Preview
DocuSign Envelope ID: 6D108973-E8C7-4469-BU6U-7DB14E852E91
Electronically FILED by
Omar S. ANORGA, ESQ. STATE BAR NO. 236520 Superior Court of California,
THE ANORGA LAW FIRM, INC. County of Los Angeles
6/13/2023 12:17
155 North Lake Avenue, Suite 800 David W. Slayton,
Pasadena, CA 91102 Executive Officer/Clerk of Court,
By A. Lopez, Deputy Clerk
Phone: (213) 489-1271
Email: Omar@Anorgalaw.com
Attorneys for Plaintiffs
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES - CENTRAL DISTRICT
STANLEY MOSK COURTHOUSE
10
11 JESUS NARANJO, an Individual; MARIA CASE NO. BC540028
12 BLANCA NARANJO, an Individual;
PLAINTIFFS’ REPLY TO
JESUS NARANJO and MARIA BLANCA
13 DEFENDANTS’ OPPOSITION TO THE
NARANJO, as Co-Trustees of THE
14 MOTION AND MOTION FOR ORDER
NARANJO FAMILY LIVING TRUST
AMENDING JUDGMENT TO
15 DATED OCTOBER 3, 2013
CONFORM TO POST-JUDGMENT
16 ORDERS AND TO CORRECT
Plaintiffs,
17 CLERICAL ERRORS
vs
18 CONT. HEARING DATE: June 20. 2023
HEARING TIME: 8:30 a.m.
ALBERT LON CHANEY III, an HEARING DEPT.: 24
19
Individual; KAY S. CHANEY, an JUDGE: Honorable Kristin S. Escalante
20 Individual, and DOES 1 to 100, Inclusive
21 Complaint Filed: March 20, 2014
Defendants. Trial Date: None
22
23 Reservation ID: 967149395206
24
25
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28 ‘1
DocuSign Envelope ID: 6D108973-E8C7-4469-BU6U-7DB14E852E91
MEMORANDUM OF P[OINTS AND AUTHORITOES IN REPLY TO OPPOSITION
I SECTION 8 ADDITIONAL PAYMENTS BEGIN AND END WITH THE
OPENING AND CLOSING OF ESCROW.
At the February 3, 2023, the Court ruled that Defendants were entitled to an additional!
Section 8 Credit in the amount of $2,000 dollars a month. “The 219,414 is going to be increased
by $2,000 a month through the close of escrow.” (Transcript, Page 100, Lines 5-6., Exhibit 1,)
Stated elsewhere, the Court ruled: “Plus an additional 2,000 through the close of escrow.”
(Transcript, Page 88, Lines 25-26., Exhibit 1.) At the hearing, the Court did not provide
guidance as to when the aforementioned $2,000 would begin, but it can be presumed that the
10 Court meant it to start from the opening of escrow. Here is why.
11 The Court’s ruling that the credit was to end at the “closing” of escrow logically suggests
12 that the right to this credit begins with the “opening” of escrow. Moreover, in its March 30,
2023, ruling, the Court stated, in pertinent part, that the “parameters of the proposed order
13
are that the court require ‘Defendants to make good faith efforts to open escrow within thirty
14
(30) days from the date the Order is signed.” (March 30, 2023, Tentative, Page 2, Exhibit 2.)
15
The order referenced in this ruling is the proposed amended judgment.
16
As a practical matter and as a way to usher this matter to closure, the next sequence of
17
events involve the Court signing the proposed amended judgment’, which then would trigger
18
the Defendants’ requirements to open escrow, at which point, the Section 8 additional credits
19
would begin, and end at the closing of escrow, or if “the option is cancelled.” (Transcript, Page
20
100, Lines 2-3., Exhibit 1.)
21
The Plaintiffs respectfully request that the Court order that the additional Section 8
22
payments begin with the opening and end with the closing of escrow.
23
Il. DEFENDANTS MUST CURE CODE VIOLATIONS BEFORE RECEIVING
24
ANY ADDITIONAL SECTION 8 CREDITS.
25
The basis for the Defendants receiving the additional Section 8 credits during escrow
26
presumed that the Plaintiffs would be paid that amount by Section 8 during this process.
27
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' The base credit for Section 8 payments against the fair market value owed to the Defendants is 219,414.
? The proposed amended judgment was received by the Court on May 31, 2023 (Exhibit 3.)
2
DocuSign Envelope ID: 6D108973-E8C7-4469-BU6U-7DB14E852E91
However, as of the May 2023, the Section 8 payments to the Plaintiff have been “abated” by
the Housing Authority due to code violations and the Defendants’ failure to pass inspection.
(Exhibit 4.) The Defendants, specifically, Mr. Chaney was made aware of these violations by
the tenant living in the unit in question; Mr. Chaney has not cured these violations even
though he is required to do so pursuant to the Option Agreement, and Mr. Chaney’s own
testimony. At the hearing, Mr. Chaney stated, inter alia, “Your honor, as part of my
responsibility as a landlord in taking care of these properties.” (Transcript, Page 59, Lines 3-5.,
Exhibit 1.)
As a result of Mr. Chaney’s failure in taking care of the properties, and ensuring
habitability of the apartment units, Section 8 Housing Authority has ceased paying the
10
Plaintiffs the aforementioned $2,000 credit. Therefore, the Defendants should not be entitled
11
to any additional Section 8 credits until the above-mentioned code violations are cured, and
12
Section 8 payments have been restored to the Plaintiffs.
13
14
IV. CONCLUSION.
15
16 Based on the foregoing facts and law, the Court is respectfully requested to order
17 amendment to the judgment as requested, sign the proposed amended judgment, and require
18 Defendants cure code violations as a condition to obtaining any additional Section 8 credits
19 anticipated during the opening and closing of escrow.
20
21
22 Dated: June 13, 2023, Respectfully Submitted,
23 THE ANORGA LAW FIRM, INC.
24
Docusigned by:
25 Bmarlurorya.
Omar SMAniergasBsqs
26
Attorney for Plaintiffs
27
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DocuSign Envelope ID: 6D108973-E8C7-4469-BU6U-7DB14E852E91
DECLARATION OF OMAR S. ANORGA
I, Omar S. Anorga, declare,
That I am an attorney at law licensed to practice in the State of California. My business
address is The Anorga Law Firm, Inc., 155 North Lake Avenue, Suite 800, Pasadena, CA 91102;
Phone: (213) 489-1271. I am attorney of record for plaintiffs JESUS NARANJO, an Individual;
MARIA BLANCA NARANJO, an Individual; JESUS NARANJO and MARIA BLANCA
NARANJO, as Co-Trustees of THE NARANJO FAMILY LIVING TRUST DATED OCTOBER
3, 2013, in Los Angeles County Superior Court case number BC540028 short-captioned
Naranjo v. Chaney. The following is based on my personal knowledge:
10
11 1 Attached hereto as Exhibit 1 is a true and correct copy of the February 23, 2023,
12 reporter’s transcript.
13 2. Attached hereto as Exhibit 2 is a true and correct copy of the March 30, Tentative
14 Ruling.
15
3 Attached hereto as Exhibit 3 is a true and correct copy of the Proposed Amended
16
Judgment.
17
4 Attached hereto as Exhibit 4 is a true and correct copy of Section 8 Housing
18
Authority Letter.
19
20 I declare under penalty of perjury under the laws of the State of California that the
21 foregoing is true and correct.
22 Executed June 13, 2023, at Pasadena, California.
23
Docusigned by:
24
Bmarlusrya.
25 eororennessaara
Omar. S. Anorga
26
27
28
EXHIBIT 1
*ROUGH DRAFT: TRANSCRIPT*
CASE NO.: BC540028
CASE NAME: NARANJO V. CHANEY
LOS ANGELES, CALIFORNIA FRIDAY, FEBRUARY 3, 2023
DEPARTMENT 24 HON. KRISTIN ESCALANTE, JUDGE
REPORTER: JENNIFER SPEE FONSECA, 12840
TIME: 10:03 A.M.
