Silver State Land LLC v. United States ( 2021 )

In the United States Court of Federal Claims
No. 19-688C
(Filed: August 17, 2021)
)
SILVER STATE LAND LLC, )
)
Plaintiff, )
)
v. )
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THE UNITED STATES, )
)
Defendant. )
Seth H. Locke, Perkins Coie, LLP, Washington, D.C., for Plaintiff. With him on the briefs
were Paul B. Smyth, Alexander O. Canizares, and Brenna D. Duncan.
Erin K. Murdock-Park, Commercial Litigation Branch, Civil Division, United States
Department of Justice, Washington, D.C., for Defendant. With her on the briefs were
Brian M. Boynton, Acting Assistant Attorney General, Civil Division, Martin F. Hockey,
Jr., Acting Director, Allison Kidd-Miller, Assistant Director, Borislav Kushnir and Brendan
D. Jordan, Commercial Litigation Branch, Civil Division, United States Department of
Justice, Washington, D.C. Of counsel were Erica L. Anderson and Ryan M. Sklar, United
States Department of Interior, Office of the Solicitor, Pacific Southwest Region,
Sacramento, CA.
OPINION AND ORDER
SOLOMSON, Judge.
On May 9, 2019, Plaintiff Silver State Land LLC (“Silver State”), filed its original
complaint in this Court against Defendant, the United States, acting by and through the
Bureau of Land Management (“BLM”). ECF No. 1. On October 24, 2019, Silver State
filed an amended complaint, in which Silver State alleged, among other things, that the
government breached an express contract to convey to Silver State a 480-acre tract of
public land in Henderson, Nevada (the “Henderson property”). ECF No. 16 at ¶¶ 1,
41–44. Silver State seeks at least $98,000,000 in damages due to alleged “significant
costs to develop” the land and as a result of its subsequent increase in fair market value.
Id. ¶¶ 38–39, 45–46. On November 7, 2019, the government filed its motion to dismiss
for failure to state a claim upon which relief may be granted pursuant to Rule 12(b)(6) of
the Court of Federal Claims (“RCFC”). ECF No. 19. After holding oral argument on
that motion, the Court, on May 6, 2020, dismissed, in part, and granted, in part, the
government’s motion, determining that Silver State sufficiently alleged a breach of an
express contract claim and damages. Silver State Land LLC v. United States, 148 Fed. Cl.
217 (2020) (ECF No. 37).
During oral argument, the government argued that Silver State’s complaint
should be dismissed because “BLM already provided restitution when [it] refused to
convey the Property to Silver State and instead returned Silver State’s purchase money”
and therefore “the election of remedies doctrine forecloses Silver State’s claim for
damages[.]” Id. at 265. While the Court noted its skepticism of the government’s
application of the election of remedies doctrine to the present case, the Court withheld
judgment on the issue as the parties had not fully briefed the issue. Id.On May 20, 2020, the government filed its answer to Silver State’s amended
complaint, in which the government asserted as follows:
To the extent that plaintiff and defendant had a contract for
the sale of certain Federal public lands . . . and further to the
extent that the cancellation of the sale to plaintiff and/or the
failure to deliver the land patent to plaintiff by May 13, 2013,
amounted to a material breach of such contract, plaintiff is
now barred from recovering damages for such breach because
plaintiff accepted the return of its purchase money.
Alternatively, if plaintiff is not barred from recovering
damages from defendant, any sums recovered by plaintiff
must be reduced by the value of plaintiff’s unperformed
contractual duties (including, but not limited to, the payment
of the purchase price for the land since returned to plaintiff).
ECF No. 38 at ¶ 60.
On June 24, 2020, in the parties’ joint status report, the government requested
that the Court sever the election of remedies defense issue from the remaining litigation
and allow for expedited discovery and briefing on that issue. ECF No. 41 at 8–11.
Silver State opposed this request and the Court, on July 2, 2020, subsequently issued a
schedule for further proceedings in this case without severing the issues. ECF No. 42.
