Bunge Nsmail 1

1 SUPERIOR COURT OF THE STATE OF CALIFORNIA
2 FOR THE COUNTY OF LOS ANGELES
3 DEPARTMENT WE B HON. NORMAN P. TARLE, JUDGE
4 JOSE BUNGE; VICTORIA BUNGE, )
)
5 )
PLAINTIFF(S), )
6 )
V. ) NO. SC100361
7 )
511 OFW, LP., A CALIFORNIA )
8 LIMITED PARTNERSHIP; )
GINGERBREAD COURT, L.P., A )
9 CALIFORNIA LIMITED PARTNERSHIP;)
BOARDWALK SUNSET, LLC, A )
10 CALIFORNIA LIMITED LIABILITY )
COMPANY; STEVE GAGGERO; AND )
11 DOES 1-50; INCLUSIVE, )
)
12 DEFENDANT(S). )
_______________________________)
13 )
AND RELATED CROSS-ACTION )
14 _______________________________)
15
REPORTER'S TRANSCRIPT OF PROCEEDINGS
16 JANUARY 24, 2012
17
18 APPEARANCES:
FOR PLAINTIFFS: LAW OFFICES OF
19 PAUL D. BEECHEN, INC.
BY: PAUL D. BEECHEN, ESQ.
20 AND CHRISTOPHER POLK, ESQ.
1900 AVENUE OF THE STARS
21 SUITE 2300
LOS ANGELES, CALIFORNIA 90067
22
23 FOR DEFENDANTS: BLECHER & COLLINS
BY: MAXWELL M. BLECHER, ESQ.
24 AND JOHN E. ANDREWS, ESQ.
515 SOUTH FIGUEROA STREET
25 SUITE 1750
LOS ANGELES, CALIFORNIA 90071
26
27
KAREN B. YODER, CSR NO. 8123
28 OFFICIAL REPORTER

1 MASTER INDEX
2 JANUARY 24, 2012
3 CHRONOLOGICAL AND ALPHABETICAL INDEX OF WITNESSES
4
5 THEODORE FOLKERT, CALLED BY THE PLAINTIFFS PAGE
DIRECT EXAMINATION BY MR. BEECHEN (RESUMED) 32
6 CROSS EXAMINATION BY MR. BLECHER 34
REDIRECT EXAMINATION BY MR. BEECHEN 65
7
PATRICIA FRANEY, CALLED BY THE PLAINTIFF
8 DIRECT EXAMINATION BY MR. BEECHEN 73
CROSS EXAMINATION BY MR. BLECHER 99
9 REDIRECT EXAMINATION BY MR. BEECHEN 111
RECROSS EXAMINATION BY MR. BLECHER 113
10
11 EXHIBITS
12 FOR IN
IDENTIFICATION EVIDENCE
13 PLAINTIFFS' PAGE PAGE
14 33 E-MAIL 74 74
15 34 E-MAIL 74 74
16 35 SERIES OF E-MAILS 75 76
20 40 E-MAIL - 81
21 41 E-MAIL 82 82
22 48 E-MAIL 54 55
23 49 DOCUMENT FROM MS. FRANEY 56 57
24 51 DOCUMENT RE DEED - 92
25 RESTRICTION
26 52 E-MAILS 95 95
27 53 E-MAIL 95 95
28 60 E-MAIL 59 59

1 EXHIBITS CONTINUED
2
3 66 E-MAIL 61 61
4 73 E-MAIL 97 97
5 DEFENDANTS
6 118 E-MAIL 64 64
7 119 E-MAIL 64 64
8 125 E-MAIL 42 42
9 126 E-MAIL 36 36
10 127 E-MAIL 42 42
11 128 E-MAIL 45 45
12 131 E-MAIL 43 -
13 133 E-MAIL 44 44
14 137 ADDENDUM 47 47
15 140 RESPONSE TO ADDENDUM - 53
16 142 E-MAIL 53 53
17 143 E-MAIL 53 53
18 189 E-MAIL 63 63
19 193 DOCUMENT SENT TO 63 63
20 MR. GAGGERO
21 194 E-MAIL STRING 64 64
22
23
24
25
26
27
28

1
1 SANTA MONICA, CALIFORNIA; TUESDAY, JANUARY 24, 2012
2 10:57 A.M.
3 * * * *
4
5 THE COURT: WE'RE ON THE RECORD IN BUNGE VERSUS
6 511 OFW, L.P. I'LL ASK THE ATTORNEYS TO STATE THEIR
7 APPEARANCE.
8 MR. BLECHER: GOOD MORNING, YOUR HONOR. MAXWELL
9 BLECHER, JOHN ANDREWS, ATTORNEYS FOR THE DEFENDANT;
10 JENNIFER JOHNSON, PARALEGAL; AND STEVEN GAGGERO, PARTY.
11 MR. BEECHEN: GOOD MORNING, YOUR HONOR. PAUL
12 BEECHEN AND CHRISTOPHER POLK ON BEHALF OF THE
13 PLAINTIFFS. AND THE PLAINTIFFS ARE PRESENT IN COURT.
14 THE COURT: ALL RIGHT. COURT HAS READ THE
15 DEFENDANT'S APPLICATION FOR RELIEF FROM FAILURE TO
16 TIMELY SERVE OBJECTIONS TO NOTICE TO APPEAR AND PRODUCE
17 AT TRIAL. HAS THE PLAINTIFF RECEIVED THESE?
18 MR. BEECHEN: I HAVE RECEIVED THE DOCUMENT, YES,
19 AND I'VE READ IT. AND I'M PREPARED TO MAKE COMMENTS.
20 THE COURT: OKAY. LET ME HEAR FROM THE MOVING
21 PARTY FIRST.
22 MR. ANDREWS: WELL, YOUR HONOR, I DON'T REALLY
23 HAVE ANYTHING TO ADD TO THE PAPERS. I MADE A MISTAKE
24 WITH CALENDARING, AND I OVERLOOKED SERVING THESE IN A
25 TIMELY FASHION. AND, IN ADDITION TO THAT, THE DOCUMENTS
26 THAT ARE IN CONTENTION ARE NOT IN POSSESSION OF A PARTY,
27 SO --
28 THE COURT: LET ME ASK THIS: WHICH DOCUMENTS IN

2
1 THE REQUEST FOR PRODUCTION ARE WE TALKING ABOUT? MAKING
2 IT EASY FOR THE COURT HELPS, RATHER THAN MAKING IT HARD.
3 MR. ANDREWS: THE DOCUMENTS THEY ARE SEEKING ARE
4 DOCUMENTS RELATING TO TRUSTS THAT ARE LIMITED PARTNERS.
5 THE COURT: WHICH NUMBERED --
6 MR. ANDREWS: OH, I'M SORRY. I'M SORRY.
7 THE COURT: -- REQUEST FOR PRODUCTION ARE YOU
8 REFERRING TO? BECAUSE, OBVIOUSLY, YOUR OPPOSITION IS TO
9 A VERY LIMITED SET OF DOCUMENTS, AND I NEED TO KNOW WHAT
10 THOSE ARE.
11 MR. ANDREWS: ESSENTIALLY, 20 THROUGH 35. YES.
12 20 THROUGH 35.
13 THE COURT: 20 THROUGH 35?
14 MR. ANDREWS: YES.
15 THE COURT: AND THE BASIS FOR THAT IS A PREVIOUS
16 RULING ON PRIVACY?
17 MR. ANDREWS: PART OF -- THAT'S ONE REASON. SOME
18 OF THOSE ARE PRIVATE. SOME OF THEM ARE THIRD-PARTY
19 DOCUMENTS THAT WE DON'T CONTROL. I MEAN -- THE PARTIES
20 TO THIS ACTION DO NOT CONTROL THOSE DOCUMENTS.
21 THE COURT: AND WHERE IN THE SET OF OBJECTIONS DO
22 YOU RAISE THE OBJECTIONS THAT YOU'RE MAKING TODAY? I'VE
23 LOOKED AT -- I MEAN, THEY ARE ALL THE SAME BOILERPLATE
24 OBJECTIONS THAT DON'T SEEM TO RAISE THOSE OBJECTIONS
25 THAT YOU'RE MAKING IN THE NOTICE NOW, EVEN IF THE COURT
26 WERE TO SAY, "FINE, THE LATE OBJECTIONS MAY BE USED."
27 I SEE NOTHING ABOUT THEM NOT IN POSSESSION OF
28 MR. PRASKE. I SEE NOTHING WITH REGARD OR JUST SOME --

3
1 SOMETHING THAT MAY BE CONSTRUED AS A VAGUE ARGUMENT
2 ON -- OR VAGUE STATEMENT ABOUT -- IT DOESN'T MENTION THE
3 COURT'S PRIOR RULING.
4 MR. ANDREWS: NO, BUT THEY ARE MADE ON THE BASIS
5 OF PRIVACY AND --
6 THE COURT: THE ARGUMENT ISN'T MADE, IT SEEMS TO
7 ME.
8 MR. ANDREWS: WE DON'T HAVE THE DOCUMENTS. THEY
9 ARE -- THEY WERE MADE -- I BELIEVE THAT OBJECTION WAS
10 MADE IN A PRIOR REQUEST, BUT THE FACT OF THE MATTER IS
11 WE DO NOT HAVE THE DOCUMENTS.
12 THE COURT: WAIT, WAIT, WAIT. DON'T BRUSH THAT
13 ASIDE.
14 MR. ANDREWS: YES.
15 THE COURT: THE OBJECTION -- YOU'RE ASKING THAT
16 THE COURT RELIEVE YOU FROM THE FAILURE TO MAKE THE
17 OBJECTIONS ON TIME. ASSUMING THAT THE COURT DOES THAT,
18 HOW ARE THE OBJECTIONS THAT YOU ACTUALLY MADE LATE,
19 THEN, RELEVANT TO THE ARGUMENT THAT YOU'RE MAKING NOW,
20 IS MY QUESTION.
21 MR. ANDREWS: WELL, WHETHER -- I DON'T KNOW THAT
22 THEY ARE. THEY MAY NOT BE INCORPORATED, BUT THE FACT OF
23 THE MATTER IS, WE CAN'T PRODUCE DOCUMENTS THAT WE DON'T
24 HAVE, AS A TECHNICAL MATTER.
25 THE COURT: WELL, LET'S GO BEYOND THE TECHNICAL
26 MATTER. DOES MR. PRASKE HAVE THEM AS A WITNESS OR AS A
27 PARTY?
28 MR. ANDREWS: I DON'T KNOW. I MEAN, I ASSUME AS

4
1 A TRUSTEE FOR THIRD PARTIES HE COULD ACCESS THEM, BUT I
2 THINK THAT -- I DON'T THINK THAT HE WOULD. I THINK HE
3 WOULD CLAIM THE PRIVILEGE. I THINK HE WOULD CLAIM -- I
4 THINK HE WOULD WITHDRAW AS TRUSTEE FOR THOSE ENTITIES
5 BEFORE HE WOULD DO THAT, BECAUSE I BELIEVE HE --
6 THE COURT: AND THE COURT DID -- WHILE THE COURT
7 DID ORDER WITH REGARD TO THE DISCOVERY A LIMITATION ON
8 THE DISCOVERY, MY RECOLLECTION IS THAT IT WAS NOT FULL,
9 THAT THERE WAS SOME CARVE-OUT FOR, I THOUGHT, THE NAMES
10 AND SOME INTERESTS.
11 MR. ANDREWS: THE IDENTITY OF THE LIMITED
12 PARTNERS, I BELIEVE, IS WHAT YOU SAID. BUT THE IDENTITY
13 OF THE LIMITED PARTNERS, THEY HAVE BEEN DISCLOSED. IT'S
14 ANOTHER LEVEL OF PROTECTION, IF YOU WILL, OF THE
15 BENEFICIARIES UNDER THE TRUST. WE HAVE IDENTIFIED THAT
16 THOSE ARE NOT MR. GAGGERO, AND I THINK THAT SHOULD --
17 AND WE WILL PUT ON TESTIMONY TO THAT EFFECT.
18 AND, I MEAN, IT SEEMS THAT THAT -- SINCE THAT IS
19 THE SOLE PURPOSE THAT THEY HAVE EVER ARTICULATED FOR
20 WANTING THIS INFORMATION, IT WOULD SEEM THAT THAT WOULD
21 COVER IT. BUT IT IS ACTUALLY INFORMATION RELATING TO
22 LIMITED PARTNERS -- A LIMITED PARTNERSHIP WHICH IS --
23 THE LIMITED PARTNERS ARE TRUSTS AND THEN THE
24 BENEFICIARIES OF THOSE TRUSTS, WHICH THEY'RE NOT PARTIES
25 TO THIS ACTION.
26 THE COURT: LET ME ASK ANOTHER QUESTION. WHAT
27 ABOUT ALL THE OTHER ITEMS IN THE SUBPOENA REQUEST?
28 MR. ANDREWS: THEY HAVE ALL EITHER BEEN PRODUCED

5
1 OR WE HAVE DISCLOSED THAT THEY DON'T EXIST, ESSENTIALLY.
2 I DID ADDRESS THESE IN MY DECLARATION, BUT --
3 THE COURT: YEAH, I SAW THAT, BUT IT WAS KIND OF
4 ALMOST IN PASSING RATHER THAN SPECIFICALLY. ALL RIGHT.
5 LET ME HEAR FROM THE OTHER SIDE.
6 MR. BEECHEN: THANK YOU, YOUR HONOR. YOUR HONOR,
7 THROUGHOUT THIS CASE, THERE HAVE BEEN MANY ASSERTIONS.
8 FOR EXAMPLE, MR. GAGGERO HAS NO INTEREST, NO LONGER HAS
9 AN INTEREST IN THESE PROPERTIES. THESE PROPERTIES ARE
10 SEPARATE ENTITIES. YOU KNOW, THEY CAN'T COMMINGLE THEM.
11 WHAT WE'RE TRYING TO ESTABLISH IN REQUESTS 20 THROUGH 35
12 IS THAT THAT'S A LIE.
13 MR. ANDREWS: WHAT?
14 MR. BEECHEN: AND THAT, IN FACT, WHEN WE GET THE
15 DOCUMENTS BEFORE YOU, YOU WILL SEE THAT MR. GAGGERO, WHO
16 TRANSFERRED ALL THESE PROPERTIES AS PART OF AN ESTATE
17 PLAN AND WHO HAS BEEN GUIDING EVERY SINGLE ASPECT OF
18 THIS TRANSACTION WITH THE BUNGES, STILL OWNS, IN
19 SUBSTANCE, THESE PROPERTIES. AND PART OF THAT ARGUMENT
20 GOES THAT THIS SHOULD BE CONSIDERED AS ONE TRANSACTION.
21 NOW, ALL WE ASK IS THAT THESE DOCUMENTS BE
22 PRESENT IN COURT SO THAT WHEN I ASK MR. PRASKE AND
23 MR. GAGGERO, YOU KNOW, TO UNRAVEL THIS ONION, IF YOU
24 WILL, THAT THEY CAN'T SIT THERE AND SAY, "GEE, I REALLY
25 DON'T REMEMBER. I DON'T KNOW." THAT'S WHY THE
26 DOCUMENTS ARE REQUESTED TO BE HERE.
27 LIKEWISE, IN CONNECTION WITH REQUESTS 17 THROUGH
28 19, YOU HEARD YESTERDAY MR. FOLKERT SAY, "GEE, THE

6
1 BUNGES WANTED A CHANGE IN THIS TRANSACTION, AND THAT
2 CHANGE WAS GOING TO BE SOMETIME BETWEEN NOVEMBER 17 --
3 OR EXCUSE ME, THE EXPRESSION SEEKING THAT WAS ABOUT
4 MID-NOVEMBER THROUGH DECEMBER. AND I ASKED HIM, "WHERE
5 IS THE DOCUMENT?"
6 "OH, I DON'T KNOW. MAYBE YOU HAVE THEM."
7 THE PURPOSE OF THIS IS TO FIND OUT, TO QUIT THE
8 EVASIVENESS. IF THEY'VE GOT DOCUMENTS -- WHICH THEY
9 DON'T. BUT, IF THEY HAVE THEM, THEN THESE REQUESTS
10 REQUIRE -- REQUEST THEY BE PRODUCED.
11 ALSO, WHAT WE DON'T HAVE, OF COURSE, IS A
12 DECLARATION FROM MR. GAGGERO WHO IS SITTING IN THE BACK
13 RIGHT HERE. AND HE DIDN'T SAY THAT HE DIDN'T HAVE THE
14 DOCUMENTS. HE WAS NOTICED TO PRODUCE THESE DOCUMENTS.
15 MY GUESS IS HE HAS EVERY ONE OF THESE DOCUMENTS.
16 SO THE FACT THAT MR. PRASKE FILES A DECLARATION
17 THAT SAYS, IN MY CAPACITY AS -- A VERY LIMITED ROLE -- I
18 DON'T HAVE THE DOCUMENTS. MR. PRASKE IS THE ONE WHO SET
19 UP THIS ESTATE PLAN. MR. PRASKE IS THE ONE WHO IS THE
20 TRUSTEE OR THE MANAGER OF -- OF EVERY SINGLE ENTITY THAT
21 WE'VE BEEN -- THAT HAS BEEN REVEALED TO US THAT HAS
22 ANYTHING TO DO WITH THESE THREE PROPERTIES.
23 NOW, THE WHOLE PURPOSE OF A NOTICE TO PRODUCE AND
24 TO HAVE THEM HERE IN COURT AS OPPOSED TO DISCOVERY IS TO
25 ALLOW YOU TO RULE ON ADMISSIBILITY AFTER YOU'VE SEEN A
26 MORE COMPLETE RECORD. THAT'S WHY WE ASK THE DOCUMENTS
27 BE HERE. SO WHILE -- YOU KNOW, IT'S OBVIOUSLY THE
28 DISCRETION OF THE COURT TO ALLOW THE OBJECTIONS TO COME

7
1 IN, TO BE ASSERTED ON A LATE DATE. I, FRANKLY, DON'T
2 THINK THAT THE DEPRESSIVE BUSINESS, IF YOU WILL, IS
3 SUFFICIENT GOOD CAUSE, BUT I DEFER TO YOU ON THAT, OF
4 COURSE.
5 BUT I THINK THAT THESE ARE IMPORTANT DOCUMENTS.
6 THEY SHOULD BE HERE. AND THEN, AS THE TESTIMONY
7 DEVELOPS, WE THEN DETERMINE WHETHER THEY SHOULD COME
8 INTO EVIDENCE.
9 THE COURT: RIGHT. AND THIS SUBPOENA WENT TO
10 MR. PRASKE AND MR. GAGGERO?
11 MR. BEECHEN: YES. BOTH WERE NOTICED TO APPEAR
12 AND PRODUCE.
13 MR. ANDREWS: MR. PRASKE IN HIS CAPACITY AS THE
14 GENERAL PARTNER.
15 THE COURT: LET ME READ IT AGAIN. HOLD ON. IT
16 DOESN'T SAY THAT.
17 MR. ANDREWS: THE NOTICE DOESN'T.
18 THE COURT: THE NOTICE DOESN'T. SO I ASSUME IT
19 GOES TO HIM AS A WITNESS.
20 MR. ANDREWS: WELL, I MEAN, YOU NEED A SUBPOENA
21 FOR A WITNESS. THIS IS JUST A NOTICE TO APPEAR.
22 THE COURT: DOES THE OTHER SIDE WISH TO BE HEARD?
23 MR. BEECHEN: YOUR HONOR, HE IS A PARTY. HE IS A
24 PARTY. HE IS NAMED AS THE TRUSTEE OF THESE
25 PARTNERSHIPS, BUT HE IS ALSO A -- WELL, HE'S NOT NAMED
26 INDIVIDUALLY. I DON'T WANT TO MISLEAD THE COURT ON THE
27 RECORD. HE IS NAMED AS A PARTY -- EXCUSE ME, AS A
28 TRUSTEE.

