BRIEF OF PIETRCZAK AND LYNN in MATTER OF LYNN v. JORDAN
This is a simple matter of breach of contract and conversion of a security deposit. The damages sustained are more difficult to determine, speculative and dependent upon how long the litigation against the other defendants continues, and if the claimants can maintain their business while fighting for their rights.
Pietrczak and Lynn signed a lease for property owned by Jordan on June 7, 2011. The original lease was for the front half of the building known as 2946 Garnet Avenue, San Diego, CA, referred to as 2946. On June 23, 2011 a revised lease was signed, adding the back half of 2946 and raising the rent accordingly, referred to as “the lease”. Both leases were written by Jordan’s attorney, Daryl Idler. There were a few typos. One was that the date on the second lease was not changed from the first lease. This did not affect the rights or duties of either party, and was never corrected.
Lynn and Pietrczak were living together as husband and wife, but complications in Lynn’s dissolution of marriage proceedings prohibited Lynn and Pietrczak from being married legally. Lynn was close to success at straightening out the 14 year long, 12 volume divorce proceedings in 2011. She was also winding down a three year stint as an investigative journalist covering white collar crime and looked forward to helping with The Estate Sale and perhaps getting back into her old career as a real estate broker and property rehabilitation specialist.
Lynn had investment income that was about $3,000 per month in 2011 and jumped to $7,078 per month in 2012. This money and all profits of The Estate Sale were reinvested to capitalize the business at 2946. Claimants live cheaply, buying their cloths and household goods at garage sales, not drinking alcohol at restaurants (or anywhere else), and even moved into 2946 as a residence, at Jordan’s encouragement. Claimants are hard workers and spent every waking moment on the business and Lynn’s court and investigative reporting.
The business was a quick success, compared with averages. Pietrczak offered a unique service that benefitted sellers by clearing out their entire property or storage unit quickly and painlessly. Buyers got interesting, unique items for their home or collections at a fraction of ebay prices. Independent contractors had a workplace that showed them respect and paid a decent wage. The majority of the labor not done personally by the claimants was done by homeless or otherwise unemployables, but they were paid well over minimum wage. Sales tax was included in the price of the goods, and claimants backed out taxes to pay to the BOE each quarter, providing needed funding for government services.
Pietrczak reroofed 2946, painted, fixed the shower so it did not get water everywhere, added shelving and three dividing walls, made obvious repairs on the dangerous electrical system, rebuilt the back deck and cleared weeds from the front landscaped area and on and on. We worked this land as if it was our own, because we knew it would be, one day. Jordan applauded each and every improvement made by Pietrczak. Jordan came to 2946 once a month to pick up the rent check of $6,000 and look around the property. He always approved of the changes Pietrczak made, and requested that Pietrczak not get inspections because there was so much illegal work already done on the property by Jordan, and he didn’t want to bring in inspectors. Because Lynn was a combination inspector for the County of Los Angeles for 10 years, specializing in property rehabilitation for a few years of that time, claimants agreed with Jordan to let Lynn ensure any new installation was safe, decide which existing installations were a serious hazard, and not apply for permits or call in inspectors when the dangerous systems were upgraded. Claimants were not aware at that time that Jordan was already cited by The City of San Diego for illegal work done on the other building on the property, 2950 Garnet Ave, referred to as 2950.
The lease had a “time is of the essence” clause and a “right of first refusal” clause. When claimants moved in, they expressed interest in buying the property. It was listed for sale for $1.2 million. Lynn’s sister Linda Kramer (who also uses the name “Lynn”), an engineer, was already interested in the property, but would need to do extensive remodeling, so the $1.2 million dollar price was not attractive enough. Claimants will present emails from Lynn Kramer to her real estate broker in July 2011 telling him their mother, Sandi Kramer, was willing to fund up to $1.5 million and to look at this property again.
January 3, 2012, Jordan accepted an offer from Tony Bral for about $1.2 million. He did not notify the claimants of the accepted offer. The escrow was cancelled in May 2012, and then the cancellation was rescinded in June 2012. Claimants are not aware of the date of cancellation of that escrow, if it ever was cancelled. Bral was represented by broker Justin Earley of CREV. Jordan was represented by Anthony Carnevale of Nautilus Real Estate. Carnevale changed supervising broker sometime before the Kahia transaction closed escrow.
