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1 || Daniel L. Rottinghaus, California Bar No. 131949
Jacob A. Moss, California Bar No. 264820
2 || BERDING & WEIL LLP
2175 N. California Blvd, Suite 500 ELECTRONICALLY
3 || Walnut Creek, California 94596 FILED
Telephone: — 925/838-2090 Superior Court of California,
4 || Facsimile: 925/820-5592 County of San Francisco
dir@berding-weil.com NOV 17 2014
5 | jmoss@berding-weil.com Clerk of the Court
6 || Attorneys for Defendants BY oe ona fy olerk
SHACUAN SHARON SETO sued herein as SHACUAN SHARON LEE, PATRICIA W. LEE
7 || a/k/a PATRICIA LUM, and GORDON J. LEE
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9 SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN FRANCISCO
10
il
ALZ LEE, LLC, PKL REAL PROPERTY No. CGC-14-539036
12 | ASSETS LLC, and STEPHEN & SUSAN
LEE LEGACY LLC REPLY BRIEF IN SUPPORT OF
13 DEFENDANTS’ OMNIBUS MOTION
Plaintiffs, FOR AN ORDER APPOINTING A
14 REFEREE TO ASCERTAIN THE
vs. INTERESTS OF LIENHOLDERS AND
15 ENTRY OF INTERLOCUTORY
SHACUAN SHARON LEE, PATRICIA W. JUDGMENT
16 ] LEE A/K/A PATTY LUM A/K/A PATRICIA
LUM, GORDON J. LEE, FIRST REPUBLIC Date : November 24, 2014
17 || BANK, STATE OF CALIFORNIA, DOES } Time: 9:30 am.
through 50, and all persons unknown claiming Dept.: 501
18 } any interest in the property, inclusive
i9 Defendants.
Complaint Filed: May 1, 2014
20 Trial Date: April 20, 2015
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23 | L INTRODUCTION
24 Plaintiffs have requested, and Defendants have agreed, that the Subject Properties be
25 || partitioned by sale. But ever since Defendants amended their answers to agree to partition, for
26 || reasons unbeknownst to Defendants, Plaintiffs have tried to delay this process as much as
27 || possible. Plaintiffs’ Opposition to this motion for appointment of a referee is just the most recent
28 | attempt to obstruct what should have been an orderly partition. Defendants request that the Court
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DEFENDANTS’ REPLY BRIEF IN SUPPORT OF MOTION FOR APPOINTMENT OF REFEREE AND ENTRY
OF INTERLOCUTORY JUDGMENTBERDING & WEIL-LLP.
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look past Plaintiffs’ diversionary tactics, appoint a Referee to ascertain the interests of the
lienholders, and enter an interlocutory judgment as Defendants requested in their moving papers.
i. ANALYSIS
a. This Case is Ripe for Entry of interlocutory Judgment
In their Opposition, Plaintiffs’ argue that it is premature to enter an interlocutory
judgment because “some important procedural matters must occur.” (Opposition, p. 5:13.) They
contend that because the cases are not fully “at issue,” it is not an appropriate time for the Court
to enter the interlocutory judgment. Specifically, Plaintiffs argue that because of their lease
interests in 1750 Grant Ave Unit D, “‘Sharon Seto and Family* must be served with the summons
and complaint in this case as defendants.” (Opposition, p. 6:4-5.)
This argument does not make sense. Sharon Seto is already a Defendant to the case, and
there is no valid legal basis upon which Plaintiffs could challenge the lease. In fact, the author of
the lease, Stephen Lee, has already signed a Declaration establishing the basis for and validity of
the lease. (Supplemental Declaration of Jacob A. Moss, Exhibit “A”.)
Assuming arguendo, however, that “Sharon Seto and Family” are necessary parties to the
action and must be added as Defendants, the Court still has authority and discretion under
§872.720(b) to enter an interlocutory judgment at this time. Under § 872.720(b), the Court may
first ascertain the interests of the parties at issue and make an. initial interlocutory judgment as if
such persons were the sole parties in interest and the only parties to the action.
§ 872.720(b) provides:
“If the court determines that it is impracticable or highly inconvenient to make a
single interlocutory judgment that determines, in the first instance, the interests of
all the parties in the property, the court may first ascertain the interests of the
original concurrent or successive owners and thereupon make an interlocutory
judgment as if such persons were the sole parties in interest and the only parties to
the action. Thereafter, the court may proceed in like manner as between the
original concurrent or successive owners and the parties claiming under them or
may allow the interests to remain without further partition if the parties so desire.”
