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page 1015
1 COURT OF APPEAL OF THE STATE OF CALIFORNIA
2 FOURTH APPELLATE DISTRICT
3 DIVISION ONE
4 ______________________________
)
5 LEGION FOR THE SURVIVAL OF )
FREEDOM, INC., ) DCA. NO. DO27959
6 )
PLAINTIFF AND ) FROM SAN DIEGO COUNTY
7 RESPONDENT, )
) HON. RUNSTON G. MAINO
8 VS. )
)
9 WILLIS CARTO, HENRY FISCHER, )
VIBET, INC., LIBERTY LOBBY, )
10 INC., ET. AL., )
)
11 DEFENDANTS AND )
APPELLANTS. )
12 ______________________________)
13
REPORTER’s APPEAL TRANSCRIPT
14
JANUARY 13, 1997
15
VOLUME 9
16
PAGES 1015-1055
17
18
APPEARANCES:
19
FOR THE PLAINTIFF AND JACQUES BEUGELMANS AND
20 RESPONDENT: THOMAS MUSSELMAN
1901 AVENUE OF THE STARS
21 CENTURY CITY, CA 90067
22 FOR THE DEFENDANTS AND PETER J. PFUND
APPELLANTS: 2382 S.E. BRISTOL
23 SUITE A
NEWPORT BEACH, CA 92660
24
25
26
BARBARA J. SCHULTZ, CSR, RPR
27 CSR NO. 8021
OFFICIAL REPORTER
28 VISTA, CALIFORNIA
page 1016
1 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
2 IN AND FOR THE COUNTY OF SAN DIEGO
3 DEPARTMENT 11 HON. RUNSTON G. MAINO
4
_____________________________
5 )
LEGION FOR THE SURVIVAL OF )
6 FREEDOM, INC., )
)
7 PLAINTIFF, ) NO. N64584
)
8 VS. )
)
9 WILLIS CARTO, HENRY FISCHER, )
VIBET, INC., LIBERTY LOBBY )
10 INC., ET. AL., )
)
11 DEFENDANTS. )
_____________________________)
12
13 REPORTER’s TRANSCRIPT
14 JANUARY 13, 1997
15
APPEARANCES:
16
FOR THE PLAINTIFF: THOMAS MUSSELMAN
17 1901 AVENUE OF THE STARS
CENTURY CITY, CA 90067
18
19
FOR THE DEFENDANTS: WAIER AND URTNOWSKI
20 BY: RANDALL S. WAIER
1301 DOVE STREET
21 NEWPORT BEACH, CA 92660
22
23
24
25
26
BARBARA J. SCHULTZ, CSR, RPR
27 CSR NO. 8021
OFFICIAL REPORTER
28 VISTA, CALIFORNIA
page 1017 1 VISTA, CALIFORNIA, JANUARY 13, 1997, DEPARTMENT D: 2 3 THE COURT: ON THE RECORD, THE LEGION FOR THE SURVIVAL 4 OF FREEDOM, INCORPORATED, VERSUS MR. WILLIS CARTO, ET AL., A 5 MOTION FOR A NEW TRIAL. 6 FIRST, LET’s TALK ABOUT THE MONEY. YOU MAY BE 7 AWARE THAT THERE’s $2,133.90 WE HAVE BEEN TRYING TO GET OUT 8 OF YOU. 9 MR. WAIER: NOBODY HAS INDICATED THAT. I HAVE NOT SEEN 10 ANYTHING COME TO OUR DIRECTION. IF THAT IS THE CASE, I'LL 11 MAKE SURE WE GET A CHECK OVER. I'M NOT -- 12 THE COURT: THE CLERK HAS BEEN CALLING YOUR OFFICE. 13 THEY KEEP SAYING MR. WAIER HAS TO APPROVE OF THIS. 14 MR. WAIER: WHO HAS BEEN SAYING THAT? I WOULD LIKE TO 15 KNOW THAT, IF THAT’s THE CASE. I'LL MAKE SURE IT’s TAKEN 16 CARE OF IMMEDIATELY. 17 THE CLERK: THE LAST PERSON WAS A WOMAN NAMED DEBBIE. 18 MR. WAIER: DEBBIE HAS BEEN GONE ALL WEEK. SHE’s IN 19 TODAY. I WILL MAKE SURE YOU GET IT OVER. HOW MUCH IS THE 20 AMOUNT? 21 THE COURT: A JURY FEE OF $131.90 AND A COURT REPORTER 22 FEE OF $2,002 ADD TO $2,133.90. THAT’s NUMBER ONE. 23 MR. WAIER: BY THE WAY, I WANT TO APOLOGIZE TO THE 24 COURT FOR THAT. I WAS UNAWARE OF IT. I WILL GET BACK ON 25 THE PEOPLE IN MY OFFICE. NOBODY BROUGHT THAT TO MY 26 ATTENTION. 27 THE COURT: ARE YOU REPRESENTING LIBERTY LOBBY? IF SO, 28 HOW DOES THAT WORK OUT? THEY HAD THEIR OWN ATTORNEY.
page 1018 1 MR. WAIER: WE HAD COCOUNSEL, AND COCOUNSEL WAS MARK 2 LANE FROM WASHINGTON. WE ARE LOCAL COUNSEL FOR LIBERTY 3 LOBBY IN THAT REGARD. HE WAS APPROVED PRO HAC VICE. 4 THE COURT: I WAS WONDERING THE RELATIONSHIP. 5 THROUGHOUT THE COURSE OF THIS TRIAL I SAW A REAL CONFLICT 6 SITUATION. I SUSPECT THAT’s WHY LIBERTY LOBBY HAD THEIR OWN 7 ATTORNEY. FURRS AND CARTOS ARE IN OPPOSITION TO EACH OTHER. 8 MR. WAIER: THEY ARE AND THEY ARE NOT IN SOME 9 RESPECTS. THE FURRS WERE DEFAULTED, SO THERE ARE 10 DIFFERENT — AS POINTED OUT IN THE PAPERWORK, THERE ARE 11 DIFFERENT CONSIDERATIONS WITH RESPECT TO THE PARTIES. 12 THE COURT: PROCEDURAL THINGS. YOU LOOK AT THE WHOLE 13 TRIAL. THE FURRS TO DEFEND THEMSELVES HAVE TO SAY MR. CARTO 14 EXCEEDED HIS AUTHORITY AND DIDN'T TELL THEM WHAT WAS GOING 15 ON, AND MR. CARTO TO DEFEND HIMSELF HAS TO SAY THE FURRS 16 WERE GIVEN FULL KNOWLEDGE OF WHAT WAS GOING ON, AND THEY 17 MADE BAD DECISIONS, AND I WAS SIMPLY CARRYING OUT THEIR 18 WISHES. THERE DEFINITELY WAS A CONFLICT. 19 MR. WAIER: THE CONFLICT HAS TO COME FROM THE PLEADINGS 20 ITSELF, AND THAT’s WHAT WE POINTED OUT TO THIS COURT WHEN 21 THE COURT RENDERED ITS INTENDED DECISION, AS WELL AS THE 22 STATEMENT OF DECISION. 23 THE COURT: THAT BRINGS US TO THE NEXT ISSUE. THAT WAS 24 THE STATEMENT OF DECISION. BEFORE WE BROKE, I SAID IT WAS 25 MY INTENTION TO SEND YOU A STATEMENT OF DECISION, AND THEN 26 YOU HAD 15 DAYS TO OBJECT TO IT. IT WAS SENT OUT ON 27 NOVEMBER 14TH, I THINK. THEN NOTHING HAPPENED UNTIL ABOUT 28 DECEMBER 27TH, WHICH IS A LOT LONGER THAN 15 DAYS.
page 1019 1 I'M STILL GOING TO HEAR IT, BUT THAT WAS THE 2 STATEMENT OF DECISION. THE LETTER EXPLAINING WHY I SAW 3 EVIDENCE IN A CERTAIN WAY OR DIDN'T SEE IT WAS JUST 4 SOMETHING THAT I FELT THAT THE PARTIES SHOULD HAVE, EVEN 5 THOUGH IT SOMETIMES CAUSES PROBLEMS TO DO IT. THEY SPENT A 6 LOT OF MONEY ON THE CASE WONDERING WHY DOES THE JUDGE DECIDE 7 IT THE WAY HE’s DECIDING IT. TO THE EXTENT THERE’s A 8 CONFLICT BETWEEN WHAT I SAID AND THE STATEMENT EXPLAINING MY 9 REASONING AND THE STATEMENT OF DECISION, OF COURSE THE 10 STATEMENT OF DECISION TAKES PRECEDENCE. 11 MR. WAIER, DO YOU HAVE ANYTHING YOU WANT TO TELL 12 ME OTHER THAN WHAT I NEED TO HAVE READ? 13 MR. WAIER: WHAT I TRIED TO DO BECAUSE OF WHAT I 14 PERCEIVED AT LEAST IN REVIEW OF THE STATEMENT OF DECISION, 15 IN REVIEW OF THE JUDGMENT AND REVIEW OF OTHER THINGS, ALL 16 PARTIES IN ESSENCE ARE TREATED FROM ONE SIDE OF THE TABLE AS 17 BEING IN UNITY. THAT’s WHY SEPARATE MOTIONS TO VACATE, 18 REOPEN AND SO FORTH WERE FILED WITH YOU FROM EACH INDIVIDUAL 19 PARTY. 20 AS I POINTED OUT IN THE PAPERWORK, BASED ON YOUR 21 LETTER OPINION AND BASED ON YOUR STATEMENT OF DECISION, IT 22 SEEMS THAT — SEEMS THAT THE ONLY LIABILITY WITH RESPECT TO 23 CERTAIN INDIVIDUALS WAS A JOINT AND SEVERAL LIABILITY 24 THEORY. 25 I WANT TO INDICATE ONE THING. THE FURRS, AMONG 26 ALL OTHERS OF THE DEFENDANTS, ARE TO BE TREATED 27 DIFFERENTLY. THEY'RE DEFAULTED PARTIES. THE LEGION HAS TO 28 STAND ON IT’s LAURELS TO THE PLEADING — ITS COMPLAINT.
