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Del Mar Land Partners, LLC v. Stanley Consultants, Inc.

United States District Court, Ninth Circuit

September 27, 2013

Del Mar Land Partners, LLC, Plaintiff,
v.
Stanley Consultants, Inc. Defendant.

ORDER

PAUL G. ROSENBLATT, District Judge.

Pending before the Court is Defendant Stanley Consultants, Inc.'s Motion for Summary Judgment as to Plaintiff's Amended Complaint Pursuant to FRCP 56 (Doc. 80) and Motion for Summary Judgment as to Defendant/Counterclaimant's Counterclaim Pursuant to FRCP 56 (Doc. 86). Having considered the parties' memoranda in light of the relevant record, the Court finds that there are no genuine issues of material fact and that the defendant is entitled to summary judgment in its favor as a matter of law pursuant to Fed.R.Civ.P. 56 on the plaintiff's two remaining claims in its Amended Complaint and on the defendant's breach of contract counterclaim.[1]

Background

This action arises from two contracts between the parties, a Professional Services Agreement ("Master Agreement") entered into in October of 2006 and a Confirmation and Authorization for Work contract ("Addendum") entered into in January of 2007, which concerned civil engineering consulting services the defendant was to provide to plaintiff Del Mar Land Partners, LLC in connection with its development of its 324-lot residential real estate project known as Lake Mead Rancheros Units 4 & 5 located in Mohave County, Arizona.

In its Amended Complaint (Doc. 8), which is based on diversity of citizenship jurisdiction pursuant to 28 U.S.C. ยง 1332, the plaintiff raised claims for breach of contract, negligent misrepresentation, fraud, and unjust enrichment. In previous orders, the Court dismissed the plaintiff's negligent misrepresentation claim, see 2011 WL 2692959 (D.Ariz. July 12, 2011), and the plaintiff's fraud claim, see 2012 WL 1019066 (D.Ariz. March 26, 2012), on the ground that both of these tort claims were barred by Arizona's economic loss doctrine.

In its Counterclaim (Doc. 24), the defendant raised claims for breach of contract and for declaratory relief.

Discussion

I. Summary Judgment as to the Amended Complaint

A. Breach of Contract Claim

The defendant seeks summary judgment in part on the plaintiff's breach of contract claim, the First Cause of Action in its Amended Complaint. The Master Agreement stated that the defendant "shall perform professional services as stated in Exhibit 1." Exhibit 1 sets forth in its "Scope of Services" section the several professional services that the defendant would provide to the plaintiff.[2] The purpose of these engineering and consulting services from the defendant was to enable the plaintiff to obtain the necessary approvals from state agencies, in particular a Sanitary Facilities Certificate from the Arizona Department of Environmental Quality, so that the plaintiff could apply for a Public Report from the Arizona Department of Real Estate, which was required before it could begin closing sales of its lots to the public. The gist of the plaintiff's breach of contract claim is that the defendant failed to properly submit compliance reports to the appropriate state agencies, such as by submitting a mere letter to ADEQ in support of the required Sanitary Facilities Certificate which ADEQ refused to process because the letter did not comply with the formal application requirements for the certificate, and that the defendant failed to timely complete its work.

The Court concludes that there is no triable issue of fact regarding whether the defendant failed to perform the contracted-for engineering and consulting services. This is so because the admissible evidence of record and the justifiable inferences arising from that evidence, all viewed in the plaintiff's favor, is insufficient to permit a jury to reasonably find that the defendant did not eventually provide all of the services the plaintiff contracted for. With regard to the scope of work required by the Master Agreement, the plaintiff admitted in its statement of facts that a Sanitary Facilities Certificate was eventually issued by ADEQ, and Warren Church, the plaintiff's managing member and the person who negotiated and signed the contracts with the defendant, admitted at his deposition that the defendant submitted the application for the Sanitary Facilities Certificate, that the defendant submitted a letter to ADEQ addressing options for the water supply, that it prepared an application for submittal to ADWR for determination of water adequacy, that it prepared a flood and drainage report, and that a soil report was prepared; the plaintiff's answers to the defendant's requests for admissions also admit that this contractually-required work was completed by the defendant. With regard to the scope of work required by the Addendum, Church testified that the work was eventually completed by the defendant and that he was not contending that the defendant failed to perform any term or condition of the Addendum. Furthermore, the plaintiff has not submitted any expert or other significant probative evidence establishing that the engineering and consulting services that the defendant undertook in response to the contracts fell below the applicable standard of care for such services.

The dispositive issue is instead whether the defendant breached the contracts by performing its professional services in an unreasonably untimely manner. The plaintiff's position is that the defendant verbally represented prior to the signing of the Master Agreement that it would take 90 days for it to perform the work being contracted for, but that such services in fact took nine months to complete, resulting in the plaintiff suffering over $7 million in damages because the delay caused buyers of some lots to cancel their purchase agreements, caused the plaintiff to be unable to sell other lots, and reduced the ultimate sales price for other lots because of a declining real estate market.

It is undisputed that neither the Master Agreement nor the Addendum contained a time of performance provision or a provision stating that time was of the essence in the performance of the defendant's services.[3] The defendant argues that no such provision may be read into the unambiguous contracts pursuant to the parol evidence rule as adopted in Nevada because the Master Agreement contained an integration clause in Paragraph 4.13 of Exhibit 3 to the contract that stated that "[t]his Agreement represents the entire agreement between the parties and may be amended only by written instrument signed by both parties[, ]"[4] and that this provision carried over into the Addendum by the provision in that contract that stated that "[a]ll other terms and conditions of the Master Agreement of 10-19-06 will prevail." (Emphasis in original.)

As noted by the defendant, and inexplicably ignored by the plaintiff, the Court determined in an earlier opinion in this action that the interpretation of the contracts is governed by Nevada law pursuant to the choice of law provision in the Master Agreement, Paragraph 4.4 of Exhibit 3, which stated that "Controlling Law. Agreement shall be governed by Nevada law." Nevada law provides that "a fundamental principle of contract law is that the time of performance under a contract is not considered of the essence unless the contract ...


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