Preview
Superior Court
of Califomia
Sara M. Knowles (SBN 216139)
County
of Butte
LELAND, MORRISSEY & KNOWLES tip
1660 Humboldt Road, Suite 6
Chico, CA 95928 10/15/2021
E
Telephone: (530) 342-4500
D
»
ial
Facsimile: (530) 345-6836
Deputy
Attorneys for John Denton, Conservator of the Estate of Electronically FILED
Edward F. Niderost, and as Successor Trustee of the Edward
F. Niderost Revocable Living Trust Dated November 8, 1998
SUPERIOR COURT OF CALIFORNIA,
COUNTY OF BUTTE
10
WAYNE A. COOK, TRUSTEE OF THE CASE NO. 20CV00905
11 WAYNE A. COOK 1998 FAMILY TRUST
DATED 12/29/98, POST TRIAL BRIEF
12
Plaintiff,
13
Vv.
14
EDWARD F. NIDEROST, INDIVIDUALLY
15 AND AS TRUSTEE OF THE EDWARD F. Assigned to: Judge Tamara Mosbarger
NIDEROST REVOCABLE LIVING TRUST Trial Dates: April 5, 6, 7, 8, May 18, 19, June
16 DATED NOVEMBER 8, 1998, DOES 1 10, August 26, September 16, 2021
THROUGH 10,
17
Defendants.
18
EDWARD F. NIDEROST, INDIVIDUALLY
19 AND AS TRUSTEE OF THE EDWARD F.
20 NIDEROST REVOCABLE LIVING TRUST
DATED NOVEMBER 8, 1998,
21
Cross-Complainant,
22 Vv.
23 WAYNE A. COOK, INDIVIDUALLY AND
AS TRUSTEE OF THE WAYNE A. COOK
1998 FAMILY TRUST DATED 12/29/98;
LAWRENCE PATTERSON; GENE
25 CULLEY, MID VALLEY TITLE AND
ESCROW COMPANY and ROES 1 through
26
25, inclusive,
27 Cross-Defendants.
28
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I INTRODUCTION
Edward F, Niderost (“Mr. Niderost”), both individually and asa trustee of the Edward F.
Niderost Revocable Living Trust (the “Trust”) dated November 8, 1998 is a defendant and cross-
complainant in this matter. Mr. Niderost tuned 83 in May of 2020. Mr. Niderost is married to
Yolanda Niderost (“Mrs. Niderost”). From December 2019 until May of 2020, Mrs. Niderost was
in her country of origin, Costa Rica, and unable to return to the United States due to COVID-19
travel bans. Mrs. Niderost speaks English as a second language. Mr. Niderost was living alone
from December 2019 through April of 2020 and suffers from an unknown cognitive disorder or
condition and is incapable of managing his own affairs and assets. Mr. Niderost, during the times
10 referenced at trial, was and is vulnerable to being taken advantage of.
11 John Denton (“Mr. Denton”) is the conservator of the estate of Edward F. Niderost, and
12 the successor trustee of the Trust pursuant to Butte County Case Number 20PR00122. He was
13 appointed as the conservator of the estate of Mr. Niderost on April 24, 2020 and became successor
14 trustee of the Trust pursuant to a court order dated June 4, 2020.
15 Wayne A. Cook, (Mr. Cook) Trustee of the Wayne A. Cook 1998 Family Trust dated
16 12/29/98 is the plaintiff in this matter. Mr. Cook is also a cross-defendant in this matter, as an
17 individual. The Wayne A. Cook 1998 Family Trust was the owner of the real property known as
18 2185 Esplanade, Chico, CA (Butte County APN 006-120-003-000), which is known as the “Miller
19 Mansion”. Mr. Cook is a sophisticated real estate developer and investor. By and through his trust
20 and the entities controlled by him, he owns several residential and commercial structures, including
21 several properties on the National Register of Historic Places in the South Campus area known as
22 the “Language Houses,” college rentals and the Hotel Diamond located in Chico, California.
23 Eugene (aka Gene) Culley (“Mr. Culley”) is a cross-defendant in this matter. Mr. Culley is
24 an individual who befriended Mr. Niderost during Mrs. Niderost’s absence and was present during
25 the times in question regarding the purchase of the Miller Mansion. Up to approximately January
26 of 2020, Mr. Niderost did not have a relationship with Mr. Culley. Mr. Culley, on his own accord,
27 started providing “caretaking” services to Mr. Niderost and learned the details of Mr. Niderost’s
28 finances during Mrs. Niderost’s absence.
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On February 28, 2020 Mr. Niderost purchased the Miller Mansion for $1,500,000. Mr.
Niderost put $332,000 down, and two notes were generated to pay for the difference in a financing
plan that was created, instituted and developed by Mr. Cook. As a result, Mr. Niderost owed
Matthew Fine the sum of $500,000 and Mr. Cook the sum of $674,062.39 as evidenced by two
promissory notes and two deeds of trust. Sometime after the close of escrow, Mr. Cook purchased
Dr. Fine’s first deed of trust and note and then commenced with filing Notices of Default within
five days of the first missed payment. It was the very first payment owed on both Notes.
