GSF Enterprises v.
Filed 7/19/13 GSF Enterprises v. Victorville Mediterranean Gardens CA4/1
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
GSF ENTERPRISES, INC.,
Plaintiff and Respondent,
v.
VICTORVILLE
MEDITERRANEAN GARDENS,
LLC, et al.,
Defendants and Appellants.
D060067
(Super. Ct. No. 37-2010-52151-CU-
BC-NC)
APPEAL from
a judgment of the Superior Court
of
County, Robert P. Dahlquist, Judge. Affirmed.
Klinedinst;
Gates, O'Doherty, Gonter & Guy and Amanda F. Benedict for Defendant and
Appellant.
Lanack
& Hanna and Christopher M. Cullen for Plaintiff and Respondent.
Plaintiff
and respondent, GSF Enterprises, Inc. (Plaintiff or GSF), sued Victorville
Mediterranean Gardens, LLC ("VMG"), Executive Information Services
and Investment Group, LLC ("EISIG"), and the majority owner of those
companies, Larry D. Gonzales (Gonzales; sometimes together, Defendants), over
Defendants' defaults in repaying two notes that were collateralized by two
pledge agreements for stock in VMG and EISIG.
Plaintiff sought rescission and
damages on fraud, breach of contract, and other theories. (Civ. Code, § 1689, subd. (b)(1), (2);
all further statutory references are to the Civil Code unless noted.)
After a
bench trial, Plaintiff obtained judgment in its favor on the cause of action
for rescission of the notes and their related pledge agreements, due to fraud,
and it also prevailed on two causes of action for declaratory relief, to
establish Gonzales was the alter ego of VMG and EISIG. Judgment was entered for $250,000
collectively against Defendants.
Defendants
appeal, arguing there
was insufficient evidence presented to establish that Plaintiff "was
actually deceived by the concealment or misrepresentation of any material fact
or that [Plaintiff] actually relied upon the fraudulent representation when it
consented to the funding agreements."
The record is otherwise. The judgment is affirmed.
FACTUAL
AND PROCEDURAL BACKGROUND
A. Parties and Transactions
Gonzales is
a real estate developer and the principal of several companies and
proprietorships. As relevant here, he is
the president and chief executive officer of EISIG (a Nevada
corporation admitted to do business in California),
and he owns 75 percent of EISIG's shares.
EISIG's assets are mainly $2.2 million in the form of receivables from
stockholders or two companies who owe it money.
EISIG owns Topaz Capital and Investments, Inc., a Nevada
corporation (Topaz). Topaz held the
title to 52 acres of real property near Victorville,
California.
Since 2004,
Gonzales has been working on a development project on the Topaz-owned property,
"Victorville Mediterranean
Gardens," a projected 428-unit
multifamily complex (the project).
EISIG, a holding company, also owns VMG, an entity to be used for the
development of the project. VMG's 2009
operating agreement lists Gonzales as the sole member. At trial, Gonzales estimated the projected
potential returns on the project were between $60 million to $80 million.
In 2007,
Gonzales, through his company EISIG, applied for a loan guarantee for the
project from the United States Department of Housing and Urban Development
(HUD). He planned to transfer title of
the project property into VMG, once funding was obtained. On January
2, 2008, Gonzales obtained a letter from HUD (letter of invitation)
authorizing the submission of an application to obtain a "firm
commitment" of a HUD loan guarantee.
The letter of invitation was due to expire 180 days later, and could be
extended for another 90 days.
However,
the letter of invitation expired in 2008 before Gonzales could complete his
application for a firm commitment.
Gonzales kept trying to move the project forward and to obtain a HUD
loan guarantee, possibly by reapplying for another letter of invitation. By 2009, the property was overleveraged and
Topaz was behind on its monthly mortgage payments.
Plaintiff,
a Delaware corporation, owns a
framing business. Its president, John C.
Dunbar, has over 20 years of experience in construction and related industry
financing. In May of 2009, Dunbar
was introduced to Gonzales by a mutual business associate, Rick Cohen of Jaynes
Construction (Jaynes, a general contractor).
