to consolidate cases and mr johnson will hear from you  good morning your honor so i appreciate the opportunity to be before you today and present our position our client's position mr brewster mr herbert sic c brewster and brewster family limited liability pardon mr brewster herbert c brewster and brewster family limited liability company or my clients today for purposes of this argument your honors that the core of this case in our opinion in my clients and is about the court valuations that are not evidence in this case there was mr there's a standard under a section for a way to rescind that says that if the transactions occur no more than fair market value they satisfy an exemption interest and they're not prohibited transactions the court valuations were created the money into the east and the money can come back up to the corporation but then if there's a mirror loan going out to brewster family limited liability company if you don't pay that money out to brewster family limited liability company it's not deemed to be a payment on   loan that was one error and the other or the judge made in that respect and this is at page forty seven invertebrates this is a clear air judge jury and concluded that there was not a release of shares from brewster and associates company the company itself to these so well the stock was in the east it wasn't to be released from the corporation to the south it was already in the set up so that's why the three point eight million dollars was in the air and it wasn't supported by the testimony  point the point is the plaintiffs continued to argue that three point eight million dollars went into the back up to the corporation went to to mr brewster brewster family and they did not  state in the corporation that created a tax deduction that created value your honor it didn't it didn't create a loss for the stop and that's our argument so that's a clear error that's one  the damages of a would be were well if you got it if you got it three point eight million dollars payment that was to have occurred judge juergen considered that three point eight million dollars payment in deciding how much damages to have been incurred for the use up in the transactions right but that wasn't a total component it would have been part of a net netting it was it was part of it was it part of the error and it's a clear error in the much different if that were to be at least this was true when i practiced bankruptcy long ago the judges would hear testimony from experts from both sides and quite often the judge would come up with something in the middle and you call it the court valuation but it's also the shielded by clear error normally it's your honor if you look at the case law the appellate case law in florida which is straight on this issue you can't split the difference that's not evidence accord valuation is not evidence his split the difference so would a model which did give mr range fifty percent by the way he was reassured because he came out close to where the bear people had come out in donnelly with their thirty million calculations your honor he created his own value where that is that not a correct statement that he ended up essentially where the beer people did i don't know if you ended up exactly where the bear people did i think the bear the first bear calculation given to dolly was about thirty million and that's when donnelly sent it to you and you were tweaking it and trying to get it higher and your honor i did not tweak it and i did not improperly factual information to mr donnelly and others about hurricane katrina that it happened i gave factual information about the substantial number of vehicles that get the actual information about the election union election battles you're syncs actual expenses he created his own hypothetical expenses and applied them to create a valuation mr range testified at record on appeal to nine hundred forty two that that was not a proper bell you wish to say anything about these areas that you were talking about to explain you did just nor the points that you're making now in my opinion it ignored those points and didn't take them into cannot assure us i don't believe he did properly address those points or if you don't read it properly addressed but that's to say i'm going to count them on one side of the equation and mr range on the other side around your honor judge jones do you want to standard in the fifth circuit in this country that takes a valuation from a legitimate guy like mr range credibility calls on experts and then i was shielded by clear error is that we are not experts on valuation and to ask the judge to pick mr range or mr messina would be asking the judge to have a higher used in correct debt amounts it's clear in the record pages fifty sixty or sixty of our opening brief defense exhibit one eighty four appellate exhibit one ninety three it's very clear in the record that mr range use the from your honor if i said i obviously was lead trial counsel i sat there and mrs henry and mr smith they provided the testimony that corroborated from the brewster financial statements the dead amounts mr secretary never provided the correct data to mr messina at record on appeal to eighty four fifty five eight and two eighty four six zero so they never seen or never got it and mercer didn't use the correct amounts in some instances well do you have any  figures on its contemporaneous financial statements and then he says mr raines took a different answer court determined none of those approaches was clearly correct or incorrect your honor i think that's a clear error because  if you look at the testimony and you look at the brief from fifty six to sixty in the exhibits that i mentioned in the testimony that i mentioned it is clear that this ms smith who was the controller for brewster and associates testified about all the actual data and then i took the experts through the actual dead amounts and both of them concluded that they didn't use the actual dead amounts from the financial statements of you got that on cross examination i did your honor and if i may a couple  obviously want to be respectful of my twenty five and get through all my points and accurate projections judge judge juergen was concerned about inaccurate projections judge jordan to respond to th thirteen nine hundred employees and