871 F.3d 751 (9th Cir. 2017), 15-16933, Branch Banking & Trust Co. v. D.M.S.I., LLC

Docket Nº:15-16933, 15-16934, 15-16935
Citation:871 F.3d 751
Opinion Judge:TASHIMA, Circuit Judge:
Party Name:BRANCH BANKING AND TRUST COMPANY, as successor in interest on behalf of Colonial Bank, N.A., Plaintiff-Appellee, v. D.M.S.I., LLC; NOAM SCHWARTZ; NST HOLDING, INC., Trustee; YOEL INY, Individually and as Trustee on behalf of Y & T Iny Family Trust, Defendants-Appellants. BRANCH BANKING AND TRUST COMPANY, Plaintiff-Appellee, v. REGENA HOMES, LLC...
Attorney:Bart K. Larsen (argued), Kolesar & Leatham, Las Vegas, Nevada, for Defendants-Appellants. Jeremy Nork (argued), Holland & Hart LLP, Las Vegas, Nevada, for Plaintiff-Appellee.
Judge Panel:Before: A. Wallace Tashima and Richard A. Paez, Circuit Judges, Carol Bagley Amon,[*] District Judge.
Case Date:September 11, 2017
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 751

871 F.3d 751 (9th Cir. 2017)

BRANCH BANKING AND TRUST COMPANY, as successor in interest on behalf of Colonial Bank, N.A., Plaintiff-Appellee,

v.

D.M.S.I., LLC; NOAM SCHWARTZ; NST HOLDING, INC., Trustee; YOEL INY, Individually and as Trustee on behalf of Y & T Iny Family Trust, Defendants-Appellants.

BRANCH BANKING AND TRUST COMPANY, Plaintiff-Appellee,

v.

REGENA HOMES, LLC; YOEL INY; NOAM SCHWARTZ; Y & T INY FAMILY TRUST DATED JUNE 8, 1994; NOAM SCHWARTZ TRUST DATED AUGUST 19, 1999; D.M.S.I., LLC; GREAT AMERICAN CAPITAL, Defendants-Appellants.

BRANCH BANKING AND TRUST COMPANY, Plaintiff-Appellee,

v.

SMOKE RANCH DEVELOPMENT, LLC; YOEL INY, an individual and as Trustee on behalf of Y& T Iny Family Trust dated June 8, 1994, as amended; NOAM SCHWARTZ, individually and as Trustee on behalf of Noam Schwartz Trust Dated August 19, 1999; D.M.S.I., LLC, Defendants-Appellants

Nos. 15-16933, 15-16934, 15-16935

United States Court of Appeals, Ninth Circuit

September 11, 2017

Argued and Submitted, San Francisco, California April 21, 2017.

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Appeals from the United States District Court for the District of Nevada. D.C. No. 2:11-cv-01778 APG-VCF, D.C. No. 2:12-cv-00451 APG-GWF, D.C. No. 2:12-cv-00453 APG-NJK. Andrew P. Gordon, District Judge, Presiding.

Branch Banking & Trust Co. v. D.M.S.I., L.L.C., (D. Nev., Apr. 28, 2017)

Branch Banking & Trust Co. v. Smoke Ranch Dev., LLC, (D. Nev., Apr. 28, 2017)

Branch Banking & Trust Co. v. Regena Homes, LLC, (D. Nev., Apr. 28, 2017)

SUMMARY[**]

Standing / Preemption / Loans

The panel affirmed the district court's judgments in three actions against defendant debtors who failed to repay loans held by Branch Banking and Trust Company, arising from loans secured by real property in Nevada.

The panel rejected defendants' contention that Branch Banking lacked standing to bring the instant actions because it did not have the right to enforce the loans at the time it filed its complaints. The panel also held that Branch Banking was not barred by issue preclusion under Nevada law.

The panel held that Nev. Rev. Stat. § 40.459(1)(c) - which limited the ability of a third party to profit by purchasing real estate debt at a discount and foreclosing at full price -- was preempted by federal law, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as applied to transferees of the Federal Deposit Insurance Corporation (" FDIC" ). The panel noted that it would be more difficult for the FDIC to dispose of the assets of failed banks if transferees, such as Branch Banking, could not turn a profit on those assets. The panel rejected defendants' claim that Branch Banking had failed to prove each element of its deficiency action.

The panel rejected the affirmative defenses under Nevada law asserted by defendants based on alleged work-out agreements with Branch Banking. Specifically, the panel rejected defendants' argument that the alleged work-out agreements constituted contracts with implied covenants of good faith and fair dealing because under Nevada law, the agreements did not constitute contracts. The panel also held that all the elements of promissory estoppel were not met. The panel further held that no oral work-out agreement could have modified the loans or operated to waive Branch Banking's rights. The panel held that the defendants did not identify any circumstances that made the application of laches appropriate. Finally, the panel held that Branch Banking owed no duty to mitigate defendants' deficiency by the timing of the foreclosure proceedings.

