Unpublished Disposition, 935 F.2d 274 (9th Cir. 1989)

MEMORANDUM^* 

Following argument, the panel withdrew No. 89-16738 from submission and remanded the case to the district court to allow the entry of a final order, the filing of a new appeal, the dismissal of No. 89-16738, and the transfer of all materials to the new appeal, No. 91-15767. That has now been accomplished. We now rule on the merits.

Plaintiff The Monroe Partnership ("Monroe"), a Texas general partnership, appeals the district court's adverse grant of summary judgment and dismissal of its complaint in its diversity action against Sun Financial Company ("Sun"), a Nevada general partnership, and National Title Company ("National"), a Nevada corporation. We affirm.

FACTS

On March 23, 1988, Monroe and Sun entered into an agreement ("the Earnest Money Contract") providing for Sun's sale to Monroe of a 6.6-acre parcel of land in Las Vegas at a price of $900,000. The parties selected National to serve as escrow agent. On May 16, 1988, Monroe objected to the condition of title because no parcel map had been recorded for the property. Shortly thereafter, Monroe drafted and the parties executed an undated "Escrow Agreement", one of whose recitals established as a condition to the consummation of the sale that the parcel map "be prepared, duly executed by Seller and filed for record in the appropriate public records of Clark County, Nevada." The Escrow Agreement provided that National would hold $35,000 of the purchase price in escrow and release it to Sun only if Sun filed the parcel map within 60 days from the date of the Escrow Agreement. If Sun failed to file the map within that period of time, National would return the $35,000 to Monroe. Though the Escrow Agreement is not dated, Monroe contends that it was executed on May 18, 1988, and that Sun's deadline was therefore July 18, 1988. On May 19, escrow closed and the deed conveying the property to Monroe was recorded.

According to Sun, the parcel map was filed with the Clark County Recorder's Office on July 12, 1988. That office actually recorded the map on July 21, 1988. Also on July 21, Sun delivered a letter to National, noting the recordation of the map that day and asking National to release the $35,000 to Sun. The following day, Monroe telefaxed a letter to National asking it to deliver the $35,000 to Monroe instead, the necessary implication being that Sun had failed to comply with the Escrow Agreement. On July 25, National released the $35,000 to Sun.

On November 4, 1988, Monroe filed a complaint in federal district court against Sun and National, asserting jurisdiction based on the diversity of the parties and an amount in controversy of more than $10,000, the minimum sum then required under 28 U.S.C. § 1332. The complaint alleged two causes of action: (1) breach of the Escrow Agreement by Sun and (2) wrongful release of escrow funds by National. Sun filed an answer on November 28. The next day, Monroe filed its first amended complaint, which included a third cause of action, directed toward Sun, for breach of the Earnest Money Contract. National then filed its answer as well as a cross-claim against Sun. On February 27, 1989, Monroe filed its second and final amended complaint, adding two individual Monroe partners as plaintiffs. National filed another answer and cross-claim; Sun filed nothing. In fact, Sun has filed no pleadings or motions in the case except for its answer to Monroe's original complaint.

On July 5, 1989, Monroe filed a motion for summary judgment, and National responded with an opposition and countermotion for summary judgment. On October 12, the district court denied Monroe's motion, granted National's countermotion, and dismissed Monroe's second amended complaint. Monroe subsequently filed a motion to vacate the judgment, Fed. R. Civ. P. 59(e), objecting not only to the grant of summary judgment to National, but also to the court's sua sponte dismissal of the entire action, which, of course, dismissed the claims against Sun as well. The district court denied the motion to vacate on November 22, and Monroe filed a timely appeal. We have jurisdiction pursuant to 28 U.S.C. § 1291 (1988).

DISCUSSION

Because the district court considered matters outside the pleadings in dismissing Monroe's complaint, we treat its order as a grant of summary judgment in favor of both defendants. See Fed. R. Civ. P. 12(b). Our standard of review is de novo. Ashton v. Cory, 780 F.2d 816, 818 (9th Cir. 1986). We must consider whether, viewing the evidence in the light most favorable to Monroe, there are any genuine issues of material fact, and whether the district court correctly applied the relevant law. Id. We also review de novo the district court's interpretation of the law of Nevada, which governs this diversity action. Salve Regina College v. Russell, 111 S. Ct. 1217 (1991).

