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)

Case 1:09-md-02106-ASG Document 251 Entered on FLSD Docket 07/27/2011 Page 1 of 2

Case 1:09-md-02106-ASG Document 251 Entered on FLSD Docket 07/27/2011 Page 2 of 2

Case 1:09-md-02106-ASG Document 252 Entered on FLSD Docket 07/28/2011 Page 1 of 3

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 09-MD-02106-CIV-GOLD/GOODMAN
In re:
FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL NO. 2106
This document relates to:
ALL ACTIONS
__________________________________/
JOINT MOTION FOR EXTENSION OF PAGE LIMITS FOR
LEGAL MEMORANDA IN SUPPORT OF AND IN OPPOSITION TO
MOTIONS FOR SUMMARY JUDGMENT AND SUPPORTING DOCUMENTS
Plaintiffs in Avenue CLO Fund, Ltd. v. Bank of America, NA., 09-CV-1047 (D. Nev.) (the
“Avenue Action”), and defendant Bank of America, N.A. (“BANA”) submit this joint motion
respectfully requesting that the Court grant an extension of page limits for their respective
motions for summary judgment and related documents.
WHEREAS, Local Rule 7.1(c)(2) states that legal memoranda are not to exceed twenty
(20) pages in length, with the exception of a reply, which is not to exceed ten (10) pages in
length.
WHEREAS, Local Rule 7.5(c) states that a statement of material facts submitted either in
support of or in opposition to a motion for summary judgment is not to exceed ten (10) pages in
length.
WHEREAS, the litigation involves numerous claims arising from a series of events and
several contract provisions.

Case 1:09-md-02106-ASG Document 252 Entered on FLSD Docket 07/28/2011 Page 2 of 3

WHEREAS, following the conclusion of a fact and expert discovery process which has
seen the production of over 150,000 documents and 32 depositions, the parties intend to file
motions for summary judgment.
WHEREAS, the facts and argument cannot be adequately addressed within the page
limits set forth by Local Rules 7.1(c)(2) and 7.5(c).
NOW, THEREFORE, the undersigned parties hereby respectfully request that this Court
approve the following extensions on page limits referenced in the Local Rules of this Court:
1.

Memoranda of law in support of motions for summary judgment shall not exceed

forty (40) pages in length.
2.

Memoranda of law in opposition to motions for summary judgment shall not

exceed forty (40) pages in length.
3.

Reply memoranda in further support of motions for summary judgment shall not

exceed twenty (20) pages in length.
4.

Statements of material fact submitted in support of and in opposition to motions

for summary judgment shall not exceed thirty (30) pages in length.
5.

Title pages preceding the first page of text in a memorandum, signature pages,

and certificates of service shall not be counted as pages for purposes of this joint motion.
Dated: July 28, 2011

Respectfully submitted,
By: /s/ Christopher N. Johnson
HUNTON & WILLIAMS LLP
Christopher N. Johnson
1111 Brickell Avenue, Suite 2500
Miami, Florida 33131
Telephone: [phone]
Facsimile: [phone]
E-mail: [e-mail]
- and -

2

Case 1:09-md-02106-ASG Document 252 Entered on FLSD Docket 07/28/2011 Page 3 of 3

O’MELVENY & MYERS LLP
Bradley J. Butwin (pro hac vice)
Jonathan Rosenberg (pro hac vice)
Daniel L. Cantor (pro hac vice)
William J. Sushon (pro hac vice)
7 Times Square
New York, New York 10036
Telephone: [phone]
Facsimile: [phone]
Attorneys for Bank Of America, N.A.
- and DIMOND KAPLAN & ROTHSTEIN, P.A.
By: /s/ David Rothstein
David A. Rothstein
2665 South Bayshore Drive, Penthouse Two
Miami, Florida 33133
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
-andHENNIGAN DORMAN LLP
Kirk D. Dillman (pro hac vice)
865 South Figueroa Street, Suite 2900
Los Angeles, California 90017
Telephone: [phone]
Facsimile: [phone]
Attorneys for Plaintiffs Avenue CLO Fund,
Ltd., et al.

46124.000911 EMF_US 36627158v1

3

Case 1:09-md-02106-ASG Document 252-1 Entered on FLSD Docket 07/28/2011 Page 1 of 2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 09-MD-02106-CIV-GOLD/GOODMAN
In re:
FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL NO. 2106
This document relates to:
ALL ACTIONS
__________________________________/
ORDER EXTENDING PAGE LIMITS FOR
LEGAL MEMORANDA IN SUPPORT OF AND IN OPPOSITION TO
MOTIONS FOR SUMMARY JUDGMENT AND SUPPORTING DOCUMENTS
THIS MATTER came before the Court for consideration upon the Joint Motion for the
Extension of Page Limits for Legal Memoranda in Support of and in Opposition to Motions for
Summary Judgment and Supporting Documents [DE __] (the “Motion”) filed by Plaintiffs in
Avenue CLO Fund, Ltd. v. Bank of America, NA., 09-CV-1047 (D. Nev.) and Defendant Bank of
America, N.A. The Court, having considered the Motion, the record, and the representations of
counsel, finds good cause to grant the Motion.
Accordingly, it is hereby ORDERED AND ADJUDGED that:
1.

The Motion [DE __] is GRANTED.

2.

The page limit for memoranda of law in support of motions for summary
judgment is extended from twenty (20) pages to forty (40) pages.

3.

The page limit for memoranda of law in opposition to motions for summary
judgment is extended from twenty (20) pages to forty (40) pages.

4.

The page limit for reply memoranda in further support of motions for summary
judgment is extended from ten (10) pages to twenty (20) pages.

Case 1:09-md-02106-ASG Document 252-1 Entered on FLSD Docket 07/28/2011 Page 2 of 2

5.

The page limit for statements of material facts submitted in support of and in
opposition to motions for summary judgment is extended from ten (10) pages to
thirty (30) pages.

DONE and ORDERED in Chambers in Miami, Florida this ___ day of __________, 2011.

THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE

2

Case 1:09-md-02106-ASG Document 253 Entered on FLSD Docket 08/08/2011 Page 1 of 2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN
IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document applies to:
Case No. 09-CV-23835-ASG.
Case No. 10-CV-20236-ASG.
_________________________________/
MDL ORDER NUMBER 52;
GRANTING JOINT MOTION FOR EXTENSION OF PAGE LIMITS [ECF No. 252]
THIS CAUSE is before the Court upon Plaintiffs in Avenue CLO Fund, Ltd., et al. v.
Bank of America, N.A., et al., Case No. 09-23835 and Defendant Bank of America, N.A.’s
Joint Motion for Extension of Page Limits for Legal Memoranda in Support of and in
Opposition to Motions for Summary Judgment and Supporting Documents (“Motion”) [ECF
No. 252]. Having reviewed the Motion, the record, and being otherwise duly advised, it is
hereby
ORDERED and ADJUDGED that:
1.

The Joint Motion for Extension of Page Limits for Legal Memoranda in Support of
and in Opposition to Motions for Summary Judgment and Supporting Documents
[ECF No. 252] is GRANTED.

2.

All parties shall comply with the following page limits for memoranda of law and as
otherwise indicated:
a.

Motions for Summary Judgment: 40 pages

b.

Oppositions to Motions for Summary Judgment: 40 pages

Case 1:09-md-02106-ASG Document 253 Entered on FLSD Docket 08/08/2011 Page 2 of 2

c.

Replies in Support of Motions for Summary Judgment: 20 pages

d.

Statements of material facts submitted in support of and in opposition to
Motions for Summary Judgment: 30 pages

DONE AND ORDERED in Chambers at Miami, Florida, this 3rd day of August, 2011.

__________________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE
cc:

U.S. Magistrate Judge Jonathan Goodman
Counsel of record

Case 1:09-md-02106-ASG Document 262 Entered on FLSD Docket 08/24/2011 Page 1 of 3

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 09-MD-02106-CIV-GOLD/GOODMAN
In re:
FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL NO. 2106
This document relates to:
ALL ACTIONS
__________________________________/
NOTICE OF SUBSTITUTION OF COUNSEL
PLEASE TAKE NOTICE that attorneys Christopher N. Johnson and Craig Rasile have
left the law firm of Hunton & Williams LLP, and Jamie Zysk Isani of the law firm of Hunton &
Williams LLP, hereby enters an appearance as additional counsel for Defendant Bank of
America, N.A.

The undersigned therefore requests that attorneys Johnson and Rasile be

removed from the CM/ECF noticing system for this case, and requests that all future pleadings
and correspondence be served upon the undersigned.
Respectfully submitted,
Hunton & Williams LLP
Attorneys for Defendant Bank of America, N.A.

By

/s/ Jamie Zysk Isani
Jamie Zysk Isani & Matthew Mannering
Florida Bar Nos. 728861 & 39300
1111 Brickell Avenue, Suite 2500
Miami, FL 33131
[phone] fax 2460
jisani or [e-mail]

HUNTON & WILLIAMS LLP

Case 1:09-md-02106-ASG Document 262 Entered on FLSD Docket 08/24/2011 Page 2 of 3
Case No. 09-MD-02106-CIV-Gold/Goodman
CERTIFICATE OF SERVICE
I hereby certify that on August 24, 2011, I electronically filed the foregoing document
with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being
served this day on counsel of record identified on the attached Service List via transmission of
Notices of Electronic Filing generated by CM/ECF.

/s/ Jamie Zysk Isani
Jamie Zysk Isani

2
HUNTON & WILLIAMS LLP

Case 1:09-md-02106-ASG Document 262 Entered on FLSD Docket 08/24/2011 Page 3 of 3
Case No. 09-MD-02106-CIV-Gold/Goodman
SERVICE LIST
Holston Investments Inc. B.V.I. and Albert P. Hernandez v. Lanlogistics, Corp.
Case No. 08-21569-CIV-Moreno/Torres
United States District Court, Southern District of Florida
Jose A. Casal
Michael E. Garcia
HOLLAND & KNIGHT LLP
701 Brickell Avenue Suite 3000
Miami, FL 33131
Telephone: [phone]
Facsimile: [phone]
E-mail:
[e-mail] or
[e-mail]

Marcos D. Jimenez
KASOWITZ, BENSON, TORRES &
FRIEDMAN LLP
1441 Brickell Avenue Suite 1420
Miami, FL 33131
Telephone: [phone]
Facsimile: [phone]
E-mail: [e-mail]

3
46124.000911 EMF_US 36925174v1

HUNTON & WILLIAMS LLP

Case 1:09-md-02106-ASG Document 263 Entered on FLSD Docket 08/24/2011 Page 1 of 2

Case 1:09-md-02106-ASG Document 263 Entered on FLSD Docket 08/24/2011 Page 2 of 2

Case 1:09-md-02106-ASG Document 264 Entered on FLSD Docket 08/30/2011 Page 1 of 2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN
IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document applies to:
Case No. 09-CV-23835-ASG.
Case No. 10-CV-20236-ASG.
_________________________________/

MDL ORDER NUMBER 53;
GRANTING UNOPPOSED MOTIONS TO SEAL [ECF Nos. 254; 260]
This matter is before the Court on Defendant Bank of America, N.A.’s Unopposed
Motion to Seal Documents [ECF No. 254] and Plaintiffs’ Unopposed Motion to File Term
Lender Plaintiffs’ Motion for Partial Summary Judgment and Supporting Appendices Under
Seal [ECF No. 260] (collectively "Motions"). Having reviewed the Motions, the record, and
being otherwise duly advised, it is hereby
ORDERED AND ADJUDGED that:
1.

The Motions [ECF Nos. 254; 260] are hereby GRANTED.

2.

The Clerk shall permit the parties to file the following documents under seal, as well
as any exhibits attached thereto: Defendant Bank of America, N.A.’s Motion for
Summary Judgment and Incorporated Memorandum of Law; BANA's Statement of
Undisputed Material Facts in Support of its Motion for Summary Judgment; the
Declarations of Daniel L. Cantor, Brandon Bolio, Jeff Susman, and Robert W.
Barone; and all exhibits referenced therein; Plaintiffs’ motion for partial summary

Case 1:09-md-02106-ASG Document 264 Entered on FLSD Docket 08/30/2011 Page 2 of 2

judgment; appendices; and separate statement submitted in support of Plaintiffs’
motion for partial summary judgment.
DONE and ORDERED in Chambers in Miami, Florida, this 26th day of August, 2011.

______________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE

cc:

U.S. Magistrate Judge Jonathan Goodman
All counsel and parties of record

Case 1:09-md-02106-ASG Document 265 Entered on FLSD Docket 09/09/2011 Page 1 of 5

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN

IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document relates to all actions.
/
UNOPPOSED EMERGENCY MOTION TO EXTEND BY ONE DAY THE TIME TO
FILE APPENDICES IN SUPPORT OF TERM LENDER PLAINTIFFS’ OPPOSITION
TO BANK OF AMERICA, N.A.’S MOTION FOR SUMMARY JUDGMENT
As a result of Federal Express delays caused by a large power outage in the U.S.
Southwest, the Term Lender Plaintiffs will be unable to file the Appendices in support of their
Opposition to BofA’s Motion for Summary Judgment by today’s deadline, September 9, 2011.
Plaintiffs will file their Opposition and other supporting documents today, and serve all
documents, including the Appendices today. Through this Emergency Motion, Plaintiffs seek
leave to file the Appendices on Monday, September 12, 2011. BofA does not oppose the relief
requested.
I.

BACKGROUND
On Thursday, September 8, 2011, Plaintiffs’ Los Angeles counsel sent the Appendix of

Testimony and Appendix of Evidence in support of Term Lender Plaintiffs’ Opposition to
BofA’s Motion for Summary Judgment to Plaintiffs’ counsel in Florida. (Declaration of Robert
W. Mockler filed herewith (“Mocker Decl.”), ¶ 2.) The Appendices were sent via Federal
Express for delivery this morning, so that they could be filed this afternoon, along with the Term
Lender Plaintiffs’ Opposition and other supporting documents in time for the deadline to file the
Opposition. (Mockler Decl., ¶ 2.) Hard copies of the Appendices were transmitted because they

Case 1:09-md-02106-ASG Document 265 Entered on FLSD Docket 09/09/2011 Page 2 of 5

are voluminous and, as they will be filed under seal, they must be manually (and not
electronically) filed. (Mockler Decl., ¶ 3.)
Plaintiffs’ counsel was informed on the morning of Friday, September 9, 2011 on the
West Coast by Federal Express that a power outage on September 8, 2011 affected large portions
of the Southwest and as a result the Appendices did not reach Florida this morning as scheduled.
(Mockler Decl., ¶ 4.) Specifically, the power outage caused delays at the Phoenix airport,
through which the Appendices were routed. (Mockler Decl., ¶ 4.) Federal Express is unable to
deliver the Appendices to Florida today in time to be filed with this Court. (Mockler Decl., ¶ 4.)
By the time Plaintiffs’ counsel was informed of the issue, it was already afternoon in Florida.
Plaintiffs’ counsel made a good faith effort to find another way to compile the
Appendices to be able to file them by the Court’s filing deadline this afternoon. (Mockler Decl.,
¶ 5.) Due to the time constraints and the voluminous nature of the Appendices, counsel was
unable to do so. (Mockler Decl., ¶ 5.)
II.

RELIEF REQUESTED
Plaintiffs request that their time to file the Appendices in support of their Opposition be

extended by one day, until Monday, September 12, 2011. Plaintiffs will file their Opposition and
supporting documents other than the Appendices today. Plaintiffs will serve the Opposition and
all supporting documents, including the Appendices, today, as agreed between the parties.
(Mockler Decl., ¶ 6.) Plaintiffs’ counsel spoke with counsel for BofA, who indicated that they
do not oppose Plaintiffs’ request. (Mockler Decl., ¶ 7.)
III.

CONCLUSION
For the foregoing reasons, Plaintiffs respectfully request a one day extension to file the

Appendices in support of their Opposition to BofA’s Motion for Summary Judgment.

2

Case 1:09-md-02106-ASG Document 265 Entered on FLSD Docket 09/09/2011 Page 3 of 5

Dated: September 9, 2011

Respectfully submitted,

/s/ Lorenz Michel Prüss
David A. Rothstein, Esq.
Fla. Bar No.: 056881
[e-mail]
Lorenz M. Prüss, Esq.
Fla Bar No.: 581305
[e-mail]
DIMOND KAPLAN & ROTHSTEIN, P.A.
2665 South Bayshore Drive, PH-2B
Miami, FL 33133
Telephone:
[phone]
Facsimile:
[phone]
Local Counsel for Plaintiff Term Lenders
Of counsel:
J. Michael Hennigan
Kirk D. Dillman
HENNIGAN DORMAN LLP
865 South Figueroa Street, Suite 2900
Los Angeles, California 90017
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
[e-mail]

3

Case 1:09-md-02106-ASG Document 265 Entered on FLSD Docket 09/09/2011 Page 4 of 5

CERTIFICATE OF SERVICE
The undersigned hereby certifies that a copy of the foregoing UNOPPOSED
EMERGENCY MOTION TO EXTEND BY ONE DAY THE TIME TO FILE
APPENDICES IN SUPPORT OF TERM LENDER PLAINTIFFS’ OPPOSITION TO
BANK OF AMERICA, N.A.’S MOTION FOR SUMMARY JUDGMENT was filed with the
Clerk of the Court. I also certify that the foregoing document is being electronically served this
day on all counsel of record or pro se parties identified on the attached Service List by agreement
of all counsel.

Dated: September 9, 2011.

/s/ Lorenz Michel Prüss
Lorenz M. Prüss, Esq.

4

Case 1:09-md-02106-ASG Document 265 Entered on FLSD Docket 09/09/2011 Page 5 of 5

Service List

Attorneys:

Representing:

Bradley J. Butwin
Daniel L. Cantor
Jonathan Rosenberg
William J. Sushon
Ken Murata
Asher Rivner
O’MELVENY & MYERS LLP
Times Square Tower
7 Times Square
New York, NY 10036
Tele: [phone]
Fax: [phone]

Defendant
Bank of America, N.A.

Kevin Michael Eckhardt
HUNTON & WILLIAMS
1111 Brickell Avenue
Suite 2500
Miami, FL 33131
Tele: [phone]
Fax: [phone]

Defendant
Bank of America, N.A.

5

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Case 1:09-md-02106-ASG Document 266 Entered on FLSD Docket 09/09/2011 Page 1 of 1

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN
IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document applies to:
Case No. 09-CV-23835-ASG.
Case No. 10-CV-20236-ASG.
_________________________________/
MDL ORDER NUMBER 54;GRANTING UNOPPOSED
EMERGENCY MOTION TO EXTEND BY ONE DAY THE TIME TO FILE
APPENDICES IN SUPPORT OF TERM LENDER PLAINTIFFS’ OPPOSITION TO
BANK OF AMERICA, N.A.’S MOTION FOR SUMMARY JUDGMENT [ECF No. 265]
This matter is before the Court on the Term Lender Plaintiffs’ Unopposed
Emergency Motion to Extend by One Day the Time to File Appendices in Support of Term
Lender Plaintiffs' Opposition to Bank of America, N.A.'s Motion for Summary Judgment
[ECF No. 265] ("Motion"). Having reviewed the Motion, the record, and being otherwise
duly advised, it is hereby
ORDERED AND ADJUDGED that:
1.

The Motion [ECF No. 265] is hereby GRANTED.

2.

The Term Lender Plaintiffs shall file their Opposition to Bank of America N.A.'s
Motion for Summary Judgment no later than Monday, September 12, 2011.
DONE and ORDERED in Chambers in Miami, Florida, this 9th day of September,

2011.
______________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE
cc:

U.S. Magistrate Judge Jonathan Goodman
All counsel and parties of record

Case 1:09-md-02106-ASG Document 284 Entered on FLSD Docket 09/15/2011 Page 1 of 4

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN

IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document relates to all actions.
/
NOTICE OF CHANGED CONTACT INFORMATION FOR
AVENUE TERM LENDERS’ COUNSEL
Avenue Term Lenders1 hereby file this Notice of Changed Contact Information for
Avenue Term Lenders’ Counsel and give notice that effective September 12, 2011, Avenue
Term Lenders’ counsel have changed their association from Hennigan Dorman LLP to McKool
Smith P.C. Counsel’s address, telephone number and facsimile number have not changed. The
email address of J. Michael Hennigan has changed to [e-mail], the
email address of Kirk Dillman has changed to [e-mail], the email
address of C. Dana Hobart has changed to [e-mail], the email
address of Peter J. Most has changed to [e-mail], the email address of
Robert W. Mockler has changed to [e-mail], the email address of
Rebecca T. Pilch has changed to [e-mail], and the email address of
Caroline M. Walters has changed to [e-mail].

1 Avenue Term Lenders consist of the plaintiffs in the case captioned Avenue CLO Fund, Ltd., et

al. v. Bank of America, N.A., et al., Case No. 09-CV-23835-GOLD/GOODMAN.

Case 1:09-md-02106-ASG Document 284 Entered on FLSD Docket 09/15/2011 Page 2 of 4

Dated: September 15, 2011

Respectfully submitted,

__/s Lorenz Michel Prüss
David A. Rothstein, Esq.
Fla. Bar No.: 056881
[e-mail]
Lorenz M. Prüss, Esq.
Fla Bar No.: 581305
[e-mail]
DIMOND KAPLAN & ROTHSTEIN, P.A.
2665 South Bayshore Drive, PH-2B
Miami, FL 33133
Telephone:
[phone]
Facsimile:
[phone]
Local Counsel for Plaintiff Term Lenders
Of counsel:
J. Michael Hennigan
Kirk D. Dillman
MCKOOL SMITH P.C.
865 South Figueroa Street, Suite 2900
Los Angeles, California 90017
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
[e-mail]

-2-

Case 1:09-md-02106-ASG Document 284 Entered on FLSD Docket 09/15/2011 Page 3 of 4

CERTIFICATE OF SERVICE
The undersigned hereby certifies that a copy of the foregoing NOTICE OF CHANGED
CONTACT INFORMATION FOR AVENUE TERM LENDERS’ COUNSEL was filed
with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being
served this day on all counsel of record or pro se parties identified on the attached Service List in
the manner specified either via transmission of Notices of Electronic Filing generated by
CM/ECF or in some other authorized manner for those counsel or parties who are not authorized
to receive electronically the Notice of Electronic Filing.

Dated: September 14, 2011.

/s/ Lorenz M. Prüss ___________
Lorenz M. Prüss, Esq.

Case 1:09-md-02106-ASG Document 284 Entered on FLSD Docket 09/15/2011 Page 4 of 4

SERVICE LIST

Attorneys:

Representing:

Bradley J. Butwin, Esq.
Daniel L. Cantor, Esq.
Jonathan Rosenberg, Esq.
William J. Sushon, Esq.
Ken Murata, Esq.
Asher Rivner, Esq.
O’MELVENY & MYERS LLP
Times Square Tower
7 Times Square
New York, NY 10036
Tele: [phone]
Fax: [phone]

Defendants
Bank of America, N.A.
Merrill Lynch Capital Corporation

Kevin Michael Eckhardt, Esq.

Defendants
Bank of America, N.A.
Merrill Lynch Capital Corporation

Jamie Zysk Isani, Esq.
HUNTON & WILLIAMS
1111 Brickell Avenue
Suite 2500
Miami, FL 33131
Tele: [phone]
Fax: [phone]

-4-

Case 1:09-md-02106-ASG Document 285 Entered on FLSD Docket 09/27/2011 Page 1 of 6

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN

IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document relates to all actions.
/
TERM LENDER PLAINTIFFS’ OPPOSITION TO BANK OF AMERICA’S
REQUEST FOR JUDICIAL NOTICE
The Term Lender Plaintiffs hereby object to Bank of America, N.A.’s Request for
Judicial Notice of: (1) Exhibit 28 to the Declaration of Daniel L. Cantor in support of Bank of
America, N.A.’s Opposition to Plaintiffs’ Motion for Partial Summary Judgment and Request for
Judicial Notice (“Cantor Decl.”), which is a copy of an article by Pierre Paulden titled Highland
Shuts Funds Amid ‘Unprecedented’ Disruption, Bloomberg (Oct. 16, 2008) (“Paulden Article”);
and (2) Exhibit 101 to the Cantor Decl., which is a copy of the Complaint and Jury Demand for
Fraud, Breach of Fiduciary Duty, Negligence and Conspiracy filed in the District Court of Clark
County, Nevada on or about March 25, 2011 in Brigade Leveraged Capital Structures Fund,
Ltd., et al v. Fontainebleau Resorts, LLC, et al., No. A-11-637835-B (“Brigade Complaint”).
The Term Lender Plaintiffs object to BofA’s Request for Judicial Notice of the Paulden
Article on the ground that the Article is not relevant to any issue raised by the Term Lender
Plaintiffs’ Motion for Partial Summary Judgment or BofA’s Opposition thereto. The Term
Lender Plaintiffs object to BofA’s Request for Judicial Notice of the Brigade Complaint on the
grounds that the Complaint is not relevant to any issue in the Motion.

Case 1:09-md-02106-ASG Document 285 Entered on FLSD Docket 09/27/2011 Page 2 of 6

I.

THE PAULDEN ARTICLE IS NOT RELEVANT TO THIS MOTION
“[A] court may properly decline to take judicial notice of documents that are irrelevant to

the resolution of a case.”1 BofA cites to the Paulden Article in support of its argument that BofA
“had good reason to view Highland’s claims skeptically” because “numerous credible
publications reported that certain Highland funds had suffered staggering losses and faced a
liquidity crunch.”2 BofA, however, “requests that the Court take judicial [notice] of this article
under Fed. R. Evid. 201 not for the truth of the matters set forth therein, but for the fact of its
publication.”3 BofA offers no explanation as to why the fact this article was published is
relevant to this Motion. It is not. BofA does not contend that it saw or read the Article at the
time it was written and the Article therefore had no bearing on any decision BofA made.
Even if BofA did make such a claim, the article would still be irrelevant to the issue
presented: whether BofA breached its obligations under the Disbursement Agreement.
Regardless of whether Highland funds “suffered staggering losses,” as BofA claims, BofA was
not permitted to ignore notices from Highland of the failure of conditions precedent to
disbursement. Thus, judicial notice of the fact that the Paulden Article was published should be
denied.

1 Cravens v. Smith, 610 F.3d 1019, 1029 (8th Cir. 2010).
2 BofA’s Opposition to Term Lender Plaintiffs’ Motion for Partial Summary Judgment (“BofA

Opp.”) at p. 16.
3 In doing so, BofA cites to a case explaining that articles are inadmissible hearsay if “they are

relevant primarily to establish the truth of their contents.” United States v. Baker, 432 F.3d
1189, 1211 (11th Cir. 2005); see Cantor Decl. ¶ 30.
-2-

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II.

THE BRIGADE COMPLAINT IS NOT RELEVANT TO THIS MOTION AND
CAN NOT BE USED FOR THE TRUTH OF THE MATTERS ALLEGED
THEREIN
The fact that the Brigade Complaint was filed is also irrelevant to this Motion. BofA

offers no explanation as to why it would be. BofA simply states that “plaintiffs rely on these
same facts [regarding ULLICO entering into a Guaranty Agreement with Fontainebleau] to plead
a fraud claim against FBR, Soffer, Freeman, and ULLICO.”4 This is not relevant to whether
BofA breached its obligations under the Disbursement Agreement by disbursing the Term
Lender Plaintiffs’ funds despite knowing Lehman had filed for bankruptcy and failed to fund its
obligations. Thus, BofA’s request for judicial notice of the Brigade Complaint also should be
denied.5 In any event, as BofA appears to recognize,6 the Court may only take judicial notice of
the Brigade Complaint for the fact it was filed.7

4 BofA Opp. at p. 14.
5 Cravens, 610 F.3d at 1029.
6 Cantor Decl. ¶ 103.
7 United States v. Jones, 29 F.3d 1549, 1553 (11th Cir. 1994) (“[A] court may take notice of

another court’s order only for the limited purpose of recognizing the judicial act that the order
represents or the subject matter of the litigation.”). See e.g., Verizon Trademark Services, LLC v.
The Producers, Inc., 2011 U.S. Dist. LEXIS 11659, *3 (M.D. Fla. Jan. 27, 2011) (taking judicial
notice of a complaint that had been filed in another case “for the limited purpose of recognizing
. . . the subject matter of the litigation” (internal quotation marks omitted)).
-3-

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III.

CONCLUSION
For the foregoing reasons, the Term Lender Plaintiffs respectfully request that the Court

deny BofA’s Request for Judicial Notice as to both the Paulden Article and the Brigade
Complaint.
Dated: September 27, 2011

Respectfully submitted,

/s Lorenz Michel Prüss
David A. Rothstein, Esq.
Fla. Bar No.: 056881
[e-mail]
Lorenz M. Prüss, Esq.
Fla Bar No.: 581305
[e-mail]
DIMOND KAPLAN & ROTHSTEIN, P.A.
2665 South Bayshore Drive, PH-2B
Miami, FL 33133
Telephone:
[phone]
Facsimile:
[phone]
Local Counsel for Plaintiff Term Lenders
Of counsel:
J. Michael Hennigan
Kirk D. Dillman
Robert Mockler
Rebecca T. Pilch
Caroline M. Walters
MCKOOL SMITH, P.C.
865 South Figueroa Street, Suite 2900
Los Angeles, California 90017
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]

-4-

Case 1:09-md-02106-ASG Document 285 Entered on FLSD Docket 09/27/2011 Page 5 of 6

CERTIFICATE OF SERVICE
The undersigned hereby certifies that a copy of the foregoing TERM LENDER
PLAINTIFFS’ OPPOSITION TO BANK OF AMERICA’S REQUEST FOR JUDICIAL
NOTICE was filed with the Clerk of the Court using CM/ECF. I also certify that the foregoing
document is being served this day on all counsel of record or pro se parties identified on the
attached Service List in the manner specified either via transmission of Notices of Electronic
Filing generated by CM/ECF or in some other authorized manner for those counsel or parties
who are not authorized to receive electronically the Notice of Electronic Filing.

Dated: September 27, 2011.
/s Lorenz Michel Prüss
Lorenz M. Prüss, Esq.

-5-

Case 1:09-md-02106-ASG Document 285 Entered on FLSD Docket 09/27/2011 Page 6 of 6

SERVICE LIST

Attorneys:

Representing:

Bradley J. Butwin, Esq.
Daniel L. Cantor, Esq.
Jonathan Rosenberg, Esq.
William J. Sushon, Esq.
Ken Murata, Esq.
Asher Rivner, Esq.
O’MELVENY & MYERS LLP
Times Square Tower
7 Times Square
New York, NY 10036
Tele: [phone]
Fax: [phone]

Defendants
Bank of America, N.A.

Kevin Michael Eckhardt, Esq.

Defendants
Bank of America, N.A.

Jamie Zysk Isani, Esq.
HUNTON & WILLIAMS
1111 Brickell Avenue
Suite 2500
Miami, FL 33131
Tele: [phone]
Fax: [phone]

-6-

Case 1:09-md-02106-ASG Document 286 Entered on FLSD Docket 09/27/2011 Page 1 of 4

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN

IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document relates to all actions.
/
REPLY IN SUPPORT OF TERM LENDER PLAINTIFFS’
REQUEST FOR JUDICIAL NOTICE
The Term Lender Plaintiffs requested the Court take judicial notice of Exhibit 1504, a
proof of claim submitted by Fontainebleau Las Vegas Retail, LLC, in the Lehman bankruptcy, In
re Lehman Brothers Holdings, Inc., et al., United States Bankruptcy Court for the Southern
District of New York, Case No. 08-13555. Defendant Bank of America, N.A. (“BofA”) opposes
the Request to the extent the Proof of Claim is being introduced “as evidence of the disputed
facts contained therein.”1
Plaintiffs request judicial notice of the Proof of Claim to evidence that Fontainebleau
filed the Proof of Claim and alleged that Lehman’s failure to pay its portion of Advance
Requests beginning in September 2008 and on four occasions thereafter were defaults under the
Retail Facility, and not for the truth of the matters asserted therein.2 As BofA acknowledges,

1 Bank of America, N.A.’s Opposition to Request for Judicial Notice (“BofA Opp. to RJN”)

at p. 2.
2 See Term Lender Plaintiffs’ Motion for Partial Summary Judgment at p. 9, n.37.

Case 1:09-md-02106-ASG Document 286 Entered on FLSD Docket 09/27/2011 Page 2 of 4

such a request is permissible.3 Accordingly, Plaintiffs respectfully request the Court take
judicial notice of the Proof of Claim for that purpose.
Dated: September 27, 2011

Respectfully submitted,

_____/Lorenz Michel Prüss___________
David A. Rothstein, Esq.
Fla. Bar No.: 056881
[e-mail]
Lorenz M. Prüss, Esq.
Fla Bar No.: 581305
[e-mail]
DIMOND KAPLAN & ROTHSTEIN, P.A.
2665 South Bayshore Drive, PH-2B
Miami, FL 33133
Telephone:
[phone]
Facsimile:
[phone]
Local Counsel for Plaintiff Term Lenders
Of counsel:
J. Michael Hennigan
Kirk D. Dillman
Robert Mockler
Rebecca T. Pilch
Caroline M. Walters
MCKOOL SMITH, P.C.
865 South Figueroa Street, Suite 2900
Los Angeles, California 90017
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]

3 See BofA Opp. to RJN at p. 1; see also United States v. Jones, 29 F.3d 1549, 1553 (11th Cir.

1994) (explaining that a “court may take judicial notice of a document filed in another court . . .
to establish the fact of such litigation and related filings” (internal quotation marks omitted)).
-2-

Case 1:09-md-02106-ASG Document 286 Entered on FLSD Docket 09/27/2011 Page 3 of 4

CERTIFICATE OF SERVICE
The undersigned hereby certifies that a copy of the foregoing REPLY IN SUPPORT
OF TERM LENDER PLAINTIFFS’ REQUEST FOR JUDICIAL NOTICE was filed with
the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being served
this day on all counsel of record or pro se parties identified on the attached Service List in the
manner specified either via transmission of Notices of Electronic Filing generated by CM/ECF
or in some other authorized manner for those counsel or parties who are not authorized to receive
electronically the Notice of Electronic Filing.

Dated: September 27, 2011.

/s Lorenz Michel Prüss _________________
Lorenz M. Prüss, Esq.

Case 1:09-md-02106-ASG Document 286 Entered on FLSD Docket 09/27/2011 Page 4 of 4

SERVICE LIST

Attorneys:

Representing:

Bradley J. Butwin, Esq.
Daniel L. Cantor, Esq.
Jonathan Rosenberg, Esq.
William J. Sushon, Esq.
Ken Murata, Esq.
Asher Rivner, Esq.
O’MELVENY & MYERS LLP
Times Square Tower
7 Times Square
New York, NY 10036
Tele: [phone]
Fax: [phone]

Defendants
Bank of America, N.A.
Merrill Lynch Capital Corporation

Kevin Michael Eckhardt, Esq.

Defendants
Bank of America, N.A.
Merrill Lynch Capital Corporation

Jamie Zysk Isani, Esq.
HUNTON & WILLIAMS
1111 Brickell Avenue
Suite 2500
Miami, FL 33131
Tele: [phone]
Fax: [phone]

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Case 1:09-md-02106-ASG Document 300 Entered on FLSD Docket 10/03/2011 Page 1 of 2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN
IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document applies to:
Case No. 09-CV-23835-ASG.
Case No. 10-CV-20236-ASG.
_________________________________/
MDL ORDER NUMBER 55;
GRANTING UNOPPOSED MOTIONS TO SEAL [ECF Nos. 267; 273; 276; 288; 294]
This matter is before the Court on the following unopposed motions to seal:
Defendant Bank of America, N.A.’s Unopposed Motion to Seal Documents [ECF No. 267];
Term Lender Plaintiffs’ Unopposed Motion to File Term Lender Plaintiffs’ Opposition to
Bank of America, N.A.’s Motion for Summary Judgment and Supporting Documents Under
Seal [ECF No. 273]; the Term Lender Plaintiffs’ Unopposed Motion to File Appendices to
Term Lender Plaintiffs’ Opposition to Bank of America, N.A.’s Motion for Summary
Judgment Under Seal [ECF No. 276]; Defendant Bank of America, N.A.’s Unopposed
Motion to Seal Documents [ECF No. 288]; the Term Lender Plaintiffs’ Unopposed Motion
to File Reply in Support of Term Lender Plaintiffs’ Motion for Partial Summary Judgment
and Supporting Documents Under Seal [ECF No. 294] (collectively "Motions"). Having
reviewed the Motions, the record, and being otherwise duly advised, it is hereby
ORDERED AND ADJUDGED that:
1.

The Motions [ECF Nos. 267; 273; 276; 288; 294] are hereby GRANTED.

2.

