Court sides with LV lenders in real estate finance dispute

Tuesday, Nov. 6, 2001 | 9:49 a.m.

CARSON CITY -- A federal appeals court has ruled that a real estate loan made in Las Vegas to finance developments in California is subject to Nevada law that does not limit the amount of interest charged.

The 9th U.S. Circuit Court of Appeals Friday rejected the claims of real estate developer Thomas P. Dobron, who entered into six loan agreements with Del and Ernestine Bunch between 1993 and 1995 to fund new projects in California.

Dobron and the Bunches were all Nevada residents.

The loans carried a 15 percent per annum interest rate plus 10 percent paid up front. Dobron, who owns several corporations, contended in his suit that the effective interest rates ranged from 27.1 percent to 31.6 percent.

In November 1995 Shannon/Vail Five, one of Dobron's corporations, overpaid its loan by $52,000. Instead of refunding the money, the Bunches applied it to the balance of other outstanding loans, over Dobron's objection.

Dobron sued in a state court in California, claiming that California law prohibits interest rates in excess of 10 percent on loans. Nevada does not have usury law. The suit was shifted to a federal court in California, then sent to the federal court in Nevada, where U.S. District Judge David Hagen was assigned the case.

Hagen ruled Nevada has a more significant relationship to the loans than California. All the parties were Nevada residents, the loans were personally guaranteed by Dobron and the repayments were to be made in Nevada. The security was the property in California.

The circuit court panel of three judges agreed.