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Raoul Barrie Clymer 14150 Grant St., Suite 33 Moreno Valley, CA 92553 (951) 231-5886 raoulclymer@yahoo.com Propria persona

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

RAOUL BARRIE CLYMER, Plaintiff, v. KEVIN ELDER, RICHARD ELDER, SCOTT WOODSIDE, PIMLICO RANCH LLC, DRAKE DEVOLOPMENT, LLC, GOWIRELESS, INC., ALLIANCE BANK, MARK COHEN, et al., Defendants.

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CASE NO. EDCV 11-1414-VAP (OPX)

OBJECTION TO ALLIANCE BANKS MOTION TO DISMISS

Comes now, Raoul Barrie Clymer, plaintiff respectfully filing his objection to Alliance
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Banks Motion to Dismiss and sets forth the following in support thereof: I. INTRODUCTION I. INTRODUCTION It is a sad day in the annals of American Jurisprudence when the filing of a Civil action is considered by some as only to further harass A families lifetime savings were invested with the Defendants based upon promises and obligations that were all made with false

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pretenses. Upon learning of the fraud Plaintiff attempted to circumvent litigation by approaching certain of the named Defendants asking them to honor their contractual obligations and avoid Civil R.I.C.O. prosecution. For being forthright and stalwart plaintiff was rewarded with a

OBJECTION TO MOTION TO DISMISS Page 1

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plethora of false accusations resulting in a TRO1 lodged against him. II. SUMMARY OF THE FACTS AND ALLEGATIONS: B&D was induced into a business venture by K. Elder; called the Pimlico Ranch LLC Project. K. Elder stated he was the sole shareholder of GoWireless, Inc., and gave his personal guarantee2, backed by GoWireless, Inc., for a timely completion of said business venture3. K. Elder stated that he needed $3.5 to purchase the Pimlico Ranch LLC project with property outright. Based upon K. Elders personal guarantee backed by his holdings in GoWireless B&D accepted the terms stated within the Prospectus. B&D liquidated family owned real estate for investment in Pimlico Ranch LLC. Subsequently, K. Elder directed B&D to wire more than six Bank transfers totaling $3.5 into K. Elders personal bank account. B&D agreed to Subordination of Deed of Trust for the sole purpose of a Construction Loan4. Alliance prepared and filed Subordination of Deed of Trust on behalf of B&D thereby placing Alliance Bank as first in line on Pimlico Ranch LLC title. Alliance Bank concealed the Loan Agreement and the amount contained therein from B&D5. Defendant Woodside, on behalf of Pimlico Ranch LLC, prepared

It should be noted that the State Court hearing for the TRO was held in a private Courtroom, without the ability to cross-examine the false bearing witnesses. When Plaintiff stated the right to cross-examine false bearing witnesses the Judge plainly stated I dont care about the U.S. Constitution, California Constitution, or the Fiji Constitution for that matter. They dont have to be here they have their Attorney here. There is no court record and the docket entry has Elder as present [which he was not.]. Plaintiff understands why Defendants want this Court to dismiss the R.I.C.O. claims and relinquish jurisdiction to the State Court. 2 Besides the testimony of three witnesses to verify this, it can also be inferred from the fact that K. Elder gave his personal guarantee to obtain the $13.9 million dollar loan, so why wouldnt he give his personal guarantee for the $3.5 million necessary to procure the $13.9 million loan. 3 It should be noted K. Elder provided all three Body Shop phones free of charge thru GoWireless, Inc. as a bonus. 4 Findlaw: Legal definition of construction loan - a short-term, to finance the cost of building a new home. The lender pays the builder based on milestones accomplished during the building process. For example, once a sub-contractor pours the foundation and it is approved by inspectors the lender will pay for their service. 5 The Successor-in-interest, CB&T Bank, also denied Plaintiff a copy of the Loan Agreement and refused to state the total amount granted allegedly based upon their clients privacy . However, they did provide the amount then currently owed once informed of Pimlicos default status with B&D.

