1 brian barry #135631 jill levine betts...

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JOINT STIPULATION REGARDING PLAINTIFFS’ MOTION FOR SANCTIONSAGAINST DEFENDANT ATKINSON, ANDELSON, LOYA, RUUD & ROMO

AND JOEL BOEHM FOR DESTRUCTION OF EVIDENCE

BRIAN BARRY #135631JILL LEVINE BETTS #208065LAW OFFICES OF BRIAN BARRY1801 Avenue of the Stars, Suite 307Los Angeles, California 90067Telephone: (310) 788-0831Facsimile: (310) 788-0841

Attorneys for Class Action Plaintiffs[Additional Counsel on Signature Page]

UNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIA - WESTERN DIVISION

In re HERITAGE BOND LITIGATION____________________________________

David Sinow, Howard Preston, Langdon Parrill,Ray Stits, Barrett Anderson, Laurence Pilgeram,Scott McKenry, Ralph Allman, and GilbertKivenson, On behalf of themselves and allothers similarly situated,

Plaintiffs,v.

U.S. Trust Company of Texas, N.A., U.S. TrustCorporation, Tarrant County Health FacilitiesDevelopment Corporation, Jerold Goldstein,Onofrio V. Bertolini, Stephen P. Goodman,Evan Greenspan, Estate of Andrew Kornreich,Deceased, Cary Medill, Estate of Emery Rubin,Larry A. Rubin, Herbert Saltzman, Virgil Lim,Clarke Underwood, Donald B. Chalker,Marshall Wexler, Robert Kasirer, Debra Kasirer,Bistra & Munkacs Holdings, Inc., JDDJHoldings, L.P., Health Care Holdings, LLC,CareContinuum, LLC, Loui s Pontarelli,William Filippone, Leo Dierckman, Alan Pollak,Geri Ostlund, Richard Kuhl, James E. Iverson,Victor P. Dhooge, John M. Clarey, James F.Dlugosch, Edward J. Hentges, Kenneth R.Larsen, Jerome E. Tabolich, Steven W.Erickson, Paul R. Ekholm, Kenneth E. Dawkins,Joel T. Boehm, Sabo & Green, Atkinson,Andelson, Loya, Ruud & Romo, ValuationCounselors Group, Inc., Capital ConsultingGroup, Inc., Healthcare Financial SolutionsGroup, Inc., Zelenofske, Axelrod & Co., Ltd.,Berman and Bertolini, Inc. aka Berman &Associates, Michael Sobelman, SobelmanCohen & Sullivan LLP, Foley & Lardner as DoeNo. 2, and Wildman, Harrold Allen & Dixon asDoe No. 3 and Does 4-10,

Defendants.

02-ML-1475-DT(RCx)

Consolidated With Case Nos:CV 01-5752 DT (RCx)CV 02-382 DT (RCx)CV 02-993 DT (RCx)CV 02-2745 DT (RCx)CV 02-6484 DT (RCx)CV 02-6841DT (RCx)CV 02-9221 DT (RCx)

Companion CaseCV 02-6512 DT

This Document Relates To:

CV 02-382 DT (RCx)

JOINT STIPULATIONREGARDINGPLAINTIFFS’ MOTIONFOR SANCTIONSAGAINST DEFENDANTATKINSON, ANDELSON,LOYA, RUUD &ROMOAND JOEL BOEHM FORDESTRUCTION OFEVIDENCE

Date: December 17, 2003Time: 9:30 a.m.Courtroom: 23Hon. Rosalyn M. Chapman

Discovery Cutoff: June 30,2004Pre-Trial Conf: August 25,2004

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AND JOEL BOEHM FOR DESTRUCTION OF EVIDENCE 1

I. INTRODUCTION

A. Plaintiffs’ Introduction

Before the Court is a class action arising from eleven municipal bond

offerings which raised over $130 million between December 1996 and March

1999. The money was purportedly borrowed to acquire and renovate former

hospitals as facilities to assist the elderly. Instead, the offerings comprised a large

scale Ponzi scheme; the end result of which was that all of the facilities went into

foreclosure or bankruptcy by 2000.

Defendant Atkinson, Andelson, Loya, Ruud & Romo (“Atkinson” or the

“Firm”) is a law firm which acted as underwriter’s counsel for the last four bond

offerings (the Fort Worth No. 2 offering, the East Houston offering, the Seminole

offering and the Brownsville offering). Defendant Joel T. Boehm acted as the

primary attorney for the underwriter on eight of the offerings, including the last

four. Initially, Boehm was employed by defendant Sabo & Green, but on or about

October 1998, he went to work for Atkinson and is still in their employ. In

addition, Boehm claims to have performed some additional work related to the

Heritage bond offerings as a sole practitioner in the 1998-March 1999 time frame

for which he received approximately $100,000. His counsel represents that when

he left Sabo & Green he went to work immediately for Atkinson, so the work he

did on his own had to be done while employed at the law firms. Despite the

extensive role that Boehm and Atkinson played in all of the last four bond

offerings, plaintiffs’ counsel has been advised that, in response to plaintiffs’ First

Request For Production of Documents (“1st RFP”), the only documents Boehm

personally has are the closing binders for the Offerings and the Firm is unable to

produce a single piece of paper because they cannot “locate” their documents.

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1 The Firm has likewise failed to provide supplemental responses to theRequest for Admissions, and, just days ago, the Firm provided a much delayedsupplemental response to the plaintiffs’ Interrogatories, which are inadequate, seefn. No. 6 herein.



Moreover, the Firm has failed to offer any kind of explanation as to why they can

not “locate” their documents, despite two years having passed since they were first

sued in connection with the Heritage debacle. The Firm has also failed to give any

indication as to where the documents may possibly be now, where they were last,

what might have happened to them, or the steps they have taken to track them

down. Despite repeated promises to do so, the Firm has never provided a

supplemental response to the 1st RFP or the Second Request for Documents (“2nd

RFP”) (which requested invoices and billing records).1 Instead, after the Firm’s

initial objection, plaintiffs have encountered an ever-flowing stream of promises to

supplement followed by predictable failures to live up to promises flippantly

made.

B. Defendants’ Introduction

Defendants Atkinson, Andelson, Loya, Ruud & Romo (“AALR&R”) and

Joel T. Boehm (“Mr. Boehm”) have complied with each of Plaintiffs’ discovery

requests and each of this Court’s orders.

In sum, Mr. Boehm and AALR&R, played only a partial role in the

preparation of the Official Statements – a booklet that the plaintiff bondholders

may or may not have ever seen or read in the course of purchasing Heritage bonds

from their respective brokers. The preliminary versions of the last four Heritage

bond Official Statements were compiled, in part, by Mr. Boehm, in the course of

his employment with AALR&R. They were subsequently reviewed for

finalization by a multitude of other parties with an involvement in and a

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knowledge of the subject Heritage projects, much greater than that of Mr. Boehm.

Much of the information in the Official Statements was supplied by other

defendants, i.e., feasibility studies supplied by the Feasibility Defendants,

appraisals supplied by the Appraisal Defendants, etc. The final versions of the

Official Statements were not even signed by Mr. Boehm, but instead, by other

defendants in this litigation. Neither Mr. Boehm, nor AALR&R, were involved in

the construction, management, operation, or financial function of any of the

Heritage projects. Plaintiffs allege as much throughout their Fourth Amended

Consolidated Class Action Complaint (“4AC”).

The true and unobscured facts show that AALR&R and Mr. Boehm have

each timely, properly, and in good faith, responded to each and every one of

Plaintiffs’ multiple discovery requests in this matter. Neither AALR&R, nor Mr.

Boehm, have ever destroyed any records in response to this litigation, and Plaintiff

has not, and cannot, provide any evidence of this careless allegation. And, until

this Motion, Plaintiffs have never formally challenged any of Defendants’

substantive responses or legal objections to Plaintiffs’ requests for production, the

first of which were received by Plaintiffs as far back as 11 months ago.

Nevertheless, Plaintiffs now bring this frivolous motion, which has no basis

in law, much less in fact. Very simply, this motion is unfounded, unauthorized by

law, and a form of harassment of the subject Defendants.

II. STATEMENT OF FACTS

A. Plaintiffs’ Statement of Facts

Atkinson is a California-based law firm with offices in Sacramento,

Pleasanton, Riverside, Cerritos and San Diego. Boehm joined Atkinson’s San

Diego office and brought Miller & Schroeder, the now-bankrupt underwriter for

all the Heritage bond offerings, to Atkinson as a client. Atkinson thereupon acted

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2 In connection with its role as underwriter’s counsel on the last fourHeritage bond offerings, Atkinson and Boehm have been named in this action forJoint and Several Liability under Cal. Corps. Code §25504.1 (FAC, ¶¶448-51),negligence (FAC, ¶¶461-73) and conspiracy to commit fraud (FAC, ¶¶496-504).

3 Herrmann eventually filed an action in this Court and dismissed hisState Court case.

4 As noted above, the offerings for which Atkinson acted asunderwriter’s counsel were the last of the series, and were all less than a year old



as underwriter’s counsel for the last four Heritage bond offerings that Miller &

Schroeder underwrote (Fort Worth No. 2, East Houston, Seminole and

Brownsville). These offerings were effective October 5, 1998, November 3, 1998,

December 21, 1998 and March 11, 1999, respectively, and raised a total of slightly

more than $37 million.2

Atkinson and Boehm were initially named in the Hermann putative class

action filed in San Diego Superior Court on November 20, 2001. Barry

Declaration at ¶4, Exhibit A.3 Atkinson and Boehm were named in this action for

the first time in the Allman complaint, which was filed on August 20, 2002.

However, years earlier, Atkinson and Boehm had ample reason to know that the

Heritage Entities would become immersed in litigation. Atkinson’s employee,

defendant Boehm, was intimately familiar with the allegations of fraud in

connection with the offerings which were levied in the Platt (filed in 1997) and

Cornerstone (filed in 1998) litigations. FAC at ¶¶164,243. Moreover, in May

1999, the Firm’s client, Miller & Schroeder, abruptly refused to underwrite any

additional Heritage offerings and began an investigation into its liability for the

previous offerings. FAC at ¶¶360-64. Thus, Atkinson and Boehm knew or should

have known that litigation was imminent.4 In late 1999 and early 2000,

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28 in May 1999.



receivership and/or foreclosure actions were filed relating to each Heritage facility

and in August 2000 Heritage Rancho filed for bankruptcy.

On December 27, 2002, plaintiffs served their 1st RFP on all defendants.

Barry Declaration at ¶5, Exhibit B. On January 29, 2003, Atkinson and Boehm

responded with a slew of objections but said they would produce. Barry

Declaration at ¶6, Exhibit C and D.

On May 17, 2003, plaintiffs’ counsel, Brian Barry, sent a fax to Atkinson’s

counsel, Dan White, asking why he had not heard from him regarding Atkinson’s

production of documents. Barry Declaration at ¶7, Exhibit E. Thereafter, a

conversation took place wherein Mr. White informed Mr. Barry that Atkinson

could not find any documents. On June 12, 2003, the 2nd RFP was on served on

Atkinson along with the Requests for Admission (“RFA”) to all defendants and

the First Set of Interrogatories (“Rogs”) to the attorney and accountant defendants.

Barry Declaration at ¶ 9, Exhibits F-H. On July 11, 2003, Atkinson and Boehm

again responded with blanket objections. Barry Declaration at ¶10, Exhibits I-N.

On July 17, 2003, the day after the initial discovery status conference with this

Court, plaintiffs’ counsel wrote to Charles Grebing, the lead attorney for the

attorney group and counsel for Boehm, and asked Grebing to look into the

situation regarding Atkinson’s document production, or lack thereof, because

Plaintiffs’ found their claim to not have a single document very difficult to

believe. Barry Declaration at ¶11, Exhibit O. On August 6, 2003, for the first

time in writing, counsel for Atkinson advised plaintiffs’ counsel that, although

efforts to locate their documents continued, they were not in possession of any

documents responsive to plaintiffs’ discovery requests. Atkinson also promised to

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28 5 The same sentences appeared in the October discovery report.



provide supplemental responses to all of the outstanding discovery requests within

30-45 days. Barry Declaration at ¶12, Exhibit P.

