This is a deposition of US Bank National Association done by Brian and I have a certified copy of this PSA if you need it let me know.
1 IN THE SEVENTEENTH JUDICIAL CIRCUIT COURT IN AND
FOR BROWARD COUNTY, FLORIDA
2 CASE NO. CACE-10-21953-18
U.S. BANK NATIONAL ASSOCIATION,
5 as Trustee for the Registered
Holders of MLCFC Commercial
6 Mortgage Trust 2006-1,
Commercial Mortgage Pass-Through
7 Certificates, Series 2006-1,
10 TIDEWATER ESTATES CO-OP, INC.,
a Florida not-for-profit
11 corporation and ALL OTHER
KNOWN PARTIES, including all
12 claimants, persons or parties,
natural or corporate or whose
13 legal status is unknown, claiming
under and of the above-named or
14 described Defendants,
– - -
TRANSCRIPT OF THE PROCEEDINGS BEFORE
20 THE HONORABLE MICHELE TOWBIN SINGER
21 – - -
Fort Lauderdale, Florida
23 Monday, March 7, 2011
11:15 a.m. – 12:14 p.m.
24 1:30 p.m. – 4:37 p.m.
2 ROETZEL & ANDRESS
350 East Las Olas Boulevard, Suite 1150
3 Fort Lauderdale, Florida 33301
Counsel for the Plaintiff
4 BY: LORI L. HEYER-BEDNAR, ESQUIRE
5 KORTE & WORTMAN, P.A.
2041 Vista Parkway, Suite 102
6 West Palm Beach, Florida 33411
Counsel for the Defendant
7 BY: BRIAN KORTE, ESQUIRE
SCOTT WORTMAN, ESQUIRE
I N D E X
12 WITNESS PAGE
13 ROBERT WIEST
14 Direct Examination by Ms. Heyer-Bednar 79
15 STEVEN REYNOLDS
16 Direct Examination by Ms. Heyer-Bednar 103
EXHIBITS MARKED IN EVIDENCE
Plaintiff’s Exhibit No. 1 94
20 (2010 rent roll)
Plaintiff’s Exhibit No. 2 145
21 (Pooling & Servicing Agreement)
Plaintiff’s Exhibit No. 3 155
22 (Promissory note)
Plaintiff’s Exhibit No. 4 156
Plaintiff’s Exhibit No. 5 165
24 (Notice of event of default)
1 BE IT REMEMBERED that the foregoing
2 proceedings were had before the HONORABLE MICHELE
3 TOWBIN SINGER, in Chambers, in the Broward County
4 Courthouse, Fort Lauderdale, Florida, on Monday,
5 March 7, 2011, starting at 11:15 a.m., with appearances
6 as hereinabove noted, to wit:
7 * * *
8 THE BAILIFF: All rise. Circuit court of the
9 17th Judicial Circuit of the State of Florida in
10 and for Broward County is now in session. The
11 Honorable Michelle Towbin Singer presiding. Please
12 be seated.
13 THE COURT: Good morning, everyone. Deputy
14 Barnes told you that I had a calendar call set at
15 10:00 this morning, and my Judicial Assistant told
16 me that she called the attorneys and let them know
17 that we would be starting today at 11, not at ten,
18 because of the conflict. I know you were all here
19 at ten. So I apologize for the delay, but it
20 couldn’t be helped. I had to do the calendar call
21 at ten. So here we are. Will the parties announce
22 their appearances for the record.
23 MS. HEYER-BEDNAR: Lori Heyer on behalf of
24 the Plaintiff, U.S. Bank as trustee.
25 MR. WORTMAN: Scott Wortman for the
1 Defendant, Tidewater Estates Co-op.
2 MR. KORTE: Brian Korte on behalf of the
3 Defendant, Tidewater Estates Co-op.
4 THE COURT: All right. You want to proceed.
5 MS. HEYER-BEDNAR: Yes, Your Honor. Do you
6 want to take brief openings or how do you want to
7 handle this?
8 MR. WORTMAN: Your Honor, if I may interject.
9 It’s my understanding that there are two parts to
10 today’s hearing. We were supposed to start with
11 discovery-related issues that we had addressed at
12 the last hearing before Your Honor on January 20th,
13 2011. Because the outcome of those discovery
14 issues have a direct impact on the ability to
15 proceed as it relates to the receivership hearing.
16 THE COURT: Okay.
17 MR. WORTMAN: There are still very serious
18 outstanding discovery in terms of production of
19 documents and failure to respond to
20 interrogatories, issues relating to depositions
21 that were recently taken which Your Honor had
22 indicated, at the previous hearing, we’re going to
23 address first, because Your Honor did make certain
24 rulings and findings. We have the transcript.
25 But Your Honor had asked for some
1 clarification on these points, and I believe it’s
2 going to take some time to go through each of the
3 discovery items one by one as it relates to the
4 unanswered request for production of documents,
5 unanswered interrogatories and untimely answers to
7 So before we start jumping into this very
8 drastic remedy, namely the appointment of a
9 receiver, we’re entitled to a full and fair
10 opportunity to defend ourselves and prepare for
11 today’s receivership hearing, and part and parcel
12 to that is receiving discovery. And that’s what I
13 believe was the first part of today’s hearing.
14 THE COURT: Counsel.
15 MS. HEYER-BEDNAR: Briefly, Your Honor. At
16 the last hearing Your Honor heard two things.
17 Briefly a Motion to Compel and a Motion to Strike.
18 The Motion to Strike filed by the defense as to
19 untimely discovery was denied. We haven’t received
20 that order yet, but that was Your Honor’s ruling
21 and I have the transcript.
22 Second off, the Motion to Compel, we got
23 through one of the issues on the request for
24 production, which was the Pooling and Servicing
25 Agreement. And Your Honor said, why don’t you
1 parties try to work everything out, try to get as
2 much discovery done as possible.
3 To that end, Your Honor, we had produced two
4 binders worth of documents to the defense. We do
5 not have any other documents responsive. They have
6 everything. It’s been produced. Including the
7 appraisal that was just done the end of last year.
8 So every document we have received, whether
9 it was directly responsive to this or whether it
10 was going to be used in today’s hearing, has been
11 produced in toto.
12 THE COURT: Okay.
13 MR. WORTMAN: Your Honor, their responses to
14 date are unresponsive to our request for production
15 of documents. There are a litany of documents that
16 we’ve still not received. And that’s the first
17 time we’re hearing that she does not have these
18 documents or her client does not have these
19 documents. Like Your Honor indicated at the
20 previous hearing, if you do not have the documents,
21 you’re supposed to say so. We’ve yet to receive
22 responses stating that they are not in possession
23 of these particular documents.
24 Aside from that, Judge, we’ve not received
25 one answer to one interrogatory. We’ve been
1 ladened with objections.
2 THE COURT: Go ahead. Did you not respond
3 that you did not have documents that were requested
4 if that was the case?
5 MS. HEYER-BEDNAR: Your Honor, all of the
6 documents basically relate to transfer and
7 assignment and the litany of successor trustees.
8 All of the documents are basically responsive to
9 all of the requests in one way or another. They
10 asked for an assignment. Well, there’s not
11 necessarily just an assignment, then there’s a
12 Mortgage Loan Purchase Agreement, then there’s a
13 Pooling and Servicing Agreement.
14 THE COURT: Right.
15 MS. HEYER-BEDNAR: All those documents are
16 basically responsive, although not specifically in
17 response to an assignment. But all of those
18 documents were produced. And, in fact, there is no
19 prejudice to the defense, Your Honor, going forward
20 with today’s hearing, because we’ve taken
22 The defense has actually had two depositions
23 in this — three, I’m sorry, depositions. Two of
24 the Plaintiff, one of the person with the most
25 knowledge with respect to the Pooling and Servicing
1 Agreement, that was done. They had as much time as
2 they wanted. The second deposition was a corporate
3 representative of the Plaintiff with the most
4 knowledge regarding the Verified Complaint and
5 these proceedings. That also was taken. No
6 interruption, no time limit. That was concluded.
7 In addition, third deposition was David
8 Rogers. He was the individual from Merrill Lynch,
9 which is the originator of this loan in this case,
10 and he was deposed for seven hours. There’s no
11 prejudice to the defense to proceed in this case.
12 Everything has been produced.
13 And with respect to the interrogatories, we
14 did answer the interrogatories. And we also
15 related to documents produced.
16 THE COURT: When did you answer the
18 MS. HEYER-BEDNAR: The interrogatories were
19 previously answered, and they say subject to, and
20 notwithstanding the objections, because they were
21 inartfully crafted. We reference to the transfer
22 of the loan through the successor trustees from the
23 originator to the depositor, from the depositor
24 into the trust. And all those documents that we
25 produced shed light on that, and so do the three
1 depositions. This is just a red herring to
2 continue the hearing, Your Honor.
3 MR. WORTMAN: Your Honor, if I may remind the
4 Court, and my colleague. Rule 1.350 requires that
5 they delineate which documents are responsive to
6 which request. Providing a banker box of documents
7 is not consistent with Rules of Civil Procedure, A.
8 B, the answers to interrogatories were
9 ladened with objections. C, just because we had an
10 opportunity to take two depositions does not mean
11 that they responded to our documentary request for
13 THE COURT: As I understand it, correct me if
14 I’m wrong, the whole issue from the defense
15 perspective is whether the Plaintiff has standing
16 to bring this suit. And I read your memorandum
17 talking about how the Pooling and Servicing
18 Agreement had a certain deadline and then the
19 assignment occurred after the deadline. So you
20 seem to have the issue pretty delineated.
21 MR. WORTMAN: Well, standing is one part of
22 our position, Judge. There are multiple other
23 prongs that they must prove in order to be entitled
24 to this drastic remedy of receivership.
25 THE COURT: No, I understand that. Right now
1 I’m still on the discovery issue. So that seems to
2 be a relatively narrow issue.
3 MR. WORTMAN: The standing issue is a big
4 one, Judge.
5 THE COURT: It may be important and
6 significant, but it doesn’t seem to be a broad
7 issue that would encompass a lot of other issues.
8 I mean, you’ve defined it well.
9 MR. WORTMAN: Yes, Judge. But that does not
10 obviate their obligation to provide answers to
12 THE COURT: Right. Well, let me ask you
13 this. How are you prejudiced? Let’s say that
14 you’re right, that they should have been more
15 specific and said this document pertains to this,
16 et cetera.
17 MR. WORTMAN: I’ll give you an example,
18 Judge. One of the documents they’re refusing to
19 produce, that they claim they have in their
20 possession but they’re placing it in some type of
21 privilege log because they claim it to be, quote,
22 unquote, confidential, is an amendment to the
23 Pooling and Servicing Agreement. I believe it’s
24 the first amendment to the Pooling and Servicing
1 The Pooling and Servicing Agreement, again,
2 Your Honor, is that very long, large, thousand page
3 document that controls and governs how this trust
4 operates and how loans are to be deposited into the
5 trust for purposes of this trustee doing things
6 like seeking receivership and seeking foreclosure
7 of the property.
8 THE COURT: Right.
9 MR. WORTMAN: So this Pooling and Servicing
10 Agreement is at the heart of this case. Apparently
11 there’s an amendment to this document; they’re
12 refusing to produce that. Just claiming it’s
14 THE COURT: Right. Let me ask you this. The
15 defense, from what I can gather, is disputing or
16 challenging U.S. Bank’s standing to go forward on
17 this, but is there any dispute about the mortgage
18 and the note, that, the validity of it, let’s say,
19 originally to Merrill Lynch?
20 MR. WORTMAN: Well, as far as the original
21 execution of the note and mortgage, no. But that,
22 that begs the issue. The question is whether or
23 not U.S. Bank as trustee, which is –
24 THE COURT: Well, we’ll get to that. I’m
25 trying to figure out the issues in my mind.
1 Now, so there was a mortgage and note. Your
2 client borrowed over $9 million; is that correct?
3 MR. WORTMAN: $9 million was the loan amount,
5 THE COURT: Okay. And there were certain
6 requirements in the mortgage and note that your
7 client was supposed to follow; is that correct?
8 MR. WORTMAN: The obligation, right, rested
9 with Merrill Lynch Mortgage Lending, Inc., the
11 THE COURT: All right. Okay. But is there
12 any question about whether your client actually
13 defaulted on that mortgage and note?
14 MR. WORTMAN: As it relates to that note to
15 Merrill Lynch Mortgage Lending.
16 THE COURT: Right, to Merrill Lynch.
17 MR. WORTMAN: No.
18 THE COURT: Okay. And Merrill Lynch, then,
19 if it existed, it would have had the right, you’re
20 saying or admitting, would have had the right to
21 follow through with the contract provisions, et
23 MR. WORTMAN: Absolutely, Judge.
24 THE COURT: All right.
25 MR. WORTMAN: Your Honor, we’re prepared –
1 THE COURT: What other parties, other than
2 Merrill Lynch, could possibly be entitled to this
3 mortgage? I mean, $9 million was borrowed. I
4 could understand your client’s position that your
5 client doesn’t want to pay off to U.S. Bank and
6 then have some other party come in saying, wait a
7 minute, you were supposed to pay to us, or, U.S.
8 Bank didn’t have that right.
9 MR. WORTMAN: Your Honor, it’s not our
10 obligation to untangle the mortgage securitization
11 mess which has been created here. We have ample
12 evidence that this particular party, U.S. Bank as
13 trustee, of this very long mortgage securitization
14 trust, which I can’t recall the labels to it and
15 the names as part of that, but that particular
16 entity does not have the right to stand before Your
17 Honor today and seek this drastic remedy of
19 THE COURT: I understand that’s what you’re
20 saying. What I’m trying to get at is, certainly
21 your client owes the money to somebody.
22 MR. WORTMAN: Absolutely, Judge.
23 THE COURT: All right.
24 MR. WORTMAN: And if Merrill Lynch Mortgage
25 Lending, Inc. was standing over there, we’d have a
1 really big problem in terms of today’s hearing.
2 But they’re not.
3 THE COURT: All right.
4 MR. WORTMAN: In addition — Well, let me
5 back up for a second, Judge. Because like I said
6 before, standing is a big argument, and it’s at the
7 focal point of this case in large part.
8 THE COURT: Yes.
9 MR. WORTMAN: But also a humongous issue for
10 purposes of today’s hearing is whether or not
11 they’re entitled to receivership vis-a-vis waste of
12 the property.
13 THE COURT: Right. And we’re not even, I’m
14 not even addressing that. I’ll reassure you again,
15 I’m not readdressing that point, at this time. All
16 I want to address right now is the discovery issue
17 and the prejudice to you.
18 Your concern in the example you bring up is
19 that the amendment to the Pooling and Servicing
20 Agreement could affect the standing argument?
21 MR. WORTMAN: It could involve — I don’t
22 know what it says, Judge, but it could involve the
23 further transfer of the loan to U.S. Bank to some
24 other party. I mean, I just don’t know. And it’s
25 clearly a relevant document. The request relates
1 to the possibility of the admissibility of this
2 document which is relevant to our defense. That’s
3 just one example, Judge. There are dozens of
4 examples, there are dozens of interrogatory
5 questions that were just simply not responded to,
6 not consistent with the Rules of Civil Procedure.
7 THE COURT: While all that may be true, and
8 I’m not saying that it is because I haven’t
9 reviewed it at this time. The point also is what
10 prejudice there is to you. So we can, I can go
11 through a few of these and see how fruitful it is,
12 but the amendment to the Pooling and Servicing
13 Agreement, what’s your position on that?
14 MS. HEYER-BEDNAR: First off, Your Honor,
15 that was never called up. We did timely serve a
16 privilege log with respect to that. With respect
17 to the prejudice argument, it’s interesting you
18 point that out, because during Steve Reynolds’
19 deposition not once was that question addressed as
20 to the amendment to the Pooling and Servicing
21 Agreement, where it is, who signed it, what’s its
22 importance, what’s the purpose of it? Zero.
23 Everyone has always operated under the fact
24 that the Pooling and Servicing Agreement outlines
25 the duties and responsibilities of various parties.
1 That’s undisputed. And that’s exactly what they’ve
2 been focusing on all along.
3 THE COURT: So you’re telling the Court that
4 an amendment to the Pooling and Servicing Agreement
5 could in no way have any relevance as to assignment
6 of rights?
7 MS. HEYER-BEDNAR: That’s correct.
8 MR. WORTMAN: How do I know that, Judge,
9 without seeing the document?
10 THE COURT: Okay. Well, what about an in
11 camera hearing where I look at it?
12 MS. HEYER-BEDNAR: Fine. Or you can ask the
13 witness, Steve Reynolds, what’s its importance.
14 THE COURT: Well, I’m sure defense counsel
15 would prefer the actual document.
16 MR. WORTMAN: And, Judge, as it relates to
17 prejudice. I have a case that states: “Hearings to
18 determine receivers and attorneys fees should
19 command sufficient gravity to require that all
20 parties be afforded a full opportunity to prepare
21 and be heard.”
22 THE COURT: Well, I don’t think she’s
23 disagreeing with that. Full opportunity to be
24 prepared and heard has to do with the prejudice
25 prong. So even if you’re right, that they did not
1 adequately respond to your interrogatories, and I
2 haven’t made that finding because, again, I don’t
3 have the interrogatories and answers in front of
4 me, but assuming that to be the case, I next have
5 to look at what prejudice there is to you.
6 So, again, this issue, while factually it may
7 be complicated, legally it doesn’t seem to be that
8 complicated. I understand your legal argument,
9 that you’re arguing that U.S. Bank doesn’t have the
10 standing to go forward.
11 MR. WORTMAN: Judge, there are a lot of
12 moving parts to this standing argument. We have an
13 expert to testify on the mortgage securitization
14 issues which will help flesh it out for the Court.
15 We have issues as relates to the note and how it
16 was endorsed, and we have issues as it relates to
17 the assignment of mortgage. There are at least
18 eight or nine reasons why U.S. Bank does not belong
19 in this courtroom today and asking for this relief
20 as it relates to standing.
21 We’re prepared to proceed, Judge. But we’d
22 just like to note our objection for the record that
23 these discovery responses were not provided. I
24 thought Your Honor had indicated at the previous
25 hearing that — You had actually ruled, and I have
1 the transcript, that they’re supposed to produce
2 certain items, which they didn’t.
3 One example of that, Judge, is the fully
4 executed Pooling and Servicing Agreement. They
5 again directed us to the SEC website which enabled
6 us to print out the Pooling and Servicing
7 Agreement. It’s unexecuted, it does not contain
8 the addendums and exhibits and amendment like the
9 ones we’re talking about.
10 Like counsel was stating, I had taken a
11 deposition of a certain person, David Rogers. He
12 was a representative of Merrill Lynch who was in
13 charge of the securitization of this loan.
14 Mr. Rogers specifically testified, during the seven
15 hours, that this Pooling and Servicing Agreement is
16 easily obtainable, as far as the executed copy.
17 Why that hasn’t been produced is beyond me.
18 Frankly, I think no effort has been made.
19 And to the extent they don’t have or can’t
20 get it, all they have to do, Judge, is state
21 “none.” They’ve said nothing to that effect.
22 They’ve just produced a banker box worth of
23 materials that’s not responsive.
24 THE COURT: Well, I will see — Because I
25 have a transcript of the hearing as well that
1 occurred January 20th in my chambers. On page 21 I
2 said: “You’re either going to provide or you’re
3 going to respond that you don’t have to some of
4 these documents.” And then the parties were
5 supposed to try to work together, because I did not
6 have the time at that hearing to go through each
7 and every interrogatory and address each and every
9 MR. WORTMAN: That’s what we thought the
10 first half of today’s hearing would be about.
11 THE COURT: Yes. I’m addressing it right
12 now; am I not?
13 MR. WORTMAN: Thank you. Sorry.
14 THE COURT: Again, and I keep asking you for
15 the prejudice. I’m even skipping over the issue of
16 whether they complied or not. I’m giving you the
17 benefit of the doubt that they didn’t comply. I
18 want to jump to the punch line. What’s the
20 So the amendment to the Pooling and Servicing
21 Agreement, I agree with you if that in any way
22 could impact the legal issues that you’ve raised in
23 this case, then I might overrule their privilege
24 objection and order them to give it to you. And if
25 you’d like, I’ll have an in camera hearing, they
1 have agreed, the Plaintiff’s have agreed to that,
2 and I’ll look at it, and if it has anything
3 whatsoever to do with assignment of rights, then I
4 would, I would disclose that.
5 MR. WORTMAN: Well, if I may make a
7 THE COURT: Yes.
8 MR. WORTMAN: I suggest we proceed, Judge.
9 If there’s an issue that arises as it relates to
10 our inability to contest a particular position
11 taken during the hearing, we’ll raise our objection
12 once again based upon their failure to comply with
13 our discovery request.
14 THE COURT: Okay.
15 MR. WORTMAN: Because we do want to proceed
16 because we think we’re going to prevail in any
17 event. However, these discovery issues again still
18 lay out there, they still lay unresponded to. It’s
19 an effort of stonewalling in our opinion, Judge,
20 and we think it, it cannot be countenance by the
21 Court. And we need court orders compelling them to
22 respond appropriately.
23 THE COURT: All right. But just so I’m
24 clear, you do not want the Court to spend anymore
25 time on the discovery issues, you want to move
1 forward –
2 MR. WORTMAN: Well –
3 THE COURT: — to the receivership motion?
4 MR. WORTMAN: Judge, I just want to make sure
5 we have a full and fair opportunity to go item by
6 item in terms of the unanswered documents. If Your
7 Honor would like to schedule that for a different
8 day, due to time constraints, you know, of course
9 accommodate the Court. But, you know, we do
10 reiterate our position that it could be problematic
11 in terms of presenting a full and fair defense
13 THE COURT: Well, do you want me to go
14 forward on the receivership motion or not at this
15 time? And I will address the discovery issues.
16 I’ll either address it now or at a later time.
17 MR. WORTMAN: I think, Your Honor, we have to
18 preserve our objection, and the answer would be,
19 no, as it relates to their failure to produce
20 documents in response to our discovery request.