APPEARANCES: (AS NOTED ON THE TITLE PAGE)
(UNEDITED, UN-PROOFREAD, UNCERTIFIED ROUGH
DRAFT WARNING! THIS TRANSCRIPT OF PROCEEDINGS IS
PRODUCED IN INSTANT FORM. THERE WILL BE DISCREPANCIES
10 BETWEEN THIS FORM AND THE FINAL FORM BECAUSE THE INSTANT
FORM HAS NOT BEEN PROOFREAD, EDITED, FINALIZED, INDEXED
11 OR CERTIFIED. THERE WILL ALSO BE A DISCREPANCY IN PAGE
AND LINE NUMBERS APPEARING ON THE INSTANT FORM AND THE
12 EDITED, PROOFREAD, FINALIZED, AND CERTIFIED FORM.)
13
14 THE COURT: NARANJO VERSUS CHANEY, CASE NUMBER
15 BC54028. TAKE A MOMENT TO GET SET UP. I'M GOING TO TAKE
16 A BRIEF BREAK TO ALLOW YOU TO GET EVERYTHING SET UP.
17 (A DISCUSSION WAS HELD OFF THE RECORD.)
18 THE COURT: ALL RIGHT. CALLING THE CASE OF
19 NARANJO VERSUS CHANEY, CASE NUMBER BC540028. CAN I HAVE
20 APPEARANCES STARTING WITH PLAINTIFF'S COUNSEL.
21 MR. ANORGA: GOOD MORNING, YOUR HONOR. OMAR
22 ANORGA APPEARING ON BEHALF OF PLAINTIFFS.
23 MR. CHANEY: ALBERT CHANEY FOR DEFENDANT.
24 THE COURT: MR. CHANEY, YOU'RE APPEARING ON YOUR
25 OWN BEHALF PRO PER AND ALSO ON BEHALF OF MRS. CHANEY AS
26 HER ATTORNEY; CORRECT?
27 MR. CHANEY: CORRECT, YOUR HONOR.
28 THE COURT: OKAY. SO WE ARE GOING TO START WITH
*ROUGH DRAFT: TRANSCRIPT*
THE EVIDENTIARY HEARING TO DETERMINE THE AMOUNT OF
CREDITS TO THE PURCHASE PRICE. WE'VE BEEN THROUGH THIS
BEFORE IN TERMS OF THE PARTIES STATING THEIR POSITIONS,
BUT I WANT TO MAKE SURE THAT WE HAVE A CLEAR RECORD AND
ALSO TO HELP THE COURT. I'D LIKE TO FIRST GO THROUGH
EACH CATEGORIES OF CREDITS THAT THE COURT IS GOING TO BE
CONSIDERING AND THEN TO HEAR THE POSITION OF THE PARTIES
WITH RESPECT TO EACH CATEGORY AND TO FIND OUT WHERE THERE
ARE FACTUAL DISPUTES THAT NEED TO BE RESOLVED BY THE
10 COURT. SO WHY DON'T WE START WITH MR. CHANEY, WHAT ARE
11 THE CATEGORIES OF CREDITS, AND THEN I'M GOING TO ASK YOU
12 TO SHOW ME WHAT PROVISIONS OF THE OPTION AGREEMENT AND
13 SETTLEMENT TO THE EXTENT THAT IT'S IN THE SETTLEMENT THAT
14 WAS REFLECTED IN THE TRANSCRIPT. YOU CAN POINT ME TO
15 WHERE THOSE ARE, BUT WHY DON'T YOU START BY JUST WALKING
16 ME THROUGH THE CATEGORIES.
17 MR. CHANEY: THOSE CATEGORIES ARE PREVIOUSLY
18 SUBMITTED TO THIS COURT, AND I DO NOT HAVE A COPY OF THEM
19 WITH ME AS TO THE CATEGORIES, HOWEVER, I DO HAVE NUMEROUS
20 EXHIBITS THAT SUPPORT THOSE CATEGORIES.
21 MR. ANORGA: YOUR HONOR, IF I MAY, THE COURT HAS
22 ALREADY RULED ON THE CATEGORIES ON --
23 THE COURT: I KNOW. BUT I WANT THE RECORD TO BE
24 CLEAR AS TO WHAT WE'RE DETERMINING TODAY, AND IT'S ALSO
25 BEEN A LONG TIME. SO I WANT --
26 MR. ANORGA: WOULD YOU LIKE ME TO SET THE TABLE
27 AND BRING THE COURT UP TO SPEED.
28 THE COURT: YEAH, GO AHEAD.
*ROUGH DRAFT: TRANSCRIPT*
MR. ANORGA: WE'RE HERE TODAY, YOUR HONOR, TO
MAKE A RULING ON MR. CHANEY'S ELISOR MOTION WHICH I THINK
IS IMPORTANT BECAUSE IT'S GOING TO GO TO THE ISSUE OF
SECTION 8 PAYMENTS AND WHETHER HE'S ENTITLED TO THEM, AND
IF HE IS, WHAT IS THE CREDIT MY CLIENT IS ALSO ENTITLED
TO. THAT'S AN ISSUE WE CAN GET INTO, YOUR HONOR. WE'RE
ALSO HERE FOR THE EVIDENTIARY HEARING ON THE
DETERMINATION OF CREDITS --
THE COURT: WE'RE STARTING WITH THE EVIDENTIARY
10 HEARING OF CREDITS.
11 MR. ANORGA: AND ON MAY 16TH, YOUR HONOR, THE
12 COURT STATED THAT THE CATEGORIES WOULD INCLUDE A
13 PREDETERMINED ATTORNEYS' FEE CREDIT OF $100,000, CREDITS
14 FOR PAYMENTS MADE TO THE NARANJOS FOR SECTION 8 TENANTS,
15 MORTGAGE LOAN AND OTHER DEBT OBLIGATIONS THAT EXISTED
16 AGAINST THE PREMISE ON THE EXECUTION DATE OF THE OPTION
17 AGREEMENT, YOUR HONOR, AND THIS IS FROM THE COURT'S
18 MAY 16TH RULING, YOUR HONOR.
19 THE COURT: AND THE MORTGAGE -- THE LAST CATEGORY
20 THAT YOU MENTIONED, THAT'S IN THE -- IS THAT BASED ON THE
21 ALLOWANCES SECTION OF THE OPTION AGREEMENT; CORRECT?
22 MR. ANORGA: CORRECT, YOUR HONOR.
23 THE COURT: OKAY. AND THE PARTIES AGREE ON THE
24 100,000. ON THE MORTGAGE DEBT WALK ME THROUGH AGAIN THE
25 ISSUE -- THE AMOUNTS AND WHERE THERE'S AGREEMENT AND
26 WHERE THERE'S DISAGREEMENT. ON THAT WHOLE ALLOWANCES
27 SECTION UNDER SECTION 8 OF THE -- NOT SECTION 8 OF THE
28 LANDLORD TENANT LAW, BUT SECTION 8 OF THE OPTION
*ROUGH DRAFT: TRANSCRIPT*
AGREEMENT UNDER THE CATEGORY OF ALLOWANCES, WHERE ARE
THERE AGREEMENTS AND DISAGREEMENTS ON THOSE AMOUNTS?
MR. ANORGA: YOUR HONOR, AT OUR LAST HEARING ON
THIS MATTER, MR. CHANEY ARGUED THAT THERE SHOULD BE
MORTGAGE REDUCTION BY THE AMOUNT OF $231,436.80. THE
ISSUE WITH THAT, YOUR HONOR, IS THAT HE DIDN'T PRESENT
ANY ADMISSIBLE EVIDENCE TO SUSTAIN OR SUPPORT SUCH A
FINDING. I THINK THAT'S PART OF THE REASON WHY WE'RE
HERE TODAY TO SEE WHETHER OR NOT HE CAN DEMONSTRATE THAT
10 THAT -- THE MORTGAGE HAS INDEED BEEN REDUCED BY THAT
11 AMOUNT, YOUR HONOR.
12 THE COURT: AND WHAT'S PLAINTIFF'S POSITION AS TO
13 WHAT THE CORRECT AMOUNT SHOULD BE UNDER THAT SECTION?
14 MR. ANORGA: TO THE EXTENT HE CAN DEMONSTRATE,
15 YOUR HONOR, AND THERE'S PERSUASIVE EVIDENCE TO SHOW THAT,
16 THEN WE WOULD CONCEDE ON THAT ISSUE, YOUR HONOR.
17 THE COURT: AND IS THERE ANY AMOUNT THAT YOU
18 AGREE IS AN APPROPRIATE AMOUNT OF REDUCTION?
19 THE WITNESS: I DON'T -- WELL, No, YOUR HONOR,
20 BECAUSE I HAVEN'T SEEN THE EVIDENCE TO SUPPORT WHAT THE
21 MORTGAGE REDUCTION IS. I'LL WE'VE HEARD IS WHAT
22 MR. CHANEY IS SAYING IT SHOULD BE.
23 MR. CHANEY: MAY I ADDRESS THAT, YOUR HONOR?
24 THE COURT: JUST GIVE ME ONE SECOND BECAUSE I
25 WANT TO GET FROM PLAINTIFF'S PERSPECTIVE NOW WHERE
26 THERE'S AGREEMENT AND DISAGREEMENT, AND THE SECTION 8
27 PAYMENTS TELL ME WHAT PLAINTIFF'S POSITION IS AGAIN. AND
28 AGAIN, THIS IS REPETITIVE OF WHAT WE'VE DONE AT PRIOR
*ROUGH DRAFT: TRANSCRIPT*
HEARINGS. IT'S BEEN A LONG TIME, AND I NEED MY MEMORY
REFRESHED.
