Case 6:12-bk-28006-MJ

1
2
3
4
5
6
7
8

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 1 of 244

Desc

MICHAEL J. GEARIN (admitted pro hac vice)
MICHAEL B. LUBIC (SBN 122591)
MICHAEL K. RYAN (admitted pro hac vice)
BRETT D. BISSETT (SBN 280366)
K&L GATES LLP
10100 Santa Monica Boulevard, Seventh Floor
Los Angeles, California 90067
Telephone: 310.552.5000
Facsimile:
310.552.5001
Email:
michael.gearin@klgates.com
michael.lubic@klgates.com
michael.ryan@klgates.com
brett.bissett@klgates.com
Attorneys for California Public Employees’
Retirement System

9

UNITED STATES BANKRUPTCY COURT10CENTRAL DISTRICT OF CALIFORNIA

11

RIVERSIDE DIVISION

12
In re

Case No. 6:12-bk-28006 MJ

CITY OF SAN BERNARDINO, CALIFORNIA,

Chapter 9

13
14
Debtor.
15
16
17
18
19
20
21
22
23
24
25
26
27
28

CALPERS’ MOTION FOR LEAVE TO
APPEAL FILED PURSUANT TO FRBP
8001(b)[HEARING TO BE SET BY DISTRICT
COURT]

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 2 of 244

Desc

1
TABLE OF CONTENTS
2
3

Page
I.

CALPERS’ APPEAL IS OF RIGHT BECAUSE THE ORDERS FROM WHICH
CALPERS APPEALS ARE “FINAL.” ..................................................................................... 1

II.

REQUIREMENTS NECESSARY FOR MOTION FOR LEAVE TO APPEAL. .................... 4

III.

STATEMENT OF FACTS NECESSARY TO AN UNDERSTANDING OF THE
QUESTIONS PRESENTED BY THE APPEAL. ..................................................................... 5

4
5
6
7

A.

CalPERS.......................................................................................................................... 58

B.

The City of San Bernardino’s Bankruptcy Filing. ..........................................................59C.

The Bankruptcy Court’s Determination of the City’s Eligibility....................................6

10

IV.

STATEMENT OF QUESTIONS TO BE PRESENTED BY CALPERS’ APPEAL AND
RELIEF SOUGHT. .................................................................................................................... 7

V.

STATEMENT OF REASONS WHY AN APPEAL SHOULD BE GRANTED. ..................... 8

11
12
13
14
15
16
17

A.

The Appeal Involves a Controlling Question of Law on Which There is a
Substantial Basis for Difference of Opinion. ................................................................10

B.

An Immediate Appeal Will Materially Advance the Resolution of thisBankruptcy Case. ..........................................................................................................11

VI.

COPY OF THE JUDGMENT AND ORDER. ........................................................................ 12VII.

CONCLUSION. ....................................................................................................................... 12

18
19
20
21
22
23
24
25
26
27
28

-i-

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 3 of 244

Desc

1
TABLE OF AUTHORITIES
2Page(s)3

CASES
Ashton v. Cameron Cnty. Water Improvement Dist. No. 1,
298 U.S. 513 (1936) ........................................................................................................................... 3
City of Oakland v. Pub. Emps. Ret. Sys.,
95 Cal. App. 4th 29 (2002) ................................................................................................................ 5
Cohen v. Beneficial Industrial Loan Corp.,
337 U.S. 541 (1949) ....................................................................................................................... 3, 4
Coopers & Lybrand v. Livesay,
437 U.S. 463 (1978) ........................................................................................................................... 3
In re Capen Wholesale, Inc.,
184 B.R. 547 (N.D. Ill. 1995) .......................................................................................................... 10
In re Cottonwood Water & Sanitary Dist., Douglas County, Colo.,
138 B.R. 973 (Bankr. D. Colo. 1992) ............................................................................................ 3, 8
In re Coudert Bros. LLP Law Firm Adversary Proceedings,,
447 B.R. 706 (S.D.N.Y. 2011) ........................................................................................................... 9In re Desert Hot Springs,
339 F.3d 782 (9th Cir. 2003).......................................................................................................... 3, 4
In re Flores,-- F.3d --, 2013 WL 4566428 ............................................................................................................. 8
In re Gotcha Int’l. L.P.,
311 B.R. 250 (9th Cir. BAP 2004) ................................................................................................... 11
In re Mason,
709 F.2d 1313 (9th Cir. 1983)............................................................................................................ 2
In re Mickey Thompson Entm’t. Grp., Inc.,
292 B.R. 415 (9th Cir. BAP 2003) ..................................................................................................... 2
In re New York City Off-Track Betting Corp.,
427 B.R. 256 (Bankr. S.D.N.Y. 2010) ............................................................................................... 8
In re NSB Film Corp.,
167 B.R. 176 (9th Cir. BAP 1994) ..................................................................................................... 9In re Sullivan Cnty Reg’l Refuse Disposal Dist.,
165 B.R. 60 (Bankr. D.N.H. 1994) .................................................................................................. 10
In re Thorpe Insulation Co.,
677 F.3d 869 (9th Cir. 2012).............................................................................................................. 4
Law Offices of Nicholas A. Franke v. Tiffany (In re Lewis),
113 F.3d 1040 (9th Cir. 1997)............................................................................................................ 2
Preblich v. Battley,
181 F.3d 1048 (9th Cir. 1999)............................................................................................................ 2
Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc.,
506 U.S. 139 (1993) ....................................................................................................................... 3, 4
Reese v. BP Exploration (Alaska) Inc.,643 F.3d 681 (9th Cir. 2011).............................................................................................................. 9

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

-ii-

Case 6:12-bk-28006-MJ

1
2
3
4
5
6
7
8
9
10
11
12

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 4 of 244

Desc

Roderick Timber Co. v. Levy,
185 B.R. 601 (9th Cir. BAP 1995) ..................................................................................................... 9
FEDERAL STATUTES
11 U.S.C. § 109(c) ................................................................................................................................. 3
11 U.S.C. § 903 ...................................................................................................................................... 3
11 U.S.C. § 904 ...................................................................................................................................... 3
11 U.S.C. § 921(c) ............................................................................................................................. 7, 8
11 U.S.C. § 921(e) ................................................................................................................................. 9
11 U.S.C. § 109(c)(4)............................................................................................................................. 8
28 U.S.C. § 1292(b) ............................................................................................................................... 928 U.S.C. § 158(a) ................................................................................................................................. 4
28 U.S.C. § 158(a)(1)............................................................................................................................. 1
28 U.S.C. § 158(a)(3)......................................................................................................................... 1, 4
Cal. Gov. Code § 20000......................................................................................................................... 5
Cal. Gov. Code § 20532......................................................................................................................... 5
Cal. Gov. Code § 20831......................................................................................................................... 5

13
14
15
16
17
18
19
20

OTHER AUTHORITIES
Public Employees’ Retirement Law....................................................................................................... 5
State Employees’ Retirement Act .......................................................................................................... 5
RULES
FRBP 8001(a) ........................................................................................................................................ 1
FRBP 8001(b) ........................................................................................................................................ 1
FRBP 8002(c)(2) .................................................................................................................................... 7
FRBP 8003 ............................................................................................................................................. 1
FRBP 8003(a) ........................................................................................................................................ 4
FRBP 9014 ............................................................................................................................................. 2

21
22
23
24
25
26
27
28

-iii-

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 5 of 244

Desc

1

The California Public Employees’ Retirement System (“CalPERS”), by and through its

2

undersigned attorneys, hereby moves, out of an abundance of caution, pursuant to Federal Rules of3

Bankruptcy Procedure 8001(b) and 8003, for leave to appeal the bankruptcy court’s Order for Relief

4

under Chapter 9 of the Bankruptcy Code [Dkt. No. 798] (“Order for Relief”) and its Order (1)5Granting the City of San Bernardino’s Motion for Summary Judgment on Eligibility and (2) Denying

6

CalPERS’ Rule 56 Motions [Dkt. No 797] (“Order on Summary Judgment,” and collectively with the7Order for Relief, the “Orders”).1 Because the Orders finally adjudicated the discrete legal issues of8

the City of San Bernardino’s eligibility for relief under the Bankruptcy Code and CalPERS’ ability to

9conduct discovery related to that question, the Orders are final and therefore may be appealed as a10

matter of right. CalPERS has filed its notice of appeal under 28 U.S.C. § 158(a)(1) and FRBP

11

8001(a). Out of an abundance of caution, CalPERS’ notice of appeal has been filed in the alternative

12

under 28 U.S.C. § 158(a)(3) and FRBP 8001(b). In support thereof, CalPERS files this Motion

13

requesting leave to appeal. For the reasons set forth below, CalPERS respectfully requests that the14

Court grant the Motion and exercise its discretion and allow this appeal to proceed expeditiously.

15

I.

16
17
18
19
20
21
22
23

CalPERS’ appeal is of right because the bankruptcy court’s Orders finally resolve the discrete
legal issues which they address. That is, the Order for Relief finally determines that the City may be
a debtor under chapter 9 of the Bankruptcy Code, a matter CalPERS has contested from the outset of
the City’s filing for chapter 9 protection. The bankruptcy court’s Orders, absent an appeal, are notinterim in nature, will not be further litigated by the parties, and will not be considered again by thebankruptcy court. In short, they are final and therefore appealable as a matter of right. In addition,
the Orders also seriously affect the substantive rights of the City, CalPERS, and many interested
parties in the City’s bankruptcy case.

24
25

CalPERS’ Appeal Is of Right because the Orders from which CalPERS Appeals Are“Final.”Under 28 U.S.C. § 158(a)(1), district courts of the United States shall have jurisdiction to hearappeals from final judgments, orders, and decrees. The standard for determining whether a

26
27
28

1

The bankruptcy court’s reasons for entering the Orders are articulated in its oral ruling on August28, 2013, the “Court’s Statement of Uncontroverted Facts and Conclusions of Law,” [Dkt. No. 796]
and its San Bernardino Eligibility Opinion [Dkt. No. 830].
-1-Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 6 of 244

Desc

1

bankruptcy court’s disposition is “final” is more flexible than in an ordinary civil case. In the2bankruptcy context, the Ninth Circuit has developed a “pragmatic” approach to determining finality,

3“recognizing that certain proceedings in a bankruptcy case are so distinct and conclusive either to the4rights of individual parties or the ultimate outcome of the case that final decisions as to them should5

be appealable as of right.” In re Mason, 709 F.2d 1313, 1317 (9th Cir. 1983). Under this flexible

6

standard, the court need not completely adjudicate the merits of the entire bankruptcy proceeding.

7

Rather, a bankruptcy court order is appealable as of right when it “1) resolves and seriously affects

8

substantive rights and 2) finally determines the discrete issue to which it is addressed.” Law Offices

9of Nicholas A. Franke v. Tiffany (In re Lewis), 113 F.3d 1040, 1043 (9th Cir. 1997). Thus, a variety

10of bankruptcy court orders have been determined “final.” See e.g., Preblich v. Battley, 181 F.3d

111048, 1056 (9th Cir. 1999) (allowing or disallowing exemption); In re Lewis, 113 F.3d 1040, 1211

12

(9th Cir. 1997) (disgorgement of attorneys’ fees); In re Mickey Thompson Entm’t. Grp. , Inc., 292

13

B.R. 415, 419-20 (9th Cir. BAP 2003) (approval of settlement agreement).

14

The bankruptcy court’s Orders are “final” orders under the Ninth Circuit’s pragmatic

15

approach to determining whether an appeal exists as a matter of right. The Orders resolve and16

determine the discrete legal issues of the City’s ability to be a debtor under chapter 9 and CalPERS’

17

ability to obtain discovery related to that question. They also resolve and seriously affect the18

substantive rights of the parties. The City’s eligibility was a contested matter under Fed. R. Bankr. P.

199014 and subject to the Federal Rules of Civil Procedure, as incorporated into the Bankruptcy Rules.

20

The bankruptcy court denied CalPERS’ request for discovery and determined the City to be eligible21

as a matter of law. CalPERS has no ability to further object to the City’s eligibility under Section

22

109 and the City now can take advantage of the provisions of the Bankruptcy Code subject to only

23

limited control by the bankruptcy court.

24

That the Orders are “final” is underscored by the fact that the eligibility determination is one

25of the keystone events of a chapter 9 case and far more important than many bankruptcy court orders,26such as orders approving settlements or disgorging attorneys’ fees, that other courts have considered27“final.” Chapter 9, as a consequence of the constitutional concerns imposed by the rights granted to28

the states, imposes unique requirements in municipal bankruptcies. Chapter 9 requires a putative-2-

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 7 of 244

Desc

1

debtor to litigate its way into bankruptcy court once a party objects to the municipality’s eligibility.

2

Municipal debtors are not automatically entitled to an order of relief at the time the case is filed.

3

Furthermore, once a municipality that seeks protection under the Code obtains an order for relief, the4Tenth Amendment concerns reflected in 11 U.S.C. §§ 903 & 904 limit the control that the bankruptcy

5

court has over the actions of a municipal debtor. Additionally, the eligibility determination is

6

particularly important because many of the protections available to creditors in a chapter 7 or 11 case7

are absent in chapter 9. Indeed, Congress’s early attempt at crafting municipal bankruptcy legislation8

was declared unconstitutional by the Supreme Court. See Ashton v. Cameron Cnty. Water

9

Improvement Dist. No. 1, 298 U.S. 513 (1936). Keenly aware of the constitutional issues that lurk

10around every corner in a municipal bankruptcy case, Congress purposefully imposed strict eligibility

11

requirements under 11 U.S.C. § 109(c) “to limit accessibility to the bankruptcy court by

12

municipalities.” In re Cottonwood Water & Sanitary Dist., Douglas County, Colo., 138 B.R. 973,13

979 (Bankr. D. Colo. 1992) (quoting legislative history).2

14

Even if this Court does not consider the Orders final, the bankruptcy court’s eligibility

15

determination—which is essentially a ruling that says the City is properly a debtor under chapter 9—

16should be subject to the collateral order doctrine established in Cohen v. Beneficial Industrial Loan

17

Corp., 337 U.S. 541 (1949). Under Cohen, the “order must [1] conclusively determine the disputed

18

question, [2] resolve an important issue completely separate from the merits of the action, and [3] be19

effectively unreviewable on a appeal from a final judgment.” Coopers & Lybrand v. Livesay, 437

20

U.S. 463, 468 (1978) (footnote omitted). For example, “the Court has held that orders denying

21

individual officials’ claim of absolute and qualified immunity are among those” that are immediately

22

appealable as a matter of right. Puerto Rico Aqueduct & Sewer Auth. v. Metcalf & Eddy, Inc., 506

23

U.S. 139, 143 (1993) (citations omitted). In including the question of sovereign immunity in the24class of cases covered by Cohen, the court in that case focused on the fact that sovereign immunity

25
26
27
28

2

In In re Desert Hot Springs, 339 F.3d 782, 789 (9th Cir. 2003), the Ninth Circuit held that the denialof a creditor’s motion to dismiss the city’s chapter 9 case was not a final decision. That case,however, is distinguishable. The denial of a creditor’s motion to dismiss a chapter 9 case is different
than a court’s determination of the municipality’s eligibility for relief. A dismissal motion may berevisited, while eligibility under Section 109(c) finally determines whether the municipality may be
eligible for relief at all.
-3-

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 8 of 244

Desc

1

raised the question of whether the particular defendant should even be in federal court in the first2

place. Puerto Rico Aqueduct at 145-46. The bankruptcy court’s eligibility determination is the other3side of this same coin—if the City is not eligible it cannot be a debtor in chapter 9. Thus, it presents

4

an appropriate application of the collateral order doctrine. Each of Cohen’s factors are met: (1) the5

bankruptcy court conclusively determined that the City was eligible; (2) it resolved an issue

6completely separate from the merits of the underlying case, which in a chapter 9 case is the ultimate

7

confirmation of a plan of adjustment; and (3) the bankruptcy court’s eligibility determination could8

be effectively unreviewable if CalPERS had to wait until a plan was confirmed because the9“equitable mootness” doctrine could preclude substantive consideration of the appeal if the City’s

10plan of adjustment is substantially consummated. See, e.g., In re Thorpe Insulation Co., 677 F.3d

11869, 879-83 (9th Cir. 2012) (explaining “equitable mootness” doctrine). Accordingly, even if this12

Court determines that the Orders are not final, it should apply the collateral order doctrine and allow

13

the appeal to proceed.

14

For these reasons, CalPERS’ appeal of the bankruptcy court’s Orders is as of right, and it is15

therefore unnecessary for CalPERS to obtain leave to file its appeal. Nevertheless, in the event that16

the Orders are construed as interlocutory, as opposed to final, CalPERS alternatively requests that the17

Court grant leave to file an appeal. This request is consistent with Ninth Circuit precedent. See, e.g.,

18

In re City of Desert Hot Springs, 339 F.3d 782, 787 (9th Cir. 2003) (“if a litigant is unsure about the19nature of an order, the litigant should file both a notice of appeal and a motion for leave to appeal

20

before the BAP or district court.”)

21

II.

22

Requirements Necessary for Motion for Leave to Appeal.
The Federal Rules of Bankruptcy Procedure, pursuant to 28 U.S.C. § 158(a)(3), specifically23

authorize appeals from orders that are interlocutory in nature. The Bankruptcy Rules provide:24

26

A motion for leave to appeal under 28 U.S.C. § 158(a) shall contain: (1) statement offacts necessary to an understanding of the questions to be presented by the appeal; (2)a statement of those questions and the relief sought; (3) statement of the reasons why
an appeal should be granted; and (4) a copy of the judgment, order, or decreecomplained of an any opinion or memorandum relating thereto.

27

Fed. R. Bankr. P. 8003(a). As will be demonstrated below, to the extent necessary, CalPERS satisfies

28

all of these bases and this Court should grant CalPERS’ Motion.

25

-4-

Case 6:12-bk-28006-MJ
III.

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 9 of 244

Desc

1

Statement of Facts Necessary to an Understanding of the Questions Presented By the
Appeal.

2

A.

3

In 1945, the City of San Bernardino elected to participate in the California State Retirement

CalPERS.

4

System, subject to the provisions of the State Employees’ Retirement Act. The City’s obligations are5

defined by the Public Employees’ Retirement Law (the “PERL”), Cal. Gov. Code § 20000 et. seq.

6

Article XVI, section 17 of the California Constitution mandates that the CalPERS Board of

7

Administration ensure the rights of CalPERS members and retirees to their full earned benefits. City

8

of Oakland v. Pub. Emps. Ret. Sys., 95 Cal. App. 4th 29, 39 (2002). The PERL requires an agency

9participating in the CalPERS system to make timely contributions for employees in amounts

10

recommended by CalPERS’ actuary and approved by the CalPERS Board. Cal. Gov. Code §§ 20532,

1120831. The PERL explicitly provides that a participating agency may not refuse to pay the required

12

contributions as determined by CalPERS within the prescribed deadlines. Id. at § 20831.

13

B.

The City of San Bernardino’s Bankruptcy Filing.

14

On August 1, 2012, the City of San Bernardino became the second-largest city in the nation

15(at that time) to file a chapter 9 petition for relief. The City authorized its filing before considering

16

any alternatives to bankruptcy and without negotiating with any of its principal creditors even though

17

the City was aware that it was in financial distress as early as March of 2007. Despite the fact that18

the City knew about its financial trouble for years, it took no action to address its problems. Instead,19

the City simply stopped paying its bills, filed its petition for relief under chapter 9 of the Bankruptcy

20

Code (the “Petition”), and used the automatic stay of this Court as a means to avoid its ongoing

21

financial obligations. In clear violation of California State law, the City immediately stopped making

22

payments to CalPERS, and currently owes CalPERS approximately $14 million in statutorily

23

required postpetition payments that it has deferred. Such payments continue to accrue interest,

24

penalties, and fees and costs.

25

In October, 2012, CalPERS filed its objection to the City’s eligibility for relief under chapter

26

9 of the Bankruptcy Code arguing, principally, that the City did not have a desire to effect a plan of27

adjustment and that it did not file its Petition in good faith. At a status conference on December 21,

28

2012, the parties commenced a discussion of protocol for discovery and a briefing schedule for-5-Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 10 of 244

Desc

1

resolving the eligibility dispute. Between January and June of 2013, the City and CalPERS discussed2

informal document production, directed principally towards understanding the City’s finances. The

3

City and CalPERS agreed to defer the bulk of discovery pertaining to eligibility and the eligibility

4contest during this period, and deferred formal discovery, including document production relating to5eligibility and depositions of City representatives. At the bankruptcy court’s June 5, 2013 status6

conference, the City abruptly changed its position regarding the deferral of the eligibility contest and7insisted on proceeding to a decision on a summary basis, without discovery. At the status conference,8

the Court stated that it would not set a discovery schedule until after considering the City’s motion

9

for summary judgment on eligibility issues (for which it set the filing and hearing schedule that day

10and, accordingly, imposed an informal, de facto stay on formal discovery).

11

C.

The Bankruptcy Court’s Determination of the City’s Eligibility.

12

On July 5, 2013, the City filed its Motion for Summary Judgment on Eligibility [Dkt. No.

13679] (“Summary Judgment Motion”). On August 2, 2013, CalPERS filed its Response to the City of

14

San Bernardino’s Motion for Summary Judgment and Request for Rule 56 Relief [Dkt. No. 722]. In

15

CalPERS’ response, it requested that the bankruptcy court enter judgment in favor of CalPERS,

16

arguing that the City did not file its Petition in good faith and that, on the date the City filed its

17

Petition, it did not have the desire to effect a plan of adjustment. In the alternative, CalPERS

18

requested that the court deny the City’s motion because the evidence cited by the City, which was

19

subject to CalPERS’ evidentiary objections, plus the facts shown by CalPERS, demonstrated the20

existence of genuine disputes as to material facts. CalPERS filed the Declaration of Michael B.

21

Lubic in in Support of CalPERS’ Request for Rule 56 Relief [Dkt. No. 725] regarding additional

22

facts that, because of the lack of discovery on eligibility to date, CalPERS was unable to present that23

may have been essential to its opposition to the City’s summary judgment motion.

24

The bankruptcy court held a hearing on the City’s Summary Judgment Motion on August 28,

25

2013. The bankruptcy court issued an oral decision granting the City’s motion, and subsequently

26

issued a separate written opinion memorializing its conclusions of law. In its ruling, the bankruptcy

27

court assumed as true many of the facts supporting CalPERS’ assertions that the City did not have a28

desire to effect a plan and did not file its Petition in good faith. It was undisputed that the City failed-6-

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 11 of 244

Desc

1

to negotiate with its principal creditors prior to filing for relief, failed to consider alternatives to filing2

for bankruptcy, and failed, even a year after filing its petition, to propose a plan of reorganization or3even develop a term sheet or outline of a plan. When it filed its Petition, the City had not even4

assigned anyone with the task of working on a plan of adjustment. The same was true a year after the

5

City filed its Petition. Additionally, during the year after the City filed for bankruptcy, the City had

6made no effort to engage in negotiations with most of its principal creditors. Despite the existence of7these undisputed facts, and others, the bankruptcy court determined, as a matter of law, that the City8

had a desire to effect a plan of adjustment, and that it filed its petition in good faith. No bankruptcy

9

court, let alone district court or circuit court of appeals, has ever set the hurdle of eligibility, a10

requirement made intentionally difficult by Congress, so low.

11

On September 17, 2003, the bankruptcy court entered the Order for Relief and Order on

12

Summary Judgment. The Order on Summary Judgment provides that the City is eligible for chapter

13

9 relief, and that such relief shall be entered, and that all objections to eligibility and requests for

14

dismissal under § 921(c) are overruled. The Order on Summary Judgment also denies CalPERS’

15

Rule 56(d) request and Rule 56(f)(1) motion for summary judgment. The Order for Relief provides

16

that the City filed its chapter 9 petition in good faith and that the Petition meets all of the applicable

17

requirements of the Bankruptcy Code. In conjunction with its entry of the Orders, the bankruptcy

18

court also entered its Statement of Uncontroverted Facts and Conclusions of Law [Dkt. No. 796]. On

19

September 27, 2013, the bankruptcy court entered an order approving the stipulation between the

20

City and CalPERS to extend, pursuant to Fed. R. Bankr. P. 8002(c)(2), the time to file appeals from21

the Orders and from the Statement of Uncontroverted Facts and Conclusions of Law to October 22,

22

2013. Dkt. No. 817 (the “Order Extending Appeal Deadline”). On October 16, the bankruptcy court

23

issued its San Bernardino Eligibility Opinion [Dkt. No. 830].

24

IV.

25
26

Statement of Questions to be Presented by CalPERS’ Appeal and Relief Sought.
CalPERS will raise the following issues in its appeal:
Whether the bankruptcy court’s entry of the order granting summary judgmentin the City’s favor is proper where:

27
(i)
28

the City filed its Petition without any concept of a plan ofadjustment;-7-Case 6:12-bk-28006-MJ
(ii)
1
2

(iii)
(iv)

3

(v)

4
(vi)
5
(vii)
6
7
8

V.

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 12 of 244

Desc

the City filed its Petition without negotiating with any of its major
creditors;
the City failed to explore any alternatives to bankruptcy;
a year after the City filed its Petition, had not even tasked someone
with developing the basic terms of a plan of adjustment;
the City failed to make meaningful financial information available
to pre- and postpetition creditors during the course of its
bankruptcy;
the City made significant prepetition preferential transfers prior tofiling its Petition; andthe bankruptcy court denied CalPERS’ request to obtain any
discovery regarding the City’s eligibility and good faith.

Statement of Reasons Why an Appeal Should Be Granted.
The bankruptcy court’s ruling turns on the meaning of key sections of the Bankruptcy Code,9

including 11 U.S.C. § 109(c)(4) (desire to effect a plan) and 11 U.S.C. § 921(c) (good faith).

10

Accordingly, CalPERS’ appeal presents an issue of law. See, e.g., In re Flores, -- F.3d --, 2013 WL

114566428, at * 1 n.4 (9th Cir. August 29, 2013) (“We review the de novo the issue of statutory

12

construction, including a bankruptcy court’s interpretation of the Bankruptcy Code.”). In addition,13

the meanings of these particular sections of the Bankruptcy Code have never been addressed by the14

Ninth Circuit Court of Appeals, any other circuit court of appeals, or the Supreme Court. The

15

bankruptcy court determined that standards for eligibility are to be construed broadly. The

16

bankruptcy court, in granting the City’s Motion for Summary Judgment, effectively reduced

17

Congress’s requirement that a municipality have a desire to effect a plan of adjustment into a “check-18

the-box” standard that may be satisfied by any insolvent municipality that merely files a petition for

19

relief and submits a declaration stating that the City has a desire to effect a plan. The bankruptcy

20

court’s ruling deprived the Bankruptcy Code’s eligibility requirements of real meaning and is21

inconsistent with the principle that courts must scrutinize chapter 9 petitions with “a jaded eye” given

22

the federalism concerns that are ever-present in chapter 9 cases. See e.g., In re New York City Off-23

Track Betting Corp., 427 B.R. 256, 264 (Bankr. S.D.N.Y. 2010) (“Bankruptcy courts should review

24chapter 9 petitions with a jaded eye.”); In re Cottonwood Water & Sanitary Dist. Douglas Cnty,

25

Colo., 138 B.R. 973, 979 (Bankr. D. Colo. 1992) (stating that Congress, recognizing the26

constitutional concerns present in chapter 9, “consciously sought ‘to limit accessibility to the27bankruptcy court’ by municipalities”) (quoting legislative history). Furthermore, the bankruptcy

28

court’s ruling creates a dangerous precedent that provides municipalities with the incentive to ignore-8-Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 13 of 244

Desc

1

its deteriorating financial condition until there is a fiscal crisis, fail to negotiate with its creditors, and2

file a bankruptcy petition without any genuine intention of moving its case forward in a diligent

3

manner and effectuating a plan. The issue is of vital importance to CalPERS, the State of California,

4other States and municipalities across the nation, and raises important federalism issues.
A court may grant leave to appeal from an interlocutory order where it “involves a controlling5
6

question of law as to which there is substantial ground for difference of opinion” and where “an7

immediate appeal from the order may materially advance the ultimate termination of the litigation.”

8

28 U.S.C. § 1292(b). While 28 U.S.C. § 1292(b) applies to interlocutory appeals from the district

9

court to the courts of appeal, the Ninth Circuit Bankruptcy Appellate Panel and district courts have10

applied the same standard when considering a motion for leave to appeal a bankruptcy court’s

11

decision. See e.g., Roderick Timber Co. v. Levy (In re Roderick Timber Co.), 185 B.R. 601, 604 (9th12

Cir. BAP 1995); In re Coudert Bros. LLP Law Firm Adversary Proceedings, 447 B.R. 706, 711

13(S.D.N.Y. 2011). For leave to be granted, the appellant does not need to establish that a prior court

14“reached a conclusion adverse to that from which appellants seek relief.” Reese v. BP Exploration

15(Alaska) Inc., 643 F.3d 681, 688 (9th Cir. 2011). Rather, a substantial ground for difference of

16

opinion exists “when novel legal issues are presented, on which fair-minded jurists might reach17

contradictory conclusions . . . .” Id. Courts also consider whether denying leave “will result in

18

wasted litigation and expense.” Id. (citing In re NSB Film Corp., 167 B.R. 176, 180 (9th Cir. BAP

191994)).

20

If the Court determines the Orders to be interlocutory in nature, the issues presented on appeal

21

present a particularly compelling case in which the Court should grant leave to appeal. No court,

22

including the Ninth Circuit and the Supreme Court, may stay the bankruptcy court’s proceedings “on23

account of an appeal from an order for relief.” 11 U.S.C. § 921(e). Immediate review of this case is24

necessary to afford CalPERS an opportunity for meaningful relief and will obviate the need for25

further costly bankruptcy proceedings if the appeal is withheld. A successful appeal may end the26case before more time and money is spent by the parties in the City’s bankruptcy case and before the27City takes additional steps to alter its legal rights and relationships with its creditors. Even if the case28

is remanded for an evidentiary hearing on the City’s eligibility, immediate review will clarify, for the-9-Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 14 of 244

Desc

1

benefit of the many interested parties to this case, the right of the City to avail itself of benefits of the2

Bankruptcy Code.

3

A.

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

The Appeal Involves a Controlling Question of Law on Which There is a
Substantial Basis for Difference of Opinion.

The appeal will raise the issue of law that the bankruptcy court erred in its determination,necessary to its entry of the Order for Relief, that the City satisfied Section 109(c)(4)’s requirementthat the City have a desire to effect a plan of adjustment and its determination that the City filed its
petition in good faith under Section 921(c). The bankruptcy court’s determination of the City’s
eligibility for relief under chapter 9 is a controlling question of law. Section 921(c) requires
dismissal of the City’s bankruptcy case if the debtor is not eligible for relief for failure to meet theeligibility requirements of Section 109. See, In re Capen Wholesale, Inc., 184 B.R. 547, 549 (N.D.
Ill. 1995) (noting that “controlling” issue of law is ordinarily “outcome determination” but may also
encompass issues that could “significantly” impact “the bankruptcy proceedings below”). It isdifficult to imagine a more impactful issue than the City’s eligibility for relief and ability to be inbankruptcy.
Furthermore there is a substantial basis for a difference of opinion. As highlighted above,
there is no circuit court authority that squarely faces the 109(c)(4) eligibility requirement. Nor isthere authority from any circuit court of appeals discussing dismissal of a chapter 9 petition for lackof good faith under Section 921(c). In CalPERS’ view, never before has a bankruptcy court set sucha low bar for a municipal debtor to enter the doors of the bankruptcy court. Certainly, “fair-mindedjurists” may reach a conclusion contrary to that of the bankruptcy court in this case given that chapter
9 petitions must be scrutinized with a “jaded eye” in order to honor Congress’s intent that the gates tochapter 9 be intentionally difficult to open. See In re Sullivan Cnty Reg’l Refuse Disposal Dist., 165
B.R. 60, 82 (Bankr. D.N.H. 1994) (“Considering the bankruptcy court’s severely limited control overthe debtor, once the petition is approved, access to Chapter 9 relief has been designed to be an
intentionally difficult task.”)

26
27
28

-10-

Case 6:12-bk-28006-MJ
B.

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 15 of 244

Desc

1

An Immediate Appeal Will Materially Advance the Resolution of thisBankruptcy Case.

2

If the bankruptcy court’s decision to deny CalPERS’ cross-motion for summary judgment is3

reversed, this entire bankruptcy case will end. Even if the bankruptcy court’s decision to grant the

4City’s Motion for Summary Judgment is reversed and remanded for a trial, the appeal will materially5advance the ultimate resolution of this case because it will provide clarity to all parties with respect to

6

the City’s ability to be in bankruptcy and use the bankruptcy process to alter its relationships with7

creditors.

8

If leave is not granted, the City will proceed in bankruptcy—a lengthy, time consuming and

9expensive process—with the specter of a possible reversal on appeal (assuming “equitable mootness”

10

does not prevent the appeal altogether). Immediate relief is the only way to avoid wasted litigation11and expense because, pursuant to Section 921(e), the proceedings below cannot be stayed.

12

Bankruptcy is unique in that the parties’ rights and legal relationship with a debtor are altered and13

modified throughout the bankruptcy process—whether it be through a debtor’s assumption or

14

rejection of executory contracts, claims allowance, or plan confirmation. The more time that passes

15

in the City’s case, the more difficult it becomes for this Court to grant CalPERS’ meaningful relief

16

given that the City will presumably have taken additional steps to move towards plan confirmation17

and may argue that CalPERS’ appeal has become moot. See e.g., In re Gotcha Int’l. L.P., 311 B.R.

18

250 (9th Cir. BAP 2004) (appeal from confirmation order dismissed as moot where plan of

19

reorganization was substantially consummated and effective relief was no longer available).

20

Immediate leave should be granted because the eligibility determination is the threshold21

decision in chapter 9 that allows the City to take advantage of the panoply of provisions in the

22

Bankruptcy Code to the detriment of CalPERS and many other creditors. Should the Court grant

23

CalPERS leave to appeal, the consideration of these largely untested legal issues in an expeditious

24

appeal will have the added benefit of providing meaningful guidance to municipalities, in California

25

as well as in other states, that are financially distressed and contemplating bankruptcy. The parties

26

should not have to engage in additional costly and time intensive proceedings that impair the rights of27

the City’s many creditors if the City is, in fact, ineligible for relief under chapter 9.

28

-11-

Case 6:12-bk-28006-MJ

1

VI.

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 16 of 244

Desc

Copy of the Judgment and Order.

2

CalPERS attaches, as Appendix A to this Motion, a copy of the bankruptcy court’s Orders and3

its Statement of Uncontroverted Facts and Conclusions of Law, which were entered on September 17,

4

2013. Also included in Appendix A is a copy of the transcript of the bankruptcy court’s oral ruling5

given on August 28, 2013, a copy of the Order Extending Appeal Deadline, and a copy of the

6bankruptcy court’s San Bernardino Eligibility Opinion.

7

VII.

Conclusion.

8

For the foregoing reasons, the Court should grant CalPERS’ request for leave to appeal the9bankruptcy court’s Orders determining that the City is eligible for relief under chapter 9 as a matter10of law and denying CalPERS’ request for Rule 56 relief.

11

Respectfully submitted,

12Michael J. Gearin (pro hac vice)
Michael B. Lubic
Michael K. Ryan (pro hac vice)
Brett D. Bissett
K&L GATES LLP

13
14
15
16
17

Dated: October 22, 2013

By: /s/ Michael B. Lubic
Michael B. Lubic
Attorneys for California Public Employees’
Retirement System

18
19
20
21
22
23
24
25
26
27
28

-12-

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 17 of 244

EXHIBIT A

Desc

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 18 of 244

Desc

APPENDIX A
1. Order for Relief under Chapter 9 of the Bankruptcy Code[Dkt. No. 798] (“Order for Relief”)…………………………………………………14
2. Order (1) Granting the City of San Bernardino’s Motion for
Summary Judgment on Eligibility and (2) Denying CalPERS’Rule 56 Motions [Dkt. No 797] (“Order on Summary Judgment”)…………………19
3. Court’s Statement of Uncontroverted Facts andConclusions of Law [Dkt. No. 796]…………………………………………………25
4. Order Approving Stipulation Between City of San Bernardino
and California Public Employees’ Retirement System Regarding
Extension of Time to File Appeal in Accordance with Federal Ruleof Bankruptcy Procedure 8002(c) [Dkt. No. 817]…………………………………..37
5. San Bernardino Eligibility Opinion [Dkt. No. 830]…………………………………42
6. Transcript of Hearing held on August 28, 2013…………………………………….84

EXHIBIT A PAGE 13

Case 6:12-bk-28006-MJ

1
2
3
4
5
6
7
8
9
10
11

Doc 837798 Filed 10/22/13
09/17/13 Entered 09/17/13
10/22/13 15:38:24
18:32:10
Main
Main
Document
Document Page
Page191 of 244
5

PAUL R. GLASSMAN (State Bar No. 76536)
FRED NEUFELD (State Bar No. 150759)
LAURA L. BUCHANAN (State Bar No. 156261)
STRADLING YOCCA CARLSON & RAUTH, P.C.
100 Wilshire Blvd., 4th Floor
Santa Monica, CA 90401
Telephone: (424) 214-7000
Facsimile: (424) 214-7010
E-mail: pglassman@sycr.com
fneufeld@sycr.com
lbuchanan@sycr.com

Desc

FILED & ENTERED
SEP 17 2013
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY moser
DEPUTY CLERKJAMES F. PENMAN (State Bar No. 91761)
CITY ATTORNEY
300 North “D” STREET, Sixth Floor
San Bernardino, CA 92418
Telephone: (909) 384-5355
Facsimile: (909) 384-5238
E-mail: Penman_Ja@sbcity.org
Attorneys for Debtor
City of San Bernardino
UNITED STATES BANKRUPTCY COURTCENTRAL DISTRICT OF CALIFORNIA
RIVERSIDE DIVISION

12
13
14
15

In re

Case No. 6:12-bk-28006 MJ

16

CITY OF SAN BERNARDINO,CALIFORNIA,

Chapter 917

Debtor.

ORDER FOR RELIEF UNDER CHAPTER 9
OF THE BANKRUPTCY CODE

18
19

Hearing held August 28, 2013

20
21
22
23
24
25
26
27
28
S TRADLING Y OCCAC ARLSON & R AUTHLAWYERSS ANT A MO NI C A

1
ORDER FOR RELIEF UNDER CHAPTER 9
DOCSSM/3004393v1/200430-0003

EXHIBIT A PAGE 14

Case 6:12-bk-28006-MJ

Doc 837798 Filed 10/22/13
09/17/13 Entered 09/17/13
10/22/13 15:38:24
18:32:10
Main
Main
Document
Document Page
Page202 of 244
5

Desc

1

Order for Relief Under Chapter 9

2

The Court having determined that the City of San Bernardino, California (“City”) is eligible

3

to be a debtor under chapter 9, that the City filed its chapter 9 petition in good faith and that the4petition meets all of the applicable requirements of the Bankruptcy Code, relief is hereby ordered5

under chapter 9 for the City.
###

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

Date: September 17, 2013

Meredith A. Jury
United States Bankruptcy Judge

25
26
27
28
S TRADLING Y OCCAC ARLSON & R AUTHLAWYERSS ANT A MO NI C A

2ORDER FOR RELIEF UNDER CHAPTER 9
DOCSSM/3004393v1/200430-0003

EXHIBIT A PAGE 15

Case 6:12-bk-28006-MJ

Doc 837798 Filed 10/22/13
09/17/13 Entered 09/17/13
10/22/13 15:38:24
18:32:10
Main
Main
Document
Document Page
Page213 of 244
5

Desc

NOTICE OF ENTERED ORDER AND SERVICE LIST
Notice is given by the court that a judgment or order entitled (specify): ORDER APPOINTING THE HONORABLE GREGG
W. ZIVE AS MEDIATOR was entered on the date indicated as Entered on the first page of this judgment or order and will
be served in the manner stated below:
1. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF) Pursuant to controlling General Orders
and LBRs, the foregoing document was served on the following persons by the court via NEF and hyperlink to the
judgment or order. As of August 12, 2013, the following persons are currently on the Electronic Mail Notice List for thisbankruptcy case or adversary proceeding to receive NEF transmission at the email addresses stated below.
UNITED STATES TRUSTEE
United States Trustee (RS) ustpregion16.rs.ecf@usdoj.gov
ATTORNEYS FOR DEBTORPaul Glassman pglassman@sycr.com
Fred Neufeld fneufeld@sycr.com
ATTORNEYS FOR CALPERS
Brett Bissett brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com
ATTORNEYS FOR SAN BERNARDINO CITY PROFESSIONAL FIREFIGHTERS LOCAL 891
David M Goodrich dgoodrich@marshackhays.com, ecfmarshackhays@gmail.com
Chad V Haes chaes@marshackhays.com, ecfmarshackhays@gmail.com
D Edward Hays ehays@marshackhays.com, ecfmarshackhays@gmail.com
Richard A Marshack rmarshack@marshackhays.com, lbergini@marshackhays.com;
ecfmarshackhays@gmail.com
ATTORNEYS FOR SAN BERNARDINO PUBLIC EMPLOYEES ASSOCIATION
Christopher H Conti chc@sdlaborlaw.com, sak@sdlaborlaw.com
ATTORNEYS FOR SAN BERNARDINO POLICE OFFICERS ASSOCIATION
Aron M Oliner roliner@duanemorris.com
ATTORNEYS FOR AMBAC ASSURANCE COMPANY, ERSTE EUROPAISCHE PFANDBRIEF-UND
KOMMUNALKREDITBANK AG AND WELLS FARGO BANK, N.A., AS TRUSTEEMette H Kurth kurth.mette@arentfox.com
Jerrold Abeles abeles.jerry@arentfox.com, labarreda.vivian@arentfox.com
ATTORNEYS FOR RETIRED EMPLOYEES OF THE CITY OF SAN BERNARDINO JENIFER ARAGON,MICHAEL BILLDT, DAVE DILLON, MICHAEL ECKLEY, WALT GOGGIN, WAYNE HARP, STEVEKLETTENBERG, FRANK MANKIN, DENIS MOON, SCOTT PATERSON, AND ROBERT SIMMONS
Anthony Bisconti tbisconti@bmkattorneys.com, admin@bmkattorneys.com
Steven J Katzman SKatzman@bmkattorneys.com, admin@bmkattorneys.com
Anne A Uyeda auyeda@bmkattorneys.com
Jerrold Abeles abeles.jerry@arentfox.com, labarreda.vivian@arentfox.com
Franklin C Adams franklin.adams@bbklaw.com,
arthur.johnston@bbklaw.com;lisa.spencer@bbklaw.com;bknotices@bbklaw.com
Joseph M Adams jadams@lawjma.com
Andrew K Alper aalper@frandzel.com, efiling@frandzel.com;ekidder@frandzel.com
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012

DOCSSM/3004169v8/200430-0003

F 9021-1.1.NOTICE.ENTERED.ORDER
EXHIBIT A PAGE 16

Case 6:12-bk-28006-MJ

Doc 837798 Filed 10/22/13
09/17/13 Entered 09/17/13
10/22/13 15:38:24
18:32:10
Main
Main
Document
Document Page
Page224 of 244
5

Desc

Thomas V Askounis taskounis@askounisdarcy.com
Julie A Belezzuoli julie.belezzuoli@kayescholer.com
Anthony Bisconti tbisconti@bmkattorneys.com, admin@bmkattorneys.com
Brett Bissett brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Brett Bissett brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Jeffrey E Bjork jbjork@sidley.com
Michael D Boutell mdbell@comerica.com
J Scott Bovitz bovitz@bovitz-spitzer.com
John A Boyd fednotice@tclaw.net
Jeffrey W Broker jbroker@brokerlaw.biz
Deana M Brown dbrown@milbank.com
Michael J Bujold Michael.J.Bujold@usdoj.gov
Suzanne Burke Spencer sburke@sall-lawoffice.com, aduran@sall-lawoffice.com;rsall@salllawoffice.com;jbernaldo@sall-lawoffice.com;msall@sall-lawoffice.com
Shirley Cho scho@pszjlaw.com
Alicia Clough alicia.clough@kayescholer.com, managingattorneyofficeassignments@kayescholer.com
Marc S Cohen mcohen@kayescholer.com, dhernandez@kayescholer.com
Ronald R Cohn rcohn@horganrosen.com
Christopher H Conti chc@sdlaborlaw.com, sak@sdlaborlaw.com
Christopher J Cox chris.cox@weil.com, janine.chong@weil.com
Christina M Craige ccraige@sidley.com
Alex Darcy adarcy@askounisdarcy.com, akapai@askounisdarcy.com
Susan S Davis sdavis@coxcastle.com
Robert H Dewberry robert.dewberry@dewlaw.net
Todd J Dressel dressel@chapman.com, lubecki@chapman.com
Chrysta L Elliott elliottc@ballardspahr.com, manthiek@ballardspahr.com
Scott Ewing contact@omnimgt.com, sewing@omnimgt.com;katie@omnimgt.com
John A Farmer jfarmer@orrick.com
Brian W Freeman brian@pedigolaw.com, brian@brianwfreeman.com
Victoria C Geary victoria.geary@boe.ca.gov
Paul R. Glassman pglassman@sycr.com
Robert P Goe kmurphy@goeforlaw.com, rgoe@goeforlaw.com;mforsythe@goeforlaw.com
David M Goodrich dgoodrich@marshackhays.com, ecfmarshackhays@gmail.com
Christian Graham cgraham23@dlblaw.net
Everett L Green everett.l.green@usdoj.gov
Chad V Haes chaes@marshackhays.com, ecfmarshackhays@gmail.com
James A Hayes jhayes@jamesahayesaplc.com
M Jonathan Hayes jhayes@srhlawfirm.com,
roksana@srhlawfirm.com;carolyn@srhlawfirm.com;shawnj@srhlawfirm.com;rosarioz@srhlawfirm.com
D Edward Hays ehays@marshackhays.com, ecfmarshackhays@gmail.com
Eric M Heller eric.m.heller@irscounsel.treas.gov
Jeffery D Hermann jhermann@orrick.com
Jeffery D Hermann jhermann@orrick.com
Bonnie M Holcomb bonnie.holcomb@doj.ca.gov, rosita.eduardo@doj.ca.gov
Whitman L Holt wholt@ktbslaw.com
Michelle C Hribar mch@sdlaborlaw.com
Steven J Katzman SKatzman@bmkattorneys.com, admin@bmkattorneys.com
Jane Kespradit jane.kespradit@limruger.com, amy.lee@limruger.com
Mette H Kurth kurth.mette@arentfox.com
Mette H Kurth kurth.mette@arentfox.com
Sandra W Lavigna lavignas@sec.gov
Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012

DOCSSM/3004169v8/200430-0003

F 9021-1.1.NOTICE.ENTERED.ORDER
EXHIBIT A PAGE 17

Case 6:12-bk-28006-MJ

Doc 837798 Filed 10/22/13
09/17/13 Entered 09/17/13
10/22/13 15:38:24
18:32:10
Main
Main
Document
Document Page
Page235 of 244
5

Desc

Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com
Richard A Marshack rmarshack@marshackhays.com,
lbergini@marshackhays.com;ecfmarshackhays@gmail.com
David J McCarty dmccarty@sheppardmullin.com
Reed M Mercado rmercado@sheppardmullin.com
Fred Neufeld fneufeld@sycr.com
Aron M Oliner roliner@duanemorris.com
Scott H Olson solson@seyfarth.com
Dean G Rallis drallis@sulmeyerlaw.com
Christopher O Rivas crivas@reedsmith.com
Kenneth N Russak krussak@frandzel.com, efiling@frandzel.com;dmoore@frandzel.com
Gregory M Salvato gsalvato@salvatolawoffices.com, calendar@salvatolawoffices.com
Mark C Schnitzer mschnitzer@rhlaw.com, mcschnitzer@gmail.com
William R Shafton wshafton@winston.com
Diane S Shaw diane.shaw@doj.ca.gov
Ariella T Simonds asimonds@sidley.com
Leonard Steiner ls@steinerlibo.com, jasoncarter@steinerlibo.com;aam@steinerlibo.com
Jason D Strabo jstrabo@mwe.com, LosAngelesTrialDocket@mwe.com
Cathy Ta cathy.ta@bbklaw.com, Arthur.Johnston@bbklaw.com;lisa.spencer@bbklaw.com
Sheila Totorp stotorp@clausen.com, jbrzezinski@clausen.com
Benjamin R Trachtman btrachtman@trachtmanlaw.com, sstraka@trachtmanlaw.com
Matthew J Troy matthew.troy@usdoj.gov
United States Trustee (RS) ustpregion16.rs.ecf@usdoj.gov
Anne A Uyeda auyeda@bmkattorneys.com
Annie Verdries verdries@lbbslaw.com, Autodocket@lbbslaw.com
Brian D Wesley brian.wesley@doj.ca.gov
Kirsten A Roe Worley kworley@wthf.com, bcordova@wthf.com
Clarisse Young youngshumaker@psmlawyers.com, sally@psmlawyers.com
Pamela Jan Zylstra zylstralaw@gmail.com
Service information continued on attached page
2. SERVED BY THE COURT VIA UNITED STATES MAIL: A copy of this notice and a true copy of this judgment ororder was sent by United States mail, first class, postage prepaid, to the following persons and/or entities at theaddresses indicated below:
Service information continued on attached page
3. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment or order whichbears an “Entered” stamp, the party lodging the judgment or order will serve a complete copy bearing an “Entered” stamp
by United States mail, overnight mail, facsimile transmission or email and file a proof of service of the entered order on thefollowing persons and/or entities at the addresses, facsimile transmission numbers, and/or email addresses stated below:
Service information continued on attached page

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012

DOCSSM/3004169v8/200430-0003

F 9021-1.1.NOTICE.ENTERED.ORDER
EXHIBIT A PAGE 18

Case 6:12-bk-28006-MJ

1
2
3
4
5
6
7
8
9
10
11
12
13

Doc 837797 Filed 10/22/13
09/17/13 Entered 09/17/13
10/22/13 15:36:17
18:32:10
Main
Main
Document
Document Page
Page24
1 of 244
6

PAUL R. GLASSMAN (State Bar No. 76536)
FRED NEUFELD (State Bar No. 150759)
LAURA L. BUCHANAN (State Bar. No. 156261)
KATHLEEN D. DeVANEY (State Bar No. 156444)
STRADLING YOCCA CARLSON & RAUTH, P.C.
100 Wilshire Blvd., 4th Floor
Santa Monica, CA 90401
Telephone: (424) 214-7000
Facsimile: (424) 214-7010
E-mail: pglassman@sycr.com
fneufeld@sycr.com
lbuchanan@sycr.com
kdevaney@sycr.com

Desc

FILED & ENTERED
SEP 17 2013
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY moser
DEPUTY CLERKJAMES F. PENMAN (State Bar No. 91761)
CITY ATTORNEY
300 North “D” STREET, Sixth Floor
San Bernardino, CA 92418
Telephone: (909) 384-5355
Facsimile: (909) 384-5238
E-mail: Penman_Ja@sbcity.org
Attorneys for Debtor
City of San Bernardino

14
UNITED STATES BANKRUPTCY COURTCENTRAL DISTRICT OF CALIFORNIA
RIVERSIDE DIVISION

15
16
17
18
19
20

In re

Case No. 6:12-bk-28006 MJ

CITY OF SAN BERNARDINO,CALIFORNIA,

Chapter 9

Debtor.

21
22
23

ORDER (1) GRANTING CITY OF SANBERNARDINO’S MOTION FOR
SUMMARY JUDGMENT ON ELIGIBILITY,
AND (2) DENYING CALPERS’ RULE 56
MOTIONS
Hearing:
Date:
August 28, 2013
Time: 1:30 p.m.
Place: United States Bankruptcy Court
3420 Twelfth Street
Courtroom 301
Riverside, CA 92501

24
25
26
27
28
S TRADLING Y OCCAC ARLSON & R AUTHLAWYERSS ANT A MO NI C A

ORDER GRANTING SUMMARY JUDGMENT TO CITY ON ELIGIBILITYDOCSSM/3004396v1/200430-0003

EXHIBIT A PAGE 19

Case 6:12-bk-28006-MJ

Doc 837797 Filed 10/22/13
09/17/13 Entered 09/17/13
10/22/13 15:36:17
18:32:10
Main
Main
Document
Document Page
Page252 of 244
6

Desc

1

Order Granting City’s Motion for Summary Judgment on Eligibility

2

On July 5, 2013, chapter 9 debtor City of San Bernardino, California (the “City”) filed its

3

motion for summary judgment and supporting papers on eligibility for relief under chapter 9 of the4

Bankruptcy Code pursuant to 11 U.S.C. §§109(c), 921(c) and 921(d) (the “City Eligibility Motion”).

5

On August 5, 2013, the California Public Employees’ Retirement System (“CalPERS”) filed its

6

opposition brief and supporting papers with respect to the City Eligibility Motion, including a7

request under Federal Rule of Civil Procedure 56(d) (made applicable by Federal Rule of8

Bankruptcy Procedure 7056) for additional discovery, and a motion for summary judgment under

9

Federal Rule of Civil Procedure 56(f)(1). On August 16, 2013, the City filed its reply brief and10

supporting papers. A hearing was held on August 28, 2013 (the “Hearing”) on the City's Eligibility

11

Motion, CalPERS’ request for additional discovery under Federal Rule of Civil Procedure 56(d) and

12

CalPERS’ motion for summary judgment under Federal Rule of Civil Procedure 56(f)(1).

13

The Court, having read and considered the moving, opposition and reply papers, including all

14

supporting documents submitted therewith, and having considered only admissible and competent15

supporting evidence and declarations; having heard the arguments of counsel on this matter at the16

Hearing; having determined that there are no triable issues of material fact and that the City is

17eligible to be a debtor under chapter 9 of the United States Bankruptcy Code as a matter of law, and18

that CalPERS’ Rule 56(d) request and Rule 56(f)(1) motion are without merit; and having

19

determined that the City is entitled to summary judgment in its favor as a matter of law based on the20

uncontroverted facts and law, and good cause appearing therefor, IT IS HEREBY ADJUDGED,

21

ORDERED AND DECREED that:

22
23
24
25

1.

The City is granted judgment in its favor that it is eligible for chapter 9 relief and thatan order for chapter 9 relief shall be entered.
2.

All objections to eligibility and requests for dismissal on Bankruptcy Code Section

921(c) grounds are overruled.

26

3.

CalPERS’ Rule 56(d) request is denied.

27

4.

CalPERS’ Rule 56(f)(1) motion is denied.

28
S TRADLING Y OCCAC ARLSON & R AUTHLAWYERSS ANT A MO NI C A

2ORDER GRANTING SUMMARY JUDGMENT TO CITY ON ELIGIBILITYDOCSSM/3004396v1/200430-0003

EXHIBIT A PAGE 20

Case 6:12-bk-28006-MJ

1
2

5.

Doc 837797 Filed 10/22/13
09/17/13 Entered 09/17/13
10/22/13 15:36:17
18:32:10
Main
Main
Document
Document Page
Page26
3 of 244
6Desc

The Court’s findings of fact and conclusions of law and/or memorandum decision on

eligibility shall follow in a separate document.

