Ignite Spirits, Inc. v. Consulting by Ar, LLC

• Court: Court of Appeals for the Ninth Circuit
• Decided: April 3, 2025
• Docket: 23-15635
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS APR 3 2025 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

IGNITE SPIRITS, INC., No. 23-15635

Plaintiff-Appellant, D.C. No. 2:21-cv-01590-JCM-EJY v.

CONSULTING BY AR, LLC, MEMORANDUM*

Defendant-Appellee,

and

IGNITE INTERNATIONAL BRANDS, LTD.,

Counter-defendant.

IGNITE SPIRITS, INC., No. 23-15638

Plaintiff, D.C. No. 2:21-cv-01590-JCM-EJY v.

CONSULTING BY AR, LLC,

v.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. IGNITE INTERNATIONAL BRANDS, LTD.,

Counter-defendant- Appellant.

Appeal from the United States District Court for the District of Nevada James C. Mahan, District Judge, Presiding

Argued and Submitted March 7, 2025 Las Vegas, Nevada

Before: RAWLINSON, MILLER, and DESAI, Circuit Judges.

Ignite Spirits, Inc. (Spirits) and Ignite International Brands, Ltd. (Brands)

(collectively, Ignite) appeal from the district court’s order granting summary

judgment to Consulting by AR, LLC (AR) on its claim for breach of contract. We

have jurisdiction under 28 U.S.C. § 1291, and we affirm.

As a federal court sitting in diversity, we apply the substantive law of the

forum state, here, Nevada. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).

We review the district court’s grant of summary judgment de novo, viewing the

evidence in the light most favorable to the non-moving party to determine whether

there are any genuine issues of material fact. Csutoras v. Paradise High Sch., 12

F.4th 960, 965 (9th Cir. 2021). We review the district court’s calculation of money

damages for clear error. See Felder v. United States, 543 F.2d 657, 664 (9th Cir.

2 1976). And we review the district court’s denial of a motion for reconsideration for

abuse of discretion. Coastal Transfer Co. v. Toyota Motor Sales, U.S.A., 833 F.2d

208, 211 (9th Cir. 1987).

1. Brands was a party to the contract. Its president signed the letter

agreement, and the letter agreement created obligations for Brands to issue shares

as part of AR’s compensation. Any ambiguity in the letter agreement is resolved

by the option agreement in Exhibit B, which the letter agreement incorporated by

reference. Exhibit B defined Brands as “the Company” and described the letter

agreement as a contract between AR and “the Company,” thus demonstrating that

the parties understood Brands to be a party.

2. Ignite argues that AR materially breached the contract by failing to

execute the definitive agreements between Ignite and Resorts World by the July 1,

2021 deadline, thereby relieving Ignite of its duty to pay. Under Nevada law, “one

party’s material breach of its promise discharges the non-breaching party’s duty to

perform.” Cain v. Price, 415 P.3d 25, 29 (Nev. 2018). But AR did not materially

breach the terms of the contract. Regardless of whether the contract made time of

the essence, AR’s one-day delay was not material because it did not impede the

contract’s purpose of establishing a strategic partnership between Ignite and

Resorts World, especially given that both parties performed according to the

contract’s preliminary terms at Resorts World’s grand opening at the end of June.

3 See 15 Williston on Contracts § 46:3 (4th ed. 2024). Furthermore, AR was not

responsible for the delay, as Ignite received the definitive agreements from Resorts

World by July 1 but did not finalize and sign them until July 2. See NGA #2 Ltd.

Liab. Co. v. Rains, 946 P.2d 163, 169 (Nev. 1997).

3. Ignite also argues that AR breached the contract because the agreements

with Resorts World did not contain substantially all of the desired terms listed in

Exhibit A of the letter agreement. The letter agreement gave Ignite “sole and

absolute discretion” over accepting the agreements with Resorts World. But

Nevada law allows “[a] party [to] waive a condition in a contract if the condition

was included in the contract for his or her benefit.” Mayfield v. Koroghli, 184 P.3d

362, 368 (Nev. 2008). And Ignite has submitted no evidence of its dissatisfaction

with AR’s performance or determination that the agreements were unacceptable.

Rather, the record shows the opposite: Ignite represented that it was content with

the agreements. The district court thus correctly determined that Ignite waived

AR’s obligation to obtain substantially all of the terms. See id.

Ignite contends that the district court erred in finding waiver through the use

of parol evidence. The parol evidence rule “bars extrinsic evidence regarding prior

or contemporaneous agreements that are contrary to the terms of an integrated

contract.” Khan v. Bakhsh, 306 P.3d 411, 413 (Nev. 2013). But it does not apply to

course-of-performance evidence that supplements or explains a contract’s

4 requirements. See Restatement (Second) of Contracts § 209 cmt. a (Am. L. Inst.

1981); M.C. Multi-Fam. Dev., LLC v. Crestdale Assocs., Ltd., 193 P.3d 536, 545

(Nev. 2008). Here, the evidence considered by the district court supplemented the

“sole and absolute discretion” provision by showing that Ignite chose not to voice

any objections over the course of the contract’s performance.

4. Finally, Ignite argues that the district court erred in awarding money

damages. Once it determined that Ignite materially breached the contract by failing

to compensate AR, the district court correctly awarded damages “to place the

nonbreaching party in as good a position as if the contract had been performed.”

Colorado Env’ts, Inc. v. Valley Grading Corp., 779 P.2d 80, 84 (Nev. 1989). And

the court did not clearly err in calculating damages. Under the contract, Ignite

promised to provide AR with CAD 2 million of Brands subordinate voting shares

at the time of execution of the definitive agreements. The contract thus provided a

clear monetary value of the shares and a specific date of issuance: CAD 2 million

on July 2, 2021, the day the definitive agreements were executed.

In its motion for reconsideration, Ignite submitted evidence of Brands’ take-

private transaction, which it claimed would have lowered the value of Brands’

shares. But subsequent events are irrelevant to the shares’ stated value on July 2,

2021. The district court did not abuse its discretion in denying reconsideration.

AFFIRMED.