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EDWARD A.

COPLEY AND AKIN GUMP STRAUSS HAUER & FELD LLPS


MOTION TO QUASH SUBPOENAS
Page 1
UNITED STATES DISTRICT COURT
FOR THE
NORTHERN DISTRICT OF TEXAS

SCI LA PAUSA, a French corporation
Plaintiff

v.

Arnold Leon Schroeder, Jr.

Defendant.

Civil Action No. __________________

(pending in the U.S. Central District of
California, Cause No. 2:11-cv-1048


EDWARD A. COPLEY AND AKIN GUMP STRAUSS HAUER & FELD LLPS
MOTION TO QUASH SUBPOENAS



Pursuant to Rules 26(c) and 45(c) of the Federal Rules of Civil Procedure, third parties
Edward A. Copley and Akin Gump Strauss Hauer & Feld LLP move to quash the subpoenas
issued by this Court and served upon them by Arnold L. Schroeder, Jr. on August 1, 2012. The
reasons supporting this motion are explained in detail in the accompanying Memorandum in
Support.
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MEMORANDUM IN SUPPORT OF
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UNITED STATES DISTRICT COURT
FOR THE
NORTHERN DISTRICT OF TEXAS

SCI LA PAUSA, a French corporation
Plaintiff

v.

Arnold Leon Schroeder, Jr.

Defendant.

Civil Action No. __________________

(pending in the U.S. Central District of
California, Cause No. 2:11-cv-10483 ABC)


EDWARD A. COPLEY AND AKIN GUMP STRAUSS HAUER & FELD LLPS
MEMORANDUM IN SUPPORT OF MOTION TO QUASH SUBPOENAS


Pursuant to Rules 26(c) and 45(c) of the Federal Rules of Civil Procedure, Edward A.
Copley (Mr. Copley) and Akin Gump Strauss Hauer & Feld LLP (Akin Gump) move to
quash the subpoenas issued by this Court and served upon them by Arnold Leon Schroeder, Jr.
(Schroeder) on August 1, 2012, in a collection action pending in the United District Court for
the Central District of California, and would respectfully show the Court as follows:
I. INTRODUCTION
The subpoenas that are the subject of this motion are nothing more than attempts by
Schroeder to circumvent this Courts dismissal of his suit against Mr. Copley and a separate
order by the U.S. District Court for the Central District of California in the underlying action
rejecting Schroeders attempts to obtain the exact discovery sought here. The underlying action,
SCI La Pausa v. Schroeder (the California Collection Action), is a suit by a French corporation
(SCI La Pausa) seeking to domesticate and to enforce a valid French judgment of approximately
$2.5 million against Schroeder, pursuant to the Uniform Foreign Country Money Judgments
Recognition Act. Neither Mr. Copley nor Akin Gump is a party to the California Collection
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Action, nor were they parties or participants in the underlying French action. Due to the limited
scope of the California Collection Action, the California court has repeatedly admonished
Schroeder regarding the scope of that action, expressly stating that Schroeder will not be
permitted to relitigate the merits of the French judgment. Furthermore, the California court
recently rejected Schroeders efforts to secure the same type of discovery he seeks here by
refusing to issue letters rogatory for a transcript of Mr. Copleys testimony provided in another
French proceeding, calling it irrelevant to the California Collection Action. Nonetheless,
Schroeder continues on, demanding documents and depositions from Mr. Copley and his firm,
Akin Gump, attempting to utilize the subpoenas to relitigate not only the French judgment, but
also his failed Texas claims dismissed with prejudice by this Court last year. This end-run
around both the California courts order and this Courts dismissal should not be allowed, and
these subpoenas should be quashed.
II. BACKGROUND
Arnold Schroeders mother, Wyn-Nelle Russel Reves (Ms. Reves or Wendy Reves)
was born in Marshall, Texas and married Arnold Leon Schroeder, Sr. at the age of 18. They
divorced shortly after the birth of Schroeder in 1935. Decades later, in 1964, Ms. Reves went on
to marry Emery Reves, a noted author and art collector, and they lived together in France until
Emerys death in 1981. Beginning in the 1940s, before marrying Ms. Reves, Emery Reves had
set up various corporate entities to hold his assets, including an entity which became a majority
shareholder in SCI La Pausa, a holding company that owned the Villa La Pausa, an estate in
France where Ms. Reves lived during the last years of her life.
Edward A. Copley, a Dallas estate lawyer who has worked at Akin Gump for over 40
years, met Ms. Reves in 1998 and performed several legal services at her request, including
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drafting and revising her will and creating a charitable foundation to further the philanthropic
goals that Ms. Reves and Emery had pursued throughout their lives.
After Ms. Reves death in 2007, Schroeder instituted legal actions across the globe in an
attempt to circumvent Ms. Reves wish that he receive a fixed-sum inheritance of $500,000 from
her estate. Schroeder attempted to claim rights as a forced heir under French law to one-half
of her estate, and further tried to make that estate as large as possible by claiming ownership of
assets not belonging to Ms. Reves. As part of that strategy, in 2008, Schroeder filed an adverse
possession action in Nice, France against SCI La Pausa, claiming that Villa La Pausa should be
part of the estate and thus part of his inheritance.
1
(See California Application at 10, attached
hereto as Exhibit 1.) But in May 2009, the French court rejected Schroeders claim to the
Villa and further granted SCI La Pausas counterclaim, awarding at least 523,000 EUR in
compensatory damages against Schroeder. (Id. at 11-12.) This judgment was upheld by the
French appellate court in 2011, which awarded 1,222,000 EUR in additional compensatory
damages plus interest against Schroeder. (Id. at 12-15.)
After the French action failed, Schroeder came to Texas and attempted to squeeze money
from the charitable entities, such as the Dallas Museum of Art, that had benefitted from Ms.
Reves generosity during her lifetime by filing suit in this Court. He also sued Mr. Copley and
individuals affiliated with the Dallas Museum of Art claiming fraud/fraud on the
estate/conspiracy. (See Amended Complaint, attached hereto as Exhibit 2.) Each of the
defendants in that lawsuit, including Mr. Copley, filed motions to dismiss pursuant to Federal
Rules of Civil Procedure 9(b) and 12, arguing that there were no cognizable claims against any

1
Schroeder also brought ex parte claims in New York around this time period. In 2009, a New York court rejected
Schroeders attempts to gain control of the WERF Charitable Foundation and assessed costs against him. That
decision was upheld by the New York Supreme Court. See In re Schroeder, 70 A.D.3d 583, 895 N.Y.S.2d 395 (N.Y.
Sup. Ct. Feb. 25, 2010).
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of the defendants. On November 30, 2011, this Court agreed, granting those motions and
thereby dismissing with prejudice all of Schroeders claims. (See Memo. and Order, attached
hereto as Exhibit 3.)
Meanwhile, SCI La Pausa, the French corporation that owns the Villa and had secured a
counterclaim judgment against Schroeder, sought to enforce its French judgment by filing the
California Collection Action in the U.S. District Court for the Central District of California
seeking entry of judgment pursuant to the Uniform Foreign Country Money Judgments
Recognition Act. (See California Application, Exhibit 1.) SCI La Pausas French judgment
now equates to approximately $2.5 million. (Id. at 16.) Schroeder has put forth several
affirmative defenses in California, but his options are strictly limited by the framework for
recognizing foreign judgments. (See Answer, attached hereto as Exhibit 4.) In essence, the
California court may only refuse to recognize the French judgment if Schroeder proves: (1) that
it was obtained by the kind of extrinsic fraud that deprived him of an adequate opportunity to
present his case (such as purposefully serving the defendant at the wrong address and then
obtaining a default judgment); (2) that the French proceeding was not compatible with the
requirements of due process; or (3) that the judgment goes against the public policy of the United
States. See Cal. Code of Civil Proc. 1716(c). SCI La Pausas application, including
Schroeders affirmative defenses, is pending in the Central District of California. The California
court has repeatedly admonished Schroeder that he will not be permitted to relitigate the merits
of the French judgment. (See April 11, 2012 Civil Minutes and Order (April Order) at 7,
attached hereto as Exhibit 5 (emphasis in original); see also June 15, 2012 Order Denying Ex
Parte Application For Issuance of Letter Rogatory (June Order) at 1, attached hereto as Exhibit
6; August 6, 2012 Civil Minutes and Order Denying Motion for Review of and Objections to
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Magistrate Judges Ruling Denying Ex Parte Application for Issuance of Letter Rogatory
(August Order) at 1, attached hereto as Exhibit 7.) Confirming its strict stance on ensuring a
narrow scope of discovery, the California court recently denied Schroeders attempt to obtain
Letters Rogatory for a transcript of Mr. Copleys prior testimony in a separate French
proceeding. (See August Order, Exhibit 7.)
Notwithstanding the California courts prohibition on relitigating the merits of the French
action and its recent ruling on Schroeders attempts to obtain similar discovery, Schroeder served
Mr. Copley and Akin Gump with subpoenas on August 1, 2012, seeking both their depositions
and the production of documents. (See Subpoenas, attached hereto as Exhibits 8 (Copley) and
9 (Akin Gump).) This discovery seeks information relevant only to the merits of the
underlying French action and the dismissed Texas action. The deposition topics to Akin Gump
and the document requests to both the firm and Mr. Copley reveal Schroeders true intentions.
For example, the deposition topics for the Akin Gump subpoena include the following:
The use of corporate funds or assets of SCI La Pausa for the benefit of
Wendy Reves;
The extent to which Wendy Reves exercised control of the assets of SCI La
Pausa;
The identification of all stock or other ownership interest in SCI La Pausa
from January 1, 1998 until the death of Wendy Reves in 2007;
The tracing of funds and other assets of Wendy Reves to and from
Cooperation Verlags AG;
Any and all efforts to segregate and trace funds of Wendy Reves to Beaux
Arts; and
The source of funds used to pay for landscaping work at Villa La Pausa from
January 1, 1998 until the death of Wendy Reves in 2007.
(Subpoena to Akin Gump, Exhibit 9.)
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Similarly, the subpoenas to Akin Gump and Mr. Copley contain document requests that
have absolutely no relevance to the California Collection Action, such as the following:
All documents, including but not limited to invoices, checks and check stubs
relating to payment of any real property taxes relating to Villa La Pausa from
January 1, 1998 to the death of Wendy Reves in 2007;
All documents, including but not limited to invoices, checks and check stubs
relating to payment for any service of food and beverages at Villa La Pausa
from January 1, 1998 to the death of Wendy Reves in 2007;
All documents reflecting any effort made by SCI La Pausa to sell Villa La
Pausa from 2007 to the present; and
All documents reflecting or relating to an appraisal of the value of Villa La
Pausa from 2007 to the present.
(Id.; Subpoena to Edward A. Copley, Exhibit 8.)
This Court need look no further than the discovery sought by the subpoenas to see that
Schroeder is utilizing Federal Rule of Civil Procedure 45 to attempt what the California court has
expressly forbidden: relitigate the underlying French action (as well as the dismissed Texas
action against Mr. Copley).
III. ARGUMENT AND AUTHORITY
A. The Court Must Quash the Subpoena Because It Subjects Non-Parties to An
Undue Burden.

Under the Federal Rules of Civil Procedure, a court must quash or modify a subpoena
that subjects a person to undue burden. Fed. R. Civ. P. 45(c)(3)(A)(iv). The moving party has
the burden of proof to demonstrate that compliance would be unreasonable and oppressive.
Wiwa v. Royal Dutch Petroleum Co., 392 F.3d 812, 818 (5th Cir. 2004). Whether a burdensome
subpoena is reasonable must be determined according to the individual facts of the case. Id. To
determine whether the subpoena presents an undue burden, the Fifth Circuit has held that courts
should consider the following factors: (1) relevance of the information requested; (2) the partys
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need for the documents; (3) the breadth of the document request; (4) the time period covered by
the request; (5) the particularity with which the party describes the requested documents; and (6)
the burden imposed. Id. Importantly, non-parties are entitled to additional protection and
considerations. See id.
Courts in the Northern District of Texas routinely use these factors to protect third parties
from subpoenas that are unduly burdensome. See Cmedia, LLC v. Lifekey Healthcare, LLC, 216
F.R.D. 387 (N.D. Tex. 2003) (modifying in part and quashing in part a subpoena that subjected
third party to an undue burden because of overbroad and irrelevant requests); S.E.C. v. Brady,
238 F.R.D. 429, 438 (N.D. Tex. 2006) (sustaining third partys objection to discovery on the
basis of undue burden when non-party would have had to review over 226 boxes of documents).
Here, all of the Fifth Circuits six factors weigh in favor of quashing the subpoenas to Mr.
Copley and Akin Gump. See Wiwa, 392 F.3d at 818.
1. None of the information Schroeder seeks is relevant, as confirmed by
the District Court in California.
As detailed above, Schroeders discovery in the pending California action is limited to a
narrow set of defenses stated in the Act, and discovery into issues intrinsic to the French action is
not permitted or relevant. (See Answer, Exhibit 4; August Order, Exhibit 7.) Despite this
narrow query, Schroeders subpoenas purport to seek information from Mr. Copley and Akin
Gump that is totally irrelevant to these defenses. To begin with, neither Mr. Copley nor Akin
Gump was a party to the French action, nor did either represent any of the parties in those
proceedings. As such, the deposition testimony sought cannot shed light on any of Schroeders
defenses to recognition of the French judgment. Schroeder seems to ignore the limited scope of
his defenses in drafting his subpoenas. His irrelevant written requests run the gamut from
decades-old meeting minutes to the source of funds used to pay for food and beverage service at
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Villa La Pausa.
2
Indeed, Schroeders document requests include such irrelevant categories as
property maintenance work documents,
3
landscaping work documents,
4
and any documents
of grounds keeping work
5
performed at Villa La Pausa between 1998 and 2008. This
underlying factual information can only go to the futile substantive claims already disposed of by
the courts in France as well as Texas, and are irrelevant to the narrow defenses in the present
judgment action.
As the California court explained in its recent Civil Minutes, it had initially expressed
reservations about allowing any discovery at all in the present action. (August Order at 1,
Exhibit 7.) Nonetheless, the Court did agree to allow some discovery, but cautioned that
Schroeder was strictly limited to carrying [his] burden under the narrow framework set out
in the Foreign Country Money Judgments Recognition Act. (April Order at 7, Exhibit 5.)
Importantly, the court made clear that Defendant [Schroeder] will not be permitted to relitigate
the merits of the French judgment as he has suggested. (Id.)
To the extent that Schroeder asserts that the evidence is relevant to his defense that the
French judgment was somehow obtained by fraudulent means, the California court has already
ruled on that issue. In its August 6, 2012, ruling, the California court confirmed that the only
type of fraud to which this defense to the Foreign Money Judgment Act applies is extrinsic
fraud, i.e. fraud that deprives the unsuccessful party of the opportunity to fairly present its case to
the court. (August Order at 7, Exhibit 7.). The California court further ruled that
defendant has presented nothing to indicate or support any possible contention that he was
fraudulently prevented from participating in [the French] proceeding. (June Order at 3, Exhibit

2
Subpoena of Akin Gump, at Deposition Topic Villa La Pausa No. 5, Exhibit 9.
3
Subpoena of Copley, at Document Request No. 4, Exhibit 8.
4
Id. at Document Request No. 5.
5
Id. at Document Request No. 6.
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6; affirmed by August Order at 8, Exhibit 7.). The California court stated: Thus, because
Defendants allegations of fraud under [the Act] implicate only intrinsic fraud not covered by the
statute, any discovery sought to prove them, including the letters rogatory, is irrelevant and
therefore beyond the scope of Rule 26(b)(1). (August Order at 8, Exhibit 7 (emphasis
added)). The discovery sought here is obviously intrinsic to the merits of the underlying French
action and should be barred by this Court as irrelevant. This Court should follow the California
courts thoughtful analysis, find that the discovery sought in the subpoenas to Mr. Copley and
Akin Gump is totally irrelevant to Schroeders defenses, and quash the subpoenas.
2. Schroeder has no need for the information.
Schroeder seeks information related to the estate planning and property rights of Ms.
Reves. As explained above, this information only relates to the underlying claims already
dismissed by courts in North America and Europe. Therefore, Schroeder has absolutely no need
for this information in the California Collection Action. By continuing to harass Mr. Copley and
his firm with discovery requests, deposition subpoenas, and the need to spend the time and
money in fending off these assaults, Schroeders alleged need for the information appears even
more attenuated.
3. Schroeders discovery requests and deposition topics are overbroad.
Schroeder submits 48 different deposition topics to Akin Gump along with 36 document
requests to the firm and another 33 document requests to Mr. Copley. Apart from being
irrelevant and unnecessary, these requests are so overbroad that Mr. Copley and Akin Gump
could not reasonably respond even if they needed to do so. For example, Schroeder requests:
All of SCI La Pausas financial statements, profit and loss statements, balance sheets,
accounting information and tax returns for the period commencing in January 1, 1998 and ending
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March 31, 2012.
6
In essence, he requests the entirety of the corporate financial and tax records
for the last 14 years for entities which the French court has ruled are not part of Ms. Reves
estate. Of course, financial records of SCI La Pausa are not relevant to Schroeders limited
defenses under the Uniform Foreign Country Money Judgments Recognition Act. This request,
and the other requests contained in the subpoenas, are patently overbroad and are the type of
discovery requests that courts disfavor, particularly when sought from a non-party. This factor,
too, weighs in favor of quashing the subpoenas.
4. The time period of Schroeders request is too vast.
Most of Schroeders requests reach back to January 1998a full decade before the
commencement of the French proceeding.
7
As outlined by the California court, the only relevant
information concerns the actual extrinsic goings-on of the French case, which was filed in
2008. Any information request reaching back before Ms. Reves death is a transparent attempt
to discover information unrelated to the California Collection Action. The time period of
Schroeders request shows the irrelevance of this discovery and the Court should therefore quash
the subpoena.
5. None of Schroeders requests and/or topics is sufficiently
particularized.
Further, because none of Schroeders requests seek specific information about the actual
events of the French proceeding, none of them is particularized enough to pass muster under
Wiwa. See 392 F.3d at 818. The requests and topics seek general financial information about
SCI La Pausa and related corporate structures, details on officers and directors of these entities,
tracing of funds for upkeep of the Villa, and a whole host of other information related to the

6
Subpoena of Copley, at Document Request No. 17, Exhibit 8.
7
See e.g. Subpoena of Copley, at Document Request Nos. 1-10, Exhibit 8.
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underlying substantive claims, but none of them is aimed at discovering information about the
procedural issue of how the French trial was conducted.
6. Schroeders requests create a substantial burden on Mr. Copley and
Akin Gump.
Lastly and most importantly, this Court should consider the heavy burden imposed upon
Mr. Copley and Akin Gump, both in time and in costs. It would take a tremendous amount of
time to prepare for and submit to two depositions demanding information from the last 14 years
and involving legal work performed in conjunction with five different corporate entities.
Further, it would take untold attorney-hours to locate, review, log, and produce all the documents
in response to the 69 different document requests from Schroeder. Couple this with the fact that
neither Mr. Copley nor Akin Gump is even a party to the California action and the burden
becomes greater still. In sum, this substantial burden, along with the other factors analyzed
above, dictate that the subpoenas to Mr. Copley and Akin Gump should be quashed.
B. The Information Sought By Schroeder Is Protected by the Attorney Client
Privilege and Work Product Doctrine.

