Eagle Spe Nv I, Inc., v. Kiley Ranch Communities, et al, No. 3:2012cv00245 - Document 118 (D. Nev. 2016)

Court Description: ORDER granting 108 Motion for Summary Judgment; dismissing 24 / 27 Counterclaim. Signed by Judge Robert C. Jones on 1/25/2016. (Copies have been distributed pursuant to the NEF - KR)
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Eagle Spe Nv I, Inc., v. Kiley Ranch Communities, et al Doc. 118 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF NEVADA 8 EAGLE SPE NV I, INC., 13 ) ) ) ) ) ) ) ) ) ) 14 This case arises out of the default of four commercial loans. Pending before the Court is 15 a Motion for Summary Judgment (ECF No. 108). For the reasons given herein, the Court grants 16 the motion and dismisses the Counterclaim (ECF Nos. 24, 27). 17 I. 9 Plaintiff, 10 vs. 11 KILEY RANCH COMMUNITIES et al., 12 Defendants. 18 3:12-CV-00245-RCJ-WGC 2:12-cv-00245-RCJ-WGC ORDER FACTS AND PROCEDURAL HISTORY Between April 2007 and February 2008, non-party Colonial Bank gave Defendant Kiley 19 Ranch Communities (“Kiley Ranch”) four loans totaling $45 million (the “Loans”) in order to 20 build Kiley Ranch North (the “Development”) in Sparks, Nevada. (See Am. Compl. ¶ 14, June 7, 21 2012, ECF No. 5). Each of the Loans was made via its own promissory note and was secured by 22 a Common Deed of Trust (the “CDOT”) against the Development. (Id. ¶ 15). The Loans were 23 further secured by separate guaranties (the “Guaranties”), all of which were signed by Defendants 24 Matthew N. Kiley, individually and as trustee of the Matthew N. Kiley Trust; Megan L. Kiley, 25 individually and as trustee of the Megan L. Kiley Trust; L. David Kiley, as trustee of the Dockets.Justia.com 1 Matthew N. Kiley Trust and as trustee of the Megan L. Kiley Trust; and Michael and Kellee 2 Kiley, both individually and as trustees of the Michael P. Kiley and Kellee Kiley Living Trust 3 Instrument (collectively, “Guarantors”). (See id. ¶¶ 4–9, 16).1 4 Repayment on each of the Loans was originally due within one year, but Colonial Bank 5 granted Kiley Ranch three extensions on the $20 million, $2 million, and $13 million loans and 6 one extension on the $10 million loan via separate Loan Modifications. (Id. ¶ 17).2 When the last 7 of the Loans matured on July 20, 2009, Kiley Ranch owed Colonial Bank $41,023,667.99 under 8 the Loans. (Id. ¶ 18). 9 On August 14, 2009, the FDIC put Colonial Bank into receivership after the State 10 Banking Department of the State of Alabama closed it. (Id. ¶ 21). The FDIC transferred the 11 rights to the Loans to non-party BB&T the same day, recording an “Assignment of Security 12 Instruments, Notes and Other Loan Documents” (the “FDIC Assignment”) in Washoe County. 13 (Id. ¶ 22).3 14 On September 14, 2009, counsel for BB&T sent Kiley Ranch and Guarantors demand 15 letters as to each of the Loans. (Id. ¶ 19).4 On March 2, 2010, after Kiley Ranch and Guarantors 16 refused to honor the Notes and Guaranties, BB&T executed a Notice of Default and Election to 17 Sell (the “NOD”), which it recorded in Washoe County on March 4, 2010. (Id. ¶¶ 24–25).5 On 18 July 15, 2010, the trustee under the CDOT, non-party Western Title Co., noticed a trustee’s sale 19 20 1 21 22 The Loan Agreements are adduced as Exhibits 1–4 to the Amended Complaint (“AC”); the promissory notes (the “Notes”) are adduced as Exhibits 5–8; the CDOT and modifications thereto are adduced as Exhibits 9–11; and the Guaranties are adduced as Exhibits 12–15. 2 The Loan Modifications are adduced as Exhibits 16–25 to the AC. 3 The FDIC Assignment is adduced as Exhibit 30 to the AC. 4 23 The demand letters are adduced as Exhibits 26–29 of the AC. 5 The NOD is adduced as Exhibit 31 to the AC. 24 25 Page 2 of 7 1 for August 12, 2010 via a Notice of Trustee’s Sale (the “NOS”). (Id. ¶ 26).6 In August 2010, 2 however, before either the trustee’s sale or the effective date of Nevada Revised Statutes 3 (“NRS”) section 40.459(1)(c), BB&T assigned its rights to the Notes, CDOT, Guaranties, and 4 other loan documents to Plaintiff Eagle SPE NV I, Inc. (“Eagle”) via an Assignment of Deed of 5 Trust (the “BB&T Assignment”), which it recorded in Washoe County. (See id. ¶ 27).7 The 6 Development was eventually sold to non-party Rising Tides LLC via trustee’s sale on November 7 8, 2011 for $9.8 million, after NRS section 40.459(1)(c) had taken effect. (See id. ¶ 28).8 The 8 fair market value of the Development on the date of the trustee’s sale was approximately $10.5 9 million, (id. ¶ 30), leaving a a deficiency of approximately $35,682,908.60, (id. ¶ 31). 