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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE IN RE: NEW CENTURY TRS HOLDINGS, INC., ET AL., Debtor. ) ) ) ) ) ) ) ) Chapter 11 Case No. 07-10416 (KJC) Jointly Administered Wilmington, Delaware May 27, 2009

TRANSCRIPT OF HEARING BEFORE THE HONORABLE KEVIN J. CAREY UNITED STATES BANKRUPTCY JUDGE APPEARANCES: For Liquidating Trustee and Plan Administrator: DAVID CARICKHOFF, ESQUIRE ELIZABETH SLOAN, ESQUIRE Blank Rome, LLP 1201 Market Street Suite 800 Wilmington, Delaware 19801 JANINE CERBONE, ESQUIRE MARK POWER, ESQUIRE Hahn & Hessen, LLP 488 Madison Avenue 15th Floor New York, New York 10022 For the Debtors: GARY TELL, ESQUIRE OMelveny & Myers, LLP 400 South Hope Street Los Angeles, California ROBERT J. KEACH, ESQUIRE Bernstein Shur 100 Middle Street Portland, Maine 04104

90071

For Ad Hoc Committee of Deferred Compensation Plan:

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APPEARANCES (continued): For Leslie Marks: For Janet Longo and Alfonso J. Longo: Audio Operator: Transcribed by: LESLIE P. MARKS, IN PRO PER JANET LONGO, IN PRO PER

AL LUGANO DIANA DOMAN TRANSCRIBING P. O. Box 129 Gibbsboro, New Jersey 08026 Off: (856) 435-7172 Fax: (856) 435-7124 Email: dianadoman@comcast.net

Proceedings recorded by electronic sound recording; transcript produced by transcription service.

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ARGUMENT: By: By: By: By: By: By: By: Ms. Longo Ms. Cerbone Mr. Power Mr. Keach Ms. Marks Mr. Augustine Mr. Carikoff 7 10, 30, 35 16 22 32, 37 44 46

THE COURT: Ruling 13, 38

CLERK:

All rise.

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THE COURT: MS. SLOAN:

Good morning, everyone. Good morning, Your Honor. Elizabeth

Sloan of Blank Rome on behalf of New Century Liquidating Trust and Trustee. Your Honor, I assume you received the second If not, I have an extra copy.

amended agenda this morning. THE COURT: MS. SLOAN:

I have it. Okay. On the agenda, items number 1 For item number 18, that is And, that claim is

through 17 have been continued.

related to Cedric Mohammads claim.

currently under advisement as Mr. Mohammad has until June 1st to file his proposed finding of facts and conclusions of law. As to item number 19 regarding the motion for reconsideration of the order disallowing the Longo claim, Janine Cerbone of Hahn & Hessen will be taking this matter. THE COURT: MS. SLOAN: MS. CERBONE: Very well. Thank you. Good morning, Your Honor. Janine

Cerbone from Hahn & Hessen on behalf of the Liquidating Trustee. Your Honor, as this is the Longos motion to

reconsider, would you like to allow Ms. Longo to go through her motion before we -- we respond or would you like us to give the Court a little bit of background? THE COURT: the telephone. MS. MARKS: Yes. Good morning, Your Honor. This is Let me first confirm that Ms. Marks is on

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Leslie Marks. THE COURT: MS. MARKS: THE COURT: MS. CERBONE: interrupt. Good morning. This is Judge Carey.

Good morning, Judge. Well, there are two things -Your Honor, Im sorry. I dont mean to

But, this is actually the Longo motion. THE COURT: Im sorry, Longo. Forgive me. Im

confusing it.

All right.

Lets -- I had some preliminary Ms. Longo, I received

thoughts, so bear with me for a moment. your December 4th letter.

And, it followed, according to the

submissions that Ive read -- you know, five months after we had a hearing on the claim objection, at which you did not appear, and after I had entered an order. What I normally do with pro se litigants -- that is litigants who are representing themselves -- is, when I get a letter like yours, I give you the -- I call it a motion for reconsideration of the order, and I consider it an opportunity for you to tell me -- in your case it would be why the proof of claim was filed late, why no one appeared at the hearing, and why it took so long for you to send me the letter after the order was entered disallowing your claim. This is really -- before we even get to anything on the merits of what you claim to be due to you in this case, procedurally I must first address these issues of lateness and to determine whether, in plain words, you have an adequate

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Longo - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Longo. reason for that. So, thats where Id like you to start. (Pause). Did you

before you do, bear with me for one more moment.

entered an order on the 23rd of April of this year. receive a copy of that order? MS. LONGO: Good morning, Judge.

This is Janet I --

Thank you for giving me the opportunity to speak. THE COURT: MS. LONGO: THE COURT: MS. LONGO: THE COURT: Ms. Longo, -Yes, Judge.

-- did you -- did you hear my question? No. Did you -- have you received a copy of my

April 23rd, 2009 order? MS. LONGO: THE COURT: Yes, sir. Okay. In it, the order provides that --

Ill hear you by telephone, but I will not hear sworn testimony by telephone, because I find it difficult, if not impossible, to judge the veracity of a witness when I cant see and hear them at the same time almost always in person. And, as I said

to you just now, you need to convince me, as a preliminary matter, that you have a good reason for the lateness in these filings. MS. LONGO: THE COURT: Okay. So, Id like you to start there. But, But,

understand what you say I cannot consider as evidence. Ill give you the chance --

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Longo - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Court. MS. LONGO: THE COURT: MS. LONGO: I understand. -- Ill give you the chance to be heard. Thank you. Originally, when all of this

took place, it took quite some time for us to find an attorney that was willing to take this on a contingency basis. By the

time we found an attorney that was willing to take it, they sent in the paperwork, and it turns out that it was later than what was allowed. reconsider. I received the paper giving us the -- a time. And, I I sent the letter asking for you to

made an error because I thought that the Court contacted us. Nowhere in the letter that I received did it say that I was supposed to call in for a telephonic appearance. So, I

contacted the Court, I guess it was after the Court started and the hearing started, and they said it was too late. So, thats -- it was a misunderstanding on -- I guess on my part. But, it wasnt that I -- I was, you know, not I just thought that I was So, I kept my line

doing what you asked me to do.

supposed to get a call from the Court. open.

And, when I didnt hear from anyone, I called the And, they said it was too late. And, I looked over the

paper that was sent saying that we were going to be given another chance. And, nowhere on that letter did it state that

I needed to call in.

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Longo - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to me. it. beginning. So, I resubmitted another letter asking you to allow us to be heard again.

And, thats -- and, then I received this

letter saying that -- actually it was a while back -- we were in -- sat in on the line, but you didnt call our case at that point. And, then I continued to check, and they told us to

call in today. THE COURT: Well, lets -- lets start at the

I entered an order in June of 2007 fixing August

31st, 2007 as the bar date; that is the time by which claims had to be filed. Your claim was filed in January of 2008. Why was

your claim filed late? MS. LONGO: It was the attorneys that were handling

I guess they -- they sent it in -- well, actually we By the time I had gotten

retained the attorneys in October.

all of the information that they needed to them, they submitted everything. up. But, I wasnt sure of the policies, and this is new And, it took quite some time to find an attorney that So, they -- I guess, And, I guess it was that -- thats what held it

was willing to take on this type of case. they sent it in. late.

And, when they sent it, it was -- it was

But, I had received something from Crossroads stating that we were going to be able to participate in this. didnt -- never heard anything again. And, I

So, I called again, and

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Longo - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 notice? MS. LONGO: I -- well, when I -- I didnt get any of And, I just assumed that And, later on, I spoke with someone who said that that was a standard letter that went out to everybody that had -- you know, had a notice of claim filed on their behalf. So, I -- I really didnt quite know what to expect and what -- you know, what was going on. And, I -- as it

started to come, and I started getting other letters, and I started to make phone calls, thats when I found out that it was -- it was late filing. And, then I did send you a letter, and you allowed us to, I guess, be heard. And, there was a mixup. I thought that

I was supposed to wait for a call.

