David Beats Goliath: TVA recovers client’s investment and return from non-performing developer

In the heady last days of the real estate boom, before what became known as the Great Recession, investors were lured into what appeared to be guaranteed deals with promises of high returns and low risk. As we all learned, there is no such thing as a guaranteed real estate deal.In August 2007, a developer sought investors for a commercial project in Orange County. TVA’s client, Jerry Fuller, and two other family members, invested $700,000 in exchange for a promise that their money would be repaid in two years plus a guaranteed 32% return. As further inducement, the developer personally guaranteed their investment and the 32% return. By August 2009, the project was in default to its primary lender and ultimately wound up in foreclosure. The investors were offered a cents-on-the-dollar settlement, with the money to be paid in five years.

In February 2014, with no sign of payment forthcoming, Fuller and his family members sued to recover their investment and guaranteed return. The developer, represented by a large Orange County firm, defended by saying they had waited too long, past the four-year limit on written contracts.

Worse, the developer moved to send the matter to arbitration, where he had already defeated the claims of his other investors who, unfortunately for them, were not represented by TVA. Following California’s arbitration-friendly policy, the court sent the case to arbitration at the American Arbitration Association.

After a one-week arbitration, TVA obtained a complete victory for Fuller. Although Fuller’s co-investors had been stymied by the statute of limitations, the arbitrator agreed with TAV that the statute of limitations did not apply because the personal guarantee expressly waived all defenses. TVA clients were awarded 100% of their initial investment, 32% interest for two years, 10% interest from 2009 until 2016, plus attorneys’ fees – over $2 million in total.

All in all, it’s hard to get a better result, especially when the client waits five years to bring suit!