Ninth Circuit dismisses appeal filed by Todd Burch
An appeal by Yuma Realtor Todd Burch to the 9th U.S. Circuit Court of Appeals has been dismissed because there is still unfinished business at the U.S. District Court level.
Burch’s attorney, Robert Cook, had filed the motion of appeal in March after a federal judge rejected Burch’s $34 million lawsuit against National Credit Union Administration as conservator for AEA Federal Credit Union. In his lawsuit, Burch alleged fraudulent misrepresentation, breach of contract and defamation.
When U.S. District Court Judge Frederick Malone denied Burch’s lawsuit on March 6, the court retained jurisdiction of a counterclaim by appellee NCUA/AEA against Burch for damages caused to AEA when he filed three notices of lis pendens in early February on his properties to secure his claim to them. Lis pendens, a Latin term for “suit pending,” is a written notice that a lawsuit has been filed against a property or an interest in property.
Shortly after, AEA acquired those properties in a trustee sale and filed the counterclaim against Burch, alleging that his lis pendens notices caused damage to AEA by clouding title to the properties and preventing the credit union from reselling certain parcels. Burch released his lis pendens a few days later.
NCUA had argued to the 9th Circuit that Burch’s appeal should be dismissed, stating it was premature because the counterclaim was still pending and the court’s jurisdiction is limited to final orders.
Three 9th Circuit judges granted NCUA’s motion “because the district court’s order challenged in this appeal did not dispose of the action as to all claims and parties.”
John Zimmerman, NCUA spokesman, said he couldn’t comment on the case.
Burch said he understands that the counterclaim will go to trial in April 2013 in U.S. District Court in Phoenix. He said he welcomes the trial as it will provide an opportunity for his attorney to enter additional evidence.
“He’ll be able to bring out all the stuff he hadn’t been able to before,” Burch said of his attorney.
Cook didn’t return several phone calls seeking comment on the case.
In earlier conversations, Cook has said AEA erred by issuing loans to Burch that were illegal because they violated federal limits on loans to one borrower of 10 percent of the credit union’s stated capital.
According to a document by CU Business Group dated Jan. 15, 2010, detailing a review in late 2009 and early 2010 of business loans made by AEA, Burch was one of four borrowers whose loans exceeded the debt limit. Those loans were found to be well in excess of the value of property purchased by as much as 243 percent, and a number of irregularities in the issuance of the loans were noted by the document.
The document, addressed to AEA’s then-CEO Ken Bredemeyer and AEA’s internal auditor, states: “In the immediate future you should request all of the related companies’ financial information and the guarantors’ financial information and perform a global cash flow to ascertain if the borrowers can debt service this extraordinary amount of debt. With only $32 M in capital, the credit union is extremely exposed with these four borrowers.”
Burch’s debt was listed as $14.8 million in the document. The other three borrowers noted in the document were Frank Ruiz, Dan Thelen and Shelby Carl, Ruiz’s former partner. Combined, the four borrowers’ reported debt at the time of the review totaled $48.3 million.
All of the loans were arranged by William Liddle while he was head of AEA’s business lending department. Liddle resigned from AEA in early December 2009 amid allegations of financial wrongdoing. In February, he was convicted of conspiracy, fraud and money laundering and is to be sentenced June 1.
AEA was placed in conservatorship by NCUA in December 2010.
In his lawsuit, Burch, developer of the Tuscan Ranch housing subdivision and the Reflections assisted living condominium project, said he was coaxed away from Yuma Community Bank to the credit union with false promises by AEA. Burch claims the credit union cut off his line of credit and sued him for collection of his loan in breach of promises he was made, driving him into bankruptcy in the spring of 2010.