Judge: John J. Kralik, Case: 21BBCV00708, Date: 2022-10-07 Tentative Ruling

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Case Number: 21BBCV00708    Hearing Date: October 7, 2022    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Petition Allegations

On August 6, 2021, Plaintiffs FB Ventura Blvd. LLC and 12251 Ventura Boulevard LLC filed a complaint for partition of real property located at 12251 Ventura Boulevard, Studio City, California (“Subject Property”).  Plaintiffs and Defendant 12251 Ventura Blvd. LLC (“Defendant”) are each the owner of a 1/3 undivided interest in the Subject Property as tenants in common. 

Plaintiffs alleged that they desire to sell the Subject Property, but Defendant has not cooperated with a sale.  Thus, Plaintiffs sought a partition of the entire fee simple interest in the Subject Property and seek a partition by sale. 

B.     Relevant Background

On October 19, 2021, the Court signed the Stipulation and Interlocutory Judgment—Sale of Real Property.  The Court approved the parties’ stipulation to sell the property and divide the proceeds in accordance with their respective interests in the Subject Property.  Howard Grobstein of Grobstein Teeple, LLP was appointed as the referee with the authority to sell the Subject Property at a public auction to the highest bidder for cash, or by a private sale in the event that the referee determined a private sale would be most beneficial to the parties. The Court ordered the referee to report to the Court after making a sale of the Subject Property and, upon confirmation of the sale by the Court and payment of the purchase price, the referee would be authorized and directed to execute and deliver a deed of the Subject Property sold to the purchaser.  The proceeds of the sale of the Subject Property are to be applied as follows: (a) to pay direct expenses connected with the sale of the Subject Property; (b) to pay the fees and disbursements of the referee; and (c) the residue to be divided as follows: 1/3 to Plaintiff FB Ventura Blvd. LLC, 1/3 to Plaintiff 12251 Ventura Boulevard LLC, and 1/3 to Defendant 12251 Ventura Blvd. LLC.  (Grobstein Decl. at Ex. 1.) 

On June 6, 2022, the Court signed the Amended Stipulation and Order Regarding Form of Bid.  This Order stated: “The Parties, or any of them, may submit an offer with a combination of a “credit bid” equal to each of their respective ownership interests in the Property and a cash amount that is at least equal to all liens on the property at 12251 Ventura Boulevard, Studio City, California, Assessor’s Parcel Number 2367-017-003 (“Property”) plus 150% of all fees and costs of the Referee and 110% of the costs of sale (including without limitation, commissions, escrow, title insurance and transfer taxes), as estimated by the Referee at the time the offer is received by the Referee.”   (Grobstein Decl. at Ex. 2.) 

C.     Motion on Calendar

On August 31, 2022, Partition Referee Howard Grobstein (“Mr. Grobstein”) filed a motion for order granting confirmation of the sale of real property pursuant to CCP § 873.710 et seq. and Probate Code § 10308 and for approval of the report. 

The motion is not opposed.

LEGAL STANDARD

CCP § 873.060 states: “The referee may perform any acts necessary to exercise the authority conferred by this title or by order of the court.”
            CCP § 873.710 states:

(a) Upon making a sale of property, the referee shall report the sale to the court.

(b) The referee's report shall contain, in addition to such other information as may be appropriate, all of the following information:

(1) A description of the property sold to each purchaser.

(2) The name of the purchaser.

(3) The sale price.

(4) The terms and conditions of the sale and the security, if any, taken.

(5) Any amounts payable to lienholders.

(6) A statement as to contractual or other arrangements or conditions as to agents' commissions.

(7) Any determination and recommendation as to opening and closing public and private ways, roads, streets, and easements.

(8) Other material facts relevant to the sale and the confirmation proceeding.

(CCP § 873.710.)

            Probate Code, § 10308 states:

(a) Except as provided in Section 10503, all sales of real property shall be reported to and be confirmed by the court before title to the property passes to the purchaser, whether the sale is a private sale or a public auction sale and notwithstanding that the property is directed by the will to be sold or authority is given in the will to sell the property.

(b) If the personal representative fails to file the report and a petition for confirmation of the sale within 30 days after the sale, the purchaser at the sale may file the report and petition for confirmation of the sale.

(c) Notice of the hearing on the petition for confirmation filed under subdivision (a) or (b) shall be given as provided in Section 1220 to the persons designated by that section and to the purchasers named in the petition, and posted as provided in Section 1230.

(Prob. Code, § 10308.) 

