Stacey - RT Proceedings

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LOS ANGELES, CALIFORNIA; WEDNESDAY, OCTOBER 5, 2011
DEPARTMENT 24 HONORABLE ROBERT L. HESS, JUDGE
12:00 P.M.
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APPEARANCES:
(AS NOTED ON TITLE PAGE)
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(CAROL L. CRAWLEY, OFFICIAL REPORTER.)
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THE COURT:
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MR. CHATFIELD:
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GAGGERO, PLEASE.
DAVID CHATFIELD ON BEHALF OF THE
PLAINTIFF.
MR. KHAJAVI-NOURI:
GOOD MORNING, KAMRAN KHAJAVI-NOURI
ON BEHALF OF THE DEFENDANTS AND THE MILLER LAW FIRM.

THE COURT:
THE COURT ISSUED AN ORDER YESTERDAY STRIKING
I THINK IT WAS YESTERDAY, WAS THE ORDER YESTERDAY.

THE CLERK:
8:45.
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STRIKING THE 170.1, SO WE ARE HERE ON A MOTION TO
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COMPEL FURTHER RESPONSES TO INTERROGATORIES, AND THESE ARE
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POST JUDGMENT INTERROGATORIES.
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I HAVE A COUPLE OF QUESTIONS.
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PLAINTIFF, IT APPEARS TO ME THAT QUESTIONS, 1, 2,
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3, 8, AND 9 ARE ALL APPROPRIATE FOR POST JUDGMENT INQUIRY.
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IS THERE ANY REASON -- WELL, LET ME BACK UP.
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HAVE THERE BEEN ANY SUPPLEMENTAL RESPONSES SERVED?
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MR. CHATFIELD:
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NO, THERE HAVEN'T, YOUR HONOR.
WE ATTEMPTED TO ENGAGE IN A MEET AND CONFER ON

THIS.
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IT WAS JUST RECENTLY THAT WE HAVE LEARNED THAT THE
DEFENDANTS ALREADY HAVE THE ADDRESSES AND THE INFORMATION
THAT THEY ARE SEEKING NUMBER ONE.
THE COURT:
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WELL, BUT JUST A MINUTE.
YOU MADE A SERIES OF OBJECTIONS BASED ON PRIVACY TO

1 AND 2.
AND YOU REFUSED TO ANSWER NUMBER THREE BASICALLY,
AND YOUR ANSWER TO NUMBER EIGHT WAS ESSENTIALLY
NON-RESPONSIVE BECAUSE YOU CLAIMED HE HAD NO ATTACHABLE
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INTEREST AS A BENEFICIARY WHICH WASN'T THE QUESTION.

AND NUMBER NINE, YOU KNOW, SEEMS TO ME TO ALSO BE
APPROPRIATE.
AND I DON'T, YOU KNOW, WHAT I SEE IN THE MEET AND
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CONFER IS I SEE THAT YOUR RESPONSE TO THEIR MEET AND CONFER
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REQUEST WHICH IS VERY AGGRESSIVE, IT IS A DIATRIBE AGAINST
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THE KNAPP PETERSEN FIRM, RELATING TO THEIR HANDLING OF
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MATTERS AS TO WHICH INCLUDING THOSE WHICH WERE TRIED HERE
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AND YOU LOST.
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AND THAT LOSS WAS AFFIRMED.
I DON'T SEE THAT YOUR
RESPONSES LEAVE ANYTHING OPEN.
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YOU BASICALLY SAID NO.
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YOU SAID HECK NO.
ACTUALLY YOU SAID IT MIGHT BE
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FAIR TO SAY YOU SAID IT STRONGER THAN THAT, BUT YOU SAID
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HECK NO WE ARE NOT GOING TO GIVE TO IT YOU.
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SO, I DON'T SEE WHAT YOUR RESPONSE TO THEIR MEET

AND CONFER LETTER LEAVES OPEN.
LET'S TAKE THE PARAGRAPH THAT RELATES TO
INTERROGATORY NUMBER ONE, INQUIRY ABOUT MR. GAGGERO
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INTERROGATORY NUMBER ONE, ASKS FOR WHAT IS YOUR CURRENT
RESIDENCE ADDRESS.
AND YOUR RESPONSE WAS INQUIRY ABOUT MR. GAGGERO'S
PRIVATE RESIDENCE INTERROGATORY NUMBER ONE IS NOT PERMITTED
BY LAW.
MR. GAGERRO HAS TOLD YOU UNDER PENALTY OF PERJURY
THAT HE OWNS NO REAL PROPERTY, HOLDS NO LEASEHOLD INTEREST
IN ANY REAL PROPERTY AND HOLDS NO OTHER ATTACHABLE INTEREST
IN ANY REAL PROPERTY.
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YOU ARE ONLY ENTITLED TO REQUEST INFORMATION TO

AIDE IN THE ENFORCEMENT OF THE COST JUDGMENT.
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CITATION, FURTHERMORE, INFORMATION THAT FALLS
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WITHIN AN EVIDENTIARY PRIVILEGE IS SHIELDED FROM YOUR
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DISCOVERY.
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INFORMATION THAT DOES NOT FALL WITH AN EVIDENTIARY
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PRIVILEGE IS NONETHELESS, IS NONETHELESS BE SHIELDED FROM
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DISCOVERY WHERE ITS DISCLOSURE WOULD INVADE AN INDIVIDUAL'S
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CONSTITUTIONAL RIGHT OF PRIVACY.
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CITATION, AS MR. GAGGERO OWNS NO REAL PROPERTY AND
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HOLDS NO LEASEHOLD OR ATTACHABLE INTEREST IN ANY REAL
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PROPERTY, YOU ARE NOT ENTITLED TO MAKE ANY FURTHER INQUIRY
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IN THAT REGARD ESPECIALLY IN LIGHT OF HIS PRIVACY RIGHTS.
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HORSE FEATHERS.
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SINCE WHEN MAY THEY NOT INQUIRE AS TO THE RESIDENCE
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ADDRESS?
MR. CHATFIELD:
SINCE THE STATE OF CALIFORNIA INSTITUTED
ARTICLE ONE SECTION ONE OF THE CONSTITUTION.

THE COURT:
OH, HORSE FEATHERS.
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THAT IS NOT PROTECTABLE AS PRIVACY.
HIS RESIDENCE ADDRESS IS NOT PROTECTABLE.
IT IS NOT EXCUSE ME.
IT IS NOT PROTECTED IN THIS CASE, AND I AM NOT
GOING TO SUSTAIN THAT.
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AND BUT YOU COMPLAIN THAT THEY DIDN'T CARRY FORTH

THE MEET AND CONFER.
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YOUR RESPONSE TO THAT INTERROGATORY, FOR EXAMPLE,

LEAVES NO ROOM FOR FURTHER DISCUSSION.
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MR. CHATFIELD:
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THE COURT:
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THAT IS NOT TRUE, YOUR HONOR.
WELL, WHAT ROOM FOR FURTHER DISCUSSION DOES
IT LEAVE?
YOU HAVE ASSERTED THAT THIS IS PRIVILEGED AND YOU
WILL NOT DO IT.
MR. CHATFIELD:
SO WHEN A PARTY ASSERTS A PRIVACY RIGHT
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OF THE OTHER SIDE MAY OVERCOME THE PRIVACY RIGHT BY STATING
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THEY HAVE NO OTHER WAY OF OBTAINING THE INFORMATION FROM ANY
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OTHER PARTY AND AS THE COURT MAY RECALL FROM TRIAL, THE
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DEFENDANTS WERE THE PLAINTIFF'S LAWYERS.
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THEY WENT TO HIS HOUSE.
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THEY WENT TO HIS OFFICE.
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THEY HAD BOTH ADDRESSES.
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THE COURT:
IN ADDITION.
SIR, WHY, JUST A MINUTE.
SUPPOSE THEY CAN
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FIND OUT THAT INFORMATION BY OTHER MEANS, WHY DOES THAT
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PRECLUDE THEM FROM ASKING, AND THAT WAS DURING THE
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REPRESENTATION IN 2001 AND 2002.
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NOW WHY DOES THAT PRECLUDE THEM FROM ASKING FOR A

SWORN RESPONSE TO THAT QUESTION IN 2011?
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MR. CHATFIELD:
THEM FROM ASKING FOR THE INFORMATION.
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HOWEVER, ONCE THE PRIVACY RIGHT IS ASSERTED, AND

THEY TELL US THAT THEY HAVE SEVERAL SOURCES.
THE COURT:
MR.
THE COURT:
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I DON'T FIND THAT THERE IS A PRIVACY RIGHT
TO THIS THAT IS COGNIZABLE IN THIS CASE.
WELL, YOUR HONOR, IT DOESN'T PRECLUDE
KHAJAVI-NOURI:
CAN I ADD SOMETHING HERE?
YOU KNOW, AND THEN THEY WANT TO KNOW WHO IS
THE OWNER OF THE PROPERTY AT WHICH HE RESIDES AT.

YOU HAVE NO STANDING TO ASSERT THE PRIVACY RIGHTS
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OF THIRD PERSONS IF HE DOESN'T OWN IT.
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APPEARING TO ASSERT THEIR PRIVACY RIGHTS.
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THEY ARE NOT
OR IS THERE A THEORY ON WHICH YOU HAVE STANDING TO

ASSERT THE PRIVACY RIGHTS OF SOME THIRD PERSON?
WHO IS THE PERSON ON WHOSE BEHALF YOU ARE ASSERTING
THE PRIVACY RIGHTS?
THAT IS INTERROGATORY NUMBER TWO.
MR. CHATFIELD:
I DON'T KNOW WHO THE PERSON IS TO WHOM I
AM ASSERTING THE PRIVACY RIGHTS.

THE COURT:
ARE YOU ASSERTING A PRIVACY RIGHT --
ARE YOU ASSERTING A CLAIM FOR PRIVACY?

MR. CHATFIELD:
WE ARE STATING THAT MR. GAGGERO IS NOT
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GOING TO REVEAL ANY PRIVATE INFORMATION HE MAY HAVE
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REGARDING THIRD PARTIES.
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THE COURT:
I AM GOING TO COMPEL HIM TO.
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THIS IS NOT CLOSE.
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THIS IS NOT A CLOSE CASE.
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MR. CHATFIELD:
WHY IS THE INFORMATION RELATING TO THE
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OWNER OF PROPERTY IN WHICH MR. GAGGERO RESIDES RELEVANT?
THE COURT:
BECAUSE THE TESTIMONY AT TRIAL, SIR, WAS
THAT IN -- WELL, PRIOR TO THE TURN OF THE CENTURY, AND I
THINK MY RECOLLECTION IS ROUGHLY BETWEEN '95 AND '98,
MR. GAGGERO CLAIMED TO HAVE DONE EXTENSIVE QUOTE ESTATE
PLANNING QUOTE CLOSE IN WHICH HE PURPORTED TO TRANSFER EVERY
INTEREST IN PROPERTY TO ONE OR MORE CORPORATIONS AND/OR
TRUSTS TO BE HELD FOR HIM.
AND THE PURPOSE FOR THIS WAS TO DEFEAT CLAIMS OF
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CREDITORS BY ALLOWING HIM TO ASSERT THAT HE HAD NO PROPERTY
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AND NO INTEREST IN PROPERTY, AND THEREFORE CREDITORS OF HIS
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COULD NOT COLLECT AGAINST HIM FOR JUDGMENTS OWED.
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THIS SMELLS LIKE A PERPETUATION OF THE SAME TACTIC,
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AND WHEN I RECITE THIS, I AM RECITING IT ON THE BASIS OF THE
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EVIDENCE PRESENTED IN THIS COURT DURING THE TRIAL OF THIS
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CASE BACK IN ABOUT 2006.
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I DON'T KNOW WHAT HIS CURRENT SITUATION IS, BUT HE
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WENT SO FAR AS TO CLAIM THAT HE HAD NO BANK ACCOUNTS, AT
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ALL.
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HE HAD NO CHECKING ACCOUNTS.
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HE BASICALLY CLAIMED HE CLAIMED HE HAD NO REAL
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PROPERTY, APPARENTLY LITTLE OR NO PERSONAL PROPERTY.
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HE COMPLAINED THAT WHENEVER HE WANTS MONEY THAT HE
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GOES TO THE TRUSTEE OF HIS TRUST AND SAYS MAY I PLEASE HAVE
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SOME MONEY, AND THE TRUSTEE CAN SAY YES OR NO.
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IF HE HAS A BILL, IF HE PURPORTS TO CONTRACT FOR AN
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OBLIGATION, IF HE WANTS TO BUY SOMETHING, AND THE BILL COMES
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IN, HE GIVES IT TO THE TRUSTEE OF THE TRUST.
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AND THE TRUSTEE DECIDES WHETHER OR NOT TO PAY IT.
I THINK THAT THESE INQUIRIES ARE ENTIRELY
APPROPRIATE.
MR.
KHAJAVI-NOURI:
MAY I JUST ADD SOMETHING HERE, YOUR
HONOR?
THE COURT:
MR.
YES.
KHAJAVI-NOURI:
WITH RESPECT TO THE ADDRESSES AND
THE PRIVACY INTEREST, THE FORM INTERROGATORIES THAT HAVE
BEEN APPROVED BY THE JUDICIAL COUNCIL FREQUENTLY ASK FOR THE
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ADDRESSES, NAME, ADDRESS AND TELEPHONE NUMBER SO THAT WOULD
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FURTHER SUPPORT OUR, YOU KNOW, MEET AND CONFER ON THAT.
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THE COURT:
THERE IS POTENTIALLY A DISTINCTION BETWEEN
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PRETRIAL INTERROGATORIES AND POST TRIAL, BUT IT SEEMS TO ME
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THAT IT DOES NOT SIGNIFICANTLY IMPLICATE ANY INTERESTS.
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NOW, THE OTHER THING IS, THAT, EXCUSE ME THE 3 THAT
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I HAD QUESTIONS ABOUT REALLY WERE 14, 15, AND 16 WHICH ASKS
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FOR INFORMATION CONCERNING THE ADDRESS AND TELEPHONE NUMBER
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OF STEVEN GAGGERO, SENIOR, STEPHANIE LEE BOREN B-O-R-E-N.
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BETTY SUE GAGGERO, AND THE RESPONSE WAS THEY CAN BE
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CONTACTED THROUGH THE OFFICES OF COUNSEL IN THIS MATTER FOR
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STEVEN M GAGGERO.
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WHY IS THAT AN APPROPRIATE RESPONSE?
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YOU DECLINED TO GIVE ME THE INFORMATION.
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WHY IS IT AN APPROPRIATE RESPONSE?
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MR. CHATFIELD:
ALL RIGHT.
BEFORE WE GET TO THAT ISSUE, CAN I JUST ADDRESS

SOMETHING THE COURT SAID A SECOND AGO?
THE COURT:
MAY I?
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I WOULD -- WE ARE AT 20 MINUTES AFTER 12.
AND I
WANT I SEE THAT THERE IS SOMEBODY ELSE STILL HERE, AND I
WOULD LIKE TO BE ABLE TO MOVE THROUGH THIS PROCEEDING.
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AND SO IF YOU CARE, IF YOU CARE TO ANSWER MY

QUESTION, FINE.
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IF YOU DO NOT CARE TO ANSWER THAT QUESTION, I WILL

MOVE ON.
MR. CHATFIELD:
ALL RIGHT.
THEN, I WILL ANSWER YOUR QUESTION.
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WHY DO THEY NOT NEED THE ADDRESS AND PHONE NUMBERS
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OF MR. GAGGERO'S ELDERLY PARENTS AND SISTER, BECAUSE I HAVE
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OFFERED TO ACCEPT SERVICE ON THEIR BEHALF OF ANY DOCUMENTS
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THAT THEY NEED TO SERVE ON THEM FOR A JUDGMENT DEBTOR
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EXAMINATION.
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THE COURT:
IN OTHER WORDS, YOU OKAY, IF THEY WERE TO
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SERVE A SUBPOENA ON YOU, ON YOUR OFFICE, ON BEHALF OF THESE
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PEOPLE, AND THOSE PEOPLE FAIL TO THE APPEAR.
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MR. CHATFIELD:
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THE COURT:
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YES.
YOU WOULD WAIVE ANY OBJECTION OF PERSONAL
SERVICE FOR PURPOSES OF CONTEMPT?
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MR. CHATFIELD:
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THE COURT:
I AM ACCEPTING SERVICE.
BECAUSE YOU ARE REPRESENTING THAT YOU DO
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REPRESENT EACH OF THEM.
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MR. CHATFIELD:
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THE COURT:
THAT'S CORRECT, YOUR HONOR.
AND YOU, YOU WOULD WAIVE ANY CLAIM THAT
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SERVICE ON YOUR OFFICE AS OPPOSED TO PERSONAL SERVICE ON
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THEM, WAS IN ANY SENSE INADEQUATE FOR ENFORCEMENT OF THOSE
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SUBPOENAS TO APPEAR FOR JUDGMENT DEBTOR EXAM.
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MR. CHATFIELD:
THAT WAS THE PURPOSE OF MY RESPONSE AND THE MEET
AND CONFER LETTER.
THE COURT:
YES, YOUR HONOR.
SO YOU WOULD ALSO WAIVE ANY DISTANCE
LIMITATIONS?
MR. CHATFIELD:
THE COURT:
NO, YOUR HONOR.
OKAY.
WELL, IF WE DON'T KNOW WHERE THEY ARE, IF YOU WON'T
TELL US WHERE THEY ARE, AND YOU WON'T WAIVE ANY DISTANCE
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LIMITATIONS FOR SERVICE ON THEM, THEN IT IS A LITTLE BIT
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HARD FOR THE DEFENSE TO BRING THEM IN TO TESTIFY.
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THAT IS INEFFECTIVE.
MR. CHATFIELD:
THEY ARE IN SAN DIEGO, CALIFORNIA, YOUR
HONOR.
THE COURT:
THAT IS INEFFECTIVE, SIR.
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THAT IS INEFFECTIVE.
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IF IT IS NOT FULLY EFFECTIVE BY SERVING IT ON YOUR
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OFFICE, IT IS NOT FULLY EFFECTIVE.

IS THERE ANY REASON WHY I SHOULD NOT THEN I SHOULD
NOT GRANT EACH OF THESE?
IS THERE ANYTHING ELSE YOU WANT TO SAY?
MR. CHATFIELD:
YES.
I WOULD LIKE TO SAY THAT THE COURT'S COMMENTS
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REGARDING THE REASON AND LEGAL EFFECT OF THE CREATION OF THE
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TRUSTS DIFFERS FROM THE RECORD AS I UNDERSTAND IT, AND --
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THE COURT:
WERE YOU HERE?
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MR. CHATFIELD:
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THE COURT:
PARDON ME?
WERE YOU HERE FOR THAT TESTIMONY?
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I HEARD OUT OF MR. GAGGERO'S MOUTH.

MR. CHATFIELD:
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I READ THE TESTIMONY.
I READ THE TESTIMONY, AND I READ IT DIFFERENTLY,

YOUR HONOR, AND I SIMPLY.
THE COURT:
ALL RIGHT.
MR. CHATFIELD:
THE COURT:
I WOULD LIKE.
THE TESTIMONY IS WHAT THE TESTIMONY IS, BUT
THAT WAS THE COURT'S -- THAT WAS THE COURT'S FINDING AT THE
TIME THOSE FINDINGS BEING AFFIRMED BY THE COURT OF APPEAL.
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SO YOU MAY DIFFER IN NUANCE, FINE, BUT THAT WAS THE

SUBSTANCE OF WHAT HE TESTIFIED TO.
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IS THERE ANYTHING YOU WANT TO SAY ABOUT THE

SANCTIONS?
MR. CHATFIELD:
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YES, YOUR HONOR.
THE MOTION DID NOT TAKE AS MUCH TIME AS ESTIMATED

BY THE DEFENDANTS.
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I ALSO BELIEVE THAT THERE WAS.
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THE COURT:
AND WE KNOW THAT BECAUSE?
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MR. CHATFIELD:
BECAUSE OF THE MOTION AND THE REPLY
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BRIEF WERE LESS THAN TEN PAGES LONG, AND I ALSO BELIEVE WHEN
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I PREPARED MY OPPOSITION THAT THERE WAS SUBSTANTIAL
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JUSTIFICATION FOR MY OPPOSITION.
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THE COURT:
LET ME ASK AN -- I JUST HAD A QUESTION AS TO
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WHETHER IF THE INTERROGATORIES WERE SERVED PURSUANT TO CCP
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708.020, WHETHER THE SANCTIONS PROVISION OF THE DISCOVERY
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STATUTE APPLIED.
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MR.
KHAJAVI-NOURI:
I BELIEVE THAT SECTION HAS A
PROVISION THAT DISCOVERY IN ACCORDANCE WITH POST JUDGMENT
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ENFORCEMENT IS TO BE INTERPRETED AND ENFORCED AS ANY OTHER
TYPE OF DISCOVERY.
I THINK THERE IS A PROVISION ON THAT POINT THERE
WHICH WOULD IMPLY THAT THE SAME RULES AS TO MOTIONS TO
COMPEL AND SANCTIONS WOULD APPLY AS WELL.
MR. CHATFIELD:
THE COURT:
MR. CHATFIELD:
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THAT IS NOT MY UNDERSTANDING OF IT.
WHAT IS YOUR UNDERSTANDING, SIR?

MY UNDERSTANDING IS THAT THE RULES
RELATING TO PRETRIAL DISCOVERY DO NOT APPLY GENERALLY TO

POST TRIAL DISCOVERY.
THE COURT:
AND THAT IS BASED OKAY, BUT IN THIS
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PARTICULAR CASE, AS TO SANCTIONS, WOULD YOU LIKE TO CITE ME
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THE STATUTE, RULE OR CASE AUTHORITY?
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MR. CHATFIELD:
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NO.
I DON'T HAVE ANY TO CITE TO YOU, YOUR HONOR.

MR. KHAJAVI-NOURI:
I THINK IT IS 708.020 SECTION C, AS
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WE CITED IN OUR MOTION, WHICH I THINK PARAPHRASED HERE
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INTERROGATORIES SERVED PURSUANT TO THIS SECTION MAY BE
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INFLUENCED TO THE EXTENT PRACTICABLE IN THE SAME MANNER AS
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INTERROGATORIES IN A CIVIL ACTION.
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THE COURT:
WELL, WHAT I SEE IS THAT THE OPPOSITION
DOESN'T RAISE ANY ISSUE OF THIS.

MR.
KHAJAVI-NOURI:
IF THE COURT WERE TO AWARD
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SANCTIONS HE WOULD REQUEST IT BE AWARDED HALF AND HALF
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AGAINST PLAINTIFF.
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THE COURT:
SINCE THERE WERE OBJECTIONS, THESE WERE NOT
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SIGNED BY MR. GAGGERO, SINCE THEY WERE ONLY OBJECTIONS, IS
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IT APPROPRIATE TO AWARD THE SANCTIONS AGAINST MR. GAGGERO AS
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OPPOSED TO AS AGAINST COUNSEL?

MR. CHATFIELD:
JUST OBJECTIONS.
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YOUR HONOR, I DON'T BELIEVE THESE WERE
THEY WERE VERIFIED RESPONSES.

THE COURT:
WELL, AS TO THE ONES IN QUESTION I DON'T
THINK THERE WERE RESPONSES THAT THEY WERE VERIFIED RESPONSE.

MR. CHATFIELD:
NO, ACTUALLY MR. GAGGERO RESPONDED THAT
HE DID NOT OWN ANY REAL PROPERTY OR ANY INTEREST IN ANY REAL
PROPERTY WHEN ASKED THE QUESTIONS ABOUT REAL PROPERTY.
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THE COURT:
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SO WE WILL MAKE IT JOINT AND SEVERAL.

MR.
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KHAJAVI-NOURI:
TO CLARIFY I BELIEVE THERE WAS A
VERIFICATION BY MR. GAGGERO.

THE COURT:
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OKAY.
OKAY.
BUT SOME OF THESE ARE PHRASED IN TERMS OF

OBJECTIONS ONLY.
MR.
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KHAJAVI-NOURI:
CORRECT, CORRECT.
AND, IN ADDITION, I HAVE SPENT TIME ON THIS MOTION
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TODAY IN COURT AND ALSO BRIEFLY REVIEWING THE MOTION
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OPPOSITION AND REPLY, AND THAT TIME WAS NOT CAPTURED IN
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MR. FIELD'S DECLARATION WHICH I THINK HAD A TOTAL OF ABOUT
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11 HOURS.
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THE COURT:
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MR.
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OKAY.
KHAJAVI-NOURI:
AND I AM HAPPY TO PROVIDE A
DECLARATION TO THE COURT.

THE COURT:
OKAY.
JUST A MINUTE.
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WE ARE GOING TO RESOLVE THIS TODAY.
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HERE IS THE ORDER:
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THE MOTION TO COMPEL IS GRANTED IN ITS ENTIRETY.
COMPLETE, VERIFIED, SUPPLEMENTAL RESPONSES, WITHOUT
FURTHER OBJECTION, ARE TO BE SERVED ON OR BEFORE OCTOBER
24TH, 2011 AS TO INTERROGATORIES 1, 2, 3, 8, 9, 14, 15, AND
16.
MONETARY SANCTIONS OF $2,000 ARE IMPOSED JOINTLY
AND SEVERELY UPON MR. GAGGERO AND HIS COUNSEL PAYABLE TO
COUNSEL FOR KPC, ON OR BEFORE NOVEMBER 7TH, 2011 PER CODE OF
CIVIL PROCEDURE SECTIONS 2023.030, AND 2030.300.
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DEFENSE IS TO GIVE NOTICE.
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MOVING PARTY IS TO GIVE NOTICE.
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MR.
KHAJAVI-NOURI:
PAID ON OR BEFORE NOVEMBER 7TH?
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THE COURT:
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MR.
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ONE QUESTION THE SANCTIONS TO BE
YES, THAT'S CORRECT.
KHAJAVI-NOURI:
OKAY.
THANK YOU.
SUPERIOR COURT OF THE STATE OF CALIFORNIA.

FOR THE COUNTY OF LOS ANGELES
DEPARTMENT LA 24
HON. ROBERT L. HESS,
STEPHEN M. GAGGERO,
JUDGE
)
)
)CASE NO.
-VS)BC 286925
)
KNAPP PETERSEN AND CLARKE,
)
)
DEFENDANTS. )
_______________________________________ )
REPORTER'S TRANSCRIPT OF PROCEEDINGS
PLAINTIFF,
OCTOBER 5, 2011
APPEARANCES:
FOR THE PLAINTIFF:
FOR THE DEFENDANTS:
LAW OFFICES OF
DAVID BLAKE CHATFIELD
2625 TOWNSGATE ROAD
SUITE 330
WESTLAKE VILLAGE, CA 91361
MILLER LLP
BY: KAMRAN KHAJAVI-NOURI
515 SOUTH FLOWER STREET
SUITE 2150
LOS ANGELES, CA 90071
CAROL L. CRAWLEY, CSR #7518

VOLUME 1 OF 1
PAGES A1 THROUGH A-14 ONLY
SUPERIOR COURT OF THE STATE OF CALIFORNIA

DEPT. LA 24
HONORABLE ROBERT L HESS, JUDGE
STEPHEN M. GAGGERO,
)
)
)CASE NO.
-VS)BC 286925
)
)
)
DEFENDANTS. )
_______________________________________ )
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
PLAINTIFF,
)
)
)
SS
I, CAROL L. CRAWLEY, OFFICIAL REPORTER OF THE

SUPERIOR COURT OF THE STATE OF CALIFORNIA, FOR THE COUNTY OF
LOS ANGELES, DO HEREBY CERTIFY THAT THE FOREGOING PAGES,
A-1 THROUGH A-14 COMPRISE A FULL, TRUE, AND CORRECT
TRANSCRIPT OF THE PROCEEDINGS HELD ON OCTOBER 5, 2011 IN
DEPARTMENT 24 OF THE LOS ANGELES COURT IN THE MATTER OF THE
ABOVE-ENTITLED CAUSE.
DATED THIS 11TH DAY OF DECEMBER, 2011
___________________________, CSR #7518

CAROL L. CRAWLEY, OFFICIAL REPORTER
COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT
STEPHEN M. GAGGERO,
)
)
PLAINTIFFS-APPELLANT,
)
) CASE NO.
-VS) BC 286925
)
KNAPP PETERSON & CLARK, ETC. ET AL.,
)
DEFENDANTS-RESPONDENTS,
)
_______________________________________)
APPEAL FROM THE SUPERIOR COURT OF LOS ANGELES COUNTY
HONORABLE ROBERT L. HESS, JUDGE PRESIDING
REPORTER'S TRANSCRIPT ON APPEAL
TITLE, INDICES, CERTIFICATE
OCTOBER 5, 2011
APPEARANCES:
FOR APPELLANT:
THE RESPONDENTS:
WESTLAKE LAW GROUP

BY: DAVID CHATFIELD
2625 TOWNSGATE ROAD
SUITE 330
MILLER LLP
SUITE 2150
LOS ANGELES, CA 90071
VOLUME 1 OF 1 VOLUME
PAGES A-1 THROUGH A-14 ONLY
CAROL CRAWLEY, CSR NO. 7518

OFFICIAL REPORTER
ALPHABETICAL/CHRONOLOGICAL INDEX OF WITNESSES

OCTOBER 5, 2011
VOLUME 1 OF 1
PLAINTIFF'S WITNESSES
DIRECT CROSS REDIRECT RECROSS
NONE
DEFENSE WITNESSES
(NONE)
EXHIBITS
NONE
SUPERIOR COURT OF THE STATE OF CALIFORNIA.

HON. ROBERT L. HESS,
DEPARTMENT LA 24
STEPHEN GAGGERO, AN INDIVIDUAL; ET AL.,

PLAINTIFF,
JUDGE
)
)
)CASE NO.
)BC286925
-VS-
)
)
KNAPP, PETERSEN & CLARKE,
)
STEPHEN RAY GARCIA, STEPHEN M. HARRIS
)
AND ANDRE JARDINI,
DEFENDANTS. )
)
REPORTER'S EXPEDITED TRANSCRIPT OF PROCEEDINGS

TUESDAY, MAY 29, 2012
APPEARANCES:
FOR THE PLAINTIFF:
FOR THE DEFENDANTS:
FOR NEW JUDGMENT DEBTORS:
DAVID CHATFIELD
ATTORNEY AT LAW
2625 TOWNSGATE RD
. SUITE 330
MILLER LLP
RANDALL A. MILLER
BY:
BY: AUSTA WAKILY
- --- 515 -S-mJT-H-FLOWER STREET -SUITE 2150
LOS "ANGELES, CA 90071
DAVID ESQUIBIAS
2625 TOWNSGATE ROAD
SUITE 330
CAROL L. CRAWLEY, CSR #7518

VOLUME 1 OF 1
---PAGES---l--.z-8---
LOS ANGELES, CALIFORNIA; TUESDAY, MAY 29,
2012
DEPARTMENT 24 HONORABLE ROBERT L. HESS JUDGE
11:50 A.M.
4
APPEARANCES:
(AS NOTED ON TITLE PAGE)
6
(CAROL L. CRAWLEY,
OFFICIAL REPORTER.
8
9
MR; CHATFIELD:
10
PLAINTIFF.
11
MR. ESQUIBIAS:
12
GOOD MORNING, YOUR HONOR.
DAVID ESQUIBIAS ESPECIALLY APPEARING FOR
13
14
JOSEPH PRASKE TRUSTEE OF THE GIGANIN TRUST, TRUSTEE
15
OF THE ARANZANO TRUST, AND THE AQUASANTE FOUNDATION
16
AND VARIOUS LLC'S AND LP'S THAT ARE NOTED IN OUR
17
PLEADING AS A GENERAL PARTNER AND/OR MANAGING MEMBER.