The three men met to discuss a project that Gonzales was working on,
along with Plaintiff's vice-president Gary Viano, Gonzales's associate Roy
Peterson and others. At the meeting,
Gonzales explained the VMG project concept, discussed the participating companies
he controlled, and stated that they needed a limited amount of funding to help
move VMG's project forward, by obtaining required permits and fees. Plaintiff was interested in bidding for the
framing portion of the project, through Jaynes, and later did so. Dunbar understood from
Gonzales that Jaynes was also a potential investor.
B. Documentation of Deal
After the
meeting, in May 2009, Plaintiff agreed to pay VMG money, in return for a
security interest in one of Gonzales's companies as collateral. First, Plaintiff signed a "Note Agreement"
(the note) and a "Pledge Agreement," and paid $150,000 to VMG. In the note, VMG warranted and pledged
collateral of 600 shares of stock in VMG to Plaintiff "with the
understanding that said shares/stock will be repurchased/redeemed by VMG when
payment is returned for principal plus 15% interest with the note paid off in
full in six months." In the note,
VMG warranted that the funding was for "securing a HUD loan guarantee to
build a 428-unit multifamily complex in Victorville,
California." The due date on the note was November 22, 2009. Additionally, the note provided that in the
event of default, "both parties agree that pledged shares/stock of VMG in
the amount of this Agreement will become certificates of shares/stock in"
VMG, and VMG would have a right of redemption within six months.
The
separate pledge agreement by VMG referenced the note and stated that the pledge
agreement supplied collateral and security for the payment and obligations
under the note.
In June
2009, Plaintiff signed a similar note and pledge agreement, this time in favor
of EISIG, and paid an additional $100,000 in funding towards the project. The due date on this note was July 25,
2009. In the note, Plaintiff agreed to
receive a security interest in EISIG as collateral, and EISIG agreed "to
warrant and to pledge as collateral four hundred (400) shares/stock of
EISIG" to Plaintiff, "with the understanding that said shares/stock
will be repurchased/redeemed by EISIG when payment is returned for principal
plus 15% interest with the note paid in full within thirty (30) days of the
date of execution (below)." Again,
the note warranted that the funding was to be used for "securing a HUD
loan guarantee to build [the project]," and the pledged stock constituted
a security interest for the capital provided, and EISIG would be repurchasing
the security interest. Additionally,
this note provided the same type of default provision as above, which allowed
the pledged stock to become certificates of stock in EISIG upon any default,
and EISIG would then have a right of redemption within six months.
The
separate pledge agreement by EISIG included a stock issuance table, referenced
the note, and stated that the pledge agreement supplied collateral and security
for the payment and obligations under the note.
VMG, EISIG
and Gonzales spent the money, stopped communicating with Plaintiff in October
2009, did not pay the notes and did not transfer the stock.
C. Lawsuit, Trial and Judgment
In March
2010, Plaintiff filed a complaint seeking to rescind the notes and pledges of
stock based on (a) failure of consideration or (b) fraud, and sought
restitution and damages for breaches of contract, declaratory relief and an
accounting.
title="">[3] Copies of the notes and pledges of stock were
attached to the complaint. Defendants
answered and discovery ensued.
In February
2011, Plaintiff's motion to amend its complaint was denied and the matter
proceeded to trial in March 2011.
Initially, Defendants sought dismissal on the grounds that Plaintiff was
doing business in California as "Golden State Framers," but that was
a suspended corporation. (Rev. &
Tax. Code, § 23301 [suspended corporations cannot exercise corporate
powers].) However, the trial court
denied dismissal, because the body of the complaint made it clear that the
plaintiff in the matter was GSF, not its dba, and GSF was in good standing.
At trial,
the parties and their associates Viano and Peterson testified about their
understandings of the role of the HUD letter of invitation, the financial condition
of Gonzales's various companies, the identity of the title holder to the
project's property, and the planned use of the money from Plaintiff (as
described in the discussion portion of this opinion). Numerous exhibits were admitted, mostly by
stipulation.
After taking the matter under
submission, the court issued its ruling in the form of a minute order and
(the decision). The court first
determined that insufficient evidence had been presented to support the
cause of action for rescission due to failure of consideration. The court ruled that Plaintiff had abandoned
its fifth cause of action for an accounting.