The Clerk shall permit the parties to file the following documents identified in the

Case 1:09-md-02106-ASG Document 300 Entered on FLSD Docket 10/03/2011 Page 2 of 2

above-referenced motions [ECF Nos. 267; 273; 276; 288; 294] under seal, as well
as any exhibits attached thereto.
DONE and ORDERED in Chambers in Miami, Florida, this 3rd day of October,
2011.
______________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE

cc:

U.S. Magistrate Judge Jonathan Goodman
All counsel and parties of record

Case 1:09-md-02106-ASG Document 301 Entered on FLSD Docket 10/07/2011 Page 1 of 7

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Miami Division
CASE NO.: 09-2106-MD-GOLD/GOODMAN
IN RE:
FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL NO. 2106
This document relates to all actions.
______________________________________/
DEFENDANT BANK OF AMERICA, N.A.’S REPLY
TO TERM LENDER PLAINTIFFS’ OPPOSITION
TO ITS REQUEST FOR JUDICIAL NOTICE
Defendant Bank of America, N.A. (“BANA”) respectfully submits this Reply to Term
Lender Plaintiffs’ Opposition to Bank of America’s Request for Judicial Notice (“Pls. Opp.”).
Both the (1) Complaint and Jury Demand for Fraud, Breach of Fiduciary Duty, Negligence and
Conspiracy filed in the District Court of Clark County, Nevada on or about March 25, 2011 in
Brigade Leveraged Capital Structures Fund, Ltd., et al. v. Fontainebleau Resorts, LLC, et al.,
No. A-11-637835-B (the “Brigade Complaint”), and (2) Pierre Paulden article titled Highland
Shuts Funds Amid ‘Unprecedented’ Disruption, Bloomberg (Oct. 16, 2008) (“Paulden Article”)
should be properly admitted into evidence, as the arguments made by the Plaintiffs in their
Opposition are inapposite.
ARGUMENT
I.

THE BRIGADE COMPLAINT IS RELEVANT AND ADMISSIBLE
A.

Plaintiffs’ Brigade Complaint Allegations Are Relevant to This Action.

Plaintiffs’ claim that the Brigade Complaint “is not relevant to any issue” raised by
BANA’s Motion for Summary Judgment is frivolous. (Pls. Opp. at 3.) Plaintiffs’ allegations in
the Brigade Complaint are fundamentally inconsistent with its assertions here on several key
issues. That makes the Brigade Complaint’s allegations relevant in assessing Plaintiffs’ claims
based on those same underlying facts in this action. A party’s inconsistent pleadings in a
different action based on the same facts are clearly relevant and admissible. In Dugan v. EMS

Case 1:09-md-02106-ASG Document 301 Entered on FLSD Docket 10/07/2011 Page 2 of 7
Case No. 09-2106-MD-GOLD/GOODMAN
Helicopters, Inc., 915 F.2d 1428 (10th Cir. 1990), the Tenth Circuit held that the district court
abused its discretion when it refused to admit the plaintiff’s complaint in another action,
explaining that the other complaint’s inconsistent pleadings were relevant for, among other
things, impeachment purposes and allocating responsibility for the injury allegedly suffered by
plaintiffs. Id. at 1434; see also Burdis v. Texas & Pac. Ry. Co., 569 F.2d 320, 323-24 (5th Cir.
1978) (affirming admission of plaintiff’s state court complaint).
The Brigade action was commenced on March 25, 2011 in Nevada state court by many of
the same Plaintiffs that are pursuing this action. That case, in which Plaintiffs assert claims for
fraud, negligent misrepresentation, and breach of fiduciary duty against former Fontainebleau
executives and affiliates, is clearly based on discovery obtained in this litigation, including
hundreds of thousands of pages of documents produced by BANA, Fontainebleau and other nonparties, and depositions of dozens of BANA and non-party witnesses. Yet despite being based
on the same source materials, Plaintiffs’ fraud allegations in the Brigade Complaint are
inconsistent with their claim here that BANA breached its agent duties under the Credit and
Disbursement Agreements.
For example, the Brigade Complaint alleges that Fontainebleau executives and affiliates
falsified the Advance Requests sent by Fontainebleau to BANA and the Lenders by concealing
massive Project cost overruns and the implications of Lehman’s bankruptcy. With respect to
construction costs, the Brigade Complaint alleges that Fontainebleau and Turnberry West
Construction concealed the financial impact of hidden cost overruns and undisclosed change
orders:
•

“Beginning no later than mid-2007, in connection with the [Advance] Requests,
Defendants made material misrepresentations regarding the status of the Project and
provided false, misleading and incomplete information about change order logs, cost
reports and budgets, which they represented to be true and complete.” (Brigade
Compl. ¶ 126.)

•

“Defendants periodically held conference calls with Plaintiffs and other lenders in
connection with the Draw Requests. On these calls, and in the written ‘Lender
Updates’ that Defendants distributed to lenders, Defendants … failed to inform the
lenders of … the fact that, according to Defendants’ true cost information, the Project
had experienced hundreds of millions of dollars in undisclosed change orders and cost
overruns. On these calls, Defendants consistently stated, incorrectly, that the Project
was ‘on time and on budget.’” (Id.)

•

“[W]hile Defendants at this point revealed some of the additional costs, they
expressly decided not to expose what TWC’s Chief Executive Officer, Bob
2

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Case No. 09-2106-MD-GOLD/GOODMAN
Ambridge, characterized to [Fontainebleau’s Deven] Kumar as the ‘big lie,’ namely
that the Project was massively over budget. Instead, Defendants informed the
Lenders of only $60 million in change orders and additional costs and continued to
conceal the remaining undisclosed change orders and additional costs and to submit
Draw Requests that they new [sic] to be materially false.” (Id. ¶ 143.)
•

Plaintiffs claim that “[i]f Defendants had incorporated accurate and complete
information regarding the budgets and costs to complete the Project into the materials
submitted in connection with the Draw Requests … the In Balance Test would have
failed and Borrowers would not have been able to access additional funding under the
Credit and Disbursement Agreements.” (Id. ¶ 127.)

The Brigade Complaint further alleges that Fontainebleau’s officers—including CFO Jim
Freeman—failed to exercise due care in monitoring and reporting Project costs. The complaint
alleges, among other things, that Fontainebleau officers:
•

“Failed to ensure that the statements made to [Lenders] in connection with the Draw
Requests were accurate and complete”

•

“Failed to accurately monitor and report on project budgets and costs”

•

“Failed to ensure the timely reporting of changes to the Project and change orders”

•

“Failed to exercise reasonable diligence, oversight, monitoring and review of TWC’s
project administration and management”

•

“Failed to monitor subcontractors” (Id. ¶ 174.)

With respect to Lehman, the Brigade Complaint alleges that the Brigade defendants
concealed adverse information regarding the Lehman bankruptcy’s implications:
•

“[T]he FBR Defendants, aided by ULLICO, actively concealed the full extent of
Lehman’s impact on the Project from the Lenders in an effort to increase the
likelihood that Loans would continue to be funded and disbursed.” (Id. ¶ 136.)

•

“ULLICO fronted Lehman’s draw obligations under the Retail Facility in December
2008, and January, February and March 2009. Defendants did not disclose the
‘fronting’ arrangement to the Plaintiffs and actively concealed the existence of the
Guaranty Agreement from them.” (Id. ¶ 141.)

The Brigade Complaint also alleges that the Brigade defendants falsified the information
disclosed to Lenders to conceal the fact that Fontainebleau could not satisfy the Advance
Request conditions precedent. (Id. ¶ 153.)
The Brigade Complaint highlights the inadequacy of Plaintiffs’ factual response to
BANA’s Motion for Summary Judgment. As demonstrated in BANA’s motion papers, there is
no evidence that BANA knew about Fontainebleau’s Lehman-related financial machinations.
The Brigade Complaint’s allegations that Fontainebleau’s officers and affiliates were engaged in

3

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Case No. 09-2106-MD-GOLD/GOODMAN
fraud demonstrate how implausible are Plaintiffs’ allegations that Fontainebleau told BANA that
Fontainebleau Resorts had funded for Lehman in September 2008, and that Fontainebleau told
BANA that FBR and its affiliates were guarantying ULLICO’s payment of Lehman’s Retail
Shared Costs portion from December 2008 through March 2009.1 It is inconceivable that at the
same time that it was attempting to defraud Lenders, Fontainebleau would have disclosed the
fraud to the Lenders’ agent.2 Thus, the Brigade Complaint is relevant—and admissible—
because it contradicts Plaintiffs’ claims in this action.
Likewise, the Brigade Complaint’s allegation that Fontainebleau officers failed to
adequately monitor the Project’s costs also belies Plaintiffs’ claim that BANA should have
known that the Project was facing cost overruns. If Fontainebleau’s officers—i.e., BANA and
the construction consultants’ source of Project cost information—did not know the true state of
the Project’s finances, they could not have been telling BANA that the Project was facing cost
overruns.
The Brigade Complaint’s assertion that Fontainebleau provided Lenders with a stream of
misinformation through the Advance Requests and other disclosures makes clear that BANA was
the victim of the same misrepresentations and omissions underlying Plaintiffs’ own Nevada
fraud claims. The Brigade Complaint’s claims conflict with Plaintiffs’ claims against BANA
because any damages they seek from BANA were caused by Fontainebleau’s fraud, and not
BANA’s contractually permitted reliance on Fontainebleau’s Advance Requests and statements
certifying Fontainebleau’s satisfaction of all Disbursement Agreement conditions precedent, and
the absence of defaults. Thus, these allegations are relevant in this action because they tend to
(and, in fact, do) demonstrate that Plaintiffs’ claims against BANA are baseless.
B.

The Brigade Complaint Should Be Admitted as an Admission Against
Interest.

Plaintiffs also incorrectly claim that “the Court may only take judicial notice of the
Brigade Complaint for the fact it was filed.” (Pls. Opp. at 3.) Plaintiffs’ argument fails because
the Brigade Complaint and its contents are an admission by Plaintiffs. It is proper to admit a
state court complaint filed in one action as evidence against the same party in a pending federal
1

See Term Lender Pls. Opp. to BANA’s Mot. for Summ. J. at 16-18.

2

See Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742-43 (11th Cir. 1996) (“A court need
not permit a case to go to a jury … when the inferences that are drawn from the evidence,
and upon which the non-movant relies, are implausible.”).
4

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Case No. 09-2106-MD-GOLD/GOODMAN
litigation. See Dugan, 915 F.2d at 1434 (“The ancillary complaint is factually inconsistent with
the position plaintiffs pursued in this case and therefore constitutes an admission against interest
pursuant to Fed. R. Evid. 801(d)(2).”); see also Thyssen Elevator Co. v. Drayton-Bryan Co., 106
F. Supp. 2d 1355, 1360-61 (S.D. Ga. 2000) (relying on Dugan in allowing prior state court
pleadings by the same party to be introduced into evidence as admissions).
Plaintiffs’ authorities are inapposite because they do not involve admissions. In United
States v. Jones, 29 F.3d 1549 (11th Cir. 1994), the court rejected the government’s effort to
introduce a court order from a prior proceeding involving the defendant—not a court filing filed
by the defendant. Id. at 1552-54. Verizon Trademark Servs., LLC v. Producers, Inc., 2011 U.S.
Dist. LEXIS 11659 (M.D. Fla. Jan. 27, 2011), is even further afield, because the plaintiffs there
attempted to introduce as evidence against defendants a complaint filed in another case by a
completely different party. Id. at **2-3. Because the Brigade Complaint contains allegations by
the same Plaintiffs as this case, it is a party admission and should be admitted into evidence.
Plaintiffs incorrectly assert that BANA’s Response to Plaintiffs’ Request for Judicial
Notice somehow establishes that the Court cannot take judicial notice of the Brigade
Complaint’s allegations. BANA opposed Plaintiffs’ request that this Court take judicial notice of
assertions in a September 2009 filing by non-party Fontainebleau Las Vegas Retail, LLC in the
Lehman bankruptcy on the grounds that its contents were hearsay.3 This is comparing apples
and oranges: the bankruptcy court filing is inadmissible because, unlike the Brigade Complaint,
it does not contain party admissions, an exception to the hearsay rule. See Fed. R. Evid.
801(d)(2).
II.

THE FACT OF THE PAULDEN ARTICLE’S PUBLICATION IS RELEVANT
As stated by BANA and repeated by the Plaintiffs in their Opposition, BANA seeks to

introduce the Paulden Article solely for the fact of its publication and not for the truth of its
contents. Plaintiffs’ argument against judicial notice consists solely of their claim that the
Paulden Article’s publication is not relevant to BANA’s summary judgment arguments. (Pls.
Opp. at 2.) But as BANA’s Opposition Brief explained, the fact that credible publications were
reporting that Highland funds had suffered staggering losses and faced a liquidity crunch is
relevant to evaluating BANA’s response to Highland’s claims.4
3

See Def. BANA’s Opp. to Pls. Req. for Jud. Notice at 1-2.

4

See Def. BANA’s Opp. to Term Lender Pls. Mot. for Partial Summ. J. at 16.
5

Case 1:09-md-02106-ASG Document 301 Entered on FLSD Docket 10/07/2011 Page 6 of 7
Case No. 09-2106-MD-GOLD/GOODMAN
CONCLUSION
For the foregoing reasons, BANA’s request for judicial notice of the Brigade Complaint
and the Paulden Article should be granted.

Dated: October 7, 2011

Respectfully submitted,

By: s/Jamie Zysk Isani
O’MELVENY & MYERS LLP
Bradley J. Butwin (pro hac vice)
Jonathan Rosenberg (pro hac vice)
Daniel L. Cantor (pro hac vice)
William J. Sushon (pro hac vice)
7 Times Square
New York, New York 10036
Telephone: [phone]
Facsimile: [phone]
E-mails: [e-mail];
[e-mail]; [e-mail];
[e-mail]
- and HUNTON & WILLIAMS LLP
Jamie Zysk Isani (Fla. Bar No. 728861)
Matthew Mannering (Fla. Bar No. 39300)
1111 Brickell Avenue, Suite 2500
Miami, Florida 33131
Telephone: [phone]
Facsimile: [phone]
E-mails: [e-mail];
[e-mail]
Attorneys for Bank of America, N.A.

6

Case 1:09-md-02106-ASG Document 301 Entered on FLSD Docket 10/07/2011 Page 7 of 7
Case No. 09-2106-MD-GOLD/GOODMAN
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing was served by electronic
means pursuant to an agreement between the parties upon the below-listed counsel of record.
Kirk Dillman, Esq.
Robert Mockler, Esq.
MCKOOL SMITH HENNIGAN
865 South Figueroa Street, Suite 2900
Los Angeles, California 90017
Telephone: [phone]
Fascimile: [phone]
E-mail: [e-mail]
[e-mail]
Attorneys for Plaintiffs Avenue CLO Fund, Ltd. et al.

s/Jamie Zysk Isani
Jamie Zysk Isani

7

Case 1:09-md-02106-ASG Document 310 Entered on FLSD Docket 10/20/2011 Page 1 of 2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN
IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document applies to:
Case No. 09-CV-23835-ASG.
Case No. 10-CV-20236-ASG.
_________________________________/

MDL ORDER NUMBER 56;
GRANTING UNOPPOSED MOTIONS TO SEAL [ECF Nos. 302, 305, 307]
This matter is before the Court on the following unopposed motions to seal: Term
Lender Plaintiffs’ Unopposed Motion to File Under Seal Term Lender Plaintiffs’ Response
to Bank of America’s Evidentiary Objections [ECF No. 302]; Defendant Bank of America,
N.A.’s Unopposed Motion to Seal Documents [ECF No. 305]; and Defendant Bank of
America, N.A.’s Unopposed Motion to Seal Documents [ECF No. 307] (collectively
"Motions"). Having reviewed the Motions, the record, and being otherwise duly advised,
it is hereby
ORDERED AND ADJUDGED that:
1.

The Motions [ECF Nos. 302, 305, 307] are hereby GRANTED.

2.

The Clerk shall permit the parties to file the following documents identified in the
above-referenced motions [ECF Nos. 302, 305, 307] under seal, as well as any
exhibits attached thereto.

Case 1:09-md-02106-ASG Document 310 Entered on FLSD Docket 10/20/2011 Page 2 of 2

CASE NO 09-MD-02106-CIV-GOLD/GOODMAN
DONE and ORDERED in Chambers in Miami, Florida, this 19th day of October,
2011.
______________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE

cc:

U.S. Magistrate Judge Jonathan Goodman
All counsel and parties of record

Case 1:09-md-02106-ASG Document 319 Entered on FLSD Docket 11/17/2011 Page 1 of 2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN
IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document applies to:
Case No. 09-CV-23835-ASG.
Case No. 10-CV-20236-ASG.
_________________________________/
MDL ORDER NUMBER 57; GRANTING UNOPPOSED MOTION TO FILE NOTICE OF
SUBMISSION UNDER SEAL [ECF No. 311]
This matter is before the Court on the Term Lender Plaintiffs’ Unopposed Motion to
File Plaintiffs’ Notice of Submission of Recently Produced Documents Under Seal [ECF
No. 311]. Having reviewed the Motions, the record, and being otherwise duly advised, it
is hereby
ORDERED AND ADJUDGED that:
1.

The Motion [ECF No. 311] is GRANTED.

2.

The materials submitted in conjunction with the Notice of Submission [ECF No. 312]
will be considered on summary judgment with no additional briefing from the parties.

3.

During oral argument scheduled for Friday, November 18, 2011, Bank of America
shall be prepared to discuss its delayed production of documents, as well as the
status of its document production in this case.

DONE and ORDERED in Chambers in Miami, Florida, this 16th day of November,
2011.

Case 1:09-md-02106-ASG Document 319 Entered on FLSD Docket 11/17/2011 Page 2 of 2

______________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE
cc:

U.S. Magistrate Judge Jonathan Goodman
All counsel and parties of record

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 1 of 113
1

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
Case 09-MD-02106
IN RE:
FONTAINEBLEAU LAS VEGAS HOLDINGS, LLC,
et al.,
Debtors.

FONTAINEBLEAU LAS VEGAS
HOLDINGS, LLC, et al.,
COURTROOM 11-1
Plaintiffs,
MIAMI, FLORIDA
vs.
NOVEMBER 18, 2011
BANK OF AMERICA, N.A., et al.,
(Pages 1 - 113)
Defendants.
__________________________________________________________________
TRANSCRIPT OF ORAL ARGUMENT
BEFORE THE HONORABLE ALAN S. GOLD
SENIOR UNITED STATES DISTRICT JUDGE
__________________________________________________________________

APPEARANCES:
FOR THE PLAINTIFFS:

TOTAL ACCESS

J. MICHAEL HENNIGAN, ESQ.
KIRK D. DILLMAN, ESQ.
McKool Smith Hennigan
865 South Figueroa Street, Suite 2900
Los Angeles, CA 90017
213.694.1002
(Fax) 213.694.1234
[e-mail]
[e-mail]

NETWORK COURTROOM REALTIME TRANSCRIPTION
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 2 of 113
2

1

FOR THE DEFENDANTS:

2
3

Bank of America
Merrill Lynch Capital

4
5

DANIEL L. CANTOR, ESQ.
KEN MURATA, ESQ.
O'Melveny & Myers LLP
Times Square Tower, Times Square
New York, NY 10036
212.408.2483
[e-mail]
[e-mail]

6
7

JAMIE ZYSK ISANI, ESQ.
Hunton & Williams LLP
1111 Brickell Avenue, Suite 2500
Miami, FL 33131
305.536.2724
(Fax) 305.810.1675
[e-mail]

8
9
10
11
12
13
14

REPORTED BY:

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]

15
16
17
18
19
20
21
22
23

TABLE OF CONTENTS

24

Page

25

Reporter's Certificate ..................................... 104
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 3 of 113
Oral Argument
3

MR. HASBUN: All rise.

The Honorable Alan S. Gold

09:00:24

1

09:00:26

2

09:00:28

3

THE COURT:

09:00:33

4

MR. HENNIGAN:

09:00:34

5

MR. CANTOR:

09:00:56

6

THE COURT:

09:00:58

7

please.

09:01:14

8

your family a very happy holiday to come.

09:01:17

9

09:01:17

10

MR. CANTOR:

09:01:18

11

THE COURT:

09:01:20

12

Case 09-MD-02106, and let me start with appearances, please, on

09:01:32

13

that side.

09:01:33

14

09:01:34

15

09:01:35

16

09:01:37

17

don't mind, since I can only hear and Mr. Millikan can only

09:01:43

18

hear, to speak directly in a microphone.

09:01:46

19

MR. HENNIGAN:

09:01:48

20

MR. DILLMAN:

09:01:50

21

on behalf of the plaintiffs.

09:01:53

22

THE COURT:

09:01:55

23

09:01:58

24

09:02:00

25

presiding.

This Court is in session.
Good morning.
Good morning, Your Honor.
Good morning, Your Honor.
Please be seated.

I need just one moment,

So, let me begin by welcoming everyone.

MR. HENNIGAN:

I wish you and

Thank you.
Thank you, Your Honor.

And at this time I will call

MR. HENNIGAN:

Good morning, Your Honor.

Michael

Hennigan on behalf of the plaintiffs.

THE COURT:

I'm only going to ask everybody, if you

I forgot.

Good morning.

Good morning, Your Honor.

All right.

Thank you.

Kirk Dillman

Would you like to

introduce who else is present today?

MR. CANTOR:

Good morning, Your Honor.

O'Melveny & Myers on behalf of Bank of America.
November 18, 2011

Dan Cantor from

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 4 of 113
Oral Argument
4

Ken Murata also from O'Melveny & Myers for

09:02:04

1

09:02:09

2

09:02:10

3

THE COURT:

09:02:11

4

MS. ISANI:

09:02:16

5

of Bank of America.

09:02:17

6

THE COURT:

09:02:20

7

I know you've prepared PowerPoints® and I'll listen to them -- by

09:02:25

8

the way, I do have others who are listening by telephone.

09:02:33

9

me get the calls transferred in now, although they're muted,

09:02:46

10

09:02:46

11

09:02:46

12

09:02:46

13

09:02:48

14

has now transferred in on the telephone.

09:02:57

15

from counsel, and I understand that your participation is muted.

09:03:05

16

It would help me, before I hear your specific arguments

09:03:11

17

and get into the PowerPoint®, to walk through some of the matters

09:03:18

18

that I'm trying to figure out and, if you don't mind, have more

09:03:24

19

of a conversation about these matters where I can engage both

09:03:27

20

sides, rather than start with the formal presentations, counter,

09:03:35

21

then, you know, the rest of it.

09:03:39

22

09:03:45

23

frame the issues.

09:03:49

24

stay seated and you'll have your papers in front of you -- that

09:03:54

25

will be helpful -- and you may consult with each other as you

MR. MURATA:
Bank of America.

Thank you.
Jamie Isani of Hunton & Williams on behalf

All right.

What I would like to do -- and

Let

right?

MR. HASBUN:

They should be, but let me go inside,

Judge.

THE COURT:

Okay.

Let me welcome everybody else who
I've had appearances

Often this gives me more clarity on positions and helps
So I'm going to invite you for the moment to

November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 5 of 113
Oral Argument
5

09:03:57

1

need in addressing some of these questions.

09:04:00

2

Fair enough?

09:04:01

3

MR. CANTOR:

09:04:03

4

THE COURT:

09:04:11

5

in the following way:

09:04:17

6

to focus on the key agreement which is before me in this aspect

09:04:27

7

of the litigation and that's the Master Disbursement Agreement,

09:04:32

8

correct?

09:04:32

9

09:04:33

10

09:04:41

11

questions are not trying to lead one side or another down a

09:04:46

12

rabbit hole and into admissions or a trap, so please understand

09:04:53

13

I don't have an agenda for that purpose in starting to ask these

09:04:57

14

questions.

09:05:01

15

09:05:06

16

to, starting with the plaintiffs' summary judgment motions, that

09:05:12

17

the motions are directed against Bank of America solely in its

09:05:19

18

capacity as Disbursement Agent under the Master Disbursement

09:05:25

19

Agreement?

09:05:26

20

Would you agree to that or not?

09:05:29

21

MR. HENNIGAN:

09:05:32

22

THE COURT:

09:05:33

23

MR. HENNIGAN:

09:05:37

24

09:05:43

25

Yes, Your Honor.
All right.

What I would like to try to start with is

Correct, Your Honor.

MR. CANTOR:
THE COURT:

So let's go through the matter

Okay.

And let me preface this:

My

It's really to help me clarify everybody's position.

But is it a correct statement of position with regard

And as Administrative Agent, Your Honor.

And as what?
Administrative agent under the Credit

Agreement.

THE COURT:

Okay.

But that's a different phase of the
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 6 of 113
Oral Argument
6

09:05:45

1

case, isn't it?

09:05:47

2

In terms of what we're here for today, aren't we

09:05:52

3

focusing on what Bank of America did or did not do as the

09:06:06

4

administrating agent under the Master Disbursement Agreement?

09:06:09

5

09:06:11

6

09:06:17

7

Their role as Administrative Agent becomes relevant in

09:06:20

8

terms of their knowledge of the Credit Agreement and aspects of

09:06:23

9

the Credit Agreement, but their conduct, actions and inactions

09:06:28

10

09:06:33

11

THE COURT:

09:06:34

12

MR. CANTOR:

09:06:37

13

thought it was more simple and straightforward than that; that

09:06:40

14

this is about whether Bank of America complied with its duties

09:06:43

15

as Disbursement Agent full stop.

09:06:49

16

09:06:53

17

this, so help me understand a little bit more about how their

09:07:00

18

role as Administrative Agent under the Credit Agreement

09:07:07

19

interplays here.

09:07:12

20

09:07:14

21

there are interlocking agreements, that one agreement refers to

09:07:17

22

the other agreement; but I agree with counsel that the conduct

09:07:20

23

at question in these motions is conduct as Disbursement Agent.

09:07:24

24

09:07:27

25

MR. HENNIGAN:

Your Honor, absolutely what we're

focusing on is the conduct of BofA as Disbursement Agent.

absolutely as Disbursement Agent.

THE COURT:

Any comments?
My only comment would be that I just

I really do want to hear your position on

MR. HENNIGAN:

THE COURT:

Only to the extent, Your Honor, that

Okay.

That's what I'm trying to focus on

and see if my understanding of the matters before me were just
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 7 of 113
Oral Argument
7

09:07:34

1

that and, yet, I do want further to ask questions about the

09:07:41

2

interrelationships of agreements because there are times when

09:07:46

3

Bank of America refers to the Credit Agreement, such as on

09:07:52

4

notice requirements, and there are no comparable requirements

09:07:57

5

that I saw written in the same way in the Disbursement

09:07:59

6

Agreement.

09:08:02

7

09:08:11

8

09:08:13

9

09:08:15

10

MR. HENNIGAN:

09:08:16

11

THE COURT:

09:08:19

12

09:09:00

13

MR. DILLMAN:

09:09:01

14

THE COURT:

09:09:03

15

me know when you get there.

09:09:16

16

MR. HENNIGAN:

09:09:18

17

THE COURT:

09:09:22

18

moment, let me rephrase that.

09:09:32

19

how I am supposed to read the Disbursement Agreement in

09:09:37

20

relationship to the Credit Agreement?

09:09:40

21

09:09:43

22

the Credit Agreement that are referred to in Bank of America's

09:09:47

23

briefs, from the plaintiffs' standpoint, do those notice

09:09:55

24

provisions apply and sort of fill in a gap with regard to how

09:10:00

25

notice is given in the Disbursement Agreement?

So let me ask both sides about some of these matters.
Do you have the Disbursement Agreement in front of you?
I do, Your Honor.

MR. CANTOR:

Page 80?

About to.

Yes.

If you don't mind, can you turn to

Take a moment.
Sorry for the delay, Your Honor.
No.

That's all right.

Take a moment.

Let

We're there.

All right.

Before I focus on 9.1 for a
What is each side's position on

In other words, where there are notice provisions in

November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 8 of 113
Oral Argument
8

09:10:05

1

Do both sides agree that these agreements are one and

09:10:09

2

09:10:14

3

09:10:15

4

that they are one and the same.

09:10:18

5

they are intertwined.

09:10:20

6

09:10:23

7

points in each of the agreements they are referred to as the

09:10:29

8

loan agreements or other terms that make it clear that this was

09:10:34

9

a complete set of documents that was meant to be referred to in

09:10:38

10

09:10:40

11

That said, Your Honor, you know, I will --

09:10:42

12

THE COURT:

09:10:46

13

to refer to the Disbursement Agreement, § 11.5, which talks

09:10:52

14

about the entire agreement.

09:10:55

15

09:10:58

16

instrument attached hereto, or referred to herein,

09:11:02

17

integrate all the terms and conditions mentioned herein, or

09:11:07

18

incidental hereto, and supersede all oral negotiations,

09:11:11

19

prior writings," et cetera.

09:11:16

20

So what am I to make of that?

09:11:21

21

MR. HENNIGAN:

09:11:24

22

that regard need to be read, from the disbursement agreement's

09:11:28

23

perspective, as integrated documents, remembering that the

09:11:31

24

lenders that we represent are not signatories to the

09:11:34

25

Disbursement Agreement.

the same and intertwined?
Your Honor, I don't know that I would say

MR. CANTOR:

I certainly would agree that

They were all executed at the same time.

At various

an integrated fashion.

Well, let me not mislead anybody.

I want

It says:

"This agreement, and any agreement, document or

Your Honor, I believe the agreements in

They're signatories to the Credit
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 9 of 113
Oral Argument
9

09:11:38

1

Agreement only.

09:11:41

2

THE COURT:

09:11:53

3

me turn to Bank of America.

09:11:56

4

09:12:02

5

the Disbursement Agent, has responsibilities to the Term

09:12:05

6

Lenders --

09:12:08

7

MR. CANTOR:

09:12:09

8

THE COURT:

09:12:11

9

09:12:12

10

09:12:14

11

Agent for the process of disbursing funds and in that sense they

09:12:21

12

have obligation -- let me put a finer point on it.

09:12:26

13

09:12:28

14

Term Lenders are not signatories to the Disbursement Agent that

09:12:31

15

they don't have the right to sue Bank of America for breaching

09:12:36

16

its duties as Disbursement Agent.

09:12:40

17

argument.

09:12:40

18

09:12:47

19

09:12:52

20

09:12:57

21

an authorized Disbursement Agent to act on its behalf

09:13:01

22

hereunder and under the control agreements."

09:13:06

23

09:13:09

24

the record.

09:13:18

25

summary judgment motions that we've missed here?

Okay.

But there's no argument -- well, let

Under the Disbursement Agreement, Bank of America, as

Yes, Your Honor.
-- independent, even if they're not

signatories to it.

MR. CANTOR:

Well, they are appointed as Disbursement

We have never contended, Your Honor, that because the

THE COURT:

All right.

We've never raised that

So let's go back to 9.1 for a

minute and just the beginning of that section:
"Each of the funding agents hereby irrevocably appoints

I've never seen anything called "control agreements" in
Did anybody put any control agreements in their

November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 10 of 113
Oral Argument
10

The control agreements -- that's

09:13:22

1

09:13:26

2

interesting.

09:13:30

3

seem to be defined.

09:13:32

4

09:13:37

5

agreements included, among other things, the Credit Agreement,

09:13:41

6

and this would be one place where there's an interplay.

09:13:45

7

THE COURT:

09:13:47

8

MR. CANTOR:

09:13:48

9

THE COURT:

09:13:50

10

09:13:50

11

09:13:52

12

believe "control agreement" is a defined term referring to other

09:13:54

13

agreements.

09:13:59

14

09:14:04

15

Is there something independent that was signed called "control

09:14:09

16

agreement?"

09:14:15

17

that in a moment.

09:14:16

18

09:14:23

19

09:14:35

20

09:14:38

21

09:14:38

22

09:14:43

23

09:14:47

24

09:14:51

25

MR. CANTOR:

I'm looking at the definitions, and it doesn't

I think everyone had always understood that the control

My question is very narrow.
Okay.
Is there a document called "control

agreement"?
I do not believe so, Your Honor.

MR. CANTOR:

THE COURT:

I

What about from the plaintiffs' standpoint?

I'll give you something specific in reference to

What's your understanding of that?

Doesn't that have

some significance to that clause which is an issue in this case?

MR. HENNIGAN:

Your Honor, we've never focused on that

issue.

THE COURT:

Well, if you turn to your appendix of

definitions on Page 9, it says:
"'Control agreements' means the control agreements of
even date herewith, executed by the project entities, in
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 11 of 113
Oral Argument
11

09:14:56

1

respect of the accounts in favor of the Disbursement

09:14:59

2

Agent," et cetera, et cetera.

09:15:02

3

09:15:08

4

definitions, a document which was executed at the time of the

09:15:13

5

Disbursement Agreement called the control agreement which is

09:15:18

6

referenced in 9.1 and seems to have perhaps some significance

09:15:25

7

and, yet, I can't find it in the materials referenced by either

09:15:32

8

party.

09:15:32

9

09:15:36

10

slightly imperfect answer but in the definition there, it refers

09:15:40

11

to § 2.2.

09:15:44

12

09:15:50

13

agreement, I think what you will see is that the control

09:15:53

14

agreements seem to refer to agreements that essentially allow

09:15:56

15

the Disbursement Agent to move funds from bank accounts which

09:16:04

16

are in the name of the project entities.

09:16:09

17

09:16:14

18

example of one of the problems that I'm having trying to

09:16:20

19

understand the document that is at issue here.

09:16:24

20

09:16:34

21

notices, and look at subpart 2, it refers to the controlling

09:16:47

22

person notifying the Disbursement Agent that a default or Event

09:16:51

23

of Default has occurred.

09:16:53

24

Isn't "controlling person" and all of its

09:16:59

25

responsibilities defined in the control agreement?

So I beg to differ.

MR. CANTOR:

There is, according to the

Your Honor, I think this is going to be a

If you turn to § 2.2, which is Pages 3, 4, and 5 of the

THE COURT:

Okay.

But let me give you a specific

If you turn to Page 10 under § 2.5.1, the stop funding

November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 12 of 113
Oral Argument
12

No, Your Honor.

It is defined in this

09:17:01

1

09:17:03

2

agreement as until the exhaustion of the second mortgage

09:17:09

3

proceeds -- I am looking at Page 10 of the appendix -- as until

09:17:13

4

the exhaustion of the second mortgage proceeds account, the

09:17:18

5

trustee and thereafter the Bank Agent.

09:17:25

6

09:17:30

7

here, Bank of America, I get back to which hat is Bank of

09:17:35

8

America wearing where it is being sued?

09:17:43

9

the Disbursement Agent?

09:17:46

10

09:17:48

11

09:17:50

12

09:17:53

13

well, although the Bank Agent is the Bank of America under

09:17:59

14

2.2 -- 2.5.1, subpart 2.

09:18:05

15

09:18:12

16

into a discussion about is some of the later language under

09:18:18

17

Article 9 where Bank of America is wearing one hat other than

09:18:27

18

Disbursement Agent and gains certain information, and then under

09:18:36

19

certain language it's not obligated to recognize that

09:18:41

20

information under the other half as Disbursement Agent.

09:18:46

21

09:18:57

22

is Bank of America acting at any particular point in time

09:19:01

23

factually, but I don't want to get there quite yet.

09:19:04

24

09:19:09

25

MR. CANTOR:

THE COURT:

So when we're discussing who is being sued

Is it only its hat as

That's my understanding, Your Honor, and

MR. CANTOR:

that's how we've approached the case.

MR. HENNIGAN:

THE COURT:

I think that's the way we look at it as

Okay.

So one of the things we will get

I'm trying to sort all that out as to in which capacity

So let's continue our discussion of the structure of
the agreement itself.

Now, is it the parties' position that in
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 13 of 113
Oral Argument
13

09:19:28

1

interpreting this language in 9.1, I don't need to worry about

09:19:38

2

or look at anything called control agreements?

09:19:42

3

09:19:43

4

09:19:43

5

MR. HENNIGAN:

09:19:45

6

THE COURT:

09:19:47

7

MR. CANTOR:

09:19:48

8

THE COURT:

09:19:54

9

Does either party contend that the Disbursement

09:20:00

10

09:20:04

11

MR. CANTOR:

09:20:04

12

THE COURT:

09:20:06

13

MR. CANTOR:

09:20:16

14

MR. HENNIGAN:

09:20:19

15

09:20:19

16

THE COURT:

09:20:21

17

MR. HENNIGAN:

09:20:24

18

THE COURT:

09:20:29

19

09:20:32

20

So let me give you a question about that.

09:20:48

21

sentence -- let's see -- of 9.1 talks about the Disbursement

09:20:55

22

Agent accepts such appointments and agrees to exercise

09:21:01

23

commercially reasonable efforts and utilize commercially prudent

09:21:05

24

practices in the performance of its duties hereunder, consistent

09:21:10

25

with those of similar institutions holding collateral,

Yes, Your Honor, that would be our

MR. CANTOR:
position.

That's our position as well.

Okay.

So I should ignore all that --

Yes, sir.
-- right?

That's your mutual position.

Agreement contains an ambiguity -Defendants --- under New York law?
Defendants do not, Your Honor.
There is a potential ambiguity, Your

Honor.
Well, how did you argue it in your briefs?
We have argued no ambiguity.

Okay.

Thank you.

That's what I'm trying

to find out, everybody's position.

November 18, 2011

The second

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 14 of 113
Oral Argument
14

09:21:15

1

et cetera, and disbursing control funds.

09:21:22

2

09:21:30

3

How do I know what that standard is?

