author: WIGGINS, Circuit Judge:

text:
    W. Michael KIMES; J. Colette Boykin, Plaintiffs-Appellants, v. Peter G. STONE, Judge, Superior Court; Robert L. Mezzetti, II; Henry Mariani; Robert Machado, Defendants-Appellees.
    No. 94-17210.
    United States Court of Appeals, Ninth Circuit.
    Argued and Submitted April 9, 1996.
    Decided May 22, 1996.

      Robert H. Gonzales, Laguna Niguel, California, for plaintiffs-appellants.
    Barbara H. Choi and Lisa B. Berkowitz, Deputy County Counsel, San Jose, California, for defendant-appellee Stone.
    William J. Elfving and David P. Eby, Hoge, Fenton, Jones & Appel, San Jose, California, for defendants-appellees Mezzetti, Mariam and Machado.
    Before: NORRIS and WIGGINS, Circuit Judges, and JONES, District Judge.

       Hon. Napoleon A. Jones, Jr., United States District Judge for the Southern District of California, sitting by designation.

   WIGGINS, Circuit Judge:

OVERVIEW

W. Michael Kimes and J. Colette Boykin, brother and sister, (collectively “Kimes”) brought a claim in the United States District Court for the Northern District of California under 42 U.S.C. § 1983 against Santa Clara County Superior Court Judge Peter Stone (“Judge Stone”) and attorneys Robert L. Mezzetti, Henry Mariani, and Robert Macha-do (“the Attorney Defendants”). Kimes’ complaint alleged that Judge Stone and the Attorney Defendants conspired against Kimes in estate litigation in state court to “overturn” a jury verdict, thus depriving Kimes, without due process of law, of property he would have otherwise received from his father’s estate. The district court granted Judge Stone’s and the Attorney Defendants’ motions to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), relying on Cal.Civ.Code § 47(b), which immunizes parties involved in litigation from civil liability for communications made in the course of that litigation. We have jurisdiction pursuant to 28 U.S.C. § 1291 and affirm the dismissal in favor of Judge Stone and reverse the dismissal in favor of the Attorney Defendants.

FACTS

The following is based entirely on Kimes’ complaint and the exhibits attached thereto.

Kimes brought suit against his stepmother, Marie Kimes (“Marie”) in Santa Clara County Superior Court, alleging that she had induced Kimes’ terminally ill father to draft a will and trust disinheriting Kimes. Kimes’ brother, Kevin Kimes (“Kevin”), was also named as a defendant. Judge Taketsugu Takei presided over an almost four week jury trial, and on July 11, 1990, the jury returned a verdict, finding that Marie had used fraud and undue influence in inducing Kimes’ father to sign the will and trust. The jury set aside the will and trust, but did not grant any damages to Kimes. During the trial, Kimes was represented by Mariani, his co-plaintiff sister was represented by Mezzetti, and Kevin was represented by Machado.

As a result of the verdict, the estate became intestate, subject to division pursuant to the California Probate Code. Soon after the verdict, an Internal Revenue Service (“IRS”) lawyer met with counsel for all parties, advising them that the IRS intended to impose a substantial tax assessment against the decedent’s estate because the will and trust had been set aside, and therefore did not qualify for the marital deduction. The Attorney Defendants and attorneys for Marie had begun settlement negotiations to decide how the estate property would be divided, and the IRS lawyer purportedly told them that the ease should not be settled without IRS participation.

Pursuant to the jury verdict, Judge Takei issued an interlocutory order on August 20, 1990 declaring the will and trust null and void and imposing a constructive trust upon Marie. Marie filed a Motion for New Trial/JNOV on October 2,1990, which was taken under submission by Judge Takei on October 26, 1990. Judge Takei failed to rule on the motion within sixty days, so the motion was denied as a matter of California procedural law.

Settlement negotiations continued among the Attorney Defendants, without the participation of the IRS. The attorneys apparently came to an agreement, and Kimes was informed “only that Marie Kimes had agreed to pay $2.4 Million ... to them and that they would work out the details.” Compl. at 4 (emphasis- in original). Without Kimes’ knowledge, “a transfer to a different judge was being maneuvered” by the Attorney Defendants. Id. Unbeknownst to Kimes, the case was transferred by Judge Takei to Judge Stone on February 25,1991.

According to the complaint, the Attorney Defendants “entered into a private extrajudicial agreement with Judge Stone to have the ease transferred to him” from Judge Takei as part of a scheme by the Attorney Defendants to avoid the IRS tax liability, and to create an emotional distress award which would not be taxable and from which the attorneys would receive a large contingency fee. Id. at 5-6. According to the complaint, the Attorney Defendants knew that the Motion for New Trial/JNOV would be denied as a matter of law after sixty days, and that any ruling after that date would be void because of the court’s lack of jurisdiction. Nonetheless, the Attorney Defendants “agreed and conspired to draft in their own language, a ‘Ruling’ that was purportedly to emanate from Judge Stone.” Id. at 6. In support of his claim, Kimes attached to his complaint a letter from Attorney Mezzetti to Marie’s attorney (with copies to Attorneys Mariani and Machado) which included a draft of the proposed order by Judge Stone, purportedly drafted by the Defendant Attorneys, which is virtually identical to the order issued soon afterward by Judge Stone. “All four of the defendants ... had specific knowledge the ‘Ruling’ was fraudulent, lacking in jurisdiction and lacking any legal support whatsoever ... yet they all ... created the appearance of having a ‘hearing’ on [the motion] to attempt to give legitimacy to their scheme.” Id.

On March 25, 1991, Judge Stone issued a ruling on the Motion for New Trial/JNOV, declaring that the will and trust were valid, but awarding Kimes $2.4 million for emotional distress damages. Because Kevin’s testimony at trial had helped convince the jury that Kimes’ father did not intend to disinherit him, the Attorney Defendants advised Kimes to enter into a sharing agreement with Kevin regarding the $2.4 million award, under which Kevin would receive the share of his father’s estate provided for in the will and trust.

“The IRS found out about the legal maneuvering of the attorneys and filed a $1.7 Million ... lien on the estate” of the decedent. Id. at 7. Shortly thereafter, Marie filed for Chapter 11 bankruptcy to prevent foreclosure on the estate property because of the tax lien and the $2.4 million judgment. In addition, Marie sued Kimes to set aside a Stipulation that was part of the $2.4 million judgment and provided the terms for payment of the judgment.

Marie entered into a settlement with the IRS and the State of California, agreeing to pay a total of $447,000 in taxes from the estate. The estate has incurred over $100,-000 in fees as a result of the proceeding, and Kimes has incurred substantial attorney’s fees in defending the lawsuit by Marie, in protecting the interests of the estate, and in defending a lawsuit filed by Kevin at the insistence of the Attorney Defendants to enforce the sharing agreement regarding the $2.4 million judgment. Kimes was paid approximately $800,000 of the $2.4 million judgment from his mother, and the Attorney Defendants each received approximately $100,000 of the $800,000 as part of then-contingency fee. The estate is currently in bankruptcy, and Kimes expects the litigation to continue.

PROCEDURAL HISTORY

On September 13, 1994, Kimes brought suit against Judge Stone and the Attorney Defendants for damages in the United States District Court for the Northern District of California, alleging that Judge Stone’s and the Attorney Defendants’ conduct deprived them “of their civil rights guaranteed under the Constitution,” by depriving them of property rights in their father’s estate and causing the unwarranted imposition of state and federal taxes in violation of 42 U.S.C. §§ 1983, 1985, and 1986. Id. at 13. The complaint also alleges that Kimes did not learn of the conspiracy until mid-June 1994.