page 1020 1 THE COURT INDICATED THAT IF THERE WAS ANY 2 WRONGDOING ON THE PART OF THE FURRS, AS I POINTED OUT, IT 3 WOULD HAVE BEEN THEY WERE GROSSLY NEGLIGENT, AND THAT THEY 4 SHOULD HAVE DONE SOME DUE DILIGENCE OTHER THAN LISTENING, I 5 ASSUME, OTHER THAN LISTENING TO MR. CARTO, ALTHOUGH THAT 6 WASN'T CLEAR IN THE DISCUSSION IN BOTH THE LETTER OPINION 7 AND STATEMENT OF DECISION. 8 THERE’s NO AUTHORITY THEY HAVE TO GO FURTHER THAN 9 TO GO TO WHAT THEY PERCEIVE AS A TRUSTED AGENT. AND THE 10 ONLY EVIDENCE BEFORE YOU IS THEY DID EVERYTHING ALONG THOSE 11 LINES. THEY LISTENED TO MR. CARTO. THERE WAS NOTHING THAT 12 INDICATED THEY HAD TO DO ANYTHING DIFFERENTLY, NOR DOES THE 13 LAW REQUIRE THEM TO DO THAT. MORE IMPORTANTLY, THERE IS NO 14 CLAIM AGAINST THE FURRS UNDER THE COMPLAINT FOR NEGLIGENCE, 15 AND THEY'RE A DEFAULTED PARTY. THEY HAVE TO LIVE AND DIE BY 16 THE PLEADING. 17 THE FOURTH CAUSE OF ACTION IS DIRECTED TO ONE 18 PERSON AND ONE PERSON ONLY, AND THAT IS WILLIS CARTO. THERE 19 IS NO DUTY ALLEGED AND SO FORTH THAT RAISES THE ISSUE OF 20 425.15 OF THE CODE OF CIVIL PROCEDURE. 21 IN MY PAPERWORK I ATTEMPTED TO GO THROUGH, AND I 22 TOOK GREAT PAINS TO GO THROUGH THE LEGISLATIVE HISTORY AND 23 COURT HISTORY IN CONNECTION WITH 425.15 AS IT RELATES TO THE 24 TORT REFORM ACT. WHAT BOUNCES OUT OF THAT IS VERY CLEAR 25 WITH RESPECT TO FURRS. THE PREPLEADING, NOT PLEADINGS — I 26 KNOW WHAT YOU INDICATED IN YOUR LETTER OPINION — THIS IS 27 PREPLEADING. IT’s JURISDICTION. THEY HAD TO FILE A 28 PREPLEADING VERIFIED COMPLAINT, AND THE REASON WHY THEY DID
page 1021 1 IT IS SIMPLE WITH RESPECT TO THE OTHER PREPLEADING STATUTES 2 425.14 AND ONE THREE WITH RESPECT TO PUNITIVE DAMAGES; ONE 3 FOUR WITH RESPECT TO RELIGIOUS ORGANIZATIONS. IT ALLOWS, AS 4 THE INDICATED, IT ALLOWS A PARTY WHO HAVE BEEN SERVED, 5 WHETHER THEY WANT TO ANSWER OR NOT A COMPLAINT, WHETHER THEY 6 WANT TO GO FORWARD WITH ANY ISSUE, WHETHER THEY WANT TO 7 SPEND THE MONEY OR TIME, AND LIKE BROUGHT UP IN THE BROWN 8 CASE, WHICH I CITED TO YOU, WHICH DEALT WITH AN ANALOGOUS 9 SECTION WHERE THERE’s A TIME LIMIT AND IT’s NOT COMPLIED 10 WITH, AND THERE WAS A TIME LIMIT, BEFORE YOU CAN FILE A 11 COMPLAINT YOU MUST HAVE A VERIFIED PETITION WITH AFFIDAVITS 12 AND A RULING BY THE COURT BEFORE YOU CAN FILE THE 13 COMPLAINT. AS TO A DEFAULTED PARTY, IT IS A VOID EXERCISE 14 IF YOU DON'T DO IT. SO AS TO THE FURRS, THERE’s NO QUESTION 15 THAT 425.15 NORMALLY APPLIES BUT MANDATES A DISMISSAL OF THE 16 COMPLAINT AND THE VACATION OF THE JUDGMENT AND DISMISSAL OF 17 THE COMPLAINT. THAT I THINK IS CLEAR. 18 SECOND OF ALL, THERE IS NO CLAIM OF NEGLIGENCE IN 19 THE COMPLAINT. DEFAULTED PARTY CAN RELY UPON THE PLEADING. 20 THAT’s WHAT THE WHOLE IDEA IS. THEY WERE A DOE DEFENDANT, 21 AS YOU ARE AWARE, AND THEY HAD AN OPPORTUNITY PRIOR TO 22 JUDGMENT BEING ENTERED TO ATTEMPT TO AMEND THE COMPLAINT. 23 THEY HAD AN OPPORTUNITY TO FILE A MOTION WITH RESPECT TO 24 THAT AS TO A DEFAULTED PARTY. IT HAS NO BEARING WHETHER 25 THEY COULD MOVE TO AMEND OR NOT. 26 THEY TOOK A DEFAULT ON WHAT THEY HAD AND DEFAULTED 27 THE FURRS. SO AS TO THE FURRS, THERE SHOULD BE AS A MATTER 28 OF LAW A VACATION OF THE JUDGMENT AND A DISMISSAL OF THE
page 1022 1 COMPLAINT. 2 WITH RESPECT TO HENRY FISCHER, I WAS VERY, VERY 3 THOROUGH WITH HENRY FISCHER’s MOTION, AS WELL AS IN THE 4 COLLECTIVE REPLY BRIEFS. 5 EVEN ASSUMING YOU FIND THAT 425.15 IS INAPPLICABLE 6 TO MR. FISCHER, I JUST AS SOON YOU DO FOR THE MOMENT, IF YOU 7 TAKE UNDER THE JOINT AND SEVERAL LIABILITY, WHICH IS THE 8 ONLY AREA THAT YOU PINNED MR. FISCHER ON, AND SOMEHOW HE'S 9 JOINTLY AND SEVERALLY LIABLE FOR THE CONVERSION CLAIM — I'M 10 NOT TALKING ABOUT THE TORT CLAIM. I'M TALKING ABOUT THE 11 FACTS OF THE CASE. TO DO THAT, TO SHOW HIM AS BEING JOINT 12 AND SEVERALLY LIABLE NOW WE CAN PRESENT TO THIS COURT — YOU 13 MUST SHOW BY EVIDENCE, AND I SUGGEST THERE WAS NONE, THAT HE 14 HAD KNOWLEDGE THAT MR. CARTO WAS INVOLVED IN ANY 15 WRONGDOING. THERE WAS NO EVIDENCE THAT MR. FISCHER HAD 16 KNOWLEDGE THAT MR. CARTO WAS DOING ANYTHING FOR QUOTE, AN 17 UNLAWFUL PURPOSE. WE POINTED THAT OUT IN THE POINTS AND 18 AUTHORITIES. THAT IS A KEY ELEMENT FOR JOINT AND SEVERAL 19 LIABILITY WITH RESPECT TO CONVERSION OR ANY OTHER TORT. 20 SECOND, MR. FISCHER CAN'T BE HELD LIABLE UNDER A 21 NEGLIGENCE CLAIM BECAUSE HE WASN'T SUED FOR NEGLIGENCE. THE 22 ONLY WAY THAT MR. FISCHER CAN BE HELD LIABLE IS UNDER A 23 JOINT AND SEVERAL LIABILITY THEORY. AND I SUGGEST TO THIS 24 COURT, AND YOU CAN REVIEW YOUR NOTES — I WENT OVER ALL OF 25 MY NOTES. IT’s NOT AS THOROUGH AS YOURSELF — THERE WAS NO 26 EVIDENCE, AS I POINTED OUT, WITH RESPECT TO MR. FISCHER. 27 THE ONLY THING HE DID WAS TO DO EXACTLY WHAT HE WAS SUPPOSED 28 TO.
page 1023 1 IF YOU TAKE A LOOK AT THE PLEADINGS, THEY HAVE THE 2 JUDICIAL ADMISSIONS. HE WAS TO HELP TRANSFER FUNDS TO 3 MR. ROCHAT. THERE WAS NO EVIDENCE HE DID ANYTHING OTHER 4 THAN THAT. NONE BEFORE THIS COURT. AND AS YOU KNOW, AN 5 AGENT IS TO FOLLOW THE ORDERS OF HIS PRINCIPAL OR HE COULD 6 HAVE BEEN HELD LIABLE, IF HE HADN'T DONE THAT. BUT MORE 7 IMPORTANTLY, AS I POINTED OUT, WHAT IS THE LAW IS THE LAW 8 AND WHAT THE LAW SAYS AS TO MR. FISCHER -- 9 THE COURT: ARE YOU SAYING MR. FISCHER IS SORT OF LIKE 10 A CLERK? 11 MR. WAIER: EXACTLY. 12 THE COURT: THEN WHY WAS HE, ACCORDING TO MR. CARTO, 13 PAID $250,000? 14 MR. WAIER: IT’s INTERESTING. YOU SAID THAT BECAUSE -- 15 YOU DIDN'T EVEN ALLOW THAT AS AN OFFSET AS PART OF YOUR 16 STATEMENT IN DECISION. YOU SAID THAT — THAT THERE WAS NO 17 PROOF OF CREDIBLE EVIDENCE IT WAS PAID. IF THERE’s NO 18 CREDIBLE EVIDENCE IT WAS PAID, AND THAT’s YOUR EVIDENCE, AND 19 THAT’s WHAT YOU ARE TELLING US, THEN THERE’s NO EVIDENCE 20 THAT IT WAS EVER PAID, THEREFORE, THE ONLY EVIDENCE THAT YOU 21 HAVE THAT MR. FISCHER DID ANYTHING CAME OUT OF MR. Cartos’ 22 OWN MOUTH. THAT WAS THE FACT HE TRANSFERRED FUNDS TO OR HE 23 SAID EXPEDITED FUNDS TO MR. ROCHAT. 24 THERE WAS ALSO A POWER OF ATTORNEY. WHAT DID THE 25 POWER OF ATTORNEY — WHAT YOU DID ADMIT INTO EVIDENCE STATED 26 HE WAS TO, PURSUANT TO WHAT LAVONNE FURR PUT IN THE POWER OF 27 ATTORNEY, YOU ARE TO EXPEDITE THE FUNDS TO MR. ROCHAT. 28 THAT’s ALL HE DID. HE FOLLOWED EXACTLY WHAT HE WAS TOLD TO
page 1024 1 DO. 2 BUT THAT BEGS EVEN THE QUESTION. THE QUESTION IS, 3 DID HE HAVE ANY KNOWLEDGE THAT MR. CARTO WAS DOING ANY WRONG 4 OR DOING ANYTHING FOR AN UNLAWFUL PURPOSE? THERE WAS NO 5 EVIDENCE THAT MR. FISCHER HAD ANY OF THAT KNOWLEDGE. THERE 6 WAS NO EVIDENCE THAT MR. FISCHER KNEW ANYTHING OTHER THAN 7 WHAT WAS BEING TOLD TO HIM BY MR. CARTO OR MRS. CARTO OR 8 ANYBODY ELSE. HE WAS GIVEN THE POWER OF ATTORNEY. HE DID 9 WHAT HE WAS SUPPOSED TO HAVE DONE IN THAT CASE, YOUR HONOR. 10 AS I POINTED OUT IN OUR PAPERWORK TO YOU, TO BE 11 HELD LIABLE — THAT’s THE WYATT V. UNION MORTGAGE CASE, A 12 CALIFORNIA SUPREME COURT CASE, YOU MUST SHOW THAT THE 13 INDIVIDUAL DEFENDANT DID TWO THINGS TO BE HELD FOR JOINT AND 14 SEVERAL LIABILITY: HE CONCURRED IN THE TORTIOUS SCHEME. HE 15 HAD KNOWLEDGE OF THE UNLAWFUL PURPOSE. 16 THERE WAS NO EVIDENCE. THEY HAD THE OPPORTUNITY 17 TO PUT ON EVIDENCE LIKE THAT. THERE WAS NO EVIDENCE, 18 CIRCUMSTANTIAL, INFERENCEWISE, IMPLIED, ANYTHING, THAT 19 MR. FISCHER KNEW ANYTHING OF ANY UNLAWFUL PURPOSE OF 20 MR. CARTO, OR THAT HE CONFERRED OR CONCURRED IN SOME 21 TORTIOUS SCHEME. THAT’s A CALIFORNIA SUPREME COURT CASE. 22 THE REASON WHY IT’s THERE LIKE THAT, YOUR HONOR, 23 IT’s SIMPLE, AND I THINK YOU PUT YOUR FINGER RIGHT ON TO 24 TOUCH IT, AND THAT IS THE FACT THAT THAT MEANS THAT THE 25 ATTORNEYS BACK IN LONDON COULD BE HELD FOR JOINT AND SEVERAL 26 LIABILITY. MR. FOETISCH COULD BE HELD FOR JOINT AND SEVERAL 27 LIABILITY HAD THEY BEEN SUED. MR. ROCHAT COULD HAVE BEEN, 28 AND ANY ATTORNEY WHO TOUCHED THAT MATTER OVER IN EUROPE
page 1025 1 COULD HAVE BEEN, AND THE SETTLING PARTIES AND THEIR 2 ATTORNEYS COULD POSSIBLY BE HELD UNDER THE OMNIBUS OR 3 GENERAL TERM WITH JOINT AND SEVERAL LIABILITY. AS THE 4 PLAINTIFF WOULD LIKE YOU TO FOLLOW, EVEN SECRETARIES COULD 5 BE. 6 THAT ISN'T WHAT JOINT AND SEVERAL LIABILITY IS ALL 7 ABOUT. WHEN IT COMES TO A TORT, YOU MUST HAVE KNOWLEDGE OF 8 AN UNLAWFUL PURPOSE. THERE WAS NO EVIDENCE, AND THAT IS 9 WHAT YOU HAVE HERE, NOT WHAT YOU CAN SUPPOSE OR NOT WHAT YOU 10 CAN GUESS AT. IT’s WHAT COMES FROM THAT WITNESS STAND 11 THROUGH TESTIMONY AND THROUGH DOCUMENTS, AND YOU HAVE NONE 12 BEFORE YOU. AND EVEN ASSUMING YOU FIND, AND YOU DID FIND 13 THAT THERE WAS NO CREDIBLE EVIDENCE THAT MR. FISCHER GOT 14 PAID ANYTHING, THAT’s WHY THERE WAS NO DEDUCTION OR OFFSET. 15 THE COURT: I'M NOT SAYING HE DIDN'T GET PAID. I'M 16 SAYING THAT IT WASN'T FOR THE PURPOSE OF TAKING THE MONEY 17 FROM WHERE IT WAS SUPPOSED TO GO — WHERE IT WAS TO WHERE IT 18 WAS SUPPOSED TO GO. 19 MR. WAIER: THE EVIDENCE THAT YOU HAVE BEFORE YOU, YOUR 20 HONOR, IS THE FACT THAT THEY NEEDED A LIAISON IN EUROPE TO 21 INTERFACE WITH THE VARIOUS ATTORNEYS. YOU ARE NOT DEALING 22 WITH ONE COUNTRY. YOU ARE DEALING WITH ENGLAND, 23 SWITZERLAND. YOU ARE DEALING WITH ITALY. YOU ARE DEALING 24 WITH BANKS AND SO FORTH. THEY NEED THE LIAISON OVER THERE. 25 THAT’s THE ONLY EVIDENCE BEFORE YOU, AND THE ONLY EVIDENCE 26 YOU HAVE IS THAT MR. FISCHER DID WHAT HE WAS COMMISSIONED TO 27 DO, AND HE WAS PAID FOR THAT. AND ALL — NO, THE BEST 28 EVIDENCE WOULD HAVE BEEN SOME SORT OF DISTRIBUTION TO HIM.
