A federal judge has issued a temporary restraining order after an investor said a developer in a controversy southern Utah land project misused investment funds.
The project is that of St. George businessman James Doyle and his company Rocky Mountain Ventures. They are sued by a California company, RWR Investments Inc., owned by Robert W. Reisner.Doyle has leased 2,428 acres of state land from the Utah Division of State Lands and Forestry, and the state proposes to sell it to him at around $400,000. He has told the Deseret News that he intends to build "a very low-density" resort and residential community on the property.
The land, located in Washington County, is partly in the St. George city limits. The state's price has been challenged and a hearing scheduled soon to determine if that is a fair value.
The temporary restraining order issued by U.S. District Judge David Sam applies to both sides in the suit.
The joint venture is a plan to develop some of the property. According to the suit, on Dec. 17, 1986, Doyle and Rocky Mountain entered into the lease arrangement with the state to lease the land. The defendants then negotiated with RWR for financing to develop one tract called the Green Springs Parcel.
According to the suit, Doyle and Rocky Mountain breached the joint venture agreement by:
- Using funds from the $200,000 capital advance "to pay debts unrelated to acquiring the leasehold interests and/or free simple interests."
- Spending capital advance money "to pay appraisal fees relating to lands other than the subject lands" that are covered by the agreement.
- Refusing to "provide adequate accountings with supporting documentation itemizing expenditure from the capital advance funds."
- Arbitrarily assessing the joint venture money not authorized under the agreement for office space occupied by themselves, and for office equipment, receptionist and secretarial services, supplies, an automobile and other items. In addition, the suit says, "Defendant Doyle has used a portion of the capital advance funds for his own benefit in the form of direct payments to himself and in payment of personal indebtedness." It says this was contrary to the joint venture agreement.
Although Doyle and his company assured RWR that both sides would have equal voice in running the joint venture, the defendants were intent on exercising all management powers themselves, the suit says.
The suit seeks $1 million in compensatory damages, plus punitive damages.