On October 24, 1994, Judge Stone filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) on the grounds that the complaint did not satisfy Fed.R.Civ.P. 8(a), that Kimes’ action was barred by the statute of limitations, and that Judge Stone enjoys absolute immunity for acts undertaken in his judicial capacity. The Attorney Defendants joined in Stone’s motion, and also moved for dismissal on the ground that their actions were protected by Cal.Civ.Code § 47, the litigation privilege. Kimes withdrew his claims under 42 U.S.C. §§ 1985 and 1986, and opposed the Attorney Defendants’ motion, arguing with respect to § 47(b) only that the Attorney Defendants’ conspiring with Judge Stone did not qualify as a “communication” immunized by § 47(b). On December 1, 1994, the district court granted Judge Stone’s and the Attorney Defendants’ motions to dismiss, finding that Kimes’ claim was barred by Cal. Civ.Code § 47(b).

DISCUSSION

Kimes appeals the district court’s dismissal of his 42 U.S.C. § 1983 claim, arguing that the district court erred in determining that the litigation privilege provided for by Cal. Civ.Code § 47(b) barred Kimes’ claim. Kimes’ counsel conceded at oral argument that Kimes’ claim against Judge Stone is barred by judicial immunity, and we thus affirm the district court’s dismissal in favor of Judge Stone. We find, however, that the district court erred in applying Cal.Civ.Code § 47(b) as a bar to Kimes’ § 1983 claim against the Attorney Defendants, and finding no other basis for affirming the district court, we reverse the dismissal in favor of the Attorney Defendants.

1. Standard of Review

A dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) is reviewed de novo. Stone v. Travelers Corp., 58 F.3d 434, 436-37 (9th Cir.1995). A complaint should not be dismissed unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Parks Sch. of Business, Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995). We can affirm the district court’s dismissal for failure to state a claim on any basis fairly supported by the record. Janicki Logging Co. v. Mateer, 42 F.3d 561, 564 (9th Cir.1994); Blake v. Dierdorff, 856 F.2d 1365, 1368 (9th Cir.1988).

II. Litigation Immunity

Section 1983 subjects any person who deprives someone of a constitutional right under color of state law to civil liability for that deprivation. 42 U.S.C. § 1983 (1994). Although the Attorney Defendants are themselves private actors, private parties who corruptly conspire with a judge in conjunction with the judge’s performance of an official judicial act are acting under color of state law for the purpose of § 1983, even if the judge himself is immune from civil liability. Dennis v. Sparks, 449 U.S. 24, 28-29, 101 S.Ct. 183, 186-87, 66 L.Ed.2d 185 (1980). Nonetheless, the district court concluded that Kimes’ § 1983 claim against the Attorney Defendants was barred by Cal.Civ.Code § 47(b), commonly known as the litigation privilege.

For the first time on appeal, Kimes’ argues that the Supremacy Clause prohibits the application of California’s litigation privilege to bar a federal civil rights claim. ‘We will review an issue that has been raised for the first time on appeal under certain narrow circumstances.” Parks, 51 F.3d at 1488. “They are (1) to prevent a miscarriage of justice; (2) when a change in law raises a new issue while an appeal is pending; and (3) when the issue is purely one of law.” Id. The decision to consider an issue not raised below is discretionary, and such an issue should not be decided if it would prejudice the other party. Aronson v. Resolution Trust Corp., 38 F.3d 1110, 1114 (9th Cir.1994); Bolker v. Commissioner, 760 F.2d 1039, 1042 (9th Cir.1985). Because the Supremacy Clause issue is purely a question of law and consideration of the issue would not prejudice the Attorney Defendants’ ability to present relevant facts that could affect our decision, we exercise our discretion to consider Kimes’ argument.

Because the existence of § 1983 immunities is a matter of federal law, the district court erred in determining that the Attorney Defendants were entitled to litigation immunity pursuant to Cal.Civ.Code § 47(b). In addition, because the federal common law did not provide immunity for private parties accused of conspiring with a judge to deprive someone of their constitutional rights, the Attorney Defendants are not entitled to- immunity under federal law.

In California, the litigation privilege applies to any “publication or broadcast” made in any “judicial proceeding.” Cal.Civ. Code § 47 (West Supp.1996). “For well over a century, communications with ‘some relation’ to judicial proceedings have been absolutely immune from tort liability by the privilege codified as section 47(b).” Rubin v. Green, 4 Cal.4th 1187, 17 Cal.Rptr.2d 828, 831, 847 P.2d 1044, 1047 (1993). “[T]he privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.” Silberg v. Anderson, 50 Cal.3d 205, 266 Cal.Rptr. 638, 642, 786 P.2d 365, 369 (1990). “Although originally enacted with reference to defamation, the privilege is now held applicable to any communication, whether or not it amounts to a publication, and all torts except malicious prosecution.” Id. 266 Cal.Rptr. at 641, 786 P.2d at 368 (citations omitted). The privilege “protects attorneys, judges, jurors, witnesses, and other court personnel.” Mattco Forge, Inc. v. Arthur Young & Co., 5 Cal.App.4th 392, 402, 6 Cal.Rptr.2d 781, 787 (1992).

The district court erred in relying on § 47(b) immunity to bar Kimes’ § 1983 claim.

Conduct by persons acting under color of state law which is wrongful under 42 U.S.C. § 1983 or § 1985(3) cannot be immunized by state law. A construction of the federal statute which permitted a state immunity defense to have controlling effect would transmute a basic guarantee into an illusory promise; and the supremacy clause of the Constitution insures that the proper construction may be enforced.

Martinez v. California, 444 U.S. 277, 284 n. 8, 100 S.Ct. 553, 558 n. 8, 62 L.Ed.2d 481 (1980) (citation omitted). While the Attorney Defendants attempt to characterize this language in Martinez as “dicta,” it was explicitly treated as a holding and followed in Howlett v. Rose, 496 U.S. 356, 376-77,110 S.Ct. 2430, 2443, 110 L.Ed.2d 332 (1990), and Felder v. Casey, 487 U.S. 131, 139, 108 S.Ct. 2302, 2307, 101 L.Ed.2d 123 (1988) (“[W]e have held that a state law that immunizes government conduct otherwise subject to suit under § 1983 is preempted ... because the application of the state law would thwart the congressional remedy ... which of course already provides certain immunities for state officials.”) (citing Martinez). Moreover, this portion of Martinez has been followed by this and other circuits. See, e.g., Sosa v. Hiraoka, 920 F.2d 1451, 1460 n. 3 (9th Cir.1990) (noting that the Supreme Court has “held that state law immunities have no force against § 1983 suits where the state law immunity purports to provide immunity ‘over and above those already provided in § 1983’ ”) (quoting Howlett, 496 U.S. at 375, 110 S.Ct. at 2442); see also Palmer v. City of Monticello, 31 F.3d 1499, 1504 (10th Cir.1994) (following Martinez in holding that a Utah provision similar to Cal.Civ.Code § 47(b) does not bar a § 1983 claim). Thus, the litigation immunity provided in Cal.Civ. Code § 47(b) does not apply to Kimes’ § 1983 cause of action.