MR. ANORGA: NO WORRIES, YOUR HONOR. THERE WAS
SOME BRIEFING THAT THE COURT REQUIRED OF US IN THE SUMMER
OF LAST YEAR. IT'S BEEN SOME TIME, BUT OUR POSITION ON
THAT AND THIS RELATES TO THE ELISOR MOTION IS MR. CHANEY
IS NOT ENTITLED TO ANY SECTION 8 CREDITS FOR THE
FOLLOWING REASON: AND THAT IS BECAUSE THE PARTIES NEVER
AGREED TO IT, YOUR HONOR, THE. THE PARTIES AGREED THAT
10 MY CLIENTS WOULD MAKE BEST EFFORTS TO HAVE SECTION 8
11 REDIRECT SECTION 8 PAYMENTS TO MR. CHANEY. THEY MADE
12 THOSE BEST EFFORTS, YOUR HONOR. SECTION 8 DENIED IT.
13 EVEN IF THEY WOULD HAVE ALLOWED IT, YOUR HONOR,
14 MR. CHANEY WASN'T ENTITLED TO THOSE SECTION 8 PAYMENTS
15 BECAUSE HE WAS SUPPOSED TO HAVE PAID MY CLIENTS $2,000 A
16 MONTH SINCE THE DATE OF THE SETTLEMENT AGREEMENT, AND SO
17 THAT NEVER TOOK PLACE. MR. CHANEY TESTIFIED TO THAT.
18 HE'S NEVER ONCE MADE A PAYMENT. SO, YOUR HONOR, THE
19 PLAINTIFF'S POSITION IS THAT THEY ESSENTIALLY CROSS EACH
20 OTHER OUT.
21 THE COURT: THAT'S PART OF WHAT THE EVIDENCE THAT
22 WE NEED TO CONSIDER IS HOW MUCH WOULD THE SECTION 8
23 PAYMENTS AND HOW MUCH WERE THE -- HOW DOES THAT COMPARE
24 TO THE $2,000 A MONTH PAYMENTS.
25 MR. ANORGA: YOUR HONOR, IF THE COURT IS INCLINED
26 TO GRANT THE SECTION 8 PAYMENTS, WE'RE GOING TO HAVE TO
27 FIGURE THAT OUT, BUT I CAN TELL YOU WHAT MY CLIENTS
28 SHOULD HAVE BEEN PAID SINCE THE DATE OF THE SETTLEMENT TO
*ROUGH DRAFT: TRANSCRIPT*
TODAY'S DATE, YOUR HONOR, AND THAT'S $136,000.
THE COURT: WAIT. WHAT IS THAT?
MR. ANORGA: $136,000.
THE COURT: BUT WHAT IS $136,000 REPRESENT? I
JUST MISSED WHAT YOU SAID THAT NUMBER WAS.
MR. ANORGA: SURE, YOUR HONOR. ONCE AGAIN, AS IT
RELATES TO THE SECTION 8 PAYMENTS, IF THEY WERE GOING TO
BE REDIRECTED TO MR. CHANEY, HE WAS SUPPOSED TO HAVE
STARTED TO PAY MY CLIENTS $2,000 A MONTH, AND WE CAN PULL
10 THAT FROM THE SETTLEMENT AGREEMENT, YOUR HONOR.
11 THE COURT: I UNDERSTAND THAT.
12 MR. ANORGA: THAT NUMBER, YOUR HONOR, IS WHAT HE
13 HASN'T PAID SINCE THE SETTLEMENT AGREEMENT -~-
14 THE COURT: THAT'S THE AMOUNT THAT'S $2,000 A
15 MONTH. IS THAT --
16 MR. ANORGA CORRECT, YOUR HONOR.
17 THE COURT: INCLUSIVE OF INTEREST?
18 MR. ANORGA NO INTEREST, YOUR HONOR.
19 THE COURT: WHAT IS THE AMOUNT OF THE SECTION 8
20 PAYMENTS THAT YOUR CLIENTS HAVE RECEIVED?
21 MR. ANORGA I DON'T KNOW -- I DON'T HAVE THAT
22 NUMBER, YOUR HONOR. BUT IT WAS -- AT THE TIME OF THE
23 SETTLEMENT, YOUR HONOR, I BELIEVE THEY WERE RECEIVING
24 ABOUT $2,000 A MONTH. SO THE POINT THAT I'M TRYING TO
25 MAKE, YOUR HONOR, IS THESE TWO CREDITS ARE LIKELY GOING
26 TO CROSS EACH OTHER OUT.
27 THE COURT: RIGHT. BUT I'M GOING TO HAVE TO MAKE
28 THE FINDING AS TO WHETHER THEY DO CROSS EACH OTHER OUT OR
*ROUGH DRAFT: TRANSCRIPT*
NOT. I GUESS PLAINTIFF'S POSITION IS THAT I SHOULD
ASSUME THEY CROSS EACH OTHER OUT BECAUSE THE $2,000
AMOUNT WAS MEANT TO BE AN ESTIMATE OF WHAT WAS EXPECTED
TO BE RECEIVED?