09:21:36

4

agreement as a specific definition.

09:21:40

5

09:21:44

6

comes time to apply that definition to specific conduct, it's a

09:21:53

7

determination that one, you know, will make.

09:21:59

8

09:22:01

9

09:22:05

10

to whether something is or is not commercially reasonable,

09:22:10

11

recognizing, Your Honor, our position that § 9.1 is just sort of

09:22:16

12

a general introductory provision.

09:22:19

13

THE COURT:

09:22:20

14

MR. CANTOR:

09:22:20

15

THE COURT:

09:22:22

16

MR. CANTOR:

09:22:23

17

THE COURT:

09:22:29

18

09:22:34

19

09:22:36

20

check-the-box provision.

09:22:40

21

commercially reasonable or was it not commercially reasonable.

09:22:43

22

09:22:46

23

ambiguity under New York law that invites extrinsic evidence as

09:22:52

24

to what that is, to the extent it's material?

09:22:58

25

Doesn't that refer necessarily to extrinsic evidence?

MR. CANTOR:

It is not defined in the

Well, I think, Your Honor, that when it

Obviously, it has to be based on the evidence before
you, and the trier of fact is entitled to apply its judgment as

We will talk about that.
Correct.
I am only talking about 9.1.
Okay.
It references something outside of the four

corners of the agreement as a standard, does it not?

MR. CANTOR:

THE COURT:

MR. CANTOR:

It does in the sense that it is not a

Okay.

You need to say was something

So as to that section, is there an

To the extent it's material and leaving
November 18, 2011

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Oral Argument
15

09:23:03

1

that question aside, I think I am struggling with how to answer

09:23:07

2

it because it is an odd provision in the sense that it is

09:23:10

3

essentially imposing a tort standard into a contract.

09:23:16

4

09:23:20

5

sense that it's a contract interpretation point and thus it is

09:23:25

6

an ambiguous contract provision.

09:23:29

7

09:23:32

8

acting commercially reasonable is necessarily going to be a

09:23:37

9

judgment that's committed to the trier of fact.

09:23:45

10

09:23:59

11

Bank of America says, well, you know, that shouldn't be

09:24:02

12

considered, but it raised the question of extrinsic evidence in

09:24:11

13

terms of this motion for summary judgment.

09:24:20

14

New York law, as best as my independent research

09:24:24

15

discloses, is different than Florida law in terms of when

09:24:29

16

extrinsic evidence is permitted and how it determines ambiguity.

09:24:37

17

09:24:41

18

York law as I understand it.

09:24:42

19

MR. CANTOR:

09:24:47

20

THE COURT:

09:24:51

21

law that in the face of ambiguity, recourse to extrinsic

09:24:56

22

evidence is permissible insofar as that evidence tends to

09:25:00

23

clarify the meaning of the language employed by the parties.

09:25:03

24

So here the parties employed language which by its very

09:25:12

25

nature refers to a standard that is not defined in the agreement

I don't know that it requires extrinsic evidence in the

The determination as to whether someone is or is not

THE COURT:

Well, I have this expert submission which

There's no latent versus patent distinction under New

Right.
There seems to be some language in the case

November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 16 of 113
Oral Argument
16

09:25:17

1

itself and adds somewhat to the confusion here as to what that

09:25:23

2

actually is and means.

09:25:26

3

MR. CANTOR:

09:25:28

4

I guess my point from a contract interpretation

09:25:31

5

perspective would be that -- and you are right, New York law

09:25:36

6

does not allow the Court to consider extrinsic evidence for the

09:25:39

7

purpose of proving that there is an ambiguity in the first

09:25:42

8

place.

09:25:45

9

09:25:51

10

what the contract sets up as its standard under 9.1, to the

09:25:57

11

extent that 9.1 applies in any given situation.

09:26:03

12

09:26:07

13

party has complied with that standard, I think, like any other

09:26:13

14

contract determination, that's going to be based on the evidence

09:26:16

15

and that will be within the province of the finder of fact.

09:26:21

16

09:26:24

17

correctly, Your Honor, I don't believe that that makes the

09:26:26

18

agreement ambiguous or requires a reference to extrinsic

09:26:34

19

evidence in the way that one normally talks about it in the

09:26:38

20

contract interpretation context if I'm understanding you.

09:26:42

21

THE COURT:

09:26:45

22

MR. HENNIGAN:

09:26:50

23

09:26:51

24

09:26:55

25

Yeah, I see your point, Your Honor.

There is no ambiguity as to what the contract says and

When the time comes for someone to determine whether a

But I don't think, if I am understanding your question

Any comments from plaintiffs' side?
If I followed Mr. Cantor along, I think

I agree with him.

THE COURT:

So let's talk -- I know there is a lot of

discussion about this in the briefing, but I'd like to talk
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 17 of 113
Oral Argument
17

09:27:01

1

about 9.1 and then the other parameters under 9.2 and 9.3.

But

09:27:11

2

before getting into that discussion, I'd like to go back into

09:27:16

3

structure again.

09:27:19

4

09:27:29

5

and please help me with your own thoughts on this -- is the

09:27:39

6

borrowers make an advance request, along with retail affiliates,

09:27:52

7

in the form specified in Exhibit C-1, and this is in accordance

09:27:55

8

with § 2.4 of the agreement and that's what kicks off the

09:28:02

9

process, correct?

09:28:03

10

MR. HENNIGAN:

09:28:04

11

MR. CANTOR:

09:28:06

12

THE COURT:

09:28:16

13

09:28:23

14

09:28:33

15

09:28:35

16

MR. CANTOR:

09:28:36

17

THE COURT:

09:28:42

18

MR. HENNIGAN:

09:28:44

19

09:28:45

20

THE COURT:

09:28:46

21

MR. HENNIGAN:

09:28:48

22

THE COURT:

09:28:54

23

excuse me, a drafted document incorporated into the Disbursement

09:28:57

24

Agreement.

09:28:58

25

So the way the agreement works as I understand it --

Yes.
Yes, Your Honor.

Let me see if I can impose upon my staff to

bring in some water.

Oh, thank you very much.

C-1 is pretty much a complete document in and of itself
drafted by the parties -Yes, Your Honor.
-- correct?
Drafted by the parties to the

Disbursement Agreement.
Right.
BofA and the borrowers.

Yes.

MR. HENNIGAN:

I mean, it is a drafted agreement,

Correct.
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 18 of 113
Oral Argument
18

It contains all of these affirmative

09:29:03

1

09:29:07

2

statements and representations and the like so that the request

09:29:18

3

is made in accordance with this C-1 document and in the C-1

09:29:26

4

document on all these representations --

09:29:29

5

MR. CANTOR:

09:29:31

6

THE COURT:

09:29:35

7

09:29:37

8

MR. CANTOR:

09:29:38

9

THE COURT:

09:29:54

10

submitted, under 2.4.4, the Disbursement Agent and the

09:30:00

11

construction consultant have to review and determine whether all

09:30:08

12

the documentation was provided.

09:30:13

13

09:30:17

14

reasonable efforts to notify project entities of any

09:30:21

15

deficiency."

09:30:23

16

So that's the next step in this process, correct?

09:30:30

17

MR. CANTOR:

09:30:36

18

THE COURT:

09:30:40

19

and ask about it because in regard to Bank of America's role

09:30:52

20

wearing the hat of Disbursement Agent, of course Bank of America

09:30:57

21

says, "Look, our job here is ministerial.

09:31:04

22

going through the checklist," right?

09:31:07

23

MR. CANTOR:

09:31:08

24

THE COURT:

09:31:13

25

THE COURT:

Yes, Your Honor.
-- there are blanks to be filled in, date,

amount, signatures, things like that.
Right.
Okay.

So after the request, C-1, is

Then here are these words again, "and use commercially

Yes, Your Honor.
I wanted to note one thing in this process

We are, in effect,

Yes, Your Honor.
"We're doing this and, by the way, we're

only paid a relatively small amount of money for this function."
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 19 of 113
Oral Argument
19

Yes, Your Honor.

09:31:20

1

MR. CANTOR:

09:31:21

2

THE COURT:

09:31:27

3

obligation or the like for Bank of America to carry some type of

09:31:35

4

insurance for its function.

09:31:41

5

There wasn't any insurance criteria, right?

09:31:44

6

MR. CANTOR:

Not that I'm aware of, Your Honor, no.

09:31:47

7

THE COURT:

In fact, did it have sort of malpractice

09:31:50

8

09:31:50

9

09:31:53

10

somewhere within the organization there would be a policy that

09:31:58

11

might cover this, but there was no insurance specifically

09:32:01

12

obtained for this role.

09:32:03

13

09:32:07

14

09:32:08

15

MR. CANTOR:

09:32:09

16

THE COURT:

09:32:10

17

So turn to Page 9 for a moment.

09:32:19

18

debt service notifications, do you see that paragraph that

09:32:24

19

begins with "the Disbursement Agent shall"?

09:32:26

20

MR. CANTOR:

09:32:35

21

THE COURT:

09:32:38

22

agreement where there is an affirmative obligation on the

09:32:42

23

Disbursement Agent to do more than just ministerial acts.

09:32:47

24

has to use reasonable diligence to assure the construction

09:32:53

25

consultant performs its review of the materials required,

I didn't see anywhere in the agreements any

insurance?

MR. CANTOR:

THE COURT:

Not specifically.

I don't know whether

It probably wouldn't cover gross negligence

anyway, right?
Probably not.
All right.
In the paragraph below

Uh-huh.
Here is an example of one place in the

November 18, 2011

It

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 20 of 113
Oral Argument
20

09:33:02

1

et cetera.

09:33:02

2

09:33:10

3

09:33:12

4

Would you agree from Bank of America's side?

09:33:15

5

MR. CANTOR:

09:33:20

6

09:33:22

7

09:33:25

8

the way, this would be an instance where the commercial

09:33:27

9

reasonableness requirement would apply.

09:33:29

10

09:33:32

11

the construction consultant performs its review of the

09:33:35

12

materials, I don't think that it is a terribly high standard.

09:33:38

13

09:33:42

14

09:33:44

15

09:33:48

16

09:33:50

17

MR. CANTOR:

09:33:51

18

THE COURT:

09:33:56

19

09:34:00

20

MR. CANTOR:

09:34:01

21

THE COURT:

09:34:04

22

MR. CANTOR:

09:34:05

23

THE COURT:

09:34:12

24

09:34:13

25

I noted this as a higher standard of obligation than
just ministerial checklists.

It certainly is more than just a

checklist.
I think, though, that using reasonable diligence -- by

But I think using reasonable diligence to assure that

It's not checking a box; it's making sure that the
construction consultant is doing its job.

THE COURT:

Let me back up.

The construction

consultant files its own piece of paper -Right.
-- Saying, "We looked at everything and the

advance is within the projected budget" -Right.
-- "and the projected construction cost."
Right.
So it files its piece of paper and it

certifies that.

MR. CANTOR:

Right.
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 21 of 113
Oral Argument
21

Now, you have all your Article 9 things

09:34:14

1

09:34:20

2

which you point out and argue.

09:34:22

3

don't have to do anything more than accept representations.

09:34:29

4

MR. CANTOR:

09:34:30

5

THE COURT:

09:34:32

6

agreement that seemed to me to impose, trying to read these

09:34:38

7

things together, a higher standard on Bank of America to do

09:34:44

8

reasonable diligence.

09:34:45

9

09:34:47

10

way.

09:34:51

11

is use reasonable diligence to make sure that the construction

09:34:55

12

consultant is doing the work and is doing it in a way that will

09:34:59

13

allow the advance request ultimately to be processed in a timely

09:35:04

14

fashion.

09:35:04

15

09:35:09

16

construction consultant performs, that's where § 9.3.2 would

09:35:15

17

kick in and says that Bank of America is entitled to rely on the

09:35:21

18

certification that the construction consultant provides in

09:35:26

19

determining that the things that the construction consultant is

09:35:29

20

responsible for have been satisfied.

09:35:31

21

09:35:34

22

reviews as required by § 2.4 is just to make sure that the

09:35:40

23

process is moving forward and is moving forward in a timely

09:35:43

24

fashion.

09:35:45

25

THE COURT:

MR. CANTOR:

You say, we, Bank of America,

Right.
I'm pointing out one other part of the

I think, Your Honor, it works the other

What Bank of America is required to do in this provision

When it comes to the substance of the review that the

The reasonable diligence to assure that it performs its

THE COURT:

All right.

Well, let me hold on that for a

November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 22 of 113
Oral Argument
22

09:35:47

1

second and turn to the plaintiffs' side.

09:35:52

2

09:36:00

3

there, by this provision -- and I know this isn't the issue

09:36:04

4

which is on summary judgment.

09:36:10

5

costs per se.

09:36:15

6

09:36:18

7

your position with regard to this aspect?

09:36:25

8

Agent have a higher standard with regard to reviewing the

09:36:34

9

construction consultant's performance, et cetera, than it does

09:36:42

10

09:36:47

11

09:36:48

12

come back and catch something that was part of the colloquy on

09:36:52

13

the other side.

09:36:52

14

THE COURT:

09:36:53

15

MR. HENNIGAN:

09:36:56

16

the same, which is commercially reasonable, and I believe that

09:37:00

17

this articulation of reasonable diligence, I don't read it

09:37:05

18

different from commercially reasonable efforts to make sure the

09:37:08

19

construction consultant is doing his job.

09:37:10

20

THE COURT:

09:37:10

21

MR. HENNIGAN:

09:37:13

22

say, plenary obligations throughout the agreement that Bank of

09:37:19

23

America use commercially reasonable diligence, efforts,

09:37:22

24

whatever, to make sure that the conditions are fulfilled.

09:37:27

25

I'd like to have your comments on the question.

Is

It is not about the construction

In terms of the structure of the agreement, what is
Does the Disbursement

with regard to other obligations?

MR. HENNIGAN:

Let me answer that and I would like to

Go ahead.
I think their standard remains roughly

Okay.
So I think there are, you know, I would

The part I wanted to bounce back to, Your Honor, was
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 23 of 113
Oral Argument
23

09:37:32

1

the point that you referred to, the relatively modest fee that

09:37:37

2

Bank of America was earning for this.

09:37:41

3

underwriter of these loans, Your Honor.

09:37:45

4

tens of millions of dollars in putting this package together.

09:37:50

5

This Disbursement Agreement was an essential part of

09:37:56

6

the comfort assurances that lenders look to in order to put

09:38:01

7

their money into the deal and so, yeah, they may have only made

09:38:04

8

$40,000 on this one, but it was an integral part of the overall

09:38:10

9

financing package.

09:38:13

10

09:38:15

11

09:38:18

12

some debate on this issue but in terms of the Disbursement Agent

09:38:24

13

hat and function, there is no dispute that Bank of America was

09:38:31

14

being paid a limited amount of money for that job.

09:38:37

15

09:38:40

16

earmarked specifically for that job, it was a very modest amount

09:38:44

17

of money.

09:38:46

18

THE COURT:

09:38:47

19

MR. HENNIGAN:

09:38:49

20

THE COURT:

09:38:54

21

relations to this deal other than Disbursement Agent, but I

09:39:00

22

don't want to go there yet.

09:39:02

23

09:39:12

24

to understand the general introductory language in 9.1 on

09:39:19

25

commercial reasonableness with regard to other aspects of the

Bank of America was the
Bank of America earned

It had to be here and it had to be performed

by somebody that people trusted.

THE COURT:

All right.

MR. HENNIGAN:

I knew I was going to invite

I would say in terms of funds that were

Yes.

That was my only point.

It was part of the overall deal.

I understand that Bank of America has other

My main point in trying to address this issue is to try

November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 24 of 113
Oral Argument
24

09:39:23

1

agreement.

09:39:25

2

09:39:33

3

diligence has to be done with regard to the construction

09:39:39

4

consultant's obligations.

09:39:42

5

09:39:48

6

the Disbursement Agent and the construction consultant shall

09:39:52

7

review the advance requests and attachments thereto to determine

09:39:56

8

whether all required documentation has been provided and shall

09:39:59

9

use commercially reasonable efforts, et cetera.

09:40:02

10

09:40:08

11

integrate the whole, one of the points that is of concern to me

09:40:18

12

is how do you apply that introductory language in 9.1 with

09:40:27

13

regard to the other parts of the agreement where there is

09:40:29

14

specific reference then to the commercial diligence or

09:40:32

15

equivalent and then the rest of Article 9 that seems to limit

09:40:41

16

how that is exercised or the conditions under which it is

09:40:46

17

exercised.

09:40:47

18

09:40:49

19

about this is if you start with Article 9 as a whole.

09:40:56

20

essentially a contract within a contract.

09:41:04

21

most part, the rest of the Disbursement Agreement deals with

09:41:09

22

mechanics for disbursing funds, but Article 9 is specifically

09:41:14

23

limited to the retention, the rights, the responsibilities of

09:41:16

24

the Disbursement Agent.

09:41:19

25

I pointed out to you this one matter where reasonable

Also, under 2.4.4(A) under general review, here again

So when I am looking at the document and trying to

MR. CANTOR:

Your Honor, I think the best way to think
It is

You know, for the

So you can look at 9.1, I think, as like a whereas
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Oral Argument
25

09:41:23

1

09:41:26

2

It sets forth the general purpose of the agreement for

09:41:33

3

retaining the Disbursement Agent, and it leaves the details for

09:41:38

4

the paragraphs that follow.

09:41:40

5

09:41:42

6

of America is going generally to perform its duties in a manner

09:41:47

7

that is consistent with similarly situated institutions like

09:41:52

8

indenture trustees and the like, and it provides a general

09:41:56

9

standard of care for those Disbursement Agent obligations that

09:42:01

10

09:42:06

11

09:42:10

12

this question, and I want to get back to the plaintiffs'

09:42:13

13

response, what you said in a second, but let me take one step

09:42:19

14

further in our discussion and set up the question and then get

09:42:24

15

back to what we're talking about.

09:42:27

16

09:42:29

17

Disbursement Agreement on 2.5.1?

09:42:46

18

important aspect of the flow of obligations under this

09:42:56

19

Disbursement Agreement, so let's go over this together.

09:43:05

20

"In the event that:

09:43:07

21

"1.

22

clause for this agreement within an agreement.

So what it says is it is an acknowledgement that Bank

are not otherwise subject to more specific provisions.

THE COURT:

But I have a specific purpose in asking

Could you turn your attention to Page 10 of the
This is, to me, a very

The conditions precedent to an advance have not

been satisfied; or,

09:43:11

23

"2.

The controlling person notifies the Disbursement

09:43:13

24

Agent that a default or an Event of Default has occurred

09:43:18

25

and is continuing, then the Disbursement Agent shall notify
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Oral Argument
26

09:43:24

1

the project entities, and each funding agent thereof as

09:43:29

2

soon as reasonably possible, a stop funding notice,"

09:43:33

3

et cetera, et cetera.

09:43:34

4

09:43:41

5

of that, the controlling person, whoever that is -- and I assume

09:43:47

6

that has to be somebody defined under the control agreement.

So let's go back and break that down.

Under subpart 2

7

No?

09:43:53

8

MR. CANTOR:

09:43:55

9

09:44:00

10

09:44:02

11

THE COURT:

09:44:06

12

MR. CANTOR:

09:44:06

13

THE COURT:

09:44:13

14

09:44:21

15

09:44:26

16

a formal demand to Bank of America as the Disbursement Agent

09:44:33

17

that there's a notice of default?

09:44:35

18

09:44:36

19

agreement contemplates for purposes of making sure that

09:44:40

20

everything is papered in case there is a later litigation and,

09:44:44

21

by the way, Your Honor, this --

09:44:45

22

THE COURT:

09:44:50

23

MR. CANTOR:

09:44:55

24

performing the agent functions at Bank of America were all part

09:44:59

25

of the same specific group, the credit debt products group in

No, Your Honor.

The controlling person is

defined in this agreement as, for purposes of our discussion,
the Bank Agent.

get to.

Well, the Bank Agent being Bank of America?
Yes, Your Honor.
Okay.

Okay.

How does this work?

So this is what I'm trying to

Bank of America notifies itself?

Bank of America, as the controlling person, then writes

MR. CANTOR:

That would be the process that the

Which portion of Bank of America does this?
Your Honor, the individuals who were

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Oral Argument
27

09:45:09

1

Dallas, and, yes, Your Honor, it is a formulistic requirement.

09:45:16

2

09:45:19

3

who are the controlling person at Bank of America are also the

09:45:20

4

same people who are disbursement agents?

09:45:22

5

09:45:27

6

specific individuals who actually press the button and move the

09:45:32

7

money, but the people who are performing this function and

09:45:34

8

making the decisions are the same group of people.

09:45:36

9

09:45:39

10

Somebody under the definition of controlling person has to make

09:45:44

11

a decision to pull the trigger --

09:45:46

12

MR. CANTOR:

09:45:47

13

THE COURT:

09:45:51

14

09:45:56

15

MR. CANTOR:

09:45:57

16

THE COURT:

09:46:01

17

today about how Bank of America is being sued here, is it sued

09:46:10

18

as only Disbursement Agent, or is it sued as controlling agent

09:46:20

19

or controlling person, and how do you divide up the knowledge

09:46:26

20

that Bank of America has as controlling person from that which

09:46:30

21

it has as Disbursement Agent?

09:46:33

22

MR. CANTOR:

09:46:37

23

09:46:40

24

09:46:43

25

THE COURT:

MR. CANTOR:

THE COURT:

Let me narrow this down.

The same people

Yes, Your Honor, with the exception of the

I'm talking about the decision-makers.

Yes, Your Honor.
-- and then notifies itself, wearing a

different hat, that such a decision has been made.
Right, Your Honor.
Okay.

So when I started our discussion

Well, Your Honor, let me answer that

somewhat obliquely, but I think you'll see where I'm going.
This actually goes back to one of your original
questions about what is the relevance of the Credit Agreement
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28

09:46:46

1

here because the Credit Agreement which governs the Bank Agent,

09:46:53

2

which is synonymous with Administrative Agent, that is where you

09:46:57

3

get the provision that Your Honor alluded to earlier this

09:47:00

4

morning about knowing whether there has been a default or an

09:47:04

5

Event of Default.

09:47:05

6

09:47:08

7

specifically provides that Bank of America is not deemed to have

09:47:10

8

notice of an Event of Default or a default unless it receives an

09:47:13

9

actual notice to that effect.

09:47:16

10

09:47:21

11

America as Bank Agent is not required to notify the Disbursement

09:47:26

12

Agent under this provision here and so therefore you --

09:47:31

13

09:47:39

14

does controlling person, namely Bank of America wearing a

09:47:43

15

different hat, have an independent duty and responsibility to

09:47:51

16

review whether there has been a default and pull the trigger?

09:47:54

17

09:47:58

18

09:48:02

19

09:48:07

20

09:48:13

21

09:48:18

22

plaintiffs in this discussion -- but let me stick with them for

09:48:21

23

a second because I'd like to hear their response before

09:48:25

24

plaintiffs' response.

09:48:28

25

There is a provision in the Credit Agreement that

So until it receives that actual notice, Bank of

THE COURT:

But my question is:

Controlling person,

I'm not sure what you mean by "review."

MR. CANTOR:

I

think that -- I'm sorry --

THE COURT:

Well, here's where I'm having difficulty

with the agreement before we get into the facts.
Your position -- and I am not trying to exclude

Your position is that Bank of America as Disbursement
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29

09:48:34

1

Agent has certain protections?

09:48:39

2

MR. CANTOR:

09:48:41

3

THE COURT:

09:48:43

4

controlling person, under some authority, seems to me to have

09:48:55

5

more obligation, if you will, to monitor what's going on in this

09:49:02

6

deal.

09:49:03

7

MR. CANTOR:

09:49:05

8

THE COURT:

09:49:09

9

MR. CANTOR:

09:49:15

10

Agreement which mirror the provisions in the Disbursement

09:49:18

11

Agreement about the Bank Agent or the Administrative Agent,

09:49:23

12

which again is synonymous, being allowed to rely on the same

09:49:28

13

types of certifications, representations and warranties that the

09:49:33

14

Disbursement Agent relies upon.

09:49:36

15

09:49:43

16

09:49:45

17

09:49:50

18

issue about controlling person notifying the Disbursement Agent

09:49:54

19

that there has been a default or an Event of Default, the Credit

09:49:58

20

Agreement specifically provides that Bank of America doesn't

09:50:01

21

have knowledge of an Event of Default or a Default, capital D

09:50:06

22

default, unless it has received notice from someone of that

09:50:10

23

event.

09:50:10

24

So what you get is, if you focus specifically on 2.5.1,

09:50:17

25

it is undisputed that Bank of America never received a notice of

Yes.
All right.

But Bank of America as

I would disagree with that, Your Honor.
Okay.

Tell me why you disagree with that.

Okay.

There are provisions in the Credit

That would be § 9.4 of the Credit Agreement, and § 9.3
of the Credit Agreement all deal with that.
When you get specific to 2.5.1, Your Honor, and the

November 18, 2011

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Oral Argument
30

09:50:21

1

default here, and so therefore this second portion of 2.5.1

09:50:28

2

which focuses on the controlling person as opposed to the

09:50:32

3

Disbursement Agent is not part of our discussion here this

09:50:34

4

morning, Your Honor.

09:50:35

5

THE COURT:

09:50:38

6

MR. CANTOR:

09:50:39

7

THE COURT:

09:50:42

8

One of the issues raised by plaintiffs is, well, they

09:50:46

9

09:50:56

10

09:51:00

11

09:51:02

12

They received an email from one of the Term Lenders who is not a

09:51:07

13

party here that expressed their views as to whether the Lehman

09:51:14

14

bankruptcy had certain consequences, but what it didn't do was

09:51:17

15

say this is an event of -- we hereby declare an Event of

09:51:20

16

Default.

09:51:21

17

09:51:23

18

09:51:25

19

09:51:29

20

provisions on notice as to what is formal notice, leaving aside

09:51:36

21

who has to give it for a moment, does the Credit Agreement

09:51:43

22

notice requirements apply here?

09:51:46

23

09:51:53

24

given in a written, certified way that creates a triggering

09:52:00

25

event, or is it enough that it be electronically transmitted?

Well, you are saying a lot of things.
Okay.
So let me go back to what you just said.

did receive notice from one of the Term Lenders that the Lehman
bankruptcy was a triggering Event of Default.

MR. CANTOR:

THE COURT:

I would say that is a mischaracterization.

Let me interrupt for a second and turn to

plaintiffs.
Since the Disbursement Agreement does not itself have

Is there a formal process where that notice has to be

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Oral Argument
31

If I am tracking it, Your Honor, it

09:52:08

1

09:52:09

2

seems to me that the unity of control agent and -- I am using

09:52:14

3

the right word, right, control agent?

MR. HENNIGAN:

Control person.

4

THE COURT:

09:52:19

5

MR. HENNIGAN:

09:52:20

6

being the Bank Agent and that same person being the disbursing

09:52:25

7

agent makes notice under that circumstance self-executing.

09:52:29

8

Notice to one is notice to the other automatically.

09:52:32

9

THE COURT:

09:52:34

10

The unity of the controlling person

Yes.

But let's say one of the Term

Lenders, like in this situation -Gotcha.

11

MR. HENNIGAN:

09:52:37

12

THE COURT:

09:52:43

13

notice in this formal sense under the Credit Agreement which

09:52:50

14

then is notice of appropriate communication for purposes of the

09:52:54

15

Disbursement Agreement?

09:52:55

16

MR. HENNIGAN:

09:52:59

17

MR. CANTOR:

09:53:01

18

09:53:05

19

09:53:09

20

is that, you know, we believe that there are all sorts of

09:53:13

21

problems here and we want you to check it out, that's not the

09:53:16

22

same thing as saying we, as Highland, subject to being liable

09:53:21

23

for doing so, hereby declare an Event of Default under the

09:53:27

24

relevant agreements.

09:53:28

25

-- sends an email.

Does that qualify as

It is absolutely a notice of default.
Your Honor, the issue is not the means of

transmission; the issue is the content of the transmission.
If what the Term Lender said, which is the case here,

Basically, they tried to have it both ways.
November 18, 2011

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32

So let me get back to 2.5.1.

We talked

09:53:30

1

09:53:37

2

about controlling person notifies, which is a triggering event

09:53:43

3

if that provision was met, but it wasn't met here.

09:53:47

4

MR. CANTOR:

09:53:48

5

THE COURT:

09:53:51

6

09:53:52

7

MR. CANTOR:

09:53:55

8

THE COURT:

09:53:57

9

09:54:02

10

person to Disbursement Agent that would meet that requirement,

09:54:09

11

is there?

09:54:09

12

09:54:11

13

since they are the same entity, notice to one is by definition

09:54:17

14

notice to the other.

09:54:17

15

THE COURT:

09:54:19

16

MR. CANTOR:

09:54:21

17

The contract specifically requires -- and, again, it

09:54:24

18

might seem overly formalistic as you sit here today, but you can

09:54:29

19

imagine a litigation situation where the failure to have all of

09:54:34

20

these specified boxes checked could be important.

09:54:37

21

09:54:41

22

notifying the disbursing agent, and there is no evidence in the

09:54:45

23

record that that ever happened.

09:54:48

24

09:54:51

25

THE COURT:

Correct.
So I don't have to pay any attention to

that subpart 2, right?

different?

That's my position, Your Honor.
And I don't know.

Do you have a position

There isn't any formal notice from controlling

MR. HENNIGAN:

As I said, Your Honor, I believe that

What do you say about that?
That is not what the contract says.

What 2.5.1 talks about is the controlling person

THE COURT:

All right.

But let's go back to Part 1:

In the event, 1, the conditions precedent to an advance have not
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Oral Argument
33

09:54:56

1

been satisfied.

09:55:06

2

09:55:10

3

this Disbursement Agreement to see who triggers that, who says

09:55:17

4

that.

Well, one thing I know is that Fontainebleau can say

09:55:24

5

that.

Fontainebleau can give notice and eventually later in the

09:55:28

6

deal did give notice that the conditions precedent were not

09:55:37

7

satisfied.

09:55:37

8

MR. CANTOR:

09:55:38

9

THE COURT:

09:55:40

10

09:55:50

11

as Disbursement Agent is doing its checklist and it

09:55:56

12

determines -- and I'm going to use something which is really not

09:55:59

13

our situation here -- but it determines that the construction

09:56:06

14

consultant has not adequately, reasonably been diligent in the

09:56:15

15

project costs and that condition has not been satisfied, or

09:56:18

16

something of that nature, that would be an event where the

09:56:28

17

Disbursement Agent is required to notify the project entities,

09:56:34

18

right?

09:56:34

19

09:56:38

20

put them might not work, but let me tie it to something that

09:56:41

21

happened here.

09:56:42

22

09:56:48

23

consultant, initially reviewed the advance request, it was

09:56:50

24

unwilling to sign off on the advance request.

09:56:53

25

Now, what I have tried very hard to do is look through

Right.
So that is one situation.

Another situation seems to me to be if Bank of America

MR. CANTOR:

Yeah.

I think the facts as you actually

For example, in March 2009, when IVI, the construction

Ultimately that got resolved, but if it had not, then
November 18, 2011

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Oral Argument
34

09:56:56

1

Bank of America would not have been allowed --

09:56:59

2

THE COURT:

09:57:01

3

MR. CANTOR:

09:57:02

4

THE COURT:

09:57:05

5

under your ministerial checklist theory, the construction

09:57:08

6

consultant refuses to sign the document.

09:57:11

7

MR. CANTOR:

09:57:12

8

THE COURT:

09:57:19

9

09:57:26

10

09:57:30

11

Would you agree?

09:57:32

12

MR. CANTOR:

09:57:32

13

THE COURT:

09:57:42

14

Disbursement Agent has an obligation, "shall" -- mandatory --

09:57:47

15

notify the project entities, et cetera.

09:57:50

16

MR. CANTOR:

09:57:51

17

THE COURT:

09:57:57

18

to me -- and I want to have more argument from both sides on

09:58:01

19

this -- and I'm going to have more questions to you as you go

09:58:07

20

through this -- is another type of situation, and that has to do

09:58:23

21

where it is not a matter of determining whether C-1 has been

09:58:31

22

submitted correctly with all certifications.

09:58:35

23

09:58:40

24

the other conditions precedent have been met and what I'm trying

09:58:53

25

to get at is the structure of the agreement as to various

I'm trying to use a simple example.
Yeah.
I'm trying to use a simple example where

Yes, Your Honor.
Then in the ministerial review of the

paperwork, the Disbursement Agent would determine that a
condition precedent to an advance has not been satisfied.

Yes, Your Honor.
Okay.

And in that event, under 2.5.1, the

Right.
Okay.

Now, where this does get confusing

It's a more subjective determination of whether or not

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Oral Argument
35

09:59:01

1

alternative circumstances.

09:59:04

2

09:59:13

3

Disbursement Agent shall use reasonable diligence to make sure

09:59:17

4

that each condition precedent to an advance has been satisfied,

09:59:24

5

the way it has been with the construction side, is there an

09:59:29

6

affirmative duty in any way on the part -- under the

09:59:33

7

agreement -- on the part of Bank of America to do that?

09:59:37

8

MR. CANTOR:

09:59:38

9

THE COURT:

09:59:42

10

09:59:49

11

09:59:55

12

through, you know, all the Article 9 limitations that would be

10:00:02

13

consistent with.

10:00:07

14

checklisting.

10:00:09

15

MR. CANTOR:

10:00:12

16

THE COURT:

10:00:19

17

10:00:20

18

MR. CANTOR:

10:00:23

19

THE COURT:

10:00:30

20

which is, I think, the subject of this summary judgment, as to

10:00:39

21

if Bank of America knew or should have known in the course of

10:00:47

22

its dealings with the loan as controlling person or Disbursement

10:00:56

23

Agent that a condition precedent has not been satisfied, okay,

10:01:08

24

and it -- not that it is imputed knowledge.

10:01:11

25

Number 1, since there is no specific language saying

No, Your Honor.
Okay.

I know your position is no, but let

me just phrase these things and then we will get back to them.
Okay.

In support of your position, you would go

We don't have the obligation.

Okay.

We are just

I understand that.
Yeah, in particular 9.3.2.
And you would also rely on 9.2.5, no

imputed knowledge.
Yes, Your Honor.
So now we get to the much harder question

I mean, under the best of circumstances, let's say it
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Oral Argument
36

10:01:13

1

is a clean-cut advance.

You are doing your checklist.

10:01:17

2

don't know anything.

10:01:21

3

approved.

10:01:25

4

agreement.

10:01:27

5

10:01:36

6

and Lehman's bankruptcy, and then the question is, well, what

10:01:43

7

did Bank of America know or what should it have known?

10:01:50

8

If it either should have known or knew, did it have an

10:01:54

9

affirmative duty at that point, under commercial reasonableness

10:02:03

10

language, to do more and, in fact, didn't it do more by looking

10:02:10

11

into the question, having its lawyer look into the question or

10:02:14

12

other thing?

10:02:15

13

10:02:19

14

that Bank of America did more, that's not the way that you

10:02:25

15

define the standard, the minimum standard of what they were

10:02:28

16

required to do.

10:02:31

17

things, shows that they weren't grossly negligent here.

10:02:35

18

10:02:37

19

think you need to split "knew or should have known" into two

10:02:44

20

parts.

10:02:44

21

10:02:50

22

and unambiguous language of 9.3.2 says, Bank of America is

10:02:58

23

entitled to rely without further investigation on

10:02:59

24

Fontainebleau's certifications that conditions precedent had

10:03:02

25

been met.

There is nothing at issue.

Off it goes.

You

You stamp it

You are covered by everything in this

But here you have this issue with the retail facility

MR. CANTOR:

Well, let me start by saying to the extent

The fact that they did more, among other

But in determining what it is that they need to do, I

The premise of our argument here is that, as the clear

November 18, 2011

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Oral Argument
37

10:03:02

1

If Bank of America actually knew that a condition

10:03:08

2

precedent had not been satisfied, then it would not be relying

10:03:12

3

on Fontainebleau's certifications at that point, and we would

10:03:17

4

concede that they had an obligation to not allow the funding to

10:03:22

5

go forward but actually knew.

10:03:25

6

THE COURT:

10:03:29

7

So for purposes of the summary judgment, your position

10:03:34

8

is if Bank of America had actual knowledge that a condition

10:03:38

9

precedent had not been met -- in this case, I guess that

10:03:44

10

translates to the equivalent of actual knowledge that Lehman was

10:03:52

11

not funding the retail facility, right?

10:03:54

12

MR. CANTOR:

10:03:55

13

THE COURT:

10:03:58

14

MR. CANTOR:

10:04:01

15

because there are other people that could have funded that it

10:04:05

16

would have been permissible.

10:04:05

17

THE COURT:

10:04:07

18

MR. CANTOR:

10:04:08

19

THE COURT:

10:04:14

20

that Lehman did not fund and none of the other lenders within

10:04:22

21

the retail structure funded and that Fontainebleau funded, that

10:04:30

22

is a different situation and then Bank of America did have,

10:04:35

23

notwithstanding Article 9, an affirmative duty to initiate a

10:04:43

24

default notice.

10:04:44

25

MR. CANTOR:

Hold right there.

Right.
Okay.