Nonetheless, the Attorney Defendants argue in their brief that “[t]he Supreme Court has often ruled that the creation of certain immunities under section 1983 is appropriate,” and that we “should recognize the California state policy granting immunity to attorneys in limited circumstances under [§ 47(b) ], and apply said immunity” to Kimes’ claim. Contrary to the Attorney Defendants’ characterization of § 1983 immunity caselaw,. the Supreme Court has not “created” any immunities applicable to § 1983; rather, it has recognized that “Congress did not intend § 1983 to abrogate immunities Veil grounded in history and reason.’ ” Buckley v. Fitzsimmons, 509 U.S. 259, 268, 113 S.Ct. 2606, 2612-13, 125 L.Ed.2d 209 (1993) (quoting Tenney v. Brandhove, 341 U.S. 367, 376, 71 S.Ct. 783, 788, 95 L.Ed. 1019 (1951)).

Certain immunities were so well established in 1871, when § 1983 was enacted, that we presume that Congress would have specifically so provided had it wished to abolish them. Although we have found immunities in § 1983 that do not appear on the face of the statute, “[w]e do not have a license to establish immunities from § 1983 actions in the interests of what we judge to be sound public policy.”

Id., at 268, 113 S.Ct. at 2613 (quoting Tower v. Glover, 467 U.S. 914, 922-23, 104 S.Ct. 2820, 2826, 81 L.Ed.2d 758 (1984)) (other citations omitted). Thus, regardless of any policy argument that could weigh in favor of adopting an additional § 1983 immunity, the Attorney Defendants are only immunized from Kimes’ claim if their alleged conduct was immunized under the common law.

Attorneys were entitled to some immunity at the common law. “The common law provided absolute immunity from subsequent damages liability for all persons-govemmen-tai or otherwise-who were integral parts of the judicial process.” Briscoe v. LaHue, 460 U.S. 325, 335, 103 S.Ct. 1108, 1115-16, 75 L.Ed.2d 96 (1983). This protection extended to private counsel and witnesses for their involvement in the “judicial proceeding itself.” Id. at 334, 103 S.Ct. at 1115. However, in Wyatt v. Cole, 504 U.S. 158, 112 S.Ct. 1827, 118 L.Ed.2d 504 (1992), the Supreme Court relied on the common law in concluding that private actors are not entitled to the absolute immunity granted to some government officials, such as prosecutors and judges, id. at 164-65, 112 S.Ct. at 1831-32, and that “private persons, who conspire with state officials to violate constitutional rights” are not entitled to the good faith immunity, also known as qualified immunity, available to other public officials. Id. at 168-69, 112 S.Ct. at 1834. See also Tower, 467 U.S. at 921, 104 S.Ct. at 2825 (under the common law, a privately retained lawyer would not “have enjoyed immunity from tort liability for intentional misconduct”); Dennis, 449 U.S. at 29, 101 S.Ct. at 187 (finding “nothing indicating that, historically, judicial immunity insulated from damages liability those private persons who corruptly conspire with the judge”); Religious Technology Ctr. v. Wollersheim, 971 F.2d 364, 367 n. 10 (9th Cir.1992) (finding no cases indicating that the immunity articulated by Cal.Civ.Code § 47(b) “has been recognized as a matter of federal common law”). Thus, there was no immunity at common law that would have shielded the Attorney Defendants from liability for the acts alleged in Kimes’ complaint.

Because state immunity law does not govern § 1983 claims, and the common law did not provide immunity to private attorneys conspiring with a judge to deprive someone of their constitutional rights, Kimes’ complaint does not reveal that his claim against the Attorney Defendants is barred by any immunity.

III. Statute of Limitations

Because § 1983 does not contain its own statute of limitations provision, under Wilson v. Garcia, 471 U.S. 261, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985), we apply the statute of limitations for personal injury claims in the state in which the claim accrued. Thus, the limitations period for § 1983 claims in California is one year. Golden Gate Hotel Ass’n v. San Francisco, 18 F.3d 1482, 1485 (9th Cir.1994). Under federal law, “the limitations period accrues when a party knows or has reason to know of the injury” which is the basis of the cause of action. Id. at 1486. Kimes’ complaint reveals that he learned of the alleged conspiracy that deprived him of his constitutional rights in mid-June 1994. The complaint, filed in September 1994, alleges several times that Kimes had no knowledge of the alleged conspiracy between Judge Stone and the Attorney Defendants while it was occurring, and nothing in the complaint reveals that they “should have known” about it before June 1994. Thus, Kimes’ complaint does not reveal that his § 1988 claim against the Attorney Defendants is barred by the statute of limitations.

IV. Short and Plain Statement of Kimes’ Claim

Fed.R.Civ.P. 8(a), requiring “a short and plain statement of the claim showing that the pleader is entitled to relief,” does not provide a separate ground for affirming the district court. Rule 8(f) indicates that “[a]ll pleadings shall be so construed as to do substantial justice.” Fed.R.Civ.P. 8(f). All that is required is that the complaint gives “the defendant fair notice of what the plaintiffs claim is and the ground upon which it rests.” Datagate, Inc. v. Hewlett-Packard Co., 941 F.2d 864, 870 (9th Cir.1991), cert. denied, 508 U.S. 984, 112 S.Ct. 1667, 118 L.Ed.2d 388 (1992). Kimes’ complaint fairly satisfies this requirement, by, at a minimum, making specific allegations which could establish the elements of a § 1983 claim based upon procedural due process: (1) a liberty or property interest protected by the Constitution; (2) a deprivation of the interest by the government; and (3) lack of process. Portman v. County of Santa Clara, 995 F.2d 898, 904 (9th Cir.1993). The complaint reveals (1) that Kimes suffered, inter alia, a loss of a certain property right in his father’s estate, (2) that he was deprived of this property right by the Attorney Defendants acting in conjunction with Judge Stone, and (3) that an extra-judicial agreement between the Attorney Defendants and Judge Stone and the allegedly fraudulent court proceeding circumvented the “due course of justice.” Compl. at 13. Accordingly, Fed.R.Civ.P. 8(a) does not provide a separate basis for affirming the district court.

CONCLUSION

For the reasons stated above, we AFFIRM the dismissal of Kimes’ claim against Judge Stone and REVERSE the district court’s dismissal of Kimes’ claims against the Attorney Defendants.

Each party is to bear its own costs.

      . Kimes’ complaint did not accuse Judge Takei of any wrongdoing.

      . See generally Ashelman v. Pope, 793 F.2d 1072 (9th Cir.1986) (enbanc).

      . Even if we had declined to address Kimes' supremacy clause argument, we are not entirely convinced that the Attorney Defendants would have been entitled to immunity for their alleged conduct because such conduct appears to constitute "extrinsic fraud,” which is not covered by § 47(b). Silberg, 266 Cal.Rptr. at 638, 786 P.2d at 370. A judgment has been obtained by extrinsic fraud where " 'the aggrieved party [has been] deliberately kept in ignorance of the action or proceeding, or in some other way fraudulently prevented from presenting his claim or defense.’ " Moore v. Conliffe, 7 Cal.4th 634, 29 Cal.Rptr.2d 152, 157 n. 5, 871 P.2d 204, 209 n. 5 (1994) (quoting 8 Witkin, California Procedure § 204 (3d ed. 1985)). Examples of extrinsic fraud include: "Keeping the unsuccessful party away from the court by a false promise of a compromise, or purposely keeping him in ignorance of the suit; or, where an attorney fraudulently pretends to represent a party, and connives at his defeat or, being regularly employed, corruptly sells out his client’s interest.” Kachig v. Boothe, 22 Cal.App.3d 626, 633, 99 Cal.Rptr. 393, 397 (1971) (quoting Pico v. Cohn, 91 Cal. 129, 25 P. 970, 971, aff'd, 91 Cal. 129, 27 P. 537 (1891)) (both cases cited by Silberg, 266 Cal.Rptr. at 643, 786 P.2d at 370); see also In re Marriage of Stevenot, 154 Cal.App.3d 1051, 1068-69, 202 Cal.Rptr. 116, 128-29 (1984) (giving examples of acts constituting extrinsic fraud). Kimes’ complaint accuses his attorneys of selling out his interests.