3

###

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

Date: September 17, 201325

Meredith A. Jury
United States Bankruptcy Judge

26
27
28
S TRADLING Y OCCAC ARLSON & R AUTHLAWYERSS ANT A MO NI C A

3ORDER GRANTING SUMMARY JUDGMENT TO CITY ON ELIGIBILITYDOCSSM/3004396v1/200430-0003

EXHIBIT A PAGE 21

Case 6:12-bk-28006-MJ

Doc 837797 Filed 10/22/13
09/17/13 Entered 09/17/13
10/22/13 15:36:17
18:32:10
Main
Main
Document
Document Page
Page27
4 of 244
6

Desc

NOTICE OF ENTERED ORDER AND SERVICE LIST
Notice is given by the court that a judgment or order entitled (specify): ORDER (1) GRANTING CITY OF SANBERNARDINO’S MOTION FOR SUMMARY JUDGMENT ON ELIGIBILITY, AND (2) DENYING CALPERS’ RULE 56
MOTIONS was entered on the date indicated as Entered on the first page of this judgment or order and will be served in
the manner stated below:
1. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF) Pursuant to controlling General Orders
and LBRs, the foregoing document was served on the following persons by the court via NEF and hyperlink to the
judgment or order. As of August 29, 2013, the following persons are currently on the Electronic Mail Notice List for thisbankruptcy case or adversary proceeding to receive NEF transmission at the email addresses stated below.
UNITED STATES TRUSTEE
United States Trustee (RS) ustpregion16.rs.ecf@usdoj.gov
ATTORNEYS FOR DEBTOR
pglassman@sycr.com
fneufeld@sycr.com
ATTORNEYS FOR CALPERS
Brett Bissett brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com
Jerrold Abeles abeles.jerry@arentfox.com, labarreda.vivian@arentfox.com
Franklin C Adams franklin.adams@bbklaw.com,
arthur.johnston@bbklaw.com;lisa.spencer@bbklaw.com;bknotices@bbklaw.com
Joseph M Adams jadams@adamspham.com
Andrew K Alper aalper@frandzel.com, efiling@frandzel.com;ekidder@frandzel.com
Thomas V Askounis taskounis@askounisdarcy.com
Julie A Belezzuoli julie.belezzuoli@kayescholer.com
Anthony Bisconti tbisconti@bmkattorneys.com, admin@bmkattorneys.com
Brett Bissett brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Brett Bissett brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Jeffrey E Bjork jbjork@sidley.com
Michael D Boutell mdbell@comerica.com
J Scott Bovitz bovitz@bovitz-spitzer.com
John A Boyd fednotice@tclaw.net
Jeffrey W Broker jbroker@brokerlaw.biz
Deana M Brown dbrown@milbank.com
Michael J Bujold Michael.J.Bujold@usdoj.gov
Suzanne Burke Spencer sburke@sall-lawoffice.com, aduran@sall-lawoffice.com;rsall@salllawoffice.com;jbernaldo@sall-lawoffice.com;msall@sall-lawoffice.com
Shirley Cho scho@pszjlaw.com
Alicia Clough alicia.clough@kayescholer.com, managingattorneyofficeassignments@kayescholer.com
Marc S Cohen mcohen@kayescholer.com, dhernandez@kayescholer.com
Ronald R Cohn rcohn@horganrosen.com
Christopher H Conti chc@sdlaborlaw.com, sak@sdlaborlaw.com
Christopher J Cox chris.cox@weil.com, janine.chong@weil.com
Christina M Craige ccraige@sidley.com
Alex Darcy adarcy@askounisdarcy.com, akapai@askounisdarcy.com
Susan S Davis sdavis@coxcastle.com
Robert H Dewberry robert.dewberry@dewlaw.net
Todd J Dressel dressel@chapman.com, lubecki@chapman.com
Chrysta L Elliott elliottc@ballardspahr.com, manthiek@ballardspahr.com
Scott Ewing contact@omnimgt.com, sewing@omnimgt.com;katie@omnimgt.com
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
June 2012

DOCSSM/3004396v1/200430-0003

F 9021-1.1.NOTICE.ENTERED.ORDER
EXHIBIT A PAGE 22

Case 6:12-bk-28006-MJ

Doc 837797 Filed 10/22/13
09/17/13 Entered 09/17/13
10/22/13 15:36:17
18:32:10
Main
Main
Document
Document Page
Page285 of 244
6

Desc

John A Farmer jfarmer@orrick.com
Brian W Freeman brian@pedigolaw.com, brian@brianwfreeman.com
Victoria C Geary victoria.geary@boe.ca.gov
Paul R. Glassman pglassman@sycr.com
Robert P Goe kmurphy@goeforlaw.com, rgoe@goeforlaw.com;mforsythe@goeforlaw.com
David M Goodrich dgoodrich@marshackhays.com, ecfmarshackhays@gmail.com
Christian Graham cgraham23@dlblaw.net
Everett L Green everett.l.green@usdoj.gov
Chad V Haes chaes@marshackhays.com, ecfmarshackhays@gmail.com
James A Hayes jhayes@jamesahayesaplc.com
M Jonathan Hayes jhayes@srhlawfirm.com,
roksana@srhlawfirm.com;carolyn@srhlawfirm.com;shawnj@srhlawfirm.com;rosarioz@srhlawfirm.com
D Edward Hays ehays@marshackhays.com, ecfmarshackhays@gmail.com
Eric M Heller eric.m.heller@irscounsel.treas.gov
Jeffery D Hermann jhermann@orrick.com
Jeffery D Hermann jhermann@orrick.com
Bonnie M Holcomb bonnie.holcomb@doj.ca.gov, rosita.eduardo@doj.ca.gov
Whitman L Holt wholt@ktbslaw.com
Michelle C Hribar mch@sdlaborlaw.com
Steven J Katzman SKatzman@bmkattorneys.com, admin@bmkattorneys.com
Jane Kespradit jane.kespradit@limruger.com, amy.lee@limruger.com
Mette H Kurth kurth.mette@arentfox.com
Mette H Kurth kurth.mette@arentfox.com
Sandra W Lavigna lavignas@sec.gov
Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com
Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com
Richard A Marshack rmarshack@marshackhays.com, lbergini@marshackhays.com;ecfmarshackhays@gmail.com
David J McCarty dmccarty@sheppardmullin.com
Reed M Mercado rmercado@sheppardmullin.com
Fred Neufeld fneufeld@sycr.com
Aron M Oliner roliner@duanemorris.com
Scott H Olson solson@seyfarth.com
Dean G Rallis drallis@sulmeyerlaw.com
Christopher O Rivas crivas@reedsmith.com
Kenneth N Russak krussak@frandzel.com, efiling@frandzel.com;dmoore@frandzel.com
Gregory M Salvato gsalvato@salvatolawoffices.com, calendar@salvatolawoffices.com
Mark C Schnitzer mschnitzer@rhlaw.com, mcschnitzer@gmail.com
William R Shafton wshafton@winston.com
Diane S Shaw diane.shaw@doj.ca.gov
Ariella T Simonds asimonds@sidley.com
Leonard Steiner ls@steinerlibo.com, jasoncarter@steinerlibo.com;aam@steinerlibo.com
Jason D Strabo jstrabo@mwe.com, cnorris@mwe.com
Cathy Ta cathy.ta@bbklaw.com, Arthur.Johnston@bbklaw.com;lisa.spencer@bbklaw.com
Sheila Totorp stotorp@clausen.com, jbrzezinski@clausen.com
Benjamin R Trachtman btrachtman@trachtmanlaw.com, sstraka@trachtmanlaw.com
Matthew J Troy matthew.troy@usdoj.gov
United States Trustee (RS) ustpregion16.rs.ecf@usdoj.gov
Anne A Uyeda auyeda@bmkattorneys.com
Annie Verdries verdries@lbbslaw.com, Autodocket@lbbslaw.com
Brian D Wesley brian.wesley@doj.ca.gov
Kirsten A Roe Worley kworley@wthf.com, bcordova@wthf.com
Clarisse Young youngshumaker@psmlawyers.com, sally@psmlawyers.com
Pamela Jan Zylstra zylstralaw@gmail.com
Service information continued on attached page

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
June 2012

DOCSSM/3004396v1/200430-0003

F 9021-1.1.NOTICE.ENTERED.ORDER
EXHIBIT A PAGE 23

Case 6:12-bk-28006-MJ

Doc 837797 Filed 10/22/13
09/17/13 Entered 09/17/13
10/22/13 15:36:17
18:32:10
Main
Main
Document
Document Page
Page296 of 244
6Desc

2. SERVED BY THE COURT VIA UNITED STATES MAIL: A copy of this notice and a true copy of this judgment ororder was sent by United States mail, first class, postage prepaid, to the following persons and/or entities at theaddresses indicated below:
Service information continued on attached page
3. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment or order whichbears an “Entered” stamp, the party lodging the judgment or order will serve a complete copy bearing an “Entered” stamp
by United States mail, overnight mail, facsimile transmission or email and file a proof of service of the entered order on thefollowing persons and/or entities at the addresses, facsimile transmission numbers, and/or email addresses stated below:
Service information continued on attached page

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
June 2012

DOCSSM/3004396v1/200430-0003

F 9021-1.1.NOTICE.ENTERED.ORDER
EXHIBIT A PAGE 24

Case 6:12-bk-28006-MJ

796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Doc 837
Main
Document Page
Page30
1 of
Main
Document
of12
244

Desc

1
2

FILED & ENTERED

3
4

SEP 17 2013

5
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY moser
DEPUTY CLERK

6
7
8

UNITED STATES BANKRUPTCY COURT9CENTRAL DISTRICT OF CALIFORNIA

10RIVERSIDE DIVISION

11

In re:

Case No. 6:12-bk-28006 MJ

12

CITY OF SAN BERNARDINO, CALIFORNIA

Chapter 9

13
14
15
16

Debtor.

COURT’S STATEMENT OFUNCONTROVERTED FACTS AND
CONCLUSIONS OF LAW
Hearing Held:Time:

August 28, 2013
1:30 p.m.

17
18
19
20
21
22
23
24

On July 5, 2013, debtor City of San Bernardino, California (the “City”) filed its motion forsummary judgment seeking an order determining that it is eligible for relief under chapter 9 pursuant
to 11 U.S.C. §§109(c), 921(c) and 921(d) (the “Eligibility Motion”) and supporting papers. On
August 5, 2013, the California Public Employees’ Retirement System (“CalPERS”) filed its
opposition to the Eligibility Motion and supporting papers. On August 16, 2013, the City filed its
reply and supporting papers. A hearing was held on the Eligibility Motion on August 28, 2013.
By separate orders, the Court has determined that the City is entitled to summary judgment on

25

the Eligibility Motion, and that that an order for relief under chapter 9 should be entered. Pursuant to26

Fed. R. Civ. P. 56, made applicable to bankruptcy proceedings by Fed. R. Bankr. P. 7056 and 9014,

27

the Court hereby adopts the following Statement of Uncontroverted Facts and Conclusions of Law

28

EXHIBIT A PAGE 25

Case 6:12-bk-28006-MJ

1
2

Doc 837796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Main
Main
Document
Document Page
Page31
2 of
of12
244

Desc

concerning the City’s petition and eligibility for chapter 9 relief in support of the grant of the City’s
Summary Judgment Motion.

3
UNCONTROVERTED FACTS

4
5
6
7

Uncontroverted Facts
1. The City is a California municipal
corporation operating under a city charter
ratified by its voters.

Evidence
Ex. A to Declaration of Georgeann Hanna
In Support of City of San Bernardino’s
Memorandum of Facts and Law in Supportof the Statement of Qualifications Under
Section 109(c) of the Bankruptcy Code(“Hanna Decl.”) [Docket No. 129]

2. The City is a municipality.

The evidence in paragraph 1 above and thatno party objected to eligibility on Section
109(c)(1) grounds.

3. The City placed items on the agenda for
the July 10, 2012 noticed public meeting of
the Mayor and Common Council that there
would be discussion on the City’s budget
for the fiscal year 2012/2013 and possible
action on authorizing the filing of a petition
under Chapter 9.
4. A report was prepared entitled the “SanBernardino Budgetary Analysis andRecommendations for Budget Stabilization”
dated July 9, 2012 (the “Budget Report”).

Hanna Decl., Exhibit D; Declaration ofAndrea Travis-Miller in Support of City of
San Bernardino’s Memorandum of Factsand Law in Support of the Statement of
Qualifications Under Section 109(c) of the
Bankruptcy Code [Docket No. 126](“Travis-Miller Decl.”), ¶ 7.
Exhibits B and C to Hanna Decl.; TravisMiller Decl. at ¶ 6.

5. At the July 10, 2012 noticed public
meeting of the Mayor and Common
Council, the Budget Report concerning the
fiscal condition of the City was presented
and the meeting was open for publiccomments.

Hanna Decl. Exhibits B and C; TravisMiller Decl., ¶ 8; Busch Decl., ¶ 13.

6. The City placed items on the agenda of
the July 16, 2012 noticed public meeting of
the Mayor and Common Council for
discussion concerning a declaration of fiscal
emergency in the City and taking possible
action on authorizing the filing of a petition
under Chapter 9.

Exhibit E to Hanna Decl.; Travis-Miller
Decl., ¶ 9.

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27

7. The July 16, 2012 meeting of the Mayor Exhibit F to Hanna Decl.; Travis-Miller
Decl., ¶ 9.
and Common Council was open for publiccomments and was adjourned and continued
to July 18, 2012. A presentation was madeon the city’s financial crisis at that meeting.

28-1-

EXHIBIT A PAGE 26

Case 6:12-bk-28006-MJ

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Doc 837796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Main
Main
Document
Document Page
Page32
3 of
of12
244

Desc

Uncontroverted Facts
8. The City placed items on the agenda of
the July 18, 2012 noticed public meeting of
the Mayor and Common Council for
discussion concerning a declaration of fiscal
emergency in the City and taking possible
action on authorizing the filing of a petition
under Chapter 9.

Evidence
Exhibit F to Hanna Decl.; Travis-Miller
Decl., ¶ 9.

9. A report entitled “City of San
Bernardino, California Staff Report” dated
July 18, 2012 (“Staff Report”) was prepared
for the Mayor and Common Council
regarding the subject of a declaration of
fiscal emergency.

Exhibit I to Hanna Decl.; Travis-Miller
Decl. ¶ 10; Bush Decl. ¶ 15.

10. At the July 18, 2012 noticed public
Exhibit I to Hanna Decl.; Travis-Miller
meeting of the Mayor and Common Council Decl. ¶ 9.
concerning the fiscal condition of the City,
the Common Council was presented with anconsidered the Staff Report and publiccomments were taken.
Exhibits G and H to Hanna Decl.; Travis11. After the presentations and public
Miller Decl. ¶ 10.
comments that took place at the three
noticed public meetings of the Mayor andCommon Council held on July 10, July 16
and July 18, 2012 concerning the fiscal
condition of the City, a majority of themembers of the Common Council voted todeclare a fiscal emergency and approved aresolution finding that: (1) the City is or will
be unable to pay its obligations within thenext 60 days, and that the financial state of
the City jeopardizes the health, safety or
well-being of the residents of the City
absent the protections of Chapter 9; and (2)given the City’s dire financial condition, it
was in the best interest of the City to declarea fiscal emergency. The Common Council
also passed by a majority vote a resolution
authorizing the filing of a petition underchapter 9 of the Bankruptcy Code.
12. The City was specifically authorizedunder California law to be a chapter 9
debtor.

The evidence in paragraphs 3-11 above andthat no party maintained an objection toeligibility on Section 109(c)(2) grounds.

13. A plan entitled “Fiscal Emergency
Operating Plan--July 2012 to September
2012” (the “Fiscal Emergency Plan”) and areport entitled “City of San Bernardino
selected Monthly Cash Flow Analysis

Exhibits L and M to Hanna Decl.; Simpson
Decl., ¶ 21; Busch Decl., ¶ 16.

-2-

EXHIBIT A PAGE 27

Case 6:12-bk-28006-MJ

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Doc 837796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Main
Main
Document
Document Page
Page33
4 of
of12
244

Uncontroverted Facts
Measures to Manage Cash” were preparedand presented for approval to the Mayor andCommon Council on July 24, 2012.

Desc

Evidence

14. The Fiscal Emergency Plan wasapproved by the Common Council on July24, 2012.

Exhibit N to Hanna Dec.

15. The City was insolvent within themeaning of Section 101(32)(c) of the
Bankruptcy Code as of August 1, 2012.

No party maintained an objection toeligibility on Section 109(c)(3) grounds.
Amended Statement of Qualifications under
Section 109(c) [Docket No. 124].
Amended Statement of Qualifications
Under Section 109(c) [Docket No. 124].

16. The City filed its Amended Statementof Qualifications signed by the City
Manager that states under penalty of perjury
that the City desires to effect a plan toadjust its debts.

17. A document entitled Pre-Pendency Plan Busch III Decl. at ¶ 7 and Exhibit 2 thereto.
was prepared and first presented to the
Common Council for consideration andapproval at the meeting of the Mayor andCommon Council conducted on August 30,
2012.
18. In September 2012 and on October 1,
2012, the Common Council approved the
Pre-Pendency Plan as adjusted by a 9-Point
Adjustment Plan.

Busch III Decl. at ¶ 7 and Exhibit 1, 2 and
3.

19. A document entitled Pendency Plan
was prepared and first presented to the
Common Council at the meeting of the
Mayor and Common Council conducted on
November 19, 2012.

Busch II Decl. at ¶ 5 and Exhibit 1 thereto.

20. The Common Council approved thePendency Plan at the meeting of the Mayor
and Common Council conducted on
November 26, 2012.

Busch III Decl. at ¶ 5 and Exhibit 1 thereto.

21. On or about September 12, 2012, theCity engaged Linda Daube to perform
services for the City as the City’s principal
representative and chief negotiator at allmeet and confer sessions held withrepresentatives of the City’s bargaining
units. Linda Daube attended andparticipated in meetings withrepresentatives of the City’s sevenbargaining units subsequent to September

Declaration of Linda Daube In Support Of
Debtor City of San Bernardino’s Motion
Pursuant To 11 U.S.C. §§ 365, 901 And 904
For Order Approving: (A) Rejection Of
Collective Bargaining Agreements With
San Bernardino Public Employees Assoc.,
San Bernardino Police Officers Assoc. And
San Bernardino City Professional
Firefighters; And (B) February 1, 2013
Interim Modifications To Such Collective-3-

EXHIBIT A PAGE 28

Case 6:12-bk-28006-MJ

1
2

Doc 837796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Main
Main
Document
Document Page
Page34
5 of
of12
244

Uncontroverted Facts

Evidence
Bargaining Agreements [Docket No. 444](“Daube Decl.”) at ¶ 3.

22. The City reached agreements with fourof its seven unions (the General Bargaining
Unit, the Fire Management Bargaining Unit,
the Police Management Bargaining Unit,
and the Management/Confidential
Bargaining Unit) on modifications of theterms and conditions of employment to theirrespective collective bargaining agreements,
and those modifications took effect on
February 1, 2013 as set forth in Resolution
No. 2013-22, Resolution No. 2013-23,
Resolution No. 2013-24, and Resolution
No. 2013-25.
23. The City did not reach an agreementwith three of its bargaining units on themodifications of the terms and conditions of
employment- the Middle Management Unit,
the Police Safety Unit and the Fire Safety
Unit. On January 28, 2013, the City
Council voted to impose modifications to
the terms and conditions of employment onthese three bargaining units as set forth in
Resolution No. 2013-18, Resolution No.
2013-19, and Resolution No. 2013-20.

Declaration Of Diana Leibrich In Support
Of Debtor City Of San Bernardino’s Motion
Pursuant To 11 U.S.C. §§ 365, 901 And 904
For Order Approving: (A) Rejection Of
Collective Bargaining Agreements With
San Bernardino Public Employees Assoc.,
San Bernardino Police Officers Assoc. And
San Bernardino City Professional
Firefighters; And (B) February 1, 2013
Interim Modifications To Such Collective
Bargaining Agreements [Docket No. 446](“Leibrich Decl.”) at ¶¶ 11-15 and Exhibits
17-20 thereto.
Leibrich Decl. at ¶¶ 16-19 and Exhibits 2123 thereto; Daube Decl. at ¶ 13.

24. At the meeting of the Mayor andCommon Council conducted on April 22,
2013, the City adopted its budget for the
General Fund for fiscal years 2012-13 and2013-14.

City Of San Bernardino’s Report
Respecting: (1) Approval Of Budgets for
Fiscal Years 2012-13 And 2013-14 Further
Implementing Pendency Plan; And (2)Supplemental Update On City’s Financial
Condition; Declaration Of Michael BuschIn Support Thereof [Docket No. 572](“Busch II Decl.”) at ¶ 5 and Exhibit 1
thereto.

25. The City was unable to negotiate withcreditors because such negotiation was
impracticable.

No party objected to eligibility on Section
109(c)(5) grounds. Amended Statement of
Qualifications under Section 109(c)26. In March 2007, the City was provided
with a study from Management Partners,
Inc., noting the City’s “fiscal distress,”“significant and threatening unfundedliabilities,” and “tenuous” general fundfinances.”

Bissett Decl. ¶ 5, Ex. A (page 3).
This uncontroverted fact was found by the
court to be irrelevant to Section 109(c)(4)and Section 921 issues.

12, 2012.

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27

Desc

28
-4-

EXHIBIT A PAGE 29

Case 6:12-bk-28006-MJ

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Doc 837796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Main
Main
Document
Document Page
Page35
6 of
of12
244

Desc

Uncontroverted Facts
27. In March 2008, the City Manager
reported a projected $7.2 million budget
deficit.

Evidence
Bissett Decl. ¶ 7, Ex. C (page 1).
This uncontroverted fact was found by the
court to be irrelevant to Section 109(c)(4)and Section 921 issues.
28. In February 2009, the Interim City
Bissett Decl. ¶ 8, Ex. D (page 1).
Manager reported a projected deficit of $9.0 This uncontroverted fact was found by the
million for fiscal year 2008-2009, and acourt to be irrelevant to Section 109(c)(4)$19.8 million deficit for fiscal year 2009-10. and Section 921 issues.
29. In early 2009, the City fire chief andpolice chief submitted reports with costcutting recommendations, including layoffs,
but those recommendations were not
adopted.
30. During the meeting of the Mayor andCommon Council on August 23, 2010, theTreasurer noted the possibility ofbankruptcy if the City continued its“accounting tricks” and did not close its
deficit.

Bissett Decl. ¶¶ 9-10, Exs. E & F.
This uncontroverted fact was found by the
court to be irrelevant to Section 109(c)(4)and Section 921 issues.

31. During the meeting of the Mayor andCommon Council on August 23, 2010, theCity’s Finance Director presented aPowerPoint Slide entitled “Symptoms of
Bankruptcy.”

Bissett Decl. ¶ 11, Ex. G.
This uncontroverted fact was found by the
court to be irrelevant to Section 109(c)(4)and Section 921 issues.

Bissett Decl. ¶ 11.
This uncontroverted fact was found by the
court to be irrelevant to Section 109(c)(4)and Section 921 issues.

16
17
18
19
20
21
22
23
24

32. The City’s Finance Department issued a Decl. Simpson [Dkt. No. 127] ¶ 6.
report entitled “San Bernardino Budgetary
Analysis and Recommendations for Budget
Stabilization” on July 9, 2012 (the “Budget
Report”). The Budget Report projected that
the City’s General Fund balance would be anegative $10.6 million by June 30, 2012.
33. At the July 18, 2012 meeting of the
Bissett Decl. ¶¶ 14-15, Exs. J-K.
Common Council, the Common Council
adopted resolutions declaring a fiscal
emergency and directing that a chapter 9
petition “shall be filed.” The Common
Council resolutions authorizing the Petition
say nothing about a plan of adjustment or let
a “desire to effect” a plan of adjustment.

25
26
27
28
-5-

EXHIBIT A PAGE 30

Case 6:12-bk-28006-MJ

1
2
3
4
5
6
7
8
9
10
11
12

Doc 837796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Main
Main
Document
Document Page
Page36
7 of
of12
244

Uncontroverted Facts
34. Nearly a year after the City filed its
Petition, it has failed to file a plan ofadjustment, set forth the terms of a plan ofadjustment, or formulate so much as an
outline of an eventual plan of adjustment.
As of May 2013, no one at the City had
been assigned the task of creating a plan ofadjustment.

Evidence
Busch Dep. at 268:18-272:4.

35. At the time the City filed its Petition, it
had no concept or outline of a plan ofadjustment.

See Busch Dep. at 268:18-272:4.

36. The City did not negotiate with its
principal creditors prior to filing its Petition
on Aug. 1, 2012 and has not engaged inmeaningful postpetition negotiations with
its creditors regarding the terms of a plan ofadjustment.

See July 31, 2013 Declaration of Corey W.
Glave filed concurrently herewith, ¶¶ 2-4;
February 8, 2013 Declaration of Bonnie E.
Clarke [Dkt. No. 401-3], ¶¶ 10, 13; March
21, 2013 Declaration of Dennis J. Hayes[Dkt. 498-1], ¶¶ 12-13, 28-30; February 26,
2013 Declaration of Michael A. McGill[Dkt. No. 424-2], ¶¶ 17-21, 24.

37. The City did not formulate a pendency
plan until November 26, 2012.

See Declaration of Michael Busch Re Cityof San Bernardino’s Pendency Plan [Dkt.
No. 234], Ex. 1; CalPERS’ Preliminary
Objection [Dkt. No. 207] at 9.

38. The City has not submitted any
evidence that it ever explored alternatives tobankruptcy, other than those included in the
Budget Report of July 9, 2012.

Minutes of the July 10, 2012 council
meeting (where bankruptcy was authorized)
reflect that the City did not evaluate
alternatives such as access to the capital
markets or asset sales. See Bissett Decl. ¶13, Ex. I. The Budget Report of July 9,2012 Minutes of City Council July 10, 2012
meeting. Hanna Decl. Exhibits B and C.
See Pendency Plan [Dkt. No. 234-2].

13
14

Desc

15
16
17
18
19
20
21
22
23

39. The City’s Pendency plan is 10 pages
long, contains no detailed supporting
financial information, and is premised on a
postpetition budget which deferred
postpetition expenses.

24
25
26
27

40. The City had inadequate resources in its Bissett Decl., ¶ 5, Ex. A (page 2); id. ¶ 6,
finance department at the time it filed its
Ex. B (Busch Dep. At 257:17-261:5).
bankruptcy case and the City’s finance
Williams Decl. [Dkt. No. 282] ¶¶ 7-8.
department remains understaffed.

28-6-

EXHIBIT A PAGE 31

Case 6:12-bk-28006-MJ

1
2
3
4

Doc 837796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Main
Main
Document
Document Page
Page37
8 of
of12
244

Desc

Uncontroverted Facts
41. The City did not produce to CalPERS
its reconciled bank account statements untillate January and early February 2013, anddid not prepare cash forecasts until April
2013.

Evidence
Crisafulli Decl. ¶¶ 16-17.

42. The City, since filing its Petition, has
not provided all requested financial
information to its creditors and parties ininterest.

See March 21, 2013 Declaration of Dennis
J. Hayes [Dkt. No. 498-1], ¶¶ 15-24; seealso July 10, 2013 Declaration of Corey W.
Glave [Dkt. 686, p. 11 of 298], ¶¶ 8. Decl.
Crisafulli ¶¶ 15-18.

5
6
7
8
9
10
11
12
13

43. The City has failed to provide CalPERS Decl. Crisafulli ¶¶ 13-18.
with some financial data it has requested
during the pendency of the City’s case.
44. During the 90 days before filing its
Bissett Decl. ¶ 16, Ex. L (Reuters article);bankruptcy petition, the City paid some $2
Crisafulli Decl. ¶ 23.
million as “cashouts” to employees andnewly retiring employees, including nearly$1.2 million in July ($600,000 of which was
paid on the day before it filed its Petition).

14
15
16
17
18

45. The City has made payments on
prepetition debt post-filing while itcontinues to not pay some postpetition
creditors.

Busch Dep. at 265:9-268:17

46. The City has failed to timely pay
millions of dollars in postpetition
obligations.

Crisafulli Decl. ¶¶ 20-21; Busch Decl. ofApril 29 [Dkt. No. 572-6].

47. The City knew of the underlying
settlements in the three civil rights cases
months before filing its Petition.

See generally Galipo Decl.

48. The audited annual financial report for
the City’s Water Department reflects that at
the time the City filed its Petition, the City’s
Water Department held over $37,000,000 in
immediately available cash and cash
equivalents which were not designated as
restricted. The City has set forth noevidence indicating that it consideredborrowing money from the Water
Department to address its liquidity
concerns.

Decl. Crisafulli ¶ 12.
The Court determined as a matter of law
that the City could not use any of theWater Department funds as general fundmonies nor could it borrow from the Water
Department.

19
20
21
22
23
24
25
26
27
28

-7-

EXHIBIT A PAGE 32

Case 6:12-bk-28006-MJ

1

4

Desc

Uncontroverted Facts

Evidence

49. The City’s Water Department had total
net assets in the amount of $263 million asof the Petition date.

Decl. Crisafulli ¶ 12.
The Court determined as a matter of law
that the City could not use any of theWater Department funds as general fundmonies nor could it borrow from the Water
Department.

2
3

Doc 837796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Main
Main
Document
Document Page
Page38
9 of
of12
244

5
6
7
8
9
10
11
12

CONCLUSIONS OF LAW
1.

The Court’s conclusions of law on the City’s Motion for Summary Judgment on

13

Eligibility for Chapter 9 Relief (the “Motion”) were made by the Court on the record at the hearing

14

on August 28, 2013, and will be reflected in the Court’s forthcoming written opinion on its ruling on

15

the City’s Motion.

16
17

###

18
19
20
21
22
23
24
25

Date: September 17, 2013

Meredith A. Jury
United States Bankruptcy Judge

26
27
28
-8-

EXHIBIT A PAGE 33

Case 6:12-bk-28006-MJ

1

Doc 837796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Main
MainDocument
Document Page 39
10 of 244
12Desc

NOTICE OF ENTERED ORDER AND SERVICE LIST

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Notice is given by the court that a judgment or order entitled (specify): CALPERS’ STATEMENT OFUNCONTROVERTED FACTS AND CONCLUSIONS OF LAW was entered on the date indicated as“Entered” on the first page of this judgment or order and will be served in the manner stated below:
1. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF) B Pursuant to controlling
General Orders and LBRs, the foregoing document was served on the following persons by the court via NEF
and hyperlink to the judgment or order. As of (date)__09/11/13__, the following persons are currently on theElectronic Mail Notice List for this bankruptcy case or adversary proceeding to receive NEF transmission at theemail addresses stated below.

Jerrold Abeles abeles.jerry@arentfox.com, labarreda.vivian@arentfox.com
Franklin C Adams franklin.adams@bbklaw.com,
arthur.johnston@bbklaw.com;lisa.spencer@bbklaw.com;bknotices@bbklaw.com
Joseph M Adams jadams@adamspham.com
Andrew K Alper aalper@frandzel.com, efiling@frandzel.com;ekidder@frandzel.com
Thomas V Askounis taskounis@askounisdarcy.com
Julie A Belezzuoli julie.belezzuoli@kayescholer.com
Anthony Bisconti tbisconti@bmkattorneys.com, admin@bmkattorneys.com
Brett Bissett brett.bissett@klgates.com,
carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Brett Bissett brett.bissett@klgates.com,
carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Jeffrey E Bjork jbjork@sidley.com
Michael D Boutell mdbell@comerica.com
J Scott Bovitz bovitz@bovitz-spitzer.com
John A Boyd fednotice@tclaw.net
Jeffrey W Broker jbroker@brokerlaw.biz
Deana M Brown dbrown@milbank.com
Michael J Bujold Michael.J.Bujold@usdoj.gov
Shirley Cho scho@pszjlaw.com
Alicia Clough alicia.clough@kayescholer.com,
managingattorneyofficeassignments@kayescholer.com
Marc S Cohen mcohen@kayescholer.com, dhernandez@kayescholer.com
Ronald R Cohn rcohn@horganrosen.com
Christopher H Conti chc@sdlaborlaw.com, sak@sdlaborlaw.com
Christopher J Cox chris.cox@weil.com, janine.chong@weil.com
Christina M Craige ccraige@sidley.com
Alex Darcy adarcy@askounisdarcy.com, akapai@askounisdarcy.com
Susan S Davis sdavis@coxcastle.com
Robert H Dewberry robert.dewberry@dewlaw.net
Todd J Dressel dressel@chapman.com, lubecki@chapman.com
Chrysta L Elliott elliottc@ballardspahr.com, manthiek@ballardspahr.com
Scott Ewing contact@omnimgt.com, sewing@omnimgt.com;katie@omnimgt.com
John A Farmer jfarmer@orrick.com
Brian W Freeman brian@pedigolaw.com, brian@brianwfreeman.com
Victoria C Geary victoria.geary@boe.ca.gov
Paul R. Glassman pglassman@sycr.com
Robert P Goe kmurphy@goeforlaw.com, rgoe@goeforlaw.com;mforsythe@goeforlaw.com
David M Goodrich dgoodrich@marshackhays.com, ecfmarshackhays@gmail.com
Christian Graham cgraham23@dlblaw.net
Everett L Green everett.l.green@usdoj.gov
Chad V Haes chaes@marshackhays.com, ecfmarshackhays@gmail.com
James A Hayes jhayes@jamesahayesaplc.com
EXHIBIT A PAGE 34

Case 6:12-bk-28006-MJ

1

Doc 837796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Main
MainDocument
Document Page 40
11 of 244
12Desc

M Jonathan Hayes jhayes@srhlawfirm.com,
roksana@srhlawfirm.com;carolyn@srhlawfirm.com;shawnj@srhlawfirm.com;rosarioz@srhla
wfirm.com;jhayesecf@gmail.com;j@alkazian.com
D Edward Hays ehays@marshackhays.com, ecfmarshackhays@gmail.com
Eric M Heller eric.m.heller@irscounsel.treas.gov
Jeffery D Hermann jhermann@orrick.com
Jeffery D Hermann jhermann@orrick.com
Bonnie M Holcomb bonnie.holcomb@doj.ca.gov, rosita.eduardo@doj.ca.gov
Whitman L Holt wholt@ktbslaw.com
Michelle C Hribar mch@sdlaborlaw.com
Steven J Katzman SKatzman@bmkattorneys.com, admin@bmkattorneys.com
Jane Kespradit jane.kespradit@limruger.com, amy.lee@limruger.com
Mette H Kurth kurth.mette@arentfox.com
Mette H Kurth kurth.mette@arentfox.com
Sandra W Lavigna lavignas@sec.gov
Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com
Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com
Richard A Marshack rmarshack@marshackhays.com,
lbergini@marshackhays.com;ecfmarshackhays@gmail.com
David J McCarty dmccarty@sheppardmullin.com
Reed M Mercado rmercado@sheppardmullin.com
Fred Neufeld fneufeld@sycr.com
Aron M Oliner roliner@duanemorris.com
Scott H Olson solson@seyfarth.com
Dean G Rallis drallis@sulmeyerlaw.com
Christopher O Rivas crivas@reedsmith.com
Kenneth N Russak krussak@frandzel.com, efiling@frandzel.com;dmoore@frandzel.com
Gregory M Salvato gsalvato@salvatolawoffices.com, calendar@salvatolawoffices.com
Mark C Schnitzer mschnitzer@rhlaw.com, mcschnitzer@gmail.com
William R Shafton wshafton@winston.com
Diane S Shaw diane.shaw@doj.ca.gov
Ariella T Simonds asimonds@sidley.com
Leonard Steiner ls@steinerlibo.com, jasoncarter@steinerlibo.com;aam@steinerlibo.com
Jason D Strabo jstrabo@mwe.com, LosAngelesTrialDocket@mwe.com
Cathy Ta cathy.ta@bbklaw.com, Arthur.Johnston@bbklaw.com;lisa.spencer@bbklaw.com
Sheila Totorp stotorp@clausen.com, jbrzezinski@clausen.com
Benjamin R Trachtman btrachtman@trachtmanlaw.com, sstraka@trachtmanlaw.com
Matthew J Troy matthew.troy@usdoj.gov
United States Trustee (RS) ustpregion16.rs.ecf@usdoj.gov
Anne A Uyeda auyeda@bmkattorneys.com
Annie Verdries verdries@lbbslaw.com, Autodocket@lbbslaw.com
Brian D Wesley brian.wesley@doj.ca.gov
Kirsten A. Worley kw@wlawcorp.com, admin@wlawcorp.com
Clarisse Young youngshumaker@psmlawyers.com, sally@psmlawyers.com
Pamela Jan Zylstra zylstralaw@gmail.com

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Service information continued on
attached page
2. SERVED BY THE COURT VIA UNITED STATES MAIL: A copy of this notice and a true copy of thisjudgment or order was sent by United States mail, first class, postage prepaid, to the following persons and/or
entities at the addresses indicated below:

Debtor
EXHIBIT A PAGE 35

Case 6:12-bk-28006-MJ

1
2
3

Doc 837796 Filed 10/22/13
09/17/13 Entered 10/22/13
09/17/13 18:32:10
15:33:46
Main
MainDocument
Document Page 41
12 of 244
12

Desc

City of San Bernardino, California, City Hall, 300 North "D" Street,
San Bernardino, CA 92418-0001
Service information continued on
attached page

4
5
6
7

3. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment ororder which bears an “Entered” stamp, the party lodging the judgment or order will serve a complete copy
bearing an “Entered” stamp by United States mail, overnight mail, facsimile transmission or email and file a
proof of service of the entered order on the following persons and/or entities at the addresses, facsimiletransmission numbers, and/or email addresses stated below:

8
9
10
11

Service information continued on
attached page

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

EXHIBIT A PAGE 36

Case 6:12-bk-28006-MJ

1
2
3
4
5
6
7
8
9
10
11

817 Filed 10/22/13
09/27/13 Entered 10/22/13
09/27/13 18:32:10
16:37:11
Doc 837
Main
Document Page
Page42
1 of 244
5
Main
Document

PAUL R. GLASSMAN (State Bar No. 76536)
FRED NEUFELD (STATE BAR NO. 150759)
STRADLING YOCCA CARLSON & RAUTH, P.C.
100 Wilshire Blvd., 4th Floor
Santa Monica, CA 90401
Telephone: (424) 214-7000
Facsimile: (424) 214-7010
pglassman@sycr.com
fneufeld@sycr.com

Desc

FILED & ENTEREDSEP 27 2013
CLERK U.S. BANKRUPTCY COURT
Central District of California
BY tolleson DEPUTY CLERKJAMES F. PENMAN (State Bar No. 91761)
CITY ATTORNEY
300 North “D” STREET, Sixth Floor
San Bernardino, CA 92418
Telephone: (909) 384-5355
Facsimile: (909) 384-5238
E-mail: Penman_Ja@sbcity.org
Attorneys for Debtor
City of San Bernardino

UNITED STATES BANKRUPTCY COURTCENTRAL DISTRICT OF CALIFORNIA
RIVERSIDE DIVISION

12
13
14
15

In re

Case No. 6:12-bk-28006 MJ

16

CITY OF SAN BERNARDINO,CALIFORNIA,

Chapter 917
18

Debtor.

19
20
21

ORDER APPROVING STIPULATIONBETWEEN CITY OF SAN BERNARDINO
AND CALIFORNIA PUBLIC EMPLOYEES’RETIREMENT SYSTEM REGARDING
EXTENSION OF TIME TO FILE APPEAL IN
ACCORDANCE WITH FEDERAL RULE OFBANKRUPTCY PROCEDURE 8002(C)22
23

Hearing Date:
Date: September 30, 2013
Time: 9:30 a.m.
Place: United States Bankruptcy Court
3420 Twelfth Street
Courtroom 301
Riverside, CA 92501

24
25
26
27
28
S TRADLING Y OCCAC ARLSON & R AUTH
L AW Y E R S
SANT A M ONICA

ORDER APPROVING STIPULATION BETWEEN DEBTOR AND CALPERSDOCSSM/3004650v2/200430-0003

EXHIBIT A PAGE 37

Case 6:12-bk-28006-MJ

Doc 837817 Filed 10/22/13
09/27/13 Entered 10/22/13
09/27/13 18:32:10
16:37:11
Main
Main
Document
Document Page
Page432 of 244
5

1

Desc

Order

2

The Court, having read and considered the motion and related papers filed by the California

3

Public Employees’ Retirement System (“CalPERS”) for a 21-day extension of time to file appeals

4from the following orders entered on September 17, 2013:

5(i) Order (1) Granting City of San Bernardino’s Motion for Summary Judgment on Eligibility6

and (2) Denying CalPERS’ Rule 56 Motions [Dkt. No. 797],

7(ii) Court’s Statement of Uncontroverted Facts and Conclusions of Law [Dkt. No. 796], and8(iii) Order for Relief Under Chapter 9 of the Bankruptcy Code [Dkt. No. 798],

9(collectively, the “Eligibility Orders”); and having read and considered the Stipulation between City

10

of San Bernardino and California Public Employees’ Retirement System regarding Extension of

11

Time to File Appeal in Accordance with Federal Rule of Bankruptcy Procedure 8002(C)12(“Stipulation”) entered into by and between debtor City of San Bernardino, California and CalPERS,

13

which contains the agreement of the parties that a 21-day extension of time should be granted; and14

having determined that (a) CalPERS is not seeking an extension of time for appeal for an improper

15

purpose; (b) an extension does not inconvenience the Court or the City and would not unduly delay

16

the administration of this case; and (c) an extension would benefit the appeal process as whole,17accordingly, IT IS HEREBY ORDERED that:

18

1.

The Stipulation is approved in its entirety and the time to file appeals from the19

Eligibility Order is extended to October 22, 2013, as allowed pursuant to Federal Rule of20

Bankruptcy Procedure 8002(c)(2).

21
22

2.

This Court shall retain jurisdiction to hear and determine all matters arising from orrelated to this Order.
###

23
24

Date: September 27, 201325

Meredith A. Jury
United States Bankruptcy Judge

26
27
S TRADLING Y OCCA
28
C ARLSON & R AUTH
L AW Y E R S
SANT A M ONICA

1
ORDER APPROVING STIPULATION BETWEEN DEBTOR AND CALPERSDOCSSM/3004650v2/200430-0003

EXHIBIT A PAGE 38

Case 6:12-bk-28006-MJ

Doc 837817 Filed 10/22/13
09/27/13 Entered 10/22/13
09/27/13 18:32:10
16:37:11
Main
Main
Document
Document Page
Page443 of 244
5

Desc

NOTICE OF ENTERED ORDER AND SERVICE LIST
Notice is given by the court that a judgment or order entitled (specify): ORDER APPROVING STIPULATION BETWEENCITY OF SAN BERNARDINO AND CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM REGARDING
EXTENSION OF TIME TO FILE APPEAL IN ACCORDANCE WITH FEDERAL RULE OF BANKRUPTCY PROCEDURE
8002(C) was entered on the date indicated as Entered on the first page of this judgment or order and will be served in themanner stated below:
1. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF) Pursuant to controlling General Orders
and LBRs, the foregoing document was served on the following persons by the court via NEF and hyperlink to the
judgment or order. As of September 26, 2013, the following persons are currently on the Electronic Mail Notice List for thisbankruptcy case or adversary proceeding to receive NEF transmission at the email addresses stated below.
The United States trustee will be served electronically by the court to:United States Trustee (RS) ustpregion16.rs.ecf@usdoj.gov
ATTORNEYS FOR DEBTORPaul R. Glassman pglassman@sycr.com
Fred Neufeld
fneufeld@sycr.com
ATTORNEYS FOR CALPERS
Brett Bissett brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com
Jerrold Abeles abeles.jerry@arentfox.com, labarreda.vivian@arentfox.com
Franklin C Adams franklin.adams@bbklaw.com,
arthur.johnston@bbklaw.com;lisa.spencer@bbklaw.com;bknotices@bbklaw.com
Joseph M Adams jadams@adamspham.com
Andrew K Alper aalper@frandzel.com, efiling@frandzel.com;ekidder@frandzel.com
Thomas V Askounis taskounis@askounisdarcy.com
Julie A Belezzuoli julie.belezzuoli@kayescholer.com
Anthony Bisconti tbisconti@bmkattorneys.com, admin@bmkattorneys.com
Brett Bissett brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Brett Bissett brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Jeffrey E Bjork jbjork@sidley.com
Michael D Boutell mdbell@comerica.com
J Scott Bovitz bovitz@bovitz-spitzer.com
John A Boyd fednotice@tclaw.net
Jeffrey W Broker jbroker@brokerlaw.biz
Deana M Brown dbrown@milbank.com
Michael J Bujold Michael.J.Bujold@usdoj.gov
Shirley Cho scho@pszjlaw.com
Alicia Clough alicia.clough@kayescholer.com, managingattorneyofficeassignments@kayescholer.com
Marc S Cohen mcohen@kayescholer.com, dhernandez@kayescholer.com
Ronald R Cohn rcohn@horganrosen.com
Christopher H Conti chc@sdlaborlaw.com, sak@sdlaborlaw.com
Christopher J Cox chris.cox@weil.com, janine.chong@weil.com
Christina M Craige ccraige@sidley.com
Alex Darcy adarcy@askounisdarcy.com, akapai@askounisdarcy.com
Susan S Davis sdavis@coxcastle.com
Robert H Dewberry robert.dewberry@dewlaw.net
Todd J Dressel dressel@chapman.com, lubecki@chapman.com
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012

DOCSSM/3004650v2/200430-0003

F 9021-1.1.NOTICE.ENTERED.ORDER
EXHIBIT A PAGE 39

Case 6:12-bk-28006-MJ

Doc 837817 Filed 10/22/13
09/27/13 Entered 10/22/13
09/27/13 18:32:10
16:37:11
Main
Main
Document
Document Page
Page45
4 of 244
5

Desc

Chrysta L Elliott elliottc@ballardspahr.com, manthiek@ballardspahr.com
Scott Ewing contact@omnimgt.com, sewing@omnimgt.com;katie@omnimgt.com
John A Farmer jfarmer@orrick.com
Brian W Freeman brian@pedigolaw.com, brian@brianwfreeman.com
Victoria C Geary victoria.geary@boe.ca.gov
Paul R. Glassman pglassman@sycr.com
Robert P Goe kmurphy@goeforlaw.com, rgoe@goeforlaw.com;mforsythe@goeforlaw.com
David M Goodrich dgoodrich@marshackhays.com, ecfmarshackhays@gmail.com
Christian Graham cgraham23@dlblaw.net
Everett L Green everett.l.green@usdoj.gov
Chad V Haes chaes@marshackhays.com, ecfmarshackhays@gmail.com
James A Hayes jhayes@jamesahayesaplc.com
M Jonathan Hayes jhayes@srhlawfirm.com,
roksana@srhlawfirm.com;carolyn@srhlawfirm.com;shawnj@srhlawfirm.com;rosarioz@srhlawfirm.com;jhayesecf@gmail.com;j@alkazian.com
D Edward Hays ehays@marshackhays.com, ecfmarshackhays@gmail.com
Eric M Heller eric.m.heller@irscounsel.treas.gov
Jeffery D Hermann jhermann@orrick.com
Jeffery D Hermann jhermann@orrick.com
Bonnie M Holcomb bonnie.holcomb@doj.ca.gov, rosita.eduardo@doj.ca.gov
Whitman L Holt wholt@ktbslaw.com
Michelle C Hribar mch@sdlaborlaw.com
Steven J Katzman SKatzman@bmkattorneys.com, admin@bmkattorneys.com
Jane Kespradit jane.kespradit@limruger.com, amy.lee@limruger.com
Mette H Kurth kurth.mette@arentfox.com
Mette H Kurth kurth.mette@arentfox.com
Sandra W Lavigna lavignas@sec.gov
Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com
Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com
Richard A Marshack rmarshack@marshackhays.com,
lbergini@marshackhays.com;ecfmarshackhays@gmail.com
David J McCarty dmccarty@sheppardmullin.com
Reed M Mercado rmercado@sheppardmullin.com
Fred Neufeld fneufeld@sycr.com
Aron M Oliner roliner@duanemorris.com
Scott H Olson solson@seyfarth.com
Dean G Rallis drallis@sulmeyerlaw.com
Christopher O Rivas crivas@reedsmith.com
Kenneth N Russak krussak@frandzel.com, efiling@frandzel.com;dmoore@frandzel.com
Gregory M Salvato gsalvato@salvatolawoffices.com, calendar@salvatolawoffices.com
Mark C Schnitzer mschnitzer@rhlaw.com, mcschnitzer@gmail.com
Diane S Shaw diane.shaw@doj.ca.gov
Ariella T Simonds asimonds@sidley.com
Leonard Steiner ls@steinerlibo.com, jasoncarter@steinerlibo.com;aam@steinerlibo.com
Jason D Strabo jstrabo@mwe.com, cnorris@mwe.com
Cathy Ta cathy.ta@bbklaw.com, Arthur.Johnston@bbklaw.com;lisa.spencer@bbklaw.com
Sheila Totorp stotorp@clausen.com, jbrzezinski@clausen.com
Benjamin R Trachtman btrachtman@trachtmanlaw.com, sstraka@trachtmanlaw.com
Matthew J Troy matthew.troy@usdoj.gov
United States Trustee (RS) ustpregion16.rs.ecf@usdoj.gov
Anne A Uyeda auyeda@bmkattorneys.com
Annie Verdries verdries@lbbslaw.com, Autodocket@lbbslaw.com
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012

DOCSSM/3004650v2/200430-0003

F 9021-1.1.NOTICE.ENTERED.ORDER
EXHIBIT A PAGE 40

Case 6:12-bk-28006-MJ

Doc 837817 Filed 10/22/13
09/27/13 Entered 10/22/13
09/27/13 18:32:10
16:37:11
Main
Main
Document
Document Page
Page46
5 of 244
5Desc

Brian D Wesley brian.wesley@doj.ca.gov
Kirsten A. Worley kw@wlawcorp.com, admin@wlawcorp.com
Clarisse Young youngshumaker@psmlawyers.com, sally@psmlawyers.com
Pamela Jan Zylstra zylstralaw@gmail.com
Service information continued on attached page
2. SERVED BY THE COURT VIA UNITED STATES MAIL: A copy of this notice and a true copy of this judgment ororder was sent by United States mail, first class, postage prepaid, to the following persons and/or entities at theaddresses indicated below:
Service information continued on attached page
3. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment or order whichbears an “Entered” stamp, the party lodging the judgment or order will serve a complete copy bearing an “Entered” stamp
by United States mail, overnight mail, facsimile transmission or email and file a proof of service of the entered order on thefollowing persons and/or entities at the addresses, facsimile transmission numbers, and/or email addresses stated below:
Service information continued on attached page

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.

June 2012

DOCSSM/3004650v2/200430-0003

F 9021-1.1.NOTICE.ENTERED.ORDER
EXHIBIT A PAGE 41

Case 6:12-bk-28006-MJ

830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Doc 837
Main
Document Page
Page47
1 of
Main
Document
of42
244

Desc

FOR PUBLICATION
12

FILED & ENTERED

3

OCT 16 2013

4

CLERK U.S. BANKRUPTCY COURT
Central District of California
BY moser
DEPUTY CLERK

5
UNITED STATES BANKRUPTCY COURTCENTRAL DISTRICT OF CALIFORNIA
RIVERSIDE DIVISION

678CITY OF SAN BERNARDINO CALIFORNIA ,Defendant

91011) Case No.: RS 6: 12-bk-28006 MJ))) OPINION
)
)
)
)
)
)

12
CITY OF SAN BERNARDINO ELIGIBILITY OPINION
13
A major creditor of the City of San Bernardino, the California Public Employee
14
Retirement System, objected to the eligibility of the City to file a petition under chapter
15

91 of the Bankruptcy Code on the grounds that it did not desire to effect a plan of

16
adjustment and did not file the petition in good faith. The Court recognizes that the City17
was not a poster child in organization and prepetition planning before it entered into18
the complex world of chapter 9 reorganization. The Court also acknowledges that the
19
1

20

Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1521.
“Rule” references are to the Federal Rules of Bankruptcy Procedure and “Civil Rules” references are to the Federal
Rules of Civil Procedure.

21
OPINION - 1
EXHIBIT A PAGE 42

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
Main
Document
Document Page
Page48
2 of
of42
244

Desc

1

City got off to a slow start in getting its financial records in order and adopting an

2interim balanced budget to bridge the gap from the petition date to eventual plan of3

adjustment. However, despite the untidy disarray of the City’s finances and the early4lack of direction toward long-term resolution of its admitted financial distress, in this5summary judgment proceeding, the Court overrules the CalPERS objections on their

6

limited stated grounds and finds the City eligible to remain in its chapter 9 proceeding.

7

The factual and legal basis for the Court’s decision follows.2

8

Factual Background9

The Great Recession and the burst of the housing bubble in 2007 negatively

10affected the City of San Bernardino like many other cities in California and the entire

11

country. The drop in housing prices and increase in foreclosures of single family

12

residences resulted in significantly lower property tax revenues, a prime source of13

revenue for California cities. The City was particularly hard hit by these phenomena

14

because, due to the cheaper housing and available financing, an influx of people moved

15

to the Inland Empire during the boom, and the consequent bust led to unprecedented

16

foreclosures, one of the highest rates in the country. Along with the foreclosures came17

substantial unemployment, as much of the population had been employed in the18

housing industry, from construction workers to real estate realtors to mortgage brokers,

19
2

20

This opinion is intended to supplement the oral ruling made by this Court on the summary judgment motion on
August 28, 2013, and the docketed Statement of Uncontroverted Facts which supports the order granting thesummary judgment. All three sources are meant to articulate the reasons the Court granted eligibility.

21
OPINION - 2
EXHIBIT A PAGE 43

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
Main
Document
Document Page
Page49
3 of
of42
244

Desc

1

resulting in a significant drop in household income.3 This decline led to less consumer

2

sales and consequently smaller sales tax revenues, another major component of the

3City’s revenues.

4

The City was impacted not only on the revenue side but also by escalating

5

expenses. The influx of population created a greater demand for public services, from6

public safety (police and fire) to more mundane matters such as street repair and7

infrastructure maintenance.4 City employee salaries and benefits, as in most

8

municipalities, make up 75% of the City’s budget and, as the need for services grew in9the boom, so did the number of City employees and consequent expenses. Adding to10

the costs were particularly lucrative retirement benefits which the Common Council had

11

negotiated in the collective bargaining agreements with the City’s seven unions.

12

The City participates in the California Public Employee Retirement System

13(CalPERS), a state-run retirement system, which is funded by a combination of an

14

employer share and an employee share.5 Until 2011, the City, unlike most California

15

cities, paid not only the employer share but also the employee share to CalPERS, making

16

the City’s contributions to retirement rate as a percentage of payroll 39% for safety and17

25% for other employees. Along with the current CalPERS obligations were substantial

18

unfunded liabilities to the pension funds based on actuarial tables, past performance of

19
20

3

The City’s unemployment rate was 16.9% as of June 2012, more than double the national rate of 8.2%.
The City’s population of approximately 213,000 is spread over 59.3 square miles, compounding the difficulty inproviding adequate services.
5
CalPERS has set the City’s employer share at 30% for safety employees and 17% for all others, and the employee
share at 9% for safety and 8% for all others.
4

21
OPINION - 3
EXHIBIT A PAGE 44

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
Main
Document
Document Page
Page50
4 of
of42
244

Desc

1

the funds, retirement age and other contractual factors. Each year the City must also

2

pay a portion of the unfunded liabilities to CalPERS.6

3

Along with the CalPERS obligations, the City has promised its retirees an annual

42% cost of living adjustment regardless of the Consumer Price Index or the state of the5

retirement funds. In addition, the City’s retirement plans also provide for another post-

6

employment benefit consisting of retiree medical care. Because the City’s employees

7are eligible to retire at either age 50 (safety) or 55 (other employees), many employees

8retire before they are eligible for Medicare, creating a significant cost for the City. The

9cost of this perk has not been funded through the working life of the employees and the10City has little money set aside to fund these benefits, resulting in another substantial

11

unfunded liability.
As the economy worsened and revenues decreased, the City took some stop gap

12
13

measures to try to stop the bleeding. It implemented a hiring freeze and down-sized

14

departments, reducing the workforce by 20%. It negotiated and imposed concessions

15

on its unions, saving about $10 million per year.7 It exhausted its general fund reserves

16

and sold excess assets to provide cash to fund ongoing operations. While the financial

17

crisis deepened, the City’s finance department, either because it was understaffed or

18

because it was incompetent (or both), fell behind in providing basic accounting records

19
6

20

It is the Court’s understanding that most cities in California have unfunded liabilities to CalPERS.
One negotiated or imposed term was that beginning with new employees in 2011, employees would pay theemployee share to CalPERS.

