Developer James W. Jones' $100-million lawsuit against Crocker National Bank, filed last week and claiming that the bank breached its lending agreement, is as much a matter of taking a philosophical stand on behalf of bank clients as it is a business action, Jones said Thursday.
"We have a message to deliver," Jones said. "There are many people basically fed up . . . and frustrated with the treatment they've received from major lenders. Builders and developers have been (the ones) who typically have brought about these lawsuits (because) they're much more sensitive about the circumstances regarding lending practices."
Jones, owner of the J. W. Jones Cos. and InterState Builders Ltd., spoke to a small group of reporters Thursday at his lawyer's office. The lawsuit against Crocker, Jones said, deals primarily with the "obligation of a bank to honor an agreement."
The lawsuit claims that Jones' companies entered into a "total relationship lending" package with Crocker in 1980, whereby Jones pledged to conduct all of his banking with Crocker in exchange for Crocker financing Jones' development projects.
But the bank eventually reneged on several loan commitments, according to the lawsuit.
As a result, Jones was slapped with a default notice on other construction loans he had and, he said, he has been pushed dangerously close to severe financial problems.
If a La Jolla parcel of land that is now in default is eventually lost and if the lawsuit racks up enormous legal fees, then, Jones acknowledged, there is the potential that his companies "might be forced into a bankruptcy situation."
Jones' company generated about $18 million in revenues last year, he said.
Jones, according to the lawsuit, was intentionally misled by Crocker executives into thinking he could "rely on the bank's verbal commitment and contract."
Jones claimed that between 1983 and 1984, he was "persuaded by Crocker" to further "good will" between the bank and his firms by buying two parcels of land in Oceanside that Crocker had obtained through foreclosure.
Jones later built 69 single-family homes on the land as part of a profit-sharing agreement with Crocker.
Late in 1984 and early in 1985, as Crocker reorganized its top management, Jones said he was told by Crocker to "delay his project loan request temporarily until the bank sorted out its problems."
But Jones said he could wait no longer to begin construction on a 10.85-acre site just west of the so-called Golden Triangle. So, relying on his "previously established relationship . . . coupled with existing written and verbal commitments to provide constructing financing," Jones said Thursday, he began grading the property and applied for building permits.
Change of Plans
A year ago, Jones said, Crocker officials told him they had changed their minds about the financing and told Jones "to seek funding sources elsewhere."
Jones subsequently secured partial financing from Imperial Savings & Loan Assn. But Crocker, Jones alleged, told him that it would not permit Jones to build on any part of the La Jolla property without entirely paying his previous loan fund balance.
Crocker later filed a default and Jones filed his lawsuit.
Crocker spokeswoman Jana Reese in San Francisco said that the lawsuit "doesn't have any merit, and we believe we will prevail."
She said the bank would not comment on the specifics of the lawsuit.
In his press briefing Thursday, Jones said the "most relevant question raised by these circumstances is not who is right or wrong" between the two parties.
Rather, he said, the question is: "Does a very large national bank have a special obligation to act responsibly with regard to the public's banking needs" and to apply consistent and fair business practices?