Avenue CLO Fund, Ltd. et al v. Bank of America, N.A., et al

Filing 79

CERTIFIED REMAND ORDER. MDL No. 2106. Signed by MDL (FLSD) on 1/14/14. (Attachments: # 1 Transmittal from FLSD, # 2 1 09-md-02106 Designation of Record, # 3 1 09-md-02106 Dkt. Sheet - flsd, # 4 09-MD-2106 DE 1, 2, 4-30, # 5 0 9-MD-2106 DE 32-36, # 6 09-MD-2106 DE 37 part 1 of 3, # 7 09-MD-2106 DE 37 part 2 of 3, # 8 09-MD-2106 DE 37 part 3 of 3, # 9 09-MD-2106 DE 38, 39, 41-47, 49, 50, # 10 09-MD-2106 DE 51, # 11 09-MD-2106 DE 52-59, 61-65, 68, 70, 72-76, # (1 2) 09-MD-2106 DE 78-84, 86-91, # 13 09-MD-2106 DE 93, 95-103, 106-108, # 14 09-MD-2106 DE 110-115, # 15 09-MD-2106 DE 116-125, 127-129, 132-134, # 16 09-MD-2106 DE 136-140, 142-158, # 17 09-MD-2106 DE 160-162, 164-167, 170-175, 177-190, # ( 18) 09-MD-2106 DE 191-199, 201-215, # 19 09-MD-2106 DE 217-229, 232-247, # 20 09-MD-2106 DE 248, # 21 09-MD-2106 DE 249 part 1 of 2, # 22 09-MD-2106 DE 249 part 2 of 2, # 23 09-MD-2106 DE 251-253, 262-266, 284-287, 300, 301, 310, 319, 326-3 31, # 24 09-MD-2106 DE 335, 336, 338-344, 346-349, # 25 09-MD-2106 DE 350, # 26 09-MD-2106 DE 351-358, # 27 09-MD-2106 DE 360-366, 368-374, # 28 09-MD-2106 DE 375 part 1 of 3, # 29 09-MD-2106 DE 375 part 2 of 3, # 30 09-MD-2106 DE 375 p art 3 of 3, # 31 09-MD-2106 DE 376 part 1, # 32 09-MD-2106 DE 376 part 2, # 33 09-MD-2106 DE 376 part 3, # 34 09-MD-2106 DE 376 part 4, # 35 09-MD-2106 DE 376 part 5, # 36 09-MD-2106 DE 376 part 6, # 37 09-MD-2106 DE 376 part 7, # 38 09-MD-2106 DE 376 part 8, # 39 09-MD-2106 DE 376 part 9, # 40 09-MD-2106 DE 377 part 1, # 41 09-MD-2106 DE 377 part 2, # 42 09-MD-2106 DE 378, # 43 09-MD-2106 DE 379, # 44 09-MD-2106 DE 380, # 45 09-MD-2106 DE 381 part 1, # 46 09-MD-2 106 DE 381 part 2, # 47 09-MD-2106 DE 382 part 1, # 48 09-MD-2106 DE 382 part 2, # 49 09-MD-2106 DE 382 part 3, # 50 09-MD-2106 DE 382 part 4, # 51 09-MD-2106 DE 383 part 1, # 52 09-MD-2106 DE 383 part 2, # 53 09-MD-2106 DE 383 part 3, # 54 09-MD-2106 DE 383 part 4, # 55 09-MD-2106 DE 383 part 5, # 56 09-MD-2106 DE 383 part 6, # 57 09-MD-2106 DE 383 part 7, # 58 09-MD-2106 DE 383 part 8, # 59 09-MD-2106 DE 383 part 9, # 60 09-MD-2106 DE 383 part 10, # 61 09-MD-2106 DE 383 part 11, # 62 09-MD-2106 DE 384 part 1, # 63 09-MD-2106 DE 384 part 2, # 64 09-MD-2106 DE 384 part 3, # 65 09-MD-2106 DE 384 part 4, # 66 09-MD-2106 DE 384 part 5, # 67 09-MD-2106 DE 384 part 6, # 68 09-MD-2106 DE 384 part 7, # ( 69) 09-MD-2106 DE 384 part 8, # 70 09-MD-2106 DE 384 part 9, # 71 09-MD-2106 DE 384 part 10, # 72 09-MD-2106 DE 384 part 11, # 73 09-MD-2106 DE 385 part 1, # 74 09-MD-2106 DE 385 part 2, # 75 09-MD-2106 DE 386 part 1, # 76 09-MD-2106 DE 386 part 2, # 77 09-MD-2106 DE 386 part 3, # 78 09-MD-2106 DE 386 part 4, # 79 09-MD-2106 DE 386 part 5, # 80 09-MD-2106 DE 386 part 6, # 81 09-MD-2106 DE 386 part 7, # 82 09-MD-2106 DE 387 part 1, # 83 09-MD-2106 DE 387 part 2, # 84 09-MD-2106 DE 388, # 85 09-MD-2106 DE 389 part 1, # 86 09-MD-2106 DE 389 part 2, # 87 09-MD-2106 DE 389 part 3, # 88 09-MD-2106 DE 389 part 4, # 89 09-MD-2106 DE 390, 392-394, # 90 1 10-cv-20236 Dkt. Sheet - flsd, # 91 10cv20236 DE #1-27, 29-31, 45, 53, 60-65, 67-70, 73, # 92 1 09-cv-23835 Dkt. Sheet - flsd, # 93 09cv23835 DE 112, 115-126, # 94 09cv23835 DE 130, 134, 135 and 145)(Copies have been distributed pursuant to the NEF - MMM)

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Case 1:09-md-02106-ASG Document 111 Entered on FLSD Docket 07/22/2010 Page 1 of 2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/BANDSTRA
IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document relates to all actions.
_________________________________/

MDL ORDER NUMBER 25; GRANTING CHAPTER SEVEN
TRUSTEE’S MOTION FOR EXTENSION OF TIME [DE 96] IN PART;
REQUIRING SUBMISSION SETTING TELEPHONE STATUS CONFERENCE
THIS CAUSE is before the Court upon the Chapter 7 Trustee’s Motion for Extension
of Time [DE 96]. A telephonic status conference was held on Tuesday, July 20, 2010. Per
the agreement of the parties, the following is hereby ORDERED AND ADJUDGED for the
reasons stated of record:
1.

The Trustee’s Motion for Extension of Time [DE 96] is GRANTED IN PART.
a.

By no later than Friday, August 20, 2010 at 5:00 p.m., the Trustee is
ORDERED to:
i.

File a Notice with the Court stating: (a) whether it intends on
prosecuting Case No.: 09-CV-21879-ASG; and (b) whether it has
been able to settle Case No.: 09-CV-21879-ASG; and

ii.

If the Trustee intends on proceeding with Case No.: 09-CV-21879ASG, file a Discovery Status Report with the Court setting forth a
good faith proposal that will allow the Trustee to comply with
outstanding document production requests in accordance with
applicable law by Friday, September 17, 2010.

Case 1:09-md-02106-ASG Document 111 Entered on FLSD Docket 07/22/2010 Page 2 of 2

iii.

The Trustee is expressly admonished that it MAY NOT propose a
“document dump” strategy. See [DE 106, p. 11].

2.

A telephonic status conference is HEREBY SET before the Honorable Alan S. Gold,
at the United States District Court, Courtroom 11-1, Eleventh Floor, 400 North
Miami Avenue, Miami, Florida, on Tuesday, August 31, 2010 at 8:45 a.m.
a.

All parties shall call 1-888-684-8852 five minutes before the scheduled start
time and enter access code 8321924 and security code 5050. Please be
prompt.

DONE and ORDERED IN CHAMBERS at Miami, Florida this 21st day of July,
2010.
______________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE
cc: Magistrate Judge Bandstra
Counsel of record

Case 1:09-md-02106-ASG Document 112 Entered on FLSD Docket 07/22/2010 Page 1 of 2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO.: 09-MD-2106-CIV-GOLD/MCALILEY
In re:
FONTAINEBLEAU LAS VEGAS CONTRACT
LITIGATION,
MDL No. 2106
This document relates to all actions.
______________________________________/
MDL ORDER NUMBER TWENTY SIX: GRANTING MOTION
FOR LIMITED APPEARANCE OF VINCENT BUCCOLA [DE 108]
THIS CAUSE having come before the Court upon the Motion for Limited Appearance
of VINCENT BUCCOLA, Consent to Designation and Request to Electronically Receive
Notices of Electronics Filings (“Motion”) [DE 108], requesting, pursuant to the Special
Rules Governing the Admission and Practice of Attorneys in the United States District
Court for the Southern District of Florida, permission for a limited appearance of VINCENT
BUCCOLA in this matter and to electronically receive notice of electronic filings. Having
considered the Motion and being otherwise fully advised in the Premises, it is hereby
ORDERED and ADJUDGED that:
1.

The Motion for Limited Appearance, Consent to Designation and Request to
Electronically Receive Notices of Electronic Filings [DE 108] is GRANTED.

2.

VINCENT BUCCOLA is permitted to appear and participate in this action for
purposes of limited appearances as co-counsel on behalf of AURELIUS
CAPITAL MANAGEMENT LP in the above-styled actions.

3.

The Clerk shall provide electronic notification of all electronic filings to VINCENT
BUCCOLA at [e-mail]

Case 1:09-md-02106-ASG Document 112 Entered on FLSD Docket 07/22/2010 Page 2 of 2

CASE NO.: 09-MD-2106-CIV-GOLD/MCALILEY
DONE AND ORDERED in Chambers at Miami, Florida, this 21st day of
July, 2010.

__________________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE
cc:
Magistrate Judge Chris McAliley
All Counsel of Record

Case 1:09-md-02106-ASG Document 113 Entered on FLSD Docket 07/22/2010 Page 1 of 20
1

1
2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION

3

Case 09-2106-MDL-GOLD

4
IN RE:
5
6

FONTAINEBLEAU LAS VEGAS HOLDINGS, LLC,
et al.,

7

Debtors.

8
9

FONTAINEBLEAU LAS VEGAS
HOLDINGS, LLC, et al.,

10

COURTROOM 11-1
Plaintiffs,

11
12

MIAMI, FLORIDA
vs.

JULY 20, 2010

BANK OF AMERICA, N.A., et al.,
13
14
15
16

(Pages 1 - 20)
Defendants.
__________________________________________________________________
TRANSCRIPT OF TELEPHONIC CONFERENCE
BEFORE THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE
__________________________________________________________________

17
18
19

APPEARANCES:

20

Soneet R. Kapila

21
22

RUSSELL M. BLAIN, ESQ.
Stichter, Riedel, Blain & Prosser, P.A.
110 East Madison Street, Suite 200
Tampa, Florida 33602
813.229.0144
(Fax) 813.229.1811
[e-mail]

23
24
25
TOTAL ACCESS

NETWORK COURTROOM REALTIME TRANSCRIPTION
July 20, 2010

Case 1:09-md-02106-ASG Document 113 Entered on FLSD Docket 07/22/2010 Page 2 of 20
2

1
2
3

Barclays Bank PLC
Deutsche Bank
JP Morgan Chase
Royal Bank of Scotland

4

THOMAS C. RICE, ESQ.
STEVE FITZGERALD, ESQ.
Simpson Thacher & Bartlett, LLP
425 Lexington Avenue
New York, NY 10017
212.445.3040
(Fax) 212.455.2502
[e-mail]

5
6

Sumitomo Mitsui Banking

JASON I. KIRSCHNER, ESQ.
JEAN-MARIE L. ATAMIAN, ESQ.
Mayer Brown LLP
1675 Broadway
New York, NY 1001
212.506.2115
(Fax) 212.262.1910
[e-mail]
[e-mail]

Bank of America
Merrill Lynch Capital

WILLIAM J. SUSHON, ESQ.
O'Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, NY 10036
[e-mail]

7
8
9
10
11
12
13
14

212.326.2000

15
16

HSH Nordbank AG

17
18

PHILLIP A. GERACI, ESQ.
Kaye Scholer, LLP
425 Park Avenue
New York, NY 10022
[e-mail]

212.836.8000

19
20
21
22

Bank of America

CRAIG VINCENT RASILE, ESQ.
Hunton & Williams
1111 Brickell Avenue, Suite 2500
Miami, FL 33131
305.810.2579
(Fax) 305.810.2460
[e-mail]

23
24
25

July 20, 2010

Case 1:09-md-02106-ASG Document 113 Entered on FLSD Docket 07/22/2010 Page 3 of 20
3

1

Avenue CLO

KIRK DILLMAN, ESQ.
Hennigan Bennett & Dorman LLP
865 S. Figueroa Street, Suite 2900
Los Angeles, CA 90017
213.694.1200
(Fax) 213.694.1234
[e-mail]

Aurelius Capital
Master, Ltd.

STEVEN JAMES NACHTWEY, ESQ.
Bartlit Beck Herman Palenchar & Scott
54 West Hubbard Street, Suite 300
Chicago, IL 60610
312.494.4400

REPORTED BY:

JOSEPH A. MILLIKAN, RPR-CM-NSC-FCRR
Official United States Court Reporter
Federally Certified Realtime Reporter
Wilkie D. Ferguson, Jr., United States Courthouse
400 North Miami Avenue, Suite 11-1
Miami, FL 33128
305.523.5588
(Fax) 305.523.5589
[e-mail]

2
3
4
5
6
7
8
9
10
11
12
13
14
15

TABLE OF CONTENTS

16
17
18

Page
Reporter's Certificate ...................................... 17

19
20
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22
23
24
25
July 20, 2010

Case 1:09-md-02106-ASG Document 113 Entered on FLSD Docket 07/22/2010 Page 4 of 20
4

THE COURT:

Good morning.

This is Judge Gold on Case

11:00:35

1

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2

09-MDL-2106.

11:00:48

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trustee?

11:00:51

4

11:00:53

5

Blain of Stichter, Riedel, Blain & Prosser in Tampa appearing on

11:00:56

6

behalf of the Chapter 7 Trustee, Soneet Kapila.

11:01:03

7

11:01:04

8

11:01:09

9

11:01:12

10

Rice and Steve Fitzgerald from Simpson, Thacher & Bartlett.

11:01:16

11

represent Barclays, Deutsch Bank, JP Morgan Chase Bank and the

11:01:23

12

Royal Bank of Scotland.

11:01:24

13

11:01:28

14

Jean-Marie Atamian from Mayer Brown in New York with my

11:01:30

15

colleague, Jason Kirschner.

11:01:33

16

Sumitomo Mitsui.

11:01:36

17

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18

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May I have appearances, first on behalf of the

MR. BLAIN:

Good morning, Your Honor.

THE COURT:

All right.

Thank you.

This is Russell

May I have

appearances, please, on behalf of the revolving lenders?
MR. RICE:

Yes, Your Honor.

MR. ATAMIAN:

MR. SUSHON:

Good morning.

Good morning, Your Honor.

This is Tom
We

This is

We're appearing on behalf of

Good morning, Your Honor.

This is William

Sushon of O'Melveny & Myers for Bank of America.
MR. GERACI:

Good morning, Judge.

This is Phil Geraci

of Kaye Scholer, LLP, for HSH Nordbank.
MR. RASILE:

Craig Rasile of Hunton & Williams on

behalf of Bank of America.
THE COURT:

Any other appearances on behalf of

revolving lenders?
On behalf of the term lenders?
July 20, 2010

Case 1:09-md-02106-ASG Document 113 Entered on FLSD Docket 07/22/2010 Page 5 of 20
5

MR. DILLMAN:

Good morning, Your Honor.

Kirk Dillman

11:02:09

1

11:02:12

2

of Hennigan Bennett & Dorman on behalf of the Avenue CLO

11:02:14

3

plaintiffs, otherwise known as the Nevada term lenders.

11:02:17

4

11:02:19

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Nachtwey.

11:02:22

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action.

11:02:26

7

THE COURT:

11:02:29

8

MR. KAPILA:

11:02:33

9

11:02:36

10

11:02:39

11

not recognized?

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12

trustee's motion for brief excusal of compliance with the second

11:02:53

13

amended order which was filed July 12th at Docket Entry 96.

11:03:01

14

11:03:07

15

granted to the May 13th deadline.

11:03:14

16

and I extended the document production deadline to July 12th.

11:03:20

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On the evening of July 12th, I received this motion.

11:03:27

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11:03:31

19

107 which does not oppose a brief extension, although the trustee

11:03:38

20

has not set forth the amount of time requested and therefore the

11:03:46

21

nonopposition is not specific in terms of how much time should

11:03:53

22

be granted.

11:03:55

23

11:04:00

24

significant opposition at Docket Entry 106.

11:04:05

25

with the trustee.

MR. NACHTWEY:

Good morning, Your Honor.

Steve

I represent the Aurelius plaintiffs in the New York

Any other appearances?
Judge, this is Soneet Kapila.

I am the

bankruptcy trustee in the Chapter 7 case.
THE COURT:

All right, sir.

Anybody else that I have

This matter then is before me on the Chapter 7

This is the third extension requested.

The first was

The second was also granted,

The term lenders have filed a response at Docket Entry

On the other hand, the revolving lenders have set forth
So, let me start

You have not obviously had a chance to
July 20, 2010

Case 1:09-md-02106-ASG Document 113 Entered on FLSD Docket 07/22/2010 Page 6 of 20
6

11:04:13

1

respond to the opposition of the revolving lenders.

11:04:14

2

Do you wish to do so at this time?

11:04:16

3

MR. BLAIN:

11:04:21

4

is -- the Court is aware of the circumstances of the appointment

11:04:23

5

of the trustee having come into this late, having no prior

11:04:27

6

knowledge of this lawsuit, and the trustee has done everything

11:04:32

7

that it could have done up to now to bring itself -- bring

11:04:37

8

himself up to speed on where the lawsuit is and to do his

11:04:40

9

fiduciary duty in terms of evaluating where the estate should

11:04:44

10

11:04:45

11

11:04:48

12

estate does not have sufficient funds to do what they would ask

11:04:53

13

to be done, and it just doesn't make sense for the trustee to

11:04:59

14

expend scarce funds in a bankruptcy estate to produce documents

11:05:02

15

in a lawsuit where the trustee has not even made the

11:05:06

16

determination that it makes sense for the estate to proceed with

11:05:09

17

that lawsuit.

11:05:13

18

11:05:16

19

11:05:16

Yes, Your Honor.

Specifically, the trustee

be.
As far as responding to the revolving lenders, the

THE COURT:

Well, let me ask you to be specific at this

20

MR. BLAIN:

Yes, sir.

11:05:18

21

THE COURT:

What is your specific request with regard

11:05:21

22

11:05:22

23

11:05:24

24

talked to the various parties.

11:05:29

25

the Court on this as far as the specific date.

time.

to extension?

Do you have a date?

MR. BLAIN:

Your Honor, we have thought about that and
We are -- we would be guided by

July 20, 2010

We think it

Case 1:09-md-02106-ASG Document 113 Entered on FLSD Docket 07/22/2010 Page 7 of 20
7

11:05:32

1

would be reasonable to suggest 60 days from today.

11:05:36

2

As far as the specific date time frame and within that

11:05:40

3

time, the trustee would hope to accomplish one of three things:

11:05:44

4

11:05:46

5

should proceed, whether it's in the best interest of the

11:05:49

6

estate for that to happen.

11:05:51

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11:05:55

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pursued during that time, and we have begun and had

11:05:59

9

significant discussions in that direction, or

11:06:02

10

11:06:04

11

estate to abandon this lawsuit in this cause of action, and

11:06:08

12

we think that the 60-day period, given the complexities of

11:06:11

13

the case and the difficulties with documents, not all of

11:06:15

14

which are in the trustee's possession or control, is

11:06:18

15

reasonable to finish and accomplish those goals.

11:06:21

16

11:06:24

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the lawsuit should proceed, settlement does not work, and you

11:06:29

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don't abandon.

11:06:30

19

MR. BLAIN:

Yes, sir.

11:06:31

20

THE COURT:

How are you going to respond?

11:06:35

21

great concern that there's simply going to be a document dump in

11:06:41

22

bad faith.

11:06:42

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MR. BLAIN:

Yes, sir.

11:06:43

24

THE COURT:

What's your response?

11:06:44

25

MR. BLAIN:

Well, that's a difficult problem to deal

1.

2.

3.

To determine, first of all, whether the lawsuit

Whether there are settlement prospects that can be

Whether it's in the best interest of the bankruptcy

THE COURT:

Well, let's assume there's a decision that

July 20, 2010

There's a

Case 1:09-md-02106-ASG Document 113 Entered on FLSD Docket 07/22/2010 Page 8 of 20
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11:06:47

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with, Your Honor, and I'm appreciative of the concern with the

11:06:52

2

document dump and have had discussion with the revolving

11:06:54

3

lenders' counsel about that.

11:06:56

4

11:07:00

5

process and to take documents that it has inherited is somewhere

11:07:05

6

in the range of a quarter of a million dollars and up.

11:07:09

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trustee, even proceeding with that, is a very costly decision to

11:07:14

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the estate.

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11:07:19

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we do because this is not a matter of just seeking time to

11:07:23

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accomplish that.

11:07:27

12

to make the evaluation as to whether this lawsuit should go

11:07:31

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forward at all.

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should go forward -- and that is by no means a preordained

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conclusion -- if the trustee does make that decision, then we

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will sit down with the revolving lenders and do whatever we can

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possibly do to satisfy their concerns and to comply in good

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faith with discovery.

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One of the -- I'm sorry.

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THE COURT:

11:07:54

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11:08:00

24

are available to us, and we're going to review what we get when

11:08:03

25

we get the documents that are being downloaded by the custodians

The trustee's estimate of the cost just to start this

So the

That is one reason we suggest the element of time that

This is an extension of time for the trustee

And if the trustee makes the decision that the lawsuit

How are you going to make a decision like

that without reviewing the documents?
MR. BLAIN:

Well, we're going to review what documents

July 20, 2010

Case 1:09-md-02106-ASG Document 113 Entered on FLSD Docket 07/22/2010 Page 9 of 20
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11:08:08

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of those documents at their disparate locations in Miami and Las

11:08:15

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Vegas.

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3

11:08:18

4

with prior estate counsel on this who had handled this

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5

litigation, we would hope to get access to whatever documents

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are needed for the trustee to make that decision.

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heard, and then I'll hear from the revolving lenders.

11:08:43

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gonna speak on this issue?

11:08:44

13

11:08:48

14

chime in here.

11:08:52

15

We need these documents for our case.

11:08:54

16

11:08:57

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relatively quickly one way or the other, and we think that there

11:09:00

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should be a process put in place here to get us to the end of

11:09:03

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that.

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20

11:09:06

21

11:09:13

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11:09:15

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The term lenders in the response did not oppose a request for a

11:09:21

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brief extension.

11:09:23

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And with that information in hand and in consulting

THE COURT:

All right.

So now that I have something

more specific, let me start with the term lenders.
MR. DILLMAN:
THE COURT:

Yes, sir.

Do you have a position, given what you have

MR. DILLMAN:

Who's

Your Honor, this is Kirk Dillman.

Let me

We have a case where the trustee is not a party.

We think this issue is going to come up, you know,

I don't know what it is but, you know, we need to be
able to access those documents for our case.
THE COURT:

Okay.

MR. DILLMAN:

I'm not sure what you're telling me.

Oh, and we don't.
July 20, 2010

We don't, Your Honor.

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A brief extension is fine but --

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prefer it to be a shorter period of time, although we're mindful

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of the trustee's sort of dilemma.

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here may be what has to occur.

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available to the parties who are in this case so that we can go

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through them seems to be the only alternative.

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done quickly.

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THE COURT:

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MR. DILLMAN:

11:10:03

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trustee provide the documents as requested in both the subpoena

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and the request in a narrower fashion than a dump within the 60

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days, or sooner than that if the trustee elects not to proceed or

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determines that a more narrow production is not economically

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feasible; that we be given to access to wherever the documents

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are.

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trustee says, "We don't have the resources to go through those

11:10:37

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documents to sort out which ones are particularly responsive to

11:10:42

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particular requests," we understand that, but just give us the

11:10:46

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ability to do that.

THE COURT:

The request here is 60 days.

What's your

position?
MR. DILLMAN:

Well, 60 days, Your Honor, is -- we would

We think a "document dump"

If the trustee cannot economically go through the
documents, which he may not be able to do, then making them

That could be

So what is your request?
Your Honor, our request is either the

There's a virtual warehouse of documents somewhere.
We just want to be able to get access to those.

If the

Make the documents available to us, and we
July 20, 2010

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can do that in a matter of weeks.

11:10:54

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So while we're prepared to work with the trustee while

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he goes through the decision process to decide exactly how he's

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going to respond to the revolver's claims and so on, in the

11:11:05

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meantime we'd like to have our interests, you know, put forward

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as well which, even if he drops the case, we're going to be

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there asking for those documents.

11:11:15

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11:11:19

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certainly speaking for my client, you know, and I think for the

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others as well, although if they disagree they'll say so, I

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think if the decision is made obviously to dismiss the case,

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then the revolving lenders, other than Bank of America, are out

11:11:42

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and we don't care what happens.

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you know, in no way would we agree to, you know, anything

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approaching this idea of a document dump.

11:11:56

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will decide whether to proceed with the case and then will

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comply within that time period, you know, with his obligations

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under Rule 34, then certainly speaking for my clients that's

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something I would agree to.

11:12:14

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THE COURT:

It wouldn't take 60 days.

What's the revolving lenders' position

given what you have heard?
MR. RICE:

Your Honor, this is Tom Rice.

If I may,

But if the trustee decides to proceed with the case,

If what the trustee is saying is that within 60 days he

I think, Your Honor, we do have a schedule that Your
Honor has put in place that has depositions starting on August
July 20, 2010

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30th.

I would think that will need to be adjusted, and there

11:12:25

2

are some other dates that might need to be adjusted as well.

11:12:30

3

guess is we could work cooperatively with everybody to come up

11:12:33

4

with new dates.

11:12:34

5

11:12:36

6

which is an extension of 60 days to provide them -- to enable

11:12:41

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them to decide to proceed, whether or not to proceed, and then,

11:12:44

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if so, to meet their obligations under Rule 34, then that's

11:12:48

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certainly something from my clients we could agree with.

11:12:51

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11:12:53

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If I might respond to the notion of an extension of the other

11:12:56

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deadlines in this case.

11:12:59

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who are indeed the plaintiffs in these cases, at least in two of

11:13:04

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them, would be very opposed.

11:13:06

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We have a schedule.

11:13:09

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sufficiently far out to allow discovery to be done.

11:13:12

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been extensions that are certainly not the fault of the term

11:13:16

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lenders, and it's important that we keep our trial dates.

11:13:19

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here because there's sufficient time between events that were

11:13:28

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going to occur beginning actually the beginning of September and

11:13:33

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other dates which are set for November and December, but we'll

11:13:36

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get back to that.

11:13:43

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everybody's position is.

11:13:47

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My

So, you know, assuming that's what we're talking about,

MR. DILLMAN:

THE COURT:

Your Honor, this is Kirk Dillman again.

That is something that the term lenders

The trial date was set
There has

Well, I don't know that that's an issue

So let me discuss this concept and see what

Mr. Blain, I understand that you're in a situation
July 20, 2010

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where you have to make an assessment, but there are limitations

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on what I'm going to do giving you this time.

11:14:02

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MR. BLAIN:

Yes, sir.

11:14:03

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THE COURT:

So as I see this, given what I've heard

11:14:07

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from the parties now, it would appear to me that a two-step

11:14:11

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process would be appropriate.

11:14:21

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you a period of time -- and we'll have to discuss how this works

11:14:26

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in a moment -- not more than 30 days to make a decision relative

11:14:31

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to whether this lawsuit's going to proceed and whether you have

11:14:35

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11:14:43

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goes away, then we need to have a specific plan on compliance

11:14:53

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filed at the end of that 30-day period for production within the

11:14:58

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next 30 days and this is not a dump.

11:15:02

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that is going to be more helpful regardless of the cost if

11:15:11

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you're going to proceed with this litigation.

11:15:13

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So I would see it in those two steps.

11:15:20

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Does anybody have an objection to that from the term

11:15:23

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lenders or the revolving lenders, assuming I have to adjust some

11:15:29

20

dates here to commence fact depositions?

11:15:34

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11:15:37

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clients.

11:15:40

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with makes a lot of sense.

11:15:43

24

Just to respond, I don't think the trial date needs,

11:15:46

25

you know, changing, even if we needed to adjust things at the

The first step would be to give

accomplished any settlement.
If Events 1 and 2 have not been resolved and this case

MR. RICE:

This has to be something

Your Honor, Tom Rice again speaking for my

I think, you know, the 30-day idea that you came up

July 20, 2010

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front end.

11:15:57

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and there's gonna be, you know, depositions, depositions

11:15:59

3

shouldn't start against us or shouldn't start generally until

11:16:02

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we've had access to the debtor's documents.

11:16:04

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11:16:07

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date.

11:16:12

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revolvers?

11:16:17

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approach here?

11:16:19

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10

But I do think if we're going to be in these cases

THE COURT:

Well, I know.

We'll have to readjust that

Any other comment then by your side?
What's your position?

MR. DILLMAN:

How about the

Does that seem a reasonable

Actually, that was the revolvers, Your

Honor.

11

THE COURT:

11:16:23

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MR. DILLMAN:

11:16:27

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if he disagrees, but we don't have an objection to the 30 days.

11:16:30

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We have worked out with Bank of America an extension of their

11:16:33

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time to produce documents which is consistent with that.

11:16:37

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11:16:40

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conference set before the conclusion of that 30 days because

11:16:45

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whatever the decision of the trustee is, as I said, we will have

11:16:50

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the need for those documents, and we're going to need to figure

11:16:53

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out how to get from here to there even if the trustee elects to

11:16:58

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abandon its case.

11:16:59

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11:17:00

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11:17:02

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11:17:05

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Any further comments from the term lenders?
I'll let Mr. Nachtwey obviously speak up

I would suggest that perhaps we have a status

THE COURT:

All right.

MR. BLAIN:

Your Honor, this is Russ Blain speaking.

Any comments from the trustee

on that?

No, Your Honor.

I think that the proposal that you have
July 20, 2010

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outlined is workable and is consistent with the requests that we

11:17:11

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have made and we appreciate your fashioning it in that way.

11:17:14

3

11:17:16

4

specific here on dates.

11:17:22

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get input from you.

11:17:26

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11:17:30

7

additional 30 days.

11:17:45

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side of it, until August 20th to make a decision on whether or

11:17:51

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not you're going to proceed with the litigation or it has

11:17:56

10

11:17:58

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11:18:03

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If the status report is that the case is going to go forward,

11:18:07

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then you're going to have to include in that report a proposal

11:18:12

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for document compliance not later than September 17, and that

11:18:22

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document compliance is going to have to be done not as a dump

11:18:24

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but in good faith and in accordance with applicable rules and

11:18:29

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procedures.

11:18:30

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11:18:36

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11:18:40

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MR. BLAIN:

Yes, sir.

11:18:41

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THE COURT:

So is that part understood?

11:18:44

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MR. BLAIN:

Yes, sir.

11:18:48

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Honor, and that's understood.

11:18:50

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THE COURT:

11:18:54

25

THE COURT:

All right.

So let's see if we can be more

Let me go through this, and then I'll

I'm going to grant the motion in part by allowing an
Let's see.

Well, I will give you, on this

settled.
By August 20th you're to file a status report with me.

So you have to submit a response in some detail about
how that's going to be accomplished with no further extensions.

All right.

This is Rus Blain speaking, Your

Now, I'm going to set a status

conference which follows during that week of August 23rd.
July 20, 2010

I

Case 1:09-md-02106-ASG Document 113 Entered on FLSD Docket 07/22/2010 Page 16 of 20
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11:19:00

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don't have a date yet but I'll give that to you in the order and

11:19:06

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we'll discuss this.

11:19:15

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go forward, I will discuss adjustments to the Court's order at

11:19:20

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Docket Entry 76 concerning the commencement of fact depositions

11:19:27

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and the date for filing nondispositive motions.

11:19:31

6

11:19:35

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time at that status conference is suggest to me some revised

11:19:40

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dates for that early part of our schedule, but I intend to hold

11:19:44

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the other parts of the schedule so that we will be able to move

11:19:50

10

11:19:52

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11:19:57

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11:19:58

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11:20:00

14

11:20:02

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11:20:05

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11:20:05

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THE COURT:

11:20:08

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MR. DILLMAN:

11:20:10

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THE COURT:

11:20:13

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expect from the trustee's standpoint that you do not wait to

11:20:18

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receive anything in writing but you make good use of the time

11:20:21

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that I've given you here.

11:20:23

23

11:20:25

24

11:20:26

25

Also at that time if the case is going to

What I would ask counsel to be prepared to do at that

forward as set forth.
Does anybody have any objection or suggestions relative
to those matters?
MR. RICE:

No, Your Honor.

Thank you.

This is Tom

Rice.
MR. BLAIN:

Rus Blain, Your Honor.

No, that's fine and

understood.

MR. BLAIN:

Anything else this morning?
I don't believe so, Your Honor.

If not, I'll put this in an order, but I

Yes, Your Honor, and we appreciate it and

thank you for the Court's time today.
THE COURT:

All right.

Thank you for your appearances

July 20, 2010

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today.
MR. BLAIN:

[The proceedings conclude at 11:20 a.m., 7/20/10.]

4
5
6

Thank you, Your Honor.

CERTIFICATE
I hereby certify that the foregoing is an accurate transcription of the
proceedings in the above-entitled matter.