7

21
OPINION - 4
EXHIBIT A PAGE 45

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
Main
Document
Document Page
Page51
5 of
of42
244

Desc

1

for the City, including bank reconciliations. The financial picture for the City was blurred2

at best and the City was sliding toward severe cash flow problems.

3

A major change in City personnel from late December 2011 through May 20124awakened the Common Council to the full import of the impending financial crisis. The

5City’s former Director of Finance retired at the end of December 2011 and the City

6

Manager resigned effective May 1, 2012. The new Director of Finance, James P.

7

Simpson, began analyzing the City’s financial condition in May 2012, while attempting to8formulate a budget for 2012-13. In doing so, he discovered the bookkeeping woes

9

described above and even worse. He determined that the budget projection for 2012-10

13 resulted in a $45.9 million cash deficit with no general fund reserves; the cash

11

balances for the prior two fiscal years had been overstated; the beginning cash deficit

12

for the next fiscal year was over $18.2 million; and the City did not have enough13

unrestricted cash or reserves to pay its current financial obligations due and those

14

obligations to become due beginning in July 2012, and continuing indefinitely.

15

On July 9, 2012, the City’s Department of Finance issued a report “San Bernardino

16

Budgetary Analysis and Recommendations for Budget Stabilization” (the Budget Report)

17

which was presented to the Common Council at a publicly noticed meeting on July 10,18

2012. The presentation of the Budget Report on July 10, 2012, was the first

19
20
21
OPINION - 5
EXHIBIT A PAGE 46

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
Main
Document
Document Page
Page52
6 of
of42
244

Desc

1

comprehensive report to the Common Council regarding the fiscal crisis facing the City.8

2

The Common Council addressed the Budget Report at three meetings in July 2012. At

3meetings on July 16 and 18, 2012, the Common Council adopted Resolutions 2012-205

4

and 2012-206 which (1) declared a fiscal emergency and (2) authorized the City Attorney5

to file a chapter 9 petition in the bankruptcy court and the City Attorney and other6

management staff to take all steps necessary to prosecute the chapter 9 proceeding.

7

Compliant with these resolutions, on August 1, 2012, the City filed its petition for

8chapter 9 in the Central District of California, Riverside Division.9

9Procedural Background in Chapter 9

10

The City filed its Statement of Qualifications on August 13, 2013, and its

11

Amended Statement of Qualifications on August 31, 2013.10 Based on a deadline set by

12

the Court, only two parties filed objections to eligibility: CalPERS and the San

13

Bernardino Public Employees Association (SBPEA).11 CalPERS objected on the grounds

14
8

15
16
17
18
19
20

CalPERS has argued and for the purposes of this opinion the Court does acknowledge that earlier reports ofimpending financial doom were presented to the City by its consultants as early as 2007 and that some of thesereports contained suggested actions which the City could take to stave off financial crisis. The City did not takemany of the recommended steps. As a consequence, the Common Council was not totally unaware of the unstable
fiscal condition of the City.
9The August 1, 2012 filing date was earlier than the City staff and its bankruptcy counsel had anticipated filing. The
initial projected filing date was late August. The earlier filing date was precipitated by the City’s belief that a party
which held a stipulated civil rights judgment against the City was seeking a writ from the federal district court
which would allow it to execute on the City’s bank account. The City asserted this belief as an alternative groundto meet eligibility under § 109(c)(5)(D). However since no party objected to eligibility under § 109(c)(5) and theCity also qualified under § 109(c)(5)(C), the Court need not determine whether this criteria was met. Suffice it tosay, the belief did lead to an earlier filing date.
10
The only difference between the two statements was the addition in the Amended Statement of the alternative
ground for § 109(c)(5) eligibility under subpart (D).
11
Several individual interested parties filed “objections” with the court but none of these individual objections
stated an opposition to the grounds for eligibility set forth in § 109(c).

21
OPINION - 6
EXHIBIT A PAGE 47

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
Main
Document
Document Page
Page53
7 of
of42
244

Desc

1

that the City did not “desire to effect a plan to adjust debts” as required under § 109(c)2(4) and that the City did not file the petition in good faith, which is a ground for3

dismissal under § 921(c). SBPEA objected on the basis that the City was not authorized

4

by state law to file a chapter 9 because it had not complied with Assembly Bill 506 (AB5506) as mandated by § 109(c)(2) 12 and because the City was not insolvent as required6by § 109(c)(3). SBPEA also asserted the petition was not filed in good faith. Subsequent

7

to the objection deadline, the Court held a status conference to schedule the case, but a8

discovery deadline was not set because the parties wished to engage in informal

9

discovery. As will be further described below, the Court held a series of these status10

conferences on case progress but at the mutual request of the City and CalPERS never11

set a discovery deadline. The Court, however, also did not issue an order staying

12

discovery.
While the initial procedural matters were taking place, in September and October

13
14

2012, the City adopted a Pre-Pendency Plan as adjusted by a 9-Point Adjustment Plan.

15

The Pre-Pendency Plan did not present a balanced budget from a cash flow perspective,

16

but anticipated that expense adjustments were necessary to balance available cash with

17

expected expenses during the first year in chapter 9. Subsequently, the City on

18

November 26, 2012, approved a Pendency Plan, which was a balanced budget for that

19

12

20

AB 506 enacted by the State of California in 2011 and effective on January 1, 2012, is the common California
nomenclature for Cal. Gov’t Code § 53760, et seq. It requires a city to participate in a neutral evaluation process
pursuant to § 53760.3 or, in the alternative, to declare a fiscal emergency before it may file a bankruptcy petition.
Because SBPEA subsequently withdrew its objection, this opinion does not address the AB 506 issues.

21
OPINION - 7
EXHIBIT A PAGE 48

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
Main
Document
Document Page
Page54
8 of
of42
244

Desc

1

first year but was dependent on the City either negotiating or imposing certain

2

conditions on the employees. Both the Pre-Pendency Plan and the Pendency Plan were3

short-term budgets and neither purported to address the longer term planning required4

by a chapter 9 plan of adjustment. As asserted frequently by CalPERS, the City’s

5financial department was understaffed and no person was assigned the task of drafting

6

a plan of adjustment.
In order to implement the Pendency Plan, the City authorized two employees to7
8meet with the seven unions to negotiate the concessions required by that budget.13

9Four of the unions reached agreement with the City and accepted the changes, which

10

became effective on February 1, 2013. Three unions, police, fire, and SBPEA, did not.

11

On January 28, 2013, the City unilaterally imposed the modifications, also effective on

12

February 1, 2013, so that it could balance the Pendency Plan budget. On April 22, 2013,13

the City adopted budgets for the General Fund for fiscal years 2012-13 and 2013-2014.

14

Meanwhile, informal discovery continued between the City, CalPERS, and the15

other interested parties but little progress was made in moving the case toward an

16

eligibility hearing to resolve the CalPERS and SBPEA objections. However, at a status17

conference in April or May 2013, SBPEA formally withdrew its objection under §18

109(c)(3), conceding that the City was insolvent. At that time, with respect to the

19
20

13

The concessions required from the unions pertained to the employee share of the contributions to CalPERS, notsalary. CalPERS has asserted that these changes in contributions are not authorized by state law and the three
nonconsenting unions – Police, Fire, and the SBPEA – echo those arguments. For the purpose of this opinion, thecourt only notes the practical effect on the employees’ net take home pay and the budget; the take home pay issubstantially negatively impacted but the concessions allowed the Pendency Plan budget to balance.

21
OPINION - 8
EXHIBIT A PAGE 49

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
Main
Document
Document Page
Page55
9 of
of42
244

Desc

1

remaining contested eligibility issues under §§ 109(c)(2) and (c)(4) and the good faith2requirement under § 921(c), the Court openly questioned whether there were any

3disputed material facts that would require formal discovery. Subsequently, at a status

4

conference in early June 2013 the Court suggested that a summary judgment motion

5

could resolve the remaining issues. While an unusual approach in a contested matter as

6

opposed to an adversary proceeding, resolution by a summary judgment motion is not

7

unprecedented. When CalPERS protested that it wished to conduct essential formal

8

discovery on the eligibility issues, the Court directed CalPERS to brief those arguments in

9

a Civil Rule 56(d) motion, made applicable in bankruptcy proceedings by Rule 7056, and10

set the Civil Rule 56 (d) motion to be heard at the same time the City’s summary

11

judgment motion would be argued.

12

The Propriety of Summary Judgment to Resolve Eligibility

13

A summary judgment motion under Civil Rule 56(d), as incorporated by Rule

14

7056, is properly granted when the movant shows that there is no genuine dispute as to15

any material fact and the movant is entitled to judgment as a matter of law. Celotex

16

Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). In making this determination, conflicts are17

resolved by viewing all facts and reasonable inferences in the light most favorable to the18

non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).

19
20

In deciding a contested motion for summary judgment, a court is required tomake decisions of law based on a statement of uncontroverted facts and is prohibited

21
OPINION - 9
EXHIBIT A PAGE 50

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 56
10 of 244
42

Desc

1

from granting summary judgment where material disputed facts are at issue.

2

Accordingly, this Court in granting the City’s motion for eligibility must address the3

critical issue of whether material disputed facts are at issue. Civil Rule 56(d) allows a4party, such as CalPERS here, to assert as a defense to summary judgment a need to

5conduct further discovery. In particular, “where, as here, [non-moving party’s] case6

turns so largely on [its] ability to secure evidence within the possession of [moving

7

party], courts should not render summary judgment because of gaps in a [non-moving

8

party’s] proof without first determining that [non-moving party] has had a fair chance to9obtain necessary and available evidence from the other party.” Carmona v. Toledo, 215

10F.3d 124, 133 (1st Cir. 2000).

11

Operating within the universe of the remaining contested eligibility

12requirements—desire to effect a plan, good faith in filing the petition and compliance13

with AB 506 in meeting state authorization to file—the Court observed that the14

subjective state of mind of any employee or representative of a city was not at issue

15

because a city, as an entity, takes objective actions such as adopting resolutions,16presenting budgets, and negotiating with unions. Based on these considerations, the17

Court invited the objecting parties to present in a Civil Rule 56(d) motion those factual18

issues which they believed to be material and disputed and upon which they needed19further discovery before eligibility could be determined. The Court observed that if the20

Civil Rule 56(d) motion revealed that formal discovery was necessary for disputed

21
OPINION - 10
EXHIBIT A PAGE 51

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 57
11 of 24442

1material factual issues, then the factual disputes would need to be resolved in an

2evidentiary hearing after perhaps months of such discovery.

Desc

The remaining contested issues narrowed by the time the Civil Rule 56(d) motion

3
4

was filed; SBPEA reached an agreement with the City whereby it accepted on a short-5

term basis the conditions imposed on it on January 28, 2013, and withdrew its objection

6

to eligibility. That eliminated the challenge under § 109(c)(2), leaving only CalPERS as an

7

objecting party and only §§ 109(c)(4) and 921(c) in play.14 Addressing CalPERS Civil Rule8

56(d) motion, the Court found that none of the facts that it asserted were material and9disputed would impact the decision on “desire” and good faith.

10

The Court will address why the purported facts are either irrelevant or, even11

taken as true in the most negative light to the City, do not show a lack of desire or good

12

faith. The Court categorizes the Civil Rule 56(d) discovery requests into groups as13

follows: (1) discovery on historical facts pertaining to activities at the City between 200614

and early 2012; (2) discovery on facts immediately prepetition; (3) discovery on post

15

petition facts pertaining to City actions during the chapter 9; and (4) discovery directed16

toward depositions of City officials or consultants and on document requests not yet

17satisfied.

18

14

19
20

CalPERS argued in its opposition that its objections to eligibility filed at the court deadline were “preliminary”
and that it had reserved the right to supplement those objections (without specifying which ground it wished toassert that had not been previously challenged). The Court rejected the notion that new objections could beraised after the deadline date because no court order allowed the right to supplement. The whole purpose of theobjection deadline was to fix the eligibility issues so that a chapter 9 could proceed in an orderly manner, and
CalPERS had not attempted to supplement its objections prior to the summary judgment motion and therefore had
waived any right it might have claimed to do so.

21
OPINION - 11
EXHIBIT A PAGE 52

Case 6:12-bk-28006-MJ

1

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 58
12 of 244
42

Desc

CalPERS argues that it should have discovery about consultant and staff reports

2

presented to the City as early as 2006 which alerted the Common Council about

3

unstable financial issues and budgetary concerns and made recommendations of steps

4

the City could take to alleviate the impending crisis. CalPERS asserts that these issues

5

are material to good faith or desire because the discovery will reveal that the City knew

6or should have known about the budgetary shortfalls and cash crisis for several years,

7

yet took no materials steps to alleviate the problem until it declared a financial

8

emergency on July 18, 2012.

9

The Court finds these remote facts irrelevant to determining desire or good faith10on the petition date. The inactivity of the City to forestall cash flow insolvency in prior11

years does not mean, as a matter of law, the City is forever forbidden to file chapter 9

12when the full impact of the cash situation was presented to the Common Council on July

13

10, 2012. Just because it did not act earlier does not mean it cannot act now if the City

14

finds, as it did, that the City was cash flow insolvent and could not pay its bills as they15

came due on July 1, 2012, and onward without the protection of a bankruptcy

16

proceeding where it could defer or impair liabilities. No matter that some earlier

17

actions by the City might have lessened the shortfalls in July 2012. The undisputed

18

material facts are the cash flow crunch existed and no immediate remedies could

19
20
21
OPINION - 12
EXHIBIT A PAGE 53

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 59
13 of 244
42

Desc

1

address it other than the relief that chapter 9 afforded.15 Historical facts have no import2

on the Court’s decision.

3

The Court will accept as true many of the “negative” facts that occurred

4

immediately prepetition which CalPERS argues are material and disputed. The Court’s

5

legal analysis which follows will encompass those facts and demonstrate why, taken as

6

true, they do not defeat eligibility on the contested grounds. Because the Court adopts

7

them, no dispute exists and no discovery is needed.16 A summary of the facts follows:

8(a) the City had not formulated a proposed plan of adjustment or even aterm sheet before it filed;(b) the City did not enter into meaningful negotiations with its major
creditors prepetition;(c) the City entered into several stipulated judgments to settle civil rights
litigation prepetition upon which it immediately defaulted;(d) the City’s financial records were in disarray, including delinquent
audited financials, lack of bank reconciliations, imprecise cash
projections, and incomplete interfund accounting;(e) the City’s finance department was understaffed;(f) the City paid more than a million dollars in cash outs to terminating
employees within 60 days of filing, including a substantial sum
immediately before the petition date;(g) the City had no pre-filing plan to pay post petition expenses andobligations to CalPERS;

9
10
11
12
13
14
15
16
17
18
19
20

15

The prior knowledge of the City of the upcoming fiscal crisis might have relevance on the declaration of
emergency to meet the AB 506 requirements which allowed the City to bypass neutral evaluation. Since SBPEA
withdrew its objection, that uncontested criteria is not before the Court to decide.
16
The legal analysis below demonstrates why any individual mindset or subjective intent is not material inassessing the objective actions of the City which affect eligibility. Discovery consisting of depositions of City
officials or consultants would not elicit any objective information not already in the City records. Most
communications are not only irrelevant but also protected by the closed session or legislative privileges accorded
such communications in California. Cal. Gov’t Code § 54963(a); see City of Fairfield v. Superior Court, 14 Cal. 3d768, 772 (1975).

21
OPINION - 13
EXHIBIT A PAGE 54

Case 6:12-bk-28006-MJ

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 60
14 of 24442Desc(h) other than as set forth in the Budget Report and reflected bydownsizing of personnel and employment freezes, the City had notconsidered financial alternatives to face the cash flow crisis other than
filing chapter 9; and(i) the City’s Water Fund had more than $37,000,000 in immediately
available cash.
The post petition facts which CalPERS argues are material and subject todiscovery because they are disputed do not lend themselves to objective discovery. As
with a number of the asserted prepetition facts, the Court will adopt those facts as
uncontroverted and provide in the legal analysis below an explanation for why even iftrue they do not defeat the City’s petition for eligibility:(a) during the 13 months of post petition activity in the chapter 9 case,
the City did not undertake meaningful negotiations with its major
creditors which focused on a proposed plan;(b) the City did not adopt a Pendency Plan until November 26, 2012, andonly then because the Court made clear that the existence of a
Pendency Plan was a factor to be considered under § 109(c)(4);(c) the Pendency Plan was only 10 pages long and contained no detailed
financials;(d) no City employee or agent was assigned to draft the plan ofadjustment;(e) CalPERS did not receive reconciled bank statements and otherrequested financial documents until April 2013, or later;(f) the City did not have cash projections until April 2013;(g) the City did not adopt a 2012-2013 budget until April 2013;(h) the City paid certain vendors on their prepetition invoices post
petition;(i) the City did not pay post petition obligations to CalPERS;(j) the City did not have enough manpower in its finance department;

20
21
OPINION - 14
EXHIBIT A PAGE 55

Case 6:12-bk-28006-MJ

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 61
15 of 24442Desc(k) the City accrued cash post petition while not paying all monies due to
CalPERS;(l) the City did not provide all requested financial information tocreditors; and(m) the City imposed wage and benefit conditions on the three unions
which did not agree to them, effective February 1, 2013.
In addition to these areas of requested discovery by CalPERS is a demand todepose certain City employees. First, the factual expertise of Mr. Simpson, priorDirector of Finance for the City, and Mr. Bush, financial consultant to the City areirrelevant because insolvency is not at issue. Second, Mr. Kennedy, Mr. Pachon, Mr.
McNeely, Mr. Wilson, Mr. Weinberg, and Mr. Majaj’s knowledge is limited to facts too
remote in time to be relevant. Lastly, any testimony would be subject to closed session
or legislative privilege to the extent there were inquiries about the witness’ state ofmind. Objective facts are all known in the City records.
In summary, the Court denies the Civil Rule 56(d) motion as grounds to delay
ruling on eligibility because CalPERS is entitled to formal discovery only on material
disputed facts. The inquiries which are relevant to the determination of whether theCity desired to effect a plan of adjustment on the petition date and whether the City
filed in good faith are centered on objective facts, which are measured by the acts of theCity, and not by a subjective inquiry into the state of mind of any employee, consultant
or agent. The relevant objective facts are either admittedly undisputed or the Court will
adopt them as true for the purpose of its analysis on these two legal principles.

21
OPINION - 15
EXHIBIT A PAGE 56

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 62
16 of 244
42

Desc

The consequence of the Court’s approach in determining there are no disputed

12material facts is that it may grant summary judgment for the non-moving party, here

3

CalPERS (Civil Rule 56(f)(1)).17 As shown below, the uncontroverted facts lead the Court

4

to conclude the City is eligible for chapter 9.

5Analysis6(a) General Requirements; Uncontested Provisions

7

Eligibility for an order for relief under chapter 9 is governed by five mandatory8

requirements. Four of these requirements are set forth in the provisions of §§9109(c)(1)-(4). Alternatives for the fifth requirement are set forth in § 109(c)(5).

10

In addition, the Court may dismiss a chapter 9 petition under § 921(c), even

11

where all of the § 109(c) requirements are met, if the debtor did not file the petition in

12

good faith. “Unlike the eligibility requirements of § 109(c), the court's power to dismiss

13

a petition under § 921(c) is permissive, not mandatory.” In re Pierce Cnty. Hous. Auth.,14414 B.R. 702, 714 (Bankr. W.D. Wash. 2009) (“Pierce County”) (citing 6 Collier on

15

Bankruptcy 921-7 (Alan N. Resnick & Henry J. Sommer eds., 15th ed. 2009) [hereinafter

16

Collier]).
The chapter 9 petitioner has the burden to show that it is eligible to file under §1718

109(c). In re City of Stockton, Cal., 475 B.R. 720, 725-26 (Bankr. E.D. Cal. 2012)

19
17

20

If the Court granted for nonmovant CalPERS on § 109(c)(4) the result would be dismissal for ineligibility. If it
granted for nonmovant CalPERS on § 921(c), the Court could exercise its discretion to not dismiss the case. In re
Pierce Cnty. Hous. Auth., 414 B.R. 702, 710 (Bankr. W.D. Wash. 2009).

21
OPINION - 16
EXHIBIT A PAGE 57

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 63
17 of 244
42

Desc

1

(“Stockton”); Int'l Assn. of Firefighters, Local 1186 v. City of Vallejo (In re City of Vallejo),2

408 B.R. 280, 289 (9th Cir. BAP 2009) (“Vallejo”); In re Valley Health Sys., 383 B.R. 156,3

161 (Bankr. C.D. Cal. 2008) (“Valley Health”). “The quantum of proof, there being no4

contrary indication in statute or in controlling decisional law, is the familiar

5

preponderance-of-evidence standard of basic civil litigation. Nothing suggests there

6

should be a higher burden. This conclusion comports with the argument by the authors

7of the Collier treatise that the burden should be liberally applied in favor of granting

8

relief.” Stockton, 475 B.R. at 726 (citing 2 Collier § 109.04[3]). The § 109(c) eligibility

9requirements are to be construed broadly “to provide access to relief in furtherance of

10

the Code’s underlying policies.” Valley Health, 383 B.R. at 161 (quoting Hamilton Creek

11

Metro. Dist. v. Bondholders Colo. Bondshares (In re Hamilton Creek Metro. Dist.), 143

12F.3d 1381, 1384 (10th Cir. 1998)).
The issues before the Court are controlled by any objections that were filed with

13
14

the Court by October 24, 2012. The SBPEA union and CalPERS were the two original

15

objecting parties. After SBPEA withdrew its objections to the City’s eligibility, the16

CalPERS objections under § 109(c)(4)—whether the City has presented undisputed

17

material facts to show the City’s desire to effect a plan as a matter of law—and § 921—

18

whether the undisputed evidence establishes that the City’s chapter 9 petition was filed

19

in good faith—are the only contested matters before the Court.

20

///

21
OPINION - 17
EXHIBIT A PAGE 58

Case 6:12-bk-28006-MJ

I)

1

II)

8
9

authorizing the filing of a petition under chapter 9 of the Bankruptcy Code. The
Common Council also adopted a resolution declaring a financial emergency as required
by Cal. Gov’t Code § 53760(b). The City met the State requirements and is authorized tofile a chapter 9 under California law. This issue is uncontested.
III)

10

13

Insolvency: § 109 (c)(3)The uncontroverted facts establish that the City is insolvent. The City was unable

1112Specifically Authorized To Be a Debtor by California Law: § 109(c)(2)
It is undisputed that the Common Council passed by a majority vote a resolution

5

7

Municipality: § 109(c)(1)of the State of California. This issue is uncontested.

4

6

Desc

The City of San Bernardino is a municipal corporation and a political subdivision2
3

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 64
18 of 24442

to pay its forthcoming obligations when the resolutions were passed and faced a cash
deficit of $45.9 million for fiscal year 2012-2013. This issue is uncontested.
IV)

14

Negotiations With All of the City’s Creditors Was Impracticable: § 109(c)(5)(C)The following uncontroverted facts support the finding that negotiations were15
impracticable: there are a large number of creditors in one or more classes; there is a16lack of a viable business plan that addresses the City’s ongoing financial problems; and17
there is a need to act quickly to protect the public from harm. This issue is uncontested.
18
Vallejo, 408 B.R. at 298.
19
///
20
21
OPINION - 18
EXHIBIT A PAGE 59

Case 6:12-bk-28006-MJ

3

Desc

(b) General Requirements; Contested Provisions

1
2

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 65
19 of 244
42

I)

Desire to Effect a Plan: § 109(c)(4)“An entity may be a debtor under chapter 9 of this title if and only if such4

entity . . . desires to effect a plan to adjust such debts.” § 109(c)(4). Although5

uncommon, “[t]hose cases that have considered the issue demonstrate that no bright-

6

line test exists for determining whether a debtor desires to effect a plan because of the7highly subjective nature of the inquiry under § 109(c)(4).” Vallejo, 408 B.R. at 295. This8

requirement may be satisfied with direct and circumstantial evidence. Id.; In re City of

9

Stockton, Cal., 493 B.R. 772, 791 (Bankr. E.D. Cal. 2013) (“Stockton II”) (noting that

10“[e]vidence probative of intent includes attempt to resolve claims, submitting a draft

11

plan, and other circumstantial evidence.”). So long as the evidence shows that the12“purpose of the filing of the chapter 9 petition not simply be to buy time or evade13

creditors,” a bankruptcy court may properly find that the § 109(c)(4) requirement has

14

been met. Vallejo, 408 B.R. at 295 (quoting 2 Collier § 109.04[3][d]); In re Boise Cnty.,

15

465 B.R. 156, 168 (Bankr. D. Idaho 2011) (“Boise County”).

16“The cases equate ‘desire’ with ‘intent’ and make clear that this element is highly

17

subjective.” Stockton II, 493 B.R. at 791 (citing Vallejo, 408 B.R. at 295). Subjective

18

inquiry should not be misunderstood as an inquiry into a subjective state of mind.

19

Courts in the Ninth Circuit and other circuits conduct a subjective inquiry when

20

determining whether the municipality’s objective acts demonstrate the requisite

21
OPINION - 19
EXHIBIT A PAGE 60

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 66
20 of 244
42

Desc

1

“desire” or “intent.” Vallejo, 408 B.R. at 295; Stockton II, 493 B.R. at 791 (finding that2

circumstantial evidence indicating the debtor’s desire to effect a plan existed where the3

debtor could either excuse certain impaired contracts by confirming a chapter 9 plan or4reach an agreement with the affected parties); In re Cnty. of Orange, 183 B.R. 594, 607

5(Bankr. C.D. Cal. 1995) (“Orange County”) (finding a comprehensive settlement6agreement along with other steps taken sufficiently demonstrated efforts to resolve

7

claims which satisfied § 109(c)(4)); In re Sullivan County Reg'l Refuse Disposal Dist., 165

8

B.R. 60, 76 (Bankr. D.N.H. 1994) (“Sullivan County”) (finding a draft plan of adjustment

9

post petition met the requirement of § 109(c)(4)).

10The City filed a Qualification Statement signed by the City Manager that stated11

under penalty of perjury that the City desires to effect a plan to adjust its debts. The

12

Court places little weight on the Qualification Statement, recognizing that any

13municipality could prepare that conclusionary document. The Court notes, however,14

the following additional steps which demonstrate desire: preparing and presenting the15

Budget Report at the public meeting of the Mayor and Common Council on July 10,162012; preparing and presenting the staff report to the Common Council on July 18,

17

2012; conducting open public meeting discussions of what these reports projected as

18

the City’s financial future; voting to declare a fiscal emergency and approve the19resolutions; preparing a cash flow analysis report; preparing the Fiscal Emergency Plan,

20

which was presented to the Common Council and approved before the petition date;

21
OPINION - 20
EXHIBIT A PAGE 61

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 67
21 of 244
42

Desc

1

preparing and discussing the Pre-Pendency Plan at the Common Council meetings in late2

August 2012 and then approving the Pre-Pendency Plan as adjusted by a 9-Point

3

Adjustment Plan in September 2012 and on October 1, 2012; and approving its

4

Pendency Plan on November 26, 2012. These actions are of public record and they5

objectively demonstrate that the City desired to effect a plan.

6

These uncontroverted facts sufficiently show that after taking steps to cut costs

7

and raise revenue, the City—faced with a 45.9 million dollar cash deficit—had little

8

choice but to restructure its debt. Prior to filing, the City had depleted any reserves it

9

had in its general fund and had cut salaries and jobs of its employees. These cuts had

10already negatively impacted City services and safety. The Budget Report also indicated11that the City liquidated what assets it could and had made limited attempts to raise its

12revenue. Upon filing its chapter 9 petition, the City defaulted on numerous obligations,

13

including payments owed to CalPERS, health benefit payments owed to retirees and14

payments owed to pension obligation bondholders and other bondholders.

15

The Pre-Pendency Plan and Budget Report reinforced the reality that the City did

16

not have enough money to pay all of its contracts and would need to impair contracts,

17

voluntarily or otherwise, in order to achieve a balanced budget. The City did this with its

18

employees; the City reached agreements with four of its seven unions on modifications

19

to their respective collective bargaining agreements and voted to impose modifications

20

on the remaining three unions. The undisputed circumstances which precipitated the21
OPINION - 21
EXHIBIT A PAGE 62

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 68
22 of 244
42

1City’s filing and the steps taken after the petition date show that the City began

2

implementation of the steps necessary to restructure its debt.

Desc

The sparse reported case law where a municipality was found ineligible under §34

109(c)(4) turned on filing to evade a creditor. In Sullivan County, a bankruptcy court

5

found that the decision to file chapter 9 was a litigation tactic to hold off the major

6

creditor’s “threatened shut-out. “ Sullivan County, 165 B.R. at 82. In that case, the7

option to file chapter 9 was not memorialized on the written agenda of the board

8

meeting and there was no evidence that the district engaged in a discussion regarding

9

what type of plan might be appropriate under chapter 9. Rather, the district filed

10

preemptively to ward off a threatened action of its only creditor, which caused the court11

to declare it ineligible under § 109(c)(4). Id.
The triggering event that often forces a bankruptcy filing under other chapters is

12
13

aggressive creditor activity, but this is not the case here. Unlike the single major

14

creditor scenario in Sullivan County, the City’s decision to file chapter 9 was a logical and15

arguably inevitable result of a debt structure that it could no longer keep current. Faced

16with inevitable default on its obligations because of insufficient cash, the City took the17

affirmative step to file chapter 9 so that it could restructure the debt and impair the18

creditors as necessary to achieve a balanced budget.18

19
18

20

As noted previously, the precise date the City filed its petition was driven by the steps a civil rights judgment
creditor was taking to execute on the City’s bank accounts. However, the resolutions to declare a fiscal emergency
and file the petition had been passed two weeks prior and before the creditor action was threatened.

21
OPINION - 22
EXHIBIT A PAGE 63

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 69
23 of 244
42

Desc

1

CalPERS contends that to determine the City’s intent, it is entitled to depose the2

relevant decision-makers for the City. When conducting the § 109(c)(4) inquiry, courts

3

have only looked at the municipality’s objective actions as an entity. Vallejo, 408 B.R. at

4295; In re City of Stockton, Cal., 475 B.R. 720, 726 (Bankr. E.D. Cal. 2012); In re Pierce

5

Cnty. Hous. Auth., 414 B.R. 702, 710 (Bankr. W.D. Wash. 2009). The subjective intent of

6

an individual councilmember is immaterial in determining whether a municipal body7

had the requisite intent or good faith.

8

CalPERS argues that the adoption of the Pendency Plan is not evidence of a9“desire to effect” because the Court put pressure on the City to adopt it. The objective

10

fact is the City did adopt the Pendency Plan in November 2012 and the Court may

11consider this as evidence of desire.

12

CalPERS asserts that § 109(c)(4) requires some form of plan of adjustment be

13

presented to creditors prior to filing and that the City have staff tasked to prepare and14

formulate the plan immediately post petition. CalPERS also argues that the admittedly

15

woeful state of the City’s financial records upon and after filing make desire impossible16

to achieve. The Court disagrees that those factors defeat a showing under § 109(c)(4).

17

The lack of an early plan might have an impact on some of the alternative prongs of §18

109(c)(5), but not on desire. And the disarray of the City’s financial books more

19

persuasively enforces why it needed a breathing space to get them in order before it

20

could effect the plan of adjustment.

21
OPINION - 23
EXHIBIT A PAGE 64

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 70
24 of 244
42

Desc

1

It is widely endorsed that “no bright-line test exists for determining whether a2

debtor desires to effect a plan because of the highly subjective nature of the inquiry

3

under § 109(c)(4).” Vallejo, 408 B.R. at 295; Stockton, 475 B.R. at 726; Pierce County,

4

414 B.R. at 710; Boise County, 465 B.R. at 169. Moreover, the cases CalPERS cites to for5this proposition are not specific to a determination of intent for purposes of § 109(c)(4)6and thus offer no persuasive weight. As such, the fact the City did not have some form

7of plan in place at the Petition Date is immaterial.

8

Other factors that CalPERS argues defeat “desire” such as the cash outs to9terminating employees just before the filing date, the negotiation of civil rights

10

settlements upon which the City immediately defaulted, and the payments post petition

11of some prepetition bills are all issues which need to be addressed in any plan before it

12

can be approved by the Court. But they are not material to “desire;” nor is the fact that13

the City did not have a method in mind to address the immediate post petition defaults

14

to CalPERS. Again, those are plan issues and must be addressed in the course of15

negotiating or litigating treatment in the plan.

16

Finally, CalPERS submits that the uncontroverted fact that the City’s Water Fund17

had a large cash balance before and after the petition date which the City did not tap to18

attempt to balance its books is evidence of lack of desire to effect a plan. This argument

19

has no legal legs. It is a matter of California constitutional law that the City may not use

20

funds belonging to the Water Department for general fund purposes. Amendments to

21
OPINION - 24
EXHIBIT A PAGE 65

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 71
25 of 244
42

Desc

1

the Constitution enacted by Proposition 218 in 1996, which added Articles XIIIC and

2

XIIID, expanded restrictions on local government revenue-raising and imposed3

limitations on local government use of special fees, including water and sewer fees. C.A.

4

Const. art. XIIIC and XIIID. Article XIIID covers water fees and prohibits the use of such5

fees for general governmental services, including police, fire and other services. Bighorn

6

Desert View Water Agency v. Verjil, 39 Cal. 4th 205, 216-17 (2006); Richmond v. Shasta

7

Cmty. Servs. Dist., 32 Cal. 4th 409 (2004). Thus, the City was legally prohibited by the8

California Constitution from using Water Department funds for general fund purposes.

9

Similarly, the City could not have borrowed funds from the Water Department

10

without incurring debt that it could not repay within one year. Article XVI, Section 18 of

11

the Constitution prohibits the City from incurring a debt in any year that exceeds the12available revenues of the City for that year without the approval of a two-thirds vote of

13

qualified voters. C.A. Const. art. XVI, § 18. Looking at its dire financial status in July

14

2012, the City could not reasonably conclude that it would be able to repay to the15

Water Fund any loans it made within that fiscal year. The Water Fund cash was thereby

16

out of reach to address the City’s insolvency and this issue is an outlier to the Court’s

17

analysis.

18

Accordingly, the uncontroverted facts provide a broad basis on which the Court

19

may find that the City has shown a desire to effect a plan by giving an official statement20of its intent to adjust its debt, taking actions to approve a Pendency Plan, and by

21
OPINION - 25
EXHIBIT A PAGE 66

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 72
26 of 244
42

Desc

1

circumstantial evidence that indicated the City needed relief in a chapter 9 proceeding2

to give it space to restructure its debt.

3
4

II)

Good Faith: § 921(c)Section 921(c) provides that a court may dismiss a chapter 9 petition if the debtor

5

did not file the petition in good faith. Pierce County, 414 B.R. at 714. “Unlike the6eligibility requirements of § 109(c), the court's power to dismiss a petition under §7921(c) is permissive, not mandatory.” Id. Although Judge Klein in Stockton II, 493 B.R. at

8

794-795, concluded that a rebuttable presumption arises when the City meets its

9burden under § 109(c), this Court need not shift the burden because it finds that the10City has met its burden by a preponderance of the evidence and shown that its chapter

11

9 petition was filed in good faith.

12

In Pierce County, the court found that relevant facts to the good faith analysis

13

include “(i) the debtor's subjective beliefs; (ii) whether the debtor's financial problems

14

fall within the situations contemplated by chapter 9; (iii) whether the debtor filed its

15

chapter 9 petition for reasons consistent with the purposes of chapter 9; (iv) the extent

16of the debtor's prepetition negotiations, if practicable; (v) the extent that alternatives to17chapter 9 were considered; and (vi) the scope and nature of the debtor's financial

18

problems.” Pierce County, 414 B.R. at 714. Courts look to objective acts of a city to19

determine good faith. In re Town of Westlake, Tex., 211 B.R. 860, 868 (Bankr. N.D. Tex.

201997) (finding that the chapter 9 debtor filed in good faith because it faced “frozen

21
OPINION - 26
EXHIBIT A PAGE 67

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 73
27 of 244
42

Desc

1

funds, multiple litigation, and disannexation of a substantial portion of its tax base.”);2

Stockton II, 493 B.R. at 794-95 (looking to the city’s effort to cut spending, its cash and3service insolvency, its efforts to negotiate with creditors, and its inability to achieve4

significant reductions without being able to impair contracts, to find that the § 921(c)5good faith presumption was strong). As in many other considerations of good faith in6

the context of bankruptcy, the test is a totality of the circumstances where the Court is7

given the power to weigh the numerous factors in light of the circumstances as a whole8

in determining whether good faith is lacking.19

9

The Court finds that the City filed in good faith by relying on uncontroverted

10facts. At the July 18, 2012 meeting, the Common Council adopted Resolution 2012-205,

11

declaring a fiscal emergency. In Resolution 2012-205, the Common Council made the12

official findings that (1) the City was or would be unable to pay its obligations within the13

next 60 days, and that the financial state of the City jeopardized the health, safety, or

14well-being of the residents of the City absent the protections of chapter 9 of the United

15

States Bankruptcy Code; and (2) given the City’s dire financial condition, it was in the16best interest of the City to declare a fiscal emergency. The Common Council, as an17

authoritative body, did so because they knew that the City was insolvent and believed

18
19
20

19

The Court notes parenthetically that the counter to good faith is bad faith, which often arises in the context ofother bankruptcy matters. Evidence of bad faith is concealing assets, lying to the court, multiple and abusive
filings – all of them affirmative acts of bad behavior. None of the typical bad faith factors are argued to the Courtin this proceeding.

21
OPINION - 27
EXHIBIT A PAGE 68

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 74
28 of 244
42

Desc

1

that the City could no longer pay its employees on July 1st without impairing contracts.

2

The Court finds that this factor weighs in favor of a finding of good faith.

3

The City’s financial problems fall within the situations contemplated by chapter 9.

4Here, the City cannot achieve a balanced budget unless it is allowed to reorganize its

5debt. The City cannot keep current with its mounting obligations because it is insolvent.

6

The City’s filing is consistent with the purposes of chapter 9, which is to give a debtor a7“breathing spell” so that it may establish a plan of adjustment. In re Cnty. of Orange,

8

183 B.R. 594, 607 (Bankr. C.D. Cal. 1995). The findings in Resolution 2012-205

9demonstrate that the City filed the Petition for this exact purpose.

10

Although the Court finds that the City did not engage in meaningful prepetition

11

negotiations with its creditors, did not seriously consider alternatives to filing chapter 912(other than those considered in the Budget Report) when faced with the severe cash

13

flow shortage in July 2012, honored its contractual obligations to its terminating

14

employees by paying large cash outs just before the petition date, and was generally

15

unprepared to formulate a plan of adjustment either before or soon after it filed, none

16of these uncontroverted facts add up to lack of good faith in filing. Were the purposes

17

of chapter 9—to give a municipality a breathing space from a cash crunch and an

18

opportunity to address its long term solvency through an organized process of

19

proposing a long term plan of adjustment—met here? The Court answers this question

20“yes.” Was there an alternative available to the City when it was faced with a $45.9

21
OPINION - 28
EXHIBIT A PAGE 69

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 75
29 of 244
42

Desc

1

million cash deficit in the upcoming fiscal year and inevitably was going to default on its

2

obligations as they came due? The Court answers this question “no.” To deny the3opportunity to reorganize in chapter 9 based on lack of good faith would be to ignore

4fiscal reality and the general purposes of the Bankruptcy Code. The Court will not deny

5

that opportunity.

6

Even if the Court were to find that the City did not file in good faith, which it

7

declines to do, case law instructs that the dismissal is not mandatory. Pierce County,

8414 B.R. at 714. Having had a firsthand view of this City and its struggles, the attitudes

9and actions of its major creditors, the concerns of its unions, particularly the safety

10

employees, and the paucity of options for a City with such substantial, undisputed fiscal

11

woes, this Court would exercise its discretion to not dismiss this case.

12

Almost no cases have addressed this permissive nature of § 921(c), but the Court

13

can take some instruction from the Ninth circuit in In re City of Desert Hot Springs, 339

14

F.3d 782 (9th Cir. 2003), where the circuit ruled that an order denying a motion to15

dismiss under § 921(c) and objections to eligibility is an interlocutory order which

16

cannot be appealed without leave of the BAP, which in that case had been denied. In

17reaching its decision that the ruling was not final, the Ninth circuit found that there was18

no irreparable injury to the movant that could not be addressed after finality:

19
20

The denial of an objection to and a motion to dismiss a chapter 9 bankruptcy
does not irreparably injure a party so that later addressing the issue would be

21
OPINION - 29
EXHIBIT A PAGE 70

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 76
30 of 244
42

Desc

1

futile. We therefore hold that such a denial is not a final decision and cannot
be immediately appealed to this court.

2

Id. at 792.

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

In reaching this conclusion, which is contrary to a similar denial of a motion todismiss for bad faith in a chapter 11 case, the Ninth circuit observed that the purpose
and statutory scheme of a chapter 9 proceeding were different than those in chapter
11, but also found that a creditor was not without further remedy if its motion todismiss was denied by the bankruptcy court.
When determining whether an order is final, in the context of objections toand motions to dismiss a bankruptcy, our cases are concerned with whether
an order finally determines an issue in such a way that addressing the issue
later would not serve to prevent a party from suffering irreparable injury.
[citations omitted] A court’s denial of such a motion merely allows themunicipality to proceed with the bankruptcy. We are not convinced that
Congress’s whole municipal bankruptcy statutory scheme is so skewed infavor of the municipality that the commencement of proceedings itself causes
irreparable injury. To so hold would essentially say that a creditor’s rights are
determined before the bankruptcy process really begins.
Id. at 790.
This holding instructs this Court that by granting eligibility for the City andoverruling CalPERS objections, the Court is not condemning CalPERS to an unfair or
injurious outcome in the proceeding. The plan process is complex and will be lengthy,
involving potentially extensive negotiations before the Court-appointed mediator. This
Court is well aware, as observed by Judge Klein in his City of Stockton opinions, thatmost chapter 9 plans are consensual, having been achieved after good faith and willing
participation in a mediation process. However, if that process fails to reach consensus,
ultimate approval of any plan of adjustment lies with this Court, which would have to21
OPINION - 30
EXHIBIT A PAGE 71

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 77
31 of 244
42

Desc

1

bless any creditor impairment. CalPERS will have further opportunities to argue its

2

potential injury to the Court and to protect its interests, just as the other creditors have3

those remedies.

4

As the Court observed when making its oral ruling on this motion, at least six

5other major creditors or classes of creditors exist here: the guarantors of the Pension

6

Obligation Bonds20; the guarantors of other general obligation bonds; the police and fire

7

unions; the remaining five unions of City employees; the potential class of unsecured8

creditors (which might have subclasses); and the potential class of City retirees. Each of

9these creditor groups stands to be substantially impacted by the City’s chapter 9

10

proceeding21; each of these creditor groups was given the opportunity to object to the

11City’s eligibility or good faith in filing. None of them objected because they conceded

12

the City was insolvent and needed a long term, orderly process to sort out its finances13

and propose a path out of its abyss. The Court rightly notes that the best interest of all

14

these creditor groups is served by proceeding forward in chapter 9.

15

Only the interest of CalPERS would be served if the Court dismissed this case.

16

Exactly how that interest would be served is far from crystal clear. The cash deficit of17

the City is real and unchallenged. The City cannot pay its obligations with money it does18

not presently have. Impairment of contracts seems inevitable in order for the City to

19

20

20

The Pension Obligation Bonds were issued in the mid-2000’s to generate a substantial cash paydown by the Cityof its unfunded liabilities to CalPERS. As a result CalPERS benefited from the cash generated by these bonds.
21
Almost all have already been impacted at least short term because the City has deferred payments to theseclasses of debt since the petition date.

21
OPINION - 31
EXHIBIT A PAGE 72

Case 6:12-bk-28006-MJ

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 78
32 of 244
42

Desc

1

reach cash stability and only the chapter 9 process accords the City the legal opportunity2

to do so. How far that impairment might reach is a question to be negotiated or3

answered by this Court on a later day. Dismissal would leave this quagmire without

4

orderly court oversight. This Court believes that oversight is critical to the financial

5

future of the City and its creditors.

6

Conclusion

7

The purposes of chapter 9 are met by this proceeding. The integrity of the8bankruptcy system is not offended by this proceeding. The City, its citizens, and its

9creditors deserve a chance to achieve an orderly financial future. The Court finds the

10

City of San Bernardino eligible to proceed in its chapter 9 case.
###

11
12
13
14
15
16
17
18
19

Date: October 16, 2013

Meredith A. Jury
United States Bankruptcy Judge

20
21
OPINION - 32
EXHIBIT A PAGE 73

Case 6:12-bk-28006-MJ
In re:

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 79
33 of 244
42

City of San Bernardino California

Desc

CHAPTER: 9
CASE NUMBER: RS 6:12-bk-28006-MJ

NOTE TO USERS OF THIS FORM:
1) Attach this form to the last page of a proposed Order or Judgment. Do not file as a separate document.
2) The title of the judgment or order and all service information must be filled in by the party lodging the order.
3) Category I. below: The United States trustee and case trustee (if any) will always be in this category.
4) Category II. below: List ONLY addresses for debtor (and attorney), movant (or attorney) and person/entity (or attorney)
who filed an opposition to the requested relief. DO NOT list an address if person/entity is listed in category I.

NOTICE OF ENTERED ORDER AND SERVICE LIST
Notice is given by the court that the attached order was entered on the date indicated as AEntered@ on the first page ofthis judgment or order and will be served in the manner indicated below:

I. SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (ANEF@) B Pursuant to controlling General Order(s) and
Local Bankruptcy Rule(s), I, deputy clerk who is making this entry; certify that service on all parties under Section II was completed,the foregoing document was served on the following person(s) by the court via NEF and hyperlink to the judgment or order. The
following person(s) are currently on the Electronic Mail Notice List for this bankruptcy case or adversary proceeding to receive NEF
transmission at the email address(es) indicated below.

Jerrold Abeles on behalf of Interested Party Ambac Assurance Company
abeles.jerry@arentfox.com, labarreda.vivian@arentfox.com
Jerrold Abeles on behalf of Interested Party Erste Europische Pfandbrief-und Kommunalkreditbank AG
abeles.jerry@arentfox.com, labarreda.vivian@arentfox.com
Jerrold Abeles on behalf of Interested Party Wells Fargo Bank, N.A.
abeles.jerry@arentfox.com, labarreda.vivian@arentfox.com
Franklin C Adams on behalf of Creditor San Bernardino Associated Governments
franklin.adams@bbklaw.com, arthur.johnston@bbklaw.com;lisa.spencer@bbklaw.com;bknotices@bbklaw.com
Franklin C Adams on behalf of Creditor San Bernardino Local Agency Formation Commission
franklin.adams@bbklaw.com, arthur.johnston@bbklaw.com;lisa.spencer@bbklaw.com;bknotices@bbklaw.com
Franklin C Adams on behalf of Interested Party Courtesy NEF
franklin.adams@bbklaw.com, arthur.johnston@bbklaw.com;lisa.spencer@bbklaw.com;bknotices@bbklaw.com
Joseph M Adams on behalf of Interested Party Courtesy NEF
jadams@adamspham.com

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
January 2009

F 9021-1.1
EXHIBIT A PAGE 74

Case 6:12-bk-28006-MJ
In re:

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 80
34 of 244
42

City of San Bernardino California

Desc

CHAPTER: 9
CASE NUMBER: RS 6:12-bk-28006-MJ

Andrew K Alper on behalf of Interested Party Courtesy NEF
aalper@frandzel.com, efiling@frandzel.com;ekidder@frandzel.com
Thomas V Askounis on behalf of Interested Party Courtesy NEF
taskounis@askounisdarcy.com
Julie A Belezzuoli on behalf of Defendant California Department of Financejulie.belezzuoli@kayescholer.com
Julie A Belezzuoli on behalf of Defendant Office of State Controller, State of California
julie.belezzuoli@kayescholer.com
Julie A Belezzuoli on behalf of Defendant Ana J Matosantos
julie.belezzuoli@kayescholer.com
Julie A Belezzuoli on behalf of Defendant John Chiang
julie.belezzuoli@kayescholer.com
Anthony Bisconti on behalf of Creditor Certain Retired Employees of the City of San Bernardino
tbisconti@bmkattorneys.com, admin@bmkattorneys.com
Anthony Bisconti on behalf of Interested Party Courtesy NEF
tbisconti@bmkattorneys.com, admin@bmkattorneys.com
Brett Bissett on behalf of Creditor California Public Employees' Retirement System
brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Brett Bissett on behalf of Interested Party Courtesy NEF
brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com
Jeffrey E Bjork on behalf of Interested Party Courtesy NEF
jbjork@sidley.com
Michael D Boutell on behalf of Creditor Comerica Bank
mdbell@comerica.com
J Scott Bovitz on behalf of Creditor U.S. TelePacific Corp.
bovitz@bovitz-spitzer.com
John A Boyd on behalf of Interested Party Courtesy NEF
fednotice@tclaw.net

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
January 2009

F 9021-1.1
EXHIBIT A PAGE 75

Case 6:12-bk-28006-MJ
In re:

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 81
35 of 244
42

City of San Bernardino California

Desc

CHAPTER: 9
CASE NUMBER: RS 6:12-bk-28006-MJ

John A Boyd on behalf of Interested Party Thompson & Colegate LLP
fednotice@tclaw.net
Jeffrey W Broker on behalf of Creditor The Glen Aire Mobilehome Park Corporation
jbroker@brokerlaw.biz
Jeffrey W Broker on behalf of Interested Party Courtesy NEF
jbroker@brokerlaw.biz
Deana M Brown on behalf of Interested Party Courtesy NEF
dbrown@milbank.com
Michael J Bujold on behalf of U.S. Trustee United States Trustee (RS)Michael.J.Bujold@usdoj.gov
Shirley Cho on behalf of Interested Party National Public Finance Guarantee Corp.
scho@pszjlaw.com
Alicia Clough on behalf of Defendant California Department of Financealicia.clough@kayescholer.com, managingattorneyofficeassignments@kayescholer.com
Alicia Clough on behalf of Defendant Office of State Controller, State of California
alicia.clough@kayescholer.com, managingattorneyofficeassignments@kayescholer.com
Alicia Clough on behalf of Defendant State of California
alicia.clough@kayescholer.com, managingattorneyofficeassignments@kayescholer.com
Alicia Clough on behalf of Defendant Ana J Matosantos
alicia.clough@kayescholer.com, managingattorneyofficeassignments@kayescholer.com
Alicia Clough on behalf of Defendant John Chiang
alicia.clough@kayescholer.com, managingattorneyofficeassignments@kayescholer.com
Marc S Cohen on behalf of Defendant California Department of Financemcohen@kayescholer.com, dhernandez@kayescholer.com
Marc S Cohen on behalf of Defendant Office of State Controller, State of California
mcohen@kayescholer.com, dhernandez@kayescholer.com
Marc S Cohen on behalf of Defendant State of California

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
January 2009

F 9021-1.1
EXHIBIT A PAGE 76

Case 6:12-bk-28006-MJ
In re:

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 82
36 of 244
42

City of San Bernardino California

Desc

CHAPTER: 9
CASE NUMBER: RS 6:12-bk-28006-MJ

mcohen@kayescholer.com, dhernandez@kayescholer.com
Marc S Cohen on behalf of Defendant Ana J Matosantos
mcohen@kayescholer.com, dhernandez@kayescholer.com
Marc S Cohen on behalf of Defendant John Chiang
mcohen@kayescholer.com, dhernandez@kayescholer.com
Ronald R Cohn on behalf of Interested Party Courtesy NEF
rcohn@horganrosen.com
Christopher H Conti on behalf of Interested Party San Bernardino Public Employees Association
chc@sdlaborlaw.com, sak@sdlaborlaw.com
Christopher J Cox on behalf of Interested Party National Public Finance Guarantee Corp.
chris.cox@weil.com, janine.chong@weil.com
Christina M Craige on behalf of Interested Party Courtesy NEF
ccraige@sidley.com
Alex Darcy on behalf of Creditor Marquette Bank
adarcy@askounisdarcy.com, akapai@askounisdarcy.com
Susan S Davis on behalf of Interested Party Courtesy NEF
sdavis@coxcastle.com
Robert H Dewberry on behalf of Creditor Allison Mechanical, Inc.
robert.dewberry@dewlaw.net
Todd J Dressel on behalf of Creditor Pinnacle Public Finance, Inc.
dressel@chapman.com, lubecki@chapman.com
Chrysta L Elliott on behalf of Interested Party Courtesy NEF
elliottc@ballardspahr.com, manthiek@ballardspahr.com
Scott Ewing on behalf of Interested Party Rust Consulting/Omni Bankruptcy
contact@omnimgt.com, sewing@omnimgt.com;katie@omnimgt.com
John A Farmer on behalf of Creditor County of San Bernardino, California
jfarmer@orrick.com

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
January 2009

F 9021-1.1
EXHIBIT A PAGE 77

Case 6:12-bk-28006-MJ
In re:

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 83
37 of 244
42

City of San Bernardino California

Desc

CHAPTER: 9
CASE NUMBER: RS 6:12-bk-28006-MJ

Brian W Freeman on behalf of Creditor Kim Thompson
brian@pedigolaw.com, brian@brianwfreeman.com
Victoria C Geary on behalf of Defendant California State Board Of Equalization
victoria.geary@boe.ca.gov
Victoria C Geary on behalf of Defendant Cynthia Bridges
victoria.geary@boe.ca.gov
Paul R. Glassman on behalf of Attorney Paul R. Glassman
pglassman@sycr.com
Paul R. Glassman on behalf of Debtor City of San Bernardino, Californiapglassman@sycr.com
Paul R. Glassman on behalf of Plaintiff City of San Bernardino, Californiapglassman@sycr.com
Robert P Goe on behalf of Creditor Miramontes Const. Co., Inc.
kmurphy@goeforlaw.com, rgoe@goeforlaw.com;mforsythe@goeforlaw.com
David M Goodrich on behalf of Creditor San Bernardino City Professional Firefighters Local 891
dgoodrich@marshackhays.com, ecfmarshackhays@gmail.com
Christian Graham on behalf of Creditor Miramontes Const. Co., Inc.
cgraham23@dlblaw.net
Everett L Green on behalf of U.S. Trustee United States Trustee (RS)everett.l.green@usdoj.gov
Chad V Haes on behalf of Creditor San Bernardino City Professional Firefighters Local 891
chaes@marshackhays.com, ecfmarshackhays@gmail.com
Chad V Haes on behalf of Interested Party Courtesy NEF
chaes@marshackhays.com, ecfmarshackhays@gmail.com
James A Hayes on behalf of Interested Party Courtesy NEF
jhayes@jamesahayesaplc.com
M Jonathan Hayes on behalf of Interested Party Courtesy NEF
jhayes@srhlawfirm.com,

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
January 2009

F 9021-1.1
EXHIBIT A PAGE 78

Case 6:12-bk-28006-MJ
In re:

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 84
38 of 244
42

City of San Bernardino California

Desc

CHAPTER: 9
CASE NUMBER: RS 6:12-bk-28006-MJ

roksana@srhlawfirm.com;carolyn@srhlawfirm.com;shawnj@srhlawfirm.com;rosarioz@srhlawfirm.com;jhayesecf@gmail.com;j@alk
azian.com
D Edward Hays on behalf of Creditor San Bernardino City Professional Firefighters Local 891
ehays@marshackhays.com, ecfmarshackhays@gmail.com
Eric M Heller on behalf of Interested Party Courtesy NEF
eric.m.heller@irscounsel.treas.gov
Jeffery D Hermann on behalf of Creditor County of San Bernardino, California
jhermann@orrick.com
Jeffery D Hermann on behalf of Defendant County of San Bernardino
jhermann@orrick.com
Bonnie M Holcomb on behalf of Interested Party Courtesy NEF
bonnie.holcomb@doj.ca.gov, rosita.eduardo@doj.ca.gov
Whitman L Holt on behalf of Interested Party Courtesy NEF
wholt@ktbslaw.com
Michelle C Hribar on behalf of Interested Party San Bernardino Public Employees Association
mch@sdlaborlaw.com
Steven J Katzman on behalf of Creditor Certain Retired Employees of the City of San Bernardino
SKatzman@bmkattorneys.com, admin@bmkattorneys.com
Steven J Katzman on behalf of Interested Party Courtesy NEF
SKatzman@bmkattorneys.com, admin@bmkattorneys.com
Jane Kespradit on behalf of Interested Party Courtesy NEF
jane.kespradit@limruger.com, amy.lee@limruger.com
Mette H Kurth on behalf of Interested Party Ambac Assurance Company
kurth.mette@arentfox.com
Mette H Kurth on behalf of Interested Party Erste Europische Pfandbrief-und Kommunalkreditbank AG
kurth.mette@arentfox.com
Mette H Kurth on behalf of Interested Party Wells Fargo Bank, N.A.
kurth.mette@arentfox.com

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
January 2009

F 9021-1.1
EXHIBIT A PAGE 79

Case 6:12-bk-28006-MJ
In re:

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 85
39 of 244
42

City of San Bernardino California

Desc

CHAPTER: 9
CASE NUMBER: RS 6:12-bk-28006-MJ

Mette H Kurth on behalf of Trustee Ambac Assurance Company, Erste Europaische Pfandbrief-Und Kommunalkreditbank Ag And
Wells Fargo Bank, N.A.
kurth.mette@arentfox.com
Sandra W Lavigna on behalf of Interested Party U. S. Securities and Exchange Commission
lavignas@sec.gov
Michael B Lubic on behalf of Creditor California Public Employees' Retirement Systemmichael.lubic@klgates.com, jonathan.randolph@klgates.com
Michael B Lubic on behalf of Interested Party California Public Employees' Retirement Systemmichael.lubic@klgates.com, jonathan.randolph@klgates.com
Richard A Marshack on behalf of Interested Party Courtesy NEF
rmarshack@marshackhays.com, lbergini@marshackhays.com;ecfmarshackhays@gmail.com
David J McCarty on behalf of Interested Party David J. McCarty
dmccarty@sheppardmullin.com
Reed M Mercado on behalf of Interested Party M. Reed Mercado
rmercado@sheppardmullin.com
Fred Neufeld on behalf of Debtor City of San Bernardino, California
fneufeld@sycr.com
Fred Neufeld on behalf of Plaintiff City of San Bernardino, California
fneufeld@sycr.com
Aron M Oliner on behalf of Interested Party San Bernardino Police Officers Association
roliner@duanemorris.com
Scott H Olson on behalf of Creditor Kohl's Department Stores, Inc.
solson@seyfarth.com
Dean G Rallis, Jr on behalf of Interested Party Courtesy NEF
drallis@sulmeyerlaw.com
Christopher O Rivas on behalf of Interested Party Courtesy NEF
crivas@reedsmith.com

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
January 2009

F 9021-1.1
EXHIBIT A PAGE 80

Case 6:12-bk-28006-MJ
In re:

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 86
40 of 244
42

City of San Bernardino California

Desc

CHAPTER: 9
CASE NUMBER: RS 6:12-bk-28006-MJ

Kenneth N Russak on behalf of Interested Party Courtesy NEF
krussak@frandzel.com, efiling@frandzel.com;dmoore@frandzel.com
Gregory M Salvato on behalf of Interested Party Courtesy NEF
gsalvato@salvatolawoffices.com, calendar@salvatolawoffices.com
Mark C Schnitzer on behalf of Attorney Mark C. Schnitzermschnitzer@rhlaw.com, mcschnitzer@gmail.com
Diane S Shaw on behalf of Interested Party Courtesy NEF
diane.shaw@doj.ca.gov
Ariella T Simonds on behalf of Interested Party Courtesy NEF
asimonds@sidley.com
Leonard Steiner on behalf of Defendant Jose Munoz
ls@steinerlibo.com, jasoncarter@steinerlibo.com;aam@steinerlibo.com
Jason D Strabo on behalf of Creditor U.S. Bank National Association, not individually, but as Indenture Trustee
jstrabo@mwe.com, cnorris@mwe.com
Cathy Ta on behalf of Interested Party Courtesy NEF
cathy.ta@bbklaw.com, Arthur.Johnston@bbklaw.com;lisa.spencer@bbklaw.com
Sheila Totorp on behalf of Creditor Landmark American Insurance Company
stotorp@clausen.com, jbrzezinski@clausen.com
Benjamin R Trachtman on behalf of Interested Party Courtesy NEF
btrachtman@trachtmanlaw.com, sstraka@trachtmanlaw.com
Matthew J Troy on behalf of Creditor United States of America
matthew.troy@usdoj.gov
United States Trustee (RS)
ustpregion16.rs.ecf@usdoj.gov
Anne A Uyeda on behalf of Interested Party Courtesy NEF
auyeda@bmkattorneys.com
Annie Verdries on behalf of Interested Party Courtesy NEF
verdries@lbbslaw.com, Autodocket@lbbslaw.com

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
January 2009

F 9021-1.1
EXHIBIT A PAGE 81

Case 6:12-bk-28006-MJ
In re:

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 87
41 of 244
42

City of San Bernardino California

Desc

CHAPTER: 9
CASE NUMBER: RS 6:12-bk-28006-MJ

Brian D Wesley on behalf of Interested Party Courtesy NEF
brian.wesley@doj.ca.gov
Kirsten A. Worley on behalf of Creditor Safeco Insurance Company Of America
kw@wlawcorp.com, admin@wlawcorp.com
Clarisse Young on behalf of Interested Party Courtesy NEF
youngshumaker@psmlawyers.com, sally@psmlawyers.com
Pamela Jan Zylstra on behalf of Interested Party Courtesy NEF
zylstralaw@gmail.com
G

Service information continued on attached page

II. SERVED BY THE COURT VIA U.S. MAIL: I deputy clerk who is making this entry; certify that service on all parties under
Section II was completed, A copy of this notice and a true copy of this judgment or order was sent by United States Mail, first class,postage prepaid, to the following person(s) and/or entity(ies) at the address(es) indicated below:

City of San Bernardino, California
City Hall
300 North "D" Street
San Bernardino, CA 92418

G

Service information continued on attached page

III. TO BE SERVED BY THE LODGING PARTY: Within 72 hours after receipt of a copy of this judgment or order which bears
an AEntered@ stamp, the party lodging the judgment or order will serve a complete copy bearing an AEntered@ stamp by U.S. Mail,overnight mail, facsimile transmission or email and file a proof of service of the entered order on the following person(s) and/or
entity(ies) at the address(es), facsimile transmission number(s), and/or email address(es) indicated below:
G

Service information continued on attached page

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
January 2009

F 9021-1.1
EXHIBIT A PAGE 82

Case 6:12-bk-28006-MJ
In re:

Doc 837830 Filed 10/22/13
10/16/13 Entered 10/22/13
10/16/13 18:32:10
13:15:08
Main
MainDocument
Document Page 88
42 of 244
42

City of San Bernardino California

Desc

CHAPTER: 9
CASE NUMBER: RS 6:12-bk-28006-MJ

ADDITIONAL SERVICE INFORMATION (if needed):This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
January 2009

F 9021-1.1
EXHIBIT A PAGE 83

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 89 of 244

1

UNITED STATES BANKRUPTCY COURT2CENTRAL DISTRICT OF CALIFORNIA

3--oOo--

4

In Re:

5

CITY OF SAN BERNARDINO,

6

Debtor.

