Ally Financial Inc., et al. v. Mountain West Auto Group LLC, et al.

• Court: District Court, D. Nevada
• Decided: March 17, 2026
• Docket: 3:24-cv-00268
• Status: Unknown

Opinion

3 UNITED STATES DISTRICT COURT

4 DISTRICT OF NEVADA

5 * * *

6 ALLY FINANCIAL INC., et al., Case No. 3:24-cv-00268-MMD-CLB

7 Plaintiffs, ORDER v. 8 MOUNTAIN WEST AUTO GROUP LLC, 9 et al.,

10 Defendants. 11 I. SUMMARY 12 In this action, Plaintiffs Ally Financial Inc. (“Ally”), Ally Bank (“Ally Bank,” collectively 13 with Ally, “Ally Parties”), and Motor Insurance Corporation (“MIC”), bring two breach of 14 contract claims and seek to recover debt owed to them for secured loans made by non- 15 parties MRH Auto-Reno, LLC (“MRH Reno”), MRH Auto-Winnemucca, LLC (“MRH 16 Winnemucca,” together with MRH Reno, “Dealerships”), and MRH Auto Enterprises LLC 17 (“MRH Enterprises”), that were guaranteed by Defendants Mountain West Auto Group 18 LLC1 and Kevin E. Sheppard. (ECF No. 1 (“Complaint”).) Before the Court are 19 Defendants’ Motion for Summary Judgment (ECF No. 65 (Defendants’ Motion))2 and 20 Plaintiffs’ Motion for Summary Judgment (ECF No. 67 (“Plaintiffs’ Motion”)).3 As 21 discussed below, the Court finds that there is no genuine dispute of material fact as to 22 Plaintiffs’ claims for breach of contract and thus will grant Plaintiffs’ Motion as to their 23

24 1Plaintiffs filed a request for Clerk’s entry of default against Defendant Mountain West Auto Group LLC under Federal Rule of Civil Procedure 55. (ECF No. 46.) The Clerk 25 of Court subsequently granted its request on October 28, 2024. (ECF No. 60.)

26 2Plaintiffs responded (ECF No. 71) and Defendants replied (ECF No. 75).

