United States v. County of Clark ( 2022 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAY 12 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 21-15735
Plaintiff-Appellant, D.C. No.
2:17-cv-02303-MMD-BNW
v.
COUNTY OF CLARK; NEVADA LINKS, MEMORANDUM*
INC.,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Nevada
Miranda M. Du, Chief District Judge, Presiding
Argued and Submitted March 14, 2022
Las Vegas, Nevada
Before: KLEINFELD and BENNETT, Circuit Judges, and COGAN,** District
Judge.
The United States challenges the grant of summary judgment to defendants
County of Clark and Nevada Links. The district court held the United States’s
breach of contract and fiduciary duty claims were barred by a six-year statute of
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Brian M. Cogan, United States District Judge for the
Eastern District of New York, sitting by designation.
limitations. We have jurisdiction under 28 U.S.C. § 1291, and we reverse and
remand for further proceedings.
We review the district court’s grant of summary judgment to defendants de
novo, viewing the evidence in the light most favorable to the plaintiff. Luna v.
Hansen & Adkins Auto Transp., Inc., 956 F.3d 1151, 1152 (9th Cir. 2020). We
also review “de novo a district court’s [summary judgment] determination of when
a cause of action accrues and whether a claim is barred by the statute of
limitations.” SEIU United Healthcare Workers-W. v. Los Robles Reg’l Med. Ctr.,
812 F.3d 725, 729 (9th Cir. 2015).
In 1998, Congress passed the Southern Nevada Public Land Management
Act of 1998, Pub. L. No. 105-263, 112 Stat. 2343 (1998) (“Act”). In a 1999 deed
issued under the Act (“Deed”), the United States Department of the Interior’s
Bureau of Land Management (“BLM”) conveyed 140 acres of land near the
McCarran International Airport covered by the Act to the County. The Act
allowed the County to lease the conveyed land, but only “for fair market value.”
112 Stat. at 2347. The Act also required the County to pay BLM 85% of the
money it generated from leasing the land. Id. The Deed adopted these terms by
reference.
In 1999, the County leased 154 acres of land—about 91 acres of which were
covered by the Act—to Nevada Links (“Lease”), because the County wanted “to
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develop and construct a golf course and related facilities” on the property. Under
the Lease, the County would receive 40% of Nevada Links’s net revenue as rental
payment. In 2004, the County and BLM signed a contract (“Memorandum of
Agreement”), which restated the fair-market value rent requirement under the Act
and explicitly permitted profit-sharing leases so long as the projected net present
value of the participatory rent was at least as high as the projected net present value
of the Lease at market rate. On September 6, 2011, the Board of County
Commissioners approved an amendment to the Lease (“Fourth Amendment”),
which required Nevada Links to pay the County a fixed rent of $100,000 per year
as ground rent, with an annual adjustment.
The United States sued the defendants on September 1, 2017, arguing the
ground rent provision fixed the rent below fair-market value and was thus a breach
of the Memorandum of Agreement, the Deed, and the Act, as well as a breach of
fiduciary duty. The district court granted summary judgment to the defendants
based solely on the statute of limitations. The district court found the United
States’s alleged injury under the Fourth Amendment was the same injury as under
the 1999 original Lease: “the underpayment of rent.” The district court thus held
that the United States’s claims were barred by a six-year statute of limitations. See
28 U.S.C. § 2415(a) (“[E]very action for money damages brought by the United
States . . . which is founded upon any contract express or implied in law or fact,
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shall be barred unless the complaint is filed within six years after the right of action
accrues . . . .”). The district court found the United States’s right of action accrued
when the BLM became aware that Nevada Links was paying the County $0 in rent
under the participatory rent term of the original Lease—in August 2010, at the
latest. Alternatively, the district court held the cause of action accrued for statute
of limitations purposes when the BLM received a copy of the proposed Fourth
Amendment on August 11, 2011.
We disagree with both of the district court’s rulings and therefore reverse.
We also reinstate the United States’s declaratory judgment claim, which the district
court dismissed without discussion.
First, the United States never argued or claimed that the original Lease’s
participatory rent term breached the contract or a fiduciary duty. To the contrary,
the United States argued below and on appeal that the participatory rent term meets
the fair-market value requirement of the Act because the projections and appraisals
made in 1999 showed that the profits (and therefore the payments to the BLM)
would exceed fair-market value rent over the life of the Lease. The County agrees
that the Lease’s “participatory rent provision complied” with the fair-market value
requirement. Thus, the district court’s first holding (which is necessarily based on
a claim the United States never made—that the participatory rent term violated the
2004 Memorandum of Agreement) must be reversed. Since there was no arguable
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breach until the Fourth Amendment was on the table in 2010, the breach claim
couldn’t have possibly accrued years earlier.1
As to the district court’s “alternative” ruling, no cause of action could have
accrued based on the BLM receiving notice of a proposed Fourth Amendment on
August 11, 2011. Even putting aside that the BLM received notice of a possible
amendment, not an actual amendment, the August 11 Fourth Amendment draft
required the BLM’s consent for the rent term to go into effect. Had that version
been adopted, there could be no claim, because the rent provision wouldn’t have
changed without the BLM’s consent.2 Thus, no claim accrued on August 11, 2011.
