Graham, Michael vs. CA Farms, LLC

1571.) If no one requests oral argument, under Code of Civil Procedure section 1019.5(a) and California Rules of Court, rule 3.1312(a), no further written order is necessary. The minute order adopting this tentative ruling will become the order of the court and service by the clerk will constitute notice of the order. Court reporters are usually not available for law and motion matters in the civil division. The parties and counsel must provide their own reporter if they want a transcript of the proceedings.

Re: Graham, Michael vs. CA Farms, LLC Case No.: VCU324716 (Consolidated - Lead) (Consolidated with Conterra Agricultural Capital, LLC vs. Prosperity Farms, LLC et al., PCU325122) Date: August 27, 2026 Time: 8:30 A.M. Dept. 1-Honorable David C. Mathias Motion: Motion to Approve Procedures for Sale of Real Property Tentative Ruling: To grant the motion.

Receiver Focus Management Group (Focus) seeks court approval of sale procedures for the sale of Tulare 22, the approximately 1,500 acre pistachio ranch that is the most significant asset in this receivership action. If approved, the proposed procedures will result in sale of Tulare 22 (plus the ranch's 2026 pistachio crop) for $18,227,615 to purchaser, Jay Gill, subject to overbids at a further scheduled hearing for overbids and sale confirmation. Code of Civil Procedure section 568.5 permits a receiver, pursuant to court order, to sell real property upon the notice and in the manner prescribed by Article 6 (commencing with Section 701.510) of Chapter 3 of Division 2 of Title 9 [of the Code of Civil Procedure]."

A. Primary request

In the motion, Focus states it requests entry of a proposed order (which has been submitted with the motion) "by which the Court would, among other things, "(i) approve the Purchase Agreement between the Receiver and the current lead-bidder, Jay Gill ...; (ii) set a further hearing (the 'Sale Confirmation Hearing') for October 1, 2026 [a date Focus has already reserved], at which the Court will allow overbids and confirm the sale of Tulare-22 to the prospective overbidder whose qualification package satisfies the requirements detailed in the proposed order ... and who submits the highest and best offer for Tulare-22; (iii) approve procedures for the Receiver to give notice of the proposed sale and the Sale Confirmation Hearing; and (iv) approve procedures for qualifying bidders and allowing overbids at the Sale Confirmation Hearing."

The court notes there is no objection to the proposed sale procedures (except as noted and addressed below). The court further notes the following:

1. The purchase agreement reflects a proposed purchase price reached through a competitive bidding process. Pearson Realty Inc. (Pearson) broker Sullivan Grosz describes marketing efforts intended to "maximize exposure," including listing on numerous platforms such as "the Pearson website, MLS, ... Land.com, Lands of America, Acres.com and Crexi," and direct marketing through "distributed email marketing campaigns" and "phone calls ... and/or ... in person meetings with more than 1,000 industry contacts," which, according to Grosz, "generat[ed] significant interest."

According to Grosz, Pearson heard from "more than two dozen brokers and prospective buyers expressing interest in the property, resulting in several competing offers and multiple higher offers being submitted during the sale process." In total, Pearson received eight offers, of which bidder Jay Gill's was the highest at $18,227,615, with the other bids ranging as low as $7,000,000. According to Juanita Schwartzkopf, senior managing director of Focus, marketing of the property commenced June 4, 2026.

According to both Schwartzkopf and Grosz, the last of the eight offers was received June 27, 2026, and, after that, Gill, who had submitted an earlier lower offer, submitted a revised offer at the $18,227,615 amount.

According to Schwartzkopf, "[a]fter analyzing the offers, including the purchase prices, treatment of the pistachio crop, deposit amounts, contingencies, due diligence periods, and other key terms, we [Focus] determined that the revised offer submitted by the Lead Bidder [Jay Gill] provides the highest expected recovery for the Receivership Estate."

2. The proposed sale procedures involve a facially reasonable overbid process

The proposed agreement reflects, on an "Addendum 1," that sale of the property is "subject to overbids"; "Buyer and Seller acknowledge that (i) the approval of the sale will be subject to the rights of other interested parties to submit overbids at the approval hearing; and (ii) the Court in the Case shall have the power, in its sole discretion, to cancel the transaction contemplated by the Purchase Documents at any time." The court notes the agreement provisions regarding a "Breakup Fee" and a price floor for any initial overbid, while somewhat narrowing the possibility of the receivership receiving a higher bid, are not inherently objectionable.

The "Breakup Fee" appears to reflect a negotiated agreement reached through arm's length discussions in a marketing process that involved multiple bidders, and the receiver's explanation for the initial overbid floor appears reasonable, and, importantly, there is no objection to that aspect of the agreement. The other proposed overbid and sale confirmation hearing procedures, regarding bid qualification requirements and bid evaluation appear reasonable. Further, the court finds it reasonable and appropriate to hold a hearing to receive overbids and to confirm sale at the requested hearing date of October 1, 2026, which Focus has already reserved.