About August of 2012, Jordan dropped the list price of the property to $825,000. He did not tell the claimants.
In October 2012, Linda “Lynn” Kramer caused her broker at Marcus and Millichap, Matt LoPicollo to make a written offer of $825,000 on behalf of the Norman and Sandra Kramer Family Trust. (The broker mistakenly used “Sandi” instead of “Sandra”.) Both Linda and Laura were equal beneficiaries to the trust.
Jordan’s broker did not give a counter offer or response to the full list price offer. It appears he might have told LoPicollo verbally that they were waiting on bank approval.
Instead, there is evidence beyond a reasonable doubt that Earley hatched a fraudulent short sale flipping scheme. He put in an offer for Vicki Kahia, a straw buyer, of $890,000, which was accepted on December 7, 2012. Still no counter was made to the Kramer trust broker. No one informed the claimants about the accepted offer.
In fact, the purchase agreement was a short sale, and the lender on the first trust deed, Comerica Bank, was adamant that the deal close by December 31, 2012, or they would revoke short sale approval. The ROFR clause required a 30 day written notice, so there is no way proper notice could be given and still close by the end of the tax year. (Had claimants been notified, they were ready, willing and able to buy the property, and would have closed by the 31st also, in order to take advantage of the short sale approval and their own tax benefits.)
Because of the lack of notice, Kramer bought a different property, which recorded on December 28, 2012. Sandi Kramer, as trustee of the Norman and Sandra Kramer Family Trust gifted Laura Lynn a 1/10th undivided interest in each of two commercial properties in Los Angeles that recorded on January 3, 2013. A similar gift was made to each of Lynn’s four sisters.
Because Lynn’s father and her spiritual beliefs caused Lynn to be humble and not spend money on outward signs of wealth, like expensive cars, she did not flaunt that she was a “trust fund baby”. Earley, Kahia and Jordan assumed the claimants could not afford to protect their right to buy the property through litigation. Ironically, Earley filed bankruptcy in 2010 and Jordan claimed to be facing bankruptcy.
In fact, though Kahia was well aware of the conspiracy plan and was a willing participant, Earley told several people he was a “partner” or “owner” of the property after Kahia took title. His own bankruptcy might have been a sham, or else he took an undisclosed profit on top of commission, which should have been disclosed to the FDIC insured bank in a short sale.
Bral was mentioned by name as an assignee on the purchase agreement, and then his name was stricken out. If Jordan received part of the $300,000 profit as a kick-back and also had his debt to Comerica forgiven, this would give him motive to breach the contract with the claimants.
Had claimants been given the ROFR, they could have obtained financing from the Kramer Trust, from one of Laura Lynn’s other investors, or even assumed the Comerica loan. The Bral contract had assumption of the loan as a contingency. Pietrczak had nearly perfect credit and the bank would have done better with an assumption of the loan than with the short sale. (Pietrczak’s credit was almost non-existent, with only one line ever opened. He paid cash all his life. He has a debt of about $400 showing to a broadcast company, but that needs to be removed, as he doesn’t even watch t.v. and never signed any contract. He also had a medical bill from an emergency room, but that is about to fall off the credit report and is only a few thousand dollars anyhow, so claimants could have paid it off, if necessary to qualify.)
The claimants’ $6,000 security deposit was not transferred in escrow and Jordan did not notify claimants of a transfer of the deposit to Kahia.
After the defendants found that claimants would pursue their rights, Earley wrote an email where he asked Jordan for the family name of Lynn. He wrote “I’m going to hunt down the mom and sister and mess up Laura’s little world.” To which Jordan replied that he did not know the name, but he should try Lynn.
Earley did call Lynn’s mother and a sister, but not Linda Kramer. The sister Earley called is the oldest in the family, has a huge amount of money and, frankly, Lynn finds that sister to be greedy, conniving and allegedly embezzling from a mutual investment. Claimants do not know what Earley told the sister, or what spin she put on it, but soon thereafter, Lynn’s mother became distant. We are not claiming that defendants were wholly responsible for the breakdown of familial relations, but they contributed, and they had the intent to “mess up Laura’s little world”.
Regardless of why there was a breakdown in the familial relationship between Lynn and her mother, or if it was just too soon after buying the other property for Linda, or that the tax breaks for transferring $5,000,000 from the trust to the children was used up, Lynn could no longer get the easy, one phone call cash to purchase the property from her family trust.