7
8
9
10
11

07.22.10
________________
DATE

______________________________________
JOSEPH A. MILLIKAN, RPR-CM-NSC-FCRR
Official United States Court Reporter
Federally Certified Realtime Reporter
400 North Miami Avenue, Suite 11-1
Miami, FL 33128
305.523.5588
(Fax) 305.523.5589
[e-mail]

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Quality Assurance by Proximity Linguibase Technologies
July 20, 2010

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C
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July 20, 2010

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Gold 1:15 4:1
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16:21
grant 15:6
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H
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helpful 13:15
Hennigan 3:1 5:2
Herman 3:6
himself 6:8
hold 16:8
HOLDINGS 1:5,9
Honor 4:4,9,13,17 5:1,4 6:3,23 8:1
9:13,25 10:4,14 11:10,24,25 12:10
13:21 14:10,24,25 15:23 16:13,15
16:18,23 17:2
HONORABLE 1:15
hope 7:3 9:5
HSH 2:16 4:20
Hubbard 3:6
Hunton 2:20 4:21
I
idea 11:18 13:22
IL 3:7
important 12:18
include 15:13
indeed 12:13
information 9:3
inherited 8:5
input 15:5
intend 16:8
interest 7:5,10
interests 11:5
issue 9:12,16 12:19
J
J 2:11
JAMES 3:5
[e-mail] 3:12 17:11
Jason 2:6 4:15
[e-mail] 2:9
Jean-Marie 2:6 4:14
[e-mail] 2:9
JOSEPH 3:9 17:8
JP 2:2 4:11
Jr 3:10
Judge 1:16 4:1,19 5:8

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July 1:12 5:13,16,17
just 6:13 8:4,10 10:21,24 13:24
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Kapila 1:20 4:6 5:8,8
Kaye 2:16 4:20
keep 12:18
Kirk 3:1 5:1 9:13 12:10
Kirschner 2:6 4:15
know 9:16,20,20 11:5,11,17,17,21
12:5,19 13:22,25 14:2,5
knowledge 6:6
known 5:3
L
L 2:6
Las 1:5,9 9:1
late 6:5
later 15:14
lawsuit 6:6,8,15,17 7:4,11,17 8:12,14
lawsuit's 13:9
least 12:13
lenders 4:8,24,25 5:3,18,23 6:1,11 8:3
8:17 9:8,11,23 11:8,14 12:12,18
13:19,19 14:11
let 5:24 6:18 9:8,13 12:23 14:12 15:4
let's 7:16 15:3,7
Lexington 2:2
like 8:21 11:5
limitations 13:1
litigation 9:5 13:16 15:9
LLC 1:5,9
LLP 2:2,7,12,16 3:1 4:20
locations 9:1
Los 3:2
lot 13:23
Ltd 3:6
Lynch 2:12
M
M 1:20
made 6:15 11:13 15:2
Madison 1:21
make 6:13 8:12,16,21 9:6 10:25 13:1,8
15:8 16:21
makes 6:16 8:14 13:23
making 10:9
Master 3:6
matter 5:11 8:10 11:1 17:6
matters 16:12
may 4:2,7 5:15 10:7,9 11:10
Mayer 2:7 4:14
means 8:15
meet 12:8
Merrill 2:12
Miami 1:2,11 2:21 3:11,11 9:1 17:10
17:10
might 12:2,11
MILLIKAN 3:9 17:8
million 8:6
mindful 10:5
Mitsui 2:6 4:16
moment 13:8
more 9:8 10:18 13:8,15 15:3
Morgan 2:2 4:11
morning 4:1,4,9,13,17,1 9 5:1,4 16:17
motion 5:12,17 15:6
motions 16:5
move 16:9
much 5:21
Myers 2:12 4:18
N
Nachtwey 3:5 5:4,5 14:12
narrow 10:18
narrower 10:16
need 9:15,20 12:1,2 13:12 14:19,19
needed 9:6 13:25
needs 13:24
Nevada 5:3
new 2:3,8,13,17 4:14 5:5 12:4
next 13:14
nondispositive 16:5
nonopposition 5:21
Nordbank 2:16 4:20
North 3:11 17:10

notion 12:11
November 12:22
NY 2:3,8,13,17
N.A 1:12
O
objection 13:18 14:13 16:11
obligations 11:21 12:8
obviously 5:25 11:13 14:12
occur 10:7 12:21
Official 3:9 17:9
Oh 9:25
Okay 9:22
one 7:3 8:9,20 9:17
ones 10:23
only 10:11
oppose 5:19 9:23
opposed 12:14
opposition 5:24 6:1
order 5:13 16:1,3,19
other 4:23 5:7,23 9:17 11:14 12:2,11
12:22 14:6 16:9
others 11:12
otherwise 5:3
out 10:23 11:14 12:16 14:14,20
outlined 15:1
O'Melveny 2:12 4:18
P
Page 3:16
pageraci@ kayescholer.com 2:18
Pages 1:13
Palenchar 3:6
Park 2:17
part 15:6,21 16:8
particular 10:24
particularly 10:23
parties 6:24 10:10 13:5
parts 16:9
party 9:14
perhaps 14:16
period 7:12 10:5 11:21 13:7,13
Phil 4:19
PHILLIP 2:16
place 9:18 11:25
plaintiffs 1:10 5:3,5 12:13
plan 13:12
PLC 2:1
please 4:8
position 9:10 10:3 11:8 12:24 14:7
possession 7:14
possibly 8:18
prefer 10:5
preordained 8:15
prepared 11:2 16:6
prior 6:5 9:4
problem 7:25
procedures 15:17
proceed 6:16 7:5,17 10:17 11:16,20
12:7,7 13:9,16 15:9
proceeding 8:7
proceedings 17:3,6
process 8:5 9:18 11:3 13:6
produce 6:14 14:15
production 5:16 10:18 13:13
proposal 14:25 15:13
prospects 7:7
Prosser 1:20 4:5
provide 10:15 12:6
pursued 7:8
put 9:18 11:5,25 16:19
P.A 1:20
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quarter 8:6
quickly 9:17 10:12
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R 1:20 17:4
range 8:6
Rasile 2:20 4:21,21
[e-mail] 1:22
RE 1:4
readjust 14:5
Realtime 3:10 17:9
reason 8:9

reasonable 7:1,15 14:7
receive 16:21
received 5:17
recognized 5:11
regard 6:21
regardless 13:15
relative 13:8 16:11
relatively 9:17
report 15:11,12,13
REPORTED 3:9
Reporter 3:9,10 17:9,9
Reporter's 3:17
represent 4:11 5:5
request 6:21 9:23 10:2,13,14,16
requested 5:14,20 10:15
requests 10:24 15:1
resolved 13:11
resources 10:22
respond 6:1 7:20 11:4 12:11 13:24
responding 6:11
response 5:18 7:24 9:23 15:18
responsive 10:23
review 8:23,24
reviewing 8:22
revised 16:7
revolvers 14:7,9
revolver's 11:4
revolving 4:8,24 5:23 6:1,11 8:2,17
9:11 11:8,14 13:19
Rice 2:1 4:9,10 11:10,10 13:21,21
16:13,14
Riedel 1:20 4:5
right 4:7 5:10 9:7 14:22 15:3,24 16:25
Royal 2:3 4:12
RPR-CM -NSC-FCRR 3:9
RPR-CM -NSC-FCRSC 17:8
Rule 11:22 12:8
rules 15:16
Rus 15:22 16:15
Russ 14:24
Russell 1:20 4:4
S
S 1:15 3:2
satisfy 8:18
saying 11:19
says 10:22
scarce 6:14
schedule 11:24 12:15 16:8,9
Scholer 2:16 4:20
Scotland 2:3 4:12
Scott 3:6
second 5:12,15
see 12:23 13:4,17 15:3,7
seeking 8:10
seem 14:7
seems 10:11
sense 6:13,16 13:23
September 12:21 15:14
set 5:20,23 12:15,22 14:17 15:24
16:10
settled 15:10
settlement 7:7,17 13:10
shorter 10:5
side 14:6 15:8
significant 5:24 7:9
simply 7:21
Simpson 2:2 4:10
sir 5:10 6:20 7:19,23 9:9 13:3 15:20,22
sit 8:17
situation 12:25
some 12:2 13:19 15:18 16:7
something 9:7 11:23 12:9,12 13:14
somewhere 8:5 10:20
Soneet 1:20 4:6 5:8
sooner 10:17
sorry 8:20
sort 10:6,23
SOUTHERN 1:1
speak 9:12 14:12
speaking 11:11,22 13:21 14:24 15:22
specific 5:21 6:18,21,25 7:2 9:8 13:12
15:4
Specifically 6:3
speed 6:8
Square 2:12,13
standpoint 16:20

July 20, 2010

start 5:24 8:4 9:8 14:3,3
starting 11:25
States 1:1,16 3:9 17:9
status 14:16 15:11,12,24 16:7
step 13:6
steps 13:17
Steve 2:1 4:10 5:4
STEVEN 3:5
Stichter 1:20 4:5
Street 1:21 3:2,6
submit 15:18
subpoena 10:15
sufficient 6:12 12:20
sufficiently 12:16
suggest 7:1 8:9 14:16 16:7
suggestions 16:11
Suite 1:21 2:21 3:2,6,11 17:10
Sumitomo 2:6 4:16
sure 9:22
Sushon 2:11 4:17,18
T
T 17:4,4
TABLE 3:15
take 8:5 11:1
talked 6:24
talking 12:5
Tampa 1:21 4:5
telling 9:22
TELPHONIC 1:15
term 4:25 5:3,18 9:8,23 12:12,17
13:18 14:11
terms 5:21 6:9
Thacher 2:2 4:10
thank 4:7 16:13,24,25 17:2
their 8:18 9:1 12:8 14:14
things 7:3 13:25
think 6:25 7:12 9:16,17 10:6 11:11,13
11:24 12:1 13:22,24 14:1,25
third 5:14
THOM AS 2:1
thought 6:23
three 7:3
through 10:8,11,22 11:3 15:4
time 5:20,21 6:2,19 7:2,3,8 8:9,10,11
10:5 11:21 12:20 13:2,7 14:15 16:2
16:7,21,24
Times 2:12,13
today 7:1 16:24 17:1
Tom 4:9 11:10 13:21 16:13
Tower 2:12
TRANSCRIPT 1:15
transcription 17:6
trial 12:15,18 13:24
[e-mail] 2:4
trustee 4:3,6 5:9,19,25 6:3,5,6,13,15
7:3 8:7,11,14,1 6 9:6,14 10:8,15,17
10:22 11:2,16,19 14:18,20,22
trustee's 5:12 7:14 8:4 10:6 16:20
two 12:13 13:17
two-step 13:5
U
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understand 10:24 12:25
understood 15:21,23 16:16
United 1:1,16 3:9 17:9
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use 16:21
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V
various 6:24
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virtual 10:20
vs 1:11
W
wait 16:20
want 10:21
warehouse 10:20
way 9:17 11:17 15:2
week 15:25
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12:2,19 14:5 15:7
were 12:20
West 3:6
we'll 12:22 13:7 14:5 16:2
we're 4:15 8:23,24 10:5 11:2,6 12:5
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William 2:11 4:17
Williams 2:20 4:21
wish 6:2
work 7:17 11:2 12:3
workable 15:1
worked 14:14
works 13:7
wouldn't 11:1
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6
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Y
York 2:3,8,13,17 4:14 5:5
0
09-MDL-2106 4:2
09-2106-MDL-GOLD 1:3
1
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212.262.191 0 2:8
212.326.2000 2:13
212.445.3040 2:3
212.455.2502 2:3
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305.523.55 89 3:12 17:11
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312.494.4400 3:7
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33602 1:21
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4
400 3:11 17:10
425 2:2,17
5
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July 20, 2010

Case 1:09-md-02106-ASG Document 114 Entered on FLSD Docket 07/23/2010 Page 1 of 22

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
MASTER CASE NO. 09-2106-MD-GOLD/BANDSTRA
In re:
FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL NO. 2106
This document relates to Case Number:
09-CV-21879-ASG
______________________________________/

BANK DEFENDANTS’ OPPOSITION TO FONTAINEBLEAU RESORTS, LLC,
FONTAINEBLEAU RESORTS HOLDINGS, LLC AND FONTAINEBLEAU RESORTS
PROPERTIES I, LLC’S MOTION TO QUASH SUBPOENAS [DKT # 93]

Case 1:09-md-02106-ASG Document 114 Entered on FLSD Docket 07/23/2010 Page 2 of 22

TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT .................................................................................................... 1
BACKGROUND ............................................................................................................................ 3
I.

The Credit Agreement......................................................................................................... 3

II.

The Discovery Dispute ....................................................................................................... 5

ARGUMENT.................................................................................................................................. 8
I.

Judge Gold Has Rejected Any Assertion that the Conversion of FBLV’s Bankruptcy
Case Should Serve as a Basis for Delaying or Avoiding Discovery .................................. 9

II.

The May 4 Subpoena is Neither Overbroad Nor Unduly Burdensome ............................ 12
A.

III.

Fontainebleau Resorts Has Not Established that the Subpoenas are Overbroad .. 12

The Motion to Quash Should Be Denied Because Fontainebleau Resorts Failed to
Satisfy Rule 7.1(A)(3)....................................................................................................... 16

CONCLUSION............................................................................................................................. 18

i

Case 1:09-md-02106-ASG Document 114 Entered on FLSD Docket 07/23/2010 Page 3 of 22

TABLE OF AUTHORITIES
Page(s)
Cases
Armor Screen Corp. v. Storm Catcher, Inc.,
No. 07-81091-Civ., 2009 WL 1871685 (S.D. Fla. June 29, 2009)......................................... 16
Choice-Intersil Microsystems, Inc. v. Agere Sys. Inc.,
224 F.R.D. 471 (N.D. Cal 2004)............................................................................................. 10
Gerling Int’l Ins. v. Comm’r of Internal Revenue,
839 F.2d 131 (3d Cir. 1988).................................................................................................... 10
Grosek v. Panther Transp., Inc., 251 F.R.D. 162 (M.D. Pa. 2008) .............................................. 10
Guzman v. Irmadan, Inc., 249 F.R.D. 399 (S.D. Fla. 2008)......................................................... 13
In re Fontainebleau Las Vegas Holdings, LLC,
417 B.R. 651 (S.D. Fla. 2009) .................................................................................... 3, 4, 5, 14
Int’l Ass’n of Machinists and Aerospace Workers v. P&B Transport,
3:05-cv-1083, 2007 WL 4145974 (M.D. Fla. Nov. 19, 2007)................................................ 12
Linder v. Dep’t of Defense, 133 F.3d 17 (D.C. Cir. 1998) ........................................................... 13
Lockheed Martin Corp. v. Boeing Co.,
No. 6:03-cv-796, 2003 WL 22962782 (M.D. Fla. Oct. 21, 2003).......................................... 17
S.E.C. v. Huff,
No. 08-60315-CIV, 2010 WL 228000 (S.D. Fla. Jan. 13, 2010)............................................ 14
Trinos v. Quality Staffing Servs., Inc., 250 F.R.D. 696 (S.D. Fla. 2008) ..................................... 17
Westinghouse Electric Corp. v. City of Burlington,
351 F.2d 762 (D.C. Cir. 1965) ................................................................................................ 13
Wiwa v. Royal Dutch Petroleum Co., 392 F.3d 812 (5th Cir. 2004) ...................................... 12, 13
Rules
Federal Rule of Civil Procedure 34(a) .......................................................................................... 10
Federal Rule of Civil Procedure 45(a)(1)(A)(iii).......................................................................... 10
Federal Rule of Civil Procedure 45(c)(3)(A)................................................................................ 12
S.D. Fla. R. 7.1(A) ........................................................................................................................ 16
ii

Case 1:09-md-02106-ASG Document 114 Entered on FLSD Docket 07/23/2010 Page 4 of 22

Defendants Barclays Bank PLC, Deutsche Bank Trust Company Americas, JPMorgan
Chase Bank N.A., and The Royal Bank of Scotland plc, (collectively the “Bank Defendants”) by
and through their undersigned counsel, hereby submit this response and opposition to
Fontainebleau Resorts, LLC, Fontainebleau Resorts Holdings, LLC and Fontainebleau Resorts
Properties I, LLC’s (collectively, “Fontainebleau Resorts”) Motion to Quash Subpoenas Dated
May 4, 2010 [DKT #93] (the “Motion to Quash”). On July 8, 2010, the Honorable Alan S. Gold
referred the Motion to Quash to the Honorable Ted E. Bandstra [DKT # 94].
PRELIMINARY STATEMENT
On June 9, 2009, Fontainebleau Resorts’ bankrupt affiliate, Fontainebleau Las Vegas,
LLC (“FBLV”), commenced a lawsuit against the Bank Defendants and other revolving lenders
(collectively, the “Revolving Lender Defendants”) under a Credit Agreement, dated as of June 6,
2007 (the “Credit Agreement”). FBLV alleged, inter alia, that the Revolving Lender Defendants
breached the Credit Agreement by (i) failing to fund Notices of Borrowing issued in March
2009; and (ii) terminating their revolving lending commitments under the Credit Agreement in
April 2009 based on the occurrence of Events of Default. FBLV’s lawsuit is now part of a
Multi-District Litigation pending before the Honorable Alan S. Gold. In decisions dated August
26, 2009 and May 28, 2010, 1 Judge Gold twice ruled that the March Notices of Borrowing
issued by FBLV did not comply with the Credit Agreement and thus, that the Revolving Lender
Defendants were within their rights not to fund those Notices. Accordingly, the only claims

1

The August 26, 2009 ruling was issued in FBLV’s lawsuit and denied FBLV’s motion for
partial summary judgment. The May 28, 2010 ruling was issued in two lawsuits
commenced by Term Lenders, which Judge Gold dismissed in their entirety as against the
Revolving Lender Defendants.

Case 1:09-md-02106-ASG Document 114 Entered on FLSD Docket 07/23/2010 Page 5 of 22

remaining in FBLV’s suit relate to the assertion that no Events of Default had occurred as of the
time the Revolving Lender Defendants terminated their obligations in April 2009.
Pursuant to Scheduling Orders entered by Judge Gold, the Bank Defendants and the other
revolving lenders have for several months sought document discovery from FBLV and from
Fontainebleau Resorts. Despite these efforts, not a single document has been produced by either
entity. Even though Fontainebleau Resorts is the indirect corporate parent of FBLV and many of
the present and former employees of FBLV are or were employed by Fontainebleau Resorts,
FBLV took the position that it would not produce any documents in the possession of
Fontainebleau Resorts, thus requiring the Bank Defendants to serve subpoenas on Fontainebleau
Resorts, which they did on May 4, 2010 (the “Subpoenas”).2 After multiple extensions and
delays, Fontainebleau Resorts now claims that the Chapter 7 trustee appointed in FBLV’s
bankruptcy case (the “FBLV Trustee”) has directed it not to produce responsive documents and
that logistical issues relating to the appointment of a FBLV Trustee prevent it from complying
with the Subpoenas. The FBLV Trustee, for its part, has claimed that Fontainebleau Resorts has
directed it not to produce responsive documents in FBLV’s custody or control that are
purportedly the property of Fontainebleau Resorts.
Judge Gold, considering document requests similar in scope to those contained in the
Subpoenas, rejected out of hand the suggestion that the conversion of FBLV’s bankruptcy case
and the appointment of the FBLV Trustee is an excuse for not participating fully in discovery.
Judge Gold has given the FBLV Trustee until August 20 to decide whether to pursue its case
against the Revolving Lender Defendants and, if so, to complete its document production by
2

See Exhibits A, B, and C to the Declaration of Steven S. Fitzgerald in Support of the
Bank Defendants’ Opposition to Fontainebleau Resorts’ Motion to Quash Subpoenas.
References to “Exhibit” herein are to the Exhibits attached to the Fitzgerald Declaration.
2

Case 1:09-md-02106-ASG Document 114 Entered on FLSD Docket 07/23/2010 Page 6 of 22

September 17, 2010 in a manner that fully complies with the Federal Rules of Civil Procedure
regardless of the cost.
Consistent with Judge Gold’s rulings, this Court should reject Fontainebleau Resorts’
attempt to evade its obligations to respond to the Subpoenas and order Fontainebleau Resorts to
fully comply with the Subpoenas by September 17, 2010. The Court should also reject
Fontainebleau Resorts’ conclusory assertions that the Subpoenas are overbroad because (1) they
are appropriately tailored to seek responsive materials, and (2) Fontainebleau Resorts made no
attempt to meet and confer with the Revolving Lender Defendants regarding the scope of the
Subpoenas.
BACKGROUND
I.

The Credit Agreement
The present case involves a dispute under a $1.85 billion Credit Agreement entered into

on June 6, 2007 in connection with Fontainebleau Resorts’ now bankrupt affiliate FBLV. In re
Fontainebleau Las Vegas Holdings, LLC, 417 B.R. 651, 655-56 (S.D. Fla. 2009). The Credit
Agreement provided FBLV with three types of loans:
•

A $700 million term loan that was funded on the date of the inception of the
Credit Agreement;

•

a $350 million so-called Delay Draw Term Loan that would become available
after the inception date of the Credit Agreement; and

•

an $800 million revolving loan (the “Revolver”) funded by lenders that included
the Revolving Lender Defendants.

Id. FBLV planned to use the proceeds from these loans, along with other sources of funding, to
build a Fontainebleau branded casino in Las Vegas (the “Project”). Id. The Project was the
brainchild of Jeffrey Soffer who controlled both Fontainebleau Resorts and FBLV (prior to its
bankruptcy). Under the Credit Agreement, the Revolving Lender Defendants had the right to
3

Case 1:09-md-02106-ASG Document 114 Entered on FLSD Docket 07/23/2010 Page 7 of 22

terminate their obligations to loan money upon the occurrence of an Event of Default. Id. at 664.
As Judge Gold has ruled, the Revolving Lender Defendants also had the ability to refuse to lend
if FBLV materially breached the Credit Agreement. Id.
On March 2 and March 3, 2009, FBLV submitted Notices of Borrowing under the Credit
Agreement (the “March Notices of Borrowing”), requesting a Delay Draw Term Loan for the
entire $350 million facility and a $670 million Revolving Loan. FBLV offered no explanation
for its sudden request for over $1 billion. In re Fontainebleau Las Vegas Holdings, 417 B.R. at
655-56. The Credit Agreement’s Administrative Agent notified FBLV that it would not process
the March Notices of Borrowing because they did not comply with the Credit Agreement’s
requirement that “unless the Total Delay Draw Commitments have been fully drawn, the
aggregate outstanding principal amount of all Revolving Loans and Swing Line Loans shall not
exceed $150,000,000.” Id. Judge Gold has ruled on two occasions that, as a matter of law, the
Revolving Lender Defendants properly denied the March Notices of Borrowing because the
Credit Agreement unambiguously prohibits FBLV from borrowing more than $150 million
under the Revolver until FBLV requests and receives the entire $350 million provided for under
the Delay Draw Term Loan. Id. at 659-60; In re Fontainebleau Las Vegas Contract Litig., No.
09-MD-2106-CIV-GOLD/BANDSTRA, MDL Order 18, at 20-21 [DKT. #79] (S.D. Fla. May
28, 2010).
In the days and weeks following the March Notice of Borrowing, FBLV provided its
Lenders with information that not only confirmed that the Project was in serious trouble, but also
strongly suggested that FBLV had been in default under the Credit Agreement when it submitted
the March Notices of Borrowing.

4

Case 1:09-md-02106-ASG Document 114 Entered on FLSD Docket 07/23/2010 Page 8 of 22

As Judge Gold found, on April 13, 2009, FBLV notified the Lenders that, contrary to its
representations, FBLV did not have sufficient sources of capital to satisfy the In Balance Test:
[O]ne or more events, occurrences or circumstances have occurred
which reasonably could be expected to cause the In Balance Test
to fail to be satisfied or render the Project Entities incapable of, or
prevent the Project Entities from (a) achieving the Opening Date
on or before the Scheduled Opening Date, or (b) meeting one or
more material obligations under the Prime Construction
Agreement or the other Material Contracts as and when required
thereunder.
In re Fontainebleau, 417 B.R. at 656.
On April 20, 2009, in light of the evidence that Events of Default had occurred, the
Revolving Lenders issued a notice of termination of their obligations under the Credit
Agreement. Id. On June 9, 2009, FBLV filed for bankruptcy. Id. at 655. The same day, it filed
suit against the Revolving Lender Defendants for breach of the Credit Agreement for failure to
fund its March 2009 borrowing request and for improperly terminating the Credit Agreement.
Id. In light of Judge Gold’s rulings, the only claims remaining in the case are those based on the
alleged improper termination of the Credit Agreement.
II.

The Discovery Dispute
From the beginning of the case, FBLV has indicated to the Revolving Lender Defendants

that Fontainebleau Resorts has knowledge and documents relevant to this case. The declaration
filed in support of FBLV’s Chapter 11 Petition and First Day Pleadings was from Howard C.
Karawan, who self-identified as “Chief Operating Officer and Chief Restructuring Officer of
Fontainebleau Resorts, LLC, the indirect parent company and manager of Fontainebleau Las
Vegas Holdings, LLC, Fontainebleau Las Vegas, LLC and Fontainebleau Las Vegas Capital
Corp.” Exhibit G (Karawan Decl.) at ¶ 1. Organizational charts submitted to the Bankruptcy
Court make clear that there is an unbroken chain of parent/subsidiary relationships with 100%
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ownership interests between Fontainebleau Resorts, LLC and FBLV. Exhibit G at 61, Exhibit A.
Karawan further described Fontainebleau Resorts in Miami as the nerve center where “all major
decisions” regarding the Project were made. Exhibit G at ¶ 12.
In addition, during meet and confer conferences, FBLV has indicated that Fontainebleau
Resorts possesses relevant documents, a fact which Fontainebleau Resorts does not dispute.
Both Fontainebleau Resorts and FBLV shared common email servers and documents databases.
See Exhibit H (Mar. 24, 2010 letter from S. Baena to R. Mockler) at 1 (indicating that FBLV’s
documents are housed on same servers as Fontainebleau Resorts’ documents). The Revolving
Lender Defendants requested that FBLV collect and produce those documents but, to date,
FBLV has refused stating that Fontainebleau Resorts was claiming a proprietary interest in the
documents and would not consent to production. See Chapter 7 Trustee’s Motion for Brief
Excusal of Compliance With Second Amended Order Resetting Certain Pretrial Deadlines,
Referring Discovery Motions, Directing Parties to Mediation, and Establishing Pretrial Dates and
Procedures (“Motion for Excusal”) [DKT # 96] at ¶ 9 (The FBLV’s motion seeking to be
relieved from Judge Gold’s scheduling order in part because “Fontainebleau Resorts, LLC,
Fontainebleau Resorts Holdings, LLC and Fontainebleau Resorts Properties I, LLC … are
claiming that certain documents in the Chapter 7 Trustee’s possession are owned by [them] …”).
What makes FBLV’s position particularly unreasonable is that FBLV concedes that it already
possesses many of the relevant documents it claims are controlled by Fontainebleau Resorts.
Although the Revolving Lender Defendants believe that FBLV is required to produce
documents relating to the Project regardless of whether FBLV or Fontainebleau Resorts purports
to “own” the document, in order to avoid unnecessary delay, on May 4, 2010, the Bank
Defendants served the Subpoenas with a June 4, 2010 return date. On June 7, 2010,

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Fontainebleau Resorts sought an extension of time to respond to the Subpoenas. Fontainebleau
Resorts’ Motion for Extension of Time to Respond to Subpoenas Dated May 4, 2010 [DKT #84].
The Bank Defendants consented to the extension and on June 8 the Court entered an order
extending Fontainebleau Resorts’ time to respond to July 6, 2010. Paperless Order Granting
Unopposed Motion for Extension of Time [DKT #85].
In a letter dated June 9, 2010, counsel for Fontainebleau Resorts stated:
In order to respond to your subpoenas, Fontainebleau Resorts needs access to
their computer servers which house both e-mails and documents. However,
because these servers contain information belonging to the debtors or the servers
themselves belong to the debtors, the Trustee has either taken possession these
[sic] servers or is aware of the servers and will not allow the removal of any
information at this time.
Exhibit D (June 9, 2010 letter from S. Springer to T. Rice) at 1-2. Thus, the Bank Defendants
found themselves in a position where FBLV was claiming that Fontainebleau Resorts was
refusing to consent to discovery and, for its part, Fontainebleau Resorts was claiming that the
FBLV Trustee was actually the party who would not consent to production. Fontainebleau
Resorts asked the Bank Defendants to be “patient.” Id.
During a call that occurred at the end of June, counsel for Fontainebleau Resorts assured
the Bank Defendants that Fontainebleau Resorts was working through its issues with the FBLV
Trustee. Fontainebleau Resorts again asked the Bank Defendants to “be patient” as they worked
through these issues. Fitzgerald Decl. at ¶ 5. Fontainebleau Resorts did not indicate that it
wished to discuss the scope of the subpoena. Id.
However, on July 6, 2010, counsel for Fontainebleau Resorts emailed counsel for the
Bank Defendants stating:
As a result of the conversion and the breadth of the subpoenas, please be advised
that I plan on filing a Motion to Quash Defendants’ Subpoenas dated May 4,
2010. As required by S.D.Fla.L.R. 7.1A, I am writing in an attempt to resolve by
agreement the issues raised in the Motion to Quash. If you would like, I will send
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you a signed copy of the Motion when it is complete. Please let me know if you
need to see the Motion before deciding whether I need to file it. I look forward to
hearing from you before the end of the day as the deadline to file a response is
today.
Exhibit E (July 6, 2010 email from S. Fitzgerald to S. Springer).
Counsel for the Bank Defendants responded:
When we spoke you did not mention that you believed our subpoena was overbroad. We are willing to meet and confer on that subject and discuss further any
additional issues you may be having with the trustee. I do not think emailing us
with an hour’s notice satisfies your obligations under the S.D. Fla. Local Rules. If
you would like to satisfy the rule and engage in a legitimate meet and confer
process let me know.
Id. Shortly thereafter, the parties spoke on the telephone. Counsel for the Bank Defendants
offered to grant an extension and stated that the Bank Defendants had thoughts on how to
mitigate the burden of complying with the Subpoenas. Fitzgerald Decl. at ¶ 7. But counsel for
Fontainebleau Resorts indicated that Fontainebleau Resorts had no interest in discussing an
extension or a mutually acceptable approach to mitigating the burden of discovery and, instead,
intended to file this Motion to Quash, which it did later in the evening of July 6, 2010. Id. at ¶ 8.
ARGUMENT
Fontainebleau Resorts refuses to make any production in response to the Subpoenas on
the ground that the conversion of FBLV’s bankruptcy case to a Chapter 7 case in April 2010
purportedly makes compliance difficult and, alternatively, on the ground that the requests are
overbroad and unduly burdensome. Fontainebleau Resorts’ objections are inadequate and
without merit, and are particularly inappropriate in light of its disregard of its meet and confer
obligations.

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I.

Judge Gold Has Rejected Any Assertion that the Conversion of FBLV’s Bankruptcy
Case Should Serve as a Basis for Delaying or Avoiding Discovery
Judge Gold has rejected out of hand any contention that the conversion of FBLV’s

Chapter 11 case to a Chapter 7 case is grounds for avoiding discovery in this case. See Exhibit I
(Transcript from the April 16, 2010 Telephonic Status Conference) at 8:12-24 (“I’m not
interested as much as you all are in what a bankruptcy trustee does or doesn’t do. So what I set
in this case as our timelines and guidelines must be followed, end of story, including by the
bankruptcy judge and the trustee. As far as I understand the way our system works, if I say do
something, the bankruptcy judge is obligated to do it and any trustee for the bankruptcy judge is
obligated to follow it. … So this is to be done, and I’m going to require that Fontainebleau
proceed forthwith and get it done.”).
In FBLV’s most recent attempt to evade discovery, the FBLV Trustee filed a motion
seeking relief from Judge Gold’s scheduling order setting July 12 as the deadline for documents
responsive to the Revolving Lenders’ document requests, which contain requests similar to those
in the Subpoenas. FBLV argued that it cannot comply with discovery requests served upon
FBLV because the FBLV Trustee could not “work out logistic and proprietary issues” relating to
an asserted ownership interest by Fontainebleau Resorts in documents in the FBLV Trustee’s
possession. See Motion for Excusal at 3. Judge Gold rejected the FBLV Trustee’s assertion that
an open-ended extension of discovery is appropriate in the present case in light of the logistical
issues presented by conversion of FBLV’s bankruptcy case and Fontainebleau Resorts’
purported ownership interest in responsive documents. Judge Gold ordered the FBLV Trustee to
decide by August 20, 2010 whether or not to pursue its claims and report its decision in a filing
with the Court. See Exhibit J (MDL Order Number 25). If FBLV decides to pursue its claims, it
must complete its document production by September 17, 2010. Id. Judge Gold also “expressly
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admonished” that a “document dump” shall not suffice and that FBLV must comply with the
Revolving Lender Defendants’ discovery requests in good faith and in compliance with the
Federal Rules of Civil Procedure regardless of cost. Id. This Court should order Fontainebleau
Resorts to produce documents on the same schedule as FBLV and on the same terms.3
Fontainebleau Resorts’ attempt to characterize itself a “non-party” to this litigation that
should not have to comply with discovery demands is disingenuous. Fontainebleau Resorts is
the corporate parent of bankrupt FBLV. Exhibit G at ¶¶ 1, 12. Fontainebleau Resorts and FBLV
share common email servers and document databases. Exhibit H. Pursuant to Federal Rules of
Civil Procedure 34(a) and 45(a)(1)(A)(iii), a party may serve a request for the production of
documents that are an entity’s “possession, custody or control.” Here, Fontainebleau Resorts
clearly has “control” over the documents (along with FBLV) as contemplated by Rule 34(a) and
45(a)(1)(A)(iii) and Fontainebleau Resorts has an obligation to respond to the Subpoenas. See
Choice-Intersil Microsystems, Inc. v. Agere Sys. Inc., 224 F.R.D. 471, 472-73 (N.D. Cal 2004)
(holding that pursuant to third-party subpoena, wholly-owned subsidiary of foreign company was
required to produce documents in possession of parent, given that among other things parent and
subsidiary shared databases); see also Gerling Int’l Ins. v. Comm’r of Internal Revenue, 839 F.2d
131, 140-41 (3d Cir. 1988) (“Where the relationship is thus that the agent-subsidiary can secure
documents of the principal-parent to meet its own business needs and documents helpful for use
in the litigation, the courts will not permit the agent-subsidiary to deny control for purposes of
discovery by an opposing party.”); Grosek v. Panther Transp., Inc., 251 F.R.D. 162, 166 (M.D.
Pa. 2008) (holding that to the extent a parent and subsidiary had a “business relationship,”
3

Of course, if FBLV voluntarily dismisses its lawsuit on August 20, 2010, Fontainebleau
Resorts will not have to produce any documents responsive to the Subpoena. However, if
FBLV, Fontainebleau Resorts’ affiliate, decides to pursue the action, Fontainebleau
Resorts should complete its production by September 17, 2010.
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information on the financial information of the parent was under the control of the subsidiary and
had to be produced).
Fontainebleau Resorts’ claim that the parties must sift through all the documents to
determine “which documents belong to” which entity before they can be produced is nonsense.
Motion to Quash at 3. All Fontainebleau Resorts and FBLV need to do is identify responsive
documents and produce them. There is no need to segregate them by entity.
Fontainebleau Resorts’ attempt to distance itself from the present controversy is further
undermined by the fact that key officers of FBLV were employees of Fontainebleau Resorts.
According to the declaration of Howard C. Karawan filed in the In re Fontainebleau Las Vegas
Holdings, LLC bankruptcy proceeding:
All major decisions in respect to the Project (defined below) have been made by
the Board of Managers of Fontainebleau Resorts, LLC. The Board of Managers
has continuously exercised its ultimate control over the management, business
activities (including the design and development of the Project) and capital
structure/financing .… I report directly to the Board of Managers … including
the ultimate controlling person of the Fontainebleau families and Chairman of
Fontainebleau Resorts, LLC, Jeffrey Soffer.
Exhibit G at ¶ 12. Moreover, the assertion that Fontainebleau Resorts and FBLV are even
separate entities is a dubious claim which we understand is currently being litigated in multiple
forums. See Exhibit K (Complaint in CCCS International v. Fontainebleau Las Vegas, 2:09-cv00853-KJD-PAL)at ¶ 5 (“Upon information and belief, Defendant Fontainebleau Resorts, LLC is
a parent company, and/or is an alter ego of the Fontainebleau Las Vegas LLC …”); Exhibit L
(Amended Complaint in Fidelity National Title Insurance Company v. Fontainebleau Resorts,
LLC, No. 09-75602-CA-15) at ¶ 15 (“[T]he assets and management of the various
[Fontainebleau] entities have been intermingled, formalities have not been maintained, and the

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assets have been manipulated by and among the defendants (including undercapitalization) to
assist them in evading obligations and debt payments.”)4
II.

The May 4 Subpoena is Neither Overbroad Nor Unduly Burdensome
Prior to the date of its Motion to Quash, Fontainebleau Resorts never indicated that it

believed the scope of the Subpoenas was in any way inappropriate and never sought to meet and
confer with the Bank Defendants to narrow the scope of the Subpoenas. Nevertheless,
Fontainebleau Resorts now argues that the Subpoenas are overbroad.5
A.

Fontainebleau Resorts Has Not Established that the Subpoenas are
Overbroad

Under Federal Rule of Civil Procedure 45(c)(3)(A), the burden to establish that a
subpoena should be quashed is on the party that moves to have it quashed. Int’l Ass’n of
Machinists and Aerospace Workers v. P&B Transport, 3:05-cv-1083, 2007 WL 4145974, at *2
(M.D. Fla. Nov. 19, 2007) (citing Wiwa v. Royal Dutch Petroleum Co., 392 F.3d 812, 818 (5th
Cir. 2004)). The moving party also has the burden of proof to demonstrate that compliance with

4

The Fidelity National plaintiffs further allege that Soffer, the “ultimate controlling person
of the Fontainebleau family of companies,” is also the general partner and owner of both
Turnberry West Construction, the corporation created for the sole purpose of performing
general contractor services to benefit Fontainebleau Resorts, and Turnberry Residential
Limited Partner, L.P., a Delaware limited partnership that owns or controls various
residential and commercial development entities, and signed the Project’s Completion
Guaranty on June 6, 2007. Exhibit L at ¶¶ 11-12, 17. On May 20, 2010, the Revolving
Lender Defendants served a subpoena requesting documents from Turnberry West
Construction and Turnberry Residential Limited Partner. To date, there has not been any
acknowledgment of the subpoena from those entities and they are in default.

5

Fontainebleau Resorts also objects on the basis that the Subpoenas request that
Fontainebleau Resorts send the documents to New York. During counsels’ telephone
conversation on July 6, 2010, the Bank Defendants indicated that they would be happy to
allow Fontainebleau Resorts to produce documents at the offices of Bank Defendants’
Miami counsel, Greenberg Traurig. Indeed, Fontainebleau Resorts concedes that “[t]he
FBR Entities have not been requested . . . to produce documents in New York.” Motion
to Quash at 4.
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the subpoena would be unreasonable and oppressive. Wiwa, 392 F.3d at 818; Linder v. Dep’t of
Defense, 133 F.3d 17, 24 (D.C. Cir. 1998) (holding that, to justify quashing a subpoena for
relevant information, the moving party must satisfy the heavy burden of proving oppressiveness
or other recognized ground); Westinghouse Electric Corp. v. City of Burlington, 351 F.2d 762,
766 (D.C. Cir. 1965) (noting that the burden is “particularly heavy to support a motion to quash
as contrasted to some more limited protection”).
A party objecting to a discovery request must, at a minimum, identify the objectionable
request and explain why it is overbroad or unduly burdensome. Guzman v. Irmadan, Inc., 249
F.R.D. 399, 400 (S.D. Fla. 2008) (holding that an objecting party “must explain the specific and
particular ways in which a request is vague, overly broad, or unduly burdensome.”).
Fontainebleau Resorts barely even attempts to meet this burden. It has not even attached a copy
of the Subpoenas to its Motion to Quash.
Fontainebleau Resorts points to two single document requests in support of its assertion
that the Subpoenas must be quashed in their entirety as overbroad. It cites request number 9,
which seeks all documents concerning communications between FBLV and Fontainebleau
Resorts concerning the Project. See Motion to Quash at 1-2. It also cites request number 26,
which they contend “asks for ‘[a]ll [d]ocuments [c]oncerning [y]our [c]ommunications with
Fontainebleau relating to this [a]ction’ and ‘[a]ll [d]ocuments [c]oncerning [c]ommunications
with, to or from Turnberry West, or any general contractor concerning the [Fontainebleau Las
Vegas] Project.’” See Motion to Quash at 4 n.2.
Other than conclusory statements, Fontainebleau Resorts does not explain why these
requests are overbroad. It cannot be disputed that Fontainebleau Resorts was involved in
overseeing the construction of the Project and that its communications concerning the Project

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will reflect whether or not FBLV could satisfy the In-Balance Test under the Credit Agreement.
It also is undisputed that Fontainebleau Resorts’ communications with its affiliates will reflect
whether there were Events of Default under the Credit Agreement entitling the Revolving Lender
Defendants to terminate their obligations under the Credit Agreement. Such communications
will help show whether or not FBLV was in compliance with its financial covenants, including
those relating to the solvency of FBLV and its affiliates. In re Fontainebleau Las Vegas, 417
B.R. at 664 (noting that each Revolving Lender Defendant “had the specified right” to determine
if FBLV had satisfied the terms and conditions set forth in the Credit Agreement, and the
representations and warranties under the Credit Agreement and Disbursement Agreement). As
those materials are obviously relevant, the Bank Defendants are entitled to discovery of them
under the Federal Rules of Civil Procedure. S.E.C. v. Huff, No. 08-60315-CIV, 2010 WL
228000, at *3-4 (S.D. Fla. Jan. 13, 2010) (Under Fed. R. Civ. P. 26(b), “Parties may obtain
discovery regarding any matter, not privileged, that is relevant to the claim or defense of any
party…the purpose of discovery is to allow a broad search for facts, the names of witnesses, or
any other matters which may aid a party in the preparation or presentation of his case.”) (internal
citations omitted).
Fontainebleau Resorts has provided no facts that suggest compliance with these requests
would be unduly burdensome. It apparently asserts that its attorney’s argument is evidence
enough of overbreadth, but this is plainly inadequate to support a motion to quash. See Order on
Discovery, Kelesceny v. Chevron U.S.A., Inc., No. 08-61294-CMA [DKT # 61] (S.D. Fla. Nov.
17, 2008) (noting in the context of Federal Rule of Civil Procedure 34, “Objections which state
that a discovery request is ‘vague, overly broad, or unduly burdensome’ are, by themselves,
meaningless, and are deemed without merit by this Court. A party objecting on these bases must

14

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explain the specific and particular ways in which a request is vague, overly broad, or unduly
burdensome.”).6
Fontainebleau Resorts cannot dispute that the Subpoenas also contain other requests that
are tailored to seek documents obviously responsive to this action. For example, the Subpoenas
ask for documents concerning:
•
•
•

•

“the Credit Agreement, Disbursement Agreement or Financing Agreements”
(Request No. 2);
“the In Balance Test, including any calculation or revision thereof” (Request No. 6);
“the financial condition of each Fontainebleau entity involved with the Project,
including, without limitation, financial statements, balance sheets, income statements,
cash flow statements and other reports for any period or as of any date during
calendar years 2007, 2008 and 2009.” (Request No. 8 seeking documents relating to
whether FBLV was in compliance with financial covenants);
“financing for the Project’s retail component, including any communication with
Lehman Brothers Holdings Inc.” (Request No. 21 seeking documents relating to the
Event of Default that occurred when FBLV was unable to replace financing the
Lehman could not provide due to its collapse).

