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Fnbn-Rescon I LLC v. Ritter

United States District Court, D. Nevada

March 12, 2014

FNBN-RESCON I LLC, Plaintiff,
v.
John A. Ritter, et al., Defendants.

ORDER DENYING PLAINTIFF'S MOTIONS FOR SUMMARY JUDGMENT [DOC. 42] AND TO STRIKE DEFENDANTS' SURREPLY [DOC. 53]

JENNIFER A. DORSEY, District Judge.

This breach of guaranty action involves five loans issued in the mid-2000s from private banks to several entities in connection with large-scale residential development projects in Las Vegas for which John Ritter, a Las Vegas real estate developer, signed guaranties personally and on behalf of the Mustang Trust and Focus Investment Manager, LLC, (collectively, "Defendants"). See Doc. 32.[1] RESCON, which currently holds the loans, sues Defendants for breach of these guaranties after the loans defaulted. See id. RESCON now moves for partial summary judgment on Defendants' liability for breach of these guaranties, which requires RESCON to present adequate evidence of the fair market value of the property at the time suit was commenced. Since RESCON has not satisfied this predicate step, the Court and denies the motion for summary judgment.[2]

A. Motion for Summary Judgment

1. Background

Over the course of several years, three investment entities-Ironwood Properties, LLC, Southwest Desert Entites, LLC, and PV Land Investment, LLC (collectively, "Property Investors")-acquired real estate in the Las Vegas area to be developed into two masterplanned residential communities: Kyle Canyon and Stonewater. Doc. 44-1 at 2, 4. To facilitate these land purchases, Property Investors took out the following loans from First National Bank of Nevada, LLC and First National Capital LLC:

(1) On September 27, 2004, First National loaned Ironwood Properties, LLC $4, 869.045.00. Doc. 43-1 at 3. The loan was secured by, inter alia, a deed of trust delivered to First National on September 27, 2004, and recorded in Clark County on October 12, 2004, which provided a first priority lien on the "Ironwood Property." Id. at 4. Ritter, both personally and as a Trustee of the Mustang Trust, delivered to First National Commercial Guaranties promising repayment of all amounts on the Ironwood Loan, as well as all performance thereto. Id. Both guarantees provided for a waiver of Nevada's "one action" rule. Doc. 43-1 at 14, 17. The FDIC was appointed receiver for First Nevada on July 25, 2008; Ironwood defaulted on its obligations at an unspecified time thereafter. Id. at 4-5.

(2) On August 1, 2005, First National loaned Southwest Desert Equities, LLC $11.9 million. Doc. 43-1 at 5. The loan was secured by, inter alia, a Deed of Trust with Assignment of Rents "executed and delivered by Ironwood" on July 13, 2005, and recorded on August 1, 2005, which provided a first priority lien over the "Southwest Desert Property 1." Id. at 5-6. Also on August 1, 2005, Ritter executed and delivered to First Nevada a Guaranty promising repayment of all amounts on the Southwest Desert Property 1 loan, and all performance thereunder. Id. at 7. The guaranty contains a waiver of Nevada's "one action" rule. Doc. 43-1 at 26. Southwest defaulted on its obligations at an unspecified time thereafter. Id.

(3) On December 12, 2005, First National loaned Southwest $1.6 million. Doc. 43-1 at 6. The loan was secured by, inter alia, a Short Form Deed of Trust and Assignment of Rents. Id. at 6. Also on December 12, 2005, Ritter executed and delivered a guaranty promising repayment of all amounts on the Southwest Desert Property 2 loan, and performance thereunder. Id. at 7. The guaranty contains a waiver of Nevada's "one action" rule. Id. at 31. Southwest defaulted on its obligations at an unspecified time thereafter. Id. at 7-8.

(4) On March 28, 2007, First National Capital, LLC, made two loans (Note 1 and Note 2) to PV Land Investments, LLC in the aggregate amount of $18.5 million. Doc. 43-1 at 8. The loan was secured by, inter alia, a Deed of Trust with and Security Agreement with Assignment of Rents and Fixture Filing executed by PV Land on March 28, 2007, and recorded on March 30, 2007, which provided a first priority lien over the "PV Land Property." Id. at 9. Also on March 28, 2007, Ritter, personally as Trustee of the Mustang Trust and as Manager of Focus Investment Manager, LLC, executed and delivered to First National a guaranty promising repayment of all amounts on the PV Land Property loans, and all performance thereof. Id. at 38, 52, 66. These guaranties contain a waiver of Nevada's "one action" rule. Doc. 43-1 at 38, 52, 66. First National Capital subsequently sold its entire interest in these instruments to First National, and PV Land defaulted on its obligations at an unspecified time thereafter. Id. at 9.

Starting in 2008, the Focus entities came under significant financial pressure as a result of the economic downturn. Doc. 44-1 at 14. In early-to-mid 2008, Ritter contacted First Nevada representatives and informed them that the loans would not be paid when due, but that he was open to either (1) restructuring the loans, (2) foreclosing on the respective properties, or (3) simply relinquishing the properties to First Nevada in satisfaction of the loans. Id. First National claimed that due to regulatory scrutiny it would be unable to take any of these courses of action; however, it would be willing to extend the loans. Id. at 15. On May 19, 2008, Ironwood and First National entered into an agreement extending the maturity date of the loan to April 27, 2009. Doc. 44-1 at 17.[3] Also on May 19, 2008, PV Land, Southwest Desert, and JV Properties agreed to a loan extension date for an unspecified time with First National, for which $1, 279, 198.00 was paid. Doc. 44-2 at 1-6.

On July 25, 2008, the Office of the Comptroller of the Currency ("OCC") closed First National and appointed the FDIC as receiver, took over the operations of the loan issuers, and succeeded to their interests under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. § § 1821 ("FIRREA"). See Docs. 43-1 at 4; 44-2 at 19. On February 2, 2009, the FDIC formed FNBN-RESCON and transferred "all of its right title and interest" in each of the loans to this new entity. Doc. 43-1 at 5, 7, 10. On February 5, 2009, Stearns SPV I, LLC, a private company, purchased and acquired from the FDIC a 100% membership interest in RESCON. Id.

2. Discussion

Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law."[4] When considering the propriety of summary judgment, the court views all facts and draws all inferences in the light most favorable to the nonmoving party.[5] If reasonable minds could differ on the material facts at issue, summary judgment is not appropriate because the purpose of summary judgment is to avoid unnecessary trials when the facts are undisputed.[6]

Once the moving party satisfies Rule 56 by demonstrating the absence of any genuine issue of material fact, the burden shifts to the party resisting summary judgment to "set forth specific facts showing that there is a genuine issue for trial."[7] The nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts;"[8] it "must produce specific evidence, through affidavits or admissible discovery material, to show that" there is a sufficient evidentiary basis on which a reasonable fact finder could ...


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