2. QLC_SE B2 4 J_67_
(Related Appellate Matters B207567, B209522, B236610, B236834)
IN THE COURT OF APPEAL OF THE STATE OF
CALIFORNIA FOR THE SECOND APPELLATE DISTRICT
DIVISION EIGHT
STEPHEN M. GAGGERO, and individual, et al,
Plaintiff and Appellants
VS.
KNAPP, PETERSEN & CLARKE, STEVEN RAY GARCIA, STEPHEN M.
HARRIS and ANDRE JARDINI,
Defendants and Respondent
On Appeal from Los Angeles Superior Court,
Honorable Robert L. Hess, (213) 974-5625
Department 24, Case No BC286925
DECLARATION OF AUSTA WAKILY IN SUPPORT OF
RESPONDENTS' OPPOSITION TO APPELLANTS APPLICATION FOR
EXTENSION OF TIME TO FILE BRIEF
MILLER LLP
RANDALL A. MILLER (SBN 116036)
randy@millerllp.com
AUSTA WAKILY (SBN 257424)
austa@millerllp.com
515 South Flower Street, Suite 2150
Los Angeles, CA 90071-2201
Telephone: 800.720.2126
Facsimile: 888.749.5812
Attorneys for Respondents
3. DECLARATION OF AUSTA WAKILY
I, Austa Wakily, declare as follows:
I. I am an associate at Miller LLP and counsel of record for Respondents
Knapp, Petersen and Clarke, Stephen M. Harris, Steven Ray Garcia, and Andre
Jardini in this case. ! am licensed to practice law in the State of California and
before this Court. I have personal knowledge of the facts set forth in this
declaration and, if called as a witness, I could and would competently testify as to
these facts. I submit this declaration in support of Respondents Opposition to the
Application for Extension of Time to File Brief.
2. Attached as Exhibit A to this response is a true and correct copy of the
reporter's expedited transcript of proceeding for the May 29, 2012 hearing on the
motion to amend the judgment. I attended the motion on behalf of the
respondents and have reviewed the transcript. The transcript accurately reflects
the content of testimony on that day.
3. Attached as Exhibit B to this response it a true and correct copy of the
Appellants' opposition to the motion to amend the judgment.
4. Attached as Exhibit C to this response it a true and correct copy of the
Appellant, Stephen M. Gaggero's opposition to the motion to amend the
judgment.
5. In addition to the opposition filed to the motion to amend the judgment the
appellants filed a Petition for Writ of Supersedeas on July 19, 2012 and their
Reply brief on August 22, 2012. The arguments at issue on the appeal of the
motion to amend the judgment were briefed by appellants as part of the Petition
for Writ of Supersedeas.
6. The appellants also filed a Reconsideration of the Petition for Writ of
Supersedeas on October 3, 2012. The arguments at issue on the appeal of the
4. motion to amend the judgment were briefed by appellantsas part the
Reconsiderationof thePetitionfor Writ of Supersedeas.ThisPetitionwasfiledby
Mr.Hoffman.
7. Asof thedateof thisresponsetheappellantshaverefusedto producethe
trustdocuments.
I declareunderpenaltyof perjurythattheforegoingis trueandcorrect.
ExecutedonMarch____2013in Los Angeles California.
&Au_'sta W aki)ly_
6. SUPERIOR COURT OF THE STATE OF CALIFORNIA.
FOR THE COUNTY OF LOS ANGELES
DEPARTMENT LA 24 HON. ROBERT L. HESS, JUDGE
STEPHEN GAGGERO, AN INDIVIDUAL; ET AL., )
PLAINTIFF, )
)CASE NO.
-VS- )BC286925
)
KNAPP, PETERSEN & CLARKE, )
STEPHEN RAY GARCIA, STEPHEN M. HARRIS )
AND ANDRE JA-RDINI, )
DEFENDANTS. )
)
REPORTER'S EXPEDITED TRANSCRIPT OF PROCEEDINGS
TUESDAY, MAY 29, 2012
APPEARANCES:
FOR THE PLAINTIFF:
FOR THE DEFENDANTS:
DAVID CHATFIELD
ATTORNEY AT LAW
2625 TOWNSGATE RD
SUITE 330
WESTLAKE VILLAGE, CA 91361
MILLER LLP
BY: RANDALL A. MILLER
BY: AUSTA WARILY
vOLUME 1 OF 1
[
CAROL L. .CRAWLEY, CSR #7518-
...................................•......................................................5Z5--gOUT-H-FLOWERSTREET ................
SUITE 2150
LOSANGELES, CA 90071
FOR NEW JUDGMENT DEBTORS: DAVID ESQUIBIAS
2625 TOWNSGATE ROAD
SUITE 330
WESTLAKE VILLAGE, CA 91301
7. 1
2
3
4
5
6
7
8
9
I0
ii
12
13
14
15
16
17
18
19
20
21
i 22
LOS ANGELES, CALIFORNIA; TUESDAY _ MAY 29, 2012
DEPARTMENT 24 HONORABLE ROBERT L. HESS JUDGE
11:50 A.M.
APPEARANCES: (AS NOTED ON TITLE PAGE)
(CAROL L. CRAWLEY, OFFICIAL REPORTER.
MR. CHATFIELD: DAVID CHATFIELD ON BEHALF OF THE
PLAINTIFF.
MR. ESQUIBIAS: GOOD MORNING, YOUR HONOR.
DAVID ESQUIBIAS ESPECIALLY APPEARING FOR
JOSEPH PRASKE TRUSTEE OF THE GIGANIN TRUST, TRUSTEE
OF THE ARANZANO TRUST, AND THE AQUASANTE FOUNDATION
AND VARIOUS LLC'S AND LP'S THAT ARE NOTED IN OUR
PLEADING AS A GENERAL PARTNER AND/oR MANAGING MEMBER.
I WOULD LIKE TO NOTE FOR THE RECORD THAT
JOSEPH PRASKE IS NOT A PARTY TO THIS ACTION.
......MS_WAKILI} ....G00D-MORNING/-AUSTAWAKILI-FOR ........................
DEFENDANT, KNAPP, PETERSEN & CLARKE.
THE COURT} THIS IS A MOTION TO AMEND .THE JUDGMENT
. 23 TO ADD JUDGMENT DEBTORS ON THE THEORY THAT VARIOUS
........ 24 .... TRUSTS _FOUNDATIONS, _AND..OTHER BUSINE$S...ENT_.TIE$ ...........
25----TNCL-U-DTN-G---L-L-C-,_--AR-E---A_--M_--@_GG_O-,-S--_TDR-D@@_,--_N-D --
26 THEY SHOULDBE LIABLE FOR OR THEIR ASSETS -- SHOULD
' 28 HiM .... " .....:.... - ".................
8. E
1
2
3
4
5
6
7
8
9
I0
Ii
12
13
14
15
16
17
18
19
.........................20
21
22
23
24
_5--
26
27
28
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, AND
FRANKLY IT LOOKS TO ME LIKE THESE ARE APPROPRIATE
MOTIONS.
I SEEM TO HAVE QUITE A SHOWING HERE THAT IN
FACT, MR. GAGGERO CONTROLS THESE -- DIRECTS THE
MONIES AND WILL.
AND SINCE wE HAVE, You KNOW, IT SEEMS TO ME
THAT THE MOTION HAS SOME MERIT, SO LETME START WITH
MR. GAGGERO'S COUNSEL, AND SEE WHAT YOU WOULD LIKE TO
SAY ON THIS POINT, SIR.
MR. CHATFIELD: YOUR HONOR, IF I MAY START AS --
REALLY THE PARTY IN INTEREST -- I REPRESENT THE
TRUSTEE WHO CONTROLS THESE ASSETS WITHIN THESE
TRUSTS.
IF I MAY RESPOND TO THE COURT FIRST, I WOULD
APPRECIATE THAT.
THE COURT: WEL'L, THE TRUSTEE HAS TO BE -- THE
9RUSTEZ GETS N_AMZD, BUT IT-IS-REALLY THE ITRUST THAT ..........
HIS ASSETS ARE BEING SOUGHT.
' MR. ESQUIBIAS: THE CORPUS OF THE TRUST --
THE COURT: I DON'T UNDERSTAND THAT THEY ARE
SEEKING TQ_ ADD YOU IN ANY OTHE_ CAPACITy PERHAPS THAN ..........
----AS_R-[TSTgE. -........
THERE IS CERTAINLY NO INDIVIDUAL CAPACITY.
MR. ESQUIBIAS: CORRECT. WE DON'T BELIEVE THAT
ANYONE IS SEEKING MR. BRABKE.
9. 1
2
3
4
5
7
8
9
10
Ii
12
13
14
15
16
17
18
19
..................... 20
21
22
23
24
26
27
[................
WE DON'T BELIEVE THAT KPS IS TRYING TO SAY
THAT MR. PRASKE AS PERSONAL LIABILITY, THAT WE DON'T
BELIEVE.
THE COURT: AND I DIDN'T GET THAT OUT OF THEIR
PAPERS.
MR. ESQUIBIAS: WHAT WE DO BELIEVE, IS'THAT THE
ASSETS, WHICH MR. PRASKE CONTROLS ARE ASSETS THAT ARE
BEING SOUGHT, AND BECAUSE THESE ASSETS ARE CONTAINED
WITHIN IRREVOCABLE TRUSTS -- OR EVEN IF THEY WERE
REVOCABLE, THE FACT IS THAT THESE ARE IRREVOCABLE
TRUSTS THAT THERE ARE CERTAIN PROCEDURES THAT NEED TO
BE FOLLOWED WHEN YOU ARE TRYING TO OBTAIN OR CONTROL
LEVY OR GARNISH THE ASSETS'OF TRUSTS.
AND I WOULD NOTE FOR THE. RECORD; THAT THE
PROBATE COURT HAS THE EXCLUSIVE JURISDICTION OF TRUST
MATTERS UNDER PROBATE CODE 17000, WHICH SPECIFICALLY
STATES THAT ACTIONS AND PROCEEDINGS BY OR AGAINST A
CREDITOR ARE VESTED IN THAT COURT AND MORE
IMPORTANTLY, BECAUSE THE ASSETS IN THIS PARTICULAR
NOTICE UNDER THE PROBATE CODE NEEDS TO BE PROVIDED OF
THIS MOTION TO THE VESTED CURRENT INCOME AND
PRINCIPAL AND REMAINDER BENEFICIARIES OF THESE
• RUSTS ...................................... • .........
NO _S-UCH---NO_C_--W_S-_RO_I-D_D_O--A-N_ ........
BENEFICIARY NOR WAS NOTICE PROVIDED TO THE TRUSTEE OF
THESE TRUSTS, AND} "NOTICE' WOULD BE REQUIRED UNDER
PROBAT£ CODE 17203 : ........
10. 1
2
3
4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
..................... 2 O _
21
22
23
..... 24
_5--
26
27
AND LAST, PROBATE CODE 18200 sPEcIFICALLY
STATES THAT THE ASSETS OF AN IRREVOCABLE TRUST ARE
NO.T AVAILABLE TO THE SETTLERS CREDITORS, WHICH IS THE
CASE HERE.
TO THE EXTENT THAT THERE WAS FRAUDULENT
CONVEYANCE, THEN IT WOULD BE MADE POTENTIALLY •
AVAILABLE.
BUT, AS THE MOVING PARTY HAS CONCEDED IN
THEIR OWN DOCUMENTS THAT THE FRAUDULENT CONVEYANCE
CAUSE OF ACT!ONIS UNAVAILABLE TO THEM DUE TO THE
STATUTE OF LIMITATIONS, FRAUDULENT CONVEYANCE IS THE
ONLY EXCEPTION TO PROBATE CODE SECTION 18200 AND
PROBATE CODE SECTION 15403.
I SEE THE COURT .IS LOOKING AT THE PROBATE
CODE ....
THE COURT: JUST A MINUTE.
MR. ESQUIBIAS: -- I WOULD LIKE TO POINT OUT JUST
ONE CASE.
THE COURT: MAY I ASK WHERE THIS ARGUMENT APPEARS
IN-YOUR-OPPOSITIDN_SIR? ....................................................:......
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 5RGUM_NT NOW THAT .AP.PARENTLY 90ES ...............
--TS--J-H-R_DI_L_T-I-@N-?
IS THERE A REASON wHY, IF THIS IS A
MERITORIOUS ARGUMENT, .-IT-WAS NOT INCLUDED IN•THE
......................... .--i.........................................................................................................................
28 OPPOSITION? •
11. 1
2
3
4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
MR. CHATFIELD: I CAN TELL THE COURTTHAT I AM
SPECIALLY APPEARING FOR THE PURPOSEOF ARGUING
JURISDICTION AND NOTICE.
I HAVE NO EXPLANATION AS TO WHY IT WASN'T IN
THE OPPOSITION. I AM LATE TO THIS PARTY.
THE COURT: THE NOTICE OF SPECIAL APPEARANCE TO
OPPOSE AN OPPOSITION WAS FILED MAY 15TH.
MOVING PAPERS WERE FILED APRIL 10TH, AND AS I
LOOK AT YOUR PAPERS HERE, I DON'T EVEN GET A SNIFF OF
THESE ARGUMENTS, QUITE FRANKLY.
MR. ESQUIBIAS: I WOULD AGREE. BUT I DON'T
BELIEVE THE FACT THAT THEY WERE NOT RAISED IN THAT
DOCUMENT DOES NOT PRECLUDE THE ARGUMENT TODAY.
THE COURT: WELL, WHY? SO MY QUESTION IS, IF
THESE ARE ESSENTIAL ARGUMENTS, WHY DID YOU HOLD THEM
BACK SO THAT THEY COULD NOT REsPoND TO THEM?
MR. ESQUIBIAS: IT WAS NOT DESIGNED TO AMBUSH THE
MOVING PARTY.
