Judge says allegations must be proven or dropped
By Christy Scott
The Alpine Sun
ALPINE — The plaintiffs in a lawsuit against a prominent Alpine business group have been given two weeks to re-file their complaints after an original suit was struck down in court Sept. 2.
The plaintiffs are seeking damages and other relief for common law fraud, breach of contract, and accounting errors, by their former business partner Real Estate International (REI).
REI entered into a homebuilding venture with Dartmouth in September 1998 to build and sell custom homes on 165 acres and 33 acres in the Alpine area. Party to the agreement — and to the lawsuit — are Dartmouth Development Company, Inc., Dartmouth Alpine Associates, LLC, and Dartmouth Stagecoach Associates, LLC according to the lawsuit. The REI-NC, LLC partners are David Waitley and Kenneth Stroud. Gonya characterizes his role as merely a consultant/advisor and that he had retired from the company in 1997, though the suit alleges that he is “…the mastermind behind the fraudulent cost-shifting and billing practices at REI.”
Waitley is a resident of Alpine, president and chief financial officer for REI, and member of the Alpine Planning Group. Gonya is a resident of Alpine, owner of a horse breeding business and Gonya Enterprises, Inc., and held a financial interest in the homebuilding venture. Kenneth Stroud is a resident of Alpine and serves as vice president and secretary of REI-NC.
California Superior Court Judge Joan Lewis ruled that a demurrer submitted by the defendants was sustained, pending an amendment to the original filing.
According to dictionary.law.com, a demurrer is a written response pleading for dismissal on the point that, even if the facts alleged were true, there is no legal basis for a lawsuit, or that the complaint is unclear, or that it omits an essential element of fact. A hearing before a judge is then held to determine the validity of the demurrer.
In sustaining the REI demurrer, Lewis found that the allegation of breach of contract could not be proven because the plaintiffs did not submit a copy of the original contract.
“The court finds that, as currently pled, all causes of action appear to depend on the allegation that the defendants breached a certain agreement,” the judge wrote. “However, because the terms of the agreement have not been adequately pled or attached to the complaint, the court finds the entire complaint uncertain.”
The judge also wondered why Kenneth Stroud was included in the complaint.
The lawsuit was initiated in November 2004 and filed in April 2005, when a former employee of REI-NC contacted Dartmouth. According to the suit, Netters worked as a file clerk, assisted with accounts payable, and served as personal secretary to Gonya.
Netters alleges that defendants consistently defrauded the plaintiffs by billing Dartmouth projects for costs and expenses that should have been billed to other REI projects.
The plaintiffs also allege that Gonya personally gave orders for fraudulent billings to be created to bill his personal expenses at his estates and horse ranch and other properties to the Dartmouth/REI joint venture. They add that Waitley faked bills to pay for his expenses at other construction projects he was vested in.
Both Gonya and Waitley charged personal expenses, such as housekeeping, to the Dartmouth/REI joint venture,” reads the lawsuit. “Waitley also billed plaintiffs for personal expenses, such as landscaping expenses, at his personal residence.”
Gonya, however, disputes the lawsuit and the charges of misappropriation of funds, arguing that the entire suit was brought about by the sole account of one person, Netters.
“To date, the plaintiffs have not provided any documents to back up what is essentially the lies and fabrication of a disgruntled person who worked in the office for the company and, due to her temper tantrums, was dismissed,” Gonya said. “Everything in the lawsuit is based on what she said.”
The wording of the lawsuit supports Gonya’s claim, stating, “Netters revealed, for the first time, that defendants were consistently defrauding the plaintiffs…”
Gonya also claimed that Netters was not involved in the business affairs of the company and that she would have no knowledge of which checks were signed for which projects. According to Gonya, several small companies were operating and paying bills out of the same office.
“We have offered to have an independent accountant audit the books to show they are in perfect order,” said REI attorney Miles Scully. “The plaintiffs have refused.”
The defendants paid for a third party auditor to review the books and determine whether any of the claims were true.
“The audit didn’t substantiate the outrageous claims made by this one person,” Gonya said.
The plaintiffs have until this Friday to amend the original suit to address the concerns raised by the demurrer. The matter will then come before a judge.
“We will be amending the suit and including all of the information that the court requested,” said John Belcher, Dartmouth attorney. He is confident that, after the procedural aspects are cleared up, the suit will move forward on its merit.
According to Belcher, the amendment will also include signed statements from two former employees of REI which support the claims of
misappropriation of funds. He did not name them.
An amendment to a complaint cannot always overcome a demurrer, as in a case filed after the time allowed by law to bring a suit, according to the online law dictionary. If, after amendment, the complaint is still not legally good, a demurrer could be sustained.
“Our response was that the complaint was improper and the court granted that request,” Scully said. “The plaintiffs can now try to make a claim again, or go away. If they don't re-file, the case goes away.”
“We do plan to counter sue, if the case goes forward. Our view is that plaintiffs have made unsubstantiated allegations just as the monies from the project are to be split in order to try and keep the monies. They are just trying to cheat my clients out of their share of the monies from the project,” Scully said.
Dartmouth Development Company is the owner of record for Dartmouth Stagecoach Associates and Dartmouth Alpine Associates, according to the state department of cop owns. The listed president of Dartmouth Development Company is James Van de Water, a Carlsbad resident and president of the San Diego chapter of the United Nations Association.
The county’s grantor-grantee listings show no real estate activity by either Van de Water or Dartmouth Development Company.
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Christy Scott
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