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Deem v. Baron

United States District Court, D. Utah, Central Division

January 10, 2020

DARRELL L. DEEM, et. al., Plaintiffs,
v.
TRACEY BARON, et. al., Defendants.

          FINDINGS OF FACT AND CONCLUSIONS OF LAW

          David Sam United States District Judge

         INTRODUCTION

         This case came before the Court for a bench trial beginning June 10, 2019. The Honorable David Sam presided. Mark A. Larsen appeared on behalf of the Plaintiffs. Stephen K. Christiansen appeared on behalf of the Defendants.[1]

         The parties presented evidence through witnesses and exhibits from June 10-13, 2019, and in subsequent submissions of identified deposition testimony on June 20, 2019. The Court heard live or electronically transmitted testimony at trial from Tracey Baron, David Law, Gretchen Pan, Stephen Medford, Bart White, Darrell Deem, Michelle Baron, Cynthia Morris, Kyle Lattimer, and Rob Hausner. The Court also received identified portions of deposition testimony from Jeff Long and Ronald Stendahl, with accompanying objections to those submissions. (ECF Nos. 287-89.)

         The parties then submitted their amended proposed findings of fact and conclusions of law to the Court on September 13, 2019. Having heard the evidence and arguments at trial and having received the parties' written submissions, the Court determined that it was sufficiently apprised such that subsequent argument of counsel would not materially assist the Court in rendering its decision and closing arguments were therefore unnecessary.

         Now being fully advised, and for good cause appearing, the Court hereby enters the following findings of fact and conclusions of law in this case pursuant to Fed.R.Civ.P. 52(a)(1).

         FINDINGS OF FACT[2]

         1. Tracey Baron created a real estate investment model that underlies this dispute. His model centered on the homes of bankrupt debtors with no equity who were going to lose their properties in the bankruptcy. He observed that bankruptcy trustees did not want to deal with the dual hassle of managing debtors' homes during the bankruptcy process and litigating against questionable lienholder assertions at great cost to the estate when there was no equity involved.

         2. Mr. Baron purchased the homes outright from them for a nominal agreed amount. The trustee received the benefit of additional cash in the bankruptcy estate in exchange for an asset with no equity that had threatened to cost the estate additional resources to handle. Mr. Baron, meanwhile, received the benefit of a home he could lease to third parties while negotiating or litigating with the lienholders. In exchange for his purchase price, he would receive the benefit of monthly rental income plus the chance to recover equity through a favorable settlement or litigation outcome.

         3. For purposes of the transactions at issue in this case, Mr. Baron worked on this model in the Portland, Oregon, area. He undertook his bankruptcy-related efforts in the United States Bankruptcy Court for the District of Oregon (the “Oregon Bankruptcy Court”).

         4. In 2009, Plaintiff David Law (“Mr. Law”) and Defendant Tracey Baron began a long-distance working relationship. Law was buying Utah real property and Baron was operating a short sale negotiation/processing service. A short sale is where the underlying debt secured by a trust deed or mortgage on a residential property exceeded its fair market value, and to resolve the debt, the lender would waive the unsecured balance.

         5. From 2009 to 2012, Tracey Baron assisted Law with Law's short sale business in Utah using Mr. Baron's software.

         6. In or about 2012, Mr. Baron transitioned from short sales to the bankruptcy-purchase business model described above. He used a variety of lenders to fund the initial purchases. Among these was Mr. Law.

         7. Law made his first loan January 30, 2013 and later that year Plaintiff Darrell L. Deem (“Mr. Deem”) became involved in financing some of Tracey's purchases of residential properties from bankruptcy trustees for small amounts of money.

         8. Law and Deem entered into numerous contracts with different Defendants, which basically consist of two different types of contracts: (i) Joint Venture Agreements; and (ii) two Promissory Notes and a Supplemental Loan Agreement.

         9. Initially Mr. Law's relationship with Mr. Baron was profitable. During the years of 2012 to 2013, Mr. Law received significant returns on his investment. He testified that in many cases, he had made 100% to 200% of his money back in 90 days. He and Mr. Baron trusted each other, worked well together, and communicated.

         10. Like Mr. Law, Mr. Deem made loans to Mr. Baron in furtherance of his business model, received significant returns on his invested funds, and trusted Mr. Baron.