Even assuming arguendo that the subpoenas are relevant and do not present an undue
burden on Mr. Copley and Akin Gump, they are impermissible because the information sought
by Schroeder is protected by the attorney-client privilege and the work-product doctrine. See
Fed. R. Evid. 502. Many of Schroeders requests, such as the request for [a]ll documents
relating to the transfer of funds between Wendy Reves and some of the charitable organizations,
directly implicate information that is protected by the attorney-client privilege and/or work-
product doctrine.
8
As the attorney of Ms. Reves, Mr. Copley and Akin Gump are not at liberty to

8
Similarly, Schroeders requests for production of tax returns is improper and should be quashed absent the showing
of relevance and a compelling need for such information.
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disclose this confidential information. As such, the subpoenas should be quashed on this
independent ground.

IV. CONCLUSION
Edward A. Copley and Akin Gump thereby respectfully request that this Court quash the
subpoenas served upon them by Arnold Leon Schroeder, Jr. on August 1, 2012.
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Dated: August 24, 2012 Respectfully submitted,

FISH & RICHARDSON, P.C.

By: /s/ Scott C. Thomas
Thomas M. Melsheimer
State Bar No. 13922550
Scott Cashion Thomas
State Bar No. 24046964
Martha D. Jones
State Bar No. 24061595
John Michael Gaddis
State Bar No. 24069747
FISH & RICHARDSON, P.C.
1717 Main Street
Dallas, TX 75201
(214) 747-5070

Counsel for Edward A. Copley and
Akin Gump Strauss Hauer & Feld




CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the above and foregoing
document will be served on August 24, 2012 by hand delivery to counsel for Mr. Schroeder.

_________/s/ Scott C. Thomas________
Scott C. Thomas
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 1
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

ARNOLD LEON SCHROEDER, JR.,

Plaintiff,

v.

KERN WILDENTHAL, EDWARD A.
COPLEY, HARRY S. PARKER, III,
GEORGE CHARLTON, IRVIN LEVY,
and the DALLAS MUSEUM OF ART,

Defendants.





C.A. NO. 3:11cv-00525-B
(JURY DEMANDED)



PLAINTIFFS FIRST AMENDED COMPLAINT
Plaintiff Arnold Leon Schroeder, Jr. (Schroeder) files this First Amended
Complaint against Defendants Kern Wildenthal, Edward A. Copley, Harry S. Parker, III,
George Charlton, Irvin Levy, and the Dallas Museum of Art (collectively, Defendants)
and states:
PARTIES
1. Schroeder. Arnold Leon Schroeder is a citizen of California, who may be
contacted only through the undersigned attorneys of record.
2. Defendant Kern Wildenthal (Wildenthal). Wildenthal is a citizen of
Texas who resides in this District and Division. Wildenthal may be served with process
by serving his attorney of record, George W. Bramblett, Jr., Haynes & Boone, LLP, 2323
Victory Avenue, Suite 700, Dallas, Texas 75219.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 2
3. Defendant Edward A. Copley (Copley). Copley is a citizen of Texas
who resides in this District and Division. Copley may be served with process by serving
his attorney of record, Thomas M. Melsheimer, Fish & Richardson, PC, 1717 Main
Street, Suite 5000, Dallas, Texas 75201.
4. Defendant Harry S. Parker, III (Parker). Upon information and
belief, Parker is citizen of Texas or New York. Parker may be served with process by
serving his attorney of record, Raymond E. LaDriere, II, Locke Lord Bissell & Liddell,
LLP, 2200 Ross Avenue, Suite 2200, Dallas, Texas 75201.
5. Defendant George Charlton (Charlton). Charlton is a citizen of Texas
who resides in this District and Division. Charlton may be served with process by
serving his attorney of record, Raymond E. LaDriere, II, Locke Lord Bissell & Liddell,
LLP, 2200 Ross Avenue, Suite 2200, Dallas, Texas 75201.
6. Defendant Irvin Levy (Levy). Levy is a citizen of Texas who resides in
this District and Division. Levy may be served with process by serving his attorney of
record, Raymond E. LaDriere, II, Locke Lord Bissell & Liddell, LLP, 2200 Ross Avenue,
Suite 2200, Dallas, Texas 75201.
7. Defendant Dallas Museum of Art (DMA). DMA is a Texas not-for-
profit corporation located in Dallas, Texas. DMA may be served with process by serving
its attorney of record, Raymond E. LaDriere, II, Locke Lord Bissell & Liddell, LLP, 2200
Ross Avenue, Suite 2200, Dallas, Texas 75201.

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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 3
JURISDICTION & VENUE
8. Jurisdiction. The Court has subject-matter jurisdiction pursuant to 28
U.S.C. 1332. Schroeder is a citizen of California, and Defendants are citizens of Texas
or New York. There is complete diversity of citizenship between Schroeder and
Defendants, and the amount in controversy exceeds the sum or value of $75,000.00,
exclusive of interest and costs.
9. Venue. Venue is proper in this district and division pursuant to 28 U.S.C.
1391(a) because a substantial part of the events or omissions giving rise to the claim
occurred in this District and Division. Alternatively, venue is proper in this district and
division because at least one of the Defendants is subject to personal jurisdiction in this
district and division at the time this action was commenced and there is no other district
in which the action may be brought.
OPERATIVE FACTS
A. Overview.
10. Defendants conspired and acted at numerous times during the life of Wyn-
Nelle Reves (Wendy) and following her death to defraud her estate (the Estate) of
hundreds of millions of dollars. Defendants contrived to evade the laws of France, which
govern the Estate, with the purpose of depriving Schroeder, Wendys only son and sole
heir, of his rightful heirship under French law. As set forth more fully below, one or
more of the Defendants conspired and acted in concert to cause an art collection
containing unique, irreplaceable, and invaluable pieces of art to be removed from
Wendys home and transported to the DMA under the guise of a donation by Wendy and
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 4
entities that held color of title, which had been created to avoid taxes. Thereafter, one or
more of the Defendants conspired and acted in concert to deplete the remainder of the
Estate of millions of dollars in cash and property. Defendants caused Wendy to sign a
will, codicils to the will, a power of attorney, and other documents and caused the
creation and operation of sham entities, all with the purpose again of evading Schroeders
rightful heirship under the laws of France.
B. Applicable French Heirship Laws.
11. Prior to her death, Wendy had lived in France the majority of each year for
decades, and without interruption since at least 2000. She was domiciled there. Her
Estate is governed by French law. Under French law, Wendys death would
automatically vest her Estate in Schroeder, as her only son, regardless of whether Wendy
had a will. Under French law, Schroeder, as Wendys only child, is entitled to 50% of
Wendys Estate. This law may not be avoided under any relevant circumstances. More
particularly, under French law, Schroeder is a reserved heir whose interest in the Estate
is known as a reserved share. As a reserved heir, Schroeder has the right to re-capture
any lifetime gifts made by Wendy within at least the thirty (30) years prior to her death
for the purposes of reconstituting the Estate to correctly calculate the reserved share.
In this process, sham arrangements to artificially shelter assets will be set aside.
Defendants have judicially admitted Schroeders status as a reserved heir under French
law entitled to 50% of the Estate.

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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 5
C. Schroeders Tax Exposure.
12. Under French law, an heir remains exposed to liability for French taxes that
are attributed to his share of the estate under applicable French heirship laws. As such, as
Wendys sole heir, Schroeder may be held liable for any taxes assessed on the entire
Estate by French taxing authorities, including those over which the Defendants maintain
possession and control and over which they claim ownership.
D. Wendy Reves.
13. Wendy was born in Marshall, Texas, in 1916.
14. In 1934, at the age of 18, Wendy married her first husband, Arnold Leon
Schroeder, Sr. (Schroeder, Sr.).
15. Wendy and Schroeder, Sr. had one child together, Schroeder, who was born
on May 27, 1935.
16. Schroeder is Wendys only child by any marriage and her sole surviving
heir.
17. Wendy and Schroeder, Sr. divorced in approximately 1938, and Wendy
then moved from Texas to New York to pursue her international modeling career.
Although Schroeder, Sr. actually raised Schroeder, Wendy remained in contact with her
son throughout her life, even after moving abroad to live in Europe.
E. Emery Reves.
18. In the 1940s, Wendy met Emery Reves (Emery), an Hungarian born
author, publisher, and financier. Emery and Wendy married in 1964. They remained
married throughout his life.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 6
19. Immediately prior to World War II, Winston Churchill became personal
friends with Emery who had fled to England from Hungary. Emery subsequently
acquired and published Churchills memoirs. Emery also published biographies about
Churchill and other famous individuals. Additionally, Emery was a successful author,
having written several best-selling books, including The Anatomy of Peace, which was
eventually translated into several languages. Through Emerys writing and publishing
prowess, he and Wendy enjoyed considerable financial success.
F. The Collection.
20. In addition to his literary and publishing ventures, Emery became a prolific
art collector. Together with Wendy, Emery acquired a large number of paintings and
other significant pieces of art, including many by Frances most famous impressionist
artists, such as Van Gogh, Monet, Manet, Cezanne, Bonnard, and Renoir among others.
Emery and Wendy also acquired numerous sculptures and other invaluable works of art.
Over Emerys life, they amassed an impressive collection of some 1,400 pieces of
unique, irreplaceable, and invaluable pieces of art (the Collection). It has been recently
estimated that the Collection could be sold for some $400,000,000.00. Through the acts
described in this pleading, the Collection is now located primarily, if not exclusively, at
the DMA.
G. Villa La Pausa.
21. Initially, Wendy and Emery housed much, if not all, of the Collection in
their French villa known as Villa La Pausa, which was previously beneficially owned
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 7
by the famous French fashion designer, Coco Chanel. Villa La Pausa was Wendy and
Emerys home and remained their principal residence until their respective deaths.
22. During his lifetime, Emery set up an elaborate web of corporate entities
with the assistance of prominent attorneys, and purported to transfer title to the
Collection, Villa La Pause, and other assets to those entities likely to avoid substantial
taxation under applicable French law. For example, as was a common practice for Emery
and Wendy, rather than owning Villa La Pausa in their own names, title to La Pausa was
placed in the name of an entity owned and controlled by Emery. Specifically, in 1947,
Emery formed a publishing company originally known as Cooperation Publishing
Company SA. This Liechtenstein corporation later became known as Cooperation
Verlags AG (CVAG). CVAG, in turn, acquired shares of an entity known as SCI La
Pausa (SCI), the French company set up by Coco Chanel, which continued to hold
legal title to Villa La Pausa.
23. Wendy and Emery used Villa La Pausa as their personal residence
continuously from 1954 to Emerys death in 1981. Wendy then lived there alone and
exclusively as her main residence from 1981 until her death in 2007. Indeed, she lived
solely and uninterruptedly at Villa La Pause for the last nine years of her life.
24. Throughout their marriage, Wendy and Emery continued to seek avenues to
avoid the heavy burden of French taxes despite residing in France at Villa La Pausa. For
example, they entered into a so-called forfait arrangement with Swiss authorities, an
agreement whereby Wendy and Emery claimed to be Swiss residents and paid an agreed
sum in Swiss taxes each year, which in their case was merely a sham since they initially
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 8
neither owned property, nor spent significant time, in that country at any stage. The
amount they paid in Swiss taxes was far below the taxes they would have incurred under
French law.
H. The Arts Limited.
25. In 1967, following his marriage to Wendy, Emery formed a Bahamian
entity known as The Arts Limited (TAL). In 1968 and again in 1972, Emery and
Wendy purported to transfer much, if not all, of the Collection into TAL in exchange for
a small number of shares of this entity, nominally valued at some $3,600.00 in Bahamian
dollars. However, as the Collection had a value far in excess of that amount at the time
of the transfer, this transaction is a sham under French law for failure to transfer
equivalent value.
26. The shares in TAL were then purportedly transferred in 1969 into a trust
with First National City Trust Company (Bahamas) Limited in New York, which later
became known as Citytrust (Citytrust). Notwithstanding the alleged transfer of the
TAL shares into this trust, Wendy and/or Emery continued to maintain complete
control of the TAL shares, subsequently causing the withdrawal of those shares in 1979.
As a result, this trust was also effectively a sham.
I. WERF (New York) The First of Several WERF Entities.
27. In 1967, Wendy and Emery also created an entity known as the Wendy &
Emery Reves Foundation, Inc. (WERF) in New York, which was allegedly intended to
receive assets after their deaths. However, WERF is not a proper or valid legal entity and
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 9
should be disregarded, as should the transactions purporting to transfer assets into WERF
through Beaux-Arts and/or TAL or out of WERF.
28. Specifically, in 1968 Wendy and Emerys estate attorney, Hans J. Frank
(Frank) (who was also an initial director of WERF), wrote to the Commissioner of the
Internal Revenue Service (IRS) about WERFs tax-exempt status under Section
501(c)(3) of the Internal Revenue Code in which he represented that:
The Foundation [WERF], which was formed for the purpose
of acquiring paintings, sculpture, and other art objects, has
not yet commenced operations, but Mr. Reves is about to
contribute to the Foundation a number of art objects
purchased and physically located in Europe which will be
displayed in France.
* * *
The Foundations [WERFs] primary purpose is to acquire,
upon the death of Mr. and Mrs. Reves, the very extensive
collection of paintings, sculpture and other art objects which
Mr. Reves now owns, as well as a French country estate
known as Villa La Pausa in Roquebrune Cap Martin, on
the French Riviera.