MR. ANORGA: NO, YOUR HONOR. IT'S BECAUSE THAT'S
WHAT THEY AGREED TO AT THE SETTLEMENT HEARING, AND I CAN
BRING UP THE LANGUAGE --
THE COURT: I HAVE THE LANGUAGE RIGHT HERE. THE
NARANJOS SHALL MAKE ALL NECESSARY STEPS TO MAKE THE
10 CHANEYS THE DIRECT PAYEES OF THE UNITS THAT ARE CURRENTLY
11 UNDER SECTION 8 THAT I'VE IDENTIFIED PREVIOUSLY.
12 REMAINING OPTION TERM, THE PAY THE MONTHLY SUM OF $2,000
13 WHICH SHALL BE PAID TO DIRECT DEPOSIT WHICH THE NARANJOS
14 WERE PROVIDING THE CHANEYS, AND THAT RUNS INTO THE OPTION
15 OF EXERCISE OR THE OPTION EXPIRES. THE PURPOSE OF THE
16 PAYMENTS, THAT WOULD STOP AS OF THE DATE THE ESCROW IS
17 CLOSED. IF THE CHANEYS EXERCISE THE OPTION AGREEMENT,
18 THEY'LL RECEIVE A CREDIT FOR ALL SECTION 8 PAYMENTS.
19 THEY WILL RECEIVE A CREDIT FOR ALL SECTION 8 PAYMENTS THE
20 NARANJOS RECEIVED FOR THESE TWO UNITS DURING THE OPTION
21 TERM. THEY'LL RECEIVE A CREDIT FOR THE TOTAL OF ALL
22 MONTHLY PAYMENTS IN THE AMOUNT OF $2,000, WHICH THEY PAID
23 PERSONALLY TO THIS AGREEMENT. SO AS OF TODAY'S DATE --
24 LET ME JUST SAY THIS. AS OF TODAY'S DATE AND FOR SOME
25 PERIOD OF TIME, THE UNITS IDENTIFIED THAT HAVE BEEN
26 SUBJECT TO SECTION 8 HAVE HAD PAYMENTS DIRECTED TO THE
27 NARANJOS RATHER THAN THE CHANEYS. WE ARE ACKNOWLEDGING
28 THAT THE CHANEYS ARE ENTITLED TO A CREDIT FOR THOSE
*ROUGH DRAFT: TRANSCRIPT*
PAYMENTS IF AND WHEN THE OPTION IS EXERCISED. SO I THINK
IT'S -- I DON'T -- I MEAN, I'LL HEAR LEGAL ARGUMENT I
GUESS LATER ON THAT, BUT I DON'T UNDERSTAND WHY THEY
WOULDN'T GET CREDIT FROM SECTION 8. IN LIEU OF THOSE
PAYMENTS FROM SECTION 8, THE NARANJOS WILL RECEIVE 2,000
FROM THE CHANEYS, AND THIS IS PART OF THE AGREEMENT JUST
SO THE COURT IS AWARE, THE AMOUNT THEY CURRENTLY RECEIVE
FROM SECTION 8 AMOUNTS TO APPROXIMATELY 2,000 OR CLOSE TO
IT. THIS IS MEANT TO GUARANTEE THE NARANJOS WILL RECEIVE
10 THAT MINIMUM AMOUNT OF INCOME STREAM UNTIL THE POINT IN
11 WHICH THE OPTION AGREEMENT EITHER EXPIRES OR THE OPTION
12 IS EXERCISED. I NEED TO LOOK AT THIS AGAIN, BUT --
13 MR. ANORGA: IT'S NOT CLEAR, YOUR HONOR, BUT IT
14 SEEMS LIKE IT'S CONDITIONAL LANGUAGE. IF MR. CHANEY WAS
15 TO RECEIVE THOSE PAYMENTS, THEN HE WAS GOING TO THEN
16 THEREAFTER HAVE TO BE MAKING THE $2,000 PAYMENT TO THE
17 NARANJOS AS WELL. NONE OF THAT TOOK PLACE, YOUR HONOR.
18 SO THAT'S WHY I KEEP COMING BACK TO THIS ISSUE THAT THESE
19 TWO CREDITS APPEAR TO CROSS THEMSELVES OUT, YOUR HONOR.
20 THE COURT: WELL, IT SEEMS TO BE THAT THEY'RE
21 ENTITLED TO -- SO I NEED TO LOOK AT THIS AGAIN. I'M NOT
22 MAKING A RULING ON THIS, BUT I HAD FIGURED THIS ALL OUT
23 AT SOME POINT AND COME TO A CONCLUSION. I DON'T REMEMBER
24 IF I MEMORIALIZED THAT IN A MINUTE ORDER OR NOT.
25 MR. ANORGA: NOT TO MY KNOWLEDGE, YOUR HONOR.
26 THE COURT: BUT I'LL -- I JUST NEED TO LOOK AT
27 THE LANGUAGE AGAIN MORE CAREFULLY. TO ME THERE WAS -- I
28 REACHED A CONCLUSION THAT I BELIEVED WAS CLEAR ENOUGH IN
*ROUGH DRAFT: TRANSCRIPT*
THE AGREEMENT REGARDING THESE CREDITS ABOUT WHETHER THE
SECTION 8 AND THE 2,000 ARE SORT -- SORT OF CROSS EACH
OTHER OUT OR WHETHER THE $2,000 WAS MEANT TO BE IN
ADDITION TO THE SECTION 8 PAYMENTS BECAUSE IT SAYS
HERE -- THIS IS THE KEY LANGUAGE TO ME. IF THE CHANEYS
EXERCISE THE OPTION AGREEMENT, THEY WILL RECEIVE A CREDIT
FOR ALL SECTION 8 PAYMENTS THAT THE NARANJOS RECEIVED FOR
UNITS 55062 AND 5510-5 DURING THE OPTION TERM. IN
ADDITION, THE CHANEYS WILL RECEIVE A CREDIT FOR THE TOTAL
10 AMOUNT OF ALL MONTHLY PAYMENTS IN THE AMOUNT OF $2,000
11 WHICH THEY PAY PERSONALLY TO THE AGREEMENT. AND SO I
12 THINK THEY GET -- I THINK THEY GET THE $2,000 A MONTH
13 BACK PLUS THE SECTION 8 PAYMENTS. AGAIN, I'M NOT MAKING
14 THAT RULING RIGHT NOW BUT AS I'M LOOKING AT THE PLAIN
15 LANGUAGE WHERE THE SETTLEMENT WAS MEMORIALIZED, THAT
16 SEEMS TO BE THE CASE. YOU'RE GOING TO HAVE THE
17 OPPORTUNITY TO TELL ME WHY THAT'S WRONG.
18 MR. ANORGA: I DON'T UNDERSTAND WHICH WAY THE
19 COURT IS LEANING. MY CLIENT IS NOT ENTITLED TO THE
20 $2,000 A MONTH THEY WERE SUPPOSED TO BE GETTING IN LIEU
21 OF LOSING OR HAVING SECTION 8 REDIRECT THOSE $2,000 TO
22 THE CHANEYS?
23 THE COURT: IT SEEMS TO ME THAT WHAT THE
24 AGREEMENT WAS IS THAT THE CLIENTS, IN ORDER TO GET THAT
25 $2,000 A MONTH AS A GUARANTEED INCOME STREAM, BUT AT THE
26 END OF THE DAY, THE CHANEYS WERE GOING TO GET BOTH THE
27 $2,000 A MONTH PAYMENTS AND THE SECTION 8 PAYMENTS BACK.
28 I NEED TO LOOK AT IT MORE CAREFULLY. THIS IS NOT IN ANY
10
*ROUGH DRAFT: TRANSCRIPT*
WAY A RULING. I WANT YOU TO RESPOND TO THAT AFTER WE'VE
ALL HAD A CHANCE TO STUDY THIS SETTLEMENT AGREEMENT
AGAIN, WHICH PROBABLY WILL BE AFTER LUNCH WE'LL GET INTO
THE LEGAL ARGUMENTS AFTER WE HEAR WHAT THE EVIDENCE IS
PRESENTED, BUT IT SEEMS TO ME THAT THERE IS AT LEAST AN
ARGUMENT BASED ON WHAT I JUST READ THAT THEY GET BOTH THE
$2,000 A MONTH BACK THAT THEY DIDN'T PAY SO THAT WOULD BE
0 PLUS THE SECTION 8 PAYMENTS WHICH WE DON'T KNOW WHAT
THEY ARE, BUT WE CAN ASSUME THAT THE PARTIES WERE
10 ESTIMATING THEY WOULD BE ABOUT $2,000 A MONTH.
11 MR. ANORGA: OKAY, YOUR HONOR. WE CAN ADDRESS IT
12 AT THE APPROPRIATE TIME.
13 THE COURT: OKAY.
14 MR. CHANEY: WOULD YOU LIKE ME TO ADDRESS THAT,
15 YOUR HONOR?
16 THE COURT: YES. NOW WHAT I WANT TO TURN TO IS
17 THE DEFENDANT, WHAT YOUR POSITION IS ON ALL OF THIS AND
18 WHAT WE'RE HAVING AN EVIDENTIARY HEARING ON?
19 MR. CHANEY: SINCE WE'VE STARTED WITH THE -- THE
20 ISSUE HERE ON THE SECTION 8 CREDITS, I'D LIKE TO LET THE
21 COURT KNOW WHAT'S GOING ON WITH THAT.
22 THE COURT: OKAY.
23 MR. CHANEY: THE ORIGINAL OPTION AGREEMENT STATES
24 THAT MY WIFE AND I WERE TO RECEIVE ALL RENTS, AND
25 CONDITIONED WITH THAT, UPON -- RIGHT AFTER WE DID THE
26 OPTION AGREEMENT --
27 THE COURT: CAN YOU JUST REMIND ME WHAT -- I WANT
28 TO FOLLOW YOUR ARGUMENT.
11
*ROUGH DRAFT: TRANSCRIPT*
MR. CHANEY: YES. IT'S UNDER EXCLUSIVE CONTROL
AND MANAGEMENT OF THE PREMISES PAGE 3 OF THE OPTION
AGREEMENT.
THE COURT: OKAY. SECTION 10, EXCLUSIVE CONTROL
AND MANAGEMENT OF THE PREMISES.
