Kizer v. PTP, Inc.

• Decision Date: 03 September 2015
• Docket Number: No. 3:15–cv–00120–RCJ.,3:15–cv–00120–RCJ.
• Citation: 129 F.Supp.3d 1000
• Parties: Leon Mark KIZER, Plaintiff, v. PTP, INC. et al., Defendants.
• Court: U.S. District Court — District of Nevada

129 F.Supp.3d 1000

Leon Mark KIZER, Plaintiff,

v.PTP, INC. et al., Defendants.

No. 3:15–cv–00120–RCJ.

United States District Court, D. Nevada.

Signed Sept. 3, 2015.

Aaron Harkins, Jeremy R. Harrell, Jerome A. Miranowski, Faegre Baker Daniels LLP, Minneapolis, MN, Douglas R. Brown, Lemons, Grundy & Eisenberg, Reno, NV, for Plaintiff.

Justin M. Clouser, J.M. Clouser & Associates, Ltd., Gardnerville, NV, Diane M. Luczon, Eric P. Early, Early Sullivan Wright Gizer & McRae, LLP, Los Angeles, CA, Scott E. Gizer, Early Sullivan Wright Gizer & McRae LLP, Las Vegas, NV, Marni Rubin Watkins, Fidelity National Law Group, Henderson, NV, James R. Cavilia, Carson City, NV, Kelly R. Chase, Law Office of Kelly R. Chase, Minden, NV, for Defendants.

ORDER

ROBERT C. JONES

, District Judge.

This case arises over a dispute regarding the validity of a lease between Plaintiff and Defendant PTP, Inc. for certain Indian land that is held in trust by the United States on Plaintiff's behalf. Pending before the Court is Defendants' Motion to Dismiss (ECF Nos. 229, 233, 234, 290).¹ Also pending is a Motion to Join the Bureau of Indian Affairs as an Additional Party Defendant (ECF No. 203) filed by Defendant Pineview Homeowners Association ("PVHOA"). The Court has considered the parties' filings, and for the reasons contained herein, the Motion to Dismiss is granted in part and denied in part, and the Motion to Join is granted.

I. BACKGROUND

Plaintiff Leon Mark Kizer is a member of the Washoe Indian Tribe of Nevada and California. (Compl. ¶ 4, ECF No. 1). He owns a 62.76–acre parcel of land in Douglas County, Nevada ("the Property") that the United States holds in trust for him pursuant to 25 U.S.C. § 348

. (Id. ). In October 1997, Plaintiff entered into a 99–year lease (fifty years plus an automatic renewal of forty-nine years) of the Property ("the Master Lease") with PTP, a commercial developer, for $331,000. (Id.; Master Lease § 9(1), ECF No. 1–2). The Master Lease incorporates the provisions of 25 U.S.C. § 415 as well as the rules promulgated under 25 C.F.R. Part 162, which concern the leasing of allotted Indian-trust land such as the Property. (Compl.¶ 13). The Master Lease also contains a purchase option that grants PTP or a homeowners association with a right at any point after ten years from the date of the Master Lease to purchase the Property for a certain sum. (Id. ¶ 21). The Master Lease was approved by Robert Hunter, the Superintendent of the BIA's Western Nevada Agency at the time. (Id. ¶ 27). The Property was subdivided into 250 individual lots for single-family and manufactured homes and PTP invested considerable money in establishing infrastructure to support the developing community.

After October 1997, Plaintiff and PTP executed three separate amendments to the Master Lease. The first amendment, ratified in 1998, adjusted the provision providing for the term of the lease, requiring approval of the Superintendent rather than an automatic renewal for the additional forty-nine years to take effect. (Mod. of Master Lease 1, ECF No. 1–3, Ex. 3). The second amendment was agreed to in 2000, and it completely replaced the language governing the purchase option, requiring a one-time payment of $1,000 if a sub-lessee, rather than PTP or the HOA, chooses to exercise the option and requiring Plaintiff to take all steps necessary to secure a fee patent pursuant to federal regulations governing Indian-trust lands. (Id. at Ex. 4). And the third amendment, signed by the parties in 2002, leased additional acreage from Plaintiff to PTP for $38,000. (Id. at Ex. 5). Each of these amendments was approved by the local Superintendent who was serving at the time of the particular amendment. (Compl. ¶¶ 31–33).

