rate at the time the agreement is entered into, then the borrower receives
a payment from the counterparty to the agreement. But, if interest rates
fall below that designated rate, then the borrower has to make a payment
to the counterparty. In this case, interest rates fell and, upon the
agreement's end date, Town Center owed $1.7 million Because Town
Center was unable to pay the full amount, Bank of America agreed to
finance a portion of the amount owed on the treasury lock by modifying
the amount of Town Center's construction loan. Town Center then paid
approximately $600,000 in cash to Bank of America, and the bank added
the remaining $1.1 million to the construction loan by modification,
thereby settling the terms of the treasury lock agreement.
After multiple extensions of the construction loan's maturity
date, Bank of America refused to grant another extension because the
property value had fallen below the amount of debt on the loan. And
Town Center had not applied for a permanent loan because it knew it
would not meet the necessary criteria. Thus, when Town Center failed to
pay the balance upon the maturity date, Bank of America initiated non-
judicial foreclosure procedures and filed a complaint seeking an
appointment of a receiver. Town Center filed an answer to the complaint
and alleged numerous counterclaims. The district court dismissed all of
Town Center's counterclaims except for its claim that Bank of America
breached the covenants of good faith and fair dealing during the
negotiation over the treasury lock agreement. With the foreclosure sale
approaching, Town Center sought a preliminary injunction to prevent the
sale until its underlying claim was litigated. The district court denied the
injunction. Town Center argues on appeal that the district court abused
its discretion by denying its request for a preliminary injunction.
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The district court did not abuse its discretion in denying injunctive relief to
Town Center
A preliminary injunction is proper when the moving party can
demonstrate that it will suffer irreparable harm for which compensatory
damages would not suffice if the action complained of is not halted and
that it has a reasonable likelihood of success on the merits. See NRS
33.010; Boulder Oaks Cmty. Ass'n v. B & J Andrews Enters., LLC, 125
Nev. 397, 403, 215 P.3d 27, 31 (2009). A district court's denial of a
preliminary injunction is reviewed for an abuse of discretion. Univ. &
Cmty. Coll. Sys. of Nev. v. Nevadans for Sound Gov't, 120 Nev. 712, 721,
100 P.3d 179, 187 (2004). Factual determinations will be upheld unless
they are "clearly erroneous or not supported by substantial evidence." Id.
Questions of law are reviewed de novo. Id.
The district court correctly determined that Town Center was not
likely to succeed on the merits of its claim
When Town Center sought injunctive relief, its only surviving
counterclaim was for Bank of America's breach of the covenants of good
faith and fair dealingS relating to its representations about the treasury
lock agreement. "An implied covenant of good faith and fair dealing is
recognized in every contract under Nevada law." Consol. Generator-
Nevada, Inc. v. Cummins Engine Co., Inc., 114 Nev. 1304, 1311, 971 P.2d
1251, 1256 (1998). "When one party performs a contract in a manner that
is unfaithful to the purpose of the contract and the justified expectations of
the other party are thus denied, damages may be awarded against the
party who does not act in good faith." Hilton Hotels Corp. v. Butch Lewis
Prods., Inc., 107 Nev. 226, 234, 808 P.2d 919, 923 (1991). "Whether the
controlling party's actions fall outside the reasonable expectations of the
dependent party is determined by the various factors and special
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circumstances that shape these expectations." Id. at 234, 808 P.2d at 923-
24. Whether a party has acted in good faith is a question of fact. Consol.
Generator-Nevada, 114 Nev. at 1312, 971 P.2d at 1256.
Here, the district court concluded that Town Center had not
shown any bad faith by Bank of America in regard to the treasury lock
agreement. We agree. Despite Town Center's contention that it was
misled by representatives of Bank of America as to the nature and
function of the treasury lock agreement, our review of the record reveals
that evidence was presented at the preliminary injunction hearing
demonstrating that Town Center was aware of the risks when it entered
into the treasury lock agreement. And, as the record reflects, both parties
to the transaction were sophisticated parties who had ample opportunity
to understand the contract. Although Black testified that he never really
understood the risks associated with a treasury lock, he admitted that,
prior to entering into the contract, his Chief Financial Officer Scott Dean
specifically informed him of what would occur if interest rates fell below
the designated rate.' Furthermore, Dean testified that Bank of America
advised him to conduct an independent review, either internally or with
independent advisors, but that he failed to discuss the contract with or to
seek advice from any independent entity or expert.