I. PROCEDURAL HISTORY
This litigation was commenced on April 22, 2020 by Mr. Cook, as trustee, against Mr.
10
Niderost, individually and as trustee of the Edward F. Niderost Revocable Living Trust. Mr.
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Cook’s action involved a single cause of action for a judicial foreclosure on a deed of trust which
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was generated in favor of Dr. Matthew Fine, and through Mr. Cook’s actions. This deed of trust
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was purchased by Mr. Cook.
14
Mr. Niderost cross-complained against Mr. Cook for elder abuse and cancellation. Mr.
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Niderost also brought claims against Mr. Culley for elder abuse, fraud, breach of fiduciary and
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unconscionability.
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This matter was tried over nine days with the following non-party witnesses giving
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testimony: Yolanda Niderost, Michael McCready, Bill Chance, John Denton, Mary Thompson,
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Greg Scott, Charlene Durkin, Scott Hamm, and Theresa Campbell.
20
21
TL. FACTS
22 Mr. Cook purchased the Miller Mansion on February 8, 2019 for $825,000. He listed the
23 property for sale as a single family residence for $1,550,000 on July 15, 2019 and the property sat
for approximately seven months with no offers and no price reductions until Mr. Niderost, aided
25 and encouraged by Mr. Culley (his assistant/caregiver and fiduciary), showed interest. The
26 property was listed by Bill Chance, a real estate agent and broker. Mr. Chance had been the agent
27 and broker for Mr. Cook and for the prior owner, the Colter Estate, when Mr. Cook purchased the
28 property in 2019. Mr. Chance was also the broker for both Mr. Niderost and Mr. Cook as a dual
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agent with respect to this transaction.
a. TERMS OF THE AGREEMENT
Mr. Chance testified that he was not involved in any of the negotiations regarding the
purchase details of the Miller Mansion. He specified that the deal points ‘had been basically agreed
to” prior to his involvement. In addition, Mr. Chance testified that he was not involved in any of
the discussions or arrangement of the loans. This was confirmed by the testimony of Mr. Cook.
The parties utilized a Residential Purchase Agreement (“Agreement”) (admitted into evidence as
Exhibit 2), despite the fact that the Miller Mansion is zoned as community commercial. In
addition, a box was checked that Mr. Niderost intended to live in the Miller Mansion. Mr. Chance
10 testified that he prepared the agreement but he didn’t know what the basis was for the $1,000,000
11 initial deposit. The terms of the seller financing were relayed to Chance by Wayne Cook (pg 43).
12 Chance testified that residential use is a permitted use for a community commercial zoning so long
13 “as it hasn’t stopped being that for a period of one year. . .” Wayne Cook testified that no one had
14 lived in the property for at least one year prior it being sold to Niderost. On the TDS (Exhibit 7)
15 page 2, section ii(C)10 “Any zoning violations, nonconforming uses, violations of “setback
16 requirements” — and the answer was “No.” This document was signed by Cook and Chance on
17 February 15, 2020. Mr. Niderost signed it on February 24, 2020.
18 Initially, the transaction was set up that Niderost would submit a $1,000,000 ($50,000
19 deposit and $950,000 down payment) down payment and the remaining $500,000 would be paid
20 through a note and deed of trust carried by the owner, Mr. Cook. Subsequently, Mr. Niderost was
21 unable to come up with the $1,000,000 down payment and the terms of the transaction were
22 changed. Mr. Chance only became aware of this by a telephone call from Wayne Cook. Asa
23 result a second seller financing addendum was prepared by Chance and sent over to Mary
24 Thompson at Mid Valley Title and Escrow Company without any discussion with Mr. Niderost.
25 Chance did not prepare the promissory note, and he did not prepare the deed of trust. He had no
26 dealings with the negotiation regarding the loans that would be owed to Dr. Fine and Mr. Cook and
27 that were necessary to close the transaction. He testified that he did not go over the second seller
28 financing addendum with Mr. Niderost before it was sent to the title company because it was a last
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minute change. Mr. Chance claims that he was not aware that Mr. Niderost did not have the
necessary funds to come up with the one million dollar deposit until after escrow closed. He
testified that he prepared the seller financing addendum but he did not know what the cause was
for that document. The second seller financing addendum did not mention or refer to Dr. Fine.
When Chance was asked who told him the terms of the seller financing at the first meeting at Mr.
Cook’s office, he replied “Probably Wayne.”
Chance did not tell Niderost, his client, to whom he owed a fiduciary duty, that when the
Miller Mansion was listed the first time in 2018, that it was listed for $1,600,000 and that an offer
came in for $1,050,000. Mr. Chance testified that prior to writing up the sales contract between
10 Mr. Cook and Mr. Niderost he had never met Mr. Niderost, and had not had any conversations
11 with him. His first meeting with Mr. Niderost was in Mr. Cook’s office where the details of the
12 transaction were told to him. Mr. Chance did not have any conversations with Mr. Niderost about
13 how he was going to pay for the Miller Mansion. Mr. Chance took no steps to confirm that Mr.
