Surefunding, Llc v. Hatton

IN THE SUPREME COURT OF THE STATE OF NEVADA
SUREFUNDING, LLC, A DELAWARE No. 81639
LIMITED LIABILITY COMPANY,
Appellant,
vs.
BRETT HATTON, AN INDWIDUAL;
EARL CORONEL, AN INDIVIDUAL;
F8LRD
AUTUMN WIND GLOBAL MULTI- JAN 1 3 2022
STRATEGIES FUND, LP, A
EL2A2 1 k BROWN
DELAWARE LIMITED PARTNERSHIP; CLE
PREME COURT
DAMON GERSH, AN INDIVIDUAL; It/De -•«Si(
JASON ECKENROTH, AN
INDIVIDUAL; SHERRI R. SANDS, AS
TRUSTEE OF THE SHERRI R. SANDS
REVOCABLE TRUST, A FLORIDA
TRUST; GLICKFIELD CAPITAL
MANAGEMENT, LLC FBO M.
GLICKFIELD DYNASTY TRUST, A
MARYLAND TRUST; GLICKFIELD
CAPITAL MANAGEMENT, LLC FBO
CHERYL NEWMARK, A MARYLAND
TRUST; GLICKFIELD CAPITAL
MANAGEMENT, LLC.11130 MARLA
SCHRAM, A MARYLAND TRUST;
CARRICKFERGUS INVESTMENTS
LIMITED, A BRITISH VIRGIN
ISLANDS COMPANY; STEPHANIE
CARNOT, AS TRUSTEE OF THE
CARNOT FAMILY TRUST, A DISTRICT
OF COLUMBIA TRUST; DORSEY AND
WHITNEY TRUST CO., LLC, AS
TRUSTEE OF THE DYLAN TAYLOR
2011 GRANTOR TRUST, A SOUTH
DAKOTA TRUST: ESECO. LLC, A
MICHIGAN LIMITED LIABILITY
COMPANY; SEQURIS GROUP, LLC, A
MICHIGAN LIMITED LIABILITY
COMPANY; MATTHEW BRIGGS, AS
TRUSTEE OF THE BRIGGS
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MANAGEMENT TRUST: MICHAEL
RUBENSTEIN, AN 1ND1V DUAL;
JUNE FARMER, AN INDIVIDUAL;
THOMAS CARL MYERS, AN
INDIVIDUAL; RICHARD L. ROGERS,
AN INDIVIDUAL; NEAL J.
GLICKFIELD, AS TRUSTEE OF THE
NEAL J. GLICKFIELD 2018 TRUST, A
MARYLAND TRUST; LINEAGE, LLC, A
VIRGINIA LIMITED LIABILITY
COMPANY; CHARLES B. CHOKEL, AS
TRUSTEE OF THE CHARLES B.
CHOKEL TRUST U/A 4/21/92, A NEW
HAMPSHIRE TRUST; BRIAN GRAY,
AN INDIVIDUAL; HFJ INVESTMENTS
I, LLC, A TEXAS LIMITED LIABILITY
COMPANY; PATRICIA B. JONES, AS
TRUSTEE OF THE PATRICIA B.
JONES REVOCABLE TRUST, A
MARYLAND TRUST; JOHN B. SHAW,
AS TRUSTEE OF THE JOHN B. SHAW
2012 FAMILY GRANTOR TRUST; AND
1086 LLC, A MARYLAND LIMITED
LIABILITY COMPANY,
Respondents.
ORDER OF REVERSAL AND REMAND
This is an appeal from an order appointing a receiver. Eighth
Judicial District Court, Clark County; Mark R. Denton, Judge.
Appellant SureFunding, LLC, an investment firm, lost millions
of dollars it invested into a foreign company that was later discovered to be
a Ponzi scheme. Respondents are a subset of SureFunding's noteholders
who are granted a senior secured priority interest with respect to their
'We do not recount the facts except as necessary to our disposition.
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collateral per the Third Amendment to the Note Purchasing Agreement
(TNPA).
Respondents sued SureFunding, alleging a breach of the TNPA
due to SureFunding improperly investing funds in the Ponzi scheme.
Respondents thereafter moved for appointment of a receiver, alleging that
SureFunding was not acting in the best interest of the creditors. The
district court granted respondents motion and appointed a receiver of
respondents' choice. Sure-Funding moved to vacate the receivership order,
and the district court denied the motion. This appeal followed.
