Bank of the West v. Great Falls Limited Partnership et al
Filing
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ORDER Denying as Moot 89 Motion for Leave to File Surreply and Denying 96 Motion for District Judge to Reconsider Order. Signed by Judge James C. Mahan on 10/25/11. (Copies have been distributed pursuant to the NEF - ASB)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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BANK OF THE WEST,
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2:09-CV-388 JCM (RJJ)
Plaintiff,
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v.
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GREAT FALLS LIMITED
PARTNERSHIP, et al.,
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Defendants.
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ORDER
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Presently before the court is defendants Great Falls Limited Partnership, et. al.’s motion to
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reconsider magistrate judge’s order. (Doc. #96). Plaintiff Bank of the West filed a response. (Doc.
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#97). Defendants then filed a reply. (Doc. #100).
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Defendants move this court to reconsider Magistrate Judge Johnston’s order denying
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defendants’ motion to enforce an alleged settlement agreement. In support of their motion,
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defendants assert three grounds for reconsideration: (1) the magistrate judge erred in finding that the
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parties never agreed to the material terms of the settlement agreement; (2) the magistrate judge erred
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in finding that the disclaimer prevented a contract from being formed; and (3) the magistrate failed
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to conduct an evidentiary hearing on disputed material facts. (Doc. #96).
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Briefly, the current dispute arises out of an alleged oral settlement agreement between the two
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parties. During the course of their settlement negotiations, the parties exchanged several letters of
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intent. Each of the letters of intent included the following disclaimer:
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James C. Mahan
U.S. District Judge
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THIS TERM SHEET IS FOR SETTLEMENT DISCUSSION PURPOSES ONLY:
THERE IS NO OBLIGATION ON THE PART OF ANY NEGOTIATING PARTY
UNTIL A DEFINITIVE AGREEMENT IS SIGNED BY ALL PARTIES.
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After several months of settlement negotiations without attorneys, the parties reached a
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tentative agreement. Then, the parties asked counsel to prepare the proposed settlement agreement.
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At some point during the finalization of the phrasing of the written agreement, plaintiff received an
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updated appraisal of the property included in the settlement. The appraised value of the property was
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less than anticipated, and plaintiff reconsidered the prior tentative settlement agreement. Plaintiff
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never signed the proposed written settlement agreement.
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Defendants then attempted to enforce the alleged oral settlement agreement between the two
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parties. (Doc. #84). Magistrate Judge Johnston denied defendants’ motion. (Doc. #95). Defendants
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then filed the instant motion to reconsider the magistrate judge’s denial. (Doc. #96).
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Standard of Review
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When reviewing the magistrate judge’s order, this court determines whether the order is
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clearly erroneous or contrary to law. See FED. R. CIV. P. 72(a); Local Rule IB 3-1. The magistrate
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judge’s order is “clearly erroneous” if this court is left with “a definite and firm conviction that a
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mistake has been committed.” See United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948);
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Burdick v. Comm’r IRS, 979 F.2d 1369, 1370 (9th Cir. 1992).
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Defendants assert that the proper standard of review in this case is abuse of discretion. (Doc.
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#96). Defendants argue that the court is acting within its “inherent or equitable power summarily
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to enforce an agreement to settle a case pending before it.” Wilson v. Wilson, 46 F.3d 660 (7th Cir.
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1995). Thus, the court should review the magistrate judge’s decision under the abuse of discretion
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standard. See id.
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The court is not satisfied that this single out-of-circuit citation is sufficient to mandate the
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abuse of discretion standard of review. Nevertheless, the court declines to address this issue because
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the court would affirm the magistrate judge’s decision under both the clearly erroneous and abuse
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of discretion standards of review.
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James C. Mahan
U.S. District Judge
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Discussion
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As stated above, defendants assert three separate grounds for reconsidering the magistrate
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judge’s order. In the interest of efficiency, the court will address these arguments in reverse order.
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I.
The magistrate judge should have conducted an evidentiary hearing
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As an alternative to their other arguments, defendants argue that the court should overturn
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the magistrate judge’s order to allow the parties to conduct an evidentiary hearing. (Doc. #97).
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Specifically, defendants state that the parties must be allowed an evidentiary hearing when material
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facts concerning the existence or terms of an agreement to settle are in dispute. (Doc. #97 (citing
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Callie v. Near, 829 F.2d 888 (9th Cir. 1987))).
