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.
A federal bankruptcy court’s Jan. 3 abandonment order left ownership of the horses in Bennett’s hands, according to DeCaprio. But Bennett, who’s also named in the foundation’s suit, still faces 65 counts of animal cruelty preventing him from reclaiming his horses.
“We’d never give them back to him anyway,” said a defiant DeCaprio, who claims in her lawsuit that Ryan’s actions, on behalf his bank clients, left the horses in an expensive “legal limbo.”
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 high-risk births and care for the foals and mares, some of which are feral and still pregnant, has cost $870,000 thus far, and nearly bankrupt the foundation, which is currently $400,000 in debt and spending $50,000 per month on the horses, according to DeCaprio.
Bennett willingly gave up his first and worst-off 20 horses to the Grace Foundation in April 2011. While rounding up the starving and dehydrated Whispering Pines horses, the foundation’s adoption director, Ron Warr confirmed that he and a team of volunteers encountered the remains of at least 28 less-fortunate horses and a couple of dogs, some in apparent burial pits, others rotting on the ground in plain sight.
Bennett argued in subsequent blog posts that the dead horses were poisoned. He was nonetheless eventually charged with animal cruelty.
Bennett might have run afoul of the law again. The Lassen Times reported that the Lassen County Narcotics Task Force arrested a Dwight Bennett and two other men after they reportedly found methamphetamine, marijuana, morphine, hydrocodone and anti-anxiety medications, along with drug distribution paraphernalia, in their vehicle a July 6 traffic stop.
Contacted over the weekend, Lassen County officials would only say that no Dwight Bennett is currently in custody.
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.
“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.”