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    Richard McCLURE, Plaintiff-Appellee, v. LIFE INSURANCE COMPANY OF NORTH AMERICA; The EG&G Voluntary Accident Insurance Plan; Cigna Corporation; EG&G, Inc., Defendants-Appellants.
    No. 94-15874.
    United States Court of Appeals, Ninth Circuit.
    Argued and Submitted Dec. 8, 1995.
    Decided May 23, 1996.

      Travis C. Williamson, Williamson & Rush, Las Vegas, Nevada, for defendants-appellants.
    Laura Wightmann FitzSimmons, Las Vegas, Nevada, for plaintiff-appellee.
    Before BOOCHEVER and REINHARDT, Circuit Judges, and KING, District Judge.

       Honorable Samuel P. King, Senior United States District Judge for the District of Hawaii, sitting by designation.

   PER CURIAM:

Defendants/appellants Life Insurance Company of North America (“LINA”), the EG & G Voluntary Accident Insurance Plan, Cigna Corporation, and EG & G, Inc. (“EG & G”) appeal from the district court’s decision granting plaintiff/appellee Richard McClure’s (“McClure”) renewed' motion for summary-judgment. The district court held that the “process of nature” rule was not preempted by the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (“ERISA”), that state laws apply, and that Nevada would adopt the “process of nature” rule. The court also held that McClure’s disability was the result of the process of nature, and that McClure could recover because the parties stipulated that the accident was the proximate cause of his disability.

I

McClure started working as a fire fighter for EG & G in 1980. McClure paid all required premiums for a policy issued by LINA for accidental death, dismemberment and permanent disability (“the policy”). The policy provided for the lump sum payment of $350,000.00 to McClure if he became totally and permanently disabled because of an accident.

On November 16, 1988, McClure tripped over a guide wire and fell. This was the accident to which he attributed his disability. However, prior to the accident, on October 24,1988, McClure began seeing Dr. Fathie, a board certified neurosurgeon. He initially complained of right side lateral thigh pain with numbness and tingling. He also complained of lower back pain for about six months. On November 4, 1988, Dr. Fathie suggested that McClure have an MRI of his lower back area, as well as other tests. Dr. Fathie found some abnormalities in McClure’s discs. McClure testified, however, that the symptoms that he had prior to the fall did not cause him to modify his work activities in any way. There was no evidence contradicting that testimony.

The day after the accident, November 17, 1988, McClure again saw Dr. Fathie. The medical records reflect, however, that McClure did not inform the doctor of his accident. McClure then continued working. He was unable to perform the physical duties required by his job, however, and performed light duties, not actual fire fighting. In October 1989, he was forced to stop working, as no light duty was available.

In January 1990, McClure began seeing an orthopedist, Dr. Brandner. Dr. Brandner concluded that the accident set in motion a chain of deterioration that resulted in the disability. The parties have stipulated that the accident was the proximate cause of the eventual total disability.

On November 27, 1990, McClure made a claim for permanent total disability benefits under the group accident policy. On May 14, 1991, his claim was denied. On July 12, 1991, he requested that his claim be reviewed, and on July 16, 1991, his claim was again denied. McClure then filed a complaint for declaratory relief and benefits under ERISA He prevailed upon summary judgment motions.

The issues raised in this appeal are reviewed de novo. Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994) (a grant of summary judgment is reviewed de novo); Olson v. General Dynamics Corp., 960 F.2d 1418, 1420 (9th Cir.1991), cert. denied, 504 U.S. 986, 112 S.Ct. 2968, 119 L.Ed.2d 588 (1992). If an ERISA benefit plan gives the administrator discretionary authority to determine eligibility for benefits, or to construe the terms of the plan, then the administrator’s decision is reviewed under the deferential “arbitrary and capricious” standard. Madden v. ITT Long Term Disability Plan, 914 F.2d 1279, 1283-84 (9th Cir.1990), cert. denied, 498 U.S. 1087, 111 S.Ct. 964, 112 L.Ed.2d 1051 (1991). LINA does not argue that the policy in question grants any such discretionary authority. Therefore, our review, like the district court’s, is governed by Fed.R.Civ.P. 56(c), which provides that the court shall enter summary judgment when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). The moving party has the initial burden of “identifying for the court the portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact.” T.W. Elec. Serv. Inc., v. Pacific Elec. Contractors Ass’n., 809 F.2d 626, 630 (9th Cir.1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986)). We may affirm a summary judgment for reasons other than those relied on by the district court. Shawmut Bank, N.A., v. Kress Assocs., 33 F.3d 1477, 1484 (9th Cir.1994).

The district court found that: 1) McClure’s disability was the result of the process of nature and, 2) McClure was entitled to benefits even though he had a preexisting condition, because the accident was the proximate cause of his disability. Under the “process of nature” rule, a claimed disability is considered to have occurred immediately within the meaning of a total disability policy provision when it follows directly from the accidental injury within the time the process of nature takes.

II.

Under ERISA, state law does not control the construction of the LINA policy. ERISA preempts state common-law rules related to employee benefit plans. 29 U.S.C. § 1144(a); Evans v. Safeco Life Ins. Co. 916 F.2d 1437, 1439 (9th Cir.1990). While ERISA’s “savings” clause exempts from preemption “any law of any state which regulates insurance,” 29 U.S.C. § 1144(b)(2)(A), “state laws of insurance policy interpretation do not qualify for the saving clause exception and are preempted.” Evans, 916 F.2d at 1440. Instead, “the interpretation of ERISA insurance policies is governed by a uniform federal common law.” Id. at 1439.

McClure argues that the “process of nature” rule “regulates” insurance and thus is saved from preemption by ERISA. This court need not reach the issue whether ERISA preempts a state “process of nature” rule. Even without relying on the “process of nature” rule, under the stipulation and the undisputed facts, and applying general federal rules of contract interpretation, it is clear that McClure was continuously and totally disabled immediately following the accident, and permanently and totally disabled within one year. See Aetna Ins. Co. v. Craftwall of Idaho, Inc., 757 F.2d 1030, 1034 (9th Cir.1985) (declining to address state law question where unnecessary to resolution of case).

The parties’ stipulation of facts provides:

10. McClure continued working at the Nevada Test Site but was unable to perform all of the physical tasks required of him because of unrelenting back pain, beginning with the accident of November 16, 1988. Ultimately, and the plaintiff contends because of the accident of November 16, 1988, McClure was unable to perform any of the physical tasks of a firefighter and EG & G, the employer, informed him that it had no light duty available and plaintiff was forced to stop working on October 12,1989 ...
17. Although McClure had a pre-existing back condition that was aggravated by the accident of November 16, 1988, the fall itself was the proximate cause of McClure’s subsequent total disability. That is, the fall of November 16, 1988, set in motion the chain of events which led to McClure’s total disability retirement on October 12,1989.

According to the LINA policy:

“Continuous and total disability”, which must result from such injuries and commence within 180 days after the date of the accident, means the insured’s complete inability during the first year thereof to perform every duty of his occupation.

(Emphasis added.) At issue is the meaning of “every duty.” (Emphasis added). Because in the district court this issue was not specifically addressed, although generally raised, we ordered the parties to file supplemental briefs discussing this provision.