21 THE COURT: No, what?
22 MR. WORTMAN: No, we don’t want to move
23 forward in the face of not having received these
25 THE COURT: All right. Then what is the
2 MR. WORTMAN: Again, Judge, it relates to the
3 standing argument. If there are documents out
4 there that further impact whether or not this
5 particular Plaintiff has the right to be in this
6 courtroom and does not own, control, possess this
7 note is a break in the chain of title, although we
8 see it already, we see that there could be
9 additional documents to further support that
10 position, and if they’re refusing to produce
11 documents which will help support, make that
12 argument, then we’re prejudiced.
13 THE COURT: Okay. Well, while they may not
14 have in their answers to the interrogatories or in
15 their answers to request for production of
16 documents specified, as I ordered them to, but if
17 they didn’t say we don’t have those particular
18 documents, they will have that opportunity right
19 now. Go ahead.
20 MS. HEYER-BEDNAR: Your Honor, as an officer
21 of the Court, as I stated in my beginning opening
22 statement, we have produced everything in our files
23 responsive to the request for production, and then
24 some. In fact, with respect to the Pooling and
25 Servicing Agreement, not only did we print out the
1 copy that you, Judge, asked us to do so from the
2 SEC website and produce it, we did. And we also
3 produced our file copy of the execution version.
4 That’s all we have.
5 If they think there’s something else out
6 there, I guess they could have got it from Merrill
7 Lynch, maybe from David Rogers. But everything we
8 have, and it’s this entire document here, was
9 produced. And it was an execution copy from our
11 THE COURT: All right.
12 MR. WORTMAN: If they said that in the
13 responses, Judge, maybe we wouldn’t be going on
14 like this.
15 THE COURT: All right. Well, now she’s
16 saying it. And I agree with you, Counsel, she
17 should have said that in her responses. I mean, we
18 really didn’t get much accomplished on
19 January 20th, but the one thing that I did say was,
20 if you don’t have the documents, specify that, and
21 that wasn’t done and it should have been done.
22 But in any event, she’s saying it now. What
23 would you like the Court to do now?
24 MR. WORTMAN: With that as an admission,
25 Judge. How about the answers to interrogatories?
1 THE COURT: All right.
2 MR. WORTMAN: I mean, they’re still filled
3 with objections. We believe all of them are, go to
4 the heart, again, of our position as it relates to
5 standing, and they should be responded to.
6 MS. HEYER-BEDNAR: Your Honor, with respect
7 to those interrogatories. You’ve got to keep in
8 mind, these were served way back in July of last
9 year, before any discovery was taken whatsoever. A
10 lot of these answers have not only been reaffirmed,
11 clarified and more testimony added on to it with
12 the additional discovery and the depositions. And
13 I believe there’s only like two questions where
14 there was an objection without an answer subject to
15 the objections.
16 THE COURT: All right.
17 MS. HEYER-BEDNAR: And I think the only
18 question was with respect to what is the
19 consideration, excuse me, what was the
20 consideration that U.S. Bank paid for the loan.
21 Now we objected because we don’t think that’s
22 relevant at all with respect to the transfer, and
23 it was for consideration. I don’t think that’s an
24 issue, that it was valuable consideration. So I
25 think that that question is not proper.
1 THE COURT: Hold on one second. Let me stop
2 you for one moment. Do you agree that they did
3 answer every question and then they had objections,
4 but they answered it except for two, two of the
6 MR. WORTMAN: They answered with objections.
7 THE COURT: That’s fine. They answered it,
9 MR. WORTMAN: But it’s –
10 THE COURT: So they’re entitled to answer and
11 then have objections. They objected but they
12 answered anyway is essentially what she’s telling
13 me she did.
14 MR. WORTMAN: Yes, Judge. One of the aspects
15 of the January 20th hearing was the appropriateness
16 of these objections, and counsel had indicated,
17 well, you’re going to take some depositions, go get
18 your answers to interrogatories through deposition
19 testimony, which again is, that’s not appropriate.
20 THE COURT: But the bottom line is she — to
21 me she answered. Plaintiff answered those
22 interrogatories. Now they objected, but then they
23 answered. So I don’t see any prejudice.
24 Plaintiff, the fact that you objected, did
25 you still fully answer those interrogatories?
1 MS. HEYER-BEDNAR: Yes. Your Honor, because
2 the questions were vague, some of them had
3 pertinent objections, but we still wanted to give
4 them the information regarding the transfer and the
5 assignment, and so we did so.
6 THE COURT: All right. I can understand if
7 they objected and they didn’t give you an answer.
8 But they gave you an answer, and they objected as
9 well. But they’re saying it didn’t affect their
10 answer. If you thought that the answer was
11 incomplete in some way, then –
12 MR. WORTMAN: Well, of course the answer is
13 incomplete. They’re not providing any substantive
14 response. They’re just objecting, Judge.
15 THE COURT: She’s saying they’re not just
16 objecting. She gave answers except for two of the
17 interrogatories. Can you point to one? Let’s look
18 at one. Do I have the interrogatories?
19 MR. WORTMAN: Your Honor, interrogatory
20 number five.
21 THE COURT: Does anyone have a copy for the
22 Court, because we don’t have the court file?
23 MR. WORTMAN: Yes, Your Honor. May I
25 THE COURT: Yes. All right. Interrogatory
1 number five, for the record it says: “Please state
2 the date, amount and nature of and fully describe
3 the consideration or value given in exchange for
4 each and every assignment of the loan, and identify
5 from and to what person or entity such
6 consideration or value was given providing the
7 contact name, full legal name, address and phone
8 number of each such person or entity.”
9 Now Plaintiff’s counsel, when she said that
10 they answered every single one except for a couple.
11 This was one of them that she mentioned. All
12 right. I’ll address this. U.S. Bank objected to
13 it on the grounds that: “It is overbroad and
14 unduly burdensome, seeks disclosure of information
15 that is irrelevant or not reasonably calculated to
16 lead to the discovery of admissible evidence and
17 asks U.S. Bank to disclose information that is
18 protected by the attorney/client privilege and
19 applicable work product doctrine.”
20 What is your response to the attorney/client
21 privilege and applicable — Well, attorney/client
23 MR. WORTMAN: Judge, I don’t know how the
24 amount of consideration, a number, a dollar amount
25 could be considered attorney/client privilege. I
1 mean, it just doesn’t seem applicable.
2 MS. HEYER-BEDNAR: No, they’re also talking
3 about the nature of, Your Honor. So that was a
4 protection. Because it’s so broad in scope.
5 But as I mentioned previously, when they’re
6 talking about the date and the amount of
7 consideration, first off I’m not sure by whom
8 they’re talking about. But as I mentioned
9 previously, the consideration paid by Merrill Lynch
10 Investors as the depositor –
11 THE COURT: Right.
12 MS. HEYER-BEDNAR: — is completely
13 irrelevant for purposes of them acquiring the loan
14 to put it into a trust. The further transfer
15 thereafter, there wasn’t one. They talk about
17 THE COURT: Well, why not say that, then? I
18 mean, for the record, this is going to be your
19 revised answer to interrogatory number five. So
20 you’ve narrowed it down.
21 MS. HEYER-BEDNAR: Well, that’s fine, Your
22 Honor. Because we do reference a lot to our
23 Verified Complaint in this case which gives a
24 detailed synopsis of exactly how this loan
25 transferred from the original lender all the way to
1 U.S. Bank now as trustee. And so it’s very — I
2 mean, we can keep reciting that here. But I’m not
3 sure, when they’re talking about assignment, what
4 they mean, and I’m not sure what they’re talking
5 about with respect to consideration. If they’re
6 asking how much Merrill Lynch Investors paid for
7 the loan, we then –
8 THE COURT: Is that a secret, is it
10 MS. HEYER-BEDNAR: Yeah, I mean, they
11 generally don’t — Well, I don’t even necessarily
12 know if, at this lineage, now that we’re talking
13 about the servicer here on behalf of Merrill Lynch
14 Investors, what they paid for it, but it is
15 generally treated as confidential. Certainly it’s
16 irrelevant. The loan was transferred with
17 consideration. That’s not a dispute here.
18 THE COURT: Well, their –
19 MS. HEYER-BEDNAR: In fact, David Rogers was
20 asked the question of the transfer and how the loan
21 got transferred. All that has been spelled out in
22 his lengthy seven-hour deposition. I’m not really
23 sure why now us answering this interrogatory is
24 going to provide any clarity whatsoever.
25 THE COURT: Well, they’re challenging the
1 assignment, the alleged assignment for the
2 Defendant’s benefit of the mortgage and note from
3 Merrill Lynch to U.S. Bank. So that’s why they
4 want — I see that it has relevance. I don’t know
5 that the amount of the actual price paid.
6 MS. HEYER-BEDNAR: Correct.
7 THE COURT: I don’t know about that.
8 MS. HEYER-BEDNAR: Can I answer and say, yes,
9 consideration was paid? Absolutely, Your Honor.
10 THE COURT: Well, I’ll go ahead and hear from
11 defense. Why do you need to know the exact number?
12 MR. WORTMAN: Because it goes to the issue of
13 whether or not, again, Merrill Lynch Mortgage
14 Investors, which is the depositor in this case,
15 purchased this loan for full and fair
16 consideration, became a holder in due course. The
17 amount of consideration, just because they say it’s
18 confidential, doesn’t fall under any privilege.
19 Attorney/client privilege doesn’t apply.
20 THE COURT: Fine. She’s dropping that
21 argument. It sounds like. She dropped that
23 MR. WORTMAN: As far as the relevancy, Judge.
24 Again, I rely upon the fact we’re entitled to this
25 information. It’s one piece of many of our
1 standing argument, vis-a-vis in this particular
2 instance, whether or not one of the many parties in
3 between got this loan as a holder in due course.
4 MS. HEYER-BEDNAR: Briefly, Your Honor.
5 THE COURT: Yes.
6 MS. HEYER-BEDNAR: Holder in due course has
7 nothing to do with this case. We are clearly just
8 a holder. So all we’ve got to do, have possession,
9 and I’m here today with the original. Holder in
10 due course and that status is completely irrelevant
11 to the discussion today.
12 THE COURT: So your client has the actual
13 note and mortgage?
14 MS. HEYER-BEDNAR: Correct.
15 MR. WORTMAN: Your Honor, again, the amount
16 of consideration could potentially impact the
17 validity of the assignment of the mortgage.
18 THE COURT: How? Explain how.
19 MR. WORTMAN: Well, it has to be — In our
20 opinion, in order to be a holder in due course,
21 they have to pay full and fair consideration for
22 the loan. So I don’t see how it’s, it prejudices
23 them at all, aside from just labelling it
24 confidential. There’s certainly some –
25 THE COURT: I’ll tell you what.
1 MR. WORTMAN: — basis of relevancy here.
2 THE COURT: I don’t know that the answer to
3 this question is going to prejudice you from going
4 forward in this hearing today. So I –
5 MR. WORTMAN: I would agree with that, Judge.
6 We’d just like them to answer the questions.
7 THE COURT: All right. So we’ll put that on
8 hold. What was another interrogatory in fact that
9 concerns you for this hearing today?
10 MR. WORTMAN: We have number six, Judge.
11 This goes to a list of the parties that took
12 assignment of the note and mortgage.
13 THE COURT: All right.
14 MR. WORTMAN: Again, that goes to the heart
15 of the standing argument. Their response is that,
16 this information is easily ascertainable or
17 available to Tidewater, and it’s of public record.
18 I mean, just because a document is a public
19 record, which may or may not be the case, doesn’t
20 mean they’re not obligated to produce it. They
21 just can’t say, go to the courthouse and go find
23 THE COURT: What’s your response?
24 MS. HEYER-BEDNAR: Our response is, Your
25 Honor, we adopt all of our allegations from the
1 Verified Complaint. Doesn’t get a whole lot better
2 than that. It absolutely outlines by date, by
3 instrument attached to the Verified Complaint
4 exactly the transfer and how the loan was assigned
5 and how we get to where we are for today.
6 THE COURT: So at the bottom of your answer
7 you write U.S. Bank refers Tidewater to the
8 allegations, you’re actually adopting that as your
10 MS. HEYER-BEDNAR: Correct. Subject to.
11 That’s correct, Your Honor.
12 THE COURT: Okay. So there you have your
13 answer. It’s in their Complaint.
14 MR. WORTMAN: They can’t be more specific
15 than send us to a 27 page Complaint, Judge?
16 THE COURT: Can you tell them specifically
18 MR. WORTMAN: Again, Judge, this won’t
19 prejudice our ability to proceed. It’s just full
20 and fair opportunity to receive discovery here in
21 the right manner.
22 THE COURT: I understand. She’s going to
23 tell you the actual paragraphs.
24 MS. HEYER-BEDNAR: From the time the note was
25 executed, Your Honor, you start at paragraph four
1 of the Verified Complaint through 14. Whole ten
2 paragraphs of allegations.
3 THE COURT: Okay. So now you have your
4 answer to interrogatory number six.
5 MR. WORTMAN: There are a few subparts here,
6 Judge, as it relates to the address of the party,
7 contact information. Can the answer be
8 supplemented with that information?
9 THE COURT: Okay. I would imagine that kind
10 of detail is not going to prejudice you for the
11 hearing today, correct?
12 MR. WORTMAN: Yes.
13 THE COURT: Okay.
14 MS. HEYER-BEDNAR: In fact, the addresses are
15 in the Pooling and Servicing Agreement, Your Honor.
16 THE COURT: Well, they don’t want to rely on
17 that. They want you to answer that. So please
18 provide, I’m going to order that you provide that
19 information, addresses and other contact
20 information. And I’ll give you ten days to do
22 MR. WORTMAN: Interrogatory number seven,
23 Judge, close to the same issue, but we’re changing
24 it a bit by asking for the timeframe, when these
25 loans and mortgages were actually assigned and
1 endorsed. We need actual dates. Because there’s a
2 serious allegation here as it relates to the
3 endorsement of the note, the attempted transfer
4 from the Merrill Lynch one, that I’ll call it, over
5 to LaSalle Bank where Mr. Rogers testified that he
6 signed the document on one day and it was postdated
7 by his in-house counsel for a different day.
8 So there’s real confusion as to when all of
9 these assignments and endorsements occurred, and
10 there’s an admission by the Merrill Lynch
11 representative that documents were postdated. So
12 this interrogatory goes to the heart of that issue
13 in terms of timing. When were these assignments
14 actually executed.
15 THE COURT: Well, that’s not what your number
16 seven says. If you wanted to know when it was
17 executed, I think that’s different than –
18 MR. WORTMAN: We’re taking — Maybe I
19 misspoke a bit. But taking assignment of the loan.
20 We’re looking for specifics as to the date when
21 this particular Plaintiff took assignment of the
22 loan, assignment of the mortgage, as well as
23 possession of the note. That’s a full — That’s a
24 fair question.
25 THE COURT: What’s your response?
1 MS. HEYER-BEDNAR: Your Honor, once again, we
2 refer to the Verified Complaint which has the
3 assignment attached, it has the execution date of
4 the assignments attached, it has the effective
5 dates of the assignments.
6 THE COURT: So when you are asking when did
7 these assignments take place, are you asking for
8 the date of the execution, are you asking for the
9 date they took effect? Which one?
10 MR. WORTMAN: Well, usually they should be
11 the same. But, you know, if they have –
12 THE COURT: Not necessarily. Not
14 MR. WORTMAN: If they have to break it down.
15 The date they took control, possession of the loan.
16 When the loan became theirs, when title to that
17 loan was now U.S. Bank’s.
18 THE COURT: What’s your response?
19 MS. HEYER-BEDNAR: Your Honor, I don’t think
20 this question is very artfully drafted. I mean, I
21 think that the documents specify an execution date,
22 they have a notary block on them, they have an
23 effective date on them, and the note has an allonge
24 attached to it, and we have all successor trustees,
25 all those documents been produced too. We know
1 exactly when the trustees were appointed, we have
2 the effective dates and signature dates, execution
4 I don’t really know what more he can glean
5 that aren’t on the face of the document. I rely on
6 the 1.310 that refers you to the documents
7 themselves. That’s the best answer.
8 MR. WORTMAN: Judge, if the dates of the
9 documents are the answer, then just answer it that
10 way, because there’s a serious question here.
11 David Rogers stated that he signs it and it gets
12 dated sometime thereafter. So we’re just looking
13 for clarity on that.
14 MS. HEYER-BEDNAR: In fact, we do, Your
15 Honor, because if we refer to the Verified
16 Complaint, which has not only verified allegations,
17 but then has each of the assignments attached.
18 THE COURT: Okay. So she wants the answer to
19 be that it’s paragraphs 4 through 14, those dates
20 that are in there. She’s separating out the
21 execution date versus the date effective, date of
22 effectiveness, or date it takes effect, excuse me.
23 MR. WORTMAN: I’m sorry, Your Honor. I was
24 just looking at the Verified Complaint to see if
25 there are dates in here. Judge, we’ll accept the
1 dates represented in the Verified Complaint on face
2 value I guess. There’s inconsistent evidence to
3 that effect, but if that’s their answer, that’s
4 their answer.
5 THE COURT: Okay. What else?
6 MR. WORTMAN: Number nine, Judge, asked if
7 the loan was ever subject to or included in a
8 Mortgage Loan Purchase Agreement. Again, they
9 object. The Mortgage Loan Purchase Agreement has
10 been produced, Judge. I do want to represent that
11 to the Court. Again, that still doesn’t obviate
12 their obligation to just answer the question
13 instead of objecting to it.
14 THE COURT: Okay. So answer the question.
15 MS. HEYER-BEDNAR: Your Honor, the loan
16 agreement is the Mortgage Loan Purchase Agreement
17 between Merrill Lynch Mortgage and Merrill Lynch
18 Investors that was produced subsequent to these
19 answers to interrogatories.
20 MR. WORTMAN: They did produce it, Judge.
21 THE COURT: All right. Well, I agree she
22 should have, or Plaintiff should have answered yes
23 and then referenced that document.
24 MS. HEYER-BEDNAR: But, again, we were not a
25 party to that agreement so… You know, certainly
1 David Rogers testified amply about it. But with
2 respect to these interrogatories, we’ve given him
3 the agreement, the copy that we have in our file.
4 We know nothing else about it.
5 THE COURT: So Plaintiff’s answer is that,
6 yes, the loan was subject to or included in a
7 Mortgage Loan Purchase Agreement and they’ve
8 attached. You now have it.
9 MR. WORTMAN: Right. That document was
10 recently produced.
11 THE COURT: Right.
12 MR. WORTMAN: At the time that we received
13 these answers, we did not have that. That’s why we
14 had a problem with this answer.
15 THE COURT: Right. But now you have no
16 problem with that answer, correct? As revised?
17 MR. WORTMAN: Assuming there are no
18 amendments to it. I mean, we only have the
19 Mortgage Loan Purchase Agreement. If there are no
20 amendments to it, it would be nice if they just
21 said none.
22 THE COURT: All right. Are there any
23 amendments to it?
24 MS. HEYER-BEDNAR: Not to our knowledge, Your
25 Honor. Remember, we’re not a party to the
1 agreement. Everything we had in our file, which
2 was only the Mortgage and Loan Purchase Agreement,
3 the original, we produced.
4 THE COURT: All right.
5 MR. WORTMAN: Interrogatory 13, Judge.
6 “Please state for each of the note and mortgage
7 whether and as of what date you secured the
8 originals thereof.” In this one we’re talking
9 about the actual physical control, and when it was
10 transferred from the vault in Chicago to U.S. Bank,
11 wherever their office may be. So we’re looking for
12 those dates.
13 THE COURT: Plaintiff’s counsel.
14 MS. HEYER-BEDNAR: Your Honor, in response, I
15 don’t understand what that question’s trying to ask
16 for, because it says “you.” And I don’t know who
17 they’re referring to, when it’s saying secured the
18 originals. Now, remember, there was an originator
19 of this loan, there was a depositor of this loan,
20 then it went to a custodian, and then there’s
21 obviously an appointment of a trustee for the
22 trust, and then you have the special servicer and
23 the master servicer. Who’s “you”? I don’t know
24 what he’s referring to.
25 THE COURT: All right.
1 MR. WORTMAN: Very simply the Plaintiff,
3 THE COURT: U.S. Bank.
4 MS. HEYER-BEDNAR: Okay. Well, U.S. Bank did
5 not secure the originals because the originals were
6 with the custodian.
7 THE COURT: But U.S. Bank has it now, right,
8 or not?
9 MS. HEYER-BEDNAR: U.S. Bank requested it
10 from the custodian for purposes of this proceeding.
11 THE COURT: When did U.S. Bank physically get
12 it? That’s what they want to know.
13 MS. HEYER-BEDNAR: U.S. Bank got it at the
14 time it was deposited into the trust.
15 THE COURT: When was that?
16 MS. HEYER-BEDNAR: March 30th, 2006.
17 MR. WORTMAN: Is that the answer?
18 THE COURT: That’s the answer.
19 MR. WORTMAN: Okay. Well –
20 MS. HEYER-BEDNAR: In fact, that’s what David
21 Rogers talked about in his deposition for seven
23 MR. WORTMAN: Again, we’re not obligated to
24 accept answers of a nonparty representative for
25 purposes of gleaning information to put answers in
2 THE COURT: All right. Well, that question
3 has been answered. Let’s move on.
4 MR. WORTMAN: Judge, I think that’s it for
6 THE COURT: All right. So are you ready to
7 go forward on the Motion For Receivership?
8 MR. WORTMAN: We will again reassert our
10 THE COURT: And I will again ask you what
11 prejudice there is at this point?
12 MR. WORTMAN: We would like a copy of the
13 first amendment to the Pooling and Servicing
14 Agreement. That could be relevant as it relates to
15 the standing issue.
16 THE COURT: All right. Anything else?
17 MR. WORTMAN: Another document, Custodian
18 Agreement. Custodian Agreement is a document
19 that’s supposed to control how and when the note
20 moves from this party to that party. We’ve not
21 received that. That, again, goes to the standing.