MR. CHANEY: SECOND SENTENCE, OPTIONOR HEREBY
GRANT OPTIONEES TO FULL AND IRREVOCABLE AUTHORITY TO RENT
THE PREMISE ANDS TO COLLECT AND RETAIN ALL RENT PAYMENTS
AND SECURITY DEPOSITS TO PAY MORTGAGE AND LOAN PAYMENTS,
10 INSURANCE PREMIUMS, OPERATING EXPENSES, TAXES, UTILITY
11 PAYMENTS, HIGHER CONTRACT VENDORS TO MAKE REPAIRS OR
12 ALTERATIONS TO THE PREMISES, MAINTAIN LEGAL ACTIONS AND
13 PERFORM ALL ACTS AND DO ALL THINGS AS REQUIRED IN THE
14 SOLE DISCRETION OF THE OPTIONEES AS NECESSARY TO MANAGE
15 THE PREMISES.
16 THE COURT: RIGHT.
17 MR. CHANEY: OPTIONEES HAVE NO OBLIGATION TO PAY
18 ANY EXCESS RENTS TO THE OPTIONORS DURING THE OPTION TERM.
19 OPTIONORS SHALL NOT PERFORM ANY ACT THAT
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DocuSign Envelope ID: 6D108973-E8C7-4469-BU6U-7DB14E852E91 Electronically FILED by Omar S. ANORGA, ESQ. STATE BAR NO. 236520 Superior Court of California, THE ANORGA LAW FIRM, INC. County of Los Angeles 6/13/2023 12:17 155 North Lake Avenue, Suite 800 David W. Slayton, Pasadena, CA 91102 Executive Officer/Clerk of Court, By A. Lopez, Deputy Clerk Phone: (213) 489-1271 Email: Omar@Anorgalaw.com Attorneys for Plaintiffs SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES - CENTRAL DISTRICT STANLEY MOSK COURTHOUSE 10 11 JESUS NARANJO, an Individual; MARIA CASE NO. BC540028 12 BLANCA NARANJO, an Individual; PLAINTIFFS’ REPLY TO JESUS NARANJO and MARIA BLANCA 13 DEFENDANTS’ OPPOSITION TO THE NARANJO, as Co-Trustees of THE 14 MOTION AND MOTION FOR ORDER NARANJO FAMILY LIVING TRUST AMENDING JUDGMENT TO 15 DATED OCTOBER 3, 2013 CONFORM TO POST-JUDGMENT 16 ORDERS AND TO CORRECT Plaintiffs, 17 CLERICAL ERRORS vs 18 CONT. HEARING DATE: June 20. 2023 HEARING TIME: 8:30 a.m. ALBERT LON CHANEY III, an HEARING DEPT.: 24 19 Individual; KAY S. CHANEY, an JUDGE: Honorable Kristin S. Escalante 20 Individual, and DOES 1 to 100, Inclusive 21 Complaint Filed: March 20, 2014 Defendants. Trial Date: None 22 23 Reservation ID: 967149395206 24 25 /// ‘1 27 28 ‘1 DocuSign Envelope ID: 6D108973-E8C7-4469-BU6U-7DB14E852E91 MEMORANDUM OF P[OINTS AND AUTHORITOES IN REPLY TO OPPOSITION I SECTION 8 ADDITIONAL PAYMENTS BEGIN AND END WITH THE OPENING AND CLOSING OF ESCROW. At the February 3, 2023, the Court ruled that Defendants were entitled to an additional! Section 8 Credit in the amount of $2,000 dollars a month. “The 219,414 is going to be increased by $2,000 a month through the close of escrow.” (Transcript, Page 100, Lines 5-6., Exhibit 1,) Stated elsewhere, the Court ruled: “Plus an additional 2,000 through the close of escrow.” (Transcript, Page 88, Lines 25-26., Exhibit 1.) At the hearing, the Court did not provide guidance as to when the aforementioned $2,000 would begin, but it can be presumed that the 10 Court meant it to start from the opening of escrow. Here is why. 11 The Court’s ruling that the credit was to end at the “closing” of escrow logically suggests 12 that the right to this credit begins with the “opening” of escrow. Moreover, in its March 30, 2023, ruling, the Court stated, in pertinent part, that the “parameters of the proposed order 13 are that the court require ‘Defendants to make good faith efforts to open escrow within thirty 14 (30) days from the date the Order is signed.” (March 30, 2023, Tentative, Page 2, Exhibit 2.) 15 The order referenced in this ruling is the proposed amended judgment. 16 As a practical matter and as a way to usher this matter to closure, the next sequence of 17 events involve the Court signing the proposed amended judgment’, which then would trigger 18 the Defendants’ requirements to open escrow, at which point, the Section 8 additional credits 19 would begin, and end at the closing of escrow, or if “the option is cancelled.” (Transcript, Page 20 100, Lines 2-3., Exhibit 1.) 21 The Plaintiffs respectfully request that the Court order that the additional Section 8 22 payments begin with the opening and end with the closing of escrow. 23 Il. DEFENDANTS MUST CURE CODE VIOLATIONS BEFORE RECEIVING 24 ANY ADDITIONAL SECTION 8 CREDITS. 25 The basis for the Defendants receiving the additional Section 8 credits during escrow 26 presumed that the Plaintiffs would be paid that amount by Section 8 during this process. 27 28 ' The base credit for Section 8 payments against the fair market value owed to the Defendants is 219,414. ? The proposed amended judgment was received by the Court on May 31, 2023 (Exhibit 3.) 2 DocuSign Envelope ID: 6D108973-E8C7-4469-BU6U-7DB14E852E91 However, as of the May 2023, the Section 8 payments to the Plaintiff have been “abated” by the Housing Authority due to code violations and the Defendants’ failure to pass inspection. (Exhibit 4.) The Defendants, specifically, Mr. Chaney was made aware of these violations by the tenant living in the unit in question; Mr. Chaney has not cured these violations even though he is required to do so pursuant to the Option Agreement, and Mr. Chaney’s own testimony. At the hearing, Mr. Chaney stated, inter alia, “Your honor, as part of my responsibility as a landlord in taking care of these properties.” (Transcript, Page 59, Lines 3-5., Exhibit 1.) As a result of Mr. Chaney’s failure in taking care of the properties, and ensuring habitability of the apartment units, Section 8 Housing Authority has ceased paying the 10 Plaintiffs the aforementioned $2,000 credit. Therefore, the Defendants should not be entitled 11 to any additional Section 8 credits until the above-mentioned code violations are cured, and 12 Section 8 payments have been restored to the Plaintiffs. 13 14 IV. CONCLUSION. 