This document is the transcript from a court hearing regarding a motion to compel further responses to post-judgment interrogatories. The plaintiff filed the motion, arguing that the defendants' responses to several interrogatories were incomplete or improperly asserted privacy objections. The judge agreed and ruled to compel further responses, finding that questions about current addresses and property ownership did not implicate legitimate privacy concerns given the history of the case. The defendants' counsel disagreed but ultimately provided some additional information requested by the court.

1. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-1
LOS ANGELES, CALIFORNIA; WEDNESDAY, OCTOBER 5, 2011
DEPARTMENT 24 HONORABLE ROBERT L. HESS, JUDGE
12:00 P.M.
APPEARANCES: (AS NOTED ON TITLE PAGE)
(CAROL L. CRAWLEY, OFFICIAL REPORTER.)
THE COURT: GAGGERO, PLEASE.
MR. CHATFIELD: DAVID CHATFIELD ON BEHALF OF THE
PLAINTIFF.
MR. KHAJAVI-NOURI: GOOD MORNING, KAMRAN KHAJAVI-NOURI
ON BEHALF OF THE DEFENDANTS AND THE MILLER LAW FIRM.
THE COURT: THE COURT ISSUED AN ORDER YESTERDAY STRIKING
I THINK IT WAS YESTERDAY, WAS THE ORDER YESTERDAY.
THE CLERK: 8:45.
STRIKING THE 170.1, SO WE ARE HERE ON A MOTION TO
COMPEL FURTHER RESPONSES TO INTERROGATORIES, AND THESE ARE
POST JUDGMENT INTERROGATORIES.
I HAVE A COUPLE OF QUESTIONS.
PLAINTIFF, IT APPEARS TO ME THAT QUESTIONS, 1, 2,
3, 8, AND 9 ARE ALL APPROPRIATE FOR POST JUDGMENT INQUIRY.
IS THERE ANY REASON -- WELL, LET ME BACK UP.
HAVE THERE BEEN ANY SUPPLEMENTAL RESPONSES SERVED?
MR. CHATFIELD: NO, THERE HAVEN'T, YOUR HONOR.
WE ATTEMPTED TO ENGAGE IN A MEET AND CONFER ON
THIS.

2. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-2
IT WAS JUST RECENTLY THAT WE HAVE LEARNED THAT THE
DEFENDANTS ALREADY HAVE THE ADDRESSES AND THE INFORMATION
THAT THEY ARE SEEKING NUMBER ONE.
THE COURT: WELL, BUT JUST A MINUTE.
YOU MADE A SERIES OF OBJECTIONS BASED ON PRIVACY TO
1 AND 2.
AND YOU REFUSED TO ANSWER NUMBER THREE BASICALLY,
AND YOUR ANSWER TO NUMBER EIGHT WAS ESSENTIALLY
NON-RESPONSIVE BECAUSE YOU CLAIMED HE HAD NO ATTACHABLE
INTEREST AS A BENEFICIARY WHICH WASN'T THE QUESTION.
AND NUMBER NINE, YOU KNOW, SEEMS TO ME TO ALSO BE
APPROPRIATE.
AND I DON'T, YOU KNOW, WHAT I SEE IN THE MEET AND
CONFER IS I SEE THAT YOUR RESPONSE TO THEIR MEET AND CONFER
REQUEST WHICH IS VERY AGGRESSIVE, IT IS A DIATRIBE AGAINST
THE KNAPP PETERSEN FIRM, RELATING TO THEIR HANDLING OF
MATTERS AS TO WHICH INCLUDING THOSE WHICH WERE TRIED HERE
AND YOU LOST.
AND THAT LOSS WAS AFFIRMED. I DON'T SEE THAT YOUR
RESPONSES LEAVE ANYTHING OPEN.
YOU BASICALLY SAID NO.
YOU SAID HECK NO. ACTUALLY YOU SAID IT MIGHT BE
FAIR TO SAY YOU SAID IT STRONGER THAN THAT, BUT YOU SAID
HECK NO WE ARE NOT GOING TO GIVE TO IT YOU.
SO, I DON'T SEE WHAT YOUR RESPONSE TO THEIR MEET
AND CONFER LETTER LEAVES OPEN.
LET'S TAKE THE PARAGRAPH THAT RELATES TO
INTERROGATORY NUMBER ONE, INQUIRY ABOUT MR. GAGGERO

3. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-3
INTERROGATORY NUMBER ONE, ASKS FOR WHAT IS YOUR CURRENT
RESIDENCE ADDRESS.
AND YOUR RESPONSE WAS INQUIRY ABOUT MR. GAGGERO'S
PRIVATE RESIDENCE INTERROGATORY NUMBER ONE IS NOT PERMITTED
BY LAW.
MR. GAGERRO HAS TOLD YOU UNDER PENALTY OF PERJURY
THAT HE OWNS NO REAL PROPERTY, HOLDS NO LEASEHOLD INTEREST
IN ANY REAL PROPERTY AND HOLDS NO OTHER ATTACHABLE INTEREST
IN ANY REAL PROPERTY.
YOU ARE ONLY ENTITLED TO REQUEST INFORMATION TO
AIDE IN THE ENFORCEMENT OF THE COST JUDGMENT.
CITATION, FURTHERMORE, INFORMATION THAT FALLS
WITHIN AN EVIDENTIARY PRIVILEGE IS SHIELDED FROM YOUR
DISCOVERY.
INFORMATION THAT DOES NOT FALL WITH AN EVIDENTIARY
PRIVILEGE IS NONETHELESS, IS NONETHELESS BE SHIELDED FROM
DISCOVERY WHERE ITS DISCLOSURE WOULD INVADE AN INDIVIDUAL'S
CONSTITUTIONAL RIGHT OF PRIVACY.
CITATION, AS MR. GAGGERO OWNS NO REAL PROPERTY AND
HOLDS NO LEASEHOLD OR ATTACHABLE INTEREST IN ANY REAL
PROPERTY, YOU ARE NOT ENTITLED TO MAKE ANY FURTHER INQUIRY
IN THAT REGARD ESPECIALLY IN LIGHT OF HIS PRIVACY RIGHTS.
HORSE FEATHERS.
SINCE WHEN MAY THEY NOT INQUIRE AS TO THE RESIDENCE
ADDRESS?
MR. CHATFIELD: SINCE THE STATE OF CALIFORNIA INSTITUTED
ARTICLE ONE SECTION ONE OF THE CONSTITUTION.
THE COURT: OH, HORSE FEATHERS.

4. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-4
THAT IS NOT PROTECTABLE AS PRIVACY.
HIS RESIDENCE ADDRESS IS NOT PROTECTABLE.
IT IS NOT EXCUSE ME.
IT IS NOT PROTECTED IN THIS CASE, AND I AM NOT
GOING TO SUSTAIN THAT.
AND BUT YOU COMPLAIN THAT THEY DIDN'T CARRY FORTH
THE MEET AND CONFER.
YOUR RESPONSE TO THAT INTERROGATORY, FOR EXAMPLE,
LEAVES NO ROOM FOR FURTHER DISCUSSION.
MR. CHATFIELD: THAT IS NOT TRUE, YOUR HONOR.
THE COURT: WELL, WHAT ROOM FOR FURTHER DISCUSSION DOES
IT LEAVE?
YOU HAVE ASSERTED THAT THIS IS PRIVILEGED AND YOU
WILL NOT DO IT.
MR. CHATFIELD: SO WHEN A PARTY ASSERTS A PRIVACY RIGHT
OF THE OTHER SIDE MAY OVERCOME THE PRIVACY RIGHT BY STATING
THEY HAVE NO OTHER WAY OF OBTAINING THE INFORMATION FROM ANY
OTHER PARTY AND AS THE COURT MAY RECALL FROM TRIAL, THE
DEFENDANTS WERE THE PLAINTIFF'S LAWYERS.
THEY WENT TO HIS HOUSE.
THEY WENT TO HIS OFFICE.
THEY HAD BOTH ADDRESSES. IN ADDITION.
THE COURT: SIR, WHY, JUST A MINUTE. SUPPOSE THEY CAN
FIND OUT THAT INFORMATION BY OTHER MEANS, WHY DOES THAT
PRECLUDE THEM FROM ASKING, AND THAT WAS DURING THE
REPRESENTATION IN 2001 AND 2002.
NOW WHY DOES THAT PRECLUDE THEM FROM ASKING FOR A
SWORN RESPONSE TO THAT QUESTION IN 2011?

5. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-5
MR. CHATFIELD: WELL, YOUR HONOR, IT DOESN'T PRECLUDE
THEM FROM ASKING FOR THE INFORMATION.
HOWEVER, ONCE THE PRIVACY RIGHT IS ASSERTED, AND
THEY TELL US THAT THEY HAVE SEVERAL SOURCES.
THE COURT: I DON'T FIND THAT THERE IS A PRIVACY RIGHT
TO THIS THAT IS COGNIZABLE IN THIS CASE.
MR. KHAJAVI-NOURI: CAN I ADD SOMETHING HERE?
THE COURT: YOU KNOW, AND THEN THEY WANT TO KNOW WHO IS
THE OWNER OF THE PROPERTY AT WHICH HE RESIDES AT.
YOU HAVE NO STANDING TO ASSERT THE PRIVACY RIGHTS
OF THIRD PERSONS IF HE DOESN'T OWN IT. THEY ARE NOT
APPEARING TO ASSERT THEIR PRIVACY RIGHTS.
OR IS THERE A THEORY ON WHICH YOU HAVE STANDING TO
ASSERT THE PRIVACY RIGHTS OF SOME THIRD PERSON?
WHO IS THE PERSON ON WHOSE BEHALF YOU ARE ASSERTING
THE PRIVACY RIGHTS?
THAT IS INTERROGATORY NUMBER TWO.
MR. CHATFIELD: I DON'T KNOW WHO THE PERSON IS TO WHOM I
AM ASSERTING THE PRIVACY RIGHTS.
THE COURT: ARE YOU ASSERTING A PRIVACY RIGHT --
ARE YOU ASSERTING A CLAIM FOR PRIVACY?
MR. CHATFIELD: WE ARE STATING THAT MR. GAGGERO IS NOT
GOING TO REVEAL ANY PRIVATE INFORMATION HE MAY HAVE
REGARDING THIRD PARTIES.
THE COURT: I AM GOING TO COMPEL HIM TO.
THIS IS NOT CLOSE.
THIS IS NOT A CLOSE CASE.
MR. CHATFIELD: WHY IS THE INFORMATION RELATING TO THE

6. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-6
OWNER OF PROPERTY IN WHICH MR. GAGGERO RESIDES RELEVANT?
THE COURT: BECAUSE THE TESTIMONY AT TRIAL, SIR, WAS
THAT IN -- WELL, PRIOR TO THE TURN OF THE CENTURY, AND I
THINK MY RECOLLECTION IS ROUGHLY BETWEEN '95 AND '98,
MR. GAGGERO CLAIMED TO HAVE DONE EXTENSIVE QUOTE ESTATE
PLANNING QUOTE CLOSE IN WHICH HE PURPORTED TO TRANSFER EVERY
INTEREST IN PROPERTY TO ONE OR MORE CORPORATIONS AND/OR
TRUSTS TO BE HELD FOR HIM.
AND THE PURPOSE FOR THIS WAS TO DEFEAT CLAIMS OF
CREDITORS BY ALLOWING HIM TO ASSERT THAT HE HAD NO PROPERTY
AND NO INTEREST IN PROPERTY, AND THEREFORE CREDITORS OF HIS
COULD NOT COLLECT AGAINST HIM FOR JUDGMENTS OWED.
THIS SMELLS LIKE A PERPETUATION OF THE SAME TACTIC,
AND WHEN I RECITE THIS, I AM RECITING IT ON THE BASIS OF THE
EVIDENCE PRESENTED IN THIS COURT DURING THE TRIAL OF THIS
CASE BACK IN ABOUT 2006.
I DON'T KNOW WHAT HIS CURRENT SITUATION IS, BUT HE
WENT SO FAR AS TO CLAIM THAT HE HAD NO BANK ACCOUNTS, AT
ALL.
HE HAD NO CHECKING ACCOUNTS.
HE BASICALLY CLAIMED HE CLAIMED HE HAD NO REAL
PROPERTY, APPARENTLY LITTLE OR NO PERSONAL PROPERTY.
HE COMPLAINED THAT WHENEVER HE WANTS MONEY THAT HE
GOES TO THE TRUSTEE OF HIS TRUST AND SAYS MAY I PLEASE HAVE
SOME MONEY, AND THE TRUSTEE CAN SAY YES OR NO.
IF HE HAS A BILL, IF HE PURPORTS TO CONTRACT FOR AN
OBLIGATION, IF HE WANTS TO BUY SOMETHING, AND THE BILL COMES
IN, HE GIVES IT TO THE TRUSTEE OF THE TRUST.

7. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-7
AND THE TRUSTEE DECIDES WHETHER OR NOT TO PAY IT.
I THINK THAT THESE INQUIRIES ARE ENTIRELY
APPROPRIATE.
MR. KHAJAVI-NOURI: MAY I JUST ADD SOMETHING HERE, YOUR
HONOR?
THE COURT: YES.
MR. KHAJAVI-NOURI: WITH RESPECT TO THE ADDRESSES AND
THE PRIVACY INTEREST, THE FORM INTERROGATORIES THAT HAVE
BEEN APPROVED BY THE JUDICIAL COUNCIL FREQUENTLY ASK FOR THE
ADDRESSES, NAME, ADDRESS AND TELEPHONE NUMBER SO THAT WOULD
FURTHER SUPPORT OUR, YOU KNOW, MEET AND CONFER ON THAT.
THE COURT: THERE IS POTENTIALLY A DISTINCTION BETWEEN
PRETRIAL INTERROGATORIES AND POST TRIAL, BUT IT SEEMS TO ME
THAT IT DOES NOT SIGNIFICANTLY IMPLICATE ANY INTERESTS.
NOW, THE OTHER THING IS, THAT, EXCUSE ME THE 3 THAT
I HAD QUESTIONS ABOUT REALLY WERE 14, 15, AND 16 WHICH ASKS
FOR INFORMATION CONCERNING THE ADDRESS AND TELEPHONE NUMBER
OF STEVEN GAGGERO, SENIOR, STEPHANIE LEE BOREN B-O-R-E-N.
BETTY SUE GAGGERO, AND THE RESPONSE WAS THEY CAN BE
CONTACTED THROUGH THE OFFICES OF COUNSEL IN THIS MATTER FOR
STEVEN M GAGGERO.
WHY IS THAT AN APPROPRIATE RESPONSE?
YOU DECLINED TO GIVE ME THE INFORMATION.
WHY IS IT AN APPROPRIATE RESPONSE?
MR. CHATFIELD: ALL RIGHT.
BEFORE WE GET TO THAT ISSUE, CAN I JUST ADDRESS
SOMETHING THE COURT SAID A SECOND AGO?
THE COURT: MAY I?

8. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-8
I WOULD -- WE ARE AT 20 MINUTES AFTER 12. AND I
WANT I SEE THAT THERE IS SOMEBODY ELSE STILL HERE, AND I
WOULD LIKE TO BE ABLE TO MOVE THROUGH THIS PROCEEDING.
AND SO IF YOU CARE, IF YOU CARE TO ANSWER MY
QUESTION, FINE.
IF YOU DO NOT CARE TO ANSWER THAT QUESTION, I WILL
MOVE ON.
MR. CHATFIELD: ALL RIGHT.
THEN, I WILL ANSWER YOUR QUESTION.
WHY DO THEY NOT NEED THE ADDRESS AND PHONE NUMBERS
OF MR. GAGGERO'S ELDERLY PARENTS AND SISTER, BECAUSE I HAVE
OFFERED TO ACCEPT SERVICE ON THEIR BEHALF OF ANY DOCUMENTS
THAT THEY NEED TO SERVE ON THEM FOR A JUDGMENT DEBTOR
EXAMINATION.
THE COURT: IN OTHER WORDS, YOU OKAY, IF THEY WERE TO
SERVE A SUBPOENA ON YOU, ON YOUR OFFICE, ON BEHALF OF THESE
PEOPLE, AND THOSE PEOPLE FAIL TO THE APPEAR.
MR. CHATFIELD: YES.
THE COURT: YOU WOULD WAIVE ANY OBJECTION OF PERSONAL
SERVICE FOR PURPOSES OF CONTEMPT?
MR. CHATFIELD: I AM ACCEPTING SERVICE.
THE COURT: BECAUSE YOU ARE REPRESENTING THAT YOU DO
REPRESENT EACH OF THEM.
MR. CHATFIELD: THAT'S CORRECT, YOUR HONOR.
THE COURT: AND YOU, YOU WOULD WAIVE ANY CLAIM THAT
SERVICE ON YOUR OFFICE AS OPPOSED TO PERSONAL SERVICE ON
THEM, WAS IN ANY SENSE INADEQUATE FOR ENFORCEMENT OF THOSE
SUBPOENAS TO APPEAR FOR JUDGMENT DEBTOR EXAM.

9. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-9
MR. CHATFIELD: YES, YOUR HONOR.
THAT WAS THE PURPOSE OF MY RESPONSE AND THE MEET
AND CONFER LETTER.
THE COURT: SO YOU WOULD ALSO WAIVE ANY DISTANCE
LIMITATIONS?
MR. CHATFIELD: NO, YOUR HONOR.
THE COURT: OKAY.
WELL, IF WE DON'T KNOW WHERE THEY ARE, IF YOU WON'T
TELL US WHERE THEY ARE, AND YOU WON'T WAIVE ANY DISTANCE
LIMITATIONS FOR SERVICE ON THEM, THEN IT IS A LITTLE BIT
HARD FOR THE DEFENSE TO BRING THEM IN TO TESTIFY.
THAT IS INEFFECTIVE.
MR. CHATFIELD: THEY ARE IN SAN DIEGO, CALIFORNIA, YOUR
HONOR.
THE COURT: THAT IS INEFFECTIVE, SIR.
THAT IS INEFFECTIVE.
IF IT IS NOT FULLY EFFECTIVE BY SERVING IT ON YOUR
OFFICE, IT IS NOT FULLY EFFECTIVE.
IS THERE ANY REASON WHY I SHOULD NOT THEN I SHOULD
NOT GRANT EACH OF THESE?
IS THERE ANYTHING ELSE YOU WANT TO SAY?
MR. CHATFIELD: YES.
I WOULD LIKE TO SAY THAT THE COURT'S COMMENTS
REGARDING THE REASON AND LEGAL EFFECT OF THE CREATION OF THE
TRUSTS DIFFERS FROM THE RECORD AS I UNDERSTAND IT, AND --
THE COURT: WERE YOU HERE?
MR. CHATFIELD: PARDON ME?
THE COURT: WERE YOU HERE FOR THAT TESTIMONY?

10. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-10
I HEARD OUT OF MR. GAGGERO'S MOUTH.
MR. CHATFIELD: I READ THE TESTIMONY.
I READ THE TESTIMONY, AND I READ IT DIFFERENTLY,
YOUR HONOR, AND I SIMPLY.
THE COURT: ALL RIGHT.
MR. CHATFIELD: I WOULD LIKE.
THE COURT: THE TESTIMONY IS WHAT THE TESTIMONY IS, BUT
THAT WAS THE COURT'S -- THAT WAS THE COURT'S FINDING AT THE
TIME THOSE FINDINGS BEING AFFIRMED BY THE COURT OF APPEAL.
SO YOU MAY DIFFER IN NUANCE, FINE, BUT THAT WAS THE
SUBSTANCE OF WHAT HE TESTIFIED TO.
IS THERE ANYTHING YOU WANT TO SAY ABOUT THE
SANCTIONS?
MR. CHATFIELD: YES, YOUR HONOR.
THE MOTION DID NOT TAKE AS MUCH TIME AS ESTIMATED
BY THE DEFENDANTS.
I ALSO BELIEVE THAT THERE WAS.
THE COURT: AND WE KNOW THAT BECAUSE?
MR. CHATFIELD: BECAUSE OF THE MOTION AND THE REPLY
BRIEF WERE LESS THAN TEN PAGES LONG, AND I ALSO BELIEVE WHEN
I PREPARED MY OPPOSITION THAT THERE WAS SUBSTANTIAL
JUSTIFICATION FOR MY OPPOSITION.
THE COURT: LET ME ASK AN -- I JUST HAD A QUESTION AS TO
WHETHER IF THE INTERROGATORIES WERE SERVED PURSUANT TO CCP
708.020, WHETHER THE SANCTIONS PROVISION OF THE DISCOVERY
STATUTE APPLIED.
MR. KHAJAVI-NOURI: I BELIEVE THAT SECTION HAS A
PROVISION THAT DISCOVERY IN ACCORDANCE WITH POST JUDGMENT

11. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-11
ENFORCEMENT IS TO BE INTERPRETED AND ENFORCED AS ANY OTHER
TYPE OF DISCOVERY.
I THINK THERE IS A PROVISION ON THAT POINT THERE
WHICH WOULD IMPLY THAT THE SAME RULES AS TO MOTIONS TO
COMPEL AND SANCTIONS WOULD APPLY AS WELL.
MR. CHATFIELD: THAT IS NOT MY UNDERSTANDING OF IT.
THE COURT: WHAT IS YOUR UNDERSTANDING, SIR?
MR. CHATFIELD: MY UNDERSTANDING IS THAT THE RULES
RELATING TO PRETRIAL DISCOVERY DO NOT APPLY GENERALLY TO
POST TRIAL DISCOVERY.
THE COURT: AND THAT IS BASED OKAY, BUT IN THIS
PARTICULAR CASE, AS TO SANCTIONS, WOULD YOU LIKE TO CITE ME
THE STATUTE, RULE OR CASE AUTHORITY?
MR. CHATFIELD: NO.
I DON'T HAVE ANY TO CITE TO YOU, YOUR HONOR.
MR. KHAJAVI-NOURI: I THINK IT IS 708.020 SECTION C, AS
WE CITED IN OUR MOTION, WHICH I THINK PARAPHRASED HERE
INTERROGATORIES SERVED PURSUANT TO THIS SECTION MAY BE
INFLUENCED TO THE EXTENT PRACTICABLE IN THE SAME MANNER AS
INTERROGATORIES IN A CIVIL ACTION.
THE COURT: WELL, WHAT I SEE IS THAT THE OPPOSITION
DOESN'T RAISE ANY ISSUE OF THIS.
MR. KHAJAVI-NOURI: IF THE COURT WERE TO AWARD
SANCTIONS HE WOULD REQUEST IT BE AWARDED HALF AND HALF
AGAINST PLAINTIFF.
THE COURT: SINCE THERE WERE OBJECTIONS, THESE WERE NOT
SIGNED BY MR. GAGGERO, SINCE THEY WERE ONLY OBJECTIONS, IS
IT APPROPRIATE TO AWARD THE SANCTIONS AGAINST MR. GAGGERO AS

12. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-12
OPPOSED TO AS AGAINST COUNSEL?
MR. CHATFIELD: YOUR HONOR, I DON'T BELIEVE THESE WERE
JUST OBJECTIONS.
THEY WERE VERIFIED RESPONSES.
THE COURT: WELL, AS TO THE ONES IN QUESTION I DON'T
THINK THERE WERE RESPONSES THAT THEY WERE VERIFIED RESPONSE.
MR. CHATFIELD: NO, ACTUALLY MR. GAGGERO RESPONDED THAT
HE DID NOT OWN ANY REAL PROPERTY OR ANY INTEREST IN ANY REAL
PROPERTY WHEN ASKED THE QUESTIONS ABOUT REAL PROPERTY.
THE COURT: OKAY.
SO WE WILL MAKE IT JOINT AND SEVERAL.
MR. KHAJAVI-NOURI: TO CLARIFY I BELIEVE THERE WAS A
VERIFICATION BY MR. GAGGERO.
THE COURT: OKAY.
BUT SOME OF THESE ARE PHRASED IN TERMS OF
OBJECTIONS ONLY.
MR. KHAJAVI-NOURI: CORRECT, CORRECT.
AND, IN ADDITION, I HAVE SPENT TIME ON THIS MOTION
TODAY IN COURT AND ALSO BRIEFLY REVIEWING THE MOTION
OPPOSITION AND REPLY, AND THAT TIME WAS NOT CAPTURED IN
MR. FIELD'S DECLARATION WHICH I THINK HAD A TOTAL OF ABOUT
11 HOURS.
THE COURT: OKAY.
MR. KHAJAVI-NOURI: AND I AM HAPPY TO PROVIDE A
DECLARATION TO THE COURT.
THE COURT: OKAY. JUST A MINUTE.
WE ARE GOING TO RESOLVE THIS TODAY.
HERE IS THE ORDER:

13. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A-13
THE MOTION TO COMPEL IS GRANTED IN ITS ENTIRETY.
COMPLETE, VERIFIED, SUPPLEMENTAL RESPONSES, WITHOUT
FURTHER OBJECTION, ARE TO BE SERVED ON OR BEFORE OCTOBER
24TH, 2011 AS TO INTERROGATORIES 1, 2, 3, 8, 9, 14, 15, AND
16.
MONETARY SANCTIONS OF $2,000 ARE IMPOSED JOINTLY
AND SEVERELY UPON MR. GAGGERO AND HIS COUNSEL PAYABLE TO
COUNSEL FOR KPC, ON OR BEFORE NOVEMBER 7TH, 2011 PER CODE OF
CIVIL PROCEDURE SECTIONS 2023.030, AND 2030.300.
DEFENSE IS TO GIVE NOTICE.
MOVING PARTY IS TO GIVE NOTICE.
MR. KHAJAVI-NOURI: ONE QUESTION THE SANCTIONS TO BE
PAID ON OR BEFORE NOVEMBER 7TH?
THE COURT: YES, THAT'S CORRECT.
MR. KHAJAVI-NOURI: OKAY. THANK YOU.

14. SUPERIOR COURT OF THE STATE OF CALIFORNIA.
FOR THE COUNTY OF LOS ANGELES
DEPARTMENT LA 24 HON. ROBERT L. HESS, JUDGE
STEPHEN M. GAGGERO, )
PLAINTIFF, )
)CASE NO.
-VS- )BC 286925
)
KNAPP PETERSEN AND CLARKE, )
)
DEFENDANTS. )
_______________________________________ )
REPORTER'S TRANSCRIPT OF PROCEEDINGS
OCTOBER 5, 2011
APPEARANCES:
FOR THE PLAINTIFF: LAW OFFICES OF
DAVID BLAKE CHATFIELD
2625 TOWNSGATE ROAD
SUITE 330
WESTLAKE VILLAGE, CA 91361
FOR THE DEFENDANTS: MILLER LLP
BY: KAMRAN KHAJAVI-NOURI
515 SOUTH FLOWER STREET
SUITE 2150
LOS ANGELES, CA 90071
CAROL L. CRAWLEY, CSR #7518
VOLUME 1 OF 1
PAGES A1 THROUGH A-14 ONLY

15. SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
DEPT. LA 24 HONORABLE ROBERT L HESS, JUDGE
STEPHEN M. GAGGERO, )
PLAINTIFF, )
)CASE NO.
-VS- )BC 286925
)
KNAPP PETERSEN AND CLARKE, )
)
DEFENDANTS. )
_______________________________________ )
STATE OF CALIFORNIA )
) SS
COUNTY OF LOS ANGELES )
I, CAROL L. CRAWLEY, OFFICIAL REPORTER OF THE
SUPERIOR COURT OF THE STATE OF CALIFORNIA, FOR THE COUNTY OF
LOS ANGELES, DO HEREBY CERTIFY THAT THE FOREGOING PAGES,
A-1 THROUGH A-14 COMPRISE A FULL, TRUE, AND CORRECT
TRANSCRIPT OF THE PROCEEDINGS HELD ON OCTOBER 5, 2011 IN
DEPARTMENT 24 OF THE LOS ANGELES COURT IN THE MATTER OF THE
ABOVE-ENTITLED CAUSE.
DATED THIS 11TH DAY OF DECEMBER, 2011
___________________________, CSR #7518
CAROL L. CRAWLEY, OFFICIAL REPORTER

16. COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
STEPHEN M. GAGGERO, )
)
PLAINTIFFS-APPELLANT, )
) CASE NO.
-VS- ) BC 286925
)
KNAPP PETERSON & CLARK, ETC. ET AL., )
DEFENDANTS-RESPONDENTS, )
_______________________________________)
APPEAL FROM THE SUPERIOR COURT OF LOS ANGELES COUNTY
HONORABLE ROBERT L. HESS, JUDGE PRESIDING
REPORTER'S TRANSCRIPT ON APPEAL
TITLE, INDICES, CERTIFICATE
OCTOBER 5, 2011
APPEARANCES:
FOR APPELLANT:
WESTLAKE LAW GROUP
BY: DAVID CHATFIELD
2625 TOWNSGATE ROAD
SUITE 330
WESTLAKE VILLAGE, CA 91361
THE RESPONDENTS: MILLER LLP
515 SOUTH FLOWER STREET
SUITE 2150
LOS ANGELES, CA 90071
CAROL CRAWLEY, CSR NO. 7518
OFFICIAL REPORTER
VOLUME 1 OF 1 VOLUME
PAGES A-1 THROUGH A-14 ONLY

17. ALPHABETICAL/CHRONOLOGICAL INDEX OF WITNESSES
OCTOBER 5, 2011
VOLUME 1 OF 1
PLAINTIFF'S WITNESSES DIRECT CROSS REDIRECT RECROSS
NONE
DEFENSE WITNESSES
(NONE)
EXHIBITS
NONE

18. SUPERIOR COURT OF THE STATE OF CALIFORNIA.
FOR THE COUNTY OF LOS ANGELES
DEPARTMENT LA 24 HON. ROBERT L. HESS, JUDGE
.STEPHEN GAGGERO, AN INDIVIDUAL; ET AL.,
PLAINTIFF,
)
)
-VS-
KNAPP, PETERSEN & CLARKE,
)CASE NO.
)BC286925
)
)
STEPHEN RAY GARCIA, STEPHEN M. HARRIS
AND ANDRE JARDINI,
)
)
DEFENDANTS. )
)
REPORTER'S EXPEDITED TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR THE PLAINTIFF:
TUESDAY, MAY 29, 2012
DAVID CHATFIELD
ATTORNEY AT LAW
2625 TOWNSGATE RD
. SUITE 330
WESTLAKE VILLAGE, CA 91361
FOR THE DEFENDANTS: MILLER LLP
BY: RANDALL A. MILLER
BY: AUSTA WAKILY
---- 515 -S-mJT-H-FLOWER STREET --
SUITE 2150
LOS "ANGELES, CA 90071
FOR NEW JUDGMENT DEBTORS: DAVID ESQUIBIAS
2625 TOWNSGATE ROAD
SUITE 330
VOLUME 1 OF 1
---PAGES---l--.z-8---
WESTLAKE VILLAGE, CA 91301
CAROL L. CRAWLEY, CSR #7518

19. ..... _.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20 I-
21
LOS ANGELES, CALIFORNIA; TUESDAY, MAY 29, 2012
DEPARTMENT 24 HONORABLE ROBERT L. HESS JUDGE
11:50 A.M.
APPEARANCES: (AS NOTED ON TITLE PAGE)
(CAROL L. CRAWLEY, OFFICIAL REPORTER.
MR; CHATFIELD: DAVID CHATFIELD ON BEHALF OF THE
PLAINTIFF.
MR. ESQUIBIAS: GOOD MORNING, YOUR HONOR.
DAVID ESQUIBIAS ESPECIALLY APPEARING FOR
JOSEPH PRASKE TRUSTEE OF THE GIGANIN TRUST, TRUSTEE
OF THE ARANZANO TRUST, AND THE AQUASANTE FOUNDATION
AND VARIOUS LLC'S AND LP'S THAT ARE NOTED IN OUR
PLEADING AS A GENERAL PARTNER AND/OR MANAGING MEMBER.
I WOULD LIKE TO NOTE FOR THE RECORD THAT
JOSEPH PRASKE IS NOT A PARTY TO THIS ACTION.
M·S: WAKILI : GObb ·MORNING,AtJSTAWAKltIFOR
DEFENDANT, KNAPP, PETERSEN & CLARKE.
1
22 THE COURT: THIS IS A MOTION TO AMEND THE JUDGMENT
23 TO ADD JUDGMENT DEBTORS ON THE THEORY THAT VARIOUS
.24 .TRUSTS FOUNDATIONS, .AND OTHER BUSINESS. ENTITIES
26 THEY SHOULD BE LIABLE FOR OR THEIR ASSETS -- SHOULD
27 BE REACHABLE FOR COLLECTION TO THE JUDGMENTS AGAINST
28 HIM.
-_..._ ..._ - - - - - - _ . _ - _ . - - - - - ._-------_._---

20. 2
1 I HAVE A VERY SUBSTANTIAL AMOUNT OF EVIDENCE
2 ON THE NATURE OF THESE RELATIONSHIPS THAT HAS BEEN
3 SUBMITTED TO ME IN CONNECTION WITH THIS MOTION, AND
4 FRANKLY IT LOOKS TO ME LIKE THESE ARE APPROPRIATE
5 MOTIONS.
6 I SEEM TO HAVE QUITE A SHOWING HERE THAT IN
7 FACT, MR. GAGGERO CONTROLS THESE -- DIRECTS THE
8 MONIES AND WILL.
9 AND SINCE WE HAVE, YOU KNOW, IT SEEMS TO ME
10 THAT THE MOTION HAS SOME MERIT, SO LET ME START WITH
11 MR. GAGGERO'S COUNSEL, AND SEE WHAT YOU WOULD LIKE TO
12 SAY ON THIS POINT, SIR.
13 MR. CHATFIELD: YOUR HONOR, IFI MAY START AS
14 REALLY THE PARTY IN INTEREST -- I REPRESENT THE
15 TRUSTEE WHO CONTROLS THESE ASSETS WITHIN THESE
16 TRUSTS.
17 IF I MAY RESPOND TO THE COURT FIRST, I WOULD
18 APPRECIATE THAT.
19 THE COURT: WELL, THE TRUSTEE HAS TO BE -- THE
-10 ~~ TRUSTEE GETS NAMED, ~~~ BOT -IT- IS --REALLY THE -TRUST-THAT
21 HIS ASSETS ARE BEING SOUGHT.
22 MR. ESQUIBIAS: THE CORPUS OF THE TRUST --
23 THE COURT: I DON'T UNDERSTAND THAT THEY ARE
24 SEEKING TO ADD _YOU IN ANY OTHER CAPACITY PERHAPS THAN
- - - - ------2-5- ---AS--T-RtJ-S-T-EE-;---~------~-~---~----~----~----------- ------------------ ----------
j-- -
ir-------
26 THERE IS CERTAINLY NO INDIVIDUAL CAPACITY.
27 MR. ESQUIBIAS: CORRECT. WE DON'T BELIEVE THAT
28 ANYONE IS SEEKING MR. PRASKE.

