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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 23, 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 23, 2012
3 CHRONOLOGICAL AND ALPHABETICAL INDEX OF WITNESSES
4
5 JOSE BUNGE, CALLED BY THE PLAINTIFF PAGE
DIRECT EXAMINATION BY MR. BEECHEN 14
6 CROSS EXAMINATION BY MR. BLECHER 48
REDIRECT EXAMINATION BY MR. BEECHEN 85
7 RECROSS EXAMINATION BY MR. BLECHER 88
8 TED FOLKERT, CALLED BY THE PLAINTIFF (776)
DIRECT EXAMINATION BY MR. BEECHEN 91
9
10
11 EXHIBITS
12 FOR IN
IDENTIFICATION EVIDENCE
13 PLAINTIFFS' PAGE PAGE
14 2 DEED RESTRICTION 20 20
15 16 LETTER 18 18
16 17 LETTER OF INTENT 104 104
17 18 RESPONSE TO LETTER OF 105 155
18 INTENT
19 20 E-MAILS 110 110
20 21 FAX 27 28
21 22 E-MAIL SEPTEMBER 17 112 114
22 23 E-MAIL FROM TED FOLKERT 28 29
23 24 E-MAIL 114 117
24 25 E-MAIL SEPTEMBER 25 119 122
25 26 E-MAIL FROM MR. GAGGERO 122 122
26 27 AGREEMENT 123 123
27 28 E-MAIL 125 125
28 29 E-MAIL 126 126

1 EXHIBITS CONTINUED
2 PLAINTIFFS'
3 31 AGREEMENT 31 31
4 32 AGREEMENT 32 32
5 43 FORM INSTRUCTION 132 132
6 44 FORM INSTRUCTION 132 132
8 50 E-MAIL FROM MS. FRANEY 133 133
9 51 CORRESPONDENCE 156 -
10 54 E-MAIL FROM MR. GAGGERO 135 135
11 55 E-MAIL 136 136
12 56 E-MAIL - 138
13 57 E-MAIL 143 143
14 58 E-MAIL FROM MS. FRANEY - 144
16 61 DRAFT AGREEMENT 148 148
17 62 E-MAIL - 149
18 63 E-MAIL 152 152
19 64 E-MAIL 149 149
20 65 DOCUMENT 41 45
21 69 EXPLANATION TO 154 154
MR. BUNGE
22
70 LETTERS 45 46
23
71 RESPONSE FROM 46 46
24 MR. GAGGERO
25 72 LETTER - 47
26 81 ESCROW INSTRUCTIONS 38 40
27 82 HANDWRITTEN CHART 37 37
28

1 EXHIBITS CONTINUED
2 DEFENDANTS'
3 116 E-MAIL FROM 109 110
4 MR. GAGGERO
5 134 E-MAIL 123 124
6 177 E-MAIL FROM MR. KAHN 90 90
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1
1 SANTA MONICA, CALIFORNIA; MONDAY, JANUARY 23, 2012
2 9:44 A.M.
3 * * * *
4
5 THE COURT: ALL RIGHT. WE'RE ON THE RECORD.
6 BUNGE VERSUS 511 OFW, LP, ET AL. I'LL ASK THE ATTORNEYS
7 TO STATE THEIR APPEARANCE. ALSO INDICATE WHO IS SITTING
8 WITH THEM.
9 MR. BEECHEN: YOUR HONOR, PAUL BEECHEN,
10 B-E-E-C-H-E-N, ON BEHALF OF PLAINTIFFS. WITH ME IS
11 CHRISTOPHER POLK, P-O-L-K, CO-COUNSEL ON THIS MATTER.
12 MR. BLECHER: MAXWELL BLECHER AND JOHN ANDREWS
13 FOR THE DEFENDANT AND COUNTERCLAIMANTS. AND MR. STEVEN
14 GAGGERO IS IN THE AUDIENCE.
15 THE COURT: THANK YOU. I SEE THE PARTIES
16 PREPARED WITNESS LISTS AND EXHIBIT LISTS, BUT SEPARATE
17 RATHER THAN JOINT. OKAY. DOES PLAINTIFF WISH TO MAKE
18 AN OPENING STATEMENT?
19 MR. BEECHEN: WELL, YOUR HONOR, BEFORE WE GET TO
20 THAT, THERE ARE TWO ISSUES. FIRST OF ALL, I'D LIKE TO
21 MAKE A MOTION UNDER EVIDENCE CODE SECTION 777 TO EXCLUDE
22 ANY NONPARTY PERSONS WHO ANTICIPATE BEING WITNESSES IN
23 THIS MATTER UNTIL THEY HAVE FINISHED TESTIFYING.
24 THE COURT: ANY OBJECTIONS?
25 MR. ANDREWS: I DON'T KNOW WHO HE IS SPEAKING
26 ABOUT.
27 MR. BEECHEN: I DON'T SEE ANYBODY HERE NOW.
28 THE COURT: IT'S A REASONABLE REQUEST TO MAKE,

2
1 BECAUSE WITNESSES MAY WALK IN AT ANY TIME. SO THE
2 MOTION IS GRANTED. ALL WITNESSES EXCEPT FOR DESIGNATED
3 PARTIES ARE TO BE EXCLUDED AND ORDERED NOT TO DISCUSS
4 ANY OF THEIR TESTIMONY. PLEASE GO AHEAD.
5 MR. BEECHEN: THE NEXT MATTER, YOUR HONOR, IS A
6 REQUEST FOR PRODUCTION OF A DOCUMENT -- EXCUSE ME -- A
7 NOTICE TO APPEAR AND PRODUCE, WHICH WAS SERVED BY
8 PLAINTIFFS ON DECEMBER 14, AND THE OBJECTION WAS NOT
9 SERVED UNTIL JANUARY 9 OF THIS YEAR. WE HAVE REQUESTED
10 NOT ONLY THE APPEARANCE OF CERTAIN INDIVIDUALS. THAT
11 DOES NOT APPEAR TO BE AN ISSUE IN THIS BEING CONTESTED.
12 HOWEVER, IN RESPONSE TO THE REQUEST FOR
13 PRODUCTION OF DOCUMENTS OR NOTICE TO PRODUCE DOCUMENTS
14 AT TRIAL, THERE WERE OBJECTIONS TO EVERY SINGLE REQUEST.
15 I HAVE WRITTEN COUNSEL SAYING THESE OBJECTIONS ARE NOT
16 TIMELY AND UNDER CODE OF CIVIL PROCEDURE SECTION
17 1987(C), THOSE OBJECTIONS HAVE TO BE FILED WITHIN FIVE
18 DAYS AFTER THE NOTICE TO APPEAR AND PRODUCE IS SERVED.
19 GIVEN THE ADDITIONAL FIVE DAYS FOR MAILING, THE
20 RESPONSES WERE DUE DECEMBER 24; BEING SERVED ON
21 JANUARY 9 IS OBVIOUSLY MUCH LATER. THERE'S BEEN NO
22 REQUEST MADE BY THE DEFENDANTS TO BE EXCUSED, AND WE DO
23 REQUEST THAT THE DOCUMENTS BE HERE IN COURT.
24 THE COURT: OKAY. I DON'T HAVE ANY DOCUMENTS. I
25 DON'T HAVE THE SUBPOENA OR THE OBJECTION. DOES THE
26 DEFENSE WISH TO BE HEARD?
27 MR. ANDREWS: YES. YOUR HONOR, IF THE RESPONSE
28 WAS, INDEED, LATE, THAT REQUEST CAME IN OVER THE

3
1 HOLIDAYS. I THINK IT'S 20 DAYS BEFORE TRIAL IS WHEN THE
2 NOTICE USUALLY GETS SERVED. AND IF I WAS UNTIMELY, IT'S
3 INADVERTENT. I BELIEVE THEY HAVE ALL THE DOCUMENTS THAT
4 ARE RESPONSIVE, OR COPIES. WE'VE HAD -- DURING
5 DISCOVERY, WE'VE HAD THESE DISPUTES. I WOULD REQUEST
6 THAT UNLESS THERE'S SOME SPECIFIC DOCUMENT THAT THEY ARE
7 SEEKING, WE CAN WORK THAT OUT. BUT I WOULD LIKE TO BE
8 EXCUSED IF THE RESPONSE IS UNTIMELY. IT WAS SERVED WELL
9 IN ADVANCE OF THE TRIAL DATE.
10 MR. BEECHEN: WELL, YOUR HONOR, THE REQUEST
11 ITSELF, WHICH IS NOW BEFORE YOU, IS VERY SPECIFIC AS TO
12 WHAT DOCUMENTS ARE BEING SOUGHT. THAT THEY HAVE IN MOST
13 INSTANCES NOT BEEN PREVIOUSLY PRODUCED. THERE ARE
14 CERTAIN CATEGORIES OF DOCUMENTS WHICH DEFENSE HAVE NOW
15 SAID THEY DO NOT POSSESS. SO THAT RENDERS THOSE
16 REQUESTS MOOT. BUT SPECIFICALLY THE ONES THAT I'VE BEEN
17 REQUESTING BE PRODUCED DEAL WITH THE VARIOUS ENTITIES
18 WHICH EITHER HAVE AN OWNERSHIP INTEREST OR CONTROL OVER
19 THESE THREE PROPERTIES.
20 THE COURT: HANG ON A MINUTE. YOU'RE CITING THE
21 COURT TO THE C SECTION. LET ME TAKE A LOOK AT IT. DO
22 YOU HAVE YOUR RESPONSE?
23 MR. ANDREWS: EXCUSE ME?
24 THE COURT: DO YOU HAVE YOUR RESPONSE?
25 MR. ANDREWS: MY OBJECTIONS?
26 THE COURT: WELL, THE OBJECTIONS AND THE PROOF OF
27 SERVICE.
28 MR. ANDREWS: I DON'T HAVE IT WITH ME, YOUR

4
1 HONOR.
2 MR. BEECHEN: I HAVE IT.
3 MR. ANDREWS: I WOULD ALSO ADD THAT THESE SAME
4 REQUESTS WERE MADE AT LEAST HALF A DOZEN TIMES DURING
5 DISCOVERY IN -- DOCUMENT REQUESTS UNDER 2031 AND UNDER
6 DEPOSITION NOTICES. AND WE HAVE FOUGHT -- I MEAN, WE'VE
7 PRODUCED PRETTY MUCH EVERYTHING WE HAVE. I MEAN -- AND
8 WE'VE STATED OUR OBJECTIONS REPEATEDLY TO PRODUCTION.
9 THE COURT: WELL, IT STILL REQUIRES AN OBJECTION
10 WITHIN FIVE DAYS UNDER SUBSECTION C. COUNSEL IS RIGHT.
11 1987 DOES REQUIRE THAT, AND ADDING THE FIVE DAYS, I
12 THINK HE IS RIGHT AS TO THE DATE THAT IT WAS DUE.
13 MR. ANDREWS: WELL, THAT BEING THE CASE, I WOULD
14 ASK TO BE EXCUSED CONSIDERING THAT, ORDINARILY, THEY
15 DON'T GET SERVED UNTIL 20 DAYS BEFORE TRIAL. WE WOULD
16 HAVE BEEN WITHIN FIVE DAYS UNDER THAT REQUIREMENT, I
17 BELIEVE.
18 THE COURT: WELL, IT JUST SAYS IT MUST BE SERVED
19 AT LEAST 20 DAYS BEFORE THE TIME REQUIRED FOR
20 ATTENDANCE.
21 MR. ANDREWS: YES.
22 THE COURT: BUT THAT'S THE MINIMUM.
23 MR. ANDREWS: OKAY. UNDERSTOOD. UNDERSTOOD.
24 WELL, IF I MADE A MISTAKE, I WOULD REQUEST THAT WE BE
25 EXCUSED FROM IT OR THAT WE COULD NARROW THE REQUEST.
26 THEY'RE REALLY -- THEY'RE REALLY QUITE BURDENSOME
27 REQUESTS, AND THERE'S NOT REALLY GOOD CAUSE FOR MOST OF
28 THOSE THINGS ON THERE. THEY HAVE ALL THESE -- MOST OF

5
1 THESE DOCUMENTS.
2 THE COURT: BUT YOU'RE PUSHING ASIDE THE
3 OBJECTION OR THE PROBLEM WITH THE UNTIMELINESS.
4 MR. BLECHER: UNDERSTOOD.
5 THE COURT: AND I UNDERSTAND WHY, BUT IT STILL
6 HAS TO BE ADDRESSED.
7 MR. BEECHEN: YOUR HONOR --
8 THE COURT: WE'LL WAIT FOR THE MUSICAL INTERLUDE
9 TO BE OVER. I'LL ASK ALL COUNSEL, ALL WITNESSES, ALL
10 THOSE PRESENT TO TURN OFF THEIR CELL PHONES.
11 MR. BEECHEN: MAY I SUGGEST THIS, YOUR HONOR?
12 THE COURT: YES.
13 MR. BEECHEN: I THINK THAT THE DOCUMENTS SHOULD
14 BE PRESENT IN COURT. FOR EXAMPLE, THERE ARE DOCUMENTS
15 REGARDING TWO TRUSTS, THE ARENZANO TRUST AND THE TERRA
16 MAR TRUST. IN ADDITION, WE HAVE ASKED NOT ONLY THAT
17 THESE TRUST DOCUMENTS BE PRESENT, BUT THAT THE
18 BENEFICIARY -- IDENTITY OF THE BENEFICIARIES AND IF
19 THOSE ARE, IN FACT, TRUSTS OR OTHER ENTITIES, THAT THOSE
20 DOCUMENTS BE PRESENT SO THAT WE CAN GET TO THE BOTTOM OF
21 WHO ACTUALLY OWNS THESE TWO PROPERTIES.
22 NOW, DURING EXAMINATION IT'S MY INTENTION TO ASK
23 ABOUT THOSE ISSUES. AT THAT POINT, IF THERE'S AN
24 OBJECTION ABOUT THE DOCUMENTS BEING PRODUCED OR PLACED
25 INTO EVIDENCE, THEN WE CAN ADDRESS THAT. BUT I THINK AT
26 THIS POINT ALL I'M ASKING IS, IS THAT COUNSEL HAVE THE
27 DOCUMENTS PRESENT IF THEY EXIST. NOT SO HE CAN TURN
28 THEM OVER, JUST HAVE THEM HERE IN THE COURTROOM.

6
1 THE COURT: ALL RIGHT. LET ME ASK, DID EITHER
2 SIDE CALL THE OTHER TO FIND OUT IF THOSE DOCUMENTS ARE
3 GOING TO BE PRESENT OR HAD TO BE PRESENT OR WHAT THE
4 RESPONSE WOULD BE WITH REGARD TO THE LATE OBJECTIONS?
5 MR. BEECHEN: YOUR HONOR --
6 THE COURT: HAS THERE BEEN ANY KIND OF
7 MEET-AND-CONFER?
8 MR. BEECHEN: YOUR HONOR, I SENT A LETTER TO
9 COUNSEL ABOUT FOUR DAYS AFTER I RECEIVED THIS OBJECTION,
10 STATING THAT THE OBJECTIONS WERE NOT TIMELY AND THAT I
11 EXPECTED THE DOCUMENTS TO BE PRESENT IN COURT.
12 THE COURT: HOW DID THE DEFENSE RESPOND IN ANSWER
13 TO THE DEFENDANT?
14 MR. BEECHEN: I RECEIVED NO RESPONSE.
15 THE COURT: I'M ASKING DEFENSE COUNSEL.
16 MR. ANDREWS: I DON'T -- I DON'T -- I DON'T
17 THINK -- I SAW THAT -- I DID SEE THAT LETTER. IT
18 CAME -- IT WAS JUST SENT BY REGULAR MAIL, AND I SAW IT A
19 FEW DAYS AGO WHEN I WAS SORTING THROUGH DOCUMENTS, BUT I
20 DID NOT RESPOND TO IT AT THAT POINT.
21 I WOULD SAY THIS: ON THIS ISSUE THAT HE'S
22 TALKING ABOUT, WE HAVE PROVIDED ALL THE DOCUMENTS ON
23 THESE TRUSTS DOWN TO THE ISSUE OF IDENTIFYING THE
24 BENEFICIARIES, WHICH WE HAVE NOT DONE, THE BENEFICIARIES
25 OF THE TRUSTS. AND WHEN THAT COMES UP, WE CAN ADDRESS
26 THAT, WHICH IS WHAT I THINK THAT COUNSEL IS SAYING. IF
27 IT COMES UP. WE THINK IT'S GROSSLY IRRELEVANT AND
28 DOESN'T INVOLVE PARTIES TO THE CASE.

7
1 THE COURT: MR. BEECHEN, LET ME ASK, TO WHAT
2 EXTENT IS THE DEFENSE COUNSEL -- AND I'M TAKING THIS
3 SIDE TRIP ONLY FOR A SHORT PERIOD OF TIME. I'M GOING TO
4 MAKE AN ORDER WITH REGARD TO THE RESOLUTION OF THE 1987
5 REQUEST. BUT FIRST I WANT TO FIND OUT IF -- HOW SHALL I
6 PUT IT ? IT'S WHISTLING IN THE WIND. HOW MUCH OF THIS
7 HAS BEEN TURNED OVER IN DISCOVERY?
8 MR. BEECHEN: WELL, THERE WERE CERTAIN REQUESTS,
9 FOR EXAMPLE, WHERE WE WERE PROVIDED WITH A REDACT -- NOT
10 REDACTED, BUT A DOCUMENT WHICH WAS NOT COPIED IN FULL.
11 SO, FOR EXAMPLE, I WOULD SAY ONE OF THOSE REQUESTS DEALS
12 WITH "PLEASE PRODUCE THE FULL DOCUMENT," NOT THAT IT'S
13 BEEN CUT OFF ON ONE SIDE OR NOT. I DID NOT ASK FOR THE
14 PRODUCTION OF DOCUMENTS WHICH HAVE BEEN TURNED OVER IN
15 FULL AND IN COMPLETE FASHION. SO NONE OF THOSE REQUESTS
16 ADDRESS THAT ISSUE.
17 THERE HAVE BEEN REQUESTS, FOR EXAMPLE, WHERE I
18 SAID, "PRODUCE AN ESCROW STATEMENT" REGARDING A CERTAIN
19 TRANSACTION. THEY'VE ALREADY SAID THOSE DOCUMENTS DO
20 NOT -- THEY DON'T EXIST. THAT'S FINE. THE REASON I
21 SERVED THE REQUEST IS THAT, IF, ON EXAMINATION, I WANT
22 TO MAKE SURE THAT THAT'S PINNED DOWN, THAT THERE'S NO
23 DOCUMENTS ON REQUEST OR -- EXCUSE ME -- NO DOCUMENTS
24 THAT FALL WITHIN THAT CATEGORY.
25 THERE ARE DOCUMENTS WHICH I HAVE ASKED FOR WHICH
26 I HAVE NEVER SEEN BEFORE AND WHICH I THINK ARE EXTREMELY
27 RELEVANT TO THESE PROCEEDINGS. THOSE DEAL WITH, REALLY,
28 OWNERSHIP ISSUES OF THESE THREE PROPERTIES. AND

8
1 SPECIFICALLY THERE ARE TWO TRUSTS WHICH OWN OR WHICH
2 CONTROL ALL OF THE INCOME AND EXPENSES OF THESE THREE
3 PROPERTIES, THE ARENZANO TRUST AND THE TERRA MAR TRUST.
4 WE HAVE NEVER BEEN PROVIDED WITH THOSE TWO DOCUMENTS,
5 THOSE TRUST DOCUMENTS. WE HAVE NEVER BEEN ALLOWED TO,
6 IN OTHER WORDS, FIND OUT IF, IN FACT, AT THE END OF THE
7 DAY, THE PROPERTIES CONTINUE TO BE OWNED BY MR. GAGGERO,
8 STEVEN GAGGERO.
9 NEVER SEEN THOSE DOCUMENTS, AND, AGAIN, THE
10 REASON FOR THEM TO BE PRODUCED HERE IN COURT IS SO THAT
11 YOU CAN THEN RULE ON WHETHER THAT INFORMATION IS GOING
12 TO BE ADMITTED INTO EVIDENCE OR NOT. AND IF IT IS, WE
13 WANTED TO HAVE THE DOCUMENTS HERE SO THAT WE CAN GET TO
14 THE BOTTOM OF THIS.
15 MR. ANDREWS: ONE LAST POINT. THE TRUSTS -- I
16 MEAN, THEY ARE THE LIMITED PARTNERS OF THE OWNERS OF THE
17 PROPERTY. SO WE HAVE THE GENERAL PARTNER, MR. PRASKE,
18 WHO IS GOING TO BE HERE AND -- BUT THE QUESTION IS, DO
19 THEY GET TO PROBE INTO THE FINANCIAL HOLDINGS OF THE
20 LIMITED PARTNERS WHO ARE NOT PARTIES TO THIS ACTION WHO
21 ARE NOT MR. GAGGERO, AS THEY CONTEND? AND THAT'S THE
22 ONLY INFORMATION THAT HAS NOT BEEN DISCLOSED, HAS TO DO
23 WITH THE IDENTITY OF THE LIMITED PARTNERS.
24 THE COURT: WHEN DO YOU EXPECT ALL THIS, THE
25 FIRST REFERENCE TO ANY OF THAT MATERIAL, TO COME UP IN
26 THE TESTIMONY AND NEED FOR IT IN YOUR CASE IN CHIEF?
27 MR. BEECHEN: TOMORROW OR WEDNESDAY. NOT TODAY.
28 THE COURT: ALL RIGHT. THIS IS WHAT I PROPOSE TO