probably gone to the bank for working capital lines occasionally or whatever didn't do its accounting through gap your honor there's many many companies in this country that are well run that don't have  tell me the of the side will tell me i thought we had your answer and i thought we had indicated that they are equally briefed on appeal yes you did right and is there any obvious reason in your view this is we're talking about two thousand and four and five when these transactions happened so that's the interest rates to look at but the pre judgment interest runs from two thousand and ten forward i think this year with the pre judgment interest they only argument we made was there any last compensation and i'm looking at the zealot case in that the tribune case was there any loss compensation the participants were still paid their same level of compensation they were still paid their same benefits and on top of that they had the seized up benefits and nothing was taken away from them in order to provide the cce up benefit your honor also i'd cory whether even if even if mr brewster in the trustees have done the transactions at the court valu the company's still what there's still a there's still a windfall issue here because what what would have happened so if they'd done that valuation there would have been any any benefit to the set up at the end of the day because three or four years after the transaction happened events occurred like siebel systems like the bell self loss of that contract other things happened that caused the business to go out of business so i didn't see anything about what caused the business business there was there was it didn't have to do did you have to do with what judge sheridan identified is three big problems katrina or the vehicle game changer or whatever the third there was just speculation about that there was no evidence that was presented that proved that something one of those things caused it i added two other things that i know happened after two thousand and five that should be considered siebel systems the belt loss of the bell south contract both brought up at trial that were not reasonably understood to have occurred by the trustees at the time that they made the decision to do the transaction issue of whether or not mr brewster supplant supplanted the authority of mrs smith and mrs henry mr brewster the case on this is schlegel versus boswell and there's a key phrase  there i'd just like to read for one minute if i may the key phrase is to satisfy the authority or control element to the plan or smarts demonstrate and i'll say that mr brewster caused the trustees to relinquish independent discretion and invest in the plans fund and follow the course prescribed by mr brewster that didn't happen in this case and that's the testimony at trial thank you for letting me be heard your honour's i really appreciate it ronson you say some time for about herbert brewster saw his company going downhill diminishing profitability and lower margins he wanted out and his way out was provided by his attorney mr hanson who described a way to transfer ownership the company to an isa had removed any risk from mr brewster himself and that's what happened just for the sake of argument doesn't say anything about mr brewster we're seeing the downfall of his company is early two thousand and one there's certainly plenty of st opinion about two thousand and five but nothing about two thousand and one that i recall and his findings i don't recall that judge or made a specific finding about this your honor but there is evidence in the record that the reason mr brewster started looking for a buyer for the company back in two thousand and one was the fact that margins for going down profits were going down and was he at that time i am not aware your honor he was looking at retirement that is a possibility to try to sell the company to other parties before he turned to the stock i think yes he did and he had no success in trying to the contracts are not under the contracts and that would be the end of the company that is accurate a lot of the company may have been able to retool his motives how are they relevant to whether there is a and there was damages legal damages right so rather than pain a jury argument how you don't like this guy and what his motives are why don't we deal with the seemingly the important thing in this question is  calculation of damages and whether they're justified or not i agree here on earth the motors themselves are not important they just give background for the transaction and what we have observed in the transaction is a situation where the owner of a company creates any sob to acquire the company basically a captive audience he hires an appraiser without investigating the qualifications of the praiser he doesn't give the information necessary information to the appraiser and then he influences the appraiser and the other fiduciary is of the trust to make sure that he sells the company at the highest possible price yes what concerned me i mean you know the dant the finding so shielded by clear took a little too lightly the question of mr seely's ability to sue here i'm sort of wondering what value was added to this case by your i mean i realize you filed suit and maybe the labor department did afterwards or did you file suit while they were investigating the point is once a department of labor's gotten in with that same material allegation same question and so on what value is added by y investigators they had their attorneys obviously and we worked in conjunction with them to economically pursue the litigation whether mr seely had any particular genius that you know contributed to the was your particular well ok all right the only question i have legally is and i think it's pretty significant yes you have an argument that any plan participant may sue on behalf of the plan but what guarantee is there that a person in mr see you he's position could not to simply souza stalking horse for a company the same as you say that a class action representative who isn't fulfilling his fiduciary duty to the class can settle out bind everybody under res judicata and inflate the company from liability well your honor in that there is there an agency problem in here and him what you're doing in some cases run to the reserve question about agency