Silver State Land, LLC v. Beaudreau

• Decision Date: 24 July 2014
• Docket Number: Civil Action No. 13–cv–00717 BAH
• Citation: 59 F.Supp.3d 158
• Parties: Silver State Land, LLC, Plaintiff, v. Tommy P. Beaudreau, in his official capacity as Acting Assistant Secretary of Land and Minerals Management, U.S. Department of the Interior, et al., Defendants.
• Court: U.S. District Court — District of Columbia

59 F.Supp.3d 158

Silver State Land, LLC, Plaintiff

v.Tommy P. Beaudreau, in his official capacity as Acting Assistant Secretary of Land and Minerals Management, U.S. Department of the Interior, et al., Defendants.

Civil Action No. 13–cv–00717 BAH

United States District Court, District of Columbia.

Signed July 24, 2014

W. Hartmann Young, Paul Burton Smyth, John F. Henault, Jr., Perkins Coie LLP, Washington, DC, for Plaintiff.

Alison D. Garner, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

BERYL A. HOWELL, United States District Judge

Several days before the plaintiff, Silver State Land, LLC, expected to receive the patent for approximately 480 acres of federal land located in the City of Henderson, Nevada, the patent was withdrawn and the plaintiff was not permitted to consummate the purchase of the land. The plaintiff thereafter filed this action against Tommy P. Beaudreau, in his official capacity as Acting Assistant Secretary, Land and Minerals Management (“LMM”), U.S. Department of the Interior (“DOI”), and Neil Kornze, in his official capacity as Principal Deputy Director, DOI's Bureau of Land Management (“BLM”), (collectively “defendants”) to (1) set aside the determination of the LLM to withdraw the sale of a land patent; and (2) allow the sale to proceed as required by law. Pending before the Court is the plaintiff's motion to supplement the administrative record with, or allow for extra-record review or judicial notice of, a Nevada state court order dismissing fraud claims against the plaintiff. Pl.'s Mot. to Compel Suppl. of A.R. or Extra–R. Review or Judicial Notice (“Pl.'s Mot.”), at 1, ECF No. 26. According to the plaintiff, this excluded order eliminated the underlying reason for the LLM's determination and, consequently, is “most relevant to Defendants' arbitrary and capricious decision.” Pl.'s Mem. Supp. Mot. to Compel Supplementation of A.R. or Extra–R. Review or Judicial Notice (“Pl.'s Mem.”), at 8, ECF No. 26–1. For the reasons set forth below, the plaintiff's motion is denied.

I. BACKGROUND

In September 2011, the City of Henderson, Nevada (“Henderson” or “the city”) nominated for sale, pursuant to the Southern Nevada Public Land Management Act (“SNPLMA”), an approximately 480–acre parcel of public land (“the Land”) under the administration of BLM. Id. ¶ 8. Henderson requested that BLM conduct a direct sale of the land to Las Vegas National Sports Center, LLC (“LVNSC”), which had a Development Agreement with the city to “develop a regional mixed use project including professional sports venues on the Land” (“Development Agreement”). Id. BLM did not accede to this request but instead published, on April 4, 2012, a Notice of Realty Action for a modified competitive bidding process in accordance with BLM regulations. Id. ¶¶ 9–10.

Meanwhile, in early 2012, with the consent of both Henderson and BLM, the plaintiff was substituted for LVNSC as the sale nominee. Id. ¶ 8. Both LVNSC and the plaintiff are wholly owned by Las Vegas National Sports Center (Holding) LLC. Id. Henderson identified the plaintiff to BLM as the “designated bidder,” allowing the plaintiff to match the high bid. Id. ¶ 10.

On June 4, 2012, the plaintiff submitted a bid to purchase the land for $10,560,000, which was “the fair market value as previously determined by the BLM under an appraisal prepared by a third party and reviewed and approved by the Office of Valuation Services, [DOI].” Id. ¶ 11. No other bids were submitted and, on June 12, 2012, BLM confirmed that the plaintiff was the successful bidder. Id. ¶¶ 11–12. On November 28, 2012, as a requirement of sale, the plaintiff timely deposited into an escrow the amount of $8,428,000, thereby triggering BLM's obligation to issue a patent, which would give the plaintiff the title to the land, within 30 days. Id. ¶¶ 13–14. On the same day the escrow deposit was made, the plaintiff's affiliated company, LVNSC, terminated its Development Agreement with Henderson. Id. ¶ 15. The plaintiff offers as an explanation for the termination that “[b]oth Henderson and LVNSC had reciprocal and unilateral rights to terminate the Development Agreement if either party believed the terms of the Development Agreement made the project non-viable.” Id. The plaintiff further alleges that “[t]he termination of the Development Agreement affected the potential issuance by Henderson of revenue bonds for the project but it did not affect the zoning of the Land ... [which] remains ... zoned to be used for the development of a mixed use project with sports venues and that designation cannot be changed by any party other than Henderson.” Id.