21. .__ . - ....- _.-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20 .
21
22
23
24
WE DON'T BELIEVE THAT KPS IS TRYING TO SAY
THAT MR. PRASKE AS PERSONAL LIABILITY, THAT WE DON'T
BELIEVE.
THE COURT: AND I DIDN'T GET THAT OUT OF THEIR
PAPERS.
MR. ESQUIBIAS: WHAT WE DO BELIEVE, IS THAT THE
ASSETS, WHICH MR. PRASKE CONTROLS ARE ASSETS THAT ARE
BEING SOUGHT, AND BECAUSE THESE ASSETS ARE CONTAINED
WITHIN IRREVOCABLE TRUSTS -- OR EVEN IF THEY WERE
REVOCABLE, THE FACT IS THAT THESE ARE IRREVOCABLE
TRUSTS THAT THERE ARE CERTAIN PROCEDURES THAT NEED TO
BE FOLLOWED WHEN YOU ARE TRYING TO OBTAIN OR CONTROL
LEVY OR GARNISH THE ASSETS OF TRUSTS.
AND I WOULD NOTE FOR THE.RECORD; THAT THE
PROBATE COURT HAS THE EXCLUSIVE JURISDICTION OF TRUST
MATTERS UNDER PROBATE CODE 17000, WHICH SPECIFICALLY
STATES THAT ACTIONS AND PROCEEDINGS BY OR AGAINST A
CREDITOR ARE VESTED IN THAT COURT AND MORE
IMPORTANTLY, BECAUSE THE ASSETS IN THIS PARTICULAR
MOTION ARE BEING· S6UGi-t'r-:SY--A. J'UiTGMENT -C::RJ~~-DrTOR,­
NOTICE UNDER THE PROBATE CODE NEEDS TO BE PROVIDED OF
THIS MOTION TO THE VESTED CURRENT INCOME AND
PRINCIPAL AND REMAINDER BENEFICIARIES OF THESE
TRUSTS.
26 BENEFICIARY NOR WAS NOTICE PROVIDED TO THE TRUSTEE OF
27 THESE TRUSTS, AND,NOTICE WOULD BE REQUIRED UNDER
28 PROBATE CODE 17203.
3
- - - - - - - - _ . _ - - - - _ . _ - - - - - - - - - _ . - - - - - - - - - - - - - - - - - - - - - - -

22. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
...._- - - -
- 20
21
22
23
AND LAST, PROBATE CODE 18200 SPECIFICALLY
STATES THAT THE ASSETS OF AN IRREVOCABLE TRUST ARE
NOT AVAILABLE TO THE SETTLERS CREDITORS, WHICH IS THE
CASE HERE.
TO THE EXTENT THAT THERE WAS FRAUDULENT
CONVEYANCE, THEN IT WOULD BE MADE POTENTIALLY
AVAILABLE.
BUT, AS THE MOVING PARTY HAS CONCEDED IN
,
THEIR OWN DOCUMENTS THAT THE FRAUDULENT CONVEYANCE
CAUSE OF ACTION IS UNAVAILABLE TO THEM DUE TO THE
STATUTE OF LIMITATIONS, FRAUDULENT CONVEYANCE IS THE
ONLY EXCEPTION TO PROBATE CODE SECTION 18200 AND
PROBATE CODE SECTION 15403.
I SEE THE COURT IS LOOKING AT THE PROBATE
CODE --
THE COURT: JUST A MINUTE.
MR. ESQUIBIAS: -- I WOULD LIKE TO POINT OUT JUST
ONE CASE.
THE COURT: MAY I ASK WHERE THIS ARGUMENT APPEARS
4
MR. ESQUIBIAS: IT DOES NOT APPEAR. THE SUBSTANCE
OF THE ARGUMENT WAS FILED.
THE COURT: IS THERE A REASON, IS THERE A REASON
I 24 YOU ARE MAKING AN ARGUMENT NOW THAT AP·PARENTLY GOES
I------~-2-5----T-e--o-tJ-R-I-S-SI-eT-I-eN-?--------------------------------------~----------------
26 IS THERE A REASON WHY, IF THIS IS A
27 MERITORIOUS ARGUMENT, IT-WAS NOT INCLUDED IN THE
28 OPPOSITION?
I
r----~-----

23. 5
1 MR. CHATFIELD: I CAN TELL THE COURT THAT I AM
2 SPECIALLY APPEARING FOR THE PURPOSE OF ARGUING
3 JURISDICTION AND NOTICE.
4 I HAVE NO EXPLANATION AS TO WHY IT WASN'T IN
5 THE OPPOSITION. I AM LATE TO THIS PARTY ..
6 THE COURT: THE NOTICE OF SPECIAL APPEARANCE TO
7 OPPOSE AN OPPOSITION WAS FILED MAY 15TH.
8 MOVING PAPERS WERE FILED APRIL 10TH, AND AS I
9 LOOK AT YOUR PAPERS HERE, I DON'T EVEN GET A SNIFF OF
10 THESE ARGUMENTS, QUITE FRANKLY.
11 MR. ESQUIBIAS: I WOULD AGREE. BUT I DON'T
12 BELIEVE THE FACT THAT THEY WERE NOT RAISED IN THAT
13 DOCUMENT DOES NOT PRECLUDE THE ARGUMENT TODAY.
14 THE COURT: WELL, WHY? SO MY QUESTION IS, IF
15 THESE ARE ESSENTIAL ARGUMENTS, WHY DID YOU HOLD THEM
16 BACK SO THAT THEY COULD NOT RESPOND TO THEM?
17 MR. ESQUIBIAS: IT WAS NOT DESIGNED TO AMBUSH THE
18 MOVING PARTY.
19 THE COURT: IS IT ANYTHING OTHER THAN AMBUSH
~~20-~ THdtJGH,-- ~AT~THI-$~-Pb1NT?-
21 MR. ESQUIBIAS: I CAN SEE HOW IT IS PERCEIVED AS
22 THAT BY THIS COURT, AND PERHAPS MOVING PARTIES XXXJD
23 THIS MATTER CAN BE CONTINUED TO BRIEF IT AND TO ALLOW
24 THEM TO RESPOND TO TkESEARGUMENTS.
26 MR. ESQUIBIAS: I AM PREPARED TO DO SO.
27 THE COURT: SO THAT, AGAIN, RAISES THE QUESTION --
28 THIS 18 THE TIME AND PLACE FOR THE HEARING DN THIS

24. 6
1 MOTION.
2 MS. WAKILI: CAN I MAKE ONE BRIEF POINT ON THIS?
3 HAD HE BRIEFED IT OR RAISED IT IN HIS OPPOSITION,
4 MR. PRASKE HAS TESTIFIED UNDER IN.A DEBTOR EXAM,
5 THESE ARE OFFSHORE TRUST$.
6 ARANZANO IS AN OFFSHORE TRUST. THEY HAVE
7 NEVER BEEN FILED WITH ANY COURT IN CALIFORNIA OR THE
8 UNITED STATES, SO THESE ARE ESSENTIALLY VERY SECRET
9 DOCUMENTS THAT ARE PRIVATE.
10 THEY HAVE INDEPENDENT CONFIDENTIALITY
11 PROVISIONS THAT BOUND PRETTY MUCH THE TRUSTOR THE
12 TRUSTEE, SO THEY WON'T BE SOMETHING YOU WILL FIND IN
13 A PROBATE COURT AND ACCORDING TO MR. PRASKE -- THAT
14 IS SOMETHING THAT HE SAID HE NEVER FILED, AND AGAIN
15 HAD WE HAD ANY IDEA THIS WOULD BE AN ARGUMENT THEY
16 WOULD RAISE WE WOULD HAVE PULLED EXCERPTS FROM THE
17 DEBTOR EXAMINATION TO ADDRESS THAT.
18 THE COURT: I DON'T DISAGREE, BUT DO I HAVE ANY
19 EVIDENCE? JUST A SECOND. DO I HAVE ANY EVIDENCE IN
20
21 MR. ESQUIBIAS: RAISED BY OPPOSING COUNSEL?
22 THE COURT: NO, YOUR FACTUAL ASSERTIONS. YOU HAVE
23 CHARACTERIZED THESE AS IRREVOCABLE AND SUBJECT TO
24 THIS THAT AND THE OTHER. I DON' 'l' KNOW . HOW DO I
---.~- - ----~--- ··L-5----K-N-OW--Tli1{T-?-·----~---·-------~-~---~· ----------------- ~--~.-~
26 WHERE IS THE EVIDENCE TO SUPPORT IT?
27 MR. ESQUIBIAS: YOU WILL NOT FIND IT IN OUR
28 P1.EAblING THAT WAS FILED.
T------·-~--·-·

25. ·J
7
1 THE COURT: IS THERE ANYTHING IN THEIRS, THAT WILL
2 DO IT?
3 MR. ESQUIBIAS: I HAVE THE PLEADINGS THAT I HAVE
4 REVIEWED IN PREPARATION FOR TODAY'S HEARING, DID NOT
5 SHOW OTHER THAN THEIR OWN STATEMENTS IN THEIR
6 PLEADINGS WHICH ARE CONSIDERED ADMISSIONS THAT THE
7 TRUSTS ARE IRREVOCABLE.
8 THE COURT: HAS THERE -- HAS MR. PRASKE TAKEN THE
9 POSITION, THAT THE TRUSTS THEMSELVES ARE
10 CONFIDENTIAL?
11 MR. CHATFIELD: I HAD NOT PARTICIPATED IN THAT
12 PRIOR DISCOVERY THAT COUNSEL TALKS ABOUT, BUT I WILL
13 SAY THIS, ON BEHALF OF MR. PRASKE --
14 THE COURT: AND THAT THE TERMS OF THE TRUST
15 THE TRUST DOCUMENTS OUGHT NOT TO BE PRODUCED?
16 MR. ESQUIBIAS: I WILL SAY THIS ON BEHALF OF
17 MR. PRASKE, .THAT IF NOTICE IS PROVIDED TO THE ALL THE
18 VESTED CURRENT INCOME AND PRINCIPAL BENEFICIARIES
19 THE COURT: HAS MR. -- AND HOW WOULD THEY DO THAT?
.. _- _. - -.. _.
20
21 TRUST DOCUMENTS TO COUNSEL UPON NOTICE TO THE
22 BENEFICIARIES.
23 THE COURT: HOW WOULD THEY KNOW WHO THE
24 BENEEICIARIES ARE?
26 DOCUMENTS THEMSELVES HAVE NOT BEEN PRODUCED UNDER A
27 CLAIM OF CONFIDENTIALITY.
£0 A~ THIS POINT, YOU ARE ASSERTING A SERIES
--:-----_._----------_._---_._----------"'"-_._--------

26. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
" ... -- _.. - -.-- _.
20
21
22
23
24
OF THINGS WHICH FIND NO EVIDENTIARY SUPPORT AND THE
REASON THEY HAVE NO EVIDENTIARY SUPPORT, AND YOUR
OBJECTIONS ARE VERY INTERESTING, IS THAT YOU HAVE, AS
I UNDERSTAND IT, YOU OR MR. GAGGERO HAVE PRECLUDED
THE OTHER SIDE FROM ACCESS TO THE VERY INFORMATION
THAT YOU CLAIM IS NECESSARY FOR THEM TO GIVE NOTICE.
THAT IS NOT A SITUATION THAT IS REASONABLY
CALCULATED TO GIVE RISE TO A SYMPATHETIC HEARING.
FOR YOU TO SAY, WELL YOU CAN'T GO FORWARD WITHOUT
GIVING NOTICE TO ALL THESE PEOPLE, AND BY THE WAY WE
WON'T TELL YOU WHO IS ENTITLED TO GET NOTICE. HOW DO
I RESOLVE THAT?
MR. ESQUIBIAS: YOU HONOR, I HAVE A RESPONSE. I
HAVE A RESOLUTION.
I AM NEW TO THIS CASE. I WILL MAKE SURE THAT
OPPOSING COUNSEL HAS A COPY OF THE TRbsT DOCUMENTS,
SO THAT SHE CAN APPRISE THE SITUATION HERSELF. SHE
CAN GIVE NOTICE.
THE COURT: WELL, APPARENTLY, WAS MR. PRASKE
MS. WAKILI: I BELIEVE HE WAS REPRESENTED BY
MR. CHATFIELD.
THE COURT: OKAY. WHAT DO I DO WITH THAT? IF HE
WAS REPRESENTED BY MIL CHATFIELD AT THE DEPOSITIONS,
8
I-
r------------z-5- ----AN-B--TH-I-S--r-S---'f-H-E-FO-S-I-T-I-ON-TH-kT--W-AS---T-A-~E_N__;_--W-H AT--B0--1------ ----
26 DO WITH THAT?
27 MR. ESQUIBIAS: I DON'T KNOW ANYTHING ABOUT ANY
rI 28 DEPOSITIONS. r WAS NOT PRESENT, BUT r-WILL TELL-THE I·
1 - - - - - - - - - - - - - - - - - - - - - -

27. 1 COURT NOW, AND OPPOSING COUNSEL, I NOW REPRESENT
2 MR. PRASKE IN HIS CAPACITY AS TRUSTEE OF THESE
3 TRUSTS, AND WE INTEND TO COMPLETELY AND FULLY
4 COOPERATE WITH THE REQUESTS FOR THE DOCUMENTATION.
5 THERE IS NO REASON WHY IT SHOULD NOT BE
6 DISCLOSED.
7 THE COURT: IS THERE A REASON WHY YOU DON'T HAVE
8 THEM TODAY?
9 MR. ESQUIBIAS: I DO HAVE THEM TODAY BUT THEY ARE
10 MY VERSIONS WITH MY MARKINGS ON THEM. I AM NOT AWARE
11 OF THE REASON WHY THEY WERE NOT PROVIDED IMMEDIATELY
12 TO COUNSEL, BECAUSE I THINK ONCE COUNSEL DOES SEE
13 THEM -- NOTES THAT THEY ARE IRREVOCABLE NOTES, THE
14 ASSETS WERE TRANSFERRED TO THESE TRUSTS MANY, MANY
15 YEARS AGO. READ PROBATE CODE SECTION 18200. I JUST
16 THINK THAT WE CAN RESOLVE THIS ISSUE FAIRLY QUICKLY.
17 MS. WAKILI: YOUR HONOR, COULD I GET SOME
18 CLARIFICATION ON COUNSELS RESPONSE RIGHT NOW?
19 THE COURT: JUST A SECOND.
--2-0 -MR~ ESQUIBIA-g-:-- -1TI8 - I,;m1'--MY-PRAC::'J:'ICE '::'-RATRER-,--
21 LET ME RESTATE THAT IT IS MY PRACTICE TO BE OPEN WITH
22 THIS COURT AND WITH OPPOSING COUNSEL, TO BE FAIR AND
23 CLEAR'AND TRANSPARENT -- TO THE BEST THAT I CAN BE.
24 I INTEND TO DO THAT. GOINGF'ORWARD, I_WOULD
26 TO DISCLOSURE OF THESE TRUST DOCUMENTS, THAT THEY BE
27 USED BY OPPOSING COUNSEL FOR PURPOSES ONLY FOR THIS
MOTION AND FOR GXVING NOTICE, AND THAT 1T IS NOT TO
9

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

29. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
1--
2-0 -
21
!
22
11
TRANSFERRED OVER TO OPPOSING COUNSEL.
THE COURT: WHY WAS THIS NOT BROUGHT OUT IN
ANYTHING UNTIL I ASKED YOU WHAT THE FACTUAL BASIS FOR
THE ORAL ASSERTIONS YOU WERE MAKING?
MR. ESQUIBIAS: ALL I CAN TELL YOU, YOUR HONOR, IS
THAT I HAVE BEEN PRACTICING PROBATE LAW FOR 20 YEARS.
ORAL ARGUMENTS ARE COMMON PLACE. IT IS A DIFFERENT
COURTROOM WITH DIFFERENT SETS OF RULES, AND I
APOLOGIZE THAT I AM NOT FAMILIAR WITH THE CIVIL
COURTS OR THE RULES OF THIS COURT.
BUT, THE FACT REMAINS THAT WE HAVE TO GIVE
NOTICE TO THESE VESTED PRINCIPAL AND INCOME
BENEFICIARIES, 30 DAYS.
THE COURT: I DON'T KNOW THAT THERE ARE VESTED
INCOME AND PRINCIPAL BENEFICIARIES. I HAVE BEEN
DENIED THAT INFORMATION AS DEFENSE COUNSEL HAS BEEN
DENIED THAT INFORMATION.
MR. ESQUIBIAS: I SEEK TODAY TO RIGHT THAT WRONG.
THE COURT: WHAT, IF ANYTHING ELSE ARE YOU
-- -OF}'ERING---tNWAT--OF'IN'FORMATTON---THA-T -HAS BEEN -- --- - --- --
PREVIOUSLY WITHHELD?
MR. 'ESQUIBIAS: IT IS HARD FOR ME TO ANSWER THAT
I 23 QUESTION BECAUSE I DON'T KNOW WHAT HAS BEEN
I 24 PREVIOUSLY WITHHELQ. I HAVE ONLY BEEN IN THIS CASE
_-I- - - - - -----2-5-- ----1-4-D-A-Y--s-:- -----------
I 26 THE COURT: I SUSPECT IT HAS BEEN A LITTLE LONGER
27 THAN THAT, BECAUSE IT TOOK SOME TIME ~O PREPARE THE
28 DOCUMENT , UNLESS YOU DIDN 1 T PREPARE IT ~

30. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
.. - ----
- -20-
21
22
23
24
MR. ESQUIBIAS: I BELIEVE ALL THE INFORMATION
CONTAINED IN THE TRUST INSTRUMENTS AND PERHAPS
FUNDING DATES OF THE ASSETS IN THOSE TRUSTS WOULD BE
SUFFICIENT. I DON'T KNOW OF ANY OTHER INFORMATION
THAT WOULD BE REQUIRED FOR THIS COURT OR OPPOSING
COUNSEL TO MAKE THE CONCLUSION THAT THE ASSETS ARE
UNREACHABLE.
THE COURT: SO, YOU WISH TO PROVIDE NOT THE
ENTIRETY OF THE INFORMATION BUT ONLY A PART OF THAT?
MR. ESQUIBIAS: WE WOULD ONLY WANT TO PROVIDE
12
INFORMATION THAT IS EITHER AGREED UPON BETWEEN MYSELF
AND OPPOSING COUNSEL OR IF WE COULD NOT COME TO SOME
TYPE OF AGREEMENT, WHATEVER THIS COURT WOULD
DETERMINE TO BE RELEVANT.
THE COURT: HOW WOULD I KNOW WITHOUT YOU PROVIDING
EVERYTHING? I HEAR AT BEST A CONTINGENT OFFER.
MR. ESQUIBIAS: I PLAN TO HAVE A MEET AND CONFER
WITH OPPOSING COUNSEL TO FIND OUT WHAT IN PARTICULAR
THEY ARE INTERESTED IN KNOWING ABOUT THESE TRUSTS,
BUT--:nr MY- M:rJ:,:rI5~-ACC-ORDING-TO tHE-tAW- AND ACCORDING TO
THE DOCUMENTS THEMSELVES, I KNOW IN MY MIND WHAT
INFORMATION THEY NEED.
I REMAIN OPEN TO PERSUASION FROM OPPOSING
COUNSEL AS TO ADDITIONAL.INFORMATION,
:·--------------2'-,5----M-R-.-C-ri-AT-F-I-E-IJEl---==----------- ----------- ---------.------ ------.
Ir---
26 MR. CHATFIELD: WELL, YOUR HONOR, AN ISSUE THAT
27 LOOMS OVER THIS IS THAT, WHAT THE DEFENDANTS SEEK TO
bO HERE 18 IMPE.RMISSrBLE OUTslbE REVERSE PIERCING.

31. I
r- - - . -- ----
I
I
13
1 THE COURT: I READ THE ARGUMENT IN DETAIL, AND I
2 READ THE AUTHORITIES, AND FRANKLY I AM NOT PERSUADED
3 BY THAT. IT IS WELL ESTABLISHED THAT YOU CAN PIERCE
4 IF THE TRUST IS -- IF ONE OR MORE OF THE TRUSTS, FOR
5 EXAMPLE, IS AN ALTER EGO OF MR. GAGGERO, THE CASE LAW
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20- I -
21
IS WELL ESTABLISHED THAT YOU CAN GO IN TO THE TRUST.
YOU DON'T NAME THE TRUST. YOU HAVE TO GO AT IT
THROUGH THE TRUSTEE, BUT I DON'T THINK THERE IS A LOT
OF DOUBT ABOUT THAT, AND THE CASE ONE OR MORE RECENT
CASES ON THIS IS GREENSPAN, G-R-E-E-N-S-P-A-N
V-L-A-D-T LLC, 191 CAL APP. 4TH, 486, AND THAT HAS A
GOOD DEAL TO SAY ABOUT THIS.
AND, IF YOU, YOU KNOW, THE BASIC PARAMETERS
OF AMENDING THE JUDGMENT ARE ARTICULATED IN HALL,
H-A-L-L G-O-O-D-H-U-E, H-A-I-S-L-E-Y, AND BARKER
VERSES M-A-R-C-O-N-I CONFERENCE CENTER BOARD, 41 CAL
APP. 4TH, 1551.
AND THERE IS A BUNCH OF OTHER CASES THAT
APPLY ON THIS.
MR. CHATFIELD:
HAVING ENTERED THE AWARD APPROVING THE ARBITRATION IN
22 THAT GREENSPAN CASE, THAT THE COURT ON PAGES 513
23 THROUGH 514 OF GREENSPAN STATED THAT IN POSTAL
24 __ INSTANT PRESS VERSUS KAZO CORP THE CQURT OF APPEAL
26 VEIL IS NOT PERMITTED IN CALIFORNIA.
27 THAT IS, THE CORPORATE VEIL WILL NOT BE-
28 PIERCED TO -£ATISFY TREDEBT OF AN J:N'olV1DOAL
1--------------------

32. 14
1 SHAREHOLDER--
2 THE COURT: RATHER THIS COURT EXPLAINED THE ALTER
3 EGO DOCTRINE WILL ONLY BE APPLIED TO AN INDIVIDUAL
4 SHAREHOLDER LIABLE FOR A CORPORATE DEBT WHERE THE
5 INDIVIDUAL IS HAS DISREGARDED THE CORPORATE FORM BUT
6 THAT IS NOT --
7 MR. CHATFIELD: AT THE VERY NEXT SENTENCE, YOUR
8 HONOR, IT SAYS THIS CASE DOES NOT INVOLVE OUTSIDE
9 REVERSE PIERCING. AND WHY IS THAT? BECAUSE THE
10 JUDGMENT WAS AGAINST TWO ENTITIES, AND THEY WERE
11 SEEKING TO BRING INDIVIDUALS IN AS ADDITIONAL
12 JUDGMENT DEBTORS. NOT -- THIS WAS NOT A CASE WHERE
13 THERE WAS A JUDGMENT AGAINST AN INDIVIDUAL, AND THEY
14 WERE TRYING TO GO AFTER THE TRUST.
15 THE COURT: THIS ISA SITUATION WHERE, KPC IS
16 SEEKING TO HOLD THE SPECIALLY APPEARING PARTIES
17 LIABLE FOR GAGGERO'S DEBT WHERE THEY ARE ALLEGED TO
18 BE THE ALTER EGOS OF GAGGERO.
19 MR. CHATFIELD: THAT IS TYPICAL OUTSIDE REVERSE
20
21 IS NOT RECOGNIZED IN THE STATE OF CALIFORNIA. I HAVE
22 PROVIDED YOU WITH AUTHORITY ON THAT, PLUS THERE ARE
23 AT MY LAST VIEW, 24 OTHER UNPUBLISHED DECISIONS WHICH
24 STATE EXACTLY THE SAME THING. YOU CANNOT IMPOSE
:-- ----- ---2-.']- -L-r-ltB-rI:,-I-TY-1tND-B-R-I-N-<:~--I-N---E-NTJ:-TJ:-E-S--TG-S-A-T-I-S-Fy-kN------- - ------
26 INDIVIDUAL'S DEBT. AND EVEN IF THE STATE RECOGNIZED
27 OUTSIDE REVERSE PIERCING, WHICH IT DOESN'T, YOU, WOULD
28. HAVE TO GO THROUGH AN ADlYtT10DJAL ANALYS IS WHICH THIS
. _ - - - _ . _ - - -

33. - --- - - - _._.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
·26-
21
22
23
24
15
COURT DISPOSED OF IN ITS OWN STATEMENT OF DECISION.
THE COURT: I KNOW WHERE YOU ARE GOING ON THAT.
GO AHEAD AND SAY IT. YOU ARE WRONG, BUT I KNOW.WHERE
YOU ARE GOING. BECAUSE I READ IT IN YOUR PAPERS.
YOU ARE SUGGESTING THAT THE FACT THAT AT TRIAL
MR. GAGGERO PUT ON NO EVIDENCE THAT HE WAS SUING ON
BEHALF OF PCM TO RECOVER THE ATTORNEY'S FEES, IS
SOMEHOW DISPOSITIVE. IT IS NOT. THAT WAS A COMMENT
ON THE FAILURE OF MR. GAGGERO TO PRODUCE CERTAIN
EVIDENCE IN THE TRIAL WHEN IT WAS DIRECTED TO THE
ISSUE OF DAMAGES, HIS DAMAGES THAT HE WAS CLAIMING
AGAINST KNAPP PETERSEN & CLARKE SO, YOU KNOW. I SAW
WHAT YOU SAID IN YOUR PAPERS, AND I AM SORRY IT IS
NOT --
MR. CHATFIELD: WHAT I AM SAYING IS SOMETHING A
LITTLE DIFFERENT.
I AM GOING BY YOUR FINDINGS OF FACT, AND YOU
STATED ON PAGE 16 OF YOUR STATEMENT OF DECISION THAT
UNLESS OTHERWISE SPECIFICALLY STATED, THE FACTS SET
-- -to-RTH --BELo~r ARE ·-Et'fHE R-- UNO :CS PllTED -ORRE PRE SENT T·Ho~rE
WHICH THE COURT FINDS TO BE TRUE BY THE PREPONDERANCE
OF THE CREDIBLE EVIDENCE, AND THEN IN THE FINDINGS OF
FACT ON PAGE 18, THE COURT STATED THAT IN 1995 AND
1996 GAGGERO DID EXTENSIVE ESTATE PLANNING WHICH
26 TRANSFERRED TO VARIOUS CORPORATIONS, TRUSTS
27 FOUNDATIONS.
28 HE RE~AfNEb ABSOLUTELY NO OWNERSHIP INTEREST

34. 16
1 AND NO CONTROL.
2 THE COURT: IS THERE A DOT DOT DOT IN THERE? DID
3 YOU OMIT SOME OF THE WORDS THAT I PUT IN THERE?
4 MR. CHATFIELD, DID YOU OMIT SOME OF THE WORDS THAT
5 WERE IN THE ORIGINAL, IN THE STATEMENT OF DECISION?
6 MR. CHATFIELD: I AM SUMMARIZING THAT.
7 THE COURT: YES, BECAUSE YOU ARE OMITTING FOR THE
8 PURPOSE THERE IS SOMEWHERE IN THERE FOR THE
9 PURPOSE OF TRYING TO SHIELD THEM FROM CREDITORS.,
10 MR. CHATFIELD: ACTUALLY, WHAT THE COURT SAID
11 RELATING TO CREDITORS WAS, THAT ALTHOUGH GAGGERO USED
12 THREATS, BLUSTERS AND ULTIMATUMS TO ATTEMPT TO
13 DISCHARGE THE KNBC CREDITORS
14 THE COURT: I SAID OTHER THINGS. I SAID OTHER
15 THINGS.
. .
16 MR. CHATFIELD: YOU ALSO SAID THAT KNBC'S CLAIM
17 WAS PAID EARLY IN 2002 BY FULL PAYMENT PLUS INTEREST
18 AND AWARDED ATTORNEYS FEES, AND YOU ALSO STATED THAT
19 THE SLOCOM CLAIM WAS WITHDRAWN AND DISMISSED.
--- 2"0"-"' --"._- -". --- t-H"E--C(5U-R"T" :---"- -NOW-,-- S r-R";"-- -"T-R-KT---HAS"-"-N0THT"N-G --TO- -D"O- -"WITH" -- -.. ".- - ---"----"..
21 THIS CASE. THAT HAS NOTHING TO DO WITH THE ISSUES
22 BEFORE THE COURT: THE STATEMENT OF DECISION THE
23 COURT ENTERED, WHICH HAS BEEN AFFIRMED BY THE COURT
24 OF APPEALS, IS NOT DISPOSITIVE OF ANY ISSUE BEFORE
f- ----------z-5-----T-H-E-e-etJ-R-':p--T-e-BA~-.---------------------------------------------- -----
26 IF -- IS THERE ANYTHING ELSE YOU WOULD LIKE
27 TO SAY.
28 MR. CHATFIELD: YES. -KPC HAS NOT MET ITS BURDEN
T

35. I '.
17
1 OF SHOWING THAT THE BUSINESS ENTITIES OR PRASKE WERE
2 GAGGERO ALTER EGOS. KPC PRESENTED NO EVIDENCE THAT
3 THE BUSINESS ENTITIES OR PRASKE'S CONTROLLED THE
4 LITIGATION OR WERE VIRTUALLY REPRESENTED IN THE
5 ACTION. IN FACT --
6 THE COURT: DOES THE FACT THAT THEY -- IT LET ME
7 START OUT WITH THIS PREDICATE, MR. CHATFIELD, I THINK
8 THAT THEY HAVE MADE A PRIMA FACIA CASE THAT THESE
9 ENTITIES ARE ALTER EGOS OF MR. GAGGERO. AND IF I DO
10 THAT, THERE IS NO DOUBT THAT MR. GAGGERO CONTROLLED
11 THE UNDERLYING LITIGATION. THESE ARE NOT INDEPENDENT
12 ENTITIES AS I SEE THEM. AND IF THEY ARE ALTER EGOS
13 OF MR. GAGGERO, AND MR. GAGGERO CONTROLLED THE
14 LITIGATION WHICH HE UNDOUBTEDLY DID, THEN WHAT?
15 MR. ESQUIBIAS: YOUR HONOR, IF I MAY RESPOND.
16 THE COURT: NO, MR. CHATFIELD CAN RESPOND TO THIS.
17 HE WAS ONE OF THE ATTORNEYS WHO REPRESENTED
18 MR. GAGGERO DURING THE TRIAL PROCEEDINGS OR IN POST
19 TRIAL.
i··· .- ",2-0-"'- --- --_.. - _. MR-.--- tHAT-F-f'E1~t) :-... _- I, ._. P"IR-S-t- "OF- AtL-~ ---FAIL -- To-·· .- --- .-.---. -- ..
21 UNDERSTAND HOW THE COURT HAS REACHED THE CONCLUSION
22 THAT ALL OF THE ELEMENTS OF ALTER EGO HAVE BEEN
23 FULFILLED WITHOUT ANY EVIDENCE SUPPORTING IT WHEN WE
24 HAVE PROVIDED THE COURT WITH DECLARATIONS. AND ALSO,
L. :J T-I1-E~El-E-F-~m)1tNT-S~I11tV-E-J:>-R-(J-V-I-L)'~El--T-I1-E-eOtYR-T~W-I-T-H~E-V-I-BE-Ne-E--- ~---
26 AS TO THE CORRECTNESS OF THE SETUP OF THE PARTICULAR
II
~- --
ENTITIES == TIlE STATUS OF TIlE ENTITIES AS BEING IN27
28 GOOD STANDING INTBE STATE OF CA-L:LFORNIA, THAT THE
•

36. 18
1 ENTITIES HAVE -~ IT IS IN THE DECLARATION OF
2 MR. PRASKE THAT IS IN MR. ESQUIBIAS'S BRIEF, THAT THE
3 COMPANIES ARE SEPARATE AND DISTINCT FROM MR. GAGGERO,
4 AND THAT THERE IS NO EVIDENCE TO SUPPORT THE
5 CONCLUSION OTHERWISE.
6 AND AGAIN,· EVEN IF THEY WERE TO BE FOUND TO
7 BE THE ALTER EGO, YOU CANNOT TAKE A JUDGMENT AGAINST
8 AN INDIVIDUAL AND DO OUTSIDE REVERSE PIERCING TO ADD
9 ENTITIES AS NEW JUDGMENT DEBTORS.
10 THE COURT: WELL, YOU KNOW, THE EXHIBITS ATTACHED
11 TO THE MOTION CONTAIN TESTIMONY OF BOTH MR. GAGGERO
12 AND MR. PRASKE SHOWING THAT THE ONLY INTEREST OF THE
13 SPECIALLY APPEARING PARTIES IS TO PROTECT 100 PERCENT
14 OF MR. GAGGERO'S ASSETS, BOTH PERSONAL AND BUSINESS.
15 PRASKE IS THE ONLY TRUSTEE OF THE TRUST AND
16 FOUNDATION INVOLVED IN THE MOTION. HE IS ONE OF ONLY
17 TWO OFFICERS IN PCM. PCM PAYS EVERYTHING AT
18 GAGGERO'S WISHES WITHOUT RESISTANCE OR HESITANCE.
19 PRASKE IS ALSO THE REGISTERED AGENT FOR SERVICE OF
21 EVIDENCE SHOWS THAT MR. GAGGERO'S OWN ACCOUNTANT
22 TESTIFIED UNDER PENALTY OF PERJURY THAT THE GAINS AND
23 LOSSES FOR THE ASSETS AND THE ESTATE PLAN, ULTIMATELY
24 FLOW THROUGHMR.GAGGERO'S TAX RETURNS, WHICH IS MORE
---·-·------L-5----E-V-I-DE-N-C-E-L,-F-~I:JT-E-R-E-GO-S-T"A"T-tJ-S--.--·-----·----·----------- --.~ -.--
26 GAGGERO CONTROLLED THE LITIGATION. HE DID SO
27 BY THE WAY OF THE FINANCIAL ASSETS OF THE SPECIALLY
28 APPEARING PARTIE£. THEIR INTERESTS AREALtGNED WITH

37. 19
1 MR. GAGGERO. WITHOUT THEM -- WITHOUT MR. GAGGERO
2 THEY WOULDN'T EVEN EXIST. MR. PRASKE TESTIFIED THAT
3 THE SOLE PURPOSE OF THE EXISTENCE OF THE SPECIALLY
4 APPEARING PARTIES IS TO HOLD MR. GAGGERO'S ASSETS.
5 THEY ARE ONE IN THE SAME. THAT IS THE BOTTOM LINE.
6 MR. CHATFIELD: WELL, YOUR HONOR, I DON'T KNOW
7 WHERE YOU ARE GETTING THIS.
8 THE COURT: YOU MEAN OTHER THAN THE EXHIBITS, YOU
9 KNOW, IF I WERE INCLINED, WHICH I AM NOT, I COULD GO
10 DOWN AND SITE THE PAGE AND LINE NUMBERS OR PAGE
11 NUMBERS IN THE EXHIBITS WHERE THE DIFFERENT
12 COMPONENTS OF THAT FLOW FROM, BUT, YOU KNOW, I AM NOT
13 INCLINED TO DO THAT.
14 MR. CHATFIELD: WELL, YOUR HONOR, I HAVE LOOKED AT
15 THE PAGE AND LINE NUMBERS AND THE TESTIMONY WHICH IS
16 ATTACHED TO THE MOTION, AND I HAVE SEEN THAT THE
17 QUOTATIONS IN THE MOTION AND IN THE REPLY BRIEF ARE
18 NOT WHAT THE PEOPLE ACTUALLY SAID.
19 FOR EXAMPLE, A QUESTION WAS ASKED --
-_.. --- --
20 THE COURT:
21 THEMSELVES. I READ THE EXHIBITS.
22 MR. CHATFIELD: AS I.SAID, THE MOTION TAKES
23 MR. PRASKE'S TESTIMONY OUT OF CONTEXT.
24. THE COURT: .WHAT ASPECT OF MR. PRASKE' S TEST:r:MONY
26 PAGE AND LINE NUMBERS YOU THINK ARE TAKEN OUT OF
27 CONTEXT.
28 MR. ESQUIBIAS: YOUR HONOR, IF 1 MAY lNTERRUPT.
I
·~I-·--

38. 20
1 THE COURT: THIS IS MR. CHATFIELD'S ARGUMENT.
2 MR. ESQUIBIA~: HE IS ARGUING ABOUT SOMETHING
3 ABOUT MY CLIENT WHO I REPRESENT.
4 THE COURT: HE IS ARGUING ABOUT SOMETHING FROM
5 WHEN HE REPRESENTED YOUR CLIENT. ARE YOU TALKING
6 ABOUT THE TESTIMONY IN THE JUDGMENT DEBTOR EXAM?
MR. CHATFIELD: NO, YOUR HONOR.7
8 THE COURT: WHICH TESTIMONY ARE YOU TALKING ABOUT
9 IN THE URA CASE?
10 MR. CHATFIELD: YES, YOUR HONOR, AND TELL ME
11 I DID NOT REPRESENT HIM IN THE URA CASE, YOUR
12 HONOR.
13 THE COURT: WHOM DID YOU REPRESENT, MR. GAGGERO?
14 MR. CHATFIELD: NO, I WAS NOT. I WITHDREW AS
15 ATTORNEY OF RECORD IN THAT CASE PRIOR TO TRIAL.
16 MR. BOSWICK REPRESENTED MR. GAGGERO.
17 THE COURT: WHAT IS THE PORTION OF THE TESTIMONY
18 THAT YOU THINK WAS TAKEN OUT OF CONTEXT, SIR?
19 MR. CHATFIELD: WELL--
---20-- -----
21 MR. CHATFIELD: IN EXHIBIT G.
22 THE COURT: THE PRASKE CROSS-EXAMINATION
23 JUNE 13TH, 2005.
24 MR. CHATFIELD: THE QUESTION WAS ASKED ON PAGE
+-~---------L-.5---±e-eJ:I-.--------------------------~------------------------ -~--
r--
I-,-
I
26 THE COURT: JUST A MINUTE. I AM TRYING TO FIND
27 THIS.
28 MR. CEA'1'FXEtD: ALL RIGHT.

39. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
---., -----------_.- --
-20
21
22
23
21
THE COURT: I HAVE PAGE 1001.
MR. CHATFIELD: WELL, STARTING ON PAGE 1000 GOING
THROUGH 1001. MR. PRASKE TESTIFIED THAT MR. GAGGERO
MAKES RECOMMENDATIONS TO HIM, BUT THAT MR. PRASKE IS
THE ONLY ONE THAT CAN MAKE THE DECISIONS. AND IF YOU
GO
THE COURT: BUT MR. -- PAGE 1000 HE SAYS THAT
MR. GAGGERO, HE HAS GOT THE TRUST AND THE LLC'S THESE
ENTITIES WANT TO BUY A PIECE OF PROPERTY. MR. PRASKE
IS THE TRUSTEE, BUT MR. GAGGERO IS THE MANAGER, AND
HE TELLS MR. PRASKE WHAT HE WANTS TO DO.
MR. CHATFIELD: THAT IS NOT THE WAY I READ THE
TESTIMONY. I READ THE TESTIMONY TO SAY THAT
MR. GAGGERO IS ONE OF THE PEOPLE WHO WORKS AT THE
MANAGEMENT COMPANY AND MAKES RECOMMENDATION TO
MR. PRASKE, AND MR. PRASKE MAKES THE DECISION AS TO
WHAT TO DO.
THE COURT:
QUESTION: PAGE 1,000, LINE 22.
WANT TO BUY THIS GREAT PIECE OF PROPERTY.
WHAT SHOWING MUST MR. GAGGERO MAKE TO YOU IN
ORDER TO SATISFY YOU AS THE TRUSTEE WITH
24 FIDUCIARY DUTIES,_THAT I AM GOING TO RELEASE
--------L-5---------FtJND3---FCYR-TJi-AT-P-rE-e-E--(')-F-]:l-R-(')-]:l-E-:R.-T-Y-?---------------------
26 ANSWER: .SUCCESSFUL HISTORY OF
27 MAKrNG POSITIVE, SUCCESSFUL
28 TRANSACTIONS -.
._ - - - - - - - - - - - - - - -

40. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
I1-- .._- -- _.. __. ---
20
21
22
,
QUESTION: THAT IS IT?
ANSWER: THAT IS THE MOST IMPORTANT
THING.
QUESTION: SO, MR. GAGGERO SAYS I
WANT MONEY AND YOU SAY, HOW MUCH?
ANSWER: WELL, NO.
QUESTION: SO WHAT IS THE PROCESS?
ANSWER: IF IT IS WITH REGARD TO
MAKING INVESTMENTS FOR THE BENEFIT
OF THE TRUST,HE MAKES A
RECOMMENDATION ON A PROPERTY
INVESTMENT. I WILL FOLLOW THAT
RECOMMENDATION.
WHAT IS OUT OF CONTEXT?
MR. CHATFIELD: WHAT IS OUT OF CONTEXT IS THAT
MR. GAGGERO IS NOT THE DECISION MAKER. THE TRUSTEE
IS THE DECISION MAKER.
THE COURT: MR. PRASKE IS FOR ALL INTENTS AND
PURPOSES A RUBBER STAMP. AND THE TESTIMONY THAT YOU
-t:fIRECTE-b---ME---TTs-eONF-IRMS TR-AT-IF- HE--MAKES- -THE----
RECOMMENDATION, MR. PRASKE DOES IT. IT IS A LITTLE
HARD TO INTERPRET THAT LANGUAGE ANY OTHER WAY.
1 2 3 MR. CHATFIELD: WELL, HE GOES ON TO SAY ON THAT
I
I 24 PAGE; 'fEAT ONLINE 14 LINE 15 IT SAYS --I - -- - - - - - - -
22
-j------------2-5-~-_---~~tJ-E-s-'I'-I-eN-:--I-:kM-T-RY-I-NG--IN-M-Y-eW-N---------------1---------
26 MIND TO DISTINGUISH THAT DIFFERENT
27 FROM MR.GAGGERO SAYING I WANT MONEY
1--
! 28 AND YOU SAYING HOW MUCH,BECAUSE --
r------~-------------------------

41. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
._- -- -- - - ---.
20
21
22
23
24
23
AND THEN ANSWER IS BECAUSE AND
THEN --
QUESTION: WHY ARE YOU DRAWING A
DISTINCTION BETWEEN THOSE TWO?
ANSWER: BECAUSE IF HE CAME TO ME
AND SAID I WANT $2,000,000 TO SPEND
IN LAS VEGAS. I MIGHT SAY NO. IN
OTHER WORDS IT HAS TO BE FOR THE
BENEFIT OF THE TRUST?
ANSWER: YES.
QUESTION: YES?
ANSWER: YES.
THE COURT: OKAY. SO, I WANT THE -- GAGGERO SAYS
I WANT THE TRUST TO BUY THIS PROPERTY AND MR. PRASKE
SAYS YES, SIR, YES,' SIR, THREE BAGS FULL AND SIGNS
THE CHECK.
MR. CHATFIELD: THAT IS NOT NECESSARILY SO, YOUR
HONOR, ALTHOUGH --
THE COURT: WHAT ABOUT MR. PRASKE'S TESTIMONY
MR. CHATFIELD: HIS TESTIMONY IS THAT MR. GAGGERO
MAKES THE RECOMMENDATION, AND HE MAKES THE DECISION
IT IS NOTHING IN THERE THAT SAYS THAT.
THE COURT: WHAT DO YOU DO THEN, SIR, WITH_THE
r-----------Z5- --nTRKC~-WSWER?'------------------------------------------------
i 26 QUESTION: SO WHAT IS THE PROCESS?
i 27 ANSWER: IF IT IS REGARD TO MAKING
28 INVtSTMtNTS FOR TH~ BENEfIT OF THE

42. '~1 1")"
24
1 TRUST, AND HE MAKES A RECOMMENDATION
2 ON A PROPERTY INVESTMENT, I WILL
3 FOLLOW THAT RECOMMENDATION. SOUNDS
4 LIKE NO EXERCISE OF DISCRETION BY
5 MR. PRASKE. HE SAYS DO IT, YOU
6 KNOW, IT IS LIKE, YOU KNOW --
7 MR. ESQUIBIAS: I COMPLETELY DISAGREE, YOUR HONOR.
8 THE COURT:_ WHEN MR. GAGGERO SAYS JUMP, MR. PRASKE
9 SAYS HOW HIGH ON HIS WAY UP.
10 MR. ESQUIBIAS: AS A PERSON SITTING HERE LISTENING
11 TO THE STATEMENTS NOT INVOLVED IN THE DEPOSITION --
12 THE COURT: THAT IS TRIAL TESTIMONY, SIR. THIS IS
13 TRIAL TESTIMONY.
14 MR. ESQUIBIAS: AS A PERSON LISTENING TO TRIAL
15 TESTIMONY, I CAN TELL YOU IT SOUNDS LIKE HE DOES
16 EXERCISE DISCRETION THAT HE DETERMINES WHETHER IT IS
17 FOR THE BENEFIT OF THE TRUST.
18 THE COURT: DO YOU HAVE ANY DIFFERENT POINTS YOU
19 WISH TO MAKE, MR. CHATFIELD? THE ONLY REASON WE
- -- - -- ------20----- DEALT WITH THAT PARTIcTfLAR-O-NKrS--THAT--WAS-TR8---0NE- --- - -------- - --
21 YOU POINTED ME TO. THERE ARE OTHER -- THERE ARE
22 PLENTY OF OTHER STUFF.
23 MR. CHATFIELD: WELL, YOUR HONOR, I DISAGREE THAT
24 THE EVIDENCE SHOWS ALTER EGO, AND AGAIN, - L STATE TBAT
-------------L-5-----E""V-E-N---I-F-I-T--El-I-D--3It()W-kI:JT-E"R--E-~O,-T-rtE"-()-N-L-Y--WA-Y-y-()tr-e--AN---------I----
26 PIERCE IN TO THE ENTITIES IS THROUGH OUTSIDE REVERSE
27 ALTER EGO WHICH IS N()T-PERMITTED rN THE STATE OF
CALIFORNIA.
I
Ir------ - - - - - - - - - - - - - -

43. 25
1 THIS IS A JUDGMENT AGAINST AN INDIVIDUAL, AND
2 YOU ARE TRYING ~O MAKE AN ENTITIES AND THEIR ASSETS
3 SUBJECT TO JUDGMENT AGAINST AN INDIVIDUAL.
4 THE COURT: IF I AM JOHN JONES, AND I SET UP A
5 JOHN JONES TRUST, AND I DUMP ALL MY ASSETS IN TO IT,
6 AND I RUN IT AS MY PIGGYBANK, ARE YOU SUGGESTING THAT
7 JOHN JONES TRUST CAN'T BE REACHED?
8 MR. ESQUIBIAS: ACTUALLY, YOUR HONOR --
9 THE COURT: I DON'T THINK SO.
10 MR. ESQUIBIAS: I WOULD ACTUALLY SAY, YES, THAT'S
11 CORRECT.
12 THE COURT: I DON'T THINK SO.
13 MR. ESQUIBIAS: THAT IS THE LAW UNDER 141 CAL APP.
14 4TH, 25 A 2006-CASE, DIVISION ONE OF THE FOURTH
15 DISTRICT.
16 THE COURT: AND THEN THAT SEEMS TO RUN COUNTER TO
17 GREENSPAN, BECAUSE GREENSPAN SAYS THAT YOU CAN GO IN
18 TO THE TRUST THE ALTER EGO DOCTRINE, MAY APPLY TO THE
19 TRUSTEE -- THE TRUST THROUGH THE TRUSTEE, AND
20
21 CITES GREENSPAN.
22 MR. ESQUIBIAS: I WILL TELL YOU WHAT -- SAYS IN
23 THAT REGARD, YOUR HONOR, IT SAYS THAT --
.24 THE COURT: .1 WILL TAKE THE 2010-CASE.OU'l' Of OUR
26 AUTHORITY.
27 I AM PERSUADED BY THE SHOWING THAT THESE
28 PERSONS AND ENTITIES ARE AtTER :EGOS OF MR. GAGGER.O

44. 26
1 AND CLEARLY, CLEARLY, IT WOULD BE INEQUITABLE NOT TO
2 PIERCE THE VEIL -- NOT TO GET OUT THESE ENTITIES
3 WHICH ARE HIS ALTER EGO. SINCE HE HAS THIS
4 SUBSTANTIAL JUDGMENT AGAINST HIM, AND HE HAS
5 ATTEMPTED TO USE THESE DEVICES TO PUT HIS ASSETS
6 BEYOND THE REACH OF LEGITIMATE CREDITORS, AND WE HAVE
7 HAD A FULL AND FAIR OPPORTUNITY TO LITIGATE THIS.
8 I AM NOT RESPONSIBLE FOR WHEN MR. PRASKE GETS
9 NEW COUNSEL. I AM NOT RESPONSIBLE FOR WHAT ARGUMENTS
10 NEW COUNSEL MAKES OR DOESN'T MAKE IN HIS OPPOSITION.
11 I KNOW AT THE MOMENT THERE IS ZERO EVIDENCE
12 TO SUPPORT, ZERO EVIDENCE IN THE RECORD TO SUPPORT
13 THE POSITION THAT THERE IS A PLETHORA OF -- I DON'T
14 KNOW WHO THESE PEOPLE ARE.
15 AND IN FACT, I DO KNOW THAT MR. PRASKE WAS
16 EXTRAORDINARILY VAGUE WHEN HE WAS QUESTIONED AT TRIAL
17 ABOUT THE IDENTITIES OF THESE BENEFICIARIES SUPPOSED
18 BENEFICIARIES.
19 YOU KNOW, THE DECISION WAS MADE LONG AGO TO
r--- ---- -- - - - - - 10-- --- -KEEp-THE-Tl~.-oST---DOCURENTS-(jU-T - OT -TRg-HANDS--OFTBE-- - -
21 DEFENSE, AND NOW TO TRY AND INVOKE THE TERMS OF IT,
22 YOU KNOW, WITHOUT GIVING IT TO THE OTHER SIDE. HAVE
23 IT, YOU KNOW -- THERE IS A LITTLE BIT OF AN ANALOGY,
i
24 BERE, TO THE ASSERTION OF THE ATTORNEY-CLIENT
I
~.- ~------2-5- --P-R-I-V-I-I:JE-@-E-~---T-HE-G-E-N-E-RA-I:JRtJ-I:JE--I-S--T-H-AT~T-H-E'------------~--- -----
I
r
26 ATTORNEY-CLIENT PRIVILEGE CANNOT BE ASSERTED AS BOTH
27 A SWORD AND ASHIELD,AND IF YOU IN PRETRIAL
28 DISCOVERY ASSERT THE ATTORNEY-CLIENT PRIVILEGE , TO

45. 27
1 PROTECT CERTAIN THINGS AGAINST DISCLOSURE, ORDINARILY
2 YOU ARE NOT GOING TO BE ALLOWED TO ALL OF A SUDDEN AT
3 THE LAST MINUTE, DROP IT AND SAY BOY OH BOY, NOW WE
4 HAVE GOT ALL THIS STUFF, WE KNOW WE HAVEN'T TOLD YOU
5 ABOUT IT BUT WE ARE NOW MAKING THE DECISION TO WAIVE
6 IT. THAT IS ONLY AN ANALOGY, I HAVE GOT TO TELL YOU
7 THE -- THIS IS A SITUATION WHERE THESE ISSUES HAVE
8 BEEN PERCOLATING FOR A LONG TIME, AND THERE IS A
9 FUNDAMENTAL UNFAIRNESS TO MAKING KPC JUMP THROUGH ALL
10 THESE HOOPS TO COLLECT THE JUDGMENT AND SAYING NO, NO
11 YOU CAN'T HAVE X, Y, AND Z, AND THEN COMING IN AT THE
12 LAST MINUTE MAKING ARGUMENTS NOT SET FORTH IN THE
13 PLEADINGS WEIGHS ON EVIDENCE, NOT BEFORE THE COURT
14 AND SAYING JUDGE GIVE US A DO OVER.
15 THERE IS A FUNDAMENTAL UNFAIRNESS TO THAT.
16 MR. CHATFIELD: WELL, YOUR HONOR, I WOULD
17 RESPECTFULLY WOULD SAY THAT THE REASONING BEHIND IS
18 THERE IS A FUNDAMENTAL UNFAIRNESS FOR BRINGING IN
19 OTHER PEOPLE WITH OTHER INTERESTS WHO DIDN'T ATTEND A
21 THE COURT: MR. GAGGERO CONTROLS THESE ENTITIES.
22 THEY ARE HIS ALTER EGO, THE EVIDENCE FIRMLY PERSUADES
23 THE COURT OF THAT.
24 MR. ESQUIBIAS: YOUR HONQR, lWO_ULD THINK THAT - __
26 THIS SYSTEM, AND MR. GAGGERO IS THE GUY WHO IS -- YOU
27 KNOW,THIS IS WHAT HE DID. AND· HE DID IT FOR· THESE
28PURP~SES. HE TOLD ME SO, IN THE TRIALr TO SHIELD HIS
I.r--_.-

46. · ~ ? l
28
1 ASSETS FROM CREDITORS. I BELIEVE THAT WAS HIS
2 TESTIMONY ON CROSS EXAMINATION AT THE TRIAL IN THIS
3 CASE.
4 MR. CHATFIELD: I BELIEVE THAT IS INCORRECT, YOUR;
5 HONOR. THAT WAS YOUR CONCLUSION, BUT WHAT I DON'T
6 UNDERSTAND IS HOW WITHOUT ANY EXAMINATION OF THESE
7 ENTITIES PACIFIC COAST MANAGEMENT, 511 OCEAN FRONT
8 WALK LP, GINGERBREAD COURT LP, MALIBU BROAD BEACH LP,
9 MARINO GLENCO LP, BLU HOUSE LLC AND BOARDWALK SUNSET
10 LLC, HOW YOU CAN DETERMINE THAT THEY ARE ALL HIS
11 ALTER EGO.
12 THE COURT: THE MOTION IS GRANTED.
13 THE ORDER HAS BEEN SIGNED. DEFENSE TO GIVE
14 NOTICE. THANK YOU.
15
16
17
18
19
----2d
21
22
23
24
~--~~--~----z-5-:~~--~--------~----------~~-----~-----------------------1------
26
27
28
I
-r---

47. <') J-I!'~' ,.
f-
I, -
- :- - - - - - - - - -
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
DEPT. LA 24 HONORABLE ROBERT L HESS r JUDGE
STEPHEN GAGGERO r AN INDIVIDUAL;
PLAINTIFF r
-VS-:
KNAPP r PETERSEN & CLARKE r
DEFENDANTS.
STATE OF CALIFORNIA
SS
COUNTY OF LOS ANGELES
)
)
) CASE NO.
)BC286925
) REPORTER'S
) CERTIFICATE
)
)
Ir CAROL L. CRAWLEY r OFFICIAL REPORTER OF THE
SUPERIOR COURT OF THE STATE OF CALIFORNIA r FOR THE COUNTY OF
LOS ANGELES r DO HEREBY CERTIFY THAT THE FOREGOING PAGES r
1-28 COMPRISE A FULL r TRUEr AND CORRECT TRANSCRIPT OF THE
PROCEEDINGS HELD ON MAY 29 r 2012 r IN DEPARTMENT 24 OF THE
LOS "ANGELES COURT IN THE MATTER OF THE ABOVE-ENTITLED CAUSE.
DATED THIS 10TH DAY OF JULY r 2012
-=:-=-::t=-=-tvt--=----:::1==-===-=~""===_::=_=_:::_I_..:r........CSR #7518
CAROL PORTER

62. l'i ..... ,-·-- . -o
I
I
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 24 HON. ROBERT L. HESS, JUDGE
STEPHEN M. GAGGERO; AN INDIVIDUAL,
ET AL. I
PLAINTIFFS AND JUDGMENT DEBTORS,
)
)
)
)
)
v. ) BC286925
)
KNAPP, PETERSEN & CLARKE, STEPHEN RAY
GARCIA, STEPHEN M. HARRIS AND ANDRE
JARDINI,
DEFENDANTS AND JUDGMENT CREDITORS.
)
)
)
)
)
)
----~----------------~)
REPORTER'S TRANSCRIPT OF PROCEEDINGS
JUNE 27, 20l2
APPEARANCES:
FOR THE PLAINTIFFS
AND JUDGMENT DEBTORS:
WESTLAKE LAW GROUP
ORIGINAL
BY: DAVID BLAKE CHATFIELD, ESQ.
2625 TOWNSGATE ROAD
SUITE 330
WESTLAKE VILLAGE, CALIFORNIA 9l36l
(805) 267-l220
L.A. SUPERIOR COURT REPORTERS, INC.
l6l4 W. TEMPLE STREET ~--~-~-~--~~~~~--
LOS ANGELES, CALIFORNIA 90026
l(855) 528-l040
INFO@LASCR.COM
f-·· --· -- ----· -·-----·----- --------- ------------------·-·-- --------- ------- -- ------ ---- ----- ---- ---- --- --- - --- -- --- ------- -------· --- ---
!
!-
i
r1 -~i--------------------4fc..~AN°-CE-JAR.cJ!--I~~a~n~1~~,__________-J~~-~
I : OFFICIAL REPORTER
:
'
-!--------------·-------·----------------· ---------------------------------------- --------------------·-·------·---- -·----- ----------------------------

63. 1
2
3
4
5
6
APPEARANCES: (CONTINUED)
FOR NEW JUDGMENT DEBTORS:
DAVID A. ESQUIBIAS, ESQ.
2625 TOWNSGATE ROAD
SUITE 330
WESTLAKE VILLAGE, CALIFORNIA 91361
(805) 267-1141
7 FOR DEFENDANTS:
8 MILLER LLP
9
10
11
12.
. 13
14
15
16
17
18
19
20
21
22
23
BY: AUSTA WAKILY, ATTORNEY AT LAW
515 SOUTH FLOWER STREET
SUITE 2150
LOS ANGELE$, CALIFORNIA 90071
(213) 493-6400
Page 2
~
24
- - - - - · - - - - - - - - - - - - - - - - - ! ¥ -
~
~,
~
25
·<
,--- --·---z-6----------·-------------- -·-----------·----·-···--·--·-·---- --------·-- --- ·- -· ---- - - --~- --- ··----- ·~·--·-- --- --· - · · - - - ---- ~· -------
B
I
I
I
27
~ -
·r---------------·----·------------··-----·--------------------· ·----------- ----- -- - --·--·- ---·-- ----------·-·-- -·- ·----·-- --·--· -----------·-------

64. :
1
. 2
3·
4
5
6
7
8
9
10
11
12
13·
.
14
15
16
17'
I
;
18
I 19
i;-
;.
20j
I
21
22
23
24
25
CASE NUMBER: BC286925
CASE NAME: G.A.GGERO V. KPC
LOS ANGELES, CA
DEPARTMENT 24:
WEDNESDAY, JUNE 27, 2012
HON. ROBERT L. HESS
APPEARANCES: (AS NOTED ABOVE)
REPORTER: VANCE JARVIS, CSR #9014
TIME: 11:09 A.M. TO 11:40 A.M.
---000---
THE COURT: LET'S GO AHEAD AND HAVE
APPEARANCES, PLEASE, AND I'LL LOOK AT THE
APPLICATION.
MS. WAKILY: GOOD MORNING. AUSTA WAKILY
FOR JUDGMENT CREDITOR KNAPP, PETERSEN & CLARKE .
MR. CHATFIELD: GOOD MORNING, YOUR HONOR.
DAVID CHATFIELD ON BEHALF OF JUDGMENT DEBTOR STEPHEN
GAGGERO.
MR. ESQUIBIAS: GOOD MORNING, YOUR HONOR.
DAVID ESQUIBIAS ON BEHALF OF THE NEW JUDGMENT
DEBTORS.
BOND?
THE COURT: WHY DON'T HAVE YOU A SEAT.
MR. CHATFIELD: THANK YOU, YOUR HONOR.
THE COURT: OKAY. YOU ARE ASKING FOR A
MS. WAKILY: YES, YOUR HONOR.
THE COURT: ON APPEAL?
i
Page 3
--·-·----2·6- -· --··-- ---·--·M-S-;----WAK-'Ib-Y-:--YE-81 - ¥GTJR- -HGNQR .- -· -· --·- - -- ·- ---·.- ·--- - - - - - - - - -. --
27 THE COURT: UNDER CCP 1917.9; IS THAT
28 CORRECT?
.,----------·- ----------- ·------------------------------- ------------- ---------------- ------------ ----·-----------·--------·------ ------ ------- ---------------
1

65. . -
l
2.
3
4
5
6
7
8
9
10
11
12
13
I14
·' 15
16
17
18
19
20
21
22
23
24
25
AND WHAT IS THE AMOUNT OF THE BOND YOU ARE
SEEKING?
MS. WAKILY: WE ARE SEEKING A BOND UNDER
THOUGHT AS AN ALTERNATIVE BASIS.
THE COURT: I MISSPOKE. IT'S 917.9.
MS. WAKILY: 917.9.
WE BELIEVE THAT THIS -- WE STAND ON MONEY
JUDGMENT AND PURSUANT TO 917.1, I BELIEVE (A) (1),
ANY EFFORTS TO STAY THIS JUDGMENT REQUIRES AN
UNDERTAKING BY THE JUDGMENT DEBTORS.
THE JUDGMENT DEBTORS ARE RELYING ON THE
APPEAL OF THE UNDERLYING JUDGMENT IN I BELIEVE MAY
2008, APPROXIMATELY FOUR YEARS AGO. IN THAT CASE
THE APPEAL OF THE JUDGMENT AWARDING ATTORNEY FEES
AND COSTS STAYED THE ENFORCEMENT EFFORTS BECAUSE IT
WAS A COST ONLY JUDGMENT.
THE JUDGMENT CREDITORS ARE ASSERTING NOW
THAT BECAUSE IT WAS A COST ONLY JUDGMENT AND
MR. GAGGERO WAS ENTITLED TO AN AUTOMATIC STAY
PURSUANT TO THE 917.l(D) THAT THEY ARE GOING TO
APPARENTLY ALWAYS BE ENTITLED TO THAT AUTOMATIC STAY
WITH EVERY POST JUDGMENT APPEAL.
THE COURT: WELL, THAT JUDGMENT IS NOW
FINAL.
MS. WAKILY: EXACTLY, YOUR HONOR. THAT
Page 4
-- --- -- --26------JUBGM-E-N'±'- ±S--f'c..I-NAL:.-..--- -T~ L£....-EN-FORGEA@~E--A£---A--MO.NEY-- --- - - - - - - -- - ·- -
27 JUDGMENT AND ON THAT BASIS, I BELIEVE THE LAW IS
28 CLEAR, THE STATUTE IS CLEAR, THAT KPC HAS A MONEY
ir·-·-------·-----------------------------------·--------______________________.___-------------------------·- ------- ------------------------·----------

66. -.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
JUDGMENT BUT THERE IS A DISPUTE BETWEEN THE JUDGMENT
CREDITORS AND THE JUDGMENT DEBTORS ON THAT ISSUE.
SO THE FIRST BASIS WE BELIEVE, JUST TO
CLARIFY, THIS IS NOT A COST ONLY JUDGMENT ANYMORE.
THE JUDGMENT DEBTOR IS RELYING ON THIS COURT ORDER
IN NOVEMBER 2010 RELATING TO THE UNDERLYING JUDGMENT
IS NOT APPLICABLE TO POST JUDGMENT APPEALS.
THE OTHER ISSUE THAT HAS COME UP IS
RECENTLY WE HAD THE DEBTOR EXAMINATION OF JUDGMENT
DEBTOR STEPHEN GAGGERO.
THE DAY BEFORE WE HAD A HEARING ON A MOTION
FOR PROTECTIVE ORDER RELATING TO THE DEBTOR
EXAMINATION.
AT THE HEARING THE COURT DENIED THE MOTION
- 15 FOR PROTECTIVE ORDER IN ITS ENTIRETY.
16
17
18
19
20
21
22
23
24
25
MR. CHATFIELD WAS PRESENT FOR MR. GAGGERO.
THERE WAS NO ATTORNEY PRESENT FOR ANY OF
THE NEW ALTEREGO JUDGMENT DEBTORS.
MR. CHATFIELD INDICATED TO THE COURT THAT
HE WOULD FILE AN APPEAL AND ON THAT BASIS
MR. GAGGERO WAS NOT REQUIRED TO APPEAR FOR A DEBTOR
EXAMINATION THE NEXT DAY.
WE APPEARED FOR THE DEBTOR EXAMINATION THE
NEXT DAY. MR. GAGGERO -- MR. CHATFIELD INFORMED ME
THAT MR. GAGGERO WAS NOT GOING TO PROCEED WITH THE
27 DENYING THE MOTIONS FOR PROTECTIVE ORDER.
28 ON THAT BASIS I REQUESTED A HEARING WITH
Page 5
1--------------------------------------··---------·- ----·----------------·-·-- -------- ------------------ ----------------- ·----·----------------·----

67. ..
1
. 2
3
4
5
6
7
8
i
I
9'
I
10
11
12
13
14
. 15
16
17
18
19
20
21
22
23
24
25
-- ·-~ -- --2-6-·
27
' 28
I
THE, NOT A HEARING, BUT I REQUESTED THE ASSISTANCE
OF THE COMMISSIONER RELATING TO WHETHER THE APPEAL
OF THE ORDER DENYING THE MOTION FOR PROTECTIVE ORDER
STAYED MR. GAGGERO'S DEBTOR EXAMINATION.
THE ~UDGMENT DEBTOR'S STATE IN THEIR
OPPOSING PAPERS THAT THERE WERE EX-PARTE MOTIONS OR
EX-PARTE RELIEF THAT WAS NOT THE CASE. THE JUDGE IN
DEPARTMENT lA DID NOT RULE ON THE ISSUE OF COST
JUDGMENT. THERE WAS NOTHING IN THERE ABOUT ALTEREGO
LIABILITY. IT WAS SIMPLY WHETHER MR. GAGGERO HAD TO
PROCEED WITH THE DEBTOR EXAMINATION IN LIGHT OF THE
FILING OF A NOTICE OF APPEAL. THE JUDGE RULED ON
THAT BASIS.
THE JUDGE ALSO IN THAT COURT RULED THAT OUR
TESTIMONY WITH MR. GAGGERO WOULD BE LIMITED TO HIM
AND NOT TO THE ALTEREGO ENTITIES BECAUSE THE APPEAL
OF THIS COURT'S MAY 29TH ORDER AMENDING THE
JUDGMENT.
I ATTEMPTED TO EXPLAIN TO THE JUDGE THAT
THIS IS A MONEY JUDGMENT. THAT THE ALTEREGOS ARE
BOUND BY THE FINAL JUDGMENT IN THEIR CAPACITY AS THE
ALTEREGO.
THE COURT, DEPARTMENT lA, STATED THAT THAT ·
ISSUE WAS NOT BEFORE THE COURT AND SO HE COULD NOT
RULE ON THAT.
Page 6
.·
-- --- ----- ---------------SG- -~H-E-NG-±-I-GE---G-F---R1Jb-ING--±I=IA+---MR- .---CRA~RIELD-~- ---------- -- -- --- -- ~ -- -----
PREPARED IN RESPONSE TO OR WITH RESPECT TO THE
DEBTOR EXAMINATION DISPUTE THAT WE HAD ON JUNE 20TH
~ -
'~
~
r.------- ---- ----- ---·-------·-·-----------------·-------------·- -- --·--·-----· ------ -----·.-.---·---------------------------------·-- ---·-- ----------- -----------