         11. Both Mr. Law and Mr. Deem, as well as Mr. Law's wife Janine Law, loaned monies to Mr. Baron's entities both personally and through entities and using their self-directed Individual Retirement Accounts (“IRAs”). Mr. Baron's entities would use the borrowed funds to purchase a property. In exchange, the Law and Deem Plaintiffs would receive an agreed amount of rent proceeds, typically 80%, until their loans were paid back. After that, they would typically receive 20% of rent proceeds until a property sold or was lost to foreclosure. If the property could be financially restructured and then sold, Plaintiffs could get an additional 30% of net profit. The parties initially anticipated that the time from purchase through subsequent short sale of the properties would be one year or less.

         12. The parties' understandings were memorialized in written contracts (the “Loan Transaction Agreements”) provided by Mr. Law and Mr. Deem, all of which were with entity Defendants and reflect the same basic terms.

         13. The Loan Transaction Agreements state that they are non-recourse as to the individual partners of the borrowers. The individual Defendants did not sign them and are not parties. The agreements were entered into on behalf of entities. Mr. Baron signed only as managing member on behalf of LLCs. The non-recourse language of the agreements states: “The loan is non-recourse in nature to the individual partners of the Borrower.” The “Borrower” in each instance is an entity.

         14. Plaintiffs are Utah residents and companies. The individuals sue on their own behalf and on behalf of their Roth IRA accounts. Defendants are Oregon residents and companies.

         The Steiner Trust

         15. In about 2013, Mr. Baron began adding to some of the Loan Transaction Agreements a guaranty from the Steiner Trust (hereafter sometimes the “Trust”). (E.g., Ex. 12, at 2 ¶ 2.) The Trust was a hereditary family trust whose beneficiary was Gretchen Pan. The Trust was managed by an attorney named Jeff Long as trustee of the Trust.

         16. Mr. Long became business partners with Mr. Baron, and Mr. Long represented to Mr. Baron that the Trust was available to guarantee the notes. (T. Baron testimony.) Mr. Long received a 25% interest in one of Tracey Baron's entities.

         17. Mr. Baron's entity Big Blue Capital, LLC, now known as RenX Group, LLC (sometimes hereafter “RenX”), entered into agreements with the Trust for credit to back the Loan Transaction Agreements, knowing that the anticipated turnaround time was short and Plaintiffs would never have out more than a few thousand dollars on a deal. (T. Baron testimony; Exs. 1067-68; Deem testimony.) These agreements provided that default for nonpayment to the Trust of any amount due would be declared only after notice and an opportunity to cure were given. (Ex. 1068, at 9 ¶ 6(2).)

         18. The weight of the evidence shows that the guaranty added to the Loan Transaction Agreements was not a major factor in the parties' decision to continue entering into the agreements. (T. Baron testimony.) The parties had already been doing deals together for a year and a half without the guaranty and had received substantial returns on their investments. This and the opportunity to continue receiving profits were the principal inducement for them to continue doing the same. (T. Baron testimony; Deem testimony.) This is confirmed further by the fact that the parties entered into multiple agreements after December 3, 2013-the date when RenX was allegedly in default-that did not contain the Trust guaranty language. The undisputed testimony at trial was that Mr. Law and Mr. Deem did not raise any concerns or objections about the omission of the guaranty from those agreements, demonstrating further that the guaranty language was not a principal point of inducement for the plaintiffs. Furthermore, no evidence was introduced that the default had been declared by the Trust against RenX during this time period.

         19. The amount disbursed and outstanding by the Trust did not exceed the amount available under Defendants' agreements with the Trust. (Ex. 256, at 3 ¶ 7; Ex. 1068, at 1.)

         20. In or about 2015, Mr. Baron discovered that Mr. Long had misrepresented the nature of the backing provided by the Trust and had violated his obligations as trustee of the Trust by using funds for his own benefit. (T. Baron testimony.) Consequently, Mr. Baron's attorney Ha Dao wrote a letter to Mr. Long terminating the relationship, and Mr. Baron assisted the Pans in removing Mr. Long as trustee of the Trust. (Ex. 1098; T. Baron testimony.) Mr. Baron then filed a complaint against Mr. Long with the Oregon State Bar. (T. Baron testimony.) Mr. Baron testified without contradiction that he advised Mr. Law of these facts at the time they occurred. (T. Baron testimony.)

