Ngv Gaming, Ltd. v. Upstream Point Molate, LLC

Decision Date31 January 2005
Docket NumberNo. C 04-3955-SC.,C 04-3955-SC.
Citation355 F.Supp.2d 1061
CourtU.S. District Court — Northern District of California
PartiesNGV GAMING, LTD., a Florida partnership, Plaintiff, v. UPSTREAM POINT MOLATE, LLC, a California limited liability company and Harrah's Operating Company, Inc., a Delaware corporation, Defendants.

Craig A. Caldwell, Porter Scott Weiberg & Delehant, Sacramento, CA, Stephen J. Calvacca, Attorney at Law, West Falmouth, MA, for Plaintiff.

Daniel Q. Poretti, John Juneau Wackman, Stanely E. Siegel, Jr., Rider Bennett, LLP, Minneapolis, MN, Robert H. Zimmerman, Schuering Zimmerman Sculy & Doyle, LLP, Sacramento, CA, for Defendants.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS

CONTI, District Judge.

I. INTRODUCTION

Plaintiff NGV Gaming, Ltd., ("Plaintiff" or "NGV") filed this action against rival casino development groups Upstream Point Molate, LLC and Harrah's Operating Company, Inc. ("Defendants"), alleging that Defendants tortiously interfered with Plaintiff's contract with the Guidiville Band of Pomo Indians ("the Tribe"). Defendants bring the present motion to dismiss Plaintiff's complaint for failure to state a claim upon which relief can be granted. The Tribe applies to participate as amicus curiae, and urges dismissal of the entire action due to its status as a necessary and indispensable party. This Court grants the Tribe's application to participate as amicus curiae, but does not find the Tribe to be necessary to this action at this time. Moreover, this Court finds that Plaintiff has sufficiently stated a claim, and denies Defendants' motion to dismiss the action.

II. LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) tests the sufficiency of the complaint. Dismissal of an action pursuant to Rule 12(b)(6) is appropriate only where it "appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Levine v. Diamanthuset, Inc., 950 F.2d 1478, 1482 (9th Cir.1991) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). In reviewing the motion, a court must assume all factual allegations to be true and construe them in the light most favorable to the nonmoving party. North Star Intern. v. Arizona Corp. Comm'n, 720 F.2d 578, 580 (9th Cir.1983). Nevertheless, a complaint must be based on more than "[c]onclusory allegations of law and unwarranted inferences" in order to defeat a motion for dismissal. Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir.1998)(quoting In re VeriFone Sec. Litig., 11 F.3d 865, 868 (9th Cir.1993)).

III. BACKGROUND

Plaintiff's factual allegations must be deemed true and considered in their best light; accordingly, the following represents the facts upon which Plaintiff brings its claim.1 On July 3, 2002, the Guidiville Band of Pomo Indians entered into a series of contracts (the "Transaction Agreements") with F.E.G.V. Corporation to develop and construct a proposed gaming facility on restored trust land in Northern California. With the Tribe's written consent, F.E.G.V. assigned its interest in these contracts to NGV Gaming, Ltd. on December 23, 2003. The Transaction Agreements consist of the Development Agreement and Personal Property Lease ("Lease") and a Cash Management Agreement ("CMA"). At the time of contracting, the Tribe had not yet acquired any land, and NGV was also obligated under the Transaction Agreements to assist the Tribe in identifying and purchasing land in order to establish the trust land base on which the gaming facility would eventually be built.

In January of 2004, Defendants began negotiating with the City of Richmond to purchase 354 acres of land from the city for the purpose of building a gaming facility. According to Plaintiff, Defendants were aware of the existing contracts between NGV and the Tribe, yet intended to put these lands into trust for the Tribe and build a gaming facility for the Tribe to operate.

On August 2, 2004, the Tribe sent a letter to Plaintiff in which it attempted to "rescind" the Transaction Agreements with Plaintiff. Plaintiff maintains that the reasons given for the rescission were "entirely pretextual" and that the Tribe was induced to terminate its agreements with Plaintiff as a result of Defendants' interference. Pl. Opp. at 3.

IV. DISCUSSION

Defendants rest their motion to dismiss on three grounds: the Transaction Agreements are void and unenforceable, Plaintiff's damages are too speculative to provide a basis for recovery, and this case is completely preempted by Federal law. This Court addresses each of these arguments in turn.

A. Validity of the Transaction Agreements

First, Defendants argue that Plaintiff's sole claim for tortious interference with contract depends on the validity of the contracts in the first place. Defendants posit that the contracts are invalid, and therefore the entire claim must be dismissed.