9
1 DO THEN: THE FIRST ISSUE IS WHETHER OR NOT THE FAILURE
2 TO RESPOND WITHIN THE FIVE DAYS IS FATAL AND WHAT THE
3 COURT'S RESPONSE WILL BE TO THAT. I'M GOING TO ALLOW
4 THIS TO GO OVER TO TOMORROW MORNING AS THE FIRST ORDER
5 OF BUSINESS, AND YOU CAN PROVIDE SOMETHING TO THE COURT
6 IN WRITING UNDER PENALTY OF PERJURY, IF NECESSARY. I'M
7 GOING TO ALLOW YOU TO ADDRESS THIS SOMEHOW. BUT IF
8 THE -- AND ALSO THE LAW THAT APPLIES TO THIS. IF THE
9 OTHER SIDE NEEDS A CHANCE TO RESPOND AFTER THAT, THEN I
10 WILL PROVIDE THEM A CHANCE TO RESPOND, AND WE'LL JUST
11 HOLD OFF THE REST OF THE TRIAL FOR A DAY OR TWO UNTIL WE
12 RESOLVE THIS.
13 BUT THE FIRST ORDER OF BUSINESS IS TO DETERMINE
14 THE EFFECT OF THE FAILURE TO RESPOND WITHIN THE FIVE-DAY
15 PERIOD. I DON'T BRUSH OFF THE REQUIREMENTS. IT JUST
16 MAY WELL BE THAT YOU'VE LOST THE ABILITY TO OBJECT TO
17 THE PRODUCTION OF THE MATERIAL. WHETHER OR NOT IT'S
18 RELEVANT IN THE TRIAL IS A DIFFERENT ISSUE. THE
19 PRODUCTION UNDER THE SUBPOENA AND THE RELEVANCE OR OTHER
20 OBJECTION AT TRIAL FOR ITS USE ARE TWO DIFFERENT THINGS
21 ALTOGETHER.
22 SO THEN THE FIRST QUESTION IS, DO YOU HAVE TO
23 COME INTO COURT WITH IT? AND, GENERALLY, UNLESS THE
24 OBJECTIONS ARE RAISED WITHIN THE TIME PERIOD, THE ANSWER
25 IS "YES." I WILL GIVE YOU A CHANCE TO RESPOND AS TO
26 WHAT HAPPENED AND AS TO THE LAW THAT APPLIES, BUT IF THE
27 OBJECTIONS WERE LATE, MY BELIEF IS THAT YOU HAVE TO COME
28 INTO COURT WITH IT.

10
1 AGAIN, WHETHER OR NOT THAT PROJECTS INTO THE
2 TRIAL IS A DIFFERENT ISSUE. ANY TESTIMONY OR EXHIBIT
3 MAY BE OBJECTED TO SEPARATELY. BUT THOSE -- THAT'S MY
4 BELIEF, BUT I'LL GIVE YOU A CHANCE TO DEFEND THAT ISSUE
5 UNTIL TOMORROW MORNING. IT SEEMS TO BE RELEVANT. AND,
6 AGAIN, IF THE PLAINTIFF NEEDS TIME TO RESPOND TO
7 ANYTHING IN THAT WRITTEN DOCUMENT, I'LL PERMIT IT.
8 BUT I'M NOT LOOKING FOR 25 PAGES. I'M LOOKING
9 FOR SOMETHING SHORT AND TO THE POINT THAT I CAN DEAL
10 WITH IMMEDIATELY. BUT YOU HAVE MY THOUGHTS ON IT AND
11 THE WAY I'M LEANING TOWARDS IT. ON THE OTHER HAND,
12 KNOWING THAT, IF THE PARTIES WANT TO MEET AND CONFER ON
13 THIS OVER LUNCH OR LATER IN THE AFTERNOON, YOU CAN DO
14 THAT. RIGHT NOW, I INTEND TO GO AHEAD WITH THE TRIAL --
15 MR. BEECHEN: RIGHT.
16 THE COURT: -- AND SEE WHERE WE END UP. I KNOW
17 WHAT -- TO A CERTAIN EXTENT, I KNOW WHAT THE DEFENSE
18 POSITION IS ON THE ALTER EGO ISSUE BECAUSE I'VE HEARD.
19 IT'S BEEN STATED TO ME THAT YOU DIDN'T THINK VERY MUCH
20 OF IT BECAUSE THERE WAS AN OFFER FOR THE INDIVIDUAL TO
21 BACK UP ANY AWARD THAT WAS MADE TO THE ENTITY.
22 BUT THAT'S NOT REALLY RELEVANT. UNLESS THERE'S A
23 CASE THAT TELLS ME THAT, YOU KNOW, IT'S RELEVANT, YOU
24 STILL HAVE TO GO THROUGH THE ALTER EGO ISSUES. THAT WAS
25 SOMETHING THAT EVERYBODY AGREED THAT WE WOULD BE DOING
26 DURING THIS PHASE OF THE CASE.
27 SO THAT'S AS MUCH AS I CAN TELL YOU AT THIS
28 POINT. LET'S GO AHEAD WITH ANY OTHER ISSUES THERE ARE.

11
1 MR. BEECHEN: LET ME JUST INQUIRE. I WANT TO
2 MAKE SURE THIS ISN'T ONE OF YOUR WITNESSES.
3 MR. ANDREWS: NO. OH, YES. TED, HI.
4 MR. BEECHEN: COULD YOU EXCUSE HIM?
5 THE COURT: I'M GOING TO HAVE TO MAKE AN ORDER
6 THAT THE ATTORNEYS MONITOR THE WITNESSES COMING IN.
7 IT'S YOUR OBLIGATION TO DO THAT ONCE A 777 MOTION IS
8 GRANTED. SO PLEASE MAKE SURE THAT THE WITNESSES ARE
9 OUTSIDE. I KNOW THEY MAY WALK IN AT ANY TIME, BUT I
10 HAVE NO IDEA WHO THEY ARE.
11 MR. ANDREWS: HE IS HERE AT THE REQUEST OF THE
12 PLAINTIFF.
13 MR. BEECHEN: RIGHT. I WANT TO BE GUIDED BY YOU,
14 YOUR HONOR, IN TERMS OF OPENING STATEMENTS. YOU HAVE
15 NOW -- YOU KNOW, FOUR DAYS AGO YOU WERE HEARING A MOTION
16 FOR SUMMARY JUDGMENT ON THIS CASE, AND THEN THAT GOT A
17 STACK OF PAPER COLLECTIVELY AT LEAST SIX INCHES TALL.
18 IF YOU WOULD LIKE TO HEAR AN OPENING STATEMENT, I'M
19 CERTAINLY PREPARED TO PRESENT ONE. IF YOU FEEL THAT
20 YOU'RE COMFORTABLE WITH THE BASIC OUTLINE OF THE CASE,
21 THEN WE'LL PUT ON OUR FIRST WITNESS.
22 THE COURT: I'M GOING TO LEAVE IT UP TO YOU. IF
23 YOU THINK THERE'S SOMETHING I NEED TO KNOW, THAT'S FINE.
24 OTHERWISE, I AM -- I'M HAPPY TO BE GETTING TO -- DIVING
25 INTO THE EVIDENCE. I MEAN, I RARELY BELIEVE THAT I NEED
26 AN OPENING STATEMENT. IF THE TESTIMONY DOESN'T PROVE
27 IT, THEN I DON'T NEED TO HEAR IT.
28 MR. BEECHEN: RIGHT. WELL, I THINK YOU'VE

12
1 CERTAINLY SEEN THAT. I DID NOT SEE THAT DEFENDANTS HAVE
2 FILED A TRIAL BRIEF.
3 THE COURT: I DID NOT SEE IT EITHER, BUT I DON'T
4 REQUIRE IT.
5 MR. BEECHEN: UNDERSTOOD.
6 MR. ANDREWS: WE CAN -- CAN WE FILE A POST TRIAL
7 BRIEF, THOUGH?
8 THE COURT: I THINK I ADDRESSED THAT THE LAST
9 TIME.
10 MR. BEECHEN: YOU DID. YOU DID.
11 THE COURT: YOU MAY IF BOTH SIDES AGREE TO IT.
13 THE COURT: BUT IF THAT IS THE METHOD, THAT IS
14 THE ONLY METHOD. THERE'S NO ORAL ARGUMENT AT THE END.
15 YOU GET ONE OF TWO POSSIBILITIES; EITHER YOU DO IT THE
16 TRADITIONAL METHOD WHERE PLAINTIFF ARGUES FIRST, DEFENSE
17 GOES NEXT, AND THEN PLAINTIFF ARGUES AGAIN -- AND IF
18 NOT, THEN WE HAVE THE BRIEFING, A SCHEDULE THAT I'LL
19 PERMIT THE ATTORNEYS TO DETERMINE. BUT NOT BOTH.
20 MR. BEECHEN: WE CAN ADDRESS THAT LATER. RIGHT
21 NOW I'M JUST TRYING TO -- OKAY. SO I THINK -- I THINK I
22 WILL WAIVE OPENING ARGUMENT, BECAUSE I THINK THAT
23 THERE'S NOTHING I WOULD BE SAYING THAT YOU HAVEN'T READ
24 AT LEAST TWO OR THREE TIMES ALREADY IN THIS CASE.
25 THE COURT: I APPRECIATE THAT.
26 MR. ANDREWS: CAN I JUST ASK ONE MORE QUESTION
27 ABOUT THE BRIEFING?
28 THE COURT: SURE.

13
1 MR. ANDREWS: THEY'VE ESSENTIALLY RESUBMITTED
2 THEIR SUMMARY JUDGMENT BRIEF WITH A NEW COVER ON IT, AND
3 YOU HAVE OUR SUMMARY JUDGMENT BRIEFING. WHAT I WAS
4 GOING TO ASK IS ABOUT POCKET BRIEFS ON, SAY, DISCREET
5 ISSUES THAT MAY COME UP DURING TRIAL.
6 THE COURT: THAT'S FINE. YEAH. I WILL ALWAYS
7 LOOK AT THOSE AS LONG AS THE OTHER SIDE HAS AN
8 OPPORTUNITY TO SEE IT, OBVIOUSLY. AND IF THE OTHER SIDE
9 WANTS TO RESPOND, I'LL KEEP AN OPEN MIND UNTIL I SEE THE
10 RESPONSE. JUST LET ME KNOW THAT A RESPONSE IS COMING.
11 POCKET BRIEFS ARE FINE. THEY ARE USUALLY PRETTY
12 HELPFUL, SO I DON'T DISCOURAGE THEM.
13 MR. ANDREWS: THANK YOU.
14 THE COURT: DOES THE DEFENSE WISH TO MAKE AN
15 OPENING STATEMENT AT THIS TIME?
16 MR. BLECHER: NO, YOUR HONOR.
17 THE COURT: THANK YOU. ALL RIGHT. PLEASE
18 CALL --
19 MR. BEECHEN: CALL AS MY FIRST WITNESS JOSE
20 BUNGE.
21 THE COURT: SIR, PLEASE COME FORWARD. I'LL ASK
22 YOU TO STAND RIGHT THERE, RAISE YOUR RIGHT HAND. THE
23 CLERK WILL SWEAR YOU IN.
24
25 JOSE BUNGE,
26 CALLED BY PLAINTIFF IN HIS OWN BEHALF, HAVING BEEN DULY
27 SWORN, WAS EXAMINED AND TESTIFIED AS FOLLOWS:
28 THE CLERK: DO YOU SOLEMNLY STATE THAT THE

14
1 TESTIMONY YOU MAY GIVE IN THE CAUSE NOW PENDING BEFORE
2 THIS COURT SHALL BE THE TRUTH, THE WHOLE TRUTH, AND
3 NOTHING BUT THE TRUTH, SO HELP YOU GOD?
4 THE WITNESS: YES.
5 THE COURT: PLEASE HAVE A SEAT. MAKE YOURSELF
6 COMFORTABLE. ALL RIGHT. WOULD YOU PLEASE ADJUST THE
7 MICROPHONE SO THAT YOU'RE SPEAKING DIRECTLY INTO THE
8 MICROPHONE. AND WHEN YOU'RE READY, WOULD YOU PLEASE SAY
9 YOUR FULL NAME AND THEN SPELL YOUR FULL NAME.
10 THE WITNESS: MY FULL NAME IS JOSE M. BUNGE,
11 J-O-S-E M. B-U-N-G-E.
12 THE COURT: PLEASE PROCEED.
13 MR. BEECHEN: THANK YOU.
14
15 DIRECT EXAMINATION
16 BY MR. BEECHEN:
17 Q MR. BUNGE, WHERE WERE YOU BORN?
18 A I WAS BORN IN BUENOS AIRES, ARGENTINA.
19 Q WHEN DID YOU FIRST COME TO THE UNITED
20 STATES?
21 A 1978.
22 Q AND ARE YOU FAMILIAR WITH A -- INN-LIKE
23 SUITE --
24 A EXCUSE ME. I COME TO UNITED STATES BEFORE
25 THAT, BUT I WASN'T DRAFTING.
26 Q ON A PERMANENT BASIS, YOU WERE HERE WHEN?
27 A 1978.
28 Q ARE YOU FAMILIAR WITH A INN-LIKE SUITES

15
1 CALLED THE SU CASA?
2 A YES.
3 Q WHAT IS SU CASA?
4 A IT'S LIKE INN-LIKE SUITES THAT WE RENT,
5 APARTMENT RENTS, IN SHORT-, MEDIUM-, LONG-TERM.
6 Q AND WHERE IS IT LOCATED?
7 A IT IS LOCATED IN THE BOARDWALK IN VENICE
8 BEACH.
9 Q AND WHAT IS THE ADDRESS?
10 A 431 OCEAN FRONT WALK.
11 Q AND DO YOU OPERATE SU CASA NOW?
12 A I DO.
13 Q AND YOU OPERATE THAT WITH VICTORIA BUNGE?
14 A CORRECT.
15 Q NOW, PRIOR TO AUGUST OF 2007, HAD YOU
16 PURCHASED AND SOLD PROPERTIES?
17 A YES, I DID.
18 Q APPROXIMATELY HOW MANY HAD YOU PURCHASED
19 OR SOLD PRIOR TO AUGUST OF 2007?
20 A I WOULD SAY BETWEEN 20 AND 30.
21 Q WERE ANY OF THESE LOCATED WITHIN THE
22 VENICE AREA OF CALIFORNIA?
23 A SOME OF THEM.
24 Q APPROXIMATELY HOW MANY?
25 A MAYBE HALF OF THEM.
26 Q NOW, IN CONNECTION WITH THESE -- WELL,
27 EXCUSE ME. IN CONNECTION WITH -- BACK UP FOR A MOMENT.
28 WERE YOU AWARE OF PROPERTIES LOCATED AT 511 AND 517

16
1 OCEAN FRONT WALK?
2 A I WAS AWARE, YES.
3 Q AND HOW FAR ARE THEY FROM SU CASA; THAT
4 IS, 431 OCEAN FRONT WALK?
5 A ABOUT 100-SOMETHING FEET.
6 Q NOW, IN APPROXIMATELY AUGUST OF 2007, WERE
7 YOU INTERESTED IN PURCHASING ONE OF THESE PROPERTIES?
8 A YES, I WAS.
9 Q WHICH ONE WERE YOU INTERESTED IN
10 PURCHASING?
11 A 511 OCEAN FRONT WALK.
12 Q OKAY. AND DID YOU CONTACT ANYONE ABOUT
13 TRYING TO PURCHASE THIS PROPERTY?
14 A I DID CONTACT MR. FOLKERT.
15 Q AND DO YOU KNOW HIS FULL NAME?
16 A TED FOLKERT.
17 Q AND WHY DID YOU CONTACT HIM?
18 A BECAUSE HE WAS AT THAT TIME THE MANAGER OF
19 THAT BUILDING.
20 Q AND WHAT DID YOU SAY TO MR. FOLKERT
21 REGARDING YOUR INTEREST IN THE 511 PROPERTY?
22 A WELL, I SAID I WAS INTERESTED IN ATTENDING
23 AN OFFER TO BUY IT.
24 Q OKAY. WAS AN OFFER PREPARED?
25 A IT WAS.
26 Q AND WAS IT ACCEPTED?
27 A NO.
28 Q AND WHAT WERE YOU TOLD WHEN IT WAS NOT

17
1 ACCEPTED?
2 A I WAS TOLD THAT -- I WAS OFFERED ANOTHER
3 PROPERTY, TOO; AND I WAS TOLD I WOULD BE INTERESTED IN
4 OBTAINING BOTH PROPERTIES.
5 Q AND WHAT WAS THE OTHER PROPERTY YOU WERE
6 TOLD?
7 A 517 OCEAN FRONT.
8 Q SO, IN OTHER WORDS, YOU WERE TOLD THAT IF
9 YOU WANTED TO BUY 511, YOU ALSO HAD TO BUY 517 AT THE
10 SAME TIME?
11 A YES.
12 Q AND THAT WAS MR. FOLKERT WHO TOLD YOU
13 THAT?
14 A MR. GAGGERO THROUGH MR. FOLKERT, I
15 BELIEVE.
16 Q WELL, NOW, HAD MR. FOLKERT SPOKEN TO YOU
17 ABOUT WHO OWNED THESE PROPERTIES AT THAT TIME? THIS IS
18 AGAIN ABOUT AUGUST OF 2007.
19 A HE DID.
20 Q AND WHAT DID HE SAY?
21 A THAT MR. GAGGERO WAS THE OWNER.
22 Q NOW, DID YOU ULTIMATELY PREPARE WHAT'S
23 CALLED A LETTER OF INTENT WITH RESPECT TO PURCHASING THE
24 511 AND 517 PROPERTIES?
25 A THAT'S WHAT WE DID, YES.
26 Q ALL RIGHT. IF YOU COULD LOOK AT
27 EXHIBIT 12 -- NO, EXCUSE ME -- EXHIBIT 16 IN THE BOOK IN
28 FRONT OF YOU.