8
1 BUT I THINK AS -- HE STILL IS GOING TO BE HERE,
2 AND THAT'S WHY WE ASK THAT HE PRODUCE -- AND, AS I SAID,
3 WE ALSO SERVED THIS EQUALLY ON MR. GAGGERO. AND HE
4 IS -- EXCUSE ME, MR. GAGGERO IS SIMPLY A PARTY. HE IS
5 NOT NAMED IN ANY CAPACITY, IF YOU WILL.
6 THE COURT: OKAY. GO AHEAD.
7 MR. ANDREWS: MR. PRASKE WILL BE HERE. HE WILL
8 ANSWER QUESTIONS. HE WILL BE HERE TODAY, IN FACT.
9 MR. GAGGERO, IF YOU WANT TO ASK HIM, HE CAN -- REGARDING
10 THE POSSESSION OF DOCUMENTS, HE CAN ANSWER QUESTIONS.
11 I STILL DON'T THINK THEY HAVE MADE A SHOWING OF
12 RELEVANCE. I MEAN, THIS DEAL IS WHAT IT IS. EITHER
13 THEY'RE -- AND IT'S REFLECTED IN THE CORRESPONDENCE.
14 THE OWNERSHIP OF THESE PROPERTIES THAT GOES BACK 20
15 YEARS, A LOT OF THESE DOCUMENTS -- JUST -- IT'S NOT
16 RELEVANT. AND I DON'T THINK THEY'VE MADE ANY SHOWING OF
17 RELEVANCE.
18 MR. BEECHEN: WELL, YOUR HONOR, IF COUNSEL WISHES
19 TO CONCEDE THAT IT DOESN'T MAKE ANY DIFFERENCE -- YOU
20 KNOW, THAT THEY WILL CONSIDER THESE TO BE BASICALLY ONE
21 ENTERPRISE AND ONE TRANSACTION, I WILL WITHDRAW THESE
22 REQUESTS IN A MOMENT. BUT THAT IS NOT SOMETHING THAT I
23 HAVE EVER HEARD BEING OFFERED TO YOUR HONOR. AND THAT'S
24 WHY IT REMAINS AN ISSUE IN THIS CASE.
25 THE COURT: WELL, LET ME CUT OFF THE DEBATE ON
26 THAT. THERE'S BEEN AN INDICATION THAT ALL OR MOST OF
27 THIS HAS BEEN TURNED OVER, BUT THAT'S ONLY BY A
28 REFERENCE OF THE ATTORNEYS. WHAT SPECIFICALLY IN THESE

9
1 HAS BEEN TURNED OVER? I'M RELUCTANT TO ORDER REDUNDANT
2 MATERIAL, BUT I DON'T HAVE ANYTHING OTHER THAN WHAT
3 SEEMS TO BE A CONVERSATION BETWEEN ATTORNEYS THAT
4 MATERIAL REQUESTED HAS BEEN TURNED OVER.
5 GENERALLY, WHAT I WOULD EXPECT TO SEE IS A
6 SPECIFIC REFERENCE TO A SPECIFIC ITEM AND A DECLARATION
7 BY THE WITNESS SAYING THAT "THIS IS THE SAME THING I
8 WOULD BRING IN." PERIOD. BUT I DON'T HAVE THAT. I
9 HAVE VAGUE OBJECTIONS THAT REALLY DON'T GO TO THE ISSUES
10 THAT I HAVE AT THIS POINT.
11 EVEN IF I WERE TO PERMIT THE LATE OBJECTIONS, I'M
12 STRUGGLING TO FIT THEM INTO THE BOILERPLATE. AND I
13 SHOULDN'T BE DOING THAT.
14 MR. BLECHER: AGREED, YOUR HONOR. I THINK WHAT'S
15 AT ISSUE IS THE DOCUMENTS EVIDENCING THESE TWO FOREIGN
16 TRUSTS ON THE THEORY THAT THOSE FOREIGN TRUSTS ARE
17 LIMITED PARTNERS IN SOME OF THE ENTITIES SUBJECT TO THE
18 LITIGATION. NON OF THE LIMITED PARTNERS HAVE NO
19 CONTROL. AND MR. GAGGERO IS NOT AN OWNER. HE WILL
20 TESTIFY TO THAT. HE'S ALREADY SUBMITTED DECLARATIONS TO
21 THAT EFFECT AS WE GO ALONG. AND THESE TRUSTS, HE DOES
22 NOT HAVE COPIES OF THOSE. YOU CAN ASK HIM THAT IN THE
23 NEXT FIVE MINUTES IF YOU WANT UP ON THE STAND.
24 THE COURT: I DON'T WANT ANYTHING. ALL I'M GOING
25 TO DO IS MAKE A RULING BASED UPON WHAT THE TWO SIDES
26 BRING TO ME. AND IF WHAT YOU BRING IS INSUFFICIENT FOR
27 EITHER SIDE, THEN THAT'S HOW THE RULING IS GOING TO BE
28 DETERMINED.

10
1 MR. BLECHER: THE CORE QUESTION IS WHETHER WE
2 OUGHT TO BE REQUIRED TO PRODUCE THESE TRUSTS THAT ARE
3 THE SUBJECT AND THAT ARE FOREIGN ENTITY TRUSTS.
4 THE COURT: I DON'T KNOW THAT.
5 MR. BLECHER: WELL, THAT'S WHY I'M SAYING. I'M
6 WONDERING --
7 THE COURT: BUT THERE'S NOTHING IN THE OBJECTIONS
8 THAT SAY THAT.
9 MR. ANDREWS: THEY ARE NOT PARTIES AND WE DON'T
10 REPRESENT THEM.
11 MR. BLECHER: I'M WONDERING WHETHER YOU MIGHT BE
12 ADVISED -- THIS IS JUST A LAWYER'S SUGGESTION -- TO
13 LISTEN TO MR. PRASKE AND LISTEN TO MR. GAGGERO TO SEE
14 WHETHER THIS WHOLE THING IS NOT JUST A HORNET'S NEST.
15 THAT'S WHAT WE CONTEND IT IS. IT'S AN ATTEMPT TO
16 COERCE SOME KIND OF SETTLEMENT WHERE WE'RE GOING TO GET
17 INTO YOUR PRIVATE LIMITED PARTNERSHIP ARRANGEMENTS. IT
18 HAS NOTHING TO DO WITH THIS CASE. IT HAS NOTHING TO DO
19 WITH ESTABLISHING ALTER EGO. BOTH MR. PRASKE AND
20 MR. GAGGERO CAN PUT THAT TO BED BY THEIR SWORN TESTIMONY
21 AS THEY ALREADY HAVE.
22 SO WHAT I WOULD COMMEND YOU TO THINK ABOUT IS LET
23 THEM TESTIFY AND SEE IF THERE'S ANYTHING LEFT OF THIS
24 ISSUE THAT'S WORTH PURSUING.
25 THE COURT: THE PROBLEM IS THAT ALL OF THIS COULD
26 HAVE BEEN LITIGATED PRIOR TO TRIAL IF THE DEFENSE HAD
27 FOLLOWED THE REQUIREMENTS OF 1987(C). AND THE ARGUMENTS
28 THAT ARE BEING PUT FORWARD NOW ARE NOT PART OF THE

11
1 OBJECTIONS, PART OF THE VAGUE OBJECTIONS THAT THE COURT
2 HAS RECEIVED. SO EVEN IF I ALLOW THE LATE OBJECTIONS, I
3 DON'T KNOW WHERE THAT BRINGS US EXCEPT TO LITIGATION OF
4 THE ISSUE THAT SHOULD HAVE BEEN LITIGATED PRIOR TO
5 TRIAL.
6 ANYTHING FURTHER EITHER SIDE?
7 MR. ANDREWS: WELL, JUST THAT WE CAN'T PRODUCE
8 WHAT WE DON'T HAVE AS A PARTY.
9 THE COURT: THERE IS NO -- THERE IS NO
10 DECLARATION SAYING THAT "I DON'T HAVE IT." AS FAR AS
11 THE ONES THAT YOU ARE ARGUING WITH REGARD TO
12 MR. GAGGERO, I HAVE NO DECLARATION FROM HIM; THAT'S
13 CORRECT.
14 I HAVE A VAGUE DECLARATION THAT IS, CANDIDLY,
15 VERY HARD TO READ FROM MR. PRASKE THAT I'M NOT SURE WHAT
16 IT'S SAYING. IT'S SAYING THAT "I HAVE THE FILES," BUT
17 THOSE FILES ARE OFF LIMITS SOME WAY TO THE COURT,
18 WITHOUT ANY LEGAL ANALYSIS, WHICH THE COURT WOULD HAVE
19 ORDERED IF 1987(C) HAD BEEN ADHERED TO.
20 MR. BLECHER: YOU'RE ABSOLUTELY CORRECT. IT
21 SHOULD HAVE BEEN. BUT THE FACT IS THAT MR. GAGGERO HAS
22 PREVIOUSLY SAID HE'S NOT AN OWNER. HE'S NOT AN OWNER OF
23 ANY OF THESE ENTITIES, AND NOW ALL THEY ARE TRYING TO DO
24 IS IMPEACH THAT, WHICH, EVEN IF THEY ACCOMPLISH,
25 WOULDN'T HAVE ANY MERIT.
26 S O HE'S HERE, YOUR HONOR. YOU'RE CORRECT, THERE'S
27 NO DECLARATION. WE'RE TENDERING TO PUT HIM ON THE STAND
28 AND EXAMINE HIM ON WHETHER HE HAS COPIES OF THIS AND

12
1 WHAT HIS RELATIONSHIP TO THOSE LIMITED PARTNERS IS TO
2 TRY TO PUT THIS TO BED.
3 IT'S A VAIN ATTEMPT -- BECAUSE YOU ALREADY
4 REJECTED IN YOUR MOTION TO DISMISS RULING THE IDEA THAT
5 THESE WERE COMMON OWNERS AND, THEREFORE, THEY COULD BE
6 TREATED AS A SINGLE CONTRACT.
7 THE COURT: WELL, IT DEPENDS. ONE, THE OTHER
8 ITEMS THAT ARE NOT ITEMS 20 TO 35 ARE STILL NOT
9 ADDRESSED IN ANY DECLARATION OR ANY OBJECTION. I DON'T
10 KNOW WHETHER OR NOT THE OTHER SIDE HAS EVERYTHING. I
11 JUST -- THERE'S NO DECLARATION THAT REALLY --
12 MR. BLECHER: ALL WE'RE HEARING ABOUT, THOUGH,
13 YOUR HONOR, IS TO GET THE TRUST AGREEMENTS. THAT'S
14 ALL --
15 THE COURT: WELL, THE ONLY REASON WE'RE DOING
16 THAT IS THAT'S WHAT YOUR OPPOSITION IS FOCUSED ON. SO
17 THE OTHER SIDE IS FOCUSING ON ADDRESSING --
18 MR. BLECHER: THAT'S CORRECT. BUT THAT PROVES, I
19 THINK, THEY HAVE EVERYTHING ELSE OR AN EXPLANATION THAT
20 THEY'RE DOCUMENTS WE DON'T HAVE. IN OTHER WORDS, I
21 DON'T THINK THEY ARE LEGITIMATELY AN ISSUE. WHAT IS IN
22 PLAY AND WHAT IS AN ISSUE IS WHETHER WE HAVE TO
23 PRODUCE --
24 THE COURT: BUT WE'RE GOING AROUND IN CIRCLES.
25 IN ORDER FOR THERE TO BE A PROPER OBJECTION --
26 GENERALLY, THERE'S A REFERENCE TO A BATES NUMBER FOR A
27 PARTICULAR DOCUMENT IN THE SUBPOENA. I'M HAPPY TO LOOK
28 AT THAT AND TO HAVE THAT. AND IF THE ITEM DOESN'T EXIST

13
1 OR THE WITNESS DOESN'T HAVE IT, LET'S GET A DECLARATION
2 THAT THAT PARTICULAR ITEM THAT IS REQUESTED, THE WITNESS
3 DOESN'T HAVE. BUT I DON'T HAVE THAT.
4 MR. ANDREWS: THESE REQUESTS ARE WRITTEN LIKE
5 DISCOVERY REQUESTS. LIKE EACH WRITING THAT SETS FORTH
6 THE CONSIDERATION PAID BY -- THAT SORT OF THING. AND
7 WE'VE ALREADY PREVIOUSLY RESPONDED THAT WE DON'T HAVE
8 THOSE DOCUMENTS IN DISCOVERY RESPONSES. AND I DID
9 MENTION THAT IN MY DECLARATION.
10 AND THEY HAVE THE STATE BOARD OF EQUALIZATION
11 DOCUMENTS, FOR WHAT THEY'RE WORTH, WHICH THEY OBTAINED
12 DIRECTLY FROM THE STATE. THE CORRESPONDENCE THAT THEY
13 ASKED FOR -- WE HAVE PREVIOUSLY DONE A SEARCH FOR ANY
14 ADDITIONAL CORRESPONDENCE AND WE DID FIND A COUPLE OF
15 PAGES --
16 THE COURT: WHY IS THIS COMING FROM YOU AND NOT
17 THE WITNESS? THIS IS DIRECTED TOWARDS THE WITNESS
18 RATHER THAN THE ATTORNEY. IT'S THE WITNESS THAT HAS TO
19 MAKE THESE STATEMENTS UNDER OATH, BECAUSE IT'S TOO EASY
20 FOR THE ATTORNEY TO SAY, "WE HAVEN'T GOT IT, I HAVEN'T
21 SEEN IT." THIS IS -- THAT'S OKAY FOR DISCOVERY, BECAUSE
22 THE ATTORNEY HAS AN OBLIGATION TO MAKE AN INQUIRY. BUT
23 A SUBPOENA IS DIFFERENT. AND SO --
24 MR. ANDREWS: WELL, A LOT OF THESE THEY DON'T
25 WANT US TO HAVE. FOR EXAMPLE, THE DOCUMENTS REQUESTING
26 THE CONSIDERATION PAID, BECAUSE THAT REINFORCES THEIR
27 IDEA THAT THIS WAS A GRATUITOUS TRANSACTION AND IT
28 WASN'T AN EXCHANGE FOR VALUE OR WHATEVER THEY'RE ARGUING

14
1 ABOUT THE ESTABLISHMENT OF THE TRUSTS.
2 I MEAN, THAT'S WHAT THOSE ARE DIRECTED TO. AND
3 WE'VE ALREADY CONCEDED THAT THERE ARE NO -- THAT NO --
4 THERE WAS NO CONSIDERATION EXCHANGING HANDS. AND
5 VIRTUALLY ALL OF THE OTHER ONES ARE -- A LOT OF THEM ARE
6 ADDRESSED TOWARD CONSIDERATION, ESCROW CLOSING
7 STATEMENTS FROM 15 YEARS AGO THAT NOBODY HAS. THEY ALL
8 REINFORCE THEIR THEORY, FOR WHAT IT'S WORTH, THAT THIS
9 WAS NOT AN ARM'S LENGTH TRANSACTION AS SUCH WHEN IT WAS
10 DONE BACK IN '97.
11 THE COURT: PLAINTIFF? MR. BEECHEN?
12 MR. BEECHEN: YOUR HONOR, THE PURPOSE OF THIS
13 REQUEST OR NOTICE TO PRODUCE WAS TWO-FOLD. ONE IS, YES,
14 TO ESTABLISH THAT CERTAIN DOCUMENTS NEVER EXISTED. TO
15 REINFORCE, AS MR. ANDREWS JUST SAID, THAT THIS WAS NOT
16 AN ARM'S LENGTH TRANSACTION WHEN THESE TRANSFERS TOOK
17 PLACE.
18 BUT THERE ARE ALSO ADDITIONAL DOCUMENTS WHICH ARE
19 TO REFUTE ASSERTIONS, SPECIFICALLY REQUESTS 17 THROUGH
20 19, AND THEN THERE ARE DOCUMENTS WHICH ARE NOTICED TO BE
21 PRODUCED TO ESTABLISH WHO IS THE TRUE OWNER OF THIS
22 PROPERTY. THOSE ARE THE ONES THAT WE HAVE BEEN MOST
23 ADDRESSING, 20 THROUGH 35.
24 THE BOTTOM LINE IS THAT JUST AS MR. BLECHER SAID,
25 MR. GAGGERO IS NOT THE OWNER OF THIS PROPERTY.
26 INTERESTINGLY ENOUGH, THAT'S EXACTLY WHAT HE SAID IN HIS
27 DEPOSITION, AND THEN I ASKED, "WELL, WHO IS THE OWNER OF
28 THIS?" "I REFUSE TO TELL YOU."

15
1 SO I'M TRYING TO REMOVE THE MYSTERY HERE, TO GET
2 OUT THE FULL RECORD, AND THAT'S WHY THESE REQUESTS WERE
3 PRESENTED. FOR THEM TO COME IN HERE AND SAY, YOU KNOW,
4 "LET ME PUT ON MY PART OF THE CASE BUT PRECLUDE YOU FROM
5 HAVING DOCUMENTS PRESENT THAT WILL REFUTE THAT" -- THOSE
6 ASSERTIONS -- AS YOU JUST POINTED OUT, WE SERVED
7 THESE -- I SERVED THIS NOTICE TO PRODUCE 30 DAYS -- I
8 THINK IT WAS MORE THAN 30 DAYS AGO, BECAUSE I RECOGNIZE
9 THAT THE COURT'S RULES SAY IF THERE'S GOING TO BE AN
10 OBJECTION, THEN YOU FILE A MOTION, YOU FILE THAT ON
11 NORMAL CALENDARING -- MOTION CALENDARING, AND WE WOULD
12 HAVE HAD THIS ALL PRESENT BEFORE YOU IN A TIMELY FASHION
13 BEFORE THIS TRIAL TOOK PLACE.
14 BUT NOW WE'RE HERE, AND WE'RE IN THE MIDDLE OF
15 THIS, AND I THINK IT'S, FRANKLY, A LITTLE TOO LATE AND
16 NOT EXACTLY CANDID WITH YOUR HONOR REGARDING WHO HAS
17 THESE DOCUMENTS AND WHETHER OR NOT THEY CAN BE PRODUCED.
18 THE COURT: ALL RIGHT. ARE YOU CONCEDING,
19 THOUGH, THAT ANY OF THIS HAS BEEN PRODUCED AS THE
20 DEFENSE HAS INDICATED, THAT MUCH OF THIS HAS BEEN
21 ALREADY GONE OVER IN DISCOVERY?
22 MR. BEECHEN: NO, BECAUSE -- NOW, LET ME BREAK IT
23 DOWN BY CATEGORY. YES, THEY HAVE PREVIOUSLY SAID IN
24 RESPONSE TO REQUEST NUMBERS 1 THROUGH 12 THAT NO
25 DOCUMENTS EXIST.
26 THE COURT: WAIT A MINUTE. ALL RIGHT. OKAY.
27 MR. BEECHEN: ALL RIGHT. NOW, IN CONNECTION WITH
28 13, 14, 15, 16, I THINK I HAVE BEEN TOLD BY MR. ANDREWS

16
1 THAT I HAVE AS GOOD A DOCUMENT AS THEY ARE ABLE TO
2 PRODUCE. YOU MAY RECALL THAT ON SOME OF THESE DOCUMENTS
3 THEY WERE CUT OFF AND THAT'S WHY THOSE REQUESTS -- BUT
4 I'VE BEEN TOLD I'VE GOT AS GOOD AS THEY ARE ABLE TO
5 PRODUCE.
6 16, 17, 18, 19 HAVE NO RESPONSE AT ALL. IN OTHER
7 WORDS, THIS GOES TO WHETHER, IN FACT, ANY DOCUMENTS
8 EXIST. I WILL REPRESENT TO THE COURT THAT I HAVE GONE
9 THROUGH EVERY DOCUMENT THAT HAS BEEN PRODUCED.
10 THERE IS NOTHING THAT FALLS WITHIN 17, 18, AND
11 19. BUT I DON'T -- YOU DON'T WANT TO HEAR IT FROM ME.
12 THAT'S WHY I ASK THAT THEY BE PRODUCED.
13 WITH REGARD TO 20 THROUGH 35, THEY HAVE
14 DEFINITELY NOT BEEN PRODUCED.
15 MR. ANDREWS: A LOT OF THE TRUST DOCUMENTS WERE
16 PRODUCED. THE ONLY THING -- YOU CAN'T REPRESENT THAT --
17 MR. BEECHEN: EXCUSE ME. THE TRUST DOCUMENTS --
18 WELL, NO, NO, NO. THE ARENZANO TRUST AND THE TERRA MAR
19 TRUST DOCUMENTS HAVE NOT BEEN PRODUCED. THE LIMITED
20 PARTNERSHIP AGREEMENTS FOR 511, O.F.W., GINGERBREAD
21 COURT, AND THE LIMITED LIABILITY COMPANY AGREEMENT FOR
22 BOARDWALK SUNSET HAVE BEEN PRODUCED. THOSE ARE THE ONES
23 THAT IDENTIFY THESE TWO TRUSTS AS BEING EITHER THE
24 LIMITED PARTNERS OR THE MEMBERS IN THE CASE OF BOARDWALK
25 SUNSET. BUT WE HAVE NEVER SEEN THE ARENZANO TRUST OR
26 THE TERRA MAR OR WHOEVER IS OWNERSHIP OF THAT.
27 WITH REGARD TO ITEMS 36, 37, WHAT WE HAVE BEEN
28 TOLD IS, AT LEAST SO FAR, THAT NO SUCH DOCUMENT WAS

