The most complicated real estate debacle going may see one Carmel woman lose it all.

Brick By Brick: Constance Laub stands on the corner outside her Constance Wine Bar at Lincoln and Ocean. She had hoped to spin the wine bar into a franchise, with singer Shane Smit of the a cappella band Overtone as a stakeholder.

Constance Laub is having a colossally bad day, a disheveled, woman-on-the-verge-of-losing-it-all kind of day. She stands on the sidewalk just down the block from her Constance Wine Bar in Carmel, her long brown hair uncombed, her shirt on inside out and backwards. And she is surrounded by men. 


There’s the Monterey County Sheriff’s deputy who’s just served her with a court order to vacate her businesses in the brick building on the corner of Lincoln and Ocean. There’s a Carmel cop on standby to back the deputy up. There’s a locksmith, there to remove the old locks and put new ones on the wine bar, the Pegasus Art Gallery (also hers) and Dametra Cafe (not hers, but more on that later). 


There’s a security guard to prevent her from trying to get back into her businesses, and the security guard’s boss, grumpy at the arrival of press and insistent there’s no need for Laub to air her laundry on the sidewalk. There’s the restaurateur, Dametra’s co-owner, holding his head in disbelief and trying to figure out if he’s going to be able to open for the day (or really, ever again), given Laub is his landlord and he’s been paying rent for a space she’s just been ordered to vacate. And there are a few guys not on the scene – a famous Southern California artist royally ticked off that his $6 million worth of paintings have just been locked inside Pegasus, and a wanna-be-famous singer whose boy band is managed by Dina Eastwood and who was counting on his percentage stake in the wine bar to sustain him between gigs. 


Then there’s the guy in the white shirt and blue tie, holding a clipboard and pacing up and down the block.


That guy is Tom Griffin. He’s the attorney representing The Lincoln Trust, the legal entity that holds the Lincoln and Ocean building in trust for the now-adult children Laub had with her ex-husband. That trust is supposed to provide Laub with a “life estate” – an income stream from the rents that will sustain her for life – and Griffin is directing traffic, telling the locksmith what to change and Dametra co-owner Faisal Nimri what it will take to reopen. 


And he’s telling a reporter that the procedural history of The Lincoln Trust, and everything that’s happened leading up to this catastrophe of a day for Constance Laub, might be too complex for a writer or the Weekly’s readers to easily understand.


Later, after the law enforcement has departed, the restaurateur has sent his crew home and the security guard is guarding the corner, Laub sits in her office, a space she rents just down the block from Ocean on Lincoln. Her sweet, sad-eyed dog, a King Doberman named Magic, leans against a visitor until a quick ear rub is proffered. The space is packed with furniture and artwork, tchotchkes and family photos, and multiple desks and computers. 


There are also hundreds of binders and file boxes containing the tens of thousands of pages of legal documents Laub has amassed since she and Paul Laub divorced in 1995 and she agreed to walk away with relatively little. No alimony, no child support – just a home she bought in Carmel Valley when she and Laub separated, and the life estate in the building. Paul Laub walked away with an oceanfront home on Maui, two commercial properties elsewhere in Carmel that produced about $600,000 annually in rent, a half-dozen or so classic cars, a couple of trust accounts from other real estate deals with about $300,000 in them and the now-defunct, conservative-leaning newspaper he and Constance started, Freedom of Speech.


She’s holding it together. She has to: She needs to hustle to the Sixth District Court of Appeals in San Jose and try to get the writ issued by Monterey Superior Court Judge Kay Kingsley stayed or overturned. She’s allowed to stay in her apartment in the Lincoln building, but everything else is on lockdown and she’s worried – about Dametra’s employees, the wine bar’s employees and the artwork of Howard LaMar.


She pauses for a moment and asks plaintively, “Am I crazy?” She later adds, “I’m not crazy, but they’re trying to make it seem like I am.”


There are other questions, though, like this: What’s going to happen to that primo piece of Carmel real estate now that the Monterey County Tax Collector is weeks away from putting the building up for auction because the property taxes are five years past due?


And given the use permits for the wine bar, restaurant and gallery are all in Constance Laub’s name, what happens if the trustees succeed in cutting her out of the property altogether and open up businesses of their own?


Griffin might be right. The story of The Lincoln Trust is one hell of a complicated ride. 


