Gonzales v. Shotgun Nevada Investments, et al

Filing 105

ORDER that Case No. 2:13-cv-931 will be tried to the Court but Case No. 2:15-cv-915 will be tried to a jury. Signed by Judge Robert C. Jones on 3/3/16. (Copies have been distributed pursuant to the NEF - MMM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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TOM GONZALES,
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Plaintiff,
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vs.
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SHOTGUN NEVADA INVESTMENTS, LLC et )
al.,
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Defendants.
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TOM GONZALES,
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Plaintiff,
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vs.
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DESERT LAND, LLC et al.,
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Defendants.
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2:13-cv-00931-RCJ-VPC

2:15-cv-00915-RCJ-VPC
ORDER

These consolidated cases arises out of the alleged breach of a settlement agreement that

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was part of a confirmation plan in a Chapter 11 bankruptcy action. For the reasons given herein,

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the Court determines that Case No. 2:13-cv-931 will be tried to the Court and Case No. 2:15-cv-

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915 will simultaneously be tried to a jury.

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I.

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FACTS AND PROCEDURAL HISTORY
Case No. 2:13-cv-931 is the Lead Case and the second action in this Court by Plaintiff

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Tom Gonzales concerning his entitlement to a fee under a Confirmation Order the undersigned

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entered years ago while sitting as a bankruptcy judge.

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A.

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On December 7, 2000, Plaintiff loaned $41.5 million to Desert Land, LLC and Desert

The Previous Case

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Oasis Apartments, LLC to finance their acquisition and/or development of land (“Parcel A”) in

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Las Vegas, Nevada. The loan was secured by a deed of trust. On May 31, 2002, Desert Land

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and Desert Oasis Apartments, as well as Desert Ranch, LLC (collectively, the “Desert Entities”),

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each filed for bankruptcy, and the undersigned jointly administered those three bankruptcies

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while sitting as a bankruptcy judge. The court confirmed the second amended plan, and the

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Confirmation Order included a finding that a settlement had been reached under which Gonzales

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would extinguish his note and reconvey his deed of trust, Gonzales and another party would

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convey their fractional interests in Parcel A to Desert Land so that Desert Land would own 100%

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of Parcel A, Gonzales would receive Desert Ranch’s 65% in interest in another property, and

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Gonzales would receive $10 million if Parcel A were sold or transferred after 90 days (the

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“Parcel Transfer Fee”). Gonzales appealed the Confirmation Order, and the Bankruptcy

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Appellate Panel affirmed, except as to a provision subordinating Gonzales’s interest in the Parcel

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Transfer Fee to up to $45 million in financing obtained by the Desert Entities.

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In 2011, Gonzales sued Desert Land, Desert Oasis Apartments, Desert Oasis Investments,

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LLC, Specialty Trust, Specialty Strategic Financing Fund, LP, Eagle Mortgage Co., and Wells

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Fargo (as trustee for a mortgage-backed security) in state court for: (1) declaratory judgment that

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a transfer of Parcel A had occurred entitling him to the Parcel Transfer Fee; (2) declaratory

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judgment that the lender defendants in that action knew of the bankruptcy proceedings and the

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requirement of the Parcel Transfer Fee; (3) breach of contract (for breach of the Confirmation

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Order); (4) breach of the implied covenant of good faith and fair dealing (same); (5) judicial

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foreclosure against Parcel A under Nevada law; and (6) injunctive relief. Defendants removed
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that case to the Bankruptcy Court. The Bankruptcy Court recommended withdrawal of the

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reference because the undersigned had issued the underlying Confirmation Order while sitting as

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a bankruptcy judge. One or more parties so moved, and the Court granted the motion. In that

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case, Gonzales v. Desert Land, LLC, 3:11-cv-613, the Court dismissed the second and fifth

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causes of action and later granted certain defendants’ counter-motion for summary judgment as

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against the remaining claims. Plaintiff asked the Court to reconsider and to clarify which, if any,

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of its claims remained, and defendants asked the Court to certify its summary judgment order

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under Rule 54(b) and to enter judgment in their favor on all claims. The Court denied the motion

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to reconsider, clarified that it had intended to rule on all claims, and certified the summary

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judgment order for immediate appeal. Defendants submitted a proposed judgment, which the

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Court signed, and Plaintiff asked the Court to enjoin defendants from further encumbering Parcel

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A with loans or mechanic’s liens until the Court of Appeals ruled, a motion the Court denied.

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The Court of Appeals affirmed, ruling that the Parcel Transfer Fee had not been triggered based

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on the allegations in that case, and that Plaintiff had no lien against Parcel A.

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B.

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In the present Lead Case, Case No. 2:13-cv-931, also removed from state court, Plaintiff

The Lead Case

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recounts the Confirmation Order and the Parcel Transfer Fee. (See Compl. ¶¶ 10–14, Apr. 10,

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2013, ECF No. 1, at 11). Plaintiff also recounts the history of the ‘613 Case. (See id. ¶¶ 17–21).

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Plaintiff alleges that Defendant Shotgun Nevada Investments, LLC (“Shotgun”) began making

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loans to the Desert Entities for the development of Parcel A between 2012 and January 2013

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despite its awareness of the Confirmation Order and Parcel A transfer fee provision therein. (See

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id. ¶¶ 22–23). Plaintiff sued Shotgun, Shotgun Creek Las Vegas, LLC, Shotgun Creek

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Investments, LLC, and Wayne M. Perry for intentional interference with contract, intentional

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interference with prospective economic advantage, and unjust enrichment based upon their

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having provided financing to the Desert Entities to develop Parcel A. Defendants removed and
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moved for summary judgment, arguing that the preclusion of certain issues decided in the ‘613

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Case necessarily prevented Plaintiffs from prevailing in the present case. The Court granted that

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motion as a motion to dismiss, with leave to amend.