THE couRT: IS ITANYTHING OTHER THAN AMBUSH
21 MR. 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 . _HEM TO. RESPOND. TO THES.E. ARGUM_NTS ....................
-----95 ....... TH-E--COU-Rq_._L-L_'<>U--_A-V-E_-'-T-f-E_k_N--BR-I-_PE-D---I_.
26 MR. ESQUIBIAS: I AM PREPARED TO DO SO.
27 THE COURT: SO THAT, AGAIN, RAISES THEQUESTION --
28 TH_S YS THE TIME A.ND PLACE FOR THE HEARING DN THIS
12. 1
2
3
4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
MOTION.
MS. WAKILI: CAN I MAKE ONE BRIEF POINT ON THIS?
HAD HE BRIEFED IT OR RAISED IT INHIS OPPOSITION,
MR. PRASKE HAS TESTIFIED UNDER-- IN.A DEBTOREXAM,
THESE ARE OFFSHORETRUSTS.
ARANZANOIS AN OFFSHORETRUST. THEY HAVE
NEVER BEEN FILED wITH ANY COURTIN CALIFORNIA OR THE
UNITED STATES, SO THESE ARE ESSENTIALLY VERY SECRET
DOCUMENTSTHAT ARE PRIVATE.
THEY HAvE INDEPENDENTCONFIDENTIALITY
PROVISIONS THAT BOUNDPRETTY MUCHTHE TRUSTORTHE
TRUSTEE, So THEY WON'T BE SOMETHINGYOU WILL FIND IN
A PROBATECOURTAND ACCORDINGTO MR. PRASKE -- THAT
IS SOMETHINGTHAT HE SAID HE NEVER FILED, AND AGAIN
HAD WE HAD ANY IDEA THIS WOULDBE AN ARGUMENTTHEY
WOULDRAISE WE WOULDHAVE PULLED EXCERPTS_FROMTHE
DEBTOREXAMINATION TO ADDRESSTHAT.
THE COURT: i DON'T DISAGREE, BUT DO I HAVE ANY
EVIDENCE? JUST A SECOND. DO I HAVE ANY EVIDENCE IN
J- ] ......................20 ......su P POR-T- 0F -T H-ESE ---FAC-T[JAL -AS S-_.R T ION S ?......................
I
i 21
I
! 22
i 23
i
i ..... 24.
............. _ 5--
26
27
MR. ESQUIBIAS: RAISED BY OPPOSING COUNSEL?
THE COURT: No, YOUR FACTUAL ASSERTIONS. YOU HAVE
CHARACTERIZED THESE AS IRREVOCABLE AND SUBJECT TO
_HIS THAT. AND THE OTHEK.. I DO_.'T..KNOW ....HOW DO I
--K-_OW--THAT-F.
WHERE ISTHE EVIDENCE TO SUPPORT IT?
MR.. ESQUIBIAS: "YOU WILL NOT FIND IT IN OUR
_8 PLEA_N_ T_AT WAS FILED.
13. 1
2
3
4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
THE COURT: IS THERE ANYTHING IN THEIRS, THAT WILL
DO IT?
MR. ESQUIBIAS: I HAvE THE PLEADINGS THAT I HAVE
REVIEWED IN PREPARATIONFOR TODAY'S HEARING, DID NOT
SHOWOTHER THAN THEIR OWNSTATEMENTSIN THEIR
PLEADINGS WHICHARE CONSIDEREDADMISSIONS THAT THE
TRUSTS ARE IRREVOCABLE.
THE COURT: HAS THERE -- HAS MR. PRASKETAKEN THE
POSITION, THAT THE TRUSTS THEMSELVESARE
CONFIDENTIAL?
MR. CHATFIELD: I HAD NOT PARTICIPATED IN THAT
PRIOR DISCOVERY THAT COUNSELTALKS ABOUT, BUT I WILL
SAY THIS, ON BEHALF OF MR. PRASKE --
THE COURT: AND THAT THE TERMSOF THE-TRUST --
THE TRUST DOCuMENTs OUGHT NOT TO BE PRODUCED?
MR. ESQUIBIAS: I WILL SAY THIS ON BEHALF OF
MR. PRASKE, .THAT IF NOTICE IS.PROVIDED TO THE ALL THE
VESTED CURRENT INCOME AND PRINCIPAL BENEFICIARIES --
THE COURT: HAS MR. -- AND HOWWOULD THEY DO THAT?
21 TRUST DOCUMENTS TO COUNSEL UPON NOTICE TO THE
22 BENEFICIARIES.
23 THE.COURT: HOW WOULD THEY KNOW WHO THE
24 .....BENEEICIARIES ARE? ..............................
2_ [---A_--TA-K-I-N-G__ OU-R--R-D_P O-N_E --A-S--TH E_I_R-UST
26 DOCUMENTS THEMSELVES HAVE NOT BEEN PRODUCED UNDER A
27 CLAIM OF CONFIDENTIALITY.
_8 SO AT .TH_IS POINT, YOU ARE ASSERTING A SERIES ....
14. 1
2
3
4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
..........................2_
21
22
23
24
26
OF THINGS WHICH FIND NO EVIDENTIARY SUPPORT AND THE
REASON THEY HAVE NO EVIDENTIARY SUPPORT, AND YOUR
OBJECTIONS ARE VERY INTERESTING, IS THAT YOU HAVE, AS
I UNDERSTAND IT, YOU OR MR. GAGGERO HAVE PRECLUDED
THE OTHER SIDE FROM ACCESS TO THE VERY INFORMATION
THAT YOU CLAIM IS NECESSARY FOR THEM TO GIVE NOTICE.
THAT IS NOT A SITUATION THAT IS REASONABLY
CALCULATED TO GIVE RISE TO A SYMPATHETIC HEARING.
FOR YOU TO SAY, WELL YOU CAN'T GO FORWARD WITHOUT
GIVING NOTICE TO ALL THESE PEOPLE, AND BY THE WAY WE
WON'T TELL • YOU WHO IS ENTITLED TO GET NOTICE. HOW DO
I RESOLVE THAT?
MR. !ESQUI•BIAS: YOU HONOR, I HAVE A RESPONSE. I
HAVE A RESOLUTION.
I AM NEW TO THIS CASE. I• WILL MAKE•SURE •THAT
OPPOSING COUNSEL HAS A COPY OF THE TRUST DOCUMENTS,
SO THAT SHE CAN APPRISE THE SITUATION HERSELF. SHE
CAN GIVE NOTICE.
THE COURT: WELL, APPARENTLY, WAS MR. PRASKE
MS. WAKILI: i BELIEVE•HE WAS REPRESENTED BY
MR. CHATFIELD.
THE COURT: • OKAY. •WHAT DO I DO WITH• THAT? •IF HE
WAS R_PRESENTED BY MR. CHATFIELD AT THE/DEP0$ITIONS, ....
-A-ND_I_HI_--_S_gHE_-po_3:I_I_-I-_--TH-A_I_--W-A_I_A-K-DN_----WHAT--DO--I-----
DO WITH THAT?
27 MR. • ESQUIBIAS: _ I DON'T KNOW ANYTHING ABOUT ANY
• 28..DEgOSiTION<S ..I.WASNOTPRESENT, BUT IWILL.TELLTHE
16. i0
1
2
3
4
5
6
7
8
9
I0
ii
12
13
14
15
16
17
18
19
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. SORTOF
LOOKS LIKE THEY ARE JOINED AT THE HIP.
MR. ESQUIBIAS: I VIEW THAT AS PROBLEMATIC, YOUR
HONOR, AND THAT IS WHY --
THE COURT: IN CONNECTION WITH THIS MOTION, THIS
IS NOT A SITUATION WHERE MR. PRASKE, DURING THESE
PRECEDING TIMES, HAS HAD INDEPENDENT COUNSEL.
HE HAS USED MR. GAGGERO AS.coUNSEL, WHICH
SUGGESTS TO ME -- CERTAINLY LEADS TO AN INFERENCE,
THAT THE POSITIONS TAKEN wERE COORDINATED POSITIONS.
AND, WHATI HAVE HERE SUGGESTS, COMING INAT
THIS POINT IN TIME, RAISING ARGUMENTS ORALLY, THAT
WERE NOT IN THE PAPERS, ASSERTING EVIDENCE THAT HAS
- " -_............ _2 0........... PREVIO0SLT BZ_-R_FVSE'D-T0"BE -PRODUCE_ -AND TIYEN .................................
21 SAYING, WELL YOU HAVE GOT TO DELAY IT JUDGE, THIS
22 THAT AND THE OTHER THING.
23 I WANT TO DO ALL THE THINGS THAT MR. PRASKE
.. 24 .... HAS_ NOT_DONE,. WHEN HE. W.AS REPRESENTED BY MR ....
I
--2-5----@A-@G-_R_ -S--C-_UN_L_MI_L-L-S_-L--I-KE--MQ-_E---D E-L-A_ .
26 MR. ESQUIBIAS: I AM NOT SEEKING AN EXTRAORDINARY
27 AMOUNT OF-TIME TO CONTINUES--THIS'_ I THINK-IT COULD
28 BE JUST DAYS IN ORDER FOR THE DOCUMENTS TO BE
17. ii
1
2
3
4
5
6
8
9
10
Zl
12
14
15
16
17
18
19
..................... 2-0 ._
21
22
23
24
..... _-"2-5-
26
27
TRANSFERRED OVER TO OPPOSING COUNSEL.
THE COURT: WHY WAS THIS. NOT BROUGHT OUT IN
ANYTHING UNTIL I ASKED YOU WHAT THE FACTUAL BASIS FOR
THE ORAL ASSERTIONS YOU WERE MAKING?
MR. ESQUIBIAS: ALL I CAN TELL YOU, YOUR HONOR, IS
THAT I HAVE BEEN PRACTICING PROBATE LAW FOR 20 YEARS.
ORAL ARGUMENTS ARE COMMON PLACE. IT IS A DIFFERENT
COURTROOM WITH DIFFERENT SETS OF RULES, AND I
APOLOGIZE THAT I AM NOT FAMILIAR WITH THE CIVIL
COURTS OR THE RULES OF THIS COURT.
BUT, THE FACT REMAINS THAT WE HAVE TO GIVE
NOTICE TO THESE VESTED PRINCIPAL AND INCOME
BENEFICIARIES, 30 DAYS.
THE COURT: I DON'T KNOW THAT THERE ARE VESTED
INCOME AND PRINCIPAL BENEFICIARIES. I HAVE BEEN
DENIED THAT INFORMATION AS DEFENSE COUNSEL HAS BEEN
DENIED THAT INFORMATION.
MR. ESQUIBIAS: I SEEK TODAY TO RIGHT THAT WRONG.
THE COURT: WHAT, IF ANYTHING ELsE ARE YOU
'OFFERIN_-IN-WAY'"OF-INFORNAT'rO__H_T-HAS'BEEN ...............................
PREVIOUSLY WITHHELD?"
MR_ :ESQUIBIAS: IT IS HARD FOR ME TO ANSWER THAT
QUESTION BECAUSE i DON'T KNOW WHAT HAS BEEN
PREVIOUSLY .W_T_HELD_. I .HAVE ONLY BEEN IN. THIS CASE _
THE COURT: I SUSPECT IT HAS BEEN A LITTLE LONGER
THAN TEATF BECaUSE-IT _TOOK SOME TIME-TO PREPARE THE •
28 DOCUMENT,_UNLESS YOUDIDN'T PREPARE IT] ......
i
18. 4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
2O
21
22
23
.... 24
..... 25---
26
27
12
MR. ESQUIBIAS: I BELIEVE ALL THE INFORMATION
CONTAINED IN THE TRUST INSTRUMENTS AND PERHAPS
FUNDING DATES OF THE ASSETS IN THOSE TRUSTS WOULD BE
SUFFICIENT. I DON'T KNOW OF ANY OTHER INFORMATION
THAT WOULD BE REQUIRED FOR THIS COURT OR OPPOSING
COUNSEL TO MAKE THE CONCLUSION THAT THE ASSETS ARE
UNREACHABLE.
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
INFORMATION THAT IS EITHER AGREED UPON BETWEEN MYSELF
AND OPPOSING COUNSEL OR IF WE COULD NOT COME _ TO SOME
TYPE OF AGREEMENT, WHATEVER THIS COURT WOULD
DETERMINE TO BE RELEVANT.
. • THE _cOURT: HOW WOULD I KNOW WITHOUT YOU PROVIDING
EVERYTHING? I HEAR AT BEST A CONTINGENT OFFER.
MR. ESQUIBIAS: I PLAN TO HAVE A MEET AND CONFER
WITH OPPOSING COUNSEL TO FIND OUT WHAT IN PARTICULAR
THEY ARE INTERESTED IN KNOWING ABOUT THESE TRUSTS,
THE DOCUMENTS THEMSELVES, I KNOW IN MY MIND WHAT
INFORMATION THEY NEED.
I REMAIN OPEN TO PERSUASION FROM OPPOSING
. .COUNSEL AS TO ADDITIONAL INFORMATION .....
--M_-._CH-A?F_I-_L-D --
MR. CHATFIELD: WELL, YOUR HONOR, AN ISSUE THAT
LOOMS OVER THISIS THAT, WHAT-THE DE_END_NTS-SEEK TO
28 D0 H_E IS iMP E-RMISSIBLE OUTS_IDE REVERSE PIERCING.
19. 13
1
2
3
4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
THE COURT: I READ THE ARGUMENTIN DETAIL , AND I
READ THE AUTHORITIES, AND FRANKLY. I AM NOT PERSUADED
BY THAT. IT IS WELL ESTABLISHED THAT YOU CAN PIERCE
IF THE TRUST IS -- IF ONE OR MORE OF _HE TRUSTS, FOR
EXAMPLE, IS AN ALTER EGO OF MR. GAGGERO, THE CASE LAW
IS WELL ESTABLISHED THAT YOU CAN GO IN TO THE TRUST.