Only one of Monroe's three claims is directed at National, the claim for wrongful release of escrow funds. Monroe argues that National should not have released the $35,000 to Sun because, first, Sun failed to comply with the Escrow Agreement, and, second, Sun and Monroe had given National contradictory instructions on how to proceed. The district court granted summary judgment to National on the grounds that the Escrow Agreement obligated Sun only to file--not to record--the parcel map within the 60-day period and that Sun had fulfilled that obligation.

We first consider the pertinent clauses of the Escrow Agreement, sections 1.02 and 1.03. They read in relevant part:

Section 1.02. Filing of Parcel Map. Seller shall have a period of sixty (60) days from the date of this Agreement to attempt to file the Parcel Map in the appropriate public records of Clark County, Nevada.... In the event that Seller files the Parcel Map in the appropriate public records of Clark County, Nevada prior to the end of such sixty (60) day period, then in such event the Escrow Agent shall disburse the Escrow Sum (together with accrued interest thereon) to the Seller.

Section 1.03. Failure of Seller to File Parcel Map. In the event that Seller has failed to file or caused to be filed the Parcel Map in the appropriate public records of Clark County, Nevada on or before the end of the aforementioned sixty (60) day period, then in such event, the Escrow Agent shall disburse the Escrow Sum (excluding interest thereon, which interest amount shall be disbursed to Seller) to Buyer, in which event Seller shall be released from any further obligations with respect to filing the Parcel Map.

Monroe contends that the phrase "file in the appropriate public records" obligated Sun to obtain the map's recordation before the expiration of the 60-day period. The district court rejected this contention as contrary to the plain language of the Escrow Agreement.

We agree with the district court. The Escrow Agreement is replete with references to "filing" the map. Nowhere does it state that Sun must "record" the map. Indeed, it would be impossible for Sun to fulfill an obligation to record the map; that is the very job that is entrusted to the County Recorder's Office, as its name reflects. The power to record a parcel map rests solely with that Office, and individuals are not empowered to go behind the counter of the County Recorder's Office to record their own maps. The Escrow Agreement's use of the word "file" reflects this reality. Monroe's tortured reading of the term does not.

Monroe argues further that the district court's reading focuses myopically on the word "file", while neglecting the accompanying phrase "in the appropriate public records". This argument is specious. The phrase describes where the map is to be filed; it imposes no duty, either explicitly or implicitly, to record. The presence of the noun "records" within five words of the verb "file" does not transform that verb into "record". The Escrow Agreement is unambiguous: Sun was required to file--not record--the parcel map within the 60-day period.¹ 

We also reject Monroe's position that two Nevada statutes require us to adopt its construction of the Escrow Agreement. Monroe contends that the agreement necessarily incorporates Nevada statutory law requiring the filing and recordation of parcel maps under certain situations. The first statute to which Monroe refers, Nev.Rev.Stat. Sec. 278.461, does not further its argument, as the statute employs language nearly identical to that used in the Escrow Agreement. Section 278.461 requires a person proposing to divide land for transfer or development into four or fewer lots to "file a parcel map in the office of the county recorder." As is true of the Escrow Agreement, the statute says nothing about requiring a party to record the map.

The other statute, Nev.Rev.Stat. Sec. 278.590, makes it "unlawful for any person to contract to sell, to sell or to transfer any subdivision or any part thereof ... until the required map thereof ... has been recorded in the office of the recorder of the [appropriate] county...." Monroe claims that the Escrow Agreement was intended to ensure compliance with section 278.590, and that the agreement therefore should be read to have required Sun to accomplish the recordation of the parcel map before the 60-day deadline. We disagree. Assuming, arguendo, that this statute was implicated in the present transaction--and we express no view on this question--it was violated when escrow closed and the deed of sale was recorded on May 19, 1988, well before the 60-day deadline and with Monroe's full complicity. Thus, if the Escrow Agreement was designed to facilitate belated compliance with section 278.590, the 60-day deadline was arbitrary and indicates nothing about whether it was filing or recordation that had to be accomplished before that date. Any intention the parties had to fulfill the requirements of section 278.590 is simply irrelevant to our conclusion that the Escrow Agreement unambiguously obligated Sun only to file the parcel map within the 60-day period.

