SEC’S OPP. TO NON-PARTY INTERVENORS’

“TAKINGS” CLAIM (ECF 294) 

 CASE NO. 3:17-CV-00223-RS

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JINA L. CHOI (NY Bar No. 2699718) 

ERIN E. SCHNEIDER (Cal. Bar No. 216114) 

 schneidere@sec.gov 

ANDREW J. HEFTY (Cal. Bar No. 220450) 

 heftya@sec.gov 

SUSAN F. LAMARCA (Cal. Bar No. 215231) 

 lamarcas@sec.gov 

THOMAS J. EME (Ill. Bar No. 6224870) 

 emet@sec.gov 

Attorneys for Plaintiff 

SECURITIES AND EXCHANGE COMMISSION 

44 Montgomery Street, Suite 2800 

San Francisco, CA 94104 

(415) 705-2500 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

SECURITIES AND EXCHANGE COMMISSION, 

 Plaintiff, 

 v. 

SAN FRANCISCO REGIONAL CENTER, LLC; 

THOMAS M. HENDERSON; CALIFORNIA 

GOLD MEDAL, L.P.; CALLSOCKET, L.P.; 

CALLSOCKET II, L.P.; CALLSOCKET III, L.P.; 

COMPREHENSIVE CARE OF OAKLAND, L.P.; 

NA3PL, L.P.; WEST OAKLAND PLAZA, L.P.; 

CALLSOCKET, LLC; CALLSOCKET II, LLC; 

CALLSOCKET III, LLC; COMPREHENSIVE 

CARE OF CALIFORNIA, LLC; IMMEDIA, LLC; 

NORTH AMERICA 3PL, LLC; 

 Defendants, 

CALLSOCKET HOLDING COMPANY, LLC; 

CALLSOCKET III HOLDING COMPANY, LLC; 

CENTRAL CALIFORNIA FARMS, LLC; 

BERKELEY HEALTHCARE DYNAMICS, LLC; 

JL GATEWAY, LLC; 

Relief Defendants. 

Case No. 3:17-cv-00223-RS 

SECURITIES AND EXCHANGE 

COMMISSION’S OPPOSITION TO NONPARTY INTERVENORS CHIN, 

SHIMAMOTO AND BRONSON’S 

“TAKINGS” CLAIM (ECF 294) 

Date: January 25, 2018 

Time: 1:30 p.m. 

Place: Courtroom 3 

 450 Golden Gate Ave., 17th Floor 

 San Francisco, CA 94102 

Judge: The Hon. Richard Seeborg 

Case 3:17-cv-00223-RS Document 301 Filed 01/05/18 Page 1 of 8
SEC’S OPP. TO NON-PARTY INTERVENORS’

“TAKINGS” CLAIM (ECF 294) 

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The Securities and Exchange Commission (“SEC”) files this opposition to the “takings” claim 

against the government submitted as part of Non-Party Intervenors Clement Chin, Kevin Shimamoto 

and Jennifer Bronson’s Opposition to the Receiver’s Motion for Order Authorizing: (1) Closing 

North America 3PL, LLC and (2) Retaining Broker for Listing and Sale of Berkeley Healthcare 

Dynamics, LLC Property (ECF No. 294) (“Non-parties’ Opp.”). Non-party Intervenors assert a socalled “takings” claim, variously arguing that either the approval of the Court of the Receiver’s 

Motion would effect a “judicial taking” or that the government is effecting a regulatory taking of 

their purported ownership interests in an entity, Relief Defendant Berkeley Healthcare Dynamics, 

LLC (“BHD, LLC”), which in turn supposedly owns real property. See Non-parties’ Opp. at 22-24. 

A “takings” claim against the government is properly submitted as a noticed motion, which 

gives the government a full opportunity to respond. However, rather than insist that Non-parties file 

a separately noticed motion (and seek Court approval to do so), the SEC files this opposition to both 

affect expediency and to provide the Court with relevant law and facts pertinent to addressing Nonparties’ Constitutional attack on this Court’s authority to order critical remedial relief that is in the 

interest of all investors and creditors of the receivership estate. (The SEC previously filed its 

Response to the Receiver’s Motion, largely supporting her request and proposing minor 

modifications to her proposed order. See ECF 293.) 

Non-parties’ takings claim fails for several reasons. First, Non-parties fail to state a legally 

cognizable taking. Indeed, it is unclear precisely who they claim is the governmental actor. 

Second, Non-parties have failed to even allege that the purported taking was “without just 

compensation,” as required under the Sixth Amendment for any such claim to be cognizable, or ripe. 

