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Board of Trustees of Southern Nevada Joint Management v. Fava

United States District Court, D. Nevada

May 2, 2019

CHRISTOPHER FAVA, et al., Defendants.


         Presently before the court is plaintiff Board of Trustees of the Southern Nevada Joint Management and Culinary and Bartenders Training Fund d/b/a Culinary Academy of Las Vegas' (“CALV”) motion for reconsideration. (ECF Nos. 72, 74-1). Defendant/counter claimant Jaime Monardes filed a response (ECF No. 77), to which CALV replied (ECF No. 81).

         Also before the court is CALV's motion for leave to amend. (ECF Nos. 73, 75). Monardes filed a response (ECF No. 78), to which CALV replied (ECF No. 82).

         I. Facts

         This case involves two former CALV employees who allegedly breached their fiduciary duties when they negotiated and executed a contract with Eclipse Theater, LLC (“Eclispe Theater”).

         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. (ECF No. 1). In January 2012, CALV hired Christopher Fava as vice president of food & beverage and chief operating officer, and later as its chief executive officer. Id. Fava's position involved managing CALV's assets and expenditures. Id. In April 2015, CALV hired Monardes as vice president of finance and accounting. Id. Monardes' work responsibilities required him to oversee program operations, which also included managing CALV's assets and expenditures. Id.

         In December of 2015, Fava notified the CALV trustees of a new training and investment opportunity with the 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 and Monardes entered into a concession agreement with 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 and Monardes, acting on behalf of CALV, amended the Eclipse agreement without notifying the CALV trustees. Id. The amended agreement required CALV to staff positions outside of the organization's training scope and extended CALV's staffing responsibilities to Eclipse Theater's in-house restaurant, 21 Greens Inc. (“21 Greens”). Id. CALV also promised to purchase up to $250, 000 in supplies and equipment for 21 Greens in exchange for a guarantee that Eclipse Theater would repay CALV within the first year of operation. Id. The agreement further stated that CALV would receive either two percent of gross ticket revenues or $100, 000 per year, whichever is greater. Id.

         Over the next few months, Fava and Monardes allegedly engaged in further misdeeds such as spending over $20, 000 for food, alcohol, entertainment, and travel. Id. In October 2016, Fava and Monardes amended the Eclipse agreement a second time without obtaining the CALV trustees' consent. Id. Eventually, CALV discovered Monardes' misconduct and placed him under suspension. (ECF Nos. 1, 49).

         On or about November 18, 2016, Monardes filed a formal complaint with the Equal Employment Opportunity Commission (“EEOC”), alleging employment discrimination and various related causes of action. (ECF No. 49). Thereafter, CALV terminated Monardes. (ECF Nos. 1, 49).

         From December 2016 through January 2017, CALV and Monardes entered settlement discussions concerning his termination and EEOC complaint. (ECF No. 51-1). On January 23, 2017, Monardes executed a separation agreement (“separation agreement”) wherein he released, settled, acquitted, and waived all claims against CALV in exchange for $11, 000.00. Id.

         On January 9, 2018, CALV filed the underlying complaint asserting fourteen causes of action against several individual and entity defendants, including Monardes. (ECF No. 1). On May 3, 2018, Monardes filed an answer and counterclaim, raising three counterclaims against CALV: (1) fraud in the inducement, (2) breach of the implied covenant of good faith and fair dealing, and (3) declaratory relief. (ECF No. 49).

         On May 24, 2018, CALV filed a motion to dismiss Monardes' counterclaims. (ECF No. 51). On December 12, 2018, the court denied CALV's motion, holding that the court cannot determine as a matter of law whether the separation agreement precluded Monardes' counterclaims because Monardes plausibly pleaded a claim for fraud in the inducement. (ECF No. 71). Now, CALV moves for reconsideration, raising a new argument that it failed to raise in its initial motion to dismiss. (ECF No. 74-1). CALV also moves in the alternative for leave to amend the complaint. (ECF No. 75).

         II. ...

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