CLERK, BOARD OF SUPERVISORS

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1 Agenda Ju1y 30, 2013 CLERK, BOARD OF SUPERVISORS Honorable Board of Supervisors County of Alameda 1221 Oak Street Oakland CA Dear Board Members: July 24, 2013 SUBJECT: Claims for Excess Proceeds Tax Defaulted Property Sales RECOMMENDATIONS: Pursuant to the applicable provisions of the Revenue and Taxation Code, it is recommended that your Board approve the Hearing Officer's decision regarding Excess Proceeds Claims from tax defaulted property sales of 2009, included in Attachment A and direct the Auditor-Controller to distribute excess proceeds detailed in Attachment B pursuant to the Hearing Officer's Decision: Claimants Parcel No.(s) A. Global Discoveries, LTD B. Franklin AAA Holdings C. Global Discoveries, LTD DISCUSSION/SUMMARY The Tax Collector conducted sales of tax defaulted properties in Any excess in the proceeds of these sales, over and above the amounts collected to satisfy the tax delinquencies, were deposited by the Tax Collector in a delinquent tax sale trust fund. The excess proceeds were subject to claims made by parties of interest in accordance with applicable provisions of the California Revenue and Taxation Code. All claimants were given the opportunity for a hearing before the Assessment Hearing Officer to establish the priority and extent of their claims. The Assessment Hearing Officer has rendered his written decisions on these claims and they are now being submitted to your Board for approval and ratification. Your approval of the decision presented in Attachment B will result in the Auditor-Controller distributing the excess proceeds.

2 Honorable Board of Supervisors July 24,2013 FINANCING: There is no impact on the General Fund. Excess proceeds claims are paid from funds held in trust. Sincerely, CP/db P:\LegalHO\bdltr_7_3o_13 Cheryl Perk Assistant Clerk, Board of Supervisors Attachments: Notice of Decision; Excess Proceeds Distribution; cc: County Counsel Auditor-Controller Tax Collector Claimant File SUSAN S. MURANISHI, County Administrator CHERYL PERKINS, Asst. Clerk of the Board 1221 Oak Street, Room 536, Oakland, California 94612, (510) , Fax: (510)

3 ATTACHMENT A DECISION OF ASSESSMENT HEARING OFFICER COUNTY OF ALAMEDA APPLICANT: Paul J. Mansdorf as Chapter 7 Trustee for Community Development Company, through Global Discoveries, Ltd. PARCEL: FILE NO: EXCESS PROCEEDS 2009 HEARING DATE: JUNE 20, 2013 AGENDA NUIVlBER: SEVEI\I HEARING OFFICER: JED SOMIT, Esq. FACTS: There were two separate claims for the excess proceeds from the March 2009 auction sale of this tax defaulted parcel. The Assessee at the time of sale was Community Development Company. A. Jesse Robey Trust: Martha E. Compton, as Trustee of the Jesse Robey Trust, filed a Claim for Excess Proceeds received November 10, 2010, claiming $43, She relied upon a Deed of Trust recorded on August 28, 1998, as document , with the Alameda County Recorder. The Trustor is "Community Development Corporation", and the beneficiary is named as "Jesse Robey and Lula Robey, Husband and Wife, as joint tenants". The Short Form Deed of Trust contains the same parcel number. Also submitted was a Declaration - Death of Joint Tenant, with no showing that it was recorded. Martha Compton, in the Declaration, stated HEARING OFFICER DECISION Page 1

4 that Lula Marjorie Robey is the same person as named as a beneficiary in the Short Form Deed of Trust. A Certificate of Death for that person establishes a date of death of October 20, An Affidavit for Transfer of Personal Property of Decedent Without Administration, under Probate Code Section 13101, was submitted by Martha F. Compton as Trustee of the Jesse Robey dated December 22, 2004 (after the death of Lula Robey). It states that Jesse Robey died March 15, The Declaration states that the successor of the decedent under Probate Code section is Martha F. Compton as Trustee of the Jesse Robey Trust, although that is not explained. The Affidavit specifically asks that the excess proceeds be paid to Ms. Compton. A Certificate of Death confirmed Mr. Robey's date of death as March 15, A Brief in Support of Claim and eight exhibits thereto were provided by Frederic Harvey under cover of letter of May 23, A further review of those materials is not necessary. The Claim by IVls. Compton was withdrawn, pursuant to a letter from Mr. Harvey dated June 20, 2013, which states that upon further research, he "discovered documents which establish that the note and deed of trust which were the basis for her claim had in fact been paid off" in HEARING OFFICER DECISION Page 2