And, when I realized that

that didnt take place, I contacted the Court, but it was too late. THE COURT: But, were you aware that there was a

deadline for filing claims? MS. LONGO: THE COURT: No, sir. Are you saying you didnt receive the

that, the original attorneys did.

they did what they were supposed to on time.

when I started getting all the paperwork faxed to us because the -- the attorneys decided that they didnt want the case anymore, it sort of left us up in the air. I -- I was trying

to grab hold of everything and, you know, take care of it again

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Cerbone - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 until I was -- you know, had everything said. THE COURT: Liquidating Trustee. MS. CERBONE: Thank you, Your Honor. Again, Janine Your All right. Let me hear from the

Cerbone from Hahn & Hessen on behalf of the Trustee.

Honor, I just wanted to point out a couple of the dates here. As you recognized, the bar date order had been entered in June. That notice was filed in July of 07, July 9th, setting August 31st as the bar date. Janet Longo had filed a complaint in the District Court in New Jersey against a number of parties, including New Century, for the same cause of action on which I believe her claim is based on September 12th of 07. So, presumably, the

attorneys who had filed that complaint had been retained prior to the August 31st deadline, which was less than two weeks prior to that. When the proof of claim was filed, there was a different set of attorneys on the proof of claim. And, all

subsequent notices, notice of the omnibus objection and notice of the order granting the omnibus objection, all of those notices were served on the attorneys that were listed on the proof of claim, as well as on Ms. Longo herself. THE COURT: MS. CERBONE: And, where is the evidence of that? We had attached the declarations of

service of Crossroads to our -- I believe it was our objection

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Cerbone - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to the motion for reconsideration.

We attached the declaration

of service with respect to the omnibus objection. THE COURT: MS. CERBONE: All right. Sure. Let me get to that. Actually, Your Honor,

(Pause).

Im looking at the objection now.

And, Im not sure if it was

attached or just referenced by docket numbers. THE COURT: MS. CERBONE: by docket numbers. THE COURT: MS. CERBONE: And, it reflects service on -It reflects service on Janet Longo, as I didnt see it. Yeah. I think it was just referenced

well as her attorneys of record that were listed on the proof of claim. THE COURT: on Ms. Longo? MS. CERBONE: to find the declaration. It was -- let me just take two seconds (Pause). The Longos were served at 4 And, what address did you use for service

Friar Court, Jackson, New Jersey. THE COURT: MS. LONGO: THE COURT: MS. CERBONE: Ms. Longo, what address is that? 4 Friar Court is my home. Okay. And, we also served notice on attorney

Jennifer Simelli at Light, DePalmer, Greenberg & Revis, LLC in Newark, New Jersey. THE COURT: Ms. Longo, where do you reside now?

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Cerbone - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 agenda. THE COURT: MS. CERBONE: All right. (Pause). that date. moment? MS. LONGO: THE COURT:

At 4 Friar Court in Jackson, New Jersey. Well, I thought I made it clear in the

order that evidence was going to have to be presented in person. So, I -- I hear what your explanation is, but if -- if

you want to make a record on that in support of a consideration of going back to the claim objection, youre going to have to appear in person and testify under oath exactly what happened, what notices you received, when you received them, who you gave them to, which lawyers were representing you at the time, what you told them, and any other thing thats relevant to convincing the Court that I should consider your claim. MS. LONGO: to Delaware. THE COURT: MS. CERBONE: THE COURT: When is the next omnibus hearing? June 23rd. All right. We have an hour scheduled on Yes, sir. I -- we would make a trip down

What -- what else do we have then so far of any

Can you say? MS. CERBONE: Let me just take one quick look at the

Your Honor, there are a number of

claims objections that weve been continuing with respect to certain claims as were trying to settle those claims. There

shouldnt be many going forward at the next hearing because the

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Cerbone - Argument / The Court - Ruling 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 goal is to get as many resolved consensually as possible. The only other matter that may be going forward is the -- the Gregory Schroeder adversary against New Century. Theres a motion to dismiss thats been continued to the next hearing. Im not -- I havent been intimately involved in

those proceedings, but Im told that it may be going forward at the next hearing. MS. SLOAN: And, Your Honor, thats item number 22 on So, that may

the agenda which is set for a status conference. be affected. THE COURT:

Well, were just going to have to press

through this because this particular matter has been pending long enough. I will -- Ms. Longo,-Yes, sir. -- this is Judge Carey. Im going to

MS. LONGO: THE COURT:

have an evidentiary hearing on what Ive considered a motion to reconsider the order disallowing your claim for Tuesday, June 23rd at 1:00 in the afternoon. MS. LONGO: THE COURT: Okay. Now, the way this works is, with respect

to individuals who represent themselves, which you are perfectly entitled to do, the Court can offer some help in guiding you through the litigation. that so far. But, ultimately, you are the person whos responsible And, I think weve done

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The Court - Ruling 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 for meeting the necessary standards so that I can even get to decide whether I should rehear the claim objection hearing. And, it starts with why the claim was filed late.

Now, I will tell you the Liquidating Trustee tells me there is evidence you were served at your residence with a notice of the bar date. MS. CERBONE: And, -Im sorry, Your Honor, one correction.

She was served at her residence with the notice of the objection to her claim. THE COURT: MS. CERBONE: And, what about the bar date? The bar date it is unclear whether --

we werent able to obtain the mailing matrix because, at that time she wasnt a known creditor. So, its possible that she She didnt file

was not served with a notice of the bar date.

her complaint until after the bar date had passed. THE COURT: Well, then Ms. Longo may have the better But, then Ill need a

argument on -- on that part of it.

detailed explanation of what happened after that, and which lawyer handled what, and why the various deadlines have been missed. MS. LONGO: THE COURT: Okay. I will -- so, Ill need to judge your --

the credibility of your testimony on that and hear what -- what evidence, if any, in opposition to that the Liquidating Trustee has to offer.

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MS. LONGO: THE COURT: MS. LONGO: THE COURT: MS. LONGO:

Okay. And, then well go from there. Thank you so much. Do you have any questions? No, sir. Just that well be there at

And, I -- I guess the only other thing I -- I need to do

is find out where Im going. THE COURT: You can call the clerks office here and

theyll give you directions, or call my chambers and we can give you a general idea of how to get here. MS. LONGO: THE COURT: MS. LONGO: THE COURT: MS. LONGO: THE COURT: MS. LONGO: MS. CERBONE: MS. LONGO: MS. SLOAN: Okay. All righty? Thank you so much, Your Honor. Youre welcome. And, well see you then. All right. Thank you. Thank you, Your Honor. Bye-bye. Your Honor, the next item on the agenda

is the Liquidating Trusts motion regarding EPD breach claims. And, Mr. Power of Hahn & Hessen will be handling this matter. THE COURT: MR. POWER: Very well. Good morning, Your Honor. Mark Power Your

from Hahn & Hessen, counsel for the Liquidating Trustee.