I WOULD LIKE TO NOTE FOR THE RECORD THAT
18
JOSEPH PRASKE IS NOT A PARTY TO THIS ACTION.
19
20
I-
MS: WAKILI :
GObb MORNING,AtJSTAWAKltIFOR
21
DEFENDANT, KNAPP,
22
THE COURT:
23
.24
.....
DAVID CHATFIELD ON BEHALF OF THE
PETERSEN & CLARKE.
THIS IS A MOTION TO AMEND THE JUDGMENT
TO ADD JUDGMENT DEBTORS ON THE THEORY THAT VARIOUS

.TRUSTS FOUNDATIONS, .AND OTHER BUSINESS. ENTITIES
26
THEY SHOULD BE LIABLE FOR OR THEIR ASSETS -- SHOULD
27
BE REACHABLE FOR COLLECTION TO THE JUDGMENTS AGAINST
28
HIM.
_.
- _...
..._ - - - - - - _ . _ - _ .
-----
._-------_._---
2
I
HAVE A VERY SUBSTANTIAL AMOUNT OF EVIDENCE
ON THE NATURE OF THESE RELATIONSHIPS THAT HAS BEEN
SUBMITTED TO ME IN CONNECTION WITH THIS MOTION,
FRANKLY IT LOOKS TO ME LIKE THESE ARE APPROPRIATE
MOTIONS.
I
MR.
SEEM TO HAVE QUITE A SHOWING HERE THAT IN
FACT,
MONIES AND WILL.
GAGGERO CONTROLS THESE -- DIRECTS THE
AND SINCE WE HAVE,
YOU KNOW,
10
THAT THE MOTION HAS SOME MERIT,
11
MR.
12
SAY ON THIS POINT,
GAGGERO'S COUNSEL,
MR.
13
IT SEEMS TO ME
SO LET ME START WITH
AND SEE WHAT YOU WOULD LIKE TO
SIR.
CHATFIELD:
YOUR HONOR,
IFI MAY START AS
14
REALLY THE PARTY IN INTEREST -- I REPRESENT THE
15
TRUSTEE WHO CONTROLS THESE ASSETS WITHIN THESE
16
TRUSTS.
17
IF I MAY RESPOND TO THE COURT FIRST,
THE COURT:
19
21
~~
WELL,
TRUSTEE GETS NAMED,
~~~
THE TRUSTEE HAS TO BE -- THE
BOT -IT- IS --REALLY THE -TRUST-THAT
HIS ASSETS ARE BEING SOUGHT.
22
MR.
23
THE COURT:
24
I WOULD
APPRECIATE THAT.
18
-10
AND
ESQUIBIAS:
I
THE CORPUS OF THE TRUST -DON'T UNDERSTAND THAT THEY ARE
SEEKING TO ADD _YOU IN ANY OTHER CAPACITY PERHAPS THAN
- - - - ------2-5- ---AS--T-RtJ-S-T-EE-;---~------~-~---~----~----~----------- - - - - - - - ----------- ----------
THERE IS CERTAINLY NO INDIVIDUAL CAPACITY.
26
27
j--
MR.
ESQUIBIAS:
CORRECT.
28
i
r-------
ANYONE IS SEEKING MR.
PRASKE.
WE DON'T BELIEVE THAT
WE DON'T BELIEVE THAT KPS IS TRYING TO SAY
1
2
THAT MR.
BELIEVE.
4
5
6
THE COURT:
....-
_.-
THAT WE DON'T
AND I DIDN'T GET THAT OUT OF THEIR
PAPERS.
MR. ESQUIBIAS:
WHAT WE DO BELIEVE,
IS THAT THE
ASSETS, WHICH MR.
BEING SOUGHT, AND BECAUSE THESE ASSETS ARE CONTAINED
WITHIN IRREVOCABLE TRUSTS -- OR EVEN IF THEY WERE
PRASKE CONTROLS ARE ASSETS THAT ARE
10
REVOCABLE,
11
TRUSTS THAT THERE ARE CERTAIN PROCEDURES THAT NEED TO
12
BE FOLLOWED WHEN YOU ARE TRYING TO OBTAIN OR CONTROL
13
LEVY OR GARNISH THE ASSETS OF TRUSTS.
THE FACT IS THAT THESE ARE IRREVOCABLE
AND I WOULD NOTE FOR THE.RECORD;
14
. __ .
PRASKE AS PERSONAL LIABILITY,
THAT THE
15
PROBATE COURT HAS THE EXCLUSIVE JURISDICTION OF TRUST
16
MATTERS UNDER PROBATE CODE 17000, WHICH SPECIFICALLY
17
STATES THAT ACTIONS AND PROCEEDINGS BY OR AGAINST A
18
CREDITOR ARE VESTED IN THAT COURT AND MORE
19
IMPORTANTLY,
20 .
MOTION ARE BEING S6UGi-t'r-:SY--A. J'UiTGMENT - C::RJ~~-DrTOR,
21
NOTICE UNDER THE PROBATE CODE NEEDS TO BE PROVIDED OF
22
THIS MOTION TO THE VESTED CURRENT INCOME AND
23
PRINCIPAL AND REMAINDER BENEFICIARIES OF THESE
24
TRUSTS.
26
BENEFICIARY NOR WAS NOTICE PROVIDED TO THE TRUSTEE OF
27
THESE TRUSTS, AND,NOTICE WOULD BE REQUIRED UNDER
28
PROBATE CODE 17203.
BECAUSE THE ASSETS IN THIS PARTICULAR
--------_._----_._---------_. - - - - - -
-----------------
AND LAST,
PROBATE CODE 18200 SPECIFICALLY
STATES THAT THE ASSETS OF AN IRREVOCABLE TRUST ARE
NOT AVAILABLE TO THE SETTLERS CREDITORS, WHICH IS THE
CASE HERE.
TO THE EXTENT THAT THERE WAS FRAUDULENT
5
6
CONVEYANCE, THEN IT WOULD BE MADE POTENTIALLY
AVAILABLE.
BUT, AS THE MOVING PARTY HAS CONCEDED IN

,
THEIR OWN DOCUMENTS THAT THE FRAUDULENT CONVEYANCE
10
CAUSE OF ACTION IS UNAVAILABLE TO THEM DUE TO THE
11
STATUTE OF LIMITATIONS,
12
ONLY EXCEPTION TO PROBATE CODE SECTION 18200 AND
13
PROBATE CODE SECTION 15403.

I SEE THE COURT IS LOOKING AT THE PROBATE
14
15
THE COURT:
17
MR. ESQUIBIAS: -- I WOULD LIKE TO POINT OUT JUST
19
_-
- - -
CODE --
16
18
....
FRAUDULENT CONVEYANCE IS THE
JUST A MINUTE.
ONE CASE.
THE COURT:
MAY I ASK WHERE THIS ARGUMENT APPEARS
- 20
21
22
23
24
MR. ESQUIBIAS:
IT DOES NOT APPEAR.
THE SUBSTANCE
OF THE ARGUMENT WAS FILED.

THE COURT:
IS THERE A REASON,
IS THERE A REASON
YOU ARE MAKING AN ARGUMENT NOW THAT APPARENTLY GOES
I------~-2-5-- --T-e--o-tJ-R-I-S-SI-eT-I-eN-?--------------------------------------~------- ---------
I
r----~-----
26
IS THERE A REASON WHY,
27
MERITORIOUS ARGUMENT,
28
OPPOSITION?
IF THIS IS A
IT-WAS NOT INCLUDED IN THE
MR.
CHATFIELD:
I CAN TELL THE COURT THAT I AM
SPECIALLY APPEARING FOR THE PURPOSE OF ARGUING
JURISDICTION AND NOTICE.
4
5
6
7
I HAVE NO EXPLANATION AS TO WHY IT WASN'T IN

THE OPPOSITION.
THE COURT:
10
11
THE NOTICE OF SPECIAL APPEARANCE TO
OPPOSE AN OPPOSITION WAS FILED MAY 15TH.
8
9
I AM LATE TO THIS PARTY ..
MOVING PAPERS WERE FILED APRIL 10TH, AND AS I

LOOK AT YOUR PAPERS HERE,
THESE ARGUMENTS,
MR.
I DON'T EVEN GET A SNIFF OF
QUITE FRANKLY.
ESQUIBIAS:
I WOULD AGREE.
BUT I DON'T
12
BELIEVE THE FACT THAT THEY WERE NOT RAISED IN THAT
13
DOCUMENT DOES NOT PRECLUDE THE ARGUMENT TODAY.
14
THE COURT:
WELL,
WHY?
SO MY QUESTION IS,
15
THESE ARE ESSENTIAL ARGUMENTS,
16
BACK SO THAT THEY COULD NOT RESPOND TO THEM?
17
18
19
~~20-~
21
MR.
ESQUIBIAS:
IF
WHY DID YOU HOLD THEM
IT WAS NOT DESIGNED TO AMBUSH THE
MOVING PARTY.
THE COURT:
THdtJGH,--
MR.
IS IT ANYTHING OTHER THAN AMBUSH
~AT~THI-$~-Pb1NT?-
ESQUIBIAS:
I CAN SEE HOW IT IS PERCEIVED AS
22
THAT BY THIS COURT, AND PERHAPS MOVING PARTIES XXXJD
23
THIS MATTER CAN BE CONTINUED TO BRIEF IT AND TO ALLOW
24
THEM TO RESPOND TO TkESEARGUMENTS.
26
MR.
27
THE COURT:
28
ESQUIBIAS:
I AM PREPARED TO DO SO.
SO THAT, AGAIN,
RAISES THE QUESTION --
THIS 18 THE TIME AND PLACE FOR THE HEARING DN THIS
MOTION.
MS. WAKILI:
CAN I MAKE ONE BRIEF POINT ON THIS?
HAD HE BRIEFED IT OR RAISED IT IN HIS OPPOSITION,
MR.
THESE ARE OFFSHORE TRUST$.
PRASKE HAS TESTIFIED UNDER
IN.A DEBTOR EXAM,
ARANZANO IS AN OFFSHORE TRUST.
THEY HAVE
NEVER BEEN FILED WITH ANY COURT IN CALIFORNIA OR THE
UNITED STATES,
DOCUMENTS THAT ARE PRIVATE.
SO THESE ARE ESSENTIALLY VERY SECRET
THEY HAVE INDEPENDENT CONFIDENTIALITY
10
11
PROVISIONS THAT BOUND PRETTY MUCH THE TRUSTOR THE
12
TRUSTEE,
13
A PROBATE COURT AND ACCORDING TO MR.
14
IS SOMETHING THAT HE SAID HE NEVER FILED,
15
HAD WE HAD ANY IDEA THIS WOULD BE AN ARGUMENT THEY
16
WOULD RAISE WE WOULD HAVE PULLED EXCERPTS FROM THE
17
DEBTOR EXAMINATION TO ADDRESS THAT.
18
19
SO THEY WON'T BE SOMETHING YOU WILL FIND IN
THE COURT:
EVIDENCE?
I DON'T DISAGREE,
JUST A SECOND.
PRASKE -- THAT
AND AGAIN
BUT DO I HAVE ANY
DO I HAVE ANY EVIDENCE IN
20
---.~-
----~---
21
MR.
ESQUIBIAS:
22
THE COURT:
NO,
RAISED BY OPPOSING COUNSEL?

YOUR FACTUAL ASSERTIONS.
23
CHARACTERIZED THESE AS IRREVOCABLE AND SUBJECT TO
24
THIS THAT AND THE OTHER.
I DON' 'l' KNOW .
L-5----K-N-OW--Tli1{T-?-----~----------~-~---~
26
27
28
T-------~---
YOU HAVE
HOW DO I
-----------------
WHERE IS THE EVIDENCE TO SUPPORT IT?

MR. ESQUIBIAS:
YOU WILL NOT FIND IT IN OUR
P1.EAblING THAT WAS FILED.
~--~.-~
THE COURT:
1
2
DO IT?
MR. ESQUIBIAS:
REVIEWED IN PREPARATION FOR TODAY'S HEARING,
SHOW OTHER THAN THEIR OWN STATEMENTS IN THEIR
PLEADINGS WHICH ARE CONSIDERED ADMISSIONS THAT THE
TRUSTS ARE IRREVOCABLE.
9
10
THE COURT:
HAS THERE -- HAS MR. PRASKE TAKEN THE
CONFIDENTIAL?
MR. CHATFIELD:
I HAD NOT PARTICIPATED IN THAT
12
PRIOR DISCOVERY THAT COUNSEL TALKS ABOUT,
13
SAY THIS, ON BEHALF OF MR.

THE COURT:
14
15
DID NOT
POSITION, THAT THE TRUSTS THEMSELVES ARE
11
BUT I WILL
PRASKE --
AND THAT THE TERMS OF THE TRUST
THE TRUST DOCUMENTS OUGHT NOT TO BE PRODUCED?

MR.
16
ESQUIBIAS:
I WILL SAY THIS ON BEHALF OF
17
MR.
18
VESTED CURRENT INCOME AND PRINCIPAL BENEFICIARIES
19
- - .. _.
I HAVE THE PLEADINGS THAT I HAVE
.. _- _.
IS THERE ANYTHING IN THEIRS, THAT WILL
PRASKE, .THAT IF NOTICE IS PROVIDED TO THE ALL THE
THE COURT:
HAS MR. -- AND HOW WOULD THEY DO THAT?
20
21
TRUST DOCUMENTS TO COUNSEL UPON NOTICE TO THE
22
BENEFICIARIES.
23
THE COURT:
24
BENEEICIARIES ARE?
26
DOCUMENTS THEMSELVES HAVE NOT BEEN PRODUCED UNDER A
27
CLAIM OF CONFIDENTIALITY.
0
A~
HOW WOULD THEY KNOW WHO THE
THIS POINT, YOU ARE ASSERTING A SERIES
--:- - - - - _ . _ - - - - - - - - - - _ . _ - - - _ . _ - - - - - - - - - - " ' " - _ . _ - - - - - - - -
OF THINGS WHICH FIND NO EVIDENTIARY SUPPORT AND THE
REASON THEY HAVE NO EVIDENTIARY SUPPORT,
OBJECTIONS ARE VERY INTERESTING,
THE OTHER SIDE FROM ACCESS TO THE VERY INFORMATION
THAT YOU CLAIM IS NECESSARY FOR THEM TO GIVE NOTICE.
UNDERSTAND IT,
CALCULATED TO GIVE RISE TO A SYMPATHETIC HEARING.
FOR YOU TO SAY,
GIVING NOTICE TO ALL THESE PEOPLE,
11
WON'T TELL YOU WHO IS ENTITLED TO GET NOTICE.
12
I RESOLVE THAT?
MR.
_.
YOU HONOR,
I AM NEW TO THIS CASE.
HOW DO
I HAVE A RESPONSE.
I WILL MAKE SURE THAT
16
OPPOSING COUNSEL HAS A COPY OF THE TRbsT DOCUMENTS,
17
SO THAT SHE CAN APPRISE THE SITUATION HERSELF.
18
CAN GIVE NOTICE.

THE COURT:
19
-.--
ESQUIBIAS:
AND BY THE WAY WE
HAVE A RESOLUTION.
15
_.. -
WELL YOU CAN'T GO FORWARD WITHOUT
10
14
--
GAGGERO HAVE PRECLUDED
13
...
IS THAT YOU HAVE, AS
THAT IS NOT A SITUATION THAT IS REASONABLY
"
YOU OR MR.
AND YOUR
WELL, APPARENTLY,
WAS MR.
SHE
PRASKE
20
MS. WAKILI:
21
22
23
24
MR.
I BELIEVE HE WAS REPRESENTED BY
CHATFIELD.
THE COURT:
OKAY.
WAS REPRESENTED BY MIL
WHAT DO I DO WITH THAT?
IF HE
CHATFIELD AT THE DEPOSITIONS,
I-
r------------z-5- ----AN-B--TH-I-S--r-S---'f-H-E-FO-S-I-T-I-ON-TH-kT--W-AS---T-A-~E_N__;_--W-H A T--B 0--1---- - - ----
26
r
I
27
28
DO WITH THAT?
MR.
ESQUIBIAS:
DEPOSITIONS.
1----------------------
I DON'T KNOW ANYTHING ABOUT ANY
r WAS NOT PRESENT, BUT r-WILL TELL-THE
COURT NOW,
MR.
TRUSTS,
COOPERATE WITH THE REQUESTS FOR THE DOCUMENTATION.
I NOW REPRESENT
PRASKE IN HIS CAPACITY AS TRUSTEE OF THESE
5
6
AND OPPOSING COUNSEL,
AND WE INTEND TO COMPLETELY AND FULLY
THERE IS NO REASON WHY IT SHOULD NOT BE

DISCLOSED.
THE COURT:
IS THERE A REASON WHY YOU DON'T HAVE
THEM TODAY?
MR.
ESQUIBIAS:
DO HAVE THEM TODAY BUT THEY ARE
10
MY VERSIONS WITH MY MARKINGS ON THEM.
11
OF THE REASON WHY THEY WERE NOT PROVIDED IMMEDIATELY
12
TO COUNSEL,
13
THEM -- NOTES THAT THEY ARE IRREVOCABLE NOTES,
14
ASSETS WERE TRANSFERRED TO THESE TRUSTS MANY,
MANY
15
YEARS AGO.
16
THINK THAT WE CAN RESOLVE THIS ISSUE FAIRLY QUICKLY.
17
18
19
--2-0
MS.
I AM NOT AWARE
BECAUSE I THINK ONCE COUNSEL DOES SEE
READ PROBATE CODE SECTION 18200.
WAKILI:
YOUR HONOR,
THE
JUST
COULD I GET SOME
CLARIFICATION ON COUNSELS RESPONSE RIGHT NOW?

THE COURT:
-MR~
JUST A SECOND.
ESQUIBIA-g-:-- -1TI8 - I,;m1'--MY-PRAC::'J:'ICE '::'-RATRER-,--
21
LET ME RESTATE THAT IT IS MY PRACTICE TO BE OPEN WITH
22
THIS COURT AND WITH OPPOSING COUNSEL,
23
CLEAR'AND TRANSPARENT -- TO THE BEST THAT I
24
INTEND TO DO THAT.
TO BE FAIR AND
GOINGF'ORWARD,
CAN BE.
I_WOULD
26
TO DISCLOSURE OF THESE TRUST DOCUMENTS,
27
USED BY OPPOSING COUNSEL FOR PURPOSES ONLY FOR THIS
THAT THEY BE
MOTION AND FOR GXVING NOTICE, AND THAT 1T IS NOT TO
10
1
2
3
4
5
6
BE MADE.
THE DOCUMENTS ARE NOT TO BE MADE PUBLIC OR
USED FORANY OTHER REASON.
THE COURT:
YOU COULD HAVE APPLIED FOR A
PROTECTIVE ORDER TO THAT EFFECT IN A TIMELY FASHION.

YOU SEE, MR.
PRASKE HAS PREVIOUSLY BEEN
REPRESENTED BY COUNSEL FOR MR. GAGGERO.
LOOKS LIKE THEY ARE JOINED AT THE HIP.
10
11
MR. ESQUIBIAS:
I VIEW THAT AS PROBLEMATIC, YOUR
HONOR, AND THAT IS WHY -THE COURT:
IN CONNECTION WITH THIS MOTION,
12
IS NOT A SITUATION WHERE MR.
13
PRECEDING TIMES,
14
SORT OF
PRASKE,
THIS
DURING THESE
HAS HAD INDEPENDENT COUNSEL.
HE HAS USED MR. GAGGERO AS COUNSEL, WHICH
15
SUGGESTS TO ME -- CERTAINLY LEADS TO AN INFERENCE,
16
THAT THE POSITIONS TAKEN WERE COORDINATED POSITIONS.
17
AND, WHAT I HAVE HERE SUGGESTS,
COMING IN AT
18
THIS POINT IN TIME,
RAISING ARGUMENTS ORALLY, THAT
19
WERE NOT IN THE PAPERS, ASSERTING EVIDENCE THAT HAS
-- -20
21
SAYING, WELL YOU HAVE GOT TO DELAY IT JUDGE,
22
THAT AND THE OTHER THING.
23
I WANT TO DO ALL THE THINGS THAT MR.
24
HAS NOT _DONE, WHEN: HE WAS REPRESENTED BY MR.
THIS
PRASKE
--------- ------ -------
f------------~---z-5-- ~G__A_G_G-E-Re '-s--eetJNS-E-b-.--S-ME-b-b-S--b-I~K:-E--MeR-E-BE-b-A-Y:-.
26
MR. ESQUIBIAS:
I AM NOT SEEKING AN EXTRAORDINARY
27
AMOUNT OF TIME TO CONTINUES THIS.
28
BE JUST DAYS IN ORDER FOR THE DOCUMENTS TO BE
I THINK IT COULD
11
TRANSFERRED OVER TO OPPOSING COUNSEL.
THE COURT:
2
3
ANYTHING UNTIL I ASKED YOU WHAT THE FACTUAL BASIS FOR
THE ORAL ASSERTIONS YOU WERE MAKING?

MR.
ESQUIBIAS:
YOUR HONOR,
ORAL ARGUMENTS ARE COMMON PLACE.
COURTROOM WITH DIFFERENT SETS OF RULES,
APOLOGIZE THAT I AM NOT FAMILIAR WITH THE CIVIL
IT IS A DIFFERENT
AND I
COURTS OR THE RULES OF THIS COURT.

BUT,
THE FACT REMAINS THAT WE HAVE TO GIVE
NOTICE TO THESE VESTED PRINCIPAL AND INCOME
13
BENEFICIARIES,
14
THE COURT:
30 DAYS.
I
DON'T KNOW THAT THERE ARE VESTED
15
INCOME AND PRINCIPAL BENEFICIARIES.
16
DENIED THAT INFORMATION AS DEFENSE COUNSEL HAS BEEN
17
DENIED THAT INFORMATION.
18
MR.
19
THE COURT:
2-0
ESQUIBIAS:
WHAT,
HAVE BEEN
SEEK TODAY TO RIGHT THAT WRONG.

IF ANYTHING ELSE ARE YOU
-- -OF}'ERING---tNWAT--OF'IN'FORMATTON---THA-T -HAS BEEN -- - -- - --- -PREVIOUSLY WITHHELD?
22
23
QUESTION BECAUSE I
24
PREVIOUSLY
MR. 'ESQUIBIAS:
IT IS HARD FOR ME TO ANSWER THAT

DON'T KNOW WHAT HAS BEEN
WITHHELQ.
I HAVE ONLY BEEN IN THIS CASE
-----2-5-- ----1-4-D-A-Y--s-:26
IS
HAVE BEEN PRACTICING PROBATE LAW FOR 20 YEARS.
12
21
CAN TELL YOU,
THAT I
11
_-I- - - - -
ALL I
10
1--
WHY WAS THIS NOT BROUGHT OUT IN
- - - - -------
THE COURT:
27
THAN THAT,
28
DOCUMENT ,
SUSPECT IT HAS BEEN A LITTLE LONGER
BECAUSE IT TOOK SOME TIME
~O
UNLESS YOU DIDN 1 T PREPARE IT
PREPARE THE
12
1
I BELIEVE ALL THE INFORMATION
CONTAINED IN THE TRUST INSTRUMENTS AND PERHAPS
FUNDING DATES OF THE ASSETS IN THOSE TRUSTS WOULD BE
SUFFICIENT.
THAT WOULD BE REQUIRED FOR THIS COURT OR OPPOSING
COUNSEL TO MAKE THE CONCLUSION THAT THE ASSETS ARE
UNREACHABLE.
9
10
I DON'T KNOW OF ANY OTHER INFORMATION
THE COURT:
SO, YOU WISH TO PROVIDE NOT THE
ENTIRETY OF THE INFORMATION BUT ONLY A PART OF THAT?

MR.
ESQUIBIAS:
WE WOULD ONLY WANT TO PROVIDE
11
INFORMATION THAT IS EITHER AGREED UPON BETWEEN MYSELF
12
AND OPPOSING COUNSEL OR IF WE COULD NOT COME TO SOME
13
TYPE OF AGREEMENT, WHATEVER THIS COURT WOULD
14
DETERMINE TO BE RELEVANT.
15
16
17
- ----
ESQUIBIAS:
..
MR.
THE COURT:
EVERYTHING?
HOW WOULD I KNOW WITHOUT YOU PROVIDING
I HEAR AT BEST A CONTINGENT OFFER.
MR. ESQUIBIAS:
I PLAN TO HAVE A MEET AND CONFER
18
WITH OPPOSING COUNSEL TO FIND OUT WHAT IN PARTICULAR
19
THEY ARE INTERESTED IN KNOWING ABOUT THESE TRUSTS,
- -20-
BUT--:nr MY-
M:rJ:,:rI5~-ACC-ORDING-TO
21
THE DOCUMENTS THEMSELVES,
22
INFORMATION THEY NEED.
23
24
tHE-tAW- AND ACCORDING TO
I KNOW IN MY MIND WHAT
I REMAIN OPEN TO PERSUASION FROM OPPOSING

COUNSEL AS TO ADDITIONAL.INFORMATION,
:--------------2'-,5----M-R-.-C-ri-AT-F-I-E-IJEl---==----------- ----------- ---------.------ ------.

26
27
MR. CHATFIELD:
WELL,
YOUR HONOR, AN ISSUE THAT
LOOMS OVER THIS IS THAT, WHAT THE DEFENDANTS SEEK TO
bO HERE 18 IMPE.RMISSrBLE OUTslbE REVERSE PIERCING.
I
r---
13
THE COURT:
1
2
READ THE AUTHORITIES, AND FRANKLY I AM NOT PERSUADED
BY THAT.
IF THE TRUST IS -- IF ONE OR MORE OF THE TRUSTS,
EXAMPLE,
IS WELL ESTABLISHED THAT YOU CAN GO IN TO THE TRUST.
YOU DON'T NAME THE TRUST.
THROUGH THE TRUSTEE, BUT I DON'T THINK THERE IS A LOT
OF DOUBT ABOUT THAT, AND THE CASE ONE OR MORE RECENT
--
----
YOU HAVE TO GO AT IT
V-L-A-D-T LLC,
12
GOOD DEAL TO SAY ABOUT THIS.

AND,
191 CAL APP.
IF YOU,
4TH,
YOU KNOW,
486, AND THAT HAS A
THE BASIC PARAMETERS
14
OF AMENDING THE JUDGMENT ARE ARTICULATED IN HALL,
15
H-A-L-L G-O-O-D-H-U-E, H-A-I-S-L-E-Y, AND BARKER
16
VERSES M-A-R-C-O-N-I CONFERENCE CENTER BOARD,
17
APP.
20-
4TH,
FOR
THE CASE LAW
11
41 CAL
1551.
AND THERE IS A BUNCH OF OTHER CASES THAT

APPLY ON THIS.
19
-
IS AN ALTER EGO OF MR. GAGGERO,
CASES ON THIS IS GREENSPAN, G-R-E-E-N-S-P-A-N
18
I
IT IS WELL ESTABLISHED THAT YOU CAN PIERCE
10
13
r- -
I READ THE ARGUMENT IN DETAIL, AND I
MR. CHATFIELD:
21
HAVING ENTERED THE AWARD APPROVING THE ARBITRATION IN
22
THAT GREENSPAN CASE, THAT THE COURT ON PAGES 513
23
THROUGH 514 OF GREENSPAN STATED THAT IN POSTAL
24
26
27
28
I
1--------------------
__ INSTANT PRESS VERSUS KAZO CORP THE CQURT OF APPEAL
VEIL IS NOT PERMITTED IN CALIFORNIA.

THAT IS, THE CORPORATE VEIL WILL NOT BEPIERCED TO -ATISFY TREDEBT OF AN J:N'olV1DOAL
14
1
SHAREHOLDER--
THE COURT:
RATHER THIS COURT EXPLAINED THE ALTER
EGO DOCTRINE WILL ONLY BE APPLIED TO AN INDIVIDUAL
SHAREHOLDER LIABLE FOR A CORPORATE DEBT WHERE THE
INDIVIDUAL IS HAS DISREGARDED THE CORPORATE FORM BUT
THAT IS NOT --
MR.
CHATFIELD:
HONOR,
REVERSE PIERCING.
AT THE VERY NEXT SENTENCE,
IT SAYS THIS CASE DOES NOT INVOLVE OUTSIDE

AND WHY IS THAT?
BECAUSE THE
10
JUDGMENT WAS AGAINST TWO ENTITIES,
11
SEEKING TO BRING INDIVIDUALS IN AS ADDITIONAL
12
JUDGMENT DEBTORS.
13
THERE WAS A JUDGMENT AGAINST AN INDIVIDUAL,
14
WERE TRYING TO GO AFTER THE TRUST.
15
YOUR
THE COURT:
AND THEY WERE
NOT -- THIS WAS NOT A CASE WHERE
THIS ISA SITUATION WHERE,
AND THEY
KPC IS
16
SEEKING TO HOLD THE SPECIALLY APPEARING PARTIES
17
LIABLE FOR GAGGERO'S DEBT WHERE THEY ARE ALLEGED TO
18
BE THE ALTER EGOS OF GAGGERO.
19
MR.
CHATFIELD:
THAT IS TYPICAL OUTSIDE REVERSE
20
21
IS NOT RECOGNIZED IN THE STATE OF CALIFORNIA.
22
PROVIDED YOU WITH AUTHORITY ON THAT,
23
AT MY LAST VIEW,
24
STATE EXACTLY THE SAME THING.
I HAVE
PLUS THERE ARE
24 OTHER UNPUBLISHED DECISIONS WHICH
YOU CANNOT IMPOSE
:-- - - - - - - - - 2 - . ' ] - -L-r-ltB-rI:,-I-TY-1tND-B-R-I-N-<:~--I-N---E-NTJ:-TJ:-E-S--TG-S-A-T-I-S-Fy-kN-------
26
INDIVIDUAL'S DEBT.
AND EVEN IF THE STATE RECOGNIZED
27
OUTSIDE REVERSE PIERCING,
28.
HAVE TO GO THROUGH AN ADlYtT10DJAL ANALYS IS WHICH THIS
WHICH IT DOESN'T,
._---_._---
YOU, WOULD
- ------
- --- - - -
15
1
2
THE COURT:
I KNOW WHERE YOU ARE GOING ON THAT.
GO AHEAD AND SAY IT.
YOU ARE GOING.
YOU ARE SUGGESTING THAT THE FACT THAT AT TRIAL
MR. GAGGERO PUT ON NO EVIDENCE THAT HE WAS SUING ON
BEHALF OF PCM TO RECOVER THE ATTORNEY'S FEES,
SOMEHOW DISPOSITIVE.
ON THE FAILURE OF MR. GAGGERO TO PRODUCE CERTAIN
YOU ARE WRONG, BUT I KNOW.WHERE
BECAUSE I READ IT IN YOUR PAPERS.
IT IS NOT.
IS
THAT WAS A COMMENT
10
EVIDENCE IN THE TRIAL WHEN IT WAS DIRECTED TO THE
11
ISSUE OF DAMAGES, HIS DAMAGES THAT HE WAS CLAIMING
12
AGAINST KNAPP PETERSEN & CLARKE SO, YOU KNOW.
13
WHAT YOU SAID IN YOUR PAPERS, AND I AM SORRY IT IS
14
NOT --
15
16
_._.
COURT DISPOSED OF IN ITS OWN STATEMENT OF DECISION.
MR. CHATFIELD:
I SAW
WHAT I AM SAYING IS SOMETHING A
LITTLE DIFFERENT.
17
I AM GOING BY YOUR FINDINGS OF FACT, AND YOU
18
STATED ON PAGE 16 OF YOUR STATEMENT OF DECISION THAT
19
UNLESS OTHERWISE SPECIFICALLY STATED, THE FACTS SET
26- -- -to-RTH --BE Lo~r ARE -Et'f HE R-- UNO :CS P llTED -ORRE PRE SEN T
THo~rE
21
WHICH THE COURT FINDS TO BE TRUE BY THE PREPONDERANCE
22
OF THE CREDIBLE EVIDENCE, AND THEN IN THE FINDINGS OF
23
FACT ON PAGE 18, THE COURT STATED THAT IN 1995 AND
24
1996 GAGGERO DID EXTENSIVE ESTATE PLANNING WHICH
26
TRANSFERRED TO VARIOUS CORPORATIONS, TRUSTS
27
FOUNDATIONS.
28
HE
RE~AfNEb
ABSOLUTELY NO OWNERSHIP INTEREST
16
1
AND NO CONTROL.
THE COURT:
IS THERE A DOT DOT DOT IN THERE?
YOU OMIT SOME OF THE WORDS THAT I
MR.
WERE IN THE ORIGINAL,
CHATFIELD,
MR.
THE COURT:
PUT IN THERE?
DID YOU OMIT SOME OF THE WORDS THAT
CHATFIELD:
IN THE STATEMENT OF DECISION?
I AM SUMMARIZING THAT.
YES,
BECAUSE YOU ARE OMITTING FOR THE
THERE IS SOMEWHERE IN THERE FOR THE
PURPOSE
PURPOSE OF TRYING TO SHIELD

THEM FROM CREDITORS.
,
10
MR.
CHATFIELD:
ACTUALLY,
11
RELATING TO CREDITORS WAS,
12
THREATS,
13
DISCHARGE THE KNBC CREDITORS
14
THINGS.
16
MR.
WHAT THE COURT SAID
THAT ALTHOUGH GAGGERO USED
BLUSTERS AND ULTIMATUMS TO ATTEMPT TO
THE COURT:
15
DID
I
.
CHATFIELD:
SAID OTHER THINGS.
SAID OTHER
YOU ALSO SAID THAT KNBC'S CLAIM
17
WAS PAID EARLY IN 2002 BY FULL PAYMENT PLUS INTEREST
18
AND AWARDED ATTORNEYS FEES, AND YOU ALSO STATED THAT
19
THE SLOCOM CLAIM WAS WITHDRAWN AND DISMISSED.
--- 2"0"-"' --"._- -". --- t-H"E--C(5U-R"T" :---"- -NOW-,-- S r-R";"-- -"T-R-KT---HAS"-"-N0THT"N-G --TO- -D"O- -"WITH" -- -.. ".- - ---"----" ..
21
THIS CASE.
THAT HAS NOTHING TO DO WITH THE ISSUES
22
BEFORE THE COURT:
23
COURT ENTERED, WHICH HAS BEEN AFFIRMED BY THE COURT
24
OF APPEALS,
THE STATEMENT OF DECISION THE
IS NOT DISPOSITIVE OF ANY ISSUE BEFORE
f- ----------z-5-----T-H-E-e-etJ-R-':p--T-e-BA~-.----------------------------------------------
26
IF -- IS THERE ANYTHING ELSE YOU WOULD LIKE
27
TO SAY.
28
MR.
CHATFIELD:
YES.
-KPC HAS NOT MET ITS BURDEN
-----
'.
17
1
OF SHOWING THAT THE BUSINESS ENTITIES OR PRASKE WERE
GAGGERO ALTER EGOS.
THE BUSINESS ENTITIES OR PRASKE'S CONTROLLED THE
LITIGATION OR WERE VIRTUALLY REPRESENTED IN THE
ACTION.
I
I
~-
IN FACT --
THE COURT:
KPC PRESENTED NO EVIDENCE THAT
DOES THE FACT THAT THEY -- IT LET ME
START OUT WITH THIS PREDICATE, MR.
THAT THEY HAVE MADE A PRIMA FACIA CASE THAT THESE
ENTITIES ARE ALTER EGOS OF MR.
CHATFIELD,
GAGGERO.
10
THAT,
THERE IS NO DOUBT THAT MR.
11
THE UNDERLYING LITIGATION.
12
ENTITIES AS I
13
OF MR.
14
LITIGATION WHICH HE UNDOUBTEDLY DID,
SEE THEM.
GAGGERO,
15
MR.
16
THE COURT:
AND MR.
ESQUIBIAS:
NO,
THINK
AND IF I
DO
GAGGERO CONTROLLED
THESE ARE NOT INDEPENDENT
AND IF THEY ARE ALTER EGOS

GAGGERO CONTROLLED THE
YOUR HONOR,
MR.
THEN WHAT?
IF I MAY RESPOND.
CHATFIELD CAN RESPOND TO THIS.
17
HE WAS ONE OF THE ATTORNEYS WHO REPRESENTED
18
MR.
19
TRIAL.
GAGGERO DURING THE TRIAL PROCEEDINGS OR IN POST
. - ",2-0-"'- --- -- _.. - _. MR-.---
tHAT-F-f'E1~t)
:-... _- I, ._. P"IR-S-t- "OF-
AtL-~
---FAIL -- To- .- --- .-.---. -- .
21
UNDERSTAND HOW THE COURT HAS REACHED THE CONCLUSION
22
THAT ALL OF THE ELEMENTS OF ALTER EGO HAVE BEEN
23
FULFILLED WITHOUT ANY EVIDENCE SUPPORTING IT WHEN WE
24
HAVE PROVIDED THE COURT WITH DECLARATIONS.
L. :J
T-I1-E~El-E-F-~m)1tNT-S~I11tV-E-J:>-R-(J-V-I-L)'~El--T-I1-E-eOtYR-T~W-I-T- H~E-V-I-BE-Ne-E--- ~---
26
AS TO THE CORRECTNESS OF THE SETUP OF THE PARTICULAR
27
ENTITIES
28
GOOD STANDING INTBE STATE OF CA-L:LFORNIA,
==
AND ALSO,
TIlE STATUS OF TIlE ENTITIES AS BEING IN
--
THAT THE
18
1
ENTITIES HAVE
MR.
ESQUIBIAS'S BRIEF,
THAT THE
COMPANIES ARE SEPARATE AND DISTINCT FROM MR.
GAGGERO,
AND THAT THERE IS NO EVIDENCE TO SUPPORT THE
CONCLUSION OTHERWISE.
-~
IT IS IN THE DECLARATION OF
PRASKE THAT IS IN MR.
AND AGAIN, EVEN IF THEY WERE TO BE FOUND TO
BE THE ALTER EGO,
AN INDIVIDUAL AND DO OUTSIDE REVERSE PIERCING TO ADD
ENTITIES AS NEW JUDGMENT DEBTORS.
10
THE COURT:
YOU CANNOT TAKE A JUDGMENT AGAINST
WELL,
YOU KNOW,
THE EXHIBITS ATTACHED
11
TO THE MOTION CONTAIN TESTIMONY OF BOTH MR.
GAGGERO
12
AND MR.
13
SPECIALLY APPEARING PARTIES IS TO PROTECT 100 PERCENT
14
OF MR.
15
PRASKE IS THE ONLY TRUSTEE OF THE TRUST AND
16
FOUNDATION INVOLVED IN THE MOTION.
17
TWO OFFICERS IN PCM.
18
GAGGERO'S WISHES WITHOUT RESISTANCE OR HESITANCE.
19
PRASKE IS ALSO THE REGISTERED AGENT FOR SERVICE OF
21
EVIDENCE SHOWS THAT MR.
22
TESTIFIED UNDER PENALTY OF PERJURY THAT THE GAINS AND
23
LOSSES FOR THE ASSETS AND THE ESTATE PLAN,
24
FLOW THROUGHMR.GAGGERO'S TAX RETURNS,
PRASKE SHOWING THAT THE ONLY INTEREST OF THE
GAGGERO'S ASSETS,
BOTH PERSONAL AND BUSINESS.
HE IS ONE OF ONLY
PCM PAYS EVERYTHING AT
GAGGERO'S OWN ACCOUNTANT
ULTIMATELY
WHICH IS MORE
----------L-5----E-V-I-DE-N-C-E-L,-F-~I:JT-E-R-E-GO-S-T"A"T-tJ-S--.---------------------- --.~
26
GAGGERO CONTROLLED THE LITIGATION.
HE DID SO
27
BY THE WAY OF THE FINANCIAL ASSETS OF THE SPECIALLY
28
APPEARING PARTIE.
THEIR INTERESTS AREALtGNED WITH
-.--
19
1
MR. GAGGERO.
THEY WOULDN'T EVEN EXIST.
THE SOLE PURPOSE OF THE EXISTENCE OF THE SPECIALLY
APPEARING PARTIES IS TO HOLD MR.
THEY ARE ONE IN THE SAME.

MR.
CHATFIELD:
THE COURT:
KNOW,
GAGGERO'S ASSETS.
THAT IS THE BOTTOM LINE.

YOUR HONOR,
DON'T KNOW
YOU MEAN OTHER THAN THE EXHIBITS,
IF I WERE INCLINED, WHICH I AM NOT,
11
NUMBERS IN THE EXHIBITS WHERE THE DIFFERENT
12
COMPONENTS OF THAT FLOW FROM,
13
INCLINED TO DO THAT.
MR.
CHATFIELD:
WELL,
BUT,
YOU KNOW,
YOUR HONOR,
YOU
I COULD GO
DOWN AND SITE THE PAGE AND LINE NUMBERS OR PAGE
I AM NOT
I HAVE LOOKED AT
15
THE PAGE AND LINE NUMBERS AND THE TESTIMONY WHICH IS
16
ATTACHED TO THE MOTION,
17
QUOTATIONS IN THE MOTION AND IN THE REPLY BRIEF ARE
18
NOT WHAT THE PEOPLE ACTUALLY SAID.
19
20
-_ .. ---
--
THE COURT:
THEMSELVES.
22
MR.
24.
AND I HAVE SEEN THAT THE
FOR EXAMPLE, A QUESTION WAS ASKED --
21
23
MR.
I READ THE EXHIBITS.
CHATFIELD:
AS I.SAID,
THE MOTION TAKES
PRASKE'S TESTIMONY OUT OF CONTEXT.

THE COURT:
. WHAT ASPECT OF MR.
PRASKE' S TEST:r:MONY
26
PAGE AND LINE NUMBERS YOU THINK ARE TAKEN OUT OF
27
CONTEXT.
28
PRASKE TESTIFIED THAT
10
14
~I---
WELL,
MR.
GAGGERO
WHERE YOU ARE GETTING THIS.
WITHOUT THEM -- WITHOUT MR.
MR. ESQUIBIAS:
YOUR HONOR,
IF 1 MAY lNTERRUPT.
20
1
THE COURT:
MR.
THIS IS MR.
ESQUIBIA~:
CHATFIELD'S ARGUMENT.
HE IS ARGUING ABOUT SOMETHING
ABOUT MY CLIENT WHO I REPRESENT.

THE COURT:
HE IS ARGUING ABOUT SOMETHING FROM
WHEN HE REPRESENTED YOUR CLIENT.
ABOUT THE TESTIMONY IN THE JUDGMENT DEBTOR EXAM?
MR.
THE COURT:
NO,
YOUR HONOR.
WHICH TESTIMONY ARE YOU TALKING ABOUT
IN THE URA CASE?

MR.
10
11
12
CHATFIELD:
ARE YOU TALKING
CHATFIELD:
I
YES,
YOUR HONOR, AND TELL ME
DID NOT REPRESENT HIM IN THE URA CASE,
HONOR.
13
THE COURT:
14
MR.
WHOM DID YOU REPRESENT,
CHATFIELD:
NO,
I WAS NOT.
MR.
GAGGERO?
I WITHDREW AS
15
ATTORNEY OF RECORD IN THAT CASE PRIOR TO TRIAL.
16
MR.
BOSWICK REPRESENTED MR.

THE COURT:
17
18
YOUR
GAGGERO.
WHAT IS THE PORTION OF THE TESTIMONY
THAT YOU THINK WAS TAKEN OUT OF CONTEXT,

MR.
CHATFIELD:
WELL--
21
MR.
CHATFIELD:
IN EXHIBIT G.
22
THE COURT:
19
SIR?
---20-- -----
23
JUNE 13TH,
24
MR.
THE PRASKE CROSS-EXAMINATION
2005.
CHATFIELD:
THE QUESTION WAS ASKED ON PAGE
+-~---------L-.5---e-eJ:I-.--------------------------~------------------------ -~--
26
27
THE COURT:
JUST A MINUTE.
THIS.
r--
28
I
-,I
MR. CEA'1'FXEtD:
ALL RIGHT.
I AM TRYING TO FIND
21
1
THE COURT:
MR. CHATFIELD:
THROUGH 1001.
MAKES RECOMMENDATIONS TO HIM, BUT THAT MR. PRASKE IS
THE ONLY ONE THAT CAN MAKE THE DECISIONS.
GO
AND IF YOU
BUT MR. -- PAGE 1000 HE SAYS THAT
MR. GAGGERO, HE HAS GOT THE TRUST AND THE LLC'S THESE
ENTITIES WANT TO BUY A PIECE OF PROPERTY.
MR.
PRASKE
10
IS THE TRUSTEE, BUT MR. GAGGERO IS THE MANAGER, AND
11
HE TELLS MR.
PRASKE WHAT HE WANTS TO DO.
MR. CHATFIELD:
THAT IS NOT THE WAY I READ THE
I READ THE TESTIMONY TO SAY THAT
13
TESTIMONY.
14
MR. GAGGERO IS ONE OF THE PEOPLE WHO WORKS AT THE
15
MANAGEMENT COMPANY AND MAKES RECOMMENDATION TO
16
MR.
17
WHAT TO DO.
18
19
--
MR. PRASKE TESTIFIED THAT MR. GAGGERO
THE COURT:
12
-----------_.-
WELL, STARTING ON PAGE 1000 GOING
---.,
I HAVE PAGE 1001.
PRASKE, AND MR.
PRASKE MAKES THE DECISION AS TO
THE COURT:
QUESTION:
PAGE 1,000, LINE 22.
-20
21
WANT TO BUY THIS GREAT PIECE OF PROPERTY.
22
WHAT SHOWING MUST MR.
23
ORDER TO SATISFY YOU AS THE TRUSTEE WITH
24
FIDUCIARY DUTIES,_THAT I AM GOING TO RELEASE
GAGGERO MAKE TO YOU IN
--------L-5---------FtJND3---FCYR-TJi-AT-P-rE-e-E--(')-F-]:l-R-(')-]:l-E-:R.-T-Y-?--------------------26
ANSWER:
.SUCCESSFUL HISTORY OF
27
MAKrNG POSITIVE, SUCCESSFUL
28
TRANSACTIONS -.
._ - - - - - - - - - - - -
---
22
1
QUESTION:
ANSWER:
THING.
QUESTION:
WANT MONEY AND YOU SAY,
ANSWER:
QUESTION:
ANSWER:
MAKING INVESTMENTS FOR THE BENEFIT
--
_..
__ .
---
NO.
SO WHAT IS THE PROCESS?

IF IT IS WITH REGARD TO
12
INVESTMENT.
13
RECOMMENDATION.
14
WHAT IS OUT OF CONTEXT?

MR.
CHATFIELD:
I WILL FOLLOW THAT
WHAT IS OUT OF CONTEXT IS THAT
16
MR. GAGGERO IS NOT THE DECISION MAKER.
17
IS THE DECISION MAKER.

THE COURT:
MR.
THE TRUSTEE
PRASKE IS FOR ALL INTENTS AND
PURPOSES A RUBBER STAMP.
AND THE TESTIMONY THAT YOU
-t:fIRECTE-b---ME---TTs-eONF-IRMS TR-AT-IF- HE--MAKES- -THE----
20
21
RECOMMENDATION, MR.
22
HARD TO INTERPRET THAT LANGUAGE ANY OTHER WAY.
24
HOW MUCH?
RECOMMENDATION ON A PROPERTY
123
WELL,
GAGGERO SAYS I
11
19
_-
SO, MR.
OF THE TRUST,HE MAKES A
18
..
THAT IS THE MOST IMPORTANT
10
15
I
1--
THAT IS IT?
MR.
--
CHATFIELD:
PRASKE DOES IT.
WELL,
IT IS A LITTLE
HE GOES ON TO SAY ON THAT
PAGE; 'fEAT ONLINE 14 LINE 15 IT - - SAYS

- - - ---
------------2-5- ~-_---~~tJ-E-s-'I'-I-eN-:--I-:kM-T-RY-I-NG--IN-M-Y-eW-N---------------1---------
-j
26
MIND TO DISTINGUISH THAT DIFFERENT
27
FROM MR.GAGGERO SAYING I WANT MONEY
28
AND YOU SAYING HOW MUCH,BECAUSE --
1--
r------~-------------------------
23
1
AND THEN ANSWER IS BECAUSE AND
THEN --
QUESTION:
DISTINCTION BETWEEN THOSE TWO?
ANSWER:
AND SAID I WANT $2,000,000 TO SPEND
IN LAS VEGAS.
OTHER WORDS IT HAS TO BE FOR THE
BENEFIT OF THE TRUST?

ANSWER:
11
QUESTION:
12
ANSWER:
YES?
YES.
OKAY.
SO,
I WANT THE -- GAGGERO SAYS
SAYS YES,
16
THE CHECK.
SIR, YES,' SIR, THREE BAGS FULL AND SIGNS
MR. CHATFIELD:
HONOR,
PRASKE
THAT IS NOT NECESSARILY SO,
YOUR
ALTHOUGH --
THE COURT:
WHAT ABOUT MR.
PRASKE'S TESTIMONY
---.
20
21
r---------i
i
YES.
15
19
-
IN
I WANT THE TRUST TO BUY THIS PROPERTY AND MR.
18
-- --
THE COURT:
I MIGHT SAY NO.
14
17
._-
BECAUSE IF HE CAME TO ME
10
13
WHY ARE YOU DRAWING A
MR. CHATFIELD:
HIS TESTIMONY IS THAT MR. GAGGERO
22
