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The Guidiville Rancheria of California v. United States

United States District Court, N.D. California

December 12, 2013

THE GUIDIVILLE RANCHERIA OF CALIFORNIA, AND UPSTREAM POINT MOLATE LLC, Plaintiffs,
v.
THE UNITED STATES OF AMERICA, SALLY JEWELL, et al., And THE CITY OF RICHMOND, Defendants. And Counterclaims

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[Copyrighted Material Omitted]

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For Guidiville Rancheria of California, Plaintiff: Michael Patrick Scott, LEAD ATTORNEY, Law Offices of Michael P. Scott, Santa Rosa, CA; Scott David Crowell, LEAD ATTORNEY Sedona, AZ.

For Upstream Point Molate, LLC, Plaintiff, Counter-defendant: Garet Damon O'Keefe, Shona L. Armstrong, LEAD ATTORNEYS, O'Keefe & O'Keefe LLP, Berkeley, CA; Dean Allan Hanley, Hanley Legal, Berkeley, CA; Joel Freid, Office of General Counsel, Oakland, CA.

For United States Of America, Ken Salazar, Secretary of the Department of the Interior, Larry Echohawk, Assistant Secretary- Indian Affairs, Defendants: Reuben Schifman, United States Department of Justice, Environment and Natural Resources Division, Washington, DC.

For City of Richmond, Defendant, Counter-claimant: Arturo J. Gonzalez, Christopher J. Carr, LEAD ATTORNEYS, Shaye Diveley, Morrison & Foerster LLP, San Francisco, CA.

OPINION

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Order Granting Motion of City of Richmond for Judgment On The Pleadings, FRCP 12(c); Continuing Case Management Conference

YVONNE GONZALEZ ROGERS, UNITED STATES DISTRICT COURT JUDGE.

Plaintiffs Upstream Point Molate, LLC (" Upstream" ) and the Guidiville Rancheria of California (" the Tribe" ) (collectively " Plaintiffs" ) bring this action against Defendants the United States of America, Sally Jewell, Secretary of the Department of the Interior, Ken Washburn, Assistant Secretary -- Indian Affairs, and City of Richmond.

Defendant City of Richmond (" the City" ) moves under Federal Rule of Civil Procedure 12(c) for an order granting judgment on the pleadings as the following claims in Plaintiffs' Third Amended Complaint (Dkt. No. 91, 'TAC" ): the Seventh for breach of contract, the Eighth for breach of the implied covenant of good faith and fair dealing, the Ninth for unjust enrichment, the Tenth for quantum meruit, and the Thirteenth for specific performance.

The City maintains that, by bringing this lawsuit, Upstream has violated a 2006 court-approved settlement agreement which addressed the legal effect of the contract at issue here. Specifically, Plaintiffs bring claims against the City for breach of a Land Disposition Agreement (" LDA" ), as well as quasi-contract theories based on that LDA. The City argues that the contract-based claims run contrary to the discretion granted to the City in the LDA, and restated in the settlement agreement that Plaintiff Upstream entered into in prior environmental litigation concerning the project at issue here.

Having carefully considered the papers submitted and the pleadings in this action, as well as the matters judicially noticeable [1] in connection with this motion,

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and for the reasons set forth below, the Court hereby Grants the Motion for Judgment on the Pleadings as to the Seventh, Eighth, Ninth, Tenth, and Thirteenth claims in the TAC.[2]

I. Background

A. Land Development Agreement

During June 2003, the City's then-City Manager discussed with Plaintiff Upstream the possibility of development of a gaming project on a parcel of land referred to as " Point Molate." Part of the Point Molate land consisted of a decommissioned Naval Fuel Depot, still owned by the Navy, and located in the City of Richmond. The City could only acquire that portion of the property from the Navy if it was to be used for a self-sustaining regional economic development. (TAC ¶ 37.)

In 2004, Upstream paid the City $250,000 for the exclusive right to negotiate with the City for the redevelopment of the Navy Fuel Depot, including the gaming project. On August 2, 2004, then-Mayor of Richmond, Irma Anderson, sent a letter to then-Governor Arnold Schwarzenegger announcing that the City was nearing a conclusion of its negotiations with the Tribe and Upstream, and noting that the " City strongly supports the Tribe in its efforts to obtain a [gaming] Compact [with the State]." (TAC ¶ 41.)

Plaintiffs entered into several agreements with the City thereafter. In November 2004, the Tribe, Upstream, and the City entered into the LDA which provided that the City would transfer the Point Molate property to Upstream for development of an Indian casino (the " Casino Project" ) in cooperation with the Tribe, contingent upon the Casino Project's final legal approval. (TAC ¶ 47 and Exh. 3 [LDA] § § 1.1, 2.2(a), 2.8.) Final legal approval, in turn, depended upon a number of permits and approvals, including determinations by the federal government to allow gaming at Point Molate,[3] as well as environmental review of the Casino Project under the California Environmental Quality Act (" CEQA" ).