See, e.g., Exhibit A. While Fontainebleau Resorts objects to the number of requests, the present
dispute involves complex commercial agreements that were entered into as a direct result of
Fontainebleau Resorts involvement in the Project. Fontainebleau Resorts created FBLV and
directly participated in the complex commercial agreements at issue in the present case with eyes
wide open knowing that if litigation ensued there would be substantial discovery obligations as a
result. Given the critical significance of the documents requested, and Fontainebleau’s utter
failure to establish overbreadth, this Court must deny the Motion to Quash.

6

Attached as Exhibit M.
15

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III.

The Motion to Quash Should Be Denied Because Fontainebleau Resorts Failed to
Satisfy Rule 7.1(A)(3)
In addition, Fontainebleau Resorts’ assertions of overbreadth must be rejected for its

failure to meet and confer prior to filing its Motion to Quash. Rule 7.1(A)(3) of this court
requires that prior to filing any motion in a civil case, counsel for the movant:
shall confer (orally or in writing), or make reasonable effort to
confer (orally or in writing), with all parties or non-parties who
may be affected by the relief sought in the motion in a good faith
effort to resolve by agreement the issues to be raised in the
motion. … Failure to comply with the requirements of this rule
may be cause for the court to grant or deny the motion and impose
on counsel an appropriate sanction, which may include an order to
pay the amount of the reasonable expenses incurred because of the
violation, including a reasonable attorney’s fee. (emphasis added)
S.D. Fla. R. 7.1(A). Failure to satisfy this obligation alone provides grounds for denying the
motion. See Armor Screen Corp. v. Storm Catcher, Inc., No. 07-81091-Civ., 2009 WL 1871685,
at *5 (S.D. Fla. June 29, 2009) (“Apparently, rather than confer with Plaintiff's counsel in a good
faith attempt to resolve the issue, the [Defendants] filed the motion shortly before midnight that
same day. Such action undermines the purpose and effectiveness of the meet and confer
requirement and the Court considers such action an additional reason for finding that the motion
was not in response to a genuine dispute.”).
Late in the afternoon on the day Fontainebleau Resorts was required to respond to the
Subpoenas, its counsel sent counsel for the Bank Defendants an email stating that rather than
comply, Fontainebleau Resorts intended to move to quash the Subpoenas. See Exhibit E.
Counsel for the Bank Defendants immediately objected to the fact that Fontainebleau was raising
the issue of overbreadth for the first time and encouraged Fontainebleau Resorts to engage in a
“meaningful meet and confer process.” Id. Shortly thereafter, the Bank Defendants offered to
extend Fontainebleau Resorts’ time to respond so that Fontainebleau Resorts could work through
16

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its issues with the FBLV Trustee. Fitzgerald Decl. at ¶ 7. Counsel also indicated that the Bank
Defendants had ideas for mitigating any burden associated with complying with the Subpoenas.
Id. Fontainebleau Resorts declined and instead filed this motion. Id. at ¶ 8.
Particularly in the discovery context, Rule 7.1(A) cannot be satisfied merely by picking
up the telephone (or sending an email) just hours before a motion is to be filed and telling your
adversary you are going to file a motion. If Rule 7.1(A) is construed to have any meaning at all,
the party making the motion must confer “in a good faith effort to resolve by agreement the
issues to be raised in the motion.” See Trinos v. Quality Staffing Servs., Inc., 250 F.R.D. 696,
698 (S.D. Fla. 2008) (emphasis added) (finding that refusal to engage in telephone discussions
before moving for a protective order did not comply with Rule 7.1(A), “and the Court is entitled
to deny the motion on these grounds alone”); see also Lockheed Martin Corp. v. Boeing Co., No.
6:03-cv-796, 2003 WL 22962782 (M.D. Fla. Oct. 21, 2003) (noting in the context of equivalent
Local Rule 3.01(g) that “the term ‘confer’ … requires a substantive conversation in person or by
telephone in a good faith effort to resolve the motion without court action, and does not envision
an exchange of ultimatums by fax or letter.”). Fontainebleau Resorts made no effort to resolve
the issues relating to its Motion to Quash by agreement and, thus, its Motion to Quash should be
denied.
[Remainder of page intentionally left blank.]

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CONCLUSION
For the foregoing reasons, Fontainebleau Resorts’ Motion to Quash [DKT # 93] should
be denied and Fontainebleau Resorts should be ordered to comply with the Subpoenas and
complete its document production by September 17, 2010, the same date Judge Gold recently
ordered FBLV to complete its production.
Dated: July 23, 2010

By:

/s/ John B. Hutton

GREENBERG TRAURIG, P.A.
John B. Hutton
Florida Bar No. 902160
Mark D. Bloom
Florida Bar No. 303836
1221 Brickell Avenue
Miami, FL 33131
Telephone: [phone]
Facsimile: [phone]
E-mail: [e-mail]
[e-mail]
-andSIMPSON THACHER & BARTLETT LLP
Thomas C. Rice (pro hac vice)
David Woll (pro hac vice)
425 Lexington Avenue
New York, New York 10017
Telephone: [phone]
Facsimile: [phone]
E-mail: [e-mail]
[e-mail]
ATTORNEYS FOR DEFENDANTS
BARCLAYS BANK PLC, DEUTSCHE
BANK TRUST COMPANY AMERICAS,
JPMORGAN CHASE BANK, N.A., and
THE ROYAL BANK OF SCOTLAND PLC

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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing Bank Defendants’
Opposition to Fontainebleau Resorts, LLC, Fontainebleau Resorts Holdings, LLC and
Fontainebleau Resorts Properties I, LLC’s Motion to Quash Subpoenas was furnished via First
Class U.S. Mail to those on the attached service list on July 23, 2010.

By:

/s/ John B. Hutton
John B. Hutton

Service List:
Sarah J. Springer
WALDMAN TRIGOBOFF HILDEBRANDT MARX & CALNAN, P.A.
2200 North Commerce Parkway, Suite 200
Weston, Florida 33326

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EXHIBIT A

Case 1:09-md-02106-ASG Document 115-1 Entered on FLSD Docket 07/23/2010 Page 2 of 19
AO 88H (Rev. 06109) Subpoena to Produce Documents, Information, or Objects or to Permit Inspection of Premises in a Civil Action

Issued by the

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
SUBPOENA IN A CIVIL CASE
IN RE: FONTAINEBLEAU LAS VEGAS CONTRACT
LITIGATION

Case No. 09-MD-02106-CIVGOLD/BANDSTRA

SUBPOENA TO PRODUCE DOCUMENTS, INFORMATION, OR OBJECTS OR TO PERMIT

INSPECTION OF PREMISES IN A CIVIL ACTION
TO: FONTAINEBLEAU RESORTS, LLC
Attention: Whitney Their, General Counsel
19950 West Country Club Drive
Aventura, Florida 33180

YOU ARE COMMANDED to produce and permit inspection and copying of the following documents or objects at
the place, date, and time specified below (list documents or objects):
See attached Exhibit A
PLACE

AND TIME

Simpson Thaclier & Bartlett LLP
Attention: David Woll
425 Lexington Avenue
New York, New York 10017

4,2010

YOU ARE COMMANDED to permit inspection of the following premises at the date and time specified below.
PREMISES

AND TIME

Any organization not a party to this suit that is subpoenaed for the taking of a deposition shall designate one or more officers,
directors, or managing agents, or other persons who consent to testify on its behalf, and may set forth, for each person designated, the
matters on which the person will testify. Federal Rules of Civil Procedure, 30(b)(6).
AND 717t (I11ICATE IF ATTORNEY FOR PLAINTIFF OR DEFENDANT

W

IJ
ISSUINGOFFICER'S ÂME DR ESS AND PHONE NUMBER
IS

David WoU
Simpson Thacher & Bartlett LLP
Attorney for Defendants JPMorgan Chase Bank, N.A., Barclays Bank PLC, Deutsche
Bank Trust Company Americas, and The Royal Bank of Scotland plc
425 Lexington Avenue
New York, New York 10017
[phone]
(See Rule 45, Federal Rake of Civil Procedure, Subdivisions (c). (d) and (a), on ,len

AND TIME

May 4, 2010

Case 1:09-md-02106-ASG Document 115-1 Entered on FLSD Docket 07/23/2010 Page 3 of 19
AO 88B (Rev. 06/09) Subpoena to Produce Documents, Information, or Objects or to Permit Inspection of Premises in a Civil Action

PROOF OF SERVICE
DATE

SERVED ON (PRINT NAME)

SERVED BY (PRINT NAME)

PLACE

MANNER OF SERVICE

TITLE

DECLARATION OF SERVER
I declare under penalty of perjury under the laws of the United States of America that the foregoing information contained
in the Proof of Service is true and correct.
Executed on
DATE

SIGNATURE OF SERVER

ADDRESS OF SERVER

Rule 45, Federal Rules of Civil Procedure, Subdivision (c), (d), and (e) (Effective 12/1107)
(c) Protecting a Person Subject to a Subpoena.
(1) AvoitlIng Undue Burden or Expense; Sanctions. A party or attorney
responsible for issuing and serving a subpoena must take reasonable steps to avoid
imposing undue burden or expense on a person subject to the subpoena. The
issuing court must enforce this duty and impose an appropriate sanction - which
may include lost earnings and reasonable attorney's fees - on a party or attorney
who fails to comply.

(2) Command to Produce Materials or Permit Inspectlon
(A)Appearance Not Required. A person commanded to produce documents,
electronically stored information, or tangible things, or to permit the inspection of
premises, need not appear in person at the place of production or inspection unless
also commanded to appear for a deposition, hearing, or trial.
(B)Objections. A person commanded to produce documents or tangible things or
to permit inspection may serve on the party or attorney designated in the subpoena
a written objection to inspecting, copying, testing or sampling any or all of the
materials or to inspecting the premises - or to producing electronically stored
infbrmation in the form or forms requested. The objection must be served before
the earlier of the time specified for compliance or 14 days after the subpoena is
served, if an objection is made, the following rules apply:
(1) At any time, on notice to the commanded person, the serving party may move
the issuing court for an order compelling production or inspection.
(ii) These acts may be required only as directed in the order, and the order must
protect a person who is neither a party nor a party's officer from significant
expense resulting from compliance.
(3) Qseeeshurg or Modifying a Subpoena
(A) "en Required. On timely motion, the issuing court must quash or modify a
subpoena that:
(I) fails to allow a reasonable time to comply;
(ii) requires a person who is neither a party nor a party's officer to travel more
than 100 miles from where that person resides, is employed, or regularly transacts
business in person - except that, subject to Rule 45(c)(3XB)(iii), the person may
be commanded to attend a trial by traveling from any such place within the state
where the trial is held;
(iii) requires disclosure of privileged or other protected matter, if no exception or
waiver applies; or
(iv) subjects a person to undue burden.
(B) When Permitted To protect a person subject to or affected by a subpoena, the
issuing court may, on motion, quash or modify the subpoena if it requires:
(i) disclosing a trade secret or other confidential research, development, or
commercial inforsnation;
(ii) disclosing an unretained expert's opinion or information that does not
describe specific occurrences in dispute and results from the expert's study that
was not requested by a party; or
(iii) a person who is neither a party nor a party's officer to incur substantial
expense to travel more than 100 miles to attend trial.
(C) Specifying Conditions as an Alternative. In the circumstances described in
Rule 45(cX3)(13), the court may, instead of quashing or modifying a subpoena,
order appearance or production under specified conditions if the serving party:

(i) shows a substantial need for the testimony or material that cannot be
otherwise met without undue hardship; and
(ii) ensures that the subpoenaed person will be reasonably compensated.
(d) Duties in Responding to a Subpoena.

(1) Producing Documents or Electronically Stored Information,
These procedures apply to producing documents or electronically stored
information:
(A)Documents. A person responding to a subpoena to produce documents must
produce them as they are kept in the ordinary course of business or must organize
and label them to correspond to the categories in the demand.

(B)Form for Producing Electronically Stored information Not SpecifIed. Ifs
subpoena does not specify a form for producing electronically stored information,
the person responding must produce it in a form or forms in which it is ordinarily
maintained or in a reasonably unable form or forms.

(C)Electronically Stored information Produced in Only One
Form. The person responding need not produce the same
electronically stored information in more than one form.
(0) Inaccessible Elect l'onically Stored Information The person responding need
not provide discovery of electronically stored information from sources that the
person identities as not reasonably accessible because of undue burden or cost. On
motion to compel discovery or for a protective order, the person responding must
show that the information is not reasonably accessible because of undue burden or
cost. If that showing is made, the court may nonetheless order discovery from such
sources if the requesting party shows good cause, considering the limitations of
Rule 26(bX2)(C). The court may specify conditions for the discovery.

(2) Claiming Privilege or Pratectirnn.
(A)Information Withheld. A person withholding subpoenaed information under a
claim that it is privileged or subject to protection as trial-preparation material must:
(I) expressly make the claim; and
(ii) describe the nature of the withheld documents, communications, or tangible
things in a manner that, without revealing information itself privileged or
protected, will enable the parties to assess the claim,
(B)information Produced, if information produced in response to a subpoena is
subject to a claim of privilege or of protection as trial preparation material, the
person making the claim may notify any party that received the information of the
claim and the basis for it. After being notified, a party must promptly return,
sequester, or destroy the specified information and any copies it has; must not use
or disclose the information until the claim is resolved; must take reasonable steps
to retrieve the information if the party disclosed it before being notified; and may
promptly present the inlbrmation to the court under seal for a determination of the
claim. The person who produced the information must preserve the information
until the claim is resolved,
(e) Contempt. The issuing court may hold in contempt a person who, having
been served, fails without adequate excuse to obey the subpoena. A nonparty's
failure to obey must be excused if the subpoena purports to require the nonparty to
attend or produce at a place outside the limits of Rule 45(c)(3XAXii).

Case 1:09-md-02106-ASG Document 115-1 Entered on FLSD Docket 07/23/2010 Page 4 of 19

EXHIBIT A TO DEFENDANTS' DOCUMENT SUBPOENA
TO FONTAINEBLEAU RESORTS, LLC
DEFINITIONS AND INSTRUCTIONS
1.

These Requests cover all Documents in Your possession, custody, and

control, including Documents in the possession of Your officers, employees, agents, servants,
representatives, trustees, attorneys, consultants, or other Persons directly or indirectly employed
or retained by You, or anyone else acting on Your behalf or otherwise subject to Your control,
and any merged, consolidated, or acquired predecessor or successor, subsidiary, division, or
affiliate.
2.

Unless otherwise indicated, the Documents requested are those generated,

created, or distributed on or after June 1, 2006.
3.

These Requests are continuing in nature and require production in the

future of any responsive Documents that are subsequently discovered, generated, created,
distributed or received by You or any previously-known Documents whose responsiveness to
these Requests is later ascertained.
4.

For each Request, You are to produce entire Documents including all

attachments, enclosures, cover letters, memoranda, and appendices. Copies that differ in any
respect from an original (because, by way of example only, handwritten or printed notations have
been added) are treated as separate Documents and should be produced separately. A Request
for a Document shall be deemed to include a request for any and all transmittal sheets, cover
letters, exhibits, enclosures or attachments to the Document, in addition to the Document itself.
5.

With the exception of Excel files which shall be produced in native

format, You are to produce Documents and electronically stored information ("ES!") in a
searchable format including:
a) Single-page TIFF images at a resolution of 300 dpi

Case 1:09-md-02106-ASG Document 115-1 Entered on FLSD Docket 07/23/2010 Page 5 of 19

b) Concordance compatible comma-delimited file for all fields excluding OCR
c) One OCR text file per document with the file name matching the beginning bates
number
d) An IPRO (LFP) image cross-reference file
6.

ES! and e-mails produced pursuant to this request shall be produced in a

searchable format with an accompanying index that states the following metadata:
a) Date created/sent
b) Author
c) Recipients
d) cc - copies
e) bcc - blind copies
1) Beginning bates
g) End bates
h) File type
7.

If any Document or thing requested was at one time in existence, but has

been lost, discarded or destroyed, identify each such Document or thing by date, type, and
subject matter, describe the circumstances under which the Document was lost, discarded, or
destroyed, and identify the person with knowledge of its subject matter and of the circumstances
under which it was lost, discarded, or destroyed and, if the Documents are destroyed, state the
reason for such destruction.
8. If the production of any document requested herein is withheld on the
ground of any claim of privilege or attorney work-product, provide a statement detailing the
claim of privilege and all facts relied on to support that claim, including the Document date,
author(s), recipient(s), type (e.g., memo, interview notes), subject matter, its present location,
and all information required by the Federal Rules of Civil Procedure.
9.

If a portion of an otherwise responsive Document contains information

subject to a claim of privilege, those portions and the rest of the Document subject to the claim
of privilege shall be redacted from the Document and the rest of the Document shall be

2

Case 1:09-md-02106-ASG Document 115-1 Entered on FLSD Docket 07/23/2010 Page 6 of 19

produced. Information regarding that portion that is redacted must be included in the privilege
log.
10.

If there is any question as to the meaning of any part of these Requests, or

an issue as to whether production of any Documents requested herein would impose an undue
burden on Fontainebleau Resorts, Defendants' counsel should be contact promptly to discuss
these matters, and Fontainebleau Resorts should respond to the remainder of these Requests as
written.
11.

Whenever an objection is made as to any particular part or subpart of a

Request herein, all other portions or aspects of that Request as to which the objection does not
apply shall be responded to in full.
12.

If any Request cannot be responded to fully, You should provide as full a

response as possible, state the reason for the inability to answer fully, and provide any
information, knowledge, or belief that You have regarding the unanswered portion.
13

Whenever appropriate, the singular form of a word shall be interpreted in

the plural, or vice versa; verb tenses shall be interpreted to include past, present, and future
tenses; the terms "and" as well as "or" shall be construed either disjunctively or conjunctively as
necessary to bring within the scope of these Requests any Documents that might otherwise be
construed as outside its scope; words in the masculine, feminine or neuter form include the
others.
14.

The following definitions will apply to these Requests. Notwithstanding

any definition stated below, each word, term or phrase used in this document is intended to have
the broadest meaning permitted under the Federal Rules of Civil Procedure.

3

Case 1:09-md-02106-ASG Document 115-1 Entered on FLSD Docket 07/23/2010 Page 7 of 19

a.

"Action" refers to the case captioned Fontainebleau Las Vegas LLC v. Bank of
America, NA., et al., in the United District Court for the Southern District of
Florida, Case No. 09-21879-CJV-ASG.

b.

"CCCS" means CCCS International and each of its predecessors, successors,
affiliates, divisions, subsidiaries, parents, members, officers, representatives,
agents and/or employees.

C.

"Communication" means any form of transmission of information, oral, written,
electronic or otherwise, including, without limitation, in-person discussions and
conversations, telephone calls, memoranda, letters, telecopies and e-mails.

d.

"Concerning" means relating to, referring to, describing, evidencing, constituting,
supporting, negating, refuting, embodying, containing, memorializing,
comprising, reflecting, analyzing, identifying, referencing, discussing, indicating,
connected with or otherwise pertaining in any way, in whole or in part, to the
subject matter referred to in each Request.
"Credit Agreement" shall refer to the agreement titled Credit Agreement by and
among Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas II, LLC, and
each lender from time to time party thereto, including Bank of America, N.A.,
Merrill Lynch Capital Corporation, JP Morgan Chase Bank, N.A., Barclays Bank
PLC, Deutsche Bank Trust Company Americas, The Royal Bank of Scotland plc,
Sumitomo Mitsui Banking Corporation, Bank of Scotland plc, HSH Nordbank
AG, New York Branch, and MB Financial Bank, N.A., dated as of June 6, 2007
(as amended, supplemented or otherwise modified from time to time).

4

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f.

"Defendants" or "Revolving Lenders" shall refer to the defendants to this Action,
collectively Bank of America, N.A., Merrill Lynch Capital Corporation,
JPMorgan Chase Bank, N.A., Barclays Bank PLC, Deutsche Bank Trust
Company Americas, The Royal Bank of Scotland plc, Sumitomo Mitsui Banking
Corporation, Bank of Scotland plc, HSH Nordbank AG, and MB Financial Bank,
N.A.

g.

"Disbursement Agreement" shall refer to the agreement titled Master
Disbursement Agreement by and among Fontainebleau Las Vegas Holdings,
LLC, Fontainebleau Las Vegas Capital Corp., Fontainebleau Las Vegas Retail,
LLC, Fontainebleau Las Vegas, LLC, and Fontainebleau Las Vegas II, LLC,
Bank of America, N.A., Wells Fargo Bank, N.A., and Lehman Brothers Holdings
Inc., dated as of June 6, 2007 (as amended, supplemented or otherwise modified
from time to time).

h.

"Document(s)" is used in the broadest possible sense in accordance with Rule 34
of the Federal Rules of Civil Procedure and shall include, without limitation, all
written, recorded, transcribed, punched, taped, filmed or graphic material,
however produced or reproduced, which embodies any handwritten, typed,
printed, oral or visual Communication or representation, including writings,
drawings, graphs, spreadsheets, charts, photographs, presentations, calendar
entries, data compilations or any other information or data recorded in readable
and/or retrievable form, whether typed, handwritten, reproduced, magnetically or
optically or electronically recorded, coded, or in any other way made readable or
retrievable, computer files, hard disk files, diskettes or tapes, or archival or

5

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backup copies thereof, audio recordings, video recordings, drafts of all the
aforesaid and all copies of the aforesaid upon which have been placed any
additional marks, stamps, underlining, bees or notations of any kind, which are in
your possession or custody or subject to your control.
i.

"Each" shall be construed to include "every," and "every" shall be construed to
include "each." "Any" shall be construed to include "all," and "all" shall be
construed to include "any."

j.

"Financing Agreements" means, collectively, the Disbursement Agreement, the
Facility Agreements, the Security Documents, the Disbursement Agent Fee
Letter, the Bank Agent Fee Letter, the Trustee's fee letters with the Issuers, the
Second Mortgage Purchase Agreement, the Second Mortgage Notes and any other
loan or security agreements entered into on, prior to or after the Closing Date with
the Disbursement Agent or any Funding Agent in connection with the financing
of the Project.

k.

"Fontainebleau" means Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas
II, LLC, Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas
Retail, LLC and/or Fontainebleau Las Vegas Capital Corporation and each of
their predecessors, successors, affiliates, divisions, subsidiaries, parents,
members, officers, representatives, agents and/or employees, including without
limitation, their attorneys, investment bankers and advisers acting or purporting to
act on its or their behalf.

1.

"Fontainebleau Resorts, LLC," "Fontainebleau Resorts," "You," "Your," and
"Yours" mean Fontainebleau Resorts, LLC and its parents, subsidiaries, partners,

Case 1:09-md-02106-ASG Document 115-1 Entered on FLSD Docket 07/23/2010 Page 10 of
19

directors, shareholders, officers, employees, agents assigns or any predecessors or
successors in interest, or any person or entity over which Fontainebleau Resorts
exercises control, or who exercises control over, or is in common control with
them.
M.

"Including" is used in its inclusive sense and shall be construed so as to require
the broadest possible response. In other words, "including" should be read as
"including, but not limited to."

n.

"Moelis" mean Moelis & Company LLC and its parents, subsidiaries, partners,
directors, shareholders, officers, employees, agents assigns or any predecessors or
successors in interest, or any person or entity over which Moelis exercises control,
or who exercises control over, or is in common control with them.

o.

"Offering Materials" means any materials distributed to existing and potential
investors or lenders in connection with the Project.

P. "Offering Memorandum" means the March 2007 Senior Secured Credit Facilities
Confidential Offering Memorandum.
q.

"Person" means each and every individual, partner, corporation, partnership, joint
venture, or any other entity, whether incorporated or unincorporated,
encompassed within the usual and customary meaning of "person" or "persons"
or otherwise encompassed within this definition.
"Project" refers to the construction of the Fontainebleau Resort and Casino in Las
Vegas, Nevada.
"Relating to" means concerning, referring to, describing, evidencing or
constituting.

7

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19

t.

"Request(s)" refers to each of these document requests to Fontainebleau Resorts.

U.

"Retail Facility Agreement" means the Loan Agreement dated June 6, 2007 (as
amended, supplemented or otherwise modified from time to time) among
Fontainebleau Las Vegas Retail, LLC, Lehman Brothers Holdings Inc., and
certain other parties.

V.

"Tumberry Residential" means Turnberry Residential Limited Partner, L.P. and
its parents, subsidiaries, partners, directors, shareholders, officers, employees,
agents assigns or any predecessors or successors in interest, or any person or
entity over which Tumberry Residential exercises control, or who exercises
control over, or is in common control with them.

W.

"Turnberiy West" means Turnberry West Construction, Inc. and its parents,
subsidiaries, partners, directors, shareholders, officers, employees, agents assigns
or any predecessors or successors in interest, or any person or entity over which
Turnberry West exercises control, or who exercises control over, or is in common
control with them.

X.

All capitalized terms used but not defined herein shall have the same meanings
given to them in the Credit Agreement and Master Disbursement Agreement.
REQUESTS FOR DOCUMENTS

1.

Documents sufficient to identify the ownership and organizational

structure of Fontainebleau Resorts as well as each Fontainebleau entity involved with the Project,
including, without limitation, Documents sufficient to identify each Person or entity that holds,
directly or indirectly, an ownership interest in any Fontainebleau entity involved with the
Project.

8

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19

2.

All Documents Concerning the Credit Agreement, Disbursement

Agreement or Financing Agreements, including, without limitation, all drafts thereof, and any
memoranda or notes.
All Documents Concerning any presentations and/or meetings Concerning
the Project from June 6, 2006 to the present, including without limitation, all Documents,
including presentations, PowerPoint slides, spreadsheets, videos, charts, or memoranda provided
by Fontainebleau to any actual or potential Project lender, rating agency, any Project
construction consultant, or any actual or potential Investor in Fontainebleau or the Project, any
and all drafts thereof, and any other Documents Concerning Information provided by
Fontainebleau through such presentations and/or meetings.
4.

All Documents Concerning any Notice of Borrowing by Fontainebleau,

including, without limitation, all Documents Concerning Fontainebleau's decision to amend or
revise any Notice of Borrowing, any amended or revised Notices of Borrowing, as well as all
supporting documents and drafts thereof.
5.

All Documents Concerning any Advance Request by Fontainebleau

including, without limitation, all Documents Concerning Fontainebleau's decision to amend or
revise any Advance Requests, any amended, revised or draft Advance Requests, any
certifications included in or accompanying the Advance Requests and all drafts and other support
documents.
6.

All Documents Concerning the In Balance Test, including any calculation

or revision thereof.
7.

All Documents Concerning Available Funds as of each Advance Date,

including, without limitation, all supporting documents.

Case 1:09-md-02106-ASG Document 115-1 Entered on FLSD Docket 07/23/2010 Page 13 of
19

8.

All Documents Concerning the financial condition of each Fontainebleau

entity involved with the Project, including, without limitation, financial statements, balance
sheets, income statements, cash flow statements and other reports for any period or as of any date
during calendar years 2007, 200 8 and 2009.
9.

All Documents Concerning Communications between Fontainebleau

Resorts and Fontainebleau, its shareholders, management, members, financial advisors, board of
directors, auditors or accountants Concerning the Project.
10.

All Documents Concerning Fontainebleau's failure to furnish audited

annual financial statements for the year ended December 31, 2008.
11.

All Documents Concerning Fontainebleau's internal controls or

accounting procedures.
12.

All Documents Concerning any request, demand or attempt to inspect or

to audit any of the books or records of Fontainebleau.
13.

All Documents Concerning Communications Relating to any potential or

actual Fontainebleau bankruptcy filing on or before June 9, 2009.
14.

All Documents Concerning Fontainebleau's ability to repay its debts

including, without limitation, the debts incurred to build the Project.
15.

All Documents Concerning Communications with rating agencies

Relating to the Project, as well as Documents Concerning presentations made to or by rating
agencies discussing the Project.
16.

All Documents Concerning Standard & Poor's reporting on the Project,

including any internal Communications at Fontainebleau Resorts Concerning such reporting.

10

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19

17.

All Documents Concerning the resignation or termination of employment

of Glenn Schaeffer, including, without limitation, Documents Concerning the possibility that Mr.
Schaeffer would resign or be terminated and all Communications, agreements or understandings
relating thereto.
18.

All Documents Concerning the Offering Materials,

19.

All Documents Concerning any efforts given to or consideration of raising

any additional equity or debt capital, or selling of any interests in the Project, including, without
limitation, any presentation made to or by investment or commercial banks, financial advisors or
restructuring advisors.
20.

All Documents Concerning any efforts to obtain alternative financing for

the Project as a replacement or substitute for the financing contemplated by the Credit
Agreement.
21.

All Documents Concerning financing for the Project's retail component,

including any communication with Lehman Brothers Holdings Inc.
22.

All Documents Concerning any actual or potential investment in,

financing of, or acquisition of an interest in the Project by Persons other than parties to the Credit
Agreement, the Retail Agreement, or the holders of the Second Mortgage Notes from June 6,
2006 to the present.
23.

All Documents Concerning Communications between Fontainebleau

Resorts and investors or potential investors Concerning the Project from June 6, 2006 to the
present.

11

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19

24.

All Documents relating to any investigation or due diligence undertaken in

connection with any actual or contemplated financing or other acquisition of any claim or
interest in Fontainebleau or the Project, after June 6, 2007.
25.

All Documents Concerning Communications with, to or from Moelis &

'Company Concerning the Project.
26.

All Documents Concerning Communications with, to or from Tumberry

West, or any general contractor Concerning the Project.
27.

All Documents Concerning Communications with, to or from Tumberry

Residential, or any property manager Concerning the Project.
28.

All Documents Concerning Communications with, to or from CCCS

International, Hill International, Inc. or Cumming Corporation, and any other construction
management company or consultant relating to the Project.
29.

All Documents Concerning Advance Requests under the Retail

Agreement, including, without limitation, any Communications between Fontainebleau and the
Retail Lenders Concerning such Advance Requests.
30.

All Documents Concerning the Revolving Lenders' requests to arrange for

a discussion or meeting with Fontainebleau Concerning the Project, including any internal
Communications within Fontainebleau Resorts Concerning the Revolving Lenders' requests.
31.

All Documents Concerning the "Enhanced Plan" discussed by

Fontainebleau at the April 17, 2009 meeting with the Lenders.
32.

All Documents Concerning Applied Analysis relating to the Project or to

Las Vegas economic conditions.

12

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19

33.

All Documents Concerning Fontainebleau's Budgets, including, without

limitation, the underlying assumptions, models, analyses and calculations used.
34.

All Documents Concerning actual and anticipated costs for the Project.

35.

All Documents Cánceming anticipated contingencies for the Project.

36.

All Documents Concerning billing of, and payment to, contractors and/or

suppliers for expenses related to the Project, including any Documents Concerning actual or
potential overpayments to contractors and/or suppliers.
37.

All Documents Concerning change order requests or pending change

orders for the Project and the dates and amounts of such requests, including, without limitation,
any schedules or charts reflecting same and all Communications with any contractor or
subcontractor Concerning same.
38.

All Documents Concerning the schedule for work on the Project,

including, without limitation, all as-planned schedules, master schedules, milestone schedules,
monthly or periodic update schedules.
39.

All Documents Concerning financial projections and/or forecasts for the

Project, including, without limitation, all supporting Documents.
40.

All Documents Concerning valuations or appraisals of the Project.

41.

All Documents Concerning marketing studies related to the Project.

42.

All Documents Concerning economic trends and developments related to

the Project, including current and projected supply and demand for retail space, hotel rooms,
condominiums and convention space in Las Vegas and projections for Las Vegas visitor volume
and hotel occupancy.

13

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43.

All Documents Concerning the sales of condominium units at

Fontainebleau Las Vegas, including, without limitation, any Communications with investment or
commercial banks Concerning the financing of condominium unit sales at Fontainebleau Las
Vegas, marketing materials, sales efforts, financing for the sales and offers received.
44.

All Documents Concerning Communications with the Revolving Lenders

Relating to the Project.
45.

All Documents Concerning LEED credits, audits, shortfalls and/or targets

46.

All Documents Concerning the development, construction, operation and

for the Project.

status of the Project, including, without limitation, any actual or proposed plans for modifying or
enhancing the current Project plan.
47.

All Documents Concerning the Opening Date, including, without

limitation, any Documents Concerning impediments to achieving the Opening Date by the
Scheduled Opening Date or the Outside Date and any changes in the Project's Opening Date.
48.

All Documents Concerning any actual, alleged, potential or anticipated

breach of, or any actual, alleged, potential or anticipated Material Adverse Event, Default or
Events of Default under the Credit Agreement, Disbursement Agreement, Financing Agreements
or any Material Contract.
49.

All Documents Concerning any existing or threatened material litigation

by or against Fontainebleau.
50.

All Documents Concerning the holders of Indebtedness issued by

Fontainebleau, including, without limitation, any agreements or proposals with respect to

14

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19

restructuring matters and all notices of default or reservations of rights received by
Fontainebleau or by You.
51.

All Documents Concerning any default or alleged default by completion

guarantor Turnberry Residential Limited Partner, L.P. that was the subject of the action
captioned Prudential Insurance Co. ofAmerica et ano. v. Turnberry West, L.L.C., et al., Case
No. 2:09-cv00695-KJD-GWF (D. Nev. Apr. 17, 2009).
52.

All Documents Concerning Your Communications with Fontainebleau

relating to this Action.
53.

All Documents provided to or Concerning the Examiner appointed by

Order of the Bankruptcy Court dated October 14, 2009, in the action captioned In re
Fontainebleau Las Vegas Holdings, LLC, et al., Case No. 09-21481-BKC-AJC (Bankr. S.D.
Fla.) (D.E. #770), and any Communications relating thereto.
54.

All Documents Concerning Communications with the plaintiffs in any of

the following actions Concerning those actions and/or matters at issue in those actions, including
the costs associated with maintaining those actions, as well as all Documents Concerning this
litigation and/or matters at issue in this litigation:
a. Avenue CLO Fund, Ltd., et al. v. Bank ofAmerica, NA., et al., 2:09-cv-01047-

KJD-PAL (D. Nev.);
b. ACP Master, Ltdd et ano. v. Bank ofAmerica, NA., et al., No. 09 Civ.
8064 (LTS)(THK) (S.D.N.Y.); or
c. Turnberry West Construction, Inc. v. Fontainebleau Las Vegas Holdings, et
al., Adv. Pro. No. 09-01762-13KC-AJC-A (Bankr. S.D. Fla.).
55. All Documents Concerning Communications with any or all of the
defendants or third-party plaintiffs in the action captioned Deutsche Bank Trust Company
Americas v. Soffer, et al., No. 09 Civ. 7089 (RJS) (S.D.N.Y.) Concerning that litigation and/or
15

Case 1:09-md-02106-ASG Document 115-1 Entered on FLSD Docket 07/23/2010 Page 19 of
19

matters at issue in that litigation or Concerning this litigation and/or matters at issue in this
litigation.
56.

All Documents sufficient to show Fontainebleau Resorts' document

retention or destruction policies and practices, including, without limitation, as to electronic mail
and other electronic records.

