More on the Goof Ball Judge Decision aginst the L. Optionor - Posted by Bill Gatten

Posted by Bill Gatten on June 09, 1999 at 15:08:02:

Thanks Joe,

I was feeling a bit down til I saw your post. Sure appreciate it.


BTW the attorney on the plaintiff’s side of this stupid thing called me last night and talked for an hour explaining the situation from the other point of view… and guess what? There is one (another point of view), though the “facts” (using the term very very loosely) of the case are essentially as told to me by the defendant, except, of course, that the other guy is now the bad guy.

More on the Goof Ball Judge Decision aginst the L. Optionor - Posted by Bill Gatten

Posted by Bill Gatten on June 07, 1999 at 15:45:22:

The following is a revised version of a post I made last week after having spoken with a reluctant Lease Optionor about a horror story regarding a thwarted PACTrust? that ended up becoming a Lease Option.

In a nutshell, what happened was that the option period was by-passed by nearly 3 months, but the Optionor is none-the-less being forced to sell at the original option price, even though the property has gone up over $54,000. They are also being directed by the court to refund all moneys having been taken for insurance and property over the option term and to pay reasonable attorneys fees to the plaintiffs.

Since my original post, I have researched the data through the defendant in the case, one of the brokers involved and an attorney friend of mine who happens to know someone involved in the case (knows the uncle of the cousin of the plaintiff’s next-door neighbor’s former boyfriend).

He deal as told to me:

12/1/97 - Party A accepted a PACTrust? Purchase Offer from Party B which was to commence on, or about 12/18, and which was to include payments for PITI+HOA and Trustee Fee. Property worth $195,000 Mutually Accepted Value was $181,000. Broker informed seller that Party B had filed a BK in the past and that a home they had owned had been deeded to a relative and was not a part of the BK

12/18/98 - A new agreement, a Lease Option, drawn up in lieu of the PACTrust? and initially rejected by Seller.

1/98 Party B convinced Party A that a PACTrust? would be too costly, and that a lease Option would be better. Party A consented, indicating that the Lease Option would become effective only if there was a full Escrow, and only upon the opening of such Escrow? the Escrow was never opened. It was clearly understood by all parties that a balloon payment on the property was coming due in full on 08/01/99.

1/98 - The first payment and option fee several weeks late. Insurance not paid and HOA not paid for 2 more months.

2/98 - Option Agreement (from 12/18/97 to 12/18/98) finally executed by Optionor, but never by Optionees.

A year goes by?

12-18-98 - Option Agreement terminates.

2/99 - Property had gone up from $181,000 to approximately $23,5000 (good upswing in Ca. Market). Over the term of the Option Agreement, payments were invariably 1 to 2 months late (to the detriment of Optionor’s credit record) and paid only after begging by the Optionor. Likewise, HOA Due were always 2-3 months late, and the hazard insurance carrier threatened cancellation for non-payment on one occasion. On various occasions, Party A paid the HOA dues to avert a lien being placed on the property by the HOA?an act which would bite them later.

2/99 - Party B was notified of the planned sale of the property by Party A, who, feeling sorry for them and their financial condition, offered to return Party B’s option fee (about $3,500). Party B then realized the value of the house and sought out an attorney (a partner in the law firm of Tyler and Dorsa, Temecula, Ca) who I’m told, sued for the Party B’s right to exercise the Lease Purchase Option, even though the option date had passed. Party B reportedly thought they had obtained a financing commitment at 85% LTV just prior to, or just after approaching the law firm; but were subsequently turned-down by the lender when it was discovered that a house they had formerly owned had been foreclosed upon. It was also discovered by at that time that Party B was in the midst of an “eviction” and UDT Action: it is rumored that to hide the property from their BK they had moved a relative into it, whom their lender thought was the borrower? (this info is not confirmed, however).

Next, Party B made a Purchase Offer to Party A for a sum, which would have given Party A about $10,000 cash. That offer was rejected and followed with a counter offer for an amount that was $10,000 under market. Party B rejected the counter.

The suit that then ensued was based upon: “The detrimental reliance of Party B upon an oral modification of the original Lease Option (purportedly an oral Agreement to Extend?which Party A insists was never proffered, but which the Realtor for Party B insisted at the hearing had been made).” Interestingly, the Lease Option contract contained an estopple strictly forbidding any reliance upon ANY oral modifications to the Agreement (but that didn’t matter to our “pioneer law maker, semi-retired” judge/arbitrator).