On October 5, 2020, however, the parties filed a joint motion, requesting that the Court
amend the schedule to allow the parties to file motions for summary judgment solely on
the government’s election of remedies defense. ECF No. 43. The Court granted this
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request. Minute Order (Oct. 5, 2020). On March 19, 2021, Silver State filed its motion
for partial summary judgment regarding the government’s asserted election of
remedies defense, ECF No. 54 (“Pl. Mot.”), and the government filed its motion for
summary judgment. ECF No. 55 (“Def. Mot.”). The parties filed their respective
response briefs, ECF Nos. 56 (“Def. Resp.”), 57 (“Pl. Resp.”), and, on June 14, 2021, they
provided additional supplemental briefing as directed by the Court’s June 13, 2021
order. ECF Nos. 60 (“Pl. Supp. Br.”), 61 (“Def. Supp. Br.”). On June 15, 2021, the Court
held oral argument on the pending motions. ECF Nos. 58, 63 (“Oral Argument Tr.”).
I. Factual Background 1
On April 4, 2012, BLM publicized its intent to sell the Henderson property. JS
¶ 1, JX1. On June 4, 2012, Silver State submitted its bid in the amount of $10,560,000 to
purchase the property and provided BLM a $2,132,000 initial bid deposit. JS ¶ 2, JX2–3.
On June 12, 2012, BLM formally accepted Silver State’s purchase offer and, on August
17, 2012, the parties executed escrow instructions to complete the sale. JS ¶¶ 3–4, JX4–5.
Pursuant to the escrow instructions, Silver State had to deposit the $8,428,000 balance in
escrow with the Nevada Title Company (“Nevada Title”) and, within 30 days of
payment, BLM had to provide the land patent to Silver State. JS ¶ 4, JX5. Within three
days of Silver State’s receiving the land patent, Nevada Title would deliver BLM the
final payment of $8,428,000. Id.On November 28, 2012, Silver State deposited $8,428,000 with Nevada Title. JS
¶ 5, JX6. In support of this transaction, Silver State borrowed $13,825,000 from
Rockafellow Investment, LLC (“Rockafellow”), at an annual interest rate of 18%, and
$1,093,000 from II C.B., L.P., at a 4% interest rate. DX3. Because of a dispute between
Silver State and local municipal authorities concerning the future development of the
Henderson property, Silver State and BLM executed three bilateral, written
amendments to the initial escrow instructions and extended BLM’s deadline for
delivery of the land patent until May 13, 2013. JS ¶¶ 6–8, JX7–9. Due to this extension,
Silver State was forced to return the loans that were funding the escrow account, and, in
April 2013, Silver State signed for a new $18,000,000 loan with MVP Mortgage and
CapSource, Inc., at a daily interest rate of 12%, and received loans from multiple
additional lenders. DX8, DX10–11, DX14.
1Because the facts of this case were presented at length in the Court’s prior decision, see Silver
State Land, 148 Fed. Cl. at 223–33, the Court reiterates only the facts pertinent to the instant
motions. Citations to the parties’ joint stipulation of undisputed facts (ECF No. 53) are denoted
as “JS” and citations to the parties’ attached exhibits (ECF No. 53-1) are denoted as “JX”. The
government filed additional exhibits (ECF No. 55-1), to which Plaintiff did not object, see Pl.
Mot. at 8–9, that are designated as “DX”.
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On May 10, 2013, BLM notified Silver State, via a letter, that BLM was
terminating the issuance of the land patent and that it would “take the steps necessary
to return the purchase deposit and bid guarantee to Silver State ($2,132,000) as
expeditiously as practicable.” JS ¶¶ 9–10, JX10–12. On May 21, 2013, the United States
Department of Treasury issued Silver State a check for $2,132,2000, on which the
government printed, “BLM Refund . . . Refund due to cancellation of sale.” JS ¶ 14,
JX14. Three days later, Silver State deposited the check. Id. During May and June 2013,
Nevada Title wired multiple “lender refunds” to Silver State’s various lenders and, as of
June 7, 2013, all the funds were transferred out of the escrow and returned to Silver
State’s lenders. JS ¶ 15, DX 15.
II. Jurisdiction And Standard Of Review
The Tucker Act provides this Court with “jurisdiction to render judgment upon
any claim against the United States founded either upon the Constitution, or any Act of
Congress or any regulation of an executive department, or upon any express or implied
contract with the United States, or for liquidated or unliquidated damages in cases not
sounding in tort.” 28 U.S.C. § 1491(a). For purposes of resolving the instant motions,
the government does not dispute that Silver State’s breach of contract claim arises out of
an express contract with the government to sell Silver State the Henderson property.
