Judge will allow Robertson as defendant in SunTrust case

NORFOLK

A federal magistrate judge opened the way Monday for SunTrust Bank to name Pat Robertson as a defendant in the bank's attempt to recover more than $3.6 million from a trust and oil company controlled by Regent University's president and chancellor.

In filings and testimony in U.S. District Court in Norfolk, attorneys for SunTrust contended the bank had difficulty getting Robertson to address the dispute. Earlier this year, both sides were able to get Robertson and a SunTrust principal to meet in the same room without any lawyers, but nothing materialized, Jonathan L. Hauser, an attorney for SunTrust, told U.S. Magistrate Judge F. Bradford Stillman.

SunTrust expanded its complaint, its attorneys said, because Robertson accepted a personal obligation when he signed a trust agreement backing a SunTrust letter of credit to the Robertson-controlled oil company.

Robertson is trustee of the Robertson Charitable Remainder Unitrust, and the trust is sole shareholder of the oil company Cenco Inc. The trust and the oil company each have denied any wrongdoing.

Stillman said he would allow SunTrust to amend its complaint against the trust and Cenco and add Robertson as a defendant. The initial complaint, filed in April, alleges that the Robertson trust breached its contract with SunTrust and that Cenco was unjustly enriched by the trust's failure to pay what it owed the bank.

The amended complaint contends that Robertson, too, breached a contract with the bank.

"He can no longer hide behind the veil of the trust," Robert A. Angle, an attorney for SunTrust, told Stillman.

By amending its complaint, SunTrust is attempting to make the litigation more expensive and painful, countered Glen A. Huff, an attorney for the Robertson trust and oil company. "All that can be gained is to complicate matters" and increase the expense, he told the court.

In response to questions from Stillman about the amount of SunTrust's claim and its legal bills, Hauser said the trust's obligation has climbed to $7.5 million from the $3.6 million in the initial complaint. That's partly because of its mounting legal bills and partly because SunTrust still has $3.98 million of exposure from the irrevocable letter of credit it issued to Robertson's oil company.

SunTrust contends that Cenco and the Robertson trust refused to reimburse the bank for payments and litigation costs related to Cenco's acquisition of an oil refinery and terminal south of Los Angeles.

SunTrust's Richmond-based predecessor, Crestar Bank, provided a standby letter of credit to Golden West Refining Co. in Santa Fe Springs, Calif., in 1998 on behalf of Cenco. The document was intended to protect Golden West against possible environmental obligations involving the marine terminal and related assets that Cenco bought.

While it was trying to upgrade the refinery, Cenco encountered several challenges from environmental regulators over air-quality and hazardous-waste issues. As part of a settlement reached with the California Environmental Protection Agency, Cenco paid $1 million and agreed to remove thousands of barrels of contaminated water, oil and solids from deteriorating refinery tanks for treatment.

In response to a motion from the Robertson trust and Cenco for a court order to mediate the dispute, Stillman told both parties on Monday to prepare for a settlement conference with a mediator. A trial date has been set for July 27.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com