By Tina Richards
The Orange Unified School District brought an abrupt end to a license agreement allowing Gregory Palm Farms to use a portion of its Walnut property, by taking possession of the trees and claiming sole ownership, March 9.
It is unclear what OUSD plans to do with 1,200 palm trees, but its new arboreal interest appears to be the culmination of a legal strategy that inhibited any good faith negotiations by creating rancor via false assumptions, mixed messages and demands that can’t be reasonably met.
The 9.7-acre Walnut property is landlocked between Santiago Middle School and Burl and Michelle Gregory’s Renee Street home, better known as the Jones Victorian Estate. The district has declared it “surplus” and wants it unencumbered, so it can sell it. A previous attempt to sell the acreage fell through in 2015.
The Gregorys have, since 1993, been paying monthly fees to the district to use a portion of the Walnut property abutting theirs for a palm tree farm and as a parking area for the Jones Estate, a popular venue for weddings and events. They have been willing to vacate the palm tree portion of the property, but would like to negotiate an agreement to allow continued use of the parking area.
The negotiation waters, however, have been muddied by district claims that the Gregorys refuse to cooperate with attorney demands, owe substantial sums of money, and have not sold the palms or paid the district its share of the trees’ fair market value. In return, the Gregorys believe the district is demanding unreasonable payments, with the intent to take a portion of their property when the Palm Farm/Jones Estate defaults. “Our Renee Street driveway would give them access to the Walnut property,” Michelle Gregory says. “Access to the property would make it easier to sell.”
Under the 1993 lease agreement between the Gregorys and OUSD, 50 percent of the gross palm tree sales go to the district. The event parking is not covered under the palm farm lease, but was authorized by a separate OUSD agreement, wherein the district is paid a fee for every Jones Estate gathering. OUSD was getting $50 to $60 thousand per year from the Gregorys.
In February 2016, a post on the OUSD website accused Michelle Gregory of using the parking area since 1993 “without authorization.” She was alleged to owe the district over a million dollars for 20 years of illegal use. She was offered “forgiveness” for the debt, in exchange for one-fifth of her family’s property. She said “no.” Gregory presented the 1993 document giving her express use of the parking area, but the story that she owes money (and refuses to negotiate) persists to this day, and is still cited in letters from OUSD Attorney Constance Schwindt.
When the lease agreement for the palm farm expired in 2016, the district replaced the lease with a license agreement giving Burl Gregory six months to sell the trees. It also extended the Jones Estate use of the parking area for a $5 per person fee. The license agreement states that it supersedes any previous contracts between the district and the Gregorys. However, it also says that fully half the stipulations in the 1993 lease remain in effect. One section says Gregory must pay the district “50 percent of gross sales.” Another says, “Assets [palm trees] are owned by OUSD and Gregory as tenants in common. OUSD owns an undivided interest in the assets equal to the share of the proceeds of the sale of assets.”
In the resulting confusion, Burl Gregory continued to pay the district 50 percent of gross palm sales, but the district says it is entitled to half the value of every tree on the property, whether it is sold or not.
Because the market for palms is limited, and it takes time to sell them or transfer them to another location, Gregory has asked for, and received, a number of license extensions. Both the Palm Farm and the Jones Estate, however, have since been operating on a month-to-month basis.
Asked repeatedly to reduce the tree inventory, Burl Gregory moved some to another location. “I was accused of stealing my own trees,” he recalls, because he didn’t give OUSD its 50 percent. Personal health problems, a changing market and a disease that killed a number of palms reduced OUSD’s monthly payment.
The district’s legal counsel demanded an audit. Michelle Gregory logged every tree by species, and assigned a market value based on height. Her attorney submitted the accounting on Nov. 4. OUSD’s attorney claimed it was never received. In February, that “failure” prompted a 30-day notice to quit. Gregory proposed several payment options that would give him more time to remove the trees and, over a period of months, pay the district its share of the tree inventory. Those offers were rejected because, from the district’s perspective, they undercut the value of the trees.
No discount deal
Somehow, with or without Gregory’s tree audit, OUSD learned that the trees had a market value of $469,000. Through correspondence from Attorney Schwindt, the district demanded 50 percent of the full market value of the trees, whether they were sold at a discount, removed or died. She wrote a letter, March 3, demanding that the Gregorys comply with a licensing requirement to “secure” the district’s share with “a promissory note secured by a deed of trust.”
“Certainly,” the Gregorys' attorney Dan Lincoln replied, “the district understands that the value of goods in a going out of business sale are far less than full retail value. There is no evidence that Gregory Palm Farm has ever failed to pay any money owed to the district. The district should not be asking for security.”
Nonetheless, Burl Gregory came back with an offer to pay $20,000 per month for 10 months. That, too, was rejected.
When Michelle Gregory saw the words “deed of trust,” she feared the worst. “They’re trying to take our land,” she shuddered. “They’re hoping we’ll default and they’ll take our property.”
Both Superintendent Gunn Marie Hansen and Assistant Superintendent of Business Services Dave Rivera are adamant that OUSD has no interest in the Gregory’s property. And both agree that while the palm farm needs to go, the district is willing to work with Michelle Gregory to allow the events to continue. Both Rivera and Hansen have assured her that she can “go ahead and book” weddings because she’d have use of the parking area.
Three days after Hansen told Michelle Gregory she could book weddings, attorney Dan Lincoln received a notice of immediate termination of license and notice to vacate from Constance Schwindt. “The district is providing notice that the license is terminated, effective immediately, and that the district shall take possession of the entire license area including the palm tree area, the assets and the parking area.”
The March 9 letter harkened back to the assertion that the Gregorys owed the district money for 20 years’ worth of unauthorized parking, and that the palm farm still owed for unpaid inventory.
Now the district owns the palm trees. It has accepted payment from Michelle Gregory for several forthcoming weddings and, according to Hansen, may firm up the event parking issue with a memorandum of understanding.
OUSD wins palm farm battle but loses good will
Gregory Palm Farms, OUSD says, is hindering the sale of its surplus Walnut property.