Preview
1 BUCHALTER E-FILED
A Professional Corporation 6/10/2020 1:51 PM
2 JOHN L. HOSACK (SBN: 42876) Superior Court of California
STEVEN M. SPECTOR (SBN: 51623) County of Fresno
3 WILLIAM M. MILLER (SBN: 216289) By: Louana Peterson, Deputy
1000 Wilshire Boulevard, Suite 1500
4 Los Angeles, CA 90017-1730
Telephone: 213.891.0700
5 Fax: 213.896.0400
E-mail: jhosack@buchalter.com
6
Attorneys for Third Party
7 DCR Mortgage 7 Sub 2, LLC
8 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 IN AND FOR THE COUNTY OF FRESNO
10
11 CITY OF FRESNO, a municipal corporation, CASE NO.: 20CECG01636
PEOPLE OF THE STATE OF CALIFORNIA,
12
Petitioners, LIMITED OPPOSITION OF DCR
13 MORTGAGE 7 SUB 2, LLC TO EX
vs. PARTE APPLICATION FOR ORDER
14 TO ABATE SUBSTANDARD BUILDING,
SPIRIT OF WOMAN OF CALIFORNIA INC.; APPOINTMENT OF RECEIVER AND
15 and DOES 1 THROUGH 50, inclusive, ORDERS PURSUANT TO THE
CALIFORNIA HEALTH AND SAFETY
16 Respondents. CODE
17 Ex Parte Hearing
Date: June 11, 2020
18 Time: 8:30 am
Dept: 402 (Hon. D. Tyler Tharpe)
19
Action filed: June 8, 2020
20
[Declaration of John Hosack, Declaration of
21 David P. Stapleton and Request for Judicial
Notice, filed concurrently herewith.]
22
23
24
25
26
27
28
BUCHALTER
A PROFES SION AL CORPORAT ION 1
LOS ANG ELES
LIMITED OPPOSITION TO EX PARTE APPLICATION
1 I. INTRODUCTION
2 DCR Mortgage 7 Sub 2, LLC (“DCR Mortgage”) holds a lien on the substandard real
3 property and improvements (the “Property”), which are the subject of this action to secure
4 repayment of a debt of more than $2 million. Hence it has a significant economic interest in this
5 action and the Property. DCR Mortgage supports the appointment of a receiver in this matter.
6 However, no matter who the receiver is with regard to the Property, the expense of the
7 receivership will, ultimately, be an expense of DCR. Accordingly, for the reasons expressed
8 hereinafter, DCR Mortgage respectfully requests that the Court appoint the receiver candidate
9 nominated by DCR Mortgage – David Stapleton (“Stapleton”) – because: (1) DCR Mortgage will
10 be the party which pays for the cost of the remediation of the Property (and is willing to do so to
11 the satisfaction of the Petitioners); (2) having DCR Mortgage’s candidate appointed by the Court
12 will, therefore, benefit the Petitioners since there will be no expenditure of time or money by the
13 Petitioners (i.e., public funds) for the remediation of the property; and (3) DCR Mortgage must be
14 able to prove in its currently pending litigation with North American Title over the Property that
15 it took reasonable measures to mitigate its damages.
16 The Petitioners should have no objection to the Court appointing Stapleton as receiver
17 because it provides a no-cost path for the Petitioners to obtain their desired result of remediation.
18 Indeed, Stapleton has vast experience which qualifies him to serve as receiver in this specialized
19 matter. Moreover, if the Court appoints Stapleton as receiver, DCR Mortgage will fund the
20 receivership estate to finance the receivership’s expenses (including remediation). That would
21 allow the Petitioners to avoid the need to use taxpayer money to fund the receivership’s expenses.
22 Petitioners and DCR Mortgage both have an interest in the abatement of the conditions at
23 the Property, but only DCR Mortgage has a true economic interest in the Property. The
24 appointment of Stapleton as receiver protects both sets of interests.
25 II. STATEMENT OF FACTS
26 DCR Mortgage is the current owner of a loan (the “Loan”) which State Bank of India
27 (California) (the “Bank”) made to Spirit of Woman of California, Inc. (the “Borrower”). The
28 Loan is secured by a Deed of Trust (the “Deed of Trust”) on the Property commonly known as
BUCHALTER
A PROFES SION AL CORPORAT ION
LOS ANG ELES
2
LIMITED OPPOSITION TO EX PARTE APPLICATION
1 327 W. Belmont Avenue, Fresno, California 93728 and the insured under the “Loan Policy of
2 Title Insurance” which was originally issued by North American Title Insurance Company and
3 North American Title Company (collectively, the “Title Company”) to the Bank (the “Title
4 Policy”). Events of default under the Loan have occurred and are occurring for more than a year,
5 including, but not limited to the Borrower’s failure to pay the amount due upon the Loan’s
6 maturity.
