Gaggero Background 1

1. December 2, 2015
Contextual Public Record Background as to
BoardWalk Sunset Co., LLC, et al.
Before Judge Hess, Dept. 24, Los Angeles Superior Court
NOTICE OF MOTION AND MOTION TO AMEND JUDGMENT TO
ADD JUDGMENT DEBTORS;
The cause is called for hearing.
Per Mr. Esquibias, he has numerous objections not raised in the
opposition based on the Probate Code and lack of notice. He offers no
explanation for not raising them in the opposition. The Court notes that Mr.
Praske, represented by the same counsel who represented Mr. Gaggero, has
apparently refused to produce the trust documents on the grounds that they
are confidential. That refusal has resulted in ther now being no evidentiary
for any of the factual assertions concerning the trust which counsel has made
today. In partucular, to the extent counsel suggests there are beneficiaries
and contingent beneficiaries who are entitled to notice, the actions of Mr.
Praske, while represented byMr. Gaggero’s counsel, have made this
impossible. The offer to provide further information is of limited scope. The
motion of KPC sets forth a convincing basis that the entities are the alter ego
of Mr. Gaggero, who controlled this litigation.
The order is signed by the Court and filed.
The motion is granted.
Having considered Defendants and Judgment Creditors Knapp, Petersen
and Clarke, Stephen Ray Garcia, Stephen Harris, and Andre Jardini (KPC)
motion to amend the judgment to add judgment debtors pursuant to the Code
Civil Procedure Section 187, and the papers and pleadings submitted in
support of and in opposition and good cause appearing, the Court hereby
grants KPS’s motion. Pacific Coast Management, 511 OFW LP,

2. Gingerbread Court LP, Malibu Broad Beach LP, Marina Glencoe LP,
Blu House LLC, and Boardwalk Sunset LLC, are the Stephen
Gaggero’s alter egos and are hereby added as judgment debtors. The
Giganin Trust, Arenzano Family Trust, and Aquasante Foundation are
Stephen Gaggero’s alter egos. Joseph Praske in his capacity as the
trustee the Giganin Trust, Arenzano Family Trust, and Aquasante
Foundation is hereby added as a judgment debtor. (emphasis added)
May 29th
, 2012
The Honorable Judge Robert Hess
Metropolitan News-Enterprise
Wednesday, November 12, 2014
Page 3
C.A. Paves Way for Law Firm to Collect on $1.8 Million
Judgment
Div. Eight Rejects Contentions of Multi-Millionaire With Elaborate
Scheme to Evade Creditors
By a MetNews Staff Writer
The Court of Appeal for this district has given a boost to the Glendale
law firm of Knapp, Petersen & Clarke and some of its principals in
their quest to collect an attorney fee award of more than $1.8 million
from a man who sued them in 2002 for legal malpractice and lost.
Div. Eight, in an opinion by Justice Elizabeth Grimes, affirmed an
order adding alter egos of the plaintiff, real estate investor and
developer Stephen M. Gaggero.

3. Los Angeles Superior Court Judge Robert L. Hess, who presided
over the malpractice action and has remained in charge of the case
through its span of nearly 12 years, in 2008 had awarded fees to the
defendants in the amount of more than $1.2 million. The appeals court
in May 2010 affirmed the judgment in an unpublished opinion, and
the judgment was amended in December 2010 to reflect costs and fees
in connection with the appeal.
In 2012, Hess added as judgment debtor’s entities which he found
to be alter egos Gaggero. The judge also declared La Cañada attorney
Joseph Praske to be a judgment debtor.
It was Praske who set up Gaggero’s elaborate estate plan, placing
each of the entities owned by the client—cumulatively valued in 1998
at between $35 million to $40 million—in one of three trusts. Praske
is trustee of the trusts.
Gaggero claims to be judgment-proof.
In her unpublished opinion on Friday, she quoted Hess as saying of
Gaggero:
“Supposedly, he retained absolutely no ownership interest in and
no control over these assets. Indeed, he testified that he did not even
have a checking account. When asked how he paid any bills,
[plaintiff] said in substance that he submitted them to the trustee of his
trust, who had absolute discretion to pay or not to pay them. If he
wanted cash, it was available at the trustee’s sole discretion—on
sufferance, as it were. [¶] If this sounds unusual or unbelievable, the
record is clear that [plaintiff] repeatedly used precisely these
assertions and arguments to discourage creditors who were seeking to
collect moneys he owed them. The stonewall...and the claim of no
personal assets that could be liened or attached, were...integral parts of
the effort to discourage or defeat creditors.”
Game Not Over
Hess was correct in adding Gaggero’s alter egos as judgment
debtors, Grimes said, explaining:

4. “Additional judgment debtors argue that, because plaintiff
transferred his ownership of the entities to the trusts, and he is not the
trustee, he has no ownership interest in any of the additional judgment
debtors and, ergo, alter ego doctrine cannot apply. They say that
defendants repeatedly conceded—by simply describing plaintiff’s
transfer of his assets to the entities, and then his transfer of ownership
of the entities to the trusts—that plaintiff does not own any of them or
their assets, and this ‘binding judicial admission’ is fatal. And so, they
think, game over.
“We reject this simplistic, form-over-substance notion, and
conclude on the evidence in this case that plaintiff had a sufficient
ownership interest to satisfy alter ego doctrine.”
Relying on “practical realities,” Grimes said:
“[I]t is of course true that, on paper, plaintiff owns nothing. On
paper, plaintiff depends, for everything in life (except, perhaps, the
$3,000 a month he earns for managing a $40-million portfolio of
assets), on the generosity of Mr. Praske. But the law is not so
unyielding that it cannot take account of practical realities. Plaintiff
transferred his ownership of assets worth tens of millions of dollars to
entities that exist for the sole purpose of owning his properties, and
then transferred his ownership of those entities to the trusts, and
appointed Mr. Praske the trustee. So, Mr. Praske has legal title to
these entities in his capacity as trustee. But the evidence demonstrated
that Mr. Praske is plaintiff’s ‘rubber stamp.’ ”
Going further, she said: “[W]e find the record shows Mr. Praske
was the rubber plug on the underside of the piggy banks that plaintiff
could remove any time he wanted to spill funds into his own hands at
will.”
Grimes added that trust beneficiaries are the “real” owners of
trusts, and this equitable ownership by Gaggero is sufficient to permit
a trust to be declared his alter ego.
Rule Found Inapplicable
The additional judgment creditors pointed to the principle that an
irrevocable trust cannot liable for debts of the settlor. Grimes

5. responded that there’s nothing in the record showing the trusts to be
irrevocable, but added that even if they are, “that principle has no
pertinence where the trustee is the alter ego of the settlor of the trust.”
The appellants cited a 2008 case that says that a corporation
cannot be held liable for debts of its shareholders.
“The facts and governing law in this case are entirely different,”
Grimes declared, proceeding to point out:
“Unlike a corporation, a trust is not a legal person which can own
property or enter into contracts. Since a trust is not a legal entity, it
cannot sue or be sued. A trust is a relationship by which one person
holds legal title for the benefit of another person.”
The case is Gaggero v. Knapp, Petersen & Clarke, BC286925.
David Blake Chatfield of the Westlake Law Group in Westlake
Village represented Gaggero; Westwood attorney Edward A. Hoffman
acted for the alter egos; and Randall A. Miller and Steven S. Wang of
the Bunker Hill law firm of Miller LLP argued for Knapp, Petersen &
Clarke.
Div. Eight filed two separate unpublished opinions by Grimes
related to the litigation. Hess’s award to Knapp, Petersen & Clarke of
fees and costs in connection with the 2012 proceeding to add
judgment debtors was upheld, as well as his order for the appointment
of a receiver and assigning to the defendant financial rights of the alter
egos.
http://www.metnews.com/articles/2014/gaggero111214.htm
Filed 11/7/14 Gaggero v. Knapp, Petersen & Clarke CA2/8
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and
parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule

6. 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
STEPHEN M. GAGGERO et al.,
Plaintiffs and Appellants,
v.
KNAPP, PETERSEN & CLARKE et
al.,
Defendants and Respondents.
B241675
(Los Angeles County
Super. Ct. No. BC286925)
APPEAL from an order of the Superior Court for the County of Los
Angeles. Robert L. Hess, Judge. Affirmed.
Westlake Law Group and David Blake Chatfield for Plaintiff and
Appellant Stephen M. Gaggero.
Law Offices of Edward A. Hoffman and Edward A. Hoffman for
Appellants Pacific Coast Management, Inc.; 511 OFW LP; Gingerbread
Court LP; Malibu Broad Beach LP; Marina Glencoe LP; Blu House LLC;
Boardwalk Sunset LLC; and Joseph Praske, as Trustee of the Aquasante
Foundation, the Arenzano Trust, and the Giganin Trust.
Miller, Randall A. Miller and Steven S. Wang for Defendants and
Respondents.
__________________________
SUMMARY
In May 2010, we affirmed a judgment, including an attorney fee
award of more than $1.2 million, against plaintiff Stephen M. Gaggero in a
malpractice lawsuit he brought against defendants Knapp, Petersen & Clarke
and several of its principals.
Plaintiff did not pay the judgment.

7. In April 2012, defendants moved to add additional judgment debtors
to the judgment. These additional judgment debtors included (a) six entities
(four limited partnerships and two limited liability companies) that were
owned by plaintiff in 1998, with assets then valued at $35 or $40 million; (b)
an entity that managed those assets; and (c) the trustee, Joseph Praske, of
three trusts to which plaintiff had transferred his ownership of all the limited
partnerships and limited liability companies in 1998. The trial court found
all of these were plaintiff’s alter egos, and added as additional judgment
debtors the entities and Mr. Praske, in his capacity as trustee of the three
trusts that held all the entities to which plaintiff had transferred his entire
estate.
The additional judgment debtors and plaintiff appeal from the court’s
order, raising many arguments. They contend they cannot be alter egos as a
matter of law, because “outside reverse veil-piercing” is a doctrine that
applies to them and is forbidden in California. They contend the evidence of
alter ego status is insufficient, claiming there is no “unity of interest and
ownership” between them and plaintiff. They contend that, even if they
were alter egos, defendants did not prove they controlled the litigation.
They contend the trusts are irrevocable (the trust documents are not in
evidence), and irrevocable trusts may never be held liable for the debts of
their settlors. They contend the trial court’s findings that trustee Praske
refused to produce the trust documents was not supported by the evidence
(and that plaintiff’s failure to produce them is not attributable to Mr. Praske).
They contend defendants are estopped to claim they are alter egos
because defendants allegedly admitted in the underlying litigation that the
additional judgment debtors and plaintiff were financially separate.
They contend the trial court invaded the probate court’s exclusive
jurisdiction over the internal affairs of the trusts.
They contend the evidence of alter ego status was known to
defendants before the original judgment was entered in 2008, and
defendants’ failure to act until 2012 waived their alter ego claim.
And, plaintiff contends that affirming the alter ego finding in this case
would “threaten the integrity of estate planning in California.”
We find none of these arguments persuasive, and affirm the order
granting defendants’ motion to add the additional judgment debtors to the
judgment.
FACTS
This litigation began in 2002, when plaintiff sued defendants for
malpractice. Plaintiff lost, and the trial court granted defendants’ motion for
attorney fees. We affirmed the judgment in an unpublished opinion in May

