United States District Court, D. Nevada
R. HICKS UNITED STATES DISTRICT JUDGE.
the court is Plaintiffs' motion for reconsideration to
clarify and enforce settlement agreement (ECF No. 150).
Defendants have filed three separate responses (ECF Nos.
155-57), to which Plaintiffs replied. ECF No. 160. Because
Plaintiffs' requested relief stems from multiple
conflicting interpretations of the settlement agreement at
issue rather than its repudiation or complete frustration,
this case does not present the "extraordinary
circumstances" required to grant relief from the final
order dismissing the case. And because there is no basis for
this court's continued jurisdiction over the settlement
agreement, Plaintiffs' only recourse is to file a new
action. The court will therefore deny Plaintiffs' motion.
The original dispute
instant motion relates to a case formerly before this court
that settled in 2013. The case stems from a dispute between
two groups of investors over priority under a deed of trust
that secured their respective promissory notes. The
plaintiffs in this case are some of the investors in the
first promissory note: Dominique Naylon, an individual, and
Daniel B. O'Dell and Linda D. Hess, as Trustees of the
O'Dell Family Trust dated May 15, 1999. In the summer of
2005, Defendant John Wittrig, a mortgage broker, solicited
Plaintiffs and other investors with the opportunity to make
an investment loan to develop a 412.5 acre parcel of real
property located in Lyon County, Nevada, and owned by
Defendant Geothermal Rail Industrial Development, LLC
29, 2005, GRID executed a promissory note secured by deed of
trust ("the First Note") in the principal sum of
$450, 000 in favor of Plaintiffs and other non-party initial
investors. The same day, a short form deed of trust and
assignment of rents was recorded against the GRID property to
secure the note. The terms of the First Note called for GRID
to make monthly repayments of the loan with interest and
complete repayment of the remaining balance on September 1,
2007 (i.e., the maturity date). It appears that in 2006,
Plaintiffs and GRID agreed to modify this maturity date to
September 1, 2008. ECF No. 156 at 12.
a year after the First Note's formation, Wittrig began
soliciting other investors to make an additional loan on the
GRID property. On May 26, 2006, GRID executed a promissory
note ("the Second Note") in the principal sum of
$700, 000 in favor of a second group of investors
("Individual Defendants"). Like the earlier note, the
Second Note called for GRID'S monthly repayments, with
the complete remaining balance being due on September 1,
2008. A second deed of trust was not recorded. Instead, in
June 2006, an additional advance to deed of trust and
assignment of rents was recorded to secure the Second Note as
a future advance under the first deed of trust and to add the
Individual Defendants as beneficiaries.
dispute between the two groups of investors (i.e., Plaintiffs
and Individual Defendants) began in August 2008, when
Individual Defendants and GRID executed a modification of
both notes, extending the due dates of both loans until March
10, 2010. ECF No. 150 at 6; ECF No. 156 at 12. Plaintiffs
have asserted that they never agreed to this modification and
have continuously referred to the decision as
"unilateral." ECF No. 150 at 6. Conversely,
Defendants have maintained that more than a majority of the
investors supported this decision, and thus, pursuant to
Nevada's 51% rule,  Individual Defendants were entitled to
modify the loan's terms, including its maturity date.
See, e.g., ECF No. 155 at 5; ECF No. 156 at 12. This
argument stems from the disputed premise that, because the
Second Note was formed as a future advance under the first
deed of trust that secured the First Note, the two notes
merged into a single loan. See ECF No. 107 at 3; ECF
No. 150-14 at 3. Under this argument, Individual Defendants
would be the majority beneficial-interest holders for the
combined $1, 150, 000 loan and Plaintiffs would therefore no
longer have management control of their individual loan.
See, e.g., ECF No. 150-7 at 10.
following month, Plaintiffs served GRID, the issuer of both
notes, with a notice of default for failing to repay the
First Note's remaining balance by the 2008 maturity date-
thereby refusing to recognize the modified 2010 maturity
date. However, Defendant Wittrig informed Plaintiffs that
they were no longer majority interest holders of the
purportedly combined loan and thus, under the 51% rule, could
not declare a default. ECF No. 150-7 at 10.
subsequently filed suit against Individual Defendants, GRID,
and Wittrig (collectively "Defendants") in this
court in November 2008. One of the primary issues in the suit
was whether the Second Note's formation not only combined
both loans but also granted both groups of investors equal
priority under the deed of trust, a position that Defendants
had asserted. ECF No. 150-7 at 10-11; see also ECF
No. 107. After the court denied Defendants summary judgment
on this precise issue (ECF No. 107), the parties entered
The settlement agreement
Judge William G. Cobb held a settlement conference with the
parties on July 16, 2012, at which point the parties agreed
to settle the case. ECF No. 134. After the parties placed the
settlement agreement's terms on the record, Judge Cobb
informed the parties that he would retain jurisdiction only
for the limited purpose of resolving any disputes while the
parties reduced these terms to writing. ECF No. 159 at 34. He
further clarified that the court would not retain
jurisdiction to enforce the settlement agreement after its
execution. Id. No disputes over the settlement
agreement's terms were raised at the time, and the
parties, pursuant to the agreement, filed a stipulation
dismissing Plaintiffs' claims with prejudice (ECF Nos.
138, 147), which the court granted (ECF Nos. 139, 148).
the agreement, Plaintiffs conceded that both groups of
investors are entitled to equal priority under the deed of
trust (ECF No. 150-10 at 7), a position that, even in light
of the instant motion, remains undisputed. Additionally,
Plaintiffs consented to a loan modification that Individual
Defendants and GRID had agreed to several weeks before the
settlement agreement's execution, which extended the
loan's maturity date until December 31, 2013. ECF No.
150-10 at 6, 17-22. The parties also agreed that, "[i]n
the event of default under the [First Note], as modified,
[Plaintiffs] and [Individual Defendants] will be entitled to
utilize any remedies available to them under the [First
Note], the [Second Note], the [First Note deed of trust],
and/or Nevada law ...." ECF No. 150-10 at 6.
The current dispute ...