7 A dispute arose between DCR Mortgage and the Title Company over the priority of the
8 Deed of Trust with the Title Company that insured the priority of the same and a claim was made
9 under the Title Policy. That dispute is the subject of an action entitled DCR Mortgage 7 Sub 2,
10 LLC v. North American Title Insurance Company, etc. and currently pending before the Superior
11 Court of California, County of Los Angeles as case number 20STCV11554 (the “Title Insurance
12 Litigation”). The claims asserted by DCR Mortgage in the Title Insurance Litigation are detailed
13 in the Complaint attached as Exhibit A to the concurrently filed Declaration of John Hosack
14 (“Hosack Declaration”) and referenced in the concurrently filed Request for Judicial Notice.
15 As a result of the Title Insurance Litigation, and after DCR Mortgage requested that the
16 Title Company respond to the City of Fresno’s notice regarding the condition of the Property,
17 among other things, the Title Insurance Company demanded that DCR Mortgage mitigate its
18 damages respecting its interest in the Property. [Hosack Decl., ¶4, Exh. B.] In order to protect its
19 interest in the Property, DCR Mortgage concluded that it was required to submit the instant
20 limited opposition to Petitioners’ ex parte application in an effort to achieve mitigation. 1
21 Moreover, after learning of Petitioners’ ex parte application, DCR Mortgage’s counsel
22 communicated with Petitioners’ counsel about the issues raised herein. As of the signing of this
23 opposition, however, Petitioners counsel had not yet provided DCR Mortgage’s counsel with a
24 substantive response. 2
25 In this regard, Stapleton has vast experience which qualifies him to serve as receiver in
26 1
DCR Mortgage does so while reserving all of its rights and remedies, including, but not limited to its rights and
remedies in the Title Insurance Litigation.
27 2
DCR Mortgage notes that neither it, nor the Department of Housing and Urban Development (which purports to
hold a lien on the Property) were named as parties in the instant action despite their status as indispensable parties
28 due to their respective interests in the Property.
BUCHALTER
A PROFES SION AL CORPORAT ION
LOS ANG ELES
3
LIMITED OPPOSITION TO EX PARTE APPLICATION
1 this specialized matter and, further, in order that the Petitioners might understand Stapleton’s
2 background and experience and those who would assist him, Mr. Stapleton sent Petitioners,
3 through Petitioners’ counsel, a letter describing his qualifications and inviting Petitioners to
4 communicate with him and ask any questions which they might have about his ability to serve as
5 receiver in this matter. As of the signing of his declaration in support of this opposition, Mr.
6 Stapleton had not received a response from Petitioners’ counsel. [Declaration of David P.
7 Stapleton (“Stapleton Declaration”), ¶8, Exh. A.]
8 III. ARGUMENT
9 A. The Court should appoint Stapleton as receiver because it is the most cost-
efficient approach and Stapleton is well qualified for the role.
10
If the Court appoints Stapleton as receiver in this matter, DCR Mortgage will lend funds
11
to the receivership estate to finance the remediation of the Property such that the Property’s
12
condition meets Petitioners’ satisfaction. As a result, Petitioners would not need to advance
13
taxpayer funds to finance the receivership’s expenses (essentially, the remediation).
14
It is clear that Stapleton is well-qualified to act as receiver in this specialized matter.
15
Stapleton has served as a court-appointed fiduciary leading the management and disposition of
16
assets throughout the Central Valley of California and Northern California, including but not
17
limited to Fresno, Modesto, Porterville, Visalia, Bakersfield, Tehachapi, Grass Valley and
18
Sacramento, among other areas. [Stapleton Decl., ¶2, Exh. A.] As an agent of the court in the
19
Central Valley of California, Stapleton has led the management and disposition of over 100
20
properties, consisting of vacant lots, industrial properties, office buildings, hotels, large future
21
development sites, farms, and thousands of acres of agricultural land. [Id.] In addition to real
22
property, Stapleton has managed operating and closed-down motels subject to several health and
23
life safety code violations. [Stapleton Decl., ¶3, Exh. A.] Stapleton specializes in securing and
24
safeguarding real property assets, managing the completion of abatement, remediation,
25
demolition, and construction of these assets, as required. [Id.] Stapleton has worked in
26
conjunction with cities, municipalities, regulatory agencies, lenders and other stakeholders on
27
various matters to achieve the best resolution for all parties involved. [Stapleton Decl., ¶4, Exh.
