                             NOT FOR PUBLICATION                         FILED
                    UNITED STATES COURT OF APPEALS                        JUN 25 2019
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                             FOR THE NINTH CIRCUIT

NEW INVESTMENTS INC.,                           No.    18-35269

                Appellant,                      D.C. No. 2:16-cv-01368-RAJ

 v.
                                                MEMORANDUM*
ALTANATURAL CORPORATION,

                Appellee.

                   Appeal from the United States District Court
                     for the Western District of Washington
                   Richard A. Jones, District Judge, Presiding

                        Argued and Submitted June 7, 2019
                               Seattle, Washington

Before: BEA and NGUYEN, Circuit Judges, and MÁRQUEZ,** District Judge.


      New Investments Inc. appeals the judgment of the district court affirming

the judgment of the bankruptcy court awarding $487,989.36 to Altanatural




      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
              The Honorable Rosemary Márquez, United States District Judge for
the District of Arizona, sitting by designation.
Corporation. We have jurisdiction under 28 U.S.C. §§ 158 and 1291, and we

affirm in part, vacate in part, and remand.

      1.     Altanatural did not fail to “establish damages with reasonable

certainty.” Holmquist v. King County, 368 P.3d 234, 238 (Wash. Ct. App. 2016).

New Investments claims that the district court erred in admitting testimony from

Lukens because he was qualified as an expert in appraisal, but Lukens’ expertise

was broader than that. He had extensive experience in hotel development and in

conducting feasibility studies to determine what types of hotels could be built on

particular sites. He was therefore competent to offer an opinion on the cost of

building under-unit or underground parking spaces. Furthermore, although New

Investments contends Lukens’ cost estimate was speculative, Lukens had “spoken

to several contractors about underground parking in this area.” Although “no

comprehensive construction analysis was presented,” Lukens’ testimony was

sufficient to “give[] the trier of fact a reasonable basis for estimating the loss.” Id.

      2.     The bankruptcy court did not err by allowing Altanatural the remedy

of recoupment. The promissory note waived “any right of offset.” New

Investments claims that the waiver of offset was a waiver of recoupment, but the

term “offset” is commonly used as a synonym for “setoff,” not recoupment. See

Offset, Black’s Law Dictionary (11th ed. 2019) (“[C]ourts use the terms ‘offset’

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and ‘setoff’ interchangeably, often switching between them from sentence to

sentence, supporting the conclusion that there is no substantive difference between

them.” (alteration in original) (quoting 4 Ann Taylor Schwing, California

Affirmative Defenses § 44:1, at 4–5 (2d ed. 1996))); Citizens Bank of Maryland v.

Strumpf, 516 U.S. 16, 18 (1995) (“The right of setoff (also called ‘offset’) . . . .”);

In re Madigan, 270 B.R. 749, 754 (B.A.P. 9th Cir. 2001) (“The ‘same transaction’

requirement essentially distinguishes recoupment from ‘setoff’ or ‘offset’ . . . .”).

The bankruptcy court therefore properly construed the waiver provision as

covering setoff but not recoupment.

      3.     The bankruptcy court did not clearly err in rejecting New

Investments’ waiver and equitable estoppel defenses. There was no evidence that

Altanatural acquiesced in New Investments’ free occupation of hotel rooms after

November 13, 2014. Accordingly, New Investments cannot satisfy the elements of

waiver or estoppel. See Schuster v. Prestige Senior Mgmt., L.L.C., 376 P.3d 412,

420 (Wash. Ct. App. 2016).

      4.     Altanatural properly suspended performance following New

Investments’ material breach. See Bailie Commc’ns, Ltd. v. Trend Bus. Sys., 765

P.2d 339, 342 (Wash. Ct. App. 1988) (“A material failure by one party gives the

other party the right to withhold further performance as a means of securing his

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expectation of an exchange of performances.” (quoting Restatement (Second) of

Contracts § 241 cmt. e (1981))).

