memo on uep auction

8/12/2019 Memo on UEP auction

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CALLISTER NEBEKER & McCULLOUGHJEFFREY L. SHIELDS (2947)[email protected]

T. RICHARD DAVIS (0836)

[email protected] T. SHIELDS (6031)[email protected] D. STANGER (10406)[email protected] Bank Building Suite 90010 East South TempleSalt Lake City, UT 84133Telephone: (801) 530-7300Facsimile: (801) 364-9127

Attorneys for Bruce R. Wisan, as the Court-Appointed SpecialFiduciary of the United Effort Plan Trust

IN THE THIRD JUDICIAL DISTRICT COURT OF SALT LAKE COUNTY

STATE OF UTAH

IN THE MATTER OFTHE UNITED EFFORT PLAN TRUST,TRUSTEES I THROUGH IX

(Dated November 9, 1942, Amended April 10,1946, and Amended and Restated onNovember 3, 1998); and its, TRUSTEES,including known trustees TRUMANBARLOW, WARREN JEFFS, LEROYJEFFS, WINSTON BLACKMORE, JAMESZITTING and WILLIAM E. JESSOP a/k/aWILLIAM E. TIMPSON and DOE

MEMORANDUM IN SUPPORT OF

FIDUCIARYS MOTION TO APPROVESALES OF REAL PROPERTY

Civil No. 053900848

Judge: Denise P. Lindberg

Bruce R. Wisan, in his capacity as the Court Appointed Special Fiduciary (Fiduciary)

of the United Effort Plan Trust (Trust or UEP), by and through counsel, and pursuant to


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UTAH R.CIV.P. 7(b), submits the following Memorandum in Support of Fiduciarys Motion to

Approve Sales of Real Property (Motion).

I. BACKGROUND FACTS

1. On May 27, 2005, the Third District Court for Salt Lake County, State of Utah, inCivil No. 053900848, entered an Order appointing Bruce R. Wisan to serve as the Fiduciary of

the Trust. The Fiduciarys appointment has been confirmed in subsequent orders issued from the

Court.

2. On June 22, 2005, the Third District Court for Salt Lake County, State of Utah, inCivil No. 053900848, entered an Order granting the Fiduciary the authority to request Court

approval to sell, rent or otherwise dispose of Trust property for the purpose of funding the

administration of the Trust.... See, June 22, 2005 Order at 10.

3. On June 13, 2014, at 11:00 a.m., a scheduled conference in open Court was heldin the Third Judicial District Court for Salt Lake County, State of Utah, Judge Denise P.

Lindberg, presiding, during which the Fiduciarys plan for an Auction Sale of certain non-

residential real properties owned by the Trust, scheduled to be conducted by Statewide

Liquidation and Auction Company (the Auctioneer) in Hurricane, Utah, was presented to and

approved by the Court (subject to final Court approval of each individual property sale),

including the terms and conditions of each such prospective sale as set forth in the Master Real

Estate Auction Agreement and the Bidder Terms.

4. Prior to the Auction Sale, the Auctioneer published notice of and detailedinformation concerning each parcel, including the creation and maintenance of a web-site

describing each parcel, providing still photographs and video panoramic views of each parcel, a


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copy of a current title report prepared by First American Title Company together with copies of

all documents identified in said report as exceptions to title and vesting instruments. At the sale,

the auctioneer provided a date-down update of the approximate amount of real estate taxes

assessed against, still owing, and to be assumed by the purchaser of each respective parcel. The

advertisements for the Auction were physically posted locally in public places within the Hildale

and Colorado City communities, were published in newspapers in the larger areas of Washington

County, Utah and Mohave County, Arizona, and were distributed widely by email and telephone

to over 3,500 prospective bidders and customers known to the Auctioneer in the southwestern

region of the United States.

5. As a result of the efforts of the Auctioneer and the Fiduciary, more than 80 peopleappeared at the designated location and place for the Auction, and 16 persons were qualified and

registered to bid (by submitting certified funds of $10,000 as a deposit and agreeing in writing to

abide the terms of the Auction and promptly close on any successful bid).

6. On June 25, 2014, commencing at 12:00 noon, the Auction Sale was conducted inaccordance with the approved terms and conditions, in each instance subject to approval by this

Court. Attached hereto as Exhibit A is a written summary of the parcels placed for auction,

which summary includes for each separate parcel provisionally sold: (1) its Tax identification

number; (2) its designated Auction Lot number; (3) its general property description including

acreage; (4) the highest bid offered at the Auction; (5) the most recently assessed value made by

the County Assessor of the county in which the parcel is located; (6) the high bid amount as a

percentage of the assessment; (7) the most recent independent appraisal (where available); (8)

the high bid as a percentage of the appraised value; (9) the identity of and contact information for

the high bidder; and (10) the Fiduciarys recommendation as to whether the provisional auction

sale should be approved and closed.


