HomeMy WebLinkAboutOpinion of Pillsbury Winthrop Shaw Pittman LLP, as Counsel to Ashby USA, LLC
o MGM Tower Tel 310.203.1100 10250 Constellation Blvd. 21st Floor Fax 31 0.286.6672 Los Angeles, CA 90067-6221 www.pillsburylaw.com Shaw PittmanlLP April 27, 2006 Temecula Public Financing
Authority Community Facilities District No. 03-02 Temecula, California Temecula Public Financing Authority Temecula, California Stone & Youngberg LLC Los Angeles, California Re: $51,250,000
Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh Ranch) 2006 Special Tax Bonds Ladies and Gentlemen: We have acted as special counsel to Ashby USA,
LLC, a California limited liability company ("Ashby USA, LLC"), in connection with Ashby USA, LLC's participation in the issuance by Temecula Public Financing Authority Community Facilities
District No. 03-02 (the "District") of its 2006 Special Tax Bonds (the "Bonds"). This opinion is provided for the benefit of Stone & Youngberg LLC (the "Underwriter"), the Temecula Public
Financing Authority (the "Authority"), and the District pursuant to Section 3(d)(19) of that certain Bond Purchase Agreement, dated April 13, 2006 (the "Purchase Agreement"), by and
between the Authority, on behalf of the District, and the Underwriter. We advise you that we are not general counsel to Ashby USA, LLC and do not represent Ashby USA on a continuing
basis. Rather, we represent Ashby USA, LLC as requested from time to time on specific matters. In rendering the opinions hereinafter expressed, we have reviewed and examined the following
documents: A. The Purchase Agreement;
Temecula Public Financing Authority Community Facilities District No. 03-02 Temecula Public Financing Authority Stone & Youngberg LLC April 27, 2006 Page 2 B. The final Official Statement
dated April 13, 2006, relating to the Bonds (the "Official Statement"); C. The Developer Continuing Disclosure Agreement (the "Continuing Disclosure Agreement"), dated as of March 1,
2006, by and between Ashby USA, LLC and U.S. Bank National Association, as both Dissemination Agent and Fiscal Agent; D. The Acquisition Agreement (the "Acquisition Agreement"), dated
as of March 1, 2006, by and between the Authority and Ashby USA, LLC; E. The Preannexation and Development Agreement (the "Development Agreement"), dated as of December 17, 2002, by
and between the City of Temecula (the "City") and Ashby USA, LLC, recorded on January 9, 2003, as Document No. 2003-018567; F. The First Operating Memorandum to the Recorded Development
Agreement Between City of Temecula and Ashby USA, LLC (Roripaugh Ranch Project) (the "First Operating Memorandum"), dated as of October 21, 2004, by and between Ashby USA, LLC and the
City; G. The Second Operating Memorandum to the Recorded Development Agreement Between City of Temecula and Ashby USA, LLC (Roripaugh Ranch Project) (the "Second Operating Memorandum"),
by and between Ashby USA, LLC and the City; H. The Agreement to Defer Completion of Conditions of Approval Until After Recordation of Final Map for Tract No. 29353-2 Roripaugh Ranch
Specific Plan (the "Deferral Agreement"), between the City and Ashby USA, LLC; I. The Joint Community Facilities Agreement -EMWD (the "Joint Community Facilities Agreement -EMWD"), dated
as of November 1, 2004, by and among the Authority, Eastern Municipal Water District and Ashby USA, LLC; Pillsbury Winthrop Shaw Pittman LLP
Temecula Public Financing Authority Community Facilities District No. 03-02 Temecula Public Financing Authority Stone & Youngberg LLC April 27, 2006 Page3 J. The Joint Community Facilities
Agreement (Street Improvements) (the "Joint Community Facilities Agreement -County Transportation"), dated as of November 1, 2004, by and among the County of Riverside (the "County"),
the City, the Authority, and Ashby USA, LLC; K. The Joint Community Facilities Agreement (Flood Control Improvements), dated as of November 1, 2004, by and among Riverside County Flood
Control and Water Conservation District, the County, the Authority, and Ashby USA, LLC (the "Joint Community Facilities Agreement -RCFCWCD" and together with the Continuing Disclosure
Agreement, the Acquisition Agreement, the Joint Community Facilities Agreement -EMWD, and the Joint Community Facilities Agreement -County Transportation, are referred to herein as the
"Developer Documents"); L. The Certificate of Ashby USA, LLC set forth in Exhibit "A" attached hereto, dated the date hereof and executed by the duly authorized representative of Ashby
USA, LLC (the "Certificate of Ashby USA, LLC"); M. The Certificate of Good Standing for Ashby USA, LLC, executed by the California Secretary of State on February 17, 2006, and (ii) the
letter of good standing for Ashby USA, LLC, executed by the California Franchise Tax Board on February 14, 2006 (collectively, the "Ashby USA, LLC Good Standing Certificates"); N. The
