Nevada Supreme Court Clarifies Enforceability of Sole-Discretion Gaming Suitability Termination Clauses and Treats Undisclosed Vendor Kickbacks as Bad Faith and Fraud

Introduction

In Seibel v. PHWLV, LLC, No. 86462 (Nev. Oct. 23, 2025), the Supreme Court of Nevada affirmed summary judgment in a high-stakes commercial dispute arising from restaurant development and operating agreements at hotel-casino properties. The case pits a group of restaurant developers and affiliates—including Rowen A. Seibel, GR BURGR LLC, Craig Green, and several related entities (some acting derivatively on behalf of DNT Acquisition, LLC)—against gaming-hospitality operators PHWLV, LLC, Desert Palace, Inc., Paris Las Vegas Operating Company, LLC, and Boardwalk Regency Corporation d/b/a Caesars Atlantic City.

The litigation was triggered after respondents discovered that Seibel had pleaded guilty to a felony tax crime and had not disclosed that conviction as required. Respondents terminated the agreements and sought declaratory relief. They later added damages claims based on an alleged vendor kickback scheme orchestrated by Seibel and Craig Green. Appellants counterclaimed for breach of contract and accounting. The district court granted summary judgment to respondents on all claims and entered judgment against appellants on their counterclaims. The Nevada Supreme Court affirmed in full.

The opinion is an important clarification for Nevada’s gaming and hospitality sector and for commercial contracting more broadly. It (1) enforces “sole judgment/sole discretion” suitability termination clauses in gaming-affiliated contracts; (2) rejects attempts to salvage post-termination financial benefits where the contracts lack clear terms and suitability has been breached; (3) confirms that undisclosed vendor kickbacks contravene the implied covenant of good faith and fair dealing and constitute fraudulent concealment; and (4) underscores strict adherence to scheduling order deadlines before amending pleadings.

Summary of the Opinion

Standard of review: The Court applied de novo review to summary judgment and contract interpretation issues.
Termination for unsuitability: The agreements expressly allowed respondents, in their “sole judgment,” to determine whether appellants satisfied suitability obligations. Seibel’s felony conviction and failure to disclose rendered him unsuitable; respondents properly terminated without any obligation to allow a cure.
No surviving obligations: Once terminated for unsuitability, respondents’ and appellants’ ongoing obligations ceased. The contracts did not guarantee post-termination financial entitlements, and any claims to profits after termination were moot.
“Agreements to agree” unenforceable: Certain provisions in the LLTQ and FERG agreement lacked material terms (timing, location, costs) and were thus unenforceable “agreements to agree.”
Damages—implied covenant breach: Evidence (emails, invoices, interrogatory answers) established that Seibel and Green pressured vendors to pay $326,046.87 in non-contractual kickbacks, violating the implied covenant of good faith and fair dealing and respondents’ ethics/compliance requirements.
Damages—fraudulent concealment: The elements of fraudulent concealment were satisfied where Seibel and Green concealed the kickback scheme, instructed vendors not to disclose it, respondents would have acted differently had they known, and damages resulted (including jeopardy to gaming licensure and vendor payments exceeding $300,000).
Amended counterclaims: The district court did not abuse its discretion by striking amended counterclaims filed after the scheduling order deadline without leave or diligence, consistent with NRCP 16 and Nutton v. Sunset Station.
Result: Judgment affirmed on all issues; the Court did not reach alternative damages theories because the good-faith and fraud rulings sufficed to support the award.

