United States District Court, D. Nevada
C. JONES, UNITED STATES DISTRICT JUDGE
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.)
FACTS AND PROCEDURAL BACKGROUND
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"). (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.)
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.)
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.)
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)."
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.)
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.)
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
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).
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.
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.
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 ...