Lynn has other potential investors, but decided to ask for a constructive trust on the property or at least get a decent price concession when she was forced to litigate. And Pietrczak could probably have qualified to assume the loan from Jordan, but that option was no longer available after Jordan passed title to Kahia.
Claimants did offer to pay $860,000 to Kahia, if Kahia would carry the loan at 6% until other financing could be arranged or Lynn could sell her other property to her sisters to get the cash. Earley informed Jordan and other defendants of this offer by email. Kahia refused. As Earley wrote, he “literally threw” Lynn out of his office.
Earley has embarked on a campaign to defame the claimants, both slander and libel, calling them “con artists” several times. He wrote in an email that Lynn “laid in wait during the sale transaction just so she could claim to be wronged by everyone, including all of us”. Since he knows that claimants were ready, willing and able to buy the property if only they were notified of the accepted offer, and willing to purchase the property from Kahia after the transaction closed, if she would give them bridge financing until other arrangements could be made, this is patently false.
In fact, Earley, Kahia and Jordan, et al, knew of the claimants right of first refusal, but claimants knew only that Earley and Kahia were one of a score of prospective buyers on the property. One reason ROFR clauses are unpopular with landlords is that prospective purchasers might not make an offer because they don’t want to waste time and effort negotiating a deal, just to have the mandatory, equitable assignee exercise their rights. For this reason, the claimants did not discuss their ROFR with prospective buyers, because the claimants wanted a written offer to be made. Holding their cards close to their chest is not the same as laying in wait.
So, what are the damages?
The arbitrator has broad discretion to determine this, but the amount is of little consequence in that several people aligned with Jordan have mentioned that Jordan will be difficult to collect from. Included in the damages are the costs to litigate and collect any verdict. This can easily reach into the hundreds of thousands of dollars. So far, Pietrczak and Lynn have spent countless hours working on the litigation instead of working on their start-up business. Copies of documents alone run in the thousands of dollars. Scores of subpoenas and pleadings have been served at $20 or $30 per each. Court reporters were paid a few thousand dollars. The arbitrator was paid $2,000. Lynn has driven downtown and paid for parking to do research at the law library countless times. Pietrczak paid an attorney $10,000 to protect him against the unlawful detainer filed by Kahia. The 3-day notice to quit or pay rent filed on January 9, 2013, before anyone discussed the breach of contract with the claimants.
Because Kahia has a history of buying existing businesses, claimants think she wanted the claimants to be driven from the property so she could take over their business. Jordan and the other defendants started driving the claimants out well before the breach of contract. First Jordan reneged on his verbal agreement to forego rent increases. He started charging the increases months after the written contract ordered them, after the Bral transaction stalled.
Other strange occurrences happened, that make sense now in the context that a group of conspirators were plotting to take over the property rights that belonged to the claimants. For example, Jordan’s neighbor befriended Lynn. She worked for an attorney. She offered to help the claimants recover a few thousand dollars from a credit card processor who was wrongfully charging the claimants. Claimants paid her $500 and the work was never done. After the sale to Kahia, the neighbor set up an appointment with the attorney she worked for to see if he could defend the claimants in the unlawful detainer case filed by Kahia. Claimants had what they thought would be a confidential meeting with the attorney, and the neighbor never disclosed that she knew Jordan. Claimants only discovered it when they went to serve Jordan with this lawsuit and found he lived in the house next door to hers.
Jordan and the tenant on 2950 tapped into the claimants’ electrical service, causing outrageous bills.
Even before finding out about the breach of contract, Pietrczak was falling back into depression. He had built his life up from homelessness and psychosis to owning his own business and serving the community. But no matter how hard he worked, he felt oppressed. Perhaps because Pietrczak is more sensitive than average, he probably sensed the evil going on. (Pietrczak was always suspicious of Jordan’s neighbor, but Lynn did not heed his wise counsel to reject her offer of friendship.)
On or about December 27, 2012, Pietrczak, a dry alcoholic had his first drink in five years. He was suicidal, bashing his head on the street and, although he does not remember this, he apparently broke a glass door at a bar. He was brought to emergency services at Scripps, but the police did “not want to wait around” to take him to County, so he was released.