On November 29, 2012, the day following the plaintiff's payment of the escrow deposit and its affiliate's termination of the Development Agreement, Henderson sent a letter to BLM requesting that the issuance of the land patent to the plaintiff be postponed. Id. ¶ 16. In order to facilitate its discussions with Henderson, on December 2, 2012, the plaintiff agreed to extend the date by when BLM was required to transfer the land patent until the first week of February 2013. Id. ¶ 17. The plaintiff agreed to a second escrow extension until March 29, 2013, after Henderson filed suit, on January 28, 2013, in Nevada state court against the plaintiff “alleging fraud related claims and contract claims.” Id. ¶ 18.

Before the lapse of the second closing date extension, the Nevada state court in City of Henderson v. Milam (“City of Henderson ”), No. A–13–675741–B (Nev. Dist. Ct., Clark Cty), entered an order, on March 7, 2013, dismissing, without prejudice, the fraud related claims against the plaintiff (“Nevada Order”). Id. ¶ 20. Shortly thereafter, on March 14, 2013, the plaintiff and Henderson reached a settlement regarding the remaining contract claims and Henderson provided a copy of the settlement agreement to DOI's Solicitor's Office. Id. ¶ 21. In the agreement, the “parties agreed that the settlement agreement was not to be considered an admission or acknowledgement as to liability or damages related to claims by either party.” Id. Henderson advised BLM, by a letter “sent” on April 5, 2013, that the city no longer opposed the issuance of the patent to the plaintiff. Id. ¶ 22. In view of these developments, the plaintiff agreed to a third extension of the closing with BLM until May 13, 2013. Id.

On May 10, 2013, three days before the scheduled date for the issuance of the patent, LMM issued a Decision Memorandum adopting an earlier recommendation of BLM. See A.R. SSL00133. Specifically, in its Decision Memorandum, the LLM asserted jurisdiction over the matter and directed BLM to: “(i) not issue the patent to [the plaintiff], (ii) terminate the sale process, and (iii) take the steps necessary to return the purchase deposit and bid guarantee to [the plaintiff], as expeditiously as practicable.” Id. ; Compl. ¶¶ 25–26. Consistent with these directions, BLM did not deliver the patent to the plaintiff by the closing date. Compl. ¶ 27.

The plaintiff filed an action for declaratory and injunctive relief against the defendant on May 15, 2013. See generally Compl. The defendants timely lodged the administrative record in this case on November 5, 2013, ECF No. 25, which record the plaintiff argues is incomplete for failing to include the Nevada Order dismissing the fraud related claims brought against the plaintiff in the City of Henderson litigation. The plaintiff's pending motion to supplement the administrative record or allow extra-record review or judicial notice of the Nevada Order, is now fully briefed for resolution.

II. LEGAL STANDARD

Under the APA, “the court shall review the whole record or those parts of it cited by a party.” 5 U.S.C. § 706. “The record consists of the order involved, any findings or reports on which that order is based, and ‘the pleadings, evidence, and other parts of the proceedings before the agency.’ ” Am. Wildlands v. Kempthorne, 530 F.3d 991, 1002 (D.C.Cir.2008) (quoting Fed. R. App. P. 16(a) ). As the Supreme Court explained, “[t]he task of the reviewing court is to apply the appropriate APA standard of review ... to the agency decision based on the record the agency presents to the reviewing court.” Florida Power & Light Co. v. Lorion, 470 U.S. 729, 743–744, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985). Otherwise, the reviewing court would consider de novo material not included in the agency record and “reach its own conclusions based on such an inquiry.” Id. at 744, 105 S.Ct. 1598. This is inconsistent with applying the arbitrary and capricious standard, where “the focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court.” Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973).

Hence, “[i]t is a widely accepted principle of administrative law that the courts base their review of an agency's actions on the materials that were before the agency at the time its decision was made.” IMS, P.C. v. Alvarez, 129 F.3d 618, 623 (D.C.Cir.1997) ; see also Hill Dermaceuticals, Inc. v. FDA, 709 F.3d 44, 47 (D.C.Cir.2013) (“[I]t is black-letter administrative law that in an APA case, a reviewing court ‘should have before it neither more nor less information than did the agency when it made its decision.’ ” (quoting Walter O. Boswell Mem'l Hosp. v. Heckler, 749 F.2d 788, 792 (D.C.Cir.1984) ); Deukmejian v. Nuclear Regulatory Comm'n, 751 F.2d 1287, 1325 (D.C.Cir.1984) (en banc) (“Were courts cavalierly to supplement the record, they would be tempted to second-guess agency decisions in the belief that they were better informed than the administrators empowered by Congress and appointed by the President.”), vacated en banc in part on other grounds, 760 F.2d 1320 (D.C.Cir.1985). When “the record before the agency does not support the agency action, [ ] the agency has not considered all relevant factors, or [ ] the reviewing court simply cannot...