Further, the Casino Project depended upon the Tribe confirming its ability to conduct gaming activities at Point Molate. In California, only Indian tribes may engage in full casino gaming activities. California Constitution Article IV, Section 19; Artichoke Joe's v. Norton, 353 F.3d 712 (9th Cir. 2003). Guidiville is a federally

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recognized Indian Tribe. Federal Register, vol. 73, No. 66 at 18554 (April 4, 2008). Its lands include those lands held by the United States in trust status for the benefit of the Tribe. 25 U.S.C. 2703(4)(B). The Court Decree in Scott's Valley Band v. United States, CIV C-86-360 WWS (N.D. Cal. 1991) and the Indian Reorganization Act, 25 U.S.C. § § 461 et. seq. , provide the legal basis for the Tribe to have newly acquired lands taken into trust status. However, the Indian Gaming Regulatory Act, 25 U.S.C. § § 2701 et. seq. (" Gaming Act" ), prohibits gaming on Indian lands newly acquired after 1988 unless a tribe meets one or more of several exceptions. 25 U.S.C. § 2719. Thus, in order for the Casino Project to go forward at Point Molate, a portion of the land would have to be taken into trust status for the benefit of the Tribe, and the federal government would have to determine that the land qualifies for gaming under one of the exceptions set forth in the Gaming Act.[4]

If at any point the Casino Project was determined to be " not legally permitted" due to " federal, state, and local permitting issues," the LDA granted Upstream an additional exclusive 120-day period to negotiate with the City regarding a non-casino development proposal (the " Alternative Proposal" ). (LDA § 2.8.) In connection with any Alternative Proposal, Upstream was " required to submit land use and building plans for such alternative proposal to the City for its discretionary approval in accordance with all applicable federal, State, and local laws, rules and regulations." ( Id. )

In exchange for the City's reservation of exclusive purchase rights for Upstream, the LDA required Upstream to make payments to the City. ( Id. § 1.2.) Specifically, " [t]o compensate the City for granting Developer the right to purchase and lease the Property until January 15, 2006," Upstream was required to pay " Initial Consideration" of $1 million. After this initial term, Upstream had the option to extend the closing period of the LDA for four successive 12-month periods, for payments of $2 million, $3 million, $4 million, and $5 million, respectively, plus monthly amounts to extend the period thereafter up until April 2011. These payments were " Non-refundable Consideration," which was to be " earned by the City upon receipt" and " in all events [] retained by the City and [] nonrefundable." ( Id. ) The Non-refundable Consideration was to be credited against the purchase price if the sale closed; however, the LDA stated that Upstream " shall not receive any refund of the Non-refundable Consideration if [the] Project is disapproved . . . or if the Project otherwise becomes legally or economically infeasible." ( Id. § 2.2(a).)[5]

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The LDA also included a provision obligating the City to provide support for the Casino Project in the form of " correspondence to the BIA, and to the Governor of the State of California, and the County of Contra Costa which supports the application of the Tribe to the United States and requests that the United States take the Property into trust for the benefit of the Tribe," as well as " urg[ing] the Governor of the State of California to negotiate and execute with the Tribe a Compact for gaming purposes in accordance with the intent of this Agreement," and working with " other governmental agencies to help resolve any impediments to the approval process." (LDA ¶ 2.7.)

In addition, the LDA contained a provision defining what acts would constitute a default by either party, and the remedies for such default. With respect to the City's default, that section of the LDA provided:

The following events each constitute a default by the City hereunder:
(a) The City fails to convey the Property as provided in this Agreement;
or
(b) The City breaches any other material provision of this Agreement.
Upon the happening of any of the above-described events, Developer shall first notify the City in writing of its purported default, giving the City sixty (60) days after receipt of such notice to cure such default. In the event the City does not then cure the default within such sixty-day period (or, if the default is not susceptible of cure within such sixty day period, the City fails to commence the cure within such period and thereafter to prosecute the cure diligently to completion), then Developer shall be entitled to (i) terminate this Agreement in writing; and/or (ii) seek any rights or remedies afforded it in law or in equity; provided that any monetary damages payable by the City shall be limited to the amount of the sum of the Non-refundable Consideration, deposits paid to the City in connection with the Exclusive Right to Negotiate Agreement plus actual costs expended by the Developer in processing permits and applications for the Project, provided, further that such limits shall not apply in the case of a breach resulting from any willful action or omission taken or authorized to be taken by the City Council or the City Manager.

(LDA § 6.2.)

When the LDA was executed in 2004, CEQA review for the Casino Project had not yet been conducted. ( See City RJN, Exh. A, ΒΆ D [noting that preparation of an Environmental Impact Report (EIR) did not begin until 2005].) The LDA provided that, as to the scope and nature of the Project, a final determination would only be made after consideration of the CEQA review process, ...


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