Suit Over Loan Entangles Wells Fargo Holdings

A Riverside County man has tied up Wells Fargo Bank’s California real estate holdings in a legal ploy to get the big bank to pay him a $700,000 judgment.

Ted Hays, 78, was hospitalized with cancer in 1984 when Wells Fargo “mistakenly” paid a $1.5-million loan that Hays had arranged to two of his business associates, according to a civil suit Hays filed in Los Angeles. The loan was needed to build a small housing project in Orange.

The two business associates expected Hays to die, said his lawyer, Robert C. Aronoff, and never gave him $440,000 from the loan.

A Los Angeles Superior Court jury in September awarded Hays $700,000. Wells Fargo said it would appeal the decision, but cited federal court cases in declining to post a bond while it appealed.

National banks, Wells Fargo contended, are not obligated under those court cases to post bonds while appealing lawsuits. Defendants in California courts are ordinarily required to post a bond equal to up to 1 1/2 times the amount of the judgment when they appeal a case. That’s to ensure they’ll pay if they lose on appeal.

Hays’ lawyer then asked the trial judge to place liens on Wells Fargo’s real estate, which the judge did Wednesday. The liens--a type of legal obligation--make it virtually impossible for the bank to sell property since a buyer would be stuck with the obligation to pay the judgment.

The liens cover property Wells Fargo owns throughout the state, including in Los Angeles and Orange counties.

Wells Fargo said it would go to federal court today to ask that the liens be removed. Should that fail, a lawyer for the bank said, the bank will appeal to a state court and ultimately will post a bond if rejected by the courts.

“This is simply a tactical maneuver by Mr. Hays,” said William Reichert, senior counsel for the bank.