Lawyers want judge removed from Aspen Financial lawsuit

By Steve Green

Wednesday, Aug. 5, 2009 | 1:40 a.m.

Attorneys in one of the investor lawsuits against Aspen Financial Services are seeking to have Clark County District Court Judge Elizabeth Gonzalez disqualified from the case, charging she has been biased in favor of Aspen and failed to fully disclose her prior relationships with officials associated with Aspen.

Gonzalez has denied those assertions.

Aspen is a Las Vegas hard-money lender that pools investors’ funds and loans them to real estate developers. It faces three lawsuits in Clark County District Court from investors who say Aspen and its owner, Jeff Guinn, have failed to look after their interests and deceived them. Guinn and Aspen have denied the allegations.

Gonzalez is presiding over one of those suits.

Aspen, Guinn and other officials associated with Aspen are also suing Community Bank of Nevada, claiming the bank reneged on a promise to finance a Henderson development project. The bank has denied the allegation and asserts Guinn and his fellow investors have defaulted on several unrelated loans.

Gonzalez is presiding over that case, but no one has moved to disqualify her in that matter.

In a 2008 lawsuit filed by Lois Levy and other investors, plaintiffs’ attorneys Aaron Maurice and Scott Taylor said in a July 23 court filing that Gonzalez failed to make required disclosures before ruling on a contested matter in the case.

“Judge Gonzalez’ impartiality can be reasonably questioned and Judge Gonzalez has, through her decisions in this case, shown her bias,” the attorneys charged.

One issue cited was a motion by the investors to have a receiver appointed to supervise their investments with Aspen.

Aspen attorneys argued that such a request should have been made with the state Division of Mortgage Lending and said the plaintiff investors — a minority of investors in some of the loans in question — were improperly trying to have all of the investors’ investments supervised by a receiver.

“These 14 lenders — despite controlling less than 1 percent of the interest on several of the loans at issue — would have the court controvert the will of the majority of lenders, vitiate the 51 percent voting requirement set forth in the servicing agreements, and allow these 14 minority lenders to control and decide each and every action related to these multiple multi-million dollar investments. Plaintiffs’ request for a receiver is merely an attempt by an extreme minority group of lenders to usurp control of the majority merely because they are unhappy with the voting results,” Aspen argued in court papers at the time.

While rejecting the request that a receiver be appointed, Gonzalez ordered discovery to go forward and ordered Aspen to turn over records of votes among investors on how they wanted to proceed with actions on the loans, some in default.

Maurice and Taylor — who took over the plaintiffs’ case from attorneys Joseph Kistler and Jeffrey Hulet of the firm Gordon Silver on June 15 — and the investor plaintiffs remain unhappy with the ruling against appointing a receiver.

“Despite the absence of any authority supporting Aspen’s argument, Judge Gonzalez ruled in favor of Aspen,” attorneys Maurice and Taylor wrote in their motion to disqualify Gonzalez. They are with the law firm Woods Erickson Whitaker & Maurice LLP.

The attorneys and their clients also complained Gonzalez imposed a “gag order” preventing the plaintiffs’ attorneys from contacting Aspen investors not involved in the suit — making it difficult for the attorneys to determine which non-party investors should be deposed.

Gonzalez has ruled for and against Aspen on various motions in both cases. In the case against Community Bank of Nevada, she dismissed fiduciary duty claims against the bank but allowed fraudulent misrepresentation claims to proceed.

During a hearing in that case Tuesday that Gonzalez called so she could make disclosures, Gonzalez disclosed a bank official mentioned in some of the pleadings has a son involved in the same soccer team as her son; and she disclosed her prior representation of Southwest Gas Corp.

In the Levy case, she ruled against Aspen’s motion to move the dispute to arbitration and rejected an effort by Aspen attorneys to block another group of disgruntled investors from intervening in the case. Those investors are represented by attorneys Nancy Allf and Angela Nakamura of the firm Gonzalez Saggio & Harlan LLP.

In response to the motion that she be disqualified, Gonzalez filed an affidavit July 28 saying the Levy v. Aspen case was transferred to her as a random assignment in December.

The judge said she disclosed at the beginning of the first hearing in the case in January that she was familiar with some of the plaintiffs and that she had other issues pending with Aspen, so she was familiar with Jeff Guinn.

Gonzalez said that when making that disclosure, she knew that one of the Levy plaintiffs’ attorneys at the time, Kistler, was involved in a 1988 case in which she represented Southwest Gas at a time when Jeff’s father, Kenny Guinn, was president of Southwest Gas.

“Therefore, I did not feel the need to make a disclosure regarding my previous representation of Southwest Gas,” Gonzalez said in her affidavit.

She noted Kenny Guinn, as governor, later appointed her to the bench in 2004 and that was reported in the media.

In the Levy case, the judge said she admonished counsel for Aspen during a May hearing for submitting a letter to her. She told both sides that if they wanted her to act on something, they need to file motions so they can be ruled upon on the record.

Gonzalez said in her affidavit that in another Aspen Financial case, Amtrust v. Aspen, she made disclosures about Kenny Guinn because Jeff Guinn was called to testify at an evidentiary hearing. That case was also randomly assigned to her, she said.

“I disclosed the fact that Kenny Guinn had appointed me to the bench and had been president of Primerit Bank and Southwest Gas, two entities I had represented as an attorney,” Gonzalez said in her affidavit.

The judge said that in the Amtrust v. Aspen case, she ruled against Aspen on two motions before the case was settled.

The judge’s affidavit doesn’t mention Jeff Guinn’s prior employment at Primerit Bank, a point raised by the attorneys trying to disqualify her.

Gonzalez said in her affidavit she has not discussed the Levy case with any party or anyone related to any party in the case.

“I do not have a personal, business, or other relationship with any party or persons related to any party in the subject case which affects my impartiality,” she wrote. “Any rulings I have made in the subject case have been the result of critical legal and factual analysis, and not the result of partiality or personal bias in favor of any party.”

Chief Judge Art Ritchie is to preside over a hearing Sept. 18 on the motion to disqualify Gonzalez.