The panel held that the district court did not abuse its discretion in denying defendants' late-filed motion to amend pleadings because defendants demonstrated neither good cause nor excusable neglect.

The panel held that defendants were not entitled to a jury trial on the fair market value of the property. The panel also held that Branch Banking did not violate Nev. Rev. Stat. § 163.120(2) concerning notice to trust beneficiaries.

Bart K. Larsen (argued), Kolesar & Leatham, Las Vegas, Nevada, for Defendants-Appellants.

Jeremy Nork (argued), Holland & Hart LLP, Las Vegas, Nevada, for Plaintiff-Appellee.

Before: A. Wallace Tashima and Richard A. Paez, Circuit Judges, Carol Bagley Amon,[*] District Judge.

OPINION

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TASHIMA, Circuit Judge:

Defendants in these three actions are debtors who have failed to repay loans held by Branch Banking and Trust Company (" BB& T" ). They appeal the respective judgments of the district court against them. We have jurisdiction under 28 U.S.C. § 1291 and we affirm.

I. BACKGROUND

A. The D.M.S.I. Action, No. 15-16933

On February 27, 2004, D.M.S.I., LLC, Yoel Iny, and Noam Schwartz executed and delivered a Promissory Note to Colonial Bank, N.A., for $2,000,000 (" D.M.S.I. Loan" ). On the same date, Yoel Iny, acting as Trustee of the Y & T Iny Family Trust, and Ronnie Schwartz, as a Trustee of the NS 1998 Family Trust, executed and delivered guarantees of the payment of the D.M.S.I. Loan. The D.M.S.I. Promissory Note was amended in 2006, increasing the principal amount of the loan to $3,500,000. After an additional amendment in March 2009, the D.M.S.I. Loan was set to be paid in full by June 1, 2009. It is undisputed that Defendants failed to repay the D.M.S.I. Loan.

Colonial Bank, N.A., was succeeded by Colonial Bank, an Alabama banking corporation. On August 14, 2009, Colonial Bank was closed, and the Federal Deposit Insurance Corporation (" FDIC" ) was named as its receiver.

On the same day, the FDIC executed an agreement titled " Purchase and Assumption Agreement Whole Bank All Deposits Among Federal Deposit Insurance Corporation, Receiver of Colonial Bank, Montgomery, Alabama Federal Deposit Insurance Corporation and Branch Banking and Trust Company Winston-Salem, North Carolina" (" PAA" ). The PAA assigns " all right, title, and interest of the Receiver in and to all of the assets . . . of the Failed Bank [Colonial Bank]" to BB& T. The PAA goes on to state that " Schedules 3.1 and 3.1a attached hereto and incorporated herein sets forth certain categories of Assets purchased hereunder. Such schedule is based upon the best information available to the Receiver and may be adjusted as provided in Article VIII." Schedules 3.1 and 3.1a to the PAA are both blank, containing only the legend " SEE ATTACHED LIST." No " attached list" was included with the PAA.

At the same time it entered the PAA, BB& T also entered a loss sharing agreement with the FDIC " for reimbursement of loss sharing expenses on certain loans and other assets." The loss sharing agreement applies " when the Assuming Bank [BB& T] purchases Shared-Loss Assets." Schedule 4.15b lists the assets subject to the loss sharing agreement. The D.M.S.I. Loan is listed in Schedule 4.15b.

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On October 23, 2009, the FDIC executed an " Assignment of Security Instruments and Other Loan Documents" (" Bulk Assignment" ). The Bulk Assignment assigns to BB& T all of Assignor's [FDIC's] rights, title and interests in and to all those certain Mortgages, Security Deeds, Deeds to Secure Debt, Deeds of Trust, Assignments of Rents and Leases, UCC-1 financing statements, judgment liens, and all such other instruments and security agreements securing loans owned by Colonial Bank . . . and all modifications, extensions, amendments and renewals thereto (collectively the " Security Instruments" ).

The Bulk Assignment also assigns " all of Assignor's [FDIC's] rights, title and interests in and to the promissory notes, loan documents and all other Indebtedness secured by the Security Instruments." The Bulk Assignment thus appears to apply only to security instruments and to secured debt.

The FDIC also produced an undated allonge1 purporting to endorse the D.M.S.I. Loan to BB& T effective August 14, 2009.

In 2009 and 2010, BB& T engaged in discussions with Defendants about restructuring the D.M.S.I. Loan. Notwithstanding discussions over this " work-out agreement," on August 18, 2010, Defendants signed an " Acknowledgment" stating that any such discussions " are without any prejudice to the Lender [BB& T] in the exercise of its rights and remedies with respect to the Loans. Furthermore, Lender reserves the right in its sole discretion to terminate discussions at any time and thereafter exercise its right and remedies."

On November 4, 2011, BB& T filed the D.M.S.I. Action against Defendants. The district court issued a Discovery Plan and Scheduling Order on May 2, 2012. The Scheduling Order established November 2, 2012, as the deadline to file motions to amend the pleadings. The operative Second Amended...

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