17
1 FILED BY THESE TRUSTS OR THESE ENTITIES, RATHER, WITH
2 THE BOARD OF EQUALIZATION. AND YOU'LL BE HEARING
3 EVIDENCE AS TO WHY THAT'S INSIGNIFICANT. THERE WAS NO
4 SUCH DOCUMENT.
5 LIKEWISE, WITH REGARD TO 42, 43, WE WILL HAVE A
6 REPRESENTATIVE OF THE COUNTY ASSESSOR TESTIFYING, AND I
7 JUST WANTED TO MAKE SURE THAT THE DEFENDANTS DO NOT
8 ASSERT THAT A DOCUMENT THAT IS NOT IN THEIR POSSESSION
9 WAS SOMEHOW PROVIDED TO THEM.
10 AND WITH REGARD TO 44, 45, AND 46, WE HAVE BEEN
11 TOLD THERE ARE NO TITLE POLICIES.
12 THE COURT: ALL RIGHT. ALL OF WHICH, ACTUALLY,
13 SHOULD BE BY DECLARATION SO THAT IT CAN BE AS A MATTER
14 OF PROOF USED AT TRIAL. I ASSUME THAT'S PART OF THE
15 ISSUE.
16 MR. BEECHEN: THAT WOULD BE EXTREMELY HELPFUL
17 BECAUSE THEN IT WOULD ESTABLISH ONCE AND FOR ALL
18 WHAT'S -- WHAT IS THERE AND WHAT IS NOT THERE.
19 THE COURT: GO AHEAD.
20 MR. ANDREWS: I STILL -- I WANT TO JUST RAISE THE
21 RELEVANCE OBJECTION ON THE -- ASSUMING THAT ALL THESE
22 PROPERTIES WERE OWNED BY MR. GAGGERO, HOW WOULD -- THAT
23 WOULD NOT CHANGE THE MERITS OF THIS CASE IN ANY WAY.
24 THIS CASE EVOLVES FROM A CONTRACT AND THE
25 NEGOTIATIONS OF A CONTRACT. AND THIS SEARCHING THROUGH
26 MULTIPLE LAYERS OF FINANCIAL PLANNING THAT'S OUT -- IT
27 IS LEGALLY OUT OF THE CONTROL OF ANY PARTY TO THIS CASE,
28 IT'S A RED HERRING DESIGNED TO DETRACT FROM THE REAL

18
1 ISSUES. AND I DON'T THINK THEY'VE MADE A SHOWING OF
2 RELEVANCE WHY ALL THIS -- I MEAN, THIS THEORY THAT THEY
3 ARE OFFERING JUST DOESN'T MAKE SENSE.
4 I MEAN, WHETHER IT'S MR. GAGGERO WHO'S THE PARTY
5 IN INTEREST OR WHETHER IT'S THREE ENTITIES THAT OWN
6 THESE PROPERTIES, THE DEAL WAS THE DEAL. WE DON'T
7 DISPUTE THAT MR. GAGGERO WAS THE PERSON WHO WAS
8 NEGOTIATING THE DEAL ON BEHALF OF THE ENTITIES. AND IF
9 THERE WAS ANYTHING SAID, HE'S THE GUY. I MEAN, IT'S
10 JUST --
11 THE COURT: WHAT DO YOU MEAN "HE'S THE GUY"?
12 MR. ANDREWS: HE'S THE GUY WHO WAS DOING THE
13 NEGOTIATING. AND IT JUST -- IT'S A RED HERRING. AND I
14 JUST DON'T THINK THEY'VE MADE ANY SHOWING OF RELEVANCE.
15 MR. BEECHEN: WELL, YOUR HONOR, THE IDEA IS THAT,
16 AS WE PRESENT THIS CASE, WE'RE GOING TO ESTABLISH THAT
17 IT IS RELEVANT, WE'RE GOING TO HAVE THE WITNESSES ON THE
18 STAND; AND THAT'S WHY WE WANTED THE DOCUMENTS HERE SO
19 THAT, AS THIS EVIDENCE IS PRODUCED, YOU CAN THEN MAKE A
20 RULING ON A FULLER RECORD THAN HAVING TO HEAR FROM
21 COUNSEL AS TO, YOU KNOW, WHAT THE STATE OF THE RECORD IS
22 IN TERMS OF EVIDENCE. OBVIOUSLY, YOU HAVE THE LAW
23 BEFORE YOU.
24 MR. ANDREWS: WELL, YOU HAVEN'T EXPLAINED WHY
25 IT'S RELEVANT.
26 THE COURT: PLEASE DON'T CROSS TALK. THIS IS --
27 MR. ANDREWS: SORRY. I'M SORRY.
28 THE COURT: DOES THIS LOOK LIKE SMALL CLAIMS? I

19
1 HAVE TO PUT DOWN THOSE RULES FOR SMALL CLAIMS LITIGANTS.
2 I DON'T EXPECT TO DO THAT FOR ATTORNEYS.
3 MR. ANDREWS: I'M SORRY.
4 MR. BEECHEN: YOUR HONOR, YOU HAVE HEARD REPEATED
5 ARGUMENTS OVER -- I THINK THIS CASE IS NOW FOUR YEARS
6 OLD. UNDER THE ALTER EGO THEORY, AS WE PRESENTED IN OUR
7 BRIEF, THIS COURT IS TO LOOK AT THE ENTIRETY OF THE
8 CIRCUMSTANCES UNDER CIVIL CODE SECTION -- OR CODE OF
9 CIVIL PROCEDURE SECTION 1642.
10 YOU LOOK AT THE ENTIRETY OF THE CIRCUMSTANCES TO
11 DETERMINE SHOULD THIS BE VIEWED AS A SINGLE TRANSACTION
12 AND THAT THE FAILURE TO PROVIDE PARKING AS PART OF THIS
13 TRANSACTION EXCUSED THE PERFORMANCE BY THE PLAINTIFFS
14 AND REQUIRES THAT THEIR MONEY BE REFUNDED.
15 SO THE PURPOSE OF ESTABLISHING, CONTRARY TO
16 STATEMENTS THAT ARE BEING ASSERTED BY THE DEFENSE, THAT
17 THESE ARE COMPLETELY SEPARATE ENTITIES AND THAT WHAT
18 MAYBE WAS AN IMPROPRIETY BY ONE ENTITY, BOARDWALK
19 SUNSET, THE 601 PROPERTY, MAYBE, YOU KNOW, THE DEFENSE
20 ARGUMENT HAS BEEN THAT, "EVEN IF THERE'S A FRAUD, EVEN
21 IF THERE'S A MISTAKE, EVEN IF WE SOMEHOW INDUCED YOU
22 THROUGH PARKING WHICH WE NEVER PROMISED TO PROVIDE, THAT
23 THE REMEDY IS NOT THAT YOU ARE EXCUSED FROM BUYING
24 511/517."
25 WHAT WE'RE TRYING TO ESTABLISH HERE IS A NUMBER
26 OF THINGS, INCLUDING EVIDENCE OF FRAUD, THAT SIMPLY THE
27 REPRESENTATIONS THAT THESE ARE SEPARATE ENTITIES IS NOT
28 TRUE. THAT IT WAS, IN FACT, ONE ENTITY MADE OF UP

20
1 DIFFERENT NAMES, BUT IT'S REALLY A SINGLE ENTITY OWNED
2 BY THE SAME MAN WHO OWNED IT IN 1997, MR. GAGGERO.
3 AND, AS COUNSEL JUST SAID, THAT THERE WAS
4 TRANSFERS WITHOUT CONSIDERATION. THEY JUST FILED A
5 GRANT DEED. THIS WAS ALL PART OF SOME GREAT ESTATE PLAN
6 THAT MR. PRASKE, THE ATTORNEY, SET UP. AND SO WHAT
7 WE'RE TRYING TO ESTABLISH THROUGH THESE DOCUMENTS IS
8 THAT IT IS A SINGLE ENTITY. DIFFERENT NAMES, BUT ONE
9 ENTITY.
10 THE COURT: LET ME ASK SOME QUESTIONS FIRST.
11 REGARDLESS OF HOW I RULE ON THIS AT THIS POINT, ONE OF
12 THE THINGS THAT THE COURT IS OBLIGATED TO DO AND WILL DO
13 IS PROTECT THIRD-PARTY NONPARTIES BECAUSE THEY DON'T
14 HAVE AN OPPORTUNITY TO COME IN AND PROTECT THEMSELVES
15 THROUGH THIS PROCESS NECESSARILY. AND I SUSPECT AND I
16 SUSPECTED AT THE TIME THAT I MADE THE NOVEMBER 16TH
17 RULING THAT, AS IN MANY OF THESE DOCUMENTS, THERE'S
18 QUITE A BIT OF OVERLAP IN PRIVACY. WHAT OUGHT TO BE
19 DISCLOSED BY MR. GAGGERO FOR PURPOSES OF PLAINTIFF'S
20 PROOF MAY WELL IMPINGE ON THE PRIVACY OF THE THIRD
21 PARTIES.
22 HOW DO YOU PROPOSE, IF THE COURT WERE TO GRANT OR
23 FIND THAT ALL OF THIS SHOULD BE DISCLOSED -- HOW DO YOU
24 PROPOSE THAT THE PROTECTION OF THOSE THIRD PARTIES GO
25 FORWARD WITH REGARD TO THESE DOCUMENTS?
26 MR. BEECHEN: WELL, FIRST OF ALL, WHAT'S REALLY
27 OCCURRING HERE IS: HAD THE DEFENDANTS TIMELY OBJECTED
28 THAT YOU HAVE SERVED THE WRONG PARTY, WE WOULD HAVE BEEN

21
1 ABLE TO JUST OBVIATE THIS BY GETTING SUBPOENAS SERVED ON
2 MR. PRASKE AS -- IN HIS CAPACITY AS THE HEADS OF THESE
3 TRUSTS.
4 WE DO KNOW THAT HE IS THE TRUSTEE OF THE ARENZANO
5 AND TERRA MAR TRUST. THAT'S IN CERTAIN DOCUMENTS THAT
6 HAVE BEEN PROVIDED. SO WE COULD HAVE JUST SERVED HIM
7 WITH THAT. SO, THEREFORE, THIS WHOLE ARGUMENT ABOUT,
8 YOU KNOW, THERE'S SOME THIRD PARTY YOU NEED TO PROTECT,
9 WE COULD HAVE DEALT WITH THAT IN A TIMELY FASHION. NOW
10 WE'RE IN THE MIDDLE OF THIS TRIAL AND NOW THEY'RE
11 RAISING THIS ISSUE.
12 SO, SECONDLY, IN TERMS OF HOW DO YOU PROTECT IT,
13 MR. PRASKE IS THE TRUSTEE OF THESE ENTITIES. WE DO KNOW
14 THAT. AND SO, THEREFORE, HE HAS COUNSEL HERE. THESE
15 TWO GENTLEMEN REPRESENT HIM. AND HE COULD HAVE COME
16 FORWARD AND SAID THAT "I OBJECT AS THESE ARE DOCUMENTS
17 THAT DO NOT -- ARE NOT PROPERLY SOUGHT PURSUANT TO THIS
18 NOTICE TO APPEAR AND PRODUCE."
19 THE COURT: THE COURT'S ORDER IN NOVEMBER HAS --
20 IT APPEARS ON THE OPPOSITION BY DEFENSE, IS THAT THE
21 NAMES, ADDRESSES, AND PERCENT INTEREST IN THE ENTITIES
22 WOULD BE DISCLOSED. DO YOU HAVE THE NAMES AND ADDRESSES
23 OF THOSE OTHER PEOPLE WHO ARE -- WHO HAVE INTEREST IN
24 THE TRUST?
25 MR. BEECHEN: NO. THEY WERE NOT -- I ASKED FOR
26 THEM AND THEY REFUSED TO ANSWER THEM IN DEPOSITION.
27 MR. ANDREWS: WELL, I UNDERSTOOD THAT TO MEAN THE
28 ENTITIES BEING THE LIMITED PARTNERSHIPS. THE NAMES AND

22
1 ADDRESSES OF THE LIMITED PARTNERS, THEY ARE TRUSTS AND
2 THEY HAVE THE NAME AND ADDRESS OF THE TRUSTEE OF THOSE
3 TRUSTS. WHAT THEY DON'T HAVE IS THE NAMES OF THE
4 BENEFICIARIES, WHICH IS WHAT WE OBJECT TO BEING REQUIRED
5 TO DISCLOSE EXCEPT TO THE EXTENT THAT IT IS NOT
6 MR. GAGGERO. AND THERE ARE DOCUMENTS THAT SHOW HE MADE
7 AN IRREVOCABLE GRANT. THESE TRUSTS ARE IRREVOCABLE
8 TRUSTS AND HE HAS NO INTEREST IN THEM.
9 MR. BEECHEN: YOUR HONOR, THAT WAS NOT PRODUCED.
10 THE ONLY IRREVOCABLE TRUST DEALS WITH THE GENERAL
11 PARTNER, NOT THE LIMITED PARTNERS. THOSE TRUSTS HAVE
12 NEVER BEEN PRODUCED AND THAT'S -- WELL, I'M JUST --
13 REGARDLESS, GOING BACK TO THEIR ARGUMENT OF RELEVANCE,
14 THE ONLY REASON THEY CITE IS EVIDENCE CODE -- CIVIL CODE
15 1642, WHICH IS A RULE OF CONTRACT INSTRUCTION OF LAST
16 RESORT. IF THE COURT FINDS AN AMBIGUITY IN THE CONTRACT
17 WHEN IT'S CONSTRUING THE CONTRACT, IT IS NOT -- IT DOES
18 NOT OPEN THE DOOR TO THEM TO ARGUE THAT WHATEVER -- THE
19 FACT THAT THEY WERE DEALING WITH LEGAL ENTITIES THEY
20 COULD JUST DISREGARD THAT. I MEAN, IT'S A RULE OF
21 CONTRACT INSTRUCTION. AND THE COURT HAS ALREADY
22 CONSTRUED THIS CONTRACT AT THE DEMURRER STAGE.
23 THE COURT: RIGHT, BUT THE DEMURRER AND THE
24 SUMMARY JUDGMENT IS JUST THAT, DEMURRER AND SUMMARY
25 JUDGMENT. THE COURT CAN DECIDE THAT IT WAS WRONG, IT
26 DIDN'T HAVE ENOUGH INFORMATION, OR JUST MOVE ON AND
27 DECIDE THAT OTHER EVIDENCE OR LEGAL PRINCIPLES APPLY AND
28 RULE CONTRARY. THAT DOESN'T LAY EVERYTHING TO REST.

23
1 MR. ANDREWS: EXCEPT THAT YOU DID DISMISS THE
2 BREACH OF CONTRACT CLAIM.
3 THE COURT: RIGHT.
4 MR. ANDREWS: AND WE'RE NOT ON TRIAL HERE FOR A
5 BREACH OF CONTRACT CLAIM. THERE IS NO ISSUE OF CONTRACT
6 CONSTRUCTION HERE. YOU RULED THAT THE CONTRACT WAS NOT
7 AMBIGUOUS. SO THEY HAVE TO PROVE FRAUD OR SOME KIND OF
8 WRONGFUL CONDUCT TO SET ASIDE THE -- TO CIRCUMVENT THE
9 PAROL EVIDENCE RULE. THE PAROL EVIDENCE RULE IS WHAT
10 GOVERNS CONTRACT ACTIONS. AND THEY'RE JUST GETTING VERY
11 FAR AWAY FROM THAT. THEY'RE TRYING TO REARGUE THE
12 BREACH OF CONTRACT CLAIM.
13 THE COURT: ONE MOMENT, PLEASE.
14 I'VE HAD A CHANCE TO REREAD THE ENTIRE DECISION.
15 CLEARLY, THE NOVEMBER 16TH RULING -- CLEARLY, THE
16 DOCUMENTS CAN BE REVIEWED FOR STRUCTURE AND THE REST OF
17 IT. THE COURT ALSO -- I THOUGHT MAYBE I MISUNDERSTOOD
18 MY OWN RULING WHEN I SAW A PORTION OF IT IN THE MOTION,
19 BUT THE NAMES, ADDRESSES, AND PHONE NUMBERS OF THOSE
20 THIRD PARTIES ARE NOT PRIVATE. THEY WERE TO BE TURNED
21 OVER. IT IS THEIR FINANCIAL INFORMATION IN THOSE
22 DOCUMENTS THAT WERE PROTECTED.
23 ONE OF THE PROBLEMS IS OF NOTICE TO THOSE THIRD
24 PARTIES. I WOULD EXPECT WHEN A SUBPOENA LIKE THIS GOES
25 OUT THAT THE -- A NOTICE ALSO GOES OUT TO THOSE THIRD
26 PARTIES.
27 BUT THE PROBLEM IS THAT -- IS WITH THE
28 BOILERPLATE RESPONSE, CANDIDLY. IT IS LATE, ACCORDING

24
1 TO THE STATUTE. BUT EVEN IF I ALLOWED IT, IT DOESN'T
2 ADDRESS THE ISSUES THAT ARE RAISED, NOT DIRECTLY. AND
3 TO RAISE THEM NOW AT THE TIME OF TRIAL, I THINK IT'S TOO
4 LATE.
5 THE COURT IS WILLING, CERTAINLY, TO TAKE A LOOK
6 AT ANY OF THE DOCUMENTS IN CAMERA THAT THE PLAINTIFF
7 BELIEVES ARE -- THAT THE DEFENSE BELIEVES ARE PRIVILEGED
8 OR PRIVACY ISSUES. I PROBABLY OUGHT TO DO THAT. BUT
9 THE STRUCTURE OF THE TRUST IS DIFFERENT FROM THE PRIVACY
10 INTERESTS.
11 CERTAINLY, AS WAS -- AS I DISCUSSED IN THE RULING
12 ON NOVEMBER 16TH, I WENT THROUGH ALL OF THE INDICIA OF
13 ALTER EGO AND INDICATED WHAT MIGHT, IN FACT, BE
14 RELEVANT. THAT INCLUDES THE TRANSFER FOR NO
15 CONSIDERATION, THAT MIGHT BE EVIDENCE OF CO-MINGLING,
16 AND/OR THE FAILURE TO MAINTAIN AN ARM'S LENGTH
17 TRANSACTION, OR UNDER-CAPITALIZATION.
18 ALL THAT IS RELEVANT AND ONLY COMES THROUGH IF
19 THOSE DOCUMENTS ARE PRODUCED. AS I -- BUT THE SPECIFIC
20 ARGUMENT WAS NOT MADE IN THE OBJECTIONS.
21 MR. ANDREWS: THAT WE DON'T HAVE POSSESSION OF
22 THE DOCUMENTS. THAT PARTIES DO NOT HAVE POSSESSION OF
23 THE DOCUMENTS.
24 THE COURT: BUT THAT'S NOT -- YOU'RE ASKING ME TO
25 ALLOW THE OBJECTIONS TO LIE AT THIS TIME. BUT WHERE IN
26 THE OBJECTION THAT WAS FILED IN RESPONSE TO THAT,
27 ALTHOUGH LATE, DOES IT SAY THAT THERE'S NO -- THAT YOU
28 DON'T HAVE POSSESSION OF THOSE PARTICULAR ITEMS? I

25
1 DON'T SEE ANYTHING IN YOUR RESPONSES TO 20 THROUGH 35
2 THAT SAY THAT. THAT'S NOT AN OBJECTION THAT'S BEEN
3 RAISED, EVEN IF I ALLOW THE OBJECTIONS --
4 MR. BLECHER: NOT TRUE, YOUR HONOR. I RAISE AN
5 OBJECTION TO SAY WE DON'T OBJECT ON THE GROUND THAT WE
6 DON'T HAVE THEM. I THINK THAT'S JUST A REPRESENTATION
7 THAT, RELEVANT OR NOT, WE CAN'T PRODUCE THEM. AND WHAT
8 I WAS SUGGESTING TO YOU IN WHAT I THOUGHT WAS A
9 STATESMAN-LIKE APPROACH WAS TO HEAR MR. PRASKE AND
10 MR. GAGGERO, BECAUSE I THINK THAT WILL GO A LONG WAY
11 TOWARD RELIEVING ANY CONCERN YOU HAVE THAT THE
12 NONPRODUCTION OF THESE TRUSTS AND THE PRIVATE
13 INFORMATION WILL IN ANY WAY ASSIST --
14 THE COURT: BUT THAT'S NOT -- EACH SIDE IS
15 ALLOWED TO BUILD ITS CASE THE WAY IT SEES FIT. AND THE
16 COURT DOESN'T ALWAYS KNOW WHICH WAY IT'S GOING. BUT
17 THEY SHOULD BE ALLOWED TO DO THAT. THE BRUSH-OFF TO THE
18 PROCEDURAL ISSUES IS OFFENSIVE. OTHERWISE, THE RULES
19 DIFFER FOR WHOMEVER IS COMING INTO COURT, AND I'M JUST
20 NOT GOING TO DO THAT. THE RULES ARE THE RULES FOR A
21 PARTICULAR REASON. OTHERWISE, I HAVE A KALEIDOSCOPE OF
22 CONSIDERATIONS ON EACH AND EVERY CASE THAT DIFFERS, AND
23 THAT'S JUST NOT FAIR.
24 IF YOU WANT TO INTERPOSE AN OBJECTION, IT HAS TO
25 BE TIMELY ACCORDING TO THE CODE, AND SPECIFIC, NEITHER
26 OF WHICH HAS OCCURRED IN THIS CASE. THE SPECIFIC
27 OBJECTIONS HAVE OCCURRED JUST TODAY, AT THIS MOMENT.
28 AND EVEN SO, THEY ARE NOT SPECIFIC ENOUGH. THEY DON'T

