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Winecup Gamble, Inc. v. Gordon Ranch LP

United States District Court, D. Nevada

August 30, 2017




         This is a consolidated action for declaratory relief arising from a contract for the sale of real property. Now pending before the Court are a Motion for Summary Judgment, (Mot. Summ. J., ECF No. 33), and a Cross-Motion for Judgment on the Pleadings, (Mot. J. Pleadings, ECF Nos. 36,37). The parties have also filed two Motions to Seal. (ECF Nos. 35,45.)


         On October 18,2016, Gordon Ranch LP ("Gordon Ranch") and Winecup Gamble, Inc. ("Winecup") entered into a Purchase and Sale Agreement for the conveyance of real property in Elko County, Nevada ("the October Agreement"). (October Agreement, ECF No. 36-1.) Then on December 21,2016, the parties executed an amendment to the purchase agreement ("the Amendment").[1] (Amendment, ECF No. 36-2.) The subject property, commonly known as the Winecup Gamble Ranch ("the Property"), comprises approximately 247,500 deeded acres, rights to federal grazing permits covering approximately 558,080 acres, and Nevada state grazing rights covering approximately 142,800 acres. Pursuant to the Agreement, Gordon Ranch placed a total of $5 million in escrow as earnest money, in anticipation of a closing date "on or before April 15, 20\7." (See Id. at §§ 2, 3.)

         On February 8,2017, severe flooding on the Property caused an earthen dam (commonly known as "21 Mile Dam") to fail, and Gordon Ranch alleges the floodwaters damaged a material part of the Property. (3:17-cv-157 Compl. ¶ 29, ECF No. 1.) The flooding also gave rise to claims of liability from third parties, namely Union Pacific Railroad Company ("Union Pacific"), which sent two letters to Winecup in February 2017 indicating that the failure of two dams on the Property caused damage to Union Pacific tracks and other property. (Id.)

         Following the flooding, Win`ecup indicated that it may not replace or repair certain destroyed portions of the Property, and may not rebuild certain infrastructure, including 21 Mile Dam. (Id. at ¶¶ 33-35.) On February 24, counsel for Gordon Ranch sent a letter to Winecup stating its position that Winecup bore the risk of loss and requesting an itemization and description of the damage and cost of repair. (Id. at ¶ 36.) On February 28, Clay Worden, representative of Winecup, emailed D.R. Horton of Gordon Ranch and informed him that, notwithstanding their attorneys' discussions regarding the flood damage, Winecup intended to proceed with closing on April 15. (Id. at ¶ 37.)

         Having not received a formal response to its letter) of February 24, and understanding that Winecup intended to move forward with the sale as originally planned, Gordon Ranch sent another letter through its attorney, along with a notice of default. (Id. at ¶ 39.) In its letter, Gordon Ranch asserted that Winecup's inability to "deliver at closing what was contracted for" constituted a material breach of the Agreement. (March 2 Letter, ECF No. 36-3.) Gordon Ranch provided five days' notice of its termination of the Agreement. In the event Winecup failed to cure its alleged breach within five days' time, Gordon Ranch demanded a refund of its earnest money and "payment of its reasonable, actual out-of-pocket expenses incurred in connection with the Purchase Agreement (not to exceed $100,000)."

         Winecup's counsel replied one week later. In its reply, Winecup argued that it had no contractual obligation to repair any damage to the Property, and thus did not breach the Agreement by indicating it may opt not to make certain repairs. (3:17-cv-157 March 9 Letter, ECF No. 1 at 60-62.) Winecup further asserted that, pursuant to the Amendment, the earnest money was nonrefundable under any circumstances. Therefore, although Gordon Ranch had a contractual right to terminate the Agreement as a result of the flooding, which Winecup acknowledged was a "casualty event," such termination nonetheless amounted to a forfeiture of the earnest money. Winecup informed Gordon Ranch that it would "proceed in its ranch operations and future sale efforts without further obligation to [Gordon Ranch]," and demanded that Gordon Ranch immediately instruct the title company to release the earnest money to Winecup. (3:17-cv-157 March 9 Letter 3, ECF No. 1 at 62.)

         On March 9, 2017, the same day of its written response to Gordon Ranch's notice of default, Winecup filed a declaratory relief action in the Fourth Judicial District Court of Nevada, Elko County. On March 13, Gordon Ranch filed an essentially identical action in federal court. On March 16, Gordon Ranch removed Winecup's state-court case to this Court. On May 23, the Court consolidated the two cases under the above-entitled action. (Order, ECF No. 26.)

         Both parties now move for judgment as a matter of law regarding which of them is entitled to the $5 million that sits in escrow. (Mot. Summ. J., ECF No. 33; Mot. J. Pleadings, ECF No. 36.)


         a. Summary Judgment

         A court must grant summary judgment when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Material facts are those which may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 All U.S. 242,248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See Id. A principal purpose of summary judgment is "to isolate and dispose of factually unsupported claims." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

         In determining summary judgment, a court uses a burden-shifting scheme. The moving party must first satisfy its initial burden. "When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial." C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474,480 (9th Cir. 2000) (citation and internal quotation marks omitted). In contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323-24.

         If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970). If the moving party meets its initial burden, the burden then shifts to the opposing party to establish a genuine issue of material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626,631 (9th Cir. 1987). In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations unsupported by facts. See Taylor v. List, 880 F.2d 1040,1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. See Fed. R. Civ. P. 56(e); Celotex Corp., 477 U.S. at 324.

         At the summary judgment stage, a court's function is not to weigh the evidence and determine the truth, but to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249. The evidence of the nonmovant is "to be believed, and all justifiable inferences are to be drawn in his favor." Id. at 255. But if the evidence of the nonmoving party is merely colorable or is not significantly probative, summary judgment may be granted. See Id. at 249-50. Notably, facts are only viewed in the light most favorable to the non-moving party where there is a genuine dispute about those facts. Scott v. Harris,550 U.S. 372,380 (2007). That is, even where the underlying claim contains a reasonableness test, where a party's evidence is so clearly contradicted ...

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