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7. In as much as the Auction Sale was conditionally approved by the Court, subjectto review of the Report by the Fiduciary and demonstration of the fairness of the procedure and

best interests to the Trusts, the Fiduciary submits this report on the Auction, recommending

approval of some of the Auction Sales and rejection of the others with a potential second bid

opportunity for the high bidder, and gives his reasons for such recommendations.

II. RECOMMENDATIONS OF THE FIDUCIARY FOR APPROVAL OF SALES

8. For the reasons set forth below, the Fiduciary recommends that the Court approve

the following provisional auction sales:

a. Lot 1A; 115 acres (HD-03-32-110) for $172,500 to Richard Holm;

b. Lot 1B; 152 acres (HD-03-29-220) for $228,000 to Richard Holm;

c. Lot 1C; 30 acres (HD-03-28-330) for $87,000 to Willie Jessop;

d. Lot 2; 32 acres (HD-03-33-424) for $128,000 to Richard Holm;

e. Lot 3; 89.5 acres (HD-178-A-2) for $67,125 to Benjamin Zitting;

f. Lot 4; 97 acres (HD-3) for $223,100 to David Stubbs;

g. Lot 7*; 80 acres (1389-A) for $24,000 to David Stubs;

h. Lot 8*; 80 acres (1388-A) for $26,000 to SLI Ventures;

i. Lot 9*; 40 acres (1388-G) for $11,000 to SLI Ventures;

j. Lots 10*, 11*, and 12*; 314.34 total acres (2201, 2202, 1387) for

$110,019 to SLI Ventures;

k. Lot 19; 0.3 acres (404-21-051) for $2,000 to Willie Jessop;

l. Lot 20; 1.5 acres (404-21-052) for $50,000 to Willie Jessop;

m. Lot 23; 1.22 acres (404-33-029) for $8,500 to Susan Williams;

n. Lot 27; 1.31 acres (404-33-030) for $10,000 to Allen Zitting;


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o. Lot 28; 1.22 acres (404-33-037) for $8,000 to Allen Zitting; and

p. Lot 31; 2.61 total acres (404-31-049 and 404-31-051) for $45,000 to

David Stubbs.

9. The Fiduciary strongly recommends approval of each of the foregoing auction

sales of parcels (other than those marked with an * above and discussed in paragraph 10

below) because the highest bid for each of the parcels in those 12 Lot sales was in excess of 64%

of its assessed value. As a group, the aggregate high bid for these 12 parcels (approximately

$1,100,000) is equal to 93% of the aggregate assessed value of the parcels in the 12 Lot sales

(approximately $1,029,000).

10. The parcels sold in Lots 7, 8, 9, 10, 11, and 12 (the Gap parcels) each sold at the

Auction for amounts significantly less than the other Utah parcels. Therefore, the Fiduciary

appropriately resorted to fee appraisals of said Lots prepared by Craig Morley, MMA, of Morley

& McConkie LC, Real Estate Appraisers and Consultants. It was discovered that the County

assessments for the Gap parcels were between 54% and 92% higher than the fee appraisals,

justifying a closer review of the lower auction bids. The aggregate bid prices of the Gap parcels

is 68% of their aggregate appraised value. According to the fee appraiser, the better accuracy of

the fee appraisals was evidenced by the actual bids received at the Auction. Further investigation

since the Auction Sale has convinced the Fiduciary that it would be unlikely that a significant

increase in the bids for the Gap parcels would be obtained either in a later auction or through

standard realtor marketing efforts. Accordingly, the Fiduciary recommends the Courts approval

of the provisional sales of the Gap parcels.

11. Lot 4 consists of approximately 97 acres within a single 119-acre tax parcel (No.

HD-3). The remaining approximate 22-acre parcel was removed from the auction sale because it

had been promised to be conveyed to the Lost Boys pursuant to a prior Court-approved


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settlement. Tax Parcel HD-C has not yet been subdivided. The Fiduciary recommends that the

sale of Lot 4 be approved, and that the 97 acres be conveyed to the high bidder as soon as that

subdivision has been accomplished.

III. RECOMMENDATIONS OF THE FIDUCIARY FOR REJECTION OF SALES

12. For the reasons set forth below, the Fiduciary recommends that the Court reject

the following provisional auction sales:

a. Lot 17; 8.65 acres (404-23-010) for $38,925 to Willie Jessop;

b. Lot 18; 1.61 acres (404-21-046) for $5,000 to Willie Jessop;

c. Lot 22; 1.72 acres (404-31-023) for $40,000 to Daniel Dutson;

d. Lot 24; 2.66 acres (404-33-048) for $9,000 to Willie Jessop;

e. Lot 25; 1.22 acres (404-33-049) for $4,000 to Allen Zitting;

f. Lot 26; 1.3 acres (404-33-028) for $7,000 to Willie Jessop;

g. Lot 29; 1.69 acres (404-31-071) for $13,000 to Richard Holm;

h. Lot 30; 2.72 acres (404-33-046) for $8,000 to Samuel Zitting; and

i. Lot 32; 6.33 acres (404-33-043) for $26,000 to Willie Jessop.