Def. Resp. at 3–4.
Summary judgment pursuant to RCFC 56 is appropriate when “the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled
to a judgment as a matter of law.” A material fact is one “that might affect the outcome
of the suit,” and a genuine dispute exists when the finder of fact may reasonably resolve
the dispute in favor of either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 250
(1986). If “the record taken as a whole could not lead a rational trier of fact to find for
the non-moving party, there is no ‘genuine issue for trial.’” Matsushita Elec. Indus. Co.,
Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986) (quoting First Nat’l Bank of Ariz. v.
Cities Serv. Co., 391 U.S. 253, 289 (1968)); see Demontiney v. United States, 54 Fed. Cl. 780,
784 (2002) (“The judge must determine whether the evidence presents a disagreement
sufficient to require submission to fact finding, or whether the issues presented are so
one-sided that one party must prevail as a matter of law.”). Any inferences that are to
be drawn from the underlying facts must be done in the light most favorable to the
nonmoving party. Matsushita, 475 U.S. at 587. “When both parties move for summary
judgment, the court must evaluate each motion on its own merits, resolving reasonable
inferences against the party whose motion is under consideration.” First Commerce
Corp. v. United States, 335 F.3d 1373, 1379 (Fed. Cir. 2003); see Lippmann v. United States,
127 Fed. Cl. 238, 244 (2016) (“The [RCFC 56] standard also applies when the Court
considers cross-motions for summary judgment.”).
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If the party opposing summary judgment does not challenge any material fact, it
must provide an affidavit explaining why further discovery is necessary. RCFC 56(d).
“[T]he facts that the movant seeks to discover must be foreseeably capable of breathing
life into his claim or defense.” Vivid Tech., Inc. v. Am. Sci. & Eng’g, Inc., 200 F.3d 795, 809
(Fed. Cir. 1999) (citation omitted). Critically, “[s]ummary judgment need not be denied
merely to satisfy a litigant’s speculative hope of finding some evidence [through
discovery] that might tend to support a complaint.” Sweats Fashions, Inc. v. Pannill
Knitting Co., Inc., 833 F.2d 1560, 1566 (Fed. Cir. 1987) (quoting Pure Gold, Inc. v. Syntex
(U.S.A.), Inc., 739 F.2d 624, 627 (Fed. Cir. 1984)). “A party may not simply assert in its
brief that discovery is necessary and thereby overturn summary judgment when it
failed . . . to set out reasons for the need for discovery in an affidavit.” Id.; see Anham
FZCO v. United States, 123 Fed. Cl. 386, 388–89 (2015).
In this case, the material facts are not in dispute, as evidenced by the parties’
having filed a joint stipulation of undisputed facts. Accordingly, the central issue
before the Court – whether Silver State’s depositing of BLM’s refund check and the
defunding of the escrow account constitute an election of restitution – is a purely legal
one, thus making this issue particularly well suited for summary judgment.
III. The Election Of Remedies Doctrine Does Not Bar Silver State From
Claiming Expectation Damages
The government argues that assuming, but without conceding, that Silver State
proves a breach of an express contract, Silver State is still barred from pursuing
expectation damages because of the election of remedies doctrine. Def. Mot. at 12–13.
In the government’s view, Silver State elected to receive restitution and thus can longer
seek a “double recovery” of additional expectation damages. Id. Silver State counters
that it never elected restitution and, concomitantly, that it never abandoned its claim for
expectation damages. Pl. Mot. at 12–14. For the reasons explained below, the Court
agrees with Silver State that the election of remedies doctrine is inapplicable to the
present case.
In breach of contract situations, the non-breaching party has three enforceable
interests: expectation, restitution, and reliance. Hansen Bancorp, Inc. v. United States, 367
F.3d 1297, 1308–09 (Fed. Cir. 2004). It is the first two types of damages that are at issue
in this case. Expectation damages “‘attempt to put [the non-breaching party] in as good
a position as [it] would have been in had the contract been performed, that is, had there
been no breach.’” Id. (alteration omitted) (quoting Restatement (Second) Contracts
§ 344 cmt. a. (1981)); see La Van v. United States, 382 F.3d 1340, 1350–51 (Fed. Cir. 2004)
(“‘One way the law makes the non-breaching party whole is to give him the benefits he
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expected to recover had the breach not occurred.’” (quoting Glendale Fed. Bank, FSB v.
