Umpqua loses bid to dismiss suit

Case related to Bend Summit 1031 bankruptcy scheduled for February trial

By Andrew Moore
The Bulletin

May 28, 2010

Umpqua Bank’s motion to dismiss the $30 million lawsuit filed against it by Summit 1031’s bankruptcy trustee and the bankruptcy creditor’s committee has been denied, according to a ruling issued Monday by Multnomah County Circuit Court Judge Marilyn Litzenberger.

Kevin Padrick, who is liquidating the assets of Bend-based Summit 1031, filed suit against the bank in June 2009 alleging it aided and abetted Summit to operate what Padrick has characterized as a Ponzi scheme. The creditor’s committee filed a similar suit against the bank, which the court has since paired with Padrick’s suit.

Summit 1031, also known as Summit Accommodators Inc., filed for Chapter 11 bankruptcy protection in December 2008. At the time, the company — which facilitated tax-deferred property exchanges — announced it was short roughly $14 million due its clients. The company ran into trouble when, instead of placing its clients’ funds in liquid bank accounts, it invested them in real estate that Summit couldn’t sell after the real estate market collapsed, according to bankruptcy documents.

The case was later converted to a Chapter 11 liquidation.

Padrick declined to comment on the judge’s ruling.

Umpqua Bank’s executive vice president and general counsel, Steven Philpott, was traveling late Thursday and unavailable for comment.

A trial has been scheduled for Feb. 1, 2011.

Andrew Moore can be reached at 541-617-7820 or at amoore@bendbulletin.com.

Copyright 2010