Jiangmen Kinwai Furniture Deco v. Int'l Market Centers, Inc.
16-15474
| 9th Cir. | Dec 13, 2017Background
- Kinwai (Jiangmen Kinwai Furniture Decoration Co. Ltd. and Kinwai USA) leased showroom space; disputes arose after landlord IHFC Properties, LLC relocated Kinwai’s showroom in North Carolina.
- Kinwai sued IHFC and a competitor in North Carolina (NCDC) alleging breach of lease and related claims; NCDC denied Kinwai’s motion to add IHFC affiliates as futile and limited amendment; discovery later revealed Kinwai engaged in bad-faith discovery tactics.
- NCDC granted summary judgment for IHFC in 2016, finding no breach when IHFC moved Kinwai’s showroom.
- While the North Carolina suit was pending, Kinwai filed a second suit in Nevada against IHFC affiliates regarding Kinwai’s Nevada showroom lease; Kinwai later amended to add WMCV (Nevada landlord) and dropped IHFC.
- The Nevada district court dismissed Kinwai’s Nevada action under the first-to-file rule and Rule 12(b)(6) (failure to state claims for interference with prospective economic advantage and breach of the implied covenant), and denied a Rule 59 motion to alter/amend judgment; Kinwai appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Application of first-to-file rule | Kinwai argued both suits were proper and not duplicative | Defendants argued the North Carolina action was first and the Nevada suit duplicated parties/issues and was bad-faith forum-shopping | Affirmed: Nevada court did not abuse discretion in dismissing under first-to-file rule due to substantial similarity and Kinwai’s bad-faith litigation conduct |
| Consideration of North Carolina record | Kinwai argued Nevada court impermissibly relied on another court’s record (hearsay) | Defendants argued courts may judicially notice related proceedings | Affirmed: district court may take judicial notice of related court proceedings |
| Intentional interference with prospective economic advantage (Nevada claim) | Kinwai alleged IMC Manager sabotaged lease talks | Defendants contended IMC Manager acted with privilege to protect common economic interests of affiliated entities | Affirmed: dismissal under Rule 12(b)(6); Kinwai failed to plead lack of privilege/justification |
| Breach of implied covenant of good faith and fair dealing (Nevada claim) | Kinwai claimed WMCV acted in bad faith by not renewing lease | Defendants argued WMCV had no contractual duty to renew and no special-reliance facts supporting bad faith | Affirmed: dismissal under Rule 12(b)(6); no duty to renew or special-reliance facts |
| Denial of Rule 59 motion / leave to amend | Kinwai argued relief and an opportunity to amend were warranted post-judgment | Defendants noted Kinwai never sought leave to amend before dismissal and prior conduct showed bad faith/futility | Affirmed: denial not an abuse of discretion; no newly discovered evidence, clear error, or intervening law; leave to amend not required where futile or sought in bad faith |
Key Cases Cited
- Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622 (9th Cir. 1991) (first-to-file rule is discretionary and reviewed for abuse of discretion)
- Kohn Law Grp., Inc. v. Auto Parts Mft. Mississippi, Inc., 787 F.3d 1237 (9th Cir. 2015) (first-to-file rule prevents disruptive duplicative litigation and gamesmanship)
- Pacesetter Sys. Inc. v. Medtronic, Inc., 678 F.2d 93 (9th Cir. 1982) (permitting dismissal to avoid duplicative litigation)
- U.S. ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244 (9th Cir. 1992) (district courts may take judicial notice of other courts’ proceedings)
- Lloyd v. CVB Fin. Corp., 811 F.3d 1200 (9th Cir. 2016) (Rule 12(b)(6) review accepts well-pleaded allegations as true)
- Leavitt v. Leisure Sports Incorporation, 103 Nev. 81 (Nev. 1987) (elements of tortious interference in Nevada, including absence of privilege)
- Dalton Props., Inc. v. Jones, 100 Nev. 422 (Nev. 1984) (Nevada law on implied covenant and bad-faith exceptions requiring special reliance)
- McDowell v. Calderon, 197 F.3d 1253 (9th Cir. 1999) (standards for granting Rule 59 relief)
- Zimmerman v. City of Oakland, 255 F.3d 734 (9th Cir. 2001) (denial of Rule 59(e) reviewed for abuse of discretion)
- AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d 946 (9th Cir. 2006) (leave to amend need not be granted when amendment would be futile or prejudicial)
- In re Tracht Gut, LLC, 836 F.3d 1146 (9th Cir. 2016) (limits on amendment where bad faith or undue delay exists)
- World Wide Rush, LLC v. City of Los Angeles, 606 F.3d 676 (9th Cir. 2010) (district court discretion in denying leave to amend)