16

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 1 of 19

EXHIBIT B

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 2 of 19
AQ 88B (Rev. 06/09) Subpoena to Produce Documents, Information, or Objects or to Permit Inspection of Premises in a Civil Action
Issued by the

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
IN RE: FONTAINEBLEAU LAS VEGAS CONTRACT
LITIGATION

SUBPOENA IN A CIVIL CASE
Case No. 09-MD-02106-CIV-

GOLD1BANDSTRA

SUBPOENA TO PRODUCE DOCUMENTS, INFORMATION, OR OBJECTS OR TO PERMIT
INSPECTION OF PREMISES IN A CIVIL ACTION
TO: FONTAINEBLEAU RESORTS HOLDINGS, LLC
Attention: Whitney Their, General Counsel
19950 West Country Club Drive
Aventura, Florida 33180

YOU ARE COMMANDED to produce and permit inspection and copying of the following documents or objects at
the place, date, and time specified below (list documents or objects):
See attached Exhibit A
PLACE

TIE AND TIME

Simpson Thacher & Bartlett LLP
Attention: David Woll
425 Lexington Avenue
New York, New York 10017

une 4, 2010

YOU ARE COMMANDED to permit inspection of the following premises at the date and time specified below.
PREMISES

TE AND TIME

Any organization not a party to this suit that is subpoenaed for the taking of a deposition shall designate one or more officers,
directors, or managing agents, or other persons who consent to testify on its behalf, and may set forth, for each person designated, the
matter on which the person will testify. Federal Rules of Civil Procedure, 30(b)(6).
ISSUING OFFICER'S N lURE AND TITL (1 1 ATE IF ATTORNEY FOR PLAINTIFF OR DEFENDANT

ISSUM

24D PHONE

David Woll
Simpson Thacher & Bartlett LLP
Attorney for Defendants JPMorgan Chase Bank, N.A., Barclays Bank PLC, Deutsche
Bank Trust Company Americas, and The Royal Bank of Scotland plc
425 Lexington Avenue
New York, New York 10017
[phone]
(See Rule 45, Federal Rules orCivI Procedure, Subdivisions (a), (d) and (n) on ne

DATE

TE AND TIME

May 4,20 10

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 3 of 19
AO 88B (Rev. 06/09) Subpoena to Produce Documents, information, or Objects or to Permit Inspection of Premises in a Civil Action

PROOF OF SERVICE
DATE

PLACE

SERVED ON (PRINT NAME)

MANNER OF SERVICE

SERVED BY (PRINT NAME)

TITLE

DECLARATION OF SERVER
I declare under penalty of perjury under the laws of the United States of America that the foregoing information contained
in the Proof of Service is true and correct.
Executed on
DATE

SIGNATURE OF SERVER

ADDRESS OF SERVER

Rule 45, Federal Rules of Civil Procedure, Subdivision (c), (d), and (e) (Effective 12/1107)
(c) Protecting a Person Subject to a Subpoena.
(I) A voiding Undue Burden or Epense; Sanctloror A party or attorney
responsible for issuing and serving a subpoena must take reasonable steps to avoid
imposing undue burden or expense on a person subject to the subpoena. The
issuing court must enforce this duty and impose an appropriate sanction - which
may include lost earnings and reasonable attorney's fees - on a party or attorney
who fails to comply.
(2) Comnsand to Produce Materials or Perndtlnspecston.
(A)Appearance Not Required. A person commanded to produce documents,
electronically stored information, or tangible things, or to permit the inspection of
premises, need not appear in person at the place of production or inspection unless
also commanded to appear for a deposition, hearing, or trial.
(B)Objections. A person commanded to produce documents or tangible things or
to permit inspection may nerve on the party or attorney designated in the subpoena
a written objection to inspectin& copying, testing or sampling any or all of the
materials or to inspecting the premises - or to producing electronically stored
information in the form or forms requested. The objection must be nerved before
the earlier of the time specified for compliance or 14 days after the subpoena is
served. If an objection is made, the following roles apply:
(i) At any time, on notice to the commanded person, the serving party may move
the issuing court for an order compelling production or inspection.
(ii) These acts may be required only as directed in the order, and the order must
protects person who is neither a party nor a pasty's officer from significant
expense resulting from compliance.
(3) Quashing or Modifying a Subpoena.
(A) When Required. On timely motion, the issuing court must quash or modify a
subpoena that:
() fails to allow a reasonable time to comply;
(ii) requires a person who is neither a party nor a party's officer to travel more
than 100 miles from where that person resides, is employed, or regularly transacts
business in person - except that, subject to Rule 45(cX3)(13)(iii), the poison may
be commanded to attend a trial by traveling from any such place within the state
where the trial is held;
(iii) requires disclosure of privileged or other protected matter, if no exception or
waiver applies; or
(iv)subjects it person to undue burden.
(B) When Permitted To protect a person subject to or affected by a subpoena, the
issuing court may, on motion, quash or modify the subpoena if it requires:
(I) disclosing a trade secret or other confidential research, development, or
commercial information;
(ii) disclosing an unretained expert's opinion or information that does not
describe specific occurrences in dispute and results from the expert's study that
was not requested by a petty; or
(iii) a person who is neither a party nor S party's officer to incur substantial
expense to travel more than 100 miles to attend trial.
(C) Speclng Conditions as an Alternative. In the circumstances described in
Rule 45(cX3)(B), the court may, instead of quashing or modifying a subpoena,
order appearance or production under specified conditions if the serving party:

(i) shows a substantial need for the testimony or material that cannot be
otherwise met without undue hardship; and
(ii) ensures that the subpoenaed person will be reasonably compensated.
(d) Duties in Responding to a Subpoena.
(I) Producing Documents or Electronically Stored Information.
These procedures apply to producing documents or electronically stored
information:
(A)Documents. A person responding to s subpoena to produce documents must
produce them as they are kept in the ordinary course of business or must organize
and label them to correspond to the categories in the demand.
(B) Fe i'm for Producing Electronically Stored Information Not Specpted. If a
subpoena does not specify a form for producing electronically stored information,
the person responding must produce it ins form or forms in which it is ordinarily
maintained or in a reasonably usable form or forms.
(C)Electronically Stored Information Produced in Only One
Form. The parson responding need not produce the same
electronically stored information in more than one form.
(D)Inaccessible Electronically Stored Information. The person responding need
not provide discovery of electronically stored information from sources that the
person identifies as not reasonably accessible because of undue burden or coat On
motion to compel discovery or for a protective order, the person responding must
show that the information is not reasonably accessible because of undue burden or
cost. If that showing is made, the court may nonetheless order discovery from such
sources if the requesting party shows good cause, considering the limitations of
Rule 26(b)(2)(C). The court may specify conditions for the discovery.
(2) CluimIng Privilege or Protection.
(A) Information Withheld. A person withholding subpoenaed information under a
claim that it is privileged or subject to protection as trial-preparation material must:
(i) expressly make the claim; and
(ii) describe the nature of the withheld documents, communications, or tangible
things in a manner that, without revealing information itself privileged or
protected, will enable the parties to assess the claim.
(B) information Prodseced If information produced in response to a subpoena is
subject to a claim of privilege or of protection as trial preparation material, the
person making the claim may notify any party that received the information of the
claim and the basis for it. After being notified, a party must promptly return,
sequester, or destroy the specified information and any copies it has; must not use
or disclose the information until the claim is resolved; must take reasonable steps
to retrieve the information if the party disclosed it before being notified; and may
promptly present the information to the court under seal for a determination of the
claim. The person who produced the information must preserve the information
until the claim is resolved.
(e) Contempt. The issuing court may hold in contempt a person who, having
been served, fails without adequate excuse to obey the subpoena. A nonparty's
failure to obey most be excused if the subpoena purports to require the nonparty to
attend or produce at a place outside the limits of Rule 45(c)(3)(AXii).

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 4 of 19

EXHIBIT A TO DEFENDANTS' DOCUMENT SUBPOENA
TO FONTAINEBLEAU RESORTS HOLDINGS, LLC
DEFINITIONS AND INSTRUCTIONS
These Requests cover all Documents in Your possession, custody, and
control, including Documents in the possession of Your officers, employees, agents, servants,
representatives, trustees, attorneys, consultants, or other Persons directly or indirectly employed
or retained by You, or anyone else acting on Your behalf or otherwise subject to Your control,
and any merged, consolidated, or acquired predecessor or successor, subsidiary, division, or
affiliate.
2.

Unless otherwise indicated, the Documents requested are those generated,

created, or distributed on or after June 1, 2006,
3.

These Requests are continuing in nature and require production in the

future of any responsive Documents that are subsequently discovered, generated, created,
distributed or received by You or any previously-known Documents whose responsiveness to
these Requests is later ascertained.
4.

For each Request, You are to produce entire Documents including all

attachments, enclosures, cover letters, memoranda, and appendices. Copies that differ in any
respect from an original (because, by way of example only, handwritten or printed notations have
been added) are treated as separate Documents and should be produced separately. A Request
for a Document shall be deemed to include a request for any and all transmittal sheets, cover
letters, exhibits, enclosures or attachments to the Document, in addition to the Document itself.
5.

With the exception of Excel files which shall be produced in native

format, You are to produce Documents and electronically stored information ("ESI") in a
searchable format including:
a) Single-page TIFF images at a resolution of 300 dpi

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 5 of 19

1,) Concordance compatible comma-delimited file for all fields excluding OCR
c) One OCR text file per document with the file name matching the beginning bates
number
d) An IPRO (LFP) image cross-reference file
6.

ESI and c-mails produced pursuant to this request shall be produced in a

searchable format with an accompanying index that states the following metadata:
a) Date created/sent
b) Author
C) Recipients
d) cc - copies
e) bce - blind copies
f) Beginning bates
g) End bates
h) File type
7.

If any Document or thing requested was at one time in existence, but has

been lost, discarded or destroyed, identify each such Document or thing by date, type, and
subject matter, describe the circumstances under which the Document was lost, discarded, or
destroyed, and identify the person with knowledge of its subject matter and of the circumstances
under which it was lost, discarded, or destroyed and, if the Documents are destroyed, state the
reason for such destruction.
8. If the production of any document requested herein is withheld on the
ground of any claim of privilege or attorney work-product, provide a statement detailing the
claim of privilege and all facts relied on to support that claim, including the Document date,
author(s), recipient(s), type (e.g., memo, interview notes), subject matter, its present location,
and all information required by the Federal Rules of Civil Procedure.
9.

If a portion of an otherwise responsive Document contains information

subject to a claim of privilege, those portions and the rest of the Document subject to the claim
of privilege shall be redacted from the Document and the rest of the Document shall be

2

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 6 of 19

produced. Information regarding that portion that is redacted must be included in the privilege
log.
10.

If there is any question as to the meaning of any part of these Requests, or

an issue as to whether production of any Documents requested herein would impose an undue
burden on Fontainebleau Resorts Holdings, Defendants' counsel should be contact promptly to
discuss these matters, and Fontainebleau Resorts Holdings should respond to the remainder of
these Requests as written.
11.

Whenever an objection is made as to any particular part or subpart of a

Request herein, all other portions or aspects of that Request as to which the objection does not
apply shall be responded to in full.
12.

If any Request cannot be responded to fully, You should provide as full a

response as possible, state the reason for the inability to answer fully, and provide any
information, knowledge, or belief that You have regarding the unanswered portion.
13..

Whenever appropriate, the singular form of a word shall be interpreted in

the plural, or vice versa; verb tenses shall be interpreted to include past, present, and future
tenses; the terms "and" as well as "or" shall be construed either disjunctively or conjunctively as
necessary to bring within the scope of these Requests any Documents that might otherwise be
construed as outside its scope; words in the masculine, feminine or neuter form include the
others.
14.

The following definitions will apply to these Requests. Notwithstanding

any definition stated below, each word, term or phrase used in this document is intended to have
the broadest meaning permitted under the Federal Rules of Civil Procedure.

3

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 7 of 19

a.

"Action" refers to the case captioned Fontainebleau Las Vegas LLC v. Bank of
America, NA., et al., in the United District Court for the Southern District of
Florida, Case No. 09-21879-CIV-ASG.

b.

"CCCS" means CCCS International and each of its predecessors, successors,
affiliates, divisions, subsidiaries, parents, members, officers, representatives,
agents and/or employees.

C.

"Communication" means any form of transmission of information, oral, written,
electronic or otherwise, including, without limitation, in-person discussions and
conversations, telephone calls, memoranda, letters, telecopies and e-mails.

d.

"Concerning" means relating to, referring to, describing, evidencing, constituting,
supporting, negating, refuting, embodying, containing, memorializing,
comprising, reflecting, analyzing, identifying, referencing, discussing, indicating,
connected with or otherwise pertaining in any way, in whole or in part, to the
subject matter referred to in each Request.
"Credit Agreement" shall refer to the agreement titled Credit Agreement by and
among Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas II, LLC, and
each lender from time to time party thereto, including Bank of America, N.A.,
Merrill Lynch Capital Corporation, JP Morgan Chase Bank, N.A., Barclays Bank
PLC, Deutsche Bank Trust Company Americas, The Royal Bank of Scotland plc,
Sumitomo Mitsui Banking Corporation, Bank of Scotland plc, HSH Nordbank
AG, New York Branch, and MB Financial Bank, N.A., dated as of June 6, 2007
(as amended, supplemented or otherwise modified from time to time).

4

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 8 of 19

f.

"Defendants" or "Revolving Lenders" shall refer to the defendants to this Action,
collectively Bank of America, N.A., Merrill Lynch Capital Corporation,
JPMorgan Chase Bank, N.A., Barclays Bank PLC, Deutsche Bank Trust
Company Americas, The Royal Bank of Scotland plc, Sumitomo Mitsui Banking
Corporation, Bank of Scotland plc, HSH Nordbank AG, and MB Financial Bank,
N.A.

g.

"Disbursement Agreement" shall refer to the agreement titled Master
Disbursement Agreement by and among Fontainebleau Las Vegas Holdings,
LLC, Fontainebleau Las Vegas Capital Corp., Fontainebleau Las Vegas Retail,
LLC, Fontainebleau Las Vegas, LLC, and Fontainebleau Las Vegas II, LLC,
Bank of America, N.A., Wells Fargo Bank, N.A., and Lehman Brothers Holdings
Inc., dated as of June 6, 2007 (as amended, supplemented or otherwise modified
from time to time).

h.

"Document(s)" is used in the broadest possible sense in accordance with Rule 34
of the Federal Rules of Civil Procedure and shall include, without limitation, all
written, recorded, transcribed, punched, taped, filmed or graphic material,
however produced or reproduced, which embodies any handwritten, typed,
printed, oral or visual Communication or representation, including writings,
drawings, graphs, spreadsheets, charts, photographs, presentations, calendar
entries, data compilations or any other information or data recorded in readable
and/or retrievable form, whether typed, handwritten, reproduced, magnetically or
optically or electronically recorded, coded, or in any other way made readable or
retrievable, computer files, hard disk files, diskettes or tapes, or archival or

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 9 of 19

backup copies thereof, audio recordings, video recordings, drafts of all the
aforesaid and all copies of the aforesaid upon which have been placed any
additional marks, stamps, underlining, bccs or notations of any kind, which are in
your possession or custody or subject to your control.
"Each" shall be construed to include "every," and "every" shall be construed to
include "each." "Any" shall be construed to include "all," and "all" shall be
construed to include "any."
j.

"Financing Agreements" means, collectively, the Disbursement Agreement, the
Facility Agreements, the Security Documents, the Disbursement Agent Fee
Letter, the Bank Agent Fee Letter, the Trustee's fee letters with the Issuers, the
Second Mortgage Purchase Agreement, the Second Mortgage Notes and any other
loan or security agreements entered into on, prior to or after the Closing Date with
the Disbursement Agent or any Funding Agent in connection with the financing
of the Project.

k.

"Fontainebleau" means Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas
II, LLC, Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas
Retail, LLC and/or Fontainebleau Las Vegas Capital Corporation and each of
their predecessors, successors, affiliates, divisions, subsidiaries, parents,
members, officers, representatives, agents and/or employees, including without
limitation, their attorneys, investment bankers and advisers acting or purporting to
act on its or their behalf.
"Fontainebleau Resorts Holdings, LLC," "Fontainebleau Resorts Holdings,"
"You," "Your," and "Yours" mean Fontainebleau Resorts Holdings, LLC and its

rol

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 10 of
19

parents, subsidiaries, partners, directors, shareholders, officers, employees, agents
assigns or any predecessors or successors in interest, or any person or entity over
which Fontainebleau Resorts Holdings exercises control, or who exercises control
over, or is in common control with them.
M.

"Including" is used in its inclusive sense and shall be construed so as to require
the broadest possible response. In other words, "including" should be read as
"including, but not limited to."

n.

"Moelis" mean Moelis & Company LLC and its parents, subsidiaries, partners,
directors, shareholders, officers, employees, agents assigns or any predecessors or
successors in interest, or any person or entity over which Moelis exercises control,
or who exercises control over, or is in common control with them.

o.

"Offering Materials" means any materials distributed to existing and potential
investors or lenders in connection with the Project.

P. "Offering Memorandum" means the March 2007 Senior Secured Credit Facilities
Confidential Offering Memorandum.
q.

'Person" means each and every individual, partner, corporation, partnership, joint
venture, or any other entity, whether incorporated or unincorporated,
encompassed within the usual and customary meaning of "person" or "persons"
or otherwise encompassed within this definition.

r.

"Project" refers to the construction of the Fontainebleau Resort and Casino in Las
Vegas, Nevada.
"Relating to" means concerning,. referring to, describing, evidencing or
constituting.

7

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 11 of
19

t.

"Request(s)" refers to each of these document requests to Fontainebleau Resorts
Holdings.

U.

"Retail Facility Agreement" means the Loan Agreement dated June 6, 2007 (as
amended, supplemented or otherwise modified from time to time) among
Fontainebleau Las Vegas Retail, LLC, Lehman Brothers Holdings Inc., and
certain other parties.

V.

"Turnberry Residential" means Turnberry Residential Limited Partner, L.P. and
its parents, subsidiaries, partners, directors, shareholders, officers, employees,
agents assigns or any predecessors or successors in interest, or any person or
entity over which Turnberry Residential exercises control, or who exercises
control over, or is in common control with them.

W.

"Turnberry West" means Turnberry West Construction, Inc. and its parents,
subsidiaries, partners, directors, shareholders, officers, employees, agents assigns
or any predecessors or successors in interest, or any person or entity over which
Tumberry West exercises control, or who exercises control over, or is in common
control with them.

X.

All capitalized terms used but not defined herein shall have the same meanings
given to them in the Credit Agreement and Master Disbursement Agreement.
REQUESTS FOR DOCUMENTS

Documents sufficient to identify the ownership and organizational
structure of Fontainebleau Resorts Holdings as well as each Fontainebleau entity involved with
the Project, including, without limitation, Documents sufficient to identify each Person or entity

8

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 12 of
19

that holds, directly or indirectly, an ownership interest in any Fontainebleau entity involved with
the Project.
2.

All Documents Concerning the Credit Agreement, Disbursement

Agreement or Financing Agreements, including, without limitation, all drafts thereof, and any
memoranda or notes.
3.

All Documents Concerning any presentations and/or meetings Concerning

the Project from June 6, 2006 to the present, including without limitation, all Documents,
including presentations, PowerPoint slides, spreadsheets, videos, charts, or memoranda provided
by Fontainebleau to any actual or potential Project lender, rating agency, any Project
construction consultant, or any actual or potential Investor in Fontainebleau or the Project, any
and all drafts thereof, and any other Documents Concerning Information provided by
Fontainebleau through such presentations and/or meetings.
4.

All Documents Concerning any Notice of Borrowing by Fontainebleau,

including, without limitation, all Documents Concerning Fontainebleau's decision to amend or
revise any Notice of Borrowing, any amended or revised Notices of Borrowing, as well as all
supporting documents and drafts thereof.
5.

All Documents Concerning any Advance Request by Fontainebleau

including, without limitation, all Documents Concerning Fontainebleau's decision to amend or
revise any Advance Requests, any amended, revised or draft Advance Requests, any
certifications included in or accompanying the Advance Requests and all drafts and other support
documents.
6.
or revision thereof.

All Documents Concerning the In Balance Test, including any calculation

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 13 of
19

7.

All Documents Concerning Available Funds as of each Advance Date,

including, without limitation, all supporting documents.
8.

All Documents Concerning the financial condition of each Fontainebleau

entity involved with the Project, including, without limitation, financial statements, balance
sheets, income statements, cash flow statements and other reports for any period or as of any date
during calendar years 2007, 2008 and 2009.
9.

All Documents Concerning Communications between Fontainebleau

Resorts Holdings and Fontainebleau, its shareholders, management, members, financial advisors,
board of directors, auditors or accountants Concerning the Project.
10.

All Documents Concerning Fontainebleau's failure to furnish audited

annual financial statements for the year ended December 31, 2008.
11.

All Documents Concerning Fontainebleau's internal controls or

accounting procedures.
12.

All Documents Concerning any request, demand or attempt to inspect or

to audit any of the books or records of Fontainebleau.
13.

All Documents Concerning Communications Relating to any potential or

actual Fontainebleau bankruptcy filing on or before June 9, 2009.
14.

All Documents Concerning Fontainebleau's ability to repay its debts

including, without limitation, the debts incurred to build the Project.
15.

All Documents Concerning Communications with rating agencies

Relating to the Project, as well as Documents Concerning presentations made to or by rating
agencies discussing the Project.

10

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 14 of
19

16.

All Documents Concerning Standard & Poor's reporting on the Project,

including any internal Communications at Fontainebleau Resorts Holdings Concerning such
reporting.
17.

All Documents Concerning the resignation or termination of employment

of Glenn Schaeffer, including, without limitation, Documents Concerning the possibility that Mr.
Schaeffer would resign or be terminated and all Communications, agreements or understandings
relating thereto.
18.

All Documents Concerning the Offering Materials.

19.

All Documents Concerning any efforts given to or consideration of raising

any additional equity or debt capital, or selling of any interests in the Project, including, without
limitation, any presentation made to or by investment or commercial banks, financial advisors or
restructuring advisors.
20.

All Documents Concerning any efforts to obtain alternative financing for

the Project as a replacement or substitute for the financing contemplated by the Credit
Agreement.
21.

All Documents Concerning financing for the Project's retail component,

including any communication with Lehman Brothers Holdings Inc.
22.

All Documents Concerning any actual or potential investment in,

financing of, or acquisition of an interest in the Project by Persons other than parties to the Credit
Agreement, the Retail Agreement, or the holders of the Second Mortgage Notes from June 6,
2006 to the present.

11

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 15 of
19

23.

All Documents Concerning Communications between Fontainebleau

Resorts Holdings and investors or potential investors Concerning the Project from June 6 2006
to the present.
24.

All Documents relating to any investigation or due diligence undertaken in

connection with any actual or contemplated financing or other acquisition of any claim or
interest in Fontainebleau or the Project, after June 6, 2007.
25.

All Documents Concerning Communications with, to or from Moelis &

Company Concerning the Project.
26.

All Documents Concerning Communications with, to or from Turnberry

West, or any general contractor Concerning the Project.
27.

All Documents Concerning Communications with, to or from Turnberry

Residential, or any property manager Concerning the Project.
28.

All Documents Concerning Communications with, to or from CCCS

International, Hill International, Inc. or Cumming Corporation, and any other construction
management company or consultant relating to the Project.
29,

All Documents Concerning Advance Requests under the Retail

Agreement, including, without limitation, any Communications between Fontainebleau and the
Retail Lenders Concerning such Advance Requests.
30.

All Documents Concerning the Revolving Lenders' requests to arrange for

a discussion or meeting with Fontainebleau Concerning the Project, including any internal
Communications within Fontainebleau Resorts Holdings Concerning the Revolving Lenders
requests.

12

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 16 of
19

31.

All Documents Concerning the "Enhanced Plan" discussed by

Fontainebleau at the April 17, 2009 meeting with the Lenders.
32.

All Documents Concerning Applied Analysis relating to the Project or to

Las Vegas economic conditions.
33.

All Documents Concerning Fontainebleau's Budgets, including, without

limitation, the underlying assumptions, models, analyses and calculations used.
34.

All Documents Concerning actual and anticipated costs for the Project.

35.

All Documents Concerning anticipated contingencies for the Project.

36.

All Documents Concerning billing of, and payment to, contractors and/or

suppliers for expenses related to the Project, including any Documents Concerning actual or
potential overpayments to contractors and/or suppliers.
37.

All Documents Concerning change order requests or pending change

orders for the Project and the dates and amounts of such requests, including, without limitation,
any schedules or charts reflecting same and all Communications with any contractor or
subcontractor Concerning same.
38.

All Documents Concerning the schedule for work on the Project,

including, without limitation, all as-planned schedules, master schedules, milestone schedules,
monthly or periodic update schedules.
39.

All Documents Concerning financial projections and/or forecasts for the

Project, including, without limitation, all supporting Documents.
40.

All Documents Concerning valuations or appraisals of the Project.

41.

All Documents Concerning marketing studies related to the Project.

13

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 17 of
19

42.

All Documents Concerning economic trends and developments related to

the Project, including current and projected supply and demand for retail space, hotel rooms,
condominiums and convention space in Las Vegas and projections for Las Vegas visitor volume
and hotel occupancy.
43.

All Documents Concerning the sales of condominium units at

Fontainebleau Las Vegas, including, without limitation, any Communications with investment or
commercial banks Concerning the financing of condominium unit sales at Fontainebleau Las
Vegas, marketing materials, sales efforts, financing for the sales and offers received.
44.

All Documents Concerning Communications with the Revolving Lenders

Relating to the Project.
45.

All Documents Concerning LEED credits, audits, shortfalls and/or targets

46.

All Documents Concerning the development, construction, operation and

for the Project.

status of the Project, including, without limitation, any actual or proposed plans for modifying or
enhancing the current Project plan.
47.

All Documents Concerning the Opening Date, including, without

limitation, any Documents Concerning impediments to achieving the Opening Date by the
Scheduled Opening Date or the Outside Date and any changes in the Project's Opening Date.
48.

All Documents Concerning any actual, alleged, potential or anticipated

breach of, or any actual, alleged, potential or anticipated Material Adverse Event, Default or
Events of Default under the Credit Agreement, Disbursement Agreement, Financing Agreements
or any Material Contract.

14

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 18 of
19

49.

All Documents Concerning any existing or threatened material litigation

by or against Fontainebleau.
50.

All Documents Concerning the holders of indebtedness issued by

Fontainebleau, including, without limitation, any agreements or proposals with respect to
restructuring matters and all notices of default or reservations of rights received by
Fontainebleau or by You.
51.

All Documents Concerning any default or alleged default by completion

guarantor Tumberry Residential Limited Partner, L.P. that was the subject of the action
captioned Prudential Insurance Co. ofAmerica et ano. v. Turnberry West, L. L. C., et al,, Case
No, 2:09-cv00695-KJD-GWF (D. Nev. Apr. 17, 2009).
52.

All Documents Concerning Your Communications with Fontainebleau

relating to this Action.
53.

All Documents provided to or Concerning the Examiner appointed by

Order of the Bankruptcy Court dated October 14, 2009, in the action captioned In re
Fontainebleau Las Vegas Holdings, LLC, et al., Case No. 09-21481-BKC-AJC (Bankr. S.D.
Fla.) (D.E. #770), and any Communications relating thereto.
54.

All Documents Concerning Communications with the plaintiffs in any of

the following actions Concerning those actions and/or matters at issue in those actions, including
the costs associated with maintaining those actions, as well as all Documents Concerning this
litigation and/or matters at issue in this litigation:
a. Avenue CLO Fund, Ltd, et al. v. Bank ofAmerica, NA., et al., 2:09-cv-0 1047KJD-PAL (D. Nev.);
b. ACP Master, Ltd et ano. v. Bank ofAmerica, NA., et al., No. 09 Civ.
8064 (LTS)(TI-IK) (S.D.N.Y.); or

15

Case 1:09-md-02106-ASG Document 115-2 Entered on FLSD Docket 07/23/2010 Page 19 of
19

c. Turnberry West Construction, Inc. v. Fontainebleau Las Vegas Holdings, et
aL, Adv. Pro. No. 09-01762-BKC-AJC-A (Bankr. S.D. Fla.).
55.

All Documents Concerning Communications with any or all of the

defendants or third-party plaintiffs in the action captioned Deutsche Bank Trust Company

Americas v. Soffer, et al., No. 09 Civ. 7089 (RJS) (S.D.N.Y.) Concerning that litigation and/or
matters at issue in that litigation or Concerning this litigation and/or matters at issue in this
litigation.
56.

Al] Documents sufficient to show Fontainebleau Resorts Holdings'

document retention or destruction policies and practices, including, without limitation, as to
electronic mail and other electronic records.

16

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 1 of 19

EXHIBIT C

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 2 of 19
AO 88B (Rev. 06/09) Subpoena to Produce Documents, Information, or Objects or to Permit Inspection of Premises in a Civil Action

Issued by the

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
SUBPOENA IN A CIVIL CASE
IN RE: FONTAINEBLEAU LAS VEGAS CONTRACT
LITIGATION

Case No. 09-MD-02 106-C! V-

GOLD/BANDSTRA

SUBPOENA TO PRODUCE DOCUMENTS, INFORMATION, OR OBJECTS OR TO PERMIT
INSPECTION OF PREMISES IN A CIVIL ACTION
TO: FONTAINEBLEAU RESORTS PROPERTIES I, LLC
Attention: Whitney Their, General Counsel
19950 West Country Club Drive
Aventura, Florida 33180

YOU ARE COMMANDED to produce and permit inspection and copying of the following documents or objects at
the place, date, and time specified below (list documents or objects):
See attached Exhibit A
PLACE

AND TIME

Simpson Thacher & Bartlett LLP
Attention: David Woll
425 Lexington Avenue
New York, New York 10017

4,2010

YOU ARE COMMANDED to permit inspection of the following premises at the date and time specified below.
PREMISES

AND lIME

Any organization not a party to this suit that is subpoenaed for the taking of a deposition shall designate one or more officers,
directors, or managing agents, or other persons who consent to testify on its behalf, and may set forth, for each person designated, the
n)atti?p which the person will testify. Federal Rules of Civil Procedure, 30(b)(6).
TTORNEY FOR PLAINTIFF OR DEFENDANT

I

AND TIME

David Woll
Simpson Thacher & Bartlett LLP
Attorney for Defendants iPMorgan Chase Bank, N.A., Barclays Bank PLC, Deutsche
Bank Trust Company Americas, and The Royal Bank of Scotland plc
425 Lexington Avenue
New York, New York 10017
[phone]
(See Rule 45, Federal Rules otCivil Procedure, Subdivisions (c), (d) and (c), on nunS

May 4, 2010

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 3 of 19
AO 88B (Rev. 06/09) Subpoena to Produce Documents, Information, or Objects or to Permit Inspection of Premises in a Civil Action

PROOF OF SERVICE
DATE

SERVED ON (PRINT NAME)

SERVED BY (PRINT NAME)

PLACE

MANNER OF SERVICE

TITLE

DECLARATION OF SERVER
I declare under penalty of perjury under the laws of the United States of America that the foregoing information contained
in the Proof of Service is true and correct.
Executed on
DATE

SIGNATURE OF SERVER

ADDRESS OF SERVER

Rule 45, Federal Rules of Civil Procedure, Subdivision (c), (d), and (e) (Effective 12/1/07)
(c) Protecting a Person Subject to a Subpoena,
(I)Avoiding Undue Burden or Expense, Sancliona A party or attorney

responsible for issuing and serving a subpoena must take reasonable steps to avoid
imposing undue burden or expense on a person subject to the subpoena. The
issuing court must enforce this duty and Impose an appropriate sanction - which
may include lost earnings and reasonable attorney's lees - on a party or attorney
who fails to comply.

(2) Command to Produce Materials or Permit Inspection.
(A)Appearance Not Required. A person commanded to produce documents,
electronically stored information, or tangible things, or to permit the inspection of
premises, need not appear in person at the place of production or inspection unless
also commanded to appear for a deposition, hearing, or trial,
(B)Objections. A person commanded to produce documents or tangible things or
to permit inspection may serve on the party or attorney designated in the subpoena
a written objection to inspecting, copying, testing or sampling any or all of the
materials or to inspecting the premises - or to producing electronically stored
information in the form or forms requested. The objection must be served before
the earlier of the time specified for compliance or 14 days after the subpoena is
served. If an objection is made, the following roles apply;
(i) At any time, on notice to the commanded person, the serving party may move
the issuing court for an order compelling production or inspection.
(ii) These acts may be required only as directed in the order, and the order must
protect a person who is neither a party nor a party's officer from significant
expense resulting from compliance.
(3) Quashing or Modifying a Subpoeius
(A) IThen Required On timely motion, the issuing court must quash or modify a
subpoena that:
(I) fails to allow a reasonable time to comply;
(ii) requires a person who is neither a party nor a party's officer to travel more
than 100 mites from where that person resides, is employed, or regularly transacts
business in person - except that, subject to Rule 4(cX3)(B)(iii), the person may
be commanded to attend a trial by traveling from any such place within the state
where the trial is held;
(iii) requires disclosure of privileged or other protected matter, if no exception or
waiver applies; or
(iv) subjects a person to undue burden.
(B) When Permitted To protect a person subject to or affected by a subpoena, the
issuing court may, on motion, quash or modify the subpoena ifit requires:
(I) disclosing a trade secret or other confidential research, development, or
commercial information;
(ii) disclosing an unretained expert's opinion or information that does not
describe specific occurrences in dispute and results from the expert's study that
was not requested by a party; or
(iii) a person who is neither a party nor a party's officer to incur substantial
expense to travel more than 100 miles to attend trial.
(C) Specifying Conditions as an Alternative. In the circumstances described in
Rule 45(c)(3XB), the court may, instead of quashing or modifying a subpoena,
order appearance or production under specified conditions if the serving party;

(i) shows a substantial need for the testimony or material that cannot be
otherwise met without undue hardship; and
(ii) ensures that the subpoenaed person will be reasonably compensated.
(ii) Duties in Responding to a Subpoena.
(1) Producing Documents or Electronically Stored Information.
These procedures apply to producing documents or electronically stored
information:
(A)Documents. A person responding to a subpoena to produce documents must
produce them as they are kept in the ordinary course of business or must organize
and label them to correspond to the categories in the demand,
(B)Farm for Producing Electronically Stored Information Not Specified. If a
subpoena does not specify a form for producing electronically stored information,
the person responding must produce it in a form or forms in which it is ordinarily
maintained or in a reasonably usable form or forms.

(C)Electronically Stored information Produced in Only One
Form. The person responding need not produce the same
electronically stored information in more than one form,
(B) Inaccessible Electronically Stored Information. The person responding need
not provide discovery of electronically stored information from sources that the
person identifies as not reasonably accessible because of undue burden or coat. On
motion to compel discovery or for a protective order, the person responding must
show that the information is not reasonably accessible because of undue burden or
cost. If that showing is made, the court may nonetheless order discovery from such
sources if the requesting party shows good cause, considering the limitations of
Rule 26(b)(2)(C). The court may specify conditions for the discovery.

(2) ChurnIng Privilege or Protection,
(A) information Withheld A person withholding subpoenaed information under a
claim that it is privileged or subject to protection as trial-preparation material must:
(i) expressly make the claim; and
(ii) describe the nature of the withheld documents, communications, or tangible
things in a manner that, without revealing information itself privileged or
protected, will enable the parties to assess the claim.
(B) Information Produced If information produced in response to a subpoena is
subject to a claim of privilege or of protection as trial preparation material, the
person making the claim may notify any party that received the information of the
claim and the basis for it. After being notified, a party must promptly return,
sequester, or destroy the specified information and any copies it has; must not use
or disclose the information until the claim is resolved; must take reasonable steps
to retrieve the information if the party disclosed it before being notified; and may
promptly present the information to the court under seal for a determination of the
claim. The person who produced the information must preserve the information
until the claim is resolved.
(e) Contempt The issuing court may hold in contempt a person who, having
been served, fails without adequate excuse to obey the subpoena. A nonparty's
failure to obey must be excused if the subpoena purports to require the nonparty to
attend or produce at a place outside the limits of Rule 45(c)(3XA)(ii)

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 4 of 19

EXHIBIT A TO DEFENDANTS' DOCUMENT SUBPOENA
TO FONTAINEBLEAU RESORTS PROPERTIES I, LLC
DEFINITIONS AND INSTRUCTIONS
1.

These Requests cover all Documents in Your possession, custody, and

control, including Documents in the possession of Your officers, employees, agents, servants,
representatives, trustees, attorneys, consultants, or other Persons directly or indirectly employed
or retained by You, or anyone else acting on Your behalf or otherwise subject to Your control,
and any merged, consolidated, or acquired predecessor or successor, subsidiary, division, or
affiliate.
2.

Unless otherwise indicated, the Documents requested are those generated,

created, or distributed on or after June 1, 2006.
3.

These Requests are continuing in nature and require production in the

future of any responsive Documents that are subsequently discovered, generated, created,
distributed or received by You or any previously-known Documents whose responsiveness to
these Requests is later ascertained.
4.

For each Request, You are to produce entire Documents including all

attachments, enclosures, cover letters, memoranda, and appendices. Copies that differ in any
respect from an original (because, by way of example only, handwritten or printed notations have
been added) are treated as separate Documents and should be produced separately. A Request
for a Document shall be deemed to include a request for any and all transmittal sheets, cover
letters, exhibits, enclosures or attachments to the Document, in addition to the Document itself.
5.

With the exception of Excel files which shall be produced in native

format, You are to produce Documents and electronically stored information ("ES I") in a
searchable format including:
a) Single-page TIFF images at a resolution of 300 dpi

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 5 of 19

b) Concordance compatible comma-delimited file for all fields excluding OCR
c) One OCR text file per document with the file name matching the beginning bates
number
d) An IPRO (LFP) image cross-reference file
6.

ESI and e-mails produced pursuant to this request shall be produced in a

searchable format with an accompanying index that states the following metadata:
a)
b)
c)
d)
e)
f)
g)
h)

Date created/sent
Author
Recipients
cc - copies
bcc - blind copies
Beginning bates
End bates
File type
7.

If any Document or thing requested was at one time in existence, but has

been lost, discarded or destroyed, identify each such Document or thing by date, type, and
subject matter, describe the circumstances under which the Document was lost, discarded, or
destroyed, and identify the person with knowledge of its subject matter and of the circumstances
under which it was lost, discarded, or destroyed and, if the Documents are destroyed, state the
reason for such destruction.
8. If the production of any document requested herein is withheld on the
ground of any claim of privilege or attorney work-product, provide a statement detailing the
claim of privilege and all facts relied on to support that claim, including the Document date,
author(s), recipient(s), type (e.g., memo, interview notes), subject matter, its present location,
and all information required by the Federal Rules of Civil Procedure.
9.

If a portion of an otherwise responsive Document contains information

subject to a claim of privilege, those portions and the rest of the Document subject to the claim
of privilege shall be redacted from the Document and the rest of the Document shall be

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 6 of 19

produced. Information regarding that portion that is redacted must be included in the privilege
log.
10.

If there is any question as to the meaning of any part of these Requests, or

an issue as to whether production of any Documents requested herein would impose an undue
burden on Fontainebleau Resorts Properties, Defendants' counsel should be contact promptly to
discuss these matters, and Fontainebleau Resorts Properties should respond to the remainder of
these Requests as written.
11.