The claims process has not yet begun in this case. Rather, Non-parties attack the Court’s authority to 

issue orders, arguing that the Receiver should be stopped before she can effect the purported taking, 

further asserting that the Receiver’s requested relief is so unusual or rare that it somehow effects a 

taking. See Non-Party Opp. at 16. Numerous federal courts have authorized the sale of real property 

by receivers in a multitude of situations, including property titled in the name of relief defendants 

such as Relief Defendant BHD, LLC. 

In addition to the legal infirmity of their takings claim, Non-parties make little effort to 

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articulate a factual basis for their takings claim. Instead, they make the conclusory declaration that a 

sale of the warehouse (to anyone other than their preferred buyer) would interfere with their 

“investment-backed expectations,” pointing only generally to “Operating Agreements.” Id. at 23. 

Their vague factual theories further support the need for a robust examination of their claims through 

a claims process, where they would stand to receive compensation for any truly supported claims 

they have for the value of the real property. Indeed, the Non-parties’ suggested cure for their alleged 

taking – in the form of a purchaser who pays the Non-parties, instead of the Receiver, for the value of 

the warehouse – suggests a goal of avoiding the claims process so that they are never required to 

substantiate the basis for their claims against the receivership estate. Their takings claim, and their 

requested delay of the sales process, should be rejected. 

Legal Standards for Establishing a “Takings” Claim 

The Takings Clause of the Fifth Amendment prohibits the taking of private property for 

public use without just compensation. United States Const. Amend. V. Courts recognize two types 

of compensable takings. The first are those which effect a permanent, “physical invasion” of private 

property. Golden Pac. Bancorp v. United States, 15 F.3d 1066, 1071 (Fed. Cir. 1994). In the second, 

a regulatory scheme may go “too far” if it has nearly the same effects as the complete destruction of 

the claimant’s rights, and constitutes a compensable taking. Id. at 1072. The latter claims are 

analyzed on a case-by-case basis, with consideration given to “the character of the governmental 

action, its economic impact, and its interference with reasonable investment-backed expectations.” 

Pruneyard Shopping Center v. Robins, 447 U.S. 74, 83 (1981). “[N]either property rights nor 

contract rights are absolute . . . Equally fundamental with the private right is that of the public to 

regulate it in the common interest. . . .“[T]he guaranty of due process, as has often been held, 

demands only that the law shall not be unreasonable, arbitrary or capricious, and that the means 

selected shall have a real and substantial relation to the objective sought to be attained.” Id. at 84-85 

(quoting Nebbia v. New York, 291 U.S. 502, 523, 525). See Penn Central Transp. Co. v. City of New 

York, 438 U.S. 104 (1978) (describing case-by-case, factual analysis required when a regulatory 

taking is claimed). 

Non-parties appear to posit a third type of “judicial takings” claim. As the precedent upon 

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which Non-parties rely recognized: “[T]he United States Supreme Court is divided on the question of 

whether a judicial action may, itself constitute a taking.” Surfrider Found. v. Martins Beach 1, LLC, 

14 Cal. App. 5th 238, 258 (2017) (citations omitted). Non-parties ignore this division, even though 

they cite the very same precedent as establishing the judicial takings doctrine. See Non-parties Opp. 

at 22, citing Stop the Beach Renourishment Inc. v. Fla. Dep’t of Envtl. Prot., 560 U.S. 702, 715 

(2010) (Scalia, J., plurality). As the Surfrider decision observed, an equally-divided plurality of the 

Supreme Court considered that a court decision could theoretically effect a compensable taking 

(though not in that case), while an equal number of Justices declined to determine whether the actions 

of a court could ever effect a taking. See Surfrider, 15 Cal. App. 5th at 260-61 (citing Stop the 

Beach, 560 U.S. at 715, 727, 733-34).1 Non-parties also declare that the Ninth Circuit “recognized 

the viability of the judicial takings doctrine” in Vandevere v. Lloyd, 644 F.3d 947, 963 n.4 (9th Cir. 

2011), but the footnote they cite merely refers to the theoretical point addressed by the plurality 

decision in Stop the Beach. As is true for each of the other cases upon which Non-parties rely, no 

taking of a compensable property interest was found in Vandevere. 

Non-parties Fail to Assert a Cognizable “Takings” Claim

Non-parties’ Opposition is especially vague in describing the nature of the “property interest” 

they claim will be (but has not yet been) taken if the Court were to approve the Receiver’s motion to 

hire a broker to market the warehouse property. At most, Non-parties claim they have “valid 

contracts at issue [that] include the BHD Operating Agreement, which establish rights under 

California law, as described and invoked by the Receiver, to the purchase of a Former Member’s 

minority interest by a majority of the remaining members.” Non-parties’ Opp. at 23. This vague 

statement is a far cry from the showing any litigant must make to establish a taking without just 

compensation; but based on the record evidence, Non-parties would not be able to establish a 

 

1 The concurrence by Justice Breyer (in which Justice Ginsburg joined) warned that such a judicial 

takings doctrine “would invite a host of federal takings claims without the mature consideration of 

potential procedural or substantive legal principles that might limit federal interference in matters that 

are primarily the subject of state law.” Stop the Beach, 560 U.S. at 743 (Breyer, J., concurring). 