This court has the power to affirm a district court’s grant of summary judgment on any basis supported by the record. Golden Nugget, Inc. v. American Stock Exch., Inc., 828 F.2d 586, 590 (9th Cir.1987) (per curiam). ‘Whether, as a prudential matter, we should do so depends on the adequacy of the record and whether the issues are purely legal, putting us in essentially as advantageous a posture to decide the case as would be the district court.” Id. In this case, the parties’ stipulation of facts puts this court in that advantageous posture.

Assuming that a particular occupation required performance of three duties, and that an employee was unable to perform one of those duties, under one interpretation, the employee could not perform “every duty” of his occupation. The other interpretation of “every duty” is that the employee would be disabled only if he or she could not perform each of the three duties.

Thus, the word “every” is ambiguous. See Black’s Law Dictionary 555 (6th ed.1990) (defining “every” as “Each one of all; ...” The term is sometimes equivalent to “all”; and sometimes equivalent to “each ” (emphasis added)). “Every” can mean both “all” (the entirety) and “each” (the separate parts of the entirety). The policy language could easily be made explicit and unambiguous to specify that the employee must be unable to perform every single one of his or her duties to recover benefits. Without explicit analysis of the language, courts have differently interpreted “any and every” and “each and every.” Compare, e.g., Gunderson v. W.R. Grace & Co. Long Term Disability Income Plan, 874 F.2d 496, 498 (8th Cir.1989) (“any and every” duty means any one of the duties associated with the job); Brassard v. Continental Cas. Co., 630 F.Supp. 951, 955 (D.Conn.1986) (“each and every” duty means all of the duties associated with the job).

The insurance company claims that it would make no sense to interpret the contract in favor of McClure, because then an employee would be “disabled” by his inability to perform only one (perhaps trivial) duty of many job duties. The opposite is also true, however; it would make little sense to say that an employee like McClure was not disabled because, although he could not perform the physical duties required of him as a firefighter, he could perform at least one trivial duty of many job duties (i.e., punching a time clock). In any event, we believe the provision should be construed in a practical sense to refer to essential duties.

‘We interpret terms in ERISA insurance policies in an ordinary and popular sense as would a [person] of average intelligence and experience.” Evans, 916 F.2d at 1441 (quotations omitted). A common-sense interpretation of the ambiguous provision is that continuous and total disability exists if an employee is unable to perform one of the essential duties of his or her position. See Hammond v. Fidelity and Guar. Life Ins. Co., 965 F.2d 428, 431 (7th Cir.1992) (as amended) (policy provides claimant is disabled when unable to carry out the “chief’ duties of his job). This interpretation also favors McClure, and ERISA insurance policies are governed by the rule that ambiguous language is construed against the insurer and in favor of the insured. Kunin v. Benefit Trust Life Ins. Co., 910 F.2d 534, 539-40 (9th Cir.) (as amended), cert. denied, 498 U.S. 1013, 111 S.Ct. 581, 112 L.Ed.2d 587 (1990).

Thus, whether we give the term “every” a common sense construction in view of its context in the policy, or we consider it to be ambiguous, we construe it in McClure’s favor. Therefore, McClure suffered “continuous and total disability” under the terms of the policy.

III

The LINA policy also provides:

“Permanently and totally disabled”, means the insured’s complete inability, after one year of continuous total disability as defined above, to engage in an occupation or employment for which the insured is fitted by reason • of his education, training or experience for the remainder of his life.

McClure was clearly “permanently and totally disabled” a year after the beginning of his continuous and total disability, when he was forced to retire because he could not continue to be a firefighter, and (as the parties stipulated) his “physical limitations prevent him from working with reasonable continuity in his customary occupation or in any other occupations in which he might reasonably be expected to engage.”

IV

Appellants claim that McClure nevertheless cannot recover because the policy states that it insures against loss “resulting directly and independently of all other causes from bodily injuries caused by accident.” They argue that because McClure had a preexisting back condition, his disability did not result “directly and independently” from the accident.

Again, state law interpretation of this phrase does not control our inquiry. ERISA requires that courts apply a federal common-law rule, keeping in mind that “the common law decision-making process is inherently incremental in nature ... [and] calls for devising a rule that does not stray too far from the existing regime.” PM Group Life Ins. Co. v. Western Growers Assurance Trust, 953 F.2d 543, 547 (9th Cir.1992) (citation omitted).

The Fourth Circuit has held that the existence of a preexisting condition does not bar recovery under an ERISA policy unless the preexisting condition “substantially contributed to the disability or loss,” even when the general policy language limits coverage to losses caused by accidents “directly and independently of all other causes.” Adkins v. Reliance Standard Life Ins. Co., 917 F.2d 794, 795, 797 (4th Cir.1990) (quotations omitted) (emphasis added). Without referring to the conspicuousness of the language, the court reasoned that such a limitation, literally construed, would nullify the benefits an insured could expect from a policy in a large number of instances. “[W]ith such a stringent construction, a claimant would have to be in perfect health at the time of his most recent injury before the policy would benefit him_” Id. at 796. The application of the Fourth Circuit test “requires a two-pronged analysis, namely: (1) whether there is a preexisting disease, pre-disposition, or susceptibility to injury; and (2) whether this preexisting condition, pre-disposition, or susceptibility substantially contributed to the disability or loss.” Quesinberry v. Life Ins. Co. of N. Am., 987 F.2d 1017, 1032 (4th Cir.1993) (en banc).

Construing an ERISA policy which inconspicuously contained similar language limiting coverage to losses caused by “an accidental bodily injury which is a direct result, independent of all other causes” of the accident, the district court for the Central District of California has allowed recovery, adopting as federal common law a test “re-quir[ing] the plaintiff to show that the accident was the predominant, as opposed to remote, cause of the injury.” Henry v. Home Ins. Co., 907 F.Supp. 1392, 1394, 1398 (C.D.Cal.1995) (Tashima, D.J.). The court stated that this test is similar to a proximate cause inquiry. Id; see, e.g., Carroll v. CUNA Mut. Ins. Soc’y, 894 P.2d 746, 755 (Colo.1995) (“proximate cause” in this context means “predominant cause”); 1A John A. Appleman & Jean Appleman, Insurance Law and Practice, § 362 at pp. 484-85, 490-91 (West 1981) (requirement that accident be “proximate cause” of disability not necessarily same as negligence standard; “The weight of authority is that such terms have no greater meaning that [sic] the usual rule requiring that the injury be a predominant factor in causing the loss.”).

Henry applied the principle of federal common law under ERISA that “courts will protect the reasonable expectations of ... insureds ... even though a careful examination of the policy provisions indicates that such expectations are contrary to the expressed intention of the insurer.” Saltarelli v. Bob Baker Group Medical Trust, 35 F.3d 382, 386 (9th Cir.1994) (quotations omitted). In Saltarelli we allowed an insured to recover for his medical expenses relating to a preexisting cancer despite an ERISA policy clause excluding coverage for “pre-existing conditions,” finding that the exclusion, buried amid definitions in the policy, “was not clear, plain, and conspicuous enough to negate [a] layman[’s] ... objectively reasonable expectations of coverage.” Id. at 387. Henry emphasized that the language limiting coverage to loss caused directly and independently by an accident was “inconspicuously included within the [ERISA plan’s] definition of ‘injury.’” 907 F.Supp. at 1396. Because the plan “does not prominently indicate that recovery for an accident is to be construed so narrowly ... this phrase is not sufficiently conspicuous to apprise insureds of its impact on the scope of coverage, [and] it denies insureds their reasonable expectations of accident insurance.” Id. at 1396-97.

