592 B.R. 709
Bankr. D. Nev.2018Background
- Charleston Associates (Debtor) owned a shopping center; a 42-acre third phase left ~23 acres undeveloped ("Undeveloped Land"). CNB held a Deed of Trust; after default CNB foreclosed (Aug 11, 2009) and later sold the land to RAS.
- Dispute concerned whether "Declarant Rights" under the Grant of Reciprocal Easements and Declaration (REA) passed to CNB (and then RAS) via foreclosure, or remained with Charleston after a post-foreclosure REA Amendment purporting to transfer those rights to an affiliate (BFV).
- Charleston sued CNB and RAS in an adversary complaint seeking declarations (it was Declarant) and alleging stay violations and slander of title; CNB and RAS filed counterclaims including breach of the Settlement Agreement (CNB).
- This court initially granted partial summary judgment for Charleston; the district court and Ninth Circuit reversed, holding the Settlement Agreement and Deed of Trust transferred Declarant Rights to CNB at foreclosure and directing the bankruptcy court to enter summary judgment for CNB/RAS.
- On remand CNB moved for partial summary judgment on its breach-of-contract and implied-covenant counterclaims; the bankruptcy court applied the mandate/law-of-the-case, found Charleston materially interfered with the foreclosure, awarded CNB damages of $6,851,030.98 on the First Counterclaim, and entered summary judgment for CNB on Counts I, II and V of Charleston’s complaint and CNB’s Third Counterclaim per the appellate mandate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Declarant Rights passed to CNB via foreclosure | Charleston: REA Amendment and subsequent acts show it retained Declarant Rights | CNB: Deed of Trust and Settlement Agreement unambiguously included Declarant Rights; foreclosure transferred them | CNB wins — appellate mandate and Ninth Circuit held Rights passed to CNB; bankruptcy court follows mandate |
| Whether Charleston materially interfered with foreclosure (breach of Settlement Agreement §2.2) | Charleston: post-foreclosure litigation and filings protected by litigation privileges; also raises unclean-hands defense | CNB: Charleston recorded REA Amendment, continued asserting rights, attempted sale to QREM — interference with foreclosure | Held for CNB — interference was material; breach found; unclean-hands and Noerr-Pennington defenses rejected |
| Measure and amount of damages for breach (credit-bid vs. property value) | Charleston: various post-sale sale prices/opinions reflect value; questions about appraisal admissibility | CNB: credit bid amount minus fair market value at foreclosure; offers testimony and 2009 appraisal valuing land at ~$18.38M | Held for CNB — admissible McKenna testimony and Garff appraisal support value; damages awarded $6,851,030.98 |
| Effect of prior fee awards and statutory foreclosure timing on CNB’s damages claim | Charleston: prior attorneys’ fees awards and Nevada deficiency statutes bar/offset CNB recovery | CNB: prior fee awards separate; Settlement Agreement permits damages for interference; credit-bid prevented a statutory deficiency | Held for CNB — prior fee awards do not preclude damages; NRS timing/deficiency arguments fail because contract expressly provided remedies for interference |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden allocation)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment genuine-issue and "scintilla" standards)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (summary judgment and requirement of more than metaphysical doubt)
- Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099 (summary judgment burden-shifting in Ninth Circuit)
- Stacy v. Colvin, 825 F.3d 563 (law-of-the-case doctrine; exceptions and abuse-of-discretion standard)
- Hall v. City of Los Angeles, 697 F.3d 1059 (rule of mandate; limits on lower courts)
- Charmicor, Inc. v. Bradshaw Fin. Co., 550 P.2d 413 (Nev. authority cited by appellate courts regarding transfer of declarant rights via sale)
- Baker & Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158 (American Rule on attorney's fees)
- Zoslaw v. MCA Distrib. Corp., 693 F.2d 870 (movant's burden on summary judgment)
- Aydin Corp. v. Loral Corp., 718 F.2d 897 (amount of evidence necessary to create genuine issue)
- Ninth Circuit decision on appeal, [citation="632 F. App'x 362"] (affirming district court reversal; holding Settlement Agreement and Deed of Trust transferred Declarant Rights to CNB)