8. 2010. (Gaggero v. Knapp, Petersen & Clarke (May 6, 2010, B207567)
(Gaggero I).) In December 2010, the judgment was amended to include
attorney fees and costs on appeal, plus postjudgment interest, and amounted
to more than $1.8 million.
Defendants’ initial efforts to enforce the judgment against plaintiff
were predictably fruitless. We say “predictably” because one of the
principal issues in the underlying malpractice case involved the tactics
plaintiff employed with other judgment creditors. These included the
assertion that he had no assets and was judgment-proof. The trial court in
the malpractice case described plaintiff’s testimony on the subject this way
(a description we found was fully supported by the record): “Between 1995
and 1998, [plaintiff] did extensive ‘estate planning,’ which supposedly
resulted in all of his personal assets being transferred to various
corporations, trusts and foundations. Supposedly, he retained absolutely no
ownership interest in and no control over these assets. Indeed, he testified
that he did not even have a checking account. When asked how he paid any
bills, [plaintiff] said in substance that he submitted them to the trustee of his
trust, who had absolute discretion to pay or not to pay them. If he wanted
cash, it was available at the trustee’s sole discretion – on sufferance, as it
were. [¶] If this sounds unusual or unbelievable, the record is clear that
[plaintiff] repeatedly used precisely these assertions and arguments to
discourage creditors who were seeking to collect moneys he owed them.
The stonewall . . . and the claim of no personal assets that could be liened or
attached, were . . . integral parts of the effort to discourage or defeat
creditors.” (See Gaggero I, supra, B207567, pp. 13-14 & fn. 8.)
This tactic continued unabated with respect to defendants’ judgment,
and in April 2012, defendants sought to add the “various corporations, trusts
and foundations” to the judgment as additional judgment debtors. Below,
we describe the creation of what the parties call plaintiff’s “estate plan”; the
evidence defendants submitted in support of their motion to amend the
judgment to add additional judgment debtors; and the trial court’s ruling.
1. The “Estate Plan”
In 1997, plaintiff, a real estate investor and developer, hired Mr.
Praske to create and implement an estate plan. At the time, the net value of
the assets in plaintiff’s estate (according to Mr. Praske) was approximately
$30 million. (Plaintiff testified the gross fair market value of his properties
was $35 to $40 million, and that “every asset, up to the time I met Joe
Praske, was owned 100 percent by me, either by virtue of the membership
interest, the shares, or the direct title to the property.”)

9. The estate plan Mr. Praske designed was structured so that each real
property plaintiff owned was transferred by grant deed to a limited liability
company or limited partnership. These entities are four limited partnerships
(511 OFW LP; Gingerbread Court LP; Malibu Broad Beach LP and Marina
Glencoe LP); and two limited liability companies (Blu House LLC and
Boardwalk Sunset LLC). As the entities themselves say, each of them was
created “to own a distinct piece of [plaintiff’s] real property.” Plaintiff
“would be the sole member of the limited liability company, and then would
transfer that membership interest to a trust.” Two trusts (the Aquasante
Foundation and the Arenzano Trust) were created to hold the limited liability
companies and limited partnerships. A third trust (the Giganin Trust) was
created as a qualified personal residence trust, and ownership of plaintiff’s
principal residence (a 1,500-acre property with several buildings on it) was
in the name of that trust. According to Mr. Praske, the Giganin Trust is an
irrevocable trust with substantial estate tax benefits, and gives the taxpayer
(plaintiff) the right to reside at the property.
Mr. Praske is the trustee of the three trusts.
1
In June 2005, he testified
the beneficiaries of the Aquasante Foundation and the Arenzano Trust were
the same, namely, “a class of beneficiaries” comprised of “[a]ny member of
the Gaggero family.” Mr. Praske said that plaintiff was “a potential
beneficiary” of the trusts, and that “[b]eing a potential beneficiary means
that it is up to the trustee to decide each year among the class of
beneficiaries who will be – who will receive distributable income.”
(Plaintiff also testified that he was “in a class of beneficiaries” of the
Arenzano Trust.)
Mr. Praske had the sole and absolute authority to decide “which
beneficiaries would receive anything from the trust.” By 2005, the value of
the “total estate” – the three trusts – had substantially increased, by “[a]t
least 30 to 40 percent,” since it was funded in 1998.
1
Mr. Praske is also the president, secretary and director of Pacific Coast
Management, Inc. (PCM), the corporation that manages the assets, and the general
partner of two of the four limited partnerships. According to plaintiff, Mr. Praske
“was the trustee or managing member or majority membership owner or limited
liability – or limited partnership with the 100 percent ownership of all of those
various entities, i.e., limited liability companies, limited partnerships, or trusts that
formed general partnerships.” Mr. Praske “had control over the ownership entities
of each of the entities that they were a part of,” and “had control over all of the
entities in the estate plan that he created.”

10. Mr. Praske and plaintiff have testified or given sworn statements that
the trusts are irrevocable. As mentioned before, the trust documents are not
in evidence, despite defendants’ extensive attempts to discover them, as
described more fully below.
Mr. Praske could not remember whether he had ever distributed cash
to plaintiff from any of the trusts.
2. How the “Estate Plan” Works
Mr. Praske, in his capacity as trustee, appointed plaintiff manager of
the assets for the entire estate plan. Plaintiff testified in 2005 that he was the
asset manager for the three trusts and for all of the entities owned by them.
Plaintiff’s duties included “[b]uying and selling, financing, trading,
everything.” His services included “[a]ll of the tasks that go along with
property management as well as all of the aspects of the asset management,
such as refinancing, dealing with tax issues, insurance issues, making
decisions to buy, sell, buy or sell the asset, to improve the asset, overseeing
any improvements to the asset, financing, designing some ultimate
disposition of the asset.”
PCM, an additional judgment debtor, is the management company for
the assets held by the trusts. PCM paid plaintiff $3,000 a month (as of
2001), plus the use of a company vehicle, for his services managing the
assets of the additional judgment debtors. Plaintiff testified he was a
managing director of PCM. According to plaintiff, PCM “manages my
estate, entities, and assets.” Further, PCM “[m]anaged assets, companies,
me, my life, my family’s life, trust, foundation, things of that nature.”
Plaintiff testified that “[c]hecks were written by PCM,” but “I paid for it, I
give PCM the money. PCM writes the checks. They write checks for me.
[¶] They pay my utilities. They pay my credit card, they pay for my dogs’
vet bills. I mean PCM manages my life. They are a management company
for me personally and for other things.”
The workings of the “estate plan” are illustrated by testimony Mr.
Praske, plaintiff, and plaintiff’s accountant gave in June and July 2005 in the
Yura litigation. (This was a lawsuit plaintiff brought alleging failure to close
on a real estate transaction. (See Gaggero I, supra, B207567, p. 5, fn. 2.))
Mr. Praske testified he had conferred with plaintiff about the availability of
resources to purchase the property in question in the Yura litigation, which
plaintiff wanted to purchase. At this conference, plaintiff “was just
confirming my commitment of the estate to purchase that property . . . .”
Mr. Praske was then asked, “What did you say to [plaintiff]?” and he
responded, “I said, like I always do, I say yes.”

11. Plaintiff also testified in the Yura case. He was questioned about
whether he had funds available (and from what sources) for the transaction.
He said: “[P]art of the funds might have come from my trust or all of the
funds could have come from my trust. [¶] . . . [¶] . . . [T]he funds would
have come from me, if that’s what you’re asking. I mean, you’re asking
where I would have got the funds or would they be coming from me? [¶]
. . . [¶] . . . It would have come from me into the escrow. But are you
asking where I would have got them from? . . . [¶] . . . [¶] . . . At all times
I commanded the resources to purchase this all cash or with a mortgage.
And if there happened to be a 1031 exchange opportunity available, I would
have exchanged into it with one of the entities that were owned by my trust.”
Plaintiff was asked, “[O]n and after January 1 of 2000 to the present date,
have you commanded and do you command the resources necessary to close
this transaction pursuant to the terms of the purchase agreement,” and he
answered, “Yes.” At another point he testified, “Mr. Praske and myself
always had the ability to . . . pull cash directly out of the trust.”
Plaintiff also testified about what would happen once the property was
purchased in his name. After the close of escrow, “I would have options at
that point. . . . I would have the option, just like I did when I created – when
I funded the trust with my asset, when I took my assets and created my trust,
my personal trust. [¶] I could take this asset in my name, transfer it to an
entity, a limited liability company, a limited partnership, a general
partnership, or a corporation, and then have one of the trusts or the
foundation subsume – if that’s the right word – that entity into the estate
plan, just like I did the other properties in 1997 and 1998; or I could just
keep the property in my name.”
James Walters, a certified public accountant who took over plaintiff’s
tax work in 1984 or 1985, testified that since 1988, plaintiff had been
involved in 10 real estate purchase transactions. He met with plaintiff on all
of those transactions, “to strategize as to tax planning and also strategize as
to the estate planning, and actually to strategize as to which entities
[plaintiff] managed would at times take ownership of the properties.”
During those meetings, decisions were made on those issues, and plaintiff
made those decisions. Mr. Praske’s role was “[a]dvice.” Mr. Walters was
asked, “And once [plaintiff] made the decision, was the decision – those
decisions implemented?” He answered, “Absolutely.” Mr. Walters
specifically testified that plaintiff made the decision on “what entity would
take title for these 10 various properties,” and that plaintiff “command[ed]
the resources necessary to purchase each of those properties.” Mr. Walters

12. continued: “They all flow – the actual gains on these properties always flow
through [plaintiff’s] tax return, through the trusts and all the other entities.”
3. Postjudgment Discovery
After the judgment in the malpractice case, defendants conducted
various forms of postjudgment discovery. On June 8, 2009, defendants took
the third party debtor examination of Mr. Praske, “concerning property of
the judgment debtor in [his] possession or control . . . .”
Mr. Praske was represented by plaintiff’s attorney, David Chatfield.
Mr. Praske testified that plaintiff had no ownership interest in 511
OFW (an additional judgment debtor), and Mr. Chatfield instructed him not
to answer any further questions about its operations on the basis of its
“privacy rights and trade secrets” and irrelevance to the subject matter of the
examination.
Mr. Praske further testified plaintiff had no ownership interest in
additional judgment debtors Gingerbread Court LP, Blu House LLC,
Boardwalk Sunset LLC, Malibu Broad Beach LP, and Marina Glencoe LP.
He was instructed not to answer, on attorney-client privilege grounds,
questions as to what plaintiff received in 1997 or 1998 in exchange for
transferring his ownership in various properties to Gingerbread Court LP,
Blu House LLC, and Boardwalk Sunset LLC. He did not recall whether
plaintiff received any compensation for transferring property to Malibu
Broad Beach LP, and testified plaintiff received compensation in exchange
for transferring property to Marina Glencoe LP, but refused to describe it on
counsel’s instructions.
Mr. Praske testified that plaintiff has never received money or any
assets from the Arenzano Trust. Mr. Praske testified the Arenzano Trust
was an irrevocable, discretionary trust created under the laws of Anguilla,
and plaintiff “has no right whatsoever to any property in the possession or
control of the trust.” He did not recall whether the Arenzano Trust had ever
made any distributions to any of plaintiff’s family members.
Defendants served plaintiff with postjudgment special interrogatories
(set one) on April 25, 2011. On June 21, 2011, plaintiff filed responses to
defendants’ first set of production requests. (The interrogatories and
production requests themselves are not in the record.) No documents were
produced. Plaintiff’s response to the production requests included
objections that defendants’ request was “not reasonably limited to trust
documents reflecting Gaggero’s present interest as the beneficiary of a trust
and therefore are not relevant to judgment enforcement . . . .” Plaintiff also
objected that the request invaded his privacy rights and those of third parties,