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the application for the Construction Loan. Alliance Bank approved said Application with conditions. K. Elder was required to deposit equity funds totaling $3.5 into Alliance Bank6 to procure the $13.9 million Construction Loan. [See exhibit 1, Construction Loan Agreement, page 2.] As mandated in the Construction Loan Agreement for Budget and Schedule of Estimated Advances wherein Lender shall have approved detailed budget and cash flow projections of total Project costs . a Release Price Schedule by Lot was created. See Exhibit 2. Ultimately, Alliance Bank authorized the requested funds for construction and mandated that UNDISBURSED FUNDS must be REQUESTED.IN WRITING. See Exhibit 3. In the Construction Loan there was $3.8 million allocated from the Construction Loan to Stewart Title for pay off which was not disclosed or agreed to by B&D. [See exhibit 3, Other Disbursements:] Alliance Bank materially altered the Subordination Agreement by changing the terms of the Construction Loan Agreement, from a short term loan for construction purposes, containing a draw down payment schedule which protected B&D, into a purchase

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money/long term personal loan; which was concealed by Alliance and others party to said agreement from B&D. Although the Trustee for B&D would continually inquire into the status of the Project the named Defendants continually provided banking and/or permit excuses. In the interim K. Elder paid interest as agreed the first three years using funds from

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sources other than Pimlico Ranch LLC utilizing bank transfers and the U.S. Mail. K. Elder refused to pay interest in the fourth year which precipitated Plaintiffs investigation. All interest payments were made in interstate commerce from Nevada to California.
Plaintiff is no scholar of Banking, however ,with fractionalized reserve banking methods that $3.5 million would equate to well over $35 million dollars for Alliance Bank.

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Plaintiff has been making substantial cumulative lease payments7 for the Body Shops (3 shops in the Inland Empire) totaling approximately $50,000.00 per month for six years which is attributable solely to the investment in Pimlico Ranch LLC Project. This causes Plaintiff and his family undue stress and vexation in the current economy. SUMMARY OF THE ALLEGATIONS:

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Contrary to what the successor-in-interest, California Bank &Trust, would contend, Alliance Bank is without clean hands. This was not simply a real estate business deal gone awry. Nor is this a simple breach of contract. The property in question is as vacant a lot as the day it was initially presented to the Trustee of B&D. However, there is $32,600,000.00 [$32.6 million] verifiable funds invested in the Pimlico Ranch LLC project that are unaccounted for by any of the named Defendants. The first time that Alliance Bank and Pimlico Ranch LLC collaborated to manipulate investment funds, Pimlico Ranch LLC ,by and through defendant Woodside, submitted an Application for a secured construction loan in early 2004. Alliance8 granted Pimlico Ranch LLC a $11.4 million Construction Loan [hereinafter First Loan] back on or about April 28, 2004; a year and a half before B&D became involved with Pimlico. This loan was secured by a Construction Deed of Trust. See exhibit 4. On or about October 21, 2005, Defendants procured a $3.8 million loan against Pimlico Ranch LLC title [hereinafter Second Loan] from Diversified Builder Services. This loan was

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secured by a Deed of Trust. See exhibit 5. On or about December 31, 2005, defendants secured a $3.5 million loan from B&D [hereinafter Third Loan]. This loan was secured by a Deed of Trust. See exhibit 6.
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The family real estate was sold with lease back options and buy back options.

It is unknown at this point who represented Alliance Bank in working with defendant Woodside for the First Loan. This will be resolved by discovery.

