Facts

In early 2009, plaintiff Joseph Mohamed Sr., a real estate developer in the Sacramento area, approached Exchange Bank seeking to purchase 106 lots in a residential subdivision in Rancho Cordova, from Cambridge Homes.

In 2005, Cambridge Homes purchased the lots from AKT Development Corp. Defendant Exchange Bank had loaned Cambridge Homes over $11 million to finance the purchase of the lots. Pursuant to a Builder's Agreement between Cambridge Homes and AKT, Cambridge Homes was obligated to purchase fee credits from AKT, which could be applied against fees owing to the City of Rancho Cordova and the County of Sacramento. The fee credits enabled AKT to recoup costs it incurred building infrastructure improvements at the project. The builder's agreement was recorded as an encumbrance against the subject property.

In 2008, Cambridge Homes incurred severe financial hardship, did not pay AKT under the agreement, and defaulted on its loan from Exchange Bank. Exchange Bank foreclosed on its loan and acquired the property. Shortly after, AKT issued a demand to Exchange Bank claiming that the agreement was an encumbrance on the 106 lots, and as Cambridge Homes' successor, Exchange Bank owed AKT $3.3 million for unpaid fee credits.

After plaintiff's purchase, AKT sent plaintiff a demand claiming that, as a successor to Cambridge Homes, he was now liable to AKT for $3.3 million in fee credits under the builder's agreement. Exchange Bank disagreed, and asserted its position that it was not obligated, and nor would its successors be obligated, to pay AKT for fee credits. However, Exchange Bank and AKT never reached a resolution in the matter.

Plaintiff filed the instant lawsuit, claiming defendant made false representations in regards to his obligations to pay fees.

PLAINTIFF'S CONTENTIONS:
Mohamed contended that Exchange Bank led him to believe, through a series of oral and written misrepresentations, that he would not be obligated to purchase fee credits from AKT, and that he would not have to pay the City of Rancho Cordova or County of Sacramento for certain building and permit fees in order to build homes on the lots.

Plaintiff claimed that defendant made intentional misrepresentations regarding plaintiff's obligations to pay fee credits to AKT under the builder's agreement, to pay fees to Rancho Cordova or Sacramento County, and that defendant made negligent misrepresentations regarding the same. Plaintiff asserted that defendant committed financial elder abuse by making such misrepresentations. Plaintiff filed causes of action for fraud and elder abuse.

DEFENDANT'S CONTENTIONS:
Exchange Bank denied that it made any false representations to plaintiff or that he had suffered any damages as a result of its conduct.

Damages

Plaintiff alleged that, as a result of Exchange Bank's purported misrepresentations, he incurred damages of approximately $3.3 million, arising from the building permit fees he otherwise would not have been obligated to pay, plus more than $1 million dollars in holding costs on the property, which he alleged could not be developed and sold. Plaintiff alleged more than $4.5 million in damages.

Result

The jury returned a unanimous defense verdict in favor of Exchange Bank on all claims.

Deliberation

1.5 hours

Length

five days