The court further finds the proposed form of notice of sale submitted with the moving papers appears to conform to the requirements set forth in article 6 of chapter 3 of division 2 of title 9 of the Code of Civil Procedure.

3. The parties have been kept informed regarding Focus's analysis of bids for Tulare 22 and have expressed no objection to proposed terms of any proposed bid

According to Schwartzkopf, "[a]fter analyzing the offers, including the purchase prices, treatment of the pistachio crop, deposit amounts, contingencies, due diligence periods, and other key terms, we [Focus] determined that the revised offer submitted by the Lead Bidder [Jay Gill] provides the highest expected recovery for the Receivership Estate." Schwartzkopf states that Focus "consulted Plaintiff Conterra Agricultural Capital, LLC and Defendants Michael Graham and Cynthia Graham regarding" its analyses of the bid offers, and "did not receive objections from either of them." Focus prepared memorandums regarding the offers received reflecting its analysis, which are attached as Exhibit A to Schwartzkopf's declaration. The memoranda attached to Schwartzkopf's declaration reflect that they were addressed to, amongst others, Conterra and the Grahams.

Conclusion

Based on the foregoing, the court finds that the proposed sale procedures described in the motion and in the proposed order are reasonable and, there being no objection (except as addressed below), the court grants the motion as to that specific relief requested.

B. Additional "propos[als]"

1. Proposed distribution

Focus additionally "proposes" distribution of the Tulare 22 sale proceeds "in the following order of priority: [P.] a. First, to pay all costs of sale ...; [P.] b. Second, to pay all real property taxes and assessments ...; [P.] c. Third, to pay all outstanding fees, costs, and expenses of the Receivership Estate, including the fees and costs of the Receiver, its agents, and its counsel, to the extent approved or subject to approval by this Court; [P.] d. Fourth, to pay a portion of the remainder of the proceeds to Conterra in an amount not to exceed the total outstanding balance of the Loan, with the specific amount to be discussed between Conterra and the Receiver in light of the anticipated funding needs of the Receivership Estate for the expected duration of the Receivership after the closing of the sale; [and] [P.] e.

Fifth, any remaining proceeds shall be held by the Receiver in trust in an interest-bearing account pending further order of the Court."

Focus states that, "[a]t some point after the close of escrow, and when all other feasible functions of the Receiver under the Appointment Order have been fully administered, the Receiver intends to file a motion for approval of its Final Account and Report," and "[t]here, ... will make further recommendations ... regarding the final disposition of remaining proceeds and the resolution of any outstanding creditor priority disputes." As Focus indicates, paragraph 10 of the order appointing Focus directs that "[a]fter Receiver pays its operating costs from the proceeds generated from the Receivership Assets according to the Operating Budget, Receiver shall make distributions of funds to Conterra and other creditors based on the nature and priority of their claims," and paragraph 10 states further that "[t]he Receiver in its discretion may move the Court for an order authorizing proposed distributions." (Order Appointing Rec'vr, filed Nov. 21, 2025, in the now consolidated PCU325122 case.)

The court declines to entertain this "propos[al]" as a specific request for any separate order beyond what paragraph 10 of the order appointing Focus already provides. Given Focus's statement to the effect that it will move at some later date for orders regarding "final disposition of remaining proceeds" as part of a later request for approval of a final account and report and, further, that neither Focus's motion, nor proposed order, specifically refers to relief regarding distribution of sale proceeds, there appears to be no sound basis for any additional order regarding distribution of sale proceeds.

2. Sale free and clear of liens, encumbrances, claims and interests

Additionally still, "the Receiver proposes that the sale of Tulare-22 be free and clear of all liens, encumbrances, claims, and interests, including the lien of Conterra under the Deed of Trust recorded August 24, 2018 as Instrument No. 2018-0046837 of Official Records (as assigned to Conterra by Instrument No. 2021-0063300); the lis pendens recorded by Conterra on September 23, 2025 as Instrument No. 2025-0047191 of Official Records; the lis pendens recorded by Compeer Financial, ACA/FLCA/PCA on August 19, 2025 as Instrument No. 2025-0039993 of Official Records; the Certificate of Lien for Delinquent Groundwater Extraction Fees recorded March 19, 2026 as Instrument No. 2026-0012801 of Official Records, to the extent the same has not been released by the time of the closing; the Receiver's own liens; and any other liens or encumbrances of record as identified in the preliminary title report [attached as Exhibit B to the declaration of I. Keller submitted concurrently in support of Focus's motion]."