26
1 TELL ME WHICH DOCUMENTS ARE THE SAME, WHICH DOCUMENTS
2 HAVE BEEN PROVIDED.
3 THIS IS WHAT WE'RE GOING TO DO: THE COURT RULES
4 AS FOLLOWS:
5 THAT, ONE, THE OBJECTIONS UNDER 1987(C) ARE NOT
6 TIMELY; THAT THE PROTECTION OF THE NONPARTIES AS
7 DISCUSSED BY THE COURT IN ITS NOVEMBER 16TH RULING
8 WOULD, NONETHELESS, APPLY BECAUSE OF THE COURT'S
9 OBLIGATION TO PROTECT NONPARTIES. SO ALL OF THE
10 DOCUMENTS THAT ARE --
11 THE THIRD PART OF THE RULING IS THAT EVEN IF THE
12 COURT WERE TO PERMIT THE LATE OBJECTIONS, WHICH NORMALLY
13 IT WOULD BE INCLINED TO DO BASED UPON MISTAKE OR
14 INADVERTENCE, THEY DO NOT ADDRESS THE ISSUES RAISED
15 TODAY. AND, THEREFORE, THERE IS INSUFFICIENT OBJECTION
16 TO THE PRODUCTION OF ANY OF THOSE DOCUMENTS.
17 THERE'S ABSOLUTELY NO DECLARATION FOR
18 MR. GAGGERO. HE IS THE WITNESS, AND IT IS HIS
19 DECLARATION THAT WOULD -- THAT MIGHT PROTECT HIM FROM
20 THE OBLIGATIONS OF DISCLOSURE OR PRODUCTION, BUT THERE'S
21 NOTHING FROM HIM.
22 AGAIN, THOUGH, THE COURT IS CONCERNED ABOUT THE
23 PRIVACY OF THE NONPARTIES TO THE TRUST DOCUMENTS. IF
24 THAT IS AN ISSUE, THEN THE DISCLOSURE CAN BE THROUGH A
25 COURT IN CAMERA. BUT THE ENTIRE DECISION ON
26 NOVEMBER 16TH NEEDS TO BE TAKEN INTO CONSIDERATION.
27 AND, AS I'VE READ BEFORE, THE COURT IS GOING TO
28 PERMIT THE PLAINTIFF TO GET INTO THE DOCUMENTS

27
1 SUFFICIENTLY TO DETERMINE WHETHER THERE'S CO-MINGLING,
2 WHETHER THERE'S CONSIDERATION, WHETHER IT WAS
3 UNDER-CAPITALIZED. ALL THOSE AREAS ARE -- WOULD BE
4 OPEN.
5 WHETHER OR NOT THERE ARE ANY FINANCIAL
6 INFORMATION FOR THOSE NONPARTIES CAN ONLY BE DETERMINED
7 BY THE COURT AFTER IT VIEWS IT. BUT, GENERALLY I WOULD
8 EXPECT THOSE TRUST DOCUMENTS TO BE STRUCTURE RATHER THAN
9 FINANCIAL, WHICH IS JUST VERY DIFFERENT.
10 WHAT WE'RE NOT GOING TO DO IS DELAY THE TRIAL.
11 WE ARE GOING TO GO ON WITH THE TRIAL TO THE EXTENT THAT
12 WE CAN. EACH OF THE WITNESSES WHO WAS ORDERED TO BE
13 HERE AND TO TESTIFY AND TO WHOM A PROPER SUBPOENA WAS
14 PROVIDED WILL BE ORDERED TO REMAIN ON CALL AND TO
15 PRODUCE THOSE ITEMS. WE WILL HAVE A -- AND WE WILL GO
16 BACK AGAIN AND ALLOW PLAINTIFF TO EXAMINE THEM BASED
17 UPON THOSE DOCUMENTS.
18 NOW, IN THE END, THE ALTER EGO MAY HAVE NO EFFECT
19 WHATSOEVER ON THIS CASE. YOU MAY BE ABSOLUTELY CORRECT.
20 BUT THAT PRESUPPOSES THE DECISION THE COURT WILL
21 ULTIMATELY MAKE, AND I CAN'T DO THAT AT THIS STAGE. I
22 HAVE TO ALLOW THEM TO BUILD -- THE PLAINTIFFS TO BUILD
23 THEIR CASE AS FAR AS THESE ISSUES ARE CONCERNED.
24 SO -- AND EVEN IF THE ALTER EGO IS NOT PROPERLY
25 PROVEN, THERE IS ALSO THE ISSUE TO THE EXTENT THAT ANY
26 OF THE STATEMENTS OR E-MAILS OR DOCUMENTS PROVIDED GO TO
27 THE CREDIBILITY OF THE WITNESSES. THAT ALSO IS A
28 CONSIDERATION. THERE'S JUST TOO MUCH HERE THAT I DON'T

28
1 KNOW. AND ALL I CAN DO IS GO DOWN THE PATH STEP BY STEP
2 AND MAKE THE RULINGS BASED ON THE PARTICULAR ISSUES.
3 I WILL THEN CONTINUE THE TRIAL. WE'LL DO THAT
4 AT -- WE'RE NOT GOING TO DO THAT NOW. IT'S ALMOST 10 TO
5 12:00. BUT I EXPECT TO GO ON.
6 MR. BEECHEN: IF I MAY --
7 THE COURT: ONE MOMENT.
8 MR. BEECHEN: YES, OF COURSE. SORRY.
9 THE COURT: LET ME FINISH MY THOUGHT AND THEN YOU
10 CAN GO AHEAD.
11 THE SUGGESTION THAT MR. BLECHER MADE WITH REGARD
12 TO AN INQUIRY CAN STILL BE MADE. I DON'T THINK THAT'S A
13 BAD IDEA. BOTH SIDES CAN EXAMINE THE WITNESSES WITH THE
14 EXTENT -- TO THE EXTENT TO WHICH THEY HAVE THOSE
15 DOCUMENTS AND THAT THEY MAY BE RELEVANT, EVEN IF THEY
16 ARE NOT HERE. AND IF THE COURT DECIDES TO CHANGE ITS
17 RULING ON ANY PARTICULAR DOCUMENT, IT WILL DO THAT. SO
18 THERE'S NOTHING BARRING THAT, AND I WOULD ENCOURAGE
19 THAT. AND I WOULD BE HAPPY TO TAKE IT UP ON AN
20 ISSUE-BY-ISSUE OR DOCUMENT-BY-DOCUMENT BASIS.
21 BUT IN ORDER TO PRESERVE THE RIGHT OF THE
22 PLAINTIFF UNDER 1987, THE COURT THEN RULES THAT THE
23 OBJECTIONS ARE LATE AND THE DOCUMENTS OTHERWISE MUST BE
24 PROVIDED. I'M RELUCTANT, THOUGH, TO ENGAGE IN ANY
25 SANCTIONS UNTIL I HAVE ALL THOSE DOCUMENTS. THE ONLY
26 SANCTION, REALLY, IS, IF THEY ARE RELEVANT AFTER THIS
27 PORTION OF THE TRIAL IS OVER, I'M STILL GOING TO ORDER
28 THEM IN AND EVERYBODY ON CALL AND WE'LL SEE WHAT

29
1 HAPPENS.
2 THIS IS A CONTINUING PROCESS, AND WE'LL JUST GO
3 AHEAD WITH THAT. CANDIDLY, IF THE OBJECTIONS WERE MORE
4 SPECIFIC, MORE SPECIFIC TO EACH DOCUMENT, I MIGHT HAVE A
5 DIFFERENT FEELING ON THIS. BUT THE REPETITIVE
6 BOILERPLATE GIVES ME A HEADACHE. AND IT DOESN'T ADDRESS
7 THE ISSUE. IT JUST DOESN'T ADDRESS THE ISSUES RAISED.
8 SO IT'S NOT REALLY HELPFUL. A FIVE YEAR OLD COULD HAVE
9 PRINTED THIS OUT WITHOUT ANY REFERENCE TO THE PARTICULAR
10 DOCUMENT. THAT IS REALLY NOT HELPFUL. SO, YES.
11 MR. BEECHEN: ALL I WAS GOING TO SAY IS: FOR
12 PURPOSES OF SCHEDULING, AND AS I HAVE INFORMED COUNSEL,
13 WE'RE GOING TO CONTINUE WITH MR. FOLKERT. THE NEXT
14 WITNESS IS MS. FRANEY, WHO IS THE ESCROW OFFICER. WE
15 WERE THEN GOING TO PICK UP MR. PRASKE, I THINK WAS THE
16 NEXT ONE. REALISTICALLY, PROBABLY WON'T PICK UP PRASKE
17 UNTIL TOMORROW MORNING, SO THAT WILL GIVE COUNSEL AT
18 LEAST AN OPPORTUNITY TO SEE WHAT THEY CAN PUT TOGETHER.
19 AND THEN WE'LL JUST TAKE IT ONE STEP AT A TIME.
20 BUT I JUST WANTED TO LET YOU KNOW THAT, FOR
21 PURPOSES OF CONTINUING TODAY, WE'RE READY TO GO AND FILL
22 THE DAY WITH AS MUCH TESTIMONY AS WE CAN.
23 THE COURT: ALL RIGHT. THEN LET'S RECONVENE AT
24 1:30.
25 MR. BLECHER: DO YOU WANT MR. PRASKE HERE?
26 THE COURT: I'M GOING TO LET THE ATTORNEYS TALK
27 ABOUT THAT.
28 MR. BLECHER: YOUR HONOR, FORGIVE ME. I HAVE ONE

30
1 SCHEDULING PROBLEM. I HAVE A CASE DISPOSITIVE MOTION
2 PLANNING ON FOUR DAYS. I HAVE A CASE DISPOSITIVE MOTION
3 BEFORE JUDGE WILEY IN CENTRAL CIVIL WEST ON FRIDAY
4 MORNING.
5 THE COURT: OKAY.
6 MR. BLECHER: COULD WE JUST DO FRIDAY AFTERNOON?
7 OR I CAN MOVE OVER TO MONDAY IF YOU WANT ONE MORE FULL
8 DAY.
9 THE COURT: MR. ANDREWS WOULD NOT BE GOING AHEAD
10 WITH THE TRIAL, THEN, ON FRIDAY BY HIMSELF?
11 MR. BLECHER: THAT WOULD BE MY HOPE, THAT I COULD
12 BE HERE.
13 THE COURT: OKAY.
14 MR. BEECHEN: WE MAY BE DONE BY THURSDAY.
15 THE COURT: WELL, IT DEPENDS ON THESE SUBPOENA
16 ISSUES.
17 MR. BEECHEN: THAT'S TRUE. THAT'S TRUE.
18 THE COURT: IF THEY CAN BE WORKED OUT TO THE
19 SATISFACTION OF BOTH SIDES, I'M HAPPY TO ACCOMMODATE IT.
20 BUT ON A COURT TRIAL, I'LL TELL YOU THE TRUTH, I
21 NORMALLY GIVE COUNSEL THE BENEFIT OF BEING ABLE TO
22 RECESS WHETHER OR NOT AND TO MAKE APPEARANCES.
23 MR. BEECHEN: I'M NOT DISPUTING THAT AT ALL. I
24 UNDERSTAND THAT.
25 THE COURT: GIVE JUDGE WILEY MY BEST AND WE'LL
26 TALK ABOUT IT ON THURSDAY, BUT YOU'LL MAKE THE
27 APPEARANCE. WHETHER OR NOT WE COME IN ON FRIDAY
28 AFTERNOON, THAT REALLY DEPENDS ON WHAT WE STILL HAVE.

31
1 MR. BLECHER: THAT WOULD BE FINE, TOO. THANK
2 YOU, YOUR HONOR.
3 THE COURT: THANK YOU.
4 (LUNCH RECESS TAKEN AT 11:51 A.M.)
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32
1 (AFTERNOON SESSION BEGINS AT 1:37 P.M.)
2 THE COURT: BACK ON THE RECORD. BUNGE VERSUS 511
3 BUNGE OFW, L.P. ET AL. THE ATTORNEYS ARE ONCE AGAIN
4 PRESENT. ALL RIGHT. AND MR. FOLKERT IS ONCE AGAIN ON
5 THE WITNESS STAND.
6 SIR, YOU ARE STILL UNDER OATH.
7 THE WITNESS: YES.
8 THE COURT: LET'S PROCEED.
9 MR. BEECHEN: THANK YOU, YOUR HONOR.
10
11 DIRECT EXAMINATION (RESUMED)
12 BY MR. BEECHEN:
13 Q NOW, MR. FOLKERT, WHEN MR. BUNGE INFORMED
14 YOU THAT HE WANTED TO OPERATE A HOTEL, OR WAS INTERESTED
15 IN OPERATING A HOTEL AT THE 511/517 PROPERTIES, IS IT
16 CORRECT THAT IT WAS YOUR UNDERSTANDING THAT A HOTEL
17 WOULD BE OPEN ON A 24-HOUR-A-DAY BASIS?
18 A I DON'T REMEMBER HIM CALLING IT A HOTEL.
19 BUT I KNEW HE WANTED TO DO SOME KIND OF HOSPITALITY
20 BUSINESS THERE, AND I WOULD ASSUME IT WOULD BE A 24-HOUR
21 BUSINESS.
22 Q AND DID YOU ASSUME, THEN, THAT IF YOU LOOK
23 AT EXHIBIT 2, WHICH IS THE 1989 DEED RESTRICTION, AND
24 SPECIFICALLY THE SECOND PAGE OF THAT DOCUMENT, WHICH
25 LOOKING AT -- DO YOU HAVE IT IN FRONT OF YOU, SIR?
26 A YES.
27 Q OKAY. AND IF YOU LOOK AT SUBPARAGRAPH A
28 WHICH STARTS OFF "AT A MINIMUM OF 43 OFF-SITE PARKING

33
1 SPACES." DO YOU SEE THAT PARAGRAPH?
2 A YES.
3 Q IF YOU FOLLOW DOWN A LITTLE BIT FURTHER
4 DOWN AND FIVE LINES FROM THE BOTTOM OF THAT PARAGRAPH,
5 IT SAYS, "SUCH SPACES SHALL BE AVAILABLE DURING ALL
6 HOURS THAT THE RETAIL USES ARE OPEN FOR BUSINESS." DO
7 YOU SEE THAT, SIR?
8 A YES.
9 Q ALL RIGHT. WHEN MR. BUNGE WAS TALKING TO
10 YOU ABOUT A CHANGE IN USE, DID YOU ASSUME THAT WHATEVER
11 THAT USE WAS THAT THIS 1989 DEED RESTRICTION WAS THEN
12 GOING TO, IN ESSENCE, TRACK WHATEVER THE NEW USE WAS IN
13 TERMS OF AVAILABILITY?
14 A I DIDN'T MAKE ANY ASSUMPTION ON THAT AT
15 ALL.
16 Q BUT THERE WAS NOTHING EITHER IN THE -- IN
17 THE DEED RESTRICTION AGREEMENT OR THE DEED RESTRICTION
18 ITSELF, THE NEW DEED RESTRICTION, WHICH LIMITED THE
19 HOURS IN WHICH PARKING WAS GOING TO BE AVAILABLE;
20 CORRECT?
21 A I DON'T BELIEVE THERE WAS ANYTHING THAT
22 LIMITED THE HOURS.
23 Q ALL RIGHT. AND, IN FACT, NOW MR. BUNGE
24 RENTS SPACES AT THE 601 PROPERTY ON A MONTHLY BASIS AND
25 THOSE SPACES ARE AVAILABLE TO HIM ON A 24/7 BASIS;
26 CORRECT?
27 A THAT'S CORRECT.
28 MR. BEECHEN: NO FURTHER QUESTIONS, YOUR HONOR.

34
1 THE COURT: CROSS?
2
3 CROSS EXAMINATION
4 BY MR. BLECHER:
5 Q GOOD AFTERNOON, MR. FOLKERT.
6 A GOOD AFTERNOON.
7 Q CAN I GET YOU TO LOOK AT EXHIBIT 2?
8 A YES, I'M THERE RIGHT NOW.
9 Q AND DO YOU RECOGNIZE THAT TO BE --
10 A THE COASTAL COMMISSION DOCUMENT REGARDING
11 THE PARKING COVENANT FOR THE THREE PROPERTIES.
12 Q DO YOU REMEMBER YESTERDAY THE JUDGE ASKED
13 YOU A QUESTION OF HOW YOU CAN GET $100,000 UNDER THAT
14 DOCUMENT? SOMETHING TO THAT EFFECT?
15 A I DON'T REMEMBER THAT QUESTION.
16 Q WHAT DID YOU UNDERSTAND EXHIBIT --
17 THE COURT: I'M NOT SURE THAT I ASKED THAT
18 EITHER, BUT GO AHEAD.
19 Q BY MR. BLECHER: WHAT DID YOU UNDERSTAND
20 EXHIBIT 2 TO BE?
21 A I BELIEVE EXHIBIT 2 IS THE DOCUMENT THAT
22 WAS CREATED BY THE COASTAL COMMISSION WHEN THE CHANGE OF
23 USE WAS IMPLEMENTED FOR THE FOUR PROPERTIES OR THE THREE
24 PROPERTIES, AND IT SPECIFIED SPACE PARKING REQUIREMENTS
25 IN PLACE OF THE COVENANT IN THE DEED OF 601 TO ALLOW
26 PARKING FOR THE OTHER THREE PROPERTIES.
27 Q THAT WAS BACK IN 1989?
28 A YES, SIR.

35
1 Q AND DID YOU UNDERSTAND THAT, IT WAS A
2 PERMIT FROM THE COASTAL COMMISSION TO THE OWNERS OF 601
3 WITH RESPECT TO PARKING RIGHTS ON 601?
4 A YES, SIR.
5 Q AND DID YOU UNDERSTAND -- AS A REAL ESTATE
6 BROKER I'D ASSUME YOU UNDERSTAND -- DID YOU UNDERSTAND
7 THAT THOSE RIGHTS RAN WITH THE LAND?
8 A YES, SIR.
9 Q AND DID YOU UNDERSTAND THAT UNDER THAT
10 PERMIT, THE OWNERS OF 601 WERE PERMITTED TO MAKE FURTHER
11 CONTRACTS IMPLEMENTING THOSE RIGHTS?
12 A YES, SIR.
13 MR. BEECHEN: OBJECTION.
14 THE COURT: WHAT'S THE OBJECTION?
15 MR. BEECHEN: FIRST OF ALL, LACK OF FOUNDATION.
16 AND I WOULD MOVE TO STRIKE.
17 THE COURT: AND THE FOUNDATION?
18 MR. BEECHEN: THE FOUNDATION THAT HE WOULD HAVE
19 AN UNDERSTANDING AS TO WHAT THE RIGHTS OR WHAT THE
20 COASTAL COMMISSION WAS PERMITTING OR -- EXCUSE ME, WAS
21 ALLOWING OR NOT ALLOWING, IF I UNDERSTOOD THE QUESTION
22 CORRECTLY.
23 THE COURT: OVERRULED. YOU MAY TESTIFY -- IT'S
24 PART OF THE UNDERSTANDING OF WHAT WAS BEING SOLD.
25 WHETHER OR NOT THE COURT AGREES WITH THAT IS DIFFERENT.
26 MR. BEECHEN: OKAY.
27 THE COURT: BUT HE IS ONE OF THE PARTIES INVOLVED
28 IN WHATEVER SALE THERE WAS, AND SO THE COURT WILL ALLOW

36
1 THE TESTIMONY.
2 Q BY MR. BLECHER: IF YOU RECALL YESTERDAY I
3 THINK YOU LOOKED AT EXHIBIT 126. EXCUSE ME, I THINK --
4 DO YOU RECALL LOOKING AT EXHIBIT 126 YESTERDAY?
5 A YES, I BELIEVE WE DID.
6 Q AND EXHIBIT 126 IS AN E-MAIL FROM YOU TO
7 MR. GAGGERO ATTACHING BUNGE'S ATTORNEY'S VERSION. DO
8 YOU SEE THAT?
9 A YES, SIR.
10 Q EXCEPT EXHIBIT 126 -- OH, AND IT IS
11 ATTACHED AT THE LAST TWO PAGES; CORRECT?
12 A YES.
13 Q AND THAT WAS SENT TO YOU ON SEPTEMBER 17.
15 MR. BLECHER: OKAY. IS THAT IN EVIDENCE?
16 MR. ANDREWS: NO.
17 MR. BLECHER: WE'LL OFFER 126 IN EVIDENCE, YOUR
18 HONOR.
19 MR. BEECHEN: NO OBJECTION.
20 THE COURT: OKAY. LET ME CATCH UP HERE. ONE
21 MOMENT, PLEASE. ALL RIGHT. 126 IS MARKED AND ADMITTED.
22 MR. BLECHER: THANK YOU, YOUR HONOR.
23 Q NOW, GO BACK FOR A MINUTE TO EXHIBIT 125.
24 TOWARD THE BOTTOM HALF OF THE PAGE THERE'S AN E-MAIL
25 FROM MR. GAGGERO TO YOU SUGGESTING WHAT LANGUAGE YOU
26 WOULD AGREE WITH RESPECT TO THE SO-CALLED DEED
27 RESTRICTION. DO YOU SEE THAT?
28 A YES, SIR.