13. and responded that he “has no attachable interest as a beneficiary of any
trust.”
On August 9, 2011, defendants filed a motion to compel, and on
October 5, 2011, the court held a hearing on defendants’ motion to compel
further responses to interrogatories. The court granted the motion “in its
entirety”; ordered “[c]omplete, verified, supplemental responses, without
further objection,” to specified interrogatories, to be served by October 24,
2011; and imposed monetary sanctions of $2,000 on plaintiff and his
counsel.
2
On January 31, 2012, defendants filed a request for production of
documents (set two). The production requests asked, among other things,
for documents relating to the trusts. On March 20, 2012, plaintiff
responded, but produced no documents. He objected on a host of grounds,
and repeatedly responded that he had no documents responsive to the
requests in his possession or control. Among his objections were that
requests for documents “relating to assets transferred, sold or liquidated over
a decade ago are clearly irrelevant to this judgment enforcement and will not
be produced by plaintiff.”
On April 30, 2012 (a few weeks after defendants filed their motion to
amend the judgment to add judgment debtors), plaintiff filed supplemental
responses to defendants’ document requests. Again he produced no
documents related to the trusts or his “estate plan,” and objected on multiple
grounds, including lack of relevance, privacy rights, attorney-client privilege
and attorney work-product doctrines. He repeatedly stated he had no trust
documents responsive to the requests in his possession or control, and
repeatedly stated that the trusts were irrevocable; he had no control or
interest in them; they were set up over 13 or 14 years ago, well before
defendants’ judgment; and trust documents “are believed by plaintiff to be in
the possession and control of the attorney and Trustee, Joseph J. Praske . . .
.”
4. The Motion to Amend the Judgment
On April 10, 2012, defendants filed their motion to amend the
judgment to add the three trusts and their assets, seven separate entities, as
additional judgment debtors, presenting the facts we have recited. Plaintiff
2
Plaintiff appealed from the order, and a year later, on October 3, 2012, this
court dismissed the appeal (case No. B236834) on the court’s own motion as
having been taken from a nonappealable order.

14. opposed the motion, as did the additional judgment debtors, who made “a
special appearance” to oppose the motion.
Counsel David Esquibias represented the seven entities and Mr.
Praske in opposing defendants’ motion. They argued (as did plaintiff) that
the court had no authority to add them to the judgment because California
law forbids “outside reverse piercing”; there was no evidence they were alter
egos of plaintiff; they did not control the litigation between plaintiff and
defendants; plaintiff did not represent their interests during any stage of the
litigation; and judicial and collateral estoppel precluded defendants from
claiming they were alter egos because at trial the court “ruled that [plaintiff]
and the Entities were separate and that [plaintiff] had no authority to
represent them [(the entities)], as [defendants] argued at trial.”
The trial court granted defendants’ motion at a hearing on May 29,
2012. At that hearing, counsel David Esquibias, who filed the opposition on
behalf of the seven entities named in defendants’ motion, stated he also
represented Mr. Praske, as trustee for the three trusts that hold title to the
seven entities. After the court indicated the motion appeared to have merit
and solicited argument, Mr. Esquibias asserted previously unmentioned
arguments, that the trusts were irrevocable; the probate court had exclusive
jurisdiction over trust matters under Probate Code section 17000; the
Probate Code requires that notice of defendants’ motion be given “to the
vested current income and principal and remainder beneficiaries of these
trusts”; no such notice had been provided; and under section 18200, the
assets of an irrevocable trust are not available to the settlor’s creditors.
3
The court asked Mr. Esquibias if there was “a reason why, if this is a
meritorious argument, it was not included in the opposition.” Mr. Esquibias
responded that he was “specially appearing for the purpose of arguing
jurisdiction and notice,” and that “I have no explanation as to why it wasn’t
in the opposition. I am late to this party.” (No doubt, the trial court found
this to be as strange a response as we do, since Mr. Esquibias himself
submitted the written opposition two weeks previously, denominating it a
“notice of special appearance to oppose and opposition” to defendants’
motion.)
When asked why he held back the arguments, counsel said “[i]t was
not designed to ambush the moving party,” and perhaps the matter could be
3
Probate Code section 18200 states: “If the settlor retains the power to
revoke the trust in whole or in part, the trust property is subject to the claims of
creditors of the settlor to the extent of the power of revocation during the lifetime
of the settlor.”

15. continued for briefing. The court said, “This is the time and place for the
hearing on this motion,” and then asked if there was evidence in support of
counsel’s assertions that the trusts were “irrevocable and subject to this that
and the other.” Counsel admitted there was nothing “other than their
[defendants’] own statements in their pleadings which are considered
admissions that the trusts are irrevocable.”
Mr. Esquibias said, “We will provide a copy of the trust documents to
counsel upon notice to the beneficiaries,” and the court inquired, “How
would they know who the beneficiaries are?” The court continued: “[Y]ou
are asserting a series of things which find no evidentiary support and the
reason they have no evidentiary support . . . 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.”
Mr. Esquibias responded that he “ha[d] a resolution.” He said he was
“new to this case” and stated: “I will make sure that opposing counsel has a
copy of the trust documents, so that she can apprise the situation herself.
She can give notice.” Counsel said he was not present at the depositions
(apparently referring to Mr. Praske’s third party debtor examination, at
which plaintiff’s lawyer, Mr. Chatfield, represented Mr. Praske), “but I will
tell the court now, and opposing counsel, I now represent Mr. Praske in his
capacity as trustee of these trusts, and we intend to completely and fully
cooperate with the requests for the documentation. [¶] There is no reason
why it should not be disclosed.”
The court asked if there was a reason why counsel did not have the
trust documents at the hearing, and counsel said he had them, but his notes
were on the documents. He stated his intention “to be fair and clear and
transparent,” and asked for an order that the documents not be made public,
to which the court responded that counsel could have applied for a protective
order in a timely fashion. The court further stated that Mr. Praske, “during
these preceding times,” had not had independent counsel: “He has used Mr.
Gaggero as [sic] counsel, which suggests to me – certainly leads to an
inference, that the positions taken were coordinated positions.” The court
concluded that this “[s]mells like more delay.”
Mr. Esquibias said the delay would be short, and went on to renege on
his earlier statement that “we intend to completely and fully cooperate with
the requests for the documentation.” He said: “We would only want to
provide information that is either agreed upon between myself and opposing
counsel or if we could not come to some type of agreement, whatever this
court would determine to be relevant.”

16. The court declined to allow further delay. The court concluded that
“these persons and entities are alter egos of Mr. Gaggero and clearly, clearly,
it would be inequitable not to pierce the veil – not to get [at] these entities
which are his alter ego. Since he has this substantial judgment against him,
and he has attempted to use these devices to put his assets beyond the reach
of legitimate creditors, and we have had a full and fair opportunity to litigate
this. [¶] . . . [¶] I know at the moment there is . . . zero evidence in the
record to support the position that there is a plethora of – I don’t know who
these people are. [¶] And in fact, I do know that Mr. Praske was
extraordinarily vague when he was questioned at trial about the identities of
these . . . supposed beneficiaries. [¶] You know, the decision was made
long ago to keep the trust documents out of the hands of the defense, and
now to try and invoke the terms of it, you know, without giving it to the
other side. . . . [T]his is a situation where these issues have been percolating
for a long time, and there is a fundamental unfairness to making [defendants]
jump through all these hoops to collect the judgment and saying no, no you
can’t have x, y, and z, and then coming in at the last minute making
arguments not set forth in the pleadings [based] on evidence, not before the
court and saying Judge give us a do over. [¶] There is a fundamental
unfairness to that.”
On the evidence of alter ego status, the court observed: “[T]he
exhibits attached to the motion contain testimony of both Mr. Gaggero and
Mr. Praske showing that the only interest of the specially appearing parties is
to protect 100 percent of Mr. Gaggero’s assets, both personal and business.
Praske is the only trustee of the trust and foundation involved in the motion.
He is one of only two officers in PCM. PCM pays everything at Gaggero’s
wishes without resistance or hesitance. Praske is also the registered agent
for service of process at each of the business entities. [Defendants’]
evidence shows that Mr. Gaggero’s own accountant testified under penalty
of perjury that the gains and losses for the assets and the estate plan,
ultimately flow through Mr. Gaggero’s tax returns, which is more evidence
of alter ego status. [¶] Gaggero controlled the litigation. He did so by the
way of the financial assets of the specially appearing parties. Their interests
are aligned with Mr. Gaggero. Without them – without Mr. Gaggero they
wouldn’t even exist. Mr. Praske testified that the sole purpose of the
existence of the specially appearing parties is to hold Mr. Gaggero’s assets.
They are one and the same. That is the bottom line.”
The court rejected Mr. Chatfield’s contention that Mr. Praske’s
testimony was that “Mr. Gaggero makes the recommendation, and he [(Mr.