27 3Plaintiffs move in the alternative for partial summary judgment on a revised debt amount determined by the Court. Defendants responded (ECF No. 73 (“Defendants’ 28 Response”)) and Plaintiffs replied (ECF No. 76 “Plaintiff’s Reply”)). Defendants additionally filed a motion to strike the waiver argument raised in Plaintiffs’ Reply. (ECF 2 and their Motion to Strike. 3 II. BACKGROUND4 4 The MRH Parties entered into various loan agreements with the Ally Parties in 5 2019 for secured loans to finance the Dealerships’ acquisition of parts, new and used 6 vehicles of inventory, and the Dealerships’ operations. There were four agreements in 7 total: two Inventory Financing and Security Agreements (ECF Nos. 68-1; 68-1 (“Inventory 8 Financing Agreements”)), a Commercial Loan and Security Agreement (ECF No. 68-3 9 (“Term Loan Agreement”)), and an Advance Agreement (ECF No. 68-4). In June 2021, 10 Sheppard acquired the MRH Parties by stock purchase agreement. (ECF Nos. 67 at 13; 11 68 at 5.) Sheppard entered into a Cross Collateral, Cross Default, and Guarantee 12 Agreement (ECF No. 68-5 (“Cross Agreement”)) and three guarantee agreements (ECF 13 No. 68-7 (“Sheppard Guarantees”)), personally guaranteeing the obligations owed to 14 Plaintiffs by the MRH Parties. 15 In May 2023, the Ally Parties determined that the Dealerships had breached their 16 Inventory Financing Agreements, which also constituted defaults of the Term Loan 17 Agreement, Advance Agreement and Cross Agreement, and the Ally Parties sent notices 18 of default and demand for immediate payment from the Dealerships and Sheppard. (ECF 19 Nos. 68-8; 68-9; 68 at 7.) The parties negotiated and entered into an Agreement for the 20 Voluntary Surrender of Collateral that allowed the Ally Parties to repossess the vehicle 21 collateral. (ECF No. 68-10.) On July 24, 2023, the Ally Parties provided Notifications of 22 Disposition of Collateral to the Dealerships and Defendants. (ECF No. 68-11.) The same 23 day, the Dealerships filed voluntary bankruptcy petitions under Title 11 of the Bankruptcy 24 Code. (ECF No. 68-12.) The Ally Parties filed Motions for Relief from the Automatic Stay 25 to repossess and dispose of collateral, which the bankruptcy court granted on November 26 4The parties do not dispute the underlying factual background. (ECF No. 73 at 8 27 (Defendants state that “[t]he Ally Parties’ concise statement of material facts summarizes all of the loan agreements between the parties.”)). A short summary of the factual 28 background relevant to the disposition of this case follows. 2 Collateral, there are still outstanding amounts owed to Plaintiffs totaling $6,735,015.42 as 3 of July 23, 2025. (ECF Nos. 68 at 10-11; 67 at 18.) 4 Under the terms of the Cross Agreement and the Sheppard Guarantees, Plaintiffs 5 were entitled to seek payment from Sheppard. Sheppard has not paid the remaining debt, 6 nor reasonable attorneys’ fees and costs incurred by Plaintiffs in enforcing their rights. 7 Arising from these undisputed facts, Plaintiffs bring two causes of action for breach of 8 contract arising from (1) breach of the Cross Agreement and (2) the breach of the 9 Sheppard Guarantees. They seek to recover $6,735,015.42—the outstanding amount left 10 unpaid—from Sheppard. 11 III. DISCUSSION 12 To avoid repetition, the Court will address the Motions as they pertain to each claim 13 and counterclaim, while bearing in mind the parties’ burdens on summary judgment. The 14 purpose of summary judgment is to avoid unnecessary trials when there is no dispute as 15 to the facts before the court.” Nw. Motorcycle Ass’n v. U.S. Dep’t of Agric., 18 F.3d 1468, 16 1471 (9th Cir. 1994). Summary judgment is appropriate when the pleadings, the discovery 17 and disclosure materials on file, and any affidavits “show that there is no genuine issue 18 as to any material fact and that the moving party is entitled to a judgment as a matter of 19 law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). An issue is “genuine” if there is 20 a sufficient evidentiary basis on which a reasonable fact-finder could find for the 21 nonmoving party and a dispute is “material” if it could affect the outcome of the suit under 22 the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Where 23 reasonable minds could differ on the material facts at issue, however, summary judgment 24 is not appropriate. See id. at 250-51. “The amount of evidence necessary to raise a 25 genuine issue of material fact is enough ‘to require a jury or judge to resolve the parties' 26 differing versions of the truth at trial.’” Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th 27 Cir. 1983) (quoting First Nat’l Bank v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968)). In 28 evaluating a summary judgment motion, a court views all facts and draws all inferences 2 Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986). 3 A. Breach of Contract Claims 4 Plaintiffs move for summary judgment on their breach of contract claims and as to 5 damages in the amount of $6,735,015.42, or alternatively, partial summary judgment on 6 a revised debt amount determined by the Court. (ECF No. 67 at 8.) Plaintiffs argue, and 7 Defendants do not disagree, that there is no genuine dispute of material fact as to the 8 breach of contract claims. Specifically, Plaintiffs argue that there are no disputes of 9 material fact that Sheppard entered into the Cross Agreement and Sheppard Guarantees 10 but has refused to pay the amounts owed to Plaintiffs. (Id. at 20-23.) 11 Under Nevada law, a claim for a breach of contract requires the plaintiff to 12 demonstrate three elements: “(1) the existence of a valid contract; (2) a breach by the 13 defendant and (3) damages as a result of the breach.” Cohen-Breen v. Gray Television 14 Grp., Inc., 661 F. Supp. 2d 1158, 1171 (D. Nev. 2009). Here, the Court agrees with the 15 parties that there is no genuine dispute as to any material fact related to the breach of 16 contract for the claims concerning the Cross Agreement and the Sheppard Guarantees. 17 Accordingly, the Court finds that Plaintiffs are entitled to partial summary judgment on 18 their breach of contract claims, because the record shows that “there is no genuine issue 19 as to any material fact.” Celotex Corp. v. Catrett, 477 U.S. at 322. 20 However, the Court cannot grant Plaintiffs summary judgment as to the requested 21 sum of $6,735,015.42. While Defendants do not present any evidence or argument as to 22 damages beyond challenging whether Plaintiffs may claim a deficiency after selling 23 collateral, see infra, Plaintiffs’ Motion indicates that the requested sum may not be 24 accurate. Plaintiffs’ Motion states that the Ally Parties accepted an offer to purchase 80 25 of the used vehicles repossessed from the Dealerships for a sum of $200,975, and that 26 the closing would occur sometime within 90 days of when Plaintiffs’ Motion was filed. 27 (ECF No. 67 at 17.) Plaintiffs further state that “when received, the Ally Parties will apply 28 the net proceeds to reduce the amount owed, including, if applicable, by partially 2 requested may not be current, the Court cannot grant judgment as to the requested sum 3 of $6,735,015.42. 4 Accordingly, the Court will grant Plaintiffs’ Motion as to their alternative request for 5 partial motion for summary judgment relating to their breach of contract claims, but the 6 specific amount requested is denied. The Court will permit supplemental briefing as to the 7 current sum of the debt due. 8 B. Jurisdiction 9 Defendants state in their Motion that “[i]t is possible that the factual and legal issues 10 that must be resolved in this motion for summary judgment . . . may fall under the original 11 and exclusive jurisdiction of the Bankruptcy Court” as core proceedings. (ECF No. 65 at 12 2.) Plaintiffs state that this action is not a core bankruptcy proceeding and note that 13 Defendants do not affirmatively argue that the Court lacks jurisdiction.5 (ECF No. 71 at 14 2.) The Court agrees with Plaintiffs. Because Plaintiffs bring two breach of contract claims 15 to recover debt from Defendant Sheppard—who guaranteed the debts of the now- 16 bankrupt Dealerships—this is not a core-proceeding. See Sec. Farms v. Int’l Bhd. of 17 Teamsters, Chauffers, Warehousemen & Helpers, 124 F.3d 999, 1008 (9th Cir. 1997) 18 (“Actions that do not depend on bankruptcy laws for their existence and that could 19 proceed in another court are considered non-core.”) Thus, to the extent that Defendants 20 challenge the Court’s jurisdiction, the Court rejects this argument. 21 C. NRS § 482.516 22 Defendants, in their Motion and in their Response to Plaintiffs’ Motion, argue that 23 Plaintiffs’ failure to comply with NRS § 482.516 discharges Defendants from their 24 guarantees. (ECF Nos. 65 at 24; 73 at 11-19). Defendants claim that while the Ally Parties’ 25 July 24, 2023 Notice of Disposition may have complied with Article 9 of the UCC, it is 26 deficient because it failed to comply with “heightened” notice requirements that apply 27 5Indeed, Defendants do not, stating that they “are not advocating that the issues 28 in this motion are or are not core matters.” (ECF No. 65 at 4.) 