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Unlike Callie, the parties here never moved the court for an evidentiary hearing. See Callie,
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829 F.2d at 890. It is procedurally improper for defendants to assert, post hoc, that they were denied
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an evidentiary hearing when they never requested one. The magistrate judge’s decision not to hold
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an evidentiary hearing was neither clear error nor abuse of discretion because the parties did not
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indicated that an evidentiary hearing was necessary to settle disputed material facts.
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II.
The disclaimer did not prevent a contract from being formed
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Defendants argue that the legal disclaimer included on each of the letters of intent did not
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prevent the parties from entering a valid, binding oral contract. (Doc. #97). Defendants allege that
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the language in the letters of intent “only served to avoid any misunderstanding that [defendants
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were] making a commitment to the terms until an agreement was reached. After negotiations and
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[plaintiff’s] verbal acceptance to settle . . . an agreement was indeed finalized.” (Doc. #100,
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emphasis in original). Defendants further point to plaintiff’s subsequent actions as “support[ing] a
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finding that the executed settlement agreement only served as a memorial of the parties’ binding
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[oral] agreement.” (Doc. #97).
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In the Ninth Circuit, if there is “a manifest intention that the formal agreement is not to be
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complete until reduced to a formal writing to be executed, there is no binding contract until this is
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done.” Rennick v. O.P.T.I.O.N. Care, Inc., 77 F.3d 309 (9th Cir. 1996) (internal citations omitted).
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“Since some measure of agreement must usually be reached before a written draft is prepared, the
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James C. Mahan
U.S. District Judge
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evidence that the parties intended to be presently bound must be convincing and subject to no other
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reasonable interpretation.” Tropicana Hotel Corp. v. Speer, 692 P.2d 499, 502 (1985).
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While defendants have presented “some evidence” that the parties considered the alleged
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agreement to be binding, this evidence falls short of the “convincing and subject to no other
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reasonable interpretation” standard cited in defendants’ brief. See id. The magistrate judge
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examined the evidence that defendants proffer as convincing evidence, subject to no other reasonable
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interpretation and found that at least some of the evidence “strongly supports a finding that the deal
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was not officially done.” (Doc. #95).
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Defendants object to this finding, stating that it focuses on the wrong point in time in
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settlement negotiations. According to defendants, the parties entered into a valid, binding oral
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contract before counsel for either party was involved. The parties asked their counsel to draft a
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written settlement agreement only after the parties had entered a binding oral contract. Defendants
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further assert that plaintiff’s subsequent actions support a finding that the parties had entered into
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a binding oral agreement. (Doc. #95). Even assuming, arguendo, that the magistrate judge focused
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on the wrong settlement negotiation events, defendants still have not met their burden by showing
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that there is “no other reasonable interpretation” of plaintiff’s subsequent actions. Speer, 692 P.2d
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at 502. Again, while defendants have presented some evidence of an oral contract, they have not
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established the existence of a binding oral contract by convincing evidence, subject to no other
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reasonable interpretation. See id. Thus, the magistrate judge did not abuse his discretion or commit
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clear error.
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III.
The magistrate judge erred in finding that the parties never agreed to material terms
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The court finds that it is unnecessary to address this argument. The court has already held
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that the magistrate judge did not abuse his discretion or commit clear error. Defendants have not
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established by convincing evidence, subject to no other reasonable interpretation that a valid, binding
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oral contract existed. Therefore, defendants have failed to carry their burden. It is unnecessary to
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determine whether the magistrate judge erred in his finding that the parties never agreed to the
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material terms of the contract.
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James C. Mahan
U.S. District Judge
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Accordingly,
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IT IS ORDERED, ADJUDGED, AND DECREED that defendants Great Falls Limited
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Partnership, et. al.’s motion to reconsider magistrate judge’s order (doc. #96) be, and the same
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hereby is, DENIED.
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IT IS FURTHER ORDERED that plaintiff Bank of the West’s motion for leave to file
surreply to defendants’ motion to enforce settlement agreement (doc. #89) be DENIED as moot.
DATED October 25, 2011.
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UNITED STATES DISTRICT JUDGE
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James C. Mahan
U.S. District Judge
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