5 B. Paul J. Mansdorf, Chapter 7 Trustee of Community Development Corporation of Oakland, by Global Discoveries, Ltd. as Assignee. A Claim for Excess Proceeds was filed by Jed Byerly, Chief Operating Officer of Global Discoveries, Ltd., claiming 100% of the excess proceeds, as assignee. A Specific Power of Attorney signed by Paul J. Mansdorf as Chapter 7 Trustee for "Community Development Corporation" appoints Jed W. Byerly, Chief Operating Officer of Global Discoveries Ltd, as the attorneyin-fact for Paul J. Mansdorf, Chapter 7 Trustee of Community Development Corporation. The Power of Attorney is dated October 29, 2009, and specifically concerns obtaining the excess proceeds. It notes that the assignor has been advised of the right to file a claim for the excess proceeds on ~Iis own behalf. There is no statement concerning the disclosure of facts known by each party concerning the value of the claim assigned. The Power of Attorney specifically states that "Agent shall be able to deposit the subject funds into a trust in the name of Trustee." A printout from U.S. Bankruptcy Court, Northern District of California, Petition , identifies the debtor as Community Development Corporation of Oakland, and the Trustee as Paul Mansdorf; the Trustee is stated to be represented by Luce, Forward, Hamilton and Scripps. Also provided is an Order Authorizing Employment of Collection Agent, entered August 31, 2009, specifically allowing the employment of Global Discoveries, Ltd. to collect the excess proceeds. It states that, "No payment shall be made to Global for fees and expenses until HEARING OFFICER DECISION Pqge 3

6 after further Court order." The Claim is supported by a Grant Deed recorded August 28, 1998, from Jesse Robey and Lula Robey, Husband and Wife, to "Community Development Corporation". A Memorandum of April 4, 2012, for the Office of County Counsel was provided by Farand C. Kan, Deputy County Counsel and Jessica G. Williams, Associate County Counsel. After reviewing the documentation provided (not including the Harvey Brief or the new exhibits to the Brief, which were submitted after the date of the Memorandum, nor the material discussed below submitted by Global Discoveries immediately prior to the hearing), the Memorandum concludes that the Claim of Martha Compton was filed late and "should therefore be denied." (That issue is now moot.) The Memorandum concludes that the Claim by Global Discoveries, Ltd., should be granted for the full amount of the excess proceeds. No claimant appeared at the hearing on June 20 th As noted, Mr. Harvey sent a sent withdrawing the Claim by Ms. Compton. Amy Elmer for Global Discoveries, Ltd., sent an dated June 18 th stating that Mr. Byerly had a conflict and could not attend the hearing, but asking that its Claim be considered submitted with consideration of some additional documentation provided by attachments to the . The HEARING OFFICER DECISION Page 4

7 additional materials consisted of a letter from Ms. Elmer dated June 17, 2013, with attachments of a Notice of Trustee's Intent to Sell and Assign Rights in Excess Tax Sale Proceeds and Related Contract, Etc., and an Order upon that Notice. The letter stated that the bankruptcy court approved the Intent to Sell, that the bankruptcy proceeding is closed, and as a consequence, 25% of the excess proceeds should be distributed to Global Discoveries, and 75% to Franklin AAA Holdings in accordance with the court order. An Order Authorizing Trustee to Sell and Assign Rights In Excess Tax Sale Proceeds and Related Contract was entered August 11, 2010 in the Community Development Corporation of Oakland's bankruptcy proceeding, approving the Trustee's Request in the Notice of Trustee's Intent, Etc. The Notice of Trustee's Intent, Etc., states that Paul Mansdorf, as Trustee in Bankruptcy, intends to sell to Franklin AAA Holdings, LLC, on as "as-is, where-is" basis, without representation or warranty, all of the bankruptcy estate's interest in the excess tax sale proceeds at issue in this matter. That Notice identifies the excess proceeds as thought to be $52,100, or $46,994 (County Counsel's Memorandum states $43,359.29). It notes the entry of a prior order authorizing Global Discoveries, Ltd to collect the funds, upon a "25% net contingency free on the collection." It states that it often takes years to collect excess proceeds, and that the HEARING OFFICER DECISION Page 5

