Douglas Nurock v. Pelican Eyes Holding Co., 683 F. App'x 615

Background

Ted and Laura Key purchased an unfinished residence in Pelican Eyes Resort, Nicaragua; the developer became insolvent and PEHC later acquired the resort.
The Keys and Pelican Parties settled claims (including federal securities and state fraud/contract claims); the Keys received an option to buy a larger completed house, Casa Alegria, conditioned on tendering 1,344,389.38 class B PEHC shares by April 6, 2015.
The settlement allowed the Keys to buy needed shares from third-party shareholders or from PEHC at $0.10 per share; the agreement required parties to “cooperate as may be necessary and/or desirable to effectuate” the settlement and treated third-party share purchases as private transactions that parties must not “hinder.”
The Keys attempted to acquire shares from other shareholders and communicated with PEHC board members about logistics; shortly before the deadline, a board member stopped responding and PEHC later said the deadline had passed.
The Keys moved to enforce the settlement, alleging Pelican Parties thwarted their ability to tender the requisite shares and breached the cooperation clause; the magistrate judge denied relief, finding the Keys had not obtained enough shares by the deadline and the Pelican Parties’ conduct was not the cause.
The Keys appealed; the Ninth Circuit affirmed, concluding factual findings were not clearly erroneous and that the contract did not require affirmative assistance assembling third-party shares.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Pelican Parties prevented tender of required shares, excusing condition precedent	Keys: Pelican Parties’ lack of communication thwarted their ability to tender and thus excused the condition	Pelican Parties: Keys simply failed to acquire enough shares; Pelican conduct did not cause nonperformance	Court: No breach; Keys did not have required shares and Pelican conduct was not the cause (factual finding not clearly erroneous)
Whether cooperation clause required Pelican Parties to facilitate logistics of third-party share transfers	Keys: Clause obliged Pelican to explain and help effectuate transfers	Pelican Parties: Clause did not obligate affirmative assistance; third-party purchases were private transactions only protected from being hindered	Court: Contract did not require Pelican to help assemble shares; no breach of cooperation clause
Whether equity should compel transfer of Casa Alegria or extension of deadline	Keys: Pelican’s conduct warrants equitable relief (specific performance or extension)	Pelican Parties: Both sides to blame; conduct not sufficiently egregious to require equity	Court: Denial of equitable relief not an abuse of discretion; no extraordinary grounds for specific performance or extension
Whether Keys suffered a forfeiture requiring relief (ability to cure)	Keys: Forfeiture principles entitle buyer to cure and avoid loss	Pelican Parties: Keys did not pay Pelican; any prior claims were released in settlement; no unjust enrichment	Court: Forfeiture cases inapposite; Keys forfeited option by failing to exercise on time; no equitable shift of loss to Pelican

Key Cases Cited

L.K. Comstock & Co. v. United Eng’rs & Constructors Inc., 880 F.2d 219 (9th Cir. 1989) (standards for reviewing factual findings and contract interpretation)
Dollar Sys., Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 165 (9th Cir. 1989) (standard of review for denial of equitable relief)
City of Hollister v. Monterey Ins. Co., 81 Cal. Rptr. 3d 72 (Ct. App. 2008) (prevention of condition precedent excuses performance)
Petersen v. Hartell, 707 P.2d 232 (Cal. 1985) (buyer’s right to cure under installment land contracts discussed)
Holiday Inns of Am., Inc. v. Knight, 450 P.2d 42 (Cal. 1969) (time for exercising an option is enforceable; courts will not extend contractual option periods)
Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375 (1994) (federal courts’ enforcement of settlement agreements and retained jurisdiction)