1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *
7 BRADLEY J. BUSBIN, Case No. 2:20-CV-1299 JCM
8 Plaintiff(s), ORDER
9 v.
10 SHOTGUN CREEK INVESTMENTS, LLC, et al., 11 Defendant(s). 12
13 Presently before the court is appellant Bradley J. Busbin (“Busbin”), Trustee of The 14 Gonzales Charitable Remainder Unitrust One’s (“Busbin”) appeal of the bankruptcy court’s 15 order granting partial summary judgment. (ECF Nos. 1 (notice of appeal); 18 (opening brief)). 16 17 Appellees Shotgun Creek Investments, LLC, Shotgun Creek Las Vegas, LLC, Shotgun 18 Investments Nevada, LLC (collectively the “Shotgun entities”), and the Northern Trust 19 Company, LLC (“Northern Trust”) (together with the Shotgun entities, the “lenders”) filed a 20 response (ECF No. 44), to which Busbin replied (ECF No. 45). 21 Busbin appeals the bankruptcy court’s grant of partial summary judgment as to count 22 one of his adversary complaint, in which he sought declaratory judgment that his interest in 23 the bankruptcy estate property was superior to the deeds of trust. Busbin contends that the 24 bankruptcy court erred in holding that issue preclusion foreclosed his claim. 25 This court has jurisdiction over an appeal from an order of a bankruptcy court under 26 28 U.S.C. § 158. The court reviews a bankruptcy court’s conclusions of law, including its 27 interpretation of the bankruptcy code, on a de novo basis. In re Rains, 428 F.3d 893, 900 28 1 (9th Cir. 2005); In re Maunakea, 448 B.R. 252, 258 (D. Haw. 2011). Findings of fact are 2 reviewed for clear error. United States v. Hinkson, 585 F.3d 1247, 1260 (9th Cir. 2009). 3 The instant action arises from the jointly administered bankruptcy cases of Desert 4 Land, LLC and Desert Oasis Apartments, LLC (collectively “the debtors”). (ECF No. 1). 5 Busbin is a judgment creditor in both cases. 6 The debtors owned what the parties and bankruptcy court refer to as “Parcel A,” 7 which is real property located along Las Vegas Boulevard, across from Mandalay Bay. (ECF 8 No. 18 at 13). Busbin’s predecessor in interest, Tom Gonzales (“Gonzales”), originally 9 loaned the sum of $41.5 million to debtors, which loan was secured by a deed of trust against 10 Parcel A. Busbin reconveyed his deed of trust under Chapter 11 bankruptcy proceedings to 11 debtors in exchange for ownership in other real properties and—most important and relevant 12 to this appeal—a “Parcel A Transfer Fee” of $10 million in the event Parcel A was sold or 13 transferred. (Id.). The crux of this appeal is the priority of the transfer fee against the deeds 14 of trust on Parcel A. 15 As further background, between 2011 and 2017, the debtors obtained numerous loans 16 from appellees Shotgun entities and Northern Trust, using Parcel A as collateral.1 (ECF No. 17 44 at 21). In light of these additional loans secured by Parcel A, Busbin filed numerous 18 lawsuits2 in the bankruptcy court, this district court, and the Ninth Circuit to clarify the 19 nature of his interest in Parcel A. 20 In 2018, a different judge in this district entered a money judgment for Busbin in the 21 amount of $13,177,708.33—representing his $10 million transfer fee plus interest—in his 22 23 24 25 1 Per the settlement agreement as confirmed by the Bankruptcy Appellate Panel of the Ninth Circuit (“the bankruptcy settlement agreement”). 26 2 This issue was litigated in an April 21, 2003, bankruptcy confirmation order; again in a 27 Ninth Circuit Bankruptcy Appellate Panel decision on March 31, 2004; in a December 9, 2011, order in a related 2011 lawsuit in this district, which the Ninth Circuit affirmed; in another 28 related 2015 lawsuit in this district; and finally in a March 27, 2018, order in a related lawsuit in this district. 1 breach of contract suit against the debtors,3 but the court rejected Busbin’s request for 2 equitable relief by way of reprioritization and subordination of the lenders’ liens on Parcel A. 3 (ECF No. 18 at 21–22). 