In October 2006, the Bureau of Indian Affairs ("BIA") sent a letter to Brian Wallace, then Chairman of the Washoe Tribe of Nevada and California, in response to concerns the Tribe had expressed regarding certain provisions of the Master Lease, namely the length of the term and the purchase option. The BIA indicated to Wallace that both provisions appeared to violate federal law. (2006 BIA Letter 2, ECF No. 1–3, Ex. 6). The BIA explained that 25 U.S.C. § 415

allows trust land to be leased by the Indian owners, with approval from the Secretary of the Interior or his designated representative, for "business purposes." However, the term of such leases is not to exceed twenty-five years, with one additional term of twenty-five years, for a maximum duration of fifty years. (Id. ). The sale of Indian-trust land is also restricted by Congress, with the terms and conditions of such regulations delegated to the BIA. Under relevant BIA regulations, non-Indian purchasers may only purchase trust land at the fair market value calculated at the time of sale and with BIA approval. (Id. ). As such, the BIA expressed its view that the purchase option provision in the original lease was "null and void." (Id. ).

Thereafter in 2010, the BIA sent a letter to the PVHOA, the association for the community developed by PTP, indicating that the Washoe Tribe had raised issues concerning the validity and enforceability of the Master Lease and that the BIA had engaged Plaintiff and its Western Regional Office ("WRO") in discussions regarding the term length and purchase option. (2010 BIA Letter 1, ECF No. 1–3, Ex. 7). The Letter explained that the WRO had prepared a framework whereby the leased premises could be transferred to fee status and that steps should be taken to correct the uncertainties in the Master Lease. (Id. ). It requested that PVHOA confirm a meeting date with Plaintiff, the WRO, and representatives of PTP to determine how best to move forward. (Id. ). On the facts provided, it is unclear whether such a meeting took place or what the parties resolved to do.

On February 26, 2015, Plaintiff filed the instant suit against PTP, PVHOA, and the individual sub-lessees of the 250 lots seeking declaratory judgment that the Master Lease—and subsequent subleases—are void ab inicio because the Master Lease violates federal law governing trust lands, and he asks the Court to quiet title to the Property in his favor. (Compl. ¶¶ 43–47). Defendants have moved to dismiss the Complaint pursuant to Rule 12(b)(6) for failure to state a claim. PVHOA has also moved to join the BIA as a party Defendant.

II. MOTION TO DISMISS

A. Legal Standard

The purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim is to test the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001)

. The issue is not whether a plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir.1997) (quotations omitted). "A complaint may be dismissed as a matter of law for one of two reasons: ‘(1) lack of a cognizable legal theory, or (2) insufficient facts under a cognizable legal claim.’ " Allen v. United States, 964 F.Supp.2d 1239, 1251 (D.Nev.2013) (quoting Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984) ). Allegations in the complaint are taken as true and construed in the light most favorable to the plaintiff. Id. (citation omitted).

To avoid a Rule 12(b)(6) dismissal, a complaint does not need detailed factual allegations, but it must plead "enough facts to state a claim to relief that is plausible on its face." Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir.2008)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ); Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (stating that a "claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged"). And while considering evidence outside the pleadings normally converts a Rule 12(b)(6) motion into one for summary judgment, a court may "consider certain materials—documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice—without converting the motion to dismiss into a motion for summary judgment." United States v. Ritchie, 342 F.3d 903, 907–08 (9th Cir.2003).

B. Discussion

Defendants raise three theories in support of their Motion. They first argue that the case should be dismissed because Plaintiff has been unjustly enriched. Second, they contend that the case must be dismissed because it is barred by the relevant statute of limitations. And third, Defendants claim that Plaintiff is equitably estopped from pursuing his claims.

1. Unjust Enrichment

Defendants contend that even if the Master Lease is invalid, Plaintiff's claims are barred because he has not offered to return any of the money earned thereunder and is therefore unjustly enriched. "Unjust enrichment is an equitable rather than a legal claim; consequently, no action for unjust enrichment lies where a contract governs the parties' relationship to each other." McKesson HBOC, Inc. v. N.Y. State Common Retirement Fund, Inc., 339 F.3d 1087, 1091 (9th Cir.2003)

. Accordingly, whether unjust enrichment applies in the present case is premised on whether the Master Lease is void. Since the validity of the Master Lease is the ultimate issue in this case, the Court cannot dismiss the Complaint on a theory that may or may not apply. Moreover, unjust enrichment functions best as an affirmative defense based on the facts of a particular case, and it is better addressed at the summary judgment stage. It is simply unclear at this point in the litigation whether there has even been unjust enrichment. Thus, this theory does not justify granting Defendants' Motion.

2. Statute of Limitations

Defendants next argue that Plaintiff's claims are barred by the statute of limitations. "There is no federal statute of limitations governing federal common-law actions by Indians to enforce property...