but that's not disk ace in this case we didn't see you on behalf of the plan as a whole and the department of labor sued on behalf of the plant as a whole and as the judge noted that the role of that it's of the department of labor in this case completely addresses any concerns about dispersement all represented to capacity and furthermore after the judgment was entered at  place the department of labor is here to make sure that takes place all of the all of the procedural protections that one could hope for labor or not and you would agree there might be an agency problem no your honor would i would not agree with that i think that's a terrible idea well your honor if the department of labor had chosen not to get involved plainest would is or at least had the option of moving from class for this occasion which is commonly done in these are recent cases and at that point there would have been court oversight there would be appointed class representatives and appointed class counsel that was unnecessary here however because department of labor got involved early in the case which obviated the need for a formal like each expert in the case the court is taking a number of valuations under different methods and assumptions and then combining the results to arrive at a figure in this way the court sample pool is larger than those average for weighed weighted by the individual that's not creating a new number out of thin air that is creating a damages number based on all the evidence in the case the judge heard in didn't an exemplary way of doing that and in terms of the three point eight million dollar argument that mr hanson led with he's apparently argued that that was the most critical mistake that the trial court made but i guess i think he's missing the big picture here what happened with the three point eight million was this is money that the aesop paid they wrote a check for three point eight million dollars to be ai as they were required to do under the documents now b a i didn't transfer that to the limited liability company but that doesn't change the fact that the sub spent the money that's real damages no matter how you measure it and not only that is the court noted that's money that was received by mr brewster it didn't go into thin air that benefits right yes your honor bit but b a on the day i was controlled by mr brewster at that time and he made the choice not to transfer the money to be f l g and again we don't know his motivation for that matter once he made that decision they both shared in tax benefit right they shared in the tax benefit but that does not change the fact that it's real damages suffered by the aesop we're looking at damages in a situation like this the question is how much did the aesop pay and how much poised how much did they overpay in the transaction and the fact to be a i didn't transfer the money to be a fellow see that is a transaction by  question is has there been a breach and as a result of that breach was there a difference in the fark or market value that was paid for market value that may be what the bargain should according to the judge's findings by four and a half million dollars and that is that to do that is how much the amount of their damage now whether after the fact you know mr brewster you know moved money around between his different entities you know out to be a good deal or a bad deal later it isn't the touchstone of whether there's due reaches and what and what the damages are for those breaches that's right so the i have a few a few short answers to that your honor and i hope i'm answering your question please tell me if i'm not the whole winfall argument is something of a red herring here because a windfall is when a intra party recovers his or her damages twice it's not recovering your damages wants no it's not it's recovering more than you're supposed to it may be one point five times not twice right and it's understanding what you know you're out of it but the question here is what is the measure of damages and the measure of damages here is the difference in value between the actual fair market value of the company at that at the time back in two thousand or two thousand and five in the amount that the aesop paid for the company and that difference in value is going to have million dollars you know you're talking about the total four and a half million yes i mean you're not time but the december  transaction the three point eight million mirror loan is only on the december for right am i wrong about that i thought it was i and i told you guys right i don't remember the transactions that issue one was december for a vote for right yes september september of zero five in december of zero five yes all right now maybe i was mistaken but i thought the mirror trends you talked about this four point five million and you were saying and you're referring to a gross figure my understanding was that three point eight million referred to just one aspect of the borrowing and one of those stock sales the three point eight million is a reference to the december of zero four transaction and everything in everything from that transaction was refinanced in december of  five so the december of four transaction and the december of five transaction are sort of the one in the same because everything all the debt from two thousand and four got rolled over into two thousand and five  financed in knew that so well where was the nine hundred thousand dollars over he kept the judge calculated one overpaying a separate overpayment for each transaction duty and yes ma'am and it was nine hundred thousand for december of zero four right and then zero zero i forget what the overpay was smaller for september right and then a larger one for december of  bess and and so the overpayment amount as you say was nine hundred thousand for the first transaction two hundred thirty six thousand for the second transaction and then three point three million for the last transaction and september of five transactions where we're refinanced and in reissued with with a new new no new a new whole new set of transactions and to to quickly address the question of windfall  paid and and there's no want to the contrary that is offered by the defendants here moreover it's important to consider that in order to avoid a windfall to the wrong door in this