Facts

Defendant Michael J. Mona Jr. was a resident of Las Vegas, Nev., and he acquired and was developing 549 lots in a project that consisted of 1,362 lots in Cathedral City. (the "Project") commencing in 2003. The balance of the Project was being developed by another entity.

Mona formed defendant Rio Vista Nevada, LLC ("RVN"), a single-purpose LLC to take title to the Project. He contributed no capital to RVN upon its formation. Immediately following Mona's acquisition of the Project and securing of his $35 million construction loan, Mona allegedly took in excess of $2 million for himself and unrelated to any construction purpose on the Project. Because he capitalized RVN solely with the construction loan, this payment rendered the company technically insolvent.

Following RVN's creation, Mona solicited co-defendant World Development's involvement in the Project. World Development was a local Coachella Valley developer, and Mona sold 45 percent of RVN to World Development. The designated managers of RVN were thereafter defendant Bruce Maize ("Maize") and Mona.

In January 2006, Far West was considering purchasing 76 lots from RVN that were in the middle of this large in-process residential community. If the infrastructure surrounding the Far West project was not timely completed, Far West would have no streets, water, electrical, telephone and the like to which it could connect. Far West therefore secured representations and warranties in the purchase agreements that all infrastructure would be completed timely. Also, Maize and Mona represented to Far West that Mona had personally guaranteed the construction loan. In light of these representations, Far West purchased 76 lots on June 1, 2006 for $6,430,961.

Far West closed escrow on June 9, 2006 and Aug. 31, 2006. Within months of closing escrow, problems began to surface. The infrastructure for the entire project had come to a halt and Far West subsequently learned that RVN had deeded the remainder of the Project back to its lender in lieu of foreclosure. There was no way that the Project infrastructure was going to be completed timely and in compliance with the representations and warranties contained within the purchase agreements. While Far West did its best to mitigate its damages, the Project was a total loss and Far West suffered damages (which include prejudgment interest) of $17,841,652.

Counsel for RVN and World Development withdrew before trial, and those parties' defaults were entered. Maize filed bankruptcy the week before trial. As a result, RVN, World Development and Maize did not participate at trial. Instead, only Michael J. Mona Jr. appeared and defended.

PLAINTIFF'S CONTENTIONS:
Far West contended that RVN breached the purchase agreements, defrauded Far West, and that Maize and Mona misrepresented numerous material facts and concealed others for the sole purpose of inducing Far West to purchase the lots. Far West also contended that Mona was liable on all causes of action as RVN's alter ego.

DEFENDANTS' CONTENTIONS:
Mona contended that he was not the alter ego of RVN. He further contended that he made no misrepresentations to Far West because he never met any representatives of Far West, but rather Maize did.

Settlement Discussions

Plaintiff demanded $7 million. Mona offered a deferred payment of $1 million before trial.

Result

Judgment was issued against defendants Michael J. Mona Jr. in his individual capacity and as Trustee of the Mona Family Trust, Rio Vista Nevada, LLC, and World Development Inc. in the amount of $17,841,652.

Other Information

The court found that RVN had breached both purchase agreements and committed fraud against Far West. Mona individually was similarly found liable for fraud. Finally, Mona was found to be the alter ego of RVN and therefore personally liable for its obligations to Far West. Far West's request for punitive damages was denied. Judgment was entered on March 5, 2012. Far West's motion for attorney fees is pending. The claim as to Maize was stayed by his filing of bankruptcy. Bruce Maize, President of Empire West Development Inc. is in pro per. FILING DATE: March 24, 2008.