California Palms Sold for $4M at Sheriff’s Sale

YOUNGSTOWN, Ohio — The owner of the California Palms Addiction Recovery Campus is appealing a sheriff’s sale of the property for $4 million to the Los Angeles-based Pender Capital Asset Based Lending Fund.

Documents from the Mahoning County Auditor show the sale closed April 2, and that the property was sold at sheriff’s sale. This sale is the latest development in a legal dispute between the rehabilitation center’s owner, Sebastian Rucci, and Pender Capital.

The case is on appeal and California Palms is “progressing through that process,” Rucci said in an email to The Business Journal. Rucci contends the sheriff’s sale didn’t comply with “multiple statutory protections,” he said.

“We also respectfully believe that no lender has ever filed for foreclosure where their complaints admits that they are holding over one year’s interest, refuse to apply this to the loan, and refuse to return it,” Rucci stated. “As of this writing, we have not had one hearing in this case. We will continue to progress through the legal process which we respectfully believe is not concluded.

“We are confident that the courts will not allow the foreclosure to conclude under these facts. Instead, in Ohio, a lender cannot file foreclosure without first providing that the loan is in default, we have the opposite, the lender’s own words confirm that we were not in default.”

On Jan. 12, California Palms sued Pender Capital claiming that the loan is usury, he said.

Last month, California Palms filed for summary judgment on Pender Capital’s claims.

Meanwhile, on March 18, Mahoning County Court of Common Pleas rejected California Palms’ motion to vacate the sheriff’s sale. The court also overruled a motion to stay execution of foreclosure judgment pending resolution of an appeal.

On March 17, the court gave an order of confirmation for foreclosure sale and distribution of the property. The following day, California Palms appealed the case to the Seventh District Court of Appeals.

The court case centers on a $4 million commercial loan Rucci took out with Pender Capital in March 2018. Rucci sued Pender Capital for breach of the loan. Pender then foreclosed on the property, prompting Rucci to file a countersuit disputing the amount of the debt.

The court found Pender Capital’s motion to foreclose to be “well-taken and that it should be granted.”

Rucci in his email said that California Palms is still operating and providing long-term care to 90 clients. The drug and alcohol rehab center employs 48, he said.

Related coverage:

July 18, 2020 | Rucci’s California Palms Treats Addicts with Trust

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