Kim v. Kearney

• Decision Date: 23 January 2012
• Docket Number: No. 2:09–CV–02008–PMP–PAL.,2:09–CV–02008–PMP–PAL.
• Citation: 838 F.Supp.2d 1077
• Parties: TAI–SI KIM and Jin–Sung Hong, Plaintiffs, v. Adam B. KEARNEY, et al., Defendants.
• Court: U.S. District Court — District of Nevada

838 F.Supp.2d 1077

TAI–SI KIM and Jin–Sung Hong, Plaintiffs,

v.Adam B. KEARNEY, et al., Defendants.

No. 2:09–CV–02008–PMP–PAL.

United States District Court, D. Nevada.

Jan. 23, 2012.

Steven A. Gibson, Jodi Donetta Lowry, Jonathan M.A. Salls, Laura Lucero, Dickinson Wright PLLC, John Scott Burris, Wilson Elser Moskowitz Edelman & Dicker, Las Vegas, NV, for Plaintiffs.

Michael E. Stoberski, Olson Cannon, Gormley & Desruisseaux, Brian L. Bradford, Carleton R. Burch, Anderson, McPharlin & Conners LLP, Joseph P. Garin, Lipson Neilson Cole Seltzer & Garin, P.C., Michael F. Bohn, Law Office of Bohn & Morris, Las Vegas, NV, Aaron R. Maurice, Brittany Wood, Woods Erickson Whitaker & Maurice, LLP, Henderson, NV, for Defendants.

ORDER

PHILIP M. PRO, District Judge.

Presently before the Court is Defendant Cumorah Credit Union's (“Cumorah”) Motion for Summary Judgment (Doc. # 159), filed on August 15, 2011. Plaintiffs filed an Opposition (Doc. # 177) on September 8, 2011. Defendant Cumorah filed a Reply (Doc. # 186) on September 26, 2011. Defendant Valley Foreclosure Services (“VFS”) filed a Joinder (Doc. # 182) on September 15, 2011. Plaintiffs filed an Opposition (Doc. # 192) to VFS's Joinder on September 29, 2011.

Also before the Court is Plaintiffs' Motion to Extend the Amend Pleading Deadline and Leave to File a Second Amended Complaint (Doc. # 163), filed on August 30, 2011. Defendant Cumorah filed an Opposition (Doc. # 175) on September 7, 2011. Plaintiffs filed a Reply (Doc. # 180) on September 14, 2011.

Also before the Court is Plaintiffs' Emergency Motion to Suspend Dispositive Motion Deadline (Doc. # 165), filed on August 30, 2011. Defendant Cumorah filed an Opposition (Doc. # 173) on September 7, 2011.

Also before the Court is Defendants RE/MAX Extreme, Edward C. Reed, and Barbara P. Reed's (collectively “Reed Defendants”) Motion for Partial Summary Judgment on Negligent Undertaking to Perform Services (Doc. # 167), filed on September 1, 2011. Plaintiffs filed an Opposition (Doc. # 187) on September 26, 2011. Reed Defendants filed a Reply (Doc. # 196) on October 13, 2011.

Also before the Court is Reed Defendants' Motion for Partial Summary Judgment on Civil Conspiracy, Concert of Action, Aiding and Abetting (Doc. # 168), filed on September 1, 2011. Plaintiffs filed an Opposition (Doc. # 188) on September 26, 2011. Reed Defendants filed a Reply (Doc. # 195) on October 13, 2011.

Also before the Court is Reed Defendants' Motion for Partial Summary Judgment on Contract Related Claims (Doc. # 169), filed on September 1, 2011. Plaintiffs filed an Opposition (Doc. # 189) on September 26, 2011. Reed Defendants filed a Reply (Doc. # 193) on October 13, 2011.

Also before the Court is Reed Defendants' Motion for Partial Summary Judgment on Plaintiffs' Fraud–Based Claims (Doc. # 170), filed on September 1, 2011. Plaintiffs filed an Opposition (Doc. # 190) on September 26, 2011. Defendants filed a Reply (Doc. # 194) on October 13, 2011.

Also before the Court is Plaintiffs' Motion for Relief From Voluntary Dismissal of Adam B. Kearney (Doc. # 179), filed on September 9, 2011. No opposition was filed.

Finally before the Court is Plaintiffs' Motion for Clarification (Doc. # 197), filed on October 26, 2011. Defendant VFS filed an Opposition (Doc. # 198) on October 26, 2011. Defendant Cumorah filed a Joinder (Doc. # 199) to VFS's Opposition on November 1, 2011. Plaintiffs filed a Reply (Doc. # 200) to VFS's Opposition on November 8, 2011. Plaintiffs filed a Reply (Doc. # 201) to Cumorah's Joinder on November 9, 2011.

I. BACKGROUND

Plaintiff Jin–Sung Hong (“Hong”) is the son of Plaintiff Tai–Si Kim (“Kim”). (Decl. of Jonathan Salls (Doc. # 191) [“Salls Decl.”], Ex. 4 at 14.) Prior to the transaction at issue in this case, Plaintiffs had used the services of Defendants Edward Reed (“Ed”), Barbara Reed (“Barbara”), and their company, Barbie Ltd. doing business as RE/MAX Extreme, to purchase several properties in Nevada. (Cumorah Credit Union's Mot. for Summ. J. (Doc. # 159) [“CMSJ”], Ex. A at 23, 26–27.) Barbara was a broker-salesperson, and Ed was a real estate licensee for RE/MAX Extreme. (Reed Defs.' Mot for Partial Summ. J. on Pls.' Fraud–Based Claims (Doc. # 170) [“Reed Fraud MSJ”], Exs. A, B.) Ed and Barbara own RE/MAX Extreme. (Pls.' Mot. to Amend (Doc. # 163), Ex. 1 at 119.)

