Mission Viejo Co. Project Stalled by Legal Dispute

Home-building giant Mission Viejo Co.’s plans to start its first California venture outside the community that bears its name has been stymied by a legal dispute with the new project’s developer.

Mission Viejo Co. announced last January that it would join five other builders in a planned 1,433-acre community to be known as the Village of Heritage in Fontana.

But the home builder has since put its plans on hold and is suing Fontana Heritage West End Associates, the limited partnership that is developing the project.

Others named as defendants in the suit filed in San Bernardino County Superior Court include BD Investors, a general partnership that was the predecessor of Fontana Heritage West End Associates, and BD Fontana West End Venture, another limited partnership. Barclay Investors Fontana, a general partnership, is also a defendant.

According to Harvey Stearn, Mission Viejo Co.’s senior vice president of marketing and residential construction, the company already had signed a contract with the developers of the community to purchase 271 lots in the project.

But Stearn claims “great demand” has since driven up the value of the lots, and that Fontana Heritage West End Associates is now refusing to part with the parcels unless Mission Viejo Co. agrees to pay more than the contracted price.

The ambitious development plan reportedly hit a snag earlier this year, when Bank of America unexpectedly decided not to get involved with the project.

First Nationwide Savings has replaced B of A.

Stearn says the lawsuit asks that the developer be ordered to honor the terms of the contract.

Ron Perlman, a partner in Fontana Heritage West End Associates, said he can say little about the lawsuit on the advice of the firm’s legal counsel.

“We just believe (Mission Viejo Co.’s) suit is groundless,” Perlman said. “There’s a disagreement between the two parties, and we’ll find out what happens when we get to court.”

Stearn believes Mission Viejo Co. is the only home builder that has actually signed a contract to purchase lots in the Village of Heritage, and says he “can’t imagine” building there if it doesn’t win the court battle.

The home builder’s plans to take part in the Fontana project had attracted media attention because it would mark the first time the company would take part in a California venture away from its home base. The firm founded the Orange County community of Mission Viejo 20 years ago and has helped to turn it into the home of 60,000 people.

Even if the company bows out of the Village of Heritage, Stearn said, his company will proceed with plans to expand into other parts of the Southland. Still, he said, the legal hassles over the Fontana project have been disappointing.

“The fact that a lawsuit is necessary to protect one’s rights is kind of a sad commentary on the management of the project,” Stearn complains.