MAKES THE RECOMMENDATION, AND HE MAKES THE DECISION
23
IT IS NOTHING IN THERE THAT SAYS THAT.
24
THE COURT:
WHAT DO YOU DO THEN, SIR, WITH_THE
-Z5- --nTRKC~-WSWER?'------------------------------------------------
SO WHAT IS THE PROCESS?
26
QUESTION:
27
ANSWER:
28
INVtSTMtNTS FOR
IF IT IS REGARD TO MAKING
TH~
BENEfIT OF THE
'~1
1")"
24
1
TRUST,
ON A PROPERTY INVESTMENT,
FOLLOW THAT RECOMMENDATION.
LIKE NO EXERCISE OF DISCRETION BY
MR.
KNOW,
PRASKE.
MR.
THE COURT:_
9
10
11
12
13
AND HE MAKES A RECOMMENDATION
HE SAYS DO IT,
IT IS LIKE,
ESQUIBIAS:
I WILL
SOUNDS
YOU
YOU KNOW --
COMPLETELY DISAGREE,
WHEN MR.
GAGGERO SAYS JUMP,
YOUR HONOR.
MR.
PRASKE
SAYS HOW HIGH ON HIS WAY UP.

MR.
ESQUIBIAS:
AS A PERSON SITTING HERE LISTENING
TO THE STATEMENTS NOT INVOLVED IN THE DEPOSITION -THE COURT:
THAT IS TRIAL TESTIMONY,
SIR.
THIS IS
TRIAL TESTIMONY.
14
MR.
15
TESTIMONY,
16
EXERCISE DISCRETION THAT HE DETERMINES WHETHER IT IS
17
FOR THE BENEFIT OF THE TRUST.
18
19
- -- - -- ------20-----
ESQUIBIAS:
AS A PERSON LISTENING TO TRIAL
I CAN TELL YOU IT SOUNDS LIKE HE DOES
THE COURT:
WISH TO MAKE,
DO YOU HAVE ANY DIFFERENT POINTS YOU

MR.
CHATFIELD?
DEALT WITH THAT PARTIcTfLAR-O-NKrS--THAT--WAS-TR8---0NE- --- - - ------- - --
21
YOU POINTED ME TO.
22
PLENTY OF OTHER STUFF.
23
24
THE ONLY REASON WE
MR.
CHATFIELD:
THERE ARE OTHER -- THERE ARE
WELL,
YOUR HONOR,
THE EVIDENCE SHOWS ALTER EGO,
DISAGREE THAT
AND AGAIN, - L STATE TBAT
-------------L-5-----E""V-E-N---I-F-I-T--El-I-D--3It()W-kI:JT-E"R--E-~O,-T-rtE"-()-N-L-Y--WA-Y-y-()tr-e--AN---------I----
26
PIERCE IN TO THE ENTITIES IS THROUGH OUTSIDE REVERSE
27
ALTER EGO WHICH IS N()T-PERMITTED
CALIFORNIA.
Ir------
--------------
rN
THE STATE OF
25
1
THIS IS A JUDGMENT AGAINST AN INDIVIDUAL, AND
YOU ARE TRYING
SUBJECT TO JUDGMENT AGAINST AN INDIVIDUAL.
THE COURT:
~O
MAKE AN ENTITIES AND THEIR ASSETS
IF I AM JOHN JONES, AND I SET UP A
JOHN JONES TRUST, AND I DUMP ALL MY ASSETS IN TO IT,
AND I RUN IT AS MY PIGGYBANK, ARE YOU SUGGESTING THAT
JOHN JONES TRUST CAN'T BE REACHED?
MR.
THE COURT:
MR.
10
11
ESQUIBIAS:
YOUR HONOR --
I DON'T THINK SO.
ESQUIBIAS:
I WOULD ACTUALLY SAY,
YES,
THAT'S
CORRECT.
12
THE COURT:
13
MR.
I DON'T THINK SO.
ESQUIBIAS:
14
4TH,
15
DISTRICT.
16
ACTUALLY,
THAT IS THE LAW UNDER 141 CAL APP.
25 A 2006-CASE,
THE COURT:
DIVISION ONE OF THE FOURTH
AND THEN THAT SEEMS TO RUN COUNTER TO
17
GREENSPAN,
BECAUSE GREENSPAN SAYS THAT YOU CAN GO IN
18
TO THE TRUST THE ALTER EGO DOCTRINE, MAY APPLY TO THE
19
TRUSTEE -- THE TRUST THROUGH THE TRUSTEE, AND
20
21
22
23
.24
26
27
28
CITES GREENSPAN.
MR. ESQUIBIAS:
THAT REGARD,
I WILL TELL YOU WHAT -- SAYS IN
YOUR HONOR,
THE COURT:
.1
IT SAYS THAT --
WILL TAKE THE 2010-CASE.OU'l' Of OUR
AUTHORITY.
I AM PERSUADED BY THE SHOWING THAT THESE
PERSONS AND ENTITIES ARE AtTER :EGOS OF MR. GAGGER.O
26
1
AND CLEARLY,
PIERCE THE VEIL -- NOT TO GET OUT THESE ENTITIES
WHICH ARE HIS ALTER EGO.
SUBSTANTIAL JUDGMENT AGAINST HIM,
ATTEMPTED TO USE THESE DEVICES TO PUT HIS ASSETS
BEYOND THE REACH OF LEGITIMATE CREDITORS,
HAD A FULL AND FAIR OPPORTUNITY TO LITIGATE THIS.
I AM NOT RESPONSIBLE FOR WHEN MR.
10
AND HE HAS
AND WE HAVE
PRASKE GETS
KNOW AT THE MOMENT THERE IS ZERO EVIDENCE
12
TO SUPPORT,
13
THE POSITION THAT THERE IS A PLETHORA OF -- I
14
KNOW WHO THESE PEOPLE ARE.
ZERO EVIDENCE IN THE RECORD TO SUPPORT
AND IN FACT,
DO KNOW THAT MR.
DON'T
PRASKE WAS
16
EXTRAORDINARILY VAGUE WHEN HE WAS QUESTIONED AT TRIAL
17
ABOUT THE IDENTITIES OF THESE BENEFICIARIES SUPPOSED
18
BENEFICIARIES.
YOU KNOW,
19
~.
SINCE HE HAS THIS
NEW COUNSEL MAKES OR DOESN'T MAKE IN HIS OPPOSITION.
15
IT WOULD BE INEQUITABLE NOT TO
I AM NOT RESPONSIBLE FOR WHAT ARGUMENTS
NEW COUNSEL.
11
r--- ---- -- - - - - -
CLEARLY,
10-- ---
THE DECISION WAS MADE LONG AGO TO
-KEEp-THE-Tl~.-oST---DOCURENTS-(jU-T
21
DEFENSE,
22
YOU KNOW,
23
IT,
24
BERE,
- OT -TRg-HANDS--OFTBE-- - -
AND NOW TO TRY AND INVOKE THE TERMS OF IT,

WITHOUT GIVING IT TO THE OTHER SIDE.
HAVE
YOU KNOW -- THERE IS A LITTLE BIT OF AN ANALOGY,
TO THE ASSERTION OF THE ATTORNEY-CLIENT
~------2-5- --P-R-I-V-I-I:JE-@-E-~---T-HE-G-E-N-E-RA-I:JRtJ-I:JE--I-S--T-H-AT~T-H-E'------------~---
26
ATTORNEY-CLIENT PRIVILEGE CANNOT BE ASSERTED AS BOTH
27
A SWORD AND ASHIELD,AND IF YOU IN PRETRIAL
28
DISCOVERY ASSERT THE ATTORNEY-CLIENT PRIVILEGE ,
TO
-----
27
1
PROTECT CERTAIN THINGS AGAINST DISCLOSURE,
YOU ARE NOT GOING TO BE ALLOWED TO ALL OF A SUDDEN AT
THE LAST MINUTE,
HAVE GOT ALL THIS STUFF, WE KNOW WE HAVEN'T TOLD YOU
ABOUT IT BUT WE ARE NOW MAKING THE DECISION TO WAIVE
IT.
THE -- THIS IS A SITUATION WHERE THESE ISSUES HAVE
BEEN PERCOLATING FOR A LONG TIME, AND THERE IS A
FUNDAMENTAL UNFAIRNESS TO MAKING KPC JUMP THROUGH ALL
DROP IT AND SAY BOY OH BOY,
THAT IS ONLY AN ANALOGY,
NOW WE
I HAVE GOT TO TELL YOU
10
THESE HOOPS TO COLLECT THE JUDGMENT AND SAYING NO,
11
YOU CAN'T HAVE X,
12
LAST MINUTE MAKING ARGUMENTS NOT SET FORTH IN THE
13
PLEADINGS WEIGHS ON EVIDENCE,
14
AND SAYING JUDGE GIVE US A DO OVER.
15
16
Y,
AND Z,
NO
AND THEN COMING IN AT THE
NOT BEFORE THE COURT
THERE IS A FUNDAMENTAL UNFAIRNESS TO THAT.

MR.
CHATFIELD:
WELL,
YOUR HONOR,
I WOULD
17
RESPECTFULLY WOULD SAY THAT THE REASONING BEHIND IS
18
THERE IS A FUNDAMENTAL UNFAIRNESS FOR BRINGING IN
19
OTHER PEOPLE WITH OTHER INTERESTS WHO DIDN'T ATTEND A
21
THE COURT:
MR.
GAGGERO CONTROLS THESE ENTITIES.
22
THEY ARE HIS ALTER EGO,
23
THE COURT OF THAT.
24
MR.
ESQUIBIAS:
THE EVIDENCE FIRMLY PERSUADES
YOUR HONQR,
26
THIS SYSTEM, AND MR.
27
KNOW,THIS IS WHAT HE DID.
28PURP~SES.
I
.r--_.-
ORDINARILY
lWO_ULD THINK THAT - __
GAGGERO IS THE GUY WHO IS -- YOU
HE TOLD ME SO,
AND HE DID IT FOR THESE

IN THE TRIAL r
TO SHIELD HIS
28
1
ASSETS FROM CREDITORS.
TESTIMONY ON CROSS EXAMINATION AT THE TRIAL IN THIS
CASE.
MR.
CHATFIELD:
I BELIEVE THAT WAS HIS
I BELIEVE THAT IS INCORRECT,
THAT WAS YOUR CONCLUSION,
YOUR;
HONOR.
UNDERSTAND IS HOW WITHOUT ANY EXAMINATION OF THESE
ENTITIES PACIFIC COAST MANAGEMENT,
WALK LP,
MARINO GLENCO LP,

LLC,
11
ALTER EGO.
BLU HOUSE LLC AND BOARDWALK SUNSET
HOW YOU CAN DETERMINE THAT THEY ARE ALL HIS
THE COURT:
THE MOTION IS GRANTED.
THE ORDER HAS BEEN SIGNED.
13
14
511 OCEAN FRONT
GINGERBREAD COURT LP, MALIBU BROAD BEACH LP,
10
12
BUT WHAT I DON'T
NOTICE.
DEFENSE TO GIVE
THANK YOU.
15
16
17
18
19
----2d
21
22
23
24
~--~~--~----z-5-:~~--~--------~----------~~-----~-----------------------1------
26
27
28
I
-r---
<')
J-I!'~'
,.
fI, -

HONORABLE ROBERT L HESS r JUDGE
DEPT. LA 24
STEPHEN GAGGERO r AN INDIVIDUAL;
PLAINTIFF r
-VS-:
KNAPP r PETERSEN & CLARKE r
)
)
) CASE NO.
)BC286925
) REPORTER'S
) CERTIFICATE
DEFENDANTS. )
)
STATE OF CALIFORNIA
SS
Ir CAROL L. CRAWLEY r OFFICIAL REPORTER OF THE
SUPERIOR COURT OF THE STATE OF CALIFORNIA r FOR THE COUNTY OF
LOS ANGELES r DO HEREBY CERTIFY THAT THE FOREGOING PAGES r
1-28 COMPRISE A FULL r TRUEr AND CORRECT TRANSCRIPT OF THE
PROCEEDINGS HELD ON MAY 29 r 2012 r IN DEPARTMENT 24 OF THE
LOS "ANGELES COURT IN THE MATTER OF THE ABOVE-ENTITLED CAUSE.
DATED THIS 10TH DAY OF JULY r 2012
-=:-=-: t=-=-tvt- =- - : :1= -= =-=~" = =_: =_=_: :_I_

CAROL
- :- - - - - - - - - -
. :r........CSR # 7 518
PORTER
l'i ..... ,---
-o
SUPERIOR COURT OF CALIFORNIA

HON. ROBERT L. HESS, JUDGE
DEPARTMENT 24
STEPHEN M. GAGGERO; AN INDIVIDUAL,

ET AL.
I
PLAINTIFFS AND JUDGMENT DEBTORS,
v.
)
)
)
)
)
) BC286925
KNAPP, PETERSEN & CLARKE, STEPHEN RAY

GARCIA, STEPHEN M. HARRIS AND ANDRE
JARDINI,
DEFENDANTS AND JUDGMENT CREDITORS.
)
)
)
)
)
)
)
ORIGINAL
----~----------------~)
JUNE 27, 20l2
APPEARANCES:
FOR THE PLAINTIFFS
AND JUDGMENT DEBTORS:
WESTLAKE LAW GROUP
BY: DAVID BLAKE CHATFIELD, ESQ.
2625 TOWNSGATE ROAD
SUITE 330
WESTLAKE VILLAGE, CALIFORNIA 9l36l
(805) 267-l220
L.A. SUPERIOR COURT REPORTERS, INC.

l6l4 W. TEMPLE STREET
~--~-~-~--~~~~~-LOS ANGELES, CALIFORNIA 90026
l(855) 528-l040
INFO@LASCR.COM
f- -- -- ---- ----------- - - - - - - - - - --------------------- --------- ------- -- ------ ---- ----- ---- ---- --- --- - --- -- --- ------- ------- --- ---
!i
1 -~i--------------------4fc..~AN-CE-JAR.cJ!--I~~a~n~1~~,_____ _ _ _ _ _-J~~-~
r
OFFICIAL REPORTER
:
'
-!------------------------------------- ---------------------------- ------------ ------------ ------------- -- ---- ------ ----------------------------
Page 2
1
APPEARANCES:
(CONTINUED)
FOR NEW JUDGMENT DEBTORS:

DAVID A. ESQUIBIAS, ESQ.
2625 TOWNSGATE ROAD
SUITE 330
WESTLAKE VILLAGE, CALIFORNIA 91361
(805) 267-1141
5
6
7
8
9
10
FOR DEFENDANTS:
MILLER LLP
BY: AUSTA WAKILY, ATTORNEY AT LAW
SUITE 2150
LOS ANGELE$, CALIFORNIA 90071
(213) 493-6400
11
12 .
. 13
14
15
16
17
18
19
20
21
22
23
----------------------!
24
,~
25
,--- -----z-6------------------------ -------------------------- ---------- --- - - ---- -
--~-
- - - -----
~----
--- --
<
----
---- ~ -------
27
I
I
r--------------------------------------------------------
- - - - - - - - - - - ----- -- - ----- ----- ------------- -- ------ ---- - - - - - - - - - - - - - - - - - -
Page 3
:
CASE NUMBER:
BC286925
CASE NAME:
G.A.GGERO V. KPC
LOS ANGELES, CA
WEDNESDAY, JUNE 27, 2012
DEPARTMENT 24:
HON. ROBERT L. HESS
APPEARANCES:
(AS NOTED ABOVE)
REPORTER:
VANCE JARVIS, CSR #9014
TIME:
11:09 A.M. TO 11:40 A.M.

---000---
8
THE COURT:
APPEARANCES, PLEASE, AND I'LL LOOK AT THE
11
APPLICATION.
MS. WAKILY:
13
GOOD MORNING.
AUSTA WAKILY
FOR JUDGMENT CREDITOR KNAPP, PETERSEN & CLARKE .

MR. CHATFIELD:
14
'
LET'S GO AHEAD AND HAVE
10
12
.
15
DAVID CHATFIELD ON BEHALF OF JUDGMENT DEBTOR STEPHEN
16
GAGGERO.
MR. ESQUIBIAS:
17
I
;
i;;.
j
I
18
DAVID ESQUIBIAS ON BEHALF OF THE NEW JUDGMENT
19
DEBTORS.
20
THE COURT:
21
MR. CHATFIELD:
22
THE COURT:
23
WHY DON'T HAVE YOU A SEAT.

THANK YOU, YOUR HONOR.
OKAY.
YOU ARE ASKING FOR A
BOND?
24
MS. WAKILY:
25
THE COURT:
YES, YOUR HONOR.

ON APPEAL?
--- -- --26- - ---- -----M-S-;----WAK-'Ib-Y-:--YE-81 - GTJR- -HGNQR .- - - --- - -- - ---. - --- - - - - - - - - - . -THE COURT:
27
28
UNDER CCP 1917.9; IS THAT
CORRECT?
.,----------- ----------- ------------------------------- ------------- ---------------- ------------ ----------------------------- ------ ------- --------------1
Page 4
.-
AND WHAT IS THE AMOUNT OF THE BOND YOU ARE
SEEKING?
MS. WAKILY:
3
4
THOUGHT AS AN ALTERNATIVE BASIS.
THE COURT:
MS. WAKILY:
WE BELIEVE THAT THIS -- WE STAND ON MONEY
I MISSPOKE.
IT'S 917.9.
917.9.
JUDGMENT AND PURSUANT TO 917.1, I BELIEVE (A) (1),
ANY EFFORTS TO STAY THIS JUDGMENT REQUIRES AN
10
UNDERTAKING BY THE JUDGMENT DEBTORS.
11
WE ARE SEEKING A BOND UNDER
THE JUDGMENT DEBTORS ARE RELYING ON THE
12
APPEAL OF THE UNDERLYING JUDGMENT IN I BELIEVE MAY
13
2008, APPROXIMATELY FOUR YEARS AGO.
14
' 15
16
IN THAT CASE
THE APPEAL OF THE JUDGMENT AWARDING ATTORNEY FEES

AND COSTS STAYED THE ENFORCEMENT EFFORTS BECAUSE IT
WAS A COST ONLY JUDGMENT.
17
THE JUDGMENT CREDITORS ARE ASSERTING NOW
18
THAT BECAUSE IT WAS A COST ONLY JUDGMENT AND
19
MR. GAGGERO WAS ENTITLED TO AN AUTOMATIC STAY
20
PURSUANT TO THE 917.l(D) THAT THEY ARE GOING TO
21
APPARENTLY ALWAYS BE ENTITLED TO THAT AUTOMATIC STAY
22
WITH EVERY POST JUDGMENT APPEAL.

THE COURT:
23
24
25
WELL, THAT JUDGMENT IS NOW
FINAL.
MS. WAKILY:
EXACTLY, YOUR HONOR.
THAT
-- --- -- --26------JUBGM-E-N''- S--f'c..I-NAL:.-..--- -T~ L ....-EN-FORGEA@~E--A---A--MO.NEY-- --- - - - - 27
JUDGMENT AND ON THAT BASIS, I BELIEVE THE LAW IS
28
CLEAR, THE STATUTE IS CLEAR, THAT KPC HAS A MONEY
- -- - - -
i
r---------------------------------------- ----------______________________.___ --------------------- ----- ------- ----------------------------------
Page 5
-.
JUDGMENT BUT THERE IS A DISPUTE BETWEEN THE JUDGMENT
CREDITORS AND THE JUDGMENT DEBTORS ON THAT ISSUE.

SO THE FIRST BASIS WE BELIEVE, JUST TO
3
4
CLARIFY, THIS IS NOT A COST ONLY JUDGMENT ANYMORE.
THE JUDGMENT DEBTOR IS RELYING ON THIS COURT ORDER
IN NOVEMBER 2010 RELATING TO THE UNDERLYING JUDGMENT
IS NOT APPLICABLE TO POST JUDGMENT APPEALS.

THE OTHER ISSUE THAT HAS COME UP IS
8
9
10
RECENTLY WE HAD THE DEBTOR EXAMINATION OF JUDGMENT

DEBTOR STEPHEN GAGGERO.
THE DAY BEFORE WE HAD A HEARING ON A MOTION
11
12
FOR PROTECTIVE ORDER RELATING TO THE DEBTOR
13
EXAMINATION.
AT THE HEARING THE COURT DENIED THE MOTION
14
- 15
FOR PROTECTIVE ORDER IN ITS ENTIRETY.
16
MR. CHATFIELD WAS PRESENT FOR MR. GAGGERO.
17
THERE WAS NO ATTORNEY PRESENT FOR ANY OF
18
THE NEW ALTEREGO JUDGMENT DEBTORS.

MR. CHATFIELD INDICATED TO THE COURT THAT
19
20
HE WOULD FILE AN APPEAL AND ON THAT BASIS
21
MR. GAGGERO WAS NOT REQUIRED TO APPEAR FOR A DEBTOR
22
EXAMINATION THE NEXT DAY.

WE APPEARED FOR THE DEBTOR EXAMINATION THE
23
24
NEXT DAY.
25
THAT MR. GAGGERO WAS NOT GOING TO PROCEED WITH THE
27
DENYING THE MOTIONS FOR PROTECTIVE ORDER.
28
MR. GAGGERO -- MR. CHATFIELD INFORMED ME
ON THAT BASIS I REQUESTED A HEARING WITH
1------- ----------------------------------------- ---------------------- - -------- ------------------ ----------- ------ ------------------------
Page 6
..
THE, NOT A HEARING, BUT I REQUESTED THE ASSISTANCE
. 2
OF THE COMMISSIONER RELATING TO WHETHER THE APPEAL
OF THE ORDER DENYING THE MOTION FOR PROTECTIVE ORDER
STAYED MR. GAGGERO'S DEBTOR EXAMINATION.

THE
'
I
OPPOSING PAPERS THAT THERE WERE EX-PARTE MOTIONS OR
EX-PARTE RELIEF THAT WAS NOT THE CASE.
DEPARTMENT lA DID NOT RULE ON THE ISSUE OF COST
JUDGMENT.
11
PROCEED WITH THE DEBTOR EXAMINATION IN LIGHT OF THE
12
FILING OF A NOTICE OF APPEAL.
13
THAT BASIS.
IT WAS SIMPLY WHETHER MR. GAGGERO HAD TO
THE JUDGE RULED ON
THE JUDGE ALSO IN THAT COURT RULED THAT OUR

TESTIMONY WITH MR. GAGGERO WOULD BE LIMITED TO HIM
16
AND NOT TO THE ALTEREGO ENTITIES BECAUSE THE APPEAL
17
OF THIS COURT'S MAY 29TH ORDER AMENDING THE
18
JUDGMENT.
I ATTEMPTED TO EXPLAIN TO THE JUDGE THAT
19
20
THIS IS A MONEY JUDGMENT.
21
BOUND BY THE FINAL JUDGMENT IN THEIR CAPACITY AS THE
22
ALTEREGO.
23
--
THERE WAS NOTHING IN THERE ABOUT ALTEREGO
LIABILITY.
. 15
-~
THE JUDGE IN
10
14
--
DEBTOR'S STATE IN THEIR
i
I
~UDGMENT
THAT THE ALTEREGOS ARE
THE COURT, DEPARTMENT lA, STATED THAT THAT
24
ISSUE WAS NOT BEFORE THE COURT AND SO HE COULD NOT
25
RULE ON THAT.
--2-6- -- --- ----- ---------------SG-
-~H-E-NG--I-GE---G-F---R1Jb-ING--I=IA+---MR- .---CRA~RIELD-~-
---------- -- -- --- -- ~ -- ----~
'
27
PREPARED IN RESPONSE TO OR WITH RESPECT TO THE
28
DEBTOR EXAMINATION DISPUTE THAT WE HAD ON JUNE 20TH
'~
r.I ----- -- ---- ----- --- ------- ------------------- - ----------- -- -------- - ------ -----. -. ------------------ ------------------- - ----- ----------- -----------
Page 7
t~:
IS NOT ACCURATE.
WHETHER THIS IS ENFORCEMENT OF A COST ONLY JUDGMENT
OR A MONEY JUDGMENT OR WHETHER KPC IS PRECLUDED FROM
CONTINUING THEIR ENFORCEMENT IN ALL OTHER ASPECTS.
SECTION 917.9 IS AN ALTERNATIVE BASIS FOR
THAT DOES NOT RESOLVE THE ISSUES
REQUIRING POSTING AN UNDERTAKING.
TO THE EXTENT THAT THAT'S --
THE COURT:
9
10
11
12
13
YOU SEEKING?
MS. WAKILY:
THE COURT:
WELL, I SEE VARIOUS NUMBERS IN
YOUR PAPERS -MS. WAKILY:
15
THE COURT:
16
MS. WAKILY:
17
THE COURT:
19
DOUBLE THE AMOUNT OF THE
JUDGMENT OR WHATEVER IS --
14
18
HOW MUCH OF AN UNDERTAKING ARE
UH-HUH.
-- FOR DIFFERENT THINGS.
RIGHT.
AND
THE HIGHEST NUMBER IS
SOMETHING LIKE 2.1 MILLION.

MS. WAKILY:
THE PROPOSED ORDER IS
20
$4,365,277.76.
21
DECEMBER 28TH JUDGMENT WE HAVE PLUS THE POST
22
JUDGMENT OR ACCRUED INTEREST THAT MR. CHATFIELD
23
INCL-UDED IN HIS MOTION FOR COSTS AND THE MOTION FOR -
AND
THAT IS BASED ON THE
"
~-~-~~~~~~~~~~~~~~~~~~--~~~--~~~~~~~-~~~~-!'~~
24
ATTORNEY FEES THAT HE HAS CONCEDED IN THE MOTION FOR
25
COSTS TO STAY CONSERVATIVE ON THAT NUMBER.
27
OF THE UNDERTAKING WOULD BE DOUBLE THE JUDGMENT
28
AMOUNT UNLESS THERE IS SOME --
I ---- ---- ----- -------------------------------------- -------- ------------ ------ -------------- ------------------ --------- --------------- ----T--
Page 8
THE COURT:
MR. ESQUIBIAS:
II
I
YOUR HONOR, IT 1 S MY
UNDERSTANDING THAT THE PLAINTIFF IS SEEKING TWO
ITEMS OF RELIEF TODAY.
ONE OF THEM BEING AUTHORIZATION TO PROCEED
WITH COLLECTION EFFORTS AGAINST THE NEW DEFENDANTS,
THE NEW JUDGMENT DEFENDANTS.
10
IF I CAN ADDRESS THE FIRST.
11
THE COURT:
WELL, AS I UNDERSTAND IT THEY
12
ARE ASKING AN ORDER REQUIRING YOUR CLIENTS TO POST
13
AN UNDERTAKING TO STAY ENFORCEMENT OF THE JUDGMENT.
14
MS. WAKILY:
15
THE COURT:
16
MR. ESQUIBIAS:
THAT 1 S CORRECT, YOUR HONOR.
AND THEN ALTERNATIVELY IF
AN UNDERTAKING IS NOT POSTED THEN THEY WOULD LIKE TO
18
HAVE AUTHORITY TO PROCEED WITH ENFORCEMENT
19
COLLECTIONS?
THE COURT:
I
II
THAT 1 S WHAT I UNDERSTAND.
17
20
II
II
AND TWO, FOR THE UNDERTAKING.
ON BEHALF OF NEW
DEFENDANTS.
ALL RIGHT.
I.
~
~
q,
If
?.
WELL, THAT 1 S THE COROLLARY.
IF
21
YOU ARE ORDERED TO POST A BOND TO STAY COLLECTION
22
EFFORTS ON APPEAL S, AND YOU DON T POST IT THEN THEY
23
GET TO GO FORWARD.
~~
~
II
r-~~--~~~~~-~~~~~~~~~~~~~~--~~~~~~--~~~~I~
MR. ESQUIBIAS:
24
THIS IS A COST JUDGMENT AS
~
}
AGAINST THE NEW JUDGMENT DEFENDANTS.
25
fi
- - --2-fr------ --- --THK-GGURT-:--NOT--I~- 1 -NGTA-GOST .J.~GMEN'I'--- - .. -- - - -
,,~
i--~
27
AGAINST THE NEW DEFENDANTS BECAUSE IT HAS BEEN
28
REDUCED TO A MONEY JUDGMENT NOW.
3fl
THE APPEAL IS OVER
"
'i
=~:. :;:.1,_. ,., .~=-,"....,.-i",,,.-:.... =-~.:::..=

.. ..-.,...= "'-, -" "= ~,- : -,. ..,-,_-=..=:--~"=-=,_,-.,,=~~=,~=>.>...a'=:~=,;:s:.=.,=.. =~=.~=:;o..:,=~-=-~=;.>r~==-=.,.~~=~~=~=.=
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........=
..::...."',-.=~=~~=~~~=-._.=.,.,,, .,_,;:7 ,. ;:; :.,. , _~"7";, ~=". ,;.=.,. .~: -.=~....,=--=-'"'.:--::'.":...=,,.,.-~--~.J
L....,-,
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. .,-,.._
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.=....
----------- - - -- - - - - - - - - - - - - - - - - - - - - -------------------- -------------------------- ---- - - - - - ---------------------- - ------ ----- ---- -
Page 9
'
!
AND THE ORDER AGAINST MR. GAGGERO IS FINAL.
NOW A FINAL MONEY JUDGMENT WHATEVER IT'S ORIGIN
MIGHT HAVE BEEN AND IT IS NOT MAGICALLY REDUCED OR
TRANSMOGRIFIED INTO SOMETHING ELSE --
MR. ESQUIBIAS:
THE COURT:
THE COURT:
THE JUDGMENT IS FINAL AS TO
MR. ESQUIBIAS:
I AGREE.
THE JUDGMENT IS
FINAL AS TO MR. GAGGERO.

THE COURT:
13
-- AND IT IS NOW A MONEY
14
JUDGMENT AND YOUR CLIENTS ARE SEEKING TO BE HELD
15
LIABLE ON THAT MONEY JUDGMENT.

MR. ESQUIBIAS:
16
17
19
WHICH IS WHY WE FILED AN
APPEAL.
THE COURT:
18
YES, BUT IT IS STILL A MONEY
JDDGMENT.
NOW, YOU ARE APPEALING FROM THE IMPOSITION
20
'
NEW TO THE CASE?
MR. GAGGERO --
11
I AM NOT --
NEW.
MR. ESQUIBIAS:
12
-- BECAUSE YOUR CLIENTS ARE
10
IT'S
21
OF OR THE EXTENSION OF THE MONEY JUDGMENT FINAL ON
22
APPEAL TO YOUR CLIENTS.
23
THIS.
THAT'S THE WAY I ANALYZE
'
24
25
--
-- _,,_ ..
NOW, IS THERE A REASON WHY I OUGHT NOT TO

REQUIRE YOUR CLIENTS TO POST --
___ 2-6---- ---- ---- - -----MR-,--EQY--RJ\;S-i-------E$,- RE-CAUS-E- -DOI-NG----'I'RA-'I' - -- - -- --------- - - - --l- ---
27
28
WOULD BE AN UNLAWFUL TAKING OF PROPERTY PRIOR TO DUE

PROCESS FOR THESE PEOPLE.
!
~
"
t---------------------------------------------------------------------------------------------------------------------------------
Page 10
THE COURT:
ARE YOU SUGGESTING THEN THAT
THERE IS AN UNCONSTITUTIONAL -- THAT THE STATUTE
REQUIRING POSTING OF A BOND IN THE COURT'S
DISCRETION ARE UNCONSTITUTIONAL?
MR. ESQUIBIAS:
I
I
I AM SAYING IN THIS
PARTICULAR INSTANCE WHERE WE HAVE DEFENDANTS NEW TO
THIS CASE WHO HAVE NOT BEEN AFFORDED ANY DUE PROCESS
WHATSOEVER AT ANY TIME -THE COURT:
OH, I THINK YOU HAVE.
I THINK
lO
YOU HAVE BEEN AFFORDED DUE PROCESS IN CONNECTION
ll
WITH THE MOTIONS AND APPLICATIONS THAT LED TO YOUR
l2
CLIENT BEING NAMED.
13
OPPORTUNITY TO BE HEARD ON THIS.

MS. WAKILY:
14
THE COURT:
- 15
YOU WERE GIVEN NOTICE AND AN
YOUR HONOR, IF I MAY.

NO.
l6
MR. ESQUIBIAS:
l7
THE COURT:
18
MR. ESQUIBIAS:
YOUR HONOR, IF I MAY.
GO AHEAD.
I DISAGREE WITH THE COURT
19
WHICH IS WHY WE ARE FILING THE APPEAL.
20
BE --
21
22
23
THE COURT:
IT WOULD
YOU DISAGREE WITH ME ON THE
MERITS OF WHETHER THEY SHOULD BE HELD.

MR. ESQUIBIAS:
NO.
I DISAGREE WITH THE
24
RATIONALE THAT THE NEW DEFENDANTS HAVE BEEN GIVEN
25
DUE PROCESS IN THIS CASE.
THEY HAVE NOT AND THAT'S
-- - --- --2e- --WM-Y- --W-K-AR-E----F-1'-LLNG--AN----A-12-l?-EAL----- ----AND--==----- -- -- -- -- - -- -- --- - - - - - - --27
THE COURT:
OKAY.
28
MR. ESQUIBIAS:
GO AHEAD.
AND TO NOW FURTHER ALLOW
Page 11
1
SOME TYPE OF TAKING OF THEM OF THEIR
WITHOUT SOME TYPE OF DUE PROCESS WOULD BE AN
UNLAWFUL TAKING.
ARE APPEALING WHETHER OR NOT ALTEREGO IS APPROPRIATE
HERE, WE ARE APPEALING WHETHER OR NOT NOTICE WAS
PROPERLY GIVEN WHICH GAVE RISE TO THE ALTEREGO
FINDING BY THIS COURT, THIS COURT-I WOULD THINK
SHOULD EXERCISE DISCRETION IN FAVOR OF DUE PROCESS
PRIOR TO ANY TYPE OF UNDERTAKING.
~ROPERTY
AND AT THE VERY LEAST BECAUSE WE
IT'S CLEAR WHEN WE APPEARED LAST TIME, YOUR
10
11
HONOR, WE MADE A SPECIAL APPEARANCE AND OUR MAIN
12
ARGUMENT WAS NO NOTICE.

AND TO REMIND THE COURT, THE NEW DEFENDANTS
13
,
14
. 15
ARE IRREVOCABLE TRUSTS THAT MR. GAGGERO HAS NO

INTEREST IN.
HE HAS NO REMAINDER INTEREST.
HE HAS
16
NO CURRENT PRINCIPAL OR INCOME BENEFICIAL INTEREST.
17
HE IS NOT A TRUSTEE.
18
CREATED YEARS BEFORE THIS LITIGATION BEGAN, AND FROM
19
MY UNDERSTANDING YEARS BEFORE THE RELATIONSHIP BEGAN
20
WITH THE PLAINTIFFS.

THESE ARE ASSETS THAT l:\RE HELD IN A
21
22
REVOCABLE TRUST SUBJECT TO THE CONTROL OF A TRUSTEE.

THE CURRENT PRINCIPAL AND INCOME
23
25
HE IS A SETTLOR OF A TRUST
REMAINDER BENEFICIARIES NONE OF WHOM ARE GAGGERO,
______2fi______THE
.CDNTINGEN.T..REMAINDER._BENEELCIARIES_ND.NE_QF_W_H.QM___________ _
i --
27
ARE GAGGERO HAVE NO CONTROL OVER THE ADMINISTRATION
28
OF THE TRUST.
-~--- --- - ------------------. - -------- ---- ------------------- --------------- ---------------- -------- ---------- ------ ----------------------- - -----
--
---- -------- -----------
Page 12
SO THE BENEFICIARIES PRESENT OR FUTURE
CANNOT COMPEL A DISTRIBUTION, CANNOT CAUSE THE
NATURE OF THE ASSETS TO CHANGE.
HAVE NO CONTROL AND FOR THAT REASON THERE IS NO RISK
OF THE DISSIPATION OF ASSETS IN THE NEW DEFENDANT
ENTITIES.
THE BENEFICIARIES
THE TRUSTEE OF THESE ENTITIES IS WILLING TO
STIPULATE ON THE RECORD THAT NO ASSETS WILL BE MOVED
OR DISSIPATED OUT OF THE TRUST ESTATE PENDING THE

APPEAL.
10
THE COURT:
11
ANYTHING ELSE YOU WANTED TO
SAY?
12
MR. ESQUIBIAS:
13
YES.
I'D LIKE TO KNOW IF
14
THERE'S A FINDING OF AN EXIGENT CIRCUMSTANCE FOR
- 15
TODAY'S HEARING AND IF SO WHAT IS THAT BASED ON?

THE COURT:
16
MR. GAGGERO DOES NOT HAVE A DOG
17
IN THIS FIGHT, DOES HE?
18
MR. CHATFIELD:
WELL, YOUR HONOR,
MR. GAGGERO AS AN APPELLANT AND --
19
THE COURT:
20
MR. GAGGERO'S APPEAL IS OVER.
21
THAT JUDGMENT IS FINAL.
22
MR. CHATFIELD:
YES, BUT MR. GAGGERO IS
23
INTERTWINED APPARENTLY IN THIS NEW AMENDED JUDGMENT
24
IN THAT THE COURT HAS FOUND THAT THE JUDGMENT
25
AGAINST MR. GAGGERO INDIVIDUALLY CAN BE -- THAT
27
INDIVIDUAL JUDGMENT.
I~
THE COURT:
28
~-
.--
---
--
---
--
SO HE IS PART OF THE APPEAL.

AND HOW DOES THAT AFFECT HIM?
----
- ---
- - - - - - - - - - ---------------------.---- ----------------- -
Page 13
1
MR. CHATFIELD:
THE COURT:
HOW DOES THAT AFFECT HIM?
YES.
HE DOESN'T HAVE A DOG IN
THIS FIGHT.
AGAINST HIM IT'S VALID AND SUBSISTENT.
5
6
THE JUDGMENT IS AGAINST HIM.
ARGUE AGAINST THIS?

MR. CHATFIELD:
THE COURT:
10
AS
AND DO I UNDERSTAND YOU ARE IN HERE TO
NO, YOUR HONOR.
IN FACT --
THEN WHAT IS THE ANSWER TO MY
QUESTION ABOUT WHETHER MR. GAGGERO HAS A DOG IN THIS

FIGHT?
DOES HE OR DOES HE NOT?
11
MR. ESQUIBIAS:
12
THE COURT:
NOT IN TODAY'S HEARING.
NO.
MR. CHATFIELD IS CAPABLE
13
OF REPRESENTING MR. GAGGERO AND HE'S CAPABLE OF
14
SPEAKING FOR HIS OWN CLIENT RATHER THAN YOU SPEAKING
: 15
FOR HIS CLIENT.

MR. CHATFIELD:
16
AS TO THE AMOUNT OF THE
17
BOND OR IF A BOND GETS PLACED FOR THE NEW JUDGMENT
18
DEBTORS, NO, HE DOES NOT.

THE COURT:
19
OKAY.
BECAUSE IF YOU SAID
20
ANYTHING ELSE IT WOULD BE INCONSISTENT WITH WHAT THE
21
NEW DEBTORS COUNSEL WAS TELLING ME.

SO HE DOESN'T HAVE AN INTEREST IN THIS THEN
22
23
AT ALL; IS THAT A FAIR STATEMENT?

MR. CHATFIELD:
24
25
OTHER THAN TO CORRECT THE
MISSTATEMENTS THAT WERE MADE BY OPPOSING COUNSEL
- --2-6-- ----E-ARI:r:I--E-R-o- - - --- - -- - -- - --- - ----- ----
THE COURT:
27
28
WERE MADE THAT WERE DIRECTED THAT AFFECT
r-- ---------------------1
I DON'T KNOW WHAT MISSTATEMENTS
~---------------------
a
i
~
,_
------------------ -------- ----------- ------------- - --- ----------------------------------- ------ ----- --- ---
Page 14
MR. GAGGERO.
I'M UNAWARE OF WHAT THOSE WERE, SIR.
MR. CHATFIELD:
SINCE YOU HAVE ADDED THE
WORDS AS THEY ONLY AFFECT MR. GAGGERO THEN YOU WOULD
BE CORRECT.
THE COURT:
MR. CHATFIELD:
10
OKAY.
BUT I DO STAND BY MY NOTICE
OF RULING THAT I FILED WITH THE COURT.

THE COURT:
8
9
HOW DO I DETERMINE WHICH IS
CORRECT SINCE NEITHER OF YOU HAVE GIVEN ME A MINUTE

ORDER OR ANYTHING LIKE THAT?
MR. CHATFIELD:
11
WELL, YOUR HONOR, I SUPPOSE
12
AT SOME POINT IN THE FUTURE WHEN THE TRANSCRIPT OF
13
THE JUDGMENT DEBTOR'S EXAM BECOMES AVAILABLE THE
14
COURT CAN DETERMINE FROM THE ADMISSIONS OF COUNSEL
: .15
FOR THE JUDGMENT CREDITOR AND THE OBJECTIONS THAT I
16
RAISED BASED UPON THE COMMISSIONER'S ORDERS.
17
IT WOULD BE EASY TO TELL WHAT THE COMMISSIONER
18
ORDERED AND WHAT THE COMMISSIONER DID NOT ORDER.
19
AND IT' S . CONSISTENT WITH MY MINUTE ORDER.
20
MINUTE ORDER.
22
~--
OR NOT MY
MY NOTICE OF RULING.
THE COURT:
21
THEN
OKAY.
HERE IS THE MINUTE
ORDER.
23
"IT IS STIPULATED THAT COMMISSIONER
24
MATTHEWS ST. GEORGE MAY HEAR THIS MATTER
25
AS TEMPORARY JUDGE.
27
STEPHEN M. GAGGERO'S MOTION FOR
28
PROTECTIVE ORDER IS DENIED.
THE MATTER COMES ON
JUDGMENT
- -- ------ . ------- ------ - ---- --- ---- -------- ------------ - - -- -- - - - - - - -- --- - - - - - - - - ------ ------- -- ------ -
----------------------. - - - - - - - - - --------- -----
Page 15
1
DEBTOR EXAMINATION HEARING OF 6/20/12
REMAINS SET.
NOTICE.
JUDGMENT CREDITOR TO GIVE
II
SO THAT'S ON THE 19TH.
MS. WAKILY:
THE COURT:
I HAVE
AND SO IS THAT WHAT YOU WERE
PURPORTING TO GIVE NOTICE OF, THE -MR. CHATFIELD:
9
10
11
RIGHT, YOUR HONOR.
NOTICE OF THAT.
7
8
THE COURT:
NO.
OKAY.
THE MINUTE ORDER FOR THE
20TH SAYS,
12
"THE MATTER IS CALLED FOR HEARING,
13
STEPHEN M. GAGGERO IS SWORN AND IS
14
EXAMINED
IS DISCHARGED."
15
THAT'S WHAT THE MINUTE ORDER SAID.
16
MR. CHATFIELD:
17
AND
UNFORTUNATELY THE MINUTE
ORDER DOES NOT REFLECT THE RULINGS OF THE COURT.
18
MS. WAKILY:
19
THE COURT:
20
SIR?
21
ME TODAY?
YOUR HONOR -WELL, HOW DO I.DETERMINE THAT,
HOW DO I DETERMINE THAT ON THE RECORD BEFORE
22
MR. CHATFIELD:
23
THE COURT:
WELL, BASED UPON --
I DON'T SEE ANYTHING IN THE
24
25
OF THE COURT.
NOR DO I SEE ANYTHING IN THE MINUTES
. - .. -2-6-- - ..Q. --'rHE- -1~ TH- 'I'-EA'I'- A-P-E>EAR -'I'.Q-
27
28
MR. CHATFIELD:
STATED THE --
-TJRS~ANTIAT.E--
-I-T..- ---- -- - - . --- . --
AS I PREVIOUSLY
---
- . . . . .
,,.
~
..
Page 16
'
THE COURT:
I DON'T SEE ANY RULING BY
COMMISSIONER ST. GEORGE ON THIS RECORD WHICH IS
CONSISTENT WITH PARAGRAPH TWO OF YOUR NOTICE OF
RULING.
MR. CHATFIELD:
NO.
THE RULING WAS MADE IN
OPEN COURT AND WE CONDUCTED THE JUDGMENT DEBTOR EXAM
UNDER THE PARAMETERS OF THE RULING AND IT'S
REFLECTED IN THE RECORD OF THE TRANSCRIPT OF THE
COURT REPORTER AT THE JUDGMENT DEBTOR EXAM.

THE COURT:
10
ALL RIGHT.
HERE'S THE COURT'S
RULING.
11
"CCP SECTION 917.9 PERMITS THE
12
13
COURT TO DETERMINE WHETHER TO REQUIRE A
14
BOND PENDING APPEAL.
..
.' 15
LITIGATION IS FINAL WHAT WAS A JUDGMENT
16
FOR COSTS PRIOR TO APPEAL IS NOW A FINAL
17
MONEY JUDGMENT.
18
DEFENDANTS LIABLE ON THAT JUDGMENT DOES
19
NOT TRANSFORM IT INTO A JUDGMENT FOR
20
COSTS.
THE ADDITION OF NEW
"IN THE EXERCISE OF THE COURT'S
21
--
THE UNDERLYING
22
DISCRETION, THE EVIDENCE PREVIOUSLY
23
PRESENTED TO THE COURT PERSUADES THE
24
COURT THAT AN UNDERTAKING IS NECESSARY
25
TO ENSURE THE COLLECTABILITY OF THE
--~-6--
- - -- - - - -- ----JOOGMEN' -AGAN--T--'H-E- NEW-E>E-FENDANT.S--- -- - - - - - - -
27
SHOULD IT BECOME FINAL.
THE COURT DOES
28
NOT ACCEPT THE ORAL ASSURANCES OF
j
i
II
I
.t
COUNSEL FOR THE NEW DEFENDANTS AS TO
COLLECTABILITY."
I HAVE REVIEWED THE FORM OF ORDER PRESENTED
3
4
BY KPC.
IT APPEARS TO ME TO BE APPROPRIATE
INCLUDING THE AMOUNT AND I HAVE SIGNED THE ORDER.
THANK YOU.
MS. WAKILY:
CONCLUDES THESE PROCEEDINGS.

---000---
9
10
11
12
13
''
14
_. 15
16
17
18
19
20
21
22
23
24
~
25
,,
']
'
---~
---- -
-,
27
28
i
Ir------------------------------ - - -
-- --- ---..-------- -- ------------ ---------- - - ------ -------- .._________ ... __________.. _________________ . ----------
SUPERIOR COURT OF CALIFORNIA

DEPARTMENT 24
HON. ROBERT L. HESS,_ JUDGE
STEPHEN M. GAGGERO; AN IND;I:VIDUAL,

ET AL.,
PLAINTIFFS AND JUDGMENT DEBTORS,
}
)
)
)
)
v.
) BC286925
)
)
KNAPP, PETERSEN & CLARKE, STEPHEN RAY

GARCIA, STEPHEN M. HARR!S AND ANDRE
JARDINI,
)
)
DEFENDANTS AND JUDGMENT CREDITORS.
)
)
~~~~~~~~~~~~~~~~~~~~~-)
STATE OF CALIFORNIA
SS
COUNTY
OF LOS ANGELES
I,
VANCE JARVIS,
CSR 9014,
OFFICIAL
REPORtER OF THE SUPERIOR COURT OF THE STATE OF