YOU DON'T NAME THE TRUST. YOU HAVE TO GO AT IT
THROUGH THE TRUSTEE, BUT I DON'T THINK THERE IS A LOT
OF DOUBT ABOUT THAT, AND THE CASE ONE OR MORE RECENT
CASES ON THIS IS GREENSPAN, G-R-E-E-N-S-P-A-N
V-L-A-D-T LLC, 191 CAL APP. 4TH, 486, AND THAT HAS A
GOOD DEAL TO SAY ABOUT THIS.
AND, IF YOU, YOU KNOW, THE BASIC PARAMETERS
OF AMENDING THE JUDGMENT AREARTICULATED IN HALL,
H-A-L-L G-O-O-D-H-U-E, H-A-I-S-L-E-Y, AND BARKER
VERSES M-A-R-C-O-N-I CONFERENCE CENTER BOARDr 41 CAL
APP. 4TH, 1551.
AND THERE IS A BUNCH OF OTHER CASES THAT
APPLY ON THIS.
.................. 2.() .............. M-Rq-C-_t/_TF-I_.SD-: ..... WE-LL-_ Y0*UR-H-ONOR, -_ A_S Y-0-U I4-N_W FROi_/
21
22
23
. . 24.
Z5--
26
• 27
HAVING ENTERED THE AWARD APPROVING THEARBITRATION IN
THAT GREENSPAN CASE, THAT THE COURT ON PAGES 513
THROUGH 514 OF GREENSPAN STATED THAT IN POSTAL
INSTAk4T_PRESS VERSUS KAZQ CORP ITHE C O.URT QF APPEAL ..
--HDL-D--T-H-_T--OUTS-I-D-E--R-DVE_E_-_IE-R_X-N_,--OF--_H-E--CO-R-POR-A_E----
VEIL IS NOT PERMITTED IN CALIFORNIA.
......... THATIS, THE CORPORATE VEIL-WILL NOT BE *
20. 14
6
7
8
9
i0
11
12
1i
14
15
16
17
18
19
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: AT THE VERY NEXT SENTENCE, YOUR
HONOR, IT SAYS THIS CASE DOES NOT INVOLVE OUTSIDE
REVERSE PIERCING. AND WHY IS THAT? BECAUSE THE
JUDGMENT WAS AGAINST TWO ENTITIES, AND THEY WERE
SEEKING TO BRING INDIVIDUALS IN AS ADDITIONAL
JUDGMENT DEBTORS. NOT --THIS WAS NOT A CASE WHERE
THERE WAS A JUDGMENT AGAINST AN INDIVIDUAL, AND THEY
WERETRYING TO GO AFTER THE TRUST.
"'" THE. CouRT: THIS I-S A SITUATION WHERE, KPC .IS
SEEKING TO HOLD THE SPECIALLYAPPEARING PARTIES
LIABLE-FOR GAGGERo'S DEBT WHERE THEY ARE ALLEGED TO
BE THE ALTER EGOS OF GAGGERO.
MR. CHATFIELD: THAT IS TYPICAL OUTSIDE REVERSE
.........................20 .... P-IE RC IN G: ........THER-E -IS "NO '_THER-TERM "_- THaT [....._N D- IT ......................
2i IS NOT RECOGNIZED IN THE STATE OF CALIFORNIA. I HAVE
22 PROVIDED YOU WITH AUTHORITYON THAT, PLUS THERE ARE
23 AT MY LAST VIEW, 24 OTHER UNPUBLISHED DECISIONS WHICH
.... 2_4 .._STATE EXACTLY THE_SAME _THING...YOU .CANN.QT .IMPOSE
25--_-B_/I-TY--_ND--B-_I-_G--I-N-_N-TTTTE_--TO--SgfI_ISi_Y--A-N
........... [ - .
26 INDIVIDUAL'S DEBT. AND EVEN IF THE STATE RECOGNIZED
27 OUTSIDEREVERSE PIERCING;WHICH ITDOESN-'T, YOU'WOULD
2_8 HAVETO GO .gHKOUGZ;AN A_DI_ZONAL ANALYSIS WHICH THIS
21. 5
6
7
8
9
I0
ii
12
13
14
15
16
17
18
19
2O
21
22
23
24
2-5--
26
27
15
COURT DISP'OSEDOF IN ITS OWNSTATEMENTOF DECISION.
THE COURT: I KNOWWHEREYOU ARE GOING ON THAT.
GO AHEAD AND SAY IT. YOU ARE WRONG,BUT I KNOWWHERE
YOU ARE GOING. BECAUSE I READ IT IN YOUR PAPERS.
YOU ARE SUGGESTINGTHAT THE FACT THAT AT TRIAL
MR. GAGGEROPUT ON NO EVIDENCE THAT HE WAS SUING ON
BEHALF OF PCM TO RECOVERTHE ATTORNEY'S FEES, IS
SOMEHOWDISPOSITIVE. IT IS NOT. THAT WASA COMMENT
ON THE FAILURE OF MR. GAGGEROTO PRODUCECERTAIN
EVIDENCE IN THE TRIAL WHENIT WASDIRECTED TO THE
ISSUE OF DAMAGES, HIS DAMAGESTHAT HE WAS CLAIMING
AGAINST KNAPP PETERSEN & CLARKE SO, You KNow. I SAW
WHATYOU SAID IN YOUR PAPERS, AND I AM SORRYIT IS
NOT --
MR. CHATFIELD: WHATI AM SAYING IS SOMETHINGA
LITTLE DIFFERENT.
I AM GOING BY YOUR FINDINGS OF FACT, AND YOU
STATED ON PAGE 16 OF YOUR STATEMENTOF DECISION THAT
UNLESS OTHERWISESPECIFICALLY STATED, THE FACTS SET
....F0-RTH-BELbW-_-REEYTHER-U-N-DISPOTE0"OR_EPRESENg-THOSE........
WHICH THE COURTFINDS TO BE TRUE BY THE PREPONDERANCE
OF THE CREDIBLE EVIDENCE, AND THEN IN THE FINDINGS OF
FACT ON PAGE 18, THE COURTSTATED THAT IN 1995 AND
.1996 GAGGER0...DIDEXTENSIVE ESTATE.PLANNING WHICH.
--_U-_T_-D--I-N--A-_-L--_F--H_-_--FDR-SO-N-AL--A-S-S-ETS--B-_I_G-
TRANSFERREDTO VARIOUS CORPORATIONS,TRUSTS
FOUNDAT-IONS. ................................................
22. 16
5
6
7
8
.9
io
ii
12
13
14
15
16
17
18
19
AND NO CONTROL.
THE COURT: IS THERE A DOT DOT DOT IN THERE? DID
YOU OMIT SOME OF THE WORDS THAT I PUT IN THERE?
MR. CHATFIELD, DID YOU OMIT SOME OF THE WORDS THAT
WERE IN THE ORIGINAL, IN THE STATEMENT OF DECISION?
MR. CHATFIELD: I AM SUMMARIZING THAT.
THE COURT: YES, BECAUSE YOU ARE OMITTING FOR THE
PURPOSE -- THERE IS SOMEWHERE IN THERE FOR THE
PURPOSE OF TRYING TO SHIELD THEM FROM CREDITORS.
MR. CHATFIELD: ACTUALLY, WHAT THE COURT SAID
RELATING TO CREDITORS WAS, THAT ALTHOUGH GAGGERO USED
THREATS, BLUSTERS AND ULTIMATUMS TO. ATTEMPT TO
DISCHARGE THE KNBC CREDITORS --
THE COURT: I SAID OTHER THINGS. I SAID OTHER
THINGS.
MR; CHATFIELD: "YOU ALSO SAID THAT KNBC'S' CLAIM
WAS PAIDEARLY IN 2002 BY FULL PAYMENT PLUS INTEREST
AND AWARDED ATTORNEYS FEES, AND YOU ALSO STATED THAT
THE'SLOCOM CLAIM WAS WITHDRAWN AND DISMISSED.
.................... 20 ................ TH:E--COUR_r i .... NOW,- S rR,- T-H_T--HAS-_O_rH_G -TO--DO-WITH .....
21 THIS CASE THAT HAS NOTHING TO DO WITH THE ISSUES
22
23
2_4.
2-5--
26
....27
i
" 28 MR. CHATFIELD: YES. :.KPC HAS NOT MET ITS BURDEN
BEFORE THE COURT" THE STATEMENT OF DECISION THE
COURT ENTERED, WHICH HAS BEEN AFFIRMED BY THE'COURT
.0_ .APPEALS.,. IS NOT DISPOSIT!.VE OF ANY ISSUE .BEF.0RE .............
_H-E--t-_D_-Rq_ODA_. --.
IF -- IS THERE ANYTHING ELSE YOU WOULD LIKE
TO SAY. ................................
23. 17
1
2
3
4
5
6
7
8
9
i0
II
12
13
14
_5
16
17
18
19
2O
21
22
23
24
26
27
OF SHOWING THAT THE BUSINESS ENTITIES OR PRASKE WERE
GAGGERO ALTER EGOS. KPC PRESENTED NO EVIDENCE THAT
THE BUSINESS ENTITIES OR PRASKE'S CONTROLLED THE
LITIGATION OR WERE VIRTUALLY REPRESENTED IN THE
ACTION. IN FACT --
THE COURT: DOES THE FACT THAT THEY -- IT LET ME
START OUT WITH THIS PREDICATE, MR. CHATFIELD, I THINK
THAT THEY HAVE MADE A PRIMA FACIA CASE THAT THESE
ENTITIES ARE ALTER EGOS OF MR. GAGGERO. AND IF I DO
THAT, THERE IS NO DOUBT THAT MR. GAGGERO cONTROLLED
THE UNDERLYING LITIGATION. THESE ARE NOT INDEPENDENT
ENTITIES AS I SEE THEM. AND IF THEY ARE ALTER EGOS
OF MR; GAGGERO, AND MR. GAGGERO cONTRoLLED THE
LITIGATION WHICH HE uNDouBTEDLY DID, THEN WHAT?
MR. ESQUIBIAS: YOUR HONOR, IF I MAY RESPOND.
THE COURT: NO, MR. CHATFIELD CAN RESPOND TO THIS..
HE WAS ONE OF THE ATTORNEYS WHO REPRESENTED
MR. GAGGERO DURING THE TRIAL PROCEEDINGS OR IN POST
TRIAL.
...........MR]-- CHATF-I ELO i.....i,'- FfRS T -OF- A-LL/--FAiL ""TO .......................
UNDERSTAND HOW THE COURT HAS REACHED THE CONCLUSION
THAT ALL OF THEELEMENTSOF ALTER EGO HAVE BEEN
FULFILLED WITHOUT ANY EVIDENCE SUPPORTING IT WHEN WE
i .HAVE PROVIDED THE CO:UR_ .WITH.DECLARA_.ION$_. .AND. ALSQ .....
I---THE--DDFE;NOANTS--N_-_E--PROVq-D_D_I_HE--CO-_R-T--_ITH--_V-I-DDN-CE ---
......................... ] ...........................................
AS TO THE CORRECTNESS OF THE SETUP OF THE PARTICULAR
ENTITIES =a TRE STATUSOF THE ENTITIESAS BEING-IN-
28 GOOD S_AND_N-G ZN _HE STATE OF-CAL2FOR:NIA, THAT THE
24. 18
1
2
3
4
5
6
7
8
9
i0
Ii
12
13
14
15
16
17
18
19
2O
21
22
23
_24
....... 2-5-
26
27
ENTITIES HAVE -- IT IS IN THE DECLARATIONOF
MR. PRASKE THAT IS IN MR. ESQUIBIAS'S BRIEF, THAT THE
COMPANIESARE SEPARATEAND DISTINCT FROMMR. GAGGERO,
AND THAT THERE IS NO EVIDENCE TO SUPPORTTHE
CONCLUSIONOTHERWISE.
AND AGAIN, EVEN IF THEY WERETO BE FOUNDTO
BE THE ALTER EGO, YOU CANNOT TAKE A JUDGMENT AGAINST
AN INDIVIDUAL AND DO OUTSIDE REVERSE PIERCING TO ADD
ENTITIESAS NEW JUDGMENT DEBTORS.
THE COURT: WELL, YOU KNOW, THE EXHIBITS ATTACHED
TO THE MOTION CONTAIN TESTIMONY OF BOTH MR. GAGGERO
AND MR. PRASKE SHOWING THAT THE ONLY INTEREST OF THE
SPECIALLY APPEARING PARTIES IS TO PROTECT i00 PERCENT
OF MR. GAGGERO'S ASSETS, BOTH PERSONAL AND BUSINESS.
PRASKE IS THE ONLY TRUSTEE OF THE TRUST AND
FOUNDATION INVOLVED IN THE MOTION. HE IS ONE OF ONLY
TWO OFFICERS IN PCM_ PCM PAYS EVERYTHING AT
GAGGERO'S WISHES WITHOUT RESISTANCE OR HESITANCE.
PRASKE IS ALS0 THE REGISTERED AGENT FOR SERVICE'OF
-PR b C-ES S- AT _EACH-0F -T HE _B USI N E S S -E-NTI TiE_ _.....K PC' _..........................
EVIDENCE SHOWS THAT MR. GAGGERO'S OWN ACCOUNTANT.
TESTIFIED UNDER PENALTY OF PERJURY THAT THE GAINS AND
LOSSES FOR THE ASSETS AND THE ESTATE PLAN, ULTIMATELY
FLOW T_HROUGH_MR ....GAGGERO'S TAX RETURNS, W_IC__ _S M_OR_.
--E-V_-D-DNCE--O_F--A-_T_E-R--E-GO--S_f-_T_S-"
GAGGERO CONTROLLED THE LITIGATION. HE DID SO
BY THE WAY OF THE-FINANCIALASsETs OF THE SPECIALLY .....
