Branch Banking v. Frank
| Decision Date | 26 September 2013 |
| Docket Number | 2:11-CV-1366 JCM (CWH) |
| Parties | BRANCH BANKING AND TRUST COMPANY, Plaintiff, v. DAVID M. FRANK, et al., Defendants. |
| Court | U.S. District Court — District of Nevada |
Presently before the court is plaintiff Branch Banking & Trust Co.'s motion for summary judgment (doc. # 107). Defendants filed an opposition to plaintiff's motion (doc. # 112) and plaintiff replied (doc. # 117). Also before the court is defendants' motion for summary judgment (doc. # 106). Plaintiff filed an opposition to defendants' motion (doc. # 113) and defendants replied (doc. # 116).
This case arises out of a loan transaction which occurred on or about April 19, 2005 by and between Station Plaza Partners, LLC ("Station Plaza") and Colonial Bank, plaintiff's predecessor-in-interest.1 Station Plaza requested $29,260,700.00 to purchase and develop approximately 20.16 acres of raw land near the intersection of Lake Mead Blvd. and Rancho Drive in North Las Vegas, Nevada. A deed of trust was executed on the subject property to secure repayment. The loan was evidencedby a promissory note, and each of the defendants in this action individually guaranteed repayment.
On or about August 19, 2008, with the consent of Colonial Bank, Station Plaza, and defendants, the maximum amount committed under the loan was reduced to $19,885,000.00. On July 23, 2009, Station Plaza defaulted on the loan. As a result, on June 22, 2011, plaintiff declared the entire balance due in accordance with the terms of the loan.
Plaintiff initiated this action on August 24, 2011, after neither Station Plaza nor any of the defendants attempted to pay the balance of the loan. On March 23, 2012, a trustee's sale of the property occurred in which plaintiff acquired the property by placing a credit bid of $7.6 million.
Plaintiff seeks summary judgment on its claims of breach of contract related to each defendant's individual guaranty under NEV. REV. STAT. § 40.495 or § 40.459.2 (Doc # 117, 3:13-17). Alternatively, plaintiff seeks partial summary judgment as to defendants' liability and the appointment of an appraiser and a hearing to determine the fair market value of the property at the time of sale, pursuant to NEV. REV. STAT. § 40.457. Id.
In their motion, defendants claim that plaintiff has failed to present evidence showing the fair market value of the property at the time of the trustee's sale or the amount of consideration that plaintiff paid to acquire the loan, which are necessary elements under NEV. REV. STAT. § 40.459(1)(c). (Doc. # 106, 2:24-3:2). Defendants also contend that summary judgment in plaintiff's favor would not be proper because there are genuine issues of material fact relating to the reimbursement that plaintiff has received from the FDIC and defendants' affirmative defenses of recoupment. (Doc # 112, 2:18-3:2).
The Federal Rules of Civil Procedure provide for summary adjudication when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that "there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(a). A principal purpose of summary judgment is "toisolate and dispose of factually unsupported claims." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).
In determining summary judgment, a court applies a burden-shifting analysis. C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) (citations omitted).
In contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323-24. If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60 (1970).
If the moving party satisfies its initial burden, the burden then shifts to the opposing party to establish that a genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). To establish the existence of a factual dispute, the opposing party need not establish a material issue of fact conclusively in its favor. It is sufficient that "the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." T.W. Elec. Serv., Inc. v. Pac. Elec. ContractorsAss'n, 809 F.2d 626, 631 (9th Cir. 1987).
In other words, the nonmoving party cannot avoid summary judgment by relying solely on conclusory allegations that are unsupported by factual data. See Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposition must go beyond the assertions and allegations of the pleadings and set forth specific facts by producing competent evidence that shows a genuine issue for trial. See Celotex Corp., 477 U.S. at 324.
Where a moving party's papers are insufficient to support a motion for summary judgment, or reveal a genuine issue of material fact, summary judgment is inappropriate. Martinez v. Stanford, 323 F.3d 1178, 1182-83 (9th Cir. 2003).
Under Nevada law, following a trustee's sale, a creditor is entitled to a deficiency judgment "if it appears from the sheriff's return or the recital of consideration in the trustee's deed that there is a deficiency of the proceeds of the sale and a balance remaining due to the judgment creditor or the beneficiary of the deed of trust, respectively." NEV. REV. STAT. § 40.455(1). This statutory scheme also requires that the court, prior to awarding a deficiency judgment, hold a hearing regarding the fair market value of the property as of the date of the trustee's sale. NEV REV. STAT. § 40.457(1).
The arguments in these motions for summary judgment focus on a provision of Nevada law specifically limiting the recovery of parties who acquired the right to obtain a deficiency judgment from a previous holder of the right. In such a case, "[t]he court shall not render judgment for more than . . . the amount by which the amount of the consideration paid for that right exceeds the fair market value of the property sold at the time of sale or the amount for which the property was actually sold, whichever is greater, with interest from the date of sale and reasonable costs." NEV. REV. STAT. § 40.459(1)(c).
Defendants allege that plaintiff has not met its burden to provide evidence of (1) the consideration it paid to obtain the right to obtain a judgment under the loan and (2) the fair market value at the time of the sale. (Doc. # 106). Both of these elements are necessary under the statute to prove the amount to which plaintiff would be entitled if it received a judgment in its favor. Defendants further argue that they have put forward affirmative defenses which create a genuine dispute of material fact as to the calculation of indebtedness.
Plaintiff contends that it has provided sufficient evidence regarding the issues of consideration and fair market value at the time of sale, and that there are no other genuine issues of material fact, and thus it argues is entitled to summary judgment in its favor.
As a preliminary matter, plaintiff asserts and defendants do not refute that the loan documents and guaranty agreements are valid and enforceable contracts, and that defendants breached these contracts by failing to pay the agreed-upon amount. Similarly, defendants do not dispute plaintiff's standing as the legitimate successor-in-interest to Colonial Bank for the purposes of this loan. Accordingly, the court finds that defendants will be liable to plaintiff for the amount to be determined under § 40.459(1)(c). Therefore the court will grant plaintiff's motion for summary judgment as to the issue of liability.
Plaintiff argues that the deposition testimony of Thomas Brent Hicks3 and a redacted schedule 4.15B provide competent evidence of the consideration paid for the right to obtain the judgment under the loan. Defendants argue that both of these pieces of evidence are inadmissible, and even if they are admissible, that they do not establish the amount of consideration.
Defendants contend that the testimony of Mr. Hicks violates the best evidence rule, claiming that his testimony alluded to the contents of documents that were not submitted as evidence. This rule states that "an original writing, recording, or photograph is required in order to prove its content unless the rules or a deferral statute provides otherwise." FED. R. EVID. 1002.
Defendants' argument severely overstates the requirements of rule 1002. This rule requires only that an original document be produced in order to prove the contents of that document. Here, Mr. Hicks was testifying as to the amount of consideration that was paid by plaintiff to obtain the loan, not the contents of any unproduced document. The documents Mr. Hicks referenced in his deposition testimony, namely the purchase and assumption agreement and a redacted schedule 4.15B, were made available to defendants during the deposition. Because Mr. Hicks' testimony did not address the contents of any documents that were not made available, the testimony is not rendered...
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