CALIFORNlA,
FOR THE COUNTY OF LOS ANGELES,
CERTitY THAT THE FOREGO!NG PAGES,
DO HEREBY
1 THROUGH 17,
COMPRISE A FULL, TRUE AND CORRECT TRANSCRIPT OF THE

PROCEEDINGS TAKEN IN THE MATTER OF THE
ABOVE-ENTITLED CAUSE ON JUNE 27,
2012.
DATED THIS 2ND DAY OF JOLY,
- -
----- - - -
____
::
_________
28
-------------
2012.
-----~~,,---_./'
-- --~-----r:;,,...r
/
-
//~-
VANC
--- - - - -
--
CSR 9014
JARVI , OFFICIAL REPORTER
18
~---
- - - - - - - - - - - - - -- - - - - - - - - - - --------- - - - - - - - - - - - - - - - - - -- ---------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

HON. JAMES C. CHALFANT, JUDGE
DEPARTMENT 85
STEPHEN M. GAGGERO,
PETITIONER,
NO. BC286925
vs .

RESPONDENT.
ORIGINAL
FRIDAY, JULY 20, 2012
FOR PETI TIONER:
DAVID CHATFIELD, ATTORNEY AT LAW
FOR RESPONDENT:
AUSTA WAKILY, ATTORNEY AT LAW
BUFORD J. JAMES
OFF I CIAL REPORTER 9296
III NORTH HILL STREET
LOS ANGELES, CALIFORNIA 90012
Buford J. James, CSR 9296
FRIDAY, JULY 20, 2012; LOS ANGELES, CALIFORNIA
2:00 P . M.
THE COURT:
Number two on calendar.
Gaggero versus Knapp, Petersen & Clark.
for the record, please.

MS. WAKILY:
Your appearances
This is BC286925 .
Good afternoon, your Honor, Austa
Wakily for Knapp Petersen & Clark,
MR. CHATFIELD:
10
Stephen
judgment creditors.
David Chatfield appearing on
behalf of judgment debtor.

THE COURT:
11
Okay .
All right .
There are two
12
motions here -- one fi l ed by the judgment debtor,
13
Mr . Gaggero , and one filed by the judgment creditor, Knapp ,
14
Pet ersen & Clark
15
documents .
to compel post judgment production of
Is that correct?
16
MS. WAKILY:
17
MR . CHATF IELD :
18
Honor,
Yes.
Yes, your Honor.
And, your
I also
19
THE COURT:
20
MS. WAKILY :
21
THE COURT:
22
MS. WAKILY :
The two seem to be interrelated .

Yes , the y are , your Honor .
All right .
The motion for protective order was
23
f ile d on the same day .
Mr. Chatfield had stated that he
24
would produce documents in response to our request for
25
production.
26
THE COURT :
27
MR. CHATFIELD:
28
Okay.
Yes.
Counsel.
I had submitted a declaration
today with the Court , and
Buford J . James, CSR 9296
THE COURT :
Why is it being submitted today?
you see from this stack,
MR. CHATFIELD:
As
I've had a lot to read already.

It ' s our amended responses to
discovery , which we said in our opposition that we would be
filing this week .
THE COURT :
MR. CHATFIELD:
All right .
It's just to give the Court
notice that we did file them.

THE COURT :
All right .
Good.
So with the
10
responses, do you still feel there is a need for a motion
11
to compel?
12
MS . WA KI LY:
There's no documents.
There is a
13
total of fourteen documents that have been produced in
14
response to all of our requests .
15
lawsuits Mr . Gaggero has been involved in that there are
16
numerous documents out there invo l ving his various
17
entities .
18
11th, goes into detail, identifying the very specific
19
entries we're requesting .
20
p l an has offshore trusts, offshore foundation,
21
corporations .
22
in is here for,
23
Mountain Lennon Livestock , that ' s another entity owned or
24
controlled by Mr. Gaggero that's requested in our request
25
for production o f documents .
26
that we already had .
27
else.
28
We know from all the
The last letter I drafted on May , I believe it's
In fact,
Mr. Gaggero ' s asset production
one of the entities he ' s involved
I think, number
THE COURT :
11
on calendar today Sulfur
We've received 14 documents
They are public records, and nothing
All right .
Counsel.
MR. CHATFIELD:
Last time we were here, the
judgment debtor was here for a judgment debtor exam which
lasted all day and in which he explained who had the
documents that the judgment creditor is seeking and
explained that that person is not giving him the documents.
It's -- in the verified responses today,
we've indicated that he's verified the statement that
various individuals in the entities that are currently up
on appeal have documents that they are seeking, but he
10
doesn't personally have control of them.
11
THE COURT:
12
MS. WAKILY:
13
are judgment debtors.
14
motion filed before Judge Hess to resolve the issue of
15
staying enforcement with respect to the judgment, alter ego
16
judgment debtors , they did not post a bond.
Judge Hess
17
required a bond in the amount $4.3 million.
They have
18
refused to post it so there is to basis for the alter ego
19
judgment debtor to refuse production of documents relating
20
to enforcement of this judgment.
21
THE COURT:
All right.
Your Honor, those entities now, they
There was an ex parte application
All right.
We have -In the papers that were
22
filed with regards to the motion for protective order,
23
their reply that was filed by counsel for Mr. Gaggero
24
referenced an old protective order that was issued by my
25
predecessor, Commissioner Gross.
26
sign an order which gave those protections as part of the
27
discovery in this matter.
28
I would be prepa r ed to
Which side would like to draft that order?
Buford J . James, CSR 9296
MS. WAKILY :
1
2
Your Honor,
just one note, that was
10 years ago.
THE COURT :
MS. WAKILY:
I know.
That ' s why I need a new one .
The thing is since then, he's
asserting trade secret privilege, and there is no showing
about what exactly is trade secret.
on behalf of unident i fied third parties.
statute requir i ng --
THE COURT:
10
discovery.
They ' re being asserted

There is a
Well, but you are going to get
You just can't past it on to other people .
11
MR. CHATFIELD :
12
THE COURT:
And I might note, your Honor

other than, as it says, counsel
13
for judgment creditor or judgment creditor or persons
14
acting under your supervision .

MR. CHATFIELD :
15
16
I would be happy to draft the
order, your Honor.
17
THE COURT :
18
MS. WAK I LY:
All right .
Your Honor, one more note -- request
19
is Mr. Gaggero currently suing clients again in another
20
law suit.
21
THE COURT:
22
MS . WAKILY :
Right .
And in one he's asserting he ' s very
23
wealthy investment real estate investo r , so he's making
24
inconsistent statements, and part of the protective order
25
is to preclude impeachment of Mr . Gaggero .
26
asserting he's judgment proof here to and wealthy there at
27
a minimum.
28
that legal malpractice lawsu i t that's currently pending.
And he's
We'd l ike to use the documents in defense of
THE COURT :
by another court .
judge.
I can't tight the hands of another
MS . WAKILY:
That will have to be a decision made
All right.
Then can we get a
privilege log with respect to our request for production of
documents?
THE COURT:
Well , they haven't actually produced
anything yet in compliance with this order so once the
order is issued, they are to produce the documents.
10
There
shouldn't be anything that's not produced.
11
MS . WAKILY:
12
THE COURT:
13
MS. WAKILY:
Then can we get a - Yes.

- - a privilege log to the extent
14
they are going to withhold anything that they have, they
15
would have to
THE COURT:
16
Yes.
If they believe that they have
17
anything that this order does not provide for that.
18
Because its protections are built in so that there should
19
be nothing withhe l d.
20
would have -- there is no need for a privilege log,
21
guess,
22
23
24
25
26
If there is something withhe l d,
they
is what I am saying, because -MS. WAKILY :
I see .
I understand.
So everything
has to be produced.
THE COURT :
The protections I put in here, they
should just disclose everything.

MS . WAKILY:
Including purported attorney-client
27
privileged communication, because Mr . Practices key was
28
trustee also his personal attorney j ust to be clear he ' s
going to produce those documents as well.

THE COURT:
Everything is to be produced, because
of the protections in here that the concerns that have been
expressed wil l be met by the fact that the information will
only go to yourself, to the judgment creditors and person's
acting under direct supervision of judgment creditor ,
judgment creditor's counsel reflection of judgment.

MR. CHATFIELD:
8
9
Your Honor -- your Honor , their
requests go back 15 years, and there may be communications
10
with counsel which we will list on a privilege log if there
11
is attorney-client
THE COURT:
12
13
Is there a motion to quash to limit
the discovery, the discovery requests?
14
MR . CHATFIELD:
15
THE COURT:
16
Objections and motion to quash.
17
request for protective order, but I don't see anything
18
about a motion to quash or limit or modify the
19
20
21
22
23
We're sort of past that, aren't we?
MR. CHATFIELD:
subpoena .
The objections.
This has to do with your
We objected - - well,
it ' s not a
It was a notice of - THE COURT:
Okay .
I'm sorry .
You are right.
It ' s production of documents.

MR. CHATFIELD:
We did object throughout, and I
24
think that the Court ' s prior statement that if there are
25
documents that are discovered that should be listed on a
26
privilege log,
27
issue with that,
28
they wil l be , and then if there is not an

the Court can take it up at that time.
THE COURT :
What's the date of this lawsuit?
MS. WAKILY:
Well, the judgment debtors have been
added -- they were added recently.
estate plan implemented by Mr . Gaggero .
lawsuit was filed,
decision in 2010 on appeal .
This is all part of an

The underlying
I believe, in 2001 and reached a final
THE COURT:
Al l right .
So the discovery can go
back to the origin of the lawsuit, which is not quite 15
yea r s.
MS. WAKILY:
Your Honor , t h e purpose of the going
10
back that far is tha t is when Mr . Gaggero transferred all
11
the assets.
12
property into v arious corporations .
13
He personal l y owed about $30 mi l lion worth of
THE COURT :
If you are provided with documents
14
that you believe justify going farther back, you can make a
15
motion.
16
MS. WAKILY :
17
THE COURT :
That ' s part of our request - Wel l , I think I ' m going to start with
18
when the lawsuit started.
19
should have b e en dealt with pret r ial d u ring the course of
20
litigation discovery .
21
the time to st a rt creating a whole bunch of discovery when
22
you are trying to collect a judgment .
23
gotten a lot of that through the pretr i al and litigation
24
itself , the testimony; you are free to use all that .
25
MS . WAKILY :
We'll go f r om there .
That
All these documents - - this isn't
You should have
But the underlying lawsuit had
26
nothing to do with his assets.
It was a legal malpractice
27
lawsuit Mr. Gaggero filed against KPC .
28
alter egos had no re l evance at a l l
At that time, his
in the underlying
lawsuit as part of co llec ting the judgment.
understand that he's creating an estate plan that
essentially conc eal ed al l his wealth in various entities,
including offshore trusts.
THE COURT:
Now we
Well, see what you discover -- this
isn't the final word.
judgment debtor exam of him and third parties and discovery
from them that you will have access to -- if you believe
there are areas that you need to go farther into, you can
10
come back and ask the Court.

MS. WAKILY :
11
12
So from the commencement of the
underly ing lawsuit.

Right.
13
THE COURT:
14
MS. WAKILY:
15
I'm sure if you believe after the
All right.
Then we can come back if
there is any further issues on this request.
16
THE COURT:
17
Thursday and Friday,
18
particular.
19
motion for protective order,
20
part, in the sense that, as discussed,
21
Gaggero will prepare the protective order.
22
regards to the motion to compel documents subjec t to the
23
protective order shall be produced with the protection so
24
there should be a plethora of documents coming your way .
25
All right.
26
Okay.
Yes .
I'm here -- at least on
I'm here.
Let's see.
MS. WAKILY:
But Friday afternoon,

So with regards to the
I am going to grant that in

the counsel for Mr.
And with
One more question, your Honor.
27
sorry.
28
of that he has not produced.
in
I'm
There is public documents out there that I am aware

would that fall within the
scope of the protective order?
THE COURT:
MS. WAKILY :
those,
If they are public, you have access.

Right.
But what I'm asking is,
I can continue using and treating as public

THE COURT:
Yeah.
Anything within the public
record does not fall within the confidential protective
order.
is now public.
I don't think I can take back what was once pr i vate
MR. CHATFIELD:
9
10
MS . WAKILY:
11
THE COURT:
Thank you, your Honor.
Is there a deadline -A deadline .
That's a good idea.
12
What do you th ink, counsel, how long is it going to take
13
your client to come up with all this?
14
all standing by and ready.

MR. CHATFIELD:
15
Your Honor,
I assume he has it
I think that I am
16
providing the Court with a draft of the proposed protective
17
order,
that may -- I have objections.
18
THE COURT:
19
MR. CHATFIELD :
20
So there is 10 days, and --
see what there is to produce.
21
THE COURT:
22
MR. CHATFIELD:
23
THE COURT:
24
MR. CHATFIELD:
25
THE COURT:
26
MS. WAKILY :
27
THE COURT:
28
Then we can review the files and
order.
How about August 31st?
How is that?
By 5:00 p.m., production shall occur.

All right.
That's complete production.
Everything within the scope of the
Now that there are protections sought by judgment
10
1
2
debtor,
which should make him happy or happy as one can be.

Will you give notice, please.
MR. CHATFIELD:
THE COURT:
Yes,
I will, your Honor.
Thank you.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
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20
21
22
23
24
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26
27
28
Buford J. James , CSR 9296

HON. JAMES C. CHALFANT, JUDGE
DEPARTMENT 85
STEPHEN M. GAGGERO,
PETITIONER,
NO. BC286925
vs.
REPORTER'S
CERTIFICATE
RESPONDENT .
I, Buford J. James , CSR 9296, Official

Reporter of the Superior Court of the State of California,
for the County of Los Angeles, do hereby certify that the
foregoing pages 1 through 10, inclusive, comprise a full,
true , and correct transcript of the testimony and
proceedings held in the above-entitled matter on FRIDAY,
JULY 20, 2012.
Dated this 4th day
o~f~~~UST,
2012.
rti led Shorthand Reporter
BEFORE THE HONORABLE ROBERT L. HESS
DEPARTMENT NUMBER 24
- - -
6
STEPHEN M. GAGGERO,
7
8
9
10
11
)
)
Plaintiff.
)
)
vs.
)
)
KNAPP, PETERSEN AND CLARKE, ET. AL, )
)
Defendants.
)
___________________________________ )
Case No. BC286925

Pages 1 to 46
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OCTOBER 3, 2012
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Atkinson-Baker, Inc.
Court Reporters
(800) 288-3376
www.depo.com
27
28
Reported by: Yolanda Huff, CSR No. 12570

File No.: A608F2A
Page 1
APPEARANCES OF COUNSEL:
2
FOR THE PLAINTIFF:
3
4
5
WESTLAKE LAW GROUP

BY: DAVID BLAKE CHATFIELD, ATTORNEY
2625 Townsgate Road
Suite 330
Westlake Village, California 91361
6
FOR ADDITIONAL JUDGEMENT DEBTORS:
7
8
9
LAW OFFICES OF EDWARD A. HOFFMAN

BY: EDWARD A. HOFFMAN, ATTORNEY
12301 Wilshire Boulevard
Suite 500
Los Angeles, California 90025
10
FOR THE DEFENDANT:
11
12
13
14
15
16
17
18
MILLER, LLP
BY: AUSTA WAKILY, ATTORNEY
City National Plaza
515 South Flower Street
Suite 2150
Los Angeles, California 90071
ALSO PRESENT:
RISER ADKISSON, LLP
BY: JAY ADKISSON, ATTORNEY/APPOINTED RECEIVER
100 Bayview Circle
Suite 210
Newport Beach, California 92660
19
20
21
22
23
24
25
26
27
28
Page 2
OCTOBER 3, 2012
10:17 a.m.
P R O C E E D I N G S
THE COURT:
MR. HOFFMAN:
Gaggero.
Good morning, your Honor.
May it
please the court, Edward Hoffman on behalf of the
additional judgement debtors.
7
8
MR. CHATFIELD:
behalf of judgement debtor Stephen Gaggero.
9
10
MS. WAKILY:
Good morning.
Austa Wakily appearing
on behalf of defendants Knapp, Petersen and Clarke.
11
12
David Chatfield appearing on
MR. ADKISSON:
Adkisson.
Good morning, your Honor.
I'm Jay
I'm your receiver.
13
THE COURT:
14
MR. HOFFMAN:
15
THE COURT:
Have a seat, please.

