Aaron Leigh-Pink v. Rio Properties, LLC ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 3 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
AARON LEIGH-PINK; TANA EMERSON, No. 19-17556
Plaintiffs-Appellants, D.C. No.
2:17-cv-02910-GMN-VCF
v.
RIO PROPERTIES, LLC, MEMORANDUM*
Defendant-Appellee.
Appeal from the United States District Court
for the District of Nevada
Gloria M. Navarro, District Judge, Presiding
Argued and Submitted December 10, 2020
Pasadena, California
Before: Ronald M. Gould and Ryan D. Nelson, Circuit Judges, and Brian M.
Cogan,** District Judge.
Plaintiffs Aaron Leigh-Pink and Tana Emerson appeal the district court’s
dismissal of their claims against Rio Properties, LLC (“the Rio”), which owns and
operates the Rio All-Suite Hotel and Casino in Las Vegas, Nevada. We have
*
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.
jurisdiction under 28 U.S.C. § 1291, and we review de novo a dismissal for failure
to state a claim. See, e.g., Lloyd v. CVB Fin. Corp., 811 F.3d 1200, 1205 (9th Cir.
2016). We assume the parties’ familiarity with the facts.
We affirm the dismissal of the claims for negligence, “declaratory relief,” and
consumer fraud based on violations of Nevada Revised Statutes (“NRS”)
§ 205.377(1). We reverse the dismissal of the claim for unjust enrichment. And we
reserve judgment on the claim for fraudulent concealment and the claim for
consumer fraud based on violations of NRS § 598.0923(2). For those two claims,
we have certified a controlling question of law to the Supreme Court of Nevada in a
separate order filed concurrently with this memorandum.
1. The district court did not err in dismissing the negligence claim. In Nevada,
a negligence claim requires “(1) that defendant owed [the plaintiff] a duty of care;
(2) that defendant breached this duty of care; (3) that the breach was the legal cause
of plaintiff’s injury; and (4) that the [plaintiff] suffered damages.” Hammerstein v.
Jean Dev. W., 907 P.2d 975, 977 (Nev. 1995). Plaintiffs put forth two theories of
negligence, but neither is viable.
First, plaintiffs alleged that the Rio breached its duty “to maintain its water
system in a safe, clean, and disease-free condition.” According to the operative
complaint, the Rio knew that its water system was contaminated with legionella, the
bacteria that cause Legionnaires’ disease, while plaintiffs stayed at the hotel.
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Plaintiffs thus sought to recover a daily “resort fee” that they paid the hotel. This
theory fails on causation grounds. The alleged failure to maintain the water system
did not cause plaintiffs to pay the resort fee.
Second, plaintiffs alleged that the Rio “negligently concealed and/or failed to
inform, disclose or otherwise notify” them of the legionella. We understand this
claim as one for “the tort of negligent misrepresentation by nondisclosure, a cause
of action based on an actor’s negligent failure to disclose material information where
there is a duty to disclose.” In re Agribiotech, Inc., 291 F. Supp. 2d 1186, 1189 (D.
Nev. 2003). Although the Supreme Court of Nevada has never recognized this tort,
it has applied the definition of negligent misrepresentation in the Restatement
(Second) of Torts, see Bill Stremmel Motors, Inc. v. First Nat. Bank of Nev., 575
P.2d 938, 940 (Nev. 1978), and the Restatement suggests that a negligent
misrepresentation by nondisclosure is actionable, see Restatement (Second) of Torts
§ 551 (1977). Specifically, it provides that “one party to a business transaction is
under a duty to exercise reasonable care to disclose . . . facts basic to the transaction,
if he knows that the other is about to enter into it under a mistake as to them.” Id.
§ 551(2)(e). Here, plaintiffs did not allege that the Rio knew that they were about to
enter into a business transaction under a mistake of fact; at most, they allege that the
Rio should have known. Therefore, assuming that Nevada would even recognize
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the tort of negligent misrepresentation by nondisclosure, plaintiffs have failed to
state a claim.