         21. On or about May 13, 2015, the Trust declared RenX in default under their agreements, with the entire balance owed to the Trust immediately due and payable. (Ex. 256, at 3 ¶ 8.) Plaintiffs suggested at trial that December 3, 2013 was a key date in connection with the default because the trust alleged in a separate lawsuit against RenX that failure to make a payment occurred on that date. Plaintiffs, however, introduced no evidence of any date, other than May 13, 2015, that notice or an opportunity to cure were given to RenX or that a declaration of default was communicated by the Trust to RenX. Parties associated with the Trust filed suit against Tracey Baron and one of his companies, RenX, with respect to the declared default in 2017. (Ex. 256.) Judgments were entered against Baron and RenX for securities fraud and breach of contract.

         22. After Mr. Baron learned about Mr. Long's mishandling of Trust funds in 2015, and after the Trust declared RenX in default on or about May 13, 2015, the Defendants did not enter into any further Loan Transaction Agreements with the Plaintiffs that contained the Trust guaranty language. (Ex. 171; T. Baron testimony.)

         23. Other than the Oxbow transaction discussed below, no payments on the Loan Transaction Agreements were made by the Defendants to the Plaintiffs after February 11, 2015. The cause of this fact was disputed by the parties at trial. However, as also discussed further below, Plaintiffs received certain rental payments directly from renters after this date.

         Rents that Tracey Baron collected following preliminary injunction

         24. At Plaintiffs' request, this Court entered a preliminary injunction on January 11, 2018 (the “Injunction”). (Ex. 1084.) Among other things, the Injunction granted Plaintiffs the right to receive rent proceeds from the loan transaction properties.

         25. Exhibit A to the Supplemental Loan Agreement on 52055 Icenogle (Exhibit 135) contains an Assignment of Rents to Lenders. Trial Trans. p. 101. The Court's Preliminary Injunction prohibited Tracey Baron from interfering with the collection of rents under this assignment. Memorandum Decision and Order filed January 1, 2018, (Conclusion, bullet point 3.) Tracey Baron was aware he was enjoined from interfering with the collection of rents under this assignment. Trial Trans. p. 103.

         26. Plaintiffs took advantage of the rights granted to them by the Injunction to communicate directly with renters and insist they pay rents to the Plaintiffs rather than to Mr. Baron or face eviction, a practice they had likewise engaged in before the Injunction had issued. (E.g., Exs. 160-63, 1016, 1076.) Regardless of their authorization or intentions in doing so, the result was to exacerbate financial issues with the Defendants rather than resolve them. Most renters either did not know who to pay or took advantage of the parties' disagreement to then not pay anyone the rents that were owed. Consequently, in most cases, neither Plaintiffs nor Defendants received these rent monies. Plaintiffs did receive some rent money, though the amounts and sources were not made clear at trial. As a result, Defendant entities were placed in an even more precarious financial position with less ability to pay Plaintiffs.

         27. Law attempted to contact the tenants on ten of the properties by physically knocking on about 10 doors. He brought a letter from counsel and court documents to let people know it was real. One of the renters (Exhibit 164) started paying Law and Deem after receiving the assignment of rents. Law testimony, Day 3, and Exhibit 160. Prior to that time, they were paying Tracey Baron in cash. Law testimony, cross-examination, Day 3.

         28. In the course of attempting to direct rents their way, Plaintiffs made statements to third parties impugning Mr. Baron's character. Among other things, they alleged he committed fraud, stole money, could not be trusted, was taking money from others “under the table, ” and would be going to jail if he acted to “pressure” tenants in any way. (Lattimer testimony; Exs. 164, 1075.)

         29. From the time present counsel for the Defendants entered his appearance in this case forward, Defendants made prompt disclosures to and communicated with Plaintiffs, through counsel, in an ongoing effort to comply with the terms of the Injunction and subsequent orders of the Court entered in response to the parties' pretrial motions seeking clarification and enforcement of the Court's orders. (Exs. 1021-48; Ex. 1097, at 2 ¶¶ 4 & 6.)

         30. In an email dated May 24, 2018, Tracey Baron's attorney stated: “I have the assurance that Tracey will be segregating the rents and they will be held in a separate account. I'll follow-up to make sure that this happens." (Exhibit 1028.) Tracey Baron agreed that this email was correct at the time it was sent. Tracey Baron testimony Day 2. The next day, further assurances were made that the money was being segregated and held in a separate account. Trial Trans. p. 100 & Exhibit 1029. Tracey Baron segregated those funds into a separate account. Trial Trans. p. 99.