United States, 238 F.3d 1374, 1380 (Fed. Cir. 2001))).
Restitution, on the other hand, seeks “to restore the non-breaching party to the
position he would have been in had there never been a contract to breach.” Hansen, 367
F.3d at 1309 (internal quotation marks omitted). This form of damages “has been
characterized as ‘a fall-back position’ for the injured party who is unable to prove
expectancy damages.” Id. (quoting Glendale, 238 F.3d at 1380)); see Admiral Fin. Corp. v.
United States, 378 F.3d 1336, 1344 (Fed. Cir. 2004) (“[Restitution] has been recognized as
an alternative measure of contract damages when a plaintiff’s expectation damages are
difficult to ascertain.”). “The non-breaching party is commonly allowed the more
generous measure of damages, unless that measure is unduly difficult to apply.” Griffin
& Griffin Exploration, LLC v. United States, 116 Fed. Cl. 163, 178 (2014).
“The common law doctrine of election of remedies applies where two possible
remedies are available for the same legal injury. The basic purpose of the doctrine is to
prevent a plaintiff from obtaining a windfall recovery, either by recovering two forms
of relief that are premised on legal or factual theories that contradict one another or by
recovering overlapping remedies for the same legal injury.” Homeland Training Ctr.,
LLC v. Summit Point Auto. Rsch. Ctr., 594 F.3d 285, 293 (4th Cir. 2010) (internal citations
omitted). Under this doctrine, plaintiffs cannot collect both expectation and restitution
damages, as this would constitute a “double redress for a single wrong.” Boulware v.
Baldwin, 545 F. App’x 725, 727 (10th Cir. 2013) (citation omitted).
Election questions usually arise in the following situation described in Williston
on Contracts:
When one party commits a material breach of contract, the
other party has a choice between two inconsistent rights—he
or she can either elect to allege a total breach, terminate the
contract and bring an action [for restitution], or, instead, elect
to keep the contract in force, declare the default only a partial
breach, and recover those damages caused by that partial
breach[.]
13 Williston on Contracts § 39:32 (4th ed.); see Old Stone Corp. v. United States, 450 F.3d
1360, 1371–72 (Fed. Cir. 2006). In such situations, “any act indicating an intent to
continue the contract is an election, and an election to continue may occur simply by the
injured party’s failure to take action to end the agreement within a reasonable time after
becoming aware of the facts.” Aleutian Constructors v. United States, 24 Cl. Ct. 372, 384
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(1991). 2 This is because, “[c]ontinuance of the contract is the most common and clearest
case of waiver.” Id. (emphasis added) (citing Cities Serv. Helex, Inc. v. United States, 543
F.2d 1306 (Ct. Cl. 1976)).
Here, there is no evidence of any election of one remedy in lieu of another, nor is
there any risk of a double recovery.
In contrast, the government seeks to extend the “election by conduct” doctrine,
arguing that Silver State’s depositing of the government’s refund check and the
liquidation of the escrow account together constituted an affirmative decision to accept
restitution and, therefore, Silver State is barred from pursuing an “inconsistent” remedy
of expectation damages. Def. Mot. at 12–20. The Court is unpersuaded.
The government relies upon cases that hold that a non-breaching party’s failure
to end performance of a contract following a breach constitutes an election that bars
restitution. See Def. Mot. at 16 (collecting cases); Def. Supp. Br. at 1. But these cases do
not support the government’s argument here that Silver State somehow elected
restitution simply because Silver State, without protest, received the funds the
government returned. For example, in Cities Service Helex, Inc. v. United States,
following the government’s breach of contract, “[n]ot only did [the plaintiffs] fail to take
any action or make any statement to end the contract before that time, but they also
continued their own performance, insisted on continued government performance, and
accepted that government performance” and “specifically sought to force the
Government to continue performance and succeeded in that effort.” 543 F.2d at 1314–15
(footnotes omitted). Because the plaintiffs’ actions in Cities Service clearly demonstrated
their intent to continue the contract’s performance, the United States Court of Claims
determined that it would be wholly inconsistent for the plaintiffs to later cancel the
contract for breach. Id. Notably, the government, during oral argument, conceded that
the facts at issue here are distinguishable from those at issue in Cities Service. See Oral
Argument Tr. at 12:21–25 (“[T]his is a very different case than most other cases because
– and certainly in Cities Service there was an ongoing contract, and plaintiff elected to
continue performance.”).