In August, per this Court’s order, all lead counsel met to formulate a

discovery plan. At that time, as lead counsel for the attorney group, Mr. Grebing

agreed that the attorney defendants would provide supplemental responses to all of

plaintiffs’ discovery requests by September 26, 2003. Grebing further agreed that

a definitive answer from Atkinson about whether they could locate their

documents would be forthcoming on that same day. That day came and went with

no communication from counsel for Atkinson. On October 6, 2003 the September

Discovery Report was sent to this Court. Atkinson stated that they were aware the

2nd RFP asked for invoice and payments records, but that a specific request for the

invoice and payment records had not been made and the matter was being further

addressed by counsel. (Emphasis in original). No explanation was provided for

why Atkinson’s counsel had not even attempted to obtain documents from its

client which were responsive to a request served four (4) months prior.5

On October 10, 2003, plaintiffs’ counsel sent a fax to Atkinson’s counsel

asking for the supplemental responses and notification in writing of whether any

documents were found. Barry Declaration at ¶15, Exhibit Q . On October 14,

2003, Atkinson’s counsel telephoned plaintiffs’ counsel and verbally provided

information as to approximately how much money Atkinson had received in fees

from their work on the Heritage deals (which was one of the questions in the

interrogatories). At that time, Atkinson’s counsel stated that a written response

would be sent by the end of the week or Monday “at the latest.”

On October 22, 2003, plaintiffs’ counsel sent an email to the lead counsel

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for the attorney group asking for the Atkinson supplemental responses. Barry

Declaration at ¶16. On October 29, 2003, plaintiffs’ counsel sent a fax to the lead

attorney again asking for Atkinson’s responses, noting they were more than a

month overdue. Barry Declaration at ¶17, Exhibit R. In response, on November

3, 2003, despite being the lead counsel for the attorney group, Mr. Grebing sent

plaintiffs’ counsel a letter wherein he stated that he did not represent Atkinson and

that plaintiffs’ counsel should continue to deal solely with counsel for Atkinson.

Barry Declaration at Exhibit S.

On November 5, 2003, Atkinson’s counsel called plaintiffs’ counsel and

said that she had served her supplemental interrogatory responses weeks before.

Plaintiffs’ counsel noted that there was no evidence of service on Verilaw.

Atkinson’s counsel chalked it up to secretarial error. Despite promises of

Atkinson’s counsel to immediately re-serve it on Verilaw, no response was sent.

Therefore, on November 6, 2003, plaintiffs’ counsel faxed the lead lawyer for the

attorney group and stated that (1) Atkinson had never provided the supplemental

responses to any of the discovery requests; (2) Atkinson had never confirmed in

writing that they could not locate the documents; and (3) Atkinson had not

produced their billing records (despite the fact all productions were supposed to be

done by the end of October per the discovery plan). Plaintiffs’ counsel stated that,

given the foregoing, a motion for evidentiary sanctions would be forthcoming

soon. Barry Declaration at ¶19, Exhibit T. On November 12, 2003, six days

after the November 5, 2003 telephone conversation with Atkinson’s counsel, and

hours after Boehm’s counsel appeared in front of this Court in connection with a

motion to compel the production of the SEC deposition transcript, supplemental

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6 Plaintiffs note that the responses are insufficient. Interrogatory No. 5was not actually answered because the response answered a differentinterrogatory. Specifically, Interrogatory No. 5 asked for information relating tomonies that were paid or transferred by Atkinson to other people (such as Kasirer)because plaintiffs have been informed that monies were transferred from Atkinsonto Debra Kasirer. However, Atkinson answered as if the question asked forinformation relating to monies paid to Atkinson (a response that was identical toInterrogatory No. 1). In addition, it also appears response No. 6 is not accuratebecause the answer does not list any payments from Kasirer to Atkinson for legalwork. However, in the Grand Jury 6(e) motion pending before Judge PercyAnderson, Kasirer is claiming attorney/client privilege for documents created byor sent to Atkinson which relate to work Atkinson did for him. Barry Declarationat ¶20, Exhibit U.

7 Boehm did provide supplemental responses to the interrogatorieswhich were incomplete, they had to be supplemented again after plaintiffs counselprovided evidence to Boehm’s counsel that they were not complete/truthful (seefn. 9 below). Also, it was not until this Court’s made its recent ruling on Plaintiffs’motion to compel production of his SEC deposition transcript that he finallysupplemented his response to the RFA and admitted being deposed.



interrogatory responses were served.6 Barry Declaration at Exhibit V. Although

it is now ten (10) months since Atkinson first responded to the initial document

request from plaintiffs, supplemental responses to the two Document Requests and

the Requests for Admissions have still not been provided, despite the repeated

promises to do so.

Boehm initially objected to all discovery requests, but eventually in his

supplemental response to the 1st RFP his answer to each of the requests therein

was:

After a reasonable search for additional documents, Boehm hasdetermined that he is not personally and/or individually in possessionof any other documents [other than the closing binders] responsive toPropounding Party’s requests.7

Barry Declaration at Exhibit W.

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8 To illustrate, Sabo & Green, the first counsel to the underwriter’s thatemployed Boehm, had 32 boxes of documents.



The documents gathered and/or generated by Atkinson/Boehm in

connection with their engagement as underwriters counsel for four bond offerings

should be voluminous.8 Instead of producing even a single page, Atkinson’s

counsel advises simply that the documents cannot be “located.” Similarly, Boehm

simply states that he has no documents “in his possession, custody or control”

relating to additional work he performed for Heritage as a sole practitioner, and in

his interrogatory answers he can’t identify exactly what he did, nor when he did it,

nor exactly how much he received in payments. Such responses conveniently

deprive plaintiffs of critical evidence to prove their claims, both against defendant

Atkinson, Boehm and against the other defendants with whom they conspired to

defraud plaintiffs. No explanation has been offered for what happened to the

documents. Plaintiffs’ case has been irreparably harmed by Atkinson/Boehm’s

actions in either destroying or losing these files and these defendants must be

punished for their misconduct.

B. Defendants’ Statement of Facts

1. Atkinson, Andelson, Loya, Ruud & Romo

Atkinson, Andelson, Loya, Ruud & Romo (“AALR&R”) served as counsel

for the underwriter, Miller & Schroeder, with respect to the last four Heritage

Bond offerings (Ft. Worth, East Houston, Seminole and Brownsville). Joel

Boehm was the attorney at AALR&R working on the Heritage Bonds, specifically

including participation in the drafting of the Official Statements relative to each of

the above-mentioned four bond offerings. The offerings were effective October 5,

1998, November 3, 1998, December 21, 1998 and March 11, 1999, respectively.

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9 AALR&R’s response to plaintiff’s Request for Production (Set One)is attached to the Declaration of Susan L. Oliver as Exhibit 3.



AALR&R was first named as a defendant in this action in the Allman

complaint, which was filed on August 20, 2002. Since becoming a party to this

lawsuit, AALR&R has at all times complied with its discovery obligations.

Plaintiffs, however, accuse AALR&R and its counsel of improprieties with respect

to discovery in this case. As demonstrated below, plaintiffs’ “factual” statement is

one-sided, misleading and inaccurate. Nothing about the conduct of AALR&R

and/or its counsel has been inappropriate or sanctionable. Plaintiff’s sanctions

request should be summarily rejected.

a. Information Regarding AALR&R’s Documents

Plaintiffs’ requests for production of documents, in typical fashion, ask

AALR&R to identify and produce any documents responsive to plaintiffs’ various

requests. AALR&R, as explained more fully below, responded that if responsive

documents exist, it would produce same, other than attorney-client privileged

material.9 Plaintiffs’ counsel was thereafter informed orally several times and in

writing on two occasions that AALR&R could locate no responsive documents

and as such had none to produce. Nothing in plaintiffs’ requests for production

asks AALR&R to state why the documents cannot be located, to explain its

actions or to state anything other than what AALR&R has already stated on

several occasions – AALR&R has no documents from its work on the Heritage

Bonds, but if some are located they will promptly be produced. AALR&R and its

counsel should not be sanctioned for not providing a detailed explanation when no

request for one has ever been made and when Mr. Barry and his clients are not

entitled to one. Nevertheless, in the spirit of cooperation and to address this issue

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head-on, AALR&R offers the following information regarding its documents.

On October 1, 1998, Joel Boehm was hired by AALR&R. (Declaration of

Joel Boehm, ¶ 3). At the time he was hired, Mr. Boehm had already been involved

in drafting the Official Statements for Bond Offerings 1-8 of the Heritage Bonds.

(Id. at ¶ 2). After becoming employed with AALR&R, Mr. Boehm drafted

portions of the Official Statements for Bond Offerings 9-12, and was the only

attorney at AALR&R to be so engaged. (Id. at ¶ 3). During this time frame, Fall

1998 through Spring 1999, AALR&R subleased an office for Mr. Boehm in the

same building as the firm’s client, Miller & Schroeder, in Solana Beach,

California. (Id. at ¶ 4). The office had its own lock and was separate from Miller

& Schroeder’s offices. (Id. ) The location of Mr. Boehm’s office was for

convenience purposes while the Official Statements for Bonds 9-12 were being

prepared. (Id.)

After the Official Statements were drafted and after the last Heritage Bond

was issued, Mr. Boehm relocated to AALR&R’s San Diego office, located in the

Rancho Bernardo area of San Diego. (See Declaration of Debra Gourluck, ¶ 4 and

Declaration of Joel Boehm, ¶ 5). AALR&R’s San Diego office is small and

accommodations had to be made to make room for Mr. Boehm, including

shuffling of administrative personnel from offices to secretarial stations.

(Declaration of Debra Gourluck, ¶ 4-5). In addition to having space concerns with

respect to staff, AALR&R had space concerns with respect to file materials. (Id.)

In other words, there was inadequate space at AALR&R for the Heritage Bond

working files. Further, there was no need for the working files any longer as all of

the deals were closed. As such, Mr. Boehm took with him only the Closing

Binders, which include copies of the Official Statements. (Declaration of Joel

Boehm, ¶ 7). At this time, no claims had been made and no lawsuits had been

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filed with respect to the Heritage Bonds. (Id.) What Miller & Schroeder did with

its files is unknown. Counsel for AALR&R is informed that the Bankruptcy

Trustee for Miller & Schroeder does not have the documents.

Plaintiffs and their lawyer may be unhappy that the AALR&R documents

cannot be located. AALR&R and its counsel also wish that they had the

documents. However, under the above-recited facts, there is simply nothing that

in any way approaches destruction of evidence or that in any way constitutes

improper conduct. The files were simply left in the safe keeping of the clients, to

whom the documents belonged, after work on the Heritage Bonds was finished but

before Boehm or AALR&R was aware of any problems with the Heritage Bonds

or the individual investors’ purported loss of money. Plaintiffs’ sanction request is

meritless and should be denied.

b. AALR&R’s Responses To Plaintiff’s Request For Production Of Documents

AALR&R, along with all other defendants in this action, was served with

plaintiff’s first request for production of documents on December 27, 2002.

AALR&R timely responded to plaintiff’s request for production, setting forth

applicable objections, including objections to the scope and format of the various

requests as well as objections based upon the attorney-client privilege, and the

prematurity of the requests under the PSLRA (as there was no operative pleading

and pending motion to dismiss at the time). (See, Exhibit 3.) Nevertheless,

AALR&R responded that it would produce all non-privileged responsive

documents in its possession, custody or control to the extent that any such

documents existed.

Both prior to and following the service of AALR&R’s responses to

plaintiff’s request for production, counsel for AALR&R had numerous

conversations with representatives of AALR&R regarding the existence of

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10 Although plaintiffs’ counsel, Mr. Barry, admits that he was informedof the lack of documentation in May 2003, he later states in his “statement offacts” that he learned for the first time on August 6, 2003, that AALR&R had nodocuments relative to its work on the Heritage Bonds. This internal inconsistencyis telling.



responsive documents. In the spring of 2003, counsel for AALR&R was

informed that the firm, despite a diligent search, could locate no documents

relative to its involvement in the Heritage Bond matters (as explained in the

foregoing section). Plaintiff’s counsel, Brian Barry, was thereafter informed of the

lack of documentation by Dan White of White, Noon & Oliver, counsel for

AALR&R. (See plaintiff’s Statement of Facts in Joint Stipulation, p. 4.)10 Mr.

Barry has also repeatedly been informed by Susan Oliver of White, Noon & Oliver

that if any of AALR&R’s documents are located that he will immediately be

advised and that AALR&R will amend its discovery responses to reflect the

existence of documents responsive to a particular request. (See Exhibit 1, Oliver

letter to Barry of August 6, 2003). In light of the foregoing, and in light of the fact

that no documents have been located between Spring 2003 and the present,

AALR&R’s responses to plaintiff’s request for production (set one) remain valid

and accurate – that AALR&R will produce the documents if they can locate same.

Nothing about the conduct of AALR&R or its counsel has been inappropriate in

any way in addressing this document issue.

c. AALR&R’s Responses To Other Discovery Served By Plaintiffs.