22 MS. HEYER-BEDNAR: And, Your Honor, with
23 respect to the Custodian Agreement, we are not the
24 custodian, we are not a party to that agreement.
25 We do not have a copy. Again, we’ve produced
1 everything we have.
2 THE COURT: And it’s your position that U.S.
3 Bank is not able to get that?
4 MS. HEYER-BEDNAR: Well, U.S. Bank wasn’t a
5 party to that. I mean, the custodian is LaSalle
6 Bank, and I’m assuming they have a copy. We have
7 not requested a copy from LaSalle. It’s my
8 understanding that discovery was attempted with
9 respect to LaSalle. But I don’t think there’s an
10 issue as to who the custodian was. That’s not a
11 disputed issue in the case.
12 MR. WORTMAN: Judge, they’re the trustee of
13 this Pooling and Servicing Agreement, this trust
14 that controls all of these loans. And all the
15 documents related to the delivery, acceptance,
16 assignment of each and every one of these loans
17 should easily be ascertainable to them.
18 THE COURT: All right. And what would be the
19 possible prejudice that you don’t have it?
20 MR. WORTMAN: Again, it’s the unknown.
21 THE COURT: Right. Okay. Well, I would
22 think that U.S. Bank could get that probably from
23 LaSalle. I mean, I think they should try to get it
24 from LaSalle Bank to avoid any issue of prejudice.
25 I would think that Plaintiff would want a clean
1 hearing without any issues, and that’s one way to
2 eliminate an issue, is if you had the Custodian
3 Agreement and give it over to the defense. But
4 if –
5 MS. HEYER-BEDNAR: Your Honor, I respectfully
6 disagree as to any prejudice. Because I don’t
7 think there was any dispute in any of the
8 testimony, nor will there be any today, that
9 LaSalle was the custodian, and that –
10 THE COURT: I don’t think that’s the issue.
11 MS. HEYER-BEDNAR: And that Midland has
12 absolutely obtained the original documents from the
13 custodian for purposes of today. That’s all they
14 do is hold the records. So I don’t think there’s
15 any prejudice whatsoever with these proceedings on
16 that issue.
17 THE COURT: All right. Well, Plaintiff –
18 I’m sorry, defense position is they don’t know
19 until they see the agreement. Maybe there’s some
20 argument there, I don’t know. But I’m, I’m going
21 to order that Plaintiff should use better efforts
22 to get that agreement. And if they can’t get it, I
23 want to know why not. Because I don’t see any
24 reason why LaSalle Bank wouldn’t give it to
1 And as to the amendment, do you have a copy
2 of the amendment now I can look at in camera?
3 MS. HEYER-BEDNAR: Your Honor, I don’t. But
4 I can provide it at a break.
5 THE COURT: All right. So I understand
6 you’re objecting, you know, you’re preserving any
7 possible prejudice that you might have from going
8 forward based on not having the Custodian Agreement
9 and the amendment to the Pooling and Servicing
10 Agreement. Anything else? Any other prejudice?
11 MR. WORTMAN: I don’t believe so at this
12 time, Judge.
13 THE COURT: All right. Well, then, let’s
14 move forward.
15 MS. HEYER-BEDNAR: Do you want a brief
16 opening or proceed right to witnesses?
17 THE COURT: Sure. And I’ll –
18 MR. WORTMAN: Your Honor, before we do
19 openings, we do have one procedural issue as it
20 relates to I believe an independent witness. I
21 believe Plaintiff is going to be putting on the
22 stand an appraiser who is going to testify as to
23 the valuation of the property.
24 Plaintiff did produce a copy of the appraisal
25 report a couple days ago, and attached to the
1 appraisal report were certain financial documents
2 that apparently this appraiser had relied upon for
3 purposes of coming up with a valuation.
4 Certain of these documents, Judge, were
5 produced by Tidewater in response to a mediation
6 agreement, a mediation that took place in December.
7 The judge, Judge Roselle, had ordered us to go to
8 mediation. We had sat down and many of the members
9 of Tidewater had showed up, and all we were able to
10 resolve was that the Plaintiff would take a look at
11 potentially modifying the loan.
12 In response they wanted to see a litany of
13 financial documents of the community. Well, we
14 agreed, which is in writing, that we would produce
15 certain financial documents but they are not be
16 used in litigation and not to be disseminated to
17 third parties. Lo and behold they’re attached to
18 this appraisal report.
19 So our request, Judge, is, A, the appraiser
20 be struck from testifying and that Plaintiff be
21 sanctioned for violating the terms of the mediation
23 THE COURT: Okay.
24 MS. HEYER-BEDNAR: Your Honor, in response.
25 The documents attached to the appraisal are not the
1 financial information that was produced at
2 mediation. In fact, if you look at the
3 information, it’s actually old information. It’s
4 ’08, ’09, and a budget. We did not provide any of
5 the 2010 or 2000 — Yeah, would have been 2010 we
6 went to mediation. We did not provide any of the
7 2010 financial information.
8 The only thing that we were allowed to
9 disseminate and allowed to use in this proceeding
10 from the mediation was the rent roll from
11 December 2010. Yes, that is attached. But, yes,
12 that was allowed to under the mediation agreement
13 to be produced. Did we want additional financial
14 information, current financial information? Yes.
15 Would it have been helpful to the appraiser? Yes.
16 Did we get it? No.
17 MR. WORTMAN: Your Honor, I have copies of
18 profit and loss statements and financial statements
19 which were produced, as part of the agreement
20 during mediation, and made its way into the
21 appraisal report.
22 THE COURT: From what year?
23 MR. WORTMAN: February through June 2009 is
24 the profit and loss statement, financial statement
25 dated January 31st, 2009.
1 THE COURT: All right. Was this agreement
2 about what would be disclosed and what wasn’t in
3 litigation, was that in writing?
4 MR. WORTMAN: Yes, Judge. I have a copy of
6 THE COURT: Okay. If I could look at it.
7 MR. WORTMAN: May I approach?
8 THE COURT: Yes. And you have a copy of that
9 as well?
10 MS. HEYER-BEDNAR: I do.
11 THE COURT: Okay. I’ll read it into the
12 record. “The parties in the case entitled U.S.
13 Bank National Association as trustee, et al, versus
14 Tidewater Estates Co-op, Inc. agree to the
15 following stipulated terms. One, all litigation
16 activity including, without limitation, all
17 motions, hearings, depositions, discovery is hereby
18 stayed up until January 5th, 2011. Counsel for
19 Plaintiff shall contact the court for purposes
20 of” — reviving? No. Of something, “the hearing
21 regarding Plaintiff’s motion for sequestration of
22 rents from Court’s current calendar docket” –
23 MR. WORTMAN: Regarding.
24 THE COURT: For purposes of — No, no. The
25 word before that.
1 MR. WORTMAN: Oh, removing.
2 THE COURT: Renewing?
3 MR. WORTMAN: Removing.
4 THE COURT: Okay. “For purposes of removing
5 the hearing regarding Plaintiff’s motion for
6 sequestration of rents.”
7 Okay. Number two: “Within ten business days
8 hereof, Defendant shall produce to Plaintiff the
9 following documents.” And it goes through a litany
10 of documents. That’s not relevant for this issue.
11 Number three. “Within ten business days of receipt
12 of all documents identified in paragraph two,
13 Plaintiff shall review,” et cetera. Again, that’s
14 not relevant to this issue.
15 Four: “None of the documents identified in
16 paragraph two shall be admissible or used in the
17 current litigation by Plaintiff with the exception
18 of rent roll.” So that is relevant. Let’s go to
19 that, number two. So these documents that I’m
20 about to read, none of them should have been
21 disclosed. Go ahead and tell me what was that’s in
22 one of these documents listed.
23 MR. WORTMAN: I’ll provide Your Honor with a
24 copy. It’s the profit and loss statement dated
25 February through June 2009.
1 THE COURT: Where is it delineated in number
3 MR. WORTMAN: F. Subsection F.
4 THE COURT: Financial statement or profit and
5 loss statement of Defendant.
6 MS. HEYER-BEDNAR: Yeah, that was the
7 current. That’s all the old stuff we already had.
8 The reason we went to mediation, Your Honor, is
9 because we didn’t have any financial documents.
10 And we said, we really can’t evaluate a settlement
11 in this case unless we have current financial
12 information. So if you look at the litany of the
13 other items that are listed in paragraph two, it
14 talks about quarterly statements, you know, balance
15 sheets, bank statements.
16 THE COURT: Right.
17 MS. HEYER-BEDNAR: But current. ’09 and ’08
18 are completely irrelevant.
19 THE COURT: All right.
20 MR. WORTMAN: Judge, 2010 financials were not
21 done yet. Mediation took place in December. These
22 are the documents that were produced.
23 THE COURT: Okay. Hold on.
24 MR. WORTMAN: In response. And like she just
25 stated, they needed these financials to evaluate
1 things from a settlement perspective, and these
2 were produced, and they shouldn’t have given it to
3 an appraiser or anybody else for purposes of
5 THE COURT: All right. So defense counsel’s
6 saying that the 2009 profit and loss statement was
7 produced as a result of this agreement that you’ve
8 handed to the Court? And Plaintiff’s counsel is
9 saying, no, you already had it before then?
10 MS. HEYER-BEDNAR: In December of — I’m
11 sorry, November of 2010 when we went to mediation,
12 Your Honor, it was completely and wholly irrelevant
13 as to what was going on in ’09. We needed ’10,
14 2010. We did get, they do quarterly financial
15 statements. They don’t just do annual. We were
16 asking for current financials. That’s what the
17 purpose of that was for. And we said, you know
18 what, if you agree to produce it, we will stand
19 down on that information. Would we have liked to
20 use that information in this case? Yes. But for
21 purpose of mediation, we agreed that any current
22 financial information they could provide to us we
23 would use for purposes of settlement.
24 THE COURT: Okay. This written agreement
25 lists a number of items that both parties agreed
1 would not be used or identified in the litigation.
2 And some of these have dates. For example, 2B.
3 2009 tax return of Defendant. That makes it easy
4 for anyone, including the Court, to figure out
5 which tax return. 2009.
6 And then you go to 2D, accounts payable.
7 From what time period? It says 2010. So now we
8 know. But when you get to F, financial statement
9 or profit and loss statement of the Defendant, it
10 does not have a date. So based on the plain
11 language, I would think that includes any and all
12 financial statements.
13 MS. HEYER-BEDNAR: Yeah, but, Your Honor, it
14 wouldn’t include something we already had. That’s
15 our point.
16 THE COURT: Except that defense counsel is
17 saying he provided that to you in response to this
19 MS. HEYER-BEDNAR: I understand. But that’s
20 not true.
21 THE COURT: That’s not true?
22 MS. HEYER-BEDNAR: And we have a witness who
23 can testify that those documents were produced
24 early on in ’09 when they had settlement
25 discussions back then. They had prior settlement
2 THE COURT: Was that document produced solely
3 for settlement purposes or as part of the
4 litigation in response to an interrogatory?
5 MS. HEYER-BEDNAR: I don’t think there was
6 any confidentiality for those documents when it was
7 produced early on. The only reason this was done
8 was for the current stuff.
9 THE COURT: I understand.
10 MS. HEYER-BEDNAR: And granted, it may not be
11 artfully drafted, as you can see it’s handwritten.
12 THE COURT: Right. But all the other items
13 have dates. This one does not. So we have a
14 dispute of fact.
15 MR. WORTMAN: Judge, the litigation commenced
16 I believe in April 2009. The profit and loss
17 statement that we’re contending was produced by us,
18 and now improperly used by them, goes from February
19 to June 2009.
20 So this is not early 2009 stuff. This is, at
21 best, middle, after middle 2009 after litigation
22 already commenced. So this is stuff we produced in
23 response to the mediation, and in a good faith
24 effort by us, as the Defendant, to give them
25 information they wouldn’t readily have or possess,
1 and frankly isn’t even relevant. And they, and
2 they violated the terms of the mediation agreement.
3 This is, and this is not early 2009. This is
4 middle 2009.
5 MS. HEYER-BEDNAR: Your Honor –
6 THE COURT: Well, it’s early to mid. But
8 MS. HEYER-BEDNAR: Your Honor, this lawsuit
9 wasn’t filed until April 2010. Not in ’09.
10 THE COURT: I’m sorry, what?
11 MS. HEYER-BEDNAR: April 2010 the lawsuit was
12 filed, not ’09.
13 MR. WORTMAN: I’m sorry, I misspoke, Judge.
14 But it doesn’t matter, Judge, because these are
15 documents that were produced in response to the
16 mediation, in discussions, we worked up an
18 THE COURT: All right. This witness that
19 will say that he or she received this document way
20 before the mediation, how did he or she receive it?
21 Was it in the mail, was it — How?
22 MS. HEYER-BEDNAR: I’m assuming it was by
24 THE COURT: Okay.
25 MS. HEYER-BEDNAR: It wasn’t marked
1 confidential at the time, and it was sent to
2 Midland Loan Services for the potential of
3 attempting to work something out, potentially
4 before pre suit.
5 THE COURT: Okay. All right. Well, in the
6 cover letter did it enumerate, here’s the attached,
7 enclosed documents? Did it enumerate that it
8 was –
9 MS. HEYER-BEDNAR: That I don’t know, Your
10 Honor. But it certainly was not delineated
11 confidential or anything.
12 THE COURT: That may be. But it would
13 certainly make my factual determination a lot
14 easier if your witness had some documentation that
15 showed that he received that.
16 MS. HEYER-BEDNAR: Well, he has personal
17 knowledge as to when he received it, and he did
18 receive it pre litigation.
19 THE COURT: Yes. But I’m also asking if
20 there is any documentation.
21 MS. HEYER-BEDNAR: I don’t know.
22 THE COURT: It’s certainly common practice,
23 when parties send over documents, to put that in
24 the cover letter to make sure that the other party
25 receives everything they intended.
1 MS. HEYER-BEDNAR: Your Honor, there was a
2 pre negotiation letter that was signed, it’s
3 actually been produced in this case, that
4 precipitated the production of those documents in
5 July of ’09.
6 THE COURT: Okay.
7 MS. HEYER-BEDNAR: That was signed by both
8 Midland Loan Services as the special servicer and
9 Tidewater as the borrower, and that’s what kind of
10 precipitated the discussions between the parties,
11 and the financial information was produced in
12 response to that letter. And that’s Bate stamp
13 number U.S. Bank 230.
14 THE COURT: Well, I’ve got two different
15 facts, factual proffers. So I could have a hearing
16 on that and make a factual finding. I was asking
17 if either side had any documentation, something in
18 writing that would make that factual determination
19 easier than for the Court to listen to witness
20 testimony and assess the credibility of witnesses.
21 But if it comes down to that, then that’s what I’ll
23 MR. WORTMAN: Your Honor, we could probably
24 produce a letter of transmittal of this document
25 but I don’t know if we have that readily available
1 right now.
2 MS. HEYER-BEDNAR: Your Honor, I have a copy
3 of the letter along with copies of all the
4 documents produced by Mr. Wortman to my office,
5 unfortunately I don’t have it here, I have it at my
6 office. But I did keep a complete copy of what was
7 produced before it was turned over to Midland.
8 THE COURT: All right. Well, time goes by
9 quickly when you’re having fun. It’s 10 after 12 I
10 see. We could take a lunch break, this seems like
11 a good time to take a lunch break, and then the
12 parties can come up with whatever documents they
13 can on that issue. As well as I would like
14 Plaintiff to see if, if they can get that Custodian
15 Agreement or an amendment or, if not, I don’t
16 expect you to necessarily get it by the time we
17 resume, but maybe attempt contact with whoever has
18 the agreements to find out when we’re going to get
19 those. And then we’ll continue at 1:30.
20 Any other issues before we adjourn for lunch?
21 MR. WORTMAN: No, Judge.
22 MS. HEYER-BEDNAR: No, Your Honor.
23 THE COURT: All right. Court will be in
24 recess until 1:30.
25 (off the record 12:14 – 1:40).
1 THE BAILIFF: All rise. Circuit Court is
2 back in session. Please be seated.
3 THE COURT: Hello. All right. The parties
4 are present. We’re back on the record. Any
5 developments with the Custodian Agreement and the
7 MS. HEYER-BEDNAR: Yes, Your Honor. The
8 Custodian Agreement does not exist. There was no
9 Custodian Agreement. The custodian is referenced
10 in the Pooling and Servicing Agreement, and since
11 the custodian has held the documents from that
12 inception, there’s been no further necessity for an
13 agreement or anything further for purposes of
14 transferring the documents.
15 THE COURT: All right. So you checked with
16 LaSalle Bank –
17 MS. HEYER-BEDNAR: Correct.
18 THE COURT: — and that’s what they told you?
19 Who told you that? Do you know the name of the
21 MS. HEYER-BEDNAR: Don’t know. I think it
22 was counsel, in-house counsel.
23 THE COURT: Okay. And then what about the
25 MS. HEYER-BEDNAR: And we have the first
1 amendment to the Pooling and Servicing Agreement
2 for in camera inspection.
3 THE COURT: Are there other amendments?
4 MS. HEYER-BEDNAR: No. It’s just titled –
5 I’m just using the full title.
6 THE COURT: All right. If you can approach,
7 I’ll look at that. Several pages long.
8 MS. HEYER-BEDNAR: Actually the agreement
9 itself is not very long, just the attachments.
10 THE COURT: All right. You were concerned
11 that this amendment has to do with the ability to
12 assign rights; is that correct?
13 MR. WORTMAN: Judge, I don’t know what it
15 THE COURT: Okay. All right.
16 MR. WORTMAN: Certainly impacts, maybe in a
17 small way, maybe in a big way, how the Pooling and
18 Servicing Agreement and trust itself operates. It
19 may have no impact whatsoever.
20 THE COURT: Let me ask Plaintiff’s counsel.
21 Why is this confidential?
22 MS. HEYER-BEDNAR: Your Honor, that is not
23 actually posted on the SEC website, unlike the
24 Pooling and Servicing Agreement. It really is a
25 confidential proprietary business information type
1 of document, just because they don’t want other
2 entities out there that are doing these similar
3 type transactions, just to see how they operate.
4 It’s more of an internal proprietary.
5 THE COURT: All right. What is your position
6 about –
7 MS. HEYER-BEDNAR: If it’s maintained — I’m
8 sorry, Your Honor. If it’s maintained confidential
9 for purposes of this litigation and not
10 disseminated, then I have no problem disclosing it
11 to the other side.
12 THE COURT: That’s what I — All right. So
13 I’m going with that qualification. Do you agree to
14 that qualification?
15 MR. WORTMAN: Yes. We’d like the document
16 now, though, Judge.
17 THE COURT: Yes. I will give it to you.
18 MR. WORTMAN: Thank you.
19 THE COURT: So you are agreeing not to
20 disseminate this outside of the litigation, and
21 it’s just for your –
22 MR. WORTMAN: Right. With the exception of
23 perhaps getting it to our expert on mortgage
24 securitization. But for purposes of this
1 THE COURT: What’s your position on that?
2 MS. HEYER-BEDNAR: We’re not aware of any
3 experts. There certainly hasn’t been any
4 disclosure of any experts. So to the extent that
5 we get to that point, that would be one thing. But
6 we’re completely in the dark of any experts.
7 THE COURT: If you want to take that step,
8 then talk to opposing counsel, and if they object
9 then you’ll bring it in front of me. But for right
10 now you’re able to look at that and not disclose
11 it, it has to remain confidential to this
12 litigation and amongst the lawyers on your side.
13 MR. WORTMAN: Okay. Your Honor, as it
14 relates to the previous request before we broke for
15 lunch involving the striking of the appraiser as a
16 result of the allegation that they breached the
17 terms of the mediation agreement. We’re going to
18 withdraw the request at this point. We’re going to
19 make it the subject of a separate motion. We don’t
20 want to delay the processing of this hearing, and
21 we’ll withdraw it at this time.
22 MS. HEYER-BEDNAR: Your Honor, just for the
23 record, we did go to the effort and trouble to
24 bring a copy of the letter sent from opposing
25 counsel to myself with all the attachments, showing
1 that none of the documents attached hereto are
2 attached to the appraisal or anything else. They
3 are certainly available for the Court if the Court
4 so wishes.
5 THE COURT: All right. Well, since this
6 issue’s –
7 MR. WORTMAN: It’s moot at this point, Judge.
8 THE COURT: Very well.
9 MR. WORTMAN: We’ll take it up at a later
11 THE COURT: Okay. Then let’s proceed.
12 MS. HEYER-BEDNAR: As we all probably know by
13 now, this is a $9 million loan taken out by an
14 entity, Tradewind — Tidewater Co-op. It’s not a
15 residential loan, it’s a commercial loan. We also
16 know that it’s a CMBS, which is a commercial
17 mortgage backed securities transaction.
18 And to aid the Court with respect to the
19 players and with respect to that transaction, we
20 have a chart for purposes of, quick little overview
21 if you will. If I may approach. It will be
22 discussed in further detail during the testimony,
23 but at least this way it gives everybody the
25 It’s undisputed this loan was made by Merrill
1 Lynch Mortgage. That was the originator of the
2 loan. That would be reflected as the buildings up
3 at the top. Those are the loans in question. The
4 loan was actually transferred by a Mortgage Loan
5 Purchase Agreement to the depositor. The depositor
6 was Merrill Lynch Investors.
7 Why was it put into a depositor? Why was it
8 transferred? Why did the note go to the depositor?
9 For investment purposes. That’s the whole purposes
10 of a CMBS, so that it can be investment grade.
11 The depositor, Merrill Lynch, didn’t service
12 the loan, didn’t do anything except one very
13 important thing, set up a trust. Set up a trust to
14 dump this loan, along with multiple other loans,
15 into the trust. And once that depositor did that
16 under the Pooling and Servicing Agreement, he had
17 to then bring in all the other players.
18 Who are all the other players? We have a
19 master servicer. Why is the master servicer
20 important? Master servicer is the one that is
21 responsible for collecting the payments on the
22 loan. It basically is the main servicer. The
23 depositor also appoints a special servicer. In
24 this case, the special servicer is Midland Loan
1 And what is the special servicer’s role?
2 Special servicer is actually involved because it is
3 going to handle any default resolution, any
4 litigation pertaining to the loan. Its main role
5 is focussed, i.e. special, on default resolution.