15 16 Based on the foregoing facts and law, the Court is respectfully requested to order 17 amendment to the judgment as requested, sign the proposed amended judgment, and require 18 Defendants cure code violations as a condition to obtaining any additional Section 8 credits 19 anticipated during the opening and closing of escrow. 20 21 22 Dated: June 13, 2023, Respectfully Submitted, 23 THE ANORGA LAW FIRM, INC. 24 Docusigned by: 25 Bmarlurorya. Omar SMAniergasBsqs 26 Attorney for Plaintiffs 27 28 DocuSign Envelope ID: 6D108973-E8C7-4469-BU6U-7DB14E852E91 DECLARATION OF OMAR S. ANORGA I, Omar S. Anorga, declare, That I am an attorney at law licensed to practice in the State of California. My business address is The Anorga Law Firm, Inc., 155 North Lake Avenue, Suite 800, Pasadena, CA 91102; Phone: (213) 489-1271. I am attorney of record for plaintiffs JESUS NARANJO, an Individual; MARIA BLANCA NARANJO, an Individual; JESUS NARANJO and MARIA BLANCA NARANJO, as Co-Trustees of THE NARANJO FAMILY LIVING TRUST DATED OCTOBER 3, 2013, in Los Angeles County Superior Court case number BC540028 short-captioned Naranjo v. Chaney. The following is based on my personal knowledge: 10 11 1 Attached hereto as Exhibit 1 is a true and correct copy of the February 23, 2023, 12 reporter’s transcript. 13 2. Attached hereto as Exhibit 2 is a true and correct copy of the March 30, Tentative 14 Ruling. 15 3 Attached hereto as Exhibit 3 is a true and correct copy of the Proposed Amended 16 Judgment. 17 4 Attached hereto as Exhibit 4 is a true and correct copy of Section 8 Housing 18 Authority Letter. 19 20 I declare under penalty of perjury under the laws of the State of California that the 21 foregoing is true and correct. 22 Executed June 13, 2023, at Pasadena, California. 23 Docusigned by: 24 Bmarlusrya. 25 eororennessaara Omar. S. Anorga 26 27 28 EXHIBIT 1 *ROUGH DRAFT: TRANSCRIPT* CASE NO.: BC540028 CASE NAME: NARANJO V. CHANEY LOS ANGELES, CALIFORNIA FRIDAY, FEBRUARY 3, 2023 DEPARTMENT 24 HON. KRISTIN ESCALANTE, JUDGE REPORTER: JENNIFER SPEE FONSECA, 12840 TIME: 10:03 A.M. APPEARANCES: (AS NOTED ON THE TITLE PAGE) (UNEDITED, UN-PROOFREAD, UNCERTIFIED ROUGH DRAFT WARNING! THIS TRANSCRIPT OF PROCEEDINGS IS PRODUCED IN INSTANT FORM. THERE WILL BE DISCREPANCIES 10 BETWEEN THIS FORM AND THE FINAL FORM BECAUSE THE INSTANT FORM HAS NOT BEEN PROOFREAD, EDITED, FINALIZED, INDEXED 11 OR CERTIFIED. THERE WILL ALSO BE A DISCREPANCY IN PAGE AND LINE NUMBERS APPEARING ON THE INSTANT FORM AND THE 12 EDITED, PROOFREAD, FINALIZED, AND CERTIFIED FORM.) 13 14 THE COURT: NARANJO VERSUS CHANEY, CASE NUMBER 15 BC54028. TAKE A MOMENT TO GET SET UP. I'M GOING TO TAKE 16 A BRIEF BREAK TO ALLOW YOU TO GET EVERYTHING SET UP. 17 (A DISCUSSION WAS HELD OFF THE RECORD.) 18 THE COURT: ALL RIGHT. CALLING THE CASE OF 19 NARANJO VERSUS CHANEY, CASE NUMBER BC540028. CAN I HAVE 20 APPEARANCES STARTING WITH PLAINTIFF'S COUNSEL. 21 MR. ANORGA: GOOD MORNING, YOUR HONOR. OMAR 22 ANORGA APPEARING ON BEHALF OF PLAINTIFFS. 23 MR. CHANEY: ALBERT CHANEY FOR DEFENDANT. 24 THE COURT: MR. CHANEY, YOU'RE APPEARING ON YOUR 25 OWN BEHALF PRO PER AND ALSO ON BEHALF OF MRS. CHANEY AS 26 HER ATTORNEY; CORRECT? 27 MR. CHANEY: CORRECT, YOUR HONOR. 28 THE COURT: OKAY. SO WE ARE GOING TO START WITH *ROUGH DRAFT: TRANSCRIPT* THE EVIDENTIARY HEARING TO DETERMINE THE AMOUNT OF CREDITS TO THE PURCHASE PRICE. WE'VE BEEN THROUGH THIS BEFORE IN TERMS OF THE PARTIES STATING THEIR POSITIONS, BUT I WANT TO MAKE SURE THAT WE HAVE A CLEAR RECORD AND ALSO TO HELP THE COURT. I'D LIKE TO FIRST GO THROUGH EACH CATEGORIES OF CREDITS THAT THE COURT IS GOING TO BE CONSIDERING AND THEN TO HEAR THE POSITION OF THE PARTIES WITH RESPECT TO EACH CATEGORY AND TO FIND OUT WHERE THERE ARE FACTUAL DISPUTES THAT NEED TO BE RESOLVED BY THE 10 COURT. SO WHY DON'T WE START WITH MR. CHANEY, WHAT ARE 11 THE CATEGORIES OF CREDITS, AND THEN I'M GOING TO ASK YOU 12 TO SHOW ME WHAT PROVISIONS OF THE OPTION AGREEMENT AND 13 SETTLEMENT TO THE EXTENT THAT IT'S IN THE SETTLEMENT THAT 14 WAS REFLECTED IN THE TRANSCRIPT. YOU CAN POINT ME TO 15 WHERE THOSE ARE, BUT WHY DON'T YOU START BY JUST WALKING 16 ME THROUGH THE CATEGORIES. 17 MR. CHANEY: THOSE CATEGORIES ARE PREVIOUSLY 18 SUBMITTED TO THIS COURT, AND I DO NOT HAVE A COPY OF THEM 19 WITH ME AS TO THE CATEGORIES, HOWEVER, I DO HAVE NUMEROUS 20 EXHIBITS THAT SUPPORT THOSE CATEGORIES. 21 MR. ANORGA: YOUR HONOR, IF I MAY, THE COURT HAS 22 ALREADY RULED ON THE CATEGORIES ON -- 23 THE COURT: I KNOW. BUT I WANT THE RECORD TO BE 24 CLEAR AS TO WHAT WE'RE DETERMINING TODAY, AND IT'S ALSO 25 BEEN A LONG TIME. SO I WANT -- 26 MR. ANORGA: WOULD YOU LIKE ME TO SET THE TABLE 27 AND BRING THE COURT UP TO SPEED. 28 THE COURT: YEAH, GO AHEAD. *ROUGH DRAFT: TRANSCRIPT* MR. ANORGA: WE'RE HERE TODAY, YOUR HONOR, TO MAKE A RULING ON MR. CHANEY'S ELISOR MOTION WHICH I THINK IS IMPORTANT BECAUSE IT'S GOING TO GO TO THE ISSUE OF SECTION 8 PAYMENTS AND WHETHER HE'S ENTITLED TO THEM, AND IF HE IS, WHAT IS THE CREDIT MY CLIENT IS ALSO ENTITLED TO. THAT'S AN ISSUE WE CAN GET INTO, YOUR HONOR. WE'RE ALSO HERE FOR THE EVIDENTIARY HEARING ON THE DETERMINATION OF CREDITS -- THE COURT: WE'RE STARTING WITH THE EVIDENTIARY 10 HEARING OF CREDITS. 11 MR. ANORGA: AND ON MAY 16TH, YOUR HONOR, THE 12 COURT STATED THAT THE CATEGORIES WOULD INCLUDE A 13 PREDETERMINED ATTORNEYS' FEE CREDIT OF $100,000, CREDITS 14 FOR PAYMENTS MADE TO THE NARANJOS FOR SECTION 8 TENANTS, 15 MORTGAGE LOAN AND OTHER DEBT OBLIGATIONS THAT EXISTED 16 AGAINST THE PREMISE ON THE EXECUTION DATE OF THE OPTION 17 AGREEMENT, YOUR HONOR, AND THIS IS FROM THE COURT'S 18 MAY 16TH RULING, YOUR HONOR. 19 THE COURT: AND THE MORTGAGE -- THE LAST CATEGORY 20 THAT YOU MENTIONED, THAT'S IN THE -- IS THAT BASED ON THE 21 ALLOWANCES SECTION OF THE OPTION AGREEMENT; CORRECT? 22 MR. ANORGA: CORRECT, YOUR HONOR. 