Mr. Chatfield and Mr. Hoffman, why are
16
we filing and serving oppositions on the day of the
17
hearing as opposed to earlier?
18
19
MR. HOFFMAN:
I apologize for that, your Honor.
It has been an insane period for me.
20
THE COURT:
And what I'm --
I will tell you that I have looked
21
through them.
I have not -- I took some minutes and
22
went through them this morning to try and understand
23
what was in there.
24
MR. HOFFMAN:
25
THE COURT:
I appreciate that.
And there is nothing about those that
26
suggests why it could not have been done in a timely
27
fashion to give the other side notice of what you were
28
doing.
Page 3
MR. HOFFMAN:
Well, your Honor, if I may respond
to that.
them was a declaration of a gentleman named Gordon
Freitas.
your Honor's point is much stronger as to that one.
other document that we filed was communication between
my office and Ms. Wakily's office, letters and e-mails
that were sent to her and to Randall Miller, the partner
in charge of the chase.
10
There are two papers that we filed and one of
And I'll set that one aside because I think
THE COURT:
The
David Chatfield's declaration to that
11
effect, the last event that is eluded to in that
12
declaration is September 25th, which is almost -- that's
13
over a week ago.
14
MR. HOFFMAN:
Yes, it was, your Honor, and in part
15
it's because we were hoping we would get a response and
16
be able to work something out and not have to reveal
17
these communications.
18
think it would have been better to file those papers
19
sooner.
20
rebut legal arguments.
21
factually I think this is all premature.
I think your Honor is right, I
The point, though, is not that we're trying to
22
THE COURT:
23
MR. HOFFMAN:
What I'm trying to say is that
Why?
Because we're new here, your Honor,
24
we just got here at end of May.
25
judgement debtors on May 29.
26
debtor discovery from us at all yet.
27
judgement debtor examinations on the 25th.
28
THE COURT:
We became additional
Nobody has taken judgement

They're attending
I understand the judgement debtor
Page 4
discovery was taken from Mr. Gaggero sort of kicking and
screaming, you know, with great reluctance.
from that, you know -- you know, look, this case goes
back several years and it has been all the way up to the
appellate court where the judgement was affirmed.
have had post-appellate proceedings for additional
attorneys' fees and so forth.
has, as far as I can see, taken the stonewall position
as far as paying this judgement.
10
But aside
We
And basically Mr. Gaggero
I can understand why there might be a lot
11
of communications on the part of the judgement creditors
12
because there is, you know, to say that he has resisted
13
any effort to either, number one, pay sums that were
14
owed prior to judgement, or to pay it once the judgement
15
was entered is an understatement of the case.
16
So, you know, it's like -- its been worse
17
trying to pull teeth without anesthetic for the
18
creditors.
19
fundamental is undisputed, and it keeps adding interest
20
and everything.
21
understand why they might be disinclined to engage in
22
prolonged discussions which have no reasonable
23
likelihood of resolving at anything approaching
24
collection.
The validity of their claim, their
And, you know, I don't -- I can
25
MR. HOFFMAN:
26
THE COURT:
27
MR. HOFFMAN:
28
THE COURT:
May I respond, to that, your Honor?

Yes.
Thank you.
Because I frankly don't see that --
Page 5
that having read the materials that were submitted I
didn't see anything that suggested that there was going
to be any money or any particular cooperation.
you setting forth your client's problems to them about
refinancing properties where things were going to become
due, you know?
MR. HOFFMAN:
I saw
Well, that, your Honor, that was the
declaration from Mr. Freitas which is what I mentioned
earlier when I said I think your Honor's points are
10
better taken as to that one.
11
had with Ms. Wakily's office, though, I think is very
12
different.
13
there was no sign of any movement towards payment.
14
offered amounts in those letters to pay the judgement in
15
full, every penny, without a receiver being appointed.
16
The correspondence that we
The last point your Honor made was that

We
All we said was please take this motion off
17
calendar, acknowledge that we're not waiving our
18
appellate rights.
19
property --
20
THE COURT:
21
MR. HOFFMAN:
We will sell this piece of
What appellate rights?

We have a right as the additional
22
judgement debtors to appeal the order that said that we
23
were --
24
THE COURT:
You already took a writ and you got a
25
temporary stay and I don't know what happened, but the
26
stay was lifted because I think there was some sort of
27
procedural default on your client's part, on somebody's
28
part.
Page 6
MR. HOFFMAN:
The court didn't explain why it was
denied.
but we're getting --
I don't believe there was a procedural default,
THE COURT:
Okay, but you got a writ -- you know,
you took a writ, you got a stay order and the stay order
was lifted.
MR. HOFFMAN:
THE COURT:
That's right, your Honor.

Now, if there is, you know, just from
what I have seen in this case, and this goes back a long
10
time.
If I -- you're familiar with the movie Jerry
11
Maguire, I assume?
12
MR. HOFFMAN:
13
THE COURT:
I have seen it, your Honor.

Show me the money?
It would not
14
surprise me if that was not the attitude, and, you know,
15
money, you know --
16
MR. HOFFMAN:
What I'd like to say, your Honor,
17
though, your question that started this discussion was
18
what rights?
19
appeal before the writ petition.
20
writ of supersedeas.
21
stop enforcing the judgement while the appeal is
22
pending."
23
the writ was denied.
24
that we don't want to waive.
25
And the answer is that we have filed an

The petition was for a
It's a writ that says, "please
So, the appeal is still pending even though

And those are the appellate rights
If a judgement debtor settles with the
26
judgement creditor, that waives the appellate rights.
27
If a judgement debtor pays voluntarily, that waives the
28
appellate rights.
If a judgement debtor pays under the
Page 7
threat of some sort of collection action, that would
potentially cause significant damage or not even
significant, some sort of collection action, and they
pay in order to prevent that, that doesn't waive their
appellate rights.
And that's all we were saying.
We're saying, "we have a piece of property
that has enough equity to cover the entire amount.
We
will sell it.
it," I don't remember exactly what we said, but we can
We will let you take a role in selling
10
share a sell in it.
11
we'll sell that right now and we will pay the judgement
12
in full because otherwise" --
13
THE COURT:
14
MR. HOFFMAN:
15
THE COURT:
But we said, "we'll go ahead and
That isn't what I got out of this.

I apologize, your Honor, I didn't -Actually, that isn't quite what I got
16
out of this.
You're talking about the September 25th
17
letter to Mr. Miller?
18
MR. HOFFMAN:
19
THE COURT:
That's correct, your Honor.

What you say is that their client's
20
interests are protected by the abstract of judgement,
21
and the -- and your proposal in the first paragraph,
22
page 2 of the letter is that they simply hold off.
23
that they not collect -- you know, you talk about the
24
cost that they will incur and you say these words, "your
25
clients could avoid these costs by simply weighing the
26
outcome of the appeal relying on their security interest
27
in my clients' property is to protect them."
28
MR. HOFFMAN:
Not
Yes, I did say that, your Honor.
Page 8
And then if your Honor will continue down the line it
says, "but if your clients are unwilling to wait, I have
a proposal which would allow them to enforce judgement
without causing needless harm to my clients."
I proceed to explain, that "we are willing to put the
property at 511 Ocean Front Walk in Venice on the market
and sell it to satisfy the judgement."
parcel on the Venice Boardwalk.
9
10
THE COURT:
MR. HOFFMAN:
THE COURT:
It is -- as of several years ago it
What is the net -- what are the
incumbrances on this property today?
15
16
What is the value of
was just over $4 million.
13
14
That's valuable
that?
11
12
By the sheriff.
MR. HOFFMAN:
The value has gone up since then.
It was a $1 million incumbrance.
17
THE COURT:
18
years ago, when, 2007?
19
When you say it's $4 million several
MR. HOFFMAN:
As a matter of fact, yes, 2007, but
20
we have another appraisal in the works now.
21
happy to provide that.
22
been improved.
23
it.
We'll be
And since 2007 the building has
They have put quite a bit of work into
The rents that it draws now are more --
24
THE COURT:
25
don't know what you --
26
MR. HOFFMAN:
27
THE COURT:
28
And then
I have no way of knowing that and I
Well, your Honor, I'm not asking -You know, this is -- you know, I don't
see that this gives them very much, frankly.
I think
Page 9
it's rather -- this doesn't set any time limit for any
of these things to happen.
MR. HOFFMAN:
Well, it was an invitation to
discuss this, your Honor.
concern, I'm sure we can work that out.
6
7
8
9
10
11
THE COURT:
If that's the Court's
And you are -- and you gave them four
hours to respond.
MR. HOFFMAN:
Well, including a response that says
they need time, your Honor.
We were contemplating
various other steps we might need to take and I wish -THE COURT:
"If they need more time to make a
12
decision please agree by 5:00 p.m. to continue the
13
October 3rd hearings."
14
MR. HOFFMAN:
That's --
Even so, your Honor, my point is we
15
are serious about trying to get this worked out without
16
being subjected to a receivership.
17
something that I'm sure your Honor understands is costly
18
to all parties concerned.
19
we'd be the ones --
20
THE COURT:
21
MR. HOFFMAN:
The receivership is
And as the judgement debtors
I don't doubt that.

And, so, it's an incentive that we
22
have to come out and make the judgement creditors whole,
23
which is what we were trying to do there.
24
the main concern we have is to do it in a way that
25
doesn't waive our appellate rights, and that's what the
26
letter was trying to accomplish by explaining, well,
27
here's all the reasons why we're doing it.
28
As I said,
If there are specifics that the court feels
Page 10
were not addressed adequately, I'm happy to address
those.
THE COURT:
I don't -- you see, what my impression
reading this was that it's kind of vague, kind of
conceptual, and what it does is promise significant
additional delay.
MR. HOFFMAN:
Well, I don't see that, your Honor,
because we don't have the liquid assets.
estate and even if the receiver is the one doing it or
10
even if they pursue the other usual types of remedies,
11
it would still take time, it would still involve selling
12
property.
13
to get the process started.
14
15
Now, we're willing to do that.
MS. WAKILY:
We have real
We're willing
Your Honor, can I address the offer
really quickly?
16
THE COURT:
17
MS. WAKILY:
Briefly.
Mr. Chatfield omitted from his
18
declaration my response to that e-mail, to his last
19
request or last statement, and that was that his
20
offer -- I'll read the e-mail to you actually.
21
"with respect to your e-mail your proposal offers are
22
assigned a lien that they already have while requiring
23
them to forfeit their right to enforce a money judgement
24
against Mr. Gaggero.
25
lien is involuntary for the is effect to the same.
26
Second, the judgement as to Mr. Gaggero is final fully
27
enforceable and not subject to further appeals or stays.
28
The proposal appears to benefit only your client."
It says,
First it's irrelevant that the
Page 11
1
2
3
4
MR. HOFFMAN:
That's a response to a different
proposal.
MS. WAKILY:
That was a followup to the e-mail to
Mr. Chatfield's declaration.
THE COURT:
MS. WAKILY:
Oh, to Mr. Chatfield's?

Right.
So, there's an e-mail
response that he didn't include in his declaration
that --
9
10
11
THE COURT:
But this is the proposal from
Mr. Hoffman for Mr. Miller.

MS. WAKILY:
It's the same proposal.
The alter
12
ego debtors also are requiring that we stop our
13
enforcement efforts against Mr. Gaggero which will
14
likely prove that he actually has all his assets in his
15
own name or they actually are owned by him personally.
16
THE COURT:
Just a minute.
17
When did you send this?
18
MS. WAKILY:
19
20
Hold on a second.
I sent it about -- at 12:00 p.m.
the
same day as his last e-mail.

THE COURT:
Well, since his e-mail I don't know
21
what the last day you're referring to.
22
September 25th his e-mail went to you at 12:59 to
23
Mr. Miller.
24
MS. WAKILY:
25
THE COURT:
26
MS. WAKILY:
27
declaration.
28
conversations.
If it was
Sorry, not the alter egos.

Are you talking about the 27th?
I'm talking about Mr. Chatfield's
He includes an exhibit of some e-mail
Page 12
MR. HOFFMAN:
Right.
This is not a response to
the communications that I sent, your Honor.
response to something different that Mr. Chatfield sent.
4
5
THE COURT:
Well, Mr. Chatfield also attaches to
his declaration that same September 25th letter.
MS. WAKILY:
THE COURT:
It's the same offer.

And Mr. Chatfield says that there was
no response to that letter.
response.
10
11
It's a
MR. HOFFMAN:
Apparently there was some
No, there was no response to my
letter.
12
MS. WAKILY:
13
THE COURT:
It's the same offer.

Just a minute.
I don't know, but they
14
responded to something apparently or did they not?
15
you take the position absolutely that they did not
16
respond in any way, shape or form to these things on or
17
after September 25th --
18
19
MR. HOFFMAN:
THE COURT:
21
MR. HOFFMAN:
22
THE COURT:
23
MR. HOFFMAN:
24
THE COURT:
26
That is my position, your Honor.
have not heard --
20
25
If
Then if I look at the e-mail -Which was not sent to me.

Who was it sent to, Mr. Chatfield?
Yes, your Honor.
Mr. Chatfield says that there was no
response.
MR. HOFFMAN:
I haven't studied Mr. Chatfield's
27
declaration in depth.
I believe he said there was no
28
response to what I sent, not that there was no response
Page 13
to what he sent.
Honor.
3
4
5
THE COURT:
I have heard that -- I'm sorry, your
Okay.
That's fine.
I understand what
you're saying.
MR. HOFFMAN:
I heard nothing from the Miller firm
at all about anything about this case, except
confirmation that there would be a court reporter.
sent the letter on September 25th, I sent a followup on
September 27th and I got the silent treatment.
10
Now, I guess they're not obligated to
11
respond but we're serious about trying to make this
12
work, and we would have a dialogue if they wanted to
13
have a dialogue.
14
I would say it's premature to put us into a
15
receivership.
16
be putting it strongly, your Honor.
17
do this, but it is the last battle alternative available
18
and on that basis we're willing to do it.
19
Under these circumstances, your Honor,
We're willing to do this.
MS. WAKILY:
Willing might
We're not eager to
Your Honor, there's a pending order
20
to produce documents Mr. Praske has refused to turn
21
over, so it appears --
22
THE COURT:
23
MS. WAKILY:
Mr. Who?
Mr. Praske has refused to turn over
24
documents relating to the estate plan after we obtained
25
an order subject to protection that Mr. Chatfield wanted
26
to turn over documents to the estate plan.
27
28
THE COURT:
I don't know.
I don't have a motion
or applications today with respect to that, do I?
Page 14
MS. WAKILY:
THE COURT:
Is there a motion before me today for
an application?
MS. WAKILY:
THE COURT:
6
7
It's exhibit to --
No, no, it's an order.

I don't have a motion or application
before me today to adjudicate this.

MS. WAKILY:
I'm not saying there's a --
adjudicate -- I'm saying that there's an order
outstanding that they refuse to comply with.
10
MR. HOFFMAN:
Your Honor, if I'm not mistaken that
11
order is directed only against Mr. Gaggero and not
12
against the additional judgement debtors.
13
mistaken I would be happy to acknowledge that.
14
THE COURT:
15
MS. WAKILY:
If I am
I don't know if it is or not.

We have declarations from
16
Mr. Chatfield refusing to disclose those documents --
17
I'm sorry, Mr. Praske.
18
provided by Mr. Chatfield.
19
correct me if I'm wrong?
20
MR. CHATFIELD:
I'm sorry.
Mr. Praske.
It was
Mr. Chatfield, can you
I'm not exactly sure what you're
21
talking about.
It's not before the court, so I haven't
22
reviewed any documents relating to that.
23
MR. HOFFMAN:
24
MR. CHATFIELD:
I don't know if this is the -All I know is that an offer has
25
been made to sell the 511 Ocean Front Walk property
26
either by voluntary sale by a real estate agent or by a
27
Sheriff's sale, which is ordered by the court, and
28
Mr. Hoffman can speak to the willingness of his client
Page 15
to stipulate to an order to sell the property which
would then take out all of the need for a receiver to
come in and ask for the very same relief.
judgement creditors could move for order to sell the
property anytime they wanted to.
premature to have a receiver come in and do what can be
done by ordinary judgement enforcement procedures,
especially when the new judgement debtors are willing to
stipulate to an order to sell the property.
10
11
12
MR. HOFFMAN:
In fact, the
This seems to me all
That's my point, your Honor.
And as
for the questions about Mr. Praske -THE COURT:
Why would only one judgement debtor --
13
why would this particular judgement debtor be willing to
14
sell its property?
15
MR. HOFFMAN:
I don't know the answer to that,
16
your Honor.
17
arrangements for the other ones.
18
I can only presume that they have made
THE COURT:
We've got a whole bunch of judgement
19
debtors.
20
got all these entities here, including Mr. Gaggero
21
individually, we've got Pacific Coast Management, which
22
I understand has been a vehicle for paying Mr. Gaggero's
23
expenses and has been part of this thing so that he
24
individually may be judgement proof.
25
the relationship of these other entities is in any
26
detail or why 511 OFW would step up.
27
28
I think this is an interesting question.
MR. HOFFMAN:
I don't have it.
I've
I don't know what
I can get information, your Honor.

My assumption is that they have made
Page 16
arrangements to borrow or work out a proportionate share
with the other entities.
the equity.
least disruption.
four adjacent properties.
the easiest one to get rid of.
This is the property that has
This is the property that would cause the

You know, there's a block, I believe,
THE COURT:
This one is at the end.
It's
Now --
You know, if there really is all this
money, all this equity, I would assume that you would be
able to bond the judgement.
And the statement to the
10
effect that -- you know, you're telling me that this is
11
what a $4 million property with a $1 million lien, if
12
there's all these properties I would assume that you'd
13
be able to find a surety to file the judgement and avoid
14
this.
15
MR. HOFFMAN:
We tried, your Honor.
It didn't
16
work.
The sureties didn't want incumbered property.
17
They want cash.
18
attempts each with two different sureties and were
19
turned down.
20
They want lines of credit.
We made two
But regardless of that, the point is not
21
what else could have been done in order to get a bond.
22
The point is can we pay the judgement?
23
judgement?
24
judgement creditors that we're not willing to accomplish
25
for them in a less costly, less damaging manner?
26
Will we pay the
What would a receiver accomplish for the
THE COURT:
Okay.
What you can do then is I can
27
go ahead and let the receiver go forward, and you can
28
make them an offer they can't refuse as far as payment
Page 17
goes that satisfies them as to the amount, the timing
and the collectability of this stuff.
know, I can understand -- I'm not expressing a personal
opinion here now, but I can understand why they might be
a trifle skeptical of offers coming from your side of
the table.
case, but this case has a history.
unfortunately, if your side of the table has baggage you
come into this case and the baggage affects you,
And I understand that you may be new to this

And, fortunately or
10
unfortunately.
11
people that you're trying to represent.
12
Because, you
It affects their perception of the
MR. HOFFMAN:
Well, the point, your Honor, isn't
13
so much that I'm new.
14
judgement debtors are new.
15
Mr. Praske has or hasn't provided, but nobody has served
16
him with judgement debtor discovery except for a
17
judgement debtor exam years ago when he was there in a
18
third party capacity.
19
basically be a last resort.
20
resort.
21
THE COURT:
22
MR. HOFFMAN:
The point is that the additional

They mock about what
A receivership is supposed to
We're here as a first
I would tend to disagree with that.

Well, your Honor, we cited law in
23
the papers that says a court when deciding whether to
24
appoint receivership has to balance the interest of both
25
the judgement creditor and the judgement debtor.
26
Now, there's a lot at stake on their side
27
of the balance, there's a lot at stake on our side of
28
the balance.
We haven't even had an opportunity to
Page 18
answer discovery.
words.
THE COURT:
Nobody has -- let me back up two
There has been discovery that has been
taken, as I understand it, from Mr. Gaggero and I
believe other people, or there have been attempts to get
discovery from other people.
MR. HOFFMAN:
Nobody has served us with judgement
debtor interrogatories.
Nobody has served us with
judgement debtor requests for production.
We do have
10
pending judgement debtor examinations but they haven't
11
been taken.
12
Since we became parties, or at least
13
additional debtors, nobody has asked us anything.
14
haven't failed to answer.
15
We haven't been less than fully forthcoming because it
16
hasn't happened yet.
17
that we have been able to participate responsibly in
18
this case.
19
THE COURT:
We
We haven't failed to produce.
We haven't had a chance to show
Well, the problem is that Mr. Gaggero
20
has been less than forthcoming.
21
of the judgement debtor examination where he refused to
22
say where he lives and refused to give information that
23
was perfectly appropriate.
24
MR. HOFFMAN:
25
THE COURT:
26
I read the transcript
I don't have a dog in the fight.

But you see the problem is, this
colors the entire relationship.
27
MR. HOFFMAN:
28
THE COURT:
I understand that.
And, frankly, my general understanding
Page 19
is that this web of entities was set up by Mr. Gaggero
in consultation with various people essentially to make
him judgement proof.
is evidence that has been presented to that effect, and
indeed I have some recollection of Mr. Gaggero's own
testimony at trial.
And I think that -- I think there
And I have seen this, you know?
So, you know, if I'm a little -- if I'm a
trifle skeptical of this, let's turn to the merits of
the proposed order for assignment rights and order
10
11
restraining judgement debtors.

MR. HOFFMAN:
Your Honor, before we do that, may I
12
suggest that we simply continue this hearing to give us
13
a chance in order to make that sale happen?
14
THE COURT:
Why should I -- on the basis of what I
15
have before me today, I do not have a high degree of
16
confidence that will happen within a reasonable period
17
of time.
18
MS. WAKILY:
Your Honor, we don't accept the terms
19
and we're not going to accept on offer without evidence
20
supporting the statements.
21
that there's not other entities or assets available.
22
THE COURT:
There's nothing to suggest
I don't know.
You know, you say
23
you're getting updated appraisal.
24
will show.
25
properties.
26
there's a million dollars in incumbrances.
27
what the values are and --
28
I don't know what it
I don't know the value of any of these

I don't know what the -- you tell me
MR. HOFFMAN:
I don't know
I'll be happy to document that.
Page 20
THE COURT:
But I don't know have enough before me
today to know that I'm not buying a pig in a pole.
that's not casting doubts on your voracity.
intended to express that you are asking me to require
them to submit to something that they are not willing to
do voluntarily on the basis of a theoretical offer which
has not yet been reduced to anything that would be
enforceable.
MR. HOFFMAN:
And
It's
Your Honor, I'd like to say a couple
10
of things in response to that.
11
provide the documentation once we have the appraisal.
12
Ms. Wakily says that there's potentially some other
13
assets out there.
14
but they're not entitled to say, okay, we insist on this
15
particular method of payment.
16
insist on a particular amount of money.
17
have done is proposed a way to get them that amount of
18
money and get it to them expeditiously.
19
I will be happy to
I don't know what there is or isn't,
They're entitled to
And what we
Now, I'm not asking them to submit to this,
20
which is, I believe, the way your Honor phrased it a
21
moment ago.
22
this and be --
23
I'm not saying, okay, they should accept
THE COURT:
Well, in the sense that you are asking
24
me to deny their request here and prohibit them,
25
postpone this motion --
26
MR. HOFFMAN:
27
THE COURT:
28
Postpone, yes, that's what I meant.

-- for an indefinite period of time.
I don't hear any commitments yet.
I have not yet heard
Page 21
a commitment or an offer to commit for any particular
thing as to any particular date.
I'm buying a pig in a pole.
something will happen.
me today that I could, to turn a phrase, take to the
bank.
MR. HOFFMAN:
MS. WAKILY:
THE COURT:
10
MR. HOFFMAN:
That's why I'm saying
You know, it's hope that
But I don't have anything before
Well, your Honor -One more important note on this.

Just a minute.
Last stand.
If there are
11
specific shortcomings than what we proposed that your
12
Honor would like us to address, I would be happy to --
13
THE COURT:
It's too indefinite, sir.
It's not
14
that there are specific shortcomings.
15
know what you have offered.
16
about this and there's no timeframe, and there's no
17
basis for assurance that it's going to happen in a
18
reasonable period of time or shake out the way that you
19
intend.
20
MR. HOFFMAN:
It's that I don't
There are no specifics
Well, then can we continue this long
21
enough for me to get that kind of commitment from the
22
client and make the specifics at additional parts of
23
this proposal?
24
MS. WAKILY:
Your Honor, one more important point
25
is we received numerous letters from counsel for the
26
alter ego debtors and Mr. Chatfield immediately after
27
the order amending the judgement threatening KPC and
28
their law firm with liability by various unnamed third
Page 22
party entities if we didn't seek to enforce our
judgement against the assets of the entities.
3
4
5
So, we would be exposing ourselves to that

kind of liability based on the proposal.
THE COURT:
Well, just a second.
significance of that?
shouldn't do it?
8
9
MS. WAKILY:
What is the
Does that mean I should or
Shouldn't, because if we foreclose on
it and they got the appellate decision reversing it,
10
then we're going to essentially be liable to these
11
unnamed third parties, that they're refusing to
12
disclose, for having enforced our judgement.
13
they're proposal is exposing us to a liability that
14
we're not willing to take on.
15
MR. HOFFMAN:
So,
That's not correct, your Honor.
Our
16
proposal includes the liability that they would already
17
if they enforce the judgement by other means.
18
a reversal on appeal, they have to make us whole.
19
That's true whether they have collected -- through the
20
proposal that we make, whether they've collected through
21
the receiver, whether they collect through an execution
22
sale, whatever the method is, if they have collected and
23
then we went on appeal we're entitled to get it back.
24
And that's all we were saying.
25
MS. WAKILY:
If we get
That's exactly why we need a
26
receiver.
Somebody who go in review the estate plan
27
what ownership interest each entity has, what ownership
28
interest Mr. Gaggero has, and based on that satisfy the
Page 23
judgement.
MR. HOFFMAN:
That's a non-sequitur, your Honor.
They're entitled to an amount of money.
entitled to an investigation.
dissect whatever arrangements exist on this side of the
table.
They're not entitled to
They're entitled to cash.

THE COURT:
They're not
We've offered --
Give them cash, then.
You can settle
this -- you can settle this by giving them cash.
have zero confidence -- you know, look, again, I am not
10
And I
casting aspersions on your personal rectitude.
11
MR. HOFFMAN:
12
THE COURT:
I know that, your Honor.
Thank you.
But, I have -- put it this way.
13
seriously doubt -- I have nothing before me that
14
suggests that you have the kind of intimate knowledge of
15
all these entities and their financial condition that
16
you would be able to detail what the situation is.
17
the moment.
18
information that has already been presented to me and
19
that is including about the ability of these entities to
20
come up with cash, given the vagueness of that
21
information, I'm not prepared, necessarily, to buy into
22
the notion that you gotta sell the property.
23
know whether do you or not.
24
would sell a property.
25
At
At the moment, given the vagueness of the
I don't
I don't know whether they
I see that the receiver is supposed to
26
take -- supposed to have certain rights or the ability
27
to go the receipts of judgements that are coming in
28
which would not involve the sale of property.
There's a
Page 24
whole list of judgement -- of lawsuits that involve
different claims.
MR. HOFFMAN:
THE COURT:
But, you know, I -Then what I would ask -The problem is I've got -- did you
read the statement of decision that I wrote?
MR. HOFFMAN:
THE COURT:
I did, your Honor.

Okay.
And, so, you know, with respect
to that underlying lawsuit that he had that resulted in
the anti-slap judgement, the thing that he was claiming
10
that Knapp Petersen and Clarke should have settled for
11
him, that he sued that homeowner's association and got a
12
judgement, and the judgement kept compounding and
13
compounding and compounding.
14
although there was no basis on which to refuse to pay
15
the judgement, no legitimate basis, he did.
16
stonewalled.
17
with Knapp Peterson.
18
And I found that all
He
And that was a big part of the falling out
And I know the history of Mr. Gaggero on
19
that.
He doesn't want to pay judgements against him,
20
okay?
So, he got -- the way he set up these
21
relationships, as I understand it, with these different
22
entities it's very hard to twist his arm.
23
have here now is counsel for the judgement creditor who
24
is willing to come in and take the steps actually to
25
effectively twist the arm.
26
MR. HOFFMAN:
27
THE COURT:
28
And what we
What I'm saying -It's hard for me to say that given
this history, given my understanding of the facts, given
Page 25
my understanding of the relationship between Mr. Gaggero
and these different persons and entities, that that
shouldn't allow to go forward.
MR. HOFFMAN:
Well, your Honor, what I'm saying is
that the arm twisting is working.
We're here saying,
uncle.
like just a little time in order to make it more clear.
Your Honor raises some valid points about what more
information we could have provided.
If we haven't said uncle clearly enough, I would
10
provide it.
11
said, we got silence from the other side.
12
ask for it.
13
already been able to provide it by now.
14
is on us, but I'm willing to carry that onus.
15
16
I can get it.
I didn't think to
I can provide it.
Like I
They didn't
If they had asked for it we might have
MS. WAKILY:
I realize onus
Your Honor, we believe the receiver
can help.
17
THE COURT:
Let me turn to the receiver, if I may.
18
MR. ADKISSON:
19
THE COURT:
Yes, sir.
I have this notice in the receiver's
20
ex parte request for instructions.
21
what you're asking.
22
MR. ADKISSON:
I'm not quite sure
I'm merely asking, your Honor, for
23
the authority that I have in conclusion of this hearing
24
after you take into account these alter ego entities.
25
So, in other words, that the court originally entered an
26
order appointing receiver.
27
Apparently there was some confusion or some issue
28
regarding these other entities.
You have that order.
Page 26
THE COURT:
There was the writ filed for
supersedeas to prevent enforcement against these other
entities pending appeal, when they had not bonded this.
And the Court of Appeals had lifted the writ, initially
issued it, and then lifted that.
So, I'm not sure -- so the order that was
signed back at the beginning of September, I think, sets
that -- sets forth that stuff, and I thought that was
reasonably fair.
10
11
I'm looking for the documents right
now.
MR. HOFFMAN:
If I may, your Honor.
My concern
12
with the ordered is that it didn't cross out the names
13
of my clients.
14
the stay was in place, so it was seeking relief against
15
Mr. Gaggero and my clients.
16
17
18
The proposed order had been filed before
THE COURT:
Exactly, and the court did not sign it
until the stay was lifted.

MR. HOFFMAN:
Right.
But in the interim my
19
clients did not participate in that hearing and their
20
opposition papers were returned to them.
21
no notice, they had no opportunity to be heard, and,
22
yet, there's an order that was issued that says it
23
applies both to Mr. Gaggero and my clients.
24
25
26
THE COURT:
So, they had
If you have a motion for
reconsideration, then you make it.

MR. CHATFIELD:
Well, your Honor, if I may.
I was
27
in court with Ms. Wakily when your Honor ordered the
28
hearings to the new judgement debtors off calendar, and
Page 27
said that she could move to reset it, which is why we're
here today because she has moved to reset.
3
4
MS. WAKILY:
about.
I'm not sure what you're talking
I was -THE COURT:
I have, for today, the order for
assignment of rights and order restraining judgement
debtors.
8
9
10
Okay?
MR. HOFFMAN:
That's properly on calendar today,
yes.
THE COURT:
And I asked you for your comment on
11
that and you wanted to discuss these other things.
12
I'm inclined to grant that motion if I sign that order.
13
Are you familiar with that order, sir?
14
MR. ADKISSON:
15
THE COURT:
16
17
And
Yes, I am, your Honor.
Does that answer most of your
questions?
MR. ADKISSON:
Just to be clear for the record,
18
your Honor.
19
behalf of these alter ego entities; is that correct?
20
21
22
So, I am authorized to act as a receiver on
MR. HOFFMAN:
I would like to go through these
items as your Honor proposed.

THE COURT:
Well, it seems to me that the order
23
for appointment of the receiver, of which I assume we
24
just printed out a copy in pink here, which I assume you
25
also have, identifies the second paragraph of these
26
various entities.
27
writ of supersedeas to prevent enforcement as against
28
these various entities, Court of Appeal granted them,
And when there was a petition for
Page 28
and then a week or ten days later vacated it.
they vacated it that lifted the stay and the
perfection -- you know, and they haven't bonded it to
stay it, so I think it goes forward, sir.
order, as I understood the order for appointment of
receiver was fairly clear on that.
not to act on that order until the Court of Appeals had
lifted its stay.
9
10
And when
I think the
And I was careful
So, I'm, you know, I'm inclined to grant

the motion here that was on calendar before me today.
11
MR. HOFFMAN:
Your Honor, just for the sake of
12
clarity we're talking about two different orders.
13
was -- the motions that are on calendar today have no
14
orders yet.
15
THE COURT:
There
I have the proposed order for
16
17
debtors on hearing today.
18
MR. HOFFMAN:
19
THE COURT:
20
Right.
Their proposed orders today.
And what I am saying is that I'm
inclined to grant them.
21
MR. HOFFMAN:
I understand that and I would like
22
to go through the objections.
23
the court saying that the September 13th orders were
24
also meant to apply to my clients?
25
THE COURT:
But my question was is
The September 13th order says what it
26
says.
Paragraph 2 for the second -- it's unnumbered.
27
"It is ordered that judgement creditor, KPC's motion for
28
the appointment of the receiver to enforce their
Page 29
judgement against judgement debtor Stephen M. Gaggero,
Pacific Coast Management, Inc., 511 OFW, LP, Gingerbread
Court, LP, Malibu Broad Beach, LP, Marina Glen, LP,
Blu," B-l-u, "House, LLC, and Boardwalk Sunset, LLC,
Joseph Praske as trustee of the Giganin," G-i-g-a-n-i-n,
"Trust, Joseph Praske as trustee of the Arenzano Trust,"
A-r-e-n-z-a-n-o, "and Joseph Praske as trustee of the
Aquasanta," A-q-u-a-s-a-n-t-a "Foundation, collectively,
referred to as judgement debtors, in the amount of
10
$2,178,235.51, plus post-judgement interests and
11
allowable costs is granted."
12
All right.
13
MR. HOFFMAN:
That's paragraph 2.
Okay.
We submitted written objections to
14
the number of proposed terms in the receivership order.
15
I don't know if the court has made rulings on those
16
objections.
17
18
19
20
21
THE COURT:
I am -- I have reviewed the proposed
order and it seems that it's in appropriate form.

MR. HOFFMAN:
Has the court had the opportunity to
review the objections we submitted?

THE COURT:
The court has had the opportunity to
22
review -- we're not talking about the evidentiary
23
objections, we're talking about the objections served by
24
you on -- I have your opposition, is that what you're
25
eluding to, sir?
26
MR. HOFFMAN:
There were several papers filed
27
concurrently with the opposition.
One of them is called
28
objections of -- in the name of all of my clients --
Page 30
THE COURT:
MR. HOFFMAN:
3
4
Yes.
-- to proposed order for appointment
of receiver.
THE COURT:
Yes, I do have it here, yes.
And it's
boiler plate.
order seeks the receiver's powers right and obligations
not reasonably necessary to enforce the judgement.
then that's an objection number 2, objection to number
3, objection to number 6, to number 7, to number 10, to
10
11
Objection to number 1, this proposed
number 12, section 13, 14, 22.