6 From nonperforming loans, when the loan becomes
8 Now when the loans are put into a trust, the
9 trust needs to be able to operate. The trust
10 operates by a trustee. In this case there was
11 actually a couple of different trustees before it
12 actually got to the Plaintiff in this case, U.S.
13 Bank as trustee. And we have all of the successor
14 trustees, appointments of trustees, resignations of
15 trustees, to show that it actually went from
16 LaSalle, Wells Fargo to U.S. Bank as trustee.
17 Is it unusual that there’s successor trustees
18 and intervening trustees? No, not at all. Did it
19 change the fact that it’s been in the trust since
20 the time the loan was conveyed by the depositor?
21 That’s exactly where it’s been.
22 In fact, the evidence is going to show that
23 the documents were conveyed right after closing to
24 LaSalle Bank as custodian to maintain the
25 documents. The original documents have been
1 maintained by LaSalle to this day. In fact, only
2 just recently, for purposes of this litigation and
3 this hearing, were those originals actually
4 requested from LaSalle, from their vault, as
5 custodian, so that the special servicer, Midland
6 Loan Servicers, could present them to the Court.
7 And why is it important about these
8 originals? Well, Uniform Commercial Code says we
9 need to look to enforcement of this loan. And
10 that’s what we’re here for today, enforcement of
11 the loan. So, therefore, we look to the transfer
12 of the note, we look to possession of the note, we
13 look to the allonge of the note. That really is
14 going to be the focus of today’s hearing, besides
15 as well as appointment of receiver.
16 But it’s undisputed, there’s not one person
17 in this courtroom who is going to come up on that
18 stand and testify that this loan is not in default.
19 There’s not one person in this courtroom who’s
20 going to testify that they’re not paying
21 assessments as co-op members or that they’re paying
22 rental fees to the co-op. The co-op is collecting
23 on a monthly basis rents and assessments.
24 Why is that important to the Court? Well, we
25 want an appointment of receiver. They’re
1 collecting those rents and they’re not paying the
2 loan. We don’t know what they’re doing with those
3 rents. We haven’t had any financial disclosure at
4 all in this case from the property manager, we
5 haven’t had it from the borrower.
6 Why is it important to know what’s going on
7 with these rents, and where they’re being
8 deposited? Because we have a security interest, a
9 separate security interest apart from the mortgage
10 and the rents and the deposit accounts, and we also
11 have an assignment of the management agreement.
12 The manager is supposed to stand down to the lender
13 in this case. And that’s not what’s happening.
14 We filed this lawsuit back in April of 2010.
15 It’s been almost a year later. Loan’s in default,
16 not receiving any payments whatsoever, not
17 receiving any rents, property manager’s collecting
18 all the rents, and we don’t know where they’re
19 going. And guess what? The property’s going down
20 in value. Not a surprise. Not a surprise in South
22 So the debt is continuing to accrue at
23 default interest, and we’re talking about 10
24 million plus at this point. It’s accruing on a
25 daily basis. The rents are finite. And the
1 property value is doing what? Going straight down.
2 There’s not going to be any ability
3 whatsoever for the loan to be paid unless a
4 receiver comes in, takes control of the rents,
5 takes control of the property and starts trying to
6 pay down on this debt and try to make a go of
7 making this property earn some money and pay,
8 obviously pay off the debt.
9 So, therefore, we think we’re going to be
10 able to show today, loan’s in default, property’s
11 going down in value, that there’s waste, and that
12 turning over security, the security, which is the
13 rents, and so, therefore, we need a receiver.
14 MR. WORTMAN: Your Honor, let’s start out by
15 saying the appointment of a receivership is an
16 extraordinary remedy. And it’s only appropriate in
17 extreme situations. Let’s not make a mistake here.
18 What this entire hearing is about is for U.S.
19 Bank to get their hands on money to pay down a loan
20 and pay off this arrearage. But this situation
21 goes well beyond that. We’re not here for them to
22 win the case outright. We’re here about
23 receivership. And the extreme extraordinary remedy
24 of receivership should only be granted in the
25 rarest of circumstances, since the appointment of
1 receiver is essentially a derogation on the legal
2 owner’s fundamental right to possession of
3 property. That’s pursuant to Alafaya Square
4 Association Limited vs Great Western Bank, 700
5 So.2d, 38, Florida, Fifth DCA 1997.
6 So let’s start with that as the baseline.
7 There’s several different reasons why this request
8 for receivership is inappropriate, and doesn’t meet
9 the necessary test. Restatement as it relates to
10 the appointment of receiver requires that they
11 prove three prongs. The mortgage is in default by
12 another mortgage. Like counsel had stated, there’s
13 nobody here that’s going to testify the mortgage
14 isn’t in default. Again, our obligation rests with
15 Merrill Lynch Mortgage Lending, Inc., and if they
16 were sitting at that table, you know, we’d have a
17 problem in terms of defending this hearing.
18 But secondly, the value of the real estate is
19 inadequate to satisfy the mortgage obligation.
20 We’re going to present testimony through our
21 appraiser that the property is worth in excess of
22 the balance of the mortgage. And if there’s a
23 question as it relates to the value of the property
24 between this battle of the experts, then
25 receivership cannot be appointed. It must be clear
1 and convincing evidence — or, I’m sorry,
2 preponderance of the evidence in favor of them
3 stating, proving that the value of the real estate
4 is inadequate.
5 Lastly, and most importantly, the mortgagor
6 must be committing waste. What that means is the
7 property must be going down in terms of the
8 maintenance and the upkeep. Quite the opposite is
9 happening here. As Your Honor can see, we have a
10 very interested group of residents and occupants
11 who take great pains to participate in the
12 management of the property, the maintenance of the
13 property, the upkeep of the property. This is not
14 a situation where a property’s being abandoned or
15 it’s vacant, there’s nobody in charge of what’s
16 going on over there. They’re a very experienced
17 property management company, and the property
18 manager is doing a fine job of maintaining very
19 high standards for this community, such that the
20 insurance is fully paid, the property taxes are
21 fully paid.
22 We’re going to have testimony presented here
23 from certain members of the Board of Directors, as
24 well as other residents, who are going to attest to
25 the fact that this property is in fine condition.
1 There is not a scintilla of evidence to prove that
2 this property is in the position of, quote,
3 unquote, waste. And without evidence proving that
4 the property is in, quote, unquote, waste,
5 receivership is inappropriate.
6 As Your Honor had already been exposed to
7 this morning, obviously there’s a second prong to
8 this. They must prove that there’s a likelihood
9 that they’re going to succeed on the merits of this
10 case and that they have standing to prosecute this
11 entire action, let alone the appointment of a
12 receivership. There are at least nine reasons why
13 U.S. Bank does not properly own, control and
14 possess this loan. I’ll highlight a few of them
15 for you.
16 This note which they waive around so proudly,
17 said they’ve got it, why are we all bothering to
18 discuss anything further. It’s actually not the
19 note. It’s the note plus something called an
20 allonge. An allonge is a document that is supposed
21 to be used to transfer a note from one party to the
22 next. Under Florida law, an allonge must be
23 affixed to the note. That’s one. And, two, an
24 allonge should only be used when there is
25 inadequate space on the actual promissory note for
1 purposes of endorsing a note and transferring it.
2 We have two problems right out of the gate as it
3 relates to this allonge and this note.
4 We have other testimony which we’re going to
5 read into the record from the deposition of
6 Mr. David Rogers who, again, was a representative
7 of Merrill Lynch Mortgage Lending as well as
8 Merrill Lynch Investors as relates to the date of
9 this allonge. I mean, we have a lot of facts here
10 that suggest there was some strangeness going on
11 involving this trust as well as this note.
12 Particularly, Mr. Rogers testified that he signed
13 these batches of allonge, you may have heard these
14 things out there called robo-signers as it relates
15 to mortgage foreclosure stuff, and I’m not saying
16 he’s, quote, unquote, a robo-signer, but he signed
17 batches of allonge and they were dated sometime
18 thereafter. We will read deposition testimony in
19 the record to that effect.
20 Furthermore, you have two different versions
21 of this allonge floating out there. You have one
22 that is, quote, unquote, endorsed in blank with no
23 specific party identified as far as the recipient
24 of the note. And then you have one with a stamp on
25 it from LaSalle Bank, the original trustee of this
1 mortgage securitized trust which is based in New
2 York. And that particular stamp was not placed on
3 that allonge at the time Mr. Rogers executed the
4 allonge. Mr. Rogers had no present intent at the
5 time he was sitting at the table signing the 400
6 allonges sitting in front of him, no present intent
7 to specifically transfer this note vis-à-vis the
8 allonge to LaSalle Bank. Someone, unknown to
9 everybody else, slapped this sticker on this
10 allonge to say LaSalle Bank. But that’s just the
11 beginning of the problem.
12 Ms. Bednar had referenced something involving
13 a depositor. Very important party here. This
14 Pooling and Servicing Agreement, which again
15 controls this commercial mortgage securitized
16 trust, talks about how the loan has to go from the
17 original lender. Again, the parties here are very
18 confusing to follow and track, and I’ll start with
19 Merrill Lynch Mortgage Lending, that’s the original
20 lender. The depositor is Merrill Lynch Investors,
21 Inc. It’s easy to get that confused.
22 The Mortgage Loan Purchase Agreement is
23 supposed to control this depositor relationship,
24 and one does exist and counsel produced it very
25 recently. But Merrill Lynch Investors, the
1 depositor, never received this loan. The Mortgage
2 Loan Purchase Agreement does not do that. That’s
3 like trying to buy real estate and saying, oh, I
4 bought it because I signed a real estate contract.
5 No, there’s a deed that transfers title to property
6 from one person to the next. The contract itself
7 doesn’t do that. And so the Mortgage Loan Purchase
8 Agreement, it’s inefficient and does not effectuate
9 the transfer to the depositor who then is supposed
10 to deposit it into the trust.
11 Again, we’re talking about standing. This
12 trust is governed by New York law. It is a New
13 York trust, and the language of the Pooling and
14 Servicing Agreement which controls the trust says
15 so, that New York law requires — New York law
16 governs the situation. And if this loan did not
17 make it into the trust, New York law basically
18 provides, which is kind of black letter trust law,
19 that the trustee has no authority to do anything
20 with respect to a corpus that never made its way
21 into the trust. And this loan, for the few reasons
22 that I just recited, and there are several others
23 which we’re going to be going through during our
24 testimony from our mortgage securitization expert,
25 and I’m going to highlight a couple now. Because
1 it did not get in there, U.S. Bank as the, I guess,
2 the final trustee is what I’ll call them, had no
3 authority to do anything with respect to this loan.
4 But, again, if the Court is unsure as to
5 whether or not how these standing arguments all
6 play out, there’s a lot of facts here and a lot of
7 parties. I’ve been living with this case for a
8 long time, so I’ve finally committed these things
9 to memory. So I appreciate the complexity the
10 Court is having to deal with on these issues. But
11 if there is a situation where it’s not clearcut
12 that they’re going to succeed on the merits of this
13 case because of these standing arguments, again,
14 they’re not entitled to receivership. That’s
15 another one of the prongs, they must have a
16 likelihood of success on the merits.
17 Let me just finish up as it relates to the
18 mortgage and these trustees. So many of them out
19 there, it’s very interesting. Merrill Lynch
20 Mortgage Lending assigned the mortgage to LaSalle
21 in May of 2006. Again, it should have been Merrill
22 Lynch Investors, the depositor.
23 The purpose of the depositor, pursuant to the
24 terms of the Pooling and Servicing Agreement, the
25 depositor is supposed to get this loan and then
1 dump it, quote, unquote, into the trust. That did
2 not happen. They skipped past the depositor.
3 Secondly, Wells Fargo replaced LaSalle as the
4 trustee on June 30th, 2008. That’s an important
5 date. Because on September 4, 2008, after LaSalle
6 was out of the picture, when they were no longer
7 trustee, LaSalle, instead of Wells Fargo, assigns
8 the mortgage to U.S. Bank. When Wells is already
9 named the successor trustee and LaSalle, thank you
10 very much, your services are no longer needed as
11 trustee. But instead of having Wells, the new
12 trustee of this trust, assigning the mortgage to
13 U.S. Bank, they use the old replaced LaSalle.
14 Again, another defect as it relates to the
15 ownership, control and possession of this loan.
16 Which maybe we can’t reconcile today, but certainly
17 it calls into question legitimacy of this party
18 standing before this Court asking for the drastic
19 remedy of receivership which will have a dramatic
20 impact on all of the residents that are sitting
21 here and the other residents in the community.
22 So for those reasons, Judge, we ask that you
23 deny their request for receivership.
24 MS. HEYER-BEDNAR: No rebuttal, Your Honor.
25 Now that counsel has stated that he is going to be
1 presenting witnesses, our witnesses are already
2 outside, we would like to invoke the rule for any
3 witnesses plus any co-op members that he intends to
4 call, we may need them as rebuttal, now that I’m
5 just now finding out that he’s going to be calling
6 co-op members to testify. So we certainly would
7 like to invoke the rule.
8 THE COURT: Are you calling co-op owners?
9 MR. WORTMAN: Your Honor, yes. It depends
10 upon what testimony they present.
11 THE COURT: All right.
12 MR. WORTMAN: We have witnesses that we’ll be
13 putting forward. Again, it would depend upon the
14 evidence before us.
15 THE COURT: All right. Well, let me just
16 explain to the audience, who I assume are most, if
17 not all, co-op owners. The rule has been invoked.
18 What that means is, if there’s any chance at all
19 that you may be testifying at this hearing, you’re
20 going to not only need to leave the courtroom but
21 you can’t talk about your potential testimony, nor
22 can you talk about with anyone what’s been going on
23 in this hearing. You are allowed to talk to the
24 lawyers, but that’s it.
25 So do the witnesses know who they are?
1 MR. WORTMAN: We have a rough list, Judge.
2 Again, it’s going to depend upon what the
3 Plaintiff’s present.
4 THE COURT: Well, the bottom line is, if you
5 think that — Unless you’re sure that you’re not
6 going to be testifying, you should leave.
7 MS. HEYER-BEDNAR: I think we need to err –
8 THE COURT: If there’s a chance that you
9 might want to testify, if you’ve been sitting in
10 this courtroom, from this point on Plaintiff’s
11 counsel is going to be objecting because you have,
12 you will have heard the other testimony and that
13 could possibly influence your testimony.
14 So I’ll say it again. If you think that
15 there’s even a possibility that you could be
16 testifying in this case, you’re going to need to
17 leave at this point and not discuss this case with
18 anyone other than the lawyers.
19 MR. WORTMAN: Judge, I do have a list.
20 Should I read it out?
21 THE COURT: Yes.
22 MR. WORTMAN: Mike Blanchette, Louis Mayrand,
23 Tony Longobardo, Sean Troyer, Holly Coyle, David
24 Schriner, Rhonda Blackwell, Henry Rosetto, Pierre
25 Poirier, Arnold Valteco, Rob Lavoie and Ronie
1 Alexander, Sharon Wiest and Bob Wiest.
2 Your Honor, may I take two minutes to run to
3 the restroom, is that possible?
4 THE COURT: Yes. Also, can the parties
5 approach, because I did review this document over
6 the weekend. It should have been forwarded to the
7 parties but… (Handing).
8 It appears to be a letter from somebody. Say
9 the name of the person for the record.
10 MR. WORTMAN: Jeannette Lewellen (phonetic).
11 THE COURT: Okay. So I’m showing it to both
12 sides at this point.
13 MS. HEYER-BEDNAR: Correct.
14 MR. WORTMAN: Okay. Thank you.
15 THE COURT: Okay.
16 MS. HEYER-BEDNAR: Just leave it here for
18 THE COURT: Okay. We’ll take a five minute
20 MR. WORTMAN: Thank you, Judge.
21 (Off the record 2:07 – 2:23).
22 THE BAILIFF: All rise. Circuit Court back
23 in session. Please be seated.
24 THE COURT: All right. The parties are
25 present. We’re back on the record. Let’s proceed.
1 MS. HEYER-BEDNAR: Yes, Your Honor.
2 Plaintiff calls Robert Wiest as an adverse witness.
3 THE BAILIFF: Wiest?
4 MS. HEYER-BEDNAR: Wiest?
5 THE CLERK: Please raise your right hand,
8 ROBERT WIEST,
9 being by the Clerk first duly sworn to testify the
10 whole truth, testified as follows:
11 THE CLERK: Please state your name for the
12 record and spell your last name.
13 THE WITNESS: First name Robert, last name
14 Wiest. W-i-e-s-t..
15 THE COURT: You may be seated.
16 THE WITNESS: Thank you.
17 DIRECT EXAMINATION
18 BY MS. HEYER-BEDNAR:
19 Q. Mr. Wiest, good afternoon.
20 A. Good afternoon.
21 Q. By whom are you employed?
22 A. S&B Services. S&B Consulting Services.
23 Q. And where are they located?
24 A. Pompano Beach, Florida.
25 Q. And what type of services do they provide?
1 A. We are a licensed property management company
2 licensed by the State of Florida.
3 Q. And who are the employees of S&B?
4 A. My wife Sharon and myself.
5 Q. Are you also the officers?
6 A. Yes. She’s President and I’m Vice President.
7 Q. And Sharon holds a license you mentioned?
8 A. That’s correct.
9 Q. Okay. What type of license is that?
10 A. Well, the company holds a license. The
11 company holds a property management license issued by
12 the State of Florida.
13 Q. And does Sharon hold a license individually?
14 A. Yes, she holds a CAM license.
15 Q. I’m sorry?
16 A. A CAM license. Community Association
17 Management license for the last seven years.
18 Q. And you don’t hold such a license; do you?
19 A. Not as of yet, no.
20 Q. And have you ever held such a license?
21 A. No.
22 Q. And what does that license allow you to do in
23 the state?
24 A. Actually allows you to basically perform the
25 functions as defined by state statute as it relates to
2 Q. As a property manager?
3 A. Correct.
4 Q. How long has S&B been a property manager on
5 the Tidewater property?
6 A. Since May of 2008.
7 Q. And what has been your role with respect to
9 A. Basically operating under the direction of
10 the Board, following the day-to-day routines that would
11 normally just — You know, effectively collect the
12 monies, deposit them, take care of issues that the
13 Board has requested me to take care of.
14 Q. And do you also maintain accounts for
15 purposes of the collection of rents for the property?
16 A. Each individual resident has its own account,
18 Q. And as property manager, do you maintain an
19 account on behalf of Tidewater for purposes of
20 collection of the rents?
21 A. I don’t understand your question.
22 Q. When you say you collect the rents, how does
23 the property manager handle the accounting of
24 collecting the rents?
25 A. Basically the rents are due by the 5th of
1 each month. They’re collected and deposited the day
2 that they’re received. They’re posted to their
3 individual accounts acknowledging the fact that each
4 one has been paid for that month.
5 Q. And who handles those deposits?
6 A. I do.
7 Q. And do you maintain any other accounts on
8 behalf of Tidewater?
9 A. Maintain –
10 Q. For depositing?
11 A. We only have three bank accounts. Actually
12 all the money goes into one account.
13 Q. And what about paying expenses, are you as
14 property manager responsible for paying expenses on
15 behalf of Tidewater?
16 A. I was given that responsibility February of
17 last year. Prior to that it was an outside source.
18 Q. And since February of ’09, was it your duty
19 as property manager in paying expenses to pay the loan
21 A. Up until the point where counsel advised us
22 not to.
23 Q. When did you stop making loan payments as
24 property manager?
25 A. I think the last one was May of 2010.
1 Q. How many units do you collect rent or
2 assessments for?
3 A. There’s currently, Tidewater has 125 units.
4 Five of those units are vacant lots. That leaves 120.
5 So basically roughly around 120.
6 Q. And what is the delinquency on assessments
7 for those?
8 A. Less than three percent.
9 MR. KORTE: Objection, Your Honor. This is
10 not relevant.
11 THE COURT: Overruled.
12 THE WITNESS: And those delinquencies
13 basically are in litigation.
14 BY MS. HEYER-BEDNAR:
15 Q. How much is collected on a monthly basis from
16 the Tidewater rents?
17 MR. KORTE: Objection, Your Honor. This is
18 Aid of Execution discovery. I mean, how much is
19 collected by the Plaintiff — by the Defendant?
20 THE COURT: I’m sorry, I don’t understand
21 your objection.
22 MR. KORTE: Objection, Your Honor. Relevance
23 and not germane to the issue at bar, the
25 THE COURT: Overruled.
1 THE WITNESS: Would you restate the question,
3 BY MS. HEYER-BEDNAR:
4 Q. Absolutely. How much rent is being collected
5 on a monthly basis from Tidewater rents?
6 A. Rent or rent and assessments?
7 Q. Rent and assessments, from the 125 lots.
8 A. 120.
9 Q. 120.
10 A. About $77,000, 78,000.
11 THE COURT: I just want to ask you a question
12 to clarify. Was it as of February ’09 or
13 February 2010 that you had the responsibility of
14 paying this money?
15 THE WITNESS: February 2010.
16 BY MS. HEYER-BEDNAR:
17 Q. Let me show you a document that’s been marked
18 as Plaintiff’s Exhibit A for identification. And ask
19 you if you recognize that document, Mr. Wiest?
20 A. Yes, I do.
21 Q. What is it?
22 A. It’s the rent roll.
23 Q. And what’s the, what rent roll is that from,
24 what month?
25 A. Says December 2010.
1 THE COURT: It’s a what?
2 THE WITNESS: Rent roll.
3 THE COURT: Rent?
4 MS. HEYER-BEDNAR: Rent roll.
5 THE COURT: Roll. Okay.
6 BY MS. HEYER-BEDNAR:
7 Q. And what is the monthly rent collected in
8 toto for the month of December 2010?
9 A. A little in excess of 70,000.
10 Q. And would that be about the monthly rent
11 collected since December 2010?