Whenever an objection is made as to any particular part or subpart of a

Request herein, all other portions or aspects of that Request as to which the objection does not
apply shall be responded to in full.
12.

If any Request cannot be responded to fully, You should provide as full a

response as possible, state the reason for the inability to answer fully, and provide any
information, knowledge, or belief that You have regarding the unanswered portion.
13.

Whenever appropriate, the singular form of a word shall be interpreted in

the plural, or vice versa; verb tenses shall be interpreted to include past, present, and future
tenses; the terms "and" as well as "or" shall be construed either disjunctively or conjunctively as
necessary to bring within the scope of these Requests any Documents that might otherwise be
construed as outside its scope; words in the masculine, feminine or neuter form include the
others.
14.

The following definitions will apply to these Requests. Notwithstanding

any definition stated below, each word, term or phrase used in this document is intended to have
the broadest meaning permitted under the Federal Rules of Civil Procedure.

3

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 7 of 19

a.

"Action" refers to the case captioned Fontainebleau Las Vegas LLC v. Bank of
America, NA., et al., in the United District Court for the Southern District of
Florida, Case No. 09-21879-CIV-ASG,

b.

"CCCS" means CCCS International and each of its predecessors, successors,
affiliates, divisions, subsidiaries, parents, members, officers, representatives,
agents and/or employees.

C.

"Communication" means any form of transmission of information, oral, written,
electronic or otherwise, including, without limitation, in-person discussions and
conversations, telephone calls, memoranda, letters, telecopies and e-mails.

d.

"Concerning" means relating to, referring to, describing, evidencing, constituting,
supporting, negating, refuting, embodying, containing, memorializing,
comprising, reflecting, analyzing, identifying, referencing, discussing, indicating,
connected with or otherwise pertaining in any way, in whole or in part, to the
subject matter referred to in each Request.

e.

"Credit Agreement" shall refer to the agreement titled Credit Agreement by and
among Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas II, LLC, and
each lender from time to time party thereto, including Bank of America, N.A,
Merrill Lynch Capital Corporation, JP Morgan Chase Bank, N.A., Barclays Bank
PLC, Deutsche Bank Trust Company Americas, The Royal Bank of Scotland plc,
Sumitomo Mitsui Banking Corporation, Bank of Scotland plc, HSH Nordbank
AG, New York Branch, and MB Financial Bank, N.A., dated as of June 6, 2007
(as amended, supplemented or otherwise modified from time to time).

4

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 8 of 19

f.

"Defendants" or "Revolving Lenders" shall refer to the defendants to this Action,
collectively Bank of America, N.A., Merrill Lynch Capital Corporation,
JPMorgan Chase Bank, N.A., Barclays Bank PLC, Deutsche Bank Trust
Company Americas, The Royal Bank of Scotland plc, Sumitomo Mitsui Banking
Corporation, Bank of Scotland plc, HSH Nordbank AG, and MB Financial Bank,
N.A.

g.

"Disbursement Agreement" shall refer to the agreement titled Master
Disbursement Agreement by and among Fontainebleau Las Vegas Holdings,
LLC, Fontainebleau Las Vegas Capital Corp., Fontainebleau Las Vegas Retail,
LLC, Fontainebleau Las Vegas, LLC, and Fontainebleau Las Vegas II, LLC,
Bank of America, N.A., Wells Fargo Bank, N.A., and Lehman Brothers Holdings
Inc., dated as of June 6, 2007 (as amended, supplemented or otherwise modified
from time to time).

h.

"Document(s)" is used in the broadest possible sense in accordance with Rule 34
of the Federal Rules of Civil Procedure and shall include, without limitation, all
written, recorded, transcribed, punched, taped, filmed or graphic material,
however produced or reproduced, which embodies any handwritten, typed,
printed, oral or visual Communication or representation, including writings,
drawings, graphs, spreadsheets, charts, photographs, presentations, calendar
entries, data compilations or any other information or data recorded in readable
and/or retrievable form, whether typed, handwritten, reproduced, magnetically or
optically or electronically recorded, coded, or in any other way made readable or
retrievable, computer files, hard disk files, diskettes or tapes, or archival or

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 9 of 19

backup copies thereof, audio recordings, video recordings, drafts of all the
aforesaid and all copies of the aforesaid upon which have been placed any
additional marks, stamps, underlining, bccs or notations of any kind, which are in
your possession or custody or subject to your control.
i.

"Each" shall be construed to include "every," and "every" shall be construed to
include "each." "Any" shall be construed to include "all," and "all" shall be
construed to include "any."
"Financing Agreements" means, collectively, the Disbursement Agreement, the
Facility Agreements, the Security Documents, the Disbursement Agent Fee
Letter, the Bank Agent Fee Letter, the Trustee's fee letters with the Issuers, the
Second Mortgage Purchase Agreement, the Second Mortgage Notes and any other
loan or security agreements entered into on, prior to or after the Closing Date with
the Disbursement Agent or any Funding Agent in connection with the financing
of the Project.

k.

"Fontainebleau" means Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas
II, LLC, Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas
Retail, LLC and/or Fontainebleau Las Vegas Capital Corporation and each of
their predecessors, successors, affiliates, divisions, subsidiaries, parents,
members, officers, representatives, agents and/or employees, including without
limitation, their attorneys, investment bankers and advisers acting or purporting to
act on its or their behalf.

I.

"Fontainebleau Resorts Properties," "You," "Your," and "Yours" mean
Fontainebleau Resorts Properties I, LLC and its parents, subsidiaries, partners,

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 10 of
19

directors, shareholders, officers, employees, agents assigns or any predecessors or
successors in interest, or any person or entity over which Fontainebleau Resorts
Properties exercises control, or who exercises control over, or is in common
control with them.
m.

"Including" is used in its inclusive sense and shall be construed so as to require
the broadest possible response. In other words, "including" should be read as
"including, but not limited to."

n.

"Moelis" mean Moelis & Company LLC and its parents, subsidiaries, partners,
directors, shareholders, officers, employees, agents assigns or any predecessors or
successors in interest, or any person or entity over which Moelis exercises control,
or who exercises control over, or is in common control with them.

o.

"Offering Materials" means any materials distributed to existing and potential
investors or lenders in connection with the Project.

P. "Offering Memorandum" means the March 2007 Senior Secured Credit Facilities
Confidential Offering Memorandum.
q.

"Person" means each and every individual, partner, corporation, partnership, joint
venture, or any other entity, whether incorporated or unincorporated,
encompassed within the usual and customary meaning of "person" or "persons"
or otherwise encompassed within this definition.
"Project" refers to the construction of the Fontainebleau Resort and Casino in Las
Vegas, Nevada.

S.

"Relating to" means concerning, referring to, describing, evidencing or
constituting.

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 11 of
19

t.

"Request(s)" refers to each of these document requests to Fontainebleau Resorts
Properties.

U.

"Retail Facility Agreement" means the Loan Agreement dated June 6, 2007 (as
amended, supplemented or otherwise modified from time to time) among
Fontainebleau Las Vegas Retail, LLC, Lehman Brothers Holdings Inc., and
certain other parties.

V.

"Turnberry Residential" means Tumberry Residential Limited Partner, L.P. and
its parents, subsidiaries, partners, directors, shareholders, officers, employees,
agents assigns or any predecessors or successors in interest, or any person or
entity over which Tumberry Residential exercises control, or who exercises
control over, or is in common control with them.

W.

"Turnbeny West" means Turnberry West Construction, Inc. and its parents,
subsidiaries, partners, directors, shareholders, officers, employees, agents assigns
or any predecessors or successors in interest, or any person or entity over which
Tumberry West exercises control, or who exercises control over, or is in common
control with them.

X.

All capitalized terms used but not defined herein shall have the same meanings
given to them in the Credit Agreement and Master Disbursement Agreement.
REQUESTS FOR DOCUMENTS

Documents sufficient to identify the ownership and organizational
structure of Fontainebleau Resorts Properties as well as each Fontainebleau entity involved with
the Project, including, without limitation, Documents sufficient to identify each Person or entity

8

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 12 of
19

that holds, directly or indirectly, an ownership interest in any Fontainebleau entity involved with
the Project.
2.

All Documents Concerning the Credit Agreement, Disbursement

Agreement or Financing Agreements, including, without limitation, all drafts thereof, and any
memoranda or notes.
3.

All Documents Concerning any presentations and/or meetings Concerning

the Project from June 6, 2006 to the present, including without limitation, all Documents,
including presentations, PowerPoint slides, spreadsheets, videos, charts, or memoranda provided
by Fontainebleau to any actual or potential Project lender, rating agency, any Project
construction consultant, or any actual or potential Investor in Fontainebleau or the Project, any
and all drafts thereof, and any other Documents Concerning Information provided by
Fontainebleau through such presentations and/or meetings.
4.

All Documents Concerning any Notice of Borrowing by Fontainebleau,

including, without limitation, all Documents Concerning Fontainebleau's decision to amend or
revise any Notice of Borrowing, any amended or revised Notices of Borrowing, as well as all
supporting documents and drafts thereof.
5.

All Documents Concerning any Advance Request by Fontainebleau

including, without limitation, all Documents Concerning Fontainebleau's decision to amend or
revise any Advance Requests, any amended, revised or draft Advance Requests, any
certifications included in or accompanying the Advance Requests and all drafts and other support
documents.
6.
or revision thereof.

All Documents Concerning the In Balance Test, including any calculation

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 13 of
19

7.

All Documents Concerning Available Funds as of each Advance Date,

including, without limitation, all supporting documents.
8.

All Documents Concerning the financial condition of each Fontainebleau

entity involved with the Project, including, without limitation, financial statements, balance
sheets, income statements, cash flow statements and other reports for any period or as of any date
during calendar years 2007, 200 8 and 2009.
9.

All Documents Concerning Communications between Fontainebleau

Resorts Properties and Fontainebleau, its shareholders, management, members, financial
advisors, board of directors, auditors or accountants Concerning the Project.
10.

All Documents Concerning Fontainebleau's failure to furnish audited

annual financial statements for the year ended December 31, 2008.
11.

All Documents Concerning Fontainebleau's internal controls or

accounting procedures.
12.

All Documents Concerning any request, demand or attempt to inspect or

to audit any of the books or records of Fontainebleau.
13.

All Documents Concerning Communications Relating to any potential or

actual Fontainebleau bankruptcy filing on or before June 9, 2009.
14.

All Documents Concerning Fontainebleau's ability to repay its debts

including, without limitation, the debts incurred to build the Project.
15.

All Documents Concerning Communications with rating agencies

Relating to the Project, as well as Documents Concerning presentations made to or by rating
agencies discussing the Project.

FEll

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 14 of
19

16.

All Documents Concerning Standard & Poor's reporting on the Project,

including any internal Communications at Fontainebleau Resorts Properties Concerning such
reporting.
17.

All Documents Concerning the resignation or termination of employment

of Glenn Schaeffer, including, without limitation, Documents Concerning the possibility that Mr.
Schaeffer would resign or be terminated and all Communications, agreements or understandings
relating thereto.
18.

All Documents Concerning the Offering Materials.

19.

All Documents Concerning any efforts given to or consideration of raising

any additional equity or debt capital, or selling of any interests in the Project, including, without
limitation, any presentation made to or by investment or commercial banks, financial advisors or
restructuring advisors.
20.

All Documents Concerning any efforts to obtain alternative financing for

the Project as a replacement or substitute for the financing contemplated by the Credit
Agreement.
21.

All Documents Concerning financing for the Project's retail component,

including any communication with Lehman Brothers Holdings Inc.
22.

All Documents Concerning any actual or potential investment in,

financing of, or acquisition of an interest in the Project by Persons other than parties to the Credit
Agreement, the Retail Agreement, or the holders of the Second Mortgage Notes from June 6,
2006 to the present.

11

Case 1:09-md-02106-ASG Document 115-3 Entered on FLSD Docket 07/23/2010 Page 15 of
19

23.

All Documents Concerning Communications between Fontainebleau

Resorts Properties and investors or potential investors Concerning the Project from June 6, 2006
to the present.
24.

All Documents relating to any investigation or due diligence undertaken in

connection with any actual or contemplated financing or other acquisition of any claim or
interest in Fontainebleau or the Project, after June 6, 2007.
25.

All Documents Concerning Communications with, to or from Moelis &

Company Concerning the Project.
26.

All Documents Concerning Communications with, to or from Turnberry

West, or any general contractor Concerning the Project.
27.

All Documents Concerning Communications with, to or from Tumberry

Residential, or any property manager Concerning the Project.
28.

All Documents Concerning Communications with, to or from CCCS

International, Hill International, Inc. or Cumming Corporation, and any other construction
management company or consultant relating to the Project.
29.

All Documents Concerning Advance Requests under the Retail

Agreement, including, without limitation, any Communications between Fontainebleau and the
Retail Lenders Concerning such Advance Requests.
30.

All Documents Concerning the Revolving Lenders' requests to arrange for

a discussion or meeting with Fontainebleau Concerning the Project, including any internal
Communications within Fontainebleau Resorts Properties Concerning the Revolving Lenders'
requests.

12

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31.

All Documents Concerning the "Enhanced Plan" discussed by

Fontainebleau at the April 17, 2009 meeting with the Lenders.
32.

All Documents Concerning Applied Analysis relating to the Project or to

Las Vegas economic conditions.
33.

All Documents Concerning Fontainebleau's Budgets, including, without

limitation, the underlying assumptions, models, analyses and calculations used.
34.

All Documents Concerning actual and anticipated costs for the Project.

35.

All Documents Concerning anticipated contingencies for the Project.

36.

All Documents Concerning billing of, and payment to, contractors and/or

suppliers for expenses related to the Project, including any Documents Concerning actual or
potential overpayments to contractors and/or suppliers.
37.

All Documents Concerning change order requests or pending change

orders for the Project and the dates and amounts of such requests, including, without limitation,
any schedules or charts reflecting same and all Communications with any contractor or
subcontractor Concerning same.
38.

All Documents Concerning the schedule for work on the Project,

including, without limitation, all as-planned schedules, master schedules, milestone schedules,
monthly or periodic update schedules.
39.

All Documents Concerning financial projections and/or forecasts for the

Project, including, without limitation, all supporting Documents.
40.

All Documents Concerning valuations or appraisals of the Project.

41.

All Documents Concerning marketing studies related to the Project.

13

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42.

All Documents Concerning economic trends and developments related to

the Project, including current and projected supply and demand for retail space, hotel rooms,
condominiums and convention space in Las Vegas and projections for Las Vegas visitor volume
and hotel occupancy.
43.

All Documents Concerning the sales of condominium units at

Fontainebleau Las Vegas, including, without limitation, any Communications with investment or
commercial banks Concerning the financing of condominium unit sales at Fontainebleau Las
Vegas, marketing materials, sales efforts, financing for the sales and offers received.
44.

All Documents Concerning Communications with the Revolving Lenders

Relating to the Project.
45.

All Documents Concerning LEED credits, audits, shortfalls and/or targets

46.

All Documents Concerning the development, construction, operation and

for the Project.

status of the Project, including, without limitation, any actual or proposed plans for modifying or
enhancing the current Project plan.
47.

All Documents Concerning the Opening Date, including, without

limitation, any Documents Concerning impediments to achieving the Opening Date by the
Scheduled Opening Date or the Outside Date and any changes in the Project's Opening Date.
48.

All Documents Concerning any actual, alleged, potential or anticipated

breach of, or any actual, alleged, potential or anticipated Material Adverse Event, Default or
Events of Default under the Credit Agreement, Disbursement Agreement, Financing Agreements
or any Material Contract.

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49.

All Documents Concerning any existing or threatened material litigation

by or against Fontainebleau.
50.

All Documents Concerning the holders of Indebtedness issued by

Fontainebleau, including, without limitation, any agreements or proposals with respect to
restructuring matters and all notices of default or reservations of rights received by
Fontainebleau or by You.
51.

All Documents Concerning any default or alleged default by completion

guarantor Tumberry Residential Limited Partner, L.P. that was the subject of the action
captioned Prudential Insurance Co. ofAmerica et ano. v. Turnberty West, L.L.C., et al., Case
No. 2:09-cv00695-KJD-OWF (D. Nev. Apr. 17, 2009).
52.

All Documents Concerning Your Communications with Fontainebleau

relating to this Action.
53.

All Documents provided to or Concerning the Examiner appointed by

Order of the Bankruptcy Court dated October 14, 2009, in the action captioned In re
Fontainebleau Las Vegas Holdings, LLC, et al., Case No. 09-2148 1 -BKC-AJC (Bankr. S.D.
Fla.) (D.E. #770), and any Communications relating thereto.
54.

All Documents Concerning Communications with the plaintiffs in any of

the following actions Concerning those actions and/or matters at issue in those actions, including
the costs associated with maintaining those actions, as well as all Documents Concerning this
litigation and/or matters at issue in this litigation:
a, Avenue CLO Fund, Ltd., et al. v. Bank ofAmerica, NA., et al., 2:09-cv-0 1047KJD-PAL (D. Nev.);
b. ACP Master, Ltd. et ano. v. Bank ofAmerica, NA., et al., No. 09 Civ.
8064 (LTS)(TIiK) (S.D.N.Y.); or

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c. Turnberry West Construction, Inc. v. Fontainebleau Las Vegas Holdings, et
al., Adv. Pro. No, 09-01762-BKC-AJC-A (Bankr. S.D. Fla.).
55.

All Documents Concerning Communications with any or all of the

defendants or third-party plaintiffs in the action captioned Deutsche Bank Trust Company
Americas v. Soffer, et al., No. 09 Civ. 7089 (RJS) (S.D.N.Y.) Concerning that litigation and/or
matters at issue in that litigation or Concerning this litigation and/or matters at issue in this
litigation.
56.

All Documents sufficient to show Fontainebleau Resorts Properties'

document retention or destruction policies and practices, including, without limitation, as to
electronic mail and other electronic records.

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EXHIBIT D

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EXHIBIT E

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EXHIBIT F

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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
www.flsb.uscourts.gov
In re:

Chapter 11

FONTAINEBLEAU LAS VEGAS
HOLDINGS, LLC, ET AL.,1

Case No. 09-21481-BKC-AJC

Debtors.
(Jointly Administered)
________________________________________/
DECLARATION OF HOWARD C. KARAWAN IN SUPPORT OF
DEBTORS' CHAPTER 11 PETITIONS AND FIRST DAY PLEADINGS
I, Howard C. Karawan, being duly sworn, depose and state as follows:
1.

I am the Chief Operating Officer and the Chief Restructuring Officer of

Fontainebleau Resorts, LLC ("Fontainebleau Resorts" or "FBR"), the indirect parent company
and manager of Fontainebleau Las Vegas Holdings, LLC ("Resort Holdings"), Fontainebleau
Las Vegas, LLC ("Resort") and Fontainebleau Las Vegas Capital Corp. ("Capital"; and, together
with Resort Holdings and Resort, the "Resort Debtors"). I also serve as the Chief Operating
Officer and the Chief Restructuring Officer of three affiliates of the Resort Debtors, namely
Fontainebleau Las Vegas Retail Parent, LLC ("Retail Parent"), Fontainebleau Las Vegas Retail
Mezzanine, LLC ("Retail Mezzanine") and Fontainebleau Las Vegas Retail, LLC ("Retail"; and,
together with Retail Parent and Retail Mezzanine, the "Retail Entities")2. The Resort Debtors
and the Retail Entities are referred to collectively as the "Debtors").

1

The last four digits of each Debtor's tax identification number are: (i) Fontainebleau Las Vegas
Holdings, LLC [9337]; (ii) Fontainebleau Las Vegas, LLC [9332]; and (iii) Fontainebleau Las Vegas Capital Corp.
[7822]. The Debtors' current mailing address is 19950 West Country Club Drive, Aventura, Florida 33180.
2

Although chapter 11 cases for the Retail Entities have not been filed concurrently with those of the
Resort Debtors, it is nonetheless anticipated that the Retail Entities will be filing petitions for relief under chapter 11
shortly, and that the bankruptcy cases of the Resort Debtors and the Retail Entities will be jointly administered.

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I have been the Chief Operating Officer of Fontainebleau Resorts since

September 2007 and was officially designated the Chief Restructuring Officer in May 2009.
3.

I am familiar with each of the matters set forth below based on personal

knowledge, from review of the Debtors' relevant business records, information supplied to me by
others at the Debtors' businesses, or my opinion based upon my experience and knowledge of the
Debtors' operations and financial condition. If I were called to testify, I could and would testify
competently to the facts set forth herein.
4.

On June 9, 2009 (the "Petition Date"), each of the Resort Debtors filed voluntary

petitions for relief (the "Chapter 11 Cases") under chapter 11 of Title 11 of the United States
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of
Florida (the "Bankruptcy Court"). Each of the Resort Debtors continues to operate its business
and manage its affairs and prospects as a debtor in possession.
5.

This Declaration describes the business of the Debtors, the circumstances

surrounding the commencement of the Resort Debtors' Chapter 11 Cases, and the relevant facts
for the purpose of supporting the First Day Motions (as defined below). Nothing herein is
intended to be or should be construed as an admission of the validity of claims, security interests,
liens, contractual defaults or any other rights or interests that may be asserted against the Resort
Debtors. The statements made herein regarding debts, obligations, defaults and liens represent
only assertions made by creditors to the Resort Debtors or that the Resort Debtors anticipate will
be made by creditors and does not constitute a belief on the part of the Resort Debtors that these
assertions are true or accurate.

2

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BACKGROUND
My Background and Experience
6.

I completed post-graduate studies and obtained a Master's of Business

Administration degree with a concentration in finance and marketing from the State University
of New York. At the age of 24, I became one of the youngest Directors of Marketing at Hyatt
Hotels. Prior to joining FBR, I was President of Kerzner International's destination resort
business. I had responsibility for the development of Kerzner's Atlantis at Paradise Island in the
Bahamas. I was also involved with project planning for Kerzner's Atlantis project in Dubai and
strategic direction of Kerzner's international One&Only Resorts.
The Debtors' Business and Ownership Structure
7.

Until recently, the Resort Debtors were actively engaged in ongoing construction

and development of "Fontainebleau Las Vegas," conceived as a signature "Tier A" casino hotel
resort with gaming, lodging, convention and entertainment amenities (the "Project"). Upon
completion of construction, the Resort Debtors anticipate that the Project will support 6,000 fulltime jobs at the Project and 2,000 additional jobs elsewhere in Las Vegas. The Project is situated
on approximately 24.4 acres at the sites of the former El Rancho Hotel and Algiers Hotel on the
north end of the Las Vegas Strip. The current plans for the Project include a 63-story glass
skyscraper, featuring, among other things: (a) approximately 3,815 stylishly furnished guest
rooms;3 (b) an approximately 100,000 square-foot casino with an approximately 40-foot tall
ceiling, featuring 1,700 slot machines, 125 table games, a 14-table poker room and a race and
sports book; (c) approximately 394,000 square feet of class "A" convention, meeting and pre-

3

Original plans for the Project included 933 luxury hotel-condominium suites. The Resort Debtors
have determined that market conditions are so highly unfavorable at the present time that the sale of hotelcondominium suites is not desirable. The Resort Debtors may reincorporate hotel-condominiums in the Project if
market conditions become more favorable in the future.

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function space; (d) an approximately 60,000 square-foot state-of-the-art spa; (e) a rooftop pool;
and (f) a state-of-the-art theater featuring live entertainment and shows.

At the time that

construction of the Project was reduced to a stabilization effort as a result of the unjustified
failure of certain of the Debtors' lenders to fulfill their loan commitments, the Project was
approximately 70% complete.
8.

The Retail Entities have been engaged in the development of approximately

286,500 square feet of the Project's retail component, consisting of signature restaurants,
marquee nightclubs and related amenities (the "Retail Component").

The Retail Component is

the subject of a Master Lease Agreement dated as of June 6, 2007, by and among Resort, as
lessor, and Retail, as lessee (the "Retail Component Lease").
9.

The Debtors' business strategy is to create an architecturally and experientially

significant destination resort appealing to sophisticated travel consumers with high levels of
discretionary income and a desire for luxury and aesthetic quality. The Debtors intend to reflect
the Fontainebleau brand4 and image in their lodging, convention and entertainment offerings,
including (i) luxury hotel rooms and suites, (ii) high-tech convention and meeting amenities,
(iii) signature restaurants and lounges, (iv) upscale entertainment venues, (v) state-of-the-art spa
facilities, (vi) high-end retail outlets, and (vii) gaming.
10.

The chart attached as Exhibit "A" hereto illustrates the organizational structure of

the Debtors, their parent entities and certain affiliated entities. The chart does not contain all of
Fontainebleau Resorts' subsidiaries. By way of example, the Fontainebleau family of companies

4

Resort and Retail are non-exclusive licensees of the trademarks and service marks related to the
"Fontainebleau." The trademarks and service marks are owned by Fontainebleau Resort Properties II, LLC, a nondebtor affiliate.

4

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includes a joint venture partner in Fontainebleau Miami Beach5 which is among the most
dynamic destination resorts in the world.
11.

Each Resort Debtor is a member managed limited liability company, except for

Capital, which is a Delaware corporation. FBR, the indirect parent of each Resort Debtor,
operates through a "Board of Managers" which, in turn, is responsible for all major business
decisions for each Resort Debtor, other than Capital. Capital's board of directors currently
consists of two members, each of whom is also on the Board of Managers of FBR.
12.

FBR is headquartered in Miami, Florida. All major decisions in respect of the

Project have been and are made by the Board of Managers of FBR. The Board of Managers has
continuously exercised its ultimate control over the management, business activities (including
the design and development of the Project) and capital structure/financing of the Debtors.
Overall responsibility within the Fontainebleau family of companies for managing, directing and
coordinating reorganization efforts has been entrusted to me by the Board of Managers. My
office is in Miami, Florida. I report directly to the Board of Managers and generally work sideby-side with members of the Board of Managers, including the ultimate controlling person of the
Fontainebleau family of companies and Chairman of FBR, Jeffery Soffer, and Albert Kotite, an
Executive Vice President of FBR. Mr. Kotite has his office in Miami, Florida. All other
personnel critical to the reorganization of the Debtors either work from or report to others
situated in Miami, Florida. As a consequence, all critical decisions in respect of the Project –
operational and restructuring – are and shall be made in Miami, Florida. Accordingly, I am
advised and believe that venue is proper in this district pursuant to 28 U.S.C. §§1408 and 1409.

5

Fontainebleau Miami JV Member, LLC.

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THE DEBTORS' FINANCING STRUCTURE
A.

The Resort Debtors

13.

On June 6, 2007 (the "Closing Date"), Resort and Fontainebleau Las Vegas II,

LLC,6 as borrowers, and Bank of America, N.A., as Administrative Agent, Issuing Lender and
Swing Line Lender, as well as various other lenders thereto, entered into a $1.85 billion senior
secured credit facility (the "Senior Credit Facility"), comprised of a seven-year, $700 million
term loan facility (the "Term Loan Facility") which was fully funded on the Closing Date, a
seven-year, $350 million delay draw term loan facility (the "Delayed Draw Facility") and a fiveyear, $800 million revolving credit facility (the "Revolver Facility"; the Revolver Facility, the
Term Loan Facility and the Delayed Draw Facility being collectively referred to as the
"Facilities"). As of the Petition Date, approximately $700 million is outstanding under the Term
Loan Facility; approximately $336.7 million is outstanding under the Delayed Draw Facility;7
and, other than letters of credit in the aggregate face amount of approximately $13 million,
nothing is outstanding under the Revolver Facility.8 The Senior Credit Facility is secured by a
first priority lien on substantially all of the Project's assets, other than the air rights comprising
the Retail Component of the Project, which serves as collateral for the Retail Loans (as defined
below). The Senior Credit Facility is guaranteed by Resort Holdings, which is the direct parent
of Capital and Resort, Capital, FBR and Fontainebleau Resort Properties I, LLC ("FRP"), the
direct parent of the Resort Holdings. In addition, Turnberry Residential Limited Partner, L.P.
("TRD") provided a completion guaranty in respect of construction of the Project.
6

On February 4, 2009, Fontainebleau Las Vegas II, LLC merged into Resort.

7

Of that amount, approximately $136.5 million is held in the Bank Proceeds Account (as
hereinafter defined) and has not been advanced to the Resort Debtors for use in the Project.
8

As will be discussed in greater detail, it was the unjustified and impermissible failure and refusal
of the lenders which committed to make revolving loans under the Revolver Facility that ultimately resulted in the
suspension of construction of the Project and the chapter 11 proceedings of the Resort Debtors.

6

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The Senior Credit Facility provides two related mechanisms for funding the

Project. First, Resort must submit a notice of borrowing under the Delayed Draw Facility and/or
the Revolver Facility, as applicable (each, a "Notice of Borrowing") which obligates the
respective lenders to transfer the requested funds into an account (the "Bank Proceeds Account")
that is subject to the Disbursement Agreement (as hereinafter defined). Second, Resort must
submit an advance request (each, an "Advance Request"), typically monthly, to secure
disbursements from the Bank Proceeds Account that can then be used to pay the costs of the
Project.
15.

In addition, on the Closing Date, Resort Holdings and Capital, jointly and

severally, issued $675 million of 10.25% Second Mortgage Notes Due 2015 (the "Junior
Mortgage Notes"), for which Wells Fargo Bank, National Association serves as Trustee. The
Junior Mortgage Notes are secured primarily by a second priority mortgage lien on the Project,
other than the air rights comprising the Retail Component of the Project, and is guaranteed by
Resort, FRP and FBR. As of the Petition Date, the full $675 million principal amount of the
Junior Mortgage Notes and accrued interest thereon, is outstanding.
16.

The Junior Mortgage Notes and the Senior Credit Facility are subject to an

intercreditor agreement among the various lenders thereto.
17.

The Senior Credit Facility, the Junior Mortgage Notes and the Mortgage Loan (as

defined below) are subject of a Master Disbursement Agreement (the "Disbursement
Agreement"), among the Debtors, the Administrative Agent under the Senior Credit Facility, the
Trustee under the Junior Mortgage Notes, and Lehman Brothers Holdings, Inc. ("Lehman") as
Agent under the Retail Loans, that established the conditions to and the order of funding of such
credit facilities.

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B.

The Retail Entities

18.

On June 6, 2007, Retail, as borrower, and Lehman,9 individually and as Agent for

one or more Co-Lenders, entered into a $315 million construction loan (the "Mortgage Loan"), is
presently secured by the Retail Component Lease. The Mortgage Loan matures on October 9,
2010, subject to certain rights to extend the maturity, and is guaranteed, in part, by FBR. As
described above, the Mortgage Loan is subject to the Disbursement Agreement.
19.

As contemplated by the Mortgage Loan, Lehman syndicated a portion of the

Mortgage Loan to Union Labor Life Insurance Company (“ULLICO”), Mitsui Trust Company,
and National City Bank (collectively with ULLICO, the “Co-Lenders”). Lehman, as agent and
split note holder, and the Co-Lenders, as split note holders, are parties to a Co-Lending
Agreement. After the syndication, on information and belief, Lehman retained 68.26% of the
Retail Loan.
20.

On September 15, 2008, Lehman filed for relief under chapter 11 of the

Bankruptcy Code in the Bankruptcy Court for the Southern District of New York.

Since

December 2008, Lehman has failed and refused to make any advances under the Mortgage Loan.
As a consequence, ULLICO agreed to fund above and beyond its own funding commitment in
respect of several monthly draws under the Mortgage Loan (the "Defaulted Funding Loans"). As
of the Petition Date, the outstanding principal balance of the Defaulted Funding Loans is
approximately $5.7 million, and the loans are guaranteed by FBR and TRD, and secured by the
pledge of certain interests.

9
On September 15, 2008, Lehman and a number of its affiliates and subsidiaries filed for chapter 11
protection in the United States Bankruptcy Court for the Southern District of New York (Case No. 08-13555).

8

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As of the Petition Date, approximately $165 million of principal is outstanding on

the Mortgage Loan. Of the remaining $105 million of undrawn funds on the Mortgage Loan,
$66 million is allocable to Lehman and $39 million is allocable to the non-Lehman Co-Lenders.
22.

In addition, on the Closing Date, Retail Mezzanine, as borrower, and Lehman,

individually and as Agent for one or more Co-Lenders, entered into a $85 million PIK secured
loan (the "Mezzanine Loan"; and, together with the Mortgage Loan, the "Retail Loans"), secured
by, among things, Retail Mezzanine's membership interests in Retail. In addition, Retail Parent
has pledged its 100% membership interest in Retail Mezzanine as collateral for the Mezzanine
Loan. The Mezzanine Loan was fully funded on the Closing Date and matures on October 9,
2009, subject to certain rights to extend the maturity, and is guaranteed, in part, by Jeffrey Soffer
and FBR. The Mezzanine Loan is not subject to the Disbursement Agreement.
23.

As of the Petition Date, approximately $114 million of principal and PIK interest

is outstanding on the Mezzanine Loan.
EVENTS LEADING UP TO THE CHAPTER 11 CASES AND RELATED
CONSEQUENCES
24.

The bankruptcy of Lehman and its subsequent failure to fund its commitment

under the Mortgage Loan necessitated the search for additional funding sources. However, the
demise of Lehman also marked a cataclysmic global decline in the credit markets, making it
exceedingly difficult to find financing or to attract an equity investment. Making matters more
difficult, the general decline in the economy has taken its toll on Las Vegas which likewise
affects investment and credit risks. Nonetheless, FBR has been intensely focused on those
efforts ever since. To assist, the Debtors and their affiliates engaged investment bankers and

9

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other advisors to advise them and to identify sources of equity and credit.

Numerous

confidentiality agreements have been executed with diverse parties. That process continues.
25.

The Lehman experience, the insolvency and the ensuing FDIC receivership of one

of the lenders under the Delayed Draw Facility, and the continuing downward macro-economic
spiral also engendered concerns that bank members of the Senior Credit Facility might become
unable or unwilling to meet their respective commitments under the Delayed Draw Facility and
the Revolver Facility.
26.

Reference is made to the Complaint filed in the Adversary Proceeding No. 09-

01621-ap-AJC [D.E. #1] commenced by Resort in these cases contemporaneously herewith. The
Complaint specifically describes the defaults and wrongful termination by the bank members of
the Senior Credit Facility with respect to their commitment to fund the Revolver Facility. The
Complaint seeks specific performance of these bank members’ obligations, as well as enormous
damages resulting from their malfeasance.
27.

As a consequence of the bank members’ breaches of the Senior Credit Facility,

the Resort Debtors have been left with virtually no source of funding the continuing construction
of the Project. Try as they might to find new sources of working capital, to encourage existing
lenders to meet their funding commitments, or to obtain further financial accommodations from
existing lenders, the Debtors were ultimately compelled to virtually cease construction of the
Project and the Retail Component. As a consequence, most laborers and materialmen have left
the jobsite and many of them have filed mechanic liens against the Project. As of the Petition
Date, there were approximately $403 million of payables outstanding in respect of the Project
that might result in mechanic liens against the Project.10 It is my understanding that under
10

On June 4, 2009, Turnberry West Construction, Inc., the general contractor on the Project, filed a
claim of lien against the Project for $668,990,933.27.

10

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Nevada law, duly perfected mechanic liens against the Project may prime the mortgage liens of
existing lenders.
28.

At my direction, the Resort Debtors have also terminated the employment of

approximately 40 employees, are implementing significant across-the-board salary reductions,
and have reallocated certain personnel. We continue to evaluate cost saving opportunities that
will not jeopardize the value of the Project or our ability to resume construction. However, it has
become painfully clear that the Project likely will not be completed by the scheduled opening
date in January 2010.11 As a consequence, we are in cancellation/rescheduling discussions with
groups which have made bookings for January through March 2010 and, out of an abundance of
caution, April 2010.
FACTS IN SUPPORT OF FIRST DAY MOTIONS
29.

Concurrently with the filing of the Chapter 11 Cases, the Resort Debtors filed a

number of motions for immediate and necessary relief (the "First Day Motions").

I have

reviewed the First Day Motions and I believe that the relief sought in each of the First Day
Motions is necessary to enable the Resort Debtors to operate in chapter 11 and preserve and
maximize value of the Project for all constituencies. The factual background in support of the
First Day Motions is set forth herein.
Ex Parte Motion by the Resort Debtors for Joint Administration
30.

As discussed above, the Resort Debtors consist of Resort Holdings and five of its

affiliates, all of whom are ultimately controlled by the Board of Managers of the parent
company, FBR, as two of the Resort Debtors are limited liability companies that are member
managed, and the third has a board of directors that is comprised of the same members as the

11

Under the Mortgage Loan, March 31, 2010 is the Outside Opening Date.

11

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Board of Managers of FBR. The Resort Debtors share key financial and operational systems, as
well as local management to oversee day-to-day operations.
31.

The Resort Debtors anticipate that a multitude of creditors and parties in interest

will be involved in their chapter 11 bankruptcy cases, many of whom may have overlapping
claims and interests in several of the Resort Debtors’ estates. Joint administration of these cases
will obviate the need for the filing and service of duplicative notices, motions, applications,
hearings, and orders. Moreover, joint administration will reduce the administrative burden on
this Court, by freeing the Court from the burden of scheduling duplicative hearings, entering
duplicative orders, and maintaining redundant files, and will also save the Resort Debtors’
estates considerable time and expense.
32.

The Resort Debtors believe that the requested relief is needed immediately in

order to avoid the substantial costs of duplicative mailing expenses that debtors traditionally
incur after the filing of a chapter 11 petition. The procedural benefits of joint administration will
not adversely affect creditors and other parties in interest, but rather will ultimately benefit all
creditors since it will reduce costs and the administrative burden of maintaining the estates.
Debtors’ Motion for Orders (I) Authorizing Use of Cash Collateral Pursuant to Section 363
of the Bankruptcy Code, (II) Providing Adequate Protection to Prepetition Secured Parties
Pursuant to Sections 361, 362, and 363 of the Bankruptcy Code, and (III) Scheduling Final
Hearing
33.