14 Niderost had access to those funds, despite the fact that the showing instructions for the Miller
15 Mansion specified that it be shown only to “qualified buyers”. Mr. Chance testified that the deal
16 points were told to him by “probably Wayne.” There was no discussion, with Mr. Chance present,
17 about the fact that the Agreement specified a one day inspection period and Chance, Mr. Cook’s
18 agent on the Miller Mansion for now the second time, never discussed the pitfalls of having a one
19 day inspection period with Mr. Niderost. Chance never discussed the $50,000 nonrefundable
20 down payment, and he testified that he never met privately with Mr. Niderost. He explained that
21 he met Mr. Niderost, his client, to whom he owed a fiduciary duty, three times. Once was to get
22 the terms with Mr. Cook, Eugene Culley and others present in a meeting that took less than two
23 hours. The second meeting also occurred at Mr. Cook’s office and the purpose was to execute the
Agreement. He met with him a final time, at Mr. Niderost’s home to sign all the required
25 disclosure statements. He did not discuss with Mr. Niderost the terms of the Agreement that
26 provided for no appraisal. Chance also said that he didn’t even have Niderost’s phone number.
27 Mr. Chance had previously acted as a broker for Mr. Cook as an agent for Mr. Cook when
28 he purchased the Miller Mansion in 2018. He also assisted Cook when he purchased the Garden
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DEFER ANT ANT CDACE CAMDT ATMANTIC BACT TDIAT RDTEE
Villa complex in 2017 (which was owned by the same family that had owned the Miller Mansion).
The Seller property questionnaire (Exhibit 6) page 1 asks section VA10 “Material facts or
defects affecting the property upon otherwise disclosed to the buyer” The answer was no.
The Agreement specified that obtaining an appraisal would not be a condition of the sale,
there were no contingencies, there was a one day inspection period, and a fifty thousand dollar
nonrefundable deposit. Mr. Chance represented both parties, the parties were together when the
terms of the agreement were relayed to Mr. Chance, and the parties signed the agreement while the
other was present. There was no inquiry by Mr. Chance as to the source of funding for the
purchase price of the property, the disclosures were taken by Mr. Chance to Mr. Niderost’s home
10 and Mr. Niderost was directed to sign them without being given any chance to review and digest
1 them. Interestingly, Chance testified that Mr. Niderost never specifically asked him (Mr. Chance)
12 to be his broker. This fact is consistent with Mr. Niderost’s testimony.
13 Theresa Kym Campbell, a licensed real estate broker with thirty years of experience, was
14 designated as an expert by this Court in residential real estate transactions in Chico, California and
15 the regarding California Association of Realtor forms in accompanying those transactions. Ms.
16 Campbell testified that a one day inspection period was not a normal term, nor was it the standard
17 in the industry. She indicated that the normal time period for an inspection period is seventeen
18 days. The purpose of this is to give a buyer adequate time to check everything that they want to
19 check about the physical part of property. In addition, it often takes inspectors a week to get out to
20 a property to do any inspections. Ms. Campbell testified that a fifty thousand dollar nonrefundable
21 deposit was not a reasonable term, particularly on a property that sat for sale for two hundred days,
22 with a full price offer. She clarified that this was not a standard term in the industry for sales in the
23 Chico area and based on her expert opinion. She further testified that if she was representing a
24 buyer and seller that she would not meet with them together. She also advised that a real estate
25 broker should inquire with a buyer as to the source of funding for the purchase of a property. She
26 noted that she would, contrary to what occurred in this transaction, give a buyer an opportunity to
27 review any disclosures (typically seventeen days). She further advised that she would not write up
28 a real estate purchase agreement and have both parties sign at the same time because it is important
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to avoid pressure by either and to give each party the opportunity to freely ask questions Ms.
Campbell remarked that the failure to require an appraisal was not a reasonable term as it would set
“a buyer up for possible failure”.
Ms. Campbell also testified that she listed the Miller Mansion for Mr. Niderost and that of
two offers that were in writing that each buyer was unable to obtain financing.
Dennis Gregory Scott is Mr. Cook’s son-in-law. He testified on behalf of Mr. Cook. The
Court admitted Exhibits 20 and 21, two profit and loss statements from AAA Properties, for the
Miller Mansion for presumably establishing the amount of funds that Mr. Cook had invested in the
Miller Mansion. AAA Properties is a commercial and residential real estate entity that manages
10 rentals, college rentals and commercial rentals. AAA is an entity that is owned and managed by
11 Mr. Cook. Mr. Scott testified that certain entries were included in error (such as auto insurance)
12 and that other payments were not verified. He further testified that no one was living in the Miller
13 Mansion at the time of the renovations. Mr. Scott also could not recall the purpose of an entry for
14 $5,681.16. Mr. Scott could not explain why the insurance for one year (2019) was $1,411 and for a
15 period of two and a half months (January — February of 2020) was $5,729. He admitted that he did
16 not inspect each and every back up material for these entries. As to this business records counsel
17 for Mr. Cook admitted that “there was cross-examination that one or two items may not be
18 believable”.
19 Evidencing Mr. Niderost’s general confusion, he testified in his deposition that at the time
20 of the Miller Mansion transaction he was 82 years old and that at one time he had up to seventy
21 properties in Sacramento. Mr. Niderost was unable to accurately recite the terms of the transaction.
