HomeMy WebLinkAbout20260311_Opposition Filed- Smith and Company_City v Smith1
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DEFENDANT SMITH AND COMPANY’S OPPOSITION TO CITY OF SAN LUIS OBISPO’S EX PARTE APPLICATION FOR APPOINTMENT OF RECEIVER
PRICE, POSTEL
& PARMA LLP
SANTA BARBARA, CA
TODD A. AMSPOKER, State Bar No. 111245
CHRISTOPHER E. HASKELL, State Bar No. 126745
JEFF F. TCHAKAROV, State Bar No. 295506
PRICE, POSTEL & PARMA LLP
200 East Carrillo Street, Fourth Floor
Santa Barbara, California 93101
Telephone: (805) 962-0011
Facsimile: (805) 965-3978
taa@ppplaw.com, ceh@ppplaw.com,
jft@ppplaw.com
Attorneys for Defendant
Smith and Company, a Real Estate Investment
Development Corporation, a California corporation,
and LC Lenders, LLC, a Delaware limited liability
company
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN LUIS OBISPO
THE PEOPLE OF THE STATE OF
CALIFORNIA, EX REL, J. CHRISTINE
DIETRICK, CITY ATTORNEY OF THE CITY
OF SAN LUIS OBISPO; and, THE CITY OF
SAN LUIS OBISPO, a California municipal
corporation,
Plaintiffs,
vs.
LAUREL CREEK, LP, a California Limited
Partnership;
Laurel creek, II, L.P., a Delaware limited
partnership;
1160 LAUREL LANE, LLC, a California limited
liability company;
PATRICK N. SMITH a/k/a PATRICK SMITH, ,
An individual;
SMITH AND COMPANY, A REAL ESTATE
INVESTMENT DEVELOPMENT
CORPORATION, a California corporation;
PATRICK N. SMITH a/k/a PATRICK SMITH,
AS TRUSTEE OF THE PATRICK N SMITH
2004 LIVING TRUST;
CPIF CALIFORNIA LLC, a California limited
liability company;
CPIF LAUREL CREEK, LLC, a Washington
limited liability company;
ALL WALL SYSTEMS, INC., a Delaware
corporation;
Case No.: 25CV-0667
Assigned to the Hon. Tana L. Coates
PRELIMINARY OPPOSITION OF
DEFENDANTS SMITH AND
COMPANY, A REAL ESTATE
INVESTMENT CORPORATION AND
LC LENDERS, LLC TO EX PARTE
APPLICATION OF CITY OF SAN
LUIS OBISPO FOR APPOINTMENT
OF RECEIVER, OR
ALTERNATIVELY, FOR AN ORDER
SHORTENING TIME;
DECLARATION OF PATRICK
SMITH IN SUPPORT THEREOF
Date: March 12, 2026
Time: 8:30 a.m.
Dept: 4
Trial: Not Set
ELECTRONICALLY FILED3/11/2026 3:57 PM
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DEFENDANT SMITH AND COMPANY’S OPPOSITION TO CITY OF SAN LUIS OBISPO’S EX PARTE APPLICATION FOR APPOINTMENT OF RECEIVER
PRICE, POSTEL
& PARMA LLP
SANTA BARBARA, CA
AMERICAN RIVIERA BANK, a California
corporation;
ARNOLD BUILDERS, INC., a California
corporation;
B & B CONSTRUCTION CLEANUP INC., a
California corporation
BLUE STEEL CONCRETE, LLC, a California
limited liability company;
COAST ENGINEERING & DESIGN INC., a
California corporation;
CONSOLIDATED ELECTRICAL
DISTRIBUTORS, INC., d/b/a CALIFORNIA
ELECTRICAL SUPPLY, a Delaware
corporation;
CULBERT PLUMBING INC., F/K/A
CULBERT CONSTRUCTION AND
PLUMBING, INC., a
California stock corporation;
EMPIRE ELECTRICAL SOLUTIONS, INC., a
California corporation;
FAMCON PIPE & SUPPLY, INC., a California
corporation;
G W SURFACES, a California corporation;
HOMER T. HAYWARD LUMBER CO., a
California corporation;
KIRK CONSTRUCTION, a California
corporation;
LC LENDERS, LLC, a Delaware limited liability
company;
LW CONSTRUCTION, INC., a California
corporation;
MAHOGANY CONSTRUCTION, INC., a
California corporation;
NOLAN CHURCH DOING BUSINESS AS
COLORTRENDS PAINTING &
DECORATING,
a California sole ownership or proprietor
business;
THE SHERWIN-WILLIAMS COMPANY, an
Ohio corporation;
UNITED RENTALS (NORTH AMERICA)
INC.,
a Delaware corporation;
US AIR CONDITIONING DISTRIBUTORS,
LLC, a Delaware limited liability company; and,
DOES 1-50, inclusive
Defendants.