After
explaining its reasoning process in detail (to be summarized
Plaintiff on its cause of action for rescission due to fraud, and on the two
causes of action declaring Gonzales the alter ego of VMG and EISIG. No ruling was deemed necessary on the breach
of contract claims. The court ordered
VMG to pay Plaintiff $150,000 and EISIG to pay it $100,000. Gonzales was held personally responsible for
payment of the same amounts, under the doctrine of alter ego, in the combined
amount of $250,000.
title="">[4] Plaintiff was required to prepare a form of judgment, which was
entered.
The court
denied Defendants' request for reconsideration on May 23, 2011. Defendants appeal.
DISCUSSION
I
A. Review on Appeal
This
decision was issued after the trial court heard testimony and reviewed the
exhibits to resolve the issues identified in the pleadings and trial briefs,
and it was duly formalized into a judgment.
In reviewing such a decision after trial, "any conflict in the
evidence or reasonable inferences to be drawn from the facts will be resolved
in support of the determination of the trial court decision." (In re
Marriage of Hoffmeister (1987) 191 Cal.App.3d 351, 358.) The ultimate facts found in the court's
decision, which is equivalent in this case to a statement of decision,
necessarily include findings on the intermediate evidentiary facts that sustain
them. (Muzquiz v. City of Emeryville (2000) 79 Cal.App.4th 1106, 1125.)
The
appellate court will "consider all of the evidence in the light most
favorable to the prevailing party, giving it the benefit of every reasonable
inference, and resolving conflicts in support of the [findings]." (Howard
v. Owens Corning (1999) 72 Cal.App.4th 621, 630.) "Substantial" evidence has
" 'ponderable legal significance, . . . [and is] reasonable in
nature, credible, and of solid value.' "
(Bowers v. Bernards (1984) 150
Cal.App.3d 870, 873, italics omitted.)
In determining its existence, we look at the entire record on appeal
rather than simply considering the evidence cited by a party. (Ibid.) We may not reweigh the evidence and are bound
by the trial court's credibility determinations. (Ibid.;
see Heller v. Pillsbury Madison &
Sutro (1996) 50 Cal.App.4th 1367, 1384.)
B. Rescission for Fraud
Under
section 1689, subdivision (b)(1), a contract may be rescinded: "If the consent of the party rescinding,
or of any party jointly contracting with him, was given by mistake, or obtained
through duress, menace, fraud, or
undue influence, exercised by or with the connivance of the party as to whom he
rescinds, or of any other party to the contract jointly interested with such
party." (Italics added.) In Estate
of Young (2008) 160 Cal.App.4th
62, 79, this court considered a substantial evidence challenge to an adverse
fraud judgment by first reviewing the required elements of a claim of
fraud: " ' "(a) a
misrepresentation (false representation, concealment, or nondisclosure); (b)
knowledge of falsity (or 'scienter'); (c) intent to defraud, i.e., to induce
reliance; (d) justifiable reliance; and (e) resulting damage." [Citations.]' "
"Actual
fraud is always a question of fact."
(§ 1574.) Within the
definitions of section 1572, fraud can take numerous forms: "Fraud is a generic term which embraces
all the multifarious means which human ingenuity can devise and are resorted to
by one individual to get an advantage over another. No definite and invariable rule can be laid
down as a general proposition defining fraud, and it includes all surprise,
trick, cunning, dissembling, and unfair ways by which another is deceived. [Citation.]
The statutes of California expressly provide that . . . any other act
fitted to deceive is actual fraud."
(Wells v. Zenz (1927) 83
Cal.App. 137, 140; see 1 Witkin, Summary of Cal. Law, supra, § 286, p. 316.)
A fraudulent representation is one made "with intent to
deceive" the other party to the contract.
(§ 1572; 1 Witkin, Summary of Cal. Law, supra, § 290, p. 318.)
C. Materiality of a Misstatement or Concealment
A
representation that is material, or goes to the heart of an agreement, is one
of " 'such a nature, weight, and force that the court can say,
"without it the contract would not have been
made." ' " (
174, 178, citing Oppenheimer v. Clunie
(1904) 142 Cal. 313, 319.)
Determining
the materiality of a false representation
presents a question of law that is related to the concept of justifiable
reliance. (5 Witkin, Cal. Procedure (5th
ed. 2008) Pleading, § 718, pp. 134-135.)
