SC2006, LLC v. Arbor Agency Lending, LLC, No. 2:2018cv02003 - Document 57 (D. Nev. 2021)
Court Description: ORDER granting 55 Motion for Leave to File Document. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that: Final judgment is entered in favor of plaintiff SC2006 against defendant Arbor on plaintiff's breach-of-contract claim and defendant 9;s "attorneys' fees" counterclaim, for $0.00. Final judgment is entered in favor of the defendant and against plaintiff SC2006 on plaintiff's claims for breach of the implied covenant, promissory estoppel, negligent mis representation, bad-faith lending practices, and "alter ego." The Clerk of Court is directed to ENTER JUDGMENT accordingly and CLOSE THIS CASE. Signed by Judge Jennifer A. Dorsey on 7/1/2021. (Copies have been distributed pursuant to the NEF - HAM)
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SC2006, LLC v. Arbor Agency Lending, LLC Doc. 57 1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 SC2006, LLC, 4 Case No.: 2:18-cv-02003-JAD-BNW Plaintiff 5 v. 6 Arbor Agency Lending, LLC, et al., 7 Order Supplementing Findings of Fact and Conclusions of Law, Denying Damages Award, and Granting Motion for Leave to File Surreply Defendants [ECF No. 55] 8 9 Apartment-complex owner SC2006, LLC sues lender Arbor Agency Lending, LLC (and 10 its alter-ego companies, Arbor Commercial Funding I, LLC and Arbor Realty Trust) because it 11 failed to provide SC2006 with a mortgage loan in time to pay off its debts. 1 Asserting that the 12 parties had a contract and that Arbor had bound itself to issue the loan, SC2006 sought damages 13 for Arbor’s breach of contract, breach of the implied covenant of good faith and fair dealing, 14 promissory estoppel, bad-faith lending practices, and negligent misrepresentation. On April 7, 15 2021, I entered judgment in favor of SC2006 on one of its breach-of-contract theories as to 16 liability only and Arbor’s attorneys’ fees counterclaim, and I entered judgment in favor of Arbor 17 on the remaining claims. 2 I also directed the parties to brief the issue of damages because 18 SC2006 had failed to explain what damages, if any, it incurred from Arbor’s failure to finish 19 processing the loan application. 20 21 22 23 1 ECF No. 14. 2 ECF No. 49 (findings of fact and conclusions of law). Dockets.Justia.com 1 SC2006 largely ignored that request and, instead, submitted the damages model it 2 previously provided for the bench trial. 3 But as I explained in my April 7th order, that model 3 failed to disaggregate the damages caused by Arbor’s unlawful failure to process the loan 4 application from those damages caused by Arbor’s anticipated decision not to issue SC2006 a 5 loan. Recognizing this oversight, SC2006’s overlong reply brief impliedly asks me to reconsider 6 my findings of fact and conclusions of law; find that Arbor was contractually obligated to issue it 7 a loan or, in the alternative, that Arbor breached the implied covenant of good faith and fair 8 dealing; and award it $1,077,806 in damages. 4 Arbor moves to file a surreply responding to 9 these new arguments, 5 to which SC2006 responds with more merits-based arguments. 6 Seeing 10 that good cause exists, 7 I grant Arbor’s motion and, after considering the parties’ arguments, find 11 that SC2006 has failed to prove its damages. Discussion 8 12 13 In my April 7, 2021, findings of fact and conclusions of law, I entered judgment in favor 14 of SC2006 on its breach-of-contract claim and requested that the parties brief a narrow issue: 15 what damages, if any, “spring[] from the breach of the promise to process the application, rather 16 17 18 19 20 3 ECF No. 50 (SC2006’s opening brief). 4 ECF No. 54. 5 ECF No. 55. 6 ECF No. 56. 