Leeward Capital, L.P. v. Archon Corp.
759 F. Supp. 2d 1249
D. Nev.2010Background
- Archon issued Exchangeable Redeemable Preferred Stock (EPS); Leeward Capital holds 60,000 EPS shares.
- Certificate governs dividends, liquidation rights, and redemption price; dividends are fully cumulative and may be paid in cash or in kind.
- Archon paid first six dividends in kind; after that, dividends accrued rather than paid in cash.
- On August 31, 2007 Archon redeemed EPS for $5.241 per share, allegedly below the Liquidation Preference calculated under the Certificate.
- Shaw v. Archon (prior related case) held the Certificate unambiguous and that compound dividends were correct; this case seeks final judgment consistent with that interpretation.
- Plaintiff moves for summary judgment and prejudgment interest; Archon moves for summary judgment and for reconsideration; court also strikes several affirmative defenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Certificate unambiguously requires compound dividends | Leeward argues the Certificate unambiguously yields compound dividends per Shaw. | Archon contends the Certificate is ambiguous and allows a different interpretation. | Certificate unambiguous; compound dividends correct. |
| Whether Archon's redemption price breached the Certificate | Redemption price should equal Liquidation Preference including accrued dividends. | Redemption price paid complied with the Certificate's terms. | Archon breached by paying $5.241 vs. $8.69 Liquidation Preference; damages awarded. |
| Whether affirmative defenses (equitable estoppel, lack of standing, unclean hands, failure to mitigate, statute of limitations) should be struck | Some defenses are legally insufficient and should be stricken. | Affirmative defenses should remain; arguments preserved. | Equitable estoppel and mitigation defenses struck; others abandoned or unproven remain; affirmative defenses limited. |
| Whether prejudgment interest is proper and at what rate | Nevada law sets interest rate; prejudgment interest applies from breach date. | Rate and accrual contested; follow governing law. | Prejudgment interest awarded at Nevada rate applicable to the breach; amount calculated. |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (Sup. Ct. 1986) (summary judgment standard: genuine disputes of material fact)
- Celotex Corp. v. Catrett, 477 U.S. 317 (Sup. Ct. 1986) (summary judgment burden shifting)
- In re Harrison Living Trust, 112 P.3d 1058 (Nev. 2005) (equitable estoppel elements; discretion to strike defenses)
- Donovan v. Schmoutey, 592 F. Supp. 1361 (D. Nev. 1984) (court’s discretion to strike affirmative defenses)
- Conner v. S. Nev. Paving, Inc., 103 Nev. 353 (Nev. 1987) (mitigation of damages doctrine in Nevada)
- Kerala Props., Inc. v. Familian, 137 P.3d 1146 (Nev. 2006) (factors for awarding prejudgment interest in Nevada)