Lawsuit clouds sale of Sisters-area chateau

On property 25 minutes from Bend, an attorney from California has built a 21st-century version of a French chateau.

The 7,744-square-foot, two-story residence on Gist Road comes with six bedrooms, six bathrooms, three fireplaces and Cascade views. Noteworthy for its architectural style, the place is remarkable, as well, for its price. The 40-acre estate off U.S. Highway 20 southeast of Sisters is for sale at an asking price of $11.95 million.

“It is truly amazing,” said Deb Tebbs, a Bend real estate agent who listed the property. “On the art and furniture alone, I think they spent a couple million. I’ve never seen anything like it.”

As with many a French chateau, a deeper story lies within. The owner, Russel Hiles, of Glendale, California, is being sued in Deschutes County Circuit Court by Farmers Insurance Exchange, a division of Farmers Insurance Group that operates in California. Farmers seeks to stop Hiles from selling the property and to recover $4.8 million that it says Hiles owes the insurance company.

In a suit filed June 24, attorneys for Farmers Insurance Exchange state that Hiles, an attorney who handled litigation for the exchange, misappropriated $2.5 million from attorney-client trust accounts. The lawsuit alleges Hiles “used a portion of Farmers’ misappropriated funds for construction on and/or improvements to the Bend property.” Hiles bought the property in 2008 for $1.15 million and built the home two years later, according to county property records.

In January, according to the lawsuit, an arbitrator heard Farmers’ case over the disputed money and on May 10 found in Farmers’ favor. On May 27, the arbitrator awarded the insurance company $4.8 million, according to the lawsuit filed by the Stoel Rives law firm in Portland. In it, Farmers alleges Hiles is selling the Gist Road estate in order to put it, along with other property, out of Farmers’ and other creditors’ legal reach.

On Oct. 31, Hiles listed the chateau and its surrounding acreage for sale, the lawsuit states. The listing has drawn little interest, Tebbs said. It’s one of three pieces of real estate, and a yacht, mentioned in the suit.

A week after the arbitrator’s interim award, the suit alleges, Hiles filed a grant deed May 18 transferring ownership of a home in Palm Springs, California, to his wife. Two days later, she transferred the property by a deed of trust to a Los Angeles law firm as a guarantee for payments her husband owes for legal services, the Farmers’ lawsuit alleges. Farmers alleges Hiles sold a Los Angeles condominium for $940,000 in January and recently tried to sell a yacht, the Tenacious, for $249,000.

The lawyers for Farmers allege Hiles transferred the Palm Springs property and sold the Los Angeles condo to put those assets out of the insurance company’s reach. Hiles could not be reached Tuesday for comment. No response to the Farmers’ lawsuit was filed in the court record as of Tuesday.

Farmers Insurance Exchanges asks the court to attach a $4.8 million lien on the Gist Road property or to halt its sale.

— Reporter: 541-617-7815,

jditzler@bendbulletin.com


Source: BB Real Estate – topStory

Leave a Reply

Your email address will not be published. Required fields are marked *