Cathay General Bancorp. said in a regulatory filing this week that an Orange County Superior Court jury awarded $11.6 million in damages to Garden Grove Galleria LLC, which had sued the bank over a disputed construction loan.
The Garden Grove Galleria is a stalled mixed-use project in Garden Grove’s Korean Business District that was hit by declining property values during the recession.
The Los Angeles-based bank in early 2010 claimed that Galleria’s investors had defaulted on a $42.5 million loan from Cathay and two other banks.
The project’s developers sued the bank, claiming it had breached the loan agreement. A 2010 report in the Garden Grove Journal said the developer accused Cathay of improperly refusing to release the full amount promised after requiring the developers to put more money into the deal when a reappraisal of the property in 2009 lowered the value of the land being used as collateral. The hold-up on funding brought the project to a halt, according to the report.
The Los Angeles holding company for Cathay Bank, which declined to comment, did note in its filing that the trial judge in the case has yet to rule on several portions of the case, including Cathay’s cross complaint against the development partnership for the $19 million unpaid balance on the loan. Cathay held 50 percent of the initial loan, and said its potential liability in the case is expected to be proportional.
Crowe is a reporter for the Los Angeles Business Journal, a sister publication of the Orange County Business Journal