MR. HOFFMAN:
And
Yeah, I see that.
Now, your Honor, the objections use
12
the same language repeatedly, and I don't like that very
13
much either.
14
is substance as well, that is the opening of the
15
objections.
16
It was under time and pressure, but there
There is more to it.

For example, on the first one we object to
17
the amount of the bond.
18
receivership over so many different entities on a
19
$2 million judgement.
20
too low.
21
THE COURT:
22
MR. HOFFMAN:
A $10,000 bond for a
We submit the $10,000 was simply
It's too much?

It's too low.
That's the opposite
23
of what I'm saying, your Honor.
And looking at some of
24
the other, like number 3, for example, the proposed
25
order asks the receiver to become an investigator and
26
not a collector of money.
27
of that.
28
you look in any transfer the $10,000 or more over the
I don't understand the point
There's a proposed term in here that says, "if
Page 31
1
2
3
4
5
6
7
8
9
10
11
12
past seven years."

THE COURT:
That's not number 3.

Where is the reference in your
objections to the amount of the bond?

MR. HOFFMAN:
It's in objection number 1, your
Honor, because that was -THE COURT:
Okay, I have -- and where is the bond
amount set forth?

MR. HOFFMAN:
In the first paragraph under
objections, your Honor.

THE COURT:
Where in their proposed order, where
is the bond amount set forth?

MR. ADKISSON:
I'm looking for it.
Your Honor, the original bond
13
amount was set in the original appointing receiver, and
14
I have posted a $10,000 bond pursuant to your order,
15
which is pretty common in these cases.
16
THE COURT:
17
MR. HOFFMAN:
18
THE COURT:
19
20
Anything else?
Well, yes, your honor.
Let's highlight any things of special
significance.
MR. HOFFMAN:
On number 3.
Among the
21
investigative provisions here is to obtain tax returns.
22
Tax returns are privileged information.
23
MS. WAKILY:
Your Honor, the receiver doesn't have
24
to turn over those documents to KPC.
The receiver
25
will -- once he steps into the shoes of the debtors,
26
will have access to that information and can make a
27
determination to this court as to the assets
28
available --
Page 32
THE COURT:
As to the objection to number 3, I
don't see anything in number 3 that relates to tax
returns.
MR. HOFFMAN:
THE COURT:
In their proposed order, your Honor?

Are we talking about the order for
debtors?
8
9
10
MR. HOFFMAN:
No, your Honor, I apologize.
I was
referring to the receivership order.

THE COURT:
The receivership order was already
11
signed.
12
reconsideration of that before me today.
13
talk about the order of assignment of rights and order
14
restraining judgement debtors.
15
There is no motion or application for
MS. WAKILY:
I'm trying to
Your Honor, we filed the motion as to
16
alter egos as a precaution.
17
egos debtor based on the previous orders, because we
18
weren't aware that we could.
19
a chance to oppose it, so we've refiled the same
20
motions.
21
proposed order for receiver is -- there's additional
22
authority that we've added in there based on other
23
receivership orders.
24
We didn't pursue the alter
And we knew it didn't have
The assignment order is identical.
THE COURT:
The
I'm sorry, am I correct or incorrect
25
that the only order that I have from you, the only
26
proposed order for today, is this order for assignment
27
of rights?
28
MS. WAKILY:
No, there's --
Page 33
THE COURT:
What is the other order that I'm
supposed to have for you?
have this huge stack of documents that I have been
attempting to respond to.
5
6
MS. WAKILY:
The appointment of receiver is the
other one.
7
8
Because I'm trying to -- I
THE COURT:
Well, where is -- do you have an order
that relates to that?
MS. WAKILY:
10
filed with the --
11
MR. HOFFMAN:
Yes, let me give you a copy.
It was
I believe this is the receiver to
12
asset verification, your Honor, the fact that there was
13
this pending motion with a proposed order as well as the
14
order that had been received previously.
15
to put words into the receiver's mouth, but -- I see the
16
receiver is agreeing with me?
17
MS. WAKILY:
I don't mean
I have an extra copy of the proposed
18
order that was filed with the motion for today's
19
hearing.
20
May I approach the bench to give you a copy?
THE COURT:
Just a minute.
I'm a little bit
21
confused now.
I see various proofs of service here.
22
One of these is as to the notice of entry of protective
23
order.
24
MS. WAKILY:
25
THE COURT:
26
MS. WAKILY:
27
28
For protective order?

Yes.
That's an exhibit to one of the
replies.
THE COURT:
I see a notice of entry order for
Page 34
assignment of rights and for the restraining judgement
debtors.
3
4
5
6
7
MS. WAKILY:
And those were to the September
orders.
THE COURT:
Yes.
Now, how are the orders intended
for today different in substance?

MS. WAKILY:
The only one that's different is the
appointment of a receiver and that includes additional
language that I inserted after I reviewed a boiler
10
template receivership order from one of the individuals
11
nominated by Mr. Chatfield in that previous motion,
12
David Pasternak, and based on that I just inserted
13
additional authority that he had used in one of his
14
receivership orders.
15
And the proposed order for today's hearing
16
reflects that as to Mr. Gaggero the authority of the
17
receiver is going to be limited to what we had obtained
18
in September and as only the new authorities to the
19
alter ego debtors.
20
THE COURT:
21
MS. WAKILY:
22
THE COURT:
All right.
Let me see yours.
The one for today's hearing?

Whatever orders you have for today.
23
Now, is this order for assignment of rights and order
24
restraining judgement debtors that has the hearing date
25
for today.
You want me to sign that; is that correct?
26
MS. WAKILY:
27
THE COURT:
28
Yes.
Is that different than the orders than
the court previously signed?
Page 35
1
2
MS. WAKILY:
That one's
the same.
3
4
No, that one's identical.
THE COURT:
Well, why would I want to sign it
today?
MS. WAKILY:
So that the alter ego debtors will
have an order as to this motion, because they didn't
have a chance to file an opposition to the previous
motion and it sounds like they're objecting to the
application of that order as to them.
So, I want it to
10
be clear so that they don't object later as to whether
11
they had a right to oppose or due process issues
12
relating to the assignment order and the receivership.
13
THE COURT:
How is this proposed order for the
14
appointment of receiver different than the one I
15
previously signed?
16
MS. WAKILY:
It starts on page 6, line 4.
It
17
says, "it is further ordered that the receiver will have
18
the following additional," and it's in italics, "powers
19
with respect to the judgement debtor," and then it lists
20
the alter ego debtors below that.
21
22
THE COURT:
So, this should be an amended order?
Should this be captioned amended order?
23
MS. WAKILY:
24
get an objection later.
25
THE COURT:
It could be, yes, as long as I don't
Are you seeking -- does this supercede
26
or supplement or amend?
27
MS. WAKILY:
28
So, paragraphs 22.
What is it?
Come on.
It supercedes the previous one, yes.
Actually, your Honor, it will amend the previous one to
Page 36
reflect the alter ego debtors.
much distinction.
3
4
THE COURT:
Very briefly make your points.
have the amount of the bond.
I'm not sure if there's
MR. HOFFMAN:
You
The tax returns, correct?
Those were objections to among the
first of the terms.
September 13th order was intended to address my clients,
then --
THE COURT:
If the court is saying that the
You are submitting an amended order
10
for payment of receiver.
11
objecting to?
12
13
MR. HOFFMAN:
Is that what you are now
Yes, your honor, that's what we
submitted the objections to was that proposed order.
14
THE COURT:
15
MR. HOFFMAN:
Okay.
So, I believe where we left off,
16
your Honor, was with the tax returns.
17
number 3.
18
THE COURT:
That was on
Now, why should we not include the tax
19
returns?
20
to tax returns, but this is a receiver.
21
receiver normally not have access to the tax returns of
22
the person or entity over which the receivership is
23
made?
24
I understand the general notion of privacy as
MR. HOFFMAN:
Why would a
Because a receiver is not within the
25
privilege held by the taxpayer.
26
receiver is not entitled to attorney-client
27
communications because it's not within that privilege.
28
THE COURT:
It's not -- the
If you have -- if he was taking over a
Page 37
business are you suggesting that the receiver would not
be able to get tax returns from the business if the
receiver, if we appointed a receiver to take over a
business, are you suggesting that the receiver would not
have the ability to look at the tax returns?
MR. HOFFMAN:
THE COURT:
Yes.
For example, would the receivership
obligations include making sure that the taxes were paid
and the tax returns were filed?
Of course they would,
10
if you have a receiver take over the business.
11
do not understand why the receiver in that capacity
12
would not have it.
13
MR. HOFFMAN:
14
I'm not aware of any authority that
says the privilege includes an exception for receivers.
15
16
Why -- I
THE COURT:
But the receiver steps into the place
of management.
17
MR. HOFFMAN:
By that logic, your Honor, the
18
receiver would also be able to see attorney-client
19
communications and that's also a privilege.
20
MS. WAKILY:
21
THE COURT:
They can.
I suppose it is conceivable that if
22
the privilege is held by an entity and the receiver
23
takes over the entity, they would.
24
shoes.
25
MR. HOFFMAN:
That's why we're objecting, your
26
Honor, because that's improper.
27
is there --
28
THE COURT:
He steps into the
The receiver
Is there authority cited?
Page 38
1
2
3
4
5
MR. HOFFMAN:
That's authority cited in the
written objections, your Honor.

THE COURT:
I know, there is the -- I saw that
authority, but I asked you case authority.

MR. HOFFMAN:
There is case authority cited in
there, your Honor, and it's been a couple of weeks.
don't remember it in enough detail to discuss it in more
detail than it is here.
9
10
THE COURT:
What are your other points?
Very
briefly, let's do just the high points.
11
MR. HOFFMAN:
12
order, your Honor.
13
THE COURT:
14
MR. HOFFMAN:
Well, not going in any particular
How about the order as we go down?

All right.
Please bear with me,
15
your Honor, as I try to pick out the ones that are most
16
pertinent.
17
On number 10, your Honor, access to records
18
in the possession of third parties.
19
over that, your Honor, I'm not sure that's among the
20
most important parts.
21
THE COURT:
Well, let me skip
Well, what that says is that the
22
receiver can go to a bank and get bank records, among
23
other things.
24
MR. HOFFMAN:
To that extent I don't have a
25
problem with it, your Honor.
If there's going to be a
26
receivership, I think that's proper.
27
that I eluded to earlier.
28
of transfers of more than $10,000 over the course of the
Number 14 is one
It's about the investigation
Page 39
past seven years.
It's hard to see any legitimate purpose for
that, your Honor.
possible fraudulent transfers, there's a statute of
limitations on those and it's three years.
6
7
MS. WAKILY:
It's seven years, Civil Code
3439.09(C).
8
9
I mean, even if they're looking into
MR. HOFFMAN:
I'm concerned about the language of
number 22, your Honor, because it authorizes the
10
receiver basically to run the businesses but does not
11
specify that he needs to account for my clients'
12
interests as well as for the interest of collecting the
13
judgement.
14
needs to balance my clients' need to continue existing
15
with the need to pay the amount of the judgement.
16
17
I'm concerned that it's not clear that he
THE COURT:
All right.
I understand your point.
Anything else?
18
MS. WAKILY:
Your Honor, with number 22 we'll
19
agree to get rid of the last sentence eluding to the
20
bankruptcy, "no one other that the receiver that's
21
authorized to file any volunteer bankruptcy petition on
22
behalf of the alter egos."
23
24
25
26
27
28
THE COURT:
They haven't asked for that, have
they?
MS. WAKILY:
opposition.
They referenced it in their
I looked at it closely.
THE COURT:
Why should I get rid of it?
I saw
that and I said --
Page 40
1
2
3
MR. HOFFMAN:
Court has no authority to do that,
your Honor.
THE COURT:
What do you mean?
If the
receivership takes over the business, let's assume an
ordinary business, when the receiver takes over are you
suggesting that an officer who has been displaced would
be able to file bankruptcy on behalf of the entity and
cut the receiver's legs off at the ankles?
MR. HOFFMAN:
Yes, that's what the case law cited
10
in our opposition says.
11
precisely so that debtors would have access to the
12
bankruptcy courts.
13
courts have absolutely no authority to limit that
14
access.
15
MR. ADKISSON:
Bankruptcy codes exists
There's abundant case law that state
Your Honor, since I have some
16
familiarity with this issue in the another matter, the
17
bankruptcy code also provides that once a receiver is
18
appointed that a party to whom the receiver has been
19
appointed is prohibited from filing bankruptcy for some
20
period of time.
21
six months but it's in the Bankruptcy Code.
22
can't happen is that the court can't appoint a receiver
23
and then somebody files bankruptcy the next day to get
24
rid of the receiver.
25
time, but they can't do it immediately under the
26
Bankruptcy Code.
27
28
I don't remember if it's 120 days or
MR. HOFFMAN:
So, what
They can after some period of
I don't know that we need to be
arguing about this, your Honor, because counsel for KPC
Page 41
has stipulated that we can eliminate that provision.
MS. WAKILY:
MR. HOFFMAN:
4
5
Just the last sentence.

That's the stipulation is as just to
the last sentence in paragraph 22.

MS. WAKILY:
But we're not saying that the
receiver cannot file bankruptcy.
he doesn't have the sole power to file bankruptcy.
8
9
MR. HOFFMAN:
We're just saying that
That's how I understood what counsel
was saying, your Honor.
10
THE COURT:
11
MR. HOFFMAN:
What else?
Number 25, your Honor.
Authorizing
12
the receiver not only to read all of our mail, but to
13
have it redirected someplace else.
14
distinguish between particular types of mail.
15
Mr. Praske gets a birthday card it will wind up in the
16
receiver's mailbox.
17
THE COURT:
It doesn't even
If
And which of these entities would be
18
receiving a birthday card?
19
Mr. Praske getting a birthday card at the trust?
20
MR. HOFFMAN:
Mr. Praske?
Why is
Business contacts send personal
21
cards to people at their business addresses, your Honor.
22
I get personal cards at my office instead of my home
23
from people who know me professionally.
24
MS. WAKILY:
Number 25 is limited to mail
25
addressed to the alter ego judgement debtors and the
26
entities, not personal mail.
27
THE COURT:
28
MR. HOFFMAN:
Well, okay.
Next point.
On number 23, I know we're backing
Page 42
up just a bit here, purports to give the receiver
authority over assets that are located outside of
California.
data he's referring to.
5
6
It's also kind of vague about what other
THE COURT:
statement.
MR. HOFFMAN:
THE COURT:
10
11
I understand your
Go ahead.
All right.
27.
Are there are assets located outside
of California, sir?
MR. HOFFMAN:
I don't know all of that, your
Honor, but --
12
THE COURT:
13
MR. HOFFMAN:
Is that a purely theoretical concern?

Well, the trust -- it's not purely
14
theoretical, but I don't know have a specific breakdown
15
of where my clients assets are off the top of my head.
16
THE COURT:
17
MR. HOFFMAN:
Go ahead.
Next.
I do have some information here that
18
the trusts themselves, at least one of the trust is
19
foreign-based.
20
THE COURT:
21
MS. WAKILY:
22
THE COURT:
23
MR. HOFFMAN:
Which one?
Arenzano.
Okay.
And I don't know about the other two
24
offhand, your Honor, but to the extent that they're
25
foreign-based I've offered authority that the court
26
could give to the receiver.
27
THE COURT:
28
this to a close.
Okay.
I hear you.
We need to bring
Is there anything else?
Page 43
MR. HOFFMAN:
We object to a lot it to the extent
that's in the papers, your Honor, since I only have
limited time to pick up highlights, I don't know what
else to pick.
minute --
But if you can give me just one more
THE COURT:
MR. CHATFIELD:
8
9
10
It will stand submitted.
Thank you.
Your Honor, may I seek
clarification?
THE COURT:
On what?
MR. CHATFIELD:
This order that you're signing
11
today, does this order apply to Mr. Gaggero as well as
12
to the new judgement?
13
14
THE COURT:
Have you looked at the order?
familiar with the text of the order?
15
MR. CHATFIELD:
16
THE COURT:
17
MR. CHATFIELD:
18
THE COURT:
19
20
Are you
Yes.
What does it say about Mr. Gaggero?

It refers to --
Are you asking me to give you an
advisory opinion or legal advice?

MR. HOFFMAN:
No, what I'm saying is that it
21
appears that you're replacing the prior order with a new
22
order, and this one purports to apply to Mr. Gaggero and
23
I haven't had an opportunity to raise any issues,
24
whatsoever, relating to the order.
25
MS. WAKILY:
Your Honor, this only amends the two
26
previous orders to reflect the alter ego debtors'
27
involvement in it.
28
THE COURT:
It does not affect -I think there's orders that relate to
Page 44
Mr. Gaggero already in effect, are there not?
MS. WAKILY:
Correct, these do not --
THE COURT:
(END TIME: 11:26 a.m.)
Matter stand submitted.
Thank you.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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Page 45
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES )
4
5
6
I, YOLANDA HUFF, Certified Shorthand Reporter for
the State of California, County of Los Angeles, do
hereby certify:
9
10
11
12
13
14
15
That I was present at the time of the above

proceedings;
That I took down in machine shorthand notes all
proceedings had and testimony given;
That I thereafter transcribed said shorthand
notes with the aid of a computer;
That the above and foregoing is a full, true, and
16
correct transcription of said shorthand notes, and a
17
full, true, and correct transcript of all proceedings
18
had and testimony taken;
19
20
21
That I am not a party to the action or related to

a party or counsel;
That I have no financial or other interest in the
22
outcome of the action.
23
Dated: OCTOBER 12, 2012
24
25
_______________________________
26
YOLANDA HUFF, CSR NO. 12570
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28
Page 46
1
2

3
4
5
6
7
8
9
10
11
STEPHEN M. GAGGERO,
)
)
PLAINTIFF,
)
)
VS.
) CASE NO.: BC286925
) RECEIVER'S EX PARTE
KNAPP, PETERSEN & CLARKE;
) MOTION
STEPHEN RAY GARCIA; STEPHEN M.)
HARRIS; ANDRE JARDINI; AND
)
DOES 1 THROUGH 50, INCLUSIVE, )
)
DEFENDANTS.
)
______________________________)
12
13
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15
NOVEMBER 5, 2012
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17
8:30 A.M.
18
111 NORTH HILL STREET, DEPARTMENT 24
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20
LOS ANGELES, CALIFORNIA
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22
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25
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27
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AUDREY V. LEHMAN, CSR NUMBER 12738
HON. ROBERT L. HESS, PRESIDING
2
3
4
5
APPEARANCES OF COUNSEL:
6
7
FOR THE PLAINTIFF:
LAW OFFICES OF EDWARD A. HOFFMAN

BY: EDWARD A. HOFFMAN, ESQ.
12301 WILSHIRE BOULEVARD
SUITE 500
(310) 442-3600
9
10
11
12
WESTLAKE LAW GROUP

BY: DAVID BLAKE CHATFIELD, ESQ.
2625 TOWNSGATE ROAD
SUITE 330
WESTLAKE VILLAGE, CALIFORNIA 91361
(805) 267-1220
13
14
15
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FOR THE DEFENDANTS:

MILLER LLP
BY: AUSTA WAKILY, ESQ
CITY NATIONAL PLAZA
SUITE 2150
(213) 493-6400
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18
19
20
21
22
23
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THE RECEIVER:
JAY D. ADKISSON
COURT APPOINTED RECEIVER
100 BAYVIEW CIRCLE
SUITE 210
NEWPORT BEACH, CALIFORNIA 92660
(949) 200-7773
25
26
27
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AUDREY V. LEHMAN CSR #12738

OFFICIAL REPORTER
LOS ANGELES, CALIFORNIA, THURSDAY
NOVEMBER 5, 2012
8:30 A.M.
4
5
THE COURT:
ON BEHALF OF MR. GAGGERO, THIS
IS AN APPLICATION BY THE RECEIVER FOR A REQUEST FOR
INSTRUCTIONS AND AUTHORIZATION TO DO CERTAIN THINGS,
THAT SUPPOSEDLY WOULD MOVE TOWARDS PAYING OFF THIS DEBT.
9
10
DO YOU HAVE A POSITION WITH RESPECT TO

WHETHER I SHOULD APPROVE SOME OR ALL OF THESE THINGS?
11
MR. HOFFMAN:
YOUR, HONOR EDWARD HOFFMAN, ON
12
BEHALF OF THE ADDITIONAL JUDGMENT DEBTORS.
13
YOUR HONOR, WE ASK THAT THE COURT APPROVE THAT.
14
THE COURT:
15
MR. CHATFIELD:
16
THE COURT:
17
THE ORDER?
18
ONE?
19
AND YES,
ON BEHALF OF MR. GAGGERO.

WE, WE APPROVE THIS.
HAVE YOU LOOKED AT THE FORM OF
THIS SAYS PROPOSED BY DEBTORS; IS THAT THE
MR. ADKISSON:
YES, YOUR HONOR, THE ONE THAT
20
SAYS "PROPOSED ORDER" IS THE ONE BY DEBTORS AND THE ONE
21
THAT COUNSEL SENT ME YESTERDAY WHEN WE WERE TRYING TO
22
WORK THROUGH THIS MATTER.
23
THE COURT:
IS THERE SOMETHING ELSE?
24
MR. ADKISSON:
THERE IS NOT ANOTHER PROPOSED
25
ORDER.
26
COUNSEL FOR THE KNAPP, PETERSEN IN THIS CASE HAVE SOME
27
ISSUES REGARDING THE ORDER.
28
THAT IS THE ONLY PROPOSED ORDER, BUT I BELIEVE
THE COURT:
LET'S SEE WHAT THOSE MIGHT BE.
1
2
MR. ADKISSON:
THE COURT:
ON BEHALF OF KNAPP, PETERSEN, IS
TO EASIEST TO GO DOWN THE PROPOSED ORDER PARAGRAPH BY
PARAGRAPH OR DO YOU WANT TO START WITH SOME CONCEPTUAL
ISSUE?
MS. WAKILY:
THE ONLY ISSUE WE HAVE, YOUR
HONOR IS, IS -- WE DON'T HAVE A PROBLEM WITH TAKING OUT
A LOAN TO PAY OFF THE JUDGMENT -- THE ISSUE IS THAT THE
10
JUDGEMENT DEBTOR ARE ASKING THAT MR. ADKISSON DELEGATE
11
ALL AUTHORITY TO HIM TO COMPLETE THE TRANSACTION; WE
12
WOULD RATHER THAT THE TRANSACTION BE COMPLETED IN
13
COMPLIANCE WITH THE COURT'S ORDER AND PRESUMED TO THE
14
RECEIVERSHIP -- UNDER THIS COURT'S SUPERVISION.

MR. HOFFMAN:
15
IF I MAY.
I BELIEVE COUNSEL
16
IS MISTAKEN ABOUT WHAT WE ARE ASKING FOR.
COUNSEL AND I
17
SPOKE BEFORE THE COURT TOOK THE BENCH THIS MORNING --
18
AND I ONLY REALIZED AFTERWARDS THAT WERE TALKING ACROSS
19
EACH OTHER -- WE ARE NOT FOR ANY OF THE RECEIVER'S
20
DECISION MAKING AUTHORITIES.
21
THE RECEIVER HAS PAPERS THAT HE SATISFIED WITH THAT THE
22
SIGNATURES MAY BE MR. ^
23
RECEIVERS.
24
OF THE DISCRETION HE HAS UNDER THE COURT'S ORDERS.
25
IS SIMPLY JUST WHOSE NAME FILLS THE SIGNATURE LINES.
26
THE REASON FOR THAT --
27
THE COURT:
28
KNAPP, PETERSEN --
WE ARE ASKING THAT ONCE
CONTRAST KEY'S RATHER THAN THE
WE ARE NOT ASKING THE RECEIVER TO YIELD ANY

IT
JUST A SECOND.
I WILL CALL YOU CREDITOR
--
MS. WAKILY:
THE COURT:
MS. WAKILY:
THE COURT:
ALL RIGHT.
-- RATHER THAN ALL THE NAMES.
YES.
PARAGRAPH ONE OF THE PROPOSED
ORDER SAYS THE RECEIVER IS GRANTED AUTHORITY TO APPROVE
AND FACILITATE A FINANCING TRANSACTION.
FOUR OTHER JUDGEMENT DEBTORS HEREIN, WHEREBY FOUR
JUDGMENT DEBTORS WILL BORROW AGAINST THE EQUITY IN THEIR
ARRANGED BY
10
REAL PROPERTIES TO PAY EXISTING LOANS AGAINST THOSE
11
PROPERTIES AND CONVERT EQUITY IN TO CASH TO SATISFY THE
12
JUDGMENT IN THIS MATTER IN FULL.
13
AND THEN PARAGRAPH TWO, THE RECEIVER IS
14
GRANTED AUTHORITY TO AUTHORIZE A REPRESENTATIVE OF THE
15
FOUR JUDGEMENT DEBTORS, JOSEPH ^ CONTRAST KEY, TO SIGN
16
ALL DOCUMENTS REQUIRED TO EFFECTUATE THIS FINANCING
17
TRANSACTION BY THE FOUR JUDGMENT DEBTORS.
18
TO ME THAT THE TERMS OF THE DEAL HAVE TO BE APPROVED BY
19
THE RECEIVER UNDER THIS?
20
MS. WAKILY:
RIGHT.
NOW IT SEEMS
BUT THE JUDGMENT
21
DEBTORS HAVE NOT COMPLIED WITH ANY PART OF THE COURT'S
22
ORDER TO DATE.
23
DOCUMENTS.
THEY HAVE NOT PRODUCED THE FINANCIAL
THEY HAVE NOT EXPLAINED THE LOAN TERMS --
24
THE COURT:
25
MS. WAKILY:
26
THE COURT:
JUST A MINUTE.
MR. ADKISSON HAS -JUST A MINUTE.
AS I UNDERSTAND
27
WHAT MR. ADKISSON IS ASKING FOR IS AUTHORITY TO APPROACH
28
THIS IN THIS PARTICULAR FASHION --
MS. WAKILY:
THE COURT:
RIGHT.
-- IN THIS PARTICULAR FASHION
WITH THESE FOUR DEBTORS -- THE ADDITIONAL DEBTORS -- WHO
WILL BE ALLOWED TO RAISE CASH THROUGH REFINANCING ON
EXISTING REAL PROPERTIES WHERE THE REFINANCING WILL
APPARENTLY REQUIRE THE PAYOFF OF SENIOR INDEBTEDNESS,
AND THEN THE EXCESS WILL BE AVAILABLE FOR THE PAYOFF OF
THE DEBTS.
APPROACH THAT NO SPECIFIC TRANSACTION HAS YET BEEN
I UNDERSTAND THIS TO BE THE APPROVAL OF AN
10
CONTEMPLATED -- EXCUSE ME, NO SPECIFIC TRANSACTION AS OF
11
YET HAS BEEN DOCUMENTED.
12
CONTEMPLATION OF WHAT IT IS.
13
APPARENTLY THERE IS SOME
MR. ADKISSON:
ACTUALLY, YOUR HONOR, I
14
BELIEVE WE ARE RIGHT UP TO THE POINT OF IMPACT WHERE
15
THERE IS A TRANSACTION.
16
SORT OF THIS FINAL QUESTION AS WHO IS GOING TO SIGN THE
17
LOAN DOCUMENTS AND THE DEED, BUT OTHER THAN THAT, I
18
BELIEVE WE ARE RIGHT AT THE POINT OF HAVING A
19
TRANSACTION THAT LITERALLY -- IF THE COURT RULES -- CAN
20
BE SIGNED OFF ON, AS I UNDERSTAND IT, THIS AFTERNOON.
21
WE ARE THAT CLOSE.
22
THAT TRANSACTION.
23
24
25
THERE IS A QUESTION -- THERE IS
WE ARE AT THE POINT OF IMPACT ON
THE COURT:
NOW WHAT ABOUT AN OPPORTUNITY
FOR THE JUDGMENT CREDITOR TO REVIEW THAT STUFF?

MR. ADKISSON:
IT IS FINE WITH THE RECEIVER.
26
THE DOCUMENTS RELATED TO THE LOAN TRANSACTION WERE
27
TRANSMITTED TO ME BY DEBTOR'S COUNSEL.
28
TRANSMITTED "CONFIDENTIAL" FOR YOUR EYES ONLY.
THEY WERE
I HAVE
NOT SHARED THOSE DOCUMENTS WITH CREDITOR'S COUNSEL.
DO NOT HAVE ANY OBJECTION TO SHARING THEM WITH
CREDITOR'S COUNSEL.
WOULD WANT TO SEE THEM, BUT THAT IS NOT RECEIVER'S CALL;
THAT IS FOR THE COURT.
THE COURT:
IF I WERE CREDITOR'S COUNSEL, I
I UNDERSTAND.
RECOGNIZING THE
RESPONSIBILITY OF THE RECEIVER, IS THIS STUFF THAT
YOU'VE HAD ENOUGH TIME TO REVIEW TO SEE WHAT -- SEE IF
EVERYTHING IS COPACETIC?
ARE THERE LOOPHOLES?
ARE
10
THERE CONDITIONS IN HERE THAT MIGHT RESULT IN
11
FRUSTRATION OF THE EXTENSIBLE PURPOSE?
12
OPPORTUNITY TO GET ANY ADDITIONAL -- LEGAL OR OTHER
13
PROFESSIONAL ADVICE --
14
PROCESS OF REVIEWING AND APPROVING THIS?
15
HAVE YOU HAD THE
THAT YOU MIGHT NEED TO IN THE
MR. ADKISSON:
TO IT ANSWER THE COURT'S
16
QUESTION, I WAS NOT ADVISED OF THIS TRANSACTION UNTIL
17
LAST THURSDAY -- THURSDAY/FRIDAY I HAD A BAD COLD, BUT I
18
REVIEWED IT -- IT APPEARS TO BE AN ORDINARY FINANCING
19
TRANSACTION.
20
PARTICULARLY SQUIRRELY ABOUT IT --
21
THE COURT:
22
MR. ADKISSON:
THERE DOESN'T APPEAR TO E ANYTHING
PARTICULARLY.
WELL, EVERY TRANSACTION HAS
23
ITS SQUIRRELINESS ABOUT IT.
IT APPEARS, FROM WHAT I CAN
24
TELL, AND I HAVE SPOKEN WITH THE ESCROW COMPANY, THAT
25
THE MONEY WILL BE PAID INTO AN ESCROW -- HERE IS WHERE
26
IT GETS A LITTLE BIT DIFFERENT THAN YOUR ORDINARY
27
RECEIVERSHIP TRANSACTION.
28
WILL BE PAID OUT OF ESCROW AND THE CREDITORS WILL BE
OF COURSE THE PRIMARY LENDERS
PAID OUT OF ESCROW AND THE RECEIVERS WILL BE PAID OUT OF
ESCROW.
PRIORITY PEOPLE ARE PAID OFF; THE CREDITOR RELEASES
THEIR LIENS; THE RECEIVER TAKES IN MONEY AND RECEIVER
PAYS OFF THE CREDITOR, ACCOUNTS FOR THE MONEY, AND GIVES
WHATEVER IS LEFT OVER BACK TO THE DEBTOR IN THE NORMAL
COURSE; THAT'S HOW A RECEIVERSHIP GENERALLY WORKS.
IS A LITTLE BIT DIFFERENT BECAUSE THERE IS GOING TO BE
THIS ESCROW WHERE EVERYTHING IS GOING TO GET PAID OUT OF
NORMALLY WHAT HAPPENS IN A RECEIVERSHIP IS THE
THIS
10
ESCROW AND EVERYTHING IS GO LIKE THAT -- QUICKLY.
11
APPEARS TO BE AN ORDINARY TRANSACTION.
12
FOR CREDITOR OUGHT TO BE ABLE TO LOOK AT THE DOCUMENTS
13
TO MAKE SURE THAT THEY DON'T SEE ANYTHING FUNNY GOING ON
14
AND ADVISE ME IF THEY THINK THEY DO.
15
AS I LOOK AT IT, DOESN'T APPEAR TO BE A TRANSACTION THAT
16
REQUIRES ANY EXPERTISE; I DON'T THINK I NEED TO GET A
17
LAWYER.
18
WILL TAKE CARE OF THE JUDGMENT IN THIS CASE.
19
IT
I THINK COUNSEL
IT DOESN'T APPEAR,
I THINK IT IS FRANKLY BREAD AND BUTTER THAT
THE COURT:
ON BEHALF OF THE VARIOUS
20
DEBTORS, IS THERE A PROBLEM WITH LETTING THE CREDITOR
21
SEE THE PAPER WORK?
22
MR. HOFFMAN:
THERE IS, YOUR HONOR.
23
RECEIVERSHIP IS A MECHANISM TO GET THEM PAID.
24
A DISCOVERY MECHANISM --
25
THE COURT:
THE
IT IS NOT
MY QUESTION IS -- NOT AS A
26
DISCOVERY TOOL, BUT AS A PRACTICAL TOOL, IF YOU WILL, AS
27
A SECOND LOOK AS TO THE TRANSACTION HERE OF THIS
28
PARTICULAR IT TRANSACTION -- IT IS BEING DONE ON SHORT
NOTICE AND IT SEEMS TO ME I WOULD LIKE TO HAVE, BEFORE I
PUT THE RECEIVER IN THE POSITION, I WOULD LIKE TO HAVE A
COMFORT LEVEL THAT THIS IS APPROPRIATE FOR THE RECEIVER
TO DO.
GOING TO GET MONEY.
RECEIVER'S FEES APPARENTLY WITHOUT ANY COURT OVERSIGHT.
I THINK HE IS SUPPOSED TO, IN THE ORDINARY COURSE -- I
DO NOT DO THIS THAT OFTEN, BUT MY RECOLLECTION IN
GENERAL TERMS IS THAT THE RECEIVER SUBMITS A REPORT AND
THERE IS ALSO THE ISSUE OF THE FACT THAT HE IS

HE IS GOING TO BE PAID THE
10
BILLS AND THINGS TO THE COURT AND THINGS GET APPROVED.
11
THE PROPOSED TRANSACTION SEEKS TO SHORTCUT THIS STUFF.
12
LET ME LEAVE THAT OBSERVATION DANGLING.
13
14
DO I UNDERSTAND THAT THERE ARE ONE OR MORE

APPEALS PENDING IN THE COURT'S ORDERS?
15
MR. HOFFMAN:
THERE IS AN APPEAL PENDING
16
FORM THE ORDER NAMING THE ADDITIONAL JUDGMENT DEBTORS AS
17
ALTER EGOS AND THE AMENDED JUDGEMENT IN FAULT, YES.
18
19
THE COURT:
MR. HOFFMAN:
THE COURT:
26
QUESTION NO. 2:
IF THIS IS
DONE, THIS IS GOING TO MOOT THE APPEAL?
24
25
NO, THERE IS NOT A STAY.
THAT'S WHY WE ARE TRYING TO PAY THE JUDGMENT.
22
23
IS THERE A
STAY?
20
21
QUESTION NO. 1:
MR. HOFFMAN:
THAT IS NOT CORRECT, YOUR
HONOR.
THE COURT:
WHY WOULD IT NOT MOOT THE APPEAL
27
IF YOU VOLUNTARILY ENTER INTO A TRANSACTION WITH THE
28
COURT'S APPROVAL TO PAY THE JUDGMENT THROUGH THIS
10
MECHANISM?
I UNDERSTAND THAT -- I HAVE THE IMPRESSION
THAT IT IS THE ADDITIONAL JUDGMENT DEBTORS WHO ARE
PRINCIPALLY CONCERNED IN THIS -- THE NEWLY NAMED ONES?
MR. HOFFMAN:
THE COURT:
MR. HOFFMAN:
YES.
CORRECT, YOUR HONOR.
WHAT THEN?
THERE IS QUITE AT A BIT OF
CASE LAW, YOUR HONOR, WHICH WE CITED IN THE PAPERS THE
LAST TIME WE WERE HERE ON THE MOTION TO APPOINT THE
RECEIVER -- SORRY, I DO NOT THINK I HAVE IT WITH ME
10
NOW -- IT DOES MOOT AN APPEAL TO PAY A JUDGEMENT
11
VOLUNTARILY.
12
OF AN EFFORT TO EXECUTE ON THE JUDGMENT.
13
AS A CERTIFIED APPELLATE SPECIALIST, YOUR HONOR, THE
14
PRESENCE OF RECEIVERSHIP PLUS THE ABSTRACTS OF JUDGMENTS
15
THAT THE CREDITORS FILE CONSTITUTE SUFFICIENT ACTIVITY
16
ON THEIR PART TO MAKE THIS AN A NON VOLUNTARY
17
TRANSACTION.
18
CONSUMMATE BECAUSE WE REALLY DON'T HAVE A CHOICE.
19
PROFESSIONAL OPINION, IT WILL NOT WAIVE THE APPEAL.
20
21
BUT "VOLUNTARILY" MEAN ABSENT COMPULSION

IN MY OPINION
IT IS A TRANSACTION WE ARE WILLING TO
THE COURT:
IN MY
NOTWITHSTANDING THE ABILITY TO
BOND AROUND IT?
22
MR. HOFFMAN:
YOUR HONOR, WE DO NOT HAVE THE
23
ABILITY TO BOND AROUND IT, IF WE HAD THAT ABILITY, WE
24
WOULD HAVE DONE IT.
25
26
MS. WAKILY:
HAVE THE ABILITY TO BE BONDED.
27
28
I DON'T KNOW THAT THEY DON'T
THE COURT:
OTHER.
I DON'T KNOW ONE WAY OR THE
11
MR. HOFFMAN:
THE CASE LAW DOES NOT REQUIRE
THAT A PARTY WHO COULD BOND POST A BOND POST A BOND; IT
DOES NOT SAY THAT IS A NECESSARY STEP IN ORDER TO
PRESERVE THESE RIGHTS THAT I AM TALKING ABOUT.
AS THE JUDGMENT CREDITOR HAS STARTED ENFORCING THE
JUDGMENT, THAT IS SUFFICIENT TO MAKE SURE THAT PAYMENT
OF THE JUDGMENT DOES NOT WAIVE THE APPEAL.
8
9
10
THE COURT:
AS LONG
HAS ANYBODY LOOKED AT WHETHER
THIS ARRANGEMENT FOR PAYING THE RECEIVER IN THIS FASHION

WITHOUT COURT APPROVAL?
11
MR. HOFFMAN:
IS IT LAWFUL?
YOUR HONOR, THE PROPOSED ORDER
12
DOES SAY THAT THE RECEIVER WILL STILL HAVE TO FILE HIS
13
REPORTS AND HIS MOTION IF IT TURNS OUT THAT THERE IS
14
SOMETHING IN HIS BILL THAT SHOULDN'T BE THERE, AND THEN
15
IT CAN COME OUT OF HIS BOND.
16
TRYING TO BYPASS PROCEDURE, WE ARE JUST MAKING SURE IT
17
ISN'T AN ARTIFICIAL ROADBLOCK BECAUSE MY CLIENTS ARE
18
BLEEDING MONEY FROM THE INTEREST, AND THEY WANT TO GET
19
IT PAID.
20
21
THE COURT:
MR. HOFFMAN:
23
THE COURT:
25
I UNDERSTAND THAT RECEIVERSHIPS
CAN BE VERY COSTLY.
22
24
I DON'T THINK WE ARE
RIGHT.
I UNDERSTAND THE IMPEDANCE THAT
YOU ARE SUGGESTING.