Turning to the factual record, we also agree with the district court's view that Monroe has established no genuine issue of material fact as to the date on which Sun filed the map. According to the deposition testimony of two Sun principals, the map was filed on July 12, six days before the expiration of the 60-day period. This testimony was uncontroverted. Even on appeal, Monroe points to no contrary evidence. The district court was correct in concluding that Sun fulfilled its obligations under the Escrow Agreement.

As escrow agent, National was "required to conduct [its] affairs with scrupulous honesty, skill and diligence" and to "strictly comply with the terms of the escrow agreement...." Broussard v. Hill, 682 P.2d 1376, 1378, 100 Nev. 325 (1984). The terms of the Escrow Agreement called on National to release the $35,000 to Sun if and when Sun complied with its obligation to file the parcel map in a timely fashion. Sun fulfilled its duty. National's release of the funds to Sun therefore constituted diligent compliance with the terms of the Escrow Agreement. Indeed, had National followed the instructions contained in Monroe's last-ditch fax and sent the $35,000 to Monroe, National would have violated its duties and the terms of the Escrow Agreement. Strict compliance with that agreement required National to release the funds to Sun. The district court correctly granted summary judgment to National.

Although Sun made no appearance after its answer to Monroe's original complaint, the district court dismissed Monroe's entire action and denied its subsequent motion to vacate the judgment. Monroe argues that these rulings were improper because Sun never filed an answer to its amended compliants, which included a cause of action not asserted in the original complaint, and never filed any motion for summary judgment or dismissal. Monroe contends that the district court's sua sponte dismissal of its entire case precluded it from presenting arguments and evidence in support of its claims against Sun.

Though the district court did not explicate its reasons for dismissing Monroe's entire action, it is clear that the underlying factual basis for all of Monroe's claims is the same: namely, the alleged failure of Sun to comply with the terms of the Escrow Agreement. Our circuit has established that " [a] District Court may properly on its own motion dismiss an action as to defendants who have not moved to dismiss where such defendants are in a position similar to that of moving defendants or where claims against such defendants are integrally related." Silverton v. Department of Treasury, 644 F.2d 1341, 1345 (9th Cir.), cert. denied sub nom. Silverton v. Regan, 454 U.S. 895 (1981). We consider the two claims against Sun in turn.

Certainly the claim against Sun for breach of the Escrow Agreement is integrally related to its claim against National. The determination that National properly disbursed the $35,000 to Sun, because Sun had complied with the terms of the Escrow Agreement, necessarily defeats the claim against Sun as well. Monroe had an opportunity to present evidence to counter the deposition testimony that Sun filed the map on July 12; Monroe simply failed to take advantage of that opportunity.

The second claim against Sun was for breach of the Earnest Money Contract. Again invoking Nev.Rev.Stat. Sec. 278.590, Monroe contends that Sun breached its representation that neither the execution of the Earnest Money Contract nor the consummation of the transaction "will result in a violation of any applicable law ... affecting Seller." Article VII(g). Monroe argues that Sun breached this representation by failing to record the parcel map prior to the execution of the Earnest Money Contract. However, Sun cured any such breach by subsequently filing the parcel map within the 60-day period established by the parties to avoid delaying the consummation of the transaction. While, as Monroe correctly notes, the parties lack the power to negate the statutory recordation requirement, Monroe's claim is predicated not directly on the alleged violation of the statute, but on Sun's representation that their transaction would not violate applicable law. By drafting and entering into the subsequent Escrow Agreement, and thereby seeking to avoid delaying the deal, Monroe permitted Sun to cure its breach. By filing the map within the 60-day time period, Sun did exactly that. In sum, the fate of Monroe's second claim against Sun is also inextricably linked to that of Monroe's claim against National. As the latter claim falls, so does the former.

Even if Monroe were permitted to go forward on its claims against Sun, Monroe could not succeed on those claims for the simple reason that Sun fully complied with the Escrow Agreement. Under such circumstances--i.e., where "the claimant cannot possibly win relief"--it is entirely proper for the trial court to dismiss the claimant's action sua sponte. See Omar v. Sea-Land Service, Inc., 813 F.2d 986, 991 (9th Cir. 1987). The district court did not err in applying that rule in this case.

The district court is AFFIRMED.