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Again in early 2006 defendant Woodside submits another Application to Alliance Bank on behalf of Pimlico Ranch LLC for second Construction Loan. On or about May 25, 2006, Alliance issues a Construction Loan for $13.9 million to Pimlico Ranch LLC [hereinafter Fourth Loan]. This loan was secured by a Construction Deed of Trust. See exhibit 7. If the First Loan was subject to the same contractual conditions as the Fourth Loan,

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Alliance benefited to the tune of $1.3 million on the First Loan. The Fourth Loan established that Alliance retained $720,238.00 in Undisbursed Interest Reserve, $386,234.00 in Undisbursed Contingency, $174,500.00 in Loan Fees, $30,000.00 in Construction Inspection & Fund Control Fees [Emphasis added]. This is a combined total of approximately $2.6 million in their coffers over a two year span on two transactions collateralized by the same 30 acre bare lot. Plaintiff posits this pattern of activity gives rise to a cause of action for RICO conspiracy. Approximately $32,600,000.00 invested in construction of the Pimlico Ranch LLC Project and not one piece of heavy equipment touched the soil. It can be reasonably inferred that bank money was disbursed knowing that it would not be utilized for the purpose of construction by a failing

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financial institution: Especially in light of the fact the first Construction Loan was not spent for construction. It is little wonder why Alliance Bank failed. Alliance Bank committed fraud by processing a Construction loan that was a purchase money/personal loan. Alliance intentionally concealed the fact the construction loan contained a $3.8 million pay off from B&D whom subordinated to the construction loan as defined in the Construction Loan Agreement. The aforesaid actions of Alliance Bank defrauded the Federal Reserve Bank. Discovery will prove that Alliance securitized the Pimlico Ranch LLC Promissory Note, which was signed and personally guaranteed by the managing members of Pimlico Ranch LLC, defendants K.

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Elder, R. Elder, and Scott Woodside, to secure the funds from the Federal Reserve Bank. III. PLAINTIFF LACKS STANDING Plaintiff is one member of a family that owns Ben Clymers The Body Shop, Inc. [hereinafter Body Shop]. The Body Shop liquidated its real estate properties with lease back options to finance the Pimlico Ranch LLC Project, which equates to a burden of approximately

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$50,000.00 [$49,392.30] per month. Plaintiff contends that this ongoing financial burden is an injury to his business and property. This injury to Plaintiffs business ipso facto gives Plaintiff standing. The only requirement for RICO standing is that one be a "person injured in his business or property by reason of a violation of section 1962." 18 U.S.C. 1964(c). And the Supreme Court has already told us that "by reason of" incorporates a proximate cause standard, Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, @ 265-68, (1992), which is generous enough to include the unintended, though foreseeable, consequences of RICO predicate acts. Notwithstanding the aforesaid, Plaintiff has acquired assignment for 100% of the Pimlico Ranch LLC Project from the successor-in-interest to B&D Clymer Real Estate, A Trust,

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including but not limited to right to chose in action. It is Plaintiffs position that he has standing to seek redress. IV. UNLESS PLAINTIFF SUFFICIENTLY ALLEGES A RICO CLAIM THE COURT LACKS SUBJECT MATTER JURISDICTION Even if the RICO conspiracy should not survive, this Court may exercise jurisdiction based on diversity of the parties. Diversity jurisdiction extends to "all civil actions where the matter in controversy exceeds . . . $75,000 . . . and is between . . . [c]itizens of different States." 28 U.S.C. 1332(a)(1). The Complaint names, Defendant, GoWireless, Inc., stating the place of

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incorporation and having headquarters in Las Vegas, Nevada and defendant, K. Elder, whom is also a resident of Nevada. The pleadings of the said complaint also state an amount in