In this ease, we cannot determine whether the clause in the LINA policy was similarly inconspicuous. The parties did not discuss the manner in which the exclusion appears, nor did they submit a complete copy of the policy to the district court to allow it or us to determine whether the “directly and independently” language was conspicuous or buried in general policy language. This has a bearing on whether the language could defeat McClure’s objectively reasonable expectations of coverage. Without that threshhold determination, we cannot decide whether the outcome is controlled by the Fourth Circuit’s rule, which is not dependent on the conspicuousness of the exclusionary language, that the preexisting condition bars recovery when it substantially contributed to the disability, or the Central District’s more liberal rule applied when the exclusionary language was inconspicuous, that recovery may be had when the accident is the proximate or predominant cause of the disability.

Thus, we hold that if the exclusionary language here in question is conspicuous it would bar recovery if a preexisting condition substantially contributed to the disability. This could result in a denial of recovery even though the claimed injury was the predominant or proximate cause of the disability. On the other hand, we hold that if the language is inconspicuous, a policy holder reasonably would expect coverage if the accident were the predominant or proximate cause of the disability.

We therefore remand to the district court. Upon remand, the parties should provide a copy of the LINA policy to the district court, so that the court may determine whether the “directly and independently” language appears in such a “clear, plain and conspicuous” manner so as to defeat McClure’s otherwise reasonable expectation of coverage. See Saltarelli, 35 F.3d at 387. If, on the one hand, the policy language is not so conspicuous, McClure would reasonably expect coverage and therefore should prevail, because the parties have stipulated that the accident was the proximate cause of McClure’s disability. If, on the other hand, the limiting language is conspicuous, we believe that the desirability of a uniform federal common law persuades us to follow the Fourth Circuit test, which reasonably construes the exclusionary language.

Because this case arises from the grant of a summary judgment, the district court, of course, must first decide whether the conspicuousness of the language presents a triable issue of fact whether the “purported exclusion for pre-existing conditions is not conspicuous enough to attract the attention of a reasonable layman.” Id. at 385. See Rebel Oil Co. v. Atlantic Richfield Co., 51 F.3d 1421, 1435 (9th Cir.1995)(that issue is factual does not preclude summary judgment; court must assess whether the fact finder could reasonably render verdict in favor of nonmoving party). If there is no triable issue regarding the conspicuousness of the language, the grant or denial of summary judgment may be appropriate. Also, if the exclusionary language is conspicuous, the court must similarly determine if there is a triable issue whether the preexisting condition substantially contributed to McClure’s disability.

V

McClure requests attorney fees under 29 U.S.C. § 1132(g)(1), which permits a reasonable attorney’s fee and costs of action to either party in an action by a participant or beneficiary in an ERISA plan. “A plan participant who prevails in an action to enforce rights under the plan is ordinarily entitled to a reasonable attorney’s fee if the participant ‘succeed[s] on any significant issue in litigation which achieves some of the benefit ... sought in bringing suit’ and if no special circumstances make an award unjust.” Barnes v. Independent Auto. Dealers of Cal. Health & Welfare Benefit Plan, 64 F.3d 1389, 1397 (9th Cir.1995) (quoting Losada v. Golden Gate Disposal Co., 950 F.2d 1395, 1401 (9th Cir.1991)). Because we remand to the district court, neither party has yet “prevailed” in this action. McClure’s request for fees must await a final determination on the merits. If he prevails on remand, the district court should calculate a reasonable attorney’s fee, which includes the fees for bringing the appeal.

REVERSED IN PART AND REMANDED.


author: REINHARDT, Circuit Judge:

text:
    JET INVESTMENT, INC., a Nevada Corporation, Plaintiff-Appellant, v. DEPARTMENT OF the ARMY, Directorate of Contracting, Fort Lewis, WA; Small Business Administration; Convention Marketing Service, Inc., an Oregon Corporation, Defendants-Appellees.
    No. 94-16497.
    United States Court of Appeals, Ninth Circuit.
    Argued and Submitted Dec. 7, 1995.
    Decided May 23, 1996.

      Dozie Ike Ezeife, Amamgbo & Ezeife, Oakland, California, for plaintiff-appellant.
    Charles L. Green, Special Assistant United States Attorney, San Francisco, California, John H. Hemann, argued, Assistant United States Attorney, San Francisco, California; J. William Bennett, Portland, Oregon, for defendants-appellees.
    Before BOOCHEVER and REINHARDT, Circuit Judges and KING, District Judge.

       The Honorable Samuel P. King, Senior United States District Judge for the District of Hawaii, sitting by designation.

   REINHARDT, Circuit Judge:

Plaintiff, Jet Investments, Inc. (“Jet”), appeals the district court’s denial of declaratory and injunctive relief and grant of summary judgment in favor of defendants. Jet contends that the Small Business Administration (“SBA”) improperly determined that it was not a “Small Disadvantaged Business” under the Small Business Act Minority Small Business and Capital Ownership Development Program (“the 8(a) program”). Having self-certified as a Small Disadvantaged Business, Jet submitted a bid for a contract with defendant Department of the Army Directorate of Contracting to provide lodging, meals, and transportation to armed forces personnel applicants of the Military Entrance Processing Station in Oakland, California. The bid solicitation was restricted to small businesses. Defendant Convention Marketing Service, Inc. protested the Department of the Army’s restriction of bidding to small businesses. Pending resolution of that protest, the Department of the Army invited three qualified bidders to tender bids for an interim contract. Jet won this bid and was awarded the interim contract.

The Department of the Army conducted a second, unrestricted bid solicitation. Jet submitted another bid in response to this solicitation and was again adjudged the apparent low bidder. Convention Marketing— the apparent second lowest bidder- — and Specialized Contract Services, Inc. — the apparent third lowest bidder — challenged Jet’s status as a disadvantaged business in protest letters to the Army Directorate of Contracting. The Department of the Army contracting officer forwarded the protests to the Division of Program Certification and Eligibility (“DPCE”) of the Office of Minority Small Business and Capital Ownership Development. The DPCE Director determined that Jet did not qualify for disadvantaged status because it did not satisfy the regulatory standards governing the participation of nondisadvantaged individuals in a Small Disadvantaged Business. Jet appealed the DPCE Director’s determination to the Associate Administrator of the Minority Small Business and Capital Ownership Development Program. The Associate Administrator upheld the Director’s finding that Jet did not qualify as a Small Disadvantaged Business. The principal basis for the Small Business Administration’s determination was the role in the operation of the business allegedly played by the husband of its sole owner.

In light of the Small Business Administration’s determination, the Army reevaluated the bids and awarded the contract to Convention Marketing. After it was notified that it had not been awarded the contract, Jet filed the present action in district court, alleging that the SBA’s ruling denying it disadvantaged status was arbitrary and capricious. Jet sought a preliminary injunction and the defendants moved for summary judgment.

The district court denied Jet’s motion and granted the defendants’. Jet appealed. We reverse the grant of summary judgment in favor of the defendants, direct that summary judgment be entered in favor of Jet, and remand for further proceedings on the question of the appropriate relief.

* * * * *

Judicial review of the actions of the Small Business Administration is governed by the Administrative Procedure Act (APA). 5 U.S.C. §§ 701 et seq. The issue before us is whether the agency’s determination is “arbitrary, capricious, an abuse of discretion, or not otherwise in accordance with law.” Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 414, 91 S.Ct. 814, 822, 28 L.Ed.2d 186 (1971); 5 U.S.C. § 706(2). When a court examines the question whether an agency’s determination survives that test, “[t]he focal point for judicial review is the administrative record already in existence, ‘not some new record made initially in the reviewing court.’” Asarco, Inc. v. United States Environmental Protection Agency, 616 F.2d 1153, 1159 (9th Cir.1980) (quoting Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973)).

