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Andrew J. Wiegel, Esq., (SBN 075204) by Superior jt alifexnia, unity of 1 Matec
G. Ryan Patrick, Esq., (SBN 275517) ON 10/22/2020
WIEGEL LAW GROUP, PLC By. /s/ Marcela Enriquez
Deputy Clerk
414 Gough Street
San Francisco, CA 94102-4464
(415) 552-8230
ndrew@wiecellawgroup.coi
ryan@wiegellawgroup.cor
Attorneys for Defendants:
ERNEST J. MCNABB, Individually and as
Trustee of the ERNEST J, MCNABB REVOCABLE
LIVING TRUST DATED 11/19/1990
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11 SUPERIOR COURT OF CALIFORNIA
12 COUNTY OF SAN MATEO
a3
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PENINSULA OPEN SPACE TRUST, Case No,: 20 CIV-02349
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Plaintiff,
16 vs,
DECLARATION OF ERNEST J.
REDWOOD TRUST DEED SERVICES, INC.,
17 MCNABB IN SUPPORT OF
A CALIFORNIA CORPORATION; ERNEST
DEFENDANT’S OPPOSITION TO
18 J. MCNABB, Individually and as
PLAINTIFF’S MOTION FOR
‘Trustee of the ERNEST J. MCNABB
19 PRELIMINARY INJUNCTION
REVOCABLE
LIVING TRUST DATED 11/19/1990; LOUIS
20 Date: November 5, 2020
J. ARATA, I Time: 2:00 P.M.
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Dept.: 28, Courtroom 2F
22 Defendant Hon. George A Miram
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DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO
PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION
ep
I, Ernest J. McNabb, declare and state as follows:
1. Tam the trustee of the Ernest J. McNabb Revocable Living Trust 11/19/1990 and a
defendant, along with my trust, in the above entitled action. The facts stated in this Declaration
are true and correct of my own personal knowledge, except for those matters expressly stated
on
information and belief, which matters that I believe to be true. If called as a witness, I could and
would competently testify thereto.
2. Tama professional real estate investor. The source of income on which I depend upon to
live and pay my bills is generated from my real estate investments,
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di FACTUAL BACKGROUND ON FUNDING THE LOAN
12 3. In February 2017, I was asked to consider funding a loan in the principal of $1,100,000
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with an 18-month term that would be secured as a second mortgage against the John and
Grace
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Arata 2004 Trust’s (“Arata Trust”) interest in and to the real property commonly known as the
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Arata Ranch, located at 6090 Stage Road and 3225 Pomponio Road, San Gregorio, California
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17 (“Arata Ranch”),
18 4. On information and belief, it was my understanding that the Arata Trust required this
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loan because Gary J. Arata, a beneficiary of the Arata Trust, had placed two personal loans
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against his interest in the Arata Ranch real property that were cither in default or on the brink of
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22 default and his estate could not pay them; and additionally, the Arata Trust was delinquent in
23 paying its property taxes for the Arata Ranch property.
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5. On information and belief, it was also my understanding, the Arata Ranch real property
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would be immediately listed for sale and extensively marketed until it was sold,
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DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO
PLAINTIFF’S MOTION F OR PRELIM INARY INJUNCTION
6. There are two other San Mateo Superior Court actions involving disputes between the
Arata family members, Arata v. Arata, Case No, CIV531627 and Jn the Matter of John & Grace
Arata 2004 Trust, Case No. 19-PRO-01586.
7. At the time I was considering funding the loan, it was my understanding that there was a
Settlement Agreement between the parties in the San Mateo Superior Court action: Arata v.
A rata, Case No. CIV531627 that required the sale of the Arata Ranch property and a February
28, 2017 court order approving the sale of the Arata Ranch pursuant to the terms of the
Settlement Agreement.
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11 8. Based on this understanding, I decided to fund this bridge loan. I would not have agreed
12 to the loan, had I known the term of the loan would exceed two years.
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9. On March 28, 2017, a note was executed by the trustee of the Arata Trust for my loan in
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the principal amount of $1,100,000 and it was secured by a Deed of Trust against the Arata
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Trust’s interest in the Arata Ranch real property.
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17 10. On November 1, 2018, the Arata Trust defaulted on my note secured by the subject
18 property.
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11, Before and after this default, I repeatedly reached out to the Arata Trust expressing my
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concern about the Trust’s allowing the Arata Ranch listing agreement to expire on June 1, 2018,
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22 and leaving the property without active representation and with no active sales and marketing
23 effort.
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McNABR’S LOAN FORBEARANCE
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12. [have repeatedly expressed my willingness to work with the Arata Trust to facilitate a
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sale and to provide the necessary forbearance if they took prudent steps to list the Arata Ranch
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DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO
PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
eye
property with experienced brokers to effectively market the property. My efforts to reach
out to
the Arata Trust, include but are not limited to the following:
13. On November 6, 2018, I sent an email to Mr. Gary Dambacher (“Dambacher”), the
attorney for the Arata Trust, which stated, in part, that:
Lam very concerned about this situation. The expressed terms of the Arata
Settlement Agreement with an effective date of January 1, 2017 and the
associated February 28, 2017 “Order on Stipulation to Appoint Referee to Sell
and Divide Property” required the sale of the Arata real property commonly
known as 6090 Stage Road and 3225 Pomponio Creek Road, San Gregorio,
California. Yet, in the 20 months since the court order and in the hottest real
estate market, there has been minimal effort to sell the property.
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ib 14. Attached hereto as Exhibit “A” is a true and correct copy of my email of November 6,
12 2018 to Gary Dambacher.
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15. On November 6, 2018, Dambacher responded, “[w]e have been working very hard on
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the sale of the property and as a preliminary matter, we have secured our client's authority to
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have Bill Maier represent the Grace Arata Trust's interest in listing the property, an issue we
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17 addressed in our prior phone conference. We have contacted Bill and he has agreed to co-list the
18 property with the realtor selected by the Lillian Arata Trust.”
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16. Attached hereto as Exhibit “B” is a true and correct copy of an email from Gary
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Dambacher received on November 6, 2018.
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22 17, On November 8, 2018, I sent an email to Dambacher stating, in part, that I needed to see!
23 on or before December 1, 2018, an executed agreement between the Arata Trust and the co-
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brokers (William Maier and the broker chosen by the Clarence and Lillian Arata 2002 Trust). I
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further stated, in part:
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[Mly concern is that more than 20 months have passed since the court ordered the
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sale of the property and it has been 252 days since Ms. Laura Arata was appointed
28 successor trustee by Judge Harry Tobias. Yet, during this time, there has been no
DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO
PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
mee
credible effort to sell the property in a white-hot real estate market. Instead, I have
repeatedly heard about the intention to sell; but intentions without actions are
meaningless. It has been more than 19 months since I made my loan and your
client is now in default.
18, Attached hereto as Exhibit “C” is a true and correct copy of my email of November 8,
2018 to Gary Dambacher.
19, On November 29, 2018, having not heard from Dambacher in response to my November
8, 2018 email, I once again reached out to him and sent an email that asked, inpart:
(1) Whether the listing agreement, timetable and marketing plan of Chris Bailey
and Bill Maier has been approved by your client and by Lillian Arata? (2) And
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Has the court appointed referee, Michael Carbone, approved the representation of
1i Chris Bailey and Bill Maier to sell the Arata Property? (3) Has the issue of
Lillian's life estate been resolved? if so, what are the terms?
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20, Attached hereto as Exhibit “D” is a true and correct copy of my email of November 29,
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14 2018 to Gary Dambacher.
15 21. In response, on November 29, 2018, Dambacher and his associate Ms. Carrie McKernan
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(“Mckernan”), responded that they would be receiving a listing agreement that week, after their
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review it would be submitted to the court appointed referee, Mr. Michael Carbone and that they
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had reached an agreement in principal with the Lillian Arata side “for the property to be sold
20 without the life estate,”
21 22, Attached hereto as Exhibit “E” is a true and correct copy of an email received from
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Gary Dambacher and Carrie McKernan received on November 29, 2018.
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23. On December 18, 2018, I wrote an email to Dambacher and McKernan that stated, in
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25 part:
26 Ihave been very patient in this matter, and will provide your client one final
opportunity to avoid commencement of foreclosure on their property interest. On
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or before December 28, 2018, please either: (i) facilitate the execution of a listing
28 agreement by Mr. Carbone that sets forth a realistic schedule of price reductions
DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO.
PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION,
enn
on the listing price of the Arata Ranch property starting with an asking
price of less than $8.5 Million; or alternatively, (ii) file a motion with the court
seeking the removal of the court-appointed referee for good cause and an
order for the immediately (sic) sale of the Arata Ranch property via a no
reserve auction or a structured price reduction plan with a starting price of
$8.5 Million or less,
24, Attached hereto as Exhibit “F” is a true and correct copy of my email of December 18,
2018 to Gary Dambacher and Carrie McKernan.
25. On December 18, 2018, McKernan responded that they were actively negotiating with
the agent of a perspective purchaser of the Arata Ranch.
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26, After not receiving from the Arata Trust, a specific response to my December 18, 2018
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email, on January 8, 2019, I sent a Notice of Default to the principals of the Arata Trust. The
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Notice of Default stated, in part:
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14 In recent months, I have made repeated attempts to facilitate a sale of the Arata
Ranch Property so that we could avoid foreclosure on my First and Second Notes
15 and so that the beneficiaries of the Arata 2004 Trust could receive their respective
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share of the proceeds. Unfortunately, my most reasonable offer to avoid
foreclosure, as set forth in my email of December 18, 2018 to the counsel of the
17 John and Grace Arata 2004 Trust (“Arata 2004 Trust”), was not accepted by the
deadline of December 28, 2018.
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I was particularly concerned that since June 1, 2018, when the listing agreement
with San Benito Realty, Inc, expired, there has been no active representation nor
20 marketing of the Arata Ranch Property, Leaving the Arata Ranch Property
without an active sales effort for the last seven months, especially since you are
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now incurring total interest charges (on my First and Second Notes) of
22 approximately $24,000 per month and have loans due and payable, is not in your
interest nor mine.
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27. Attached hereto as Exhibit “G” is a true and correct copy of my January 8, 2019 Notice
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of Defauit.
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28. On January 11, 2019, I sent an email to Dambacher explaining why I served the Notice
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28 of Default:
DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO
PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION
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As you are aware, I have been very patient in this matter and have tried to work
with all parties to avoid foreclosure, And I have even emailed Mr, Carbone
regarding my desire to avoid foreclosure and offered to help structure a plan to
promptly sell the Arata Ranch property at the highest price. Mr, Carbone never
responded to my email. It has been 225 days since the Arata Ranch property
listing agreement has expired and there has been no active marketing of the
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property. The real estate market has peaked and is now in a decline. This is an
untenable situation, to the extreme detriment of not only your client, but also
impairing my security interest in the Arata Ranch property, [Emphasis in
Original]
29. Attached hereto as Exhibii “H” is a true and correct copy of my email of January 11,
9 2019 to Gary Dambacher.
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30. Thereafter, on January 11, 2019, I received an email from Dambacher that he had secured
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a lender to refinance the Arata Ranch property to pay off my note, she stated, in part:
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Please submit your respective demands under both notes to our office. We have
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secured a private lender to pay in full the notes you are holding. My partner, Tim
14 Trujillo, will be drawing up loan documents. Mr. Trujillo is currently out of the
office for today, but we will advise you by email over the weekend, but no later
15 than Monday, January 14”, of the parameters of the escrow and other matters
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germane to completing the refinancing of your notes and deeds of trust. We are
endeavoring to have the process completed by Friday, January 18, 2019.
17 Therefore, we request that you refrain from incurring any costs, expenses or legal
fees relating to the commencement of foreclosure of the subject notes and deeds
18 of trust,
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29, Attached hereto as Exhi! bit “I” is a rue and correct copy of an email received from Gary
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Dambacher on January 11, 2019,
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22 30. On January 18, 2019, I received an email from Dambacher about “a new development”
23 that he received an offer for the purchase of the Arata Ranch and thus, would not be refinancing
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the property:
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We received an offer on the property by email today which is attached. Our client
26 agrees with the sales price, We believe that the Referee is prepared to accept it...
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Although we have a lender prepared to fund our refinance, it does not make sense
28 for us to absorb fees associated with the refinance, only to have an escrow close
DECLARATION OF ERNEST J, MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO
PLAINTIEI’S MOTION FOR PRELIMINARY INJUNCTION
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on the sale of the property within 60 days. Also, it would not give the lender a
reasonable return on the loan to have it paid in such a short duration.
31. Attached hereto as Exhibit “J” is a true and correct copy of an email received from Gary
Dambacher on January 18, 2019.
32. On January 23, 2019, in an email I responded to Dambacher’s email of January 18, 2019
by stating:
First, I was disappointed that you did not finalize the refinancing of the notes and
close escrow, as you represented you would, in your email of January 11, 2019.
Thave no confidence that the pending offer of Scott Cook, with all the outstanding
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issues, will result in the "close on the sale of the property within 60 days.” And I
a1 have repeatedly questioned why the Arata Ranch property has not been listed with
a broker and actively marketed. It is an untenable situation, that the Arata
12 Ranch property has been without active marketing for 237 days — to the
detriment of my interests and your client. [Emphasis in Original]
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14 I will hold off from instituting any action for foreclosure, if on or before 5:00 PM,
Wednesday, January 30, 2019, you either (i) finalize the refinancing and close
15 escrow with First American Title Company, or (ii) send me an executed copy of
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the listing agreement for the sale of the Arata Ranch property, that was previously
presented to Mr, Michael Carbone by Mr, Bill Maier.
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Otherwise, you will leave me no choice but to immediately proceed as outlined in
18 my letters of January 8, 2019.
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33. Attached hereto as Exhibit “K” is a true and correct copy of my email of January 23,
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2019 to Gary Dambacher.
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22 34, Since I received no response from the Arata Trust to my January 23, 2019 email, on
23 February 7, 2019, a Notice of Default was recorded against the Arata Trust’s interest in the Arata
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Ranch real property.
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35. A Trustee Sale of the Arata Trust’s interest in the Arata Ranch was scheduled for June 5,
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2019.
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DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO
PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
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36, On May 29, 2019, I received a letter from POST that the pending Trustee Sale would
violate their Conservation Easement on the Arata Ranch,
37. On May 30, 2019, I responded to the attorney representing POST that prior to receiving
the POST letter and Notice of Hearing and for reasons totally independent of the issues raised
in
the POST letter and Notice, I had made a decision to postpone the above referenced Trustee Sale
in an effort to facilitate the sale of the entire Arata Ranch property. Thereafter, I directed
Redwood ‘Trust Deed Services to postpone the Trustee Sale scheduled for June 5, 2019 until July
10, 2019.
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i 38. Thereafter, in an effort to provide time for the Arata Trust’s emergency motion to sell
12 the Arata Ranch free and clear of the life estate, which was scheduled to be heard in the Superior
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Court of San Mateo County on July 25, 2019, I extended the Trustee Sale to July 24, 2019, and
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then extended the sale again to August 7, 2019.
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39. On July 25, 2019, after the hearing on the Arata Trust emergency motion, in the hallway
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7 of the courthouse I spoke to Dambacher and Ms, Laura Arata, the trustee of the Arata Trust
and
18 expressed my willingness to work with them to facilitate the sale of the Arata Ranch, if the
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property was immediately listed with an experienced broker, had a realistic sales price, and was
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appropriately marketed.
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22 40. Twas given assurances by Dambacher that the property would be immediately listed and
23 marketed; and that Mr. William Maier would be the broker representing the Arata Trust’s
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interest, I made it very clear that I would be cooperative, but also diligent in monitoring the
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Arata Trust’s progress in listing and maketing the Arata Ranch property.
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41. [then repeatedly postponed the Trustee Sale from August 14, 2019 to August 28, 2019,
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28 then to September 11, 2019, then to September 25, 2019, then to October 9, 2019, then to
DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION
TO
PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION
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October 23, 2019, then to December 4, 2019 — all in the hope that the Arata Trust would take
concrete steps to list and sale the Arata Ranch property as a whole, but they didn’t,
42, On information and belief, in November 2019, | was shocked to learn that the clean-up
of the Arata Ranch by the Estate of Gary Arata, that was required to be completed by April 1,
2017 under the Settlement Agreement ] 5(c), had not taken place and was holding up the listing
of the Arata Ranch property. Under the Settlement Agreement, the clean-up of the Arata Ranch
is condition precedent to the sale and marketing of the Arata Ranch property.
43, On information and belief, the co-executor of the Estate of Gary Arata who committed
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1i the estate to the clean-up under the Settlement Agreement is Ms. Laura Arata, who also serves as
12 the trustee of the Arata Trust.