Now, Party A, in order to avoid the minimum of a one year delay that a court hearing would no doubt entail, agreed after the failure of their UDT, to Arbitration. The arbitration hearing was overseen by one Judge Kenneth Ziebarth Ret. (retired, but still sitting on the bench in San Juan Capistrano) and concluded by “J.A.M.A. Endispute” at the rate of $240 per hour (including the Judge’s research).

5/4/99 Judgement rendered in favor of Party B. The judge’s statement was that “Even in view of the caveat prohibiting reliance upon oral modifications, there must have been acceptance. Why on Earth else would Party B not have exercised an Option that would clearly give them $54,000 in equity in a property in which they had been diligently making payments on for over a year?” The order was for Party A to sell to Party B at the price of $181,000 (the original Option Price); and to give Party B 60 days in which to arrange for financing. And since the Option itself did not contain a provision for HOA dues and insurance, Party A is now also to refund all such sums paid by Party B. The fact that Party B was not responsible for the HOA dues was, of course, evidenced by Party A’s having paid them on several occasions. They are also directed to pay court costs and all of plaintiff’s reasonable attorney’s fees (so I am told).

It appears that a Hard Money lender has now agreed to loan 75% on the property, without any consideration for credit, credit history or the former BK and eviction record. It is apparent to all concerned, however, that once the sale does take place, Party B will be forced to default and lose the property to the hard money lender. They are believed to be virtually “stone broke,” without enough even for Closing Costs, and have never, it is said, had enough money to even cover their lease obligations on a timely basis, much less the new mortgage payments which will be considerably higher.

Closing Costs? No problemo. Party B has indicated that they plan to cover their Closing Costs with the settlement money from Party A. And Party A has a taped recorded message from Party B indicating that if Party B’s payment record is revealed to the new prospective lender, that they (Party B) will tie up the property beyond the call date of the existing loan, and notify the lender that the house is not owner-occupied (a provision of reinstatement of the 5 year call date).

How do you spell, “This deal sucks?”


In answer to those who asked the question last time: Mrs. A tells us that she and Mr. A would give ANYTHING now to have had the foresight to have insisted on the original PACTrust? offer as originally proposed. It would have made Party B easy to evict and no more than a tenant in the property without claim to equity, options or ownership rights per-se (even though all the “benefits” of ownership remain fully in tact for the resident beneficiary).

The real lesson to be learned is - Posted by Irwin

Posted by Irwin on June 09, 1999 at 23:16:37:

not that a particular type of trust would have saved the day. Trust, Shmust - if the arbitrating judge ignores the language of the l/o he could just as easily have ignored the language and status of any trust and ordered the same thing.
The real lesson here is NEVER agree to arbitration of a dispute in a situation like this. Party A had the law and the facts on their side. By agreeing to arbitrate (what did they have to lose by the passage of some time?) they let B off the legal hook and set themselves up to get hosed. Their lawyer (if he recommended the accept arbitration)ought to be sued for malpractice.

Should we bring in Jimmy Carter to draft a peace agreement? - Posted by hkCA

Posted by hkCA on June 09, 1999 at 19:14:29:


I again apologize if I came across in the wrong way. The subject of reporting events without all the facts touched a sore spot (a personal tragedy) that had nothing to do with you. As I said in earlier posts, I have the greatest respect for you and I enjoy reading your tips, advice and information. Believe it or not, I even like your sense of humor! Nothing was intended to discredit you. I hope we can remain friends (even though we’ve never met). I extend this olive branch (the olives, though, went into the martinis).


Can you site the case ? - I would like to read it - Posted by Steve

Posted by Steve on June 08, 1999 at 12:19:23:

Can you site the case ? - I would like to read it

Goof Ball Judge or experienced arbitrator? You decide. - Posted by hkCA

Posted by hkCA on June 08, 1999 at 01:28:10:


Here is one fact that will help contribute to your credibility! I’ve discovered the mysterious judge. Now if we can get some concrete info about the case itself, we can hopefully find the reasoning behind the decision.


