Title company sued in failed deal

Grace Leong

Tuesday, Feb. 8, 2000 | 11:34 a.m.

Las Vegas real estate tycoon Robert Bigelow and his 13 real estate companies sued their Chicago escrow agent, alleging it mishandled a $44 million property sale and caused the Bigelow companies to be embroiled in a legal dispute with the properties' buyer.

The federal suit against Guaranty National Title Co. is over the failed sale of 13 apartment projects in Arizona and Colorado to American Asset Partners Inc. of Las Vegas.

The suit said American Asset was to make a $1 million earnest money deposit with Guaranty National. The money was supposed to be paid to the Bigelow companies once American Asset decided whether to complete the deal.

Under the deal, if American Asset, which had the right to cancel the escrow and get a full refund of the earnest money, didn't cancel the escrow by the end of the feasibility period on May 31, 1999, then the money would become non-refundable and belong to the Bigelow companies, the suit said.

The Bigelow companies accused Guaranty National of breaching its duties when it repeatedly concealed from them alleged amendments made to the escrow by American Asset that prevented the Bigelow companies from getting the money.

The suit said American Asset didn't cancel the escrow by May 31, but the Bigelow companies couldn't get the $1 million deposit because Guaranty National allegedly accepted the $1 million from an unidentified third party and had agreed not to release the earnest money without the third party's consent.

Guaranty National officials couldn't be reached for comment.

The suit said American Asset agreed to replace the $1 million earnest money with a letter of credit in favor of the Bigelow companies, after they discovered the existence of the third party instruction and demanded the violation be corrected.

American Asset, which requested the feasibility period be extended to June 30, paid $300,000 to Bigelow for the extension, the suit said.

But the earnest money was allegedly never replaced with a letter of credit and Guaranty National again allegedly failed to inform the Bigelow companies of a second escrow violation, the suit said.

The Bigelow companies, which still couldn't get the money after the feasibility period expired on June 30, said they refused to extend or further amend the escrow unless American Asset removed the third party instruction or replaced the existing $1 million with its own money.

The suit said American Asset cancelled the escrow on June 30 in response to Bigelow's demands. But American Asset later asked to reactivate the cancelled escrow and allegedly agreed to replace the $1 million earnest money, which would be paid to the Bigelow companies once they agreed to reinstate the escrow.

The Bigelow companies said they would reactivate the escrows only if the earnest money was transferred to another escrow company or to an account controlled by them.

American Asset allegedly refused to change the escrow agent.