17. Praske)] makes the decision,” concluding that “Mr. Praske is for all intents
and purposes a rubber stamp.”
The court’s order granting defendants’ motion was signed and entered
the same day. On June 1, 2012, plaintiff’s attorney filed a notice of appeal
on behalf of plaintiff and the additional judgment debtors.
DISCUSSION
1. Preliminary Motions
Both sides filed motions during the briefing of this appeal.
The additional judgment debtors ask us to take judicial notice of
several documents filed in the trial court in this case after the notice of
appeal: the August 6, 2012 third amended judgment; the trial court’s
November 5, 2012 order authorizing the receiver appointed in this case (the
subject of a separate appeal by additional judgment debtors) to approve and
facilitate a financing transaction arranged by four of the additional judgment
debtors; and defendants’ December 3, 2012 notice of satisfaction of the
judgment. These documents are relevant, they say, to show they paid the
judgment, were prejudiced by the order adding them as judgment debtors,
and their payment did not waive their right to seek relief in this court. None
of these points is at issue in this appeal. While there is nothing controversial
about the documents, they are not relevant to any matter at issue in this
appeal, and there is no point in judicially noticing them.
Defendants ask us to dismiss plaintiff’s appeal on the ground he lacks
standing to prosecute it. They say he has not been injured by the order
adding judgment debtors, because he says he is completely separate from
them. We see no point in expending judicial resources on interesting
theoretical issues, or on plaintiff’s many arguments about why he is
nevertheless aggrieved by the order. Moreover, there is no substantial
difference in the issues plaintiff and the additional judgment debtors raise on
appeal, all of which we must consider in any event. And, given our
disposition of this appeal, plaintiff is, as a practical matter, very much
aggrieved by the order.
2. General Principles on Adding Debtors to the Judgment
Code of Civil Procedure section 187 authorizes a trial court to amend
a judgment to add judgment debtors. (NEC Electronics Inc. v. Hurt (1989)
208 Cal.App.3d 772, 778 (NEC Electronics).) “Judgments are often
amended to add additional judgment debtors on the grounds that a person or
entity is the alter ego of the original judgment debtor.” (Ibid.)
The Supreme Court tells us that the alter ego doctrine “arises when a
plaintiff comes into court claiming that an opposing party is using the
corporate form unjustly and in derogation of the plaintiff’s interests.”

18. (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300 (Mesler).)
Mesler instructs that there is “no litmus test to determine when the corporate
veil will be pierced; rather the result will depend on the circumstances of
each particular case.” (Id. at p. 300.) There are “two general requirements:
‘(1) that there be such unity of interest and ownership that the separate
personalities of the corporation and the individual no longer exist and (2)
that, if the acts are treated as those of the corporation alone, an inequitable
result will follow.’ [Citation.] And ‘only a difference in wording is used in
stating the same concept where the entity sought to be held liable is another
corporation instead of an individual.’ [Citation.]” (Ibid.)
Mesler explained the alter ego doctrine as follows: “The essence of
the alter ego doctrine is that justice be done. ‘What the formula comes down
to, once shorn of verbiage about control, instrumentality, agency, and
corporate entity, is that liability is imposed to reach an equitable result.’
[Citation.]” (Mesler, supra, 39 Cal.3d at p. 301 [holding that a parent
corporation’s liability as alter ego of its subsidiary corporation continued
after settlement with the subsidiary; “[t]o hold otherwise would be to defeat
the policy of promoting justice that lies behind the alter ego doctrine”].)
Alter ego liability may be applied to a trustee. (Greenspan v. LADT
LLC (2010) 191 Cal.App.4th 486, 522 (Greenspan) [if the trustee is the alter
ego of an individual, then the individual “may be considered the owner of
the [trust’s] assets for purposes of satisfying the judgment”; “ ‘[t]rustees are
real persons . . . and, as a conceptual matter, it’s entirely reasonable to ask
whether a trustee is the alter ego of a defendant who made a transfer into
[the] trust’ ”; “ ‘[a]lter-ego doctrine can therefore provide a viable legal
theory for creditors vis-à-vis trustees’ ”]; cf. Wood v. Elling Corp. (1977) 20
Cal.3d 353, 365-366 [allegations that corporate defendants were alter egos
of individual defendants were barred by statute of limitations on fraudulent
conveyance cause of action, but plaintiff should have been allowed to amend
his complaint, because “[i]f it were alleged and proven that the two trusts in
question [which owned the corporate defendants] were themselves alter egos
of the [individuals], those trusts would essentially drop out as independent
legal entities”].)
“ ‘The decision to grant an amendment . . . lies in the sound discretion
of the trial court. “The greatest liberality is to be encouraged in the
allowance of such amendments in order to see that justice is done.” ’
[Citation.]” (Greenspan, supra, 191 Cal.App.4th at p. 508.) Where, as here,
facts are in dispute, we review the trial court’s fact findings for substantial
evidence. (NEC Electronics, supra, 208 Cal.App.3d at p. 777.)

19. 3. Issues Raised by the Additional Judgment Debtors
We turn to the specific contentions the additional judgment debtors
raise on appeal, discussing first the several bases on which they claim they
may not be added to the judgment as a matter of law.
a. “Reverse piercing” of the corporate veil (a red herring)
Additional judgment debtors contend they may not be added to the
judgment because “reverse piercing” of the corporate veil is “forbidden by
California law.” They rely on one opinion, Postal Instant Press, Inc. v.
Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1512-1513 (Postal Instant
Press) to argue that, while traditional alter ego doctrine allows an individual
shareholder to be held liable for claims against a corporation, it does not
allow a corporation to be held liable for claims against an individual
shareholder. Postal Instant Press rejected the “variant of the alter ego
doctrine, called third party or ‘outside’ reverse piercing of the corporate
veil,” and held that “a third party creditor may not pierce the corporate veil
to reach corporate assets to satisfy a shareholder’s personal liability.” (Id. at
p. 1513.)
The opinion in Postal Instant Press includes a thorough analysis of
cases from California, federal and other state courts discussing “outside
reverse piercing of the corporate veil,” both cases accepting, and others
rejecting that theory of alter ego. The Postal Instant Press opinion rejected
it as “a radical and problematic change in standard alter ego law.” (Postal
Instant Press, supra, 162 Cal.App.4th at p. 1521.) The opinion explains
outside reverse piercing of the corporate veil creates unanticipated exposure
for innocent investors and secured and unsecured creditors who relied on the
impregnability of the corporate form; and that other remedies are available
to the creditor of an individual shareholder, such as enforcing the judgment
against the shareholder’s assets, including his shares in the corporation. (Id.
at p. 1524.)
We find these are sound principles, consonant with Mesler’s directive
to look to “the circumstances of each particular case.” (Mesler, supra, 39
Cal.3d at p. 300.) In Postal Instant Press, the corporation at issue had other
shareholders, the plaintiff failed to show that innocent creditors would be
adequately protected, and the plaintiff admittedly did not pursue other
available legal remedies because it was “simply more expedient” to add the
corporation as a judgment debtor. (Postal Instant Press, supra, 162
Cal.App.4th at pp. 1524, 1523.) In other words, the equities of the case did
not justify disregarding the corporate form.

20. The facts and governing law in this case are entirely different. The
additional judgment debtors are Mr. Praske, as the trustee of three trusts
plaintiff created for the sole purpose of holding his assets, and the entities
plaintiff transferred into the trusts which comprise the trust assets. Unlike a
corporation, a trust is not a legal person which can own property or enter
into contracts. Since a trust is not a legal entity, it cannot sue or be sued. A
trust is a relationship by which one person holds legal title for the benefit of
another person. (Greenspan, supra, 191 Cal.App.4th at p. 521.)
We find neither the holding nor the reasoning of Postal Instant Press
govern whether the additional judgment debtors were properly found to be
alter egos of plaintiff for the reasons set forth more fully below.
b. The ownership issue
Additional judgment debtors argue that, because plaintiff transferred
his ownership of the entities to the trusts, and he is not the trustee, he has no
ownership interest in any of the additional judgment debtors and, ergo, alter
ego doctrine cannot apply. They say that defendants repeatedly conceded –
by simply describing plaintiff’s transfer of his assets to the entities, and then
his transfer of ownership of the entities to the trusts – that plaintiff does not
own any of them or their assets, and this “binding judicial admission” is
fatal. And so, they think, game over.
We reject this simplistic, form-over-substance notion, and conclude
on the evidence in this case that plaintiff had a sufficient ownership interest
to satisfy alter ego doctrine.
i. Ownership in the trust context
Additional judgment debtors correctly point out that the cases
uniformly say that one of the “two general requirements” for disregarding
the corporate form is “ ‘that there be such unity of interest and ownership
that the separate personalities of the corporation and the individual no longer
exist . . . .’ [Citation.]” (Mesler, supra, 39 Cal.3d at p. 300.) They further
point out that one Ninth Circuit case has said that “ownership of stock is an
absolute requirement for an alter ego finding.” (SEC v. Hickey (9th Cir.
2003) 322 F.3d 1123, 1129, id. at p. 1130.)
But this case does not involve an individual and a corporation. It
involves trusts. There are no stock owners of a trust. It should go without
saying that cases are not authority for propositions they have not considered.
(And, as many cases have noted, “[b]ecause it is founded on equitable
principles, application of the alter ego [doctrine] ‘is not made to depend
upon prior decisions involving factual situations which appear to be
similar,’ ” and “ ‘ “the conditions under which a corporate entity may be

21. disregarded vary according to the circumstances of each case.” ’
[Citations.]” (Las Palmas Associates v. Las Palmas Center Associates
(1991) 235 Cal.App.3d 1220, 1248.)
Here, it is of course true that, on paper, plaintiff owns nothing. On
paper, plaintiff depends, for everything in life (except, perhaps, the $3,000 a
month he earns for managing a $40-million portfolio of assets), on the
generosity of Mr. Praske. But the law is not so unyielding that it cannot take
account of practical realities. Plaintiff transferred his ownership of assets
worth tens of millions of dollars to entities that exist for the sole purpose of
owning his properties, and then transferred his ownership of those entities to
the trusts, and appointed Mr. Praske the trustee. So, Mr. Praske has legal
title to these entities in his capacity as trustee. But the evidence
demonstrated that Mr. Praske is plaintiff’s “rubber stamp.” Moreover, under
general principles of trust law, “trust beneficiaries hold ‘an equitable estate
or beneficial interest in’ property held in trust and are ‘ “regarded as the real
owner[s] of [that] property.” ’ [Citation.]” (Steinhart v. County of Los
Angeles (2010) 47 Cal.4th 1298, 1319; see In re Schwartzkopf (9th Cir.
2010) 626 F.3d 1032, 1039 [under California law, “equitable ownership in a
trust is sufficient to meet the ownership requirement for purposes of alter
ego liability”].)
ii. Substantial evidence of ownership
Substantial evidence supported the trial court’s alter ego findings.
Like the trial court, we do not believe that Mr. Praske has any actual
authority to decide what to do with the assets held by the trusts. It is
plaintiff who exercises that authority. Plaintiff’s testimony in the Yura
litigation showed that he treated the trusts like his own personal piggy banks.
The trial court described Mr. Praske as plaintiff’s “rubber stamp.”
Extending the piggy bank analogy, we find the record shows Mr. Praske was
the rubber plug on the underside of the piggy banks that plaintiff could
remove any time he wanted to spill funds into his own hands at will.
Plaintiff plainly said that he could get funds from his trust to buy the
property, and then either put the property into the “estate plan” or keep it in
his own name. Since Mr. Praske said yes, “like I always do,” to providing
funds from the trust to purchase property that plaintiff could keep in his own
name, it seems quite clear that plaintiff (who is, Mr. Praske admits, “a
potential beneficiary” of the trusts) not only controls the trusts (and the
entities owned by the trusts) but also – and certainly in a court of equity –
has an ownership interest in trust assets within the contemplation of alter ego
doctrine. (See Greenspan, supra, 191 Cal.App.4th at p. 518 [if the trustee is

