Friday, September 3, 2010

San Francisco-based New Resource Bank is not a Racketeer Influenced and Corrupt Organization

I believe this is where the properties in question are located.
Photo courtesy of Google Maps.
On Tuesday Judge Claudia Wilken dismissed Buena Vista LLC's claims that San Francisco-based New Resource Bank is a Racketeer Influenced Corrupt Organization.  The dismissal was without prejudice giving the real estate company the opportunity to amend its allegations.

According to court documents, in October 2006, Buena Vista secured a loan from New Resource Bank in order to build a few homes in Martinez, CA.  The units did not sell or generate sufficient rental income to pay off the loan after New Resource granted a few loan extensions.  New Resource then sold the loan to Ferguson & Brewer Investment Company (FBIC).  Buena Vista alleges that New Resource failed to complete a number of oral agreements and gave Buena Vista's confidential information to Marcus and Millencamp who, in turn gave it to FBIC to determine whether to buy the loan.

The court noted that RICO requires the plaintiff to show that 1) a pattern of racketeering activity 2) the existence of an enterprise that affects interstate commerce 3) a nexus between the racketeering activity and the enterprise and 4) an injury to person or property caused by the above.  Buena Vista argues that New Resource's pattern of racketeering activity was a series of letters and phone calls which made oral agreements upon which Buena Vista relied which is either mail fraud or wire fraud.

Judge Wilken found wire fraud a stretch since it involves an interstate phone call and both businesses are located in California.  Similarly, mail fraud requires a list of specific statements that were false.  At this stage, Buena Vista gets another chance to find those letters with false statements.

The case is Buena Vista, LLC v. New Resource Bank No. C 10-1502 and the opinion is below the jump.

Buena Vista v. New Resource Bank

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