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Power - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 approach? THE COURT: Yes. Thank you. Honor, weve had an estimation motion pending a few months --

actually, I thought we would -- were going to go forward today on a number of issues. But, midnight calls and early morning

calls have forced me to basically adjourn most of them. What I thought I would do though, since Im here anyway, is give Your Honor a chart, show where we are. My goal

in this is to have Your Honor have to not decide anything, to resolve all these claims without an evidentiary hearing, and were getting close. Weve had, I think, a little bit over four billion of these claims filed. And, were -- weve so far reduced them I think, when were done,

and liquidated it into 140 million.

well be in the 350 to 400 range, which is consistent with the disclosure statement, actually on the low end. And, as Your Honor remembers from the protocol, its designed to be -- not be requi -- you know, basically be a mathematical calculation. We are running into a lot of

interesting issues regarding, you know, when the loans originated, when the reps were made, and things like that that were working through. The protocol wasnt as perfect as we

had predicted, but it is working through. THE COURT: MR. POWER: Well, next time youll have it down pat. Thats right, Your Honor. May I

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Power - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 claims. as well? MR. POWER: They did. Yes, Your Honor. American MR. POWER: Interesting enough, Your Honor, the

protocol has been adopted by three other cases in plans that have been confirmed in this court. So, this is the first one,

but hopefully well work through with those as well. THE COURT: So, someone else bought into that notion

Home -- Judge Sontchi approved it even though we had a contested confirmation. approved. approved. Your Honor, we are down to, as Your Honor can see, 12 And, I -- I do anticipate -- I would just quickly go Alaska Seaboard and SNGC are together. And, we And, in Delta, it recently was

And, Aegis, which is coming, hopefully will be

through them.

expect -- we have a stipulation thats expected to be signed within a few days. Deutsche Bank is the largest of the creditors because they were the trust -- largest trustee of securitizations. And, their issue is that they -- a lot of the loans that came from New Century were renumbered through other institutions that purchased the loans and then resecuritized. trying to track that through. claim. And, so were

That one is really a complicated

But, Im hopeful that, by the end of the month, well

have it done. Greenwich is the next one, Your Honor. And, weve

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Power - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

reached a settlement with Greenwich where the claim truthfully was quite small and ended up being less than $100,000. And, so

the simple thing to do was submit up an order which allows the claim on consent. So, Im representing to Your Honor that we -- that I have Greenwichs consent to submit the order and allow the claim in the amount. at the end -THE COURT: MR. POWER: Thats fine. -- of the presentation. Morgan Stanley, If its all right, Ill hand the order up

Your Honor, weve adjourned this for quite a while, and were working through these issues, their claim is complicated because not only do they have a repurchase claim, but they also are a large MR -- what we call an MRA creditor -- master repurchased agreement under repo. And, they have a deficiency

which were contesting, but were trying to resolve that. UBS, Your Honor, were in settlement negotiations, similar to Morgan Stanley. by the next month. And, we hope to have that resolved

Washington Mutual, interesting enough, this

is the one where I got a midnight call asking to adjourn. The attorney who represents Washington Mutual Mortgage and Washington Mutual Specialty Mortgage originally didnt think they were representing Washington Mutual Bank. It ended up As Your

that the firm was representing Washington Mutual Bank.

Honor may be aware, Washington Mutual has been acquired and

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Power - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 went through an insolvency proceeding with FDIC. So, we have agreed to adjourn that as a courtesy to the counsel. And, hopefully well have that resolved. Its just a matter of

We have

resolved number 11 and number 12.

getting number 10 resolved in a few days. THE COURT: MR. POWER: Okay. The last is Carrington which is -- I Its a -- its not

think is a separate item under the agenda. an estimation motion. claim.

Its a motion where we objected to the

If you recall, Carrington was the successful purchaser They -- they purchased

of the service business in this case.

approximately $700M in loans right before the bankruptcy. And, the way their system worked we had -- the -they would resell those loans in securitization, and they would basically require New Century to re-up its representations. And, they claim that New Century breached because it was in a position to make those representations in March of 07. So, its a slightly different claim than all the others that -- and, were trying to resolve that issue right now, and we hope to be -- have it resolved. issues with Carrington. We have about six

And, our idea is to just come up with If

a global resolution, so the trustee is working on that.

not, we will be before Your Honor on that one next month, and well see where it goes. at this point. Its primarily a contractual dispute

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THE COURT: MR. POWER:

Okay. Your Honor, I do have one other order But, it ends up when reviewing the

which isnt on the agenda.

prior order Your Honor entered, there was an error in one of them. One of the schedules listed the correct plan class, but

put the wrong debtor that the claimant was a claimant against. So, we have an order to submit up that would correct that error. No substantive changes beyond that. THE COURT: MR. POWER: All right. So, Your Honor, with those two changes, The trustee really wants The large unliquidated So,

thats where we are on this motion. to resolve this by the end of June.

claims is preventing distributions from going forward. its a key goal to get these reduced and resolved. But,

hopefully well get them all resolved before I see Your Honor next month. THE COURT: MR. POWER: THE COURT: MR. POWER: Okay. If I may approach? Yes. Thank you.

Your Honor, that -- that ends my So, if its okay with Your

contribution to this hearing. Honor, Id like to be excused. THE COURT: MR. POWER: MS. SLOAN:

You may be. Thank you. Your Honor, the next item upon on the

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agenda is Mr. Augustines petition for a stay of discovery matters pending the outcome of an emergency writ to the higher courts. Its item number 21. THE COURT: MS. SLOAN: Im not sure -THE COURT: Chambers received a telephone call He Yes. I dont see Mr. Augustine here today.

indicating he was on the highway and would be late. estimated his arrival time to be 11:00.

I note that its 11 Well see

now, but we still have a couple matters to address. where we are at the end of that. MS. SLOAN: Okay.

We can move on to item number 22

under the adversary matters. THE COURT: MS. SLOAN: Schroder litigation. Yes. This is a status conference on the I believe that Mr. Paul Friedman of Blank

Rome and Mr. Gary Tell of OMelveny & Myers is on the phone to handle the status conference on this matter. THE COURT: MR. TELL: All right. Your Honor, this is Gary Tell with Whats

OMelveny & Myers on behalf of the liquidating debtor.

pending before Your Honor is a number of motions including a motion to compel. And, I would step aside and allow the

plaintiffs to address that. MR. KEACH: Well, Your Honor, Bob Keach and Paul

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Keach - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 McDonald on the phone for the plaintiffs.

that the only thing thats on for today with respect to the status is a motion to compel. And, what we received recently

was the defendants ex parte -- I guess mislabeled ex parte motion for leave to file a surreply brief on the motion to compel. THE COURT: MR. KEACH: THE COURT: MR. KEACH: I received that -Perhaps we can --- late this morning. -- make short work of today. The

plaintiff has no opposition to the Liquidating Trustee filing a surreply. We also think, frankly, that the parties are talking

past each other on -- on the motion to compel and that probably another conversation between counsel will resolve the motion to compel and moot the need for the filing of the surreply. And, I would urge Mr. Tell and Mr. McDonald, whos also here to have that conversation. editorial comment. I say only by way of

But, to the point of the -- of the

substantive matter on for today, we have no objection to the filing of a surreply which would suggest to me that we should also therefore move the hearing on the motion to compel to the next omnibus date so that we can see what the surreply says. And -- and, as I said, I think a conversation between counsel will resolve these matters in any event. THE COURT: Well, I received late this morning --

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Keach - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 late meaning just before I took the bench -- a copy of the ex parte motion, there is no -- whats styled as an ex parte motion, there is no order accompanying it. But, given Mr.

Keachs statement, I would be willing to sign that now. MR. TELL: either, Your Honor. Yeah, we have not seen a form of order But, I assume that just simply grants them And, as I

leave to file the reply, which is as a surreply. said, we have no opposition to that. THE COURT: MS. SLOAN: All right.

Your Honor, there was a proposed form of I have a copy of

order, I believe, attached as Exhibit A. that. THE COURT: All right.

Bring that up, if you would, (Pause). Thank you.

because it wasnt in my chambers copy. All right.

Mr. Keach, I will tell you all it says is that --

that -- the decretal part of it is the -- the motion for leave to file is granted. The Liquidating Trustee shall file a

surreply within five days from entry of this order. MR. KEACH: Your Honor. Thats satisfactory to the plaintiffs,

Thats fine. All right. That order has been signed.