37
1 Q OKAY. NOW, TAKE A LOOK -- PUT YOUR FINGER
2 ON THAT ONE AND TAKE A LOOK AT THE EXHIBIT THAT'S
3 ATTACHED TO 126.
4 A OKAY.
5 Q PARKING LICENSE AGREEMENT THAT YOU
6 DESCRIBED AS MR. BUNGE'S ATTORNEY'S VERSION. DO YOU SEE
7 THAT?
8 A YES, SIR.
9 Q AND WOULD YOU AGREE WITH ME THAT THERE'S A
10 CONSIDERABLE DIFFERENCE BETWEEN MR. GAGGERO'S LANGUAGE
11 AND WHAT MR. BUNGE'S ATTORNEY SAID?
12 A YES, THERE IS.
13 Q IN FACT, IF YOU LOOK AT WHAT MR. BUNGE'S
14 ATTORNEY SAID, IT TIES THE DEED RESTRICTION, DOES IT
15 NOT, TO THE SALE OF THE 511 AND 517 PROPERTY?
16 MR. BEECHEN: OBJECTION, YOUR HONOR; VAGUE AS TO
17 "TIES."
18 THE COURT: SUSTAINED. I'M A LITTLE LOST. LET
19 ME --
20 MR. BLECHER: WE'RE ON THE PAGE MARKED "0057,"
21 WHICH IS PART OF EXHIBIT 126.
22 THE COURT: OKAY.
23 Q BY MR. BLECHER: YOU HAD EXHIBIT 126 AND
24 THAT'S WHAT YOU SENT TO MR. GAGGERO; CORRECT?
26 Q SO I TAKE IT YOU LOOKED AT 126.
27 A YES, I DID.
28 Q DID YOU SEE THAT IT WAS CONSIDERABLY

38
1 DIFFERENT FROM WHAT MR. GAGGERO PROPOSED IN 125?
2 A YES, IT IS.
3 Q AND DID YOU NOTICE THAT AMONG THE
4 DIFFERENCES WAS THAT THIS PARKING LOT WAS CALLED A
5 "PARKING LICENSE AGREEMENT," TIED THE AGREEMENT TO THE
6 CONVEYANCE OF THE 511 AND 517 PROPERTY.
7 A YES.
8 Q AND YOU, IN YOUR DISCUSSIONS WITH
9 MR. GAGGERO -- AND I THINK YOU TESTIFIED THAT WAS A
10 NO-NO.
12 MR. BEECHEN: OBJECTION, YOUR HONOR; RELEVANCE.
13 MOVE TO STRIKE. THIS IS A CONVERSATION BETWEEN
14 MR. FOLKERT AND MR. GAGGERO ABOUT WHAT WAS REPORTEDLY A
15 NO-NO.
16 THE COURT: I'M SORRY. I CAN'T HEAR YOU. THE
17 BASIS OF THE OBJECTION?
18 MR. BEECHEN: IT'S IRRELEVANT BECAUSE IT IS
19 STRICTLY A COMMUNICATION BETWEEN MR. FOLKERT AND
20 MR. GAGGERO. IT IS NOT SOMETHING THAT'S BEEN EXPRESSED
21 TO THE BUNGES.
22 THE COURT: ON THAT BASIS, THE OBJECTION WILL BE
23 OVERRULED.
24 Q BY MR. BLECHER: NOW, YOU REMEMBER
25 YESTERDAY YOU LOOKED AT EXHIBIT 127, WHICH IS
26 MR. GAGGERO SAYING, "SIMPLY UNACCEPTABLE. I'LL TAKE IT
27 AS A PASS ON PURCHASING THE PROPERTY. SORRY IT DIDN'T
28 WORK OUT." DO YOU SEE THAT?

39
1 A YES.
2 Q WHEN MR. GAGGERO SAID, "I'M GOING TO TAKE
3 IT AS A PASS, IT WAS UNACCEPTABLE," WHAT DID YOU
4 UNDERSTAND SPECIFICALLY ABOUT THE OFFER IN 126 FROM
5 MR. BUNGE'S ATTORNEY THAT UPSET MR. GAGGERO?
6 A WELL, THE PARKING LICENSE AGREEMENT WAS
7 NOT WHAT HAD BEEN AGREED UPON. IT WAS A CHANGE IN THE
8 DEED RESTRICTION, NOT A PARKING LICENSE AGREEMENT.
9 Q AND DID IT ALSO TIE THE PARKING TO THE
10 PURCHASE OF THE TWO LOTS?
12 Q AND MR. GAGGERO TOLD YOU REPEATEDLY --
13 A IT'S A SEPARATE AGREEMENT.
14 Q -- THAT WAS NOT ACCEPTABLE. AND I THINK
15 YOU SAID YESTERDAY YOU REPEATEDLY TOLD THAT TO MR. AND
16 MRS. --
17 MR. BEECHEN: OBJECTION; LEADING.
18 THE COURT: SUSTAINED.
19 Q BY MR. BLECHER: DID YOU HAVE ANY
20 CONVERSATIONS WITH MR. AND MRS. --
21 THE COURT: WELL, NO. IT'S OVERRULED. THIS IS
22 CROSS, AND THAT HASN'T -- THE COURT DID NOT GRANT THE
23 REQUEST UNDER 776 AS A HOSTILE WITNESS; SO TECHNICALLY
24 THIS REMAINS AS CROSS.
25 MR. BEECHEN: WELL, EXCEPT -- ALL RIGHT. WELL, I
26 THINK THAT THIS IS BEING -- THAT MR. FOLKERT IS THE
27 DEFENDANT'S WITNESS. I DID ATTEMPT TO -- I DID ASK FOR
28 776 WHEN I -- YOU DENIED THAT AND THEN I PROCEEDED TO

40
1 EXAMINE HIM, BUT I THINK THAT, GIVEN THE RELATIONSHIP
2 THAT'S BEEN ESTABLISHED BETWEEN THIS WITNESS AND
3 MR. GAGGERO AND THE DEFENDANTS, THAT HE IS ALIGNED WITH
4 THEIR INTERESTS. HE HAS BEEN THEIR BROKER -- OR, EXCUSE
5 ME, THEIR PROPERTY MANAGER SINCE '97 AND CONTINUOUSLY
6 THEREAFTER AND HAS RECEIVED COMPENSATION FROM THEM
7 CONTINUOUSLY THEREAFTER, AND I THINK THAT MAKES HIM A
8 FRIENDLY WITNESS TOWARD THEM, CERTAINLY AS OPPOSED TO
9 THE PLAINTIFF'S SIDE.
10 THE COURT: ALL RIGHT. DEFENSE?
11 MR. BLECHER: THERE IS NOTHING IN THE HISTORY HE
12 TESTIFIED TO THAT WOULD SHOW HE WAS ALIGNED WITH THE
13 GAGGERO INTERESTS. HE SAID HE ACTED, AS I RECALL, AS A
14 BROKER FOR BOTH PARTIES IN THIS TRANSACTION AND HE WAS
15 THE ONLY BROKER INVOLVED AND HE DEALT WITH THE BUNGES IN
16 THE SAME WAY THAT HE DEALT WITH MR. GAGGERO. AND,
17 THEREFORE, THERE'S NO SUGGESTION THAT HIS TESTIMONY IS
18 GOING TO BE A TENTATIVE FOR THE DEFENDANT. I DON'T
19 THINK TECHNICALLY HE'S A MANAGING AGENT OF ANY OF THE
20 PARTIES, WHICH I BELIEVE, BASED ON MEMORY, THE RULE
21 REQUIRES.
22 THE COURT: WHAT IS YOUR CURRENT WORK,
23 MR. FOLKERT?
24 THE WITNESS: PROPERTY MANAGER FOR THE PROPERTIES
25 AT OCEAN FRONT WALK.
26 THE COURT: WHICH PROPERTIES?
27 THE WITNESS: 511, 517, 523, AND 621 OCEAN FRONT
28 WALK.

41
1 THE COURT: WHO IS -- ON THAT BASIS, THE COURT
2 WOULD ACTUALLY SUSTAIN THE OBJECTION. I BELIEVE THAT
3 MR. FOLKERT IS MORE ALIGNED WITH THE DEFENSE. THOSE ARE
4 THE ENTITIES THAT ARE BEING SUED BY THE PLAINTIFF; SO
5 THIS HAS TO BE CROSS EXAMINATION -- REDIRECT,
6 TECHNICALLY, UNDER 776. THEREFORE, THE OBJECTION OF
7 LEADING IS SUSTAINED.
8 ALL RIGHT. LET'S MOVE ON.
9 MR. BLECHER: WOULD IT BE APPROPRIATE IF I COULD
10 ASK THE REPORTER TO READ BACK THE LAST QUESTION?
11 THE COURT: SURE. THE ONE THAT YOU CAN'T ASK
12 BECAUSE IT'S -- ALL RIGHT.
13 IF YOU WOULD, MS. YODER.
14 (RECORD READ)
15 Q BY MR. BLECHER: DURING THE TIME THESE
16 NEGOTIATIONS TOOK PLACE, DID YOU HAVE ANY CONVERSATION
17 WITH MR. AND MRS. BUNGE OR EITHER OF THEM OF AND
18 CONCERNING THE SEPARATENESS OF THE TWO TRANSACTIONS?
19 A YES. THAT WAS MADE CLEAR AT ALL TIMES.
20 Q AND WHEN YOU SAY "THAT WAS MADE CLEAR,"
21 TELL US WHAT YOU MADE CLEAR TO EACH OF THEM.
22 A THAT THE PURCHASE OF 511 AND 517 WAS A
23 REAL ESTATE PURCHASE AGREEMENT AND IT WAS NOT CONNECTED,
24 OWNERSHIP-WISE, WITH 601 WHATSOEVER, AND ANYTHING THAT
25 TRANSPIRED WITH AN AGREEMENT ON 601 HAD TO BE AN
26 ENTIRELY SEPARATE AGREEMENT.
27 Q WHEN YOU READ MR. KAHN'S RECONSTRUCTION OF
28 THE PARKING LICENSE AGREEMENT AS PART OF EXHIBIT 126,

42
1 DID YOU BELIEVE THAT THAT DOCUMENT TO BE CONSISTENT WITH
2 THE SEPARATENESS OF THE TWO TRANSACTIONS?
3 A YES. WOULD YOU REPEAT THAT QUESTION?
4 Q I WAS ASKING WHETHER YOU BELIEVE THE
5 PARKING LICENSE AGREEMENT PREPARED BY MR. KAHN WAS
6 CONSISTENT WITH THE NOTION THAT THERE WAS TWO SEPARATE
7 TRANSACTIONS, NOT ONE.
8 A NO, IT WAS NOT.
9 THE COURT: I'M SORRY. WHICH PARKING LICENSE
10 AGREEMENT?
11 MR. BLECHER: THAT IS ATTACHED TO EXHIBIT 126 AND
12 HAS BATES NUMBER AT THE BOTTOM, 57.
13 Q AND JUST SO WE UNDERSTAND IT, THAT'S THE
14 DOCUMENT THAT MR. BUNGE'S ATTORNEY, MR. KAHN, PREPARED
15 AND SENT TO YOU SOMETIME AROUND SEPTEMBER 17; CORRECT?
17 MR. BLECHER: IS 126 IN EVIDENCE? OKAY. IF WE
18 COULD MARK AND OFFER 125 AND 127.
19 THE COURT: OBJECTIONS? THEY ARE BOTH MARKED.
21 THE COURT: THEY ARE ADMITTED.
22 Q BY MR. BLECHER: LET ME ASK YOU FOR A
23 MOMENT TO LOOK AT 128 AND SEE IF YOU CAN IDENTIFY THAT
24 AS AN E-MAIL FROM MR. GAGGERO TO YOU DATED SEPTEMBER 17
25 AT 8:29 P.M. DO YOU SEE THAT?
26 A YES, I SEE THAT.
27 Q AND THAT SEEMED TO BE RESPONSIVE TO AN
28 E-MAIL YOU SENT TO MR. GAGGERO A COUPLE HOURS EARLIER?

43
1 A THAT'S CORRECT.
2 Q AND DOES THIS E-MAIL SUGGEST -- WAS IT
3 MR. GAGGERO'S SUGGESTION THAT THEY COULD BUY CERTAIN
4 RIGHTS OF PARKING, BUT THAT THEY ARE NOT INCLUDED AS
5 PART OF THE PRESENT TRANSACTION?
6 A YES. IT STATES THEY CAN BUY THE PARKING
7 LOT AND IT STATES THE PRICE THEY CAN BUY IT FOR.
8 Q ALL RIGHT. AND IF WE GO TO 131, THAT'S AN
9 E-MAIL YOU SENT TO MR. GAGGERO. DO YOU SEE THAT?
10 A YES, SIR.
11 Q AND IT'S DATED SEPTEMBER 25?
12 A YES.
13 MR. BLECHER: AND WE'LL OFFER 131 INTO EVIDENCE.
14 MR. BEECHEN: NO OBJECTION. IT'S IN EVIDENCE AS
15 A PLAINTIFF'S EXHIBIT ALSO.
16 THE COURT: ALL RIGHT. 131. IT'S MARKED.
17 Q BY MR. BLECHER: IN CASE YOU HAVEN'T MADE
18 YOUR DEAL YET, JOSE BUNGE IS WILLING TO AGREE TO THE
19 DEED RESTRICTION THAT I BELIEVE IS WHAT YOU SUBMITTED
20 PREVIOUSLY. I BELIEVE THE ONLY CHANGE IS 601 ADDED IN
21 THE CHANGE OF USE CLAUSE. DID YOU SEE THAT?
22 A YES, SIR.
23 Q AND MR. BUNGE, IN FACT, COMMUNICATES THAT
24 UNDERSTANDING TO YOU?
25 A YES, HE DID.
26 Q IN A PHONE CONVERSATION?
27 A YES.
28 Q YOU UNDERSTOOD MR. BUNGE DID NOT OFTEN, IF

44
1 EVER, USE E-MAIL?
2 A I DON'T BELIEVE HE USED E-MAIL.
3 Q SO IT WAS MOSTLY PHONE CONVERSATIONS YOU
4 HAD WITH HIM?
5 A YES.
6 Q AND THEN YOU ATTACHED THE DEED RESTRICTION
7 WITH MR. GAGGERO'S LANGUAGE WITH TRACT OR LOT 601 ADDED
8 AS THE NEXT PAGE, PAGE 073. DO YOU SEE THAT?
9 A YES, SIR.
10 Q AND THAT'S WHAT YOU SAID MR. BUNGE
11 AUTHORIZED YOU TO SUBMIT TO MR. GAGGERO AND WHICH
12 MR. GAGGERO ACCEPTED; CORRECT?
14 Q AND HE INDICATED THAT ACCEPTANCE -- IF YOU
15 LOOK AT 133 HE SENDS YOU AN E-MAIL ON SEPTEMBER 25TH.
16 THAT SAME DAY, I BELIEVE.
17 A YES.
18 Q SAYING, "OKAY. NOW WE CAN GO AHEAD AND
19 PREPARE THE PURCHASE AND SALE AGREEMENT."
21 MR. BLECHER: WE'LL OFFER 133 INTO EVIDENCE, YOUR
22 HONOR.
24 THE COURT: ALL RIGHT. WE'LL MARK 133 AND ORDER
25 IT ADMITTED.
26 MR. BLECHER: AND WHICH COUNSEL REMINDS ME, I
27 FAILED TO OFFER 123.
28 THE COURT: ONE MOMENT.

45
1 MR. BLECHER: OH, 138 -- 128. I CAN'T EVEN READ.
2 THE COURT: HOLD ON A MINUTE. LET ME GO BACK AND
3 TAKE A LOOK AT THIS. WE'LL MARK 128.
4 MR. BEECHEN: NO OBJECTION AS TO 128 COMING INTO
5 EVIDENCE.
6 THE COURT: ALL RIGHT. 128 IS ADMITTED.
7 Q BY MR. BLECHER: NOW, IF YOU LOOK, SIR, AT
8 134, THAT'S AN E-MAIL YOU SENT TO MR. BUNGE ON
9 SEPTEMBER 28 --
10 A YES, SIR.
11 Q -- 2007; CORRECT?
12 A YES.
13 Q AND YOU SAY JOSE ATTACHED THE DEED
14 RESTRICTION AGREEMENT AND RECORDING DOCUMENT. "I WILL
15 SEND THE P.S.A. IN A SEPARATE E-MAIL." DO YOU SEE THAT?
16 A YES, SIR.
17 Q SO YOU CONTINUED TO MAINTAIN THE
18 SEPARATENESS OF THE TWO TRANSACTIONS?
19 A YES, SIR.
20 MR. BLECHER: WE'LL OFFER 134 INTO EVIDENCE.
21 THE COURT: ALL RIGHT. LET'S MARK IT FIRST. AND
22 IT'S ALREADY BEEN ADMITTED YESTERDAY.
23 Q BY MR. BLECHER: SO IS IT CORRECT THAT AS
24 OF ABOUT THE END OF SEPTEMBER, SEPTEMBER THE 28TH, THE
25 SELLERS AND MR. BUNGE HAD AGREED ON LANGUAGE FOR THE
26 DEED RESTRICTION?
28 Q AND THAT DEED RESTRICTION SAID NO MORE

46
1 THAN, "IF THERE'S A CHANGE OF USE, YOU, MR. BUNGE, WILL
2 STILL BE ENTITLED TO THE 38 PARKING LOTS PER THE COASTAL
3 PERMIT"?
4 A THAT'S CORRECT
5 Q NOTHING MORE, NOTHING LESS.
6 A THAT'S CORRECT.
7 Q AND DID YOU THINK 601 HAD THE ABILITY
8 UNDER THE PERMIT TO MAKE SUCH A REPRESENTATION TO
9 MR. BUNGE?
10 A YES, I DID.
11 Q AND MR. BUNGE NEVER CHALLENGED THAT?
12 A NO, HE DID NOT.
13 Q NOW, KEEP THE DATE IN YOUR HEAD NOW,
14 SEPTEMBER 28. YOU JUST HAD THIS AGREEMENT. AND NOW
15 MOVE TO EXHIBIT 137. THAT'S A DOCUMENT YOU SENT TO
16 MR. GAGGERO NOW ON OCTOBER 3, FIVE DAYS LATER. DO YOU
17 SEE THAT?
18 A YES.
19 Q AND IT SAYS, "HERE IS THE ADDENDUM SENT
20 OVER BY HIS ATTORNEY." I PRESUME "HIS" MEANS MR. BUNGE.
21 A CORRECT.
22 Q AND THOSE CHANGES ARE ATTACHED TO THE
23 DOCUMENT CALLED "ADDENDUM," WHICH IS BATES NUMBERS 93,
24 94, AND 95; IS THAT CORRECT?
25 A YES, SIR.
26 Q NOW, CAN YOU -- SO I DON'T LEAD YOU, CAN
27 YOU TELL US WHAT KIND OF CHANGES MR. BUNGE AND HIS
28 LAWYER WERE PROPOSING IN THE PARKING ARRANGEMENT UNDER

47
1 EXHIBIT 137?
2 A I'LL HAVE TO READ IT OVER.
3 MR. BLECHER: WHILE HE'S DOING THAT, I THINK HE'S
4 AUTHENTICATING; SO I'LL MARK IT AND ASK THAT IT BE
5 ADMITTED.
6 THE COURT: I'M SORRY. I'M HAVING TROUBLE
7 HEARING YOU.
8 MR. BLECHER: I WILL ASK YOU TO MARK AND ADMIT
9 137.
10 THE COURT: 137 IS MARKED.
11 MR. BEECHEN: NO OBJECTION, YOUR HONOR, TO ITS
12 ADMISSION.
13 THE COURT: WITHOUT OBJECTION, THEN, IT COMES IN.
14 THE WITNESS: IT APPEARS THAT THERE'S AN EFFORT
15 TO TIE THE TWO PROPERTIES INTO ONE PROPERTY.
16 THE COURT: ONCE AGAIN.
17 THE WITNESS: IT'S AN EFFORT TO TIE THE TWO
18 PROPERTIES INTO ONE PROPERTY.
19 THE COURT: WHICH TWO PROPERTIES?
20 THE WITNESS: THE 511 AND 517 AGREEMENT TO THE
21 601 AGREEMENT.
22 Q BY MR. BLECHER: AND WAS THIS ADDENDUM A
23 SUGGESTION THAT THERE WOULD BE A PURCHASE OF 601 OR SOME
24 PART OF IT?
25 A LET ME READ THIS AGAIN. I'M ASSUMING THIS
26 IS AN ADDENDUM TO THE PURCHASE AND SALE AGREEMENT TO
27 511/517. SO HE'S ASKING THEY NOT BE REFERRED TO AS TWO
28 PROPERTIES BUT AS ONE PROPERTY.

