Transbay Auto Service, Inc. v. Chevron USA Inc.
807 F.3d 1113
9th Cir.2015Background
- Chevron owned a service-station property in San Francisco and informed franchisee Transbay it intended to sell; Transbay ultimately purchased the property for about $2.375 million after accepting Chevron’s offer under protest.
- Chevron’s consultant (Deloitte) issued a revised appraisal valuing the property at about $2.386 million (highest-and-best-use) and $1.5 million (going concern). Transbay submitted its own $1.8 million appraisal for litigation.
- Transbay sought financing; American California Bank commissioned a third-party appraisal (PSG) valuing the property at $2.52 million and gave Transbay a copy; Transbay later delivered that PSG appraisal to California Pacific Bank when applying for a loan. Transbay’s owner testified at trial he never read the PSG appraisal before handing it to the bank.
- At summary judgment the district court ruled the PSG appraisal was admissible as an adoptive admission under Fed. R. Evid. 801(d)(2)(B). At trial, after mid-trial voir dire, the court reversed and excluded the PSG appraisal, concluding there was no evidence Transbay’s owner had read or acceded to it.
- The jury awarded Transbay $495,000; Chevron appealed, arguing the PSG appraisal should have been admitted as an adoptive admission and that exclusion required a new trial.
- The Ninth Circuit majority reversed, holding the PSG appraisal was admissible under a “possession plus” adoption standard even if Transbay’s owner did not read the document, and remanded for a new trial; a dissent argued the trial court correctly excluded the appraisal and that the majority retroactively adopted a new rule.
Issues
| Issue | Plaintiff's Argument (Transbay) | Defendant's Argument (Chevron) | Held |
|---|---|---|---|
| Whether the PSG appraisal was an adoptive admission under Fed. R. Evid. 801(d)(2)(B) | PSG not admissible because Transbay’s owner never read or understood the appraisal before delivering it to the bank | PSG admissible: handing the appraisal to a lender to obtain a loan manifested adoption ("possession plus") even if not read | Court held PSG admissible as an adoptive admission under a possession-plus standard and reversed exclusion |
| Proper legal standard for document adoptive admissions | Must show the party actually heard/understood/acceded to the statement | Adoption can be shown by conduct tied to the document (possession plus), not only actual review | Court adopted the possession-plus test: surrounding circumstances tying party to document suffice |
| Whether exclusion of PSG appraisal was harmless error | Exclusion was harmless because other appraisals/bids supported verdict | Exclusion was prejudicial because PSG was the only higher third-party going-concern appraisal and could have changed jury outcome | Court found exclusion not harmless and ordered a new trial |
| Retroactivity / standard application | Not raised separately by Transbay | Dissent: new possession-plus rule not previously adopted in Ninth Circuit and should not be applied retroactively; trial court acted within bounds | Majority applied possession-plus standard, rejecting retroactivity argument; dissent would have affirmed |
Key Cases Cited
- Ellis v. Mobil Oil, 969 F.2d 784 (9th Cir. 1992) (bona fide offer under PMPA must approach fair market value)
- United States v. Monks, 774 F.2d 945 (9th Cir. 1985) (foundational facts required before submitting adoptive-admission question to jury)
- United States v. Ospina, 739 F.2d 448 (9th Cir. 1984) (possession-plus concept: acting on information in a document supports adoption)
- Sea-Land Serv., Inc. v. Lozen Int’l, LLC, 285 F.3d 808 (9th Cir. 2002) (adopting and incorporating a memorandum into another communication can show adoption)
- Pilgrim v. Trs. of Tufts Coll., 118 F.3d 864 (1st Cir. 1997) (surrounding circumstances tying possessor to document determine adoption)