THE COURT:

I -- Ill tell you what.

I did have a question I was going to

ask, but in these kinds of matters, sometimes that just starts things that never end. So, Im willing to just -- I heard what

Mr. Keach said about maybe having one more conversation which

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may resolve the matters.

Ill hold my comment.

else wish to be heard in connection with this status? MR. KEACH: Yeah, I mean, we dont need to be -- mean I would simply add

to be mysterious about that, Your Honor.

that Im not sure that there is substantive disagreement between the parties with whats being alleged in the ex parte motion as to what has been produced and what remains to be produced. I think its a fairly technical and minor

distinction that the parties can work out and well be done with this issue. THE COURT: MR. KEACH: Okay. Anything further on this matter?

Not on the motions to compel, Your Honor.

I think while -- actually while we have everybody on the phone, just by way of a status report in general, we intend to file the -- the last of our motions for summary judgment, that being relating to the Top Hat matters next week. As I understand whats left, we filed a cross motion on the so-called remedies motion, and we need a reply from the defendants. And, then we would have -- we need an answering

brief from the defendants, and we would have a reply. I think once that sequence is done, including, of course, the answering brief and reply on our motion for summary judgment, I think well have all of the dispositive motions and well be able to submit a -- a completion of briefing certificate, and then well move on to the next phase of this.

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In the meantime, as -- as we said before, we continue to hope the talks will be productive. MR. TELL: Liquidating Trustee. Your Honor, this is Gary Tell for the Just a technical correction. Theres a

motion for partial summary judgment with respect to the status of the assets held in the Rabbi trust. 137 and 138. That motion has now been fully briefed and submitted. We were -- were inclined to file a notice of completion on the briefing with respect to that motion. MR. KEACH: Well, thats -- Your Honor, I mean, we Thats frankly just Thats at docket entry

have substantive disagreement about that. not accurate. opening brief.

We filed with our response a cross motion and an And, they can certainly file a response that

simply incorporates their previous brief and then we would have a reply, but it is by no means true that the briefing is closed on that. MR. TELL: I didnt understand that. This is Gary

Tell again for the Liquidating Trustee. filed was an opposition. MR. KEACH:

What I understand was

And, a cross motion for summ -- partial

summary judgment which -- to which you owe us a reply, which may, in fact, be late. But, Im not standing on that. And,

then we would have a reply to that.

Theres an answering brief And, then the

due from you and then a reply due from us.

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briefing will be closed on that motion. MR. TELL: My -- my understanding -- and, this is

secondhand -- again, Gary Tell for the Liquidating Trustee -is -- from your co-counsel is thats not correct, -MR. KEACH: MR. TELL: Well, --- that that brief is -- that that motion

is now fully briefed and submitted. MR. KEACH: I dont know what co-counsel youre

referring to, Gary, but I wrote that brief -MR. TELL: MR. KEACH: MR. TELL: MR. KEACH: with you, so -MR. TELL: this offline and -MR. KEACH: Yeah, we should. We dont have to waste We ought to -- then we ought to just take Paul McDonald --- and the motion. Paul McDonald. And, Paul is here, and he doesnt agree

more court time on this. THE COURT:

But, that matter is not --

Well, I think we -- counsel, I think, if

my memory serves me correctly, and youll correct me if it doesnt, we may have had some preliminary discussion about this when counsel gave me the heads up some time ago of what was coming down the line in the way of dispositive motions. And, I

think I indicated at the time my inclination would probably be to hear them all at once anyway, because I --

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 We -Honor.

MR. KEACH:

That was our recollection as well, Your

And, that there would be one certificate of completion And, then Your Honor would

as to all matters at the end.

select the order of consideration of the motions filed. THE COURT: say, Mr. Keach. the status? Okay. It sounds exactly like something I would Anything further then with respect to

See, thats, I think, really why you need to come Otherwise, youll just -We would -- we would love to, Your Honor.

to settlement on this. MR. KEACH:

THE COURT: MR. KEACH: THE COURT: MR. KEACH:

Youll be crushed -Well communicate with --- under the weight of the paper. -- with Mr. Tell and his co-counsel And,

offline, and I think well be able to resolve all this.

we -- we agree with Your Honors recollection of the prior status conference. So, I think -- I think, once everybody

talks to everybody they need to talk to, this will resolve itself. THE COURT: Well, I dont know. I had a thought.

Mr. Keach, do you have access to a place on the water? MR. KEACH: We -- we do, Your Honor. If youd like,

we can certainly do a -- a summit conference at many of our fine inns up here. THE COURT: Summer weekend, you know, nice setting.

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Everyone is nice and calm, a little barbeque, a little couple of crabs. MR. KEACH: THE COURT: MR. KEACH: Ill even buy the lobster, Your Honor. Wow, -Ill reserve a spot at the Black Point

Inn, and well get this done. THE COURT: Just a thought. All right. Anything

further on this matter? MR. KEACH: Honor. MR. TELL: Honor. THE COURT: MR. KEACH: excused? THE COURT: MR. KEACH: COUNSEL: excused? THE COURT: COUNSEL: MS. SLOAN: All right. Thank you, Your Honor. Your Honor, that brings us to item number You may. Thank you. Your Honor, may local counsel also be All right. Thank you. May we be Not from the Liquidating Trustee, Your Nothing further from the plaintiffs, Your

Thank you, Your Honor.

23 on the agenda, which is set for a pretrial conference regarding the Marks versus New Century matter. Cerbone will be handling this agenda item. And, Ms.

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Cerbone - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: All right. Let me ask -- go back to

where I started and ask if Ms. Marks is on the phone? MS. MARKS: THE COURT: Yes, Your Honor, Im here. All right. This is -- actually, until we

got the agenda, I wasnt aware that this matter was pending at all. Typically, immediately after the briefing is completed, I

would expect a notice of completion of briefing binder which we have not received so far as I know. MS. CERBONE: I dont believe the time has lapsed yet

for filing a notice of completion of briefing, is that correct, Liz? MS. SLOAN: you look under -MS. MARKS: MS. SLOAN: was filed on 5/21/09. the end of this week. THE COURT: in there for a moment. Okay. All right. Ms. Marks, just hang Your Honor, --- item number C, the reply memorandum So, we expect to be filing at this -- at Your Honor, Elizabeth Sloan. As -- if

The proceeding thats before me today

has been listed in the agenda as a pretrial conference. MS. MARKS: THE COURT: Right. And, the purpose of which is simply to

decide scheduling and other matters for -- for the adversary proceeding. So, first let me hear from the Liquidating

Trustee, and then Ill hear whatever it is youd like to tell

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Cerbone - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 me, okay? MS. MARKS: THE COURT: MS. CERBONE: Okay. All right. Thank you, Your Honor. Again, Janine

Cerbone from Hahn & Hessen on behalf of the Liquidating Trustee. Your Honor, I just wanted to walk through a brief

time line in terms of whats been filed and where we are today. And, then, I guess, address what we think is pending before today and where the next step should be. On April 25th of 07, Leslie Marks filed her proof of claim, and it was a timely filed claim. In -- on March 27th of

08, the debtors filed their 18th omnibus objection seeking to expunge that claim as having -- the debtor having no liability based on its books and records. On May 7th of 08, this Court

entered its order granting the debtors 18th omnibus objection and, in fact, expunging Ms. Marks claim. On February 27th of 09, Leslie Marks filed her complaint against New Century in this court. has started these instant proceedings. the trustee filed the motion to dismiss. And, thats what

On April 17th of 09, And, on April 26th of

09, Ms. Marks filed her opposition to the motion to dismiss. On May 21st of 09, the trustee filed its reply. The motion to dismiss is fairly simple. purely on legal grounds at this point. Its based

Given that Ms. Marks

claim has been expunged, the -- the trustees position is that

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Cerbone / Marks - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

it -- it would be a waste of estate and Ms. Marks resources to move forward with an adversary proceeding, pursuant to which she would have no means of recovery against the Trust, even if she were to get a judgment in her favor because she has no claim at this point against the estate. And, the second piece of the motion to dismiss is that, under the terms of the plan, the -- all parties that held claims against the Trust arising prior to the effective date of the plan are enjoined from filing any loss -- commencing any lawsuits or continuing any lawsuits against the Trust. THE COURT: Okay. Youre -- youre beginning to

argue the merits of your motion -MS. CERBONE: MS. MARKS: THE COURT: Im sorry, Your Honor. Thank you. -- which is really what Im not But, I did read it.

interested in getting into today. MS. CERBONE: THE COURT: Okay.