The Resort Debtors require the use of cash on deposit or maintained in bank

accounts identified in Section 2.2 of the Disbursement Agreement (the "Cash Collateral") to,
among other things, pay present operating expenses, including payroll and vendors, maintain
insurance coverage, taxes, utilities, security and other essential expenses essential to the
preservation of the Project.

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The Debtors and their financial advisors undertook extensive efforts to obtain

debtor-in-possession financing for the purpose of paying their anticipated expenses of
administration in the Chapter 11 Cases. While the Debtors obtained expressions of interest in
providing such financing, the Debtors did not receive commitments for the same by the Petition
Date. Moreover, the expressions of interest received imposed conditions that made it difficult, if
not impossible, to timely access the proposed financing.
35.

The Debtors also requested the use of Cash Collateral from lenders under the

Term Loan and Delayed Draw Facilities (collectively, the "Term Lenders") which have the first
priority lien and security interest in the Cash Collateral. The Debtors' counsel and financial
advisors extensively negotiated the terms upon which the Debtors can use the Cash Collateral
with counsel for certain of the Term Lenders. Such negotiations were at arms' length and in
good faith. By the Petition Date, a group of the Term Lenders comprising the holders of
approximately $350 million of the Term Loan and Delayed Draw Facilities consented to the
Debtors' use of the Cash Collateral. Moreover, the Debtors' were encouraged to believe that
additional Term Lenders would likewise consent by the date of the hearing on the Debtors'
emergency motion for leave to use the Cash Collateral. Thus, the Debtors' anticipate that Term
Lenders holding over 51% of the Term Loan and Delayed Draw Facilities will consent to the
Debtors' use of the Cash Collateral by the hearing.
36.

The Debtors will suffer immediate and irreparable harm if they cannot obtain use

of the Cash Collateral. Among other things, the Debtors have payroll obligations that must be
met almost immediately. The failure to meet those payroll obligations may well result in the loss
of critical employees vital to the Project and to the Debtors' reorganization efforts. Likewise, the

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failure to pay insurances, taxes, utilities, security and other ordinary and necessary expenses may
impair the maintenance of the Project until such time as construction may be resumed.
Emergency Motion by the Debtors for Entry of an Order (A) Authorizing the Debtors to
Maintain Their Existing Cash Management System, Bank Accounts, and Business Forms,
(B) Granting Administrative Expense Priority to Postpetition Intercompany Claims and
Authorizing Continued Intercompany Arrangements and Historical Practices; and
(C) Waiving Investment and Deposit Requirements
37.

To facilitate efficient operations, in the ordinary course of business, and as

required by the Resort Debtors' loan documents, the Resort Debtors maintain a cash management
system (the "Cash Management System") allowing them to collect, transfer, and disburse funds
pursuant to a disbursement agreement. The Cash Management System provides significant
benefits to the Resort Debtors, including the ability to: (a) control and centrally manage
corporate funds; (b) invest idle cash; (c) ensure the availability of funds when necessary; (d)
reduce administrative costs by facilitating the movement of funds and the development of more
timely and accurate balance and presentment information; (e) provide the necessary accounting
controls to enable the Resort Debtors, as well as creditors and the Court, if necessary, to trace
funds through the system and to ensure that all transactions are adequately documented and
readily ascertainable, whether prepetition or postpetition; and (f) fulfill contractual obligations of
the Credit Facilities, the Notes, as well as to facilitate any DIP financing agreements that may be
approved by this Court. The cash management procedures employed by the Resort Debtors
constitute ordinary, usual and essential business practices, and are similar to those used by other
corporate enterprises in the same industry.
38.

The Resort Debtors' Cash Management System consists generally of the

following accounts described below (collectively, the "Bank Accounts").

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Debtor-Controlled Bank of America Accounts
39.

Resort Payment Account (*2813) – In accordance with practices prior to the

Petition Date, Monthly Disbursements are deposited into this account. The funds are then
disbursed to pay costs of the Project in accordance with the applicable Advance Request or
transferred to the Construction Payable Account (see below), Cash Management Account (see
below) or Payroll Account to pay costs of the Project.
40.

Construction Payable Account (*2853) – This account is funded from the Resort

Payment Account and used as a disbursement account to pay construction costs.
41.

Cash Management Account (*2450) – This impressed account is funded from the

Resort Payment Account and used to pay Project costs between regularly scheduled
disbursements and is replenished on a revolving basis up to $6 million at any given time.
42.

Payroll Account (*1021) – This account is funded from the Resort Payment

Account and used to pay Resort's payroll.
43.

General Account (*8730) – This account is used for customer deposits received

by Resort.
44.

Credit Card Deposit Account (*8743) – This account was set up to receive credit

card deposits when Resort starts to take reservations.
45.

Retail Payment Account (*3826) – This account is not active.
Bank-Controlled Accounts

Resort Accounts at Bank of America, N.A.
46.

Bank Funding Accounts (*6005) – This account was established for the initial

funding under the Credit Facilities, and currently has a zero balance.
47.

Resort Loss Proceeds Account (*5959) – This account was set up to receive all

loss proceeds received by Resort and applied to pay for Project costs in respect of Resort,

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including the costs to repair or replace the property that was damaged or destroyed. In limited
circumstances, amounts held in this account could be applied to the prepayment of indebtedness
under the Senior Credit Facility or Junior Mortgage Notes.
48.

Second Mortgage Funding Account (*5954) – The net proceeds of the Junior

Mortgage Notes were deposited into this Account and applied, from time to time, to the payment
of the Project's costs.
49.

Completion Guarantee Proceeds Account (*6968) – This account was set up to

receive any drawings on the completion guarantee provided by TRD or any replacement
completion guarantor. There are no funds currently in this account.
50.

Bonded Condo Proceeds Account (*5997) – This account was set up to receive

the proceeds of deposits for the purchase of condominiums to the extent such deposits have been
bonded. There are no funds currently in this account.
Resort Accounts at Columbia Investments12
51.

Equity Funding Account (*0385) – This account is used for equity contributions.

However, previous equity contributions have been used to pay construction costs of the Project
and the account currently has a zero balance.
52.

Bank Proceeds Account (*0384) – All funds advanced from time to time by the

participating lenders under the Senior Credit Facility are deposited in this account. Upon
approval of an Advance Request, certain amounts on deposit in this account are transferred to the
Resort Payment Account and used to pay the Project's costs, to fund the Cash Management
Account, or to pay interest on the Senior Credit Facility. Currently, there is approximately
$136.6 million in this account, which was funded under the Delayed Draw Term Facility.

12

Columbia Investments is an affiliate of Bank of America, N.A.

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Liquidity Reserve Account (*0382) – As security for Resort's obligation to

complete the Project, Resort has $50 million on deposit in this account which serves as cash
collateral for the Senior Credit Facility. The interest earned from this account is used to pay a
portion of the Advance Request.
Resort Accounts at Wells Fargo
54.

Second Mortgage Proceeds Account (*8800) – This is a trust account held at

Wells Fargo bank that received proceeds of the Junior Mortgage Notes. Such proceeds were
subsequently used to pay costs of the Project. There are no funds presently in this account.
55.

10.25% Second Mortgage Notes Due 2015 Account (*6200) – This is a trust

account held at Wells Fargo Bank that received proceeds of the Notes. Such proceeds were
subsequently used to pay costs of the Project. There are no funds presently in this account.
56.

The operation of the Resort Debtors' business requires that the Cash Management

System continue. Requiring the Resort Debtors to adopt new, segmented cash management
systems at this critical stage of these Chapter 11 Cases would be unduly expensive, create
unnecessary administrative problems, and negatively impact the usual and ordinary operations of
the Resort Debtors, This impact would be much more disruptive than productive. The Resort
Debtors’ treasury, accounting, and bookkeeping employees would be forced to focus nearly
exclusively upon immediately opening new accounts and revising cash management procedures,
instead of upon their many other usual daily responsibilities. These distractions would hinder the
Resort Debtors' smooth transition into chapter 11.
57.

Importantly, parties in interest would not be harmed by the Resort Debtors’

maintenance of the Cash Management System. The Resort Debtors will immediately undertake
measures to ensure that they will not make payments inadvertently on any prepetition debt,
unless otherwise authorized by the Court.

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The Cash Management System allows the Resort Debtors to centrally manage all

of their cash-flow needs and includes the necessary accounting controls to enable the Resort
Debtors, as well as creditors and the Court, if necessary, to trace funds through the system and to
ensure that all transactions are adequately documented and readily ascertainable. The Resort
Debtors will continue to maintain detailed records reflecting all transfers of funds between
themselves so that all intercompany transactions can be readily ascertained. Consequently,
maintenance of the existing Cash Management System during these Chapter 11 Cases is in the
best interests of all creditors and other parties in interest.
59.

In order to avoid delays in payments to administrative creditors, to ensure as

smooth a transition into chapter 11 as possible with minimal disruption, and to aid in the Resort
Debtors' efforts to successfully and rapidly complete these cases, it is important that the Resort
Debtors be permitted to continue to maintain their existing Bank Accounts and, if necessary,
open new accounts, wherever they are needed, all in the ordinary course of business and as
provided in the existing agreements between the Resort Debtors and the various banks regarding
the Bank Accounts.
60.

The Resort Debtors use a wide variety of business forms. In order to minimize

expenses to the estates, and to minimize disruption of their businesses, the Resort Debtors also
request that they be authorized to continue to use all correspondence, business forms (including,
but not limited to, letterhead, stationary, purchase orders, employment applications, invoices,
etc.) and checks in the form that they exist immediately prior to the Petition Date (collectively,
the "Business Forms"), without reference to the Resort Debtors' status as debtors-in-possession.
Because of the complex nature of the Resort Debtors’ business operations, use of new business

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forms would greatly increase the Resort Debtors’ costs and add significantly to the
administrative burdens of transitioning to operations under chapter 11.
61.

Parties doing business with the Resort Debtors will undoubtedly be aware of the

Resort Debtors' status as chapter 11 debtors-in-possession as a result of the size and notoriety of
these cases, and from coverage of these cases by the press. Moreover, each of the parties with
whom the Resort Debtors do business will also receive notices of the commencement of these
cases. Because of the nature and scope of the Resort Debtors' business operations and the large
number of vendors, customers and other parties with whom the Resort Debtors deal on a regular
basis, it is necessary that the Resort Debtors be permitted to continue to use their existing
Business Forms without alteration or change.
62.

If the Resort Debtors were required to change their Business Forms, it would be

unduly expensive and burdensome to the Resort Debtors' estates and disruptive to the Resort
Debtors' business operations and would not confer any benefit on those dealing with the Resort
Debtors. For these reasons, the Resort Debtors request that they be authorized to use existing
checks and Business Forms without being required to place the label "debtor-in-possession" on
each.
63.

Each of the Bank Accounts are swept nightly and invested in conservative

investments with the primary goal of protecting principal, and the secondary goal of maximizing
yield and liquidity.
64.

The Resort Debtors believe that the institutions at which the Bank Accounts are

maintained are financially stable. Both Bank of America, N.A. and Wells Fargo Bank, N.A. are
approved depositories pursuant to the U.S. Trustee’s List of Approved Depositories for Region
21, dated as of April 15, 2009. Columbia Investments is an affiliate of Bank of America, N.A.

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All such deposits and investments are prudent and designed to yield the maximum reasonable net
return on the funds invested, taking into account the safety of such deposits and investments.
65.

The Resort Debtors believe that it is in the best interests of the estates and

creditors for the Resort Debtors to continue their prepetition practice of investing excess cash as
they did prior to the bankruptcy. The yield on investments under these prepetition practices will
be substantially greater than that which can be obtained under the restrictions contained in
Section 345(b) of the Bankruptcy Code. Indeed, the Resort Debtors estimate that, given the
amount of cash that is or will be in the estates, the Resort Debtors would lose a substantial
amount of money if limited to direct investment in government securities.
66.

The Resort Debtors believe that investments made in accordance with their

standard prepetition investment procedures provide the protection required by Section 345(b) of
the Bankruptcy Code, notwithstanding the absence of a "corporate surety" requirement. First,
these procedures permit investments only in investment or money market accounts maintained at
stable institutions (which are insured), and such accounts are widely regarded as one of the safest
forms of investment. Moreover, any corporate surety that might be obtained to guarantee the
safety of such investments would likely not have significantly greater strength than the private
entities in which the Resort Debtors would continue to invest. Finally, the requirement of
obtaining a bond secured by the undertaking of a corporate surety from each of the numerous
institutions with which the Resort Debtors deposit or invests funds would be prohibitively
expensive and administratively burdensome, and could offset much of the gain derived from
investing in private as well as federal or federally guaranteed securities.
67.

Accordingly, the Resort Debtors seek an order (a) authorizing the Resort Debtors

to maintain their existing Cash Management System, Bank Accounts, and Business Forms;

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(b) granting administrative expense priority to postpetition intercompany claims and authorizing
continued intercompany arrangements and historical practices; and (c) waiving the Resort
Debtors' compliance with investment and deposit requirements of § 345(b) of the Bankruptcy
Code and the U.S. Trustee's operating guidelines.
Emergency Motion by Debtors for Entry of an Order (I) Authorizing the Debtors to Pay
(A) Prepetition Wages, Salaries, and Employee Benefits and (B) Prepetition Withholding
Obligations, (II) Authorizing Continuation of Employee Benefit Plans and Programs
Postpetition, and (III) Directing All Banks to Honor Payments of Prepetition Employee
Obligations (the “Wage Motion”)
68.

In order to maintain the level of excellence typical of the Fontainebleau brand

name, Resort has engaged the services of employees in various sectors, including, inter alia,
information technology, sales and marketing, legal services, purchasing, and design
development.

Since April 2009, Resort has undergone significant reductions in force,

eliminating approximately one-third of its total workforce and has begun to implement the
reduction of the salaries of the remaining employees. The remaining employees are crucial to
the continued marketing and development of the Project facilities and thus to the viability of the
Project as a going concern.
69.

The Resort Debtors believe that it is in the best interests of the estates for this

Court to: (a) authorize the Resort Debtors to pay or otherwise honor the Resort Debtors' various
employee-related prepetition obligations (including, but not limited to, claims for wages,
salaries, vacation, leave obligations, unpaid reimbursable expenses, and federal and state
withholding obligations) to, or for the benefit of, current employees (each an "Employee" and
collectively, the "Employees"), (b) authorize the Resort Debtors to continue postpetition the
employee benefit plans and programs in effect immediately prior to the filing of this case
(including, but not limited to, medical, dental, vision, prescription drug, life insurance, and

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disability benefits), and (c) direct all banks to honor prepetition checks for payment of the Resort
Debtors' prepetition employee obligations.
A.

The Workforce

70.

The Employees perform a variety of critical functions, all directed towards

completion of the ongoing construction of the Project, development of current and future
operations of the Resort Debtors' businesses, and sales and marketing of the Project as a worldclass casino resort.13 The Employees also perform many administrative, accounting, marketing,
purchasing, supervisory, and management tasks. The Employees' skills, institutional knowledge,
and understanding of the Resort Debtors' operations are essential to the effective restructuring of
the Resort Debtors' business. To ensure timely completion of the Project and a successful
opening of the resort and gaming facilities, Resort has retained a sufficient number of Employees
to open and operate the Project immediately upon completion. The collective expertise of these
Employees, many of whom are highly specialized within the gaming industry, is instrumental to
the Project's success as a going concern.
71.

If prepetition Employee obligations and Employee benefits are not received by

the Employees in the ordinary course, they will suffer extreme personal hardship and, in many
cases, will be unable to pay their basic living expenses. Such a result obviously would destroy
Employee morale and result in unmanageable Employee turnover, causing immediate and
pervasive damage to the Resort Debtors' business operations. Further, any significant Employee
departures could seriously jeopardize the crux of the Resort Debtors' current business, namely,
construction and design development of the Project. Any significant deterioration in morale at
this time would substantially and adversely affect the Resort Debtors and their ability to
13

Approximately 40% of the Project’s business is expected to be generated from corporate and
association groups that make their meeting and conference commitments up to three years in advance, which
necessitates Resort maintaining a sales and marketing effort prior to the opening of the Project.

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reorganize, thereby resulting in immediate and irreparable harm to the Resort Debtors, their
estates, and creditors.
72.

With a few exceptions, the compensation, benefit, and reimbursement amounts

that the Resort Debtors seek to pay the Employees do not exceed the sum of $10,950 per
Employee (not including accrued vacation).
B.

Employee Compensation.

73.

Wages and Salaries. As of the Petition Date, the Resort Debtors' workforce

consisted of approximately 115 Employees located in Florida, Nevada, California, and Virginia.
Resort employs all Employees on either a salaried or hourly basis.14 Resort pays its Employees
(the collective payments, the "Employee Compensation") either biweekly (collectively, the
"Biweekly Employees") or semimonthly (collectively, the "Semimonthly Employees"). Resort
has a combined total of approximately 88 Biweekly Employees (12 of whom are paid hourly)15
and 27 salaried Semimonthly Employees.
74.

Employment Agreements.

agreements with Resort.

Approximately 23 Employees have employment

All of these Employees are executive, senior management, or

supervisory level employees.

A number of executives are eligible for bonuses upon a

substantially complete and timely opening of the Project and thereafter.
75.

Payment Schedule and Average Payroll. The Biweekly Employees are paid every

two weeks, which equates to 26 pay periods in a calendar year, and are paid four days in arrears.
The Semimonthly Employees are paid twice a month, which equates to 24 pay periods in a
calendar year, and are current when paid.

14

Of the 115 Employees, 114 are full-time employees and one is a part-time employee.

15

All hourly employees are Biweekly Employees. The rest of the Employees (both Biweekly and
Semimonthly) are salaried.

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The gross amount of the Resort Debtors' average Biweekly Employee payroll is

approximately $351,000.

The gross amount of the Resort Debtors' average Semimonthly

Employee payroll is approximately $152,071.

The combined total of both payrolls is

approximately $503,071.
77.

Overtime.

Certain of the Employees are eligible for overtime and, when

necessary, their pay is adjusted accordingly. At present, the Resort Debtors do not owe overtime
pay to any Biweekly Employees. The year-to-date totals for 2009 overtime pay is approximately
$4,850 for Biweekly Employees. No overtime pay has been allocated to current Semimonthly
Employees for this calendar year.
78.

Biweekly Employees received their most recent paychecks on May 29, 2009,

which includes payments of all amounts owed through May 24, 2009. Semimonthly Employees
received their last paychecks on May 29, 2009 for work through May 31, 2009. Biweekly
Employees are scheduled to receive their next paychecks on June 12, 2009, and Semimonthly
Employees are scheduled to receive their next paychecks on June 15, 2009.
79.

The Resort Debtors seek authority to pay the outstanding amounts owed as of the

Petition Date for accrued Employee Compensation, including unpaid wages, salaries, and
adjustments thereto.
C.

Vacation, Holiday Benefits, and Other Leave Obligations.

80.

The Resort Debtors provide vacation time to Employees ("Vacation Time") under

two different policies: (i) a paid time off policy and (ii) a vacation policy.
81.

Paid Time Off Policy for Biweekly Employees.

Biweekly Employees are

provided Vacation Time pursuant to a paid time off ("PTO") policy. This policy covers all forms
of time off from work, including holidays, vacation and sick days. Biweekly Employees earn

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PTO time for each regular hour of work (not including overtime hours) plus hours taken for
PTO. Biweekly Employees can apply no more than 40 hours per workweek towards the PTO
policy. Biweekly Employees begin to accrue PTO on each such Employee's respective hire date
(a.k.a. the "anniversary" date), with the accrual continuing over a 12-month rolling period. The
actual rate of PTO accrual is based upon length of the particular Employee's service with Resort.
All full-time employees earn PTO hours according to the schedule below:
Completed Years of
Service

PTO Days Per Year

Hourly Accrual

Hours Earned in a
80-Hour Pay Period

Hire Date to 1 Year

19

0.07308

5.85

2 – 5 years

21

0.08077

6.46

5 – 12 Years

25

0.09618

7.69

12+ Years

28

0.10769

8.62

82.

Biweekly Employees may carry over up to 40 hours from one anniversary year to

the next. All other PTO hours must be taken during the relevant twelve month period or such
hours are forfeited. Although accrued PTO hours may be used during a Biweekly Employee's
first year of employment, PTO hours do not vest until the Biweekly Employee's first anniversary
date. Separated employees may receive payment for any unused vested PTO hours. As of the
Petition Date, current Biweekly Employees have accrued approximately $440,121 in earned but
unused PTO hours. Approximately $177,115 of this PTO time has vested and would thus need
to be paid in the event of the relevant Employees' departure.
83.

Vacation Policy for Semimonthly Employees. Semimonthly Employees accrue

Vacation Time semimonthly at an annual rate of two to four weeks per year in most cases based
upon years of service with Resort. However, four Employees have been credited with a past
employer’s years of service. Semimonthly Employees must use accrued Vacation Time during

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the twelve months immediately following completion of each year of continuous employment.
Semimonthly Employees may not carry over Vacation Time into the subsequent year and taking
pay in lieu of unused Vacation Time is not permitted absent termination. Upon termination,
Resort pays Semimonthly Employees in good standing who have completed at least one year of
full-time employment the value of their accrued, unused Vacation Time.

Semimonthly

Employees working less than 1,900 hours during their anniversary year are entitled to a partial
vacation determined by the number of hours worked.

As of the Petition Date, current

Semimonthly Employees have accrued approximately $203,858 in earned but unused Vacation
Time. Approximately $184,041 of this time has been earned by Employees with more than one
year of service with Resort.
84.

Paid Holidays. Semimonthly Employees are also compensated for eight holidays

per year and Employees are paid for up to twenty days spent in jury duty (less the amount earned
as juror) per year. Employees are also entitled to certain other paid leave, much of which is
required by law, i.e. the Family and Medical Leave Act (FMLA).
85.

Military Leave. Any Employee who is a member of the United States Army,

Navy, Air Force, Marines, Coast Guard, National Guard, Reserves, or Public Health Service is
entitled to an unpaid leave of absence for military service, training, or related obligations in
accordance with applicable law. Employees on military leave may substitute their accrued paid
leave time for unpaid leave.
86.

Bereavement. Biweekly Employees may receive three days of bereavement leave

for the death of immediate family members.
bereavement leave.

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The Debtors seek authority to honor the PTO, vacation, military, bereavement,

and other applicable leave obligations to current Employees in the ordinary course of the Resort
Debtors' business.
D.

Deductions, Payroll Taxes and Withholding Obligations.

88.

Deductions.

In the ordinary course of its business, Resort deducts certain

amounts from the Employees' paychecks in each pay period, including, without limitation,
garnishments, child support, and other pre-tax and after-tax deductions payable pursuant to
certain of the Employee Benefit Plans and Programs discussed herein (such as an Employee's
share of insurance premiums) (collectively, the "Deductions"). Resort remits the amount of the
Deductions to the appropriate third-party recipients. As of the Petition Date, approximately
$5,130 in Deductions were accrued but unremitted to the third-party recipients.
89.

Payroll Taxes. In addition, Resort is required by law to withhold amounts related

to federal, state and local income taxes, Social Security, and Medicare taxes from an Employee's
wages for remittance to the appropriate federal, state or local taxing authority (collectively, the
"Withheld Amounts"). Resort must then match from its own funds the required remittances for
Social Security and Medicare taxes and subsequently pay, based on a percentage of gross
payroll, additional amounts for federal and state unemployment insurance (the "Employer
Payroll Tax Contributions," and together with the Withheld Amounts, the "Payroll Taxes"). The
Resort Debtors estimate that approximately $150,49416 in Payroll Taxes have accrued but remain
unpaid as of the Petition Date. Resort's average monthly submission for Payroll Taxes17 is
$303,261.

16

This figure includes approximately $35,127 in Employer Payroll Tax Contributions.

17

The Debtors submit that Payroll Taxes, to the extent that they remain in the Debtors' possession,
constitute amounts held in trust and therefore, are not property of the Debtors' bankruptcy estates.

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Resort pays all Payroll Taxes and Deductions

(collectively, the "Withholding Obligations") directly to applicable taxing authorities and third
parties. As of the Petition Date, Resort may not have completed the process of forwarding
certain Withholding Obligations to the appropriate third party recipients.
91.

The Resort Debtors request that they be authorized to remit any Withholding

Obligations accrued but unpaid as of the Petition Date to the appropriate third parties and to
continue to make such deductions from the Employees' paychecks postpetition and to remit such
Withholding Obligations to the appropriate third party recipients.
E.

Reimbursement Obligations.

92.

Most Employee work-related expenses are incurred on the Employees' personal

credit cards. It is the Resort Debtors' policy to reimburse Employees for certain expenses within
the scope of their employment, including expenses for travel, mileage, lodging, meals and
entertainment, supplies, cellular phone, gas, car rental, and other miscellaneous expenses.
Reasonable reimbursable expenses are incurred on the Resort Debtors' behalf and with the
understanding that the Resort Debtors will reimburse such expenses. The Resort Debtors request
authority to pay such accrued reasonable prepetition reimbursement amounts, and to continue to
reimburse such expenses as they are incurred postpetition.
F.

Employee Benefit Plans and Programs.

93.

The Resort Debtors offer Employees many standard employee benefits, including

health insurance, dental insurance, disability and life insurance, workers' compensation
insurance, and other benefits (collectively, the "Employee Benefit Plans and Programs") through
its parent company, Fontainebleau Resorts.

Although the contracts associated with the

Employee Benefit Plans and Programs are between Fontainebleau Resorts and the applicable

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providers (collectively, the "Providers"), Resort pays the premiums and payments for such plans
directly to the Providers.
94.

Health, Dental, and Vision Insurance Plans.

Through the above-mentioned

association with Fontainebleau Resorts, Resort offers all Employees one of four voluntary health
insurance plans, two dental insurance plans, and a prescription vision insurance plan. The health
insurance plans for non-Florida Employees include two PPO plans and one HMO plan,
administered by Health Plan of Nevada and Sierra Health and Life. The health insurance plan
for Florida Employees is through Humana Healthcare. Each of the health insurance plans
includes a prescription drug coverage plan.

Guardian Life Insurance Co. ("Guardian")

administers the dental and vision plans.
95.

Payment Schedule. Resort pays all of the employer obligations for its benefit

programs on a current basis. Mid-month, the Providers of the various Employee Benefits and
Programs submit a consolidated bill to Fontainebleau Resorts and Resort for coverage in the
month to follow. Each company pays its respective share early in the following month, with
such payment relating to the coverage which is actually being provided for that month.
96.

Employer Contribution. Resort pays approximately 85% of the premium for the

Employees electing either of the PPO plans and approximately 90% of the premium for
Employees electing the HMO plan. Employees are responsible for the payment of 70%-85% of
the premiums under the dental and vision insurance plans, with the actual percentage depending
upon whether the applicable Employee has a spouse and/or other dependents included on his or
her particular plan. Similarly, the amount of each Employee's contribution to his or her health
insurance coverage varies depending upon the plan in which the Employee elects to participate
and whether or not the Employee's spouse or dependents are covered. Resort's monthly

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contribution (including both Employee and employer contributions) is approximately $88,209
for health insurance premiums and a combined total of approximately $12,509 for dental plan
premiums and vision premiums. All premiums for such benefit plans have been paid through
May 31, 2009.
97.

The Resort Debtors anticipate that, as of the Petition Date, some Employees have

filed claims under the health, dental, and vision insurance plans that are as yet unpaid. If the
Resort Debtors are not authorized to honor Resort's various obligations under the insurance
programs, these Employees will likely not be reimbursed nor have their benefit claims paid.
Consequently, certain Employees may become primarily obligated for the payment of these
claims in cases where Providers of health care have not been reimbursed. These Employees may
also face termination of health services.
98.

Disability and Life Insurance. The Debtors also provide basic life and accidental

death and dismemberment insurance ("Life and AD&D Insurance") to all Employees through
Guardian. The premiums are fully paid by Resort. Such insurance entitles all Employees hired
prior to January 1, 2009 and certain Executive Director level Employees hired after January 1,
2009 (collectively, the "Group I Employees") to a life insurance benefit of up to one year's salary
not to exceed $750,000. Employees hired after January 1, 2009 who are below the Executive
Director level (the "Group IV Employees") are entitled to a maximum benefit of $20,000. All
Employees may purchase supplemental life insurance for themselves and/or their dependents at
their own expense. The current monthly premium for Life and AD&D Insurance remitted by
Resort is approximately $3,056.
99.

For Group I Employees, Resort also provides employer-paid long- and short-term

disability plans ("Disability Insurance").

Resort allows Group IV Employees to purchase

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Disability Insurance at their own cost and likewise permits Group I Employees to purchase
supplemental Disability Insurance as they elect.

Resort pays premiums of approximately

$12,255 per month for short- and long-term disability insurance benefits for the Employees.
100.

Workers Compensation Insurance Program.

The Resort Debtors also carry

workers compensation insurance provided by Hartford (a.k.a. Twin City Fire Insurance Co.) and
premiums on such policy are paid through August 9, 2009.
101.

401(k) Program. The Resort Debtors' direct and indirect parent, Fontainebleau

Resorts, also maintains a retirement savings plan (the "401(k) Plan") meeting the requirements of
section 401(k) of the Internal Revenue Code for the benefit of eligible employees, including
Employees of the Debtors. The 401(k) Plan allows for automatic pre-tax salary deductions of
eligible compensation up to the limits set by the Internal Revenue Code. Approximately 71
Employees currently participate in the 401(k) Plan.

For both Semimonthly and Biweekly

Employees, Resort withheld a combined total of approximately $17,145 in the last pay period of
May 2009 for employee 401(k) contributions. The Resort Debtors are currently not making any
matching contributions to such plan. The 401(k) plan is administered by Fontainebleau Resorts.
102.

Exec-U-Care Coverage. Four Employees are eligible for Exec-U-Care, a form of

supplemental insurance coverage for certain key employees. This program covers the majority
of all out of pocket health costs incurred by enrollees. Resort pays Exec-U-Care claim charges
for these Employees when due. The amount currently outstanding is the sum of $3,192.67.
Historically, the Debtors have incurred on average approximately $1,126.20 per month in ExecU-Care charges.

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Car Allowance. Two of Resort's executives receive an automobile allowance as

part of their negotiated compensation packages. Resort currently pays $1,400 per applicable pay
period for existing automobile allowances to these Employees.
104.

The Resort Debtors believe that it is critical that they be authorized to continue

making payments for the Employee Benefit Plans and Programs on a regular basis as and when
they come due. For example, if the Resort Debtors fail to pay insurance premiums, certain
Providers may seek payment directly from the Employees and might refuse to provide
continuing medical services or treatment. Employees and their dependents who have sought
health care services in reliance on their insurance could become financially devastated if their
medical services are affected by the Resort Debtors' bankruptcy filing. Moreover, the morale of
the Employees would be seriously undermined if Employee Benefit Plans and Programs are
interrupted.
105.

The Resort Debtors' ability to remain engaged in a highly competitive business

depends on their ability to retain existing skilled and dedicated employees. Absent the relief
requested herein, the Employees and their families will suffer undue hardship and consequently,
the Employees may be forced to seek employment elsewhere. The requested funds requested are
essential for the Employees and their families to be able to continue to meet their financial
obligations and to maintain their life and health insurance. Since the Resort Debtors' ability to
preserve their going concern value and to maximize the value of their assets for all creditors of
its estate is inextricably linked with Resort's ability to retain its dedicated and loyal Employees,
all creditors will be adversely affected if the Resort Debtors are not permitted to timely pay their
obligations under the Employee Benefit Plans and Programs. It is thus critical that any hardship

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and disruption to Employees caused by these Chapter 11 Cases be minimized in order to
preserve Employee morale and maintain the Resort Debtors' workforce.
106.

Accordingly, the Resort Debtors request authority (a) to pay the appropriate

parties any unpaid prepetition obligations, including monthly maintenance or administrative fees,
associated with the Employee Benefit Plans and Programs, and (b) to continue paying all
premiums, expenses, and employee wage deductions related to the Employee Benefit Plans and
Programs when due.
G.

Direction to Banks.

107.

With the exception of approximately three Employees, payroll for both Biweekly

and Semimonthly Employees is effectuated through electronic fund transfers.
108.

Accordingly, the Resort Debtors also seek an order authorizing and directing all

banks to receive, process, honor and pay any and all checks or electronic transfers drawn on
Resort's payroll and general disbursement accounts related to ordinary course Employee
compensation, Employee reimbursement obligations, Employee Benefit Plans and Programs,
Deductions, Payroll Taxes and premiums and fees in respect of workers' compensation
insurance, as outlined above, whether presented before or after the Petition Date, provided that
sufficient funds are on deposit in the applicable accounts to cover such payments.
Debtors’ Emergency Motion to (A) File Under Seal Exhibit "B" to Wage Motion and (B)
Set an In Camera Hearing for Consideration Thereof.
109.

Exhibit B to the Wage Motion (the "Wage Motion Exhibit") provides a detailed

list of (a) the names of the Employees, (b) the amount due to each Employee as of the Petition
Date, (c) the amounts withheld from each Employee's wages, including all applicable payroll
taxes and related benefits, (d) the period of time for which such prepetition wages are due, and

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(e) whether the Employee is presently employed by Resorts. Additionally, the Wage Motion
Exhibit also identifies any Employees who may hold insider status.
110.

Within the gaming and resort industry, salaries are highly confidential, as the pool

of skilled persons within this specialized area of industry is limited. Since all employers,
including competitors of the Resort Debtors, naturally wish to obtain the most talented
employees available, the information contained in the Wage Motion Exhibit is highly sensitive.
The Resort Debtors need the continued support of their employees throughout the chapter 11
process. Accordingly, the Resort Debtors seek entry of an order authorizing the Resort Debtors
to file the Wage Motion Exhibit under seal in order to maintain as confidential the information
contained in the Wage Motion Exhibit.
Motion by Debtors for Entry of an Order (I) Prohibiting Utility Companies From Altering,
Refusing, or Discontinuing Service (II) Deeming Utility Companies Adequately Assured for
Future Payment and Establishing Procedures for Determining Requests for Additional
Adequate Assurance (the “Utility Motion”)
111.

In connection with its daily operations, Resort uses electricity, natural gas,

telephone and telecommunication, water, waste removal, and other utility services from
approximately nine utility providers through approximately thirty different accounts with an
average monthly aggregate cost of approximately $180,913.18 A complete list of the companies
that provide these utility services (each, a "Utility Provider" and collectively, the "Utility
Providers") is annexed to the Utility Motion as Exhibit "B" ("Utility Provider List"). As of the
Petition Date, the Debtor believes they have no past due utilities payments due to the Utility
Providers.

18
The amount assumes Resort's portion of the accounts listed in Exhibit "B" to the Utilities Motion
that are shared with its non-debtor affiliate.

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Prior to the Petition Date, certain of the Utility Providers (the "Assured Utility

Providers") were provided letters of credit or deposits from the Debtors as security for future
services to be provided by such Utility Provider (collectively, the "Pre-Petition Security
Deposits"). A list containing the Pre-Petition Security Deposits is attached to the Utility Motion
as Exhibit "C". As of the Petition Date, the Assured Utility Providers include Southwest Gas
Corporation ("SW Gas"), NV Energy, and Las Vegas Valley Water District ("LVVWD").
113.

On August 13, 2008, Resort provided SW Gas with an irrevocable standby letter

of credit (the "SW LOC") in the amount of $754,672 to secure utility services. The termination
date of the SW LOC is currently August 31, 2009.

The SW LOC provides that it will

automatically renew without amendment for a period of one year upon each successive
expiration date, but in no event later than August 2016, unless Bank of America ("BOA")
provides thirty days' notice of its intent not to renew the SW LOC for any additional period. In
addition to the SW LOC, SW Gas currently holds two deposits totaling approximately $8,130 for
the benefit of Resort (the "SW Gas Cash Deposits"). The combined average monthly invoices
for all SW Gas accounts maintained by Resort was approximately $572.
114.

On February 3, 2009, Resort provided NV Energy with an irrevocable standby

letter of credit (the "NV Energy LOC") in the amount of $855,000. The NV Energy LOC
provides that it will automatically renew without amendment for a period of one year from the
date of signing or any future expiration date, unless BOA provides sixty days' notice of its intent
not to automatically extend the NV Energy LOC. The combined total of Resort's most recently
monthly invoices for all relevant NV Energy accounts was approximately $156,000.

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LVVWD currently holds two deposits (the "LVVWD Deposit") in the aggregate

amount of $5,250 for the benefit of Resort. The combined total of Resort's most recently
monthly invoices for all relevant LVVWD accounts was approximately $1,773.
116.

None of the other Utility Providers (the "Other Utility Providers") currently holds

a deposit from Resort.
117.

The Utility Providers service the Resort Debtors' properties, including the Project

and corporate offices. Preserving utility services on an uninterrupted basis is essential to the
Resort Debtors' ongoing operations and, therefore, to the success of their reorganization. Any
interruption of utility services, even for a brief period of time, would disrupt the Resort Debtors'
ability to continue to construct the Project, thereby negatively impacting the estate. Such a result
could seriously jeopardize the Resort Debtors' reorganization efforts and, ultimately, value and
creditor recoveries. It is, therefore, critical that utility services continue uninterrupted during
these Chapter 11 Cases.
118.

The Resort Debtors intend to pay postpetition obligations owed to the Utility

Providers in a timely manner. Should the use of cash collateral be approved by this Court, the
Resort Debtors expect that they will have ample liquidity, based upon borrowings, to pay their
postpetition obligations to their Utility Providers. Moreover, the Resort Debtors submit that the
Assured Utility Providers are adequately protected by the Pre-Petition Security Deposits.
119.