18
1 MR. BEECHEN: YOUR HONOR, I THINK WE HAVE -- I
2 KNOW WE HAVE A SET FOR YOU.
3 YOUR HONOR, JUST SO I UNDERSTAND THE COURT
4 PROCEDURES, THESE HAVE ALREADY BEEN MARKED IN TERMS OF
5 BEING TABBED. DO YOU WANT ME TO OTHERWISE IDENTIFY THEM
6 FOR THE RECORD?
7 THE COURT: YES, IT MAKES LIFE EASIER IF THESE
8 ARE MARKED FOR IDENTIFICATION. IT JUST MAKES LIFE
9 EASIER FOR ME.
10 MR. BEECHEN: OKAY. I WOULD LIKE TO HAVE
11 EXHIBIT 16, A LETTER BEARING A DATE OF SEPTEMBER 12,
12 2007, MARKED FOR IDENTIFICATION AS 16. IT IS THREE
13 PAGES IN LENGTH.
14 THE COURT: SO MARKED.
15 Q BY MR. BEECHEN: NOW, MR. BUNGE, IS THIS
16 THE LETTER OF INTENT THAT WAS PREPARED ON YOUR BEHALF IN
17 CONNECTION WITH SEEKING TO PURCHASE THE 511/517
18 PROPERTIES?
19 A YEAH, IT IS.
20 Q IF YOU COULD LOOK AT THE SECOND AND THIRD
21 PAGES, ARE THOSE THE SIGNATURES OF YOURSELF AND VICTORIA
22 BUNGE?
23 A YES, THEY ARE.
24 MR. BEECHEN: MOVE EXHIBIT 16 INTO EVIDENCE, YOUR
25 HONOR.
26 MR. BLECHER: NO OBJECTION.
27 THE COURT: IT IS ADMITTED INTO EVIDENCE: 16.
28 Q BY MR. BEECHEN: NOW, MR. BUNGE, LOOKING

19
1 AT THE FIRST PAGE OF EXHIBIT 16, THERE'S A REFERENCE TO
2 WHAT'S CALLED "PARKING COVENANT." DO YOU SEE THAT?
3 A YES, I DO.
4 Q ALL RIGHT. FIRST OF ALL, WHO ACTUALLY
5 PREPARED THIS DOCUMENT, EXHIBIT 16?
6 A MR. TED FOLKERT AND MYSELF.
7 Q AND WHO ACTUALLY WROTE THE WORDS THAT
8 APPEAR ON IT?
9 A MR. TED FOLKERT.
10 Q ALL RIGHT. AND DID YOU TALK TO
11 MR. FOLKERT ABOUT THE NEED FOR A PARKING COVENANT?
12 A YES, I DID.
13 Q AND WHAT DID YOU SAY TO HIM ON THAT TOPIC?
14 A THAT I NEED THIS PARKING COVENANT TO BE
15 PRESENT IN MY PURCHASE SO I CAN PROCEED WITH MY PLAN.
16 Q PRIOR TO SEPTEMBER 12, 2007, THE DATE OF
17 EXHIBIT 16, DID MR. FOLKERT DISCUSS WITH YOU PARKING
18 BEING AVAILABLE IN CONNECTION WITH THE 511/517
19 PROPERTIES?
20 A YES, WE DID.
21 Q AND WHAT DID HE SAY ON THAT TOPIC?
22 A THE FIRST TIME THAT I MET -- WE TALK ABOUT
23 THAT, HE SAID THAT THERE WAS A BUNCH OF PARKING COMING
24 WITH THE PROPERTIES.
25 Q AND DID HE SAY HOW THIS BUNCH OF PARKING
26 WAS PRESENTED? IN OTHER WORDS, WHAT GUARANTEED THAT
27 THERE WOULD BE THIS PARKING?
28 A THE FIRST TIME HE DIDN'T KNOW WHAT

20
1 PROPERTY HAVE HOW MANY PARKINGS. HE TOLD ME THAT HE WAS
2 GOING TO GIVE ME A TYPE OF REPORT IN WHICH THEY WERE
3 STATING WHAT THE PARKING WAS.
4 Q DID HE EVENTUALLY -- DID MR. FOLKERT, THAT
5 IS, PRIOR TO SEPTEMBER 12, GIVE YOU A DOCUMENT WHICH
6 OUTLINED -- THAT YOU UNDERSTOOD TO OUTLINE THE PARKING
7 FOR 511/517?
8 A HE DID EVENTUALLY.
9 Q AND WAS THAT CALLED A "DEED RESTRICTION"
10 ON THE FACE OF IT?
11 A I BELIEVE SO.
12 Q IF YOU COULD LOOK AT EXHIBIT 2 --
13 MR. BEECHEN: -- WHICH I WOULD ASK TO BE MARKED.
15 MR. BEECHEN: EXHIBIT 2 IS ENTITLED "DEED
16 RESTRICTION." IT'S A RECORDED DOCUMENT BEARING
17 RECORDING NUMBER 891104160.
18 Q IF YOU COULD LOOK AT EXHIBIT 2, PLEASE.
19 IS THIS THE DOCUMENT THAT MR. FOLKERT GAVE YOU REGARDING
20 THE PARKING FOR 511/517?
21 A IT IS AMONG OTHER PAPERS THAT I RECEIVED.
22 Q PARDON?
23 A IT IS.
24 Q OKAY.
25 MR. BEECHEN: MOVE EXHIBIT 2 INTO EVIDENCE.
27 THE COURT: IT COMES IN.
28 Q BY MR. BEECHEN: NOW, BY THE TIME YOU

21
1 HAD -- WHEN YOU GOT THIS DOCUMENT, DID YOU GO OVER IT?
2 DID YOU ATTEMPT TO UNDERSTAND WHAT IT SAID?
3 A I DID READ IT.
4 Q AND DID YOU HIRE AN ATTORNEY TO HELP YOU
5 UNDERSTAND THE SIGNIFICANCE OF THIS DEED RESTRICTION?
6 A I DID THAT, TOO.
7 Q NOW, GOING BACK TO EXHIBIT 16, IT STATES
8 UNDER "PARKING COVENANT" THAT THE USE OF THE PARKING
9 SPACES AS DEFINED IN THE EXISTING COVENANT RELATING TO
10 511/517 OCEAN FRONT WALK SHOULD SAY, "COVENANT IS
11 DETERMINED FROM THE FACT THAT DUE TO ANY CHANGE IN USE
12 IN 511 AND/OR 517."
13 WHAT DID YOU EXPRESS TO MR. FOLKERT REGARDING
14 WHAT YOU WANTED TO ACHIEVE BY A CHANGE OR MODIFICATION
15 TO THE EXISTING PARKING COVENANT?
16 A I EXPLAIN TO HIM THAT I WANTED TO DO A
17 HOTEL REGARDING -- SO THAT'S WHY I NEEDED THIS
18 PROTECTION, TO BE SURE THAT I WILL HAVE ENOUGH PARKING
19 ON THE REAR OR THE MEANS OF PARKING TO SATISFY THAT --
20 THE REPORTER: I'M SORRY. SATISFY THE WHAT?
21 THE WITNESS: SATISFY THAT HOTEL REQUIREMENT.
22 Q BY MR. BEECHEN: SO YOU TOLD HIM THAT YOU
23 NEEDED SOMETHING TO PROTECT IN THE -- PROTECT THE
24 PARKING THAT WOULD BE AVAILABLE IF YOU TURNED IT INTO --
25 THE PROPERTIES INTO A HOTEL?
26 A CORRECT.
27 Q WAS THERE ANY PARKING ON EITHER THE 511 OR
28 517 PROPERTY?

22
1 A RIGHT NOW, ACTUALLY?
2 Q I MEAN, ON THOSE PROPERTIES THEMSELVES?
3 A NO, THERE IS NO PARKING AVAILABILITY ON
4 THE LAND ITSELF.
5 Q AND WHY IS THAT?
6 A BECAUSE THE BUILDINGS OCCUPY ALL THE
7 PROPERTY.
8 Q OKAY. AND WAS THAT THE SITUATION IN
9 AUGUST/SEPTEMBER OF 2007?
10 A YES.
11 Q SO THE BUILDINGS OCCUPY THE ENTIRETY OF
12 THE LOTS AT THAT TIME AS WELL AS NOW?
13 A CORRECT.
14 Q SO THEN WITH -- OKAY. NOW, DID
15 MR. FOLKERT -- LET ME GET A LITTLE BACKGROUND. IN YOUR
16 DISCUSSIONS WITH WHOEVER THE SELLER WAS OF THIS
17 PROPERTY, WERE THEY ALL CONDUCTED THROUGH MR. FOLKERT?
18 WAS HE THE ONE WHO YOU WOULD ALWAYS TALK TO?
19 A YES.
20 Q DID YOU EVER TALK TO MR. GAGGERO PRIOR TO
21 JANUARY OF 2008 REGARDING YOUR PURCHASE OF THESE
22 PROPERTIES?
23 A NO, I DIDN'T.
24 Q DID YOU EVER TALK TO AN INDIVIDUAL BY THE
25 NAME OF PRASKE, JOSEPH PRASKE, REGARDING THESE --
26 PURCHASING THE PROPERTIES?
27 A NO, I DID NOT.
28 Q SO THEN THE ONLY ONE YOU WOULD SPEAK TO

23
1 AND THAT YOU UNDERSTOOD TO REPRESENT THE SELLERS WAS TED
2 FOLKERT?
3 A YES.
4 Q NOW, DID YOU EXPLAIN TO MR. FOLKERT IF YOU
5 WOULD PURCHASE THE 511 AND 517 PROPERTIES WITHOUT
6 GETTING THIS AMENDMENT TO THE 1989 DEED RESTRICTION --
7 DID YOU EXPLAIN TO HIM IF, IN FACT, YOU WOULD CONTINUE
8 TO -- YOU WOULD BUY THE PROPERTIES EVEN IF YOU DIDN'T
9 GET THAT PROTECTION?
10 A I EXPLAINED TO HIM THAT I CAN'T. I
11 COULDN'T DO THAT.
12 Q DID YOU EXPLAIN TO HIM WHY?
13 A BECAUSE, AGAIN, I WAS CHANGING THE USE OF
14 THE PROPERTIES, AND AFTER READING THE EXISTING
15 RESTRICTION, I BELIEVE THAT I NEED THIS ADDITIONAL
16 ADDENDUM.
17 Q NOW, AFTER YOU PRESENTED -- TO YOUR
18 KNOWLEDGE, DID MR. FOLKERT PRESENT THIS LETTER OF
19 INTENT, EXHIBIT 16, TO MR. GAGGERO?
20 A REPEAT THE QUESTION.
21 Q TO YOUR KNOWLEDGE, DID MR. FOLKERT PRESENT
22 THIS LETTER OF INTENT, EXHIBIT 16, TO MR. GAGGERO?
23 A I BELIEVE SO.
24 Q AND WHAT WAS THE RESPONSE TO THIS LETTER
25 OF INTENT? WHAT WAS MR. GAGGERO'S OR MR. FOLKERT'S
26 RESPONSE TO YOU? WHAT DID HE SAY TO YOU AFTER YOU AND
27 VICTORIA HAD SIGNED THE LETTER OF INTENT?
28 A THE RESPONSE WAS THAT THEY WERE WORKING ON

24
1 THESE ADDENDUMS TO SEE IF WE CAN SATISFY THIS REQUEST.
2 Q "THIS REQUEST." YOU MEAN THE PARKING
3 COVENANT REQUEST?
4 A WHAT -- THIS PARKING COVENANT, YES.
5 Q OKAY. SO THEN THE FIRST THING -- SO THE
6 RESPONSE FROM MR. FOLKERT WAS THAT THE SELLER WAS
7 INTERESTED IN WORKING WITH YOU?
8 A CORRECT.
9 Q AND THAT THE FIRST THING THAT HE WANTED
10 ADDRESSED WAS THIS PARKING COVENANT? WAS THAT WHAT
11 MR. FOLKERT SAID?
12 A THIS WAS AN IMPORTANT ISSUE, YES.
13 Q MR. FOLKERT SAID TO YOU IT WAS IMPORTANT?
14 A NO. I'M SAYING TO MYSELF.
15 Q OKAY. DID YOU TELL MR. FOLKERT, "LOOK,
16 THIS PARKING ISSUE IS AN IMPORTANT ISSUE TO ME"?
17 A YES. I TOLD HIM THIS IS THE WAY I NEED
18 TO -- YOU KNOW, TO BUY THESE PROPERTIES.
19 Q NOW, DID YOU DISCUSS WITH MR. FOLKERT OR
20 WAS THERE ANY -- WAS IT YOUR PLAN TO HAVE A DOCUMENT
21 PREPARED THAT WAS GOING TO BE RECORDED WITH THE COUNTY
22 RECORDER, THE LOS ANGELES COUNTY RECORDER?
23 A YES.
24 Q WHY DID YOU WANT TO HAVE A DOCUMENT THAT
25 WAS RECORDED?
26 A TO PROTECT MYSELF AND TO DO WHAT I WAS
27 DOING.
28 Q AND DID MR. FOLKERT SAY THAT THE SELLER

25
1 HAD ANY PROBLEM WITH A RECORDED DOCUMENT BEING PREPARED
2 AND RECORDED -- A RECORDABLE DOCUMENT BEING PREPARED AND
3 RECORDED?
4 A MY BELIEF IS THAT THEY WERE THINKING ABOUT
5 WHAT DOCUMENT TO PRESENT TO THE RECORDER, YES.
6 Q TO THE RECORDER?
7 A YEAH, THE RECORDER.
8 Q NOW, WHY DID YOU WANT A RECORDED DOCUMENT?
9 A AS I TOLD YOU BEFORE, SECURITY. I WANTED
10 TO BE SURE THAT THAT IS DONE SO I KNOW THAT I WILL HAVE
11 THE NECESSARY PARKING TO BE ABLE TO REALIZE THE HOTEL,
12 TO BE ABLE TO EXPLAIN TO THE BANKS, INVESTORS,
13 ET CETERA. AND MOST OF ALL IS TO HAVE THE PARKING
14 AVAILABLE TO REALIZE HOTEL.
15 Q HOW MANY PARKING SPACES WERE YOU -- WERE
16 YOU BEING INFORMED WOULD BE PROVIDED TO THE 511 AND 517
17 PROPERTIES?
18 A BETWEEN BOTH, 38 PARKINGS.
19 Q AND WHERE WERE THESE SPACES TO BE
20 PROVIDED?
21 A THEY WERE GOING TO BE ON 601 OCEAN FRONT.
22 THEY WERE BEING ASSIGNED PARKINGS 601 OCEAN FRONT.
23 Q HOW FAR IS 601 FROM THE 511 AND 517 OCEAN
24 FRONT WALK PROPERTIES?
25 A ABOUT 60, 70 FEET, 80 FEET.
26 Q WHAT IS LOCATED AT 601? EXCUSE ME, WHAT
27 WAS LOCATED AT 601 IN, LET'S SAY, SEPTEMBER OF 2007?
28 WHAT DID IT LOOK LIKE?

26
1 A MOSTLY IT'S A PARKING LOT.
2 Q WAS IT BUILT UP OR WAS IT JUST ONE LEVEL,
3 GROUND LEVEL OF PARKING?
4 A GROUND LEVEL OF PARKING.
5 Q BETWEEN YOU AND YOUR LAWYER, DID YOU
6 ATTEMPT TO PUT TOGETHER A MODIFICATION OR SOME DOCUMENT
7 THAT WOULD MODIFY THE 1989 DEED RESTRICTION, EXHIBIT 2?
8 A MOSTLY MY LAWYER. I FOLLOW HIS KNOWLEDGE
9 ON THIS. AND BETWEEN HIM AND TED FOLKERT THEY WERE
10 TRYING TO PRESENT WHAT HE THOUGHT I NEEDED.
11 Q AND WAS THE LANGUAGE THAT WAS BEING URGED
12 BY YOUR LAWYER -- WAS THAT ACCEPTED BY THE SELLER?
13 MR. BLECHER: EXCUSE ME. I THINK THAT ASSUMES
14 THE LAWYER URGED SOMETHING. I DIDN'T HEAR IT.
15 THE COURT: SUSTAINED.
16 MR. BEECHEN: EXCUSE ME. I DIDN'T HEAR THE
17 OBJECTION.
18 THE COURT: ASSUMES FACTS NOT IN EVIDENCE, THAT
19 THE LAWYER ACTUALLY URGED SOMETHING.
20 MR. BEECHEN: SORRY. WHEN I'M BEHIND HIM, IT'S A
21 LITTLE HARD.
22 THE COURT: I UNDERSTAND.
23 MR. BEECHEN: MAX, YOU HAVE TO SPEAK UP. THAT'S
24 ALL.
25 Q NOW, WAS A DOCUMENT PRESENTED ON YOUR
26 BEHALF, MR. BUNGE, TO TRY AND -- TO YOUR KNOWLEDGE, WAS
27 A DOCUMENT PRESENTED TO THE SELLER ON YOUR BEHALF
28 SAYING, "HERE IS WHAT THE BUNGES WOULD LIKE WITH REGARD

27
1 TO A MODIFICATION TO THE 1989 DEED RESTRICTION"?
2 A I BELIEVE SO.
3 Q ALL RIGHT. AND WAS THERE A RESPONSE THAT
4 YOU HEARD FROM MR. FOLKERT REGARDING WHATEVER IT WAS
5 THAT WAS SUBMITTED TO THE OWNER REGARDING THIS
6 MODIFICATION?
7 A I THINK WHAT MY LAWYER PRESENTED WAS NOT
8 ACCEPTED.
9 Q DID THE SELLER, THEN, ULTIMATELY PROVIDE
10 LANGUAGE WHICH MR. FOLKERT SAID, "THIS IS WHAT THE
11 OWNERS WILL ACCEPT IN TERMS OF A MODIFICATION TO THE
12 1989 DEED RESTRICTION"?
13 A THAT'S CORRECT.
14 Q AND WAS THAT PRESENTED TO YOU IN WRITING;
15 THAT IS, WHAT -- THE LANGUAGE THAT THEY WOULD ACCEPT?
16 A YES.
17 Q ALL RIGHT. IF YOU COULD TAKE A LOOK AT
18 EXHIBIT 21, PLEASE --
20 IT'S A ONE-PAGE DOCUMENT.
22 Q BY MR. BEECHEN: IS THIS THE DOCUMENT THAT
23 YOU RECEIVED FROM MR. FOLKERT SETTING FORTH WHAT THE
24 OWNERS WOULD AGREE TO IN TERMS OF A MODIFICATION TO THE
25 DEED RESTRICTION?
26 A YES, IT IS.
28 MR. BLECHER: NO OBJECTION, YOUR HONOR.

28
1 THE COURT: IT'S ADMITTED.
2 Q BY MR. BEECHEN: NOW, AFTER YOU RECEIVED
3 THIS FAX -- AND DID YOU RECEIVE IT ON OR ABOUT
4 SEPTEMBER 17, 2007, THE DATE THAT IT BEARS?
5 A I BELIEVE SO.
6 Q ALL RIGHT. AFTER YOU GOT THIS DOCUMENT,
7 DID YOU THEN TRY AND SUGGEST SOME CHANGES TO THE
8 LANGUAGE WHICH APPEARED HERE IN EXHIBIT 21? DID YOU OR
9 YOUR LAWYER, RATHER?
10 A I BELIEVE MY LAWYER TOOK CARE OF THAT.
11 Q ALL RIGHT. AND WHAT, IF ANY, RESPONSE DID
12 YOU GET FROM MR. FOLKERT WHEN -- IN RESPONSE TO THAT
13 ATTEMPT TO CHANGE THE LANGUAGE WHICH APPEARS ON
14 EXHIBIT 21?
15 A THE RESPONSE WAS THAT THERE WAS NO DEAL.
16 Q AND WAS THAT EXPRESSED TO YOU IN WRITING?
17 THAT THERE WOULD BE NO DEAL IF YOU DID NOT ACCEPT THIS
18 LANGUAGE APPEARING IN EXHIBIT 21?
19 A I BELIEVE SO.
20 Q IF YOU COULD LOOK AT EXHIBIT 23.
21 MR. BEECHEN: I WOULD ASK THAT IT BE MARKED, YOUR
22 HONOR, ONE-PAGE DOCUMENT.
23 THE COURT: SO MARKED. 23.
24 Q BY MR. BEECHEN: NOW, IF YOU LOOK AT THIS
25 DOCUMENT AND SPECIFICALLY THE TOP OF THE PAGE, IS THIS
26 SOMETHING WHICH YOU SAW ON OR ABOUT SEPTEMBER 17?
27 A YES, I DID.
28 Q SO THIS IS A DOCUMENT FROM TED FOLKERT TO

29
1 CORIN KAHN; WAS THAT YOUR UNDERSTANDING?
2 A CORRECT.
3 THE COURT: I'M SORRY. WHO IS CORIN KAHN?
4 THE WITNESS: CORIN KAHN, YOUR HONOR, IS MY
5 LAWYER AT THIS TIME THAT WAS HELPING ME.
6 THE COURT: THANK YOU.
7 MR. BEECHEN: LET ME -- THANK YOU, YOUR HONOR,
8 FOR CLARIFYING THAT. SOMETIMES YOU GET TOO CLOSE TO
9 THIS THING AND YOU KNOW ALL THE PLAYERS AND FORGET THAT
10 THE COURT DOES NOT.
11 Q ALL RIGHT. SO THEN CORIN KAHN FORWARDED
12 THIS TO YOU IN SOME WAY, THIS NOTICE FROM -- THAT THE
13 OWNER WOULD CONSIDER A REJECTION OF HIS TERMS TO MEAN --
14 ON PARKING, MEANING THERE WOULD BE NO DEAL ON PURCHASE?
15 A CORRECT.
17 HONOR.
19 THE COURT: 23 IS ADMITTED.
20 Q BY MR. BEECHEN: WHEN YOU READ THIS, THAT
21 IF YOU DON'T -- "IF WE DON'T REACH AGREEMENT ON PARKING,
22 WE UNDERSTAND THAT THERE WOULD BE NO AGREEMENT ON BUYING
23 511 AND 517." WHEN YOU READ THIS IN THIS E-MAIL, WAS
24 THAT CONSISTENT OR INCONSISTENT WITH WHAT YOUR
25 UNDERSTANDING WAS REGARDING THE TIE-IN BETWEEN PARKING
26 AND THE PURCHASE OF THE PROPERTIES?
27 MR. BLECHER: EXCUSE ME, YOUR HONOR. THE
28 QUESTION IS CONTRARY TO THE EVIDENCE. THERE'S NOTHING

30
1 IN EXHIBIT 23 THAT SAYS THE PARKING --
2 THE COURT: HOLD ON A MINUTE. OVERRULED. YOU
3 MAY ANSWER.
4 THE WITNESS: REPEAT ME THE QUESTION, PLEASE.
5 Q BY MR. BEECHEN: I'LL TRY. WHEN YOU SAW
6 THAT THIS WAS NOW -- THAT THE OWNER WAS SAYING, "I
7 REJECT YOUR CHANGES OFFERED ON THE PARKING, AND BECAUSE
8 OF THAT, WE'RE ACCEPTING THAT" -- THAT THE OWNER IS
9 ACCEPTING THAT IF YOU CAN'T AGREE ON THE PARKING,
10 THERE'S GOING TO BE NO PURCHASE OF THE 511 AND 517
11 PROPERTIES.
12 WAS THAT YOUR UNDERSTANDING OF WHAT THE OWNER,
13 FIRST OF ALL, WAS SAYING TO YOU?
14 A YES.
15 Q ALL RIGHT. NOW, WAS THAT CONSISTENT WITH
16 YOUR UNDERSTANDING THAT, IF THERE'S NO AGREEMENT ON
17 PARKING, YOU'RE NOT BUYING 511/517?
18 A OF COURSE, YES.
19 Q ALL RIGHT. NOW, AFTER YOU WERE INFORMED
20 THAT THE OWNER WAS NOT GOING TO CHANGE THE LANGUAGE
21 WHICH THE OWNER HAD SAID IT WANTED FOR THIS PARKING
22 RESTRICTION -- OR EXCUSE ME, THIS MODIFICATION TO THE
23 PARKING -- DID YOU EVENTUALLY AGREE THAT THAT -- THAT
24 THE LANGUAGE DRAFTED BY THE OWNER WOULD BE ACCEPTABLE TO
25 YOU REGARDING THIS PARKING SITUATION?
26 A YES, I DID.
27 Q OKAY. AND DID YOU EXPRESS THAT TO
28 MR. FOLKERT, THAT YOU ULTIMATELY AGREED?