DISCUSSION

Mr. Grobstein moves for an order granting confirmation of the sale of the Subject Property and for approval of the Referee’s Report.

Mr. Grobstein states in his declaration that he determined a private sale was most beneficial for all parties and therefore followed the Probate statutes and rules for the private sale of real property estates of deceased persons.  (Grobstein Decl., ¶9.)  He states that he sought proposals for listing the Subject Property for private sale from 3 commercial real estate brokers who regularly list this type of property in Los Angeles County, and specifically in the general vicinity of the Property. (Id., ¶10.)  He states that the proposal from the brokers provided for recommended listing prices ranging from $9,500,000 to not more than $12,250,000, and with commissions ranging from 3.5% to 4%.  After comparing the proposals and after consulting with counsel for Plaintiffs and Defendants, he retained the Seymour Group with KW Commercial – Keller William Studio City (“KW”) to list the Property for sale.  (Id.)  He states that on April 11, 2022, he entered into a Commercial and Residential Income Listing Agreement (“Listing Agreement”) for the Subject Property with KW.  (Id., ¶11.)  Mr. Grobstein states that the highest and best offer received was for a $12,000,000 purchase price with all buyer contingencies removed, which was submitted by Plaintiffs (through Francine Bernstein and Barry Gumbiner) (“Buyer”).  (Id., ¶14, Exs. 5-6.)  The offer was accepted, subject to Court approval, on June 16, 2022, and escrow was opened.  (Id., ¶15.)  Mr. Grobstein states that escrow is currently in possession of the initial deposit of $360,000 and the increased deposit in the amount of $820,000, and escrow is currently holding the full deposit of $1,200,000 (10% of the Purchase Price in accordance with the offer).  (Id.)  He states that he also obtained an appraisal of the Subject Property on May 27, 2022, which values the property at $9,800,000 (valuation date May 25, 2022) and that the accepted purchase price for the Subject Property far exceeds the 90% requirement. (Id., ¶16, Ex. 9.)  He states that he prepared and has instructed his brokers and counsel to provide to all parties interested in overbidding for the Subject Property at the confirmation hearing, the Rules and Procedures for Overbid at Confirmation Hearing. (Id., ¶17, Ex. 10.)  Mr. Grobstein has provided a report of the sale pursuant to CCP § 873.710 and seeks confirmation of the sale pursuant to his report.  (Id., ¶¶13, 18, Ex. 3.) 

Mr. Grobstein refers to the declaration of David Weinberger, who is a broker with KW, in order to provide details regarding the listing of the Subject Property for sale and the offers.  (Id., ¶12.)  Mr. Weinberger states that the Subject Property was listed for sale and marketed to the public on April 19, 2022, for $12,000,000 and an offer deadline was set for May 31, 2022, at 12 p.m.  (Weinberger Decl., ¶7.)  He states that the marketing efforts to sell the Subject Property have been substantial in order to achieve maximum value by exposing the Subject Property to the largest pool of qualified buyers. (Id., ¶8.)  The marketing efforts and plan included professional photography, aerial drone footage and images, professional video tour, custom website, press release, social media campaigns, targeted email marketing campaigns, Search Engine Optimization and custom meta-data descriptions, countrywide site syndication, international exposure, and a custom designed offering memorandum. (Id.)  He states that the Subject Property was listed on multiple commercial listing platforms such as Loopnet, Crexi Pro, the Commercial Investment Multiple Listing Service, and Costar, as well as placed on international listing platforms, where it was broadcast on global portals in over 50 countries worldwide.  (Id., ¶9.)  He states that they created a custom website and drone video and utilized social media outlets to advertise the listing further, posting several advertisements on Facebook, Instagram, and LinkedIn, and also distributed a press release and e-marketed the Property by announcing the listing to over 40,000 local real estate brokers and agents, builders, investors, and brokers.  (Id., ¶10.)  He states that their efforts also targeted specific buyers and brokers active in Studio City and who purchase assets like the Property and these buyers and brokers received specific email marketing campaigns and direct calls to inform them of the asset and opportunity. (Id.)  Mr. Weinberger states that as of June 14, 2022, the marketing efforts resulted in 39,400 listing views, 1,000+ detailed page clicks, and 81 broker & buyer inquiries, such that they received 6 offers ranging from $8,000,000 to $12,000,000 by the offer deadline and sent to the Partition Referee and his counsel for review.  (Id., ¶11.)  He states that on June 9, 2022, a Seller Multiple Counter Offer & Addendum requesting highest and best terms was sent to the top 4 offers, with a response deadline for June 13, 2022 at 5 p.m.  (Id., ¶12.)  Of the 4 Buyer Counter Offers, the highest and best offer received was Plaintiffs’ offer of a $12,000,000 purchase price with all buyer contingencies removed.  (Id., ¶13.)  Mr. Weinberger states the offer was accepted and executed by the Partition Referee on June 16, 2022 and escrow was opened.  (Id., ¶14.) 