Analysis

Precedents Cited and Their Role

Bielar v. Washoe Health Sys., Inc., 129 Nev. 459, 465, 306 P.3d 360, 364 (2013) and Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029 (2005): De novo review of summary judgment; summary judgment is appropriate where no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law. The Court repeatedly applied Wood, emphasizing that appellants failed to create a genuine factual dispute, particularly on whether a felony conviction (and non-disclosure) rendered Seibel unsuitable.
Am. First Fed. Credit Union v. Soro, 131 Nev. 737, 739, 359 P.3d 105, 106 (2015): Contracts with clear, unambiguous language are enforced as written. This principle guided enforcement of the “sole judgment” suitability clause and the absence of post-termination entitlements.
Cain v. Price, 134 Nev. 193, 196, 415 P.3d 25, 29 (2018): A material breach by one party discharges the other party’s obligations. Appellants’ suitability breach discharged respondents’ ongoing duties, especially given gaming licensure responsibilities.
May v. Anderson, 121 Nev. 668, 672, 119 P.3d 1254, 1257 (2005) and City of Reno v. Silver State Flying Serv., Inc., 84 Nev. 170, 176, 438 P.2d 257, 261 (1968): A valid contract requires certain and definite material terms; an “agreement to agree” is unenforceable. Applied to invalidate LLTQ/FERG provisions that lacked basic deal terms for future projects.
Griffin v. Old Republic Ins. Co., 122 Nev. 479, 483, 133 P.3d 251, 254 (2006): Courts will not rewrite contracts to increase obligations the parties limited by design. This supported denial of post-termination financial claims not specified in the agreements.
State, Dep’t of Transp. v. Eighth Jud. Dist. Ct., 133 Nev. 549, 555, 402 P.3d 677, 683 (2017) and Nelson v. Heer, 123 Nev. 217, 226, 163 P.3d 420, 427 (2007): The implied covenant prohibits arbitrary or unfair conduct that disadvantages the other party. The hidden kickback scheme qualified as bad faith performance.
Hilton Hotels Corp. v. Butch Lewis Prods., Inc., 107 Nev. 226, 234, 808 P.2d 919, 923 (1991): Damages are available where a party performs unfaithfully to the contract’s purpose, defeating the other party’s justified expectations. This underpinned the damages award for the kickback-based covenant breach.
Leigh-Pink v. Rio Props., LLC, 138 Nev. 530, 533, 512 P.3d 322, 325–26 (2022): Elements of fraudulent concealment. The Court found each element met by undisputed evidence of concealment, materiality, intent, lack of plaintiff knowledge, different action had the truth been known, and resulting damages.
Bingham v. Zolt, 66 F.3d 553, 564 (2d Cir. 1995): A damages award can stand where one viable liability theory supports it, without reaching alternative theories. Applied to avoid additional damages analyses once good-faith and fraud sufficed.
Connell v. Carl’s Air Conditioning, 97 Nev. 436, 439, 634 P.2d 673, 675 (1981) and Nutton v. Sunset Station, Inc., 131 Nev. 279, 287–89, 357 P.3d 966, 971–73 (Ct. App. 2015): Leave to amend is discretionary; after a scheduling order, diligence is required under NRCP 16. Lack of diligence ends the inquiry. These cases supported striking amended counterclaims filed after the deadline without leave.

Legal Reasoning

1) Declaratory Relief: Suitability-Based Termination and No Surviving Obligations

The agreements obligated appellants to maintain the highest standards of honesty and integrity and to make suitability disclosures. Crucially, the contracts vested respondents with “sole judgment” to determine whether appellants met suitability standards. The Court enforced that allocation of discretion as written (Soro), emphasizing that Nevada courts do not rewrite clear contractual terms (Griffin).

Respondents terminated after learning that Seibel had pleaded guilty to a felony tax offense and failed to disclose it. The Court held that appellants’ evidence did not create a genuine dispute of material fact (Wood) over whether such a felony and its non-disclosure rendered Seibel unsuitable, especially given the gaming context and the parties’ explicit suitability requirements. Because the contracts granted respondents the unilateral right to deem unsuitability incurable, appellants had no right to “cure” the breach.

The Court further held that termination for unsuitability extinguished any ongoing obligations. Material breach by appellants discharged respondents’ duties (Cain). The agreements contained no clause promising post-termination financial entitlements in this scenario. Attempts to claim profits or continuing benefits post-termination failed, and counterclaims predicated on post-termination revenue were moot.

Finally, sections of the LLTQ and FERG agreement were invalid as “agreements to agree,” lacking definite material terms about future projects (May; Silver State Flying Serv.). Those provisions could not be used to bootstrap post-termination remedies.

2) Damages: Implied Covenant of Good Faith and Fair Dealing

The Court sustained summary judgment on the implied covenant claim. Evidence showed Seibel and Green covertly pressured respondents’ vendors to pay $326,046.87 in kickbacks. The scheme was “unauthorized under the agreements,” violated the parties’ Ethics and Compliance Program (which expressly prohibited kickbacks outside of contracts), and risked respondents’ gaming licensure—an existential concern in Nevada’s regulated gaming economy.

This conduct was the archetype of bad faith performance: it was unfaithful to the purpose of the contracts (delivering compliant, transparent, and reputable restaurant operations) and denied respondents’ justified expectations (Hilton Hotels). It also represented “arbitrary or unfair acts” disadvantaging respondents (State DOT; Nelson). Appellants’ characterization of the kickbacks as “marketing services” failed for lack of evidentiary support to create a triable issue (Wood).