68. 1
t~:
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
IS NOT ACCURATE. THAT DOES NOT RESOLVE THE ISSUES
WHETHER THIS IS ENFORCEMENT OF A COST ONLY JUDGMENT
OR A MONEY JUDGMENT OR WHETHER KPC IS PRECLUDED FROM
CONTINUING THEIR ENFORCEMENT IN ALL OTHER ASPECTS.
SECTION 917.9 IS AN ALTERNATIVE BASIS FOR
REQUIRING POSTING AN UNDERTAKING.
TO THE EXTENT THAT THAT'S --
THE COURT: HOW MUCH OF AN UNDERTAKING ARE
YOU SEEKING?
MS. WAKILY: DOUBLE THE AMOUNT OF THE
JUDGMENT OR WHATEVER IS --
THE COURT: WELL, I SEE VARIOUS NUMBERS IN
YOUR PAPERS --
MS. WAKILY: UH-HUH.
THE COURT: -- FOR DIFFERENT THINGS.
MS. WAKILY: RIGHT.
THE COURT: AND THE HIGHEST NUMBER IS
SOMETHING LIKE 2.1 MILLION.
MS. WAKILY: THE PROPOSED ORDER IS
$4,365,277.76. AND THAT IS BASED ON THE
DECEMBER 28TH JUDGMENT WE HAVE PLUS THE POST
JUDGMENT OR ACCRUED INTEREST THAT MR. CHATFIELD
INCL-UDED IN HIS MOTION FOR COSTS AND THE MOTION FOR -
Page 7
"
~-~-~~~~~~~~~~~~~~~~~~--~~~--~~~~~~~-~~~~-·!'~~
24 ATTORNEY FEES THAT HE HAS CONCEDED IN THE MOTION FOR
25 COSTS TO STAY CONSERVATIVE ON THAT NUMBER.
27 OF THE UNDERTAKING WOULD BE DOUBLE THE JUDGMENT
28 AMOUNT UNLESS THERE IS SOME --
IT--· ---- ---- ---·-- ------------------------------·--·------·----------·-·-----·---------- -------------- ----------··------·-------------------------------

69. .
1
, 2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
THE COURT: ALL RIGHT. ON BEHALF OF NEW
DEFENDANTS.
MR. ESQUIBIAS: YOUR HONOR, IT 1
S MY
UNDERSTANDING THAT THE PLAINTIFF IS SEEKING TWO
ITEMS OF RELIEF TODAY.
ONE OF THEM BEING AUTHORIZATION TO PROCEED
WITH COLLECTION EFFORTS AGAINST THE NEW DEFENDANTS,
THE NEW JUDGMENT DEFENDANTS.
AND TWO, FOR THE UNDERTAKING.
IF I CAN ADDRESS THE FIRST.
THE COURT: WELL, AS I UNDERSTAND IT THEY
ARE ASKING AN ORDER REQUIRING YOUR CLIENTS TO POST
AN UNDERTAKING TO STAY ENFORCEMENT OF THE JUDGMENT.
MS. WAKILY: THAT 1
S CORRECT, YOUR HONOR.
THE COURT: THAT 1
S WHAT I UNDERSTAND.
MR. ESQUIBIAS: AND THEN ALTERNATIVELY IF
AN UNDERTAKING IS NOT POSTED THEN THEY WOULD LIKE TO
HAVE AUTHORITY TO PROCEED WITH ENFORCEMENT
COLLECTIONS?
THE COURT: WELL, THAT 1
S THE COROLLARY. IF
YOU ARE ORDERED TO POST A BOND TO STAY COLLECTION
EFFORTS ON APPEAL S, AND YOU DON 1
T POST IT THEN THEY
GET TO GO FORWARD.
Page 8 I·.
II
I
II
II
i
I
I
I
II
I~
~
~q,
~
If
?.
~
i
~~
~
~
II
24
·r-~~--~~~~~-·~~~~~~~~~~~~~~--~~~~~~--~~~~I~
MR. ESQUIBIAS: THIS IS A COST JUDGMENT AS
~,,
~
fi25 AGAINST THE NEW JUDGMENT DEFENDANTS.
}
-····· - ·--2-fr······--···--·-- -·--·· --THK-·GGURT-:-·-NOT--I~-1
·£-NGT·A-GOST .J.~GMEN'I'---· - .. ·-- - -· - ·i-·-··-
~
27 AGAINST THE NEW DEFENDANTS BECAUSE IT HAS BEEN 3fl
"
28 REDUCED TO A MONEY JUDGMENT NOW. THE APPEAL IS OVER
'i
L....,-,=~:..:;:.1,_..,.,. .,-,.._.~=-,·"....,.-·i",,,.-:.... =-~·.:::..=....-.,-...=··"'·-,,··-"""=··~·,--::-,...,-,_•.-=···..=:--·~"=-·=,_,-.,,=~~=·,~=>.>...a'=·:~=··,;:s:.=.,=·...,_=•... =~•=.•~··=:;o..:,=~-=-~=;.>r~=·=•-=.,.~·~=~~=·~=.·=......_·::c.=·~=·"·:::::;•·.=~--~=;.,,--'=·.-=~=,........=..::...."',-.=•~•=~~=~~~=·-._.=.,.,,,···.=.-....,_,;:77,..;:;;:.,..,,_~"7";·,,~="·..,;.=•.,...~::-.=··~....,=--=-'"'.:--::'.":...=,,.,.-~--~.J
,-- ----------- - - -- -------------------- -------------------- -------------------------- ---- - · - - - - ---------------------- - ------ ----- ---- -

70. '
!
1
-· 2
3
4
5
6
7
8
9
10
11
12
13
-·
14
15
16
17
18
19
20
'
21
22
'
I
23
24
25
-··- -- _,,_.. ___2-6----
27
28
AND THE ORDER AGAINST MR. GAGGERO IS FINAL. IT'S
NOW A FINAL MONEY JUDGMENT WHATEVER IT'S ORIGIN
MIGHT HAVE BEEN AND IT IS NOT MAGICALLY REDUCED OR
TRANSMOGRIFIED INTO SOMETHING ELSE --
MR. ESQUIBIAS: I AM NOT --
THE COURT: -- BECAUSE YOUR CLIENTS ARE
NEW.
MR. ESQUIBIAS: NEW TO THE CASE?
THE COURT: THE JUDGMENT IS FINAL AS TO
MR. GAGGERO --
MR. ESQUIBIAS: I AGREE. THE JUDGMENT IS
FINAL AS TO MR. GAGGERO.
THE COURT: -- AND IT IS NOW A MONEY
JUDGMENT AND YOUR CLIENTS ARE SEEKING TO BE HELD
LIABLE ON THAT MONEY JUDGMENT.
MR. ESQUIBIAS: WHICH IS WHY WE FILED AN
APPEAL.
THE COURT: YES, BUT IT IS STILL A MONEY
JDDGMENT.
NOW, YOU ARE APPEALING FROM THE IMPOSITION
OF OR THE EXTENSION OF THE MONEY JUDGMENT FINAL ON
APPEAL TO YOUR CLIENTS. THAT'S THE WAY I ANALYZE
THIS.
NOW, IS THERE A REASON WHY I OUGHT NOT TO
REQUIRE YOUR CLIENTS TO POST --
Page 9 J
I
---- ---- - -----MR-,--E£QY-±-R±J;S-i------¥-E$,- RE-CAUS-E- -DOI-NG----'I'RA-'I' - -- - -- --------- - - - --l- ---
!
~
r
WOULD BE AN UNLAWFUL TAKING OF PROPERTY PRIOR TO DUE
"
PROCESS FOR THESE PEOPLE.
t-·------·------··-----------------------------------------------·-··---------------------·---------··-··----------··----·---·--------------------

71. 1 THE COURT: ARE YOU SUGGESTING THEN THAT
2 THERE IS AN UNCONSTITUTIONAL -- THAT THE STATUTE
3
4
5
REQUIRING POSTING OF A BOND IN THE COURT'S
DISCRETION ARE UNCONSTITUTIONAL?
MR. ESQUIBIAS: I AM SAYING IN THIS
6 PARTICULAR INSTANCE WHERE WE HAVE DEFENDANTS NEW TO
7 THIS CASE WHO HAVE NOT BEEN AFFORDED ANY DUE PROCESS
8 WHATSOEVER AT ANY TIME --
9
lO
THE COURT: OH, I THINK YOU HAVE. I THINK
YOU HAVE BEEN AFFORDED DUE PROCESS IN CONNECTION
ll WITH THE MOTIONS AND APPLICATIONS THAT LED TO YOUR
l2 CLIENT BEING NAMED. YOU WERE GIVEN NOTICE AND AN
13 OPPORTUNITY TO BE HEARD ON THIS.
14
- 15
l6
l7
18
MS. WAKILY: YOUR HONOR, IF I MAY.
THE COURT: NO.
MR. ESQUIBIAS: YOUR HONOR, IF I MAY.
THE COURT: GO AHEAD.
MR. ESQUIBIAS: I DISAGREE WITH THE COURT
19 WHICH IS WHY WE ARE FILING THE APPEAL. IT WOULD
20 BE --
21 THE COURT: YOU DISAGREE WITH ME ON THE
22 MERITS OF WHETHER THEY SHOULD BE HELD.
23 MR. ESQUIBIAS: NO. I DISAGREE WITH THE
24 RATIONALE THAT THE NEW DEFENDANTS HAVE BEEN GIVEN
25 DUE PROCESS IN THIS CASE. THEY HAVE NOT AND THAT'S
Page 10
-- - --- --2e- --WM-Y- --W-K-AR-E----F-1'-LLNG--AN----A-12-l?-EAL----- ----AND--==----- -- -- -- -- - -- -- --- - - - - - - ---
27 THE COURT: OKAY. GO AHEAD.
28 MR. ESQUIBIAS: AND TO NOW FURTHER ALLOW
I
I

72. 1
2
3
4
5
6
7
8
9
10
11
12
13
,
14
SOME TYPE OF TAKING OF THEM OF THEIR ~ROPERTY
WITHOUT SOME TYPE OF DUE PROCESS WOULD BE AN
UNLAWFUL TAKING. AND AT THE VERY LEAST BECAUSE WE
ARE APPEALING WHETHER OR NOT ALTEREGO IS APPROPRIATE
HERE, WE ARE APPEALING WHETHER OR NOT NOTICE WAS
PROPERLY GIVEN WHICH GAVE RISE TO THE ALTEREGO
FINDING BY THIS COURT, THIS COURT-I WOULD THINK
SHOULD EXERCISE DISCRETION IN FAVOR OF DUE PROCESS
PRIOR TO ANY TYPE OF UNDERTAKING.
IT'S CLEAR WHEN WE APPEARED LAST TIME, YOUR
HONOR, WE MADE A SPECIAL APPEARANCE AND OUR MAIN
ARGUMENT WAS NO NOTICE.
AND TO REMIND THE COURT, THE NEW DEFENDANTS
ARE IRREVOCABLE TRUSTS THAT MR. GAGGERO HAS NO
. 15 INTEREST IN. HE HAS NO REMAINDER INTEREST. HE HAS
16
17
18
19
20
21
NO CURRENT PRINCIPAL OR INCOME BENEFICIAL INTEREST.
HE IS NOT A TRUSTEE. HE IS A SETTLOR OF A TRUST
CREATED YEARS BEFORE THIS LITIGATION BEGAN, AND FROM
MY UNDERSTANDING YEARS BEFORE THE RELATIONSHIP BEGAN
WITH THE PLAINTIFFS.
THESE ARE ASSETS THAT l:RE HELD IN A
22 REVOCABLE TRUST SUBJECT TO THE CONTROL OF A TRUSTEE.
23 THE CURRENT PRINCIPAL AND INCOME
25 REMAINDER BENEFICIARIES NONE OF WHOM ARE GAGGERO,
Page 11
______2fi______THE .CDNTINGEN.T..REMAINDER._BENEELCIARIES_ND.NE_QF_W_H.QM___________ _
27 ARE GAGGERO HAVE NO CONTROL OVER THE ADMINISTRATION
28 OF THE TRUST.
i --
-~--- ---· - -----------------·-. - -------- ---- ---···-·--------------- --------------- ----------------· -·-·--·----· ----------· -----·- --------------------·--·- ·- ----- --· ---- -------·- -----------

73. 1
-· 2
3
4
5
6
7
8
9
10
11
12
13
14
- 15
16
17
18
19
20
21
22
23
24
25
27
28
SO THE BENEFICIARIES PRESENT OR FUTURE
CANNOT COMPEL A DISTRIBUTION, CANNOT CAUSE THE
NATURE OF THE ASSETS TO CHANGE. THE BENEFICIARIES
HAVE NO CONTROL AND FOR THAT REASON THERE IS NO RISK
OF THE DISSIPATION OF ASSETS IN THE NEW DEFENDANT
ENTITIES.
THE TRUSTEE OF THESE ENTITIES IS WILLING TO
STIPULATE ON THE RECORD THAT NO ASSETS WILL BE MOVED
OR DISSIPATED OUT OF THE TRUST ESTATE PENDING THE
APPEAL.
THE COURT: ANYTHING ELSE YOU WANTED TO
SAY?
MR. ESQUIBIAS: YES. I'D LIKE TO KNOW IF
THERE'S A FINDING OF AN EXIGENT CIRCUMSTANCE FOR
TODAY'S HEARING AND IF SO WHAT IS THAT BASED ON?
THE COURT: MR. GAGGERO DOES NOT HAVE A DOG
IN THIS FIGHT, DOES HE?
MR. CHATFIELD: WELL, YOUR HONOR,
MR. GAGGERO AS AN APPELLANT AND --
THE COURT: MR. GAGGERO'S APPEAL IS OVER.
THAT JUDGMENT IS FINAL.
MR. CHATFIELD: YES, BUT MR. GAGGERO IS
INTERTWINED APPARENTLY IN THIS NEW AMENDED JUDGMENT
IN THAT THE COURT HAS FOUND THAT THE JUDGMENT
AGAINST MR. GAGGERO INDIVIDUALLY CAN BE -- THAT
INDIVIDUAL JUDGMENT. SO HE IS PART OF THE APPEAL.
THE COURT: AND HOW DOES THAT AFFECT HIM?
Page 12
I~
~- . - - - · · . · - - - . --- - - - - - -- - - - - - --- - - - - · - - - - - - ·------·-------------·--·.---- ----------------- -

74. 1 MR. CHATFIELD: HOW DOES THAT AFFECT HIM?
2 THE COURT: YES. HE DOESN'T HAVE A DOG IN
3 THIS FIGHT. THE JUDGMENT IS AGAINST HIM. AS
4 AGAINST HIM IT'S VALID AND SUBSISTENT.
5 AND DO I UNDERSTAND YOU ARE IN HERE TO
6 ARGUE AGAINST THIS?
7
8
MR. CHATFIELD: NO, YOUR HONOR. IN FACT --
THE COURT: THEN WHAT IS THE ANSWER TO MY
9 QUESTION ABOUT WHETHER MR. GAGGERO HAS A DOG IN THIS
10 FIGHT? DOES HE OR DOES HE NOT?
11 MR. ESQUIBIAS: NOT IN TODAY'S HEARING.
12 THE COURT: NO. MR. CHATFIELD IS CAPABLE
13 OF REPRESENTING MR. GAGGERO AND HE'S CAPABLE OF
14 SPEAKING FOR HIS OWN CLIENT RATHER THAN YOU SPEAKING
: 15 FOR HIS CLIENT.
16 MR. CHATFIELD: AS TO THE AMOUNT OF THE
17 BOND OR IF A BOND GETS PLACED FOR THE NEW JUDGMENT
18 DEBTORS, NO, HE DOES NOT.
19 THE COURT: OKAY. BECAUSE IF YOU SAID
20 ANYTHING ELSE IT WOULD BE INCONSISTENT WITH WHAT THE
21 NEW DEBTORS COUNSEL WAS TELLING ME.
22 SO HE DOESN'T HAVE AN INTEREST IN THIS THEN
23 AT ALL; IS THAT A FAIR STATEMENT?
24 MR. CHATFIELD: OTHER THAN TO CORRECT THE
25 MISSTATEMENTS THAT WERE MADE BY OPPOSING COUNSEL
---2-6-- ----E-ARI:r:I--E-R-o- - - --- - -- - -- - --- - ----- ----
27 THE COURT: I DON'T KNOW WHAT MISSTATEMENTS
28 WERE MADE THAT WERE DIRECTED THAT AFFECT
Page 13 I
,
a
i
~
,_
r-- ---------------------- ~--------------------- --·------------·---- -------·- --·--------- ------------- - --- ----------------------------------·- -----·- ----- --·- ---
1

75. 1
2
3
4
5
6
7
8
9
10
11
12
13
:
14
: .15
16
17
18
19
20
21
22
23
24
25
27
28
MR. GAGGERO. I'M UNAWARE OF WHAT THOSE WERE, SIR.
MR. CHATFIELD: SINCE YOU HAVE ADDED THE
WORDS AS THEY ONLY AFFECT MR. GAGGERO THEN YOU WOULD
BE CORRECT.
THE COURT: OKAY.
MR. CHATFIELD: BUT I DO STAND BY MY NOTICE
OF RULING THAT I FILED WITH THE COURT.
THE COURT: HOW DO I DETERMINE WHICH IS
CORRECT SINCE NEITHER OF YOU HAVE GIVEN ME A MINUTE
ORDER OR ANYTHING LIKE THAT?
MR. CHATFIELD: WELL, YOUR HONOR, I SUPPOSE
AT SOME POINT IN THE FUTURE WHEN THE TRANSCRIPT OF
THE JUDGMENT DEBTOR'S EXAM BECOMES AVAILABLE THE
COURT CAN DETERMINE FROM THE ADMISSIONS OF COUNSEL
FOR THE JUDGMENT CREDITOR AND THE OBJECTIONS THAT I
RAISED BASED UPON THE COMMISSIONER'S ORDERS. THEN
IT WOULD BE EASY TO TELL WHAT THE COMMISSIONER
ORDERED AND WHAT THE COMMISSIONER DID NOT ORDER.
AND IT' S.. CONSISTENT WITH MY MINUTE ORDER. OR NOT MY
MINUTE ORDER. MY NOTICE OF RULING.
THE COURT: OKAY. HERE IS THE MINUTE
ORDER.
"IT IS STIPULATED THAT COMMISSIONER
MATTHEWS ST. GEORGE MAY HEAR THIS MATTER
AS TEMPORARY JUDGE. THE MATTER COMES ON
STEPHEN M. GAGGERO'S MOTION FOR
PROTECTIVE ORDER IS DENIED. JUDGMENT
Page 14 I
~--· - -- ------ . -----··-- ------ - ----· --- ---- --------· ------·------ -- -- -- ---·--·-· -- --- ------- -· ------ --·----- -- --·---- - ----------------------. --------- --·------- -----·

76. T
1
2
3
4
5
6
7
8
9
10
11
12
13
;
14
15
16
17
18
19·
20
21
22
23
24
25
DEBTOR EXAMINATION HEARING OF 6/20/12
REMAINS SET. JUDGMENT CREDITOR TO GIVE
NOTICE. II
SO THAT'S ON THE 19TH.
MS. WAKILY: RIGHT, YOUR HONOR. I HAVE
NOTICE OF THAT.
THE COURT: AND SO IS THAT WHAT YOU WERE
PURPORTING TO GIVE NOTICE OF, THE --
MR. CHATFIELD: NO.
THE COURT: OKAY. THE MINUTE ORDER FOR THE
20TH SAYS,
"THE MATTER IS CALLED FOR HEARING,
STEPHEN M. GAGGERO IS SWORN AND IS
EXAMINED AND IS DISCHARGED."
THAT'S WHAT THE MINUTE ORDER SAID.
MR. CHATFIELD: UNFORTUNATELY THE MINUTE
ORDER DOES NOT REFLECT THE RULINGS OF THE COURT.
MS. WAKILY: YOUR HONOR --
THE COURT: WELL, HOW DO I.DETERMINE THAT,
SIR? HOW DO I DETERMINE THAT ON THE RECORD BEFORE
ME TODAY?
MR. CHATFIELD: WELL, BASED UPON --
THE COURT: I DON'T SEE ANYTHING IN THE
OF THE COURT. NOR DO I SEE ANYTHING IN THE MINUTES
.- .. -2-6-·- - ..Q.¥ --'rHE- -1~ TH- 'I'-EA'I'- A-P-E>EAR -'I'.Q- -£TJRS~ANTIAT.E-- -I-T..- ---- -- - -.--- .--···
27 MR. CHATFIELD: AS I PREVIOUSLY
28 STATED THE --
Page 15 I
·-··-·····-··· ·- ..... ,,. - ..
~

77. '
1
2
3
4
5
6
7
8
9
10
11
12
13
..
14
.' 15
16
17
I 18
19
20
21
22
23
24
25
- - - --~-6-- -
27
28
THE COURT: I DON'T SEE ANY RULING BY
COMMISSIONER ST. GEORGE ON THIS RECORD WHICH IS
CONSISTENT WITH PARAGRAPH TWO OF YOUR NOTICE OF
RULING.
MR. CHATFIELD: NO. THE RULING WAS MADE IN
OPEN COURT AND WE CONDUCTED THE JUDGMENT DEBTOR EXAM
UNDER THE PARAMETERS OF THE RULING AND IT'S
REFLECTED IN THE RECORD OF THE TRANSCRIPT OF THE
COURT REPORTER AT THE JUDGMENT DEBTOR EXAM.
RULING.
THE COURT: ALL RIGHT. HERE'S THE COURT'S
"CCP SECTION 917.9 PERMITS THE
COURT TO DETERMINE WHETHER TO REQUIRE A
BOND PENDING APPEAL. THE UNDERLYING
LITIGATION IS FINAL WHAT WAS A JUDGMENT
FOR COSTS PRIOR TO APPEAL IS NOW A FINAL
MONEY JUDGMENT. THE ADDITION OF NEW
DEFENDANTS LIABLE ON THAT JUDGMENT DOES
NOT TRANSFORM IT INTO A JUDGMENT FOR
COSTS.
"IN THE EXERCISE OF THE COURT'S
DISCRETION, THE EVIDENCE PREVIOUSLY
PRESENTED TO THE COURT PERSUADES THE
COURT THAT AN UNDERTAKING IS NECESSARY
TO ENSURE THE COLLECTABILITY OF THE
Page 16 j
i
II
I
- - --· - - - -- ----JOOGMEN±'·-AGA±N-£-T--'±H-E- NEW-E>E-FENDANT.S--- -- ·- -· - - - - -
SHOULD IT BECOME FINAL. THE COURT DOES
NOT ACCEPT THE ORAL ASSURANCES OF

78. .t
l
2
3
4
5
6
7
8
9
10
11
12
13
''
14
_. 15
16
17
18
19
20
21
22
23
24
25
27
28
i
I
I
COUNSEL FOR THE NEW DEFENDANTS AS TO
COLLECTABILITY."
I HAVE REVIEWED THE FORM OF ORDER PRESENTED
BY KPC. IT APPEARS TO ME TO BE APPROPRIATE
INCLUDING THE AMOUNT AND I HAVE SIGNED THE ORDER.
THANK YOU. CONCLUDES THESE PROCEEDINGS.
MS. WAKILY: THANK YOU, YOUR HONOR.
---000---
s,,~ - ']
'
~·---- ·--·-- ·-
-,
r---·--·---·-··---··---------------·--··- --- ·-- ·--- ---..-·-------·· ·-·- ·------------ ---------- -- ---··--·- -----·--- .._________ ...__________.._________________ . ------·----

79. SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 24 HON. ROBERT L. HESS,_ JUDGE
STEPHEN M. GAGGERO; AN IND;I:VIDUAL,
ET AL.,
PLAINTIFFS AND JUDGMENT DEBTORS,
v.
KNAPP, PETERSEN & CLARKE, STEPHEN RAY
GARCIA, STEPHEN M. HARR!S AND ANDRE
JARDINI,
DEFENDANTS AND JUDGMENT CREDITORS.
}
)
)
)
)
) BC286925
)
)
)
)
)
)
)
~~~~~~~~~~~~~~~~~~~~~-)
STATE OF CALIFORNIA
SS
COUNTY OF LOS ANGELES
I, VANCE JARVIS, CSR 9014, OFFICIAL
REPORtER OF THE SUPERIOR COURT OF THE STATE OF
CALIFORNlA, FOR THE COUNTY OF LOS ANGELES, DO HEREBY
CERTitY THAT THE FOREGO!NG PAGES, 1 THROUGH 17,
COMPRISE A FULL, TRUE AND CORRECT TRANSCRIPT OF THE
PROCEEDINGS TAKEN IN THE MATTER OF THE
ABOVE-ENTITLED CAUSE ON JUNE 27, 2012.
DATED THIS 2ND DAY OF JOLY, 2012.
- - - - ----- --- ____ ::_________ ------------- -----~~,,-- - ---_./'----~------- - - - - - - - --
. r:;,,...r //~- / I CSR 9014
28 VANC JARVI , OFFICIAL REPORTER
18
~---------------- -- ---------- --------- ----------------- -- ---------------- -------------------------- --------- ---------------

80. SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
DEPARTMENT 85
STEPHEN M. GAGGERO,
vs .
HON. JAMES C. CHALFANT, JUDGE
PETITIONER,
NO. BC286925
KNAPP PETERSEN AND CLARKE,
RESPONDENT. ORIGINAL
REPORTER'S TRANSCRIPT OF PROCEEDINGS
FRIDAY, JULY 20, 2012
FOR PETI TIONER: DAVID CHATFIELD, ATTORNEY AT LAW
FOR RESPONDENT: AUSTA WAKILY, ATTORNEY AT LAW
BUFORD J. JAMES
OFF I CIAL REPORTER 9296
III NORTH HILL STREET
LOS ANGELES, CALIFORNIA 90012
Buford J. James, CSR 9296

81. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
FRIDAY, JULY 20, 2012; LOS ANGELES, CALIFORNIA
2:00 P . M.
THE COURT: Number two on calendar. Stephen
1
Gaggero versus Knapp, Petersen & Clark. Your appearances
for the record, please. This is BC286925 .
MS. WAKILY: Good afternoon, your Honor, Austa
Wakily for Knapp Petersen & Clark, judgment creditors.
MR. CHATFIELD: David Chatfield appearing on
behalf of judgment debtor.
THE COURT: Okay . All right . There are two
motions here -- one fi l ed by the judgment debtor,
Mr . Gaggero , and one filed by the judgment creditor, Knapp ,
Petersen & Clark to compel post judgment production of
documents . Is that correct?
MS. WAKILY: Yes.
MR . CHATF IELD : Yes, your Honor. And, your
Honor, I also
THE COURT: The two seem to be interrelated .
MS. WAKILY : Yes , they are , your Honor .
THE COURT: All right .
22 MS. WAKILY : The motion for protective order was
23 f iled on the same day . Mr. Chatfield had stated that he
24 would produce documents in response to our request for
25 production.
26 THE COURT : Okay. Yes. Counsel.
27 MR. CHATFIELD: I had submitted a declaration
28 today with the Court , and
Buford J . James, CSR 9296

82. 1
2
3
4
5
6
7
B
9
2
THE COURT : Why is it being submitted today? As
you see from this stack, I've had a lot to read already.
MR. CHATFIELD: It ' s our amended responses to
discovery , which we said in our opposition that we would be
filing this week .
THE COURT : All right .
MR. CHATFIELD: It's just to give the Court
notice that we did file them.
THE COURT : All right . Good. So with the
10 responses, do you still feel there is a need for a motion
11 to compel?
12 MS . WAKI LY: There's no documents. There is a
13 total of fourteen documents that have been produced in
14 response to all of our requests . We know from all the
15 lawsuits Mr . Gaggero has been involved in that there are
16 numerous documents out there invo l ving his various
17 entities . The last letter I drafted on May , I believe it's
18 11th, goes into detail, identifying the very specific
19 entries we're requesting . Mr. Gaggero ' s asset production
20 p l an has offshore trusts, offshore foundation,
21 corporations . In fact, one of the entities he ' s involved
22 in is here for, I think, number 1 1 on calendar today Sulfur
23 Mountain Lennon Livestock , that ' s another entity owned or
24 controlled by Mr. Gaggero that's requested in our request
25 for production o f documents . We've received 14 documents
26 that we already had . They are public records, and nothing
27 else.
28 THE COURT : All right . Counsel.
Buford J. James, CSR 9296

83. 3
1 MR. CHATFIELD: Last time we were here, the
2 judgment debtor was here for a judgment debtor exam which
3 lasted all day and in which he explained who had the
4 documents that the judgment creditor is seeking and
5 explained that that person is not giving him the documents.
6 It's -- in the verified responses today,
7 we've indicated that he's verified the statement that
8 various individuals in the entities that are currently up
9 on appeal have documents that they are seeking, but he
10 doesn't personally have control of them.
11 THE COURT: All right.
12 MS. WAKILY: Your Honor, those entities now, they
13 are judgment debtors. There was an ex parte application
14 motion filed before Judge Hess to resolve the issue of
15 staying enforcement with respect to the judgment, alter ego
16 judgment debtors , they did not post a bond. Judge Hess
17 required a bond in the amount $4.3 million. They have
18 refused to post it so there is to basis for the alter ego
19 judgment debtor to refuse production of documents relating
20
21
to enforcement of this judgment.
THE COURT: All right.
We have --
In the papers that were
22 filed with regards to the motion for protective order,
23 their reply that was filed by counsel for Mr. Gaggero
24 referenced an old protective order that was issued by my
25 predecessor, Commissioner Gross. I would be prepar ed to
26 sign an order which gave those protections as part of the
27 discovery in this matter.
28 Which side would like to draft that order?
Buford J . James, CSR 9296

84. 1
2
3
4
5
6
7
8
9
MS. WAKILY :
10 years ago.
THE COURT :
MS. WAKILY:
4
Your Honor, just one note, that was
I know. That ' s why I need a new one .
The thing is since then, he's
asserting trade secret privilege, and there is no showing
about what exactly is trade secret. They ' re being asserted
on behalf of unident i fied third parties.
statute requiri ng --
There is a
THE COURT: Well, but you are going to get
10 discovery. You just can't past it on to other people .
11 MR. CHATFIELD : And I might note, your Honor
12 THE COURT: other than, as it says, counsel
13 for judgment creditor or judgment creditor or persons
14 acting under your supervision .
15 MR. CHATFIELD : I would be happy to draft the
16 order, your Honor.
17 THE COURT : All right .
18 MS. WAKI LY: Your Honor, one more note -- request
19 is Mr. Gaggero currently suing clients again in another
20 lawsuit.
21
22
23
24
25
26
27
28
THE COURT: Right .
MS . WAKILY : And in one he's asserting he ' s very
wealthy investment real estate investor , so he's making
inconsistent statements, and part of the protective order
is to preclude impeachment of Mr . Gaggero . And he's
asserting he's judgment proof here to and wealthy there at
a minimum. We'd l ike to use the documents in defense of
that legal malpractice lawsu i t that's currently pending.
Buford J. James, CSR 9296

85. 1
2
3
4
5
6
7
8
9
5
THE COURT : That will have to be a decision made
by another court .
judge.
I can't tight the hands of another
MS . WAKILY: All right. Then can we get a
privilege log with respect to our request for production of
documents?
THE COURT: Well , they haven't actually produced
anything yet in compliance with this order so once the
order is issued, they are to produce the documents. There
10 shouldn't be anything that's not produced.
11 MS . WAKILY: Then can we get a - -
12 THE COURT: Yes.
13 MS. WAKILY: - - a privilege log to the extent
14 they are going to withhold anything that they have, they
15 would have to
16 THE COURT: Yes. If they believe that they have
17 anything that this order does not provide for that.
18 Because its protections are built in so that there should
19 be nothing withhe l d. If there is something withhe l d, they
20 would have -- there is no need for a privilege log, I
guess, is what I am saying, because --
MS. WAKILY : I see . I understand.
has to be produced.
So everything
21
22
23
24 THE COURT : The protections I put in here, they
25 should just disclose everything.
26 MS . WAKILY: Including purported attorney-client
27 privileged communication, because Mr . Practices key was
28 trustee also his personal attorney j ust to be clear he ' s
Buford J. James, CSR 9296

86. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
6
going to produce those documents as well.
THE COURT: Everything is to be produced, because
of the protections in here that the concerns that have been
expressed wil l be met by the fact that the information will
only go to yourself, to the judgment creditors and person's
acting under direct supervision of judgment creditor ,
judgment creditor's counsel reflection of judgment.
MR. CHATFIELD: Your Honor -- your Honor , their
requests go back 15 years, and there may be communications
with counsel which we will list on a privilege log if there
is attorney-client
THE COURT: Is there a motion to quash to limit
the discovery, the discovery requests?
MR . CHATFIELD: The objections.
THE COURT: We're sort of past that, aren't we?
Objections and motion to quash. This has to do with your
request for protective order, but I don't see anything
18 about a motion to quash or limit or modify the
19 MR. CHATFIELD: We objected - - well, it ' s not a
20 subpoena . It was a notice of - -
21 THE COURT: Okay . I'm sorry . You are right.
22 It ' s production of documents.
23 MR. CHATFIELD: We did object throughout, and I
24 think that the Court ' s prior statement that if there are
25 documents that are discovered that should be listed on a
26 privilege log, they wil l be , and then if there is not an
27 issue with that, the Court can take it up at that time.
28 THE COURT : What's the date of this lawsuit?
Buford J. James, CSR 9296

87. 7
1 MS. WAKILY: Well, the judgment debtors have been
2 added -- they were added recently. This is all part of an
3 estate plan implemented by Mr . Gaggero . The underlying
4 lawsuit was filed, I believe, in 2001 and reached a final
5 decision in 2010 on appeal .
6 THE COURT: Al l right . So the discovery can go
7 back to the origin of the lawsuit, which is not quite 15
8
9
yea r s.
MS. WAKILY: Your Honor , t he purpose of the going
10 back that far is that is when Mr . Gaggero transferred all
11 the assets. He personal l y owed about $30 mi l lion worth of
12 property into v arious corporations .
13 THE COURT : If you are provided with documents
14 that you believe justify going farther back, you can make a
15 motion.
16 MS. WAKILY : That ' s part of our request - -
17 THE COURT : Wel l , I think I ' m going to start with
18 when the lawsuit started. We'll go f r om there . That
19 should have b e en dealt with pret r ial du ring the course of
20 litigation discovery . All these documents - - this isn't
21 the time to st a rt creating a whole bunch of discovery when
22 you are trying to collect a judgment . You should have
23 gotten a lot of that through the pretr i al and litigation
24 itself , the testimony; you are free to use all that .
25 MS . WAKILY : But the underlying lawsuit had
26
27
28
nothing to do with his assets. It was a legal malpractice
lawsuit Mr. Gaggero filed against KPC . At that time, his
alter egos had no re l evance at a l l in the underlying
Buford J. James, CSR 9296

88. 1 lawsuit as part of co llec ting the judgment. Now we
2 understand that he's creating an estate plan that
8
3 essentially concealed al l his wealth in various entities,
4 including offshore trusts.
5 THE COURT: Well, see what you discover -- this
6 isn't the final word. I'm sure if you believe after the
7 judgment debtor exam of him and third parties and discovery
8 from them that you will have access to -- if you believe
9 there are areas that you need to go farther into, you can
10 come back and ask the Court.
11
12
13
14
MS. WAKILY :
underlying lawsuit.
THE COURT:
MS. WAKILY:
So from the commencement of the
Right.
All right. Then we can come back if
15 there is any further issues on this request.
16 THE COURT: Yes . I'm here -- at least on
17 Thursday and Friday, I'm here. But Friday afternoon, in
18 particular. Okay. Let's see. So with regards to the
19 motion for protective order, I am going to grant that in
20 part, in the sense that, as discussed, the counsel for Mr.
21 Gaggero will prepare the protective order. And with
22 regards to the motion to compel documents subjec t to the
23 protective order shall be produced with the protection so
24 there should be a plethora of documents coming your way .
25 All right.
26 MS. WAKILY: One more question, your Honor. I'm
27 sorry. There is public documents out there that I am aware
28 of that he has not produced. would that fall within the
Buford J. James, CSR 9296

89. 9
1 scope of the protective order?
2 THE COURT: If they are public, you have access.
3 MS. WAKILY : Right. But what I'm asking is,
4 those, I can continue using and treating as public
5 THE COURT: Yeah. Anything within the public
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
record does not fall within the confidential protective
order. I don't think I can take back what was once pr i vate
is now public.
MR. CHATFIELD: Thank you, your Honor.
MS . WAKILY: Is there a deadline --
THE COURT: A deadline . That's a good idea.
What do you think, counsel, how long is it going to take
your client to come up with all this? I assume he has it
all standing by and ready.
MR. CHATFIELD: Your Honor, I think that I am
providing the Court with a draft of the proposed protective
order, that may -- I have objections.
THE COURT: So there is 10 days, and --
MR. CHATFIELD : Then we can review the files and
see what there is to produce.
THE COURT: How about August 31st? How is that?
MR. CHATFIELD: Thank you, your Honor.
THE COURT: By 5:00 p.m., production shall occur.
MR. CHATFIELD: Thank you, your Honor.
THE COURT: All right.
26 MS. WAKILY : That's complete production.
27 THE COURT: Everything within the scope of the
28 order. Now that there are protections sought by judgment
Buford J. James, CSR 9296

90. 10
1 debtor, which should make him happy or happy as one can be.
2 Will you give notice, please.
3 MR. CHATFIELD: Yes, I will, your Honor.
4 THE COURT: Thank you.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
2 3
24
25
26
27
28
Buford J. James , CSR 9296

91. SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
DEPARTMENT 85 HON. JAMES C. CHALFANT, JUDGE
STEPHEN M. GAGGERO,
PETITIONER,
vs.
KNAPP PETERSEN AND CLARKE,
RESPONDENT .
NO. BC286925
REPORTER'S
CERTIFICATE
I, Buford J. James , CSR 9296, Official
Reporter of the Superior Court of the State of California,
for the County of Los Angeles, do hereby certify that the
foregoing pages 1 through 10, inclusive, comprise a full,
true , and correct transcript of the testimony and
proceedings held in the above-entitled matter on FRIDAY,
JULY 20, 2012.
Dated this 4th day o~f~~~UST, 2012.
rti led Shorthand Reporter
Buford J. James, CSR 9296

92. Page 1
1 SUPERIOR COURT OF THE STATE OF CALIFORNIA
2 COUNTY OF LOS ANGELES
3 BEFORE THE HONORABLE ROBERT L. HESS
4 DEPARTMENT NUMBER 24
5 - - -
6
STEPHEN M. GAGGERO, )
7 )
Plaintiff. )
8 )
vs. ) Case No. BC286925
9 )
KNAPP, PETERSEN AND CLARKE, ET. AL, )
10 ) Pages 1 to 46
Defendants. )
11 ___________________________________ )
12
13
14
15
16
17
18
19
REPORTER'S TRANSCRIPT OF PROCEEDINGS
20
OCTOBER 3, 2012
21
22
23
24
25 Atkinson-Baker, Inc.
Court Reporters
26 (800) 288-3376
www.depo.com
27
Reported by: Yolanda Huff, CSR No. 12570
28 File No.: A608F2A

93. Page 2
1 APPEARANCES OF COUNSEL:
2
FOR THE PLAINTIFF:
3
WESTLAKE LAW GROUP
4 BY: DAVID BLAKE CHATFIELD, ATTORNEY
2625 Townsgate Road
5 Suite 330
Westlake Village, California 91361
6
FOR ADDITIONAL JUDGEMENT DEBTORS:
7
LAW OFFICES OF EDWARD A. HOFFMAN
8 BY: EDWARD A. HOFFMAN, ATTORNEY
12301 Wilshire Boulevard
9 Suite 500
Los Angeles, California 90025
10
FOR THE DEFENDANT:
11
MILLER, LLP
12 BY: AUSTA WAKILY, ATTORNEY
City National Plaza
13 515 South Flower Street
Suite 2150
14 Los Angeles, California 90071
15 ALSO PRESENT:
16 RISER ADKISSON, LLP
BY: JAY ADKISSON, ATTORNEY/APPOINTED RECEIVER
17 100 Bayview Circle
Suite 210
18 Newport Beach, California 92660
19
20
21
22
23
24
25
26
27
28

94. Page 3
1 OCTOBER 3, 2012 10:17 a.m.
2 P R O C E E D I N G S
3 THE COURT: Gaggero.
4 MR. HOFFMAN: Good morning, your Honor. May it
5 please the court, Edward Hoffman on behalf of the
6 additional judgement debtors.
7 MR. CHATFIELD: David Chatfield appearing on
8 behalf of judgement debtor Stephen Gaggero.
9 MS. WAKILY: Good morning. Austa Wakily appearing
10 on behalf of defendants Knapp, Petersen and Clarke.
11 MR. ADKISSON: Good morning, your Honor. I'm Jay
12 Adkisson. I'm your receiver.
13 THE COURT: Have a seat, please.
14 MR. HOFFMAN: Thank you, your Honor.
15 THE COURT: Mr. Chatfield and Mr. Hoffman, why are
16 we filing and serving oppositions on the day of the
17 hearing as opposed to earlier?
18 MR. HOFFMAN: I apologize for that, your Honor.
19 It has been an insane period for me. And what I'm --
20 THE COURT: I will tell you that I have looked
21 through them. I have not -- I took some minutes and
22 went through them this morning to try and understand
23 what was in there.
24 MR. HOFFMAN: I appreciate that.
25 THE COURT: And there is nothing about those that
26 suggests why it could not have been done in a timely
27 fashion to give the other side notice of what you were
28 doing.

95. Page 4
1 MR. HOFFMAN: Well, your Honor, if I may respond
2 to that. There are two papers that we filed and one of
3 them was a declaration of a gentleman named Gordon
4 Freitas. And I'll set that one aside because I think
5 your Honor's point is much stronger as to that one. The
6 other document that we filed was communication between
7 my office and Ms. Wakily's office, letters and e-mails
8 that were sent to her and to Randall Miller, the partner
9 in charge of the chase.
10 THE COURT: David Chatfield's declaration to that
11 effect, the last event that is eluded to in that
12 declaration is September 25th, which is almost -- that's
13 over a week ago.
14 MR. HOFFMAN: Yes, it was, your Honor, and in part
15 it's because we were hoping we would get a response and
16 be able to work something out and not have to reveal
17 these communications. I think your Honor is right, I
18 think it would have been better to file those papers
19 sooner. The point, though, is not that we're trying to
20 rebut legal arguments. What I'm trying to say is that
21 factually I think this is all premature.
22 THE COURT: Why?
23 MR. HOFFMAN: Because we're new here, your Honor,
24 we just got here at end of May. We became additional
25 judgement debtors on May 29. Nobody has taken judgement
26 debtor discovery from us at all yet. They're attending
27 judgement debtor examinations on the 25th.
28 THE COURT: I understand the judgement debtor

96. Page 5
1 discovery was taken from Mr. Gaggero sort of kicking and
2 screaming, you know, with great reluctance. But aside
3 from that, you know -- you know, look, this case goes
4 back several years and it has been all the way up to the
5 appellate court where the judgement was affirmed. We
6 have had post-appellate proceedings for additional
7 attorneys' fees and so forth. And basically Mr. Gaggero
8 has, as far as I can see, taken the stonewall position
9 as far as paying this judgement.
10 I can understand why there might be a lot
11 of communications on the part of the judgement creditors
12 because there is, you know, to say that he has resisted
13 any effort to either, number one, pay sums that were
14 owed prior to judgement, or to pay it once the judgement
15 was entered is an understatement of the case.
16 So, you know, it's like -- its been worse
17 trying to pull teeth without anesthetic for the
18 creditors. The validity of their claim, their
19 fundamental is undisputed, and it keeps adding interest
20 and everything. And, you know, I don't -- I can
21 understand why they might be disinclined to engage in
22 prolonged discussions which have no reasonable
23 likelihood of resolving at anything approaching
24 collection.
25 MR. HOFFMAN: May I respond, to that, your Honor?
26 THE COURT: Yes.
27 MR. HOFFMAN: Thank you.
28 THE COURT: Because I frankly don't see that --

97. Page 6
1 that having read the materials that were submitted I
2 didn't see anything that suggested that there was going
3 to be any money or any particular cooperation. I saw
4 you setting forth your client's problems to them about
5 refinancing properties where things were going to become
6 due, you know?
7 MR. HOFFMAN: Well, that, your Honor, that was the
8 declaration from Mr. Freitas which is what I mentioned
9 earlier when I said I think your Honor's points are
10 better taken as to that one. The correspondence that we
11 had with Ms. Wakily's office, though, I think is very
12 different. The last point your Honor made was that
13 there was no sign of any movement towards payment. We
14 offered amounts in those letters to pay the judgement in
15 full, every penny, without a receiver being appointed.
16 All we said was please take this motion off
17 calendar, acknowledge that we're not waiving our
18 appellate rights. We will sell this piece of
19 property --
20 THE COURT: What appellate rights?
21 MR. HOFFMAN: We have a right as the additional
22 judgement debtors to appeal the order that said that we
23 were --
24 THE COURT: You already took a writ and you got a
25 temporary stay and I don't know what happened, but the
26 stay was lifted because I think there was some sort of
27 procedural default on your client's part, on somebody's
28 part.

98. Page 7
1 MR. HOFFMAN: The court didn't explain why it was
2 denied. I don't believe there was a procedural default,
3 but we're getting --
4 THE COURT: Okay, but you got a writ -- you know,
5 you took a writ, you got a stay order and the stay order
6 was lifted.
7 MR. HOFFMAN: That's right, your Honor.
8 THE COURT: Now, if there is, you know, just from
9 what I have seen in this case, and this goes back a long
10 time. If I -- you're familiar with the movie Jerry
11 Maguire, I assume?
12 MR. HOFFMAN: I have seen it, your Honor.
13 THE COURT: Show me the money? It would not
14 surprise me if that was not the attitude, and, you know,
15 money, you know --
16 MR. HOFFMAN: What I'd like to say, your Honor,
17 though, your question that started this discussion was
18 what rights? And the answer is that we have filed an
19 appeal before the writ petition. The petition was for a
20 writ of supersedeas. It's a writ that says, "please
21 stop enforcing the judgement while the appeal is
22 pending." So, the appeal is still pending even though
23 the writ was denied. And those are the appellate rights
24 that we don't want to waive.
25 If a judgement debtor settles with the
26 judgement creditor, that waives the appellate rights.
27 If a judgement debtor pays voluntarily, that waives the
28 appellate rights. If a judgement debtor pays under the

99. Page 8
1 threat of some sort of collection action, that would
2 potentially cause significant damage or not even
3 significant, some sort of collection action, and they
4 pay in order to prevent that, that doesn't waive their
5 appellate rights. And that's all we were saying.
6 We're saying, "we have a piece of property
7 that has enough equity to cover the entire amount. We
8 will sell it. We will let you take a role in selling
9 it," I don't remember exactly what we said, but we can
10 share a sell in it. But we said, "we'll go ahead and
11 we'll sell that right now and we will pay the judgement
12 in full because otherwise" --
13 THE COURT: That isn't what I got out of this.
14 MR. HOFFMAN: I apologize, your Honor, I didn't --
15 THE COURT: Actually, that isn't quite what I got
16 out of this. You're talking about the September 25th
17 letter to Mr. Miller?
18 MR. HOFFMAN: That's correct, your Honor.
19 THE COURT: What you say is that their client's
20 interests are protected by the abstract of judgement,
21 and the -- and your proposal in the first paragraph,
22 page 2 of the letter is that they simply hold off. Not
23 that they not collect -- you know, you talk about the
24 cost that they will incur and you say these words, "your
25 clients could avoid these costs by simply weighing the
26 outcome of the appeal relying on their security interest
27 in my clients' property is to protect them."
28 MR. HOFFMAN: Yes, I did say that, your Honor.

100. Page 9
1 And then if your Honor will continue down the line it
2 says, "but if your clients are unwilling to wait, I have
3 a proposal which would allow them to enforce judgement
4 without causing needless harm to my clients." And then
5 I proceed to explain, that "we are willing to put the
6 property at 511 Ocean Front Walk in Venice on the market
7 and sell it to satisfy the judgement." That's valuable
8 parcel on the Venice Boardwalk.
9 THE COURT: By the sheriff. What is the value of
10 that?
11 MR. HOFFMAN: It is -- as of several years ago it
12 was just over $4 million.
13 THE COURT: What is the net -- what are the
14 incumbrances on this property today?
15 MR. HOFFMAN: The value has gone up since then.
16 It was a $1 million incumbrance.
17 THE COURT: When you say it's $4 million several
18 years ago, when, 2007?
19 MR. HOFFMAN: As a matter of fact, yes, 2007, but
20 we have another appraisal in the works now. We'll be
21 happy to provide that. And since 2007 the building has
22 been improved. They have put quite a bit of work into
23 it. The rents that it draws now are more --
24 THE COURT: I have no way of knowing that and I
25 don't know what you --
26 MR. HOFFMAN: Well, your Honor, I'm not asking --
27 THE COURT: You know, this is -- you know, I don't
28 see that this gives them very much, frankly. I think

101. Page 10
1 it's rather -- this doesn't set any time limit for any
2 of these things to happen.
3 MR. HOFFMAN: Well, it was an invitation to
4 discuss this, your Honor. If that's the Court's
5 concern, I'm sure we can work that out.
6 THE COURT: And you are -- and you gave them four
7 hours to respond.
8 MR. HOFFMAN: Well, including a response that says
9 they need time, your Honor. We were contemplating
10 various other steps we might need to take and I wish --
11 THE COURT: "If they need more time to make a
12 decision please agree by 5:00 p.m. to continue the
13 October 3rd hearings." That's --
14 MR. HOFFMAN: Even so, your Honor, my point is we
15 are serious about trying to get this worked out without
16 being subjected to a receivership. The receivership is
17 something that I'm sure your Honor understands is costly
18 to all parties concerned. And as the judgement debtors
19 we'd be the ones --
20 THE COURT: I don't doubt that.
21 MR. HOFFMAN: And, so, it's an incentive that we
22 have to come out and make the judgement creditors whole,
23 which is what we were trying to do there. As I said,
24 the main concern we have is to do it in a way that
25 doesn't waive our appellate rights, and that's what the
26 letter was trying to accomplish by explaining, well,
27 here's all the reasons why we're doing it.
28 If there are specifics that the court feels

102. Page 11
1 were not addressed adequately, I'm happy to address
2 those.
3 THE COURT: I don't -- you see, what my impression
4 reading this was that it's kind of vague, kind of
5 conceptual, and what it does is promise significant
6 additional delay.
7 MR. HOFFMAN: Well, I don't see that, your Honor,
8 because we don't have the liquid assets. We have real
9 estate and even if the receiver is the one doing it or
10 even if they pursue the other usual types of remedies,
11 it would still take time, it would still involve selling
12 property. Now, we're willing to do that. We're willing
13 to get the process started.
14 MS. WAKILY: Your Honor, can I address the offer
15 really quickly?
16 THE COURT: Briefly.
17 MS. WAKILY: Mr. Chatfield omitted from his
18 declaration my response to that e-mail, to his last
19 request or last statement, and that was that his
20 offer -- I'll read the e-mail to you actually. It says,
21 "with respect to your e-mail your proposal offers are
22 assigned a lien that they already have while requiring
23 them to forfeit their right to enforce a money judgement
24 against Mr. Gaggero. First it's irrelevant that the
25 lien is involuntary for the is effect to the same.
26 Second, the judgement as to Mr. Gaggero is final fully
27 enforceable and not subject to further appeals or stays.
28 The proposal appears to benefit only your client."

103. Page 12
1 MR. HOFFMAN: That's a response to a different
2 proposal.
3 MS. WAKILY: That was a followup to the e-mail to
4 Mr. Chatfield's declaration.
5 THE COURT: Oh, to Mr. Chatfield's?
6 MS. WAKILY: Right. So, there's an e-mail
7 response that he didn't include in his declaration
8 that --
9 THE COURT: But this is the proposal from
10 Mr. Hoffman for Mr. Miller.
11 MS. WAKILY: It's the same proposal. The alter
12 ego debtors also are requiring that we stop our
13 enforcement efforts against Mr. Gaggero which will
14 likely prove that he actually has all his assets in his
15 own name or they actually are owned by him personally.
16 THE COURT: Just a minute. Hold on a second.
17 When did you send this?
18 MS. WAKILY: I sent it about -- at 12:00 p.m. the
19 same day as his last e-mail.
20 THE COURT: Well, since his e-mail I don't know
21 what the last day you're referring to. If it was
22 September 25th his e-mail went to you at 12:59 to
23 Mr. Miller.
24 MS. WAKILY: Sorry, not the alter egos.
25 THE COURT: Are you talking about the 27th?
26 MS. WAKILY: I'm talking about Mr. Chatfield's
27 declaration. He includes an exhibit of some e-mail
28 conversations.

104. Page 13
1 MR. HOFFMAN: Right. This is not a response to
2 the communications that I sent, your Honor. It's a
3 response to something different that Mr. Chatfield sent.
4 THE COURT: Well, Mr. Chatfield also attaches to
5 his declaration that same September 25th letter.
6 MS. WAKILY: It's the same offer.
7 THE COURT: And Mr. Chatfield says that there was
8 no response to that letter. Apparently there was some
9 response.
10 MR. HOFFMAN: No, there was no response to my
11 letter.
12 MS. WAKILY: It's the same offer.
13 THE COURT: Just a minute. I don't know, but they
14 responded to something apparently or did they not? If