So, are you telling me that what you

think should happen is the Court should dispose of the motion to dismiss before any other pretrial activity should take place? MS. CERBONE: It would be the Trusts position that

bef -- before we were to spend any time and Ms. Marks would spend any time doing discovery and trying to determine whether the underlying claim had merit, putting aside these legal

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Marks - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 arguments, we would like the Court to decide whether the adversary should proceed based on those legal arguments. THE COURT: MS. MARKS: THE COURT: MS. MARKS: THE COURT: Okay. Hello? Yes. Oh, I couldnt hear. All right.

Ms. Marks, you heard what the

Liquidating Trustee said.

Did you understand and is there

anything you would like to tell me? MS. MARKS: Sure. Your Honor, I filed a law suit

against New Century in 2006 in California in Federal Court, as I put down as a related matter. The day before New Century

filed bankruptcy, one day -- Friday or something like that -they transferred my property to Ocklin (phonetic). And, its my understanding that, under the bankruptcy law, you cant transfer property for 90 days or something like that prior to filing. So, in the meantime, it has been

extremely difficult finding an attorney to represent me in subprime litigation from 2006 to present because, you know, its very new litigation, I guess. But, in any event, I filed the lawsuit in San Francisco against Ocklin. And, the Judge determined that I had It needed to be filed against

filed against the wrong person.

New Century because the initial transfer which happened before they filed bankruptcy and were protected by the automatic stay

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Marks - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 -- you know, it -- it just couldnt be determined exactly who was supposed to be holding my -- my mortgage.

Nobody has been

servicing it since New Century filed, even though Ocklin has been pursuing it in court. The related Court granted $25,000 against Tom Centrone (phonetic), who was the New Century employee. And,

she did not, you know, charge me any legal fees or anything against them. So, I went ahead and filed my claim here. But, number

I understand what the trustee is saying.

one, every document that I got -- and, it was numerous documents from Centrone. I checked every last one of them. I

never received the documents that had my property listed on it, not one. I went through the documents that I still have remaining here. property. I dont have a single document that lists my

I was never under any impression that my claim was I never received any notice that

invalid under -- at any time.

there was -- that my claim was invalid. So, my point is that the original transfer which happened the day before they filed bankruptcy was an invalid transfer. With all the subsequent stuff the trustee is talking

about as far as from what I could see in the law, they shouldnt have transferred it in the first place. It should

not have been transferred right before they did their bankrup --

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Marks - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MS. MARKS: THE COURT: interrupting. Ms. Marks? Yes. This is Judge Carey. Forgive me for

But, Id like to discourage you in the same way

I discouraged the Liquidating Trustee from getting into the merits -MS. MARKS: THE COURT: MS. MARKS: THE COURT: Right. -- of your claim. Okay. The purpose of todays hearing is

primarily to talk about process. MS. MARKS: THE COURT: MS. MARKS: THE COURT: Okay. Thank you. Uh-huh. So, let me -- let me go back to what I And, that

think the Liquidating Trustee is suggesting here.

is, instead of proceeding with any discovery or any other pretrial activity, the suggestion is that the Court decide the motion to dismiss. the end of it. However, if its not granted, then we would proceed with whatever normal pretrial activity there would be, discovery and -- and things of that nature. And, frankly Im And, if its granted, then that would be

-- Im inclined to -- to take that approach so that nobody is spending money or taking time beyond that which is necessary.

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Cerbone - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Trustee. But, I do have a question for the Liquidating

Accompanying the motion to dismiss is a declaration.

And, I guess the question I have is does that turn the motion to dismiss into a motion for summary judgment? MS. CERBONE: Procedurally, Your Honor, Im -- Im Weve done it We were

not sure, under the local rules, if it does.

that way -- I guess weve done it that way before.

just attaching the declaration for purposes of -- are we filing the declaration for purposes of attaching the documents that we wanted to file in support of the memorandum of law? THE COURT: Well, typically the way the rules work,

as I understand them, is that, on a motion to dismiss the Court can consider the allegations in the complaint, documents referred to in the complaint, a general statement. But, if the

parties submit other documents in connection with the motion to dismiss, the rules suggest that its appropriate to consider a summary judgment motion because youre asking the Court to consider evidence as opposed to sufficiency of pleading. MS. CERBONE: THE COURT: MS. CERBONE: of that rule. Okay. So, Id like your view on that. Im sorry, Your Honor. I was not aware

I do know -- and, I know that thats not a good But, I do know weve done it this

reason for doing anything. way before.

So, I think weve just tended to -- to do it this

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Marks - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 way.

It was also a little -- it was a little different in this

situation because we werent seeking to dismiss the complaint on any of the facts surrounding the causes of action or any of the merits of the actual complaint itself. It was simply

bankruptcy procedure that we were trying to introduce in -- for our grounds of dismissal. that regard. Its not necessarily evidence of the actual transaction or events giving rise to the complaint or giving rise to the causes of action. It was just -- it was simply So, I think its a little unique in

introduction of procedures that have taken place in this court which Im not sure that we even needed to necessarily introduce at this point. And, we -- we probably could have rested on the -the facts and the docket. But, we certainly didnt intend for

this to be a summary judgment motion because it wasnt on any of the meritorious grounds. THE COURT: It was procedural grounds. Ms. Marks, anything else on

All right.

-- on the motion to dismiss?

I will get to your request for But, anything else on

treatment in forma pauperis in a moment. the motion to dismiss? MS. MARKS: THE COURT:

So, we are here on the motion to dismiss? No. What were doing is deciding that

procedurally what were going to do is -- and, Ill ask the Liquidating Trustee to just draft a form of order that says

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Marks - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 about it? that, pending disposition of the motion to dismiss by the Court, there will be no further pretrial activity. MS. MARKS: THE COURT: MS. MARKS: Okay. Okay? Well, no.

But, -- I mean, what can I do And,

I just received their reply yesterday.

according to local rule 7007-1, they were supposed to reply five days after receiving mine. yesterday. And, you know, I just got that

And, then I talked to the Court, they hadnt

submitted their binder and these other things. And, I just -- I am just frustrated. have been trying to get this -- this handled. Since 2006, I New Century and

Ocklin have my credit report with the same loan -- I mean, theyre ruining my life here. And, I -- I mean, after -- if What happens to my property?

you dismiss this, where do I go? THE COURT:

Well, the -- the Liquidating Trustee, in So, I am

his motion to dismiss, has raised threshold issues.

going to decide them first before we move forward with this litigation. MS. MARKS: THE COURT: Okay. Now, lets address your request for in

forma pauperis treatment and other -- other relief, I guess, Ill -- Ill say it that way. Let me ask if the Liquidating

Trustee has received a copy of Ms. Marks submission with a letter to chambers that was dated May 15th and received here on

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The Court - Ruling 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 May 20th? MS. CERBONE: I have not, Your Honor. I -- I cant

guarantee that someone in my office didnt receive it. do not have it, and I -- I have not seen it. THE COURT: Okay.

