Securities and Exchange Commission v. Nadel et al

Filing 690

RESPONSE in opposition re #675 Unopposed MOTION for miscellaneous relief, specifically to (1) Approve Determination And Priority Of Claims, (2) Pool Receivership Assets And Liabilities, (3) Approve Plan Of Distribution, And (4) Establish Objection ProcedureUnopposed MOTION for miscellaneous relief, specifically to (1) Approve Determination And Priority Of Claims, (2) Pool Receivership Assets And Liabilities, (3) Approve Plan Of Distribution, And (4) Establish Objection ProcedureUnopposed MOTION for miscellaneous relief, specifically to (1) Approve Determination And Priority Of Claims, (2) Pool Receivership Assets And Liabilities, (3) Approve Plan Of Distribution, And (4) Establish Objection ProcedureUnopposed MOTION for miscellaneous relief, specifically to (1) Approve Determination And Priority Of Claims, (2) Pool Receivership Assets And Liabilities, (3) Approve Plan Of Distribution, And (4) Establish Objection Procedure Objection and Opposition to Receiver's Motion to Approve Determination and Priority of Claims and Supporting Memorandum of Law filed by TRSTE, Inc., Wells Fargo Bank, N.A., as successor by merger to Wachovia Bank, N.A.. (Attachments: #1 Exhibit Declaration of TRSTE, Inc. records custodian, #2 Exhibit Receiver's February 6, 2009 letter, #3 Exhibit Declaration of Mayda Nahhas, #4 Exhibit SDNY Preliminary Order of Forfeiture/Final Order of Forfeiture, #5 Exhibit SDNY Indictment, #6 Exhibit Declaration of W. Samuel Woodard, Esq.)(Barnett, Ana)

EXHIBIT F

CASE NO. I : 09-cv-0087-T-26TBM

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF' FLORIDA
TÄMPA DIVISION
CASE NO. I : 09-cv-0087-T.26TBM

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,
vs.

ARTIIUR NADEL,

scooP CAPTTAL, LLC,
scooP MANAGEMENT, INC.,
Defendants,

scooP REAL ESTATE, L.P.,
VALITALLA II{VESTMENT PARTNERS, L.P.,
VALHALLA MANAGEMENT, rNC.,
VICTORY IRA F'UND, LTD,
VICTORY FIJND, LTD,
VIKING IRA ['UND,LLC,
VIKING FUND, LLC, ANI)
VIKING MANAGEMENT, LLC,
Relief Defendants.

DECLARATION PURSUANT TO 28 USC

I,

'W.

Q 1746

Samuel Woodard, make this declaration on personal knowledge and declare

as

follows:

l.

I am over the age of

2.

I

18 years old.

am member of the North Carolina State Bar, licensed to practice in North

Carolina since 1969, My Martindale-Hubbell rating has been AV since the late 1970's. I have
been named

in Woodward and V/hite's The Best Lawyers in America

as a best lawyer in the

practice area ofreal estate law since their 1993-1994 edition.

3.

My practice focuses on all aspeots of real property law in North Carolina.

4.

I am knowledgeable of the law regarding real property in North Carolina and of

the law regarding real estate lending and finance in North Carolina.

5.

I have reviewed the Deed of Trust and Assignment of Rents made on May 2,2008

by Laurel Preserve, LLC, as Grantor, to TRSTE, lnc., a Virginia corporation, as Trustee for
Wachovia Bank, National Association, as Benefïciary (the 'Deed of Trust). The Deed of Trust
was given to secure payment of a Promissory Note evidencing a $1,900,000.00 loan made by
'Wachovia
Preserve,

Bank, National Association, now known as, Wells Fargo Bank, N.A. to Laurel

LLC. TRSTE, Inc. is authorized to transact business in North Carolina by the North

Carolina Secretary of State and is in good standing.

6.

North Carolina is a title theory state where under a deed of trust the legal title to

real property in a trust is controlled by a trustee until an underlying debt and/or obligation is

fully

paid or performed.

7.

A North Carolina Deed of Trust is

a three

parly arrangement in which the Grantor

(the owner of the real property who usually is the bonower or obligor as well) conveys its legal

title to real property to a Trustee to hold for the benefit of the Beneficiary (the lender) until the
underlying loan and/or obligation is repaid or satisfied. Legal title is only restored to the Grantor

when the indebtedness andlor obligation is fully repaid or satisfied. Until that occurs, the
Grantor only has an equitable interest in the real property conveyed to the Trustee.

8.

Here, Laurel Preserve

,

LLC, conveyed all its legal title to the real property

described in the legal description exhibit attached to the Deed

TRSTE,

Inc.

of Trust on May 2,2008, to

TRSTE, INC., the Trustee, holds fee simple title to the real property until the

Grantor, Laurel Preserve, LLC, fully repays the $1,900,000.00 loan plus interest and other
charges to the
as Trustee,

Beneficiary. When Laurel Preserve, LLC, conveyed its legal'title to TRSTE, Inc,,

all Laurel Preserve, LLC, retained was mere equitable title to the real property.

9.

Under North Carolina law, the holder of an equitable interest in real property

cannot convey fee simple, legal and insurable title to such real property. Thus, neither Laurel
Preserve,

LLC, noi anyone deriving title'from Laurel Preserve, LLC, can convey fee simple,

legal and insurable title to the real property under North Carolina law unless and until the Deed

of Trust is marked cancelled of record in the offtce of the Register of Deeds in each county in
which it is recorded, or a Satisfaction of Deed of Trust is recorded in the office of the Register of
Deeds in each county in which the Deed of Trust is recorded.