15 you take the position absolutely that they did not
16 respond in any way, shape or form to these things on or
17 after September 25th --
18 MR. HOFFMAN: That is my position, your Honor. I
19 have not heard --
20 THE COURT: Then if I look at the e-mail --
21 MR. HOFFMAN: Which was not sent to me.
22 THE COURT: Who was it sent to, Mr. Chatfield?
23 MR. HOFFMAN: Yes, your Honor.
24 THE COURT: Mr. Chatfield says that there was no
25 response.
26 MR. HOFFMAN: I haven't studied Mr. Chatfield's
27 declaration in depth. I believe he said there was no
28 response to what I sent, not that there was no response

105. Page 14
1 to what he sent. I have heard that -- I'm sorry, your
2 Honor.
3 THE COURT: Okay. That's fine. I understand what
4 you're saying.
5 MR. HOFFMAN: I heard nothing from the Miller firm
6 at all about anything about this case, except
7 confirmation that there would be a court reporter. I
8 sent the letter on September 25th, I sent a followup on
9 September 27th and I got the silent treatment.
10 Now, I guess they're not obligated to
11 respond but we're serious about trying to make this
12 work, and we would have a dialogue if they wanted to
13 have a dialogue. Under these circumstances, your Honor,
14 I would say it's premature to put us into a
15 receivership. We're willing to do this. Willing might
16 be putting it strongly, your Honor. We're not eager to
17 do this, but it is the last battle alternative available
18 and on that basis we're willing to do it.
19 MS. WAKILY: Your Honor, there's a pending order
20 to produce documents Mr. Praske has refused to turn
21 over, so it appears --
22 THE COURT: Mr. Who?
23 MS. WAKILY: Mr. Praske has refused to turn over
24 documents relating to the estate plan after we obtained
25 an order subject to protection that Mr. Chatfield wanted
26 to turn over documents to the estate plan.
27 THE COURT: I don't know. I don't have a motion
28 or applications today with respect to that, do I?

106. Page 15
1 MS. WAKILY: It's exhibit to --
2 THE COURT: Is there a motion before me today for
3 an application?
4 MS. WAKILY: No, no, it's an order.
5 THE COURT: I don't have a motion or application
6 before me today to adjudicate this.
7 MS. WAKILY: I'm not saying there's a --
8 adjudicate -- I'm saying that there's an order
9 outstanding that they refuse to comply with.
10 MR. HOFFMAN: Your Honor, if I'm not mistaken that
11 order is directed only against Mr. Gaggero and not
12 against the additional judgement debtors. If I am
13 mistaken I would be happy to acknowledge that.
14 THE COURT: I don't know if it is or not.
15 MS. WAKILY: We have declarations from
16 Mr. Chatfield refusing to disclose those documents --
17 I'm sorry, Mr. Praske. I'm sorry. Mr. Praske. It was
18 provided by Mr. Chatfield. Mr. Chatfield, can you
19 correct me if I'm wrong?
20 MR. CHATFIELD: I'm not exactly sure what you're
21 talking about. It's not before the court, so I haven't
22 reviewed any documents relating to that.
23 MR. HOFFMAN: I don't know if this is the --
24 MR. CHATFIELD: All I know is that an offer has
25 been made to sell the 511 Ocean Front Walk property
26 either by voluntary sale by a real estate agent or by a
27 Sheriff's sale, which is ordered by the court, and
28 Mr. Hoffman can speak to the willingness of his client

107. Page 16
1 to stipulate to an order to sell the property which
2 would then take out all of the need for a receiver to
3 come in and ask for the very same relief. In fact, the
4 judgement creditors could move for order to sell the
5 property anytime they wanted to. This seems to me all
6 premature to have a receiver come in and do what can be
7 done by ordinary judgement enforcement procedures,
8 especially when the new judgement debtors are willing to
9 stipulate to an order to sell the property.
10 MR. HOFFMAN: That's my point, your Honor. And as
11 for the questions about Mr. Praske --
12 THE COURT: Why would only one judgement debtor --
13 why would this particular judgement debtor be willing to
14 sell its property?
15 MR. HOFFMAN: I don't know the answer to that,
16 your Honor. I can only presume that they have made
17 arrangements for the other ones.
18 THE COURT: We've got a whole bunch of judgement
19 debtors. I think this is an interesting question. I've
20 got all these entities here, including Mr. Gaggero
21 individually, we've got Pacific Coast Management, which
22 I understand has been a vehicle for paying Mr. Gaggero's
23 expenses and has been part of this thing so that he
24 individually may be judgement proof. I don't know what
25 the relationship of these other entities is in any
26 detail or why 511 OFW would step up.
27 MR. HOFFMAN: I can get information, your Honor.
28 I don't have it. My assumption is that they have made

108. Page 17
1 arrangements to borrow or work out a proportionate share
2 with the other entities. This is the property that has
3 the equity. This is the property that would cause the
4 least disruption. You know, there's a block, I believe,
5 four adjacent properties. This one is at the end. It's
6 the easiest one to get rid of. Now --
7 THE COURT: You know, if there really is all this
8 money, all this equity, I would assume that you would be
9 able to bond the judgement. And the statement to the
10 effect that -- you know, you're telling me that this is
11 what a $4 million property with a $1 million lien, if
12 there's all these properties I would assume that you'd
13 be able to find a surety to file the judgement and avoid
14 this.
15 MR. HOFFMAN: We tried, your Honor. It didn't
16 work. The sureties didn't want incumbered property.
17 They want cash. They want lines of credit. We made two
18 attempts each with two different sureties and were
19 turned down.
20 But regardless of that, the point is not
21 what else could have been done in order to get a bond.
22 The point is can we pay the judgement? Will we pay the
23 judgement? What would a receiver accomplish for the
24 judgement creditors that we're not willing to accomplish
25 for them in a less costly, less damaging manner?
26 THE COURT: Okay. What you can do then is I can
27 go ahead and let the receiver go forward, and you can
28 make them an offer they can't refuse as far as payment

109. Page 18
1 goes that satisfies them as to the amount, the timing
2 and the collectability of this stuff. Because, you
3 know, I can understand -- I'm not expressing a personal
4 opinion here now, but I can understand why they might be
5 a trifle skeptical of offers coming from your side of
6 the table. And I understand that you may be new to this
7 case, but this case has a history. And, fortunately or
8 unfortunately, if your side of the table has baggage you
9 come into this case and the baggage affects you,
10 unfortunately. It affects their perception of the
11 people that you're trying to represent.
12 MR. HOFFMAN: Well, the point, your Honor, isn't
13 so much that I'm new. The point is that the additional
14 judgement debtors are new. They mock about what
15 Mr. Praske has or hasn't provided, but nobody has served
16 him with judgement debtor discovery except for a
17 judgement debtor exam years ago when he was there in a
18 third party capacity. A receivership is supposed to
19 basically be a last resort. We're here as a first
20 resort.
21 THE COURT: I would tend to disagree with that.
22 MR. HOFFMAN: Well, your Honor, we cited law in
23 the papers that says a court when deciding whether to
24 appoint receivership has to balance the interest of both
25 the judgement creditor and the judgement debtor.
26 Now, there's a lot at stake on their side
27 of the balance, there's a lot at stake on our side of
28 the balance. We haven't even had an opportunity to

110. Page 19
1 answer discovery. Nobody has -- let me back up two
2 words.
3 THE COURT: There has been discovery that has been
4 taken, as I understand it, from Mr. Gaggero and I
5 believe other people, or there have been attempts to get
6 discovery from other people.
7 MR. HOFFMAN: Nobody has served us with judgement
8 debtor interrogatories. Nobody has served us with
9 judgement debtor requests for production. We do have
10 pending judgement debtor examinations but they haven't
11 been taken.
12 Since we became parties, or at least
13 additional debtors, nobody has asked us anything. We
14 haven't failed to answer. We haven't failed to produce.
15 We haven't been less than fully forthcoming because it
16 hasn't happened yet. We haven't had a chance to show
17 that we have been able to participate responsibly in
18 this case.
19 THE COURT: Well, the problem is that Mr. Gaggero
20 has been less than forthcoming. I read the transcript
21 of the judgement debtor examination where he refused to
22 say where he lives and refused to give information that
23 was perfectly appropriate.
24 MR. HOFFMAN: I don't have a dog in the fight.
25 THE COURT: But you see the problem is, this
26 colors the entire relationship.
27 MR. HOFFMAN: I understand that.
28 THE COURT: And, frankly, my general understanding

111. Page 20
1 is that this web of entities was set up by Mr. Gaggero
2 in consultation with various people essentially to make
3 him judgement proof. And I think that -- I think there
4 is evidence that has been presented to that effect, and
5 indeed I have some recollection of Mr. Gaggero's own
6 testimony at trial. And I have seen this, you know?
7 So, you know, if I'm a little -- if I'm a
8 trifle skeptical of this, let's turn to the merits of
9 the proposed order for assignment rights and order
10 restraining judgement debtors.
11 MR. HOFFMAN: Your Honor, before we do that, may I
12 suggest that we simply continue this hearing to give us
13 a chance in order to make that sale happen?
14 THE COURT: Why should I -- on the basis of what I
15 have before me today, I do not have a high degree of
16 confidence that will happen within a reasonable period
17 of time.
18 MS. WAKILY: Your Honor, we don't accept the terms
19 and we're not going to accept on offer without evidence
20 supporting the statements. There's nothing to suggest
21 that there's not other entities or assets available.
22 THE COURT: I don't know. You know, you say
23 you're getting updated appraisal. I don't know what it
24 will show. I don't know the value of any of these
25 properties. I don't know what the -- you tell me
26 there's a million dollars in incumbrances. I don't know
27 what the values are and --
28 MR. HOFFMAN: I'll be happy to document that.

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

113. Page 22
1 a commitment or an offer to commit for any particular
2 thing as to any particular date. That's why I'm saying
3 I'm buying a pig in a pole. You know, it's hope that
4 something will happen. But I don't have anything before
5 me today that I could, to turn a phrase, take to the
6 bank.
7 MR. HOFFMAN: Well, your Honor --
8 MS. WAKILY: One more important note on this.
9 THE COURT: Just a minute. Last stand.
10 MR. HOFFMAN: Thank you, your Honor. If there are
11 specific shortcomings than what we proposed that your
12 Honor would like us to address, I would be happy to --
13 THE COURT: It's too indefinite, sir. It's not
14 that there are specific shortcomings. It's that I don't
15 know what you have offered. There are no specifics
16 about this and there's no timeframe, and there's no
17 basis for assurance that it's going to happen in a
18 reasonable period of time or shake out the way that you
19 intend.
20 MR. HOFFMAN: Well, then can we continue this long
21 enough for me to get that kind of commitment from the
22 client and make the specifics at additional parts of
23 this proposal?
24 MS. WAKILY: Your Honor, one more important point
25 is we received numerous letters from counsel for the
26 alter ego debtors and Mr. Chatfield immediately after
27 the order amending the judgement threatening KPC and
28 their law firm with liability by various unnamed third

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

115. Page 24
1 judgement.
2 MR. HOFFMAN: That's a non-sequitur, your Honor.
3 They're entitled to an amount of money. They're not
4 entitled to an investigation. They're not entitled to
5 dissect whatever arrangements exist on this side of the
6 table. They're entitled to cash. We've offered --
7 THE COURT: Give them cash, then. You can settle
8 this -- you can settle this by giving them cash. And I
9 have zero confidence -- you know, look, again, I am not
10 casting aspersions on your personal rectitude.
11 MR. HOFFMAN: I know that, your Honor. Thank you.
12 THE COURT: But, I have -- put it this way. I
13 seriously doubt -- I have nothing before me that
14 suggests that you have the kind of intimate knowledge of
15 all these entities and their financial condition that
16 you would be able to detail what the situation is. At
17 the moment. At the moment, given the vagueness of the
18 information that has already been presented to me and
19 that is including about the ability of these entities to
20 come up with cash, given the vagueness of that
21 information, I'm not prepared, necessarily, to buy into
22 the notion that you gotta sell the property. I don't
23 know whether do you or not. I don't know whether they
24 would sell a property.
25 I see that the receiver is supposed to
26 take -- supposed to have certain rights or the ability
27 to go the receipts of judgements that are coming in
28 which would not involve the sale of property. There's a

116. Page 25
1 whole list of judgement -- of lawsuits that involve
2 different claims. But, you know, I --
3 MR. HOFFMAN: Then what I would ask --
4 THE COURT: The problem is I've got -- did you
5 read the statement of decision that I wrote?
6 MR. HOFFMAN: I did, your Honor.
7 THE COURT: Okay. And, so, you know, with respect
8 to that underlying lawsuit that he had that resulted in
9 the anti-slap judgement, the thing that he was claiming
10 that Knapp Petersen and Clarke should have settled for
11 him, that he sued that homeowner's association and got a
12 judgement, and the judgement kept compounding and
13 compounding and compounding. And I found that all
14 although there was no basis on which to refuse to pay
15 the judgement, no legitimate basis, he did. He
16 stonewalled. And that was a big part of the falling out
17 with Knapp Peterson.
18 And I know the history of Mr. Gaggero on
19 that. He doesn't want to pay judgements against him,
20 okay? So, he got -- the way he set up these
21 relationships, as I understand it, with these different
22 entities it's very hard to twist his arm. And what we
23 have here now is counsel for the judgement creditor who
24 is willing to come in and take the steps actually to
25 effectively twist the arm.
26 MR. HOFFMAN: What I'm saying --
27 THE COURT: It's hard for me to say that given
28 this history, given my understanding of the facts, given

117. Page 26
1 my understanding of the relationship between Mr. Gaggero
2 and these different persons and entities, that that
3 shouldn't allow to go forward.
4 MR. HOFFMAN: Well, your Honor, what I'm saying is
5 that the arm twisting is working. We're here saying,
6 uncle. If we haven't said uncle clearly enough, I would
7 like just a little time in order to make it more clear.
8 Your Honor raises some valid points about what more
9 information we could have provided. I didn't think to
10 provide it. I can get it. I can provide it. Like I
11 said, we got silence from the other side. They didn't
12 ask for it. If they had asked for it we might have
13 already been able to provide it by now. I realize onus
14 is on us, but I'm willing to carry that onus.
15 MS. WAKILY: Your Honor, we believe the receiver
16 can help.
17 THE COURT: Let me turn to the receiver, if I may.
18 MR. ADKISSON: Yes, sir.
19 THE COURT: I have this notice in the receiver's
20 ex parte request for instructions. I'm not quite sure
21 what you're asking.
22 MR. ADKISSON: I'm merely asking, your Honor, for
23 the authority that I have in conclusion of this hearing
24 after you take into account these alter ego entities.
25 So, in other words, that the court originally entered an
26 order appointing receiver. You have that order.
27 Apparently there was some confusion or some issue
28 regarding these other entities.

118. Page 27
1 THE COURT: There was the writ filed for
2 supersedeas to prevent enforcement against these other
3 entities pending appeal, when they had not bonded this.
4 And the Court of Appeals had lifted the writ, initially
5 issued it, and then lifted that.
6 So, I'm not sure -- so the order that was
7 signed back at the beginning of September, I think, sets
8 that -- sets forth that stuff, and I thought that was
9 reasonably fair. I'm looking for the documents right
10 now.
11 MR. HOFFMAN: If I may, your Honor. My concern
12 with the ordered is that it didn't cross out the names
13 of my clients. The proposed order had been filed before
14 the stay was in place, so it was seeking relief against
15 Mr. Gaggero and my clients.
16 THE COURT: Exactly, and the court did not sign it
17 until the stay was lifted.
18 MR. HOFFMAN: Right. But in the interim my
19 clients did not participate in that hearing and their
20 opposition papers were returned to them. So, they had
21 no notice, they had no opportunity to be heard, and,
22 yet, there's an order that was issued that says it
23 applies both to Mr. Gaggero and my clients.
24 THE COURT: If you have a motion for
25 reconsideration, then you make it.
26 MR. CHATFIELD: Well, your Honor, if I may. I was
27 in court with Ms. Wakily when your Honor ordered the
28 hearings to the new judgement debtors off calendar, and

119. Page 28
1 said that she could move to reset it, which is why we're
2 here today because she has moved to reset.
3 MS. WAKILY: I'm not sure what you're talking
4 about. I was --
5 THE COURT: I have, for today, the order for
6 assignment of rights and order restraining judgement
7 debtors. Okay?
8 MR. HOFFMAN: That's properly on calendar today,
9 yes.
10 THE COURT: And I asked you for your comment on
11 that and you wanted to discuss these other things. And
12 I'm inclined to grant that motion if I sign that order.
13 Are you familiar with that order, sir?
14 MR. ADKISSON: Yes, I am, your Honor.
15 THE COURT: Does that answer most of your
16 questions?
17 MR. ADKISSON: Just to be clear for the record,
18 your Honor. So, I am authorized to act as a receiver on
19 behalf of these alter ego entities; is that correct?
20 MR. HOFFMAN: I would like to go through these
21 items as your Honor proposed.
22 THE COURT: Well, it seems to me that the order
23 for appointment of the receiver, of which I assume we
24 just printed out a copy in pink here, which I assume you
25 also have, identifies the second paragraph of these
26 various entities. And when there was a petition for
27 writ of supersedeas to prevent enforcement as against
28 these various entities, Court of Appeal granted them,

120. Page 29
1 and then a week or ten days later vacated it. And when
2 they vacated it that lifted the stay and the
3 perfection -- you know, and they haven't bonded it to
4 stay it, so I think it goes forward, sir. I think the
5 order, as I understood the order for appointment of
6 receiver was fairly clear on that. And I was careful
7 not to act on that order until the Court of Appeals had
8 lifted its stay.
9 So, I'm, you know, I'm inclined to grant
10 the motion here that was on calendar before me today.
11 MR. HOFFMAN: Your Honor, just for the sake of
12 clarity we're talking about two different orders. There
13 was -- the motions that are on calendar today have no
14 orders yet.
15 THE COURT: I have the proposed order for
16 assignment of rights and order restraining judgement
17 debtors on hearing today.
18 MR. HOFFMAN: Right. Their proposed orders today.
19 THE COURT: And what I am saying is that I'm
20 inclined to grant them.
21 MR. HOFFMAN: I understand that and I would like
22 to go through the objections. But my question was is
23 the court saying that the September 13th orders were
24 also meant to apply to my clients?
25 THE COURT: The September 13th order says what it
26 says. Paragraph 2 for the second -- it's unnumbered.
27 "It is ordered that judgement creditor, KPC's motion for
28 the appointment of the receiver to enforce their

121. Page 30
1 judgement against judgement debtor Stephen M. Gaggero,
2 Pacific Coast Management, Inc., 511 OFW, LP, Gingerbread
3 Court, LP, Malibu Broad Beach, LP, Marina Glen, LP,
4 Blu," B-l-u, "House, LLC, and Boardwalk Sunset, LLC,
5 Joseph Praske as trustee of the Giganin," G-i-g-a-n-i-n,
6 "Trust, Joseph Praske as trustee of the Arenzano Trust,"
7 A-r-e-n-z-a-n-o, "and Joseph Praske as trustee of the
8 Aquasanta," A-q-u-a-s-a-n-t-a "Foundation, collectively,
9 referred to as judgement debtors, in the amount of
10 $2,178,235.51, plus post-judgement interests and
11 allowable costs is granted." That's paragraph 2. Okay.
12 All right.
13 MR. HOFFMAN: We submitted written objections to
14 the number of proposed terms in the receivership order.
15 I don't know if the court has made rulings on those
16 objections.
17 THE COURT: I am -- I have reviewed the proposed
18 order and it seems that it's in appropriate form.
19 MR. HOFFMAN: Has the court had the opportunity to
20 review the objections we submitted?
21 THE COURT: The court has had the opportunity to
22 review -- we're not talking about the evidentiary
23 objections, we're talking about the objections served by
24 you on -- I have your opposition, is that what you're
25 eluding to, sir?
26 MR. HOFFMAN: There were several papers filed
27 concurrently with the opposition. One of them is called
28 objections of -- in the name of all of my clients --

122. Page 31
1 THE COURT: Yes.
2 MR. HOFFMAN: -- to proposed order for appointment
3 of receiver.
4 THE COURT: Yes, I do have it here, yes. And it's
5 boiler plate. Objection to number 1, this proposed
6 order seeks the receiver's powers right and obligations
7 not reasonably necessary to enforce the judgement. And
8 then that's an objection number 2, objection to number
9 3, objection to number 6, to number 7, to number 10, to
10 number 12, section 13, 14, 22. Yeah, I see that.
11 MR. HOFFMAN: Now, your Honor, the objections use
12 the same language repeatedly, and I don't like that very
13 much either. It was under time and pressure, but there
14 is substance as well, that is the opening of the
15 objections. There is more to it.
16 For example, on the first one we object to
17 the amount of the bond. A $10,000 bond for a
18 receivership over so many different entities on a
19 $2 million judgement. We submit the $10,000 was simply
20 too low.
21 THE COURT: It's too much?
22 MR. HOFFMAN: It's too low. That's the opposite
23 of what I'm saying, your Honor. And looking at some of
24 the other, like number 3, for example, the proposed
25 order asks the receiver to become an investigator and
26 not a collector of money. I don't understand the point
27 of that. There's a proposed term in here that says, "if
28 you look in any transfer the $10,000 or more over the

123. Page 32
1 past seven years." That's not number 3.
2 THE COURT: Where is the reference in your
3 objections to the amount of the bond?
4 MR. HOFFMAN: It's in objection number 1, your
5 Honor, because that was --
6 THE COURT: Okay, I have -- and where is the bond
7 amount set forth?
8 MR. HOFFMAN: In the first paragraph under
9 objections, your Honor.
10 THE COURT: Where in their proposed order, where
11 is the bond amount set forth? I'm looking for it.
12 MR. ADKISSON: Your Honor, the original bond
13 amount was set in the original appointing receiver, and
14 I have posted a $10,000 bond pursuant to your order,
15 which is pretty common in these cases.
16 THE COURT: Anything else?
17 MR. HOFFMAN: Well, yes, your honor.
18 THE COURT: Let's highlight any things of special
19 significance.
20 MR. HOFFMAN: On number 3. Among the
21 investigative provisions here is to obtain tax returns.
22 Tax returns are privileged information.
23 MS. WAKILY: Your Honor, the receiver doesn't have
24 to turn over those documents to KPC. The receiver
25 will -- once he steps into the shoes of the debtors,
26 will have access to that information and can make a
27 determination to this court as to the assets
28 available --

124. Page 33
1 THE COURT: As to the objection to number 3, I
2 don't see anything in number 3 that relates to tax
3 returns.
4 MR. HOFFMAN: In their proposed order, your Honor?
5 THE COURT: Are we talking about the order for
6 assignment of rights and order restraining judgement
7 debtors?
8 MR. HOFFMAN: No, your Honor, I apologize. I was
9 referring to the receivership order.
10 THE COURT: The receivership order was already
11 signed. There is no motion or application for
12 reconsideration of that before me today. I'm trying to
13 talk about the order of assignment of rights and order
14 restraining judgement debtors.
15 MS. WAKILY: Your Honor, we filed the motion as to
16 alter egos as a precaution. We didn't pursue the alter
17 egos debtor based on the previous orders, because we
18 weren't aware that we could. And we knew it didn't have
19 a chance to oppose it, so we've refiled the same
20 motions. The assignment order is identical. The
21 proposed order for receiver is -- there's additional
22 authority that we've added in there based on other
23 receivership orders.
24 THE COURT: I'm sorry, am I correct or incorrect
25 that the only order that I have from you, the only
26 proposed order for today, is this order for assignment
27 of rights?
28 MS. WAKILY: No, there's --

125. Page 34
1 THE COURT: What is the other order that I'm
2 supposed to have for you? Because I'm trying to -- I
3 have this huge stack of documents that I have been
4 attempting to respond to.
5 MS. WAKILY: The appointment of receiver is the
6 other one.
7 THE COURT: Well, where is -- do you have an order
8 that relates to that?
9 MS. WAKILY: Yes, let me give you a copy. It was
10 filed with the --
11 MR. HOFFMAN: I believe this is the receiver to
12 asset verification, your Honor, the fact that there was
13 this pending motion with a proposed order as well as the
14 order that had been received previously. I don't mean
15 to put words into the receiver's mouth, but -- I see the
16 receiver is agreeing with me?
17 MS. WAKILY: I have an extra copy of the proposed
18 order that was filed with the motion for today's
19 hearing. May I approach the bench to give you a copy?
20 THE COURT: Just a minute. I'm a little bit
21 confused now. I see various proofs of service here.
22 One of these is as to the notice of entry of protective
23 order.
24 MS. WAKILY: For protective order?
25 THE COURT: Yes.
26 MS. WAKILY: That's an exhibit to one of the
27 replies.
28 THE COURT: I see a notice of entry order for

126. Page 35
1 assignment of rights and for the restraining judgement
2 debtors.
3 MS. WAKILY: And those were to the September
4 orders.
5 THE COURT: Yes. Now, how are the orders intended
6 for today different in substance?
7 MS. WAKILY: The only one that's different is the
8 appointment of a receiver and that includes additional
9 language that I inserted after I reviewed a boiler
10 template receivership order from one of the individuals
11 nominated by Mr. Chatfield in that previous motion,
12 David Pasternak, and based on that I just inserted
13 additional authority that he had used in one of his
14 receivership orders.
15 And the proposed order for today's hearing
16 reflects that as to Mr. Gaggero the authority of the
17 receiver is going to be limited to what we had obtained
18 in September and as only the new authorities to the
19 alter ego debtors.
20 THE COURT: All right. Let me see yours.
21 MS. WAKILY: The one for today's hearing?
22 THE COURT: Whatever orders you have for today.
23 Now, is this order for assignment of rights and order
24 restraining judgement debtors that has the hearing date
25 for today. You want me to sign that; is that correct?
26 MS. WAKILY: Yes.
27 THE COURT: Is that different than the orders than
28 the court previously signed?

127. Page 36
1 MS. WAKILY: No, that one's identical. That one's
2 the same.
3 THE COURT: Well, why would I want to sign it
4 today?
5 MS. WAKILY: So that the alter ego debtors will
6 have an order as to this motion, because they didn't
7 have a chance to file an opposition to the previous
8 motion and it sounds like they're objecting to the
9 application of that order as to them. So, I want it to
10 be clear so that they don't object later as to whether
11 they had a right to oppose or due process issues
12 relating to the assignment order and the receivership.
13 THE COURT: How is this proposed order for the
14 appointment of receiver different than the one I
15 previously signed?
16 MS. WAKILY: It starts on page 6, line 4. It
17 says, "it is further ordered that the receiver will have
18 the following additional," and it's in italics, "powers
19 with respect to the judgement debtor," and then it lists
20 the alter ego debtors below that. So, paragraphs 22.
21 THE COURT: So, this should be an amended order?
22 Should this be captioned amended order?
23 MS. WAKILY: It could be, yes, as long as I don't
24 get an objection later.
25 THE COURT: Are you seeking -- does this supercede
26 or supplement or amend? What is it? Come on.
27 MS. WAKILY: It supercedes the previous one, yes.
28 Actually, your Honor, it will amend the previous one to

128. Page 37
1 reflect the alter ego debtors. I'm not sure if there's
2 much distinction.
3 THE COURT: Very briefly make your points. You
4 have the amount of the bond. The tax returns, correct?
5 MR. HOFFMAN: Those were objections to among the
6 first of the terms. If the court is saying that the
7 September 13th order was intended to address my clients,
8 then --
9 THE COURT: You are submitting an amended order
10 for payment of receiver. Is that what you are now
11 objecting to?
12 MR. HOFFMAN: Yes, your honor, that's what we
13 submitted the objections to was that proposed order.
14 THE COURT: Okay.
15 MR. HOFFMAN: So, I believe where we left off,
16 your Honor, was with the tax returns. That was on
17 number 3.
18 THE COURT: Now, why should we not include the tax
19 returns? I understand the general notion of privacy as
20 to tax returns, but this is a receiver. Why would a