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44, Asa result of learning of Ms. Laura Arata’s failure to clean-up the ranch, and because of
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her inability to even get a listing agreement executed for more than 18 months; I lost all faith and
as
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contidence in Ms, Laura Arata’s ability and competence to serve as trustee of the Arata Trust and
17 to facilitate the sale of the property.
18 45. These events caused Louis Arata to file a petition to remove Laura Arata as Trustee of
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the Arata Trust. This action is Zn the Matter of John and Grace Arata 2004 Trust San Mateo
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Superior Court Case No. 19-PRO-01586.
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22 46. In late 2019, I had several conversations with William Maier, who advised me that he
23 was approached by Louis Arata, a beneficiary of the Arata Trust, to serve as interim and
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successor trustee, if the court approved Louis Arata’s petition for the removal of Ms. Laura Aratal
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as trustee. Mr, Maier indicated he was willing to serve, only if | would agree to provide at least a
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six-month period of forbearance in seeking the foreclosure of the Arata Ranch property, to allow
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28 for adequate time to market and sale the Arata Ranch.
DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO
PLAINTIFE’S MOTION FOR PRELIMINARY INJUNCTION
Styne
1 47. Asa result of Mr. Maier’s experience in real estate and finance, his extensive
knowledge of the Arata Ranch property and because of my confidence in his ability to get things
done; I agreed to provide Mr. Maier with at least a six-month forbearance period, if he becomes
the interim and/or successor trustee of the Arata Trust.
HARM SUFFERED BY McNABB
48. It has been nearly 2 years since the Arata Trust first defaulted on my loan on
November 1, 2018. In the time leading up to this motion, I have repeatedly postponed the
Trustee’s sale and continued to work with the Arata family in an effort to sell the property as a
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12 whole.
12 49. [have also provided repeated assurances to POST that I will fully honor the
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Conservation Easement if the Trustee’s Sale is allowed to move forward so that I can acquire a
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fee interest in the Arata Ranch property encumbered by my loan. I have no intention to
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subdivide or engage in any use or activity prohibited by the Conservation Easement.
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17 50. Tam simply trying to get my money back, Acquiring a fee interest in the Arata
18 Ranch property through a Trustee’s Sale will give me standing to do so. Acquiring a fee interest
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will give me standing as an owner which will allow me to move a partition action forward and
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compel the sale of the entire Arata Ranch property to a single owner. This will allow me to
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recover the money I’m owed and achieve POST’s goal of common ownership of the Arata
23 Ranch under the Conservation Easement,
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51. Ifa preliminary injunction is issued, I will experience irreparable harm in that I will
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continue to be denied the use of the money ’'m owed. In addition, I will also be denied the right
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to enforce my mortgage secured against the Arata Trust interest in the Arata Ranch real property.
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28 The loss of this property right venders my loan unenforceable and denies me standing as an
DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO
PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION
reps
owner lo solve the problem. Furthermore, it would put the fate of ever recovering the money I’m]
owed on the loan in the control of the feuding Arata family who has demonstrated over the past
two years that they have no intention of ever selling the property. Thus, an injunction would
deny me recovery indefinitely.
50. Again, as a real estate investor I depend the income of my investments to live and
pay my bills. As it stands, [ am owed over $2.3 million dollars on this loan which has been in
default for 2 years. Depriving me of the use of my money adversely impacts my business which
in turn makes is harder to generate income to live and pay my bills.
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1. Sk. The issuance of a preliminary injunction would put me in severe financial hardship,
12 at a time of great economic uncertainty. I am already experiencing substantial financial losses as
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a result of the Covid-19 pandemic crises, including non-payment of rent by the majority of my
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tenants, If I am not permitted to proceed with a Trustee Sale, I will not receive funds in an
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amount of more than $2.3 Million that will likely be gencrated from the Trustee Sale; this will do
17 substantial harm to my business, including putting me at a significant competitive disadvantage
18 because of a lack of funds and will result in a loss of future business opportunities. The impact
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on my business from being at a competitive disadvantage and by a loss of future business
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opportunities cannot be calculated.
aL
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23 I declare under the penalty of perjury under the laws of the State of California that the
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foregoing is true and correct and that this Declaration was executed on October 224 , 2020, at
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San Francisco, California.
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/s/Ernest_ J. McNabb
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Ernest J. McNabb
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DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO.
PLAINTIFF'S MOT! ION FOR PRELIMINARY INJONCTION
—T wr
EXHIBIT A
McNabb Ernie fe _ November 6, 2018 at 2:49 PM
Arata Loan due 11/1/2018 Details
To: Gary-Arata Dambacher, Ce: MeNabb Ernie
Dear Gary,
Jam writing {o you as a follow-up to our telephone conversation of October 16, 2018. At the end of our
conversation, you indicated that you would endeavor to arrange a conference call with the Attorney
representing Lillian Arata, Mr. Tim Baldwin, but we never heard back from you regarding the conference
call.
As you are aware, as of November 1, 2018, the Gary Arata Estate and Louis Arata are in default on my
Second Note and as a result, the interest on the note has now risen to 18% per annum. Additionally, the
First Note on the property shall become due and payable on March 1, 2019.
lam very concerned about this situation. The expressed terms of the Arata Settlement Agreement with an
effective date of January 1, 2017 and the associated February 28, 2017 "Order on Stipulation to Appoint
Referee to Sell and Divide Property” required the sale of the Arata real property commonly known as 6090
Stage Road and 3225 Pomponio Creek Road, San Gregorio, California. Yet, In the 20 months since the
court order and in the hottest real estate market, there has been minimal effort to sell the property.
Please set forth the concrete steps that will be immediately taken to assure that the property will be
promplly sold.
Thank you for your time and cooperation.
Ernie McNabb
_Deciation of est MNP
EXHIBIT.8 —
From: Gary Dambacher
Date: November 6, 2018 at 5:28:08 PM PST
‘To: Ernie McNabb
Ce: Carrie McKernan , luckyla1024@
yahoo.col
Subject: Re: Arata Loan due 14/1/2018
Dear Ernie,
We have been working very hard on the sale of the property
and as a preliminary matter, we have
secured our client's authority to have Bill Maier re} present the Grace
Arata Trust's interest in listing the
property, an issue we addessed in our prior phon: @ conference.
We have contacted Bill and he has
agreed to co-list the properly with the realtor sel icted by the
Lillian Arata Trust.
As you know, there is a current offer on the property for $6.5
million but it is hoped that this offer can be
successfully negotiated upward to arrive at a sales price satisfa
ctory to ail owners. Moreover, we feel that
in view of negotiations with Tim Baldwin, the @ attorney for Lil ian,
that the properly can be sold without the
relained life estate interest which was a term of the settlem ent agreement.
Thank you for your int iquiry and be assured that | am doing everyth
ing | can to move this along in the
limited time that Laure ‘a Arata has been appointed by the court as trustee
to succeed Louis Arata,
Best regards,
Gary Dambacher
Sent from my iPhone
Declaration of Ernest J McNabb
wh
EXHIBIT-C
McNabb Ernie B November 8, 2018 at 9:40 AM
Re: Arata Loan due 11/1/2018 Details
To: Gary Dambacher, Cc: Carrie McKernan, laura arata
Dear Gary,
Thank you for your prompt response to my message. ! am happy to learn that it is your client’s intention
that Bill Maier will be retained as co-broker to sell the property.
Having said that, my concern is that more than 20 months have passed since the court ordered the sale of
the properly and it has been 252 days since Ms. Laura Arata was appointed successor trustee by Judge
Harry Tobias, Yet, during this time, there has been no credible effort to sell the property in a white-hot real
estate market, Instead, | have repeatedly heard about the intention to sell; but intentions without actions are
meaningless, it has been more than 19 months since | made my loan and your client is now in default,
Therefore, | need to see on or before December 1, 2018, an executed agreement with the co-brokers that
sets forth a viable pian to sell the property that includes clear metrics that will trigger price reductions in the
sale price in the event the property doesn’t immediately sell and/or a no reserve auction of the property.
‘Thank you for your time and consideration.
Ernie McNabb
Declaration of Ernest J. MeNabb
EXHIBIT D
McNabb Ernie © Inbox - iCloud =~ November 29, 2018 at 2:53 PM
Arata Loan-Due 11/1/18 Details
To: Gary-Arata Dambacher, Ce: McNabb Ernie
Dear Gary,
fam following-up on my November 8, 2018 message to you, a copy of which Is below.