Limited Liability Company Articles of Organization (Form LLC-1) of Ashby USA, LLC, filed March 8, 2001, certified to be true and correct by the California Secretary of State on February
17, 2006, and a copy of the Operating Agreement for Ashby USA, LLC, effective as of March 19, 2001 (the "Operating Agreement") certified to be true and correct by an authorized representative
of Ashby USA, LLC (collectively, the "Ashby USA, LLC Organizational Documents"); O. The 15c2-12 Certificate -Ashby USA, LLC, the Certificate of Ashby USA, LLC, and the Closing Certificates
of Ashby USA, LLC, delivered by Ashby USA, LLC pursuant to Section 3(d)(19) of the Purchase Agreement (collectively, the "Ashby USA, LLC's Closing Certificates"); andPillsbury Winthrop
Shaw Pittman LLP
Temecula Public Financing Authority Community Facilities District No. 03-02 Temecula Public Financing Authority Stone & Youngberg LLC April 27, 2006 Page 4 P. The certificates of public
officials and other persons required under the Purchase Agreement (the Certificate of Ashby USA, LLC, the Ashby USA, LLC's Closing Certificates, and the certificates described in this
sentence are collectively referred to herein as the "Certificates"), and such other documents as we deemed relevant for the purposes of this opinion. In conducting our examination, we
have assumed, without investigation: (i) the genuineness of all signatures (other than those of Ashby USA, LLC), the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of the originals from which such copies were made; (ii) the accuracy of
the representations and warranties of the factual matters made by Ashby USA, LLC in the Developer Documents, the Certificates, and any other certificates and opinions delivered by any
party in connection with this transaction; (iii) the legal capacity of all natural persons; (iv) as to documents executed by parties other than Ashby USA, LLC (the "Other Parties"),
such Other Parties' power to enter into and perform the obligations under such documents, and that such documents have been duly authorized, executed and delivered by, and are binding
upon and enforceable against, such Other Parties; (v) that there are no oral or written terms or conditions (other than as expressed in the Developer Documents) agreed to by Ashby USA,
LLC and the Other Parties to the Developer Documents or by the Other Parties and any other party, which would expand or modify the respective rights and obligations of Ashby USA, LLC
or the Other Parties set forth in the Developer Documents or which would have an effect on the opinions rendered herein; and (vi) that the Other Parties are not subject to any statute,
rule, or regulation, or to any impediment to which contracting parties are generally not subject, which requires any of them to obtain the consent of, or to make a declaration or filing
with, any governmental authority in connection with the execution and delivery of the Developer Documents. We have performed a computerized litigation search of the records (civil filings
only) of the Riverside County Superior Court, the San Bernardino County Superior Court, the Los Angeles County Superior Court, the Orange County Superior Court, the San Diego Superior
Court, the Nevada Superior Courts, the U.S. Bankruptcy Court (All Districts), California, the U.S. District Court, Central District of California, the U.S. Pillsbury Winthrop Shaw Pittman
LLP
Temecula Public Financing Authority Community Facilities District No. 03-02 Temecula Public Financing Authority Stone & Youngberg LLC April 27, 2006 Page 5 District Court, Southern District
of California, the U.S. Bankruptcy Court (Nevada) and the U.S. District Court (Nevada), regarding the existence of pending litigation with the words "Ashby USA, LLC," "Ashby Development
Company, Inc.," or "USA Investment Partners, LLC," in the name of a plaintiff, defendant, or a debtor in such courts, each search being performed on the dates set forth in Exhibit "B"
hereof (collectively, the "Litigation Searches"). We have delivered the Litigation Searches to Ashby USA, LLC and requested that Ashby USA, LLC review the appropriate Litigation Searches,
and all other pending litigation, if any, which is not listed in the Litigation Searches, and determine the effect or impact that any matters identified in the Litigation Searches and
all other litigation (if any) would have on the obligations of Ashby USA, LLC with respect respect to its duties and obligations under the Developer Documents. After review, Ashby USA,
LLC determined that the representations set forth in paragraph 5 of the Certificate of Ashby USA, LLC are fair and accurate. In rendering our opinion in paragraph 3 below, we have, with
your consent, relied on the Litigation Searches and the representations set forth in paragraph 5 of the Certificate of Ashby USA, LLC without undertaking any independent investigation.
