United States District Court, D. Nevada
ORDER
ROBERT
C. JONES UNITED STATES DISTRICT JUDGE.
These
consolidated cases arises out of the alleged breach of a
settlement agreement that was part of a confirmation order in
a Chapter 11 bankruptcy action.
I.
FACTS AND PROCEDURAL HISTORY
Case
No. 2:15-cv-915 is the third and only remaining action in
this Court by Tom Gonzales concerning his entitlement to a
fee under a confirmation order the undersigned entered years
ago while sitting as a bankruptcy judge. A jury trial is
scheduled for April 17, 2017.
A.
The Previous (First) Case
On
December 7, 2000, Plaintiff loaned $41.5 million to Desert
Land, LLC and Desert Oasis Apartments, LLC to finance their
acquisition and/or development of land (“Parcel
A”) in Las Vegas, Nevada. The loan was secured by a
deed of trust. On May 31, 2002, Desert Land and Desert Oasis
Apartments, as well as Desert Ranch, LLC (collectively, the
“Desert Entities”), each filed for bankruptcy,
and the undersigned administered those bankruptcies while
sitting as a bankruptcy judge. The court confirmed the Second
Amended Plan of Reorganization (“the Plan”), and
the confirmation order included a finding that a settlement
had been reached under which Gonzales would extinguish his
note and reconvey his deed of trust, Gonzales and another
party would convey their fractional interests in Parcel A to
Desert Land so that Desert Land would own 100% of Parcel A,
Gonzales would receive Desert Ranch's 65% interest in
another property, and Gonzales would receive $10 million if
Parcel A were sold or transferred after 90 days (“the
Parcel A Transfer Fee”). Gonzales appealed the
confirmation order, and the Bankruptcy Appellate Panel
affirmed, except as to a provision subordinating
Gonzales's interest in the Parcel A Transfer Fee to up to
$45 million in financing.
In
2011, Gonzales sued Desert Land, Desert Oasis Apartments,
Desert Oasis Investments, LLC, Specialty Trust, Specialty
Strategic Financing Fund, LP, Eagle Mortgage Co., and Wells
Fargo (as trustee for a mortgage-backed security) in state
court for: (1) declaratory judgment that a transfer of Parcel
A had occurred entitling him to the Parcel A Transfer Fee;
(2) declaratory judgment that the lender defendants in that
action knew of the bankruptcy proceedings and the requirement
of the Parcel A Transfer Fee; (3) breach of contract; (4)
breach of the implied covenant of good faith and fair
dealing; (5) judicial foreclosure against Parcel A under
Nevada law; and (6) injunctive relief. Defendants removed
that case to the Bankruptcy Court. The Bankruptcy Court
recommended withdrawal of the reference because the
undersigned had issued the underlying confirmation order
while sitting as a bankruptcy judge. One or more parties so
moved, and the Court granted the motion. In that case,
Gonzales v. Desert Land, LLC, 3:11-cv-613, the Court
dismissed the second and fifth causes of action and later
granted certain defendants' counter-motion for summary
judgment as against the remaining causes of action. Plaintiff
asked the Court to reconsider and to clarify which, if any,
of its claims remained, and defendants asked the Court to
certify its summary judgment order under Rule 54(b) and to
enter judgment in their favor on all claims. The Court denied
the motion to reconsider, clarified that it had intended to
rule on all claims, and certified the summary judgment order
for immediate appeal. Defendants submitted a proposed
judgment, which the Court signed, and Plaintiff asked the
Court to enjoin defendants from further encumbering Parcel A
with loans or mechanics liens until the Court of Appeals
ruled, a motion the Court denied. The Court of Appeals
affirmed, ruling that the Parcel A Transfer Fee had not been
triggered based on the allegations in that case, and that
Plaintiff had no lien against Parcel A.
B.
The Lead (Second) Case
In the
Lead Case, Case No. 2:13-cv-931, also removed from state
court, Plaintiff recounts the confirmation order and the
Parcel A Transfer Fee. (See Compl. ¶¶
10-14, ECF No. 1, at 11 in Case No. 2:13-cv-931). Plaintiff
also recounts the history of the previous case. (See
Id. ¶¶ 17-21). Plaintiff alleges that
Defendant Shotgun Nevada Investments, LLC
(“Shotgun”) began making loans to the Desert
Entities for the development of Parcel A between 2012 and
January 2013 despite its awareness of the confirmation order
and Parcel A Transfer Fee provision therein. (See
Id. ¶¶ 22-23). Plaintiff sued Shotgun, Shotgun
Creek Las Vegas, LLC, Shotgun Creek Investments, LLC, and
Wayne M. Perry for intentional interference with contract,
intentional interference with prospective economic advantage,
and unjust enrichment based upon their having provided
financing to the Desert Entities to develop Parcel A.
Defendants removed and moved for summary judgment, arguing
that the preclusion of certain issues decided in the
‘613 Case necessarily prevented Plaintiffs from
prevailing in the present case. The Court granted that motion
as a motion to dismiss, with leave to amend.
Plaintiff
filed the Amended Complaint (“AC”). (See
Am. Compl., ECF No. 28 in Case No. 2:13-cv-931). Plaintiff
alleges that the confirmation order permitted Parcel A to be
used as collateral for up to $25, 000, 000 in deeds of trust
against Parcel A itself or as collateral for a mortgage
securing the purchase of real property subject to the FLT
Option if the proceeds were used only for the purchase of
that real property, but that any encumbrance of Parcel A
outside of these parameters would trigger the Parcel A
Transfer Fee. (See Id. ¶¶ 15-16). Various
Shotgun entities made additional loans to the Desert Entities
in 2012 and 2013 “related to the development of Parcel
A.” (Id. ¶¶ 25-26). Multiple Shotgun
entities have also invested in SkyVue Las Vegas, LLC
(“SkyVue”), the company that owns the entities
that own Parcel A. (Id. ¶ 27). Plaintiff
alleges that the reason Perry, the principal of the Shotgun
entities, did not document his $10 million investment was to
“avoid evidence of a transfer, ” and thus the
triggering of the Parcel A Transfer Fee. (See Id.
¶ 29).
Defendants
moved for summary judgment, and Plaintiff moved to compel
discovery. The Court struck the conspiracy and declaratory
judgment claims from the AC, because Plaintiff had no leave
to add them. The Court otherwise denied the motion for
summary judgment and granted the motion to compel discovery,
although the Court noted that the intentional interference
with prospective economic advantage claim (but not the
intentional interference with contractual relations claim)
was legally insufficient. Defendants moved for summary
judgment after further discovery and filed a motion in
limine. The Court denied both motions as well as a motion to
reconsider but granted a motion to strike the untimely jury
demand.
C.
The Member (Third) Case
In the
Member Case, Case No. 2:15-cv-915, Plaintiff sued the Desert
Entities, SkyVue Las Vegas, LLC, Howard Bulloch, and David
Gaffin variously in this Court for breach of contract, breach
of the covenant of good faith and fair dealing, and
conspiracy, making a timely jury demand. The Court asked the
parties to show cause why both cases should not be tried to a
jury. After a hearing, the Court ruled that the Lead Case
would be tried to the Court but the Member Case would
simultaneously be tried to a jury. The Court later
de-consolidated the cases for trial. Midway through a bench
trial in the Lead Case in February and March 2017, the
parties settled the claims. A jury trial is scheduled for the
Member Case beginning April 17, 2017.
II.
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