8 Trustee recently accepted an offer from Franklin AAA Holdings to purchase the bankruptcy's estate right to the excess proceeds, subject to Global Discoveries' rights. The Notice discusses factors which affect the value of the rights being assigned, such as delay, disagreement over the amount available, the potential of other claims, etc. DECISION: The Claim for Excess Proceeds of Paul J. Mansdorf, Chapter 7 Trustee of Community Development Corporation, by Global Discoveries, Ltd., is granted in the full amount of the excess proceeds. The funds are to be distributed 25% to Global Discoveries, Ltd., and 75% to Franklin AAA Holdings (if no address is known for that entity or can be obtained from Barry Milgrom, Esq., of Luce, Forward Hamilton & Scripps, attorneys for Paul J. Mandorf, then issue the check to "Franklin AAA Holdings c/o Global Discoveries, Ltd."). RATIONALE: Revenue & Taxation Code 4674 directs the application of excess proceeds from the sale of tax defaulted property as provided by section 4675; if not claimed within one year, the remaining amount shall be distributed as provided in section (b), after deduction of administrative costs. HEARING OFFICER DECISION Page 6

9 Revenue & Taxation Code 4675(a) provides that any party of interest in the property may file with the county a claim for the excess proceeds, in proportion to his or her interest held with others of equal priority in the property at the time of sale, at any time prior to the expiration of one year following the recordation of the tax collector's deed to the purchaser. The Claim for Excess Proceeds of Paul Mansdorf, Chapter 7 Trustee, by assignee Global Discoveries, Ltd., was timely l=iled. Section 4675(b) continues: "After the property has been sold, a party of interest in the property at the time of the sale may assign his or her right to claim the excess proceeds only by a dated, written instrument that explicitly states that the right to claim the excess proceeds is being assigned, and only after each party to the proposed assignment has disclosed to each other party to the proposed assignment all facts of which he or she is aware relating to the value of the right that is being assigned. Any attempted assignment that does not comply with these requirements shall have no effect..." The Specific Power of Attorney allowing Global Discoveries to make the Claim for Excess Proceeds on behalf of the Trustee in Bankruptcy satisfies all of these requirements, except that it lacks a statement concerning the mutual disclosure of facts relating to the value of the right being assigned. The later assignment effected by the Order Authorizing Trustee to Sell and Assign Rights, Etc., does not have a statement complying with Section HEARING OFFICER DECISION Page 7

10 4675(b), but it does contain a discussion of the risks involved. Section 4675(c) adds further requirements for assignment: "Any person or entity who in any way acts on behalf of, or in place of, any party of interest with respect to filing a claim for any excess proceeds shall submit proof with the claim that the amount of excess proceeds has been disclosed to the party of interest and that the party of interest has been advised of his or her right to file a claim for the excess proceeds on his or her own behalf." The Power of Attorney satisfies these requirements. Although the later Order Authorizing Trustee to Sell and Assign Rights, Etc., lacks express statements satisfying Section 4675(c), the history of the matter and the discussion in the l\iotice of Trustee's Intent evidences that Paul J. Mansdorf was aware of the relevant facts. Section 4675(e) defines the parties of interest who may make a claim: "For the purposes of this article, parties of interest and their order of priority are: (1) First, lienholders of record prior to the recordation of the tax deed to the purchaser in the order of their priority. (2) Second, any person with title of record to all or any portion of the property prior to the recordation of the tax deed to the purchaser." There were no surviving claims of the first priority. Global Discoveries, Ltd. submitted sufficient evidence to establish Community Development Corporation as an owner of record prior to the tax sale. There is a minor issue that the bankruptcy proceeding involves "Community Development HEARING OFFICER DECISION Page 8