While the government revoked the sale of the Henderson property and Silver
State received a return of its funds paid, there is no inherent inconsistency in accepting
a government-issued refund for the bid deposit and then pursuing the remainder of
2 The Federal Circuit has indicated that continued performance, alone, may not constitute an
election in the absence of “either (1) detrimental reliance by the breaching party . . . or (2) a
benefit to the non-breaching party as a result of the delay . . . .” Old Stone, 450 F.3d at 1372(internal citations omitted).
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Silver State’s expectation damages. Indeed, the election doctrine is intended only to
avoid a plaintiff’s collecting for “two inconsistent rights[.]” 13 Williston on Contracts
§ 39:32 (4th ed.). As the Court noted during oral argument, “[w]hat would the double
recovery be if the Court subtracts the amount returned from the expectancy damages?”
Oral Argument Tr. at 13:12–14. Although that, admittedly, was a rhetorical question,
the government did not attempt to answer the obvious challenge to its position.
Nor does Silver State’s removal of funds from the escrow account constitute an
election of remedies. Without more, such an act does not indicate an intent to accept
restitution in lieu of expectation damages. Rather, one way to view Silver State’s
decision is that it reasonably sought to mitigate the interest payments on the loans that
were no longer necessary following the government’s refusal to proceed with the sale.
The Court, again, sees no inconsistency between Silver State’s conduct with respect to
the escrow funds and its pursuit of expectancy damages in this case. 3 Furthermore,
because restitution is only a “fall-back position” for when a plaintiff is unable to prove
expectation damages, Hansen, 367 F.3d at 1309, the Court cannot construe Silver State’s
actions as having elected restitution. Indeed, while the government argues that Silver
State should have “endorsed [the refund check] under protest” or “written a letter to
the Government[,]” Oral Argument Tr. at 8:1–3, 11:8–10, the government was unable to
cite a single case in which a failure to object to a returned payment constituted an
election of remedy. See id. at 11:16–20. If anything, the Court believes that the returned
sums are best viewed as a mitigation of any expectancy damages, assuming that Silver
State can prove entitlement to such damages.
Turning to Silver State’s motion for partial summary judgment, the government
argued that the Court should not grant Silver State’s motion (which would effectively
preclude the government from raising the election of remedies defense at trial) because
“the parties have not conducted any discovery into damages” and that “to the extent
that there is something that comes up in damages discovery that there is an affirmative
election, then we can present that evidence to the Court[.]” Oral Argument Tr. at 46:4–
25. Although this argument is not without merit, the government did not move for
relief pursuant to RCFC 56(d) and thus failed to demonstrate with an affidavit “how
postponement of a ruling on the motion will enable [it], by discovery or other means, to
rebut the movant’s showing of the absence of a genuine issue of fact.” Simmons Oil
Corp. v. Tesoro Petroleum Corp., 86 F.3d 1138, 1144 (Fed. Cir. 1996) (citation omitted).
Even had the government filed an affidavit, however, the Court is doubtful that the
3The Court notes that there may be a case where a plaintiff affirmatively and expressly
indicates that the return of such monies constitutes an acceptable remedy elected in lieu of
expectation damages. But those are not the facts of this case.
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government’s assertion that it may find a document showing that Silver State used the
word “restitution” amounts to anything more than a “speculative hope of finding some
evidence[.]” Sweats Fashions, 833 F.2d at 1566.
Additionally, Silver State correctly notes that any concerns that the government
has raised about insufficient time for discovery are mitigated by the fact that it was the
government that initially requested that the Court bifurcate the election of remedies
issue from the remaining litigation and to allow for expedited briefing. Pl. Mot. at 8
(citing ECF No. 41 at 8–11). To the extent that the government sought the benefit of
presenting the election of remedies defense separate from the rest of the issues in this
case and before the conclusion of discovery into damages, the government will have to
accept the adverse consequences of its decision.
CONCLUSION
For the reasons explained above, the Court GRANTS Silver State’s motion for
partial summary judgment and DENIES the government’s motion for summary
judgment.
IT IS SO ORDERED.
s/Matthew H. Solomson
Matthew H. Solomson
Judge
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