28 APPEARING PARTIES. THEIR INTERESTS ARE AL_-G_EO WITH
25. i0
ii
12
13
14
15
16
17
18
19
2O
21
22
23
24-
2-5-
26
27
28
19
MR. GAGGERO. WITHOUT THEM --.WITHOUT MR. GAGGERO
THEY WOULDN'T EVEN EXIST. MR. PRASKE TESTIFIED THAT
THE SOLE PURPOSE OF THE EXISTENCE OF THE SPECIALLY
APPEARING PARTIES IS TO HOLD MR. GAGGERO'S ASSETS.
THEY ARE ONE IN THE SAME. THAT IS THE BOTTOM LINE.
MR. CHATFIELD: WELL, YOUR HONOR, I DON'T KNOW
WHERE YOU ARE GETTING THIS.
THE COURT: YOU MEAN OTHER THAN THE EXHIBITS, YOU
KNOW, IF I WERE INCLINED, WHICH I AM NOT, I COULD GO
DOWN AND SITE THE PAGE AND LINE NUMBERS OR PAGE
NUMBERS IN THE EXHIBITS WHERE THE DIFFERENT
COMPONENTS OF THAT FLOW FROM, BUT, YOU KNOW, I AM NOT
INCLINED TO DO THAT.
MR. CHATFIELD: WELL, YOUR HONOR, I HAVE LOOKED AT
THE PAGE AND LINE NUMBERS AND THE TESTIMONY WHICH IS
ATTACHED TO THE MOTION, AND I HAVE SEEN THAT THE
QUOTATIONS IN THE MOTION AND IN THE REPLY BRIEF ARE
NOT WHAT THE PEOPLE ACTUALLY SAID.
FOR EXAMPLE, A QUESTION WAS ASKED --
............._'_-" _b _R_-i .......f- _- _E-/_R R_N_ _ THE-EXH IB_'¢_ .....................................
THEMSELVES. I READ THE EXHIBITS.
MR. CHATFIELD: AS I.SAID, THE MOTION TAKES
MR. PRASKE'S TESTIMONY OUT OF CONTEXT.
....THE COURT: .WHAT ASPECT OF MR. PRASKE'S T_$T_QNY ......
_A-KEN--OUT_F--CONT£X.TCZ--GTV_M-5_'f_E--EXIiq-_D
PAGE AND LINE NUMBERS YOU THINK ARE TAKEN OUT OF
'CONTEXT. " • ............................ ..........
......... •_. _ ............................................................................ •.............
' " -MRs ESQUiBIAS: YOUR HONOR, IF ._ -MAY INTER_RUPT.
26. 2O
1
2
3
4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
..................... "- --2-0- .L
21
22
23
_24
26
.... 27
w- ...............
28
THE COURT: THIS IS MR. CHATFIELD'S ARGUMENT.
MR. ESQUIBIAS: HE IS ARGUING ABOUT SOMETHING
ABOUT MY CLIENT WHO I REPRESENT.
THE COURT: HE IS ARGUING ABOUT SOMETHING FROM
WHEN HE REPRESENTED YOUR CLIENT. ARE YOU TALKING
•ABOUT THE TESTIMONY IN THE JUDGMENT DEBTOR EXAM?
MR. CHATFIELD: NO, YOUR HONOR.
THE COURT: WHICH TESTIMONY ARE YOU TALKING ABOUT
IN THE URA CASE?
MR. CHATFIELD: YES, YOUR HONOR, AND TELL ME --
I DID NOT REPRESENT HIM IN THE URA CASE, YOUR
HONOR.
THE COURT: wHOM DID YOU REPRESENT, MR. GAGGERO?
MR. CHATFIELD: NO, I WAS NOT. I WITHDREW AS
ATTORNEZ OF RECORD IN THAT CASE PRIOR TO TRIAL.
MR. BOSWICK REPRESENTED MR. GAGGERO.
THE COURT: WHAT IS THE• PORTION OF THE TESTIMONY
THAT YOU THINK WAS TAKEN OUT OF CONTEXT, SIR?
MR. CHATFIELD: WELL --
.................._HE-COURT{ ......I--HAVE!THEEXHIBITS-R_HTHE_. ....................,....
MR. CHATFIELD: IN EXHIBIT G.
THE COURT: THE PRASKE CROSS-EXAMINATION
JUNE 13TH, 2005.
. . .MR. CHAT FIELO:
---1-0131.
THE COURT JUST A MINUTE. I AM TRYING TO FIND
THIS. ............
M_. _A_F_LD: ALL RIGHT.
THE .QUEST.ION WAS_ ASK__D..QN [_AGE ...........
27. ,'3 _ '_
21
1
2
3
4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
21
22
THE COURT: I HAVE PAGE i001. •
MR. CHATFIELD: WELL, STARTING ON PAGE 1000 GOING
THROUGH I001. MR. PRASKE TESTIFIED THAT MR. GAGGERO
MAKES RECOMMENDATIONS TO HIM, BUT THAT MR. PRASKE •IS
THE ONLY ONE THAT CAN MAKE THE DECISIONS. AND IF YOU
GO --
THE COURT: BUT MR. -- PAGE i000 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
IS THE TRUSTEE, BUT MR. GAGGERO IS THE MANAGER, AND
HE TELLS MR. PRASKE WHAT HE WANTS TO DO.
MR. CHATFIELD: THAT IS NOT THEWAY I READ THE
TESTIMONY. I READ THE TESTIMONY TO SAY THAT
MR. GAGGERO IS ONE OF• THE PEOPLE WHO WORKS AT THE
MANAGEMENT COMPANY AND MAKES RECOMMENDATION TO
MR. PRASKE, AND MR. PRASKE MAKES THE DECISION AS TO
WHAT TO DO.
THE COURT:
QUESTION: PAGE 1,000, LINE 22.
..................... _OWMR:---G_GGE_O-CbN-E_TO-Y___NO_NYS_"HEYI ..................
WANT TO BUY THIS GREAT PIECE OF PROPERTY.
WHAT SHOWING MUST MR. GAGGERO MAKE TO YOU IN
23
24 ............
26
ORDER TO SATISFY YOU AS THE TRUSTEE WITH
FIDUCIARY D_TIES,_THAT ! AM G0_NG_TQ RELEASE
FU-N-D-_--FO-_H-_T--PTE_C-E_OI_-pR_9_R_y_
ANSWER: .SUCCESSFUL HISTORY OF
27 - MAKI'NG "POSITIVE} SUCCESSFUL ..........
28 TRANSACTIONS_
28. 22
1
2
3
4
5
6
7
8
9
I0
ii
•12
13
14
15
16
17
18
19
21
22
.23
24...
i
25
26
27
QUESTION: THAT IS IT?
ANSWER: THAT IS THE MOST IMPORTANT
THING.
QUESTION: SO, MR. GAGGEROSAYS I
WANTMONEYAND YOU SAY, HOWMUCH?
ANSWER: WELL, NO.
QUESTION: SO wHAT IS THE PROCESS?
ANSWER: IF IT IS WITH REGARDTO
MAKING INVESTMENTSFOR THE BENEFIT
OF THE TRUST, HE MAKES A
RECOMMENDATIONON A PROPERTY
INVESTMENT. I WILL FOLLOW_THAT
RECOMMENDATION.
WHAT IS OUT•OF CONTEXT?•
MR. CH•ATFIELD: WHATIS OUT OF CONTEXTIS THAT
MR. GAGGEROIS NOT•THE DECISION MAKER. THE TRUSTEE
IS THE DECISION MAKER.
THE COURT: MR. PRASKE IS FORALL INTENTS AND
PURPOSESA RUBBERSTAMP.• AND THE TESTIMONY THAT YOU
....D_-RZCT_D--_ME--TO-C-O._.Fy_MS--T_T:IF-HE--MAKES_-THE.......................................
RECOMMENDATION,MR. PRASKE DOES IT. IT.IS A LITTLE
HARD TO INTERPRET THAT LANGUAGE ANY OTHER WAY.
MR. cHATFIELD: WELL, HE GOES ON TO SAY ON THAT
PAGE _HAT QN-LINE 14.LINE !5 IT SAYS 7.- ...........
Q-_-T_ONz--I--A-M--q_Y-hN_S_-I-N_M-y--Q_N ........
MIND TO DISTINGUISH THAT DIFFERENT
........ FROM-M_:'"GA@OERO SAYIN@ I WANTMONEY ......
28 . AND YOU .SAYING ;HOW-MUCH, BECAHSE -_- . .... i.
29. 4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
2O
21
22
23
.......... 24.
-2-5--
26
27
.z
23
AND THEN ANSWER IS BECAUSE AND
THEN --
QUESTION: WHY ARE YOU DRAWING A
DISTINCTION BETWEEN THOSE TWO?
ANSWER: BECAUSE IF HE CAME TO ME
AND sAID I WANT $2,000,000 TO SPEND
IN LAS VEGAS. I MIGHT SAY NO. IN
OTHER woRDs IT HAS TO BE FOR THE
BENEFIT OF THE TRUST?
ANSWER: YES.
QUESTION: YES?
ANSWER: YES.
THE COURT: OKAY. SO, I WANT THE -- GAGGERO SAYS
I WANT THE TRUST TO BUY THIS PROPERTY AND MR. PRASKE
SAYS YES,'SIR, YES, 'SIR, THREE BAGS FULL AND SIGNS
THE CHECK.
MR. CHATFIELD: THAT IS NOT NECESSARILY SO, YOUR
HONOR, ALTHOUGH --
THE COURT': WHAT ABOUT MR. PRASKE'S TESTIMONY
MR_ CHATFIELD: HIS TESTIMONY IS THAT MR. GAGGERO
MAKES THE RECOMMENDATION, AND HE MAKES THE DECISION
IT IS NOTHING IN THEiE THAT SAYS THAT.
. THE COURT: ...._HA_ DO YOU DO THEN, SIR, WITH THE .........
_-yRE_X_-A-N-S-WE_? -
QUESTION: SO WHAT IS THE PROCESS?
...... _NSWER_ iF IT IS REGARD TOMAKING
.................................... ............................................. =...................... z...................
-28 INVESTME.NTS -FOR ..THE. BENE.FIT0F. THE . . "
30. 24
1
2
3
4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
21
22
23
....... 2.4
---- 2-5--
26
2?
TRUST, AND HE MAKESA RECOMMENDATION
ON A PROPERTYINVESTMENT, I WILL
FOLLOWTHAT RECOMMENDATION. SOUNDS
LIKE NO EXERCISE OF DISCRETION BY
MR. PRASKE. HE SAYS DO IT, YOU
KNOW, IT IS LIKE, YOU KNOW--
MR. ESQUIBIAS: .I COMPLETELYDISAGREE, YOURHONOR.
THE COURT:. WHENMR. GAGGEROSAYS JUMP, MR. PRASKE
SAYS HOWHIGH ON HIS WAY UP.
MR. ESQUIBIAS: AS A PERSONSITTING HERE LISTENING
TO THE STATEMENTSNOT INVOLVED IN THE DEPOSITION --
THE COURT: THAT IS TRIAL TESTIMONY, SIR. THIS IS
TRIAL TESTIMONY.
MR. ESQUIBIAS: AS A PERSONLISTENING TO TRIAL
TESTIMONY, I CAN TELL YOU IT SOUNDSLIKE HE DOES
EXERCISE DISCRETION THAT HE DETERMINESWHETHERIT IS
FOR THE BENEFIT OF THE TRUST.
THE COURT: DO YOU HAVE ANY DIFFERENT POINTS YOU
WISH TO MAKE, MR. CHATFIELD? THE ONLY.REASONWE
YOU POINTED ME TO. THERE ARE OTHER -- THEREARE
PLENTY OF OTHERSTUFF.
MR. CHATFIELD: WELL, YOUR HONOR, I DISAGREETHAT
THE. EV!DENCE.SHDWS.ALTEREGO.,AND..AGAIN,: IIS_ATE THAT
--DV-EN--I-F--IT--DTD_OW--kL_-DR---DGOT-?H-E--O_L-Y-_A-Y--YO-U--CA-N....
PIERCE IN TO THE ENTITIES IS THROUGHOUTSIDE REVERSE
ALTER EGO WHICH IS-NOT- PERMITTED IN THE-STaTE OF.............
.... d
32. 26
1
2
3
4
5
6
7
8
9
i0
Ii
12
13
14
15
16
17
18
19
......................... 2_ 0_...
21
22
23
........ 24
AND CLEARLY, CLEARLY, IT WOULD BE INEQUITABLE NOT TO
PIERCE THE VEIL -- NOT TO GET OUT THESE ENTITIES
WHICH ARE HIS ALTER EGO. SINCE HE HAS THIS
SUBSTANTIAL JUDGMENT AGAINST HIM, AND HE HAS
ATTEMPTED TO USE THESE DEVICES TO PUT HIS ASSETS
BEYOND THE REACH OF LEGITIMATE CREDITORS, AND WE HAVE
HAD A FULL AND FAIR OPPORTUNITY TO LITIGATE THIS.
I AM NOT RESPONSIBLE FOR.WHEN MR. PRASKE GETS
NEW COUNSEL. I AM NOT RESPONSIBLE FOR WHAT ARGUMENTS
NEW COUNSEL MAKES OR DOESN'T MAKE IN HIS OPPOSITION.
I KNOW AT THE MOMENT THERE IS ZERO EVIDENCE
TO SUPPORT, ZERO EVIDENCE IN THE RECORD TO SUPPORT
THE POSITION THAT THERE IS A PLETHORA OF -- I DON'T
KNOW WHO THESE PEOPLE ARE.
AND IN FACT, I DO KNOW THAT MR. PRASKE WAS
EXTRAORDINARILY VAGUE WHENHE WAS QUEsTIONED AT TRIAL
ABOUT THE IDENTITIESOF THESE BENEFICIARIES-SUPPOSED
BENEFICIARIES.
YOU KNOW, THE DECISION WAS MADE LONG AGO TO
..... _p-.--TH_--TRU_--DOCUMENT_--_UT-._F.-TH_E-H_ND_.-OF-THE ..............................