31
1 A I BELIEVE SO.
2 Q THEREAFTER, WAS A PARKING AGREEMENT
3 PREPARED? THAT IS, AN AGREEMENT FOR THE RECORDING OF A
4 MODIFICATION TO THIS 1989 DEED RESTRICTION IN EXHIBIT 2?
5 A YES, IT WAS.
6 Q IF YOU COULD LOOK AT EXHIBIT 31, PLEASE --
7 MR. BEECHEN: -- WHICH I WOULD LIKE TO HAVE
8 MARKED.
9 THE COURT: EXHIBIT 31 IS MARKED FOR
10 IDENTIFICATION.
11 Q BY MR. BEECHEN: NOW, IS THIS DOCUMENT --
12 FIRST OF ALL, DOES IT BEAR YOUR INITIALS AND THAT OF
13 VICTORIA BUNGE?
14 A YES.
15 Q AND, TO YOUR UNDERSTANDING, IS THIS THE
16 AGREEMENT REGARDING HOW THIS MODIFICATION TO THE DEED
17 RESTRICTION, THE 1989 DEED RESTRICTION, WAS GOING TO BE
18 RECORDED?
19 A YES.
21 HONOR.
23 THE COURT: EXHIBIT 31 IS ADMITTED.
24 Q BY MR. BEECHEN: NOW, IF YOU LOOK AT THE
25 FIRST PAGE OF EXHIBIT 31, AT THE VERY BOTTOM, IT TALKS
26 ABOUT WHEN THIS DOCUMENT WOULD BE RECORDED, THIS
27 AMENDMENT TO THE 1989 DEED RESTRICTION. DO YOU SEE
28 THAT, SIR?

32
1 A YES, I DO.
2 Q DID YOU -- NOW, IT SAYS THAT BEFORE
3 NOVEMBER 10 YOU'RE GOING TO PUT $100,000 INTO ESCROW.
4 LET'S STOP RIGHT THERE.
5 BEFORE NOVEMBER 10, DID YOU, IN FACT, PUT
6 $100,000 INTO ESCROW?
7 A YES, I DID.
8 Q ALL RIGHT. AND IT THEN GOES ON TO STATE,
9 "WITHIN TWO BUSINESS DAYS OF
RECEIPT OF THAT MONEY, BUYER'S DEPOSIT,
10 ESCROW HOLDER SHALL RECORD THE DEED
RESTRICTION."
11
12 WAS THAT DONE WITHIN TWO DAYS?
13 A IT WAS NOT DONE.
14 Q NOW, JUMPING AHEAD A LITTLE BIT, YOU ALSO
15 ENTERED INTO AN AGREEMENT TO PURCHASE 511/517; CORRECT?
16 A CORRECT.
17 Q THAT AGREEMENT, IF YOU COULD LOOK AT
18 EXHIBIT 32 --
19 MR. BEECHEN: -- WHICH I WOULD ASK TO BE
20 MARKED --
22 Q BY MR. BEECHEN: IS THAT THE AGREEMENT
23 THAT YOU SIGNED REGARDING 511/517?
24 A YES, IT IS.
25 MR. BEECHEN: MOVE THAT INTO EVIDENCE.
27 THE COURT: IT IS ADMITTED INTO EVIDENCE.
28 Q BY MR. BEECHEN: NOW, IF YOU LOOK AT THE

33
1 SECOND PAGE OF EXHIBIT 32, THE PURCHASE AGREEMENT, IT
2 TALKS ABOUT A CLOSING DATE. DO YOU SEE THAT UP TOWARD
3 THE TOP?
4 A CLOSING DATE, YES.
5 Q WAS THE CLOSING DATE FOR YOUR PURCHASE OF
6 511 AND 517 -- WAS THAT ABOUT JUNE 15, 2008?
7 A CORRECT.
8 Q OKAY. BUT, NOW, GOING BACK TO EXHIBIT 31,
9 THIS MODIFICATION TO THE DEED RESTRICTION WAS TO BE
10 RECORDED APPROXIMATELY MID-NOVEMBER 2007; CORRECT?
11 A YES, CORRECT.
12 Q WAS THAT SOMETHING THAT YOU WANTED IN
13 TERMS OF THE TIMING OF THE RECORDING OF THIS AMENDMENT
14 TO THE DEED RESTRICTION VERSUS WHEN YOU WERE TO ACTUALLY
15 CLOSE ESCROW AND BUY 511 AND 517?
16 A I NEEDED TO BE RECORDED MUCH BEFORE IN
17 ORDER TO BE ABLE TO DO WHAT I WANT TO DO WITH THE
18 PROPERTIES.
19 Q WHICH WAS WHAT?
20 A I HAVE TO DO SOME WORK, LIKE TALK TO THE
21 BANKS, TALK TO INVESTORS, TALK TO THE CITY AND THE
22 COASTAL COMMISSION, AND SEE THAT EVERYTHING IS ACCEPTED.
23 AND FOR THAT I NEED THIS PAPER.
24 Q DID YOU EXPLAIN TO MR. FOLKERT WHY YOU
25 NEEDED TO HAVE THIS RECORDED SOME SEVEN MONTHS OR SIX
26 MONTHS -- SEVEN MONTHS AHEAD OF THE CLOSING OF ESCROW?
27 DID YOU TELL HIM WHY YOU WANTED IT IN THIS SEQUENCE?
28 A IN GENERAL, YES.

34
1 Q AND WHAT DID YOU SAY?
2 A THAT I NEED THIS TO BE SURE THAT I WILL BE
3 ABLE TO DO WHAT I WANT TO DO.
4 Q DID MR. FOLKERT EXPRESS ANY OBJECTION FROM
5 THE SELLER ABOUT YOUR WANTING TO RECORD THIS
6 MODIFICATION TO THE DEED RESTRICTION APPROXIMATELY SIX
7 OR SEVEN MONTHS PRIOR TO CLOSE OF ESCROW?
8 A MR. FOLKERT SAID THAT THERE WAS NO
9 PROBLEM.
10 Q NOW, LET'S JUST TAKE UP UNTIL THE TIME
11 THAT YOU SIGNED THESE DOCUMENTS, EXHIBITS 31 AND 32,
12 WHICH WAS ABOUT THE FIRST PART OF NOVEMBER OF 2007 THAT
13 THESE AGREEMENTS WERE SIGNED BY YOU AND VICTORIA?
14 A CORRECT.
15 Q UP UNTIL THAT TIME, HAD YOU EVER BEEN TOLD
16 IN ANY WAY, SHAPE, OR FORM THAT EVEN IF AFTER YOU SIGNED
17 THESE AGREEMENTS THERE WAS PARKING -- THE PARKING CHANGE
18 DID NOT GO THROUGH, THAT YOU WOULD STILL HAVE TO BUY 511
19 AND 517?
20 A NO. I HAVE NOT HEAR FROM ANYBODY THIS.
21 Q DID YOU READ THAT ANYWHERE?
22 A NO, I DIDN'T READ IT ANYWHERE.
23 Q NOW, AFTER YOU SIGNED THESE AGREEMENTS,
24 EXHIBITS 31, 32, DID YOU PUT MONEY INTO ESCROW?
25 A I BELIEVE SO.
26 Q DID YOU PUT A TOTAL OF A MILLION DOLLARS
27 IN ESCROW IN CONNECTION WITH -- TO PURCHASE 511 AND 517?
28 A I DID.

35
1 Q AND, TO YOUR KNOWLEDGE, WAS THAT MONEY
2 THEN -- THAT MILLION DOLLARS THEN GIVEN TO THE SELLER?
3 A CORRECT.
4 Q WASN'T GIVEN BACK TO YOU, WAS IT?
5 A NO.
6 Q AND WE'VE ALREADY TESTIFIED YOU PUT THE
7 HUNDRED THOUSAND DOLLARS ALSO IN ESCROW; CORRECT?
8 A CORRECT.
9 Q NOW, THE ESCROW, WAS THAT SOMETHING THAT
10 WAS SELECTED BY YOU?
11 A NO.
12 Q IT ALSO SAYS, "BOTH OF THESE DOCUMENTS
13 STATE, 'TO OLD REPUBLIC TITLE COMPANY' ON THEIR FACE."
14 DID YOU SELECT OLD REPUBLIC TITLE COMPANY?
15 A NO, I DID NOT.
16 Q NOW, AFTER YOU PUT THE HUNDRED THOUSAND
17 DOLLARS INTO THE ESCROW AND UNDER EXHIBIT -- THE
18 AGREEMENT, EXHIBIT 31, THE OWNER AGREES TO RECORD THE
19 DEED RESTRICTIONS WITHIN TWO BUSINESS DAYS AFTER YOU PUT
20 THE MONEY IN.
21 A CORRECT.
22 Q ALL RIGHT. AFTER YOU PUT THE MONEY IN,
23 DID YOU ASK ANYONE, "HAS THIS DEED RESTRICTION BEEN
24 RECORDED?"
25 A I DID ASK FOLKERT SEVERAL TIMES.
27 A HE SAID THAT THERE WAS SOME PROBLEMS; THAT
28 THE ESCROW DIDN'T WANT TO RECORD; THAT GAGGERO WAS GOING

36
1 TO TAKE IT TO SOMEWHERE ELSE.
2 THE COURT: LET'S STOP HERE. WE'LL TAKE THE
3 MORNING RECESS. 15 MINUTES. THE ATTORNEYS ARE ORDERED
4 TO RETURN. THE WITNESS IS ORDERED TO RETURN. THANK
5 YOU.
6 (RECESS TAKEN FROM 10:46 TO 11:02 A.M.)
7 THE COURT: BACK ON THE RECORD. ATTORNEYS ARE
8 PRESENT. AND PLEASE HAVE A SEAT. MR. BUNGE IS STILL ON
9 THE WITNESS STAND.
10 SIR, YOU ARE UNDER OATH. I'LL REMIND YOU AS I'M
11 REQUIRED TO DO. ALL RIGHT. LET'S PROCEED. GO AHEAD.
12 MR. BEECHEN: YOUR HONOR, IF I CAN APPROACH
13 THE -- TOWARD THE WITNESS. WHILE WE WERE TAKING THE
14 BREAK, AS BEST I COULD, HAND DRAWN, JUST SO YOU CAN HAVE
15 SOME UNDERSTANDING.
16 Q SO MR. BUNGE, LET ME ASK YOU: IN TERMS OF
17 JUST JUXTAPOSITION, THAT IS, WHERE ONE IS LOCATED NEXT
18 TO THE OTHER, DOES THIS LITTLE HANDWRITTEN CHART
19 REPRESENT THE RELATIONSHIP OF 431 SU CASA, THE 511
20 PROPERTY, THE 517 PROPERTY, PROPERTY LOCATED AT 523
21 OCEAN FRONT WALK, AND THE 601 PARKING LOT?
22 A YES.
23 Q NOW, SO THIS IS, AGAIN, LOOKING SORT OF
24 FROM THE OCEAN SIDE IN?
25 A CORRECT.
26 THE COURT: DO YOU WANT TO MARK THAT?
27 MR. BEECHEN: WELL, I SUPPOSE WE COULD. IT WOULD
28 BE NEXT IN ORDER, WHICH IS EXHIBIT 82. AND I'LL JUST

37
1 MARK IT UP HERE.
2 THE COURT: ALL RIGHT. IT IS MARKED.
3 MR. BEECHEN: AND I THINK WHAT WE'LL DO, YOUR
4 HONOR, IS GET IT REDUCED DOWN JUST SO WE DON'T HAVE A
5 HUGE EXHIBIT RUNNING AROUND HERE FOR KIND OF NOTHING.
6 THE COURT: EITHER WAY IS FINE.
7 Q BY MR. BEECHEN: SO, NOW, LOOKING AT
8 EXHIBIT 82 --
9 MR. BEECHEN: -- WHICH I WOULD NOW MOVE INTO
10 EVIDENCE, I GUESS.
11 THE COURT: ANY OBJECTION?
12 DEFENSE COUNSEL: NO OBJECTION, YOUR HONOR.
13 THE COURT: THANK YOU.
14 Q BY MR. BEECHEN: SO IS IT CORRECT 511 IS
15 IMMEDIATELY NEXT TO 517?
16 A CORRECT.
17 Q TELL ME NOW, WHAT IS 517 IN TERMS OF THE
18 STRUCTURES? WHAT IS LOCATED ON 517?
19 A IT'S PROPERTY THAT CONSISTS OF ABOUT 16
20 BUNGALOWS OR SO OR LITTLE HOUSES BESIDES EACH OTHER WITH
21 A CORRIDOR IN THE MIDDLE. AND THEN AT THE END IS LIKE A
22 LITTLE PROPERTY OR LITTLE BUILDING, THREE-STORY
23 BUILDING. THESE LITTLE HOUSES ARE ONE-STORY BUILDING.
24 AND THEN IT'S A THREE-STORY BUILDING, WHICH INSIDE IS
25 ABOUT SIX OR SO SPACES FOR -- BEING USED FOR MASSAGE AND
26 SOME OTHER STUFF LIKE OFFICE.
27 Q AND WHAT IS LOCATED ON THE 511 PROPERTY?
28 WHAT IMPROVEMENTS ARE LOCATED --

38
1 A 511 IS TWO BUILDINGS, ONE BEHIND THE
2 OTHER. THEY ARE THREE-STORY BUILDINGS. EACH ONE HAS
3 ABOUT SIX UNITS. TOTAL 12.
4 Q AND, AT LEAST, IN SEPTEMBER OF 2007, WHAT
5 WERE THESE PROPERTIES BEING USED FOR?
6 A 511 HAS ON THE FRONT THE APARTMENT HAS
7 BEEN CONVERTED TO RETAIL BECAUSE IT'S ON THE BOARDWALK,
8 AND THE REST ARE APARTMENTS.
9 Q AND 517?
10 A 517, THEY ARE BEING USED FOR AS RETAIL.
11 THE LITTLE BUNGALOWS ARE EACH ONE RETAIL STORE. LET'S
12 PUT IT THAT WAY.
13 Q NOW, GETTING BACK TO WHAT WE'VE BEEN
14 FOCUSING ON BEFORE THE BREAK, WE WERE TALKING ABOUT THE
15 FACT THAT YOU CALLED MR. FOLKERT AND HAD ASKED HIM HAD
16 THE DEED RESTRICTION BEEN RECORDED. THIS IS AFTER YOU
17 PUT IN THE HUNDRED THOUSAND DOLLARS. AND HE TOLD YOU
18 THAT IT HAD NOT BEEN RECORDED.
19 A CORRECT.
20 Q AFTER THAT TIME, WERE YOU THEN GIVEN SOME
21 FURTHER ESCROW INSTRUCTIONS TO SIGN IN CONNECTION WITH
22 THE DEED RESTRICTION, THE NEW DEED RESTRICTION?
23 A I DON'T RECALL THAT.
24 Q ALL RIGHT. IF YOU COULD TAKE A LOOK AT
25 EXHIBIT 81 --
28 Q BY MR. BEECHEN: FIRST OF ALL, DOES THIS

39
1 BEAR THE SIGNATURE, LOOKING AT THE INITIALS AND
2 SIGNATURE, OF YOU AND VICTORIA BUNGE?
3 A YES.
4 Q NOW, LET'S JUST TAKE THE FIRST FIVE PAGES
5 WHICH, AT THE BOTTOM IN THE MIDDLE, START AT 679 THROUGH
6 683. DO YOU RECALL WHO PROVIDED THESE TO YOU OR HOW YOU
7 CAME TO SIGN THEM?
8 A EXCUSE ME. WHERE DO YOU WANT ME TO READ?
9 Q OKAY. I'M JUST LOOKING AT THE FIRST FIVE
10 PAGES OF THE EXHIBIT 81, WHICH AT THE BOTTOM STATES "679
11 THROUGH 683."
12 A YES.
13 Q JUST THOSE FIRST PAGES. DO YOU RECALL HOW
14 YOU CAME TO SIGN THIS DOCUMENT?
15 A WHAT DO YOU MEAN BY "CAME TO SIGN"?
16 Q IN OTHER WORDS, DID MR. FOLKERT BRING IT
17 TO YOU? DID YOU GO TO ESCROW? HOW DID YOU --
18 A I DON'T REMEMBER. I DIDN'T GO TO ESCROW,
19 NO.
20 Q OKAY. NOW, IF YOU LOOK TO THE NEXT PAGES,
21 666. LET'S JUST LOOK AT THAT PAGE, WHICH IS THE
22 FOLLOWING PAGE. OKAY? THIS IS JUST ENTITLED
23 "ADDITIONAL ESCROW INSTRUCTIONS." AND DOES THAT BEAR
24 THE SIGNATURE OF YOU AND VICTORIA BUNGE?
25 A YES.
26 Q AND, TO YOUR KNOWLEDGE, WERE THESE
27 DOCUMENTS RETURNED TO ESCROW?
28 A I BELIEVE SO.