In our view, the statute of limitations does not bar the United States’s claims.
General contract law and the applicable statute of limitations rely on a specific
“time of the breach,” Franconia Assocs. v. United States, 536 U.S. 129, 141 (2002)
(quoting 1 C. Corman, Limitations of Actions § 7.2.1, p. 482 (1991)), that created
the United States’s “right of action,” 28 U.S.C. § 2415(a). The United States’s
position is that the Board of County Commissioners’ approval of the Fourth
Amendment on September 6, 2011 (“Approval Date”) created the United States’s
1
We do not hold that the United States’s description of its claim controls. Were
the original Lease’s rent terms and the Fourth Amendment’s rent terms identical or
very similar, we might well reject a “strategic” disclaimer of a claim by the United
States. But here, participatory rent is much different from fixed rent.
2
By contrast, the adopted Fourth Amendment rent term arguably did not require
the BLM’s consent, as discussed below.
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right of action. The County argues that “[t]he Fourth Amendment did not injure
the government” because the Fourth Amendment’s rent provision never went into
effect. Assuming the fixed rent term went into effect on the Approval Date, we
hold the United States’s right of action accrued on September 6, 2011. Thus, the
lawsuit filed on September 1, 2017—less than six year later—was timely.
The County also raises two arguments that relate to interpreting the Fourth
Amendment. These arguments were made to the district court, which did not
discuss them when granting summary judgment. Because we “may affirm on any
ground supported by the record, including grounds the district court did not reach,”
we address these arguments now. Rodriguez v. City of San Jose, 930 F.3d 1123,
1130 (9th Cir. 2019).
First, the County characterizes both the fixed rent term, and the Fourth
Amendment as a whole, as “inoperative.”3 Similarly, Nevada Links argues that
“[t]he Fourth Amendment never actually became effective because the U.S. did not
approve it, as it must do in order for the amendment to take effect.” Second, the
County argues that even if the fixed rent term came into effect on the Approval
3
This is the term used by the County. But the County does not deny that some
portions of the Fourth Amendment came into effect on the Approval Date, as
discussed below. In context, the County asserts only that the fixed rent term never
came into effect.
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Date, it did not replace the participatory rent; the two rent terms were both in effect
following the Approval Date.
“[T]he interpretation of private contracts is ordinarily a question of state law
. . . .” Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S.
468, 474 (1989). “A federal court applies state law as it believes the highest court
of the state would apply it.” Jones-Hamilton Co. v. Beazer Materials & Servs.,
Inc., 973 F.2d 688, 692 (9th Cir. 1992). “A contract is ambiguous if its terms may
reasonably be interpreted in more than one way,” or if it is “obscure in meaning,
through indefiniteness of expression, or having a double meaning.” Galardi v.
Naples Polaris, LLC, 301 P.3d 364, 366 (Nev. 2013) (cleaned up).
Under Nevada law—which controls the interpretation of the Fourth
Amendment, a contract between Nevada Links and the County—summary
judgment is appropriate only if the court can decide the contract’s meaning without
resort to any extrinsic evidence. See Dickenson v. Nevada, 877 P.2d 1059, 1061
(Nev. 1994) (“If there is an ambiguity requiring extrinsic evidence to discern the
parties’ intent, summary judgment is improper.”).4 Because the Fourth
Amendment is ambiguous as to both interpretations the County raises, neither this
4
Nevada provides an exception for trade usage and custom, but the Nevada
Supreme Court has stated that “[a]llowing extrinsic evidence of objective facts
such as industry usage and custom does not open the door to a party’s subjective
understanding of a contract’s terms, when that understanding contradicts the
contract’s express terms.” Galardi, 301 P.3d at 368.
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court nor the district court can decide these issues on summary judgment. Thus,
we remand these two arguments for further proceedings.
First, if the new fixed rent term did not go into effect, as the County argues,
there could not have been a breach, and the United States would lose. But the
Fourth Amendment is ambiguous on the question. Thus, whether the fixed rent
term went into effect is for the trier of fact.
Section 1.2 states that “[w]hile the County and [Nevada Links] agree that
this Fourth Amendment shall be deemed binding upon the parties after the date that
both the County and [Nevada Links] have executed this Fourth Amendment and
the Approval Date has occurred,” the parties agree that “except for the provisions
and conditions” in a specified list of sections—in which Section 1.6, which
contains the fixed rent term, is not included—“the remaining Sections of this
Fourth Amendment shall not become operative unless and until the . . . conditions
precedent are first satisfied.” The date when the conditions are satisfied is defined
as the “Effective Date.” The conditions, in short, are as follows: Nevada Links
must obtain approval from the lender, the County must obtain approval from the
BLM, and Nevada Links must obtain a final non-conforming zone change that
entitles it to develop commercial facilities beyond golf facilities. The latter two
conditions have not yet been satisfied. The defendants argue that because Section
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1.6 was not in the list, and because the conditions have not been satisfied, the fixed
rent term is not operative. This is a reasonable interpretation of the contract.
