Glacier Bear Retreat, LLC v. Matt Dusek
Opinion
NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 11 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
GLACIER BEAR RETREAT, LLC; et al., No. 23-35117
Plaintiffs-counter- D.C. No. 9:22-cv-00019-KLD defendants-Appellees,
v. MEMORANDUM*
MATT DUSEK; RACHEL DUSEK,
Defendants-counter- claimants-Appellants.
GLACIER BEAR RETREAT, LLC; et al., No. 23-35268
Plaintiffs-counter- D.C. No. 9:22-cv-00019-KLD defendants-Appellants,
v.
MATT DUSEK; RACHEL DUSEK,
Defendants-counter- claimants-Appellees.
Appeal from the United States District Court for the District of Montana Kathleen Louise DeSoto, Magistrate Judge, Presiding
Argued and Submitted March 26, 2024
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. San Francisco, California
Before: PAEZ, NGUYEN, and BUMATAY, Circuit Judges.
Matt and Rachel Dusek (collectively, “Buyers”) appeal the district court’s
order granting summary judgment in favor of Glacier Bear Retreat, LLC, Gail
Goodwin, and Darryl Slattengren (collectively, “Sellers”).1 We have jurisdiction
pursuant to 28 U.S.C. § 1291. We affirm.
1. At issue in this litigation are two contingency provisions included as part of
a multi-million-dollar real estate Buy-Sell Agreement (“BSA”) entered into by the
parties. These provisions specified different circumstances under which Buyers
could unilaterally terminate the BSA. The parties dispute whether Buyers properly
relied upon either contingency when they sought to terminate the BSA.
The first of these contingency provisions—the “Water Rights
Contingency”—required that “All well related permitting, well log recording, and
any associated water rights . . . be in place prior to closing.” The second of these
provisions—the “Inspection Contingency”—authorized Buyers, prior to a specified
date, to give notice of their disapproval of any property conditions in an
“Inspection Notice” and either terminate the BSA on that basis or “elect[] to
negotiate a resolution of the conditions noted.” If Buyers elected to negotiate, they
1 In a separately filed order, we address Sellers’ cross-appeal of the district court’s denial of their motion to amend the judgment pursuant to Federal Rule of Civil Procedure 59(e) to include an award of prejudgment interest.
2 were required to include in the Inspection Notice “all of [their] objections and
requested remedies.” Buyers could then “enter into a written agreement in
satisfaction of the conditions noted” with Sellers, in which case the Inspection
Contingency would cease to be in effect. If, however, Buyers did not enter into
such a written agreement and did not withdraw the Inspection Notice, the BSA
would be terminated.
The district court concluded that Buyers were not authorized to terminate the
BSA based on either contingency. We agree.
2. Water Rights Contingency. Buyers’ reliance on the Water Rights
Contingency did not authorize them to terminate the BSA. As an initial matter, the
Water Rights Contingency is a condition precedent and so must be construed
strictly under Montana law. Scottsdale Ins. Co. v. Hall, 316 Mont. 460, 467
(2003). Here, the BSA requires that the contingency be satisfied, not that the party
invoking it be satisfied. Thus, contrary to Buyers’ arguments on appeal, a
subjective belief that the water rights are not “in place” would be insufficient to
terminate the BSA under the Water Rights Contingency. Rather, Buyers needed to
demonstrate that the water rights were objectively not “in place” to properly invoke
the provision. This interpretation accords with how Montana courts have
construed similar conditions precedent predicated on one party’s approval or
satisfaction. Cf. Bender v. Rosman, 413 Mont. 89, 97 (2023) (relying on objective
3 indicia to determine whether condition precedent was “satisfied”); see also Waite
v. C.E. Shoemaker & Co., 50 Mont. 264, 287 (1915).
Viewing the evidence in the light most favorable to Buyers, they have failed
to raise a genuine dispute of material fact that the water rights were not “in place”
at the time they intended to terminate the BSA. In Montana, contractual provisions
are interpreted “according to their plain, ordinary meaning.” Ophus v. Fritz, 301
Mont. 447, 453 (2000). The plain, ordinary meaning of the phrase “in place”
emphasizes operative function. See Merriam-Webster’s Collegiate Dictionary 946
(11th ed. 2003) (defining “in place” as “established, instituted, or operational”).
Buyers do not dispute that, at the time of their intended termination of the BSA, all
water rights relevant to the property were operational. Rather, Buyers’ sole
argument is that the water rights were not “in place” because Sellers had not at the
time filed a Form 617 with the Montana Department of Natural Resources and
Conservation to finalize the property’s well-rights permit. Although this form, if
not filed within a year, would render the property’s well-rights permit subject to
cancellation, it had no effect on the operative function of the property’s water
rights.2 Thus, we conclude that Sellers’ failure to file a Form 617 is not sufficient
to raise a genuine dispute of material of fact whether the water rights were “in
2 Buyers also presented no evidence that suggested Sellers would not file the Form 617. As the record reflects, Sellers filed it in June 2022.
4 place”—that is, operational—at the time they sought to terminate the BSA.
3. Inspection Contingency. Buyers’ reliance on the Inspection Contingency did
not authorize them to terminate the BSA. In addition to identifying the
unsatisfactory conditions and proposed remedies required by the Inspection
Contingency, the Inspection Notice contained the following language:
If Seller and Buyer agree to the remedies specified above, this document shall constitute an amendment to the Buy-Sell Agreement referred to above and shall be an integral part of this transaction. Seller shall complete all agreed upon resolution(s) to the condition(s) and problem(s) identified by 5:00 p.m. (Mountain Time) on 11/05/2021.
Thus, in this case, the parties agreed to certain remedies which “satisf[y]” the
conditions noted in the Inspection Notice.3 As a result, the Inspection Contingency
ceased to have any force or effect, and Buyers could not rely on it to terminate the
BSA. In the absence of a contingency governing the matter, Buyers were entitled
only to seek damages for any remaining issues under the terms of the Inspection
Notice. Cf. Halcro v. Moon, 226 Mont. 121, 125 (1987) (“A breach which goes to
only part of the consideration, is incidental and subordinate to the main purpose of
the contract, and may be compensated in damages does not warrant a rescission of
the contract; the injured party is still bound to perform his part of the agreement,
3 We do not agree with Buyers that the language “written agreement in satisfaction of the conditions noted” requires that the conditions noted be “satisfied to their liking.” Nor do we agree that the language is ambiguous.
5 and his only remedy for the breach consists of the damages he has suffered
therefrom.” (quoting Johnson v. Meiers, 118 Mont.
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