The opinion of the court was delivered by: United States District Judge Robert C. Jones
This case arises out of a default on a commercial loan. Plaintiff has filed an Emergency Motion to Appoint Receiver (ECF No. 17). Defendants have filed a Motion to Dismiss (ECF No. 18). For the reasons given herein, the Court denies the emergency motion to appoint a
in part, and denies the motion to dismiss. The Court will hold a hearing to determine a receiver is warranted.
FACTS AND PROCEDURAL HISTORY
On or about October 4, 2007, Plaintiff Bank of America, N.A. made a commercial loan to Defendant MPLDP, LLC in the amount of $1.7 million to purchase a 14,170 square-foot, multi-tenant, commercial building located at 2715 Argent Ave., Elko, NV 89801 (the "Property"). (Compl. ¶¶ 2, 13--14, Feb. 7, 2013, ECF No. 1; Loan Agreement § 1.1, Oct. 4, 2007, ECF No. 2, loan was secured by a deed of trust, assignment of rents, security agreement, and ("DOT"). (Compl. ¶ 20; DOT, Oct. 4, 2007, ECF No. 2, at 19). The DOT granted MPLDP a revocable license to collect and retain the rents of the Property so long as the Loan Agreement was not in default. (Compl. ¶ 24; DOT § 3.2). The DOT includes, as its title security agreement including all tangible personal property, general intangibles, and deposit accounts. (Compl. ¶ 26; DOT § 4.1).
Upon any event of default, Plaintiff is permitted under the Loan Agreement to declare default and demand immediate full repayment. (Compl. ¶ 18; Loan Agreement § 9). Under the DOT, Plaintiff is also permitted upon any event of default to, inter alia, "in person, by agent or court-appointed receiver . . . enter, take possession of, manage and operate all or any part of the Property, and . . . collect any and all Rents . . . ." (DOT § 6.3(c)).
Furthermore, Defendant D. Patel signed two guaranties, one in his personal capacity (the "D. Patel Guaranty") and one on behalf of Defendant Patel Northeastern Nevada Cardiology PC ("PNENC") in his capacity as President (the "PNENC Guaranty"), and Defendant M. Patel also signed a guaranty in a personal capacity (the "M. Patel Guaranty"). (Compl. ¶¶ 30--33). The Guaranties are materially identical and are attached to the Complaint as Exhibits 3, 5, and 4, respectively.
Events of default under the Loan Agreement and DOT include the failure to make payments when due and the filing of a bankruptcy petition by MPLDP. (Loan Agreement §§ 9.1, 9.5). MPLDP was required to "repay the remaining principal balance plus any interest then due" on the maturity date of October 1, 2012. (Compl. ¶ 36; Loan Agreement § 1.3(b)). When MPLDP failed to do this, Plaintiff sent MPLDP a Demand Letter to MPLDP and all three guarantors, demanding immediate payment of the remaining $1547,858.57 in principal, $37.63.36 in accrued interest, $350 in administrative fees, plus $78.016 per day in interest until satisfied. (Compl. ¶ 37; Demand Letter, Oct. 22, 2012, ECF No. 2, at 63). No party has complied. (Compl. ¶ 38). MPLDP's failure to make timely payment under § 1.3(b) constitutes an default triggering the remedies described under § 6 of the DOT.
Plaintiff sued Defendants in this Court for: (1) Receivership; (2) Breach of Guaranty; and (3) Breach of the Implied Covenant of Good Faith and Fair Dealing. Plaintiff asked the Court to appoint a receiver, but the Court denied the motion, without prejudice, because no Defendant had been served. Plaintiff has now served Defendants and refiled its motion. Defendants have moved to dismiss.
Rule 66 permits receivers, to be governed by local rules. See Fed. R. Civ. P. 66. Local Rule 66-2 requires a hearing after fourteen (14) days notice to the affected party and all creditors, unless an emergency receiver is appointed under the standards of Rule 65(b) governing restraining orders. Under state law, a court may appoint a receiver after a complainant notice of breach and election to sell. Nev. Rev. Stat. § 107.100(1).
A receiver shall be appointed where it appears that personal property subject to the deed of trust is in danger of being lost, removed, materially injured or destroyed, that real property subject to the deed of trust is in danger of substantial waste or that the income therefrom is in danger of being lost, or that the property is or may become insufficient to discharge the debt which it secures. § 107.100(2); see also id. § ...