Judge Kingsbury off Embassy hearing
El Dorado County Superior Court Judge Suzanne Kingsbury has been disqualified from hearing a civil case involving the developers of the state line Embassy Suites Resort and the bank which provided its loan for construction.
Attorneys for Mitsui Trust & Banking Co. Ltd. filed the motion for disqualification Friday. California civil law allows each party the right to disqualify the presiding judge, by pro forma motion, within 10 days after the judge is assigned to the case.
The next hearing in the case will still be held on March 2, although it will be before Judge Patrick Riley, the county’s other superior court judge based in Placerville. Court sources were unsure if the hearing would be held in Placerville or South Lake Tahoe.
The March hearing will determine if a temporary restraining order should remain intact prohibiting the bank from engaging in conduct to sell KOAR’s $53 million matured loan to a third party.
The order, granted by Kingsbury Jan. 20, was not a preliminary vote for the developers, according to court sources, it only freezes the case, and is not a determination of merits.
In the March hearing, KOAR will likely allege, as its partners said in written statements before the court, it had verbal assurances from Mitsui representatives that the bank would allow the developers to convert about half the units at the hotel to time shares.
KOAR would sell the time shares to a leading company in that industry and use the proceeds to put a $35 million dent in the overdue loan.
KOAR claims that one of its partners had telephone conversations with bank representatives who said Mitsui approved of the conversion and would allow it reasonable time to proceed.
Mitsui attorneys said bank representatives didn’t agree to allow KOAR any time for the conversion process, and the bank is simply trying to find a solution for a borrower which has stopped paying interest on a loan that matured in July 1997.
Attorneys for Mitsui contend KOAR has not made an interest payment since the loan matured and became past due on July 31.
Mitsui, through Secured Capitol Corporation, which is also named in the lawsuit filed by KOAR, had been trying to find a buyer for the balance of the loan since the end of last year.
The bank has asserted it will lose money due to the order as potential buyers will look unfavorably upon a property embroiled in lawsuits.
The hotel’s developers have claimed losing the property will damage KOAR irreparably.
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