4 Ultimately, the debtors’ Chapter 11 trustee sold Parcel A at an auction sale on June 5, 5 2020, for $15,600,000, which was insufficient to pay the claims of Busbin and the lenders, 6 along with the remaining creditors. (ECF No. 1 at 39). 7 The parties do not dispute that Busbin’s transfer fee is not a lien or preemptive 8 property right since that issue was already litigated and resolved by the Ninth Circuit. (ECF 9 No. 18 at 18). The question before this court is whether a court of proper jurisdiction has 10 already decided the issue of the priority status of Busbin’s interest in Parcel A, therefore 11 barring it from being litigated again. The bankruptcy court determined that a 2011 case in 12 this district and the Ninth Circuit appeal that followed had already decided the issue, while 13 Busbin asserts that the contention surrounding priority of payments is distinct from previous 14 relevant court decisions. (Id. at 35). 15 Determining the applicability of issue preclusion (or collateral estoppel) “is a mixed 16 question of law and fact in which the legal issues predominate,” Oyeniran v. Holder, 672 17 F.3d 800, 806 (9th Cir. 2012); therefore, the court reviews this issue de novo. Upon de novo 18 review, the court finds that the bankruptcy court did not err in applying issue preclusion to 19 bar Busbin’s claim as to count 1. 20 Judge Jones in his 2011 district court opinion previously held that Busbin’s transfer 21 fee contained within the bankruptcy settlement agreement did not create a lien—including an 22 equitable lien—and thus refused to subordinate the lenders’ liens to Busbin’s interest. (ECF 23 No. 18 at 17). The court clarified that Busbin “simply has, potentially, an immediate claim 24 to $10 million under the confirmation order due to the transfer of Parcel A.” (Id.). 25 Affirming Judge Jones’s 2011 decision, the Ninth Circuit further held that Busbin’s interest 26 was neither a lien nor a preemptive property right on Parcel A since “the [settlement] 27 28 3 For violating the financing limit of the bankruptcy settlement agreement—to wit, the debtors borrowed beyond the $25 million limit contained within the agreement. 1 agreement contain[ed] no language suggesting that the transfer fee was anything but a right 2 to receive a certain sum of money in the event of a Parcel A transfer.” (Id.) (emphasis 3 added). 4 Though it reviews de novo, this court agrees with bankruptcy Judge Spraker that 5 Busbin’s argument “slices the issues too thin.” By previously holding that Busbin’s interest 6 was not elevated to the status of a lien, the prior courts of proper jurisdiction held his interest 7 to be junior to the lenders’ deeds of trust. 8 It is evident from these prior decisions that Busbin’s interest has been determined to 9 be an unsecured right to payment contingent upon a future act under the bankruptcy 10 settlement agreement. In other words, the issue underlying Busbin’s claim on this appeal is 11 identical to prior proceedings; was actually litigated and decided in prior proceedings; was 12 given a full and fair opportunity to be litigated; and was necessary to decide the merits in 13 prior proceedings.4 Janjua v. Neufeld, 933 F. 3d 1061, 1065 (9th Cir. 2019). 14 Therefore, this issue cannot be re-litigated.5 See Dodd v. Hood River Cty., 59 F.3d 15 852, 863 (9th Cir.1995) (“Under collateral estoppel, once a court has decided an issue of fact 16 or law necessary to its judgment, that decision may preclude re-litigation of the issue in a suit 17 on a different cause of action involving a party to the first case.”). 18 . . . 19 20 4 And Busbin’s subsequent money judgment received in 2018 from Judge Jones in this district, based on his transfer fee interest in Parcel A, does not alter this court’s analysis.
Free access — add to your briefcase to read the full text and ask questions with AI
1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *
7 BRADLEY J. BUSBIN, Case No. 2:20-CV-1299 JCM
8 Plaintiff(s), ORDER
9 v.
