Judge won’t force OneCap investors to take case to arbitration

A district judge decided a procedural issue on Tuesday in a lawsuit that pits investors who previously entrusted millions of dollars to OneCap Mortgage against the Las Vegas-based private lender. But larger issues loom for OneCap as investors pursue lawsuits arguing that the firm is improperly handling loans the firm brokered.

In the hearing Tuesday, Clark County District Judge Timothy Williams refused to force investors suing OneCap Mortgage to go through arbitration instead of the court.

In a separate but related case earlier this month, Clark County District Judge Mark Denton found in favor of Jacques Massa and 16 plaintiffs who invested in an $8.9 million Serenata Development Group loan brokered by OneCap.

Denton ordered OneCap to release loan servicing to a third party. The Albright Stoddard law firm persuaded Denton that the plaintiffs owned more than half of a mortgage loan that defaulted. As a result, the judge ruled that the investors should be allowed to get a new loan servicer for the project. Loan servicers collect interest and principal and also can take other actions on behalf of investors in loans.

Like other private lenders, OneCap makes loans to developers using money solicited from individual investors. Investors generally enjoy double-digit interest rates on these loans and also have the relative security of having real estate as collateral in case the borrower fails to repay the interest and principal on the loans.

OneCap, a private lender, is entangled in several lawsuits with investors. The firm's attorney, Harold Gewerter, said most of the lawsuits revolve around the Riverside County, Calif., developments of Serenata and Shadow Ranch. The borrowers are different although borrowers have some common owners, Gewerter said.

In two lawsuits, the plaintiffs argue that OneCap did not disclose that Serenata was partly owned by a company controlled by Vince Hesser, who also owns OneCap, and by another company.

Gewerter said investors were told of the firm's ownership interests in the borrower.

"These were interests that were fully disclosed in writing to investors," Gewerter said.

In their lawsuit, Stuart and other plaintiffs accuse OneCap of breaking a contract, fraud, negligent misrepresentation and six other claims. The Stuart lawsuit seeks compensatory damages exceeding $10,000 as well as punitive damages.

"We're talking about resolving all the issues in all the cases as we speak," Gewerter said.