Receivership moves Dyer Mountain forward
The developer of a proposed four season resort in Westwood, DMA is also suing one of its former managers for $2.4 million.
“I’ve been involved on a daily basis, constantly,” said Jeffrey T. Makoff, of Makoffs, LLP, in Tiburon, the receiver appointed by San Francisco Superior Court Judge Madeleine Simborg with full power to manage Tazuk's interest in DMA.
Makoff met on Thursday, June 21, with DMA’s other two managers, Sara Duryea and Grant Sedgewick, who joined the management team on May 1. Duryea and Sedgewick agreed the addition of Makoff is a positive move.
“It’s helped immeasurably,” Sedgewick said. “The perception we’ve seen of current management is positive and improving every day.”
As part of divorce proceedings between Tazuk and his wife Marilyn Robertson, on May 29, Simborg gave Makoff full power to manage Tazuk's interest in DMA. He owns 520 out of 1,000 Class A membership units of DMA. There are also 1,000 Class B membership units in DMA, but Makoff said only the class A units have been issued, so he controls 52 percent of the ownership.
According to court records, both of the other members of the DMA management committee filed declarations in support of Robertson's motion for the appointment of a receiver "stating that the disagreements between them and Briar are threatening to close down DMA and put it into bankruptcy."
The court's order states DMA is “in immediate need of additional funding. It is in default of outstanding loans to creditors, payroll, rent and other financial obligations.”
The court appointed the receiver to control and manage Tazuk's property and rights under California Code of Civil Procedure Section 568.
DMA is suing former management committee member Chad Waters.
According to a Feb. 9 story in the Silicon Valley/San Jose Business Journal. Tazuk and DMA are suing Waters and Deerheart Investments, LLC, a limited liability corporation he formerly managed, for failure to deliver a $2.4 million payment promised under a November 2005 agreement, in which Waters promised to buy a portion of Dyer Mountain. That failure put DMA "in breach of its own financial obligations," according to the Journal article.
Waters hasn't been part of the DMA management committee since May 2006, when Deerheart Investments replaced him as a manager of Deerheart and a manager of DMA, according to Duryea. DMA filed the complaint in San Francisco Superior Court in early October 2006.
Another lawsuit, filed by Ligustica, LLC, formerly Acer Capital Group, LLC, alleges breach of contract, breach of good faith and fraud against DMA, Deerheart Investments, Waters and Duryea.
Makoff is overseeing DMA’s response to the lawsuit.
“We dispute the allegations of the lawsuit,” Makoff said. “We haven’t reached the time for us to answer (or file a response to the lawsuit). We dispute the allegations of that case. We are not required to respond formally for about six weeks. We have reviewed it and do not believe it has merit. … They come out of the woodwork and this one came out of the woodwork.”
Now that DMA “has effective management, I expect litigation to be very limited,” Makoff said, adding people file lawsuits to get attention and such suits “become a cost of doing business. It’s not something that’s going to bog us down.”
Makoff added, “There’s a difference between a lawsuit and a lawsuit that has merit. You end up dealing with these course-of-business lawsuits.”
Ligustica filed a first amended complaint on June 13 in San Francisco Superior Court, demanding payment of $1.5 million in loan finder’s fees. In October 2005, the suit alleges DMA agreed to pay Ligustica the money as a 2 percent funding success fee for a $31.5 million loan from California Mortgage Realty, Inc and its mortgage fund. It also alleges DMA agreed to give Ligustica a 5 percent equity interest in DMA.
Ligustica also objects to a pending $10.9 California Mortgage Realty Mortgage Fund loan to DMA proposed in April would have been forced to foreclose on a $10.9 loan proposed in April, saying the company will not receive the 2 percent funding success fee outlined in its consulting agreement with DMA.
“During most of the alleged misconduct by DMA, Waters and Duryea were the controlling members of DMA by virtue of their possessing two-thirds of the DMA management’s voting power,” the lawsuit stated.
The suit seeks damages in an amount to be proven at trial, the $1.5 million funding success fee, it’s 5 percent interest in DMA and $218,000 as a 2 percent fee on the 10.9 million loan, if granted. It also seeks general damages, attorney's fees and the cost of the suit.
DMA also faces a $420,000 claim for damages and breach of contract from Newmark Realty Capital, Inc, stemming from an Aug. 30, 2006, agreement to pay a finder's fee on a $42 million loan from Kennedy Financial, Inc. The suit also seeks $420,000 in damages, attorney's fees and the cost of the suit.
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