22 He was, throughout his testimony, vulnerable to suggestion. Throughout Mr. Niderost’s testimony
23 he was unresponsive to questions and unable to answer the question posed to him. This testimony
24 was controverted later by John Denton who advised that Mr. Niderost never owned 70 properties.
25 Contrary to the testimony of Mr. Cook, Mr. Culley and Mr. Chance, Mr. Nidreost stated that he
26 had signed the Agreement at his house. Mr. Niderost testified that over the years that he had
27 conducted many transactions, purchasing homes and selling them as well as providing money for
28 private loans. At his deposition Mr. Niderost also testified that Mr. Culley and Larry Patterson
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TEEENTANT ANT CDACC AMDT AINANTIC DACT TDTAT BDIEE
viewed the Miller Mansion together. Testimony at trial from Mr. Culley refuted this claim by Mr.
Niderost as being untrue. Mr. Niderost also claimed that his wife came to the Miller Mansion and
viewed the property before close of escrow. Later testimony from Yolanda Niderost provided that
this was false as she was stuck in Costa Rica until May 2020 due to the travel ban as a result of
COVID-19. Mrs. Niderost did not view the Miller Mansion until after escrow had closed. Mr.
Niderost testified in his deposition that he was comfortable making an offer for the Miller Mansion
for $1,500,000 at the time, when Mr. Culley was present, but later he realized after he signed the
contract that it was a big mistake. At trial, Mr. Niderost’s testimony was unclear and his
recollection was confused. Mr. Niderost specified that after he signed the Agreement to buy the
10 Miller Mansion that he wasn’t ‘qualified’. It is important to note that Mr. Niderost merely
11 responded yes to any questions by counsel for Mr. Cook.
12 Mr. Niderost testified that he did not own the Miller Mansion, and that it was owned by
13 Wayne Cook. He testified that Eugene Culley “talked him” into buying the Miller Mansion.
14 Specifically he stated that Mr. Culley thought it would be a good idea to have ‘wedding parties and
15 stuff like that’. Mr. Niderost remarked that he was not qualified to buy the Miller Mansion and
16 that he did not have the income to support the payments on the property. Mr. Culley, who
17 admitted that he was Mr. Niderost’s care-taker and fiduciary, admitted that he had access to Mr.
18 Niderost’s financial documents. Mr. Niderost testified that there was a box on the real estate
19 purchase agreement that the broker forgot to check. He was unable to locate that box. Mr.
20 Niderost further testified that he came to find out the Miller Mansion was for sale by Mr. Culley.
21 He testified that he thought he was buying the Miller Mansion for $1,000,000 but that it turned out
22 to be $1,500,000. He testified that he didn’t want to buy the Miller mansion at all. He denied that
23 he ever told Bill Chance that he wanted to buy the Miller Mansion for one and half million dollars.
24 His response was “No Way. He’s Wayne Cook’s realtor. Never met the man before. In fact, I
25 don’t even remember his name.” Mr. Niderost could not accurately testify at trial as to what
26 happened when he first met with Mr. Cook, Bill Chance, and Eugene Culley at Mr. Cook’s office.
27 Mr. Niderost, upon questioning from the Court, indicated that the first meeting at Mr.
28 Cook’s office was when he filled out the purchase agreement. The testimony of Mr. Chance and
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Mr. Cook indicate that is not accurate. He testified he did not talk with anyone before meeting
about the terms of buying the Miller Mansion, but Wayne Cook’s testimony differed. Mr. Niderost
testified that when he was looking at the Miller Mansion that his wife, Yolanda Niderost was in
Costa Rica and he was living alone. He explained that Mr. Culley would come over and visit him.
He relayed that Mr. Culley was telling him “how good of a deal that was”. Mr. Niderost stated that
he looked at the Miller Mansion because Mr. Culley told him what a good deal it would be. Mr.
Niderost stated, upon questioning from the Court that he didn’t want to buy the Miller Mansion
before he signed the agreement. When he was asked why he went ahead and signed the agreement,
he was nonresponsive. Mr. Niderost explained that he never could have come up with the
10 $1,000,000 deposit. He realized after he signed the purchase agreement and the deal that was
11 arranged by Wayne Cook and Eugene Culley, that he couldn’t afford it. Yet, this vulnerable 83
12 year old man, who was living alone, was unable to extract himself from the transaction in which he
13 had no real representation by the real estate broker, a fact known to Mr. Cook.
14 He specified that Mr. Cook located Mr. Fine for him, and that he didn’t know “who that
15 was”. He did not remember talking about a one day inspection period. He didn’t remember
16 checking a box on the Agreement that specified that he would be living in the Miller Mansion.
17 Mr. Niderost met Eugene Culley through a neighbor. Mr. Niderost was introduced as
18 someone who “always has money to lend.” Mr. Culley befriended Mr. Niderost while Mr.
19 Niderost’s wife was in Costa Rica. Mr. Niderost testified that he didn’t go over to Mr. Culley’s
20 house, but that Mr. Culley frequently came to his house, as much as four or five times a week. He
21 again testified that Mr. Culley talked him into making an offer on the Miller Mansion because it
22 was a good idea. He was able, after repeated questioning, to state that his wife had not met Mr.
