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  • IN THE MATTER OF THE KATHRYN C. QVALE MARITAL TRUST DATED 1-31-2006 TRUST (PETITION FOR APPOINTMENT OF SUCCESSOR INDEPENDENT TRUSTEE TO FILL VACANCY) document preview
  • IN THE MATTER OF THE KATHRYN C. QVALE MARITAL TRUST DATED 1-31-2006 TRUST (PETITION FOR APPOINTMENT OF SUCCESSOR INDEPENDENT TRUSTEE TO FILL VACANCY) document preview
  • IN THE MATTER OF THE KATHRYN C. QVALE MARITAL TRUST DATED 1-31-2006 TRUST (PETITION FOR APPOINTMENT OF SUCCESSOR INDEPENDENT TRUSTEE TO FILL VACANCY) document preview
  • IN THE MATTER OF THE KATHRYN C. QVALE MARITAL TRUST DATED 1-31-2006 TRUST (PETITION FOR APPOINTMENT OF SUCCESSOR INDEPENDENT TRUSTEE TO FILL VACANCY) document preview
  • IN THE MATTER OF THE KATHRYN C. QVALE MARITAL TRUST DATED 1-31-2006 TRUST (PETITION FOR APPOINTMENT OF SUCCESSOR INDEPENDENT TRUSTEE TO FILL VACANCY) document preview
  • IN THE MATTER OF THE KATHRYN C. QVALE MARITAL TRUST DATED 1-31-2006 TRUST (PETITION FOR APPOINTMENT OF SUCCESSOR INDEPENDENT TRUSTEE TO FILL VACANCY) document preview
  • IN THE MATTER OF THE KATHRYN C. QVALE MARITAL TRUST DATED 1-31-2006 TRUST (PETITION FOR APPOINTMENT OF SUCCESSOR INDEPENDENT TRUSTEE TO FILL VACANCY) document preview
  • IN THE MATTER OF THE KATHRYN C. QVALE MARITAL TRUST DATED 1-31-2006 TRUST (PETITION FOR APPOINTMENT OF SUCCESSOR INDEPENDENT TRUSTEE TO FILL VACANCY) document preview
						
                                

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28 MANATT, PHELPS & PHILuips, LLP ATFORNDES At Late Sax Fuawcasco MANATT, PHELPS & PHILLIPS, LLP BARRY W. LEE (Bar No. CA 088685) ELECTRONICALLY CHRISTIAN E. BAKER (Bar No. CA 247006) FILED One Embarcadero Center, 30th Floor San Francisco, CA. 94111 Telephone: (415) 291-7400 Facsimile: (415) 291-7474 Attorneys for BRUCE H. QVALE Superior Court of Catifornia, County of Sar Francisco 03/29/2019 Clerk of the Court BY: ALISON AGBAY Deputy Clerk SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN FRANCISCO In the Matter of the Kathryn C. Qvale Exempt Trust, Dated January 31, 2006 Miles Jeffrey Qvale, individually and as trustee, vs. Bruce H. Qvale, Laura Hiura, and DOES |- Case No. PTR-13-297016 [Consolidated with Case Nos. PTR-13-297017 and PTR-13-297143] DECLARATION OF SCOTT B. JOHNSON IN SUPPORT OF OPPOSITION TO MILES JEFFREY QVALE’S MOTION TO ENFORCE SETTLEMENT AGREEMENT Date: March 27, 2019 Time: 2:00 P.M. Div: 204 Judge: Hon. John K. Stewart Date Approved By: Jackie Alameda DECLARATION OF SCOTT B, JOHNSON IN SUPPORT OF OPPOSITION TO MILES JEFFREY QVALE’S MOTION TO ENFORCE SETTLEMENT AGREEMENT2 3 4 5 6 7 8 9 I, Scott B. Johnson declare as follows: L lam an attorney duly licensed to practice law in California, and hold the position of counsel with the law firm of Manatt, Phelps & Phillips, LLP, counsel for Bruce H. Qvale in this action. All facts set forth in this Declaration are based upon my personal knowledge, and, if called upon to testify as to the truth of those facts, [ could and would competently do so. 2. After the parties reached a settlement in this case, | had many discussions with Miles Jeffrey Qvale’s counsel, Peter Muhs, about the implementation of the Settlement Agreement. Those discussions culminated in my December 5, 2018 email to Mr. Muhs. In that email, | raised with Mr. Muhs a number of issues relevant to the appraisals that affected the valuations of the 901 Van Ness Property and the Dublin Property, and suggested a proposal to address those issues. On February 28, 2019, having received no response from Mr. Muhs, I sent him another email following up on my proposal. Mr. Muhs then contacted me by phone to inform me that Jeff would be filing a motion to enforce the Settlement Agreement, A true and correct copy of an email thread that includes both my December 5, 2018 email and my February 28, 2019 email is attached hereto as Exhibit 1. 