Gonzales v. Shotgun Nevada Investments, et al

Filing 174

ORDER that the scheduling order is AMENDED, and the parties may file summary judgment motions as to contractual interpretation issues no later than 3/20/2017. Responses due by 3/27/2017. Replies due by 3/31/2017. Signed by Judge Robert C. Jones on 03/17/2017. (Copies have been distributed pursuant to the NEF - KW)

1
2
3
4
5
6

UNITED STATES DISTRICT COURT

7

DISTRICT OF NEVADA

8
TOM GONZALES,
9
10
11
12
13
14
15
16
17
18
19

)
)
Plaintiff,
)
)
vs.
)
)
SHOTGUN NEVADA INVESTMENTS, LLC et )
al.,
)
)
Defendants.
)
)
)
TOM GONZALES,
)
)
Plaintiff,
)
)
vs.
)
)
DESERT LAND, LLC et al.,
)
)
Defendants.
)
)

20

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

21

was part of a confirmation order in a Chapter 11 bankruptcy action.

22

I.

FACTS AND PROCEDURAL HISTORY

23

Case No. 2:15-cv-915 is the third and only remaining action in this Court by Tom

24

Gonzales concerning his entitlement to a fee under a confirmation order the undersigned entered

25

years ago while sitting as a bankruptcy judge. A jury trial is scheduled for April 17, 2017.

1

A.

2

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

The Previous (First) Case

3

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

4

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

5

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

6

each filed for bankruptcy, and the undersigned administered those bankruptcies while sitting as a

7

bankruptcy judge. The court confirmed the Second Amended Plan of Reorganization (“the

8

Plan”), and the confirmation order included a finding that a settlement had been reached under

9

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

10

party would convey their fractional interests in Parcel A to Desert Land so that Desert Land

11

would own 100% of Parcel A, Gonzales would receive Desert Ranch’s 65% interest in another

12

property, and Gonzales would receive $10 million if Parcel A were sold or transferred after 90

13

days (“the Parcel A Transfer Fee”). Gonzales appealed the confirmation order, and the

14

Bankruptcy Appellate Panel affirmed, except as to a provision subordinating Gonzales’s interest

15

in the Parcel A Transfer Fee to up to $45 million in financing.

16

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

17

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

18

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

19

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

20

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

21

requirement of the Parcel A Transfer Fee; (3) breach of contract; (4) breach of the implied

22

covenant of good faith and fair dealing; (5) judicial foreclosure against Parcel A under Nevada

23

law; and (6) injunctive relief. Defendants removed that case to the Bankruptcy Court. The

24

Bankruptcy Court recommended withdrawal of the reference because the undersigned had issued

25

the underlying confirmation order while sitting as a bankruptcy judge. One or more parties so
Page 2 of 5

1

moved, and the Court granted the motion. In that case, Gonzales v. Desert Land, LLC, 3:11-cv-

2

613, the Court dismissed the second and fifth causes of action and later granted certain

3

defendants’ counter-motion for summary judgment as against the remaining causes of action.

4

Plaintiff asked the Court to reconsider and to clarify which, if any, of its claims remained, and

5

defendants asked the Court to certify its summary judgment order under Rule 54(b) and to enter

6

judgment in their favor on all claims. The Court denied the motion to reconsider, clarified that it

7

had intended to rule on all claims, and certified the summary judgment order for immediate

8

appeal. Defendants submitted a proposed judgment, which the Court signed, and Plaintiff asked

9

the Court to enjoin defendants from further encumbering Parcel A with loans or mechanics liens

10

until the Court of Appeals ruled, a motion the Court denied. The Court of Appeals affirmed,

11

ruling that the Parcel A Transfer Fee had not been triggered based on the allegations in that case,

12

and that Plaintiff had no lien against Parcel A.

13

B.

14

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

15

the confirmation order and the Parcel A Transfer Fee. (See Compl. ¶¶ 10–14, ECF No. 1, at 11 in

16

Case No. 2:13-cv-931). Plaintiff also recounts the history of the previous case. (See id.