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controversy exceeding $75,000.00. A Plaintiff must set forth affirmatively not only the state by which these corporations have been incorporated, but also the state where each of them has its principal place of business. Brandt v. Bay City Super Market, D.C., 182 F.Supp. 937 (1960); and Cameron v. Hodges, 127 U.S. 322, 8 S.Ct. 1154, 32 L.Ed. 132 (1888) Recently the U.S. Supreme held ..that the phrase "principal place of business" refers to the place where the corporation's high level officers direct, control, and coordinate the corporation's activities. Hertz.Corp. v. Friend, 130 S. Ct. 1181, @ 1186 (2009) V. NONE OF THE PLAINTIFFS SIX CAUSES OF ACTION CANNOT [Sic] WITHSTAND A RULE 12(B)(6) MOTION A. Plaintiff has not satisfactorily alleged a RICO Claim Counsel for Alliance claims [t]he Complaint has failed to allege any predicate acts as to Alliance Bank. However, Plaintiff has pled that Alliance Bank, by and through its acting agent, Mark Cohen, did conspire with K. Elder, and others to commit bank fraud by issuing a $13.9 million dollar construction loan without regard for performance. [Complaint page 10, para. 54] Plaintiff also attached to Complaint, exhibit 8, which is the Construction Deed of Trust based upon said construction loan filed in the Official Records of Riverside County by Alliance dated May 25, 2006.

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The bank fraud statute prohibits one who "knowingly executes, or attempts to execute, a scheme or artifice ... to obtain any of the moneys ... credits ... or other property owned by" a federally insured institution by making false pretenses. The plain language of the statute states that each execution of the scheme constitutes a separate offense. See United States v. Poliak, 823 F.2d 371, @ 372 (9th Cir.1987), cert. denied, 485 U.S. 1029, 108 S.Ct. 1586, 99 L.Ed.2d 901

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(1988). Rule 9(b) provides that "[i]n all averments of fraud ... the circumstances constituting

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fraud ... shall be stated with particularity." "A pleading is sufficient under rule 9(b) if it identifies the circumstances constituting fraud so that a defendant can prepare an adequate answer from the allegations." Moore v. Kayport Package Express, Inc., 885 F.2d 531, @ 540 (9th Cir. 1989) (citations omitted). "The plaintiff must set forth what is false or misleading about a statement, and why it is false." In re GlenFed Inc. Sec. Litig., 42 F.3d 1541, @ 1548 (9th Cir.1994)

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The aforesaid facts pled, combined with the exhibits, articulate the who, what, when and where necessary for submitting a defense. Plaintiff believes this satisfies the requirements of Rule 9(b). It is an undeniable fact that the terms of said Construction Loan Agreement stated the purpose of the loan with specificity as: CONSTRUCTION LOAN TO COMPLETE PHASE I OF A SEMI-CUSTOM SINGLE FAMILY RESIDENTIAL SUBDIVISION IN MURRIETA, CALIFORNIA (PHASE I INCLUDES COMPLETION OF ALL 25 LOTS AND BUILD OUT OF ONE MODEL HOME AND EIGHT PRODUCTION UNITS). See exhibit 8 Alliance memorialized the method of payment in the Construction Loan Agreement as follows: Conditions precedent to each advance. Equity Funds. Borrower shall provide evidence of equity funds totaling $3,500,000.00 prior to the initial advance from the Loan Fund. Disbursement of Loan Funds. .Borrower shall apply only for disbursement with respect to work actually done by the General Contractor and for materials and equipment actually incorporated into the Project.. Construction of the project. Commence construction of the project no later than June 25, 2006, and cause the improvements to be constructed and equipped in a diligent and orderly manner and in strict accordance with the plans and specifications approved by lender, the construction contract, and all applicable laws, ordinances, codes, regulations, and rights of adjoining or concurrent property owners. Borrower agrees to complete the Project for purposes of final payment to the General Contractor on or before May 25, 2007, regardless of the reason for delay.

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It is also an undeniable fact that Alliance assessed a $30,000.00 prepaid finance charge for Construction Inspections & Fund Control Fee as evidenced by their document entitled Disbursement Request and Authorization. See exhibit 8. In said exhibit is further evidence of bank fraud whereby a closer reading of said document revels under the subheading:

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DISBURSEMENT INSTRUCTIONS: Other Disbursements: $3,800,000.00 Wire to Stewart Title for payoff. When Alliance sold the Pimlico Ranch LLC Promissory Note, which was based upon the Construction Deed of Trust, to the Federal Reserve Bank they committed Bank Fraud in violation of Title 18 U.S.C. section 1344. RICO CONSPIRACY: Title 18 section 1962(d) proscribes a conspiracy to violate RICO. It provides: "It shall be unlawful for any person to conspire to violate any of the [other RICO] provisions." 18 U.S.C. 1962(d). Bank Fraud is a predicate act for RICO. When Alliance agreed to issue an open line of

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credit for Pimlico Ranch LLC, when all documentation sold to the Federal Reserve Bank was for a Construction Loan, Alliance Bank by and through its acting agent, Cohen, committed bank fraud. It is the mere agreement to violate RICO that 1962(d) forbids; it is not necessary to prove any substantive RICO violations ever occurred as a result of the conspiracy. Aetna Cas. Sur. Co. v. P & B Autobody, 43 F.3d 1546, 1562 (1st Cir.1994). See also, Salinas v. United

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States, 522 U.S. 52, 118 S.Ct. 469, 139 L.Ed.2d 352 (1997), (which held that a defendant who was acquitted of the substantive racketeering charge nonetheless could be convicted of conspiracy to violate RICO.) Paramount is the fact that the illegal agreement need not be express as long as its

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existence can be inferred from the words, actions, or interdependence of activities and persons involved. Id. If a RICO conspiracy is demonstrated, "[a]ll conspirators are liable for the acts of their co-conspirators." Sec. Investor Prot. Corp. v. Vigman, 908 F.2d 1461, 1468 (9th Cir.1990) rev'd on other grounds sub nom. Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992) (internal quotations and citations omitted). Holding RICO

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conspirators jointly and severally liable for the acts of their co-conspirators reflects the notion that the damage wrought by the conspiracy "is not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole." Vigman, 908 F.2d @ 1468. As a whole it is impossible for Alliance to avert liability for fraudulently selling the Federal Reserve Bank a short term Promissory Note backed by a Construction Deed of Trust with full knowledge the money purchased would not be utilized for the intended purpose. Although Alliance pleads that specific conduct of other named conspirators do not state a claim against Alliance, Plaintiff would remind them that "one who joins with the existing conspirators in the criminal plan does not create a new conspiracy but becomes a member of the

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existing conspiracy. Hence, an overt act committed prior to the new member joining will be just as effective against him or her as against the prior parties....". U.S. v. Fernandez, 388 F.3d 1199 @ 1225 (9th Cir., 2004) ALLIANCES BREACH OF FIDUCIARY DUTY: Alliance Bank, by and through its acting agent, Mark Cohen, did conspire with K. Elder, and others to commit bank fraud by issuing a $13.9 million dollar construction loan without regard for performance. K. Elder, R. Elder, Woodside submitted application for a $13.9 million Construction Loan utilizing the Pimlico Ranch LLC property as collateral, approved by Alliance Bank, by and through its acting agent, Mark Cohen; with the knowledge

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by all named herein that the Construction Loan was not going to be used for constructing the Pimlico Ranch Project LLC. Plaintiff has submitted documentary evidence that establishes Alliance Bank prepared and filed in the Office of Records, in Riverside County, California, a Subornation of Deed of Trust [on behalf of B&D] and a Construction Deed of Trust on the Pimlico Ranch LLC Project

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Title. It is Alliances position that Plaintiff failed to allege facts demonstrating the existence of any relationship between Alliance Bank and Plaintiff, let alone one that was fiduciary in nature. [Motion to Dismiss, page 10, ln 3-5] It is agreed that there was no debtor and creditor relationship between B&D and Alliance. There is, however, evidence in the record that B&D, a creditor already on title of Pimlico Ranch LLC Project, agreed to Alliances terms to subordinate to Alliances position on the Pimlico Ranch LLC Projects title. The negotiating of, and agreeing to terms between B&D and Alliance allowed both lenders to share in the profits of a joint venture. "A joint venture is 'an undertaking by two or more persons jointly to carry out a single business enterprise for profit." Weiner v. Fleischman 54 Cal.3d 476 (1991) There are three basic elements of a joint venture: (1) the members must have joint control over the venture (even though they may delegate it), (2) they must share the profits of the undertaking, and (3) the members must each have an ownership interest in the enterprise. Unruh-Haxton v. Regents of