AALR&R has also appropriately and timely responded to plaintiff’s other

discovery requests. Specifically, on June 12, 2003, plaintiff served upon

AALR&R, and the other defendants in this action, special interrogatories, requests

for admissions and request for production of documents (set two). On July 11,

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2003, AALR&R timely responded to plaintiff’s discovery requests, serving its

responses via the Verilaw system in place in this litigation. (See Exhibits 4-6

respectively, attached to the Declaration of Susan L. Oliver.)

Following receipt of AALR&R’s responses to this discovery, neither Mr.

Barry nor anyone at his firm expressed any dissatisfaction whatsoever with respect

to anything contained in AALR&R’s responses. Specifically, neither Mr. Barry

nor anyone from his office ever sent Mr. White or Ms. Oliver a letter or placed a

phone call to either of them regarding perceived inadequacies in AALR&R’s

discovery responses. Instead, several weeks after receipt of AALR&R’s discovery

responses, Mr. Barry included in plaintiff’s portion of the initial draft discovery

status report, which was subsequently sent to Judge Chapman, a short statement

regarding AALR&R’s alleged lack of compliance with its discovery obligations.

This was the first time that counsel for AALR&R was aware that plaintiffs were

dissatisfied with its responses to discovery.

Upon receipt of the discovery status report, counsel for AALR&R sent a

letter to Mr. Barry, dated August 6, 2003, despite still receiving no direct

communication from Mr. Barry’s office. In this August 6 letter, counsel for

AALR&R, Ms. Oliver, informed Mr. Barry that AALR&R had at all times

complied with its discovery obligations and that while the objections asserted by

AALR&R in response to plaintiff’s discovery were appropriate and warranted,

she would re-review AALR&R’s responses to plaintiffs’ discovery and provide

supplemental responses within 30 to 45 days. (See Exhibit 1, Oliver letter to

Barry of August 6, 2003.)

Counsel for AALR&R then re-reviewed AALR&R’s discovery responses

and determined that the responses to request for admissions and request for

production of documents were appropriate and that no supplemental responses

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11 At the time Ms. Oliver sent this letter she was referring to plaintiffs’request for production (set one). Since that time, she has conferred with Mr. Barryby telephone and has agreed to produce information, to the extent it exists, torequest for production (set two), which primarily involves payment informationrelative to work performed by AALR&R on the Heritage Bonds. When Ms.Oliver spoke with Mr. Barry in late August or early September, her reminded herthat a second request for production had been served. Ms. Oliver stated that shehad forwarded that request to her client but that her office had not specificallyreferenced that request (set two) in its most recent (at that time) communicationswith AALR&R. That is the subject of the statements in the September DiscoveryStatus Report. Mr. Barry’s attempt to twist those statements to make it sound thatcounsel for AALR&R had made no attempt to obtain payment information or thatit had delayed in obtaining the information is disingenuous and should beunavailing.



were needed. Counsel then promptly advised Mr. Barry, via a letter to Barry dated

August 11, 2003, that AALR&R would not be supplementing its responses to

these discovery requests. (Exhibit 2, Oliver letter to Barry of August 11, 2003).

However, counsel for AALR&R felt that a supplemental response to plaintiff’s

special interrogatories would be appropriate and informed Barry that supplemental

responses the interrogatories would be provided within 30 to 45 days.11

Interestingly, plaintiff’s counsel has never responded in any way to Ms.

Oliver’s letter of August 11, 2003; plaintiff’s counsel has never indicated that he

disagreed with the course of action set forth in the letter of August 11, 2003; and

notably plaintiff’s counsel fails to even mention the existence of this letter in its

current request for sanctions against AALR&R.

In keeping with the representations set forth in its letter of August 11, 2003,

counsel for AALR&R further conferred with her client and began preparation of a

supplemental response to plaintiff’s special interrogatories, to be served in

September 2003. However, counsel for AALR&R became ill with staff infection

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and was placed on bed rest for a number of days. Because counsel for AALR&R

wanted to keep plaintiff’s counsel “in the loop” as to the timing of service of

supplemental responses, Ms. Oliver’s secretary called Jill Betts, an attorney

employed at the law offices of Brian Barry, who also works on this case. Ms. Betts

was informed of Ms. Oliver’s illness and also that supplemental responses would

be provided as soon as Ms. Oliver returned to the office. When Ms. Oliver

returned to work, she promptly called Ms. Betts. At that time, Ms. Oliver orally

provided Ms. Betts with information responsive to plaintiff’s special

interrogatories, so that the information would be immediately available to the

plaintiffs. Ms. Oliver also informed Ms. Betts that the information provided over

the telephone would also be set forth in the form of a supplemental response to the

special interrogatories and served upon plaintiffs (and all other parties via the

Verilaw system) by the end of that week (October 10, 2003) or Monday at the

latest.

Monday, October 13, 2003 was a holiday (Columbus Day) and Ms. Oliver’s

law offices were closed. Therefore on Tuesday, October 14, 2003, Ms. Oliver

finalized the supplemental discovery responses and asked her secretary to serve

those through the Verilaw system. Ms. Oliver was informed that the supplemental

discovery responses had been served through Verilaw.

On November 5, 2003, Brian Barry sent counsel for all of the Attorney

Defendants a settlement demand letter. Ms. Oliver received this letter late that

afternoon, just as she was preparing to leave the office for a trip out of the country.

Ms. Oliver telephoned Mr. Barry immediately and informed him that she was

leaving the office very shortly and would be out of the country for the next five

days. Ms. Oliver also informed Mr. Barry that counsel for Joel Boehm, Charles

Grebing, was in Hawaii attending an ABOTA meeting and that the other attorney

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in Mr. Grebing’s office working on this case, Kimberly Howatt, was out of the

country. Ms. Oliver therefore informed Mr. Barry that it would be a period of time

before the Attorney Defendants could evaluate and respond in any fashion to his

demand letter. This call was placed by Ms. Oliver as a courtesy to Mr. Barry.

During this telephone call, which was initiated by Ms. Oliver, Mr. Barry asked

why he had not received supplemental interrogatory responses from AALR&R.

Ms. Oliver informed Mr. Barry that those responses had been served weeks ago.

Mr. Barry stated that he had not received them and after checking his computer

system, he indicated that the Verilaw website showed no record of their service.

Counsel for AALR&R then indicated that she would doublecheck with respect to

the service of the supplemental interrogatories and acknowledged that it was

possible a mistake may have occurred since a series of temporary secretaries had

worked for her in October 2003 (while a permanent secretary was being

interviewed and hired). Counsel also informed Mr. Barry that if there had been a

problem with service that the issue would be rectified promptly upon her return to

the office on Tuesday, November 11, 2003.

November 5, 2003 was the first time that Ms. Oliver or any person in her

office was aware that there was any problem with the service of the supplemental

responses to the special interrogatories. In other words, plaintiff’s counsel made

no effort whatsoever to raise this issue with counsel for AALR&R and then only

raised it when AALR&R’s counsel initiated a phone call on another issue.

Thereafter, on November 6, 2003, despite being aware that AALR&R’s

counsel was out of the country, despite being told that if there was a problem with

service it would be rectified upon counsel’s return on November 11, 2003, and

despite being informed that the lawyers representing Joel Boehm were either out

of the country or in Hawaii, Mr. Barry apparently sent a letter to Charles Grebing,

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12 In addition to the fact that Mr. Barry has allegedly beencommunicating with other counsel regarding purported discovery disputes withAALR&R, rather than with AALR&R’s counsel directly, AALR&R also finds itcurious that Mr. Barry would tell Mr. Grebing (counsel for Joel Boehm) thatAALR&R had never confirmed in writing its inability to locate documents relativeto its work on the Heritage Bonds. By November 6, 2003, the date of his letter toMr. Grebing, Mr. Barry had been told in writing on at least two occasions thatAALR&R had no documents regarding its work on the Heritage Bonds. Specifically, that information is contained in Ms. Oliver’s letters to Mr. Barry ofAugust 6, 2003 and August 11, 2003. (Mr. Barry was also advised of this severaltimes over the telephone by counsel for AALR&R.) Notably, this statement inMr. Barry’s letter to Mr. Grebing also contradicts Mr. Barry’s own statements inPlaintiff’s portion of this Joint Stipulation. On page 4 of Plaintiff’s Statement ofFacts, Mr. Barry acknowledges that he was informed in writing of the lack ofdocuments upon receipt of Ms. Oliver’s letter of August 6, 2003.



counsel for Boehm, rather than to counsel for AALR&R, stating that “(1)

[AALR&R] had not provided supplemental responses to discovery requests, (2)

[AALR&R] had never confirmed in writing that it could not locate the documents;

(3) [AALR&R] had not produced their billing records . . . and that . . . a motion for

evidentiary sanctions would be forthcoming soon.” (Plaintiffs’ Statement of Facts

in Joint Stipulation pg. 6). AALR&R was not copied on the letter.12

Upon her return to the office, Ms. Oliver served AALR&R’s supplemental

responses to the special interrogatories, serving same by Verilaw on November 12,

2003. (See Exhibit 7). (This time Ms. Oliver personally checked to make sure the

responses had been properly forwarded to Verilaw and personally obtained the

written verification from Verilaw that the responses were received and served.)

Nothing about the conduct of AALR&R or its counsel has been

inappropriate, designed to frustrate the discovery process, or anything other than

cooperative. Counsel for AALR&R acknowledges and accepts responsibility for

the error in the service of the supplemental responses to special interrogatories in

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October 2003. This error was, however, unintentional and was rectified as soon as

it was brought to counsel’s attention. This error, while unfortunate, certainly does

not equate to sanctionable conduct. Morever, had Mr. Barry communicated

directly with counsel for AALR&R, this problem could have been easily corrected

much sooner.

Additionally, neither Mr. Barry nor anyone from his office, has to date ever

communicated directly to AALR&R that plaintiffs are dissatisfied with

AALR&R’s responses to requests for admissions. In other words, there has been

no direct communication on this topic, much less any formal meet and confer, as

required by the Federal Rules of Civil Procedure and by Judge Chapman’s

Discovery Order. AALR&R cannot be required to supplement its responses to

requests for admissions (which responses are appropriate and reasonable in the

first instance) unless AALR&R has been informed that there is a perceived

inadequacy in the responses and is given an opportunity to meet and confer or

amend its responses if appropriate.

In sum, AALR&R and its counsel have engaged in no wrong-doing of any

sort and sanctions are wholly unwarranted.

2. Joel T. Boehm

Mr. Boehm has completely and timely complied with each and every of

Plaintiffs’ discovery requests to the full extent of the Federal Rules, Local Rules,

and the Court’s Orders in this matter. Plaintiffs cannot show otherwise, and any

contention that Mr. Boehm has not complied is simply untrue. That stated, and

undisputed, it is wholly unclear what conduct of Mr. Boehm Plaintiffs so

vehemently seek to punish. The simple answer is that there is no such conduct,

and thus Plaintiffs’ Motion is not only meritless, but frivolous, as well.

By their Motion, Plaintiffs seek punishment of Mr. Boehm for his failure to

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answer questions that Plaintiffs never asked. Plaintiffs further seek to sanction

Mr. Bohem for the purported destruction of documents that were not in his

possession. Plaintiffs request that this Court punish Mr. Boehm despite the fact

that he has not violated and discovery order or rule. Plaintiffs’ Motion for

Sanctions as against Mr. Boehm is entirely unjustified, and an abuse of both the

parties’ prior efforts towards cooperation, and this Court’s confidence in

Plaintiffs’ counsel.

a. Mr. Boehm has responded to each of Plaintiffs’ discovery requests in a

timely and complete manner.

On December 27, 2002, Plaintiffs propounded their First Request for

Production of Documents. Mr. Boehm provided his written responses thereto

on January 29, 2003. (Exhibit “A” to Declaration of Kimberly D. Howatt.)

By these responses, Mr. Boehm stated objections to both the form and

substance of Plaintiffs’ discovery requests, yet subject thereto and in the spirit of

good faith, advised Plaintiffs that discovery and investigation were in progress.

Mr. Boehm further advised, through his written responses, that he would “produce

all non-privileged responsive documents in his possession, custody, or control, to

the extent any such documents exist.” [emphasis added] In or about April 2003, as

discovery progressed, Mr. Boehm voluntarily and without formal action, provided

supplemental responses to Plaintiffs’ first set of document requests. (Exhibit “B”

to Declaration of Kimberly D. Howatt.) By these supplemental responses (of

which Plaintiffs only cite a portion), Mr. Bohem maintained the same legal

objections, yet, again, subject thereto and in the spirit of good faith, advised

Plaintiffs that, Mr. Boehm had conducted a reasonable search and the only non-

privileged documents of which he is in possession are the closing transcripts

relative to the Heritage bonds.