3. Together with certain of my colleagues at Manatt, Phelps & Phillips, LLP, I have been involved in the leasing of building space located at 945-999 Van Ness Avenue in San Francisco, California (the “999 Van Ness Property”). This building was used as a “comparable improved sale” in the appraisal report for the property located at 901 Van Ness Avenue in San Francisco, California (the “901 Van Ness Property”). That appraisal report identifies the 999 Van Ness Property as having 77,545 square feet of “rentable area.” That number is not accurate. Based on materials provided by leasing brokers and architects, the total square footage of the building at the 999 Van Ness Property is approximately 111,000. This figure includes approximately 84,000 square feet of enclosed rentable area and 27,000 square feet of parking space on the roof of the building. 4, On September 18, 2018, a representative from Bank of the West informed me that the appraisal of the 901 Van Ness Property was acceptable to the bank through February 22, DECLARATION OF SCOTT B. JOHNSON IN SUPPORT OF OPPOSITION TO MILES JEFFREY QVALE’S MOTION TO ENFORCE SETTLEMENT AGREEMENTCoC Oe YN A Hw FF WN Se 2R8 A ESBHK AS 20 21 2019, and that the appraisal for the Dublin property, located at 6015 and 6085 Scarlett Court in Dublin, California, was acceptable to the bank through February 28, 2019. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct, and that this Declaration was executed on this 28th day of March, Sdoit I$. Johnson 2019 at San Francisco, California. 3228414613 2 DECLARATION OF SCOTT B JOHNSON IN SUPPORT OF OPPOSITION TO MILES JEFFREY QVALE’S MOTION TO ENFORCE SETTLEMENT AGREEMENTEXHIBIT 1From: Johnson, Scott Sent: Thursday, February 28, 2019 9:14 AM To: Peter Muhs (PMuhs@cwclaw.com) Subject: Qvale exchange Peter --- | hope all is well, | am following up on my email below. To the best of my knowledge, there has been no response to the proposal. Please let us know Jeff's response. Thank you. Scott Scott 8, Johnson Manatt, Phelps & Phillips, LLP One Embarcadero Center, 30th Floor San Francisco, CA 94114 D (415) 281-7428 F (415) 291-7476 SBJohnson@manatt.com manatt.com 165 OF previous e-niail messages attached to it, may contain confidential infocnvation that is vering itt the hareby notified that any disclosure, copying, ICTLY PROHIBITED. If you have received this transmission in atior, plaase 3 whoul reading thier oF saving them to dist, Thank you, CONFIDENTIALITY NOTICE: This ¢-mait transmission, and any documer tegally privileged. if you ars not the Intended recipient, or a person teagan distribution oF use of any of the information contained in or atlached to this ammnediately notiy us by reply email and destroy the original transmission and it From: Johnson, Scott Sent: Wednesday, December 05, 2018 10:28 AM To: Peter Muhs (PMuhs@cwclaw.com) Subject: Qvale exchange Peter --- | am writing with regard to the 901 Van Ness and Dublin appraisals. As | noted last week, recent developments, and our related analysis of the two appraisals, have led us to conclude that they fail to reflect the current fair market value of the 901 and Dublin properties, as required by the 2015 settlement agreement. Our conclusions are based on the following: *¢ The 901 and Dublin appraisals state that they are to be used for loan underwriting and/or bank credit decisions. This intended use of the appraisals is not what the parties intended or expected; i.e., that the appraisals would be for use in an arms-iength transaction and would determine current fair market value accordingly. Further, we have reason to believe that the appraisers did not follow necessary appraisal guidelines, standards or practices appropriate for an arms-length transaction. In any case, if we had known that the bank would instruct its appraisers to value the 901 and Dublin properties for use in loan underwriting, we would not have agreed to accept appraisals prepared for