If it knew that --

Well, that Fontainebleau Resorts was,

Let me rephrase that.
Yeah.
If Bank of America had actual knowledge

Right.

Bank of America in that instance

November 18, 2011

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Oral Argument
38

10:04:46

1

would know that the conditions precedent have not been satisfied

10:04:49

2

and, thus, it would be required under 2.5.1 to issue a stop

10:04:53

3

funding notice.

10:04:54

4

10:04:58

5

10:05:07

6

10:05:08

7

like more discussion -- is there a material issue of fact about

10:05:14

8

actual knowledge?

10:05:28

9

no action taken.

10:05:30

10

Wouldn't that be gross negligence under New York law?

10:05:33

11

MR. CANTOR:

10:05:36

12

10:05:36

13

10:05:39

14

10:05:43

15

MR. CANTOR:

10:05:44

16

THE COURT:

10:05:49

17

received some new information, other discovery, is there a

10:05:55

18

material issue of fact on actual knowledge?

10:05:57

19

10:06:00

20

10:06:00

21

10:06:03

22

issue of fact that Bank of America had actual knowledge.

10:06:08

23

Plaintiffs have not submitted sufficient evidence in admissible

10:06:14

24

form to establish actual knowledge by Bank of America.

10:06:17

25

So let's hold on that for a second and

THE COURT:

switch back to the factual issues here.
Is there from the plaintiffs' standpoint -- and I would

Let's assume there was actual knowledge, but

It would not, Your Honor, under these

circumstances.

THE COURT:

Okay.

So let's divide the two up.

Let's

start with Question 1, actual knowledge.

MR. CANTOR:

Yes, Your Honor.
Based upon all these emails, and I've now

Let me make sure I phrase it correctly,

Your Honor.
Your Honor, we don't believe that there is a material

When you add up all of the emails, many of which, I
November 18, 2011

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Oral Argument
39

10:06:21

1

believe, they have mischaracterized -- a lot of the evidence

10:06:25

2

that they rely on they both mischaracterized and it is

10:06:30

3

inadmissible.

10:06:32

4

When you add all that up, Your Honor, all that adds up

10:06:35

5

to is, at best, a finding that Bank of America should have been

10:06:38

6

suspicious, that Bank of America should have asked more

10:06:41

7

questions.

10:06:44

8

THE COURT:

10:06:46

9

Does plaintiff contend that Bank of America had actual

10:06:52

10

10:06:52

11

MR. HENNIGAN:

10:06:54

12

THE COURT:

10:06:57

13

10:07:03

14

10:07:04

15

Honor, that I think disposes of the question is a series of

10:07:09

16

emails that begin on September 19th, that make it clear inside

10:07:18

17

Bank of America that Bank of America is actively discussing with

10:07:24

18

Fontainebleau that Lehman Brothers will not make the payment and

10:07:28

19

Fontainebleau will.

10:07:31

20

10:07:48

21

have Exhibit 73, Yunker email to Kotzin.

10:07:53

22

quoting:

10:07:54

23

10:07:59

24

from Lehman for retail costs this month.

10:08:03

25

Freeman of Fontainebleau -- "can put money down from up top

That's not actual knowledge.
Let me hold up for a second.

knowledge?
Yes.

What evidence are you relying on that

creates at least a material issue of fact of actual knowledge?

MR. HENNIGAN:

The evidence that I am relying on, Your

We have a series of emails.

Let me get to them.

We

They say, and I am

"They," meaning Fontainebleau, "only need $4 million

November 18, 2011

Jim" -- Jim

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 40 of 113
Oral Argument
40

10:08:05

1

to solve that gap if/when Lehman fails to fund."

10:08:11

2

10:08:17

3

10:08:19

4

"I spoke with Doug last night on this matter.

10:08:22

5

initial reaction is that he thinks the Fontainebleau

10:08:24

6

funding and no adjustment to in balance this month are

10:08:28

7

reasonable and makes sense."

10:08:30

8

Next, same email:

10:08:33

9

"What times work for you today to wrap up the Lehman

10:08:35

10

issue with Jim?"

10:08:41

11

balance, and unless I am missing something, the company's

10:08:43

12

advance request is satisfied and we move on."

10:08:47

13

10:08:54

14

evidence.

10:08:59

15

Yunker.

10:09:00

16

10:09:02

17

resolved; that is, do we as the Bank Agent make the

10:09:06

18

unilateral call to interpret Fontainebleau funding as

10:09:10

19

retail agent funding, or do we seek required lender

10:09:14

20

consent?"

10:09:14

21

10:09:18

22

have unmistakable evidence that they are actively planning for

10:09:23

23

the Fontainebleau funding of the Lehman share.

10:09:26

24

10:09:35

25

The next one, also on the 19th, from Jeff Susman,
project manager.
His

Skipping, "If there is no change to in

So on the 19th we've got clear, I think, unmistakable
Then there is Exhibit 229, again Susman emails

"There is still one issue that still needs to be

So I think absolutely, categorically on the 19th, we

THE COURT:

What was the actual date of the

Fontainebleau certification which included that all conditions
November 18, 2011

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Oral Argument
41

10:09:40

1

were met?

10:09:40

2

10:09:44

3

request.

10:09:49

4

that they reissue it on the 26th, September 26, the date of the

10:09:54

5

funding.

10:09:58

6

that.

10:09:59

7

10:10:08

8

they were planning for the Fontainebleau funding.

10:10:13

9

now -- everyone in this courtroom knows -- that, in fact, on the

10:10:17

10

10:10:22

11

10:10:24

12

conceded it, but we also have Exhibit 56 which is an email that

10:10:30

13

reports the wire transfer that came out of Bank of America on

10:10:36

14

Fontainebleau's behalf in the exact amount of the Lehman

10:10:39

15

Brothers funding.

10:10:40

16

10:10:46

17

payment on the 26th.

10:10:54

18

is no doubt on this record -- we have this little gap between

10:10:56

19

the 19th and the 26th.

10:10:58

20

10:11:01

21

communications that happened.

10:11:04

22

point that Bank of America has changed its mind; that this will

10:11:07

23

not satisfy the condition; that if Fontainebleau makes the

10:11:11

24

payment it will fail the condition and therefore create, you

10:11:15

25

know, requirements of notices of default and stop funding

MR. HENNIGAN:

They made it with the original advance

I'll get to that in a second.

Bank of America asked

I think that's a very important moment and I'll get to

So as of the 19th, we have unmistakable evidence that
Now, we know

26th, Fontainebleau, not Lehman, made the payment.
How do we know that?

First of all, Bank of America has

So Bank of America, on Fontainebleau's behalf, made the
Now, what do they do?

They say -- there

There is no doubt what we see is a lot of privileged
It is perfectly plain at this

November 18, 2011

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Oral Argument
42

10:11:19

1

notices.

10:11:20

2

10:11:35

3

say, please bring current your -- "Please reaffirm the

10:11:46

4

representations and warranties which the companies made pursuant

10:11:48

5

to the advance request and advance confirmation notice submitted

10:11:51

6

to the Disbursement Agent earlier this month."

10:11:54

7

75.

10:11:55

8

10:12:01

9

10:12:02

10

10:12:08

11

Freeman and Susman have been reaching an agreement that

10:12:12

12

Fontainebleau is going to fund and that will satisfy the

10:12:14

13

condition.

10:12:15

14

10:12:18

15

now to Mr. Freeman and says, "Please reaffirm all of your

10:12:25

16

representations and warranties."

10:12:28

17

10:12:32

18

because, of course, he already knows he did fund.

10:12:36

19

get is Freeman's position in an "I affirm" that it must be okay,

10:12:42

20

but he doesn't say I didn't fund.

10:12:46

21

10:12:49

22

another series of conversations that happen where a memo comes

10:12:53

23

out from Bank of America on being pushed by lenders and he sends

10:12:58

24

a memo out and he says, "Look, I want to have a conversation

10:13:01

25

with you, Mr. Freeman, on behalf of the lenders.

So what do they do?

They send an email to Freeman and

That's Exhibit

On the top of Exhibit 75, on the 26th, Mr. Freeman says
"I affirm."
Now, let's pause for a minute.

The context of this is

Bank of America has now changed its mind and so it goes

What does he not say?

He doesn't say "Did you fund"
So what we

We know for a fact that a few days later there is

November 18, 2011

The lenders

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 43 of 113
Oral Argument
43

10:13:04

1

would like to know did Lehman Brothers make the contribution;

10:13:11

2

and if not, who made it?"

10:13:14

3

10:13:20

4

have a conversation because there are things that I can't say."

10:13:26

5

You know, there is controversy on whether he said on advice of

10:13:29

6

counsel, but he clearly told them "I can't have the conversation

10:13:34

7

with you because there are things I can't say.

10:13:36

8

memo."

10:13:38

9

10:13:43

10

portion of it -- remember, what is the question?

10:13:48

11

Brothers make the payment; and if not, who did?

10:13:52

12

Freeman say?

10:14:01

13

question.

10:14:02

14

10:14:08

15

had this exchange with Mr. Freeman and he said -- or whoever it

10:14:12

16

was -- he said:

10:14:14

17

"Did he answer the question?"

10:14:15

18

He said:

10:14:18

19

10:14:18

20

10:14:21

21

there is not a jury or a court anywhere in the country that

10:14:24

22

wouldn't understand in that context that he was saying it was

10:14:28

23

made in a way that violates the condition.

10:14:33

24

that point.

10:14:36

25

What happens then?

Mr. Freeman says, "I don't want to

And what does the memo say?

It was made.

I'll send you a

With respect to the Lehman

It was made.

Did Lehman
And what does

He doesn't answer the

In the colloquy in deposition, my partner, Mr. Dillman,

"Yeah, I guess he did.

Yeah, I guess he

did."
In other words, when you answer the question that way,

Everyone knew it at

What they were doing was looking for cover.

So we think it is not that it raises a triable issue of
November 18, 2011

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Oral Argument
44

10:14:40

1

fact.

We think there is no credible evidence on this record

10:14:44

2

that Bank of America did not know that that funding was made by

10:14:49

3

Fontainebleau and not by Lehman Brothers and now let's look at

10:14:53

4

whether or not they have denied it.

10:14:56

5

10:15:01

6

this thing.

10:15:05

7

America's behalf has said, I believed that Lehman Brothers made

10:15:09

8

the payment, or I believed that some other retail lender made

10:15:12

9

the payment, or I believe that Fontainebleau didn't make the

10:15:15

10

10:15:16

11

10:15:20

12

because things were funded and dah-dah, dah-dah, dah-dah.

10:15:25

13

hard was it in the context of this motion to put in a

10:15:28

14

declaration by Jeff Susman that said I believed that

10:15:31

15

Fontainebleau did not make the payment, or I believed that some

10:15:33

16

other retail lender made the payment?

10:15:36

17

10:15:37

18

10:15:41

19

10:15:45

20

10:15:45

21

10:15:50

22

story.

10:15:53

23

interpretation of the evidence.

10:15:56

24

evidence will show.

10:15:58

25

The answer is they have mealy-mouthed their way through
They never squarely say.

No one on Bank of

payment.
Instead, we got all this sort of squishy language
How

How does he get around the fact that the payment was
made on Fontainebleau's behalf by Bank of America?

THE COURT:

Okay.

So, let me ask for responses on

that.

MR. CANTOR:

Sure, Your Honor.

That was a really nice

It would sound great at closing, but it is an
It is not, in fact, what the

What the evidence does show is that the conversations
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 45 of 113
Oral Argument
45

10:16:02

1

that were held between Bank of America and Fontainebleau --

10:16:07

2

10:16:10

3

10:16:10

4

MR. CANTOR:

10:16:11

5

THE COURT:

10:16:14

6

MR. CANTOR:

10:16:15

7

THE COURT:

10:16:18

8

10:16:21

9

10:16:22

10

10:16:26

11

10:16:28

12

MR. CANTOR:

10:16:28

13

THE COURT:

10:16:33

14

to your motion, before I get to their motion -- the question is

10:16:37

15

whether they have generated enough through these emails to

10:16:42

16

trigger a material issue of fact of actual knowledge.

10:16:45

17

10:16:47

18

emails themselves don't show actual knowledge.

10:16:50

19

Mr. Hennigan gets a chance to spin them that he even gets close.

10:16:55

20

10:16:59

21

clear that what was going on during the first week, during the

10:17:02

22

first week after Lehman filed for bankruptcy, was that there

10:17:05

23

were discussions between Bank of America and Fontainebleau in

10:17:09

24

which Fontainebleau laid out the various options that it had,

10:17:14

25

was considering if, in fact, Lehman ended up not funding.

THE COURT:

Let me ask you to rephrase this in a

different way.
Okay.
We're not here on closing argument either.
Right.
The issues have to be addressed in terms of

the standards for summary judgment --

MR. CANTOR:
THE COURT:

Uh-huh.
-- and whether or not there is a material

issue of fact on this.

MR. CANTOR:

Right.
So the question is -- at least in response

They have not, Your Honor, because the
It is only when

The actual testimony and the emails themselves make

November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 46 of 113
Oral Argument
46

10:17:18

1

It was not known at that point whether, in fact, Lehman

10:17:22

2

10:17:25

3

10:17:27

4

America side that they were hearing that Lehman was going to be

10:17:32

5

funding some of its obligations, and so they did not know

10:17:36

6

whether Fontainebleau was going to be one of those obligations,

10:17:39

7

and so there was a discussion with Fontainebleau in which

10:17:42

8

Fontainebleau laid out its options.

10:17:44

9

10:17:48

10

told Bank of America, If Lehman doesn't fund, we are going to

10:17:54

11

fund for them.

10:17:57

12

no --

10:17:58

13

10:18:03

14

of America?

10:18:06

15

happened there.

10:18:07

16

10:18:11

17

bank in the United States and among its thousands and thousands

10:18:14

18

of clients is Fontainebleau Las Vegas.

10:18:18

19

Just as if when Jeff Soffer goes to the ATM machine,

10:18:23

20

there is a record generated somewhere in Bank of America that

10:18:25

21

that happens.

10:18:26

22

10:18:31

23

of America, made a wire transfer of its funds, that money came

10:18:34

24

out of a Bank of America account.

10:18:35

25

was or was not going to fund.
There is testimony in the record from the Bank of

There is no testimony in the record that Fontainebleau

That conversation never happened.

THE COURT:

There is

What about the actual funding made by Bank

I don't understand quite the mechanics of what

MR. CANTOR:

Basically, Bank of America is the largest

When Fontainebleau Las Vegas, which was banked by Bank

But there is absolutely no evidence in the record that
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 47 of 113
Oral Argument
47

10:18:37

1

anyone with any connection to the Fontainebleau Las Vegas

10:18:40

2

project had any knowledge that this wire transfer took place nor

10:18:45

3

would there have been any reason for them to know about that.

10:18:47

4

THE COURT:

10:18:49

5

Your response to that?

10:18:52

6

plaintiffs are relying on that shows that anyone within the Bank

10:18:59

7

of America controlling person, disbursing agent side, knew of

10:19:07

8

that wire transfer, knew of the wire transfer?

10:19:13

9

10:19:18

10

conceptual issues about the different hats that want to be worn

10:19:23

11

here.

10:19:23

12

10:19:26

13

able to determine in any manner, and where is it, that someone

10:19:32

14

within the structure, a controlling person, Administrative

10:19:36

15

Agent, somewhere in that pecking order of who pulls the trigger

10:19:43

16

down to who is working on the account had actual knowledge of

10:19:48

17

that transfer?

10:19:50

18

MR. HENNIGAN:

10:19:54

19

THE COURT:

10:19:56

20

MR. HENNIGAN:

10:20:00

21

principal for Trimont, the agent that actually received the

10:20:05

22

funds and disbursed them as --

10:20:07

23

THE COURT:

10:20:09

24

MR. HENNIGAN:

10:20:12

25

Okay.

MR. HENNIGAN:

THE COURT:

Hold on that.
Is there anything of record

Your Honor, I always have these

My question is very specific.

Were you

The answer is yes.

Tell me specifically.
We have McClendon Rafitti, who is the

I am not talking about Trimont.
I am talking about what his testimony

is.
November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 48 of 113
Oral Argument
48

Okay.

Go ahead.

10:20:12

1

THE COURT:

10:20:13

2

MR. HENNIGAN:

10:20:15

3

10:20:19

4

10:20:22

5

cut it.

10:20:33

6

there was an objection --

10:20:33

7

MR. CANTOR:

10:20:34

8

THE COURT:

10:20:38

9

10:20:46

10

10:20:47

11

MR. HENNIGAN:

10:20:48

12

THE COURT:

10:20:50

13

10:20:50

14

MR. HENNIGAN:

10:20:53

15

THE COURT:

10:20:55

16

that somebody from Trimont actually remembered directly telling

10:21:04

17

someone in the structure that that funding occurred, is there?

10:21:11

18

10:21:14

19

of America that says that she understood that Lehman had stopped

10:21:18

20

funding in September.

10:21:21

21

THE COURT:

10:21:24

22

MR. HENNIGAN:

10:21:26

23

have got Mr. Bolio's handwritten notes that says Lehman did not

10:21:31

24

fund their share, so I think I can circle the whole Lehman

10:21:35

25

didn't make the payment part.

He testified that it was likely that he

informed the BofA that Fontainebleau had funded.

THE COURT:

Well, you know, that's not quite going to

I mean, that sounds like, at best, speculative.

If

There was.
-- made to that, I would grant it because

it's an assumption unless established as something in terms of
habit and course of practice and all that.
That is exactly what it is.

But I don't think that is what I am asking

you.
Well, --

There is nothing in the record that said

MR. HENNIGAN:

We have Jean Brown's testimony from Bank

That was her understanding.

Okay.

That's not the question I asked.

I am going to get as close as I can.

I know what your question is.

November 18, 2011

I

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 49 of 113
Oral Argument
49

Okay.

But that doesn't mean others didn't,

10:21:38

1

10:21:41

2

so that's Bank of America's point in terms of other lenders.

10:21:46

3

is different than Fontainebleau made it.

10:21:51

4

MR. HENNIGAN:

10:21:52

5

Now let me describe to Your Honor how it is that we

10:21:57

6

focused on this email that demonstrates conclusively that BofA

10:22:04

7

actually made the payment, and that is because while we are

10:22:10

8

thinking about this problem and we are thinking about this

10:22:13

9

strange phenomenon that after planning for it, after being

10:22:17

10

notified that Fontainebleau was intending to make the payment,

10:22:21

11

they go through this silly charade about asking them to reaffirm

10:22:26

12

affirmations, a silly charade of accepting a passive voice

10:22:32

13

response to a specific question.

10:22:35

14

10:22:39

15

is that if I were Bank of America and I wanted to know really

10:22:45

16

whether Fontainebleau funded, I would go and ask the people who

10:22:50

17

control the Fontainebleau bank accounts because they're all at

10:22:58

18

the BofA.

10:22:59

19

10:23:01

20

category of studied ignorance.

10:23:05

21

point.

10:23:11

22

evidence in the record that, in fact, they had induced this

10:23:16

23

default and therefore were in error for having disbursed the

10:23:20

24

funds.

10:23:21

25

THE COURT:

It

That's true.

What occurs to us as we are preparing for this argument

So, the fact they don't puts them, I think, into the
They didn't want to know at that

They wanted to cover their tracks.

THE COURT:

Okay.
November 18, 2011

They did not want

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 50 of 113
Oral Argument
50

I don't think there is another

10:23:21

1

10:23:22

2

explanation for it.

10:23:23

3

THE COURT:

10:23:25

4

MR. CANTOR:

10:23:26

5

THE COURT:

10:23:28

6

10:23:29

7

10:23:32

8

10:23:34

9

10:23:37

10

is equivalent to the criminal concept of deliberate ignorance,

10:23:45

11

that Bank of America, in analyzing this question which it was

10:23:51

12

discussing and asking for affirmations or explanations from

10:23:58

13

Fontainebleau about, deliberately did not verify the answer

10:24:09

14

within the confines of records it controlled.

10:24:12

15

10:24:14

16

go and check the records.

10:24:17

17

when Mr. Hennigan says that Bank of America induced

10:24:21

18

Fontainebleau Resorts to fund, that's just false and not based

10:24:25

19

on any testimony or documents that are in the record.

10:24:29

20

10:24:32

21

considering a variety of options in the event that Lehman didn't

10:24:37

22

fund.

10:24:38

23

10:24:41

24

beginning of his presentation refer to Bank of America's

10:24:46

25

internal determination that if Fontainebleau was to choose to

MR. HENNIGAN:

But let's turn back -Okay.
-- and then we will take a break in a

minute.

MR. CANTOR:

There has been so much thrown out that I

am not sure I am going to be able to hit all of it.

THE COURT:

MR. CANTOR:

What is being argued, as I understand it,

Your Honor, it didn't have any reason to
As I was starting to explain before,

What Bank of America knew is that Fontainebleau was

The emails that Mr. Hennigan cited to you at the very

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10:24:49

1

have Equity fund for Lehman, that their initial determination

10:24:53

2

was that that would be okay.

10:24:55

3

10:24:59

4

Fontainebleau that if Fontainebleau wanted to do that, it would

10:25:02

5

be okay.

10:25:06

6

There is no evidence in the record of that, no testimony by Jim

10:25:09

7

Freeman, no testimony by anyone from Bank of America that that

10:25:13

8

happened.

10:25:15

9

10:25:19

10

internally as to whether it would be permissible for

10:25:22

11

Fontainebleau Resorts to fund on behalf of Lehman.

10:25:25

12

10:25:29

13

one knew whether, in fact, Lehman was going to fund or not, Bank

10:25:33

14

of America, even though it was not required to do so, asked

10:25:37

15

Fontainebleau to confirm that all of its previous

10:25:40

16

representations and warranties, including the representation and

10:25:43

17

warranty about the retail lenders making the funding, was true

10:25:47

18

and Fontainebleau did.

10:25:48

19

10:25:52

20

required or had reason to do at that point.

10:25:56

21

in.

10:25:57

22

10:25:59

23

money here.

10:26:03

24

$4 million retail advance in a project that has $3 billion in

10:26:11

25

costs.

There is no evidence that they ever communicated to

That's an assumption that Mr. Hennigan has made.

Bank of America ultimately changed their position

When the money came in, in the context that, again, no

There was nothing further that Bank of America was
The money had come

Remember, we are talking about a very small amount of
Right?

We are talking about $2.5 million out of a

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10:26:13

1

The money came in.

10:26:16

2

by Fontainebleau.

10:26:18

3

rely on those representations without further investigation.

10:26:25

4

10:26:28

5

look to see whether there was some wire transfer out there.

10:26:32

6

fact, it would not have even known the amount of a wire transfer

10:26:34

7

to look for because at that point it had no knowledge as to how

10:26:37

8

the retail facility had been whacked up among the different

10:26:44

9

co-lenders.

10:26:45

10

10:26:49

11

that is a criminal concept that I don't think applies when

10:26:52

12

you've got a contract that specifically says you can rely

10:26:53

13

without investigation, but there just was no reason for Bank of

10:26:57

14

America to have to do that.

10:26:59

15

THE COURT:

10:27:07

16

we'll take a break.

The documents specifically say that we can

So there was no reason for Bank of America to go and
In

So there is no studied ignorance here and, as you say,

17
18

The representations were reaffirmed

Let me toss out two more matters and then

MR. HENNIGAN:

Could I respond in just a couple of

sentences?
Yes

19

THE COURT:

10:27:07

20

MR. HENNIGAN:

10:27:10

21

presumably he is talking about on the 19th of September -- a

10:27:13

22

variety of ways to solve the problem of Lehman Brothers not

10:27:16

23

funding.

10:27:18

24

discussed on the 19th was Fontainebleau making the funding.

10:27:22

25

Number 2, they didn't have to know what the exact

Mr. Cantor says they were studying --

I don't think so.

The only thing that was being

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1

amount was.

They just needed to ask one question:

10:27:29

2

of September 2008, did Fontainebleau transfer funds to Trimont?

10:27:38

3

10:27:40

4

Your Honor, when they don't have a contractual obligation to do

10:27:42

5

so?

10:27:43

6

10:27:47

7

few minutes, but let me pose a couple of questions to you to

10:27:50

8

consider during our break.

10:27:55

9

10:28:03

10

Lehman did fund in October and November?

10:28:10

11

fact by and between the parties that that funding occurred from

10:28:14

12

Lehman.

10:28:29

13

how I should hear the evidence on summary judgment?

10:28:39

14

10:28:48

15

picture issue which is troubling to me so I'll mention it -- the

10:28:55

16

Term Lenders are wearing different hats, too, it seems to me.

10:29:02

17

10:29:13

18

funded their share of the deal, when is it, in March?

10:29:17

19

should have funded it all.

10:29:21

20

funded, and why is that?

10:29:27

21

continue in order to protect our investment.

10:29:33

22

10:29:36

23

10:29:37

24

10:29:39

25

Why would they have asked that question,

MR. CANTOR:

THE COURT:

On the 26th

Well, we're going to discuss this more in a

What significance does it have that as a matter of fact
There is no dispute of

How is that put into this factual equation in terms of

The second thing is -- and this is like a bigger

One hat is, Ahhh, look at this, revolvers should have
They

Because we funded, you should have
Because we wanted this project to
Right?

Isn't that a fair way of looking at your first
position?

MR. HENNIGAN:

Our first position on that subject, Your

Honor, is we absolutely, categorically wanted their money into
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1

the bank proceeds account because we have a lien on it and we're

10:29:49

2

going to thereby share the pain with them as was contemplated by

10:29:53

3

the overall funding agreements.

10:29:55

4

10:30:01

5

10:30:07

6

10:30:10

7

been a default all and there would have been a stoppage, if you

10:30:16

8

would, of the project for every lender back in September, right,

10:30:32

9

'08?

10:30:34

10

10:30:37

11

have pulled the plug on the whole project because of this retail

10:30:47

12

issue involving Lehman.

10:30:51

13

something.

10:30:52

14

10:30:55

15

10:30:59

16

10:31:03

17

10:31:03

18

10:31:05

19

remember what the whole requested that month.

10:31:08

20

like $100 million or something.

10:31:16

21

10:31:22

22

10:31:25

23

10:31:31

24

doesn't really make sense to me for the Term Lenders to take a

10:31:37

25

position that the Revolvers were obligated to fund in March if,

We did not want this money, ours and theirs, to go down
this rat hole.

We wanted them to fund.

THE COURT:

But if there was a default, it would have

If your theory is correct, then Bank of America would

MR. CANTOR:

What did you say?

It was one point

The amount of the issue for Lehman in that

September advance was $4 million total, 2.5 from Lehman.

THE COURT:

2.5 for Lehman and the whole advance was

for?

MR. CANTOR:

THE COURT:

The whole retail advance was 4.

Okay.

I don't

It was probably

What bothers me is two-fold looking

at this from a broader perspective.
One is, notwithstanding your statement to me, it

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10:31:45

1

in fact, your position is that none of the lenders should have

10:31:50

2

been obligated to fund anything and Bank of America shouldn't

10:31:55

3

have advanced anything, sorry, back in September.

10:32:00

4

Number 1.

10:32:00

5

10:32:16

6

every effort being made to try to make it work to protect

10:32:23

7

everybody's money.

10:32:27

8

10:32:33

9

back retroactively to a situation in September where there is no

10:32:39

10

question that money was coming forward to do the retail part and

10:32:49

11

that was moving forward and, in fact, Lehman did continue after

10:32:56

12

that.

10:32:56

13

10:33:00

14

money was being protected, at least up to that point in time,

10:33:07

15

until it was discovered about all these cost overruns which

10:33:14

16

nobody here claims anybody knew at the time.

10:33:19

17

10:33:28

18

could see, is in a bit of a dilemma.

10:33:32

19

plug on the whole project, based upon what you are arguing from

10:33:36

20

the Term Lenders looking in retrospect, would it have had a

10:33:44

21

massive lawsuit from Fontainebleau as well as potentially others

10:33:53

22

who were dependent upon this project going forward?

10:33:57

23

10:34:03

24

standard, what was done, was that commercially unreasonable to

10:34:08

25

allow that project go forward and maybe not look at the question

That's

Number 2, this project was well underway and there was

So what is being done here, it seems to me, is to look

So the project was being protected and everybody's

So here you have an Administrative Agent that really, I
I mean, if it pulled the

So even if I applied a commercial reasonableness

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1

too closely?

Those are a couple of things that are of concern

10:34:21

2

to me on this issue.

10:34:24

3

10:34:35

4

November and the like, where Lehman didn't fund and there were

10:34:42

5

continuing questions and whatever, it would be a tougher call

10:34:46

6

here but, I mean, we are dealing with one month which is

10:34:51

7

squirrelly, followed by two months where no one contests that

10:34:56

8

Lehman actually did fund.

10:34:59

9

10:35:09

10

but I also think that in the real world sense it is necessary to

10:35:16

11

take a look at what was going on in this project at that time in

10:35:25

12

terms of the Term Lenders' argument on commercial reasonableness

10:35:27

13

and gross negligence.

10:35:31

14

time to all respond to this.

10:35:34

15

10:35:39

16

summary judgment that there may have been this funding, they

10:35:48

17

knew or should have known or deliberately ignorant in not

10:35:54

18

knowing that Fontainebleau actually directly or indirectly

10:35:57

19

funded, is that, under the standard of the agreement, gross

10:36:11

20

negligence as a matter of law?

10:36:14

21

10:36:21

22

10:36:25

23

MR. CANTOR:

10:36:26

24

THE COURT:

10:36:31

25

You know, if the situation repeated itself in October,

So I know I'm looking at this in terms of this record,

I am going to take a break and give you

Then, even if you accept as true for purposes of

When we return, can we deal with some of these issues?
I'll give both sides an opportunity to address it.
Thank you.
Let's take fifteen minutes.

In fact, I

have to break by no later than noon, so let's reconvene at 10 of
November 18, 2011

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57

10:36:40

1

11:00.

10:36:44

2

10:36:48

3

much as you want to make them.

10:36:51

4

detailed slides and all, but I think we have covered a lot and

10:36:54

5

I'm trying to get as close to the heart of the controversy as I

10:37:00

6

can.

10:37:00

7

10:37:03

8

10:37:06

9

10:37:08

10

10:37:11

11

have posed to you.

10:37:15

12

Thank you.

10:37:16

13

10:37:18

14

will reconvene because we're not going to call everybody or have

10:37:22

15

people call in again.

10:37:24

16

I want to hear your arguments from this point on, as
I know you have prepared

So whatever you want to do in the remaining time, I'm
going to be quiet and let you do your thing.
Thank you, Your Honor.

MR. CANTOR:
THE COURT:

But keep in mind some of these questions I
All right.

10 of 11:00 we will be back.

Those on the phone, please remain on the phone and we

[There was a short recess taken at 10:37 a.m.]

17

AFTER RECESS

10:54:10

18

[The proceedings in this cause resumed at 10:54 a.m.]

10:55:11

19

THE COURT:

10:55:15

20

Just so everybody knows, during the interim there was a

10:55:21

21

problem with the call-in.

10:55:29

22

which created a necessity to hang up and require everybody to

10:55:35

23

call in again, so you may hear about that later from those who

10:55:41

24

are interested, but I don't want to delay the proceedings

10:55:45

25

waiting for everybody to come in.

All right.

Are we back on the record, Joe?

Someone on the line did something

November 18, 2011

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So let me open the argument again to some of the

10:55:58

2

issues.

10:56:05

3

would argue in point and counterpoint.

10:56:08

4

10:56:10

5

any kind of a formal presentation because so much of what I

10:56:14

6

would have done has been covered earlier today, but I do want to

10:56:21

7

try and address some of the issues that have been raised this

10:56:25

8

morning as well as the questions that you left us with.

10:56:30

9

I think, Your Honor, what I will do as to the more

10:56:34

10

specific factual issues that opposing counsel has raised, I

10:56:39

11

think I'm going to leave them either for the end or for further

10:56:43

12

rebuttal because where the argument has taken us, I have got

10:56:48

13

lots to say about the factual issues and, in particular, the

10:56:53

14

inability of plaintiffs to create a triable issue of fact on

10:56:57

15

actual knowledge.

10:56:59

16

10:57:01

17

discussed has been mischaracterized and is inadmissible, but

10:57:07

18

unless Your Honor wants me to, I think that may be something

10:57:10

19

that I'll come to a little later on.

10:57:14

20

10:57:17

21

just briefly on the basic issue of breach of contract because we

10:57:21

22

have covered so much of it.

10:57:23

23

10:57:26

24

a very simple case, that the obligations of Bank of America as

10:57:33

25

Disbursement Agent are limited.

Why don't you start and then I would appreciate if you

MR. CANTOR:

Sure, Your Honor.

I am not going to do

I think a lot of the factual material that they have

What I would like to focus on, Your Honor, first is

Just to reiterate, Your Honor, our position is this is

Your Honor pointed out the two

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59

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1

obligations essentially:

determining that the required

10:57:40

2

documentation has been submitted with each advance request and

10:57:43

3

confirming that all of the conditions precedent to disbursement

10:57:48

4

have been met.

10:57:48

5

From our perspective, in performing the obligation to

10:57:52

6

ensure that the conditions precedent to disbursement have been

10:57:56

7

met, the key provision is obviously 9.3.2 which in relevant part

10:58:03

8

provides, notwithstanding anything else in this agreement to the

10:58:07

9

contrary, in performing its duties hereunder, including

10:58:11

10

approving advance requests or making other determinations or

10:58:14

11

taking other actions hereunder, the Disbursement Agent shall be

10:58:18

12

entitled to rely on certifications from the project entities as

10:58:23

13

to the satisfaction of any requirements and/or conditions

10:58:26

14

imposed by this agreement.

10:58:28

15

10:58:35

16

entitled to rely without further investigation on the

10:58:38

17

representations that it received from Fontainebleau.

10:58:42

18

10:58:44

19

correctly pointed out that the record at that point was

10:58:46

20

incomplete because plaintiffs' complaint had not alleged whether

10:58:50

21

or not Fontainebleau had submitted all of the necessary

10:58:52

22

certifications.

10:58:55

23

10:58:59

24

that's at issue in this case, Bank of America received all of

10:59:02

25

the required certifications, representations and warranties from

So it's clear, Your Honor, that Bank of America was

At the motion to dismiss hearing, Your Honor, you

That's no longer an issue here, Your Honor.

It is undisputed that for every single advance request

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Fontainebleau; and from our perspective, Your Honor, that should

10:59:10

2

be the end of the case.

10:59:11

3

Bank of America has done everything that the

10:59:15

4

Disbursement Agreement expressly required it to do and § 9.10

10:59:19

5

leaves no doubt that unless the agreement specifically says that

10:59:23

6

Bank of America has to do something, it does not have any

10:59:27

7

additional duties.

10:59:28

8

10:59:32

9

10:59:36

10

obligations hereunder except as expressly set forth herein,

10:59:40

11

shall be responsible only for the performance of such duties and

10:59:43

12

obligations and shall not be required to take any action

10:59:46

13

otherwise in accordance with the terms hereof.

10:59:49

14

10:59:54

15

contract argument, Your Honor, is that their entire case is

10:59:56

16

premised on ignoring 9.3.2 and 9.10 and imposing additional

11:00:02

17

unwritten obligations on Bank of America.

11:00:05

18

11:00:08

19

America is entitled to summary judgment here, Your Honor, and I

11:00:12

20

think it ties into some of the issues that you raised just

11:00:16

21

before the break.

11:00:17

22

11:00:22

23

contract limits Bank of America's liability to gross negligence

11:00:26

24

or worse.

11:00:27

25

9.10, as Your Honor probably knows, in relevant part
provides that the Disbursement Agent shall have no duties or

That is the fundamental flaw with plaintiffs' breach of

There is a second independent reason why Bank of

It is undisputed, as Your Honor mentioned, that the

There is no dispute between the parties that such
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11:00:29

1

clauses are fully enforceable under New York law, and plaintiffs

11:00:35

2

have acknowledged in their papers that gross negligence is a

11:00:37

3

very high standard requiring either reckless disregard for the

11:00:41

4

rights of others or conduct that smacks of intentional

11:00:44

5

wrongdoing or, as the one that they cite in their papers, as

11:00:47

6

that case put it, an absence of even slight diligence.

11:00:51

7

11:00:55

8

culpable conduct here, especially when Bank of America's actions

11:00:59

9

are considered in context and without hindsight and that is, I

11:01:02

10

11:01:07

11

11:01:11

12

against asking too much and giving you a chance, but I asked you

11:01:17

13

before if it is assumed there is a material issue of fact on

11:01:41

14

actual knowledge, is there a further question that if there was

11:01:47

15

actual knowledge, that that would equate to gross negligence and

11:01:52

16

not following through with the terms of the agreement.

11:01:55

17

11:02:00

18

knowledge of what we are talking about is the Lehman issue, for

11:02:04

19

example.

11:02:05

20

11:02:09

21

11:02:13

22

MR. CANTOR:

11:02:14

23

THE COURT:

11:02:15

24

11:02:17

25

There is nothing even approaching that level of

think, what Your Honor was alluding to just before the break.