22. the alter ego of an individual, then the individual “may be considered the
owner of the [trust’s] assets for purposes of satisfying the judgment”].) So it
is here.
c. Other alter ego requirements and supporting evidence
Additional judgment debtors also contend that the evidence was
insufficient to establish the required unity of interest and ownership. They
rely on Misik v. D’Arco (2011) 197 Cal.App.4th 1065 (Misik), where the
court listed some of the “many factors to be considered” in determining
whether there is sufficient unity of interest and ownership that “the separate
personalities of the individual and the corporation no longer exist . . . .” (Id.
at p. 1073.) Additional judgment debtors observe that no evidence was
offered on most of the factors that Misik lists (such as commingling of funds,
failure to maintain records, inadequate capitalization, and so on).
But the question is not what factors were not present, but what
circumstances were present to establish the required unity of interest and
ownership. As Misik also observes, “[t]his list of factors is not exhaustive”;
the enumerated factors “may be considered with others under the particular
circumstances of each case”; and no single factor is determinative. (Misik,
supra, 197 Cal.App.4th at p. 1073.) Instead, “ ‘ “a court must examine all
the circumstances to determine whether to apply the doctrine.” ’ [Citation.]”
(Ibid.)
That is just what the trial court did: it examined all the circumstances.
Most of the laundry list of factors recited in Misik did not apply to the
arrangements plaintiff and Mr. Praske implemented in this case. Others did:
the ownership factor already considered, and the use of the trusts and the
entities “as a mere shell, instrumentality or conduit for the business of an
individual.” (Misik, supra, 197 Cal.App.4th at p. 1073.) We have recited
the established facts at length in parts 1 and 2 of the facts, ante, and will not
repeat them here. Plainly the evidence was sufficient for the trial court to
conclude that “under the particular circumstances” (ibid.) plaintiff and
additional judgment debtors were “one and the same.”
Additional judgment debtors complain that defendants did not present
evidence specific to any of them, “treated all ten of them as a single unit”
and did not prove “any facts specific to any of the individual trusts, LLCs or
LPs.” That is because plaintiff and Mr. Praske devised a single enterprise –
which they conveniently denominate an “estate plan” – controlled by
plaintiff to his own ends, one of which was to place his personal assets
beyond the reach of legitimate creditors.

23. Finally, additional judgment debtors say the other alter ego
requirement – that adherence to the fiction of separate existence would
“sanction a fraud or promote injustice” (Misik, supra, 197 Cal.App.4th at p.
1073) – is not met either. The facts we have related patently demonstrate
otherwise.
d. Control of the litigation
Some authorities tell us that adding a judgment debtor to a judgment
requires both that the additional judgment debtor be an alter ego of the
original judgment debtor and “that the new party had controlled the
litigation, thereby having had the opportunity to litigate, in order to satisfy
due process concerns.” (Triplett v. Farmers Ins. Exchange (1994) 24
Cal.App.4th 1415, 1421 (Triplett).) “[T]he due process concern raised when
new parties are named after judgment is to determine not only alter ego
status but also whether there was sufficient control over the underlying
litigation to permit the opportunity to contest the underlying judgment.”
(Ibid.)
Seizing on this principle, additional judgment debtors point to the trial
court’s express finding that it was plaintiff who controlled the underlying
litigation. They say this finding necessarily means that they did not control
the litigation, and therefore cannot be added to the judgment.
While due process considerations are distinct from alter ego findings,
under the circumstances here there are no due process considerations that
prevent amending the judgment. This is not a case where the interests of the
individual defendant in the underlying litigation were different from those of
the alter egos. Plaintiff fought tooth and nail to prevent the attorney fee
award against him (and, perforce, to prevent any part of the assets he had
transferred to his alter egos from being used to satisfy his judgment
creditors). As was the case with the real estate developer in Greenspan who
transferred his limited liability companies to a trust he managed, plaintiff’s
interests were the same as his trusts and the entities they hold; if at any point
plaintiff wanted to protect the funds of a particular entity, he could make a
transfer to another entity. In reality, plaintiff was the head of a single
enterprise and controlled the litigation on behalf of all of them. (Cf.
Greenspan, supra, 191 Cal.App.4th at p. 510 [real estate developer who
transferred ownership of limited liability companies to a trust he managed
viewed all the entities as a single enterprise, so he did not consider their
“distinct” interests “because, as far as he was concerned, their interests were
identical to his own”].)

24. e. The irrevocability claim
Additional judgment debtors contend that, as a matter of law, the
trustee may not be added to the judgment because the trusts are irrevocable,
and the assets of an irrevocable trust can never be reached by the settlor’s
creditors. We do not agree, for multiple reasons, including absence of the
trust documents from the record. (See pt. 3.f., post.) But even if the trusts
were irrevocable, that principle has no pertinence where the trustee is the
alter ego of the settlor of the trust.
First, we do not agree with additional judgment debtors that Laycock
v. Hammer (2006) 141 Cal.App.4th 25 (Laycock) is controlling here. In
Laycock, the court held that, once the settlor of an irrevocable trust
transferred an insurance policy to the trust, “he no longer had any ownership
interest in the policy and it was not subject to the claims of his creditors.”
(Id. at p. 27.) The court cited Probate Code provisions
4
and said “[t]here are
no cases that permit the settlor of a trust to make an irrevocable trust
revocable by way of conduct after the trust has been established” (id. at p.
30), and “a settlor’s conduct after an irrevocable trust has been established
will not alter the nature of such a trust.” (Id. at p. 31.)
Laycock did not involve circumstances where the trustee of the trust
was the alter ego of the settlor (and, as additional judgment debtors
themselves have pointed out, cases are not authority for points they did not
consider). Greenspan, on the other hand, did involve circumstances where
the trustee of a trust was the alter ego of the settlor, and the trust in that case
was an irrevocable trust, created by the settlor for the benefit of his children.
(Greenspan, supra, 191 Cal.App.4th at p. 497.) The court held the plaintiff
“properly sought to add . . . the trustee of the . . . Trust, as a judgment
debtor” (id. at p. 518), and that if the trustee is the alter ego of an individual
who made a transfer into the trust, then the individual “may be considered
the owner of the [trust’s] assets for purposes of satisfying the judgment.”
4
Probate Code section 18200 states that “[i]f the settlor retains the power to
revoke the trust in whole or in part, the trust property is subject to the claims of
creditors of the settlor to the extent of the power of revocation during the lifetime
of the settlor.” And section 19001, subdivision (a) states that, upon his or her
death, “the property of the deceased settlor that was subject to the power of
revocation at the time of the settlor’s death is subject to the claims of creditors of
the deceased settlor’s estate and to the expenses of administration of the estate to
the extent that the deceased settlor’s estate is inadequate to satisfy those claims
and expenses.”

25. (Ibid.; see In re Schwartzkopf, supra, 626 F.3d at p. 1040 [holding that an
irrevocable trust (id. at p. 1034) was an individual’s alter ego].)
Second, the record is insufficient to conclude the trusts were
irrevocable anyway. As Laycock tells us, California courts considering the
issue “have looked to the express terms of the trust instrument in
determining whether a trust is revocable or irrevocable.” (Laycock, supra,
141 Cal.App.4th at p. 30.) The trust instruments are not in the record, and
that is because plaintiff and Mr. Praske have not produced them. (See part
3.f., post.) This likewise disposes of the assertion that defendants had to
prove the trusts were revocable and did not meet that burden. Probate Code
section 15400 provides that “[u]nless a trust is expressly made irrevocable
by the trust instrument, the trust is revocable by the settlor.” Even if
defendants were required to produce proof of revocability (and Greenspan
supports the conclusion the issue is irrelevant), it was plaintiff and Mr.
Praske who eliminated the possibility of doing so.
f. The failure to produce trust documents
In a related argument, additional judgment debtors assert that the trial
court erroneously found, without evidentiary support, that they “had
committed misconduct” by refusing to produce the trust instruments or
identify the beneficiaries of the trusts during postjudgment discovery. (We
note parenthetically that the references by additional judgment debtors to
Mr. Praske’s “misconduct,” “purported misdeeds” and “wrongful[]”
withholding of evidence are strictly their own characterizations, not those of
the trial court.) Additional judgment debtors say the alter ego decision “rests
entirely” on this finding, and that the trial court was wrong, because Mr.
Praske himself never refused, and indeed was never asked, to turn over the
disputed documents.
This argument ignores the evidence. It ignores plaintiff’s response to
the production requests (objecting on grounds of a constitutional right to
privacy as well as attorney-client privilege and attorney work product). It
ignores the evidence that Mr. Praske “always” said yes to plaintiff. It
ignores the evidence that plaintiff’s counsel represented Mr. Praske at his
third party debtor examination. It ignores the evidence that Mr. Praske
followed plaintiff’s counsel’s instructions not to answer questions about the
operations of the entities to which plaintiff had transferred his properties
(except to say plaintiff did not now own them). And it ignores the fact that
at the hearing, Mr. Praske’s own counsel, after first saying that Mr. Praske
intended “to completely and fully cooperate with the requests for the
documentation,” said, “I know in my mind what information they need,” and

26. that he would only provide information either agreed upon between counsel
or “whatever this court would determine to be relevant.” (As the court
observed, this was “a contingent offer” and “of limited scope.”)
In other words, we find apt the trial court’s description of plaintiff and
Mr. Praske as being “joined at the hip,” whose “positions taken were
coordinated positions.” We find no error in the trial court’s inference that
Mr. Praske had effectively “refused” to produce the trust documents, with
the result that the record was devoid of evidentiary support for the claims
counsel made – belatedly and with no excuse – at the hearing.
Additional judgment debtors further contend their due process rights
were violated because they “had no notice that they would need to rebut a
claim that Praske had withheld documents,” having “only learned of the
accusation at the hearing,” and “[a] ruling that is entered without notice to
the affected parties is void.” (In a similar vein, they claim the court’s
“refusal to let [them] produce the trust documents before penalizing them”
was “reversible per se” and violated their constitutional right to a fair
hearing.)
These are baseless contentions. Additional judgment debtors are the
ones who generated the issue in the first place, by raising last-minute claims
about the trusts that they failed to raise in their opposition papers. The only
reason they “had no notice” was that they gave none. (Defendants’ counsel
pointed out at the hearing that Mr. Praske testified these were offshore trusts,
never filed with any United States court, with “independent confidentiality
provisions” and “had we [(the defendants)] any idea this would be an
argument they would raise we would have pulled excerpts from the debtor
examination to address that.”) These claimed “structural” errors,
purportedly “reversible per se,” are neither. They are arguably as far from
due process violations as it is possible to get.
Next, additional judgment debtors characterize the court’s ruling as
“an evidentiary and/or issue sanction for discovery abuses,” and then tell us
all the reasons why such a discovery sanction is improper. The short answer
to these claims is that the court did not impose an evidentiary sanction. The
court refused to continue the hearing, concluding it would be fundamentally
unfair to do so in light of the history of the litigation. And the trial court did
not “presume” that plaintiff and additional judgment debtors were “one and
the same”; the court found they were “one and the same” based on the
evidence we have described at length. The court’s refusal to continue the
hearing was within the trial court’s sound discretion, and we see no basis
upon which to find any error.
g. Judicial estoppel and related claims