         31. After collecting approximately $41, 000 and depositing it into a separate account, by July 27, 2018, Tracey Baron withdrew the money from that account and spent it. Trial Trans. p. 100 & Exhibit 1043. Before withdrawing and spending it, he did not ask for permission from anyone to take and spend this money. Tracey Baron Testimony, Day 2, redirect, and Exhibit 1043; Law testimony, Day 3 & Exhibit 1027.

         The Joint Venture Agreement for the Hill Top property

         32. In 2009, Tracey Baron's wife Michelle Baron learned through a friend about a home for rent on Hill Top Avenue in Lake Oswego, Oregon. The home was owned by her friend's father-in-law, Don Olsen. Mr. Olsen became good friends with the Barons and rented the Hill Top home to them. The Barons moved into the property (sometimes hereafter “Hill Top”) with their three children and paid Mr. Olsen rent.

         33. The Barons made improvements to Hill Top. Because Mr. Olsen was a close friend, because he was in poor health with a terminal condition, and because the Barons hoped ultimately to purchase the home, the Barons themselves bore the cost of the expenses associated with their improvements.

         34. In late 2013, with Mr. Olsen's health in decline, the Barons discussed purchasing Hill Top from Mr. Olsen. He agreed to sell it to them for approximately $500, 000 despite its appraised value of $600, 000 in recognition of their substantial work on and improvements to the property.

         35. Mrs. Baron did not have sufficient credit to purchase the Hill Top home. However, she discussed with Mr. Baron that she would like to purchase it and asked him if he would help her secure a loan. He said he would. The testimony at trial reflected that Mrs. Baron was not involved in the finances of the family or the businesses but depended in this area wholly on Mr. Baron, whom she trusted.

         36. Because of his positive relationship with Mr. Law and Mr. Deem at the time, Mr. Baron approached them about funding the purchase of Hill Top. The result was a document entered between the parties titled “Joint Venture Agreement.” (Ex. 1.) This document (sometimes hereafter the “Hill Top Agreement”) was signed individually by Mr. and Mrs. Baron, Mr. Law, and Mr. Deem.

         37. Under the Hill Top Agreement, Mr. Law and Mr. Deem agreed to put up $496, 000 to purchase the property ($248, 000 each). Michelle Baron did not contribute any money for her interest in the Hill Top property. Trial Day 2. Any profits were to be split in accordance with the formula in Paragraph 2 of the JVA. Trial Trans. p. 28. The JVA was not a loan agreement. Mr. and Mrs. Baron agreed to live in the house and maintain it. The agreement also called for the parties to attempt to refinance the purchase as soon as possible so that Mr. Law and Mr. Deem could receive a return of the purchase money they advanced.

         38. Law, Deem and Michelle Baron each received undivided interests in the Hill Top property pursuant to a Statutory Warranty Deed (Exhibit 251; Trial Trans. p. 21-22), recorded on December 18, 2013, which grants Michelle Baron an undivided 16.6% Interest, Mr. Law an undivided 41.7% Interest, and Mr. Deem an undivided 41.7% Interest.

         39. To further secure the repayment of the funds they advanced, Mr. Law and Mr. Deem required that the JVA, ¶ 5, include the following: “The Parties hereby agree that a Warranty Deed is to be prepared by WFG National Title that is to be signed by MBaron in favor of Law and Deem and forwarded to Cornerstone Title to be held in escrow and recorded . . .” in the event of a default “as judged in the sole discretion of Law and/or Deem.”

         40. Michelle Baron complied with the ¶ 5 requirement of the JVA to provide a Warranty Deed, but Cornerstone Title lost the deed, making it impossible for Law and Deem to record a copy (Exhibit 250). At trial, Michelle Baron did not have a problem or issue with signing a replacement Deed. Michelle Baron testimony, Day 4, cross-examination.

         41. In addition to the agreement regarding the purchase of the property, the Hill Top Agreement anticipated the parties' subdividing the large parcel of land on which the home sat and selling off those lots. Anticipated profits from that venture were to be split 70-15-15 between Mrs. Baron, Mr. Law, and Mr. Deem respectively. (Ex. 1, at 1 ¶ 2.) The parties received estimates that the engineering required for the partitioning and development would cost approximately $100, 000. In the Hill Top Agreement, Mr. Law and Mr. Deem agreed that they would pay up to $110, 000 toward expenses to improve the property, but no more. The relevant paragraph reads:

Law and Deem are required to contribute no more than $110, 000 towards development and partitioning of the anticipated three additional lots. Any amounts required in excess of $110, 000.00 shall be the responsibility of MBaron and TBaron.