"The facts of materiality are shown by the specific allegation of
the representation contrasted with the true facts." (Id.
at p. 135.) This commentator explains
that a plaintiff seeking redress for fraud must be able to prove that there was
actual, justifiable reliance on the false representations. (Id. at
§ 732, pp. 152-154.) "This may
in some cases require a showing of such matters as materiality of
representations of fact, circumstances warranting reliance on opinions, or the
absence of a duty to investigate or of the means of obtaining other
information." (Ibid.)
As
Defendants acknowledge in their reply brief, "the existence of a single
material misstatement or concealment of a material fact can be sufficient
ground for rescission of a contract. (
Cal.App.2d 126[, 138]; Richard v. Baker
(1956) 141 Cal.App.2d 857, 861.)"
We now turn to Defendants' specific claims that under all the relevant
circumstances, no "material" facts were misstated or concealed, such
as the topics identified by the trial court as critical to the Plaintiff's
decision to enter into these contractual arrangements.
II
A. HUD Letter of Invitation
Ruling
The trial
court's decision characterized the testimony by Dunbar, on behalf of Plaintiff,
as showing that Gonzales failed to disclose that he had been unsuccessful in
obtaining a HUD loan guarantee, or that his letter of invitation to do so had
already expired. On the other hand,
Gonzales had testified that all material information about the project was
disclosed, and that Plaintiff was only now complaining, after the fact, about
matters that were immaterial to it at the time.
In the
decision's findings and analysis, the court observed that the testimony offered
for Plaintiff by Dunbar, concerning the disclosures and representations made by
Defendants, was generally credible and established that Plaintiff was misled in
connection with the funding it provided to them. The court then stated that Gonzales's
testimony about his disclosures and representations was "not entirely
credible." The totality of the
evidence persuaded the court that Plaintiff should have been but was not told
that the HUD letter of invitation had lapsed many months before Plaintiff paid
the money to VMG or EISIG.
Contentions, Evidence and Analysis
Defendants
contend that the evidence does not support the trial court's determination that
this factor was "material" and influenced Plaintiff's decision to
enter into the notes and pledge agreements.
Defendants argue Plaintiff did not diligently investigate the
"investment," and that any misrepresentation was not an inducing
cause of the assent. (See 1 Witkin,
Summary of Cal. Law, supra, § 300, p.
326.) Rather, Defendants claim Plaintiff
was investing in the project out of its own self-interest, in seeking to supply
a framing bid for it.
Plaintiff
responds that the transactions were intended on its part to be loans that would
be repaid according to the terms specified on the notes, with collateral
provided by the pledge agreements.
Plaintiff understood that the project was in the permitting stage and
that governmental entitlements had to be obtained and fees paid, and Dunbar
testified that he understood the transaction to be a bridge loan toward such
expenses, rather than an investment.
Dunbar testified that Gonzales told him that the purpose of the second
loan was to tie up loose ends, such as paying for permits and fees. Later, Gonzales told Plaintiff that he would
be able to pay it back, once the next $1.5 million in investment he was
expecting came in, although it never did.
We are
required to look at the entire record on appeal rather than simply considering
the evidence cited by a party. (
Cal.App.3d 870, 873.) We do not reweigh
the evidence and are bound by the trial court's credibility
determinations. (Ibid.) From all of the
testimony and evidence, the trial court had a sufficient basis to determine
that it was a material fact, important to Plaintiff's contractual
decisionmaking, whether the project was currently and actively underway, with
respect to pursuing eligibility for governmental funding approvals. Such information was withheld. Without a viable project, Plaintiff could not
have expected its planned bid for the framing work to be accepted, and more
probably than not, it would have declined to contribute toward any hypothetical
request for such approvals.
The record
does not support Defendants' arguments that Plaintiff was given the necessary
information about the project but failed to investigate it adequately. The trial court had an adequate basis to rule
that there were material misrepresentations and concealments in Defendants'
presentation to Plaintiff, in this respect.
B. Financial Condition of Companies
Ruling
The trial
court's decision characterized the testimony by Dunbar, on behalf of Plaintiff,
as credibly claiming that Gonzales failed to disclose, as of the time that
Plaintiff was deciding to advance money to the project, that the project was in
financial distress. Defendants owed
money to their lender and to other creditors that they could not pay.