40
3 THE COURT: THANK YOU. 81 IS ADMITTED.
4 Q BY MR. BEECHEN: SO, NOW, LOOKING AT THE
5 LAST INSTRUCTION WHICH IS DATED NOVEMBER 16, AND IT SAYS
6 THAT NOW -- THAT THE ATTACHMENT IS GOING TO BE A DEED
7 RESTRICTION TO BE RECORDED. SO AFTER NOVEMBER 16, DID
8 YOU ASK MR. FOLKERT WHETHER THE DEED RESTRICTION WAS
9 GOING TO BE RECORDED OR HAD BEEN RECORDED?
10 A YES.
12 A "NO."
13 Q DID HE EXPLAIN WHY?
14 A HE TOLD ME THAT IT WAS NOT RECORDED AT THE
15 BEGINNING, BECAUSE THE ESCROW OR THE COMPANY THAT -- THE
16 ESCROW WENT TO BUNCH OF WHATEVER AND THAT HE WAS GOING
17 TO DO IT HIMSELF. AND THEN LATER ON, HE -- LOOKS LIKE
18 THERE WAS A PROBLEM WITH THE PAPER ITSELF.
19 Q THAT'S WHAT HE TOLD YOU?
20 A YES.
21 Q NOW, AT SOME POINT IN TIME YOU WERE TO --
22 UNDER THE PURCHASE OF 511/517, YOU WERE TO PUT IN AN
23 ADDITIONAL $500,000.
24 A CORRECT.
25 Q AND DID YOU, IN FACT, PUT THAT ADDITIONAL
26 $500,000 INTO ESCROW?
27 A I DID.
28 Q AND WHEN YOU PUT THAT INTO ESCROW, DID YOU

41
1 ASK MR. FOLKERT ABOUT PARKING? WHAT WAS THE SITUATION
2 WITH PARKING?
3 A HE SAID THAT "DON'T WORRY," THAT THEY WERE
4 GOING TO RECORD IT AND NOT, YOU KNOW, -- GAGGERO WILL
5 TAKE CARE OF THE PROBLEM.
6 Q DID YOU BELIEVE HIM AT THAT POINT?
7 A YES, I DID.
8 Q NOW, AFTER THAT TIME, AFTER YOU PUT IN THE
9 $500,000, THE SECOND 500,000, AND THEN THAT WAS IN
10 DECEMBER, EARLY DECEMBER OF 2007?
11 A CORRECT.
12 Q ALL RIGHT. SO IN THAT MONTH OF DECEMBER
13 OF 2007, WOULD YOU AND MR. FOLKERT HAVE SOME
14 COMMUNICATION ABOUT THIS NEW AGREEMENT REGARDING
15 PARKING?
16 A NO. I ASKED HIM WHAT'S GOING ON WITH THE
17 RECORDING OF THE THING, AND THEY WERE WORKING ON IT.
18 Q ALL RIGHT. DID YOU EVER SEE A NEW
19 AGREEMENT REGARDING PARKING?
20 A LATER ON, YES.
21 Q WAS THAT A WRITTEN AGREEMENT THAT WAS
22 PRESENTED TO YOU, OR WRITTEN DOCUMENT PRESENTED TO YOU?
23 A WAS A WRITTEN DOCUMENT PRESENTED TO ME.
27 Q BY MR. BEECHEN: IS THIS THE DOCUMENT THAT
28 WAS SUPPLIED TO YOU AT THE END OF DECEMBER OF 2007?

42
1 A YES.
2 Q AND THIS WAS SUPPLIED TO YOU BY
3 MR. FOLKERT?
4 A YES.
5 Q IS THAT CORRECT?
6 A YES.
7 Q AND DID YOU READ THE DOCUMENT?
8 A I DID.
9 Q AND WHAT WAS YOUR REACTION?
10 A I WAS -- I DIDN'T LIKE IT.
11 Q AND DID YOU EXPRESS THAT TO MR. FOLKERT
12 THAT YOU DIDN'T LIKE IT?
13 A I DID.
14 Q WHAT DID YOU SAY? DID YOU GO INTO DETAILS
15 OF WHAT YOU DIDN'T LIKE?
16 A SOME OF THEM, I BELIEVE.
17 Q AND WHAT DID YOU SAY?
18 A WHAT I SAY?
19 Q YES, TO MR. FOLKERT THAT YOU DIDN'T LIKE
20 ABOUT IT.
21 A ONE OF THE ONES, ESPECIALLY ONE IS
22 NUMBER -- THAT THESE RIGHTS CAN BE ELIMINATED BY THE
23 OWNER OF 601. THAT REALLY --
24 Q DID YOU REFER HIM TO THAT, YOUR REFERENCE
25 TO THE RECITAL D AS IN DOG?
26 A YES.
27 Q SO YOU TOLD HIM YOU DIDN'T LIKE THAT?
28 A YES, AMONG OTHER THINGS.

43
1 Q WHAT ELSE DID YOU TELL HIM YOU DIDN'T
2 LIKE?
3 A NUMBER C. IT'S NOW 30 PARKING -- SORRY,
4 IT'S NUMBER D. NUMBER E. SORRY. THAT ONE. INSTEAD OF
5 38. THEN THERE WERE NOT -- LET ME READ IT, PLEASE.
6 Q YEAH. LET ME ASK IT THIS WAY. DID YOU
7 ATTEMPT TO DETERMINE HOW MUCH MONEY IT WOULD COST YOU
8 FOR THESE PARKING SPACES UNDER THIS OPTION, EXHIBIT 65?
9 A YES, I DID SOME WORK ON THAT.
10 Q AND WHAT DID YOU CONCLUDE IN TERMS OF THE
11 COST OF THE PARKING?
12 A WHEN YOU REFER TO THE OPTION OF PARKING,
13 YOU REFER ALSO TO THE LEASE?
14 Q YES, CORRECT, THE ENTIRE DOCUMENT.
15 A YES, WELL, THERE'S MANY THINGS THERE THAT
16 ARE WAY OUT OF THE ORIGINAL THING. IF YOU READ THE
17 OPTION, THE PARKING LEASE, IT BEARS ON ME THE COST OF
18 THE CONSTRUCTION OF AN UNDERGROUND PARKING THAT WOULD BE
19 EXTREMELY EXPENSIVE. I'M TALKING MILLIONS OF DOLLARS TO
20 DO IT. THEN THE PARKING ITSELF WILL BE UNAFFORDABLE FOR
21 ME FOR WHAT I WANT TO DO.
22 ALSO THE TIMING. I HAD THE DEED RESTRICTION THAT
23 WAS SUPPOSED TO BE WITH THE LAND FOREVER, AND THIS IS
24 NOW ONLY 30 YEARS. THAT OBVIOUSLY AFFECTS THE BUILDING
25 ITSELF AND THE VALUE OF THE BUILDINGS.
26 Q NOW, HOW MUCH -- LET'S SAY, IN 2007, WERE
27 YOU FAMILIAR -- LET ME BACK UP JUST FOR A MOMENT. WHEN
28 YOU WERE DISCUSSING THAT THERE WAS GOING TO BE THESE 38

44
1 PARKING SPACES, DID MR. FOLKERT SAY ANYTHING TO YOU
2 ABOUT WHAT THE CHARGE WOULD BE FOR THE PARKING SPACES?
3 A AT WHAT TIME?
4 Q THIS IS BEFORE YOU SIGN THE AGREEMENT,
5 BEFORE OCTOBER 30. SO WHEN YOU'RE DISCUSSING, "ALL
6 RIGHT. THERE'S GOING TO BE 38 PARKING SPACES FOR YOU
7 UNDER THE 1989 DEED RESTRICTION," DID HE TALK TO YOU
8 ABOUT WHAT WOULD BE CHARGED FOR PARKING?
9 A WE TALK ABOUT FAIR VALUE, AND I WAS
10 ALREADY RENTING THERE $125 PER CAR PER MONTH, SO -- AND
11 THAT'S WHAT THE MORE OR LESS IS WHAT THE MARKET WAS.
12 Q SO WHEN YOU WERE LOOKING AT EXHIBIT 65,
13 DID YOU CONCLUDE THAT IT WAS GOING TO BE MORE THAN $125
14 A MONTH?
15 A EXHIBIT WHAT?
16 Q DID YOU THINK THAT THE PARK -- THAT THE
17 COST OF PARKING UNDER THIS PARKING LEASE, EXHIBIT 65 --
18 A YES.
19 Q -- WAS GOING TO BE MORE THAN $125 A MONTH?
20 A MUCH MORE, YES.
21 Q NOW, AFTER YOU LOOKED AT THIS PARKING
22 LEASE, WHAT DID YOU DO -- DID YOU THEN EXPRESS TO THE
23 OWNERS THAT YOU DID NOT LIKE IT? DID YOU SEND A LETTER
24 SAYING THAT YOU DID NOT WANT TO GO FORWARD WITH THE
25 AGREEMENT WITH THE PURCHASE?
26 A I DID TOLD THEM THAT I DON'T LIKE IT, YES.
27 AND I BELIEVE IN WRITING, TOO.

45
1 MR. BEECHEN: -- WHICH I HAVE ASKED TO BE MARKED.
3 Q BY MR. BEECHEN: AND SPECIFICALLY THE
4 SECOND PAGE OF THAT EXHIBIT. IS THIS THE DOCUMENT THAT
5 YOU SENT ON OR ABOUT JANUARY 22, 2008? DID YOU ACTUALLY
6 SEND IT TO MR. FOLKERT?
7 A YES, I DID.
8 Q AND IT'S ADDRESSED TO STEVE GAGGERO?
9 A CORRECT.
10 MR. BEECHEN: YOUR HONOR, IF I HAVEN'T ALREADY,
11 I'D ASK THAT EXHIBIT 65 BE ADMITTED INTO EVIDENCE.
12 THE COURT: OBJECTION?
14 THE COURT: 65 IS ADMITTED.
15 Q BY MR. BEECHEN: NOW, SO YOU SENT THIS
16 LETTER OF JANUARY 22, 2008. AND IT'S ADDRESSED TO
17 MR. GAGGERO?
18 A CORRECT.
19 Q WHY IS IT ADDRESSED TO MR. GAGGERO?
20 A BECAUSE I BELIEVED MR. GAGGERO WAS THE
21 OWNER OF THE PLACE.
22 MR. BEECHEN: I WOULD MOVE EXHIBIT 70, AT LEAST
23 THE SECOND PAGE OF IT, INTO EVIDENCE.
25 MR. BLECHER: I THINK WE SHOULD HAVE THE WHOLE
26 DOCUMENT, YOUR HONOR.
27 MR. BEECHEN: I HAVE NO OBJECTION TO THAT. IT'S
28 JUST --

46
1 THE COURT: THEN THE WHOLE DOCUMENT WILL COME IN.
2 MR. BEECHEN: OKAY.
3 Q DID YOU RECEIVE A RESPONSE TO YOUR LETTER
4 FROM MR. GAGGERO?
5 A I BELIEVE SO.
6 Q NOW, IF YOU COULD LOOK AT EXHIBIT 71 --
8 IT'S A TWO-PAGE DOCUMENT.
10 Q BY MR. BEECHEN: IS THIS THE RESPONSE YOU
11 RECEIVED FROM MR. GAGGERO?
12 A YES.
13 Q IS THIS A DOCUMENT YOU RECEIVED FROM
14 MR. GAGGERO AFTER YOU SENT YOUR LETTER, EXHIBIT 70?
15 A YES, IT IS.
16 Q ALL RIGHT.
18 HONOR.
21 THE COURT: IT'S ADMITTED.
22 Q BY MR. BEECHEN: NOW, DID YOU THEN RESPOND
23 TO THIS LETTER, EXHIBIT 71?
24 A YES, I DID.
25 Q IF YOU COULD LOOK AT EXHIBIT 72, PLEASE.
26 IS THIS YOUR RESPONSE?
27 A YES, IT IS.
28 Q MOVE EXHIBIT -- DID YOU, IN FACT, SEND

47
1 THIS LETTER TO THE PEOPLE TO WHOM IT IS ADDRESSED? THIS
2 EXHIBIT 72?
3 A I BELIEVE SO.
4 MR. BEECHEN: IF I DIDN'T, I WOULD ASK TO MARK
5 AND NOW MOVE IT INTO EVIDENCE
6 THE COURT: 72 WAS MARKED. ANY OBJECTION?
7 MR. BLECHER: NO OBJECTION, YOUR HONOR.
8 THE COURT: EXHIBIT 72 IS ADMITTED INTO EVIDENCE.
9 Q BY MR. BEECHEN: NOW, GOING BACK TO
10 EXHIBIT 71, WAS THIS THE FIRST TIME THAT YOU WERE
11 INFORMED WHEN YOU SAW THIS LETTER THAT THE TWO
12 AGREEMENTS BETWEEN 511/517 ON THE ONE HAND AND 601 ON
13 THE OTHER WERE SEPARATE AGREEMENTS?
14 A IN THIS LETTER, YES.
15 Q HAD YOU BEEN TOLD THIS -- GIVEN THIS
16 INFORMATION PRIOR TO THIS LETTER?
17 A NO.
18 Q NOW, AFTER YOU SENT EXHIBIT 72, WHAT
19 HAPPENED AFTER --
20 MR. BEECHEN: AGAIN, IF I HAVEN'T ALREADY ASKED,
21 I WOULD ASK THAT IT BE ADMITTED INTO EVIDENCE.
22 THE COURT: WHICH ONE?
23 MR. BEECHEN: 72.
24 THE COURT: 72 HAS ALREADY BEEN ADMITTED.
25 MR. BEECHEN: ALL RIGHT. FINE.
26 Q AFTER YOU SENT OUT EXHIBIT 72, THIS LETTER
27 OF JANUARY 24, DID YOU HAVE FURTHER DISCUSSIONS WITH
28 MR. GAGGERO AND MR. FOLKERT REGARDING PURCHASING BOTH

48
1 THE PROPERTIES AT 511 AND 517 AND PARKING?
2 A I BELIEVE SO.
3 Q WAS ANY FURTHER AGREEMENT REACHED AFTER
4 JANUARY 24 WHERE EVERYBODY AGREED ON THE TERMS UNDER
5 WHICH THE PURCHASE OF THE PROPERTIES AND THE PARKING
6 WOULD GO FORWARD?
7 A NO. NO AGREEMENT WAS REACHED.
8 Q AND THEN IN OCTOBER OF 2008 YOU STARTED
9 THIS LAWSUIT; IS THAT CORRECT?
10 A CORRECT.
11 MR. BEECHEN: NO FURTHER QUESTIONS.
12 THE COURT: THANK YOU. CROSS EXAMINATION?
13
14 CROSS EXAMINATION
15 BY MR. BLECHER:
16 Q GOOD MORNING, MR. BUNGE.
17 A GOOD MORNING, MR. BLECHER.
18 Q IT IS CORRECT, IS IT NOT, THAT YOU SOUGHT
19 OUT MR. FOLKERT?
20 A PARDON ME? IF I WHAT?
21 Q YOU WENT TO HIM. HE DIDN'T COME TO YOU.
22 A I BELIEVE SO.
23 Q AND THAT'S BECAUSE AT THE TIME YOU KNEW
24 THERE WERE OTHER PEOPLE LOOKING AT THE PROPERTIES AT 511
25 AND 517; CORRECT?
26 A NO.
27 Q IS IT YOUR TESTIMONY HERE TODAY THAT, AT
28 THE TIME THESE TRANSACTIONS WERE GOING DOWN, YOU DID NOT

49
1 KNOW OTHER PEOPLE WERE SEEKING TO MAKE OFFERS ON 511?
2 A NO, I DIDN'T SAY THAT.
3 MR. BLECHER: MAY I APPROACH THE WITNESS WITH HIS
4 DEPOSITION?
5 THE COURT: YES.
6 MR. BEECHEN: MAY I JUST ASK WHAT SECTION WE'RE
7 TALKING ABOUT?
8 MR. BLECHER: VOLUME 1 AT PAGE 45.
9 Q MR. BUNGE, LET ME ASK YOU --
10 MR. BEECHEN: WAIT, WAIT, WAIT.
11 THE COURT: HOLD ON A MINUTE. FIRST, ARE YOU
12 REFERRING TO A DEPOSITION?
13 MR. BLECHER: YES, YOUR HONOR.
14 MR. BEECHEN: ALL I REQUEST IS THAT I BE TOLD
15 WHAT SECTION WE'RE GOING TO BE TALKING ABOUT BEFOREHAND.
16 MR. BLECHER: I SAID VOLUME 1, WHICH IS THE
17 SECTION OF JUNE 30, 2009.
19 MR. BLECHER: AND WE'RE AT PAGE 45.
20 MR. BEECHEN: WHAT LINES?
21 MR. BLECHER: LINES 3 THROUGH 6.
23 THE COURT: GIVE COUNSEL A CHANCE TO TAKE A LOOK
24 AT IT, PLEASE.
25 MR. BLECHER: ACTUALLY, IT CAN GO DOWN TO
26 LINE 13.
27 MR. BEECHEN: 3 THROUGH 13?
28 MR. BLECHER: YES.

50
1 MR. BEECHEN: NO OBJECTION. JUST VAGUE AS TO
2 TIME IN THE QUESTION ITSELF.
3 THE COURT: THERE'S NO OBJECTION. THERE'S
4 NOTHING FOR THE COURT TO RULE ON. SO PLEASE PROCEED.
5 Q BY MR. BLECHER: MR. BUNGE, FIRST, I'M
6 GOING TO ASK YOU TO READ YOUR TESTIMONY STARTING AT
7 LINE 3 AND DOWN TO LINE 13, AND SEE IF IT REFRESHES YOUR
8 RECOLLECTION AS TO WHETHER AT THE TIME YOU WERE MAKING
9 THE OFFER FOR THE PROPERTY --
10 A WHAT NUMBER?
11 Q START AT LINE 3 AND GO DOWN TO LINE 13.
12 A TO THE NUMBER HERE?
13 Q YES.
14 A OKAY.
15 Q YOU'VE NOW HAD A CHANCE TO READ THAT, SIR?
16 A YES.
17 Q DOES IT REFRESH YOUR RECOLLECTION THAT AT
18 THE TIME OF THE NEGOTIATIONS LEADING TO THE 511 OFFER
19 YOU KNEW OTHER PEOPLE WERE LOOKING AT AND MAKING OFFERS
20 ON THAT PROPERTY?
21 A WHEN YOU REFER HERE TO MR. LAMBERT.
22 Q I'M ASKING, DOES THIS REFRESH YOUR
23 RECOLLECTION THAT THERE WERE OTHER COMPETING OFFERS FOR
24 THE PROPERTY AT THE TIME YOU WERE NEGOTIATING?
25 A AT THE TIME I WAS NEGOTIATING?
26 Q YES.
27 A I KNEW -- FOLKERT TOLD ME THAT IT WAS SOME
28 OTHER OFFERS OR SOME OTHER PEOPLE INTERESTED IN THE

51
1 BUILDING.
2 Q OKAY.
3 A BUT THIS IS NOTHING. OKAY.
4 Q SO WHEN YOU SAID YOU DIDN'T KNOW THERE
5 WERE OTHER OFFERS, YOU NOW SEE YOU'RE MISTAKEN; CORRECT?
6 A NO. WHEN YOU ASKED ME THE QUESTION, YOU
7 ASKED ME WAS -- IF AT THE TIME I MET WITH FOLKERT I KNEW
8 THERE WAS ANOTHER.
9 Q WHO TOLD YOU ABOUT THESE OFFERS FROM
10 MR. LAMBERT?
11 A HE DID. WHEN I REACHED FOR FOLKERT, I
12 DIDN'T KNOW THERE WAS ANOTHER OFFER. WHEN I REACHED FOR
13 FOLKERT. NOT WHEN I WAS WITH FOLKERT. AFTER REACHING
14 FOLKERT, HE EXPLAIN THAT THERE WAS ANOTHER.
15 Q BUT YOU WENT TO MR. FOLKERT BECAUSE YOU
16 THOUGHT IT WOULD GIVE YOU AN ADVANTAGE OVER THE
17 COMPETING --
18 A NO.
19 Q NO? OKAY. LET ME FIND THAT IN THE
20 DEPOSITION. IN THIS SAME VOLUME THAT YOU HAVE THERE,
21 SIR.
22 MR. BEECHEN: YOU TOOK IT BACK.
23 MR. BLECHER: I TOOK IT BACK?
24 THE COURT: DO YOU HAVE A SEPARATE DEPOSITION FOR
25 THE WITNESS AND FOR THE COURT? IT'S SUPPOSED TO BE
26 LODGED WITH THE COURT IF YOU'RE GOING TO USE IT PRIOR TO
27 EXAMINATION.
28 MR. BEECHEN: MAY I APPROACH JUST FOR A SECOND?