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13 In fact, Plaintiffs cite, as an example of proper production, to a“memo to file” purportedly prepared by Mr. Boehm that logically came from thedocuments produced by Sabo & Green.



Two months later, on June 12, 2003, Plaintiffs propounded their Second

Request for Production of Documents. Mr. Boehm provided his written

responses thereto on July 10, 2003. (Exhibit “C” to Declaration of Kimberly D.

Howatt.)

By these responses, Mr. Boehm again stated legal objections to both the

form and substance of Plaintiffs’ discovery requests, but nonetheless responded

subject to the objections and in the spirit of good faith. Mr. Boehm again advised

Plaintiffs that Mr. Boehm had conducted a reasonable search, and that the only

non-privileged documents of which he is in possession are the closing transcripts

relative to the Heritage bonds. Mr. Boehm’s counsel informally advised

Plaintiffs’ counsel that documents generated during his employment with Sabo &

Green were in the possession of that firm’s counsel, and would be produced. Mr.

Boehm’s counsel further advised that Mr. Boehm was similarly not in possession

of the documents generated for Miller & Schroeder during his employment with

AALR&R.

In accordance with these representations, Mr. Boehm’s former employer,

Defendant Sabo & Green, produced the documents that had been generated by Mr.

Boehm in the course of his employment therewith. Plaintiffs never expressed any

shock or concern that such documents were in the possession of parties other than

Mr. Boehm. As a matter of conventional reason, Mr. Boehm as an employee of

the law firm retained by Miller & Schroeder, simply would not have possession or

control of such documents; he is neither the legal owner of the documents (i.e., the

client), nor a partner in the firm that was retained by the client.13 Again, in

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accordance with those representations, Mr. Boehm formally responded to

discovery by indicating that the Miller & Schroeder files were no longer in his

possession. Mr. Boehm’s counsel further advised Plaintiffs’ counsel that the

Miller & Schroeder files were also not within the possession of AALR&R, if they

even existed.

As to Plaintiffs’ request for Mr. Boehm’s SEC deposition transcript, Mr.

Boehm made a good faith objection to the production, and the parties were unable

to agree on the interpretation of relevant legal authorities. Mr. Boehm informed

Plaintiffs, and this Court, that he had been expressly advised by the SEC that the

deposition was part of a non-public hearing within the meaning of 17 C.F.R.

§203.6, and was thus confidential. Even so, and as Mr. Boehm advised Plaintiffs’

counsel, he conveyed Plaintiffs’ request for his deposition to the SEC attorney,

and was awaiting further instruction, in accordance with cited decisional law.

Plaintiffs were dissatisfied with this response, met and conferred with counsel for

Mr. Boehm, and the parties subsequently participated in the Joint Stipulation

process pursuant to Local Rule 37.1, et seq.

On November 12, 2003, this Court ordered that Mr. Boehm also submit a

specific deposition request form to the same SEC attorney by November 19, 2003.

Mr. Boehm complied with this Order on November 18, 2003. (See,

Declaration of Kimberly D. Howatt.)

On June 12, 2003, Lead Plaintiff Ray Stits’ propounded his Special

Interrogatories and Requests for Admissions. Mr. Boehm provided his written

responses to each of these, respectively, on July 10, 2003. (See, Declaration of

Kimberly D. Howatt.)

With regard to the Requests for Admissions, requesting information

regarding the SEC proceedings Mr. Boehm understood to be confidential, Mr.

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14 Mr. Boehm is not the only party to have expressed difficulty recallingevents that transpired at least 4-6+ years ago. Three of the Outside Directordefendants each specifically stated, in their written discovery responses, that theytoo were unable to recall all events about which Plaintiffs inquired via written



Boehm stated the legal basis for his stated inability to answer. Following this

court’s ruling on the production of Mr. Boehm’s SEC deposition transcript, Mr.

Boehm voluntarily provided supplemental responses to the Requests for

Admissions, with substantive answers thereto. (See, Declaration of Kimberly D.

Howatt.)

b. Plaintiffs have never objected to Mr. Boehm’s responses to their requests

for production of documents.

Importantly, Plaintiffs have never formally challenged Mr. Boehm’s legal

objections to the form and substance of Plaintiffs’ special interrogatories and

requests for admissions. Mr. Boehm has continuously and consistently maintained

valid objections to Plaintiffs’ discovery requests, as authorized by the F.R.C.P.,

federal and constitutional law, and/or the Discovery Order in this matter. In fact,

instead of addressing these objections in a proper procedural and professional

manner, Plaintiffs’ counsel has taken a more antagonistic approach and has

accused Mr. Boehm of intentional misrepresentations, based solely upon his own

one-sided interpretation of various documents. Whereas most counsel would

address questions about a party’s discovery responses and corresponding

documentary evidence at the time of that party’s deposition, this method of

refreshing a party’s recollection is, indeed, unconventional. Nonetheless, Mr.

Boehm has responded to such approach, in the spirit of good faith, by informally

agreeing to provide (and has provided) supplemental responses to certain of the

specially interrogatories.14

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28 discovery due to the lapse of time.



Likewise, aside from the SEC deposition transcript, Plaintiffs have never

sought any further response from Mr. Boehm to their requests for production of

documents, nor challenged Mr. Boehm’s substantive objections, nor requested

formal responses regarding the location of his employers’ or Miller & Schroeder’s

documents. In fact, on October 27, 2003, Plaintiffs proceeded to propound a third

set of requests for production of documents which seek yet another category of

documents (electronic data), and make no mention of the documents of Mr.

Boehm’s employer or Miller & Schroeder.

c. Mr. Boehm does not have possession, custody, or control of the documents

generated for Miller & Schroeder, nor the ability or reason to preserve

same for the Firm.

In actuality, Mr. Boehm does not have possession, custody, or control over

any of the file documents generated for Miller & Schroeder while he was at

AALR&R. At the time Mr. Boehm drafted the last four Official Statements for

Miller & Schroeder, through his employment with AALR&R, AALR&R had

leased an office for him in the same building as the offices of the client in Solana

Beach, California. (See, Declaration of Joel T. Boehm, ¶ 4.) By the end of March

1999, the Official Statements for Miller & Schroeder had all been drafted and the

corresponding Heritage bond offerings issued. In June of 1999, Mr. Boehm

relocated from AALR&R’s Solana Beach office to AALR&R’s San Diego office.

(See, Declaration of Joel T. Boehm, ¶ 5.) At this time, due to space constraints,

Mr. Boehm took with him most all of the Closing Binders, which included copies

of the Official Statements. (See, Declaration of Joel T. Boehm, ¶¶ 6-7.)

Thus, Mr. Boehm believes that those documents, if they still exist, remain in

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15 Notably, the Herrmann action never proceeded past the pleadingstage, and was ultimately voluntarily dismissed by Plaintiff Lewis Herrmann.



the possession and control of Miller & Schroeder – the client and rightful owners

of the files. From the time he left those files in the Spring of 1999, it was

approximately 2 ½ years before Mr. Boehm was ever named in a Heritage

bond proceeding. Mr. Boehm does not know what Miller & Schroeder did with

the documents left in their possession. Mr. Boehm has no information as to

whether Plaintiffs have ever pursued this issue with the Miller & Schroeder

bankruptcy trustee. It is unknown if any of these files are in the Miller &

Schroeder documents now held by the trustee.

Plaintiffs allegations that Mr. Boehm should have known of the impending

litigation at the time he last saw the Miller & Schroeder documents is entirely

meritless and factually unreasonable. As Plaintiffs, themselves, allege, the last

Heritage bond offering occurred in March of 1999 – almost 3 years before the

Herrmann state court action was filed and served.15 Thus, at the time of the final

Heritage bond, Mr. Boehm had no notice of impending litigation, nor any reason

to predict the aggressive litigation that was forthcoming. It was after the

completion of this last bond offering that AALR&R and Mr. Boehm left the

documents in possession of the client, Miller & Schroeder. At this time, Mr.

Boehm saw no continued need for my possession of the files because he was not

aware of any claims then being made against Miller & Schroeder with respect to

the Heritage Bonds. (See, Declaration of Joel T. Boehm, ¶ 7.)

In fact, the Platt lawsuit that Plaintiffs reference, stems from a 1997

Complaint for unlawful termination – not a lawsuit for fraud. No identifiable

allegations of “fraud” arose until several years into that lawsuit, as documents

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exchangedi n the course of this litigation now reveal. Even so, Mr. Boehm was

not “intimately familiar” with the Platt lawsuit as Plaintiffs baselessly allege, and

thus would not have been aware of such allegations either way. The same is true

with regard to the Cornerstone lawsuit to which Plaintiffs cite. In fact, nothing

more that Plaintiffs own 4AC allegations are offered in support of these

conclusive expressions of Plaintiffs’ counsel’s opinion of what he thinks Mr.

Boehm knew. These mere allegations are offered, very simply, because there is no

evidence to demonstrate that Mr. Boehm had such knowledge, and in fact, he did

not.

In fact, the allegations that Plaintiffs cite in support of their allegation that

Mr. Boehm was “intimately familiar” with the Platt litigation, pertain to a 1999

document which was written after the last bond had been issued. This does not

confirm that Mr. Boehm had any knowledge of any of the allegations of that

complaint. There is no evidence that Mr. Boehm that Mr. Boehm had any

familiarity with the Platt litigation, much less an “intimate” one.

Plaintiffs are also devoid of any evidence whatsoever to support their

frivolous and ill-conceived allegation that Mr. Boehm had any role in the “loss or

destruction” of the Miller & Schroeder documents. Very simply, Plaintiffs’

statement that “Bohem’s [discovery] tactics have been similarly offensive” is

entirely baseless, and nothing more than a vexatious contention by Plaintiffs’

counsel. Mr. Boehm, too, is dismayed by the absence of these documents, as they

would likely show the work he performed in drafting the Official Statements at

issue, and thus support his solid defense against Plaintiffs’ allegations.

d. Plaintiffs’ conduct in filing their meritless and frivolous motion should be

stopped and sanctioned.

As demonstrated above, Mr. Boehm has timely complied with Plaintiffs’

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16 Boehm’s first supplemental response to plaintiffs’ Interrogatoriesinitially claimed that Boehm performed some unidentified work relating to theHeritage debacle for both Miller & Schroeder and Heritage “during his transitionfrom Sabo & Green to Atkinson, Andelson, Loya, Ruud, & Romo in 1998" and



discovery requests, as well as this Court’s Orders, at all times. As such,

Plaintiffs’ current motion is manifestly baseless and patently frivolous. Plaintiffs’

motion is a complete abuse of the cooperation that has previously been extended

to him, a misuse (and mis-citation) of the laws regarding discovery, and, in itself,

warrants sanctions in a monetary amount reflecting the time spent by counsel for

Mr. Boehm in responding to this sham.

III. ARGUMENT

A. Plaintiffs’ Argument

Attorneys such as Atkinson/Boehm owe special duties to their clients,

including duties to retain and protect documents. See, e.g., Rules of Professional

Conduct, Rule 4-100 (Preserving Identity of Funds and Property of a Client);

Ramirez v. Fuselier, 183 Bankr. 583 (9th Cir. BAP 1995) (interpreting Rule 4-100

as requiring an attorney “to keep and maintain files for five years after the

conclusion of a case”). See also, Cal. Bus. & Prof. Code §6068(e) (requiring an

attorney, at every peril to himself, to protect the confidential information of his

client). It can not be disputed that Atkinson was underwriter’s counsel for the

final four (4) Heritage bond offerings. Neither can it be disputed that Boehm was

employed by Atkinson at the time of the last four (4) offerings and that he was

Atkinson’s primary attorney assigned to handle Miller & Schroeder deals. In

addition, according to Boehm, he performed additional work related to the

Heritage bonds in 1998 and 1999 as a sole practitioner.16 See Barry Declaration at

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again in 1999 after the final bond offering. See Barry Declaration at Exhibit X. Plaintiffs’ counsel immediately pointed out that if Boehm did work on his own,during the time he was transitioning between firms, why were his fees and costsbeing completely covered by the Sabo and Atkinson insurance policies? Boehmalso denied ever giving any monies to Kasirer. Plaintiffs counsel had to informBoehm’s counsel that there was proof Boehm gave Kasirer at least $18,000, andBoehm’s counsel requested that the documents be faxed to him. Plaintiffs counseldid just that. Shortly thereafter, Boehm served his second supplemental responseto the Interrogatories which eliminates the language quoted above and simply saysthat work was performed in 1998 and 1999 for which he was paid directly and thathe paid Kasirer $18,000 but did not remember why. See Barry Declaration atExhibit Y. Recently, Boehm’s counsel sent plaintiffs’ counsel a letter wherein henow claims that Boehm’s dates of employment from Sabo & Green to theAtkinson firm were consecutive but he “continued to do some work, however, inorder to assist in the continuing effort to gather information concerning the bonddocuments for which he was entitled to be paid.” See Barry Declaration at ExhibitZ. While the story is changing, and memories are suddenly being somewhatrefreshed when presented with evidence, the one thing that is certain is thatBoehm performed work for Heritage and Miler & Schroeder as a sole practitionerin addition to the work he performed as an employee of Atkinson and perhapsSabo too. Therefore, Boehm should have his own file of documents that relate to this work. Yet he claims he does not have anything other than the “closingbinders” and seems to have an amazing lack of memory of important things.