Nevertheless, to provide additional assurance of payment for future services to the

Other Utility Providers, the Resort Debtors will deposit $25,000, a sum in excess of the Debtors'
estimated cost of their aggregate monthly utility consumption of the Other Utility Providers, into
an interest-bearing account (the "Utility Deposit Account") for the benefit of the Other Utility
Providers. The Utility Deposit Account will provide still further assurance of future payment,

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over and above the Resort Debtors' ability to pay for future utility services in the ordinary course
of business, based upon their cash on hand and cash flow from operations (collectively, with the
Utility Deposit Account and Pre-Petition Security Deposits, the "Proposed Adequate
Assurance").
120.

The Resort Debtors submit that the Proposed Adequate Assurance package

provides sufficient protection to all Utility Providers. Specifically, the Resort Debtors submit
that the SW LOC, SW Gas Cash Deposits, the NV Energy LOC, and the LVVWD Deposit
provide ample assurance of payment and thus respectfully request that SW Gas, NV Energy, and
LVVWD be deemed adequately assured by the Pre-Petition Security Deposits.
121.

Accordingly, the Resort Debtors request entry of an order (i) prohibiting all

Utility Providers from altering, refusing, or discontinuing service to the Resort Debtors on
account of prepetition amounts outstanding or on account of any perceived inadequacy of the
Resort Debtors' Proposed Adequate Assurance (as defined in the above-named motion),
(ii) deeming the Assured Utility Providers adequately assured of future payment by the
Prepetition Security Deposits, (iii) deeming the Other Utility Providers assured of future
payment by the Utility Deposit Account, and (iv) establishing procedures for determining
requests for additional adequate assurance.
Debtors’ Emergency Motion for an Order, (I) Authorizing, But Not Requiring, the Debtors
to (a) Continue Their Existing Insurance Programs, and (b) Pay Certain Obligations in
Respect Thereof, and (II) Authorizing Financial Institutions to Honor and Process Checks
and Transfers Related to Such Obligations (the "Insurance Motion")
122.

The Resort Debtors request entry of an order authorizing the Resort Debtors to

(a) continue Resort's Owner Controlled Insurance Program (the "OCIP") for construction of the
Project, which includes a workers' compensation program (the "Workers' Compensation

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Program")19 and a builder's risk program (the "Builder's Risk Program"), as well as general
liability, excess liability, contractor's pollution liability, and environmental site liability
programs, and (b) continue all of the Resort Debtors' various insurance programs for, among
other things, property, general liability, automobile, umbrella, excess liability, professional
liability, crime, employment practices liability, directors' and officers' liability, and fiduciary
liability (collectively, the "General Insurance Programs," and, together with the Workers'
Compensation and Builder's Risk Programs, the "Insurance Programs") uninterrupted, and
(c) honor certain of their undisputed prepetition obligations thereunder (collectively, the
"Insurance Obligations").20
The Resort Debtors' OCIP and Related Obligations
123.

The OCIP.

The Resort Debtors are required to maintain various forms of

insurance coverage for all persons working on the Project site (collectively, the "Insured
Parties") for claims arising from or related to their employment on the Project. Under applicable
Nevada law, programs similar to the OCIP are created to manage claims on projects with a
construction budget of over $50 million. Generally, an OCIP is a single insurance program that
covers the owner, all enrolled contractors, and their enrolled subcontractors under a single
insurance contract. The benefits of an OCIP include reduced project cost and owner-controlled
safety standards.21

19

The Resort Debtors have separately requested relief for workers' compensation payments for
Resort employees in the Wage Motion, filed concurrently herewith.
20

In addition to the Insurance Programs discussed in this section, the Resort Debtors maintain
numerous insurance programs with respect to, among other things, medical, prescription, dental, vision, and other
health-related benefits and life, accidental death and dismemberment, and other welfare-related benefits. These
policies are addressed in the Wage Motion.
21

Within certain states, including Nevada, it has become very difficult (and generally very
expensive) for subcontractors to obtain workers' compensation insurance on larger projects, primarily due to the
recent increase in construction litigation claims. By using an OCIP, a project owner can reduce overall insurance
costs significantly. Further, by using an OCIP, the owner is also able to offer all qualified contractors and

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In the case of Resort, all contractors and subcontractors performing work at the

Project site must enroll in the OCIP in order to provide their employees with appropriate workrelated insurance coverage. All other professionals, suppliers, and materialmen performing work
at the Project site must also enroll, including, inter alia, architects, interior designers, engineers,
vendors, suppliers, fabricators, and material dealers. Persons not performing work at the Project
site are excluded from coverage, as are workers who merely transport or deliver materials to or
from the site and workers who specifically deal in hazardous materials and/or waste removal.
125.

OCIP Premium Payments and Cost-Sharing. Since the OCIP covers various

parties working at the Project site for multiple types of potential liability, the cost of such
coverage is distributed amongst the Insured Parties in proportion to their actual cost, duration,
and nature of participation in the Project. Thus, although Resort is responsible for upfront
payment of premiums as the contracting "Owner" under the policy, this cost has been and will
continue to be ratably distributed amongst all Insured Parties over the course of Project
construction. Resort obtains reimbursement from the Insured Parties that are employers by
deducting a ratable portion of the premium cost from each construction payment made to the
Insured Parties (as set forth more fully below).
126.

In June 2007, Resort contracted for initial OCIP coverage and paid the first set of

premiums (each, an "OCIP Premium") to the OCIP plan administrator, Aon Risk Services
("Aon"). In order to reimburse Resort for this and other subsequent upfront OCIP Premiums
paid by Resort in advance of coverage, Aon continually recalculates the various premium
percentages owed by each of the Insured Parties based upon the relevant Insured Party's

subcontractors the option of participating in the project, as opposed to only those contractors and subcontractors who
can obtain affordable insurance. Finally, an OCIP permits the owner to implement and enforce uniform safety
standards, which provides yet another benefit to all parties involved.

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Thus, as construction progresses, Aon monitors and assesses the proportionate

required contribution from each of the Insured Parties. Resort subsequently deducts the required
premium amount, plus a small fee, from each Insured Party's portion of Resort's advance request.
By following this process, Resort will recoup its initial cash investment for OCIP Premiums, and
all Insured Parties are continuously provided with adequate workers' compensation coverage as
required by applicable state law. In the ordinary course of business, Resort will continue
postpetition to deduct each Insured Party's ratable share of the prepaid OCIP Premiums from the
amount that would otherwise be paid to the party by Resort for work completed on the Project.
127.

In anticipation of a completion date in late 2009, Resort solicited OCIP coverage

through March 2010. Pursuant to the terms of the OCIP, Resort has currently prepaid all OCIP
Premiums.23
128.

Workers' Compensation Program. The OCIP includes comprehensive workers'

compensation coverage for all persons actively working at the Project site, including, but not
limited to, enrolled contractors, subcontractors, vendors, suppliers, materialmen, architects,
designers, engineers, and other similar service providers. Such coverage is separate from the
workers' compensation program for employees of the Resort Debtors and is intended to cover
claims arising from injuries incurred at the Project location by persons who are not direct
employees of the Resort Debtors.
129.

Builders' Risk Program. As part of the OCIP, Resort also maintains insurance

coverage for certain non-personal injury claims related to construction of the Project, including,
inter alia, theft of construction materials, property damage, and similar claims.
22

The Insured Parties submit monthly payroll reports to Aon as part of the general OCIP
administration process.
23

Upon completion of the Project, Aon will audit the total project costs and has the right to assess a
supplemental premium.

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Other OCIP Programs. Included within the OCIP are several other insurance

programs that are intended to cover claims arising from or related to construction of the Project,
including programs for general liability, excess liability, professional liability, contractor's
pollution liability, and environmental site liability (collectively, the "Other OCIP Programs").
The cost of such coverage is included in the OCIP Premiums and, accordingly, all necessary
premiums for such additional coverage have been prepaid by Resort as noted above.
131.

OCIP Deductibles and Open Claims. Resort has a $250,000 deductible (the

"Deductible") per incident under both the Workers' Compensation and Builder's Risk Programs
of the OCIP. Claimants are required to seek payment from the OCIP. For the last twelve
months, Resort has paid an average cost of $161,000 in deductibles for filed claims. Resort has
estimated that its obligations associated with open claims is approximately $2,095,000 as of the
Petition Date. Under the terms of the OCIP, Resort would be obligated to pay amounts up to the
deductible for each such open claim.
132.

The OCIP Letter of Credit and Claims Escrow. As part of its OCIP obligations,

Resort obtained a letter of credit (the "OCIP LOC") from Bank of America in the amount of
$11,750,000 for the benefit of multiple insurance providers that provide coverage for the OCIP.
133.

In addition to the OCIP LOC, when the OCIP was established, Resort funded a

claims escrow of $250,000 with AIG. AIG pays valid claims from this account, and Resort then
replenishes the account to bring it back up to the $250,000 threshold. Resort has booked a
reserve of approximately $2,094,528 for open OCIP claims as of the Petition Date.
The Debtors' General Insurance Programs and Related Obligations
134.

General Insurance Programs.

In addition to the OCIP, the Resort Debtors

maintain the General Insurance Programs to help manage the risks associated with their business.

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The General Insurance Programs collectively are intended to provide coverage for Resort and its
employees in connection with the Resort Debtors' general business operations. A list of all
insurance policies and the dates in which the policies are in force is attached to the Insurance
Motion as Exhibit "C".24
135.

Continuation of the General Insurance Programs policies is essential to the

ongoing operation of the Resort Debtors' businesses and is also required under the U.S. Trustee
guidelines. Accordingly, the Resort Debtors submit that it is both appropriate and necessary for
Resort to (i) be authorized to pay any prepetition obligations associated with the OCIP and
General Insurance Programs, including the payment of deductibles associated with such claims,
and (ii) continue the OCIP and General Insurance Programs in the ordinary course of the Resort
Debtors' business.
136.

The nature of the Resort Debtors' businesses and the extent of their operations

make it essential for the Resort Debtors to maintain their Insurance Programs on an ongoing and
uninterrupted basis. The nonpayment of any premiums, deductibles, or related fees under one of
the Insurance Programs could provoke one or more of the carriers under the Insurance Programs
to terminate or decline to renew one or more aspects of the Insurance Programs, or to refuse to
enter into new insurance agreements with the Resort Debtors in the future. If the Insurance
Programs are allowed to lapse without renewal, then the Resort Debtors could be exposed to
substantial liability. This exposure would almost certainly have an extremely negative impact on
the Resort Debtors' ability to successfully reorganize. Furthermore, the Resort Debtors would be
required to obtain replacement policies on an expedited basis at what they expect to be a

24
A number of the policies have the Debtors' non-debtor affiliate, Fontainebleau Resorts, LLC, as an
additional insured party under such policies.

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significantly higher cost to their estates. Accordingly, it is in the best interests of all creditors for
the Resort Debtors to make all payments with respect to the Insurance Programs.
137.

Moreover, the Insurance Programs are vital to the Resort Debtors' continued

operations since applicable state law mandates that the Resort Debtors maintain workers'
compensation coverage for persons working at the Project site. Failure by the Resort Debtors to
pay the any necessary open prepetition claims or future premiums associated with the OCIP
would potentially expose the Resort Debtors to substantial liability in fines by the state workers'
compensation board.
138.

Finally, pursuant to the guidelines established by the United States Trustee for the

Southern District of Florida (the "U.S. Trustee"), the Resort Debtors are obligated to remain
current with respect to certain of their primary Insurance Programs. Therefore, the continuation
of the Insurance Programs on an uninterrupted basis and the payment of all prepetition and
postpetition Insurance Obligations arising under the Insurance Programs are both essential to
preserve the Resort Debtors' businesses and to comply with U.S. Trustee guidelines.
Application by Debtors for Interim and Final Order Authorizing the Employment and
Retention of Scott L. Baena and the Law Firm of Bilzin Sumberg Baena Price & Axelrod
LLP as Counsel for the Debtors Nunc Pro Tunc to the Petition Date and for Entry of a
Final Order on or After June 29, 2009
139.

The Resort Debtors seek immediate entry of an interim order, and entry of a final

order on or after June 29, 2009 authorizing the Resort Debtors to employ and retain Scott L.
Baena, Esq. and the law firm of Bilzin Sumberg Baena Price & Axelrod LLP ("Bilzin Sumberg")
as its general bankruptcy counsel in these Chapter 11 Cases. The Resort Debtors request
authority to employ Bilzin Sumberg under a general retainer because of the extensive legal
services that will be required in connection with these Chapter 11 Cases and the firm's familiarity
with the Resort Debtors' business operations.

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Mr. Baena and Bilzin Sumberg are well-known to this Court. Mr. Baena has

practiced in the areas of creditors' rights, workouts and restructurings, secured transactions, and
bankruptcy for over 35 years. He has represented numerous high-profile clients in some of the
largest bankruptcy cases ever filed in this jurisdiction and elsewhere. Mr. Baena is constantly
recognized as "tops in his field" by his peers and by national and international rating associations
such as Chambers Partners, Best Lawyers in America, Martindale-Hubbell, and Florida Trend.
He is the only bankruptcy lawyer in Florida included for six consecutive years in the K & A
Restructuring Register of the top 100 restructuring professionals in the United States.
141.

Likewise, Bilzin Sumberg has achieved national recognition for its restructuring

and bankruptcy practice. Chambers Partners most recently ranked the firm in the highest tier of
bankruptcy groups situated in Florida. The depth of the firm's restructuring and bankruptcy
practice derives from the senior members of the practice group, including Mindy A. Mora,
Jay M. Sakalo, Matthew I. Kramer, and Jason Z. Jones, all seasoned and highly regarded
bankruptcy professionals, who – like Mr. Baena – handle matters throughout the United States.
142.

Prior to commencement of these Chapter 11 Cases, the Resort Debtors sought the

services of Bilzin Sumberg with respect to, among other things, advice regarding restructuring
matters in general, and preparation for the potential commencement and prosecution of chapter
11 cases on behalf of the Debtors. The Resort Debtors believe that continued representation by
its prepetition restructuring counsel, Bilzin Sumberg, is critical to the Resort Debtors' efforts to
restructure its businesses because Bilzin Sumberg has extensive experience and expertise in
complex commercial reorganization cases and has become familiar with the Debtors' business,
legal and financial affairs. Accordingly, Bilzin Sumberg is well-suited and uniquely able to
guide the Resort Debtors through the chapter 11 process in an efficient and timely manner.

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Application by Debtors for Interim Order Authorizing the Employment and Retention of
Buchanan Ingersoll & Rooney, P.C. as Special Counsel to the Debtors Nunc Pro Tunc to
the Petition Date and for Entry of a Final Order
143.

The Resort Debtors seek entry of an order (i) authorizing the employment and

retention of Buchanan Ingersoll & Rooney PC ("Buchanan") as special counsel to the Resort
Debtors nunc pro tunc to the Petition Date, and (ii) approving the terms and conditions under
which Buchanan will be retained and compensated.
144.

The Resort Debtors seek to retain Buchanan as special counsel because of its

intimate knowledge of the Debtors' business and operations. Since the inception of the Debtors
in 2005, Buchanan has represented certain of the Debtors and non-debtor affiliates (collectively,
"FB Entities") on a variety of matters, including general advice and legal services relating to the
following practice areas: corporate, financing, tax, real estate, intellectual property, litigation,
employment, construction and government relations matters (collectively, the "Buchanan
Matters"). The Resort Debtors believe that the employment of Buchanan as special counsel for
the Resort Debtors will enable the Resort Debtors to avoid the unnecessary delay and expense
otherwise attendant to another law firm familiarizing itself with the Buchanan Matters. As a
result of its knowledge and experience, it is unquestionable that the postpetition employment of
Buchanan as special counsel to provide FB Entities with advice and services relating to the
Buchanan Matters during the bankruptcy is in the best interests of the Resort Debtors and the
Resort Debtors' estates.
145.

In addition to seeking to retain Buchanan as special counsel with respect to the

Buchanan Matters, by separate Application filed herein, the Resort Debtors have filed
applications to employ, among others, (i) Bilzin Sumberg, as the Resort Debtors' general
bankruptcy counsel, (ii) Kasowitz Benson Torres & Friedman LLP, as special litigation counsel,

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and (iii) Moelis & Company LLC and Citadel Derivatives Group LLC as investment bankers and
financial advisors to the Resort Debtors. The Resort Debtors will ensure that Buchanan will
coordinate with the Resort Debtors' other professionals to ensure that services are, to the
maximum extent possible, complementary and not duplicative.
Application by Debtor for Entry of an Interim Order Authorizing the Employment and
Retention of Kasowitz Benson Torres as Special Litigation Counsel
146.

The Resort Debtors seek to retain Kasowitz Benson Torres & Friedman LLP

("Kasowitz Benson") as special litigation counsel because of Kasowitz Benson’s extensive
experience in matters concerning complex bankruptcy and commercial litigation. Kasowitz
Benson is a 300 attorney litigation firm based in New York City which has acted as lead counsel
in numerous lawsuits on behalf of debtors against lenders. Among the "lender liability" cases
handled by Kasowitz Benson are those in the bankruptcy cases of Adelphia, Le Natures, Refco,
Hechinger Stores, FoxMeyer Drug Company, Fruit of the Loom, Enron, Sunbeam and
NextWave Telecom. All of these cases have involved hundred million to multi-billion dollar
damage claims and those that have been resolved have yielded substantial benefits. Accordingly,
Kasowitz Benson is well suited to deal effectively with many of the potential legal issues that
may arise in the Chapter 11 Cases, including prosecution of the Credit Agreement Litigation
described below.
147.

Further, Kasowitz Benson currently represents Resort in connection with

numerous aspects of dealing with its lenders and related issues. In that capacity, among other
things, Kasowitz Benson represents Resort in litigation against certain of Resort’s lenders
pending in the United States District Court for the District of Nevada, initially commenced in
Nevada State Court on April 23, 2009 and removed by the defendants to federal court on May
13, 2009, captioned Fontainebleau Las Vegas LLC v. Bank of America, N.A., Case No. 2:09-cv-

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00860-RLH-GWF. Contemporaneously with the filing of a chapter 11 petition by Resort, the
complaint filed in Nevada has been withdrawn without prejudice and a substantially similar
complaint has been filed as an adversary proceeding in this Court (the "Credit Agreement
Litigation").
148.

Kasowitz Benson maintains offices in New York, Houston, Atlanta, San

Francisco, Newark, and Miami. Kasowitz Benson’s principal areas of practice include, among
others, general litigation and creditors’ rights and bankruptcy.
149.

The proposed lead attorneys at Kasowitz Benson on this matter are Marc E.

Kasowitz and David M. Friedman. Mr. Kasowitz, the founding and managing partner of the
firm, is widely regarded as one of the nation's preeminent business litigators and trial lawyers.
He has been recognized in several publications as one of the nation's leading litigators and trial
lawyers, including in Chambers USA ("bright and skilled" and "respected") and Law Dragon 500
("the cream of the crop"), and was ranked among The American Lawyer's "Forty-Five Under
45." Mr. Kasowitz has an extensive background as national trial counsel in complex litigation,
including in the areas of bank finance, leveraged-buyouts, fraudulent conveyance, RICO,
corporate governance, trade secret misappropriation, antitrust, securities, mass tort, breach of
contract and other commercial cases.
150.

Mr. Friedman, the head of Kasowitz Benson’s bankruptcy group, has represented,

among others, debtors-in-possession, commercial lenders in complex real estate and industrial
bankruptcies and informal restructurings, committees of creditors and equity security holders,
hedge funds, high-yield mutual funds and other distressed investors, trustees in bankruptcy and
acquirers of distressed businesses. He has published articles and lectured on novel and complex
areas of bankruptcy law. Since the inception of its publication, Chambers has ranked Mr.

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Friedman as one of the "Leading Individuals" in the United States in Bankruptcy/Restructuring.
He is perennially listed as one of the "Best Lawyers in New York" and as one of the top
bankruptcy lawyers in the United States in the "K&A Restructuring Register." In 2007 and
2008, Lawdragon named Mr. Friedman one of the 500 leading lawyers in the United States. Mr.
Friedman has served as lead lawyer on many of the Kasowitz Benson lender-liability matters
discussed above.
151.

The Resort Debtors seek to retain Kasowitz Benson on an interim and final basis

as special litigation counsel to assist in the prosecution of the Chapter 11 Cases, the Credit
Agreement Litigation and other necessary matters. In particular, the Resort Debtors anticipate
that Kasowitz Benson will provide the following professional services, among others, for the
Debtors:
a.

b.

commence and conduct any and all litigation necessary or appropriate, as
directed by the Resort Debtors, to assert rights held by the Resort Debtors,
including without limitation any litigation within the bankruptcy cases in
adversary proceedings or contested matters in connection with the
Prepetition Credit Agreement and/or any DIP Financing Agreement or
contested cash collateral usage, as well as litigation to protect assets of the
Resort Debtors’ chapter 11 estates, confirm a plan of reorganization, or
otherwise further the goal of completing the Resort Debtors’ successful
reorganization; and

c.
152.

advise Resort regarding the pending Credit Agreement Litigation and all
matters related thereto, including the continued prosecution of the Credit
Agreement Litigation against all non-settling defendants;

advise the Resort Debtors with respect to any possible settlement of
potential claims by or against the Resort Debtors' estates.

The services of Kasowitz Benson are necessary and appropriate to enable the

Resort Debtors to execute their duties as debtors and debtors-in-possession faithfully and are in
the best interest of the Resort Debtors, their estates, and creditors. It is proposed that Kasowitz

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Benson be employed to render such services as requested by the Resort Debtors and agreed to by
Kasowitz Benson pursuant to the terms of the Engagement Letter.
153.

In addition to seeking to retain Kasowitz Benson as special litigation counsel, by

separate Application filed herein, the Resort Debtors have filed applications to employ, among
others, (i) Bilzin Sumberg, as the Resort Debtors' general bankruptcy counsel, (ii) Buchanan as
special counsel, and (iii) Moelis & Company LLC and Citadel Investment Group, L.L.C. as
investment bankers and financial advisors to the Resort Debtors. The Resort Debtors will ensure
that Kasowitz Benson will coordinate with the Resort Debtors' other professionals to ensure that
services are, to the maximum extent possible, complementary and not duplicative.
Application by Debtor for Entry of an Interim Order Authorizing the Employment and
Retention of Moelis & Company LLC as Financial Advisors and Investment Bankers to the
Debtor Nunc Pro Tunc to the Petition Date and for Entry of a Final Order
154.

The Resort Debtors require the expertise and services of a financial advisor and

investment banker to assist in the restructure of outstanding debt obligations, raising additional
capital and/or consummating a sale transaction, in a short timeframe, to facilitate the Resort
Debtors' reorganization and emergence from chapter 11.
155.

Moelis & Company LLC ("Moelis") is an investment banking firm with its

principal office located at 245 Park Avenue, 32nd Floor, New York, New York 10167. Moelis is
a registered broker-dealer with the United States Securities and Exchange Commission and is a
member of the Financial Industry Regulatory Authority and the Securities Investor Protection
Corporation. Moelis was founded in 2007 and is a wholly-owned subsidiary of Moelis &
Company Holdings LLC.

Moelis' chief executive officer is Kenneth D. Moelis and the

Recapitalization & Restructuring Group is co-headed by Thane W. Carlston and William Q.

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Derrough. Moelis & Company Holdings LLC, together with its subsidiaries, has approximately
150 employees located in offices in New York, Los Angeles, Boston, Chicago and London.
156.

Moelis provides a broad range of corporate advisory services to its clients,

including, without limitation, services pertaining to: (i) general financial advice; (ii) mergers,
acquisitions, and divestitures; (iii) corporate restructurings; (iv) special committee assignments;
and (v) capital raising. Moelis and its senior professionals have extensive experience in the
reorganization and restructuring of distressed companies, both out-of-court and in chapter 11
proceedings.
157.

Prior to the Petition Date, Moelis's professionals have worked closely with the

Debtors' management and other professionals and have become well-acquainted with the
Debtors' operations, debt structure, creditors and business and operations. Accordingly, Moelis
has developed significant and relevant experience and expertise regarding the Resort Debtors and
their business that will assist it in providing effective and efficient services throughout the
Chapter 11 Cases.
158.

Based on the breadth of Moelis' experience in this area and excellent reputation in

providing financial advisory and investment banking services in complex chapter 11 cases such
as these, the Resort Debtors, after due deliberation, determined it would be in the best interest of
their estates, creditors and stakeholders to retain Moelis as their financial advisor and investment
banker in the Resort Debtors' Chapter 11 Cases. The Resort Debtors believe that Moelis is
qualified and uniquely situated to perform the work required to facilitate the Resort Debtors'
restructuring activities and exit from chapter 11.

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Application by Debtor for Entry of an Interim Order Authorizing the Employment and
Retention of Citadel Derivatives Group LLC as Financial Advisors and Investment
Bankers to the Debtor Nunc Pro Tunc to the Petition Date and for Entry of a Final Order
159.

The Resort Debtors require the expertise and services of a financial advisor and

investment banker to assist in the restructure of outstanding debt obligations, raising additional
capital and/or consummating a sale transaction, in a short timeframe, to facilitate the Resort
Debtors' reorganization and emergence from chapter 11.

Accordingly, the Resort Debtors

believe that the retention of Citadel Derivatives Group LLC ("CDRG") is necessary and will be
critical to the overall success of the reorganization efforts.
160.

Founded in 1990, Citadel Investment Group, L.L.C. ("Citadel") is a diverse global

financial institution focused on financial services and investment strategies located at 131 South
Dearborn Street, Suite 3200, Chicago, Illinois 60603. Citadel’s investment banking services are
provided by CDRG, a broker-dealer with the United States Securities and Exchange Commission
and a member of the Financial Industry Regulatory Authority.
161.

CDRG is led by three senior investment bankers, Todd Kaplan, Brian Maier and

Carl Mayer, each of whom joined CDRG from Merrill Lynch. At Merrill Lynch, Todd Kaplan
was head of Global Leveraged Finance, Capital Markets & Financing, Global Principal
Investments and Corporate Finance, and Head of Capital Commitments; Brian Maier was Group
Head of Consumer Industries and Equity Private Placements; and Carl Mayer was Head of
Leveraged Finance Capital Markets. Each of these principals has over 20 years of experience
providing financial advisory, mergers, acquisitions and divestiture services. In addition, CDRG
has substantial experience in balance sheet restructurings and debt and equity capital raising
services for clients across a wide range of industries, with a particular expertise in the gaming
and lodging sector.

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CDRG's professionals have represented numerous gaming and lodging clients

including: Fontainebleau Resorts, Harrah’s Entertainment, MGM Mirage, International Game
Technology, Kerzner International, Wynn Resorts, Trump Entertainment Resorts, Penn National
Gaming, Boyd Gaming, Stations Casino, Isle of Capri, Mandalay Resorts Group, Greektown
Casino, Seminole Tribe of Florida, Mashantucket Pequot (Foxwoods), Seneca Nation, Mohegan
Tribal Gaming Authority (Mohegan Sun), Waterford Gaming, Yonkers Raceway, BLB
Management Services, Intrawest Corporation, Cannery Casino Resorts, French Lick Resorts and
Casino, San Pasqual, Chukchansi Economic Development Authority, Cabazon Band of Mission
Indians, Galaxy Entertainment (Macau), MotorCity Casinos, Gulfside Casino Resorts,
Hollywood Casinos, and Bally’s Las Vegas.
163.

Based on the breadth of CDRG's experience in this area and excellent reputation

in providing financial advisory and investment banking services to numerous hotel and gaming
companies, the Resort Debtors, after due deliberation, determined it would be in the best interest
of their estates, creditors and stakeholders to retain CDRG as their financial advisor and
investment banker in the Chapter 11 Cases. As such, the Resort Debtors believe that CDRG is
qualified and uniquely situated to perform the work required to facilitate the Resort Debtors'
restructuring activities and exit from chapter 11.
164.

The services to be provided by CDRG will be undertaken concurrently with the

services of Moelis. The Resort Debtors believe it is in the best interests of these estates to retain
both CDRG and Moelis as financial advisors and investment bankers to the Debtors. Each of
these entities has critical, but distinct, expertise necessary to assist the Resort Debtors in
effectuating a Restructuring Transaction, Capital Transaction or Sales Transaction. In addition,
the Resort Debtors recognize that each of these entities possess differing industry knowledge and

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relationships that will be utilized for the benefit of the Debtors. Furthermore, CDRG will
coordinate any services performed (or to be performed) with Moelis, counsel for the Resort
Debtors and other professionals as appropriate to ensure resources are not expended on
duplication of effort. Moreover, the combined aggregate fees that could be awarded to CDRG
and Moelis in the event a Restructuring Transaction, Capital Transaction or Sale Transaction is
consummated was specifically negotiated with the recognition and acknowledgment that both
advisors would be engaged.
Emergency Motion for Entry of an Order Authorizing the Employment and Retention of
Kurtzman Carson Consultants LLC as Notice, Claims and Balloting Agent
165.

The Resort Debtors have more than 1600 potential creditors. Although the office

of the Clerk of the United States Bankruptcy Court for the Southern District of Florida (the
“Clerk’s Office”) ordinarily would serve notice on the Resort Debtors’ creditors and other parties
in interest and administer claims against the Resort Debtors, the Clerk’s Office may not have the
resources to undertake such tasks, especially in light of the sheer magnitude of the Resort
Debtors’ creditor body and the tight timelines that frequently arise in chapter 11 cases.
166.

As specialists in legal administration services, Kurtzman Carson Consultants LLC

("KCC") provides comprehensive solutions to design legal notice programs and manage claims
issues for chapter 11 cases. With respect to chapter 11 case management, KCC specializes in
noticing, claims processing, balloting and other administrative tasks necessary to operate chapter
11 cases effectively. KCC is well-recognized as a specialist in performing these functions and
has been retained in numerous chapter 11 cases of significant size, both in the Southern District
of Florida and in other districts. See, e.g., In re Mercedes Homes, Inc., Case No. 09-11191
(Bankr. S.D. Fla. Jan. 29, 2009); In re TOUSA, Inc., Case No. 08-10928 (Bankr. S.D. Fla. Jan.
31, 2008); In re Levitt & Sons, LLC, Case No. 07-19845 (Bankr. S.D. Fla. Nov. 14, 2007), In re

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All Am. Semiconductor, Inc., No. 07-12963 (Bankr. S.D. Fla. May 25, 2007); see also In re
Circuit City Stores, Inc., No. 08-36563 (Bankr. E.D. Va. Nov. 12, 2008); In re Gottschalks Inc.,
Case No. 09-10157 (Bankr. D. Del. Jan. 15, 2009); In re Aleris Int'l Inc., Case No. 09-10478
(Bankr. D. Del. Feb. 13. 2009); In re HPG Int'l, Inc., Case No. 09-10231 (Bankr. D. Del. Jan. 27,
2009); In re Wash. Mut., Inc., Case No. 08-12229 (Bankr. D. Del. Oct. 30, 2008); In re Motor
Coach Indus. Int'l, Inc., Case No. 08-12136 (Bankr. D. Del. Sept. 16, 2008); In re Boscov's, Inc.,
Case No. 08-11637 (Bankr. D. Del. Aug. 5, 2008); In re Mervyn's Holdings, LLC, Case No. 0811586 (Bankr. D. Del. July 30, 2008).
167.

Accordingly, the Resort Debtors propose to engage KCC to act as the Debtors’

notice, claims and balloting agent. The Resort Debtors respectfully submit that the retention of
KCC is the most effective and efficient manner of noticing the thousands of creditors and parties
in interest of the filing of the Resort Debtors’ Chapter 11 Cases and other developments in the
Chapter 11 Cases. In that capacity, KCC will transmit, receive, docket and maintain proofs of
claim filed in connection with these Chapter 11 Cases and solicit ballots in favor of the Resort
Debtors’ chapter 11 plan.
Emergency Motion for an Order Establishing Omnibus Hearing Dates and Certain Notice,
Case Management and Administrative Procedures Pursuant to Section 105(a) of the
Bankruptcy Code, Procedures and Local Bankruptcy Rule 2002-1 (the "Notice and Case
Management Motion")
168.

The Resort Debtors expect there to be a substantial number of creditors and

parties-in interest in these cases and that many of such parties will be filing requests for service
of filings. The Resort Debtors also expect numerous motions, applications, orders, and other
such documents to be filed in these cases that will need to be served on some or all of these
parties.

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Given the size of these cases, the Resort Debtors believe it necessary to establish

clear and streamlined procedures, in the form of the "Notice, Case Management, and
Administrative Procedures" (the "Case Management Procedures") attached as Schedule 1 to
Exhibit A of the Notice and Case Management Motion, in order to facilitate the efficient
administration of these cases. Specifically, the Case Management Procedures will benefit the
Resort Debtors, the Court and all parties-in-interest by, among other things:
a.
b.

Fostering consensual resolution of important matters;

c.

Assuring prompt receipt of appropriate notice affecting parties' interests;

d.

Providing ample opportunity to parties-in-interest to prepare for and
respond to matters before this Court;

e.

Reducing the substantial administrative and financial burden that would
otherwise be placed on the Resort Debtors and parties-in-interest who file
documents in these cases; and

f.
170.

Reducing the need for emergency hearings and requests for expedited
relief;

Reducing administrative burdens on the Court and the Clerk's office.

The Resort Debtors propose to serve the Case Management Procedures on the

master service list (the "Master Service List") maintained in accordance with Local Rule 20021(H) and the Case Management Procedures. Additionally, on the last day of each calendar
month, or as soon thereafter as is practicable, the Resort Debtors shall cause a copy of the Case
Management Procedures to be served on each party that has filed a notice of appearance or
request for notice in these cases during the preceding calendar month.

Further, the Case

Management Procedures will be available, free of charge, (a) directly from the website to be
maintained by KCC, the Resort Debtors' proposed notice, balloting and claims agent, in
connection with these cases (www.kccllc.net/FBLV) or (b) by contacting KCC directly. Should
the Case Management Procedures be modified in any respect during the pendency of these cases,

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the Resort Debtors will redistribute the modified Case Management Procedures to the Master
Service List.
Debtor's Motion to Establish Procedures to Permit Monthly Payment of Interim Fee
Applications of Chapter 11 Professionals
171.

The Resort Debtors request that the Court enter an order establishing procedures

(the "Procedures") for compensating and reimbursing professionals on a monthly basis
comparable to those established in complex chapter 11 cases in this District and elsewhere.
172.

In connection with these Chapter 11 Cases, the Debtors are filing applications to

retain (i) Bilzin Sumberg as general bankruptcy counsel, (ii) KCC as claims, noticing and
balloting agent, (iii) Moelis as financial advisors and investment bankers, (iv) CRDG and Moelis
as financial advisors and investment bankers, (v) Buchanan as special corporate, tax, and
lobbying counsel, and (vi) Kasowitz Benson as special litigation counsel.

As this case

progresses, the Resort Debtors may seek to employ additional professionals in the future.
173.

The Procedures will enable the Court and parties-in-interest to more effectively

monitor fees incurred, and the Resort Debtors to spread out payment of professional fees, rather
than suffer larger depletions to cash flow on an irregular basis. Because of the likelihood that the
Resort Debtors may seek to employ additional professionals, the process of such professional fee
applications may well be burdensome on the Resort Debtors, these professionals, and the Court.
Thus, implementation of the Procedures will provide a streamlined and efficient method for
compensating professionals and, as stated, such procedures will allow the Court and parties-ininterest to monitor fees sought by and paid to such professionals. Moreover, the Procedures will
ensure against imposition upon estate professionals to finance the Resort Debtors' Chapter 11
Cases.

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The requested Procedures would require all professionals retained with Court

approval to present a detailed statement of services rendered and expenses incurred for the prior
month to counsel for the Resort Debtors, counsel for the Official Committee of Unsecured
Creditors, if one is established, counsel to any other appointed committee, counsel to the Resort
Debtors' postpetition lenders, and the United States Trustee. If no timely objection is filed, the
Procedures require the Resort Debtors to promptly pay 80% of the amount of fees incurred for
the month and 100% of out-of-pocket expenses for the month. These payments and allowance of
payment of a 20% holdback will be subject to the Court’s subsequent approval as part of the
normal interim fee application process (i.e. every 120 days).
175.

The Resort Debtors will include all payments made to Professionals as

contemplated herein in their monthly operating reports, identifying the amount paid to each
Professional. Additionally, the Procedures will enable all parties to closely monitor costs of
administration, and will enable the Resort Debtors to maintain a more level cash flow availability
and implement efficient cash management.
Motion for Entry of an Order Authorizing the Retention of Compensation of Certain
Professionals in the Ordinary Course of Business Nunc Pro Tunc to the Petition Date
176.

The Resort Debtors employ various attorneys, accountants, appraisers, and other

professionals in the ordinary course of their business (each, an “OCP” and, collectively, the
“OCPs”). The OCPs provide services for the Resort Debtors in a variety of matters unrelated to
these Chapter 11 Cases, including legal services with regard to specialized areas of the law such
as real estate and gaming, accounting services, auditing and tax services, and certain consulting
services.
177.

The Resort Debtors submit that the continued employment and compensation of

the OCPs is in the best interests of their estates, creditors, and other parties in interest. Although

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the Resort Debtors anticipate that the OCPs will wish to continue to represent the Resort Debtors
on an ongoing basis, some may not be in a position to do so if the Resort Debtors cannot pay
them on a regular basis. Without the background knowledge, expertise, and familiarity that the
OCPs have relative to the Resort Debtors and their operations, the Resort Debtors undoubtedly
would incur additional and unnecessary expenses in educating replacement professionals about
the Resort Debtors’ business and financial operations.
178.

The Resort Debtors’ estates and their creditors are best served by avoiding any

disruption in the professional services that are required for the day-to-day operation of the Resort
Debtors’ businesses. Moreover, in light of the substantial number of OCPs, and the significant
costs associated with the preparation of employment applications for professionals who will
receive relatively modest fees, the Resort Debtors submit that it would be impractical, inefficient,
and extremely costly for the Resort Debtors and their legal advisors to prepare and submit
individual applications and proposed retention orders for each OCP.
179.