11 Corporation of Oakland", while the Claim for Excess Proceeds and the Grant Deed identify the property owner and claimant as "Community Development Corporation". The issue is not whether Community Development Corporation has proved its ownership, but whether Mr. Mansdorf is the bankruptcy Trustee of the former owner or of another entity. In light of the Trustee's somewhat interchangeably using the two names, the lack of any other claimant professing to be the former owner, the similarity of name, and the bankruptcy court's confidence that it was dealing with an asset of the bankruptcy estate, the Hearing Officer will overlook this defect. The only issues are the technical defect in the Specific Power of Attorney and in the Order Authorizing Trustee to Sell and Assign Rights in Excess Tax Sale Proceeds. The Hearing Officer finds that the entire situation was well understood by the Trustee in Bankruptcy, represented by a competent law firm, who could take no action without bankruptcy court approval. The failure to have a form statement that all facts relating to value were mutually disclosed is cured by the combination of a later intelligent discussion in the l\jotice of Intent, the opportunity of creditors to object, and the United States Bankruptcy Court for the Northern District of California's Order AuthoriZing Trustee to Sell and Assign Rights in Excess Tax Sale Proceeds, Etc., directing that the excess proceeds asset be handled as described in the Notice of Intent, Etc. The purpose of the statute, to protect potential claimants, was amply met by the hearings in the bankruptcy HEARING OFFICER DECISION Page 9

12 proceeding. The Hearing Officer directs payment pursuant to the Order Authorizing Trustee, Etc. Although the earlier order allowing employment of Global Discoveries, Ltd. suggested that the funds should be received by the bankruptcy estate, with Global Discoveries' compensation to be determined thereafter, the later entered Order Authorizing Trustee, Etc., is viewed as superceding the earlier order. The Notice of Intent contains sufficient discussion of the transaction to assure the Hearing Officer that the bankruptcy court duly considered the contingency fee for Global Discoveries before issuing the Order Authorizing Trustee to Sell and Assign Rights in Excess Tax Sale Proceeds. Dated: July 16, 2013 ~ 0<::.:::=1Cj-C _~ l-\. Jed Somit, Attorney at Law Hearing Officer.. HEARING OFFICER DECISION Page 10

13 DECISION OF ASSESSMENT HEARING OFFICER COUNTY OF ALAMEDA APPLICANT: GLOBAL DISCOVERIES, LTD. PARCEL: FILE NO: EXCESS PROCEEDS 2009 TAX SALE HEARING DATE: JUNE 20, 2013 AGENDA NUMBER: SIX and SEVEN HEARING OFFICER: JED SOMIT, Esq. FACTS: Global Discoveries, Ltd. submitted three Claims for Excess Proceeds, upon assignments from Albert L. Lyons, Bobby Sharp, and David J. and Carol A. Lyons. 1) Albert L. Lyons: The Summary of Events states the parcel was owned by 5 couples (10 people) as joint tenants. Six of the joint tenants are deceased. The conclusion is that Albert L. Lyons, one of the named joint tenants, owns 25% of the excess proceeds. Certificates of death are provided for John Franklin Wilson (9/6/1995), Eleanor Lyons Wilson (3/22/06), Manuel Souza Montero (2/6/1994), Lorraine Bernadine Montero (6/28/2000), Grace Margaret Sharp (4/25/08), and Wilma Jean Lyons (3/19/02), all of whom are named on the Grant Deed recorded May 7, 1975, as reel 3958 image 805, document , with the Alameda County Recorder. The Claim for Excess Proceeds is dated April 24, 2009, by Jed Byerly, HEARING OFFICER DECISION Page 1