‡ ‡ ‡ ‡ ‡

To qualify as a Small Disadvantaged Business, the business concern must be a bona fide small business that is at least 51% owned, managed and controlled by individuals who are socially and economically disadvantaged. 13 C.F.R. § 124.601-602(1). The defendants do not dispute the fact that Juliana Breece, a United States citizen of Asian Pacific descent, qualifies as socially and economically disadvantaged under the 8(a) program. It is also undisputed that Juliana Breece is the 100 percent owner, President, Secretary, Treasurer, sole stock holder and sole member of the Board of Directors of the newly formed Jet Investments. The contract at issue would have been Jet’s first.

The applicable regulations clearly state that individuals who are not socially and economically disadvantaged “may be involved in the management of’ and “may be stockholders, partners, officers, and/or directors of’ the Small Disadvantaged Business. 13 C.F.R. § 124.104(c). It is undisputed that no nondisadvantaged individual is a stockholder, partner, officer or director of Jet and that Lee Breece — Juliana Breece’s husband and Jet’s “operations officer” — is a nondisadvan-taged individual who is involved in the management of Jet. Section 124.104(c) prohibits Lee Breece, as a nondisadvantaged manager, from receiving excessive compensation, 13 C.F.R. § 124.104(c)(3), which has not been alleged by the defendants, and from exercising “actual control” or having “the power to control” the disadvantaged applicant or business, 13 C.F.R. § 124.104(c)(1). It is the “control” issue that lies at the heart of this dispute.

Nondisadvantaged individuals or entities “may be found to control or have the power to control” a disadvantaged business under the following circumstances:

(1) Nondisadvantaged individuals control the voting Board of Directors of the 8(a) concern, either directly through majority voting membership, or indirectly, if the bylaws allow nondisadvantaged individuals to block any action proposed by the disadvantaged individuals through negative control. For example, an equal number of disadvantaged and nondisadvantaged voting directors could create negative control.
(2) A nondisadvantaged individual, as an officer or member of the Board of Directors of the 8(a) concern, or through stock ownershvp, has the power to control day-to-day direction of the business affairs of the concern.
(3) The nondisadvantaged individual or entity provides critical financial or bonding support or licenses to the 8(a) concern which directly or indirectly allows the non-disadvantaged individual to gain control or direction of the 8(a) concern.
(4) A nondisadvantaged individual or entity exercises voting control of the Participant through a nominee(s).
(5) A nondisadvantaged individual or entity controls the corporation or the individual disadvantaged owners through loan arrangements.
(6) Other contractual relationships exist with nondisadvantaged individuals or entities, the terms of which would create control over the disadvantaged concern.

13 C.F.R. § 124.104(d)(l)-(6) (emphasis added). The aforementioned circumstances are illustrative but not exhaustive of the types of situations in which nondisadvantaged individuals or entities may be said to control or have the power to control the business seeking certification as a Small Disadvantaged Business. 13 C.F.R. § 124.104(d).

The Small Business Administration denied Jet Small Disadvantaged Business status primarily because it determined that Lee Breece controls the company. The DPCE Director based his conclusion in part on the assertion that Juliana Breece told a Small Business Administration official that she had transferred sole authority to Lee Breece to make business decisions for the company, including all decisions related to the Army bid solicitation for which Jet had been designated the lowest bidder. There is nothing in the administrative record that supports the allegation that Juliana Breece ever made any such statement.

The district court rejected Jet’s argument that the Small Business Administration’s determination was arbitrary and capricious because it was based on a statement found nowhere in the administrative record. The district court also rejected Jet’s contention that the corporate records submitted to the Director definitively demonstrated that Juliana Breece was in “total and absolute control” of Jet. Instead, the district court affirmed the SBA’s determination.

In discussing the summary judgment motion, the district court appeared to recognize that the SBA could not base its determination in whole or in part upon the alleged statement by Juliana Breece because there was nothing in the administrative record suggesting that any such statement had been made. Nevertheless, in its decision granting summary judgment, the court seemed to rely on its conclusion that Jet failed to present an affidavit or other evidence in response to the allegation made by the defendants in their summary judgment papers that the statement had indeed been made.

Jet was not, as the district court appeared to conclude, required to submit an affidavit or other evidence that the alleged statement by Juliana Breece was not made. The defendants conceded at oral argument and before the district court that there is no evidence in the administrative record that Juliana Breece ever told any SBA official that Lee Breece possessed sole decision making authority for Jet Investments. Therefore, at the time of summary judgment, Jet had no obligation to submit an affidavit to rebut an allegation for which there was no support in the administrative record, notwithstanding any facts or charges set forth in the defendants’ moving papers. To the extent that the district court granted judgment for the defendants because Jet failed to refute such an allegation, it erred.

The district court also erred in its conclusion that the administrative record contained ample evidence that Lee Breece controls or has the power to control Jet. Apart from relying on the undocumented alleged statements by Juliana Breece, the DPCE Director based his conclusion that Lee Breece exercises control over Jet almost entirely on the fact that Lee Breece was given the authority to obligate Jet to the lease involved. While the Director also referred cryptically to “the apparent trend of bestowing authority unto Mr. Breece to run the day-to-day affairs of the business,” the administrative record contains no support for this statement, other than vague and conclusory allegations contained in the letter of the protesting bidders. There is nothing in the administrative record that suggests that the SBA ever contacted, the letter-writers to obtain any facts or specific information regarding the general charge.

When weighed against the other evidence in the record — the corporate records demonstrating that Juliana Breece controlled Jet in every respect — the fact that Lee Breece was delegated the authority to obligate Jet to the lease agreement is insufficient to support a finding that he controls or has the power to control as described in the regulations governing the 8(a) program. That Juliana Breece did not personally sign the lease is, of course, not evidence that she did not decide whether to enter into that lease. The president of a company could, as Juliana Breece contends is the case here, delegate the task of entering into lease agreements to one of her employees without' conferring control over the affairs of the company to that employee.

According to the minutes of a meeting of Jet’s Board of Directors held on August 10, 1993, which are contained in the administrative record, Juliana Breece, as the sole member of the Board of Directors, considered and resolved to adopt a proposal to enter into the lease with the Heritage Inn. Further, at the same meeting, Juliana Breece resolved that “the operations officer [Lee Breece] of this corporation be and hereby is authorized to execute said Lease in the name and on behalf of this corporation and in substantially the form approved at this meeting.” The minutes were signed by Juliana Breece as the Chairman and Secretary.

Evidence that Lee Breece does not exercise control or have the power to control Jet is found in Jet’s Articles of Incorporation, which are also part of the administrative record. The Articles of Incorporation were filed with the State of Nevada on January 8, 1992, and name Juliana Breece as the only member of the Board of Directors. The company’s By-laws show Juliana Breece to be the only person who can call Special Meetings; designate the place for such a meeting; establish a quorum of shareholders; and elect directors. As the only member of the Board of Directors, Juliana Breece has the power to manage the business affairs of the corporation; to call regular and special meetings of the board; establish a quorum of board members; remove directors with or without cause; elect or appoint officers; and remove officers. As President of Jet, Juliana Breeee has the power to supervise and control all of the business and affairs of the corporation. As Treasurer, Juliana Breeee has the power of charge, custody and responsibility for all funds and securities of the corporation. This evidence of Juliana Breece’s control weighs heavily against the conclusion that Lee Breeee exercises or has the potential to exercise control over Jet.