page 1026 1 WE DID MAKE OBJECTIONS DURING THE COURSE OF THE 2 TRIAL AS TO THE BEST EVIDENCE. MR. CARTO DID INDICATE THAT 3 $250,000 WERE PAID TO MR. FISCHER, ASSUMING THAT THERE WAS 4 NOTHING INDICATING THAT THAT WAS UNREASONABLE. THERE WAS 5 NOTHING INDICATING BY THE LEGION THAT MR. FISCHER DIDN'T DO 6 WHAT HE WAS SUPPOSED TO HAVE DONE. BUT MORE IMPORTANTLY, 7 THERE WAS NO EVIDENCE THAT HE HAD A KNOWLEDGE THERE WAS ANY 8 UNLAWFUL PURPOSE. 9 THE COURT: DOESN'T THE WHOLE DISCUSSION SORT OF GET 10 BACK TO THE TERRIBLE CONFLICT SITUATION? 11 MR. WAIER: I'M NOT SURE IT DOES. THE CONFLICT DOESN'T 12 ARISE UNLESS AT THE POINT IN TIME YOU CAN HAVE AN APPARENT 13 OR YOU CAN HAVE A REAL CONFLICT. AND IN SOME RESPECTS, YES, 14 THERE MAY BE A CONFLICT WITH RESPECT TO MR. FISCHER. THE 15 FURRS ARE A SEPARATE ENTITY. THEY WERE DEFAULTED. FISCHER 16 WAS NOT. HE WAS DEFAULTED AND CAME BACK IN AND WAS — THE 17 DEFAULT WAS SET ASIDE. 18 BUT WITH RESPECT TO MR. FISCHER, THAT AND THE 19 REASON I WANT TO RAISE THE ISSUE — I CAN SEE WHERE THE 20 COURT IS COMING FROM. YOU NEED TO SEPARATE YOURSELF AND 21 LOOK AT MR. FISCHER INDIVIDUALLY AS TO HOW THE COMPLAINT 22 RELATES TO HIM. 23 AS I POINTED OUT IN OUR PAPERWORK I LAID BARE ALL 24 OF THE ALLEGATIONS AGAINST MR. FISCHER, AND THOSE 25 ALLEGATIONS DON'T AMOUNT TO ANYTHING, AND THEY DIDN'T PROVE 26 UP THE ALLEGATION ITSELF WITH RESPECT TO MR. FISCHER. 27 MY POINT IS, YOUR HONOR, IT STILL DOESN'T GO TO 28 THE ELEMENT. CONFLICT OR NO CONFLICT, IT DOESN'T GO TO THE
page 1027 1 ELEMENTS THEY NEEDED TO PROVE THAT THEY DID NOT PROVE. AND 2 THAT IS KNOWLEDGE OF AN UNLAWFUL PURPOSE. 3 AND THERE WAS NO TESTIMONY. THERE WAS NO 4 INDICATION, AND WHICH BRINGS ME TO AN INTERESTING QUESTION, 5 A COUPLE OF INTERESTING QUESTIONS, WHICH LEAVES ME UP IN THE 6 AIR BASED ON YOUR LETTER OPINION. 7 FIRST OF ALL, WHO WAS THE LEGION IN 1985? NOW WE 8 RAISED ISSUES YOU DIDN'T NEED TO HAVE BOARD MEETINGS. THAT 9 WAS IN THE PAPERWORK. MAJORITY OF DIRECTORS CAN MAKE 10 DECISIONS UNDER AN OSTENSIBLE AUTHORITY. THAT’s CORPORATE 11 LAW, NONPROFIT CORPORATE LAW. 12 AS THIS COURT KNOWS, BASED ON THE EXHIBITS, THE 13 LEGION WAS ONLY ENTITLED IN 1985, '86, '87, '88, '89, '90, 14 '91 TO HAVE THREE DIRECTORS. THAT’s ALL THEY WERE 15 AUTHORIZED TO DO. WE DO KNOW THE EVIDENCE WAS UNREFUTED, 16 WAS ARGUED AGAINST THAT LEWIS AND LAVONNE FURR WERE 17 DIRECTORS. THERE WERE TWO OR THREE OTHER DIRECTORS AT THAT 18 TIME. 19 IT’s QUESTIONABLE WHO THAT THIRD DIRECTOR WAS ALL 20 DURING THAT PERIOD OF TIME. AND THE COURT DISBELIEVED 21 MR. CARTO; THAT MR. CARTO HAD SOME RIGHT TO APPOINT 22 DIRECTORS. I'M NOT GOING TO QUARREL WITH THAT. YOU HAVE -- 23 YOU VIEWED THE EVIDENCE, AND THAT’s YOUR DECISION. HOWEVER, 24 LEWIS AND LAVONNE FURR UNDER CORPORATE LAW HAVE THE RIGHT TO 25 MAKE, BECAUSE THEY'RE A MAJORITY, THEY DON'T NEED TO HAVE 26 MEETINGS WITH RESPECT TO CORPORATE POWERS, INCLUDING 27 ENTERING AGREEMENTS. WE DON'T KNOW WHO THE DIRECTORS WERE. 28 THE THIRD DIRECTORS WERE — THE BURDEN OF PROOF IS ON THE
page 1028 1 LEGION TO SHOW NO CORPORATE AUTHORITY. THERE WAS NO 2 EVIDENCE THAT LEWIS AND LAVONNE FURR DIDN'T HAVE CORPORATE 3 AUTHORITY. THEY DID. THAT’s SUBMITTED BY BOTH SIDES. 4 NOW SO WHO WAS THE LEGION? IT WAS LEWIS AND 5 LAVONNE FURR. THAT WAS THE EVIDENCE, UNLESS THIS COURT CAN 6 ENLIGHTEN ME AND MR. MUSSELMAN AS TO WHO ELSE WAS THE 7 LEGION. 8 WHO WERE THE FURRS TO GO TO? WHO WAS MR. CARTO TO 9 GO TO? THAT WAS THE BURDEN ON THE LEGION. IF THE LEGION 10 HAD OTHER DIRECTORS AT THAT POINT IN TIME, AND THE FURRS 11 DIDN'T HAVE AUTHORITY AS DIRECTORS, WHICH THEY NEVER ARGUED 12 THEY DIDN'T, IT WAS NEVER POINTED OUT OR BROUGHT OUT AT 13 TRIAL. AND IN OTHER WORDS, THE QUESTION IS — THE 14 OVERRIDING QUESTION IS WHO WAS THE LEGION, AND WHO COULD 15 MAKE DECISIONS? 16 NOW IMPLIEDLY IN YOUR DECISION, YOUR HONOR, THE 17 FURRS DID HAVE AUTHORITY TO MAKE DECISIONS. HOWEVER, 18 UNDER — BASED ON WHAT I CAN READ, READ THROUGH THE LINES, 19 YOU ARE SAYING THEY SHOULD HAVE WENT OUT AND ASKED OTHER 20 PEOPLE. WELL, WHEN? 1985? 1986? '87? '88 OR '89? THEY 21 COMMISSIONED THE ONLY PERSON THEY BELIEVED HAD KNOWLEDGE. 22 WHO ELSE WERE THEY SUPPOSED TO GO OUT AND TALK ABOUT — TALK 23 TO? 24 THERE WAS NOBODY ELSE WITHIN THE LEGION. SO THAT 25 BECOMES A REAL SERIOUS ISSUE. THEY DID HAVE THE AUTHORITY 26 IN '85 TO MAKE AN AGREEMENT WITH MR. CARTO. THEY HAD, AND I 27 WANT YOU TO LOOK BACK ON THAT EVIDENCE, BECAUSE IT'S 28 EXTREMELY IMPORTANT.
page 1029 1 THE COURT: YOU ARE TALKING ABOUT WHEN THEY SAID THAT 2 MR. CARTO COULD TAKE THIS MONEY AND USE IT FOR OTHER GOODS, 3 SERVICES? 4 MR. WAIER: COULD USE THE DISCRETION IN HOW TO DISBURSE 5 IT. 6 THE COURT: WAIT A SECOND. DOESN'T ALSO THE LAW IN 7 THIS STATE REQUIRE THAT IF YOU ARE GOING TO DO THAT, 8 NONPROFIT CORPORATION, YOU HAVE TO NOTIFY THE ATTORNEY 9 GENERAL? 10 MR. WAIER: YOUR HONOR, THAT IF IT — AND THIS GETS TO 11 MY — AND I KNEW YOU WERE GOING TO COME IN THAT, CORRECT, I 12 KNEW EXACTLY. THAT’s WHY I WAS COMING TO THE SECOND ISSUE. 13 WHAT WAS THE CORPORATE OPPORTUNITY? WHAT WAS THE 14 ASSET? THAT DEALS WITH AN ASSET IN 1985, YOUR HONOR. IT 15 WAS LEFT KIND OF VAGUE. AND WHAT YOU SENT BACK TO US — AND 16 IT WAS LEFT VAGUE AT TRIAL. WHAT WAS THE ASSET IN 1985? 17 WHAT WAS IT? THERE WAS NO ASSET IN 1985. THERE WAS A 18 QUOTE, CORPORATE OPPORTUNITY THAT YOU SAID, CORPORATE 19 OPPORTUNITY. 20 WHAT WAS THE OPPORTUNITY? WHAT WAS THE 21 OPPORTUNITY IN 1985? THERE WAS NO OPPORTUNITY IN 1985. YOU 22 CAN'T CONSIDER A CORPORATE OPPORTUNITY TO GO OVERSEAS AND 23 FIGHT A WILL THAT LEFT YOU NOTHING OTHER THAN AS A RESIDUAL 24 BENEFICIARY, WHICH NOW WAS RENDERED MOOT BECAUSE THE PRIMARY 25 BENEFICIARY WAS STILL ALIVE WHEN SHE DIED. IN OTHER WORDS, 26 YOU GOT TO LOOK AT THE TIME FRAME WHEN THIS TOOK PLACE. IS 27 THAT CONSIDERED TO BE A CORPORATE OPPORTUNITY? IS THAT WHAT 28 THE COURT WAS REFERRING TO IN THE LETTER OPINION AS THE
page 1030 1 CORPORATE OPPORTUNITY? WHAT EVIDENCE DO YOU — THE ONLY 2 EVIDENCE THAT YOU HAD WAS AN ARGUMENT BY MR. BEUGELMANS THAT 3 THE LEGION COULD HAVE HAD MONEY IN 1986 TO WAGE THIS BATTLE 4 OVERSEAS ON A PRAYER. REMEMBER, MR. MARCELLUS WASN'T IN THE 5 LEGION IN 1986. HE ADMITTED IT. THE FURRS, WHO WERE THE 6 LEGION AND THE ONLY ONES IN THE LEGION, SAID THEY DIDN'T 7 HAVE THE MONEY TO DO IT. THEY DIDN'T HAVE THE MONEY TO DO 8 IT. 9 WE DO HAVE A LAW IN CALIFORNIA THAT I POINTED OUT 10 AT THE TIME OF TRIAL, NOT POINTED OUT IN THE PAPERWORK, I 11 POINTED IT OUT IN THE CLOSING ARGUMENT, AND I DIDN'T WANT TO 12 BE REDUNDANT. YOU HAVE TO AVOID SPECULATION AS A CORPORATE 13 NONPROFIT CORPORATE EXECUTIVE, DIRECTOR AND SO FORTH. I 14 ARGUED THAT AD NAUSEAM. 15 MY POINT IS WHAT WAS THE CORPORATE OPPORTUNITY TO 16 GO OVERSEAS TO FIGHT A BATTLE OVERSEAS? YOU SAID THERE WAS 17 A CORPORATE OPPORTUNITY. I DON'T KNOW WHAT THAT CORPORATE 18 OPPORTUNITY WAS, AND THERE’s NO EVIDENCE OF THIS 19 OPPORTUNITY, ESPECIALLY WHEN THE PRIMARY BENEFICIARY IS 20 STILL ALIVE AND HAS THE ASSETS. THERE WAS NO ASSET OF THE 21 LEGION. 22 THE COURT: WE'RE STARTING TO REPEAT OURSELVES. 23 MR. WAIER: I'M SORRY. SO THAT LED INTO THAT ISSUE 24 WHAT IS THE CORPORATE OPPORTUNITY. AND I DON'T THINK WE 25 REALLY HAVE A DEFINITION OF THAT. BUT THIS IS VERY 26 INTERESTING. AS I POINTED OUT IN CLOSING ARGUMENT, AND I 27 DON'T THINK IT WAS REALLY RESOLVED IN THE LETTER OPINION, IN 28 1990 THE COURT COULD VERY WELL SAY THERE WAS CORPORATE