52
1 I THINK THIS IS JUST A MINISCRIPT.
2 THE COURT: IT MAY WELL BE.
3 MR. BEECHEN: NO. IT LOOKS LIKE A FULL
4 TRANSCRIPT.
5 MR. BLECHER: I THINK THERE'S TWO VOLUMES. CAN
6 YOU HELP ME FIND THE OTHER VOLUME AT PAGE 137? IT'S
7 THIS ONE (INDICATING). THE COURT REPORTER DID TWO
8 VOLUMES, YOUR HONOR, AND USED THE SAME NUMBER. THIS IS
9 THE VOLUME OF JULY 6, 2011. THAT'S FOR THE COURT. IS
10 THERE ONE FOR MR. BUNGE?
11 THE COURT: JENNIFER, NEED SOME HELP, PLEASE.
12 MR. BLECHER: I -- ALL RIGHT.
13 Q NOW, I'M HANDING YOU, MR. BUNGE, A COPY OF
14 YOUR DEPOSITION OF JULY 6, 2011, CAPTIONED "VOLUME 2."
15 AND I'M INVITING YOUR ATTENTION TO PAGE 137. DO YOU SEE
16 THAT?
17 MR. BEECHEN: COUNSEL, LINE NUMBERS, PLEASE?
18 MR. BLECHER: VOLUME 2.
19 THE COURT: THE LINE NUMBERS.
20 MR. BLECHER: JULY 6 --
21 THE COURT: NO. LINE NUMBERS.
22 MR. BLECHER: PARDON ME?
23 THE COURT: THE NUMBERS, LINE NUMBERS.
24 MR. BLECHER: STARTING AT LINE 11.
25 THE WITNESS: WHAT PAGE, PLEASE?
26 THE COURT: 137.
27 MR. BEECHEN: THROUGH?
28 MR. BLECHER: WE'RE GOING TO NEED VOLUME 2 AT

53
1 PAGES 80 AND 81. LET ME GET THESE DEPOSITIONS TOGETHER.
2 THIS IS THE DEPOSITION OF JUNE 30, 2009.
3 MR. BEECHEN: WHAT PAGE?
4 Q BY MR. BLECHER: NOW I'M GOING TO HAND YOU
5 THE DEPOSITION OF JUNE 30, 2009, MR. BUNGE.
6 A THIS ONE (INDICATING)?
7 Q THAT ONE, YES.
8 A NOT THIS ONE (INDICATING)?
9 MR. BLECHER: YOUR HONOR, MAY I DO THIS?
10 THE COURT: SURE. THANK YOU. PAGE AND LINES?
11 MR. BLECHER: IT'S PAGE 80 STARTING AT LINE 22.
12 Q AND I'D ASK YOU TO READ, MR. BUNGE, AT
13 PAGE 80, LINE 22.
14 A LINE 22.
15 Q THROUGH LINE 11 ON PAGE 81.
16 THE COURT: THIS IS FOR REFRESHING RECOLLECTION?
17 MR. BLECHER: YES.
18 THE WITNESS: FROM -- EXCUSE ME. FROM NUMBER 22
19 TO --
20 MR. BLECHER: LINE 11 ON 81.
21 THE WITNESS: OKAY.
22 Q BY MR. BLECHER: DOES THAT REFRESH YOUR
23 RECOLLECTION, SIR?
24 A DO YOU WANT ME TO READ IT FIRST?
25 Q YES.
26 A THANK YOU. ONE SECOND. NUMBER 12?
27 Q YES. DID THAT REFRESH YOUR RECOLLECTION,
28 SIR, THAT YOU WENT EXPRESSLY AND DIRECTLY TO MR. FOLKERT

54
1 BECAUSE YOU THOUGHT IT WOULD GIVE YOU MORE LEVERAGE IN
2 CONNECTION WITH THE PROPERTIES THAN THE OTHER BUYERS?
3 A I SAID THAT "OTHER BUYERS," "THERE ARE
4 OTHER BUYERS."
5 Q THAT'S WHAT I SAID. DID -- DOES IT
6 REFRESH YOUR RECOLLECTION THAT YOU SOUGHT OUT
7 MR. FOLKERT AS A BROKER BECAUSE YOU THOUGHT DEALING WITH
8 HIM DIRECTLY WOULD GIVE YOU MORE LEVERAGE THAN THE OTHER
9 BUYERS?
10 A NOT "THE OTHER BUYERS." THEN "OTHER
11 BUYERS."
12 Q OTHER BUYERS.
13 A IS DIFFERENT IN MY MIND.
14 Q AND THEN HE TOLD YOU AS TIME WENT ON THAT
15 THERE WAS STILL MORE THAN MR. LAMBERT, THERE WERE OTHER
16 BUYERS; CORRECT?
17 A PARDON?
18 Q CORRECT?
19 A CAN YOU REPEAT THE QUESTION?
20 Q MR. FOLKERT TOLD YOU AS TIME WORE ON THAT
21 THERE WERE OTHER PEOPLE INTERESTED IN BUYING THE
22 PROPERTY OTHER THAN MR. LAMBERT?
23 A MR. LAMBERT WAS A MISTAKE BY ME. I --
24 Q MY QUESTION IS, YES OR NO, DID HE TELL YOU
25 THERE WERE OTHER BUYERS THAT WERE INTERESTED --
26 THE COURT: WAIT, WAIT. MR. BUNGE, I'M GOING TO
27 ASK YOU TO WAIT UNTIL THE QUESTION IS ASKED, BECAUSE THE
28 COURT REPORTER CAN'T TAKE DOWN MORE THAN ONE PERSON

55
1 SPEAKING AT A TIME.
2 PLEASE ASK YOUR QUESTION.
3 Q BY MR. BLECHER: IS THAT CORRECT, SIR?
4 A CAN YOU REPEAT THE QUESTION, PLEASE?
5 Q YES. AS TIME WENT ON IN THE NEGOTIATING
6 PROCESS, MR. FOLKERT INFORMED YOU THAT THERE WERE OTHER
7 PROSPECTIVE BUYERS OTHER THAN MR. LAMBERT. YES? NO?
8 A OTHER BUYERS? YES. OTHER THAN
9 MR. LAMBERT? NO.
10 Q IN OTHER WORDS, YOU THINK MR. LAMBERT IS
11 THE ONLY ONE HE EVER TOLD YOU WAS INTERESTED?
12 A MR. FOLKERT TOLD ME THAT THERE WAS ANOTHER
13 PROSPECTIVE BUYERS. PERIOD.
14 Q NOW -- AND YOU SOUGHT MR. FOLKERT OUT
15 BECAUSE YOU THOUGHT DEALING WITH HIM DIRECTLY WOULD GIVE
16 YOU AN ADVANTAGE.
17 A IN MANY OF MY TRANSACTIONS, I ALWAYS TRY
18 TO GO TO THE SOURCE OF THE SALE AND TRY TO AVOID BROKERS
19 OR BROKERS OF A THIRD PARTY. IN OTHER WORDS, I'D RATHER
20 GO TO A BROKER OF THE SELLER BECAUSE THAT DIRECT
21 CONNECTION OR CONTACT GIVES ME SOME LEVERAGE OVER PRICE,
22 OVER MANY THINGS.
23 Q SO THE ANSWER IS YES, YOU SOUGHT HIM OUT
24 BECAUSE YOU THOUGHT IT WOULD GIVE YOU -- MIGHT GIVE YOU
25 SOME ADVANTAGE?
26 A YES.
27 Q OKAY. AND YOU REGARDED MR. FOLKERT
28 THROUGHOUT THIS TRANSACTION AS YOUR AGENT, DIDN'T YOU?

56
1 A I DID.
2 Q AND YOU CONFIDED IN HIM COMPLETELY.
3 A YES.
4 Q AND YOU HAD NO REASON TO BELIEVE HE EVER
5 TOLD YOU SOMETHING THAT WASN'T TRUE.
6 MR. BEECHEN: OBJECTION AS TO TIME, YOUR HONOR.
7 THE COURT: SUSTAINED AS TO TIME.
8 Q BY MR. BLECHER: THROUGHOUT THE WHOLE
9 NEGOTIATION WITH MR. FOLKERT, DO YOU RECALL ANY TIME
10 THAT YOU CAN NOW IDENTIFY WHERE HE LIED TO YOU?
11 A REPEAT THE QUESTION, PLEASE.
12 Q THROUGHOUT THE ENTIRE TIME YOU WERE
13 DEALING WITH MR. FOLKERT, DO YOU RECALL ANY OCCASION NOW
14 IN WHICH HE LIED TO YOU?
15 A WELL, HE TOLD ME THAT, AGAIN, HE WAS GOING
16 TO RECORD THAT PAPER, NOT TO WORRY, AND I PUT $500,000
17 BECAUSE OF THAT. THAT NEVER HAPPENED.
18 Q AT ANY TIME -- STRIKE THAT. YOU EXTENDED
19 OUT THE ESCROW. THE AGREEMENT TO BUY IS DATED
20 OCTOBER 30, 2007. DO YOU RECALL THAT? THAT'S
21 EXHIBIT --
22 A PARDON ME? CAN YOU REPEAT THE QUESTION?
23 Q IF YOU LOOK AT EXHIBIT 32, THAT'S THE
24 PURCHASE AND SALE AGREEMENT AND IT'S DATED OCTOBER 30,
25 2007.
26 A HOLD ON ONE SECOND, PLEASE. LET ME PULL
27 IT.
28 Q AND THE ESCROW FOR THAT PURCHASE WAS

57
1 SCHEDULED TO CLOSE IN JUNE, MID-JUNE OF 2008. DO YOU
2 SEE THAT? WANT ME TO SHOW IT TO YOU?
3 A SURE.
4 Q THAT'S AT PAGE -- AT THE BOTTOM, "BUNGE
5 50." SEE THAT? "ESCROW SHALL CLOSE ON JUNE 15." DO
6 YOU SEE THAT?
7 A CORRECT.
8 Q SO NOW YOU HAD AN ESCROW THAT WAS MORE
9 THAN SIX MONTHS; CORRECT?
10 A CORRECT.
11 Q AND YOU SPECIFICALLY ASKED FOR THE ESCROW
12 TO BE EXTENDED, DID YOU NOT?
13 A I DID ASK FOR EXTENSIONS, YES.
14 Q AND THAT, MR. BUNGE, IS BECAUSE YOU DIDN'T
15 HAVE $10 MILLION AVAILABLE TO BUY THE PROPERTY.
16 A WHERE I DIDN'T HAVE THE MONEY? WHERE YOU
17 THINK I DIDN'T HAVE THE MONEY?
18 Q YOU DID?
19 A NO. I'M ASKING YOU --
20 Q I'M ASKING YOU.
21 A -- WHERE IS THAT YOU THINK --
22 Q I'M ASKING YOU IF AT ANY TIME BEFORE
23 JUNE 15, 2008, DID YOU HAVE $10 MILLION IN CASH TO
24 COMPLETE THE PURCHASE?
25 A NO, I DIDN'T HAVE IT IN CASH.
26 Q AND YOU WOULD HAVE HAD TO SELL SOME OF THE
27 PROPERTIES YOU TOLD MR. BEECHEN YOU HAD ACQUIRED AND
28 OWNED; CORRECT?

58
1 A CORRECT.
2 Q AND INCLUDING ONE AT WINDWARD AND PACIFIC.
3 A COULD BE.
4 Q YOU TRIED TO SELL THAT TO RAISE THE MONEY,
5 DIDN'T YOU?
6 A I HAVE MANY PROPERTIES FOR SALE.
7 Q I UNDERSTAND, BUT FOR SALE AND SALE, TWO
8 DIFFERENT THINGS. YOU NEVER SOLD ANY.
9 A I DIDN'T.
10 Q AND THE FACT IS THAT, AS THE ESCROW IS
11 MOVING FORWARD TOWARD THE TERMINAL DAY, TOWARD JUNE 15,
12 YOU KNEW AND REALIZED YOU DID NOT HAVE $10 MILLION IN
13 CASH.
14 A BUT TO SOME QUESTION, I DON'T UNDERSTAND
15 THE QUESTION. I HAVE NEVER HAD CASH, I TOLD YOU.
16 Q WELL, WOULDN'T YOU NEED $10 MILLION TO
17 CLOSE THE TRANSACTION?
18 A I WOULD NEED AT THAT TIME LESS THAN THAT
19 MONEY.
20 Q PARDON?
21 A I WOULD NEED LESS THAN $10 MILLION AT THAT
22 TIME TO BUY THIS PROPERTY.
23 Q HOW MUCH LESS?
24 A PROBABLY 40 TO 50 PERCENT OF $10 MILLION.
25 Q I THOUGHT THE PRICE WAS 11 MILLION AND YOU
26 PUT A MILLION DOWN; CORRECT?
27 A YES.
28 Q DOESN'T THAT LEAVE 10?

59
1 A YES.
2 Q YOU DIDN'T HAVE 10 MILLION AVAILABLE AT
3 ANY TIME PRIOR TO THE CLOSE OF ESCROW.
4 A I TOLD YOU NOT.
5 Q AND YOU WERE TRYING TO SELL YOUR
6 PROPERTIES TO RAISE THAT MONEY, BUT YOU DIDN'T SELL ANY;
7 CORRECT?
8 A NOT CORRECT. I SAY, "NOT CORRECT."
9 Q NOW, IF YOU TAKE A LOOK AT EXHIBIT 31,
10 THAT'S THE SO-CALLED DEED RESTRICTION?
11 A 81?
12 Q 31. AND I WOULD LIKE TO INVITE YOU OVER
13 TO THE THIRD PAGE WHICH HAS A NUMBER AT THE BOTTOM OF
14 522. DOES THAT HELP YOU?
15 A 522. I'M HERE.
16 Q SEE THAT? OKAY. AND IN THAT -- ON THAT
17 PAGE, THERE'S A LITTLE "E" THAT'S CAPTIONED
18 "CONSTRUCTION." JUST ABOVE THE CENTER OF THE PAGE. DO
19 YOU SEE THAT, SIR?
20 A YES, I SEE.
21 Q AND IN THERE IT SAYS, "THE DEED
22 RESTRICTION" -- THAT'S WHAT WE'RE LOOKING AT,
23 EXHIBIT 31 -- "THE DEED RESTRICTION WAS PREPARED BY THE
24 BUYER AND THE BUYER'S ATTORNEY." IS THAT CORRECT?
25 A LET ME SEE WHERE IS THAT?
26 Q IT'S ABOUT FIVE LINES DOWN. "THE DEED
27 RESTRICTION WAS PREPARED BY THE BUYER AND THE BUYER'S
28 ATTORNEY."

60
1 A I READ THAT.
2 Q WAS THAT TRUE?
3 A CORRECT.
4 MR. BEECHEN: WAIT. OBJECTION. IS WHAT TRUE?
5 IT STATES IT?
6 MR. BLECHER: YES.
7 Q IS IT TRUE THAT THE DEED RESTRICTION WAS
8 PREPARED BY THE BUYER AND BUYER'S ATTORNEY?
9 A I BELIEVE THAT THE RESTRICTION WAS
10 PREPARED BY THE SELLERS. I'M TALKING ABOUT -- YOU'RE
11 TALKING ABOUT THE OLD RESTRICTION OR THE NEW ONE? THE
12 ONE THAT NEVER BEEN RECORDED OR -- THIS IS THE OLD ONE.
13 Q EXHIBIT 31 APPARENTLY IS THE DEED
14 RESTRICTION, AND THIS DOCUMENT RECITES THAT YOU OR YOUR
15 LAWYERS PREPARED IT. IS THAT TRUE, SIR?
16 A IS THIS A NEW DEED RESTRICTION OR THE ONE
17 THAT WAS ALREADY --
18 Q NEW ONE, THIS ONE (INDICATING).
19 A THE NEW RESTRICTION WAS PREPARED BY THE
20 SELLERS AND I ACCEPT IT. I SAY, "FINE."
21 Q YOU SIGNED AND INITIALED THE DOCUMENT --
22 THE COURT: LET ME ASK A QUESTION. WHERE IT SAYS
23 "DEED RESTRICTION" ON THIS PAGE, WHAT DOCUMENT DOES IT
24 REFER TO?
25 THE WITNESS: THAT'S WHAT I'M ASKING HIM.
26 THE COURT: NO, I'M ASKING YOU. FORGET HIS
27 QUESTION. ANSWER MY QUESTION. WHEN IT SAYS "DEED
28 RESTRICTION" ON PAGE 522, WHAT DOCUMENT IS IT TALKING

61
1 ABOUT AS FAR AS YOU UNDERSTOOD?
2 THAT SAME PARAGRAPH THAT COUNSEL REFERRED YOU TO
3 ON PAGE 522 UNDER "E," IT SAYS THAT THE DEED RESTRICTION
4 WHICH WAS PREPARED BY BUYER AND BUYER'S ATTORNEY, WHAT
5 DOCUMENT DID "DEED RESTRICTION" REFER TO AS FAR AS YOU
6 KNOW?
7 THE WITNESS: YOUR HONOR, CAN I TAKE A MINUTE TO
8 READ WHERE WE ARE SO --
9 THE COURT: OKAY.
10 THE WITNESS: ONE SECOND, PLEASE. THANK YOU.
11 THIS IS THE NEW RESTRICTION, YOUR HONOR.
12 THE COURT: IT REFERS TO WHICH DOCUMENT?
13 THE WITNESS: I BELIEVE JOINT VENTURE OR JOINT
14 ESCROW INSTRUCTIONS.
15 THE COURT: RIGHT. SO "DEED RESTRICTION" MEANS
16 THIS DOCUMENT, EXHIBIT 31; IS THAT CORRECT? OR NOT?
17 THE WITNESS: I BELIEVE SO. YES, YOUR HONOR.
18 Q BY MR. BLECHER: AND THE DEED RESTRICTION
19 IS ATTACHED TO EXHIBIT 31 AND HAS A LITTLE NUMBER 527
20 AT THE BOTTOM. DO YOU SEE THAT?
21 A REPEAT THAT, PLEASE. THE DEED
22 RESTRICTION --
23 Q THE DEED RESTRICTION THAT'S REFERRED TO,
24 WHAT WE'RE TALKING ABOUT, IS ATTACHED TO THIS DOCUMENT
25 AND HAS A LITTLE NUMBER 527 AT THE BOTTOM, AND IT'S
26 CAPTIONED AT THE TOP, "DEED RESTRICTION ATTACHMENT TO
27 ESCROW INSTRUCTIONS."
28 A CORRECT.

