Developer suing Vestin over loan of $3.6 million

A bankrupt company that unsuccessfully tried to develop residential properties on Mount Charleston is suing Vestin Mortgage over its handling of a $3.6 million loan.

Forest Development claims that Vestin breached the contract, in part by failing to provide the money borrowed through two promissory notes. Forest also alleges that Vestin charged the company more than the 12.5 percent interest negotiated for the loans.

The debtor also argues that unjust enrichment resulted because Vestin retained money that should have been loaned to Forest. Vestin did not return a call for comment.

This is what happened, according to the lawsuit:

The development company was established by Barbara Orcutt and Jerry Snyder, who wanted to build six single-family houses on two properties on the mountain. Synder cashed out. Dr. Glenn Lockwood; his girlfriend, Christina Wells; and Orcutt then became partners in the development.

Attorney Carl Lovell became a partner and persuaded the developers to build six cooperative units, rather than single-family homes. Lovell also advised the partners that they could get a loan from Vestin if they hired Joe Gattis of Nevada Investment and Development as general contract. The partners hired Gattis and got the loan.

Vestin assigned its interest in the loans to Vestin Realty Mortgage I and Vestin Realty Mortgage II, two publicly traded real estate investment trusts.

Clark County in January 2006 questioned whether the zoning would permit the co-ops, resulting in local news coverage. The development was stopped. Forest decided to build single-family homes as originally planned. All the partners but Orcutt withdrew from the project. Gattis put liens on the properties. Vestin refused to release more money until $300,000 was put in the construction control account.

Vestin started foreclosure proceedings and Forest filed for bankruptcy in April 2007. The local law firm of Matthew L. Johnson & Associates filed the lawsuit earlier this month.