Claimants took their first time away from the store since they opened. They went to Sedona, and decided to work less hours when they returned. The business was moving into the black.
When they returned, there was the letter from Earley saying the property was sold. Jordan might as well have swung a sledge hammer into Pietrczak’s gut then put the knife in his back and charged him for it.
If Lynn was not an investigative journalist with legal training and real estate experience, and if they did not have income from Lynn’s properties, and if Pietrczak was not the most amazing business man, kind, wise, and hardworking, Kahia would get to keep the property and the claimants would have lost their entire investment of blood, sweat, tears and money. Jordan didn’t just sell a commodity; he sold Pietrczak’s dreams for a successful, productive future.
Pietrczak had a second suicidal and alcohol drinking experience on May 27, 2013. This time the police brought him to County Mental Health for a WIC 5157 hold (often referred to as a 5150). Upon release, Pietrczak met with his psychiatrist who had diagnosed him in 2009. Finding the psychiatrist took both claimants an entire day, but we won’t go into detail. Pietrczak went on 200mg of Trazadone nightly to sleep and an anti-depressant. He also uses cannabis under the recommendation of a physician, but still has trouble sleeping or accepting the evil he cannot change.
Lynn had to go back to her psychiatrist, after a year of living without anti-anxiety medication. She now takes Xanax, and needs sleeping pills, but the pharmaceuticals gave her severe constipation, so she is trying cannabis for the first time in her 51 years. It works, but leaves Lynn groggy when she wakes up. Lynn gave birth without pain killers, has rarely taken prescription or any drugs, uses no caffeine and doesn’t drink more than a couple glasses of wine per year, so medicating is an extreme measure for her.
Had Jordan gave the claimants notice and their right to buy the property, all this litigation would not happen. Also, Lynn would be able to concentrate on wrapping up the divorce case. The court in Los Angeles admitted to “losing” the entire 12 volume file, so Lynn is supposed to recreate the file by March 20, 2014. She proved the orders charging her $200,000 in child support arrears is void and needs to file a motion to vacate void orders. It is extremely difficult for Lynn to accomplish everything at once.
But that was not enough. The other tenant on the property has tormented the claimants since early December 2013, causing them to close down their business for the weeks leading up to Christmas. He has parked his van and BMW in the space Jordan had designated in writing belonged to the claimants for their display to attract customers. Earley and Kahia encourage the other tenant. They have enlisted building inspectors to “help in the process” of evicting them, since a judicial eviction failed. If the claimants had purchased the property, the other tenant would get a 30 day notice. He was on month to month when the property was sold.
If claimants were given their ROFR, they would pay about $5,000 in mortgage, if the family trust made them pay anything at all. (The deed to the property bought by the joint trust funds on December 28, 2013 was gifted to Linda Kramer’s personal trust.) The Comerica loan was costing Jordan about $6,000 per month. The other two tenants on the property pay about $4,000 per month in rent. So if that money was going to the claimants, they would only pay $1,000 to $2,000 per month to own, instead of $6,360 rent flushed. Over the eight remaining years of the lease, that would be about $610,000, $470,000 more to rent with no future value, instead of $144,000 to own with a future value of who knows how many million dollars minus the $860,000 investment.
Even though the claimants had no intention of leaving the property if they bought it, they could have just resold for $1,200,000 to someone like Bral. Earley relisted the property immediately for $1,695,000 with a 7.9% CAP rate. The value of the property and the existing business of The Estate Sale is speculative. But there is a funded project to build a trolley station and infrastructure for the new blue line kitty-corner to the property. That is a $1.2 Billion dollar infusion of cash for redevelopment and improvement of the surrounding area.
If we could have Jordan pay our medical bills and legal bills for the past year and give us specific performance to purchase the property, and if we could still get funding, we would do that. But Jordan has no control over the property now, so we are forced to continue litigating with Kahia, Earley, the other defendants and their teams of lawyers. If we are not given a constructive trust or an offset in the purchase price for actual and punitive damages, we will have the burden of collecting on any judgment.
Claimants wish Jordan had performed his end of the contract. All the money in the world cannot compensate them for the emotional distress and disruption of their long sought after peace. But, the arbitrator is required here to only decide on a reasoned monetary award for the breach of contract and conversion of $6,000 deposit. We submit to his judgment.