21 receiver normally not have access to the tax returns of
22 the person or entity over which the receivership is
23 made?
24 MR. HOFFMAN: Because a receiver is not within the
25 privilege held by the taxpayer. It's not -- the
26 receiver is not entitled to attorney-client
27 communications because it's not within that privilege.
28 THE COURT: If you have -- if he was taking over a

129. Page 38
1 business are you suggesting that the receiver would not
2 be able to get tax returns from the business if the
3 receiver, if we appointed a receiver to take over a
4 business, are you suggesting that the receiver would not
5 have the ability to look at the tax returns?
6 MR. HOFFMAN: Yes.
7 THE COURT: For example, would the receivership
8 obligations include making sure that the taxes were paid
9 and the tax returns were filed? Of course they would,
10 if you have a receiver take over the business. Why -- I
11 do not understand why the receiver in that capacity
12 would not have it.
13 MR. HOFFMAN: I'm not aware of any authority that
14 says the privilege includes an exception for receivers.
15 THE COURT: But the receiver steps into the place
16 of management.
17 MR. HOFFMAN: By that logic, your Honor, the
18 receiver would also be able to see attorney-client
19 communications and that's also a privilege.
20 MS. WAKILY: They can.
21 THE COURT: I suppose it is conceivable that if
22 the privilege is held by an entity and the receiver
23 takes over the entity, they would. He steps into the
24 shoes.
25 MR. HOFFMAN: That's why we're objecting, your
26 Honor, because that's improper. The receiver
27 is there --
28 THE COURT: Is there authority cited?

130. Page 39
1 MR. HOFFMAN: That's authority cited in the
2 written objections, your Honor.
3 THE COURT: I know, there is the -- I saw that
4 authority, but I asked you case authority.
5 MR. HOFFMAN: There is case authority cited in
6 there, your Honor, and it's been a couple of weeks. I
7 don't remember it in enough detail to discuss it in more
8 detail than it is here.
9 THE COURT: What are your other points? Very
10 briefly, let's do just the high points.
11 MR. HOFFMAN: Well, not going in any particular
12 order, your Honor.
13 THE COURT: How about the order as we go down?
14 MR. HOFFMAN: All right. Please bear with me,
15 your Honor, as I try to pick out the ones that are most
16 pertinent.
17 On number 10, your Honor, access to records
18 in the possession of third parties. Well, let me skip
19 over that, your Honor, I'm not sure that's among the
20 most important parts.
21 THE COURT: Well, what that says is that the
22 receiver can go to a bank and get bank records, among
23 other things.
24 MR. HOFFMAN: To that extent I don't have a
25 problem with it, your Honor. If there's going to be a
26 receivership, I think that's proper. Number 14 is one
27 that I eluded to earlier. It's about the investigation
28 of transfers of more than $10,000 over the course of the

131. Page 40
1 past seven years.
2 It's hard to see any legitimate purpose for
3 that, your Honor. I mean, even if they're looking into
4 possible fraudulent transfers, there's a statute of
5 limitations on those and it's three years.
6 MS. WAKILY: It's seven years, Civil Code
7 3439.09(C).
8 MR. HOFFMAN: I'm concerned about the language of
9 number 22, your Honor, because it authorizes the
10 receiver basically to run the businesses but does not
11 specify that he needs to account for my clients'
12 interests as well as for the interest of collecting the
13 judgement. I'm concerned that it's not clear that he
14 needs to balance my clients' need to continue existing
15 with the need to pay the amount of the judgement.
16 THE COURT: All right. I understand your point.
17 Anything else?
18 MS. WAKILY: Your Honor, with number 22 we'll
19 agree to get rid of the last sentence eluding to the
20 bankruptcy, "no one other that the receiver that's
21 authorized to file any volunteer bankruptcy petition on
22 behalf of the alter egos."
23 THE COURT: They haven't asked for that, have
24 they?
25 MS. WAKILY: They referenced it in their
26 opposition. I looked at it closely.
27 THE COURT: Why should I get rid of it? I saw
28 that and I said --

132. Page 41
1 MR. HOFFMAN: Court has no authority to do that,
2 your Honor.
3 THE COURT: What do you mean? If the
4 receivership takes over the business, let's assume an
5 ordinary business, when the receiver takes over are you
6 suggesting that an officer who has been displaced would
7 be able to file bankruptcy on behalf of the entity and
8 cut the receiver's legs off at the ankles?
9 MR. HOFFMAN: Yes, that's what the case law cited
10 in our opposition says. Bankruptcy codes exists
11 precisely so that debtors would have access to the
12 bankruptcy courts. There's abundant case law that state
13 courts have absolutely no authority to limit that
14 access.
15 MR. ADKISSON: Your Honor, since I have some
16 familiarity with this issue in the another matter, the
17 bankruptcy code also provides that once a receiver is
18 appointed that a party to whom the receiver has been
19 appointed is prohibited from filing bankruptcy for some
20 period of time. I don't remember if it's 120 days or
21 six months but it's in the Bankruptcy Code. So, what
22 can't happen is that the court can't appoint a receiver
23 and then somebody files bankruptcy the next day to get
24 rid of the receiver. They can after some period of
25 time, but they can't do it immediately under the
26 Bankruptcy Code.
27 MR. HOFFMAN: I don't know that we need to be
28 arguing about this, your Honor, because counsel for KPC

133. Page 42
1 has stipulated that we can eliminate that provision.
2 MS. WAKILY: Just the last sentence.
3 MR. HOFFMAN: That's the stipulation is as just to
4 the last sentence in paragraph 22.
5 MS. WAKILY: But we're not saying that the
6 receiver cannot file bankruptcy. We're just saying that
7 he doesn't have the sole power to file bankruptcy.
8 MR. HOFFMAN: That's how I understood what counsel
9 was saying, your Honor.
10 THE COURT: What else?
11 MR. HOFFMAN: Number 25, your Honor. Authorizing
12 the receiver not only to read all of our mail, but to
13 have it redirected someplace else. It doesn't even
14 distinguish between particular types of mail. If
15 Mr. Praske gets a birthday card it will wind up in the
16 receiver's mailbox.
17 THE COURT: And which of these entities would be
18 receiving a birthday card? Mr. Praske? Why is
19 Mr. Praske getting a birthday card at the trust?
20 MR. HOFFMAN: Business contacts send personal
21 cards to people at their business addresses, your Honor.
22 I get personal cards at my office instead of my home
23 from people who know me professionally.
24 MS. WAKILY: Number 25 is limited to mail
25 addressed to the alter ego judgement debtors and the
26 entities, not personal mail.
27 THE COURT: Well, okay. Next point.
28 MR. HOFFMAN: On number 23, I know we're backing

134. Page 43
1 up just a bit here, purports to give the receiver
2 authority over assets that are located outside of
3 California. It's also kind of vague about what other
4 data he's referring to.
5 THE COURT: All right. I understand your
6 statement. Go ahead.
7 MR. HOFFMAN: 27.
8 THE COURT: Are there are assets located outside
9 of California, sir?
10 MR. HOFFMAN: I don't know all of that, your
11 Honor, but --
12 THE COURT: Is that a purely theoretical concern?
13 MR. HOFFMAN: Well, the trust -- it's not purely
14 theoretical, but I don't know have a specific breakdown
15 of where my clients assets are off the top of my head.
16 THE COURT: Go ahead. Next.
17 MR. HOFFMAN: I do have some information here that
18 the trusts themselves, at least one of the trust is
19 foreign-based.
20 THE COURT: Which one?
21 MS. WAKILY: Arenzano.
22 THE COURT: Okay.
23 MR. HOFFMAN: And I don't know about the other two
24 offhand, your Honor, but to the extent that they're
25 foreign-based I've offered authority that the court
26 could give to the receiver.
27 THE COURT: Okay. I hear you. We need to bring
28 this to a close. Is there anything else?

135. Page 44
1 MR. HOFFMAN: We object to a lot it to the extent
2 that's in the papers, your Honor, since I only have
3 limited time to pick up highlights, I don't know what
4 else to pick. But if you can give me just one more
5 minute --
6 THE COURT: It will stand submitted. Thank you.
7 MR. CHATFIELD: Your Honor, may I seek
8 clarification?
9 THE COURT: On what?
10 MR. CHATFIELD: This order that you're signing
11 today, does this order apply to Mr. Gaggero as well as
12 to the new judgement?
13 THE COURT: Have you looked at the order? Are you
14 familiar with the text of the order?
15 MR. CHATFIELD: Yes.
16 THE COURT: What does it say about Mr. Gaggero?
17 MR. CHATFIELD: It refers to --
18 THE COURT: Are you asking me to give you an
19 advisory opinion or legal advice?
20 MR. HOFFMAN: No, what I'm saying is that it
21 appears that you're replacing the prior order with a new
22 order, and this one purports to apply to Mr. Gaggero and
23 I haven't had an opportunity to raise any issues,
24 whatsoever, relating to the order.
25 MS. WAKILY: Your Honor, this only amends the two
26 previous orders to reflect the alter ego debtors'
27 involvement in it. It does not affect --
28 THE COURT: I think there's orders that relate to

136. Page 45
1 Mr. Gaggero already in effect, are there not?
2 MS. WAKILY: Correct, these do not --
3 THE COURT: Matter stand submitted. Thank you.
4 (END TIME: 11:26 a.m.)
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

137. Page 46
1 STATE OF CALIFORNIA )
2 )
3 COUNTY OF LOS ANGELES )
4
5
6 I, YOLANDA HUFF, Certified Shorthand Reporter for
7 the State of California, County of Los Angeles, do
8 hereby certify:
9 That I was present at the time of the above
10 proceedings;
11 That I took down in machine shorthand notes all
12 proceedings had and testimony given;
13 That I thereafter transcribed said shorthand
14 notes with the aid of a computer;
15 That the above and foregoing is a full, true, and
16 correct transcription of said shorthand notes, and a
17 full, true, and correct transcript of all proceedings
18 had and testimony taken;
19 That I am not a party to the action or related to
20 a party or counsel;
21 That I have no financial or other interest in the
22 outcome of the action.
23 Dated: OCTOBER 12, 2012
24
25 _______________________________
26 YOLANDA HUFF, CSR NO. 12570
27
28

138. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
STEPHEN M. GAGGERO, )
)
PLAINTIFF, )
)
VS. ) CASE NO.: BC286925
) RECEIVER'S EX PARTE
KNAPP, PETERSEN & CLARKE; ) MOTION
STEPHEN RAY GARCIA; STEPHEN M.)
HARRIS; ANDRE JARDINI; AND )
DOES 1 THROUGH 50, INCLUSIVE, )
)
DEFENDANTS. )
______________________________)
REPORTER'S TRANSCRIPT OF PROCEEDINGS
NOVEMBER 5, 2012
8:30 A.M.
111 NORTH HILL STREET, DEPARTMENT 24
LOS ANGELES, CALIFORNIA
AUDREY V. LEHMAN, CSR NUMBER 12738

139. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
2
HON. ROBERT L. HESS, PRESIDING
APPEARANCES OF COUNSEL:
FOR THE PLAINTIFF:
LAW OFFICES OF EDWARD A. HOFFMAN
BY: EDWARD A. HOFFMAN, ESQ.
12301 WILSHIRE BOULEVARD
SUITE 500
LOS ANGELES, CALIFORNIA 90025
(310) 442-3600
WESTLAKE LAW GROUP
BY: DAVID BLAKE CHATFIELD, ESQ.
2625 TOWNSGATE ROAD
SUITE 330
WESTLAKE VILLAGE, CALIFORNIA 91361
(805) 267-1220
FOR THE DEFENDANTS:
MILLER LLP
BY: AUSTA WAKILY, ESQ
CITY NATIONAL PLAZA
515 SOUTH FLOWER STREET
SUITE 2150
LOS ANGELES, CALIFORNIA 90071
(213) 493-6400
THE RECEIVER:
JAY D. ADKISSON
COURT APPOINTED RECEIVER
100 BAYVIEW CIRCLE
SUITE 210
NEWPORT BEACH, CALIFORNIA 92660
(949) 200-7773
AUDREY V. LEHMAN CSR #12738
OFFICIAL REPORTER

140. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
3
LOS ANGELES, CALIFORNIA, THURSDAY
NOVEMBER 5, 2012
8:30 A.M.
THE COURT: ON BEHALF OF MR. GAGGERO, THIS
IS AN APPLICATION BY THE RECEIVER FOR A REQUEST FOR
INSTRUCTIONS AND AUTHORIZATION TO DO CERTAIN THINGS,
THAT SUPPOSEDLY WOULD MOVE TOWARDS PAYING OFF THIS DEBT.
DO YOU HAVE A POSITION WITH RESPECT TO
WHETHER I SHOULD APPROVE SOME OR ALL OF THESE THINGS?
MR. HOFFMAN: YOUR, HONOR EDWARD HOFFMAN, ON
BEHALF OF THE ADDITIONAL JUDGMENT DEBTORS. AND YES,
YOUR HONOR, WE ASK THAT THE COURT APPROVE THAT.
THE COURT: ON BEHALF OF MR. GAGGERO.
MR. CHATFIELD: WE, WE APPROVE THIS.
THE COURT: HAVE YOU LOOKED AT THE FORM OF
THE ORDER? THIS SAYS PROPOSED BY DEBTORS; IS THAT THE
ONE?
MR. ADKISSON: YES, YOUR HONOR, THE ONE THAT
SAYS "PROPOSED ORDER" IS THE ONE BY DEBTORS AND THE ONE
THAT COUNSEL SENT ME YESTERDAY WHEN WE WERE TRYING TO
WORK THROUGH THIS MATTER.
THE COURT: IS THERE SOMETHING ELSE?
MR. ADKISSON: THERE IS NOT ANOTHER PROPOSED
ORDER. THAT IS THE ONLY PROPOSED ORDER, BUT I BELIEVE
COUNSEL FOR THE KNAPP, PETERSEN IN THIS CASE HAVE SOME
ISSUES REGARDING THE ORDER.
THE COURT: LET'S SEE WHAT THOSE MIGHT BE.

141. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
4
MR. ADKISSON: THANK YOU, YOUR HONOR.
THE COURT: ON BEHALF OF KNAPP, PETERSEN, IS
TO EASIEST TO GO DOWN THE PROPOSED ORDER PARAGRAPH BY
PARAGRAPH OR DO YOU WANT TO START WITH SOME CONCEPTUAL
ISSUE?
MS. WAKILY: THE ONLY ISSUE WE HAVE, YOUR
HONOR IS, IS -- WE DON'T HAVE A PROBLEM WITH TAKING OUT
A LOAN TO PAY OFF THE JUDGMENT -- THE ISSUE IS THAT THE
JUDGEMENT DEBTOR ARE ASKING THAT MR. ADKISSON DELEGATE
ALL AUTHORITY TO HIM TO COMPLETE THE TRANSACTION; WE
WOULD RATHER THAT THE TRANSACTION BE COMPLETED IN
COMPLIANCE WITH THE COURT'S ORDER AND PRESUMED TO THE
RECEIVERSHIP -- UNDER THIS COURT'S SUPERVISION.
MR. HOFFMAN: IF I MAY. I BELIEVE COUNSEL
IS MISTAKEN ABOUT WHAT WE ARE ASKING FOR. COUNSEL AND I
SPOKE BEFORE THE COURT TOOK THE BENCH THIS MORNING --
AND I ONLY REALIZED AFTERWARDS THAT WERE TALKING ACROSS
EACH OTHER -- WE ARE NOT FOR ANY OF THE RECEIVER'S
DECISION MAKING AUTHORITIES. WE ARE ASKING THAT ONCE
THE RECEIVER HAS PAPERS THAT HE SATISFIED WITH THAT THE
SIGNATURES MAY BE MR. ^ CONTRAST KEY'S RATHER THAN THE
RECEIVERS. WE ARE NOT ASKING THE RECEIVER TO YIELD ANY
OF THE DISCRETION HE HAS UNDER THE COURT'S ORDERS. IT
IS SIMPLY JUST WHOSE NAME FILLS THE SIGNATURE LINES.
THE REASON FOR THAT --
THE COURT: JUST A SECOND.
KNAPP, PETERSEN -- I WILL CALL YOU CREDITOR

142. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5
--
MS. WAKILY: ALL RIGHT.
THE COURT: -- RATHER THAN ALL THE NAMES.
MS. WAKILY: YES.
THE COURT: PARAGRAPH ONE OF THE PROPOSED
ORDER SAYS THE RECEIVER IS GRANTED AUTHORITY TO APPROVE
AND FACILITATE A FINANCING TRANSACTION. ARRANGED BY
FOUR OTHER JUDGEMENT DEBTORS HEREIN, WHEREBY FOUR
JUDGMENT DEBTORS WILL BORROW AGAINST THE EQUITY IN THEIR
REAL PROPERTIES TO PAY EXISTING LOANS AGAINST THOSE
PROPERTIES AND CONVERT EQUITY IN TO CASH TO SATISFY THE
JUDGMENT IN THIS MATTER IN FULL.
AND THEN PARAGRAPH TWO, THE RECEIVER IS
GRANTED AUTHORITY TO AUTHORIZE A REPRESENTATIVE OF THE
FOUR JUDGEMENT DEBTORS, JOSEPH ^ CONTRAST KEY, TO SIGN
ALL DOCUMENTS REQUIRED TO EFFECTUATE THIS FINANCING
TRANSACTION BY THE FOUR JUDGMENT DEBTORS. NOW IT SEEMS
TO ME THAT THE TERMS OF THE DEAL HAVE TO BE APPROVED BY
THE RECEIVER UNDER THIS?
MS. WAKILY: RIGHT. BUT THE JUDGMENT
DEBTORS HAVE NOT COMPLIED WITH ANY PART OF THE COURT'S
ORDER TO DATE. THEY HAVE NOT PRODUCED THE FINANCIAL
DOCUMENTS. THEY HAVE NOT EXPLAINED THE LOAN TERMS --
THE COURT: JUST A MINUTE.
MS. WAKILY: MR. ADKISSON HAS --
THE COURT: JUST A MINUTE. AS I UNDERSTAND
WHAT MR. ADKISSON IS ASKING FOR IS AUTHORITY TO APPROACH
THIS IN THIS PARTICULAR FASHION --

143. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
6
MS. WAKILY: RIGHT.
THE COURT: -- IN THIS PARTICULAR FASHION
WITH THESE FOUR DEBTORS -- THE ADDITIONAL DEBTORS -- WHO
WILL BE ALLOWED TO RAISE CASH THROUGH REFINANCING ON
EXISTING REAL PROPERTIES WHERE THE REFINANCING WILL
APPARENTLY REQUIRE THE PAYOFF OF SENIOR INDEBTEDNESS,
AND THEN THE EXCESS WILL BE AVAILABLE FOR THE PAYOFF OF
THE DEBTS. I UNDERSTAND THIS TO BE THE APPROVAL OF AN
APPROACH THAT NO SPECIFIC TRANSACTION HAS YET BEEN
CONTEMPLATED -- EXCUSE ME, NO SPECIFIC TRANSACTION AS OF
YET HAS BEEN DOCUMENTED. APPARENTLY THERE IS SOME
CONTEMPLATION OF WHAT IT IS.
MR. ADKISSON: ACTUALLY, YOUR HONOR, I
BELIEVE WE ARE RIGHT UP TO THE POINT OF IMPACT WHERE
THERE IS A TRANSACTION. THERE IS A QUESTION -- THERE IS
SORT OF THIS FINAL QUESTION AS WHO IS GOING TO SIGN THE
LOAN DOCUMENTS AND THE DEED, BUT OTHER THAN THAT, I
BELIEVE WE ARE RIGHT AT THE POINT OF HAVING A
TRANSACTION THAT LITERALLY -- IF THE COURT RULES -- CAN
BE SIGNED OFF ON, AS I UNDERSTAND IT, THIS AFTERNOON.
WE ARE THAT CLOSE. WE ARE AT THE POINT OF IMPACT ON
THAT TRANSACTION.
THE COURT: NOW WHAT ABOUT AN OPPORTUNITY
FOR THE JUDGMENT CREDITOR TO REVIEW THAT STUFF?
MR. ADKISSON: IT IS FINE WITH THE RECEIVER.
THE DOCUMENTS RELATED TO THE LOAN TRANSACTION WERE
TRANSMITTED TO ME BY DEBTOR'S COUNSEL. THEY WERE
TRANSMITTED "CONFIDENTIAL" FOR YOUR EYES ONLY. I HAVE

144. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
7
NOT SHARED THOSE DOCUMENTS WITH CREDITOR'S COUNSEL. I
DO NOT HAVE ANY OBJECTION TO SHARING THEM WITH
CREDITOR'S COUNSEL. IF I WERE CREDITOR'S COUNSEL, I
WOULD WANT TO SEE THEM, BUT THAT IS NOT RECEIVER'S CALL;
THAT IS FOR THE COURT.
THE COURT: I UNDERSTAND. RECOGNIZING THE
RESPONSIBILITY OF THE RECEIVER, IS THIS STUFF THAT
YOU'VE HAD ENOUGH TIME TO REVIEW TO SEE WHAT -- SEE IF
EVERYTHING IS COPACETIC? ARE THERE LOOPHOLES? ARE
THERE CONDITIONS IN HERE THAT MIGHT RESULT IN
FRUSTRATION OF THE EXTENSIBLE PURPOSE? HAVE YOU HAD THE
OPPORTUNITY TO GET ANY ADDITIONAL -- LEGAL OR OTHER
PROFESSIONAL ADVICE -- THAT YOU MIGHT NEED TO IN THE
PROCESS OF REVIEWING AND APPROVING THIS?
MR. ADKISSON: TO IT ANSWER THE COURT'S
QUESTION, I WAS NOT ADVISED OF THIS TRANSACTION UNTIL
LAST THURSDAY -- THURSDAY/FRIDAY I HAD A BAD COLD, BUT I
REVIEWED IT -- IT APPEARS TO BE AN ORDINARY FINANCING
TRANSACTION. THERE DOESN'T APPEAR TO E ANYTHING
PARTICULARLY SQUIRRELY ABOUT IT --
THE COURT: PARTICULARLY.
MR. ADKISSON: WELL, EVERY TRANSACTION HAS
ITS SQUIRRELINESS ABOUT IT. IT APPEARS, FROM WHAT I CAN
TELL, AND I HAVE SPOKEN WITH THE ESCROW COMPANY, THAT
THE MONEY WILL BE PAID INTO AN ESCROW -- HERE IS WHERE
IT GETS A LITTLE BIT DIFFERENT THAN YOUR ORDINARY
RECEIVERSHIP TRANSACTION. OF COURSE THE PRIMARY LENDERS
WILL BE PAID OUT OF ESCROW AND THE CREDITORS WILL BE

145. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
8
PAID OUT OF ESCROW AND THE RECEIVERS WILL BE PAID OUT OF
ESCROW. NORMALLY WHAT HAPPENS IN A RECEIVERSHIP IS THE
PRIORITY PEOPLE ARE PAID OFF; THE CREDITOR RELEASES
THEIR LIENS; THE RECEIVER TAKES IN MONEY AND RECEIVER
PAYS OFF THE CREDITOR, ACCOUNTS FOR THE MONEY, AND GIVES
WHATEVER IS LEFT OVER BACK TO THE DEBTOR IN THE NORMAL
COURSE; THAT'S HOW A RECEIVERSHIP GENERALLY WORKS. THIS
IS A LITTLE BIT DIFFERENT BECAUSE THERE IS GOING TO BE
THIS ESCROW WHERE EVERYTHING IS GOING TO GET PAID OUT OF
ESCROW AND EVERYTHING IS GO LIKE THAT -- QUICKLY. IT
APPEARS TO BE AN ORDINARY TRANSACTION. I THINK COUNSEL
FOR CREDITOR OUGHT TO BE ABLE TO LOOK AT THE DOCUMENTS
TO MAKE SURE THAT THEY DON'T SEE ANYTHING FUNNY GOING ON
AND ADVISE ME IF THEY THINK THEY DO. IT DOESN'T APPEAR,
AS I LOOK AT IT, DOESN'T APPEAR TO BE A TRANSACTION THAT
REQUIRES ANY EXPERTISE; I DON'T THINK I NEED TO GET A
LAWYER. I THINK IT IS FRANKLY BREAD AND BUTTER THAT
WILL TAKE CARE OF THE JUDGMENT IN THIS CASE.
THE COURT: ON BEHALF OF THE VARIOUS
DEBTORS, IS THERE A PROBLEM WITH LETTING THE CREDITOR
SEE THE PAPER WORK?
MR. HOFFMAN: THERE IS, YOUR HONOR. THE
RECEIVERSHIP IS A MECHANISM TO GET THEM PAID. IT IS NOT
A DISCOVERY MECHANISM --
THE COURT: MY QUESTION IS -- NOT AS A
DISCOVERY TOOL, BUT AS A PRACTICAL TOOL, IF YOU WILL, AS
A SECOND LOOK AS TO THE TRANSACTION HERE OF THIS
PARTICULAR IT TRANSACTION -- IT IS BEING DONE ON SHORT

146. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
9
NOTICE AND IT SEEMS TO ME I WOULD LIKE TO HAVE, BEFORE I
PUT THE RECEIVER IN THE POSITION, I WOULD LIKE TO HAVE A
COMFORT LEVEL THAT THIS IS APPROPRIATE FOR THE RECEIVER
TO DO. THERE IS ALSO THE ISSUE OF THE FACT THAT HE IS
GOING TO GET MONEY. HE IS GOING TO BE PAID THE
RECEIVER'S FEES APPARENTLY WITHOUT ANY COURT OVERSIGHT.
I THINK HE IS SUPPOSED TO, IN THE ORDINARY COURSE -- I
DO NOT DO THIS THAT OFTEN, BUT MY RECOLLECTION IN
GENERAL TERMS IS THAT THE RECEIVER SUBMITS A REPORT AND
BILLS AND THINGS TO THE COURT AND THINGS GET APPROVED.
THE PROPOSED TRANSACTION SEEKS TO SHORTCUT THIS STUFF.
LET ME LEAVE THAT OBSERVATION DANGLING.
DO I UNDERSTAND THAT THERE ARE ONE OR MORE
APPEALS PENDING IN THE COURT'S ORDERS?
MR. HOFFMAN: THERE IS AN APPEAL PENDING
FORM THE ORDER NAMING THE ADDITIONAL JUDGMENT DEBTORS AS
ALTER EGOS AND THE AMENDED JUDGEMENT IN FAULT, YES.
THE COURT: QUESTION NO. 1: IS THERE A
STAY?
MR. HOFFMAN: NO, THERE IS NOT A STAY.
THAT'S WHY WE ARE TRYING TO PAY THE JUDGMENT.
THE COURT: QUESTION NO. 2: IF THIS IS
DONE, THIS IS GOING TO MOOT THE APPEAL?
MR. HOFFMAN: THAT IS NOT CORRECT, YOUR
HONOR.
THE COURT: WHY WOULD IT NOT MOOT THE APPEAL
IF YOU VOLUNTARILY ENTER INTO A TRANSACTION WITH THE
COURT'S APPROVAL TO PAY THE JUDGMENT THROUGH THIS

147. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
10
MECHANISM? I UNDERSTAND THAT -- I HAVE THE IMPRESSION
THAT IT IS THE ADDITIONAL JUDGMENT DEBTORS WHO ARE
PRINCIPALLY CONCERNED IN THIS -- THE NEWLY NAMED ONES?
MR. HOFFMAN: YES. CORRECT, YOUR HONOR.
THE COURT: WHAT THEN?
MR. HOFFMAN: THERE IS QUITE AT A BIT OF
CASE LAW, YOUR HONOR, WHICH WE CITED IN THE PAPERS THE
LAST TIME WE WERE HERE ON THE MOTION TO APPOINT THE
RECEIVER -- SORRY, I DO NOT THINK I HAVE IT WITH ME
NOW -- IT DOES MOOT AN APPEAL TO PAY A JUDGEMENT
VOLUNTARILY. BUT "VOLUNTARILY" MEAN ABSENT COMPULSION
OF AN EFFORT TO EXECUTE ON THE JUDGMENT. IN MY OPINION
AS A CERTIFIED APPELLATE SPECIALIST, YOUR HONOR, THE
PRESENCE OF RECEIVERSHIP PLUS THE ABSTRACTS OF JUDGMENTS
THAT THE CREDITORS FILE CONSTITUTE SUFFICIENT ACTIVITY
ON THEIR PART TO MAKE THIS AN A NON VOLUNTARY
TRANSACTION. IT IS A TRANSACTION WE ARE WILLING TO
CONSUMMATE BECAUSE WE REALLY DON'T HAVE A CHOICE. IN MY
PROFESSIONAL OPINION, IT WILL NOT WAIVE THE APPEAL.
THE COURT: NOTWITHSTANDING THE ABILITY TO
BOND AROUND IT?
MR. HOFFMAN: YOUR HONOR, WE DO NOT HAVE THE
ABILITY TO BOND AROUND IT, IF WE HAD THAT ABILITY, WE
WOULD HAVE DONE IT.
MS. WAKILY: I DON'T KNOW THAT THEY DON'T
HAVE THE ABILITY TO BE BONDED.
THE COURT: I DON'T KNOW ONE WAY OR THE
OTHER.

148. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
11
MR. HOFFMAN: THE CASE LAW DOES NOT REQUIRE
THAT A PARTY WHO COULD BOND POST A BOND POST A BOND; IT
DOES NOT SAY THAT IS A NECESSARY STEP IN ORDER TO
PRESERVE THESE RIGHTS THAT I AM TALKING ABOUT. AS LONG
AS THE JUDGMENT CREDITOR HAS STARTED ENFORCING THE
JUDGMENT, THAT IS SUFFICIENT TO MAKE SURE THAT PAYMENT
OF THE JUDGMENT DOES NOT WAIVE THE APPEAL.
THE COURT: HAS ANYBODY LOOKED AT WHETHER
THIS ARRANGEMENT FOR PAYING THE RECEIVER IN THIS FASHION
WITHOUT COURT APPROVAL? IS IT LAWFUL?
MR. HOFFMAN: YOUR HONOR, THE PROPOSED ORDER
DOES SAY THAT THE RECEIVER WILL STILL HAVE TO FILE HIS
REPORTS AND HIS MOTION IF IT TURNS OUT THAT THERE IS
SOMETHING IN HIS BILL THAT SHOULDN'T BE THERE, AND THEN
IT CAN COME OUT OF HIS BOND. I DON'T THINK WE ARE
TRYING TO BYPASS PROCEDURE, WE ARE JUST MAKING SURE IT
ISN'T AN ARTIFICIAL ROADBLOCK BECAUSE MY CLIENTS ARE
BLEEDING MONEY FROM THE INTEREST, AND THEY WANT TO GET
IT PAID.
THE COURT: I UNDERSTAND THAT RECEIVERSHIPS
CAN BE VERY COSTLY.
MR. HOFFMAN: RIGHT.
THE COURT: I UNDERSTAND THE IMPEDANCE THAT
YOU ARE SUGGESTING.
LET ME ASK YOU THIS. I AM NOT LOOKING AT
CREDITORS' REVIEW OF THINGS AS A DISCOVERY ISSUE. IS
THERE A PROBLEM WITH LETTING THE CREDITOR SEE THE
TRANSACTIONAL DOCUMENTS IN ORDER TO EVALUATE THIS AND

149. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
12
MAKE AN OBJECTION IF THEY HAVE ONE? IF THEY SHOULD HAVE
ONE WITHIN A SHORT BUT REASONABLE PERIOD OF TIME?
MR. HOFFMAN: THAT RAISES TWO CONCERNS FOR
ME, YOUR HONOR. I HOPE THE COURT WILL BEAR WITH ME
WHILE I EXPLAIN WHAT THEY ARE. FIRST, WE BELIEVE THIS
LOAN IS FRAGILE. IT IS NOT FROM A BANK, IT IS FROM A
COMPANY THAT ORGANIZES INVESTORS TO GET BEHIND A LOAN.
THE MORE COURT ACTIVITY THEY SEE, THE MORE SKIDDISH THEY
MAY BECOME. WE ARE CONCERNED THAT THIS COULD CAUSE
PROBLEMS -- WE ARE CONCERNED THIS MAY ALREADY BE CAUSING
PROBLEMS BUT THIS WILL MAKE IT WORK.
THE SECOND CONCERN I HAVE, IS THERE IS
ANOTHER CASE PENDING BETWEEN MR. GAGGERO AND JUDGEMENT
CREDITORS. I WORRY THAT THE JUDGEMENT CREDITORS WILL --
THE COURT: WHAT IS THAT?
MR. HOFFMAN: ANOTHER ACTION MS. WAKILY
REFERS TO IN HER DECLARATION. I AM NOT PART OF IT
BECAUSE MY CLIENTS ARE NOT PART OF IT. WHAT I FEAR,
WHAT THEY WILL TRY TO DO IS TRY TO FIND A WAY TO USE
THIS MATERIAL TO SPIN IT IN SOME WAY THAT BRINGS MY
CLIENTS IN TO THAT CASE AS WELL; THAT IS MY OTHER
CONCERN.
THE COURT: DO YOU HAVE A DOG IN THAT FIGHT?
I DON'T THINK YOU DO.
MR. HOFFMAN: NOT AT THE MOMENT. BUT IF
THEY COME AFTER MY CLIENTS THE WAY THEY DID IN THIS
CASE, IT WILL BE A SIGNIFICANT IMPACT ON THEM.
THE COURT: I DON'T SEE ANYTHING IN THESE

150. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
13
PAPERS --
MS. WAKILY: IT IS A MALPRACTICE LAWSUIT
THAT MR. GAGGERO FILED AGAINST KPC --
THE COURT: IS THAT ARISING OUT OF --
MR. WAKILY: -- EURO LAWSUIT --
THE COURT: YEAH.
MS. WAKILY: -- SO THE ALTER EGOS HAVE NO
INVOLVEMENT IN THAT LAWSUIT, AND I DON'T SEE HOW THE
FINANCIAL DOCUMENTS WOULD DRAG THEM INTO IT.
THE COURT: I AM DEALING WITH THE
RECEIVERSHIP. IS IT A DEAL BREAKER TO LET THEM SEE THE
DOCUMENTS HEREWITH RESPECT TO THIS TRANSACTION?
MR. HOFFMAN: MAY I HAVE A FEW MOMENTS TO
CONSULT WITH MY CLIENT ON THAT?
THE COURT: YES.
MR. HOFFMAN: I DON'T WANT TO SAY IT IS A
DEAL BREAKER AND THEN FIND OUT THAT I SAID THAT
UNNECESSARILY.
THE COURT: YOU'RE WELCOME TO CALL --
MR. HOFFMAN: MAY I STEP IN TO THE JURY ROOM
IF THERE IS A PHONE SIGNAL THERE.
THE COURT: YES. AND I WILL BRIEFLY TAKE
THE OTHER EX PARTE.
(OFF THE RECORD.)
(PROCEEDING IN RECESS.)

151. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
14
THE COURT: BACK ON THE RECORD IN GAGGERO.
MR. HOFFMAN: YOUR HONOR, WHAT WE ARE
PREPARED TO DO, YOUR HONOR, I HAVE THE DOCUMENTS WITH
ME. WE CAN SHOW THEM TO THE COURT FOR AN IN CAMERA
INSPECTION; I DON'T HAVE A PROBLEM WITH THAT. MY
CONCERN IS THAT --
THE COURT: I AM NOT SURE THAT I HAVE THE
EXPERTISE TO LOOK AT THAT AND SEE WHERE THE SQUIRRELS
LIVE. I MAY TO BORROW A MODIFIED VERSION OF THE
RECEIVER'S DISCRETION.
MR. HOFFMAN: MY CONCERN IS THAT SOMEHOW KPC
IS GOING TO USE THIS OPPORTUNITY TO LOOK AT THE
DOCUMENTS TO CAUSE PROBLEMS WITH THE LOAN. I DON'T
UNDERSTAND -- IF I MAY, YOUR HONOR -- I DON'T UNDERSTAND
WHY WE ARE FIGHTING ABOUT THIS? WE ARE HERE SAYING
PLEASE TAKE OUR MONEY. WE HAVE THIS ALL WORKED OUT.
THE MONEY IS GOING TO BE PAID. IT WON'T EVEN GO THROUGH
OUR HANDS; IT WILL GO DIRECTLY TO THEM. WE HAVE NO
OPPORTUNITY TO MESS THEM UP OR CHEAT THEM. THIS IS
SOMETHING THAT IS EXACTLY WHAT THE JUDGMENT REQUIRES OF
IT. IT IS WHAT THE RECEIVERSHIP IS SUPPOSED TO MAKE
SURE HAPPENS. WE ARE TRYING TO DO IT, AND THEY ARE
SAYING, NO, NO, NO DON'T DO IT; WE WANT MORE -- NOT
NECESSARILY MORE MONEY -- BUT MORE PROCEDURAL HURDLES.
THE COURT: I DON'T THINK SO. I AM AWARE
THAT KNAPP, PETERSEN HAS DECLINED TO BE DISCOURAGED IN
THEIR ATTEMPTS TO RECOVER THESE COSTS AND THINGS FROM
MR. GAGGERO. BUT MY OPERATING HYPOTHESIS IS THAT THE

152. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
15
OVERRIDING INTEREST -- VISA VIE THIS CASE -- IS TO
COLLECT THE MONEY. ENLIGHTENED SELF-INTEREST TO THAT
END WOULD SEEM TO MILITATE AGAINST DOING ANYTHING TO
SABOTAGE THE DEAL. THE PROPOSED APPROACH HERE IS UNIQUE
IN MY LIMITED EXPERIENCE. WHILE THE RECEIVER HASN'T
FOUND ANYTHING PROBLEMATIC ABOUT THIS, HIS TIME FOR
REVIEW HAS BEEN FAIRLY LIMITED BECAUSE OF THE
CIRCUMSTANCES HERE. I AM LOOKING AT MY COMFORT LEVEL
TOO. IF, FOR EXAMPLE, COUNSEL FOR THE CREDITOR HAS A
CHANCE TO LOOK AT THIS AND SAY, OKAY, IT LOOKS ALL
RIGHT; THAT BOOSTS MY CONFIDENCE LEVEL INTO APPROVING
THIS. THAT'S THE CONSIDERATION.
LET ME ARTICULATE ANOTHER CONSIDERATION. I
WANT A CHANCE TO LOOK AT THIS PROPOSED ORDER AND SEE IF
IT IS APPROPRIATE FOR ME TO SIGN AND GET SOME ADVICE
FROM PEOPLE THAT HAVE GREATER EXPERIENCE WITH
RECEIVERSHIPS THAN I DO. I WANT A CERTAIN AMOUNT OF
TIME TO LOOK AT THIS AND TO CONSIDER, BECAUSE IT IS
BEING SPRUNG UPON ME. THIS IS, AGAIN, FOR MY COMFORT
LEVEL. I -- IF THIS IS AN APPROPRIATE ORDER THEN FINE.
BUT IF IT IS NOT AN APPROPRIATE ORDER FOR SOME REASON, I
WANT TO TAKE WHATEVER STEPS ARE NECESSARY TO CORRECT IT,
IF THAT'S POSSIBLE OR TO -- OR I AM GOING TO REJECT IT.
THIS IS FOR MY COMFORT IN DOING THIS. I AM NOT GOING TO
SIGN IT THIS INSTANT. I AM NOT GOING TO SIGN IT THIS BE
INSTANT. I AM GOING TO TAKE A LOOK AT IT. I DON'T HAVE
A TRIAL THIS AFTERNOON. I AM TRYING TO VOTE MY EARLY
AND EARNEST ATTENTION TO IT. I THINK THAT THE PROPER

153. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
16
DISCHARGE OF MY RESPONSIBILITIES INCLUDES BEING
SATISFIED THAT THIS IS THE APPROPRIATE KIND OF ORDER FOR
ME TO MAKE AND IF NOT, WORK OUT SOMETHING ELSE.
MR. HOFFMAN: IF I CAN RESPOND TO TWO OF
YOUR HONOR'S POINTS?
THE COURT: YES.
MR. HOFFMAN: YOUR HONOR SAID HE MAY WANT TO
CONSULT WITH OTHERS WITH GREATER EXPERTISE IN THIS AREA;
I DON'T THINK THAT IS PROPER METHOD TO ADDRESS AN ORDER.
THE COURT --
THE COURT: THE ORDER IS DENIED.
MR. HOFFMAN: I AM SORRY?
THE COURT: IF I CAN'T -- IF YOU ARE TELLING
ME THAT I CANNOT SPEAK, FOR EXAMPLE, AS A BENCH OFFICER
ABOUT THIS OR TAKE IT --
MR. HOFFMAN: THEN I WITHDRAW --
THE COURT: -- OR OTHER PEOPLE, THAT'S THE
ANSWER.
MR. HOFFMAN: THEN I WITHDRAW THAT. THAT
WAS AN ARGUMENT.
THE COURT: YOU DIDN'T THINK I INTENDED TO
GO OUT AND -- I HOPE YOU DIDN'T THINK THAT I WAS GOING
TO CONSULT WITH OUTSIDE COUNSEL --
MR. HOFFMAN: NO. NO, OF COURSE NOT, YOUR
HONOR.
THE COURT: WELL THEN --
MR. HOFFMAN: I THOUGHT YOUR HONOR MEANT
ANOTHER BENCH OFFICER AND I THOUGHT THAT WAS NOT

154. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
17
CORRECT AND IF -- I WITHDRAW THAT.
THE COURT: IF YOU -- IT IS NOT AN EX PARTE
COMMUNICATION BY DEFINITION.
MR. HOFFMAN: I STAND CORRECTED.
THE COURT: IF YOU ARE SUGGESTING -- IF IT
MAKES YOU UNCOMFORTABLE --
MR. HOFFMAN: NO, NO. YOUR HONOR IS
CORRECT. I APOLOGIZE. I STAND CORRECTED. NOT
EVERYTHING I SAY IS CORRECT. I AM FIRST TO ADMIT THAT,
AND THAT WAS ONE OF THOSE THINGS, AND I AM FIRST TO
ADMIT THAT, YOUR HONOR. I DO APOLOGIZE, YOUR HONOR.