48
1 Q DID YOU PERCEIVE THIS WAS A CHANGE IN THE
2 DEED RESTRICTION THAT MR. BUNGE AND THE SELLERS HAD
3 AGREED UPON ONLY A FEW DAYS EARLIER?
4 A YES.
5 Q AND DID YOU HAVE ANY CONVERSATION WITH
6 MR. BUNGE WHICH EXPLAINED WHY ON SEPTEMBER 28 HE SIGNED
7 OFF ON THE DEED RESTRICTION AND WAS NOW PROPOSING
8 SOMETHING WHOLLY NEW?
9 A NO, WE DIDN'T HAVE A CONVERSATION ABOUT
10 THAT.
11 Q OR WITH MR. KAHN?
12 A NO.
13 Q SO, AS FAR AS YOU KNOW, THIS CAME OUT OF
14 THE BLUE.
15 A RIGHT.
16 Q AND DID YOU CONSIDER IT STRANGE THAT FIVE
17 DAYS AFTER HE AGREED TO THE DEED RESTRICTION HE IS NOW
18 PROPOSING SOMETHING NEW?
19 A I DIDN'T UNDERSTAND WHAT THE -- WHAT IT
20 WAS ALL ABOUT; SO I JUST SENT IT ON TO THE PROPERTY
21 OWNERS FOR THEIR USE.
22 Q AND, IN THAT REGARD, I WOULD ASK YOU TO
23 LOOK AT EXHIBIT 140 AND SEE IF THAT CONTAINS WHAT YOU
24 UNDERSTOOD THE OWNER'S RESPONSE TO THE PROPOSED ADDENDUM
25 IN EXHIBIT 137 WAS.
26 A WHAT WAS YOUR QUESTION? I'M SORRY.
27 Q IF YOU UNDERSTOOD 140, EXHIBIT 140 THAT
28 CONTAINS THE OWNER'S RESPONSE TO THE ADDENDUM YOU HAVE

49
1 JUST LOOKED AT, WHICH IS EXHIBIT 137.
2 A YES; THAT'S CORRECT.
3 Q AND DID YOU UNDERSTAND THE OWNER REJECTED
4 THE CHANGE ABOUT THE DEED RESTRICTION OR PARKING?
5 A YES.
6 Q AND, AGAIN, IN YOUR E-MAIL TO MR. BUNGE,
7 WHO I TAKE IT WAS THE RECIPIENT AT THE HOTEL IN
8 ARGENTINA, YOU TOLD HIM ONCE AGAIN HE -- MEANING WHO,
9 MR. GAGGERO?
10 A MEANING -- YES.
11 Q HE CANNOT REFER TO THE 601 PROPERTY IN THE
12 PURCHASE AGREEMENT BECAUSE THEY ARE SEPARATE PROPERTIES
13 AND WILL HAVE SEPARATE OWNERS.
15 Q AND YOU SENT A COPY OF THAT E-MAIL TO THE
16 ATTORNEY, MR. KAHN.
18 THE COURT: LET ME ASK YOU A QUESTION. EARLIER
19 YOU WERE ASKED A QUESTION ABOUT THE COASTAL COMMISSION
20 DEED RESTRICTION THAT WAS EXHIBIT 2. AND THE QUESTION
21 WAS WHETHER OR NOT YOU THOUGHT THAT IT RAN WITH THE
22 LAND. WHAT DID YOU MEAN BY THAT?
23 THE WITNESS: WELL, I THINK IT'S IN THE DEED OF
24 THE PROPERTY, SO IT RUNS WITH THE LAND.
25 THE COURT: WHICH PROPERTY?
26 THE WITNESS: IT'S IN THE DEED OF THE 601
27 PROPERTY AND REFERS TO THE OTHER THREE PROPERTIES THAT
28 THEY GRANT AS BEING ISSUED TO.

50
1 THE COURT: SO WHAT DOES THAT MEAN, THOUGH? WHEN
2 YOU WERE ARRANGING THE SALE OF 511/517, WHAT, IN FACT,
3 WAS IT YOUR UNDERSTANDING THAT THE BUYER WAS GOING TO
4 GET WITH REGARDS TO THE RIGHTS THAT RAN WITH THE LAND?
5 THE WITNESS: YES. I ASSUMED THAT THOSE RIGHTS
6 RAN WITH WHOEVER OWNED THE PROPERTY, YOU KNOW, IN
7 PERPETUITY.
8 THE COURT: WHAT WERE THE RIGHTS THAT THEY GOT
9 WITH THAT?
10 THE WITNESS: THE RIGHTS THEY GOT WERE THE USE
11 OF -- FOR 511, THEY GOT THE USE OF SIX PARKING SPACES
12 DURING NORMAL BUSINESS HOURS; AND THEY GOT THE USE OF
13 FOR 517, 32 PARKING SPACES DURING NORMAL BUSINESS HOURS.
14 THE COURT: SO THEY DIDN'T HAVE TO PURCHASE THOSE
15 RIGHTS FROM 601; IS THAT CORRECT?
16 THE WITNESS: THAT'S CORRECT.
17 THE COURT: OKAY.
18 THE WITNESS: THEY WANTED TO CHANGE; THAT'S WHAT
19 THEY PURCHASED.
20 THE COURT: OKAY. AND THE CHANGE WAS THE CHANGE
21 OF THE USE?
22 THE WITNESS: THE CHANGE WAS THAT, IF THERE WAS A
23 CHANGE IN USE, THEY WOULD STILL RETAIN THE SAME PARKING
24 RIGHTS.
25 Q BY MR. BLECHER: THAT'S WHAT THE DEED
26 RESTRICTION THAT THEY ULTIMATELY AGREED UPON ON
27 SEPTEMBER 25TH PROVIDED.

51
1 Q AND THEN MR. BUNGE CAME BACK A FEW DAYS
2 LATER AND SAID, "I'M INTERESTED IN BUYING 601 AND BUYING
3 SOMETHING MORE THAN THAT AGREED UPON IN THE DEED
4 RESTRICTION."
5 MR. BEECHEN: OBJECTION; LEADING.
6 THE COURT: SUSTAINED.
7 Q BY MR. BLECHER: WHAT DID YOU UNDERSTAND
8 THE OFFER IN 140 TO CONSIST OF AS COMPARED WITH THE DEED
9 RESTRICTION THAT HAD BEEN AGREED UPON A FEW DAYS
10 EARLIER?
11 A THE ADDENDUM IN 140?
12 Q YES, SIR.
13 A WELL, IN THE ADDENDUM THEY WERE ASKING
14 TO -- THAT THE SELLERS BE 511 OFW, L.P. AND GINGERBREAD
15 COURT L.P. AND BOARDWALK SUNSET, LLC AS SELLERS. AND
16 THAT WAS GOING TO BE AN ADDENDUM TO THE PURCHASE
17 AGREEMENT FOR 511 AND 517.
18 Q SO YOU UNDERSTOOD THEY WERE TRYING TO
19 CRUNCH ALL THREE PROPERTIES TOGETHER?
21 Q AND WAS THERE A DIFFERENCE IN THE NATURE
22 OF THE PARKING RIGHTS THAT THEY WOULD ACQUIRE UNDER THE
23 ADDENDUM, EXHIBIT 140, AS OPPOSED TO WHAT HAD BEEN
24 AGREED UPON ON SEPTEMBER 25TH?
25 A THE DIFFERENCE IN THE PARKING RIGHTS?
26 Q YES.
27 A I DON'T SEE WHERE IT REFERS TO THE PARKING
28 RIGHTS.

52
1 Q CAN I ASK YOU, THEN, TO LOOK AT THE
2 DEPOSITION.
3 THE COURT: AND THE PAGE AND LINES THAT YOU WANT
4 THE WITNESS TO LOOK AT?
5 MR. BLECHER: IT SHOULD BE PAGE 119. THAT'S NOT
6 RIGHT.
7 Q DO YOU HAVE ANY RECOLLECTION OF TESTIFYING
8 THAT, WHEN YOU SAW THESE CHANGES EVIDENCED BY EXHIBIT
9 140, YOU THOUGHT THERE WERE EXTENSIVE CHANGES TO THE
10 PARKING RIGHTS?
11 A I DON'T RECALL WHAT MY THOUGHTS WERE THERE
12 OR WHAT'S IN THIS AGREEMENT THAT'S REFERRED TO THERE OR
13 THIS PROPOSED ADDENDUM.
14 Q NOW, IF YOU MOVE OVER TO 142, IS THAT AN
15 E-MAIL YOU SENT TO MR. GAGGERO --
16 A YES, SIR.
17 Q -- ON OR ABOUT OCTOBER 5?
19 Q AND THE SECOND PART OF IT RECITES ANOTHER
20 QUESTION ON THE DEED RESTRICTION. DID YOU GIVE THOUGHTS
21 TO CHANGING THE TERM "NORMAL BUSINESS HOURS" TO "24
22 HOURS"? I CAN'T REMEMBER IF WE DISCUSSED. DO YOU SEE
23 THAT?
24 A YES.
25 Q YOU'RE SUGGESTING TO MR. GAGGERO THAT THE
26 BUNGES WANTED TO CHANGE IN THE DEED RESTRICTION "NORMAL
27 BUSINESS HOURS" TO "24 HOURS."
28 A RIGHT.

53
1 MR. BLECHER: MARK AND OFFER 142, YOUR HONOR.
2 MR BEECHEN: NO OBJECTION.
3 THE COURT: 142 IS ADMITTED.
4 Q BY MR. BLECHER: AND IF YOU LOOK AT
5 EXHIBIT 143, THAT'S AN E-MAIL FROM MR. GAGGERO REJECTING
6 THE 24-HOUR REQUEST. DO YOU SEE THAT?
7 A THAT'S CORRECT.
8 MR. BLECHER: MARK AND OFFER 143, YOUR HONOR.
9 THE COURT: ONE MOMENT, PLEASE.
11 MR. BLECHER: 140?
12 THE COURT: I'M SORRY? LET ME DO THIS ONE AT A
13 TIME. AS TO 143, SINCE THERE'S NO OBJECTION, IT WILL BE
14 ADMITTED.
15 I'M SORRY, WHICH ONE?
16 MR. BLECHER: 140, YOUR HONOR.
18 THE COURT: OKAY. SINCE THERE'S NO OBJECTION,
19 WE'LL ADMIT THAT.
20 Q BY MR. BLECHER: NOW, WE DISCUSSED A
21 LITTLE BIT ABOUT YOUR EFFORTS TO RECORD THIS DOCUMENT AS
22 I RECALL YESTERDAY.
23 A YES, SIR.
24 Q LET ME ASK YOU IF YOU HAVE THE RIGHT BOOK
25 UP THERE TO LOOK AT EXHIBIT 48.
26 A I HAVE 48.
27 Q THIS IS IN NOVEMBER OF 2007?
28 A YES, SIR.

54
1 Q AND I THINK WE ESTABLISHED YESTERDAY THE
2 DISCUSSION WITH THE TITLE COMPANY ABOUT THE
3 RECORDABILITY OF THE DEED RESTRICTION OCCURRED SOMEWHERE
4 AROUND THE 19TH.
5 A THAT'S CORRECT.
6 Q SO THIS WAS BEFORE THAT.
7 A YES.
8 Q NOW, THIS IS AN E-MAIL FROM MR. KAHN TO
9 THE TITLE COMPANY, MR. MIZRAHI, A COPY TO MR. BUNGE,
10 WITH NO COPY TO YOU OR MR. GAGGERO. DO YOU SEE THAT?
12 Q DID YOU EVER SEE THIS E-MAIL BEFORE?
13 A NO, I DIDN'T.
14 Q MR. KAHN OR MR. BUNGE DID NOT SHARE THIS
15 WITH YOU?
16 A NO.
17 Q DID YOU HAVE ANY IDEA THAT MR. BUNGE
18 UNILATERALLY AND WITHOUT ANY CONSENT FROM EITHER YOU OR
19 MR. GAGGERO WAS TRYING TO GET THE TITLE COMPANY AGAIN TO
20 CONNECT THE TWO TRANSACTIONS INTO ONE?
21 A NO, I DIDN'T.
22 MR. BLECHER: WE WOULD OFFER 48 INTO EVIDENCE.
24 THE COURT: IT WOULD BE HELPFUL IF COUNSEL WOULD
25 ASK THAT IT BE MARKED AT THE VERY BEGINNING SO I CAN
26 KEEP TRACK OF THEM WITHOUT HAVING TO STOP. ONE MOMENT.
27 48 IS NOT IN EVIDENCE. WE'LL MARK IT. ANY OBJECTION TO
28 ADMISSION?

55
1 MR. BEECHEN: NO.
2 THE COURT: 48 COMES IN.
3 Q BY MR. BLECHER: NOW, I'LL ASK YOU TO TURN
4 TO THE PAGE TO EXHIBIT 49, SIR.
5 THE COURT: CAN I -- I'M SORRY, BEFORE YOU DO
6 THAT. CAN YOU GO BACK TO 143?
7 MR. BLECHER: YOU'RE ASKING ME FOR PERMISSION?
8 THE COURT: NO. I'M ASKING YOUR WITNESS TO GO TO
9 143.
10 MR. BLECHER: JUST KIDDING.
11 THE COURT: THE E-MAIL FROM YOU THAT REFERS TO
12 CHANGING THE TERM "NORMAL BUSINESS HOURS" TO "24
13 HOURS" -- YOU HAVE THE PHRASE, "NORMAL BUSINESS HOURS"
14 IN QUOTES. WHERE ARE YOU QUOTING FROM?
15 THE WITNESS: I THINK THAT'S THE WAY IT WAS
16 REFERRED TO IN THE COASTAL COMMISSION DOCUMENTS FROM
17 THE --
18 MR. BLECHER: EXHIBIT 2.
19 THE COURT: CAN YOU SHOW ME WHERE? I LOOKED, AND
20 I CAN'T FIND IT. AND I WANT TO SEE IF THAT IS ACTUALLY
21 THE PHRASE.
22 THE WITNESS: WHAT EXHIBIT?
23 THE COURT: 2 IS THE COASTAL COMMISSION DEED
24 RESTRICTION.
25 MR. BLECHER: IT'S ON THE SECOND PAGE. THEY
26 ACTUALLY REFER TO IT AS THE "HOURS" -- "SPACES WILL BE
27 AVAILABLE DURING ALL HOURS THAT THE RETAIL USES ARE OPEN
28 FOR BUSINESS."

56
1 THE COURT: IS THAT WHAT YOU'RE REFERRING TO?
2 THE WITNESS: THAT'S WHAT I WAS REFERRING TO.
3 THE COURT: SO YOU ARE REFERRING TO THE PHRASE,
4 "ALL HOURS THAT THE RETAIL USES ARE OPEN FOR BUSINESS"?
5 THE WITNESS: YES.
6 THE COURT: SO IF IT WERE A 24-HOUR OPERATION
7 LIKE SOME SUPERMARKETS, THEN IT WOULD BE OPEN 24 HOURS.
8 THE WITNESS: I ASSUME SO.
9 THE COURT: ALL RIGHT. PLEASE CONTINUE.
10 Q BY MR. BLECHER: I THINK WE'RE LOOKING AT
11 49 AND ASKING WHETHER THAT'S A DOCUMENT YOU RECEIVED
12 FROM MS. FRANEY.
13 A YES.
14 MR. BLECHER: I'LL ASK 49 BE MARKED.
15 THE COURT: I'M SORRY? 49 IS MARKED.
16 MR. BEECHEN: IF HE'S OFFERING IT, NO OBJECTION.
17 THE COURT: ALL RIGHT. HOLD ON.
18 Q BY MR. BLECHER: MR. FOLKERT, WHEN YOU
19 RECEIVED IT, DID IT HAVE THE HANDWRITTEN NOTES ON THE
20 BOTTOM?
21 A NO.
22 Q AND THE NOTES INDICATE THAT YOU TALKED
23 WITH SOMEBODY ON 11/19 AT 10:31, PRESUMABLY IN THE
24 MORNING. DO YOU SEE THAT?
25 A IT SAYS LEFT VOICE MAIL FOR ME. SOMEBODY
26 LEFT ME A VOICE MAIL, I BELIEVE IS WHAT THEY ARE
27 REFERRING TO. "L.V.M.," LEFT VOICE MAIL "FOR TED F."
28 Q DO YOU KNOW WHO LARRY BROWN IS?

57
1 A NO.
2 THE COURT: I MUST ADMIT, THE LINE OF QUESTIONING
3 ON THIS EXHIBIT, I'VE MISSED HALF OF IT. I CAN'T HEAR,
4 AND I'M NOT SURE WHAT'S GOING ON. IF COUNSEL WANTS THE
5 COURT TO CONSIDER THIS, I NEED TO HEAR WHAT'S GOING ON.
6 YOU DIDN'T WAIT FOR A RULING ON WHETHER IT WAS ADMITTED,
7 SO AT THIS POINT IT'S NOT. AND I HAVE TO TELL YOU THAT
8 THERE'S SOME DISCUSSION OF THE HANDWRITING, BUT I DIDN'T
9 CATCH THAT.
10 DO YOU KNOW WHOSE HANDWRITING THIS IS?
11 THE WITNESS: NO, I DON'T. IT WAS SENT TO ME BY
12 PATTY FRANEY. I DON'T KNOW IF THAT'S HER HANDWRITING OR
13 NOT.
14 THE COURT: ALL RIGHT. LET ME CATCH UP WITH
15 THIS, THEN. THE COURT WILL ADMIT IT BECAUSE THERE IS NO
16 OBJECTION FROM THE OPPOSITION.
17 THE CLERK: THAT'S NUMBER --
18 MR. BEECHEN: 49.
19 THE COURT: 49.
20 THE CLERK: THANK YOU, YOUR HONOR.
21 THE COURT: OKAY. ALL RIGHT. LET'S PROCEED.
22 Q BY MR. BLECHER: NOW, LET ME ASK YOU TO
23 LOOK AT EXHIBIT 59.
24 A 59?
25 Q FIRST TO 56. SORRY.
26 MR. BLECHER: I ASK YOUR HONOR THAT THAT BE
27 MARKED.
28 THE COURT: SURE. IT'S SO MARKED.