Please let me know the following:
(1) Whether the listing agreement, timetable and marketing plan of Chris Bailey and Bill Maier has been
approved by your client and by Lillian Arata?
(2) Has the court appointed referee, Michael Carbone, approved the representation of Chris Bailey and Bill
Maler to sell the Arata Property?
(3) Has the Issue of Lillian’s life estate been resolved? if so, what are the terms?
Thank you,
Ermle McNabb
Declaration of Ernest J, McNabb
EXHIBIT E
From: Carrie McKernan
Date: November 29, 2018 at 4:57:53 PM PST
To: “erniemcnabb@aol.com"
Gc: Gary Dambacher
Subject; RE: Arata Loan-Due 14/148
Dear Emie:
Thank you for you inquiry.
Attorney, Carrie McKernan of our office has coi mmunicated with
Mr, Maeir ragarding the listing agreement
and was informed we would receive the sting agreement this week.
We will let you know when it is
received,
Upon receipt and review, it will be submitted fo Mr. Garbone for signature
.
In terms of the life estate, we have an agreement in principa
l with Lillan's side , by and through her attorney,
Tim Baldwin, that the property will be sold without the life estate.
Our side of t he estate will pay
consideration to Lillian for her waiver of the life estate interest,
Gary & Carrie
Carrie M. McKernan, Esq.
Carrie M. Mckernan, Esq.
Dambacher, Trujillo & Associates,
a professional law corporation
32 N. Washington Street
Sonora, CA 95370
Office Telephone: (209) 533-1883
Office Facsimile: (209) 533-3844
e-mail: carrie@dtalawyers.com
Declaration of Emest J. McNabb
=
EXHIBIT F
McNabb Ernie EXinbox - Cloud Becember 18, 2018 at 10:28 AM
Arata Ranch Property
Yo: Gary-Arata Dambacher, Cartie McKernan
Dear Gaty and Carrie,
On November 8, 2018, | wrote you requesting that on or before December 1, 2048, that you facilitate an executed listing
agreement “that sets forlh a viable plan to sell the {Arata Ranch] property that includes clear metrics that will tigger price
reductions in the safe price Ia the event the properly doesn’t immediately sell and/or a no roserve auction of the property.” As of
the date of this emall, no listing agreement has been executed.
On December 12, 2018, I wrote the court appointed referee, Mr. Michael Carbone, requesting immediate action in structuring a
viable plan to safe the Arata Ranch property. As of the date of this email, Mr. Carbone has not responded to my message.
‘On February 28, 2017, the court ordered the sale of the Arata Ranch property. [na white-hot real estate market, the property was
not sold because of the unrealistic high asking price of $12 Million, that was later reduced to $10 Million. The only offer received
was $6.5 Millon. In March 2017, prior to providing my financing, my analysis established a valuation of the proparty in the range:
of $5.2 to $8.7 Millon,
Moreover, the original listing agreement expired on June 1, 2018 and in the almost seven months since then, thera has been
no aclive representation nor marketing of the Arala Ranch property.
Furthermore, all indications are that the real estate market has peaked, and property values ara now on a decline; especially
expensive and non-income producing properties, like the Arata Ranch, And every day the economy seems to have more dark
clouds on the horizon.
You have been representing the John and Grace Arata 2004 Trust since March 4, 2018 -- for 293 days. Your client Is now in
default on my second note in the principal amount of $1.1 Million and interest, that was due and payable on Novernbor 1,
2018. My first note In the principal amount of $530,000 and interest, is due and payable on March 1, 2019. Additionaliyyour client
is currently incurring interest fees of more than$20,000 per month.
{have been very patient in this matter, and will provide your etient one final opportunity to avoid commencement of foreclosure on
their property interest. On or bafore December 28, , 2018, please either:
Declaration of EmestJ. (cNabb
{i} facilitate the execution of a listing agreement by Mr, Cerbonethat sets forth a realistic schodute of price reductions on the listing
price of the Arata Ranch property starting with an asking price of less than $8.6 Million; or alternalively, (i) fle a motion with the
court seeking the removal of the court-appointed referee for good cause and an order for the immediately sale
of the Arata Ranch
Property via ano reserve auction or a structured price reduction plan with a starting price of $8.6 Mifion or less,
Amotion to remove tho referee is certainly justified given Mr. Garbone’s gross neglect in allowing the broker listing agreemant to
expire on June 1, 2018 and tho property not being actively marketed, in the almost seven months sinco then, Additionally,
the severe harm impacting your client further justifies the filing of such a motion.
in the absence of the abova, you will leave me ne choice, but to immediately commence foraclosure,
Thank you for your time and consideration.
Sincerely,
Emlo McNabb:
a
Decl ion of Ernest J. MoNabb
EXHIBIT G
Ernest J. MeNabb
558 - 28th Avenue, #201
San Francisco, California 94121-2867
Email: emlemcnabb@aol.com
Telephone: (415) 385-2000
January 8, 2019
VIA UPS NEXT DAY AND FIRST-CLASS CERTIFIED MAIL
Ms. Marie Arata Ms. Laura Arata
Estate of Gary J, Arata John and Grace Arata 2004 Trust
2001 Green Hollow Road 1402 West 13th avenue
Colfax, Washington 99111 Stillwater, Oklahoma 74074
Mr. Louis J. Arata
53 East Cremetti Lane
Yerington, Nevada $9447
Re: Borrower: John and Grace Arata 2004 Trust
Original Loan amount: $1,100,000.00
Loan Date: March 28, 2017
NOTICE OF DEFAULT
Ladies and Gentleman:
it am the noteholder of the above described Promissory
Note.
in recent months,
I have made repeated attempts
facilitate a sale of tl he Arata Ranc to
h Property so that we
could avoid foreclosur © on my First
and Second Notes and so
that the beneficiaries of the Arat
a 2004 Trust could
receive their respectiv @ share of
the proceeds.
Unfortunately, my most reasonable offe
r to avoid
foreclosure, as set forth in
my email of December 18, 2018
to the counsel of the John and
Grace Arata 2004 Trust
(“Arata 2004 Trust” }, was not
accepted by the deadline of
December 28, 2018.
——_ _-
—=- Declaration of Ernest J. McNabb
= =S== ——
I was particularly concerned that since June 1, 2018,
when the listing agreement with San Benito Realty, Inc.
expired, there has been no active representation nor
marketing of the Arata Ranch Property. Leaving the Arata
Ranch Property without an active sales effort for the last
seven months, especially since you are now incurring total
interest charges (on my First and Second Notes) of
approximately $24,000 per month and have loans due and
payable, is not in your interest nor mine.
I hope you understand why I have no choice, but to
protect my interest and exercise my rights and remedies
under the loan documents or at law or in equity.
The above referenced loan is in default because the
loan has matured and the required final payment due on
November 1, 2018 has not been made. The total amount now
due and payable as of the date of this notice is as
follows:
Accrued Interest & Principal
Due 11/1/2018 $1,215,497.00
Late Fee on 11/12/18 1,283.00
Interest 11/1/2018 to 1/8/2019 $40,800.00
TOTAL DUE $1, 257,580.00
A detailed breakdown of the total amount due is attached to
this letter,
To cure this default, on or before January 20, 2019, I
must receive the amount of $1,257,580.00. The default will
not be considered cured unless I receive “good funds” in
the amount of $1,257,580.00 on or before January 20, 2019,
If any check (or other payment) is returned to me for
insufficient funds or for any other reason, “good funds”
will not have been received and the default will not have
been cured. No extension of time will be granted due to a
returned payment.