Respondents lacked standing to bring their claim,
SureFunding contends that respondents lack standing to bring
their breach of contract claim, and therefore lack standing to pursue the
appointment of a receiver. because the TNPA bars an action brought
without the consent of all Key Purchasers, and one Key Purchaser has not
joined the suit against SureFunding.
Whether a party has standing is a question of law we review de
novo. Arguello v. Sunset Station, Inc., 127 Nev. 365, 368, 252 P.3d 206, 208
(2011). And, we review a district court's interpretation of a contract de novo.
May v. Anderson, 121 Nev. 668, 672, 119 P.3d 1254, 1257 (2005).
A plaintiff has the burden of proving that it has standing to
assert its claims. Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992).
"[S]tanding requires that a plaintiff have suffered an 'injury in face that is
not merely conjectural or hypothetical." Miller v. Ignacio, 112 Nev. 930, 936
n.4, 921 P.2d 882, 885 n.4 (1996) (citing to Lujan, 504 U.S. at 560.); Anya
Bernstein, The Hidden Costs of Terrorist Watch Lists, 61 Buff. L. Rev. 461,
510 (2013) (standing requires "an actual or imminent concrete harm.").
However, this court will enforce a contract as written if the language of the
contract is clear and unambiguous. Am. First Fed. Credit Union v. Soro,
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131 Nev. 737, 739, 359 P.3d 105, 106 (2015). And we will not disturb a
contract between parties unless the agreement is "unconscionable, illegal,
or in violation of public policy." Rivero v. Riuero, 125 Nev. 410, 429, 216
P.3d 213, 226 (2009).
The TNPA distinguishes two groups of investors. First, the
TNPA labels noteholders who have an aggregate principal amount of at
least two million dollars as Key Purchasers. Second, the TNPA describes
the holders of a majority of the outstanding principal amount, including
each Key Purchaser, as Required Purchasers. The TNPA vests the
' authority to initiate action with respect to the collateral funds to a
Collateral Agent, who is required to seek approval from the Required
Purchasers before initiating any action under the TNPA. After the
Collateral Agent resigned in 2019, the Required Purchasers elected not to
appoint a new one. As a result, the Required Purchasers thereafter held
the rights and obligations of the Collateral Agent under the TNPA. It is
undisputed that respondents hold the majority of SureFunding's
outstanding debt and include all but one Key Purchaser.
We conclude that respondents do not have standing to bring
their claim. After the Collateral Agent resigned, the Required Purchasers
acted as the de facto Collateral Agent per the TNPA. As such, the Required
Purchasers were obligated to acquire the assent of every Key Purchaser to
initiate any action under the TNPA with respect to their collateral.2 While
2 0nappeal, respondents contend for the first time that they are not
bound by the TNPA because the record copy of that document is unsigned.
However, respondents did not raise this issue with the district court, so we
consider it waived. See Old Aztec Mine, Inc. v. Brown, 97 Nev. 49, 52, 623
P.2d 981, 983 (1981) CA point not urged in the trial court, unless it goes to
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respondents hold a majority of SureFunding's principal, they are missing
one Key Purchaser. Therefore, under the TNPA, respondents may not
initiate a breach of contract with respect to the collateral.
Because respondents do not have standing to bring their
substantive tort law claim, they are therefore barred from seeking the
appointment of a receiver; NRS 32.010 only permits a district court to
appoint a receiver where "an action is pending." See Hines v. Plante, 99
Nev. 259, 262, 661 P.2d 880, 882 (1983) (explaining that a party seeking a
receivership must show that it is likely that it would be entitled to a
judgment in the underlying action). The parties freely contracted to include
this limitation, and respondents do not allege that the TNPA is otherwise
unconscionable, illegal, or in violation of public policy. See Rivero, 125 Nev.
at 429, 216 P.3d at 226 (2009).3 Accordingly, we
ORDER the judgment of the district court REVERSED AND
REMAND this matter to the district court for proceedings consistent with
this order.
, J.
Hardesty
Aligy;4— 0
Stiglich Herndon
the jurisdiction of that court, is deemed to have been waived and will not be
considered on appeal.").
31n light of this resolution, we need not reach the other arguments
raised by the parties on appeal.
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cc: Hon. Mark R. Denton, District Judge
Paul M. Haire, Settlement Judge
Snell & Wilmer, LLP/Las Vegas
Brownstein Hyatt Farber Schreck, LLP/Las Vegas
Blank Rome LLP/Chicago
Eighth District Court Clerk
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