Judge Ziebarth was a Judge of the San Bernardino Superior Court for over 16 years from 1975 to 1991. He was the Presiding Judge from 1985 to 1987 and Supervising Judge of the West District from 1980 to 1985. Prior to being elected to the Superior Court in November, 1974, he sat on the West Valley Municipal Court for almost four years. He served as a Justice Pro Tem on the Fourth District Court of Appeal, Division Two, in 1981 and 1990. Since retirement in 1991, Judge Ziebarth has accepted assignments to the Superior Court in San Bernardino, Imperial and Ventura Counties.

Prior to being appointed to the bench in 1971, Judge Ziebarth was in private practice for six years in Upland. He served as City Attorney for the City of Chino from 1966-1971. He also served as a City Councilman for the City of Montclair from 1962-1964 and as Mayor from 1964-1966.

In his private practice, Judge Ziebarth was a general practitioner but devoted most of his time to personal injury, family law and municipal law matters. During his service on the bench for over 25 years, Judge Ziebarth has presided over hundreds of trials, both jury and non-jury, and conducted more than 3,500 settlement conferences. He is a recognized authority in the field of family law. During his assignment to the Court of Appeal in 1981, Judge Ziebarth authored the original opinion in the famous Sullivan case, which concerned a wife who put her husband through medical school. That case was rated by the Los Angeles Daily Journal as one of the ten most significant cases in California during the 1980?s. Upon his retirement in 1991, Judge Ziebarth joined JAMS/Endispute. He has worked on cases involving:

? Real Estate Issues
? Contract Disputes
? Partnership Dissolutions
? Personal Injury
? Family Law
? Public Entity Administrative Law
? Products Liability
? Medical Malpractice
? He has handled many settlement conferences, mediation sessions, arbitrations and court references.

In 1965, when he was Mayor of the City of Montclair, he was selected by the California Jay Cees as one of the five most outstanding young men in California. He was elected President of the Western San Bernardino County Bar Association in 1967. In 1973-1974, he was selected as Trial Judge of the Year by the Pomona-Riverside-San Bernardino Chapter of CTLA.

? J.D., William Mitchell College of Law, St. Paul, Minnesota, 1959
? B.A., St. John?s University, Collegeville, Minnesota, 1954 650 E. Hospitality Lane ? Suite 125 ? San Bernardino, CA 92408

In 25 years as a judge, Judge Ziebarth has conducted over 3,500 settlement conferences and ADR proceedings. He has particular expertise in real estate, family law, public entity administrative law, and court reference matters.


And they say the sequel is never as good as the original - Posted by hkCA

Posted by hkCA on June 07, 1999 at 21:38:34:

Bill, Bill, Bill,

With all due respect, your story still looks like Swiss cheese. All of the information you give is heresay; you admit to that yourself:

["…I have researched the data through the defendant in the case, one of the brokers involved and an attorney friend of mine who happens to know someone involved in the case (knows the uncle of the cousin of the plaintiff’s next-door neighbor’s former boyfriend)."]

And as far as I can tell, it’s also unsubstantiated and inconclusive. You use such terms as:

“…who I’m told…”
"…just prior to or just after…"
"…it is rumored that…"
"…(this info is not confirmed, however)."

It’s also suspicious that the case was handled in San Bernadino County, recorded in Riverside County, heard by a judge who is still sitting in Orange County (who, by the way, I’m still not able to find on the list of California Judges), and represented by attorneys from San Diego County and Riverside County.

You are inferring that these are the facts and this is what the judge did based on these facts. You are asking us to extrapolate that the PACTrust would have saved this guy’s butt. Without ALL of the details, we just can’t do that.

Now Bill, I love ya like a brother, and I’m not saying this didn’t happen the way you say it did, and I understand your wanting to make a point about the PACTrust vs. the L/O, but goll dang it Bill, posting unverified information does a disservice to all of us. It also wastes our time with false suppositions. Sounds to me like this is a one-sided accounting of the story. I’d like to hear the other side.

As Joe Friday used to say, “Just the facts.”



Re: More on the Goof Ball Judge Decision aginst the L. Optionor - Posted by Rob FL

Posted by Rob FL on June 07, 1999 at 21:03:38:

Hey they can still appeal it. I read through the current court cases in Florida every month. It is amazing how many times when the judge makes an idiotic judgment like this that he/she ends up getting humiliated by the appelate court when it goes to appeal.