LET ME ASK YOU THIS.
I AM NOT LOOKING AT
26
CREDITORS' REVIEW OF THINGS AS A DISCOVERY ISSUE.
IS
27
THERE A PROBLEM WITH LETTING THE CREDITOR SEE THE
28
TRANSACTIONAL DOCUMENTS IN ORDER TO EVALUATE THIS AND
12
MAKE AN OBJECTION IF THEY HAVE ONE?
ONE WITHIN A SHORT BUT REASONABLE PERIOD OF TIME?
MR. HOFFMAN:
IF THEY SHOULD HAVE
THAT RAISES TWO CONCERNS FOR
ME, YOUR HONOR.
I HOPE THE COURT WILL BEAR WITH ME
WHILE I EXPLAIN WHAT THEY ARE.
LOAN IS FRAGILE.
COMPANY THAT ORGANIZES INVESTORS TO GET BEHIND A LOAN.
THE MORE COURT ACTIVITY THEY SEE, THE MORE SKIDDISH THEY
MAY BECOME.
FIRST, WE BELIEVE THIS
IT IS NOT FROM A BANK, IT IS FROM A
WE ARE CONCERNED THAT THIS COULD CAUSE
10
PROBLEMS -- WE ARE CONCERNED THIS MAY ALREADY BE CAUSING
11
PROBLEMS BUT THIS WILL MAKE IT WORK.
12
THE SECOND CONCERN I HAVE, IS THERE IS
13
ANOTHER CASE PENDING BETWEEN MR. GAGGERO AND JUDGEMENT
14
CREDITORS.
I WORRY THAT THE JUDGEMENT CREDITORS WILL --
15
THE COURT:
16
MR. HOFFMAN:
WHAT IS THAT?
ANOTHER ACTION MS. WAKILY
17
REFERS TO IN HER DECLARATION.
18
BECAUSE MY CLIENTS ARE NOT PART OF IT.
19
WHAT THEY WILL TRY TO DO IS TRY TO FIND A WAY TO USE
20
THIS MATERIAL TO SPIN IT IN SOME WAY THAT BRINGS MY
21
CLIENTS IN TO THAT CASE AS WELL; THAT IS MY OTHER
22
CONCERN.
23
24
25
THE COURT:
I AM NOT PART OF IT
WHAT I FEAR,
DO YOU HAVE A DOG IN THAT FIGHT?
I DON'T THINK YOU DO.

MR. HOFFMAN:
NOT AT THE MOMENT.
BUT IF
26
THEY COME AFTER MY CLIENTS THE WAY THEY DID IN THIS
27
CASE, IT WILL BE A SIGNIFICANT IMPACT ON THEM.
28
THE COURT:
I DON'T SEE ANYTHING IN THESE
13
1
2
3
PAPERS -MS. WAKILY:
IT IS A MALPRACTICE LAWSUIT
THAT MR. GAGGERO FILED AGAINST KPC --
THE COURT:
MR. WAKILY:
THE COURT:
MS. WAKILY:
IS THAT ARISING OUT OF --- EURO LAWSUIT -YEAH.

-- SO THE ALTER EGOS HAVE NO
INVOLVEMENT IN THAT LAWSUIT, AND I DON'T SEE HOW THE
FINANCIAL DOCUMENTS WOULD DRAG THEM INTO IT.
10
THE COURT:
I AM DEALING WITH THE
11
RECEIVERSHIP.
12
DOCUMENTS HEREWITH RESPECT TO THIS TRANSACTION?
13
14
IS IT A DEAL BREAKER TO LET THEM SEE THE
MR. HOFFMAN:
MAY I HAVE A FEW MOMENTS TO
CONSULT WITH MY CLIENT ON THAT?
15
THE COURT:
16
MR. HOFFMAN:
YES.
I DON'T WANT TO SAY IT IS A
17
DEAL BREAKER AND THEN FIND OUT THAT I SAID THAT
18
UNNECESSARILY.
19
THE COURT:
20
MR. HOFFMAN:
21
22
23
YOU'RE WELCOME TO CALL -MAY I STEP IN TO THE JURY ROOM
IF THERE IS A PHONE SIGNAL THERE.

THE COURT:
YES.
AND I WILL BRIEFLY TAKE
THE OTHER EX PARTE.
24
25
(OFF THE RECORD.)
26
27
28
(PROCEEDING IN RECESS.)
14
THE COURT:
MR. HOFFMAN:
BACK ON THE RECORD IN GAGGERO.

YOUR HONOR, WHAT WE ARE
PREPARED TO DO, YOUR HONOR, I HAVE THE DOCUMENTS WITH
ME.
INSPECTION; I DON'T HAVE A PROBLEM WITH THAT.
CONCERN IS THAT --
WE CAN SHOW THEM TO THE COURT FOR AN IN CAMERA
THE COURT:
MY
I AM NOT SURE THAT I HAVE THE
EXPERTISE TO LOOK AT THAT AND SEE WHERE THE SQUIRRELS
LIVE.
10
I MAY TO BORROW A MODIFIED VERSION OF THE
RECEIVER'S DISCRETION.
11
MR. HOFFMAN:
MY CONCERN IS THAT SOMEHOW KPC
12
IS GOING TO USE THIS OPPORTUNITY TO LOOK AT THE
13
DOCUMENTS TO CAUSE PROBLEMS WITH THE LOAN.
14
UNDERSTAND -- IF I MAY, YOUR HONOR -- I DON'T UNDERSTAND
15
WHY WE ARE FIGHTING ABOUT THIS?
16
PLEASE TAKE OUR MONEY.
17
THE MONEY IS GOING TO BE PAID.
18
OUR HANDS; IT WILL GO DIRECTLY TO THEM.
19
OPPORTUNITY TO MESS THEM UP OR CHEAT THEM.
20
SOMETHING THAT IS EXACTLY WHAT THE JUDGMENT REQUIRES OF
21
IT.
22
SURE HAPPENS.
23
SAYING, NO, NO, NO DON'T DO IT; WE WANT MORE -- NOT
24
NECESSARILY MORE MONEY -- BUT MORE PROCEDURAL HURDLES.
I DON'T
WE ARE HERE SAYING
WE HAVE THIS ALL WORKED OUT.

IT WON'T EVEN GO THROUGH
WE HAVE NO
THIS IS
IT IS WHAT THE RECEIVERSHIP IS SUPPOSED TO MAKE
25
WE ARE TRYING TO DO IT, AND THEY ARE
THE COURT:
I DON'T THINK SO.
I AM AWARE
26
THAT KNAPP, PETERSEN HAS DECLINED TO BE DISCOURAGED IN
27
THEIR ATTEMPTS TO RECOVER THESE COSTS AND THINGS FROM
28
MR. GAGGERO.
BUT MY OPERATING HYPOTHESIS IS THAT THE
15
OVERRIDING INTEREST -- VISA VIE THIS CASE -- IS TO
COLLECT THE MONEY.
END WOULD SEEM TO MILITATE AGAINST DOING ANYTHING TO
SABOTAGE THE DEAL.
IN MY LIMITED EXPERIENCE.
FOUND ANYTHING PROBLEMATIC ABOUT THIS, HIS TIME FOR
REVIEW HAS BEEN FAIRLY LIMITED BECAUSE OF THE
CIRCUMSTANCES HERE.
TOO.
ENLIGHTENED SELF-INTEREST TO THAT
THE PROPOSED APPROACH HERE IS UNIQUE

WHILE THE RECEIVER HASN'T
I AM LOOKING AT MY COMFORT LEVEL
IF, FOR EXAMPLE, COUNSEL FOR THE CREDITOR HAS A
10
CHANCE TO LOOK AT THIS AND SAY, OKAY, IT LOOKS ALL
11
RIGHT; THAT BOOSTS MY CONFIDENCE LEVEL INTO APPROVING
12
THIS.
THAT'S THE CONSIDERATION.
13
LET ME ARTICULATE ANOTHER CONSIDERATION.
14
WANT A CHANCE TO LOOK AT THIS PROPOSED ORDER AND SEE IF
15
IT IS APPROPRIATE FOR ME TO SIGN AND GET SOME ADVICE
16
FROM PEOPLE THAT HAVE GREATER EXPERIENCE WITH
17
RECEIVERSHIPS THAN I DO.
18
TIME TO LOOK AT THIS AND TO CONSIDER, BECAUSE IT IS
19
BEING SPRUNG UPON ME.
20
LEVEL.
21
BUT IF IT IS NOT AN APPROPRIATE ORDER FOR SOME REASON, I
22
WANT TO TAKE WHATEVER STEPS ARE NECESSARY TO CORRECT IT,
23
IF THAT'S POSSIBLE OR TO -- OR I AM GOING TO REJECT IT.
24
THIS IS FOR MY COMFORT IN DOING THIS.
25
SIGN IT THIS INSTANT.
26
INSTANT.
27
A TRIAL THIS AFTERNOON.
28
AND EARNEST ATTENTION TO IT.
I WANT A CERTAIN AMOUNT OF
THIS IS, AGAIN, FOR MY COMFORT
I -- IF THIS IS AN APPROPRIATE ORDER THEN FINE.
I AM NOT GOING TO
I AM NOT GOING TO SIGN IT THIS BE
I AM GOING TO TAKE A LOOK AT IT.
I DON'T HAVE
I AM TRYING TO VOTE MY EARLY

I THINK THAT THE PROPER
16
DISCHARGE OF MY RESPONSIBILITIES INCLUDES BEING
SATISFIED THAT THIS IS THE APPROPRIATE KIND OF ORDER FOR
ME TO MAKE AND IF NOT, WORK OUT SOMETHING ELSE.
4
5
MR. HOFFMAN:
IF I CAN RESPOND TO TWO OF
YOUR HONOR'S POINTS?
THE COURT:
MR. HOFFMAN:
YES.
YOUR HONOR SAID HE MAY WANT TO
CONSULT WITH OTHERS WITH GREATER EXPERTISE IN THIS AREA;
I DON'T THINK THAT IS PROPER METHOD TO ADDRESS AN ORDER.
10
THE COURT --
11
THE COURT:
12
MR. HOFFMAN:
13
THE COURT:
THE ORDER IS DENIED.

I AM SORRY?
IF I CAN'T -- IF YOU ARE TELLING
14
ME THAT I CANNOT SPEAK, FOR EXAMPLE, AS A BENCH OFFICER
15
ABOUT THIS OR TAKE IT --
16
MR. HOFFMAN:
17
THE COURT:
18
-- OR OTHER PEOPLE, THAT'S THE
ANSWER.
19
20
THEN I WITHDRAW --
MR. HOFFMAN:
THEN I WITHDRAW THAT.
THAT
WAS AN ARGUMENT.
21
THE COURT:
YOU DIDN'T THINK I INTENDED TO
22
GO OUT AND -- I HOPE YOU DIDN'T THINK THAT I WAS GOING
23
TO CONSULT WITH OUTSIDE COUNSEL --
24
25
MR. HOFFMAN:
NO, OF COURSE NOT, YOUR
HONOR.
26
THE COURT:
27
MR. HOFFMAN:
28
NO.
WELL THEN -I THOUGHT YOUR HONOR MEANT
ANOTHER BENCH OFFICER AND I THOUGHT THAT WAS NOT
17
CORRECT AND IF -- I WITHDRAW THAT.
THE COURT:
COMMUNICATION BY DEFINITION.
MR. HOFFMAN:
THE COURT:
IF YOU -- IT IS NOT AN EX PARTE
I STAND CORRECTED.
IF YOU ARE SUGGESTING -- IF IT
MAKES YOU UNCOMFORTABLE --
MR. HOFFMAN:
I APOLOGIZE.
NO, NO.
CORRECT.
EVERYTHING I SAY IS CORRECT.
YOUR HONOR IS
I STAND CORRECTED.
NOT
I AM FIRST TO ADMIT THAT,
10
AND THAT WAS ONE OF THOSE THINGS, AND I AM FIRST TO
11
ADMIT THAT, YOUR HONOR.
12
13
THE COURT:
I DO APOLOGIZE, YOUR HONOR.

LET ME COME BACK TO THE
CREDITOR'S COUNSEL.
14
MS. WAKILY:
15
THE COURT:
16
MS. WAKILY:
YOUR HONOR WE HAVE THE SAME -GO AHEAD.

-- WE HAVE THE SAME CONCERNS.
17
I DON'T BELIEVE THAT MR. ADKISSON HAS BEEN PROPERLY
18
INFORMED ABOUT THE EXTENT AND NATURE OF THE LOAN.
19
ARE CONCERNED IF THERE IS A LOOPHOLE OR FRUSTRATION OR
20
SOMETHING ELSE THAT MIGHT --
21
22
THE COURT:
WE
IS THE PROBLEM WITH THE LOAN OR
THE OTHER ARRAIGNMENTS OR BOTH?
23
MS. WAKILY:
IT IS PARTLY THAT IT WAS
24
NEGOTIATED A HUNDRED PERCENT BY THE JUDGMENT DEBTOR'S
25
WITHOUT NOTIFYING THE RECEIVER AND WITHOUT ANY
26
INFORMATION.
27
KNOW WHAT THE INTEREST RATE IS.
28
MADE OTHER ATTEMPTS TO PAY OFF THE JUDGMENT.
I KNOW NOTHING ABOUT THE LOAN.
I DON'T
I DON'T KNOW IF THEY

I KNOW
18
MR. HOFFMAN HAS REPEATEDLY SAID WE WOULD BE LIABLE FOR
ANY DAMAGES OCCURRING IN THE EVENT THE APPEAL IS
REVERSED.
OR TRYING TO GO OUT AND GET THE HIGHEST INTEREST LOAN.
WE WOULD FEEL BETTER IF THIS GOES TO THE RECEIVER AND
GIVE HIM TIME TO REVIEW ALL THE DOCUMENTS.
AGENT OF THE COURT; HE IS NOT WORKING FOR MY INTEREST OR
THE DEBTOR'S INTEREST.
WE WOULD LIKE TO FOLLOW THROUGH ON THAT.
10
11
IT COULD BE THAT THEY ARE TRUMPING UP DAMAGES
THAT IS THE GENERAL COURSE AND
MR. HOFFMAN:
THE RECEIVER HAS DONE THAT AND
THAT'S WHY WE ARE HERE TODAY --
12
THE COURT:
13
MR. HOFFMAN:
14
HE IS AN
PLEASE DO NOT BE INTERRUPT HER.

I THOUGHT SHE WAS DONE.
APOLOGIZE.
15
MS. WAKILY:
THE LENDER IS AWARE OF THE
16
RECEIVER AND FACTS INDICATE THAT HIS DESIRES THAT THE
17
RECEIVER ACTUALLY SIGN OFF ON THE DOCUMENTS AND NOT MR.
18
PRASKE BECAUSE IT IS AN ISSUED ORDER.
19
OF THIS LOAN GOING AWAY.
20
IF IT IS IN COMPLIANCE WITH THE COURT.
THERE IS NO RISK
WE FEEL IT IS MORE COMFORTABLE
21
THE COURT:
WHO IS FIDELITY MORTGAGE LENDER?
22
MR. ADKISSON:
FIDELITY MORTGAGE LENDER,
23
FROM WHAT I CAN TELL, YOUR HONOR, IS A COMMERCIAL
24
MORTGAGE LENDER TO REAL ESTATE AND COMMERCIAL VENTURES
25
IN CALIFORNIA.
26
NOT AFFILIATED, AS FAR AS I CAN TELL, WITH THE DEBTOR.
27
28
THEY APPEAR TO BE A THIRD PARTY COMPANY
THE COURT:
DEPARTMENT?
THEY HAVE THEIR OWN ESCROW
19
MR. ADKISSON:
THE COURT:
YES.
ALL THESE DOCUMENTS WOULD BE?
RECORDED.
MR. ADKISSON:
I BELIEVE THE DEED WOULD BE
RECORDED.
I AM NOT SURE THE LOAN DOCUMENTS WOULD BE
RECORDED.
I THINK WHEN IT COMES TO THE POINT OF
RECORDING -- AND PROBABLY A DEED OF TRUST ON THE
LENDER -- I THINK THE RECORDING --
THE COURT:
I ASSUME THE DEED OF TRUST WOULD
10
BE RECORDED AS PART OF THE ESTABLISHING WHAT THE
11
ENCUMBRANCES ON THE PROPERTY WERE.
12
MR. ADKISSON:
I PRESUME THAT.
AS FAR AS I
13
CAN TELL, AND COUNSEL FOR THE DEBTORS CAN CORRECT ME --
14
IT IS NOT FIDELITY THAT'S THE LENDER, ACTUALLY -- IS
15
FIDELITY THE ONE THAT HAVE THE LIEN NOW AND THE ANOTHER
16
GROUP WHICH I WILL NOT IDENTIFY ARE THE ONES MAKING THE
17
LOAN?
18
MR. HOFFMAN:
AS I SAID, YOUR HONOR,
19
FIDELITY ARRANGES WITH INVESTORS TO PUT THEIR MONEY INTO
20
LOANS.
21
THE COURT:
22
KIND?
23
AND PLACE IT?
24
THEY ARE A FACILITATOR OF SOME
OR THEY AGGREGATE MONEY OF INVESTORS AND SO ON
MR. HOFFMAN:
IN LAY PERSON'S TERMS I THINK
25
THAT IS A FAIR STATEMENT; I DON'T KNOW THE TECHNICAL
26
TERMS.
27
OF THE LOAN DOCUMENTS WHICH I AM PREPARED TO SHOW
28
MS. AUSTA WAKILY WHILE WE ARE HERE.
IF IT WOULD SATISFY THE COURT, I DO HAVE COPIES
SHE IS NOT ALLOWED
20
TO TAKE IT OUT.
LOOPHOLES OR FUNNY BUSINESS.
3
4
IT SHOULD ASSURE HER THAT THERE IS NO
THE COURT:
IT IS 12:37 BY THE CLOCK ON THE
CLUBHOUSE WALL.
MR. ADKISSON:
THE COURT:
MR. ADKISSON:
CAN I HAVE JUST ONE SECOND?
YES.
VERY QUICKLY, THE ALTERNATIVE
WAY TO DO THIS IS TO SIMPLY DO THE RECEIVER IN THE
NORMAL COURSE, AND THAT IS, KNAPP, PETERSEN RELEASE
10
THEIR LIEN TO THE ESCROW COMPANY; THE ESCROW COMPANY
11
PAYS ME AS AN RECEIVER; I BASICALLY PAY KNAPP, PETERSEN,
12
THAT PAYS OFF THE JUDGMENT.
13
COME TO THE COURT WITH AN ACCOUNTING OF MY FEES; THE
14
COURT APPROVES ON IT; SIGNS OFF ON WHATEVER THE BALANCE
15
IS; WE REMIT IT BACK TO THE DEBTORS AND CALL IT A DAY.
16
THAT'S THE TYPICAL WAY THESE THINGS ARE DONE AND THEN
17
THERE ARE NO PROCEDURAL QUESTIONS.
18
DEBTORS HAVE SOME QUESTIONS ABOUT DOING THAT TO PERHAPS
19
EFFECT THE PROPERTY VALUE --
20
THE COURT:
WHATEVER IS LEFT OVER, I
I UNDERSTAND THE
WHAT IF THE TRANSACTION IS
21
CLOSED AND THE MONEY IS PAID?
22
RESPECT TO DOING IT WITH THE TERMS THAT HE SAID?
23
MR. HOFFMAN:
IS THERE AN ISSUE WITH
ONE -- TWO ISSUES.
ONE, THAT
24
PROCEDURE TAKES TIME, AND I DON'T THINK THIS LOAN IS
25
GOING TO BE AVAILABLE TO US FOR MUCH LONGER SIMPLY
26
BECAUSE OF JITTERS THAT I MENTIONED BEFORE THE INVESTORS
27
HAVE BECAUSE OF THE COURT PROCEEDINGS.
28
THE OTHER CONCERN IS ABOUT THE RECEIVER'S
21
SIGNATURE ON THE DOCUMENTS.
THAT MS. WAKILY RELAID WOULD ALL BE ADDRESSED IF THE
COURT AUTHORIZES THE RECEIVER TO SIGN.
THE COURT:
I BELIEVE THAT THE CONCERNS
SUPPOSED I LET HIM SIGN -- DO
YOU HAVE PRESIDENT COPIES -- DO YOU OUT THERE HAVE
COPIES OF THIS PROPOSED ORDER RIGHT NOW?
MR. HOFFMAN:
YES, I HAVE IT RIGHT HERE.
MR. ADKISSON:
MR. HOFFMAN:
I BELIEVE I HAVE ANOTHER COPY.
10
THE COURT:
11
MR. ADKISSON:
12
MR. HOFFMAN:
13
16
OKAY.
HERE IS ANOTHER COPY, YOUR
MR. ADKISSON:
I GUESS, YOUR HONOR THE ONLY
THING -THE COURT:
17
TWO, AND THREE?
18
THE STANDARD?
19
MS. WAKILY CAN SHARE WITH YOU.
HONOR; THEY DON'T NEED TO SHARE.
14
15
YOU HAVE MY COPY, YOUR HONOR.
SUPPOSE I APPROVE PARAGRAPH ONE,
IS THAT IN ANY SENSE A DEPARTURE FROM
MR. ADKISSON:
I THINK YOUR HONOR -- I WOULD
20
PROBABLY HAVE TO ALSO BE AUTHORIZE THE TO PAY OFF ANY
21
JUNIOR ENCUMBRANCES TOO WHICH WOULD BE THE OTHER THING.
22
23
24
THE COURT:
ISN'T THAT INCLUDED IN ONE OF
THOSE -- PAY-EXISTING LOANS AGAINST THE PROPERTY?

MR. ADKISSON:
I THINK THAT WOULD BE THE
25
PRIORITY LOANS.
I THINK THE TITLE COMPANY WOULD
26
PROBABLY WANT TO PAY THE PRIORITY LOANS FROM THE ESCROW.
27
THE COURT:
THAT'S FINE.
28
MR. ADKISSON:
NO. 2 -- THE RECEIVER KIND OF
22
GOES BOOK AND FORTH, AND I GO BACK AND FORTH ON IT --
THE ONLY THINK WEIRD ABOUT MR. PRASKE IS, OF COURSE, MR.
PRASKE IS THE TRUST HE SIGNS OFF --
THE COURT:
I KNOW WHO MR. PRASKE IS --
MR. ADKISSON:
-- IT IS A LITTLE WEIRD -- I
PRESUME HE IS SIGNING FOR THE RECEIVER BUT IT MAY CAUSE
SOME CONFUSION LATER AS TO HOW AND WHAT CAPACITY HE WAS
SIGNING FOR, BUT I WILL LEAVE THAT WITH THE COURT.
MR. HOFFMAN:
THE DOCUMENTS IDENTIFY HIM AS
10
A SIGNATORY ON BEHALF OF THE BORROWERS.
11
EARLIER, WE ARE NOT ASKING FOR ANY OF THE RECEIVER'S
12
DECISION-MAKING AUTHORITIES --
13
14
THE COURT:
AS I SAID
I UNDERSTAND THAT.
LET ME ASK
YOU THIS.
15
SUPPOSED I APPROVE ONE, TWO AND THREE, AND
16
WE HAVE THE REST OF THIS COMPLETED IN THE NORMAL
17
PROCEDURE?
18
19
DOES THAT SATISFY THE INTEREST?

MR. HOFFMAN:
GIVE ME A MOMENT TO
CONTEMPLATE THAT.
20
THE COURT:
LET ME OFFER YOU A THOUGHT.
WHY
21
DON'T WE STAND IN RECESS UNTIL 1:45.
AND YOU CAN SHOW
22
CREDITOR'S COUNSEL THESE DOCUMENTS AND SHE CAN LOOK AT
23
THEM -- AND IF THE RECEIVER NEEDS TO DO THAT ANY MORE,
24
FINE -- AND YOU CAN SHOW THEM TO ME AT 1:45.
25
BE FINE.
26
THROUGH THREE THAN I AM WITH THE BALANCE OF THE THING.
27
I THINK IT IS IN EVERYBODY'S INTEREST TO -- WELL,
28
ENLIGHTEN SELF-INTEREST OF EVERYBODY IS -- TO GET THIS
THAT WILL
I AM MORE COMFORTABLE WITH PARAGRAPHS ONE
23
THING DONE IF IT AT ALL POSSIBLE.
IT IN THAT FASHION.
JUST DOING PARAGRAPHS ONE THROUGH THREE WHICH WOULD
AUTHORIZE THE RECEIVER TO APPROVE THIS AND FACILITATE IT
AND SO FORTH.
WOULD HAVE TO BE ADDED GO BACK; YOU CAN TELL ME.
I WOULD APPRECIATE YOUR REACTION TO
AND THEN IF THERE IS ANYTHING ELSE THAT
MR. HOFFMAN:
THE COURT:
9
10
WHY DON'T WE APPROACH
VERY GOOD, YOUR HONOR.

I WOULD LIKE TO REACH A
CONSTRUCTIVE SOLUTION HERE.

MR. HOFFMAN:
I APPRECIATE THAT, YOUR HONOR.
11
AND I APPRECIATE YOUR HONOR'S TIME AND THE STAFF'S TIME
12
FOR GOING INTO LUNCH.
13
14
(RECESS.)
15
16
17
18
THE COURT:
I WOULD ASK WHERE WE STAND, BUT
WE ALL SEEM TO BE SITTING.

MR. ADKISSON:
I THINK WE MADE VERY
19
SUBSTANTIAL PROGRESS ON REACHING A MIDDLE GROUND.
THERE
20
IS STILL BASICALLY ONE ISSUE THAT IS LEFT FOR DISPUTE --
21
THE RECEIVER DOESN'T HAVE AN IRON IN THAT FIGHT, I WILL
22
DEFER IT TO THE END -- YOUR, HONOR, ON THE ORDER THAT'S
23
HERE IF STRIKE OUT STARTING AT LINE 13 ON THE SIDE WHICH
24
IS PARAGRAPH 3 AND JUST DELETE FROM PARAGRAPH 3 DOWN.
25
IN THE UNDERSTANDING OF THE PARTIES -- I WILL RECITE IN
26
RECORD SO WE ALL MEMORIALIZED -- MS. WAKILY'S CLIENTS
27
ARE GOING TO PROVIDE A RELEASE OF THE LIEN TO ME.
28
WILL PROVIDE A RELEASE OF THE LIEN TO ESCROW, WHEREBY
24
ESCROW IS GOING TO RELEASE THE FUNDS TO PAY OFF THE
CREDITOR AND SOME MONEY -- WHICH I WILL REPRESENT WILL
BE ABOUT 25,000 -- TO PAY THE RECEIVER'S -- FOR THE
RECEIVER'S FEES AND COSTS.
ANOTHER FIVE GRAND IN TO IT JUST IN CASE WE HAVE ANY
MISCELLANEOUS COSTS.
RECEIVER.
AFTER THE CREDITOR HAS BEEN PAID, WE WILL PROVIDE AN
EXECUTED ACKNOWLEDGEMENT OF SATISFACTION OF JUDGMENT TO
AND I'D LIKE TO THROW
THAT MONEY WOULD BE PAID TO THE
THE RECEIVER WOULD THEN PAY OFF THE CREDITOR.
10
THE DEBTORS.
AND THEN THE RECEIVER, IN THE NORMAL
11
COURSE, WILL PRESENT AN ACCOUNTING TO THE COURT AND A
12
REQUEST FOR APPROVAL OF THE RECEIVER'S FEES, AND ANY
13
BALANCE LEFT OVER WILL BE REMITTED TO THE DEBTORS.
14
THAT'S HOW I UNDERSTAND HOW THIS TRANSACTION IS GOING TO
15
WORK.
16
I HAVE MISREPRESENTED THAT.
I WOULD CERTAINLY INVITE COUNSEL TO CORRECT ME IF
17
THE COURT:
ON BEHALF OF THAT PORTION ON
18
BEHALF OF THE JUDGEMENT -- THE NEW JUDGMENT DEBTORS
19
COMMENT?
QUESTIONS?
20
DISAPPROVAL?
MR. HOFFMAN:
AGREEMENT?
THE ONLY QUESTION I WOULD HAVE
21
WOULD BE WHAT TYPE OF FRAME THAT WOULD CARRY FOR THE
22
RECEIVER'S ACTIONS.
23
MR. ADKISSON:
THE RECEIVER WILL REPRESENT
24
THAT THE RECEIVER IS PREPARED TO EXECUTE THAT
25
IMMEDIATELY.
26
THAT -- MAYBE MS. WAKILY CAN REPRESENT HOW QUICKLY THEY
27
CAN GET A RELEASE OF THE LIEN TO US BECAUSE THAT'S KIND
28
OF THE STARTING STEP.
SO AS QUICKLY AS THE RECEIVER WILL DO
25
1
2
THE COURT:
QUICKLY THE RECEIVER IS TO WHAT?
3
4
MR. HOFFMAN:
THE COURT:
AND PAY OVER THE MONEY ONCE IT
ITS GOING THROUGH THE ESCROW,
ISN'T IT?
7
8
EXECUTE THE DOCUMENTS?
IS IN HIS POSSESSION.
5
6
SO THE QUESTION YOU HAVE IS HOW
MR. HOFFMAN:
FROM THE ESCROW TO THE
RECEIVER.
MR. ADKISSON:
YES, YOUR HONOR.
THAT'S THE
10
DIFFERENCE, BEFORE THE CREDITOR WAS BEING PAID OUT OF
11
ESCROW, NOW THE ESCROW IS PAYING THE RECEIVER, AND THE
12
RECEIVER IS PAYING OFF THE CREDITOR.
13
MR. HOFFMAN:
I BELIEVE THE ESCROW WOULD
14
STILL BE PAYING THE SENIOR LIEN HOLDERS.
15
MONEY WOULD BE GO TO RECEIVER AS IS BEFORE?
16
17
MR. ADKISSON:
BUT THE OTHER
THAT IS CORRECT.
THE SENIOR
LIEN HOLDER WILL BE PAID BEFORE THE OTHER RECEIVER.
18
THE COURT:
MR. CHATFIELD?
19
MR. CHATFIELD:
MY CLIENT IS NOT ONE OF THE
20
JUDGMENT DEBTORS WHO ARE INVOLVED IN THIS DEAL.
21
DON'T HAVE ANY PROBLEM WITH THE JUDGMENT BEING PAID OFF
22
FOR MY CLIENT.
23
THE COURT:
24
MS. WAKILY:
25
26
27
28
BUT I
MS. WAKILY?
I AGREE WITH MR. ADKISSON'S
PROPOSAL.
THE COURT:
IF I WERE TO INTERLINEATE THIS,
HOW MUCH WOULD BE RESERVED FOR THE RECEIVER?

MR. ADKISSON:
THE RECEIVER FEES --
26
1
2
THE COURT:
APPROXIMATELY 30 THOUSAND
DOLLARS INCLUDING THE BUMPER?
MR. ADKISSON:
INCLUDING THE BUMPER, IT
WOULD BE 30 THOUSAND, YOUR HONOR.
OUTSTANDING AMOUNT OF THE JUDGMENT AS OF LAST FRIDAY WAS
2.23 MILLION, ACCORDING TO THE CALCULATION.
THE COURT:
OKAY.
I BELIEVE THE
SO YOU ARE GOING TO HOLD
ABOUT 30 THOUSAND DOLLARS FOR YOUR FEES AND
MISCELLANEOUS INCIDENTAL EXPENSES AND PROMPTLY REMIT THE
10
BALANCE TO THE DEBTORS?
11
12
MR. ADKISSON:
SO THE COURT IS CLEAR.
WILL TAKE IN SOMEWHERE AROUND -- WAS IT WAS 2.23 --
13
MS. WAKILY:
YES --
14
MR. ADKISSON:
-- I WILL TAKE IN 2.23
15
MILLION PLUS AN ADDITIONAL 30 THOUSAND WHICH IS THE
16
RECEIVER'S FEES AND THE BUMPER.
17
THE CREDITOR.
18
AN APPLICATION TO THE COURT FOR PAYMENT OF MY FEES AND
19
COSTS.
20
AND COSTS, WHATEVER IS LEFT OVER OF THAT AMOUNT I WILL
21
REMIT THAT TO THE DEBTOR.
22
THOUSAND DOLLARS IF ALL THIS WORKS THE WAY WE THINK IT
23
WILL.
24
25
26
I WILL REMIT THE 2.3 TO
AND THEN OF THE 30 THOUSAND, I WILL MAKE
AFTER THE COURT APPROVES THAT PAYMENT OF FEES
MR. HOFFMAN:
THEY WILL GET BACK A FEW
I BELIEVE THE RECEIVER IS
GOING TO ACTUALLY RECEIVE A LARGER SUM TO BEGIN WITH.