~ ~ ~

To get to now – now being more than three weeks after Laub was locked out of her businesses on May 1 – you first have to go all the way back to the ’70s, when a 27-year-old Constance Anne Dudley first laid eyes on a 34-year-old Paul Laub, a real estate investor and classic-car collector one local attorney (who asked not to be named) described as “just rich enough to be a pain in the ass.” 


“Pain in the ass,” though, is an eye-of-the-beholder phrase. Laub by all accounts was an eccentric charmer, a lady’s man, the kind of brazen guy who wrote out complex real estate deals on cocktail napkins and ran for mayor against Clint Eastwood (and opened up the “Clintville” store, selling Eastwood-related T-shirts and memorabilia, during the race).


But while Paul Laub had a lot of property, Constance claims he was overleveraged on most of it. She had no college education, but she had a reputation for being able to work complicated real estate deals, as she says she did for her former father-in-law, the late County Supervisor Tom Hudson; she started working deals for Laub too. In short order, she had engineered a series of complicated tax exchanges for him, allowing Laub to sell property, lose the tax burden and profit. They bought more real estate together – the Paradise building on Ocean and Dolores, for example – and in business, they flourished. Son Avi was born in 1983 and son Barak came along in 1986. 


And then things, as they sometimes do, went to hell.


The legal wrangling around the divorce went on for a year, culminating in the 1996 creation of The Lincoln Trust: “Effective Dec. 1, 1996, Connie shall receive a life estate interest in the building commonly known as Lincoln.” The trust was to be held for Avi and Barak Laub, satisfy any obligation to pay child support and negate any spousal support Constance or Paul might seek from each other, too. 


“I gave up my rights to $15 million in property in exchange for this life estate,” she says. “This wasn’t a gift to me. This was my divorce settlement.”


The Lincoln Trust was to be managed by Constance, Monterey certified public accountant Breck Tostevin and Salinas attorney Andy Swartz, whom Contance Laub described as a family friend from Temple Beth El. 


The trust was amended once, with Constance being allowed to take a $115,000 loan against the property to pay outstanding attorneys’ and accountants’ fees arising from the divorce. Other than that, Laub was free and clear. She collected rents from the businesses in the building, including Sadies Bar, Jewels on Ocean and the old Little Napoli restaurant, whose space was taken over by Dametra. She worked restoring and flipping Carmel Valley real estate, she bought a ranch in Paso Robles and she generally took care of business and of her kids. Life was finally settled. Life was finally good.


And then came the fraud.


~ ~ ~

Make that alleged fraud, because nobody was ever charged criminally. Laub claims that while she was buying Carmel property to renovate and flip, employees of her mortgage company – the now-defunct Mortgage CO of America – were generating ghost documents, forging her signature on loan papers and generating fraudulent loans through Washington Mutual Bank. She filed for Chapter 11 bankruptcy protection and sued the mortgage company and WaMu, among others, in 2004. She had $7 million in debt and $9 million in equity, and believes she would have been able to come out of the bankruptcy with her debts paid and her property in tact.


That’s when she claims the other trustees approached her and said, in effect, maybe it would be better if you weren’t a trustee of The Lincoln Trust anymore. Because what if the bankruptcy trustee comes after the property?


Constance Laub consented and had her ex-husband installed as a trustee. The fraud suit was dismissed and the dominos began to fall.


She lost the ranch and the Carmel Valley home. She still had the rents from the Lincoln and Ocean businesses, but she says that shortly after the bankruptcy court ratified her settlement in 2006, the new trustees started coming after those businesses too. 


In April 2007, the trustees obtained an order from Judge Kingsley prohibiting Laub from collecting rent from any of the tenants and mandating she turn over any assets of The Lincoln Trust.


By June that year, when she had failed to comply, the judge ordered her held in contempt. She continued to collect rent, although Sadie’s Bar began paying directly to the trustees. In 2009, she evicted Jewels on Ocean and took over the gallery and retail space herself. Laub tried a variety of tactics, including registering various deeds of trust on the building and trying to give title to an offshore holding company, but none of the tactics worked. 


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In fact, according to documents filed by Griffin, her moves created a cloud on the title trustees are still trying to clear. 


The trustees now also say Constance Laub has no life estate interest – despite a divorce settlement signed in 1997 by Judge Robert O’Farrell saying she has one. According to a proposed order drafted by Griffin but not yet signed by Kingsley, that’s because Laub never asserted her right to a life estate during her bankruptcy proceedings.


And as the legal war raged on, the property tax debt accumulated. 