By the way, if the judge is this ridiculously ignorant (i.e. stupid), they would probably say your PACTrust is just another guise too and go against the trust agreement as well. How many judge ITOs (the O.J. Simpson guy) out there know anything about trust law? Just food for thought. After reading your PACTrust, I know it is a good deal. Unfortunately you are probably alot wiser on trust law than most of the judges out there.

Re: The real lesson to be learned is - Posted by Greg

Posted by Greg on June 09, 1999 at 23:45:05:

Irwin is absolutely on the mark here. Never agree to binding arbitration. And never initial the arbitration clause in the standard CAR form (California Asssoc of Realtors). Arbitrations do not have the same evidentiary proceedings as a court of law. You may have a real estate case, but the arbitrator more likely than not is a retired family or criminal law judge who has never heard a real estate case, but is happy to charge $400+ per hour to hear yours and decide what is equitable (meaning “fair”, or more likely “how did that poor innocent person get screwed by that unethical investor”). I have seen it first hand, although thankfully not as a party.

Re: Who’s extending whose branch? - Posted by Bill Gatten

Posted by Bill Gatten on June 09, 1999 at 21:41:29:


Now, let me see if I got that Right. You and I are going to have a few Martinis, and some lady named Olive is going to join us, and do what? OK, what time is it now? I can be there in an hour.

You bet. Thanks so much for the note. I look forward to meeting you one day soon. And I do understand your consternation… it’s just that I so wanted to tell the story as it was burning a hole in my hard drive (so to speak) while it was unfolding. The facts" are that both sides are right and the other side isn’t.


Re: Can you site the case ? - I would like to read it - Posted by Bill Gatten

Posted by Bill Gatten on June 08, 1999 at 13:48:24:


See my post of yesterday.

That’s about all the details I have. However, the Optionee’s Broker called me yesterday on the same issue, and tells me (quite insistently) that the defendant (the Optionor) is the bad guy in all of this, and that his client (the folks who didn’t pay on time and who don’t have any money and who missed their Option window, who then discovered that the property had increased in value) are the good guys.

The broker (a top producer in the area) says that the judge (Zeibarth) instructed the plaintiffs that they “HAD to” acquire the property via a PACTrust™, because that was the condition of their original Purchase Offer…they then, he said, could go ahead and refinacne anyway they wanted to…I told the broker that I think we’ll just pass on this one. Not that I don’t need the money (real much); but tht I think I’d rather stay out of the monkey barrel this time around.


Re: Goof Ball Judge or experienced arbitrator? You decide. - Posted by Bill Gatten

Posted by Bill Gatten on June 08, 1999 at 12:47:56:


Contributing to my credibility. That’s what I need! If I lose that AND my sex drive too, then who am I?



Re: And they say the sequel is never as good as the original - Posted by Bill Gatten

Posted by Bill Gatten on June 08, 1999 at 15:07:31:


Perhaps you have an axe to grind on this issue. I don’t. I truly couldn’t care less about whether something is better than a lease Option or not. There’s always a trade off. The 3rd party trust arrangement is safer…but much more paper work and more complicated (and more costly if you have to pay a third party to do it for you, or to act as trustee and/or collection service). But like I’ve said time and time again… if it hurts when you go like that… for cryin’ out loud, don’t worry about it… just don’t go like that anymore!

If you don’t like my station, either turn me off, or don’t turn me on in the first place!

When I post on this site, I do it as unselfishly, non-commerically and helpfully as I possibly can…and I do it 100% for the edification and benefit of any who would choose to read what I write and for my personal enjoyment (I have not yet caused or inspired a single person on this site to enter a PACTrust transaction, that I know anything about, or upon which I have made a single dime).

You are always free to question the validity of anything I post, especially any heresay information I would proffer; but for you to question my own veracity and/or integrity is wholly another issue. I honestly see that as unfair, and I don’t feel that I need any more “credence” than I have already earned here (humility and thicker skin, maybe; but credence…I have enough).

If you want a legal brief on this case, you came to the wrong place. I have no intentions of researching it any further than I have. My relating this incident to you has nothing to do with invalidating Lease Options: it has solely to do with the capricious nature of the courts when it comes to landlord/tenant/investor rights.

My free posting of my own understanding of this incident as it was related directly to me by the defendantand the agent for the plaintiff, was quite time consuming; was true to the best of my knowledge; and is easily verifiable for anyone who would care enough to go to the effort. The information I have, as I clearly stated, is indeed heresay (I was not there…sorry), and comes to me verbally from the defendant in the case (who lost) and from the Broker for the plaintiff (who won): and its implications are apparently far more important to you than to me.

