Butterfield Savings & Loan Assn. has accused the Stein-Brief Group of fraud and breach of contract for allegedly refusing to make payments on a $1.5-million home bought as a condition for obtaining an $8.2-million loan from the S&L.
The Santa Ana-based S&L is suing Stein-Brief to uphold the sale of the house and to collect unspecified damages.
The Butterfield lawsuit was filed in Orange County Superior Court earlier this month after Stein-Brief, the partnership that is developing the Monarch Beach resort and residential community in Laguna Niguel, initiated its own suit against Butterfield.
The Stein-Brief suit, filed in August, alleged that when it "desperately needed" funds from Butterfield to make a multimillion-dollar mortgage payment on its Laguna Niguel development in 1984, the S&L fraudulently coerced it into buying the custom home in the Harbor Ridge Development in Newport Beach as part of the deal. The suit also alleges that the S&L failed to make required repairs to the home.
Butterfield has denied the allegations.
Payments Made to Court
As a result of its lawsuit, Stein-Brief obtained a preliminary injunction preventing Butterfield from filing a notice of default against it for failing to make house payments on the $800,000-mortgage from Butterfield S&L. The company is required to make $8,000-per-month payments to the court, which is holding the money until a final settlement is reached.