7 L.R. 7-2(g). Courts in this district routinely interpret Local Rule 7-2 to allow the filing of 21 surreplies by leave of court to “address new matters raised in a reply to which a party would otherwise be unable to respond.” Kavnick v. City of Reno, No. 3:06-CV-00058, 2008 WL 22 873085, at *1 n.1 (D. Nev. Mar. 27, 2008) (emphasis omitted); see also FNBN-RESCON I LLC v. Ritter, No. 2:11-cv-1867, 2014 WL 979930, at *6 (D. Nev. Mar. 12, 2014). 23 8 The parties are familiar with the facts of this case, so I do not repeat them here. See ECF No. 49 at 2–6. 2 1 than from denial of the funding.” 9 Under New York law, which applies here, “[c]ausation is an 2 essential element of damages in a breach of contract action; and, as in tort, a plaintiff must prove 3 that a defendant’s breach directly and proximately caused [its] damages.” 10 “Whe[n] a party has 4 failed to come forward with evidence sufficient to demonstrate damages flowing from the breach 5 alleged and relies, instead, on wholly speculative theories of damages, dismissal of the breach of 6 contract claim is in order.” 11 Damages “attributable [] to intervening causes” not substantially 7 incurred by[,] or a foreseeable consequence of[,] the defendant’s breach cannot be recovered. 12 8 The parties agree that SC2006 seeks expectation damages—which are “the amount 9 necessary to put [plaintiff] in as good a position as [it] would have been if the defendant had 10 abided by the contract.” 13 But SC2006 fails to provide evidence of the damages it incurred from 11 Arbor’s failure to process its loan application. 14 It argues instead that it is entitled to receive four 12 categories of damages: (1) $22,370 in reimbursement costs, which it incurred by applying for the 13 loan from Arbor; (2) $793,131 to “cover” two old loans that “could have been paid off [] had 14 Arbor issued the loan”; 15 (3) $50,075 to “cover” a third old loan, which it would similarly not 15 have been forced to pay “if Arbor had funded the loan as it should have”; 16 and (4) $224,100 in 16 interest for a “hard money loan” to repay default charges on the loans described in category 17 9 18 Id. at 12. 10 19 Nat’l Mkt. Share, Inc. v. Sterling Nat’l Bank, 392 F.3d 520, 525 (2d Cir. 2004). 11 Lexington 360 Assocs. v. First Union Nat’l Bank of N.C., 234 A.D.2d 187, 190 (N.Y. 1st Dep’t 1996) (citation omitted) (granting summary judgment because the plaintiff failed to advance any 20 theory of damages supported by the record showing that damages were attributable to a breach). 12 Wilder v. World of Boxing LLC, 310 F. Supp. 3d 426, 448 (S.D.N.Y. 2018). 13 22 Trans World Metals, Inc. v. Southwire Co., 769 F.2d 902, 908 (2d Cir. 1985). 14 Compare ECF No. 50 with ECF No. 46. 23 15 ECF No. 50 at 3. 16 Id. 21 3 1 two. 17 But as Arbor argues, and SC2006 explicitly concedes, 18 those latter three categories of 2 damages are exclusively tethered to Arbor’s failure to issue the loan. They are not proximately 3 or directly caused by the failure to process, and potentially deny, the loan application. So I 4 cannot award the $793,131, $50,075, or $224,100 damages requests. 5 The only category of damages ostensibly related to the breach that I found in this case is 6 the $22,370 in reimbursement costs, which Arbor argues it was not contractually obligated to 7 pay. 19 SC2006 declines to address this argument. “The best evidence of what parties to a 8 written agreement intend is what they say in their writing.” 20 Under longstanding rules of 9 contract interpretation, “[w]here the terms of a contract are clear and unambiguous, the intent of 10 the parties must be found within the four corners of the contract, giving a practical interpretation 11 to the language employed and reading the contract as a whole.” 21 The loan-application 12 agreement unambiguously states that SC2006 would pay a $20,500 application fee, against 13 which Arbor would levy certain enumerated expenses. 