But, I

Ms. Marks, did you send a copy of

your letter with the enclosures to the Liquidating Trustees counsel? MS. MARKS: Let me see. (Pause). It looks like I

sent a copy to everybody.

I -- everybody that was on the

service list -- there are approximately over 200 addresses there. So, I know that youre not supposed to contact the So, I am pretty certain I served everybody

Judge directly.

whos on the service list. THE COURT: All right. There are basically -- well,

let me just -- Im going to hand counsel a copy of the proposed order. (Pause). Well, a partial copy. All right. And, --

and, basically you asked for just a few things.

One, youve

asked for permission to file documents electronically. MS. MARKS: THE COURT: Yes. In our district -- and, you may be

informed of this already -- we permit electronic filing only by attorneys and claims agents. respect to pro se litigants. do so in this case. With respect to waiving of court call fees for We do not permit that with And, Im -- Im not inclined to

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The Court - Ruling 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

telephonic appearances, that I will approve and do from time to time on an individual basis. this case. MS. MARKS: THE COURT: Thank you, Your Honor. Youre welcome. Now, with respect to And, Im willing to do that in

payment of the fee for the filing of the complaint, youve asked that that be waived. Ive looked at the financial

information thats been submitted in support of this request. And, let me ask whether theres been any change in this information since you submitted it? MS. MARKS: There may be. There -- well, I dont

know if you guys are aware, but theres -- theres a lot of problems with some of the unemployment payments. almost finished with my paralegal training. But, Im

So, hopefully Ill

-- I should be working in a few months, provided the job market gets a little better. regular. But, unemployment payments are not

I wasnt asking the Court to refund my initial -- I

was just -- hello? THE COURT: MS. MARKS: my initial fees. Im listening. Oh. I wasnt asking the Court to refund

I was saying subsequently because Im more

familiar with District Court than I am with Bankruptcy Court. So, I didnt know what the additional fees were and all that kind of stuff. THE COURT: Well, --

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MS. MARKS: THE COURT: MS. MARKS:

So, --- you --- I wasnt asking you to give back my

original -- I was just -THE COURT: MS. MARKS: Okay. -- going forward. And, the expense of

serving all these people is just incredible, the copying costs, the mail, you know, -- so -THE COURT: Well, lets -- lets see if we can work

through that a little bit. MS. MARKS: THE COURT: All right. First of all, there shouldnt be actually

any subsequent fees in connection with the adversary, -MS. MARKS: THE COURT: Okay. -- at least that Im aware of. Secondly,

with respect to service, all you have to do -- and, in this case, it seems to me appropriate -- is serve counsel with one set of whatever documents you have. MS. MARKS: THE COURT: MS. MARKS: THE COURT: MS. MARKS: Its --

You mean just the Liquidating Trustee? Thats correct. Oh, okay. This is -Thats good. I didnt know. I --

theres usually a proof of service, and I -- the other documents -- thats fine.

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THE COURT:

Yeah.

This is an adversary proceeding.

So, its not like in the main case where you have to serve a lot of parties whove requested notice. You only have to serve

the person on the other side of the caption in this case, which is the Liquidating Trustee. Now, counsel, you may want to

advise Ms. Marks to whom service copies should go so that theyre directed one place, but I leave that to you to decide. MS. CERBONE: We -- we certainly will. And,

initially Ill just let you know, Ms. Marks, and then Ill -Ill reach out to you subsequently. But, on our papers that we

-- we filed that we sent you copies of, on the front page there is two sets of counsel listed. The initial set starts with

Bonnie Glantz at Blank Rome -- a law firm by the name of Blank Rome, and the second set of counsel is Hahn & Hessen, LLP. MS. MARKS: MS. CERBONE: MS. MARKS: MS. CERBONE: Uh-huh. You can serve it on Hahn & Hessen, LLP. Okay. And, you can just copy that -- that

block right there, that address block and the attention -- the attorneys that are listed under the attention to. would be sufficient. MS. MARKS: THE COURT: MS. MARKS: THE COURT: Well, -- okay. All right. -- Your Honor. Ms. Marks, -Thank you, -And, that

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MS. MARKS: THE COURT: MS. MARKS:

So, Blank Rome is not involved anymore? Pardon? Okay. I understand. I got it. I see

what shes talking about. THE COURT: MS. MARKS: THE COURT: Okay. All right. Good. Thank you.

Now, did I address, Ms. Marks, all

of the requests for relief that you made? MS. MARKS: THE COURT: Yes, Your Honor. All right. Thank you. Then that Anything further

concludes this item on the agenda, I think. from the Liquidating Trustee? MS. CERBONE: THE COURT: MS. CERBONE: THE COURT: and service request.

No, thats it, Your Honor. All right. Thank you very much. Ill draft the order on the court call

And, Ill expect a form of order from you

on the suspension of other activity in the adversary until disposition of the motion to dismiss. MS. CERBONE: THE COURT: MS. CERBONE: MS. MARKS: THE COURT: MS. MARKS: Will do. Okay. Thank you, Your Honor. Your Honor, one more thing? Pardon? Hello?

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Augustine - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MS. MARKS: Yes. Your Honor, I have another question.

Do

I get -- do I -- I dont get an additional reply to any additional motions that they file? THE COURT: this point. MS. MARKS: THE COURT: MS. MARKS: THE COURT: Okay. All right. All right. All right. Thank you. All right. And, Ms. Marks, you may -Youre No, theres nothing more for you to do at

you may jump off the phone line now if you like. welcome to stay and listen. matter. MS. MARKS: THE COURT: MS. MARKS: THE COURT: Good morning, sir. MR. AUGUSTINE: MS. SLOAN: Good morning. Okay.

But, we are finished with your

Thank you, Your Honor.

Youre welcome. All right. I see that Mr. Augustine has made it.

And, Your Honor, the last item on the

agenda is item 21, jumping back, Mr. Augustines petition for a stay of discovery matters pending the outcome of an emergency writ to the higher courts. THE COURT: MS. SLOAN: All right. Lets turn to that.

Your Honor, I dont know how you want to

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Augustine - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 please? MR. AUGUSTINE: THE COURT: Good morning. proceed. I assume you would want Mr. Augustine to go first But, Im --

being that this is his petition. THE COURT: MS. SLOAN: THE COURT: Yes, I do. Okay.

Thank you.

Mr. Augustine, would you come forward,

Tell me what it is you want me to order. First, Your Honor, Id like to --

MR. AUGUSTINE:

last time when you entered the order regarding the motion for reconsideration, I did not receive a copy neither from the Court, nor from the Liquidating Trust. Also, just last night I was reviewing the opposition to the -- to stay the discovery matter. there was a fee that needed to be paid. And, I was not aware I never -- the only

thing I received from the Court is this hearing date here. I did not receive the order that you had filed regarding that I need to pay a payment, you need to see issues that need to be presented before the Court for the -- for the emergency writ. I have -- I have -- since this morning, I have I can give it to the Court now. I dont -- yeah, because I dont know --

sent Dave an e-mail. THE COURT:

I dont understand what youre taking about. MR. AUGUSTINE: Okay. I had received a motion from

the Liquidating Trustee -- from the Liquidating Trust regarding

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Augustine / Carikoff - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

-- thats the objection regarding -- to stay discovery pending the matter on appeal. I believe you had entered an order which I dont know when. I dont -- I

I do not have a copy of it. did not receive a copy of it. night. THE COURT:

Im aware of it since last

Well, hold on a moment. Okay.

MR. AUGUSTINE: THE COURT:

In the binder is a notice of appeal that

was filed with the Bankruptcy Court on April 23rd -MR. AUGUSTINE: THE COURT: Uh-huh.

-- concerning an April 21st, 2009 ruling.