10 SHOTGUN CREEK INVESTMENTS, LLC, et al., 11 Defendant(s). 12
13 Presently before the court is appellant Bradley J. Busbin (“Busbin”), Trustee of The 14 Gonzales Charitable Remainder Unitrust One’s (“Busbin”) appeal of the bankruptcy court’s 15 order granting partial summary judgment. (ECF Nos. 1 (notice of appeal); 18 (opening brief)). 16 17 Appellees Shotgun Creek Investments, LLC, Shotgun Creek Las Vegas, LLC, Shotgun 18 Investments Nevada, LLC (collectively the “Shotgun entities”), and the Northern Trust 19 Company, LLC (“Northern Trust”) (together with the Shotgun entities, the “lenders”) filed a 20 response (ECF No. 44), to which Busbin replied (ECF No. 45). 21 Busbin appeals the bankruptcy court’s grant of partial summary judgment as to count 22 one of his adversary complaint, in which he sought declaratory judgment that his interest in 23 the bankruptcy estate property was superior to the deeds of trust. Busbin contends that the 24 bankruptcy court erred in holding that issue preclusion foreclosed his claim. 25 This court has jurisdiction over an appeal from an order of a bankruptcy court under 26 28 U.S.C. § 158. The court reviews a bankruptcy court’s conclusions of law, including its 27 interpretation of the bankruptcy code, on a de novo basis. In re Rains, 428 F.3d 893, 900 28 1 (9th Cir. 2005); In re Maunakea, 448 B.R. 252, 258 (D. Haw. 2011). Findings of fact are 2 reviewed for clear error. United States v. Hinkson, 585 F.3d 1247, 1260 (9th Cir. 2009). 3 The instant action arises from the jointly administered bankruptcy cases of Desert 4 Land, LLC and Desert Oasis Apartments, LLC (collectively “the debtors”). (ECF No. 1). 5 Busbin is a judgment creditor in both cases. 6 The debtors owned what the parties and bankruptcy court refer to as “Parcel A,” 7 which is real property located along Las Vegas Boulevard, across from Mandalay Bay. (ECF 8 No. 18 at 13). Busbin’s predecessor in interest, Tom Gonzales (“Gonzales”), originally 9 loaned the sum of $41.5 million to debtors, which loan was secured by a deed of trust against 10 Parcel A. Busbin reconveyed his deed of trust under Chapter 11 bankruptcy proceedings to 11 debtors in exchange for ownership in other real properties and—most important and relevant 12 to this appeal—a “Parcel A Transfer Fee” of $10 million in the event Parcel A was sold or 13 transferred. (Id.). The crux of this appeal is the priority of the transfer fee against the deeds 14 of trust on Parcel A. 15 As further background, between 2011 and 2017, the debtors obtained numerous loans 16 from appellees Shotgun entities and Northern Trust, using Parcel A as collateral.1 (ECF No. 17 44 at 21). In light of these additional loans secured by Parcel A, Busbin filed numerous 18 lawsuits2 in the bankruptcy court, this district court, and the Ninth Circuit to clarify the 19 nature of his interest in Parcel A. 20 In 2018, a different judge in this district entered a money judgment for Busbin in the 21 amount of $13,177,708.33—representing his $10 million transfer fee plus interest—in his 22 23 24 25 1 Per the settlement agreement as confirmed by the Bankruptcy Appellate Panel of the Ninth Circuit (“the bankruptcy settlement agreement”). 26 2 This issue was litigated in an April 21, 2003, bankruptcy confirmation order; again in a 27 Ninth Circuit Bankruptcy Appellate Panel decision on March 31, 2004; in a December 9, 2011, order in a related 2011 lawsuit in this district, which the Ninth Circuit affirmed; in another 28 related 2015 lawsuit in this district; and finally in a March 27, 2018, order in a related lawsuit in this district. 1 breach of contract suit against the debtors,3 but the court rejected Busbin’s request for 2 equitable relief by way of reprioritization and subordination of the lenders’ liens on Parcel A. 3 (ECF No. 18 at 21–22). 4 Ultimately, the debtors’ Chapter 11 trustee sold Parcel A at an auction sale on June 5, 5 2020, for $15,600,000, which was insufficient to pay the claims of Busbin and the lenders, 6 along with the remaining creditors. (ECF No. 1 at 39). 7 The parties do not dispute that Busbin’s transfer fee is not a lien or preemptive 8 property right since that issue was already litigated and resolved by the Ninth Circuit. (ECF 9 No. 18 at 18). The question before this court is whether a court of proper jurisdiction has 10 already decided the issue of the priority status of Busbin’s interest in Parcel A, therefore 11 barring it from being litigated again. The bankruptcy court determined that a 2011 case in 12 this district and the Ninth Circuit appeal that followed had already decided the issue, while 13 Busbin asserts that the contention surrounding priority of payments is distinct from previous 14 relevant court decisions. (Id. at 35). 