United States District Court, D. Nevada
BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation, Plaintiff,
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
[Copyrighted Material Omitted]
For Branch Banking and Trust Company, Plaintiff: Jeremy J. Nork, LEAD ATTORNEY, Holland & Hart LLP, Reno, NV; Nicole E. Lovelock, LEAD ATTORNEY, Brian G. Anderson, Holland & Hart LLP, Las Vegas, NV.
For Sossaman & Guadalupe Plaza, LLC, Noam Schwartz, Trustee on behalf of Noam Schwartz Trust, Yoel Iny, Trustee on behalf of Y& T Iny Family Trust, Noam Schwartz, Yoel Iny, Defendants: E. Daniel Kidd, Kolesar & Leatham, Chtd., Las Vegas, NV; F. Christopher Austin, Weide & Miller, Ltd., Las Vegas, NV.
For D.M.S.I., LLC, Defendant: E. Daniel Kidd, Kolesar & Leatham, Chtd., Las Vegas, NV; F. Christopher Austin, Weide & Miller, Ltd., Las Vegas, NV; Jeanne Crandall, LEAD ATTORNEY, FDIC as Receiver of Colonial, N.A., Jacksonville, FL.
LARRY R. HICKS, UNITED STATES DISTRICT JUDGE.
Before the Court is Plaintiff Branch Banking and Trust Company's (" Branch Banking" ) Motion for Summary Judgment as to Liability and Application for Deficiency Judgment Hearing. Doc. #69. Defendants 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. #81), to which Branch Banking replied (Doc. #93). Defendants also filed an Objection to Evidence Submitted in Support of Branch Banking's Motion for Summary Judgment. Doc. #82. Branch Banking filed a Response (Doc. #94), to which Defendants did not reply.
Also before the Court is Defendants' Motion for Summary Judgment. Doc. #99. Branch Banking filed a Response (Doc. #107), to which Defendants replied (Doc. #111). Defendants also filed a Motion to Certify Question to the Nevada Supreme Court. Doc. #114. Branch Banking filed a Response (Doc. #116), to which Defendants replied (Doc. #117).
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. The undisputed facts are as follows. On July 28, 2006, Borrower Sossaman & Guadalupe Plaza, LLC (" Borrower" ) executed and delivered a Promissory Note Secured bye Deed of Trust to Colonial Bank, N.A. (" Colonial Bank" ), in the original amount of $3,826,000.00 (the " Note" ). Doc. #69, Ex. 1A; Doc. #99, Ex. 1. The Note was secured by a Deed of Trust and Security Agreement and Fixture Filing with Assignment of Rents (" Deed of Trust" ), dated July 28, 2006, encumbering certain real property in Maricopa County, Arizona (the " Property" ). Doc. #69, Ex. 1B; Doc. #99, Ex. 2. Also on July 28, 2006, Defendants Yoel Iny, individually and as Trustee of the Y& T Iny Family Trust; Noam Schwartz, individually and as Trustee of the Noam Schwartz Trust; and D.M.S.I., LLC (" Guarantors" ) executed and delivered to Colonial Bank a Guarantee (the " Guarantee" ). Doc. #69, Ex. 1C; Doc. #99, Ex. 3. Pursuant to the Guarantee,
the Guarantors guaranteed the payment of all indebtedness of the Borrower under the loan evidenced by the Note (the " Loan" ). Id.
On February 26, 2009, the Note was amended by an Amendment to Promissory Note Secured by Deed of Trust such that the Maturity Date on the Note was extended to May 2, 2009 (the " Amendment" ). Doc. #69, Ex. 1D; Doc. #99, Ex. 4. Also on February 26, 2009, a Modification to the Deed of Trust was executed and recorded in Maricopa County, Arizona. Doc. #99, Ex. 5. On July 19, 2009, the Note was again amended by an Amendment to Promissory Note Secured by Deed of Trust such that the Maturity Date on the Note was extended to August 2, 2009. Doc. #69, Ex. IE; Doc. #87, Ex. 6. On August 14, 2009, Colonial Bank was closed by the State Banking Department of the State of Alabama and the Federal Deposit Insurance Corporation (" FDIC" ) was named receiver in order to liquidate and distribute the assets of Colonial Bank. Doc. #69, Ex. 1F; Doc. #99, Ex. 7. On September 7, 2011, the FDIC executed an Assignment of Security Instruments, Notes and Other Loan Documents (the " Assignment" ), to be deemed effective as of August 14, 2009. Id. Pursuant to the terms of the Assignment, the FDIC assigned all rights, title, and interest in the Note, the Deed of Trust, and the Guarantee to Branch Banking. Id. The Assignment was recorded in Maricopa County, Arizona on November 4, 2011. Id.