27. Additional judgment debtors assert that in the underlying litigation,
“[b]ased on [defendants’] argument, the trial court expressly found that
Gaggero was separate from the estate he had created years earlier,” so
judicial estoppel prevents defendants from making an alter ego claim. The
quoted statement distorts the facts, which provide no basis for a finding of
judicial estoppel.
In fact, there were neither arguments nor trial court findings that
plaintiff was “financially separate” from PCM or the other additional
judgment debtors. The arguments and findings were that plaintiff so
testified, and that he failed to produce any evidence that he personally paid
any attorney fees to anyone who represented him, or that he had any
obligation to repay the sums that PCM or others paid for him. The trial
court said, “As far as the evidence goes, the entities paid whatever sums
were expended entirely gratuitously.” In short, the trial court concluded
that, because plaintiff took the position throughout the litigation that “he
ha[d] no control over any funds, in an attempt to put his assets outside the
reach of creditors,” the doctrine of judicial estoppel “would apply to prevent
any change in position,” so it “is appropriate to take Mr. Gaggero at his
word on this point and let him now accept the consequences. Since he paid
nothing, he can recover nothing.” This was obviously not a finding that
plaintiff and additional judgment debtors were actually separate financially.
In sum, there was no argument, and no finding, precluding an alter
ego claim. For the same reasons, the argument by additional judgment
debtors that the (nonexistent) finding of financial separation is “law of the
case” is equally baseless. Likewise, their contention that the amended
judgment adding them as debtors “directly contradicts the original
judgment” and therefore cannot stand – which is based on the same
nonexistent trial court finding of financial separation – necessarily has no
merit.
h. Probate court jurisdiction
Additional judgment debtors claim that the trial court had no
jurisdiction to amend the judgment to add them as judgment debtors because
the probate court “has exclusive jurisdiction of proceedings concerning the
internal affairs of trusts.” (Prob. Code, § 17000, subd. (a).) The trial court
did not consider this claim because additional judgment debtors failed to
assert it in their opposition papers. (See pt. 3.f., ante.) It has no merit in any
event. This is not a proceeding concerning the internal affairs of the trusts,
and none of the authorities that additional judgment debtors cite suggests
otherwise. The probate court does not have exclusive jurisdiction of actions

28. and proceedings “by or against creditors or debtors of trusts” or actions and
proceedings “involving trustees and third persons.” (§ 17000, subd.
(b)(2)&(3); cf. Greenspan, supra, 191 Cal.App.4th at p. 522 [civil action
where the plaintiff “properly sought to add . . . the trustee of the . . . Trust, as
a judgment debtor”].)
i. Waiver
Additional judgment debtors claim that a judgment may not be
amended to include alter ego debtors if the judgment creditor was aware of
the alter ego relationship before the judgment was entered. The only case
authority they cite for this proposition is Jines v. Abarbanel (1978) 77
Cal.App.3d 702 (Jines), which does not support it. In Jines, the trial court
added a medical corporation to a malpractice judgment against the physician
after the judgment, and the Court of Appeal reversed. The medical
corporation was defendant’s employer. There was “no suggestion of any . . .
abuse” of the corporate privilege, and no need to disregard the separateness
of the employer and employee in order to do justice, because a corporate
employer is liable for the torts of its employee in the course of employment,
and could have been sued on that basis. (Id. at pp. 715-716.) In short, alter
ego doctrine simply did not apply, and so there was no legal basis for a
postjudgment order adding the corporation as a judgment debtor. (Id. at p.
716.) That is not this case.
Additional judgment debtors then say defendants did not act with due
diligence in adding them as judgment debtors, relying on Alexander v. Abbey
of Chimes (1980) 104 Cal.App.3d 39 (Alexander), where the court found
ample evidence for disregarding the corporate entity, but found the motion
to amend the judgment had not been timely made. (Id. at p. 47.) In that
case, the plaintiffs waited nearly seven years after the judgment was final to
seek to add the alter ego to the judgment, even though they knew or should
have known of the alter ego status either at the time of the original
proceedings or shortly thereafter. (Id. at p. 48.) Further, there was “no
suggestion that [the plaintiffs had] ever made any effort to satisfy the
judgment” before they filed the motion to amend the judgment. (Ibid.)
Here, the original judgment was entered on February 5, 2008, and
plaintiff’s appeal resulted in an automatic stay of enforcement until May
2010, when the judgment was affirmed on appeal. The amended judgment
including costs on appeal was not entered until December 2010. Defendants
moved to add judgment debtors on April 10, 2012, after conducting various
forms of postjudgment discovery during 2011 and 2012. In short, this is not

29. a case like Alexander, where the plaintiff did nothing at all for seven years
after the judgment was final.
The general rule is that “ ‘ “a court may amend its judgment at any
time so that the judgment will properly designate the real defendants.” ’ ”
(Greenspan, supra, 191 Cal.App.4th at p. 508, italics added.) The procedure
is an equitable one, and the decision lies in the court’s sound discretion. We
see no reason on this record to find any absence of diligence by defendants
in bringing their motion.
j. The “estate planning” argument
Finally, plaintiff contends that affirming the trial court’s alter ego
finding will “threaten the integrity of estate planning in California” and that
“no estate plan will ever be safe in a California court.” No such
consequences flow from this opinion. We merely recognize the previously
established principle that alter ego doctrine may be applied to a trustee, and
if the trustee is the alter ego of an individual, then the individual “may be
considered the owner of the [trust’s] assets for purposes of satisfying the
judgment.” (Greenspan, supra, 191 Cal.App.4th at p. 522.) The Mesler
court’s observation in the context of corporations likewise apply here: “ ‘In
the instant case there may well have been various business reasons sufficient
to justify and support the formation or continuation of the corporation on the
part of defendant. For such purposes the [corporation] still stands,’ ” but
“ ‘[t]he law of this state is that the separate corporate entity will not be
honored where to do so would be to defeat the rights and equities of third
persons.’ [Citations.]” (Mesler, supra, 39 Cal.3d at pp. 300-301.) The
same is true here.
DISPOSITION
The order is affirmed. Defendants shall recover their costs on appeal.
GRIMES, J.
We concur:
RUBIN, Acting P. J.
FLIER, J.

30. Marina Glencoe, L.P., Plaintiff v. Amidi Partners, LLC; and Does 1-10,
inclusive, Defendants – Superior Court Case No. CIV 231175 - Declaration
of Sam Ferdows in Support of Motion for Attorney Fees Against Marina
Glencoe, L.P – filed April 4, 2008:
“ At the outset of this case, Marina Glencoe’s attorney, David Chatfield,
made it abundantly clear that he was setting this case up for potential
recovery of millions of dollars in attorney’s fees. On or about April 7, 2005,
I received a letter from David Chatfield, indicating that Marina Glencoe,
L.P. would resolve the claim for specific performance matter for $2,000,000.
“At the end of one of the court hearings in this matter, David Chatfield
conveyed to me and Michael Liberty that his office was litigating this case
primarily for the purpose of “racking up” attorneys fees as he had done on
other cases and that his exorbitant attorney fee awards by other judges of this
Court have been confirmed by the appellate courts.”
Marina Glencoe, L.P., Plaintiff v. Amidi Partners, LLC; and Does 1-10,
inclusive, Defendants – Superior Court Case No. CIV 231175 - Amidi
Partners, LLC and AMA Construction & Real Estate, LLC’s Memorandum
of Points and Authorities in Support of Motion for Attorneys’ Fees Against
Marina Glencoe, L.P:
“Outside one of the many court hearings in this case, David Chatfield, an
attorney at Westlake Law Group representing Marina Glencoe told Mr.
Liberty that Chatfields office was litigating this case primarily for the
purpose of “racking up” attorneys’ fees as he had done on many other cases
and that his exorbitant attorney fee awards had been confirmed by the
appellate courts. In this matter, Marina Glencoe claimed it spent 152.75
hours just in opposing the motion to expunge the lis pendens in this case.
Indeed, from the beginning of this case, Marina Glencoe has made it clear it
was seeking millions of dollars in attorneys’ fees relating to this dispute. On
April 7, 2005, David Chatfield sent Sam Ferdows a settlement demand,
indicating that Marina Glencoe would forego acquiring the property and
resolve the dispute for $2,000,000. By August 2007, Marina Glencoe was
still claiming over $2 million in costs and fees. That month, Julian Simonis,
on behalf of Marina Glencoe, sent Amidi’s counsel a settlement letter,
demanding $2,221,438.07 to settle the dispute and remove the lis pendens on

31. the subject property. The Westlake Law Group has a pattern of “racking up”
fees in cases out of proportion to the underlying value of the case.
Cross-Defendant Gaggero, a central character in this case, and Marina
Glencoe are no strangers to litigation. A quick check on the California
Courts’ official website shows that Gaggero has been involved as a party in
24 separate appellate cases in the Second District, including his appeal from
sanctions order in this case, and Marina Glencoe has been involved in 5,
including the writ petitions in this case.
For example, in a breach of contract/warranty case filed in October
2002 in Ventura Superior Court, entitled Sulphur Mountain Land v.
John Redmond, case number CIV 214702, Westlake Law Group
incurred over $420,000 in attorneys’ fees, an amount ridiculously
exorbitant considering that the claim for damages was only for $25,000.
(accent added)
In another unrelated case filed in September 2002 (also in Ventura
Superior Court), entitled Sulphur Mountain Land v. Knapp Peterson &
Clark, case number CIV 214486, Westlake Law Group incurred over
$128,000 in attorneys’ fees for litigating a $3,000 damages claim.
These cases lend additional credence to Mr. Chatfield’s comments
outside the above-referenced court hearing and illustrate Westlake Law
Group’s institutional pattern of investing exorbitant hours in a case in the
hopes of recovering fantastical amounts of attorneys’ fees at the end.
Superior Court of the State of California for the County of Los Angeles --
West District
Case Name: Malibu BroadBeach, L.P., a California Limited Partnership v.
Michael Kent, Inc., a California corporation; et al., Defendants.
Case No. SC0091521
Assigned for all purposes to the Hon. Joseph S. Biderman, Judge
Plaintiff's Mandatory Settlement Brief (2nd Session)
Date: February 11, 2009
Dept. West "I" (Judge Conner)

