San Jose firm wins judgment against Dyer Mountain Associates
Ashworth’s client, Redwood Capital Group, LLC, won the $550,000 writ of attachment on Tuesday, June 12, against DMA, and DMA principal Sara Duryea, after a hearing in Santa Cruz County Superior Court.
It orders Lassen County’s sheriff to attach all of DMA’s property around Westwood to repay the money Redwood invested through an April 2006 agreement with DMA.
Redwood agreed to pay $500,000 for an unimproved, roughly one acre, single-family lot in Deerheart Club and Estates. DMA guaranteed the lot would be worth at least $1 million a year from close of escrow on the sale.
The agreement gave Redwood the right to cancel with a full refund paid within three months if DMA did not record a final map on the subdivision by April 11, 2007. Ashworth said he filed the suit for Redwood Capital on April 12.
Duryea said on Thursday, June 14 the agreement requires DMA to refund the money within 90 days.
“That’s not until the middle of July,” Duryea said on Thursday, June 14. “It’s under review; it’s being handled by our attorney’s. It will not stop the project.”
So far, DMA submitted to the county a tentative subdivision map dividing the 7,000-acre Dyer Mountain property near Westwood into 13 lots ranging in size from 40 to 2,935 acres. Release of draft final Environmental Impact Report is expected before the end of the month, with a development agreement to follow shortly thereafter.
Ashworth said the writ of attachment will be recorded as a lien on the property, meaning Redwood will be paid before anybody else in line to receive proceeds of a sale.
“It doesn’t give Redwood ownership,” he said. “They do not become an owner in any sense.”
However, any lender DMA approaches will want to take lien into account before investing, Ashworth said.
“They’re trying to get about 9.5 to $10 million in additional financing,” he added.
“It gives other people pause before they give any more money to Dyer Mountain associates,” he said. “Other investors will end up junior to Redwood.”
“In 90 days that’s not until the middle of July. It’s under review it’s being handled by our attorneys. It will not stop the project.”
Redwood may still file a lawsuit. If the company is not paid by time a lawsuit goes to trial, then Ashworth said he may seek writ of execution. If he wins, the court may direct the sheriff to put the property up for sale to satisfy the claim.
“The lawsuit has just begun,” he said. “In 30-45 days there will be a case management conference. I’ll ask the judge then to turn it into a trial setting conference.”
A trial is unlikely to occur before January or February of 2008. DMA faces paying Redwood’s attorney fees.
“The more money they make us spend chasing them, the more money they have to pay us if they lose,” Ashworth said, adding his client has not made up his mind whether to pursue a lawsuit if DMA pays the $550,000.
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