23 THE COURT: OKAY. AND THE PARTIES AGREE ON THE 24 100,000. ON THE MORTGAGE DEBT WALK ME THROUGH AGAIN THE 25 ISSUE -- THE AMOUNTS AND WHERE THERE'S AGREEMENT AND 26 WHERE THERE'S DISAGREEMENT. ON THAT WHOLE ALLOWANCES 27 SECTION UNDER SECTION 8 OF THE -- NOT SECTION 8 OF THE 28 LANDLORD TENANT LAW, BUT SECTION 8 OF THE OPTION *ROUGH DRAFT: TRANSCRIPT* AGREEMENT UNDER THE CATEGORY OF ALLOWANCES, WHERE ARE THERE AGREEMENTS AND DISAGREEMENTS ON THOSE AMOUNTS? MR. ANORGA: YOUR HONOR, AT OUR LAST HEARING ON THIS MATTER, MR. CHANEY ARGUED THAT THERE SHOULD BE MORTGAGE REDUCTION BY THE AMOUNT OF $231,436.80. THE ISSUE WITH THAT, YOUR HONOR, IS THAT HE DIDN'T PRESENT ANY ADMISSIBLE EVIDENCE TO SUSTAIN OR SUPPORT SUCH A FINDING. I THINK THAT'S PART OF THE REASON WHY WE'RE HERE TODAY TO SEE WHETHER OR NOT HE CAN DEMONSTRATE THAT 10 THAT -- THE MORTGAGE HAS INDEED BEEN REDUCED BY THAT 11 AMOUNT, YOUR HONOR. 12 THE COURT: AND WHAT'S PLAINTIFF'S POSITION AS TO 13 WHAT THE CORRECT AMOUNT SHOULD BE UNDER THAT SECTION? 14 MR. ANORGA: TO THE EXTENT HE CAN DEMONSTRATE, 15 YOUR HONOR, AND THERE'S PERSUASIVE EVIDENCE TO SHOW THAT, 16 THEN WE WOULD CONCEDE ON THAT ISSUE, YOUR HONOR. 17 THE COURT: AND IS THERE ANY AMOUNT THAT YOU 18 AGREE IS AN APPROPRIATE AMOUNT OF REDUCTION? 19 THE WITNESS: I DON'T -- WELL, No, YOUR HONOR, 20 BECAUSE I HAVEN'T SEEN THE EVIDENCE TO SUPPORT WHAT THE 21 MORTGAGE REDUCTION IS. I'LL WE'VE HEARD IS WHAT 22 MR. CHANEY IS SAYING IT SHOULD BE. 23 MR. CHANEY: MAY I ADDRESS THAT, YOUR HONOR? 24 THE COURT: JUST GIVE ME ONE SECOND BECAUSE I 25 WANT TO GET FROM PLAINTIFF'S PERSPECTIVE NOW WHERE 26 THERE'S AGREEMENT AND DISAGREEMENT, AND THE SECTION 8 27 PAYMENTS TELL ME WHAT PLAINTIFF'S POSITION IS AGAIN. AND 28 AGAIN, THIS IS REPETITIVE OF WHAT WE'VE DONE AT PRIOR *ROUGH DRAFT: TRANSCRIPT* HEARINGS. IT'S BEEN A LONG TIME, AND I NEED MY MEMORY REFRESHED. MR. ANORGA: NO WORRIES, YOUR HONOR. THERE WAS SOME BRIEFING THAT THE COURT REQUIRED OF US IN THE SUMMER OF LAST YEAR. IT'S BEEN SOME TIME, BUT OUR POSITION ON THAT AND THIS RELATES TO THE ELISOR MOTION IS MR. CHANEY IS NOT ENTITLED TO ANY SECTION 8 CREDITS FOR THE FOLLOWING REASON: AND THAT IS BECAUSE THE PARTIES NEVER AGREED TO IT, YOUR HONOR, THE. THE PARTIES AGREED THAT 10 MY CLIENTS WOULD MAKE BEST EFFORTS TO HAVE SECTION 8 11 REDIRECT SECTION 8 PAYMENTS TO MR. CHANEY. THEY MADE 12 THOSE BEST EFFORTS, YOUR HONOR. SECTION 8 DENIED IT. 13 EVEN IF THEY WOULD HAVE ALLOWED IT, YOUR HONOR, 14 MR. CHANEY WASN'T ENTITLED TO THOSE SECTION 8 PAYMENTS 15 BECAUSE HE WAS SUPPOSED TO HAVE PAID MY CLIENTS $2,000 A 16 MONTH SINCE THE DATE OF THE SETTLEMENT AGREEMENT, AND SO 17 THAT NEVER TOOK PLACE. MR. CHANEY TESTIFIED TO THAT. 18 HE'S NEVER ONCE MADE A PAYMENT. SO, YOUR HONOR, THE 19 PLAINTIFF'S POSITION IS THAT THEY ESSENTIALLY CROSS EACH 20 OTHER OUT. 21 THE COURT: THAT'S PART OF WHAT THE EVIDENCE THAT 22 WE NEED TO CONSIDER IS HOW MUCH WOULD THE SECTION 8 23 PAYMENTS AND HOW MUCH WERE THE -- HOW DOES THAT COMPARE 24 TO THE $2,000 A MONTH PAYMENTS. 25 MR. ANORGA: YOUR HONOR, IF THE COURT IS INCLINED 26 TO GRANT THE SECTION 8 PAYMENTS, WE'RE GOING TO HAVE TO 27 FIGURE THAT OUT, BUT I CAN TELL YOU WHAT MY CLIENTS 28 SHOULD HAVE BEEN PAID SINCE THE DATE OF THE SETTLEMENT TO *ROUGH DRAFT: TRANSCRIPT* TODAY'S DATE, YOUR HONOR, AND THAT'S $136,000. THE COURT: WAIT. WHAT IS THAT? MR. ANORGA: $136,000. THE COURT: BUT WHAT IS $136,000 REPRESENT? I JUST MISSED WHAT YOU SAID THAT NUMBER WAS. MR. ANORGA: SURE, YOUR HONOR. ONCE AGAIN, AS IT RELATES TO THE SECTION 8 PAYMENTS, IF THEY WERE GOING TO BE REDIRECTED TO MR. CHANEY, HE WAS SUPPOSED TO HAVE STARTED TO PAY MY CLIENTS $2,000 A MONTH, AND WE CAN PULL 10 THAT FROM THE SETTLEMENT AGREEMENT, YOUR HONOR. 11 THE COURT: I UNDERSTAND THAT. 12 MR. ANORGA: THAT NUMBER, YOUR HONOR, IS WHAT HE 13 HASN'T PAID SINCE THE SETTLEMENT AGREEMENT -~- 14 THE COURT: THAT'S THE AMOUNT THAT'S $2,000 A 15 MONTH. IS THAT -- 16 MR. ANORGA CORRECT, YOUR HONOR. 17 THE COURT: INCLUSIVE OF INTEREST? 18 MR. ANORGA NO INTEREST, YOUR HONOR. 19 THE COURT: WHAT IS THE AMOUNT OF THE SECTION 8 20 PAYMENTS THAT YOUR CLIENTS HAVE RECEIVED? 21 MR. ANORGA I DON'T KNOW -- I DON'T HAVE THAT 22 NUMBER, YOUR HONOR. BUT IT WAS -- AT THE TIME OF THE 23 SETTLEMENT, YOUR HONOR, I BELIEVE THEY WERE RECEIVING 24 ABOUT $2,000 A MONTH. SO THE POINT THAT I'M TRYING TO 25 MAKE, YOUR HONOR, IS THESE TWO CREDITS ARE LIKELY GOING 26 TO CROSS EACH OTHER OUT. 27 THE COURT: RIGHT. BUT I'M GOING TO HAVE TO MAKE 28 THE FINDING AS TO WHETHER THEY DO CROSS EACH OTHER OUT OR *ROUGH DRAFT: TRANSCRIPT* NOT. I GUESS PLAINTIFF'S POSITION IS THAT I SHOULD ASSUME THEY CROSS EACH OTHER OUT BECAUSE THE $2,000 AMOUNT WAS MEANT TO BE AN ESTIMATE OF WHAT WAS EXPECTED TO BE RECEIVED? MR. ANORGA: NO, YOUR HONOR. IT'S BECAUSE THAT'S WHAT THEY AGREED TO AT THE SETTLEMENT HEARING, AND I CAN BRING UP THE LANGUAGE -- THE COURT: I HAVE THE LANGUAGE RIGHT HERE. THE NARANJOS SHALL MAKE ALL NECESSARY STEPS TO MAKE THE 10 CHANEYS THE DIRECT PAYEES OF THE UNITS THAT ARE CURRENTLY 11 UNDER SECTION 8 THAT I'VE IDENTIFIED PREVIOUSLY. 12 REMAINING OPTION TERM, THE PAY THE MONTHLY SUM OF $2,000 13 WHICH SHALL BE PAID TO DIRECT DEPOSIT WHICH THE NARANJOS 14 WERE PROVIDING THE CHANEYS, AND THAT RUNS INTO THE OPTION 15 OF EXERCISE OR THE OPTION EXPIRES. THE PURPOSE OF THE 16 PAYMENTS, THAT WOULD STOP AS OF THE DATE THE ESCROW IS 17 CLOSED. IF THE CHANEYS EXERCISE THE OPTION AGREEMENT, 18 THEY'LL RECEIVE A CREDIT FOR ALL SECTION 8 PAYMENTS. 