Untangling Pioneer’s Lawsuit Web : Litigation: Judge orders a chart to deal with more than 100 civil cases and sea of lawyers involved in La Mesa-based mortgage company’s bankruptcy.

The complex web of court cases spawned by La Mesa-based Pioneer Mortgage’s Jan. 9 bankruptcy filing has quickly grown to the point where a U.S. District Court judge ordered attorneys to prepare a chart that explains “who’s suing whom.”

Judge John S. Rhoades also insisted that the growing “sea of lawyers” who already have filed more than 100 civil cases must litigate the suits in a way that will keep it from evolving into “an epic tale of Dickens . . . (that becomes) the master of us all.”

The number of suits could soar to 1,000 as more investors initiate civil lawsuits seeking damages from Pioneer and companies it did business with, said Scott L. Metzger, an attorney who represents a number of Pioneer investors.

During a recent hearing, Rhoades said that, if the Pioneer litigation remains in his courtroom, he will institute guidelines similar to those that governed a complex civil trial generated by the Nov. 21, 1980, fire at the MGM Grand Hotel in Las Vegas that killed 85 people and injured 591 others.

The MGM Grand trial involved 49 lawyers who met each day in a specially constructed courtroom next to the University of Nevada at Las Vegas basketball arena. The case generated 8 million documents and cost an estimated $342,000 a day to litigate, including attorneys’ fees. At the time, Rhoades was an attorney who represented a company that manufactured chandeliers that were installed in the hotel.

The Pioneer bankruptcy and the resulting civil cases won’t grow as complex as the MGM Grand case, Rhoades said. But the combined cases could become one of the most complicated group of related cases ever handled in San Diego, according to attorneys who are familiar with the proceedings.

Consequently, Pioneer investors are struggling to keep up with the fast-paced legal filings.

“You’re never too old to learn, I guess,” said one 80-year-old investor who is trying to formulate a legal strategy to protect his $200,000 Pioneer investment.

As is the case with most Pioneer investors, the retiree hopes bankruptcy court proceedings will recoup at least half of his investment. But the man, who asked that his name not be used, also intends to file a civil lawsuit against Pioneer’s “deep pockets”--the company’s accountants, bankers, attorneys and insurance companies.

Investors “hope to ultimately collect on their investments through bankruptcy court,” said an attorney who represents about 30 Pioneer investors. “But, in the event, God forbid, that they don’t get total satisfaction, it’s in their best interest to try and collect from a third party” such as a bank, law firm or accounting firm that might be found guilty of fraudulent activity while working for Pioneer, the attorney said.

Another investor acknowledged that these “deep pockets” firms who did business with Pioneer might be innocent of any wrongdoing. But the man, who asked that his name not be used, suggested that, “if they are guilty, then I have no qualms about making them pay.”

The flurry of lawsuits also has touched San Diego-based Jackson & Associates, a financially troubled real estate development firm with close ties to Pioneer. Jackson, in turn, has filed a lawsuit alleging fraudulent activity on the part of Pioneer executives.

The wave of lawsuits is complicated by the fact that six of Pioneer’s affiliated companies are operating under the protection of U.S. Bankruptcy Court while the related lawsuits are being filed in U.S. District Court and state Superior Court in San Diego.

The three separate court actions are expected to complicate matters because each system has its own set of rules and its own traditional area of expertise, attorneys said. And, the attorneys noted, traditionally there has been little communication between the state and federal systems.

Even relatively sophisticated Pioneer investors acknowledge that the storm of legal activity has made it difficult to determine which civil suit strategy will pay the best dividends--if any--and which law firm seems most likely to successfully litigate cases.

“You know what Shakespeare said about killing the lawyers,” said a San Diego businessman who has invested “several hundred thousand dollars” in Pioneer. “But, at this point, I’d sign on with the devil if he could get my money back,” said the businessman, who asked that his name not be used.

During one recent hearing, U.S. Bankruptcy Judge James Meyers was hard-pressed to provide enough seats for the more than 40 attorneys who represent different groups culled from Pioneer’s 2,000 investors, as well as Pioneer’s secured and unsecured creditors.

Meyers has transferred Pioneer hearings to one of the Federal Courthouse’s largest courtrooms, but his staff has still had to turn away investors for lack of seating.

San Diego-based attorneys Tim Cohelan, Mike Aguirre and John Wertz initiated the flurry of Pioneer-related civil suits in early January when they filed suits that alleged fraud on the part of Pioneer owner Gary Naiman and Pioneer’s banks and accounting firms. The three attorneys, who represent about 100 Pioneer investors, want Rhoades to certify the suit as a “class action,” a designation that would turn the suit into one that represents all of Pioneer’s 2,000 investors.

A few days later, nearly a dozen investors filed individual lawsuits in San Diego County Superior Court, alleging fraudulent actions that mirror those found in the U.S. District Court suit. On March 1, four law firms representing Pioneer investors filed 90 more suits against Naiman and several companies that did business with Pioneer.

Attorneys who filed in federal court are hoping that the bankruptcy and civil cases will eventually fall under the jurisdiction of a single district court judge.

Those who filed in superior court believe that the myriad interests of Pioneer investors would best be suited to rules of the state court system, in part because of a state law that generally provides earlier trial dates for plaintiffs who are over 70 years old and are in poor health.

The lawsuits also have sparked a legal turf battle. For example, attorney Cohelan last week asked Rhoades, the district court judge, for a speedy ruling on a request to lift a stay that insulates the now-bankrupt Pioneer companies from civil lawsuits.

Most Pioneer investors, however, seem unaware of the intricacies involved in the logic that leads different attorneys to file civil suits in different court systems.

“The only (hearing) I’ve been to so far was in the federal Bankruptcy Court,” said one retired woman who was forced to seek employment when Pioneer stopped mailing monthly checks.

“This is all something that’s very, very new to me. . . . This is my lifetime savings. I want to see what I can do about protecting it.”