The Grace Foundation’s recently filed lawsuit targeting Bank of America, Wells Fargo Bank and Orange County attorney Tim Ryan was met with a counter-suit threat from Ryan, who told Village Life he’s days away from filing a claim for $5 million plus punitive damages for “trade libel” against foundation Director Beth DeCaprio, citing “grotesquely and verifiably factually inaccurate claims” in her lawsuit.
Ryan also announced plans to file a motion for sanctions against Grace Foundation legal counsel Stuart Leviton for failing to verify the facts of the case and the details of pertinent laws.
The El Dorado Hills animal rescue’s lawsuit was filed in El Dorado County Superior Court on July 6. It seeks “at least $2 million” and, according to accompanying press releases, up to $20 million, alleging the fraudulent transfer of 36 horses, 14 of which were pregnant, from the now-infamous Whispering Pines Ranch in Susanville to the foundation while an outstanding bankruptcy filing protected the horses as assets of ranch owner Dwight Bennett.
In e-mails to Village Life Ryan insisted his actions on behalf of the Grace Foundation were made in good faith, and that the lawsuit’s allegations that he was “less than forthright” to the bankruptcy court and the foundation “are flatly contradicted by the transcript.”
He notes that superior court and bankruptcy court judges approved the removal of the horses, notwithstanding the bankruptcy, then condemned Leviton for not bothering to understand “exceptions to the automatic stay set forth in the bankruptcy code” which allowed “removal of horses from a filthy, carcass infested, likely disease ridden ranch wherein up to 30 horses starved to death … that was being occupied by squatters burning trash.”
Informed on Saturday of Ryan’s stated intent to file a libel suit against her, an angry DeCaprio replied, “Let him, and make him prove it … and Tim, you can explain to me how you’re not responsible for this. If not you, Tim, then who?”
DeCaprio said she’s asked the Attorney General to investigate, and expects charges to be filed.
The bankruptcy claim protected Bennett’s ranch from the banks trying to foreclose on it, and protected the horses as his assets. This prohibited the foundation from doing anything that diminished the value of the assets, including terminate potentially disastrous, and ultimately expensive, pregnancies. It also blocked any adoptions.
Ryan counters that bankruptcy law allows “regulatory and police power exceptions to the automatic stay set forth in the bankruptcy code,” and that Lassen County Superior Court Judge Giordano approved of the removal “notwithstanding the bankruptcy, as did Judge McManus, the bankruptcy judge in charge of Mr. Bennett’s case.”
The banks each issued similar statements in response to the foundation’s lawsuit, denying fraudulently transferring the horses, citing legal documents that indicate the foundation actually received the horses from Lassen County.
The Bank of America response also states, “At no time did the Bank of America have any ownership interest in the horses or the property.” The banks donated a combined $40,000 to the foundation in August 2011 which, according to the lawsuit, was based on the foundation being allowed to abort pregnancies and quickly adopt any healthy Susanville horses. Lassen County also agreed to a $10,000 donation, which has not been received, according to the lawsuit.
The banks recently offered another $400,000, an amount based on figures cited by the Grace Foundation in May. But DeCaprio refused the money. Early cost estimates were “mainly just (the cost of) feed,” she said. “I was trying to keep costs down to get them (the banks) to take it. We were all on the same team back then.” Her board of directors subsequently demanded a comprehensive accounting of all the costs associated with Susanville horses, including the indirect costs of the difficult births, DeCaprio said. The estimate quickly rose from $300,000 to $400,000 in May, then to $500,000 in June, according to foundation e-mails. The costs peaked at $870,000 in July, the lawsuit states.
Ryan disputed her cost claims, stating, “These numbers clearly do not add up and provide a critical mind with insight into what is occurring in this case.” DeCaprio explained that the increased price tag reflects medical expenses, portions of foundation salaries and repayment of funds earmarked for other projects, borrowed with permission from donors.
A $60-per-day, per-horse boarding fee is also included this time around, as is the cost of birthing stalls, camera equipment, an ultrasound machine, higher utility bills for the on-loan RVs where volunteers and staff hold nightly birth monitoring vigils, and expensive medications, all of which passed muster with bank auditors who visited the ranch in May, said DeCaprio.
The foundation’s lawsuit describes a parallel series of bankruptcy and superior court proceedings between July 2011 and January 2012. It depicts Ryan’s alleged betrayal of the foundation that DeCaprio said she never realized until she saw court records. In what may be a key legal point, DeCaprio claims that the receiver and the banks, through Ryan, asked the foundation to take the remaining 36 horses in August, using Lassen County as an intermediary — a normal and routine rescue practice in counties that lack sufficient horse boarding facilities, she said.
Ryan told Village Life that Lassen County’s Deputy Director of Public Works Pete Heimbigner contacted the foundation about the remaining horses, after which “Grace contacted the court-appointed receiver … At no time did the banks ask Grace to take the horses.”
By way of confirmation, he points to a May 6 foundation fundraising e-mail that chronicles the case and states, “The Grace Foundation was then asked by the receiver and Lassen County officials to take custody of the horses.”
DeCaprio countered that Ryan orchestrated the entire transfer, and that Heimbigner only called her to make sure it was OK to provide the receiver and Ryan her personal contact information.
The original bank grants were precipitated by a flurry of e-mails that demonstrate Ryan and the banks, not the county, initiating the transfer, she said. “There were a ton of questions, and a bunch of e-mails and they weren’t about Lassen County.”