17 In the case of the last offering, the Brownsville offering, the offeringwas barely effective before Miller & Schroeder pulled the plug on future offerings.



Exhibits X-Z.

Soon after Atkinson/Boehm completed their work on Miller & Schroeder’s

last four Heritage bond offerings and Boehm completed his side work on Heritage,

it became evident that litigation would likely ensue as Miller & Schroeder (its

client) began an investigation into the Heritage bond funds, facilities and

offerings. FAC, ¶¶360-64.17 Shortly thereafter, a slew of legal actions began to be

filed, such as receiverships, foreclosures and bankruptcies. On February 16, 2001,

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18 State law would appear to apply to this motion because the claimsalleged against Atkinson/Boehm are state law-based claims. Federal law,however, also supports sanctions for the conduct described herein and applicablecitations are footnoted below. A finding of bad faith is not required herein for theCourt to impose sanctions for destroying evidence and sanctions may be imposed“against a party that merely had notice that the destroyed evidence was potentiallyrelevant to litigation.” Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir. 1993). Accord, Akiona v. U.S., 938 F.2d 158, 161 (9th Cir. 1991), cert. denied, 503 U.S.962 (1992).



U.S. Trust filed an action against certain Heritage executives/Board members in

State Court in Texas. In June 2001, the first action that is part of this MDL

proceeding, the Betker action, was filed. In November 2001, the Herrmann class

action was filed in San Diego State Court which named the Firm and Boehm as

defendants. Under a variety of analyses, Atkinson/Boehm had a duty to retain all

documents. Notwithstanding this duty, Atkinson now claims that it either lost or

destroyed the documents. Boehm claims he has no documents in his possession

custody or control other than the “closing binders.”

It is highly suspicious that the very documents that would condemn or

exonerate Atkinson and/or Boehm for their role in bringing the bonds to market, to

the detriment of plaintiffs, should disappear. Thus far, Atkinson/Boehm have not

even demonstrated a willingness to clarify what happened to the documents. For

their role in losing or destroying this critical evidence, sanctions should issue.

This Court has the power to issue such sanctions as part of its inherent power to

manage its own affairs. Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991).18

1. Sanctions Pursuant to CCP §2023 Are AppropriateTo Punish Atkinson’s Conduct Herein

For the defendant’s misuse of the discovery process, sanctions pursuant to

California Code of Civil Procedure §2023 are appropriate. Cedars-Sinai Medical

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Center v. Superior Court, 18 Cal. 4th 1, 12 (1998) (“[d]estroying evidence in

response to a discovery request after litigation has commenced would surely be a

misuse of discovery within the meaning of section 2023, as would such

destruction in anticipation of a discovery request). See also, R.S. Creative, Inc. v.

Creative Cotton, Ltd., 89 Cal. App. 4th 486 (1999) (a traditional remedy for

spoliation of evidence is the imposition of discovery sanctions).

Here, Atkinson/Boehm claim that they have lost or destroyed the discovery

sought without explanation as to the circumstances leading to such loss or

destruction. As a threshold matter, plaintiffs urge this Court to order the

defendants to provide a sworn declaration describing how and under what

circumstances all documents responsive to plaintiffs’ discovery requests were lost

or destroyed. Should it be determined that the documents were destroyed after

Atkinson/Boehm received constructive or actual notice of this case, plaintiffs urge

that §2023 sanctions issue to the maximum allowable degree, as expressly

permitted by §2023:

(b) To the extent authorized by the section governing any particulardiscovery method or any other provision of this article, the court,after notice to any affected party, person, or attorney, and afteropportunity for hearing, may impose the following sanctions againstanyone engaging in conduct that is a misuse of the discovery process.

Cal. Code Civ. Proc. §2023(b). Even for negligent destruction, sanctions would

be appropriate. Glover, 6 F.3d at 1329.

a) Monetary Sanctions

Monetary sanctions are not only allowed under §2023, they are mandated:

(1) The court may impose a monetary sanction ordering that oneengaging in the misuse of the discovery process, or any attorneyadvising that conduct, or both pay the reasonable expenses, includingattorney’s fees, incurred by anyone as a result of that conduct. . . . Ifa monetary sanction is authorized by any provision of this article, thecourt shall impose that sanction unless it finds that the one subject tothe sanction acted with substantial justification or that other

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19 Boehm should be precluded from offering evidence for the last 4offerings that took place when he was at Atkinson.



circumstances make the imposition of the sanction unjust.

Cal. Code Civ. Proc. §2023(b)(1) (emphasis added). Here, Atkinson has been

stonewalling plaintiffs for 10 months without explaining what happened to the

missing documents. There can be no justification for Atkinson’s dilatory tactics

and, at a minimum, the Firm should be required to pay the costs of this motion.

Boehm’s tactics have been similarly offensive.

b) Issue Sanctions

Issue sanctions are also allowable under the facts presented by the

defendant’s misconduct:

(2) The court may impose an issue sanction ordering that designatedfacts shall be taken as established in the action in accordance with theclaim of the party adversely affected by the misuse of the discoveryprocess. The court may also impose an issue sanction by an orderprohibiting any party engaging in the misuse of the discovery processfrom supporting or opposing designated claims or defenses.

Cal. Code Civ. Proc. §2023(b)(2). Issue sanctions can be used here to preclude

Atkinson/Boehm from offering evidence, making objections and/or cross-

examining plaintiffs’ witnesses regarding designated issues. See, e.g., In re

Marriage of Economou, 223 Cal. App. 3d 97 (1990).19 Given Atkinson/Boehm’s

dilatory conduct and attitude toward plaintiffs’ rights to discovery in this action, it

would be entirely reasonable for the Court to preclude the Firm and Boehm from

offering evidence, making objections and/or cross-examining plaintiffs’ witnesses

on the issue of the veracity of the Offering Statements with respect to the last four

offerings at issue in this litigation.

c) Evidentiary Sanctions

Evidentiary sanctions are available to address the defendant’s misconduct:

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20 Federal law allows a district court to exclude witness testimonygrounded on destroyed evidence which is proffered by the party responsible fordestruction. Glover at 1329; Unigard Sec. Inc. Co. v. Lakewood Eng’g & Mfg.Corp., 982 F.2d 363, 368 (9th Cir. 1992); Campbell Indus. v. M/V Gemini, 619F.2d 24, 27 (9th Cir. 1980).



(3) The court may impose an evidence sanction by an orderprohibiting any party engaging in the misuse of the discovery processfrom introducing designated matters in evidence.

Cal. Code Civ. Proc. §2023(b)(3). Repeated misuse of the discovery process

supports evidentiary sanctions, which preclude the offering of evidence by the

wrongdoer. See, e.g., Do It Urself Moving & Storage, Inc. v. Brown, Leifer,

Slatkin & Berns, 7 Cal. App. 4th 27 (1992) (evidence supported determination that

plaintiffs’ noncompliance with discovery obligations was willful, justifying

evidentiary sanction, notwithstanding plaintiffs’ contention that their conduct

“was at most negligent” where the record was replete with instances of plaintiffs’

attempts to delay trial and withhold promised items of discovery). Here, because

of the bad faith dilatory tactics, it would be appropriate to preclude

Atkinson/Boehm from offering any form of evidence relating to the veracity of the

Offering Statements for the last four offerings, even if they ultimately convince the

Court that the loss or destruction of the documents was merely negligent.20

d) Terminating Sanctions

The sanction of rendering judgment by default against a disobedient party is

a drastic measure, but it has long been held appropriate for litigants like Atkinson

who persist in refusing to comply with discovery obligations. Petersen v. City of

Vallejo, 259 Cal. App. 2d 757 (1968); Fred Howland Co. v. Superior Court of Los

Angeles County, 244 Cal. App. 2d (1966) (trial court may apply ultimate sanction

of default against litigant who persists in outright refusal to comply with his

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21 Under federal law, “[d]efault and dismissal are proper sanctions inview of willful destruction of documents and records that deprived [a party] of theopportunity to present critical evidence on its key claims to the jury.” Nat’lHockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639 (1976); Prof.Seminar Consultants, Inc. v. Sino American Tech. Exch. Council, Inc., 727 F.2d1470 (9th Cir. 1984); Hughes Aircraft Co. v. Century Indem. Co., 141 F.3d 1176(9th Cir. 1998).

22 Lesser terminating sanctions might also be appropriate, including anorder striking Atkinson’s affirmative defenses. Cal. Code Civ. Proc. §2023(b)(4).



discovery obligations).21 As severe as this sanction is, the unsuccessful imposition

of a lesser sanction is not a prerequisite. Housing Authority of City of Alameda v.

Gomez, 26 Cal. App. 3d 366 (1972). The test on appeal is whether the lower court

abused its discretion on the particular facts before it. Id. The facts before this

Court warrant imposition of a terminating sanction. Atkinson, Boehm and their

counsel have been stonewalling plaintiffs for ten months without producing a

single sheet of paper or even attempting to explain why no documents have been

or will be forthcoming. A default sanction may be drastic, but Boehm, Atkinson

and its constituent members are officers of the Court. They know better than to

play fast and loose with the discovery rules.22

e) Contempt Sanctions

Contempt sanctions are expressly allowed under CCP §2023(b)(5). Given

Atkinson’s and Boehm’s role as an officer of the Court and its apparent contempt

for the discovery rules in this matter, contempt sanctions would not be an abuse of

discretion.

2. Adverse Evidentiary Inferences Are Appropriate ToPunish Atkinson’s Misuse Of The Discovery Process

Apart from sanctions available under CCP §2023, another potent remedy for

spoliation of evidence is imposition of an evidentiary inference that the evidence

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which one party has destroyed or rendered unavailable was unfavorable to that

party. Cedars-Sinai at 11. As the Supreme Court noted in the Cedars-Sinai case,

such an evidentiary inference has a long common law history, dating back to 1817.

Id. This inference is currently set forth in Evidence Code §413 and provides:

In determining what inferences to draw from the evidence or facts inthe case against a party, the trier of fact may consider, among otherthings, the party’s . . . willful suppression of evidence relating thereto.. . .”

Cal. Evid. Code §413. Standard civil jury instructions provide a similar inference.

See, BAJI No. 2.03. This Court is free to craft an inference to fit the

circumstances of this case, including consideration of the defendant’s role as

officers of the Court.

Adverse inferences based on spoliation of evidence are available under

federal law. Glover, 6 F.3d at 1329. A recent case on point set forth a three (3)

part test to determine if an adverse inference instruction is warranted. The party

seeking the inference must establish (1) duty to preserve; (2) that records were

destroyed with a culpable state of mind; and (3) relevance of the destroyed

evidence. Zubulake v. UBS Warburg LLC, 2003 WL 22410619 (S.D.N.Y. Oct. 22,

2003). As the Zubulake court noted, the greater the relevance of the destroyed

evidence, the less culpability required. Id. at *6 (citation omitted). An analysis of

the facts in the case at bar prove that each part of the test is met.

First, there is no question that numerous rules applicable to attorneys

imposed a duty on Atkinson and Boehm to preserve documents related to the

Heritage bond offerings. Atkinson and Boehm’s duty to preserve these

documents was underscored by the fact that they had to have reasonably

anticipated litigation when their client pulled the plug on future offerings and

started investigating potential liability, especially in light of the fact that the Platt

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litigation, which alleged that $2 million in bond monies disappeared, was ongoing

at that time. The next inquiry is, exactly what documents did Atkinson and Boehm

have to preserve? “Anyone who anticipates being a party or is a party to a lawsuit

must not destroy unique, relevant evidence that might be useful to an adversary”.

Zubulake at *3. “Once a party reasonably anticipates litigation, it must suspend its

routine document retention and destruction policy and put in place a ‘litigation

hold’ to ensure the preservation of relevant documents”. Zubulake at *4.