10.

It is the custom and practice of attorneys in North Carolina who represent persons

makíng a claim affecting the title to real property situated in North Carolina, which real property

is the collateral under a recorded deed of trust, to give written notice to the holder of the legal

title to the real property which is the trustee under the deed of trust, and in addition, to give
written notice to the beneficiary under such recorded deed of trust.

11.

The Deed of Trust provides the address of the Trustee, TRSTE, Inc., on Page

I

as

301 South Tryon Street, Charlotte, North Carolina 28202,

12.

In Paragraph Two on Page2 of the Deed of Trust, the Deed of Trust provides that

the Grantor (Laurel Preserve, LLC) conveys the real property (the "Properfy") to the Trustee

"TO HAVE AND TO HOLD the Property and all the estate, right, title

and

interes! in law and in equity, of Grantor in and to the Property unto Trustee, its
successors and assigns,

13.

in

Paragraph Three on Page 2

", , ,

and

fee simple,

forever." [Emphasis

added]

of theDeed of Trust provides, in part, as follows:

if Default (as hereinafter defined)

occurs, Trustee is authorized to

foreclose and sell the Property under power of sale or by judicial proceeding in
accordance to applicable law and as provided

herein." [Emphasis added]

14,

On Pages 3 through 7 of the Deed of Trust, the Grantor makes numerous

representations regarding the Property to the Trustee.

15.

On Page 7 of the Deed of TruSt, the Grantor indemnifies, holds harmless

defends the Trustee

and

from all damages, penalties, liabilities and expense relating to Grantor's

representations regarding the environmental condition of the Property.

16,

On Pages .11 and 12 of the Deed of Trust regaiding remedies upon a Default by

tho Grantor, the Deed of Trust provides that upon the application of the Beneficiary:

". , . Trustee shall sell the Property

and pay the proceeds ofsale according to the

following terms and conditions: (a) Trustee shall foreclose upon this Deed of Trust and
sell the'Property, or any part of the Property, at public sale conducted according to
applicable law (referred to as "Trustee's Sale"); (b) Trustee shall provide such notice and

shall advertise a Trustee's Sale in the manner required by applicable law; (c) Trustee
shall conduct additional Trustee's Sales as may be required until all of the Property is
sold or the Obligations are satisfied; (d) Trustee may received bids at Trustee's Sale from

the Bank and may accept from Bank as successful bidder, credit against the Obligations
as

payment of any portion of the purchase price; (e) Trustee may receive a reasonable fee

for Trustee's seryices hereunder, not to exceed the maximum fee allowed by applicable
law; and (f) Trustee shall apply the proceeds of Trustee's Sale, first to any permitted
Trustee's fee, second to expenses of foreclosure and sale, third .to the Obligations, and
any remaining proceeds as required by law."

17.

It is my legal opinion that in view of the fact that the Trustee

under the Deed

of

Trust held legal title in fee simple to the Property at the time of the institution of this federal
receivership proceeding, written notice of the receivership proceeding should have been given to

the Trustee (whose address is clearly set forth on Page 1 of the Deed of Trust) in order for this

receivership proceeding

to have unquestionable jurisdiction and control over the Property

covered by and described in the Deed of Trust.

18.

The fact situation in the instant case relating to the failure to give notice of the

federal receivership proceeding to the Trustee under the Deed

of Trust is

to

analogous

a

mechanic's lien claimant seeking to foreclose its Claim of Lien against real property pursuant to
Chapter 444 of the North Carolina General Statutes on Mechanic's

Liens. In order for the sale

of real property pursuant to a foreclosure of a mechanic's lien in North Carolina to pass all right,

title and interest of the owner of the real property, N.C,G.S. 444-13(o) expressly requires that the

lien claimant must first have filed a Notice of Lis Pendens in each county in which the

real

I

am

property is located (except the county in which the foreclosure action is commenced).

informed and believed that a Notice

of Lis Pendens relating to the

Property situated in

Buncombe and MoDowell counties in North Carolina was not fited by the Receiver or any other

party. In addition, it is the custom and practice of attorneys in North Carolina for a mechanic's
lien claimant who is foreclosing its Claim of Lien on real property to give written notice of the

lien foreclosure proceeding and/or to name as parties to the lien foreclosure proceeding every
person or

entþ who has any.interest in the real property

Register of Deeds and the Clerk

of Superior Court of

as shown on the public records of the

each county

in which the real property is

located. This custom and practice includes giving written notice to and/oi joining as parties to
the lien foreclosure action both the trustee and the beneficiary under any deed of trust filed of
record relating to the real property which real property is also the subject to the Claim of Lien.

In accordance with 28 U.S.C. çI746,I declare under penalty of perjury that the foregoing
is true and correct.
Date:

December2l,20II
W. Samuel Woodard

Respectfully submitted,
STEARNS WEAVER MILLER
WEISSLER ALHADEFF &
SITTERSON, P.A.

Bv:

/s/ Ana Barnett
Ana T. Barnett
[e-mail]
150 West Flagler Street - Suite 2200
Miami, FL 33130
Telephone No.: [phone]
Facsimile No.: [phone]