Perhaps you didn’t intend your post to be as offensive or adversarial as I perceived it to be. If not, I offer my most humble apology for being as ticked off as I am.

Normally I would sit on it a while and try to calm down before sending this out, but unfortunately I’ve already pushed the POST MESSAGE button.


Re: More on the Goof Ball Judge Decision aginst the L. Optionor - Posted by hkCA

Posted by hkCA on June 07, 1999 at 21:42:53:


If in fact it was decided through the J.A.M.S. Endispute program, it cannot be appealed. Kind of like Wapner’s decisions.


Thanks for the CAR mention - Posted by Rosie(CA)

Posted by Rosie(CA) on June 10, 1999 at 11:59:37:

Thank you for your specific reference to the arbitration clause in the CAR form.

I refer to a copy of it as a learning tool, so I can pick out all the many clauses that shouldn’t be in a CREONLINE devotee’s contract.

Rosie(CA, soon to be of FL)

Correction: And by the way, what’s my constipation got to do with anything? (nt) - Posted by hkCA

Posted by hkCA on June 09, 1999 at 22:02:58:


Re: Who’s extending whose branch? - Posted by hkCA

Posted by hkCA on June 09, 1999 at 21:50:03:


Don’t rush. You haven’t seen Olive.


Truth, justice and the American way - Posted by hkCA

Posted by hkCA on June 08, 1999 at 16:25:14:


Sorry if I offended you personally. That was not my intention. I only wanted to get the FACTS rather than a possibly slanted (by some parties to the transaction) representation of a story. We are exposed to inaccurate facts and half truths by the media every day. No one seems to be accountable for what they write. It seems it’s always “from an unnamed source” which “I cannot divulge.” No one cares if the inaccuracies hurt others or cause them untold hardships. Your first post was malicious with no regard for the facts. You’d expect to hear something like that at the beauty salon, not a responsible and professional sounding board for those that are trying to learn from the pros (you). I just expected more from you than that.

Since my request for an accurate accounting of the facts ticked you off so much, I wonder how Judge Ziebarth would feel about you slandering him, calling him a “Lunatic Goof-Ball” when you don’t even know what the details of the case actually were. This is why we have court hearings rather than to judge someone from what we hear on the street. This man has devoted most of his life to the justice system. Does he not deserve the respect to at least have us know what the TRUE FACTS are before we label him a GOOF-BALL and a LUNATIC? You didn’t even give the poor man a chance to defend himself before you hung him out to dry. Yet you mentioned him BY NAME and insulted him. Rather childish, isn’t it?

You’re the one that made a big deal about this case by posting two lengthy accounts of it. The least you could have done was to get the facts straight before insulting someone.

And you are right. The implications of this case are apparently far more important to me than to you. I am concerned with what really occurred, rather than what is rumored to have occurred. It helps me to make wiser decisions about my transactions in the future.

I have no axe to grind with you, this case, or the PACTrust. But, I feel if you are going to post information, I have the right to question the accuracy of that information. Otherwise, anyone can say anything (like a certain few do, and I’m not referring to you) and it could be taken as truth by many of us. Wouldn’t you agree that FACT is better than RUMOR?

I deeply apologize if I insulted you. I hold you in high regard and value your input to this board. I don’t, however, apologize for questioning the validity of the facts. I hope you can understand my point of view.


Re: More on the Goof Ball Judge Decision aginst the L. Optionor - Posted by Rob FL

Posted by Rob FL on June 07, 1999 at 22:08:11:

I understand. Like most of the attorneys I speak with tell me. If you are a big gun (banks/companies with high probability of litigation), then you like binding arbitration. But if you are a small gun (consumer), you want the right to go to court. Arbitrators don’t give multimillion dollar judgments.


Posted by Cosmos…CANADA on June 09, 1999 at 09:03:29:


Star wars is only a movie.

Bill is only human.

And this is only a story on an internet site.
get a grip.

Truth? geez, he said that he talked directly with both parties involved, what do you want him to do sleep with the judge>?

Take it as it is, if you want to do a report on it, the info’s all there.
Other wise you’re simply calling Bill a liar. And if you know him like I do, you’ll know that he’ll go out of his way for a stranger, and not get any recongnition for it.

All hail Bill!