Ed introduced Plaintiffs to an investment opportunity in a parcel of undeveloped land, Assessor's Parcel Number (“APN”) 177–19–801–008 (the “801 Property”). (Salls Decl., Ex. 6 at 129.) According to Hong, Ed told him the property was worth $800,000, that this was a good deal, and that Plaintiffs should buy the property immediately. (Salls Decl., Ex. 6 at 129, Ex. 7 at 32.) Hong entered into a Purchase Agreement with the seller of the 801 Property in June 2005 and put down a refundable $10,000 deposit. (Reed Fraud MSJ, Ex. C.) Pursuant to the Purchase Agreement and related counteroffers, Hong was to provide over $90,000 in cash at closing, and finance the remainder for a total purchase price of $435,000. (Reed Fraud MSJ, Exs. C, D, E.) Escrow was set to close by July 27, 2005. (Reed Fraud MSJ, Ex. E.)

Although Hong was pre-approved for a loan, the underwriter later refused to underwrite the loan due to a zoning issue. (CMSJ, Ex. A at 70; Reed Fraud MSJ, Ex. B; Salls Decl., Ex. 3 at 203, Ex. 5 at 136, 147.) Hong and the seller agreed to extend the time in which Hong could obtain funds to buy the land to August 12, 2005, and in exchange Hong released the $10,000 deposit to the seller. (Reed Fraud MSJ, Ex. H.)

Because Hong could not obtain conventional financing in time to buy the land under the Purchase Agreement's escrow date, Ed referred Hong to Defendant Adam B. Kearney (“Kearney”) to assist in obtaining financing. (Salls Decl., Ex. 4 at 14.) Kearney had an agreement with Ed and Barbara pursuant to which Kearney's company, ABK LLC, placed representatives in the RE/MAX Extreme office to accommodate sales, placed business cards and fliers in the RE/MAX Extreme office, and had access to any open houses or other events. (Salls Decl., Ex. 3 at 165–66, Ex. 4 at 30, 32.) In return, Kearney initially paid rent on the office space, and then later paid a per transaction fee for referrals. (Salls Decl., Ex. 3 at 175–76.) Kearney estimated RE/MAX Extreme received a fee of around $7,000 to $10,000 per month from this arrangement. (Salls Decl., Ex. 4 at 29.) Kearney had two representatives in the RE/MAX Extreme offices for approximately two years. (Salls Decl., Ex. 3 at 167.) Although the parties did not have an exclusive relationship, Ed and Barbara sent a substantial portion of their referrals to Kearney. (Salls Decl., Ex. 3 at 167–68, Ex. 4 at 30.)

Hong and Kearney agreed to an arrangement whereby Kearney would purchase the property in Kearney's own name and give Hong the option to purchase the property. (Pls.' Mot. to Amend, Ex. 1 at 208.) When Ed heard of this plan, he advised Hong to get an attorney to protect Hong's interest in the transaction. ( Id.) Hong asked if Ed knew an attorney, Ed said he did, and together they called proposed defendant Richard Tobler (“Tobler”) of the law office of Richard L. Tobler, Ltd. (“RLT”). ( Id.) Tobler agreed to draft an agreement. ( Id. at 209.) According to Ed, Tobler stated on the phone to Ed and Hong that Tobler represented Ed and Barbara, not Ed and Barbara's clients. ( Id.)

Tobler drafted the Option Agreement. (CMSJ, Ex. G, Attach. 1.) Tobler faxed the agreement to Ed with a cover sheet which indicated that Tobler prepared the draft agreement “with the understanding that RE/MAX is my client as an accommodation to the transaction. You must impress upon Mr. Hong that I do not represent him and that he seek the advice of his counsel before executing this document.” ( Id.)

Pursuant to the Option Agreement, Kearney would obtain financing and purchase the 801 Property in his own name, and Hong would have the option to purchase the 801 Property from Kearney within one year. (CMSJ, Ex. D.) Hong agreed to allow Kearney to step into his shoes under the Purchase Agreement, including receiving the benefit of the $10,000 deposit. ( Id.) Hong agreed to provide the balance of the down payment, pay all the buyer's closing costs, and make monthly installment payments to the bank on the loan Kearney would obtain to finance the property. ( Id.) Upon Hong exercising the option, Kearney would receive a $10,000 payment and Kearney and Hong would open escrow with Defendant First American Title Company (“FATCO”), through which Kearney was to convey the property to Hong with clear and marketable title in exchange for a payoff of the remaining balance owed on the loan. ( Id.)

The Option Agreement stated that Kearney was “solely a facilitator for Hong to acquire the Property, and the Exercise Fee is the sole consideration KEARNEY is to receive for acting as the facilitator to Hong acquiring the Property by means of this Option.” ( Id.) The Option Agreement stated that it was prepared by Tobler as an “accommodation through Hong's broker, and the parties acknowledge that RLT does not represent any party to this transaction.” ( Id.) The Option Agreement advised the parties to seek independent counsel and that “neither party is relying on the fact that RLT represents their interests in any aspect of this transaction.” ( Id.) Kearney and Hong executed the Option Agreement on August 10, 2005.( Id.)

Hong and the seller of the 801 Property entered into an Addendum to the Purchase Agreement pursuant to which Kearney was substituted for Hong as the buyer. (CMSJ, Ex. G, Attach. 6.) Separate and apart from the Option Agreement, Plaintiffs borrowed $100,000 at ten percent interest from Kearney to pay the earnest money due at closing. (CMSJ, Ex. E.) Plaintiffs contend they were unaware of any other charges associated with this loan, but Kearney charged them $7,000 as a flat fee. ( Id.) A Note Secured by Second Deed of Trust (the “Note”) d...