F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

M E R I T A G E H O M E S O F N E V A D A , I N C ., F KA MTH-Homes Nevada I n c., Plaintiff-Appellant

,

v

.

F E D E R A L D E P O S I T I

N S U R A N C E C O R P O R A T I O N , as Receiver for F irst National B ank of Nevada, Successor-in-I

nterest to F irst National B ank of Ariz ona; I N C A C A P I T A L F U

N D 37 L L C, Defendants-Appellees

. N o. 12-15663

D.C. No. 2:09-cv-01950- PMP-RJ J

OPI NI ON

A ppeal from the United States District Court for the District of Nevada Philip M. Pro, Senior District J udg e, Presiding

Arg ued and Submitted March 11, 2014—San F rancisco, California

F iled April 15, 2014

B efore: J . Clifford W allace, M. Marg aret McKeown, and Ronald M. Gould, Circuit J udg es.

Opinion by

J udg e W allaceM E R I T A G E H O M E S O F N E V A D A V

. F DI C 2

SUMMARY *

Satisf action of Judgm ent

The panel affirmed the district court’s orders in a n appeal broug ht by Meritag e Homes of Nevada, I nc. challeng ing the denial of its motion to strike or in the alternat i v e i ssue a

summons to certain t h ird parties to the action, and deny ing Meritag e’s motion for reconsideration.

Meritag e obtained a default judg ment ag ainst the F ederal Depo s it I nsurance Corporation (“F DI C”), and the F DI C provided Meritag e w ith a receiver’s certificate in the amount of the judg men t

. M e ritag e soug ht to have the district court strike the F D I C’s satisfaction of judg ment and instead direct the F D I C to p ay the judg ment “in cash.” A lternatively

, Meritag e requested that the district court issue a summons to a pair of third parties to the action, Rescon and Stearns.

The panel held that the district c ourt did not abuse i t s discretion in ruling that the receiver’s certificate satisfied the ju d gment ag ainst the F DI C. The panel also held that the district court did not commit c lear error in declining to issue a summons to third parties Rescon and Stearns.

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.M E R I T A G E H O M E S O F N E V A D A V

. F DI C 3

COUNSEL

Alex a nder Arpad ( arg u ed) a n d Christopher H. B y rd, F ennemore Craig J ones Varg as, P.C., L as Veg as, Nevada, for Petitioner-Appellant.

J oseph B rooks (arg

ued), Kathry

n R. N orcross, and L awrence H. Richmond, F ederal Deposit I nsu r a n ce Corporation, Arling ton, Virg inia, for Defendant-Appellee.

OP INION

W A L L ACE, Senior Circuit J udg e:

Appellant Meritag e Homes of Nevada, I nc. ( M e ri tag e) appeals from the district court’s judg ment a nd c halleng e s orders deny ing its motion to strike or, in the alternative, issue

a summons to certain third parties to this action and deny ing its motion for reconsideration. The crux of t he dispute is whether the d istrict court abused its discretion whe n i t allowed the F ederal Deposit I nsurance Corporation (F DI C) to satisfy a judg ment ag ainst it with a r e ceiver’s certificate rather than w ith cash. The district court had jurisdiction under 12 U

. S

. C

. § 1819(b)(2) & 28 U.S.C. § 1331, we have jurisdiction under 28 U.S.C. § 1291, and we affirm.

I

.

This case beg an in 2 009, when Meritag e submitted an administrative claim to the F DI C in its capacity as re c e i v e r for the F irst N ational B ank of Nevada (F irst N ational). I n its administrative claim, Meritag e asserted that it had provided certain services to I

NCA Ca pital F und 37, L L C (I nca)M E R I T A G E H O M E S O F N E V A D A V

. F DI C 4

p u r s u ant to ag reements that also involved F irst National’ s predecessor bank, whi ch had “ag reed to timely perform a nd

cure a ll unfulfilled oblig ations of I n ca” under the ag reements. As a result of these ag reeme n t s , M e ritag e stated that F irst National was “justly

indebted” to it.

The F D I C disallowed Meritag e ’s administrative claim. I t

ex p lained its decision by stating that the d o c u mentation for the claim had not provided “proof of a g uarantee or promise
to fulfill the oblig ations of the b orrower.” I n response, Meritag e filed this action in the District of Nev a d a

. I n its complaint, Meritag e broug ht various claims ag ainst both I nca and the F DI C. I n particular, Meritag e a lleg ed that it had been “damag ed b y [ F irst Natio n a l’s] breach of the [ ag reements discussed above] ”; that the F DI C, “ a s receiver for [ F irst National] ,” was “liable for breach o f the c o v e n a nt of g ood faith a nd fair dealing due to [ F irst National’s] failure to satisfy all oblig ations of I n c a u nder [one of the ag reements] ; and that the F DI C had been “unjustly enriched by Meritag e’s valuable, uncompensated w ork” as a “result of non-pay ment by [ F irst National] . . . for which the F DI C is now liable.”