23 Culley until she returned from Costa Rica. He testified that it was Mr. Culley’s plan to have
24 weddings and parties at the Miller Mansion. Mr. Culley claimed to Mr. Niderost, that they would
25 “make a lot of money on the place”. He also testified that Mr. Culley, a man he had only just met,
26 was going to oversee all of the parties and the care for the Miller Mansion. Specifically, he was
27 going to buy the Miller Mansion for someone he had only met recently, an individual that his wife
28 had never met. He testified that Mr. Culley “told me my plans.” He also testified that he was
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worried that Mr. Culley wouldn’t be his friend if he didn’t buy the Miller Mansion. Later in his
testimony upon questioning from Mr. Leclerc, Mr. Niderost replied that he wasn’t worried that Mr.
Culley wouldn’t be his friend.
Just prior to purchasing the Miller Mansion, Mr. Culley (whose name Mr. Niderost forgot
during trial testimony), arranged for Mr. Niderost to buy property in Magalia from Lawrence
Patterson. At the time, Mr. Niderost was having problems selling things inside of his home, such
as tools and furniture. Mr. Niderost testified that he did not have an agent, and that he thought it
was a good idea. He paid for the property with a cashier’s check prior to opening escrow. While
Mr. Niderost testified that the check went to the title company, the fact is that he paid Mr.
10 Patterson directly. He stated that the Miller Mansion and the property in Magalia all “went
1 together” and he purchased it because Culley thought it was a good buy. He also testified that at
12 the time that he signed the Agreement that he did not have $1,000,000 in cash — a fact that would
13 have been known to Mr. Culley since he had access to Mr. Niderost’s financial records, He
14 claimed that Mr. Chance “made” him sign papers. Mr. Culley repeatedly told Mr. Niderost what a
15 good idea it was to buy the Miller Mansion. He told Mr. Niderost about the money they would
16 make, but never showed him any figures. He further testified, at his deposition, that Mr. Culley
17 was providing caretaking duties for him, and that Mr. Culley was telling him “how good a deal it
18 was and all that”.
19 Mr. Niderost stated that he was under a conservatorship for “a couple of years” and that he
20 was under a conservatorship when he purchased the Miller Mansion. This is not accurate.
21 Both Yolanda Niderost and John Denton testified that Ed Niderost’s intelligence, lack of
22 ability to recall facts, confusion and vulnerability at trial were similar to his demeanor and
23 behavior at approximately the time that he purchased the Miller Mansion.
24 Mr. Niderost knew what day it was, but on the second day of his testimony at trial, on April
25 6, 2021, he thought it was March 29" and the president was “Benton”. He specified that the
26 president before Mr. Trump was “Bush”.
27 Mary Thompson testified on behalf of Mr. Cook. She is an escrow officer for Mid Valley
28 Title, and was the escrow officer who handled the transaction for the Miller Mansion sale from Mr.
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Cook to Mr. Niderost. She testified that Mr. Cook told her what to put in the promissory note that
Matthew Fine took back (Exhibit 17). Specifically, Mr. Cook told her the amount of the note and
the interest rate, as well as the monthly payments and that it was an interest only rate. He also
specified that there should be a due on sale clause. She further testified that in the last five years
that Mr. Niderost had conducted two, maybe three transactions. She testified that prior to this
transaction for the Miller Mansion it it had been two years since she had a transaction with Mr.
Niderost. She further explained that at the signing for the Miller Mansion Mr. Cook was present,
as well as Eugene Culley. She testified that when Mr. Niderost came into her office to open
escrow that he drove in the same vehicle as Mr. Culley.
10 Mr. Culley’s testimony at trial was very similarly aligned with that of Mr. Cook and
11 contained many discrepancies when contracted with his deposition testimony that was read into the
12 record. His testimony revealed that he held Mr. Cook in a favorable light. Mr. Culley frequently
13 offered information that was not responsive to any question that attempted to paint himself and Mr.
14 Cook in the best light possible.
15 Mr. Culley claimed that he had first met Mr. Niderost five years ago. Mr. Culley claimed
16 that there was a major change in Mr. Niderost from February of 2020 to what he saw in Court in
17 April of 2021. Mr. Culley claimed that he and Mr. Niderost first began talking about Mr. Niderost
18 purchasing the Miller Mansion when they were driving in Mr. Niderost’s vehicle. He claimed that
19 Mr. Niderost was insistent that they try to talk directly to Mr. Cook about purchasing the Miller
20 Mansion. Mr. Culley stated, under oath, during trial and not responsive to any question that “I
21 never recommended that he purchase a property because I didn’t know what his finances were. He
22 never shared with me about his estate.” However, in Mr. Culley’s deposition transcript, which was
23 read into the Court’s trial record, Mr. Culley was specifically asked if he had access to Mr.
