Court Opinion

ID: 3149537
Source: CourtListenerOpinion
Date Created: 2015-10-26 21:01:11.46605+00
Date Added: 2024-06-11T12:11:03.342996
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              OCT 26 2015

                                                                         MOLLY C. DWYER, CLERK
                     UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

DEVELOPMENT SPECIALISTS, INC.,                   No. 13-16290

              Plaintiff,                         D.C. No. 2:11-cv-01364-PMP-
                                                 CWH
JPMORGAN CHASE BANK NA,

              Plaintiff-counter-defendant,       MEMORANDUM*
  And

INSOLVENCY SERVICES GROUP,
INC.,
        Plaintiff - Appellee,
 v.

MERITAGE HOMES CORPORATION;
et al.,
            Defendants-counter-claimants
- Appellants.

                    Appeal from the United States District Court
                             for the District of Nevada
                   Philip M. Pro, Senior District Judge, Presiding

                      Argued and Submitted October 21, 2015
                             San Francisco, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: THOMAS, Chief Judge and REINHARDT and McKEOWN, Circuit
Judges.

      Meritage Homes Corp. and Meritage Homes of Nevada, Inc. (“Meritage”)

request reversal of the district court’s grant of summary judgment and award of

$15,753,343.99, plus costs, in favor of Insolvency Services Group (“ISG”).

Because the parties are familiar with the facts and procedural history, we need not

recount it here. We have jurisdiction over this appeal pursuant to 28 U.S.C.

§ 1291. We review the district court’s grant of summary judgment de novo.

Cameron v. Craig, 713 F.3d 1012, 1018 (9th Cir. 2003).

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      The district court properly concluded that ISG has standing, and this case is

not moot. “[A]n assignee of a legal claim for money owed has standing to pursue

that claim in federal court, even when the assignee has promised to remit the

proceeds of the litigation to the assignor.” Sprint Comm. Co. v. APCC Servs., Inc.,

554 U.S. 269, 271 (2008). ISG acts as a sub-agent for various lenders who sold

participation interests in their recovery under the Repayment Guaranty.

      Meritage argues that this sale divested the lenders, and therefore ISG, of

standing. However, the Supreme Court has held that promises to remit the

recovery of litigation does not divest an assignee of standing. See id. Here, the

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original holder of the claim, not an assignee, has promised to remit all proceeds

from this litigation to another. Thus, ISG has an even stronger claim to standing

than the assignees in Sprint.1

      Meritage also claims that the receipt of the sale proceeds constituted

payment in full, thus mooting this action. It does not. Even if the lenders sold the

participation interests for the full amount Meritage owned, the lenders would still

be permitted to sue Meritage for this amount because the proceeds from a sale of

participation interests do not necessarily satisfy the underlying obligations, rather

they were more akin to an investment in the outcome of the litigation. The Joint

Plan of Reorganization, through which the lenders sold the participation interests,

makes clear that the sale was not intended to satisfy Meritage’s obligations.2

      Therefore, the district court correctly determined that ISG has standing, and

the action is not moot.

      1
       We deny as moot Meritage’s Motion to Supplement the Record on Appeal,
which seeks to introduce Inspirada Builders’s Motion to Stay Arbitration Pending
Determination of Meritage’s Appeal in Repayment Guarantee Action. It does not
change our conclusion that ISG has standing for the reasons stated above.
      2
        Although Meritage alleges a potential for double recovery because of the
Inspirada Builders arbitration, Meritage has not yet paid or been required to pay
anything to Inspirada Builders.

                                           3
                                         II

      Meritage further argues that JPMorgan caused Meritage to be unable to

perform under the Repayment Guaranty because JPMorgan refused to release its

lien on property Meritage attempted to purchase in April 2008. According to

Meritage, this constituted a valid tender of performance and should excuse its

obligations under the Repayment Guaranty. However, per the terms of the

Repayment Guaranty, JPMorgan was not required to release its lien when there

was an event of default, which existed at that time because South Edge, LLC failed

to make an interest payment when it came due. Lastly, Meritage argues that

JPMorgan should not have been allowed to trigger Meritage’s obligations under

the Repayment Guaranty by pursuing involuntary bankruptcy proceedings against

South Edge, LLC. But, again, this is unpersuasive because the Repayment

Guaranty defines “Bankruptcy Event” to include involuntary bankruptcies, and

nothing in the Repayment Guaranty suggests this was limited to involuntary

bankruptcies initiated by entities other than JPMorgan.

      Meritage waived its other defenses by agreeing to a waiver in the Repayment

Guaranty.

      AFFIRMED.

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