Contentions, Evidence and Analysis
Defendants
argue that Plaintiff was made aware of all the relevant facts about the
transactions and proceeded to invest, for reasons of its own. Defendants argue that further disclosures
would not have made a difference because Plaintiff did not investigate the
current financial status of VMG or EISIG, instead relying on the business
reputation of Gonzales as conveyed by their mutual colleague, Rick Cohen of
Jaynes. Dunbar testified that Gonzales
"pitched" the project to him and Dunbar had a "hunch" that
this would be a good deal for his company.
He understood from the presentation that Gonzales owned the property,
which was unencumbered, and that Gonzales had several of his own entities
involved in the project, but there was no need to discuss the assets of those
entities. Dunbar did not believe it made
any difference that one of the notes involved VMG and the other involved EISIG,
since EISIG owned VMG, and Gonzales said they were moving forward with his HUD
project on his property.
Gonzales
testified that in addition to EISIG, which had been a defunct Nevada
corporation during 2008-2011 (but was still doing business in California), he
also owned a sole proprietorship/dba called EIS (Employee Insurance Services;
not a party to this action), and the stockholders of EISIG owed money to
EIS. Gonzales transferred money between
his various entities for the purpose of making payments on behalf of Topaz or
the others, when they ran short of funds.
He viewed the money received from Plaintiff not as a loan, but as a
capital contribution to VMG. As of trial
time, neither VMG nor EISIG had any assets.
Even if
Plaintiff understood the general types of documents he was signing, if his
consent was induced by fraud, the resulting contracts are voidable. (See 1 Witkin, Summary of Cal. Law,
to the known fact of serious financial problems with the project, nor to
similar facts about the relationship or status of the companies that provided
the stock for the supposed security for the note, or about any other companies
they owned. Plaintiff was not placed on
notice that any of the documents it signed were other than routine loan
instruments with valuable collateral, as represented. (See Brown
v. FSR Brokerage, Inc. (1998) 62 Cal.App.4th 766, 777-778 [person signing
an instrument may not, in the absence of fraud, coercion or excusable neglect,
avoid its terms on the ground of failure to read before signing].) Plaintiff submitted substantial evidence that
Defendants failed to disclose specific information about the financial
condition of the participants that would have been material to a reasonable
business person who was considering whether to enter into these
agreements. (Wilke v. Coinway, Inc., supra, 257 Cal.App.2d 126, 137-139.)
By citing
only to their preferred evidence, Defendants would have us disregard the
remaining evidence and reasonable inferences that they intentionally defrauded
Plaintiff by soliciting and accepting Plaintiff's money for payments toward
project entitlements, when the entities responsible for pursuing the project
were relatively low on assets and unable to realistically proceed. Although Dunbar relied in part upon the
referral to Gonzales that he received from his Jaynes colleague, he did so because
he believed Gonzales had a reputation as a straight shooter in pursuing
construction projects, and such projects normally include expenditures toward
necessary project entitlements. However,
the project was going nowhere, contrary to Gonzales's express and implied
representations. The record as a whole
demonstrates that because of the materially incomplete information conveyed on
this subject, this transaction left plaintiff " 'in a worse position
than he otherwise would have been.' "
(Costello v. Roer,
C. Title Holder to Property
Ruling
The trial
court's decision stated that Dunbar, on behalf of Plaintiff, had credibly
testified that Gonzales never informed him that the real property on which the
project was proposed was not owned by either VMG or EISIG, but by Topaz. Defendants failed to disclose the nature and
extent of Topaz's involvement in the project, as well as its financial
condition. Indeed, the court stated that
Gonzales's testimony that all material information about the project had been
disclosed was not entirely credible.
Contentions, Evidence and Analysis
According
to Defendants' view of the evidence, any representations they made about the
actual or apparent ownership of the project property were not material, and any
damage to Plaintiff was due to its own failure to investigate the deal. Gonzales testified that he tried to be
transparent about the participation of Topaz, the property owner, in the deal,
but maybe Dunbar did not understand his terminology concerning the HUD loan
guarantee process.
Dunbar
testified that at the meeting, he got the impression from Gonzales that he was
the owner of the land and the project, that he needed "just a few
dollars" to finalize some permitting and loan fees, and that Plaintiff's
contribution of money would enable him to proceed with the project very soon,
within a period of one to six months (as shown by the due date of the two
notes). Dunbar testified that he did not
learn until depositions were taken in this action that Topaz was the owner of
the property, and that Topaz was behind on its loans. Dunbar testified that if he had been told
that Topaz was behind on the mortgage, he would have laughed in Gonzales's face
and not paid VMG or EISIG any money.