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University of California 162 Cal.App.4th 343 (2008) "A joint venture . . . may be formed orally or assumed to have been organized from a reasonable deduction from the acts and declarations of the parties." (Weiner, @ 482-483.) In this case we have B&D who delegated controlling

position to Alliance as the principal lender in control of the project. Alliance was to maintain

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control of the project by allocating the Construction Loan in a draw down as evidenced by Alliances document called the Release Price Schedule by Lot. Both B&D and Alliance were sharing in the profits of the Pimlico Project as evidenced by their respective contractual agreements and both said parties had an interest in the project as exhibited by their respective Deed of Trust on Title to the Pimlico Ranch LLC Project.

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Even should this Honorable Court find Plaintiffs joint venture argument tenuous, it can not be denied that the failure of Alliance to execute their contract utilizing the draw down payment was the proximate cause of B&Ds loss. Should Alliance have paid out according to performance B&Ds position would have been protected inasmuch as Pimlico would not have had access to the funds without completion ,step by step, of the Construction as projected. B&D was led to believe that subornation of their position was to a Construction Loan the specific purpose of building the Pimlico Ranch LLC homes.9 This is confirmed by Alliances document entitled Construction Loan Agreement, which states: CONSTRUCTION LOAN TO COMPLETE PHASE I OF A SEMI-CUSTOM SINGLE FAMILY RESIDENTIAL SUBDIVISION IN MURRIETA, CALIFORNIA (PHASE I INCLUDES COMPLETION OF ALL 25 LOTS AND BUILD OUT OF ONE MODEL HOME AND EIGHT PRODUCTION UNITS). And again in the document entitled Disbursement Request and Authorization wherein is found: SPECIFIC PURPOSE: The specific purpose of this loan is: CONSTRUCTION LOAN TO COMPLETE PHASE I OF A SEMI-CUSTOM SINGLE FAMILY RESIDENTIAL SUBDIVISION IN MURRIETA, CALIFORNIA (PHASE I INCLUDES COMPLETION OF ALL 25 LOTS AND BUILD OUT OF ONE MODEL HOME AND EIGHT PRODUCTION UNITS). [See Exhibit 8] However, a closer reading of said document revels under the subheading

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B&D was never provided with a copy of the construction loan agreement or the amount of the loan. CB&T agents denied B&D a copy of the Contract agreement with Pimlico Ranch LLC when requested during investigation of the Projects true status.

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DISBURSEMENT INSTRUCTIONS: Other Disbursements: $3,800,000.00 Wire to Stewart Title for payoff. This fact was intentionally withheld from B&D because B&D was led to believe that

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their $3.5 million cash investment was utilized to purchase the property and project outright. This would have raised questions from the onset. Alliance would have this Court overlook the fact that Alliance filed a fraudulent document in the Office of Records by recording a Construction Deed of Trust when Alliance knew it was not a Construction loan but a money purchase/personal loan backed by personal guarantees for acquisition. These facts were known to Alliance. Alliance purports that .. the Complaint fails to specify what conduct constituted breach, or what damages resulted therefrom. [MTD, page 10, ln 7&8] Alliance issued a $13.9 million dollar Construction Loan with the knowledge that B&D subordinated and yet Alliance clandestinely incorporated the purchase money into the Construction loan and then failed to monitor and control the release of construction funds as per contract; AND, by so doing B&D lost their entire equity of $3.5 million, plus 35% of the profits and 10% annual interest. The duty of a lender to supervise the use of loan funds arises only from a written agreement to do so, or perhaps from the knowledge that the seller is relying on

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such monitoring and the lender does not disclaim such reliance or the lender actively undertakes such a role. Resolution Trust Corp. v. BVS Development, Inc, 42 F.3d 1206 @ 1215 (9th Cir, 1994) By Contract Alliance was literally paid $30,000.00 for Construction Inspections & Fund Control Fee. The excerpts from Alliances Construction Loan Agreement are as follows:

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Conditions precedent to each advance. Equity Funds. Borrower shall provide evidence of equity funds totaling $3,500,000.00 prior to the initial advance from the Loan Fund.

