Court Opinion

ID: 2736894
Source: CourtListenerOpinion
Date Created: 2014-09-25 15:08:58.063739+00
Date Added: 2024-06-11T12:40:00.126902
License: Public Domain

Ritter, as CEO of the Focus Property Group, executed personal guarantees
                for these loans. 2
                             Eventually, Focus was unable to pay interest on its loans. As
                a result, Builder's Capital and Focus entered into a three-year forbearance
                agreement for each loan at issue. Because Boyd had not expressly
                consented to the forbearance agreements, he initiated a lawsuit contesting
                their enforceability. As the trial date for the lawsuit approached, Boyd,
                Ritter, and their respective counsel agreed to extend that date to provide
                the parties time to work out a resolution.
                             During the next five months, the parties developed a system to
                resolve Boyd's concerns through prepackaged bankruptcy plans
                (prepacks). Each prepack would transfer the property securing the loan at
                issue to a new entity owned by the lenders in proportion to their original
                contribution to that loan. In exchange for this ownership interest, the
                lenders would release the borrowers (e.g., JV Properties and NGA #2) and
                guarantor (Ritter) from future liability. Each loan was to have a separate
                prepack, which included a term sheet that outlined the plan and an
                operating agreement that governed the lenders' interests after the
                approval of the prepack.
                             With the new trial date approaching, Boyd, Ritter, Builder's
                Capital, JV Properties, and NGA #2 entered into the Trial Continuance

                      'The parties filed a written stipulation that all issues raised on
                appeal related to the Victor Vista loan became moot when the Victor Vista
                prepackaged bankruptcy plan was confirmed. Accordingly, we do not
                further address any issues related to the Victor Vista loan.

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                    Agreement (TCA). The TCA deferred trial so that the parties could
                    continue their attempt to resolve the case through prepacks. In the TCA,
                    the parties agreed to execute and deliver into escrow separate sets of
                    stipulations and orders (one set for each loan) for dismissal, and agreed
                    that the forbearance loan term sheets for each subject loan was null and
                    void. The parties also agreed to execute joint escrow instructions, which
                    stated that if Focus or Builder's Capital violated certain provisions of the
                    TCA with respect to a subject loan, Boyd could terminate the TCA and
                    immediately file the dismissal pertaining to that loan.
                                Additionally, the parties agreed that the prepacks for the
                    loans at issue would be substantially similar to a previously approved
                    prepack—the "Dairy Loan." The TCA also provided that Focus and Boyd
                    were required to mutually agree upon any modification to a prepack before
                    distributing it with voting ballots to the lenders for approval. If Focus
                    sent lenders prepack documents unapproved by Boyd, then Boyd could
                    terminate the TCA by written notice as to the related loan and
                    immediately file that loan's respective dismissal. The TCA also required
                    the parties to perform other actions reasonably necessary to affect the
                    purpose and intent of the TCA. Finally, the TCA stated that the
                    prevailing party in any action or proceeding brought in connection with a
                    dispute related to the terms or enforcement of the TCA would be entitled
                    to recover costs and reasonable attorney fees from the other party.
                                After tailoring prepacks as needed, Focus began to distribute
                    them. Because Boyd voted against it, the NGA #2 prepack was not
                    approved.
                                Boyd eventually sought deficiency judgments against the
                    relevant Focus companies and Ritter as guarantor related to his loan

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(
              ey,
                contributions. The Focus parties filed counterclaims for breach of contract
                and breach of the implied covenant of good faith and fair dealing, among
                other things. Ultimately, the district court filed an order granting Boyd a
                deficiency judgment with interest for each of the loans at issue. However,
                the district court also found that Boyd breached the TCA's implied
                covenant of good faith and fair dealing with respect to the NGA #2 loan
                because Boyd voted against that prepack. The district court then ordered
                Boyd to pay the attorney fees and costs associated with the NGA #2
                prepack. Additionally, the district court ordered and declared Boyd's
                ballot cast for confirmation of the NGA #2 prepack.
                            On appeal, Boyd argues that the district court erred and
                abused its discretion by (1) finding Boyd breached the implied covenant of
                good faith and fair dealing, (2) ordering Boyd's ballot cast in favor of the
                NGA #2 prepack, and (3) awarding attorney fees and costs to
                respondents/cross-appellants.
                                                DISCUSSION
                Breach of Contract
                            Boyd argues that the district court erred by finding a breach of
                the implied covenant of good faith and fair dealing because Boyd did not
                violate a term or the spirit of a term found in the TCA. The Focus parties
                contend that Boyd intentionally engaged in unfair conduct contrary to the
                spirit and intent of the TCA that caused them actual harm. We do not
                consider either of these arguments because we conclude that Boyd
                breached the TCA's terms when voting against the NGA #2 prepack.
                            We review contract interpretation de novo. May v. Anderson,
                121 Nev. 668, 672, 119 P.3d 1254, 1257 (2005). When engaging in this
                review, we construe and enforce contracts as a whole based on their

