                                                                           FILED
                           NOT FOR PUBLICATION
                                                                           JUN 06 2019
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS


                           FOR THE NINTH CIRCUIT


WEH MAGIC VALLEY HOLDINGS,                       No. 18-35276
LLC, a Delaware limited liability
company,                                         D.C. No. 6:15-cv-00050-SEH

              Plaintiff-Appellant,
                                                 MEMORANDUM*
 v.

EIH PARENT, LLC, an Idaho limited
liability company; JAMES CARKULIS,

              Defendants-Appellees.


                    Appeal from the United States District Court
                            for the District of Montana
                     Sam E. Haddon, District Judge, Presiding

                        Argued and Submitted April 9, 2019
                               Seattle, Washington

Before: W. FLETCHER, CALLAHAN, and CHRISTEN, Circuit Judges.

      In 2014, WEH Magic Valley Holdings, LLC (“WEH”) sought to purchase

membership in Exergy Idaho Holdings (“EIH”), which was wholly held by Exergy

Idaho Holdings Parent (“EIHP”). James Carkulis, the president of EIHP, learned


      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
that certain Reserves held by a third party for the benefit of EIH that were expected

to be released in 2027, would be available as soon as 2015. Based on this

information, he negotiated an increase in the purchase price. When the Reserves,

valued at $583,868, actually became available to EIH in June 2014, Carkulis had

the amount paid directly to a creditor of a separate Carkulis-owned company, and

he hid this fact from WEH. The Purchase and Sales Agreement (“PSA”),

including the increased purchase price, was agreed to by June 30, 2014, and closed

on August 1, 2014. WEH brought this action alleging breach of contract and fraud

by EIH and Carkulis. The district court sua sponte concluded that the Reserves

were not covered by the PSA, and then entered summary judgment for the

defendants, concluding that WEH had not alleged a viable breach of contract or

fraud claim.

      A grant of summary judgment is reviewed de novo. Branch Banking & Tr.

Co. v. D.M.S.I., LLC, 871 F.3d 751, 759 (9th Cir. 2017). We must determine,

viewing the evidence in the light most favorable to the nonmoving party, whether

there are any genuine issues of material fact and whether the district court correctly

applied the relevant substantive law. Frudden v. Pilling, 877 F.3d 821, 828 (9th

Cir. 2017) (citing Fed. R. Civ. P. 56(a); Olsen v. Idaho State Bd. of Med., 363 F.3d

916, 922 (9th Cir. 2004)).




                                          2
      The district court erred in concluding that the PSA unambiguously provided

that WEH was not entitled to the distribution of the Reserves because the Reserves

were not a part of the Equity Interests to be sold to WEH, and the district court thus

erred in awarding summary judgment to defendants on the contract claim. If

“reasonable minds could differ on the meaning of the language used [in a contract],

the meaning of the words becomes an issue of fact if there is relevant extrinsic

evidence of the parties’ actual intent.” Bolt Elec., Inc. v. City of New York, 223

F.3d 146, 150 (2nd Cir. 2000) (citation omitted). There are numerous factual

issues as to whether the Reserves were promised as part of the contract. In

particular, there are facts supporting such a conclusion in Appendix A and Exhibit

C, which the parties have stipulated form part of the contract. The Base Case

Model in Exhibit C lists the $583,800 Reserves amount under the label

“Supplemental Reserves Balance at Closing.” Appendix A documents the parties

negotiated Annual Minimum and Annual Cap range of distributions for the years

2014 through 2031. For 2015, Appendix A lists a minimum amount of

$1,249,335, which is more than three times the 2014 minimum. In a July 2, 2014

email to Carkulis, as well as in his deposition, Bill Green of WEH made clear his

understanding that the “relatively high figure in 2015 relates to the release of funds

in the Supplemental Reserves Account.” Based on these facts and others like them,

there is a triable question whether EIH’s failure to transfer the Reserves to WEH

                                           3
was a breach of contract. Even EIH acknowledged at oral argument that WEH has

a triable contract claim.

      The district court also erred in granting summary judgment on the fraud

claim. The district court concluded that the fraud claim fails “since it is based on

the same factual allegations and seeks the same damages as the breach of contract

claim.” We do not agree. WEH’s fraud claim is based on a series of actions over

and above those involved in the breach of contract claim. These actions include

the inducement of a higher purchase price in consideration of the Reserves, the

receipt and conversion of the Reserves just prior to closing, the cover up of these

actions, and the failure to disclose to WEH the absence of the Reserves at closing.

It is a triable question whether these additional actions amount to fraud.

Furthermore, on this record we are not convinced that under the applicable New

York law, WEH cannot assert a fraud claim against Carkulis. Compare

Bridgestone/Fireside v. Recovery Credit Servs., 98 F.3d 13 (2d Cir. 1996), with

Cohen v. Koenig, 25 F.3d 1168 (2d Cir. 1994) and Triangle Underwriters v.

Honeywell, Inc., 605 F.2d 737 (2d Cir. 1979).1

      REVERSED and REMANDED for further proceedings.




      1
              Because WEH on appeal does not challenge the district court’s
rejection of its claims against Carkulis for constructive fraud, negligent
misrepresentation, and unjust enrichment, we do not address them.
                                           4