24 Niderost’s financial records. His response was “Yes”. Mr. Culley admitted that Mr. Niderost did
25 not have access to his financial records. This was not a reciprocal relationship as Mr. Culley
26 admitted that Mr. Niderost did not have access to his financial records. Mr. Culley testified at trial
27 that Mr. Niderost would ask his advice about investments but he claimed in his deposition
28 testimony that Mr. Niderost was “Very private with his finances.” During trial Mr. Culley was
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questioned by the Court why he stated in his deposition that he had access to Mr. Niderost’s
financial records, and then they he denied this on the stand. Mr. Culley stated that he did not, in
his deposition, state that he had access to any of Mr. Niderost’s financel records. This is directly
contradictory to the deposition testimony. (See Exhibit G)
In discussing whether Mr. Niderost should purchase the Miller Mansion, during his
deposition Mr. Culley admitted that “I realized that he (Mr. Niderost) could afford it.” He stated
that Mr. Niderost could “Absolutely could afford it” and “When he (Mr. Niderost) asked me, and
he did directly, if I thought he could afford it, I told he could afford it.” However, Mr. Culley was
ware that Mr Niderost did not have the necessary fund to close the Miller Mansion and that was
10 why Mr. Niderost was attempting to contact John Denton prior to close of escrow.
11 Mr. Culley made numerous remarks about Mr. Cook, such as he was told that “Wayne
12 Cook probably had done more for Chico since John Bidwell.” Once the Miller Mansion was in
13 default, Mr. Culley viewed it as though it had “deferred” to Mr. Cook. He would speak with Mr.
14 Cook about issues pertaining to the Miller Mansion, although Mr. Cook was not the owner of the
15 Miller Mansion.
16 Upon questioning by Mr. Cook’s counsel, Mr. Sandelman, Mr. Culley claimed that he and
17 Mr. Niderost penciled out projections for revenues for weddings. Mr. Culley stated that Mr.
18 Niderost “let me give him advice” but that he brought the name of someone who had done painting
19 in the past for Mr. Niderost. It appears that this was Mr. Niderost’s sole contribution, aside from
20 his financial resources, to Mr. Culley’s plans for the Miller Mansion. Mr. Culley made remarks in
21 his testimony that he was “satisfied with” information that was told to him by Mr. Niderost. He
22 claimed that Mr. Niderost had about twenty borrowers that owed him money. Mr. Culley stated
23 that he was going to be the events manager and live in the Miller Mansion at Mr. Niderost’s
24 request.
25 Mr. Culley explained how he took Mr. Niderost to look at properties, and that he realized
26 that his friend, Lawrence Patterson had a real ‘emotional need’ to sell his home. There was no
27 realtor involved in that transaction and Mr. Culley was aware that Mr. Niderost paid cash for the
28 property and there were no disclosures made. He claimed that he did not have any concern that
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real property was sold to his friend, Mr. Niderost, without a realtor and without any disclosure
documents or inspections because he claimed that Mr. Patterson, who was 85 at the time, and Mr.
Niderost and Mr. Patterson both seemed to be “very sharp.” Mr. Culley claimed that the
transaction was good for Mr. Niderost because the price seemed to be “right”. Mr. Culley does not
have a background in real estate but he admitted that he ‘helped’ Mr. Niderost make a decision on
purchasing the property from Mr. Patterson (without a real estate agent, sales agreement or any
disclosures) and the Miller Mansion (which had a one day inspection period, no contingencies, a
$50,000 non-refundable deposit, and no requirement for an appraisal) because both seemed like
“good investments.” Mr. Culley stated, in his deposition testimony, that he thought a one day
10 inspection period was “pretty routine”. When questioned about the fact that Mr. Niderost paid
11 money to Larry Patterson and there was no real estate purchase agreement, he claimed that he
12 wasn’t worried about it because he thought that that Mr. Niderost was very detailed. (Exhibit G.)
13 Mr. Culley confirmed prior testimony that Mrs. Niderost was not present during the time
14 period he was regularly visiting Mr. Niderost in his home.
15 Mr. Culley stated that he was present at the signing of the Agreement, and he claimed that
16 it was prepared at the same time that it was signed, pursuant to his deposition testimony that was
17 read into the record (Exhibit “G”). He testified that he saw the Agreement for the Miller Mansion
18 before it was signed by Mr. Niderost. He claimed it was just a basic contract and that Mr. Chance
19 showed it to him before it was shown to Mr. Niderost. Mr. Culley also related that he he took Mr.
20 Culley to see other properties, and that Mr. Niderost was interested in purchasing a property wat
21 1254 Yuba City in March of 2020. Mr. Niderost made an offer and subsequently a cashier’s check
22 was sent for $180,000. No escrow was opened and Mr. Culley testified that the check was never
23 located. Mr. Culley further testified that he was helping Mr. Niderost to look at a variety of
24 properties at about the time that he purchased the Magalia Property and the Miller Mansion. He
25 claimed that they were working on two or three properties in Red Bluff and a property in the State
26 of Michigan.
27 Mr. Culley also testified at this deposition that he recalled that Mr. Niderost was having
28 urinary issues in March of 2020 and that he could hear Mr. Niderost expressing pain when he used
13
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DEEERNINANT ANT CBACS COMBI ATAIANTIS DACT TOIAT RDIEE
the bathroom. He also testified that he was aware that Mr. Niderost’s phone stopped working on or
about February 9, 2020. It wasn’t until February 25, 2020 that Mr. Culley assisted Mr. Niderost in
purchasing a cell phone.