7-----------------------------

8
9
10
11
12
13
14
15
16

)
)
)
)
)
)

Desc 1Case No. 6:12-28006MJ
Riverside, California
Wednesday, August 28, 2013
1:30 PMMOTION of debtor City of San
Bernardino pursuant to 11
U.S.C. Sections 365, 901 and904 for Order approving: (A)Rejection of Collective
Bargaining Agreements withSan Bernardino Public
Employees Assoc., San
Bernardino Police Officers
Assoc., and San Bernardino
City Professional
Firefighters; and (B)February 1, 2013 Interim
Modifications to Such
Collective Bargaining
Agreements
MOTION for Summary Judgment
on Eligibility

17
18
19
20
21

MOTION for relief fromautomatic stay withsupporting declarations
ACTION IN NON-BANKRUPTCYFORUM RE: see memorandum of
points and authorities Filedby SAN BERNARDINO CITY OF
PROFESSIONAL FIREFIGHTERS
LOCAL 891

22
23
24
25

MOTION for relief fromautomatic stay withsupporting declarations
ACTION IN NON-BANKUPTCYFORUM RE: grievance andrelated procedures et seq
EXHIBIT A PAGE 84

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 90 of 244

1

Desc 2Filed by SAN BERNARDINO
POLICE OFFICERS ASSOCIATION2MOTION for relief fromautomatic stay withsupporting declarations
ACTION IN NON-BANKUPTCYFORUM RE: to file unfair
practice charge. Filed by
SAN BERNARDINO PUBLICEMPLOYEES ASSOC

3
4
5
6
7

STATUS CONFERENCE on Chapter
9 Voluntary Petition

8
9

TRANSCRIPT OF PROCEEDINGSBEFORE THE HONORABLE MEREDITH A. JURYUNITED STATES BANKRUPTCY COURT

1011APPEARANCES:
For the Debtor:

12
13
14

PAUL R. GLASSMAN, ESQ.
FRED NEUFELD, ESQ.
Stradling Yocca Carlson &Rauth, P.C.
100 Wilshire Boulevard
4th Floor
Santa Monica, CA 90401

15
16

For the City of San
Bernardino:

JAMES F. PENMAN, ESQ.
City Attorney's Office
300 North D Street
Sixth Floor
San Bernardino, CA 92418

For CalPERS:MICHAEL J. GEARIN, ESQ.
MICHAEL K. RYAN, ESQ.
K&L Gates
925 Fourth Avenue
Suite 2900
Seattle, WA 98104

17
18
19
20
21
22
23
24
25

EXHIBIT A PAGE 85

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 91 of 244

Desc 3

For CalPERS:MICHAEL B. LUBIC, ESQ.
K&L Gates
10100 Santa Monica Boulevard
7th Floor
Los Angeles, CA 90067

For Ambac Inc. Co. and Wells
Fargo:METTE H. KURTH, ESQ.
Arent Fox LLP
555 West Fifth Street
Los Angeles, CA 90013

For Ambac Inc. Co. and Wells
Fargo: (Telephonic)

DAVID L. DUBROW, ESQ.
Arent Fox LLP
1675 Broadway
New York, NY 10019

For San Bernardino Police
Officers Association:

RON OLINER, ESQ.
Duane Morris LLP
One Market Plaza
Suite 2200
San Francisco, CA 94105

For San Bernardino City
Professional Firefighters:

COREY W. GLAVE, ESQ
Corey W. Glave, Attorney at
Law
1042 2nd Street
Hermosa Beach, CA 90254

For San Bernardino City
Professional Firefighters:

DAVID M. GOODRICH, ESQ.
Marshack Hays LLP
870 Roosevelt Avenue
Irvine, CA 92620

For Certain Retired
Employees:

ANNE A. UYEDA, ESQ.
Bienert, Miller & Katzman,
PLC
903 Calle Amanecer
Suite 350
San Clemente, CA 92673
DEBRA A. DANDENEAU, ESQ.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

For National Public Finance
Guarantee:

23
24
25
EXHIBIT A PAGE 86

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 92 of 244

Desc 4Court Recorder:

RENEE JEWELL
United States Bankruptcy
Court
3420 Twelfth Street
Riverside, CA 92501(855)460-9641

Transcriber:

PENINA WOLICKI
eScribers, LLC
700 West 152nd Street,
Suite #607
New York, NY 10040(973)406-2250

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

Proceedings recorded by electronic sound recording;transcript provided by transcription service.

25
EXHIBIT A PAGE 87

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 93 of 244
CITY OF SAN BERNARDINO

RIVERSIDE, CALIFORNIA

2
3

Desc 5

AUGUST 28, 2013 1:30 PM--oOo-(Call to order of the Court.)

4

THE COURT:Now is the time and place in the matters5

set on the Court's 1:30 calendar in the Chapter 9 proceeding of

6

the City of San Bernardino.

7

the page up.

8right page, is the -- well, it is not the first matter.

9

I suppose it would help if I got

I think the first matter, if I've turned to the

We're skipping number 22, which are the continued

10

motions on the 365 motions.

11certainly intend to do that first, the motion for summary

12

judgment on the eligibility filed by the City, opposed by

13

CalPERS.

Going to number 23, because I

14

Because the issues in this motion are distinct to the15parties that have briefed and will be arguing the case after I

16give my tentative ruling, I'm going to take only the17

appearances of people that will be speaking on the motion.

18

After I complete the ruling on the motion, then I will take a19

brief recess, come back and take the appearances of all other20

parties that would be participating on the other matters on the21

calendar.

22
23
24
25

So calling for the appearances on the summary judgment
motion.
MR. GEARIN:

Good afternoon, Your Honor.

Gearin of K&L Gates for CalPERS.

MichaelAlso in the courtroom with me
EXHIBIT A PAGE 88

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 94 of 244
CITY OF SAN BERNARDINO

Desc 61is my colleague, Michael Ryan.

2

questions about specific evidentiary objection issues, he will3

address those --To the extent the Court has any

4

THE COURT:

Okay.

5

MR. GEARIN:-- but I'll address all the rest of the

6oral argument.

7

THE COURT:All right.

8

MS. KURTH:

Mette Kurth with Arent Fox LLP on behalf

Thank you.

9of Ambac Insurance Company and Wells Fargo Bank, N.A. NEPK.

10And David Dubrow from our New York office, I believe, is on the

11line --

12

THE COURT:

I believe he is.

13

MS. KURTH:-- with the --14

THE COURT:Do you want to make an appearance, Mr.

16

MR. DUBROW:

Sure.

17

Thank you very much.

18

THE COURT:

19

MR. GLASSMAN:

15

Dubrow?
David Dubrow from Arent Fox.

Thank you.
Good afternoon, Your Honor.

Paul

20

Glassman and Fred Neufeld of Stradling Yocca Carlson & Rauth,21

for the City of San Bernardino.

Also appearing for the City is

22James Penman, the City Attorney.

Also in attendance from the23

City are the Mayor, Patrick Morris; council members Wendy

24

McCammack, Virginia Marquez, Robert Jenkins, and Fred Shorett;25

the City Manager, Allen Parker; Michael Busch of Urban Futures,
EXHIBIT A PAGE 89

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 95 of 244
CITY OF SAN BERNARDINO

Desc 71

the financial consultant for the City; Jolena Grider, Senior

2

Assistant City Attorney; and Steven Graham, Deputy City

3

Attorney with the City Attorney's Office.

4

THE COURT:All right.

I am going to give a tentative

5

ruling on this matter.

6

notes give me any indication how long it will take.

7

then entertain argument from the parties at the conclusion of

8

that.

9

after I announce the tentative, please let me know, and I will10

let you do that.

It will be lengthy, I believe, if my
And I will

If it is lengthy enough and people want to take a break11

To not keep everybody here in suspense, I am going to

12

grant the motion in favor of the City and rule that as a matter13

of law, based on the uncontroverted facts that have been placed

14

before the Court on this summary judgment motion, that the City

15

is eligible to remain in Chapter 9 and to proceed with the16

document plan of adjustment.

17

In making this ruling I'd initially like to make some18

preliminary comments that overrule or sort of direct the ruling

19that I'm going to make this afternoon.

20

eligibility of the City for Chapter 9 are controlled by the21

objections that were filed with the Court on October 24th,

22

2012.

23

for the filing of objections on that date.

24

to file objections.

25

The challenges to the

There was nothing preliminary about the Court's deadline
It was a hard date

The Court is aware that CalPERS filed their objection
EXHIBIT A PAGE 90

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 96 of 244
CITY OF SAN BERNARDINO

Desc 81

with some purported reservation of rights to object on more or2

different grounds.

3

something that was ever adopted by the Court.

4

an order extending the time to object.

5were set forth in their objection are those that control my

6ruling of contested issues in the summary judgment motion.

7

That was their statement.

It was not
There was never

And the issues that

There have been many open court discussions about what8

the challenges to eligibility encompassed.

9

beginning in November and continuing thereon, there were many10

colloquies about what the issues were at the status11

conferences.

12

objections that were filed with the Court.

13

I began -- believe

And those issues were well defined by the

The SBPEA union and CalPERS were the only original

14

objecting parties.

15

the state authorization to file, which brought into play the16

emergency declaration under 109(c)(3), the issue of insolvency

17

under 109(c)(4), and 921.

18

109(c)(4) and 921.

19

The union's objection was under 109(c)(2),

The CalPERS objections were under

SBPEA withdrew in open court, its objection on

20

insolvency several months ago.

21

hearing it was.

22that SBPEA had withdrawn its objection on insolvency, and their

23

counsel confirmed that withdrawal in open court.

24

considered that issue not objected to since.

25

I've forgotten exactly which

The City made a statement that they believed

And I have

It was at that time that I began thinking, as I have
EXHIBIT A PAGE 91

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 97 of 244
CITY OF SAN BERNARDINO

Desc 91

thought throughout this case, that other than the solvency

2

issue, there were no genuine issues of disputed fact that3

really needed to be determined by the parties through discovery

4

or otherwise.

5

hearings in November or December.

6

January, because I was all ready to almost go to this type of7

procedure then.

8

factual issue that they needed discovery on.

9move forward in pulling the plug at that time on discovery and

10left the issue pending.

11

I think I said that very early on at the
I know I repeated it in

CalPERS got up and argued that intent was some
And I did not

In early August, after the oppositions -- the initial

12

responses to the summary judgment motions were due, the13settlement between SBPEA union and the City was finalized, and14

the balance of the SBPEA objection was withdrawn, meaning that15

the challenge to the 109(c)(2), the 109(c)(3) already gone,

16

were both gone, leaving only the objection under 109(c)(4) and

17

921.

18

There's a fair amount in the opposition filed by

19

CalPERS about the issues that I think are 109(c)(5) and20

109(c)(3) issues.

21

comments to make about the evidence that they think is out

22

there on them, I have disregarded those arguments.

23

not contested matters before the Court.

24

they are already resolved.

25

Although I have read them and I will have

They are

And I believe that

In affirming that there is no reservation of rights by
EXHIBIT A PAGE 92

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 98 of 244
CITY OF SAN BERNARDINO

Desc 10

1

CalPERS or no right to raise issues that they did not raise,2

I'm really just following the general policy of bankruptcy

3

courts in all proceedings, which is finality and moving cases

4

forward is very important.

5

forward quickly.

6

twelve months -- thirteen months, excuse me -- into the case,7

and at the time I structured the summary judgment motion, we

8were nine months in.

9

reservation of rights, CalPERS never filed an amended objection

10

or anything that would have put before the Court the issues

11that I will not consider this afternoon.

12

This case has clearly not moved

We are almost eleven months into the case --And I might also remark, despite its

The City acts as a body, and although I entertained

13

the arguments that were made by CalPERS in January about we

14

need to discover about the subjective intent for our objections

15

on good faith and desire to effect a plan of adjustment at the

16time of the filing of the petition, I really questioned whether

17

there was discovery to be done on that issue.

18

Although the word "subjective" is out there in a

19

number of the Chapter 9 cases, "it is a subjective inquiry as

20

to whether a city desires", if you read each and every one of

21

those cases, the only evidence that has ever been considered by22

any bankruptcy court in looking at desire or good faith, are23

the objective acts that have been taken by the city.

24

no case that turns on state of mind.

25

about the Ninth Circuit law on that later.

There's

I'll have more to say
There is no case
EXHIBIT A PAGE 93

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 99 of 244
CITY OF SAN BERNARDINO

Desc 111that does the what-does-this-word-mean-type of objective --2

subjective inquiry.

3

really think it's more a discretionary decision than4

subjective, but the words are "subjective" in the case law --5

by looking at acts which are not in dispute in making their6decision.

7

They all reached their subjective -- I

The private thoughts or statements of any member of

8

the City Council or the City staff are not relevant.

9of mind of the people making the City's decisions are

10

immaterial and not relevant.

11comments anybody might have made in a City Council meeting when

12

discussing in the public forum the decision to decide to pass a

13resolution or otherwise, are not relevant to the Court,

14

although they certainly are open and in the minutes to some

15extent.

The state

Even to a great extent, the16

A third thing that I have taken into account in making

17

this ruling is the petition date, as in all bankruptcy matters,

18

is important.

19

might have happened in 2007 and 2008 and 2010 are somehow

20

relevant to the desire to effect a plan and the good faith of21

the debtor in filing the petition on August 1st, 2012, is just22

far too remote for this Court to consider important.

23

And the assertion by CalPERS to things that

Again, reading all the cases, there's not a one of24them that is looking at anything other than immediate

25

determining facts when they consider the behaviors of the City
EXHIBIT A PAGE 94

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 100 of 244
CITY OF SAN BERNARDINO

Desc 121

in choosing to file Chapter 9.

2perhaps having a historical context in the way that Judge Klein

3

wrote in his eligibility decision in describing how the City

4

got into the financial mess it got into, most of them don't

5

look very far back at all.

6that were going on.

7

inquiry that the Court is supposed to make, I am compelled to8

look at the immediate things going on, not something that

9

happened in 2007, 2008, or in 2009.

Most of them, other than

They look at the immediate things

And I think that the case law and the10

So to the extent that CalPERS has asserted those

11

events are important or have requested discovery under the

1256(d) motion, I think it is irrelevant and I am not considering

13

that.

14

filed in 2007/2008.

15

City that indicated they were in some financial difficulty.

16

But because they didn't then, doesn't mean they can't now.

17

therefore, it's too remote to be important.

18

Now, part of me kind of says maybe the City should have
Certainly there were reports before theAnd

Finally, before I go into the merits of the19

eligibility issues, both in the prima facie case and the20

contested part of the motion, there is no script for what21

brings a city into Chapter 9.

22that are out there as opposed to a district case or otherwise,

23

they all of them came in under different circumstances.

24

Different events led up to their filing.

25

Desert Hot Springs, Town of Mammoth, they had one major

Reading all of the city cases

Sometimes, like

EXHIBIT A PAGE 95

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 101 of 244
CITY OF SAN BERNARDINO

Desc 13

1

judgment creditor that was aggressively going to assert their2right to collect on their judgment.

3

situation than this City faced.

4

It's certainly a different

The facts of Vallejo and Stockton are certainly

5

distinct from what San Bernardino did here.

6

tested the emergency filing section of the new state court

7

provisions and chose not to go the initial evaluation way, or8decided they didn't have time, I guess would be a better way of

9saying it, because of the impending cash crunch that was facing

10

them in July of 2012.

11very different than the way Stockton arrived at its Chapter 9.

12The other city cases had other distinct differences.

San Bernardino

So the way they got here was obviously

13

Just because they're different, doesn't mean it's wrong.

14

just because the City is short-staffed and is not as organized15

as, for example, Stockton was, when it filed its case and16

projecting where it's going or where it was, doesn't in and of17

itself prevent it from seeking the relief they have sought in18

the bankruptcy court, to have an opportunity to reorganize

19

their fiscal situation and have an opportunity to continue as a20

viable city that is safe for its citizens.

21

And

The City has set forth its prima facie case in the22

motion.

23(c)(5), they have satisfied the Court that they are eligible to24

file this petition.

25

really is not in dispute.

And on the issue of 109(c)(1), (c)(2), (c)(3), and(c)(1), they are a municipality.

That

The (c)(2) situation authorized by
EXHIBIT A PAGE 96

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 102 of 244
CITY OF SAN BERNARDINO

Desc 14

1

the State, again, there was a challenge to that, that would

2

have tested what is an emergency.

3

withdrawn.

4unchallenged.

5

enough for my uncontested ruling.

6

That challenge was

I have nothing to say on that since it's
It looks like an emergency to me, and that's

The issue of insolvency, which is the one that hung up

7Vallejo and the BAP for that matter, was only challenged, and8has been withdrawn.

9comment on the record a couple times that it appears the City10

is broke.

11

sounded like I had pre-ruled on that issue, and I got off the12hook, because that objection was withdrawn.

13

anybody in this courtroom seriously ever thought that the City14

was not insolvent.

Even before it was withdrawn I made theI thought in the solitude of my chambers that is

But I don't think

15

First of all, they had defaulted on paying the bonds

16

and other of their immediate obligations in July, before they17even filed, so they were not paying their debts since they came

18

due, which is a fairly easy definition.

19

the massive motions and the eight-day evidentiary hearing that

20

Vallejo had to set the precedent on, by having that issue not21

seriously challenged.

22

And luckily we avoided

And then the 109(c)(5) issue, again, there was never23

an objection to that.

24

CalPERS papers that might have been pertinent to the (c)(5) are25

not before the Court in a contested matter.

So all of the things that are in the

EXHIBIT A PAGE 97

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 103 of 244
CITY OF SAN BERNARDINO

Desc 15

I believe that the Vallejo standard -- I'm now talking

2about the BAP case -- in speaking about what it is to have so3

many creditors that it was impracticable, pretty much is

4

written in such a way that almost any city with a large number

5of retirees and trade creditors and then various bonds, secured

6

creditors of various capacities, CalPERS obligations, but more

7

importantly, the general unsecured trade creditors and the8retirees, who have no organized way of participating in some9

work-out without the ability to form committees or otherwise

10

participate in a bankruptcy proceeding, I don't -- my mind is,11

any city the size of San Bernardino is going to have a creditor

12

body that's going to be impracticable to negotiate with without

13

the assistance of the bankruptcy process.

14

And their original statement of qualifications filed

15

by the City only relied on the 109(c)(5)(C) ground.

16

added later the 109(c)(5)(D) ground of the threat of immediate

17

execution by the civil rights judgment holders.

18

again, (c)(5) isn't before me, that addition of that -- and I

19

actually made a comment on the record about it -- gave lots of20

furor to the fire coming from CalPERS -- that is all

21

irrelevant -- and perhaps made their brief longer than it would

22

have been if I hadn't -- if that hadn't been amended by the

23

City.

24

clearly it is impracticable under the standard of the Vallejo

25

case.

They then

And although,But 109(c)(5) is an "or", and we only need one, andSo I've found the City has made a prima facie case.
EXHIBIT A PAGE 98

And

Case 6:12-bk-28006-MJ

1
2

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 104 of 244
CITY OF SAN BERNARDINO

Desc 16then we have a contest of (c)(4), which I will describe later.
The statement of uncontroverted facts set forth by the3City is supported by mostly things that are certainly publicly

4

undisputed things.

5

some other things in the 56(d) -- about how I handled the6

objections to the declarations and the declaration of Ms.

7

Travis-Miller and the statement of qualifications, but there8

really is nothing in their statement of uncontroverted facts

9that is truly controverted before the Court, because they are10

describing reports that were presented to the City.

11

question they were prepared and presented at City Council

12

meetings, which they were done in public where the City Council

13

met and adopted a resolution; met and adopted a fiscal

14

emergency plan; met in an open court, adopted a pre-pendency

15plan; met in -- I don't mean open court -- open common council

16

meeting -- met in an open meeting, adopted the pendency plan;

17

later adopted a budget and did other things.

I will speak -- again, after I go through

There's no18

Those -- and the reports that were presented to them19by their staff or their consultants are all public records in20

the City's files.

None of those things are controverted.

21

are what they are.

They are acts that took place.

22

documents that exist.

23

based its prima facie case on.

24
25

They

They are

And they are really what the City has

So I don't think there's any serious challenge to theuncontroverted facts that are set forth by the City.

But

EXHIBIT A PAGE 99

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 105 of 244
CITY OF SAN BERNARDINO

Desc 17

1

CalPERS wants discovery.

2

56(d) and all of the case law that support why my choosing this3

procedure was perhaps unusual; it should not have been a4

surprise, but perhaps unusual.

5

the case law supports that if there are material facts which

6

will assist a nonmoving party in preparing their defense,

7

they're entitled to discover those facts before they have to

8file their final opposition to a motion for summary judgment.

And the Court is well aware of Rule

And I am certainly aware that

9

The CalPERS argues that I abruptly cut off discovery,

10

which I had never ruled on at all, and set the summary judgment

11

when we were here in May or June -- I've forgotten when it was.

12

Again, I sent the message I didn't think there were any

13

undisputed (sic) facts on most of the eligibility issues as

14early as November, December, and January.

15

think there were any facts in dispute should not have been a16

surprise to CalPERS.

17

And so that I didn't

But then when the matter came up in court, I still18

don't question the approach I took, and quite obviously I don't

19

question it because of where I'm going.

20

commenced this formal discovery they were screaming about

21

doing, purely by their own choice, quite frankly.

22

had an agreement with the City, but they could have terminated23

that agreement at any time.

24

ever issued by the Court.

25

But they hadn't evenI mean, they

There was no stay on discovery

And they kept filing these status conference reports
EXHIBIT A PAGE 100

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 106 of 244
CITY OF SAN BERNARDINO

Desc 18

1that had to do with a lot of things that had nothing to do with2

eligibility.

3

reports that were filed, I think, sometime the day before the4hearing in which I set this procedure.

5

there really are no factual disputes, now that insolvency has

6gone away.

7

they wanted from the City or they wanted the Court to order,8

most of which I had no authority to do.

9

had nothing to do with eligibility.

10

doing here?

11

case and we're not moving.

12

And finally, I got the two status conference

And the City is saying

And CalPERs had this laundry list of things that

And that laundry list

So I thought, what are we

We're not getting anywhere.

We're a year into the

So I thought, okay, if I -- they start their formal

13

discovery, the City's going to -- and I said this in the14

hearing -- the City's going to object and they're going to say

15

this isn't relevant to the issues of law that the Court has to16

decide on eligibility.

17

tee up a discovery motion, and then I'd have to rule on the

18

same things that I'm actually prepared to rule on today, which

19

is what is the scope of what the Court is supposed to look at

20

in making these determinations and whether there is anything

21

material that might be discovered by doing all the things that

22

CalPERS wanted to do.

23

So the City would object.

Then they'd

So rather than go through the -- what would have been24

a long, drawn-out process of starting formal discovery and25

having those objections and having the motions to compel and
EXHIBIT A PAGE 101

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 107 of 244
CITY OF SAN BERNARDINO

Desc 191

ruling on what I thought was important on the rulings that I

2have to make, I said let's do it by summary judgment, and let3them try to raise as the issues of genuine issues of fact,

4

there, and then I will then -- at least I've moved the case5

forward.

And I have.

6

Yeah, I couldn't have done this if insolvency was an

7

issue, but when it came down to only (c)(4) and 921, I thought

8

I could.

9

I gave CalPERS ample opportunity to demonstrate to me

10

that there were discovery they needed on the material disputed

11

facts, genuine issues which would entitle them to discovery and12a live trial, evidentiary hearing.

13

anything at that hearing.

14

They hadn't convinced me of

We had the status conference in July after the City

15

filed its motion, for the very reason that I wished that

16

CalPERS would tee up why they needed discovery on those issues,17

and they didn't do it then, for some reason; maybe because they18

misunderstood.

19

take it.

20

were upset because I was depriving them of discovery, that they21

could do it in their 56(d) motion, which in fact, they have

22

done.

But they had that opportunity and they didn't

And then I instructed them at that hearing, when they23

All right.

24

they wished to discover on.

25grouped them into three groups of things that they wish

Now, I'm going into the details of what
Like the City in its reply, I have

EXHIBIT A PAGE 102

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 108 of 244
CITY OF SAN BERNARDINO

Desc 20

1

discovery on.

2

2010.

3

that supports the relevancy of the City not doing something

4

before to their doing something in 2012.

5

the facts as true that are there.

6budgetary issues at the City of San Bernardino.

7

reports given to them by their professionals and staff that8

they should be addressing what to do to balance their budget,9and they didn't.

10

The A group is the remote facts, 2007 throughAs I mentioned, I can't imagine that there is anything

They -- I can take

There are long-standing
They had

So obviously they saw the reports at the Council

11

meeting in 2010, maybe 2008.

12

issues between 2007 and 2010 were before them.

13

the Fire and Police recommended some cuts that might have14

helped them balance their budget in 2009, they didn't do it.

15

can assume all of those things are true.

16

need discovery on them.

17

they're too remote to make any difference on (c)(4) and 921.

The deep and mean insolvency
The fact thatI

I don't know why we

I think they're irrelevant.

I think

18

They might have been relevant -- I'm not sure, because

19

I didn't have to figure this out -- on the 109(c)(2) issue, the20

emergency part of it.

21

California Environmental Quality Act, as a sudden unexpected22

event.

23of San Bernardino, as to whether the rising ground water in24

that basin was a sudden unexpected event.

25

the -- what the City might have known five years before might

Emergency is defined, at least in

I once did a trial about the water basin under the City

Perhaps that was

EXHIBIT A PAGE 103

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 109 of 244
CITY OF SAN BERNARDINO

Desc 21

1

have been important to their declaration of emergency, but it2

is not important to the issue before the Court, and it is not3

something that I would think was important.

4

The next grouping of facts were the facts immediately

5

preceding the petition.

6

months before they filed.

7

further than that, because I think some of the cash-outs to the8

employees and other preferential -- potentially preferential

9transfers might have been a little earlier than the two months

10

before the petition.

11

frame that I think what was going on at the City and what steps

12

the City took or didn't take are relevant.

13

The City kind of put them in the two
I think they go back a little

But they are certainly within the time

The first of those issues is the water fund had cash

14on the petition date.

15

has pointed out under California Constitutional law that it

16

didn't help the City's general fund.

17

the Constitution prevent the City from using the water funds

18

without a two-thirds vote of their populace.

19

borrow the funds from the water fund under Article XVI Section20

18 of the Constitution unless they could repay it within the21

fiscal year that they borrowed it.

22

There's no dispute they did.

The City

Article XIII C and D andAnd they can't

Facing a forty-five-million dollar cash deficit in the23

2012/2013 budget -- an issue that really isn't disputed.

24

mean, that number has been given to me since the day this case25

was filed, and it's certainly within a million of that,
EXHIBIT A PAGE 104

I

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 110 of 244
CITY OF SAN BERNARDINO

Desc 22

1

probably, if you redid the accounting.

They couldn't repay.

2

So the water fund issue is irrelevant.

They could not have3

used the money.

4

that there was cash in the water fund doesn't matter, nor does5

there need to be discovery on that.

6

They could not borrow the money.

And the fact

All of the things about the civil-rights judgments and7

what happened, what the City was doing when it settled those8

judgments, I actually want to make some comments about that9

when I talk about how the undisputed facts relate to the legal

10

decisions I have to make.

11

It is fairly clear that it is undisputed that when the

12City entered into those judgments it did not have the means to

13

pay them.

14

probably put their outside counsel that were negotiating those15

settlements in uncomfortable positions later, and definitely

16

uncomfortable positions before the district courts that17

wondered what was going on when their payments weren't made.

18

But those things happen.

19

done on that.

20

That isn't very prudent of the City, and certainly

And there's no discovery needed to be

And all of the things that happened in July that might21

have enticed the lawyer for one of the -- I think it was the22miners, the miner's settlement the judge got the most upset

23

about, and essentially, it appeared to me, was about to issue

24

an execution order on the City's accounts.

25

could not have done that but a federal court can; under state

A state court judge

EXHIBIT A PAGE 105

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 111 of 244
CITY OF SAN BERNARDINO

Desc 23

1

law you can't, but under federal law you can, and the judge

2

appeared to be about to do that.

3

Number one, it's a (c)(5)(D) issue.

4

it.

5

the legal decision the Court has to make.

6

discovery on that.

7

Nobody challenged

And the rest of it, quite frankly, just doesn't matter toSo they don't need

I'm going to take as undisputed that there was no term

8sheet for a plan.

9

the time when they filed.

10

actually, more importantly when the resolution -- the file was11passed on July the 18th, 2012, I will discuss later why I think12

the fact that they didn't have a plan or term sheet isn't

13

important, but I'll take that as true.

14

need discovery on that.

15

There was no proposed plan of adjustment at
Then I'll discuss why I think --And therefore, we don't

There aren't enough employees in the financial

16

department.

17

I'll take that as true.

18

has enough people in their financial department.

19

not at issue, so there's nothing there about the numbers.

20

actually enhances why the City needed the protection of

21

bankruptcy, more than it says they didn't file in good faith.

22

They needed that breathing spell to get their house in order23

when they came to finally recognize we don't have enough cash24

to make payroll if we pay everybody else on time.

25

How many times have we heard that in a courtroom?
I don't think anybody says the City
Insolvency is
It

And part of the reason they didn't have enough staff
EXHIBIT A PAGE 106

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 112 of 244
CITY OF SAN BERNARDINO

Desc 241

is because they didn't have enough money to have enough staff.

2

You know, the tail is chasing the dog on that issue.

3

wherever that came up in open court or in the arguments made by

4

CalPERS, first of all, it doesn't paint the City as a black-hat

5person because they don't have enough people, and it actually

6

helps the City's case far more than it helps CalPERS' case.

7

Because it really demonstrated, in a very concrete way, how the

8City is trying to survive without enough employees because it

9doesn't have enough money.

10

employees, not only can it not get its books and records in

11

order quickly without the help of their consultants, but it's

12

also is having problems with the health, welfare, and safety of13

its citizens, with regard to the safety unions, and just other14city-maintenance issues that undoubtedly are sloughing because

15

there isn't enough of staff in any department.

16

So

And because it doesn't have enough

The City clearly paid things that might be17

preferential transfers; they did make some large payments.

18

City's never questioned what CalPERS has asserted to be a true

19

fact in that area:

20

transfers that occurred within the ninety days of filing21

bankruptcy.

22

true.

23

happened, or did it happen, because it happened.

24

find that it does not affect the desire to effect a plan or25

good faith.

Thethe large, potentially preferential

And so therefore, I'm willing to assume that is

I don't see any reason to discover on that, what
I'm going to

It is a recoverable preferential transfer, if in
EXHIBIT A PAGE 107

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 113 of 244
CITY OF SAN BERNARDINO

Desc 25

1

fact, it was preferential.

2

believe that Section 926 says somebody else can do it.

3

those monies, if they were preferential, will be recovered.

And if the City won't do it, I
And

4

The argument, and I'll take it as an offer of proof

5

from the City, is that they were cash-outs to employees, that6

the Labor Code requires you to do certain things.

7

undoubtedly require you to do certain things when people

8

terminate from the City with regard to making lump-sum

9

payments.

The TAs

10

And apparently the City did that.
And you know, the employees of the City weren't

11

stupid.

12

ways to cut their pay if they could, and anybody that wanted

13

job security that had any other options was going to terminate

14

and leave.

15

that had to go out to them.

16

those are recoverable and I don't think we need any more

17

discovery on that, or that it is even going to be relevant to18

the Court's ultimate determination.

19

The City had already laid off some, was trying to findAnd apparently that exasperated the amount of cash
But again, if they did it wrong,

CalPERS, the other issue in the immediately post-

20

petition facts is the City didn't consider any alternative when21

it adopted the resolution to file Chapter 9 on July 18th.

22

will admit the record is kind of slim in that area.

23

report, I looked at them, and said forty-five million dollars

24

is a lot.

25

because no City does.

I

The budget

We don't have any quick way to raise revenues
And this deficit is such that there's no
EXHIBIT A PAGE 108

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 114 of 244
CITY OF SAN BERNARDINO

Desc 26

1

way we can pay everybody that is due on July 1st and during the

2

fiscal year 2012-2013.

3

the protection of Chapter 9.

And you know, it kind of said we need

4

Certainly, there are many of the reported cases where5

the cities much more seriously tried to not file Chapter 9 once6

they engaged in thoughts about it than this City did.

7

take that in the hopper when I analyze what, if any, effect8that has on the desire to effect a plan of adjustment or to

9file in good faith.

And I

10

So that is a somewhat troublesome issue, but again,

11

I'm going to assume that they did only what the budget report12

said, and what City Council -- Common Council meeting minutes

13

reflect they did in July, about thinking about anything else.

14

And it was fairly limiting.

15

be done there because I'm assuming they did very little else.

16

The post-petition facts that are raised in the 56(d)There's no discovery then needs to17

motion:18

regarding the plan.

19

wasn't a lot.

20

maybe I don't know of.

21

Clarkson about some of the union issues.

22

authorization from the City of Ms. Dawby (ph.) and Mr. Lubic

23(ph.) to meet at least with the unions about what the City

24

would impose on them if they didn't agree.

25

there were no meaningful negotiations with creditors
I guess that's post-petition.

Well, there

That's true -- that I know of, but then again
I know there's a mediation with Judge
I know there was some

The unions don't think that was a negotiation,
EXHIBIT A PAGE 109

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 115 of 244
CITY OF SAN BERNARDINO

Desc 271certainly under labor law, and I haven't ruled yet on what is a2

negotiation to meet the Lisco (ph.) standard of 365 and the 365

3motion.

4

uncontroverted.

5

discover about that?

6from the unions and denied it because there's no more to be7

discovered about what happened or didn't happen post-petition.

8

And I think -- I take those facts as really
What happened happened.

What are we going to

You know, I ruled on a motion to compel

CalPERS argues there was no pendency plan until

9

November 26th.

10

discover about that?

11

impliedly ordered them to, which of course I can't order them12

to do anything under 904, so I didn't do that.

Well, there wasn't.

What are we going to

And that they only filed one because I

13

But I would say that, you know, the record reflects

14

they -- it wasn't -- they didn't adopt the pendency plan in a

15

vacuum with doing nothing before.

16

emergency budget in July and their pre-pendency plan on August

17

30th.

18

to happen because they implied that payments would be made that19

weren't made immediately, and the City never had the ability to

20

make.

21

plan, they kind of settled the pre-pendency plan to show why

22

they couldn't, you know, do it without impairing their23

contracts.

24

we're going to do to balance our budget.

25

afterward complained it was too short.

They did adopt that fiscal

Now, they weren't a very good road map for what needed

But I think they kind of -- the way I read the pendency

And then in the pendency plan they say this is what
And then they

EXHIBIT A PAGE 110

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 116 of 244
CITY OF SAN BERNARDINO

Desc 28

Well, without the financial budget detail breakdown,2

which was eventually done by the City after the first of the3

year, everything was in that pendency plan that was in anybody

4else's.

5

supposed to be.

6balance their budget while the plan of adjustment is being

7

negotiated.

8budget there with that detail that shows how they're going to

9balance it.

10

And there's no blueprint for what a pendency plan is
It's supposed to describe how they hope to

And it did.

I mean -- and there's a two-page

Now, obviously they made some assumptions:

number11

one, that their imposed conditions -- they actually only

12

imposed on three of the unions because four of them agreed --13

were in place.

14

they were unless they were implementing what they said they15

were going to try to negotiate but they ended up imposing on

16

the three unions that didn't agree.

17

to be discovered about the pendency plan.

18

Their employee budgets couldn't have been what

So again, there's nothing

The next issue is no one has been assigned in the City

19

to prepare the plan.

20

not be, but I also know and was a sign because the financial

21

staff is short.

22

doing is a move toward what they need to prepare a plan.

23

without all the things they've been doing -- slowly, agreed,24

slowly, and with short staff and consultants doing the work for25

them -- are necessary for them to ever get a plan in place

I'm going to take that as true.

It might

Certainly everything that the City has been

EXHIBIT A PAGE 111

And

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 117 of 244
CITY OF SAN BERNARDINO

Desc 291

because they've got to get a handle on their debts and their2creditors -- I mean, their assets and their creditors, or their3

income and their creditors.

4

one has been assigned in the City staff to prepare a plan.

5

Quite frankly, attorneys usually do it and I don't know that

6that has started or not.

7

confidential, but I'm going to assume for the purpose of my8legal ruling, that no one has been assigned, and therefore,

9

there's nothing to discover there.

So I will take it as true that noAnd whether it has started might be

10

CalPERS' next argument is they didn't get reconciled

11bank statements until February, and other financial data they12

asked.

13

don't see that that matters that CalPERS didn't get what it

14

wanted.

15

If that's an issue at all, it's a plan issue.

And I

Their expert, Mr. Christopher Lee, tells me that the16City was unable to do cash projections until April, and that17

somehow that affected their desire to effect a plan of18

adjustment.

19

adjustment until they can do cash projections, but I'm not

20

prepared to find it affects their desire.

21

true.

22

It might affect their ability to do a plan of

So I'll take that as

There's no discovery that's needed on that.
They paid some pre-petition claims post-petition and23

they admit they did a couple of trade creditors:

24

forgot what the other one was.

25

to come up when you have to treat everybody the same in a plan.

fuel and I

If they did that, that's going

EXHIBIT A PAGE 112

Case 6:12-bk-28006-MJ

Desc 30

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 118 of 244
CITY OF SAN BERNARDINO

1

But I don't think it's a good-faith issue, which I think is2what is argued by CalPERS.

3

that and put that one in the hopper when I rule.

4

So I'm going to assume they did

They haven't paid the administrative expenses -- them,

5

CalPERS -- that have accrued post-petition.

6

is an open legal question whether there are administrative

7

expenses in a Chapter 9.

8

if they wanted me to decide that and they said not yet.

9

not going to assume there are or aren't, but they haven't paid

10

them.

11

no discovery to be done there.

First of all, it

I asked the parties back in January

They haven't paid CalPERS.

I agree with that.

So I'mThere's

12

They accrued some cash post-petition.

13

hope that ever debtor was accruing some cash before they

14

proposed their plan because there are some things that usually15

you need cash for -- maybe or maybe not, depending on whether

16

there are administrative expenses on petition date.

17

know what -- how that's no desire to effect a plan or good18

faith.

19

post-petition.

20

So I'm going to assume that's true.

Well, we would

I don't

They accrued cash

And then there's this broad statement the City

21

withheld financial information.

22

argued in court by Mr. Lubic at one of the status conferences

23

the City attorney adamantly deny there had been any withholding

24

of any financial information.

25

telling me what type of information or why it's important to

I will say that when that was

But CalPERS argues that without

EXHIBIT A PAGE 113

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 119 of 244
CITY OF SAN BERNARDINO

Desc 31

1

the issues I had to decide, so I didn't know what to do with

2

that.

3

And then they argued Ms. Travis-Miller didn't have the4

authority to sign the statement of qualifications.

5satisfied by the legal argument of the City, which I think is

6very clear, that the Resolution 2012-206 authorized her to take7

the action necessary to prosecute filing of the Chapter 9, and8that the Common Council had the authority to delegate that9authority to Ms. Travis-Miller under the City's Charter 100 and

10

some other subsections.

11

before the Court.

I am

And therefore, that's a nonissue

12

There are some other issues that were not in those13

three categories that are brought up in the declaration from

14

Mr. Lubic in support of a 56(d) motion that I think I need to15

address to make it clear I didn't ignore what CalPERS thought

16

they wanted to get.

17

They want to take the depositions of Mr. Busch and Mr.

18

Simpson.

19

declarations that the City has relied on for its uncontroverted

20facts; insolvency isn't at issue so I don't know what else is21even close to relevant that Mr. Busch and Mr. Simpson might

22

say.

23

statement of uncontroverted facts and all the Busch and Simpson

24

declarations do for that statement is they identify the reports

25

that were prepared by either staff or the consultant andI'm willing, and primarily because they provided

Fiscal emergency's not at issue.

So I looked at the

EXHIBIT A PAGE 114

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 120 of 244
CITY OF SAN BERNARDINO

Desc 32

1

presented to the City Council:

2

emergency budget, the pre-pendency budget, the pendency plan,3

the further budgeting that happened after the first of the4year; and that is the only thing those declarations do support.

5

So there isn't anything that is genuine issue of fact to6

discover from either Mr. Busch or Mr. Simpson.

7

think that their depositions aren't pertinent on any subjects

8

before the Court.

9

the budget report, the fiscal-

So I would

In the declaration, there are some things set forth in10paragraph 16 they want to discover about the knowledge of the

11City about its financial problems earlier.

12

what I think of the remote facts.

13

will take it as a fact that the City knew it had financial

14

problems way before they filed.

And besides, if it is an issue

15

at all, it's a 109(c)(2) issue.

And therefore, I don't think

16

they need discovery on that.

17

I've already said

They are not relevant, and I

There is no pre-filing plan to operate without paying

18

administrative expenses.

19that I haven't reached, that there are any.

20

true that they didn't plan to pay those expenses after July 1.

21

And they didn't.

22

and CalPERS I think is undisputed and not at issue.

23

Again, it assumes a legal conclusion
And I take it asThat there was not enough money to pay themThat they -- they want discovery on the pre-petition24

cash-outs.

25

legal impact on my ruling, I would take that into

Again, I will assume they did that, and if it had a

EXHIBIT A PAGE 115

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 121 of 244
CITY OF SAN BERNARDINO

consideration.

2

Desc 33

And I will, when I rule on the law.

Also in that paragraph in Mr. Lubic's declaration, the3authorization of Ms. Travis-Miller, they want to depose her

4about her authority.

5

make it clear she had the authority.

6

I think the resolution in the charter

Again, Simpson's -- Simpson again; he was in there a7

couple times.

8

reports that were placed before the City Council that they9considered.

10

depositions of Kennedy, Passion (ph.), McNeely, Wilson,

11

Weinberg, Majaj, who are all remote and not relevant to what12

was in the City's desire on the day they filed their petition.

13

Again the -- and here's where I'm gonna, just because

The only thing he did was authenticate the

They want to take these five -- five or six

14

it's in my notes here -- talk a little bit more about the15

subjective intent, which I guess is why they want to take those

16

depositions.

17things were being done.

18

done is what matters.

19

They imply that they want to inquire into why
Why doesn't matter.

They were being

State of mind is not an issue.

In the Stockton case, Judge Klein said the state of20

mind of an individual or an employee is not relevant to21

anything that is an act of the City.

22

the legislative privilege would prevent inquiry into those23

areas anyway.

24

an issue.

25

Chapter 11 cases, say a debtor's subjective intent is not at

And then he talks about

Pierce County supports that state of mind is not

The Ninth Circuit cases, Arnold and Marsh, which are

EXHIBIT A PAGE 116

Case 6:12-bk-28006-MJ

Desc 34

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 122 of 244
CITY OF SAN BERNARDINO

1

issue.

2closed-session privilege, we have the legislative privilege,3

none of which can be discovered about.

4

be discovered in taking depositions of any of these City5

employees or staff members or consultants on any issues that6

have to do with the intent of the City.

7

And on top of that, in closed session we have the

So there is nothing toAnd finally, I have Exhibit A to Mr. Lubic's

8

declaration, the documents they want from the City.

9categorized them in four or five different categories as to why

10

I think they are not likely to lead to any genuine issues, or

11

not going to lead to any genuine issues.

12

I have

The following documents were about issues that I have13

assumed are true, or are about (c)(2) or (c)(5); that is14

request 3, 4, 5, 6, 7, 9, 10, 11, and 13.

15

are legal conclusion type of documents and there wouldn't be

16anything pertinent to discover there.

Documents 8 and 12

17

Other documents that are either in the public record

18of the City Council in open meetings -- or Common Council -- I

19will do that throughout; I'm sorry -- or they would be in

20

closed session and then therefore be subject to a legislative

21

privilege or a closed-session privilege.

22

requests 1, 2, 8, 16, 17, 18, 19, 20, and 21.

And those are23

Those documents which might be about facts that I am

24

assuming are true against the City are document categories 9,25

10, 11, 23, 24 and 36.
EXHIBIT A PAGE 117

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 123 of 244
CITY OF SAN BERNARDINO

Desc 35

And then a whole group of documents that they -- there2

isn't even an argument from CalPERS anywhere in their papers

3that I could figure out why they thought they were relevant:4

14, 15, 16, 25, 26, 27, 28, 29, 30, and 31 through 35.

5there's nothing raised in the document request that needs

6

discovery for the Court to make the legal conclusions on

7

109(c)(4) or 921.

8

So

Then with regard to the evidentiary objections, I

9would sustain all of them because it doesn't matter except for10

the following things that support the uncontroverted facts that11

the City has filed in support of its motion.

12

Ms. Hanna, who is the city clerk, has essentially laid13

the foundation for and authenticated the agendas and minutes of

14

the City Council meetings that occurred in July and other15

times -- July of 2012 and subsequent months, at the relevant

16

meetings where they heard the reports, discussed them in open

17

session, adopted the resolutions.

18

the right person to authenticate the agendas and the minutes

19

and the reports that were in the agenda packages that were20

presented to the Common Council.

21

and Ms. Travis-Miller also authenticated the July fiscal-

22

emergency plan, the cash-flow projections that were presented

23

to the budget.

24

to authenticate those documents.

25

both sitting in the meetings, if there was some comment like a

The city clerk is obviously

She authenticated, and she

There is no question that have the foundation
And to the extent they were

EXHIBIT A PAGE 118

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 124 of 244
CITY OF SAN BERNARDINO

Desc 361

meeting took place, and it was in open session, and everybody

2

was there, they were there; they have personal knowledge, it's3

not hearsay, and they may testify to those facts.

4

Mr. Busch also authenticated the various financial

5

documents that his firm presented to the City which I think

6

entailed the July fiscal-emergency plan, the cash-flow

7

projections, the pre-pendency plan that was adopted in August.

8

I think there were some updates to the pre-pendency plan,9

although I'm not sure that was in the statement of

10

uncontroverted facts.

11authenticate those things.

12

presented to the City.

13

overrule any objection to his doing that.

The pendency plan, all he did was
They were prepared by his firm,

They are what they are and I would

14

The Dubrow (ph.) and Lubic (ph.) declarations, about

15

all I'm going to take out of them is there was some attempt to

16

talk to the unions about what they were going to impose.

17

it wasn't a negotiation, but they met with them, they tried to18

meet with them, and they basically said this is what the City

19

has to do to balance its budget, and there's nothing else that20

their declarations support in the statement of uncontroverted

21

facts.

22

and I would not consider it.

23

Maybe

So anything else they said I would grant your objection
And I have not.

And then there's another Busch authentication of the24

April 22nd budget that was adopted by the City, again the25

Common Council, in an open meeting.

And his firm, as now
EXHIBIT A PAGE 119

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 125 of 244
CITY OF SAN BERNARDINO

1essentially the head of the financial department, as

2

consultants, prepared that budget.

3

knowledge to authenticate that document.

4

Desc 37

He clearly had the personal

Those are the only things in any of those declarations

5

that the City has relied on in its statement of uncontroverted

6facts.

7

doesn't matter.

8

objections.

So I will sustain any other objections because it

9

And so that's how I rule on the evidentiary

With regard to the City's, I would let everything in

10

because there's nothing in there that I have put in the pile of11

facts that have been -- either I'm going to assume what was put

12

in their declaration is true and I will rule it doesn't matter13

on the legal issues.

14

detail.

15

and I'm not going to rule on those objections.

So I didn't even go through them in

16

It is perhaps improper to not do that, but I didn't,

So that's why I am denying the Rule 56(d) motion.

I

17

have come to the conclusion that this matter can be decided as18

a matter of law on the statement of uncontroverted facts, and19

that there are no general issues to be discovered.

20

What that means is my ruling would be up or down for21

the City.

22

judgment motion on eligibility.

23

were undisputed, and again I am assuming many of the assertions

24of CalPERS to be true, and will analyze them in my ruling, I

25

would rule one way or the other, up or down for the City today.

And I said that when I set this up as a summary
If I really thought the facts

EXHIBIT A PAGE 120

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 126 of 244
CITY OF SAN BERNARDINO

Desc 38

1

Once I get here, I either have to say the City is

2eligible or they will never be eligible, and therefore, the3case should be dismissed.

4

but if I didn't weigh the facts as I weigh them, under the case5

law that I have read, I would have to rule for CalPERS that the

6City is ineligible and the case would be over.

7

And my ruling is the City's eligible

And that is exactly the cross-summary judgment motion

8

that I told CalPERS would be implied if, in fact, I went the9

way I did, and that is where I'm at right now.

10

as a matter of law, based on the facts that are either

11

uncontroverted or asserted to be true by CalPERS, that the City12

is eligible on the issues, addressing again only (c)(4) and

13

921.

14

So I am ruling

Here's what the City has said are their uncontroverted

15facts in support of their desire to effect a plan of

16

adjustment:

17

staff report prepared on July 18th, 2012; the conclusion of

18

those reports that the City was in a dire cash-flow position;

19

that they had exhausted their general fund reserve; they had a20

negative cash balance going forward; and that if they paid

21

every due obligation in the 2012-2013 fiscal year, there would

22

be a 45.8-million-dollar deficit.