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Plaintiff filed the Amended Complaint (“AC”). (See Am. Compl., Aug. 20, 2013, ECF

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No. 28). Plaintiff alleges that the Confirmation Order permitted Parcel A to be used as collateral

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for up to $25,000,000 in mortgages of Parcel A itself or as collateral for a mortgage securing the

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purchase of real property subject to the FLT Option if the proceeds were used only for the

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purchase of that real property, but that any encumbrance of Parcel A outside of these parameters

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would trigger the Parcel Transfer Fee. (See id. ¶¶ 15–16). Various Shotgun entities made

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additional loans to the Desert Entities in 2012 and 2013 “related to the development of Parcel

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A.” (Id. ¶¶ 25–26). Multiple Shotgun entities have also invested in SkyVue Las Vegas, LLC

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(“SkyVue”), the company that owns the entities that own Parcel A. (Id. ¶ 27). Plaintiff alleges

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that the reason Perry, the principal of the Shotgun entities, did not document his $10 million

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investment was to “avoid evidence of a transfer,” and thus the triggering of the Parcel Transfer

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Fee. (See id. ¶ 29).

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Defendants moved for summary judgment, and Plaintiff moved to compel discovery

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under Rule 56(d). The Court struck the conspiracy and declaratory judgment claims from the

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AC, because Plaintiff had no leave to add them. The Court otherwise denied the motion for

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summary judgment and granted the motion to compel discovery, although the Court noted that

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the intentional interference with prospective economic advantage claim (but not the intentional

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interference with contractual relations claim) was legally insufficient. Defendants moved for

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summary judgment after further discovery and filed a motion in limine. The Court denied both

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motions. The Court refused to reconsider but granted a motion to strike the untimely jury

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demand.

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///
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C.

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In the present Member Case, Case No. 2:15-cv-915, Plaintiff sued the Desert Entities,

The Member Case

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Skyvue Las Vegas, LLC, Howard Bulloch, and David Gaffin variously in this Court for breach of

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contract, breach of the covenant of good faith and fair dealing, and conspiracy, making a timely

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jury demand in the Complaint.

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The Court recently asked the parties to show cause why both cases should not be tried to

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a jury. The Court has held a hearing.

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II.

DISCUSSION

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The Court is convinced that the Lead Case should not be tried to a jury. Although the

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trial of that case by a jury would not likely be reversable error, it is clear that Plaintiff did not

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make a timely jury demand, and Defendants were adamant at the hearing that they have prepared

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for the case under the impression that it would be tried to the Court.

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Although Defendants were also adamant at the hearing that they had so prepared as to the

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Member Case, as well, that was not a reasonable expectation, as Plaintiff clearly made a timely

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jury demand in the Complaint in the Member Case. Defendants argue that Plaintiff has acted as

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if he expected the trial to be a bench trial in the Member Case, and he has therefore waived his

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right to a jury trial in that case. The Court can find nothing in the record so indicating.

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Neither a plaintiff nor a court must continually remind a defendant that a jury trial has

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been demanded. Although a jury trial can be waived by conduct, including inaction or

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acquiescence, the Court finds no such conduct here. In Reid Bros. Logging Co. v. Ketchikan

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Pulp Co., 699 F.2d 1292 (9th Cir. 1983), the Court of Appeals ruled that a defendant’s

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continuous attempts to defeat a plaintiff’s jury right constituted a waiver of any right the

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defendant might otherwise have had to rely on the plaintiff’s own jury demand when the plaintiff

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later withdrew the demand in order to obtain an earlier trial date. Id. at 1303–05. Similar

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circumstances are not present here. Plaintiff has never attempted to prevent a jury trial in the
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Member case. A party also waives a previous jury demand by proceeding to conduct a trial to the

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court without objection. White v. McGinnis, 903 F.2d 699, 700 (9th Cir. 1990). Those

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circumstances are also not present here.

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Defendants argue that failing to mention a prior jury demand and permitting a court to set

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a bench trial can therefore constitute a waiver of a jury trial. That is probably true in some

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circumstances, but the Court finds that under the circumstances here there was no waiver. In this

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case, the Court originally set the “bench trial” for July 27, 2015 in the Lead Case, before

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consolidation. The Court later reset the “bench trial” for August 31, 2015. On August 10, 2015,

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the Court again reset the “bench trial” for December 7, 2015. The next day, the Court

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consolidated the cases. On September 16, 2015, the Court granted a stipulation to continue the

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“trial” (not “the bench trial”) to May 23, 2016. The Court has never entered a pretrial order

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indicating a bench trial in the Member Case or otherwise indicated that the case would not be

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tried to a jury such that a defendant expecting a jury trial in the Member Case should have been

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expected to object. The Court cannot find a waiver of the constitutional right to trial by jury

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under these circumstances.

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CONCLUSION
IT IS HEREBY ORDERED that Case No. 2:13-cv-931 will be tried to the Court but Case
No. 2:15-cv-915 will be tried to a jury.
IT IS SO ORDERED.
Dated this 3rd day of March, 2016.

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_____________________________________
ROBERT C. JONES
United States District Judge

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