Realtor claims breach of contract, defamation by AEA
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A Yuma Realtor has filed a $34 million lawsuit against AEA Federal Credit Union for alleged fraudulent misrepresentation, breach of contract and defamation.
In his lawsuit, filed Thursday in Yuma County Superior Court, Realtor Todd Burch asserts that the credit union unfairly sued him for collection of his capitalized loan and cut off his line of credit.
These actions drove him into bankruptcy, damaged his credit and impacted his ability to do business as the developer of the Tuscan Ranch housing subdivision and the Reflections condominium project, Burch contends.
Tom Martin, CEO and president of AEA, referred a call for comment to the National Credit Union Administration, under which the local credit union has been in conservatorship since December 2010.
David Small, spokesman for NCUA, responded that the regulatory agency “does not comment on active litigation.”
Burch's lawsuit states that AEA fraudulently misrepresented to him that if he entered into a good-faith banking relationship with the credit union, the financial institution would provide Burch with “sufficient funds to implement the business purposes of the loans.”
However, according to Burch's lawsuit, “Defendant AEA's balance sheet was insolvent as of June 30, 2006” and had exceeded its regulated loan limits.
Because of this alleged deception, Burch said he changed banks from Yuma Community Bank to AEA. As a direct result, Burch's lawsuit states, he was “damaged personally and in every other respect in an amount of not less than $34 million ...”
Of the second count of breach of contract, the lawsuit states: “AEA did not call the loss due because Plaintiff Todd Burch's businesses were failing, but because Defendant AEA itself was failing. Immediately after Defendant AEA publicly acknowledged it had exceeded its federally regulated credit limit, Defendant AEA turned around and started suing many of their business clients, including Plaintiff Todd Burch.”
Burch also is alleging defamation, saying that AEA “has made untrue, reckless, outrageous public statements to credit reporting agencies” that Burch and his friends and family members were late on payments in the approximate amount of $17 million.
In fact, Burch said, he was current on the interest payments for his capitalized loan, which was to be paid off when he finished a project. Furthermore, he said, he was denied money from his line of credit to make payroll.
On the advice of his attorney, Burch filed for bankruptcy in the spring of 2010. That includes the personal bankruptcy of Burch and his wife as well as his entities, Tuscan Ranch Inc., Cactus West Developers, Todd Burch Limited (his business) and Nflux LLC. Nflux owns the building that consists of the Reflections condominiums, some of which are used for assisted living residents.
Burch said he had tried for 18 months to make a deal with AEA to “in essence change banks so I could move on with the projects. Those efforts all failed despite the fact that they would have net AEA similar percentages as the sales of the Fun Factory and Lee Hotel.”
Since then, he said, “they've systematically dismantled everything I try to do.”
Whenever he sells a lot or house in his development projects, the proceeds go to the court or are treated as short sales, said Burch. That leaves him with the commissions he earns as a real estate agent only on unrelated products as his only income.
“I'm in bankruptcy because I was forced to,” he said. “It's not because I wasn't doing well and missing regular payments.”
Joyce Lobeck can be reached at firstname.lastname@example.org or 539-6853.