In examining the Developer Documents, we have assumed with your permission, and without investigation, that, upon execution by the Other Parties, if any, the Developer Documents will
be the legally valid and binding agreements of the applicable Other Parties, enforceable against each of such Other Parties in accordance with their respective terms, and that the Other
Parties will seek to enforce their respective rights under the Developer Documents only in good faith, in commercially reasonable circumstances, and in a commercially reasonable manner.
Whenever a statement concerning factual matters herein is qualified by the phrase "our knowledge," it is intended to indicate that, during the course of our representation of Ashby USA,
LLC in connection with this matter, no information that would give us current actual knowledge of the inaccuracy of such factual statements has come to the attention of the attorneys
in our firm who have been involved with our representation of Ashby USA, LLC in connection with this matter. Please be advised that only Robert M. Haight, Jr. and Tyler Browning have
been so involved. Other than our review of the documents listed above, and our determining the knowledge of the foregoing lawyers who have performed legal services for Ashby USA, LLC
in connection with this transaction, we have not undertaken any factual investigation, and any limited inquiry Pillsbury Winthrop Shaw Pittman LLP
Temecula Public Financing Authority Community Facilities District No. 03-02 Temecula Public Financing Authority Stone & Youngberg LLC April 27, 2006 Page 6 undertaken by us during the
preparation of this opinion letter should not be regarded as such an investigation. No inference concerning our knowledge of any factual matters bearing on the accuracy of any such factual
statement should be drawn from our limited representation of Ashby USA, LLC. We have not made or undertaken to make any investigation as to the state of title to the property within
the District, and we express no opinion with respect to such title. We have made such examination of California law and the law of the United States of America as we deem relevant for
the purposes of this opinion letter. We have not considered the effect, if any, of the laws of any other jurisdiction upon the matters covered by this opinion letter. Based on the foregoing
and subject to the assumptions and qualifications set forth in this letter, it is our opinion opinion that: 1. Based solely on the Ashby USA, LLC Good Standing Certificates, Ashby USA,
LLC is a duly formed limited liability company and is existing in good standing under the laws of the State of California. 2. Ashby USA, LLC has the limited liability company power and
authority to execute, deliver, and perform its obligations under the Developer Documents to which it is a party, has duly authorized, executed, and delivered the Developer Documents
to which it is a party, and has authorized the performance of its respective duties and obligations thereunder. 3. Based solely upon our knowledge, the Litigation Searches, and the Certificate
of Ashby USA, LLC, and other than as disclosed in the Official Statement, there is no litigation pending or threatened against or affecting Ashby USA, LLC or any of its members (a) which
affects or seeks to prohibit, restrain, or enjoin the development by Ashby USA, LLC of its property within the District, or (b) in which Ashby USA, LLC or any of its members may be adjudicated
as bankrupt or discharged from any or all of its debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts, or (c) which
seeks to grant an extension of time to pay Ashby USA, LLC's or its members debts, or (d) seeks to effect a reorganization or readjustment of Ashby USA, LLC's or its members' debts. Pillsbury
Winthrop Shaw Pittman LLP
Temecula Public Financing Authority Community Facilities District No. 03-02 Temecula Public Financing Authority Stone & Youngberg LLC April 27, 2006 Page? 4. We are not passing upon
and do not assume any responsibility for the accuracy, completeness, or fairness of any of the statements contained in the Official Statement and make no representation that we have
independently verified the accuracy, completeness, or fairness of any such statements. However, in our capacity as special counsel to Ashby USA, LLC, we met in conferences with representatives
of Ashby USA, LLC, the District, and others, during which conferences the contents of the Official Statement and related matters were discussed. Based solely on our knowledge and the
Certificate of Ashby USA, LLC, we advise you that no information came to the attention of the attorneys in our firm rendering services as special counsel to the Ashby USA, LLC which
caused us to believe that, as of the date hereof, the statements contained in the Official Statement Statement relating to Ashby USA, LLC, or the property in the District owned by Ashby
USA, LLC (including the proposed development thereof), Ashby USA, LLC's development plans, Ashby USA, LLC's financing plan, and the contractual arrangements of Ashby USA, LLC (except
that no opinion or belief is expressed as to (i) any financial statements and other financial, statistical, or engineering data or forecasts, numbers, charts, estimates, projections,
