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Branch Banking and Trust Co. v. Sossaman & Guadalupe Plaza, LLC

United States District Court, D. Nevada

March 31, 2014

BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation, Plaintiff,
v.
SOSSAMAN & GUADALUPE PLAZA, LLC, a Nevada limited liability company, YOEL INY; NOAM SCHWARTZ; YOEL INY, Trustee of the Y&T INY FAMILY TRUST dated June 8, 1994; NOAM SCHWARTZ, Trustee of the NOAM SCHWARTZ TRUST dated August 19, 1999; D.M.S.I., LLC, a Nevada limited liability company; and DOES 1 through 10, inclusive, Defendants. SOSSAMAN & GUADALUPE PLAZA, LLC, a Nevada limited liability company, YOEL INY; NOAM SCHWARTZ; YOEL INY, Trustee of the Y&T INY FAMILY TRUST dated June 8, 1994; NOAM SCHWARTZ, Trustee of the NOAM SCHWARTZ TRUST dated August 19, 1999; and D.M.S.I., LLC, a Nevada limited liability company, Counterclaimants.

ORDER

LARRY R. HICKS, District Judge.

Before the Court is Plaintiff/Counterdefendant Branch Banking and Trust Company's ("Branch Banking") Motion to Dismiss Counterclaims. Doc. #90.[1] Defendants/Counterclaimants Sossaman & Guadalupe Plaza, LLC; Yoel Iny; Noam Schwartz; Yoel Iny, trustee of the Y&T Family Trust dated June 8, 1994; Noam Schwartz, trustee of the Noam Schwartz Trust dated August 19, 1999; and D.M.S.I., LLC (collectively "Defendants") filed a Response (Doc. #97) to which Branch Banking replied (Doc. #98).

I. Facts and Background

This action arises out of Defendants' alleged breach of a secured loan agreement. Following a judicial foreclosure sale on the real property securing the loan, Branch Banking filed the present action to obtain a deficiency judgment against Defendants. Doc. #1. On October 28, 2013, Defendants filed a Second Amended Answer and Counterclaim against Branch Banking asserting claims for breach of contract and promissory estoppel. Doc. #74. Therein, Defendants allege that they entered into an oral contract with Branch Banking, whereby representatives of Branch Banking, Oscar Bruni ("Bruni") and Robert Thomas ("Thomas"), explicitly promised that Branch Banking would "provide Defendants with adequate time and opportunity to propose and implement a real estate property action plan to address and work-out certain Colonial Bank loans (Work-out Agreement')." Id. at ¶8. In reliance thereon, Defendants claim to have "expended many, many hours and substantial money, executing tasks in furtherance of the Work-out Agreement, " and "submitted extensive financial information, documentation and proposed plan(s) to [Branch Banking]." Id. at ¶¶10-11. In return for this performance, Defendants allege that "[Branch Banking] orally agreed to forbear from enforcing certain rights under the [aforementioned loan] and otherwise refrain from foreclosing on the property securing said [l]oan." Id. at ¶12. Branch Banking allegedly "breached the Work-out Agreement by arbitrarily rejecting Defendants' proposal(s) and returning checks to Defendants which contained interest payments" and "initiating foreclosure proceedings on... the property securing [the aforementioned loan], resulting in foreclosure at liquidated values in a depressed real estate market." Id. at ¶¶13-14. On November 22, 2013, Branch Banking filed the present Motion to Dismiss Counterclaims. Doc. #90.

II. Legal Standard

Defendants seek dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. To survive a motion to dismiss for failure to state a claim, a complaint must satisfy the Federal Rule of Civil Procedure 8(a)(2) notice pleading standard. See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir. 2008). That is, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The Rule 8(a)(2) pleading standard does not require detailed factual allegations; however, a pleading that offers "labels and conclusions' or a formulaic recitation of the elements of a cause of action'" will not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

Furthermore, Rule 8(a)(2) requires a complaint to "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570). A claim has facial plausibility when the pleaded factual content allows the Court to draw the reasonable inference, based on the Court's judicial experience and common sense, that the defendant is liable for the misconduct alleged. See id. at 678-79. "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. at 678 (internal quotation marks and citation omitted).