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Disbursement of Loan Funds. .Borrower shall apply only for disbursement with respect to work actually done by the General Contractor and for materials and equipment actually incorporated into the Project.. Construction of the project. Commence construction of the project no later than June 25, 2006, and cause the improvements to be constructed and equipped in a diligent and orderly manner and in strict accordance with the plans and specifications approved by lender, the construction contract, and all applicable laws, ordinances, codes, regulations, and rights of adjoining or concurrent property owners. Borrower agrees to complete the Project for purposes of final payment to the General Contractor on or before May 25, 2007, regardless of the reason for delay.

Unfortunately May 25, 2007, came and went. Alliance and Pimlico modified the Construction Loan numerous times extended said loan from eleven months to over six years. All the while Plaintiff is making almost $50,000.00 a month payments for the money invested in Pimlico. Under California law, "a lender and a borrower may not bilaterally make a material modification in the loan to which the seller10 has subordinated, without the knowledge and consent of the seller to that modification, if the modification materially affects the seller's rights." Gluskin v. Atlantic Sav. & Loan Assn., 32 Cal.App.3d 307, @ 314, (1973). B&D subordinated to a Construction Loan, not purchase money loan; thereby Alliance did modify the loan. To exacerbate the issue Alliance provided extensions without notice. But, paramount is the issue of modifying the construction loan due in eleven months after issuance of funds, into a personal loan that is due on a unknown date over six years after receipt of funds. The Ninth Circuit Court of Appeals recognized Gluskin and held that: Gluskin discerns a public policy need for protecting the seller from such reprehensible conduct even in the absence of a malevolent purpose. Read properly, Gluskin does no more than find a duty of good faith and fair dealing in a subordination agreement, preventing two of the parties from substantially impairing the third's interest in the joint enterprise. As the Ninth Circuit has explained, "[t]he rule articulated in Gluskin aims to protect subordinated sellers
The California Appellate court expressly refused to decide whether public policy justified granting a subordinating hard money lender less protection than a subordinating seller Lennar Northeast Partners v. Buice (1996) 49 Cal.App.4th 1576, @ 1587-88

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from secret agreements between buyers and lenders against the interest of the subordinated seller." Resolution Trust Corp. v. BVS Development, Inc. 42 F.3d 1206, @ 1215 (9th Cir.1994) [Emphasis added.] Plaintiff contends that Alliance Bank had a contractual and fiduciary duty to B&D to inspect the construction and control the funds; especially since this was the second Construction Loan issued on the same vacant lot for the same LLC. Plaintiff believes it would be reasonable to

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infer by Alliances deliberate avoidance of monitoring the funds that Alliance had prior knowledge the funds were not going to be used for the construction of the Pimlico Ranch LLC Project. Therefore, we conclude that under California law, when a seller subordinates his purchase money lien to a lender's lien by permitting the lender to record first, and the lender knows that the seller has agreed to record his deed second for the purpose of affecting a subordination, the priority of the lender's lien is contingent upon the fulfillment of any conditions stated in the seller's lien, whether or not the lender has actual knowledge of those conditions at the time the deeds are recorded. Sunset Bay Associates, In re, 944 F.2d 1503, @ 1513 (9th Cir. 1991) Alliance Bank had full knowledge B&D was NOT subordinating to a construction loan. PROMISSORY FRAUD: Alliance made an agreement with B&D with the assurance that they would act as specified. However, when the breaching party never intended to perform in the first place, the promise is fraudulent, plain and simple. Promisees have a right to think that they are bargaining

