Developer Walters settles lawsuit claims – again

Golf course developer Bill Walters has settled claims brought by buyers of the former Stallion Mountain Country Club - again.

The U.S. District Court lawsuit over the failed deal ended on the second day of trial in January with Walters agreeing to write a check to the buyers for an undisclosed amount. However, the deal was derailed when the Federal Deposit Insurance Corp. pounced on the money, saying it should be used to cover at least part of Walters' personal guarantee of a $15.3 million loan made by the now-failed Community Bank of Nevada that was part of the sale. A separate lawsuit regarding that end of the deal was still pending in Clark County District Court.

As a result, the buyers refused to dismiss the federal case while the money was frozen in a court-ordered account, pending resolution of the FDIC claim.

On Thursday, Clark County District Court Judge Mark Denton approved a settlement that encompasses both actions. Again, no terms were disclosed. U.S. Magistrate Judge Peggy Leen mediated the deal, as she did with the first version.

"It's done - finito," said Walters attorney Dennis Kennedy, capping four years of litigation that generated thousands of pages of exhibits. "All that's left is signing the papers."

Walters was out of town and could not be reached for comment.

The dispute dates to 2006, when Walters sold Stallion Mountain to 26 individuals for $24.5 million with $9.2 million down plus the bank loan. As the deal unraveled two years later, leading to a foreclosure by the bank, the buyers claimed Walters had inflated the numbers in the sales prospectus. Walters countered that the buyers had mismanaged the course, damaged it by poor management and were caught by the same recession that has hurt all golf venues.

As part of the state court case, Denton earlier ruled that the FDIC held a deficiency claim of $7.35 million, representing the difference between the amount owed on the loan and the value of the course at foreclosure, plus payments made. Walters' guarantee was supposed to cover the deficiency.

A potential loose end still hanging involves $1.2 million that the Southern Nevada Water Authority paid to the Stallion Mountain owners in 2008 to replace some grass with gravel to conserve water. The FDIC said that money should have gone to the bank, and it may try to recoup it in court.

The authority contends it merely followed the owners' direction and should not have to pay twice for the same acreage. If it loses, authority attorney Bryce Kunimoto wrote in court papers that it could recoup the money from both Walters and the owners.

Walters' attorney disagreed.

"There is no chance they have a claim against (Walters)," Kennedy said.

Not only did he receive no money, but Denton's approval of the settlement cuts off any authority claims.

Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.