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Board of Trustees of Southern Nevada Joint Management v. Fava

United States District Court, D. Nevada

June 28, 2018

BOARD OF TRUSTEES OF THE SOUTHERN NEVADA JOINT MANAGEMENT AND CULINARY AND BARTENDERS TRAINING FUND, Plaintiffs,
v.
CHRISTOPHER FAVA, et al., Defendants.

          ORDER

         Presently before the court is defendants' Eclipse Theater LLC, Eclipse Theater Las Vegas, Limited Partnership, and 21 Greens Inc.'s (together, the “Eclipse defendants”) motion to dismiss. (ECF No. 12). Plaintiff Culinary Academy of Las Vegas (“CALV”) filed a response (ECF No. 22), to which defendants replied (ECF No. 25).

         I. Facts

         This case involves two former CALV employees' alleged breaches of their fiduciary duty in negotiating and executing a contract with the Eclipse defendants.

         In January of 2012, CALV hired Christopher Fava as vice president of food and beverage and chief operating officer, and later as its chief executive officer. (ECF No. 1). CALV is a Nevada nonprofit employee benefit trust fund and is a provider of training for entry-level and incumbent workers in the Las Vegas hospitality industry. Id. Fava's position involved overseeing and managing CALV's assets and expenditures. Id.

         In April of 2015, Jaime Monardes joined CALV as vice president of finance and accounting. Id. Monardes was responsible for oversight of program operations, including the expenditure and use of CALV's assets. Id.

         In December of 2015, Fava notified the CALV trustees of a new training and investment opportunity with the Eclipse Theater LLC (“Eclipse Theater”) entertainment complex. Id. Fava represented that the opportunity would generate $10 million in income over five years and create over 100 employment opportunities for CALV students. See Id. Based on Fava's representations, the CALV trustees delegated authority to Fava and Monardes to pursue the Eclipse Theater opportunity. Id.

         On January 19, 2016, Fava entered into a concession agreement with the Eclipse Theater (“Eclipse agreement”) on behalf of CALV. Id. CALV's capital investment, as represented by Fava, was not to exceed $500, 000. Id.

         On July 12, 2016, Fava, acting on behalf of CALV, amended the Eclipse agreement without notifying the CALV trustees. Id. The amended agreement included terms requiring CALV to staff positions outside of the organization's training scope. Id. The amended agreement also extended CALV's staffing responsibilities to 21 Greens Inc. (“21 Greens”), an in-house restaurant within the Eclipse Theater. Id. CALV promised to purchase supplies and equipment not to exceed $250, 000 for 21 Greens that was guaranteed to be repaid within the first year of operation. Id. The agreement further stated that CALV would receive the greater of two percent of gross ticket revenues or $100, 000 per year. Id.

         On October 21, 2016, the Eclipse agreement was amended a second time. Id. The amended agreement was signed without the CALV's trustees consent by Fava on behalf of CALV and by Nicolas Steele on behalf of the Eclipse Theater and Eclipse Theater Las Vegas, Limited Partnership. Id.

         In November of 2016, CALV discovered that Fava and Monardes amended the Eclipse agreement without notifying the CALV trustees. Id. Fava and Monardes subsequently ended their employment with CALV. Id.

         On November 30, 2016, the Eclipse Theater and 21 Greens opened. Id. After opening, CALV sustained losses related to its staffing of the Eclipse Theater and 21 Greens. Id. CALV also did not recover its initial $500, 000 investment in the Eclipse Theater or its $250, 000 investment in 21 Greens. Id.

         On December 23, 2016, CALV notified the Eclipse defendants that it was invoking its 90-day right to terminate the agreement. Id. On January 9, 2017, the parties unsuccessfully attempted to renegotiate the agreement. Id.

         In a letter dated January 13, 2017, CALV confirmed to the Eclipse defendants that the agreement would terminate on January 23, 2017, as a result of the defendants' refusal to renegotiate or modify the agreement. Id.

         On January 20, 2017, the Eclipse defendants wrote to CALV disputing whether CALV had property terminated the agreement. Id. The Eclipse agreement terminated on January 23, 2017. Id. CALV contends that it sustained substantial losses due to the Eclipse defendants' failure return its ...


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