         (Ex. 1, ¶ 3k.)

         42. Plaintiffs communicated almost immediately that they did not intend to put any money toward developing or partitioning Hill Top, and then they in fact did not do so.

         43. Paragraph 3(v) of the JVA contains the following requirement: “MBaron and/or TBaron must obtain prior written authorization from Law and Deem before expending more than $2, 500.00 on any single expenditure of the 18901 Venture.” Mr. Baron spent a total of $126, 328 in expenses toward developing the property. These expenses included, among other things, application to the City of Lake Oswego, engineering expenses with 3J Engineering, and surveying. There are no written requests for approval of expenditures, nor are there any approvals from both Law and Deem for such expenditures. Trial Trans. p. 32.

         44. Paragraph 10 of the JVA also contains the following requirement: "A Party incurring any expense on behalf of the 18901 Venture shall notify the other Parties of the nature and amount of the expense within a reasonable time before the expense is incurred.”

         45. JVA ¶ 10 also states that “expenses of the 18901 Venture shall be advanced by the Party incurring those expenses and shall be reimbursed based upon proper documentation at such time as the expenses of the 18901 Venture are paid by the various Part(ies) . . . .”

         46. There is no evidence of prior written authorization before expending more than $2, 500 on any single expenditure or any written request to draw on the $110, 000. Although Tracey Baron knew of the requirement to have written approval in advance of any expenditure exceeding $2, 500, he admits that he did not obtain any written approval. Trial Trans. pp. 55-56.

         47. Defendants paid Plaintiffs $2, 500 per month in connection with the Hill Top Agreement, from the time they moved into Hill Top in 2013 until May 2015, including after Plaintiffs had communicated their intent not to pay any amount toward the expenses of developing the property. (T. Baron testimony.) These payments, totaling $45, 000, were mortgage payments and/or interest under the Hill Top Agreement to Plaintiffs as lenders. (T. Baron testimony; Law testimony; Ex. 1, at 2 ¶ 3.q.)

         The “No Lien” Provision of the JVA

         48. Paragraph 3(g) of the JVA contains a “no lien” provision. It states: “Any Party who violates this subparagraph hereby expressly releases their profits and/or interest in the subject property in favor of the remaining Parties.” (Bold in original). Trial Trans. p. 44

         a. The Oregon Claim of Construction Lien

         49. On January 20, 2016, Tracey Baron recorded an Oregon Claim of Construction Lien (Exhibit 249) against the Hill Top property in the sum of $169, 133.34. The Construction Lien asserts that (i) the claimant is Baron Construction and Development; and (ii) Law and Deem hired Baron Construction and Development. Trial Trans. p. 48. At the time, Tracey Baron owned all the shares of Baron Construction and Development. Trial Trans. pp. 48-49. He was an officer and director of that corporation. Trial Trans. p. 49. Tracey Baron submitted an expense report but failed to provide an itemized list of his expenses.

         50. While living in the Hill Top property for over four years, Michelle Baron did not see any construction on the property. The only thing she observed were blueprints, a survey and some bids. Michelle Baron testimony, Day 4.

         51. Law and Deem were unaware that Baron Construction was doing any work on the Hill Top property. They did not hire Baron Construction. When Law and Deem took control of the Hill Top property December 30, 2016, there was no evidence of over $100, 000 in improvements. The property was run down and dirty, requiring Law to spend $15, 000 to make very basic repairs and major cleaning. Law testimony, Day 3.

         52. As noted above, Law and Deem never received any request in writing or any proper documentation to draw on the $110, 000. They never received an oral request. Law testimony, Day 2 & 3; Deem testimony, Day 4. The first time Law was aware of a claim that Tracey Baron had attempted to draw on the $110, 000 was in a bankruptcy proceeding. Law testimony, Day 2 & 3.

         b. Unpaid property taxes resulting in liens against Hill Top

         53. Under the JVA, Michelle Baron & Tracey Baron were to occupy the house and were responsible for paying the mortgage, interest (JVA ¶ 3(q)) and taxes and insurance (JVA ¶ 3(r)).