62
1 Q AND THAT'S THE DOCUMENT THAT EXHIBIT 31
2 RECITES THAT YOU AND YOUR LAWYER PREPARED; CORRECT?
3 A CORRECT.
4 Q AND THE LANGUAGE IN THIS DEED RESTRICTION
5 IS THE SAME LANGUAGE THAT MR. GAGGERO OR MR. FOLKERT
6 PROPOSED TO YOU IN EXHIBIT 19 -- EXCUSE ME -- EXHIBIT
7 20.
8 MR. BEECHEN: 20 OR 21?
9 MR. BLECHER: 20 AND 21. THANK YOU.
10 Q IN EXHIBIT 21, MR. FOLKERT GIVES YOU THE
11 SAME LANGUAGE FOR THE DEED RESTRICTION THAT FOUND ITS
12 WAY INTO THE DEED RESTRICTION THAT'S PART OF EXHIBIT 31
13 WITH THE EXCEPTION THAT THE DEED RESTRICTION IN 31 ADDS
14 LOT 601 AND THE PROPOSAL IN EXHIBIT 21 DID NOT. DO YOU
15 SEE THAT?
16 A EXHIBIT 21? THERE'S AN EXCEPTION, YOU
17 SAY, THAT 601 IS NOT INCLUDED?
18 Q 601 WAS NOT INCLUDED IN MR. FOLKERT'S
19 ORIGINAL PROPOSAL OF SEPTEMBER 17, WHICH IS EXHIBIT 21.
20 BUT BY NOVEMBER, 601 GETS INCLUDED, BUT THE LANGUAGE IS
21 OTHERWISE IDENTICAL. IS THAT CORRECT, SIR?
22 MR. BEECHEN: OBJECTION; SECONDARY EVIDENCE, YOUR
23 HONOR.
24 THE COURT: OVERRULED. IT'S THERE FOR -- THE
25 QUESTION'S THERE FOR A DIFFERENT PURPOSE.
27 THE COURT: ALL RIGHT.
28 THE WITNESS: MAYBE YOU CAN EXPLAIN ME WHAT IS

63
1 THE DIFFERENCE --
2 Q BY MR. BLECHER: THE DIFFERENCE THAT I
3 SEE, MR. BUNGE, IS, IN THE DEED RESTRICTION IN EXHIBIT
4 31, LOT 601 IS ADDED, AND IT WAS NOT IN THE PROPOSAL
5 MR. FOLKERT MADE TO YOU IN EXHIBIT 22. DOES THAT ACCORD
6 WITH YOUR RECOLLECTION, THAT THE ONLY CHANGE YOU MADE
7 WAS TO ADD LOT 601 AND MR. FOLKERT AGREED TO THAT?
8 A THAT'S THE CHANGE I MAKE?
9 Q CORRECT.
10 A MY LAWYER MAKE THE CHANGE, YES. I'M
11 GUESSING.
12 Q AND THE DEED RESTRICTION AS IT READS IN
13 EXHIBIT 31 SAYS -- SEE IF YOU UNDERSTAND IT THIS WAY --
14 THAT IF YOU WERE TO CHANGE THE USE OF THE PROPERTY, ANY
15 OF THESE PROPERTIES, THAT WOULD NOT -- HERE'S THE KEY
16 WORDS: "THAT WOULD NOT INVALIDATE THE PARKING RIGHTS
17 AND OBLIGATIONS CONVEYED BY THE COASTAL COMMISSION
18 PERMIT"; CORRECT?
19 A CORRECT.
20 Q AND MR. BUNGE, DURING THE BARGAINING, YOU
21 SAID THAT WAS ALL YOU WANTED, TO BE SURE THAT, IF YOU
22 CHANGED THE USE, YOU'D STILL HAVE THE 38 PARKING PLACES
23 THAT THE COASTAL COMMISSION GAVE YOU; CORRECT?
24 A YES.
25 Q AND YOU TESTIFIED TO THAT IN YOUR
26 DEPOSITION.
27 A I BELIEVE SO. I DON'T RECALL.
28 Q OKAY. NOW, EXHIBIT 31 ALSO SAYS ON THE

64
1 FIRST PAGE THAT "THE ESCROW HOLDER SHALL RECORD THIS
2 DEED RESTRICTION."
3 A FIRST PAGE?
4 Q PAGE 1 OF EXHIBIT 31, THE LAST TWO, THREE
5 LINES. DO YOU SEE THAT?
6 A WHAT PART?
7 Q EXCUSE ME?
8 A WHAT PART DID YOU WANT ME TO READ?
9 Q THE LAST THREE LINES WHERE IT SAYS, "THE
10 ESCROW HOLDER WILL RECORD THE DEED RESTRICTION."
11 A I READ THAT ESCROW HOLDER.
12 Q NOW, YOU ARE AWARE OR HAVE BEEN INFORMED,
13 MR. BUNGE, THAT THE ESCROW HOLDER TOOK THE DEED
14 RESTRICTION DOWN TO THE RECORDER'S OFFICE. YOU'RE AWARE
15 OF THAT?
16 A NO, I'M NOT AWARE.
17 Q NO ONE EVER TOLD YOU THAT THE DEED
18 RESTRICTION WAS TAKEN TO THE RECORDER'S OFFICE?
19 A FOLKERT TOLD ME THAT GAGGERO WAS GOING TO
20 TRY HIMSELF. THAT'S WHAT HE TOLD ME. DID THAT ANSWER
21 THE QUESTION?
22 Q DID ANYONE EVER TELL YOU THAT THE DEED --
23 THAT THE ESCROW COMPANY OR THE TITLE COMPANY TOOK THE
24 DEED RESTRICTION TO THE RECORDER'S OFFICE AND THE
25 RECORDER SAID, IN SUBSTANCE, "THIS IS NOT A RECORDABLE
26 DOCUMENT. WE CAN'T INDEX IT."
27 A AT ONE POINT THAT I HEAR FROM FOLKERT AND
28 I HEAR FROM MY LAWYER THAT THERE WAS NOT RECORDABLE OR

65
1 WAS NOT -- SOME LEGAL PROBLEM OR SOMETHING.
2 Q AND THEN YOU ALSO WANTED TITLE INSURANCE
3 TO ISSUE ON THIS DEED RESTRICTION; IS THAT CORRECT?
4 A IF POSSIBLE, YES.
5 Q AND THE TITLE COMPANY SAID THEY WOULD NOT
6 ISSUE INSURANCE ON THIS DEED RESTRICTION. YOU'RE AWARE
7 OF THAT?
8 A YES.
9 Q OKAY. AND AFTER THE RECORDER TOLD SOMEONE
10 FROM THE ESCROW COMPANY, "THIS IS NOT A RECORDABLE
11 DOCUMENT," MR. FOLKERT HIMSELF TOOK IT TO THE RECORDER'S
12 OFFICE. DO YOU RECALL THAT?
13 A NO.
14 Q HE DIDN'T TELL YOU THAT HE, HIMSELF, TOOK
15 IT TO THE RECORDER'S OFFICE?
16 A HE NEVER TOLD ME THAT.
17 Q NOW, DO YOU DENY THAT MR. FOLKERT TOLD YOU
18 REPEATEDLY THAT THE PURCHASE OF 511 AND 517 WAS A
19 TRANSACTION SEPARATE AND APART FROM THE DEED
20 RESTRICTION, EXHIBIT 611 -- 601?
21 A HE TOLD ME THAT IT WAS A DIFFERENT -- THAT
22 WE PUT IN DIFFERENT CONTRACTS BECAUSE THE LEGAL -- THE
23 PROPERTIES WERE LEGALLY HOLD BY DIFFERENT ENTITIES, SO
24 WE NEED DIFFERENT PAPERS, DIFFERENT CONTRACTS.
25 Q HE TOLD YOU THERE WERE DIFFERENT OWNERS
26 AND THAT ONE TRANSACTION WAS DISTINCT FROM THE OTHER.
27 A NO, HE DIDN'T TOLD ME THAT.
28 Q DIDN'T TELL YOU THAT? YOU'RE ABSOLUTELY

66
1 POSITIVE?
2 A HE TOLD ME ALWAYS GAGGERO WAS THE OWNER.
3 Q HE TOLD YOU -- HE SHOWS HERE IN SOME MEMOS
4 TO YOU -- HE REFERS TO THE OWNERS. DO YOU RECALL THAT?
5 OWNERS.
6 A AGAIN, HE TOLD ME THAT THE PAPERS -- THE
7 CONTRACT HAVE TO BE SEPARATE BECAUSE THE TITLE WAS
8 HOLDED BY DIFFERENT ENTITIES. I DON'T MEAN -- THAT
9 MEANS WHAT IT MEANS. AND I THOUGHT WAS OKAY THEN.
10 Q JUST TAKE A LOOK AT 21 FOR A MOMENT.
11 A 21?
12 Q 21.
13 THE COURT: I'M SORRY. YOU'RE REFERRING TO
14 EXHIBIT 21?
15 MR. BLECHER: YES, YOUR HONOR.
16 Q AND MR. FOLKERT WRITES TO YOU ABOUT A
17 MESSAGE RECEIVED FROM THE 511/517 PROPERTY OWNERS,
18 PLURAL. DO YOU SEE THAT?
19 A I SEE THAT.
20 Q AND THAT DIDN'T RAISE SOME QUESTION IN
21 YOUR MIND AS TO WHETHER MR. GAGGERO WAS THE OWNER OF THE
22 PROPERTY?
23 A NO.
24 Q OKAY. NOW, YOUR POSITION HERE TODAY IS
25 THAT YOU UNDERSTOOD YOU WEREN'T GOING TO BUY THE TWO
26 LOTS 511 AND 517 UNLESS YOU HAD A SATISFACTORY PARKING
27 AGREEMENT; CORRECT?
28 A CORRECT.

67
1 Q NOW, I WANT YOU TO LOOK AT EXHIBIT 32.
2 THE COURT: ALL RIGHT. BEFORE YOU GET INTO THAT,
3 WHY DON'T WE STOP HERE. IT'S NOON. WE'LL RECONVENE AT
4 1:30. THE ATTORNEYS ARE ORDERED TO RETURN, AND THE
5 WITNESS IS ORDERED TO RETURN AT 1:30. ALL RIGHT. THANK
6 YOU.
7 (LUNCH RECESS TAKEN AT 12:01 P.M.)
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

68
1 (AFTERNOON SESSION BEGINS AT 1:38 P.M.)
2 THE COURT: WE'RE BACK ON THE RECORD. THE
3 ATTORNEYS ARE PRESENT. WITNESS IS PRESENT. YOU'RE
4 STILL UNDER OATH. LET'S PROCEED, PLEASE.
5 MR. BLECHER: THANK YOU, YOUR HONOR.
6 Q MR. BUNGE, DO YOU HAVE A RECOLLECTION THAT
7 YOU KNEW AT THE TIME THAT THE DEED RESTRICTION -- THAT
8 YOU WERE TOLD THE DEED RESTRICTION WAS NOT RECORDABLE?
9 A AT WHAT TIME, SIR?
10 Q AT THE TIME THAT THERE WAS DISCUSSION
11 ABOUT IT. LET'S SAY IN OCTOBER OF 2007.
12 A YES, I DID.
13 Q AND DID YOU LEARN THAT FROM MR. FOLKERT,
14 PROBABLY?
15 A EXCUSE ME. OCTOBER 2007? IS THAT THE
16 TIME THAT YOU WANT ME TO ANSWER? CAN YOU REPEAT THE
17 QUESTION?
18 Q AM I IN THE RIGHT YEAR? NOVEMBER. DID
19 YOU UNDERSTAND THAT IN OR ABOUT NOVEMBER OF 2007 YOU
20 WERE TOLD THAT THE DEED RESTRICTION THAT'S PART OF
21 EXHIBIT 31 IS NOT A RECORDABLE INSTRUMENT?
22 A I DON'T EXACTLY KNOW THE DATES. IT'S
23 AROUND END OF NOVEMBER I WOULD SAY.
24 Q WHO WAS IT THAT TOLD YOU THAT IT WAS NOT
25 RECORDABLE?
26 A I BELIEVE I HEAR IT FROM FOLKERT AND MY
27 LAWYER.
28 Q AND DID MR. FOLKERT TELL YOU AT SOME TIME

69
1 THAT HE PERSONALLY WENT TO THE RECORDER'S OFFICE TO
2 INQUIRE WHETHER THEY WOULD RECORD IT?
3 A I DON'T RECALL HIM TELLING ME THAT.
4 Q YOU DON'T RECALL. NOW, WHEN YOU FOUND OUT
5 THAT THE DOCUMENT WAS NOT RECORDABLE, DID YOU TALK TO
6 MR. KAHN, YOUR LAWYER, AND SAY, "FIX IT AND GET IT
7 RECORDED"?
8 MR. BEECHEN: OBJECTION, YOUR HONOR. CALLS FOR
9 ATTORNEY/CLIENT COMMUNICATION.
10 THE COURT: SUSTAINED. PLEASE ASK YOUR NEXT
11 QUESTION.
12 Q BY MR. BLECHER: AFTER YOU FOUND OUT THE
13 DOCUMENT WAS NOT RECORDABLE, DID YOU DO ANYTHING TO SEE
14 WHETHER YOU COULD MAKE IT -- FIX IT AND MAKE IT
15 RECORDABLE?
16 A YOUR QUESTION IS IF I DID ANYTHING --
17 Q YES.
18 A -- ABOUT IT?
19 Q YES.
20 A WELL, I'M IN DAILY COMMUNICATION WITH
21 FOLKERT AND MY LAWYER.
22 Q AND WHAT -- AS A RESULT OF THOSE
23 CONVERSATIONS, WHAT DID YOU DO TO FIX IT?
24 A WELL, I WAS EXPECTING TO FIX IT TO BE
25 RECORDED.
26 Q I'M ASKING, SIR, WHAT IS IT THAT YOU DID
27 TO CHANGE THE DOCUMENT THAT WOULD MAKE IT RECORDABLE?
28 A I ASK MY LAWYER TO WORK ON IT, I BELIEVE.

70
1 Q AND DID HE DO THAT? THE LAWYER IS
2 MR. KAHN; RIGHT?
3 A MY LAWYER IS MR. KAHN.
4 Q AND HE'S THE ONE THAT RECORDED EXHIBIT
5 31 -- DRAFTED THE DEED RESTRICTION; CORRECT?
6 A HE DID NOT DRAFT THE DEED RESTRICTION, I
7 BELIEVE.
8 Q WHAT?
9 A I BELIEVE I THINK HE DIDN'T DRAFT THE DEED
10 RESTRICTION.
11 Q ALL RIGHT. DO YOU SEE EXHIBIT 31 THAT
12 SAYS YOU AND YOUR LAWYER DRAFTED THE DEED RESTRICTION?
13 A I DON'T THINK IT'S A MATTER OF FACT WHAT
14 IT SAYS THERE.
15 Q ALL RIGHT. MR. KAHN'S COMMENT, SO I GUESS
16 WE CAN ASK HIM. BUT AT THE TIME, DID HE DO --
17 THE COURT: COUNSEL, I'LL ASK YOU NOT TO COMMENT.
18 JUST ASK QUESTIONS, PLEASE.
19 Q BY MR. BLECHER: AT THE TIME YOU LEARNED
20 THERE WAS SOME PROBLEM, YOU DID ASK HIM TO FIX IT.
21 A I KNOW THERE WAS SOME PROBLEM. THAT'S
22 WHAT THEY TOLD ME. I DIDN'T KNOW THE SCOPE OF THE
23 PROBLEM. I DID WANT THAT DEED TO BE RECORDED. AND I
24 ASKED NOW AND THEN TED FOLKERT WHAT WAS THE STATUS.
25 Q MR. BUNGE, DID YOU OR ANYBODY ACTING UNDER
26 YOUR DIRECTION EVER ATTEMPT TO RECORD THE DEED
27 RESTRICTION?
28 A NOT THAT I KNOW.

71
1 Q NOW, DO YOU AGREE THAT THE MILLION
2 DOLLARS -- THE MILLION DOLLARS THAT YOU PAID IN
3 CONNECTION WITH THE BUY AND SELL AGREEMENT THAT'S
4 EXHIBIT 32 -- DO YOU AGREE THAT THAT MILLION DOLLARS --
5 THAT THE PURPOSE OF THAT WAS TO EFFECTIVELY GIVE YOU AN
6 OPTION BETWEEN OCTOBER AND JUNE?
7 MR. BEECHEN: OBJECTION --
8 THE WITNESS: NO, I DON'T AGREE. SORRY.
9 THE COURT: SIR, WHEN YOUR ATTORNEY OBJECTS,
10 PLEASE STOP AND WAIT FOR THE OBJECTION.
11 MR. BEECHEN: I'LL WITHDRAW IT.
12 THE COURT: OKAY. PLEASE GO AHEAD.
13 Q BY MR. BLECHER: LET ME REFRAME IT JUST A
14 LITTLE BIT. DID YOU UNDERSTAND YOU WERE PAYING THAT
15 MILLION DOLLARS SO THAT THE TWO PROPERTIES, 517 AND 511,
16 WOULD BE TAKEN OFF THE MARKET?
17 MR. BEECHEN: OBJECTION. YOUR HONOR, JUST
18 IRRELEVANT AS TO HIS UNDERSTANDING THE DOCUMENT IN THAT
19 REGARD. PURCHASE AND SALE AGREEMENT MAKES NO MENTION OF
20 THAT.
21 THE COURT: NO. OVERRULED. HE MAY ANSWER AS TO
22 HIS BELIEF AND INTENT WITH REGARD TO WHAT HE PAID FOR.
23 GO AHEAD.
24 THE WITNESS: COULD YOU REPEAT THE QUESTION,
25 PLEASE?
26 Q BY MR. BLECHER: I'M GOING TO TRY. DID
27 YOU UNDERSTAND THAT YOU WERE PAYING THE MILLION DOLLARS
28 TO TAKE THE TWO PROPERTIES, 511 AND 517, OFF THE MARKET?

72
1 A NO.
2 Q I'M GOING TO ASK YOU TO LOOK AT YOUR
3 DEPOSITION, VOLUME 2 OF JULY 6, 2011, AT PAGE 252. I
4 THINK YOU MIGHT HAVE THAT UP THERE ALREADY, MR. BUNGE.
5 SEE IF I CAN FIND IT FOR YOU. NOT THAT ONE
6 (INDICATING). THIS ONE. YOU WANT TO GO TO PAGE 252.
7 THE QUESTION READS: "YOU AGREE --
8 MR. BEECHEN: EXCUSE ME, COUNSEL. LINE NUMBERS,
9 PLEASE?
10 MR. BLECHER: 1.
11 MR. BEECHEN: JUST 1?
12 MR. BLECHER: 252, LINE 1.
13 THE COURT: PLEASE GO AHEAD.
14 MR. BLECHER: THE QUESTION IS, QUOTE:
15 "YOU AGREED TO GIVE THEM $1
MILLION THAT WAS ABSOLUTELY
16 NONREFUNDABLE AS AN INDUCEMENT TO ENTER
INTO A CONTRACT WITH THE TWO OF YOU AND
17 TAKE THE TWO PROPERTIES OFF THE MARKET.
DO YOU AGREE WITH THAT STATEMENT?
18
"ANSWER: YES, I AGREE."
19
20 THE COURT: THAT'S ALL ON LINE 1?
21 MR. BLECHER: WELL, IT'S 1 THROUGH 9.
22 THE COURT: IF YOU'RE GOING TO READ A DEPOSITION,
23 YOU'RE GOING TO HAVE TO GIVE THE PAGE, THE LINE NUMBERS,
24 AND GIVE COUNSEL TIME TO TAKE A LOOK AT THEM TO SEE IF
25 HE OBJECTS. ALL RIGHT? IN THE FUTURE, PLEASE ADHERE TO
26 THAT.
27 MR. BEECHEN: COULD I HAVE JUST A MOMENT, YOUR
28 HONOR?

73
1 THE COURT: YES.
2 MR. BEECHEN: NO OBJECTIONS.
3 THE COURT: PLEASE GO AHEAD.
4 MR. BLECHER: I'LL START OVER AGAIN, MR. BUNGE.
5 IT SAYS:
6 "YOU AGREED TO GIVE THEM $1
MILLION THAT WAS ABSOLUTELY
7 NONREFUNDABLE AS AN INDUCEMENT TO ENTER
INTO A CONTRACT WITH THE TWO OF YOU AND
8 TO TAKE THE PROPERTIES OFF THE MARKET.
DO YOU AGREE WITH THAT STATEMENT?
9
"ANSWER: YES, I AGREED, QUOTE, TO
10 ENTER INTO A CONTRACT WITH THE TWO OF
YOU AND TAKE THE PROPERTIES OFF THE
11 MARKET."
12 Q DO YOU SEE THAT?
13 A YES.
14 Q DO YOU BELIEVE YOU WERE PAYING THE $1
15 MILLION TO TAKE THE TWO PROPERTIES OFF THE MARKET
16 BETWEEN THE END OF OCTOBER 2007 AND JUNE 2008?
17 A NO.
18 Q SO WHAT DO YOU MEAN HERE WHEN YOU SAY, "I
19 AGREE IT WAS A CONTRACT WITH THE TWO OF YOU TO TAKE THE
20 PROPERTIES OFF THE MARKET"? WHAT DID YOU MEAN?
21 A I MEAN TO ENTER INTO CONTRACT TO BUY THE
22 PROPERTIES.
23 Q YOU SAID SPECIFICALLY "TO TAKE THE TWO
24 PROPERTIES OFF THE MARKET." WAS THAT YOUR INTENTION IN
25 PAYING THE $1 MILLION?
26 A FOR ME TO TAKE THE PROPERTIES OFF THE
27 MARKET IS BECAUSE WE ARE ENTERING A CONTRACT, SO THAT'S
28 WHAT HAPPENED ALWAYS.