Under California law, the elements of a cause of action for intentional interference with contract are 1) a valid contract between plaintiff and a third party; 2) defendants' knowledge of the contract; 3) defendants' intentional acts designed to induce a breach or disruption of the contractual relationship; 4) actual breach or disruption of the contractual relationship; and 5) resulting damage. See Tuchscher Dev. Enter. Inc. v. San Diego Unified Port Dist., 106 Cal.App.4th 1219, 132 Cal.Rptr.2d 57, 73 (2003). Plaintiff's complaint clearly alleges each of these elements, and is therefore sufficient on its face.

Nevertheless, Defendants argue that the Transaction Agreements are invalid for lack of regulatory approval pursuant to the Indian Regulatory Gaming Act, 25 U.S.C. §§ 2701-2721 ("IGRA"), and 25 U.S.C. §§ 81 and 415. The Court finds that this argument rests on a faulty premise, i.e., that no contractual agreement existed between NGV and the Tribe unless and until all regulatory approval required by statute was obtained. It is true that the Transaction Agreements contemplate the necessity for regulatory approval before certain aspects of the Agreements could occur. However, execution of the Agreements may also have created immediate duties and obligations relating to matters for which no regulatory approval is needed.2

The Agreements themselves do not condition the validity of the contract on regulatory approval, but rather make such approval "conditions precedent" to subsequent obligations of each party under the Lease Agreement. Pl.Ex. A. at 15. In California, a condition precedent is "one which is to be performed before some right dependent thereon accrues, or some act dependent thereon is performed." Cal. Civ.Code, § 1436. "Thus, a condition precedent is either an act of a party that must be performed or an uncertain event that must happen before the contractual right accrues or the contractual duty arises." Platt Pacific, Inc. v. Andelson, 6 Cal.4th 307, 313, 24 Cal.Rptr.2d 597, 862 P.2d 158 (1993). See also 1 Witkin, Summary of Cal. Law, Contracts, § 721 (9th ed.1987); Restatement [2d] Contracts §§ 224, 225 ("A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.") However, it is not necessary that each condition in a contract be met before we consider the contract valid and enforceable. Rather,

[m]ost conditions precedent describe acts or events which must occur before a party is obligated to perform a promise made pursuant to an existing contract, a situation to be distinguished conceptually from a condition precedent to the formation or existence of the contract itself. In the latter situation, no contract arises `unless and until the condition occurs.'

Oppenheimer & Co., Inc. v. Oppenheim, Appel, Dixon, & Co., 86 N.Y.2d 685, 690, 636 N.Y.S.2d 734, 660 N.E.2d 415 (1995)(citing Calamari & Perillo, Contracts § 11-5, at 440 [3d ed.]). Accordingly, Plaintiff NGV has alleged the former — that a valid contract existed between NGV and the Tribe — and the contract itself provides a basis for supporting this assertion.

Therefore, even accepting Defendants' contention that the Transaction Agreements never received regulatory approval, which Plaintiff does not dispute, Plaintiffs could prove the existence of a valid contract at the time of the alleged tortious interference, which is the relevant time period for Plaintiff's claim. Inasmuch as Defendants' motion suggests that regulatory approval was not simply a condition precedent to duties and obligations arising under the contract, but indeed a condition of the formation of any valid contract at all, the Court addresses this argument below.

Defendants argue that the Transaction Agreements are void pursuant to a letter written by the Acting General Counsel of the National Indian Gaming Commission ("NIGC"), the regulatory agency established pursuant to IGRA,3 which expresses the view that the lease provisions of the Transaction Agreements provide NGV with an impermissible "proprietary interest" in the Tribe's gaming activity. Wackman Decl., Ex. 2. This letter in no way renders the Transaction Agreements void.

First, under IGRA, only "management contracts" must be preapproved by NIGC to be considered valid,4 and the NIGC letter explicitly advised that "the Agreements do not constitute a management agreement subject to our review and approval." Id. Moreover, the advisory opinion of NIGC's General Counsel that the lease provisions violate IGRA has no legal effect because it is not a final decision of the agency. See, e.g., Cheyenne-Arapaho Gaming Com'n v. National Indian Gaming Com'n, 214 F.Supp.2d 1155 (N.D.Okla.2002) (finding that a letter written by the General Counsel of the NIGC was merely advisory and did not constitute official agency action); see also Sabella v. United States, 863 F.Supp. 1, 5 (D.D.C.1994)(observing that the General Counsel of a government agency is "not a decision-maker at the highest level and, therefore, her opinion does not...

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