Regarding the second prong of the test - the “culpable state of mind” prong -

mere negligence is sufficient. If the evidence was destroyed in bad faith, that fact

alone demonstrates relevance. Zubulake at *6. Clearly, Atkinson and Boehm

were at least negligent, but the failure to offer any explanation as to what

happened to the documents, coupled with the blatant stonewalling of plaintiffs’

discovery requests in this case gives rise to an inference that Atkinson and Boehm

are acting in bad faith.

As for the third prong of the Zubulake test, the lost or destroyed documents

would undoubtedly be relevant to the plaintiffs claims. The veracity of the

Official Statements are at the very heart of the claims in this case. Furthermore,

the documents uncovered in discovery that related to the drafting of the other

Official Statements clearly show that these documents would also be relevant.

For example, the plaintiffs have uncovered a ‘memo to file’ written by

Boehm when he was working at Sabo & Green. Barry Declaration at Exhibit AA .

The ‘memo to file’ reveals the following relevant information:

• Boehm was aware of prior bond offerings which

involved both Emery Rubin and Robert Kasirer.

• Some of these offerings had “large cost overruns and

incorrect feasability study projections” and resulted in lawsuits.

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• Boehm was aware that at least one of the lawsuits

contained allegations that both Emery Rubin and Robert Kasirer

misappropriated monies.

• Boehm said he was going to review the litigation files

from these lawsuits.

Therefore, via this single ‘memo to file’ plaintiffs can prove that when

Boehm drafted the Official Statements he already knew and did not disclose the

following facts:

• Contrary to the statement in the Official Statement in the

section entitled “Relationship Among the Parties”, Robert Kasirer did

in fact have an existing relationship with Emery Rubin, an officer of

the Heritage Entity.

• Contrary to the statements in the Official Statement,

Robert Kasirer did not have a favorable history in bond projects of

this nature. In fact, his prior bond projects failed, allegedly due to

cost overruns and incorrect feasability studies. This is particularly

important given the fact that these are some of the causes for the

failure of the Heritage bond projects.

• Boehm never disclosed the allegations of

misappropriated bond monies (identical to the allegations in this case)

which were clearly material pieces of information that should have

been disclosed in the Official Statements.

See FAC ¶¶122-127, 171(c)-(d). Significantly, this single incriminating document

has not been produced by any other party in discovery. Plaintiffs do not anticipate

that it will turn up in any other files. This is because it is a “memo to file” and it is

unlikely that it was provided to anyone outside the law firm. Given Boehm’s

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position that he has no documents relating to Heritage other than the closing

binders, the ONLY party who would be able to produce this document to the

plaintiffs is Sabo & Green. The same analysis would hold true for any

incriminating ‘memos to file’ which would have been housed in the annals of

Atkinson. Therefore, plaintiffs will not likely find any of documents of this nature

relating to the time period when Boehm worked at Atkinson.

Another internal Sabo & Green memo from Green to Boehm discusses the

history of the Heritage/Columbia transaction, which was never disclosed to

investors. This document proves Boehm was fully aware of the history of the

Columbia-Kasirer situation, and the hidden profit Kasirer would be making from

the offerings. Barry Declaration Exhibit BB.

Yet another example is found in ¶250(a) where Boehm memorialized a

telephone conversation he had with bond counsel. According to the notes, Bond

counsel had opined that if Heritage Housing Development (“HHD”) guaranteed

the bonds then the history of HHD and its financial status would have to be

disclosed, which Boehm noted “which of course we’re not gonna do”. This

document provides evidence that Boehm knew that any such disclosure would

jeopardize the future of the scheme to defraud and that Boehm was willing to

structure the offerings in a way which would help perpetuate the fraud. Barry

Declaration, Exhibit CC.

Furthermore, critical evidence has been uncovered regarding the fact Boehm

was aware of and tried to “authorize” the co-mingling of monies by making or

instructing that changes be made to bond documents, and then instructed that a

risk factor be inserted for this (which never happened). FAC ¶¶256(a)-(e). These

documents came from other attorney files.

As notes to the file and similar documents appear to be lost forever, and

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they would clearly be relevant, plaintiffs easily satisfy the Zubulake test, and this

Court should hold that an adverse inference instruction is warranted.

3. Penal Sanctions Are Appropriate To PunishAtkinson’s Misuse Of The Discovery Process

California Penal Code §135 creates criminal penalties for spoliation:

Every person who, knowing that any book, paper, record, instrumentin writing, or other matter or thing, is about to be produced inevidence upon any trial, inquiry, or investigation whatever,authorized by law, willfully destroys or conceals the same, with intentthereby to prevent it from being produced, is guilty of a misdemeanor.

Cal. Pen. Code §135. Plaintiffs have been unable, despite repeated requests, to

ascertain the circumstances surrounding the loss or destruction of the documents

sought by the 1st RFP. By this motion, plaintiffs seek an order compelling

Atkinson and Boehm to provide a sworn statement describing such circumstances.

Should plaintiffs’ suspicions of wrongful destruction prove correct, penal

sanctions are appropriate.

4. Defense Counsel Should Likewise BeSanctioned For Their IndependentMisuse Of The Discovery Process

Lawyers are subject to discipline, including suspension and disbarment, for

participating in the suppression or destruction of evidence. Cedars-Sinai at 13

(citing Cal. Bus. & Prof. Code §6106 and Rules of Prof. Conduct, Rule 5-220).

Despite plaintiffs’ repeated requests and the repeated promises from counsel for

Atkinson that supplemental responses, would be forthcoming, Atkinson’s counsel

has responded with nothing but delay and obfuscation, refusing to explain why

documents have not or cannot be produced. Boehm’s counsel has been equally

evasive. Despite having authority cited to him that proved he had to request his

clients SEC deposition transcript, he refused to do so for 8 months (and refused to

answer the RFA’s until the motion to compel was granted). In addition, when he

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finally answered the interrogatories, they did not tell the truth. The fact he gave

Kasirer money had to proved to Boehm’s counsel by plaintiffs counsel, as Boehm

said in his sworn responses that he never did. When doing the second

supplemental responses to reflect this information, the answers regarding the work

Boehm did on his own suddenly changed, Funny how the story changed after

plaintiffs counsel pointed out that in light of the initial answers, Boehm’s defense

costs and fees should not be fully covered by the firms insurance policies.

Conduct less outrageous than this has been held sanctionable. See, e.g.,

Volkswagenwerk Aktiengesellschaft v. Superior Court In and For Sacramento

County, 122 Cal. App. 3d 326 (1981) (where defense counsel took no action until

25 days following service of answers to interrogatories, made only one or two

incomplete telephone calls in order to resolve disputed matters and refused

plaintiff’s offer of an extension of time in which to file a motion to compel so that

the matter could be discussed, the trial court did not abuse its discretion in

imposing sanctions against defense counsel pursuant to rule authorizing

imposition of sanctions against the person involved for failure to resolve a

discovery matter). Because counsel has repeatedly refused to acquiesce to

plaintiffs’ reasonable demands for an explanation of the circumstances

surrounding loss or destruction of the documents sought, sanctions against

Atkinson’s counsel are warranted.

B. Defendants’ Argument

Not only have plaintiffs presented a distorted summary of the facts leading

up to this Motion, they have also argued the wrong law. Specifically, except for a

few citations to federal law (two of them in footnotes), plaintiffs’ arguments are

based on California state law. Federal law, however, clearly applies to this Motion

which requests discovery sanctions pursuant to either Rule 37 of the Federal Rules

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23 Though unnecessar y, the issue of wheth er federal o r state law app lies, as well as app lication to

this Motio n of both fed eral and state la w, will be analyze d later within de fendants’ argu ments.



of Civil Procedure (“FRCP”) or this Court’s inherent authority to sanction for

misuse of discovery. Delving into the issue of whether federal or state law

applies, however, is unnecessary because the General Discovery Order issued by

the Honorable Rosalyn M. Chapman on July 16, 2003 (hereinafter referred to as

“the Discovery Order”), as modified by the parties’ August 15, 2003 Joint

Stipulation (hereinafter referred to as “the Joint Stipulation modifying Discovery

Order”), both of which are predicated upon the FRCP, clearly apply to this

Motion.23

1. The Discovery Order, the Joint Stipulation Modifying Discovery Order, andLocal Rule 37-1

This Motion relating to discovery involves two disputes - first, AALR&R’s

lack of possession of documents from its work on the Heritage Bonds which

would be responsive to plaintiffs’ requests for production of documents; and

second, service of AALR&R’s supplemental responses to plaintiffs’ other

discovery requests. Even a review of plaintiffs’ recitation of the facts leading up

to this Motion demonstrates that neither of these issues was ever addressed in a

“face-to-face” conference between Mr. Barry and counsel for AALR&R, or

between Mr. Barry and the lead attorney for the Attorney Defendants, Charles

Grebing. Plaintiffs’ lack of effort to resolve this purported dispute is important, as

explained below.

As the parties, their counsel, and this Court are aware, a full day was spent

preparing the Discovery Order. The obvious purpose of spending an entire day

preparing an order summarizing discovery procedures in this case was to simplify

such procedures and to involve the Court in discovery disputes only when

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absolutely necessary. Reflecting the Court’s intention of strictly enforcing the

Discovery Order, Paragraph 21 states: “Failure to comply with this Order will

result in severe sanctions to counsel, and may eventually result in sanctions upon

the parties.” (Emphasis added).

Notwithstanding such unambiguous words, plaintiffs have not even

attempted to comply with Paragraph 8 of the Discovery Order, as modified by the

Joint Stipulation modifying Discovery Order, which states:

The following procedures shall be observed in identifying andresolving all discovery disputes: Counsel for the party that feels thereis a discovery problem or dispute shall send a letter to counsel forthe opposing party or parties, identifying the discovery problem ordispute; counsel for the opposing party or parties shall respondwithin ten (10) work days; if the problem or dispute is not resolved,lead discovery counsel for the groups to which these parties havebeen assigned shall comply with Local Rule 37-1 (as modified)within five (5) work days (excluding weekends and holidays). Priorto personally meeting, counsel should, of course, attempt to resolvethe problem or dispute by a telephonic conference; however, thatdoes not absolve counsel from complying with the requirement tomeet in-person within five (5) work days of exchangingcorrespondence. The lead discovery counsel for the group to whichthe movant has been assigned shall schedule the in-person meetand confer... If the in-person meet and confer is unsuccessful, andthe problem or dispute remains unresolved, a Joint Stipulation shallbe filed within twenty (20) days.

(See p. 5, ls. 1-28 through p. 6, ls. 1-8 of the Joint Stipulation modifying

Discovery Order, amending ¶ 8 of the Discovery Order) (emphasis added). As

noted above, plaintiffs’ counsel, Brian Barry, has not complied with the above-

recited paragraph or even attempted to do so. Not only have Mr. Barry and

counsel for AALR&R not met in-person, neither have he and Mr. Grebing, the

lead discovery attorney for the Attorney Defendants. Moreover, Mr. Barry has

made no attempts to arrange such a meeting, even though the Discovery Order and

the Joint Stipulation modifying Discovery Order direct that he, as the moving

party, “shall schedule the in-person meet and confer.” (Ibid.). An in-person

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meeting between Mr. Barry and counsel for AALR&R would likely not have been

necessary, however, had Mr. Barry contacted counsel for AALR&R by telephone

to discuss the discovery matters at issue herein. If he had done so, counsel for

AALR&R would have imparted to Mr. Barry the information included in this

Motion, making unnecessary the Court’s participation in this dispute.

Plaintiffs have also failed to comply with Paragraph 6 of the Discovery

Order. Therein, Judge Chapman directs that Local Rule 37-1 shall be modified to

require “face-to-face meetings” to resolve discovery disputes, rather than

telephonic conferences which are normally required in cases involving counsel

located in different counties. Further demonstrating the Court’s expectation that

counsel will obey the Discovery Order, in Paragraph 6, Judge Chapman states that

“[t]he Court expects strict compliance by counsel with Local Rule 37.”

In relevant part, the Central District of California’s Local Rule 37 states as

follows:

Prior to the filing of any motion relating to discovery pursuant toF.R.Civ.P. 26-37, counsel for the parties shall confer in a good faitheffort to eliminate the necessity for hearing the motion or toeliminate as many of the disputes as possible. It shall be theresponsibility of counsel for the moving party to arrange for thisconference... Unless relieved by written order of the Court upongood cause shown, counsel for the opposing party shall confer withcounsel for the moving party within ten (10) calendar days after themoving party serves a letter requesting such conference. The movingparty’s letter shall identify each issue and/or discovery request indispute, shall state briefly with respect to each such issue/request themoving party’s position (and provide any legal authority which themoving party believes is dispositive of the dispute as to that issue/request), and specify the terms of the discovery order to be sought.(See Discovery Order, ¶ 6) (emphasis added).