(emphasis added). Based upon these representations, which are in apparent conflict with
TALs alleged ownership of the Collection, the IRS confirmed WERFs tax-exempt
status.
29. After Wendy and Emery formed WERF, its Articles of Incorporation and
By-Laws were effectively ignored and it sat dormant for many years. There is no
evidence of any activity in WERF from at least 1989 to 2000, when Wildenthal, Copley,
Charlton, Levy, and others purported to become WERF Directors. However, WERF
again sat dormant thereafter from 2000 through 2008. In fact, in approximately 2001, the
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 10
IRS even suspended WERFs tax-exempt status for lack of activity and failure to
maintain a registered address with it. This status was not restored until 2010. As a result,
as of the date of Wendys death, the IRS did not consider WERF a tax-exempt entity.
J. Beaux-Arts: Foundation Deed and By-Laws.
30. Next, in 1970, Emery created an entity under Liechtenstein law known as
Beaux-Arts Foundation (later re-named Beaux-Arts Stiftung) (Beaux-Arts) into which
he purported to donate, or caused to be donated, the shares of CVAG and TAL, over both
of which he maintained control during his life.
31. For example, as set forth in the Beaux-Arts Foundation Deed dated
December 15, 1970 (Deed), Emery had the right to appoint all the original Foundation
Committee members and the Foundations President, and to revoke any Foundation
Committee members status as such during his lifetime. (Deed, Art. 7.) The Deed also
gave Wendy veto power over Foundation Committee members veto and appointment
rights. Finally, the Deed gave Emery the right to dissolve the Foundation at any time.
(Deed, Art. 13.) In short, Beaux-Arts was just a sham vehicle through which Emery
continued to assert control over the Collection and Villa La Pausa.
32. Beaux-Arts was also governed and controlled by Regulations or By-Laws
that appointed Emery as its President and further provided that Wendy shall become
President after Emerys death. The By-Laws of Beaux-Arts were highly specific and
guaranteed that Emery had total control over the assets, bank accounts, and the corporate
life of the various entities. These By-Laws also dictated that No decision may be
adopted against the will of the President.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 11
33. The By-Laws further stated that Beaux-Arts owned 11,900 of the 12,000
shares in SCI, which owned Villa La Pausa, and that if TAL lost the rights to use Villa La
Pausa, the Foundation shall take measures to ensure that Emery Reves and Wendy
Reves, or the survivor thereof is entitled to stay and reside at the villa. Further, if
Wendy survived Emery, and Villa La Pausa were sold, the By-Laws specified that the
Foundation had the right to direct the acquisition of another property at the request, and
in accordance with the instructions of Wendy Reves. It is telling that, as a holding
company, Beaux-Arts By-Laws contained detailed provisions relating to the assets of
what was a sub-subsidiary.
34. Likewise, the Foundation could make Villa La Pausa into a museum, with
the consent of Wendy Reves. . . . Further, the By-Laws directed that the Founder
(Emery) transfer additional liquid funds into Beaux-Arts, and that the capital (or corpus)
of Beaux-Arts be used to defray any and all taxes and charges, maintenance and repair
costs, wages and salaries of personnel and all other costs and value-enhancing
expenditures for the maintenance of [Villa] LA PAUSA. The determination as to the
making of the expenditures was to be made by Emery during his life time, and thereafter
by the board of trustees, over which Wendy retained an absolute veto power.
35. The By-Laws also contemplated the storage and display of the Collection at
Villa La Pausa. If, however, Villa La Pausa were to be sold, then the expenditures
outlined above would apply to any replacement property at which Wendy resided while
the Collection was installed and displayed there.
36. Significant to this dispute, the By-Laws provided in Article 5 that:
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 12
d) After the death of Mr. Emery Reves, Ms. Wendy Reves
shall be entitled to demand that any work of art which
belongs to the foundation assets be transferred to her. She
may subsequently freely dispose of the works of art which are
transferred to her in this manner.

e) Mrs. Wendy Reves shall further be entitled to demand that
all or a part of the income or capital of the foundation be
distributed to her.

The only requirement regarding Wendys ability to exercise these rights was that she
demand it.
37. Further, the By-Laws provided that Beaux-Arts shall be dissolved and all
its assets contributed to the Wendy and Emery Reves Foundation if Ms. Wendy Reves
survives her husband and requests dissolution in writing; it shall also be dissolved after
the death of Mr. Emery Reves and Mrs. Wendy Reves.
38. Although both Wendy and Emery have died, Beaux-Arts has never been
dissolved.
39. Finally, upon Emerys death, the By-Laws became irrevocable.
40. As a result of its Deed and By-Laws, Beaux-Arts was a sham entity.
Specifically, Emery retained unfettered control over Beaux-Arts during his life time, and
upon his death, Wendy retained the irrevocable rights to (1) demand any work of art from
Beaux-Arts and then freely dispose of the same, and (2) demand that its capital or income
be distributed to her. Therefore, Beaux-Arts was not a viable legal entity, and any
alleged transfer of assets into or out of Beaux-Arts would be disregarded and considered
as part of, and returned to, the Estate.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 13
41. However, even if Beaux-Arts were not determined to be a sham, it has not
been dissolved at any time during the four years following Wendys death. Beaux-Arts
must therefore be disregarded under Lichtenstein law and its assets considered part of the
Estate.
42. In 1970, TAL also contracted with SLP to take possession of Villa La
Pausa to display the Collection and reserved the right to appoint a couple to act as
caretakers of the Collection. Not surprisingly, it appointed Emery and Wendy. As
compensation for their care-taking, TAL contracted to pay their entire living
expenses. Wendy, thus, was able to live in Villa La Pausa throughout her life, including
after Emerys death, free of charge with all her expenses paid. Although such valuable
benefits in kind gave rise to an income tax liability in France, no declaration of the
existence and value of them was ever made at any time by TAL as the nominal employer.
Not were the substantial social security charges that were due on the value of the benefits
ever declared or paid.
43. Emery appears to have transferred into Beaux-Arts (the effectiveness of
which Schroeder denies) the shares in TAL, CV, and thus indirectly SLP, resulting in the
following entity structure:

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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 14


























44. Indeed, none of these entities appear to have ever held proper corporate
meetings or even properly recorded minutes of meetings or decisions. Accordingly, all
assets of Beaux-Arts should be returned to, and treated as part of, the Estate.
K. Emerys Death and Wendys Deteriorating Health.
45. In 1981, Emery died intestate, leaving Wendy as his sole heir.
46. After Emerys death in 1981, all of Emerys assets passed to Wendy under
French law.
47. Wendy suffered a stroke in 1989, and her health began to decline thereafter.
Beaux-Arts Foundation
(Liechtenstein)
Cooperation Verlags
(Liechtenstein)
The Arts Limited
(Bahamas)
SCI La Pausa
(France)
99.2 %
100 % 100 %
Villa La Pausa
(France)
Patricia Markovitch
(Property Manager of
Villa La Pausa)
(France)
The Collection

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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 15
48. Wendys health problems were compounded by her chronic alcoholism, as
documented in her medical records and her subsequent dementia. At some point, in
approximately 2000, Wendy became effectively bed-ridden at Villa La Pausa. In fact,
during the last years of her life, Wendy became incapacitated, requiring 24-hour a day
care of several specialized nurses. As a result, Wendy did not leave Villa La Pausa after
at least 2000, until her death.
L. Transfer of the Collection to the DMA.
49. In approximately 1982, after Emerys death, three members of the DMA,
namely Parker, Charlton, and Levy (the DMA Members) called upon Wendy at Villa
La Pausa to make their pitch, on behalf of the DMA, for the Collection.
50. Wendy, by now a lonely widow and chronic alcoholic, was persuaded by
their Texas charm and flattery to disregard Emerys intentions for the Collection to be
displayed at Villa La Pausa, as he had represented to the IRS would be the case to ensure
WERFs tax-exempt status. Instead, Wendy purported to donate the Collection (or a vast
majority of it) to the DMA under a Donation Agreement dated May 31, 1983 (Donation
Agreement). Curiously, the Donation Agreement was signed by the DMA, Beaux-Arts,
TAL, and Wendy, individually and as a representative of WERF. Assuming arguendo
that these were valid, legal entities, the effect of the Donation Agreement under the
Beaux-Arts organizational documents was a gift by Wendy personally of nearly the entire
Collection. Beaux-Arts lacked the legal capacity to benefit any person that was not a
specified beneficiary under the Beaux-Arts Deed or By-Laws.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 16
51. As described above, Emery had wished for Villa La Pausa to be converted
to a museum to display the Collection publicly in France within its natural surroundings.
Instead, the DMA Members convinced Wendy that Emerys spirit would be appeased if
the DMA built a replica of several of the rooms of Villa La Pausa within the museum in
which the Collection would be displayed, which is in fact what the DMA ultimately did.
The DMA Members also promised to find a way around Frances reserved heirship rule
that protected Schroeders rights, as well as the restrictions set forth in Beaux-Arts By-
Laws, all in order to facilitate the surreptitious and unlawful transfer of the Collection to
the DMA. Indeed, it was the DMAs acceptance of the risk to construct this replica of
Villa La Pausa that was determinative of Wendys decision to give the Collection to the
DMA.
52. With the assistance of various other individuals, the DMA Members
schemed to strip away the legal protections afforded to Schroeder and caused Wendy to
sign various documents to execute a series of sham transfers that purported to move the
Collection from the fictional Beaux-Arts to the DMA via another entity bearing the same
WERF name, all to the detriment and exclusion of Schroeder and his heirship rights
under French law.
M. WERF (Texas).
53. Specifically, also in 1983, the DMA Members (with the assistance of the
Haynes & Boone law firm) created an entity in Texas known as the Wendy and Emery
Reves Foundation (WERF (Texas)), presumably to serve in the place of WERF (New
York) as the remainder beneficiary of any distribution from Beaux-Arts. This beneficiary
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 17
change purported to occur notwithstanding that Beaux-Arts By-Laws, as set forth in
paragraphs 32-37 above, could not be altered to change the beneficiary from Emerys
original designation.
54. Although the DMA Members and the DMA knew that the effect of any
distribution from Beaux-Arts became Wendys personal property (and therefore part of
her Estate subject to compulsory heirship), Wendy was then asked to sign the Donation
Agreement on behalf of herself and WERF (New York) that purportedly donated almost
all of the Collection indirectly to the DMA.
55. Notwithstanding the foregoing, the DMA actually publically represents in
the Foreword to its catalogue of the Collection that it was a gift by Wendy of her
collection.
56. Upon information and belief, Defendants improperly used WERF (Texas)
as an intermediate entity to hold most of the Collection for a time and conceal
Defendants conspiracy to transfer ownership of the Collection to the DMA,
notwithstanding Beaux-Arts By-Laws and Schroeders heirship rights. After the DMA
received nearly all of the Collection, WERF (Texas) was then dissolved in September
1989, with the result that the DMA purported to actually acquire title to nearly the entire
Collection.
57. Subsequently, the DMA caused the Collection to be packed up from Villa
La Pausa in plain boxes without identifying labels and flown by private jet to Texas.
Thus, the Collection quietly disappeared from France, neatly evading French gift taxes
that would have been as high as 60%.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 18
58. The various entities and trusts described above, including CVAG, TAL,
Beaux-Arts, and WERF, were not proper, distinct entities because Emery and Wendy
always retained the complete right to control them, their assets, and their activities, and
Wendy and Emery treated them and their bank accounts as if the corporate or entity
structure did not exist.
59. Thus, in addition to defrauding the French government, the stealth transfer
of the Collection was designed to defraud Schroeder from his half-share of the Collection
under rigid French laws regarding lifetime gifts in the context of reserved heirship.
N. The Will and Third WERF Entity.
60. Unsatisfied at having already improperly obtained almost the entire
Collection in violation of Schroeders heirship rights under French law, Defendants then
conspired to obtain the remainder of Wendys Estate.
61. Toward that end, in 1993, Wendy first met Wildenthal at a social event in
Dallas. Wildenthal immediately realized that Wendy was a suitable mark for his fund-
raising. Wildenthals aggressive fund-raising tactics and inappropriate use of donor
funds in connection with the University of Texas Southwestern Medical Center have been
well-documented by the media as well as relatives of other elderly donors.
62. Despite Wendys increasingly diminishing capacity, Wildenthal continually
attempted to persuade Wendy to transfer her remaining assets to his control. He would
then funnel those assets to his personal causes in Texas. Over the next several years,
Wildenthal sought to win over Wendys affections and confidence, successfully
persuading her to give several million dollars to his fund-raising causes.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 19
63. In approximately 1998, Wildenthal began to pressure Wendy to sign a Will.
During one of her last visits to Dallas before her health precluded travel, Wildenthal
introduced Wendy to Copley, an attorney with the Dallas law firm Akin Gump Strauss
Hauer and Feld, L.L.P. (Akin Gump).
64. After an afternoon of plying Wendy (an alcoholic) with abundant
champagne and other drinks, Wildenthal abruptly confronted Wendy and presented a
Will that had been drafted by, or at, his direction with Copleys assistance.
65. This Will appointed Wildenthal as sole Executor of Wendys Estate and
purported to direct that the majority of her Estate devolve to yet another new foundation
known as The Wendy & Emery Reves Charitable Foundation (WERCF), discussed
below. However, WERCF would not be created until Wendy died, and it would be
totally controlled by Wildenthal, Copley, and their circle. In the absence of another
controlling provision, Wildenthal would then, as Executor, have been entitled under
Texas Law to receive up to 5% of the value of the Estate.
66. Before the day it was presented to and signed by Wendy, she had never
read the Will that Copley prepared; nor had she ever met Copley before she was asked to
execute the Will; still less had she instructed Copley to prepare it. However, under the
dual pressure of Wildenthal and Copley, Wendy signed the Will.
67. This confrontation with Copley and Wildenthal so disturbed Wendy that
she became ill and could not leave her bed for several days thereafter. Wendy also
thereafter immediately wrote to Copley and asked him to change the Will to appoint
Charlton as co-executor with Wildenthal.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 20
68. Copley wrote back saying that since she lived abroad and spent a
considerable amount of time in France, he would have to obtain legal advice in
Switzerland and in France for which he billed her some $20,000.00.
69. In the course of his legal advice to Wendy, Copley would have learned that
Wendy lived in France, not Switzerland, although Wendy paid minimal taxes in
Switzerland. However, because of Wendys undeniable longtime residence at Villa La
Pausa, it was clear that French law (with its provisions regarding reserved heirship)
would apply to Wendys Estate. Copley therefore made several efforts to avoid French
law and Schroeders heirship rights.
70. Copley knew, or at least should have known, that although Switzerland has
a form of forced heirship, foreign residents may subject their estate (except for local tax)
to the law of their nationality.
71. As Wendy was now British (having renounced her US citizenship in 1978),
Copley purported to subject her Estate to British law, which he later corrected in 2005
to English law (presumably after learning that British law does not exist).
72. The laws in England permit a parent to leave his/her estate to anyone and
non-dependent children have no rights. There was absolutely no reason to do this except
to deprive Schroeder of his lawful entitlement to a share of the Estate as Wendys sole
heir under the laws of France.
73. It is clear, therefore, that the Defendants conspired to deprive Schroeder of
his 50% share of the Estate as Wendys sole heir.

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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 21
O. The Invalid POA.
74. On June 29, 2000, in connection with the Will (and one or more of its
Codicils), Copley also instructed Wendy to sign a Power of Attorney (POA) that
purported to give Copley authority over her affairs and bank accounts.
75. Wendy signed the POA from her home at Villa La Pausa. At that time, she
was suffering from the early stages of dementia.
76. Wendys signature on the POA in favor of Copley was never notarized.
77. Therefore, the POA is invalid under both Texas and French law. Enduring
powers of attorney are not valid in France and to enable Copley to make gifts, which he
later would, the document had to have been signed before a French notary, which it was
not.
P. WERCF.
78. Nonetheless, Copley then used this invalid POA to, among other things,
purport to create WERCF. Specifically, in August 2003, Wendy was the purported
grantor under a Trust Agreement establishing WERCF, making Levy, Charlton,
Wildenthal, Copley, and Ruth Sharp Altshuler its Co-Trustees. Copley, however,
executed the Trust Agreement individually (as a Co-Trustee) and on behalf of Wendy,
as her attorney in fact, presumably under the invalid POA.
79. Through WERCF, Defendants intended to transfer to the DMA certain of
Wendys assets during her lifetime and assets of the Estate following her death Again,
this was intended to avoid numerous domestic and foreign tax laws and further depleting
the Estate to Schroeders detriment.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 22
80. On July 13, 2004, Copley completed an Application for Recognition of
Exemption Under Section 501(c)(3) of the Internal Revenue Code (Application) on
behalf of WERCF. Copley signed the Application under penalty of perjury, in which he
represented (among other things) that:
In particular, the Dallas Museum of Art has been the object of
the Grantors [Wendy] charitable motivation. She and her
late husband gave to the museum a substantial collection, as
illustrated in the booklet attached hereto, which is housed in
the Dallas Museum in a separate wing entitled The Wendy
and Emery Reves Collection.

(emphasis added).
81. Copley further acknowledged in the Application that Wendy is eighty-
eight (88) years old, born May 2, 1916. She is currently bedridden and not in the best of
health.
82. Finally, Copley represented to the IRS in the Application that WERCF was
the successor to the Wendy and Emery Reves Foundation, Inc., a New York Foundation
[WERF].
83. These tortious acts of fraud, conspiracy, and interference in the affairs of a
foreign domicile as described herein, including through the use of WERCF, were
calculated to defraud Schroeder by ignoring the governing laws of Texas, France, and
Switzerland upon which Schroeder now sues. These acts of fraud were intentional,
calculated, and were done with malice.
Q. Wendys Death.
84. Wendy died in France on March 13, 2007.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 23
85. After Wendys death, the Defendants claimed that Wendy was a Swiss
resident, even though Wendy never once traveled to Switzerland in the last nine years of
her life. Defendants even attempted to open probate proceedings in that country.
However, the Court in Lausanne, Switzerland rejected this claim of Swiss residence and
found Wendy to be a French resident leaving her Estate to be governed by French law.
This judgment was later confirmed on appeal.
86. In addition to being deprived of his heirship rights under French law,
Schroeder may also be liable for estate taxes under French law for assets that French
taxing authorities contend are properly included in the Estate and regarding which there
are currently threatened collection proceedings.
RESPONDENT SUPERIOR/AGENCY/CONSPIRACY
87. The Defendants were acting for or on behalf of the DMA and in the course
and scope of their employment, agency or contract with the DMA, such that the DMA is
liable for their conduct. Although acting within the course and scope of their
employment, agency or contract with the DMA, the individual defendants are liable
jointly and severally for their tortious conduct. If any Defendant acted at any time
outside their authority for the DMA, then they conspired with the other Defendants and
the DMA to use lawful and unlawful means to achieve an unlawful end and used
unlawful means to accomplish otherwise lawful ends. In either event, all of the
Defendants are jointly and severally liable for the damages they have proximately caused
to Schroeder.