The Borrower failed to pay the outstanding principal balance of the loan due under the Note on August 2, 2009. Doc. #93, Ex. 2 (Schwartz Depo.), 12:25-13:4. By demand letter dated August 3, 2011 (the " Demand Letter" ), Branch Banking indicated its intent to take steps to exercise its rights and remedies under the Loan on or after August 31, 2011. Doc. #67, Ex. 1G. Branch Banking alleges that the Borrower and the Guarantors failed and refused to pay the balance due under the Note. Doc. #1, ¶ 26. On December 19, 2011, Branch Banking commenced a judicial foreclosure action under the Deed of Trust by filing a Verified Complaint in the Superior Court of the County of Maricopa, Arizona. Doc. #99, Ex. 8. A Default Judgment ordering the judicial foreclosure of the Property in full or partial satisfaction of the outstanding balance due under the Loan via Sheriff's sale was entered by the Superior Court of the County of Maricopa, Arizona, on April 23, 2012. Doc. #69, Ex. 1H; Doc. #101, Ex. 12. The Sheriff of the County of Maricopa, Arizona, sold the Property on June 21, 2012, at public auction for a cash bid of $816,000.00 in partial satisfaction of the Loan. Doc. #69, Ex. 1I; Doc. #101, Ex. 13.
On October 10, 2012, Branch Banking filed a Complaint before this Court, alleging claims for deficiency, breach of guarantee, and breach of the covenant of good faith and fair dealing. Doc. #1. Branch Banking claims that there is an unpaid principal balance of $1,301,845.00 as of June 21, 2012. See id. at ¶ 30; see also Doc. #69, Ex. 1H; Doc. #101, Ex. 12.
II. Legal Standard
A. Summary Judgment
Summary judgment is appropriate only when the pleadings, depositions, answers
to interrogatories, affidavits or declarations, stipulations, admissions, and other materials in the record show that " there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In assessing a motion for summary judgment, the evidence, together with all inferences that can reasonably be drawn therefrom, must be read in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Cnty. of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir. 2001).
The moving party bears the initial burden of informing the court of the basis for its motion, along with evidence showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). On those issues for which it bears the burden of proof, the moving party must make a showing that is " sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party." Calderone v. United States, 799 F.2d 254, 259 (6th Cir. 1986); see also Idema v. Dreamworks, Inc., 162 F.Supp.2d 1129, 1141 (C.D. Cal. 2001). On an issue as to which the non-moving party has the burden of proof, however, the moving party can prevail merely by demonstrating that there is an absence of evidence to support an essential element of the non-moving party's case. Celotex, 477 U.S. at 323.
To successfully rebut a motion for summary judgment, the non-moving party must point to facts supported by the record which demonstrate a genuine issue of material fact. Reese v. Jefferson Sch. Dist. No. 14J, 208 F.3d 736 (9th Cir. 2000). A " material fact" is a fact " that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. See v. Durang, 711 F.2d 141, 143 (9th Cir. 1983). A dispute regarding a material fact is considered genuine " if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Liberty Lobby, 477 U.S. at 248. The mere existence of a scintilla of evidence in support of the party's position is insufficient to establish a genuine dispute; there must be evidence on which a jury could reasonably find for the party. See id. at 252. Finally, whereas here, both sides have moved for summary judgment, the court must consider evidence submitted in support of both motions before ruling on either motion. See Fair Housing Council of Riverside Cnty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001).
B. Motion to Certify Question to the Nevada Supreme Court
Pursuant to Nevada Rule of Appellate Procedure (" NRAP" ) 5:
The [Nevada] Supreme Court may answer questions of law certified to it by . . . a United States District Court . . . when requested by the certifying court, if there are involved in any proceeding before th[at] court questions of law of this state which may be determinative of the cause then pending in the certifying court and as to which it appears to the certifying court there is no controlling precedent in the decisions of the Supreme Court of this state.
III. Cross Motions for Summary Judgment
Branch Banking contends that this is a straightforward breach of contract
case, in which the Borrower and the Guarantors failed to repay their loan obligations under the Note and the Guarantee, thereby entitling Branch Banking to summary judgment as to liability against Defendants. The Court agrees. In a breach of contract action, Nevada law requires that the plaintiff establish (1) the existence of a valid contract, (2) performance by the plaintiff, (3) breach by the defendant, and (3) damage as a result of the breach. See Saini v. Int'l Game Tech., 434 F.Supp.2d 913, 919-20 (D. Nev. 2006) (citing Richardson v. Jones, 1 Nev. 405, 405 (Nev.1865)); see also Anahuac Mgmt. v. Mazer, No. 2:09-cv-01590-RLH-PAL, 2012 WL 1142714, at *3 (citing Calloway v. City of Reno, 116 Nev. 250, 993 P.2d 1259, 1263 (2001)). In addition, Nevada law provides that a guarantor is " liable on his own obligation, which is absolute and independent of the note itself." Randono v. Turk, 86 Nev. 123, 466 P.2d 218, 223 (1970).
Here, it is undisputed that the Loan documents (i.e., the Note, the Deed of Trust, and the Guarantee) are valid and enforceable contracts. Similarly, Defendants do not dispute Branch Banking's standing as the legitimate successor-in-interest to Colonial Bank for the purposes of this Loan. Pursuant to the Note, the Borrower agreed " to pay to [Lender] . . ., in legal tender of the United States of America," the outstanding amount due under the Note on August 2, 2009. Doc. #69, Ex. 1A, Ex. 1E; Doc. #99, Ex. 1, Ex. 6. The Note further states that " [f]ailure to ...