12 A. No. As effective February of 2011 the rent
13 for rental properties went up. That’s why I stated the
14 number on the prefix question as being a higher number.
15 Q. And so how much rent is being collected
16 currently on a monthly basis?
17 A. I think I just told you. I told you around
18 77, $78,000.
19 Q. And do you have any records with you here
20 today to reflect any rent rolls beyond December 2010
21 that are being collected by you as property manager?
22 A. No, I don’t.
23 Q. In fact, you recall being served with a
24 subpoena in this case for production of documents,
1 A. That’s correct.
2 Q. And no documents were ever produced in
3 response to that subpoena; is that correct?
4 A. That’s not true.
5 Q. You produced documents in response to that
7 A. Documents –
8 MR. WORTMAN: Your Honor, are we talking
9 about discovery issues again as it relates to his,
10 his deposition?
11 THE COURT: I don’t know. Where is this
13 MS. HEYER-BEDNAR: Your Honor, this goes to
14 financial disclosure and also goes to the
15 information that he’s now — I’m cross examining
16 him basically as an adverse witness on the
17 information that he’s now soliciting.
18 THE COURT: I’ll overrule the objection.
19 THE WITNESS: Okay. Restate the question
20 again, please.
21 BY MS. HEYER-BEDNAR:
22 Q. And isn’t it true that you did not produce
23 any documents in response to the subpoena duces tecum
24 served on S&B as property manager pertaining to
25 financial records?
1 A. I supplied any documents that were requested
2 by our attorneys.
3 Q. But they were not actually produced in this
4 case to Plaintiff’s counsel or to Plaintiff?
5 MR. WORTMAN: Objection. How is he going to
6 know what is produced by this firm?
7 THE COURT: Speaking objections only. But
8 I’ll sustain that objection.
9 BY MS. HEYER-BEDNAR:
10 Q. You mentioned previously that in April 2010
11 you stopped paying loan payments as part of your
13 A. No, I said May 2010.
14 Q. Okay. May 2010 you stopped making loan
15 payments in connection with this loan. Prior to
16 May 2010, to whom were you making loan payments to?
17 A. Wachovia at that time.
18 Q. Were the payments always made to Wachovia?
19 A. To the best of my knowledge, yes.
20 Q. Whose decision was it to stop making
22 A. Counsel.
23 Q. Was it yours as property manager?
24 A. No.
25 Q. So from May 2010 you’re still collecting
1 rents from the property on a monthly basis, correct?
2 A. Correct.
3 Q. What is the aggregate total of net rental
4 proceeds that you have received as property manager
5 since May 2010?
6 A. Well, take 70,000 and take it times every
7 month up until February of 2010 and take — or, excuse
8 me, 2011. And take the month of February 2011 times
9 77, $78,000 to that. That would give you the total.
10 Q. And what are the monthly expenses?
11 A. Varies.
12 Q. Average? Average monthly expenses?
13 A. 16, $17,000.
14 Q. So you would agree with me that there is a
15 net of the rental proceeds being held by Tidewater?
16 A. That’s correct.
17 Q. Okay. And what is the current net of excess
18 proceeds being held by S&B as the property manager from
19 the rental proceeds?
20 A. S&B is not holding any money.
21 Q. Okay. In the Tidewater account that you’re
23 A. Last check, was about 298,000.
24 Q. Are you aware of a –
25 THE COURT: I’m sorry, last check when? Can
1 you be more specific?
2 THE WITNESS: Yesterday.
3 THE COURT: Yesterday. Okay.
4 BY MS. HEYER-BEDNAR:
5 Q. And what bank account is that, those funds
6 being held?
7 A. Wachovia, or Wells Fargo.
8 Q. And in whose name is that account?
9 A. Tidewater Estates.
10 Q. Are you aware of a demand for turnover of
11 rents made by Midland Loan Services on behalf of U.S.
12 Bank as trustee?
13 A. I’ve heard of it.
14 Q. Do you know if the rents have been turned
15 over to U.S. Bank as trustee as a result of that
17 A. Obviously not.
18 Q. Was it your decision as property manager to
19 not turn over rents?
20 A. No, it was not.
21 Q. Do you know whose decision it was?
22 A. No, I do not.
23 Q. Are there any other monies other than the
24 monies that are being held in the Wachovia account
25 slash Wells Fargo to the tune of $298,000?
1 A. No.
2 Q. Are there any monies that have been deposited
3 into the court registry?
4 A. No.
5 Q. Has there been any accounting provided to the
6 Court or to U.S. Bank as trustee for the accounting of
7 rentals for 2011?
8 MR. WORTMAN: Objection, form of the
9 question. I think it was –
10 THE COURT: Go ahead.
11 MR. WORTMAN: — multiple parts here.
12 BY MS. HEYER-BEDNAR:
13 Q. With respect to the amount of money being
14 collected and expenses being paid, is it true that
15 there has not been any accounting provided to this
16 Court with respect to the rental proceeds for 2011?
17 A. Best of my knowledge, I guess not.
18 Q. Okay. And there hasn’t been any accounting
19 provided to U.S. Bank as trustee with respect to those
20 same proceeds for 2011?
21 A. No.
22 Q. Who approved you to be the property manager
23 in February 2010?
24 A. Actually I was property manager January of
1 Q. And who approved you at that point in time to
2 be the property manager?
3 A. Board of Directors.
4 Q. Anybody else?
5 A. No.
6 Q. So you didn’t get approval from U.S. Bank as
7 trustee to be the property manager?
8 A. S&B Consulting Services approved — is an
9 approved property management company by Wachovia.
10 That’s as a matter of record.
11 Q. But, in fact, was S&B an approved property
12 manager by U.S. Bank as trustee?
13 A. No.
14 Q. Was S&B an approved property manager by
15 Midland Loan Services?
16 A. No.
17 Q. In fact, you’re aware of an assignment and a
18 management agreement assignment as well as a
19 subordination agreement that’s in place with respect to
20 the loan documents signed by Tidewater; are you not?
21 MR. KORTE: Object to the form, Your Honor.
22 THE WITNESS: No.
23 MR. KORTE: It’s compound.
24 THE COURT: Sustained. Rephrase.
25 BY MS. HEYER-BEDNAR:
1 Q. Do you have a management agreement in place
2 with Tidewater?
3 A. Yes, I do.
4 Q. Have you provided a copy of that agreement to
5 U.S. Bank as trustee?
6 A. No.
7 Q. When was that agreement entered into?
8 A. January — February, excuse me, February 1st
9 of 2010.
10 Q. Are you aware that U.S. Bank as trustee has
11 an assignment of all management agreements in place
12 with respect to the Tidewater property?
13 A. No.
14 Q. Did you ever recommend that approval be
15 sought for your management agreement from U.S. Bank as
17 A. No.
18 Q. With respect to any lender that or any
19 trustee that’s been involved with respect to this loan,
20 have you sought any approval?
21 A. No. My contract is with Tidewater Estates.
22 Q. What’s your management fee on a monthly
24 A. It’s an hourly basis.
25 Q. And what’s your hourly rate?
1 A. $22 an hour.
2 Q. And how many hours do you put in a week?
3 A. Varies.
4 Q. How many hours do you put in a month?
5 A. Varies.
6 Q. Approximately?
7 A. On average about 30 hours, 30 hours a week.
8 Q. And have you been collecting management fees
9 since you became property manager in February of ’09?
10 A. Correct.
11 Q. Have you been collecting management fees
12 since the loan — since Tidewater stopped making
13 payments on the loan in May of 2010?
14 A. Yes.
15 Q. Are you aware of the fact that your
16 management fee lien is subordinate to the lien of U.S.
17 Bank as trustee?
18 A. No, I’m not.
19 MR. KORTE: Your Honor, objection. A, as to
20 form and, B, as to facts in evidence.
21 MS. HEYER-BEDNAR: I just asked him if he was
22 aware, Your Honor.
23 MR. KORTE: She referenced the agreement.
24 THE COURT: I’m going to sustain the
1 BY MS. HEYER-BEDNAR:
2 Q. So at no time since May 2010 have you ceased
3 taking management fees from the Tidewater property; is
4 that correct?
5 MR. WORTMAN: Asked and answered, Judge.
6 THE COURT: Sustained.
7 BY MS. HEYER-BEDNAR:
8 Q. How many other properties do you manage?
9 A. Currently right now, as of last week just
10 one. Just this one.
11 MS. HEYER-BEDNAR: No further questions, Your
13 THE COURT: Cross?
14 MR. KORTE: No questions, Your Honor.
15 THE COURT: May this witness be excused?
16 MS. HEYER-BEDNAR: Yes, Your Honor. Thank
17 you. Your Honor, we’d like to go ahead and admit
18 the rent roll from December 2010. Any objections?
19 MR. WORTMAN: (Shakes head).
20 THE COURT: Is that a no?
21 MR. WORTMAN: No objection, Judge.
22 THE COURT: All right. It will be admitted
23 as Plaintiff’s 1.
24 (Plaintiff’s Exhibit Number 1).
25 MS. HEYER-BEDNAR: Your Honor, at this time
1 Plaintiff calls Steve Reynolds to the stand.
2 MR. KORTE: Your Honor, before the witness is
3 sworn, may we have a sidebar?
4 (Bench conference)
5 MR. KORTE: Your Honor, before we began, we
6 invoked the rule and witnesses left. Mr. Reynolds
7 is not a party. He’s a representative from Midland
8 corporation, is not the Plaintiff in this case,
9 Your Honor. I took his deposition. He’s never
10 spoken to the Plaintiff, doesn’t know who they are
11 and happens to work for Midland indirectly.
12 Clearly he’s going to be a witness, not a party in
13 this particular case. If he works for U.S. Bank,
14 that’s one thing, but he doesn’t.
15 MS. HEYER-BEDNAR: Your Honor, Midland is a
16 special servicer of the liens, he’s responsible for
17 the litigation. He’s the asset manager who handled
18 this litigation and has limited Power of Attorney
19 to act on behalf of U.S. Bank.
20 (End of bench conference).
21 THE REPORTER: Judge, I am having a hard time
23 THE COURT: I could just ask Mr. Reynolds to
24 step outside and then continue with the sidebar.
25 MR. KORTE: That’s fine. All the witnesses
1 are out.
2 THE COURT: Okay. Mr. Reynolds, step outside
3 for a minute, and then we don’t need the sidebar.
4 (Thereupon, Mr. Reynolds left the courtroom).
5 THE COURT: All right. Mr. Reynolds has
6 stepped outside. So repeat what you were saying
7 for the record.
8 MS. HEYER-BEDNAR: Okay. In response to
9 their argument, we state that Steve Reynolds is an
10 officer of Midland Loan Services. Midland Loan
11 Services is a special servicer. As special
12 servicer, that’s their job, is to be an asset
13 manager and handle defaulted loans. He has been
14 handling this loan since it went into default on
15 behalf of U.S. Bank as trustee, and, in fact, has a
16 limited Power of Attorney as Midland to be here on
17 behalf of U.S. Bank as trustee.
18 THE COURT: All right. So he is here as a
19 representative of U.S. Bank?
20 MS. HEYER-BEDNAR: Correct. Via Midland.
21 Via the special servicer.
22 MR. KORTE: Your Honor, if I may.
23 THE COURT: Yes.
24 MR. KORTE: It would be one thing to say that
25 he is the representative of U.S. Bank, assuming
1 U.S. Bank actually knew that he existed. I took
2 his deposition, asked him if he’s ever spoken to
3 anybody at U.S. Bank. Never. Ever had a
4 correspondence with them? Never. Any dealings
5 with them? Never. They don’t know anything about
6 it. Quite frankly, U.S. Bank has never spoken to
7 Mr. Reynolds. So he may have a Power of Attorney
8 not specific to him, and it’s kind of, that is not
9 the point. The point is, he would be a witness.
10 As much as the same way Mr. Wiest was a witness,
11 he’s handled the litigation along the way, handled
12 the money along the way, he’s not a party. A party
13 is U.S. Bank.
14 THE COURT: All right. Aside from a ruling
15 on that issue. Let’s say he’s not a party. So
16 what? I understand he was here for the last
17 witness but…
18 MR. KORTE: Well, Your Honor, I mean, again,
19 the question is whether or not the Court’s rules
20 have effect or not. I mean, you ruled him to get
21 out. Did he or did he not? I mean, it’s –
22 THE COURT: Right. And then we’ll skip now
23 to prejudice. He has heard what, the last
24 witness — Did you know that — Did you not know
25 that she was going to call him?
1 MR. KORTE: Your Honor, I took his deposition
2 via telephone because he was unavailable to travel
3 to Florida. So I had no idea what he looked like.
4 Had no idea whether she was going to call him or
5 not. I had no idea who this person was.
6 THE COURT: So you didn’t know the person
7 that was sitting there was Mr. Reynolds; is that
9 MR. KORTE: No, I did not.
10 MS. HEYER-BEDNAR: If I may rebut briefly,
11 Your Honor.
12 THE COURT: Yes.
13 MS. HEYER-BEDNAR: He was presented as the
14 Plaintiff’s representative. When we did a
15 corporate rep depo, Mr. Reynolds was the witness.
16 So they knew that he was acting on behalf of the
18 THE COURT: Okay. But that’s slightly, that
19 is different than what he just represented to the
20 Court. It’s not inconsistent. It’s two different
21 factual issues. But in any event. I don’t know –
22 What is he going to testify to? Is it anything
23 relating to what the last witness said?
24 MS. HEYER-BEDNAR: No.
25 THE COURT: So what prejudice is there?
1 MR. KORTE: Your Honor –
2 THE COURT: Just because a rule — Let’s say
3 the rule has been violated. Then what? It doesn’t
4 mean that that witness is automatically excluded.
5 I have to do an analysis of prejudice.
6 MR. KORTE: Of course, Your Honor. I mean,
7 this is the situation where, I mean, I can’t wait
8 and then spring it on you at the last minute after
9 he’s on the stand. I have to call a sidebar and
10 say, this is what just happened.
11 THE COURT: Right.
12 MR. KORTE: Now, obviously if this comes up
13 or some other issue arises, of course it’s going to
14 be prejudicial to me. I have no idea what
15 Mr. Reynolds is going to testify to relative to
16 today’s testimony. Ultimately he heard Mr. Wiest
17 testify, they invoked the rule for a reason, they
18 didn’t want witnesses hearing it.
19 So clearly he’s now going to be a conduit to
20 that information to anybody else even back at his
21 firm, assuming he was permitted to testify at all.
22 THE COURT: Right. Well, I’m not — I don’t
23 know frankly whether a Plaintiff, if there’s any
24 restriction on who a Plaintiff can designate to be
25 their –
1 MS. HEYER-BEDNAR: Corporate rep.
2 THE COURT: — party representative. Are
3 there? Do they have to appoint as their party
4 representative someone that is an employee of
5 theirs or can they appoint somebody else?
6 MR. KORTE: Your Honor, it would be one thing
7 if — Again, we’re going to look at this ultimately
8 on direct and cross examination, whether he has any
9 appointment thereto. If he never spoke to them, he
10 must have some sort of written appointment as their
11 representative. And that’s my problem, is that
12 he’s never communicated with U.S. Bank so how could
13 U.S. Bank have communicated with him to make him
14 the representative?
15 THE COURT: Well, Plaintiff’s counsel has
16 represented to this Court that at his deposition he
17 was presented to you as the party representative or
18 corporate representative for U.S. Bank. Is that
19 what you said earlier?
20 MS. HEYER-BEDNAR: That’s correct.
21 MR. KORTE: That’s absolutely not the way his
22 deposition was taken, Your Honor. The deposition
23 was of the Plaintiff in this case. Not the
24 Plaintiff’s rep. The Plaintiff. And they produced
25 this person.
1 THE COURT: What’s the difference?
2 MR. KORTE: Well, a huge difference, Your
4 THE COURT: Tell me.
5 MR. KORTE: The Plaintiff is a person who
6 actually works for the company or is a corporate
7 officer. A representative is a person that they
8 appoint. For instance, in a personal injury case,
9 if I’m the injured party, can I let my spouse
10 testify for me? No. I have to testify on my own
11 behalf. If you take –
12 THE COURT: Talk about a corporation.
13 Because I think it’s different.
14 MR. KORTE: Okay. Corporations, no problem.
15 I can take a deposition pursuant to 1.310 (A) which
16 is any party or the B (6) section which is
17 corporate representative.
18 THE COURT: Right.
19 MR. KORTE: But I took it pursuant to A. I
20 wanted the party. I didn’t want their designee. I
21 didn’t want the person with the most knowledge. I
22 wanted their designee. I wanted the person who
23 works there, an actual entity. Because there’s an
24 issue as to whether or not U.S. Bank actually
25 brought this action. That’s my concern. Is that
1 Mr. Reynolds is now self-fulfilling –
2 THE COURT: But wait. That’s a whole other
3 issue. Your objection originally was that the rule
4 had been invoked –
5 MR. KORTE: Correct.
6 THE COURT: — and that unless he’s a
7 corporate representative — Or did I misunderstand
8 you? Your position is even if he’s a corporate
9 representative he should not be allowed to be in
10 the room while there’s testimony?
11 MR. KORTE: Correct, Your Honor. Corporate,
12 a corporate designee, the person with most
13 knowledge, is not the corporate representative as
14 the Plaintiff. They would need to bring an
15 employee of the corporation.
16 THE COURT: Well, that, that gets us back to
17 the original question, which is can a corporation,
18 can a party corporation appoint someone who’s not
19 an employee to be their corporate representative?
20 MR. KORTE: I don’t believe they can.
21 THE COURT: What’s your position?
22 MS. HEYER-BEDNAR: Absolutely false. Just
23 like in mediation, you can appoint a corporate
24 representative to be here. Regardless of an
25 appointment of a designee, he’s here on behalf of
1 Midland Loan Services. Midland Loan Services is a
2 special servicer under the Pooling and Servicing
3 Agreement, listed on all the trustee documents, and
4 there’s a limited Power of Attorney for him to, for
5 Midland to act on behalf of U.S. Bank.
6 THE COURT: I understand. All right. Well,
7 I don’t know if it’s going to be significant or
8 not. Let’s hear what he has to say. Let’s bring
9 him in.
10 THE CLERK: Raise your right hand, sir.
12 STEVEN REYNOLDS,
13 being by the Clerk first duly sworn to testify the
14 whole truth, testified as follows:
15 THE CLERK: Please state your name for the
16 Court and spell your last name, please.
17 THE WITNESS: Steven Reynolds, last name
19 THE COURT: Have a seat.
20 DIRECT EXAMINATION
21 BY MS. HEYER-BEDNAR:
22 Q. Mr. Reynolds, by whom are you employed?
23 A. Midland Loan Services.
24 Q. And where are they located?
25 A. Overland Park, Kansas.
1 Q. And what does Midland Loan Services do?
2 A. Midland Loan Services is a servicer of
3 commercial real estate loans. They act as a master
4 servicer as well as a special servicer, and they
5 service approximately 30,000 loans. You know,
6 collection of payments, payment of expenses, we contact
7 borrowers for rent rolls, operating statements. All
8 things that go into servicing of a loan.
9 Q. And what is your title at Midland?
10 A. I’m a special servicing team lead.
11 Q. And what are your duties?
12 A. In addition to managing four individuals, I
13 have a portfolio of defaulted mortgages which I try to
14 resolve with borrowers and whatnot. But the overall
15 purpose of, you know, my existence as special servicer
16 is to resolve assets that are in default.
17 Q. And how long have you been employed by
19 A. Since March 1997.
20 Q. And are you familiar with the duties of
21 Midland as a special servicer?
22 A. I am.
23 Q. And as special servicer, is Midland appointed
24 to that role?
25 A. They are.
1 Q. And is Midland acting as a special servicer
2 in connection with the Tidewater loan which we’re here
3 about today?
4 MR. KORTE: Objection, Your Honor. Calls for
6 THE COURT: I’m sorry, repeat the question.
7 MS. HEYER-BEDNAR: Is Midland acting as a
8 special servicer in connection with the Tidewater
10 THE COURT: Why is hearsay not admissible,
11 assuming that it is hearsay? It sounds like it
12 might be, but why would hearsay not be admissible?
13 MR. KORTE: Why would hearsay not be
15 THE COURT: Mm-hmm.
16 MR. KORTE: Your Honor, in this particular
17 case it’s a statement made, obviously whether or
18 not they are or are not acting as special servicer
19 for Tidewater, that would not be known to this
20 Defendant, or this witness at the time that it was
21 made, the designation, if it was ever made, because
22 employment is subsequent to the making of that
23 agreement. Or the assignment of this pool.
24 THE COURT: Okay. Well, that’s a point that
25 you can cross examine him. So I’ll overrule the
2 MS. HEYER-BEDNAR: Thank you, Your Honor.
3 BY MS. HEYER-BEDNAR:
4 Q. Mr. Reynolds, is Midland acting as a special
5 servicer in connection with the Tidewater loan?
6 A. They are.
7 Q. And how was Midland appointed as special
9 A. Via the Pooling and Servicing Agreement.
10 Q. Why is a special servicer used in connection
11 with a loan such as Tidewater in a CMBS transaction?
12 A. So long as a loan is in a performing state,
13 you know, monthly installments are being collected,
14 there’s no need for a special servicer. Once there is
15 a special servicing triggering event, then the special
16 servicer’s role is activated to, you know, manage the
17 asset and the default and try to provide resolution to
18 that default all governed by the loan documents.
19 Q. And are you familiar with CMBS loans held in
21 A. I am.
22 Q. And is the Tidewater loan held in a CMBS
24 MR. KORTE: Objection, Your Honor, hearsay
1 THE COURT: Overruled.
2 THE WITNESS: It is.
3 BY MS. HEYER-BEDNAR:
4 Q. And do you know who is the current trustee of
5 that particular trust?
6 MR. KORTE: Objection, again, hearsay.
7 THE COURT: Overruled.
8 THE WITNESS: U.S. Bank.
9 BY MS. HEYER-BEDNAR:
10 Q. And is Midland, as a special servicer,
11 authorized to act on behalf of U.S. Bank as a trustee?
