Case Background
This case arose from a long-standing dispute over the management and development of a prime 40-acre beachfront property in Sand City, California. Security National Guaranty, Inc. (SNG) spent over 25 years securing the necessary permits and entitlements to transform the site into the Monterey Bay Shores Resort, a luxury mixed-use development. In 2015, SNG partnered with Mahender Makhijani and his investment group to refinance debt on the property through a $27 million loan. This partnership led to the formation of SNG Evariste, LLC, governed by a Memorandum of Understanding (MOU). However, the relationship quickly deteriorated, resulting in years of litigation over control of the project. By 2016, the Defendants took over the management of the company.
Cause
SNG alleged that once the Defendants gained control, they intentionally stalled the resort's development to prioritize their own financial interests. The Plaintiff claimed the Defendants ignored the MOU, failed to hold required member votes, and neglected the property. Most significantly, SNG accused the Defendants of obtaining a secret $37 million loan from Nano Banc, which they allegedly used for personal gain while intentionally wiping out SNG’s equity in the project.
Injury
The Plaintiff argued that the Defendants' misconduct caused the "wasting" of the company’s sole material asset. SNG maintained that the Defendants' inaction threatened the viability of highly valuable coastal permits and allowed the beachfront site to fall into disrepair, eventually becoming a site for illegal dumping and homeless encampments. Financially, SNG claimed that the Defendants' unauthorized loan restructuring and high-interest debt schemes directly drained the company's value.
Damages Sought
SNG sought compensatory damages for the loss of its equity and the harm to the property's value. The Plaintiff also requested punitive damages to punish the Defendants for what it described as a fraudulent scheme to "fleece" the property. Additionally, the lawsuit aimed to remove the Defendants from management and clear the property's title of the contested Nano Banc deed of trust.
Key Arguments and Proceedings
Legal Representation
Plaintiff(s): Security National Guaranty, Inc. (SNG).
Counsel for Plaintiff(s): Kyle A. Withers
Defendant(s): Mahender Makhijani | Gerald Marcil | Andrew Stupin | Evariste Group, LLC | Evariste Group Manager, LLC | Apollonius's Locus Investor Group LLC | Ioannis Xilikakis | Nano Banc.
Counsel for Defendant(s): Not Mentioned
Key Arguments or Remarks by Counsel
Claims
SNG’s legal team argued that the Defendants operated the company as a shell to facilitate fraudulent schemes. They contended that Mahender Makhijani was the mastermind who used "strawman" managers like Gerald Marcil to hide his true control and self-dealing. The core of their argument was that the Defendants breached their fiduciary duties by prioritizing a high-interest loan that benefited them personally while destroying the project's economic viability.
Defense
The Defendants maintained that their actions were legitimate business decisions intended to protect their investment. They argued that the delays in development were due to the inherent complexities of California coastal projects and the ongoing legal disputes initiated by SNG. Regarding the Nano Banc loan, the defense suggested it was a necessary step for the company's operations and was not part of any "illegal scheme".
Jury Verdict
Security National Guaranty, Inc. ("SNG Inc."), a California corporation, sued Mahender Makhijani, Evariste Group LLC, Gerald Marcil, Evariste Group Manager LLC, Andrew Stupin, Apollonius's Locus Investor Group LLC, Ioannis Xilikakis, and Nano Banc. SNG Evariste, LLC was the nominal Defendant. The jury returned Phase 1 verdicts on October 1, 2025, and the Phase 2 punitive damages verdict on October 6, 2025.
Stolen Property Claim (Penal Code § 496(c)) — Rejected. The jury found that none of the seven Defendants received, concealed, or withheld stolen property. The aiding and abetting form (Verdict Form No. 2) was therefore not completed.
Breach of Fiduciary Duty — Liability Found, $9.25 Million Awarded. The jury found that Makhijani, Marcil, and Evariste Group LLC each owed fiduciary duties to both SNG Evariste, LLC and SNG Inc., and that all three breached those duties. SNG Evariste, LLC was found to be harmed, with all three Defendants' conduct being a substantial factor in that harm. SNG Inc. was found not to be harmed. The jury awarded SNG Evariste, LLC $9.25 million in damages — entirely related to the $37 million Nano Banc Loan — and $0.00 for the Monterey Property. SNG Inc. received $0.00.
Conspiracy to Commit Breach of Fiduciary Duty — Found Against Five Defendants. The jury found that Makhijani, Evariste Group LLC, Marcil, Evariste Group Manager LLC, and Andrew Stupin were all aware of the planned fiduciary breach and each agreed and intended that the breach be committed.
Aiding and Abetting Breach of Fiduciary Duty — Found Against Two Defendants. The jury found that Evariste Group Manager LLC and Andrew Stupin knew of the planned breach, gave substantial assistance or encouragement, and that their conduct was a substantial factor in causing harm. As to Nano Banc, Apollonius's Locus Investor Group LLC, and Xilikakis (solely regarding the $37 million Nano Banc Loan transaction), the jury found they did not have knowledge of the breach, and no further questions were answered for them.
Breach of Contract — No Damages Awarded. The jury found that SNG Inc. and Evariste Group LLC entered into a Memorandum of Understanding ("MOU"), and that Makhijani and Marcil each knowingly accepted its benefits and were bound by it. However, neither SNG Evariste, LLC nor SNG Inc. was found to have performed all or substantially all of its contractual obligations. No damages were awarded on this claim.
Punitive Damages — Malice, Oppression, or Fraud Found. The jury found by clear and convincing evidence that Makhijani, Marcil, and Stupin each engaged in conduct constituting malice, oppression, or fraud. Xilikakis was found not to have engaged in such conduct. The jury also found that Michael Kluchin engaged in malicious, oppressive, or fraudulent conduct as an officer or managing agent of both Evariste Group LLC and Evariste Group Manager LLC, with corporate authorization and ratification. All three individual Defendants (Makhijani, Marcil, Stupin) were found to be officers, directors, or managing agents of the entity Defendants whose management authorized, knew of, and ratified their wrongful conduct.
Loan Offset Finding. The jury found that the $27 million Evariste Loan balance owed by SNG Inc. to Evariste Group LLC was reduced by the full $37 million amount of the Nano Banc Loan.
Punitive Damages Award (Phase 2). The jury awarded punitive damages against SNG Evariste, LLC as follows: Makhijani $7 million; Marcil $15 million; Stupin $15 million; Evariste Group LLC $0.00; Evariste Group Manager LLC $0.00.
Total Verdict: $46.25 million comprising $9.25 million in compensatory damages and $37 million in punitive damages.
Court documents are available upon request at [email protected]
