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Lubin Olson’s Dennis D. Miller Successfully Defends First National Bank of Northern California against $12 million lawsuit

In 2006, Lubin Olson client First National Bank of Northern California (“FNB”) extended a $6 million construction loan to a borrower to construct a 17 unit residential development in East Palo Alto.  In early 2007, the project came to a halt as to both construction and sales due to a dispute between the borrower and the general contractor.  The borrower filed a Chapter 11 petition in December 2007 to stop FNB’s foreclosure on its deed of trust.  Subsequently, the borrower sued FNB in the San Mateo County Superior Court in November 2010 alleging numerous claims against FNB including breach of contract, violation of Business and Professions Code 17200, fraud, conspiracy and the other claims, claiming damages in excess of $12 million.  The Complaint was ultimately reduced to breach of contract, fraud and a declaratory relief claim after several demurrers by FNB.  While the state court case was proceeding to trial, FNB was finally able to prevail on  a motion to convert the Chapter 11 case to Chapter 7. FNB was then able to negotiate a settlement with a modest payment to the Chapter 7 trustee to settle all borrower claims against FNB. On February 16, 2016, the bankruptcy court approved the Trustee-FNB settlement which results in the dismissal of the San Mateo case against FNB with prejudice, ending over five years of litigation.

See In re Weeks Street, US Bankruptcy Court, Northern District, California, 07-54183 and Weeks Street LLC v. Nexgen Builders, Inc., San Mateo Superior Court case no. CIV500942.

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