If the default is not cured on or before January 20,
2019, then foreclosure proceedings will be initiated at
that time. As such, the failure to cure the default on or:
before January 20, 2019, may result in the acceleration of
the sums secured by the Deed of Trust; and the foreclosure
and sale of your interest in the Arata Ranch Property,
oe —
—
Pursuant to Paragra ph 17
of the Deed of Trust that secu
the above Promissor y Note, the Borrower res
reinstate has the “right to
after acc eleration and the right
action to to bring a court
assert th @ nonexistence of a
default or any other
defense of Borrower to acceleration
and gale,”
Nothing set forth herein is intended,
and nothing
herein shall be deemed to mod: ify,
limit, release, reduce,
or waiver any of my rights, remedies or
privileges under
any of the loan documents, or at law or in equity, all of
which are hereby specifical ly reserved
, Furthermore, the
enumeration of any specific default herein is not intended,
and shall not be deemed, to waive other defaults that may
current exist under the loan documents,
Sincerely,
2 CR =
Ernst « McNabb
Trustee, of the Ernest J, M
Preview
Electronically Andrew J. Wiegel, Esq., (SBN 075204) by Superior jt alifexnia, unity of 1 Matec G. Ryan Patrick, Esq., (SBN 275517) ON 10/22/2020 WIEGEL LAW GROUP, PLC By. /s/ Marcela Enriquez Deputy Clerk 414 Gough Street San Francisco, CA 94102-4464 (415) 552-8230 ndrew@wiecellawgroup.coi ryan@wiegellawgroup.cor Attorneys for Defendants: ERNEST J. MCNABB, Individually and as Trustee of the ERNEST J, MCNABB REVOCABLE LIVING TRUST DATED 11/19/1990 10 11 SUPERIOR COURT OF CALIFORNIA 12 COUNTY OF SAN MATEO a3 14 PENINSULA OPEN SPACE TRUST, Case No,: 20 CIV-02349 15 Plaintiff, 16 vs, DECLARATION OF ERNEST J. REDWOOD TRUST DEED SERVICES, INC., 17 MCNABB IN SUPPORT OF A CALIFORNIA CORPORATION; ERNEST DEFENDANT’S OPPOSITION TO 18 J. MCNABB, Individually and as PLAINTIFF’S MOTION FOR ‘Trustee of the ERNEST J. MCNABB 19 PRELIMINARY INJUNCTION REVOCABLE LIVING TRUST DATED 11/19/1990; LOUIS 20 Date: November 5, 2020 J. ARATA, I Time: 2:00 P.M. 21 Dept.: 28, Courtroom 2F 22 Defendant Hon. George A Miram 23 24 25 26 27 28 DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION ep I, Ernest J. McNabb, declare and state as follows: 1. Tam the trustee of the Ernest J. McNabb Revocable Living Trust 11/19/1990 and a defendant, along with my trust, in the above entitled action. The facts stated in this Declaration are true and correct of my own personal knowledge, except for those matters expressly stated on information and belief, which matters that I believe to be true. If called as a witness, I could and would competently testify thereto. 2. Tama professional real estate investor. The source of income on which I depend upon to live and pay my bills is generated from my real estate investments, 10 di FACTUAL BACKGROUND ON FUNDING THE LOAN 12 3. In February 2017, I was asked to consider funding a loan in the principal of $1,100,000 13 with an 18-month term that would be secured as a second mortgage against the John and Grace 14 Arata 2004 Trust’s (“Arata Trust”) interest in and to the real property commonly known as the 15 Arata Ranch, located at 6090 Stage Road and 3225 Pomponio Road, San Gregorio, California 16 17 (“Arata Ranch”), 18 4. On information and belief, it was my understanding that the Arata Trust required this 19 loan because Gary J. Arata, a beneficiary of the Arata Trust, had placed two personal loans 20 against his interest in the Arata Ranch real property that were cither in default or on the brink of 21 22 default and his estate could not pay them; and additionally, the Arata Trust was delinquent in 23 paying its property taxes for the Arata Ranch property. 24 5. On information and belief, it was also my understanding, the Arata Ranch real property 25 would be immediately listed for sale and extensively marketed until it was sold, 26 27 28 DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO PLAINTIFF’S MOTION F OR PRELIM INARY INJUNCTION 6. There are two other San Mateo Superior Court actions involving disputes between the Arata family members, Arata v. Arata, Case No, CIV531627 and Jn the Matter of John & Grace Arata 2004 Trust, Case No. 19-PRO-01586. 7. At the time I was considering funding the loan, it was my understanding that there was a Settlement Agreement between the parties in the San Mateo Superior Court action: Arata v. A rata, Case No. CIV531627 that required the sale of the Arata Ranch property and a February 28, 2017 court order approving the sale of the Arata Ranch pursuant to the terms of the Settlement Agreement. 10 11 8. Based on this understanding, I decided to fund this bridge loan. I would not have agreed 12 to the loan, had I known the term of the loan would exceed two years. 13 9. On March 28, 2017, a note was executed by the trustee of the Arata Trust for my loan in 14 the principal amount of $1,100,000 and it was secured by a Deed of Trust against the Arata 15 Trust’s interest in the Arata Ranch real property. 16 17 10. On November 1, 2018, the Arata Trust defaulted on my note secured by the subject 18 property. 19 11, Before and after this default, I repeatedly reached out to the Arata Trust expressing my 20 concern about the Trust’s allowing the Arata Ranch listing agreement to expire on June 1, 2018, 21 22 and leaving the property without active representation and with no active sales and marketing 23 effort. 24 McNABR’S LOAN FORBEARANCE 25 12. [have repeatedly expressed my willingness to work with the Arata Trust to facilitate a 26 sale and to provide the necessary forbearance if they took prudent steps to list the Arata Ranch 27 28 DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION eye property with experienced brokers to effectively market the property. My efforts to reach out to the Arata Trust, include but are not limited to the following: 13. On November 6, 2018, I sent an email to Mr. Gary Dambacher (“Dambacher”), the attorney for the Arata Trust, which stated, in part, that: Lam very concerned about this situation. The expressed terms of the Arata Settlement Agreement with an effective date of January 1, 2017 and the associated February 28, 2017 “Order on Stipulation to Appoint Referee to Sell and Divide Property” required the sale of the Arata real property commonly known as 6090 Stage Road and 3225 Pomponio Creek Road, San Gregorio, California. Yet, in the 20 months since the court order and in the hottest real estate market, there has been minimal effort to sell the property. 10 ib 14. Attached hereto as Exhibit “A” is a true and correct copy of my email of November 6, 12 2018 to Gary Dambacher. 13 15. On November 6, 2018, Dambacher responded, “[w]e have been working very hard on 14 the sale of the property and as a preliminary matter, we have secured our client's authority to is have Bill Maier represent the Grace Arata Trust's interest in listing the property, an issue we 16 17 addressed in our prior phone conference. We have contacted Bill and he has agreed to co-list the 18 property with the realtor selected by the Lillian Arata Trust.” 19 16. Attached hereto as Exhibit “B” is a true and correct copy of an email from Gary 20 Dambacher received on November 6, 2018. ai 22 17, On November 8, 2018, I sent an email to Dambacher stating, in part, that I needed to see! 23 on or before December 1, 2018, an executed agreement between the Arata Trust and the co- 24 brokers (William Maier and the broker chosen by the Clarence and Lillian Arata 2002 Trust). I 25 further stated, in part: 26 [Mly concern is that more than 20 months have passed since the court ordered the 27 sale of the property and it has been 252 days since Ms. Laura Arata was appointed 28 successor trustee by Judge Harry Tobias. Yet, during this time, there has been no DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION mee credible effort to sell the property in a white-hot real estate market. Instead, I have repeatedly heard about the intention to sell; but intentions without actions are meaningless. It has been more than 19 months since I made my loan and your client is now in default. 18, Attached hereto as Exhibit “C” is a true and correct copy of my email of November 8, 2018 to Gary Dambacher. 19, On November 29, 2018, having not heard from Dambacher in response to my November 8, 2018 email, I once again reached out to him and sent an email that asked, inpart: (1) Whether the listing agreement, timetable and marketing plan of Chris Bailey and Bill Maier has been approved by your client and by Lillian Arata? (2) And 10 Has the court appointed referee, Michael Carbone, approved the representation of 1i Chris Bailey and Bill Maier to sell the Arata Property? (3) Has the issue of Lillian's life estate been resolved? if so, what are the terms? 42 20, Attached hereto as Exhibit “D” is a true and correct copy of my email of November 29, 13 14 2018 to Gary Dambacher. 15 21. In response, on November 29, 2018, Dambacher and his associate Ms. Carrie McKernan 16 (“Mckernan”), responded that they would be receiving a listing agreement that week, after their iF review it would be submitted to the court appointed referee, Mr. Michael Carbone and that they 18 19 had reached an agreement in principal with the Lillian Arata side “for the property to be sold 20 without the life estate,” 21 22, Attached hereto as Exhibit “E” is a true and correct copy of an email received from 22 Gary Dambacher and Carrie McKernan received on November 29, 2018. 