St at e of Ca li fo rn ia - D e p a r t m e n t of Bu si ne ss Ov er si gh t O O © 9 O N D n B B W N = N O N N N N = e m e e e e e m e e e e MARY ANN SMITH Deputy Commissioner SEAN M. ROONEY Assistant Chief Counsel MARLOU de LUNA (State Bar No. 162259) Senior Counsel DANIELLE A. STOUMBOS (State Bar No. 264784) Senior Counsel KELLY SUK (State Bar No. 301757) Counsel Department of Business Oversight 320 West Fourth Street, Suite 750 Los Angeles, California 90013 Telephone: (213) 576-7591 Facsimile: (213) 576-7181 Attorneys for the People ofthe State of California SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN FRANCISCO THE PEOPLE OF THE STATE OF CALIFORNIA, by and through the Commissioner of Business Oversight, Plaintiff, v. DEVELOPMENT, LLC, a California Limited Liability Company; CHRISTOPHER P. EPSHA; STEVEN G. THOMPSON; BARRY D. LEBENDIG:; DOUGLAS R. HANSON;ef al., ) ) ) ) ) ) ) ) INVESTCO MANAGEMENT & ) ) ) ) Defendants. ) ) ) Date: Time: Dept: Judge: CASE NO. CGC-11-507316 PLAINTIFF'S FURTHER RESPONSE TO SPECIAL MASTER'S PETITION FOR INSTRUCTIONS RE: DISPOSITION OF REAL PROPERTY; . GUARANTEE; AND INVESTIGATION OF POTENTIAL CLAIMS May 10, 2017 9:30 a.m. 302 Hon. Harold Kahn PLAINTIFF'S FURTHER RESPONSE TO SPECIAL MASTER'S PETITION FOR INSTRUCTIONS St at e of Ca li fo rn ia - D e p a r t m e n t of Bu si ne ss Ov er si gh t © O O ® N A L N D = N N N N N = = e e e m e e e e e e Plaintiff, the People ofthe State of California, by and through the Commissioner of Business Oversight' (Plaintiff) files this further response to Special Master James H. Donell’s October 21, 2016 Petition for Instructions Re: (1) Disposition of Real Property; (2) Guarantee; and (3) Investigation of Potential Claims (Special Master Petition). Plaintifffiles this response concurrently with Plaintiff’s Notice of Motion and Motion for: (1) Determination of Enforceability of Settlement Agreement, Amended Interlocutory Judgment, and Amended Order Appointing Special Master; or (2) in the Alternative, Leave to File Supplemental Pleading (Plaintiff's Motion). To avoid redundancy, Plaintiff incorporates by reference the Factual Background in Plaintiffs Motion herein. A. Disposition of Real Property Plaintiff does not oppose the Special Master's request for instruction regarding the timing of the disposition ofthe real property held by the LLCs. B. The Guarantee Plaintiff does not oppose the Special Master's request for confirmation that the sale of any of the property held by the LLCs will not compromise the Guarantee. As discussed in her concurrently filed Motion for Leave to File Supplemental Pleading, Plaintiff asserts that the Guarantee Provision is valid and enforceable and that Defendants are bound to the terms of the Settlement Agreement, Amended Interlocutory Judgment, and Amended Order Appointing Special Mater (collectively, Amended Orders). Plaintiff seeks leave to file a supplemental pleading and move for summary judgment regarding the validity and enforceability of the Settlement Agreement and the Amended Orders. C. Investigation of Potential Claims At the December 6, 2016 hearing, the Court inquired whether Plaintiff would conduct an additional investigation and share the results with the Special Master. Plaintiff has commenced an additional investigation and will share the findings with the Special Master. I 11 bez i . 3 : 5 Bre Formerly the California Corporations Commissioner. 1 PLAINTIFF'S PETITION FOR CLARIFICATION AND FURTHER RESPONSE TO SPECIAL MASTER'S PETITION FOR INSTRUCTIONS St at e of Ca li fo rn ia - D e p a r t m e n t of Bu si ne ss Ov er si gh t O O 0 N N L n B s W N N O N N N = m m s e s E e e s e s = Dated: March 30, 2017 Respectfully submitted, JAN LYNN OWEN Commissioner of Business Oversight By: y DANIELLE A. STOUMBOS Attorney for the People of California 2 PLAINTIFFS PETITION FOR CLARIFICATION AND FURTHER RESPONSE TO SPECIAL MASTER’S PETITION FOR INSTRUCTIONS 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES The undersigned declares: Iam citizen of the United States and I am employed in the County of Los Angeles, State of California. Iam over the age of 18 and nota party to the within action; my business address is Department of Business Oversight, 320 W. 4" Street, Suite 750, Los Angeles, California 90013-2344. On March 30, 2017 I served the