12 A. They are.
13 Q. And how do they have that power?
14 A. There’s a limited power of authority in which
15 U.S. Bank granted Midland, as a special servicer, to
16 act on behalf of U.S. Bank.
17 Q. Mr. Reynolds, I’m going to show you what’s
18 been marked as Plaintiff’s Exhibit C for
19 identification. Ask you if you recognize it?
20 A. I do.
21 Q. And what is it?
22 A. It is the limited Power of Attorney to
23 Midland Loan Services from U.S. Bank.
24 Q. And what’s the date of that Power of
1 A. November 2nd, 2009.
2 Q. And has Midland provided or brought an
3 original certified copy of that limited Power of
4 Attorney here today?
5 A. We have.
6 MS. HEYER-BEDNAR: Your Honor, we’d like to
7 move the limited Power of Attorney marked as
8 Plaintiff’s Exhibit C for identification into
10 MR. KORTE: Hearsay, Your Honor. It’s
11 unauthenticated also.
12 THE COURT: All right.
13 MR. KORTE: Unauthenticated as far as the
15 THE COURT: Well, since one of the issues
16 that I have to address is whether there’s a
17 substantial likelihood that Plaintiff would succeed
18 on the merits at trial, how would you get this into
19 evidence at trial? Because obviously –
20 MS. HEYER-BEDNAR: Your Honor, because we
21 have a certified copy.
22 THE COURT: All right.
23 MS. HEYER-BEDNAR: We’d ask the Court to take
24 judicial notice since it is recorded.
25 THE COURT: Go ahead.
1 MR. KORTE: Recorded in a different state,
2 Your Honor. It’s not recorded here in Florida.
3 The Court doesn’t have the authority to accept a
4 recorded document out of Kansas. They would have
5 to actually have certified copies and get the
6 Secretary of State approval to give that actual
7 recording to the Court. More importantly, Your
8 Honor, even if it is recorded, that doesn’t make it
9 self-authenticating under Florida Statute. Florida
10 Statute requires more. That’s assuming we get to
11 the hearsay argument.
12 THE COURT: So you’re saying that they would
13 need a certificate from the Secretary of State and
14 that would get over your –
15 MR. KORTE: That would only potentially make
16 it, potentially make it non hearsay.
17 THE COURT: Okay.
18 MR. KORTE: The fact is, it’s a double
19 hearsay concern. But let’s talk about
20 authentication for a moment, Your Honor. The
21 authentication in this particular case is a signed
22 document by parties of U.S. Bank and whoever is
23 attached hereto. They need to authenticate that
24 this is what it purports to be. Since there’s
25 nobody here to testify that this is what it
1 purports to be, this document, as to when, where
2 and how it was executed or what terms and
3 conditions it was executed, they would need to have
4 more than that. Most importantly, a statement from
5 the executing party, Melissa Rosenthal, from U.S.
6 Bank saying she did, in fact, do this, or, an
7 admission from us, or, deposition testimony. Aside
8 from that, no authentication can be had.
9 Additionally, Your Honor, the hearsay
10 argument continues to this witness. His knowledge
11 of this can be no greater than the reading of a
12 document. So whether or not he’s read the document
13 doesn’t give him personal knowledge as required
14 under the hearsay exceptions, Your Honor. He had
15 to have perceived at the time of the making, he was
16 not a party to the transaction, didn’t sign it or
17 execute it, didn’t work at U.S. Bank at the time,
18 and also didn’t work at Midland at the time, to be
19 a party hereto. So he can be perceived neither.
20 MS. HEYER-BEDNAR: Your Honor, quick
21 rebuttal. He did work at Midland, he’s been at
22 Midland since ’97.
23 THE COURT: Right.
24 MS. HEYER-BEDNAR: This was executed in ’09.
25 He is the recipient, Midland is the recipient of
1 this Power of Attorney. It was within the files,
2 the books and records of this witness. This
3 witness obtained a certified copy from his own
4 records and brought it to Court here today. And it
5 is a certified copy from the clerk. Not just
6 anybody. It’s the clerk from recording in Kansas.
7 Just because it’s a different jurisdiction — If
8 opposing counsel wants to dispute the authenticity
9 of it, he’s certainly entitled to do so. But
10 because it’s a certified copy, this Court is
11 entitled to take judicial notice.
12 THE COURT: I agree with Plaintiff’s counsel
13 that because it’s a certified copy from the clerk’s
14 office in Kansas, that would be sufficient for the
15 authenticity of what it is. But as for the –
16 Yeah, I guess, as for the hearsay…
17 MR. KORTE: Your Honor, he’s not been
18 qualified as the records custodian under the
19 hearsay exception. Producing documents by a non
20 records custodian — The only way he can get it in,
21 tipping him off, is he’s the records custodian,
22 which he’s not been proffered as.
23 THE COURT: And you have to tip him off. You
24 need to let both know.
25 Can you lay the foundation that he’s a
1 records custodian of this document?
2 BY MS. HEYER-BEDNAR:
3 Q. Certainly. Mr. Reynolds, are you familiar
4 with Midland’s records, on how they keep records
5 from –
6 THE COURT: One second. I’m sorry. Okay.
7 Proceed. I’m sorry.
8 BY MS. HEYER-BEDNAR:
9 Q. Mr. Reynolds, are you familiar with how the
10 records are kept at Midland with respect to Powers of
11 Attorney from various trustees?
12 A. I am.
13 Q. And are you familiar with the records that
14 have been retained by U.S. Bank as trustee and the
15 powers that they have given to Midland as special
17 A. I am.
18 Q. And how did it come about that you obtained a
19 certified copy of the limited Power of Attorney?
20 A. I walked upstairs to our legal counsel, asked
21 for this record and they produced it.
22 Q. And are those records maintained and kept in
23 the regular course of business at Midland on site?
24 A. They are.
25 MS. HEYER-BEDNAR: Your Honor, we believe
1 that’s sufficient foundation for the limited Power
2 of Attorney in to Midland Loan Services of this
3 certified copy.
4 MR. KORTE: I’d say, no, it’s not, Your
5 Honor. That is not a requirement of the records
6 custodian. More importantly, pulling it from your
7 lawyer? Clearly is not a records custodian.
8 THE COURT: Right. It’s not a records
9 custodian. But, again, I need to look at the
10 substantial likelihood of succeeding on the merits.
11 Is Plaintiff’s counsel stating that — I
12 don’t know if this witness knows who the records
13 custodian of this type of record would be, and how
14 do we know that this document is, is part of the
15 business records of Midland? I mean, he asked –
16 He testified he went to the lawyer and said, can I
17 have the Power of Attorney, but we’re missing a
18 link. Which at trial could be possibly completed.
19 But that’s an impediment.
20 You need somehow to show that this document
21 is a business record that has been kept in the
22 normal course of Midland’s business. And the fact
23 that this witness went and asked the lawyer for a
24 Power of Attorney, that doesn’t necessarily mean
1 BY MS. HEYER-BEDNAR:
2 Q. Do you know how this limited Power of
3 Attorney is kept at Midland?
4 A. I do.
5 Q. And how is it maintained?
6 A. It’s maintained in a file which contains all
7 of the Power of Attorneys that we have for all the
8 trusts that we service.
9 Q. And is it done in the regular course of
11 A. It is.
12 Q. And is there a regular practice to maintain
13 certified copies of all limited Powers of Attorney to
15 A. It is.
16 MS. HEYER-BEDNAR: Your Honor, I think that’s
17 a sufficient foundation.
18 MR. KORTE: Your Honor, it may be bear
19 minimum to create a foundation given the coaching
20 the witness has had from expert opinions on the
21 issue. But more importantly, Your Honor, it
22 doesn’t change his testimony. He didn’t do that.
23 He went and got it from the lawyer. End of story.
24 Whether it was maintained or not maintained. He
25 didn’t testify — I’m hoping I’m not going to
1 educate him one more time — that he went to the
2 records, pulled it in the ordinary course and
3 scope, got it out. He didn’t say that. He said, I
4 went to the lawyer, asked him to get it for me. He
5 can’t testify whether this document was contained
6 in that file on that day. He’s not testified to
7 that and he has not testified to that.
8 THE COURT: Right. Well, has he seen this
9 document at any other time? You could ask him
10 about that. I mean, just so it’s clear, when
11 objections are made as to foundation, the party
12 making the objection has to be specific about the
13 lack of foundation so that it can be cured by
14 opposing counsel. So that’s why I’m forcing you to
15 be specific.
16 Okay. Go ahead. He would need to say that
17 he recognized this document, not simply that, you
18 know, the first time he saw it was when he asked
19 the lawyer for it. Has he seen it before and does
20 he know that it’s kept in the normal course of
21 business? And how does he know that?
22 MR. KORTE: Your Honor, at sidebar, the
23 coaching happening here is really tainting the
24 evidentiary record. I mean, you’re essentially
25 helping counsel help her witness to overcome my
2 THE COURT: Well, I’m not — What I’m doing
3 is seeing if this witness can lay the proper
4 foundation, which I don’t see anything improper in
5 that, in doing that. I expect the witness to tell
6 the truth one way — You know, he needs to tell the
7 truth. And if he has it — If the first time he’s
8 ever seen this document is when he asked the lawyer
9 for it, then that’s the truth.
10 BY MS. HEYER-BEDNAR:
11 Q. Mr. Reynolds, are you familiar with limited
12 Powers of Attorney that are issued in favor of Midland?
13 A. I am.
14 Q. And is this the first time you’ve ever seen
15 this document here today?
16 A. No, it is not.
17 Q. And have you seen this document prior to this
19 A. I have.
20 Q. And how long have you been utilizing this
21 limited Power of Attorney in acting on behalf of U.S.
22 Bank as trustee?
23 A. Ever since this matter came, it fell on my
24 desk as a, you know, defaulted mortgage.
25 Q. And are you familiar with how these limited
1 Powers of Attorney are maintained at Midland?
2 A. I am.
3 Q. And do you have access to those records?
4 A. Only when I go and talk to my counsel. I
5 don’t have direct access to them.
6 Q. But you have access when you request it?
7 A. Right.
8 Q. And how are all the limited Powers of
9 Attorney maintained at Midland?
10 A. In the same vault that this one was
11 maintained in.
12 Q. And was this limited Power of Attorney
13 prepared at or about the time that it was executed to
14 your knowledge?
15 A. To my knowledge it was.
16 THE COURT: I hear some question in your
17 voice. What do you mean by that, to my knowledge?
18 What does that mean?
19 THE WITNESS: Well, to my knowledge this was
20 executed back in November of 2009. It was recorded
21 in November of 2009.
22 THE COURT: But you have no personal
23 knowledge of that, right?
24 THE WITNESS: No, no. I didn’t — You know,
25 counsel and our paralegals handle all the limited
1 Power of Attorneys and they keep them on file. And
2 when the special servicer runs into a situation
3 such as this, we go request it. But I can’t walk
4 to a file and pull it myself. I have to go through
6 BY MS. HEYER-BEDNAR:
7 Q. And has the limited Power of Attorney been
8 maintained at Midland in the regular course of business
9 since it received it from U.S. Bank as trustee?
10 MR. KORTE: Objection, Your Honor, hearsay.
11 THE COURT: I’m sorry, what was the question?
12 BY MS. HEYER-BEDNAR:
13 Q. Midland has maintained this original limited
14 Power of Attorney in its original books and records
15 since it received it from U.S. Bank as trustee?
16 MR. KORTE: Hearsay.
17 THE COURT: Sustained. Unless he, the
18 witness has personal knowledge.
19 THE WITNESS: I don’t have personal knowledge
20 as to when this arrived at Midland. But it has
21 been in Midland’s record since, you know, November
22 of 2009.
23 THE COURT: And I will let the record reflect
24 that that last statement by the witness is based on
25 assumption and hearsay, that he has no personal
1 knowledge of that. Am I right?
2 THE WITNESS: You’re right.
3 THE COURT: Okay. Well, I don’t know that,
4 if we were at a trial that I would admit that. I,
5 I would probably sustain counsel’s objection at
6 trial. But that being said, I think that this
7 technicality, if you will, could be overcome at a
8 trial. You know, I’m not going to say how, but I
9 think it’s obvious.
10 But to me this is similar in a criminal case,
11 let’s say, if a police officer wanted to — if the
12 state tried to admit a lab report through a police
13 officer and the police officer would say, yeah, I
14 know that these lab reports are kept in the normal
15 course of the chemist, but you need, you need
16 another party there to actually, that has personal
17 knowledge that this document is kept in the normal
18 course and when they first received it and that
19 sort of thing.
20 MR. KORTE: If I may, Your Honor.
21 THE COURT: Yes.
22 MR. KORTE: My understanding was this was an
23 evidentiary hearing for today, not a trial on the
24 receivership for trial aspect.
25 THE COURT: Right. But I am not — I am
1 supposed to rule on the substantial likelihood of
2 success on the merits, right?
3 MR. KORTE: Given the evidence that’s
4 admissible at the time, today.
5 THE COURT: But the fact that — I don’t know
6 if you have any case law or authority that governs
7 this Court as to whether hearsay’s admissible at a
8 hearing today.
9 MR. KORTE: Hearsay is never admissible, Your
10 Honor, under any evidentiary basis, ever.
11 THE COURT: Motions to Suppress?
12 MR. KORTE: There’s no such thing as Motions
13 to Suppress in civil court, Your Honor.
14 THE COURT: True. But you were saying there
15 were –
16 MR. KORTE: In civil court, I apologize. I’m
17 not a criminal lawyer. Your Honor, I have the
18 statute, if I may approach.
19 THE COURT: Okay.
20 MR. KORTE: Under the statute, Your Honor,
21 there are no such exceptions under any evidentiary
22 basis for the admission of hearsay on any hearing.
23 Especially evidentiary ones. In fact, the case law
24 is pretty clear.
25 THE COURT: Well, 90.801 is the basic hearsay
1 exception which applies in criminal court as well,
2 and yet we all know that Motions to Suppress
3 hearsay is admissible and there are other types of
4 evidentiary hearings where the rules of evidence
5 are relaxed pursuant to the Court’s — well, I
6 wouldn’t say Court’s discretion. But I know that
7 there are other evidentiary hearings where –
8 MR. KORTE: Like small claims?
9 THE COURT: That, and also in circuit court.
10 I can’t off the top — You know, you could be
11 right, maybe in the civil division there are no
12 hearings where the rules of evidence are relaxed.
13 I don’t know.
14 MR. KORTE: Your Honor, this is a substantial
15 issue. I would ask the Court to allow us to recess
16 and brief this issue so the Court can have it. I
17 mean, the problem is –
18 THE COURT: We don’t need to — I’ll just
19 defer on this.
20 MS. HEYER-BEDNAR: Your Honor, in fact, we
21 can go ahead and offer to admit it, not for the
22 truth of the matter asserted but to the effect on
23 the listener because of his reliance on it in
24 acting as the servicer in this matter.
25 THE COURT: We can — Let’s move forward. If
1 it turns out that hearsay under no circumstances
2 would be admissible, then, I’m going to not regard
3 it. You know, I’m a judge, I’m not a juror, I can
4 disregard evidence later on.
5 MR. KORTE: Of course.
6 THE COURT: All right. So let’s move
8 BY MS. HEYER-BEDNAR:
9 Q. Mr. Reynolds, are you familiar how a CMBS
10 loan transaction works?
11 A. I am.
12 Q. And do you have a chart to assist you that
13 you’ve utilized for purposes of CMBS transactions?
14 A. I do.
15 Q. Do you have it in front of you?
16 A. I don’t.
17 MS. HEYER-BEDNAR: Your Honor, I’m showing
18 the witness what has been marked as Plaintiff’s
19 Exhibit B for identification, which is the chart we
20 utilized in opening, and it’s only for
21 demonstrative purposes. Will not be admitted.
22 BY MS. HEYER-BEDNAR:
23 Q. Mr. Reynolds, in utilizing the chart in front
24 of you, can you please describe how a CMBS transaction
1 A. Sure. Loans originated by lenders in various
2 banking institutions, in this case Merrill Lynch, you
3 know, take any bank, USA, that provides a loan to a
4 borrower, and that’s represented by the buildings
5 across the top of this diagram. Once, you know, the
6 loans are made by the individual lenders — There are
7 numerous loans by each of the individual lenders, those
8 lenders then take these loans, enter into what’s called
9 a Mortgage Loan Purchase Agreement with a depositor.
10 So each lender has a separate Mortgage Loan Purchase
11 Agreement, or an MLPA as its referred to, with the
12 depositor. Once that agreement is memorialized, all
13 the loans are then funneled through the depositor and
14 then they’re placed into a trust.
15 The Tidewater matter was originally, the
16 original lender was Merrill Lynch Lending. That
17 filtered into the depositor Merrill Lynch Investors.
18 The purpose of the depositor is to establish the trust,
19 elect a custodian to hold the original loan documents.
20 You know, and once that is all taken care of it’s
21 memorialized in a Pooling and Servicing Agreement.
22 Under that agreement, there’s a named master
23 servicer, a named special servicer, and in this matter
24 Midland was named the special servicer. The trustee is
25 also named. In this matter it’s LaSalle Bank.
1 Beyond that, once the securitization is
2 closed, the master servicer is tasked with collection
3 of, you know, monthly payments, you know, escrow for
4 taxes, insurance, all the things that go into servicing
5 a loan. If there is a triggering event for a defaulted
6 loan, it’s then, you know, moved over into the special
7 servicing atmosphere. And once we get acknowledgment
8 of the triggering event, we then, in turn, get in touch
9 with borrowers to try to resolve the default.
10 Q. “We” being Midland?
11 A. “We” being Midland. I’m sorry. But that’s
12 the general scope of a CMBS transaction.
13 Q. Are the originator of the loans and the
14 depositor normally different parties in a CMBS
16 A. They are usually different parties.
17 Q. And why is that?
18 A. Because the depositor does not have the reach
19 to –
20 MR. KORTE: Objection, Your Honor. This is
21 all expert testimony. I mean, ultimately he’s not
22 been proffered as an expert on CMBS transactions,
23 you know, at all. Not qualified as to how this
24 stuff works and the relationship to the parties.
25 THE COURT: Well, I don’t know whether –
1 MS. HEYER-BEDNAR: Your Honor, in response.
2 THE COURT: — the question calls for expert
3 testimony or not. But why don’t you lay the
4 foundation for his knowledge of this area.
5 BY MS. HEYER-BEDNAR:
6 Q. Mr. Reynolds, how long have you been employed
7 by Midland?
8 A. Since 1997.
9 Q. And how long have you been involved in CMBS
10 loan transactions?
11 A. Since 1998.
12 Q. And are you familiar with the origination
13 loans and the deposit of loans into trusts and how it
14 works with the various parties?
15 A. I am.
16 Q. And that’s based on your experience in the
18 A. It is. In ’98 I began as an underwriter on
19 our loan origination side. So I have some experience
20 in actually going out to underwrite loans, meet with
21 borrowers, make sure the property is satisfactory. I
22 assisted with the closing of those loans. Later on in
23 my career with Midland I was a loan originator, so I
24 used to make these loans.
25 You know, and beyond the loan closing and
1 then getting placed into the trust, now I’m actually on
2 the special servicing side. So I’ve seen the other
3 side of these loans once they’ve gone through the
4 process of loan origination, institution into the
5 trust, and then coming out to, you know, name the
6 master servicers and special servicers. So I’ve worked
7 on both sides of, you know, a CMBS transaction.
8 MS. HEYER-BEDNAR: Your Honor, we think the
9 witness is qualified. Certainly not as an expert.
10 He’s merely laying the foundation of the, by fact
11 of the various roles of the parties.
12 THE COURT: From his experience working for
13 Midland. So I’ll overrule the objection and that’s
14 how I’m perceiving it. Proceed.
15 BY MS. HEYER-BEDNAR:
16 Q. Who appoints the trustee and servicer for the
18 A. The depositor.
19 Q. And who appoints the custodian?
20 A. The depositor.
21 Q. And with respect to the Tidewater loan, do
22 you know who appointed the custodian?
23 A. That would have been Merrill Lynch Investors,
25 Q. And is that the depositor?
1 A. That is the depositor.
2 Q. And who was the custodian that was appointed?
3 A. LaSalle Bank.
4 Q. And how do you know that?
5 A. Per the Pooling and Servicing Agreement.
6 Q. Is Midland a party to the Pooling and
7 Servicing Agreement?
8 MR. KORTE: Objection, Your Honor, calls for
9 hearsay as referenced in the PSA.
10 THE COURT: It is hearsay.
11 MS. HEYER-BEDNAR: Your Honor, I wasn’t
12 asking him about the content of it, just how he
13 became involved with the loan. I’m not asking him
14 to testify about the PSA. We certainly have –
15 THE COURT: Right. But he just said that he
16 knows something happened because of what was in the
17 Pooling and Servicing Agreement. So that’s
19 BY MS. HEYER-BEDNAR:
20 Q. When does a custodian generally obtain
21 custody of original loan documents?
22 A. Shortly after the loan closing.
23 Q. And with respect to the Tidewater loan, do
24 you know when LaSalle approximately obtained the
25 original loan documents from the originator Merrill
1 Lynch –
2 MR. KORTE: Foundation, Your Honor.
3 BY MS. HEYER-BEDNAR:
4 Q. — Mortgage?
5 MR. KORTE: I’m sorry.
6 THE COURT: Sustained. Well, he can answer
7 that question and then he has — then you have to
8 lay a foundation if you want to go further.
9 MS. HEYER-BEDNAR: Okay.
10 THE WITNESS: The transfer occurred –
11 THE COURT: I’m sorry. So is the answer yes
12 or no, do you know when LaSalle –
13 THE WITNESS: Yes, I do.
14 THE COURT: All right. Lay the foundation,
15 then, for his knowledge.