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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 24
CLAIMS FOR RELIEF
FRAUD/FRAUD ON THE ESTATE/CONSPIRACY
88. Schroeder incorporates by reference all preceding paragraphs as set forth
fully herein.
89. Defendants knew that TAL or Beaux-Arts held only color of title to the
Collection. They knew that, in fact, Wendy owned and controlled the Collection or that
the only way she could donate the Collection to the DMA was by directing Beaux-Arts to
distribute the Collection to her. In any event, the Collection either was or had to become
part of her Estate. They knew that Schroeder was Wendys only heir, such that he had a
50% forced heirship and that French law would allow Schroeder to reconstitute the
Estate, including the Collection, upon Wendys death. Defendants acted and conspired to
defraud the Estate and Schroeder of his heirship by using the Donation Agreement and
related documents and other entities to launder the Collection to the DMA. Further under
the Donation Agreement, the color of title to so-called Retained Works worth several
millions of dollars was to remain in Beaux-Arts, with the promise that Beaux-Arts
would donate them to WERF upon Wendys death, or that if Wendy caused the Retained
Works to be distributed to her, she would donate the Retained Works to WERF. In fact,
Defendants used the invalid POA to purportedly create WERCF and, by Copley
purporting to act as Wendys attorney-in-fact, purportedly caused Wendy to donate the
Retained Works to WERCF rather than WERF to which it was supposedly to have been
donated under the Donation Agreement. Not only was the POA invalid, but an attorney-
in-fact cannot create a trust for his principal. As such, WERCF is not a valid trust.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 25
Again, however, Defendants concocted this ruse to deliver to DMA color of title to the
Retained Works. Indeed, any assets that Defendants misguided to WERCF were sent
there fraudulently. Not satisfied with the Collection and the Retained Works, they
furthered their fraud and conspiracy by inducing Wendy to sign a will, codicils to the will
and other documents with the intent of unlawfully procuring the remainder of the Estate
through the acts described above. Their acts have been a proximate cause of damages to
Schroeder for which he is entitled to recover. Indeed, Texas law recognizes that efforts
to avoid forced or reserved heirships constitute constructive or legal fraud even without
proof or dishonesty of purpose or intent to deceive and any illusory trust may be
disregarded.
ACCOUNTING/CONSTRUCTIVE TRUST
90. Schroeder incorporates by reference all preceding paragraphs as if set forth
fully herein.
91. DMA has obtained, or may subsequently obtain, assets through its fraud,
constructive fraud, conspiracy, duress, or other inequitable conduct. It is unjust and
inequitable for such assets to remain with, or be conveyed to, the DMA. Schroeder is
therefore entitled to a detailed accounting of all assets that were or may be wrongfully
steered away from the Estate. And, due to the unique, irreplaceable, and invaluable
nature of the Collection, Retained Works and other assets, the Court should declare that
DMA holds these assets in constructive trust for Schroeder to fulfill his rights. Further,
the DMA should be disgorged in Schroeders favor of any and all profits it has realized
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 26
through its display of this art and donations it has received in anticipation of and actually
receiving the art.
TORTIOUS INTERFERENCE WITH INHERITANCE RIGHTS
92. Schroeder incorporates by reference all preceding paragraphs as if set forth
fully herein.
93. Through their fraud, duress or other tortious means, Defendants intended to
prevent Schroeders from receiving what he would have received as Wendys sole heir
or, alternatively, forced heir. As such, they tortiously interfered with Schroeders
inheritance rights and are jointly and severally liable to him for all damages proximately
caused Schroeder.
CONVERSION
94. Schroeder incorporates by reference all preceding paragraphs as if set forth
fully herein.
95. As the sole heir to Wendys Estate, Schroeder had a legal right to
possession of the assets that were unlawfully steered to this jurisdiction. Defendants
unlawfully and without proper authorization exercised dominion and control over those
assets inconsistent with the Schroeders rights as the true owner; and proximately caused
Schroeder damages.
MISAPPLICATION OF FIDUCIARY PROPERTY
96. Schroeder incorporates by reference all preceding paragraphs as if set forth
fully herein.
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 27
97. Defendants intentionally, recklessly, with conscious indifference or in a
grossly negligent manner misapplied Wendys assets, monies, and other items that
rightfully belonged to the Estate, which resulted in a substantial loss or risk of loss to
Schroeder. Moreover, to the extent Schroeder is being held liable for taxes on assets that
have been determined to be in the Estate yet in the possession or under the control of
Defendants, Schroeder has been or will be damaged in at least that amount.
EXEMPLARY DAMAGES
98. Defendants acted intentionally, maliciously, and in reckless disregard of,
with conscious indifference to, and with gross negligence regarding, Schroeders rights.
As such, Schroeder is entitled to recover exemplary damages for which the Defendants
should be held jointly and severally liable.
RELIEF REQUESTED
99. Schroeder respectfully requests the following relief:
(a) Defendants be served with process and required to answer and
appear herein;
(b) The Court award Schroeder actual, compensatory, and consequential
damages, including pre- and post-judgment interest, at the highest
rate allowed by law and costs of court;
(c) The Court award Schroeder exemplary, damages;
(d) The Court impose a constructive trust and grant a full and complete
accounting not only to disgorge the DMA of its ill-gotten profits and
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PLAINTIFFS FIRST AMENDED COMPLAINT PAGE 28
donations but to allow Schroeder to select the art and other assets to
satisfy his claim; and
(e) The Court grant Schroeder all such other relief whether in law or in
equity to which he may show himself justly entitled.
JURY DEMAND
100. Schroeder demands a trial by jury.

Respectfully submitted,



By: /s/ Gary D. Eisenstat
Gary D. Eisenstat
State Bar No. 06503200
Doug K. Butler
State Bar No. 03516050
Valeri C. Williams
State Bar No. 24058797

FIGARI & DAVENPORT, L.L.P.
3400 Bank of America Plaza
901 Main Street
Dallas, Texas 75202
TEL: 214-939-2000
FAX: 214-939-2090
ATTORNEYS FOR PLAINTIFF
ARNOLD LEON SCHROEDER, JR.

CERTIFICATE OF SERVICE
I hereby certify that on May 17, 2011, I electronically filed the foregoing with the
Clerk of Court using the CM/ECF system which will send notification of such filing to all
parties who have appeared and registered with CM/ECF.

/s/ Gary D. Eisenstat
Gary D. Eisenstat
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
ARNOLD LEON SCHROEDER, JR.