DEFENSE, AND NOW TO TRY AND INVOKE THE TERMS OF IT,
YOU KNOW, WITHOUT GIVING IT TO THE OTHER SIDE. HAVE
IT, YOU KNOW -- THERE IS.A LITTLE BIT OF AN ANALOGY,
..Hg_$.,_ TO TH_ A$$ERTI.ON OF_.THE ATTORNEY-CLIENT ..............
---P-R-_V_L-_ @_E-- @EN-_A_--_H-L-E_S---TH-AT--TH-E
ATTORNEY-CLIENT PRIVILEGE CANNOT BE ASSERTED AS BOTH
'-k'SWORD'AND A-SHIELD-,-AND--I'F "YOU-"IN-PRETRTAL ........
28 DISCOVERY ASSERT- THE ATTORNEY_CLIENT/PP_IVILEGE, TO
33. 27
l
2
3
4
5
6
7
8
9
I0
Ii
12
13
14
15
16
17
18
19
......................... 20 ....
21
22
23
.... 24.
-25--
26
27
--_-E--CO-U-R_:--_NIg--MR_A_@ER-C_--I-_H_E--ON_E--W_H-Q_ET--H_ -
THIS SYSTEM, AND MR. GAGGERO IS THE GUY WHO IS -- YOU
KNOW,--TEIS -IS W_AT HE-DID._ _NDHE-DID IT FOR-THESE -
" 28"" .[PO_P'OS_.'.....H'E TOLO-ME SO,_ IN-THE TRIAL,.T0:.SHIELD HIS ".
PROTECT CERTAIN THINGS AGAINST DISCLOSURE, ORDINARILY
YOU ARE NOT GOING TO BE ALLOWED TO ALL OF A SUDDEN AT
THE LAST MINUTE, DROP IT AND SAY BOY OH BOY, NOW WE
HAVE GOT ALL THIS STUFF, WE KNOW WE HAVEN'T TOLD YOU
ABOUT IT BUT WEARE NOW MAKING THE DECISION.TO WAIVE
IT. THAT IS ONLY AN ANALOGY, I HAVE GOT TO TELL YOU
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
THESE HOOPS TO COLLECT THE JUDGMENT AND SAYING NO, NO
YOU CAN'T HAVE X, Y, AND Z, AND THEN COMING IN AT THE
LAST'MINUTE MAKING ARGUMENTS NOT SET FORTH IN THE
PLEADINGS WEIGHS ON EVIDENCE, NOT BEFORE THE COURT
AND SAYING JUDGE GIVE US A DO OVER.
THERE IS A FUNDAMENTAL UNFAIRNESS TO THAT.
MR. cHATFIELD: WELL, YOUR HONOR, i WOULD
RESPECTFULLY WOULD SAY THAT THE REASONING BEHIND IS
THERE IS A FUNDAMENTAL UNFAIRNESS FOR BRINGING IN
OTHER PEOPLE WITH OTHER INTERESTS WHO DIDN'T ATTEND A
THE COURT: MR. GAGGERO CONTROLS THESE ENTITIES.
THEY ARE HIS ALTER EGO, THE EVIDENCE FIRMLY PERSUADES
THE COURT OF THAT.
. MR ....ESQUIBIAS: _OUR HONQR,.'_.WO_L_ T_NK THAT._ ..........
34. 28
1
2
3
4
5
6
7
8
9
i0
ii
12
13
14
15
16
17
18
19
21
22
23
...... 24
2-5-
ASSETS FROMCREDITORS. I BELIEVE THAT WASHIS
TESTIMONY ON CROSSEXAMINATION AT THE TRIAL IN THIS
CASE.
MR. CHATFIELD: I BELIEVE THAT IS INCORRECT, YOUR;
HONOR. THAT WAS YOURCONCLUSION, BUT WHAT I DON!T
UNDERSTANDIS HOWWITHOUTANY EXAMINATION OF THESE
ENTITIES PACIFIC COASTMANAGEMENT,511 OCEANFRONT
WALK LP, GINGERBREAD COURT LP, MALIBU BROAD BEACH LP,
MARINO GLENCO LP, BLU HOUSE LLC AND BOARDWALK SUNSET
LLC, HOW YOU CAN DETERMINE THAT THEY ARE ALL HIS
ALTER EGO.
THE COURT: THE MOTION IS GRANTED.
THE ORDER .HAS BEEN SIGNED. DEFENSE TO GIVE
NOTICE. THANK YOU.
/ 26 -
27
28
35. /
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
DEPT. LA 24 HONORABLE ROBERT L HESS, JUDGE
STEPHEN GAGGERO, AN INDIVIDUAL;
PLAINTIFF,
CASE NO.
-VS- BC286925
REPORTER 'S
KNAPP, PETERSEN & CLARKE, CERTIFICATE
DEFENDANTS.
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
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,
1-28 COMPRISE A FULL, TRUE, AND CORRECT TRANSCRIPT OF THE
PROCEEDINGS HELD ON MAY• 29, 2012, IN DEPARTMENT 24 OF THE
LOS "ANGELES COURT IN THE MATTER OF THE ABOVE-ENTITLED CAUSE.
DATED THIS 10TH DAY OF JULY, 2012
37. 6
7
8
9
10
11
12
13
14
I5
16
17
18
19
20
21
22
23
24
25
26
27
28
DAVID A. ESQUIBIAS, SBN 171327
TRACY H. KITZMAN, SBN 217224
LAW OFFICE OF DAVID A. ESQUIBrAS
2625 Townsgate Road, Suite 330
Westlake Village, California 91361
Telephone: (805) 267-1141
Facsimile: (805) 267-1140
Attorneys for Specially Appearing Parties
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
STEPHEN M. GAGGERO,
Plaintiff,
KNA_PP, PETERSEN & CLARKE; STEVEN
RAY GARCIA; STEPHEN M. HARRIS;
ANDRE JARDINI; and DOES I through 50,
inclusive,
Defendants.
CASE NO.: BC286925
Filed: December 12, 2002
Assigned For All Purposes To:
Hon. Robert L. Hess
Dept. 24
NOTICE OF SPECIAL APPEARANCE
TO OPPOSE AND OPPOSITION TO
DEFENDANTS' MOTION TO AMEND
JUDGMENT; DECLARATION OF
JOSEPH PRASKE
Date: May 29, 2012
Time: 8:30 a.m.
Dept: 24
OPPOSITION TO MOTION TO AMEND JUDGMENT
38. 6
7
8
9
10
11
12
13
14
15
16
17
18
19
2O
21
22
23
24
25
26
27
28
TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD:
NOTICE IS HEREBY GIVEN THAT 511 OFW LP; Gingerbread Court LP; Malibu
Broadbeach LP; Marina Glencoe LP; Blu House LLC; Boardwalk Sunset LLC; Pacific Coast
Management; Joseph Praske, trustee, of the Giganin Trust; Arenzano Trust; and Aquasante
Foundation are making a special appearance in this matter to oppose the Motion to Amend
Judgment filed by defendants K.napp, Petersen & Clarke, Steven Ray Garcia, Stephen M. Harris,
and Andre Jardini ("KPC") on the following grounds:
1. The Court does not have the authority to add the Entities to the judgment against
Stephen Gaggero in this matter because California law does not permit outside reverse piercing;
2. Even if California law permitted a judgment creditor to add third party entities to a
judgment against an individual defendant through outside reverse piercing, which it does not, the
Entities are not the alter egos of Stephen Gaggero;
The Entities and Stephen Gaggero are not identical entities, but rather separate and.
distinct;
4.
5.
The Entities did not control the litigation between Stephen Gaggero and K.PC;
Stephen Gaggero did not represent the interests of the Entities during any stage of
the litigation; and,
6. It is inequitable to add the Entities to the Judgment, subjecting the assets of the
Entities to judgment enforcement, without having been given the requisite notice and opportunity
to be heard to protect their interests at any stage in the litigation.
Consequently, the Court should deny this motion.
This Opposition is based on this Notice and Opposition, on the attached Memorandum of
Points and Authorities and Declaration of Joseph Praske, on the Opposition and Request for
Judicial Notice filed by plaintiff, on the complete court files and records in this action, and on any
such other oral or documentary evidence and argument as may be presented at the hearing.
DATED: May 15, 2012
By:
Da'
_ecially Appearing Parties
i
OPPOSITION TO MOTION TO AMEND JUDGMENT
39. 6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
1
2 I.
3 LI.
4
5 III.
IV.
TABLE OF CONTENTS
SUMMARY OF ARGUMENT ............................................................................................. 1
STATEMENT OF FACTS BASED UPON EVISDENCE SUBMITTED IN
SUPPORT OF THE MOTION AND AUGMENTED BY THE DECLARATION
OF JOSEPH PRASKE .......................................................................................................... 2
CALIFORNIA LAW PROHIBITS THE ADDITION OF THE ENTITIES TO THE
JUDGMENT AGAINST GAGGERO .................................................................................. 4
A. The Motion Must Be Denied Because California Law Does Not Allow
Imposition of Liability on An Entity That Was Not A Party To The Action ................ 4
B. The Motion Should Be Denied Because the Entities Are Not the Alter Egos of
Gaggero .......................................................................................................................... 7
CONCLUSION ........................................................................................................................ 9
OPPOSI.TION TO MOTION TO AMEND IUDGMENT
40. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
I5
16
17
18
19
20
21
22
23
24
25
26
27
28
TABLE OF AUTHORITIES
Cases
Erie Railroad Co. v. Tompkins (1938) 304 U.S 64 ........................................................................... 4
Greenspan v. LADT, LLC (2010) t91 Cal.App.4th 486 ................................................................ 1, 5
Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290 ................................................................. 9
NEC Electronics Inc. v. Hurt (1989) 208 Cal.App.3d 772 ............................................................ 6, 7
Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510 ................................. 1, 4, 5
Sonora Diamond Corp. v. Sup. Ct. (2000) 83 Cal.App.4th 523 ........................................................ 7
Towe Antique Ford Foundation v. I.R.S. (9th Cir. 1993) 999 F.2d 1387 .......................................... 4
Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 14t5 .................................................. 5, 6
Zoran Corp. v. Chen (2010) 185 Cal.App.4th 799 ............................................................................ 8
Statutes
Code of Civil Procedure § 187 .......................................................................................................... 4
Rules
Wegner, Fairbank, & Epstein, Cal. Practice Guide: Civil Trials and Evidence
(The Rutter Group 2007) § 17:164 ................................................................................................ 5
iii
OPPOSITION TO MOTION TO AMEND JUDGMENT
41. 6
7
8
9
10
1l
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
I. SUMMARY OF ARGUMENT
Defendants Knapp, Petersen & Clarke, Steven Ray Garcia, Stephen M. Harris, and Andre
Jardini ("KPC") seeks to amend its judgment against Stephen Gaggero to add non-parties 5tl
OFW LP; Gingerbread Court LP; Malibu Broadbeach LP; Marina Glencoe LP; Blu House LLC;
Boardwalk Sunset LLC; Pacific Coast Management; Joseph Praske, trustee, of the Giganin Trust;
Arel_zano Trust; and Aqua Sante Foundation (the "En_ties") as new defendants and judgment
debtors (the "Motion") on the grounds that Entities are the alter egos of Gaggero, that they are the
real parties in interest in the litigation, and that KPC should be permitted to execute on the assets
of the Entities, because K.PC claims to not be able to collect its judgment against Gaggero. The
only way to add the Entities to the judgment is through the use of outside reverse piercing of the
corporate veil. For various, solid reasons, including violation of due process, California courts
have unanimously disallowed the adding of entities as judgment debtors to a judgment against an
individual. (Postal Instant Press. Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1512-13;
Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 513-14.)
Even if outside reverse piercing were available to add entities to a judgment, which it is not,
KPC has not proven through admissible evidence the requisite elements of alter ego. In fact, this
Court determined the opposite at trial---that the Entities were separate and apart from Gaggem. The
facts are as follows:
1. Gaggero is not a shareholder, officer, or director of Pacific Coast Management, one of
the entities sought to be added here as a judgment debtor;
2. The LLC's and LP's, to whom Gaggero had irrevocably transferred ownership of
property 15 years ago, are similarly separate and distinct from Gaggero;
3. Gaggero is not a general or limited partner of any of the LP's sought to be added and is
not a member or manager of the LLC's sought to be added;
4. Gaggero is not the named or defaeto trustee of the trusts sought to be added;
5. Gaggero is not the beneficiary of the trusts; and
6. Gaggero has no authority to compel distribution from these trusts. (See the Praske
Decl.).
OPPOSITION TO MOTION TO AMEND ,IUDGMENT
42. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
I7
18
19
20
21
22
23
24
25
26
27
28
Ironically, KPC conceded at trial that each of these Entities was separate from Gaggero, and
therefore it is not surprising that it is unable to present evidence to support their new claim of lack
of separateness.
In addition, 511 OFW LP; Gingerbread Court LP; Malibu Broadbeach LP; Marina Glencoe
LP; Blu House LLC; Boardwalk Sunset LLC; Pacific Coast Management; Joseph Praske, trustee, of
the Giganin Trust; Arenzano Trust; and Aquasante Foundation t were not made parties to this action
at any time after its filing in 2002, even though KPC represented Gaggero beginning in August of
2000 and became intimately familiar with Gaggero's estate planning activities that had taken place
some years earlier. KPC cannot claim that it was misled during the case, nor surprised, as it knew
all of tile facts beginning in 2000, which facts were the subject of testimony in the 2007 trial,
wherein KPC asserted and proved the separateuess to the satisfaction of the Court as demonstrated!
in the Requests for Judicial Notice by KPC and Gaggero.
KPC, having successfully used the separateness argument in defeating Gaggero's claims
against them at trial, is both judicially and collaterally estopped from now claiming the reverse.