23

be somewhat different.

24

mean, maybe it's not forty-five; maybe it's forty.

25

wouldn't matter.

the budget report prepared on July 9th, 2012; theAgain, those numbers could

And the outcome would be the same.
That

EXHIBIT A PAGE 121

I

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 127 of 244
CITY OF SAN BERNARDINO

Desc 39

1

That the City had already depleted any reserves it had

2

in its general fund; had cut jobs and services because they had

3laid off the staff or the employees of the City that did

4essential services to the City, including safety, police and

5

fire.

6

streets don't have potholes.

7

potholes, but the less staff you have to fix them, the more

8

there are.

9

City when it doesn't have enough money.

10

They don't really argue it, but I can't imagine theI mean all cities' streets have

And other just kind of things that happen around a

They had made some preliminary efforts with the11unions, I think over a couple of years before they filed, as

12

almost every City has been doing between 2008 and 2012.

13

than lay off their employees, see if they can get some contract

14

budget concessions.

15

necessarily successful, but the City had cut some pay or laid16

some people off.

17

Rather

I'm not saying any of those were

Again, the budget report indicated they had sold18

whatever liquid assets they thought they could.

19

necessarily liquid but they had liquidated what assets they20

could.

21

could do in a short-term basis to raise their revenues.

22

not easy for a City to raise their revenues.

23

want to impose a tax, they needed to get a vote.

24

City ever does that because they don't get the vote.

25

their opportunities to get financing from some outside source

I mean not

And they had taken the very limited steps that they
It is

You know, if they
Almost no
And soEXHIBIT A PAGE 122

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 128 of 244
CITY OF SAN BERNARDINO

Desc 40

were extremely limited.

2

They also asserted as an uncontroverted fact that3

before August 1st, they did not pay CalPERS.

4

after July 1.

5They had defaulted on making their regular bond payments on the6pension obligation bonds.

7

civil rights judgments that they had settlements on, and they8

had defaulted in paying some of their trade debt or at least

9

were late paying on it.

10date, it was not paid.

11

They didn't,

They didn't pay their retiree health benefits.

They had defaulted in paying the

And so therefore, on the petition

They assert they adopted the Resolution 2012-206, that12

they authorized the filing of Chapter 9 on July 18th, after, I

13believe, three open Common Council meetings.

14

their statement of qualifications from the authorized City

15

manager that was filed with this Court in August.

16

their fiscal emergency plan, I think July 24th, at a Common

17

Council meeting.

18

August 30th, 2012.

And they madeThey adopted

They adopted their pre-pendency plan on

19

Again I note, by reading the pendency plan, that there20

was some further adoptions that had to do with the pre-pendency

21

plan that occurred in October, and actually the City asserted

22that but there was a flowing process about the pre-pendency

23

plan.

24

and they adopted their budget on April 22nd, 2013.

25

They adopted their pendency plan on November 26th, 2012,

They asserted as an uncontroverted fact that each plan
EXHIBIT A PAGE 123

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 129 of 244
CITY OF SAN BERNARDINO

Desc 41

1

or budget showed they didn't have enough money to pay all their2

contracts as they came due; that they had no choice other than3

to cut expenses, a lot of it kind of across the board, because

4of the forty-five million dollar shortfall, and they, post-5

petition, had attempted to get the unions to agree -- maybe

6

I'll use those words --- to the provisions that affected the7sharing of the CalPERS pay that, in fact, were accepted by four

8

unions and not accepted but imposed on January 28th, 2013, that

9

allowed them to be able to perform that number that was in the10

pre-pendency plan with regard to payments.

11

assert that with regard to when anything was due with regard to12

a pre-pendency plan, they met any deadline imposed by the13

Court.

14

And they also

CalPERS asserts as the facts that are uncontroverted,15

and again, I am assuming many of the facts that they wanted

16

discovery on to be true, the City knew of impending doom -- my17word -- 2007 and onward.

18

cases when they should have known they didn't have the money to

19

pay them.

20

paid a few -- the City says two; it could more than that but it21

wasn't a major number -- of pre-petition creditors post-

22

petition.

23

sheet, prior to filing.

24

with the major creditors or creditor groups prior to filing.

25

They filed their pre-pendency and pendency plan late, not

The City settled the civil rights

The City had cash in the water department.

The City

The City didn't have a plan in place, even a term
There were not meaningful negotiations

EXHIBIT A PAGE 124

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 130 of 244
CITY OF SAN BERNARDINO

Desc 421

timely.

2

CalPERS post-petition.

3

cash forecasts until April 2013.

4

in its fiscal department to prepare all the reports that

5

CalPERS wants:

6budgets, and adopt a budget.

7

reports it wanted.

8

I think that was their word.

9

assume all those things are true.

10

The City didn't pay the "administrative expense" to
The City did not have the ability to do
The City has inadequate staff

do cash-flow analysis, prepare pendency
And CalPERS didn't get all the

And that the City finances are unreliable.
I am -- again, I'm willing to

The case law on desire to effect a plan under11

109(c)(4) is kind of all over the place.

12

except for Vallejo; there are no other reported appellate

13

cases, other than the one I wrote on this issue.

14

say there's certainly -- Vallejo did a lot more than San

15

Bernardino did.

16

Bible, and that's what San Bernardino is going to have to do.

17

Again, the ruling by the appellate court was to affirm the18

subjective finding which we found to be factual.

19

clearly erroneous standard.

20

It's all of my peers,

And I will

So it isn't -- I can't say that with the

So it was a

There's no question that there's no bright-line rule21

because the inquiry is subjective in nature; that is -- Vallejo

22says that.

23

inquiry all rely on objective facts.

24

the minds of the City Council -- Common Council or any City

25

Council or the authorizing body, but the acts that were done by

But again, the cases that talk about the subjective
It is not an inquiry into

EXHIBIT A PAGE 125

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 131 of 244
CITY OF SAN BERNARDINO

Desc 43

1

the petitioning Chapter 9 debtor, not the state of mind that go2

into the subjective inquiry as to whether a City desires to3effect a plan.

4

That also is supported by the Stockton case, the5

Pierce County case, the Arnold and Marsh again are Chapter 11

6cases, but the subjective intent is not at issue in determining

7

the intent or the good faith, and that they cannot inquire into8

the state of mind of the Common Council because of the9legislative privilege, the closed-session privilege.

10

again, the City acts as a body so I don't -- even if you could

11

inquire, I think their state of mind is irrelevant, so as long12

as the evidence show, and this is critical, that the purpose of13

filing Chapter 9 is not simply to buy time or evade creditors.

14

That statement is in Vallejo; we got it from Colliers.

15

is recited in another of other cases that look at this issue.

16

Colliers implies it's filing a statement of qualification and17

almost nothing else is needed, that that's enough.

18

pretty low bar and none of the cases have done it that simply.

19

But that the statement of qualification as certainly a piece20

has been adopted by the New York Off-Track Betting case, the21

Pierce County case in western Washington.

22

all looking at objective facts.

But

And itThat's a

And again they're

23

What is critical to this Court is there's no case out

24

there, even a suggestion in Collier, that for (c)(4), one, the25City must have drafted this plan before it filed.

If anything

EXHIBIT A PAGE 126

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 132 of 244
CITY OF SAN BERNARDINO

Desc 441

it's a (c)(5)(A) or (B) issue that there's a deadline for2

filing the pendency plan in order to show a desire.

3

City must have negotiated with the major creditors pre-4

petition, that's a (c)(5) issue or a (c)(2) issue under the5state authorization.

6

That theIf, in fact, the City had to do those things, I'd rule7

for CalPERS and the case would be dismissed.

8

be the judge that makes the case law that says the City must do

9

those to desire to effect a plan.

10

tells me that then I would dismiss the case, but there's not.

11

I am not going to

If there's case law that

What I think is pertinent here, the cases, the few

12cases that scrutinized before and might have dismissed a case13

for that -- and I don't think there were any that dismissed a14case under (c)(4) and only that ground -- the City wasn't

15

evading a creditor.

16

adopted the resolution to file on July the 18th, because then

17

they had their civil rights judgment and people chasing them.

18

Where they -- where they have -- cases I've looked at, this is

19

a wrong coverage for filing a Chapter 9, is where there's like20

a single creditor that was about to execute in the City's

21

account, and that was the only reason to file a Chapter 9.

22

They might have been solvent.

23

they were evading the creditor.

24

foreclosing on any property of the City.

25

cases for collection against the City, I -- nobody's everMaybe they were on August 1st, after they

And it was a litigation tactic;
I don't see anybody
If there were civil

EXHIBIT A PAGE 127

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 133 of 244
CITY OF SAN BERNARDINO

Desc 45

1

brought them to my attention -- you haven't paid our bill, I'm

2going to sue you in civil court.

3

argued that there was somebody like that out there with a4

judgment that was trying to collect that from the City.

5

there was, but nobody's ever argued that.

6

evidence before the Court at all that the City failed -- filed

7

to evade creditors.

8

Certainly, nobody's everMaybe

So there's no

The buy time of it -- what reorganization law under9

the Bankruptcy Code isn't there some buy time aspect to --10

Chapter 13 filed to save your house and buy time for the11

foreclosing home lender to try to reorganize your financial

12

situation so you can pay them back over time.

13

mean, the precipitating factor of most filings is the14

foreclosure is tomorrow, the car is repossessed off my driveway

15

this morning.

16

filing of any Chapter 9, but it's the immediacy -- the buy time17

and only buy time, I think, is what they mean when they put

18

those words in the cases.

19

Chapter 11 -- I

So there's always some buy time aspect to the

To get a breathing space is clearly supported by the20

law so that we can work out a plan to pay these people back21

over time or determine whether we can impair them.

22

nothing that indicates, through all this objective evidence

23

that has been presented to the Court, that the City wanted to24

do anything other than that, which is to get a balanced ledger

25

in place and then see whether they can find a way to either

And there's

EXHIBIT A PAGE 128

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 134 of 244
CITY OF SAN BERNARDINO

Desc 46

1

make a deal through negotiation with their creditors or some2

ruling from a court that says you don't have to pay them in

3

full.

4

So the City looked down the -- well, what I put down

5

as the barrel of the guns and faced reality.

6

late.

7

under the case law and under my finding.

Maybe a little

Maybe they should have desired earlier what that desired

8

They were out of cash and if they paid their bond9

obligations and they paid CalPERS, they couldn't pay their

10

employees, and they thought the only way we can figure out how

11

to do this is to have a little time to restructure our debt.

12Admittedly, it was a slow start.

It took them a while13

to get their books and records in order.

14

budget was perhaps intentionally unbalanced and was not

15

performed.

16

thought they were going to perform it because they didn't have17

the money, and that was clear.

18

The pre-pendency

I mean, they couldn't have adopted that plan and

They eventually got their pendency plan.

When they19

couldn't get an agreement with the unions, they imposed on them

20

what they needed to impose in order to have that pendency

21

budget work.

22

They didn't have access to more money, at least not23

more money quickly.

24

easy.

25

it's particularly not easy to close fire stations and lay off

They had to make cuts.

Those cuts weren't

It's never easy to lay off an employee.

It's never --EXHIBIT A PAGE 129

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 135 of 244
CITY OF SAN BERNARDINO

Desc 471

police or do those things that the citizens call about when2

something isn't being attended to.

3

The police attorney -- police's attorney has stood up

4in this court and argued several times, crime is on the rise,5

public safety and welfare are at risk, the City needs to get

6going to a plan.

7

The objective evidence tells me that the City desires

8

to formulate a plan.

9

that, and therefore, I find as a matter of uncontroverted fact

10

that the City desires, under (c)(4), to formulate a plan.

11

It is their only hope and I recognize

We then go to 921, dues.

The debtor filed their

12

petition that they received uncontroverted facts that are

13

similar to those that they asserted in favor of their 109(c)(4)14argument, and not surprisingly, you can't create objective

15

evidence.

16

they point out that Mr. Busch and his firm have gotten the17

books in order, can now do cash projections, adopted a budget

18

in April and are in a position to start moving to a plan of

19

adjustment.

20

It either happened or it didn't.

And in addition,

They have pointed out they're trying to get more

21

people in their financial department so they can, in fact, do

22

that and they have argued that they needed the breathing space

23

that is accorded them in Chapter 9.

24
25

The City is within the four -- they argue that they
are within the four corners of why the legislature enacted
EXHIBIT A PAGE 130

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 136 of 244
CITY OF SAN BERNARDINO

Desc 48

1

Chapter 9 to allow temporary relief if a City needs financial

2

rehabilitation.

3

The budget report of July looked at alternatives again quickly

4in the town council looked at them quickly and really said we

5

got a forty-five million dollar deficit; we need to file.

6

The City was insolvent; everybody admits that.

CalPERS' facts on the issue of good faith -- and many7of them are the same, and as I recite them, I am going to8assume the worst of the facts asserted, if they might

9

discover -- if I allowed them discovery and rule as a matter of10

law that it does not mean the City didn't file in good faith.

11

There are a couple -- the water fund issue.

12

I'm assuming that there are money in the water fund, but the13City couldn't spend it so I tilt again that -- against that one

14legally.

15

Again,

And the other fact that I'm about to recite that I

16think there's some countering evidence on is that the -- there17

weren't any alternatives considered by the town council.

18

There, again, briefly, in the budget report there were, but it

19

was a very brief consideration of alternatives and CalPERS

20

appropriately raises that, because the case law brings up how

21much did the City think about doing something else other than

22

filing, and it matters in those cases.

23

Again, they argue there was no plan pre-petition;

24

admitted they did not negotiate pre-petition.

25

knew of their insolvency long ago.

Admitted they

Admitted they negotiated
EXHIBIT A PAGE 131

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 137 of 244
CITY OF SAN BERNARDINO

Desc 491

the civil rights settlements when they didn't have the money to

2

pay.

3

preferential transfers of two million dollars between May and4July of 2012.

Admitted they paid some pre-petition claims

5post-petition.

They didn't plan on how they're going to pay

6

their administrative expense, CalPERS, post-petition if there7

is such a thing, they did not really negotiate with the unions

8

post-petition before they imposed the contract.

9

actually don't have to get four of them to agree so they did

10something and they didn't get an agreement from the other11

three.

12

Admitted they paid cash out to terminated employees,

Well, theyThose are the CalPERS that -- or there are a few more.
The City didn't have enough staff, so you couldn't do

13

a cash flow projection until April.

14

post-petition.

15

fund had money; I already said what I have to say about that16

and that is not an issue.

17
18
19

They didn't use that cash to pay CalPERS.

Fire

Now, I look at the case law in light of theuncontroverted facts that I'm willing to consider.
Stockton really didn't have a 109(c) good faith.

20

guess they did.

21

were fighting that.

22

The City approved cashI

I guess I would -- maybe I just thought they

Judge Klein -- I'm not sure I really adopt -- Judge

23

Klein says if you meet eligibility under 109(c), then the24

presumption is you filed in good faith.

25

parsing of the words.

He doesn't have theI don't have to adopt that burden shift
EXHIBIT A PAGE 132

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 138 of 244
CITY OF SAN BERNARDINO

Desc 50

1

and I don't adopt it because I -- I don't want to take the2

problematic outcome of shifting the burden on that.

3

willing to say the City still has a preponderance under 921(c)4

to show it filed in good faith.

5faith inquiry is again subjective but found by objective

6

evidence and I have, again, looked at the objective evidence.

7

Sullivan County is the one case we could find where

I'm

But it points out the good8

they actually dismissed the case under 921(c).

9case from the '80s, '90s; long before any of the others, and10

what happened in Sullivan County is they didn't agendize a11consideration of filing Chapter 9.

12reports, there were being pursued by the creditor and as a13

litigation strategy, to stop the creditor from doing something,

14

they filed -- they authorized after an oral motion at their

15

board meeting to file Chapter 9 and they filed and the Sullivan

16County judge kicked it out for lack of good faith.

17

basically what he said is the integrity of the reorganization

18

process is being impinged upon by this filing because they19

didn't consider anything else and they did it by oral motion

20

and they had no intention of doing anything other than stopping21

the creditor as a litigation strategy.

22

That's an older

There were no written

And

The Pierce County case makes a list -- BAP loves

23

lists; is the trial judge making a list -- "the debtor's

24

subjective belief" -- there's that word "subjective" again,25

whether the debtor's financial problems fall within situations
EXHIBIT A PAGE 133

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 139 of 244
CITY OF SAN BERNARDINO

Desc 511

contemplated by Chapter 9, whether the filing was consistent2

with the purposes of Chapter 9, whether there were pre-petition

3

negotiations, whether the City considered alternatives, and the4scope and nature of the financial problems faced by the City

5

that the City should look at an objective axis.

6

by Town of Westlake City in Texas, the Stockton case.

7

Also supported

Judge Klein said these are the things that one should

8look at in determining whether a city filed in good faith.

9

Have they cut spending?

10

Have they negotiated?

11

significant reductions without impairing the contract?

12

are very important considerations to Judge Klein and to me.

13

And then finally, and then I'll discuss this in a

Is there cash and service insolvency?
Is there an ability to achieve
These

14

moment, the Court's power to dismiss under 921 is permissive,15

not mandatory.

16

Collier's and other cases point that out.

17

Pierce County, New York Off-Track Betting,None of these cases are dismissing for most of the

18

CalPERS factual assertions.

19of them ever say you must have prepared a plan or a term sheet

20

pre-petition in order to have a good faith reason for filing.

21

Nothing about they have to really have gotten their

The evidence is objective.

None

22

act together on their finances before they filed.

23

if that was a requirement -- I realize this is a bad analogy

24

for most debtors, many debtors can file -- many debtors could25

not have their financial -- their financial statements in order

Believe me,

EXHIBIT A PAGE 134

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 140 of 244
CITY OF SAN BERNARDINO

Desc 52

1

and I'm going to assume that there was some late audits being

2

done by the City and that their records were unreliable.

3
4

That they could not do a cash flow projection at thetime they filed was never addressed by any of the case law.

5

There's no discussion that the pre-petition transfers

6that could be avoided would prevent there from being in good7

faith.

8

There's no discussion about they didn't have money to

9

pay administrative expenses post-petition.

10

they were looking at Collier's, Collier's says there are none.

11

None of them complain that there weren't enough people on the

12financial staff.

13

Probably because if

I have looked at these six factors and Pierce County,

14

my peer, making the list and weigh them because they are --15

it's a pretty good list -- desire subjective relief.

16

I consider objective information and ask that the17City -- county -- council, when they adopted their resolution

18

file on July the 18th, they were broke.

19

believed that they could not pay their employees on July 1st

20

without impairing the contract.

21

of finding good faith.

22

They subjectively

I weigh that factor in favor

The financial problems fall within the contemplation

23of Chapter 9 -- yes, they do, in spades.

24

without reorganizing their debt, the City can ever balance its

25budget, because if it paid everything that was due on the date

There is no way,

EXHIBIT A PAGE 135

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 141 of 244
CITY OF SAN BERNARDINO

Desc 53

it was due it was cash insolvent and would remain so.

2

Whether their filing was consistent -- not just the3financial problems, now, the filing was consistent with the4

purpose of Chapter 9, yes, that was their only hope.

5

to reorganize.

6

negotiate a plan with their creditors to the extent they can,7

and if they can't, they need a bankruptcy court to rule on8

whether they can impair a contract unless they're -- I'm not

9looking forward to making that ruling, but we're here for10

that -- only because I hope we can negotiate it but -- and,11quite frankly, the ones that have confirmed plans they have all

12been negotiated.

13

that.

14
15

They need toThat's why there's no court that has ruled on

Again, there were no pre-petition negotiations.

I

would answer that one no.

16
17

They need to have a plan.

They need

And were there alternatives, I answered that one
maybe.

18

And then number 6, the scope and nature of their19

financial problems.

20

how that's different than 2 in the list, but they definitely

21

have problems.

22

Again, yes, in spades.

I'm not quite sure

So it's, four, one, one; four up, one down, one a tie.

23

Under the Pierce County factors, does it define -- insure the24

integrity of this system -- I think it does.

25

abusive.

The City needed breathing space.

This isn't

It could not pay
EXHIBIT A PAGE 136

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 142 of 244
CITY OF SAN BERNARDINO

Desc 541

its employees, its bond creditors, its CalPERS obligations,2

without doing something.

3

needed the breathing space.

4

on July 18th breathing down their neck, but all the civil

5

rights judgment they did is make the City file a little earlier

6

than it wished to and slightly more -- I don't -- disarray is

7

probably too strong a term -- but not as organized as I'm sure8

their attorneys and staff would have liked, but that was after

9

it.

10

9 and was clearly moving in that direction, so they weren't

11

just avoiding that creditor and they needed the breathing space12

for other reasons like everything.

That's what bankruptcy is for.

They

Although there wasn't a creditor

They already adopted their resolution to file the Chapter

13

They had done some steps to cut their expenses.

14

Couldn't happen quickly, but because they had collective

15

bargaining agreements with -- what is it -- eighty-five percent

16of the budget?

17

employees.

18

pay when you have CBAs that affect how you pay your employees

19and pay their retirement and pay their health benefits.

20

I forgot.

It's a large number; that is their

And they had seven unions and you don't just cut

So there's a lot they could do to cut other than lay

21

people off and lack of provision of services, as the service

22

insolvency issue.

23

then I saw it was a term that was in the pre-pendency plan so24

he didn't make it up.

25

I thought that Judge Klein made it up andI think all these weigh in favor of a -- finding the
EXHIBIT A PAGE 137

Case 6:12-bk-28006-MJ

1
2

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 143 of 244
CITY OF SAN BERNARDINO

Desc 55

City filed in good faith.
So finally, there's the aspect that my ruling is -- if3

I were to dismiss under 921 -- is permissive, not mandatory.

4

And I think that's where I get to look at the entire picture of5

what happens if I dismiss the case for lack of good faith.

6

The City has five groups of major creditors -- and I

7

may be missing some, but what I can see, they have the unions,8

they have the bond guarantors, they have the retirees, they9

have the trade creditors and they have CalPERS.

10

one that has objected, and I get the sense from the others that11

they would really like to get onto a plan.

12

their attorneys have indicated that in the statements they've

13

made in court.

14

motion in a joinder and they have never objected and they have15

said every time they showed up in court, they need to move16

toward a plan.

17

CalPERS is being impaired not paid.

18

There's only

Certainly, many of

The bond guarantors are supporting the City's

And they're being impaired, not paid, andThere are many places in the Bankruptcy Code that ask

19

us to look for the best interest of the creditor body when I

20make a ruling.

21

when I consider the permissive or requests to dismiss the case,22

and I think I can.

23

benefited by my finding eligibility and allowing the City to24

move to a plan of adjustment.

25

Chapter 9 if a plan can be negotiated or otherwise confirmed by

I don't know why I can't look at that issue

And I think the entire creditor body is

They will all be served by

EXHIBIT A PAGE 138

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 144 of 244
CITY OF SAN BERNARDINO

Desc 56

the Court, and who would it serve if I dismiss the case.

2

I guess CalPERS thinks it would be, because they're3

the ones asking me to do it.

4

can't make cash where it isn't, and they can't balance a budget

5

that's imbalanced on a cash basis.

6

the money that they want under what they say is their7

contracting statutory right, who isn't going to get paid?

8

the employees?

9employees aren't paid?

10

their actuarial figures that allow them to not have unfunded11

liabilities from cities, but I have no idea why dismissal of

12this case will help that.

13

I don't -- not sure how; they

And they -- if they got allAll

I don't know, how does that help CalPERS if theI mean, obviously, they want to balance

So even the one creditor that wants me to dismiss the14case, I don't know why because I don't know how it would help

15

them.

16

than dissolving the City if they can't reorganize in Chapter 9.

17And, my heavens, I used to represent LA Co., not San Bernardino

18

County, but LA and Riverside county; none of them would even19know how to do it, because they'd never dissolved a city of

20

this size that's been around for a hundred years.

21

Then we have a free-for-all.

I'm not saying necessarily that would happen, but it

22

might.

23

like to avoid that possibility.

24

case.

25

I can't see anything other

Then I guess the City becomes a county, and I would
I'm not going to dismiss thisNow, how far all that impairment of contracts might
EXHIBIT A PAGE 139

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 145 of 244
CITY OF SAN BERNARDINO

Desc 57

1

happen in a plan, I don't know how far it can be done, and I

2

don't know whether CalPERS finds a way to get everything or

3

not.

4

answering them in an orderly fashion here is better than doing5

it in chaos not here.

6

body deserves a chance, the citizens of the City deserve a

7chance.

8

the system is met, perhaps not so gracefully as one might have9

liked, but I find the City is eligible.

10

ruling and I will allow CalPERS to argue as much as they wish,

11

but I think I will rule my tentative at the end of that12

argument.

Those are unanswered questions, but it seems like

13
14
15

The City deserves a chance, the creditor

The purposes of Chapter 9 are met, the integrity of

And it is a tentative

I'm quite firm.
We'll now take a recess for ten minutes and then we

will resume and we will take argument.

Court's in recess.

(Recess from 3:04 p.m. until 3:21 p.m.)

16

THE CLERK:

17

okay, thank you.

18

(Pause)Is counsel all present and ready?

19

THE CLERK:

Remain seated and come to order.

20

THE COURT:All right.

Yes,

We're back on the record in21

the summary judgment motion in the City of San Bernardino.

22

It is time for CalPERS to offer argument.

23

MR. GEARIN:

Good afternoon, Your Honor.

THE COURT:Good afternoon, Mr. Gearin.

24
25

I'm here in

my --EXHIBIT A PAGE 140

Case 6:12-bk-28006-MJ

1
2

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 146 of 244
CITY OF SAN BERNARDINO

MR. GEARIN:

Desc 58-- customary position of trying to change

your mind about something.

3

THE COURT:

I know.

4

MR. GEARIN:

One of these days, I'll --5

THE COURT:

That's what I thought.

When you stood up

6

there I thought, I know what he's going to say first:

7

am again.

8

MR. GEARIN:

here IOne of these days I'll win the coin flip

9with Mr. Lubic and I'll appear on a matter that you're going to10rule in our favor, Your Honor, so.

11
12

THE COURT:
one.

Yeah, it does seem that you're always theNothing against you.

13

MR. GEARIN:

14

Your Honor, I guess I'll start with why is CalPERS

I understand.

15

here, and why is CalPERS the sole remaining party that's

16

objected to eligibility.

17

And I start with where I think we initially introduced

18

CalPERS and its position and its role, and why it was

19

participating in this case.

20

to ensure the integrity of the Public Employees' Retirement

21

System for the State of California, and it's taking that22

responsibility very seriously.

23

here regarding the state's ability to protect its Public

24

Employees' Retirement System, and we believe this case is an

25

important aspect of that, and the decisions that are made here

And CalPERS has the responsibility

And there's an important policy

EXHIBIT A PAGE 141

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 147 of 244
CITY OF SAN BERNARDINO

Desc 59

can have an impact on that system.

2

And we think that this decision about eligibility is3

important.

4

into Chapter 9, who is a worthy applicant, a worthy participant

5in the Chapter 9 system, there needs to be a bar set, there6

needs to be a standard, there needs to be some specific

7

requirements for a debtor to actually move forward in the8

Chapter 9 system, and to be eligible for relief.

9

We think the policies here about who is admitted

CalPERS is not here for the purpose of obstructing the10

City's reorganization.

11

reorganization.

12

sure the City can improve its financial affairs, provide

13

services to its citizens, fulfill its obligations to the Public

14

Employees' Retirement System, to its employees, to other15

creditors and other parties-in-interest to the City.

16

support those efforts, and our behavior and our participation17

in this case to this point has actually been consistent with

18

that.

19

this debtor.

20

disputes for many months to allow us to try to get the City to

21

provide meaningful financial information and information about

22

its intent and its efforts to move forward with a plan process.

23

That the City never did, and the City insisted on moving

24

forward with an eligibility fight, and that's why we're here25

today.

CalPERS supports the City's

CalPERS is interested in finding a way to makeWe

We did not intend to have a fight over eligibility withWe deferred the evidentiary hearing and those

EXHIBIT A PAGE 142

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 148 of 244
CITY OF SAN BERNARDINO

Desc 60

So I want to go back, Your Honor, I want to talk about2

what's the standard?

3

some level of expectancy for a city, for a municipality, to do

4

something to support its efforts to confirm a plan.

5

enough for the City to say we need relief, it's not enough for6

the City to say we have an urgent need, we have a fiscal crisis

7

on our hands.

8

down.

9

and say we have a plan that we are considering, we are going to10

work with our creditors, we're going to negotiate with parties,

11

we're going to work in good faith with you to collaborate, to12find a way to put a plan on the table that everybody can live

13

with.

14

about, that's what restructuring is about.

15

There has to be a bar, there has to be

It's notWe've got creditors who are beating our doors

The City actually has to do something to come forward

That's what Chapter 11's about, that's what Chapter 9 isThis City hasn't done that, this City has not come16

forward with a plan.

17

assigning somebody the task of doing that.

18

information -- financial information, to its creditors; in

19fact, it's purposely withheld certain financial information.

20

And if you allowed us to conduct certain discovery one of the21

things we would look at is the August 5 recent city council

22

meeting, at which comments were made in response to one of the23

citizens of San Bernardino who asked why the City wasn't

24

presenting financial information to the citizens.

25

answer to that question was, well, once we get past theIn fact, it hasn't even thought about
It hasn't provided

And the

EXHIBIT A PAGE 143

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 149 of 244
CITY OF SAN BERNARDINO

Desc 611

eligibility and we don't have to worry about what CalPERS is2going to think about this information we'll present financial

3

information to the citizens.

4

if we had an opportunity to present evidence to you about the5City's withholding financial information, I think would be

6

relevant to whether the City has a desire to effect a plan, and7

whether it is conducting itself in good faith in this case.

8

The City has to show an earnest effort to proceed

That's the kind of information,

9

expeditiously and in good faith towards the confirmation of a10plan of adjustment.

11

we've got some idea of what we're going to do.

12thirteen months into this case and this City hasn't done

13

anything to even think about the concept of a plan, the outline

14of the plan, the things that you said, back in a status15

conference in November, that the City was required to do.

16

words to the City at that point were you need to have a concept

17

or an outline; you need to be thinking about what you're going18

to do.

19

indication to me that you really don't want to do that.

20

response the City ran out, and thinking that you had ordered

21

them to confirm and adopt the pendency plan, they adopted a22pendency plan.

23

The City needs to move forward and say
Here we are nowYour

And if you don't have a pendency plan that's an
And inIn order to support a finding that the City is

24

conducting its restructuring effort in good faith, the City25

needs to negotiate fairly, it needs to be open in the sharing
EXHIBIT A PAGE 144

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 150 of 244
CITY OF SAN BERNARDINO

Desc 621of its information with the parties in the case, it needs to2

refrain from preferring some creditors over others, it needs to

3

pay timely its post-petition debt, and it needs to move forward

4

with a plan process.

5

those things.

6

And this City has failed to do all of

I want to go back and talk for a couple of minutes,

7Your Honor, about allegations that CalPERS has held the process

8

up here.

That's not true.

9

THE COURT:I didn't say that in my ruling.

10

MR. GEARIN:I don't think you did and --11

THE COURT:I did not.

12

MR. GEARIN:-- but I understand the City has

13suggested that in the past, and I think that I've heard you say

14

in prior status conferences that you'd ask us to stipulate to15

relief because you thought that we were responsible for some16

delay in this case.

17

THE COURT:

Well, I said one of the reasons we're not18

negotiating a plan is because we haven't determined19

eligibility, the only person between them and eligibility was

20

you, I did say that.

21

MR. GEARIN:

So my point there, Your Honor, is I don't

22

think it is inconsistent for the City to come forward with some23

notion of what its plan would look like pending a determination

24of eligibility.

25

THE COURT:

Well, certainly many have.
EXHIBIT A PAGE 145

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 151 of 244
CITY OF SAN BERNARDINO

MR. GEARIN:

Right.

Desc 63

And this contest about

2

eligibility has not diverted resources from the City towards3

its efforts to go try to put some kind of an idea what the plan4

would look like, and get the financial information together

5that it needs to do that.

6

One of the issues I heard you talk about was whether

7

the City had sufficient resources to go formulate forecasts.

8

And one of the things we've talked about is whether the City

9can provide forecasting information about what its future

10

revenues might look like.

11

in order to be able to formulate a plan.

12

any debtor goes out and creates future forecasts of revenues in

13

order to support its thinking about what its plan is going to

14

look like.

15

forecast information together, it's incapable of moving forward

16

with a plan process.

17

that, that they did not allocate resources to the finance18

department that allows them to create those forecasts, that's

19

the City's intentional decision to do that, and that is an20

indicator that they are not serious about moving this plan21

process forward.

22

They have to have that information
Any debtor does that;

Until this debtor has an ability to go put that

And the fact that they have not done

Before I turn, Your Honor, and I will not belabor the23

issues about whether CalPERS has an ability to object on

24

109(c)(2) basis or 109(c)(5); I understand the Court has ruled25

on those issues.

We are -- all we will say is that CalPERS has
EXHIBIT A PAGE 146

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 152 of 244
CITY OF SAN BERNARDINO

Desc 641

not waived those rights, and we've consistently asserted that2

we should be allowed to broach the issues about 109(c)(5) or

3about 109(c)(2) should certain developments occur in the case.

4

But I understand that the Court has ruled previously that the5

objection deadline bars the discussion of those issues and I

6will not focus my comments on those any longer.

7

myself to talking about 109.

8

THE COURT:

9

don't wish to argue.

10

MR. GEARIN:

11

Likewise, Your Honor, I don't think I need to get into

I take it that you dispute it, but you
That's fine.
Correct.

Correct.

12

the discovery issues in great detail either.

13

that CalPERS believes that --14

THE COURT:

15

I will confine

Suffice it to say

Yeah, you think the things that I said

were undisputed rule in your favor.

16

MR. GEARIN:

Well, I know I --17

THE COURT:I mean, I said I'll assume that they don't

18

have a staff, and they haven't decided on somebody to do a19plan, and all those things.

20

everything as badly for the City as I could that you might have21

done discovery on those areas I thought were relevant.

22

I'll take it that you probably dispute my ruling.

23
24
25

MR. GEARIN:

And I do assume that.

I assumed

But

And I think that's right, Your Honor.

think, that without belaboring the point, I think that -THE COURT:I think everything I ruled on, if I rule
EXHIBIT A PAGE 147

I

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 153 of 244
CITY OF SAN BERNARDINO

Desc 65

my tentative, I'll assume you disagree with.

2

MR. GEARIN:

I understand.

3

THE COURT:Other than are they insolvent, you agree

4

All I'd like to say is --with that?

5

MR. GEARIN:6

is in fiscal crisis.

7

THE COURT:All right, thank you.

8

MR. GEARIN:I think that they've provided aYour Honor, I would not dispute the City

9

sufficient basis, and the financial records we've seen they10

were running low on cash.

11

should the City have done something more about that earlier;12

you've talked about that.

13

else?

14

definitely think the City should have considered --15

I mean, we do have issues about

Could the City have done something

Should the City have considered other alternatives?

THE COURT:We

Yeah, if I find that that was necessary

16

then when should they ever file?

17

okay, they couldn't file now; they knew now.

18

in 2008; they knew then.

19

them to have known and by then they could file?

20

problem with that.

21soon as they should have then they never can.

I mean, you know, because,
They didn't file

In 2018 is that going to be okay for
That's my

If you set that up they didn't do it as

22

MR. GEARIN:

23

we'd want to be, Your Honor.

24

is that if the City intentionally puts itself in a position

25

where it's created a fiscal crisis, and that creates the needWell, I don't know if that's quite where
I think that what CalPERS' point

EXHIBIT A PAGE 148

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 154 of 244
CITY OF SAN BERNARDINO

Desc 66

1

for the City's resort to bankruptcy that, alone, cannot be2

sufficient to support its eligibility.

3

THE COURT:

Um-hum.

4

MR. GEARIN:

And once the City puts itself in that5

position willfully that, frankly, is an indicia of the City's

6lack of good faith.

7

THE COURT:I understand.

8

MR. GEARIN:As for the alternatives, I think that is

So that's our only point about the delay.

9a more difficult issue for the City, I think that the City is

10required to consider other alternatives.

11that in a little bit more detail when I get to the discussion

12

about what the factors are in determining good faith.

13

And I could go into

But back to the discovery point, Your Honor, I do want14

to mention this.

15

conduct additional discovery the facts could be worse for the

16

City, because we could actually be taking testimony that would

17

determine that the City, in fact, filed for the purpose of

18

delay, solely for the purpose of delay.

19

where we think we are.

20

at this point, languishing in bankruptcy without any intention

21

of moving things forward.

22

I think that if we did have an opportunity to

And that is, frankly,

We think that the City is in this case,That's why we're here.

So if the City is going to move forward with this23

process, is going to be eligible it needs to move forward much24

quicker, much more quickly and with more -- more of an evident

25

desire to work with its creditors and to create something that
EXHIBIT A PAGE 149

Case 6:12-bk-28006-MJ

1
2

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 155 of 244
CITY OF SAN BERNARDINO

Desc 67

people can live with.
I guess I'll go and talk a bit about the desire to3

effect a plan and your ruling on that point, Your Honor.

4

think this issue about the subjective standard and the5

objective standard, I agree with you, those terms are confusing

6

and I don't know whether subjective/objective really is that7

helpful in the analysis.

8

THE COURT:I

I actually think --I don't think it helps a lot other than

9

I -- none of the cases have looked at anything other than what10

I consider objective.

11

MR. GEARIN:Yeah.

I think that the real focus is on

12

direct evidence versus circumstantial evidence.

13

really what we're talking about here.

I think that's

14

THE COURT:I agree with that.

15

MR. GEARIN:

So I think the point is that the City --16when the City steps in and makes a direct statement and says we17have a desire to effect a plan you can consider that evidence.

18

But I think those cases that talk about subjective evidence is

19

not relevant or not determinative, those are cases where, you

20

know, the debtor -- of course the debtor's going to say I have21

a desire to effect a plan, that's not particularly -- you can't

22

have a whole lot of weight with that, and you have to look to23other factors, other --24

THE COURT:I agree.

25

MR. GEARIN:-- objective evidence to determine
EXHIBIT A PAGE 150

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 156 of 244
CITY OF SAN BERNARDINO

Desc 681

whether the City really has a desire to effect a plan or it

2

doesn't.

3

determine what the City's intent is.

4subjective intent, I think it means the City actually has to5have an intent to move forward with a plan; that's what that

6means.

7
8

So I think the focus is really on you have to

THE COURT:And what we talk about asI don't know why they'd be fighting so

hard to get this far if they didn't.

9

MR. GEARIN:

Because -- well, you know, this --10

THE COURT:And when I get to talking about the11

mediator later on, believe me they're going to have to do it.

12

MR. GEARIN:

I'm glad to hear that, Your Honor, and I

13

think the mediator could be very helpful to that process and14

you know we've supported that.

15

THE COURT:I agree with that.

16

MR. GEARIN:-- has been supportive of that.

17

THE COURT:But I'll discuss that in detail at the end

18of the ruling when I get there.

19

MR. GEARIN:

You know, that CalPERS --So why would the City move into this20

process if it didn't have a desire to effect a plan?

21

legitimate question, it's a good question.

That's a

22

THE COURT:

Um-hum.

23

MR. GEARIN:

We've been asking ourselves that24
25

question.

There may come a point -THE COURT:

But deciding it differently than I did.
EXHIBIT A PAGE 151

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 157 of 244
CITY OF SAN BERNARDINO

1

MR. GEARIN:

2

correct, Your Honor.

3

THE COURT:

4
5
6

Desc 69

I think that's right; I think that's

Which you're entitled to.

But I have alittle more power in that area than you do.
MR. GEARIN:

Of course you do, Your Honor; that's been

made very clear to us on a couple of occasions, Your Honor.

7

I think that the City may at some point have a desire

8

to effect a plan, but I think as it filed its petition, and as

9

we sit here today, I don't think there's evidence before you

10

that supports that conclusion.

11

circumstantial evidence there that is supportive of the City's

12position that it has a desire to effect a plan.

13

I don't think there isYour Honor, I think your comments in the November 5

14

status conference were, you know, you have to have something in

15

mind when you come into bankruptcy.

16

THE COURT:

17

think that the word I used.

18
19
20
21
22

MR. GEARIN:I said -- I think I said "endgame", I

An endgame, right.

That's true, that is

the term you used.
THE COURT:I did say that.

I agree I said that.

Maybe it takes a little longer to get to the endgame.
MR. GEARIN:I think you have an endgame that you're

23

working towards almost when you file, right; those are the24terms, I think.

25

THE COURT:Yeah.
EXHIBIT A PAGE 152

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 158 of 244
CITY OF SAN BERNARDINO

Desc 70

1

MR. GEARIN:

2

here doesn't have an endgame.

3

they filed, and they still don't have an endgame here today.

4

They haven't put anything in the record to supports that5

they've thought about what creditors are going to impair.

6

That's a significant issue.

7

negotiation issue and who you're going to negotiate with, the8reason 109(c)(5) has those discussions of the need to have a9

concept of a plan in that prong of eligibility is that it's

10

tied to the plan concept.

So, Your Honor, I think that the City
They didn't have an endgame when

And when we talk about the11

THE COURT:

It is.

12

MR. GEARIN:

It's tied to the idea that you're going13

to think about what your plan is, you're going to think about

14

who you're going to impair --15

THE COURT:(c)(5)(a).

16

MR. GEARIN:-- and then you're going to go negotiate

17with those creditors.

18

THE COURT:(c)(5)(a).

19

MR. GEARIN:(c)(5)(a).

20

THE COURT:

Right.

21

MR. GEARIN:

So --

22

THE COURT:

I know.

24

MR. GEARIN:

And I appreciate that, and I know we --25

THE COURT:I mean, clearly, I mean we reversed on

23

I wrote Vallejo; I know about

that.

EXHIBIT A PAGE 153

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 159 of 244
CITY OF SAN BERNARDINO

Desc 71

1that one issue because they didn't have a term sheet

2essentially, they didn't have their classes of creditors.

3

I agree with you, if you're using that prong you have to have a

4

plan.

And

5

MR. GEARIN:

And -- and --6

THE COURT:In the sense of classifying your creditor,

7

which they didn't have in Vallejo, nor do they have here.

8

agree with you, not close.

9

MR. GEARIN:

Right.

I

So and our point, Your Honor, is

10

I think -- we think likewise under 109(c)(4) you also need to11

do that kind of thinking.

12

THE COURT:

Um-hum.

13

MR. GEARIN:

You need to have thought before you

14

filed, and the policy supporting the purposes of Chapter 9 is

15

supported by compelling debtors to actually do some thinking

16

about this before they knock on the door of the bankruptcy

17

court and ask for protection.

18

debtor to do nothing to think about what its plan would look

19

like, either before it files or even after it files, even20

thirteen months after it files.

21

telling you we're not even sure when we are going to think

22

about filing a plan, or putting somebody to work to create a23plan; that's what they're telling you today.

It's not furthered by allowing aThis debtor's sitting here

24

So we believe that the standards should be the debtor

25

must come up with some concept, they must think about what its
EXHIBIT A PAGE 154

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 160 of 244
CITY OF SAN BERNARDINO

Desc 72

1plan would look like, and must think about what its objectives

2

will be in filing the plan, what it can accomplish, and does it

3have an ability to propose a plan of adjustment that is4

feasible, that is confirmable.

5

before it files the plan, before it files the bankruptcy case.

6

It's not proper for a debtor to file solely for the purpose of,7

as I think you point out, precluding a foreclosure from going

8

forward.

9

for, was for a delay and to create a -- to provide the benefits

10of being in Chapter 11 for purposes of stringing things out,

11

that's not -- that is not in support of the principles behind12the purposes of Chapter 9.

13

It needs to think about that

If that's the only purpose that you filed the case

I compare this case to -- I think you've mentioned a

14

couple of other cases that we've talked about before --15

Stockton.

16

debtor did a lot of thinking there about what its post-petition

17

plan would look like, and it had an outline -- a serious

18

outline, and it spoke with the creditors there pre-petition for

19months, for about ninety days pre-petition.

20

been involved in mediation with its principal creditors that it

21

seeks to impair in Stockton since it filed a case in June of

22

2012.

23

before the case was filed.

24
25

Stockton, the debtor there, the 790-page ask.

The

And now it has

So that outline of a plan has been in place since long

In Detroit, which was filed in July, Detroit presenteda -- I think they call it a proposal for creditors.

It

EXHIBIT A PAGE 155

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 161 of 244
CITY OF SAN BERNARDINO

Desc 73

1

presented that to its creditors before it filed.

2committed to file its plan before the end of the year.

It has3

THE COURT:

Um-hum.

4

MR. GEARIN:

So in less than five months, little more

5than five months, the City of Detroit which is far more -- far

6bigger city, billions of dollars of debt, very complicated7

problems, it is moving its case forward, and it has a concept

8of what it intends to do with respect to its plan.

9

So what has the City put forward, and I think you

10looked at some of the evidence that the City put forward in

11

support of its intent to effect a plan.

12

statement of the city manager, Ms. Andrea Travis-Miller, and I

13

think we have that fact, I suppose that falls into the category

14of the kinds of direct evidence we just talked about a little

15

while ago; it may not be particularly probative, it can't have16

a whole lot of weight.

17

THE COURT:

It puts forth theBut, of course --I agree with you; any City, anybody could

18

do what they did here, or that has been done, the statement of

19

qualifications, how you need that, but who wouldn't do that.

20

MR. GEARIN:

Correct.

And I think our point about Ms.

21

Andrea Travis-Miller's foundation, I mean the City says, well,22

she was authorized to file whatever pleadings were necessary to23

file the plan -- to file a petition, excuse me.

24

be true, but there's nothing in the record that supports the25

idea that she was authorized to speak for the City in

Well, that may

EXHIBIT A PAGE 156

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 162 of 244
CITY OF SAN BERNARDINO

Desc 741

determining the City had an intent to move forward with a plan,2

the desire to effect a plan.

3

that, that she had authority or been instructed, or given

4evidence to back up --5
6

THE COURT:There's nothing that supports

The City gave her the authority to do

whatever was necessary; I don't follow your argument on that.

7

MR. GEARIN:

Okay.

I guess the issues about the8pendency plan, Your Honor, I think that the only one I will9

focus on is this -- the adoption of the pendency plan.

10

they say is that's a factor supporting the City's desire to11

effect a plan.

12

all, they didn't have the pendency plan in place when they13

filed, it took them months to get there, they filed August 1st

14

and they didn't adopt the pendency plan until November 26th of

15

2012.

16

of the city council meeting, they thought that you had ordered17them to file a pendency plan, and that you were threatening to18

dismiss their case if they did not do so.

19

filed the plan; that's consistent with our arguments --

20

What

What we've told you there is that, first of

They only did that because, if you look in the minutes

THE COURT:

That's why theyWell, if you get the facts in order here,

21

we had a hearing at which Mr. Glassman told me the time frame

22

in which they were considering their pendency plan.

23

clear to me there was a time that he needed to file some24

further report with the Court, or response to your opposition25

or something, that in the time frame they were moving for he

And it was

EXHIBIT A PAGE 157

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 163 of 244
CITY OF SAN BERNARDINO

Desc 75

1

wasn't going to have a pendency plan, because the scheduling of2

their meetings was such that it wasn't going to get it off in

3

time.

4

those statements in court, but it wasn't going to get done

5

before he had to file what he was going to file.

6

they might have said, I don't know; I wasn't there.

7

wasn't like they started the process after those comments in

8

court; they already had it in their agenda to consider.

It wasn't like they were doing nothing before I made9

MR. GEARIN:

10

there's been some suggestion --11

THE COURT:I suppose, Your Honor.

So whateverBut itI mean, I guess

Again, it was four months into the case12

before they put it on their agenda, and that is certainly a13

factor that I get to consider.

14

MR. GEARIN:

15

I guess the other factor the Court -- that the City

16

points to is that it adopted budgets and it adopted -- excuse

17

me, let me go back to this point.

18

Right, understood.

With respect to the pendency plan and the pre-pendency

19plan, what we know is that the City adopted some of these20

measures.

21

any discovery, any information about this from the City, is

22

whether -- what they implemented, what did they actually do to23

go forward with those plans.

24

whether the City, when it adopted the pendency plan, did it

25

actually go forward and pay in the cost-cutting that it

What we don't know because we've not been provided

There are some questions about

EXHIBIT A PAGE 158

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 164 of 244
CITY OF SAN BERNARDINO

Desc 761

suggested it would do in the pendency plan.

2major issues about whether the City actually implemented the3things that its public statements indicate they adopted.

So we still have4

You know the budgets, Your Honor, the City wants to

5

say that the adoption of its budget in April of this year is

6

evidence of its intent to effect a plan.

7

to adopt a balanced budget.

8

it adopted a budget retroactively for 2012/'13, and then9prospectively going forward '13/'14.

10

that.

11

of the idea that they intended to use that to support their

12

going forward with a plan process.

The City's required

It has to do that every year, so

It was required to do

It's not inconsistent; it's not particularly supportive

13

The contravening evidence that's out there, Your

14

Honor, is, frankly, overwhelming that the City does not have a15

desire to effect a plan.

16

point to is the City actually authorized the filing of its

17

bankruptcy case on July 10th, in the July 10th city council

18

meeting.

19

which declaration it is; I apologize for that.

And the contravening evidence that weThat's reflected, I think, in Ms. -- I can't remember

20

THE COURT:I was looking at the resolution --21

MR. GEARIN:

Right.

22

THE COURT:-- which is, I think, July 18th.

23

MR. GEARIN:

Well, there's a July --24

THE COURT:I spent a lot of time trying to find that25

date and the resolution.
EXHIBIT A PAGE 159

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 165 of 244
CITY OF SAN BERNARDINO

Desc 77

1

MR. GEARIN:

Right.

2

THE COURT:I had both those dates in my notes.

I'll see with we can find the -And3

the resolution itself, I have; it was attached to something

4

filed with the Court.

5

MR. GEARIN:

And I think you're right, Your Honor.

7

THE COURT:

Uh-huh.

8

MR. GEARIN:-- there's actually two resolutions.

9

THE COURT:

Right.

10

MR. GEARIN:

There's a July 10 resolution that6

It says it was adopted on the 18th.
I

think --

11

authorizes the City to file the bankruptcy case.

12

a July 18 -- there was a meeting on the 16th -- July 16th.

13

then there was a resolution on July 18 that directs the city

14

manager to go forward to file the petition --Then there isAnd

15

THE COURT:

Okay.

16

MR. GEARIN:-- and to move forward with the process.

17

THE COURT:All right.

18

MR. GEARIN:

So I think there's a nuance there.

19

THE COURT:-- the authorization may have come, or --20

because I do have that date.

21

was important, but I couldn't find the document that the22City -- what the City did as a resolution.

23
24
25

I may have a --I don't disagree that that date

MR. GEARIN:

There is a point of that.

THE COURT:

Um-hum.

The point ofthat --EXHIBIT A PAGE 160

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 166 of 244
CITY OF SAN BERNARDINO

MR. GEARIN:

Desc 78-- is that the chronology that's laid out

2by the City is that Mr. Simpson created a budget report.

3

it took him seven weeks to do that.

4

9th.

And

He concluded it on July

5

THE COURT:

Right.

6

MR. GEARIN:

And he presented it --7

THE COURT:-- that's when it was filed with the City,

8
9

That's when it was given to --essentially.
MR. GEARIN:He presented it to the City Council on

10

July 10th.

11

meeting on July 10th.

12

they voted to authorize the City to file.

13

That is a very hasty decision --14

THE COURT:

Um-hum.

15

MR. GEARIN:-- in moving forward.

And the City Council had a four-hour City Council
And at the conclusion of that meeting,

It does not

16

reflect a discussion of any plan ideas, or an intent to affect17

the plan, or what the responsibilities of the debtor would be

18

once they got into bankruptcy.

19

It reflects a very snapshot, knee-jerk, we need to get

20

into bankruptcy in a hurry because we need to hold people off;

21

that's what that reflects.

22

We've already gone through, I think, the -- and I

23

don't know how many times I need to say this, but the City

24

still has no thought of preparing a plan.

25

at that point.

It certainly did not

It did not as of July 10, it did not as of July
EXHIBIT A PAGE 161

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 167 of 244
CITY OF SAN BERNARDINO

Desc 791

18 when it directed its manager to move forward with filing of2

the petition.

3

petition.

4

today, any evidence that it is concretely moving forward with a5plan process.

6

It didn't as of August 1st when it filed the

And at present, it -- frankly, it does not have,

It still has not produced financial reports and7analyses that would allow it to move forward with the plan8

process.

9

considering filing, and it hasn't done that as we sit here10

today.

11

It hasn't done that; it didn't do that when it was

THE COURT:I assume when you say that, you're

12referring to revenue projections that would allow it know how

13much money it was going to have in 2018 and other time frames.

14

MR. GEARIN:I think that --15

THE COURT:

What else, besides revenue, do you say

16
17
18
19
20
21

that they haven't got?
MR. GEARIN:

Well, those are the principal.

The other

key component -THE COURT:I mean -- and that goes in with the

projections your expert and you have talked about.
MR. GEARIN:

There's really three things that I think22

we've talked about in prior status conferences with you, and23

that we've talking to the debtor about.

24

reporting, what the City's present cash availability is,25

balanced or reconciled bank statement kind of --There are cash

EXHIBIT A PAGE 162

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 168 of 244
CITY OF SAN BERNARDINO

Desc 80

1

THE COURT:

Right.

2

MR. GEARIN:-- information.

3

THE COURT:When they do that, do they give you fifty

4

And I think we --different bank statements for all of the restricted funds?

5

MR. GEARIN:

That's above my pay grade, Your Honor.

6

THE COURT:

Yeah.

7

MR. GEARIN:

I'm -- and I should --8

THE COURT:

I know.

9

MR. GEARIN:

I'd have to talk to our --10

THE COURT:

Because it isn't like there's just a bank11

statement from a city because of the restricted funds.

12

may be that they have all of their money in one account, and13then they just account for it with the different accounting

14

entries, but I don't think the bank statement itself is going15

to give you much information.

16

MR. GEARIN:

17

No.

And itIt's not the bank statements that

we're -- I think we're talking about a cash reconciliation.

18

THE COURT:

Okay.

19

MR. GEARIN:

And it's sort of a --20

THE COURT:As to --

21

MR. GEARIN:-- monthly report --22

THE COURT:-- which funds they belong to, you mean.

23

MR. GEARIN:

Well, that is a separate -- that's a24second report that I think we've been trying to -- they call it

25-- I think the City calls it a cross-fund report, which is
EXHIBIT A PAGE 163

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 169 of 244
CITY OF SAN BERNARDINO

Desc 81a --2

THE COURT:

Okay.

3

MR. GEARIN:-- an analysis what the balances are in

5

THE COURT:I understand that.

6

MR. GEARIN:-- restricted funds and so forth.

4

the --

7

do think you're right that it is one bank account, as I

8

understand it --

And I

9

THE COURT:

Um-hum.

10

MR. GEARIN:-- that the City puts all of its funds

11

into and then it accounts for which --12

THE COURT:

Right.

13

MR. GEARIN:-- ones are allocated to the certain

14
15

funds.
But that information's not been provided to us.

And

16

that information is essential for the debtor's understanding of

17

its own financial affairs, such that it knows that -- when we

18

filed this case, Your Honor, the City did not know what it

19

could afford to pay on a daily basis.

20

was sitting there with his finger on a button determining what

21

checks could be paid and which ones couldn't because they22

didn't have an understanding of what their cash is.

23

what we've been facing in trying to find a way to work with the24

debtor to understand that they really are moving forward with

25

an ability to promote a plan.

They had Mr. Simpson who

And that's

EXHIBIT A PAGE 164

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 170 of 244
CITY OF SAN BERNARDINO

Desc 82

1

So I think the three categories really are -- it's2

restricted funds; it's cash -- present cash needs; and it's

3

forecast.

4

THE COURT:I understand.

5

MR. GEARIN:

Those are the three things.

