Source: http://nv.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180309_0002894.DNV.htm/qx
Timestamp: 2019-04-25 04:15:55+00:00

Document:
FindACase | Eagle SPE NV1 Inc. v. Southern Highlands Development Corp.
Eagle SPE NV1 Inc. v. Southern Highlands Development Corp.
SOUTHERN HIGHLANDS DEVELOPMENT CORP., et al., Defendants.
This case involves application of a statutory provision formerly codified at NRS § 40.459(1)(c) (“Subsection (1)(c)”), which placed additional limitations upon the right of a successor-creditor to recover on a deficiency. The Court granted summary judgment in favor of Defendants, finding that: Subsection (1)(c) applies to Eagle's deficiency claim (ECF No. 66); and Eagle failed to offer specific evidence to show that the amount of consideration it paid was more than the sale price of the Property (ECF No. 146).Because the Court found that Eagle was not entitled to a deficiency, the Court denied Eagle's motion for summary judgment on its two remaining claims for breach of the Note and of the Guarantee. Defendants now move for an award of attorney's fees and costs (“Motion”). (ECF No. 149.) Plaintiff opposes (ECF No. 156) and Defendants have replied (ECF No. 159). For the reasons discussed herein, the Motion is denied.
Defendants' Motion relies on the fees provision in the Loan Agreement. (ECF No. 149 at 8-10.) Plaintiff counters that it did not bring any claim under the Loan Agreement and that its claims for breach of contract are based on the repayment provisions of the Note and the Guarantee. (ECF No. 156 at 8-11.) The Court agrees with Plaintiff.
Nevada law permits attorneys' fees to be awarded if authorized by statute, rule or contract. Frank Settelmeyer & Sons, Inc. v. Smith & Hammer, Ltd., 197 P.3d 1051, 1059 (Nev. 2008). In determining whether a contractual provision allows for the recovery of fees, the court should apply the general rules governing contract interpretation. See Debron v. Bunch, 215 P.3d 35, 37 (Nev. 2009). The Nevada Supreme Court has offered this caution: “[w]here a contract provision purports to allow attorney's fees in an action arising out of the terms of the instrument, we will not construe the provision to have broader application.” Id. (quoting Campbell v. Nocilla, 692 P.2d 491, 493 (Nev. 1985)).
Defendants argue that the Loan Agreement's fees provision permits the Court to award fees to Defendants as the prevailing parties. (ECF No 149 at 8-10.) However, Plaintiff's two breach of contract claims involved the Note and the Guarantee (ECF No. 67 at 6), not the Loan Agreement. The first claim for relief alleges that “[t]he Borrowers defaulted on its obligations under the Note by failing to pay all amounts due thereunder when it matured on November 12, 2009.” (Id.) The second claim for relief alleges that the Guarantors have similarly failed to fulfill their obligations under the Guarantee. (Id.) As Plaintiff correctly pointed out, the Note and the Guarantee do not contain a fees provision awarding fees to Defendants in the event they prevail.
In their reply, Defendants argue that even if the Court looks beyond the Loan Agreement, Defendants are entitled to fees under the Note, the Deed of Trust and the Guarantee because these agreements' one-sided fees provisions “must be read as reciprocal as a matter of law.” (ECF No. 157 at 6.) However, there are two problems with this argument.
Defendants cite to an unpublished Nevada Supreme Court decision, Solky v. Smith, No. 60008, 2013 WL 7155016 (Nev. Oct. 31, 2013), but the court in that case did not address the defendants' argument that one of the agreements at issue “is one-sided and fails for lack of mutuality of the remedy because only [the plaintiffs] could recover attorney fees.” Id. at *3 n. 3. Instead, the court reasoned that the second agreement “contained the proper mutuality of remedy.” Id. The court affirmed the district court's decision to award fees to the defendants “because the plain language of both [agreements] provided that [the defendants] were entitled to attorney fees.” Id. at *3. As support, the court cited to Rowland v. Lepire, 662 P.2d 1332, 1337 (Nev. 1983). Solky, 2013 WL 7155016 at *3 n. 3. In Rowland, the court found that the district court's conclusion that the prevailing parties were entitled to fees under a theory of mutuality of remedy where the governing agreement contained only a one-sided fee provision to lack “legal or factual support.” Rowland, 662 P.2d at 1337. Thus, Solky and in turn Rowland do not support Defendants' argument that the fees provisions in the Note and the Guarantee should be construed as reciprocal to entitle Defendants to recover their attorney's fees. Defendants' proposed reading also runs counter to the general rule of contract interpretation-that the court should not construe contractual fees provision “to have broader application.” See Debron, 215 P.3d at 37.
The fees provisions in the Note and Guarantee do not provide for fees to be awarded to the Borrowers or the Guarantors in the event they prevail in a dispute. Accordingly, Defendants cannot rely on these agreements to support their request for fees.

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