23 23. On December 18, 2018, I wrote an email to Dambacher and McKernan that stated, in 24 25 part: 26 Ihave been very patient in this matter, and will provide your client one final opportunity to avoid commencement of foreclosure on their property interest. On 27 or before December 28, 2018, please either: (i) facilitate the execution of a listing 28 agreement by Mr. Carbone that sets forth a realistic schedule of price reductions DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO. PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION, enn on the listing price of the Arata Ranch property starting with an asking price of less than $8.5 Million; or alternatively, (ii) file a motion with the court seeking the removal of the court-appointed referee for good cause and an order for the immediately (sic) sale of the Arata Ranch property via a no reserve auction or a structured price reduction plan with a starting price of $8.5 Million or less, 24, Attached hereto as Exhibit “F” is a true and correct copy of my email of December 18, 2018 to Gary Dambacher and Carrie McKernan. 25. On December 18, 2018, McKernan responded that they were actively negotiating with the agent of a perspective purchaser of the Arata Ranch. 10 26, After not receiving from the Arata Trust, a specific response to my December 18, 2018 a1 email, on January 8, 2019, I sent a Notice of Default to the principals of the Arata Trust. The 12 Notice of Default stated, in part: 13 14 In recent months, I have made repeated attempts to facilitate a sale of the Arata Ranch Property so that we could avoid foreclosure on my First and Second Notes 15 and so that the beneficiaries of the Arata 2004 Trust could receive their respective 16 share of the proceeds. Unfortunately, my most reasonable offer to avoid foreclosure, as set forth in my email of December 18, 2018 to the counsel of the 17 John and Grace Arata 2004 Trust (“Arata 2004 Trust”), was not accepted by the deadline of December 28, 2018. 18 19 I was particularly concerned that since June 1, 2018, when the listing agreement with San Benito Realty, Inc, expired, there has been no active representation nor 20 marketing of the Arata Ranch Property, Leaving the Arata Ranch Property without an active sales effort for the last seven months, especially since you are al now incurring total interest charges (on my First and Second Notes) of 22 approximately $24,000 per month and have loans due and payable, is not in your interest nor mine. 23 24 27. Attached hereto as Exhibit “G” is a true and correct copy of my January 8, 2019 Notice 2 of Defauit. 26 28. On January 11, 2019, I sent an email to Dambacher explaining why I served the Notice 27 28 of Default: DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION een As you are aware, I have been very patient in this matter and have tried to work with all parties to avoid foreclosure, And I have even emailed Mr, Carbone regarding my desire to avoid foreclosure and offered to help structure a plan to promptly sell the Arata Ranch property at the highest price. Mr, Carbone never responded to my email. It has been 225 days since the Arata Ranch property listing agreement has expired and there has been no active marketing of the 5 property. The real estate market has peaked and is now in a decline. This is an untenable situation, to the extreme detriment of not only your client, but also impairing my security interest in the Arata Ranch property, [Emphasis in Original] 29. Attached hereto as Exhibii “H” is a true and correct copy of my email of January 11, 9 2019 to Gary Dambacher. 10 30. Thereafter, on January 11, 2019, I received an email from Dambacher that he had secured 1 a lender to refinance the Arata Ranch property to pay off my note, she stated, in part: 12 Please submit your respective demands under both notes to our office. We have 13 secured a private lender to pay in full the notes you are holding. My partner, Tim 14 Trujillo, will be drawing up loan documents. Mr. Trujillo is currently out of the office for today, but we will advise you by email over the weekend, but no later 15 than Monday, January 14”, of the parameters of the escrow and other matters 16 germane to completing the refinancing of your notes and deeds of trust. We are endeavoring to have the process completed by Friday, January 18, 2019. 17 Therefore, we request that you refrain from incurring any costs, expenses or legal fees relating to the commencement of foreclosure of the subject notes and deeds 18 of trust, 19 29, Attached hereto as Exhi! bit “I” is a rue and correct copy of an email received from Gary 20 Dambacher on January 11, 2019, 2 22 30. On January 18, 2019, I received an email from Dambacher about “a new development” 23 that he received an offer for the purchase of the Arata Ranch and thus, would not be refinancing 24 the property: 25 We received an offer on the property by email today which is attached. Our client 26 agrees with the sales price, We believe that the Referee is prepared to accept it... 27 Although we have a lender prepared to fund our refinance, it does not make sense 28 for us to absorb fees associated with the refinance, only to have an escrow close DECLARATION OF ERNEST J, MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO PLAINTIEI’S MOTION FOR PRELIMINARY INJUNCTION = on the sale of the property within 60 days. Also, it would not give the lender a reasonable return on the loan to have it paid in such a short duration. 31. Attached hereto as Exhibit “J” is a true and correct copy of an email received from Gary Dambacher on January 18, 2019. 32. On January 23, 2019, in an email I responded to Dambacher’s email of January 18, 2019 by stating: First, I was disappointed that you did not finalize the refinancing of the notes and close escrow, as you represented you would, in your email of January 11, 2019. Thave no confidence that the pending offer of Scott Cook, with all the outstanding 10 issues, will result in the "close on the sale of the property within 60 days.” And I a1 have repeatedly questioned why the Arata Ranch property has not been listed with a broker and actively marketed. It is an untenable situation, that the Arata 12 Ranch property has been without active marketing for 237 days — to the detriment of my interests and your client. [Emphasis in Original] 13 14 I will hold off from instituting any action for foreclosure, if on or before 5:00 PM, Wednesday, January 30, 2019, you either (i) finalize the refinancing and close 15 escrow with First American Title Company, or (ii) send me an executed copy of 16 the listing agreement for the sale of the Arata Ranch property, that was previously presented to Mr, Michael Carbone by Mr, Bill Maier. a7 Otherwise, you will leave me no choice but to immediately proceed as outlined in 18 my letters of January 8, 2019. 19 33. Attached hereto as Exhibit “K” is a true and correct copy of my email of January 23, 20 2019 to Gary Dambacher. 24a 22 34, Since I received no response from the Arata Trust to my January 23, 2019 email, on 23 February 7, 2019, a Notice of Default was recorded against the Arata Trust’s interest in the Arata 24 Ranch real property. 25 35. A Trustee Sale of the Arata Trust’s interest in the Arata Ranch was scheduled for June 5, 26 2019. 27 28 DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION = = 36, On May 29, 2019, I received a letter from POST that the pending Trustee Sale would violate their Conservation Easement on the Arata Ranch, 37. On May 30, 2019, I responded to the attorney representing POST that prior to receiving the POST letter and Notice of Hearing and for reasons totally independent of the issues raised in the POST letter and Notice, I had made a decision to postpone the above referenced Trustee Sale in an effort to facilitate the sale of the entire Arata Ranch property. Thereafter, I directed Redwood ‘Trust Deed Services to postpone the Trustee Sale scheduled for June 5, 2019 until July 10, 2019. 10 i 38. Thereafter, in an effort to provide time for the Arata Trust’s emergency motion to sell 12 the Arata Ranch free and clear of the life estate, which was scheduled to be heard in the Superior 13 Court of San Mateo County on July 25, 2019, I extended the Trustee Sale to July 24, 2019, and 14 then extended the sale again to August 7, 2019. 15 39. On July 25, 2019, after the hearing on the Arata Trust emergency motion, in the hallway 16 7 of the courthouse I spoke to Dambacher and Ms, Laura Arata, the trustee of the Arata Trust and 18 expressed my willingness to work with them to facilitate the sale of the Arata Ranch, if the 19 property was immediately listed with an experienced broker, had a realistic sales price, and was 20 appropriately marketed. 21 22 40. Twas given assurances by Dambacher that the property would be immediately listed and 23 marketed; and that Mr. William Maier would be the broker representing the Arata Trust’s 24 interest, I made it very clear that I would be cooperative, but also diligent in monitoring the 25 Arata Trust’s progress in listing and maketing the Arata Ranch property. 