Plaintiffs

v. CIVIL ACTION NO. 3:11-CV-0525-B



KERN WILDENTHAL, EDWARD A.
COPLEY, HARRY S. PARKER, III,
GEORGE CHARLTON, IRVIN LEVY,
and the DALLAS MUSEUM OF ART,

Defendant.
MEMORANDUM OPINION AND ORDER
Before the Court are Defendants Motions to Dismiss Pursuant to Rule 12(b)(6) (docs. 19,
20, 21), filed June 9, 2011. For the reasons stated below, the Court finds that the Defendants
Motions are hereby GRANTED and that Plaintiffs claims should be and hereby are DISMISSED
with prejudice.
I.
BACKGROUND
This case arises out of a dispute over a transfer of property by Wynelle Reves (Wendy
Reves). Plaintiff Arnold Schroeder (Schroeder) is the only son of Wendy Reves, a philanthropist
who was born in America but lived most of the latter part of her life in France. Pl.s Am. Compl.
(Am. Compl.) 10-11. Under French law, Schroeder is the reserved heir of Wendy Reves. Id.
at 11. Consequently, as her only child, Schroeder is entitled to 50% of her estate. Id. at 11.
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After divorcing from Schroeders father, Wendy Reves married Emery Reves, a wealthy
author and financier. Id. at 17-18. Both before and after his marriage to Wendy Reves, Emery
Reves collected numerous pieces of art (the Collection) with a value that was estimated as high
as $400,000,000.00. Id. at 20. Schroeder alleges that Emery and Wendy Reves established a
number of corporate sham entities during their marriage in order to avoid taxation on their
substantial property. Id. at 22-44. As a result, the Reves did not own all of their property in their
names; some of their property, such as the villa where they resided in France, Villa La Pausa, were
placed in the name of a corporate entity. Id. at 22.
Emery Reves died in 1981, and the following year, three members of the Dallas Museum of
Art (DMA) Harry Parker, George Charlton, and Irvin Levy visited Wendy Reves. Id. at 49.
On May 31, 1983, Wendy Reves signed a Donation Agreement that purported to donate a majority
of the Collection to the DMA. Id. at 50. Schroeder alleges that Wendy Reves was convinced to
donate the Collection in part because the DMA agreed to build a replica of several of the rooms of
Villa La Pausa. Id. at 51. Schroeder further alleges that, in order to validate the transfer, the DMA
Members created a number of sham corporate entities and trusts, such as the Wendy and Emery
Reves Foundation, to circumvent Frances reserved heirship rule. Id. at 51-58. By doing so, the
DMA laundered Wendy Reves possessions, notably the Collection, which deprived Schroeder of
the possibility of inheriting this property. Id. at 89.
In 1993, ten years after having donated the Collection to the DMA, Wendy Reves first met
Dr. Kern Wildenthal, who was then the President of the University of Texas Southwestern Medical
Center, at a social event in Dallas. Id. at 61. By Plaintiffs account, Wildenthal recognized Wendy
Reves as a mark for his fund-raising, and persuaded her to donate millions of dollars over the next
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several years to various causes of his choice. Id. at 61-62. Sometime around 1998, Wildenthal
introduced Wendy Reves to Edward Copley, a Dallas attorney, and then pressured her to sign a will
(the Will). Id. at 63. The Will appointed Wildenthal as sole executor of Wendy Reves estate
and established another foundation, the Wendy and Emery Reves Charitable Foundation
(WERCF). Id. at 65. In the course of performing legal services for Wendy Reves, Copley allegedly
made several attempts to evade tax laws on her estate. Id. at 69-73. Additionally, in 2000,
Wendy Reves signed a power-of-attorney that purportedly gave Copley authority over her bank
accounts. Id. at 74-77. However, because the power of attorney was never notarized, Schroeder
claims that it is invalid. Id. at 77. After Wendy Reves death in 2007, Copley claimed that Wendy
Reves was a Swiss citizen and should be subject to Swiss estate law; however, a Swiss court rejected
this claim. Id. at 85. Thus, French law governs Wendy Reves estate. Id. at 85-86.
Schroeders central argument is that he has been deprived of his rightful share of his mothers
estate as a result of actions taken by the three named Defendants: the Dallas Museum of Art, Kern
Wildenthal, Jr., and Edward Copley (together, the Defendants). Schroeder alleges that the
Defendants collectively committed fraud
1
because they were aware that Wendy Reves owned the
Collection in her personal capacity and that the sham corporations held only color of title as to the
collection. Through such actions, the Defendants conspired to circumvent the French forced
1
Schroeder made a number of additional claims in his Amended Complaint, including claims for
conversion, tortious interference with inheritance rights, and misapplication of fiduciary property. In his
Response to the Motions to Dismiss, Schroeder elected not to pursue these claims further, but never
filed an Amended Complaint or sought to dismiss these claims. Accordingly, these claims are
DISMISSED and the Court will not address them in this Order.
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heirship laws, which would have led to Schroeders direct inheritance of 50% of the Collection.
2
As
a result, Schroeder argues that DMA holds the Collection in constructive trust. Defendants deny
these allegations and each one has filed a Motion to Dismiss, arguing that Schroeder has failed to
state a claim upon which relief can be granted, and even if his claims were cognizable, they would
be barred by the relevant statutes of limitations.
II.
LEGAL STANDARD
Under the Federal Rules of Civil Procedure, a complaint must contain a short, plain
statement of the claim showing that the pleader is entitled to relief. FED. R. CIV. P. 8(a)(2). A
plaintiff may support his claim for relief with any set of facts consistent with the allegations in the
complaint. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563 (2007). Rule 12(b)(6) authorizes dismissal
of a complaint that fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).
In analyzing a Rule 12(b)(6) motion, the Court accepts all well-pleaded facts as true, viewing them
in the light most favorable to the plaintiff. In re Katrina Canal Breaches Litig., 495 F.3d 191, 205
(5th Cir. 2007)(quoting Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467
(5th Cir. 2004)). Such a motion should only be granted when the complaint does not include
enough facts to state a clam to relief that is plausible on its face. Twombly, 550 U.S. at 570.
A claim is plausible on its face when the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged. Ashcroft
2
For Schroeder to inherit the property in question, he would have to demonstrate that it was
legally part of Wendy Reves estate. This Court will not, of course, decide that question, and will assume
at this stage that the forced heirship statute would apply to the Collection.
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v. Iqbal, 129 S. Ct. 1937, 1949 (2009). The plausibility standard is not akin to a probability
requirement, but asks for more than a sheer possibility that a defendant has acted unlawfully. Id.
Thus, to survive a motion to dismiss, factual allegations must be enough to raise a right to relief
above the speculative level. Twombly, 550 U.S. at 555. A complaint that offers labels and
conclusions or a formulaic recitation of the elements of a cause of action will not survive a motion
to dismiss. Iqbal, 129 S. Ct. at 1949. Thus, [t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice. Id.
The Courts review is limited to the allegations in the complaint and to those documents
attached to a defendants motion to dismiss to the extent that those documents are referred to in
the complaint and are central to the claims. Causey v. Sewell Cadilac-Chevrolet, Inc., 394 F.3d 285,
288 (5th Cir. 2004). Nevertheless, it is well established that dismissal under Fed. R. Civ. P. 12(b)(6)
is warranted where an affirmative defense, such as the statute of limitations, is apparent on the face
of the plaintiff's complaint. Jones v. Alcoa, Inc., 339 F.3d 359, 366 (5th Cir.2003); Kansa Reinsurance
Co. v. Congressional Mortgage Corp. of Tex., 20 F.3d 1362, 1366 (5th Cir.1994).
III.
ANALYSIS
Defendants contend that Schroeders claims fail as a matter of law because he has failed to
state a claim for fraud that satisfies the pleading standard under Fed. R. Civ. P. 9(b), and has
similarly failed to plead facts that would satisfy a claim of conspiracy. Defendants further argue that
Schroeder has not alleged any fiduciary relationship, which they argue is required for a claim of
constructive fraud. Alternatively, Defendants argue that each of Schroeders claims for relief is time-
barred by the relevant statutes of limitations.
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Schroeder counters that a claim of constructive fraud need not satisfy the standard
enumerated in Rule 9(b), and the applicable statutes of limitations periods are tolled by virtue of the
discovery rule. Schroeder additionally argues that a claim of civil conspiracy is cognizable because
the Defendants acted, even if separately, to obtain Schroeders rightful property by fraud. The Court
will address these arguments in turn.
A. Constructive Fraud
Schroeder first claims that the Defendants have committed either legal or constructive
fraud.
3
Under Texas law, constructive fraud involves the breach of some legal or equitable duty .
. . that the law declares fraudulent because of its tendency to deceive others, to violate confidence,
or to injure public interests. Archer v. Griffith, 390 S.W.2d 735, 740 (Tex. 1965). Unlike actual
fraud, constructive fraud does not require any intent to deceive. Id. According to Schroeder, then,
each of the named Defendants has committed constructive fraud by inducing Wendy Reves to
donate her property, either personally or through a corporate entity, which has resulted in
circumventing French laws of forced heirship. Defendants argue in response that constructive fraud,
unlike actual fraud, requires the plaintiff to show a breach of some legal or fiduciary duty. Without
the allegation of facts, the Defendants claim that any claim of fraud must be dismissed.
i. Constructive Fraud and Breach of Legal Duty
Schroeder asserts that a claim of constructive fraud does not require a breach of legal duty.
Rather, Schroeder argues that a fiduciary relationship is unnecessary because constructive fraud has
fuzzier edges. Pl. Resp. 9. In fact, Schroeder himself concedes that this doctrine is only a
3
Texas courts, as well as both parties, have used the terms legal and constructive fraud
interchangeably. This Court will use the term constructive fraud.
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shorthand for the wrong that Defendants have committed. Id. at 16. To make this point,
Schroeder relies heavily on a concurring opinion by Judge Wiener in the Fifth Circuit that concludes
that Texas state law takes a flexible approach to constructive law, and therefore does not necessarily
require a fiduciary duty. In re Soza, 542 F.3d 1060, 1073-75 (5th Cir. 2008) (Wiener, J., specially
concurring). However, as Judge Wiener also noted in his concurrence, there was an equitable duty
at issue between the relevant parties. Id. at 1075-76. Furthermore, a number of courts have stated
unequivocally that a fiduciary duty, or at least some duty resembling a fiduciary duty, is necessary
to allege a constructive fraud cause of action. See, e.g., In re Hollis, Bankruptcy No. 09-40483,
Adversary No. 09-4066, 2011 WL 1168403, at *12 (Bankr. E.D. Tex. March 29, 2011); Ternium
Intern. USA Corp v. Consolidated Systems, Inc., No. 3:08-CV-0816-G, 2009 WL 804119, at *5 (N.D.
Tex. March 25, 2009) (Fish, J.) (dismissing a counterclaim for constructive fraud because the
defendant did not plead that it was owed a fiduciary duty); Humble Emergency Physicians, P.A. v.
Meml Hermann Healthcare Sys., Inc., No. 01-09-00587-CV, 2011 WL 1584854, at *8 (Tex.
App.Houston April 21, 2011, no pet.) (noting that because the defendant did not owe a fiduciary
duty, the plaintiff could not establish a claim for constructive fraud).
Despite the doctrinal difference between actual and constructive fraud, then, Schroeder has
not pleaded any legal relationship binding the Defendants to Wendy Reves. Even if this Court were
to agree with Schroeder and find that a fiduciary duty is not required for a claim of constructive
fraud, it is undisputed that the Defendants would need to show some duty to support this claim.
Schroeder has failed to address this point. The encounters described in the Complaint allege that
both the DMA and Wildenthal preyed on Wendy Reves because she was elderly and susceptible to
flattery, not because of a relationship based on trust or confidence. Schroeder also fails to allege any
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explicit duty owed by Copley, but as Wendy Reves attorney, such a relationship could support a
claim of constructive fraud. But Schroeder fails to allege that Copley did not act in accordance with
Wendy Reves demands, and states only that she failed to read the will that Copley prepared, and
signed it after he pressured her to do so. Schroeder does not suggest that this conduct would
constitute a breach of any legal duty that Copley owed to her, nor has he offered any legal authority
to suggest that such an action would constitute constructive fraud. Thus, the claims of constructive
fraud are insufficient as a matter of law because they fail to allege a breach of any legal or equitable
duty owed to Wendy Reves.
ii. Rule 9(b) and Constructive Fraud
Defendants also argue that Schroeders allegations fail to satisfy the higher pleading standard
required by Rule 9(b). Schroeder, on the other hand, argues that constructive fraud need not satisfy
Rule 9(b), but even if it did, the Amended Complaint would satisfy that standard. The Court agrees
with the Defendants that Schroeders claim of fraud is subject to the heightened pleading
requirement, and fails to meet it.
Rule 9(b) requires that the party claiming fraud must state with particularity the
circumstances constituting fraud or mistake. The Fifth Circuit has clarified that a plaintiff must
specify statements contended to be fraudulent, identify the speaker, state when and where the
statements were made, and explain why the statements were fraudulent. Flaherty & Crumrine
Preferred Income Fund, Inc. v. TXU Corp., 565 F.3d 200, 207 (5th Cir. 2009) (quoting Williams v.
WMX Techs., Inc., 112 F.3d 175, 177 (5th Cir. 1997)); see also United States ex rel. Thompson v.
Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir.1997) (At a minimum, Rule 9(b)
requires that a plaintiff set forth the who, what, when, where, and how of the alleged fraud.) If a
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complaint fails to adhere to this standard in pleading a claim of fraud, it may be dismissed at the
pleading stage for failure to plead with particularity. See United States ex rel. Doe v. Dow Chemical Co.,
343 F.3d 325, 329 (5th Cir. 2003). Although the Fifth Circuit has not decided whether a claim of
constructive fraud must satisfy the higher pleading standards under Rule 9(b), this Court has said
on several occasions that a plaintiff must do so in order to defeat a motion to dismiss. See Litson-
Gruenber v. JP Morgan Chase & Co., No. 7:09-CV-056-O, 2009 WL 4884426 (N.D. Tex. Dec. 16,
2009) (OConnor, J.); Kougl v. Xspedius Mgmt. Co. of Dallas/Fort Worth, L.L.C., No. 3:04-CV-2518-
D, 2005 WL 1421446 (N.D. Tex. June 1, 2005) (Fitzwater, J.). This Court will not deviate from the
accepted standard enumerated by this district.
In the present case, Schroeders Complaint contains a long-winded, often meandering
narrative, yet it fails to put the Defendants on notice of the fraud with any degree of particularity.
The allegations can be summarized as such: the Defendants, sometimes in concert, exerted pressure
on Wendy Reves to create a series of entities for the purpose of laundering her belongings to the
DMA and other organizations in order to evade French estate laws. Yet there is a dearth of
specificity in the Amended Complaint and the allegations are both generic and conclusory.
Schroeder claims, for example, that Wildenthal encouraged Wendy Reves to sign the Will, yet fails
to address how this pressure was exerted. Am. Compl. 63. Schroeders allegations about Copley
are similarly general and in fact fail to explain why they constitute fraud. In the Amended
Complaint, Schroeder lists a series of actions that Copley committed on her behalf, but fails to
address in any manner how these decisions would violate any duty to Wendy Reves, or in what
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fashion they were deceptive.
4
Additionally, though Schroeder argues that Copley committed fraud
when he claimed that Wendy Reves was a Swiss resident, he also states that a Swiss court rejected
this claim and found that her estate should be governed by French law. Am. Compl. 85. Given that
Copleys claim about her residence, no matter how ill-conceived, did not result in any damage, it is
clear that Texas law does not recognize it as fraud. Accordingly, the Court finds that Schroeders
allegations do not satisfy the heightened pleading requirements of Rule 9(b), and his claims for
constructive fraud and breach of fiduciary duty fail under Rule 12(b)(6).
iii. Statute of Limitations
Even if Schroeders claims were cognizable and pleaded with particularity, they would be
time-barred. The applicable statute of limitations for a claim of fraud is four years. TEX. CIV. PRAC.
& REM. CODE ANN. 16.004(a)(4) (West 2002). In an action for fraud, the limitations period begins
to run when the fraud is discovered, or should have been discovered in the exercise of reasonable
diligence. Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988). Defendants argue
that the fraud complained of involves the donation of the Collection, which occurred in 1983; this
would mean that the limitations period has long expired, unless Schroeder can establish that the
fraud could not have been discovered at the time. In an attempt to evade the limitations period,
however, Schroeder claims that his cause of action for fraud could not have accrued until after
Wendy Reves died. The Court cannot agree with Schroeders proposition that this action for fraud
4
In his Amended Complaint, Schroeder claims that Copley instructed Wendy Reves to sign a
power-of-attorney document that was never notarized, and is therefore invalid. Am. Compl. 74-77.
Schroeder later claims that the invalid power-of-attorney was used to create WERCF. Id. at 89. Despite
this, Schroeder never claims that Copley failed to comply with Wendy Reves requests, or that he
breached a duty to her. Furthermore, Schroeder makes no indication that he seeks to invalidate the
power-of-attorney, or transactions made pursuant to the power-of-attorney. Therefore, the Court will not
address these allegations separately from the above the discussion of constructive fraud.
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did not accrue until 2007, 24 years after the Donation Agreement was signed.
Schroeder has failed to cite any case where a party that received a donation was required by
law to return it nearly thirty years later. Rather, he relies heavily on cases from the mid-19th century
that interpreted a Texas forced heirship statute that provided that parents could only disinherit their
children for specific, enumerated reasons. Epperson v. Mills, 19 Tex. 65, 1857 WL 5045 (Tex. 1857);
Crain v. Crain, 17 Tex. 80, 1856 WL 4967 (Tex. 1856). The Texas Supreme Court interpreted this
statute to guard against fraudulent devices or donations that effectively strip the children of the
property that is secured to them. See Crain, 1856 WL 4967, at *8. The Court later clarified that a
parent seeking to avoid the rigidity of the statute must make donations absolutely, so that the
donor does not merely hold the property in trust and no longer retains any interest. Epperson, 1857
WL 5045, at *3. Schroeder reads these cases to mean that any conveyance made in a jurisdiction
with a forced heirship statute is, on its face, fraudulent. But such a broad reading not only disregards
the Texas statute that the Texas Supreme Court was charged to interpret, but the subsequent
development of the doctrine of constructive fraud. Furthermore, the above cases have had almost
no discernable impact on Texas courts that have adjudicated claims of fraud. Though Schroeder
argues that the Texas Supreme Court later analogized to these cases in applying the concept of
illusory trusts, see Land v. Marshall, 426 S.W.2d 841, 847-48 (Tex. 1968), the Court subsequently
limited illusory trusts to instances in which a non-consenting spouses property is used to fund a
trust. Westerfeld v. Huckaby, 474 S.W.2d 189, 191 (Tex. 1972).
Schroeders understanding of constructive fraud, then, is predicated on Crain and its progeny,
but bears little relevance to the facts in this case and Texas current understanding of constructive
fraud. Thus, there is no basis for this Court to find that any transaction, no matter when it occurred,
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is fraudulent per se because it has resulted in Schroeder inheriting less property than he believes he
is entitled to. The effect of Schroeders argument is that Wendy Reves would have had a viable cause
of action against the Defendants for fraud, and even after the relevant limitations period had
expired, the cause of action would again become ripe upon her death. Such a theory would
completely evade Texas statute of limitations for fraud and finds no support in either case law or
under statute.
Schroeder also fails to raise any ground to establish grounds for tolling the statute of
limitations under the discovery rule. Under Texas law, though a cause of action generally accrues
when a wrongful act causes some injury, where an injury is inherently undiscoverable and the
evidence of the injury is objectively verifiable, the statute of limitations may begin to run only upon
discovery of the injury. Computer Assocs. Intl, Inc. v. Altai, Inc., 918 S.W.2d 454, 455-56 (Tex.
1996). The requirement of inherent undiscoverability recognizes that the discovery rule exception
should be permitted only in circumstances where it is difficult for the injured party to learn of the
negligent act or omission. Id. at 456 (quoting Willis v. Maverick, 760 S.W.2d 642, 645 (Tex.1988)).
Schroeder claims that as a result of the Defendants fraud, he could not have known about the
relevant facts until after her death. However, as this Court has made clear, a party pleading
fraudulent conceal must plead sufficient facts to place the defendants on notice of the tolling
theory. Vernon v. City of Dallas, No. 3:08-CV-1068-B, 2009 WL 2486033, at *5 (N.D. Tex. Aug.
13, 2009) (Boyle, J.) (emphasis in original). The claim that the injury was inherently
undiscoverable until after Wendy Revess death is a conclusion that is unsupported by any alleged
facts that would indicate a basis for the application of the discovery rule. Indeed, the donation of the
Collection to the DMA occurred in 1983, and Schroeder cites to public filings by Copley that
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purported to establish a corporation that would inherit her assets following her death. Am. Compl.
78-80. The claim that these injuries were undiscoverable merely states a conclusion. Although
it may be possible that Schroeder was unaware of the Defendants alleged actions, he must show that
he is plausibly entitled to toll the statute of limitations period. Iqbal, 19 S. Ct. at 1949. He has failed
to do so, and thus the Court finds that the statute of limitations bars a claim of constructive fraud.
Accordingly, Schroeders claim for fraud must fail. He has failed to allege any legal or
equtable relationship that would give rise to a finding of constructive fraud. Even if the Court were
to find that his claims were sufficient to make a claim of constructive fraud, however, they would be
barred by the applicable statute of limitations. For these reasons, Schroeders claim of fraud is
DISMISSED with prejudice.
B. Conspiracy
Schroeder next argues that the Defendants conspired to defraud Wendy Reves. Under Texas
law, civil conspiracy is a derivative tort. Tilton v. Marshall, 925 S.W.2d 672, 681 (Tex. 1996) ([A]
defendants liability for conspiracy depends on participation in some underlying tort for which the
plaintiff seeks to hold at least one of the named defendants liable.) (citation omitted). Given that
the Court has dismissed his claim of constructive fraud, Schroeders claim of conspiracy must also
fail. However, even if civil conspiracy did not depend on an underlying tort, Schroeders Complaint
would fail to allege a claim of conspiracy.
To maintain an action for civil conspiracy, a plaintiff must allege facts showing: (1) two or
more persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or course
of action; (4) one or more unlawful, overt acts; and (5) damage as a proximate result. Tri v. J.T.T.,
162 S.W.3d 552, 556 (Tex. 2005). Though Schroeder concedes that the named Defendants
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encountered Wendy Reves at different times, and did not actually develop a uniform plan, he claims
that they worked toward a common goal. For the claim of conspiracy to proceed, then, the Court
would have to accept the mere conclusion that the Defendants conspired together because each
wanted to benefit from her philanthropy as sufficient to defeat a motion to dismiss. Schroeders
failure to specify how the disparate acts, acts that occurred between 1983 and 2007, amount to a
conspiracy, or when anything resembling a meeting of the minds occurred, is fatal to the claim of
conspiracy. While it may be true that juries must frequently infer the existence of a conspiracy based
on circumstantial evidence, Schroeder has failed to allege any plausible collection in his Amended
Complaint. He argues, for example, that the DMA Defendants knew and intended there to be a
future will to complete the heist . . . . [Copley and Wildenthal] then entered the picture later to
accomplish precisely that end. Pl. Resp. 34. As the Supreme Court has made clear, a plaintiff must
plead more than labels and conclusions or offer a formulaic recitation of the elements of a cause
of action to defeat a motion to dismiss. Iqbal, 129 S. Ct. At 1949. Schroeders claim of conspiracy
cannot meet this threshold. Accordingly, Schroeders claim of conspiracy is DISMISSED.
IV.
CONCLUSION
For the foregoing reasons, Defendants Motions to Dismiss are hereby GRANTED and all
of Plaintiffs claims are DISMISSED. Furthermore, Plaintiffs claims are DISMISSED with
prejudice because the Court has already given him an opportunity to amend in this case. See Moini
v. Univ. Tex. at Austin, No. A-10-CA-180-SS, 2011 WL 90472, at *13 (W.D. Tex. Jan. 10, 2011);
Swanson v. Aegis Commcns Group, Inc., No. 3:09-CV-041-D, 2010 WL 1779664, at *1 (N.D. Tex.
Apr. 29, 2010); Maa v. Rollins-Cross, No. 3:03-CV-2721-K, 2005 WL 81706, at *2 (N.D. Tex. Jan.
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11, 2005). Furthermore, any future amendment to Plaintiffs Complaint would be futile, as he is
procedurally barred from bringing his claim of constructive fraud under Texas law, which thus
defeats his claim for civil conspiracy. Finally, any equitable remedy that would result from a finding
of constructive fraud, including a constructive trust, is hereby DENIED.
SO ORDERED.
DATED November 30, 2011
_________________________________
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE
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Daniel L. Rasmussen, Bar No. 120276
dlr@paynefears.com
Erik M. Andersen, Bar No. 220513
ema@paynefears.com
PAYNE & FEARS LLP
Attorneys at Law
4 Park Plaza, Suite 1100
Irvine, California 92614
Telephone: (949) 851-1100
Facsimile: (949) 851-1212

Attorneys for Respondent Arnold L. Schroeder, Jr.




UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

SCI LA PAUSA, a French corporation,

Applicant,

v.

ARNOLD LEON SCHROEDER, JR.,
an individual,

Respondent.

Case No. 2:11-cv-10483 ABC (VBK)

ANSWER OF RESPONDENT
ARNOLD LEON SCHROEDER, JR.