6

Now, I guess I -- I think I already talked about the7timing of the Detroit filing and the Stockton filing.

8

the Pierce County case, you've talked about that case, Your

9

Honor.

10

Judge Snyder is a --11

THE COURT:

Judge Snyder, right.

12

MR. GEARIN:

It was Judge Snyder's case, and --13

THE COURT:

Yeah.

14

MR. GEARIN:-- in Pierce County, the bankruptcy plan15

And inIt's my neck of the woods, as a matter of fact, andthere was filed seven months after the case was filed.

16

THE COURT:

Hm.

17

MR. GEARIN:

And there had been years of pre-petition

18

negotiation between the principal creditors in that case who

19

were, I think, parties that were claiming that there had been

20

mold infestations in certain apartments that were owned by the21

Pierce County Housing Authority.

22

THE COURT:

23

really the County that filed.

24

MR. GEARIN:

Right.

25

THE COURT:-- all use -- we all call it Pierce

Right.

It was the Housing Authority, not
I mean we --EXHIBIT A PAGE 165

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 171 of 244
CITY OF SAN BERNARDINO

Desc 831County, which implies -- Orange County -- the whole county

2

filed it, but you are correct; it was just the Housing

3

Authority.

4

MR. GEARIN:

Right.

It was the Housing Authority,

5

right.

6

moved forward with a plan, filed it within seven months, and7

was working on negotiations with the principal creditor long8

before and after the case was filed.

9

But the point there is that the debtor immediately

I'll turn to good faith and talk about that for a10

minute, Your Honor.

11

articulation of the standard for measuring good faith.

12

they talk about a couple of cases, Orange County being one of

13

them.

14

purpose of Chapter 9 is a temporary breathing spell so that15

a party can work out a repayment plan with its creditors.

16

So it's really a couple of prongs there.

I think that I'll take the City's
And

And I think the standard that's articulated -- theFirst of17

all, it's temporary.

18

forward with creating an agreement with the creditors.

19

why you file the case.

20that there have been negotiations, discussion with creditors,

21

and there's no evidence that there's some kind of a formulation

22of what plan concept would look like, I don't know how it

23furthers the purpose of Chapter 9 to remain in bankruptcy.

24
25

Secondly, the purpose of that is to moveThat'sIf there's no evidence going forward

The Pierce County factors, I think you walked through,Your Honor; the debtor's subjective intent, and again, I think
EXHIBIT A PAGE 166

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 172 of 244
CITY OF SAN BERNARDINO

Desc 84

1

we go back and talk about does the debtor really have a true2

intent to move forward with the plan and to use the process as3

it was intended to be used.

4

there, we talk about the pre-petition preference issue.

Some of the things we talk about

5

THE COURT:

Um-hum.

6

MR. GEARIN:

And think that is an indicia of the

7City's lack of good faith.

8

You have to recall, the City is telling you that one

9of the reasons it had to file was because it was concerned

10about paying preferences to some parties that held judgments,

11

civil rights judgments, for some pretty egregious acts,

12

frankly.

And the City was concerned about --13

THE COURT:

No.

14

MR. GEARIN:-- making preferential payments --15

THE COURT:-- they said that was reason they filed.

I don't think --16

I think they said that was one of the things that would have17

satisfied (c)(5)(D).

18

exercise those judgments at the time when they adopted the19resolution to file; it was later.

20

up.

21

they have filed earlier than they wanted to file?

22

But remember, nobody was trying toI mean, maybe they set that

I don't think they intended to set it up because why would

But they didn't say that's the reason the filed.

23

have never seen them argue we filed -- we filed that day

24

because of that, but we didn't file because of that.

25

MR. GEARIN:

I understand that distinction, YourEXHIBIT A PAGE 167

I

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 173 of 244
CITY OF SAN BERNARDINO

1

Honor.

2

said that it governed the timing of its filing --I think that's probably right.

I think the City has

3

THE COURT:

It did.

4

MR. GEARIN:-- but not necessarily -- it's5

Desc 85

actually --6

THE COURT:It definitely was the timing, but not --7

because the decision happened -- they were already in default

8

under those -- because it says they were in default under other9things, but they had -- there was no threatened execution at

10

the time they -- nor did I think they thought that could

11

happen.

12federal law is different than state.

13

I would have thought that could happen.

MR. GEARIN:

Right.

I guess

I still think there's some14question about whether it could or it could not have happened,15

and when it would have happened --16

THE COURT:

Right.

17

MR. GEARIN:-- and how much notice the City would

18

have had, and all those sorts of things.

19

to get to is how do you square that up with the City paying two

20

million dollars in preference payments in the month -- in the21

ninety-day period prior to the filing, including 600,000

22dollars on the day before it filed?

23

they're really concerned about --But the point I want

If that's something

24

THE COURT:

Um-hum.

25

MR. GEARIN:-- they're concerned about making
EXHIBIT A PAGE 168

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 174 of 244
CITY OF SAN BERNARDINO

Desc 861

preferential payments, how -- why did they pay 1.2 million

2

dollars in the month of July, a great portion of that after3

they decided they were going to file the bankruptcy case, and

4600,000 dollars on the day they filed?

5

That issue is important.

It's important as a factor

6

in determining whether the debtor really intends to use this7

process appropriately.

8

won't give us the information that we've been asking for to9analyze those and determine which one are recoverable, which

10

ones aren't, that's a further factor in --And the fact that the debtor still

11

THE COURT:

Um-hum.

12

MR. GEARIN:-- the Court considering whether the City13

is really operating in good faith here.

14

The other Pierce County factors, I think, we talked

15

about the extent of pre-petition negotiations.

16

you say --17

THE COURT:

They have none.

18

MR. GEARIN:

Yeah.

19

THE COURT:

None meaningful.

20

MR. GEARIN:

Right.

I think I heard

You've assumed there's none.

And I think that the declarations

21of the Firefighters Union that we filed with you are telling22

you that there really aren't any meaningful negotiations going23

on post-petition either.

24
25

THE COURT:
while.

Well, there sort of haven't been for a

And whether there were negotiations is a term of art
EXHIBIT A PAGE 169

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 175 of 244
CITY OF SAN BERNARDINO

Desc 87that I need to avoid here.

2

MR. GEARIN:

So that --3

THE COURT:

They managed to convince four unions to4

accept what they imposed in the other three.

5

happen by osmosis.

6

negotiate.

7

didn't accept.

8
9They talked to them.

And they talked the same way to the three that

unions did it, so it couldn't have been meaningless.
MR. GEARIN:

Well, I acknowledge, Your Honor, that11

they reached agreements with unions.

12

you --

14

Maybe they didn't

I don't know whether that's meaningful, but four

10

13That didn't

THE COURT:
my statement.

Now, what we've told

They didn't do it pre-petition.

That wasThere was none of that pre-petition.

15

MR. GEARIN:

16

those unions are management --17

THE COURT:

Um-hum.

18

MR. GEARIN:-- and the agreements that are reached

19

Right.

I also think we told you thatare temporary.

20

THE COURT:

Um-hum.

21

MR. GEARIN:

They are agreements really that'll get

22them through the end of this year.

23

THE COURT:

Um-hum.

24

MR. GEARIN:

So they're not longstanding agreements;

25

they're not agreements that are going to be -EXHIBIT A PAGE 170

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 176 of 244
CITY OF SAN BERNARDINO

THE COURT:

Desc 88

They allowed them to balance the pendency

2budget, which is just that; something through the end of the

3

year.

4

MR. GEARIN:

Right.

You know the other factors, I

5think, that Pierce County looks to are the extent of

6

consideration of alternatives.

7

We've had this dialogue about the water department and8

the City says, well, we're precluded by law and by the9

California Constitution from using the revenues in the water

10

department.

11

what the contours of those limitations are.

12

the City never explored any of those alternatives, whether

13

there were any abilities to use the water department resources;

14

a transaction that could have been conducted with the water

15

department, for example.

16

That's not the point.

First of all, I don't know
The point is that

There's a contract between the City and the water

17

department that the City had, pre-petition, advanced the18

payments on in order provide liquidity to the City at an

19

earlier date.

20

that could have been considered with the water department and21

the resources that are there, which is an aspect of the City

22

itself.

23

those things or thought about alternatives that involved the24water department's assets, that is a signal that the City

25

didn't desire -- was not going to conduct itself in good faith

There certainly seems like there can be things

And the fact that the City never considered any of

EXHIBIT A PAGE 171

Case 6:12-bk-28006-MJ

Desc 89

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 177 of 244
CITY OF SAN BERNARDINO

1

and it was not going to consider other alternatives to filing2

the bankruptcy case or things that might be beneficial to3furthering the plan process.

4(Pause)5

MR. GEARIN:

I'm going to conclude, Your Honor, with

6

this.

7

this debtor is eligible, it will be unlike any other precedent

8that has been established in a Chapter 9 case before.

9

you'll be holding this that a debtor that, based on its own

10

self-inflicted crisis, without consideration of any

11alternatives, without the development either before it filed or

12after it filed of any concept of plan, while it withholds

13

material financial information from its creditors, while it

14

fails to negotiate with its creditors pre-filing and post-

15

filing, and while it refuses to commit to a timetable for even16

proposing a plan, that that debtors is eligible for relief

17

under Chapter 9.

18

I think if you allow this debtor -- if you find that

And we think that's a dangerous precedent.

And what

We think

19

it is unprecedented at this point.

20

precedent.

21

create a crisis, to determine that they have an inability to22negotiate with the creditors because they've got a large number

23

of creditors, and then to walk into the bankruptcy court

24

without any intention of moving the plan process forward.

25

We think it's a dangerous

It's going to create incentives for debtors to

We don't think that's a proper precedent.

We think

EXHIBIT A PAGE 172

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 178 of 244
CITY OF SAN BERNARDINO

1

that's bad policy.

2

to eligibility.

3

Desc 90

And that's why CalPERS continues to object

Your Honor, I will go back to, I think, a last couple

4of comments.

5

said about dismissal and what the consequence of dismissal

6

might be.

7

that.

8

What should the Court do?

And I heard what you

And I think I have a couple points with respect to

One is, you are correct that the dismissal prong of

9921 is permissive, and you're not required to dismiss the case.

10

You can impose -- you could deny summary judgment.

11

defer the decision on eligibility and you could impose

12

requirements that the City would have to meet to provide

13

meaningful information, to participate in mediation, to propose

14

a plan by a certain date.

15

your willingness to keep the case in this Court and not to16

dismiss the case.

17

You're right.

You could

And those could be conditions to

You can't order the City to do -- under18

Section 904, we think we agree with you that you cannot require

19

the City or force the City to do anything -- to do any of these20things.

21

willingness to not to dismiss the case.

But you can use those as conditions to your22

So for those reasons, Your Honor, we think that -- we23

request that the Court deny the City's summary judgment motion.

24
25

And if you're not willing to dismiss the case today,
we'd ask you to set over the decision on eligibility and
EXHIBIT A PAGE 173

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 179 of 244
CITY OF SAN BERNARDINO

Desc 911

require the City to comply with its obligations to support its

2side of the bargain in supporting its eligibility to be a3

debtor, and to have the benefits of being under the protection

4of this Court.

5

Thank you, Your Honor.

6

THE COURT:

7

Thank you very much.

argument, Mr. Gearin.

8

A very fine

Mr. Glassman, do you wish to respond?

MR. GLASSMAN:

Your Honor, let me first ask whether

9

there's any particular points the Court would like to hear10

response.

Otherwise, I would simply make statements to --11

THE COURT:

12

MR. GLASSMAN:

13

THE COURT:

14

the significant one.

I think --- clarify the record.

-- the last statement by Mr. Gearin was
Does this set a really bad precedent?

15

If all the things he just recited -- although I don't

16

agree that I would make a finding the City created the crisis.

17

By inattention they got insolvent, but I'm not sure I call that18

creating a crisis.

19

stated are all things that I have assumed to be true, or are

20

true without even assuming anything.

21

But the other summary of things that he

There's a pretty good laundry list of not very pretty

22things about the City's filing.

23

can, and then you can go anywhere else.

24
25

MR. GLASSMAN:

So respond to that, if you

Your Honor, I received a note from Mr.

Penman, and I'm going to start by reading this note.
EXHIBIT A PAGE 174

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 180 of 244
CITY OF SAN BERNARDINO

1

THE COURT:2

MR. GLASSMAN:

Desc 92

All right.
"None of us would put ourselves through3

the daily recurring pain if we didn't have to.

4

outcry against city officials is a stronger deterrent than5

anything else.

6

The public"It has been an extremely painful process being in

7

insolvency and in Chapter 9 for the City.

8

room, not a health spa.

9

subject itself to the process unless it had to is simply

10

disingenuous."11

It is an emergency

And to suggest that any city would

Also bear in mind that the City had to declare a

12fiscal emergency -- abruptly declare a fiscal emergency under13

state law before -- and to correct the record on that, the14declaration was on July 18th, but there were three days of15hearings before the initial --16

THE COURT:

17

MR. GLASSMAN:

18

THE COURT:

19

MR. GLASSMAN:

20

THE COURT:21

MR. GLASSMAN:

22

that the report was submitted --I think the 10th, the -The 10th, the 16th ---- 16th --- and the 18th.

-- and the 18th.

23

THE COURT:24

MR. GLASSMAN:

25

THE COURT:

Right.

So yes, it was submitted -- it's true

On the 9th.
-- on the 9th.

And then there --There was meeting on the 10th, on the 16th
EXHIBIT A PAGE 175

Case 6:12-bk-28006-MJ

1
2

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 181 of 244
CITY OF SAN BERNARDINO

Desc 93and on the 18th.
MR. GLASSMAN:-- the disclosure of the City's

3

insolvency -- because when the City discovered it -- maybe it

4

should have been discovered before, but that's when it became5public that it was insolvent.

6

like a public corporation, has to disclose that it is7

insolvent.

8

crisis, and that's what the report indicated after that.

9

like in any situation where that occurs, as we know from our

10

many, many years of practice, that it becomes a death spiral at

11that point.

12

Just like a municipal entity,

And that's what the report -- and there was a cashAnd

The only way that the City can protect itself and

13

preserve assets and work out a plan to restructure its debts

14and deal with the insolvent situation is through a filing15

which, in this case, occurred sooner rather than later because

16of the severity of the problem and the fact that once the17financial condition of the City was disclosed, then it

18

precipitated creditor action, as happens in -- just like in a

19

Chapter 11 case.

20

And so there was no ability for the City to do

21

anything but plan for a hastily filed Chapter 9 proceeding at

22

this point, indeed, as the Court has pointed out.

23

have been a more orderly filing, certainly one that counsel

24

would have preferred to be more orderly had there been such a

25

short time.

It would

July 8 -- for a case like this, July 18th to
EXHIBIT A PAGE 176

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 182 of 244
CITY OF SAN BERNARDINO

Desc 941

August 1st, the time of the authorization and the filing of the2

fiscal emergency is a very, very short time, and most of the

3time between those two dates is dealt with dealing with4

emergencies and crises every day and not preparing for filings.

5

And when the notice came on July 31st that there was going to

6

be an attachment of the City bank account -- it has one

7

account, many separate accounts, but just one --8

THE COURT:

9

MR. GLASSMAN:

Um-hum.
-- bank account, so that would have10

stopped payroll.

11

day in my handwriting because there was a crisis, and no one,

12

even though the City had to file, no -- in my -- there was no13

city -- it's not a decision that was taken lightly or that any

14city would do in a deed, it's not as if there have been a15

cascade of municipal filings; there's still very, very, very16

few filings and there are a lot of good reasons for that.

17

the biggest reason is because cities don't want to file unless18

they absolutely have to.

There was a face sheet filing made the next

19

THE COURT:

20

MR. GLASSMAN:And

It is expected.
I hear about that every day.

As you21

can see the City -- this is an extremely challenging case.

22

One of the cases that Mr. Gearin mentioned, the Orange County

23

case, well under his standard of having a notion to plan, that24case couldn't have been filed.

25

recently, the biggest case, I spent a considerable amount of

It was the biggest -- until

EXHIBIT A PAGE 177

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 183 of 244
CITY OF SAN BERNARDINO

Desc 95

1

time working that case.

2

Orange County case.

3

been a cascade of filings, of bankruptcy filings of school

4

districts and cities.

5

Orange County Cities in that case.

6

borrowed to invest in the pool, and there would have been a7cascade of filings if there wasn't the breathing room to work

8

that out.

9

been filed, because they hadn't thought about a plan before

10

they filed, because it was an emergency.

11

In Mr. Gearin's world there's no

The county -- the pool -- there would have

I represent the City of Irvine and theSome of the Cities have

But in Mr. Gearin's world, that case couldn't have

Was it an emergency that Orange County should have

12

known about sooner?

13

well -- was speculating with twenty-two billion dollars of

14

borrowed money?

15

Chapter 11 cases occur because human beings are not perfect and16

they make mistakes and make bad decisions and that's how these17cases result.

18

situation.

19

That their -- Mr. Citron was borrowing

Probably so, but like in any Chapter 11 case,

And this is no different than any otherAnd so I submit that it is --THE COURT:

What about the post-petition?

They were20

thirteen months in and there's not even a term sheet or a draft

21of a plan.

22

into a -- at least a concept of how they were going to do

23

that -- five months?

24

decision.

25

Because you bring up Orange County and they got

I forgot.

I think it was Judge Ryan's

Wasn't here.
MR. GLASSMAN:

Well, it certainly the City has limited
EXHIBIT A PAGE 178

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 184 of 244
CITY OF SAN BERNARDINO

Desc 961

re -- this City has -- we talk about Detroit, in fact, they are2

on a fast pace.

3

dollars of debt, they also have considerably more resources

4

that apparently -- and more access to consultants and5financial --6

Well, even though Detroit has billions of

THE COURT:And somebody that was employed by them7

full time to do nothing other than figure out how they would

8

restructure.

9

MR. GLASSMAN:

10

well than the City has.

11

THE COURT:

12

MR. GLASSMAN:

13

THE COURT:

14

MR. GLASSMAN:

And apparently more financial help as

Um-hum.
This is not an easy case.

Um-hum.
Make no question about that.

We're

15

dealing with a situation where the City has limited resources.

16

And also when you're talking about a city as opposed to some of17

the other entities that might file, they're much more complex.

18

They have to do a pen -- the budgetary process and dealing with19

all the constituencies.

20

municipal cases where they have much simpler problems.

21

THE COURT:

22

MR. GLASSMAN:

It's much larger than many of the

Um-hum.

Cities are complicated.

They're complicated and you have to do23

a pendency plan.

24

City -- and I'm looking at the July 23rd fiscal emergency

25

operating plan that the document that was submitted before in a

Indeed one of the things -- when the

EXHIBIT A PAGE 179

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 185 of 244
CITY OF SAN BERNARDINO

Desc 97

1

part of the record in the case; it's Exhibit L and was

2

submitted for the council meeting when the fiscal emergency

3plan was approved.

4

the fiscal emergency plan is a precursor to a pendency plan

5

that will lead to a plan of adjustment to comprehensively

6

restructure the debts of the City, set it on the path of7

solvency to develop in discussions with groups.

8

something that was contemplated before the bankruptcy, but the9

process of getting there has been more difficult.

And it actually talks about the fact that

So it was10

And frankly if this -- it would also, because of the

11City's limited resources, if we weren't here, you asked me at

12

an earlier time, Your Honor, what would you -- what would I be

13

doing if the City wasn't fighting eligibility, wasn't

14

litigating with its unions, or the City wasn't in this state?

15

It would be working on a plan.

16

resources, and as soon -- and the City is anxious to move the17

process along as soon as it is able to, given its resources.

And the City has limited

18

THE COURT:

19

Mr. Gearin, anything further you wish to say?

20

MR. GEARIN:

No, I don't think so.

21

THE COURT:All right.

22

MR. DUBROW:Your Honor, I'm sorry.

23

Dubrow.

Thank you.

This is David

Could I make a couple of remarks?

24

THE COURT:

Yes, you may.

25

MR. DUBROW:

Thank you very much.

One of our clients,
EXHIBIT A PAGE 180

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 186 of 244
CITY OF SAN BERNARDINO

Desc 98

1

Ambac, is involved in unfortunately, each of the municipal

2

bankruptcies that have occurred, including Central Falls, which3

is a case that hasn't come up in this discussion which is a4case that went in and out in about one year.

5

involved in Detroit and also in Stockton, Jefferson County.

6

we have, and think a lot about precedent and we're concerned

7

about precedent that might encourage future Chapter 9 filings

8

as well, just like CalPERS is, at least in California for

9

CalPERS.

10

think -- I just want to share how we look at this case and look11

at this situation, is that we see it as, first of all, as

12

somewhat of an outlier, for reasons which I'll express in one

13

minute.

14

But we'reSo

And so we thought quite a bit about this, and I

But what we think overall about the requirements for15

filings, the biggest hurdle that a city has to pass, in our

16mind, is that after you get beyond authorization, which is17something that's being contested in other cases a lot, is18

insolvency.

19

you look -- when you review all the case law, there aren't many

20

cases that have gotten kicked out based on not filing in good21

faith, the negotiation factors or desire to effectuate a plan.

And once you get over the insolvency hurdle, when

22

THE COURT:I agree with you, totally.

23

MR. DUBROW:

And so once you get over insolvency, our24view is that there aren't many cities that are going to pass25

the insolvency test plus does not want to go through a
EXHIBIT A PAGE 181

Case 6:12-bk-28006-MJ

Desc 99

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 187 of 244
CITY OF SAN BERNARDINO

1bankruptcy with all the problems it poses, unless they feel2

like they really have to and unless they actually meet these3

other qualifications of desire to effect a plan and filing in4good faith because they realize they're at the end of the road5

and they've got to do something extreme that is politically6something they'd rather not do but they just have to do it.

7

that's our big picture, first of all.

8

So

Second of all, only in the case we looked at we should

9challenge eligibility.

10

we looked at it.

11

CalPERS thought about, and we just -- we came down once -- we12came down in a difference place.

13

Bernardino as an outlier for the following reasons.

14

all, unlike Detroit, unlike Central Falls, where there -- in15

both of those cities we have an emergency manager who was

16

appointed with professional staff who can act in a way that any

17

democratic re-elected city officials cannot act.

18

essence, if you will, a form of -- I don't want to --And we decided obviously not to after

And we thought about some of the things that

19

THE COURT:

Nepotism?

20

MR. DUBROW:

Yeah.

And we looked at San
First ofIt's inAnd so you have a central --21

unlike other cases, you have a centralized authority who can be

22

decisive and act and not have to worry about political23

ramifications of decisions and divisions among politicians, and24

they can act decisively.

25

that is what Central Falls was largely about, and that's why

That is what Detroit is all about,

EXHIBIT A PAGE 182

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 188 of 244
CITY OF SAN BERNARDINO

Desc100

1

Central Falls went in and out in a year, and we'll see what2

happens in Detroit, but clearly they're on a fast track.

3

Stockton, which did have a big ask going through the 506

4process, they're still in.

5this case, if you step back and think about it, to have their

6eligibility decision.

7

number of months on a plan which hasn't been filed yet.

8

think they expect to file a plan soon, but just to put some9perspective on that.

10

Even

Took them about year, just likeNow they've been negotiating for a
And I

Now, so then in this case, why we see it as an

11outlier, you have, unfortunately, when you look at the history

12of the City, and this is not uncommon unfortunately, too, you

13

have what we would characterize, what I would characterize as

14

political dysfunction, division within the city, which makes it

15

hard to make consistent decisions.

16

history of -- and I'm not pointing fingers at any particular

17

individuals here, but then again, reading the history of what18

happened here -- financial incompetence among certain parties

19

in the city in terms of what happened with the financial

20

records and keeping track of their money.

21

sudden, basically they realized -- and they knew there were22

signs, and they knew they had problems but the problems were23

materially worse than they even knew they were, when they had

24

new people come in to take over the financial recordkeeping.

25

And those people said, hey, we've got this huge problem, we've

You seem to have had a

And so all of a

EXHIBIT A PAGE 183

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 189 of 244
CITY OF SAN BERNARDINO

Desc101

1

got to deal with this, and it was, in our mind, a pretty

2

extreme situation.

3

they had to pay on a daily basis.

4

what it could pay on a daily basis -- and I think that's an

5accurate statement -- how are they going to formulate a plan of

6

adjustment.

7

from here to there?

8

And that was our view; that's why we didn't object.

9

their financial records were in disarray, and we think they've

10

been working to -- not as fast as we would like and we don't

11

like all the problems that have been identified, but the

12

problems are what they were going into this case.

13

got to get on track where the records can be put together, the14projections can be put together; and we believe the City is

15

working on putting on projections together so that we can move16

toward formulating a plan.

17

That's how we see it.

18

And as CalPERS said, they didn't know what
So if the City didn't know

And how are they going to come up with a process
They were in a state of extreme emergency.
We think

And we've

But that's our perspective on this.

The last thing I would just add, and I've struggled

19with why CalPERS has opposed this and what -- as you posed the20question, what would they look to get out of a dismissal.

21

think that they're frustrated, which they have expressed, at22

the pace of this, and we certainly understand that.

23

I

I will just observe, and I think this is an objective

24

observation, so I'm not saying anything about anyone's intent

25

or motivation.

But it is has struck me that, if this case did
EXHIBIT A PAGE 184

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 190 of 244
CITY OF SAN BERNARDINO

Desc1021

get dismissed, there is one creditor who would have tremendous

2

leverage outside of a bankruptcy if they were to terminate the3pension plan, and that's CalPERS because they would get a lien

4

on all the City's assets by statute.

5

termination outside of a bankruptcy and the threat of that lien

6

would give CalPERS tremendous leverage outside of bankruptcy.

7

And that certainly has been something that has struck me,

8anyway, in trying to figure out what might be going on here in9

terms of at least what the impact would be of a dismissal vis-

10

a-vis CalPERS and the City.

11
12

And that threat of a

So that's all I have to say, Your Honor.
for letting me speak.

Thank you

I appreciate it.

13

THE COURT:

14

MR. GLASSMAN:

15

THE COURT:

16

MR. GLASSMAN:

17

THE COURT:18

MR. GLASSMAN:

Thank you very much.
Your Honor --Mr. Glassman.
-- I just had a couple things to add --You may.
-- on the specifics of the discussion

19of the financials.

20

information was provided to CalPERS and that the City isn't

21

working --

22
23
24
25

THE COURT:The statement was made that no financial

They didn't say no, they said you have

withheld some financial information.
MR. GLASSMAN:

Your Honor, they said they didn't have,for example, projections.

They said they did not receive -EXHIBIT A PAGE 185

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 191 of 244
CITY OF SAN BERNARDINO

Desc103

they wanted financial projections is what Mr. Gearin said.

2

THE COURT:

3

MR. GLASSMAN:

Yeah, okay.

That -- yeah, he did say.

And also bank reconciliations, I want4

to -- although the City is not required under any court order5

to provide the bank reconciliations they've continued to

6

provide reconciliations for -- February, March and April were7

provided on July 22nd, July 29th and August 22nd.

And they8

continue to provide them as they're able to do so.

They're9

prepared by the staff and reviewed by counsel.

10advises me that he sent an e-mail to CalPERS consultant, Mr.

11

Crisafulli on April 11th at 4:03 p.m. with ten-year forecasts

12of cash flow.

13

And Mr. Busch

And the City is working --THE COURT:I thought his declaration said he got it

14

in April.

15

my assumed facts that until April there were no cash

16

projections, but my understanding from his declaration is they17

had them after that.

18

I thought that was in his declaration.

MR. GLASSMAN:

So I said inAnd, Your Honor, they City is

19

working -- we mentioned in another hearing, the City's

20

financial staff is working with their auditors on the --21

they're catching up.

22

audit for 2011-'12, and 20- -- which is to be complete

23

relatively soon.

They're still behind on the fiscal year

24

UNIDENTIFIED SPEAKER:

25

MR. GLASSMAN:

In a month.

In a month.

And the fiscal year, '12EXHIBIT A PAGE 186

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 192 of 244
CITY OF SAN BERNARDINO

Desc1041'13 will be prepared within a few months, I believe, or a2

little bit later in the year, hopefully.

3

this financial information will be helpful as part of the plan4

formulation process and although the situation is clearly not

5ideal or perfect with respect to the financials it is6

improving.

7

information, is now -- the situation that was described earlier

8

in the case has changed dramatically in terms of the City's

9ability to provide financial information and forecast, although10

it is still perhaps not able to do so at the pace that some11

creditors would prefer in the case.

12

So they're working --And the City is collecting its financial

But in any event, so there is progress being made, and13

that's why I would urge the Court not to set any specific14deadlines because we're moving as fast as we can and we'll see

15

how -- I would like to see how the process develops and leave

16

some flexibility, the assurance that we're doing everything we

17

can as quickly as we can.

18

bankruptcy a moment longer than it has to, but on the other19

hand, as we've seen from the case, because of just part of the20

process and the realities of the City, certain things take

21

time.

22

formulated and such.

23

financial information.

24

information in place, it is difficult to formulate the legal

25

proposals that flow from that.

And the City doesn't want to stay in

And the legal -- you asked why plans cannot be
Well, they depend, of course, on
So until you have the financial

So that's -- I would urge the
EXHIBIT A PAGE 187

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 193 of 244
CITY OF SAN BERNARDINO

Desc105

1

Court not to set any deadlines at this time, although clearly2

it's in all of our minds that this process needs to move along3

quickly.

4

THE COURT:

5

Mr. Gearin?

6

MR. GEARIN:Your Honor, if I could?

7

THE COURT:

Yes, you may.

8

you may respond to.

9

All right, thank you.

MR. GEARIN:

You have two people thatThank you, Your Honor.

And I'll be very10

brief.

I guess I'll start with the financial information

11

issue.

Two points there.

12

take testimony on whether the City has intentionally withheld

13financial information from CalPERS.

14

to Mr. Busch, we'll do a short deposition, and we'll figure out

15

whether that's intentionally been done or not, and we'll

16

present that evidence to the Court.

17

there that the City has purposely has withheld cash reports

18

that are available today, forecasts that are available today as

19

a litigation tactic so that they don't have to share that20

information in advance of this eligibility hearing.

21

happy to provide that.

22

this case.

23

they have to share real information with their creditors.

One, we're happy to have the Court

And we think we could talkWe think the evidence is

So we'reThat's a serious issue going forward inIf you're going to find this debtor is eligible,

24

THE COURT:Of course they do.

25

MR. GEARIN:

And they can't hide behind
EXHIBIT A PAGE 188

Case 6:12-bk-28006-MJ

Desc106

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 194 of 244
CITY OF SAN BERNARDINO

1

confidentiality protections and barriers to producing

2

information.

3

Second point.

This debtor says, well, we don't have4

the resources to go forward with producing these reports and5

we're moving as fast as we can.

6

THE COURT:

They didn't say they didn't have resources7

to ever do them; they said they are doing them as quick as they

8

can.

9

MR. GEARIN:I think that's right, Your Honor.

And I

10

got to tell you, I'm sorry, I don't think that's true.

11

most recent cash report forecast indicated at the end of the

12

fiscal year they had forty million dollars of cash.

13

million dollars.

14people to create forecasts and present a plan?

15

understand why that could be true.

16

amount of cash during the time they have not been paying their

17

creditors while they're in this bankruptcy case.

18

Their

Forty

They don't have the resources to go hire the
I cannotThey have accrued a huge

I want to go back and talk about Mr. Dubrow's comments

19very briefly as well.

20

to be benefitted by dismissal.

21

think that all of the creditors in this case will be benefitted

22

by dismissal.

23

the debtor; the debtor is not going to necessarily going to24

have to dissolve.

25

to have to go back and come up with a concept of a plan and do

Mr. Dubrow says, well, CalPERS is goingThat's not true.

We actually

It's not going to be the end of the world for

What it's going to have to do, is it's going

EXHIBIT A PAGE 189

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 195 of 244
CITY OF SAN BERNARDINO

Desc1071

the things it should have done before it came in the doors of2

this Court.

3

its creditors.

4

with people about how a plan can actually move forward.

5

tell the debtor it's okay to come into these doors right now

6without doing those things, I'm telling you, we're going to7have a very difficult time prying information and getting this8

debtor to move forward with a real plan process.

9

It's going to have to negotiate in good faith with
It's going to have to have fair discussions

Last point.

If youYour Honor, one of the reasons that10

eligibility is an important decision for the Court in a Chapter

11

9 case is that you really only have a couple of tools.

12

got eligibility and plan confirmation, and once you determine

13

eligibility, you cannot unring that bell.

14

the case; you can't appoint a trustee.

15

kinds of things you would do if your case moved forward in

16

Chapter 11 and things were not proceeding in good faith and the17

debtor was not complying with its responsibilities to its

18

creditors.

19

you determine this debtor is eligible.

20

from CalPERS perspective is, don't make that decision, don't

21

ring that bell because they have not come forward with22

sufficient evidence to prove their worth, to prove that they're

23

actually fulfilling their obligations to their creditors thus

24

far in the case.

25

You've

You cannot convert

So those would be theYou're not going to be able to do those things if
So the proper course

Thank you, Your Honor.
EXHIBIT A PAGE 190

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 196 of 244
CITY OF SAN BERNARDINO

THE COURT:

Desc108

Although CalPERS may say a compelling2

argument that this debtor is certainly different than many of3the other debtors that have been found eligible and that it is4

slow, that its financial records were in disarray when they5

filed, that it has taken a long time getting them in order.

6

But it appears to have come a fairly long way based on their

7

getting their cash projections out in April and doing the other8

things they have done.

9

I do think that the characterization of this case as

10

an outlier is a correct characterization.

11

regret setting a precedent -- and of course, I have no powers

12

to do that as a trial judge -- but an example that other cities

13

could look at and thing let's follow the roadmap of San

14

Bernardino, I cannot imagine any city choosing to do that.

15

is too painful.

And although I would

16

I'm going to rule my tentative.

17

eligibility for all the reasons I shared before.

18

to ask that the order issue as quickly as possible.

19

going to condition the order.

20

It

I'm going to grant
And I'm going
I'm not

I have some things to say about what happens after

21

that order is entered when we talk about mediation.

22

might help CalPERS swallow the ruling that I'm making.

23

made my decision -- there aren't any findings and conclusions

24

in a summary judgment.

25

analysis of the law and the record; however -- and I will enter

And they
I haveSo I've made my statement about my

EXHIBIT A PAGE 191

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 197 of 244
CITY OF SAN BERNARDINO

Desc1091

the order -- I do intend to write a written opinion, but it2

will not hold up the order at all because I think doing that3

would just be a delay that's unwarranted in this case.

4

Judge Klein ruled and wrote months later, and I intend

5

to do the same thing because I think I need to explain in6

writing what happened here, and I will try do that and why I

7

ruled the way I did, although I think the record I made is8

pretty clear.

9

So I will grant the motion.

I will find eligibility,

10

and I will ask Mr. Glassman to circulate a simple order as to11form only, granting the order for relief.

12

in a short period of time, get agreement on that order, then13

lodge it, and I will follow the lodgment procedure and taking

14

challenges.

15

And if you cannot,

That, having been said and done, I want to talk about16

the mediator next.

17

that are not -- have not been appearances yet that maybe we

18

should make an appearance.

19

And therefore, there are a lot of people

MR. OLINER:

So I'll open the podium to that.

Thank you, Your Honor.

Ron Oliner, Duane

20

Morris, counsel for the San Bernardino Police Officers

21

Association.

22

Steve Turner, president of the association, and I believe the23

vice president of the association, Mr. Brian Lewis, is milling24

about somewhere.

25

moment.

In the courtroom with me today are Detective

I don't see him in the courtroom at this

EXHIBIT A PAGE 192

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 198 of 244
CITY OF SAN BERNARDINO

1

THE COURT:

Thank you.

2

MR. GLAVE:

Good afternoon, Your Honor.

3

THE COURT:

5

MR. GOODRICH:

7

Corey Glave,on behalf of the San Bernardino City Professional Firefighters.

4

6

Desc110

Good afternoon.
Good afternoon, Your Honor.

Dave

Goodrich, on behalf of the Firefighters as well.
MS. UYEDA:Good afternoon, Your Honor.

Anne Uyeda

8

and Bienert, Miller & Katzman, on behalf of Certain Retired

9

Employees of the City of San Bernardino.

10

THE COURT:

Thank you.

11

MR. LUBIC:Good afternoon, Your Honor.

12
13

Michael Lubicof K&L Gates for CalPERS.
THE COURT:Is there -- I think there's one other14

person approved live on the phone besides Mr. Dubrow.

15

Apparently, that --16

MS. DANDENDAU:

17

THE COURT:

18

MS. DANDENEAU:

Good af --Yes, no?
Good afternoon, Your Honor.

Debra

19

Dandeneau from Weil, Gotshal & Manges, for National Public

20

Finance Guarantee Corporation.

21

THE COURT:

22

MS. DANDENEAU:

I thought you were -Although we do not intend to make any

23comments with respect to --24

THE COURT:

25

MS. DANDENEAU:

All right.
-- mediation.
EXHIBIT A PAGE 193

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 199 of 244
CITY OF SAN BERNARDINO

Desc111

1

THE COURT:

2

I would like to address -- and this is a matter thatThat's fine.

Thank you.

3

is actually number 27 on the Court's calendar, which is the4status conference on the main case here.

5

after he returned from Europe last Monday, and he said he was

6willing to undertake assistance as a negotiator -- a mediator7in this case.

8

for before he is willing to undertake that.

9

I spoke to Judge Zive

But there are two conditions that I have to ask

Number one, it really is an afterword, just a

10statement of fact, and it may not matter in the timing of

11

what's going on here.

12

until the end of September, early October.

13

He's really not available with time

But the second condition will make that probably not a

14

problem compared to the second condition.

15

is he will not start a negotiation without a draft plan before16

him because -- and I agree with him.

17

there are no concepts on the table?

18

The second condition

How could he do it if

So to the extent that CalPERS wants to see that plan19

or an outline of the plan, so does the mediator and so does

20

this judge.

21

I am not going to set a deadline for filing a plan22

because that's different than Judge Zive is asking for.

23

need some commitment from the City before I sign the order

24

appointing Judge Zive that they will have some term sheet --25

which I think is another term of art for something, a precursor

But I

EXHIBIT A PAGE 194

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 200 of 244
CITY OF SAN BERNARDINO

Desc1121

to a plan -- available at some foreseeable future time because2

he cannot negotiate an essentially -- an empty -- I don't know

3

what word is -- he can't negotiate without something to4negotiate about.

5
6

You need a minute to confer with your people, Mr.
Glassman, to answer that question?

7

MR. OLINER:

May I be heard before --8

THE COURT:

Yes, you may.

9

MR. OLINER:

Thank you.

10

MR. DUBROW:Your Honor, before -- I'm sorry.

11

David Dubrow.

This isCan I make one comment before --12

THE COURT:

Yes, you may.

13

MR. DUBROW:

Thank you.

I would suggest that besides

14

a term sheet, for it to be meaningful for creditors, that it

15

would need to be accompanied by some multiyear projection.

16

THE COURT:

Yeah, it needs to project, clearly.

17

MR. DUBROW:

That --

18

THE COURT:I agree with you, a hundred percent.

19

MR. DUBROW:

Okay.

20

MR. OLINER:

Thank you, Your Honor.

I'll be brief.

21

But my thinking of interrupting what was going to be a short

22

minute for counsel to confer with the City representatives was

23

that it might be constructive -- who knows?

24

after I finished talking, and I'll be very brief now.

25

are some other -- absolutely, I am a pro-deadline kind of a

They'll decide
There

EXHIBIT A PAGE 195

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 201 of 244
CITY OF SAN BERNARDINO

Desc1131

guy, notwithstanding your comments.

2

harking back to Vallejo.

3

because I do it all the time, but that's exactly what Judge

4

McManus did when very able counsel at Orrick -- I won't say

5they were drifting necessarily, but the case was drifting.

And I keep citing back --I draw a smirk from Fires' counsel

6

So I'm a big believer in deadlines.

7

THE COURT:

Yeah, I'm not going to leave this open.

8

MR. OLINER:

That's --9

THE COURT:

I'm setting another --10

MR. OLINER:-- that's where we're going.

11

THE COURT:-- status conference for me to think about

12

setting the deadline for supplying the plan.

13

a little premature for me --14

MR. OLINER:

But --

15

THE COURT:-- to do that today.

16

MR. OLINER:

Agree.

But I think it's

But consistent with your last17

comment, let's -- and Mr. Glassman began to talk about a period18

of a month while looking back at somebody, and then said three19

months after looking back at someone else on a different issue.

20

I think we should get a fix, and particularly --21

THE COURT:

Yeah.

22

MR. OLINER:-- given Judge Zive's second condition,23

on when we're going to see this thing.

24

sense for the judge not to walk in cold with way too many

25

lawyers --And it makes eminent

EXHIBIT A PAGE 196

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 202 of 244
CITY OF SAN BERNARDINO

Desc114

1

THE COURT:

Right.

2

MR. OLINER:-- and to say okay, where do we start.

3

It begins with the --4
5

THE COURT:And he may decide after he's seenit that he starts with a piece or a piece or a piece or many --

6
7

Yeah.

MR. OLINER:
Absolutely.

8

That's how you move the case along.

That's how you move the case along.

Two other preliminary comments -- because, depending

9

on how the mediation part of today's event goes, I may have

10much more to say -- are these.

11

could in phone calls putting lawyers in the same phone line

12

anyway to discuss the parameters of a mediator.

13

indicated you're going to do what you're going to do vis-a-vis

14

the mediator's powers.

15
16

And I've participated as best I

Here are my last two points.

You'veDon't tie the mediator's

hands.

17

THE COURT:

I'm not going to.

18

MR. OLINER:

Excellent.

Let the mediator decide what19

he mediates, whatever it may be, because everyone is trying to

20

say give him this piece but not that piece.

21

Secondly --22

THE COURT:

Well, my comment at the last status

23

conference about the interplay between the Lisco motions, as I

24

call them, and the plan terms -- I haven't forgotten the25

comment, and I totally believe it, because the short-term
EXHIBIT A PAGE 197

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 203 of 244
CITY OF SAN BERNARDINO

Desc115

1

rejection or imposing of the collective bargaining agreement is2

only a piece of the long term --3

MR. OLINER:

Absolutely.

4

THE COURT:-- with the same people.

5

MR. OLINER:

Now --

6

THE COURT:

And if you're talking about the plan with7

those parties, although I know the City's proposed order was

8

only if they agree, well, you know, a mediation with a9nonagreeing party --10

MR. OLINER:

It's --

11

THE COURT:-- is not very helpful.

But I can't

12

imagine that long term -- the short term isn't going to come up

13

in the long-term discussion.

14

MR. OLINER:

15

before I get to my --Now, that's a -- now, I have a subpoint

16

THE COURT:

Okay.

17

MR. OLINER:-- final point.

Mr. Glassman has

18previously told the Court, and I suspect he'll do so again

19

today, let's move out on the 365, 362 motions.

20

THE COURT:

Well, I was going to --21

MR. OLINER:

Let's go.

22

THE COURT:

That's why I went to the mediator first.

23

MR. OLINER:

And if we go there, that may be where we

Let's go.

Let's go.

24

have to go.

25

Whoever gets a incremental victory there, you've still got fireBut precisely the point, what do you -- okay.

EXHIBIT A PAGE 198

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 204 of 244
CITY OF SAN BERNARDINO

Desc1161

and police coming to work every day looking for contracts.

2

It's sort of like a -- it may be high five among some of the

3City Council that the City got the contracts rejected or vice-4

versa, if you were to rule in favor of the unions, the public

5

safety.

6aside, the second thing that mediator needs to have is a gag

7order.

8

Whether they're going to push forward on that or not

This is a politically charged case.

Some would say a9political train wreck of a case.

10

not suggesting media can't be our friends -- all around and11

there are people who talk.

12

There are media -- and I'm

THE COURT:

They've already reported my tentative

14

MR. OLINER:

I'm quite sure if I were to --15

THE COURT:I went back in there on the break, and I

13

16

decision.

pulled up --17

MR. OLINER:

They Googled --18

THE COURT:We get a thing every day; it's called

19"Bankruptcy in the News".

20

Washington State.

And it's put together by clerks in

21

MR. OLINER:

Yeah.

22

THE COURT:

And the fir -- and it came on my computer

23

sometime while I was on the bench.

24

MR. OLINER:

Imagine if --25

THE COURT:

And the first article was about me.
EXHIBIT A PAGE 199

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 205 of 244
CITY OF SAN BERNARDINO

MR. OLINER:

Desc117-- imagine if Mr. Gearin had turned your2

tentative around.

3

heads would have rolled in the world of journal -- so --4
5Boy, would they be wrong.

THE COURT:

No, they reported it correctly as atentative ruling made at 1:30 today.

6

MR. OLINER:

7

MR. GLASSMAN:

8

It would have --All right.

Well, so --Those Washington sources are reallyaccurate.

9

MR. OLINER:

So the mediator --10

THE COURT:

No, the -- it's a wonderful service they11

do for us.

12quickly.

13

But I couldn't believe they picked that up that

MR. OLINER:

So my point's made; to summarize are, let

15

THE COURT:

Right.

16

MR. OLINER:-- mediator have unfettered discretion to14

the --

17

decide what he mediates.

18

binding authority.

After all, a mediator doesn't have19

THE COURT:

Right.

20

MR. OLINER:

It's not an arbitrator.

21

THE COURT:

And they -- and the City --22

MR. OLINER:-- sitting as a judge.

23

THE COURT:-- can come in and say we don't want toHe's not --24

talk about that.

25

I'm not going to tie his hands from trying to convince the City

And maybe he'll convince them they do.

EXHIBIT A PAGE 200

And

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 206 of 244
CITY OF SAN BERNARDINO

Desc118

1

they should talk about that, which is why I think I would do it

2

unfettered.

3

MR. OLINER:

Secondly, given his unavailability for4another month and change, that should be plenty of time.

5

I'd like to hear Mr. Glassman say yes, I agree; for them to get

6at least a term sheet out.

And

7

THE COURT:

Right.

8

MR. OLINER:

And we'll talk about deadlines down the9road when it begins to drift again.

10

suggested it might be two hearings ago, were you to rule this

11

way.

Today was a huge day, as I

Let's get to it.

12

Three, an appropriate gag order needs to be included

13

in whatever order you grant.

14

THE COURT:

15

not a gag on the --This is a gag on all parties, I assume,

16

MR. OLINER:

All parties to the --17

THE COURT:I mean, the media are going to talk18

anyway, but --19

MR. OLINER:

If you're going to be --20

THE COURT:

I know.

I -- they're losing their

21

mediator confidentiality if they talk, so they shouldn't be

22talking.

23
24
25

But maybe we need that in writing.
MR. OLINER:

That's enough for now.

THE COURT:

Okay.

Thank you, Your

Honor.
Thanks.

Mr. Glassman, do you need
EXHIBIT A PAGE 201

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 207 of 244
CITY OF SAN BERNARDINO

Desc119a minute, or have you already talked?

2

MR. GLASSMAN:

3

than a minute to --4

THE COURT:No, Your Honor.

Okay.

We need probably more

How many minutes?

My problem is if

5

I let people out of the courtroom, it'll be longer to get you

6back than I intend.

7

MR. GLASSMAN:

8

THE COURT:We do need about fifteen minutes.

All right.

You need that long.

9Then, I better let you go do that.

10

o'clock.

11

We'll take a recess until 5

Off the record.

(Recess from 4:44 p.m. until 5:17 p.m.)

12

THE CLERK:

Remain seated and come to order.

13

THE COURT:All right.

14

the City of San Bernardino.

15

the main case.

16

Okay.

We're back on the record inThis is the status conference of

Mr. Glassman.

MR. GLASSMAN:

Your Honor, I would like to raise -- to17

respond to the -- to your question and raise a few issues.

18

then, after doing so, I'm going to ask for a short continuance

19of the matter.

20

respect to the timing.

And

And let me tell you the considerations with

21

THE COURT:

22

MR. GLASSMAN:

Okay.
First, there -- I understand that in23

one of the items that Mr. Busch will need in order to prepare

24

projections in connection with the plan will be the CalPERS

25

actuarial report, which is given to the cities in mid-October.
EXHIBIT A PAGE 202

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 208 of 244
CITY OF SAN BERNARDINO

Desc120

1

And with -- Mr. Busch advises that that is a document that he2

must have.

3

THE COURT:

4

MR. GLASSMAN:

5

THE COURT:

6

year?

7

reasonable.

8

Did he get one last year, mid-October?
Every year, they're given all of it.

How about working off the one from last

CalPERS is shaking their head that that would be

MR. GLASSMAN:

Your Honor, Mr. Busch advised me that9he expects that the numbers -- well, because of all of the

10changes that the City and the number of employees and such,

11

because of layoffs and such, that the numbers and changes in

12

the plans that -- in the cost sharing -- that it's anticipated

13that the numbers will change significantly.

14

that information in order to formulate a proposal.

15

number one.

16

And they will needThat'sNumber two, they will need the starting cash balances17

which will be derived from the closing from the 2011-201218

audit, which, I indicated earlier, they expect that to be

19completed in about thirty days.

20

information from that audit in order to prepare projections and21

have the starting cash balances.

22
23
24
25

And they will need to have theSo from a financial standpoint, those are two items
that are significant.
THE COURT:

Does he think that the audit's going tochange the ones in the unaudited?

This is a delay I'm not
EXHIBIT A PAGE 203

Case 6:12-bk-28006-MJ

1
2

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 209 of 244
CITY OF SAN BERNARDINO

Desc121

liking to hear, Mr. Glassman.
MR. GLASSMAN:

Your Honor, he advised me that they do3have trial balances, that they need that information to verify

4

the trial balances, but they can certainly begin work --5

THE COURT:

6

MR. GLASSMAN:

7

THE COURT:

That's what I'm --- they can work with trial balances.

-- we're at the stage you don't need these8

exact numbers.

9

from CalPERS that would allow you to not have to wait until

10

October to do this.

11

tentative numbers from the 2011-2012 audited financials that

12

wouldn't be enough information for you to start a term sheet.

13
14

I can't imagine you can't get a ballpark number

And I can't imagine you don't have

MR. GLASSMAN:

Your Honor, if CalPERS is willing togive the City the data earlier, then that --15

THE COURT:

16

MR. GLASSMAN:

17

THE COURT:

18

number, or is it like one sum?

19

MR. GLASSMAN:

20

Or some --- would change things.

-- just a number?

Is it a complicatedComplicated number?

Certainly, it's that -- the answer

would change if the information could be obtained earlier.

21

THE COURT:

22

MR. GLASSMAN:

Okay.

Well --

With respect to one additional item, of

23

course, a component of the City's plan is the rejection of the24union contracts.

25

would have to be determined, and the City would have to know

So that matter would -- the City is assuming

EXHIBIT A PAGE 204

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 210 of 244
CITY OF SAN BERNARDINO

Desc122the outcome of that in order to --2

THE COURT:

3

until I rule on that motion.

4

alternative in your term sheet.

5

MR. GLASSMAN:

I'm not going to delay your doing a planIf you have to, put it in theYes and no.

Then, lastly, Your Honor, kind of the6elephant in the room is that the City is a political body.

7

Chapter 9 anticipates that the political process will continue.

8

And as the Court may be aware, this time of year is an --9there's an election in early November, and also there are

10

elections for mayor, several councilmembers, and there's also a

11

recall so that at this particular -- the period of time in

12

September and October is one that we're, just as a practical13

matter because of the political process, a lot of the time of

14

the City Councilmembers will be spent in dealing with the15election.

16

And

So that also has an impact on the timing.
So we're -- preliminarily, we're looking at, with17

these items that we need, we're thinking that the end of the18

year for a -- looking at the end of year -- December, January,

19

for a term sheet is what we're looking at.

20

THE COURT:21

MR. GLASSMAN:

22

THE COURT:I don't think that's reasonable.
Or --You're going to make my ruling look bad in

23

December, Mr. Glassman.

24

MR. GLASSMAN:

25

THE COURT:

Early December -- okay.

You're going to dig yourself in a hole,
EXHIBIT A PAGE 205

Case 6:12-bk-28006-MJ

1

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 211 of 244
CITY OF SAN BERNARDINO

Desc123and I'm going to get a reconsideration.

2

MR. GLASSMAN:

3

THE COURT:

4

MR. GLASSMAN:

Okay.

So think some more.
Okay.

Your Honor, given the comments

5about the actuarial protections, I would say then6

approximately -- if we get those in October, then, say, in --7

say, within thirty to -- thirty days or so after that time.

8

THE COURT:

9

Lubic, or something?

10

MR. LUBIC:

I don't know.

11

THE COURT:

Half?

12

MR. LUBIC:-- it probably can be --13

THE COURT:

I know you don't want to commit.

14

MR. LUBIC:-- expedited, but I'm going to explain why

15

Can you get those to them any earlier, Mr.

I think --the City doesn't need to wait until they get --16

THE COURT:

Okay.

17

MR. LUBIC:-- the valuation report.

18

THE COURT:

I wondered about that.

19

MR. LUBIC:

And I'm -- this is where I stand up and

20

Tell me.

say I'm not an actuary.

21

THE COURT:

I know.

22

MR. LUBIC:

And I would certainly feel better if I had

23a chance to verify this with my client.

24

my understanding is that the actuarial reports are done in25

arrears so that the report that is due this fall would actually

But with that caveat,

EXHIBIT A PAGE 206

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 212 of 244
CITY OF SAN BERNARDINO

1

be for the year ended June 30, '12.

2

right?

Is that right?

Desc124That's not

Well, without regard to what the report has in it --3

THE COURT:

Um-hum.

4

MR. LUBIC:-- the reality is that the public records

5of the City of San Bernardino reflect that they engaged Bartell

6& Associates as their consulting actuary.

7& Associates a fair amount of money.

8

actuaries at CalPERS, and they have enough information to take9

a stab at the --He has met with the10

THE COURT:

Okay.

11

MR. LUBIC:-- at the numbers.

13

THE COURT:All right.

14

MR. GLASSMAN:

12

They've paid Bartell

They don't need thisreport.

Your Honor, I would, again -- I would

15

ask, in order to have answers to these question, I would -- it16

might be helpful to have a short continuance so that we can17answer the question --18

THE COURT:

Yeah, I'm inclined to do that, because I'm

19

not going to let this thing go out.

20

run back in here, so I'm prepared to do something that a lot of

21

people could be on the phone for in a fairly short time frame.

22

If I -- like, maybe next week?

23

maybe even a week from today or even a week from yesterday.

24

And I would let anybody that can't make it here or doesn't want25

to come here be on the phone live to participate because I know

I hate to make everybody

Like a week from tomorrow or

EXHIBIT A PAGE 207

Case 6:12-bk-28006-MJ

1

Because I really think that that's an unreasonable
request.

And it --4

MR. GLASSMAN:

5

THE COURT:

6Your Honor ---- makes me question whether there ever

was an endgame.

7

MR. GLASSMAN:

8

with a shorter period.

9

THE COURT:

10

MR. GLASSMAN:

11

Desc125

it's an effort to get here from a distance.

2
3

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 213 of 244
CITY OF SAN BERNARDINOYour Honor, I would like to come up
I need an opportunity --I know.
-- to consult in order to do thatrather than --12

THE COURT:

13

MR. GLASSMAN:

14

THE COURT:All right.

I'll let you do that.

-- guess at a time.

Because my concept is you don't need that15

exact a number to get a concept of a plan drafted.

16

frankly, although I've certainly heard a lot from CalPERS about

17

nobody at the City of San Bernardino has enough staff, has been

18

assigned to draft the plan, attorneys draft plans.

19

need some financial information, but it doesn't have to be the20last dollar.

21

is this is how we intend to treat you, whatever your claim is.

And quite

Yes, you

And a lot of what's going to be in that concept

22

So you're getting hung up on detail that I'm not23

contemplating would be necessary for you to get something24

meaningful for Judge Zive to start mediating about.

25

will -- when next week can we be back?

So I

Officially, I can set
EXHIBIT A PAGE 208

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 214 of 244
CITY OF SAN BERNARDINO

1

it Tuesday or Thursday in the afternoon.

2

Wednesday, it'll be a little later in the afternoon.