W h en n either the F DI C nor I nca res p o nded to the complaint, Meritag e moved for d efault judg m ent, which the district cou r t g ranted. The judg ment entered b y the district
court stated that Meritag e had p e r f o r med on its ag reements with I nca and F irst National, a n d t h at pay ment to Meritag e had become due for this work “ n o later than J une 28, 2008.” The judg ment went on to state t h at “ [ o] n or about J uly 25, 2008, the F DI C was appointed receiver of [ F irst National]

, thereby assuming all assets and liabilities of [ F irst National]

, including the oblig ation to p ay Meritag e for the breach o f [ the
ag reements] .” According ly

, judg ment was entered in favor

o f M eritag e and “ag ainst the F DI C and [ I nca]
, jointly a n dM E R I T A G E H O M E S O F N E V A D A V

. F DI C 5

severally

, in the pr i n cipal amount of $ 436,357.12,” along with interest. The judg ment did not specify how it should be satisfied.

Subsequently

, the F DI C p rovided M e ritag e with a receiver’s certificate in the amount of the judg ment

. T h e F DI C also filed with the d i s t r i c t court a Satisfaction o f J udg me n t , in which it stated that it had “satisfied” the judg ment e ntered ag ainst it by delivering a receiver’s certificate to Meritag e. I n response, Meritag e filed a motion
st y l e d a s a “Motion to Strike Satisfaction of J udg ment, I mpo s e Cash Pay

ment L iability

, or, in the Alternative I ssue Summons f

or J oint Oblig ors” (Motion to Strike). I n its Motion to St ri k e , Meritag e soug ht to have the district court strike the F DI C’s Satisfaction o f J udg ment and instead direct th e FD I C t o pay the judg ment “in cash.” I n the alternative, Meritag e requested that the district court issue a summons to

a pair of third parties to this action (Rescon and S t e arns). Meritag e made this request on the basis of its asserti o n t h at Rescon and Stearns were “joint oblig ors ” o n the judg ment. Thus, Meritag e contended that it was “entitled to pursue its remedies” ag ainst Rescon and Stearns “pursuant to the

ex e c ution provisions of the Nevada Revised Statutes,” a nd

r e q u e sted that a summons be issued to Rescon and Stear n s according ly

.

The district court denied Meritag e’s Motion to Strike a nd fo u nd that the r eceiver’s certificate had “effectively satisfie[ d] ” the judg ment. Meritag e then moved for reconsideration, which the district court also denie d. This appeal followed.M E R I T A G E H O M E S O F N E V A D A V

. F DI C 6

I I

.

W e beg in our analy sis by c onsidering the ap p r o p r iate standards of r eview. The p resent appeal is from the district court’s denial of Meritag e’s motion for reconsiderati on, which we w ould normally review f or abuse of discretion. See Shalit v

. Coppe
, 182 F .3d 1 124, 1126–27 (9th Cir. 1999). I n that motion for reconsideration, Meritag e soug ht to have the district court r econsider its ruling o n the Motion to Strike discussed above. Our precedent does not make clear the standard of review for a district court’s rulin g o n s u ch a motion. Moreover, the leg a l basis for the Motion to Strike is unclear. Th e m o tion itself does not identify the leg al authority un d e r w hich it was b roug h t, and the district court denied the motion in a terse order that offers no ex planation of its ruling

.

W ithout reaching the abstract q uestion of the standard o f review for any motion to strike the satisfaction of a judg ment,

we conclude that the appropriate standa r d o f review for the district court’s ruling on the particula r motion before us is abuse o f discretion. Reg ardless of how it was captioned, the motion broug ht by Mer i t age was effectively a motion to amend the judg ment. W e construe the motion i n t h at lig ht because it soug ht to require the F DI C to satisfy the judg ment with cash rather than a receiver’s certificate, even thoug h the judg men t i t self did not state such a requirement. B e cause a district court’s decision “rega r d i n g a motion to amend the judg ment” is reviewed for abuse of discretion, Barber v. State of Hawai’i
, 42 F .3d 1185, 1198 ( 9th Cir. 1994), we conclude that the p roper sta n d a r d o f r eview for the ruling on the Motion to Strike in this case is abuse of discretion.M E R I T A G E H O M E S O F N E V A D A V