within: Plaintiff’s Notice Of Motion and Motion for: (1) Determination Of Enforceability Of Settlement Agreement, Amended Interlocutory Judgment, and Amended Order Appointing Special Master; or (2) In the Alternative, Leave to File Supplemental Pleadings; Memorandum of Points and Authorities in Support of: (1) Plaintiffs Motion for Determination of Enforceability of Settlement Agreement, Amended Interlocutory Judgment, and Amended Order Appointing Special Master; or (2) In the Alternative, Leave to File Supplemental Pleading with Exhibit A (Supplemental Compliant) Declaration of Danielle A. Stoumbos in Support of: (1) Plaintiff’s Motion for Determination of Enforceability of Settlement Agreement, Amended Interlocutory Judgment, and Amended Order Appointing Special Master; or (2) In the Alternative, Leaveto File Supplemental Pleading with Exhibits A-K; [Proposed] Order Granting Plaintiff’s Motion for Determination of Enforceability of Settlement Agreement, Amended Interlocutory Judgment, and Amended Order Appointing Special Master[Proposed] Order Granting Plaintiff’s Motion for Leave to File Supplemental Pleading, Reopen Limited Discovery ; and Set Motion for Summary Judgment Briefing Schedule and Hearing And Plaintiff’s Further Response to Special Master’s Petition for Instructions Re: 1. Disposition of Real Property; 2. Guarantee; and 3. Investigation of Potential Claims on: Christopher A. Epsha Law Offices of Christopher P. Epsha 1800 Century Park East, Suite 600 Los Angeles, CA 90067 Email: c.epsha@sbcglobal.net Andrew Mansfield, Esq. Mansfield Law Corporation 2775 North Ventura Road, Suite 201 Oxnard, CA 93036 Email: amansfield@mansfield.law PROOF OF SERVICE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Stephen G. Thompson 2555 Flores Street, Suite 555 San Mateo, CA 94403 Email: stevebayside@yahoo.com Barry D. LeBendig 1131 Compass Lane, #212 San Mateo, CA 94404 Email: bdlebendig@comcast.net Douglas R. Hanson 2555 Flores Street, Suite 555 San Mateo, CA 94403 Email: dougbayside@yahoo.com [X] [] [1] [] [X] By United States mail, by addressing an envelope to the above-named person(s) as indicated above, and placed in the envelope a true copy of each of said documents, and by then sealing and depositing said envelope on that same day with postage thereon fully prepaid, in the United States mail at Los Angeles, California, where is located the office of the person by and for whom said service is made. I am aware that on motion of the party served, service is presumed invalid if postal cancellation date of postage meter date is more than one day after the date of deposit for mailing in affidavit. By an Express Service Carrier, (a guaranteed next day delivery service), a true copy of the above-stated document(s) in an envelope or package designated by said carrier and addressed to the person(s) on whom it is to be served, the envelope or package was mailed on that same day with shipment costs thereon fully prepaid in the ordinary course of business. By Facsimile Transmission, of said document(s) from fax telephone number 213-576-7181 to the above-named person(s) at the fax number(s) as indicated above. This transmission was reported as complete and without error. By Personal Service, I delivered said document(s) by hand to the above-named person(s) as indicated above in the manner provide in FRCivP 5(b) or CCP §1011. By Electronic Service, based on an agreement of the parties to accept service by electronic transmission, I caused the documents to be sent to the above-named person(s) at the electronic notification address listed above. I did not receive, within a reasonable time after the transmission, any electronic message or other indication that the transmission was unsuccessful. Byron Maldo, Attorney for Special Master Jim Donell bmoldo@ECJLAW.COM Jim Donell, Special Master James.donell@fedreceiver.com PROOF OF SERVICE 10 1.1 12 13 14 15 16 17 18 19 20 21 22 2:3 24 25 26 27 28 Douglas Hanson, Defendant dougbayside(@yahoo.com Val Hornstein, Counsel for Interested Partied val(@hornsteinlaw.com Christopher P. Epsha c.epsha(@sbcglobal.net [X] (STATE) I declare under penalty of perjury under the laws of the State of California that the above is true and correct. Executed on March 30, 2017 at Los Angeles, California. N RebeccaFetutierrez \/ / PROOF OF SERVICE