The court again notes the absence of any specific reference to requested orders approving sale "free and clear of all liens, encumbrances, claims, and interests" in either the motion or proposed order. It is perhaps the case that the purchase and sale agreement with Mr. Gill, attached as Exhibit B to Ms. Schwartzkopf's declaration in support of Focus's motion, includes terms indicating the sale is to be "free and clear of all liens, encumbrances, claims, and interests," but the moving papers do not clearly state as much and the court was unable to locate such provisions in its own review of the agreement.

In any event, the court assumes the proposed sale procedures will result in sale of Tulare 22 free and clear of liens but does not discern that it is requested to make any orders beyond approval of the purchase and sale agreement as indicated in Focus's motion and proposed order. The court makes no order, here, beyond approval of the purchase and sale agreement.

C. The Graham's limited objection and reservation of rights

The court recognizes the great significance of the fact that all indications here are that the proposed sale procedures will result, effectively, in a short sale of the property, likely tens of millions of dollars less than the probable amount outstanding on the underlying more than $32 million loan obligation giving rise to this receivership action, plus amounts likely to be claimed payable for, inter alia, costs of sale, taxes and assessments, and the receiver's claimed fees, costs and expenses. Of great concern to the Grahams, as they've stated in the course of these proceedings, is that Conterra's underlying complaint includes a cause of action for entry of a deficiency judgment "[u]pon sale of the Real Property Collateral ... as to Prosperity Farms and the Grahams, should any such deficiency exist" (the court recognizes, here, the Grahams have made no concessions as to the availability of this relief against them).

The court further notes the Grahams, for their part--and they are the only parties to have filed any response to Focus's motion at all--have submitted only a "limited objection and reservation of rights." In it, they express no direct qualms with the proposed sale procedures but do imply the possibility that more could be had from a sale of Tulare 22 with Tulare 20, which is an issue they raised in their prior motion for instructions. The Grahams claimed to have received an email from counsel for CA Farms, LLC, which, in substance, states that "[t]he subject Deed of Trust includes 313 acres that are not included in the proposed sale," and that the significance of this is that, without those 313 acres, "groundwater [would be] the only source for irrigation of the subject property."

The email indicated, per the Grahams, "[t]he 313 acres presently provides additional sources of water for the subject property," having "first priority water use of 5 miles of canals pulled from the White River along the northern border of the 313 omitted acres" and "is a recharge basin that collects and stores storm water as well as the delivery origination point for water purchased through the White River." Further, the email adds, per the Grahams, "[a]s you [the Grahams] know, there are appraisals valuing the property to be sold that include the 313 acres water source for 70 million," and "the difference between 70 million and the present sales prices sought to be approved is the removal of the water rich 313 acres from the present sale that is the subject of the August 27th hearing."

The Grahams then state (a) they do not endorse or reject the factual assertion advanced by CA Farms, LLC; but (b) "raise it for the attention of the Court and the Receiver," highlighting that "the Receiver is duty-bound to investigate all relevant facts which could affect the value or marketability of the property, including water rights" and that "the Grahams previously moved for an order requiring the sale of Tulare 20 and Tulare 22 together, one of the reasons being the additional water supply would generate a higher price per acre in a combined listing." The court recalls that the Grahams previously moved to instruct the receiver to sell Tulare 22 and Tulare 20 together, and that the Grahams represented in a supporting declaration, albeit on information and belief, "that there is a supplemental water source from the White River that Tulare 22 has direct access to, but Tulare 20 does not." "On information and belief," the Grahams asserted, "Tulare 20 can access that White River water source because of the integrated water infrastructure" and "this constitutes a second source of surface water which increases the value of both properties."

The court notes, as a threshold matter, that it is obvious the reference to the "313 acres" assertedly made by CA Farms' counsel's must be a reference to Tulare 20, and it might be too obvious to acknowledge, but for the cryptic reference to "[t]he subject Deed of Trust" that "includes [the] 313 acres." The court notes this reference for a couple of reasons. First, it does not appear "[t]he subject Deed of Trust" refers to the deed of trust that was recorded in connection with the underlying $32,823,750 loan assigned to Conterra in this case.

As reflected in the grant deed by which Prosperity Farms, LLC purported to transfer Tulare 20 to Prosperity Farms Ranch 20, LLC, Tulare 20 is comprised of APNs 333-270-002, -003, -004, -012, -013, and -014. (See Ex. X of Conterra's Index of Exhibits in support of its prior motion for appointment of receiver, filed Sept. 16, 2025 in consolidated PCU325122 (Conterra's Exhibits).) The APNs in the deed of trust that was recorded in connection with the underlying $32,823,750 loan in this case, however, were 333-010-004; 333-170-001, -003, -017, -019; and 333-270-001. (See Ex.

D, Conterra's Exhibits.)

