Boyd Family Partnership v. Ritter ( 2014 )

 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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