16 BY MS. HEYER-BEDNAR:
17 Q. And how do you know that?
18 A. In accordance with the original loan file,
19 there’s a letter stating that, you know, per Fed Ex
20 delivery on or about September 14, 2005, in
21 post-closing procedures the documents, the original
22 documents were transferred to LaSalle Bank as the
24 MR. KORTE: Your Honor, move to strike for
1 BY MS. HEYER-BEDNAR:
2 Q. And are those records part –
3 THE COURT: Wait. I’m sorry. He’s made an
4 objection. It is based on hearsay, so I’ll
6 BY MS. HEYER-BEDNAR:
7 Q. Are the records from the documentation
8 transferred to LaSalle as custodian maintained as part
9 of the records of Midland Loan Services?
10 A. They are.
11 Q. And have they been maintained from the
12 beginning when Midland was appointed as a special
14 A. They have.
15 Q. And where are the original loan documents
17 A. With the custodian, LaSalle Bank.
18 Q. And who does LaSalle hold those documents on
19 behalf of?
20 A. The trust.
21 MR. KORTE: Foundation, Your Honor.
22 THE COURT: Okay. Sustained.
23 BY MS. HEYER-BEDNAR:
24 Q. Do you currently have the original loan
25 documents executed by Tidewater?
1 A. I do.
2 Q. Who are the parties again to the PSA –
3 MR. KORTE: Hearsay, Your Honor.
4 BY MS. HEYER-BEDNAR:
5 Q. — if you recall?
6 THE COURT: Wait. Hold on. I’m just looking
7 at 90.803, hearsay exceptions, and there is an
8 exception number 14: “Records of documents
9 affecting the interest in the property. The record
10 of a document purporting to establish or affect an
11 interest in a property as proof of the contents of
12 the original note recorded or filed”… Could that
13 apply in this case?
14 As well as number 15? “Statements and
15 documents affecting an interest in property.”
16 MR. KORTE: Your Honor, in this particular
17 case, they’re talking about more than likely real
18 property. This is interest in an actual
19 collateralized note or mortgage securitized. As
20 we’ve discussed before, this is a Pooling and
21 Servicing Agreement and Powers of Attorneys we’re
22 discussing. We’re not talking about the underlying
23 note or mortgage content itself, which we’ll deal
24 with when we get there. We’re actually talking
25 about the PSA, which we’ve been dancing around for
1 30 minutes now.
2 THE COURT: Right.
3 MR. KORTE: Without its admittance.
4 THE COURT: And is this a public record?
5 It’s not a public record.
6 MS. HEYER-BEDNAR: Yes, it is. It’s on the
7 SEC website, Your Honor, Pooling and Servicing
9 MR. KORTE: Your Honor, that is not a public
10 record. Government brochures, things recorded with
11 the county, those are considered to be public
12 records. Publications by the federal government,
13 tax return, instructions, that kind of stuff. In
14 fact, the DMV handbook on how to drive is a public
15 record. A document filed on a private website,
16 SEC, which is not a public entity, accessed through
17 EDGAR, which is also not a public entity, is not.
18 More importantly, Your Honor, they haven’t
19 tried to admit that document. They’re talking
20 about everything else but the PSA without actually
21 printing it out and putting it up on the table and
22 saying this is the PSA.
23 THE COURT: All right. Would you object, do
24 you have any objection if they do that?
25 MR. KORTE: Absolutely, Your Honor. But
1 we’ll get to that one.
2 THE COURT: All right. Okay. What was the
3 last question?
4 (Whereupon, the reporter read
5 from the record as requested).
6 THE COURT: All right. That’s hearsay.
7 BY MS. HEYER-BEDNAR:
8 Q. Is Midland a party to the PSA?
9 A. They are.
10 MS. HEYER-BEDNAR: Trying to lay the
11 foundation, Your Honor.
12 THE COURT: All right. He’s answered that
14 BY MS. HEYER-BEDNAR:
15 Q. Mr. Reynolds, I’m showing you what has been
16 marked as Plaintiff’s Exhibit D for identification and
17 ask you if you recognize that document?
18 A. I do.
19 Q. And what is it?
20 A. It’s the Pooling and Servicing Agreement.
21 Q. And is it executed by Midland?
22 A. It is.
23 MR. KORTE: Your Honor –
24 BY MS. HEYER-BEDNAR:
25 Q. Do you recognize –
1 MR. KORTE: — we need a sidebar immediately.
2 THE COURT: Okay. Can I just have the
3 witness step outside? It’s easier.
4 MR. KORTE: Yes, Your Honor.
5 MS. HEYER-BEDNAR: Well, Your Honor, I –
7 THE COURT: Step outside, Mr. Reynolds.
8 (Thereupon, Mr. Reynolds left the courtroom).
9 MR. KORTE: May I begin, Your Honor?
10 THE COURT: Okay.
11 MR. KORTE: We began this entire day talking
12 about discovery.
13 THE COURT: Right.
14 MR. KORTE: And the fact that we couldn’t get
15 an executed copy of the PSA. They couldn’t have
16 it, they promised and swore that in deposition we
17 got everything they had. We did not get an
18 executed copy. Lo and behold in her briefcase is
19 an executed copy of the PSA she just stuck in front
20 of that witness.
21 THE COURT: Okay.
22 MS. HEYER-BEDNAR: May I refer to Bate stamp
23 numbers, U.S. Bank 632 through 938 that were
24 produced to your office by e-mail with the entire
25 document production.
1 MR. KORTE: Your Honor, a discussion this
2 morning was we didn’t have an executed copy of the
3 document that they claim to have — couldn’t get.
4 THE COURT: Okay. I don’t recall, are you
5 saying that occurred on the record this morning?
6 MR. KORTE: This morning.
7 THE COURT: Addressed to this Court?
8 MR. KORTE: Yes, I am. You ordered them,
9 Your Honor, in your previous hearing to produce a
10 copy of the PSA if they had it. And counsel said,
11 get it off the internet, that’s the best we’ve got.
12 We’ve got an executed copy we sent to you.
13 THE COURT: Right.
14 MR. KORTE: Or an execution copy. We said we
15 never got the executed with exhibits or
16 attachments. And now there’s an executed copy
17 sitting up on the desk.
18 THE COURT: All right. And she’s saying she
19 e-mailed it to you; is that correct?
20 MS. HEYER-BEDNAR: That’s correct. As Your
21 Honor recalls at that hearing, you said give them
22 the unexecuted and then go get and give them the
23 executed. We gave them both, which is that thick,
24 by e-mail. In fact, I personally did the e-mail
25 myself, and it kept getting kicked back. So I
1 actually had to break it up in chunks because it’s
2 so voluminous.
3 MR. WORTMAN: Your Honor, this is our own
4 internal document, lists every single document that
5 was produced by Ms. Bednar’s office, and there’s a
6 gap as it relates to the 632 Bate stamp going
7 forward. I’m not saying Ms. Bednar didn’t attempt
8 potentially to PDF it and e-mail it to us, but we
9 never received it. If we can take a look at it,
10 Judge, maybe we can cut through this quickly.
11 THE COURT: All right. Any objection to them
12 looking at it?
13 MS. HEYER-BEDNAR: Absolutely not.
14 MR. KORTE: May I approach, Your Honor?
15 THE COURT: Yes.
16 MR. KORTE: Your Honor –
17 THE COURT: Yes.
18 MR. KORTE: — this appears to be different
19 from any document ever previously produced to us.
20 It includes executions but we don’t know what other
21 pages are contained therein. We’ve never received
22 the documents. They were never sent to us as far
23 as this particular one. And, in fact, this is the
24 exact scrimmage we had this morning over an
25 executed copy of the document.
1 THE COURT: All right. Well, Plaintiff’s
2 counsel’s represented that she e-mailed this exact
3 document to you. Do you know the date of that
4 e-mail by any chance?
5 MS. HEYER-BEDNAR: No, Your Honor, I don’t.
6 But I know we gave notice of filing at the same
7 time notice of production so that it was in the
8 Court file at the same time reflecting the document
9 by Bate stamp number.
10 If there was a gap, for whatever reason, that
11 they didn’t receive, certainly they could have
12 called and said I’m missing X numbers.
13 THE COURT: All right.
14 MR. WORTMAN: Your Honor, all this would have
15 been avoided if they actually delineated what
16 documents they were producing, instead of just
17 sending us this mass of documents. Like I was
18 saying this morning, the rule calls for a
19 delineation of documents and what documents are
20 responsive to what request. If they actually
21 stated, executed copy of Pooling and Service
22 Agreement pursuant to response, request number
23 seven, we wouldn’t be going through this dance.
24 THE COURT: All right. Did you list the
25 titles of each document you were e-mailing over?
1 MS. HEYER-BEDNAR: Well, no, Your Honor. But
2 they were broken out. It’s not like, it’s not like
3 we had a bunch of documents all combined. Each
4 attachment to the e-mail was a separate document.
5 THE COURT: All right. I’m going to take
6 Plaintiff’s counsel at her word that she did this.
7 The fact that you may not have received a portion
8 of it –
9 MS. HEYER-BEDNAR: I mean, the executed copy
10 is the same content as the one that’s on the SEC’s
11 website, which we also produced. In fact, they
12 used them in the depositions.
13 THE COURT: All right.
14 MR. KORTE: Your Honor, if I may approach.
15 THE COURT: Yes.
16 MR. KORTE: I’m going to hand you what we
17 received. That’s the execution copy, a single
18 page, page 189 of her Bate stamp, not where she
19 claims that it actually landed. We also received a
20 separate incomplete copy at Bates 1332. If I may
21 approach, Your Honor.
22 THE COURT: Sure.
23 MR. KORTE: Additional pages to the PSA.
25 THE COURT: Okay. And I see a Post-It note
1 on here saying incomplete copy. So when you
2 noticed that it was an incomplete copy, did you
3 contact counsel to get the rest of it?
4 MR. KORTE: No, Your Honor. That’s what they
5 claim is all they had. They gave us everything
6 they had. If they only had an incomplete copy,
7 then they only had an incomplete copy. Our
8 contention is they’re sending us everything they’ve
9 got. They’ve claimed they’ve produced documents
10 under a Bate stamp situation on different numbers.
11 We’ve got the Bate stamps they’ve sent to us,
12 nowhere around where counsel is now claiming that
13 she sent it to us at 600.
14 THE COURT: Well, again, this is something
15 that’s easily checked into, because if she e-mailed
16 it by PDF, then there’s proof of that, of exactly
17 what she e-mailed to you, the entire contents.
18 MR. KORTE: Well, perhaps. We never received
19 it. I mean, if I said I sent something, it’s
20 sitting in my outbox, I have no idea. The time,
21 date, location. I mean, it’s easily checked on.
22 THE COURT: Right. That’s what I’m talking
24 MR. KORTE: But the realty is what’s produced
25 to us at two different locations in Bate stamp
1 numbers are two different parts of the PSA.
2 THE COURT: Well, again, I –
3 MR. KORTE: We would have taken the
4 deposition of anybody who signed this thing, which
5 we tried to do, take depositions of anybody who
6 signed documents. Mr. Rogers, we took him,
7 Mr. Reynolds, we took him. There’s four or five
8 other people listed in that PSA, we would have
9 clearly taken their deposition and asked them when,
10 where and how they signed this document.
11 May I approach, Your Honor?
12 THE COURT: Yes.
13 MR. KORTE: So clearly we’re prejudiced in
14 the ability to actually have cross-examined any of
15 these people who they’ve brought their testimony
16 forward for the Court.
17 THE COURT: Well, that assumes she did not
18 send you those materials. The fact, if she sent
19 them to you or e-mailed them to you and you didn’t
20 open it for some reason or somehow it — I can’t
21 imagine how if she e-mailed them to you you
22 wouldn’t have gotten them.
23 MR. KORTE: Well, let’s start with the easy
24 part. E-mail is not acceptable under the Rules of
25 Civil Procedure. Fax and mail are the only two
1 procedures under the Rules of Civil Procedure. So
2 her e-mail is an ineffectual presentation. If she
3 has any proof today that she mailed them out to us,
4 I’d love to see it, because we never got anything
5 by mail.
6 MS. HEYER-BEDNAR: Your Honor, the notice of
7 production, there are three of them. The original,
8 a supplemental and a second supplemental. Each of
9 them delineate responsive to the discovery request
10 and provide the specific Bate stamp numbers. And
11 the reason that they’re claiming a discrepancy is
12 because they’re looking at the particular Pooling
13 and Servicing Agreement that was from the website,
14 which we produced, and then the executed copy.
15 THE COURT: Okay. Is there any discrepancy
16 between the two of them; is there?
17 MS. HEYER-BEDNAR: No. That’s why we
18 produced both of them.
19 MR. KORTE: We don’t know. I’m just seeing
20 it for the first time.
21 THE COURT: Go ahead and check. Tell me if
22 there’s any discrepancy.
23 MR. KORTE: It’s 700 pages, Your Honor. It
24 will be hard to pick it out in a shot, but, sure.
25 THE COURT: Plaintiff’s counsel’s saying it’s
1 exactly the same.
2 MS. HEYER-BEDNAR: For the record, Your
3 Honor, our notice of production was mailed out on
4 January 24, 2011.
5 MR. WORTMAN: Judge, for the record, the
6 notice of production just, lists Bate stamp numbers
7 one through 1,563. So it’s not like it’s broken
8 down Bate stamp 680 through 690 is this document.
9 It’s just, again, the mass production of documents
10 and the mass grouping of Bate stamps. So it’s
11 just — This is the problem that we’re
12 experiencing. It’s a mess as it relates to
14 THE COURT: I don’t know why. To me, I still
15 don’t think it’s that complicated. It’s the
16 servicing agreement and –
17 MR. WORTMAN: Judge, you may be right. But
18 they’re traveling under the authority of this
19 Pooling and Servicing Agreement. In fact, we
20 think, our case is based on the fact they didn’t
21 comply with the Pooling and Servicing Agreement.
22 But the appropriateness and the accuracy of this
23 document is essential, and we’ve been screaming, at
24 the last hearing before Your Honor on January 20,
25 2011, one of the issues involved the executed copy.
1 And counsel over here indicated that, well, you
2 have to go to the SEC website. That’s the only
3 version we have. The SEC –
4 MS. HEYER-BEDNAR: No.
5 THE COURT: That’s not inconsistent with what
6 she’s saying today. She’s saying that the document
7 that’s on the SEC website is the same document
8 that’s here in Court.
9 MR. WORTMAN: Without the signatures.
10 THE COURT: Right.
11 MR. WORTMAN: Frankly we don’t know if this
12 executed copy is identical, you know. Again –
13 THE COURT: Well, we can still go forward,
14 and I have no reason to question Plaintiff’s
15 counsel. I’m sure that she would not make that
16 statement lightly.
17 MR. WORTMAN: We’ll just note our objection
18 for the record, Judge.
19 THE COURT: Okay. Here’s your folder back.
20 All right. Let’s bring Mr. Reynolds back.
21 (Thereupon, Mr. Reynolds entered the courtroom).
22 MS. HEYER-BEDNAR: May we proceed, Your
24 THE COURT: Yes.
25 BY MS. HEYER-BEDNAR:
1 Q. Mr. Reynolds, you have in front of you what
2 has been marked as Plaintiff’s Exhibit D for
3 identification, and I believe you stated there’s a
4 signature on the document from Midland –
5 A. There is.
6 Q. — is that correct?
7 And you recognize that signature?
8 A. I do.
9 Q. And who signed it?
10 A. Larry Ashley.
11 Q. And are you familiar with the procedures in
12 maintaining Pooling and Servicing Agreements at
14 A. They’re maintained in the same manner as the
15 Power of Attorney. I mean, I don’t, I don’t have these
16 sitting on my desk. They’re kept in a file. And, you
17 know, if I need to go get it, I go upstairs, request it
18 and they provide it.
19 Q. But Midland maintains those records in the
20 regular course of its business?
21 A. They do.
22 Q. And it’s been maintained since Midland was
23 appointed as special servicer back in 2006?
24 A. They have.
25 Q. And is that document posted in any public
1 forum or website?
2 MR. KORTE: Objection, Your Honor, hearsay.
3 THE COURT: I’m looking at the business
4 records exception. I’m going to overrule at this
5 time. I may change my ruling later, but for now
6 I’m going to let it in. You can proceed.
7 MS. HEYER-BEDNAR: Thank you, Your Honor.
8 THE WITNESS: Could you repeat the question,
10 (Whereupon, the reporter read
11 from the record as requested).
12 THE WITNESS: Not to my knowledge.
13 BY MS. HEYER-BEDNAR:
14 Q. Who were the other parties to that agreement
15 or, in general, I should say, who are the normal
16 parties to a Pooling and Servicing Agreement?
17 A. In general the depositor, the master
18 servicer, the special servicer and the trustee.
19 Q. And do each of those parties maintain a copy
20 of the Pooling and Servicing Agreement?
21 A. Yes.
22 Q. And has Midland maintained that document
23 since it was executed as part of its records?
24 A. Midland has.
25 MS. HEYER-BEDNAR: Your Honor, we would like
1 to admit the Pooling and Servicing Agreement which
2 is marked Plaintiff’s Exhibit D in evidence.
3 MR. KORTE: Hearsay, Your Honor.
5 THE COURT: Okay. I’ll admit it at this
7 (Plaintiff’s Exhibit Number 2).
8 THE COURT: I’m going to find that this
9 witness has –
10 MS. HEYER-BEDNAR: Your Honor, we think that
11 the business exception rule provides for the
12 admission of this document. You do not have to
13 authenticate every single party to the agreement
14 and every single person in the chain of custody.
15 There’s a ton of case law.
16 THE COURT: I know. I said I’m admitting it.
17 Do you want me to change, you want to try to get me
18 to change my mind?
19 MS. HEYER-BEDNAR: No.
20 THE COURT: All right. I was just laying the
21 record that this witness, I find that this witness
22 has sufficiently laid the basis for the Court to
23 find that it was, this document has been kept in
24 the course of regularly conducted business and
25 there’s no reason for the Court to find that it’s
1 not, that it isn’t and that it’s not trustworthy,
2 that it’s not authenticated or authentic. Okay.
3 Go ahead. So it will be Plaintiff’s 2.
4 BY MS. HEYER-BEDNAR:
5 Q. And who are the parties to the Pooling and
6 Servicing Agreement?
7 A. Merrill Lynch Mortgage Investors as the
8 depositor, Wachovia Bank National Association as the
9 master servicer, Midland Loan Services, Inc. as the
10 special servicer, and LaSalle Bank National Association
11 as trustee.
12 Q. And did LaSalle remain as trustee for that
13 trust up until today’s date –
14 MR. KORTE: Hearsay, Your Honor.
15 BY MS. HEYER-BEDNAR:
16 Q. — to your knowledge?
17 THE COURT: I’m sorry, did LaSalle what?
18 MS. HEYER-BEDNAR: Has LaSalle — The trustee
19 listed in the Pooling and Servicing Agreement, Your
20 Honor, it was listed as LaSalle.
21 THE COURT: Yes.
22 MS. HEYER-BEDNAR: The question to the
23 witness as the special servicer, is has LaSalle
24 remained the trustee under the Pooling and
25 Servicing Agreement for these loans.
1 MR. KORTE: Hearsay, Your Honor.
2 THE COURT: If he has personal knowledge as
3 opposed to just reading from the agreement. I’m
4 just curious. Do you have personal knowledge of
5 that to answer?
6 THE WITNESS: I have a document that spells
7 out the successor trustee to U.S. Bank.
8 THE COURT: So you’re relying on the
9 document, the PSA, the Pooling and Servicing
11 THE WITNESS: The Pooling and Servicing
12 Agreement, and then there’s an instrument of
13 successor trustee.
14 THE COURT: All right. Well, I’ve admitted
15 the PSA into evidence so I’ll overrule the
16 objection. And, again, I may find later on that I
17 was wrong, that the PSA shouldn’t have been, that
18 there hasn’t been enough of a foundation laid. But
19 for now I’m letting it in.
20 MR. KORTE: Your Honor, you’re letting the
21 PSA in or you’re –
22 THE COURT: The PSA is in evidence. So if he
23 wants to testify about what’s in the PSA, I’m going
24 let him, it’s in evidence.
25 MR. KORTE: I thought the question was
1 whether or not the successor trustee is contained
2 in the PSA.
3 BY MS. HEYER-BEDNAR:
4 Q. My question was: The Pooling and Servicing
5 Agreement references LaSalle as the trustee. Is
6 LaSalle still currently the trustee?
7 MR. KORTE: Hearsay, Your Honor.
8 THE COURT: You have to lay the foundation
9 for that. How does he — If he knows the answer to
10 that question, how does he know the answer?
11 BY MS. HEYER-BEDNAR:
12 Q. Mr. Reynolds, do you know if LaSalle is still
13 the trustee for the trust involved in the Tidewater
15 A. LaSalle is not the trustee currently.
16 Q. Okay. How do you know that?
17 A. Per the instrument of the successor trustee.
18 MR. KORTE: Move to strike, Your Honor, for
20 THE COURT: That is hearsay. So I’ll sustain
22 BY MS. HEYER-BEDNAR:
23 Q. Is there an amendment to the Pooling and
24 Servicing Agreement?
25 MR. KORTE: Objection, Your Honor. Hearsay
2 BY MS. HEYER-BEDNAR:
3 Q. To your knowledge?
4 MR. KORTE: Foundation.
5 THE COURT: Sustained. Well, he can answer
6 if he knows if there’s an amendment.
7 THE WITNESS: There is an amendment to the
8 Pooling and Servicing Agreement.
9 BY MS. HEYER-BEDNAR:
10 Q. And is Midland a party to that?
11 A. Midland is a party to that amendment.
12 Q. And do you know why there is, why an
13 amendment was executed with respect to the Pooling and
14 Servicing Agreement which is marked as Plaintiff’s
15 Exhibit 2?
16 A. The basis for the first amendment was to
17 redefine the custodian, which is a defined term in the
18 Pooling and Servicing Agreement.
19 MR. KORTE: Your Honor, foundation.
20 THE COURT: Sustained.
21 BY MS. HEYER-BEDNAR:
22 Q. Do you have recorded documents, recorded
23 assignments in Midland’s books and records relating to
24 successor trustees and appointments of, of successor
25 trustees with respect to the trust?