THE COURT: LET ME COME BACK TO THE
CREDITOR'S COUNSEL.
MS. WAKILY: YOUR HONOR WE HAVE THE SAME --
THE COURT: GO AHEAD.
MS. WAKILY: -- WE HAVE THE SAME CONCERNS.
I DON'T BELIEVE THAT MR. ADKISSON HAS BEEN PROPERLY
INFORMED ABOUT THE EXTENT AND NATURE OF THE LOAN. WE
ARE CONCERNED IF THERE IS A LOOPHOLE OR FRUSTRATION OR
SOMETHING ELSE THAT MIGHT --
THE COURT: IS THE PROBLEM WITH THE LOAN OR
THE OTHER ARRAIGNMENTS OR BOTH?
MS. WAKILY: IT IS PARTLY THAT IT WAS
NEGOTIATED A HUNDRED PERCENT BY THE JUDGMENT DEBTOR'S
WITHOUT NOTIFYING THE RECEIVER AND WITHOUT ANY
INFORMATION. I KNOW NOTHING ABOUT THE LOAN. I DON'T
KNOW WHAT THE INTEREST RATE IS. I DON'T KNOW IF THEY
MADE OTHER ATTEMPTS TO PAY OFF THE JUDGMENT. I KNOW

155. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
18
MR. HOFFMAN HAS REPEATEDLY SAID WE WOULD BE LIABLE FOR
ANY DAMAGES OCCURRING IN THE EVENT THE APPEAL IS
REVERSED. IT COULD BE THAT THEY ARE TRUMPING UP DAMAGES
OR TRYING TO GO OUT AND GET THE HIGHEST INTEREST LOAN.
WE WOULD FEEL BETTER IF THIS GOES TO THE RECEIVER AND
GIVE HIM TIME TO REVIEW ALL THE DOCUMENTS. HE IS AN
AGENT OF THE COURT; HE IS NOT WORKING FOR MY INTEREST OR
THE DEBTOR'S INTEREST. THAT IS THE GENERAL COURSE AND
WE WOULD LIKE TO FOLLOW THROUGH ON THAT.
MR. HOFFMAN: THE RECEIVER HAS DONE THAT AND
THAT'S WHY WE ARE HERE TODAY --
THE COURT: PLEASE DO NOT BE INTERRUPT HER.
MR. HOFFMAN: I THOUGHT SHE WAS DONE. I
APOLOGIZE.
MS. WAKILY: THE LENDER IS AWARE OF THE
RECEIVER AND FACTS INDICATE THAT HIS DESIRES THAT THE
RECEIVER ACTUALLY SIGN OFF ON THE DOCUMENTS AND NOT MR.
PRASKE BECAUSE IT IS AN ISSUED ORDER. THERE IS NO RISK
OF THIS LOAN GOING AWAY. WE FEEL IT IS MORE COMFORTABLE
IF IT IS IN COMPLIANCE WITH THE COURT.
THE COURT: WHO IS FIDELITY MORTGAGE LENDER?
MR. ADKISSON: FIDELITY MORTGAGE LENDER,
FROM WHAT I CAN TELL, YOUR HONOR, IS A COMMERCIAL
MORTGAGE LENDER TO REAL ESTATE AND COMMERCIAL VENTURES
IN CALIFORNIA. THEY APPEAR TO BE A THIRD PARTY COMPANY
NOT AFFILIATED, AS FAR AS I CAN TELL, WITH THE DEBTOR.
THE COURT: THEY HAVE THEIR OWN ESCROW
DEPARTMENT?

156. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
19
MR. ADKISSON: YES.
THE COURT: ALL THESE DOCUMENTS WOULD BE?
RECORDED.
MR. ADKISSON: I BELIEVE THE DEED WOULD BE
RECORDED. I AM NOT SURE THE LOAN DOCUMENTS WOULD BE
RECORDED. I THINK WHEN IT COMES TO THE POINT OF
RECORDING -- AND PROBABLY A DEED OF TRUST ON THE
LENDER -- I THINK THE RECORDING --
THE COURT: I ASSUME THE DEED OF TRUST WOULD
BE RECORDED AS PART OF THE ESTABLISHING WHAT THE
ENCUMBRANCES ON THE PROPERTY WERE.
MR. ADKISSON: I PRESUME THAT. AS FAR AS I
CAN TELL, AND COUNSEL FOR THE DEBTORS CAN CORRECT ME --
IT IS NOT FIDELITY THAT'S THE LENDER, ACTUALLY -- IS
FIDELITY THE ONE THAT HAVE THE LIEN NOW AND THE ANOTHER
GROUP WHICH I WILL NOT IDENTIFY ARE THE ONES MAKING THE
LOAN?
MR. HOFFMAN: AS I SAID, YOUR HONOR,
FIDELITY ARRANGES WITH INVESTORS TO PUT THEIR MONEY INTO
LOANS.
THE COURT: THEY ARE A FACILITATOR OF SOME
KIND? OR THEY AGGREGATE MONEY OF INVESTORS AND SO ON
AND PLACE IT?
MR. HOFFMAN: IN LAY PERSON'S TERMS I THINK
THAT IS A FAIR STATEMENT; I DON'T KNOW THE TECHNICAL
TERMS. IF IT WOULD SATISFY THE COURT, I DO HAVE COPIES
OF THE LOAN DOCUMENTS WHICH I AM PREPARED TO SHOW
MS. AUSTA WAKILY WHILE WE ARE HERE. SHE IS NOT ALLOWED

157. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
20
TO TAKE IT OUT. IT SHOULD ASSURE HER THAT THERE IS NO
LOOPHOLES OR FUNNY BUSINESS.
THE COURT: IT IS 12:37 BY THE CLOCK ON THE
CLUBHOUSE WALL.
MR. ADKISSON: CAN I HAVE JUST ONE SECOND?
THE COURT: YES.
MR. ADKISSON: VERY QUICKLY, THE ALTERNATIVE
WAY TO DO THIS IS TO SIMPLY DO THE RECEIVER IN THE
NORMAL COURSE, AND THAT IS, KNAPP, PETERSEN RELEASE
THEIR LIEN TO THE ESCROW COMPANY; THE ESCROW COMPANY
PAYS ME AS AN RECEIVER; I BASICALLY PAY KNAPP, PETERSEN,
THAT PAYS OFF THE JUDGMENT. WHATEVER IS LEFT OVER, I
COME TO THE COURT WITH AN ACCOUNTING OF MY FEES; THE
COURT APPROVES ON IT; SIGNS OFF ON WHATEVER THE BALANCE
IS; WE REMIT IT BACK TO THE DEBTORS AND CALL IT A DAY.
THAT'S THE TYPICAL WAY THESE THINGS ARE DONE AND THEN
THERE ARE NO PROCEDURAL QUESTIONS. I UNDERSTAND THE
DEBTORS HAVE SOME QUESTIONS ABOUT DOING THAT TO PERHAPS
EFFECT THE PROPERTY VALUE --
THE COURT: WHAT IF THE TRANSACTION IS
CLOSED AND THE MONEY IS PAID? IS THERE AN ISSUE WITH
RESPECT TO DOING IT WITH THE TERMS THAT HE SAID?
MR. HOFFMAN: ONE -- TWO ISSUES. ONE, THAT
PROCEDURE TAKES TIME, AND I DON'T THINK THIS LOAN IS
GOING TO BE AVAILABLE TO US FOR MUCH LONGER SIMPLY
BECAUSE OF JITTERS THAT I MENTIONED BEFORE THE INVESTORS
HAVE BECAUSE OF THE COURT PROCEEDINGS.
THE OTHER CONCERN IS ABOUT THE RECEIVER'S

158. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
21
SIGNATURE ON THE DOCUMENTS. I BELIEVE THAT THE CONCERNS
THAT MS. WAKILY RELAID WOULD ALL BE ADDRESSED IF THE
COURT AUTHORIZES THE RECEIVER TO SIGN.
THE COURT: SUPPOSED I LET HIM SIGN -- DO
YOU HAVE PRESIDENT COPIES -- DO YOU OUT THERE HAVE
COPIES OF THIS PROPOSED ORDER RIGHT NOW?
MR. HOFFMAN: YES, I HAVE IT RIGHT HERE.
MR. ADKISSON: YOU HAVE MY COPY, YOUR HONOR.
MR. HOFFMAN: I BELIEVE I HAVE ANOTHER COPY.
THE COURT: MS. WAKILY CAN SHARE WITH YOU.
MR. ADKISSON: OKAY.
MR. HOFFMAN: HERE IS ANOTHER COPY, YOUR
HONOR; THEY DON'T NEED TO SHARE.
MR. ADKISSON: I GUESS, YOUR HONOR THE ONLY
THING --
THE COURT: SUPPOSE I APPROVE PARAGRAPH ONE,
TWO, AND THREE? IS THAT IN ANY SENSE A DEPARTURE FROM
THE STANDARD?
MR. ADKISSON: I THINK YOUR HONOR -- I WOULD
PROBABLY HAVE TO ALSO BE AUTHORIZE THE TO PAY OFF ANY
JUNIOR ENCUMBRANCES TOO WHICH WOULD BE THE OTHER THING.
THE COURT: ISN'T THAT INCLUDED IN ONE OF
THOSE -- PAY-EXISTING LOANS AGAINST THE PROPERTY?
MR. ADKISSON: I THINK THAT WOULD BE THE
PRIORITY LOANS. I THINK THE TITLE COMPANY WOULD
PROBABLY WANT TO PAY THE PRIORITY LOANS FROM THE ESCROW.
THE COURT: THAT'S FINE.
MR. ADKISSON: NO. 2 -- THE RECEIVER KIND OF

159. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
22
GOES BOOK AND FORTH, AND I GO BACK AND FORTH ON IT --
THE ONLY THINK WEIRD ABOUT MR. PRASKE IS, OF COURSE, MR.
PRASKE IS THE TRUST HE SIGNS OFF --
THE COURT: I KNOW WHO MR. PRASKE IS --
MR. ADKISSON: -- IT IS A LITTLE WEIRD -- I
PRESUME HE IS SIGNING FOR THE RECEIVER BUT IT MAY CAUSE
SOME CONFUSION LATER AS TO HOW AND WHAT CAPACITY HE WAS
SIGNING FOR, BUT I WILL LEAVE THAT WITH THE COURT.
MR. HOFFMAN: THE DOCUMENTS IDENTIFY HIM AS
A SIGNATORY ON BEHALF OF THE BORROWERS. AS I SAID
EARLIER, WE ARE NOT ASKING FOR ANY OF THE RECEIVER'S
DECISION-MAKING AUTHORITIES --
THE COURT: I UNDERSTAND THAT. LET ME ASK
YOU THIS.
SUPPOSED I APPROVE ONE, TWO AND THREE, AND
WE HAVE THE REST OF THIS COMPLETED IN THE NORMAL
PROCEDURE? DOES THAT SATISFY THE INTEREST?
MR. HOFFMAN: GIVE ME A MOMENT TO
CONTEMPLATE THAT.
THE COURT: LET ME OFFER YOU A THOUGHT. WHY
DON'T WE STAND IN RECESS UNTIL 1:45. AND YOU CAN SHOW
CREDITOR'S COUNSEL THESE DOCUMENTS AND SHE CAN LOOK AT
THEM -- AND IF THE RECEIVER NEEDS TO DO THAT ANY MORE,
FINE -- AND YOU CAN SHOW THEM TO ME AT 1:45. THAT WILL
BE FINE. I AM MORE COMFORTABLE WITH PARAGRAPHS ONE
THROUGH THREE THAN I AM WITH THE BALANCE OF THE THING.
I THINK IT IS IN EVERYBODY'S INTEREST TO -- WELL,
ENLIGHTEN SELF-INTEREST OF EVERYBODY IS -- TO GET THIS

160. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
23
THING DONE IF IT AT ALL POSSIBLE. WHY DON'T WE APPROACH
IT IN THAT FASHION. I WOULD APPRECIATE YOUR REACTION TO
JUST DOING PARAGRAPHS ONE THROUGH THREE WHICH WOULD
AUTHORIZE THE RECEIVER TO APPROVE THIS AND FACILITATE IT
AND SO FORTH. AND THEN IF THERE IS ANYTHING ELSE THAT
WOULD HAVE TO BE ADDED GO BACK; YOU CAN TELL ME.
MR. HOFFMAN: VERY GOOD, YOUR HONOR.
THE COURT: I WOULD LIKE TO REACH A
CONSTRUCTIVE SOLUTION HERE.
MR. HOFFMAN: I APPRECIATE THAT, YOUR HONOR.
AND I APPRECIATE YOUR HONOR'S TIME AND THE STAFF'S TIME
FOR GOING INTO LUNCH.
(RECESS.)
THE COURT: I WOULD ASK WHERE WE STAND, BUT
WE ALL SEEM TO BE SITTING.
MR. ADKISSON: I THINK WE MADE VERY
SUBSTANTIAL PROGRESS ON REACHING A MIDDLE GROUND. THERE
IS STILL BASICALLY ONE ISSUE THAT IS LEFT FOR DISPUTE --
THE RECEIVER DOESN'T HAVE AN IRON IN THAT FIGHT, I WILL
DEFER IT TO THE END -- YOUR, HONOR, ON THE ORDER THAT'S
HERE IF STRIKE OUT STARTING AT LINE 13 ON THE SIDE WHICH
IS PARAGRAPH 3 AND JUST DELETE FROM PARAGRAPH 3 DOWN.
IN THE UNDERSTANDING OF THE PARTIES -- I WILL RECITE IN
RECORD SO WE ALL MEMORIALIZED -- MS. WAKILY'S CLIENTS
ARE GOING TO PROVIDE A RELEASE OF THE LIEN TO ME. I
WILL PROVIDE A RELEASE OF THE LIEN TO ESCROW, WHEREBY

161. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
24
ESCROW IS GOING TO RELEASE THE FUNDS TO PAY OFF THE
CREDITOR AND SOME MONEY -- WHICH I WILL REPRESENT WILL
BE ABOUT 25,000 -- TO PAY THE RECEIVER'S -- FOR THE
RECEIVER'S FEES AND COSTS. AND I'D LIKE TO THROW
ANOTHER FIVE GRAND IN TO IT JUST IN CASE WE HAVE ANY
MISCELLANEOUS COSTS. THAT MONEY WOULD BE PAID TO THE
RECEIVER. THE RECEIVER WOULD THEN PAY OFF THE CREDITOR.
AFTER THE CREDITOR HAS BEEN PAID, WE WILL PROVIDE AN
EXECUTED ACKNOWLEDGEMENT OF SATISFACTION OF JUDGMENT TO
THE DEBTORS. AND THEN THE RECEIVER, IN THE NORMAL
COURSE, WILL PRESENT AN ACCOUNTING TO THE COURT AND A
REQUEST FOR APPROVAL OF THE RECEIVER'S FEES, AND ANY
BALANCE LEFT OVER WILL BE REMITTED TO THE DEBTORS.
THAT'S HOW I UNDERSTAND HOW THIS TRANSACTION IS GOING TO
WORK. I WOULD CERTAINLY INVITE COUNSEL TO CORRECT ME IF
I HAVE MISREPRESENTED THAT.
THE COURT: ON BEHALF OF THAT PORTION ON
BEHALF OF THE JUDGEMENT -- THE NEW JUDGMENT DEBTORS
COMMENT? QUESTIONS? DISAPPROVAL? AGREEMENT?
MR. HOFFMAN: THE ONLY QUESTION I WOULD HAVE
WOULD BE WHAT TYPE OF FRAME THAT WOULD CARRY FOR THE
RECEIVER'S ACTIONS.
MR. ADKISSON: THE RECEIVER WILL REPRESENT
THAT THE RECEIVER IS PREPARED TO EXECUTE THAT
IMMEDIATELY. SO AS QUICKLY AS THE RECEIVER WILL DO
THAT -- MAYBE MS. WAKILY CAN REPRESENT HOW QUICKLY THEY
CAN GET A RELEASE OF THE LIEN TO US BECAUSE THAT'S KIND
OF THE STARTING STEP.

162. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
25
THE COURT: SO THE QUESTION YOU HAVE IS HOW
QUICKLY THE RECEIVER IS TO WHAT? EXECUTE THE DOCUMENTS?
MR. HOFFMAN: AND PAY OVER THE MONEY ONCE IT
IS IN HIS POSSESSION.
THE COURT: ITS GOING THROUGH THE ESCROW,
ISN'T IT?
MR. HOFFMAN: FROM THE ESCROW TO THE
RECEIVER.
MR. ADKISSON: YES, YOUR HONOR. THAT'S THE
DIFFERENCE, BEFORE THE CREDITOR WAS BEING PAID OUT OF
ESCROW, NOW THE ESCROW IS PAYING THE RECEIVER, AND THE
RECEIVER IS PAYING OFF THE CREDITOR.
MR. HOFFMAN: I BELIEVE THE ESCROW WOULD
STILL BE PAYING THE SENIOR LIEN HOLDERS. BUT THE OTHER
MONEY WOULD BE GO TO RECEIVER AS IS BEFORE?
MR. ADKISSON: THAT IS CORRECT. THE SENIOR
LIEN HOLDER WILL BE PAID BEFORE THE OTHER RECEIVER.
THE COURT: MR. CHATFIELD?
MR. CHATFIELD: MY CLIENT IS NOT ONE OF THE
JUDGMENT DEBTORS WHO ARE INVOLVED IN THIS DEAL. BUT I
DON'T HAVE ANY PROBLEM WITH THE JUDGMENT BEING PAID OFF
FOR MY CLIENT.
THE COURT: MS. WAKILY?
MS. WAKILY: I AGREE WITH MR. ADKISSON'S
PROPOSAL.
THE COURT: IF I WERE TO INTERLINEATE THIS,
HOW MUCH WOULD BE RESERVED FOR THE RECEIVER?
MR. ADKISSON: THE RECEIVER FEES --

163. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
26
THE COURT: APPROXIMATELY 30 THOUSAND
DOLLARS INCLUDING THE BUMPER?
MR. ADKISSON: INCLUDING THE BUMPER, IT
WOULD BE 30 THOUSAND, YOUR HONOR. I BELIEVE THE
OUTSTANDING AMOUNT OF THE JUDGMENT AS OF LAST FRIDAY WAS
2.23 MILLION, ACCORDING TO THE CALCULATION.
THE COURT: OKAY. SO YOU ARE GOING TO HOLD
ABOUT 30 THOUSAND DOLLARS FOR YOUR FEES AND
MISCELLANEOUS INCIDENTAL EXPENSES AND PROMPTLY REMIT THE
BALANCE TO THE DEBTORS?
MR. ADKISSON: SO THE COURT IS CLEAR. I
WILL TAKE IN SOMEWHERE AROUND -- WAS IT WAS 2.23 --
MS. WAKILY: YES --
MR. ADKISSON: -- I WILL TAKE IN 2.23
MILLION PLUS AN ADDITIONAL 30 THOUSAND WHICH IS THE
RECEIVER'S FEES AND THE BUMPER. I WILL REMIT THE 2.3 TO
THE CREDITOR. AND THEN OF THE 30 THOUSAND, I WILL MAKE
AN APPLICATION TO THE COURT FOR PAYMENT OF MY FEES AND
COSTS. AFTER THE COURT APPROVES THAT PAYMENT OF FEES
AND COSTS, WHATEVER IS LEFT OVER OF THAT AMOUNT I WILL
REMIT THAT TO THE DEBTOR. THEY WILL GET BACK A FEW
THOUSAND DOLLARS IF ALL THIS WORKS THE WAY WE THINK IT
WILL.
MR. HOFFMAN: I BELIEVE THE RECEIVER IS
GOING TO ACTUALLY RECEIVE A LARGER SUM TO BEGIN WITH.
THE COURT: LET ME UNDERSTAND. THE DEAL IS
GOING TO GO THROUGH, AND IT WILL BE THE REFINANCING OF
THE PROPERTY, AND THE MONEY WILL GO INTO ESCROW AND OUT

164. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
27
OF THE ESCROW, THE FIRST PEOPLE PAID IS THE 2 MILLION
DOLLARS?
MR. ADKISSON: THAT IS CORRECT.
THE COURT: DOES THE BALANCE OF THE MONEY
INITIALLY COME TO YOU OR IS THE NEXT TO BE PAID DIRECTLY
OUT OF ESCROW -- THE JUDGMENT CREDITOR?
MR. ADKISSON: THE FORMER. THE MONEY IS
GOING TO COME TO ME AS THE RECEIVER AND I AM GOING TO
PAY THE CREDITOR.
ACTUALLY MR. HOFFMAN'S RAISED ANOTHER ISSUE
WE CAN TALK ABOUT. IT IS A VERY MINOR ISSUE.
MR. HOFFMAN: AGREED.
MR. ADKISSON: JUST SOMETHING WE DIDN'T
THINK ABOUT OVER LUNCH, FRANKLY.
THE COURT: OKAY. THE MONEY IS COMING IN
FROM THE FINANCE COMPANY; THE SENIOR LIEN HOLDER OR
HOLDERS ARE PAID OUT OF ESCROW AND PAID OFF. THEN THE
BALANCE OF THE MONEY COMES TO THE RECEIVER; THE RECEIVER
PAYS THE JUDGMENT CREDITOR IN FULL, AND WITH THE
EXCEPTION OF APPROXIMATELY 30 THOUSAND DOLLARS, GIVES
THE BALANCE OF THE REFINANCING TO THE JUDGMENT DEBTORS
WHO PUT UP THE MONEY.
MR. ADKISSON: YES. THE ONLY THING WE
DIDN'T THINK ABOUT AT LUNCH -- MR. HOFFMAN REMINDED ME
NOW -- WHEN THIS LOAN WAS ARRANGED, BASICALLY AFTER THEY
FIGURED ALL THE CREDITORS THERE WAS A BUFFER OF ABOUT A
HALF MILLION DOLLARS -- CORRECT?
MR. HOFFMAN: SOME BUFFER I DON'T REMEMBER

165. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
28
THE AMOUNT. I THINK IT WAS A BIG AMOUNT.
MR. ADKISSON: FRANKLY, THE RECEIVER DOESN'T
NEED TO TAKE ALL THAT MONEY. I WOULD BE TAKING IN A
HALF MILLION DOLLARS OR SOME LARGE AMOUNT MORE THAN I
REALLY NEED. MAYBE IF I WERE SMART I WOULD JUST TAKE IT
ALL IN AND PAY IT BACK. BUT IN STRICT CANDOR TO THE
COURT, THE RECEIVER DOESN'T NEED THAT MUCH. WHILE I
PRESUME THAT THIS PROCESS IS GOING TO GO PRETTY QUICKLY,
THEY MAY NOT WANT TO HAVE EXCESS OF HUNDREDS OF
THOUSANDS TIED UP FOR NO REASON.
YOUR HONOR, I HAVE AN EXACT NUMBER HERE IF
YOU'D LIKE IT.
THE COURT: ONE MOMENT, PLEASE.
OKAY. WHAT WE ARE GOING TO DO, I THINK
LEAVE PARAGRAPHS ONE THROUGH THREE ALONE. IN PARAGRAPHS
4 -- LET ME JUST READ THIS TO YOU, DON'T TRY TO WRITE IT
DONE BUT JUST GET THE SENSE OF IT.
PARAGRAPH FOUR: THE RECEIVER WILL HOLD THE
APPROXIMATE SUM OF 30 THOUSAND DOLLARS FOR HIS FEES
SUBJECT TO THE COURT'S APPROVAL. AFTER THE SENIOR LIEN
HOLDERS ARE PAID OUT OF ESCROW AND THE RECEIVER REMITS
THE AMOUNT OF THE JUDGMENT WITH INTEREST TO THE JUDGMENT
CREDITOR AND RETURNS ALL OF THE 30 THOUSAND DOLLARS TO
THE JUDGMENT DEBTOR PAYING THE DEBTOR, THE RECEIVER WILL
COMPLETE THESE ACTIONS PROMPTLY.
LET ME READ IT AGAIN.
MR. HOFFMAN: THANK YOU.
THE COURT: THE RECEIVER WILL HOLD THE

166. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
APPROXIMATE SUM OF 30 THOUSAND DOLLARS FOR ITS FEES.
SUBJECT TO THE COURT'S APPROVAL. AFTER THE SENIOR LIEN
HOLDERS ARE PAID OUT OF ESCROW, AND THE RECEIVER REMITS
THE AMOUNT OF THE JUDGMENT WITH INTEREST TO THE JUDGMENT
CREDITOR AND RETURNS ALL BUT THE 30 THOUSAND DOLLARS TO
THE JUDGMENT DEBTORS PAYING THE JUDGMENT. OKAY?
MR. HOFFMAN: YES.
THE COURT: BECAUSE I WAS WRITING IT DOWN AS
I UNDERSTOOD IT, IT MAY NOT BE AS ARTFUL.
THE RECEIVER WILL COMPLETE THESE ACTIONS
PROMPTLY.
OKAY?
I WILL NOT GIVE A SPECIFIC NUMBER OF DAYS,
BUT THE RECEIVER'S ACTIONS ARE SUBJECT TO THE COURT'S
REVIEW.
MR. HOFFMAN: YOUR HONOR, THERE MIGHT BE A
GLITCH, BUT IF THERE WERE AN UN-THWARTED DELAY THE COURT
COULD TAKE KNOWLEDGE OF THIS.
MR. ADKISSON: YOUR HONOR, I THINK YOU NEED
TO DELETE PARAGRAPH 3. PARAGRAPH THREE, I THINK, HAS
BEEN RENDERED AND IN FACT IS REDUNDANT, UNNECESSARY AND
IN FACT COUNTER PRODUCTIVE.
MR. HOFFMAN: I AM NOT SURE I UNDERSTAND THE
REASON FOR THAT.
THE COURT: HAVING PREVIOUSLY DELIVERED
THEIR PAYOFF DEMAND TO FIDELITY MORTGAGE LENDERS INC.
ESCROW DEPARTMENT, DEFENDANTS ARE TO PROVIDE FIDELITY
MORTGAGE ESCROW DEPARTMENT WITH A FULLY EXECUTED

167. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
30
ACKNOWLEDGEMENT OF SATISFACTION OF JUDGMENT BY 5:00 P.M.
TODAY, TO BE HELD BY THE ESCROW DEPARTMENT OR OLD
REPUBLIC TITLE COMPANY UNTIL DEFENDANTS PAYOFF DEMAND IS
PAID AT WHICH TIME THE ACKNOWLEDGEMENT WILL BE RECORDED
IN THE PUBLIC RECORDS.
THE COURT: WHAT IS THE PROBLEM?
MR. ADKISSON: THE PROBLEM IS NOW THE
DEFENDANT/CREDITORS ARE NOT BE PAID OUT OF ESCROW, THEY
ARE BEING PAID BY THE RECEIVER, SO THE SATISFACTION OF
JUDGMENT WHICH WOULD PROCEDURALLY DOESN'T MAKE ANY SENSE
TO HAVE A SATISFACTION OF JUDGEMENT PROVIDED UNTIL THE
JUDGEMENT IS PAID OFF ANYHOW.
THE COURT: IT CAN BE HELD IN ESCROW.
MR. HOFFMAN: EXACTLY.
MR. ADKISSON: SO AM I UNDERSTANDING, IS THE
COURT ORDERING THAT THE CREDITOR GET PAID OUT OF ESCROW?
THE COURT: NO.
MR. ADKISSON: THE CREDITOR IS TO BE PAID BY
THE RECEIVER.
THE COURT: WHO FILES THE SATISFACTION OF
JUDGMENT UNTIL YOUR CONCEPT?
MR. ADKISSON: IN MY CONCEPT, SATISFACTION
OF JUDGMENT WOULD BE FILED BY THE CREDITOR ONCE THE
CREDITOR HAS BEEN PAID BY THE RECEIVER.
MR. HOFFMAN: BUT THE LENDER, I BELIEVE,
YOUR HONOR, INSISTS ON HAVING A FORUM BEFORE IT RELEASES
THE MONEY SO IT CAN TURN AROUND AND FILE IT.
THE COURT: I DON'T SEE A PROBLEM WITH

168. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
31
HAVING IT THIS THE ESCROW.
MR. HOFFMAN: THAT'S ALL WE ARE ASKING, YOUR
HONOR, IS TO HAVE IT BE FILED AFTER EVERYTHING HAS BEEN
PAID. THAT IS TO SATISFY THEIR CONCERNS, WHICH I THINK
ARE REASONABLE; IT IS NOT BECAUSE ANYTHING WE ARE MAKING
UP OR ANYTHING LIKE THAT.
MR. ADKISSON: SO THE COURT IS APPRISED,
RIGHT BEFORE THIS HEARING, I WAS ABLE TO TALK TO THE
ESCROW AND THEY ARE FINE WITH JUST HAVING A COPY OF THE
LIEN RELEASE WHICH THE CREDITORS CAN PROVIDE AND A COPY
OF THE COURT'S ORDER THAT EMPOWERS THE RECEIVER TO GO
THROUGH WITH THIS ACTION.
THE COURT: BUT I DON'T KNOW WHAT THEIR
LENDERS MAY BE WANT.
MR. ADKISSON: THE ESCROW COMPANY IS THE ONE
TELLING US, HERE IS WHAT THE LENDER IS GOING TO
REQUIRE -- AGAIN, THIS IS FIDELITY AND THEY ARE THE ONES
WHO PACKAGED THIS LOAN.
MR. HOFFMAN: I THINK WE SHOULD KEEP NUMBER
3 IN THERE, YOUR HONOR. I DON'T SEE IT CAUSES ANY
DETRIMENT TO ANYBODY IF WE KEEP IT IN, AND I AM
CONCERNED ABOUT THE EFFECT IT MIGHT HAVE ON THE LENDER
IF THEY DON'T GET THE PAPERWORK.
THE COURT: SO WHAT THIS SUGGESTS IS THAT
SOMEBODY LIKE THE RECEIVERS OR THE CREDITOR IS GOING TO
HAVE TO NOTIFY THE ESCROW COMPANY THAT THE MONEY HAS
BEEN PAID AND THEY CAN FILE THE SATISFACTION OF
JUDGMENT.

169. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
32
MR. ADKISSON: AND THAT'S FINE, YOUR HONOR.
COULD WE SLIGHTLY AMEND THAT TO SAY AFTER THE COURT HAS
APPROVED THE RECEIVER -- I GUESS WHAT I AM WORRIED ABOUT
IS IF AN ACKNOWLEDGEMENT OF SATISFACTION OF JUDGMENT HAS
BEEN FILED THEN MAYBE THAT'S THE COURSE OF JURISDICTION
TO DEAL WITH -- THE RECEIVER AND MORE IMPORTANTLY THE
RECEIVER'S FEE.
THE COURT: WHY WOULD IT DIVEST ME OF
JURISDICTION OVER THE RECEIVERSHIP? THE COURT'S
JURISDICTION OVER THAT CONTINUES UNLESS AND UNTIL YOU
ARE DISCHARGED; DOESN'T IT?
MR. ADKISSON: I WOULD HOPE SO.
MR. HOFFMAN: I BELIEVE THAT CORRECT, YOUR
HONOR. WE ARE NOT TRYING TO PULL A FAST ONE ON THE
RECEIVER.
MR. ADKISSON: NO. NO. I AM NOT ACCUSING
THAT.
THE COURT: I DO NOT THINK THAT THAT'S THE
CONCERN.
I THINK THE RECEIVERSHIP IS FOR A PURPOSE,
THERE MAY BE A SATISFACTION OF JUDGMENT, BUT EVEN IF
THERE IS A SATISFACTION OF JUDGMENT, YOU ARE STILL
RESPONSIBLE -- YOU ARE APPOINTED BY THE COURT AND IT IS
OPERATIVE UNTIL I RELIEVE YOU; I THINK.
MR. ADKISSON: I HOPE THAT'S TRUE, YOUR
HONOR.
THE COURT: THAT'S THE ASSUMPTION I AM GOING
TO OPERATE UNDER -- THAT'S THE PREMISE -- BETTER THAN

170. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
33
"ASSUMPTION".
MR. ADKISSON: ES.
THE COURT: THAT'S THE PREMISE WHICH I
CHOOSE TO OPERATE BE UNDER BECAUSE IF I DON'T, YOU DON'T
GET PAID.
MR. ADKISSON: CERTAIN THOUGHTS ARE FIRST
AND FOREMOST ON THE RECEIVER'S MIND. I BELIEVE THAT
TAKES CARE OF US AS TO THE UNDERLYING TRANSACTION --
THE COURT: I DON'T NEED TO PUT THE DOLLAR
AMOUNT IN THIS PAYOFF, DO I?
MR. ADKISSON: IF THE PAYER IS BEING PAID
OUT OF ESCROW, THERE IS NO REASON TO INCLUDE IT BECAUSE
THEY ALREADY HAVE THE PAYOFF DEMAND.
THE COURT: THE CREDITOR IS NOT -- YOU ARE
PAYING THEM OFF -- OKAY. THEN I BETTER HAVE ANOTHER
COPY BECAUSE I AM GOING TO HAVE TO REWRITE THIS. WE
KEEP ADDING THINGS TO IT.
THIS HALF MILLION EXTRA YOU ARE TALKING
ABOUT, WHO PAYS THAT TO THEM? DOES IT ALL COME TO YOU?
YOU PAY IT TO THEM OR DOES IT COME TO THEM OUT OF
ESCROW?
MR. ADKISSON: AS I UNDERSTAND YOUR HONOR'S
ORDER RIGHT NOW, THE CREDITOR --
THE COURT: TELL ME THE CONCEPT OF THE
OPERATION.
MR. ADKISSON: -- AS I UNDERSTAND IT, THERE
IS GOING TO BE A RELEASE TO ME OF THE 2.23 MILLION WHICH
I WILL USE TO PAY THE CREDITOR.

171. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
34
ARE WE AGREED ON THAT.
MR. HOFFMAN: [NO AUDIBLE RESPONSE.]
MR. ADKISSON: THERE WILL BE APPROXIMATELY
$3,000 ADDITIONALLY HELD BACK FOR RECEIVER'S FEES AND
ANY INCIDENTAL COSTS THAT MAY ARISE. THEN I PRESUME
THAT THE BALANCE WILL BE REMITTED TO THE DEBTOR. YOU
BETTER POLL ALL COUNSEL AND MAKE SURE THEY ARE AGREEABLE
TO THAT, YOUR HONOR.
MR. HOFFMAN: I AM FINE WITH THAT, YOUR
HONOR.
MS. WAKILY: I AM FINE WITH THAT AS WELL,
YOUR HONOR.
MR. CHATFIELD: I HAVE NO OBJECTION.
THE COURT: LET US SUPPOSE THAT OUT OF THE
REFINANCING, THERE IS FIVE MILLION DOLLARS AND WE HAVE A
MILL AND A QUARTER THAT GOES TO THE SENIOR LENDERS, AND
THAT LEAVES ROUGHLY 3.75 MILLION -- LET'S CALL IT TWO
AND A QUARTER -- THAT LEAVES 2.75 MILLION. ROUGHLY TWO
AND A QUARTER MILLION WILL GO TO THE JUDGMENT CREDITORS,
LEAVING HALF A MILLION. OKAY. YOU ARE GOING TO GET 30
THOUSAND, SO THE HALF MILLION MINUS THE 30 THOUSAND
WHICH I WILL CALL THE "EXCESS FUNDS" PUT INTO THE ESCROW
IS IT REMITTED TO THE ESCROW COMPANY DIRECTLY BY THE
BORROWS/JUDGEMENT DEBTORS WHO PUT UP THE MONEY OR DOES
IT COME TO YOU AND YOU REMIT IT TO THEM?
MR. ADKISSON: I PRESUME THE FORMER. IN THE
LOAN DOCUMENTS I HAVE SEEN, IT IS NOT CLEAR. THE
RECEIVER DOESN'T NEED ANY MORE MONEY THAN THE 2.23

172. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
35
MILLION PLUS THE 30 THOUSAND. I DO NOT BELIEVE IT IS
NECESSARY THAT I TAKE IN THAT EXCESS MONEY. THE
RECEIVER WILL BE PLEASED TO DO IT IF THE COURT SO
ORDERS, BUT IT HAS NO NEED FOR THAT MONEY.
MR. HOFFMAN: WE WOULD PREFER THAT THE FUNDS
COME TO US, YOUR HONOR, BUT IT IS NOT CRITICAL. IF THE
ONLY WAY IT IS TO HAPPEN IS FOR IT TO GO THROUGH THE
RECEIVER, THAT'S ACCEPTABLE.
MR. ADKISSON: YOUR HONOR, I CONTEMPLATE
THAT THE TURNAROUND ON THIS MONEY WILL BE VERY, VERY
QUICK.
MR. HOFFMAN: AT THE RISK OF BEING OVERLY
CAUTIOUS, YOUR HONOR, COULD THE ORDER CLARIFY THAT THE
RECEIVER IS AUTHORIZED THE AMOUNT THAT KPC DEMANDED ON
THEIR BEHALF, JUST IN CASE THERE IS ANY
MISUNDERSTANDING?
THE COURT: PARAGRAPHS ONE, TWO, THREE STAYS
THE SAME. NEW PARAGRAPH FOUR:
AFTER THE REFINANCING IS FUNDED, THE SENIOR
LIENHOLDERS WILL BE PAID OUT OF ESCROW. THE RECEIVER
WILL RECEIVE THE APPROXIMATE SUM OF TWO MILLION TWO
HUNDRED AND THIRTY THOUSAND DOLLARS TO BE PAID TO THE
CREDITOR PLUS APPROXIMATELY 30 THOUSAND DOLLARS TO COVER
THE RECEIVER'S FEES AND INCIDENTALS. THE RECEIVER WILL
PAY THE JUDGMENT CREDITOR IN FULL AND THE RECEIVER, AND
THE JUDGMENT CREDITORS WILL AUTHORIZE THE ESCROW HOLDER
TO FILE THE SATISFACTION OF JUDGMENT. IF THERE ARE
FUNDS LEFT IN ESCROW BEYOND THESE SPECIFIED FUNDS, THE

173. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
36
ESCROW HOLDER IS TO REMIT THOSE FUNDS TO THE JUDGMENT
DEBTORS PUTTING UP THOSE FUNDS. THE RECEIVER SHALL
PROMPTLY FILE HIS FINAL ACCOUNTING.
DO YOU WANT ME TO READ IT AGAIN.
MR. HOFFMAN: IF YOU WOULD, I WOULD
APPRECIATE IT.
THE COURT: AFTER THE REFINANCING IS FUNDED,
THE SENIOR LIENHOLDERS WILL BE PAID OUT OF ESCROW. THE
RECEIVER WILL RECEIVE THE APPROXIMATE SUM OF 230
THOUSAND DOLLARS [SIC] TO BE PAID TO THE CREDITOR PLUS
APPROXIMATELY 30 THOUSAND DOLLARS TO COVER THE
RECEIVER'S FEE AND INCIDENTALS -- I AM BEING
DELIBERATELY APPROXIMATE -- THE RECEIVER WILL PAY THE
JUDGMENT CREDITOR IN FULL. AND THE RECEIVER AND
JUDGMENT CREDITOR WILL AUTHORIZE THE ESCROW HOLDER TO
FILE THE SATISFACTION OF JUDGMENT -- THAT'S A JOINT
OBLIGATION SHOULD THERE BE ANY QUESTION AS TO WHO WAS
AUTHORIZED TO DO IT -- TO MAKE THE ESCROW HOLDER DO IT
OR BOTH TO DO IT -- IF THERE ARE FUNDS LEFT IN ESCROW
BEYOND THESE SPECIFIED FUNDS -- BY "LEFT IN ESCROW" I
MEAN I AM ASSUMING ANY ESCROW FEES ARE PAID TO THE
ESCROW HOLDER -- IF THERE ARE FUNDS LEFT IN ESCROW
BEYOND THESE SPECIFIED FUNDS, THE ESCROW HOLDER IS TO
REMIT THOSE FUNDS TO THE JUDGMENT DEBTORS PUTTING UP
THOSE FUNDS. WHOEVER IS TAKING THE LOANS ON THEIR
PROPERTY WILL GET THE BALANCE OF IT AND WE WILL LET THE
JUDGMENT DEBTORS WHO ARE PUTTING UP THE MONEY WORRY
ABOUT HOW THE PROCEEDS ARE GIVEN UP. WE WILL NOT

174. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
37
INVOLVE THE ESCROW HOLDER OR THE OTHER PEOPLE IN THAT.
THE RECEIVER SHALL PROMPTLY FILE HIS FINAL ACCOUNTING.
DOES THAT SEEM TO WORK?
MR. HOFFMAN: IT DOES, YOUR HONOR, IT JUST
LEAVES OPEN THAT THE FUNDS THAT THIS RECEIVER MIGHT
STILL BE HOLDING AFTER PAYING THE JUDGMENT AND
WITHHOLDING FOR HIMSELF. I THINK THAT WOULD ALSO BE
REMITTED TO THE JUDGMENT CREDITORS --
MR. CHATFIELD: THE JUDGMENT DEBTORS.
MR. HOFFMAN: YES EXCUSE ME, THE JUDGMENT
DEBTORS. IT HAS BEEN A LONG DAY, YOUR HONOR.
THE COURT: ANY FUNDS IN EXCESS OF THE
RECEIVER'S ALLOWED FEES AND EXPENSES ARE TO BE PROMPTLY
REMITTED TO THE JUDGMENT DEBTORS PUTTING UP THE FUNDS.
THAT CONTEMPLATES THAT WHETHER THE
DETERMINATION IS IF THERE IS ANY EXCESS WILL FOLLOW THE
RECEIVER'S REPORT AND COURT'S APPROVAL AND WE ASSUME
THAT WILL BE SMALL.
IS THAT ACCEPTABLE?
MR. HOFFMAN: IT SHOULD BE, YES.
THE COURT: ANY QUESTIONS? ANYTHING WE MAY
HAVE OVERLOOKED.
MR. ADKISSON: THE ONE MORE ISSUE RELATES TO
PARAGRAPH 1 AND 2, BUT AS TO THE ISSUE WE ARE TALKING
ABOUT NOW, THAT'S FINE WITH THE RECEIVER.
THE COURT: OKAY.
WHAT IS THE OTHER ISSUE?
MR. ADKISSON: THE FINAL ISSUE BEFORE YOUR

175. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
38
HONOR IS ONE THAT THE RECEIVER HAS NO ISSUE IN -- THERE
IS NO IRON IN FIRE FOR THE RECEIVER -- BUT THE PARTIES
HOTLY DISPUTE IT, AND THAT IS IF THE COURT WILL LOOK AT
ORDER IN PARAGRAPHS 1 AND 2, THERE ARE THREE REFERENCES
TO FOUR OF THE JUDGMENT DEBTORS. FOUR OF THE JUDGMENT
DEBTORS APPARENTLY, BETWEEN THE PARTIES -- AND AS FAR AS
I CAN FIGURE OUT -- THIS RELATES TO SOME POSTURING
RELATING TO THE APPEAL IN THESE OTHER CASES. I THINK
MS. WAKILY WANTS HER FOUR OUT, WHILE CREDITOR FOR THE
DEBTOR WANTS THE FOUR IN. AGAIN, THE RECEIVER HAS
UTTERLY NO IRON IN THE FIRE, JUST SIMPLY FRAMING IT FOR
THE COURT.
MR. HOFFMAN: YOUR HONOR, FOUR OF THE
JUDGMENT DEBTORS ARE TAKING OUT THE LOAN. FOUR OF THE
JUDGMENT DEBTORS ARE PROVIDING THE MONEY, THAT'S ALL THE
ORDER SAYS. IF WE TAKE OUT THE WORD "FOUR" IT WILL BE
AN INACCURATE SUGGESTING THAT ALL OF THE JUDGMENT
DEBTORS -- MEANING NOT JUST MY CLIENT --
THE COURT: WHAT IS YOUR PROBLEM?
MS. WAKILY: YOUR HONOR, THE FOUR JUDGMENT
DEBTORS ARE OWNED BY THE AREZANO TRUST AND THE AQUASANTE
FOUNDATION AND POSSIBLY IN GAGGERO. WE WOULD LIKE THE
RECORD TO ACCURATELY REFLECT THAT THESE NEGOTIATIONS ARE
LARGELY BEING PAID BY ALL THE DEBTORS AND NOT JUST THE
FOUR ENTITIES.
THE COURT: WHY DO YOU CARE?
MS. WAKILY: I JUST WANT TO MAKE AN ACCURATE
RECORD.

176. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
39
THE COURT: ON THE GLOBAL SCALE, LET'S
ASSUME THEY ARE IN DEED STRUCTURING THIS IN A PARTICULAR
WAY FOR OTHER PURPOSES, AS A PRACTICAL MATTER, YOU HAVE
NO RIGHT TO DECIDE WHICH OF THE JUDGMENT DEBTORS PAY
THIS OFF, WHETHER IT IS ONE OR TWO OR THEY CONTRIBUTE
PRO RATA OR MR. GAGGERO PERSONALLY PAYS EVERYTHING,
YOU'VE GOT NO DOG IN THAT FIGHT.
MS. WAKILY: I JUST THINK THAT LIMITING IT
TO FOUR IS IT MISREPRESENTING THE REALITY OF IT.
THE COURT: WHY?
MS. WAKILY: BECAUSE I KNOW THAT THE AREZANO
TRUST AND THE AQUASANTE -- I KNOW THE AREZANO TRUST OWNS
THOSE ENTITIES.
THE COURT: SO.
MS. WAKILY: SO THE NEGOTIATIONS MUST HAVE
INVOLVED THEM AS WELL. BUT IF --
THE COURT: SO. WHO ARE -- WHO IS PAYING?
MR. HOFFMAN: THE FOUR JUDGMENT DEBTORS THAT
ARE LISTED IN THE DOCUMENTS, YOUR HONOR.
THE COURT: I DON'T KNOW WHO THEY ARE. WHO
ARE THE FOUR JUDGMENT DEBTORS LISTED IN THE DOCUMENTS.
MR. HOFFMAN: 511 0FW LP, YOUR HONOR; BLU
HOUSE; GINGERBREAD COURT LP -- SORRY THE CORRECT NAME IS
BLU HOUSE, LLC -- THE FOURTH ONE IS BOARDWALK SUNSET
LLC.
THE COURT: IS THERE A REASON?
MS. WAKILY: I GUESS BECAUSE IT IS NOT
REFLECTED. THEY ARE KEEPING THE DOCUMENTS -- IT SAYS

177. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
40
FOUR, BUT IT IS NOT CLEAR. AS LONG AS IT IS ON THE
RECORD, I AM OKAY WITH IT NOW.
THE COURT: THE DEEDS OF TRUSTS THAT
ACCOMPLISH THIS FINANCING ARE GOING TO BE OF RECORD.
MS. WAKILY: UH-UH.
THE COURT: I WOULD BE VERY SURPRISED IF ANY
-- IF WHOEVER IS DOING THIS IS NOT GOING TO HAVE THIS
RECORDED.
MS. WAKILY: UH-UH.
THE COURT: I MEAN IT IS CONCEIVABLE, YOU
WOULD SURE AS HECK WANT THE INVESTORS TO KNOW ABOUT THAT
IN ADVANCE INSTEAD OF SAYING YOU DON'T HAVE A RECORDED
BE INTEREST. I WILL LEAVE IT.
MS. WAKILY: ONE MORE THING FOR THE NOVEMBER
5 DEADLINE, BECAUSE OF THE TIME, CAN I GET A ONE-DAY
EXTENSION ON THAT -- ON PARAGRAPH 3.
THE COURT: YOU DON'T HAVE THE
ACKNOWLEDGMENT YET?
MS. WAKILY: NO, I NEED TO TALK TO RANDY
MILLER, THE SUPERVISING ATTORNEY AND HE WAS OUT OF
OFFICE --
THE COURT: I WILL CHANGE IT TO THE SIXTH.
MS. WAKILY: OKAY.
THE COURT: I HAVE SIGNED THIS NOW AND WE
WILL FILE STAMP IT AND WE WILL GIVE YOU EACH COPIES. WE
WILL MAKE COPIES WITH MY INTERLINEATIONS THERE, AND YOU
CAN HAVE THEM. IF YOU FEEL THAT YOU NEED CERTIFIED
COPIES, YOU CAN ARRANGE FOR THAT.

178. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
41
MR. HOFFMAN: THANK YOU, YOUR HONOR.
THE COURT: IT HELPS ME IF I UNDERSTAND THIS
A LITTLE BIT BETTER. I WAS CONCERNED THAT THE PROCEDURE
WE HAD WAS A LITTLE IRREGULAR, BUT IF THIS SATISFIES THE
INTEREST OF THE PARTIES, I AM SATISFIED.
MR. HOFFMAN: THANK YOU.
MR. CHATFIELD: THANK YOU YOUR HONOR.
MR. HOFFMAN: THANK YOU SO MUCH.
(PROCEEDING CONCLUDED.)

179. 1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
42