DEMAND FOR JURY TRIAL

The Hon. Audrey B. Collins

Pursuant to Rule 8(b) of the Federal Rules of Civil Procedure, Respondent
Arnold Leon Schroeder, Jr. (Schroeder) answers the Application for Entry of
Judgment of SCI La Pausa (Applicant). If an averment is not specifically
admitted, it is hereby denied.
ANSWER TO APPLICATION
1. Responding to Paragraph 1 of the Application for Entry of Judgment,
Schroeder admits that Applicant is a French corporation. Schroeder lacks sufficient
knowledge or information to form a belief concerning the truth of the other factual
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allegations contained therein and on that basis denies such allegations. Paragraph 1
further contains legal conclusions and argument as to which no response is required.
2. Responding to Paragraph 2 of the Application for Entry of Judgment,
Schroeder admits the allegations contained therein.
3. Responding to Paragraph 3 of the Application for Entry of Judgment,
Schroeder admits the allegations contained therein.
4. Responding to Paragraph 4 of the Application for Entry of Judgment,
Schroeder admits the allegations contained therein.
5. Responding to Paragraph 5 of the Application for Entry of Judgment,
Schroeder admits the allegations contained therein.
6. Responding to Paragraph 6 of the Application for Entry of Judgment,
Schroeder denies each and every allegation contained therein.
7. Responding to Paragraph 7 of the Application for Entry of Judgment,
Schroeder admits that he is the son of Wendy Russell Reves; that Wendy Russell
Reves married Schroeders father around 1935; that Schroeder is the only child of
Wendy Russell Reves first marriage; and that Wendy Russell Reves and
Schroeders father were divorced. Except as expressly admitted herein, Schroeder
denies each and every allegation contained therein.
8. Responding to Paragraph 8 of the Application for Entry of Judgment,
Schroeder admits that Emery Reves was an author; that Emery Reves amassed a
significant art collection; that Emery Reves created Cooperation Verlags AG; that
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Emery Reves died in 1981; and that Wendy Reves died in 2007. Schroeder lacks
sufficient knowledge or information to form a belief concerning the truth of the
other factual allegations contained therein and on that basis denies such allegations.
Paragraph 8 further contains legal conclusions and argument as to which no
response is required.
9. Responding to Paragraph 9 of the Application for Entry of Judgment
(erroneously numbered as 10), Schroeder admits the allegations contained therein.
10. Responding to Paragraph 10 of the Application for Entry of Judgment
(erroneously numbered as 11), Schroeder admits the allegations contained therein.
11. Responding to Paragraph 11 of the Application for Entry of Judgment,
Schroeder denies that his lawsuit precluded sale of the Villa. As to the other
allegations in Paragraph 11, Schroeder admits the allegations contained therein.
12. Responding to Paragraph 12 of the Application for Entry of Judgment,
Schroeder admits the allegations contained therein.
13. Responding to Paragraph 13 of the Application for Entry of Judgment,
Schroeder admits the allegations contained therein.
14. Responding to Paragraph 14 of the Application for Entry of Judgment,
Schroeder admits the allegations contained therein.
15. Responding to Paragraph 15 of the Application for Entry of Judgment,
Schroeder admits the allegations contained therein.
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16. Responding to Paragraph 16 of the Application for Entry of Judgment,
Schroeder lacks sufficient knowledge or information to form a belief concerning the
truth of the factual allegations contained therein and on that basis denies such
allegations. Paragraph 16 further contains legal conclusions and argument as to
which no response is required.
17. Responding to Paragraph 17 of the Application for Entry of Judgment,
Schroeder denies that he was given an adequate opportunity to defend himself
against SCI La Pausas counterclaim for damages. As to the other allegations in
Paragraph 17, Schroeder admits the allegations contained therein.
18. Responding to Paragraph 18 of the Application for Entry of Judgment
(erroneously numbered as 20), Schroeder denies each and every allegation contained
therein.
19. Responding to Paragraph 19 of the Application for Entry of Judgment
(erroneously numbered as 21), Schroeder denies each and every allegation contained
therein.
AFFIRMATIVE DEFENSES
Schroeder pleads the following separate defenses. Schroeder reserves the
right to assert additional affirmative defenses that discovery indicates are proper.
FIRST AFFIRMATIVE DEFENSE
(Failure to State a Claim)
1. As a separate and first affirmative defense to the Application, and to the
purported causes of action set forth therein, Schroeder alleges that the Application
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when taken as a Complaint fails to state facts sufficient to constitute a cause of
action.

SECOND AFFIRMATIVE DEFENSE
(Fraud: Cal. Code Of Civil Proc. 1716(c)(2))
2. As a second separate and affirmative defense to the Application and
each purported cause of action contained therein, Schroeder alleges that the French
Judgment was obtained by fraud which deprived Schroeder of an adequate
opportunity to present his case.
3. Schroeder is an elderly United States citizen who has resided in
California for nearly his entire adult life. He lives in Long Beach, where he
continues to teach a single community college class each semester; an opportunity
he has taken since retiring from full-time teaching.
4. In 1967, his mother married the man she had lived with since 1943,
Emery Reves. Reves was a multi-millionaire. Mr. and Mrs. Reves lived together in
a sumptuous mansion called Villa la Pausa (the Villa). After Emery Reves death,
Schroeders mother took over a vast estate measured in the hundreds of millions of
dollars and she continued residing at the Villa until her death in 2007. Mrs. Reves
passing triggered the only thing as inevitable as death: taxes.
5. Mr. and Mrs. Reves structured their life together in a manner meant to
avoid the impact of French law (and French taxes) despite their decades-long
residence in the country, relying in particular on a fictitious domicile in Switzerland.
But after Mrs. Reves passing, the courts of Switzerland determined that she had her
last domicile in France with the consequence that large portions of her estate (if not
the entirety) are governed by French law which embodies very different principles
Case 2:11-cv-10483-ABC-VBK Document 34 Filed 05/18/12 Page 5 of 14 Page ID #:910 Case 3:12-mc-00081-B Document 1-5 Filed 08/24/12 Page 5 of 14 PageID 153
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from those found in the United States. Two such French legal principles are central
here.
6. First, Schroeder qualifies for a reserved heirship under French law.
This means that he is entitled, as a matter of law on these facts, to one-half of his
mothers estate. Moreover, French law does not allow a decedent to defeat the
reserved heirship by gifting or otherwise disposing of her property in a way that
reduces the estate. Instead, the value of all such transfers above and beyond 50% of
the estate (without the transfers counting) can be reclaimed by the reserved heir.
7. Second, France lacks the hesitancy to pierce the corporate veil that is
a hallmark of American common law. A variety of reasons can be invoked to
disregard a corporate structure, including failure to comply strictly with corporate
formalities, such as having board meetings or keeping minutes.
8. Schroeder claimed his reserved heirship in France. That action has
spurred a wide range of litigation over Mrs. Reves assets (including the present
case) with several entities directed by Dr. Kern Wildenthal, George Charlton, and
Edward Copley. This non-familial group claims ownership of far more than 50% of
the assets that Mrs. Reves accumulated (including by inheritance from Emery
Reves) over her lifetime, all achieved without paying market value. One of these
assets is the Villa. Whether done as part of an effort to avoid taxes, or to avoid
French law, or to avoid Schroeders inheritance rights, sham arrangements were
made in which Mrs. Reves exercised complete dominion over the relevant assets
and entities, while making it seem as if the Villa did not belong to her personally.
9. After Schroeder claimed his reserved heirship, French tax authorities
began to look over the potential Reves estate to determine what Schroeders taxes
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should be. Among the items that French authorities ultimately determined should be
part of the estate and thus should result in a multi-million euro tax assessment to
Schroeder was the Villa. But Schroeder had a problem: SCI La Pausa denied that
he had any claim, ownership, or other rights to the Villa. Anticipating this very
conflict with the French authorities regarding whether he would be taxed on the
value of the Villa, Schroeder had already initiated the litigation giving rise to the
judgment at issue in this case (the Nice action) when it was confirmed that he
would be subject to the tax. While there is also an on-going criminal investigation
surrounding the entire history of Reves-related arrangements pre-dating Schroeders
heirship claim, it does not help Schroeder meet the taxes assessed by French
authorities.
10. With the Nice action pending, Schroeder faced being taxed for a
property that he supposedly owned but did not possess and could not possess
unless a French court ruled in his favor. To temporarily resolve the situation,
Schroeder asked the French taxing authorities to suspend or abate the tax while the
Nice action was pending. That request was denied. The tax authoritys reasoning is
significant as it concluded, after reviewing: (1) the Nice action, (2) information
relating to the criminal complaint, and (3) the governments files, that:
The reading and the analysis of the elements of the summons of 17 March
2008 and the criminal complaint against persons unknown, to which the tax
office expressly refers, as well as the data of the files of SCI La Pausa, owner
of villa la Pausa, and CooperationsVerlag, main shareholder of SCI La Pausa:
Strengthens the thesis according to which Mrs. Reves was indeed the
owner, as she was living and until she passed away, through interposed
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legal entities of Villa la Pausa, and that she is at the very least the
largest economic beneficiary
That this property, as far as the indirect ownership is concerned,
necessarily belongs to the estate of the deceased
And that the value of this indirect ownership must necessarily be
reintegrated into the taxable estate.
11. The tax authority also ultimately concluded:
The case law . . . provided in proceedings of under-valuation with the
intention of making a gift, a necessary condition in the recognition of an
indirect gift. The provision of the shares from COOPERATION VERLAG to
the BEAUX ARTS Foundation resulted in Mme Reves being the true
beneficiary of the villa.
As a result of these legal issues and facts, the real estate called la PAUSA
should be seen as the property of the deceased at the time of her death, in a
proportion of 99.16% (=11900 shares out of 1200 shares) of the capital of SCI
LA PAUSA, held by COOPERATION VERLAG, which in turn is held by
Beaux Arts Foundation, which itself is owned by MME RUSSELL, widow
REVES. The real estate named La Pausa is therefore a part of the known
proportion (11900 shares out of 1200 shares, this being 99.16%) of her estate
assets.
12. As a result of these findings, the French authorities imposed a tax of
$4.66 million euros upon Schroeder.
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13. The results of the Nice action, however, read like a mirror image of the
taxing authorities decision. Before turning to the specifics of that decision
however, it must be kept in mind that the French civil litigation system is structured
very differently from that of the United States and other common law countries.
There are no witnesses and there is no discovery. Accordingly, the documents and
assertions of an adverse party are not subject to the probing verification that is a
hallmark of justice in the United States.
14. In the Nice action, SCI La Pausa plead and presented misleading
evidence purporting to show that:
Any [adverse possession] by Mrs. Reves is therefore ruled out since Mr., and
then Mrs. Reves only ever had precarious possession of the Villa, exclusive of
all animus domini. They were nothing but sub-occupiers, authorised by a
principal occupier whose very title rules out that [adverse possession].
Mrs. Reves never intended to call into question the legal system, by virtue of
which she occupied the villa, and SCIs property rights to it. Nor did she ever
act as an owner, for example by paying property taxes or taxes on French
properties owned by foreign corporations in France; SCI was responsible for
the former, Cooperation Verlags the latter . . . as Schroeder expressly
recognised. When Schroeder affirms that the operation of villa LA PAUSA
has always been, and remains today, organised by SCI LA PAUSA and
financed by the various entities of the legal and tax structure. . . he
demonstrates Mrs. Revess rights to SCI and above all Cooperation Verlags,
not the animus domini, which his argument contradicts.
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15. Both the Nice court and a court of appeal specifically relied on this
evidence/assertion, with the reviewing court concluding:
This agreement, which is registered in the framework of the social objects of
the two companies confers a deed of occupancy of the villa onto the Reves
couple which will never be questioned, all the charges associated with the
villa will be settled by contracting companies.
Since that date any acts of possession filed that claim Wendy Reves as owner
are not justified, given that they contradict the status of occupation and the
ownership of SCI La Pausa.
Wendy Reves never disputed this agreement after the death of her husband,
not even after the collection of paintings and artworks previously exhibited at
Villa La Pausa had been transferred to the Dallas Museum of Art by the Act
of Gift of 31st May 1983. Notably, Wendy Reves never paid out any sums
whatsoever for upkeep of the Villa or the settlement of land taxes, never
questioning either the implementation of the agreement nor the ownership
of SCI La Pausa. (emphasis added)
16. As a result, the Nice court denied any relief to Schroeder and imposed a
damage penalty of 523,000 euros (subsequently increased to 1,222,000 on appeal)
premised on the theory that SCI La Pausa had lost the opportunity of selling the
property and thus incurred additional upkeep expenses. The decision from the
High Court of Nice is on review to the French Supreme Court. Moreover, as part of
another pending case, the parent company of SCI La Pausa (CVAG) has
acknowledged that money used by SCI La Pausa and its corporate parent was
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Wendy Reves money, contrary to the statements in the Nice action. In a
February 12, 2012 French filing, it said the following:
The bank statements called upon by Mr. Schroeder . . . concern transfers
debited from the personal account of Mrs. Reves . . . and credited to the
company Cooperation Verlags account . . . , and therefore do not evidence
Mrs. Reves claimed power of disposal over the Entities. They can be
explained by the fact that Mrs. Reves did not possess a bank account in
France and had asked Cooperation Verlags if they would receive, in their
account in France, the funds necessary to settle her personal living
expenses in France, notably telephone bills, healthcare expenses,
subscription fees to a magazine she received in France, whilst reimbursing
Cooperation Verlags the same amount. (emphasis added)
17. Substantially the whole of Wendy Reves personal income from
investment accounts in Switzerland was directed to the bank accounts of
Cooperation Verlags AG which has, in turn, used those same funds to fund the
upkeep and maintenance and operations, and taxes of the Villa a fact that
contradicts what SCI La Pausa alleged and what the Court of First Instance of
Nice ruled in the arriving at the French Judgment and which was subsequently
confirmed in the Aix-en-Provence Court of Appeal.
18. Thus, SCI La Pausa provided misleading, fraudulent statements to the
French court that compounded by various procedural limitations on discovery
allowed SCI La Pausa to gain a judgment by fraud. The French Judgment should
not be enforced by this United States District Court.


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THIRD AFFIRMATIVE DEFENSE
(Due Process Violation: Cal. Code Of Civil Proc. 1716(c)(8))
19. As a separate and third affirmative defense to the Application and each
allegation contained therein, Schroeder alleges that the specific proceeding in the
foreign court leading to the French Judgment was not compatible with the
requirements of due process of law within the meaning of California Code of Civil
Procedure 1716(c)(8).

20. Schroeder incorporates herein by reference paragraphs 3 through 18 as
if set forth in full herein.

FOURTH AFFIRMATIVE DEFENSE
(Public Policy: Cal. Code Of Civil Proc. 1716(c)(3))
21. As a separate and fourth affirmative defense to the Application and
each allegation contained therein, Schroeder alleges that it would be against the
public policy of the United States of America and/or the State of California to
enforce the French Judgment under the circumstances where Schroeder was
allegedly found liable for abuse of the right to sue.

WHEREFORE, Schroeder prays for relief as follows:
1. That the Application be dismissed, with prejudice and in its entirety;
2. That Applicant take nothing and that judgment be entered against
Applicant and in favor of Schroeder;
3. That Schroeder be awarded his attorneys fees and costs incurred in
defending this action;
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4. That Schroeder be granted such other and further relief as the Court
may deem just and proper.
DATED: May 18, 2012 PAYNE & FEARS LLP



By: /s/ Daniel L. Rasmussen
DANIEL L. RASMUSSEN

Attorneys for Respondent Arnold L.
Schroeder, Jr.



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DEMAND FOR JURY TRIAL
Schroeder requests a trial by jury of all issues so triable.

DATED: May 18, 2012 PAYNE & FEARS LLP



By: /s/ Daniel L. Rasmussen
DANIEL L. RASMUSSEN

Attorneys for Respondent Arnold L.
Schroeder, Jr.