32. From Malibu BroadBeach, L.P., Plaintiff, v. Michael Kent, Inc., Defendants
– Case No. SC 091521 -
From the Deposition of David Chatfield, produced as PMK for Malibu
Broadbeach, L.P, taken in 2009:
“Q: Do you have a relationship with the plaintiff in this action, Malibu
Broadbeach L.P.?
A: Yes.
Q: And what is that relationship?
A: I’m their in-house counsel.
Q: Do you have an equity interest?
A: No.
Q: Are you an officer?
A: No.
Q: Are you an employee?
A: It depends on what legal sense you’re using the word employee. I am
employed by them, yes.
Q: Do you receive a salary from Malibu Broadbeach?
A: I receive compensation from Malibu Broadbeach.
Q: The question was salary, sir, not compensation.
A: What do you mean by salary?
Q: Do you get a W-2 at the end of the year?
A: I get a document – I get a 1099 from Pacific Coast Management.
Q: So is it your understanding, then, that you are an independent
contractor?
A: Yes.
Q: Are you in your mind the person most knowledgable regarding
communication between Michael Kent and plaintiff as described in
paragraph one on page two of Exhibit 1?
A: I would say yes.
Q: Mr. Simonis: Which category was that?
Mr. Scolney: One.
Q: Please look at paragraph two. Are you the person most knowledgable
with respect to paragraph two?
A: Well, let me just say that I have knowledge about every one of these
categories. And where I needed to obtain knowledge, I made inquiry from
other individuals within Pacific Coast Management. So I am appearing here
as the person most knowledgable on all these categories. Even though I

33. haven't seen this notice, I saw a similar notice which had similar categories
on it.
Q: My question is are you the person most knowledgable; that calls for
yes or no.
Mr. Simonis: I would interpose an objection that that isn't really the
standard because the notice and the standard is officer, director or managing
agent or agent, not person.
Mr. Scolney: He can still answer the question.
The Witness: I believe that I am.
By Mr. Scolney:
Q: And what's the basis of that belief?
A: My understanding of what requirements an agent who is the person
most knowledgable in a deposition has to fulfill, I have fulfilled them.
Q: And what is that understanding?
A: That for those categories which are listed in the notice of deposition,
the plaintiff, or the person who is an entity whose deposition is noticed, has
to appoint an individual to represent them at the deposition, and that person
has to have knowledge of the information in the categories. And if need be,
that person needs to make reasonable inquiry from other individuals within
that entity so that he has knowledge relating to the subject matter in the
category. And that's what I did.
Q: With respect to Category 1, what inquiry did you make?
Mr. Simonis: Objection; argumentative to the extent that the witness has
already said he's the PMK for all the categories.
The Witness: The inquiry that I made was I reviewed my own
communications with Mr. Kent. I spoke with Mr. Gaggero and Mr.
Maravelas.
By Mr. Scolney: Would you spell that?
A: G-a-g-g-e-r-o.
Q: And who is Mr. Gaggero?
A: He is at Pacific Coast Management.
Q: And what is his position at Pacific Coast Management?
A: I think he’s a director.
Q: Pacific Coast Management is what kind of entity?
A: I think you would consider it as a management service entity where it
manages the assets of entities.
Q: Is it a corporation? Is it a limited partnership?
A: I believe that it’s a corporation, but I’m not sure.
Q: You’re the attorney for that entity?
A: I’m one of the attorneys for that entity, yes.

34. Q: How many other attorneys are there?
A: Joseph Praske and a host of litigation counsel.
Q: You mentioned a Mark Ellis?
A: Mark Maravelas.
Q: Would you please spell that.
A: Maravelas.
Q: Who is Mr. Maravelas?
A: He is the chief financial officer, I believe, for Pacific Coast
Management.
Q: What did Mr. Gaggero tell you about Category 1?
A: I don't think Mr. Gaggero told me anything about Category 1.
Q: I never discussed this category with them. I simply discussed my
communications and their communications with Mr. Kent.
A: And what did they tell you about these communications?
Mr. Simonis: Objection; vague; over broad.
The Witness: I really can't anwer that question because it is just -- I just
don't understand it. I don't understand the question.
Mr. Scolney: Please read back the question.
(Record read as follows:
"Q: What did Mr. Maravelas tell you?
A: I never discussed this category with them. I simply discussed my
communications and their communications with Mr. Kent.")
By Mr. Scolney: What did you mean when you said you merely
discussed your communications and their communications with Mr. Kent?
A: Well, I didn't read them this category. Throught this entire -- from
the period of 2002 until the present, I've had numerous discussions with
them relating to my communications
with Mr. Kent and other communications with Mr. Kent. Some of my
communications were attorney/client communications; some of them were...
“Q: Do you know who the principals of Malibu Broadbeach are?
Mr. Simonis: Objection; irrelevent; right of privacy; beyond the scope
of the PMK notice.
Mr. Scolney: You can answer the question.
A: I believe that Mr. Praske is the trustee of the general partnership –
limited partnership, excuse me.
Q: The general partner is a trustee; is that what you just said?
A: No. I believe that Mr. Praske is the trustee of the general partner.
Q: Then who was the general partner?

35. A: It’s a trust.
Q: Do you know the name of the trust?
A: No, I don’t.
Q: Do you know the name of the beneficiary of the trust?
A: No.
Q: Objection; irrelevent; not reasonably calculated to lead to the
discovery of admissible evidence; right of privacy.
By Mr. Scolney: Do you know from whom Check Investments
purchased the property?
A: No, I don't.
Q: You've identified a $275,000 payment in connection with the
purchase of the property and an approximate $78,000 payment of
payments to Mr. Kent. Are you aware of any other costs incurred by
Malibu BroadBeach or on behalf of Malibu BroadBeach in connection
with the property?
Mr. Simonis: Can we go off the record for a second.
(Discussion off the record.)
By Mr. Scolney: Q: Other than the $275,000 incurred with the
connection of the property and the approximate $78,000 that you
identified as being paid to Mr. Kent, were there any other costs incurred
with respect to the property by or on behalf of Malibu BroadBeach?
A: Yes.
Q: What were those costs?
A: Approximately $10,000 for the -- related to the demolition of the site
of the property after the stop notice.
Q: Anything else?
A: the fees that the property owners had to pay that me and the others at
Pacific coast Management for handling the problems that were created
by the stop work.
Q: How much was that?
A: I don't have a figure on that.
Q: Is that part of plaintiff's damage calculation in this case?
Mr. Simonis: He mentioned a couple of different categories. What do
you mean by "that"?
Mr. Scolney: The figure he doesn't have.
The Witness: Probably they would be considered -- my fees would be
attorneys' fees that would be defined as costs under the Code of Civil
Procedure pursuant to the agreement.
By Mr. Scolney: Do you understand the difference between damages
and costs?

36. A: Yes.
Q: You said that you looked at a damage clause in connection with the
case?
A: I looked at the discovery responses which set forth the damages, and
I looked at certain company records to veryify that those were correct.
Q: What discovery response did you look at?
A: I think answers to interrogatories.
Q: Other than the itemization and the answers to interrogatories, has
Malibu BroadBeach claimed any additional damages?
A: Well, these are the damages as I understand them: You have the
$77,877 and change that was paid to Mr. Kent; you have the $10,000
that was paid related to the demolition of what was left of the building
on the property; and the property was sold by Malibu BroadBeach for
$1,275,000 out of which a million dollars went to Malibu BroadBeach
over and above, I guess, what was owed.
They would have sold the property if it was -- if the building was
completed, it would have been sold for $3,500,000. And the costs
according to the contract with Mr. Kent would have been $600,000.
And so the damages in addition to the $10,000 and the $77,877 would
be a million nine. That what I understand the damages to be.
Q: When did Malibu BroadBeach sell the property?
A: I think it was 2006.
Q: To whom?
A: I believe the man's name is Dr. Novak.
Q: Were there any costs associated with the sale?
A: I don't know.
Q: Mr. Simonis: Well, belated objection as to what lien means related
to that question -- or I'm sure that the witness and the questioner has the
same idea for the words in that question, but that's just me.
By Mr. Scolney:
Q: Was there an escrow for the sale?
A: I would assume so, but I don't know.
Q: Do you know who the escrow officer was?
A: No.
Q: Was there a real estate agent involved in the sale?
A: I don't know. But I assume that since that the buyer is in business
with your client that he probably knows.
Q: Do you know how much Malibu BroadBeach received on account of
the sale, net?
A: I think it was a million dollars.

37. Q: Do you know where the remaining $275,000 went?
A: No.
Q: You testified, sir, that the anticipated sales price was $3.5 million?
A: Yes.
Q: What was your number based on?
A: Based upon the owner's estimate of the sale price.
Q: The owner being Malibu BroadBeach?
A: Yes.
Q: Who at Malibu BroadBeach did the calculation to come up with the
$3.5 million figure?
A: I don't know.
Q: Who told you that that was the anticipated sales price?
A: Mr. Gaggero
Q: And when did he tell you that?
A: Several times over the past several years.
Q: When was the first time?
A: I don't remember that.
Q: Was it before or after the stop notice?
A: It was after the stop notice.
Q: Prior to the stop notice did you have any conversations with
anybody regarding the anticipated sales price of the project?
A: No.
Q: Other than what Mr. Gaggero told you regarding the anticipated
sales price, is there any other source for your opinions?
A: I don't remember.
Q: Other than Mr. Gaggero, have you spoken with anybody about your
anticipated sales price of the project?
A: I could have. I just don't remember.
Q: Do you have any notes that might refresh your memory?
A: No.
Q: Is there anyone you could speak to that would refresh your
recollection?
A: We perhaps I could talk to Mr. Maravelas or Mr. Praske
Q: Do you have an understanding of what the expected square footage
of the property was in the original plans?
A: I did. I just can't remember at this point. I know that Mr. Kent and I
discussed it, and I believe it's in the contract or in the drawings that he
showed me. I don't recall off the top of my head.

38. Q: Mr. Chatfield, I want to hand you what I believe is a copy of the
underlying contract and ask you to take a look at it and see if it refreshes
your recollection of the square footage. And while you're doing that, let's
go off the record.
(Discussion off the record)
By Mr. Scolney:
Q: Have you had a chance to review the contract?
A: Yeah, I looked through it as fast as I could, and I didn't see
anything in here that refreshed my recollection on the square footage. I
would ask you or Mr. Kent if you know of where it is to point it out, but
my recollection may jave just come from looking at the plans and my
discussions with Mr. Kent.
Q: Do you have an estimate regarding what the projected square
footage would have been?
A: No. But it would be on the plans. I know that after the stop-work
order that the City requestd a reduction in the square footage.
Q: We'll get to that. Was there a contemplated or an anticipated
completion date for the project?
A: Yes.
Q: What was that date?
A: Well, in the agreement the way it was written -- the agreement was
dated April 1st, 2002. And the anticipated completion date was January
31st, 2003. Or if the construction funding didn't occur by April 1st, than
the January 31st date would be tolled by the same amount of time that it
took for the construction loan to come through. And I believe that the
construction loan came through about August 1st, 2002, and the
completion date was to be 10 months later.
Q: Who was the lender on the construction loan?
A: I presume it was Malibu BroadBeach, but I'm not sure.
Q: Do you know if the loan was secured?
A: I don't know anything about the loan, I'm sorry to say.
Q: Is it your understanding that there was a construction loan?
A: Yes.
Q: Qhat's the basis of that understanding?
A: Communication between Mr. Kent and Pacific Coast Management.
Q: Who at Pacific Coast Management?
A: I believe it was a letter sent to Mr. Kent by Mr. Gaggero in July of
2006 telling Mr. Kent the construction loan was going to be funding on
about August 1st of 2002.
Mr. Simonis: Okay. You better read back that answer.