The lawsuit also alleges that Ryan subsequently failed to notify the bankruptcy court, which was ruling on the disposition of the horses, that the receiver had already turned them over to Grace via Lassen County, “under the false pretense that Grace was now the ‘owner’ of the horses,” according to the lawsuit.
“The lawsuit’s factual allegation is demonstrably inaccurate,” said Ryan. “We were honest with the bankruptcy court in every respect. I have never been dishonest with a judicial officer. Ever. [**PD Note– NOT true. There will be plenty of lies shown by animal owner soon]
“The order to release the animals to the County of Lassen was entered on July 29, 2011, three weeks prior to the bankruptcy,” Ryan continued. DeCaprio countered, “He knows that federal (bankruptcy court) trumps state (superior court). Once the stay was invoked we should have been called off. He just wanted those horses out of there.” The bankruptcy court declared the horses abandoned on Jan. 3, 2012. To date, however, the foundation still has no ownership documents, another outcome that DeCaprio blames on Ryan, who neglected to put a lien on the horses, she said.
“The sad thing is that we’ve done everything right,” she added. “We did right by those horses…. We took the kicks.”
NO, Grace did not do everything “right.” What Grace did was to get paid to take the horses by the banks. She got a piece of paper which says the County released the horses to her. And how did the County “obtain” the horses? By an illegal seizure by a “receiver” set up by Ryan, which never followed the seizure law.
All these people and litigants claiming they are right………well, none of them even discuss the real issue here.
The “seizure documents” were drafted by attorney Ryan. Ryan drafted them for his “Receiver” who was a fake receiver, meaning, she was not neutral, she did nothing, and when she did so something, she simply signed papers that Ryan drafted for her to sign. That is not a legal receiver, and that is not how receivership works. The County may have drafted a “release” document to Grace, however, the County cannot release ownership of something they may have taken illegally, if they took the horses at all.
Further, Ryan keeps trying to claim that the “receiver” gave the horses to the County. No, the Receiver did not give the horses to the County………Ryan says it happened because a Judge ordered it? What really happened is that Ryan drafted a motion for seizure claiming exigent medical circumstances, that seizure had to take place ASAP (like next day) due to health and medical exigency. There was NO warrant. No affidavit outlining specifics of medical exigency.
The seizure was illegal, and IF the County had done the seizure, it would have been illegal as owner was never allowed due process rights, PLUS it would require a post seizure hearing. A private party cannot seize private property without more, and a court appointed receiver cannot do the same without more.
IF a court appointed reciever was legitimate (which it was not) she would STILL need to follow the law in regard to exigent circumstances, seizing property without a warrant. That was not done and owner was not allowed a hearing to put on witnesses, nor allowed the post seizure hearing. We are talking SEIZURE— not drug seizure, not contraband seizure, not even dog fighting seizure, not Federal contraband seizure. Just plain animal seizure based on exigent medical. A hearing is required even if a warrant was not required [that’s assuming seizure was legitimate, which it was not.]
So no matter what Ryan and Grace claim, the seizure was not legal, and they completely ignore that fact.
IF the seizure had been legal, and all laws followed, then it might be possible that Grace could have taken legitimate ownership—- but because it was not legal, and also due to fact that Ryan did NOT inform bankruptcy Judge on Sept 2 or any other day following the bankruptcy filing, that the physical seizure of the horses actually TOOK PLACE after the automatic stay was in PLACE, Ryan is in trouble for not disclosing that fact.
Hence the emails to Grace by Ryan trying to cover up why he was worried about Bankruptcy Case is obvious. That is why Ryan notified the Trustee to abandon the horses– thinking it would just go away? Hardly. Ryan knew that if Grace sold, or gave away or adopted the animals out, she did not have ownership of them.
Animal owner’s attorney, Ms. Chan sent a letter to Grace in late June 2012 requesting an inventory of the animals, and telling Grace that she had no ownership of the horses. Grace started to claim that Ryan tricked her into thinking she could just sell the horses but then somehow the Bankruptcy “abandonment” did not mean she “got ownership” of the horses. That is correct, Ryan told Grace abandonment “meant” she would own the horses. That is not true, abandonment simply means it reverts back to the owner. Just because the owner cannot physically “own” animals due to the charges of alleged abuse [which Ryan and Grace set up for the D.A.] — does not translate into Grace owns the animals.
Grace as a 501(c)(3) should know the Penal Code regarding seizure. A proper seizure without errors usually only gives the owner in CA about 2 weeks to pony up a substantial amount of money which usually is $15,000 to $100,000 to establish ownership, and to coverage storage lien costs. Failure to file that and to pay means you lose and forfeit your animals. That is why most owners lose their animals in seizure cases. Obviously to avoid seizure you would try and prevent it in the first place, from every happening.
In Grace’s case, she got paid by banks to take the animals where Ryan actually was representing Grace at one time, thus Grace was on Ryan’s side. Only until Grace woke up and realized that the letter sent to her by Ms. Chan was factually correct, did she finally hire counsel. Had she hired counsel in August 2011, BEFORE seizing the horses, she would have known in advance that she would not get “ownership” of the animals—- despite Ryan’s opinion that she was getting ownership. So Grace can blame Ryan all she wants, but she is not completely innocent for other reasons we will not detail right now.