3
4

MR. OLINER:
Honor.

And if I do it

Each or any, on behalf of myself, YourAnd I will --5

THE COURT:

Well, that'll be on the --6

MR. OLINER:-- I'll be availing myself of a7

Desc126

telephone --8

THE COURT:

That's fine.

9

MR. OLINER:-- versus coming back down for it.

10

THE COURT:

Absolutely.

11

MR. GLASSMAN:

12

Jewish holidays, and Wednesday evening.

13

THE COURT:

14

MR. GLASSMAN:

15

THE COURT:16

How about Tuesday afternoon?
There's a council meeting on Monday.

Is that going to work?

It's a longweekend.

17
18

Your Honor, Thursday and Friday are

MR. GLASSMAN:

And Tuesday.

And Labor Day is Monday.

Is it possible it could be early the following week?

19

MR. OLINER:

How about Friday of this week?

20

THE COURT:

I have a problem Friday.

We have our

21quarterly board judges' meeting, so I can't commit Friday, plus

22

I think he said that that was part of the Jewish holiday.

23

Right?

24

MR. GLASSMAN:

25

THE COURT:

Well, that's next Thursday --Yeah.
EXHIBIT A PAGE 209

Case 6:12-bk-28006-MJ

1
2

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 215 of 244
CITY OF SAN BERNARDINO

MR. GLASSMAN:

THE COURT:

4

MR. GLASSMAN:

5

THE COURT:
he in or out?

Oh.
-- additional --You mean you can't do it on the 5th?

Is

Is that the Jewish holiday?

7

MR. GLASSMAN:

8

THE COURT:

9

MR. GLASSMAN:

10

THE COURT:

11

But I think we need

an --

3

6

-- and Friday.

Desc127

The 5th is a Jewish holiday.

That's the -- okay.
The 5th and 6th are Jewish holidays.

Okay.

That's what I thought you said.

That Friday's just --12

MR. GLASSMAN:

13

MR. OLINER:

How about Wednesday, the 4th?

14

THE COURT:

That's what I'm thinking, later in the --15

I could do it at 1:30.

16

MR. GLASSMAN:

17

THE COURT:

19

MR. GLASSMAN:

20

THE COURT:
phone?

22
23

I can do it, like, 2:30.
Well, in the after -- the Jewish

holiday begins at sundown.

18

21

And Tuesday is a council meeting.

How about you be on the phone?
I'm sorry?

How about anybody Jewish can be on the

We'll be done by sundown.
MR. GLASSMAN:

We -- well, we can do themorn --

24

MR. LUBIC:

25

MR. GLASSMAN:

The sun will be up at 7:30.
-- the morning on the -EXHIBIT A PAGE 210

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 216 of 244
CITY OF SAN BERNARDINO

Desc128

1

THE COURT:

Oh, I can do it in the morning, actually.

2

MR. LUBIC:

Sundown is like 7:30.

3

THE COURT:I can do it -- I --4

MR. GLASSMAN:

5

THE COURT:

6
7
8
9

The morning on the --I can do it at 10 or 11 on the morning of

the 4th.
MR. GLASSMAN:
Labor Day.

Okay.

So -- okay.

THE COURT:

And then, I guess the 2nd isThen, 11 o'clock on the 4th.

Okay.

That's fine.

We will continue the10status conference part of what's on today to September 4th at

11

11 o'clock.

12

the phone live.

And I'm pre-approving anybody that wants to be on

13

MR. OLINER:

Thank you, Your Honor.

14

THE COURT:I think we should continue the Lisco

15

decision until we get this straightened out.

16

enter an order, if I am able to do it, about the mediator that17

leaves the ability to negotiate that decision on the table.

18

And I'll have a little bit more to say about that next week.

19

But I don't know that it is going to be productive to set up a20

whole number of complicated briefing schedules on that before

21

the parties have had any chance to meet with Judge Zive.

22

But I am going to

So I'm not saying I won't make that decision if the

23City absolutely refuses to meaningfully mediate on it, because,24

as you can tell, I'm prepared to make decisions when I have to.

25

But I'm not sure whether that might be obstructive to the
EXHIBIT A PAGE 211

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 217 of 244
CITY OF SAN BERNARDINO

Desc1291

negotiation if people are briefing and trying to talk at the2same time.

3

But I'll address that further next week.

So I'm going to continue them all to September 4th at4

11 o'clock.

5

other than the main case and the summary judgment motion -- I

6mean the -- other than the summary judgment motion.

7

okay with everybody that we do that?

8

what we'll do then.

That would be the other matters from the calendar

All right.

Is thatFine.

That's9

MR. OLINER:

Thank you, Your Honor.

10

THE COURT:I think that concludes the matters for11this afternoon.

The Court's in recess.

12

MR. OLINER:

Thank you for your time today.

13

THE COURT:

Thank you.

14

I'll see you next week.

(Whereupon these proceedings were concluded at 5:32 PM)

15
16
17
18
19
20
21
22
23
24
25
EXHIBIT A PAGE 212

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 218 of 244

Desc130

1
2

I N D E X

3
4

RULINGS

5

PAGE

LINE

6

Rule 56(d) motion denied

37

16

7

Eligibility granted

108

16

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
EXHIBIT A PAGE 213

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 219 of 244

Desc131

1
2

C E R T I F I C A T I O N

34I, Penina Wolicki, certify that the foregoing transcript is a5

true and accurate record of the proceedings.

6
7
8
9
10
11
_____________________________________
12
PENINA WOLICKI
13
AAERT Certified Electronic Transcriber CET**D 569
14
15
eScribers, LLC
16
17
700 West 192nd Street, Suite #607
18
New York, NY 10040
19
20
Date: August 30, 2013
21
22
23
24
25
EXHIBIT A PAGE 214

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ

A
abilities (1)88:13
ability (13)15:9;27:19;29:18;
42:2;51:10;58:23;
63:14,23;72:3;81:25;
93:20;104:9;128:17
able (8)41:9;63:11;97:17;
103:8;104:10;107:18;
113:4;128:16
above (1)80:5
abruptly (2)17:9;92:12
absolutely (6)94:18;112:25;114:7;
115:3;126:10;128:23
abusive (1)53:25
accept (2)87:4,7
accepted (2)41:7,8access (2)46:22;96:4
accompanied (1)112:15accomplish (1)72:2
accorded (1)47:23
account (8)11:16;44:21;80:12,
13;81:7;94:6,7,9
accounting (2)22:1;80:13
accounts (3)22:24;81:11;94:7
accrued (4)30:5,12,18;106:15
accruing (1)30:13
accurate (2)101:5;117:8
achieve (1)51:10
acknowledge (1)87:10
across (1)41:3
Act (7)
20:21;33:21;51:22;
99:16,17,22,24
action (2)31:7;93:18
acts (7)
10:12,23;11:5;16:21;
42:25;43:10;84:11
actually (31)
Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 220 of 244

15:19;18:18;22:8;
23:10,20;24:5;28:11;
40:21;49:9;50:8;59:7,
17;60:8;66:16;67:7;
68:4;71:15;75:22,25;
76:2,16;77:8;85:5;
97:3;99:2;106:20;
107:4,23;111:3;
123:25;128:1
actuarial (4)56:10;119:25;123:5,
24
actuaries (1)124:8
actuary (2)123:20;124:6
adamantly (1)30:23
add (2)
101:18;102:16
added (1)
15:16
addition (2)
15:18;47:15
additional (3)66:15;121:22;127:4
address (5)6:3,5;31:15;111:2;
129:2
addressed (1)52:4
addressing (2)20:8;38:12
adjustment (14)7:16;10:15;23:8;
26:8;28:6;29:18,19;
38:16;47:19;55:24;
61:10;72:3;97:5;101:6
administrative (7)30:4,6,16;32:18;
42:1;49:6;52:9
admit (2)25:22;29:23
admits (1)
48:2
Admitted (6)48:24,24,25;49:2,4;
59:3
Admittedly (1)46:12
adopt (9)27:14,15;42:6;49:22,
25;50:1;61:21;74:14;
76:7
adopted (30)
8:3;16:13,13,14,16,
17;25:21;35:17;36:7,
24;40:11,15,17,23,24;
43:20;44:16;46:15;
47:17;52:17;54:9;
61:21;75:16,16,19,24;
76:3,8;77:4;84:18
adoption (2)74:9;76:5
adoptions (1)40:20
advance (1)105:20advanced (1)88:17
advised (2)120:8;121:2
advises (2)103:10;120:1
af (1)
110:16affairs (2)59:12;81:17
affect (4)24:24;29:18;54:18;
78:16
affected (2)29:17;41:6
affects (1)29:20
affirm (1)42:17
affirming (1)9:25
afford (1)81:19
afternoon (16)5:24;6:19;7:19;
10:11;57:23,25;110:2,
4,5,7,11,18;126:1,2,13;
129:11afterward (1)
27:25
afterword (1)111:9Again (45)
11:23;14:1,22;15:18;
16:4;17:12;25:15;
26:10,19;28:16;32:18,
24;33:6,6,13;36:24;
37:23;38:12,22;39:17;
40:19;41:15;42:8,17,
22;43:5,10,21;48:3,11,
13,18,23;50:5,6,24;
53:14,19;58:7;75:11;
83:25;100:17;115:18;
118:9;124:14
against (5)34:24;44:25;48:13;
58:12;92:4
agenda (3)35:19;75:8,12
agendas (2)35:13,18
agendize (1)50:10
aggressively (1)13:1
ago (4)
8:20;48:25;73:15;
118:10agree (22)26:24;28:16;30:10;
41:5;49:9;65:3;67:5,
14,24;68:15;69:20;
71:3,8;73:17;90:18;
91:16;98:22;111:16;
112:18;113:16;115:8;
118:5
agreed (2)28:12,23
agreement (7)17:22,23;46:19;
49:10;83:18;109:12;
115:1
agreements (6)54:15;87:11,18,21,
24,25
allegations (1)62:7Allen (1)
6:25
allocate (1)63:17
allocated (1)81:13
allow (8)48:1;56:10;57:10;
59:20;79:7,12;89:6;
121:9
allowed (5)41:9;48:9;60:20;
64:2;88:1
allowing (2)55:23;71:17
allows (1)63:18
almost (7)9:6;10:5;15:4;39:12,
23;43:17;69:23
alone (1)
66:1
along (4)
97:17;105:2;114:6,7
alternative (2)25:20;122:4
alternatives (13)48:3,17,19;51:3;
53:16;65:13;66:8,10;
88:6,12,23;89:1,11
Although (18)
9:20;10:12,18;11:14;
15:17;36:9;54:3;91:15;
103:4;104:4,9;105:1;
108:1,10;109:7;
110:22;115:7;125:16
always (2)45:15;58:11
Ambac (2)6:9;98:1
amended (2)10:9;15:22
among (3)99:23;100:18;116:2

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

amount (5)9:18;25:14;94:25;
106:16;124:7
ample (1)
19:9
analogy (1)51:23
analyses (1)79:7
analysis (4)42:5;67:7;81:3;
108:25analyze (3)26:7;37:24;86:9
Andrea (2)73:12,21Anne (1)
110:7announce (1)7:9answered (1)
53:16
anticipated (1)120:12
anticipates (1)122:7
anxious (1)
97:16
apartments (1)82:20
apologize (1)76:19
apparently (5)25:9,14;96:4,9;
110:15appear (1)58:9
appearance (2)6:14;109:18
appearances (4)5:17,19,22;109:17
appeared (2)
22:23;23:2
appearing (1)
6:21
appears (2)14:9;108:6
appellate (2)42:12,17
applicant (1)59:4
appoint (1)107:14
appointed (1)99:16
appointing (1)111:24appreciate (2)70:24;102:12
approach (1)17:18
appropriate (1)118:12(1) abilities - appropriate
EXHIBIT A PAGE 215

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
appropriately (2)48:20;86:7
approved (3)49:13;97:3;110:14
approximately (1)123:6April (12)29:16;36:24;40:24;
42:3;47:18;49:13;76:5;
103:6,11,14,15;108:7
arbitrator (1)
117:20area (3)24:19;25:22;69:4
areas (2)33:23;64:21
Arent (2)
6:8,16argue (6)39:5;47:24;48:23;
57:10;64:9;84:23
argued (8)9:7;30:2,22;31:3;
45:3,5;47:4,22
argues (3)17:9;27:8;30:24
arguing (1)5:15
argument (13)6:6;7:7;25:4;29:10;
31:5;35:2;47:14;57:12,
14,22;74:6;91:7;108:2
arguments (4)9:22;10:13;24:3;
74:19
Arnold (2)33:24;43:5
around (4)39:8;56:20;116:10;
117:2
arrears (1)123:25arrived (1)
13:11
art (2)
86:25;111:25
Article (3)21:16,19;116:25
articulated (1)
83:13
articulation (1)83:11
aside (1)116:6
aspect (5)45:9,15;55:2;58:25;
88:21
assert (3)13:1;40:11;41:11
asserted (9)12:10;24:18;38:11;
40:2,21,25;47:13;48:8;
64:1
Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 221 of 244

assertion (1)11:18
assertions (2)37:23;51:18
asserts (1)41:14
assets (6)29:2;39:18,19;88:24;
93:13;102:4
assigned (4)28:18;29:4,8;125:18
assigning (1)60:17
assist (1)
17:6
assistance (2)15:13;111:6
Assistant (1)
7:2
Associates (2)124:6,7
Association (3)109:21,22,23
assume (17)
20:15;24:21;26:11;
29:7;30:2,9,18;32:24;
37:11;42:9;48:8;52:1;
64:17,19;65:1;79:11;
118:14assumed (5)34:13;64:19;86:18;
91:19;103:15
assumes (1)32:18
assuming (7)26:15;34:24;37:23;
41:15;48:12;91:20;
121:24assumptions (1)28:10
assurance (1)104:16
attached (1)77:3
attachment (1)94:6
attempt (1)36:15
attempted (1)41:5
attendance (1)6:22
attended (1)47:2
attention (1)45:1
Attorney (6)6:22;7:2,3;30:23;
47:3,3
attorneys (4)29:5;54:8;55:12;
125:18
Attorney's (1)7:3
audit (3)103:22;120:18,20
audited (1)121:11
auditors (1)103:20audits (1)52:1
audit's (1)
120:24
AUGUST (14)5:1;9:11;11:21;
27:16;36:7;40:3,15,18;
44:15;60:21;74:13;
79:2;94:1;103:7
authenticate (5)33:7;35:18,24;36:11;
37:3
authenticated (4)35:13,20,21;36:4
authentication (1)36:23
authority (14)18:8;31:4,8,9;33:4,5;
74:3,5;82:21,22;83:3,
4;99:21;117:18
authorization (7)8:15;26:22;33:3;
44:5;77:19;94:1;98:16
authorize (1)78:12
authorized (8)13:25;31:6;40:12,14;
50:14;73:22,25;76:16
authorizes (1)77:11
authorizing (1)42:25
availability (1)79:24
available (4)105:18,18;111:11;
112:1
availing (1)
126:6
a-vis (1)102:10avoid (2)56:23;87:1
avoided (2)
14:18;52:6
avoiding (1)54:11aware (4)7:25;17:1,4;122:8
away (1)
18:6
axis (1)
51:5

Bback (28)
5:19;12:5;21:6;30:7;
45:12,20;57:20;60:1;
61:14;62:6;66:13;74:4;
75:17;84:1;90:3;100:5;
106:18,25;113:1,2,18,
19;116:15;119:6,13;
124:20;125:25;126:9
bad (5)
51:23;90:1;91:14;
95:16;122:22
badly (1)64:20
balance (12)9:14;20:8,14;27:24;
28:6,9;36:19;38:20;
52:24;56:4,9;88:1
balanced (3)45:24;76:7;79:25
balances (6)81:3;120:16,21;
121:3,4,6
ballpark (1)121:8Bank (12)6:9;29:11;79:25;
80:4,10,14,16;81:7;
94:6,9;103:3,5
bankruptcies (1)98:2
bankruptcy (35)
10:2,22;11:17;13:18;
15:10,13;23:21;24:21;
45:9;53:7;54:2;55:18;
66:1,20;69:15;71:16;
72:5;76:17;77:11;
78:18,20;82:14;83:23;
86:3;89:2,23;95:3;
97:8;99:1;102:2,5,6;
104:18;106:17;116:19
BAP (3)
14:7;15:2;50:22
bar (3)
43:18;59:5;60:2
bargain (1)
91:2
bargaining (2)54:15;115:1
barrel (1)46:5
barriers (1)106:1
bars (1)64:5Bartell (2)124:5,6
based (6)7:13;16:23;38:10;
89:9;98:20;108:6
basically (3)36:18;50:17;100:21
basin (2)
20:22,24

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

basis (7)39:21;56:5;63:24;
65:9;81:19;101:3,4
bear (1)
92:11
beating (1)
60:7
became (1)93:4
becomes (2)56:22;93:10
began (3)
8:8,25;113:17
begin (1)
121:4
beginning (1)8:9
begins (3)114:3;118:9;127:17
behalf (5)6:8;110:3,6,8;126:3
behavior (1)59:16
behaviors (1)
11:25
behind (3)72:11;103:21;105:25
beings (1)95:15
belabor (1)63:22
belaboring (1)64:24
belief (1)50:24
believer (1)113:6
believes (1)64:13bell (2)
107:13,21
belong (1)80:22
bench (1)
116:23beneficial (1)89:2
benefited (1)55:23
benefits (4)40:4;54:19;72:9;
91:3
benefitted (2)106:20,21
Bernardino (20)
5:6;6:21;13:5,5;
15:11;20:6,23;42:15,
16;56:17;57:21;60:23;
99:13;108:14;109:20;
110:3,9;119:14;124:5;
125:17
besides (4)32:14;79:15;110:14;(2) appropriately - besides
EXHIBIT A PAGE 216

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
112:13
best (2)55:19;114:10
better (4)13:8;57:4;119:9;
123:22
Betting (2)
43:20;51:15
beyond (1)98:16
Bible (1)42:16
Bienert (1)110:8
big (3)
99:7;100:3;113:6
bigger (1)73:6
biggest (4)94:17,24,25;98:15
bill (1)45:1billion (1)95:13
billions (2)73:6;96:2
binding (1)117:18bit (6)
33:14;66:11;67:2;
98:9;104:2;128:18
black-hat (1)
24:4
blueprint (1)28:4
board (3)41:3;50:15;126:21
body (8)10:12;15:12;42:25;
43:10;55:19,22;57:6;
122:6
bond (5)40:5;46:8;54:1;55:8,
13
bonds (3)14:15;15:5;40:6
books (3)24:10;46:13;47:17
borrow (2)
21:19;22:3
borrowed (3)21:21;95:6,14
borrowing (1)95:12
both (5)9:16;12:19;35:25;
77:2;99:15
Boy (1)
117:2
break (2)
7:8;116:15
breakdown (1)28:1Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 222 of 244

breathing (9)23:22;45:19;47:22;
53:25;54:3,4,11;83:14;
95:7
Brian (1)
109:23brief (6)5:19;15:21;48:19;
105:10;112:20,24
briefed (1)5:15
briefing (2)128:20;129:1
briefly (2)48:18;106:19
bright-line (1)42:20
bring (1)95:21
brings (2)
12:21;48:20
broach (1)64:2
broad (1)30:20
broke (2)
14:10;52:18
brought (3)8:15;31:13;45:1
budget (37)
16:17;20:8,14;21:23;
25:22;26:11;27:16,24;
28:1,6,8;32:1,2,2;
35:23;36:19,24;37:2;
38:16;39:14,17;40:24;
41:1;42:6;46:14,21;
47:17;48:3,18;52:25;
54:16;56:4;76:5,7,8;
78:2;88:2
budgetary (2)20:6;96:18
budgeting (1)32:3
budgets (4)28:13;42:6;75:16;
76:4
burden (2)49:25;50:2
Busch (13)6:25;31:17,21,23;
32:6;36:4,23;47:16;
103:9;105:14;119:23;
120:1,8button (1)81:20
buy (7)
43:13;45:8,9,10,15,
16,17C
c1 (1)
13:24

c2 (4)
13:22,25;34:13;44:4
c3 (1)
13:22
c4 (7)
16:1;19:7;20:17;
38:12;43:24;44:14;
47:10
c5 (5)
13:23;14:24;15:18;
34:13;44:4
c5A (4)
44:1;70:15,18,19
c5D (2)
23:3;84:17
calendar (4)5:5,21;111:3;129:4
CALIFORNIA (6)5:1;20:21;21:15;
58:21;88:9;98:8
Call (7)5:3;47:1;72:25;
80:24;82:25;91:17;
114:24
called (1)116:18
calling (1)
5:22
calls (2)80:25;114:11
CalPERS (96)
5:13,25;7:25;8:13,
17;9:7,19;10:1,9,13;
11:18;12:10;14:24;
15:6,20;17:1,9,16;18:6,
22;19:9,16;24:4,18;
25:19;27:8;29:13;30:2,
5,10,24;31:15;32:22;
35:2;37:24;38:5,8,11;
40:3;41:7,14;42:2,5,6;
44:7;46:9;48:19;49:6,
11,14;51:18;54:1;55:9,
17;56:2,8;57:2,10,22;
58:14,15,18,19;59:9,
10,11;61:1;62:7;63:23,
25;64:13;68:14;90:1;
98:8,9;99:11;101:2,19;
102:3,6,10,20;103:10;
105:13;106:19;107:20;
108:1,22;110:12;
111:18;119:24;120:6;
121:9,13;124:8;125:16
CalPERS' (4)24:6;29:10;48:6;
65:23
came (12)12:23;14:17;17:17;
19:7;23:23;24:3;41:2;
94:5;99:11,12;107:1;
116:22can (72)
20:4,15;22:25;23:1;
24:10;25:2;26:1;29:19;

34:3;37:17;39:13;
45:12,20,21,25;46:10;
47:17,21;51:24;52:24;
53:6,8,10;55:7,22,25;
57:1;59:1,12;60:12;
63:9;65:21;67:1,17;
72:2;77:1;83:15;88:19;
90:10,20;91:23,23;
93:12;94:21;99:16,21,
24;101:13,14,15;
104:14,17,17;106:5,8;
107:4;112:11;117:23;
121:4,6;123:8,12;
124:16;125:25,25;
127:15,20,22;128:1,3,
5,24
capacities (1)15:6
car (1)
45:14
Carlson (1)
6:20
cascade (3)94:15;95:3,7
case (134)
5:15;9:1;10:4,5,6,24,
25;11:4;12:6,19,22;
13:15,21;15:2,25,25;
16:23;17:2,5;18:11;
19:4;21:24;24:6,6;
33:19;38:3,4,6;42:10;
43:4,5,20,21,23;44:7,8,
9,10,12,14;46:7;48:20;
49:17;50:7,8,9,22;
51:6;52:4;55:5,21;
56:1,12,14,24;58:19,
24;59:17;61:7,12;62:1,
16;64:3;66:19;72:5,8,
13,21,23;73:7;74:18;
75:11;76:17;77:11;
81:18;82:8,8,12,15,18;
83:8,19;86:3;89:2,8;
90:9,15,16,21,24;
93:15,19,25;94:21,23,
24,25;95:1,2,5,8,14;
96:12;97:1;98:3,4,10,
19;99:8;100:5,10;
101:12,25;104:8,11,19;
105:22;106:17,21;
107:11,14,15,24;108:9;
109:3;111:4,7;113:5;
114:6,7;116:8,9;
119:15;129:5
cases (35)
10:3,19,21;11:23;
12:21;13:12;26:4;
33:24,25;41:18;42:13,
22;43:6,15,18;44:11,
12,18,25;45:18;48:22;
51:16,17;67:9,18,19;
72:14;83:12;94:22;
95:15,17;96:20;98:17,
20;99:21

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

cash (43)13:9;21:13,22;22:4;
23:23;25:14;29:16,19;
30:12,13,15,18;38:20;
41:19;42:3;46:8;47:17;
49:2,13,13,14;51:9;
52:3;53:1;56:4,5;
65:10;79:23,24;80:17;
81:22;82:2,2;93:7;
103:12,15;105:17;
106:11,12,16;108:7;
120:16,21
cash-flow (4)35:22;36:6;38:18;
42:5
cash-outs (3)21:7;25:5;32:24
catching (1)103:21categories (4)31:13;34:9,24;82:1
categorized (1)34:9
category (1)73:13
caveat (1)
123:23
CBAs (1)
54:18
Central (5)98:2;99:14,20,25;
100:1
centralized (1)99:21
certain (11)25:6,7;60:19,20;
64:3;81:13;82:20;
90:14;100:18;104:20;
110:8
certainly (30)
5:11;11:14;12:14;
13:2,4;16:3;17:4;
21:10,25;22:13;26:4;
27:1;28:21;42:14;
43:19;45:2;55:11;
62:25;75:12;78:24;
88:19;93:23;95:25;
101:22;102:7;108:2;
121:4,19;123:22;
125:16challenge (5)9:15;14:1,2;16:24;
99:9
challenged (3)14:7,21;23:3
challenges (3)7:19;8:8;109:14
challenging (1)94:21
chambers (1)
14:10
chance (5)57:5,6,7;123:23;(3) best - chance
EXHIBIT A PAGE 217

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 223 of 244

128:21
13:20;24:13;47:1;
change (6)57:6;59:13;60:23,24;
58:1;118:4;120:13,
61:3
25;121:16,20
Citron (1)changed (1)
95:12
104:8
City (350)changes (2)
5:6,12;6:21,21,22,23,
120:10,1125;7:1,2,2,3,12,14,20;
chaos (1)8:21;9:13;10:12,20,23;
57:5
11:8,8,11,25;12:3,13,
Chapter (55)
15,21,21;13:3,12,14,
5:5;7:15,20;10:19;
20,21;14:9,13;15:4,11,
12:1,21;13:11;25:21;
15,23,25;16:3,10,11,
26:3,5;30:7;31:7;
12,22,25;17:22;18:4,7,
33:25;40:12;43:1,5,13;
16;19:14,24;20:3,6,22,
44:19,21;45:10,12,16;
25;21:5,11,12,14,17;
47:23;48:1;50:11,15;
22:7,12,13;23:17,20;
51:1,2;52:23;53:4;
24:4,8,16;25:1,5,8,9,
54:9;55:25;56:16;57:7;
10,11,20,25;26:6,12,
59:4,5,8;60:13,13;
22,23;27:19;28:2,18,
71:14;72:10,12;83:14,
21;29:4,16;30:20,23;
23;89:8,17;92:7;93:19,
31:5,19;32:1,11,13;
21;95:14,15;98:7;
33:8,21;34:4,6,8,18,24;
107:10,16;122:7
35:11,12,14,17;36:5,
characterization (2)12,18,24;37:5,21,25;
108:9,10
38:1,6,11,14,18;39:1,3,
characterize (2)4,9,12,15,22,24;40:14,
100:13,13
21;41:16,17,19,19,20,
charged (1)22;42:1,2,3,7,24,24;
116:8
43:2,10,25;44:3,6,8,14,
Charter (2)24,25;45:4,6,23;46:4;
31:9;33:4
47:5,7,10,24;48:1,2,10,chasing (2)13,21;49:12,13;50:3;
24:2;44:17
51:3,4,5,6,8;52:2,17,
checks (1)24;53:25;54:5;55:1,6,
81:21
23;56:16,19,22;57:5,6,
choice (2)9,21;59:12,15,20,23,
17:21;41:2
23;60:3,5,6,8,15,15,21,
choosing (3)23;61:6,8,10,12,15,16,
12:1;17:2;108:14
20,23,24;62:4,12,22;
chose (1)
63:2,7,8;64:20;65:5,11,
13:7
12,13,14,24;66:4,9,9,
Christopher (1)16,17,19,22;67:15,16;
29:15
68:1,4,19;69:7;70:1;
chronology (1)73:5,6,9,10,12,17,21,
78:1
25;74:1,5,16;75:15,19,
Circuit (2)21,24;76:2,4,14,16,17;
10:25;33:24
77:11,13,22,22;78:2,7,
circulate (1)9,10,10,12,23;80:11,
109:1025;81:10,18;84:8,12;
circumstances (1)85:1,17,19;86:12;88:8,
12:23
12,16,17,18,21,22,24;
circumstantial (2)90:12,17,19,19;91:1,
67:12;69:11
16;92:4,7,8,11;93:3,12,
cities (11)17,20;94:6,12,13,14,
26:5;56:11;94:17;
21;95:4,25;96:1,10,15,
95:4,5,5;96:21;98:24;
16,24;97:6,13,14,15,
99:15;108:12;119:25
16;98:15;99:17;
cities' (1)100:12,14,19;101:3,14;
39:6
102:10,20;103:4,12,18;
citing (1)104:6,17,20;105:12,17;
113:1
108:14;110:3,9;
citizens (8)111:23;112:22;116:3,
Min-U-Script®

3;117:21,25;119:14;
120:10;121:14,24,25;
122:6,14;123:15;
124:5;125:17;128:23
city-maintenance (1)24:14
City's (36)11:9;16:20;18:13,14;
21:16;22:24;24:6,18;
31:9;33:12;37:9;38:3;
44:20;55:13;59:10,10;
61:5;63:19;66:1,5;
68:3;69:11;74:10;76:6;
79:24;83:10;84:7;
90:23;91:22;93:2;
97:11;102:4;103:19;
104:8;115:7;121:23
civil (9)15:17;40:7;41:17;
44:17,24;45:2;49:1;
54:4;84:11
civil-rights (1)
22:6
claim (1)
125:21claiming (1)82:19
claims (2)29:22;49:4
clarify (1)91:12
Clarkson (1)26:21classes (1)71:2classifying (1)71:6
clear (8)22:11;31:6,15;33:5;
46:17;69:6;74:23;
109:8
clearly (12)10:4;15:24;24:16;
37:2;42:19;45:19;
54:10;70:25;100:2;
104:4;105:1;112:16
clerk (5)35:12,17;57:16,19;
119:12
clerks (1)116:19client (1)
123:23clients (1)97:25
close (3)31:21;46:25;71:8
closed (2)34:1,20closed-session (3)34:2,21;43:9
closing (1)120:17

Co (1)
56:17
Code (3)25:6;45:9;55:18
coin (1)58:8
cold (1)
113:24
collaborate (1)60:11colleague (1)6:1collect (2)13:2;45:4
collecting (1)104:6
collection (1)44:25
collective (2)54:14;115:1
Collier (1)
43:24
Colliers (2)43:14,16
Collier's (3)51:16;52:10,10
colloquies (1)8:10
coming (3)
15:20;116:1;126:9
commenced (1)17:20
comment (7)14:9;15:19;35:25;
112:11;113:17;114:22,
25
comments (14)7:18;9:21;11:11;
22:8;60:22;64:6;69:13;
75:7;90:4;106:18;
110:23;113:1;114:8;
123:4
commit (3)89:15;123:13;126:21
commitment (1)111:23
committed (1)73:2
committees (1)15:9
common (10)16:15;26:12;31:8;
34:18;35:20;36:25;
40:13,16;42:24;43:8
Company (1)6:9
compare (1)72:13
compared (1)111:14compel (2)
18:25;27:5
compelled (1)eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

12:7
compelling (2)71:15;108:1
complain (1)52:11complained (1)27:25
complete (2)5:18;103:22
completed (1)120:19complex (1)96:17
complicated (6)73:6;96:21,22;
121:17,18;128:20
comply (1)91:1complying (1)107:17component (2)79:18;121:23
comprehensively (1)97:5
computer (1)116:22concept (13)61:13,16;70:9,10;
71:25;73:7;83:22;
89:12;95:22;106:25;
125:14,15,20
concepts (1)111:17concerned (5)84:9,12;85:23,25;
98:6
concessions (1)39:14
conclude (1)89:5
concluded (2)78:3;129:14
concludes (1)129:10conclusion (7)7:7;32:18;34:15;
37:17;38:17;69:10;
78:11
conclusions (2)35:6;108:23
concrete (1)24:7
concretely (1)79:4
condition (6)93:17;108:19;
111:13,14,14;113:22
conditions (4)28:11;90:14,20;
111:7
conduct (3)60:20;66:15;88:25
conducted (1)(4) change - conducted
EXHIBIT A PAGE 218

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
88:14
conducting (2)61:7,24
confer (2)112:5,22
conference (10)17:25;18:2;19:14;
61:15;69:14;111:4;
113:11;114:23;119:14;
128:10conferences (4)8:11;30:22;62:14;
79:22
confidential (1)29:7
confidentiality (2)106:1;118:21
confine (1)64:6
confirm (2)60:4;61:21
confirmable (1)72:4
confirmation (2)61:9;107:12
confirmed (3)8:23;53:11;55:25
confusing (1)67:5
connection (1)119:24consequence (1)90:5
consider (15)
10:11;11:22,25;
25:20;36:22;49:18;
50:19;52:16;55:21;
66:10;67:10,17;75:8,
13;89:1
considerable (1)94:25
considerably (1)96:3
consideration (5)33:1;48:19;50:11;
88:6;89:10
considerations (2)51:12;119:19
considered (9)8:24;10:21;33:9;
48:17;51:3;65:13,14;
88:20,22
considering (5)12:12;60:9;74:22;
79:9;86:12
consistent (7)51:1;53:2,3;59:17;
74:19;100:15;113:16
consistently (1)64:1
constituencies (1)96:19
Constitution (3)Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 224 of 244

21:17,20;88:9
Constitutional (1)21:15
constructive (1)112:23
consult (1)
125:10consultant (3)7:1;31:25;103:10
consultants (6)16:19;24:11;28:24;
34:5;37:2;96:4
consulting (1)124:6
contemplated (2)51:1;97:8
contemplating (1)
125:23contemplation (1)52:22
contest (2)16:1;63:1
contested (5)8:6;9:23;12:20;
14:25;98:17
context (1)12:2
continuance (2)119:18;124:16
continue (6)13:19;103:8;122:7;
128:9,14;129:3
continued (2)5:9;103:5
continues (1)90:1
continuing (1)8:9
contours (1)
88:11
contract (6)39:13;49:8;51:11;
52:20;53:8;88:16
contracting (1)56:7
contracts (6)27:23;41:2;56:25;
116:1,3;121:24
contravening (2)76:13,15
control (1)8:5
controlled (1)7:20
controverted (2)16:9,20
convert (1)107:13convince (3)87:3;117:24,25
convinced (1)
19:12
Corey (1)

110:2
corners (1)47:25
corporation (2)93:6;110:20
correctly (1)117:4
cost (1)
120:12
cost-cutting (1)75:25
council (36)
6:23;11:8,11;16:11,
12,15;20:10;26:12,12;
31:8;32:1;33:8;34:18,
18;35:14,20;36:25;
40:13,17;42:24,24,25;
43:8;48:4,17;52:17;
60:21;74:16;76:17;
78:9,10,10;97:2;116:3;
126:14;127:12
councilmembers (2)122:10,14
counsel (9)8:23;22:14;57:16;
93:23;103:9;109:20;
112:22;113:2,4
countering (1)48:16County (32)
33:23;43:5,21;50:7,
10,16,22;51:15;52:13,
17;53:23;56:18,18,22;
82:8,14,21,23;83:1,1,1,
12,24;86:14;88:5;
94:22;95:2,2,5,11,21;
98:5
couple (15)14:9;29:23;33:7;
39:11;48:11;62:6;69:6;
72:14;83:12,16;90:3,6;
97:23;102:16;107:11
course (9)27:11;67:20;69:5;
73:16;104:22;105:24;
107:19;108:11;121:23
Court (306)
5:3,4;6:1,4,7,12,14,
18;7:4,14,21,25;8:3,7,
12,19,23;9:23;10:10,
22;11:13,22;12:7;13:6,
18,23;14:25;16:9,14,
15;17:1,17,24;18:7,15,
19;21:2;22:24,25;23:5;
24:3;30:22;31:11;32:8;
35:6;40:15;41:13;
42:17;43:23;45:2,6,23;
46:2;47:4;53:7,12;
55:13,15;56:1;57:20,
25;58:3,5,11;62:9,11,
17,25;63:24;64:4,8,14,
17,25;65:3,7,15;66:3,7;
67:8,14,24;68:7,10,15,

17,22,25;69:3,16,20,
25;70:11,15,18,20,22,
25;71:6,12,17;73:3,17;
74:5,20,24;75:4,8,11,
15;76:20,22,24;77:2,4,
7,9,15,17,19,25;78:5,7,
14;79:11,15,19;80:1,3,
6,8,10,18,20,22;81:2,5,
9,12;82:4,11,13,16,22,
25;84:5,13,15;85:3,6,
16,24;86:11,12,17,19,
24;87:3,13,17,20,23;
88:1;89:23;90:4,15,23;
91:4,6,9,11,13;92:1,16,
18,20,23,25;93:22;
94:8,19;95:19;96:6,11,
13,21;97:18,21,24;
98:22;99:19;102:13,
15,17,22;103:2,4,13;
104:13;105:1,4,7,11,
16,24;106:6;107:2,10;
108:1;110:1,4,10,13,
17,21,24;111:1;112:8,
12,16,18;113:7,9,11,
15,21;114:1,4,17,22;
115:4,6,11,16,18,20,
22;116:12,15,18,22,25;
117:4,10,15,19,21,23;
118:7,14,17,20,25;
119:4,8,13,21;120:3,5,
24;121:5,7,15,17,21;
122:2,8,20,22,25;
123:3,8,11,13,16,18,
21;124:3,10,13,18;
125:5,9,12,14;126:5,8,
10,13,15,20,25;127:3,
5,8,10,14,18,20;128:1,
3,5,9,14;129:10,13
courtroom (6)5:25;14:13;23:16;
109:21,24;119:5
courts (2)10:3;22:16
Court's (7)5:5;7:22;25:18;
51:14;57:14;111:3;
129:11coverage (1)44:19
create (8)47:14;63:18;66:25;
71:22;72:9;89:20,21;
106:14
created (3)65:25;78:2;91:16
creates (2)63:12;65:25
creating (2)
83:18;91:18
creditor (19)13:1;15:11;41:24;
44:15,20,23;50:12,13,
21;54:3,11;55:19,22;

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

56:13;57:5;71:6;83:7;
93:18;102:1
creditors (48)
15:3,5,6,7;26:17;
29:2,2,3,23;41:21,24;
43:13;44:3;45:7;46:1;
53:6;54:1;55:6,9;
59:15;60:7,10,18;62:2;
66:25;70:5,17;71:2;
72:18,20,25;73:1;
82:18;83:15,18,20;
89:13,14,22,23;104:11;
105:23;106:17,21;
107:3,18,23;112:14
crime (1)
47:4
Crisafulli (1)103:11crises (1)94:4
crisis (9)60:6;65:6,25;89:10,
21;91:16,18;93:8;
94:11
critical (2)43:12,23
cross-fund (1)80:25
cross-summary (1)38:7
crunch (1)
13:9
customary (1)58:1
cut (9)17:9;25:12;39:2,15;
41:3;51:9;54:13,17,20
cuts (3)
20:13;46:23,23

D
daily (4)81:19;92:3;101:3,4
DANDENDAU (1)110:16DANDENEAU (4)110:18,19,22,25
dangerous (2)89:18,19
data (2)
29:11;121:14
date (12)
7:23,23;11:17;21:14;
30:16;40:10;52:25;
76:25;77:20,20;88:19;
90:14
dates (2)77:2;94:3
Dave (1)110:5David (4)
6:10,16;97:22;(5) conducting - DavidEXHIBIT A PAGE 219

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
112:11
Dawby (1)26:22
day (14)
18:3;21:24;33:12;
84:23;85:22;86:4;94:4,
11,20;116:1,18;118:9;
126:17;128:8
days (7)24:20;58:4,8;72:19;
92:14;120:19;123:7
deadline (6)7:22;41:12;44:1;
64:5;111:21;113:12
deadlines (4)104:14;105:1;113:6;
118:8
deal (3)46:1;93:14;101:1
dealing (4)94:3;96:15,18;
122:14
dealt (1)94:3
death (1)
93:10
Debra (1)110:18debt (6)40:8;46:11;52:24;
62:3;73:6;96:3
debtor (35)
11:21;30:13;43:1;
47:11;59:7,19;63:11,
12,14;67:20;71:18,24;
72:6,15,16;78:17;
79:23;81:24;83:5;84:1;
86:6,7;89:6,7,9;91:3;
105:22;106:3,23,23;
107:5,8,17,19;108:2
debtors (7)51:24,24,24;71:15;
89:16,20;108:3
debtor's (7)33:25;50:23,25;
67:20;71:20;81:16;
83:25
debts (4)
14:17;29:1;93:13;
97:6
December (5)9:5;17:14;122:18,23,
24
decide (8)11:12;18:16;30:8;
31:1;112:23;114:4,18;
117:17
decided (5)13:8;37:17;64:18;
86:3;99:9
deciding (1)
68:25
decision (21)Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 225 of 244

11:3,6,12;12:3;23:5;
59:2;63:19;78:13;85:7;
90:11,25;94:13;95:24;
100:6;107:10,20;
108:23;116:13;128:15,
17,22
decisions (7)11:9;22:10;58:25;
95:16;99:23;100:15;
128:24decisive (1)99:22
decisively (1)99:24
declaration (13)8:16;16:6;21:1;
31:13;32:9;33:2;34:8;
37:12;76:19;92:14;
103:13,14,16
declarations (8)16:6;31:19,24;32:4;
36:14,20;37:4;86:20
declare (2)92:11,12deed (1)
94:14
deep (1)
20:11
default (2)85:7,8defaulted (4)14:15;40:5,6,8
defense (1)17:6defer (1)90:11deferred (1)
59:19
deficit (4)21:22;25:25;38:22;
48:5
define (1)53:23
defined (2)8:11;20:20
definitely (4)22:15;53:20;65:14;
85:6
definition (1)
14:18
delay (8)62:16;66:6,18,18;
72:9;109:3;120:25;
122:2
delegate (1)31:8
democratic (1)
99:17
demonstrate (1)19:9
demonstrated (1)24:7
denied (1)27:6
deny (3)30:23;90:10,23
denying (1)37:16
department (14)23:16,18;24:15;37:1;
41:19;42:4;47:21;
63:18;88:7,10,13,15,
17,20
department's (1)88:24
depend (1)104:22depending (2)30:15;114:8
depleted (1)39:1
depose (1)33:3
deposition (1)105:14
depositions (5)31:17;32:7;33:10,16;
34:4
depriving (1)
19:20
Deputy (1)7:2
derived (1)120:17
describe (2)16:1;28:5
described (1)104:7
describing (2)12:3;16:10
Desert (1)12:25
deserve (1)57:6
deserves (2)57:5,6desire (29)
10:15,22;11:20;
24:24;26:8;29:17,20;
30:17;33:12;38:15;
42:10;44:2,9;52:15;
61:6;66:25;67:2,17,21;
68:1,20;69:7,12;74:2,
10;76:15;88:25;98:21;
99:3
desired (2)46:6,6desires (4)10:20;43:2;47:7,10
despite (1)10:8
detail (7)28:1,8;37:14;64:12;
66:11;68:17;125:22
details (1)
19:23

Detective (1)109:21determination (2)
25:18;62:23
determinations (1)18:20
determinative (1)67:19determine (8)45:21;66:17;67:25;
68:3;86:9;89:21;
107:12,19
determined (3)9:3;62:18;121:25
determining (7)11:25;43:6;51:8;
66:12;74:1;81:20;86:6
deterrent (1)92:4
Detroit (10)72:24,24;73:5;82:7;
96:1,2;98:5;99:14,24;
100:2
develop (1)97:7
development (1)89:11
developments (1)64:3develops (1)104:15
dialogue (1)88:7
difference (2)20:17;99:12
differences (1)13:12
different (16)8:2;12:23,24;13:2,
11,13;34:9;38:23;
53:20;80:4,13;85:12;
95:17;108:2;111:22;
113:19differently (1)68:25
difficult (4)66:9;97:9;104:24;
107:7
difficulty (1)12:15
dig (1)
122:25dire (1)38:18
direct (4)7:18;67:12,16;73:14
directed (1)79:1
direction (1)54:10
directs (1)77:13
disagree (2)eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

65:1;77:20
disarray (3)54:6;101:9;108:4
disclose (1)93:6
disclosed (1)
93:17
disclosure (1)93:2
discover (11)
10:14;17:7;19:24;
24:22;27:5,10;29:9;
32:6,10;34:16;48:9
discovered (8)18:21;27:7;28:17;
34:3,4;37:19;93:3,4
discovery (37)
9:3,8,9;10:17;12:11;
17:1,9,20,23;18:13,17,
24;19:10,11,16,20;
20:1,16;22:5,18;23:6,
14;25:17;26:14;29:21;
30:11;32:16,23;35:6;
41:16;48:9;60:20;
64:12,21;66:13,15;
75:21
discretion (1)117:16
discretionary (1)
11:3
discuss (5)23:9,11;51:13;68:17;
114:12
discussed (1)
35:16
discussing (1)
11:12
discussion (9)52:5,8;64:5;66:11;
78:16;83:20;98:3;
102:18;115:13
discussions (4)8:7;70:8;97:7;107:3
disingenuous (1)
92:10
dismiss (13)44:10;51:14;55:3,5,
21;56:1,13,23;74:18;
90:9,16,21,24
dismissal (8)56:11;90:5,5,8;
101:20;102:9;106:20,
22
dismissed (6)38:3;44:7,12,13;
50:8;102:1
dismissing (1)51:17
dispute (7)11:5;13:25;17:15;
21:14;64:8,22;65:5
disputed (3)9:2;19:10;21:23(6) Dawby - disputed
EXHIBIT A PAGE 220

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
disputes (2)18:5;59:20
disregarded (1)
9:22
dissolve (1)106:24dissolved (1)56:19
dissolving (1)56:16
distance (1)125:1
distinct (3)5:14;13:5,12
distinction (1)84:25
district (2)
12:22;22:16
districts (1)95:4
diverted (1)
63:2
division (1)100:14
divisions (1)99:23
document (7)7:16;34:24;35:5;
37:3;77:21;96:25;
120:1
documents (10)
16:22;34:8,12,14,15,
17,23;35:1,24;36:5
dog (1)
24:2
dollar (4)
21:22;41:4;48:5;
125:20dollars (11)25:23;49:3;73:6;
85:20,22;86:2,4;95:13;
96:3;106:12,13
done (32)
10:17;16:12;19:6,22;
22:19,25;26:15;28:2;
30:11;33:17,18;42:25;
43:18;52:2;54:13;57:1;
60:15;61:12;63:16;
64:21;65:11,12;73:18;
75:4;79:8,9;105:15;
107:1;108:8;109:15;
123:24;127:21
doom (1)41:16
door (1)
71:16
doors (3)60:7;107:1,5
down (12)19:7;37:20,25;46:4,
4;53:22;54:4;60:8;
99:11,12;118:8;126:9
draft (4)Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 226 of 244

efforts (5)39:10;59:16,22;60:4;
63:3
egregious (1)84:11
eight-day (1)
14:19
eighty-five (1)54:15
either (12)31:25;32:6;34:17;
37:11;38:1,10;45:25;
47:15;64:12;71:19;
86:23;89:11
election (2)122:9,15
elections (1)122:10elephant (1)122:6eleven (1)10:5
eligibility (36)5:12;7:20;8:8;12:3,
19;17:13;18:2,9,16;
37:22;49:23;55:23;
58:16;59:2,18,24;61:1;
62:19,19,24;63:2;66:2;
70:9;90:2,11,25;91:2;
97:13;99:9;100:6;
105:20;107:10,12,13;
108:17;109:9
eligible (14)7:15;13:23;38:2,2,3,
12;57:9;59:8;66:23;
89:7,16;105:22;
107:19;108:3
Eelse (15)
23:24;25:2;26:13,15;
earlier (13)31:20;36:19,21;43:17;
21:9;32:11;46:6;
48:21;50:19;65:13;
54:5;65:11;84:21;
79:15;91:23;92:5;
88:19;97:12;104:7;
113:19120:18;121:14,20;
else's (1)
123:8
28:4
early (7)9:4,11;17:14;111:12; e-mail (1)103:10122:9,24;126:18
emergencies (1)earnest (1)
94:4
61:8
emergency (23)easy (6)8:16;13:6;14:2,4;
14:18;39:22;46:24,
16:14;20:20,20;21:1;
24,25;96:12
27:16;32:2;35:22;
effect (25)
40:16;92:7,12,12;94:2;
10:15;11:20;24:24;
95:10,11;96:24;97:2,4;
26:7,8;29:17;30:17;
99:15;101:7
38:15;42:10;43:3;44:9;
61:6;67:3,17,21;68:1, emergency's (1)31:22
20;69:8,12;73:11;74:2,
eminent (1)11;76:6,15;99:3
113:23
effectuate (1)employed (1)
98:21
96:6
effort (3)employee (3)61:8,24;125:1
95:20;111:15;
125:18,18
drafted (2)43:25;125:15
dramatically (1)104:8
draw (1)
113:2
drawn-out (1)
18:24
drift (1)118:9
drifting (2)113:5,5driveway (1)45:14Duane (1)109:19Dubrow (17)
6:10,15,16,16;36:14;
97:22,23,25;98:23;
99:20;106:19;110:14;
112:10,11,13,17,19
Dubrow's (1)106:18due (9)
9:12;14:18;26:1;
38:21;41:2,11;52:25;
53:1;123:25
dues (1)
47:11
during (2)26:1;106:16
dysfunction (1)100:14

28:13;33:20;46:24
employees (20)21:8;23:15;24:8,10;
25:5,10;34:5;39:3,13;
46:10;49:2;52:19;54:1,
17,18;56:8,9;59:14;
110:9;120:10
Employees' (3)58:20,24;59:14
empty (1)
112:2
enacted (1)47:25
encompassed (1)8:8
encourage (1)98:7
end (11)
57:11;68:17;73:2;
87:22;88:2;99:4;
106:11,22;111:12;
122:17,18
ended (2)28:15;124:1
endgame (8)69:16,18,21,22;70:2,
2,3;125:6
engaged (2)26:6;124:5
enhances (1)
23:20
enough (25)
7:8;14:5;23:15,18,
23,25;24:1,1,5,8,9,9,
15;32:21;39:9;41:1;
43:17;49:12;52:11;
60:5,5;118:23;121:12;
124:8;125:17
ensure (1)58:20
entailed (1)36:6
enter (2)108:25;128:16
entered (2)22:12;108:21
entertain (1)7:7
entertained (1)
10:12
enticed (1)22:21
entire (2)55:4,22
entities (1)96:17
entitle (1)19:11
entitled (2)17:7;69:3
entity (1)93:5
entries (1)eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

80:14
Environmental (1)20:21
erroneous (1)42:19
essence (1)99:18
essential (2)39:4;81:16
essentially (6)22:23;35:12;37:1;
71:2;78:8;112:2
established (1)89:8
Europe (1)111:5
evade (2)43:13;45:7
evading (2)44:15,23
evaluation (1)
13:7
Even (27)
11:10;14:8,17;17:19;
25:17;31:21;35:2;
37:13;41:22;43:10,24;
56:13,18;60:16;61:13;
71:19,19,21;89:15;
91:20;94:12;95:20;
96:2;100:2,23;124:23,
23
evening (1)
126:12
event (4)
20:22,24;104:12;
114:9
events (2)
12:11,24
eventually (2)28:2;46:18
everybody (9)7:11;23:24;26:1;
29:25;36:1;48:2;60:12;
124:19;129:7
everyone (1)114:19evidence (31)9:21;10:21;43:12;
45:6,22;47:7,15;48:16;
50:6,6;51:18;61:4;
67:12,12,17,18,25;
69:9,11;73:10,14;74:4;
76:6,13,15;79:4;83:19,
21;105:16,16;107:22
evident (1)66:24
evidentiary (6)6:2;14:19;19:12;
35:8;37:7;59:19
exact (2)
121:8;125:15
exactly (3)8:20;38:7;113:3(7) disputes - exactly
EXHIBIT A PAGE 221

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
example (4)13:15;88:15;102:25;
108:12
exasperated (1)
25:14
Excellent (1)114:18except (2)35:9;42:12
excuse (3)10:6;73:23;75:16
execute (1)44:20
execution (3)
15:17;22:24;85:9
exercise (1)84:18
exhausted (1)
38:19
Exhibit (2)34:7;97:1
exist (1)
16:22
expect (2)100:8;120:18
expectancy (1)60:3
expected (1)
94:19
expects (1)120:9
expedited (1)123:14
expeditiously (1)61:9
expense (2)42:1;49:6
expenses (8)30:4,7,16;32:18,20;
41:3;52:9;54:13
expert (2)29:15;79:20
explain (2)109:5;123:14
explored (1)88:12
express (1)98:12
expressed (1)101:21extending (1)8:4
extent (9)6:1;11:10,15;12:10;
35:24;53:6;86:15;88:5;
111:18extreme (3)99:5;101:2,7
extremely (3)40:1;92:6;94:21

F
Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 227 of 244

face (1)
94:10
faced (3)13:3;46:5;51:4
facie (4)
12:19;13:21;15:25;
16:23
facing (3)13:9;21:22;81:23
fact (30)
9:2;19:3,21;20:12;
22:3;23:12;24:19;25:1;
32:5,13;38:8;40:2,25;
41:7;44:6;47:9,21;
48:15;60:16,19;63:16;
66:17;73:13;82:9;86:7;
88:22;93:16;96:1;97:3;
111:10factor (7)45:13;52:20;74:10;
75:13,15;86:5,10
factors (8)52:13;53:23;66:12;
67:23;83:24;86:14;
88:4;98:21
facts (45)7:13;11:25;13:4;
16:2,8,25;17:5,7,13,15;
19:11;20:1,5;21:4,4;
22:9;25:20;26:16;27:3;
31:20,23;32:12;34:23;
35:10;36:3,10,21;37:6,
11,18,22;38:4,10,15;
41:14,15;42:23;43:22;
47:12;48:6,8;49:18;
66:15;74:20;103:15
factual (4)9:8;18:5;42:18;
51:18
failed (2)45:6;62:4
fails (1)89:14
fair (3)9:18;107:3;124:7
fairly (6)14:18;22:11;26:14;
61:25;108:6;124:21
faith (36)
10:15,22;11:20;
23:21;24:25;26:9;
30:18;43:7;48:6,10;
49:19,24;50:4,5,16;
51:8,20;52:7,21;55:1,
5;60:11;61:7,9,24;
66:6,12;83:9,11;84:7;
86:13;88:25;98:21;
99:4;107:2,16
fall (3)50:25;52:22;123:25
falls (5)73:13;98:2;99:14,25;
100:1

far (9)11:22;12:5;24:6;
56:25;57:1;68:8;73:5,
5;107:24
Fargo (1)
6:9
fashion (1)
57:4
fast (5)96:2;100:2;101:10;
104:14;106:5
favor (7)7:12;47:13;52:20;
54:25;58:10;64:15;
116:4
feasible (1)72:4
February (2)29:11;103:6
federal (3)22:25;23:1;85:12
feel (2)99:1;123:22
few (6)
41:20;44:11;49:11;
94:16;104:1;119:17
fifteen (1)119:7
fifty (1)
80:3
fight (2)59:18,24
fighting (3)49:21;68:7;97:13
figure (6)20:19;35:3;46:10;
96:7;102:8;105:14
figures (1)56:10
file (46)
7:24;8:15;12:1;
13:24;17:8;23:10,21;
25:21;26:5,9;44:16,21;
48:5,10;50:15;51:24;
52:18;54:5,9;65:16,17,
17,19;69:23;72:6;73:2,
22,23,23;74:17,23;
75:5,5;77:11,14;78:12;
83:19;84:9,19,21,24;
86:3;94:12,17;96:17;
100:8
filed (72)5:12;7:21,25;8:12;
9:18;10:9;12:14;13:15;
14:17;15:14;18:3;
19:15;21:6,25;23:9;
27:10;32:14;33:12;
35:11;39:11;40:15;
41:25;43:25;45:6,10;
47:11;49:24;50:4,14,
15;51:8,22;52:4;55:1;
66:17;69:8;70:3;71:14;
72:8,21,23,24;73:1;