28
BUCHALTER
A PROFES SION AL CORPORAT ION
LOS ANG ELES
4
LIMITED OPPOSITION TO EX PARTE APPLICATION
1 A.] Stapleton has experience adhering to local rules and regulations to resolve and remedy health,
2 life safety and other regulatory issues at hand. [Id.] Thus, Stapleton is well qualified to serve as
3 receiver in this action.
4 B. DCR Mortgage’s nominee should be appointed as receiver because DCR
Mortgage, not Petitioners have an economic interest in the Property.
5
To preserve and protect its title insurance claim (of more than $2 million) from defenses
6
based on the failure to mitigate damages in connection with the pending Title Insurance
7
Litigation, DCR Mortgage believes it must take its own actions respecting the Property and the
8
appointment of a receiver as opposed to merely allowing the Petitioners to take virtually the same
9
actions. Thus, DCR Mortgage believes this Court should conclude that this is not merely the
10
Petitioners and DCR Mortgage disagreeing over whom this Court should appoint as
11
receiver. Instead, DCR Mortgage has a vested economic interest in its request for appointment of
12
a receiver as it is then able to demonstrate in the Title Insurance Litigation that it undertook to
13
mitigate the damages associated with the remediation of the Property. Respectfully, the
14
Petitioners have no similar interest in connection with the appointment of a receiver. The
15
Petitioners’ legitimate concerns are resolved if a receiver is appointed – including a receiver
16
nominated by DCR Mortgage.
17
IV. CONCLUSION
18
For all of the foregoing reasons, DCR Mortgage respectfully requests that the Court
19
appoint Stapleton as the receiver in this matter.
20
21 DATED: June 10, 2020 BUCHALTER
A Professional Corporation
22
23 /s/ John L. Hosack
By:
24 JOHN L. HOSACK
STEVEN M. SPECTOR
25 WILLIAM M. MILLER
Attorneys for Third Party
26 DCR Mortgage 7 Sub 2, LLC
27
28
BUCHALTER
A PROFES SION AL CORPORAT ION
LOS ANG ELES
5
LIMITED OPPOSITION TO EX PARTE APPLICATION
Preview
1 BUCHALTER E-FILED A Professional Corporation 6/10/2020 1:51 PM 2 JOHN L. HOSACK (SBN: 42876) Superior Court of California STEVEN M. SPECTOR (SBN: 51623) County of Fresno 3 WILLIAM M. MILLER (SBN: 216289) By: Louana Peterson, Deputy 1000 Wilshire Boulevard, Suite 1500 4 Los Angeles, CA 90017-1730 Telephone: 213.891.0700 5 Fax: 213.896.0400 E-mail: jhosack@buchalter.com 6 Attorneys for Third Party 7 DCR Mortgage 7 Sub 2, LLC 8 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 IN AND FOR THE COUNTY OF FRESNO 10 11 CITY OF FRESNO, a municipal corporation, CASE NO.: 20CECG01636 PEOPLE OF THE STATE OF CALIFORNIA, 12 Petitioners, LIMITED OPPOSITION OF DCR 13 MORTGAGE 7 SUB 2, LLC TO EX vs. PARTE APPLICATION FOR ORDER 14 TO ABATE SUBSTANDARD BUILDING, SPIRIT OF WOMAN OF CALIFORNIA INC.; APPOINTMENT OF RECEIVER AND 15 and DOES 1 THROUGH 50, inclusive, ORDERS PURSUANT TO THE CALIFORNIA HEALTH AND SAFETY 16 Respondents. CODE 17 Ex Parte Hearing Date: June 11, 2020 18 Time: 8:30 am Dept: 402 (Hon. D. Tyler Tharpe) 19 Action filed: June 8, 2020 20 [Declaration of John Hosack, Declaration of 21 David P. Stapleton and Request for Judicial Notice, filed concurrently herewith.] 22 23 24 25 26 27 28 BUCHALTER A PROFES SION AL CORPORAT ION 1 LOS ANG ELES LIMITED OPPOSITION TO EX PARTE APPLICATION 1 I. INTRODUCTION 2 DCR Mortgage 7 Sub 2, LLC (“DCR Mortgage”) holds a lien on the substandard real 3 property and improvements (the “Property”), which are the subject of this action to secure 4 repayment of a debt of more than $2 million. Hence it has a significant economic interest in this 5 action and the Property. DCR Mortgage supports the appointment of a receiver in this matter. 6 However, no matter who the receiver is with regard to the Property, the expense of the 7 receivership will, ultimately, be an expense of DCR. Accordingly, for the reasons expressed 8 hereinafter, DCR Mortgage respectfully requests that the Court appoint the receiver candidate 9 nominated by DCR Mortgage – David Stapleton (“Stapleton”) – because: (1) DCR Mortgage will 10 be the party which pays for the cost of the remediation of the Property (and is willing to do so to 11 the satisfaction of the Petitioners); (2) having DCR Mortgage’s candidate appointed by the Court 12 will, therefore, benefit the Petitioners since there will be no expenditure of time or money by the 13 Petitioners (i.e., public funds) for the remediation of the property; and (3) DCR Mortgage must be 14 able to prove in its currently pending litigation with North American Title over the Property that 15 it took reasonable measures to mitigate its damages. 