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Vegas Diamond Properties, LLC, A Nevada Limited Liability Company; and v. La Jolla Bank

January 27, 2011

VEGAS DIAMOND PROPERTIES, LLC, A NEVADA LIMITED LIABILITY COMPANY; AND
JOHNSON INVESTMENTS, LLC, A NEVADA LIMITED LIABILITY COMPANY, PLAINTIFFS,
v.
LA JOLLA BANK, FSB, A CALIFORNIA CORPORATION;
ACTION FORECLOSURE SERVICES, INC., A CALIFORNIA CORPORATION; AND
DOES I-X, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge:

ORDER

The matter before the Court is the Emergency Motion for Stay or Injunction Pending Appeal filed by Plaintiffs Vegas Diamond Properties, LLC ("Vegas Diamond") and Johnson Investments, LLC ("Johnson Investments"). (ECF No. 62).

I. Background

On January 8, 2010, Plaintiffs initiated this action by filing a Complaint in Nevada state court. (ECF No. 1, Ex. A).

A. Allegations of the Complaint

Vegas Diamond is the owner of a parcel of real property located near Barbara Street and Las Vegas Boulevard in Las Vegas, Nevada ("Vegas Diamond Property"). "The main principals of Vegas Diamond are Danny Tarkanian and the extended Tarkanian family." Id. ¶ 1. Johnson Investments is the owner of two parcels of real property ("Johnson Properties") near the same location as the Vegas Diamond Property. Doug Johnson is a principal of Johnson Investments.

In 2001 or 2002, Robert A. Dyson, an owner of various "real estate entities," began investing in a real estate development in Anza, California ("Anza Project"). Id. ¶ 12. In 2005, Dyson "was encountering severe resistence and trouble in proceeding with the Anza Project." Id. ¶ 48. "La Jolla Bank was fully aware of the issues adverse to the Anza Project and the ultimate delays." Id. ¶ 49.

Dyson met with Johnson and Tarkanian and "provided [Johnson and Tarkanian] documents and oral representations ... painting a very strong financial picture for the Anza Project and high likelihood of return on [their] investment." Id. ¶ 57; see also id. ¶ 59. "After several meetings with Mr. Dyson, Mr. Johnson and Mr. Tarkanian agreed to take loans from La Jolla Bank secured against the Johnson Properties and Vegas Diamond Property and in turn, to loan the proceeds to Mr. Dyson." Id. ¶ 61. "Without ever meeting, discussing or negotiating with anyone affiliated with La Jolla Bank, Johnson Investments received a $10,933,125 loan secured by the Johnson Propert[ies] and Vegas Diamond received a $14,568,750 loan secured by the Vegas Diamond Property from La Jolla Bank." Id. ¶ 62. Johnson and his wife personally guaranteed the Johnson Investments loan, and Tarkanian, his wife, and his extended family personally guaranteed the Vegas Diamond loan. "Under the deal with Mr. Dyson, Mr. Dyson became obligated to Johnson Investments and Vegas Diamond for the full amount of the loans and in addition, [Dyson] agreed to pay approximately 11% interest." Id. ¶ 68.

"Unbeknownst to Mr. Johnson and Mr. Tarkanian, money from the loans made by La Jolla Bank to Johnson Investments and Vegas Diamond was used to pay off other loans Mr. Dyson had with La Jolla Bank." Id. ¶ 77. "As it turns out, the Anza Project which was only worth around $15 million, was securing loans in the amount of $32.5 million--the loan from La Jolla Bank to Mr. Dyson secured by a first on the Anza Project and the loans made by ... La Jolla Bank to Johnson Investments and Vegas Diamond secured by a second on the Anza Project." Id. ¶ 80.

"La Jolla Bank is subject to an 'Order to Cease and Desist' issued before the Office of Thrift Supervision ('OTS').... The effective date of the Order is September 9, 2009" Id. ¶ 90. Dyson "filed for bankruptcy on ... October 31, 2009, and is still presently in bankruptcy." Id. ¶ 15. "The Vegas Diamond Property and the Johnson Propert[ies] are presently in foreclosure" and a "Trustee's Sale is presently scheduled for [the] properties." Id. ¶¶ 10-11.

The Complaint alleges six causes of action: (1) fraudulent concealment against La Jolla Bank; (2) negligence against La Jolla Bank; (3) civil conspiracy against La Jolla Bank; (4) breach of the covenant of good faith and fair dealing against La Jolla Bank; (5) aiding and abetting deceit against La Jolla Bank; and (6) "preliminary injunction against all Defendants." Id. at 15. The Complaint's prayer for relief requests compensatory and punitive damages, attorney's fees and costs, and "an order granting a preliminary injunction against the Defendants immediately restraining Defendants from proceeding on any Trustee's Sale of the Plaintiffs' real properties." Id.

B. Procedural History

On January 8, 2010, Plaintiffs filed an "Emergency Ex Parte Application for Temporary Restraining Order; and Motion for Preliminary Injunction." (ECF No. 32-1, Ex. 1). Plaintiffs sought to restrain "Defendants from proceeding on the Trustee's Sale presently scheduled for January 8, 2010, at 10:00 a.m." Id. at 1. Plaintiffs stated: "La Jolla Bank is subject to an Order to Cease and Desist. This could lead to an eventual collapse of the bank. Should this happen, monetary damages would be an inadequate remedy. This coupled with the uniqueness of real property further militates that allowing the Trustee sale to go forward would result in irreparable harm." Id. at 20.

On January 11, 2010, the Nevada state court issued a Temporary Restraining Order, secured by a cash bond in the amount of $10,000. In the Temporary Restraining Order, the court ordered that "the Defendants shall be enjoined from proceeding with a Trustee's Sale of the Plaintiffs' real properties until further order of the Court." (ECF No. 31-1 at 10).

On January 13, 2010, La Jolla Bank removed this action to the United States District Court for the District of Nevada. (ECF No. 1).

On February 9, 2010 and February 12, 2010, the Nevada district court granted Plaintiffs' and La Jolla Bank's stipulations that Defendants would continue to be temporarily restrained from conducting any trustee's ...


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