Had KPC believed that they had evidence that these Entities were the "alter egos and real
parties in interest" in this litigation, they were required to have added the Entities as parties to the
litigation. This would have permitted the Entities their constitutional due process rights to notice
and a hearing to protect the property rights KPC now seeks to deprive them of summarily by this
Motion. For all of the above reasons, and based upon these points and authorities, the court should
deny this Motion.
II. STATEMENT OF FACTS BASED UPON EVIDENCE SUBMITTED IN SUPPORT
OF THE MOTION AND AUGMENTED BY THE DECLARATION OF JOSEPH
PRASKE.
The Entities sought to be added to this judgment were not parties to this litigation. The
Entities therefore provide this factual summary from the evidence submitted in support of the
Motion, augmented by the evidence contained in the attached declaration of Joseph Praske. 2
According to this Court's Statement of Decision, "Between 1995 and 1998 he [Gaggero]
t K.PC re.is-named this mast in its Motion.
2 The Entities also adopt the Statement of Facts set forth in the Opposition to the Motion filed by Gaggero.
2
OPPOSITION TO MOTION TO AMEND JUDGMENT
43. 6
7
8
9
10
1l
12
t3
14
15
16
17
18
19
2O
21
22
23
24
25
26
27
28
did extensive 'estate planning'.., resulting in all of his [Gaggero's] personal assets being
transferred to various corporations, trusts and foundations...he retained absolutely no ownership
interest in and no control over these assets." (Statement of Decision, Exhibit A pg 18 footnote 17.)
The attached declaration of Joseph Praske confirms these facts. (See the Praske Decl.)
Gaggero retained Knapp, Petersen & Clarke, Steven Ray Garcia, Stephen M. Harris, and
Andre Jardini (collectively "KPC") in August 2000 to represent him individually in several
lawsuits that were the subject of this litigation, wherein he was a nmned party. (Statement of
Decision 1-2; 16.) None of these lawsuits involved the Entities that KPC now seeks to add to the
judgment. (Statement of Decision, Exhibit A pp. 14 footnote 13; 18 footnote 17; also see the
Pmske Deck) In December 2002, Gaggero filed the complaint in this action against KPC for legal
malpractice and for breach of the retainer agreement between himself and KPC. This case finally
went to trial in July 2007, [Statement of Decision, Exhibit A pp. 1.]
This Court's statement of decision stated, "First, the only plaintiff in this action is Mr.
Gaggero in his personal capacity. No other person or entity has joined in this action as plaintiff,
and there is no credible evidence that Mr. Gaggero has authority to represent any other person or
entity (whether by assignment or otherwise) in asserting these damage claims." [Statement of
Decision, p. 26.] "Neither Pacific Coast Management nor Avalon, nor any of the various other
entities was a party to the underlying litigation, nor were they ever a party to this suit." [Statement
of Decision p. 14.] "There was no evidence that Mr. Gaggero was represented in a capacity as
officer, director or employee of any of these entities,..."[Statement of Decision, p. 27.] The
ultimate ruling in the case found separateness, preventing Gaggero any recovery, "Since he paid
nothing, he can recover nothing." [Statement of Decision, p. 28.]
The court entered judgment in favor of KPC and against Gaggero in his personal capacity
In Februm'y 2008, K.PC thereafter sought recovery against Oaggero only for its attorney fees and
costs from Gaggero in his personal capacity based on the contractual fee provisions contained
written retainer agreements between KPC and Gaggero. This Court awarded these costs against
Gaggero personally. [Exhibit B to the Motion.]
No evidence is presented to the Court by KPC in support of its Motion to displace the above
3
OPPOSITION TO MOTION TO AMEND JUDGMENT
44. 6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
findingsof the Court.
III. CALIFORNIA LAW PROHIBITS TIlE ADDITION OF THE ENT1TIES TO THE
JUDGMENT AGAINST GAGGERO.
KPC seeks, by way of this motion to amend the judgment entered singly and individually
against Gaggero in his personal capacity, and add the Entities as judgment debtors. This outside
reverse piercing application of the alter ego doctrine is unanimously prohibited by California law)
Even if outside reverse piercing were legally permissible, which it is not, KPC presents no
evidence to support its alter ego claim. The trial court ruled Gaggero and the Entities were
separate, that Gaggero had no ownership of or authority over the entities, and that Gaggero alone
was the real party in interest.
A. The Motion Must Be Denied Because California Law Expressly Prohibits
Reverse Piercing to Hold an Entity Liable For the Personsal Debts of an
Individual.
Under California Law, the alter ego doctrine may not be applied in reverse, as requested
here by KPC, to hold an entity liable for the debt of an individual. It is only the standard alter ego
doctrine that may be used under vary narrow circumstances to pierce the corporate veil and hold
an individual liable for claims made against the entity. Here, the claims and judgment are not
against the LLC's, LP's, trusts, or corporation. This debt is owed by an individual, and here,
contrary to seeking standard alter ego, KPC seeks the reverse, to add the Entities as new judgment
debtors.
In California, a trial court is not authorized to amend a judgment to add ma entity as a
judgment debtor under a reverse alter ego theory. "[A] third party creditor may not pierce the
corporate veil to reach corporate assets to satisfy a shareholder's personal liability." (Postal
Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1512-13.) (See, a/so: (Wegner,
Fairbank, & Epstein, Cal. Practice Guide." Civil Trials and Evidence, (The Rutter Group 2007) §
3 It is hornbook law that the law of the forum state applies to issues of substantive law, which includes the
determination of whether alter ego liability applies. Contrary to KPC's claim, California law applies to this Motion
(Erie Railroad Co. v. Tompkin_ (1938) 304 U.S 64, 79-80; Towe Antique Ford Foundation v. LR.S. (gth Cir. 1993)
999 F.2d 1387, I391.)
OPPOSITION TO MOTION TO AMEND IUDGMENT
45. 6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
18:522.1,citingPostal Instant Press', Inc. v. Kaswa Corp.)
"In Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 77
Cal.Rptr.3d 96, the Court of Appeal held that "outside reverse" piercing of the
corporate veil is not permitted in California, that is, the corporate veil will not be
pierced to satisfy the debt of an individual shareholder. Rather, the court explained,
the alter ego doctrine will only be applied to hold an individual shareholder liable
for a corporate debt where the individual has disregarded the corporate form."
(Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 513-14.)
Here, the only parties to the retainer agreements were Gaggero and KPC, and the only
parties to this litigation were Gaggero and KPC. Appropriately the only parties to the legal
malpractice action were Gaggero and KPC. This court expressly ruled, based on KPC's own
argument and evidence at trial, that Gaggero was the only real party in interest and Gaggero had
no authority to represent any other person or entity in connection with the claims asserted in this
case. The judgment in this case was entered against Gaggero in his personal capacity. KPC's
motions for attorney fees and costs were based the personal retainer agreements between Gaggero
and KPC, and the award of fees and costs was made against Gaggero in his personal capacity.
Four years later, the court is being asked to amend the jud_gnent to add the Entities, who
did not participate in this case, as judgment debtors. In fact, this court has already determined that
the Entities are not to be real parties in interest in this action. The motion is based solely on an
unrecognized legal theory and asks for this court to apply prohibited outside reverse piercing.
Code of Civil Procedure section 187 "has never been construed to allow imposition of
liability on an entity which was never a party to the action." (Triplett v. Farmers h_s. Exchange
(1994) 24 Cal.App.4th 1415, 1420.) Under a very narrow set of circumstances, none of which
exist here, the court may (using the standard alter ego theory) exercise its equitable powers to
lmend a judgment to add a new party to the judgment. Cases using "section 187 to add new
_arties as additional judgment debtors have always been rooted in the standard "alter ego" concept
:hat the original party and the new patty were one and the same." (Id.) However, the ability under
section 187 to amend a judgment to add a defendant, thereby imposing liability on the new
defendant without trial, requires both (1) that the new party be the alter ego of the old party and
(2) that the new party had controlled the litigation, thereby having had the opportunity to litigate,
in order to satisfy due process concerns. The due process considerations are in addition to, not in
5
OPPOSrrION TO MOTION TO AMEND JUDGMENT
46. 6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
lieu of, the threshold alter ego issues. (ld. at 1421.) In order to protect the constitutional due
process rights of this new party, the court must find that during the underlying litigation there was
virtually no distinction between the defendant and the new party. Since this court ruled the entities
are separate and distinct from Gaggero, it cannot add the proposed new parties to the judgment.
([d, at 1421.) Thus, KPC's Motion must fail.
Even if California law recognized outside reverse piercing to amend a judgment, which it
does not, KPC would then be required to establish, by a preponderance of admissible evidence, (1)
all of these Entities were the alter egos of Gaggero during the course of the underlying litigation,
and (2) each of the Entities exercised control of the underlying litigation, and (3) each of the
Entities' interests were represented at each stage of the underlying litigation. (Triplett v. Farmers
Ins. Exchange, supra, 24 Cal.App.4th at 1421.)
KPC has produced no evidence to establish the Entities were the alter egos of Gaggero
during the course of the litigation. In additional, KPC has failed to provide admissible evidence to
establish that each of the Entities exercised any control over the litigation, let alone had the ability
to represent their interests at each stage of the proceeding, including trial. In addition to the
undisputed evidence provided in the Praske Declaration, KPC's motion claims it is Gaggcro who
controls the Entities and the Entities had no control over the litigation. All three of the above
factors must be fully satisfied in order in insure that all of the Entities' interests were, in fact,
represented during the underlying litigation. If the court finds that KPC cannot establish all three
factors, the motion must be denied. (NEC Electronics Inc. v. Hurt (1989) 208 Cal.App.3d 772.)
Even where alter ego is proven, it is improper to add a new party who was never afforded the due
process right to litigate their interests in the underlying action. (Triplett, Supra.) Clearly, KPC has
failed to meet its burdens here and the Motion must be denied.
The Entities that KPC seeks to add to the judgment all have shareholders, members,
?artners, and trustees whose interests were clearly not the same as Gaggero's interests in this
litigation or the underlying litigations. As demonstrated herein, it is improper to add a new alter
ego party when the new party's interests are not the same as those of the original party. (NEC
Electronics lnc, v. Hurt, Supra, 208 Cal.App.3d at 780-81 ,) This case, like that in NEC, "contrasts
6
OPPOSITION TO MOTION TO AMEND JUDGMENT
47. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
with the usual scenario where the interests of the corporate defendant and its alter ego are similar
so that the trial strategy of the corporate defendant effectively represents the interests of the alter
ego." ([d. at 780.) Here, it is undisputed the Entities were not parties to the litigation, did not
control the litigation, and had no ability to litigate their differing interests. (See Praske Decl.)
Subjecting the Entities to judgment enforcement after this litigation has been concluded, under
any theory, would violate their due process rights.
B. The Motion Should Be Denied Because the Entitles Are Not the Alter Egos of
Ga ero.
KPC asserts in their Motion that the Entities should be liable for the judgment entered
against Gaggero in his personal capacity. As discussed above, California law does not permit such
reverse application of the alter ego doctrine in order to hold an Entity liable for the personal debts
of an individual. Even assuming that reverse piercing was permissible, which it clearly is not,
KPC's motion contains no evidence to establish an alter ego claim. The facts and evidence, which
was already presented at trial and is included in the Praske Declaration, unequivocally
demonstrate that Gaggero and the Entities are separate, and that the Entities were not represented
at all stages in this litigation. This court has already ruled in both its findings of fact, and its entry
of judgment against Gaggero individually.
A party seeking to invoke the alter ego doctrine must show "such a unity of interest and
ownership between the corporation and its equitable owner that the separate personalities of the
corporation and the shareholder do not in reality exist," and also "an inequitable result if the acts
in question are treated as those of the corporation alone." (Sonora Diamond Corp. v. Sup. Ct.
(2000) 83 Cal.App.4tli 523, 538 [citations omitted].) As noted above and in the Praske
Declaration, Gaggero is not a shareholder, partner, member or trustee of any of the entities, and
does not control any of the Entities.
Courts have traditionally looked at certain factors that include: "the holding out by one
entity that it is liable for the debts of the other...use of one as a mere shell or conduit for the affairs
of the other," also "inadequate capitalization, disregard of corporate formalities, lack of
segregation of corporate records, and identical directors and officers." ([d. at 538-39.) The analysis
7
OPPOSITION TO MOTION TO AMEND JUDGMENT
48. 6
7
8
9
10
II
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
is factspecific,andnoonefactoris moreimportantthantheothers,(ZoranCorp. v. Chen (2010)
185 Cal.App.4th 799, 812.) The Praske declaration proves that the Entities were properly formed
and maintained, do not commingle their funds, keep separate records, do not hold themselves out
as liable for the debts of Gaggero, Gaggero does not own or control any of the entities, and each
entity owns separate property at different addresses. (See Praske Decl.) This evidence defeats
KPC's argument.
KPC argued at trial that it was Gaggero in his personal capacity who was the only plaintiff
and real party in interest, i.e., that he was separate from and did not represent the Entities. This
court agreed with KPC when determining that Gaggero paid nothing to KPC and could recover
nothing. Thus, this court has already ruled on the issue of alleged unity and ownership between
Gaggero and the Entities, and specifically found insufficient evidence to establish that Gaggero
had authority to represent any other person or entity in connection with the claims asserted in this
case.
The Praske Declaration shows that the formation and operation of the Entities complied
with all legal formalities, there is no commingling of funds, and in fact Gaggero has no interest or
control in any of the Entities. The lone fact that Praske acts as a representative for some of the
entities does not establish that the entities are Gaggero's alter egos. This is precisely why this
court ruled that Gaggero and the Entities were separate and that he had no authority to represent
them, as KPC argued at trial.
No new evidence has been presented to support KPC's change in position, because no such
facts exist. As the evidence presented at trial established, and as set forth in the attached
declaration of Joseph Praske, Gaggero had no authority, interest, or control over these Entities,
and Gaggero did not represent them at trial in any way.