THE COURT:

MR. CANTOR:

THE COURT:

Well, I am violating my own prohibition

In these circumstances, Your Honor, actual

Right.

was doing the funding.

Yes, that Fontainebleau actually

If there were actual knowledge --

Yeah.
-- I think you have conceded that would

have been a default.
Would it then be gross -- would it necessarily follow
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11:02:25

1

that as -- it is at least a jury question at that point on

11:02:29

2

whether or not Bank of America was grossly negligent in not

11:02:37

3

declaring the default.

11:02:37

4

11:02:39

5

think what you have got, as you have alluded to, is a situation

11:02:43

6

where you have got, you know, Bank of America was the

11:02:44

7

Disbursement Agent for all of the different lenders to the

11:02:48

8

Senior Credit Facility, the initial Term Loan Lenders who had

11:02:52

9

money already in the project, the Delay Draw Term Lenders who

11:02:56

10

were going to be the next ones asked to fund and the Revolving

11:02:58

11

Lenders.

11:02:59

12

11:03:02

13

determination as to whether the September funding should go

11:03:08

14

forward in light of the fact that there was no failure of

11:03:13

15

funding here -- as Your Honor pointed out, the money showed up.

11:03:16

16

11:03:19

17

supposed to get X dollars and it ended up getting X minus $2.5

11:03:26

18

million.

11:03:27

19

11:03:31

20

level of a question of fact to say that Bank of America was

11:03:37

21

recklessly disregarding the rights of all of the lenders if it

11:03:43

22

had actual knowledge, which we say they did not, of

11:03:49

23

Fontainebleau Resorts funding for Lehman, given everything else

11:03:54

24

that was going on with the project, given the amount of money

11:03:58

25

that was involved, given that there were undoubtedly numerous

MR. CANTOR:

I don't think it is, Your Honor, because I

So when Bank of America was asked to make a

This is not a situation where Fontainebleau was

The money was there.
I don't think, Your Honor, that it even rises to the

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lenders who would have wanted to see the project go forward

11:04:05

2

especially since the money actually showed up.

11:04:06

3

11:04:11

4

reckless to pull the plug in terms of all the lenders'

11:04:17

5

investment up to that point --

11:04:19

6

MR. CANTOR:

11:04:21

7

THE COURT:

11:04:22

8

MR. CANTOR:

11:04:23

9

You can imagine what Fontainebleau's reaction would

11:04:27

10

have been.

11:04:31

11

knew this, but the facts are that an affiliate of the borrower

11:04:35

12

put in money as equity, in other words, it wanted the project to

11:04:40

13

go forward and it was willing to put its money where its mouth

11:04:43

14

is.

11:04:43

15

11:04:45

16

have been if Bank of America had come to it and said that $2.5

11:04:50

17

million came from the wrong place.

11:04:55

18

that it showed up, but it came from the wrong place and

11:04:57

19

therefore we are pulling the plug on this project and you don't

11:05:01

20

get the $100 some odd million in Term Lender money that you

11:05:06

21

otherwise requested and that you need to pay ongoing

11:05:09

22

construction costs.

11:05:11

23

11:05:16

24

Revolving Lenders for closing down the Revolver facility after

11:05:22

25

Fontainebleau admitted publicly that there were hundreds of

THE COURT:

Well, in effect, would it have been

I would say --- when, in fact, the money was there?
Absolutely, Your Honor.

Remember, again, we dispute that Bank of America

You can imagine what the reaction of the borrower would

I am glad -- it is great

Fontainebleau sued Bank of America and the other

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millions of dollars of undisclosed costs.

11:05:27

2

11:05:29

3

can being sure that if Bank of America had stopped the funding

11:05:32

4

to this project in September 2008, because $4 million didn't

11:05:37

5

come from the right place, that there would have been a lawsuit.

11:05:40

6

Bank of America would have also been in the middle of a

11:05:42

7

lawsuit from any lender that decided that they wanted the

11:05:48

8

project to continue, or any lender that decided, Gee,

11:05:51

9

Fontainebleau is suing us.

11:05:55

10

Fontainebleau suing us is for us to claim over against Bank of

11:05:59

11

America.

11:05:59

12

I think that when you are talking about a payment of

11:06:02

13

this magnitude that it absolutely would have been reckless in

11:06:10

14

the other direction for Bank of America to simply shut down the

11:06:15

15

project at that point.

11:06:17

16

11:06:19

17

11:06:22

18

11:06:28

19

their -- I want to say -- I can't remember whether it was $700

11:06:31

20

or $800 million at closing, and so it was sitting in the bank

11:06:38

21

proceeds account and a couple of hundred million of it had

11:06:41

22

already been disbursed to Fontainebleau for project costs.

11:06:46

23

11:06:51

24

in an account that was under the control of Bank of America.

11:06:55

25

Some of it had been spent on project costs; some of it had not.

If they were going to sue someone at that point, you

THE COURT:

How much did the Term Lenders have in the

deal by September '08?

MR. CANTOR:

One way for us to get out from

Do you remember?

Well, the initial Term Lenders had put up

So the money was out of their pocket.

November 18, 2011

It was sitting

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I can get you the exact figures.

I don't have them at

11:07:01

2

11:07:06

3

11:07:08

4

11:07:12

5

11:07:17

6

working off of the Disbursement Agreement as it was written,

11:07:22

7

okay, which has, as we have discussed, multiple different

11:07:26

8

provisions telling it that it can rely on representations and

11:07:32

9

warranties from Fontainebleau and that it doesn't need to

11:07:36

10

11:07:38

11

11:07:41

12

this part of the argument, that as a matter of law that it would

11:07:45

13

not be sufficient for Bank of America to allow funding if it had

11:07:49

14

actual knowledge, but that's not what Bank of America's state of

11:07:54

15

mind was at the time.

11:07:57

16

consideration in determining whether Bank of America was

11:08:00

17

recklessly disregarding the rights of others.

11:08:04

18

11:08:06

19

that shutting down the project as soon as possible was going to

11:08:09

20

be consistent with all of the lenders' rights and interests.

11:08:13

21

11:08:15

22

extent that Bank of America is taking all of these different

11:08:19

23

views into account, I don't think you can say that they were

11:08:23

24

recklessly disregarding anybody's rights even if at the end of

11:08:27

25

the day someone's rights were handled in a way that that party

the tip of my fingers at the moment, Your Honor.
This all goes back to the point I am making, Your
Honor, that you need to view all of this in context.
Okay.

Bank of America, you have to remember, was

investigate them further.
We are going here on the assumption, for purposes of

I think that has to be an important

In addition, as we have just discussed, it wasn't clear

They could have had different views on this and to the

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doesn't agree with.

11:08:32

2

In addition, Your Honor, and, again, you sort of

11:08:35

3

alluded to this prior to the break, in evaluating Bank of

11:08:39

4

America's conduct here, it is important to consider what the

11:08:42

5

Term Lenders were doing or, more importantly, what the Term

11:08:45

6

Lenders were not doing.

11:08:47

7

11:08:50

8

even a party here, not a single Term Lender ever demanded that

11:08:55

9

Bank of America take any kind of action here, much less did any

11:09:01

10

of these Term Lenders actually stick their neck out and put

11:09:05

11

themselves on the line by issuing a Notice of Default which

11:09:09

12

would have left them in the position of potentially being sued

11:09:13

13

by Fontainebleau.

11:09:14

14

Obviously, Your Honor, the events that we're all

11:09:16

15

talking about here that resulted in the failed conditions

11:09:19

16

precedent, particularly Lehman, but really everything else that

11:09:23

17

is a part of the parties' papers, these are facts that were

11:09:26

18

well-known to all of the Term Lenders and yet the Term Lenders,

11:09:30

19

for whatever reasons, chose not to act.

11:09:33

20

had the right to act, but they chose not to.

11:09:36

21

11:09:39

22

Bank of America to have recklessly disregarded plaintiffs'

11:09:43

23

rights when they were unwilling to assert those rights

11:09:47

24

themselves.

11:09:47

25

With the sole exception of Highland Capital, who is not

They could have.

They

So you have to consider whether it is even possible for

I think one of the most telling incidents here, Your
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Honor, is from March 2009, but it certainly illustrates the

11:09:57

2

position that Bank of America was in and which you, yourself,

11:09:59

3

alluded to earlier this morning.

11:10:02

4

11:10:05

5

with the two small-term lenders who failed to fund their

11:10:09

6

commitment.

It was less than two percent of the total

11:10:12

7

commitment.

It did not in any way jeopardize the amount of

11:10:18

8

money that was on hand that month to satisfy that month's

11:10:21

9

advance request, but the bottom line is that Z Capital and

11:10:25

10

11:10:28

11

11:10:29

12

figuring out what made the most sense, made the decision that

11:10:32

13

they were going to go ahead and allow funding that month; that

11:10:36

14

they were going to continue to include those entities' money in

11:10:42

15

the in balance test because they had had conversations with

11:10:45

16

these entities and, unlike First National Bank of Nevada which

11:10:49

17

had repudiated its commitment, it was unclear whether, in fact,

11:10:52

18

these entities were ultimately going to fund and one of them

11:10:54

19

ultimately did.

11:10:55

20

11:10:59

21

courtroom today, sent out a letter to all of the Term Lenders,

11:11:03

22

all of the lenders actually, not just the Term Lenders, all of

11:11:06

23

them and said, Look, here is the situation.

11:11:09

24

Here is the consequences.

11:11:12

25

about it.

In March 2009, as you may recall, there was that issue

Guggenheim didn't fund that money.
Bank of America, after studying the situation and

So on March 23rd, Henry Yu, who is here in the

Here is the facts.

Here's what we are planning to do

If you disagree with what we are going to do, let us
November 18, 2011

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11:11:16

1

know.

11:11:18

2

11:11:23

3

forward any kind of an objection whatsoever to what Bank of

11:11:27

4

America --

11:11:28

5

THE COURT:

11:11:35

6

MR. CANTOR:

11:11:37

7

Not a single one of the Term Lenders put forward any

11:11:39

8

kind of an objection.

11:11:41

9

party here, Highland sends back an email to Bank of America and

11:11:43

10

says, Look, we are not going to tell you whether what you are

11:11:45

11

doing is right or wrong, but we reserve the right to sue you

11:11:48

12

either way.

11:11:49

13

11:11:52

14

just in March but throughout.

11:11:56

15

Lenders out there.

11:11:59

16

out there.

11:12:02

17

there, and they all conceivably have differing views on what the

11:12:07

18

right thing to do is.

11:12:08

19

11:12:10

20

been more public, but all of the events that are at issue here

11:12:13

21

are either public or were available to the lenders through the

11:12:16

22

interlinks system and none of the lenders ever come forward to

11:12:20

23

Bank of America and say Do this, don't do that, with the one

11:12:24

24

exception being Highland.

11:12:26

25

Your Honor, not a single one of the Term Lenders put

I'm sorry.
'09.

March 23, '08?

Excuse me.

Highland, again Highland not being a

So this is what Bank of America is dealing with not
It's got all of these Term

It's got all of these Delayed Term Lenders

It's got all of these Revolver Term Lenders out

All of these events are public.

Lehman couldn't have

So how could it be that Bank of America is recklessly
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disregarding these lenders' rights when these lenders aren't

11:12:33

2

even standing up for their rights on their own, as they had the

11:12:37

3

right to do and certainly they had knowledge of what was going

11:12:39

4

on.

11:12:40

5

11:12:43

6

diligence, it is clear that Bank of America's actions here were

11:12:47

7

much more than slight diligence.

11:12:49

8

11:12:52

9

11:12:55

10

answers to questions that they raised, that it pressed

11:12:58

11

Fontainebleau for additional information when the lenders had

11:13:02

12

questions, that it facilitated direct communications between the

11:13:05

13

lenders and Fontainebleau.

11:13:07

14

11:13:11

15

individual Term Lenders having either phone conversations or

11:13:14

16

face-to-face meetings with Jim Freeman where they asked him

11:13:17

17

about the Lehman situation, and yet they never take any action.

11:13:22

18

11:13:25

19

thinking through these issues, vetting them, discussing them

11:13:28

20

internally, including discussing them with counsel, and that all

11:13:32

21

of their actions here are the result of careful and

11:13:36

22

contemplative deliberation before they take an action.

11:13:40

23

11:13:43

24

that Bank of America was not in any way acting with ill will

11:13:47

25

towards the Term Lenders.

If you look at gross negligence in terms of slight

The record is clear that Bank of America was responsive
to questions that were raised by the lenders, attempted to get

There is ample evidence in the record, Your Honor, of

On an internal basis Bank of America, it is clear, is

There can be no legitimate dispute here, Your Honor,

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Bank of America wanted to do the right thing here.

We

11:13:53

2

can argue about whether they ultimately did the right thing or

11:13:55

3

not, but the bottom line is they wanted to try to do the right

11:13:59

4

thing and that, of course, is the complete antithesis of

11:14:03

5

recklessly disregarding the lenders' rights.

11:14:06

6

11:14:11

7

negligence.

11:14:15

8

have come forward showing that Bank of America acted properly,

11:14:19

9

they are going to have to come forward with evidence sufficient

11:14:23

10

to establish gross negligence, their own evidence, and for the

11:14:26

11

most part they have not bothered to do that.

11:14:29

12

11:14:33

13

breach of contract argument and argue that Bank of America

11:14:36

14

ignored facts and ignored warnings but, Your Honor, those are

11:14:41

15

negligence arguments.

11:14:41

16

11:14:44

17

didn't act as a reasonable Disbursement Agent should have acted.

11:14:50

18

Even if such arguments aren't foreclosed by § 9.3.2, as we say

11:14:55

19

they are, they are insufficient without more to establish this

11:15:00

20

added degree of culpability that you have to have here to find

11:15:04

21

Bank of America liable.

11:15:06

22

The bottom line is that the Term Lenders have

11:15:10

23

completely failed to satisfy their burden on summary judgment of

11:15:14

24

creating a triable issue of fact on the issue of gross

11:15:20

25

negligence, Your Honor.

The plaintiffs here bear the burden of proof on gross
They have to not only refute the evidence that we

Their briefs -- essentially all they do is repeat their

Those are arguments that say that Bank of America

November 18, 2011

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71

All right.

Thank you.

11:15:21

1

THE COURT:

11:15:23

2

MR. HENNIGAN:

11:15:26

3

I think I'm -- I was inclined to start, I think I am

11:15:30

4

still going to start with Your Honor's questions prior to the

11:15:35

5

break.

11:15:36

6

THE COURT:

11:15:39

7

MR. CANTOR:

11:15:42

8

11:15:45

9

11:15:46

10

11:15:48

11

11:15:52

12

that something that plays a part in this equation; and, if so,

11:15:56

13

how?

11:15:56

14

11:15:58

15

equation, Your Honor, in a couple of ways.

11:16:02

16

thing, to the extent that reasonableness somehow comes into this

11:16:06

17

on the breach issue -- and again our position is that all you

11:16:09

18

need to know is 9.3.2 and that 9.1 does not in any way limit our

11:16:16

19

rights under that agreement -- but to the extent that

11:16:19

20

reasonableness comes into it, the fact that Lehman funded in

11:16:23

21

October and November 2008 demonstrates the reasonableness of

11:16:30

22

what I was discussing earlier this morning, which is that it was

11:16:34

23

not clear to anybody in September that Lehman was not going to

11:16:39

24

fund.

11:16:43

25

discussions that everyone was having was about options if Lehman

Thank you, Your Honor.

Nobody mentioned the Lehman funding.
I don't want to cut Mike off.

If you'd

like me to, I could do it in two seconds.

THE COURT:

Let him mention that because I would like

you to respond to that.
What is your position?

MR. CANTOR:

Should I consider that?

Is

Well, I think it plays a part in the
I think for one

That was not a forgone conclusion and thus, all of the

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didn't fund, but maybe Lehman will fund.

11:16:52

2

11:16:54

3

Bank of America side is that what they were hearing from other

11:16:58

4

people within the bank was that there were some loans where

11:17:03

5

Lehman was going to be stepping up in September and there were

11:17:05

6

other loans where it was not going to be stepping up.

11:17:08

7

11:17:12

8

and November lends credence to the notion that Bank of America

11:17:17

9

was reasonable in believing that it is possible that Lehman

11:17:19

10

funded in September.

11:17:22

11

26 --

11:17:24

12

11:17:25

13

11:17:25

14

MR. CANTOR:

11:17:29

15

negligence point, Your Honor.

11:17:30

16

11:17:33

17

and, again, let's start with the assumption that I don't accept,

11:17:36

18

that Bank of America knew that Fontainebleau was going to fund

11:17:40

19

for Lehman in September.

11:17:42

20

11:17:44

21

be a one-time occurrence because it was still possible that

11:17:48

22

Lehman was going to step back in -- remember, this is all

11:17:51

23

happening within ten days of, you know, one of the most

11:17:56

24

monumental bankruptcy filings in American business history.

11:18:00

25

And the testimony, as I mentioned earlier, from the

So the fact that Lehman eventually funded in October

THE COURT:

So when the money comes in on September

Does that play into the gross negligence

issue?
I think it absolutely plays into the gross

Again, if Bank of America believed that at worst --

But if Bank of America believed that this was going to

IF Bank of America believed that it was still a
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possibility that as we go forward and as things calm down that

11:18:07

2

Lehman was going to continue to fund here, which is what you get

11:18:11

3

when you find out that Lehman funded in October and November,

11:18:13

4

what you get when you had Fontainebleau telling Bank of America

11:18:17

5

and all of the lenders in a memo in mid-November that it had

11:18:20

6

talked to Lehman and Lehman said that it was going to continue

11:18:23

7

funding, that it clearly was not grossly negligent for Bank of

11:18:28

8

America to allow -- assuming it knew and we don't accept that --

11:18:32

9

for Bank of America to allow a one-time equity contribution to

11:18:36

10

bridge the gap in the face of one of the most monumental

11:18:40

11

bankruptcy filings and uncertain business situations of all

11:18:43

12

time.

11:18:43

13

11:18:45

14

ended up that you would say that it is grossly negligent for

11:18:51

15

Bank of America to allow the borrower essentially to put up more

11:18:55

16

of its own money to close that gap if it was going to be a

11:18:59

17

one-time gap.

11:19:00

18

11:19:01

19

11:19:04

20

MR. CANTOR:

11:19:05

21

THE COURT:

11:19:06

22

MR. HENNIGAN:

11:19:09

23

that they were assured by Lehman Brothers that they were going

11:19:12

24

to continue funding.

11:19:16

25

record at all.

It is only with hindsight and knowing where this case

THE COURT:

All right.

Thank you.

I want to make sure

I have plenty of time on the plaintiffs' side.
Sure.
Go ahead, sir.
I thought I just heard Mr. Cantor say

I do not believe that that is in this

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74

That is not what I said, actually.

11:19:17

1

MR. CANTOR:

11:19:19

2

MR. HENNIGAN:

11:19:20

3

THE COURT:

11:19:22

4

MR. CANTOR:

11:19:25

5

11:19:28

6

MR. HENNIGAN:

11:19:29

7

THE COURT:

11:19:29

8

MR. HENNIGAN:

11:19:32

9

11:19:35

10

11:19:35

11

11:19:39

12

11:19:43

13

11:19:46

14

11:19:51

15

11:19:56

16

pick that date because that is the date of the Lehman Brothers

11:19:59

17

bankruptcy filing.

11:20:01

18

11:20:03

19

filing on the 14th, because there were emails that were circling

11:20:07

20

throughout the Bank of America team about the magnitude of that

11:20:14

21

funding early, 1:00 a.m. in the morning on September 15th.

11:20:16

22

11:20:23

23

aware we were not aware that there had been a $201 million cost

11:20:27

24

overrun funded by capital that demonstrated the fact that the

11:20:34

25

earlier budgets on this project, the submissions that had been

That's what you said.

Okay.

Well, let's continue.

If it is what I said, I apologize because

it is not what I meant.
I want to put a point on that.

Go ahead.
There is a lot of discussion as though

this was a two-and-a-half million dollar issue on a multibillion
dollar project.
This was not a two-and-a-half million dollar issue on a
multibillion dollar project.

Let's put it in context.

I am going to focus on the time period between
September 15, 2008 and the middle of October 2008.
Here is what had happened.

On September 15, 2008 -- I

It actually probably happened late with an electronic

At that moment, from June 2008, Bank of America was

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11:20:38

1

made to support earlier fundings, were false.

11:20:42

2

11:20:50

3

apparent to IVI that there are additional known cost increases,

11:20:54

4

but the amount was not disclosed to them in a meeting that they

11:20:58

5

had had with the lenders.

11:21:00

6

11:21:03

7

overruns, $201 million worth of disclosure of this, with

11:21:08

8

significant additional cost overruns still to be expected.

11:21:13

9

11:21:18

10

files for bankruptcy.

11:21:22

11

bankruptcy in American history.

11:21:24

12

11:21:26

13

$2.5 million payment per se.

11:21:31

14

count on them for their substantial portion of the $190 million

11:21:36

15

that was still left to be funded on the retail facility.

11:21:39

16

11:21:45

17

The filing of bankruptcy -- let us make no mistake about it --

11:21:49

18

put that $190 million piece in question.

11:21:53

19

11:21:57

20

precedent, which is that there has been no Material Adverse

11:22:01

21

Effect.

11:22:07

22

come to Bank of America's attention that could reasonably be

11:22:11

23

expected to have a Material Adverse Effect.

11:22:14

24

11:22:20

25

In an email from IVI, the consultant, it said it was

So we go back to June and say there is massive cost

Now, we move toward September 15th.

Lehman Brothers

We have just heard it was the largest

The issue wasn't whether they were going to make their
The issue was whether we could

Lehman Brothers had over $65 million committed to that.

Let me read you the operative phrase from the condition

The requirement is nothing has happened, nothing has

So when Lehman Brothers files on the 15th, everybody
knows that it could reasonably be expected to have a Material
November 18, 2011

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1

Adverse Effect.

The issue isn't whether they are going to make

11:22:27

2

the $2.5 million payment; it is whether they are going to remain

11:22:31

3

committed to their share of the retail portion of this lending

11:22:34

4

facility because without it there is hole that is unlikely to be

11:22:40

5

filled.

11:22:40

6

So when they missed the $2.5 million payment, that

11:22:46

7

sends -- if it had been understood -- would have sent shock

11:22:50

8

waves through the organizations that were concerned about this

11:22:52

9

because it demonstrated that Lehman Brothers was not committed

11:22:56

10

11:23:00

11

11:23:02

12

two months they did make the required draws and indeed they did.

11:23:06

13

They never made up the draw from September and they never made

11:23:11

14

another payment.

11:23:13

15

11:23:17

16

of the picture.

11:23:22

17

the Bank of Nevada which had already disavowed their commitments

11:23:26

18

to this project.

11:23:30

19

For some reason my mind just went to Mr. Yu's letter.

11:23:38

20

Mr. Yu sent out a letter because two of the lenders had failed

11:23:42

21

to make a payment and his letter suggested that they were going

11:23:45

22

to keep those funding commitments in the in balance analysis and

11:23:50

23

was that okay.

11:23:51

24

11:23:53

25

to their share of the $190 million.
Now, Your Honor referenced the fact that in the next

So by the time we get to the March draw, they are out
They are as dead for practical purposes as was

Well, we have looked at that.

That is perfectly all

right to keep those funding commitments in the in balance test
November 18, 2011

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1

so long as there is a reasonable expectation that they are going

11:24:01

2

to be made in the future.

11:24:03

3

of the ledger.

11:24:04

4

11:24:08

5

continue to fund this project despite the fact that there are

11:24:13

6

enormous numbers of mounting breaches.

11:24:15

7

11:24:19

8

argument that the Lehman bankruptcy was well known to everybody,

11:24:25

9

including the Term Lenders, and if the Term Lenders believed, or

11:24:31

10

any of them, that there was a default as a result, the Term

11:24:37

11

Lenders could have given formal notification to Bank of America

11:24:47

12

as the Administrative Agent to initiate the proceedings under

11:24:54

13

the stop order.

11:24:58

14

11:25:01

15

signatures to the Disbursement Agreement and most of our clients

11:25:05

16

didn't have access to it.

11:25:09

17

what we call public side and private side where information was

11:25:14

18

made available through an Internet access to people who were

11:25:18

19

willing to receive confidential information, but the public side

11:25:22

20

lenders were not.

11:25:26

21

made public.

11:25:26

22

11:25:32

23

11:25:34

24

11:25:36

25

So it is okay to put it on that side

He didn't say is it okay with you that we are going to

THE COURT:

Well, let me ask you to respond to the

MR. HENNIGAN:

Recalling that we didn't -- we were not

There was a division here between

They only got information that was generally

So what we do have here is we have Highland Capital on
September -- right in this time period --

THE COURT:
trying to clarify.

Let me go back because this is what I am
The Term Lenders under the Credit Agreement
November 18, 2011

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1

made payments.

11:25:43

2

MR. HENNIGAN:

11:25:44

3

THE COURT:

11:25:54

4

11:25:57

5

MR. HENNIGAN:

11:25:57

6

THE COURT:

11:26:04

7

question that the Term Lenders themselves, if concerned that

11:26:12

8

there was a default, could have sufficiently made a demand on

11:26:19

9

Bank of America as the Administrative Agent under the

11:26:28

10

Disbursement Agreement or Bank Agent under the Credit Agreement

11:26:34

11

not to fund because of the default, but didn't.

11:26:38

12

11:26:41

13

of my clients are not privy to the information that would have

11:26:46

14

demonstrated the magnitude of the problem.

11:26:49

15

11:26:53

16

Bank of America claims it didn't know how much Lehman Brothers

11:26:56

17

was committed to on the retail facility, but my clients

11:26:59

18

certainly didn't know how much Lehman Brothers was committed to

11:27:04

19

under the retail facility.

11:27:05

20

But Highland Capital did make exactly that demand to

11:27:09

21

BofA and pointed out that the Lehman Brothers bankruptcy was,

11:27:13

22

Number 1, their position was it was a default.

11:27:15

23

11:27:19

24

of a bankruptcy doesn't create an automatic voiding of the

11:27:22

25

obligation, Highland Capital said it is at least an MAE.

Yes.

And the issue, if I understand it, was

whether the payments that were made should have been disbursed.
Correct.

Okay.

MR. HENNIGAN:

So Bank of America is raising the

Again remembering, Your Honor, that most

For example, not knowing what the retail lending --

When Bank of America went back and said the mere filing

November 18, 2011

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1

At the very least, it was an MAE.

11:27:31

2

THE COURT:

11:27:35

3

11:27:37

4

MR. HENNIGAN:

11:27:38

5

THE COURT:

11:27:41

6

11:27:47

7

11:27:50

8

11:27:50

9

11:27:53

10

11:27:54

11

11:27:57

12

11:28:02

13

11:28:06

14

11:28:14

15

MR. HENNIGAN:

11:28:16

16

THE COURT:

11:28:17

17

MR. HENNIGAN:

11:28:19

18

protocol in the Credit Agreement.

11:28:23

19

but I don't think there is a protocol to do that.

11:28:26

20

Agreement contemplated that we would make our funding

11:28:30

21

commitments.

11:28:31

22

11:28:35

23

at the time of closing.

11:28:38

24

proceeds account.

11:28:41

25

authority to disburse it unless all of the conditions precedent

Can your clients rely on that when Highland

is not even a party here?

agree.

We demand.

Well --

And your clients then join in and said we
Can you do that after the fact?

MR. HENNIGAN:

There is no protocol for us to do that,

Your Honor.

THE COURT:

Well, what about the notice provisions that

we have discussed?

MR. HENNIGAN:

The notice provision, that BofA is

required to give notice to itself to stop funding?

THE COURT:

Under the credit agreements, notice to Bank

of America of default by any of the Term Lenders.
Other than Highland, it would --

Well, yeah.
I don't think there is actually a
I could be misremembering it,
The Credit

We made $700 million worth of commitments, or funding,
That money was sitting in the bank

It could not be disbursed.

November 18, 2011

There was no

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1

were met.

11:28:45

2

11:28:50

3

record that would suggest that anybody was sitting on their

11:28:54

4

rights there.

11:28:59

5

fulfilling its responsibilities.

11:29:00

6

THE COURT:

11:29:02

7

MR. HENNIGAN:

11:29:06

8

spent a lot of time, because I do like that issue, about the

11:29:13

9

Fontainebleau funding for Lehman Brothers.

11:29:15

10

11:29:18

11

going to be a fun issue to try, but I also like that issue

11:29:22

12

because I think they can't hide from the fact that they looked

11:29:26

13

squarely at that default and ignored it and then tried to cover

11:29:30

14

it up.

11:29:31

15

11:29:37

16

defaulted.

11:29:41

17

made in the cost to complete reports that it was aware of.

11:29:47

18

It is also --

11:29:49

19

THE COURT:

11:29:50

20

MR. HENNIGAN:

11:29:52

21

THE COURT:

11:29:53

22

MR. HENNIGAN:

11:30:01

23

11:30:05

24

11:30:09

25

I am not aware of either a protocol or anything in the

They were relying upon the Disbursement Agent

Go ahead, sir.
Okay.

So in the earlier session we

I like that issue because, Number 1, I think it is

But there is also the fact that Bank of Nevada had
There is also the fact that there were misstatements

Aware of when?
In June.

Of when?
2008.

Exhibit 217, Susman's email to

Yunker:
"IVI reported that Turnberry West was not prepared for
an in-depth discussion of additional costs.
November 18, 2011

The only

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81

11:30:11

1

information brought to the meeting was the same worksheet

11:30:14

2

that Jim provided us a couple of weeks ago.

11:30:16

3

11:30:19

4

barely made it 90 minutes.

11:30:22

5

did come out was that the $201 million of increases is not

11:30:28

6

all inclusive.

11:30:31

7

additional known cost increases, but the amount was not

11:30:34

8

disclosed to them."

11:30:37

9

11:30:42

10

borrower on subjects like budgeting, is itself a default.

11:30:47

11

not receiving information that it has requested is itself a

11:30:52

12

default.

11:30:55

13

We have talked about this Lehman Brothers funding issue

11:30:59

14

as though it is okay for a retail lender to make the payment for

11:31:05

15

it, and there is indeed an interpretation of one of the

11:31:10

16

conditions precedent that might make it okay for another retail

11:31:14

17

lender to cover for it, but it is still a default as defined in

11:31:17

18

the agreement for any lender, retail or otherwise, to miss

11:31:25

19

payments.

11:31:25

20

11:31:28

21

Fontainebleau funds and therefore doesn't default on those

11:31:30

22

payments, but then defaults on every other payment after that,

11:31:33

23

so we've got mounting numbers of defaults.

11:31:36

24

11:31:41

25

"The meeting was scheduled for three hours, but it
One piece of information that

It was apparent to IVI that there are

BofA, being aware of misinformation coming from the
BofA

So, we have got, yes, October and November

Now, I am still sort of marching -- I realize I am
being a little discursive, but I am marching through the early
November 18, 2011

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1

days of September.

11:31:46

2

11:31:52

3

Poor's downgrades the Fontainebleau facility to B minus with an

11:32:00

4

indication that further downgrades are probable.

11:32:04

5

11:32:11

6

the Las Vegas market for gaming was collapsing; that they could

11:32:16

7

no longer expect repayment to come from cash flow the way they

11:32:20

8

had originally budgeted, and they were concerned about that

11:32:22

9

requiring further degradation; that $700 million of these loans

11:32:28

10

was going to be repaid from sales of condominiums and that

11:32:32

11

market was drying up and looked like it was going to be bleak

11:32:36

12

going into the future; and oh, by the way, Fontainebleau

11:32:42

13

declared bankruptcy -- I'm sorry -- Lehman Brothers declared

11:32:46

14

bankruptcy and that piece is substantially in jeopardy.

11:32:50

15

11:32:53

16

other than the fact that it downgraded it, that BofA didn't

11:32:58

17

already know.

11:32:59

18

11:33:03

19

month of March 2009, is itself contemplating a degradation of

11:33:08

20

the credit rating of the Fontainebleau Las Vegas facility and

11:33:12

21

ultimately does do that, puts it at a Category 9, high risk of

11:33:16

22

default, probability of default.

11:33:18

23

So the context in which this occurs is a nightmare of

11:33:24

24

negative information, all of which is known to the BofA at the

11:33:28

25

time it is making this decision about is the Fontainebleau

On September 18th, I may be off a day, Standard &

What it points to is what BofA also knew, which is that

There's nothing in the Standard & Poor's downgrade,

BofA itself, during the period marching toward the

November 18, 2011

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83

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1

bankruptcy an MAE?

11:33:38

2

11:33:42

3

budgets itself a default?

11:33:46

4

missed a payment strong evidence that our fears are going to

11:33:50

5

come to fruition, that indeed we can't count on that piece?

11:33:54

6

11:34:00

7

inability to make payments itself mounting?

11:34:04

8

about condominium sales?

11:34:07

9

11:34:11

10

adverse information that, taken as a whole -- I am kind of

11:34:16

11

remembering what it says -- taken as a whole, places in doubt

11:34:19

12

the other information that it has from the lender.

11:34:22

13

11:34:24

14

get a response.

11:34:31

15

argument that puts a duty on Bank of America to determine

11:34:38

16

default.

11:34:39

17

What's your response?

11:34:40

18

MR. CANTOR:

11:34:46

19

downgrade that Mr. Hennigan just talked about is evidence of

11:34:49

20

what we were talking about earlier, that all this information

11:34:52

21

was out there in the public.

11:34:54

22

11:34:56

23

went through all of these points that Mr. Hennigan considers so

11:34:59

24

significant, they were out there for all the lenders to see.

11:35:04

25

Is the fact that they have been distorting their
Isn't the fact that Lehman Brothers

Isn't the failure of other banks and their refusal or
By the way, what

So it is itself a default if Bank of America has

THE COURT:

Let me stop that part of the argument and

It is like a cumulative set of circumstances

Well, first of all, the Standard & Poor's

So to the extent that the Standard & Poor's downgrade

The idea that Bank of America was the one responsible
November 18, 2011

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1

for determining whether there was an MAE or not is just not

11:35:15

2

consistent with the --

11:35:16

3

THE COURT:

11:35:17

4

MR. CANTOR:

11:35:23

5

THE COURT:

11:35:25

6

MR. CANTOR:

11:35:28

7

What you got in the contract is a condition that says

11:35:32

8

that there shall have been no Material Adverse Event.

11:35:38

9

Fontainebleau that is required to rep that all of the conditions

11:35:43

10

precedent are met.

11:35:46

11

that all of its other representations and warranties are met.

11:35:50

12

11:35:57

13

is going to be the one determining whether there has been an MAE

11:36:01

14

or not.

11:36:06

15

certainly under these circumstances, is one of the most

11:36:10

16

subjective and speculative determinations that one can make.

11:36:16

17

11:36:19

18

11:36:23

19

11:36:28

20

risen to the level of an MAE is always going to be a subjective

11:36:33

21

determination.

11:36:34

22

11:36:38

23

America had actual knowledge that there was an MAE because there

11:36:42

24

is always going to be some difference of opinion as to whether

11:36:46

25

those facts as they stood at that time constituted an MAE.

MAE?
A Material Adverse Event.
I'm sorry.

It is not consistent with what?

With the contract, Your Honor.

It is

It is Fontainebleau that is required to rep

So Fontainebleau is the one that in the first instance

Declaring an MAE, okay, under most circumstances, and

If a meteor had hit the project, yes, that would have
been an MAE, and I don't think anyone could disagree with that.
But to determine that a set of economic factors has

You are never going to be able to say that Bank of

November 18, 2011

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1

Therefore, under the way the contract works, Bank of

11:36:59

2

America was allowed to rely without further investigation on

11:37:04

3

Fontainebleau's representation that, in fact, this amalgam of

11:37:08

4

events was not an MAE.

11:37:11

5

11:37:13

6

inconsistent with their role under the contract as it is

11:37:17

7

written, for them to be the one to make that determination and

11:37:21

8

say, yes, there has been an MAE here as a result of all these

11:37:26

9

occurrences.

11:37:27

10

11:37:30

11

11:37:33

12

THE COURT:

11:37:35

13

MR. CANTOR:

11:37:38

14

THE COURT:

11:37:44

15

under the Credit Agreement or the Disbursement Agreement are you

11:37:49

16

relying on that would allow the lenders, as compared to the

11:37:54

17

controlling person, to trigger a default notice?

11:38:00

18

11:38:02

19

I'll get it for you before we are done here this morning, Your

11:38:05

20

Honor, but the lenders obviously had the right to declare two --

11:38:08

21

THE COURT:

11:38:10

22

MR. CANTOR:

11:38:12

23

have got the provisions that provide that if Bank of America has

11:38:16

24

been notified of an Event of Default, it is required to take

11:38:20

25

certain action.

Bank of America was not required, and it would be

You know who could?

The lenders.

Again, the lenders

never did that.

MR. CANTOR:

How could the lenders do that?
The lenders, according to Mr. -Let me be more specific.

What provisions

I don't have the specific number for you.

Well, it is not so obvious to me.
Well, because what you have got is you

November 18, 2011

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1

So, therefore that allows the lenders --

11:38:23

2

THE COURT:

11:38:28

3

saw, that we discussed, was notification by the controlling

11:38:35

4

person of the Event of Default.