page 1031 1 ASSETS THERE BECAUSE THE CASE WAS SETTLED. AND ASSUMING THE 2 AMBIGUITIES AND THE DISTRIBUTION AGREEMENT WHERE THE LEGION 3 WAS DEFINED AS CARTO AND THE LEGION — I INTERPRETED THAT'S 4 THE LEGION. I DON'T CARE. THAT’s THE DEAL STRUCK. 5 ASSUME THAT’s THE PREDICATE TO THE ASSET. THIS IS 6 IN 1990. REMEMBER ALL THE OTHER EVENTS. YOU ARE RIGHT, 7 CARTO, FOR WORK TO BE DONE. YOU CAN DISTRIBUTE IT. IT'S 8 PRIOR TO THE DISTRIBUTION AGREEMENT. THAT’s THE EVIDENCE. 9 WELL, YOUR HONOR, IT’s INTERESTING. THAT’s WHY I SAID, HAVE 10 YOUR CAKE AND EAT IT TOO IN MY CLOSING ARGUMENT. WHO HAD 11 THE AUTHORITY TO APPROVE OR RATIFY THE DISTRIBUTION 12 AGREEMENT THAT WOULD BE THE PREDICATE TO THE ASSET? THAT'S 13 THE FURRS. NOW IF YOU ARE SAYING THAT THE RED HERRING ABOUT 14 THE CORPORATE MEETINGS — THERE’s NO CORPORATE MEETING, AND 15 I TEND TO DISBELIEVE THIS, GREAT. PUT ALL DUE WEIGHT TO 16 THAT. HOWEVER, THEN THE DISTRIBUTION AGREEMENT WAS NEVER 17 RATIFIED, WAS NEVER SANCTIONED BY THE CORPORATION. IF YOU 18 TAKE THAT ASPECT OF IT, THEN THERE WAS NO — NO ASSET 19 BECAUSE MR. CARTO NEVER HAD AUTHORITY TO ENTER INTO THAT ON 20 BEHALF OF THE LEGION BECAUSE YOU ARE CLAIMING THAT LEWIS AND 21 LAVONNE FURR HAD NO AUTHORITY, IF YOU VIEW IT IN THAT 22 LIGHT. 23 SO THAT’s WHERE I'M COMING BACK TO. YOU CAN'T SAY 24 THEY CAME INTO AN AGREEMENT HERE. YES, THEY CAN ENTER INTO 25 THIS AGREEMENT HERE, WHICH MAKES IT A CORPORATE ASSET. THE 26 LEGION HAS TO SANCTION THIS DISTRIBUTION AGREEMENT. THE 27 LEGION COULD HAVE SAID AT THAT TIME, MR. CARTO, YOU ARE 28 WRONG. WE WANT 100 PERCENT. I DON'T WANT YOU TO SETTLE
page 1032 1 THAT CASE. WE WANT 90 PERCENT. WE DON'T WANT 45 PERCENT. 2 BUT WHO WAS THE LEGION AGAIN? 3 THE COURT: YOU KEEP TALKING ABOUT THE ASSET. PART OF 4 YOUR ARGUMENT DURING THE COURSE OF TRIAL OR MR. Carto’s 5 ARGUMENT WAS AT THE TIME MISS FARREL DIED SHE HAD ALREADY 6 SET UP THIS NECA CORPORATION AND GIVEN HER MONEY TO NECA AND 7 GIVEN THE NECA SHARES TO THE LEGION. SO WE HAVE ALL THE 8 CONFLICTING TYPE OF STATEMENTS BY YOU AND MR. CARTO AND 9 MR. FISCHER AS TO WHETHER THIS IS AN ASSET OR NOT. 10 HIS ARGUMENT, WHEN HE GOES TO EUROPE, IS THAT I'M 11 NOT IN THE WILL. THAT’s TRUE BECAUSE ALREADY I HAD RECEIVED 12 THIS MONEY. THAT’s WHAT HE TESTIFIED TO. 13 MR. WAIER: HE DIDN'T TESTIFY TO THAT. WHAT HE 14 TESTIFIED TO, YOUR HONOR, AND LET’s GET BACK TO THE 15 TESTIMONY. FIRST YOU LUMPED FISCHER WITH MR. CARTO. I 16 DON'T THINK THAT’s FAIR. THE EVIDENCE WASN'T THERE TO LINK 17 HIM IN OTHER THAN THE POINT OF THE FACT THAT HE WAS HIRED BY 18 MR. CARTO OVERSEAS PURSUANT TO A POWER OF ATTORNEY FOR WHICH 19 HE RECEIVED MONEY. THAT’s THE ONLY EVIDENCE — I MEAN, WHAT 20 CAME FROM THAT WITNESS STAND. 21 THE COURT: YOU DON'T THINK YOU CAN DRAW ANY INFERENCE 22 FROM THE FACT MR. CARTO SAYS HE GETS $250,000 THAT HE'S 23 ACTING AS SOMETHING MORE THAN A MERE SECRETARY OR CLERK OR 24 SOMETHING AND JUST DOING A MINISTERIAL-TYPE JOB? 25 MR. WAIER: YOUR HONOR, I WILL SAY THIS. OVER A 7-YEAR 26 PERIOD OF TIME THAT THIS ALL TRANSPIRED, OVER 7 YEARS, AND 27 IT WAS MORE THAN JUST MINISTERIAL THAT HE DID. HE HAD TO 28 INTERFACE BETWEEN THE ATTORNEYS AND MR. ROCHAT AND WITH THE
page 1033 1 BANK. IT WAS MORE THAN JUST THAT. WHAT WAS INDICATED IS 2 THAT BECAUSE AN EXPENSIVE PROPOSITION WHEN YOU ARE LOOKING 3 OVERSEAS — IT’s NOT SOMETHING LIKE YOU HAVE AN OFFICE NEXT 4 DOOR AND THE OFFICE NEXT DOOR WILL BE USED AS EXPEDITER, AND 5 THERE REALLY IS NO OTHER THAN WHAT MR. CARTO SAID, AND HE 6 DID TESTIFY THAT WAS FOR THE WORK THAT WAS BEING DONE 7 PURSUANT TO THE POWER OF ATTORNEY. 8 YOU HAVE NOTHING THAT INDICATES THAT MR. FISCHER 9 DID ANYTHING OTHER THAN WHAT HE WAS ASKED TO DO. YOU DID 10 NOT HAVE ANYTHING INDICATING THAT HE TOOK MONEY FOR HIS 11 OWN. MORE IMPORTANTLY, YOU DIDN'T HAVE KNOWLEDGE OF AN 12 UNLAWFUL PURPOSE. THAT’s WHERE YOU DRAW AN INFERENCE. 13 WHERE IS THE UNLAWFUL PURPOSE THAT MR. FISCHER HAD KNOWLEDGE 14 OF? HE DIDN'T HAVE ANY KNOWLEDGE OF IT. HE DIDN'T KNOW 15 WHETHER IT WASN'T -- 16 THE COURT: WE'RE JUST REARGUING AND REDOING EVERYTHING 17 TWO AND THREE TIMES. 18 LET ME ASK A FEW QUESTIONS AND GO TO THE PLAINTIFF 19 ON THE 425.15 ISSUE. YOU DID CITE ME A CASE THAT APPEARS TO 20 BE ON POINT, TWINE V. COMPTON SUPERMARKET, 1986 CASE, 179 21 CAL. APP. 3D 514, WHICH IS A DEFAULT CASE, SAYING THAT THEY 22 SHOULD HAVE FILED THE PAPERS BEFORE THEY FILED THE 23 COMPLAINT. BUT FOR MR. FURR AND MRS. FURR TO BE WITHIN THAT 24 SECTION, THEY HAVE TO BE NONCOMPENSATED DIRECTORS. WHERE IS 25 THE EVIDENCE THEY WERE NONCOMPENSATED? 26 MR. WAIER: MR. CARTO TESTIFIED THEY WERE 27 UNCOMPENSATED. IT WAS ADMITTED BY THE LEGION THEY WERE 28 UNCOMPENSATED. THAT CAME OUT DIRECTLY IN TESTIMONY. THERE
page 1034 1 WAS NOTHING TO REFUTE THAT. 2 THE COURT: THEN WE KNOW IT APPLIES ONLY TO NEGLIGENT 3 ACTIONS, SO IT WOULDN'T APPLY TO THE CONVERSION ACTION. 4 MR. WAIER: I DISAGREE THERE. THE OTHER CASES UNDER 5 THE OTHER SECTIONS DEALT WITH THAT. I CAN PROVIDE THE COURT 6 WITH SUPPLEMENTAL AUTHORITIES, IF YOU LIKE, TO SEE WHERE THE 7 COURT SAID INTERPRETED NO CAUSE OF ACTION, AND THE OTHER 8 CASE ITSELF TO INCLUDE CAUSES OF ACTION THAT RELATE TO 9 NEGLIGENCE. 10 THE ONLY WAY ANY CONVERSION CLAIM COULD BE HIT TO 11 THE FURRS WOULD BE BECAUSE OF THEIR GROSS NEGLIGENCE BASED 12 ON WHAT YOU INDICATED, WHEN A CAUSE OF ACTION SPRINGS FROM 13 THEIR ACTIVITIES, VIS-A-VIS, NEGLIGENCE. THAT’s WHAT YOU 14 INDICATED. THEIR ONLY CRIME IS, QUOTE, THEY WERE GROSSLY 15 NEGLIGENT. 16 ALL OF THOSE CAUSES OF ACTION — AND THAT RELATES 17 BACK TO THE OTHER CASES THAT HAVE INTERPRETED THE TORT 18 REFORM ACT. I DID NOT PROVIDE THOSE. I DIDN'T ANTICIPATE 19 YOU WOULD INDICATE THAT. I COULD PROVIDE THAT AUTHORITY IN 20 VERY SHORT ORDER, IF YOU LIKE THAT. THE CALIFORNIA SUPREME 21 COURT AND COURT OF APPEAL HAVE INTERPRETED THAT WAY. 22 THE COURT: LET ME GO TO THE PLAINTIFF, AND THEN I'LL 23 COME BACK TO YOU. 24 THE QUESTION TO THE PLAINTIFF WOULD BE THIS. IS 25 THERE SOMETHING WRONG WITH THIS JUDGMENT? IF SO, WHAT IS 26 IT? 27 MR. MUSSELMAN: THE ONLY THING I CAN SEE IS THAT YOUR 28 HONOR SIGNED IT THREE DAYS BEFORE THE 10-DAY EXPIRATION
page 1035 1 PERIOD FOR THEM TO OBJECT TO THE FORM OF THE JUDGMENT. THEY 2 HAVEN'T CITED ANY LAW SHOWING THAT’s A FATAL DEFECT, SO WE 3 PROPOSE IN THE PAPERS IF YOUR HONOR FOUND ANY SUCH LAW THE 4 JUDGMENT COULD BE VACATED AND REENTERED. THEY CITED A LAW 5 THAT SIMPLY DEALT WITH STATEMENT OF DECISION. OTHER THAN 6 THAT, THERE’s NOTHING WRONG WITH THE JUDGMENT. THE 7 JUDGEMENT SUPERSEDES ANY STATEMENT OF DECISION. NO 8 STATEMENT OF DECISION WAS REQUESTED. 9 IN ANY CASE, SEVERAL OF THE PERSONS WHO ARE 10 SPEAKING THROUGH MR. WAIER ARE DEFAULTED AND DO NOT HAVE THE 11 RIGHT TO SEEK ANY TYPE OF RELIEF FROM THE COURT, UNLESS THEY 12 HAVE THE DEFAULT SET ASIDE. 13 THE FURRS DON'T HAVE THE RIGHT TO ARGUE ANYTHING. 14 ALSO, LIBERTY LOBBY AND VIBET DIDN'T FILE A MOTION 15 THAT’s SET BEFORE YOUR HONOR THIS MORNING. THEY SHOULDN'T 16 BE ALLOWED TO ARGUE ANYTHING EITHER. THEY FILED A NOTICE 17 THEY MIGHT IN THE FUTURE FILE A MOTION, BUT THEY DIDN'T IN 18 FACT FILE SUCH A MOTION. SO LIBERTY LOBBY AND VIBET AND THE 19 FURRS SHOULDN'T BE HEARD TO ARGUE ANYTHING THIS MORNING. 20 HOWEVER, WE'RE PREPARED TO ADDRESS ANYTHING YOUR 21 HONOR WANTS ADDRESSED. WE'RE NOT HERE TO REARGUE THE ENTIRE 22 TRIAL AGAIN. 23 THE COURT: WHAT ABOUT THE NEGLIGENCE ACTION AGAINST 24 THE FURRS? WERE THEY NOT LISTED IN THE NEGLIGENCE CAUSE OF 25 ACTION? 26 MR. MUSSELMAN: CAN'T TELL YOU FROM MEMORY, BUT DURING 27 THE TRIAL WHERE THAT ISSUE CAME UP WE MADE CLEAR WE WERE 28 PURSUING THEM ON A CONSPIRACY TO CONVERT. ANY ELECTION THAT