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Meritag e’s Motion to Strike in the alternati v e also requested the district c o urt to issue a summons to Rescon a nd Stearns p ursuant to “the ex ecution provisions of the Nevada Revised Statutes,” N.R. S

. § 17.030. Ag ain, our p recedent does not make clear the s t a n d ar d o f review under w hich we

are to consider a district court’s ruling on such a r eq u e st. I ndeed, in the Motion to Strike, Meritag e acknowledg ed that there “ has been no c a se l a w interpreting ” the relevant provisions of the Nevada Revised Statutes.

I n the absence of any such case law, we conclude that the
pr o p er standard of r eview for the district court’s ruling here is clear e rror. W e reach this c onclusion by analog iz ing to our precedent dealing w i th summonses issued by the I nternal Revenue Service ( I RS). S ee, e

. g. , U

n i t ed States v. Jose
, 131 F

. 3d 1325, 1327–28 (9th Cir. 1997) ( en banc) (discussing
g enerally the summons power of the I RS). T h e I RS is “authoriz e d by statute to inquire into t a x l i abilities” b y issuing summonses to third parties “in connection with a tax liability investig a tion,” but must b ring an action in d i s t r i ct court to enforce such a summons. Uni t e d S t ates v. Richey

, 632 F .3d 5 59, 564 ( 9th Cir. 2 0 1 1 ) (citation omitted). L ikewise, Meritag e’s M o t ion to Strike was based on the premise that M e r i tag e w as authoriz e d by a statute—here,

s e c t i o n 1 7.030 of the N evada Revised Statutes—to seek to have a summons issued ag a inst third parties to this action. I n the I RS contex t, we “review the d istrict court ’ s s u m monsenforcement decisions for clear error.” Id. at 563 ( c i t a t i on omitted). Thus, analog o usly

, we hold that the district court’s denial of Meritag e’s r equest for a summons is to be reviewed for clear error.M E R I T A G E H O M E S O F N E V A D A V

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I I I

. Having established the standards of review, we turn to the merits. W e f

irst consider whether the district court abused its discretion by d eclining to strike the F DI C’s Satisfaction o f J udg ment and instead f

inding that the receiver’s cer t i ficate had satisfied the judg ment ag ainst the F DI C. W e then consider whether the district court clearly erred when it declined to issue a summons to Rescon and Stearns.

A.

As discussed above, w e review the district court’s denial

o f M e r itag e’s Motion to Strike for abuse of discretion. I n deciding whether the district court a bused its discretion, we “employ a two-part test.” Pim e n t e l v. Dreyfus

, 670 F .3d 1096, 1105 (9th Cir. 2012). F irst, w e “determine de novo whether the trial court identified the correct leg al r u l e to apply to the relief r equested.” Id. ( citation omitted). Second, we determine w hether the “district court’s application of the
correct leg al standard was (1) illog ical

, ( 2 ) implausible, o r (3) without support in inferences that may be drawn from the facts in the record.” Id. (citation omitted). “A decision based

on an erroneous leg al standard or a clearly erroneous finding of fact amounts to an abuse of discretion.” Id.

I n this contex t, the “correct leg al rule” is clear. W e have

ex p ressly held that “[ t] h ere is no question that the F DI C may pay creditors with r eceiver’s certificates instead o f with cash.” Battista v. FDIC
, 195 F .3d 1 113, 1116 (9th Cir. 1999). As we ex plained in B attista
, “[ t] o require the F DI C to pay certain c reditors in cash would allow those creditors to ‘jump
t h e l i n e,’ r ecovering more than their pro rata share of the liquidated assets, if the financial institution’s debts ex ceed itsM E R I T A G E H O M E S O F N E V A D A V

. F DI C 9

assets.” Id. W e reached the same co n c l u s ion in Resolution Trust Corp. v. Titan Financial Corp.
, the first case in which

we held that a r eceiver’s certificate may be used by the F DI C

“ to pay creditors.” 36 F

. 3d 891, 892 (9th Cir. 1994). I n reaching that c onclusion

, we ex pressly “ag ree[ d] with two other courts which hav e addressed this issue.” Id. One o f those two cases was Midlantic Natio n a l B ank/North v