Now, if I remember correctly, you had filed what as in essence a motion for reconsideration after I had indicated at least one part of a disposition of your motion from the bench. And, that

is not to supply the original -- not to require supplying the original note. MR. AUGUSTINE: THE COURT: Uh-huh.

When I subsequently entered an order -- a

memorandum and order disposing of all of the points in your motion, I indicated that your motion to reconsideration was denied because it was premature. order. I had not yet entered an

I cant recon -- I cant reconsider an order that I had

not entered. MR. AUGUSTINE: Are you saying that there has not

been an order thats been entered at all?

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Carikoff - Argument 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 them. MR. CARIKOFF: If I could, Your Honor. David THE COURT: denying it. MR. AUGUSTINE: THE COURT: Okay. Thats when I filed my -Yes. I entered an order on your motion

Well, it --- notice of appeal.

MR. AUGUSTINE: THE COURT:

I denied it in part, and I granted it, I

think, in part by extending the discovery period a little bit, I think. I dont -MR. AUGUSTINE: Because the Liquidating Trust is

saying that I did not pay the notice of appeal fee and I did not raise the issues on appeal. communication because theyre -THE COURT: dont think. Well, that would be not in this court, I I have not received any

If -- if theyre challenging your appeal, it But, I dont -- I dont know

would be in the District Court. that.

Can the Liquidating Trustee shed any light on that? MR. AUGUSTINE: I dont have any communication from

Carikoff of Blank Rome on behalf of the Trust.

I think the

sequence of events, Your Honor, -- we went before your court. Mr. Augustine had his motion to compel. We had our response to Your Honor

that, and we also had our cross motion to compel.

had made rulings at that hearing with respect to that. You -- before an order was entered on the docket, Mr.

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Augustine had filed a motion for reconsideration.

Your Honor ultimately entered an order, your order addressed Mr. Augustines motion to compel, the Trusts motion to compel, and his motion for reconsideration. In your order, you adjusted the discovery schedule pushing it out to some points that, I believe, had since passed since Mr. Augustine filed his appeal. And, you had also

ordered the Trust to complete certain discovery that was part of Mr. Augustines motion to compel which we completed and served on him pursuant to your order. With respect to the appeal, there was a -- it was unclear what actually was filed. An appeal, I believe, popped

up on the docket, Your Honor, but it didnt look like the appeal fee had ever been paid. There was never a -- a There was So,

designation of records -- of record for the appeal.

no statement of issues on the appeal that was ever filed. nothing has happened on that because of those technical deficiencies, Your Honor. THE COURT: District Court? MR. CARIKOFF: MR. AUGUSTINE: No, Your Honor. So, its not been transmitted to the

In the past, Your Honor, I only had

to -- all the court had been in Boston and -- other matter in other states I only have to file notice of appeal. only presented when you submit the document. The issue

If its different

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here, I dont know. THE COURT: Well, under the -- under the federal

rules, which apply everywhere, -MR. AUGUSTINE: THE COURT: filing of the notice. Uh-huh.

-- there is a process which follows the The rules provide that, within a certain

period of time, you must identify the issues that concern the appeal and, secondly, identify a record; that is, say, what the District Court must look at in determining how to dispose of the appeal. And, then the other party to the appeal has the

opportunity to do the same things, and there are time frames for that set out. Now, I -- I think -- and its been a -- Ive had this situation before. And, youll forgive me, its been so long, I But, I think typically what

forget exactly how it works.

happens is, at some point, the appeal gets transmitted, even with an incomplete record. And, then its for the District

Court to decide what to do with it. MR. AUGUSTINE: Your Honor, I have not received I didnt

anything from the Court from the notice of appeal. receive anything back. THE COURT: Usually -You wouldnt --- when you file --

MR. AUGUSTINE: THE COURT: back.

You wouldnt necessarily receive anything

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MR. AUGUSTINE:

Because usually, when you file the

notice of appeal, they tell you, okay, this matter has been transmitted to the Court. have not received -THE COURT: I dont --- anything. Im waiting to hear from them. I

MR. AUGUSTINE: THE COURT:

I dont think youre going to hear from Youre -- youre charged with

anybody, Mr. Augustine on that.

knowing what it is youre supposed to do when youre the appellant. MR. AUGUSTINE: matters on appeal. Well, I -- I have, you know, pending And --

Thats not the first time.

THE COURT:

Why -- look, I understand you may have But, Im telling you the federal

some litigation experience.

rules and the bankruptcy rules specifically, the 8000 series, tell you what it is you need to do and within what time frame. And, then Im assuming that if you dont comply with those rules at some point, somebody is going to raise an issue with the Court, and the Court will act on it. I -- but, I

dont -- I dont think its going to be this Court. But, lets -- lets return to the matter at hand. And, Ill -- Id like to start -- Id like to go back to where I started. do? MR. AUGUSTINE: No, Im here for the hearing because And, that is what is it that you want this Court to

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the Liquidating Trust filed an objection to stay discovery pending appeal. And, thats why I raised the issue of -- of

appeal matter because I did not receive any communication from the Court. courts. So, Im going to have to find out whats going on because somehow Im not in the loop of things. Certain You just said that it has to do with the other

documents I did not receive in order for me to act or react in any way, shape or form. THE COURT: MS. SLOAN: THE COURT: MS. SLOAN: Well, -Your Honor, may I interrupt for a second? You may. It was actually Mr. Augustine who filed We actually just

the petition for the stay of discovery. objected to that. THE COURT: Im aware of that.

And, -- so, thats

why I keep asking Mr. Augustine what is it he wants me to do because -MR. AUGUSTINE: Im -THE COURT: you. No, no, heres what I have. Let me show Its all in the motion. I mean,

This is what I have scheduled for hearing today.

(Pause). MR. AUGUSTINE: Yeah, because I thought the matter on Thats --

appeal would be going forward.

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THE COURT:

So, tell me -- I -- what I gathered from

this is what you want is for -- well, typically this type of request is a request to stay the effect of the order that I entered pending an appeal. MR. AUGUSTINE: moving forward, I believe. wanted a stay. Now, the -Yeah, because the tri -- the thing is Thats my understanding. So, I

But, I did not know there was some kind of

breakdown into the procedure of the matter in the notice of appeal because I thought it was dispositive of the Court because there are other matters that we have not ruled upon. THE COURT: want me to do today. MR. AUGUSTINE: Okay. All right. I guess -- how do Well, tell me -- tell me what it is you

I cure that thing there, because I did not receive any communication that, one, the fees needed to be paid. for one. Thats

Number two, that the issues needed to be presented. THE COURT: Im sorry. Because I --

MR. AUGUSTINE: THE COURT:

Are you saying that we accepted the --

the notice of appeal without a payment of the fee? MR. AUGUSTINE: from Chapter 11. Okay. Maybe Chapter 7 is different

When I was in Chapter 7 and filed a notice of I didnt assume that I need to

appeal, I never had to pay. pay.

If I knew I had to pay, I would either, one, file in

forma pauperis asking the Court leniency or -- or pay the fee.

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Even as of right now, I dont know how much is the fee that need to be paid. THE COURT: Well, theres a -I dont have not problem --

MR. AUGUSTINE: THE COURT:

-- theres a fee schedule --- paying the fee.

MR. AUGUSTINE: THE COURT:

-- posted on our website. I assume that, once youre in

MR. AUGUSTINE:

bankruptcy, if youre one of the parties, you do not have to pay. THE COURT: I dont -- thats not my understanding.

But, I frankly dont know what the clerks office did here. MR. AUGUSTINE: request of them. that because -THE COURT: way. Okay. Well, Ill -- let me put it this Okay. So, maybe I -- I have the

And, I dont know -- find out how to cure

Well -- Ill look into that from -- from my end too

because its been a while since Ive been through this type of exercise, and I need to refresh myself anyway. that. But, -MR. AUGUSTINE: THE COURT: Okay. And, Ill do

-- again, tell me -Okay.