22 It also provides that any additional 14 “expenses incurred by Arbor” to process the loan, regardless of “whether or not the [l]oan 15 closes,” must be “remitted” to Arbor if they “exceed” the deposit amount. 23 And it implies that 16 17 17 18 Id. at 4. 18 ECF No. 54 at 7 (“[I[f Arbor had completed the loan processing . . . it would have issued the loan.”); 8 (“Therefore, if the loan had been funded, Plaintiff would not have suffered the 19 damages set forth in it’s [sic] two opening brief’s [sic] and it’s [sic] supplemental brief that the court ordered.”). 20 19 ECF No. 53 at 5. 21 20 Slamow v. Del Col, 79 N.Y.2d 1016, 1018 (Ct. App. 1992). 21 22 Ellington v. EMI Music, Inc., 24 N.Y.3d 239, 244 (Ct. App. 2014) (citing Greenfield v. Philles Recs., 98 N.Y.2d 562, 569 (Ct. App. 2002)). 23 22 ECF No. 45-2 at 3 (“The Application Fee will be used by Arbor to . . . .”). 23 Id. at 4. 4 1 any unused funds would be reimbursed to SC2006. 24 The parties agree that Arbor spent $22,370 2 in processing costs, far exceeding the deposit amount. 25 Because Arbor was not obligated to 3 return the processing costs deducted from the deposit, regardless of whether or not the loan was 4 approved, I find that SC2006 is not entitled to these damages either. 5 SC2006’s new reply-brief arguments—each of which essentially demands damages 6 because Arbor “would have issued the loan” if it “had completed the loan processing”—do not 7 persuade me otherwise. While not styled as a motion for reconsideration, SC2006’s overlong 8 reply brief seems to seek just that: it asks me to apply breach-of-contract, equitable-estoppel, 9 waiver, bad-faith, and implied-breach theories to find that “Arbor had an implied obligation to 10 fund the loan.” 26 Under Federal Rule of Civil Procedure 60, a court may “relieve a party or its 11 legal representative from a final judgment, order, or proceeding.” 27 Reconsideration motions are 12 generally appropriate when the district court is presented with newly discovered evidence or has 13 committed clear error, or there is an intervening change in controlling law. 28 But “a motion for 14 reconsideration is not an avenue to re-litigate the same issues and arguments;” 29 a party seeking 15 reconsideration must present “facts or law of a strongly convincing nature” that provide a “valid 16 reason” why reconsideration is appropriate. 30 I already considered and rejected every single one 17 18 19 24 Id. 25 ECF Nos. 50 at 11; 45-3 at 102. 26 ECF No. 54 at 7, 9, 14. 27 22 Fed. R. Civ. P. 60(b). 28 Sch. Dist. No. 1J, Multnomah Cnty., Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). 23 29 Brown v. Kinross Gold, U.S.A., 378 F. Supp. 2d 1280, 1288 (D. Nev. 2005). 30 Frasure v. United States, 256 F. Supp. 2d 1180, 1183 (D. Nev. 2003). 20 21 5 1 of SC2006’s trial arguments, 31 and the property company fails to submit new evidence, identify a 2 clear error of law in my decision, or submit intervening precedent that might warrant 3 reconsideration. 4 Even were I to address these arguments on their merits, however, I find that SC2006 has 5 failed to justify reconsideration of my April 7th order. In both its reply brief and its response to 6 Arbor’s motion for leave to file a surreply (in which the property company responds 7 substantively to Arbor’s surreply briefing), 32 SC2006 repeatedly asserts that the contract requires 8 Arbor to issue it a loan once the lender finished processing the company’s application. But 9 SC2006 fails entirely to point to a contractual provision requiring that outcome. The opposite, in 10 fact, appears to be true. The loan-application letter was not a promise to provide the loan, and it 11 noted that approval of the application would “be subject to a complete underwriting review, site 12 visit[,] and the [l]ender’s loan committee approval.” 