If Plaintiffs are actually going to, as they claim in their Opposition, seek leave to amend
their Complaint in the 1750 Grant Ave Unit D action to add “Sharon Seto and Family” as
defendants, then the current Defendants request the Court to enter an interlocutory judgment
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DEFENDANTS’ REPLY BRIEF IN SUPPORT OF MOTION FOR APPOINTMENT OF REFEREE AND ENTRY
OF INTERLOCUTORY JUDGMENTpertaining to the parties already in the case.’ As to those parties, the claims are at-issue. The
Defendants’ answer agreeing to sell the properties is conclusive on the issue of partition-by-sale.
The issue of a tenancy encumbering one of the properties is unrelated to “title” and sale of the
properties.
If the Court determines that Sharon Seto and Family should be parties to the case to
adjudicate the authenticity of their lease, and grants such a motion for leave to amend, then the
Court can enter a second interlocutory judgment at the appropriate time pertaining to such
disputed issue. Defendants believe this process would be wholly unnecessary, but regardless, i
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should not prevent the Court from entering an interlocutory judgment as to the parties currently
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in the case.
Next, Plaintiffs contend that “in view of the ciaim that has been made with respect to [the
2 || lease], there is the possibility, which must be considered, that there may exist other persons who
3 || claim to have previously undisclosed long term leaschold interests in any of the other real
14 || properties involved in these six cases.” (Opposition, p. 6:10-14.) In response, Plaintiffs have
5 || proposed a procedure whereby Ms. Uecker, acting as a referee, would contact the tenants at the
16 } Subject Properties to determine the extent of their leasehold interests.” This proposed procedure
7 || is unnecessary and another attempt to delay these cases from proceeding to resolution. There is
18 ]f no reason to contact the tenants at the Subject Properties; they have no ownership interests in the
19 |] properties and thus no rights to assert in the partition actions. The Referee should be given the
20 |{ authority to determine the extent of the leasebold interests without considering challenges from
21 || the leaseholders, who have no ownership interests in the tenancies in common and are not
22 || otherwise parties to the partition actions.
Tt should be noted that this issue only affects one of the six actions subject to this motion. The lease is not an issue
28 |} in the other five actions and thus only one interlocutory judgment should be entered in those cases.
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Boba Chee, Caen 296 OF INTERLOCUTORY JUDGMENT11
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b, Plaintiffs’ Proposed Procedure to Resolve Disputed Issues is Unreasonable
and Wasteful
Plaintiffs contend that they have proposed a “reasonable and sireamlined method for the
Court, with the referee’s assistance, to resolve any disputed issues as to Hens and encumbrances
on the six subject real properties.” (Opposition, p. 8:15-17.) Plaintiffs’ “streamlined method”
will only result in increased litigation and discovery regarding an increasing number of contrived
“disputed issues.” Their proposal states, “If Ms. Uecker determines that substantial disputed
issues of fact or law are presented by any Opposition, she will refer the dispute to the Court,
which will then conduct a status conference and set the matter for an appropriate trial or other
contested hearing to resolve the disputed issues. All discovery shall be per the CCP and shall be
subject to the supervision of the Court.”
What is the purpose of having a Referee to determine the interests of the lienholders if she
has no authority to resolve any disputed issues regarding the liens? The Court should not be
burdened with “status conferences,” “trials” and/or “contested hearings” to resolve issues that the
Court clearly has the discretion to delegate to a Referee to decide under Code of Civil Procedure
§§ 872.630 and 639. If the Referee determines that discovery is necessary, she can order it. And
if she determines that a “trial or other contested hearing” is appropriate, she can request the same
from the Court. There is no need to channel every such “dispute” to an already overburdened
Court for a hearing every time there is an issue between the parties regarding one of the liens.
It should also be noted that the only lien in dispute is Plaintiff Peter Lee’s alleged
Promissory Note and Deed of Trust at 356 Beach Street. In their Opposition, Plaintiffs contend
that Defendants have “yet to explain their basis for disputing Peter Lee’s Deed of Trust,” but that
is a blatant misrepresentation. Defendants’ counse! has had multiple conversations with Peter
Lee’s counsel regarding this issue, and Defendants’ counsel recently explained Defendants’
position regarding the Deed of Trust in a meet and confer correspondence sent directly to
Plaintiffs’ counsel. (Supplemental Moss Decl. Exhibit “B*.) In such correspondence,
Defendants requested Plaintiff Peter Lee to voluntarily remove the alleged Deed of Trust from
the property for the reasons stated in the letter, but Plaintiff has purposefully and without regard
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to the wording of his unsecured promissory note, continued to maintain the position that he is
entitled to securing at this property.