On the other hand, the Fourth Amendment states in Section 1.6, without
qualification, that “[c]ommencing on the Approval Date,” Nevada Links agreed to
pay $100,000 per year as ground rent. This is a clear statement at odds with the
sections the County cites. And Section 1.6.2.1 states: “This rental shall begin on
the Approval Date, with the first payment for the partial month of September,
prorated . . . and due no later than September 30, 2011.” This too is a clear
statement that appears to contradict the sections the County cites. Moreover, as the
County admitted at oral argument, it would have been legally impossible for the
final non-conforming zone change (one of the conditions precedent) to have gone
into effect by September 30, 2011.5 Thus, under the County’s supposed
unambiguous interpretation, the contracting parties adopted a provision on rent
proration that was necessarily a nullity. See Mendenhall v. Tassinari, 403 P.3d
365, 373 (Nev. 2017) (“A court should not interpret a contract so as to make
meaningless its provisions, and every word must be given effect if at all possible.”
(cleaned up)).
Moreover, Section 1.6.2.1 states: “In the event that this Fourth Amendment
shall terminate and be of no further force and effect on or before the Effective
5
See Oral Argument at 20:20–22:00.
9
Date, then the rent shall revert to the rent set forth in the Lease . . . .” If the Fourth
Amendment could have terminated and have had “no further force and effect”
before the Effective Date, then it must have had some force and effect before the
Effective Date. Similarly, if the fixed rent term could “revert to the rent set forth
in the Lease,” then it likely must have gone into effect on the Approval Date.
Because these two sections necessarily create an ambiguity, the County’s
argument cannot be resolved on summary judgment.6 Dickenson, 877 P.2d at
6
There is parol evidence supporting both positions. For example, the draft Fourth
Amendment’s rent term required BLM approval (as it went into effect on the
Effective Date), while the adopted Fourth Amendment’s rent provision states it
went into effect on the Approval Date. The United States argues that this change
was a “material differen[ce].” And the trier of fact could find that the parties
intended, by this change, to delete the need for BLM approval. The County argues
that the modification “simply provided that the provisional payments would begin
on the Approval Date,” but changed nothing as to “the legal question of whether or
not the ground rent provision had become legally operative.” But the trier of fact
could see it differently.
Second, the parties’ course of performance could support a finding that they
believed the new fixed rent term went into effect. Nevada Links’s annual rent
payments changed from $0 on August 31, 2011, to $100,000 starting September 6,
2011. Nevada Links made these payments to the County even after the County
stopped sending BLM its share of those payments under the Act when the United
States filed this litigation.
Third, in a letter to BLM, a County manager stated that the County and
Nevada Links “renegotiated the payment terms of the participatory rent due under
the Lease Agreement to require ground rent of $100,000 per year.” The County
manager stated that “the obligation of Nevada Links, Inc. to pay ground rent[]
became operative upon approval of the Fourth Amendment by the [Board].”
There is at least one piece of extrinsic evidence that weighs against finding
the fixed rent term went into effect on the Approval Date. The United States
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1061. These differing reasonable interpretations create a “double meaning” in the
Fourth Amendment that prevents us from resolving this issue on summary
judgment. Galardi, 301 P.3d at 366. Neither interpretation is “inevitably
compelled by the language within the four corners of the instruments.” Margrave
v. Dermody Props., Inc., 878 P.2d 291, 293 (Nev. 1994) (per curiam). We
therefore remand this issue for trial.
Second, the County argues that the fixed rent term went into effect in
tandem with the participatory rent term, not to replace it. The County thus argues
that if the participatory rent was not a breach of contract or fiduciary duty—as the
United States concedes—then participatory rent plus fixed rent could not have
possibly been a breach. Because there are two plausible readings of the Fourth
Amendment, this issue also cannot be resolved at summary judgment.
The County’s best argument on the issue relies on Section 1.6.8, which
provides that the fixed rent provisions in Section 1.6 “replace, as of the Effective
Date, the [participatory rent] provisions . . . [at Section 1.7] of the Lease.” In short,
the County argues that between the Approval Date and the Effective Date, Nevada
Links owed both fixed rent and participatory rent; because the fixed rent provision
asserted at paragraph 36 of its complaint that the fixed rent provision took effect
only after BLM approval.
Under Nevada law, this evidence, if admissible, is for the trier of fact.
Dickenson, 877 P.2d at 1061.
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wasn’t “replaced” until the effective date, it must have stayed in effect before that
date. In response, the United States points to Section 1.6.2.1, quoted above, and
argues that if the rent “shall revert to the . . . rent set forth in the Lease,” then “the
Fourth Amendment’s new rental provision had displaced the profit-sharing rent.”
Rent could only “revert” if it had changed from participatory to fixed in the first
place.
Again, there are two reasonable interpretations, neither compelled by the
language of the contract. We therefore also remand this issue for trial.
The grant of summary judgment is reversed, and the case is remanded for
further proceedings not inconsistent with this decision.
REVERSED AND REMANDED.7
7
The parties shall bear their own costs on appeal.
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