. Federal Reserve B ank of New Y ork

, 814 F

. Supp. 1195 (S.D.N.Y. 1993). I n Midlantic

, t h e c ourt considered a “money judg ment” that had been entered in favor of the plaintiff by another court. I d. at 1 196. That plaintiff received

a receiver’s certificate f

rom the F DI C f

or the “full amount o f
t h e money judg ment” rather than cash. Id. The court concluded th a t t h e plaintiff was “ not entitled to any relief bey ond” the receiver’s certificate it had received, and that to conclude otherwise w ould be to “effectivel y circumvent the statutory procedures established in order to allow equita ble distributi o n o f a n insolvent bank’s assets.” Id. at 1197. I n Resolution Trust
, we endorsed the holding o f Midlantic a nd concluded that the plaintiff was entitled only to a receiver’s certificate, and not “cash or its equivalent.” R esolution Trust
, 36 F .3d at 892–93.

Battista and Resolution Trus t h o l d that a party w ith a “money judg ment” ag ainst the F DI C i s a c reditor of the F DI C, and thus is entitled o nly to a receiver’s certificate, a nd
not to cash. According ly

, w e hold that the district c o u rt d i d
not abuse its discretion when it ruled that the receiver’s certificate provided to Merit a ge b y the F DI C satisfied the judg ment in this case.

Meritag e’s arg ument to the contrary is premised on our decision in Sharpe v. FDI C
, 1 2 6 F .3d 1147 (9th Cir. 1997). However, Sha r

p e is not controlling

. I n S h arpe , weM E R I T A G E H O M E S O F N E V A D A V

. F DI C 10

considered an action that arose following a settlement

a gr e e m ent between the plaintiffs and a bank. Id. at 115 0

. Althoug h the settle m e n t ag reement’s “ex press terms” required the b ank to make a p a y m ent to the plaintiffs via a wire transfer of funds, in ex chang e for certain documents, the bank instead provided two cashier’s checks after receivi ng the documents. Id. at 1150–51. The same day

, state reg ulators seiz ed the bank, and the F D I C w a s appointed as the bank’s receiver. Id. a t 1151. The FD I C “took p ossession of the documents” delivered by the plai ntiffs to the bank, but then notified the plaintiffs that the cashier’s checks “would not be ho n o red.” Id. I nstead, the F DI C instructed the plaintiffs to file an administrative claim, which led to the F D I C g iving the plaintiffs a receiver’s certificate in partial satisfaction o f their claim. I d.

On appeal, we held that the plaintiffs were “not creditors

o f t h e FD I C.” Id. at 1156. W e ex plained that the plaintiffs “cannot be considered creditors of the F DI C” because they

were “ a party to a pre-receivership contract breached by the FDIC .” Id. a t 1157 (emphasis added)

. This distinction was critical to our holding

. As we stated, it was “only a s a consequence of the F DI C’s breach [ of the pre-receivership contract] th a t the F DI C [ could attempt to] construe the [ plaintiffs] as creditors of the F D I C.” Id. a t 1156. W e rejected that arg ument, ex p laining that if we were to “endorse the F D I C’s assertion that the [ plaintiffs were] c reditors,” then th e “ F DI C w ould be free to breach any pre-receivership contract, keep the b enefit of the barg ain, and then escape the
consequences by hiding behind the [ administrative ] c laims process.” Id.

T h u s , our holding in Sharpe was predicated on o u r conclusion that the plaintiffs in that case were not creditors o fM E R I T A G E H O M E S O F N E V A D A V

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the F DI C. I nstea d

, we stated that the plaintiffs had a prereceivership contract that had been breached by the F DI C in its role a s receiver. A s w e pointed out, the F DI C is not allowed to breach contracts a nd then “hid[ e ] behin d ” its administrative claims process. Id. That is, the F DI C may not breach a c ontract and then compel the other party to the
contract to accept a receiver’s certificate, as the result of the F DI C’s claims process, r ather than the “benefit of the barg a in” provided for in the contract itself. Id.

Therefore, Sharpe does not control the outcom e o f this

case. That is because Meritag e , unlike the plaintiffs in Sharpe

, is a creditor of the F DI C. Here, unlike in Sharpe , it

w a s First National, rather than the F DI C, that breached t h e relevant ag reements with Meritag e. S ee sup r a a t 4. Thus, because the F

DIC did not breac h a

ny pre-receivership contract, Sharpe is inapposite.

