Bell Savings & Loan Assn. has sued Monarch Bank of Laguna Niguel for $8.9 million, claiming the bank failed to honor a 1984 agreement to repurchase loans that went into default after Monarch sold them to Bell.
The San Mateo-based S&L--which has assets of $1.5 billion, compared with Monarch's $86 million--claims in the Orange County Superior Court suit that Monarch's refusal to repurchase the loans was "completely alien to any commercially reasonable standard."
The suit, filed Tuesday, seeks almost $3.9 million that Bell claims as actual loan losses and an additional $5 million in punitive damages.
But Terry J. Metrovich, Monarch's president, said Monarch had already sued Bell earlier this month to have the contracts declared "null and void because of inappropriate documentation and other activities." That suit is pending.
Bell was taken over by federal regulators last year and is being managed by a team of executives from Glendale Federal S&L.