11:38:37

5

11:38:44

6

11:38:48

7

11:38:50

8

Honor, it provides that -- and we have argued the other side of

11:38:56

9

this, but it addresses the same issue -- the agreement provides

11:39:00

10

that the Administrative Agent shall be deemed not to have

11:39:02

11

knowledge of any Default, capital D default, unless and until

11:39:07

12

notice describing such default is given to the Administrative

11:39:10

13

Agent by borrowers, a lender or the Issuing Lender.

11:39:14

14

11:39:18

15

give notice of an Event of Default to Bank of America as

11:39:24

16

Administrative Agent and then Bank of America, as Administrative

11:39:27

17

Agent, would have knowledge of it and would have to act.

11:39:29

18

11:39:34

19

11:39:37

20

11:39:40

21

11:39:40

22

11:39:42

23

11:39:45

24

11:39:48

25

But the only notification provision that I

Where does it say that any of the lenders, Revolvers,
Term Lenders, could trigger --

MR. CANTOR:

In 9.3 of the Credit Agreement, Your

So that is the provision that allows the lenders to

THE COURT:

But here's my question.

Plaintiffs argue

that they are not parties to the Disbursement Agreement.

MR. CANTOR:

But they are parties to the Credit

Agreement, Your Honor.

THE COURT:

They are parties to the Credit Agreement,

but they are not parties as such to the Disbursement Agreement.

MR. CANTOR:

Right.

But the point is the provision I

just read to you is from the Credit Agreement.
November 18, 2011

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87

So your point is that where they are

11:39:51

1

11:39:56

2

11:39:58

3

MR. CANTOR:

11:39:59

4

THE COURT:

11:40:02

5

11:40:03

6

11:40:08

7

11:40:11

8

THE COURT:

11:40:12

9

MR. CANTOR:

11:40:13

10

11:40:16

11

to initiate a default process under the Credit Agreement,

11:40:20

12

correct?

11:40:20

13

MR. CANTOR:

11:40:21

14

THE COURT:

11:40:22

15

MR. CANTOR:

11:40:23

16

THE COURT:

11:40:27

17

MR. CANTOR:

11:40:28

18

THE COURT:

11:40:35

19

11:40:36

20

MR. CANTOR:

11:40:37

21

THE COURT:

11:40:42

22

Agreement then tie into the responsibilities and the protections

11:40:46

23

under the Disbursement Agreement?

11:40:46

24

11:40:56

25

THE COURT:
parties --

Yeah.
-- they have an express right to initiate a

default process.

MR. CANTOR:

Right, and the contract defines that if

Bank of America knows it, it has to act on it.

THE COURT:

Let me finish.
Sorry.
Let me finish.

They have an express right

Yes.
And give notice.
Right.
Now, the money is sitting in the account.
Right.
Then Bank of America has to deal with the

Credit Agreement and Disbursement Agreement.

MR. CANTOR:

Right.
So how does that notice under Credit

You go to 2.5.1, Your Honor, and you have

the provision that says that if the controlling agent gives
November 18, 2011

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notice of an Event of Default or notice of default, the stop

11:41:09

2

funding notice is going to be issued.

11:41:11

3

11:41:19

4

provides that if the Disbursement Agent is notified of an Event

11:41:21

5

of Default or a Default has occurred, is continuing, that the

11:41:27

6

Disbursement Agent shall promptly, and in any event within five

11:41:31

7

banking days, provide notices to each of the funding agents of

11:41:37

8

the same.

11:41:37

9

11:41:39

10

if the lenders, which they clearly had the right to do, gave

11:41:42

11

Bank of America a formal notice of an Event of Default, Bank of

11:41:46

12

America, both in its Disbursement Agent and Bank Agent capacity

11:41:53

13

had obligations to act.

11:41:58

14

11:42:04

15

11:42:06

16

MR. CANTOR:

11:42:07

17

THE COURT:

11:42:11

18

an Event of Default -- which is capitalized, so that means that

11:42:15

19

is a defined term?

11:42:16

20

MR. CANTOR:

11:42:17

21

THE COURT:

11:42:20

22

continuing.

11:42:27

23

Agreement?

11:42:30

24

Is that notification only by the controlling person?

11:42:34

25

MR. CANTOR:

There is also 9.2.3 of the Disbursement Agreement which

So the bottom line is, Your Honor, one way or another

THE COURT:

Okay.

So let me get back to 9.2.3 for a

moment.
Okay.
If the Disbursement Agent is notified that

Right.
-- or a default has occurred and is

So, how do I read that in terms of the Disbursement

No, I don't believe so, Your Honor.
November 18, 2011

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Oral Argument
89

Or if you read the two agreements together

11:42:36

1

11:42:39

2

the way we started our discussion, is that notification by

11:42:42

3

lenders, other lenders?

11:42:44

4

11:42:46

5

if the Disbursement Agent is notified, Your Honor.

11:42:49

6

how I can credibly argue to you that that notice has to come

11:42:52

7

from --

11:42:53

8

11:42:58

9

11:43:05

10

where there are provisions for Term Lenders, among others, to

11:43:08

11

give formal notice of default to Bank of America and then that

11:43:16

12

would be sufficient under 9.2.3 to trigger those provisions?

11:43:22

13

11:43:23

14

referred to in the Credit Agreement where lenders have the

11:43:27

15

opportunity to give notice is a capital D default under the

11:43:30

16

Credit Agreement.

11:43:31

17

11:43:33

18

defaults under the Credit Agreement.

11:43:36

19

conditions or failures of conditions under the Disbursement

11:43:40

20

Agreement.

11:43:44

21

11:43:50

22

default hole in the Credit Agreement and come back over here to

11:43:55

23

the Disbursement Agreement and say, you know, this is a question

11:43:59

24

of knowledge and information that is flowing toward BofA from

11:44:03

25

whatever source.

THE COURT:

I would read that -- I mean, it just says

MR. CANTOR:

THE COURT:

I don't see

So let me ask from the plaintiffs' side:

In reading that, do I not go back to the Credit Agreement itself

MR. HENNIGAN:

Your Honor, the Default that was

We are not talking about any of these things being
These are defaults of

So we don't -- you kind of fall into the capital D

November 18, 2011

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Oral Argument
90

You are saying that once the Term Lenders

11:44:04

1

11:44:10

2

put their money up, that there was no right on the part of the

11:44:14

3

Term Lenders to notify Bank of America that, in the opinion of

11:44:21

4

the Term Lenders, there was a formal Default and to say to Bank

11:44:28

5

of America, "Don't disburse"?

11:44:33

6

11:44:34

7

a defined term called "Required Lenders."

11:44:37

8

talked about earlier today the fact that BofA considered at one

11:44:41

9

point going and getting consents from the lenders for the

11:44:47

10

11:44:49

11

11:44:54

12

lenders, if that procedure is invoked by Bank of America, gives

11:44:58

13

the required -- the quote-unquote Required Lenders authority to

11:45:03

14

take action.

11:45:10

15

lender democracy never happened.

11:45:12

16

11:45:17

17

of $700 million sitting in a bank proceeds account subject to

11:45:24

18

the diligence of our Disbursement Agent making sure that at each

11:45:29

19

level of disbursement the right conditions have been satisfied.

11:45:32

20

11:45:34

21

11:45:36

22

The position is that Bank of America can't rely on that

11:45:43

23

argument because the default at issue would have to be a Default

11:45:49

24

under the Credit Agreement, which means that the Term Lender

11:45:53

25

wouldn't have had to fund into the account that was subject to

THE COURT:

MR. HENNIGAN:

I am going to say two things.

There is

You will recall we

Fontainebleau disbursement.
If there is -- that protocol does give the required

That was never invoked so that sort of issue of

So, what we're dealing with in September is almost all

THE COURT:

Okay.

So let me turn back to Bank of

America on this.

November 18, 2011

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Oral Argument
91

11:45:58

1

the Disbursement Agreement.

11:46:01

2

11:46:02

3

here, Your Honor, is an Event of Default, both under the

11:46:06

4

Disbursement Agreement and under the Credit Agreement.

11:46:09

5

11:46:13

6

9.2.3 or 2.5.1 in any way says that only certain events of

11:46:25

7

default give rise to a stop funding notice.

11:46:28

8

11:46:31

9

11:46:34

10

they wanted to make sure that the money that they had funded

11:46:37

11

into the bank proceeds account didn't find its way into the

11:46:40

12

project.

11:46:40

13

11:46:43

14

have the right somehow to stop that by issuing a notice of an

11:46:47

15

Event of Default or a Notice of Default, all of these things

11:46:51

16

that they are claiming, all of these things that they had equal

11:46:55

17

knowledge with Bank of America, are all things that are defaults

11:47:02

18

under all of the loan documents, both the Credit Agreement and

11:47:07

19

the Disbursement Agreement.

11:47:08

20

THE COURT:

11:47:13

21

minutes to complete your argument on the plaintiffs' side

11:47:16

22

because there is another issue I have to discuss before we

11:47:19

23

adjourn.

11:47:21

24

11:47:27

25

MR. CANTOR:

Everything that they are talking about

If there are events of default -- nothing in either

Indeed, it is completely inconsistent with what their
practical business position has been all along, which is that

So the idea that it is their position that they didn't

Let me do this.

Let me give you a few more

Any other points you want me to note that address
issues that were raised here during oral argument or from the
November 18, 2011

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Oral Argument
92

11:47:32

1

papers?

11:47:35

2

MR. HENNIGAN:

11:47:39

3

I've got a short list but I want to get to it.

11:47:44

4

to read for you -- I realize that there is a lot of information

11:47:48

5

here.

11:47:50

6

you the condition for disbursement that is 3.3.21.

11:47:57

7

THE COURT:

11:47:59

8

MR. HENNIGAN:

11:48:01

9

THE COURT:

11:48:08

10

11:48:10

11

MR. HENNIGAN:

11:48:11

12

THE COURT:

11:48:12

13

MR. HENNIGAN:

11:48:14

14

Basically, you know, nobody could be certifying to BofA

11:48:22

15

that this condition was complied with because it has to do with

11:48:27

16

BofA subjectively being unaware of information or other matter

11:48:32

17

affecting the project or transactions in an adverse manner

11:48:37

18

inconsistent with the other information.

11:48:41

19

11:48:46

20

to rely upon the representations of the borrower.

11:48:54

21

have any credible information in front of you in which they

11:48:57

22

attempt to say that, in fact, they did rely.

11:49:01

23

11:49:03

24

never said it.

11:49:07

25

representation from the borrower that they didn't have adverse

Okay.

Yes, Your Honor.

Thank you.

It is hard to keep it all straight.

I want

I want to read to

Now we are in the Disbursement Agreement.
The Disbursement Agreement.

3.3.21.

Let me just catch up with you.

The adverse information?
Yes.

Yeah, I've read that.
Okay.

You know what it says.

We've heard BofA now repeatedly say they were entitled

It would have been easy enough to say it.

You don't

They have

They have never said that they relied upon a

November 18, 2011

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Oral Argument
93

11:49:11

1

information, that no Material Adverse Effect had occurred, that

11:49:14

2

Lehman Brothers had funded.

11:49:18

3

THE COURT:

11:49:21

4

MR. CANTOR:

11:49:24

5

contract as written allows us to rely on all of the

11:49:29

6

representations and warranties that are made.

11:49:33

7

11:49:36

8

11:49:45

9

11:49:47

10

about the Bank Agent, so again you have got this dichotomy

11:49:52

11

between the two roles of Bank of America.

11:49:56

12

But the bottom line is under the contract, this is a

11:50:01

13

contract set up by sophisticated parties that is specifically

11:50:04

14

intended to limit the liability of the Disbursement Agent.

11:50:08

15

one is hiding behind that fact.

11:50:10

16

11:50:12

17

11:50:14

18

11:50:17

19

11:50:18

20

MR. CANTOR:

11:50:20

21

THE COURT:

11:50:24

22

Agent for violation of 3.3.21, would it have to be sued under

11:50:32

23

the Credit Agreement where it was the Bank Agent?

11:50:41

24

MR. CANTOR:

11:50:42

25

THE COURT:

THE COURT:

Okay.

Quick response on that?

Your Honor, the bottom line is that the

Right.

But how do I reconcile the language

in 3.3.21 with Bank Agent with the other language?

MR. CANTOR:

First of all, again, you are talking there

No

This contract was designed to limit the liability of
the Disbursement Agent.

THE COURT:

Let me interrupt.

This is where it gets

confusing.
Yeah.
If Bank of America was to be sued as Bank

I -Where was Bank of America a Bank Agent?
November 18, 2011

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Oral Argument
94

11:50:45

1

Wasn't it under the Credit Agreement?

11:50:47

2

11:50:49

3

technically -- and I realize how complicated and sometimes

11:50:53

4

counterintuitive this seems -- Bank of America was actually the

11:50:55

5

Administrative Agent under the Credit Agreement.

11:50:59

6

Bank Agent under the Disbursement Agreement.

11:51:03

7

11:51:12

8

11:51:15

9

11:51:17

10

11:51:21

11

11:51:21

12

11:51:24

13

term that is used only in the Disbursement Agreement.

11:51:28

14

that is used to describe Bank of America in the Credit Agreement

11:51:32

15

is the Administrative Agent.

11:51:33

16

THE COURT:

11:51:39

17

MR. CANTOR:

11:51:39

18

THE COURT:

11:51:44

19

11:51:47

20

11:51:50

21

of America, as Disbursement Agent, is relying on all of the

11:51:54

22

certifications by Fontainebleau that all of the conditions

11:51:57

23

precedent are satisfied.

11:52:00

24

11:52:05

25

MR. CANTOR:

THE COURT:

No.

Actually, I believe that

I'm sorry.

It was the

Bank of America was the

Disbursement Agent under the Disbursement Agreement.

MR. CANTOR:
THE COURT:

Yes.
Was it not the Bank Agent under the Credit

Agreement?

MR. CANTOR:

"Bank Agent," Your Honor, is a defined

Okay.

The term

This is where we started.

Right.
Is Bank of America being sued as

Disbursement Agent or Bank Agent?

MR. CANTOR:

Disbursement Agent, Your Honor.

So Bank

9.2.5, Your Honor, which you talked about a little bit
earlier -November 18, 2011

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 95 of 113
Oral Argument
95

So where does 3.3.21 come in?

11:52:06

1

THE COURT:

11:52:13

2

MR. CANTOR:

11:52:15

3

11:52:15

4

THE COURT:

11:52:22

5

terms of Article 9?

11:52:25

6

11:52:26

7

have got both 9.3.2, which allows us to rely without

11:52:31

8

investigation on the certification from Fontainebleau that every

11:52:35

9

single one of the conditions precedent, regardless of who, if

11:52:39

10

you will, is the action person under that condition precedent,

11:52:44

11

Fontainebleau certifies that every single one of those

11:52:46

12

conditions precedent is satisfied as of the disbursement date

11:52:53

13

and Bank of America, as Disbursement Agent, is entitled to rely

11:52:57

14

on that certification without further investigation.

11:53:00

15

11:53:06

16

specifically provides that the Disbursement Agent shall not be

11:53:09

17

deemed to have knowledge of any fact known to it in any capacity

11:53:13

18

other than the capacity of Disbursement Agent or by reason of

11:53:16

19

the fact that the Disbursement Agent --

11:53:18

20

THE COURT:

11:53:18

21

MR. CANTOR:

11:53:21

22

-- is also a funding agent.

11:53:22

23

THE COURT:

11:53:26

24

Agent is a defined term in the Disbursement Agreement that says

11:53:31

25

the Bank Agent is Bank of America in its capacity as

I'm not sure I am following your question,

Your Honor.

MR. CANTOR:

Okay.

How do I read this paragraph in

In terms of Article 9, Your Honor, you

9.2.5, which is entitled no imputed knowledge,

But -I need to finish this, I apologize.

Pardon me.

Pardon me.

November 18, 2011

Pardon me.

Bank

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 96 of 113
Oral Argument
96

11:53:34

1

Administrative Agent under the Credit Agreement.

11:53:36

2

MR. CANTOR:

Yes, Your Honor.

11:53:37

3

THE COURT:

So my question is:

11:53:40

4

of 3.3.21 as to Bank of America as Bank Agent, wouldn't it have

11:53:50

5

to be a suit under the Credit Agreement against Bank of America?

11:53:54

6

11:53:58

7

phrased, yes, I would say you're right, Your Honor, but to be

11:54:01

8

fair, that is not how the claim is phrased.

11:54:04

9

11:54:05

10

Agent, shouldn't have allowed the funding to go forward because,

11:54:09

11

among other things, this condition precedent was not satisfied.

11:54:12

12

11:54:15

13

condition precedent was not satisfied or that Bank of America

11:54:18

14

was not entitled to rely on the certification by Fontainebleau

11:54:23

15

that it was satisfied.

11:54:26

16

11:54:28

17

that both parties have, but we have been at it for almost three

11:54:32

18

hours, so let me get to one other issue which is important that

11:54:38

19

we discuss and, that is, I had entered back in January 2010,

11:54:49

20

which seems like a long time ago, MDL order number 3 which set

11:54:56

21

dates, among other thing, for a pretrial conference in January

11:55:00

22

2012.

11:55:06

23

11:55:16

24

role as an MDL Judge and what my options are here depending on

11:55:22

25

what I do on these motions.

MR. CANTOR:

If there is a violation

If that is how the claim was going to be

The claim is that Bank of America, as Disbursement

The problem is that they can't establish that this

THE COURT:

All right.

I know there is so much more

That seemed like a very long time back in 2010.
But let's talk about the posture of the case and my

November 18, 2011

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Oral Argument
97

11:55:24

1

Right now there is before the Eleventh Circuit -- and I

11:55:28

2

think the briefing is done.

11:55:31

3

Circuit has set oral argument yet.

11:55:33

4

11:55:35

5

11:55:35

6

11:55:38

7

11:55:42

8

MR. CANTOR:

Yes.

11:55:43

9

THE COURT:

Okay.

11:55:48

10

11:55:51

11

MR. CANTOR:

11:55:52

12

THE COURT:

11:55:55

13

11:56:00

14

11:56:11

15

the Eleventh Circuit affirms on fully funded.

11:56:18

16

disappears in terms of what I have in this district.

11:56:24

17

leaves, if there is a trial on what we are discussing today, the

11:56:31

18

cases in Las Vegas and New York, right?

11:56:34

19

11:56:37

20

to tell you -- I think the New York case no longer exists

11:56:41

21

because -- and you signed some orders to this effect -- but

11:56:44

22

effectively all of the Term Lenders that were plaintiffs in the

11:56:48

23

New York case had sold their interests to Term Lenders who are

11:56:51

24

plaintiffs in the Nevada case and I think -- it has never been

11:56:56

25

actually dismissed, I don't think.

MR. CANTOR:

I don't know if the Eleventh

There has been no argument date yet, Your

Honor.

THE COURT:

But the briefing has been done before the

Eleventh Circuit on the fully funded questions, right?

The only case that I actually had

was the one that Fontainebleau brought -Right.
-- which deals with the fully funded

aspect, although Term Lenders raise this in this suit.
So let's assume for the sake of just a discussion that

MR. CANTOR:

My case
That

Well, I think -- and these guys will have

November 18, 2011

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Oral Argument
98

11:56:59

1

MR. DILLMAN:

Actually, it has.

11:57:00

2

MR. CANTOR:

Has it been dismissed?

11:57:02

3

MR. DILLMAN:

I believe so.

11:57:02

4

THE COURT:

11:57:05

5

11:57:06

6

MR. CANTOR:

11:57:07

7

THE COURT:

11:57:15

8

issues, it is going to be in Las Vegas because, as an MDL Judge,

11:57:22

9

I have to send this bank to the federal court there.

11:57:29

10

11:57:31

11

sure my worthy adversary will chime in momentarily -- that is

11:57:38

12

correct.

11:57:40

13

the parties agreed, for Your Honor to keep it here.

11:57:44

14

But I don't think -- I think that is a moot point.

11:57:47

15

THE COURT:

11:57:51

16

interpretation, I, as the MDL Judge, have to stop my work and

11:57:58

17

send it back to the original court once I complete this phase of

11:58:06

18

it.

11:58:06

19

Now, whether the parties can convince the Court in Las

11:58:13

20

Vegas that I ought to try this thing and transfer it back to me

11:58:16

21

for some reason, whether I accept it, because I don't have a

11:58:19

22

case here, is a whole other issue.

11:58:23

23

MR. CANTOR:

11:58:23

24

THE COURT:

11:58:29

25

Well, let's assume it has.

That leaves the

Las Vegas case --

MR. CANTOR:

Right.
-- right?

So, if there is a trial on the

I think as a practical matter -- and I am

I believe that it is permissible for Your Honor, if

Under the MDL statute and all and

Right.
But it appears to me that my obligation, if

I determine that there are material issues of fact and a trial
November 18, 2011

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Oral Argument
99

11:58:34

1

is necessary -- and, by the way, it has to be a nonjury trial

11:58:40

2

according to the papers, right?

11:58:42

3

MR. HENNIGAN:

11:58:43

4

THE COURT:

11:58:47

5

So then I have to say, Well, wait a minute.

11:58:52

6

have to wait to see what the Eleventh Circuit does on the fully

11:58:57

7

funded questions to see whether I have a case that goes forward

11:59:03

8

with Fontainebleau because if I do have that case and all these

11:59:09

9

other matters are related, then, you know, should I, you know,

11:59:16

10

11:59:18

11

11:59:20

12

if -- and obviously, you know, we hope and believe that it won't

11:59:24

13

happen, but if the fully funded case were to come back as to

11:59:29

14

both entities, there is going to be further discovery on that

11:59:32

15

issue.

11:59:33

16

11:59:38

17

that and Fontainebleau has an issue in that, in the fully funded

11:59:43

18

side.

11:59:43

19

MR. CANTOR:

11:59:44

20

THE COURT:

11:59:51

21

all of these issues then also relate, plus there are going to be

11:59:57

22

all kinds of other claims, I assume, against Fontainebleau based

12:00:01

23

on the discovery that has come out here.

12:00:05

24

12:00:07

25

Correct, Your Honor.

That goes back to Las Vegas.
Don't I

integrate everything if the parties want that?

MR. CANTOR:

THE COURT:

MR. CANTOR:

Well, I think so, Your Honor, because

Right.

The Term Lenders have an issue in

Right.
Okay.

So then I still have a case to which

I will let them speak.

There are

litigations pending against Fontainebleau that these folks have
November 18, 2011

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113
Oral Argument

100

12:00:11

1

filed.

There is still stuff going on in the bankruptcy, Your

12:00:14

2

Honor, litigations relating to lien priority and things like

12:00:18

3

that.

12:00:19

4

THE COURT:

12:00:21

5

MR. CANTOR:

12:00:24

6

fraud claim against Fontainebleau and the Soffer entities in

12:00:29

7

bankruptcy court here.

12:00:32

8

12:00:36

9

12:00:43

10

in abeyance, at least at the moment, until I determine the

12:00:50

11

issues on this case that are before me and hear further from the

12:00:55

12

Eleventh Circuit because I can't take you to trial in any event?

12:01:00

13

12:01:02

14

at a minimum, it makes sense for us to wait until you rule on

12:01:05

15

these motions.

12:01:07

16

12:01:13

17

a pretrial stipulation which will take you a lot of time when

12:01:17

18

you don't know all the issues that would be going to trial?

12:01:24

19

12:01:27

20

12:01:31

21

THE COURT:

12:01:34

22

MR. HENNIGAN:

12:01:38

23

think Your Honor needs to decide these motions.

12:01:42

24

is a sufficient overlap with the Eleventh Circuit case and this

12:01:46

25

one, I think there's not.

THE COURT:

Well, I haven't begun to -The trustee actually has filed its own

Okay.

So the bottom line is that in terms

of the MDL order that I have issued, should I not hold anything

I would say, Your Honor, that certainly,

MR. CANTOR:

THE COURT:

Why should I require everybody to file here

MR. HENNIGAN:

Your Honor, first of all, I need two

more minutes on the substance of this argument.
Let me get my answer first.
The answer is I don't know.

November 18, 2011

Certainly I

Whether there

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Oral Argument

101

12:01:50

1

I think once we're done with these motions, this case

12:01:52

2

ought to be liberated to go to Vegas for its trial and I think

12:01:59

3

at that point the case that is pending before Your Honor will

12:02:03

4

probably be a stand-alone version here.

12:02:07

5

But, honestly, I hadn't really thought it through.

12:02:13

6

THE COURT:

12:02:13

7

MR. CANTOR:

12:02:14

8

could be.

12:02:19

9

counts.

12:02:24

10

that went up to the Eleventh Circuit.

12:02:27

11

case.

12:02:27

12

THE COURT:

12:02:30

13

MR. HENNIGAN:

12:02:30

14

THE COURT:

12:02:32

15

MR. HENNIGAN:

12:02:34

16

THE COURT:

12:02:39

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MR. HENNIGAN:

12:02:41

18

First of all, Your Honor before the break suggested

12:02:44

19

that, you know, why would they pull the plug, quote-unquote, for

12:02:48

20

a two-and-a-half million shortfall.

12:02:52

21

one of their options.

12:02:54

22

12:02:57

23

order, perhaps call the lenders together to discuss it and have

12:03:02

24

lender clarification on some of these issues, but stop funding

12:03:06

25

doesn't mean stop the project.

All right.
Your Honor, I don't understand how that

Essentially, they filed a complaint with multiple

We won on the fully drawn counts.

Over our objection,

It is still part of this

I think I heard -That's right.

You have got two minutes.
I forgot.

That's true.

Use them wisely.
I will talk fast.

Pulling the plug was not

What they needed to do was to issue a stop funding

It means that once the

November 18, 2011

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Oral Argument

102

12:03:10

1

conditions can be resolved, they can be resolved and move

12:03:15

2

forward largely consensually.

12:03:17

3

My second point was on the --

12:03:19

4

THE COURT:

12:03:22

5

12:03:24

6

12:03:28

7

moment and certainly the project in terms of a funding sense

12:03:31

8

stops at that moment until these issues can be resolved and

12:03:34

9

perhaps consensually.

12:03:37

10

12:03:40

11

order was issued, that this project wouldn't have imploded at

12:03:47

12

that point?

12:03:47

13

12:03:50

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was doomed at that moment, Your Honor.

12:03:54

15

matter --

12:03:55

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THE COURT:

12:03:57

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Are you trying to tell me that if a stop funding order

12:04:01

18

was issued, the project would not have imploded at that point

12:04:06

19

because of the contractors not getting paid and all the rest of

12:04:10

20

this thing given the Lehman bankruptcy and all the other --

12:04:13

21

12:04:16

22

believe that had the democracy protocols taken effect, it would

12:04:21

23

have ultimately -- look, make no mistake about it.

12:04:25

24

the right thing been done in September, this project would have

12:04:28

25

ended on that date.

Well, what do you mean?

In reality, if you

are not paying the contractors, the project stops.

MR. HENNIGAN:

THE COURT:

You stop paying the contractors at that

Are you trying to tell me that if a stop

MR. HENNIGAN:

I think without any doubt this project
Just as a technical

That is not my question.

MR. HENNIGAN:

I am saying not at that moment.

I

I think had

The $700 million would still be in the bank
November 18, 2011

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account and people would have been much better off than they

12:04:39

2

ultimately became.

12:04:41

3

12:04:44

4

on the cases with respect to gross negligence, it occurred to me

12:04:47

5

reviewing them on the way here that we need to put them into

12:04:50

6

three categories in the group contract cases that have gross

12:04:56

7

negligent provisions.

12:04:57

8

12:05:01

9

12:05:06

10

breached as long as there is payment of direct damages.

12:05:09

11

are what I call the efficient breach cases.

12:05:14

12

example, Global Crossing.

12:05:20

13

12:05:23

14

property, which is banks with conditions on funding and alarm

12:05:28

15

companies that, under certain conditions, are required to take

12:05:31

16

action to protect properties, in those cases where the

12:05:35

17

conditions have occurred that require affirmative action, the

12:05:39

18

courts have routinely held that gross negligence is a triable

12:05:44

19

fact.

12:05:45

20

In the one case that we cited, which is DRS, when the

12:05:50

21

bank has actively participated in the loss of property, it was

12:05:55

22

held to be gross negligence as a matter of law.

12:06:04

23

12:06:07

24

Your Honor, at this point I am not going to belabor why DRS is

12:06:12

25

completely factually inapposite here.

Now, the last point -- I am trying to speak quickly --

Category Number 1 are contracts for the provision of
goods and services.

Those contracts can be intentionally
Those

That is, for

In the case of contracts that provide for protection of

MR. CANTOR:

For the most part it is in our papers.

November 18, 2011

I think the showing in

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12:06:16

1

12:06:18

2

12:06:20

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morning.

12:06:25

4

you and hear your input.

12:06:27

5

MR. HENNIGAN:

12:06:28

6

MR. CANTOR:

12:06:32

7

104

our paper on gross negligence is sufficient.

THE COURT:

I found it very helpful to discuss these issues with

10

I always enjoy being here, Your Honor.
Thank you, Your Honor.

[The proceedings conclude at 12:06 p.m., 11/18/11.]

8
9

Thank you for your participation this

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

11
12
13
14
15

________________
11.19.11
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]

16
17
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Quality Assurance by Proximity Linguibase Technologies
November 18, 2011

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November 18, 2011

105

Avenue 2:8,12 104:14
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a.m 57:16,18 74:21
B
B 82:3
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77:9
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between 41:18 45:1,23 53:11 60:25
69:12 74:13 77:16 93:11
bigger 53:14
billion 51:24
bit 6:17 55:18 94:24

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business 72:24 73:11 91:9
button 27:6
C
C 104:8,8
CA 1:22
call 3:11 40:18 56:5 57:14,15,23 77:17
101:23 103:11
called 9:23 10:9,15 11:5 13:2 90:7
calls 4:9
call-in 57:21
calm 73:1
came 41:13 46:23 51:12 52:1 63:17,18
Cantor 2:2 3:5,10,24,2 4 5:3,9 6:12 7:9
8:3 9:7,10 10:1,8,11 11:9 12:1,10
13:3,7,11,1 3 14:5,14,16,19,2 5 15:19
16:3,22 17:11,16 18:5,8,17,2 3 19:1
19:6,9,15,2 0 20:5,17,20,22,2 5 21:4
21:9 24:18 26:8,12,18,2 3 27:5,12
27:15,22 28:17 29:2,7,9 30:6,11
31:17 32:4,7,16 33:8,19 34:3,7,12
34:16 35:8,15,18 36:13 37:12,14,18
37:25 38:11,15,19 44:21 45:4,6,9
45:12,17 46:16 48:7 50:4,7,15
52:20 53:3 54:14,18 56:23 57:9
58:4 61:17,22 62:4 63:6,8 64:18
68:6 71:7,14 72:14 73:20,22 74:1,4
83:18 84:4,6 85:13,18,22 86:7,20
86:24 87:3,6,9,13,15,17,20,2 4 88:16
88:20,25 89:4 91:2 93:4,9,20,24
94:2,9,12,17,2 0 95:2,6,21 96:2,6
97:4,8,11,1 9 98:2,6,10,2 3 99:11,19
99:24 100:5,13 101:7 103:23 104:6
capacity 5:18 12:21 88:12 95:17,18,25
capital 2:3 29:21 66:7 67:9 74:24
77:22 78:20,25 86:11 89:15,21
capitalized 88:18
care 25:9
careful 69:21
carry 19:3
case 1:3 3:12 6:1 10:19 12:11 15:20
26:20 31:19 37:9 58:24 59:24 60:2
60:15 61:6 73:13 96:23 97:9,15,20

97:23,24 98:5,22 99:7,8,13,20
100:11,24 101:1,3,11 103:13,20
cases 97:18 103:4,6,11,16
cash 82:7
catch 22:12 92:9
categorically 40:21 53:25
categories 103:6
category 49:20 82:21 103:8
cause 57:18
certain 12:18,19 29:1 30:14 85:25
91:6 103:15
certainly 8:4 20:5 67:1 69:3 78:18
84:15 100:13,22 102:7
Certificate 2:25
certification 21:18 40:25 95:8,14
96:14
certifications 29:13 34:22 36:24 37:3
59:12,22,25 94:22
certified 2:12 30:24 104:13
certifies 20:24 95:11
certify 104:9
certifying 92:14
cetera 8:19 11:2,2 14:1 20:1 22:9 24:9
26:3,3 34:15
chance 45:19 61:12
change 40:10
changed 41:22 42:14 51:9
charade 49:11,12
check 31:21 50:16
checked 32:20
checking 20:13
checklist 18:22 20:6 33:11 34:5 36:1
checklisting 35:14
checklists 20:3
check-the-box 14:20
chime 98:11
choose 50:25
chose 66:19,20
circle 48:24
circling 74:19
Circuit 97:1,3,7,15 99:6 100:12,24
101:10
circumstance 31:7
circumstances 35:1,25 38:12 61:17
83:14 84:14,15
cite 61:5
cited 50:23 103:20
claim 64:10 96:6,8,9 100:6
claiming 91:16
claims 55:16 78:16 99:22
clarification 101:24
clarify 5:14 15:23 77:25
clarity 4:22
clause 10:19 25:1
clauses 61:1
clean-cut 36:1
clear 8:8 36:21 39:16 40:13 45:21
59:15 65:18 69:6,8,18 71:23
clearly 43:6 73:7 88:10
clients 46:18 77:15 78:13,17 79:2,5
close 45:19 48:22 57:5 73:16
closely 56:1
closing 44:22 45:5 63:24 64:20 79:23
collapsing 82:6
collateral 13:25
colloquy 22:12 43:14
come 3:8 22:12 51:20 57:25 58:19
63:16 64:5 68:22 70:8,9 75:22 81:5
82:7 83:5 89:6,22 95:1 99:13,23
comes 14:6 16:12 21:15 42:22 71:16
71:20 72:10
comfort 23:6
coming 55:10 81:9
comment 6:12
comments 6:11 16:21 22:2
commercial 20:8 23:25 24:14 36:9
55:23 56:12
commercially 13:23,23 14:10,21,21
15:8 18:13 22:16,18,23 24:9 55:24
commitment 67:6,7,17
commitments 76:17,22,25 79:21,22
committed 15:9 75:16 76:3,9 78:17,18
communicated 51:3
communication 31:14
communications 41:21 69:12
companies 42:4 103:15
company's 40:11
comparable 7:4

compared 85:16
complaint 59:20 101:8
complete 8:9 17:14 70:4 80:17 91:21
98:17
completely 70:23 91:8 103:25
complicated 94:3
complied 6:14 16:13 92:15
concede 37:4
conceded 41:12 61:23
conceivably 68:17
concept 50:10 52:11
conceptual 47:10
concern 24:11 56:1
concerned 76:8 78:7 82:8
conclude 104:7
conclusion 71:24
conclusively 49:6
condition 33:15 34:10 35:4,23 37:1,8
41:23,24 42:13 43:23 75:19 84:7
92:6,15 95:10 96:11,13
conditions 8:17 22:24 24:16 25:21
32:25 33:6 34:24 36:24 38:1 40:25
59:3,6,13 66:15 79:25 81:16 84:9
89:19,19 90:19 94:22 95:9,12 102:1
103:14,15,17
condominium 83:8
condominiums 82:10
conduct 6:6,9,22,23 14:6 61:4,8 66:4
conference 96:21
confidential 77:19
confines 50:14
confirm 51:15
confirmation 42:5
confirming 59:3
confusing 34:17 93:19
confusion 16:1
connection 47:1
consensually 102:2,9
consent 40:20
consents 90:9
consequences 30:14 67:24
consider 16:6 53:8 66:4,21 71:11
consideration 65:16
considered 15:12 61:9 90:8
considering 45:25 50:21
considers 83:23
consistent 13:24 25:7 35:13 65:20
84:2,5
constituted 84:25
construction 18:11 19:24 20:11,14,15
20:21 21:11,16,18,1 9 22:4,9,19
24:3,6 33:13,22 34:5 35:5 63:22
consult 4:25
consultant 18:11 19:25 20:11,14,16
21:12,16,18,1 9 22:19 24:6 33:14,23
34:6 75:2
consultant's 22:9 24:4
contains 13:10 18:1
contemplated 54:2 79:20
contemplates 26:19
contemplating 82:19
contemplative 69:22
contend 13:9 39:9
contended 9:13
content 31:18
CONTENTS 2:23
contests 56:7
context 16:20 42:10 43:22 44:13
51:12 61:9 65:4 74:12 82:23
continue 12:24 53:21 55:11 64:8
67:14 73:2,6,24 74:3 77:5
continuing 25:25 56:5 88:5,22
contract 15:3,5,6 16:4,9,10,14,20
24:20,20 32:16,17 52:12 58:21
60:15,23 70:13 84:6,7 85:1,6 87:6
93:5,12,13,1 6 103:6
contractors 102:5,6,19
contracts 103:8,9,13
contractual 53:4
contrary 59:9
contribution 43:1 73:9
control 9:22,23,24 10:1,4,9,12,15,24
10:24 11:5,13,25 13:2 14:1 26:6
31:2,3,4 49:17 64:24
controlled 50:14
controlling 11:21,24 25:23 26:5,8,15
27:3,10,18,19,2 0 28:13,14 29:4,18
30:2 31:5 32:2,9,21 35:22 47:7,14