74
1 Q DID YOU VIEW THE PAYING OF THE $1 MILLION
2 AS ESSENTIALLY AN EIGHT-MONTH OPTION?
4 Q DID YOU VIEW THE PAYING OF THE $1 MILLION
5 AS ESSENTIALLY AN EIGHT-MONTH OPTION?
6 A NO.
7 MR. BEECHEN: OBJECTION, YOUR HONOR. EXCUSE ME.
8 NOT RELEVANT. I DON'T THINK THERE'S BEING AN OPTION
9 ASSERTED IN ANY OF THESE PLEADINGS.
10 THE COURT: OVERRULED. THE ANSWER MAY REMAIN.
11 Q BY MR. BLECHER: NOW, JUST SO WE'RE CLEAR,
12 THE $100,000 YOU PAID UNDER EXHIBIT 31 FOR THE DEED
13 RESTRICTION HAS BEEN RETURNED TO YOU.
14 A YES.
15 Q NOW, FROM THE BEGINNING, YOU UNDERSTOOD,
16 DID YOU NOT, MR. BUNGE, THAT THERE WERE TWO SEPARATE
17 CONTRACTS AND TWO SEPARATE ESCROWS?
18 A I BELIEVE THERE ARE THREE SEPARATE
19 CONTRACTS.
20 Q THERE'S ONE CONTRACT THAT COVERS 511 AND
21 517 AND THAT'S EXHIBIT 32; CORRECT? WANT TO LOOK AT
22 THAT TO FEEL COMFORTABLE?
23 A SURE.
24 Q 32 COVERS THE TWO LOTS, 511 AND 517.
25 A CORRECT.
26 Q IF YOU TURN BACK TO 31, THAT'S A SEPARATE
27 CONTRACT FOR A DEED RESTRICTION ON LOT 601; CORRECT?
28 A THE AGREEMENT OF JOINT ESCROW

75
1 INSTRUCTIONS?
2 Q YES.
3 A YES.
4 Q NOW, IF YOU LOOK AT EXHIBIT 32, SIR,
5 PURCHASE AND SALE AGREEMENT, IS THERE ANYWHERE IN
6 EXHIBIT 32 THAT CONDITIONS THAT TRANSACTION, THE
7 PURCHASE, ON SOMETHING CONCERNING THE DEED RESTRICTION
8 OR THE PARKING?
9 A I WOULD TAKE A MOMENT.
10 THE COURT: YES, PLEASE GO AHEAD.
11 THE WITNESS: YES.
12 Q BY MR. BLECHER: WHERE IS THAT?
13 A NUMBER 13. "LICENSES AND PERMITS."
14 THE COURT: I'M SORRY, MR. BUNGE. WHAT PAGE ARE
15 YOU LOOKING AT?
16 THE WITNESS: 047.
17 THE COURT: 047. OKAY.
18 Q BY MR. BLECHER: NOW, TAKE A LOOK, IF YOU
19 WOULD, AT THE PAGE MARKED IN THE LOWER RIGHT CORNER
20 "BUNGE 058." DID YOU FIND THAT PAGE, SIR?
21 A YES.
22 Q TOWARD THE TOP, THERE'S A PARAGRAPH WITH
23 PARENTHESES AND THREE LITTLE I'S. DO YOU SEE THAT?
24 A THREE "I"S?
25 Q THREE LITTLE I'S.
26 A YES.
27 Q AND THAT RECITES, "LICENSEES AND PERMITS
28 AFFECTING THE PROPERTY ARE PUBLIC RECORD, AND THE

76
1 SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES REGARDING
2 SAME."
3 DO YOU SEE THAT?
4 A YES.
5 Q SO WHAT RIGHTS DO YOU BELIEVE YOU HAD
6 BASED ON THE DEFINITION OF "LICENSES AND PERMITS" ON
7 PAGE 47?
8 A YOU ARE ASKING ME MY OPINION ON THIS?
9 Q YES.
10 A MY UNDERSTANDING IS THAT ALL LICENSE
11 PERMITS ARE INCLUDED, THAT ARE INCLUDED IN THE -- THAT
12 COME WITH THE PROPERTY ARE INCLUDED IN THE DEAL.
13 Q MR. BUNGE, WHEN YOU ENTERED INTO THIS
14 CONTRACT, YOU UNDERSTOOD THAT THERE WERE 38 PLACES ON
15 EXHIBIT 601 THAT YOU COULD USE FOR 511 AND 517; CORRECT?
16 A CORRECT.
17 Q AND YOU WERE PERFECTLY CONTENT WITH THAT.
18 A WHEN I ENTERED INTO WHAT CONTRACT?
19 Q AT THE TIME YOU WERE NEGOTIATING TO ENTER
20 INTO THE AGREEMENT 32, THE PURCHASE AND SALE, YOU KNEW
21 YOU HAD 38 PLACES UNDER THE COASTAL PERMIT THAT 511 AND
22 517 COULD USE.
23 A CORRECT.
24 Q AND YOUR ONLY PROBLEM WITH THAT WAS YOU
25 WERE CONCERNED THAT, IF YOU CHANGED THE USE OF 511 AND
26 517, YOU MIGHT LOSE THAT -- ALL OR SOME OF THAT PARKING;
27 CORRECT?
28 A CORRECT.

77
1 Q AND THAT'S WHEN THEY DRAFTED THE DEED
2 RESTRICTION THAT SAID THEY WOULD GUARANTEE TO YOU THAT
3 THE CHANGE OF USE WOULD NOT INVALIDATE THE 38 PLACES
4 THAT YOU HAD ON LOT 601; CORRECT?
5 A CORRECT.
6 Q AND WHEN THEY DID THAT AND THEY TOLD YOU
7 THEY WERE PREPARED TO DO THAT, YOU WERE CONTENT?
8 MR. BEECHEN: OBJECTION, YOUR HONOR. "CONTENT"?
9 THE COURT: SUSTAINED. IT'S A BIT VAGUE.
10 Q BY MR. BLECHER: NOW, IN THAT SAME VOLUME
11 YOU HAVE ON THE ROSTRUM, MR. BUNGE, COULD I ASK YOU TO
12 TURN TO PAGE 147.
13 MR. BEECHEN: COUNSEL, THIS IS THE JULY 6?
14 MR. BLECHER: IT IS JULY 6. IT'S CAPTIONED
15 "VOLUME 2."
16 MR. BEECHEN: OKAY. AND LINE?
17 MR. BLECHER: WE'RE STARTING --
18 THE WITNESS: 147 PAGE.
19 MR. BLECHER: PAGE 147.
20 THE COURT: AND WHERE ARE WE FINISHING?
21 MR. BLECHER: 23, LINE 23.
22 MR. BEECHEN: 8 TO 23?
23 MR. BLECHER: 8 TO 23.
24 MR. BEECHEN: JUST A MOMENT, YOUR HONOR.
25 THE WITNESS: I HAVE 147.
26 MR. BEECHEN: NO OBJECTION.
27 THE COURT: ALL RIGHT. PLEASE CONTINUE.
28 Q BY MR. BLECHER: THE QUESTION, MR. BUNGE,

78
1 WAS:
2 "THERE WAS A DEED RESTRICTION THAT
WENT WITH THE PROPERTY FOR ITS USE FOR
3 RETAIL PURPOSES. YOU UNDERSTOOD THAT;
CORRECT?
4
"ANSWER: UH-HUH.
5
"QUESTION: AND YOU WANTED THAT
6 CHANGED; CORRECT?
7 "ANSWER: I DIDN'T WANT THAT TO BE
CHANGED, NO.
8
"QUESTION: WHAT DID YOU WANT?
9
"ANSWER: I WANT IN CASE I CHANGE
10 THE USE, A TOOL THAT WILL ALLOW ME TO
HAVE THE PARKING, THE SAME PARKING THAT
11 I HAVE IN FOR THE RETAIL IN PLACE FOR ME
TO BE ABLE TO DEVELOP A HOTEL.
12
"QUESTION: WOULD THAT HAVE BEEN A
13 CHANGE IN THE WAY THE PROPERTY WAS USED,
THOUGH; CORRECT?
14
"ANSWER: CORRECT, CHANGE IN USE."
15
16 NOW, IS THERE ANYTHING YOU WANT TO CHANGE ABOUT
17 THAT TESTIMONY, SIR?
18 A IS THERE ANYTHING I WANT TO CHANGE ON
19 THIS?
20 Q YES. OR DO YOU THINK THAT WAS A
21 COMPLETELY TRUTHFUL ANSWER?
22 A LOOKS LIKE THIS IS WHAT I ANSWER.
23 Q SO THE ONLY CONCERN YOU HAD ABOUT THE
24 PARKING WAS NOT THE NUMBER OF PLACES. YOU WERE ONLY
25 CONCERNED IF YOU TORE DOWN WHAT WAS AT 511 AND 517 AND
26 BUILT A HOTEL THAT YOU WOULD LOSE SOME OR ALL OF THOSE
27 SPACES; CORRECT?
28 MR. BEECHEN: OBJECTION; MISSTATES THE TESTIMONY.

79
1 THERE'S BEEN NO TESTIMONY ABOUT THE LOSS OF SPACES
2 EITHER WAY.
3 THE COURT: OVERRULED, BUT HE MAY ASK TO CLARIFY
4 THE ANSWERS. GO AHEAD.
5 THE WITNESS: IF YOUR QUESTION IS IF I WAS
6 CONCERNED ABOUT THE QUANTITY OF THE SPACES?
7 Q BY MR. BLECHER: YOUR CONCERN WAS, IF YOU
8 BUILT A HOTEL OR HOTELS ON 511 AND 517, THAT THE 38
9 SPACES MIGHT GET REDUCED OR LOST; CORRECT?
10 A MIGHT GET REDUCED OR WHAT?
11 Q THROUGH WHAT?
12 A WHAT?
13 THE COURT: WAIT. HE COULDN'T HEAR YOU. SPEAK
14 UP, PLEASE.
15 Q BY MR. BLECHER: YOUR CONCERN THAT IF YOU
16 BUILT A HOTEL ON 511 AND 517 YOU MIGHT LOSE SOME OR ALL
17 OF THE 38 PARKING PLACES; CORRECT?
18 A YES, I WAS CONCERNED.
19 Q AND THE DEED RESTRICTION THAT'S IN EXHIBIT
20 31, THAT PROTECTS YOU AGAINST THAT, DOES IT NOT?
21 A AT THE TIME, I BELIEVE SO.
22 Q AND WHEN THAT WAS PROPOSED TO YOU EXCEPT
23 FOR ADDING LOT 601, SEPARATING LOT 601, IT WAS THE SAME
24 LANGUAGE THAT MR. FOLKERT AND MR. GAGGERO HAD PROPOSED
25 TO YOU AS EARLY AS SEPTEMBER.
26 A I BELIEVE SO.
27 Q OKAY. AND THE WHOLE DISCUSSION ABOUT
28 GETTING DIFFERENT OR NEW PARKING RIGHTS OCCURRED AFTER

80
1 EXHIBIT 32 WAS EXECUTED; CORRECT?
2 A AFTER --
3 Q AFTER YOU MADE THE CONTRACT TO BUY THE TWO
4 LOTS.
5 A CAN YOU REPEAT IT AGAIN, PLEASE? WHAT
6 HAPPENED AFTER?
7 Q ALL THE DISCUSSIONS THAT YOU HAD ABOUT A
8 NEW AND DIFFERENT KIND OF PARKING LICENSE OR PERMIT,
9 THAT ALL OCCURRED AFTER YOU MADE THE AGREEMENT THAT'S
10 EXHIBIT 32; IS THAT CORRECT?
11 A I BELIEVE SO.
12 Q AND NONE OF THOSE DISCUSSIONS REACHED AN
13 AGREEMENT. YOU WERE NEVER ABLE TO REACH AN AGREEMENT.
14 A WHAT DISCUSSIONS?
15 Q ABOUT CHANGING THE NATURE OF THE PARKING.
16 THIS MORNING YOU SHOWED MR. BEECHEN A PROPOSED OPTION.
17 DO YOU RECALL THAT?
18 A YES.
19 Q OKAY. THAT'S PART OF THE DISCUSSION YOU
20 HAD AFTER THE CONTRACT WAS SIGNED THAT LOOKED AT
21 CHANGING THE NATURE OF THE PARKING; CORRECT?
22 A CORRECT.
23 Q AND THAT NEVER REACHED AN AGREEMENT. YOU
24 AND THE OWNERS NEVER REACHED AN AGREEMENT ON THAT.
25 A WE DIDN'T REACH AN AGREEMENT. WE GOT THAT
26 OPTION YOU'RE TALKING ABOUT.
27 Q AND WHEN YOU BROUGHT YOUR ACTION FOR
28 SPECIFIC PERFORMANCE IN OCTOBER OF 2008, YOU STILL HAD

81
1 NO AGREEMENT ON THE PARKING; CORRECT? OTHER THAN THE
2 DEED RESTRICTION THAT THE OWNERS HAD SIGNED ON.
3 A CORRECT.
4 Q NOW, WE WERE DISCUSSING WHETHER THERE'S
5 ANYTHING IN EXHIBIT 32 THAT MAKES THE PERFORMANCE, THE
6 PURCHASE, CONDITIONED ON PARKING OTHER THAN WHAT CAME
7 FROM THE COASTAL PERMIT. AND YOU POINTED OUT WHAT YOU
8 THOUGHT MIGHT AFFECT THAT. IS THERE ANYTHING ELSE IN
9 EXHIBIT 32 THAT YOU'RE GOING TO POINT TO THAT SAYS, "IF
10 WE DON'T REACH AN AGREEMENT SATISFACTORY TO ME ON
11 PARKING, THIS DEAL IS OFF"?
12 A LET ME READ AGAIN.
13 Q SURE.
14 A THANK YOU. NUMBER 20.
15 THE COURT: WHAT PAGE, MR. BUNGE?
16 THE WITNESS: PAGE 11. 048, NUMBER 20.
17 THE COURT: THANK YOU, SIR.
18 Q BY MR. BLECHER: ANY OTHER PROVISIONS?
19 A NO. NO, I DIDN'T SEE --
20 Q MR. BUNGE, DID YOU, YOURSELF, OR DID YOU
21 EVER ASK MR. KAHN TO HAVE INSERTED INTO EXHIBIT 32 AN
22 EXPRESS STATEMENT THAT THE PERFORMANCE OF THE PURCHASE
23 AGREEMENT WAS CONDITIONED UPON A PARKING AGREEMENT?
24 MR. BEECHEN: OBJECTION; CALLS FOR AN
25 ATTORNEY/CLIENT COMMUNICATION.
27 MR. BLECHER: WITH DUE RESPECT, YOUR HONOR, I
28 THINK HE TESTIFIED TO A NUMBER OF ATTORNEY/CLIENT

82
1 COMMUNICATIONS.
2 THE COURT: EACH ONE, EACH AREA IS A DIFFERENT
3 SET OF RIGHTS THAT HE HAS BETWEEN HIMSELF AND HIS
4 ATTORNEY SO THAT IF HE OPENS UP ONE, IT DOESN'T OPEN UP
5 ALL OF THEM.
6 Q BY MR. BLECHER: DID YOU EVER UNDERTAKE TO
7 HAVE INSERTED IN EXHIBIT 32 SOME RECITAL THAT SAID THAT
8 THE PERFORMANCE OF THE PURCHASE AGREEMENT WAS TIED TO OR
9 CONDITIONED UPON THE PARKING AGREEMENT?
10 A I HAVE -- IF I DID THAT? NO, I DIDN'T DO
11 THAT.
12 Q YOU DIDN'T DO THAT. NOW, LAST SUBJECT.
13 IS IT NOT CORRECT THAT ON ANY NUMBER OF OCCASIONS
14 MR. FOLKERT TOLD YOU THAT THE DEED RESTRICTION UNDER
15 60 -- LOT 601 HAD TO BE SEPARATE FROM THE 511
16 TRANSACTION AND NOT INCLUDED? DID HE TELL YOU THAT?
18 MR. BLECHER: CAN I ASK THE REPORTER TO READ
19 BACK?
20 THE COURT: PLEASE.
21 (RECORD READ.)
22 THE WITNESS: NO, HE DIDN'T.
23 MR. BLECHER: LET ME NOW ASK YOU TO LOOK AT THE
24 SAME DEPOSITION TRANSCRIPT OF JULY 6, 2011 MARKED
25 VOLUME 2, AT PAGE 199 AT LINES 3 THROUGH 10.
26 THE COURT: ANY OBJECTIONS?
27 MR. BEECHEN: HOLD ON JUST A MOMENT, YOUR HONOR.
28 THE COURT: I'M HOLDING.

83
1 MR. BEECHEN: I THINK IT SHOULD JUST GO TO 17,
2 LINE 17. WITH THAT, NO OBJECTION. JUST BECAUSE LINE 10
3 IS -- CUTS THE ANSWER OFF IN THE MIDDLE.
4 MR. BLECHER: I HAVE NO PROBLEM WITH READING
5 THROUGH LINE 17.
6 THE COURT: OKAY.
7 MR. BLECHER:
8 "QUESTION: MR. BUNGE ASKED OF YOU
ON JULY 9 -- 6, 2011, PAGE 199, LINES 3,
9 4, 'DO YOU RECALL BEING TOLD THAT THE
LANGUAGE REGARDING THE 601 TRANSACTION
10 SHOULD NOT BE INCLUDED IN THE 511/517
TRANSACTION BY ANYONE, MR. FOLKERT, YOUR
11 LAWYER, YOUR WIFE'?
12 "ANSWER: I HAVE A RECOLLECTION
ABOUT. YES.
13
"QUESTION: WHAT IS YOUR
14 RECOLLECTION?
15 "THAT FOR SOME REASON IT (SIC.)
HAS TO BE IN (SIC.) A SEPARATE PAPER.
16 AND MOST OF (SIC.) -- AND ANYWAY, THE
511" --
17
18 MR. BEECHEN: WAIT, WAIT, WAIT. EXCUSE ME. IT
19 JUST HASN'T BEEN READ CORRECTLY.
20 THE COURT: I'M SORRY. I WASN'T FOLLOWING.
21 MR. BEECHEN: I UNDERSTAND THAT.
22 MR. BLECHER, IF YOU COULD JUST START AT LINE 9
23 AGAIN.
24 MR. BLECHER:
25 "THAT FOR SOME REASON THIS HAS TO
BE ON A SEPARATE PAPER. FOR MOST OF
26 THE --
27 "QUESTION: AND THAT --
28 "ANSWER: AND ANYWAY, THE 511/517
CONSENT ALSO MENTIONS MANY WAYS THAT ARE

84
1 SECTIONS. SO WE DIDN'T. BUT THEY SAID
THAT THEY WANTED ANOTHER PAPER, AND
2 THERE WAS ANOTHER CONTRACT FOR SOME
REASON."
3
4 Q DO YOU RECALL GIVING THOSE ANSWERS, SIR?
5 A THESE ANSWERS?
6 Q YES.
7 A I'M READING IT.
8 Q OKAY. YOU'RE READING?
9 A I AM READING THE ANSWERS, YES, THAT I DID.
10 Q AND WERE THOSE TRUE AT THE TIME YOU GAVE
11 THEM?
12 A THESE ANSWERS? YES.
13 Q WHEN YOU WERE TOLD THAT THE SELLERS
14 INSISTED ON HAVING SEPARATE DOCUMENTS, DID IT RAISE IN
15 YOUR MIND ANY QUESTION OR SUSPICION THAT THE 601
16 TRANSACTION WAS NOT LINKED TO AND MADE A CONDITION OF
17 THE 511/517 TRANSACTIONS?
18 A TED FOLKERT TOLD ME THAT BECAUSE THE
19 PROPERTIES ARE HOLDED BY DIFFERENT ENTITIES, WE HAVE TO
20 HAVE DIFFERENT CONTRACTS. DID THAT ANSWER YOUR
21 QUESTION?
22 Q YES.
23 A THANK YOU.
24 Q SO HE TOLD YOU NOW THAT THERE WERE
25 DIFFERENT OWNERS TO THE DIFFERENT PIECES OF LAND?
26 A NO.
27 Q OBJECTION; MISSTATES THE TESTIMONY.

85
1 Q BY MR. BLECHER: HE SAID THE TITLE WAS
2 HELD BY DIFFERENT PEOPLE.
3 A NO, IT WAS -- THE TITLE WAS HOLD BY
4 DIFFERENT ENTITIES.
5 Q AND THEY DIDN'T WANT -- 601 DIDN'T WANT TO
6 GET MIXED UP WITH THE 511/517. ISN'T THAT ESSENTIALLY
7 WHAT HE TOLD YOU?
8 A HE JUST TOLD ME WHAT I TOLD YOU. I DON'T
9 KNOW WHAT --
10 MR. BLECHER: THANK YOU, SIR.
11 I HAVE NO FURTHER QUESTIONS, YOUR HONOR.
12 THE COURT: REDIRECT?
13 MR. BEECHEN: VERY BRIEF, YOUR HONOR.
14
15 REDIRECT EXAMINATION
16 BY MR. BEECHEN:
17 Q MR. BUNGE, MR. BLECHER -- I'LL LET YOU GET
18 YOUR WATER.
19 A THANK YOU.
20 Q FIRST OF ALL, LET'S PICK UP WHERE
21 MR. BLECHER LEFT OFF. THAT IS, THAT WHILE MR. FOLKERT
22 TOLD YOU THAT THE TITLEHOLDERS OF THESE PROPERTIES WERE
23 DIFFERENT, DID HE TELL YOU -- DID HE CHANGE IN ANY
24 FASHION A STATEMENT TO YOU WHICH YOU TESTIFIED EARLIER
25 THAT MR. GAGGERO ACTUALLY OWNED ALL THOSE PROPERTIES?
26 MR. BLECHER: EXCUSE ME, YOUR HONOR. I THINK
27 THAT'S LEADING.

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