2 19-20.) Citing to In re Dinan, 425 B.R. 583 (Bankr. D. Nev. 2010), Defendants argue that 3 Plaintiffs are barred from recovering any deficiency after an improperly noticed sale. (Id. 4 at 21-23.) Plaintiffs counter that the agreements between the Ally Parties and the 5 Dealerships are loan and financing agreements, not agreements for the “sale or lease of 6 a vehicle” under the statute. (ECF No. 71 at 6.) Plaintiffs additionally argue that 7 Defendants failed to plead NRS § 482.516 as an affirmative defense and waived the 8 defense because they failed to raise it in their answer. (Id. at 5-6.) The Court generally 9 agrees with Plaintiffs. 10 The parties make extensive arguments as to the applicability of the bankruptcy 11 court’s finding In Re Dinan, 425 B.R. 583, 588 (Bankr. D. Nev. 2010). Defendants rely 12 exclusively on In re Dinan to support their argument that their obligations as guarantors 13 are discharged because Dinan held that “[a] secured creditor who violates NRS [§] 14 482.516 may keep the proceeds as to the improperly noticed sale, but may not sell 15 subsequent collateral, for there is no deficiency.” (ECF No. 65 at 7.) Even assuming, 16 arguendo, that Dinan is relevant to this case,6 Defendants’ argument is fatally deficient 17 because the bankruptcy court subsequently reversed its decision, finding that it had 18 improperly applied NRS § 482.516. See In re Dinan, 448 B.R. 775, 781 (B.A.P. 9th Cir. 19 2011). The court clarified that this statutory provision applies “where a vehicle or piece of 20 construction equipment is sold to a buyer under a security agreement,” not where the 21 party with the security interest in property “took a security agreement on equipment and 22 vehicles in the Debtors’ possession and filed a financing statement [under the UCC].” In 23 re Dinan, No. 07-05073-GWZ (Bankr. D. Nev. April 14, 2010) (ECF No. 73 at 3-4). 24 Moreover, the Court finds that the notice requirements of NRS § 482.516 do not apply 25 here, because this action concerns Defendants’ breach of the Cross Agreement and 26 Sheppard Guarantees. Accordingly, the Court finds that Defendants are not entitled to 27 6As Plaintiffs point out, Dinan does not apply because the facts of the case “did not 28 involve inventory financing or a personal guaranty.” (ECF No. 71 at 7.) 2 requirements of NRS § 482.516.7 3 In sum, the Court grants Plaintiff’s Motion as to their alternative request for partial 4 summary judgment and denies Defendants’ Motion. 5 IV. CONCLUSION 6 The Court notes that the parties made several arguments and cited to several 7 cases not discussed above. The Court has reviewed these arguments and cases and 8 determines that they do not warrant discussion as they do not affect the outcome of the 9 motions before the Court. 10 It is therefore ordered that Plaintiffs’ Motion for Summary Judgment (ECF No. 67) 11 is granted in part and denied in part. Plaintiffs’ Motion is granted as to their alternative 12 request for partial summary judgment that Defendants breached the Cross Agreement 13 and the Sheppard Guarantees. Plaintiff’s Motion is denied as to the requested amount of 14 $6,735,015.42. 15 It is further ordered that Defendants’ Motion for Summary Judgment (ECF No. 65) 16 is denied. 17 It is further ordered that Defendants’ Motion to Strike (ECF No. 77) is denied. 18 It is further ordered that Plaintiffs may file a supplemental brief as to the amount of 19 the debt owed under the Cross Agreement and the Sheppard Guarantees within 15 days. 20 Defendants will have 15 days to respond. The supplemental brief and the response brief 21 will be limited to 5 pages. 22 /// 23 /// 24

25 7The Court additionally denies Defendants’ Motion to Strike Plaintiffs’ (ECF No. 76). (ECF No. 77.) Defendants suggest that Plaintiffs should have preemptively raised a 26 waiver argument in their Motion for Summary Judgment, and because they did not, they cannot raise it in their Reply. (ECF No. 76 at 3.) Plaintiffs counter that they properly raised 27 their waiver argument as a reply to Defendants’ Response, which raises NRS § 482.516 as an affirmative defense. (ECF No. 78 at 3.) The Court agrees with Plaintiffs and will 28 deny the Motion to Strike. 1 DATED THIS 17" Day of March 2026.

3 ee MIRANDA M. DU 4 UNITED STATES DISTRICT JUDGE 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28