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DEFENDANT SMITH AND COMPANY’S OPPOSITION TO CITY OF SAN LUIS OBISPO’S EX PARTE APPLICATION FOR APPOINTMENT OF RECEIVER
PRICE, POSTEL
& PARMA LLP
SANTA BARBARA, CA
Defendants Smith and Company, a Real Estate Investment Corporation (“Smith”), and LC
Lenders, LLC, a Delaware limited liability company, (“collectively Defendants”) hereby
preliminarily oppose the City of San Luis Obispo’s Ex Parte Application for Appointment of
Receiver, or alternatively, for an Order Shortening Time, as follows:
This matter arises out of a construction project for a large housing and mixed-use
development in the City of San Luis Obispo, located at 1150 & 1160 Laurel Creek (“Project”).
The City of San Luis Obispo actively supported this Project at its commencement. The property
owner, Defendant Laurel Creek L.P. (“Laurel Creek”) sought and obtained a construction loan for
the Project from Defendant CPIF California LLC (“CPIF”). At completion the Project, to be
known as Laurel Creek, would consist of 75 apartments, 60 storage units, approximately 56,000
sq ft of warehouse, and approximately 54,000 sq ft of office.
In March of 2021, Laurel Creek and defendant CPIF entered into a Loan Agreement,
Promissory Note, and Deed of Trust, in the amount of $44,500,000. In June of 2022, CPIF
represented to Laurel Creek that the loan amount was being increased to $74,500,000 in order to
complete the Project.
Unbeknownst to Laurel Creek, CPIF never intended to loan or disburse any substantial
portion of the additional money from the increased $30,000,000 in loan availability. Instead of
continuing to fund draw requests for construction, CPIF cancelled all funding of the Project.
These wrongful actions by CPIF caused various contractors/sub-contractors to place liens on the
property. Defendant Laurel Creek has a case pending against CPIF in this court seeking to
recover substantial damages caused by CPIF’s default. In addition, Laurel Creek seeks to have
the various loan agreements with CPIF cancelled. (Laurel Creek, L.P., Laurel Creek II, L.P. and
Patrick Smith v. CPIF California, LLC, San Luis Obispo County Superior Court No. 24CV0133.)
As a result of CPIF’s defaults on its loan agreement, many mechanic’s lien foreclosure
cases regarding this Project are now pending in this court. These foreclosure actions include one
by Smith against CPIF and the other lien holders on the property. In that case, Smith alleges that
its lien for unpaid work has priority over CPIF’s lien. That case is now pending. (Smith and
Company v. Laurel Creek, et al., Action No. 24CV-0693.)
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DEFENDANT SMITH AND COMPANY’S OPPOSITION TO CITY OF SAN LUIS OBISPO’S EX PARTE APPLICATION FOR APPOINTMENT OF RECEIVER
PRICE, POSTEL
& PARMA LLP
SANTA BARBARA, CA
Prior to the Project funding initially provided by CPIF, Laurel Creek obtained a loan from
the State of California’s PACE Reserve Program. Because of CPIF’s defaults, payments to the
State ceased. The State has also filed foreclosure proceedings in this court. (California Statewide
Communities Development Authority v. Laurel Creek, LP, et al., Action No. 25CV0145.)
To avoid CPIF’s non-judicial foreclosure proceedings, Laurel Creek filed a bankruptcy
case in the Central District (In re Laurel Creek, Action No. (9:25-bk-10985-RC.) That case may
be dismissed, and the outcome of the bankruptcy filing is still unknown. However, CPIF has
obtained relief from the bankruptcy stay to pursue its previously cancelled non-judicial
foreclosure. Negotiations have almost been finalized between a new lender on the Project and
CPIF. Smith is informed and believes and thereon alleges that CPIF has agreed in concept to a
Letter of Intent that would finalize that new financing and allow the Project to be completed.
The City is now improperly seeking to insert itself into this Project, with priority over all
other parties in the pending actions described above, based merely on an ex parte application.
The City’s request should be denied, for the following reasons:
1. The City’s description of allegedly improper features of the Project construction is
incorrect and out of date. Since the original reports in March 2025 provided by the
City, Smith has performed substantial work at the property. Almost all of the items
complained of by the City have already been completely resolved, at the cost of
approximately $1 million. For instance, the City complained to Smith about open
trenching on the property. That open trenching has been filled in. Smith can provide
the details on all of these construction items. However, due to the shortness of time to
prepare this preliminary opposition, it is not possible to gather together all the details
and provide the Court with illustrating photographs. Any substantive hearing on the
City’s request should be delayed for at least 60 days, in order to allow Smith and the
other defendants to review and analyze the City’s voluminous filing and exhibits.