In reviewing a motion to dismiss, the Court accepts the facts alleged in the complaint as true. Id. However, "bare assertions... amount[ing] to nothing more than a formulaic recitation of the elements of a... claim... are not entitled to an assumption of truth." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (citing Iqbal, 556 U.S. at 681) (brackets in original) (internal quotation marks omitted). The Court discounts these allegations because "they do nothing more than state a legal conclusion-even if that conclusion is cast in the form of a factual allegation." Id. (citing Iqbal, 556 U.S. at 681). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Id.

III. Discussion

A. First Cause of Action for Breach of Oral Contract

First, Branch Banking contends that Defendants' Counterclaim fails because the underlying loan documents[2] do not permit oral modifications. Specifically, the Promissory Note Secured by Deed of Trust[3] provides, in relevant part, "No waiver by Lender of any right or remedy shall be effective unless in writing and signed by Lender...." Doc. #90, Ex. 1, p. 3. Moreover, the Guarantee[4] provides, in relevant part, "No provision of this Guarantee or right granted to Lender hereunder can be waived in whole or part nor can Guarantor be released from Guarantor's obligations hereunder except by a writing duly executed by an authorized officer of Lender." Doc. #90, Ex. 2, p. 8.

"[W]hen a contract is clear on its face, it will be construed from the written language and enforced as written." Canfora v. Coast Hotels & Casinos, Inc., 121 Nev. 771, 776 (2005) (internal quotation marks and citation omitted). Here, the Court finds no ambiguity in the terms of the aforementioned loan documents. The clauses unequivocally provide that Branch Banking may not waive any of its rights or remedies under the loan agreements unless it does so in writing. Accordingly, the Court is bound to an interpretation of these terms whereby any modification affecting Branch Banking's rights or remedies shall require a writing. See id. ("[t]he court has no authority to alter the terms of an unambiguous contract"). Because any agreement to forbear enforcement of its right to foreclose on the underlying property securing the loan is, in essence, a waiver by Branch Banking of its rights and remedies under the aforementioned loan documents, the Court finds that the alleged Work-out Agreement to this effect is unenforceable as it fails to comply with the explicit writing requirement in the loan agreements. As such, Defendants breach of oral contract claim fails on this ground.

Second, Branch Banking contends that the alleged oral contract at issue is void pursuant to the Nevada Statute of Frauds, which requires a writing for "[e]very agreement that, by the terms, is not to be performed within 1 year from the making thereof." Nev. Rev. Stat. 111.220(1). The Court agrees. Only those oral agreements which are capable of being fully performed within a year from execution are not void under the Statute of Frauds. See Stanley v. A. Levy & J. Zentner Co., 60 Nev. 432, 112 P.2d 1047, 1052 (1941). The fact that performance exceeds one year does not render an agreement void where the terms therein do not indicate that it could not be performed within one year. See Atwell v. Sw. Secs., 107 Nev. 820, 820 P.2d 766, 769 (1991) (finding that verbal contract with indefinite duration was not void under Nevada's Statute of Frauds where there was nothing to indicate that it could not be fully performed within one year). Moreover, the Statute of Frauds does not encompass agreements that are "simply not likely to be performed, " or agreements that are "simply not expected to be performed, within the space of a year from the making." Stanley, 112 P.2d at 1052 (quoting Browne on the Statute of Frauds, Page 327, § 273, 4th Ed.). The statute does, however, apply to those agreements "[w]here the manifest intent and understanding of the parties, as gathered from the words used and the circumstances existing at the time [of execution], are that the contract shall not be executed within the year[.]" Stanley, 112 P.2d at 1052.

Here, it is manifest from the terms of the alleged agreement that Branch Banking could not have fully performed its obligations under the alleged agreement within one year. According to Defendants allegations, Branch Banking "agreed to forbear from enforcing certain rights under the [aforementioned loan] and otherwise refrain from foreclosing on the property securing said [l]oan." Doc. #74, ¶12. Thus, in order for Branch Banking to fully perform under the alleged agreement, it could never exercise certain rights under the loan agreement or foreclose on the property securing the loan. Because this provision plainly envisions that ...


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