After the Miller Mansion closed, Mr. Culley moved in and also installed tenants. He
claimed that he was renting out the rooms in the Miller Mansion as “an agent for Ed Niderost”.
There was no written agreement between Mr. Niderost and Mr. Culley for this alleged agreement.
Mr. Culley claimed that he gave Mr. Niderost two thousand dollars over two or three times, but he
had no dates or proof of any kid for this alleged activity. He explained that all of his records were
stolen when he was gone from the Miller Mansion for four months. The funds were placed in a
10 safe that was not behind any locked door, because Mr. Culley instituted a rule that there were to be
11 no locks on doors. He testified, in his deposition, that there was about three to four thousand
12 dollars in the safe when it was stolen. He claimed that in his absence the tenants in the Miller
13 Mansion were safeguarding the safe. He did not discuss this with Mr. Niderost and he never told
14 Mr. Niderost about the funds being stolen. However, in his deposition transcript (which was read
15 into the Court’s record), Mr. Culley admitted that Mr. Cook had given him direction on what to do
16 with respect to the Miller Mansion.
17 He admitted that he had never given Mr. Niderost an accounting for any monies that he
18 collected from tenants. Mr. Culley executed month to month rental agreements with tenants and
19 testified that he placed the security deposit in “ ry” safe. He did not show these agreements to Mr.
20 Niderost.
21 Mr. Culley viewed the Miller Mansion as an iconic building, and he felt privileged to be
22 associated with it. He felt very excited to be involved with the Miller Mansion and was very
23 concerned about protecting the historic integrity of the premises. He instituted many rules
regarding the property which he explained to the Court at length.
25 Mr. Culley confirmed that he was aware that Mr. Denton was the conservator of Mr.
26 Niderost’s estate and the successor trustee of his trust. He further confirmed that he received a
27 request from Mr. Denton to cease and desist staying in the Miller Mansion or offering it for rent
28 and he refused to abide by that request. Mr. Culley denied that one of the reasons why he did not
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TEEENINANT ARID ADACC CAMDE ATNANT!S DACT TRTAT BDIEE
abide by the cease and desist letter is because he didn’t respect the Court’s authority with respect to
Mr. Denton. However, in his deposition transcript (Exhibit “F”) that was read into the record
during trial, Mr. Culley was asked, in relation to the Court’s order that Mr. Denton was the
conservator of Mr. Niderost’s Estate and the Successor Trustee, “So you thought your judgment
about what was best for the mansion overrode an order from the Court?” Mr. Culley’s response
was “Absolutely”.
Mr. Culley stated that he might have represented that he was Mr. Niderost’s assistant to
Lara Urseny of the Enterprice Record. He also denied that he had a health care background during
trial but had testified under oath in his deposition that he had a health care background. He
10 claimed that he was not a caregiver. However, in Mr. Culley’s deposition testimony that was read
11 into the Court’s record Mr. Culley was asked: “Did you ever tell anybody that you were his
12 caregiver?” Mr. Culley’s response was “Yes”. Mr. Culley also stated that he felt that he was
13 assisting Mr. Niderost in his investment and that he had used the word “assistant” to describe his
14 relationship with Mr. Niderost. He further stated that he understood that he was taking on a
15 fiduciary duty to Mr. Niderost with respect to the Miller Mansion.
16 Mr. Culley had requested that Mr. Cook pay for waste service as Mr. Culley had never
17 signed up for waste management services. He also paid for other expenses, such as a luncheon at
18 the property.
19 Matthew Fine is a physician and close personal friend of Mr. Cook. They have been
20 friends for approximately 40 years. He has engaged in business transactions with Mr. Cook for
21 approximately 25 to 30 years. They have also owned real estate together. He testified that he
22 never met Mr. Niderost, but he loaned him $500,000 at the rate of 7 percent as an interest only loan
23 in first position. He testified that he did not use a loan broker for this loan, and he learned about
24 the opportunity from Mr. Cook. He did not talk to Mr. Chance about this matter and he learned,
25 from Mr. Cook, that Mr. Niderost owned a number of properties and had some cash for a down
26 payment. He did not do any independent investigation into Mr. Niderost’s ability to repay the debt
27 of $500,000. After the loan was made it was then sold to Mr. Cook. Mr. Fine also testified that he
28 did not initiate a Notice of Default with respect to his loan, and he was aware that Mr. Cook was
15
TETENIN ANT ANID CDACE CAME ATNIANTIC DACT TPDTAT RPTEE
going to take a second deed of trust on the property for a loan that he was going to issue Mr.
Niderost so that the transaction could close. Dr. Fine did not recall any paperwork that he
reviewed with respect to this loan.
John Denton is a licensed broker who assisted Mr. Niderost in the past with investments
and is currently Mr. Niderost’s Conservator and the successor trustee of his trust. Mr. Denton
testified, in his deposition that was read into the Court’s record, that Mr. Niderost did not have the
funds to finish closing escrow on the Magalia property that Mr. Culley arranged for Mr. Niderost
to purchase. There was a balance owed for closing the escrow in the sum of approximately $4,000
and Mr. Niderost did not have the funds to close the escrow. The total approximate amount of
10 notes totaling five in number not twenty as proclaimed by Mr. Culley, that were due to Mr.