such a use, « The 2015 settlement agreement provides that the appraisers shall determine the “current fair market value” of each property. The 901 appraisal indicates that it determines market value as-is, as of May 2018, for use in loan underwriting and, similarly, the Dublin appraisal indicates that it determines market value as-is, as of May 2018, for use in foan underwriting. We are now more than six months past the effective dates of the two appraisals. Even if the appraisals had established fair market value for an arms-length transaction, as of May 2018, the values are not current in December 2018. Further, the lender in question (Bank of the West) has indicated that the appraisals are acceptable, for its purposes, through late February 2019; such an extended lifespan for an appraisal supports the conclusion that the lender was not seeking (and the appraisers did not prepare) a current fair market value appraisal, but rather an appraisal that falls within a value range that has a margin of error the lender is willing to tolerate when making credit decisions. + In reviewing the 901 appraisal specifically, it appears to suffer from a number of fundamental defects. For example, the appraiser relied entirely on comparable sales and a majority of the ‘comparable’ transactions involved sales of 1suburban auto dealerships, which differ materially from urban auto dealerships in multiple respects, and for the #1 comparable (899 Van Ness), the stated square footage is incorrect. The appraiser's misguided methodology, and incorrect data points, lead to a valuation conclusion that is not reasonably supportable. e Ina similar vein, we question the accuracy of the Dublin appraisal. Among other things, it improperly disregards the value of the improvements at the end of the lease term, and it appears to use a capitalization rate of 7.2%, which is significantly outside the indicated range of 4.4% to 6.4% described in the appraisal. « Incontrast to the $01 and Dublin appraisals, which are to be used for loan underwriting, the 40 Gold St appraisal states that it is to be used for acquisition, financing, loan classification or asset disposition, The fact that the appraisals were prepared for differing uses indicates that it would be inappropriate to use the three appraisals, side by side, in an integrated transaction. | mentioned last week that, for estate planning purposes, Bruce recently engaged an independent appraisal firm to value the 901 property. As you may know, CBRE valued 901 in 2012, and is familiar with the property. At Bruce's request, CBRE has now valued 901 on a current basis and concluded that in Nov 2018 the property is worth approximately $31 million. The $31 million valuation represents more than a 50% increase in value as compared to CBRE's valuation ($20 million) in 2012. We recognize that different appraisers reach different valuation conclusions, and we are willing to compromise as between the $42m value indicated by BBG and the $31m value indicated by CBRE. We propose that the property be valued at $36m for purposes of the exchange. We do not have an independent appraisal of the Dublin property, but our consultations with valuation professionals indicate that the Dublin property is reasonably valued at an amount well above $14.7m, We propose that the property be valued at $18.225m for purposes of the exchange. The values proposed above ($36m and $18.225m) still result in an equalizing cash payment to Jeff (of approximately $2,000,000), and we are hopeful that Jeff will share our view that the proposed vaiues represent a reasonable compromise under the circumstances. Scott Scott B. Johnson Manatt, Phelps & Phillips, LLP ‘One Embarcadero Center, 30th Floor San Francisco, CA 94174 D (415) 294-7428 F (416) 291-7476 SBNohnson@manatt.com nyanati.com CONFIDENTIALITY NOTICE: This e-mail tran legally privileged. If you are nol the intended 1 distrioution or use of