page 1036 1 WE MADE — WAS MADE AT THAT TIME. IT COULDN'T HAVE BEEN 2 MUCH CLEARER. THE RECORD SPEAKS FOR ITSELF. SO WE THINK 3 IT’s COMPLETELY IRRELEVANT WHETHER YOUR HONOR HAS HAD 4 JURISDICTION OVER A NEGLIGENCE CLAIM AGAINST THEM OR NOT. 5 ALSO THE EVIDENCE WILL SHOW THEY RECEIVED MONEY 6 FROM THE DISTRIBUTIONS, SO WE DO DISAGREE WITH MR. WAIER'S 7 CONTENTION THAT THE PLAINTIFFS STIPULATED THAT THEY WERE NOT 8 PAID. THAT’s NOT WHAT THE EVIDENCE SHOWS. 9 ALSO BECAUSE YOUR HONOR DID NOT AWARD THE REQUEST 10 OF PUNITIVE DAMAGES, THERE’s NO CONSEQUENCE TO WHETHER A 11 JUDGMENT WAS ENTERED ON TORT OR NONTORT CLAIMS. BUT ANY 12 CASE, WE DID ELECT TO ASSERT TORT CLAIMS. THEIR ARGUMENT 13 UNDER 425.15 TO THE FURRS IS IRRELEVANT. YOU ARE ALLOWED TO 14 ASSERT TORT CLAIMS. YOU DON'T HAVE TO SEEK PERMISSION FROM 15 ANYONE FOR WRONGFUL DEATH OR ANYTHING ELSE. 16 THE COURT: ANYTHING ELSE ON THE PLAINTIFF’s SIDE? 17 MR. MUSSELMAN: ONLY IF YOU WANT SOMETHING ADDRESSED. 18 THE PAPERS SUFFICIENTLY SET FORTH EVERYTHING. 19 MR. WAIER: THOSE LINES THEY WERE — FIRST OF ALL, LET 20 ME ADDRESS LIBERTY LOBBY AND VIBET UNDER 659. THERE IS NO 21 FORMAL REQUIREMENT FOR POINTS AND AUTHORITIES, A FORMAL 22 MOTION OR OTHERWISE. THE INTENTION TO MOVE FOR NEW TRIAL, 23 VACATE, SO FORTH IS CONSIDERED A MOTION. PERIOD. YOU DON'T 24 NEED TO DO ANYTHING FURTHER. THAT GIVES YOU THE RIGHT TO 25 COME INTO THIS COURT AND ARGUE ANY POINT YOU WANT RAISED 26 WITHOUT SUPPLYING PAPERWORK. AND YOU CAN RELY UPON THE 27 MINUTES OF THIS COURT FOR PURPOSES OF THAT ARGUMENT. 28 SECOND, WITH RESPECT TO THE FURRS, THEY ARE A
page 1037 1 DEFAULTED PARTY. THEY CAN BRING A MOTION TO VACATE 2 JUDGMENT. THAT WOULD BE CONSIDERED THE SAME AS A MOTION TO 3 SET ASIDE JUDGMENT. THAT WE DID PROVIDE AUTHORITY FOR 4 THAT. IF YOU VIEW THE CASE, WE — EVEN TWINE TALKS ABOUT 5 THAT. TWINE WAS A MOTION TO VACATE UNDER 65 — 657 — NOT 6 TWINE. THAT WAS THE BROWN CASE WAS UNDER 657. 7 WHAT THE BROWN CASE SAID, WAS YEAH, DEFAULTED 8 PARTY CAN BRING IT BY WAY OF MOTION TO VACATE THE JUDGMENT. 9 IT’s THE SAME THING AS MOTION TO SET ASIDE THE JUDGMENT. 10 THE COURT: I THINK YOU MAY HAVE THE WRONG CASE, BROWN 11 V. SUPERIOR COURT. 12 MR. WAIER: THAT DEALT WITH THE TIME LIMIT TO BRING 13 CERTAIN ISSUES WITH RESPECT TO PUNITIVE DAMAGES, SAYING 14 THOSE SECTIONS WERE — THAT THOSE SECTIONS WERE 15 JURISDICTIONAL. THE TIME LIMITS AND THE TORT REFORM ACTION 16 SECTIONS FROM 425.11 TO 425.16 IN ESSENCE INFERRED THEY WERE 17 JURISDICTIONAL. THAT’s THE IMPORTANT ISSUE. THAT’s WHY THE 18 FIRST. 19 AND IT’s VERY INTERESTING, YOUR HONOR, A NEGLIGENT 20 CLAIM WAS LODGED. IT WAS A NEGLIGENT COMPLAINT. THEY WERE 21 SUED AS A DOE DEFENDANT SIMILAR TO THE CASES WE REFERRED TO 22 IN THE PAPERWORK AS TO THE FURRS. THEY WERE DEFAULTED. AS 23 SUCH, THEY'RE ENTITLED TO RELY UPON THE PLEADING WITH 24 RESPECT THEY CAN'T GO AND NOW SEEK TO AMEND THE PLEADING ON 25 A DEFAULT PROVE-UP. YOU CAN'T DO IT. YOU LIVE OR DIE WHAT 26 IS THERE ON THE PLEADING. NEGLIGENCE WAS SUED. YOU CAN'T 27 PARE OUT THE COMPLAINT, SAY, WE CAN PARE OUT THE COMPLAINT 28 BEFORE A COMPLAINT IS FILED WITH A CAUSE OF ACTION FOR
page 1038 1 NEGLIGENCE. IT DOESN'T MEAN IT’s THE SOLE CAUSE OF ACTION. 2 WITH THE CAUSE OF ACTION FOR NEGLIGENCE YOU MUST FOLLOW THE 3 PREPLEADING REQUIREMENTS OF 425.15. 4 THIS COURT FOUND THAT THE FURRS — AND THAT’s WHY 5 I'M SAYING THE ISSUE OF WHETHER YOU FOUND FOR NEGLIGENCE OR 6 DIDN'T FIND FOR NEGLIGENCE IS IRRELEVANT AS TO THE FURRS 7 EXCEPT TO THE EXTENT THAT THAT WAS THEIR ONLY CRIME, 8 ACCORDING TO YOU, YOUR HONOR, WAS THE FACT THAT THEY SHOULD 9 HAVE DONE MORE DUE DILIGENCE. 10 THE COURT: NO. NO. I THINK YOU MISINTERPRETED. I 11 FELT THEY HAD, ALONG WITH MR. CARTO, CONVERTED THE MONEY. 12 MR. WAIER: HOW? THERE WAS NO EVIDENCE THEY OBTAINED 13 ANYTHING. I WOULD LIKE TO KNOW THE EVIDENCE WHERE THEY 14 OBTAINED ANYTHING. 15 THE COURT: THIS GETS US BACK INTO ARGUING THE EVIDENCE 16 THAT WAS PRESENTED TO ME. IF I'M WRONG AND THERE’s NOT 17 SUBSTANTIAL EVIDENCE TO SUSTAIN MY BELIEF THAT THEY 18 CONVERTED THIS MONEY, THEN OF COURSE IT SHOULD BE REVERSED. 19 MR. WAIER: YOUR HONOR, I CAN READ FROM YOUR OWN — NOT 20 ONLY STATEMENT OF DECISION BUT LETTER OPINION WHERE YOU 21 VIEWED THE EVIDENCE AND WHERE YOU SAID THE ONLY THING THAT 22 THEY WERE GUILTY OF WAS RECKLESS CONDUCT IN FAILURE TO ASK 23 WHETHER YOU CAN TAKE A CONTINGENCY CASE. THERE WAS NOTHING 24 INDICATED IN THE LETTER OPINION AS TO ANY EVIDENCE THEY 25 OBTAINED ANYTHING, WHICH THERE WAS NONE AT THE TIME OF 26 TRIAL. ALL THEY EVER DID WAS DO MINUTES, AND YOU SAID AT 27 THE BEHEST OF MR. CARTO. YOU SAID MR. CARTO IN SOME CASES 28 PREPARED THE MINUTES, AND THEY SIGNED IT BLINDLY,
page 1039 1 UNWITTINGLY FOLLOWED MR. CARTO. THAT’s THE ONLY THING YOU 2 INDICATED IN YOUR LETTER OPINION AS YOU SAW THE EVIDENCE. 3 THERE WAS NO EVIDENCE THAT THEY WERE — THAT THEY 4 RECEIVED ANYTHING, OR THAT THEY CONFISCATED ANYTHING, OR 5 THEY DID ANYTHING OR HAD KNOWLEDGE OF AN UNLAWFUL PURPOSE. 6 I'M USING YOUR OWN LETTER OPINION, HOW YOU VIEWED THE 7 EVIDENCE. 8 THE COURT: KEEP IN MIND THE LETTER OPINION WAS NOT 9 DISPOSITIVE OF ALL CAUSES OF ACTION AND EVERY LITTLE BIT OF 10 EVIDENCE EITHER. IT WAS SIMPLY AN ATTEMPT TO BROAD BRUSH AN 11 OUTLINE, TELL YOU HOW I SAW THE EVIDENCE. 12 MR. WAIER: MY POINT IS WITH RESPECT TO THE FURRS, AND 13 I STILL DON'T KNOW OF ANY EVENTS, AND THEY HAVEN'T POINTED 14 OUT ANY EVIDENCE — BY THE WAY, THEY WERE LATE IN FILING THE 15 PAPERWORK. IT WAS FILED ON JANUARY 8TH AND THE COURT, IF 16 YOU ARE GOING TO TALK ABOUT FILING REQUIREMENTS, WE FILED 17 EVERYTHING ON TIME. THEIR FILING REQUIREMENTS IS THAT THEY 18 HAD 7 DAYS WITHIN TO — WHICH TO DO IT. THEY DID IT IN 5 19 DAYS, NOTWITHSTANDING THE FURRS. THEY NEVER DID THE 20 PREPLEADING REQUIREMENTS OF 425.15. YOU CAN'T SEPARATE ONE 21 CAUSE OF ACTION. IT SAYS A COMPLAINT WITH A CAUSE OF 22 ACTION. YOU CAN'T ALL OF A SUDDEN SEPARATE THAT OUT. YOU 23 CAN'T DO IT. THEY WERE DEFAULTED ON THE COMPLAINT AS IT 24 STANDS, AND YOU JUST CAN'T DO IT, AND THAT’s WITH THE 25 FURRS. THEY SHOULD BE OUT WITH RESPECT TO MR. FISCHER. 26 THE COURT: COUNSEL, YOU KEEP TELLING ME THE LAW IS ONE 27 THING, AND I READ THE SECTION. YOU SAY IT SAYS THE 28 COMPLAINT. IT DOESN'T SAY IT. IF YOU READ 425.15 IT SAYS:
page 1040 1NO CAUSE OF ACTION AGAINST A PERSON SERVING 2 WITHOUT COMPENSATION AS A DIRECTOR OR OFFICER OF THE 3 NONPROFIT CORPORATION DESCRIBED IN THE SECTION ON ACCOUNT OF 4 ANY NEGLIGENT ACT OR OMISSION.5 IT DOESN'T SAY A COMPLAINT AND THEN ONE OF THE 6 CAUSES OF ACTION IS NEGLIGENCE. 7 MR. WAIER: IT SAYS ON ACCOUNT OF NEGLIGENCE. THAT'S 8 WHAT THEY WERE SUED WITH ON THE ACCOUNT OF NEGLIGENCE. THEY 9 DIDN'T FOLLOW THROUGH, AND THEY WERE SUED FOR NEGLIGENCE. 10 THE POINT YOU HAVE IS THAT WE RAISED THAT ISSUE 11 AND THE OTHER CASES HAVE INTERPRETED COMPLAINT. IT HAD A 12 NUMBER OF CAUSES OF ACTION, INCLUDING NEGLIGENCE. AND WHAT 13 THE COURTS HAVE SAID, THERE WAS ON ACCOUNT OF NEGLIGENCE. 14 IT’s NOT JUST A CAUSE OF ACTION BUT A CAUSE OF ACTION ON 15 ACCOUNT OF NEGLIGENCE. 16 WHAT YOU INDICATED IN THE LETTER OPINION, NOT ONLY 17 IS THERE A NEGLIGENCE CLAIM IN THE COMPLAINT, BUT AS ON AN 18 ACCOUNT OF THAT NEGLIGENCE I ASK YOU TO GO BACK AND LOOK AT 19 THE COMPLAINT. YOU WON'T FIND THE FURRS MENTIONED ANYWHERE 20 IN THE COMPLAINT. YOU WON'T FIND THEM IN THE SPECIFIC 21 ALLEGATIONS WHERE THEY DID ANYTHING. THEY'RE LIMITED TO THE 22 PROOF AS TO THE COMPLAINT. THE COMPLAINT FRAMES THE ACTIONS 23 AGAINST THE FURRS. THAT’s A PROBLEM WITH THE DEFAULTED 24 PARTY. I CAN UNDERSTAND IF IN FACT THEY WEREN'T A DEFAULTED 25 PARTY. I CAN UNDERSTAND YOUR CONCERNS THERE, BUT THEY WERE 26 A DEFAULTED PARTY, AND THEY ARE ENTITLED TO RELY ON THAT 27 PLEADING FOR HOW WEAK IT MAY BE. 28 THE COURT: YOU ARE SAYING IN THE COMPLAINT THERE'S
page 1041 1 NOTHING SAYING THAT THE FURRS DID ANYTHING WRONG? 2 MR. WAIER: EXACTLY. READ IT. 3 MR. MUSSELMAN: WELL, THEY WERE DOES AT THE TIME. 4 OBVIOUSLY IT DOESN'T USE THEIR NAME. 5 MR. WAIER: READ IT. READ THE OPERATIVE FACTS, AND YOU 6 WILL SEE. IF IN FACT THERE WAS ANYTHING YOU WILL SEE THAT 7 THERE IS NO CHARGING ALLEGATIONS AGAINST THE FURRS EITHER 8 SPECIFICALLY OR IN THE GENERIC SENSE, NOT ONLY THAT THEY 9 WERE SUED FOR NEGLIGENCE AND THEY HAD AN OPPORTUNITY BEFORE 10 THAT COMPLAINT COULD BE FILED. AND THAT’s WHAT THE CASES 11 TALK ABOUT, COMPLAINTS BEING FILED. THAT’s ALL YOU CAN FILE 12 WHETHER YOU HAVE ONE CAUSE OF ACTION OR 10. BEFORE THAT CAN 13 BE FILED, YOU HAVE TO GO THROUGH A PREPLEADING PROCEDURE, 14 INCLUDING VERIFIED. AND IT WASN'T A VERIFIED COMPLAINT BY 15 THE WAY. IT WAS AN UNVERIFIED COMPLAINT. THEY DON'T GET 16 AROUND FOR — WHAT I'M SAYING IS THERE’s SOME WAY YOU WANTED 17 TO SAY THEY FILED A VERIFIED COMPLAINT. MY POINT IS, YOUR 18 HONOR, A COMPLAINT — BEFORE A COMPLAINT CAN BE FILED, 19 BEFORE IT THE CAUSE OF ACTION — THE CAUSE OF ACTION ONLY 20 FINDS THE BASIS ON THE THING CALLED A COMPLAINT BEFORE THAT 21 CAN BE FILED, AND THAT’s WHAT WAS FILED. THEY WERE NAMED AS 22 A DOE. THAT’s WHAT WAS FILED BEFORE THAT CAN BE FILED. 23 THAT’s THE DOCUMENT. IT HAS TO GO THROUGH THE PREPLEADING 24 REQUIREMENT, WHICH WAS NOT DONE. 25 MY POINT IS, YOUR HONOR, THEY'RE ENTITLED BECAUSE 26 OF IT, BECAUSE IT WAS A CAUSE OF ACTION WITHIN THAT 27 COMPLAINT. EVEN IF YOU NARROW IT DOWN TO SAY, WELL, THERE 28 WAS A NEGLIGENCE CLAIM, BUT I THINK WHAT I'M HEARING MAYBE
page 1042 1 WE CAN SEPARATE THAT NEGLIGENCE CLAIM OUT AND GIVE THEM A -- 2 VACATE THE JUDGMENT AS TO THE NEGLIGENCE AND DISMISSAL OF 3 THE COMPLAINT TO THAT. YOU CAN'T DO THAT BECAUSE THAT’s NOT 4 WHAT THE PREPLEADING REQUIREMENT REQUIRED. IT REQUIRED THEM 5 TO GO IN TO JUSTIFY THE ENTIRE DOCUMENT THAT THEY SOUGHT TO 6 BE FILED. 7 THE COURT: YOU SAY YOU HAVE A CASE THAT SUPPORTS THAT 8 PROPOSITION? 9 MR. WAIER: YES. 10 THE COURT: AS TO 425.15? 11 MR. WAIER: NO, THE OTHER SECTIONS OF THE TORT REFORM 12 ACT. AS THIS COURT KNOWS, THEY WERE UNDER ROWE V. — ROWE 13 V. SUPERIOR COURT. THE SUPREME COURT INTERPRETED ALL THE 14 SECTIONS TOGETHER. IN FACT, SAID, LOOK IN ANALOGOUS 15 SITUATION AND CITED 425.15 AS PART AND PARCEL OF THAT TORT 16 REFORM ACT. 17 THE COURT: MAYBE I SHOULD READ ROWE AGAIN. ROWE IS A 18 CASE IN WHICH THEY TRIED TO AMEND THE COMPLAINT AND WITHOUT 19 FILING THE CERTIFICATE, AND THEY SAID, NO. 20 MR. WAIER: THAT’s CORRECT. YOU OUGHT TO READ IT. 21 THEY DISCUSSED 425.15 AS A PREPLEADING REQUIREMENT. 22 THE COURT: I DON'T WANT TO CUT YOU OFF. I THINK YOU 23 ARE STARTING TO PLOW THE GROUND TWO AND THREE TIMES. 24 MR. WAIER: NOW ONE OTHER THING THAT I DIDN'T PUT IN 25 THE PAPERWORK — THIS IS LIBERTY LOBBY. I WANT YOU TO 26 INDICATE THIS, AND I THINK THIS IS VERY IMPORTANT, WHICH 27 WOULD REQUIRE REVERSIBLE ERROR, ACCORDING TO THE LETTER 28 OPINION AND ACCORDING TO YOUR STATEMENT OF DECISION.
page 1043 1 AND LET’s LOOK TO LIBERTY LOBBY. AT THIS JUNCTURE 2 I'M GOING TO LEAD MY ARGUMENTS TO LIBERTY LOBBY. TO FIND 3 LIBERTY LOBBY JOINTLY AND SEVERALLY LIABLE, YOU COULD NOT 4 FIND THEM FOR 2.6 MILLION. I ASSUME YOU FOUND 2.6 MILLION 5 DAMAGES AGAINST LIBERTY LOBBY BECAUSE OF PROMISSORY NOTES 6 WHICH, BY THE WAY, NEVER GOT IN EVIDENCE. YOU DON'T HAVE 7 ANY EVIDENCE BEFORE YOU OTHER THAN SOMEBODY’s TESTIMONY THAT 8 THERE WERE PROMISSORY NOTES. YOU DON'T HAVE THE AMOUNT OF 9 THE PROMISSORY NOTES. IT NEVER GOT INTO THE EVIDENCE. THEY 10 NEVER REQUESTED IT INTO EVIDENCE. JUDGMENT ENTERED. IT'S 11 OUT. 12 THE BEST EVIDENCE WERE THE PROMISSORY NOTES THAT 13 WERE I.D.'D BUT NEVER ADMITTED, AND I THINK THAT WAS 14 EXHIBIT — I CAN'T TELL YOU OFFHAND, EITHER 50, 60 OR 70'S. 15 THEY NEVER ASKED FOR IT. IT NEVER GOT IN. 16 THE COURT: SO. 17 MR. WAIER: MY POINT IS, YOUR HONOR, THE ONLY ISSUE 18 THERE IS NO COMPLAINT AGAINST LIBERTY LOBBY FOR BREACH OF A 19 PROMISSORY NOTE OR FOR ANTICIPATORY REPUDIATION OF THE 20 PROMISSORY NOTES. THAT’s WHAT CAME UP AS TO LIBERTY LOBBY. 21 THEY RECEIVED SOME INCOME. 22 NOW WITH RESPECT AS A RESULT AND HAD MADE 23 PROMISSORY NOTES, THE CLAIM AS I INDICATED CAME FROM VIBET. 24 THAT’s WHO THE PROMISSORY NOTES — THAT WAS THE BENEFACTOR 25 OF THE PROMISSORY NOTES, VIBET, INC. NOW THERE’s NO CLAIM 26 BY VIBET FOR IT. VIBET ISN'T A PARTY TO THE LAWSUIT EXCEPT 27 AS A DEFENDANT. 28 GETTING BACK TO THE MORE IMPORTANT ISSUE IN YOUR
page 1044 1 LETTER OPINION, WHICH DOES GIVE SOME GUIDANCE, AND THE 2 APPELLATE COURTS WILL LOOK AT THAT LETTER OF OPINION AS TO 3 SOME GUIDANCE IF THERE’s AMBIGUITIES IN THE BRIEF. I THINK 4 THE STATEMENT OF DECISION — AND NOT TO BE HYPERCRITICAL OF 5 IT, BUT I THINK IT DID LACK IN ULTIMATE FACT DETERMINATION. 6 SO IT WILL PROBABLY LOOK — IN MY OPINION IT WOULD LOOK TO 7 THAT LETTER OPINION THAT YOU RAISED OR THAT YOU SENT US IN 8 CONNECTION WITH MAYBE INTERPRETING YOUR JUDGMENT. 9 THE ISSUE IS ONLY ONE WITH RESPECT TO LIBERTY 10 LOBBY. YOU INDICATE UNDER THE CONVERSION CLAIM THAT IT’s -- 11 AND YOU FOUND AGAINST LIBERTY LOBBY FOR CONVERSION. THE 12 ONLY DAMAGES ARE 2.6 MILLION. THAT RUNS COUNTER TO THE 13 DETERMINATION OF JOINT AND SEVERAL LIABILITY. YOU CANNOT BE 14 JOINTLY AND SEVERALLY LIABLE FOR A LESS AMOUNT OR AN UNEQUAL 15 AMOUNT THAN THE OTHER JOINT TORT-FEASORS; BUT YOU FOUND THAT 16 IT WAS. THEREFORE YOU COULDN'T HAVE FOUND JOINT AND SEVERAL 17 LIABILITY, IF YOU FOUND THAT THE ONLY FACTOR WITH RESPECT TO 18 LIBERTY LOBBY IS 2.6 MILLION. THAT’s THE LAW. I HATE TO 19 SAY THAT’s THE LAW, BUT THAT IS THE LAW UNDER JOINT AND 20 SEVERAL LIABILITY. YOU COULDN'T HAVE FOUND ONLY 2.6 MILLION 21 AGAINST LIBERTY LOBBY. THEREFORE THE JUDGMENT AS FRAMED IS 22 WRONG BECAUSE THE ONLY WAY LIBERTY LOBBY COULD BE HELD 23 ACCOUNTABLE UNDER THE CONVERSION CLAIM BASED ON THE 24 ALLEGATIONS IS JOINT AND SEVERAL LIABILITY. 25 YOU CAN'T BE JOINTLY AND SEVERALLY LIABLE THAN THE 26 OTHER JOINT TORT-FEASORS UNDER THE LAW. 27 THE COURT: ANYTHING NEW OR DIFFERENT? 28 MR. WAIER: THAT’s NEW AND DIFFERENT. THAT WAS NOT AN