13. The aggregate highest bid price for the parcels provisionally sold in the above Lot

Sales was just under 23% of the aggregate assessed value of those parcels. All but one of the

high bids offered for these parcels were well under 50% of the Countys assessed value. The

Fiduciary believes that among the several possible reasons for the lower bids for these parcels

are the following: (1) too many parcels were sold at one time with a limited amount of capital

available to the discreet bidding public in attendance [Note: the last parcels auctioned received

relatively much lower bid prices than the earlier parcels sold]; and (2) several of the parcels

would be of interest only to a limited number of potential buyers, removing the likely efficacy of

an auction to obtain a fair sales price.


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14. In addition to his recommendation to reject the provisional sales obtained at the

Auction, Fiduciary suggests that the high bidders on each of the Lot sales identified in paragraph

12 above, be contacted and invited to take a second opportunity to purchase the Lot for which the

high bid was made, by submitting to the Fiduciary a written revised firm bid equal to no less than

65% of the assessed value. If such revised bid is received by the Fiduciary within fifteen days

following the invitation from the Fiduciary, then the bid would be accepted and be considered as

approved by the Court, and the parcel sold at the revised amount to the successful second-

opportunity high bidder.

15. Although the Fiduciary intends to close on each of the approved sales within two

weeks of the Courts approval, the Fiduciary acknowledges that there may be factual issues

concerning one or more Lots that are currently unknown to Fiduciary, and that if discovered may

persuade the Fiduciary to recommend against closing. Accordingly, in the event that, prior to the

anticipated closing of the sale of the provisional auction sales, the Fiduciary discovers facts that

persuade the Fiduciary that any particular Lot is worth substantially more than the assessed or

appraised value and that the Trust would be significantly and unreasonably harmed by the

closing the sale, the Fiduciary requests it be allowed to cancel the closing and return to the Court

for approval of an alternative sale or marketing process.

WHEREFORE, the Fiduciary requests that the Court (1) approve the Report of the

Auction; (2) approve the provisional auction sales of Lots identified in paragraph 8 above; (3)

reject the provisional auction sales of Lots identified in paragraph 12 above; (4) provide the high

bidder of the rejected auction sales with a second chance to rebid and purchase said Lots in

accordance with the Fiduciarys suggestions stated in paragraph 10 above; and (5) order that if

the Fiduciary discovers facts prior to closing that persuade Fiduciary that any particular Lot is

worth substantially more than the assessed or appraised value and that UEP would be


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significantly and unreasonably harmed by the closing the sale, allow Fiduciary to cancel the

provisional auction sale of the subject Lot(s) and renegotiate or market the same.

Dated this 11t

day of July, 2014. CALLISTER NEBEKER & McCULLOUGH

/s/ Jeffrey L. ShieldsJeffrey L. ShieldsAttorneys for the Special Fiduciary


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CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing MEMORANDUM IN

SUPPORT OF FIDUCIARYS MOTION TO APPROVE SALES OF REAL PROPERTY

was served via the Courts electronic filing notification system to e-filers as indicated on the

Court Service List Report and via United States Mail, first class postage prepaid, as indicated

below, on this 11th

day of July, 2014.

Sandra R. KaneBrad Kevin KeoghArizona Attorney Generals Office1275 West Washington Street

Phoenix, AZ 85007

Daniel Dutson700 West StetsonHildale, UT 84784(801) 557-7530

[email protected]

Richard Holm211 East 2ndAvenueCulbertson, MT 59218(435) [email protected]

Willie Jessop455 Jessop AvenueHildale, UT 84784(435) [email protected]

SLI Ventures, LLC/Shelley Robertson1465 Trailcrest CourtDraper, UT 84020

David Stubbs320 North Jessop AvenueHildale, UT 84784

Susan Williams1065 Hemlock CircleSt. George, UT 84790(435) 229-4643 or (435) 229-5775

Allen Zitting1675 Berry Knoll Blvd.Colorado City, AZ 86021PO Box 3414Centennial Park, AZ 86021(435) 705-0955

Benjamin Zitting19475 East 752 RdHumansville, MO 65674

PO Box 1063Stockton, MO 65785(417) [email protected]

Samuel Zitting256 West 100 SouthHurricane, UT 84737

(435) [email protected]

/s/ Nancy Jo Potter


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