any of tho tatormation imimodiately notify us by reply amail and destray the original transmissi ssion, and any documents, files or previous e-mail messages attached to it, may contain confidential information that is » responsible for delivering it to the intended re ‘you are hereby notified that any disclosure, copying, ission in etrer, please nk youu From: Johnson, Scott Sent: Friday, November 30, 2018 1:27 PM To: Peter Muhs (PMuhs@cwclaw.com) Subject: Qvale exchange Peter --- We are preparing a proposal with regard to the 901 Van Ness and Dublin property values, and expect to send you the proposal next Tuesday or Wednesday. Scott Scott B. Johnson Manatt, Phelps & Phillips, LLP One Embarcadero Center, Wth Floor San Francisco, CA 941711D (415) 291-7428 F (415) 291-7476 SBJohnson@manatt.com manatt.com CONFIDENTIALITY NOTICE: This enail transmission, and any documents, files or previous @-mail messages attached to It, may contain Confidential information that is legaily privileged. If you are not the intended recipient, or a person responsible for delivering it to the intended recipient, you are hereby notified that any disclosure, copying, distribution or Use of any of the information contained i oF aitached to this message is STRICTLY PROHIBITED. If you have received this teansinission In error, please immediately nobly us by raply email and destroy the original transmission and is attachments without reading them or saving them to disk, Thank you.Sam Francisco PROOF OF SERVICE I, Angelica Robles, declare as follows: Tam employed in San Francisco County, San Francisco, California. [am over the age of eighteen years and not a party to this action. My business address is MANATT, PHELPS & PHILLIPS, LLP, One Embarcadero Center, 30th Floor, San Francisco, California 94111. On March 29, 2019, I served the within: DECLARATION OF SCOTT B. JOHNSON IN SUPPORT OF MILES JEFFREY QVALE’S MOTION TO ENFORCE SETTLEMENT AGREEMENT on the interested parties in this action addressed as follows: (BY ELECTRONIC MAIL) By transmitting such document(s) electronically through File&ServeXpress through the electronic mail system to the email addresses set forth above. The file transmission was reported as complete and a copy of the File&ServeXpress receipt page will be maintained with the documents in our office. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration was executed on March 29, 2019, at San Francisco, California. Angelica Robles PROOF OF SERVICE1 SERVICE LIST In the Matter of the Katheryn C. Ovale Trust, dated 1/31/2016, et al. 2 Case No. PTR-13-297016 [Consolidated with Case Nos. PTR-13-297017 and PTR-13-297143] 3 Dominic J. Capisi George Montgomery 4 Andrew Zaabronsky Friedman McCubbin Law Group 5 Matthew P. Matiasevich 425 California Street, 25th Floor Evans, Latham & Campisi San Francisco, CA 94104 6 One Post Street, Ste. 600 Telephone: (415) 433-2300 San Francisco, CA 94104 Email: george@fomlaw.com 7 Telephone: 415-421-0288 Email: deampisi@ele-law.com 8 Email: azabronsky@elc-law.com 9 Email: MMatiasevich@elc-law.com 10 Daniel T. Bernhard Edward A. Kopolowitz Freeland Cooper & Foreman LLP MacInnis, Donner & Koplowitz 11 150 Spear Street Ste 1800 465 California Street Ste 222 San Francisco, CA 94105 San Francisco, CA 94104 12 | Telephone: (415) 541-0200 ‘Telephone: 415-434-2400 13 Email: bernhard@freelandlaw.com Email: eakatt@aol.com 14 Monica Dell’Osso Peter S. Myers Wendel, Rosen, Black & Dean LLP Fox Rothchild LLP 15 1111 Broadway 24" Floor 345 California Street Ste 2200 Oakland, CA 94607 San Francisco CA 94104-2670 16 | Telephone: (510) 834-6600 Telephone: 415-651-1465 17 Email: mdellosso@wendel.com Email: psmyers@foxrothschild.com 18 Peter L. Muhs Cooper White & Cooper 19 201 California Street 17th Floor 20 San Francisco, CA 94111 Telephone: (415) 433-1900 21 Email: pmuhs‘@owclaw.com 22 23 323199250.1 24 25 26 27 28 MANATT, PELs fe 2 HILL P arrati PROOF OF SERVICE.