Second, it could be, and is perhaps likely, that "[t]he subject Deed of Trust" refers to the same deed of trust referenced by the Grahams in their cross-complaint filed in this action on February 18, 2026, in which the Grahams allege, in substance, that Ron Cook transferred title of Tulare 20 to Prosperity Farms Ranch 20 without the Grahams participation or consent, and that Cook, through Corporate America Lending (CAL), subsequently "recorded a Deed of Trust against the Tulare 20 showing a loan for $2,500,000.00," which "loan was pulled without the Grahams' knowledge or consent."

If that is true, though, reference to this deed of trust in the context of the email described by the Grahams in their limited opposition is curious. As it happens, as far as the court is aware, CA Farms's counsel is also counsel for Cook and CAL, and it would appear unusual for him to point out, to the Grahams of all people, assuming the representations about the email are accurate, that by selling Tulare 22 without Tulare 20, the receivership estate will receive substantially less--less than a third--of what it could realize if Tulare 20 were part of the sale, particularly as the failure to include Tulare 20 is, based on the allegations made in this case, significantly a consequence of the disputed matter of the transfer of Tulare 20 from Prosperity Farms to Property Farms Ranch 20 and its subsequent encumbrance by a disputed $2.5 million deed of trust, all allegedly through wrongful acts on the part of Cook.

In any event, all that the Grahams request, here, is "that the order granting the Motion, and any order confirming a sale of Tulare-22, carry forward, in its exact terms, paragraph 26 of the Appointment Order ('Reservation of Rights and Defenses') which provides in relevant part: Nothing in this Order shall be deemed or construed as a waiver, admission, or acknowledgment by the Grahams of any factual dispute, legal issue, or defense that may be raised in connection with their opposition to Conterra claims, including without limitation any claims asserting the Grahams' personal liability under the promissory note at issue in this action.

Except as to the appointment and authority of the Receiver, the findings of fact and conclusions of law in this Order shall not have any preclusive effect, including claims preclusion or issue preclusion, on the Grahams' defenses to personal liability or any other claims or defenses asserted by them in this action. To the extent any provision of this Order is or may be interpreted as inconsistent with the rights, reservations, and protections set forth in the foregoing paragraph (the 'Non-Waiver and No Findings Provision'), the Non-Waiver and No-Findings Provision shall control and prevail over such inconsistent provision."

The court is not entirely certain what to make of this request, except it can determine that there is no good reason for the court to accommodate it. There is no reason to restate the subject provision in "the order granting the Motion[] and any order confirming a sale of Tulare-22." The order is stated; it need not be restated so as to "carry [it] forward." The court does note that it appears, based on the concerns the Grahams expressed in their prior motion for instructions, that they, here, seek assurances that they are not--by declining to oppose the sale of Tulare 22 without Tulare 20, or in some other way commencing litigation regarding the sale of Tulare 22 without Tulare 20--waiving any rights or defenses, and not admitting or acknowledging anything, "that may be raised in connection with their opposition to Conterra claims, including without limitation any claims asserting the Grahams' personal liability under the promissory note at issue in this action."

The court, however, is in no position to provide such assurances, certainly not in the abstract manner they are sought here. Indeed, the court is not even certain that the purpose of the Grahams' request is the assurances indicated--it just presumes that is likely because it is the most plausible seeming explanation for the Grahams' request. Ultimately, though, if such assurances are what the Grahams seek, the court cannot give them because it is for the Grahams to decide if, when and how they litigate matters in their own interests, and this court is left only to determine matters if and when they are put before it for determination.

The court notes the Grahams additionally request that, "[i]f the Court is not inclined to adopt the requested modification, the Grahams request that the order reflect that it is entered over their limited objection and that all parties' rights, claims, and defenses are preserved." This appears to be another angle at receiving the assurances the court suspects are at the heart of their primary request. The court will recognize that, in granting the receiver's motion as herein provided, it does so over the Grahams' standing objection to any rejection of their request that any order granting the receiver's motion "carry forward, in its exact terms, paragraph 26 of the Appointment Order ('Reservation of Rights and Defenses')."

This court's order on the receiver's motion, to be clear, is intended to have no bearing on any "parties' rights, claims, and defenses" except those framed by the receiver's motion requesting approval of sale procedures, and neither confirms nor disclaims whether any other such "rights, claims, and defenses" are preserved.

There being no direct objection, however, to the proposed sale procedures, and Focus having shown that the proposed sale procedures are reasonable, the court finds that the motion should be, and it therefore is, granted.

If no one requests oral argument, under Code of Civil Procedure section 1019.5(a) and California Rules of Court, rule 3.1312(a), no further written order is necessary. The minute order adopting this tentative ruling will become the order of the court and service by the clerk will constitute notice of the order. Court reporters are usually not available for law and motion matters in the civil division. The parties and counsel must provide their own reporter if they want a transcript of the proceedings.

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