page 1045 1 ISSUE RAISED. 2 AND AGAIN, WITH RESPECT TO LIBERTY LOBBY, AGAIN, I 3 WOULD ASK THIS COURT THAT THERE’s NOTHING IN THE PLEADINGS 4 TO INDICATE ANY CULPABILITY AS TO LIBERTY LOBBY AS TO A 5 JOINT TORT-FEASOR. I'M NOT SURE HOW IT COMES UNDER A JOINT 6 TORT-FEASOR, A CORPORATION BEING UNDER A JOINT TORT-FEASOR. 7 THEY MAY BE A CONSTRUCTIVE TRUSTEE. THAT’s NOT ALLEGED. 8 I'M NOT SURE THE EVIDENCE IS THERE WITH RESPECT TO 9 CONVERSION THAT LIBERTY LOBBY HAD ANY KNOWLEDGE OF AN 10 UNLAWFUL PURPOSE. I DON'T KNOW WHO, HOW OR WHAT LIBERTY 11 LOBBY DID WITH RESPECT TO THAT. 12 THE COURT: MR. CARTO WAS THE TREASURER, WAS HE NOT, AT 13 LIBERTY LOBBY? AND YOU ARE TELLING ME YOU DON'T KNOW. 14 MR. WAIER: WAIT A SECOND. THERE’s A BIG DIFFERENCE 15 NOW. YOU HAVE TO GET INTO A WHOLE BAILIWICK AS TO WHAT 16 CONSIDERS TO BE CONSTRUCTIVE NOTICE OR NEGLIGENCE. DOES THE 17 TREASURER ALONE, WHO IS NOT A DIRECTOR, CONSTITUTE CORPORATE 18 KNOWLEDGE? NO. I DON'T THINK SO. IT HAS TO BE ONE OF THE 19 DIRECTORS. AND IN OTHER WORDS, YOU CAN BE A SECRETARY OR A 20 TREASURER TO A CORPORATION, AND YOU MAY HAVE KNOWLEDGE OF 21 CERTAIN THINGS, WHICH IS NOT IMPUTED TO THE DIRECTORS. SO 22 I'M INDICATING WITH RESPECT TO LIBERTY LOBBY I THINK THE 23 JUDGMENT AS TO LIBERTY LOBBY IS TOTALLY INCORRECT. YOU 24 CAN'T BE HELD ACCOUNTABLE FOR CONVERSION OR FOR NEGLIGENCE. 25 THEY WEREN'T LISTED. 26 AND THEN I REALLY URGE THIS COURT TO REVIEW THE 27 COMPLAINT BECAUSE I DID, AND YOU WILL SEE THAT THERE ARE 28 ONLY CERTAIN CAUSES OF ACTION THAT EVEN A DOE DEFENDANT
page 1046 1 COULD BE INCLUDED UNDER. THERE’s NO NEGLIGENCE CLAIM, 2 THEREFORE, THE JUDGMENT AGAINST LIBERTY LOBBY FOR NEGLIGENCE 3 OR FISCHER OR ANY OF THE OTHERS OR ELISABETH CARTO — LOOK 4 AT ELISABETH CARTO. YOU CAN'T BE HELD ACCOUNTABLE FOR 5 SOMETHING YOU ARE A STRANGER TO A CAUSE OF ACTION. YOU ARE 6 A STRANGER TO. THERE’s BEEN NO MOTION TO AMEND PRIOR TO 7 JUDGMENT. IF THERE WAS, WE WOULD HAVE THE OPPORTUNITY AT 8 THAT POINT IN TIME. WE'RE ENTITLED TO PUT ON A DEFENSE 9 CONSISTENT WITH THE ALLEGATIONS OF THAT COMPLAINT BECAUSE 10 THE COMPLAINT FRAMES THE ACTION. THAT’s THE LAW. AND THEY 11 DIDN'T DO IT. WE CAN'T BE HELD ACCOUNTABLE FOR THEIR 12 FAILURES OR OMISSIONS. 13 LET ME CHECK MY NOTES. GO TO THE INJUNCTIVE 14 RELIEF, YOUR HONOR. THAT’s MY LAST AREA. YOU AWARDED 15 INJUNCTIVE RELIEF ON WHAT I CONSIDERED TO BE NO EVIDENCE. 16 THERE WAS NO EVIDENCE BEFORE YOU THAT I SAW FOR THE — FROM 17 THE WITNESS STAND. LEWIS AND LAVONNE FURR, HENRY FISCHER, 18 THAT LIBERTY LOBBY, THAT EVEN WILLIS CARTO WAS OUT THERE NOW 19 SAYING HE’s THE LEGION. YOU HAD NOTHING THERE. 20 SECOND OF ALL, WITH RESPECT TO THE CORPORATE SEAL 21 AND WITH RESPECT TO THAT, THE ONLY EVIDENCE YOU HAD IS THAT, 22 ANY OF THAT, IS WITH THE COSTA MESA POLICE DEPARTMENT. IF 23 IN FACT IT EXISTS, IF YOU TAKE A LOOK AT THE INJUNCTIVE 24 RELIEF, THERE WAS NO EVIDENCE TO WARRANT THAT. NONE. IN 25 FACT, SO MUCH SO IT WASN'T EVEN ARGUED BY EITHER SIDE AT THE 26 TIME OF A FINAL ARGUMENT. THE FIRST TIME WE SEE INJUNCTIVE 27 RELIEF IS NOT THROUGH THE STATEMENT OF DECISION OR THROUGH 28 THE LETTER OPINION. IT COMES WHEN THE JUDGMENT IS HANDED TO
page 1047 1 YOU, WHICH WE NEVER HAD AN OPPORTUNITY TO OBJECT TO. 2 THE COURT: YOU KNEW ABOUT THE INJUNCTIVE RELIEF. I 3 CITED A CASE TO YOU ON THAT. YOU KNEW IT WAS COMING. 4 MR. WAIER: NO. WHAT I'M SAYING WITH RESPECT TO THERE 5 WAS NO EVIDENCE WITH RESPECT BEFORE YOU. WITH RESPECT TO 6 INJUNCTIVE RELIEF, WHEN YOU LOOK AT THE RELIEF REQUESTED -- 7 THAT’s WHAT I AM ASKING YOU TO DO. LOOK AT YOUR NOTES. 8 REMEMBER, APART FROM THE FARREL ESTATE, THERE WAS WHAT WAS 9 REQUESTED IS THAT MR. — ALTHOUGH YOU SAID IT SHOULD NOT 10 HAVE ANY BEARING ON THE TEXAS ACTION — YOU INDICATED THAT 11 BOTH ON THE RECORD AND IN YOUR LETTER OPINION — BUT IF YOU 12 TAKE A LOOK AT THE REQUESTED RELIEF, THERE WAS NO EVIDENCE 13 JUSTIFYING THAT REQUESTED RELIEF WITH RESPECT TO WHAT YOU 14 SIGNED AS YOUR JUDGMENT. THAT’s ALL I'M ASKING YOU TO LOOK 15 AT, THE BROAD BRUSH RELIEF THEY GOT WITH NO EVIDENCE. THEY 16 AT LEAST HAVE A PREPONDERANCE OF EVIDENCE WITH RESPECT TO 17 THAT INJUNCTION. 18 THE COURT: SOME NEW THINGS HAVE BEEN BROUGHT UP. 19 MR. MUSSELMAN: THE EVIDENCE EXISTS ABOUT THE GEMS, 20 YOUR HONOR, IN THE HOOPER LETTER, IF YOU ARE LOOKING FOR THE 21 REFERENCE TO WHAT YOUR HONOR HAS ORDERED THEM TO ACCOUNT 22 FOR. 23 AS FAR AS LIBERTY LOBBY GOES, OBVIOUSLY YOUR HONOR 24 IS ENTITLED TO DETERMINE THAT A PARTICULAR PARTY ONLY 25 CONSPIRED IN REFERENCE TO A CERTAIN AMOUNT OF THE CONVERTED 26 ASSETS. THAT’s UP TO THE FACT FINDER. THERE’s PLENTY OF 27 EVIDENCE TO SUPPORT THE JUDGMENT ON THAT. 28 THE JUDGMENT SUPERSEDES. NO ONE ASKED FOR A
page 1048 1 STATEMENT OF DECISION. THE STATEMENT OF DECISION DOESN'T 2 HAVE TO INCLUDE SUPPORT IN DETAIL FOR THE JUDGMENT. THE 3 JUDGMENT IS THE DOCUMENT. THAT MOTION IS TO SET ASIDE. THE 4 JUDGMENT SUPPORTS A DECISION THAT THE PARTY — THE 5 DEFENDANTS CONSPIRED TO CONVERT PLAINTIFF’s PROPERTY, AND 6 THAT THE DAMAGE NUMBER SHOULD MATCH WHAT IS STATED IN THE 7 JUDGMENT. THERE’s EVIDENCE TO SUPPORT THE JUDGMENT. 8 IF YOUR HONOR WANTS SOMETHING ELSE, I DIDN'T HEAR 9 ANYTHING THAT INVOLVED ANY LAW THAT I KNOW OF TO BE THE LAW 10 THAT REQUIRES BEING ADDRESSED, BUT I'M HAPPY TO ADDRESS 11 ANYTHING. 12 THE COURT: I ALREADY ASKED YOU IF THERE WAS SOMETHING 13 WRONG WITH THE JUDGMENT SO I SHOULD MODIFY IT. 14 MR. MUSSELMAN: THE ONLY THING I COULD THINK OF ABOUT 15 THAT THEY NEVER ASKED AT THE TRIAL FOR RELIEF, AND I DON'T 16 KNOW OF ANY LAW THAT WOULD CALL FOR YOUR HONOR TO INSERT 17 INTO THE JUDGMENT ANY REFERENCE TO THE EFFECT IN TEXAS 18 WHATEVER COLLATERAL ESTOPPEL EFFECT ON THE CALIFORNIA LAW 19 THE JUDGMENT HAS IT HAS BY INCLUDING THAT LANGUAGE. YOUR 20 HONOR IS BASICALLY INVITING A TEXAS COURT TO DO SOMETHING 21 OTHER THAN WHAT JUDGMENTS ARE FOR THE WHOLE PURPOSE OF THE 22 LAWSUIT, SO WE DON'T HAVE TO RELITIGATE THE ISSUES OVER AND 23 OVER AND OVER AGAIN. SO I DON'T KNOW WHY THE LANGUAGE WAS 24 IN THERE. THEY DIDN'T SEEK IT. 25 THE COURT: WHAT IS THAT? AS TO THE JUDGMENT PRESENTED 26 BY YOU, YOU SAY THERE’s SOMETHING WRONG? 27 MR. MUSSELMAN: WE PRESENTED A JUDGMENT THAT MATCHED 28 EXACTLY WHAT YOUR HONOR STATED; WHAT YOUR HONOR WANTED. WE
page 1049 1 DIDN'T REQUEST THAT PARTICULAR LANGUAGE. THAT WAS COPYING 2 YOUR HONOR’s RULING. 3 THE COURT: WHERE WAS THIS? 4 MR. MUSSELMAN: MAYBE I'M CONFUSING THE STATEMENT OF 5 DECISION. 6 THE COURT: I HAVE A FEELING YOU MIGHT BE. 7 MR. MUSSELMAN: I AM. EXCUSE ME, YOUR HONOR. 8 THE COURT: HOW ABOUT LET’s GO TO THAT THEN. IS THERE 9 SOMETHING ABOUT THE STATEMENT OF DECISION THAT YOU THINK 10 SHOULD BE MODIFIED? 11 MR. MUSSELMAN: I DID SEE THERE WAS SOME LANGUAGE THAT 12 SUGGESTED THAT SOMEHOW THIS ACTION SHOULDN'T HAVE SOME TYPE 13 OF EFFECT IN TEXAS. I DON'T KNOW WHAT THE INTENT OF YOUR 14 HONOR WAS INCLUDING THAT LANGUAGE. SEE IF I CAN FIND IT. 15 SINCE THE EVIDENCE AT TRIAL DEMONSTRATED MR. CARTO 16 AND THE FURRS ARE HOLDING THEMSELVES OUT TO BE THE LEGION, 17 AND SINCE OUR INJUNCTION THAT WE REQUESTED, EXPRESSLY 18 REQUESTED, THAT THEY BE ENJOINED FROM DOING THAT, ANY 19 REFERENCE TO SAYING THAT THIS SHOULDN'T HAVE ANY TYPE OF 20 EFFECT OR SOME TYPE OF EFFECT IN TEXAS WILL CAUSE MORE 21 LITIGATION. SEE IF I CAN FIND THAT LANGUAGE. 22 THE COURT: I WOULD BE INTERESTED TO SEE WHERE THAT 23 IS. 24 MR. MUSSELMAN: PAGE 4 OF THE STATEMENT OF DECISION AT 25 LINE 7 THROUGH 10, LINES 9 AND 10. I DON'T KNOW WHAT THAT 26 MEANS, EXACTLY PROHIBITS THEM. DOESN'T PROHIBIT THEM FROM 27 PROCEEDING WITH LEGAL ACTIONS HERE OR IN TEXAS WHILE THE 28 EVIDENCE AT TRIAL DEMONSTRATED THERE WAS A LEGAL ACTION