58
1 MR. BEECHEN: I THINK IT'S IN EVIDENCE, YOUR
2 HONOR.
3 THE COURT: HOLD ON. IT HAS BEEN ADMITTED INTO
4 EVIDENCE --
5 MR. BLECHER: THANK YOU, YOUR HONOR.
6 THE COURT: -- PREVIOUSLY.
7 Q BY MR. BLECHER: THAT'S YOUR MEMO
8 REPORTING TO MR. GAGGERO ABOUT YOUR EXPERIENCE IN
9 RESPECT TO RECORDING THE DEED RESTRICTION THAT WAS
10 AGREED TO BACK IN SEPTEMBER; CORRECT?
12 Q NOW, IF YOU COULD GO TO EXHIBIT 59, SIR,
13 AND IDENTIFY THAT AS AN E-MAIL YOU SENT TO MR. GAGGERO.
14 A YES.
15 MR. BLECHER: YOUR HONOR, I ASK THAT BE MARKED --
16 THE COURT: IT WAS ADMITTED YESTERDAY.
17 Q BY MR. BLECHER: AND THE SECOND LINE OF
18 YOUR E-MAIL WHICH SAID, "ANYTHING TO OFFER THEM IN THE
19 601 PARKING LOT," DOES THAT REFLECT THAT WAS AN INQUIRY
20 YOU RECEIVED FROM MR. BUNGE?
21 A YES.
22 Q AND YOU PASSED ALONG TO MR. GAGGERO?
24 Q LET'S LOOK AT EXHIBIT 60. WE'RE NOW INTO
25 DECEMBER. YOU SEE IT'S AN E-MAIL YOU GOT FROM
26 MR. GAGGERO.
27 A YES.
28 Q AND ATTACHED TO THE SIMPLE E-MAIL IS A

59
1 TWO-PAGE DOCUMENT CALLED "PARKING AGREEMENT." DO YOU
2 SEE THAT?
3 A YES, SIR.
4 MR. BLECHER: I'M GOING TO ASK, YOUR HONOR, IT BE
5 MARKED.
6 THE COURT: WE'LL MARK THIS.
7 MR. BLECHER: "60."
8 Q AND DID YOU IDENTIFY THIS AS SOMETHING YOU
9 RECEIVED FROM MR. GAGGERO?
11 MR. BLECHER: SO I'LL OFFER 60 INTO EVIDENCE.
13 THE COURT: IT COMES IN.
14 Q BY MR. BLECHER: WHO CREATED, AS FAR AS
15 YOU KNOW, THE PARKING AGREEMENT THAT'S ATTACHED TO THE
16 E-MAIL?
17 A MR. GAGGERO SENT IT TO ME.
18 Q AND HE INQUIRED IF YOU WOULD HAVE A LOOK
19 INTO THE TRUST. DO YOU SEE THAT?
20 A YES.
21 Q AND THEN IN EXHIBIT 61, YOU KIND OF
22 "FUTZED" WITH IT, WOULD YOU SAY, AND SENT IT BACK. DO
23 YOU SEE THAT?
24 A YES.
25 MR. BLECHER: SO WE'LL MARK 61, PLEASE.
26 THE COURT: WAS ADMITTED YESTERDAY.
27 THE REPORTER: YOUR HONOR, IF MR. BLECHER COULD
28 PULL THE MICROPHONE CLOSER.

60
1 Q BY MR. BLECHER: IN 61 YOU'RE REDOING
2 MR. GAGGERO'S INITIAL PARKING LOT AGREEMENT.
3 A THAT'S CORRECT.
4 Q AND HERE YOU ARE NOW IN DECEMBER, ALMOST
5 THREE MONTHS FROM THE SEPTEMBER 25 AGREEMENT ON THE DEED
6 RESTRICTION, TALKING ABOUT WHOLE NEW IDEAS.
7 A THAT'S CORRECT.
8 Q WHY?
9 A TWO REASONS. ONE, THEY INDICATED THAT
10 THEY WERE HAVING A PROBLEM WITH THE DEED RESTRICTION
11 THAT WAS AGREED TO BECAUSE OF ITS UNRECORDABILITY OR
12 INDEXING OR SOMETHING OF THAT NATURE. AND, SECONDLY,
13 MR. BUNGE CONTINUALLY WANTED TO TRY TO NEGOTIATE A 24/7
14 PARKING AGREEMENT WITH FEWER SPACES AND SOMETHING THAT
15 HE FELT MORE COMFORTABLE WITH.
16 Q DID MR. BUNGE EVER SAY TO YOU IN DIRECT
17 WORDS OR BY IMPLICATION THAT THE DEED RESTRICTION
18 LANGUAGE WAS NOT, IN HIS OPINION, ADEQUATE TO SUPPORT
19 THE HOTEL OR APARTMENT THAT HE WAS CONTEMPLATING FOR THE
20 TWO LOTS IN THE AGREEMENT, PURCHASE AGREEMENT?
21 A HE NEVER STATED THAT TO ME, NO.
22 Q NOW, IN EXHIBIT 63, SIR, THAT'S AN E-MAIL
23 STRING BETWEEN AND YOU MR. GAGGERO?
24 A YES.
25 Q AND THAT'S MORE OF AN EFFORT TO COMPLETELY
26 REDO AND SUBSTITUTE FOR THE DEED RESTRICTION; CORRECT?
27 A WOULD YOU REPEAT THAT QUESTION?
28 Q YES. 63 EVIDENCE IS CONTINUED EFFORTS TO

61
1 COMPLETELY REDO AND REPLACE THE ORIGINAL SEPTEMBER 25
2 DEED RESTRICTION.
3 A YES, THAT'S CORRECT.
4 Q NOW, WE'RE AFTER CHRISTMAS IN DECEMBER
5 2008; CORRECT?
6 A YES.
7 Q AND IS 64 MORE OF THAT ACTIVITY,
8 MR. FOLKERT?
10 Q AS IS 65?
11 A YES.
12 Q AND CAN YOU PLEASE IDENTIFY 66 AS AN
13 E-MAIL EXCHANGE BETWEEN AND YOU MR. GAGGERO IN EARLY
14 JANUARY 2008.
16 MR. BLECHER: WE WOULD ASK YOU TO MARK AND ADMIT
17 66.
18 THE COURT: OBJECTIONS?
20 THE COURT: ALL RIGHT. 66 IS ADMITTED.
21 Q BY MR. BLECHER: NOW, LOOK AT 70. BY THE
22 THIRD WEEK IN JANUARY, IS IT CORRECT THAT MR. BUNGE WAS
23 MAKING NOISES THAT THIS DEAL WASN'T GOING TO WORK
24 BECAUSE OF THE COST OF THE PARKING?
25 A YES, SIR.
26 Q CAN YOU LOOK, PLEASE, AT 71.
27 A YES, SIR.
28 Q AND THAT'S A LETTER MR. GAGGERO SENT TO

62
1 MR. BUNGE THROUGH YOU?
2 A THAT'S CORRECT.
3 Q DID YOU INDEPENDENTLY DISCUSS WITH MR. OR
4 MRS. BUNGE THAT THE OWNERS OF 511 AND 517 REMAIN READY,
5 WILLING, AND ABLE TO CARRY OUT THE PURCHASE AND SALE
6 AGREEMENT?
7 A YES.
8 Q AND DID YOU ALSO TELL HIM THAT THE OWNER
9 OF 601 WAS READY, WILLING, AND ABLE TO COMPLY WITH THE
10 DEED RESTRICTION OF SEPTEMBER 25 THAT WE LOOKED AT
11 EARLIER?
12 A YES.
13 Q NOW, IN THE CENTER OF THE PAGE IT SAID
14 THEY ARE NOT ONLY WILLING -- THE OWNER OF 601 READY AND
15 WILLING TO COMPLY AND RECORD. DO YOU SEE THAT, THE
16 DOCUMENT?
17 A IS THIS ON THE LETTER OF JANUARY 22ND?
18 Q YES. JUST BELOW THE SECOND RING.
19 A YES, I SEE THAT.
20 Q NOW, AFTER JANUARY 22, ARE YOU AWARE OF
21 ANY EFFORT MR. BUNGE MADE THROUGH HIS LAWYER OR
22 OTHERWISE TO RECORD THE DEED RESTRICTION?
23 A NO.
24 Q AND THEN IN EXHIBIT 72, MR. BUNGE PURPORTS
25 TO CALL OFF THE ENTIRE TRANSACTION. DO YOU SEE THAT?
26 A YES.
27 Q 189. LET ME ASK YOU, SIR, TO LOOK AT
28 EXHIBIT 189. IS THAT AN E-MAIL YOU SENT TO MR. GAGGERO

63
1 IN DECEMBER IN RESPECT TO TRYING TO COME UP WITH A NEW
2 FORM OF PARKING AGREEMENT?
3 A THAT'S CORRECT.
4 Q SO WE'D ASK YOUR HONOR PLEASE THAT IT BE
5 MARKED, 189.
6 THE COURT: I'M SORRY. 189?
7 MR. BLECHER: 189.
8 THE COURT: ANY OBJECTIONS?
9 MR. BEECHEN: NO OBJECTIONS.
11 Q BY MR. BLECHER: ALSO I'D ASK YOU TO LOOK,
12 SIR, AT 193. IS THAT A DOCUMENT YOU SENT TO MR. GAGGERO
13 AFTER CONFERRING WITH MR. BUNGE?
14 A YES, SIR.
15 MR. BLECHER: WE'D OFFER 193 -- ACTUALLY, MARK
16 AND OFFER INTO EVIDENCE 193.
17 THE COURT: OBJECTION?
19 THE COURT: 193 WILL BE ADMITTED.
20 Q BY MR. BLECHER: AND 194 IS ALSO AN E-MAIL
21 STRING BETWEEN YOURSELF AND MR. GAGGERO.
23 Q AND IN THERE YOU MADE THE OBSERVATION THAT
24 ONE OF THE NEW AGREEMENTS THAT WE LOOKED AT, THE OPTION
25 AND LEASE, QUOTE, "SEEMS LIKE A REASONABLE WAY TO
26 RESOLVE THE ISSUE." DO YOU SEE THAT?
27 A YES.
28 Q AND YOU SUGGEST THAT THAT AGREEMENT SHOULD

64
1 GIVE THE BUNGES WHATEVER ASSURANCE THEY NEED THAT THE
2 PARKING CANNOT BE DENIED IN THE FUTURE.
3 A THAT'S CORRECT.
4 MR. BLECHER: YOUR HONOR, WE ASK THAT YOU MARK
5 AND ADMIT 194.
8 MR. BLECHER: I THINK I'M THERE. TWO SECONDS IF
9 YOUR HONOR PLEASE.
10 THE COURT: OKAY.
11 Q BY MR. BLECHER: TO COMPLETE THE RECORD,
12 COULD I ASK YOU, SIR, TO LOOK AT 119?
13 A 119?
14 Q UH-HUH. IS THAT AN E-MAIL FROM
15 MR. GAGGERO TO YOU OF SEPTEMBER 14, 2007?
17 Q AND IF YOU'LL TURN TO PAGE -- CAN YOU TELL
18 ME WHETHER THIS APPEARS TO YOU TO BE RESPONSIVE TO THE
19 E-MAIL THAT'S MARKED EXHIBIT 118?
20 A WOULD YOU REPEAT THAT, PLEASE.
21 Q DOES 119 APPEAR TO BE MR. GAGGERO'S
22 RESPONSE TO EXHIBIT 118, WHICH IS AN E-MAIL TO YOU FROM
23 MR. GAGGERO?
24 A YES.
25 MR. BLECHER: AND I WOULD ASK YOUR HONOR TO MARK
26 AND ADMIT 118 AND 119.
28 THE COURT: BOTH WILL BE ADMITTED. THAT'S 118

65
1 AND 119.
2 THE CLERK: 18 AND 19?
3 THE COURT: 118 AND 119.
4 THE CLERK: THANK YOU, YOUR HONOR.
5 Q BY MR. BLECHER: DID MR. BUNGE DISCUSS THE
6 CANCELLATION LETTER OR CONCEPT OF CANCELLATION WITH YOU
7 BEFORE HE SENT THE LETTER OF CANCELLATION?
8 A NO, HE DIDN'T.
9 Q THAT CAME TO YOU OUT OF THE CLEAR BLUE?
11 MR. BLECHER: I THINK I HAVE NOTHING FURTHER,
12 YOUR HONOR.
13 THE COURT: OKAY. THANK YOU. MR. BEECHEN?
14 MR. BEECHEN: YES.
15 MR. BLECHER: I SET UP THE MICROPHONE.
17
18 REDIRECT EXAMINATION
19 BY MR. BEECHEN:
20 Q MR. FOLKERT, I WANT TO DISCUSS SOME BASICS
21 ABOUT WHEN YOU'RE CREATING AN AGREEMENT, A REAL ESTATE
22 AGREEMENT, THAT IS GOING TO INVOLVE THE RECORDING OF
23 DOCUMENTS, IS IT CORRECT THAT YOU WANT TO MAKE SURE THAT
24 THE ENTITY THAT IS SIGNING THAT AGREEMENT IS THE ENTITY
25 THAT APPEARS TO BE THE OWNER OF TITLE, THAT IS THE
26 RECORD OWNER OF THAT PARTICULAR PIECE OF PROPERTY?
27 A I BELIEVE THE RECORD OWNER IS THE ONLY ONE
28 THAT CAN SELL THE PROPERTY.

66
1 Q OKAY. AND IS IT COMMON -- NOT SALE, BUT
2 ALSO ENCUMBERS, SUCH AS THE 601 SITUATION?
3 A RIGHT.
4 Q SO YOU WOULD HAVE TO HAVE 601, THE TITLE
5 OWNER, BE THE SIGNATOR OF AN AGREEMENT TO RECORD THE
6 DEED RESTRICTION; IS THAT CORRECT?
7 A I BELIEVE THAT'S CORRECT.
8 Q ALL RIGHT. AND IN THIS CASE, THAT ENTITY
9 IS CALLED BOARDWALK SUNSET, LLC.
10 A YES.
11 Q AND, LIKEWISE, THE AGREEMENT FOR THE SALE
12 OF THE PROPERTY WOULD HAVE TO BE SIGNED BY THE ENTITY
13 THAT HOLDS TITLE TO 511 AND 517 --
14 A YES.
15 Q -- CORRECT? NOW YOU'RE FAMILIAR WITH THE
16 FACT THAT INDIVIDUALS OR GROUPS OF INDIVIDUALS WILL
17 CREATE ENTITIES TO HOLD TITLE TO PROPERTY; CORRECT?
18 A YES.
19 Q ALL RIGHT. SO IN OTHER WORDS, THE FACT
20 THAT 601 IS CALLED "BOARDWALK SUNSET" AND 511 IS CALLED
21 "511 OCEAN FRONT WALK, L.P.," IT COULD STILL HAVE THE
22 SAME COMMON OWNERS. IT'S JUST THAT THE TITLE IS HELD IN
23 DIFFERENT ENTITY NAMES. CORRECT?
24 A CORRECT.
25 Q AND AS FAR AS YOU WERE CONCERNED IN YOUR
26 INTERACTIONS AND CONNECTION WITH THESE PROPERTIES GOING
27 BACK TO EVEN 1989, YOU ALWAYS CONSIDERED MR. GAGGERO TO
28 BE THE OWNER OF THESE PROPERTIES.

67
1 A I NEVER KNEW WHO THE OWNERS WERE OTHER
2 THAN THE PARKING LOT WE LEASED FROM HIM BACK IN '89, AND
3 HE WAS THE OWNER OF IT AT THAT TIME.
4 Q ALL RIGHT. BUT YOU NEVER LEARNED THAT HE
5 HAD CEASED BEING THE OWNER; CORRECT?
6 A I DID WHEN WE RE-ARRIVED ON THE SCENE, I
7 THINK, IN ABOUT '97.
8 Q GO BACK TO EXHIBIT 142. EXHIBIT 142 YOU
9 TALK ABOUT -- YOU'RE SAYING TO MR. GAGGERO -- DO YOU
10 HAVE THAT IN FRONT OF YOU, SIR?
11 A YES, I DO.
12 Q YOU'RE SAYING TO MR. GAGGERO, "DO YOU HAVE
13 ANY THOUGHTS ABOUT CHANGING THE TERM 'NORMAL BUSINESS
14 HOURS' TO '24 HOURS'?" THIS IS, QUOTE, ANOTHER QUESTION
15 ON THE DEED RESTRICTION. CORRECT?
16 A YES.
17 Q ALL RIGHT. NOW, IF YOU LOOK AT THE DEED
18 RESTRICTION, WHICH IS EXHIBIT 31, THAT WHOLE AGREEMENT,
19 AND SPECIFICALLY EXHIBIT A OR -- EXCUSE ME -- EXHIBIT B
20 TO THAT AGREEMENT, WHICH IS THE DEED RESTRICTION THAT
21 WAS SUPPOSED TO BE RECORDED --
22 A I DON'T THINK THAT'S THE RIGHT NUMBER, 31.
23 Q I THINK IT IS.
24 A 31?
25 Q 31.
26 A THIS AGREEMENT AND ESCROW INSTRUCTIONS.
27 Q RIGHT. IF YOU GO FURTHER DOWN, AT THE
28 BOTTOM IT SAYS "PAGE 527."

68
1 A 527. OKAY. 527.
2 Q SO THIS IS THE DEED RESTRICTION THAT WAS
3 GOING TO BE RECORDED IN CONNECTION WITH 601; CORRECT?
4 A CORRECT.
5 Q THIS IS THE DEED RESTRICTION THAT YOU'RE
6 MAKING REFERENCE TO IN EXHIBIT 142; CORRECT?
7 A I DON'T KNOW IF I'M MAKING REFERENCE TO
8 THAT DEED RESTRICTION OR NOT. I KNOW THIS WAS EARLY
9 OCTOBER, AND JOSE HAD MADE AN OFFER TO HAVE A DIFFERENT
10 PARKING AGREEMENT WHICH HE WAS WILLING TO PAY MORE MONEY
11 FOR AND ACCEPT LESS SPACES FOR A LARGER PAYMENT AND
12 24-HOUR USE. SO I DON'T KNOW IF HE WAS REFERRING TO
13 THAT OR REFERRING TO THIS AGREEMENT.
14 Q ALL RIGHT. WELL, THIS AGREEMENT, THIS
15 EXHIBIT TO -- EXHIBIT 31, THIS DEED RESTRICTION
16 ATTACHMENT TO ADDITIONAL ESCROW INSTRUCTIONS DATED
17 11/16/07 --
18 A YES.
19 Q -- IT MAKES NO MENTION OF ANY LIMITATION
20 ON WHEN PARKING WOULD BE AVAILABLE UNDER THE DEED
21 RESTRICTION, DOES IT?
22 A NO. THIS WAS JUST AN AGREEMENT THAT, IF
23 THAT RIGHT WAS LOST, THAT IT WOULD CONTINUE AS IT WAS IN
24 THE ORIGINAL AGREEMENT WITH THE COASTAL COMMISSION.
25 Q AND, IN FACT, THERE ISN'T ONE WORD IN
26 EXHIBIT 31, AGREEMENT FOR THE RECORDING OF THE DEED
27 RESTRICTION, WHICH PUTS ANY LIMITATION ON WHEN THE
28 PARKING WOULD BE AVAILABLE TO THE BUNGES UNDER THIS

69
1 AGREEMENT.
2 A NO. IT WOULD REFER BACK TO THE ORIGINAL
3 COASTAL DOCUMENT.
4 Q CORRECT. ALL RIGHT. NOW, YOU SAID HERE
5 TODAY THAT YOU CONTINUOUSLY TOLD THE BUNGES THAT THE
6 AGREEMENT BETWEEN 601 AND 511 AND 517 WERE SEPARATE
7 DOCUMENTS, THAT, IF I UNDERSTOOD YOUR TESTIMONY HERE
8 TODAY, YOU SAID, "LOOK, THEY ARE COMPLETELY SEPARATE,
9 INDEPENDENT, HAVING NOTHING TO DO WITH ONE ANOTHER."
10 THAT WAS YOUR TESTIMONY; CORRECT?
11 A CORRECT.
12 Q LET ME READ TO YOU FROM YOUR DEPOSITION.
13 A OKAY.
14 Q PAGE 62.
15 THE COURT: LINES?
16 MR. BEECHEN: LINES 4 THROUGH 17.
17 THE COURT: LET'S SEE IF THERE'S ANY OBJECTION.
18 MR. ANDREWS: I BELIEVE HE READ THIS YESTERDAY.
19 THE COURT: ASIDE FROM THAT, IS THERE ANY
20 OBJECTION?
21 MR. BLECHER: NO, YOUR HONOR.
22 THE COURT: WAS THIS READ YESTERDAY?
23 MR. BEECHEN: IT WAS READ YESTERDAY, BUT I WANT
24 TO REEMPHASIZE THAT HE'S SAYING ONE THING NOW AND QUITE
25 ANOTHER IN HIS DEPOSITION.
26 THE COURT: RIGHT. BUT IF IT WAS READ INTO THE
27 RECORD YESTERDAY, THEN IT DOESN'T NEED TO BE READ AGAIN.
28 MR. BEECHEN: I WON'T READ IT AGAIN.

