A federal judge's dismissal last week of Yuma developer Todd Burch's $34 million lawsuit against AEA Federal Credit Union isn't the last word on the legal action.
This week, Burch's attorney filed a motion of appeal to the U.S. Court of Appeals for the Ninth Circuit.
And if that fails, Burch vows to take his lawsuit to an even higher court until AEA, which he claims is responsible for his financial troubles, is held accountable.
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 made by Liddle as the state's real estate crisis was peaking, driving him into bankruptcy in the spring of 2010.
His attorney, Robert Cook, argues that the AEA loans were illegal because they violated federal limits on loans to one borrower of 10 percent of the credit union's stated capital.
Burch's debt is estimated at $17.5 million.
He noted that he personally received about $50,000 from AEA, which he put toward business expenses. The remainder of the money paid out by AEA on his loans went directly to his suppliers, contractors and land sellers.
Burch said AEA did not cut off his credit because the developer was failing but because the credit union itself was failing, depriving him of the funds to successfully complete his projects.
“I got stiffed when AEA cut off my line of credit. My business got caught in AEA's failure.”
On Sept. 22, 2011, he filed a lawsuit against AEA for alleged fraudulent misrepresentation, breach of contract and defamation. The National Credit Union Administration was substituted as the real party of interest for AEA because the federal regulator placed the credit union into conservatorship on Dec. 17, 2010.
In other legal action, on Feb. 1, 2012, Burch filed three notices of lis pendens on his properties to secure his claim on the property. The next day, AEA acquired those properties at a trustee's sale and filed a counterclaim against Burch, seeking an injunction requiring him to release his lis pendenses.
On March 6, U.S. District Court Judge Frederick Martone denied Burch's $34 million breach of contract suit against NCUA and rejected his bid to block the credit union agency from selling off his projects. However, the order lets stand AEA's counterclaims to recover money it says is still owed by Burch. The judge also set a scheduling conference for April 20 on AEA's counterclaims.
In dismissing Burch's suit, Martone rejected his claims that AEA — now NCUA as conservator — is accountable for Liddle's promises to Burch, including continuing to fund his million-dollar projects.
“This is an oral promise to lend money in the future, which is unenforceable against the NCUA,” said the agency.
Burch's attorney said that nine people who signed Burch's loan documents as personal guarantors were later offered a deal by AEA. In exchange for paying the credit union between $5,000 to $10,000 each and agreeing not to sue the financial institution, AEA no longer held them accountable for Burch's debts.
“But I won't settle,” Burch vowed.
Joyce Lobeck can be reached at firstname.lastname@example.org or 539-6853. Find her on Facebook at www.facebook.com/YSJoyceLobeck or on Twitter at @YSJoyceLobeck.