16 The Petitioners should have no objection to the Court appointing Stapleton as receiver 17 because it provides a no-cost path for the Petitioners to obtain their desired result of remediation. 18 Indeed, Stapleton has vast experience which qualifies him to serve as receiver in this specialized 19 matter. Moreover, if the Court appoints Stapleton as receiver, DCR Mortgage will fund the 20 receivership estate to finance the receivership’s expenses (including remediation). That would 21 allow the Petitioners to avoid the need to use taxpayer money to fund the receivership’s expenses. 22 Petitioners and DCR Mortgage both have an interest in the abatement of the conditions at 23 the Property, but only DCR Mortgage has a true economic interest in the Property. The 24 appointment of Stapleton as receiver protects both sets of interests. 25 II. STATEMENT OF FACTS 26 DCR Mortgage is the current owner of a loan (the “Loan”) which State Bank of India 27 (California) (the “Bank”) made to Spirit of Woman of California, Inc. (the “Borrower”). The 28 Loan is secured by a Deed of Trust (the “Deed of Trust”) on the Property commonly known as BUCHALTER A PROFES SION AL CORPORAT ION LOS ANG ELES 2 LIMITED OPPOSITION TO EX PARTE APPLICATION 1 327 W. Belmont Avenue, Fresno, California 93728 and the insured under the “Loan Policy of 2 Title Insurance” which was originally issued by North American Title Insurance Company and 3 North American Title Company (collectively, the “Title Company”) to the Bank (the “Title 4 Policy”). Events of default under the Loan have occurred and are occurring for more than a year, 5 including, but not limited to the Borrower’s failure to pay the amount due upon the Loan’s 6 maturity. 7 A dispute arose between DCR Mortgage and the Title Company over the priority of the 8 Deed of Trust with the Title Company that insured the priority of the same and a claim was made 9 under the Title Policy. That dispute is the subject of an action entitled DCR Mortgage 7 Sub 2, 10 LLC v. North American Title Insurance Company, etc. and currently pending before the Superior 11 Court of California, County of Los Angeles as case number 20STCV11554 (the “Title Insurance 12 Litigation”). The claims asserted by DCR Mortgage in the Title Insurance Litigation are detailed 13 in the Complaint attached as Exhibit A to the concurrently filed Declaration of John Hosack 14 (“Hosack Declaration”) and referenced in the concurrently filed Request for Judicial Notice. 15 As a result of the Title Insurance Litigation, and after DCR Mortgage requested that the 16 Title Company respond to the City of Fresno’s notice regarding the condition of the Property, 17 among other things, the Title Insurance Company demanded that DCR Mortgage mitigate its 18 damages respecting its interest in the Property. [Hosack Decl., ¶4, Exh. B.] In order to protect its 19 interest in the Property, DCR Mortgage concluded that it was required to submit the instant 20 limited opposition to Petitioners’ ex parte application in an effort to achieve mitigation. 1 21 Moreover, after learning of Petitioners’ ex parte application, DCR Mortgage’s counsel 22 communicated with Petitioners’ counsel about the issues raised herein. As of the signing of this 23 opposition, however, Petitioners counsel had not yet provided DCR Mortgage’s counsel with a 24 substantive response. 2 25 In this regard, Stapleton has vast experience which qualifies him to serve as receiver in 26 1 DCR Mortgage does so while reserving all of its rights and remedies, including, but not limited to its rights and remedies in the Title Insurance Litigation. 