70
2 MR. BEECHEN: THE COURT HAS HEARD IT.
3 Q BUT WHICH IS THE TRUTH, SIR?
4 A WHICH IS THE TRUTH?
5 Q WHAT YOU SAID IN YOUR DEPOSITION --
6 MR. BLECHER: THAT'S ARGUMENTATIVE. BECAUSE
7 THERE'S NO INCONSISTENCY.
8 THE WITNESS: I DON'T LIE, SO EITHER ONE I SAID,
9 BOTH I SAID WERE TRUE.
10 MR. BLECHER: I'M OBJECTING ON THE GROUNDS IT'S
11 AN ARGUMENTATIVE QUESTION BECAUSE IT ASSUMES THERE IS AN
12 INCONSISTENCY AND, INDEED, THERE IS NONE.
13 THE COURT: HOLD ON. ALL RIGHT. LET ME TAKE A
14 LOOK. I'M SORRY. PAGE 62.
15 MR. BEECHEN: 62, LINES 4 THROUGH 17.
16 MR. BLECHER: EXACTLY WHAT HE SAID YESTERDAY.
17 THE COURT: ONE MOMENT, PLEASE. THE OBJECTION IS
18 OVERRULED. IN ONE INSTANCE, THE WITNESS IS SAYING HE
19 NEVER SPOKE TO THEM ABOUT THAT. THE OTHER INSTANCE HE'S
20 SAYING HE CONTINUALLY SPOKE TO THEM ABOUT THAT. AND SO
21 TO THAT EXTENT, THE OBJECTION -- THE QUESTION IS PROPER.
22 OVERRULED.
23 WHY DON'T YOU ASK THE QUESTION AGAIN.
24 Q BY MR. BEECHEN: WHICH WAS THE TRUTH, SIR?
25 THE ONE YOU SAID HERE OR THE ONE YOU SAID IN THE
26 DEPOSITION?
27 A WELL, THE QUESTION PROBABLY CAME TO ME IN
28 A DIFFERENT MANNER AND MAYBE I DIDN'T ANSWER YOUR

71
1 QUESTION CORRECTLY. I ANSWERED IT TRUTHFULLY, BUT MAYBE
2 I MISUNDERSTOOD YOUR QUESTION.
3 Q STILL WORK FOR -- STILL MANAGE THE
4 PROPERTIES AT 511, 517, AND 523, AND 601?
5 A YES, SIR.
6 Q DO YOU STILL WORK FOR MR. GAGGERO?
7 A PARDON ME?
8 Q DO YOU STILL PROVIDE SERVICES TO
9 MR. GAGGERO?
10 A I PROVIDE SERVICES FOR PACIFIC COAST
11 MANAGEMENT, WHO IS THE ASSET MANAGER OF THOSE
12 PROPERTIES, AND MR. GAGGERO IS THE PERSON THAT I
13 COMMUNICATE WITH THERE SOMETIMES.
14 MR. BEECHEN: THANK YOU, SIR. NO FURTHER
15 QUESTIONS.
16 THE COURT: DEFENSE?
17 MR. BLECHER: NO QUESTIONS, YOUR HONOR.
18 THE COURT: OKAY. EITHER SIDE WISH THIS WITNESS
19 TO REMAIN ON CALL?
20 MR. BEECHEN: I DON'T THINK IT'S NECESSARY, YOUR
21 HONOR.
23 THE COURT: THANK YOU, MR. FOLKERT. I APPRECIATE
24 YOU COMING IN. THANK YOU VERY MUCH.
25 THE WITNESS: THANK YOU, YOUR HONOR.
26 THE COURT: WHY DON'T WE TAKE THE AFTERNOON
27 RECESS. 15 MINUTES AND THEN WE'LL RECONVENE. THE
28 ATTORNEYS ARE ORDERED BACK.

72
1 (RECESS TAKEN FROM 2:50 P.M. TO 3:10 P.M.)
2 THE COURT: BACK ON THE RECORD. THE ATTORNEYS
3 ARE PRESENT. MR. BEECHEN, DO YOU WISH TO CALL YOUR NEXT
4 WITNESS?
5 MR. BEECHEN: YES. CALL THE NEXT WITNESS, PATTY
6 FRANEY.
7 THE COURT: PLEASE COME FORWARD, AND I'LL ASK YOU
8 TO RAISE YOUR RIGHT HAND TO BE SWORN BY THE CLERK.
9
10 PATRICIA LYNNE FRANEY,
11 CALLED ON BEHALF OF THE PLAINTIFF, HAVING BEEN DULY
12 SWORN, WAS EXAMINED AND TESTIFIED AS FOLLOWS:
13 THE CLERK: DO YOU SOLEMNLY STATE THAT THE
14 TESTIMONY YOU MAY GIVE IN THE CAUSE NOW PENDING BEFORE
15 THIS COURT SHALL BE THE TRUTH, THE WHOLE TRUTH, AND
16 NOTHING BUT THE TRUTH, SO HELP YOU GOD?
17 THE WITNESS: YES.
18 THE CLERK: THANK YOU. PLEASE BE SEATED.
19 THE COURT: PLEASE MAKE YOURSELF COMFORTABLE.
20 PLEASE TAKE A SEAT. AND I'LL ASK YOU TO ADJUST THE
21 MICROPHONE SO YOU'RE TALKING DIRECTLY INTO THE
22 MICROPHONE. YOU CAN MOVE IT AND PULL IT. IT'S GOING TO
23 HAVE TO BE PRETTY CLOSE TO YOU.
24 WHEN YOU'RE READY, PLEASE SAY YOUR FULL NAME AND
25 THEN SPELL YOUR FULL NAME.
26 THE WITNESS: MY FULL NAME IS PATRICIA LYNNE
27 FRANEY. P-A-T-R-I-C-I-A L-Y-N-N-E F-R-A-N-E-Y.
28 THE COURT: ALL RIGHT. I'M GOING TO ASK YOU TO

73
1 PLEASE KEEP YOUR VOICE UP. OKAY? LET'S PROCEED.
2 MR. BEECHEN: FINE. THANK YOU, YOUR HONOR.
3
4 DIRECT EXAMINATION
5 BY MR. BEECHEN:
6 Q MS. FRANEY, WHERE ARE YOU CURRENTLY
7 EMPLOYED?
8 A CURRENTLY I'M EMPLOYED WITH OLD REPUBLIC
9 TITLE.
10 Q AND, IN NOVEMBER OF 2007, WHERE WERE YOU
11 EMPLOYED?
12 A MARA ESCROW.
13 Q AND WHAT WAS YOUR POSITION AT MARA ESCROW?
14 A I WAS AN ESCROW OFFICER.
15 Q AND WAS THERE ANY RELATIONSHIP, ANY
16 BUSINESS RELATIONSHIP, BETWEEN -- IN NOVEMBER OF 2007
17 BETWEEN MARA ESCROW AND OLD REPUBLIC TITLE?
18 A THEY HAD THE SAME PARENT COMPANY.
19 Q I'M SORRY?
20 A THEY HAD THE SAME PARENT COMPANY. THEY'RE
21 SISTER COMPANIES.
22 Q NOW, IN NOVEMBER OF 2007, WERE YOU
23 REQUESTED TO HANDLE AN ESCROW INVOLVING PROPERTIES
24 LOCATED AT 511, 517, AND 601 OCEAN FRONT WALK?
25 A YES.
26 Q AND IN CONNECTION WITH THAT -- IF YOU
27 COULD LOOK AT EXHIBIT 33 IN THAT WHITE BOOK, WHICH IS IN
28 FRONT OF YOU.

74
1 A THAT WOULD BE THE TAB 33?
2 Q YES.
3 A OKAY.
4 Q AND THIS IS AN E-MAIL THAT YOU RECEIVED
5 FROM A STEVE GAGGERO ON OR ABOUT OCTOBER 31 ENCLOSING AN
6 AGREEMENT AND ESCROW INSTRUCTIONS; IS THAT CORRECT?
7 A YES.
8 MR. BEECHEN: MARK AND MOVE EXHIBIT 33 INTO
9 EVIDENCE.
10 MR. BLECHER: NO OBJECTION.
11 THE COURT: ALL RIGHT. IT IS ADMITTED.
12 Q BY MR. BEECHEN: NOW, IF YOU LOOK AT
13 EXHIBIT 34, AGAIN, THIS IS AN E-MAIL ADDRESSED TO YOU
14 FROM STEVE GAGGERO BEARING THE SAME DATE AND THE SAME
15 TIME. THIS ONE DEALS WITH A P.S.A. AND JOINT ESCROW
16 INSTRUCTIONS. DO YOU SEE THAT, MS. FRANEY?
17 A YES.
18 Q OKAY. AND IS THIS ALSO AN E-MAIL WITH
19 ATTACHMENTS THAT YOU RECEIVED ON OR ABOUT OCTOBER 31,
20 2007?
21 A YES, IT DOES APPEAR THAT WAY.
22 MR. BEECHEN: MARK -- AND THAT IS EXHIBIT 34 --
23 AND MOVE THAT INTO EVIDENCE.
25 THE COURT: ALL RIGHT. SO ORDERED. IT IS
26 ADMITTED.
27 Q BY MR. BEECHEN: NOW, IF YOU COULD GO TO
28 EXHIBIT 31 -- DO YOU HAVE THAT IN FRONT OF YOU,

75
1 MS. FRANEY?
2 A YES.
3 Q ALL RIGHT. AND IS THIS THE DOCUMENT THAT
4 WAS SENT TO YOU ON OR ABOUT OCTOBER 31 REGARDING THE
5 DEED RESTRICTION?
6 A IT APPEARS TO BE THAT, YES.
7 Q AND IF YOU COULD LOOK AT EXHIBIT 32, DOES
8 THIS APPEAR TO BE THE PURCHASE AND SALE AGREEMENT THAT
9 WAS ALSO SENT TO YOU ON OCTOBER 31ST?
10 A YES, IT APPEARS TO BE.
11 Q NOW, DID YOU KNOW MR. GAGGERO BEFORE HE
12 SENT THESE DOCUMENTS TO YOU?
13 A I DON'T KNOW MR. GAGGERO PERSONALLY.
14 Q HAD YOU EVER HANDLED ANY ESCROWS IN WHICH
15 HE WAS INVOLVED PRIOR TO THESE?
16 A WE HAD WORKED TOGETHER BEFORE.
17 Q SO YOU KNEW WHO HE WAS ON A PROFESSIONAL
18 BASIS. YOU HANDLED ESCROWS IN WHICH HE HAD BEEN
19 INVOLVED?
20 A YES.
21 Q ALL RIGHT. NOW, DID YOU EXPRESS OR DID
22 MR. GAGGERO EXPRESS TO YOU THAT HE WANTED YOU -- EXCUSE
23 ME. IF YOU COULD LOOK AT EXHIBIT 35, PLEASE.
24 THE COURT: DID YOU WISH THIS MARKED?
25 MR. BEECHEN: YES, PLEASE.
26 THE COURT: WE'LL MARK 35.
27 Q BY MR. BEECHEN: NOW, IS IT CORRECT,
28 MS. FRANEY, THAT THIS IS A SERIES OF E-MAILS BETWEEN YOU

76
1 AND MR. GAGGERO THAT TAKES PLACE ON OCTOBER 31?
2 A YES.
3 Q OKAY.
4 MR. BEECHEN: MOVE EXHIBIT 35 INTO EVIDENCE.
5 THE COURT: ANY OBJECTION?
6 MR. BLECHER: I'M SORRY, YOUR HONOR. NO
7 OBJECTION.
8 THE COURT: ALL RIGHT. IT IS ADMITTED.
9 Q BY MR. BEECHEN: SO LOOKING AT THE TOP
10 E-MAIL, THE ONE ON THE VERY TOP OF THE PAGE, THE ONE
11 THAT'S DATED 4:58 P.M, DID YOU REACH THE CONCLUSION
12 GETTING THIS E-MAIL THAT MR. GAGGERO WANTED YOU TO
13 HANDLE ALL THESE ESCROWS?
14 A IT WAS A STATEMENT THAT IF I DIDN'T HANDLE
15 THE ONE, THAT HE WAS GOING TO TAKE THEM ALL AND MOVE
16 THEM.
17 Q AND IS IT CORRECT THAT YOU WOULD HAVE
18 PREFERRED TO KEEP MR. GAGGERO'S BUSINESS IF THAT WAS
19 POSSIBLE?
20 A WELL, WE ALWAYS TRY TO KEEP A CUSTOMER'S
21 BUSINESS.
22 Q I'M ASCRIBING NO ILL MOTIVES TO IT, I'M
23 JUST TRYING TO FIND OUT IF YOUR REACTION TO THIS WAS
24 "LET'S SEE IF WE CAN KEEP THAT MAN'S BUSINESS."
25 A YES.
26 Q ALL RIGHT. NOW, IF YOU LOOK AT
27 EXHIBIT 36, THIS IS AGAIN A SERIES OF E-MAILS BETWEEN
28 YOU AND MR. GAGGERO; CORRECT?

77
1 A IT APPEARS TO BE, YES.
2 Q ALL RIGHT. NOW -- AND AT THE TOP, YOU'RE
3 ASKING HIM FOR THIS EXHIBIT B, WHICH IS THE DEED
4 RESTRICTION; CORRECT?
5 A YES.
6 Q AND IS THAT BECAUSE IN THE DOCUMENT THAT
7 HAD BEEN PROVIDED TO YOU, THIS EXHIBIT B, THE DEED
8 RESTRICTION, HAD NOT BEEN ATTACHED -- HAD NOT BEEN
9 INCLUDED IN THE DOCUMENTS PROVIDED TO YOU?
10 A I DON'T RECALL SPECIFICALLY, BUT I WOULD
11 EXPECT IT. YES. THAT'S THE REASON I REQUESTED THE
12 EXHIBIT.
14 MR. BLECHER: NO OBJECTION, YOUR HONOR.
15 THE COURT: ALL RIGHT. IT IS MARKED AND
16 ADMITTED.
17 THE CLERK: WHAT NUMBER IS THAT, YOUR HONOR?
18 THE COURT: 36.
19 Q BY MR. BEECHEN: NOW, IF YOU COULD LOOK AT
20 EXHIBIT 37 --
21 MR. BEECHEN: -- WHICH I WOULD LIKE MARKED.
22 THE COURT: IT IS MARKED. THANK YOU.
23 Q BY MR. BEECHEN: DO YOU HAVE THAT IN FRONT
24 OF YOU, MS. FRANEY?
25 A YES.
26 Q AGAIN, MORE EXCHANGES BETWEEN YOU AND
27 MR. GAGGERO; CORRECT?
28 A YES.

78
1 Q ALL RIGHT. NOW, IS IT CORRECT THAT WHAT
2 YOU DID WHEN YOU GOT THIS EXHIBIT D, THIS DEED
3 RESTRICTION DOCUMENT, YOU SENT THAT OUT FOR REVIEW TO
4 SOMEBODY?
5 A IT READS THAT WAY. YES, SIR.
6 Q OKAY. AND WHO WOULD YOU HAVE SENT THAT
7 OUT TO HAVE REVIEWED? WHO WOULD HAVE BEEN -- LET ME
8 REPHRASE THIS. I'LL GET IT RIGHT YET. TO WHOM WOULD
9 YOU HAVE SENT THIS DOCUMENT FOR REVIEW?
10 A WELL, I DON'T HAVE ANY E-MAILS TELLING ME
11 WHERE I SENT IT.
12 Q BASED UPON YOUR NORMAL PRACTICES AT THE
13 TIME, WHERE WOULD YOU HAVE SENT IT?
14 A IT COULD HAVE BEEN ANY NUMBER OF PEOPLE.
15 Q OKAY. WOULD IT HAVE BEEN SENT TO SOMEONE
16 AT OLD REPUBLIC TITLE?
17 A YES. OR IT COULD HAVE BEEN SENT TO
18 ADVISORY. IT COULD HAVE BEEN SENT TO ADVISORY AT MARA
19 ESCROW AS WELL.
20 Q SO IT WAS EITHER SOMEONE IN MARA ESCROW OR
21 SOMEONE WITHIN OLD REPUBLIC. YOU JUST CAN'T RECALL
22 WHICH GROUP?
23 A NO.
24 Q IS THAT RIGHT?
25 A I WOULD NOT BE ABLE TO RECALL WITHOUT
26 HAVING --
27 Q I UNDERSTAND. AS WE GET DEEPER INTO THIS,
28 YOU MAY SEE SOME NAMES THAT YOU RECALL.

79
1 OKAY. NOW, YOU NOTIFIED MR. GAGGERO. IF YOU
2 LOOK AT EXHIBIT 38, AGAIN, MORE E-MAILS BETWEEN YOU AND
3 MR. GAGGERO; CORRECT?
4 MR. BEECHEN: I WOULD ASK THAT BE MARKED IF I
5 HAVE NOT.
6 THE COURT: 38 IS MARKED. DO YOU WANT 37
7 ADMITTED?
8 MR. BEECHEN: YES, I'M SORRY. I DO. I'M SORRY,
9 IF I DIDN'T.
11 THE COURT: NO OBJECTION AND IT'S ADMITTED.
12 Q BY MR. BEECHEN: 38. DO YOU HAVE THAT IN
13 FRONT OF YOU, MS. FRANEY?
14 A YES.
15 Q AGAIN, MORE E-MAILS BEING EXCHANGED
16 BETWEEN AND YOU MR. GAGGERO. IS THAT WHAT THIS
17 REFLECTS?
18 A YES.
19 Q MOVE 38 INTO EVIDENCE.
20 THE COURT: OBJECTION?
22 THE COURT: ALL RIGHT. IT COMES IN.
23 Q BY MR. BEECHEN: NOW, IF YOU LOOK AT THE
24 TOP E-MAIL, YOU'RE TELLING MR. -- IS IT CORRECT THAT AT
25 LEAST ON OCTOBER 31, WHEN YOU GET THIS DOCUMENT, THERE'S
26 SOME CONCERN ABOUT WHETHER OR NOT IT'S A PROPER DOCUMENT
27 TO SEND IN FOR RECORDING -- CORRECT? -- THIS DEED
28 RESTRICTION DOCUMENT?

80
1 A WELL, THERE ARE SOME CONCERNS, YES.
2 Q YOU HAD SOME CONCERNS ALSO?
3 A BASED ON THE E-MAIL, IT APPEARS TO BE THAT
4 WAY, YES.
5 Q OKAY. AND SO YOU WERE SENDING IT OUT FOR
6 REVIEW BY THOSE WHO WERE MORE EXPERIENCED IN REVIEWING
7 DOCUMENTS LIKE THIS TO SEE WHETHER OR NOT IT WAS A
8 RECORDABLE DOCUMENT OR NOT? IS THAT WHY YOU WERE DOING
9 IT?
10 A I WASN'T FAMILIAR WITH THE TYPE OF
11 DOCUMENT IN THE FIRST PLACE.
12 Q UNDERSTOOD.
13 A YES.
14 Q SO IS IT CORRECT THAT THE REASON WHY YOU
15 WERE SENDING IT OUT EITHER TO MARA ESCROW ADVISORY OR
16 OLD REPUBLIC WAS TO DETERMINE WHETHER OR NOT THIS
17 DOCUMENT WAS SUITABLE FOR RECORDING, THIS DEED
18 RESTRICTION?
19 A I THINK, AT THIS POINT IN TIME, THEY WERE
20 STILL CONFIRMING WHETHER WE WOULD HANDLE THE TRANSACTION
21 OR NOT AS WELL.
22 Q OKAY.
24 THE COURT: IT'S ALREADY BEEN ADMITTED.
25 Q BY MR. BEECHEN: IF YOU'LL TURN TO EXHIBIT
26 40, PLEASE. AGAIN, MS. FRANEY, ARE THESE MORE E-MAILS
27 BETWEEN AND YOU STEVE GAGGERO?
28 A YES.

81
1 Q SO YOU'RE GIVING -- LOOKING AT THE
2 NOVEMBER 2 ENTRY, THE TOP ONE, YOU'RE BASICALLY GIVING
3 HIM AN UPDATE ON WHAT'S GOING ON WITH THE REVIEW OF THE
4 DEED RESTRICTION; CORRECT?
5 A YES.
6 Q ALL RIGHT.
7 MR. BEECHEN: MOVE 40 INTO EVIDENCE.
9 THE COURT: IT'S ADMITTED.
10 Q BY MR. BEECHEN: IS IT CORRECT THERE'S
11 SOME HANDWRITING ON THIS DOCUMENT, THIS EXHIBIT 40? DO
12 YOU RECOGNIZE THE HANDWRITING?
13 A YES.
14 Q IS IT YOURS?
15 A YES.
16 Q AND THIS REPRESENTS A PHONE CALL BETWEEN
17 YOU AND MR. GAGGERO; IS THAT CORRECT?
18 A I RECEIVED A PHONE CALL, YES.
19 Q AND HE SAID TO YOU THERE'S TWO MORE DEALS
20 ASSOCIATED WITH -- WHAT? -- 25 MILLION TOTAL --
21 A YES.
22 Q -- WOULD GO TO F.A.T.C.O. AND -- WHAT'S
23 THE NEXT WORD?
24 A IT'S AN ABBREVIATION FOR VENTURA.
25 Q "IN VENTURA IF NEED BE"?
26 A CORRECT.
27 Q SO F.A.T.C.O. IS WHAT?
28 A FIRST AMERICAN TITLE COMPANY.

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