      We reject New Investments’ argument that suspension of performance was

unjustified because the promissory note and the purchase and sale agreement were

separate contracts. Courts frequently view such documents as forming a single

integrated contract. See, e.g., In re Cochise Coll. Park, Inc., 703 F.2d 1339, 1347–

49 (9th Cir. 1983) (holding that “the failure of [the seller] to develop the land as

promised or to convey a warranty deed to the purchaser could each constitute a

material breach excusing performance by the land purchaser of his remaining

obligations,” including “payments on his promissory note”). And that approach is

particularly appropriate here, where the purchase and sale agreement—see second

addendum, exhibit B—expressly incorporates the terms of the promissory note.

      We decline to reach New Investments’ argument that the promissory note

constitutes a negotiable instrument. See Alpacas of Am., LLC v. Groome, 317 P.3d

1103, 1105–06 (Wash. Ct. App. 2014). New Investments raised this argument for

the first time at oral argument, and we ordinarily do not consider such arguments.

See Butler v. Curry, 528 F.3d 624, 642 (9th Cir. 2008).

      5.     The bankruptcy court properly concluded that Altanatural’s

performance under the contract was discharged. See Restatement (Second) of

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Contracts § 242 cmt. a (1981) (“[A] party’s uncured material failure to perform or

to offer to perform not only has the effect of suspending the other party’s duties

but, when it is too late for the performance or the offer to perform to occur, the

failure also has the effect of discharging those duties.” (citations omitted)).

        6.   New Investments’ contention that Altanatural elected inconsistent

remedies, see Bailie, 765 P.2d at 342; Melby v. Hawkins Pontiac, Inc., 537 P.2d

807, 810 (Wash. Ct. App. 1975), is based on the faulty premise that, by suspending

performance, Altanatural was seeking rescission of the contract. This was not the

case.

        7.   The bankruptcy court did not abuse its discretion by concluding that

interest did not accrue on the promissory note after Altanatural suspended its

performance. See Pit River Tribe v. U.S. Forest Serv., 615 F.3d 1069, 1080 (9th

Cir. 2010) (“We review for an abuse of discretion the district court’s equitable

orders.”); In re Country World Casinos, Inc., 181 F.3d 1146, 1151–52 & n.2 (10th

Cir. 1999) (holding that interest did not accrue); Sjoberg v. Kravik, 759 P.2d 966,

968, 970 (Mont. 1988) (holding that interest did not accrue until cure); cf. Bendik

v. Sommer Bros. Const. Co., 205 A.2d 692, 693 (Pa. Super. Ct. 1964) (holding that

interest accrued, but only because the borrower’s payment was due before the

lender’s breach).

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      8.     The bankruptcy court may have erred in calculating expectation

damages. Damages for breach of contract “should be in an amount sufficient to

place the injured party in the same economic position it would have occupied had

the contract been fully performed.” TMT Bear Creek Shopping Ctr., Inc. v. Petco

Animal Supplies, Inc., 165 P.3d 1271, 1283 (Wash. Ct. App. 2007). “Thus, the

nonbreaching party’s general or direct damages are measured by the loss in value

of the performance promised by the breacher—that is, the value of what was

promised by the breaching party minus the value of the performance actually

rendered—less any expenses saved or losses avoided by the nonbreacher as a

result of not having to perform his or her return promise . . . .” 24 Williston on

Contracts § 64:1 (4th ed. 2019) (emphasis added).

      Here, Altanatural did not have to make the final two interest payments on

the promissory note, and it does not appear that the bankruptcy court considered

these savings in calculating damages. Accordingly, we vacate the judgment of the

district court with instructions to vacate the judgment of the bankruptcy court and

remand to that court with instructions to determine whether modification of the

judgment would be appropriate to account for Altanatural’s savings.

      9.     Altanatural’s request for attorney’s fees on appeal is denied without

prejudice. See 9th Cir. R. 39-1.6(b).

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      AFFIRMED IN PART; VACATED IN PART; REMANDED. Each

party shall bear its own costs on appeal.




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