1 A. We do have those records in our file. “We”
2 being Midland.
3 Q. And does Midland maintain those records in
4 the regular course of its business?
5 A. We do.
6 Q. Is it important for Midland to know who the
7 trustee is with respect to a trust in which it’s a
8 special servicer?
9 A. It is.
10 Q. And so based on the information contained in
11 the business records of Midland, are you aware of a
12 successor trustee being appointed after LaSalle?
13 A. I am.
14 MR. KORTE: Hearsay, Your Honor.
15 THE COURT: Sustained. As to that side issue
16 of whether hearsay is ever admissible in civil
17 action. The Court accepts affidavits at some
18 evidentiary hearings as to, for example, attorneys
19 fees, motions for final summary judgment.
20 MR. KORTE: Your Honor, in most cases
21 affidavits are acceptable at summary judgment after
22 they’ve had full opportunity to be evaluated and
23 deposed and countered with other affidavits. In a
24 full blown evidentiary hearing an affidavit does
25 not permit me the opportunity to cross-examine.
1 THE COURT: Evidentiary hearings are like
2 pregnancy, either there is one or there isn’t.
3 When you say full blown evidentiary hearing. I
4 mean, aren’t there evidentiary hearings that the
5 Court holds to determine attorneys fees, for
7 MR. KORTE: Attorneys fees may not be
8 permitted by affidavit, Your Honor, unless there’s
9 consent by the parties. It requires an evidentiary
10 hearing, full blown, fully pregnant, where you’ve
11 got an expert and you’ve got testimony on both
12 sides on both issues. So, no, affidavits are
13 insufficient. The only place affidavits are
14 acceptable would be summary judgment.
15 THE COURT: And that is not an evidentiary
16 hearing you’re saying?
17 MR. KORTE: No, it’s not, Your Honor.
18 THE COURT: Okay. All right. I’ll keep
19 thinking. In any event, this whole issue of the
20 hearsay about these business records. Clearly if
21 the records custodian was present, if there is one,
22 I don’t know that there is, but if there was one,
23 then all these hearsay issues would be easily ruled
24 upon and would be overruled. But I’ll address that
25 later on. But continue.
1 BY MS. HEYER-BEDNAR:
2 Q. As your role at Midland, is it your
3 responsibility to maintain a loan file that you’re
4 actually handling for Midland that’s in default?
5 A. Yes.
6 Q. And what documents do you maintain from the
7 loan file?
8 A. The standard loan documents, notes,
9 assignment of leases and rents, you know, all the
10 historical operating information that’s been provided.
11 I mean, everything that really encompasses the loan
12 that I come across.
13 Q. And would that also include assignment of
15 A. It would.
16 Q. Does Midland have the original loan documents
17 pertaining to Tidewater today?
18 A. It does.
19 Q. And has it brought them to Court?
20 A. It has.
21 Q. And who is Midland currently holding the loan
22 documents on behalf of?
23 A. The custodian.
24 Q. And who is the custodian holding the
25 documents on behalf of?
1 A. U.S. Bank as trustee.
2 Q. I’m going to show you a document that has
3 been marked as Plaintiff’s Exhibit 7 which is Bate
4 stamped U.S. Bank 101. And ask you if you recognize
5 that document?
6 A. I do.
7 Q. What is it?
8 A. It’s the promissory note.
9 MR. WORTMAN: Your Honor, can we have an
10 extra copy of this, what the witness is referring
12 THE COURT: Yes.
13 MS. HEYER-BEDNAR: Yeah. Here’s the Bate
14 stamp numbers.
15 MR. WORTMAN: Thank you.
16 BY MS. HEYER-BEDNAR:
17 Q. Is there an allonge?
18 A. Yes, there is.
19 Q. And who is that note from, executed by?
20 A. Tidewater Estates Co-op, Inc. by Ray
22 Q. And who is the lender listed in the
23 promissory note?
24 A. Merrill Lynch Mortgage Lending, Inc.
25 Q. And with respect to the allonge, who is the
1 allonge executed on behalf of?
2 A. Merrill Lynch Mortgage Lending, Inc.
3 Q. And who is the recipient of the endorsement
4 on the allonge?
5 A. LaSalle Bank National Association as trustee
6 for the Registered Holders of MLCFC Commercial Mortgage
7 Trust 2006-1, Commercial Mortgage Pass-Through
8 Certificates Series 2006-1.
9 MS. HEYER-BEDNAR: Your Honor, I have the
10 original that I would like to go ahead and mark –
11 I mean, move into evidence Plaintiff’s Exhibit F,
12 which is a copy into evidence instead of the
14 THE COURT: Okay. Any objection?
15 MR. KORTE: Your Honor, no objection to
16 moving the copy in instead of the original.
17 THE COURT: Okay. It will be admitted
18 without objection as Plaintiff’s 3.
19 MR. KORTE: May we see the original?
20 THE COURT: Sure.
21 MS. HEYER-BEDNAR: You can touch it.
22 THE COURT: What letter was this, Plaintiff’s
24 MS. HEYER-BEDNAR: It was Plaintiff’s F.
25 MR. KORTE: We’re going to use that actual
1 original as the exhibit.
2 MS. HEYER-BEDNAR: Fine.
3 (Plaintiff’s Exhibit Number 3).
4 BY MS. HEYER-BEDNAR:
5 Q. Mr. Reynolds, is the promissory note executed
6 by Tidewater secured by collateral?
7 A. Yes.
8 Q. And what is it secured by?
9 A. A hundred –
10 MR. KORTE: Your Honor, hearsay again.
11 THE COURT: Sustained.
12 BY MS. HEYER-BEDNAR:
13 Q. Was there a mortgage executed in connection
14 with this loan?
15 A. There was.
16 Q. And is Midland the holder of the original
17 loan documents here today?
18 A. It is.
19 Q. Including the mortgage?
20 A. Yes.
21 Q. Mr. Reynolds, I’m showing you what has been
22 marked as Plaintiff’s Exhibit G for identification.
23 Ask you if you recognize that document?
24 A. I do.
25 Q. What is it?
1 A. The mortgage assignment of leases and rents
2 and security agreement.
3 Q. Executed by whom?
4 A. Tidewater Estates Co-op, Inc., Ray
5 Blanchette, President.
6 Q. And is Midland currently holding the original
7 mortgage executed by Tidewater in connection with the
8 promissory note admitted as Plaintiff’s Exhibit 3?
9 A. It is.
10 MS. HEYER-BEDNAR: Your Honor, we move to
11 admit the mortgage marked as Plaintiff’s Exhibit G.
12 We do have the original but we would like to mark a
13 copy and offer that into evidence instead.
14 MR. KORTE: No objection, Your Honor.
15 THE COURT: All right. Be admitted without
16 objection as Plaintiff’s 4.
17 (Plaintiff’s Exhibit Number 4).
18 BY MS. HEYER-BEDNAR:
19 Q. Is there an assignment of rents also
20 contained in the mortgage?
21 A. It is.
22 Q. And what type of property is listed as
23 security in the mortgage for this particular loan?
24 A. Mobile home community.
25 Q. And is there also a security interest in
1 deposit accounts owned by the borrower/titler?
2 A. There is –
3 MR. KORTE: Your Honor, objection. What’s
4 the relevancy to this? This is a hearing based
5 upon receivership, not for sequestration of rents
6 or foreclosure on any account.
7 THE COURT: Overruled.
8 BY MS. HEYER-BEDNAR:
9 Q. Who currently is collecting payments or was
10 collecting payments on the Tidewater loan?
11 A. Wachovia, Wells Fargo.
12 Q. Does Midland work, as special servicer, work
13 closely with the master servicer?
14 A. Midland does.
15 Q. And do you rely on the records of the master
16 servicer in carrying out your duties as special
18 A. Midland does.
19 Q. And do you have access to the master
20 servicer’s records?
21 A. I do.
22 Q. “You” being Midland?
23 A. Yes, Midland does.
24 Q. And what records does Midland as special
25 servicer rely on from the master servicer?
1 A. All of the loan documents, loan histories,
2 you know, third party reports that have been received,
3 you know, taxes that have been paid, insurance that’s
4 been paid. All the loan documents.
5 Q. And does the master servicer maintain those
6 records on some type of computer system?
7 A. It does.
8 Q. And does the master servicer in this case,
9 Wachovia, Wells Fargo, provide those records to Midland
10 as special servicer in the regular course of business?
11 A. They do.
12 Q. And are the records kept on Midland’s
13 computer system?
14 A. They are.
15 Q. And is it kept on the computer system in the
16 regular course of business?
17 A. They are.
18 Q. And are you familiar with the records that
19 are kept on the system with respect to loan servicing?
20 A. I am.
21 Q. And are the records maintained by Midland at
22 or about the time that they are prepared or generated?
23 A. Can you repeat that question?
24 Q. Sure. Does Midland maintain those records at
25 or about the time that they’re either inputted on the
1 system or scanned into the computer system?
2 A. They do.
3 Q. Do you know when Midland became or first –
4 Strike that.
5 Do you know when Midland took control of the
6 Tidewater loan as a special servicer?
7 A. Was approximately July of 2009.
8 Q. Do you know when the master servicer became
9 the master servicer for this loan?
10 A. That was March 30th of 2006.
11 Q. And how do you know that?
12 A. That was established with the Pooling and
13 Servicing Agreement, which identifies the master
14 servicer as well as special servicer. The master
15 servicer’s book of record reflects the first, first
16 payment date as of March 30th, 2006, that’s when they
17 became the official book of record as the master
19 Q. And when was the loan booked on the computer
20 system so that the master servicer and the special
21 servicer had access to it?
22 A. March 30, 2006.
23 Q. And are you familiar with the computer system
24 and the loan screen maintained by the master servicer
25 with respect to the Tidewater loan?
1 MR. KORTE: Your Honor, hearsay.
2 THE COURT: Overruled.
3 THE WITNESS: I am familiar with it.
4 BY MS. HEYER-BEDNAR:
5 Q. Mr. Reynolds, let me show you what has been
6 marked as Plaintiff’s Exhibit H for identification, and
7 ask you if you recognize it?
8 A. I do.
9 Q. And what is it?
10 A. It’s a loan history from the master servicer
11 off of their servicing platform.
12 Q. And was that accessed by Midland?
13 A. It was.
14 Q. And when was the loan booked?
15 MR. KORTE: Hearsay, Your Honor.
16 BY MS. HEYER-BEDNAR:
17 Q. I’m sorry. Let me strike that.
18 When the loan came over to the master
19 servicer and the special servicer, is the date the loan
20 was booked reflected on the loan history screen?
21 MR. KORTE: Hearsay, Your Honor.
22 THE COURT: Sustained.
23 MS. HEYER-BEDNAR: Your Honor, we offer
24 Plaintiff’s Exhibit H into evidence as a record of
25 Midland Loan Servicing.
1 THE COURT: What’s your objection?
2 MR. KORTE: Hearsay, Your Honor.
3 THE COURT: Sustained. The Plaintiff would
4 have to show that this document was made at or near
5 the time, by or from information transmitted by a
6 person with knowledge they’ve kept in the course of
7 regularly conducted business activity, et cetera,
8 et cetera.
9 MS. HEYER-BEDNAR: Your Honor, I think he
10 laid that foundation as special servicer and master
11 servicer. If there’s additional questions the
12 Court would like me to inquire for the foundation,
13 I’d be happy to do so. But the witness has
14 testified that it was prepared by the master
15 servicer, maintained on their computer records,
16 shared together between the two at or about the
17 time that it was booked.
18 THE COURT: Okay.
19 MR. KORTE: If the Court would like a
21 THE COURT: I’m sorry. Yes.
22 MR. KORTE: He just testified that this is a
23 screen from a different company. Business records
24 of a third party, hearsay within hearsay exception,
25 Your Honor.
1 THE COURT: He’s correct.
2 BY MS. HEYER-BEDNAR:
3 Q. Mr. Reynolds, do you know when Midland booked
4 the loan as special servicer, the loan being Tidewater?
5 A. That came in existence at the same time of
6 the transfer, which was July of 2009.
7 Q. And when did, when did Midland become the
8 special servicer for this loan?
9 A. That was March 30th, 2006.
10 Q. And why did — When did Midland become aware
11 that the loan was in default?
12 A. Once Wachovia established connectivity to
13 Midland, the transfer or the triggering event was
14 imminent default, which is one of the definitions of a
15 transfer event under the Pooling and Servicing
16 Agreement. At that point Wachovia made the election to
17 transfer the loan to Midland as special servicer to
18 remedy the default, or the imminent default in this
20 Q. And based on Midland’s records, do you know
21 when the default was by Tidewater on this loan?
22 A. That would be July or, I’m sorry, August of
24 Q. And did you, you on behalf of Midland at that
25 point in time obtain counsel on behalf of Midland to
1 send a demand letter to Tidewater?
2 A. I did.
3 Q. And was a demand letter sent?
4 A. It was.
5 Q. And sending out demand letters and retaining
6 counsel on behalf of Midland, that was part of your job
7 description and duties?
8 A. It is.
9 Q. Let me show you what’s being marked, has been
10 marked as Plaintiff’s Exhibit I for identification, and
11 ask you if you recognize that document?
12 A. I do.
13 Q. And what is it?
14 A. It’s the notice of event of default.
15 Q. And was that sent by counsel on behalf of
16 Midland as special servicer for U.S. Bank as trustee?
17 A. It was.
18 Q. What happened after the default letter was
19 sent to Tidewater?
20 A. Communications with Tidewater were still
21 taking place in the hopes that the borrower and special
22 servicer could come to some sort of resolution, i.e. a
23 modification of the loan documents as they existed.
24 Q. And who was involved in those negotiations?
25 A. Early on I dealt with Pat McCarthy. It’s
1 standard procedure for us to send out a pre negotiation
2 letter so that all parties are aware that any sort of
3 modification is memorialized by document.
4 Q. And who on behalf of Midland was involved?
5 A. That would be me.
6 Q. Anyone else?
7 A. No.
8 Q. And did there come a time where payments
9 resumed after your discussions with Tidewater?
10 A. Partial payments during the time of the
11 modification discussions were ongoing, and by partial
12 payments, there were interest-only payments plus escrow
13 payments for taxes, insurance and replacement reserves.
14 That continued for approximately eight months ending
15 somewhere around April of 2010. That was when the last
16 payment was received by the master servicer and
17 connection with the borrower was effectively terminated
18 between the special servicer and borrower.
19 Q. And what did Midland do at that point?
20 A. Midland, you know, through engaged counsel,
21 issued a notice of acceleration of the debt.
22 MS. HEYER-BEDNAR: Your Honor, Plaintiff
23 would like to move to admit Plaintiff’s Exhibit I
24 for identification into evidence.
25 THE COURT: Any objection?
1 MR. KORTE: No objection, Your Honor.
2 THE COURT: It will be admitted as
3 Plaintiff’s 5.
4 (Plaintiff’s Exhibit Number 5).
5 BY MS. HEYER-BEDNAR:
6 Q. Mr. Reynolds, I’m showing you what has been
7 marked as Plaintiff’s Exhibit J for identification, and
8 ask you if you recognize that letter?
9 A. I do.
10 Q. And what is it?
11 A. This is the notice of acceleration of the
13 Q. And what was the purpose of that letter
14 besides acceleration, if any?
15 A. That was the primary purpose of the letter,
16 was to accelerate the debt. And it also, you know,
17 reserved our rights based on partial payments received.
18 Q. Did Midland via that letter also make a
19 demand for rents?
20 A. Yes.
21 Q. And deposit accounts?
22 A. Yes.
23 Q. During November 20th, 2009, until the demand
24 letter was served on or about April 13, 2010, did you
25 at Midland ever receive any communications, verbal or
1 in writing, from Tidewater that Midland was not the
2 proper party to be discussing a work out of this loan
3 or default of this loan?
4 A. I did not.
5 Q. Has Tidewater made any payments on the loan
6 since the demand was served in April of 2010?
7 A. They have not.
8 Q. Has Tidewater turned over any rents that
9 they’ve been collecting from the property?
10 A. They have not.
11 Q. Tidewater turned over any deposits to Midland
12 in response to the demand letter?
13 A. They have not.
14 Q. To your knowledge since April 2010 has
15 Tidewater been collecting rents on the property?
16 A. To my knowledge, yes, they have.
17 MS. HEYER-BEDNAR: If I may just have a
18 moment, Your Honor.
19 BY MS. HEYER-BEDNAR:
20 Q. Mr. Reynolds, as part of the original loan
21 file that Midland obtained for purposes of today’s
22 proceeding, did Midland also obtain and bring an
23 assignment of mortgage?
24 A. It did.
25 Q. And was the assignment recorded in the public
1 records of Broward County?
2 A. It was.
3 Q. Was there, in fact, two assignments of the
4 mortgage with respect to the Tidewater loan recorded in
5 the public records?
6 A. There was.
7 MR. KORTE: Your Honor, while counsel is
8 looking for her documents, can we step outside and
9 excuse our experts because it’s going to be well
10 after five?
11 THE COURT: Let’s take a moment and discuss
13 MR. KORTE: Okay.
14 THE COURT: Obviously we’re not going to
15 finish this hearing today, but I think the parties
16 knew that, right? I heard that the parties wanted
17 three days for this.
18 MR. WORTMAN: That’s what we estimated, Your
20 THE COURT: And I was told that we couldn’t
21 continue this tomorrow or Wednesday based on
22 somebody’s schedule? I mean, I’m available.
23 MS. HEYER-BEDNAR: Right.
24 MR. KORTE: I’ve got a trial in Lee County.
25 I can’t confirm as I’m standing here. I know I’m
1 not available tomorrow for two other issues. I can
2 attempt to move depositions, but I don’t know. I’d
3 have to go outside and check and find out.
4 THE COURT: All right. Can you find out now?
5 MR. KORTE: Yes.
6 THE COURT: Let’s take a short recess and
7 find out.
8 (Off the record 4:17 – 4:33).
9 THE COURT: All right. We’re back on the
10 record. The parties are present. Off the record
11 we discussed scheduling issues, and the parties
12 have agreed that we will continue this hearing for
13 April 25th and 26th; is that correct?
14 MR. KORTE: March.
15 THE COURT: March. Wait, March?
16 MS. HEYER-BEDNAR: No, April.
17 MR. KORTE: I’m sorry. April.
18 THE COURT: April 25th and April 26th. And
19 we’ll start at 10:00 a.m. on both days. Since we
20 don’t have a trial order, the parties can now state
21 on the record what it is that they want and expect
22 from each other and how many days are reasonable
23 for the other party to comply.
24 MR. KORTE: I think we’ve agreed that the
25 parties will exchange witness and exhibit lists
1 within ten days of each other of today, and give
2 opportunity to depose each other’s experts as
3 reasonably available between now and then. We’ll
4 make them — I think our experts are almost always
5 in the State of Florida.
6 MS. HEYER-BEDNAR: I don’t know. I don’t
7 know who –
8 MR. KORTE: On, they are. I’m telling you.
9 MS. HEYER-BEDNAR: Yeah, we also would like
10 any reports prepared by any experts because we’ve
11 received nothing as of today.
12 THE COURT: All right. That will also be
13 supplied within ten days from today?
14 MR. KORTE: Yes, Your Honor.
15 THE COURT: Okay. And the parties can supply
16 to the Court any cases they would like the Court to
17 read regarding hearsay. And I would like to let
18 the parties know that 90.803, subsection 15,
19 according to Ehrhardt, does apply to not just real
20 property but also personal property. I don’t know
21 if that matters. But just as an aside.
22 So, yeah, the parties want the Court to
23 consider any case law, how much time would you want
24 for that? How about if you give it to me five
25 days, by April 20th?
1 MR. KORTE: Absolutely, Your Honor.
2 THE COURT: Any other issues that we need to
3 address before we adjourn?
4 MR. KORTE: No, Your Honor. I don’t know
5 that there’s any prohibition, the Court would
6 prohibit us from taking videotape depositions of
7 experts to prevent us having to recall theirs or
8 ours to avoid the expense of travel. I don’t know
9 if that’s prohibited or the Court just wants them
11 MS. HEYER-BEDNAR: Don’t know yet. I haven’t
12 even seen the exhibit — I haven’t seen a report
13 yet. We can certainly talk about that.
14 THE COURT: I have no objection to that
15 certainly. And the reason that we’re not finishing
16 with Mr. Reynolds is because defense counsel has
17 proffered that he’s going to be crossing, cross
18 examining for a number of hours. We’re obviously
19 not going to finish today anyway so we might as
20 well adjourn. Any other issues before we adjourn?
21 MR. KORTE: No, Your Honor.
22 THE COURT: All right. Now since the rule
23 was invoked and this hearing is being continued,
24 obviously the lawyers need to instruct the
25 witnesses or potential witnesses that the rule is
1 continuing until the end of the hearing.
2 So to the parties that or potential witnesses
3 that are in the room, make sure that you don’t talk
4 with anyone about what transpired at this hearing
5 so far, and don’t talk with anyone other than the
6 attorneys about your testimony about this case.
7 And the lawyers will make sure to properly advise
8 their witnesses.
9 MR. KORTE: Yes, Your Honor.
10 MS. HEYER-BEDNAR: Yes. Thank you, Your
12 THE COURT: Okay. Anything else before we
14 MR. KORTE: No, Your Honor.
15 MR. WORTMAN: No, Judge.
16 THE COURT: Okay. Then we’re in recess.
17 MS. HEYER-BEDNAR: Thank you, Your Honor.
18 (Proceedings were concluded at 4:37 p.m.)
1 C E R T I F I C A T E
3 THE STATE OF FLORIDA )
4 COUNTY OF PALM BEACH )
5 I, Mary Ann Hengstler, Registered Professional
6 Reporter, do hereby certify that I was authorized to
7 and did report the foregoing proceedings at the time
8 and place herein stated, and that the foregoing is a
9 true and correct transcription of my stenotype notes
10 taken during said proceedings.
12 IN WITNESS WHEREOF, I have hereunto set my hand
13 this 10th day of March, 2011.
18 MARY ANN HENGSTLER
Registered Professional Reporter