situation mr brewster walked away from the transactions and that's from the entirety of the five transactions beginning and i think your but those are outside what did he walk away with with from these three because i was not the only ones you consume on and there's no evidence that the others were improper i don't have the breakdown on that you're wrong i apologize apologize i'm sure i could figure it out but i just don't have that and i think the tips i apologize for the what is important i think to recognize the in terms of the windfall question is the fact the company was overvalued by as the judge found four and a half citizen would put them back in the position they would have been but for the illegal conduct in this in this case but if you take the position that there is a windfall if you don't have rece that presumes that you make the deal and that because you make the deal someone may be better off the fact that you made a deal but if you look at rescission you would have had no deal at all so how is it how it is or when to anybody if you have no deal at all if your body just gets back to where they were before this ever started what is creating a windfall  case is that the judge was wrong about when and if he's wrong about the when was a matter of course he should have ordered yes there are although entrepreneurs right from a tax standpoint if you accept that which i think is plain and you may not but just play along with me if that's the case why would anybody ever do  move if i'm not so i understand that there's always moves any time but there would be no incentive for the employer to do that if he could be sued for recision  of he just sold it if he just sold it to them there would not there you know unless he committed outright fraud which of it this is not this is a breach of fiduciary duty it ain't fraud if he just sold it to them and then they sued because it wasn't worth what they thought it was all you get is contract damages right if he financed it through a third party and then sold the stock out right this thing outside of the of  an ordinary breach of contract case the amount of damages to be less difference of the value gotten and the value value paid for in the value received which is what the judge applied here  things considered but i don't quite understand why you say if he threw out ranges testimony you did you move to exclude ranges testimony disregarded that's ok because i didn't see that in his opinion but he decided to admit it after a hearing or whatever right ok so before your argument has any punch we would both using donnelly's discredited evaluation for their debt calculation in their fair market value couple of your arguments in your brief i don't think something that it's an objective number debt is not a valuation right and neither of those fellows purported to say they were doing an expert evaluation of debt debt is what you know it's portion part of that evaluation if the fee doesn't agree with their overall evaluations of either one why does that preclude him from valuation and why and why does that mean that he can accept the death portion of that for one of the extra if i think i reported as a positive by mr range in his report he views the coca cola bottling company example of how valuable the coca cola bottling company was also there's no evidence in the record that directv ever terminated any of those contracts they were contracts that went on perpetually mr brewster and his company were one of the best performers in directv stable of companies and that was proven a trial as well rangel looked at that issue as a positive incorrect correct by mr mercer and mr messina we believe the secretary never gave the correct that information to mr messina to rely upon and it was reported at trial also your honor you talked about causation and you talked about was there a breach and you know again we've stated our position on the breach and in the position of what the trustees did and did not do not arguing that point right now but assuming there was a breach was the breach connected in any way to the damages and that's the point we were making on the  connect that's the point we're making about unforeseen events like the siebel systems thing that came in after the fact it cost the company a lot of dollars the last eighteen t bell south contract after the fact that about was the twenty five million i understood the exchange but specifically the actual amounts of the transactions were eighteen point four million six point seven million if you take the contracted purchase price you add them up six point seven million one point two million and ten point five billion that's eighteen point four million for those three transactions in two thousand and four and five but the actual amount of dollars and that dollars that was presented at trial was roughly about six million dollars that mr brewster received for his company built for his entire life you know again we take the position that the court valuations are are not evidence and mr ranges valuation was treated as well or better than any other valuation during the course you would order discouragement i suppose i don't know i don't know the answer to that i'm sorry your honor but in terms of we do take the position that the court valuation is not evidence as we stated in our brief and as we've stated today but if you don't agree with that then you know the best thing for the judge to do if we don't agree with that position is to have the judge actually make a determination on valuations and we believe that mr would carry the day in that mr range was slightly above the transaction prices every time and mr messina and mr mercer were way down here every time  in terms of the growth company twenty two mr range testified he used some demonstratives and he showed economically the company going up with a chart like this the value weight the projections  you know dozens and hundreds of employees to a thousand employees from two thousand and two through two thousand and five this was two thousand and six or seventy seven this company was a growth company mr range testified as such i now did i did i miss sun miss i understand your point about the three point eight million i'm sorry ma'am i did not know maybe it doesn't matter did i misunderstand your point about the three point eight million i don't know