County Treasurer-Tax Collector Mary Zeeb confirms there have been attempts to pay a few dollars here and there over the years, but now that the taxes are officially five years in arrears, the property will be subject to an auction. The trustees will be given the option to go on a payment plan that entails putting 20 percent down, paying 20 percent a year (plus penalties and interest) and staying current on new taxes. If the trustees don’t agree, Zeeb says it could take upwards of a year to legally notify everyone involved, including the Laub children, of the pending auction and complete the process.


The building currently has an assessed value of $1.6 million, with a tax liability of just over $125,000.


With its restaurant permit, its apartment and other retail spaces, it’s probably now worth between $6 million and $10 million. 


“Our goal is to pay the debts and obligations of the trust and pay her the income,” Griffin says. “But she doesn’t want that.” He calls the lockout “an unfortunate step,” but a necessary one; with the rents coming directly to the trustees, those debts and obligations – including the legal bills generated by all the fighting – might now get paid.


“She just isn’t willing to accept it,” Griffin adds. Neither Swartz nor Tostevin returned calls requesting comment; Paul Laub didn’t respond to a request for an interview.


If the building sells, or if the trustees are successful in taking it over, there’s still the issue of Constance Laub’s business-use permits. Those permits allow her, among other things, to sell wine by the glass, bottle or case at the wine bar; sell brokered art and jewelry; and allow the restaurant to run.


“There’s real value in those use permits,” says one prominent Carmel business owner who asked not to be named. “Without those, whoever tries to run a business there has to go back to the city and re-apply.” 


Dametra re-opened just two days after the initial lockout and now pays rent on a month-to-month agreement with The Lincoln Trust, thanks in part to an assist from Larry Sonsini, a frequent customer who happens to be a legal legend and arguably the toughest business lawyer in Silicon Valley. The Pegasus Gallery remains closed, with Ojai artist Howard LaMar’s vibrant, abstract paintings locked inside. Also still closed is the wine bar, which Constance Laub had hoped to franchise into a chain of wine-and-piano bars with Shane Smit, a singer from Dina Ruiz Eastwood-managed boy band Overtone, as a stakeholder. 


Smit, known on the boy bands’ website as “the ladies man,” the one with “the infectious laugh,” appears to be standing by Laub. He went to court with her on May 10, sitting in the back of the courtroom wearing geek-chic glasses and a perfectly fitted tweed jacket. 


He doesn’t say much outside of court, only that he was planning on moving to downtown Carmel with his girlfriend, but that move been placed on hold because the wine bar is closed. He met Laub because he and the band used to hang out at Dametra, eat and sing.


Since 2007, says Laub’s attorney, John Klopfenstein, there’s been no accounting of any trustee fees, which include the fees being demanded by Griffin’s firm – that latest being a bill for just over $105,000. Judge Kingsley on May 10 ordered Griffin to provide the accounting for that $105,000 bill, but for now, the writ is in place and the gallery and wine bar remain closed.


As for Constance Laub? Right now, she says she has nothing. No income from the trust, no rents from the businesses, no way to pay the employees who worked there. She has no money.


“I need to find some inexpensive storage space. Do you know of any?” she asks on recent afternoon while sitting in her office. “I’m about to lose this space too and I’m going to need to move.”

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(5) comments

valyspin

The difficult task is not to sell your real estate property, but to move from there. There are specialized moving services, like the Devon Moving Company from http://www.devonmoving.com/ that will make this process less stressful and time consuming. Its team will do the hard work while you will be busy doing something else.

gorila

It is difficult to survive in this economy, many people and businesses lose their proprieties because they haven't paid the mortgage on time. Some of them are forced to move in another neighborhood, in a smaller house. On the other hand, this is the time for real estate agencies to make money and if someone wants to become an agent, he should resort to real estate investor training Phoenix.

gorila

This matter depends on the area that you are living. For example, the apartments in Baytown are sold at a decent price. Any family can afford one because they are divided into one, two or three bedrooms.

marta80

To sell your house at a good price, you should make an entire renovation first, to increase the house price. Don't forget to replace some of the old windows. At Andy's Glass you will find everything you need in this department. After you finished the renovation, it may take a few months until you sell your house.

gorila

These days you can rebuild almost everything and find a way to reuse it for another purpose. For instance, many businessmen found out that rebuilding transformers for commercial, municipal or industrial use is a great way to recycle these big metal boxes. Also, it offers a better efficiency in function, so many companies which use these transformers should rebuild them, not throw them away. There are at least 3 reasons to rebuild transformers.

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