17

¶¶ 17–21). Plaintiff alleges that Defendant Shotgun Nevada Investments, LLC (“Shotgun”)

18

began making loans to the Desert Entities for the development of Parcel A between 2012 and

19

January 2013 despite its awareness of the confirmation order and Parcel A Transfer Fee provision

20

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

21

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

22

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

23

their having provided financing to the Desert Entities to develop Parcel A. Defendants removed

24

and moved for summary judgment, arguing that the preclusion of certain issues decided in the

25

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

The Lead (Second) Case

Page 3 of 5

1
2

that motion as a motion to dismiss, with leave to amend.
Plaintiff filed the Amended Complaint (“AC”). (See Am. Compl., ECF No. 28 in Case

3

No. 2:13-cv-931). Plaintiff alleges that the confirmation order permitted Parcel A to be used as

4

collateral for up to $25,000,000 in deeds of trust against Parcel A itself or as collateral for a

5

mortgage securing the purchase of real property subject to the FLT Option if the proceeds were

6

used only for the purchase of that real property, but that any encumbrance of Parcel A outside of

7

these parameters would trigger the Parcel A Transfer Fee. (See id. ¶¶ 15–16). Various Shotgun

8

entities made additional loans to the Desert Entities in 2012 and 2013 “related to the

9

development of Parcel A.” (Id. ¶¶ 25–26). Multiple Shotgun entities have also invested in

10

SkyVue Las Vegas, LLC (“SkyVue”), the company that owns the entities that own Parcel A. (Id.

11

¶ 27). Plaintiff alleges that the reason Perry, the principal of the Shotgun entities, did not

12

document his $10 million investment was to “avoid evidence of a transfer,” and thus the

13

triggering of the Parcel A Transfer Fee. (See id. ¶ 29).

14

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

15

Court struck the conspiracy and declaratory judgment claims from the AC, because Plaintiff had

16

no leave to add them. The Court otherwise denied the motion for summary judgment and

17

granted the motion to compel discovery, although the Court noted that the intentional

18

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

19

contractual relations claim) was legally insufficient. Defendants moved for summary judgment

20

after further discovery and filed a motion in limine. The Court denied both motions as well as a

21

motion to reconsider but granted a motion to strike the untimely jury demand.

22

C.

23

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

The Member (Third) Case

24

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

25

contract, breach of the covenant of good faith and fair dealing, and conspiracy, making a timely
Page 4 of 5

1

jury demand. The Court asked the parties to show cause why both cases should not be tried to a

2

jury. After a hearing, the Court ruled that the Lead Case would be tried to the Court but the

3

Member Case would simultaneously be tried to a jury. The Court later de-consolidated the cases

4

for trial. Midway through a bench trial in the Lead Case in February and March 2017, the parties

5

settled the claims. A jury trial is scheduled for the Member Case beginning April 17, 2017.

6

II.

DISCUSSION

7

As discussed during the bench trial of the Lead Case, the construction of disputed terms

8

in the Plan is not a simple matter, and the Court is concerned that a jury in the Member Case, if

9

left to construe the disputed provisions with no guidance other than general principles of contract

10

interpretation given in the Nevada Supreme Court’s standard jury instructions, may have

11

difficulty doing so. No party, however, has moved for summary judgment in this case as to a

12

construction of the most contentious terms of the Plan, specifically whether the “Parcel A

13

Permitted Financing” term of section A(e) of Article III of the Plan sets $25 million in liens

14

against Parcel A as a trigger of the “Parcel A Transfer Fee.” The Court invites the parties to

15

move for summary judgment on this issue or any other disputed issue of contractual

16

interpretation before trial.

17
18

CONCLUSION
IT IS HEREBY ORDERED that the scheduling order is AMENDED, and the parties may

19

file summary judgment motions as to contractual interpretation issues no later than March 20,

20

2017. Responses will be due March 27, 2017, and replies will be due March 31, 2017.

21

IT IS SO ORDERED.

22

Dated this 13th day of March, 2017.

23
24

_____________________________________
ROBERT C. JONES
United States District Judge

25
Page 5 of 5