11 Niderost in February of 2020 was $598,000. Mr. Denton’s deposition testimony revealed Mr.
12 Niderost’s difficulty in coming up with the down payment for the Miller Mansion, explaining that
13 he attempted to get financing on a credit line of $750,000 and Mr. Niderost was denied. Later,
14 however, Mr. Niderost advised Mr. Denton that Mr. Cook agreed to carry the remainder of any
15 monies that Mr. Niderost could not come up with in order to close the transaction for the Miller
16 Mansion.
17 In late February of 2020 Mr. Niderost withdrew the full balance available on his home
18 equity line of credit, in the amount of $304,000 in order to purchase the Miller Mansion. His
19 remaining assets were his home on Via Verona (now encumbered by a $304,000 line of credit), a
20 residence on Pentz Road with no debt, and five notes totaling $598,000, his claim to the Magalia
21 Property (that had not been deeded to him) and the Miller Mansion (with a debt of $1,174,000 )
22 Mr. Denton first learned about the pending transaction to purchase the Miller Mansion
23 when Mr. Niderost called him approximately February 23 or 24, 2020 to find out when he was
24 being paid out on a note that was in his favor. Mr. Niderost needed the funds to purchase the
25 Miller Mansion. On March 19, 2020 Mr. Niderost contacted him twice with a request that Mr.
26 Denton loan him money in the sum of $200,000 - $300,000 and then $1,600. When Mr. Denton
27 returned the phone call, Mr. Niderost explained that he had an emergency and needed $200,000 -
28 $300,000 right away. Mr. Denton went to Mr. Niderost’s home that day. Mr. Culley was present.
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TEEPAINANT ANT ADACE COMBI ATNANTC DACT TRTAT RDIEE
Mr. Niderost was confused and did not know how he had gotten into a financial distress position.
This is when Mr. Niderost told Mr. Denton that he purchased the Miller Mansion for $1,500,000
but he thought the purchase price was $1,000,000. Mr. Culley told Mr. Denton that the price was
always $1,500,000 for the Miller Mansion. When Mr. Denton asked Mr. Culley for the escrow
closing envelope for the Miller Mansion transcript, Mr. Culley initially said that it wasn’t in Mr.
Niderost’s home and that it was at his home. Mr. Culley then claimed the envelope was at the
Miller Mansion. When Mr. Denton asked him to go get it at the Miller Mansion, Mr. Culley
walked passed Mr. Denton, and down Mr. Niderost’s hall and retrieved the envelope from Mr.
Niderost’s office.
10 Mr. Denton was friends with Mr. Niderost, and he knew who Mr. Niderost’s friends were.
11 He testified that Mr. Niderost had never mentioned Mr. Culley as a friend and that Mr. Denton was
12 not aware that Mr. Niderost knew Mr. Culley until that date, March 19, 2020. At that meeting Mr.
13 Niderost was distraught, confused and exhibited a wide range of emotions, from general confusion
14 to sadness, crying and anger. This was not consistent with Mr. Niderost’s prior behavior as known
15 by Mr. Denton. This display, along with the circumstances of Mr. Niderost buying the Magalia
16 property with a cashier’s check with no written agreement, disclosures or a real estate agent and
17 purchasing the Miller Mansion was what motivated Mr. Denton to apply for conservatorship of the
18 Estate of Mr. Niderost. He requested that Mr. Niderost consent to him becoming conservator out of
19 respect for Mr. Niderost and due to his uncertainty regarding Mr. Niderost’s capacity.
20 Mr. Denton’s initial concerns about the Miller Mansion transaction included the following:
21 Mr. Niderost claimed the purchase price was $1,000,000 when the Agreement stated it was
22 $1,500,000; there was a $1,000,000 down payment which Mr. Niderost did not have; a $50,000
23 nonrefundable deposit. Mr. Denton was further concerned about the contract terms,
24 Just days before the closing, Mr. Denton talked with Mr. Niderost and was relieved to find
25 out that he was not going to be able to purchase the Miller Mansion. He did not believe, prior to
26 the close of escrow on the Miller Mansion, that Mr. Niderost needed a conservator as he did not
27 know how bad things had become. He had not learned about the Magalia purchase and at the time
28 he understood that the Miller Mansion purchase was not going to be consummated.
17
TEEENINANT ARI ADACC CAMP ATATANT?G DNCT TDTAT RDIEE
Mr. Denton also testified that Mr. Niderost never owned 70 properties in Sacramento, and
that at the time of the purchase of the Miller Mansion he had four notes due him. He further
testified that he discvered that Mr. Niderost’s phone lines had been tampered with.
Wayne Cook was a teacher for many years before he went into the securities business
where he was a retail broker. Mr. Cook testified that he was in the highest level license, and was
qualified to broker virtually all securities that are commonly traded. While working in this
capacity, and in the early 1980s, he began accumulating real estate. Mr. Cook stopped working as
a retail broker after nine years, and when he was 45 years old, to concentrate on real estate only.
He is not a real estate broker. He has purchased quite a number of properties and fixed them up,
10 particular