2. Ownership of the subject property is substantially in doubt. There are multiple
foreclosure proceedings pending in this court, each of which seeking to obtain
ownership of the property. This includes the State’s foreclosure proceedings, CPIF’s
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DEFENDANT SMITH AND COMPANY’S OPPOSITION TO CITY OF SAN LUIS OBISPO’S EX PARTE APPLICATION FOR APPOINTMENT OF RECEIVER
PRICE, POSTEL
& PARMA LLP
SANTA BARBARA, CA
non-judicial foreclosure proceedings, Smith and Company’s foreclosure proceedings,
and all of the foreclosure proceedings filed by subcontractors of the project. The City
desires to be placed at the top of the list and obtain super-priority over all other liens,
merely by filing an ex parte application. This is inappropriate, especially considering
the fact that the foreclosure proceedings have been pending for some time, at
substantial expense to all the other lien holders who were delayed by Laurel Creek’s
bankruptcy filing. The City should not be allowed to be placed at the top of the list,
based on an ex parte application that Smith has only had a few hours to review and
analyze.
3. There is no public danger presented by the building. To Smith’s knowledge, no one
has been injured at the property. Defendant Smith has a full-time security guard in
place at the property, who actively monitors the property. The alleged dangerous
conditions of the property are not possibly physically accessible to members of the
public without engaging in criminal vandalism and trespass. Smith’s security team
constantly works on removing homeless from the property.1 The City has not
bothered to explain at all why there is any actual danger to the public posed by the
building.
4. A new lender is on the verge of obtaining from CPIF an executed Letter of Intent for
new lending on the project which would allow the Project to finally be completed.
The appointment of a receiver who would have control over the Project and property
would destroy the opportunity for those negotiations to be completed.
5. The City has not provided any budget or description of the particular work that needs
to be done in order to resolve the alleged deficiencies. The City basically wants a
1 There is a creek and a railway right of way on the property. From time to time, the City evicts
homeless encampments from its nearby bus depot, and the homeless merely go over to the subject
property and establish encampments there. Smith’s security personnel then force the homeless to
leave, and they presumably go back to the City’s property in a never-ending cycle. Smith just
recently hired a service to clean up homeless trash and debris on the subject property. The property
is now cleaned up.
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PRICE, POSTEL
& PARMA LLP
SANTA BARBARA, CA
PROOF OF SERVICE
STATE OF CALIFORNIA, COUNTY OF SANTA BARBARA
I am employed in the County of Santa Barbara, State of California. I am over the age of
eighteen (18) and not a party to the within action. My business address is 200 East Carrillo Street,
Fourth Floor, Santa Barbara, California 93101.
On March 11, 2026, I served the foregoing document described as PRELIMINARY
OPPOSITION OF DEFENDANTS SMITH AND COMPANY, A REAL ESTATE
INVESTMENT CORPORATION AND LC LENDERS, LLC TO EX PARTE APPLICATION
OF CITY OF SAN LUIS OBISPO FOR APPOINTMENT OF RECEIVER, OR
ALTERNATIVELY, FOR AN ORDER SHORTENING TIME; DECLARATION OF
PATRICK SMITH IN SUPPORT THEREOF on all interested parties in this action by the
original and/or true copy thereof enclosed in sealed envelopes, addressed as follows:
Matthew R. Silver
Sean E. Morrissey
CIVICA LAW GROUP APC
4000 Barranca Parkway, Suite 250, PMB #782
Irvine, CA 92604
MSilver@CivicaLaw.com
SMorrissey@CivicaLaw.com
Meagan E. Leary
Marcus O. Colabiachi
DUANE MORRIS LLP
Spear Tower
One Market Plaza, Suite 2200
San Francisco, CA 94105
MELeary@duanemorris.com
MColabianchi@duanemorris.com
BY MAIL: I placed the original and/or true copy in a sealed envelope addressed as
indicated herein. I am readily familiar with the firm’s practice of collection and
processing documents for mailing. It is deposited with the U.S. postal service on that
same day in the ordinary course of business. I am aware that on motion of the party
served, service is presumed invalid if the postal cancellation date or postage meter date is
more than one day after the date of deposit for mailing in affidavit.
BY OVERNIGHT DELIVERY: I placed the original and/or true copy in a sealed, fully
prepaid FedEx, Next Day Air envelope addressed as indicated herein, which is picked up
by FedEx on that same day in the ordinary course of business.
BY E-MAIL: I caused to be e-mailed a true copy to the e-mail addresses listed herein.
(STATE) I declare under penalty of perjury under the laws of the State of California that
the foregoing is true and correct.
Executed on March 11, 2026, at Santa Barbara, California.
Signature
TIMOTHY HEARN