26 41. [then repeatedly postponed the Trustee Sale from August 14, 2019 to August 28, 2019, 27 28 then to September 11, 2019, then to September 25, 2019, then to October 9, 2019, then to DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION ge October 23, 2019, then to December 4, 2019 — all in the hope that the Arata Trust would take concrete steps to list and sale the Arata Ranch property as a whole, but they didn’t, 42, On information and belief, in November 2019, | was shocked to learn that the clean-up of the Arata Ranch by the Estate of Gary Arata, that was required to be completed by April 1, 2017 under the Settlement Agreement ] 5(c), had not taken place and was holding up the listing of the Arata Ranch property. Under the Settlement Agreement, the clean-up of the Arata Ranch is condition precedent to the sale and marketing of the Arata Ranch property. 43, On information and belief, the co-executor of the Estate of Gary Arata who committed 10 1i the estate to the clean-up under the Settlement Agreement is Ms. Laura Arata, who also serves as 12 the trustee of the Arata Trust. 13 44, Asa result of learning of Ms. Laura Arata’s failure to clean-up the ranch, and because of 14 her inability to even get a listing agreement executed for more than 18 months; I lost all faith and as 16 contidence in Ms, Laura Arata’s ability and competence to serve as trustee of the Arata Trust and 17 to facilitate the sale of the property. 18 45. These events caused Louis Arata to file a petition to remove Laura Arata as Trustee of 19 the Arata Trust. This action is Zn the Matter of John and Grace Arata 2004 Trust San Mateo 20 Superior Court Case No. 19-PRO-01586. 21 22 46. In late 2019, I had several conversations with William Maier, who advised me that he 23 was approached by Louis Arata, a beneficiary of the Arata Trust, to serve as interim and 24 successor trustee, if the court approved Louis Arata’s petition for the removal of Ms. Laura Aratal 25 as trustee. Mr, Maier indicated he was willing to serve, only if | would agree to provide at least a 26 six-month period of forbearance in seeking the foreclosure of the Arata Ranch property, to allow 27 28 for adequate time to market and sale the Arata Ranch. DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO PLAINTIFE’S MOTION FOR PRELIMINARY INJUNCTION Styne 1 47. Asa result of Mr. Maier’s experience in real estate and finance, his extensive knowledge of the Arata Ranch property and because of my confidence in his ability to get things done; I agreed to provide Mr. Maier with at least a six-month forbearance period, if he becomes the interim and/or successor trustee of the Arata Trust. HARM SUFFERED BY McNABB 48. It has been nearly 2 years since the Arata Trust first defaulted on my loan on November 1, 2018. In the time leading up to this motion, I have repeatedly postponed the Trustee’s sale and continued to work with the Arata family in an effort to sell the property as a 10 12 whole. 12 49. [have also provided repeated assurances to POST that I will fully honor the 13 Conservation Easement if the Trustee’s Sale is allowed to move forward so that I can acquire a 14 fee interest in the Arata Ranch property encumbered by my loan. I have no intention to 15 subdivide or engage in any use or activity prohibited by the Conservation Easement. 16 17 50. Tam simply trying to get my money back, Acquiring a fee interest in the Arata 18 Ranch property through a Trustee’s Sale will give me standing to do so. Acquiring a fee interest 19 will give me standing as an owner which will allow me to move a partition action forward and 20 compel the sale of the entire Arata Ranch property to a single owner. This will allow me to 21 22 recover the money I’m owed and achieve POST’s goal of common ownership of the Arata 23 Ranch under the Conservation Easement, 24 51. Ifa preliminary injunction is issued, I will experience irreparable harm in that I will 25 continue to be denied the use of the money ’'m owed. In addition, I will also be denied the right 26 to enforce my mortgage secured against the Arata Trust interest in the Arata Ranch real property. 27 28 The loss of this property right venders my loan unenforceable and denies me standing as an DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION reps owner lo solve the problem. Furthermore, it would put the fate of ever recovering the money I’m] owed on the loan in the control of the feuding Arata family who has demonstrated over the past two years that they have no intention of ever selling the property. Thus, an injunction would deny me recovery indefinitely. 50. Again, as a real estate investor I depend the income of my investments to live and pay my bills. As it stands, [ am owed over $2.3 million dollars on this loan which has been in default for 2 years. Depriving me of the use of my money adversely impacts my business which in turn makes is harder to generate income to live and pay my bills. 10 1. Sk. The issuance of a preliminary injunction would put me in severe financial hardship, 12 at a time of great economic uncertainty. I am already experiencing substantial financial losses as 13 a result of the Covid-19 pandemic crises, including non-payment of rent by the majority of my 14 tenants, If I am not permitted to proceed with a Trustee Sale, I will not receive funds in an 15 16 amount of more than $2.3 Million that will likely be gencrated from the Trustee Sale; this will do 17 substantial harm to my business, including putting me at a significant competitive disadvantage 18 because of a lack of funds and will result in a loss of future business opportunities. The impact 19 on my business from being at a competitive disadvantage and by a loss of future business 20 opportunities cannot be calculated. aL 22 23 I declare under the penalty of perjury under the laws of the State of California that the 24 foregoing is true and correct and that this Declaration was executed on October 224 , 2020, at 25 San Francisco, California. 26 /s/Ernest_ J. McNabb 27 Ernest J. McNabb 28 DECLARATION OF ERNEST J. MCNABB IN SUPPORT OF DEFENDANT’S OPPOSITION TO. PLAINTIFF'S MOT! ION FOR PRELIMINARY INJONCTION —T wr EXHIBIT A McNabb Ernie fe _ November 6, 2018 at 2:49 PM Arata Loan due 11/1/2018 Details To: Gary-Arata Dambacher, Ce: MeNabb Ernie Dear Gary, Jam writing {o you as a follow-up to our telephone conversation of October 16, 2018. At the end of our conversation, you indicated that you would endeavor to arrange a conference call with the Attorney representing Lillian Arata, Mr. Tim Baldwin, but we never heard back from you regarding the conference call. As you are aware, as of November 1, 2018, the Gary Arata Estate and Louis Arata are in default on my Second Note and as a result, the interest on the note has now risen to 18% per annum. Additionally, the First Note on the property shall become due and payable on March 1, 2019. lam very concerned about this situation. The expressed terms of the Arata Settlement Agreement with an effective date of January 1, 2017 and the associated February 28, 2017 "Order on Stipulation to Appoint Referee to Sell and Divide Property” required the sale of the Arata real property commonly known as 6090 Stage Road and 3225 Pomponio Creek Road, San Gregorio, California. Yet, In the 20 months since the court order and in the hottest real estate market, there has been minimal effort to sell the property. Please set forth the concrete steps that will be immediately taken to assure that the property will be promplly sold. Thank you for your time and cooperation. Ernie McNabb _Deciation of est MNP EXHIBIT.8 — From: Gary Dambacher Date: November 6, 2018 at 5:28:08 PM PST ‘To: Ernie McNabb Ce: Carrie McKernan , luckyla1024@ yahoo.col Subject: Re: Arata Loan due 14/1/2018 Dear Ernie, We have been working very hard on the sale of the property and as a preliminary matter, we have secured our client's authority to have Bill Maier re} present the Grace Arata Trust's interest in listing the property, an issue we addessed in our prior phon: @ conference. We have contacted Bill and he has agreed to co-list the properly with the realtor sel icted by the Lillian Arata Trust. As you know, there is a current offer on the property for $6.5 million but it is hoped that this offer can be successfully negotiated upward to arrive at a sales price satisfa ctory to ail owners. Moreover, we feel that in view of negotiations with Tim Baldwin, the @ attorney for Lil ian, that the properly can be sold without the relained life estate interest which was a term of the settlem ent agreement. Thank you for your int iquiry and be assured that | am doing everyth ing | can to move this along in the limited time that Laure ‘a Arata has been appointed by the court as trustee to succeed Louis Arata, Best regards, Gary Dambacher Sent from my iPhone Declaration of Ernest J McNabb wh EXHIBIT-C McNabb Ernie B November 8, 2018 at 9:40 AM Re: Arata Loan due 11/1/2018 Details To: Gary Dambacher, Cc: Carrie McKernan, laura arata Dear Gary, Thank you for your prompt response to my message. ! am happy to learn that it is your client’s intention that Bill Maier will be retained as co-broker to sell the property. Having said that, my concern is that more than 20 months have passed since the court ordered the sale of the properly and it has been 252 days since Ms. Laura Arata was appointed successor trustee by Judge Harry Tobias, Yet, during this time, there has been no credible effort to sell the property in a white-hot real estate market, Instead, | have repeatedly heard about the intention to sell; but intentions without actions are meaningless, it has been more than 19 months since | made my loan and your client is now in default, Therefore, | need to see on or before December 1, 2018, an executed