2. Applicability of Federal Law

As previously mentioned, and although plaintiffs state otherwise in a

Footnote contained herein (see FN 11, in plaintiffs’ legal argument, wherein

plaintiffs state: “State law would appear to apply to this motion because the

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claims alleged against Atkinson/Boehm are state law-based claims”), federal law

applies to this Motion. Admittedly, there is room for differing choice-of-law

interpretations in many federal diversity cases. In cases such as this, however,

where a valid federal rule of civil procedure is directly on point, the choice is clear

- the federal rule applies. See, Hanna v. Plumer, 380 U.S. 460, 470-474 (1965);

see also, Exxon Corp. v. Burglin, 42 F.3d 948, 950-951 (5th Cir. 1995). In Hanna,

the United States Supreme Court explained this principle as follows:

When a situation is covered by one of the Federal Rules, the questionfacing the court is a far cry from the typical, relatively unguided ErieChoice: the court has been instructed to apply the Federal Rule, andcan refuse to do so only if the Advisory Committee, this Court, andCongress erred in their prima facie judgment that the Rule in questiontransgresses neither the terms of the Enabling Act nor constitutionalrestrictions.

Hanna, supra, 380 U.S. at 471. More recently, the Fifth Circuit has reiterated the

rule:

If the [federal] Rule speaks to the point in dispute and is valid, it iscontrolling, and no regard need be paid to contrary state provisions... Indeed, to date the Supreme Court has never squarely held a provisionof the civil rules to be invalid on its face or as applied.

Exxon Corp., supra, 42 F.3d at 950 (citations omitted) (emphasis added). This

Motion has been brought by plaintiffs to request that the Court order sanctions

against AALR&R and Joel Boehm for their alleged misuse of discovery. As set

forth below, Rule 37 of the Federal Rules of Civil Procedure addresses the issue of

sanctions for misuse of discovery. Thus, Rule 37 is directly on point, and federal

law applies to this Motion.

3. Rule 37 of the Federal Rules of Civil Procedure

Rule 37 of the Federal Rules of Civil Procedure (hereinafter “Rule 37”)

provides that any party may apply for an order compelling discovery or disclosure.

(See FRCP 37(a)). The Rule is often applied in situations like this where a party

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allegedly fails to respond to requests for production or allegedly provides

incomplete or evasive discovery responses. (See FRCP 37(a)(2)-(3)). According

to Rule 37, however, counsel are required to meet and confer, or at least attempt to

meet and confer, in an effort to resolve discovery disputes before bringing motions

regarding such disputes. (See FRCP 37(a)(2)(A) and (d)). As one court explained,

sending a letter to opposing counsel demanding compliance with a discovery

request is not considered “an earnest attempt to meet and confer.” Soto v. City of

Concord, 162 FRD 603, 623 (N.D.Cal. 1995) (quotation omitted). Rather,

continued the court, a live exchange of ideas and opinions is required. Id.

Following such reasoning, in Soto v. City of Concord, the court refused to

impose sanctions against the defendants because it appeared that the plaintiff did

not make an adequate attempt to meet and confer before filing a motion to compel

production of documents. Id. Plaintiff’s counsel in Soto had sent a letter to

defendants’ counsel outlining why he thought defendants’ objections to discovery

were unfounded, and urging defendants’ compliance by a specific date. Id. at 622-

623. Although the plaintiff in Soto made more of an effort to settle the discovery

dispute outside of court than plaintiffs have made in this case, the Soto court still

found such effort inadequate. This Court should similarly find with respect to

plaintiff’s minimal efforts to settle this dispute outside of court.

According to another requirement of Rule 37, a declaration must be attached

to a motion to compel. That declaration must detail moving counsel’s efforts to

confer with opposing counsel, and, if such efforts proved useless, the declaration

must explain why. Tri-Star Pictures, Inc. v. Ungler, 171 FRD 94, 99 (S.D.NY

1997). As discussed above, plaintiffs have woefully failed to meet their burden

with respect to arranging a conference with counsel for AALR&R, or with the lead

attorney for the Attorney Defendants, regarding the discovery disputes at issue in

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24 This general rule has two exceptions, both of which are notapplicable here. The two exceptions are: (1) when a party fails to appear fordeposition; or (2) when a party fails to respond at all to interrogatories or to arequest for inspection. In these two cases only, neither of which exists in thiscase, a party may be subject to sanctions even in the absence of a prior court order. (See FRCP 37(d)).



this Motion. Therefore, plaintiffs may not rely on Rule 37 to impose sanctions

upon AALR&R and Mr. Boehm for misuse of the discovery process.

There is a second and even more compelling reason why plaintiffs may not

rely on Rule 37 to impose sanctions upon AALR&R and Mr. Boehm. This reason

is that Rule 37’s sanctions are not available absent a prior valid order compelling

discovery under Rule 37(a). See, Shepherd v. American Broadcasting Cos., Inc.,

62 F.3d 1469, 1474 (D.C. Cir. 1995); see also, Unigard Security Ins. Co. v.

Lakewood Eng. & Mfg. Corp., 982 F.2d 363, 367 (9th Cir. 1992); see also, Bayoil

v. Polembros Shipping Limited, 196 F.R.D. 479, 482 (S.D. Tex. 2000) (quoting

Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure §

2284 (1994)) (“‘For [a] [c]ourt to impose sanctions under Rule 37, “there must be

a violation of a discovery order.’”).24 Plaintiffs have not obtained or requested

(and therefore neither AALR&R nor Mr. Boehm has violated) an order from this

Court compelling discovery. Therefore, plaintiffs may not utilize Rule 37 to

impose sanctions against AALR&R or Mr. Boehm.

4. Limitations on District Courts’ Inherent Authority to Issue Sanctions

In addition to imposing sanctions pursuant to specific federal rules, federal

courts may impose sanctions pursuant to their inherent authority. See, Chambers

v. NASCO, Inc., 501 U.S. 32, 44 (1991). However, because of its potency, the

court’s inherent authority “must be exercised with restraint and discretion.” Id;

see also, Zambrano v. City of Tustin, 885 F.2d 1473, 1478 (9th Cir. 1989).

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Generally, the Ninth Circuit has held that sanctions should be reserved for “rare

and exceptional” cases only. Primus Automotive Financial Services, Inc. v.

Batarse, 115 F.3d 644, 649 (9th Cir. 1997). One court set forth three exclusive

circumstances in which federal courts may impose an attorney’s fees sanction: (1)

when imposed in favor of a party whose litigation efforts directly benefit others;

(2) when imposed against a party who has willfully disobeyed a court order; or (3)

when imposed against a party who has acted “in bad faith, vexatiously, wantonly,

or for oppressive reasons.” Chambers, supra, 501 U.S. at 45 (citations and

quotations omitted). Furthermore, in most cases, sanctions are only issued where

the court has already issued at least one warning to the disobeying party. See, Id.

at 56.

Further, many courts have emphasized that a finding of bad faith must exist

before sanctions may be imposed under the court’s inherent power. See, e.g.,

Primus Automotive Financial Services, Inc., supra, 115 F.3d at 649 (“We insist on

the finding of bad faith because it ensures that restraint is properly exercised.”)

One court explained:

To insure that restraint is properly exercised, we have routinelyinsisted upon a finding of bad faith before sanctions may be imposedunder the court’s inherent power. [Citations]. A specific finding ofbad faith by the trial judge or magistrate must accompany the sanctionorder in all such cases. [Citation].

Zambrano, supra, 885 F.2d at 1478 (citation omitted). Moreover, in order to

properly impose sanctions under their inherent powers, district courts must make

an “explicit finding ... that counsel’s conduct constituted or was tantamount to bad

faith.” Christian v. Mattel, Inc., 286 F.3d 1118, 1131 (9th Cir. 2002) (citation

omitted).

Applying this principle that bad faith must exist to impose sanctions under a

court’s inherent powers, in Dunn v. Trans World Airlines, Inc., 589 F.2d 408, 415

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(9th Cir. 1978), the Ninth Circuit upheld the trial court’s decision not to impose

sanctions because no bad faith was found with respect to the defendant’s

discovery practices. Therein, the defendant requested production of certain

medical records, but was informed by letter that those records had been destroyed.

Id. Responding to the defendant’s request that the court issue a dismissal

sanction, the court stated:

We find that the district judge did not abuse his discretion in notimposing any sanctions for plaintiff’s failure to produce medicalrecords which were no longer in existence. Where the failure tocomply with a discovery order is due to inability, and notwillfulness, bad faith, or any fault of a party, the claim of that partyshould not be dismissed.

Id. (citing Societe Internationale Pour Participations Industrielles Et Commerciales

v. Rogers, 357 U.S. 197, 212 (1958)) (emphasis added).

Bad faith has been defined in this context to mean more than merely

inadvertent or tardy conduct. For example, in United States v. Stoneberger, 805

F.2d 1391, 1393 (9th Cir. 1986) the Ninth Circuit held that “mere tardiness does

not demonstrate the improper purpose or intent required for inherent power

sanctions.” And in Zambrano, supra, 885 F.2d at 1485, the same Circuit vacated

sanctions ordered by the trial court because district courts “may not sanction mere

‘inadvertent’ conduct.” Moreover, in Yagman v. Republic Ins., 987 F.2d 622, 628

(9th Cir. 1993), the Ninth Circuit found that sanctions were improperly imposed

because there was no evidence that the sanctioned party “had acted in bad faith or

intended to mislead the court.”

Applied here, plaintiffs have failed to demonstrate any bad faith on behalf

of AALR&R or Mr. Boehm. First, the fact that AALR&R and Mr. Boehm cannot

locate the documents requested by plaintiffs, in and of itself, does not establish

bad faith on behalf of AALR&R or Mr. Boehm. The documents were left in the

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25 Obviously, this slight delay caused little, if any, prejudice toplaintiffs as plaintiffs’ counsel did not even bother to contact AALR&R’s counselto discuss it.



safekeeping of the client, Miller & Schroeder, to whom the documents belong,

after all work of AALR&R and Mr. Boehm relative to the Heritage Bonds had

been completed, but before any claims relating to the Bonds arose. Second, as

explained earlier, the delay in AALR&R’s service of their supplemental responses

to interrogatories was due to a service error, for which counsel for AALR&R takes

full responsibility. This does not constitute bad faith; rather it was innocent error.

It is noteworthy, however, that plaintiffs’ counsel neglected to contact counsel for

AALR&R about the delay, and AALR&R’s counsel

only learned about such issue when she contacted plaintiffs’ counsel to discuss a

separate matter.25

With respect to evidentiary sanctions, their imposition is appropriate only in

cases where a party’s conduct has caused undue prejudice to that party’s opponent.

One court stated: “Exclusion sanctions based on alleged discovery violations are

generally improper absent undue prejudice to the opposing side.” Matrix Motor

Co. Inc. v. Toyota Motor Sales, USA, Inc., 2003 WL 22466218 at *3 (C.D. Cal.

May 8, 2003) (citation omitted); see also, Amersham Pharmacia Biotech, Inc. v.

The Perkin-Elmer Corp., 190 F.R.D. 644, 648 (N.D. Cal. 2000). Delay alone is

not a sufficient measure of prejudice. Amersham Pharmacia Biotech, Inc., supra,

190 F.R.D. at 648 (citation omitted). Plaintiffs have not demonstrated, and cannot

demonstrate, that undue prejudice has been caused to them in this case.

Dismissal sanctions are even less frequently imposed, and generally, courts

only impose such “drastic sanctions” in “extreme circumstances” where the

disobedient party “flagrantly and repeatedly disregards a court’s discovery order.”

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Matrix Motor Co. Inc., supra, 2003 WL 22466218 at *4 (citation omitted). In

order to impose a dismissal sanction, a court must find that the non-compliant

party’s non-compliance was due to “willfulness, fault, or bad faith.” Halaco

Engineering Co. v. Costle, 843 F.2d 376, 380 (9th Cir. 1988). For example, in

Toth v. Trans World Airlines, Inc.,862 F.2d 1381, 1385 (9th Cir. 1988), the court

found that a dismissal sanction was justified where the record contained

substantial evidence of “long and unjustified delays in responding to discovery

requests and noncompliance with judicial orders.” Certainly, none of these acts

has occurred in this case.