Justice Kennedy found that the Due Process Clause better explained limitations on judicial power. 

Id. at 735 (Kennedy, J., concurring). 

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compensable taking based upon these contracts, in any event. 

The very precedent Non-parties rely upon makes clear that “prospective business 

opportunities” are not compensable. PVM Redwood Co., Inc. v. United States, 686 F.3d 1327, 1329 

(9th Cir. 1982). Thus, in PVM Redwood – contrary to Non-parties’ argument (see Opp. at 23) – the 

Ninth Circuit upheld the dismissal of a takings claim that was founded on a theory, similar to Nonparties’ theory here, that government action had thwarted future business opportunities that they had 

contracted (or hoped to contract) for. Id.

2 Similarly, Non-parties’ vague assertion of potential 

contract rights finds no support from Keeler v. City of San Diego, 2014 WL 1796710 (S.D. Cal. 

2014), which they also cite. See Non-parties’ Opp. at 23. As the district court described in Keeler, a 

takings claim must be founded on a property interest that is recognized under state law. Id. at *3. 

“But a mere unilateral expectation or an abstract need is not a property interest entitled to protection.” 

Id. (quoting Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 161 (1980)). Ultimately, 

the district court in Keeler was unable to determine whether the claimed interest – a judgment lien – 

was a protected state property interest, but dismissed the claim for failure to plead that the defendant 

had engaged “in any recognized form of a taking.” Id. at *7. 

Finally, Non-parties ask this Court to consider their claim under the regulatory takings 

analysis of Penn Central, in which the Supreme Court described the various factors courts have used 

to examine both the nature of the claimed encroachment on a property right, as well as the public 

good promoted by a governmental policy, to determine whether there is a compensable taking. See

Non-parties Opp. at 23-24. By invoking Penn Central, Non-parties appear to contend that the 

claimed taking is akin to a regulatory taking, but they assert that “there is no question that the 

proposed returns from such a liquidation would not go toward public programs promoting the 

common good.” Id. at 24. Non-parties’ contention is specious. The Court has put in place a Receiver 

to manage the assets of the entity defendants and relief defendants, including Relief Defendant BHD, 

LLC, to ensure the fair and equitable marshalling and maintenance of those assets over which 

 

2 Non-parties appear to have mistaken the dissenting opinion of one judge for the holding by the 

Ninth Circuit in their brief. See Non-parties’ Opp. at 23 (citing PVM Redwood, 6686 F.2d at 330 

(Alarcon, J., dissenting)). 

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numerous investors and creditors are expected to assert claims. The appointed Receiver is not 

requesting authorization to market the warehouse property to enrich herself, or any other particular 

individual; her mission is one classically established for the public good.3 Indeed, if she is able to do 

her job, Non-parties themselves stand to benefit, if they do have valid claims against the receivership 

estate. 

Non-parties Cannot Establish a Taking “Without Just Compensation” 

Non-parties’ failure to show that they will not receive “just compensation” is similarly fatal to 

their claim. In short, Non-parties have not yet engaged in the claims process that the Receiver will 

administer, and any takings claim is therefore not ripe. Lack of ripeness is fatal to any takings claim. 

See, e.g., Hodel v. Virginia Surface Mining & Reclamation Assn., Inc., 452 U.S. 264, 297 (1981) 

(challenge to mining act was not ripe where claimants had not availed themselves of administrative 

proceedings and Court found that “a mutually acceptable solution might well be reached with regard 

to individual properties”); Agins v. Tiburon, 447 U.S. 255, 260 (1980) (challenge to zoning ordinance 

as a regulatory taking was not ripe where owners had not submitted development plan); Penn 

Central, 438 U.S. at 136-37 (finding that, on the record presented, appellants could not show that 

they had been prohibited from occupying “any portion” of the airspace over Grand Central Terminal, 

rendering their claim of a taking of air rights premature). 

As a critical corollary to the ripeness requirement, a taking of property for public use may not 

be enjoined or stopped if it can be compensated. See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 

1016 (1984). “The Fifth Amendment does not require that compensation precede the taking.” Id. 

(citation omitted). Non-parties ignore this requirement entirely, instead merely declaring that the 

Receiver’s lawful request should be denied so that their own proposal may be heard first. Nonparties fail to cite any authority that would support their extraordinary request. Just as significant, by 

 

3 Indeed, to the extent the Non-parties claim a so-called “judicial” taking will be effected by a Court 

order granting the Receiver the relief she seeks, the order requested from the Court is one grounded 

in its equitable powers. Moreover, this entire action is brought under the federal Securities Acts, 

which were enacted to support the public’s interest in fair and reliable securities markets. It is 

difficult under these circumstances to ascertain how any the “government” actions here are not 

designed to promote the common good. 