15 Determining the applicability of issue preclusion (or collateral estoppel) “is a mixed 16 question of law and fact in which the legal issues predominate,” Oyeniran v. Holder, 672 17 F.3d 800, 806 (9th Cir. 2012); therefore, the court reviews this issue de novo. Upon de novo 18 review, the court finds that the bankruptcy court did not err in applying issue preclusion to 19 bar Busbin’s claim as to count 1. 20 Judge Jones in his 2011 district court opinion previously held that Busbin’s transfer 21 fee contained within the bankruptcy settlement agreement did not create a lien—including an 22 equitable lien—and thus refused to subordinate the lenders’ liens to Busbin’s interest. (ECF 23 No. 18 at 17). The court clarified that Busbin “simply has, potentially, an immediate claim 24 to $10 million under the confirmation order due to the transfer of Parcel A.” (Id.). 25 Affirming Judge Jones’s 2011 decision, the Ninth Circuit further held that Busbin’s interest 26 was neither a lien nor a preemptive property right on Parcel A since “the [settlement] 27 28 3 For violating the financing limit of the bankruptcy settlement agreement—to wit, the debtors borrowed beyond the $25 million limit contained within the agreement. 1 agreement contain[ed] no language suggesting that the transfer fee was anything but a right 2 to receive a certain sum of money in the event of a Parcel A transfer.” (Id.) (emphasis 3 added). 4 Though it reviews de novo, this court agrees with bankruptcy Judge Spraker that 5 Busbin’s argument “slices the issues too thin.” By previously holding that Busbin’s interest 6 was not elevated to the status of a lien, the prior courts of proper jurisdiction held his interest 7 to be junior to the lenders’ deeds of trust. 8 It is evident from these prior decisions that Busbin’s interest has been determined to 9 be an unsecured right to payment contingent upon a future act under the bankruptcy 10 settlement agreement. In other words, the issue underlying Busbin’s claim on this appeal is 11 identical to prior proceedings; was actually litigated and decided in prior proceedings; was 12 given a full and fair opportunity to be litigated; and was necessary to decide the merits in 13 prior proceedings.4 Janjua v. Neufeld, 933 F. 3d 1061, 1065 (9th Cir. 2019). 14 Therefore, this issue cannot be re-litigated.5 See Dodd v. Hood River Cty., 59 F.3d 15 852, 863 (9th Cir.1995) (“Under collateral estoppel, once a court has decided an issue of fact 16 or law necessary to its judgment, that decision may preclude re-litigation of the issue in a suit 17 on a different cause of action involving a party to the first case.”). 18 . . . 19 20 4 And Busbin’s subsequent money judgment received in 2018 from Judge Jones in this district, based on his transfer fee interest in Parcel A, does not alter this court’s analysis. Indeed, 21 Judge Jones held in that 2018 decision that “it would be an error of state law to...permit a judgment creditor to advance his lien priority as against [the lenders] beyond what would 22 normally be permitted under Chapter 21 [of Nevada Revised Statutes].” (ECF No. 1 at 17). Thus, Busbin’s many attempts over the years to elevate his interest into a priority payment 23 above the liens on Parcel A have been consistently rebuffed by numerous courts and cannot be re-litigated again now. 24 This does not leave Busbin without a potential remedy. As Judge Jones stated after 25 entering the money judgment in Busbin’s favor: “Plaintiff may then, if he wishes, register that judgment as a lien against any property of Defendants so subject under state law, and state law 26 will govern the priority of such a lien.” (Id. at 30). But the issue of priority of Busbin’s interest is collaterally estopped in federal court since it has already been decided on numerous occasions. 27 5 Because this court decides this appeal based on issue preclusion, it need not 28 comment on the remaining issues of appeal, which are foreclosed by issue preclusion ab initio. 1 Accordingly, 2 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that the bankruptcy court's July 1, 2020, order as to count one of the adversary proceeding (case no. 19-01108- 4) GS), be, and the same hereby is, AFFIRMED. 5 DATED March 18, 2022. 6 Lins CO. Malan 7 UN ITED, STATES DISTRICT JUDGE 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
es C. Mahan District Judge _5-