14 Chief Operating Officer of Global Discoveries, Ltd., claiming all of Mr. Lyon's share, stated to be approximately $9, An Assignment of Rights to Claim Excess Proceeds from the Sale of Tax Defaulted Property is signed by Albert L. Lyons, with a Certificate of Acknowledgment. It states inter alia that the amount of proceeds available for distribution is about $37,423.00, and that assignor was informed of his right to file a claim on his own behalf. It states in conclusory language that the parties have disclosed to each other all facts each is aware of regarding the value of the rights being assigned. The assignment assigns to Global Discoveries any and all rights to collect the excess proceeds, identifying the parcel and sale at issue. A Driver License (current at the time) is provided for Albert Leonard Lyons. 2) Bobby Sharp: The Summary of Events states the parcel was owned by 5 couples (10 people) as joint tenants. Six of the joint tenants are deceased. The conclusion is that Bobby Sharp, one of the named joint tenants, owns 25% of the excess proceeds. Certificates of death are provided for John Franklin Wilson (9/6/1995), Eleanor Lyons Wilson (3/22/06), Manuel Souza Montero (2/6/1994), Lorraine Bernadine Montero (6/28/2000), Grace Margaret Sharp (4/25/08), and Wilma Jean Lyons (3/19/02), all of whom are named on the Grant Deed recorded May 7, 1975, as reel 3958 image 805, document , with the Alameda County Recorder. HEARING OFFICER DECISION Page 2

15 The Claim for Excess Proceeds is dated April 24, 2009, by Jed Byerly, Chief Operating Officer of Global Discoveries, Ltd., claiming all of Mr. Sharp's share, stated to be approximately $9, An Assignment of Rights to Claim Excess Proceeds from the Sale of Tax Defaulted Property is signed by Bobby R. Sharp, with a Certificate of Acknowledgment. It states inter alia that the amount of proceeds available for distribution is about $37,423.00, and that assignor was informed of his right to 'file a claim on his own behalf. It states in conclusory language that the parties have disclosed to each other all facts each is aware of regarding the value of the rights being assigned. The assignment assigns any and all rights to collect the excess proceeds, identifying the parcel and sale at issue. A Driver License (current at the time) is provided for Bobby Ray Sharp. Also submitted was a Declaration by Bobby R. Sharp that he is the same person referenced in the Grant Deed. 3) David J. & Carole A. Lyons: The Summary of Events states the parcel was owned by 5 couples (10 people) as joint tenants. Six of the joint tenants are deceased. The conclusion is that David Lyons and Carole Lyons, two of the named joint tenants, each owns 25% of the excess proceeds, and together own 50%. Certificates of death are provided for John Franklin Wilson (9/6/1995), Eleanor Lyons Wilson (3/22/06), Manuel Souza Montero (2/6/1994), Lorraine HEARING OFFICER DECISION Page 3

16 Bernadine Montero (6/28/2000), Grace Margaret Sharp (4/25/08), and Wilma Jean Lyons (3/19/02), all of whom are named on the Grant Deed recorded May 7, 1975, as reel 3958 image 805, document , with the Alameda County Recorder. The Claim for Excess Proceeds is dated April 24, 2009, by Jed Byerly, Chief Operating Officer of Global Discoveries, Ltd., claiming all of the Lyons' share, stated to be approximately $18, An Assignment of Rights to Claim Excess Proceeds from the Sale of Tax Defaulted Property is signed by David J. Lyons and by Carole A. Lyons, with a Certificate of Acknowledgment. It states inter alia that the amount of proceeds available for distribution is about $37,423.00, and that each assignor was informed of his or her right to file a claim on his own behalf. It states in conclusory language that the parties have disclosed to each other all facts each is aware of regarding the value of the rights being assigned. The assignment assigns any and all rights to collect the excess proceeds, identifying the parcel and sale at issue. A Driver License is provided for David Joseph Lyons and for Carole Ann Lyons. Also submitted, separately, is a Declaration attesting that David Joseph Lyons is the same person as named in the Grant Deed, and that Carole A. Lyons is the same person named in the recorded Grant Deed. HEARING OFFICER DECISION Page 4