10 Plaintiff sued Defendants in this Court for: (1) Deficiency (against Kiley Ranch); (2) 11 Breach of Guaranty (against Guarantors); and (3) Breach of the Implied Covenant of Good Faith 12 and Fair Dealing (against Guarantors). Defendants included with their Answer counterclaims 13 for: (1) Breach of Contract; (2) Breach of the Implied Covenant of Good Faith and Fair Dealing; 14 (3) Intentional Interference with Prospective Economic Advantage; and (4) Declaratory 15 Judgment. 16 Plaintiff moved to dismiss certain counterclaims and affirmative defenses as precluded by 17 a previous state court action. Plaintiff also moved to dismiss Defendants’ affirmative defense 18 and counterclaim under NRS section 40.459(1)(c), arguing that it did not apply retroactively to 19 the Loans. Defendants asked the Court to certify the latter issue to the Nevada Supreme Court or 20 at least stay the case until the Nevada Supreme Court ruled in two pending consolidated appeals 21 (Sandpointe Apartments, LLC v. Dist. Ct., No. 59507 and Nielsen v. Dist. Ct., No. 59823) that 22 were expected to determine the issue or at least inform a resolution. The Court denied the 23 6 The NOS is adduced as Exhibit 32 to the AC. 7 The BB&T Assignment is adduced as Exhibit 33 to the AC. 8 The Trustee’s Deed is adduced as Exhibit 34 to the AC. 24 25 Page 3 of 7 1 motions to dismiss, without prejudice, and granted the motion to stay. The Nevada Supreme 2 Court later ruled on the merits in Sandpointe and denied the writ petition in Nielsen, and Plaintiff 3 filed a new motion to dismiss the counterclaim under NRS section 40.459(1)(c) and strike the 4 related affirmative defense under NRS section 40.459(1)(c). The Court granted that motion, 5 ruling that the statute did not apply retroactively to pre-enactment assignments, and that if it did 6 it would violate the Contract Clause in the present case. Defendants moved to dismiss for lack of 7 subject matter jurisdiction, and the Court denied the motion. Plaintiff has moved for summary 8 judgment against Defendants’ remaining three counterclaims. 9 II. 10 LEGAL STANDARDS A court must grant summary judgment when “the movant shows that there is no genuine 11 dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. 12 Civ. P. 56(a). Material facts are those which may affect the outcome of the case. See Anderson v. 13 Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there 14 is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. See id. A 15 principal purpose of summary judgment is “to isolate and dispose of factually unsupported 16 claims.” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986). In determining summary 17 judgment, a court uses a burden-shifting scheme: 18 20 When the party moving for summary judgment would bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving party has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case. 21 C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations 22 and internal quotation marks omitted). In contrast, when the nonmoving party bears the burden 23 of proving the claim or defense, the moving party can meet its burden in two ways: (1) by 24 presenting evidence to negate an essential element of the nonmoving party’s case; or (2) by 25 demonstrating that the nonmoving party failed to make a showing sufficient to establish an 19 Page 4 of 7 1 element essential to that party’s case on which that party will bear the burden of proof at trial. 2 See Celotex Corp., 477 U.S. at 323–24. If the moving party fails to meet its initial burden, 3 summary judgment must be denied and the court need not consider the nonmoving party’s 4 evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970). 