4839-9237-8895.1

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 11-10483-ABC (VBKx) Date June 15, 2012
Title SCI La Pausa v. Arnold Leon Schroeder, Jr.
Present: The
Honorable
Victor B. Kenton, United States Magistrate Judge
Roxanne Horan
Deputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiffs: Attorneys Present for Defendants:
None Present None Present
Proceedings: ORDER DENYING EX PARTE APPLICATION FOR ISSUANCE OF
LETTER ROGATORY
The Court has received and read Defendant Arnold Leon Schroeder, Jr.s (Schroeder) Ex Parte
Application for Issuance of Letter Rogatory (Ex Parte Application), and Plaintiff Sci La Pausa, a French
Corporations (Sci La Pausa) Opposition to Ex Parte Application for Letters Rogatory (Opposition).
Having reviewed these documents, and other matters contained in the Docket, and for the following reasons,
the Court DENIES the Ex Parte Application.
This action is about Sci La Pausas effort to obtain a domestic judgment against Schroeder based upon a
French money judgment for more than $2.5 million (U. S. dollars). The procedural history of the case is
well documented in Judge Collins Order Granting in Part Motion to Vacate Judgment, Quash Subpoena
and Receive an Award of Attorneys Fees, issued on April 11, 2012 (Docket No. 26).
The most pertinent part of Judge Collins Order, for purposes of this Courts adjudication of the current Ex
Parte Application, is the following, contained at p. 7 thereof:
... Defendant will not be permitted to relitigate the merits of the French judgment, as he has
suggested. Rather, the parties will be strictly limited to carrying their burdens under
[California Code of Civil Procedure] sections 1715 and 1716.
Relying on Judge Collins Order, Schroeder now seeks issuance of a Letter Rogatory (see Exhibit A to Ex
Parte Application, directed to the International Mutual Judicial Assistance Civil Service from French
Ministry of Justice.) Sci La Pausa opposes issuance of the Letter Rogatory.
Schroeders Ex Parte Application appears to be founded on a misapprehension both of the scope of
discovery allowed by Judge Collins Order, and the legal standard on which that Order (insofar as it permits
discovery) is based. As to the latter, Judge Collins instructed that the determination with regard to the
ultimate establishment of the French action will be governed by 1715 and 1716 of the California Code
of Civil Procedure. (See Judge Collins Order at 7.) In particular, the Court must focus on California Code
of Civil Procedure 1716(c)(2), which provides discretion to a court to not recognize a foreign judgment
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 11-10483-ABC (VBKx) Date June 15, 2012
Title SCI La Pausa v. Arnold Leon Schroeder, Jr.
if ... the judgment was obtained by fraud that deprived the losing party of an adequate opportunity to
present its case. This language in the statute came about through a 2007 amendment of the Code section.
The prior provision was contained in California Code of Civil Procedure 1713.4(b)(2), which provided
that a foreign judgment need not be recognized by a court if it was obtained by extrinsic fraud. While the
2007 iteration of the statute does not specifically reference the phrase extrinsic fraud, the definition of
fraud provided in 1716(c)(2) is, in fact, the prevailing and well established definition of extrinsic fraud
under California law. Indeed, legislative history cited by Sci La Pausa in its Opposition makes clear that
the amendment of the statute was not intended to enact a new or different definition of the applicable fraud,
but to clarify it. (See Opposition at 3.)
The definition of extrinsic fraud in California law has been set forth in numerous cases, many of which are
cited by Sci La Pausa in its Opposition. For example, in Home Insurance Company v. Zurich Insurance
Company, 96 Cal.App.4th 17, the Court distinguished extrinsic from intrinsic fraud in the context of an
action to set aside a release based on extrinsic fraud:
Fraud is extrinsic where the defrauded party was deprived of the opportunity to present his
or her claim or defense to the court, that is, where he or she was kept in ignorance or in some
other manner, other than from his or her own conduct, fraudulently prevented from fully
participating in the *27 proceeding. (In re Marriage of Stevenot (1984) 154 Cal.App.3d
1051, 1068 [202 Cal.Rptr. 116].)
Any fraud is intrinsic if a party has been given notice of the action and has not been
prevented from participating therein, that is, if he or she had the opportunity to present his
or her case and to protect himself or herself from any mistake or fraud of his or her
adversary, but unreasonably neglected to do so. [] When a claim of fraud goes to an issue
involving the merits of the prior proceeding which the moving party should have guarded
against at that time, or if the moving party was guilty of negligence in failing to prevent the
fraud or mistake or in contributing thereto, or failed to take advantage of liberal discovery
policies to fully investigate his or her claim, any fraud is intrinsic fraud. (In re Marriage of
Stevenot, supra, 154 Cal.App.3d at p. 1069.) Generally, the introduction of perjured
testimony or false documents, or the concealment or suppression of material evidence is
deemed intrinsic fraud. (Kachig v. Boothe (1971) 22 Cal.App.3d 626, 634 [99 Cal.Rptr.
393].)
This Court cannot find any contrary California authority.
Having thus provided the applicable standard by which Schroeder might seek to prevent Sci La Pausa from
obtaining a domestic judgment against him based upon the French judgment, the Court can now turn to the
asserted basis for the Letter Rogatory sought by Schroeder. Schroeder states the following in his Ex Parte
Application:
In order to fully establish the fraud to American standards, where issues such as
authenticity, admissibility and proper foundations matter, Schroeder has succeeded in his
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 11-10483-ABC (VBKx) Date June 15, 2012
Title SCI La Pausa v. Arnold Leon Schroeder, Jr.
request to conduct discovery ... In addition to discovery in the United States, Schroeder seeks
to get access to the evidence developed by the criminal investigation in France through this
letter rogatory.
Schroeder intends to prove that SCI La Pausa provided misleading, fraudulent statements
to the French court that - compounded by various procedural limitations - allowed SCI La
Pause to gain a judgment by fraud. (Ex Parte Application at 8.)
As articulated by Schroeder, he is seeking to do the exact things that Judge Collins prohibited in her April
11, 2012 Order, which is, to relitigate the merits of the French judgment, ... (Id. at 7.) What Schroeder
is suggesting as the basis for this discovery amounts to intrinsic, not extrinsic fraud. As Schroeder indicates,
what he is seeking includes information developed by French criminal authorities that can be obtained by
issuance of letters rogatory ... (Ex Parte Application at 3.) This is not appropriate discovery. Moreover,
whether, as Schroeder contends, French legal principles which are utilized to obtain a French judgment are
different than American standards is of no import in this context. Schroeder appears to be seeking evidence
to support his contention that Sci La Pausa presented false evidence to the French court in order to obtain
the judgment which it is seeking to establish here. But as the case authorities clearly indicate, even if this
were established, it would be a matter of intrinsic not extrinsic fraud, and thus is not relevant to the
proceedings here. Schroeder makes no contention that in any manner he comes within the California
definition of extrinsic fraud. Thus, whether or not Sci La Pausa presented what Schroeder contends to be
false or misleading evidence in the French judicial proceeding is not a concern of this Court. Schroeder has
presented nothing to indicate or support any possible contention that he was fraudulently prevented from
participating in that proceeding, or was kept in ignorance in some manner, other than from his own conduct.
Based on the foregoing, the Court does not require further briefing on this matter, and determines that
Schroeders Ex Parte Application for Letter Rogatory will be DENIED.
IT IS SO ORDERED.
:
Initials of Preparer RH
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 11-10483 ABC (VBKx) Date August 6, 2012
Title SCI La Pausa v. Arnold Leon Schroeder, Jr.
Present: The
Honorable
Audrey B. Collins, Chief United States District Judge
Angela Bridges Not Present N/A
Deputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiff: Attorneys Present for Defendants:
None None
Proceedings: ORDER DENYING Motion for Review of and Objections to Magistrate
Judges Ruling Denying Ex Parte Application for Issuance of Letter Rogatory
(In Chambers)
Pending before the Court is Defendant Arnold Leon Schroeder, Jr.s Motion for Review of and
Objections to Magistrate Judges Ruling Denying Ex Parte Application for Issuance of Letter Rogatory,
filed on July 2, 2012. (Docket No. 43.) Plaintiff SCI La Pausa opposed on July 16, 2012 and Defendant
replied on July 23, 2012. The Court previously found this matter appropriate for resolution without oral
argument and vacated the hearing date. Fed. R. Civ. P. 78; Local Rule 7-15. For the reasons below, the
motion is DENIED.
BACKGROUND
This case was initiated on November 14, 2011 when Plaintiff filed an Application for Entry for
Judgment Pursuant to the Uniform Foreign Country Money Judgments Recognition Act [Cal. Code of
Civil Procedure 1718] (the Act). (Docket No. 1.) Through this application, Plaintiff intended to
obtain a domestic judgment against Defendant based upon a French money judgment for more than $2.5
million (U.S. dollars). Because this foreign judgment was to be treated as a regular civil action
pursuant to section 1718, and because it was registered without service on Defendant, the Court set the
judgment aside and ordered that this case proceed as a regular civil case. (Docket No. 26.) However,
the Court made clear that Defendant will not be permitted to relitigate the merits of the French
judgment, as he has suggested, but that the parties will be strictly limited to carrying their burdens
under sections 1715 and 1716, which provide only a narrow framework for recognizing and refusing to
recognize a foreign judgment. (Id. (emphasis in original).)
The parties later briefed the appropriate procedure for addressing the issues in this case.
Although the Court previously expressed reservations about allowing any discovery, the Court allowed
discovery to commence. (Docket No. 32.) The Court did not express an opinion on whether any
particular type of discovery would be allowed, which was not at issue at that time. (Id.)
Defendant filed an answer on May 18, asserting defenses under subsections 1716(c)(2), (3), and
(8) of the Act. (Docket No. 34.) Defendant then filed an opposed ex parte application for issuances of
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 11-10483 ABC (VBKx) Date August 6, 2012
Title SCI La Pausa v. Arnold Leon Schroeder, Jr.
letters rogatory, seeking to obtain the March 16, 2011 deposition testimony of an individual named
Edward Copley, who was involved in the French proceedings. (Mot., Ex. 1.) The application sought
this discovery on the ground that there were inconsistent judgments in two French proceedings caused
by Plaintiffs concealment of important evidence it should have presented to the French Court in Nice
prior to entry of judgment. (Docket No. 36 at 1.) Defendant wants this evidence to prove a fruad
defense to registration that SCI La Pausa provided misleading, fraudulent statements to the French
court that compounded by various procedural limitations allowed SCI La Pausa to gain a judgment
by fraud. (Id. at 8.)
In an Order dated June 15, 2012, but that was docketed and electronically served on June 18,
2012, Magistrate Judge Kenton denied the application, finding that the information sought was not
relevant to prove fraud under section 1716(c)(2). (Docket No. 42.) After analyzing the statutory
scheme and case law, Magistrate Judge Kenton concluded that the phrase if . . . the judgment was
obtained by fraud that deprived the losing party of an adequate opportunity to present its case in
subsection (c)(2) was intended to perpetuate the former sections reference to extrinsic fraud. (Id. at
12.) Because Defendant was seeking discovery on matters that would only prove intrinsic fraud in
the French proceedings, Magistrate Judge Kenton found the letters rogatory not to be appropriate
discovery. (Id. at 3.) In doing so, Magistrate Judge Kenton also rejected Defendants contention that
the lack of discovery in the French court system impacted the analysis. (Id.) In the end, Schroeder []
presented nothing to indicate or support any possible contention that he was fraudulently prevented from
participating in that proceeding, or was kept in ignorance in some manner, other than from his own
conduct. (Id.)
Despite the substantive analysis in the Order, Defendant moved ex parte to clarify that
Magistrate Judge Kenton only denied his ex parte application based on Plaintiffs procedural objection
that the request should have been brought by way of a regularly noticed motion. (Docket No. 39.)
Plaintiff opposed and, unsurprisingly, Magistrate Judge Kenton denied the application, finding it was
actually an unsupported motion for reconsideration. (Docket No. 42.) Then, on July 2, 2012, Defendant
filed the pending motion for review of Magistrate Judge Kentons first Order.
STANDARD OF REVIEW
The parties dispute the appropriate standard of review based on their disagreement of whether
Magistrate Judge Kentons ruling was dispositive or nondispositive of Defendants fraud defense.
Federal Rule of Civil Procedure 72 provides that a magistrate judge may rule on the merits of
Nondispositive Matters, but may only prepare Findings and Recommendations on a pretrial matter
dispositive of a claim or defense, absent consent by the parties to appear before the magistrate judge for
dispositive issues. Fed. R. Civ. P. 72(a), (b); see also 28 U.S.C. 636(b)(1); Local Rules 72-2, 72-3.
For nondispositive matters, a party may object within 14 days after service of the order objected to, but
if a timely objection is not filed, [a] party may not assign as error a defect in the order not timely
objected to. Fed. R. Civ. P 72(a). When a timely objection is filed, the district court reviews the
magistrate judges order to determine if it was clearly erroneous or contrary to law. Id. Objections
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 11-10483 ABC (VBKx) Date August 6, 2012
Title SCI La Pausa v. Arnold Leon Schroeder, Jr.
to recommendations on dispositive motions must also be made within 14 days of service of the
recommendation, but the district court reviews de novo the magistrate judges recommendations on
dispositive motions. Fed. R. Civ. P. 72(b).
Section 636(b)(1) (A) of the Federal Magistrates Act lists the types of dispositive motions that
may not be determined by a magistrate judge; thus, any motion not listed, nor analogous to a motion
listed in this category, falls within the non-dispositive group of matters which a magistrate may
determine. Maisonville v. F2 Am., Inc., 902 F.2d 746, 74748 (9th Cir. 1990). Section 636(b)(1)(A)
does not contain an exhaustive list, so it is possible that a unlisted motion may be dispositive if the
effect of the motion has direct consequences on [a] defense . . . . United States v. Rivera-Guerrero,
377 F.3d 1064, 1068, 1069 (9th Cir. 2004).
Discovery-related motions are not listed in 636(b)(1)(A) and are ordinarily considered non-
dispositive because they do not have the effect of dismissing a cause of action. Gabriel Techs. Corp. v.
Qualcomm Inc., Case No. 08CV1992 AJB (MDD), 2012 WL 849167, at *2 (S.D. Cal. Mar. 13, 2012).
But because 636(b)(1)(A) calls for an effects test, the question is whether the discovery motion has
the effect of disposing of a claim or defense, that is, whether the party subject to the magistrate judges
adverse ruling is precluded from going forward as a legal matter or whether the party can go forward
on other evidence if available. See, e.g., Shared Memory Graphics, LLC v. Apple Inc., Case No. C 10-
2475 MMC, 2011 WL 5320749, at *3 (N.D. Cal. Nov. 2, 2011) (finding a motion to strike patent
infringement contentions dispositive because the ruling as a matter of law precludes the introduction of
any evidence on the claim of infringement, which goes beyond the ordinary scope of discovery orders
and becomes dispositive. (emphasis in original)). But see Jesselson v. Outlet Assocs. of Williamsburg,
Ltd. Pship, 784 F. Supp. 1223, 1228 (E.D. Va. 1991) (finding ruling excluding evidence non-
dispositive, even though plaintiffs had no evidence by which to prove their case and cannot expect to
prevail).
Both sides advance plausible arguments about the effect of Magistrate Judge Kentons ruling.
Plaintiff believes this ruling is not dispositive because it excluded only one piece of evidence and there
might be other evidence by which Defendant could provide his section 1716(c)(2) fraud defense. From
Defendants perspective, he pled his section 1716(c)(2) defense narrowly, based on only the theory that
SCI La Pausa provided misleading, fraudulent statements to the French court that compounded by
various procedural limitations on discovery allowed SCI La Pausa to gain a judgment by fraud.
(Docket No. 34 at 11, 18.) If Magistrate Judge Kentons reasoning is correct that this defense
impermissibly challenges the judgment based on intrinsic fraud and the letters rogatory therefore seek
irrelevant information then that could very well dispose of this entire defense, no matter how much
other evidence could be mustered to support it. In the end, the Court need not resolve the parties
dispute. Even reviewing Magistrate Judge Kentons ruling de novo, his denial of Defendants requested
discovery was correct.
DISCUSSION
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 11-10483 ABC (VBKx) Date August 6, 2012
Title SCI La Pausa v. Arnold Leon Schroeder, Jr.
A. Procedural Issues
Each party raises procedural issues that, if accepted, would obviate the Courts need to reach the
merits of Defendants motion. The Court finds none of these contentions persuasive.
1. Timeliness of Defendants Motion
Plaintiff initially argues that the Court should not reach the merits of Defendants motion
because it was untimely. As noted above, any challenge to a magistrate judges ruling or
recommendation whether dispositive or non-dispositive must be made within 14 days of service of
the ruling or recommendation. Fed. R. Civ. P. 72(a), (b); Local Rule 72-2.1. Here, although Magistrate
Judge Kentons order was dated June 15, 2012, it was docketed and electronically served on June 18,
2012. (Docket No. 38, Notice of Electronic Filing.) Defendant filed the instant motion on July 2, 2012,
exactly 14 days after electronic service of the order. The motion is therefore timely.
2. New Arguments Raised in Motion
Plaintiff urges the Court to ignore some portions of Defendants brief here because they contain
arguments that were not raised either in Defendants initial ex parte application or in his ex parte request
for clarification. (Opp. 12 (citing Mot. 12:1613:1, 14:1616:10, 17:118:7, 19:322:22).) The Court
has reviewed the briefing before Magistrate Judge Kenton and finds that, with one exception, the
matters raised by Defendant here are sufficiently encompassed in the prior briefing to avoid waiver.
Although the briefing is not identical to the briefing before Magistrate Judge Kenton, this is not a
circumstance in which the parties litigate[d] fully their case before the magistrate, but when
unsuccessful, change[d] their strategy and present[ed] a different theory to the district court, which
would frustrate the purpose of the Magistrates Act. Greenhow v. Secy of Health & Human Servs.,
863 F.2d 633, 638 (9th Cir. 1988), overruled on other ground by United States v. Hardesty, 977 F.2d
1347, 1348 (9th Cir. 1992) (en banc) (per curiam).
The one exception to this ruling is Defendants newly raised arguments that the letters rogatory
are relevant to defenses other than fraud, such as the defenses in subsections 1716(c)(3), (4), and (8). In
his initial ex parte application for discovery, Defendant argued only that the requested discovery was
relevant to his fraud defense. (Docket No. 36 at 3, 89.) In opposing the application, Plaintiff also
focused only on the fraud defense in section 1716(c)(2). (Docket No. 37 at 25, 69.) And in denying
the ex parte application, Magistrate Judge Kenton analyzed only section 1716(c)(2). (Docket No. 38.)
Defendant cited other portions of section 1716(c) for the first time in his ex parte application to clarify
Magistrate Judge Kentons ruling (and even then only in passing). (Docket No. 39 at 9.) By that time,
though, it was too late because Defendant failed to show that he could not have raised these arguments
earlier, see Local Rule 7-18, and, in any case, he has not sought review of Magistrate Judge Kentons
denial of the motion to reconsider. Thus, the Court will only consider Defendants discovery request in
the context of fraud under section 1716(c)(2).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 11-10483 ABC (VBKx) Date August 6, 2012
Title SCI La Pausa v. Arnold Leon Schroeder, Jr.
3. Scope of the Courts Ruling Allowing Discovery
Defendant contends that this Courts order generally allowing discovery in this case disposed of
his specific argument here that the letters rogatory should issue. The Court rejects this argument. Even
though Defendant referred to letters rogatory as possible discovery in the course of supporting his
request to open discovery, the Court expressed no opinion on the discoverability of any specific
evidence. Going forward, each discovery request must be evaluated individually to determine whether it
seeks relevant evidence under the limited grounds set out in section 1716(c).
4. Defendants Answer
Defendants contend that Plaintiffs challenge to his discovery here should be barred because
Plaintiff has not challenged Defendants defenses on the merits. Defendant cites no authority for this
proposition and the Court finds it unpersuasive.
B. Merits of Defendants Discovery Request
Parties may obtain discovery regarding any nonprivileged matter that is relevant to any partys
claim or defense, and discoverable evidence need not be admissible at trial, so long as the discovery
appears reasonably calculated to lead to the discovery of admissible evidence. Fed. R. Civ. P.
26(b)(1). Relevance in the context of discovery is broad, encompassing any matter that bears on, or
that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.
Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978).
In this case, in order to determine whether the letters rogatory seek relevant evidence under Rule
26(b)(1), the Court must determine the scope of Defendants fraud defense under section 1716(c)(2). As
part of the scheme in California governing the recognition of foreign-country judgments, section 1716
sets forth both mandatory and discretionary grounds to deny recognition of a foreign judgment.
Subsection (c)(2) is one discretionary ground that allows the Court to refuse recognition if [t]he
judgment was obtained by fraud that deprived the losing party of an adequate opportunity to present its
case. 1716(c)(2). The prior version of the Act provided that a foreign judgment need not be
recognized if [t]he judgment was obtained by extrinsic fraud. Cal. Code Civ. P. 1713.4(b)(2)
(repealed Dec. 31, 2007). The statutory change did not substantively change the standard for fraud
sufficiently to defeat recognition of a foreign judgment. The legislative history of this change confirms
that it incorporates the standard for extrinsic fraud:
This provision updates existing law which provides that a judgment need not be
recognized if it was obtained by extrinsic fraud. Courts have interpreted this
provision over the years, and have described extrinsic fraud as conduct of the
prevailing party that deprived the losing party of the opportunity to present its
case. Examples of extrinsic fraud are where the plaintiff deliberately served the
defendant at the wrong address, deliberately gave the defendant the wrong
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 11-10483 ABC (VBKx) Date August 6, 2012
Title SCI La Pausa v. Arnold Leon Schroeder, Jr.
information on the time and date and place of a hearing, or obtained a default
judgment against the defendant based on a forged confession of judgment.
Cal. Bill Analysis, S.B. 639 at 12 (May 8, 2007).
The current language is also similar to language California courts have used for decades to
define extrinsic fraud. See, e.g., Westphal v. Westphal, 20 Cal. 2d 393, 397 (1942) (Fraud or
mistake is extrinsic when it deprives the unsuccessful party of an opportunity to present his case to the
court.); Home Ins. Co. v. Zurich Ins. Co., 96 Cal. App. 4th 17, 2627 (2002) (Fraud is extrinsic
where the defrauded party was deprived of the opportunity to present his or her claim or defense to the
court, that is, where he or she was kept in ignorance or in some other manner, other than from his or her
own conduct, fraudulently prevented from fully participating in the proceeding.); San Diego Cnty.
Health & Human Servs. Agency v. Filiberto G. (In re Margarita D.), 72 Cal. App. 4th 1288, 1294 (1999)
(Extrinsic fraud usually arises when a party is denied a fair adversary hearing because he has been
deliberately kept in ignorance of the action or proceeding, or in some other way fraudulently prevented
from presenting his claim or defense.); City & Cnty. of San Francisco v. Cartagena, 35 Cal. App. 4th
1061, 1067 (1995) (same); Janetsky v. Avis, 176 Cal. App. 3d 799, 811 (1986) (same); Stevenot v.
Stevenot (In re Marriage of Stevenot), 154 Cal. App. 3d 1051, 106869 (1984) (same).
Generally, the introduction of perjured testimony or false documents, or the concealment or
suppression of material evidence is deemed intrinsic fraud, rather than extrinsic fraud. Home Ins. Co.,
96 Cal. App. 4th at 27; see also Cedars-Sinai Med. Ctr. v. Super. Ct., 18 Cal. 4th 1, 1011 (1998);
Kachig v. Boothe, 22 Cal. App. 3d 626, 634 (1971); Bonner v. Bonner (In re Adoption of Bonner), 260
Cal. App. 2d 17, 22 (1968).
1
The claimed fraud here an alleged misrepresentation by Plaintiff during
the course of the French proceeding is intrinsic because it had nothing to do with Defendants notice
or opportunity to defend himself in that court or otherwise fully litigate his case. It is precisely the kind
of fraud that did not deprive[] [Defendant] of an adequate opportunity to present [his] case, as
required by section 1716(c)(2).
Citing cases arising in the arbitration context and under Federal Rule of Civil Procedure 60(b),
1
Defendant cites two cases to suggest that submitting false evidence is not always intrinsic fraud,
but both cases are distinguishable because they involved acts beyond the mere submission of false
evidence. In Kougasian v. TMSL, Inc., 359 F.3d 1136, 1140 (9th Cir. 2004), the court treated the last-
minute submission of a false declaration as extrinsic fraud when the submitting party prevented the
opposing party from questioning the declarant. Likewise, in Stenderup v. Broadway State Bank of L.A.,
219 Cal. 593, 59697 (1933), allegedly fraudulent bank notes were given to the plaintiff in the
underlying action for the fraudulent purpose of preventing information as to the status of these notes
from reaching plaintiff, which prevented the plaintiff from controvert[ing] the account as tendered to
the court by the said bank. Unlike in these cases, Defendant alleges here only that Plaintiff submitted
false information in the French proceedings, not that Plaintiff then took other steps to prevent
Defendants full participation in the French proceedings to expose the fraudulent evidence.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 11-10483 ABC (VBKx) Date August 6, 2012
Title SCI La Pausa v. Arnold Leon Schroeder, Jr.
Defendant argues that section 1716(c)(2) is no longer limited to extrinsic fraud, but instead reflects a
slight shift from the accepted definition of extrinsic fraud outlined above to a more lenient standard.
See, e.g., Pour le Bebe, Inc. v. Guess? Inc., 112 Cal. App. 4th 810, 82829 (2003) (explaining difference
between fraud necessary to set aside a judgment versus fraud necessary to vacate an arbitration award);
Pac. Crown Distribs. v. Bhd. of Teamsters, Local 70, 183 Cal. App. 3d 1138, 114748 (1986) (applying
extrinsic fraud definition under statutes governing review of arbitration awards); see also Kalt v. Hunter
(In re Hunter), 66 F.3d 1002, 1005 (9th Cir. 1995) (noting that Rule 60(b) largely abolished the
distinction between extrinsic and intrinsic fraud for setting aside judgments in federal court). In
Defendants view, the fraud covered by section 1716(c)(2) should be relaxed here because discovery is
not available in the French proceedings. See, e.g., Home Ins. Co., 96 Cal. App. 4th at 27 (noting that
intrinsic fraud can arise in some cases when the defendant failed to take advantage of liberal discovery
policies to fully investigate his or her claim).
This interpretation of section 1716(c)(2) is not persuasive for several reasons. First, this
interpretation conflicts with the statutory language and the legislative history of section 1716(c)(2).
Under the statute, any fraud must deprive[] the losing party of an adequate opportunity to present its
case. There is no reason to think that the fraud alleged here which clearly falls outside the language
of section 1716(c)(2) could be transformed into fraud within the statute simply because the procedural
context in which it arose did not include discovery. At common law, the extrinsic/intrinsic fraud
distinction was based largely on equitable considerations, which could very well include considering
whether the defendant had an adequate opportunity to discover the alleged fraud during the underlying
proceedings. See Westphal, 20 Cal. 2d at 397; Home Ins. Co., 96 Cal. App. 4th at 27. If there was any
significance to the legislatures change of language in section 1716(c)(2) (which the Court doubts), it
was away from this equitable balancing, and toward a straightforward test applying the statutory text.
Second, to accept Defendants argument would eviscerate section 1716(c)(2) by allowing a
defendant to raise any type of fraud claim to defeat recognition of a judgment from any country that
does not allow civil discovery (such as France). This case is a perfect example: Defendant has alleged
that Plaintiff lied to the French courts on issues having nothing to do with whether Defendant could
adequately present his case. Yet he argues that the lack of discovery somehow transforms that
quintessentially intrinsic fraud into fraud that deprived [him] of an adequate opportunity to present
[his] case. If he were correct, any allegation of fraud in the course of this or any other French
proceeding would defeat recognition under section 1716(c)(2). The legislature plainly did not intend
this result.
Finally, even accepting Defendants interpretation of section 1716(c)(2), the availability of
discovery is at most only one factor to consider in deciding not to recognize a foreign judgment due to
fraud under section 1716(c)(2). Cf. Home Ins. Co., 96 Cal. App. 4th at 27 (noting other circumstances
amounting to merely intrinsic fraud). And as a factor it is not persuasive enough to defeat recognition
here, since Defendant has not demonstrated that he could not have otherwise protected himself from the
alleged fraud, even absent formal discovery. Id. (noting that intrinsic fraud can include fraud that goes
to an issue involving the merits of the prior proceeding which the moving party should have guarded
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. CV 11-10483 ABC (VBKx) Date August 6, 2012
Title SCI La Pausa v. Arnold Leon Schroeder, Jr.
against at that time).
2
Thus, because Defendants allegations of fraud under section 1716(c)(2) implicate only intrinsic
fraud not covered by the statute, any discovery sought to prove them, including the letters rogatory, is
irrelevant and therefore beyond the scope of Rule 26(b)(1).
CONCLUSION
Reviewing the matter de novo, the Court AFFIRMS Magistrate Judge Kentons denial of
Defendants request for letters rogatory.
IT IS SO ORDERED.
:
Initials of Preparer AB
2
The Court GRANTS Defendants request for judicial notice (Docket No. 44), but finds none of
the documents persuasive in this circumstance.
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ORDER GRANTING MOTION TO QUASH
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