2. The district court did not err in dismissing the claim for “declaratory relief.”
The Declaratory Judgment Act, 28 U.S.C. § 2201, creates only a remedy, not a cause
of action. See, e.g., Stock W., Inc. v. Confederated Tribes of the Colville Rsvr., 873
F.2d 1221, 1225 (9th Cir. 1989). Likewise, Nevada’s version of the Uniform
Declaratory Judgments Act “does not establish a new cause of action” but “merely
authorizes a new form of relief.” Builders Ass’n of N. Nev. v. City of Reno, 776
P.2d 1234, 1234 (Nev. 1989) (per curiam).
3. Further, we cannot conclude that the district court erred in dismissing one
of the two consumer fraud claims under NRS § 41.600. Plaintiffs based these claims
on two separate allegations: (1) that the Rio violated NRS § 598.0923(2) by failing
“to disclose a material fact in connection with the sale or lease of goods or services”
and (2) that the Rio violated NRS § 205.377(1) by engaging in “fraud or deceit upon
a person by means of a false representation or omission of a material fact.” Both the
district court and defendants treated these claims as separate, offering discrete
reasons for dismissing the second claim. Yet plaintiffs never addressed these
arguments. They did not discuss NRS § 205.377 in their opening brief – or even in
reply – apart from a passing citation when introducing their claims. We thus
conclude that plaintiffs have waived any argument that the district court erred in
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dismissing the consumer fraud claim based on NRS § 205.377. See, e.g., Brown v.
Rawson-Neal Psychiatric Hosp., 840 F.3d 1146, 1148 (9th Cir. 2016).
4. Nevertheless, the district court did err in dismissing the claim for unjust
enrichment. Under Nevada law, the claim requires “a benefit conferred on the
defendant by the plaintiff, appreciation by the defendant of such benefit, and
acceptance and retention by the defendant of such benefit under circumstances such
that it would be inequitable for him to retain the benefit without payment of the value
thereof.” Leasepartners Corp. v. Robert L. Brooks Tr. Dated Nov. 12, 1975, 942
P.2d 182, 187 (Nev. 1997) (per curiam) (quoting Unionamerica Mortg. & Equity Tr.
v. McDonald, 626 P.2d 1272, 1273 (Nev. 1981) (per curiam)). Here, plaintiffs
alleged that defendants obtained the $34.01 resort fee by knowingly withholding
information regarding the legionella in the water system. In these unique
circumstances, plaintiffs’ allegations were enough to state a claim for unjust
enrichment. See Nev. Indus. Dev., Inc. v. Benedetti, 741 P.2d 802, 804 n.2 (Nev.
1987) (per curiam) (“Money paid through misapprehension of facts belongs, in
equity and good conscience, to the person who paid it.”); see also Restatement
(Third) of Restitution and Unjust Enrichment § 1, cmt. e (2011) (stating that a
plaintiff may bring “a claim for restitution or ‘disgorgement’ of the profits of
conscious wrongdoing”).
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5. Our discussion leaves two remaining claims. The first is the consumer
fraud claim based on a violation of NRS § 598.0923(2); the second is a claim for
fraudulent concealment. For these two claims, we reject as without merit the Rio’s
arguments that plaintiffs did not adequately plead that the Rio knew of the legionella,
that plaintiffs did not adequately plead causation, and that plaintiffs have waived
their argument regarding damages. We also reject the district court’s conclusion that
the Rio lacked a “duty to disclose” the contamination. See Dow Chem. Co. v.
Mahlum, 970 P.2d 98, 110 (Nev. 1998) (observing that a duty to disclose may arise
when one party has “superior knowledge” regarding a transaction or “where the
parties enjoy a ‘special relationship’”), abrogated on other grounds by GES, Inc. v.
Corbitt, 21 P.3d 11 (Nev. 2001) (per curiam); see also Lee v. GNLV Corp., 22 P.3d
209, 212 (Nev. 2001) (stating that the innkeeper-guest relationship qualifies as a
“special relationship” for purposes of other torts). Therefore, the fraudulent
concealment claim and the remaining consumer fraud claim come down to a single
issue: whether plaintiffs have adequately pleaded damages.
We have certified this question to the Supreme Court of Nevada for the
reasons set forth in the order filed concurrently with this memorandum. The panel
shall retain jurisdiction over this case pending resolution of that question, and we
stay further proceedings in this appeal. For the claims addressed above, however,
the judgment of the district court is
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AFFIRMED IN PART AND REVERSED IN PART.
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