assumptions or expressions of opinion, or (ii) any information about valuation, appraisals, absorption, or environmental matters) under the captions "INTRODUCTION -The Community Facilities
District" (excluding therefrom the first two paragraphs, for which no opinion is made), "CONTINUING DISCLOSURE --Ashby USA, LLC," "THE COMMUNITY FACILITIES DISTRICT," and "PROPERTY OWNERSHIP"
(excluding therefrom information under the subcaptions " -Continental Residential, Inc.," " -Davidson Roripaugh Ranch 122 LLC," " -The Tanamera/Roripaugh Entities," " -KB Home Coastal,
Inc.," "-Direct and Overlapping Debt," " -Estimated Value-to-Lien Ratios," " -Overlapping Assessment and Community Facilities Districts," " -Estimated Assessed Value-to-Lien Ratios,"
" -Transportation Uniform Mitigation Fee; Multi-Species Habitat Conservation Plan," " -Market Absorption Study," and " -Appraised Property Value," for which no opinion is made) contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make such statements, in the light of the circumstances under
which they were made, not misleading. Pillsbury Winthrop Shaw Pittman LLP
Temecula Public Financing Authority Community Facilities District No. 03-02 Temecula Public Financing Authority Stone & Youngberg LLC April 27, 2006 PageS 5. Based solely on our knowledge
and the Certificate of Ashby USA, LLC, Ashby USA, LLC is not in violation of any provision of, or in default under, the Ashby USA, LLC Organizational Documents or any other agreement
or other instrument, the violation or default under which would materially and adversely affect the ability of Ashby USA, LLC to complete the proposed development of its property as
described in the Official Statement. With respect to the foregoing opinions, you should be aware of the following: We express no opinion as to the exclusion from gross income for federal
income tax purposes of the interest on the Bonds, or the exemption of the interest on the Bonds from State of California personal income taxes. Except to the limited extent set forth
in paragraph 4 above, we express no opinion as to the applicability or effect on the subject transaction of the securities laws of the State of California or of the United States of
America, including but not limited to the Securities Act of 1933, as amended. We express no opinion as to the laws of any jurisdiction other than the laws of the State of California
and the laws of the United States of America. The opinions expressed above concern only the effect of the laws (excluding the principles of conflict of laws) of the State of California
and the United States of America as currently in effect. We assume no obligation to supplement this letter if any applicable laws change after the date of this letter, or if we become
aware of any facts that might change the opinions expressed above after the date of this letter. This letter, and the legal opinions herein, are rendered as of the date hereof and are
furnished solely for your benefit in connection with the subject transaction, and may not be relied upon for any other purpose or furnished to, used, circulated, quoted, or referred
to by any other person without our prior written consent, except as contemplated by the Purchase Agreement. This letter is not intended to, and may not, be relied upon by any owners
of the Bonds. We bring to your attention the fact that our legal opinions are an expression of professional judgment and are not a guarantee of a result. Our engagement with respect
to this matter has terminated as of the date hereof, and we do not undertake to advise you Pillsbury Winthrop Shaw Pittman LLP
Temecula Public Financing Authority Community Facilities District No. 03-02 Temecula Public Financing Authority Stone & Youngberg LLC April 27, 2006 Page 9 of any matters that may come
to our attention subsequent to the date hereof that may affect our legal opinions expressed herein. This letter is limited to the matters expressly set forth herein, and no opinion is
implied or may be inferred beyond the matters expressly stated herein. Respectfully submitted, PILLSBURY WINTHROP SHAW PITTMAN LLP RMH/BJG [600119048] Pillsbury Winthrop Shaw Pittman
LLP
EXHIBIT "A" $51,250,000 Temecula Public Financing Authority Community Facilities District No. 03-02 2006 Special Tax Bonds CERTIFICATE OF ASHBY USA, LLC The undersigned, on behalf of
Ashby USA, LLC, a California limited liability company (the "Developer"), in connection with the development of certain property (the "Property") located within the boundaries of the
Temecula Public Financing Authority Community Facilities District No. 03-02 (the "District") and in connection with the issuance of the above-captioned Bonds (the "Bonds") by the District,
has requested that Pillsbury Winthrop Shaw Pittman LLP (the "Law Firm") issue a legal opinion to the Temecula Public Financing Authority, the District, and Stone & Youngberg LLC in connection
with the issuance and sale of the Bonds. The legal opinion being issued by the Law Firm (the "Opinion") includes certain assumptions as to factual matters of which the Law Firm has no,
or limited, knowledge. The Developer is providing the Law Firm with this certificate in order to allow the Law Firm to issue the Opinion. Capitalized terms not defined in this certificate