3) Damages: Fraudulent Concealment

Applying Leigh-Pink, the Court found all elements established:

Concealment of a material fact: Seibel and Green did not disclose the kickback scheme and instructed vendors not to disclose payments—despite ongoing contractual duties to disclose conduct affecting suitability and gaming licensure.
Duty to disclose: Rooted in the agreements’ suitability and ethics/compliance provisions, which recognized the sensitivity of vendor relationships and potential licensure implications.
Intent to defraud and reliance: Respondents would not have permitted such a scheme; non-disclosure deprived them of the opportunity to halt or remediate the conduct, particularly given ethics prohibitions.
Damages: The vendors paid more than $300,000 in kickbacks, and the scheme jeopardized respondents’ gaming licensure status—harm the law recognizes as consequential in this regulated setting.

Because these two tort/contract claims supported the damages award, the Court did not address other asserted damages theories (Bingham).

4) Procedural Ruling: Striking Amended Counterclaims

The district court set a deadline (February 4, 2019) for amending pleadings or adding parties. Appellants filed amended counterclaims after that date without seeking leave or explaining their delay—even after one motion to amend had already been denied. Under NRCP 16, once a scheduling order is in place, “good cause” and diligence are required to amend. The Nevada Court of Appeals’ decision in Nutton instructs that if a party is not diligent, the inquiry ends. Here, the district court did not abuse its discretion (Connell; Nutton) by striking the amendments.

Impact and Practical Implications

Gaming suitability clauses carry real bite: The Court enforced “sole judgment” suitability determinations and permitted immediate termination without cure where the contract so provides. In gaming and other highly regulated industries, counterparties should expect strict adherence to suitability-related terms.
Compliance programs matter: Incorporating ethics and compliance program obligations into agreements has enforceable consequences. Contracting parties who violate such programs—especially through undisclosed kickbacks—risk liability for both covenant breach and fraud.
No windfalls post-termination: Absent explicit contractual language, parties terminated for suitability breaches cannot rely on implied entitlements to future profits or residual benefits. Courts will not supplement or rewrite agreements (Griffin).
Beware “agreements to agree”: Future-project provisions must include definite material terms (scope, timing, location, costs) to be enforceable. Vague collaboration language won’t support damages or specific performance.
Vendor relationships under scrutiny: Side arrangements with vendors—especially those involving payments outside contractual channels—invite heightened judicial skepticism in regulated sectors. Such arrangements risk regulatory exposure and litigation liability.
Litigation discipline under NRCP 16: Parties must honor scheduling orders and show diligence to amend pleadings. Silent or tardy amendments are likely to be struck.
Evidentiary rigor on summary judgment: The nonmoving party must marshal specific facts to create genuine disputes; broad characterizations (e.g., calling kickbacks “marketing services”) without factual support will not defeat summary judgment.

Complex Concepts Simplified

Suitability (gaming context): A standard requiring individuals and entities associated with gaming operations to maintain integrity, honesty, and law-abiding conduct. Unsuitability may arise from criminal convictions or undisclosed conduct that threatens licensure.
Sole discretion/judgment clause: A contract term granting one party the unilateral right to make specified determinations (here, suitability). Nevada courts enforce these when clearly stated, though the implied covenant still bars bad-faith sabotage of the contract’s purpose.
Implied covenant of good faith and fair dealing: A duty inherent in every contract that bars arbitrary or unfair conduct that deprives the other party of the benefits of the bargain. It cannot contradict express terms but polices how performance is carried out.
Fraudulent concealment: Liability arises when a party with a duty to disclose material facts intentionally withholds them to induce reliance, causing damages. Duties can arise from contracts, relationships, or special circumstances.
Agreement to agree: An unenforceable promise to negotiate future terms without sufficient specificity on material points such as price, scope, time, place, or cost allocation.
Mootness of post-termination claims: When a contract is validly terminated for material breach, claims to ongoing or future benefits can become moot if the contract provides no post-termination rights.
NRCP 15 vs. NRCP 16: While NRCP 15 favors liberal amendment, once a scheduling order issues, NRCP 16 requires diligence and good cause to amend pleadings after the deadline.

Conclusion

Seibel v. PHWLV, LLC reaffirms key Nevada principles with particular resonance in the gaming and hospitality industries. The Supreme Court enforced clear contractual allocations of risk and discretion—especially where gaming suitability is involved—refusing to imply cure rights or post-termination entitlements that the parties did not expressly bargain for. The decision also foregrounds the legal consequences of covert vendor kickbacks: such schemes can simultaneously breach the implied covenant and satisfy the elements of fraudulent concealment, especially where compliance programs and licensure obligations are contractually embedded.

Procedurally, the case is a cautionary tale about amending pleadings after scheduling order deadlines: absent diligence and leave, late amendments will be struck. Collectively, the opinion underscores a consistent throughline in Nevada law: courts will enforce unambiguous contracts as written, police bad-faith performance that defeats justified expectations, and protect the integrity of gaming licensure through robust application of suitability concepts and compliance obligations.