agreement with the co-brokers that sets forth a viable pian to sell the property that includes clear metrics that will trigger price reductions in the sale price in the event the property doesn’t immediately sell and/or a no reserve auction of the property. ‘Thank you for your time and consideration. Ernie McNabb Declaration of Ernest J. MeNabb EXHIBIT D McNabb Ernie © Inbox - iCloud =~ November 29, 2018 at 2:53 PM Arata Loan-Due 11/1/18 Details To: Gary-Arata Dambacher, Ce: McNabb Ernie Dear Gary, fam following-up on my November 8, 2018 message to you, a copy of which Is below. Please let me know the following: (1) Whether the listing agreement, timetable and marketing plan of Chris Bailey and Bill Maier has been approved by your client and by Lillian Arata? (2) Has the court appointed referee, Michael Carbone, approved the representation of Chris Bailey and Bill Maler to sell the Arata Property? (3) Has the Issue of Lillian’s life estate been resolved? if so, what are the terms? Thank you, Ermle McNabb Declaration of Ernest J, McNabb EXHIBIT E From: Carrie McKernan Date: November 29, 2018 at 4:57:53 PM PST To: “erniemcnabb@aol.com" Gc: Gary Dambacher Subject; RE: Arata Loan-Due 14/148 Dear Emie: Thank you for you inquiry. Attorney, Carrie McKernan of our office has coi mmunicated with Mr, Maeir ragarding the listing agreement and was informed we would receive the sting agreement this week. We will let you know when it is received, Upon receipt and review, it will be submitted fo Mr. Garbone for signature . In terms of the life estate, we have an agreement in principa l with Lillan's side , by and through her attorney, Tim Baldwin, that the property will be sold without the life estate. Our side of t he estate will pay consideration to Lillian for her waiver of the life estate interest, Gary & Carrie Carrie M. McKernan, Esq. Carrie M. Mckernan, Esq. Dambacher, Trujillo & Associates, a professional law corporation 32 N. Washington Street Sonora, CA 95370 Office Telephone: (209) 533-1883 Office Facsimile: (209) 533-3844 e-mail: carrie@dtalawyers.com Declaration of Emest J. McNabb = EXHIBIT F McNabb Ernie EXinbox - Cloud Becember 18, 2018 at 10:28 AM Arata Ranch Property Yo: Gary-Arata Dambacher, Cartie McKernan Dear Gaty and Carrie, On November 8, 2018, | wrote you requesting that on or before December 1, 2048, that you facilitate an executed listing agreement “that sets forlh a viable plan to sell the {Arata Ranch] property that includes clear metrics that will tigger price reductions in the safe price Ia the event the properly doesn’t immediately sell and/or a no roserve auction of the property.” As of the date of this emall, no listing agreement has been executed. On December 12, 2018, I wrote the court appointed referee, Mr. Michael Carbone, requesting immediate action in structuring a viable plan to safe the Arata Ranch property. As of the date of this email, Mr. Carbone has not responded to my message. ‘On February 28, 2017, the court ordered the sale of the Arata Ranch property. [na white-hot real estate market, the property was not sold because of the unrealistic high asking price of $12 Million, that was later reduced to $10 Million. The only offer received was $6.5 Millon. In March 2017, prior to providing my financing, my analysis established a valuation of the proparty in the range: of $5.2 to $8.7 Millon, Moreover, the original listing agreement expired on June 1, 2018 and in the almost seven months since then, thera has been no aclive representation nor marketing of the Arala Ranch property. Furthermore, all indications are that the real estate market has peaked, and property values ara now on a decline; especially expensive and non-income producing properties, like the Arata Ranch, And every day the economy seems to have more dark clouds on the horizon. You have been representing the John and Grace Arata 2004 Trust since March 4, 2018 -- for 293 days. Your client Is now in default on my second note in the principal amount of $1.1 Million and interest, that was due and payable on Novernbor 1, 2018. My first note In the principal amount of $530,000 and interest, is due and payable on March 1, 2019. Additionaliyyour client is currently incurring interest fees of more than$20,000 per month. {have been very patient in this matter, and will provide your etient one final opportunity to avoid commencement of foreclosure on their property interest. On or bafore December 28, , 2018, please either: Declaration of EmestJ. (cNabb {i} facilitate the execution of a listing agreement by Mr, Cerbonethat sets forth a realistic schodute of price reductions on the listing price of the Arata Ranch property starting with an asking price of less than $8.6 Million; or alternalively, (i) fle a motion with the court seeking the removal of the court-appointed referee for good cause and an order for the immediately sale of the Arata Ranch Property via ano reserve auction or a structured price reduction plan with a starting price of $8.6 Mifion or less, Amotion to remove tho referee is certainly justified given Mr. Garbone’s gross neglect in allowing the broker listing agreemant to expire on June 1, 2018 and tho property not being actively marketed, in the almost seven months sinco then, Additionally, the severe harm impacting your client further justifies the filing of such a motion. in the absence of the abova, you will leave me ne choice, but to immediately commence foraclosure, Thank you for your time and consideration. Sincerely, Emlo McNabb: a Decl ion of Ernest J. MoNabb EXHIBIT G Ernest J. MeNabb 558 - 28th Avenue, #201 San Francisco, California 94121-2867 Email: emlemcnabb@aol.com Telephone: (415) 385-2000 January 8, 2019 VIA UPS NEXT DAY AND FIRST-CLASS CERTIFIED MAIL Ms. Marie Arata Ms. Laura Arata Estate of Gary J, Arata John and Grace Arata 2004 Trust 2001 Green Hollow Road 1402 West 13th avenue Colfax, Washington 99111 Stillwater, Oklahoma 74074 Mr. Louis J. Arata 53 East Cremetti Lane Yerington, Nevada $9447 Re: Borrower: John and Grace Arata 2004 Trust Original Loan amount: $1,100,000.00 Loan Date: March 28, 2017 NOTICE OF DEFAULT Ladies and Gentleman: it am the noteholder of the above described Promissory Note. in recent months, I have made repeated attempts facilitate a sale of tl he Arata Ranc to h Property so that we could avoid foreclosur © on my First and Second Notes and so that the beneficiaries of the Arat a 2004 Trust could receive their respectiv @ share of the proceeds. Unfortunately, my most reasonable offe r to avoid foreclosure, as set forth in my email of December 18, 2018 to the counsel of the John and Grace Arata 2004 Trust (“Arata 2004 Trust” }, was not accepted by the deadline of December 28, 2018. ——_ _- —=- Declaration of Ernest J. McNabb = =S== —— I was particularly concerned that since June 1, 2018, when the listing agreement with San Benito Realty, Inc. expired, there has been no active representation nor marketing of the Arata Ranch Property. Leaving the Arata Ranch Property without an active sales effort for the last seven months, especially since you are now incurring total interest charges (on my First and Second Notes) of approximately $24,000 per month and have loans due and payable, is not in your interest nor mine. I hope you understand why I have no choice, but to protect my interest and exercise my rights and remedies under the loan documents or at law or in equity. The above referenced loan is in default because the loan has matured and the required final payment due on November 1, 2018 has not been made. The total amount now due and payable as of the date of this notice is as follows: Accrued Interest & Principal Due 11/1/2018 $1,215,497.00 Late Fee on 11/12/18 1,283.00 Interest 11/1/2018 to 1/8/2019 $40,800.00 TOTAL DUE $1, 257,580.00 A detailed breakdown of the total amount due is attached to this letter, To cure this default, on or before January 20, 2019, I must receive the amount of $1,257,580.00. The default will not be considered cured unless I receive “good funds” in the amount of $1,257,580.00 on or before January 20, 2019, If any check (or other payment) is returned to me for insufficient funds or for any other reason, “good funds” will not have been received and the default will not have been cured. No extension of time will be granted due to a returned payment. If the default is not cured on or before January 20, 2019, then foreclosure proceedings will be initiated at that time. As such, the failure to cure the default on or: before January 20, 2019, may result in the acceleration of the sums secured by the Deed of Trust; and the foreclosure and sale of your interest in the Arata Ranch Property, oe — — Pursuant to Paragra ph 17 of the Deed of Trust that secu the above Promissor y Note, the Borrower res reinstate has the “right to after acc eleration and the right action to to bring a court assert th @ nonexistence of a default or any other defense of Borrower to acceleration and gale,” Nothing set forth herein is intended, and nothing herein shall be deemed to mod: ify, limit, release, reduce, or waiver any of my rights, remedies or privileges under any of the loan documents, or at law or in equity, all of which are hereby specifical ly reserved , Furthermore, the enumeration of any specific default herein is not intended, and shall not be deemed, to waive other defaults that may current exist under the loan documents, Sincerely, 2 CR = Ernst « McNabb Trustee, of the Ernest J, M