Moreover, in light of the substantial number of OCPs and the significant costs

associated with the preparation of employment applications for professionals who will receive
relatively modest fees, the Resort Debtors submit that it would be impractical, inefficient, and
extremely costly for the Resort Debtors and their legal advisors to prepare and submit individual
applications and proposed retention orders for each OCP. The Resort Debtors seek permission to
continue to employ the OCPs postpetition and to retain any new OCP postpetition without
requiring each OCP to file a formal application for employment or compensation pursuant to
§§ 327, 328, 329 or 330 of the Bankruptcy Code. Specifically, with respect to the OCPs, the
Resort Debtors request that (i) the Court dispense with the requirement of individual
employment applications and retention orders, and (ii) each OCP be retained as of the Petition

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Date on terms substantially similar to those in effect prior to the Petition Date, but subject to the
terms and procedures outlined in the above-named motion (the "Compensation Procedures").
180.

Although some of the OCPs may hold relatively small unsecured claims against

one or more of the Resort Debtors in connection with services rendered to such Debtor
prepetition, the Resort Debtors do not believe that any of the OCPs have an interest materially
adverse to the Resort Debtors, their creditors or other parties in interest.
181.

Therefore, the Resort Debtors submit it is in the best interest of all creditors and

parties in interest to avoid any disruption in the professional services that are required for the
day-to-day operation of the Resort Debtors’ businesses by retaining and compensating the OCPs
in accordance with the Compensation Procedures.

59

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62
Case 09-21481-AJC

Doc 5

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Page 60 of 61

Fontainebleau Las Vegas
Retail, LLC

100%

Fontainebleau Las Vegas
Retail Parent, LLC

100%

100%

Fontainebleau Las Vegas
Retail Mezzanine, LLC

Borrower on Credit
Facility

Borrower under
Retail Loan

Borrower
under Retail
Mezz Loan

Case 09-21481-AJC

Fontainebleau Las
Vegas, LLC

100%

Fontainebleau
Las Vegas Capital Corp.

100%

100%

Co-issuers of Notes
Guarantors of Credit Facility

Guarantor of:
- Notes
- Credit
Facility

Guarantor of:
- Notes
- Credit Facility

Page 61 of 61

Fontainebleau Las Vegas
Holdings, LLC

Filed 06/10/09

EXHIBIT "A"

Doc 5

Fontainebleau Resort
Properties I, LLC

100%

Fontainebleau Resort
Holdings, LLC
(DE)

100%

Fontainebleau Resorts, LLC

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EXHIBIT H

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EXHIBIT K

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12

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12

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12

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12

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12

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12

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12

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12

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12

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12

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22

EXHIBIT L

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22

IN THE CIRCUIT COURT OF THE
ELEVENTH JUDICIAL CIRCUIT, IN
AND FOR MIAMI-DADE COUNTY,
FLORIDA
GENERAL JURISDICTION DIVISION
CASE NO. 09-75602-CA-15
FIDELITY NATIONAL TITLE INSURANCE
COMPANY; LAWYERS TITLE INSURANCE
CORPORATION; COMMONWEALTH LAND
TITLE INSURANCE COMPANY;
TRANSNATION TITLE INSURANCE
COMPANY; ALAMO TITLE INSURANCE,
CHICAGO TITLE AND TRUST COMPANY;
TICOR TITLE INSURANCE COMPANY;
TICOR TITLE INSURANCE COMPANY OF
FLORIDA; SECURITY UNION TITLE
INSURANCE COMPANY; and FIRST
AMERICAN TITLE INSURANCE
COMPANY,
Plaintiffs,
VS.

FONTAINEBLEAU RESORTS, LLC;
TURNBERRY WEST CONSTRUCTION,
INC.; and TURNBERRY RESIDENTIAL
LIMITED PARTNER, L.P.,
Defendants.

AMENDED COMPLAINT
Plaintiffs Fidelity National Title Insurance Company, Lawyers Title Insurance
Corporation, Commonwealth Land Title Insurance Company, Transnation Title Insurance
Company, Alamo Title Insurance, Chicago Title and Trust Company, Ticor Title Insurance
Company, Ticor Title Insurance Company of Florida, Security Union Title Insurance Company,
and First American Title Insurance Company (collectively, "Title Companies") sue defendants

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Fontainebleau Resorts, LLC, Turnben- y West Construction, Inc., and Tumberry Residential
Limited Partner, L.P., and allege:

PARTIES
The Plaintiffs
Plaintiff Fidelity National Title Insurance Company is a California corporation
transacting business in Florida as a duly licensed title insurer.
2.

Plaintiff Lawyers Title Insurance Corporation is a Nebraska corporation

transacting business in Florida as a duly licensed title insurer.
3.

Plaintiff Commonwealth Land Title Insurance Company is a Nebraska

corporation transacting business in Florida as a duly licensed title insurer.
4.

Plaintiff Transnation Title Insurance Company is a Nebraska corporation

transacting business in Florida as a duly licensed title insurer.
5.

Plaintiff Alamo Title Insurance is a Texas corporation transacting business in

Florida as a duly licensed title insurer.
6.

Plaintiff Chicago Title and Trust Company is an Illinois corporation transacting

business in Florida as a duly licensed title insurer.
7.

Plaintiff Ticor Title Insurance Company is a California corporation transacting

business in Florida as a duly licensed title insurer.
8.

Plaintiff Ticor Title Insurance Company of Florida is a Nebraska corporation

transacting business in Florida as a duly licensed title insurer.
9.

Plaintiff Security Union Title Insurance Company is a California corporation

transacting business in Florida as a duly licensed title insurer.
10.

Plaintiff First American Title Insurance Company is a California corporation

transacting business in Florida as a duly licensed title insurer.
2
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The Defendants
11,

Defendant Tumberry West Construction, Inc. ("TWC") is a Nevada corporation

created for the sole purpose of perfouning general contractor services to benefit defendant
Fontainebleau Resorts (as defined below) and the Borrowers (also defined below) at the
Fontainebleau Project. TWC has a principal place of business at 19501 Biscayne Boulevard,
Suite 400, Aventura, Florida 33180. TWC — through Jeffrey Soffer — signed the Indemnity
Agreement in favor of plaintiff Title Companies that is the subject of this action.
12.

Defendant Turnberry Residential Limited Partner, L.P. ("Turnberry Residential")

is a Delaware limited partnership that was formed on August 31, 2004. Turnberry Residential
also has a principal place of business at 19501 Biscayne Boulevard, Suite 400, Aventura, Florida
33180. Turnberry Residential owns a 99.99% limited partnership interest in Tumberry
Residential Developers, L.P. ("TRD"), which was created to form a holding company for
residential and commercial development entities. Turnberry Residential also owns and/or
controls the following entities by ownership of a majority voting interest: Turnberry Investment
Company, L.P., TRD and its subsidiaries, Turnberry Residential Management, L.P., Turnberry
Lansing, LP, Turnberry Houston Tower, L.P., Sea Breeze Ocean Developers, Ltd., Sea Breeze
Ocean Developers 5, Ltd, G-Site, Limited Partnership, 1881 Rosslyn Associates, LLC,
Turnberry/MGM Grand Towers, LLC (MGM/The Residences), Turnberry Pavilion Partners,
L.P. (Tumberry Place), and Tumberry Towers, L.P. (Tumberry Towers, Las Vegas).
13.

Turnberry Residential — also through Jeffrey Soffer — signed the Indemnity

Agreement in favor of plaintiff Title Companies that is the subject of this action. As set forth in
more detail below, at the same time, Turnberry Residential — again through Jeffrey Soffer — also
signed a Completion Guaranty dated June 6, 2007 in favor of Bank of America, as disbursement
agent, and Wells Fargo Bank, as Trustee under the Indenture Agreement (now assigned to U.S.
3
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Bank, as successor trustee). The Completion Guaranty was attached to and incorporated in the
Indemnity Agreement that is the subject of this action.
14.

Defendant Fontainebleau Resorts, LLC ("Fontainebleau Resorts") is a Delaware

limited liability company that was formed on February 16, 2005, having its principal place of
business at 19950 West Country Club Drive 8th, Aventura, Florida 33180. Fontainebleau
Resorts also signed the Indemnity Agreement in favor of plaintiff Title Companies that is the
subject of this action.
15.

Fontainebleau Resorts wholly owns Fontainebleau Resort Holdings, LLC

("Holdings"), which wholly owns (i) Fontainebleau Resort Properties 1, LLC ("FBRP I"); (ii)
Fontainebleau Resort Properties H, LLC ("FBRP H") and (iii) Fontainebleau Resorts Enterprises,
LLC ("Enterprises"). FBRP 1, in turn, owns 99% of Fontainebleau Las Vegas, LLC and wholly
owns Fontainebleau Las Vegas II, LLC. Both Fontainebleau Las Vegas, LLC and Fontainebleau
Las Vegas 11, LLC signed the Indemnity Agreement that is the subject of this action, but neither
is being sued herein because, after Fontainebleau Las Vegas 11, LLC merged into Fontainebleau
Las Vegas, LLC, it (Fontainebleau Las Vegas, LLC) filed a Chapter 11 Petition in the United
States Bankruptcy Court for the Southern District of Florida, in the consolidated matter entitled
In re Fontainebleau Las Vegas Holdings, LLC et al., Case No. 09-21481-BKC-AJC.
16.

Fontainebleau Resorts also wholly owns Fontainebleau Florida Hotel Properties,

LLC ("FBFHP"). FBFHP, in turn, wholly owns (i) Fontainebleau Florida Tower 2, LLC ("FB
II"); (ii) Fontainebleau Florida Tower 3, LLC ("FB III"); (iii) Fontainebleau Tower 3 Garage
Restaurant, LLC ("FBGR III"); (iv) Fontainebleau Florida Tower 4, LLC ("FB IV"); and (v)
Fontainebleau Florida Hotel, LLC ("FB 1"). Soffer Fontainebleau Associates Limited
Partnership ("SFALP"), a Florida limited partnership controlled principally by Jeffrey Soffer,

4
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owns 82.4% of defendant Fontainebleau Resorts' outstanding Class A Units with the remaining
Class A Units held by other executives of Fontainebleau Resorts and other investors.

Jeffrey Soffer and his and the defendants' shell game with the entities
17.

Jeffrey Soffer ("Soffer") is an individual having his principal place of business at

19501 Biscayne Boulevard, Suite 400, Aventura, Florida 33180. Soffer is the Chairman and
Chief Executive Officer of defendant Fontainebleau Resorts and a member of its Board of
Managers. Soffer is the 70% owner and managing member of Soffer GP, LLC ("Soffer GP"),
which is the general partner of defendant Turnberry Residential. Soffer is also the President,
Secretary, Treasurer, and Director of defendant TWC. As stated above, Soffer signed the
Indemnity Agreement in favor of plaintiff Title Companies that is the subject of this action on
behalf of several of the indemnitors. Soffer also signed the Completion Guaranty that is attached
to and incorporated in the Indemnity Agreement.
18.

Title Companies are informed and believe that Soffer used the various entities that

he owned and/or controlled as alter-egos of each other. Title Companies are informed and
believe that there exists a unity of interest and ownership between and among the various
entities. In other words, the assets and management of the various entities have been
intermingled, formalities have not been maintained, and the assets have been manipulated by and
among the defendants (including undercapitalization) to assist them in evading obligations and
debt payments. Title Companies are informed and believe that these entities were created and
manipulated to evade liability and collectively operated as a single enterprise.
19.

For example, Title Companies are informed and believe that defendant Turnberry

Residential operates with grossly inadequate capital and presently does not have sufficient assets
to meet its obligations on all projects, including Turnberry/MGM Grand Towers, Turnberry
Pavilion Partners and Turnberry Towers. Defendant Turnberry Residential's capital appears to
5
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be illusory or is trifling compared to the obligations that it has assumed, not the least of which is
representing and warranting to Title Companies — in the Indemnity Agreement that is the subject
of this action — that it had and would maintain "Consolidated Net Worth" of not less than $200
million and Marketable Investments of not less than $75 million until June 30, 2008 and of not
less than $85 million thereafter.
20.

Indeed, defendant TWC — which is a party to the Indemnity Agreement — is a

mere shell, created through the issuance of 1000 shares having a par value of $1.00, each totaling
$1,000. TWC was grossly undercapitalized, and appears to have been created to shield
liabilities, obligations and debts.
21.

In contrast, Title Companies are informed and believe that TRD — which was not

a party to the Indemnity Agreement — is the actual entity with assets exceeding $1 billion.
Defendant Turnberry Residential, however, is the 99.99% limited partner and owner of TRD,
and one of Tumberry Residential's main purposes was to own TRD,
22.

Title Companies are informed and believe that Soffer, as Managing Member and

owner of Soffer GP, defendant Turnberry Residential's general partner, caused Tumberry
Residential to be created and incorporated solely for the purpose to exist as a limited partner in
TRD. As such, these corporate and partnership entities are a fiction, created to deceive lenders,
title companies and members of the public, and to hide assets and avoid liabilities. Title
Companies are further informed and believe that there are multiple "Organization Charts" for the
"Fontainebleau Companies" and the "Turnberry Companies," some of which are inconsistent
with each other and/or misleading.
23.

Title Companies are informed and believe that the corporate defendants maintain

the use of the same office or business location and employ the same employees and attorneys.
Title Companies are further informed and believe that the daily operations of the entities are not
6
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maintained separately. For example, Soffer GP, Tumberry Residential, TWC, and TRD all use
the office located at 19501 Biscayne Boulevard, Suite 400, Aventura, Florida 33180.
24. Title Companies are informed and believe that the corporate entities each have
common managers, directors, officers, and owners. For example, Title Companies are informed
and believe that:
a.

Soffer is the 70% managing member and owner of Soffer GP.

b.

Soffer GP, as managed and primarily owned by Soffer, is the general

partner and owner of Turnberry Residential. Tumberry Residential is a 99.99% owner and
limited partner of TRD, which is also managed by Soffer.
c.

Soffer is also the President, Secretary, Treasurer, and Director of TWC.

d.

Soffer is also the President, Chairman and Manager of Fontainebleau

e.

According to consolidated notes to financial statements filed by

Resorts.

Fontainebleau Resorts, "Jeffrey Soffer is a significant owner and officer of the group of related
individuals and companies, collectively referred to as the 'Turnberry Group' of companies."
f.

According to the declaration of Howard C. Karawan, filed in the In re

Fontainebleau Las Vegas Holdings, LLC et al, bankruptcy proceeding: "All major decisions in
respect to the Project (defined below) have been made by the Board of Managers of
Fontainebleau Resorts, LLC. The Board of Managers has continuously exercised its ultimate
control over the management, business activities (including the design and development of the
Project) and capital structure/financing .... 1 report directly to the Board of Managers ..
including the ultimate controlling person of the Fontainebleau family of companies and
Chairman of Fontainebleau Resorts, LLC, Jeffrey Soffer ...." (Howard Karawan Declaration,
filed June 10, 2009, at ¶ 12.)
7
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25.

Title Companies are informed and believe that these entities do not maintain

adequate minutes or adequate corporate records, and there is a confusion of the records of the
separate entities. Attached as Exhibit 2 are organizational charts of these entities. Title
Companies are informed and believe that these organizational charts are conflicting and
inconsistent. Likewise, during the August 21, 2009 pre-motion hearing on a contemplated
Motion to Remand an action pending in the Southern District of New York entitled Deutsche
Bank Trust Company Americas v. Jeffrey Soffer et al.,

09 C1V 7089, counsel for Soffer and
-

-

Turnberry Residential described Soffer as "the ultimate principal of both Fontainebleau and of
Turnberry."

GENERAL ALLEGATIONS
26.

The Fontainebleau Miami Beach hotel, founded in 1954, is a high-profile and

award winning luxury hotel. The iconic hotel is regularly featured in films (e.g., Goldfinger,
Scarface) and television shows (e.g., Top Chef, The 0.C.), and recently reopened after receiving
a one-billion dollar renovation and makeover.
27.

Seeking to leverage the "Fontainebleau" brand name that his father helped to

create, Soffer, then 39-years-old, conceived of the construction of a $2.8 billion Fontainebleau
Las Vegas casino and resort (the "Project" or "Property") situated on 24.4 acres on the Las
Vegas Strip. The Project as designed consists of a 68-story glass skyscraper featuring over 3,800
guest rooms, suites and condominium units; a 100-foot high three-level podium complex
containing casino and gaming areas, restaurants and bars, a spa and salon, a live entertainment
theatre, and a seven-acre rooftop pool deck; and a 353,000 square-foot convention center. The
Project also included retail space of 286,500 square-feet, containing retail shops, restaurants and
a nightclub.

8
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28.

The Project is situated on two parcels of land. Soffer caused to be created two

limited liability companies — Fontainebleau Las Vegas, LLC and Fontainebleau Las Vegas II,
LLC — each taking title to one of the parcels. (Fontainebleau Las Vegas, LLC and Fontainebleau
Las Vegas II, LLC are collectively referred to as "Borrowers.")' The Borrowers were
subsidiaries of defendant Fontainebleau Resorts and managed by Holdings. (A true and correct
copy of the legal description of the Property is attached as Exhibit A to Exhibit 1.)
Soffer needs $2.8 billion in financing, and
the Banks won't do it without title insurance
29.

In order to procure $2.8 billion in financing for the Project, the Soffer group of

companies determined it necessary to negotiate and structure a credit facility involving multiple
parties and numerous integrated agreements.
The Borrowers approached Bank of America, N.A. ("Bank of America")

a.

as agent for a syndicate of lenders and negotiated the terms of a Credit Agreement (the "Credit
Agreement") whereby the lenders agreed to loan $1.85 billion. The first tranche was a $700
million term loan (the "Term Loan") with a seven-year maturity date. The second tranche was a
$350 million delay draw term loan (the "Delay Draw") with a seven-year maturity date. The
third tranche was an $800 million revolving loan (the "Revolver Loan") with a six-year maturity
date. As partial security, the Borrowers agreed to execute a deed of trust, as trustors, in favor of
Bank of America, as beneficiary, to be recorded in first priority position.
b.

The Borrowers also negotiated with Wells Fargo Bank, as trustee, for the

issuance of certain notes (the "Notes") in the principal amount of $675 million under the terms of
the Indenture Agreement. As security, the Borrowers agreed to execute a deed of trust, as

As stated above, after Fontainebleau Las Vegas II, LLC merged into Fontainebleau Las Vegas, LLC,
Fontainebleau Las Vegas, LLC filed a Chapter ll Petition in United States Bankruptcy Court for the Southern
District of Florida in the consolidated matter entitled In re Fontainebleau Las Vegas Holdings, LLC et al., Case No.
09-2148 l -BKC-AJC.

9
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trustors, in favor of Wells Fargo Bank, as Trustee and beneficiary, to be recorded in second
priority position.
30.

Bank of America, as agent under the first Credit Facility, and disbursing agent

under the Disbursement Agreement, expressly conditioned the funding of the $1.85 billion
financing package on the issuance of an ALTA Loan Policy in the amount of $1.85 billion
providing coverage against any recorded mechanic's lien asserting priority over Bank of
America's first deed of trust. A similar express condition was imposed by Wells Fargo Bank, as
Trustee under the contemplated Indenture Agreement for the Notes. As an integral part of the
transaction, plaintiff Title Companies were thus requested to provide title insurance protection
consistent with the requirements of Bank of America and Wells Fargo Bank — i.e., agreeing to
insure the priority of the contemplated deeds of trust in favor of these lenders in first and second
priority position.
The Title Companies won't issue title insurance
without a bullet-proof Indemnity Agreement
31.

Title Companies conditioned the issuance of the two ALTA loan policies on

execution of an express written indemnification agreement by the Borrowers and other entities
holding sufficient assets and capital to indemnify Title Companies from the risk of multiple
recorded mechanics' liens. Thus, plaintiff Title Companies and defendants Turnbeny
Residential, TWC, the Borrowers, and defendant Fontainebleau Resorts negotiated the terms of a
written indemnity agreement (the "Indemnity Agreement"), which was executed on June 5,
2007. (Defendants Turnberry Residential, TWC and Fontainebleau Resorts are referred to
collectively as the "defendant Indemnitors.") A copy of the Indemnity Agreement (and the
exhibits attached to it) is attached as Exhibit 1.

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32.

The Indemnity Agreement was executed by Soffer as "Authorized Signatory" on

behalf of defendants and Indemnitors TWC and Tumben-y Residential. Title Companies are
informed and believe that Soffer executed the Indemnity Agreement in the State of Florida. Title
Companies allege, on infoimation and belief, that former manager Glenn Schaeffer also executed
the Indemnity Agreement, on behalf of defendant Fontainebleau Resorts, in the State of Florida.
33.

The Indemnity Agreement specifically recognizes that without the title insurance

provided by Title Companies (which was conditioned on receipt of the Indemnity Agreement
and the various representations contained therein), the Soffer entities would not have been able
to secure their $2.8 billion in funding:
Each of the Indemnitors acknowledges that it will receive a direct and
material benefit from the signing of this Indemnity Agreement, it being
expressly understood that without execution of this Indemnity Agreement,
the Title Companies would not issue the Title polices. Further, it being
expressly understood that without issuance of the Title Policies, the
lenders shown as the insureds in the Title Policies would not advance
funds for construction of improvements on the Property that will
ultimately benefit each of the Indemnitors. (Ex. 1 at ¶ C.)
34.

The Indemnity Agreement provides that the defendant Indemnitors: (I) jointly

and severally agree to hold harmless Title Companies from liability, loss or damage incurred by
Title Companies arising from mechanics' liens filed against the Property, including attorneys'
fees incurred by the Title Companies; (2) shall cause to be filed a Notice of Completion covering
the Project on the subject matter property; (3) shall cause to be recorded a statutory mechanic's
lien release bond or surety bond releasing the property from each recorded mechanic's lien upon
demand by the Title Companies; and (4) pay for and provide a defense against all actions relating
to mechanics' liens, all for the protection of the Title Companies.
35.

Under the Indemnity Agreement, the defendant Indemnitors further:

11
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a.

Warranted the accuracy and truthfulness of all financial statements and

other information submitted to Title Companies (Ex. 1 at 1 2.C.); and
b.

Agreed to promptly advise Title Companies in writing of any material

adverse change to the financial condition of any defendant Indemnitor. (Ex. 1 at et 2.C.)
36.

Importantly, Tumberry Residential represented in the Indemnity that it had — and

would maintain — "Consolidated Net Worth" (as that phrase is defined in the Completion
Guaranty), of not less than $200 million and Marketable Investments (as also defined in the
Completion Guaranty), of not less than $75 million until June 30, 2008, and of not less than $85
million thereafter. Turnberry Residential's Completion Guaranty was attached to and
incorporated by reference as Exhibit "C" to the Indemnity Agreement (Exhibit 1 hereto).
37.

The Completion Guaranty dated June 6, 2007 was executed as a condition of the

Credit Agreement and related lender financing agreements for the Project. Soffer also executed
the Completion Guaranty (through Soffer GP, an owner and sole general partner of Turnberry
Residential). Because the Completion Guaranty's phrases (i.e., "Consolidated Net Worth" and
"Marketable Investments") are used in the Indemnity Agreement, and because the Completion
Guaranty was referred to, attached to, and incorporated in the Indemnity Agreement, it was
always understood that the Completion Guaranty and the Indemnity Agreement would be
construed and interpreted together. The Completion Guaranty's definition of "Consolidated Net
Worth" is: "the consolidated partners' capital of Completion Guarantor [Turnberry Residential]
as of that date, determined in accordance with generally accepted accounting principles,
consistently applied."2

The Completion Guaranty defines "Marketable Investments" as: "cash, cash equivalents and liquid investments
which are reasonably approved by the Disbursement Agent [Bank of America] which are owned by the Completion
Guarantor [Turnberry Residential] and not subject to any Liens."
2

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38.

In other words, although the "Consolidated Net Worth" representation in the

Indemnity Agreement came from Turnberry Residential, it was predicated on all of Turnberry
Residential's "consolidated partners' capital." Indeed, no other interpretation is possible,
because Turnberry Residential does not itself hold any material assets, apart from its ownership
interests in various other entities that themselves hold title to the underlying assets. To that end,
in connection with the negotiation and execution of the Indemnity Agreement, the defendant
Indemnitors provided Title Companies with financial statements (which, as set forth above, the
defendant Indemnitors warranted the accuracy and truthfulness of). Those financial statements
were on behalf of Tumberry Residential "and subsidiaries" and Fontainebleau Resorts "and
subsidiaries." Those financial statements — with the consolidated "partners' capital" included
therein — show a partners' capital of slightly over $200 million. Copies of the financial
statements that Title Companies received are attached as Composite Exhibit 3,
39.

At the same time, defendant TWC (which, again, was the Soffer general

contractor that was helping to build the Project), through Soifer (TWC's President, Secretary and
Treasurer), executed an Affiliated Subordination Agreement. This was a critical agreement,
because in it, TWC agreed that all sums due to it were contractually subordinated to the debt
owed under the Credit Agreement to Bank of America, as agent, for all the lenders, and to Wells
Fargo Bank, as Trustee for the noteholders under the Indenture Agreement. In other words,
because Title Companies were insuring against mechanics' liens (based on the Indemnity
Agreement), Soffer's entity, TWC, was agreeing that any mechanics' liens that it had by virtue
of being the Project's general contractor would be subordinated to the debts owed to Bank of
America (as agent for all the lenders) and Wells Fargo Bank (as Trustee for the noteholders).

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With the title insurance in place, Soffer proceeds to
close the transaction, and billions of dollars begin to flow
40.

The transaction closed on June 6, 2007, the day after the Indemnity Agreement

was provided to Title Companies:
The Credit Agreement was executed by Soffer on behalf of the Borrowers

a.

as "Executive Chairman."
b.

Soffer, on behalf of Borrowers, and Bank of America, Wells Fargo Bank,

and others, executed a 100-page Disbursement Agreement (the "Master Disbursement
Agreement"), which set forth the order of funding under the Credit Facility, the Notes, and
certain retail financing.
c.

Numerous affiliated agreements were executed by Soffer including the

following: Affiliated Subordination Agreement, Guaranty, Completion Guaranty, Credit
Enhancement Fee Agreement, Affiliated Deferred Payment Agreement and Letter of Credit
Reimbursement Agreement (and Guaranty).
d.

Soffer executed, on behalf of the Borrowers, two deeds of trust, as

trustors, in favor of the beneficiaries, Bank of America (whose deed of trust was recorded in lust
priority position) and Wells Fargo Bank (whose deed of trust was recorded in second priority
position).
e.

Title Companies caused to be issued two separate ALTA Loan policies in

connection with loans advanced under the Credit Agreement by Bank of America, in its capacity
as Agent, and by Wells Fargo Bank, in its capacity as Mortgage Notes and Indenture Trustee
under the Indenture Agreement dated June 6, 2007. (Copies of the Proforma Policies are
attached as Composite Exhibit B to Exhibit 1.)

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Loan disbursements and construction proceeded from June 2007 through

f.
March 10, 2009.

The Project fails; the Banks terminate the funding;
and Soffer tries to undermine the Indemnity Agreement
41.

On April 20, 2009, Bank of America, on behalf of itself and other revolver

lenders, terminated any further obligation to fund proceeds of the Revolver Loan under the
Credit Agreement, asserting various conditions of default under the agreements. On June 9,
2009, pursuant to decisions made by defendant Fontainebleau Resorts' Board of Managers,
Fontainebleau Las Vegas, LLC (after Fontainebleau Las Vegas II, LLC merged into it) filed a
Chapter 11 Petition in United States Bankruptcy Court for the Southern District of Florida in the
consolidated matter entitled In re Fontainebleau Las Vegas Holdings, LLC et aL, Case No. 0921481-BKC-AJC.
42.

The Board of Managers for defendant Fontainebleau Resorts (as well as

defendants Turnberry Residential and Fontainebleau Resorts) well understood that substantial
monies were owed to third party subcontractors of labor and materials by defendant TWC, as
general contractor and related affiliated entity, and that the decision to file Chapter 11 Petitions
would lead to the recordation of mechanics' liens asserting that monies were due and payable in
excess of $600 million dollars. Nonetheless, in a clear conflict of interest, defendant
Fontainebleau Resorts caused the Chapter 11 Petitions to be filed.
43.

To make matters worse and exacerbate the clear conflicts of interest, Soffer (as

President, Secretary and Treasurer of defendant TWC) thereafter caused to be recorded a
mechanic's lien in favor of TWC in the amount of $668,990,933.27 and later filed a Complaint
against Bank of America, Wells Fargo Bank (U.S. Bank as its successor), and all lenders and
noteholders as Adversary Proceeding No. 09-01621, claiming that the Affiliated Subordination
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Agreement — an Agreement that he signed on behalf of all parties (i.e., TWC, Fontainebleau
Resorts and Turnberry Resort) — was "void" and "unenforceable," and that the mechanic's lien
recorded by defendant TWC "took priority over" and was "senior to" the interests secured under
the first and second deeds of trust. These allegations reveal the corporate shell game perpetrated
by Soffer and the various entities, especially given the well recognized law that prohibits an
owner or its affiliate from recording a mechanic's lien against its own property.
44.

It is important to note that, during this entire time, no party to the Indemnity

Agreement has ever advised Title Companies, in writing or otherwise, of any material adverse
change to the financial condition of any defendant Indemnitor, as was clearly required under the
Indemnity Agreement. (Ex. 1 at ¶ 2,C.)

The bankruptcy and the breaches of the Indemnity Agreement
45.

On June 9, 2009, pursuant to decisions made by defendant Fontainebleau Resorts'

Board of Managers, Fontainebleau Las Vegas, LLC (after Fontainebleau Las Vegas II, LLC
merged into it) filed a Chapter 11 Petition in the United States Bankruptcy Court in the matter
entitled In re Fontainebleau Las Vegas Holdings, LLC et al., Case No. 09 21481 BKC AJC.
-

46.

-

-

Thereafter, on July 14, 2009, defendant TWC filed a Complaint in Adversary

Proceeding, Case No. 09-21481-AJC, seeking a detenuination that the Affiliated Subordination
Agreement was void and unenforceable and seeking to establish the validity and priority of
TWC's recorded mechanic's lien.
47.

As of August 17, 2009, there existed 249 recorded mechanics' liens against the

Property, totaling $1,177,347,287.59. Several of these mechanic lien claimants had filed civil
actions to foreclose their liens in the Clark County District Court, Las Vegas, Nevada. 3

This total includes the lien filed by TWC in the amount of $668,990,933.27 which may include claims on behalf
of sub-contractors.

3

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48.

Title Companies have fully complied with their obligations, including their

agreement to issue ALTA loan policies dated June 7, 2007 in favor of the first and second trust
deed holders, Bank of America and Wells Fargo Bank. On August 17, 2009, Title Companies
made a written demand on the defendant Indemnitors to hold harmless, defend and indemnify
Title Companies from and against claims, liability, loss or damage suffered as a consequence of
the recorded mechanics' liens, the pending foreclosure actions, and TWC's Adversary
Proceeding.
Pursuant to paragraph 2B of the Indemnity Agreement, Title Companies

a.

requested that the defendant Indemnitors retain counsel to defend the lenders, Bank of America
and U.S. Bank, as Successor Trustee to Wells Fargo Bank, in connection with all issues relating
to the validity, priority, extent and enforcement of the recorded mechanics' liens, including
defendant TWC's recorded mechanic's lien and TWC's attempt to void the Affiliated
Subordination Agreement, the related mechanic's lien claims currently addressed in the Debtors'
Chapter 11 cases, as well as the pending foreclosure actions filed in the Clark County District
Court, Las Vegas, Nevada.
b.

Pursuant to paragraph 3 of the Indemnity Agreement, Title Companies

also demanded that the defendant Indemnitors take all necessary action to record mechanics' lien
release bonds, or other appropriate surety bonds, or otherwise cause to release the recorded
mechanic's liens from title to the Property.
c.

The defendant Indemnitors have failed and continue to fail to honor their

obligations under the Indemnity Agreement.
49.

Defendant Indemnitors have breached the express terms and conditions of the

Indemnity Agreement by failing to record release bonds or other appropriate surety bonds or
otherwise causing the release of the recorded liens from title to the Project. Had the defendant
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Indemnitors recorded such release bonds or other appropriate surety bonds or otherwise caused
the release of the recorded liens from title to the Project, the Title Companies would never have
been involved in the litigation related to the mechanics' liens, which was what the Title
Companies bargained for under the Indemnity Agreement.
50.

Defendant Indemnitors have further breached the Indemnity Agreement by failing

to pay for and provide a defense to the insured Lenders for all pending actions related to the
recorded mechanics' liens, including TWC's Complaint and the pending proceedings in the
Chapter 11 Bankruptcy cases. Defendant Indemnitors have further breached the Indemnity
Agreement by failing and refusing to defend and indemnify Title Companies in connection with
these same matters.
51.

Title Companies are informed and believe that Turnberry Residential and its

partners further breached the Indemnity Agreement by failing to maintain a "Consolidated Net
Worth" of at least $200 million as required under the Indemnity Agreement.
52.

Title Companies are informed and believe that Turnberry Residential and its

partners further breached the Indemnity Agreement by failing to maintain "Marketable
Investments" of at least $75 million until June 30, 2008, and of not less than $85 million
thereafter.
53.

Defendant Indemnitors further breached the Indemnity Agreement by failing to

promptly advise Title Companies in writing of material adverse changes in the financial
condition of defendant Indemnitors, all as required under the Indemnity Agreement.
54.

As a further direct and proximate result of the material breaches of the Indemnity

Agreement, Title Companies have incurred, and will continue to incur, attorneys' fees and costs
relating to the defense of TWC's Complaint, the defense of the mechanic lien claims in the
Bankruptcy proceedings, as well as those filed in Las Vegas, Nevada.
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55.

The Indemnity Agreement includes an attorneys' fee provision which entitles the

prevailing party in any dispute to recover its reasonable attorneys' fees, costs and expenses.
56.

The Indemnity Agreement provides that it is to be governed and construed in

accordance with the laws of the State of Nevada.

COUNT I
(Breach of the Indemnity Agreement against Defendants
Tumberry Residential, TWC and Fontainebleau Resorts)
57.

Title Companies incorporate by reference each allegation contained in paragraphs

1 through 56 above.
58.

Title Companies and Indemnitors entered into a valid and enforceable contract

pursuant to which Indemnitors were required, among other things, to record a statutory release of
lien bond or surety bond or to otherwise release the Property from any recorded mechanics' liens
and to defend and indemnify Title Companies in connection with any suits related to the
recorded mechanics' liens.
59.

Indemnitors breached the Indemnity Agreement as described herein.

60.

As a direct and proximate result of the foregoing breaches of the Indemnity

Agreement by the defendant Indemnitors, Title Companies have suffered damages and will
continue to suffer damages, potentially exceeding $1 billion.
WHEREFORE, Title Companies request damages according to proof at time of trial or
entry of judgment, attorneys' fees, costs of suit, and such further relief as this Court may deem
just and proper.

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COUNT II

(Specific Performance of the Indemnity Agreement against
Defendants Turnberry Residential and Fontainebleau Resorts)
61.

Title Companies incorporate by reference each allegation contained in paragraphs

1 through 56 above.
62.

Title Companies and Indemnitors entered into a valid and enforceable contract

pursuant to which Indemnitors were required, among other things, to record a statutory release of
lien bond or surety bond or to otherwise release the Property from any recorded mechanics' liens
and defend and indemnify Title Companies in connection with any suits related to the recorded
mechanics' liens.
63.

Indemnitors breached the Indemnity Agreement as described herein.

64,

Title Companies are entitled to specific performance of the Indemnity Agreement,

namely paragraphs 2B and 3, because Indemnitors failed to record release bonds or other
appropriate surety bonds or to otherwise cause the release of the recorded liens from title to the
Property, and Indemnitors further failed and refused to defend and indemnify Title Companies in
connection with the actions related to the recorded mechanics' liens.
65.

Title Companies have complied in all respects with their covenants and

obligations reflected in the Indemnity Agreement.
66.

Due to the corporate shell games and financial insolvency of the defendant

Indenanitors, Title Companies have no adequate remedy at law.
67.

Accordingly, justice requires that this Court exercise its equitable power to

enforce the terms of the Indemnity Agreement and require the defendant Indemnitors to record
release bonds or other appropriate surety bonds or to otherwise cause the release of the recorded

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liens from title to the Property and to provide a defense for Title Companies in the lawsuits
related to the recorded mechanics' liens.
WHEREFORE, the Title Companies demand judgment for specific performance of the
Indemnity Agreement against the defendant Indemnitors (excluding TWC), plus attorney's fees
and costs, and such farther relief as this Court deems proper.
REQUEST FOR JURY TRIAL
Plaintiff Title Companies hereby request a trial by jury on all issues so triable.
Dated: November 16th, 2009.
Respectfully submitted,
TEW CARDENAS LLP
Attorneys for Plaintiffs
Four Seasons Tower, 15th Floor
1441 Brickell enue
33131-3407
Miami, Fl
Telep
5) 536-1112
5) 536-1116

M. Lev
.A.
lorida Bar
0328731
mail: [e-mail]
Jeffrey C. Schneider, P.A.
Florida Bar No.: 933244
Email: [e-mail]

D

and
Richard G. Carlston
Amy Matthew, Esq.
Attorneys for Plaintiffs
MILLER STARR REGALIA
1331 North California Blvd., Fifth Floor
Walnut Creek, CA 94596
Telephone: [phone]
Facsimile: 925.933.4126
Email: [e-mail]
Email: [e-mail]
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EXHIBIT M

Case 1:09-md-02106-ASG Document 115-13Entered onon FLSD Docket 07/23/2010Page 1 of of 4
Entered FLSD Docket 11/17/2008
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Case 1:09-md-02106-ASG Document 115-13Entered onon FLSD Docket 07/23/2010Page 2 of of 4
Entered FLSD Docket 11/17/2008
Page 3 3
Case 0:08-cv-61294-CMA Document 61

Case 1:09-md-02106-ASG Document 115-13Entered onon FLSD Docket 07/23/2010Page 3 of of 4
Entered FLSD Docket 11/17/2008
Page 4 3
Case 0:08-cv-61294-CMA Document 61