November 18, 2011

106

85:17 86:3 87:25 88:24
controversy 43:5 57:5
conversation 4:19 42:24 43:4,6 46:11
conversations 42:22 44:25 67:15
69:15
convince 98:19
corners 14:18
correct 5:8,9,15 14:14 17:9,17,25
18:16 32:4 54:10 78:5 87:12 98:12
99:3
correctly 16:17 34:22 38:19 59:19
cost 20:21 55:15 74:23 75:3,6,8 80:17
81:7
costs 22:5 33:15 39:24 51:25 63:22
64:1,22,25 80:25
counsel 4:15 6:22 43:6 58:10 69:20
count 75:14 83:5
counter 4:20
counterintuitive 94:4
counterpoint 58:3
country 43:21
counts 101:9,9
couple 52:17 53:7 56:1 64:21 71:15
81:2
course 18:20 35:21 42:18 48:10 70:4
court 1:1 2:11 3:2,3,6,11,16,2 2 4:3,6
4:13 5:4,10,22,2 5 6:11,16,24 7:11
7:14,17 8:12 9:2,8,18 10:7,9,14,22
11:17 12:6,15 13:6,8,12,16,18
14:13,15,17,2 2 15:10,20 16:6,21,24
17:12,17,20,2 2 18:1,6,9,18,24 19:2
19:7,13,16,2 1 20:15,18,21,2 3 21:1,5
21:25 22:14,20 23:11,18,20 25:11
26:11,13,22 27:2,9,13,1 6 28:13,19
29:3,8 30:5,7,17 31:4,9,12 32:1,5,8
32:15,24 33:9 34:2,4,8,13,1 7 35:9
35:16,19 37:6,13,17,1 9 38:4,13,16
39:8,12 40:24 43:21 44:19 45:2,5,7
45:10,13 46:13 47:4,12,19,2 3 48:1
48:4,8,12,15,2 1 49:1,25 50:3,5,9
52:15,19 53:6 54:6,16,21 56:24
57:10,19 61:11,20,23 63:3,7 64:16
68:5 71:1,6,9 72:12 73:18,21 74:3,7
77:7,24 78:3,6 79:2,5,9,13,1 6 80:6
80:19,21 83:13 84:3,5 85:12,14,21
86:2,18,22 87:1,4,8,10,14,16,18,21
88:14,17,21 89:1,8 90:1,20 91:20
92:7,9,12 93:3,7,18,21,2 5 94:7,10
94:16,18 95:1,4,20,2 3 96:3,16 97:6
97:9,12 98:4,7,9,15, 17,19,24 99:4
99:16,20 100:4,7,8,16,2 1 101:6,12
101:14,16 102:4,10,16 104:2,13
courtroom 1:10,25 3:1 41:9 67:21
courts 103:18
cover 19:11,13 43:24 49:21 80:13
81:17
covered 36:3 57:4 58:6,22
co-lenders 52:9
create 41:24 58:14 78:24
created 57:22
creates 30:24 39:13
creating 70:24
credence 72:8
credible 44:1 92:21
credibly 89:6
credit 5:23 6:8,9,18 7:3,20,22 8:25
10:5 26:25 27:25 28:1,6 29:9,15,16
29:19 30:21 31:13 62:8 77:25 78:10
79:13,18,19 82:20 85:15 86:7,20,22
86:25 87:11,19,21 89:9,14,16,18,22
90:24 91:4,18 93:23 94:1,5,10,14
96:1,5
criminal 50:10 52:11
criteria 19:5
Crossing 103:12
culpability 70:20
culpable 61:8
cumulative 83:14
current 42:3
cut 48:5 71:7
C-1 17:7,14 18:3,3,9 34:21
D
D 1:21 29:21 86:11 89:15,21
dah-dah 44:12,12,12
Dallas 27:1
damages 103:10

Case 1:09-md-02106-ASG Document 326 Entered on FLSD Docket 11/20/2011 Page 107 of
113
Dan 3:24
DANIEL 2:2
date 10:25 18:6 40:24 41:4 74:16,16
95:12 97:4 102:25 104:12
dates 96:21
day 65:25 82:2
days 42:21 72:23 82:1 88:7
[e-mail] 2:5
dead 76:16
deal 23:7,19,21 29:6,16 33:6 53:18
56:21 64:17 87:18
dealing 56:6 68:13 90:16
dealings 35:22
deals 24:21 97:12
debate 23:12
debt 19:18 26:25
Debtors 1:7
decide 100:23
decided 64:7,8
decision 27:11,14 67:12 82:25
decisions 27:8
decision-makers 27:9
declaration 44:14
declare 30:15 31:23 85:20
declared 82:13,13
declaring 62:3 84:14
deemed 28:7 86:10 95:17
default 11:22,23 25:24,24 26:17 28:4
28:5,8,8,16 29:19,19,21,21,22 30:1
30:10,16 31:16,23 37:24 41:25
49:23 54:6,7 61:24 62:3 66:11
77:10 78:8,11,22 79:14 80:13 81:10
81:12,17,21 82:22,22 83:3,9,16
85:17,24 86:4,11,11,12,1 5 87:5,11
88:1,1,5,5,11,18,2 1 89:11,13,15,22
90:4,23,23 91:3,5,7,15,15
defaulted 80:16
defaults 81:22,23 89:18,18 91:17
Defendants 1:13 2:1 13:11,13
deficiency 18:15
define 36:15
defined 10:3,12 11:25 12:1 14:3 15:25
26:6,9 81:17 88:19 90:7 94:12
95:24
defines 87:6
definition 11:10 14:4,6 27:10 32:13
definitions 10:2,23 11:4
degradation 82:9,19
degree 70:20
delay 7:13 57:24 62:9
Delayed 68:15
deliberate 50:10
deliberately 50:13 56:17
deliberation 69:22
demand 26:16 78:8,20 79:6
demanded 66:8
democracy 90:15 102:22
demonstrated 74:24 76:9 78:14
demonstrates 49:6 71:21
denied 44:4
dependent 55:22
depending 96:24
deposition 43:14
DEPUTY 3:1
describe 49:5 94:14
describing 86:12
designed 93:16
despite 77:5
detailed 57:4
details 25:3
determination 14:7 15:7 16:14 34:23
50:25 51:1 62:13 84:21 85:7
determinations 59:10 84:16
determine 16:12 18:11 24:7 34:9
47:13 83:15 84:19 98:25 100:10
determines 15:16 33:12,13
determining 21:19 34:21 36:18 59:1
65:16 84:1,13
dichotomy 93:10
differ 11:3
difference 84:24
different 5:25 15:15 22:18 27:14
28:15 32:9 37:22 45:3 47:10 49:3
52:8 53:16 62:7 65:7,21,22
differing 68:17
difficulty 28:19
dilemma 55:18
diligence 19:24 20:7,10 21:8,11,21

22:17,23 24:3,14 35:3 61:6 69:6,7
90:18
diligent 33:14
Dillman 1:21 3:20,20 7:13 43:14 98:1
98:3
direct 69:12 103:10
directed 5:17
direction 64:14
directly 3:18 48:16 56:18
disagree 29:7,8 67:25 84:18
disappears 97:16
disavowed 76:17
disburse 79:25 90:5
disbursed 47:22 49:23 64:22 78:4
79:24
disbursement 5:7,18,18 6:4,6,10,15
6:23 7:5,8,19,25 8:13,22,25 9:4,5
9:10,14,16,2 1 11:1,5,15,2 2 12:9,18
12:20 13:9,21 17:19,23 18:10,20
19:19,23 22:7 23:5,12,21 24:6,21
24:24 25:3,9,17,19,2 3,25 26:16
27:4,18,21 28:11,25 29:10,14,18
30:3,19 31:15 32:10 33:3,11,17
34:9,14 35:3,22 42:6 58:25 59:3,6
59:11 60:4,9 62:7 65:6 70:17 77:15
78:10 80:4 85:15 86:19,23 87:19,23
88:3,4,6,12,17,2 2 89:5,19,23 90:10
90:18,19 91:1,4,19 92:6,7,8 93:14
93:17 94:6,8,8,13,19,20,2 1 95:12,13
95:16,18,19,2 4 96:9
disbursing 9:11 14:1 24:22 31:6 32:22
47:7
disclosed 75:4 81:8
discloses 15:15
disclosure 75:7
discovered 55:15
discovery 38:17 99:14,23
discursive 81:25
discuss 53:6 91:22 96:19 101:23 104:3
discussed 52:24 58:17 65:7,18 79:10
86:3
discussing 12:6 39:17 50:12 69:19,20
71:22 97:17
discussion 12:16,24 16:25 17:2 25:14
26:9 27:16 28:22 30:3 38:7 46:7
74:8 80:25 89:2 97:14
discussions 45:23 71:25
dismiss 59:18
dismissed 97:25 98:2
disposes 39:15
dispute 23:13 53:10 60:25 63:10
69:23
disregard 61:3
disregarded 66:22
disregarding 62:21 65:17,24 69:1
70:5
distinction 15:17
distorting 83:2
district 1:1,1,16 97:16
divide 27:19 38:13
division 1:2 77:16
document 8:15 10:9 11:4,19 17:14,23
18:3,4 24:10 34:6
documentation 18:12 24:8 59:2
documents 8:9,23 50:19 52:2 91:18
doing 18:24 20:14 21:12,12 22:19
31:23 33:11 36:1 43:24 61:21 66:5
66:6 68:11
dollar 74:9,10,11,12
dollars 23:4 62:17 64:1
done 24:3 55:8,24 58:6 60:3 85:19
97:2,6 101:1 102:24
doomed 102:14
doubt 41:18,20 60:5 83:11 102:13
Doug 40:4
down 5:11 26:4 27:2 39:25 47:16 54:4
63:24 64:14 65:19 73:1
downgrade 82:15 83:19,22
downgraded 82:16
downgrades 82:3,4
drafted 17:15,18,22,23
draw 62:9 76:13,15
drawn 101:9
draws 76:12
DRS 103:20,24
drying 82:11
during 45:21,21 53:8 57:20 82:18
91:25

duties 6:14 9:16 13:24 25:6 59:9 60:7
60:9,11
duty 28:15 35:6 36:9 37:23 83:15
E
E 104:8,8
each 4:25 7:18 8:7 9:20 26:1 35:4 59:2
88:7 90:18
earlier 28:3 42:6 58:6 67:3 71:22 72:2
74:25 75:1 80:7 83:20 90:8 94:25
early 74:21 81:25
earmarked 23:16
earned 23:3
earning 23:2
easy 92:23
economic 84:19
effect 18:21 28:9 63:3 75:21,23 76:1
93:1 97:21 102:22
effectively 97:22
efficient 103:11
effort 55:6
efforts 13:23 18:14 22:18,23 24:9
either 11:7 13:9 36:8 45:5 58:11 61:3
68:12,21 69:15 80:2 91:5
electronic 74:18
electronically 30:25
Eleventh 97:1,2,7,15 99:6 100:12,24
101:10
email 30:12 31:12 39:21 40:8 41:12
42:2 49:6 68:9 75:2 80:22
emails 38:16,25 39:16,20 40:14 45:15
45:18,20 50:23 74:19
employed 15:23,24
end 58:11 60:2 65:24
ended 45:25 62:17 73:14 102:25
enforceable 61:1
engage 4:19
enjoy 104:5
enormous 77:6
enough 5:2 30:25 45:15 92:23
ensure 59:6
entered 96:19
entire 8:14 60:15
entities 10:25 11:16 18:14 26:1 33:17
34:15 59:12 67:14,16,18 99:14
100:6
entitled 14:9 21:17 36:23 59:12,16
60:19 92:19 95:13,15 96:14
entity 32:13
equal 91:16
equate 61:15
equation 53:12 71:12,15
equity 51:1 63:12 73:9
equivalent 24:15 37:10 50:10
error 49:23
especially 61:8 63:2
ESQ 1:20,21 2:2,3,7
essential 23:5
essentially 11:14 15:3 24:20 59:1
70:12 73:15 101:8
establish 38:24 70:10,19 96:12
established 48:9
et 1:6,9,12 8:19 11:2,2 14:1 20:1 22:9
24:9 26:3,3 34:15
evaluating 66:3
even 9:8 10:25 45:19 51:14 52:6 55:23
56:15 61:6,7 62:19 65:24 66:8,21
69:2 70:18 79:3
event 11:22 25:20,24 28:5,8 29:19,21
29:23 30:10,15,15,2 5 31:23 32:2,25
33:16 34:13 50:21 84:4,8 85:24
86:4,15 88:1,4,6,11,1 8 91:3,15
100:12
events 66:14 68:19,20 85:4 91:5,6
eventually 33:5 72:7
ever 32:23 51:3 66:8 68:22
every 54:8 55:6 59:23 81:22 95:8,11
everybody 3:16 4:13 57:14,20,22,25
75:24 77:8 100:16
everybody's 5:14 13:19 55:7,13
everyone 3:7 10:4 41:9 43:23 71:25
everything 20:18 26:20 36:3 60:3
62:23 66:16 91:2 99:10
evidence 14:2,8,23 15:4,12,16,22,22
16:6,14,19 32:22 38:23 39:1,12,14
40:14,22 41:7 44:1,23,24,2 5 46:25
49:22 51:3,6 53:13 69:14 70:7,9,10

November 18, 2011

107

83:4,19
exact 41:14 52:25 65:1
exactly 48:11 78:20
example 11:18 19:21 33:22 34:2,4
61:19 78:15 103:12
except 60:10
exception 27:5 66:7 68:24
exchange 43:15
exclude 28:21
excuse 17:23 68:6
executed 8:6 10:25 11:4
exercise 13:22
exercised 24:16,17
exhaustion 12:2,4
Exhibit 17:7 39:21 40:14 41:12 42:6,8
80:22
exists 97:20
expect 82:7
expectation 77:1
expected 75:8,23,25
expert 15:10
explain 50:16
explanation 50:2
explanations 50:12
express 87:4,10
expressed 30:13
expressly 60:4,10
extent 6:20 14:24,25 16:11 36:13
65:22 71:16,19 83:22
extrinsic 14:2,23 15:4,12,16,2 1 16:6
16:18
F
F 104:8
face 15:21 73:10
face-to-face 69:16
facilitated 69:12
facility 36:5 37:11 52:8 62:8 63:24
75:15 76:4 78:17,19 82:3,20
fact 14:9 15:9 16:15 19:7 36:10,16
38:7,18,22 39:13 41:9 42:21 44:1
44:17,23 45:11,16,25 46:1 49:19,22
51:13 52:6 53:9,11 55:1,11 56:24
58:14 61:13 62:14,20 63:7 67:17
70:24 71:20 72:7 74:24 76:11 77:5
79:6 80:12,15,16 82:16 83:2,3 85:3
90:8 92:22 93:15 95:17,19 98:25
103:19
factors 84:19
facts 28:20 33:19 63:11 66:17 67:23
70:14 84:25
factual 38:5 53:12 58:10,13,16
factually 12:23 103:25
fail 41:24
failed 66:15 67:5 70:23 76:20
fails 40:1
failure 32:19 62:14 83:6
failures 89:19
fair 5:2 53:22 96:8
fall 89:21
false 50:18 75:1
family 3:8
fashion 8:10 21:14,24
fast 101:17
favor 11:1
Fax 1:23 2:9,13 104:15
fears 83:4
federal 98:9
Federally 2:12 104:13
fee 23:1
few 42:21 53:7 91:20
fifteen 56:24
Figueroa 1:22
figure 4:18
figures 65:1
figuring 67:12
file 100:16
filed 45:22 100:1,5 101:8
files 20:16,23 75:10,24
filing 74:17,19 75:17 78:23
filings 72:24 73:11
fill 7:24
filled 18:6 76:5
financing 23:9
find 11:7 13:19 70:20 73:3 91:11
finder 16:15
finding 39:5

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finer 9:12
fingers 65:2
finish 87:8,10 95:21
first 16:7 41:11 45:21,22 53:22,24
58:20 67:16 83:18 84:12 93:9
100:19,21 101:18
five 88:6
FL 2:8,13 104:14
flaw 60:14
Florida 1:1,11 15:15
flow 25:18 82:7
flowing 89:24
focus 5:6 6:24 7:17 29:24 58:20 74:13
focused 10:20 49:6
focuses 30:2
focusing 6:3,6
folks 99:25
follow 25:4 61:25
followed 16:22 56:7
following 5:5 61:16 95:2
Fontainebleau 1:5,9 33:4,5 37:14,21
39:18,19,23,2 5 40:5,18,23,25 41:8
41:10,23 42:12 44:3,9,15 45:1,23
45:24 46:6,7,8,9,18,2 2 47:1 48:3
49:3,10,16,1 7 50:13,18,20,25 51:4,4
51:11,15,18 52:2,24 53:2 55:21
56:18 59:17,21 60:1 61:20 62:16,23
63:23,25 64:9,10,22 65:9 66:13
69:11,13 72:18 73:4 80:9 81:21
82:3,12,20,2 5 84:9,10,12 90:10
94:22 95:8,11 96:14 97:10 99:8,17
99:22,25 100:6
Fontainebleau's 36:24 37:3 41:14,16
44:18 63:9 85:3
foreclosed 70:18
foregoing 104:9
forgone 71:24
forgot 3:19 101:15
form 17:7 38:24
formal 4:20 26:16 30:20,23 31:13 32:9
58:5 77:11 88:11 89:11 90:4
formalistic 32:18
formulistic 27:1
forth 25:2 60:10
forward 21:23,23 37:5 55:10,11,22,25
62:14 63:1,13 68:3,7,22 70:8,9 73:1
96:10 99:7 102:2
found 104:3
four 14:17
frame 4:23
fraud 100:6
Freeman 39:25 42:2,8,11,15,2 5 43:3
43:12,15 51:7 69:16
Freeman's 42:19
from 3:24 4:1,15 7:23 8:22 10:14
11:15 16:4,21 20:4 22:18 27:20
29:22 30:9,12 32:9 34:18 38:6
39:24,25 40:2 42:23 46:3 48:16,18
50:12 51:7 53:11 54:15,22 55:19,21
57:2,23 59:5,12,17,2 5 60:1 63:17
63:18 64:5,7,9 65:9 67:1 72:2,3
74:22 75:2,19 76:13 80:12 81:9
82:7,10 83:12 86:25 89:7,8,24 90:9
91:25 92:25 95:8 100:11
front 4:24 7:8 92:21
fruition 83:5
fulfilled 22:24
fulfilling 80:5
full 6:15
fully 61:1 97:7,12,15 99:6,13,17 101:9
fun 80:11
function 18:25 19:4 23:13 27:7
functions 26:24
fund 37:20 40:1 42:12,17,18,2 0 46:2
46:10,11 48:24 50:18,22 51:1,11,13
53:10 54:5,25 55:2 56:4,8 62:10
67:5,10,18 71:24 72:1,1,18 73:2
77:5 78:11 90:25
fundamental 60:14
funded 37:15,21,21 44:12 48:3 49:16
53:18,19,19,2 0 56:19 71:20 72:7,10
73:3 74:24 75:15 91:10 93:2 97:7
97:12,15 99:7,13,17
funding 9:20 11:20 26:1,2 37:4,11
38:3 40:6,18,19,2 3 41:5,8,15,25
44:2 45:25 46:5,13 48:17,20 51:17
52:23,24 53:11 54:3 56:16 61:21
62:13,15,23 64:3 65:13 67:13 71:6

73:7,24 74:21 76:22,25 79:12,20,22
80:9 81:13 88:2,7 91:7 95:22 96:10
101:22,24 102:7,17 103:14
fundings 75:1
funds 9:11 11:15 14:1 23:15 24:22
46:23 47:22 49:24 53:2 81:21
further 7:1 25:14 36:23 51:19 52:3
58:11 59:16 61:14 65:10 82:4,9
85:2 95:14 99:14 100:11
future 77:2 82:12
G
gains 12:18
gaming 82:6
gap 7:24 40:1 41:18 73:10,16,17
gave 88:10
Gee 64:8
general 14:12 23:24 24:5 25:2,8
generally 25:6 77:20
generated 45:15 46:20
gets 45:19,19 93:18
getting 17:2 62:17 90:9 102:19
give 10:16 11:17 13:20 30:21 33:5,6
56:13,22 79:12 86:15 87:14 89:11
89:15 90:11 91:7,20
given 7:25 16:11 30:24 62:23,24,25
77:11 86:12 102:20
gives 4:22 87:25 90:12
giving 61:12
glad 63:17
Global 103:12
go 4:11 5:4 9:18 17:2 22:14 23:22
25:19 26:4 30:7 32:24 34:19 35:11
37:5 48:1 49:11,16 50:16 52:4 54:4
55:25 62:13 63:1,13 67:13 73:1,21
74:7 75:6 77:24 80:6 87:24 89:9
96:10 101:2
goes 27:24 36:3 42:14 46:19 65:3 99:4
99:7
going 3:16 4:23 11:9 15:8 16:14 18:22
23:11 25:6 27:23 29:5 33:12 34:19
42:12 45:21 46:2,4,6,10 48:4,22
50:8 51:13 53:6 54:2 55:22 56:11
56:13 57:8,14 58:4,11 62:10,24
64:2 65:11,19 67:13,14,18,2 5 68:10
69:3 70:9 71:4,23 72:5,6,18,20,22
73:2,6,16,2 3 74:13 75:12 76:1,2,21
77:1,4 80:11 82:10,11,12 83:4
84:13,20,22,2 4 88:2 90:6,9 96:6
98:8 99:14,21 100:1,18 103:24
Gold 1:15 3:2
Good 3:3,4,5,14,19,20,24
goods 103:9
Gotcha 31:11
governs 28:1
grant 48:8
great 44:22 63:17
gross 19:13 38:10 56:13,19 60:23 61:2
61:15,25 69:5 70:6,10,24 72:12,14
103:4,6,18,2 2 104:1
grossly 36:17 62:2 73:7,14
group 26:25,25 27:8 103:6
guess 16:4 37:9 43:18,18
Guggenheim 67:10
guys 97:19
H
habit 48:10
half 12:20
hand 67:8
handled 65:25
handwritten 48:23
hang 57:22
happen 42:22 99:13
happened 32:23 33:21 41:21 46:11,15
51:8 74:15,18 75:21 90:15
happening 72:23
happens 43:3 46:21
happy 3:8
hard 33:2 44:13 92:5
harder 35:19
HASBUN 4:11
hat 12:7,8,17 18:20 23:13 27:14 28:15
53:17
hats 47:10 53:16
having 11:18 28:19 36:11 49:23 69:15
71:25

hear 3:17,18 4:16 6:16 28:23 53:13
57:2,23 100:11 104:4
heard 73:22 75:10 92:19 101:12
hearing 46:4 59:18 72:3
heart 57:5
held 45:1 103:18,22
help 4:16 5:14 6:17 17:5
helpful 4:25 104:3
helps 4:22
Hennigan 1:20,21 3:4,9,14,15,1 9 5:21
5:23 6:5,20 7:10,16 8:21 10:20
12:12 13:5,14,17 16:22 17:10,18,21
17:25 22:11,15,21 23:15,19 31:1,5
31:11,16 32:12 39:11,14 41:2 45:19
47:9,18,20,2 4 48:2,11,14,18,22 49:4
50:1,17,23 51:5 52:17,20 53:24
71:2 73:22 74:2,6,8 77:14 78:2,5,12
79:4,7,11,15,1 7 80:7,20,22 83:19,23
89:13 90:6 92:2,8,11,1 3 99:3
100:19,22 101:13,15,1 7 102:6,13,21
104:5
hennigan@mckoolsmithhennigan....
1:23
Henry 67:20
her 48:20
hereof 60:13
hereto 8:16,18
hereunder 9:22 13:24 59:9,11 60:10
herewith 10:25
hide 80:12
hiding 93:15
high 20:12 61:3 82:21
higher 20:2 21:7 22:8
Highland 31:22 66:7 68:8,8,9,24
77:22 78:20,25 79:2,15
him 16:23 69:16 71:9
hindsight 61:9 73:13
history 72:24 75:11
hit 50:8 84:17
hold 21:25 37:6 38:4 39:8 47:4 100:9
holding 13:25
HOLDINGS 1:5,9
hole 5:12 54:5 76:4 89:22
holiday 3:8
honestly 101:5
Honor 3:4,5,10,14,20,2 4 5:3,9,21 6:5
6:20 7:9,13 8:3,11,21 9:7,13 10:11
10:20 11:9 12:1,10 13:3,13,15 14:5
14:11 16:3,17 17:11,16 18:5,17,23
19:1,6 21:9 22:25 23:3 24:18 26:8
26:12,21,23 27:1,5,12,15,2 2 28:3
29:7,17 30:4 31:1,17 32:7,12 34:7
34:12 35:8,18 38:11,15,20,2 1 39:4
39:15 44:21 45:17 47:9 49:5 50:15
53:4,25 57:9 58:4,9,18,20,23,25
59:15,18,22 60:1,8,15,19,2 2 61:10
61:17 62:4,15,19 63:8 65:2,4 66:2
66:14 67:1 68:2 69:14,23 70:14,25
71:2,15 72:15 76:11 78:12 79:8
84:6 85:20 86:8,21 87:24 88:9,25
89:5,13 91:3 92:2 93:4 94:12,20,24
95:3,6 96:2,7 97:5 98:12,13 99:3,11
100:2,13,19,2 3 101:3,7,18 102:14
103:24 104:5,6
Honorable 1:15 3:1
Honor's 71:4
hope 99:12
hours 81:3 96:18
hundred 64:21
hundreds 63:25
Hunton 2:7 4:4
I
idea 83:25 91:13
if/when 40:1
ignorance 49:20 50:10 52:10
ignorant 56:17
ignore 13:6
ignored 70:14,14 80:13
ignoring 60:16
ill 69:24
illustrates 67:1
imagine 32:19 63:9,15
imperfect 11:10
imploded 102:11,18
important 25:18 32:20 41:5 65:15
66:4 96:18

November 18, 2011

108

importantly 66:5
impose 17:12 21:6
imposed 59:14
imposing 15:3 60:16
imputed 35:17,24 95:15
inability 58:14 83:7
inactions 6:9
inadmissible 39:3 58:17
inapposite 103:25
incidental 8:18
incidents 66:25
inclined 71:3
include 67:14
included 10:5 40:25
including 51:16 59:9 69:20 77:9
inclusive 81:6
incomplete 59:20
inconsistent 85:6 91:8 92:18
incorporated 17:23
increases 75:3 81:5,7
indeed 76:12 81:15 83:5 91:8
indenture 25:8
independent 9:8 10:15 15:14 28:15
60:18
indication 82:4
indirectly 56:18
individual 69:15
individuals 26:23 27:6
induced 49:22 50:17
information 12:18,20 38:17 69:11
77:17,19,20 78:13 81:1,4,11 82:24
83:10,12,20 89:24 92:4,10,16,18,21
93:1
informed 48:3
initial 40:5 51:1 62:8 64:18
initially 33:23
initiate 37:23 77:12 87:4,11
input 104:4
inside 4:11 39:16
insofar 15:22
instance 20:8 37:25 84:12
Instead 44:11
institutions 13:25 25:7
instrument 8:16
insufficient 70:19
insurance 19:4,5,8,11
integral 23:8
integrate 8:17 24:11 99:10
integrated 8:10,23
intended 93:14
intending 49:10
intentional 61:4
intentionally 103:9
interested 57:24
interesting 10:2
interests 65:20 97:23
interim 57:20
interlinks 68:22
interlocking 6:21
internal 50:25 69:18
internally 51:10 69:20
Internet 77:18
interplay 10:6
interplays 6:19
interpret 40:18
interpretation 15:5 16:4,20 44:23
81:15 98:16
interpreting 13:1
interrelationships 7:2
interrupt 30:17 93:18
intertwined 8:2,5
introduce 3:23
introductory 14:12 23:24 24:12
investigate 65:10
investigation 36:23 52:3,13 59:16
85:2 95:8,14
investment 53:21 63:5
invite 4:23 23:11
invites 14:23
invoked 90:12,14
involved 62:25
involving 54:12
in-depth 80:25
irrevocably 9:20
Isani 2:7 4:4,4
issue 10:19,21 11:19 22:3 23:12,23
29:18 31:17,18 36:2,5 38:2,7,18,22
39:13 40:10,16 43:25 45:11,16

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53:15 54:12,14 56:2 58:14,21 59:22
59:24 61:13,18 67:4 68:20 70:24,24
71:17 72:13 74:9,11 75:12,13 76:1
78:3 80:8,10,11,1 1 81:13 86:9
90:14,23 91:22 96:18 98:22 99:15
99:16,17 101:22
issued 88:2 100:9 102:11,18
issues 4:23 30:8 38:5 45:7 47:10 56:21
58:2,7,10,1 3 60:20 69:19 91:25
98:8,25 99:21 100:11,18 101:24
102:8 104:3
issuing 66:11 86:13 91:14
IVI 33:22 75:2,3 80:24 81:6
J
J 1:20
Jamie 2:7 4:4
[e-mail] 2:14
January 96:19,21
Jean 48:18
Jeff 40:2 44:14 46:19
jeopardize 67:7
jeopardy 82:14
Jim 39:24,24 40:10 51:6 69:16 81:2
[e-mail] 2:9
job 18:21 20:14 22:19 23:14,16
Joe 57:19
join 79:5
JOSEPH 2:11 104:12
josephamilli [e-mail] 104:15
Judge 1:16 4:12 96:24 98:8,16
judgment 5:16 9:25 14:9 15:9,13 22:4
35:20 37:7 45:8 53:13 56:16 60:19
70:23
June 74:22 75:6 80:20
jury 43:21 62:1
just 3:6 6:12,25 9:19 14:11 19:23 20:3
20:5 21:22 30:7 35:10,13 46:19
50:18 52:13,17 53:1 57:20 58:21,23
60:20 61:10 65:18 67:22 68:14
73:22 75:10 76:19 83:19 84:1 86:25
89:4 92:9 97:14 102:14
K
kdillman@mckoolsmithhennigan....
1:24
keep 57:10 76:22,25 92:5 98:13
Ken 2:3 4:1
key 5:6 59:7
kick 21:17
kicks 17:8
kind 58:5 66:9 68:3,8 83:10 89:21
kinds 99:22
Kirk 1:21 3:20
[e-mail] 2:5
knew 23:11 35:21 36:8,19 37:1,5,13
43:23 47:7,8 50:20 51:13 55:16
56:17 63:11 72:18 73:8 82:5
know 4:7,21 7:15 8:3,11 14:3,7 15:4
15:11 16:24 19:9 22:3,21 24:20
31:20 32:8 33:4 35:9,12 36:2,7 38:1
41:8,11,25 42:21 43:1,5 44:2 46:5
47:3 48:4,25 49:15,20 52:25 56:3,9
57:3 62:6 68:1 71:18 72:23 78:16
78:18 82:17 85:10 89:23 92:14,18
96:16 97:2 99:9,9,12 100:18,22
101:19
knowing 28:4 56:18 73:13 78:15
knowledge 6:8 27:19 29:21 35:17,24
37:8,10,19 38:8,8,14,18,22,2 4 39:7
39:10,13 45:16,18 47:2,16 52:7
58:15 61:14,15,18,2 1 62:22 65:14
69:3 84:23 86:11,17 89:24 91:17
95:15,17
known 35:21 36:7,8,19 46:1 52:6
56:17 75:3 77:8 81:7 82:24 95:17
knows 41:9 42:18 57:20 60:8 75:25
87:7
Kotzin 39:21
L
L 2:2
laid 45:24 46:8
language 12:16,19 13:1 15:20,23,24
23:24 24:12 35:2 36:10,22 44:11
93:7,8
largely

102:2
largest 46:16 75:10
Las 1:5,9 46:18,22 47:1 82:6,20 97:18
98:5,8,19 99:4
last 40:4 103:3
late 74:18
latent 15:17
later 12:16 26:20 33:5 42:21 56:25
57:23 58:19
law 13:12 14:23 15:14,15,18,2 1 16:5
38:10 56:20 61:1 65:12 103:22
lawsuit 55:21 64:5,7
lawyer 36:11
lead 5:11
least 39:13 45:13 55:14 62:1 78:25
79:1 100:10
leave 58:11
leaves 25:3 60:5 97:17 98:4
leaving 14:25 30:20
ledger 77:3
left 58:8 66:12 75:15
legitimate 69:23
Lehman 30:9,13 37:10,20 39:18,24
40:1,9,23 41:10,14 43:1,9,10 44:3,7
45:22,25 46:1,4,10 48:19,23,24
50:21 51:1,11,13 52:22 53:10,12
54:12,14,15,1 6 55:11 56:4,8 61:18
62:23 66:16 68:19 69:17 71:6,20,23
71:25 72:1,5,7,9,19,2 2 73:2,3,6,6,23
74:16 75:9,16,24 76:9 77:8 78:16
78:18,21 80:9 81:13 82:13 83:3
93:2 102:20
Lehman's 36:6
lender 31:19 40:19 44:8,16 54:8 63:20
64:7,8 66:8 81:14,17,18 83:12
86:13,13 90:15,24 101:24
lenders 8:24 9:6,14 23:6 30:9,12 31:10
37:20 42:23,25,25 49:2 51:17 53:16
54:24 55:1,20 56:12 62:7,8,9,11,21
63:1,4,24 64:16,18 65:20 66:5,6,10
66:18,18 67:5,21,22,2 2 68:2,7,15,15
68:16,21,22 69:1,1,9,11,13,15,25
70:5,22 73:5 75:5 76:20 77:9,9,11
77:20,25 78:7 79:14 83:24 85:10,10
85:12,13,16,20 86:1,5,6,14 88:10
89:3,3,10,1 4 90:1,3,4,7,9,12,13
97:13,22,23 99:16 101:23
lending 76:3 78:15
lends 72:8
less 66:9 67:6
let 3:7,12 4:8,11,13 5:10 7:7,14,18
8:12 9:2,12 11:17 13:20 17:12
20:15 21:25 22:11 25:13 27:2,22
28:22 30:7,17 32:1 33:20 35:9
36:13 37:17 38:19 39:8,20 44:19
45:2 49:5 52:15 53:7 57:8 58:1
67:25 71:9 75:17,19 77:7,24 83:13
85:14 87:8,10 88:14 89:8 90:20
91:20,20 92:9 93:18 96:18 99:24
100:21
letter 67:21 76:19,20,21
let's 5:4 9:18 12:24 13:21 16:24 25:19
26:4 31:9 32:24 35:25 38:4,8,13,13
42:10 44:3 50:3 56:24,25 72:17
74:3,12 96:23 97:14 98:4
level 61:7 62:20 84:20 90:19
liability 60:23 93:14,16
liable 31:22 70:21
liberated 101:2
lien 54:1 100:2
light 62:14
like 3:22 4:6 5:5 16:13,25 17:2 18:2,7
19:3 22:2,11 24:25 25:7,8 28:23
31:10 38:7 43:1 48:5 53:14 54:20
56:4 58:20 71:8,9 80:8,10,11 81:10
82:11 83:14 96:20,22 100:2
likely 48:2
limit 24:15 71:18 93:14,16
limitations 35:12
limited 23:14 24:23 58:25
limits 60:23
line 57:21 66:11 67:9 70:3,22 88:9
93:4,12 100:8
list 92:3
listen 4:7
listening 4:8
litigation 5:7 26:20 32:19
litigations 99:25 100:2

little 6:17 41:18 58:19 81:25 94:24
LLC 1:5,9
LLP 2:3,7
loan 8:8 35:22 62:8 91:18
loans 23:3 72:4,6 82:9
long 77:1 96:20,22 103:10
longer 59:22 82:7 97:20
look 11:21 12:12 13:2 18:21 23:6
24:25 33:2 36:11 42:24 44:3 52:5,7
53:17 55:8,25 56:11 67:23 68:10
69:5 102:23
looked 20:18 76:24 80:12 82:11
looking 10:2 12:3 24:10 36:10 43:24
53:22 54:21 55:20 56:9
Los 1:22
loss 103:21
lot 16:24 30:5 39:1 41:20 57:4 58:16
74:8 80:8 92:4 100:17
lots 58:13
Lynch 2:3
M
machine 46:19
made 18:3 23:7 27:14 41:2,10,16 42:4
43:2,12,12,2 3 44:2,7,8,16,1 8 46:13
46:23 48:8 49:3,7 51:5 55:6 67:12
67:12 75:1 76:13,13 77:2,18,21
78:1,4,8 79:22 80:17 81:4 93:6
MAE 78:25 79:1 83:1 84:1,3,13,14,18
84:20,23,25 85:4,8
magnitude 64:13 74:20 78:14
main 23:23
make 8:8,20 14:7 17:6 21:11,22 22:18
22:24 27:10 35:3 38:19 39:16,18
40:17 43:1,11 44:9,15 45:20 48:25
49:10 54:24 55:6 57:3 62:12 73:18
75:12,17 76:1,12,21 78:20 79:20
81:14,16 83:7 84:16 85:7 91:10
102:23
makes 16:17 31:7 40:7 41:23 100:14
making 20:13 26:19 27:8 51:17 52:24
59:10 65:3 82:25 90:18
malpractice 19:7
manager 40:3
mandatory 34:14
manner 25:6 47:13 92:17
many 38:25
March 33:22 53:18 54:25 67:1,4,20
68:5,14 76:15 82:19
marching 81:24,25 82:18
market 82:6,11
massive 55:21 75:6
Master 5:7,18 6:4
material 14:24,25 38:7,18,21 39:13
45:10,16 58:16 61:13 75:20,23,25
84:4,8 93:1 98:25
materials 11:7 19:25 20:12
matter 5:4 24:2 34:21 40:4 53:9 56:20
65:12 92:16 98:10 102:15 103:22
104:10
matters 4:17,19 6:25 7:7 52:15 99:9
may 4:25 23:7 56:16 57:23 58:18 67:4
82:2
maybe 55:25 72:1
McClendon 47:20
McKool 1:21
MDL 96:20,24 98:8,15,16 100:9
mealy-mouthed 44:5
mean 17:22 28:17 35:25 48:5 49:1
55:18 56:6 89:4 101:25 102:4
meaning 15:23 39:23
means 10:24 16:2 31:17 88:18 90:24
101:25
meant 8:9 74:5
mechanics 24:22 46:14
meet 32:10
meeting 75:4 81:1,3
meetings 69:16
memo 42:22,24 43:8,9 73:5
mention 53:15 71:9
mentioned 8:17 60:22 71:6 72:2
mere 78:23
Merrill 2:3
met 32:3,3 34:24 36:25 37:9 41:1 59:4
59:7 80:1 84:10,11
meteor 84:17
Miami 1:2,11 2:8,12,13 104:14,14

