CADC v. Richard J. Bradley, et al.
Published: Feb. 1, 2014 | Result Date: Oct. 1, 2013 | Filing Date: Jan. 1, 1900 |Case number: 26-58559 Verdict – Defense; Cross-Defendant
Court
Napa Superior
Attorneys
Plaintiff
Michael R. Farrell
(Allen, Matkins, Leck, Gamble, Mallory & Natsis LLP)
Cathy Ann Hongola-Baptista
(Allen Matkins Leck Gamble Mallory & Natsis LLP)
Defendant
Facts
CADC/RADC Venture 2011-1 LLC, managed by Sabal Financial Group, is the note holder of a $2.1 million loan originally made by Charter Oak Bank to Nohea Napa Gateway LLC, a single purpose entity. Defendants Richard Bradley and Reynolds Yates signed commercial guaranties of $2.1 million on the loan, which was secured by raw land in Napa. Sabal Financial Group LP services the loan for CADC.
Defendants filed a cross-complaint alleging unfair business practices.
Contentions
PLAINTIFF'S CONTENTIONS:
Plaintiff contended that the guaranties were valid and enforceable and that defendants breached the guaranties by failing to pay amounts due under the guaranties.
Plaintiff argued that the sham guaranty defense did not apply because defendants had chosen the form and identity of the borrower, accepted the liability protections such corporate borrower provided, and structured the loan to facilitate an Internal Revenue Code 1031 exchange for an affiliated company.
CADC filed a complaint for breach of guaranty against Bradley and Yates.
On the cross-complaint, cross-defendants contended that CADC's efforts to collect under the guaranties were not an unfair business practice, and that Sabal was not guilty of conspiring with CADC to commit an unfair business practice.
DEFENDANT'S CONTENTIONS:
Defendant claimed that the guaranties were unenforceable sham guaranties.
On its cross-complaint, defendant/cross-claimant Bradley claimed that CADC and Sabal were guilty of unfair business practices.
Settlement Discussions
Highest offer by Bradley and Yates was $700,000. CADC's last demand was $1.35 million.
Damages
Plaintiffs sought the deficiency plus interest and costs of $1.3 million plus attorney fees.
Result
The guaranties were found to be unenforceable sham guaranties by the jury. On the cross-complaint, the judge found that CADC had not committed any unfair business practices and the jury found that Sabal had not conspired to commit an unfair business practice.
Other Information
Motion for New Trial and Judgment Notwithstanding the Verdict by CADC was denied. Motion for Attorney Fees and Costs by Bradley and Yates was granted for $600,000 through Oct. 1, 2013, the day of the verdict. CADC has appealed the verdict on the grounds that, among other things, guarantors had failed to meet their burden of proof and that the jury instructions on the sham guaranty defense were erroneous. The appeal is currently pending before the First Circuit Court of Appeals. FILING DATE: March 13, 2012.
Deliberation
seven hours
Length
six days
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