27 2 DCR Mortgage notes that neither it, nor the Department of Housing and Urban Development (which purports to hold a lien on the Property) were named as parties in the instant action despite their status as indispensable parties 28 due to their respective interests in the Property. BUCHALTER A PROFES SION AL CORPORAT ION LOS ANG ELES 3 LIMITED OPPOSITION TO EX PARTE APPLICATION 1 this specialized matter and, further, in order that the Petitioners might understand Stapleton’s 2 background and experience and those who would assist him, Mr. Stapleton sent Petitioners, 3 through Petitioners’ counsel, a letter describing his qualifications and inviting Petitioners to 4 communicate with him and ask any questions which they might have about his ability to serve as 5 receiver in this matter. As of the signing of his declaration in support of this opposition, Mr. 6 Stapleton had not received a response from Petitioners’ counsel. [Declaration of David P. 7 Stapleton (“Stapleton Declaration”), ¶8, Exh. A.] 8 III. ARGUMENT 9 A. The Court should appoint Stapleton as receiver because it is the most cost- efficient approach and Stapleton is well qualified for the role. 10 If the Court appoints Stapleton as receiver in this matter, DCR Mortgage will lend funds 11 to the receivership estate to finance the remediation of the Property such that the Property’s 12 condition meets Petitioners’ satisfaction. As a result, Petitioners would not need to advance 13 taxpayer funds to finance the receivership’s expenses (essentially, the remediation). 14 It is clear that Stapleton is well-qualified to act as receiver in this specialized matter. 15 Stapleton has served as a court-appointed fiduciary leading the management and disposition of 16 assets throughout the Central Valley of California and Northern California, including but not 17 limited to Fresno, Modesto, Porterville, Visalia, Bakersfield, Tehachapi, Grass Valley and 18 Sacramento, among other areas. [Stapleton Decl., ¶2, Exh. A.] As an agent of the court in the 19 Central Valley of California, Stapleton has led the management and disposition of over 100 20 properties, consisting of vacant lots, industrial properties, office buildings, hotels, large future 21 development sites, farms, and thousands of acres of agricultural land. [Id.] In addition to real 22 property, Stapleton has managed operating and closed-down motels subject to several health and 23 life safety code violations. [Stapleton Decl., ¶3, Exh. A.] Stapleton specializes in securing and 24 safeguarding real property assets, managing the completion of abatement, remediation, 25 demolition, and construction of these assets, as required. [Id.] Stapleton has worked in 26 conjunction with cities, municipalities, regulatory agencies, lenders and other stakeholders on 27 various matters to achieve the best resolution for all parties involved. [Stapleton Decl., ¶4, Exh. 28 BUCHALTER A PROFES SION AL CORPORAT ION LOS ANG ELES 4 LIMITED OPPOSITION TO EX PARTE APPLICATION 1 A.] Stapleton has experience adhering to local rules and regulations to resolve and remedy health, 2 life safety and other regulatory issues at hand. [Id.] Thus, Stapleton is well qualified to serve as 3 receiver in this action. 4 B. DCR Mortgage’s nominee should be appointed as receiver because DCR Mortgage, not Petitioners have an economic interest in the Property. 5 To preserve and protect its title insurance claim (of more than $2 million) from defenses 6 based on the failure to mitigate damages in connection with the pending Title Insurance 7 Litigation, DCR Mortgage believes it must take its own actions respecting the Property and the 8 appointment of a receiver as opposed to merely allowing the Petitioners to take virtually the same 9 actions. Thus, DCR Mortgage believes this Court should conclude that this is not merely the 10 Petitioners and DCR Mortgage disagreeing over whom this Court should appoint as 11 receiver. Instead, DCR Mortgage has a vested economic interest in its request for appointment of 12 a receiver as it is then able to demonstrate in the Title Insurance Litigation that it undertook to 13 mitigate the damages associated with the remediation of the Property. Respectfully, the 14 Petitioners have no similar interest in connection with the appointment of a receiver. The 15 Petitioners’ legitimate concerns are resolved if a receiver is appointed – including a receiver 16 nominated by DCR Mortgage. 17 IV. CONCLUSION 18 For all of the foregoing reasons, DCR Mortgage respectfully requests that the Court 19 appoint Stapleton as the receiver in this matter. 20 21 DATED: June 10, 2020 BUCHALTER A Professional Corporation 22 23 /s/ John L. Hosack By: 24 JOHN L. HOSACK STEVEN M. SPECTOR 25 WILLIAM M. MILLER Attorneys for Third Party 26 DCR Mortgage 7 Sub 2, LLC 27 28 BUCHALTER A PROFES SION AL CORPORAT ION LOS ANG ELES 5 LIMITED OPPOSITION TO EX PARTE APPLICATION