We reject the idea-that simply because a wife delegates important responsibilities to her husband who works with her in the business she can be considered other than the true owner and authority figure of the enterprise. Any such argument is, to put it politely, anachronistic. Moreover, the argument is even less palatable here where the wife has extensive prior experience in the industry in which she now owns her own small company. In sum, the record plainly refutes the SBA’s arbitrary and capricious determination that Lee Breeee controlled or had the power to control Jet.

Finally, we note that the SBA’s. determination was also based in part on the alternative theory that Jet’s relationships with nondisadvantaged individuals and entities other than Lee Breeee “give rise to the potential for indirect negative control.” To the extent that the agency’s determination was based on its alternative theory, it was equally arbitrary and capricious. The evidence and circumstances upon which the Director relied to conclude that these other nondisadvantaged individuals or entities had the potential to control Jet were of a strikingly different nature from the circumstances described in the regulations. See 13 C.F.R. § 124.104(d)(l)-(6) (describing circumstances in which nondisadvantaged individuals or entities exercise control through particular corporate voting schemes or by financially controlling the disadvantaged applicant or the disadvantaged business through contracts or loan agreements).

The Director concluded that “other relationships appear to exist [between Jet and] other nondisadvantaged entities and individuals which give rise to the potential for indirect negative control” on the basis of the facts that (1) Jet’s addresses were the addresses of a nondisadvantaged hotel from which it was leasing space and another non-disadvantaged business called “Easy Mail,” (2) an employee of the hotel where Jet was leasing space answered at the phone number Jet had given as its number, and (3) income tax forms submitted by Juliana Breeee showed that her salary had been paid by her current or former employer and former business partner.

We need not decide whether “the potential for indirect negative control” would warrant disqualification in other circumstances, or whether factors which merely “appear” to exist would be sufficient for that purpose. Here, there is nothing surprising or inculpa-tory about any of the arrangements with nondisadvantaged concerns identified by the Director; nor do any of those arrangements in any way suggest the surrender by Juliana Breeee-of any type of control over the business. Rather, the record reveals the kind of innocuous relationships one would expect any new small business to establish in order to minimize start-up costs as it commences operations. Accordingly, the Director’s suggestion that these relationships demonstrate that nondisadvantaged businesses or individuals could potentially control Jet by negative indirect means is also arbitrary and capricious.

CONCLUSION

We conclude that the Small Business Administration acted arbitrarily and capriciously in determining that Jet did not qualify for disadvantaged status because Lee Breece exercises control over it or because other relationships appear to exist that give rise to a potential for indirect negative control. We reverse the grant of summary judgment in favor of the defendants and direct that judgment in favor of the plaintiff be granted.

According to counsel at oral argument, the contract at issue has already been performed and defendant Convention Marketing Services is presently performing under a one-year option to the original contract that will expire on September 30, 1996. In its complaint, Jet requested declaratory and in-junctive relief and “such other orders and further relief as may be proper in the circumstances.” The later phrase may include appropriate monetary relief should circumstances prohibit injunctive relief. Z Channel Ltd. v. Home Box Office, Inc., 931 F.2d 1338, 1341 (1991), cert. denied, 502 U.S. 1033, 112 S.Ct. 875, 116 L.Ed.2d 780 (1992) (stating that relief in damages is not foreclosed by plaintiffs failure to ask for damages in prayer). We remand to the district court to determine the appropriate relief.

REVERSED AND REMANDED.

      .The 8(a) program, which is codified in 15 U.S.C. § 637,
      is intended to be used exclusively for business development purposes to help small businesses owned and controlled by socially and economically disadvantaged individuals, economically disadvantaged Indian tribes, including Alaska Native Corporations, and economically Native Hawaiian Organizations to compete on an equal basis in the mainstream of the American economy.
      13 C.F.R. § 124.1.

      . The Army’s solicitation for bids contained a provision that allowed for bids to be evaluated so as to accommodate a preference for Small Disadvantaged Businesses. Ten percent was added to all bids except those from disadvantaged businesses and other preferred entities.

      . As well as challenging Jet’s disadvantaged status, Convention Marketing Services and Specialized Contract Services challenged Jet's size. The San Francisco Regional Office of the Small Business Administration determined that Jet was in fact a small business and that determination was affirmed by the Small Business Administration Office of Hearings and Appeals.

      . The Associate Administrator for Minority Small Business and Capital Ownership Development upheld the DPCE Director's decision. That decision constitutes the final decision of the Small Business Administration. 13 C.F.R. § 124.610(f).
      At the same time she denied Jet's appeal, the Associate Administrator noted that Jet had requested a hearing on the appeal. The Administrator correctly observed that the regulations governing the 8(a) program do not provide for hearings on appeals of disadvantaged status determinations.

      . For convenience, we use the term ''arbitrary and capricious” when describing our conclusions that the agency violated the Overton Park standard, regardless of which specific part of the standard is applicable in the particular circumstances.

      . Specifically, Juliana Breece is of Philippine descent. “Asian Pacific Americans (persons with origins from _ [t]he Philippines ... )” are presumptively "socially disadvantaged” for the purposes of determining disadvantaged status under the 8(a) program. 13 C.F.R. § 124.105(b).

      . Convention Marketing Services alleged in its protest letter to the Army contract officer that Juliana Breece was not economically disadvantaged. The Small Business Administration's determination makes no mention of this claim and the defendants have not raised this issue before this court.

      . On April 21, 1994, Darryl Hairston, former DPCE Director, submitted to the district court a certified copy of the administrative record before him at the time he determined Jet's eligibility for disadvantaged status. Thus, the complete administrative record is included in the district court clerk’s record.

      . Jet argues that the SBA should have considered written statements, denying the allegation, that were sent by Juliana Breece to the regional SBA office in response to the protest of Jet’s size, see supra note 3. Jet contends that the regional office should have forwarded the statements to the DPCE Director or that the information contained in the statements should have been considered when Jet appealed the disadvantaged status determination because Jet’s appeal letter included the same information. Because we conclude that the agency’s determination fails under the "arbitrary and capricious" standard of review, we need not address what appears to be an argument by Jet that the agency’s failure to consider the information at issue demonstrates that the Small Business Administration's fact-finding procedures are inadequate. See e.g. Pacific Architects and Engineers Inc. v. United States Department of State, 906 F.2d 1345, 1348 (9th Cir.1990) (stating that the Supreme Court has interpreted section 706(2)(F) to justify de novo judicial review when “the action is adjudicatory in nature and the agency factfinding procedures are inadequate”).

      . On her resume, which is part of the administrative record, Juliana Breeee states that she has "managed and audited hotels for six years." She names the Heritage Inn, Holiday Inn and Oxford Koala Hotel as places she has performed those services.

      . The SBA noted that Juliana Breeee was either formerly or currently employed by Remesh Pi-tamber. The protesting bidders charged that Juliana Breeee was employed by Pitamber at the time of their protests. In making its determination, the SBA did not rely on or base its decision on this allegation and the defendants do not argue that the issue is relevant to this appeal.

      . A claim for damages may be entertained in the district court, regardless of the amount sought, because the “sue and be sued” provision of the Small Business Act, 15 U.S.C. § 634(b)(1) is a basis for jurisdiction independent of the Tucker Act. See In re Liberty Construction, 9 F.3d 800, 802 (9th Cir.1993).