Counsel Kristine A. Thagard also provides her declaration.  She states that a notice of sale of real property was published in the Daily Journal on May 6, 2022, May 13, 2022, and May 20, 2022.  (Thagard Decl., ¶5, Ex. 7.)  The Sale Notice was also served on the parties.  (Id., ¶6, Ex. 8.)  She states that the Sale Notice states where the bids will be received and a day on or after which the sale will be made, contains a description of the property, and includes a legal description of the property and additional terms and conditions of sale.  (Id., ¶7.)  Ms. Thagard states that notice of the sale was also provided to Wells Fargo Bank on June 15, 2022, pursuant to the lease terms.  (Id., ¶8, Ex. 11.)  She informs the Court that as relatives of Patricia Gumbiner or Donald Heskins, Buyer is excluded from the right of first refusal; and unless an Overbid Buyer is a relative by blood or by marriage of Patricia Gumbiner or Donald Heskins, it will be subject to the 14-day right of first refusal contained in the Lease.  (Id., ¶8.) 

Mr. Grobstein’s declaration and report satisfy the requirement of CCP § 873.710.  (See Grobstein Declaration/Report, ¶19.)  He provides a description of the property, the names of the purchasers (Plaintiffs), the sales price ($12,000,000), the terms and condition of the sale, any amount payable to lienholders (no amount to be paid to lienholder as the property is free and clear), a statement as to the contractual or other arrangements or conditions as to agents’ commissions (2% commission to be paid through the close of escrow), and any determination and recommendation as to opening and closing public and private ways, roads, streets, and easement (none).  (Id., ¶19(1) to (7).) 

Further, in compliance with the Probate requirements, the Referee has reported the sale of the Subject Property and seeks confirmation of the sale prior to title passing to the Buyer.  Notice of the Sale was also published multiple times.

The motion also includes information about overbid procedures (see Mot. at pp. 10-11, Ex. 10) and discloses the 14-day right of first refusal in favor of Wells Fargo Bank, N.A. that is subject to the Lease (Mot. at p.12). 

Mr. Grobstein states that he negotiated a reduced commission of 2% if the Buyer is related to the parties in the litigation.  He states that the Buyer is related and thus to commission to be paid if Plaintiffs are the ultimate buyer is 2% to KW (Seller’s Broker) at the close of escrow.  (Mot. at pp. 11, 14.)  He states that if an Overbid Buyer is confirmed at the hearing on this motion, Mr. Grobstein requests a 3.5% commission to be fixed as the compensation pursuant to the Listing Agreement’s terms (1.75% to the Buyer’s Broker and 1.75% to KW/Seller’s Broker).  (Id.) 

The Court grants the motion to confirm the sale of the real property and to approve the Partition Referee’s Report.  The Partition Referee is authorized to execute a grant deed approved by a title company to convey the Subject Property; sign all documents necessary to consummate the sale, instruct escrow to pay all customary costs of the sale; instruct escrow to pay all current and past due property taxes; instruct escrow to pay all current and past due property taxes, homeowner association transfer fees, recording fees and costs, documentary transfer taxes, premiums for an owner title insurance policy, and other customary costs and expenses with standard and customary proration; receive and retain the sale proceeds and prepare a final accounting for approval by this Court before distributions are made; and engage in further acts to effectuate the sale of the Subject Property. 

CONCLUSION AND ORDER

Partition Referee Howard Grobstein’s motion to confirm the sale of the real property and to approve the Partition Referee’s Report is granted.  The Partition Referee is ordered to submit a proposed order that conforms to this Order.

At the hearing, the Court will determine the commission to be paid, whether at 2% if Plaintiffs are deemed the ultimate buyers of the subject property or 3.5% if an Overbid Buyer is confirmed at the hearing.

The Court sets a Status Conference Hearing for December 15, 2022 at 8:30 a.m. so that the parties and the Partition Referee may provide updates to the Court regarding the sale of the Subject Property and to provide a final accounting prior to making distributions of the sale proceeds.

The Partition Referee shall provide notice of this order.