         54. Michelle Baron & Tracey Baron were obligated under JVA ¶ 3(r) to pay the property taxes. They defaulted on these obligations. Trial Trans. p. 37. The unpaid property taxes on the Hill Top property follow:

Fiscal Year

Amount (plus interest, if any)

2015

$ 9, 926.02

2016

$ 9, 202.05

2017

$ 8, 931.44

2018

$ 8, 035.75

Total

$36, 095.02

         (Exhibit 264; Trial Trans. p. 34).

         55. The failure to pay the property taxes on the Hill Top property resulted in liens being filed against the property. Trial Trans. pp. 44-45 & Exhibit 273. See, JVA ¶ 3(g) (no liens provision).

         56. Foreclosure proceedings were scheduled to begin if the 2015 property taxes were not paid in full before June 17, 2019. (Exhibit 264). As a result, just before the trial in this case, Law paid the 2015 property taxes to avoid foreclosure on the Hill Top property. Law testimony, Day 3 & Exhibit 264. Past due property taxes accrue interest at the rate of 16%. Id.

         57. To prevent foreclosure, Tracey Baron paid the 2013 property taxes. He did not pay the 2014 property taxes.

         c. State and Federal Income Taxes Resulting in Liens on Hill Top

         58. As reflected on her Bankruptcy Schedules, Michelle Baron failed to pay state income tax in the sum of $133, 000, resulting in a lien by the State of Oregon against the Hill Top property in that amount. She also failed to pay federal income tax of $375, 045, resulting in an IRS lien against Hill Top in that amount.

         d. The Barons Failed to Maintain Insurance on the Hill Top Property

         59. Paragraph 3(r) of the JVA states that “TBaron and MBaron are to pay for taxes and insurance” on the Hill Top property, and that “Law and Deem are to be named additional insureds on the insurance policy.” Tracey Baron cancelled the insurance coverage for Law and Deem and kept himself insured on the property. When David Law found out that they were not covered, he started paying insurance in December of 2015, paying a total of $2, 396.77. David Law also paid a total of $13, 145.56 in taxes to hold off foreclosure due to Tracey Baron not paying taxes. David Law paid a total of $15, 541.77 that should have been paid by the Barons under the JVA. Exhibit 304.

         60. Paragraph 4 of the JVA states in part, “No Party to this Agreement may further assign and/or divide its own participation on the 18901 Venture with a third party without the written consent of all other Parties. . . .”

         61. Without Deem's or Law's consent, Michelle Baron transferred her interest in the real property (Exhibit 253) to a limited liability company, Turning Leaf Homes V, LLC, which then filed bankruptcy. Michelle Baron admitted she did not ask for Law or Deem's consent prior to signing this Deed. Michelle Baron testimony, Day 4, cross-examination.

         62. Paragraph 16 of the JVA entitles the prevailing party in any dispute over the JVA to recovery attorney fees and costs.

         Defendants' failure to pay rent on Hill Top

         63. Tracey and Michelle Baron signed a Residential Lease Agreement backdated to December 15, 2013 (Exhibit 263) requiring them to pay rent on the Hill Top property to DJ Property Solutions (David Law) $2, 500 a month. Trial Day 2. The parties anticipated that Tracey and Michelle Baron would either obtain permanent financing requiring payments of $2, 500 per month or pay rent of $2, 500 a month. Michelle Baron acknowledged that after she received her interest in Hill Top (Exhibit 251), she intended to continue paying rent. Michelle Baron testimony, Day 4, cross-examination. No. one agreed that the Barons could live in the Hill Top property rent free.

         64. The Barons paid $2, 500 per month from January 2014 - May 2015. Trial Trans. p. 38. Law testimony, Day 2. They moved out of the Hill Top property in February of 2015. Trial Trans. p. 38. They were not forced out of the property. Tracey told Michelle Baron that there was going to be construction and that they needed to leave during construction. Michelle Baron testimony, Day 4.

         65. On March 1, 2015, Tracey Baron rented the Hill Top house to a third party, Cynthia Morris, until she moved out on December 24, 2017. Trial Trans. p. 39. He did not inform Law or Deem they were renting the Hill Top property to Morris. Law testimony, Day 2.

         66. There is no provision in the JVA authorizing Michelle and Tracey Baron to rent the Hill Top property to a third-party. Trial Trans. p. 40. Additionally, there is no provision in the lease with DJ Property Solutions to sublet the property to a third party. Exhibit 263, page 2, paragraph. 5.

         67. Michelle and Tracey Baron failed to distribute the $6, 000 Morris paid as rent in ...


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