PHOENIX – A federal appeals court yesterday dismissed a case brought by a Yuma, Arizona, real estate developer who claims AEA FCU, which was taken over two years ago by NCUA, drove him into bankruptcy by cutting off his line of credit as the credit union itself was going under.
In dismissing the suit, the U.S. Court of Appeals for the Ninth Circuit said it could not rule on Todd Burch’s appeal because the lower court has not disposed of all of the claims in the case, referring to a multi-million dollar counter-suit NCUA has brought against him for payment of unpaid loans to the credit union.
The Yuma developer had filed a $34 million breach of contract claim against NCUA as conservator for the one-time $410 million credit union, but the lower court, the U.S. District Court for the District of Arizona, dismissed that case in March.
Burch, developer of the Tucson Ranch housing subdivision and the Reflections condominium project, said he was coaxed away from Yuma Community Bank to AEA with false promises by William Liddle, head of member business lending at AEA who was convicted in February of a massive member business loan fraud that sunk the one-time credit union for the Arizona Education Association.
Burch claimed the credit union cut off his line of credit and sued him for collection of his loan in breach of promises made by Liddle as the state’s real estate crisis was peaking, driving him into bankruptcy. The developer argued the AEA loans themselves were illegal and unenforceable because they violated the Federal CU Act’s limits on loans to one borrower, which are 10% of the "credit union's unimpaired capital and surplus.”
Burch said AEA did not cut off his credit because the developer was failing but because the credit union itself was failing.
In dismissing the developer’s suit, the lower court rejected Burch’s claims that AEA—now NCUA as conservator--is accountable for Liddle’s promises to Burch, including continuing to fund his million-dollar projects.
NCUA said Burch’s claims are founded on two alleged promises made by the Liddle, including that AEA would continue to loan Burch the needed funds, and second, that AEA was solvent. The availability of funds, noted NCUA, was based on whether AEA had the funds to lend, and it did not, they told the court. “This is an oral promise to lend money in the future, which is unenforceable against the NCUA,” said the agency in its court pleadings.
The court also issued an order erasing Burch’s attempts to bloc NCUA’s sale of several of the disputed properties through notices of lis pendens on three homes, the Reflections condominiums and vacant land and the property was subsequently sold—back to AEA in a foreclosure sale.