Even if this court were inclined to reverse its prior ruling and somehow find that the
Entities were Gaggero's alter egos, which they are not, and that he fully controlled and
represented them at trial (which the Praske Declaration shows he did not), that would only satisfy
the first prong of KPC's new alter ego claim. KPC must also prove an improper intent.
"Traditional piercing of the corporate veiI is justified as an equitable remedy when the
8
OPPOSITION TO MOTION TO AMEND JUDGMENT
49. 6
7
8
9
10
11
12
13
14
15
16
17
18
19
2O
21
22
23
24
25
26
27
28
shareholders have abused the corporate form to evade individual liability, circumvent a statute, or
accomplish a wrongful purpose." (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300-
01.) KPC has failed to meet its burden to present such evidence.
KPC's motion makes the bare accusation that Gaggero transferred ownership of property
to separate legal entities. Gaggero responds he did so for legitimate estate planning purposes 15
/ears ago.
KPC concludes without cvidentiary support that Gaggem's estate planning decisions were
done to defraud creditors. In fact, the only two creditor claims mentioned in the Statement of
Decision were noted by the Court to have either been "resolved in 2002 by full payment" or
"withdrawn or dismissed in May or June of 2002" [Statement of Decision, Exhibit A, 25 footnote
27.] It is a stretch of the imagination to now contend that Gaggero's 1997 estate planning was a
fraudulent conveyance done in anticipation of the 2008 judgment in this case.
KPC would have the court believe that, if a person or company conveys ownership of
property to an entity, the court must infer that the conveyance was made to defraud any creditor
that the person or company may ever have at any time during the rest of their life. The argument is
unreasonable. Such a conclusion would defeat the purpose for the legitimate existence of
corporations, limited liability companies, limited partnerships, and estate planning in general. Ill
the absence of specific and probative evidence of fraud, there is no abuse of the corporate form.
The evidence here does not support that Entities are the alter ego of Gaggero. This court
has already ruled on the issues of control and separateness. There is no evidence that Gaggero's
estate planning decisions were in m_y way motivated by any intent to defraud anyone, violate any
statute, or accomplish any wrongful purpose: There is thus no basis for a finding of alter ego.
IV. CONCLUSION
Based on the foregoing, it is clear that California law expressly prohibits adding 511 OFW
LP; Gingerbread Court LP; Malibu Broadbeach LP; Marina Glencoe LP; Blu House LLC;
Boardwalk Snnset LLC; Pacific Coast Management; Joseph Praske, trustee, of the Giganin Trust;
Arenzano Tnast; and Aqua Sante Foundation as judgment debtors under application of reverse
alter ego, there is no evidence to even support a finding of alter ego in this case, and KPC is
9
OPPOSITION TO MOTION TO AMEND JUDGMENT
51. 6
7
8
9
10
II
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DECLARATION OF JOSEPH PRASKE
I, Joseph Praske, declare as follows:
[. 1 have personal knowledge ofthe facts set forth in this Declar4tion and, if called as
a witness, could and would testify competently thereto.
2. This Declaration is submitted in support of51l OFW LP; Gingerbread Court LP;
Malibu Broadbeach LP; Marina Glencoe LP; B[u House LLC; Boardwalk Sunset LLC; Pacific
Coast Management; Joseph Praske. trustee, of the Giganin Tmsl; Arenzano Trust; and Aqua Santo
Fourtdation (the "Entities")' Opposition to the Motion to Amend Judgment liled by defendants
K.napp, Petersen & Clarke, Stevcn Ray Garcia, Stephen M. Harris, and Andre Jardini.
3. In 1997, I was an estate planning attorney. I was contacted by Stephen Gaggero to
review his portfolio and develop an estate plan for him that would allow his estate tu survive him,
be legally protected, and would provide a benefit for his family. Based on my recommendations,
Mr. Gaggero thereafter transferred ownership of eert,in property to various entities. This was a
legitimate es'tare planning decision.
4. Mr. Gaggero made these transfers based upon my recommendations, such
recommendations that [ made for no other purposes than legitimate estate planning. I certainly
would not have advised Mr. Gaggero to make transfers to defraud anyone.
5. I set up, and maintain in good standing, 'all of the Entities which K.PCseeks to add
as judgment dehtors in this case. 1 know who all of the shareholders, officers, and directors arc of
Pacific Coasl Management Corporation, and Mr. Gaggero is not one of them, and was not one of
hem at any stage of the underlying litigation. I set up the limited partnerships which KPC seeks to
add to the judgment. Mr. Gaggero is not a general or limited partner of Malibu Broad Beach LP,
and was not one oft.hem at any stage of the underlying litigation. Mr. Gaggero is not a general or
limited partner of Marina GIeneoe LP, and was not one of them at any stage of the underlying
litigation. Mr. Gaggero is not a general or limited partner of"511 OFW LP. In addition, Mr.
Gaggero is not a general or limited partner of Gingerbread Court LP, Each o1"the Limited
Partnerships has its own separate assets, none of which are owned by Mr, Gaggero. Each of the
OPPOSITION TO MOTION TO AMEND JUDG.'vLENT
52. I
2
3
4
5
6
7
8
9
10
I!
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
LimitedPartnershipshas a separategeneralpml.ncr,none ofwhichisMr. Gaggcro.Each ofthc
Limited Partnerships maintains its own separate bank accounts, none to which Mr. Gaggero is a
signatory.
6. I set up, and maintain in good standing, the limited liability companies tl_at KPC
seeks to add as judgment debtors. Mr. Gaggero is not a member or manager of Blu House LLC,
and was not one of them at any stage of the underlying litigation. Mr. Gaggero is nol a member or
manager of Boardwalk Sunset LLC, and was not one of them al any stage of the underlying
litigation. Each of the limited liability companies has its own separate assets, none of which are
owned by Mr. Gaggcro. Each of the limited liability companies has a separate manager, none of
which is Mr, Gaggero. Each of the limited liability companies maintains its own separate bank
accounts, none to which. Mr. Gaggcro is a signatory.
7. I am the trustee of the Giganin Trust, the Arenzano Trust, and the Aquasante
Foundation. I control those entities as the trustee and Mr. Gaggero has no power or authority to
control them. Mr. Gaggero has no power to command a distributLon to him by any of the above
cntities.
8.
9.
10.
Each of tim 'above entities keeps separate records.
Each of the entities maintain their own bank accounts.
None of the above entities were parties to, or wore represented in, or controlled the
underlying litigation.
11. All of the above Entities have shareholders, members, partners, trustees and/or
"_otential beneficiaries whose interests were clearly not the same as Gaggero's interests in this
litigation or the underlying litigations.
All of the required corporate formalities of the above stated entities have been12.
followed.
13. My legal specialty over the past two decades has been creating estate planning for
individuals and I have created a multitude of estate plans for a multitude of clients.
I declare under penalty of perjury under the laws or"the State of California that the
foregoing is true and correct.
OPPOSITION TO MOTION TO AMEND JUDGMENT
54. 1
2
3
4
5
6
7
8
9
i0
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PROOF OF SERVICE
I am a resident of the State of California, over the age of eighteen years, and not a party to
the within action. My business address is 2625 Townsgate Road, Suite 330, Westlake Village,
California 91361.
On May 15, 2012, I served the foregoing document(s) described as: NOTICE OF
SPECIAL APPEARANCE TO OPPOSE AND OPPOSITION TO DEFENDANTS'
MOTION TO AMEND JUDGMENT; DECLARATION OF JOSEPH PRASKE
BY MAIL I placed the above document(s) in a sealed envelope with postage thereon fully
prepaid, in the United States mail at Westlake Village, California, addressed as set forth
below. I am readily familiar with the firm's practice for collection and processing of
documents for mailing, Under that practice it would be deposited with U.S. Postal Service on
that same day with postage thereon fully prepaid in the ordinary course of business. I am
aware that on motion of the party served, service is presumed invalid if postal cancellation
date or postage meter date is more than one day after date of deposit for mailing in affidavit.
xK_ BY FEDERAL EXPRESS I placed the above document(s) in a sealed envelope and placed
it for deposit with Federal Express, prepaid for next day delivery, addressed as set forth
below.
BY FACSIMILE I transmitted the above document(s) by facsimile transmission to the fax
number(s) set forth below on this date before 5:00 p.m., and received confirmed
transmission reports indicating that the document(s) were successfully transmitted.
BY PERSONAL DELIVERY I placed the above document(s) in a sealed envelope and
caused them to be personally delivered by hand to the person(s) set forth below.
Randall A. Miller
Miller LLP
515 South Flower Street, Suite 2150
Los Angeles, CA 90071
Facsimile: 888-749-5812
I declare under penalty of perjury under the laws of the State of Califomia that the above is
rue and correct.
Executed on May 15, 2012, at Westlake Village, California.
14
OPPOSITION TO MOTION TO AMEND JUDGMENT
56. I0
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
David Blake Chatfield, State Bar No. 88991
WESTLAKE LAW GROUP
2625 Townsgate Road, Suite 330
Westlake Village, California 91361
Telephone: 805-267-1220
Facsimile: 805-267-1211
Attorneys for Plaintiff
Stephen M. Gaggero
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
;TEPHEN M. GAGGERO,
Plaintiff,
V°
(.NAY'P, PETERSEN & CLARKE; STEVEN
RAY GARCLA; STEPHEN M. HARR/S;
ANDRE ]'ARDINI; and DOES 1 through 50,
inclusive,
Defendants.
CASE NO.: BC286925
Filed: December 12, 2002
Assigned For All Purposes To:
Hon. Robert L. Hess
Dept. 24
NOTICE OF OPPOSITION AND
OPPOSITION TO DEFENDANTS'
MOTION TO AMEND JUDGMENT;
DECLARATION OF STEPHEN
GAGGERO
(Filed Concurrently With Plaintiff's Request
For Judicial Notice)
Date: May 29, 2012
Time: 8:30 a.m.
Dept: 24
OPPOSITION TO MOTION TO AMEND JUDGMENT
57. 6
7
8
9
10
11
12
13
14
15
16
17
t8
19
2O
21
22
23
24
25
26
27
28
TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD:
NOTICE IS HEREBY GIVEN THAT plaintiff Stephen M. Gaggero opposes the Motion to
Amend the Judgment filed by defendants Knapp, Petersen & Clarke, Steven Ray Garcia, Stephen
M. Harris, and Andre Jardini on the following grounds:
1. California law expressly does not permit outside reverse piercing, and thus court thus does
not have the authority to add non-party entities to the judgment against Stephen Gaggero as
defendants request in the Motion;
2. Even if California law did permit outside reverse piercing, which it does not, the Motion
must be denied because defendants have presented no evidence to prove an alter ego claim; and,
3. Defendants' Motion is barred by judicial estoppel and collateral estoppel.
Consequently, the court should deny defendants' Motion.
This Opposition is based on this Notice and Opposition, on the attached Memorandum of
Points and Authorities and Declaration of Stephen M. Gaggero, on the Request for Judicial Notice
filed concurrently herewith, on the complete court files and records in this action, and on any such
other oral or documentary evidence and argument as may be presented at the hearing.
DATED: May 15, 2012 WESTLAKE LAW OROUP
Stephen M. Gaggero
OPPOSITION TO MOTION TO AMEND JUDGMENT
58. 9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
I,
II.
III.
IV.
TABLE OF CONTENTS
INTRODUCTION ................................................................................................................. 1
STATEMENT OF RELEVANT FACTS .............................................................................. 3
KPC'S MOTION MUST BE DENIED BECAUSE IT IS PROHIBITED UNDER
CALIFORNIA LAW, IT LACKS ANY EVIDENT1ARY SUPPORT, AND KPC
IS ESTOPPED FROM MAKING THE ARGUMENTS CONTAINED THEREIN' ............ 4
A. California Law Expressly Prohibits Reverse Piercing To Hold An Entity
Liable For Personal Debts Of An Individual ................................................................. 5
B. KPC Has Produced No Evidence To Establish Their Claim That The Entities
Are the Alter Egos of Gaggero, And The True Facts Refute Such A Finding .............. 7
C. KPC Is Estopped From Making The Arguments in Their Motion Based On
The Contrary Rulings They Sought And Obtained At Trial, And The Fact
They Have Waited Ten Years To Raise This Issue ..................................................... 10
CONCLUSION ................................................................................................................... 12
ii
OPPOSITION TO MOTION TO AMEND JUDGMENT
59. 6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
TABLE OF AUTHORITIES
Cases
Cart v. Barnabey's Hotel Corp. (1994) 23 Cal,App,4th 14 ............................................................ 12
Erie Railroad Co. v. Tompkins (1938) 304 U.S 64 ........................................................................... 5
Greenspan v, LADT, LLC (2010) l 91 Cal.App.4th 486 .................................................................... 6
Hernandez v. City of Pomona (2009) 46 Cal.4th 501 ..................................................................... 11
Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171 ................................................. 10, 11
Mesler v. Bragg Management Co. (1985) 39 Cal.3 d 290 ................................................................. 9
NEC Electronics Inc. v. Hurt (1989) 208 Cal.App,3d 772 ................................................................ 7
Postal lnstant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510 ......................................... 6
Sonora Diamond Corp. v. Sup. Ct. (2000) 83 Cal.App.4th 523 ........................................................ 8
Towe Antique Ford Foundation v. LR.S. (9th Cir. 1993) 999 F.2d 1387 .......................................... 5
Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415 ................................................... 5, 7
Zoran Corp. v. Chen (2010) 185 Cal.App.4th 799 ............................................................................ 8
Statutes
Business and Professions Code § 6068(d) ......................................................................................... 6
Code of Civil Procedure § 197 .......................................................................................................... 5
Rules
Wegner, Fairbank, & Epstein, Cal. Practice Guide: Civil Trials and Evidence
(The Rutter Group 2007) § 17:164 ............................................................................................... 6
iii
OPPOSITION TO MOTION TO AMEND JUDGMENT
60. 6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
2l
22
23
24
25
26
27
28
I, INTRODUCTION
This is an action for legal malpractice. In December 2002, plaintiff Stephen M. Gaggero
sued Knapp, Petersen & Clarke, Steven Ray Garcia, Stephen M. Harris, and Andre Jardini
collectively "KPC") the lawyers he had retained in August 2000. This court found that he
etained K_C to represent him personally. [Statement of Decision, Exhibit A to KPC's motion, p.