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suggesting that a deal that they would craft for the sale or “restructuring” of the warehouse – rather 

than one the Receiver might select after following the dictates of 28 U.S.C. § 2001 to achieve a fair 

and competitive result – Non-parties implicitly concede that they are merely arguing over how much 

money they should ultimately receive and who they should have to share the bounty with. Such 

questions are best considered based on a complete record, only after Non-parties have fully 

substantiated any claims they may make to the Receiver in an orderly and robust claims process. 

Real Property Sales by a Receiver Are Not Unprecedented, Much Less a “Taking” 

Non-parties also appear to argue that a Receiver’s marketing or sale of real property before a 

judgment constitutes a taking. See Non-parties’ Opp. at 14 (“The Receiver cites no federal case that 

has approved a Receiver’s request to liquidate property owned and controlled by innocent parties. 

More fundamentally, the Receiver is asking this Court to authorize an unconstitutional taking of 

private property.”). Non-parties’ argument rests on numerous factual fallacies (particularly about 

what Non-parties own and “control”), which the SEC does not here address, but just as fundamentally 

misstates the law. First, Non-parties presume – without any legal basis – that the sale of real property 

is akin to “liquidation of a business” through bankruptcy. It is not, as the statute controlling such 

sales makes clear. See 28 U.S.C. § 2001(c) (distinguishing judicial sales of real property by a 

receiver from the bankruptcy code). 

Second, it is not extraordinary for courts to approve the marketing or sale of real property by a 

receiver, whether or not a “final judgment” has been entered against any party. See, e.g., Smith v. 

SEC, 653 F3d 121, 129 (2d Cir. 2011) (in upholding the district court’s order for a prejudgment sale 

of a home owned in part by the relief defendant, analogizing to prejudgment sales pursuant to 

forfeitures); SEC v. Millenium Bank, 2009 WL 10689053 (N.D. Tex. July 21, 2009) (rejecting relief 

defendant’s due process claim and ordering sale of property used as residence but purchased with 

funds obtained in Ponzi scheme); SEC v. Billion Coupons, Inc., 2009 WL 2143531, *3-4 (D. Haw. 

July 13, 2009) (granting receiver’s motion to establish procedures for sale of real and personal 

property, filed prior to motion for judgment). 

That is precisely what the district court ordered in SEC v. Path America, LLC, 2016 WL 

1588384 (W.D. Wash. Apr. 20, 2016), the EB-5 decision on which Non-parties rely. There, the court 

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granted in large part the Receiver’s motion to market the real property, over objections from the 

defendant and certain relief defendants. But the Court also ordered that the Receiver market the 

property both “AS-IS, WHERE-IS,” and in a manner seeking bids to complete the original EB-5 real 

estate development project, in an effort to protect the immigration goals of investors. Notably, no 

final judgments against any of the defendants or relief defendants had been entered, the project that 

was marketed involved interests titled in the name in numerous defendants and relief defendants (and 

interests held by third parties and creditors), and the Receiver’s motion had been opposed. 

Indeed, Non-parties attempt to distinguish a decision cited by the Receiver in her motion, SEC 

v. Am. Capital Invs., Inc., 98 F.3d 1133 (9th Cir. 1996), on the ground that a judgment by consent 

was entered before the proposal for a sale was made to the court. See Non-parties’ Opp. at 16, 17-18. 

This is a distinction without a difference in the instant case: the Receiver, who by Court order 

controls Relief Defendant BHID, LLC, could as readily agree to consent to a judgment against it 

prior to any sale. Moreover, Non-parties frequent use of the phrase “innocent third parties” does not 

help their cause, as it simply overlooks the obvious fact that BHD, LLC is a named Relief Defendant 

because it obtained, and continues to hold, property wrongfully without a bona fide claim to it. See

Complaint (ECF 1), ¶¶ 31, 108-110; SEC’s Mot. for Prelim. Inj. and Appt. of Receiver (ECF 10) at 6, 

18-19 (and evidence cited). In any event, even if the Receiver’s request were a “rare” or unusual one, 

such rarity does not transform the lawful exercise of her duties into a “taking.” And Non-parties have 

suggested no authority for such an extreme position. 

 Accordingly, the SEC respectfully requests that the Court reject Non-party Intervenors’ 

takings claim and instead permit Non-parties to avail themselves of the claims process to be 

established for this case. 

Dated: January 5, 2018 Respectfully submitted, 

/s/ Susan F. LaMarca Susan F. LaMarca 

Andrew J. Hefty 

Thomas Eme 

Attorneys for Plaintiff 

SECURITIES AND EXCHANGE 

COMMISSION 

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