Judge - for now - rules in favor of Jerry Stubblefield over Chris Dudley
Jerry Stubblefield will be able to keep his exclusive estate on a private island in Oswego Lake - for now.
Last week, a Clackamas County Circuit Court judge barred an attempt to foreclose on the home, granting a preliminary injunction sought by Stubblefield, a former University of Oregon discus champion and the founder of shoe company Avia.
The ruling blocks a nonjudicial foreclosure that had been set for Sept. 22.
The case pits Stubblefield against another Lake Oswego heavyweight: Former Portland Trail Blazer and 2010 gubernatorial candidate Chris Dudley. Their dispute stems from a $3.75 million loan from Dudley and his company, Tesoros de Oswego, to Stubblefield.
Stubblefield filed a lawsuit in May alleging that when he tried to pay off the 18-month loan last December, Dudley tried to collect an extra $1 million fee not listed on the original loan document. According to the suit, Dudley refused to accept the payment without the $1 million now in dispute, putting Stubblefield into default and scaring away an investor who had agreed to help refinance his estate so he could pay off his debt.
In court records, Dudley's attorneys argue the refinance was set up in a move to 'circumvent' paying money he would have owed Dudley if he sold the estate. Stubblefield's attorneys contend a refinance does not constitute a sale.
In March, Dudley moved to foreclose on the estate, which Stubblefield had put up as collateral.
Developed in the late 1920s, the estate includes a 9,600-square-foot Tudor-style mansion and separate 3,000-square-foot guesthouse that doubles as Stubblefield's workshop, plus a private boat house and a swimming pool. On a private island, it is accessible by boat or via a private bridge.
The home, which Stubblefield bought in 1987, has been on the market for a couple of years, during which he has dropped the asking price from about $20 million to $15 million.
When he found he could no longer leverage his property's equity while he worked on product development, he needed a nonconventional lender, court documents show. That's where Dudley came in.
Their loan agreement doesn't mention the $1 million fee now in dispute. But Dudley's attorneys contend in court records the note 'mistakenly contained typographical errors and failed to clearly reflect the payment terms negotiated and agreed to.'
They say the note should have contained a clause outlining a fee of $1 million due whether Stubblefield repaid the loan early or in December 2010 and have filed a counterclaim for $5.4 million plus interest.
In court, Dudley's attorney Martin Jaqua argued that foreclosure would provide 'an efficient way' to protect Dudley's investment. He said the Dudley family had borrowed money against their own property so they could back the loan to Stubblefield.
He said it would be unreasonable to believe that Dudley wouldn't accept more of a return on a risky investment.
'The marketplace is tough out there,' Jaqua said.
Stubblefield's attorney Bill Drew argued for the contested issues to be resolved under the eye of a judge rather than through a nonjudicial foreclosure, which would move ahead out of the courtroom.
'We are not saying they are not owed some money, but they first have to establish the right to foreclose and the amount by some judicial process,' Drew said. 'They're seeking default based on (Stubblefield's) inability to pay an amount which is in dispute.'
Both sides declined to comment on the case at the hearing Sept. 8.
In the end, Judge Ronald Thom said allowing the foreclosure to take place would cause 'irreparable harm.'
'I believe it would be inappropriate at this time to grant a nonjudicial foreclosure before these other material issues are resolved,' he said.