have the respective meanings given those terms in the Opinion. 1. The Developer has reviewed the Opinion, and all factual assumptions which support the opinions rendered in the Opinion
are true, correct, complete and accurate as of the date hereof. 2. The copies of the Ashby USA, LLC Organizational Documents delivered to the Law Firm by or on behalf of the Developer
are true and complete copies thereof, which remain in full force and effect and have not been amended or modified as of the date hereof. 3. The Developer is a duly formed limited liability
company and is existing in good standing under the laws of the State of California. 4. The Developer has the limited liability company power and authority to execute, deliver, and perform
its obligations under the Developer Documents to which it is a party, has duly authorized, executed, and delivered the Developer Documents to which it is a party, and has authorized
the performance of its respective duties and obligations thereunder. 5. Other than as disclosed in the Official Statement, there is no litigation pending or, to the best knowledge of
the Developer, threatened against or affecting the Developer (including, but not limited to, the actions, if any, described in the computerized litigation search of the records of the
Riverside County Superior Court, the San Bernardino County Superior Court, the Los Angeles County Superior Court, the Orange County Superior Court, the San Diego Superior Court, the
Nevada Superior Courts, the U.S. Bankruptcy Court (All Districts), California, the U.S. District Court, Central District of California, the U.S. District Court, Southern District of
California, the U.S. Bankruptcy Court (Nevada) A-l
and the U.S. District Court (Nevada)) (a) which affects or seeks to prohibit, restrain or enjoin the development by the Developer of its property within the District, or (b) in which
the Developer or any of its members may be adjudicated as bankrupt or discharged from any or all of its debts or obligations or granted an extension of time to pay its debts or a reorganization
or readjustment of its debts, or (c) which seeks to grant an extension of time to pay the Developer's or its members' debts, or (d) seeks to effect a reorganization or readjustment of
the Developer's or its members' debts. 6. As of the date hereof, the statements contained in the Official Statement relating to the Developer and its members or the property in the District
owned by the Developer (including the proposed development thereof), the Developer's development plans, the Developer's financing plan, and the contractual arrangements of the Developer
under the captions "INTRODUCTION --The Community Facilities District" (excluding therefrom the first two paragraphs, for which no certification is made), "CONTINUING DISCLOSURE -Ashby
USA, LLC," "THE COMMUNITY FACILITIES DISTRICT," and "PROPERTY OWNERSHIP" (excluding therefrom information under the subcaptions " -Continental Residential, Inc.," " -Davidson Roripaugh
Ranch 122 LLC," " -The Tanamera/Roripaugh Entities," "-KB Home Coastal, Inc.," "-Direct and Overlapping Debt," " -Estimated Value-to-Lien Ratios," " -Overlapping Assessment and Community
Facilities Districts," " -Estimated Assessed Value-to-Lien Ratios," " -Transportation Uniform Mitigation Fee; Multi-Species Habitat Conservation Plan," " -Market Absorption Study," and
" -Appraised Property Value," for which no certification is made), do not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein
or necessary to make such statements, in the light of the circumstances under which they were made, not misleading. 7. The Developer is not in violation of any provision of, or in default
under, the Ashby USA, LLC Organizational Documents or any other agreement or other instrument, the violation or default under which would materially and adversely affect the ability
of the Developer to complete the proposed development of its property as described in the Official Statement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] A-2
The foregoing certifications are made as representations of fact only and are not meant to constitute legal conclusions. As representations of fact, the foregoing statements are intended
to be relied upon by the Law Firm in issuing the Opinion. Dated: April 27, 2006 ASHBY USA, LLC, a Delaware limited liability company By: Ashby Development Company, Inc., a California
corporation, its Managing lylember J3y:. _ .__ Justin K. Ashby, President {" By: USA Investment Partners, a Nevada limited liability 6bmpany A itsMemb/r ) ,.~x ///* t-^f W/1) By: \^ff
/////<> /L _/{/U ffiph D. Milanowyd, Manager /A-3
EXHIBIT "B" THE LITIGATION SEARCHES Juri s4iction Riverside County Superior Court San Bernardino County Superior Court San Diego County Superior Court Los Angeles County Superior Court
Orange County Superior Court Nevada Superior Courts U.S. District Court, Central District (California) U.S. District Court, Southern District (California) U.S. District Court (Nevada)
Federal Bankruptcy Court (All Districts), California Federal Bankruptcy Court (All Districts), Nevada Dat« of Search February 3, 2006 February 3, 2006 February 3, 2006 February 3, 2006
February 3, 2006 February 3, 2006 February 3, 2006 February 3, 2006 February 3, 2006 February 3, 2006 February 3, 2006 Source PACER PACER PACER PACER PACER WESTLAW PACER PACER WESTLAW
PACER PACER B-l