39. Mr. Scolney: Think you misspoke on the date.
(Record read.)
The Witness: I meant to say 2002.
By Mr. Scolney: For the letter?
A: For the letter between Mr. Gaggero and Mr. Kent.
Q: Did Malibu BroadBeach do anything to have the stop order
rescinded?
A: Yes.
Q: What did it do?
Mr. Simonis: Objection; vague; over broad; ambiguous; calls for a
narrative.
The Witness: I worked with Mr. Kent to help him prepare
correspondence that he was using to try to appeal the stop-work order.
And I attended a meeting at the City Hall relating to what I thought was
an appeal of the stop-work order at the time. I think it was in December
of 2002.
By Mr. Scolney: What else did Malibu BroadBeach do to challenge
the stop-work order?
A: I don't think that I said that Malibu BroadBeach challenged the
stop-work order. It was Mr. Kent that was challenging the stop-work
order, and we were trying to assist him in any way we could in
challenging it.
Q: Malibu BroadBeach on its own behalf sent a letter to the City
complaining about it and stating that there were damages that were
being incurred as a result of it, and that letter was apparently given to
the City Council who had a closed session. I don't know what they did.
But then we got a letter back from the City Attorney's Office in, I think,
January of 2003 talking about trying to settle the dispute. But there was
nothing, I think, that you would say is actually -- from that point
forward it's all settlement relating to theh stop-work order, trying to get
the work on track, and I don't know how you want to characterize that.
But the City sent us a settlement proposal, and we tried to work out a
settlement with the City.
Q: What were the terms of the City's settlement proposal?
A: It was a very long settlement proposal. I couldn't tell you the exact
terms. I presume it got produced and that you guys can review it and
see.
Q: I take it that Malibu BroadBeach rejected the City's proposal; is
that correct?

40. A: We did not accept the settlement proposal as made. We made a
counter proposal, and they made a counter proposal. We were
negotiating, trying to negotiate a settlement.
Q: But no settlement was reached, correct?
A: No.
Q: That's not correct?
A: No, no settlement was reached, was ultimately reached, that's
correct.
Q: Were you involved in the settlement negotiations?
A: Yes
From Malibu BroadBeach, L.P., Plaintiff, v. Michael Kent, Inc., Defendants
– Case No. SC 091521- Excerpt from final page of Ruling:
11. This Agreement shall inure to the benefit of the Parties and be binding
on their successors, employees, agents affiliates, attorneys, representatives,
and all persons who have or claim to have a beneficial interest in any of the
Parties including, without limitation, Steve Gaggero, Joe Praske and Pacific
Coast Management.
Note (added by James) – This contextual background document is lacking
several additional documents relevant to the discussion which I’d meant to
include, one of which is a late filing in the Bunge v. 511 OFW case prior the
the Bunge settling with Gaggero (Victoria Bunge died suddenly prior to the
resolution of the case), where Praske, Gaggero's attorney, produced two
redacted trust documents to the Court which were included as exhibits in a
filing by the Bunges' attorneys, which reflected interest held by Gaggero in
the Arenzano Trust between the late 1990s through approximately 2008. In
2003, Gaggero concealed this interest in Sulphur Mountain Land and
Livestock Co., LLC v. John A. Redmond, et al., pointing away from himself
while testifying under oath that Arenzano Trust was an owner of SMLLC,
along with an individual, Mark Mooring, who continues to own a minority
share.
Los Angeles County Superior Court
Case Name: Jose Bunge; Victoria Bunge vs. 511 O.F.W L.P., Gingerbread
Court, L.P., Boardwalk Sunset, LLC; Steve Gaggero and Does 1-50 -
SC100361
Civil Case Number: SC100361

41. Filing Date: October 28, 2008
District: West (Santa Monica)
Attorneys for Plaintiffs Jose Bunge and Victoria Bunge
Polk & Berke
Attorneys at Law
Christopher Polk
Jeff Berke
Memorandum:
1. Introduction:
Plaintff's action arise out of their negotiations with defendants to
purchase 511 and 517 Ocean Front Walk together with appurtenant rights to
off-site parking at 601 Ocean Front Walk, for the purpose of redeveloping
511 and 517 as a hotel. The Ocean Front Walk properties are all located in
Venice, Beach, Los Angeles, California. Although record title to the
properties is held by separate defendants, Plaintiffs allege that defendant
Stephen Gaggero is the true owner of each of the properties and controls the
other defendants and operates through them as his alter egos. Plaintiffs
negotiated with Gaggero for the buildings and the parking rights.
Defendants prepared instruments, which Plaintiffs signed in anticipation
of a deal. The instruments were part of one transaction, were executed
simultaneously and were between the same parties. To the extenet that the
parties' interpretation of the instruments varies, the ambiguities in the
instruments are clarified by consideration extrinsic evidence including the
objectives of the parties and the circumstances, which are set out by the
FAC. Either no meeting of the minds ever occurred on this critical element
of the agreement or, if a contract was formed, there were mistakes, failure of
consideration or lack of consideration necessitating recission of the contract,
or defendants breached their agreement with Plaintiffs. Plaintiffs have
alleged alternate theories of recovery and seek the retun of one million
dollars that they paid Defendants in good faith and which Defendants have
refused to retun notwithstanding the fact that the transaction was never
consummated. Defendants' retention of the one million dollars is untenable
and wrongful under the circumstances of this case.

42. Declaration of Joseph Praske Novermber 14th, 2008 at La Canada,
California
Case Name: Jose Bunge; Victoria Bunge vs. 511 O.F.W L.P., Gingerbread
Court, L.P., Boardwalk Sunset, LLC; Steve Gaggero and Does 1-50 -
SC100361
Civil Case Number: SC100361
Filing Date: October 28, 2008
District: West (Santa Monica)
I, Joseph Praske, state and declare:
1. I am the Manager of Boardwalk Sunset LLC and made this declaration in
support of Boardwalk Sunset LLC's Motion to Expunge the Notice of
Pending Action [lis pendens] recorded against the real property owned by
Boardwalk Sunset LLC located at 601 Ocean Front Walk, Venice, Ca (the
"601 Property"). I have personal knowledge of the matters set forth herin
and, if called as a witness, I could competently testify thereto.
2. As the Manager of Boardwalk Sunset LLC, I make all of the executive
decisions and I chose to use Pacific Coast Management ("PCM") as their
asset manager. Ted Folkert is a licensed real estate broker and a principal of
Accorp Inc. PCM hired Accorp Inc. to act as the property manager for the
601 Property. Accorp also acted as the real estate broker for Boardwalk
Sunset LLC is the subject transaction.
3. On about September 13, 2007, Mr. Folkert brought Boardwalk Sunset
LLC an offer from Jose Bunge and Victoria Bunge to supplement the terms
under which Boardwalk Sunset LLC provided parking to several adjacent
properties, namely 511, 517 and 523 Ocean Front Walk, Venice, Ca. The
Bunges offered $100,000 for Boardwalk Sunset LLC to agree to a deed
restriction that would assure them that if there was a change of use on 511,
517 and/or 523 Ocean Front Walk, the parking rights and obligations
presently conveyed by Coastal Permit #5-89-059 would not be affected.
Stephen Gaggero works for PCM and he, along with our broker, Ted
Folkert, negotiated the terms with the Bunges and their attorney. Mr.
Gaggero does not own any part of Boardwalk Sunset LLC, as is alleged in
the Complaint, nor does he control it.

43. 4. On behalf of Boardwalk Sunset LLC, I approved and executed the
Agreement and Joint Escrow Instructions ("Deed Restriction Agreement")
on October 30, 2007 for the sake of a deed restriction that is meant to insure
that the parking rights and obligations presently enjoyed on Boardwalk
Sunset LLC's property at 601 Ocean Front Walk. A true and correct copy of
the executed copy Deed Restriction Agreement is attached hereto as Exhibit
"A".
Signed By: Joseph Praske
Date: November 14, 2008
Superior Court of the State of California for the County of Los Angeles --
West District
Case Name: Jose Bunge; Victoria Bunge vs. 511 O.F.W L.P., Gingerbread
Court, L.P., Boardwalk Sunset, LLC; Steve Gaggero and Does 1-50 -
SC100361
Civil Case Number: SC100361
Filing Date: October 28, 2008
District: West (Santa Monica)
Declaration of Daniel Gal Re: Due Diligence in Support of Substituted
Service - October 28, 2008:
"1. I, Daniel Gal, am a licensed Private Investigator, California License
Number 11532.
8. Through exhaustive efforts, encompassing more than 80 hours of
work, I was able to pinpoint the property occupied by Canada Larga Stables,
located at 3501 Canada Larga Road, Ventura, Californa, 93001 as Mr.
Gaggero's usual business location, as well as possibly his residence.
9. On March 13, 2009, I arranged to go to the Stables (which can only be
entered through chained gates) and was informed by the manager, Nicole
Chastain, that Mr. Gaggero was the owner of the property on which the
Stables are located, as well as the surrounding 2,500 acres. Ms. Chastain
further informed me that Mr. Gaggero operates his business, Pacific Coast
Management Group, from a residence that is used as office space. I
recognized the Pacific Coast Management Group name as a business entity

44. that i was informed is involved in the instant lawsuit. She also informed me
that the manager of Mr. Gaggero's business was Gordon Frietas and that Mr.
Gaggero was married to a woman named Colleen O'Brien. Finallly, Ms.
Chastain informed me that Mr. Gaggero was in Mexico.
10. I then went to the building that Ms. Chastain indicted was Mr.
Gaggero's office. Before approaching the building, I spoke to an individual
named Vicente, who was identified to me as Mr. Gaggero's employee.
Vicente confirmed that the building that Ms. Chastain had pointed out was in
fact Mr. Gaggero's office.
11. After knocking on the front door, I was met by an individual who
informed me that he was Mr. Frietas. I asked him if this location is Mr.
Gaggero's business office and he answered affirmatively."
Sworn Court Testimony of Stephen M. Gaggero from:
Jose Bunge; Victoria Bunge vs. 511 O.F.W L.P., Gingerbread Court, L.P.,
Boardwalk Sunset, LLC; Steve Gaggero and Does 1-50 - SC100361
Civil Case Number: SC100361
“19 Q DID YOU CREATE THE ARENZANO AND TERRA MAR
20 TRUST?
21 A YES.
22 Q ARE YOU A BENEFICIARY OF ARENZANO?
23 A NO.”
Superior Court of the State of California for the County of Los Angeles,
Central District
Case Name: Sulphur Mountain Land & Livestock v. Sue Balmforth
Civil Case Number: BC 240202
Filing Date: 11/13/2000
District: Central (Los Angeles)
Plaintiff: Sulphur Mountain Land & Livestock
Defendant: Sue Balmforth
Bountiful Inc.