33 SC2006 presents no evidence that the 13 application was reviewed by the loan committee, much less that it would have received 14 15 16 17 18 19 20 21 22 23 31 ECF No. 49. Though not disregarded on this basis, SC2006’s 21-page reply brief also violates this court’s local rules, which limit reply briefs to 12 pages, and improperly introduces new arguments. L.R. 7-3(b). “Local Rules are promulgated by [d]istrict [c]ourts primarily to promote the efficiency of the Court, and [] the [c]ourt has a large measure of discretion in interpreting and applying them.” Lance, Inc. v. Dewco Servs., Inc., 422 F.2d 778, 784 (9th Cir. 1970). Courts nationwide have long declined to consider arguments raised under such circumstances. FT Travel—New York, LLC v. Your Travel Ctr., Inc., 112 F. Supp. 3d 1063, 1079 (C.D. Cal. 2015) (“Courts decline to consider arguments that are raised for the first time in reply.”); Ellison Framing, Inc. v. Zurich Am. Ins. Co., 805 F. Supp. 2d 1006, 1011 n.1 (E.D. Cal. 2011) (“[T]he court typically cannot consider arguments first raised in reply.”); Dietrich v. Trek Bicycle Corp., 297 F. Supp. 2d 1122, 1128 (W.D. Wis. 2003) (“Defendants raised this argument for the first time in its reply brief. Because this argument should have been raised earlier or not at all, I will not consider it.”); Pub. Citizen Health Res. Grp. v. Nat’l Inst. of Health, 209 F. Supp. 2d 37, 44 (D.D.C. 2002) (“The Court highly disfavors parties creating new arguments at the reply stage that were not fully briefed during the litigation.”). 32 ECF No. 56. 33 ECF No. 46-1 at 2; see also ECF No. 49 at 2. 6 1 committee approval. 34 Again, the uncontroverted evidence shows otherwise: the lender’s chief 2 underwriter decided to stop processing the application because of his concerns over the property 3 company’s trustworthiness. 35 It hardly follows that, but for the decision to halt processing the 4 loan, approval of the loan was assured. And because damages must be “directly traceable to the 5 breach, not remote or the result of other intervening causes,” 36 I decline to disturb my judgment 6 order, and I find that SC2006 has failed to prove its damages. 7 Conclusion 8 IT IS THEREFORE ORDERED that defendant Arbor’s motion for leave to file a 9 surreply [ECF No. 55] is GRANTED. 10 Based on these and my prior findings of fact and conclusions of law, and with good cause 11 appearing and no reason for delay, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED 12 that: • 13 Final judgment is entered in favor of plaintiff SC2006 against defendant Arbor on 14 plaintiff’s breach-of-contract claim and defendant’s “attorneys’ fees” counterclaim, 15 for $0.00. • 16 Final judgment is entered in favor of the defendant and against plaintiff SC2006 on 17 plaintiff’s claims for breach of the implied covenant, promissory estoppel, negligent 18 misrepresentation, bad-faith lending practices, and “alter ego.” 19 34 ECF No. 45-4 at 15 (“And the underwriter would compile all of that analysis into a loan committee package that would be reviewed by the loan committee. And if approved, then it 21 would move forward to issuance of a commitment and then rate locking of the loan and then closing of the loan.”); 24 (Question: “So on the 5th, the loan committee did not take it under 22 advisement at that time and made no decision. They postponed it.” Answer: “It appears that way.”). 20 23 35 ECF Nos. 45-3 at 113; 45-4 at 4, 15. 36 Wenger v. Alidad, 256 A.D.2d 322, 323 (N.Y. 2d Dep’t 1999). 7 1 The Clerk of Court is directed to ENTER JUDGMENT accordingly and CLOSE 2 THIS CASE. 3 _______________________________ U.S. District Judge Jennifer A. Dorsey July 1, 2021 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 8
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