Copenbarger

FACTS AND PROCEDURAL BACKGROUND

1. The loans and the guaranty Newport Harbor is owned and managed by Paul Copenbarger and McNaughton. It entered into a sublease, acquiring a ground lease for a specified period. By quit claim deed, Newport Harbor also gained title to improvements on the property. As part of this transaction, Copenbarger loaned $3 million to Newport Harbor. The loan was secured by a first priority deed of trust on the improvements and the sublease. At the same time, Newport Harbor borrowed $1.15 million from Plaza Del Sol Real Estate Trust (Plaza Del Sol), executing a note secured by a second priority deed of trust on the improvements and the sublease. Newport Harbors’ co-owners, Paul Copenbarger and McNaughton executed a written continuing personal guaranty on Copenbarger’s loan to Newport Harbor. Approximately five years later, Newport Harbor defaulted on the note held by Copenbarger and he delivered a notice of default to Newport Harbor. Subsequently, Copenbarger sued McNaughton to enforce the guaranty. After the suit against McNaughton had been filed, Copenbarger entered into an agreement with the holder of the second deed of trust, Plaza Del Sol, agreeing to…