A lawsuit filed by a German man who alleges he was defrauded into investing in a commercial real estate project in Bisbee has been reinstated after a court-approved settlement was rejected by the property developer’s shareholders.
Judge Timothy Dickerson of the Cochise County Superior Court ordered Marcel Mattle’s 2018 lawsuit reinstated to the active calendar after learning that Bisbee-based Border Cities Land Corp. rejected a settlement approved by a judge in July which would have dismissed the case.
Mattle alleges then-Border Cities president Scott Ries sought out an investor in early 2017 to secure funding to help maximize the value of Border Cities by improving its real estate holdings in Bisbee. At the time, the company had been in a decade-long legal fight with the city over the company’s interest in building a hotel.
In April 2017, Mattle pledged to contribute $200,000 to a separate company owned by Ries so that company could partner with Border Cities. Agreements were signed by both companies and Mattle claims he was promised not only full repayment of his contribution, but up to $570,000 more if Border Cities sold two of its holdings for a designated price.
Only $70,000 had been paid by Mattle at the time Ries was replaced as Border Cities’ president in early 2018 by Douglas-based attorney Ruben Teran. Then Teran notified Mattle the company would not honor the agreement approved by Ries.
In response, Mattle sued the company, Ries, and Teran, who was unsuccessful in getting dismissed from the case under Arizona’s corporate shield law which normally protects corporate officers from personal liability for any action taken or not taken as an officer. The Arizona Corporation Commission still lists Teran as company president and he continues to serve as the company’s attorney.
On July 8, the parties met for two hours with another Cochise County judge in an attempt to reach a settlement. An agreement was reached, which the judge reviewed with all parties to ensure the provisions were understood.
Court records show the judge also received an avowal from Teran and Border Cities’ vice-president Robert Page to “advocate” for corporate approval of the deal. The judge gave Teran two weeks to formally notify Dickerson that the shareholders voted to accept the deal.
But in mid-August, Teran advised Mattle’s attorney Stephen Weeks that the vote went against the settlement. Weeks now wants Dickerson to order Border Cities to turn over records related to that board meeting.
“Despite request, Mr. Teran has not supplied the vote count and the audio or transcribed minutes from that vote,” Weeks told the judge, adding that there is “reason to believe that the settlement was not presented to the board as represented in court.”
Dickerson has not ruled on that request. For now, he has ordered all parties and their attorneys back to court for an Oct. 15 status conference. A jury trial is now expected for early 2022.
