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RKF Retail Holdings, LLC v. Tropicana Las Vegas, Inc.

United States District Court, D. Nevada

December 13, 2017




         Plaintiff RKF Retail Holdings, LLC worked as a broker for defendant Tropicana Las Vegas, Inc. in relation to a proposed retail shopping mall on Tropicana's property. When things were not proceeding as planned, Tropicana approached defendant Eastern Real Estate, LLC about becoming a joint venture partner with Tropicana. Shortly thereafter, Tropicana terminated the exclusive broker agreement it had with RKF. RKF contends Tropicana did so to deprive RKF of its commissions and that Eastern tortiously interfered with RKF's broker contract in order to obtain those commissions for itself.

         Tropicana asserts that it terminated the agreement lawfully, both by giving written notice and for cause because RKF failed to inform Tropicana about interested tenants and acted unprofessionally toward prospective tenants and their agents. Eastern contends it did not interfere with RKF's relationship with Tropicana because Tropicana had already decided to terminate RKF on its own. As it turns out, Eastern and Tropicana never agreed to a joint venture, no leases with any prospective tenants were ever signed, and the shopping mall was never built.

         RKF sues Tropicana for breach of the broker agreement, breach of the covenant of good faith and fair dealing, fraudulent inducement, fraudulent concealment, and unjust enrichment. RKF also sues Eastern for tortious interference with contractual relations and aiding and abetting a breach of fiduciary duty.[1] Tropicana and Eastern move for summary judgment on all claims.

         The parties are familiar with the facts and I will not repeat them here except where necessary for context. I grant the defendants' motions.

         I. ANALYSIS

         Summary judgment is appropriate if the movant shows “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), (c). A fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the non-moving party to set forth specific facts demonstrating there is a genuine issue of material fact for trial. Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 531 (9th Cir. 2000). I view the evidence and reasonable inferences in the light most favorable to the non-moving party. James River Ins. Co. v. Hebert Schenk, P.C., 523 F.3d 915, 920 (9th Cir. 2008).

         A. Breach of Contract/Breach of the Implied Covenant of Good Faith

         Under Nevada law, the plaintiff in a breach of contract action must show: “(1) the existence of a valid contract, (2) a breach by the defendant, and (3) damage as a result of the breach.” Saini v. Int'l Game Tech., 434 F.Supp.2d 913, 919-20 (D. Nev. 2006). “The party seeking damages has the burden of proving both the fact of damages and the amount thereof.” Mort Wallin of Lake Tahoe, Inc. v. Commercial Cabinet Co., 784 P.2d 954, 955 (Nev. 1989).

         For a breach of contract claim, “compensatory damages are awarded to make the aggrieved party whole and . . . should place the plaintiff in the position he would have been in had the contract not been breached.” Rd. & Highway Builders v. N. Nev. Rebar, 284 P.3d 377, 382 (Nev. 2012) (quotation omitted); see also Hilton Hotels Corp. v. Butch Lewis Prods., Inc., 862 P.2d 1207, 1209 (Nev. 1993) (stating the remedy for a breach of the contractual covenant of good faith and fair dealing “generally is on the contract itself” (quotation omitted)). “This includes awards for lost profits or expectancy damages.” Rd. & Highway Builders, 284 P.3d at 382.

         Where a broker like RKF seeks to be paid for commissions under an agreement, the broker's “right . . . to compensation must be governed by that agreement.” Nollner v. Thomas, 533 P.2d 478, 480-81 (Nev. 1975). If the agreement's conditions for earning or paying a commission are not satisfied, then the broker is not entitled to the commission absent bad faith conduct by the other party that prevents those conditions from being satisfied. See Redfield v. Estate of Redfield, 692 P.2d 1294, 1296 (Nev. 1985); Bartsas Realty, Inc. v. Leverton, 409 P.2d 627, 630 (1966); Evans v. Dorman, 402 P.2d 652, 654 (Nev. 1965).

         For example, in Caldwell v. Consolidated Realty and Management Company, the owner of a bar entered into an exclusive multiple listing agreement with Consolidated Realty and Management Company. 668 P.2d 284, 285 (Nev. 1983). The listing agreement expired on December 14, 1979, but it contained an extension clause requiring payment of a commission to Consolidated if within 45 days after the expiration date Consolidated secured the purchase of the bar.[2] Id. at 285, 287. During the listing agreement's term, Consolidated introduced a prospective buyer to the bar owner but no agreement was reached by December 14 or within 45 days thereafter. Id. About two weeks after the extension period ended, the buyer made a purchase offer directly to the bar owner and the owner accepted. Id.

         Consolidated sued for its commission. Id. The district court concluded that Consolidated was entitled to a commission as the broker who procured a ready, willing, and able buyer during the agreement's term, even though the actual sale took place after the agreement and its extension period expired. Id. at 286. The Supreme Court of Nevada reversed, concluding that because the sale did not take place during the term of the agreement, nor was there evidence that the buyer was “ready, willing, and able to consummate the transaction on terms acceptable to the seller” during the listing agreement's term, Consolidated was not entitled to a commission. Id. at 287-88.

         Here, Tropicana and RKF entered into an “Exclusive Agency Agreement” pursuant to which the parties agreed RKF would have the exclusive right as broker to obtain tenants for the proposed shopping mall. ECF No. 110-1 at 2. The agreement had an initial one-year term starting on September 12, 2012, and thereafter continued “on a month-to-month basis until terminated by either party giving to the other thirty (30) days written notice . . . .” Id. Tropicana also had the right to cancel the agreement immediately if it chose to terminate the project, provided that if Tropicana reinstated the project within six months, then the agreement would automatically be reinstated for an additional six months. Id. Additionally, Tropicana could terminate the agreement if RKF defaulted and did not cure the default within thirty days after Tropicana gave notice. Id. at 4.

         The agreement has specific provisions relating to when RKF earns a commission and when Tropicana must pay a commission. Section 6 of the agreement states that RKF's commission “shall be deemed earned upon execution of a lease by and between [Tropicana] and Tenant (the ‘Lease') and shall be payable by [Tropicana] to RKF as follows”:

• Fifty percent (50%) upon the execution of the Lease, or the first construction draw, ...

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