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Eagle SPE NV1 Inc v. Southern Highlands Development Corp.

United States District Court, D. Nevada

March 22, 2017

EAGLE SPE NV 1, INC., Plaintiff,
v.
SOUTHERN HIGHLANDS DEVELOPMENT CORP., et al., Defendants.

          ORDER

          MIRANDA M. DU UNITED STATES DISTRICT JUDGE.

         I. SUMMARY

         This case involves application of a statutory provision formerly codified at NRS § 40.459(1)(c) (“Subsection (1)(c)”), which placed additional limitations upon the right of a successor-creditor to recover on a deficiency. Before the Court are competing motions: (1) Plaintiff Eagle SPE NV 1's (“Eagle”) Motion for Summary Judgment as to Liability and Application for Deficiency Judgment Hearing Pursuant to Nevada Revised Statute § 40.457 (“Plaintiff's Motion”) (ECF No. 132); and (2) Defendants' Motion for Summary Judgment (“Defendant's Motion”) (ECF No. 133).[1] The Court has reviewed the parties' responses, replies and Eagle's supplement to its reply in connection with these Motions. (ECF Nos. 137, 142, 138, 143, 145.) For the reasons discussed below, Defendants' Motion is granted and Plaintiff's Motion is denied.

         II. RELEVANT BACKGROUND

         The relevant facts are undisputed.

         On July 30, 2007, Southern Highland Development Corporation, Olympia Group, L.L.C., and Olympia Land Corporation (collectively “Borrowers”) executed a Revolving Line of Credit Promissory Note (“Note”) Secured by a Deed of Trust to Colonial Bank, N.A. (“Colonial”)[2] in the original principal amount of $25, 000, 000.00 (the “Note”). (ECF No. 133-3.) The Note was secured by a Deed of Trust and Security Agreement and Fixture Filing with Assignment of Rents dated July 30, 2007, and recorded August 15, 2007 (the “DOT”), encumbering certain real property located in Clark County, Nevada (the “Property”). (Id.; ECF No. 133-5.) The same day, Garry Goett and Guy Inzalaco (“Guarantors”), in their individual capacities and in their positions as trustees of their respective trusts, executed a certain guarantee (“the Guarantee”) where they agreed to guarantee payment under the Note. (ECF No. 133-6.) The Note was amended thrice thereafter: in December 2007, September 2008, and December 2008. (ECF Nos. 132-5, 132-6 & 132-7.)

         On August 14, 2009, Colonial was closed by the State Banking Department of the State of Alabama, and the Federal Deposit Insurance Corporation (“FDIC”) was named receiver. (ECF No. 132-1 at 5.) On the same day, the FDIC assigned a substantial portion of Colonial's assets, including the Note, DOT, and accompanying loan documents, to Branch Banking and Trust Company (“BB&T”) through a Purchase and Assumption Agreement (“the Agreement”). (Id.; ECF No. 132-8; ECF Nos. 133-8 & 133-9.) The Note was made payable to BB&T. (ECF No. 132-8.)

         On November 12, 2009, the maturity date of the Note, Borrowers failed to pay the outstanding principal balance due under the Note. (ECF No. 132-1 at 5.) BB&T made a written demand for payment in August 2010. (Id.; ECF No. 132-9.) Borrowers and Guarantors failed to pay the balance owing under the Note. (ECF No. 132-1 at 5.)

         On November 8, 2011, BB&T assigned its rights under the Note, DOT, the Guarantee and other loan documents to Eagle via two assignment documents (“the Assignments”). (Id. at 5-6; ECF No. 132-10.) On November 15, 2011, Eagle effectuated the sale of the Property at a non-judicial foreclosure sale for a cash bid in the amount of $5, 340, 001.00. (ECF No. 132-1 at 6; ECF No 133-16.) On November 17, 2011, Eagle made a written demand on Borrowers and Guarantors to pay the deficiency. (ECF No. 132-13.) They refused. (ECF No. 132-1 at 6.)

         After Eagle initiated this action, the Court dismissed the Complaint with leave to amend. (ECF No. 66 (“First Dismissal Order”).) The Court subsequently dismissed the claim for breach of the implied covenant of good faith and fair dealing in the Second Amended Complaint (“SAC”), permitting Eagle to proceed on a claim for deficiency and two claims for breach of contract. (ECF No. 93 (“Second Dismissal Order”).)

         III. LEGAL STANDARD

         “The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court.” Nw. Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). Summary judgment is appropriate when the pleadings, the discovery and disclosure materials on file, and any affidavits “show there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986). An issue is “genuine” if there is a sufficient evidentiary basis on which a reasonable fact-finder could find for the nonmoving party and a dispute is “material” if it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). Where reasonable minds could differ on the material facts at issue, however, summary judgment is not appropriate. See Id. at 250-51. “The amount of evidence necessary to raise a genuine issue of material fact is enough ‘to require a jury or judge to resolve the parties' differing versions of the truth at trial.'” Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat'l Bank v. Cities Service Co., 391 U.S. 253, 288-89 (1968)). In evaluating a summary judgment motion, a court views all facts and draws all inferences in the light most favorable to the nonmoving party. Kaiser Cement Corp. v. Fishbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986).

         The moving party bears the burden of showing that there are no genuine issues of material fact. Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982). Once the moving party satisfies Rule 56's requirements, the burden shifts to the party resisting the motion to “set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256. The nonmoving party “may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material, to show that the dispute exists, ” Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991), and “must do more than simply show that there is some metaphysical doubt as to the material facts.” Orr v. Bank of Am., 285 F.3d 764, 783 (9th Cir. 2002) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). “The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient.” Anderson, 477 U.S. at 252.

         IV. ...


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