'Dean stated in a memorandum to Black that
The hedge will be settled at the BEGINNING of
the contract. On May 1, 2007, if our locked rate is
higher than our perm loan rate[,] WE PAY BOFA!!
If our rate is lower than the perm loan rate[,1
BOFA PAYS US!! . . . In essence[,] WE ARE
BETTING RATES WILL GO HIGHER. IF SO[,]
THEY PAY US! IF NOT[,] WE PAY THEM!
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Town Center also alleged in the district court that Bank of
America representatives led it to believe that the treasury lock agreement
was somehow tied to permanent financing. However, both Black and
Dean admitted multiple times during the preliminary injunction hearing
that no one from Bank of America ever actually promised Town Center a
permanent loan. Dean also stated that Town Center never received a loan
commitment letter or any other formal document from the bank regarding
permanent financing, and that he knew that the treasury lock agreement
would settle on its expiration date, whether or not permanent financing
was obtained. Finally, Black testified that Town Center never actually
requested a permanent loan because he knew that Town Center was not
yet in a position to qualify for that financing given its occupancy levels.
Thus, we conclude that substantial evidence supports the
district court's determination that Town Center was not likely to succeed
on the merits of its claim that Bank of America failed to act in good faith.
The district court correctly determined that Town Center failed to
show irreparable harm
The district court also determined that Town Center did not
demonstrate irreparable harm because the treasury lock agreement was
not related to the construction loan, and thus, any claim Town Center had
regarding the treasury lock agreement could be compensated monetarily
and would not affect the foreclosure. Town Center argues that the district
court erred in making this determination because the treasury lock
agreement was secured by the property and amounts from the treasury
lock were incorporated into the construction loan.
We are unpersuaded by Town Center's argument because even
if the treasury lock agreement had been secured by the property, Bank of
America did not foreclose on the property when Town Center could not pay
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its obligation under the treasury lock agreement. Instead, Bank of
America agreed to accept a partial cash payment and to modify Town
Center's existing construction loan by adding the remaining balance of
$1 1 million to that loan, thereby settling and concluding the treasury lock
agreement. We determineS that this equated to a separate transaction—
Town Center borrowed an additional $1.1 million to pay the treasury lock
and secured that debt with the property. And, while Town Center
disputes the validity of the treasury lock agreement, it does not dispute
that it borrowed that additional money and agreed to a modification of its
existing construction loan. Thus, even if Town Center succeeded on its
claim for the breach of good faith and fair dealing, it would only be entitled
to monetary damages and it would still be in default on the construction
loan. 2 Therefore, we conclude that substantial evidence also supports the
2 Town Center argues on appeal that if the treasury lock agreement
is not secured by the property then amounts owing under it cannot
properly be part of the amount owed under the construction loan, and
thus, the notice of default has been rendered ineffective. Town Center
bases this argument on NRS 107.080(2)(c)(3) (requiring a beneficiary to
provide the holder of the deed of trust with an accurate written statement
of the amount in default) and NRS 107.080(7)(b) (stating that a
beneficiary's failure to provide that notice mandates the grant of an
injunction preventing the foreclosure sale until the beneficiary complies
with the statutory requirements). This raises the question of whether
NRS 107.080(7)(b)'s mandate of an injunction supersedes the standard
requirements for injunctive relief. However, because Town Center failed
to raise this argument before the district court, we decline to consider this
argument on appeal. Old Aztec Mine, Inc. v. Brown, 97 Nev. 49, 52, 623
P.2d 981, 983 (1981) ("A point not urged in the trial court, unless it goes to
the jurisdiction of that court, is deemed to have been waived and will not
be considered on appeal.").
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district court's determination that Town Center failed to show irreparable
harm.
Because the district court's determination that Town Center
was not likely to succeed on the merits of its claim and failed to show
irreparable harm was not clearly erroneous and was supported by
substantial evidence, we further conclude that the district court did not
abuse its discretion in denying injunctive relief to Town Center. See
Boulder Oaks, 125 Nev. at 403, 215 P.3d at 31; Nevadans for Sound Gov't,
120 Nev. at 721, 100 P.3d at 187.
Accordingly, we
ORDER the judgment of the district court AFFIRMED.
cilaz-4.*\
Hardesty
J.
Douglas
, J.
cc: Hon. Elizabeth Goff Gonzalez, District Judge
Ara H. Shirinian, Settlement Judge
Black & LoBello
Snell & Wilmer, LLP/Las Vegas
Eighth District Court Clerk
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