6.] Court trial commenced in July 2007. In February 2008 this court entered judgment in favor of
K.PC against Gaggero personally, and in May 2008 the judgment was amended to award KPC
attorney fees and costs. In May 2010, the judgment was affirmed on appeal, in December 2010 the
iudgment was amended to award KPC its fees and costs on appeal.
KPC has now brought an undeniably belated and unfounded motion to amend the
udgment to add as judgment debtors several entities this court previously found were separate
From Gaggero. The entities are a corporation in which Gaggero is not a shareholder, officer, or
director; four limited partnerships in which Gaggero is not a general or limited partner; two
limited liability companies in which Gaggero is not a member or manager; and two irrevocable
trusts and a foundation of wlfich Gaggero is not the trustee. The sole ground KPC ,asserts for this
motion is that the entities are supposedly the alter egos of Gaggero, and fifteen years ago he
supposedly created these entities to defraud creditors who did not yet even exist. In support of this
motion, KPC's counsel intentionally misrepresents the law and facts in flagrant violation of
counsel's duty of candor owed to this court, apparently believing the court will ignore such
misrepresentations. Such conduct is sanctionable, and subjects counsel to disciplinary action.
In order to add the entities to the judgment against Gaggero, this court must engage in
outside reverse piercing. Contrary to the statements of KPC's counsel, California law expressly
prohibits the reverse piercing of the corporate or entity veil that KPC requests. Even if California
law did permit reverse application of the alter ego doctrine, which it does not, there is no basis for
a finding of alter ego. KPC presents not one shred of evidence to support its repeated allegation
that Gaggero's estate planning was done to defraud any creditor, not one that existed fifteen years
ago let alone one that exists today.
In addition, KPC omits the fact that it produced evidence at trial to prove Gaggem and
1
OPPOSITION TO MOTION TO AMEND JUDGMENT
61. 6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
these entities were completely separate, and this court ruled in KPC's favor on that issue: "First,
the only plaintiff in this action is Mr. Gaggero in his personal capacity. No other person or entity
has joined in this action as plaintiff, and there is no credible evidence that Mr. Gaggero has
authority to represent any other person or entity (whether by assignment or otherwise) in asserting
these damage claims." [Statement of Decision, p. 26.] "Neither Pacific Coast Management nor
Avalon, nor any of the various other entities was a party to the mlderlying litigation, nor were they
ever a party to this suit." [Statement of Decision p. 14.] "There was no evidence that Mr. Gaggero
was represented in a capacity as officer, director or employee of any of these
entities,..."[Statement of Decision, p. 27.] "Between 1995 and 1998 he [Gaggero] did extensive
'estate planning'...resulting in all of his [Gaggero's] assets being transferred to various
corporations, trusts and foundations...he retained absolutely no ownership interest in and no
control over those assets." [Statement of Decision, Exhibit A, pg. 18 footnote 17.] The argument
by KPC and the ruling by this court regarding separateness eliminated Gaggero's right to recover
the fee damages he was suing over, "Since he paid nothing, he can recover nothing." [Statement of
Decision, p. 28.]
In addition, KPC omits the fact that it has known of these entities and Gaggero's legitimate
estate planning since 2000 when Gaggero retained K.PC, but not until nowin 2012 does KPC
claim these entities are the real parties in interest in this action that was filed in 2002 and tried in
2007.
The true holdings of the eases KPC cites and misrepresents state that this court is not
authorized to amend the judgment based on outside reverse piercing in order to hold an entity
liable for the personal debts of an individual. The true facts K.PC misstates or omits show no
impropriety or fi'audulent intent by Gaggero when conveying the ownership of assets to entities
for estate planning purposes fifteen years ago. Indeed, the true facts show this court has already
ruled on the separateness of Gaggero and the entities, and show KPC argued for that separateness
with full knowledge of the facts regarding these entities for seven years. Thus, not only does the
law not authorize the specific relief sought by this motion, but KPC is estopped fi'om bringing the
motion. The motion must be denied.
OPPOSITION TO MOTION TO AMEND JUDGMENT
62. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
H. STATEMENT OF RELEVANT FACTS
In 1997, fifteen years ago, Gaggero transferred ownership of certain property to various
entities. "My estate was - had grown rather large, and I had just weathered the early 1990's and
mid-'90's, which was a pretty rough time for anybody in real estate. And I decided that it would
be a prudent idea to get a lawyer to look at my portfolio and develop an estate plan so that my
estate would survive me and be for the benefit of my children and not be something that is
exposed. [Transcript in Gaggero v. Yura, Exhibit C to KPC's Motion 95:3-9.] This was a
legitimate estate planning decision. Nothing more, nothing less. K.PC presents no evidence to
prove it was anything else, because no such evidence exists. Gaggero did not make the transfers
with the intent to defraud creditors. He certainly did not naake the transfers with the intent to
defraud KPC, as he did not even know who they were in 1997. Gaggero's decision to transfer
ownership of property to various entities was, and continues to be, a generally accepted estate
planning choice.
In August 2000, Gaggero retained K.PC to represent him in a variety of legal matters,
including but not limited to, representing him at depositions and had intimate knowledge of
Gaggero's prior estate planning decisions in 1997 as well as knowledge of all the entities mad their
organization. KPC knew the full extent of the separateness of Gaggero from the entities, ha late
2001, a dispute arose between Gaggero and KPC over K.PC's handling of Gaggero's legal affairs,
and related billing practices. In December 2002, Gaggero filed this action against K.PC for legal
malpractice and breach of the retainer agreement between him and KPC. The case was pending for
several years, during which time extensive discovery was conducted. This discovery included
i
imforrnataon relating to the entities to whom Gaggero had previously conveyed ownership of
property.
This case went to trial in July 2007. During the trial, K.PC specifically argued Gaggero and
the entities were separate, and produced evidence to prove Gaggero was the only real party in
interest. KPC's counsel stated: "He testified at his deposition, and he testified at trial, that he is
merely a consultant to PCM. He has no ownership interest...I have all of the corporate documents
for PCM. He is not listed as a director. He is not an officer. He is nothing. He has expressly, by
3
OPPOSITION TO MOTION TO AMEND JUDGMENT
63. 1
2
3
4
5
6
7
8
9
IO
ii
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
design, disavowed any relationship with that company. Your honor hit the nail on the head
when...you said you can't have it both ways." [Trial Transcript, Exhibit A to Request for Judicial
Notice, 3629: 8:21.] This court expressly stated: "Either it is his alter ego, because it is all his
money and he controls it, and he has absolute control...or they are separate entities." [Trial
Transcript 3632:2-4.]
It is undisputed that this court ruled in KPC's favor on the issue of separateness. The court
found that Gaggero in his personal capacity, was the only plaintiff in this action, that no other
person or entity had been joined as a plaintiff, and that there was no credible evidence to establish
that Gaggero had the authority to represent any other person or entity in connection with the
claims asserted in this case. [Statement of Decision, p. 26.]
In February 2008, the court entered judgment in favor of KPC and against Gaggero in his
personal capacity. Based on the retainer agreements between KPC and Gaggero, K.PC sought
irecovery for its attorney fees and costs from Gaggero in his personal capacity. In May 2008, the
iudgment against Gaggero in his personal capacity was amended to include an award of attorneys
fees and costs. In May 2010, the Court of Appeal affirmed the judgment. Thereafter, KPC brought
:a motion to recover their appellate fees and costs from Gaggero in his personal capacity. In
December 2010 this court awarded KPC their fees and costs on appeal, and amended the judgment
against Gaggero in his personal capacity.
Now, in April 2012, K.PC has brought a motion to add as judgment debtors the very
entities KPC successfully argued at trial that Gaggero had no ownership interest in or control over.
In this motion, KPC claims - in direct contrast to the position it took at trial and contrary to the
findings of this court - that these entities are Gaggero's alter egos, that he and the entities are one
and the same, and that the entities are actually the real parties in interest in this action. As set forth
below, this motion must fail not only as unpermitted outside reverse piercing, but KPC's motion is
also barred by both judicial and collateral estoppel.
III. KPC'S MOTION MUST BE DENIED BECAUSE IT IS PROHIBITED UNDER
CALIFORNIA LAW 1 IT LACKS ANY EVIDENTIARY SUPPORT_ AND KPC IS
ESTOPPED FROM MAKING THE ARGUMENTS CONTAINED THEREIN
KPC's motion asks this court to amend the judgment entered against Gaggero in his
4
OPPOSITION TO MOTIONTO AMEND JUDGMENT
64. 4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
i9
20
21
22
23
24
25
26
27
28
personalcapacityby addingentitiesasjudgmentdebtors.Californialawexpresslyprohibitsthis
outside reverse piercing application of the alter ego doctrine, and KPC's blatant misrepresentation
of the law should be sanctioned) Even if the relief sought were legally permissible, which it is
not, KPC's motion contains no evidence to support its alter ego claim. Moreover, the evidence
K.PC presented at trial established that Gaggero and the entities were not only separate, but also
that Gaggero had no ownership, authority, or control whatsoever with respect to the entities and
that Gaggero alone was the only real party in interest. Finally, KPC's motion should be denied on
estoppel grounds based on its argument and the court ruling at trial, and on the fact that [(PC has
know all the relevant facts since 2000.
A. California Law Expressly Prohibits Reverse Piercing To Hold An Entity
Liable For Personal Debts Of An Individual
Code of Civil Procedure section 187 "has never been construed to allow imposition of
liability on an entity which was never a party to the action." (Triplett v. Farmers Ins. Exchange
(1994) 24 Cal.App.4th 1415, 1420.) Cases using "section 187 to add new parties as additional
udgment debtors have always been rooted in the "alter ego" concept that the original party and
:he new party were one and the same." (Id.) However, this "requires both (1) that the new party be
die alter ego of the old party and (2) that the new party had controlled the litigation, thereby
having had the opportunity to litigate, in order to satisfy due process concerns. The due process
considerations are in addition to, not in lieu of the threshold alter ego issues. (Id. at 142I
[citations omitted].) In this case, KPC's motion fails on both prongs.
First and most important, the alter ego doctrine may not be applied in reverse, as requested
here, to hold an entity liable for the debt of an individual. It is only the standard alter ego doctrine
that may be used in appropriate circumstances to pierce the corporate veil and hold an individual
liable for claims made against the entity. In this case, the claim and judgment are not against any
of the entities that KPC seeks to add as judgment debtors. This is a debt that is undisputedly owed
I It is hornbook law that the law of the forum state applies to issues of substantive law, which includes the
determination of whether alter ego liability applies. Therefore, California law must be applied to this Motion. (Erie
Railroad Co. v. Tompkins (1938) 304 U.S 64, 79-80; Towe Antique Ford Foundation v, LR.S, (gth Cir. 1993) 999
F.2d 1387, 1391.)
OPPOSITION TO MOTION TO AMEND JUDGMENT
65. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
by an individual. Yet, KPC is seeking to hold these entities liable for that debt under a reverse
alter ego theory. This request must be denied.
The law in California is crystal clear that a trial court is not authorized to amend a
judgment to add an entity as a judgment debtor under a reverse alter ego theory. "[A] third party
creditor may not pierce the corporate veil to reach corporate assets to satisfy a shareholder's
_ersonal liability." (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1512-
3.) (See, also: (Wegner, Fairbank, & Epstein, Cal. Practice Guide: Civil Trials and Evidence,
(The Rutter Group 2007) § 18:522.1, citing Postal Instant Press, lnc. v. Kaswa Corp.)
"In Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 77
Cal.Rptr.3d 96, the Court of Appeal held that "outside reverse" piercing of the
corporate veil is not permitted in California, that is, the corporate veil will not be
pierced to satisfy the debt of an individual shareholder. Rather, the court explained,
the alter ego doctrine will only be applied to hold an individual shareholder liable
for a corporate debt where the individual has disregarded the corporate fonrl."
(Greenspan v, LADT, LLC (2010) 191 CaI.App.4th 486, 513-14.)
Incredulously, K_PC's counsel cites to Postal Instant Press, Inc. and Greenspan and falsely
J
represents to this Court that these cases ill fact support application of reverse piercing. This
misrepresentation of the law was clearly intentional, as it is repeated throughout K.PC's motion,
md K.PC's counsel should be sanctioned for violating its duty of candor to the court. (See: (Bus.
Prof. Code § 6068(d).)
This was a legal malpractice action brought by an individual client against the lawyers,
whom he alone hired to represent him personally in the underlying matters. The only parties to the
retainer agreements were Gaggero and KPC, and the only parties to this litigation were Gaggero
and KPC. This court expressly ruIed, based on K.PC's own argument and evidence at trial, that
Gaggero was the only real party in interest and that Gaggero had no authofty to represent any
other person or entity in connection with the claims asserted in this case. The judgment in this
case was thus entered against Gaggero in his personal capacity. KPC's subsequent motions for
attorney fees and costs were based on the retainer agreements between Gaggero personally and
K.PC, and the award of fees and costs was made against Gaggero in his personal capacity.
KPC's motion now asks this court to amend the judgment to add entities as judgment
debtors, who this court has already determined not to be real parties in interest in this action. The
6
OPPOSITION TO MOTION TO AMEND JUDGMENT
![IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIJIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII
CA2DB241675-02
{29CA8F22-B7CD-4F5A-AFD5-3759F6E23BC9}
{137323}[309-130328:090241 ]{032713}
OTHER](https://image.slidesharecdn.com/ca2db241675-02-160920062358/85/Ca2-db241675-02-1-320.jpg)