SCI LA PAUSA, a French corporation
Plaintiff

v.

Arnold Leon Schroeder, Jr.

Defendant.

Civil Action No. __________________

(pending in the U.S. Central District of
California, Cause No. 2:11-cv-10483 ABC)

[PROPOSED] ORDER QUASHING SUBPOENAS TO
EDWARD A. COPLEY AND AKIN GUMP STRAUSS HAUER & FELD LLP

Before the Court is Edward A. Copley and Akin Gump Strauss Hauer & Feld LLPs
Motion to Quash Subpoenas, filed August 24, 2012. Having considered the arguments of
counsel and the applicable law, the Court is of the opinion that the Motion to Quash should be
and hereby is GRANTED.
Therefore it is hereby ORDERED that the subpoenas served on August 1, 2012 to
Edward A, Copley and Akin Gump Strauss Hauer & Feld LLP by Arnold Leon Schroeder, Jr. are
hereby QUASHED.
SO ORDERED.

DATED ______________, 2012
_________________________________

UNITED STATES DISTRICT JUDGE
Case 3:12-mc-00081-B Document 1-11 Filed 08/24/12 Page 1 of 1 PageID 211
JS 44 (Rev. )
CIVIL COVER SHEET
The JS 44 civil cover sheet and the inIormation contained herein neither replace nor supplement the Iiling and service oI pleadings or other papers as required by law, except as provided
by local rules oI court. This Iorm, approved by the Judicial ConIerence oI the United States in September 1974, is required Ior the use oI the Clerk oI Court Ior the purpose oI initiating
the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)
I. (a) PLAINTIFFS DEFENDANTS
(b) County oI Residence oI First Listed PlaintiII County oI Residence oI First Listed DeIendant
(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)
NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF
THE TRACT OF LAND INVOLVED.

(c) Attorneys (Firm Name, Address, and Telephone Number) Attorneys (If Known)
II. BASIS OF 1URISDICTION (Place an X in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an X in One Box for Plaintiff)
(For Diversity Cases Only) and One Box for Defendant)
u 1 U.S. Government u 3 Federal Question PTF DEF PTF DEF
PlaintiII (U.S. Government Not a Party) Citizen oI This State u 1 u 1 Incorporated or Principal Place u 4 u 4
oI Business In This State
u 2 U.S. Government u 4 Diversity Citizen oI Another State u 2 u 2 Incorporated and Principal Place u 5 u 5
DeIendant (Indicate Citizenship of Parties in Item III) oI Business In Another State
Citizen or Subject oI a u 3 u 3 Foreign Nation u 6 u 6
Foreign Country
IV. NATURE OF SUIT (Place an X in One Box Only)
CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES
u 110 Insurance PERSONAL IN1URY PERSONAL IN1URY u 625 Drug Related Seizure u 422 Appeal 28 USC 158 u 375 False Claims Act
u 120 Marine u 310 Airplane u 365 Personal Injury - oI Property 21 USC 881 u 423 Withdrawal u 400 State Reapportionment
u 130 Miller Act u 315 Airplane Product Product Liability u 690 Other 28 USC 157 u 410 Antitrust
u 140 Negotiable Instrument Liability u 367 Health Care/ u 430 Banks and Banking
u 150 Recovery oI Overpayment u 320 Assault, Libel & Pharmaceutical PROPERTY RIGHTS u 450 Commerce
& EnIorcement oI Judgment Slander Personal Injury u 820 Copyrights u 460 Deportation
u 151 Medicare Act u 330 Federal Employers` Product Liability u 830 Patent u 470 Racketeer InIluenced and
u 152 Recovery oI DeIaulted Liability u 368 Asbestos Personal u 840 Trademark Corrupt Organizations
Student Loans u 340 Marine Injury Product u 480 Consumer Credit
(Excl. Veterans) u 345 Marine Product Liability LABOR SOCIAL SECURITY u 490 Cable/Sat TV
u 153 Recovery oI Overpayment Liability PERSONAL PROPERTY u 710 Fair Labor Standards u 861 HIA (1395II) u 850 Securities/Commodities/
oI Veteran`s BeneIits u 350 Motor Vehicle u 370 Other Fraud Act u 862 Black Lung (923) Exchange
u 160 Stockholders` Suits u 355 Motor Vehicle u 371 Truth in Lending u 720 Labor/Mgmt. Relations u 863 DIWC/DIWW (405(g)) u 890 Other Statutory Actions
u 190 Other Contract Product Liability u 380 Other Personal u 740 Railway Labor Act u 864 SSID Title XVI u 891 Agricultural Acts
u 195 Contract Product Liability u 360 Other Personal Property Damage u 751 Family and Medical u 865 RSI (405(g)) u 893 Environmental Matters
u 196 Franchise Injury u 385 Property Damage Leave Act u 895 Freedom oI InIormation
u 362 Personal Injury - Product Liability u 790 Other Labor Litigation Act
Med. Malpractice u 791 Empl. Ret. Inc. u 896 Arbitration
REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS Security Act FEDERAL TAX SUITS u 899 Administrative Procedure
u 210 Land Condemnation u 440 Other Civil Rights u 510 Motions to Vacate u 870 Taxes (U.S. PlaintiII Act/Review or Appeal oI
u 220 Foreclosure u 441 Voting Sentence or DeIendant) Agency Decision
u 230 Rent Lease & Ejectment u 442 Employment Habeas Corpus: u 871 IRSThird Party u 950 Constitutionality oI
u 240 Torts to Land u 443 Housing/ u 530 General 26 USC 7609 State Statutes
u 245 Tort Product Liability Accommodations u 535 Death Penalty IMMIGRATION
u 290 All Other Real Property u 445 Amer. w/Disabilities - u 540 Mandamus & Other u 462 Naturalization Application
Employment u 550 Civil Rights u 463 Habeas Corpus -
u 446 Amer. w/Disabilities - u 555 Prison Condition Alien Detainee
Other u 560 Civil Detainee - (Prisoner Petition)
u 448 Education Conditions oI u 465 Other Immigration
ConIinement Actions
V. ORIGIN
TransIerred Irom
another district
(specify)
(Place an X in One Box Only)
u 1 Original
Proceeding
u 2 Removed Irom
State Court
u 3 Remanded Irom
Appellate Court
u 4 Reinstated or
Reopened
u 5 u 6 Multidistrict
Litigation
VI. CAUSE OF ACTION
Cite the U.S. Civil Statute under which you are Iiling (Do not cite jurisdictional statutes unless diversity):

BrieI description oI cause:
VII. REQUESTED IN
COMPLAINT:
u CHECK IF THIS IS A CLASS ACTION
UNDER F.R.C.P. 23
DEMAND $ CHECK YES only iI demanded in complaint:
1URY DEMAND: u Yes u No
VIII. RELATED CASE(S)
PENDING OR CLOSED:
(See instructions):
JUDGE DOCKET NUMBER
DATE SIGNATURE OF ATTORNEY OF RECORD
FOR OFFICE USE ONLY
RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE
Edward A. Copley, and
Akin Gump Strauss Hauer & Feld LLP
Dallas
Fish & Richardson, P.C., 1717 Main Street, Suite 5000,
Dallas, TX 75201
Arnold Leon Schroeder, Jr.
Philip K. Lem, 4 Park Plaza, Ste 1100, Irvine, CA 92614
FRCP 45
Motion to Quash Subpoena under FRCP 45
Hon. Jane Boyle; Hon. Audrey Collins 3:11-cv-0525-B; cv11-10483
08/24/2012 Thomas M. Melsheimer
Case 3:12-mc-00081-B Document 1-12 Filed 08/24/12 Page 1 of 1 PageID 212