THE COURT:
LET ME UNDERSTAND.
THE DEAL IS
27
GOING TO GO THROUGH, AND IT WILL BE THE REFINANCING OF
28
THE PROPERTY, AND THE MONEY WILL GO INTO ESCROW AND OUT
27
OF THE ESCROW, THE FIRST PEOPLE PAID IS THE 2 MILLION
DOLLARS?
MR. ADKISSON:
THE COURT:
THAT IS CORRECT.
DOES THE BALANCE OF THE MONEY
INITIALLY COME TO YOU OR IS THE NEXT TO BE PAID DIRECTLY
OUT OF ESCROW -- THE JUDGMENT CREDITOR?
MR. ADKISSON:
THE FORMER.
THE MONEY IS
GOING TO COME TO ME AS THE RECEIVER AND I AM GOING TO
PAY THE CREDITOR.
10
11
ACTUALLY MR. HOFFMAN'S RAISED ANOTHER ISSUE

WE CAN TALK ABOUT.
IT IS A VERY MINOR ISSUE.
12
MR. HOFFMAN:
13
MR. ADKISSON:
14
15
AGREED.
JUST SOMETHING WE DIDN'T
THINK ABOUT OVER LUNCH, FRANKLY.

THE COURT:
OKAY.
THE MONEY IS COMING IN
16
FROM THE FINANCE COMPANY; THE SENIOR LIEN HOLDER OR
17
HOLDERS ARE PAID OUT OF ESCROW AND PAID OFF.
18
BALANCE OF THE MONEY COMES TO THE RECEIVER; THE RECEIVER
19
PAYS THE JUDGMENT CREDITOR IN FULL, AND WITH THE
20
EXCEPTION OF APPROXIMATELY 30 THOUSAND DOLLARS, GIVES
21
THE BALANCE OF THE REFINANCING TO THE JUDGMENT DEBTORS
22
WHO PUT UP THE MONEY.
23
MR. ADKISSON:
YES.
THEN THE
THE ONLY THING WE
24
DIDN'T THINK ABOUT AT LUNCH -- MR. HOFFMAN REMINDED ME
25
NOW -- WHEN THIS LOAN WAS ARRANGED, BASICALLY AFTER THEY
26
FIGURED ALL THE CREDITORS THERE WAS A BUFFER OF ABOUT A
27
HALF MILLION DOLLARS -- CORRECT?
28
MR. HOFFMAN:
SOME BUFFER I DON'T REMEMBER
28
THE AMOUNT.
I THINK IT WAS A BIG AMOUNT.

MR. ADKISSON:
FRANKLY, THE RECEIVER DOESN'T
NEED TO TAKE ALL THAT MONEY.
HALF MILLION DOLLARS OR SOME LARGE AMOUNT MORE THAN I
REALLY NEED.
ALL IN AND PAY IT BACK.
COURT, THE RECEIVER DOESN'T NEED THAT MUCH.
PRESUME THAT THIS PROCESS IS GOING TO GO PRETTY QUICKLY,
THEY MAY NOT WANT TO HAVE EXCESS OF HUNDREDS OF
10
11
12
I WOULD BE TAKING IN A
MAYBE IF I WERE SMART I WOULD JUST TAKE IT

BUT IN STRICT CANDOR TO THE
WHILE I
THOUSANDS TIED UP FOR NO REASON.

YOUR HONOR, I HAVE AN EXACT NUMBER HERE IF
YOU'D LIKE IT.
13
THE COURT:
14
OKAY.
ONE MOMENT, PLEASE.
WHAT WE ARE GOING TO DO, I THINK
15
LEAVE PARAGRAPHS ONE THROUGH THREE ALONE.
16
4 -- LET ME JUST READ THIS TO YOU, DON'T TRY TO WRITE IT
17
DONE BUT JUST GET THE SENSE OF IT.
18
PARAGRAPH FOUR:
IN PARAGRAPHS
THE RECEIVER WILL HOLD THE
19
APPROXIMATE SUM OF 30 THOUSAND DOLLARS FOR HIS FEES
20
SUBJECT TO THE COURT'S APPROVAL.
21
HOLDERS ARE PAID OUT OF ESCROW AND THE RECEIVER REMITS
22
THE AMOUNT OF THE JUDGMENT WITH INTEREST TO THE JUDGMENT
23
CREDITOR AND RETURNS ALL OF THE 30 THOUSAND DOLLARS TO
24
THE JUDGMENT DEBTOR PAYING THE DEBTOR, THE RECEIVER WILL
25
COMPLETE THESE ACTIONS PROMPTLY.
26
LET ME READ IT AGAIN.
27
MR. HOFFMAN:
28
THE COURT:
AFTER THE SENIOR LIEN
THANK YOU.
THE RECEIVER WILL HOLD THE
29
APPROXIMATE SUM OF 30 THOUSAND DOLLARS FOR ITS FEES.
SUBJECT TO THE COURT'S APPROVAL.
HOLDERS ARE PAID OUT OF ESCROW, AND THE RECEIVER REMITS
THE AMOUNT OF THE JUDGMENT WITH INTEREST TO THE JUDGMENT
CREDITOR AND RETURNS ALL BUT THE 30 THOUSAND DOLLARS TO
THE JUDGMENT DEBTORS PAYING THE JUDGMENT.
MR. HOFFMAN:
THE COURT:
OKAY?
YES.
BECAUSE I WAS WRITING IT DOWN AS
I UNDERSTOOD IT, IT MAY NOT BE AS ARTFUL.
10
11
AFTER THE SENIOR LIEN
THE RECEIVER WILL COMPLETE THESE ACTIONS

PROMPTLY.
12
OKAY?
13
I WILL NOT GIVE A SPECIFIC NUMBER OF DAYS,
14
BUT THE RECEIVER'S ACTIONS ARE SUBJECT TO THE COURT'S
15
REVIEW.
16
MR. HOFFMAN:
YOUR HONOR, THERE MIGHT BE A
17
GLITCH, BUT IF THERE WERE AN UN-THWARTED DELAY THE COURT
18
COULD TAKE KNOWLEDGE OF THIS.
19
MR. ADKISSON:
YOUR HONOR, I THINK YOU NEED
20
TO DELETE PARAGRAPH 3.
21
BEEN RENDERED AND IN FACT IS REDUNDANT, UNNECESSARY AND
22
IN FACT COUNTER PRODUCTIVE.
23
24
25
MR. HOFFMAN:
PARAGRAPH THREE, I THINK, HAS
I AM NOT SURE I UNDERSTAND THE
REASON FOR THAT.

THE COURT:
HAVING PREVIOUSLY DELIVERED
26
THEIR PAYOFF DEMAND TO FIDELITY MORTGAGE LENDERS INC.
27
ESCROW DEPARTMENT, DEFENDANTS ARE TO PROVIDE FIDELITY
28
MORTGAGE ESCROW DEPARTMENT WITH A FULLY EXECUTED
30
ACKNOWLEDGEMENT OF SATISFACTION OF JUDGMENT BY 5:00 P.M.
TODAY, TO BE HELD BY THE ESCROW DEPARTMENT OR OLD
REPUBLIC TITLE COMPANY UNTIL DEFENDANTS PAYOFF DEMAND IS
PAID AT WHICH TIME THE ACKNOWLEDGEMENT WILL BE RECORDED
IN THE PUBLIC RECORDS.
THE COURT:
MR. ADKISSON:
WHAT IS THE PROBLEM?

THE PROBLEM IS NOW THE
DEFENDANT/CREDITORS ARE NOT BE PAID OUT OF ESCROW, THEY
ARE BEING PAID BY THE RECEIVER, SO THE SATISFACTION OF
10
JUDGMENT WHICH WOULD PROCEDURALLY DOESN'T MAKE ANY SENSE
11
TO HAVE A SATISFACTION OF JUDGEMENT PROVIDED UNTIL THE
12
JUDGEMENT IS PAID OFF ANYHOW.
13
THE COURT:
14
MR. HOFFMAN:
15
MR. ADKISSON:
16
IT CAN BE HELD IN ESCROW.

EXACTLY.
COURT ORDERING THAT THE CREDITOR GET PAID OUT OF ESCROW?
17
THE COURT:
18
MR. ADKISSON:
19
20
21
22
SO AM I UNDERSTANDING, IS THE
NO.
THE CREDITOR IS TO BE PAID BY
THE RECEIVER.
THE COURT:
WHO FILES THE SATISFACTION OF
JUDGMENT UNTIL YOUR CONCEPT?

MR. ADKISSON:
IN MY CONCEPT, SATISFACTION
23
OF JUDGMENT WOULD BE FILED BY THE CREDITOR ONCE THE
24
CREDITOR HAS BEEN PAID BY THE RECEIVER.
25
MR. HOFFMAN:
BUT THE LENDER, I BELIEVE,
26
YOUR HONOR, INSISTS ON HAVING A FORUM BEFORE IT RELEASES
27
THE MONEY SO IT CAN TURN AROUND AND FILE IT.
28
THE COURT:
I DON'T SEE A PROBLEM WITH
31
HAVING IT THIS THE ESCROW.
MR. HOFFMAN:
THAT'S ALL WE ARE ASKING, YOUR
HONOR, IS TO HAVE IT BE FILED AFTER EVERYTHING HAS BEEN
PAID.
ARE REASONABLE; IT IS NOT BECAUSE ANYTHING WE ARE MAKING
UP OR ANYTHING LIKE THAT.
MR. ADKISSON:
THAT IS TO SATISFY THEIR CONCERNS, WHICH I THINK
SO THE COURT IS APPRISED,
RIGHT BEFORE THIS HEARING, I WAS ABLE TO TALK TO THE
ESCROW AND THEY ARE FINE WITH JUST HAVING A COPY OF THE
10
LIEN RELEASE WHICH THE CREDITORS CAN PROVIDE AND A COPY
11
OF THE COURT'S ORDER THAT EMPOWERS THE RECEIVER TO GO
12
THROUGH WITH THIS ACTION.
13
14
THE COURT:
BUT I DON'T KNOW WHAT THEIR
LENDERS MAY BE WANT.
15
MR. ADKISSON:
THE ESCROW COMPANY IS THE ONE
16
TELLING US, HERE IS WHAT THE LENDER IS GOING TO
17
REQUIRE -- AGAIN, THIS IS FIDELITY AND THEY ARE THE ONES
18
WHO PACKAGED THIS LOAN.
19
MR. HOFFMAN:
I THINK WE SHOULD KEEP NUMBER
20
3 IN THERE, YOUR HONOR.
21
DETRIMENT TO ANYBODY IF WE KEEP IT IN, AND I AM
22
CONCERNED ABOUT THE EFFECT IT MIGHT HAVE ON THE LENDER
23
IF THEY DON'T GET THE PAPERWORK.
24
THE COURT:
I DON'T SEE IT CAUSES ANY
SO WHAT THIS SUGGESTS IS THAT
25
SOMEBODY LIKE THE RECEIVERS OR THE CREDITOR IS GOING TO
26
HAVE TO NOTIFY THE ESCROW COMPANY THAT THE MONEY HAS
27
BEEN PAID AND THEY CAN FILE THE SATISFACTION OF
28
JUDGMENT.
32
MR. ADKISSON:
AND THAT'S FINE, YOUR HONOR.
COULD WE SLIGHTLY AMEND THAT TO SAY AFTER THE COURT HAS
APPROVED THE RECEIVER -- I GUESS WHAT I AM WORRIED ABOUT
IS IF AN ACKNOWLEDGEMENT OF SATISFACTION OF JUDGMENT HAS
BEEN FILED THEN MAYBE THAT'S THE COURSE OF JURISDICTION
TO DEAL WITH -- THE RECEIVER AND MORE IMPORTANTLY THE
RECEIVER'S FEE.
8
9
THE COURT:
WHY WOULD IT DIVEST ME OF
JURISDICTION OVER THE RECEIVERSHIP?
THE COURT'S
10
JURISDICTION OVER THAT CONTINUES UNLESS AND UNTIL YOU
11
ARE DISCHARGED; DOESN'T IT?
12
MR. ADKISSON:
13
MR. HOFFMAN:
14
HONOR.
15
RECEIVER.
16
17
I BELIEVE THAT CORRECT, YOUR
WE ARE NOT TRYING TO PULL A FAST ONE ON THE
MR. ADKISSON:
NO.
NO.
I AM NOT ACCUSING
THAT.
18
19
I WOULD HOPE SO.
THE COURT:
I DO NOT THINK THAT THAT'S THE
CONCERN.
20
I THINK THE RECEIVERSHIP IS FOR A PURPOSE,
21
THERE MAY BE A SATISFACTION OF JUDGMENT, BUT EVEN IF
22
THERE IS A SATISFACTION OF JUDGMENT, YOU ARE STILL
23
RESPONSIBLE -- YOU ARE APPOINTED BY THE COURT AND IT IS
24
OPERATIVE UNTIL I RELIEVE YOU; I THINK.
25
26
27
28
MR. ADKISSON:
I HOPE THAT'S TRUE, YOUR
HONOR.
THE COURT:
THAT'S THE ASSUMPTION I AM GOING
TO OPERATE UNDER -- THAT'S THE PREMISE -- BETTER THAN
33
"ASSUMPTION".
MR. ADKISSON:
THE COURT:
ES.
THAT'S THE PREMISE WHICH I
CHOOSE TO OPERATE BE UNDER BECAUSE IF I DON'T, YOU DON'T
GET PAID.
MR. ADKISSON:
CERTAIN THOUGHTS ARE FIRST
AND FOREMOST ON THE RECEIVER'S MIND.
TAKES CARE OF US AS TO THE UNDERLYING TRANSACTION --
9
10
THE COURT:
I BELIEVE THAT
I DON'T NEED TO PUT THE DOLLAR
AMOUNT IN THIS PAYOFF, DO I?
11
MR. ADKISSON:
IF THE PAYER IS BEING PAID
12
OUT OF ESCROW, THERE IS NO REASON TO INCLUDE IT BECAUSE
13
THEY ALREADY HAVE THE PAYOFF DEMAND.
14
THE COURT:
THE CREDITOR IS NOT -- YOU ARE
15
PAYING THEM OFF -- OKAY.
16
COPY BECAUSE I AM GOING TO HAVE TO REWRITE THIS.
17
KEEP ADDING THINGS TO IT.
18
THEN I BETTER HAVE ANOTHER
THIS HALF MILLION EXTRA YOU ARE TALKING
19
ABOUT, WHO PAYS THAT TO THEM?
20
YOU PAY IT TO THEM OR DOES IT COME TO THEM OUT OF
21
ESCROW?
22
23
MR. ADKISSON:
26
DOES IT ALL COME TO YOU?
AS I UNDERSTAND YOUR HONOR'S
ORDER RIGHT NOW, THE CREDITOR --
24
25
WE
THE COURT:
TELL ME THE CONCEPT OF THE
OPERATION.
MR. ADKISSON:
-- AS I UNDERSTAND IT, THERE
27
IS GOING TO BE A RELEASE TO ME OF THE 2.23 MILLION WHICH
28
I WILL USE TO PAY THE CREDITOR.
34
ARE WE AGREED ON THAT.
MR. HOFFMAN:
MR. ADKISSON:
[NO AUDIBLE RESPONSE.]

THERE WILL BE APPROXIMATELY
$3,000 ADDITIONALLY HELD BACK FOR RECEIVER'S FEES AND
ANY INCIDENTAL COSTS THAT MAY ARISE.
THAT THE BALANCE WILL BE REMITTED TO THE DEBTOR.
BETTER POLL ALL COUNSEL AND MAKE SURE THEY ARE AGREEABLE
TO THAT, YOUR HONOR.
9
10
MR. HOFFMAN:
YOU
I AM FINE WITH THAT, YOUR
HONOR.
11
12
THEN I PRESUME
MS. WAKILY:
I AM FINE WITH THAT AS WELL,
YOUR HONOR.
13
MR. CHATFIELD:
14
THE COURT:
I HAVE NO OBJECTION.
LET US SUPPOSE THAT OUT OF THE
15
REFINANCING, THERE IS FIVE MILLION DOLLARS AND WE HAVE A
16
MILL AND A QUARTER THAT GOES TO THE SENIOR LENDERS, AND
17
THAT LEAVES ROUGHLY 3.75 MILLION -- LET'S CALL IT TWO
18
AND A QUARTER -- THAT LEAVES 2.75 MILLION.
19
AND A QUARTER MILLION WILL GO TO THE JUDGMENT CREDITORS,
20
LEAVING HALF A MILLION.
21
THOUSAND, SO THE HALF MILLION MINUS THE 30 THOUSAND
22
WHICH I WILL CALL THE "EXCESS FUNDS" PUT INTO THE ESCROW
23
IS IT REMITTED TO THE ESCROW COMPANY DIRECTLY BY THE
24
BORROWS/JUDGEMENT DEBTORS WHO PUT UP THE MONEY OR DOES
25
IT COME TO YOU AND YOU REMIT IT TO THEM?
26
MR. ADKISSON:
OKAY.
ROUGHLY TWO
YOU ARE GOING TO GET 30
I PRESUME THE FORMER.
27
LOAN DOCUMENTS I HAVE SEEN, IT IS NOT CLEAR.
THE
28
RECEIVER DOESN'T NEED ANY MORE MONEY THAN THE 2.23
IN THE
35
MILLION PLUS THE 30 THOUSAND.
NECESSARY THAT I TAKE IN THAT EXCESS MONEY.
RECEIVER WILL BE PLEASED TO DO IT IF THE COURT SO
ORDERS, BUT IT HAS NO NEED FOR THAT MONEY.
MR. HOFFMAN:
I DO NOT BELIEVE IT IS
THE
WE WOULD PREFER THAT THE FUNDS
COME TO US, YOUR HONOR, BUT IT IS NOT CRITICAL.
ONLY WAY IT IS TO HAPPEN IS FOR IT TO GO THROUGH THE
RECEIVER, THAT'S ACCEPTABLE.
MR. ADKISSON:
IF THE
YOUR HONOR, I CONTEMPLATE
10
THAT THE TURNAROUND ON THIS MONEY WILL BE VERY, VERY
11
QUICK.
12
MR. HOFFMAN:
AT THE RISK OF BEING OVERLY
13
CAUTIOUS, YOUR HONOR, COULD THE ORDER CLARIFY THAT THE
14
RECEIVER IS AUTHORIZED THE AMOUNT THAT KPC DEMANDED ON
15
THEIR BEHALF, JUST IN CASE THERE IS ANY
16
MISUNDERSTANDING?
17
18
19
THE COURT:
THE SAME.
PARAGRAPHS ONE, TWO, THREE STAYS
NEW PARAGRAPH FOUR:

AFTER THE REFINANCING IS FUNDED, THE SENIOR
20
LIENHOLDERS WILL BE PAID OUT OF ESCROW.
THE RECEIVER
21
WILL RECEIVE THE APPROXIMATE SUM OF TWO MILLION TWO
22
HUNDRED AND THIRTY THOUSAND DOLLARS TO BE PAID TO THE
23
CREDITOR PLUS APPROXIMATELY 30 THOUSAND DOLLARS TO COVER
24
THE RECEIVER'S FEES AND INCIDENTALS.
25
PAY THE JUDGMENT CREDITOR IN FULL AND THE RECEIVER, AND
26
THE JUDGMENT CREDITORS WILL AUTHORIZE THE ESCROW HOLDER
27
TO FILE THE SATISFACTION OF JUDGMENT.
28
FUNDS LEFT IN ESCROW BEYOND THESE SPECIFIED FUNDS, THE
THE RECEIVER WILL
IF THERE ARE
36
ESCROW HOLDER IS TO REMIT THOSE FUNDS TO THE JUDGMENT
DEBTORS PUTTING UP THOSE FUNDS.
PROMPTLY FILE HIS FINAL ACCOUNTING.
THE RECEIVER SHALL
DO YOU WANT ME TO READ IT AGAIN.
MR. HOFFMAN:
IF YOU WOULD, I WOULD
APPRECIATE IT.
THE COURT:
AFTER THE REFINANCING IS FUNDED,
THE SENIOR LIENHOLDERS WILL BE PAID OUT OF ESCROW.
RECEIVER WILL RECEIVE THE APPROXIMATE SUM OF 230
THE
10
THOUSAND DOLLARS [SIC] TO BE PAID TO THE CREDITOR PLUS
11
APPROXIMATELY 30 THOUSAND DOLLARS TO COVER THE
12
RECEIVER'S FEE AND INCIDENTALS --
13
DELIBERATELY APPROXIMATE -- THE RECEIVER WILL PAY THE
14
JUDGMENT CREDITOR IN FULL.
15
JUDGMENT CREDITOR WILL AUTHORIZE THE ESCROW HOLDER TO
16
FILE THE SATISFACTION OF JUDGMENT -- THAT'S A JOINT
17
OBLIGATION SHOULD THERE BE ANY QUESTION AS TO WHO WAS
18
AUTHORIZED TO DO IT -- TO MAKE THE ESCROW HOLDER DO IT
19
OR BOTH TO DO IT -- IF THERE ARE FUNDS LEFT IN ESCROW
20
BEYOND THESE SPECIFIED FUNDS -- BY "LEFT IN ESCROW" I
21
MEAN I AM ASSUMING ANY ESCROW FEES ARE PAID TO THE
22
ESCROW HOLDER -- IF THERE ARE FUNDS LEFT IN ESCROW
23
BEYOND THESE SPECIFIED FUNDS, THE ESCROW HOLDER IS TO
24
REMIT THOSE FUNDS TO THE JUDGMENT DEBTORS PUTTING UP
25
THOSE FUNDS.
26
PROPERTY WILL GET THE BALANCE OF IT AND WE WILL LET THE
27
JUDGMENT DEBTORS WHO ARE PUTTING UP THE MONEY WORRY
28
ABOUT HOW THE PROCEEDS ARE GIVEN UP.
I AM BEING
AND THE RECEIVER AND
WHOEVER IS TAKING THE LOANS ON THEIR
WE WILL NOT
37
INVOLVE THE ESCROW HOLDER OR THE OTHER PEOPLE IN THAT.
THE RECEIVER SHALL PROMPTLY FILE HIS FINAL ACCOUNTING.
DOES THAT SEEM TO WORK?
MR. HOFFMAN:
IT DOES, YOUR HONOR, IT JUST
LEAVES OPEN THAT THE FUNDS THAT THIS RECEIVER MIGHT
STILL BE HOLDING AFTER PAYING THE JUDGMENT AND
WITHHOLDING FOR HIMSELF.
REMITTED TO THE JUDGMENT CREDITORS --
MR. CHATFIELD:
10
11
12
I THINK THAT WOULD ALSO BE
MR. HOFFMAN:
DEBTORS.
THE JUDGMENT DEBTORS.

YES EXCUSE ME, THE JUDGMENT
IT HAS BEEN A LONG DAY, YOUR HONOR.

THE COURT:
ANY FUNDS IN EXCESS OF THE
13
RECEIVER'S ALLOWED FEES AND EXPENSES ARE TO BE PROMPTLY
14
REMITTED TO THE JUDGMENT DEBTORS PUTTING UP THE FUNDS.
15
THAT CONTEMPLATES THAT WHETHER THE
16
DETERMINATION IS IF THERE IS ANY EXCESS WILL FOLLOW THE
17
RECEIVER'S REPORT AND COURT'S APPROVAL AND WE ASSUME
18
THAT WILL BE SMALL.
19
IS THAT ACCEPTABLE?
20
MR. HOFFMAN:
21
THE COURT:
22
23
IT SHOULD BE, YES.

ANY QUESTIONS?
ANYTHING WE MAY
HAVE OVERLOOKED.
MR. ADKISSON:
THE ONE MORE ISSUE RELATES TO
24
PARAGRAPH 1 AND 2, BUT AS TO THE ISSUE WE ARE TALKING
25
ABOUT NOW, THAT'S FINE WITH THE RECEIVER.
26
THE COURT:
OKAY.
27
WHAT IS THE OTHER ISSUE?
28
MR. ADKISSON:
THE FINAL ISSUE BEFORE YOUR
38
HONOR IS ONE THAT THE RECEIVER HAS NO ISSUE IN -- THERE
IS NO IRON IN FIRE FOR THE RECEIVER -- BUT THE PARTIES
HOTLY DISPUTE IT, AND THAT IS IF THE COURT WILL LOOK AT
ORDER IN PARAGRAPHS 1 AND 2, THERE ARE THREE REFERENCES
TO FOUR OF THE JUDGMENT DEBTORS.
DEBTORS APPARENTLY, BETWEEN THE PARTIES -- AND AS FAR AS
I CAN FIGURE OUT -- THIS RELATES TO SOME POSTURING
RELATING TO THE APPEAL IN THESE OTHER CASES.
MS. WAKILY WANTS HER FOUR OUT, WHILE CREDITOR FOR THE
FOUR OF THE JUDGMENT
I THINK
10
DEBTOR WANTS THE FOUR IN.
11
UTTERLY NO IRON IN THE FIRE, JUST SIMPLY FRAMING IT FOR
12
THE COURT.
13
MR. HOFFMAN:
AGAIN, THE RECEIVER HAS
YOUR HONOR, FOUR OF THE
14
JUDGMENT DEBTORS ARE TAKING OUT THE LOAN.
FOUR OF THE
15
JUDGMENT DEBTORS ARE PROVIDING THE MONEY, THAT'S ALL THE
16
ORDER SAYS.
17
AN INACCURATE SUGGESTING THAT ALL OF THE JUDGMENT
18
DEBTORS -- MEANING NOT JUST MY CLIENT --
IF WE TAKE OUT THE WORD "FOUR" IT WILL BE
19
THE COURT:
20
MS. WAKILY:
WHAT IS YOUR PROBLEM?

YOUR HONOR, THE FOUR JUDGMENT
21
DEBTORS ARE OWNED BY THE AREZANO TRUST AND THE AQUASANTE
22
FOUNDATION AND POSSIBLY IN GAGGERO.
23
RECORD TO ACCURATELY REFLECT THAT THESE NEGOTIATIONS ARE
24
LARGELY BEING PAID BY ALL THE DEBTORS AND NOT JUST THE
25
FOUR ENTITIES.
26
THE COURT:
27
MS. WAKILY:
28
RECORD.
WE WOULD LIKE THE
WHY DO YOU CARE?

I JUST WANT TO MAKE AN ACCURATE
39
THE COURT:
ON THE GLOBAL SCALE, LET'S
ASSUME THEY ARE IN DEED STRUCTURING THIS IN A PARTICULAR
WAY FOR OTHER PURPOSES, AS A PRACTICAL MATTER, YOU HAVE
NO RIGHT TO DECIDE WHICH OF THE JUDGMENT DEBTORS PAY
THIS OFF, WHETHER IT IS ONE OR TWO OR THEY CONTRIBUTE
PRO RATA OR MR. GAGGERO PERSONALLY PAYS EVERYTHING,
YOU'VE GOT NO DOG IN THAT FIGHT.
8
9
MS. WAKILY:
I JUST THINK THAT LIMITING IT
TO FOUR IS IT MISREPRESENTING THE REALITY OF IT.
10
THE COURT:
11
MS. WAKILY:
WHY?
BECAUSE I KNOW THAT THE AREZANO
12
TRUST AND THE AQUASANTE -- I KNOW THE AREZANO TRUST OWNS
13
THOSE ENTITIES.
14
THE COURT:
15
MS. WAKILY:
16
INVOLVED THEM AS WELL.
17
THE COURT:
18
MR. HOFFMAN:
19
SO THE NEGOTIATIONS MUST HAVE

BUT IF -SO.
WHO ARE -- WHO IS PAYING?
THE FOUR JUDGMENT DEBTORS THAT
ARE LISTED IN THE DOCUMENTS, YOUR HONOR.
20
21
SO.
THE COURT:
I DON'T KNOW WHO THEY ARE.
WHO
ARE THE FOUR JUDGMENT DEBTORS LISTED IN THE DOCUMENTS.
22
MR. HOFFMAN:
511 0FW LP, YOUR HONOR; BLU
23
HOUSE; GINGERBREAD COURT LP -- SORRY THE CORRECT NAME IS
24
BLU HOUSE, LLC -- THE FOURTH ONE IS BOARDWALK SUNSET
25
LLC.
26
THE COURT:
27
MS. WAKILY:
28
REFLECTED.
IS THERE A REASON?
I GUESS BECAUSE IT IS NOT
THEY ARE KEEPING THE DOCUMENTS -- IT SAYS
40
FOUR, BUT IT IS NOT CLEAR.
RECORD, I AM OKAY WITH IT NOW.
3
4
THE COURT:
AS LONG AS IT IS ON THE
THE DEEDS OF TRUSTS THAT
ACCOMPLISH THIS FINANCING ARE GOING TO BE OF RECORD.
MS. WAKILY:
THE COURT:
UH-UH.
I WOULD BE VERY SURPRISED IF ANY
-- IF WHOEVER IS DOING THIS IS NOT GOING TO HAVE THIS
RECORDED.
MS. WAKILY:
10
THE COURT:
UH-UH.
I MEAN IT IS CONCEIVABLE, YOU
11
WOULD SURE AS HECK WANT THE INVESTORS TO KNOW ABOUT THAT
12
IN ADVANCE INSTEAD OF SAYING YOU DON'T HAVE A RECORDED
13
BE INTEREST.
14
I WILL LEAVE IT.

MS. WAKILY:
ONE MORE THING FOR THE NOVEMBER
15
5 DEADLINE, BECAUSE OF THE TIME, CAN I GET A ONE-DAY
16
EXTENSION ON THAT -- ON PARAGRAPH 3.
17
18
THE COURT:
YOU DON'T HAVE THE
ACKNOWLEDGMENT YET?
19
MS. WAKILY:
NO, I NEED TO TALK TO RANDY
20
MILLER, THE SUPERVISING ATTORNEY AND HE WAS OUT OF
21
OFFICE --
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THE COURT:
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MS. WAKILY:
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THE COURT:
I WILL CHANGE IT TO THE SIXTH.

OKAY.
I HAVE SIGNED THIS NOW AND WE
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WILL FILE STAMP IT AND WE WILL GIVE YOU EACH COPIES.
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WILL MAKE COPIES WITH MY INTERLINEATIONS THERE, AND YOU
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CAN HAVE THEM.
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COPIES, YOU CAN ARRANGE FOR THAT.
IF YOU FEEL THAT YOU NEED CERTIFIED
WE
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MR. HOFFMAN:
THE COURT:

IT HELPS ME IF I UNDERSTAND THIS
A LITTLE BIT BETTER.
I WAS CONCERNED THAT THE PROCEDURE
WE HAD WAS A LITTLE IRREGULAR, BUT IF THIS SATISFIES THE
INTEREST OF THE PARTIES, I AM SATISFIED.
MR. HOFFMAN:
MR. CHATFIELD:
MR. HOFFMAN:
THANK YOU.
THANK YOU YOUR HONOR.
THANK YOU SO MUCH.
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(PROCEEDING CONCLUDED.)
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A-1

LOS ANGELES, CALIFORNIA; WEDNESDAY, OCTOBER 5, 2011

DEPARTMENT 24 HONORABLE ROBERT L. HESS, JUDGE

(AS NOTED ON TITLE PAGE)

(CAROL L. CRAWLEY, OFFICIAL REPORTER.)

GOOD MORNING, KAMRAN KHAJAVI-NOURI

ON BEHALF OF THE DEFENDANTS AND THE MILLER LAW FIRM.

THE COURT ISSUED AN ORDER YESTERDAY STRIKING

I THINK IT WAS YESTERDAY, WAS THE ORDER YESTERDAY.

STRIKING THE 170.1, SO WE ARE HERE ON A MOTION TO

COMPEL FURTHER RESPONSES TO INTERROGATORIES, AND THESE ARE

POST JUDGMENT INTERROGATORIES.

I HAVE A COUPLE OF QUESTIONS.

PLAINTIFF, IT APPEARS TO ME THAT QUESTIONS, 1, 2,

3, 8, AND 9 ARE ALL APPROPRIATE FOR POST JUDGMENT INQUIRY.

IS THERE ANY REASON -- WELL, LET ME BACK UP.

HAVE THERE BEEN ANY SUPPLEMENTAL RESPONSES SERVED?

NO, THERE HAVEN'T, YOUR HONOR.

WE ATTEMPTED TO ENGAGE IN A MEET AND CONFER ON

IT WAS JUST RECENTLY THAT WE HAVE LEARNED THAT THE

DEFENDANTS ALREADY HAVE THE ADDRESSES AND THE INFORMATION

THAT THEY ARE SEEKING NUMBER ONE.

WELL, BUT JUST A MINUTE.

YOU MADE A SERIES OF OBJECTIONS BASED ON PRIVACY TO

AND YOUR ANSWER TO NUMBER EIGHT WAS ESSENTIALLY

NON-RESPONSIVE BECAUSE YOU CLAIMED HE HAD NO ATTACHABLE

INTEREST AS A BENEFICIARY WHICH WASN'T THE QUESTION.

CONFER IS I SEE THAT YOUR RESPONSE TO THEIR MEET AND CONFER

REQUEST WHICH IS VERY AGGRESSIVE, IT IS A DIATRIBE AGAINST

THE KNAPP PETERSEN FIRM, RELATING TO THEIR HANDLING OF

MATTERS AS TO WHICH INCLUDING THOSE WHICH WERE TRIED HERE

AND YOU LOST.

AND THAT LOSS WAS AFFIRMED.

I DON'T SEE THAT YOUR

RESPONSES LEAVE ANYTHING OPEN.

YOU BASICALLY SAID NO.

YOU SAID HECK NO.

ACTUALLY YOU SAID IT MIGHT BE

HECK NO WE ARE NOT GOING TO GIVE TO IT YOU.

SO, I DON'T SEE WHAT YOUR RESPONSE TO THEIR MEET

INTERROGATORY NUMBER ONE, ASKS FOR WHAT IS YOUR CURRENT

AND YOUR RESPONSE WAS INQUIRY ABOUT MR. GAGGERO'S

PRIVATE RESIDENCE INTERROGATORY NUMBER ONE IS NOT PERMITTED

MR. GAGERRO HAS TOLD YOU UNDER PENALTY OF PERJURY

THAT HE OWNS NO REAL PROPERTY, HOLDS NO LEASEHOLD INTEREST

IN ANY REAL PROPERTY AND HOLDS NO OTHER ATTACHABLE INTEREST

IN ANY REAL PROPERTY.

YOU ARE ONLY ENTITLED TO REQUEST INFORMATION TO

CITATION, FURTHERMORE, INFORMATION THAT FALLS

WITHIN AN EVIDENTIARY PRIVILEGE IS SHIELDED FROM YOUR

INFORMATION THAT DOES NOT FALL WITH AN EVIDENTIARY

PRIVILEGE IS NONETHELESS, IS NONETHELESS BE SHIELDED FROM

DISCOVERY WHERE ITS DISCLOSURE WOULD INVADE AN INDIVIDUAL'S

CONSTITUTIONAL RIGHT OF PRIVACY.

CITATION, AS MR. GAGGERO OWNS NO REAL PROPERTY AND

HOLDS NO LEASEHOLD OR ATTACHABLE INTEREST IN ANY REAL

PROPERTY, YOU ARE NOT ENTITLED TO MAKE ANY FURTHER INQUIRY

IN THAT REGARD ESPECIALLY IN LIGHT OF HIS PRIVACY RIGHTS.

SINCE WHEN MAY THEY NOT INQUIRE AS TO THE RESIDENCE

SINCE THE STATE OF CALIFORNIA INSTITUTED

ARTICLE ONE SECTION ONE OF THE CONSTITUTION.

OH, HORSE FEATHERS.

THAT IS NOT PROTECTABLE AS PRIVACY.