Great Western Capital Corporation v. Ingersoll-Rand Financial Corporation, Concord Commercial Corporation, et al.
Published: Mar. 11, 1995 | Result Date: Feb. 8, 1995 | Filing Date: Jan. 1, 1900 |Case number: 912133WJR – $1,875,000
Judge
Court
USDC Central
Attorneys
Plaintiff
Amy L. Morse
(Knight Law Group LLP)
Michael E. Reznick
(Law Offices of Michael E. Reznick APC)
Defendant
Facts
On May 31, 1985, Defendant Ingersoll-Rand Financial Corporation (IRFC) entered into a participation agreement with Plaintiff Great Western Capital Corporation in which IRFC sold certain aged (already existing) loans and agreed to service those loans and to act as Great Western's fiduciary. IRFC made the loans to real estate limited partnerships on the West Coast. The loans were secured by investor notes from the limited partners who each had "verifiable" net worth of $1,000,000 and an annual income of $100,000. The loans were further secured by surety bonds in the event the investor defaulted. Before it entered the agreement, IRFC allegedly represented to Great Western that it had performed some due diligence, including random spot- checking of investors. IRFC then gave Great Western representations and warranties in the agreement that the investor notes, promissory notes, and related transactional documents were "genuine" and "to the best of seller's knowledge and belief" were legal, valid, and binding obligations enforceable in accordance with their terms. Defendants further represented and warranted that "to the best of seller's knowledge and belief," all information respecting any third party delivered by or on behalf of the seller to Great Western was "true, complete, and accurate." Great Western alleged that contrary to IRFC's representations, due diligence was not performed by Defendant because it had made a conscious decision not to conduct any due diligence and to rely instead on the surety bond. While IRFC was servicing the loans and acting as Great Western's fiduciary, IRFC allegedly knew that some of the loans had fraudulent or bogus investors and that the sureties were insolvent. IRFC did not notify Great Western of this fraud until May 21, 1986, even though it discovered the fraud as early as December of 1985 when it began a process to verify whether the named investors actually knew of the loans. In June of 1986, Great Western investigated the fraudulent investors in response to the May 1986 letter from IRFC's New Jersey headquarters. IRFC told Great Western representatives that the portfolio was "generally performing" and that IRFC was working with the general partner to straighten out the situation; that the general partner was going to make the payment; and that a claim was filed with the surety. In or about 1987, the surety became insolvent and the loans were restructured by IRFC. Great Western and IRFC were both sued in 1990 as a result of IRFC's restructure. The instant action was then filed by Great Western against IRFC.
Settlement Discussions
Plaintiff contends that Defendants offered $600,000. Demands, if any, were not disclosed.
Damages
$1,875,000 for damages sustained by Plaintiff as a result of Defendant's alleged misrepresentation and intentional concealment.
Other Information
In April of 1992, the trial Court granted Defendants' motion for summary judgment on the statute of limitations. On February 28, 1994, the Ninth Circuit reversed and remanded the matter for trial.
Deliberation
5.5 hours
Poll
8-0
Length
5 days
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