5 If the moving party meets its initial burden, the burden then shifts to the opposing party to 6 establish a genuine issue of material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 7 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the opposing party 8 need not establish a material issue of fact conclusively in its favor. It is sufficient that “the 9 claimed factual dispute be shown to require a jury or judge to resolve the parties’ differing 10 versions of the truth at trial.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 11 626, 631 (9th Cir. 1987). In other words, the nonmoving party cannot avoid summary judgment 12 by relying solely on conclusory allegations unsupported by facts. See Taylor v. List, 880 F.2d 13 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and 14 allegations of the pleadings and set forth specific facts by producing competent evidence that 15 shows a genuine issue for trial. See Fed. R. Civ. P. 56(e); Celotex Corp., 477 U.S. at 324. 16 At the summary judgment stage, a court’s function is not to weigh the evidence and 17 determine the truth, but to determine whether there is a genuine issue for trial. See Anderson, 477 18 U.S. at 249. The evidence of the nonmovant is “to be believed, and all justifiable inferences are 19 to be drawn in his favor.” Id. at 255. But if the evidence of the nonmoving party is merely 20 colorable or is not significantly probative, summary judgment may be granted. See id. at 249–50. 21 III. ANALYSIS 22 Plaintiff first argues that the counterclaims for breach of contract, breach of the implied 23 covenant of good faith and fair dealing, and intentional interference with prospective economic 24 advantage (“IIPEA”) should be dismissed as precluded because Kiley Ranch brought those 25 claims against Plaintiff’s predecessor-in-interest, BB&T, in state court, and the state court Page 5 of 7 1 entered a final judgment against Kiley Ranch on those claims. The first amended complaint in 2 the state court case, No. CV09-02753 (Second Judicial District Court, Washoe County, Nevada) 3 includes claims for breach of contract, contractual bad faith, accounting, and declaratory relief. 4 (See First Am. Compl. in Case No. CV09-02753, ECF No. 109-1). The state court granted 5 summary judgment on those claims. (See Order in Case No. CV09-02753, ECF No. 109-5). The 6 allegations in the Counterclaim are based on the same facts as the allegations in the first amended 7 complaint in the state court case, i.e., refusal to make further loan disbursements or to honor a 8 “Set-Aside Agreement.” (Compare Answer & Countercl. 5–13, ECF No. 27, with See First Am. 9 Compl. in Case No. CV09-02753 at 2–8, ECF No. 109-1). 10 Neither the first amended complaint nor the order addresses any IIPEA claim by name; 11 however, it is clear the issues upon which that claim is based are precluded, as well. In the 12 Counterclaim, Defendants argue that Plaintiff’s predecessor-in-interest interfered with the 13 prospective sale of both severable water rights on the Development and the Development itself. 14 But the state court explicitly ruled that Plaintiff’s predecessor-in-interest did not act wrongfully 15 in refusing to permit the sale of water rights on the Development, because it had the contractual 16 discretion whether to approve or such a sale. Kiley Ranch had presented that issue as one of 17 several bases for its breach of contract and contractual bad faith claims. The issue is therefore 18 precluded, which makes an IIPEA claim based on the thwarted water rights sale impossible. Nor 19 can such a claim succeed on the theory that Plaintiff’s predecessor-in-interest wrongfully failed 20 to disburse certain moneys, because the state court has already ruled that those refusals were not 21 wrongful but were within the lender’s contractual discretion. 22 Plaintiff has met its initial burden on summary judgment to present evidence that would 23 entitle it to a directed verdict if the evidence went uncontroverted at trial. Defendants have 24 responded by agreeing to the dismissal of their Counterclaims. 25 /// Page 6 of 7 1 2 3 4 5 CONCLUSION IT IS HEREBY ORDERED that the Motion for Summary Judgment (ECF No. 108) is GRANTED and the Counterclaim (ECF Nos. 24, 27) is DISMISSED. IT IS SO ORDERED. Dated thisthis 25th day of January, 2015. DATED 28th day of December, 2016. 6 7 _____________________________________ ROBERT C. JONES United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 7 of 7