19 THEY WILL RECEIVE A CREDIT FOR ALL SECTION 8 PAYMENTS THE 20 NARANJOS RECEIVED FOR THESE TWO UNITS DURING THE OPTION 21 TERM. THEY'LL RECEIVE A CREDIT FOR THE TOTAL OF ALL 22 MONTHLY PAYMENTS IN THE AMOUNT OF $2,000, WHICH THEY PAID 23 PERSONALLY TO THIS AGREEMENT. SO AS OF TODAY'S DATE -- 24 LET ME JUST SAY THIS. AS OF TODAY'S DATE AND FOR SOME 25 PERIOD OF TIME, THE UNITS IDENTIFIED THAT HAVE BEEN 26 SUBJECT TO SECTION 8 HAVE HAD PAYMENTS DIRECTED TO THE 27 NARANJOS RATHER THAN THE CHANEYS. WE ARE ACKNOWLEDGING 28 THAT THE CHANEYS ARE ENTITLED TO A CREDIT FOR THOSE *ROUGH DRAFT: TRANSCRIPT* PAYMENTS IF AND WHEN THE OPTION IS EXERCISED. SO I THINK IT'S -- I DON'T -- I MEAN, I'LL HEAR LEGAL ARGUMENT I GUESS LATER ON THAT, BUT I DON'T UNDERSTAND WHY THEY WOULDN'T GET CREDIT FROM SECTION 8. IN LIEU OF THOSE PAYMENTS FROM SECTION 8, THE NARANJOS WILL RECEIVE 2,000 FROM THE CHANEYS, AND THIS IS PART OF THE AGREEMENT JUST SO THE COURT IS AWARE, THE AMOUNT THEY CURRENTLY RECEIVE FROM SECTION 8 AMOUNTS TO APPROXIMATELY 2,000 OR CLOSE TO IT. THIS IS MEANT TO GUARANTEE THE NARANJOS WILL RECEIVE 10 THAT MINIMUM AMOUNT OF INCOME STREAM UNTIL THE POINT IN 11 WHICH THE OPTION AGREEMENT EITHER EXPIRES OR THE OPTION 12 IS EXERCISED. I NEED TO LOOK AT THIS AGAIN, BUT -- 13 MR. ANORGA: IT'S NOT CLEAR, YOUR HONOR, BUT IT 14 SEEMS LIKE IT'S CONDITIONAL LANGUAGE. IF MR. CHANEY WAS 15 TO RECEIVE THOSE PAYMENTS, THEN HE WAS GOING TO THEN 16 THEREAFTER HAVE TO BE MAKING THE $2,000 PAYMENT TO THE 17 NARANJOS AS WELL. NONE OF THAT TOOK PLACE, YOUR HONOR. 18 SO THAT'S WHY I KEEP COMING BACK TO THIS ISSUE THAT THESE 19 TWO CREDITS APPEAR TO CROSS THEMSELVES OUT, YOUR HONOR. 20 THE COURT: WELL, IT SEEMS TO BE THAT THEY'RE 21 ENTITLED TO -- SO I NEED TO LOOK AT THIS AGAIN. I'M NOT 22 MAKING A RULING ON THIS, BUT I HAD FIGURED THIS ALL OUT 23 AT SOME POINT AND COME TO A CONCLUSION. I DON'T REMEMBER 24 IF I MEMORIALIZED THAT IN A MINUTE ORDER OR NOT. 25 MR. ANORGA: NOT TO MY KNOWLEDGE, YOUR HONOR. 26 THE COURT: BUT I'LL -- I JUST NEED TO LOOK AT 27 THE LANGUAGE AGAIN MORE CAREFULLY. TO ME THERE WAS -- I 28 REACHED A CONCLUSION THAT I BELIEVED WAS CLEAR ENOUGH IN *ROUGH DRAFT: TRANSCRIPT* THE AGREEMENT REGARDING THESE CREDITS ABOUT WHETHER THE SECTION 8 AND THE 2,000 ARE SORT -- SORT OF CROSS EACH OTHER OUT OR WHETHER THE $2,000 WAS MEANT TO BE IN ADDITION TO THE SECTION 8 PAYMENTS BECAUSE IT SAYS HERE -- THIS IS THE KEY LANGUAGE TO ME. IF THE CHANEYS EXERCISE THE OPTION AGREEMENT, THEY WILL RECEIVE A CREDIT FOR ALL SECTION 8 PAYMENTS THAT THE NARANJOS RECEIVED FOR UNITS 55062 AND 5510-5 DURING THE OPTION TERM. IN ADDITION, THE CHANEYS WILL RECEIVE A CREDIT FOR THE TOTAL 10 AMOUNT OF ALL MONTHLY PAYMENTS IN THE AMOUNT OF $2,000 11 WHICH THEY PAY PERSONALLY TO THE AGREEMENT. AND SO I 12 THINK THEY GET -- I THINK THEY GET THE $2,000 A MONTH 13 BACK PLUS THE SECTION 8 PAYMENTS. AGAIN, I'M NOT MAKING 14 THAT RULING RIGHT NOW BUT AS I'M LOOKING AT THE PLAIN 15 LANGUAGE WHERE THE SETTLEMENT WAS MEMORIALIZED, THAT 16 SEEMS TO BE THE CASE. YOU'RE GOING TO HAVE THE 17 OPPORTUNITY TO TELL ME WHY THAT'S WRONG. 18 MR. ANORGA: I DON'T UNDERSTAND WHICH WAY THE 19 COURT IS LEANING. MY CLIENT IS NOT ENTITLED TO THE 20 $2,000 A MONTH THEY WERE SUPPOSED TO BE GETTING IN LIEU 21 OF LOSING OR HAVING SECTION 8 REDIRECT THOSE $2,000 TO 22 THE CHANEYS? 23 THE COURT: IT SEEMS TO ME THAT WHAT THE 24 AGREEMENT WAS IS THAT THE CLIENTS, IN ORDER TO GET THAT 25 $2,000 A MONTH AS A GUARANTEED INCOME STREAM, BUT AT THE 26 END OF THE DAY, THE CHANEYS WERE GOING TO GET BOTH THE 27 $2,000 A MONTH PAYMENTS AND THE SECTION 8 PAYMENTS BACK. 28 I NEED TO LOOK AT IT MORE CAREFULLY. THIS IS NOT IN ANY 10 *ROUGH DRAFT: TRANSCRIPT* WAY A RULING. I WANT YOU TO RESPOND TO THAT AFTER WE'VE ALL HAD A CHANCE TO STUDY THIS SETTLEMENT AGREEMENT AGAIN, WHICH PROBABLY WILL BE AFTER LUNCH WE'LL GET INTO THE LEGAL ARGUMENTS AFTER WE HEAR WHAT THE EVIDENCE IS PRESENTED, BUT IT SEEMS TO ME THAT THERE IS AT LEAST AN ARGUMENT BASED ON WHAT I JUST READ THAT THEY GET BOTH THE $2,000 A MONTH BACK THAT THEY DIDN'T PAY SO THAT WOULD BE 0 PLUS THE SECTION 8 PAYMENTS WHICH WE DON'T KNOW WHAT THEY ARE, BUT WE CAN ASSUME THAT THE PARTIES WERE 10 ESTIMATING THEY WOULD BE ABOUT $2,000 A MONTH. 11 MR. ANORGA: OKAY, YOUR HONOR. WE CAN ADDRESS IT 12 AT THE APPROPRIATE TIME. 13 THE COURT: OKAY. 14 MR. CHANEY: WOULD YOU LIKE ME TO ADDRESS THAT, 15 YOUR HONOR? 16 THE COURT: YES. NOW WHAT I WANT TO TURN TO IS 17 THE DEFENDANT, WHAT YOUR POSITION IS ON ALL OF THIS AND 18 WHAT WE'RE HAVING AN EVIDENTIARY HEARING ON? 19 MR. CHANEY: SINCE WE'VE STARTED WITH THE -- THE 20 ISSUE HERE ON THE SECTION 8 CREDITS, I'D LIKE TO LET THE 21 COURT KNOW WHAT'S GOING ON WITH THAT. 22 THE COURT: OKAY. 23 MR. CHANEY: THE ORIGINAL OPTION AGREEMENT STATES 24 THAT MY WIFE AND I WERE TO RECEIVE ALL RENTS, AND 25 CONDITIONED WITH THAT, UPON -- RIGHT AFTER WE DID THE 26 OPTION AGREEMENT -- 27 THE COURT: CAN YOU JUST REMIND ME WHAT -- I WANT 28 TO FOLLOW YOUR ARGUMENT. 11 *ROUGH DRAFT: TRANSCRIPT* MR. CHANEY: YES. IT'S UNDER EXCLUSIVE CONTROL AND MANAGEMENT OF THE PREMISES PAGE 3 OF THE OPTION AGREEMENT. THE COURT: OKAY. SECTION 10, EXCLUSIVE CONTROL AND MANAGEMENT OF THE PREMISES. MR. CHANEY: SECOND SENTENCE, OPTIONOR HEREBY GRANT OPTIONEES TO FULL AND IRREVOCABLE AUTHORITY TO RENT THE PREMISE ANDS TO COLLECT AND RETAIN ALL RENT PAYMENTS AND SECURITY DEPOSITS TO PAY MORTGAGE AND LOAN PAYMENTS, 10 INSURANCE PREMIUMS, OPERATING EXPENSES, TAXES, UTILITY 11 PAYMENTS, HIGHER CONTRACT VENDORS TO MAKE REPAIRS OR 12 ALTERATIONS TO THE PREMISES, MAINTAIN LEGAL ACTIONS AND 13 PERFORM ALL ACTS AND DO ALL THINGS AS REQUIRED IN THE 14 SOLE DISCRETION OF THE OPTIONEES AS NECESSARY TO MANAGE 15 THE PREMISES. 16 THE COURT: RIGHT. 17 MR. CHANEY: OPTIONEES HAVE NO OBLIGATION TO PAY 18 ANY EXCESS RENTS TO THE OPTIONORS DURING THE OPTION TERM. 19 OPTIONORS SHALL NOT PERFORM ANY ACT THAT