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                written language. See Rd. & Highway Builders, L.L.C. v. N. Nev. Rebar,
                Inc., 128 Nev. „ 284 P.3d 377, 380-81 (2012); Kaldi v. Farmers Ins.
                Exch., 117 Nev. 273, 278, 21 P.3d 16, 20 (2001).
                             The parties executed the TCA to postpone trial for the purpose
                of resolving their conflict through prepacks. Each term sheet and
                operating agreement was to be modeled after the "Dairy Loan" prepack,
                and Boyd and Focus were required to mutually agree to appropriate
                modifications before distributing those documents to the lenders with
                voting ballots for prepack approval. If Focus distributed unapproved
                documents for a loan, Boyd could terminate the TCA and file a dismissal
                for that loan.
                             Here, the record shows that Focus complied with the TCA
                when distributing the NGA #2 prepack documents and voting ballots to
                the lenders. Boyd's failure to object to that distribution during the
                solicitation process indicated that those documents were preapproved
                pursuant to the TCA, demonstrating that Boyd and Focus agreed to
                resolve the NGA #2 loan through its prepack. Having reached this
                resolution, we conclude that Boyd was required to cast a ballot in favor of
                the NGA #2 prepack as an act reasonably necessary to fulfill the purpose
                of the TCA. We therefore conclude that by voting against the NGA #2
                prepack, Boyd breached the TCA and the Focus parties were entitled to
                appropriate remedies.
                Specific Performance
                             We review a district court's grant or refusal of specific
                performance for abuse of discretion. Serpa v. Darling, 107 Nev. 299, 304,
                810 P.2d 778, 782 (1991). "[S]pecific performance is available only when:
                (1) the terms of the contract are definite and certain; (2) the remedy at law

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                  is inadequate; (3) the appellant has tendered performance; and (4) the
                  court is willing to order [specific performance]." Mayfield v. Koroghli, 124
Nev. 343, 351, 184 P.3d 362, 367 (2008) (second alteration in original)
                  (internal quotations omitted).
                              Specific performance requiring Boyd to cast his ballot in favor
                  of the NGA #2 prepack was an appropriate remedy. Boyd's obligation to
                  vote in favor of the NGA #2 prepack after approving the respective term
                  sheet and operating agreement is sufficiently definite and certain based on
                  Boyd's requirement to undertake acts reasonably necessary to effectuate
                  the purpose of the TCA. Additionally, attorney fees and costs alone would
                  be an inadequate remedy to compensate the Focus parties for their loss if
                  the NGA #2 prepack was not approved. Further, the Focus parties
                  tendered performance by negotiating with Boyd and ultimately
                  distributing the NGA #2 prepack documents. Lastly, the district court
                  was willing to exercise its discretion in favor of specific performance.
                  Accordingly, although the district court's basis for awarding specific
                  performance was flawed, we agree that specific performance ordering
                  Boyd's ballot cast in favor of the NGA #2 prepack was an appropriate
                  remedy. See Dynamic Transit Co. v. Trans Pac. Ventures, Inc., 128 Nev.
                          n.3, 291 P.3d 114, 117 n.3 (2012) (explaining that we will uphold a
                  lower court's correct decision, even if it is based on the wrong reasons).
                  Attorney Fees and Costs
                              This court reviews a district court's award of attorney fees and
                  costs for an abuse of discretion.   U.S. Design & Constr. Corp. v. Int'l Bhd.
                  of Elec. Workers Local 357, 118 Nev. 458, 462, 50 P.3d 170, 173 (2002). A
                  district court can only award attorney fees and costs when authorized by
                  statute, contract, or rule. Id. Here, the TCA expressly allows the award of

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                 attorney fees and costs to the prevailing party in a dispute related to the
                 agreement. Because the Focus parties are prevailing parties, we conclude
                 that the district court did not abuse its discretion when awarding attorney
                 fees and costs. Based on the foregoing, we affirm the district court's
                 decision. 3
                               ORDER the judgment of the district court AFFIRMED.

                                                                                     J.
                                                      Hardesty

                                                  (----
                                                                                     J.
                                                      Douglas

                 CC:           Hon. Susan Scann, District Judge
                               M. Nelson Segel, Settlement Judge
                               Holley, Driggs, Walch, Puzey & Thompson/Las Vegas
                               Gregory J. Walch
                               Brooks Hubley LLP
                               Patti, Sgro & Lewis
                               Bogatz Law Group
                               Eighth District Court Clerk

                        3 We have considered all of Boyd's remaining arguments and
                 determine that they lack merit. We also note that respondents/cross-
  0              appellants made their arguments on cross-appeal contingent to our
                 reversal of the district court's decision. Accordingly, because we affirm the
                 district court's decision and given the parties' stipulation as to the Victor
                 Vista loan, we do not consider those arguments.

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