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for performance, not an action for breach of contract. Promissory fraud is a subspecies of the action for fraud. See Behnke v. State Farm General Ins. Co., 196 Cal. App. 4th 1443, 1453 (2011). "A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is

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an implied misrepresentation of fact that may be actionable fraud." Id. The elements of promissory fraud are a promise made regarding a material fact without any intention of performing it; the existence of the intent not to perform at the time the promise was made; intent to deceive or induce the promisee to enter into a transaction; reasonable reliance by the promisee; nonperformance by the party making the promise; and resulting damage to the

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promise. Id. Here Alliance promised to issue a Construction Loan; not a purchase money/personal line of credit. B&D subordinated to a construction loan based upon the representations of Alliance. The United States Supreme Court has recently discussed the fraud scienter requirement, holding in Tellabs, Inc. v. Makor Issues and Rights, Ltd., 127 S.Ct. 2499 (2007), that a strong inference "must be cogent and compelling, thus strong in light of other explanations." According to the Court, "[t]he reviewing court must ask: When the allegations are accepted as true and taken collectively, would a reasonable person deem the inference of scienter at least as strong as

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any opposing inference?" Id. @ 2511. The facts are that Alliance gave Pimlico a first loan of $11.4 million and never built a house. Alliance gave Pimlico a second loan for $13.9 million and never built a house. Alliance mislead B&D by stating they subordinating to a construction loan when it was a money purchase loan/personal loan. Plaintiff believes that one can reasonably infer that there was no intent to build Phase I of Pimlico Ranch LLC within the time-frame stated in the Prospectus and that Alliance knew the project would never be completed in a timely fashion. An iinference can be derived from the fact Allaince issued a unbridled line of credit for $13.9 million; in lieu of the contractually obligated

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draw down for performance. Plaintiff would ask that this Court follow the U.S. Supreme Courts admonition "We reiterate, however, that the court's job is not to scrutinize each allegation in isolation but to assess all the allegations holistically." Tellabs, Id. @ 2511 UNJUST ENRICHMENT: Plaintiff incorporated paragraphs 1 through 56 into the cause of action for unjust

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enrichment. Plaintiff states that Alliance benefited almost $2.6 million unjustly by fraudulently providing a purchase money/personal line of credit to Pimlico at Plaintiffs expense. Notwithstanding that Alliances breach of fiduciary duty is the proximate cause of K. Elders unjust enrichment. BREACH OF CONTRACT: Plaintiff incorporated paragraphs 1 through 52 into the cause of action for breach of contract. It is admitted that Alliance Bank is not a party to the contract in question. However, it was Alliance Banks failure to execute the Construction Loan Agreement and inspect the construction and control the release of funds, for which they were paid and contractually bound,

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that is the proximate cause of the breach complained off. Plaintiff will seek leave to amend his complaint to include a cause of action for intentional interference of contract against Cohen, Alliance, and others to be named pursuant to discovery. FRAUD:

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Plaintiff incorporated paragraphs 1 through 66 into the cause of action for fraud. Everyone of the named Defendants knew that the Subordination of Deed of Trust Alliance executed on behalf of B&D was fraudulent. All parties had knowledge the loan contained purchase money and there was not going to be construction inspections and fund control. All

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parties knew that failure to build Pimlico Ranch LLC as projected would financially ruin B&Ds subordinated position in the project. Plaintiff contends that he has met the standard of Rule 9 in pleading fraud by Alliance Bank. WHEREFORE, it is respectfully requested that a ruling on Alliance Banks Motion to Dismiss be deferred until such time as limited discovery can be conducted to find Mark Cohen and depose him. Limited discovery requested will vitiate the need to make repetitive amendments to the complaint. IN ALTERNATIVE, should the Court dismiss any cause of action that Plaintiff be granted leave to amend the defects articulated.

DATE: January 9, 2012 Respectfully submitted,

Raoul Barrie Clymer

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