17 Farand C. Kan, Deputy County Counsel, and Jessica G. Williams, Associate County Counsel, provided a Memorandum dated April 4, 2012, applicable to all Claims. It states that the amount of excess proceeds available for distribution to claimants is $37, After a review of the Claims and the supporting documentation, it concludes: a) all of the Claims were submitted timely; b) no lienholder filed a Claim; c) the assignments meet the requirements of Revenue & Taxation Code section 4675(b); d) the four surviving joint tenants share equal interests in the property; and, e) each of the Claims should be granted. l\jo claimant appeared at the hearing. Amy Elmer of Global Discoveries sent an on June 18 th noting that Mr. Byerly had a scheduling con1:lict, and returning the Notices of Hearing with the box checked on each to signify that Claimant agreed with County Counsel's report. The matter was deemed submitted on the file. DECISION: Each of the three Claims for Excess Proceeds filed by Global Discoveries, Ltd. is granted. All (100 0 /0) of the excess proceeds should be distributed to Global Discoveries, Ltd. RATIONALE: Revenue & Taxation Code 4674 directs the application of excess HEARING OFFICER DECISION Page 5

18 proceeds from the sale of tax defaulted property as provided by section 4675; if not claimed within one year, the remaining amount shall be distributed as provided in section (b), after deduction of administrative costs. Revenue & Taxation Code 4675(a) provides that any party of interest in the property may file with the county a claim for the excess proceeds, in proportion to his or her interest held with others of equal priority in the property at the time of sale, at any time prior to the expiration of one year following the recordation of the tax collector's deed to the purchaser. Each of the Claims here was timely filed. Section 4675(b) continues: "After the property has been sold, a party of interest in the property at the time of the sale may assign his or her right to claim the excess proceeds only by a dated, written instrument that explicitly states that the right to claim the excess proceeds is being assigned, and only after each party to the proposed assignment has disclosed to each other party to the proposed assignment all facts of which he or she is aware relating to the value of the right that is being assigned. Any attempted assignment that does not comply with these requirements shall have no effect....ff In each case, the Assignment paper evidences compliance with R&T section 4675(b) and contains a statement that the relevant facts were disclosed. Section 4675(c) adds further requirements for assignment: "Any HEARING OFFICER DECISION Page 6

19 person or entity who in any way acts on behalf of, or in place of, any party of interest with respect to filing a claim for any excess proceeds shall submit proof with the claim that the amount of excess proceeds has been disclosed to the party of interest and that the party of interest has been advised of his or her right to file a claim for the excess proceeds on rlis or her own behalf." In each case, the Assignment paper evidences compliance with R&T section 4675(c). Section 4675(e) defines the parties of interest who may make a claim: "For the purposes of tllis article, parties of interest and their order of priority are: (1) First, lienllolders of record prior to the recordation of the tax deed to the purchaser in the order of their priority. (2) Second, any person with title of record to all or any portion of the property prior to the recordation of the tax deed to the purchaser." No claims of the first priority were filed. The assignors' ownership at the requisite time is established by the Grant Deed. There is no evidence that the joint tenancy was severed at any time. As a result, the three different claims by Global Discoveries constitute together assignments from all of the surviving joint tenants, i.e., by the owners collectively of the entire fee. Each Claim for Excess Proceeds could be granted separately, but since each party of interest granted his or her rights fully to Global Discoveries, and since together the Claims qualify for all of the excess proceeds, for HEARING OFFICER DECISION Page 7

20 convenience all of the funds may be issued in one check to Global Discoveries, Ltd. Dated: July 16, 2013 ~~~-(-.I\~--- Jed Somit, Attorney at Law Hearing Officer HEARING OFFICER DECISION Page 8

21 \ Honorable Board of Supervisors July 24,2013 ATTACHMENT B Excess Proceeds Distribution From Tax Defaulted Property Sale - 3/18-19/2009 Claimant Parcel Number Amount Wait 30 days before payment Global Discoveries, LTD c/o Jed Byerly th St., Suite A Modesto, CA Franklin AAA Holdings c/o Global Discoveries, LTD th St., Suite A Modesto, CA Global Discoveries, LTD c/o Jed Byerly th St., Suite A Modesto, CA $ 10, $32, $37, Yes Yes Yes