"The
essential element of causation is lacking unless the plaintiff sets forth facts
to show that his or her actual reliance on the representations was justifiable,
so that the cause of the damage was the defendant's wrong and not the
plaintiff's fault." (5 Witkin, Cal.
Procedure, supra, § 732, p. 153,
citing Lingsch v. Savage (1963) 213
Cal.App.2d 729, 739; Pulver v. Avco
Financial Services (1986) 182 Cal.App.3d 622, 640.) Here, the evidence suggested, and the judge
believed, that Plaintiff's participation in the transactions was based on the
reasonable understanding that the entities in the notes and pledge agreements
owned the property and could provide valuable security for the business loans
Plaintiff thought it was making. This
understanding was sufficiently shown to be reached through the dissembling and
deceptive way in which the deal about the property was pitched. (Wells
v. Zenz, supra, 83 Cal.App. 137,
140.) Ownership of the property asset
was a material fact in the context of these dealings, and substantial evidence
supports the trial court's conclusion that Defendants' failure to disclose it
justified rescission of the instruments.
D. Use of Proceeds of Investment
Ruling
The trial
court's decision interpreted a handwritten accounting provided by Gonzales as
showing that the $250,000 paid by Plaintiff was used to reduce the outstanding
amounts that third parties were claiming against the Defendant entities, as
well as Topaz. Specifically, $130,000
was paid to the project lender, and smaller amounts were paid to reduce bills
by the project's lawyers, architects, engineers and other professionals. $30,000 went to Gonzales to
"reimburse" him for his expenses, and Gonzales's business associate
Peterson received about $17,000 for his expenses.
Based on
that state of the evidence, the court concluded that Plaintiff was misled
concerning the proposed use of the funds it would be providing. The funds were not used for the promised
purpose, to obtain entitlements for the project and/or to secure the HUD loan
guarantee. Plaintiff was not told that
the funds were to be used to pay down pre-existing debts or to reimburse
Gonzales and his associate for alleged project expenses.
Contentions, Evidence and Analysis
Dunbar
testified that Plaintiff never anticipated that it would be obtaining an
ownership interest in the project, and instead Plaintiff was characterizing the
money it was advancing as "loans" to move a reasonably well-developed
project along, by obtaining required permits and entitlements. Gonzales's distribution of the money, for
purposes other than obtaining such required permits and entitlements (according
to his extremely broad and unreasonable definitions of what constituted
"moving the project along"), provides evidence in support of the
court's conclusion that the alter ego doctrine's requirements were
satisfied: " '(1) that there
be such unity of interest and ownership that the separate personalities of the
corporation and the individual no longer exist and (2) that, if the acts are
treated as those of the corporation alone, an inequitable result will
follow.' " (
Cal.3d 290, 300 (Mesler).)
Although
Defendants do not specifically challenge the trial court's ruling that Gonzales
is the alter ego of the two entity defendants, the evidence about the eventual
disposition of Plaintiff's funds also supports the finding that Plaintiff was
materially misled about the actual purpose of the transactions. The use of the money showed there was no
separate existence of the corporate entities, and it can be inferred that
Plaintiff's decisionmaking about entering into the agreements would have been
materially affected if the true purpose had been disclosed. (Mesler,
supra, 39 Cal.3d at p. 300.) The
trial court's resolutions of these factual and legal questions are supported by
substantial evidence.
Overall,
the grant of rescission for fraud is supported by substantial evidence that the
project was not moving forward, as represented, at the time the funds were
solicited, and the funds were not used in the manner represented. For all of the reasons stated above, the
judgment is affirmed.
DISPOSITION
The
judgment is affirmed. Costs are awarded
to Respondent.
HUFFMAN, Acting P. J.
WE CONCUR:
HALLER,
J.
AARON,
J.
name="_ftn1" title="">[1] In March 2011, at the time of trial, Topaz was a debtor in a
Chapter 11 bankruptcy proceeding. Topaz
had sold off over 16 acres of the project by then. It is not a party to this litigation.
name="_ftn2" title="">[2] As of the time of trial, the HUD application process had not
been completed, no ground had been broken on the project, and Gonzales was
planning to cut its size in half.