November 18, 2011

109

Michael 1:20 3:14
microphone 3:18
middle 64:6 74:14
mid-November 73:5
might 19:11 32:18 33:20 81:16
Mike 71:7
Millikan 2:11 3:17 104:12
million 39:23 51:23,24 54:15,20 62:18
63:17,20 64:4,20,21 74:9,11,23
75:7,13,14,16,1 8 76:2,6,10 79:22
81:5 82:9 90:17 101:20 102:25
millions 23:4 64:1
mind 3:17 4:18 7:11 41:22 42:14
57:10 65:15 76:19
minimum 36:15 100:14
ministerial 18:21 19:23 20:3 34:5,8
minus 62:17 82:3
minute 9:19 42:10 50:6 99:5
minutes 53:7 56:24 81:4 91:21 100:20
101:14
mirror 29:10
mischaracterization 30:11
mischaracterized 39:1,2 58:17
misinformation 81:9
mislead 8:12
misremembering 79:18
miss 81:18
missed 9:25 76:6 83:4
missing 40:11
misstatements 80:16
mistake 75:17 102:23
modest 23:1,16
moment 3:6 4:23 7:12,14,18 10:17
19:17 30:21 41:5 65:2 74:22 88:15
100:10 102:7,8,14,21
momentarily 98:11
money 18:25 23:7,14,17 27:7 39:25
46:23 51:12,20,23 52:1 53:25 54:4
55:7,10,14 62:9,15,18,2 4 63:2,7,12
63:13,20 64:23 67:8,10,14 72:10
73:16 79:23 87:16 90:2 91:10
monitor 29:5
month 39:24 40:6 42:6 54:19 56:6
67:8,13 82:19
months 56:7 76:12
month's 67:8
monumental 72:24 73:10
moot 98:14
more 4:18,22 6:13,17 19:23 20:5 21:3
25:10 29:5 34:18,19,23 36:10,10,14
36:16 38:7 39:6 52:15 53:6 58:9
66:5 68:20 69:7 70:19 73:15 85:14
91:20 96:16 100:20
morning 3:3,4,5,14,19,20,2 4 28:4 30:4
58:8 67:3 71:22 74:21 85:19 104:3
mortgage 12:2,4
most 24:21 66:25 67:12 70:11 72:23
73:10 77:15 78:12 84:14,15 103:23
motion 15:13 44:13 45:14,14 59:18
motions 5:16,17 6:23 9:25 96:25
100:15,23 101:1
mounting 77:6 81:23 83:7
mouth 63:13
move 11:15 27:6 40:12 75:9 102:1
moving 21:23,23 55:11
much 17:13,14 35:19 50:7 57:3 58:5
58:22 61:12 64:16 66:9 69:7 78:16
78:18 96:16 103:1
multibillion 74:9,12
multiple 65:7 101:8
Murata 2:3 4:1,1
must 42:19
muted 4:9,15
mutual 13:8
Myers 2:3 3:25 4:1
N
name 11:16
namely 28:14
narrow 10:7 27:2
National 67:16
nature 15:25 33:16
necessarily 14:2 15:8 61:25
necessary 56:10 59:21 99:1
necessity 57:22
neck 66:10
need 3:6 5:1 8:22 13:1 14:20 36:18,19

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39:23 63:21 65:4,9 71:18 95:21
100:19 103:5
needed 53:1 101:22
needs 40:16 100:23
negative 82:24
negligence 19:13 38:10 56:13,20
60:23 61:2,15 69:5 70:7,10,15,25
72:12,15 103:4,18,22 104:1
negligent 36:17 62:2 73:7,14 103:7
negotiations 8:18
NETWORK 1:25
Nevada 67:16 76:17 80:15 97:24
never 9:13,16,23 10:20 29:25 44:6
46:11 69:17 76:13,13 84:22 85:11
90:14,15 92:24,24 97:24
new 2:4 13:12 14:23 15:14,17 16:5
38:10,17 61:1 97:18,20,23
next 18:16 40:2,8 62:10 76:11
nice 44:21
night 40:4
nightmare 82:23
nobody 55:16 71:6 92:14
none 37:20 55:1 68:22
nonjury 99:1
noon 56:25
normally 16:19
North 2:12 104:14
note 18:18 91:24
noted 20:2
notes 48:23
nothing 36:2 48:15 51:19 61:7 75:21
75:21 82:15 91:5
notice 7:4,21,23,2 5 26:2,17 28:8,9,10
29:22,25 30:9,20,20,22,2 3 31:7,8,8
31:13,14,16 32:9,13,14 33:5,6
37:24 38:3 42:5 66:11 79:9,11,12
79:13 85:17 86:12,15 87:14,21 88:1
88:1,2,11 89:6,11,15 91:7,14,15
notices 11:21 41:25 42:1 88:7
notification 77:11 86:2,3 88:24 89:2
notifications 19:18
notified 49:10 85:24 88:4,17 89:5
notifies 25:23 26:14 27:13 32:2
notify 18:14 25:25 28:11 33:17 34:15
90:3
notifying 11:22 29:18 32:22
notion 72:8
notwithstanding 37:23 54:23 59:8
November 1:12 53:10 56:4 71:21 72:8
73:3 81:20
number 35:2 52:25 55:4,5 78:22
80:10 85:18 96:20 103:8
numbers 77:6 81:23
numerous 62:25
NY 2:4
N.A 1:12
O
objection 48:6 68:3,8 101:9
obligated 12:19 54:25 55:2
obligation 9:12 19:3,22 20:2 29:5
34:14 35:13 37:4 53:4 59:5 78:25
98:24
obligations 22:10,22 24:4 25:9,18
46:5,6 58:24 59:1 60:10,12,17
88:13
obliquely 27:23
obtained 19:12
obvious 85:21
obviously 14:8 59:7 66:14 85:20 99:12
occurred 11:23 25:24 48:17 53:11
88:5,21 93:1 103:4,17
occurrence 72:21
occurrences 85:9
occurs 49:14 82:23
October 53:10 56:3 71:21 72:7 73:3
74:14 81:20
odd 15:2 63:20
off 17:8 33:24 36:3 65:6 71:7 82:2
103:1
Official 2:11 104:13
Often 4:22
oh 17:13 82:12
okay 4:13 5:10,25 6:24 9:2 10:8 11:17
12:15 13:6,18 14:16,22 18:9 22:20
26:13,13 27:16 29:8,9 30:6 34:13
34:17 35:9,11,14,2 3 37:13 38:13

42:19 44:19 45:4 47:4 48:1,21 49:1
49:25 50:4 51:2,5 54:21 65:5,7 74:3
76:23 77:2,4 78:6 80:7 81:14,16
84:14 88:14,16 90:20 92:10,13 93:3
94:16 95:4 97:9 99:20 100:8
once 90:1 98:17 101:1,25
one 3:6 5:11 6:21 8:1,4 10:6 11:18
12:15,17 14:7 16:19 18:18 19:21
21:5 23:8 24:2,11 25:13 27:24 30:8
30:9,12 31:8,9 32:13 33:4,9 40:2,16
44:6 46:6 51:13 53:1,17 54:12,23
56:6,7 61:5 64:9 66:25 67:18 68:2,7
68:23 71:15 72:23 73:10 81:4,15
83:25 84:12,13,15,1 6 85:7 88:9
90:8 93:15 95:9,11 96:18 97:10
100:25 101:21 103:20
ones 62:10
one-time 72:21 73:9,17
ongoing 63:21
only 3:16,17,17 6:12,20 9:1 12:8 14:15
18:25 23:7,18 27:18 39:23 45:18
52:23 60:11 70:7 73:13 77:20 80:25
86:2 88:24 91:6 94:13 97:9
open 58:1
operative 75:19
opinion 84:24 90:3
opportunity 56:22 89:15
opposed 30:2
opposing 58:10
options 45:24 46:8 50:21 71:25 96:24
101:21
oral 1:15 8:18 91:25 97:3
order 23:6 47:15 53:21 77:13 96:20
100:9 101:23 102:11,17
orders 97:21
organization 19:10
organizations 76:8
original 27:24 41:2 98:17
originally 82:8
other 4:25 6:22 7:21 8:8 10:5,12 12:17
12:20 16:13 17:1 21:5,9 22:10,13
23:20,21,25 24:13 31:8 32:14 34:24
36:12,16 37:15,20 38:17 43:20 44:8
44:16 49:2 59:10,11 63:12,23 64:14
72:3,6 79:15 81:22 82:16 83:6,12
84:11 86:8 89:3 91:24 92:16,18
93:8 95:18 96:11,18,21 98:22 99:9
99:22 102:20
others 4:8 49:1 55:21 61:4 65:17
89:10
otherwise 25:10 60:13 63:21 81:18
ought 98:20 101:2
out 4:18 12:21 13:19 21:2,5 24:2
31:21 41:13 42:23,24 45:24 46:8,24
50:7 51:23 52:5,15 58:25 59:19
62:15 64:9,23 66:10 67:12,21 68:15
68:16,16 73:3 76:15,20 78:21 81:5
83:21,24 99:23
outside 14:17
over 25:19 64:10 75:16 89:22 101:9
overall 23:8,19 54:3
overlap 100:24
overly 32:18
overrun 74:24
overruns 55:15 75:7,8
own 17:5 20:16 61:11 69:2 70:10
73:16 100:5
O'Melveny 2:3 3:25 4:1
P
package 23:4,9
Page 2:24 7:12 10:23 11:20 12:3 19:17
25:16
Pages 1:13 11:12
paid 18:25 23:14 102:19
pain 54:2
paper 20:16,23 104:1
papered 26:20
papers 4:24 61:2,5 66:17 92:1 99:2
103:23
paperwork 34:9
paragraph 19:17,18 95:4
paragraphs 25:4
parameters 17:1
Pardon 95:23,23,23
part 21:5 22:12,25 23:5,8,19 24:21
26:24 30:3 32:24 35:6,7 48:25

55:10 59:7 60:8 65:12 66:17 70:11
71:12,14 83:13 90:2 101:10 103:23
participated 103:21
participation 4:15 104:2
particular 12:22 35:15 58:13
particularly 66:16
parties 12:25 15:23,24 17:15,18 53:11
60:25 66:17 86:19,20,22,2 3 87:2
93:13 96:17 98:13,19 99:10
partner 43:14
parts 24:13 36:20
party 11:8 13:9 16:13 30:13 65:25
66:8 68:9 79:3
passive 49:12
patent 15:17
pause 42:10
pay 32:5 63:21
paying 102:5,6
payment 39:18 41:10,17,24 43:11
44:8,9,10,15,16,1 7 48:25 49:7,10
64:12 75:13 76:2,6,14,2 1 81:14,22
83:4 103:10
payments 78:1,4 81:19,22 83:7
pecking 47:15
pending 99:25 101:3
people 23:10 27:2,4,7,8 37:15 49:16
57:15 72:4 77:18 103:1
per 22:5 75:13
percent 67:6
perfectly 41:21 76:24
perform 25:6
performance 13:24 22:9 60:11
performed 23:9
performing 26:24 27:7 59:5,9
performs 19:25 20:11 21:16,21
perhaps 11:6 101:23 102:9
period 74:13 77:23 82:18
permissible 15:22 37:16 51:10 98:12
permitted 15:16
person 11:22,24 25:23 26:5,8,15 27:3
27:10,19,20 28:13,14 29:4,18 30:2
31:4,5,6 32:2,10,21 35:22 47:7,14
85:17 86:4 88:24 95:10
perspective 8:23 16:5 54:22 59:5 60:1
phase 5:25 98:17
phenomenon 49:9
phone 57:13,13 69:15
phrase 35:10 38:19 75:19
phrased 96:7,8
pick 74:16
picture 53:15 76:16
piece 20:16,23 75:18 81:4 82:14 83:5
place 10:6 16:8 19:21 47:2 63:17,18
64:5
places 83:11
plain 41:21
plaintiff 39:9
plaintiffs 1:10,20 3:15,21 5:16 7:23
10:14 16:21 22:1 25:12 28:22,24
30:8,18 38:6,23 47:6 58:14 59:20
60:14 61:1 66:22 70:6 73:19 86:18
89:8 91:21 97:22,24
planning 40:22 41:8 49:9 67:24
play 72:12
plays 71:12,14 72:14
please 3:6,7,12 5:12 17:5 42:3,3,15
57:13
plenary 22:22
plenty 73:19
plug 54:11 55:19 63:4,19 101:19,20
plus 99:21
pocket 64:23
point 9:12 12:22 15:5 16:3,4 21:2 23:1
23:18,23 36:9 37:3 41:22 43:24
46:1 49:2,21 51:20 52:7 54:12
55:14 57:2 58:3 59:19 62:1 63:5
64:2,15 65:3 72:15 74:6 86:24 87:1
90:9 98:14 101:3 102:3,12,18 103:3
103:24
pointed 24:2 58:25 59:19 62:15 78:21
pointing 21:5
points 8:7 24:11 82:5 83:23 91:24
policy 19:10
Poor's 82:3,15 83:18,22
portion 26:22 30:1 43:10 75:14 76:3
pose 53:7
posed 57:11
position 5:14,15 6:16 7:18 12:25 13:4

November 18, 2011

110

13:5,8,19 14:11 22:7 28:21,25 32:7
32:8 35:9,11 37:7 42:19 51:9 53:23
53:24 54:25 55:1 58:23 66:12 67:2
71:11,17 78:22 90:22 91:9,13
positions 4:22
possibility 73:1
possible 26:2 65:19 66:21 72:9,21
posture 96:23
potential 13:14
potentially 55:21 66:12
PowerPoint 4:17
PowerPoints 4:7
practical 76:16 91:9 98:10
practice 48:10
practices 13:24
precedent 25:21 32:25 33:6 34:10,24
35:4,23 36:24 37:2,9 38:1 59:3,6
66:16 75:20 79:25 81:16 84:10
94:23 95:9,10,12 96:11,13
preface 5:10
premise 36:21
premised 60:16
prepared 4:7 57:3 80:24
preparing 49:14
present 3:23
presentation 50:24 58:5
presentations 4:20
presiding 3:2
press 27:6
pressed 69:10
presumably 52:21
pretrial 96:21 100:17
pretty 17:14
previous 51:15
principal 47:21
prior 8:19 66:3 71:4
priority 100:2
private 77:17
privileged 41:20
privy 78:13
probability 82:22
probable 82:4
probably 19:13,15 54:19 60:8 74:18
101:4
problem 49:8 52:22 57:21 78:14 96:12
problems 11:18 31:21
procedure 90:12
proceedings 57:18,24 77:12 104:7,10
proceeds 12:3,4 54:1 64:21 79:24
90:17 91:11
process 9:11 17:9 18:16,18 21:23
26:18 30:23 87:5,11
processed 21:13
products 26:25
prohibition 61:11
project 10:25 11:16 18:14 26:1 33:15
33:17 34:15 40:3 47:2 51:24 53:20
54:8,11 55:5,13,19,22,2 5 56:11
59:12 62:9,24 63:1,12,19 64:4,8,15
64:22,25 65:19 74:10,12,25 76:18
77:5 84:17 91:12 92:17 101:25
102:5,7,11,13,18,24
projected 20:19,21
promptly 88:6
proof 70:6
properly 70:8
properties 103:16
property 103:14,21
protect 53:21 55:6 103:16
protected 55:13,14
protection 103:13
protections 29:1 87:22
protocol 79:7,18,19 80:2 90:11
protocols 102:22
provide 85:23 88:7 103:13
provided 18:12 24:8 81:2
provides 21:18 25:8 28:7 29:20 59:8
60:9 86:8,9 88:4 95:16
province 16:15
proving 16:7
provision 14:12,20 15:2,6 21:10 22:3
28:3,6,12 32:3 59:7 79:11 86:2,14
86:24 87:25 103:8
provisions 7:21,24 25:10 29:9,10
30:20 65:8 79:9 85:14,23 89:10,12
103:7
prudent 13:23
public 68:19,20,21 77:17,19,21 83:21

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publicly 63:25
pull 27:11 28:16 63:4 101:19
pulled 54:11 55:18
pulling 63:19 101:20
pulls 47:15
purpose 5:13 16:7 25:2,11
purposes 26:9,19 31:14 37:7 56:15
65:11 76:16
pursuant 42:4
pushed 42:23
put 9:12,24 23:6 33:20 39:25 44:13
53:12 61:6 63:12,13 64:18 66:10
68:2,7 73:15 74:6,12 75:18 77:2
90:2 103:5
puts 49:19 82:21 83:15
putting 23:4
p.m 104:7
Q
qualify 31:12
question 6:23 10:7 13:20 15:1,12
16:16 22:2 25:12,14 28:13 35:19
36:6,11,11 38:14 39:15 43:10,13,17
43:20 45:13,14 47:12 48:21,25
49:13 50:11 53:1,3 55:10,25 61:14
62:1,20 75:18 78:7 86:18 89:23
95:2 96:3 102:16
questions 5:1,11,14 7:1 27:25 34:19
39:7 53:7 56:5 57:10 58:8 69:9,10
69:12 71:4 97:7 99:7
Quick 93:3
quickly 103:3
quiet 57:8
quite 12:23 46:14 48:4
quote-unquote 90:13 101:19
quoting 39:22
R
R 104:8
rabbit 5:12
Rafitti 47:20
raise 97:13
raised 9:16 15:12 30:8 58:7,10 60:20
69:9,10 91:25
raises 43:25
raising 78:6
rat 54:5
rather 4:20
rating 82:20
RE 1:4
reaching 42:11
reaction 40:5 63:9,15
read 7:19 8:22 21:6 22:17 75:19 86:25
88:22 89:1,4 92:4,5,12 95:4
reading 89:9
reaffirm 42:3,15 49:11
reaffirmed 52:1
real 56:10
reality 102:4
realize 81:24 92:4 94:3
really 5:14 6:16 33:12 44:21 49:15
54:24 55:17 66:16 101:5
Realtime 1:25 2:12 104:13
reason 47:3 50:15 51:20 52:4,13 60:18
76:19 95:18 98:21
reasonable 13:23 14:10,21,21 15:8
18:14 19:24 20:7,10 21:8,11,21
22:16,17,18,2 3 24:2,9 35:3 40:7
70:17 72:9 77:1
reasonableness 20:9 23:25 36:9 55:23
56:12 71:16,20,21
reasonably 26:2 33:14 75:22,25
reasons 66:19
rebuttal 58:12
recall 67:4 90:7
Recalling 77:14
receive 30:9 77:19
received 29:22,25 30:12 38:17 47:21
59:17,24
receives 28:8,10
receiving 81:11
recess 57:16,17
reckless 61:3 63:4 64:13
recklessly 62:21 65:17,24 66:22 68:25
70:5
recognize 12:19
recognizing 14:11

reconcile 93:7
reconvene 56:25 57:14
record 9:24 32:23 41:18 44:1 46:3,9
46:20,25 47:5 48:15 49:22 50:19
51:6 56:9 57:19 59:19 69:8,14
73:25 80:3
records 50:14,16
recourse 15:21
refer 8:13 11:14 14:2 50:24
reference 10:16 16:18 24:14
referenced 11:6,7 76:11
references 14:17
referred 7:22 8:7,9,16 23:1 89:14
referring 10:12
refers 6:21 7:3 11:10,21 15:25
refusal 83:6
refuses 34:6
refute 70:7
regard 5:15 7:24 8:22 18:19 22:7,8,10
23:25 24:3,13
regardless 95:9
reissue 41:4
reiterate 58:23
relate 99:21
related 99:9
relating 100:2
relations 23:21
relationship 7:20
relatively 18:25 23:1
relevance 27:25
relevant 6:7 31:24 59:7 60:8
relied 92:24
relies 29:14
rely 21:17 29:12 35:16 36:23 39:2
52:3,12 59:12,16 65:8 79:2 85:2
90:22 92:20,22 93:5 95:7,13 96:14
relying 37:2 39:12,14 47:6 80:4 85:16
94:21
remain 57:13 76:2
remaining 57:7
remains 22:15
remember 43:10 51:22 54:19 63:10
64:17,19 65:5 72:22
remembered 48:16
remembering 8:23 78:12 83:11
rep 84:9,10
repaid 82:10
repayment 82:7
repeat 70:12
repeated 56:3
repeatedly 92:19
rephrase 7:18 37:17 45:2
reported 2:11 80:24
Reporter 2:11,12 104:13,13
Reporter's 2:25
reports 41:13 80:17
represent 8:24
representation 51:16 85:3 92:25
representations 18:2,4 21:3 29:13
42:4,16 51:16 52:1,3 59:17,25 65:8
84:11 92:20 93:6
repudiated 67:17
request 17:6 18:2,9 21:13 33:23,24
40:12 41:3 42:5 59:2,23 67:9
requested 54:19 63:21 81:11
requests 24:7 59:10
require 57:22 100:16 103:17
required 19:25 21:10,22 24:8 28:11
33:17 36:16 38:2 40:19 51:14,20
59:1,25 60:4,12 76:12 79:12 84:9
84:10 85:5,24 90:7,11,13,1 3 103:15
requirement 20:9 27:1 32:10 75:21
requirements 7:4,4 30:22 41:25 59:13
requires 15:4 16:18 32:17
requiring 61:3 82:9
research 15:14
reserve 68:11
resolved 33:25 40:17 102:1,1,8
Resorts 37:14 50:18 51:11 62:23
respect 11:1 43:9 103:4
respond 52:17 56:14 71:10 77:7
response 25:13 28:23,24 45:13 47:5
49:13 83:14,17 93:3
responses 44:19
responsibilities 9:5 11:25 24:23 80:5
87:22
responsibility 28:15
responsible 21:20 60:11 83:25

responsive 69:8
rest 4:21 24:15,21 102:19
result 69:21 77:10 85:8
resulted 66:15
resumed 57:18
retail 17:6 36:5 37:11,21 39:24 40:19
44:8,16 51:17,24 52:8 54:11,18
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November 18, 2011

111

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total 1:25 54:15 67:6
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TRANSCRIPT 1:15
transcription 1:25 104:10
transfer 41:13 46:23 47:2,8,8,17 52:5
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translates 37:10
transmission 31:18,18
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trap 5:12
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November 18, 2011

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35:12 37:23 82:21 95:5,6
9.1 7:17 9:18 11:6 13:1,21 14:11,15
16:10,11 17:1 23:24 24:12,25 71:18
9.10 60:4,8,16
9.2 17:1
9.2.3 88:3,14 89:12 91:6
9.2.5 35:16 94:24 95:15
9.3 17:1 29:15 86:7
9.3.2 21:16 35:15 36:22 59:7 60:16
70:18 71:18 95:7
9.4 29:15
90 81:4
90017 1:22

2
2 11:21 12:14 25:23 26:4 32:6 52:25
55:5
2.2 11:11,12 12:14
2.4 17:8 21:22
2.4.4 18:10
2.4.4(A) 24:5
2.5 54:15,16
2.5.1 11:20 12:14 25:17 29:17,24 30:1
32:1,21 34:13 38:2 87:24 91:6
2008 53:2 64:4 71:21 74:14,14,15,22
80:22
2009 33:22 67:1,4 82:19
2010 96:19,22
2011 1:12
2012 96:22
212.408.2483 2:4
213.694.1002 1:22
213.694.1234 1:23
217 80:22
229 40:14
23 68:5
23 rd 67:20
2500 2:8
26 41:4 72:11
26 th 41:4,10,17,1 9 42:8 53:1
2900 1:22
3
3 11:12 96:20
3.3.21 92:6,9 93:8,22 95:1 96:4
305.523.558 8 2:13 104:14
305.523.5589 2:13 104:15
305.536.2724 2:8
305.810.1675 2:9
33128 2:13 104:14
33131 2:8
4
4 11:12 54:18
400 2:12 104:14

November 18, 2011

113

Case 1:09-md-02106-ASG Document 327 Entered on FLSD Docket 11/22/2011 Page 1 of 2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO.: 09-MD-02106-GOLD/GOODMAN
IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document applies to:
Case No. 09-CV-23835-ASG.
Case No. 10-CV-20236-ASG.
_________________________________/
MDL ORDER NUMBER 58; HOLDING DATES IN ABEYANCE
This matter is before the Court sua sponte. On January 8, 2010, I entered MDL
Order Number Three [ECF No. 10], setting pretrial deadlines and a trial date.
Subsequently, I entered several orders which are on appeal [see, e.g., ECF Nos. 168,
203, 208]. The outcome of the appeals affects whether any matters will go to trial in this
district. Accordingly, having reviewed the record and being otherwise duly advised, it is
hereby
ORDERED AND ADJUDGED that all pending deadlines, dates and hearings set
forth in MDL Order Number Three [ECF No. 10] are HELD IN ABEYANCE, subject to
further direction of this Court.

DONE and ORDERED in Chambers in Miami, Florida, this 22nd day of November,
2011.
______________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE
cc:

U.S. Magistrate Judge Jonathan Goodman
All counsel and parties of record

Case 1:09-md-02106-ASG Document 327 Entered on FLSD Docket 11/22/2011 Page 2 of 2

Case 1:09-md-02106-ASG Document 328 Entered on FLSD Docket 11/28/2011 Page 1 of 1

Case 1:09-md-02106-ASG Document 329 Entered on FLSD Docket 11/30/2011 Page 1 of 1

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN
IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document applies to:
Case No. 09-CV-23835-ASG.
Case No. 10-CV-20236-ASG.
_________________________________/
MDL ORDER NUMBER 59;
ORDERING REGARDING COMMUNICATIONS WITH THE COURT
This matter is before the Court sua sponte. On November 23, 2011, the Court
received via messenger a letter from Kirk D. Dillman regarding the parties’ positions on the
pending summary judgment motions. The letter has been entered on the docket. See
[ECF No. 328].
The parties are EXPRESSLY ADVISED that any communications with the Court
regarding the parties’ positions on the pending summary judgment motions or any other
substantive matter must be in the form of a formal pleading and filed of record.
DONE and ORDERED in Chambers in Miami, Florida, this 29th day of November,
2011.
______________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE
cc:

U.S. Magistrate Judge Jonathan Goodman
All counsel and parties of record

Case 1:09-md-02106-ASG Document 330 Entered on FLSD Docket 12/14/2011 Page 1 of 5

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN

IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document relates to 09-CV-23835-ASG.
/
STIPULATION FOR ENTRY OF [PROPOSED] ORDER DISMISSING THE ACTION
OF PLAINTIFFS STONE LION PORTFOLIO, L.P. AND CANYON SPECIAL
OPPORTUNITIES MASTER FUND (CAYMAN), LTD. WITHOUT PREJUDICE
WHEREAS, on June 9, 2009 the Plaintiffs filed an action against Bank of America, N.A.,
Merrill Lynch Capital Corporation, JPMorgan Chase Bank, N.A., Barclays Bank PLC, Deutsche
Bank Trust Company of Americas, The Royal Bank of Scotland plc, Sumitomo Mitsui Banking
Corporation, Bank of Scotland PLC, HSH Nordbank AG, New York Branch, MB Financial
Bank, N.A., and Camulos Master Fund, L.P. (collectively the “Defendants”) in United States
District Court for the District of Nevada captioned Avenue CLO Fund, Ltd., et al. v. Bank of
America, N.A., et al., Case No. 09-cv-1047-KJD-PAL (D. Nev.);
WHEREAS, on May 28, 2010, all claims were dismissed against all Defendants except
Counts I and V asserted against Bank of America, N.A. (“BofA”);
WHEREAS, on July 7, 2011, Plaintiff Stone Lion Portfolio, L.P. sold the Term Loans
that form the basis for the claims at issue in this action to another Term Lender who is already a
plaintiff in this action (the “Purchasing Plaintiff”) and who is pursuing such claims in its own
name;

Case 1:09-md-02106-ASG Document 330 Entered on FLSD Docket 12/14/2011 Page 2 of 5

WHEREAS, on July 14, 2011, Plaintiff Canyon Special Opportunities Master Fund
(Cayman), Ltd. sold the Term Loans that form the basis for the claims at issue in this action to a
Purchasing Plaintiff who is pursuing such claims in its own name;
WHEREAS, Plaintiffs Stone Lion Portfolio, L.P. and Canyon Special Opportunities
Master Fund (Cayman), Ltd. have no remaining interest in this case other than to ensure that the
Purchasing Plaintiffs are not precluded from pursuing claims arising out of such Term Loans;
WHEREAS, pursuant to Federal Rule of Civil Procedure Rule 41(a)(1)(A)(ii), Plaintiffs
Stone Lion Portfolio, L.P. and Canyon Special Opportunities Master Fund (Cayman), Ltd. seek
to voluntarily dismiss this action without prejudice to the right of the Purchasing Plaintiffs to
pursue such action in their own name;
WHEREAS, Defendant BofA has no objection to the relief sought in this Stipulation;
IT IS HEREBY STIPULATED AND AGREED, by and between the undersigned,
counsel of record, that Plaintiffs Stone Lion Portfolio, L.P. and Canyon Special Opportunities
Master Fund (Cayman), Ltd. can and should be dismissed without prejudice pursuant to the
[Proposed] Order Approving Stipulation to Dismiss the Action of Stone Lion Portfolio, L.P. and
Canyon Special Opportunities Master Fund (Cayman), Ltd. Without Prejudice, attached hereto as
Exhibit A.

-2-

Case 1:09-md-02106-ASG Document 330 Entered on FLSD Docket 12/14/2011 Page 3 of 5

Respectfully submitted,
Dated: December 14, 2011
By:

/s/ Lorenz Michel Prüss

DIMOND KAPLAN & ROTHSTEIN, P.A.
David A. Rothstein
Fla. Bar No.: 056881
Lorenz Michel Prüss
Fla Bar No.: 581305
2665 South Bayshore Drive, PH-2B
Miami, Florida 33133
Telephone:
[phone]
Facsimile:
[phone]

By:

/s/ Jamie Zysk Isani

HUNTON & WILLIAMS LLP
Jamie Zysk Isani
1111 Brickell Avenue, Suite 2500
Miami, Florida 33131
Telephone:
[phone]
Facsimile:
[phone]

-and-

-and-

McKool Smith, P.C.
J. Michael Hennigan
Kirk D. Dillman
865 South Figueroa Street, Suite 2900
Los Angeles, California 90017
Telephone:
[phone]
Facsimile:
[phone]
Attorneys for Plaintiffs Avenue CLO Fund,
Ltd., et. al.

O’MELVENY & MYERS LLP
Bradley J. Butwin
Jonathan Rosenberg
Daniel L. Cantor
William J. Sushon
7 Times Square
New York, New York 10036
Telephone:
[phone]
Facsimile:
[phone]
Attorneys for Defendant Bank of America, N.A.

-3-

Case 1:09-md-02106-ASG Document 330 Entered on FLSD Docket 12/14/2011 Page 4 of 5

CERTIFICATE OF SERVICE
The undersigned hereby certifies that a copy of the foregoing STIPULATION FOR
ENTRY OF [PROPOSED] ORDER DISMISSING THE ACTION OF PLAINTIFFS
STONE LION PORTFOLIO, L.P. AND CANYON SPECIAL OPPORTUNITIES
MASTER FUND (CAYMAN), LTD. WITHOUT PREJUDICE was filed with the Clerk of
the Court using CM/ECF. I also certify that the foregoing document is being served this day on
all counsel of record or pro se parties identified on the attached Service List in the manner
specified either via transmission of Notices of Electronic Filing generated by CM/ECF or in
some other authorized manner for those counsel or parties who are not authorized to receive
electronically the Notice of Electronic Filing.

Dated: December 14, 2011.

/s/ Lorenz M. Prüss ___________
Lorenz M. Prüss, Esq.

Case 1:09-md-02106-ASG Document 330 Entered on FLSD Docket 12/14/2011 Page 5 of 5

SERVICE LIST

Attorneys:

Representing:

Bradley J. Butwin, Esq.
Daniel L. Cantor, Esq.
Jonathan Rosenberg, Esq.
William J. Sushon, Esq.
Ken Murata, Esq.
Asher Rivner, Esq.
O’MELVENY & MYERS LLP
Times Square Tower
7 Times Square
New York, NY 10036
Tele: [phone]
Fax: [phone]

Defendants
Bank of America, N.A.
Merrill Lynch Capital Corporation

Craig V. Rasile, Esq.
Kevin Michael Eckhardt, Esq.
HUNTON & WILLIAMS
1111 Brickell Avenue
Suite 2500
Miami, FL 33131
Tele: [phone]
Fax: [phone]

Defendants
Bank of America, N.A.
Merrill Lynch Capital Corporation

-5-

Case 1:09-md-02106-ASG Document 330-1 Entered on FLSD Docket 12/14/2011 Page 1 of 2

EXHIBIT A

Case 1:09-md-02106-ASG Document 330-1 Entered on FLSD Docket 12/14/2011 Page 2 of 2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-CIV-GOLD/GOODMAN

IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document relates to 09-CV-23835-ASG.
/
[PROPOSED] ORDER APPROVING STIPULATION TO DISMISS THE ACTION OF
PLAINTIFFS STONE LION PORTFOLIO, L.P. AND CANYON SPECIAL
OPPORTUNITIES MASTER FUND (CAYMAN), LTD. WITHOUT PREJUDICE
The Court having considered the parties’ Stipulation to dismiss without prejudice the
action of Plaintiffs Stone Lion Portfolio, L.P. and Canyon Special Opportunities Master Fund
(Cayman), Ltd., and good cause appearing,
IT IS HEREBY ORDERED that:
1.

Stone Lion Portfolio, L.P. and Canyon Special Opportunities Master Fund (Cayman),
Ltd. are hereby DISMISSED WITHOUT PREJUDICE from this action against
Defendant Bank of America, N.A.. This Order has no effect on claims asserted
against any other parties.

2.

The clerk is directed to correct the docket so that the above-referenced parties are no
longer listed as plaintiffs in this action.
DONE AND ORDERED in Chambers at Miami, Florida, this __ day of December, 2011.

_______________________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT COURT JUDGE
cc:

Magistrate Judge Goodman
All Counsel of Record

Case 1:09-md-02106-ASG Document 331 Entered on FLSD Docket 12/15/2011 Page 1 of 1

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO 09-MD-02106-GOLD/GOODMAN
IN RE: FONTAINEBLEAU LAS VEGAS
CONTRACT LITIGATION
MDL No. 2106
This document relates to 09-CV-23835-ASG.
MDL ORDER NO . 60; APPROVING STIPULATION [ECF NO . 330] TO DISMISS THE ACTION OF
PLAINTIFFS STONE LION PORTFOLIO, L.P. AND CANYON SPECIAL OPPORTUNITIES
MASTER FUND (CAYMAN ), LTD . WITHOUT PREJUDICE
This Cause is before the Court upon the parties’ Stipulation to dismiss without
prejudice the action of Plaintiffs Stone Lion Portfolio, L.P. and Canyon Special
Opportunities Master Fund (Cayman), Ltd. [ECF No. 330]. Having reviewed the
Stipulation and being otherwise duly advised,

IT IS HEREBY ORDERED that:
1.

Stone Lion Portfolio, L.P. and Canyon Special Opportunities Master Fund
(Cayman), Ltd. are hereby DISMISSED WITHOUT PREJUDICE from this
action against Defendant Bank of America, N.A.

2.

This Order has no effect on claims asserted by or against any other parties.

DONE AND ORDERED in Chambers at Miami, Florida, this 14th day of December,
2011.
_____________________________________
THE HONORABLE ALAN S. GOLD
UNITED STATES DISTRICT JUDGE
cc:

Magistrate Judge Jonathan Goodman
All Counsel of Record