The Ninth Circuit recently affirmed a $15.7 million judgment Quinn Emanuel obtained against Meritage Homes Corp. related to a real estate development near Las Vegas.
The case arose from the development of a 2,000 acre planned community in Henderson, Nevada. A group of homebuilders, including Meritage, formed South Edge, LLC to develop the property. In connection with the transaction, South Edge borrowed $585 million from a syndicate of lenders, and each of the homebuilders executed a repayment guaranty, which required them to repay their respective portion of the loan if South Edge became bankrupt.
After the financial crisis and drop in the Las Vegas real estate market, South Edge was placed into an involuntary bankruptcy in December 2010. As part of the chapter 11 plan of reorganization, the lenders’ claims against Meritage were ultimately assigned to the firm’s client, Insolvency Services Group (ISG).
On behalf of ISG, the firm obtained summary judgment in the District Court and an award of $15.7 million against Meritage. The Ninth Circuit subsequently affirmed the decision in full. In particular, the court held that the repayment guaranty was enforceable and that ISG had standing even after the claims against Meritage were assigned to it in connection with the reorganization plan.