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Monaco Ordered to Pay Resort Firm $1 Million
Posted By RVBusiness On March 11, 2009 @ 11:47 am In Breaking News | No Comments
A judge has ordered Coburg, Ore.-based Monaco Coach Corp. to pay a former business partner $1 million after it failed to make a payment that came due in connection with a lawsuit settlement agreement, according to a report in the Register-Guard, Eugene.
But with Monaco in Chapter 11 bankruptcy proceedings, it’s not clear when or if Outdoor Resorts of America will see the money.
Outdoor Resorts is owned by Robert Schoellhorn, CEO of Marathon Coach in Coburg. Outdoor Resorts sued Monaco in 2007 in Lane County Circuit Court, alleging it was owed more than $4 million for a share of the profits from RV resort projects that the two companies jointly developed and financed.
Though the case was filed in county court, U.S. District Judge Michael Hogan mediated the dispute. Last June, the two companies entered into a settlement agreement. Terms of the settlement were not publicly disclosed.
But in a suit filed Feb. 27 in U.S. District Court, Outdoor Resorts alleged that Monaco was required to make a $2 million payment on Jan. 2. Outdoor Resorts said it was told by Monaco that it didn’t know when or if it would make the payment.
In response, Monaco admitted that it failed to make the Jan. 2 payment.
Six days later, after no testimony or trial and on the same day that Monaco filed for bankruptcy, Hogan entered a $1 million judgment in favor of Outdoor Resorts. Hogan offered no opinion on his judgment, other than to say it was “based upon the record.” Hogan did not return a phone message Tuesday (March 10) seeking comment.
Schoellhorn said Monaco has been in default on its payment since the start of January, and despite talks mediated by Hogan, Monaco didn’t come up with the money.
“We didn’t know what to do about it,” he said. “I hoped that something would happen where they could pay it. Promises, promises, but it never happened.”
Schoellhorn said he hasn’t “the foggiest idea” if or when Monaco will make good on the judgment.
Monaco spokesman Craig Wanichek said company officials are aware of the judgment.
“It is a pre-petition judgment as far as we can tell,” he said, meaning it was entered before Monaco filed for bankruptcy. “that will be resolved with the other pre-petition creditors.”
According to the Register-Guard, Wanichek said he didn’t know what kind of priority the judgment would have in the bankruptcy case.
The dispute involves three resort properties that Monaco and Outdoor Resorts developed together. In its 2007 complaint, attorneys for Outdoor Resorts described the following version of events:
Between July 2000 and July 2001, Monaco helped to finance Outdoor Resorts’ projects in Indio, Calif.; Las Vegas, Nev.; and Naples, Fla.
In 2002, Outdoor Resorts sold the three properties to Monaco. As part of the agreement, Outdoor Resorts was to share in any profits generated by the Las Vegas and Indio properties, such as from rental income and sale of lots, the suit said. The Naples property was to be a sold to a third party and the proceeds were to be shared between Outdoor Resorts and Monaco.
At the same time, Monaco contracted with Outdoor Resorts to manage the Indio and Las Vegas resorts. Under the terms of stock agreements, Outdoor Resorts was entitled to 20% of the net profit from the sale of lots at Indio and Las Vegas. Outdoor Resorts also said it is entitled to 50 percent of the proceeds from the sale of the Naples property.
Monaco was entitled to deduct from the shared profits “all reasonable overhead costs” relating to resorts operations and management.
In July or August 2003, “much to the surprise” of Outdoor Resorts, Monaco hired away E. Randall Henderson, president of Outdoor Resorts, to manage the resorts and to oversee Monaco’s plans to expand its resort business.
In October 2003, Monaco terminated the management agreements with Outdoor Resorts for the Indio and Las Vegas properties and assumed responsibility for the resorts’ day-to-day operations.
In April 2006, Schoellhorn spoke with Kay Toolson, Monaco’s CEO. In that conversation, Toolson suggested that Monaco owed Outdoor Resorts between $4 million and $6 million in shared profits as spelled out in the stock agreements.
But in a January 2007 letter, Monaco said it owed Outdoor Resorts just $1.5 million. Outdoor Resorts rejected that offer because it was lower than Monaco’s earlier statements and it didn’t jibe with Outdoor Resorts own estimates, the lawsuit says.
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