MR. AUGUSTINE: THE COURT:

-- what, if anything, -Okay.

MR. AUGUSTINE:

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THE COURT:

-- youd like me to do today. Assume everything was procedurally

MR. AUGUSTINE:

correct in term of paying the fees or -- I wanted the matter to stay pending the decision of the higher Court regarding the discovery of the original note. That is -- that is the thrust

of what I was asking about, very simple. THE COURT: Well, theres another issue which is not

for me to decide, but if the appeal ever makes it over to the District Court, it will be the -- for the District Court to decide. And, I dont even know -- well, there are certain

orders which are appealable and certain orders which are not. I tend to think this might not be. But, thats not for me to

decide, because it doesnt finally dispose of a matter. MR. AUGUSTINE: THE COURT: Well, it is --

Thats central to the litigation anyway. But, Im talking aloud

I know you may disagree with that.

because Im trying to figure out what -- what relief, if any, I should order today. MR. AUGUSTINE: THE COURT: Okay.

Well, let me ask this of the Liquidating

Where are we in the scheduling order? MS. CERBONE: Your Honor, as of May 13th, the

Liquidating Trustee filed its answers to Mr. Augustines discovery requests based on your scheduling order. Mr.

Augustine was also supposed to respond adequately to our

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response -- or discovery request as of May 13th.

that we did file an order -- a proposed form of order with -extending the discovery request deadline to June 3rd and pushing the dates back further from that as well. THE COURT: objection? MS. CERBONE: THE COURT: Yes, Your Honor. All right. Your Honor, correct me if Im wrong. You filed that in connection with this

MR. AUGUSTINE:

I believe the last time I was here, when I discussed with Liquidating Trust and I told them they asking for information, you know, I dont have. have? How can I point to something I dont So, what That you

And, it was agreeable that I dont have it.

can -- how can I point to something I do not have? have -- you have the documents, I do not have them. THE COURT: order? MS. CERBONE: under 18A.

Well, where in the binder is the form of

I have it in my binder, Your Honor,

I can hand up a copy if youd like. THE COURT: MS. CERBONE: THE COURT: Oh, okay. Yes, please.

May I approach? Yes. Show Mr. Augustine what youre

handing me.

(Pause). Ill object to that, Your Honor. Have you seen this proposed

MR. AUGUSTINE: THE COURT:

(Pause).

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from of order, Mr. Augustine? MR. AUGUSTINE: Just now. I just glanced at it and I

objected because I dont have time to sit down and understand the -THE COURT: All right. -- legal implication of it.

MR. AUGUSTINE: THE COURT: the discovery until -MR. AUGUSTINE: appeal -THE COURT:

So, what you want me to do is to stay all

I guess we need to figure out the

-- the appeal is disposed of. -- whats -- because -- usually, when

MR. AUGUSTINE:

you file the appeal, it takes some time to tell you, okay, this is the time to submit the issue, this is the time for the brief. And, thats what I was waiting on. My brief is already And, I --

prepared to -- to go to the higher Court. THE COURT:

Well, there are certain things you have

to file here bef -- typically before the appeal gets transmitted. MR. AUGUSTINE: going to look into it. THE COURT: looking into. that issue was. I understand that you say that youre

But, -Oh, no, Im not -- that part Im not

Im just concerned about the filing fee and what But, with respect to the other things, the

bankruptcy rules, again I refer you to the 8000 series of the

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rules.

That tells you what youre supposed to do and within

what time frame. MR. AUGUSTINE: THE COURT: Okay. All right. Anything further

All right?

in support of your petition? MR. AUGUSTINE: Thats -- thats about it. I guess

the issue that needs to be resolved is the issue of the -- of the appeal. THE COURT: All right. Okay. Thank you. Does the

Litigation Trustee have anything -- Liquidation Trustee have anything to add? MS. SLOAN: Liquidating Trustee. Your Honor, Elizabeth Sloan for the Just to clear up a few matters. The

docket currently states, regarding the notice of appeal, that payment hasnt been received. that on the record. And, -- so, I just wanted to put

And, the objection of the Liquidating

Trustee was both mailed and e-mailed to Mr. Augustine which contained the order as well. Going to the merits of his position, the Trust objects because -- for several reasons. But, one, being that

theres no reason to actually stay discovery in this matter. This matter has been going forward for quite some time as Your Honor may know. And, the Liquidating Trustee has So, to stay

continually complied with this Courts order.

discovery at this point is just continually going to further

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the matter unnecessarily. Additionally, Mr. Augustine propounded additional requests on the trustee which we have responded to according to the Courts order. delay at this point. So, we just dont see any reason for the I dont know if Your Honor wants me to go

into the reason -- the issues about the notice of appeal and the -- in that matter. THE COURT: Its not necessary. All right. Mr.

Augustine, Ill give you the last word if youd like it. MR. AUGUSTINE: THE COURT: for today, Ms. Sloan? MR. CARIKOFF: Carikoff. Your Honor, -- Im sorry -- David I dont have any -Thank you. Anything further

All right.

Before Your Honor closes the record on this, you had

asked me at the previous hearing on Mr. Augustines motion to compel whether or not the trust actually had an original copy of the note at issue. At that hearing, candidly, Your Honor, I

had not asked my client whether or not they were in the possession of the original note. After the hearing, I conferred with the client. And,

my understanding is they do not have an original copy of the note that is transferred to the subsequent loan holder which is not the trust. So, I just wanted to -- to point that out for

the Court as well. THE COURT: All right. Well, --

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MR. AUGUSTINE: THE COURT:

Well, --

-- thats what would normally happen. Well, Your Honor, I believe, under As

MR. AUGUSTINE:

original rule of evidence, this is the thrust of my issue. it is stated under the rule of evidence, whenever you raise this matter in question, they have to produce it.

So, it is up

-- and, under the discovery rules, if they have access to it, they have to get it. THE COURT: I dont -- I dont agree with that, Mr. Now, what Ive heard is not But, Ive already

Augustine, as a matter of law.

evidence, but a statement made by counsel.

made my decision on that issue, and youve appealed it. So, even if I wanted to, I couldnt make a further decision on that now because, once an appeal of that nature is lodged, it divests me of jurisdiction to make any further decision in connection with that matter, except deciding whether to stay something pending appeal. But, what Mr. Carikoff tells me is something I suppose would have happened anyway because thats normally what happens when a note is sold. But, with respect to discovery

obligations, if a party doesnt have it, they cant turn it over. MR. AUGUSTINE: THE COURT: Okay.

They may need to tell you where it went

and leave you to your discovery remedies to try to locate it

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that way, but, as far as Im concerned, Im unable to make any further decision with respect to that until the appeal is disposed of. MR. AUGUSTINE: I have one question. What does full

discovery mean in the court here?

When you had told me you had

to give full discovery, there should be no hold back of anything. THE COURT: No. What I said was you -- youd be able

to avail yourself of whatever discovery rights you have under the federal rules as the Liquidating Trustee. MR. AUGUSTINE: THE COURT: And, when I exercise that right --

But, not everything in the world is There

discoverable or not everything in the world is relevant.

are -- I mean, its -- there are judgments to be made along the way. MR. AUGUSTINE: THE COURT: Okay. That concludes this matter,

All right.

and it concludes this hearing.

Court will stand in recess.

* * * * *

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C E R T I F I C A T I O N

I, Frances L. Maristch, court approved transcriber, certify that the foregoing is a correct transcript from the official electronic sound recording of the proceedings in the above-entitled matter.

_____________________ DATE

Frances Maristch _________________________


FRANCES L. MARISTCH

Digitally signed by Frances Maristch DN: CN = Frances Maristch, C = US Date: 2009.06.24 17:01:53 04'00'