In response to plaintiffs’ spoliation claim, a sanction for failure to preserve

evidence is appropriate only when a party has “consciously disregarded” its

obligation to so preserve such evidence. Shepherd, supra, 62 F.3d at 1481

(citation omitted) (emphasis added). Therefore, in United States v. Kitsap

Physicians Service, 314 F.3d 995, 1001 (9th Cir. 2002), the court held that no

spoliation existed because, although certain documents relevant to the case had in

fact been destroyed, the purpose of such destruction - storage accommodation in

the normal course of business - was legitimate. See also, Akiona v. U.S., 938 F.2d

158, 661 (9th Cir. 1991) (No spoliation found because “[n]othing in the record

indicate[d] that the government destroyed the [relevant] grenade records with the

intent of covering up information.”) Moreover, once a party conducts a diligent

search for the evidence requested, that party has done all it is expected to do. Id.

Counsel for AALR&R has advised counsel for plaintiffs that it has

conducted, and will continue to conduct, a diligent search for documents

responsive to plaintiffs’ requests for production. Specifically, in a letter dated

August 6, 2003, Susan Oliver, counsel for AALR&R, stated:

AAL&R has in no way hidden or intentionally discarded or destroyed

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any documents. We simply do not have possession of them but arecontinuing efforts to locate same. If documents are located, they willbe provided to plaintiff...

(See Exhibit 1, Oliver letter to Barry of August 6, 2003). Yet plaintiffs still bring

this Motion, alleging that AALR&R and Mr. Boehm have misused discovery

practices and destroyed evidence. According to applicable federal law, these

claims are baseless.

5. Applicable State Law

Even if California state law appropriately applies to this Motion, plaintiffs

have erroneously construed such law. Just as plaintiffs’ contention that AALR&R

and Mr. Boehm should be sanctioned for destroying evidence and misusing the

discovery process found no support under federal law, it also finds no support

under California law. In California, there are two prerequisites to imposition of

sanctions: (1) there must be a failure to comply with a court order; and (2) that

failure to comply must be wilful. See, R.S. Creative, Inc. v. Creative Cotton, Ltd.,

75 Cal.App.4th 486, 496 (1999) (quoting Vallbona v. Springer, 43 Cal.App.4th

1525, 1545 (1996)). Here, neither AALR&R nor Mr. Boehm have failed to

comply with a court order. Thus, the imposition of sanctions is inappropriate.

Although requested by plaintiffs, terminating sanctions are particularly

unsuitable in this case. Terminating sanctions must be used sparingly, only when

lesser sanctions would not bring about the offending party’s compliance. R.S.

Creative, Inc., supra, 75 Cal.App.4th at 496. Moreover, terminating sanctions are

issued only when a party’s violation of a discovery rule was wilful or preceded by

a history of abuse of pretrial procedures, or when less severe sanctions would not

produce compliance with the rule. Security Pacific Nat’l Bank v. Bradley, 4

Cal.App.4th 89, 98 (1992) (citations omitted). For example, terminating sanctions

were ordered in a case where the plaintiff repeatedly violated stipulations and

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court orders, offered a forged document to the court, and deliberately destroyed

evidence pertinent to exposing her forgery. Id. Nothing even close to such

behavior has occurred in this case. Neither AALR&R nor Mr. Boehm have

violated a court order or stipulation, abused pretrial procedures, or deliberately

destroyed evidence pertinent to plaintiffs’ case. Accordingly, terminating

sanctions are inappropriate.

Finally, plaintiffs argue that sanctions are warranted due to AALR&R and

Mr. Boehm’s spoliation of evidence. Under California law, spoliation is “the

intentional destruction or suppression of evidence.” Id. at 497 (citation omitted)

(emphasis added). Plaintiffs have provided absolutely no evidence establishing or

even suggesting that AALR&R’s and Mr. Boehm’s failure to produce documents

responsive to plaintiffs’ requests for production is intentional. Nor have plaintiffs

provided evidence that AALR&R or Mr. Boehm have destroyed or suppressed

such evidence. Plaintiffs have not presented such evidence because none exists.

Therefore, there is no support to plaintiffs’ contention that AALR&R and Mr.

Boehm have destroyed or suppressed evidence.

Moreover, plaintiffs fail to recognize that California Code of Civil

Procedure § 2023, which plaintiffs use throughout their arguments for imposition

of sanctions against AALR&R and Mr. Boehm, actually requires that sanctions be

imposed against plaintiffs themselves. In relevant part, that statute states:

(a) Misuses of the discovery process include, but are notlimited to, the following:

* * *(9) Failing to confer in person, by telephone, or by letter with

an opposing party or attorney in a reasonable and good faith attemptto resolve informally any dispute concerning discovery, if the sectiongoverning a particular discovery motion requires the filing of adeclaration stating facts showing that such an attempt has been made. [CCP § 2031(m) requires the filing of such a declaration with respectto requests for production of documents and CCP § 2030(l) requiressuch filing with respect to interrogatories.] Notwithstanding the

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outcome of the particular discovery motion, the court shall impose amonetary sanction ordering that any party or attorney who fails toconfer as required pay the reasonable expenses, includingattorney’s fees, incurred by anyone as a result of that conduct.

California Code of Civil Procedure § 2023(a)(9) (emphasis added). As discussed

earlier, plaintiffs have failed to confer in person, by telephone, or by letter with

AALR&R’s counsel in a reasonable and good faith attempt to resolve informally

the discovery disputes at issue herein. Therefore, monetary sanctions should be

imposed against plaintiffs to compensate opposing counsel for their time spent

responding to this unnecessary Motion.

In Obregon v. Superior Court, 67 Cal.App.4th 424 (1998), a California

court was faced with a dispute similar to this one. Therein, an employee sued her

employer for sexual harassment, among other claims. After serving discovery

upon and receiving responses thereto from her employer, the employee sent her

employer a letter requesting further responses. The employer responded by

asserting essentially the same objections asserted in its initial response. The

employee filed a motion to compel further response. Not only did the court deny

the motion to compel, it imposed sanctions against the employee because “a

greater effort at informal resolution should have been made.” Id. at 433.

The court explained in detail what is meant by the requirement that parties

must attempt to informally resolve discovery disputes before filing a motion to

compel before the court. The court stated:

The level of effort at informal resolution which satisfies the‘reasonable and good faith attempt’ standard depends upon thecircumstances. In a larger, more complex discovery context, agreater effort at informal resolution may be warranted.

Id. at 431 (emphasis added). Applying such law to the facts in Obregon, the court

found that sending a letter regarding the discovery dispute was not enough of an

effort to informally resolve such dispute. Id. at 432. Citing to another case, the

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court further noted that mere bickering at a deposition would likewise not

constitute reasonable and good faith attempt at informal resolution of a discovery

dispute. Id. (citing Townsend v. Superior Court, 61 Cal.App.4th 1431, 1439

(1998)).

By all estimates, this case is complex in all contexts, including the discovery

process. Therefore, a great effort at informal resolution of discovery disputes is

warranted under California law. Here, however, plaintiffs have taken no concrete

actions to resolve any perceived discovery disputes. Therefore, if sanctions should

be issued against any party in this case, they should be issued against plaintiffs.

6. Duty to Maintain Client Files

Plaintiffs’ argument begins with a statement that attorneys such as

AALR&R and Mr. Boehm owe special duties to their clients, including duties to

retain and protect documents. From this statement, plaintiffs seem to infer that,

because AALR&R and Mr. Boehm are unable to locate documents regarding the

Heritage Bonds, AALR&R and Mr. Boehm have somehow breached a duty to

plaintiffs. Plaintiffs have no standing to make this argument, however, because

the duty owed, pursuant to Rule 4-100 of the Rules of Professional Conduct, is

owed to clients, not adversaries in a separate lawsuit.

Moreover, plaintiffs have oversimplified the analysis regarding retention of

client files. Although Rule 4-100 states that an attorney must keep and maintain

complete records of all funds, securities, and other properties of a client for five

years after distribution of such funds or properties, courts apply this Rule with

flexibility and common sense. Furthermore, the California State Bar has held that

Rule 4-100 does not even apply to an attorney’s retention of a client’s files. In

Formal Opinion No. 2001-57, the State Bar has approached this issue as follows:

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The basic principle is that [an] attorney may destroy a particular itemfrom a former client’s file if he or she has no reason to believe thatthe item will be reasonably necessary to the client’s representation... [at *3] The Committee agrees with Opinion 1996-1 that [an]attorney’s obligation regarding former client files cannot be measuredby a fixed time period... [at *4] [T]his Committee does not believethat [R]ule 4-100, [which requires that attorneys preserve for fiveyears records and accounting of funds, securities, and otherproperties of clients], is intended to address the retention of files; nor does the Committee believe that a file retention period of fiveyears is in all cases required [at *5, FN5].

California State Bar, Formal Opinion No. 2001-157 (Cal. State Bar Comm. Prof.

Resp. 2001) 2001 WL 34029611, at **3-5 (emphasis added). In this matter, the

client, Miller & Schroeder, chose to maintain its own files.

Given this set of facts and the relevant law, plaintiffs’ arguments regarding

AALR&R’s and Mr. Boehm’s duties to retain their Heritage Bonds files are

severely flawed, as are their other arguments in support of their sanctions requests.

Therefore, plaintiffs’ sanctions request must be denied.

IV. CONCLUSION

A. Plaintiffs’ Conclusion

At a minimum, plaintiffs urge this Court to order Atkinson/Boehm to

provide a sworn declaration describing how and when all documents responsive to

the 1st RFP were lost or destroyed. Plaintiffs further urge the Court to punish

Atkinson’s discovery misconduct with sanctions, adverse evidentiary inferences

and/or penal sanctions, as warranted. Sanctioning Atkinson’s attorneys would

also be appropriate for their role in perpetrating Atkinson’s dilatory tactics.

Plaintiffs additionally respectfully request that the Court order Atkinson to pay

plaintiffs’ costs in having to pursue this motion.

B. Defendants’ Conclusion

Plaintiff brings this Motion against Defendants with no basis in law or fact.

Defendants have fully complied with all of Plaintiffs’ discovery requests, and with

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each of this Court’s orders.

Even in the face of AALR&R’s and Mr. Boehm’s complete compliance with

all of the specific discovery requests propounded, Plaintiffs inexplicably bring a

Motion for Sanctions. Defendants should never have had to respond to such

allegations, but has been forced to do so by Plaintiffs’ reckless and unfounded

tactics.

As such, this Court is wholly justified in denying Plaintiffs’ Motion and

issuing sanctions and against them and their counsel, instead.

Dated: November ___, 2003 LAW OFFICE OF BRIAN BARRY

____________________Brian Barry #135631Jill Levine Betts #2080651801 Avenue of the Stars, Suite 307Los Angeles, CA 90067Telephone: (310) 788-0831Facsimile: (310) 788-0841

GLANCY & BINKOW LLPLionel Z. GlancyPeter Binkow1801 Avenue of the Stars, Suite 311Los Angeles, CA 90067Telephone: (310) 201-9150Facsimile: (310) 201-9160

Co Lead Counsel for Class Action Plaintiffs

Dated: November ___, 2003 WHITE NOON & OLIVER, APC

____________________Daniel M. WhiteSusan L. Oliver550 West C Street, Suite 950San Diego, CA 92101Telephone: (619)239-0300Facsimile: (619)239-0344

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Dated: November ___, 2003 WINGERT GREBING BRUBAKER &RYAN, LLC

____________________Charles R. GrebingKimberly D. HowattOne America Plaza600 W. Broadway, 7th FloorSan Diego, CA 92101Telephone: (619)232-8151Facsimile: (619)232-4665

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PROOF OF SERVICE VIA ELECTRONIC TRANSFER

STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

I, the undersigned, declare: that I am employed in the aforesaid County,State of California in the office of a member of the Bar of this Court at whosedirection the following service was made. I am over the age of 18 and not a partyto the within entitled action; my business address is: 1801 Avenue of the Stars,Suite 307, Los Angeles, California 90067.

On Nov. , 2003, I served upon the interested parties in this action,pursuant to Fed. R. Civ. P. Rule 5(b) and Local Rule 5-3, the document describedas follows:

JOINT STIPULATION REGARDING PLAINTIFFS’ MOTION FOR SANCTIONS AGAINST

DEFENDANT ATKINSON, ANDELSON, LOYA, RUUD &ROMO ANDJOEL BOEHM FOR DESTRUCTION OF EVIDENCE

[X] by sending electronically a true and correct copy thereof to Verilaw forservice on all counsel of record (see attached service list) by electronicservice pursuant to the Order Re: Electronic Service.

By electronic transfer I sent said document to Verilaw Technologies, Inc.,located at 400 East Lancaster Avenue, Suite 300, Wayne, Pennsylvania 19087,www.verilaw.com, initiated on the Heritage Bond Litigation Website, before thehour of 6:30 PM.

I declare under penalty of perjury, under the laws of the State of Californiaand the United States of America, that the foregoing is true and correct. Executedon Nov. 2001, at Los Angeles, Los Angeles County, California.

Jill Betts