Notwithstanding the aforementioned red herrings and false accusations, Plaintiffs have
attempted to argue the merits of the Note in this Opposition. While this is not the appropriate
forum for such arguments, on its face, the Note does not support a Deed of Trust on the 350
Beach Street property or any property, and the Note dees not empower the lender to encumber
the borrower’s property by a Deed of Trust. In fact, the borrower on the Note did not give any
secured rights, At best, what is stated is an unsecured promissory note.
The only action that should be taken in the 350 Beach Street partition case is for the Court
to remove the Deed of Trust from the 350 Beach Street property. There is no need for discovery,
status conference and/or a trial regarding this issue.’ The Court or the Referee upon review of the
Note should order the Deed of Trust expunged from the property as without regard to the validity
of the Note, there is no provision for security in the Note and specifically not as to the 350 Beach
Street property.
c Plaintiff's Proposed Procedures would Strip the Referee of any Actual
Authority and Waste Court Resources
Contrary to the assertions stated in Plaintiffs’ Opposition, Defendants did not get
“confused between the two classes of referees who might be appointed in cases of partition.”
(Opposition, p. 11:5-7.) Defendants understand that Plaintiffs are not willing to stipulate to use
Ms. Uecker as a referee under Code of Civil Procedure § 638, to determine both legal and factual
issues regarding the liens and encumbrances at the Subject Properties. However, Defendants
dispute Plaintiffs’ contention that Ms. Uecker is not qualified to adjudicate (pursuant to § 639)
disputes that have arisen, and may continue to arise, regarding the accounting for and discovery
of the liens and encumbrances. Ms. Uecker is already familiar with the
? The Court should be advised that certain of the Defendants in the subject actions have filed a Separate action
against Peter Lee for fraud related to the Note and Deed of Trust. That is the appropriate action to resolve issues
related to the validity of the Note.
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DEFENDANTS’ REPLY BRIEF IN SUPPORT OF MOTION FOR APPOINTMENT OF REFEREE AND ENTRY
OF INTERLOCUTORY JUDGMENTBERDING & WEIL LLP
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outstanding liens and surrounding issues related to the liens, and the parties have already been
dealing with her as the receiver in these cases.
Plaintiffs actually agree that it would be useful to have Ms. Uecker ascertain and pass
along information regarding the liens and how much is claimed to be owed. (Opposition,
p.12:16-18.) | However, their proposed procedure involves Ms. Uecker submitting any
“substantial disputed issues of fact or law” to the Court, without first making a recommendation
to the Court regarding the dispute. Plaintiffs want “discovery...per the CCP and...subject to the
supervision of the Court.” This process needs to be more streamlined. The parties do not need to
burden the Court with “contested hearings’ and/or “trials” for every conceivable issue that may
arise and they don’t need the costs of unnecessary discovery and litigation.
Ii. CONCLUSION
Again, Defendants have answered and agreed to Plaintiffs’ prayer for partition by sale.
Despite this agreement, Plaintiffs continue to delay and attempt to find ways around their request
for partition. Plaintiffs claimed for partition by sale and now they do not seem to want such sale
now that Defendants agree with them. All Plaintiffs really want is to battle with their siblings
and raise costs and expenses to them and to their Father, who was the source of their prosperity.
The Court should not allow Plaintiffs to continue this wasteful process. Rather, Defendants
request the Court to appoint the Referee, enter an interlocutory judgment, and get these properties
sold as soon as possible to avoid unnecessary costs and litigation expenses and to take advantage
of the favorable real estate market.
Date: November 17, 2014 BERDING & WEHL LLP
mC)
i L. Rottinghaus
A. Moss
tomers for Defendants
SHACUAN SHARON SETO sued herein as
SHACUAN SHARON LEE, PATRICIA W. LEE
a/k/a PATRICIA LUM, and GORDON J. LEE
OAWDOCS 72 1 0\G6\PLD\0062 1300, DOCX,
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SUPPLEMENTAL DECLARATION OF JACOB A MOSS IN SUPPORT OF DEFENDANTS’ OMNIBUS
MOTION FOR APPOINTMENT OF REFEREE AND ENTRY OF INTERLOCUTORY JUDGMENT