W e find further support for this view i n our decision in McCarthy v. F

DIC
, 348 F. 3 d 1075 (9th Cir. 2003). I n McCarthy

, w e ex plained that Sharpe “was an unusual case.” Id. at 1078. W e emphasiz e d that our holding in Sharpe was predicated on the fact that the plaintiffs in that case “were not creditors” of the F DI C, and that the F DI C’s o w n b r e ach o f
contract c ould not render those plaintiffs “creditors subject to the claims process.” Id. Thus, i n M cCarthy

, we held that Sharpe is not controlling outside of its limited contex t. Id. at 1077–78. W e reach the same conclusion here.

F inally

, Meritage a r g ues in its opening brief that the receiver’s c ertificate cannot satisfy the judg ment in this c ase, because such a certificate “does not avoid a security interest.” Subsequently

, however, Meritag e has b acked away from this position. I n its reply brief, Meritag e qualified this position b yM E R I T A G E H O M E S O F N E V A D A V

. F DI C 12

stating that it “does not claim to have a

. . . common security interest.” M o r eover, at oral arg ument, counsel for Meritag e flatly asserted that Meritag e “do[ es] not cl a i m that we had a security int e r e s t .” Reg ardless, Meritag e did not present this
arg ument before the d istrict c ourt, which precludes Meritag e from raising it on appeal. See United States v. Robertson

, 52 F .3d 789, 791 (9th Cir. 1994) (ex plaining that “[ i] ssues not presented to the district court cannot g enerally be raised for the first t i m e on appeal”). According ly

, we reject this
arg ument.

I n sum, we hold that the distri c t c o u r t did not abuse its discretion in r

uling that the receiver’s certificate satisfied the judg ment ag a inst the F DI C.

B

.

W e now turn to the district court’s d e n ial of Meritag e’s request f or a summons to Rescon and Stearn s

. A s s tated above, we review this decision for cle ar error. Under the clear error standard, “[ a] s long as the district court g ot the law rig ht, it w ill not be reversed si m p l y b ecause the appellate
court would have a

r rived at a different result if it had a pplied the law to the f

acts of the case.” Shell Offshore, Inc. v

. Gr e e n p ea ce, I nc. , 709 F .3d 1281, 1286 (9th Cir. 2 013) (citation omitted).

Here, the question is whether the district court committed clear error i n n o t issuing a summons pursuant to section 17.030 of the Nevada Revised S t a t utes, which p rovides that “[ w] hen a judg ment is r e c o v e re d ag ainst o ne o r more o f several persons jointly indebted upon a n oblig ation

. . . those who were n ot orig inally served with the summons and did not appear to the action m ay be summoned to show c ause whyM E R I T A G E H O M E S O F N E V A D A V

. F DI C 13

they should not be bo und by the judg ment in the same

manner as thoug h they h a d b e en orig inally served w ith the summons.” N.R.S. § 1 7.030 (emphasis added). A s p o i n ted
out above, Meritag e asserted before the district court that there has been “no case law in t e r p r e t i ng ” this section of the Nevada Revised Statutes. L ikewise, we are not aware of any such law. I n g eneral, however, it is a principle of statutory construction that the “word ‘may ,’ when used in a s t a tute, usually implies some deg ree of discretion.” Sauer v. U .S. Dep’t o f E d u c. , 668 F .3d 644, 651 (9th Cir. 2012) (citation omitted). Here, the statute clearly say s that parties w ho were not orig inally served w ith the summons “may be summoned,”
not that they “shall be summoned.” I n l i ght of the principle that the word “may ” implies “ some deg ree of discretion,” a nd in the absence of any cases interpret ing this statute, we hold that the statute leaves it to the d iscretion of the trial court whether to issue such a summons. Thus, we conclude that the district court “g ot the law rig ht,” S h e l l O ffshore, Inc.
, 709 F .3d at 1286, insofar as it implicitly determined that the de ci s i o n whether to issue a summons was within its discretion. Under clear error review, t h a t i s t h e end o f our inquiry

, a s this “sig nificantly defe r e n t i al” standard does not permit us to reverse even if we were “convinced [ we] would have f ound d ifferently .” U

nited States v. Torlai

, 728 F .3d 932, 937 (9th Cir. 2013) (citations omitted).

According ly

, we hold that the d istrict court di d not commit clear error in declining to issue a summons to Rescon and Stearns. I n so h olding

, we ex p res s no conclusion
reg arding the possible liability of either Rescon or Stearns.M E R I T A G E H O M E S O F N E V A D A V

. F DI C 14

I V.

I n conclusion, we hold that the district court did n ot abuse its discretion in ruling that the receiver’s certificate satisfied the judg ment ag ainst the F DI C. W e also hold that the district

c o u r t d id not commit clear error in declining to issue a summons to Rescon and Stearns.

AF F IRMED

.