page 1050 1 WHERE THEY WERE PURPORTING TO ACT. SO I'M NOT SURE WHAT 2 THAT MEANS. 3 IT SEEMS TO ME THAT IF AS A MATTER OF LAW THEY'RE 4 NOT PROHIBITED FROM PROCEEDING ELSEWHERE, THAT SHOULD BE 5 UNSTATED BY INSERTING THE SENTENCE,IT WILL CAUSE 6 LITIGATION.7 THE COURT: I DON'T READ IT THAT WAY. 8 MR. MUSSELMAN: FINE. 9 THE COURT: OF COURSE I SUPPOSE IT’s UP TO SOMEBODY 10 ELSE. I KNEW THERE WAS SOMETHING GOING ON IN TEXAS. 11 MR. WAIER: IT STILL IS. 12 MR. MUSSELMAN: AS LONG AS IT’s CLEAR. THIS DOESN'T 13 SUGGEST MR. CARTO CAN GO RELITIGATE THE SAME ISSUES HERE IN 14 THIS LITIGATION. THAT WOULD BE A TRAVESTY OF JUSTICE TO 15 RELITIGATE AGAIN. 16 MR. WAIER: THE LEGION HAS SUED AND DID SUE MR. CARTO 17 UNDER THE SAME CLAIMS IN ORANGE COUNTY, CALIFORNIA, AS I MAY 18 HAVE POINTED OUT IN — IN THIS COURT. WE WENT DOWN TO START 19 TRIAL ON THAT CASE, AND I ACTUALLY GOT THE CASE ABATED IN 20 ORDER TO ABATE THAT ACTION. AND JUDGE SMALLWOOD AGREED WITH 21 ME ON THAT UNTIL AFTER THIS IS APPEALED FROM AND THE FINAL 22 APPEAL IS RENDERED ONE WAY OR THE OTHER WILL THAT BE 23 LITIGATED. 24 SECOND OF ALL, AND MORE IMPORTANTLY, I DO WANT TO 25 INDICATE TO THIS COURT THAT WITH RESPECT TO LEWIS AND 26 LAVONNE FURR — YOU HAVE THE EVIDENCE BEFORE YOU — THERE 27 WAS NO EVIDENCE THAT THEY'RE HOLDING THEMSELVES OUT TO BE 28 THE LEGION. THERE’s NONE. THERE WAS NONE BEFORE YOU IN
page 1051 1 THIS COURT. THE ONLY PERSON THAT EVEN COLORABLY COULD HAVE 2 BEEN, AND I AGAIN, NOT TAKING ARGUMENTS FROM COUNSEL AS 3 EVIDENCE, I WOULD LIKE YOU TO LOOK AT YOUR NOTES. THERE WAS 4 NO EVIDENCE TO THAT EFFECT THAT THE FURRS ARE DOING THAT. 5 AND I WOULD HIGHLY SUGGEST THAT WITH RESPECT TO THAT THAT 6 YOU DO TAKE A LOOK AT YOUR NOTES BECAUSE YOU WILL SEE THERE 7 WAS NONE. 8 ALSO TAKE A LOOK AT THE COMPLAINT AS TO THE 9 ALLEGATIONS AS TO ANY DOE DEFENDANT WITH RESPECT TO ANY 10 INJUNCTIVE RELIEF. THOSE WERE DIRECTED AT MR. CARTO AND 11 MR. CARTO ONLY. THAT’s THE OTHER ISSUE. THEY'RE DEFAULTED 12 PARTIES. 13 I DO WANT TO TAKE ANOTHER ISSUE WITH COUNSEL. HE 14 SAID IT TWICE NOW. I NEED TO PUT THIS ON THE RECORD. 15 HE SAYS WE NEVER REQUESTED A STATEMENT OF 16 DECISION. THAT’s BECAUSE THE COURT INDICATED IN OPEN COURT 17 IT WOULD GIVE A STATEMENT OF DECISION. NOW WE — THE COURT 18 WOULD BE ESTOPPED, AND THERE’s CASE LAW ON THIS ISSUE. WHEN 19 THE COURT MAKES THAT STATEMENT THE PARTIES DO NOT HAVE TO 20 URGE THE COURT TO DO THAT. 21 THE COURT: I AGREE. NO DOUBT. 22 MR. WAIER: I DO WANT TO INDICATE THAT THAT WOULD BE AN 23 ESTOPPEL. 24 THE COURT: YOU INDICATE AND I AGREE. WE DON'T HAVE TO 25 GO OVER IT AGAIN. WE GO OVER EVERYTHING THREE AND FOUR 26 TIMES. 27 MR. WAIER: I UNDERSTAND. 28 THE COURT: I MAY NOT BE THE SMARTEST GUY ON THE BLOCK,
page 1052 1 BUT USUALLY ONLY NEEDS THINGS TWICE, SOMETIMES THREE. IF I 2 DON'T GET IT AFTER FOUR OR FIVE, THAT’s WHY YOU HAVE THE 3 FELLOWS ABOVE ME — THAT AND WOMAN ABOVE ME TELL ME WHERE 4 I'M WRONG. 5 LET’s SEE, IS THERE ANYTHING NEW I SHOULD 6 CONSIDER? 7 MR. MUSSELMAN: ON THE LAST POINT, IF YOU REMEMBER ONE 8 OF THE LAST EXHIBITS WE SUBMITTED WERE FAXES SENT TO MY 9 CLIENT SIGNED BY THE FURRS WHERE THEY ORDER MY CLIENT TO 10 CEASE AND DESIST AFTER THE LAWSUIT WAS FILED WHERE THEY 11 PURPORT TO BE ACTING FOR THE PLAINTIFF ITSELF. THERE'S 12 PLENTY OF EVIDENCE THAT THEY WERE HOLDING THEMSELVES OUT TO 13 BE IN FACT THE PLAINTIFF. 14 MR. WAIER: YOUR HONOR, THE EVIDENCE ALONG THE LINES IS 15 AT THE TIME OF TRIAL WHETHER THEY'RE DOING IT. THERE WAS NO 16 INDICATION OVER THE LAST FEW YEARS THERE WAS ANY INDICATION 17 THAT THE FURRS HAVE DONE ANYTHING SINCE THE TIME THE 18 ORIGINAL COMPLAINT WAS FILED. THAT’s THE ONE OTHER ISSUE I 19 WANT TO RAISE WITH RESPECT TO THE FURRS — FURRS, I THINK IS 20 EXTREMELY IMPORTANT. 21 THE COURT: OKAY. 22 MR. WAIER: TALKING ABOUT THE KNOWLEDGE OF UNLAWFUL 23 PURPOSE. I REQUEST THE COURT TO TAKE A LOOK AT THIS AS 24 WELL. WHEN THE FURRS WERE — AS THE COURT IS AWARE, THEY 25 RESIGNED IN 1993 AT THE BEHEST OF THE INSURGENCE OF THE 26 EMPLOYEES. MR. HULSY AND AN ATTORNEY FOR THE INSURGENCE 27 WROTE A LETTER TO THE FURRS SAYING IF YOU DON'T RESIGN, 28 THERE MAY BE SOME — YOU MAY BE INVOLVED IN SOME CULPABLE
page 1053 1 CONDUCT WITH RESPECT TO MR. CARTO. DOESN'T DEFINE IT. WHAT 2 DID THE FURRS DO? THEY RESIGNED. EVEN IF YOU LOOK AT THAT 3 AS ANY EVIDENCE THAT THEY FINALLY GOT KNOWLEDGE, THEY DID 4 WHAT THEY WERE SUPPOSED TO DO, AND THEY DID CONSISTENT WITH 5 WHAT THE LEGION WANTED THEM TO DO. THAT WAS RESIGN. THAT 6 EVIDENCE YOU HAD BEFORE YOU. 7 SO, YOUR HONOR, ALONG THOSE LINES, EVEN WHEN IT 8 COMES TO EVIDENCE RAISED, THE FURRS COULDN'T BE HELD FOR 9 JOINT AND SEVERAL LIABILITY OR THERE CERTAINLY IS THE LEGION 10 ESTOPPED TO ACCUSE THEM OF THAT WHEN THE PEOPLE IN THE 11 LEGION NOW TELL THEM YOU RESIGN OR WE WILL BRING CHARGES 12 AGAINST YOU. AND THAT THE EVIDENCE YOU DID HAVE THAT WAS IN 13 THE LETTERS IN 1993, AND THEY RESIGNED, SO THE EVIDENCE IS 14 THE LEGION OUGHT TO BE ESTOPPED FROM BRINGING THE CLAIMS 15 WHEN THEY SAY IF YOU RESIGN WE WON'T DO ANYTHING. THAT'S 16 THE OTHER ISSUE, WHICH IS RAISED NOW AND WAS RAISED AT THE 17 TIME OF TRIAL. 18 MR. MUSSELMAN: IF YOU LOOK AT THAT EVIDENCE, WHAT THE 19 FURRS SAID — IT’s DATED AFTER THE COMPLAINT WAS FILED. 20 THAT’s WHAT PROMPTED THEM TO BE ADDED AS DOE DEFENDANTS. 21 THE COURT: IN ANY CASE, UNLESS THERE’s SOMETHING NEW, 22 WHAT I WILL DO IS GO OFF THE RECORD. I WOULD LIKE TO READ 23 THIS ROWE CASE AGAIN, AND I'LL DO THAT. 24 MR. MUSSELMAN: DO YOU HAVE A CITE? 25 THE COURT: ROWE V. SUPERIOR COURT (1993) 15 26 CAL. APP. 4TH 1711. 27 MR. WAIER: YOU DO HAVE SOMEWHAT OF A SHORT TIME FUSE 28 ON THIS. IT’s A TEN DAY TIME FUSE ON ANYTHING YOU DO OR DO
page 1054 1 NOT DO. I DECIDED TO LET YOU KNOW. 2 THE COURT: YOU WILL GET AN ANSWER BY WEDNESDAY. 3 SHOULD BE IN THE MAIL BY WEDNESDAY. ANYTHING ELSE? 4 MR. WAIER: THANK YOU FOR YOUR PATIENCE. 5 THE COURT: NO PROBLEM. 6 7 (PROCEEDINGS CONCLUDED.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
page 1055
1 STATE OF CALIFORNIA )
)SS
2 COUNTY OF SAN DIEGO )
3
4
5 I, BARBARA J. SCHULTZ, C.S.R. NO. 8021, AN
6 OFFICIAL REPORTER OF THE SUPERIOR COURT OF THE STATE OF
7 CALIFORNIA, IN AND FOR THE COUNTY OF SAN DIEGO, HEREBY
8 CERTIFY THAT I REPORTED IN MACHINE SHORTHAND THE PROCEEDINGS
9 HAD AND TESTIMONY ADDUCED IN THE TRIAL OF THE WITHIN CASE,
10 AND THAT THE FOREGOING TRANSCRIPT, CONSISTING OF PAGES FROM
11 1 TO 1055, INCLUSIVE, IS A FULL, TRUE AND CORRECT TRANSCRIPT
12 TO THE BEST OF MY ABILITY OF THE SAID PROCEEDINGS.
13 DATED AT VISTA, CALIFORNIA, THIS 3RD DAY OF APRIL,
14 1997.
15
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17
18
19 ____________________________
BARBARA J. SCHULTZ, CSR, RPR
20 CSR NO. 8021
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