74:13,13,19;77:4;78:7;
79:2;81:18;82:15,15,
23;83:2,6,8;84:15,21,
22,23,23;85:22;86:4,
21;89:11,12;93:21;
94:24;95:9,10;100:7;
108:5
files (6)16:20;71:19,19,20;
72:5,5filing (42)7:23;10:16;11:21;
12:24;13:6;17:25;
24:20;31:7;40:12;
41:23,24;43:13,16;
44:2,19;45:16;48:22;
50:11,18;51:1,20;53:2,
3;71:22;72:2;76:16;
79:1,9;82:7,7;85:2,21;
89:1,15;91:22;93:14,
23;94:1,10;98:20;99:3;
111:21
filings (9)45:13;94:4,15,16;
95:3,3,7;98:7,15
final (2)17:8;115:17
finality (1)
10:3
finalized (1)
9:13
Finally (6)12:18;18:2;23:23;
34:7;51:13;55:2
finance (2)63:17;110:20
finances (2)42:7;51:22
financial (58)
7:1;12:4,15;23:15,
18;28:1,20;29:11;
30:21,24;32:11,13;
36:4;37:1;45:11;47:21;
48:1;50:25;51:4,25,25;
52:12,22;53:3,19;
59:12,21;60:18,19,24;
61:2,5;63:4;65:9;79:6;
81:17;89:13;93:17;
96:5,9;100:18,19,24;
101:9;102:19,23;
103:1,20;104:3,6,9,23,
23;105:10,13;108:4;
120:22;125:19
financials (3)102:19;104:5;121:11
financing (1)39:25
find (16)24:24;25:11;29:20;
45:25;47:9;50:7;57:9;
60:12;65:15;76:24;
77:1,21;81:23;89:6;
105:22;109:9

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

finding (8)42:18;46:7;52:21;
54:25;55:23;59:11;
61:23;91:16
findings (1)108:23finds (1)
57:2
fine (6)64:9;91:6;111:1;
126:8;128:9;129:7
finger (1)81:20
fingers (1)100:16finished (1)112:24fir (1)
116:22fire (6)15:20;20:13;39:5;
46:25;49:14;115:25
Firefighters (3)86:21;110:3,6
Fires' (1)113:2
firm (5)36:5,11,25;47:16;
57:12
first (20)
5:7,8,11;14:15;
21:13;24:4;28:2;30:5;
32:3;58:6;74:11;83:16;
88:10;91:8;98:11;99:7,
13;115:22;116:25;
119:22
fiscal (21)13:19;16:13;21:21;
26:2;27:15;31:22;
38:21;40:16;42:4;60:6;
65:6,25;92:12,12;94:2;
96:24;97:2,4;103:21,
25;106:12
fiscal- (2)32:1;35:21
fiscal-emergency (1)
36:6
five (9)20:25;33:9,9;34:9;
55:6;73:4,5;95:23;
116:2
fix (2)
39:7;113:20
flexibility (1)104:16
flip (1)
58:8
flow (4)49:13;52:3;103:12;
104:25flowing (1)40:22
focus (4)(8) example - focus
EXHIBIT A PAGE 222

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
64:6;67:11;68:2;
74:9
follow (3)74:6;108:13;109:13
following (5)10:2;34:12;35:10;
99:13;126:18
force (1)90:19
forecast (4)63:15;82:3;104:9;
106:11
forecasting (1)63:9
forecasts (7)42:3;63:7,12,18;
103:11;105:18;106:14
foreclosing (2)44:24;45:11
foreclosure (2)45:14;72:7
foreseeable (1)112:1forgot (3)29:24;54:16;95:23
forgotten (3)8:20;17:11;114:24
form (3)15:9;99:18;109:11
formal (3)17:20;18:12,24
formulate (7)47:8,10;63:7,11;
101:5;104:24;120:14
formulated (1)104:22
formulating (1)101:16
formulation (2)
83:21;104:4
forth (7)8:5;13:21;16:2,25;
32:9;73:11;81:6
forty (3)38:24;106:12,12
forty-five (4)25:23;38:24;41:4;
48:5
forty-five-million (1)
21:22
forum (1)
11:12
forward (48)9:9;10:4,5;19:5;
38:20;53:9;59:7,22,24;
60:8,16;61:10;62:3,22;
63:15,21;66:21,22,23;
68:5;72:8;73:7,9,10;
74:1;75:23,25;76:9,12;
77:14,16;78:15;79:1,4,
7;81:24;83:6,18,19;
84:2;89:24;105:21;
106:4;107:4,8,15,21;
Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 228 of 244

116:5
found (4)15:25;42:18;50:5;
108:3
foundation (3)35:13,23;73:21
four (11)28:12;34:9;41:7;
47:24,25;49:9;53:22,
22;75:11;87:3,8
four-hour (1)78:10
Fox (2)
6:8,16frame (4)
21:11;74:21,25;
124:21frames (1)79:13
frankly (11)17:21;23:4;29:5;
53:11;66:5,18;76:14;
79:3;84:12;97:10;
125:16
Fred (2)
6:20,24free-for-all (1)56:15
Friday (5)126:11,19,20,21;
127:1
Friday's (1)127:11friends (1)116:10frustrated (1)101:21
fuel (1)29:23
fulfill (1)59:13
fulfilling (1)
107:23full (2)46:3;96:7
fund (10)21:13,16,19;22:2,4;
38:19;39:2;48:11,12;
49:15
funds (9)21:17,19;80:4,11,22;
81:6,10,14;82:2
furor (1)
15:20
further (7)21:7;32:3;40:20;
74:24;86:10;97:19;
129:2
furthered (1)71:17
furthering (1)89:3
furthers (1)83:23
future (4)63:9,12;98:7;112:1
Futures (1)
6:25

Ggag (4)
116:6;118:12,14,15
Gates (2)5:25;110:12
gave (3)
15:19;19:9;74:5
GEARIN (112)
5:24,25;6:5;57:23,
25;58:1,4,8,13;62:10,
12,21;63:1;64:10,16,
23;65:2,5,8,22;66:4,8;
67:11,15,25;68:9,12,
16,19,23;69:1,5,18,22;
70:1,12,16,19,21,24;
71:5,9,13;73:4,20;
74:7;75:9,14;76:21,23;
77:1,5,8,10,16,18,23;
78:1,6,9,15;79:14,17,
21;80:2,5,7,9,16,19,21,
23;81:3,6,10,13;82:5,
12,14,17,24;83:4;84:6,
14,25;85:4,13,17,25;
86:12,18,20;87:2,10,
15,18,21,24;88:4;89:5;
91:7,13;94:22;97:19,
20;103:1;105:5,6,9,25;
106:9;117:1
Gearin's (2)95:1,8general (6)10:2;15:7;21:16;
37:19;38:19;39:2
genuine (6)9:2;19:3,11;32:5;
34:10,11gets (1)
115:25given (10)20:7;21:24;74:3;
78:5;97:17;113:22;
118:3;119:25;120:4;
123:4
glad (1)
68:12
GLASSMAN (75)
6:19,20;74:21;91:7,
8,12,24;92:2,17,19,21,
24;93:2;94:9,20;95:25;
96:9,12,14,22;102:14,
15,16,18,24;103:3,18,
25;109:10;112:6;
113:17;115:17;117:7;
118:5,25;119:2,7,15,
16,22;120:4,8;121:1,2,
6,13,16,19,22;122:5,

21,23,24;123:2,4;
124:14;125:4,7,10,13;
126:11,14,17,24;127:1,
4,7,9,12,16,19,22,25;
128:4,7
GLAVE (2)
110:2,2goes (3)63:12;79:19;114:9
gonna (1)33:13Good (52)5:24;6:19;10:15,22;
11:20;23:21;24:25;
26:9;27:17;30:17;43:7;
48:6,10;49:19,24;50:4,
4,16;51:8,20;52:6,15,
21;55:1,5;57:23,25;
60:11;61:7,9,24;66:6,
12;68:21;83:9,11;84:7;
86:13;88:25;91:21;
94:16;98:20;99:4;
107:2,16;110:2,4,5,7,
11,16,18
good-faith (1)30:1
GOODRICH (2)
110:5,6
Googled (1)116:17
Gotshal (1)110:19governed (1)85:2
gracefully (1)57:8
grade (1)80:5Graham (1)
7:2
grant (5)7:12;36:21;108:16;
109:9;118:13
granting (1)
109:11
great (3)
11:10;64:12;86:2
Grider (1)
7:1
ground (4)15:15,16;20:23;
44:14
grounds (1)8:2
group (2)20:1;35:1
grouped (1)19:25
grouping (1)21:4
groups (4)19:25;41:24;55:6;
97:7

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

Guarantee (1)110:20
guarantors (2)55:8,13
guess (17)13:8;26:18;33:15;
49:20,20;56:2,22;
58:14;67:2;74:7;75:9,
15;82:6;85:11;105:10;
125:13;128:7
guns (1)46:5
guy (1)
113:1

H
Half (1)123:11
hand (1)104:19handle (1)29:1
handled (1)
16:5
hands (3)60:7;114:16;117:25
handwriting (1)
94:11
Hanna (1)35:12
happen (11)22:18;24:23;27:7,18;
39:8;54:14;56:21;57:1;
85:11,11;87:5
happened (18)
11:19;12:9;22:7,20;
24:23,23;27:4,4,7;
32:3;47:15;50:10;85:7,
14,15;100:18,19;109:6
happens (4)55:5;93:18;100:2;
108:20happy (2)
105:11,21
hard (3)7:23;68:8;100:15
harking (1)
113:2
hastily (1)93:21
hasty (1)78:13
hate (1)124:19head (2)37:1;120:6
heads (1)
117:3
health (4)24:12;40:4;54:19;
92:8
hear (5)(9) follow - hear
EXHIBIT A PAGE 223

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 229 of 244

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
68:12;91:9;94:20;
118:5;121:1
heard (8)23:16;35:16;62:13;
63:6;86:15;90:4;112:7;
125:16hearing (11)8:21;14:19;18:4,14;
19:12,13,19;59:19;
74:21;103:19;105:20
hearings (3)9:5;92:15;118:10
hearsay (1)36:3
heavens (1)56:17
held (2)62:7;84:10
help (8)5:6;21:16;24:11;
56:8,12,14;96:9;
108:22
helped (1)
20:14
helpful (5)67:7;68:13;104:3;
115:11;124:16
helps (3)24:6,6;67:8
here's (2)33:13;38:14
hey (1)
100:25hide (1)
105:25high (1)116:2hire (1)
106:13historical (1)12:2
history (3)100:11,16,17
Hm (1)
82:16
hold (2)78:20;109:2
holders (1)
15:17
holding (1)89:9hole (1)
122:25holiday (4)126:22;127:6,7,17
holidays (2)126:12;127:9
home (1)45:11
Honor (74)
5:24;6:19;57:23;
58:10,14;60:1;62:7,21;
63:22;64:11,23;65:5,
Min-U-Script®

23;66:13;67:3;68:12;
69:2,5,6,13;70:1;71:9;
74:8;75:9;76:4,14;
77:5;80:5;81:18;82:9;
83:10,25;85:1;87:10;
89:5;90:3,22;91:5,8,
24;97:12,22;102:11,14,
24;103:18;105:6,9;
106:9;107:9,25;
109:19;110:2,5,7,11,
18;112:10,20;118:24;
119:2,16;120:8;121:2,
13;122:5;123:4;
124:14;125:4,7;126:4,
11;128:13;129:9
hook (1)
14:12
hope (5)28:5;30:13;47:8;
53:4,10
hopefully (1)104:2
hopper (2)26:7;30:3
Hot (1)
12:25
house (2)
23:22;45:10
Housing (4)82:21,22;83:2,4
huge (3)
100:25;106:15;118:9
human (1)
95:15
hundred (2)56:20;112:18
hung (2)14:6;125:22
hurdle (2)98:15,18
hurry (1)78:20

I
idea (6)56:11;61:11;63:3;
70:12;73:25;76:11
ideal (1)
104:5
ideas (1)78:16
identified (1)101:11
identify (1)31:24
ignore (1)31:15
imagine (8)20:2;39:5;108:14;
115:12;116:24;117:1;
121:8,10
imbalanced (1)56:5
immaterial (1)
11:10
immediacy (1)45:16
immediate (5)11:24;12:5,8;14:16;
15:16
immediately (4)21:4;25:19;27:19;
83:5
impact (4)32:25;59:1;102:9;
122:15
impair (5)45:21;53:8;70:5,14;
72:21
impaired (2)55:16,17
impairing (3)27:22;51:11;52:20
impairment (1)56:25
impending (2)13:9;41:16
impinged (1)50:18
implemented (2)75:22;76:2
implementing (1)
28:14
implied (2)
27:18;38:8
impliedly (1)27:11
implies (2)43:16;83:1
imply (1)
33:16
important (19)10:4;11:18,22;12:11,
17;19:1;21:1,2,3;
23:13;30:25;51:12;
58:22,25;59:3;77:21;
86:5,5;107:10
importantly (2)15:7;23:10
impose (6)26:24;36:16;39:23;
46:20;90:10,11
imposed (7)28:11,12;41:8,12;
46:19;49:8;87:4
imposing (2)28:15;115:1
impracticable (3)15:3,12,24
improper (1)37:14
improve (1)59:12
improving (1)104:6

inability (1)89:21
inadequate (1)42:3
inattention (1)91:17
incapable (1)63:15
incentives (1)89:20
inclined (1)124:18included (1)118:12
including (3)39:4;85:21;98:2
income (1)29:3
incompetence (1)100:18inconsistent (2)62:22;76:10
incremental (1)
115:25indeed (2)93:22;96:23
indicate (1)76:3
indicated (7)12:15;39:17;55:12;
93:8;106:11;114:13;
120:18indicates (1)45:22
indication (2)7:6;61:19
indicator (1)63:20
indicia (2)66:5;84:6
individual (1)33:20
individuals (1)100:17ineligible (1)38:6
infestations (1)82:20
information (46)
30:21,24,25;52:16;
59:21,21;60:18,18,19,
24;61:2,3,3,5;62:1;
63:4,9,10,15;75:21;
80:2,15;81:16;86:8;
89:13;90:13;102:20,
23;104:3,7,9,23,24;
105:10,13,20,23;106:2;
107:7;120:14,20;
121:3,12,20;124:8;
125:19information's (1)81:15
initial (3)eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

9:11;13:7;92:15
initially (2)7:17;58:17
inquire (3)33:16;43:7,11
inquiry (9)10:19;11:2;12:7;
33:22;42:21,23,23;
43:2;50:5
insisted (1)59:23
insolvency (18)
8:16,20,22;14:6;
18:5;19:6;20:11;23:18;
31:20;48:25;51:9;
54:22;92:7;93:3;98:18,
18,23,25
insolvent (8)14:14;48:2;53:1;
65:3;91:17;93:5,7,14
instructed (2)
19:19;74:3
Insurance (1)
6:9
insure (1)53:23
integrity (4)50:17;53:24;57:7;
58:20
intend (7)5:11;59:18;109:1,4;
110:22;119:6;125:21
intended (3)76:11;84:3,20
intends (2)73:8;86:6
intent (18)9:7;10:14;33:15,25;
34:6;43:6,7;59:22;
68:3,4,5;73:11;74:1;
76:6;78:16;83:25;84:2;
101:24intention (3)50:20;66:20;89:24
intentional (1)63:19
intentionally (4)46:14;65:24;105:12,
15
interest (1)55:19interested (1)59:11interplay (1)114:23interrupting (1)
112:21
into (33)
8:15;10:5,6;11:16;
12:4,4,18,21;18:10;
19:23,25;22:12;32:25;
33:16,22;42:23;43:2,7;
59:4;61:12;64:11;(10) heard - into
EXHIBIT A PAGE 224

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
66:10;68:19;69:15;
73:13;75:11;78:18,20;
81:11;89:23;95:22;
101:12;107:5
introduced (1)58:17
invest (1)95:6
involved (4)72:20;88:23;98:1,5
irrelevant (5)12:12;15:21;20:16;
22:2;43:11
Irvine (1)95:4
issue (57)
8:16,24;9:2,8,10;
10:17;13:22;14:6,11,
20,22;19:7;20:19;21:2,
23;22:2,23;23:3,19;
24:2;25:19;26:10;
28:18;29:12,12;30:1;
31:20,22;32:5,14,15,
22;33:18,24;34:1;
42:13;43:6,15;44:1,4,
4;48:6,11;49:16;54:22;
55:20;66:9;67:4;70:6,
7;71:1;84:4;86:5;
105:11,21;108:18;
113:19issued (1)
17:24
issues (42)5:14;6:2;8:4,6,10,11;
9:2,19,20;10:1,10;
12:19;17:13;18:15;
19:3,3,11,16;20:6,12;
21:13;24:14;26:21;
31:1,12;34:5,10,11,12;
37:13,19;38:12;63:6,
23,25;64:2,5,12;65:10;
74:7;76:2;119:17
item (1)
121:22
items (3)
119:23;120:22;
122:17J
James (1)
6:22
January (6)9:6;10:13;17:14;
30:7;41:8;122:18
Jefferson (1)98:5
Jenkins (1)
6:24
Jewish (7)126:12,22;127:6,7,9,
16,20
job (1)
Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 230 of 244

25:13
jobs (1)
39:2
joinder (1)55:14
Jolena (1)7:1
journal (1)117:3Judge (30)
12:2;22:22,24;23:1;
26:20;33:19;44:8;
49:22,22;50:16,23;
51:7,12;54:22;82:10,
11,12;95:23;108:12;
109:4;111:4,20,22,24;
113:3,22,24;117:22;
125:24;128:21
judges' (1)
126:21
judgment (23)
5:12,22;7:14;8:6;
9:12;10:7;13:1,2;
15:17;17:8,10;19:2;
37:22;38:7;44:17;45:4;
54:5;57:21;90:10,23;
108:24;129:5,6
judgments (7)22:6,8,12;40:7;
84:10,11,18
July (47)
13:10;14:16;19:14;
22:20;23:11;25:21;
26:1,13;27:16;32:20;
35:14,15,21;36:6;
38:16,17;40:4,12,16;
44:16;48:3;49:4;52:18,
19;54:4;72:24;76:17,
17,22,23;77:10,12,12,
13;78:3,10,11,25,25;
86:2;92:14;93:25,25;
94:5;96:24;103:7,7June (3)
17:11;72:21;124:1

K
K&L (2)
5:25;110:12
Katzman (1)110:8keep (3)7:11;90:15;113:1
keeping (1)
100:20Kennedy (1)33:10
kept (1)17:25
key (1)
79:18
kicked (2)50:16;98:20

kind (16)12:13;21:5;25:22;
26:2;27:20,21;39:8;
41:3;42:11;61:3;63:3;
71:11;79:25;83:21;
112:25;122:5
kinds (2)73:14;107:15
Klein (8)12:2;33:19;49:22,23;
51:7,12;54:22;109:4
knee-jerk (1)78:19
knew (8)32:13;41:16;48:25;
65:17,18;100:21,22,23
knock (1)71:16
knowledge (3)32:10;36:2;37:3
known (4)20:25;41:18;65:19;
95:12
knows (2)
81:17;112:23
KURTH (3)
6:8,8,13

L
LA (2)
56:17,18
Labor (4)25:6;27:1;126:17;
128:8
lack (5)50:16;54:21;55:5;
66:6;84:7
laid (5)25:11;35:12;39:3,15;
78:1
languishing (1)66:20
large (5)15:4;24:17,19;54:16;
89:22
largely (1)99:25
larger (1)
96:19
last (11)90:3;91:13;101:18;
107:9;111:5;113:16;
114:15,22;120:3,5;
125:20lastly (1)122:5late (4)40:9;41:25;46:6;
52:1
later (13)10:25;15:16;16:1,17;
22:15;23:11;68:11;

84:19;93:15;104:2;
109:4;126:2;127:14
laundry (3)18:6,8;91:21
law (30)
7:13;10:25;11:4;
12:6;17:2,5;18:15;
21:15;23:1,1;27:1;
33:1;37:18;38:5,10;
42:10;44:8,9;45:8,20;
46:7;48:10,20;49:17;
52:4;85:12;88:8;92:13;
98:19;108:25
lawyer (1)22:21
lawyers (2)113:25;114:11
lay (4)
39:13;46:24,25;
54:20
layoffs (1)120:11
lead (3)34:10,11;97:5
least (9)19:4;20:20;26:23;
40:8;46:22;95:22;98:8;
102:9;118:6
leave (3)25:14;104:15;113:7
leaves (1)128:17
leaving (1)9:16
led (1)
12:24
ledger (1)
45:24
Lee (1)
29:15
left (1)
9:10
legal (12)22:9;23:5;29:8;30:6;
31:5;32:18,25;34:15;
35:6;37:13;104:21,24
legally (1)48:14
legislative (4)33:22;34:2,20;43:9
legislature (1)47:25
legitimate (1)68:21
lender (1)
45:11
lengthy (2)7:5,8less (2)39:7;73:4
letting (1)102:12level (1)eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

60:3
leverage (2)102:2,6
Lewis (1)
109:23
liabilities (1)56:11lien (2)102:3,5light (1)
49:17
lightly (1)94:13
liked (2)54:8;57:9
likely (1)34:10
Likewise (2)64:11;71:10
liking (1)121:1
limitations (1)88:11
limited (6)39:20;40:1;95:25;
96:15;97:11,15
limiting (1)26:14
line (2)
6:11;114:11
liquid (2)39:18,19
liquidated (1)39:19
liquidity (1)88:18
Lisco (3)27:2;114:23;128:14
list (8)18:6,8;50:22,23;
52:14,15;53:20;91:21
lists (1)50:23
litigating (1)
97:14
litigation (4)44:22;50:13,21;
105:19little (16)
21:6,9;26:15;33:14;
46:5,11;54:5;66:11;
69:4,21;73:4,14;104:2;
113:13;126:2;128:18
live (6)19:12;60:12;67:1;
110:14;124:25;128:12
LLP (1)
6:8
lodge (1)109:13
lodgment (1)109:13long (13)(11) introduced - long
EXHIBIT A PAGE 225

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
7:6;18:24;43:11;
48:25;50:9;72:22;83:7;
108:5,6;115:2,12;
119:8;126:15
longer (5)15:21;64:6;69:21;
104:18;119:5
longstanding (1)87:24
long-standing (1)
20:5
long-term (1)
115:13
look (29)
12:5,5,8;18:19;
43:15;49:17;51:5,8;
55:4,19,20;60:21;
62:23;63:4,10,14;
67:22;71:18;72:1,17;
74:15;83:22;98:10,10,
19;100:11;101:20;
108:13;122:22
looked (13)25:23;31:22;44:18;
46:4;48:3,4;50:6;
52:13;67:9;73:10;99:8,
10,12
looking (14)
10:22;11:5,24;43:22;
52:10;53:9;76:20;
96:24;113:18,19;
116:1;122:16,18,19
looks (2)14:4;88:5
losing (1)
118:20lot (19)
18:1;25:24;26:19;
41:3;42:14;54:20;67:8,
22;72:16;73:16;76:24;
94:16;98:6,17;109:16;
122:13;124:20;125:16,
20
lots (1)
15:19
loves (1)50:22
low (2)
43:18;65:10
Lubic (18)26:22;30:22;31:14;
36:14;58:9;110:11,11;
123:9,10,12,14,17,19,
22;124:4,11;127:24;
128:2
Lubic's (2)33:2;34:7
luckily (1)
14:18
lump-sum (1)
25:8

Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 231 of 244

29:13;33:18;48:22;
129:4,10
May (26)
17:11;36:3;49:3;
main (3)55:7;68:24;69:7;73:15,
111:4;119:15;129:5
23;77:17,19;80:12;
Majaj (1)
97:24;102:17;105:7,8;
33:11
108:1;111:10;112:7,8,
major (6)12;114:4,9,19;115:23;
12:25;41:21,24;44:3;
116:2;122:8
55:6;76:2
maybe
(25)
makes (6)
12:13;19:17;20:11;
44:8;50:22;67:16;
26:20;30:15,15;36:16;
100:14;113:23;125:5
38:24,24;41:5;44:15;
making (13)45:4;46:5,6;49:20;
7:17;11:5,9,16;
53:17;69:21;84:19;
18:20;25:8;40:5;50:23;
87:5;93:3;109:17;
52:14;53:9;84:14;
117:24;118:22;124:22,
85:25;108:22
23
Mammoth (1)Mayor (2)
12:25
6:23;122:10
managed (1)McCammack (1)
87:3
6:24
management (1)McManus
(1)
87:16
113:4
Manager (6)McNeely (1)6:25;40:15;73:12;
33:10
77:14;79:1;99:15
mean
(30)
mandatory (2)12:16;13:13;16:15;
51:15;55:3
17:21;20:11;21:24;
Manges (1)28:7;29:2;38:24;39:6,
110:1918;45:13,17;46:15;
many (25)
48:10;56:9;64:17;
8:7,9;15:3;23:16;
65:10,16;70:25,25;
26:4;37:23;41:15;48:6;
73:21;75:9;79:19;
51:24,24;55:11,18;
80:22;82:23;84:19;
59:20;62:25;78:23;
118:17;127:5;129:6
93:10,10;94:7;96:19;
meaning(1)
98:19,24;108:2;
9:14
113:24;114:5;119:4
meaningful (9)map (1)
26:17;41:23;59:21;
27:17
86:19,22;87:8;90:13;
March (1)112:14;125:24
103:6
meaningfully(1)Marquez (1)
128:23
6:24
meaningless (1)Marsh (2)87:9
33:24;43:5
means
(4)
massive (1)22:12;37:20;68:4,6
14:19
measures (1)material (4)75:20
17:5;18:21;19:10;
measuring
(1)
89:13
83:11
materially (1)media (3)
100:23
116:9,10;118:17
matter (26)
5:7,8;7:5,12;14:7,25; mediate (1)128:23
17:17;22:4;23:4;33:17;
mediates(2)
35:9;37:7,12,17,18;
114:19;117:17
38:10,25;47:9;48:9;
mediating (1)58:9;82:9;111:2,10;
125:24
119:19;121:24;122:13
mediation(7)
matters (9)26:20;72:20;90:13;
5:4,20;9:23;11:17;

M

108:21;110:25;114:9;
115:8
mediator (14)68:11,13;109:16;
111:6,19;114:12,18;
115:22;116:6;117:9,
16,17;118:21;128:16
mediator's (2)114:14,15
meet (7)26:23;27:2;36:18;
49:23;90:12;99:2;
128:21
meeting (20)
11:11;16:16,16;
20:11;26:12;36:1,25;
40:17;50:15;60:22;
74:16;76:18;77:12;
78:11,11;92:25;97:2;
126:14,21;127:12
meetings (7)16:12;34:18;35:14,
16,25;40:13;75:2
member (1)
11:7
members (2)6:23;34:5
mention (1)66:14
mentioned (4)20:2;72:13;94:22;
103:19
merits (1)12:18
mess (1)
12:4
message (1)17:12
met (10)
16:13,13,14,15,16;
36:17;41:12;57:7,8;
124:7
Mette (1)
6:8
Michael (4)5:24;6:1,25;110:11
mid-October (2)119:25;120:3
might (36)10:8;11:11,19;14:24;
18:21;20:13,18,25,25;
21:9;22:20;24:16;
28:19;29:6,18;31:21;
34:23;44:12,22;48:8;
56:22,25;57:8;63:10;
64:20;75:6;89:2;90:6;
96:17;98:7;102:8;
108:22;112:23;118:10;
124:16;128:25
Miller (1)
110:8
milling (1)
109:23

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

million (9)21:25;25:23;41:4;
48:5;49:3;85:20;86:1;
106:12,13
mind (14)10:24;11:9;15:10;
33:18,20,23;43:1,8,11;
58:2;69:15;92:11;
98:16;101:1
minds (2)42:24;105:2
miners (1)22:22
miner's (1)22:22
minute (6)83:10;98:13;112:5,
22;119:1,3
minutes (9)11:14;26:12;35:13,
18;57:13;62:6;74:15;
119:4,7
missing (1)
55:7
mistakes (1)
95:16
misunderstood (1)19:18
mold (1)82:20
moment (3)51:14;104:18;109:25
Monday (3)111:5;126:14,17
money (21)22:3,3;24:1,9;32:21;
39:9;41:1,18;46:17,22,
23;48:12;49:1,15;52:8;
56:6;79:13;80:12;
95:14;100:20;124:7
monies (1)25:3
month (6)85:20;86:2;103:24,
25;113:18;118:4
monthly (1)80:21months (24)
8:20;10:5,6,6,8;21:6,
9;35:15;59:20;61:12;
71:20;72:19;73:4,5;
74:13;75:11;82:15;
83:6;95:20,23;100:7;
104:1;109:4;113:19
more (39)8:1;10:24;11:3;15:6;
23:10,21;24:6;25:16;
26:5;27:6;33:14;39:7;
41:20;42:14;46:22,23;
47:20;49:11;54:6;
65:11;66:9,11,24,24,
24;69:4;73:4,5;93:23,
24;96:3,4,9,17;97:9;(12) longer - more
EXHIBIT A PAGE 226

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
114:10;119:2;123:3;
128:18morn (1)
127:23morning (5)45:15;127:25;128:1,
4,5
Morris (2)6:23;109:20
Most (10)12:1,4;17:13;18:8;
22:22;45:13;51:17,24;
94:2;106:11
mostly (1)
16:3
motion (33)
5:11,14,17,18,23;
7:12,14;8:6;10:7;
12:12,20;13:22;17:8;
18:17;19:15,21;26:17;
27:3,5;31:14;35:11;
37:16,22;38:7;50:14,
19;55:14;57:21;90:23;
109:9;122:3;129:5,6
motions (7)5:10,10;9:12;14:19;
18:25;114:23;115:19
motivation (1)
101:25move (26)9:9;28:22;55:15,24;
59:7,22;61:10;62:3;
66:22,23;68:5,19;74:1;
77:16;79:1,7;83:17;
84:2;97:16;101:15;
105:2;107:4,8;114:6,7;
115:19
moved (4)10:4;19:4;83:6;
107:15moving (16)10:3;18:11;47:18;
54:10;59:23;63:15,20;
66:21;73:7;74:25;
78:15;79:4;81:24;
89:24;104:14;106:5
much (17)6:17;15:3;26:5;
48:21;57:10;66:23,24;
79:13;80:15;85:17;
91:6;96:17,19,20;
97:25;102:13;114:10
multiyear (1)112:15municipal (4)93:5;94:15;96:20;
98:1
municipality (2)13:24;60:3
must (8)43:25;44:3,8;51:19;
71:25,25;72:1;120:2
myself (3)Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 232 of 244

64:7;126:3,6N
NA (1)
6:9
National (1)110:19nature (3)42:21;51:4;53:18
necessarily (6)39:15,19;56:21;85:4;
106:23;113:5
necessary (6)28:25;31:7;65:15;
73:22;74:6;125:23
neck (2)54:4;82:9
need (54)
10:14;15:23;20:16;
22:5;23:5,14;25:16;
26:2;28:22;30:15;
31:14;32:16;48:5;53:4,
5,5,7;55:15;60:5,6;
61:16,17;64:11;65:25;
70:8;71:10,13;73:19;
78:19,20,23;87:1;
109:5;111:23;112:5,
15;118:22,25;119:2,7,
8,23;120:13,16,19;
121:3,7;122:17;
123:15;124:11;125:8,
14,19;127:1
needed (17)9:3,8;19:10,16;
22:18;23:20,22;27:17;
29:21;39:23;43:17;
46:20;47:22;53:25;
54:3,11;74:23
needs (21)26:14;35:5;47:5;
48:1;59:5,6,6;61:10,25,
25;62:1,2,3;63:5;
66:23;72:4;82:2;105:2;
112:16;116:6;118:12
negative (1)38:20
negotiate (18)
15:12;28:15;48:24;
49:7;53:6,10;60:10;
61:25;70:7,16;87:6;
89:14,22;107:2;112:2,
3,4;128:17
negotiated (6)28:7;44:3;48:25;
51:10;53:12;55:25
negotiating (3)22:14;62:18;100:6
negotiation (9)26:25;27:2;36:17;
46:1;70:7;82:18;98:21;
111:15;129:1
negotiations (9)26:17;41:23;51:3;
53:14;83:7,20;86:15,
22,25
negotiator (1)
111:6
NEPK (1)
6:9
Nepotism (1)99:19
Neufeld (1)
6:20
New (5)
6:10;13:6;43:20;
51:15;100:24
News (1)116:19next (11)21:4;28:18;29:10;
94:10;109:16;124:22;
125:25;126:24;128:18;
129:2,13nine (1)
10:8
ninety (2)24:20;72:19
ninety-day (1)85:21Ninth (2)
10:25;33:24
Nobody (3)23:3;84:17;125:17
nobody's (3)44:25;45:2,5
nonagreeing (1)115:9None (14)16:20;34:3;43:18;
51:17,18;52:10,11;56:18;67:9;86:17,18,
19;87:14;92:2
nonissue (1)31:10
nonmoving (1)
17:6
nor (3)
22:4;71:7;85:10
note (3)40:19;91:24,25
notes (3)7:6;33:14;77:2
notice (2)85:17;94:5
notion (2)62:23;94:23
notwithstanding (1)113:1
November (9)8:9;9:5;17:14;27:9;
40:23;61:15;69:13;
74:14;122:9
nuance (1)77:18
number (24)Desc
August 28, 2013

5:9,10;10:19;15:4;
119:10;128:8,11;
129:4
21:24;23:3;28:10;41:9,
21;53:18;54:16;89:22; October (6)7:21;40:21;111:12;
100:7;111:3,9;120:10,
121:10;122:12;123:6
15,16;121:8,17,18,18;
off (14)
125:15;128:20
14:11;17:9;25:11;
numbers (8)39:3,13,16;45:14;
23:19;38:22;120:9,
46:24,25;54:21;75:2;
11,13;121:8,11;124:11
78:20;119:10;120:5
offer (2)O
25:4;57:22
office (2)object (7)6:10;7:3
8:1,4;18:14,16;
Officers (1)63:23;90:1;101:8
109:20objected (4)Officially (1)8:24;55:10,14;58:16
125:25
objecting (1)officials (2)8:14
92:4;99:17
objection (14)
Off-Track (2)6:2;7:25;8:5,14,19,
43:20;51:15
22;9:14,16;10:9;14:12,
older (1)23;36:13,21;64:5
50:8
objections (12)OLINER (44)
7:21,23,24;8:12,17;
109:19,19;112:7,9,
10:14;16:6;18:25;35:8;
20;113:8,10,14,16,22;
37:6,8,15
114:2,6,18;115:3,5,10,
objective (16)14,17,21,23;116:14,17,
10:23;11:1;42:23;
21,24;117:1,6,9,13,16,
43:22;45:22;47:7,14;
20,22;118:3,8,16,19,
50:5,6;51:5,18;52:16;
23;126:3,6,9,19;
67:5,10,25;101:23
127:13;128:13;129:9,
objectives (1)12
72:1
once (11)obligation (2)
20:22;26:5;38:1;
38:21;40:6
60:25;66:4;78:18;
obligations (7)93:16;98:18,23;99:11;
14:16;15:6;46:9;
107:12
54:1;59:13;91:1;
one (70)
107:23
10:20;11:23;12:25;
observation (1)14:6;15:23;22:21;23:3;
101:2427:10;28:11,18;29:4,8,
observe (1)24;30:3,22;37:25;
101:23
42:13;43:24;48:13;
obstructing (1)50:7;51:7;53:15,16,22,
59:9
22,22,22;55:10;56:13;
obstructive (1)57:8;58:4,8,12;60:20,
128:25
22;62:17;63:6,8;71:1;
obtained (1)74:8;80:12;81:7;83:12;
121:2084:8,16;86:9;90:8;
obviously (7)91:14;93:23;94:6,7,11,
13:10;17:18;20:10;
22;96:23;97:25;98:4,
28:10;35:17;56:9;99:9
12;102:1;105:11;
occasions (1)107:9;110:13;111:9;
69:6
112:11;119:23;120:3,
occur (2)5,15;121:18,22;122:12
64:3;95:15
ones (6)occurred (5)53:11;56:3;81:13,21;
24:20;35:14;40:21;
86:10;120:25
93:15;98:2
only (35)occurs (1)5:16;8:13;9:16;
93:9
10:21;14:7;15:15,23;
o'clock (4)eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net(13) morn - only
EXHIBIT A PAGE 227

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
19:7;24:10;26:11;
27:10;28:11;32:4;33:7;
37:4;38:12;44:14,21;
45:17;46:10;47:8;53:4,
10;55:9;62:19;66:6;
72:8;74:8,15;93:12;
99:8;107:11;109:11;
115:2,8
onto (1)
55:11
onward (1)
41:17
oOo- (1)
5:2
open (18)
8:7,19,23;11:14;
16:14,15,15,16;24:3;
30:6;34:18;35:16;36:1,
25;40:13;61:25;
109:18;113:7
operate (1)32:17
operating (2)86:13;96:25
opinion (1)109:1
opportunities (1)39:25
opportunity (7)13:18,19;19:9,18;
61:4;66:14;125:8
opposed (4)5:12;12:22;96:16;
101:19
opposition (3)9:18;17:8;74:24
oppositions (1)9:11
options (1)25:13
oral (3)6:6;50:14,19
Orange (7)83:1,12;94:22;95:2,
5,11,21order (43)5:3;8:4;18:7;22:24;
23:22;24:11;27:11;
44:2;46:13,20;47:17;
51:20,25;57:19;61:23;
63:11,13;74:20;88:18;
90:17;103:4;108:5,18,
19,21;109:1,2,10,11,
12;111:23;115:7;
116:7;118:12,13;
119:12,23;120:14,20;
122:1;124:15;125:10;
128:16ordered (3)27:11;61:20;74:16
orderly (3)57:4;93:23,24
organized (3)Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 233 of 244

13:14;15:8;54:7
original (2)8:13;15:14
Orrick (1)113:4
osmosis (1)87:5
others (3)50:9;55:10;62:2
otherwise (6)9:4;11:13;12:22;
15:9;55:25;91:10
ourselves (2)68:23;92:2
out (43)
9:21;10:18;12:22;
20:19;21:15;25:15;
35:3;36:15;43:23;45:3,
20;46:8,10;47:16,20;
49:2;50:4,16;51:16;
61:20;63:12;72:7,10;
76:13;78:1;83:15;
93:13,22;95:8;96:7;
98:4,20;100:1;101:20;
102:8;105:14;108:7;
115:19;118:6;119:5;
124:19;127:6;128:15
outcome (3)38:23;50:2;122:1
outcry (1)92:4
outlier (4)98:12;99:13;100:11;
108:10outline (6)61:13,17;72:17,18,
22;111:19
outside (5)22:14;39:25;102:2,5,
6
over (11)38:6;39:11;42:11;
45:12,21;59:18;62:2;
90:25;98:18,23;100:24
overall (1)98:14
overrule (2)7:18;36:13
overwhelming (1)76:14
own (3)
17:21;81:17;89:9
owned (1)
82:20

Ppace (3)96:2;101:22;104:10
packages (1)35:19
page (2)5:7,8paid (20)
24:16;29:22;30:4,9,
10;38:20;40:10;41:20;
45:1;46:8,9;49:2,4;
52:25;55:16,17;56:7,9;
81:21;124:6
pain (1)
92:3
painful (2)92:6;108:15
paint (1)24:4
papers (2)
14:24;35:2
paragraph (2)32:10;33:2
parameters (1)114:12Parker (1)
6:25
parsing (1)49:25
part (10)
12:13,20;20:20;
23:25;97:1;104:3,19;
114:9;126:22;128:10
participant (1)59:4
participate (3)15:10;90:13;124:25
participated (1)114:10participating (3)5:20;15:8;58:19
participation (1)59:16
particular (3)91:9;100:16;122:11
particularly (5)46:25;67:21;73:15;
76:10;113:20
parties (15)
5:15,20;7:7;8:14;
9:3;30:7;60:10;62:1;
82:19;84:10;100:18;
115:7;118:14,16;
128:21
parties-in-interest (1)59:15
party (4)17:6;58:15;83:15;
115:9
pass (3)
11:12;98:15,24
passed (1)
23:11
Passion (1)33:10
past (2)60:25;62:13
path (1)
97:6
Patrick (1)

6:23Paul (1)
6:19
Pause (2)57:18;89:4
pay (34)
22:13;23:24;25:12;
26:1;32:20,21;39:15;
40:3,4;41:1,7,19;42:1;
45:12,20;46:2,9;49:2,5,
14;52:9,19;53:25;
54:18,18,19,19;62:3;
75:25;80:5;81:19;86:1;
101:3,4
paying (9)14:15,17;32:17;40:6,
8,9;84:10;85:19;
106:16
payments (10)22:17;24:17;25:9;
27:18;40:5;41:10;
84:14;85:20;86:1;
88:18
payroll (2)
23:24;94:10
peer (1)52:14
peers (1)42:11
pen (1)
96:18
pendency (33)
16:16;27:8,14,20,23;
28:3,4,17;32:2;36:10;
40:19,23;41:25;42:5;
44:2;46:18,20;61:18,
21,22;74:8,9,12,14,17,
22;75:1,18,24;76:1;
88:1;96:23;97:4
pending (2)9:10;62:23
Penman (2)6:22;91:25
pension (2)40:6;102:3
people (26)
5:17;7:8;11:9;23:18;
24:5;25:7;39:16;44:17;
45:20;47:21;52:11;
54:21;67:1;78:20;
100:24,25;105:7;
106:14;107:4;109:16;
112:5;115:4;116:11;
119:5;124:21;129:1
percent (2)54:15;112:18
perfect (2)95:15;104:5
perform (2)41:9;46:16
performed (1)46:15
perhaps (9)eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

12:2;15:21;17:3,4;
20:24;37:14;46:14;
57:8;104:10
period (5)85:21;109:12;
113:17;122:11;125:8
permissive (4)51:14;55:3,21;90:9
person (4)24:5;35:18;62:19;
110:14
personal (2)36:2;37:2
perspective (3)100:9;101:16;107:20
pertinent (4)14:24;32:7;34:16;
44:11
petition (20)
10:16;11:17,21;
13:24;21:5,10,14;
25:20;30:16;33:12;
40:9;41:5,22;44:4;
47:12;69:8;73:23;
77:14;79:2,3
petitioning (1)43:1
ph (6)
26:22,23;27:2;33:10;
36:14,14
phone (8)110:14;114:11,11;
124:21,25;127:18,21;
128:12
picked (1)117:11picture (2)55:4;99:7
piece (7)43:19;114:5,5,5,20,
20;115:2
Pierce (14)33:23;43:5,21;50:22;
51:15;52:13;53:23;
82:8,14,21,25;83:24;
86:14;88:5
pile (1)37:10
place (12)5:4;16:21;28:13,25;
36:1;41:22;42:11;
45:25;72:22;74:12;
99:12;104:24
placed (2)7:13;33:8
places (1)55:18
plan (193)
7:16;10:15;11:20;
16:14,15,16;23:8,8,12;
24:24;26:8,18;27:8,14,
16,21,21,23;28:3,4,6,
17,19,22,25;29:4,12,(14) onto - plan
EXHIBIT A PAGE 228

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
17,18,25;30:14,17;
32:2,17,20;35:22;36:6,
7,8,10;38:15;40:16,17,
19,21,23,23,25;41:10,
12,22,25;42:10;43:3,
25;44:2,9;45:20;46:15,
18;47:6,8,10,18;48:23;
49:5;51:19;53:5,6;
54:23;55:11,16,24,25;
57:1;59:22;60:4,9,12,
16;61:6,10,13,14,18,
21,22;62:4,18,23;63:3,
11,13,16,20;64:19;
67:3,17,21;68:1,5,20;
69:8,12;70:9,10,13;
71:4,18,22,23;72:1,2,3,
5,17,22;73:2,8,11,23;
74:1,2,8,9,11,12,14,17,
19,22;75:1,18,19,24;
76:1,6,12,15;78:16,17,
24;79:5,7;81:25;82:14;
83:6,15,22;84:2;89:3,
12,16,24;90:14;93:13,
21;94:23;95:9,21;
96:23,25;97:3,4,4,5,15;
98:21;99:3;100:7,8;
101:5,16;102:3;104:3;
106:14,25;107:4,8,12;
111:15,18,19,21;112:1;
113:12;114:24;115:6;
119:24;121:23;122:2;
125:15,18
plans (5)53:11;75:23;104:21;
120:12;125:18
play (1)8:15
pleadings (1)73:22
please (1)7:9
plenty (1)118:4
plug (1)9:9plus (2)
98:25;126:21
PM (7)
5:1;57:15,15;103:11;
119:11,11;129:14
podium (1)
109:18point (33)
47:16;51:16;59:17;
61:16;62:21;64:24;
65:23;66:6,13,20;67:3,
15;68:24;69:7;71:9;
72:7;73:20;75:17;
76:16;77:23,23;78:25;
83:5;85:18;88:10,11;
89:19;93:11,22;106:3;
107:9;115:17,24
pointed (3)Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 234 of 244

21:15;47:20;93:22
pointing (1)100:16points (6)50:4;75:16;90:6;
91:9;105:11;114:15
point's (1)117:13
Police (6)20:13;39:4;47:1,3;
109:20;116:1
police's (1)
47:3
policies (1)
59:3
policy (4)10:2;58:22;71:14;
90:1
political (6)99:22;100:14;116:9;
122:6,7,13
politically (2)99:5;116:8
politicians (1)99:23pool (2)95:2,6
populace (1)21:18
portion (1)86:2
posed (1)101:19poses (1)99:1
position (7)38:18;47:18;58:1,18;
65:24;66:5;69:12
positions (2)22:15,16
possibility (1)56:23
possible (2)108:18;126:18
post- (4)25:19;41:4,21;89:14
post-petition (17)26:16,18;27:7;29:22;
30:5,12,19;42:2;49:5,6,
8,14;52:9;62:3;72:16;
86:23;95:19
potentially (2)21:8;24:19
potholes (2)39:6,7power (2)51:14;69:4
powers (2)108:11;114:14
practical (1)122:12
practice (1)93:10

pre- (1)
44:3pre-approving (1)128:11precedent (9)14:20;89:7,18,20,25;
91:14;98:6,7;108:11
preceding (1)
21:5
precipitated (1)
93:18
precipitating (1)
45:13
precisely (1)115:24precluded (1)88:8
precluding (1)72:7
precursor (2)97:4;111:25
prefer (1)104:11preference (2)84:4;85:20
preferences (1)84:10
preferential (10)21:8,8;24:17,19,25;
25:1,3;49:3;84:14;86:1
preferred (1)93:24
preferring (1)
62:2
pre-filing (2)32:17;89:14
preliminarily (1)122:16preliminary (4)7:18,22;39:10;114:8
premature (1)113:13prepare (7)28:19,22;29:4;42:4,
5;119:23;120:20
prepared (13)
16:11;18:18;29:20;
31:25;36:11;37:2;
38:16,17;51:19;103:9;
104:1;124:20;128:24
preparing (3)17:6;78:24;94:4
pre-pendency (15)
16:14;27:16,21;32:2;
36:7,8;40:17,20,22;
41:10,12,25;46:13;
54:23;75:18
pre-petition (18)
29:22;32:23;41:21;
48:23,24;49:4;51:2,20;
52:5;53:14;72:18,19;
82:17;84:4;86:15;
87:13,14;88:17

preponderance (1)50:3
pre-ruled (1)
14:11
present (8)57:16;61:2,4;79:3,
24;82:2;105:16;106:14
presented (13)16:10,11,18;32:1;
35:20,22;36:5,12;
45:23;72:24;73:1;78:6,
9
presenting (1)
60:24
preserve (1)93:13
president (2)109:22,23
presumption (1)49:24
pretty (8)15:3;43:18;52:15;
84:11;91:21,21;101:1;
109:8
prevent (4)13:17;21:17;33:22;
52:6
previously (2)64:4;115:18
prima (4)
12:19;13:21;15:25;
16:23
primarily (1)31:18
principal (4)72:20;79:17;82:18;
83:7
principles (1)72:11prior (5)41:23,24;62:14;
79:22;85:21
private (1)11:7
privilege (7)33:22;34:2,2,21,21;
43:9,9probably (10)22:1,14;52:9;54:7;
64:22;85:1;95:14;
111:13;119:2;123:12
probative (1)73:15
problem (6)65:20;93:16;100:25;
111:14;119:4;126:20
problematic (1)
50:2
problems (16)24:12;32:11,14;
50:25;51:4;52:22;53:3,
19,21;73:7;96:20;99:1;
100:22,22;101:11,12

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

procedure (4)9:7;17:3;18:4;
109:13proceed (2)7:15;61:8
proceeding (4)5:5;15:10;93:21;
107:16
proceedings (2)10:3;129:14
process (35)
15:13;18:24;40:22;
50:18;59:22;62:4,7;
63:16,21;66:23;68:13,
20;75:7;76:12;77:16;
79:5,8;84:2;86:7;89:3,
24;92:6,9;96:18;97:9,
17;100:4;101:6;104:4,
15,20;105:2;107:8;
122:7,13pro-deadline (1)112:25produced (1)
79:6
producing (2)
106:1,4
productive (1)128:19professional (2)99:16;110:3
professionals (1)
20:7
progress (1)104:12
project (1)112:16
projecting (1)
13:16
projection (3)49:13;52:3;112:15
projections (15)
29:16,19;35:22;36:7;
47:17;79:12,20;
101:14,15;102:25;
103:1,16;108:7;
119:24;120:20
promote (1)81:25
prong (3)70:9;71:3;90:8
prongs (1)83:16
proof (1)25:4
proper (3)72:6;89:25;107:19
property (1)44:24
proposal (2)72:25;120:14
proposals (1)104:25propose (2)(15) plans - propose
EXHIBIT A PAGE 229

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
72:3;90:13
proposed (3)23:8;30:14;115:7
proposing (1)89:16
prosecute (1)31:7
prospectively (1)76:9protect (2)
58:23;93:12
protection (4)23:20;26:3;71:17;
91:3
protections (2)106:1;123:5
prove (2)107:22,22
provide (11)59:12,21;63:9;72:9;
88:18;90:12;103:5,6,8;
104:9;105:21
provided (7)31:18;60:17;65:8;
75:20;81:15;102:20;
103:7
provision (1)54:21
provisions (2)13:7;41:6
prudent (1)22:13
prying (1)
107:7
public (15)
11:12;16:12,19;
34:17;47:5;58:20,23;
59:13;76:3;92:3;93:5,
6;110:19;116:4;124:4
publicly (1)16:3
pulled (1)116:16pulling (1)9:9
purely (1)17:21
purported (1)8:1
purpose (11)29:7;43:12;53:4;
59:9;66:17,18;72:6,8;
83:14,17,23
purposely (2)60:19;105:17
purposes (5)51:2;57:7;71:14;
72:10,12
pursued (1)
50:12
push (1)116:5
put (21)
Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 235 of 244

11:23;12:21;40:19;
91:25;100:17
ready (2)9:6;57:16
real (3)
67:11;105:23;107:8
realities (1)104:20reality (2)46:5;124:4
realize (2)51:23;99:4
realized (1)Q
100:21
really (42)qualification (2)9:3;10:2,16;11:3;
43:16,19
13:25;16:8,22;18:5;
qualifications (6)
21:23;24:7;27:3;37:22;
15:14;16:7;31:4;
39:5;48:4;49:7,19,22;
40:14;73:19;99:3
51:21;55:11;61:19;
Quality (1)67:6,13;68:1,2;79:21;
20:21
81:24;82:1,23;83:16;
quarterly (1)84:1;85:23;86:6,13,22;
126:21
87:21;91:14;99:2;
quick (2)
107:11;111:9,11;
25:24;106:7
117:7;125:2
quicker (1)reason (10)
66:24
19:15,17;23:25;
quickly (11)24:22;44:21;51:20;
10:5;24:11;46:23;
70:8;84:15,22;94:17
48:3,4;54:14;66:24;
104:17;105:3;108:18; reasonable (2)120:7;122:20
117:12
reasons (9)quite (11)54:12;62:17;84:9;
17:18,21;23:4;29:5;
90:22;94:16;98:12;
53:11,19;57:12;65:22;
99:13;107:9;108:17
98:9;116:14;125:15
recall (2)84:8;122:11
R
receive (1)102:25
raise (8)received (2)10:1,1;19:3;25:24;
47:12;91:24
39:21,22;119:16,17
recent (2)raised (2)60:21;106:11
26:16;35:5
recently (1)raises (1)
94:25
48:20
recess (7)ramifications (1)5:19;57:13,14,15;
99:23
119:9,11;129:11
ran (1)recite (2)61:20
48:7,15rather (5)recited (2)
18:23;39:12;93:15;
43:15;91:15
99:6;125:11
recognize (2)Rauth (1)
23:23;47:8
6:20
recommended (1)re (1)
20:13
96:1
reconciled (2)reached (4)29:10;79:25
11:2;32:19;87:11,18
reconciliation (1)read (4)80:17
9:20;10:20;27:20;
reconciliations (3)
38:5
103:3,5,6
reading (5)10:10;21:5;22:14;
30:3;37:10,11;45:17;
46:4;60:12;63:3,14;
70:4;73:9,10;75:12;
92:2;100:8;101:13,14;
116:19;122:3
puts (4)65:24;66:4;73:11;
81:10
putting (3)71:22;101:15;114:11

reconsideration (1)123:1
record (15)14:9;15:19;25:22;
27:13;34:17;57:20;
70:4;73:24;91:12;
92:13;97:1;108:25;
109:7;119:10,13
recordkeeping (1)
100:24
records (10)
16:19;24:10;46:13;
52:2;65:9;100:20;
101:9,13;108:4;124:4
recoverable (3)24:25;25:16;86:9
recovered (1)
25:3
recurring (1)
92:3
redid (1)
22:1
reductions (1)51:11
re-elected (1)99:17
referring (1)79:12
reflect (3)26:13;78:16;124:5
reflected (1)76:18
reflects (3)27:13;78:19,21
refrain (1)62:2
refuses (2)89:15;128:23
regard (8)24:13;25:8;35:8;
37:9;41:10,11,11;
124:2
regarding (2)
26:18;58:23
regret (1)108:11
regular (1)40:5
rehabilitation (1)
48:2
rejected (1)116:3
rejection (2)115:1;121:23
relate (1)22:9
relatively (1)103:23
relevancy (1)
20:3
relevant (17)
11:8,10,13,20;18:15;
20:18;21:12;25:17;

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

31:21;32:12;33:11,20;
35:3,15;61:6;64:21;
67:19
relied (3)15:15;31:19;37:5
relief (8)
13:17;48:1;52:15;
59:8;60:5;62:15;89:16;
109:11
rely (1)42:23
remain (5)7:15;53:1;57:19;
83:23;119:12
remaining (1)58:15
remark (1)
10:8
remarks (1)97:23
remember (2)76:18;84:17
remote (6)11:22;12:17;20:1,17;
32:12;33:11
reorganization (4)45:8;50:17;59:10,11
reorganize (4)13:18;45:11;53:5;
56:16
reorganizing (1)52:24
repay (2)
21:20;22:1
repayment (1)83:15
repeated (1)9:5
reply (1)
19:24
report (22)25:23;26:11;32:1;
38:16,17;39:17;48:3,
18;74:24;78:2;80:21,
24,25;92:22;93:7,8;
106:11;119:25;123:17,
25;124:2,12
reported (4)26:4;42:12;116:12;
117:4
reporting (1)79:24
reports (19)12:14;16:10,18;
17:25;18:3;20:7,10;
31:24;33:8;35:16,19;
38:18;42:4,7;50:12;
79:6;105:17;106:4;
123:24
repossessed (1)45:14
represent (2)56:17;95:4(16) proposed - represent
EXHIBIT A PAGE 230

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
representatives (1)112:22
request (4)34:14;35:5;90:23;
125:3
requested (1)
12:11
requests (2)34:22;55:21
require (3)25:7;90:18;91:1
required (6)61:15;66:10;76:6,9;
90:9;103:4
requirement (1)51:23
requirements (3)59:7;90:12;98:14
requires (1)
25:6
reservation (3)8:1;9:25;10:9
reserve (1)38:19
reserves (1)39:1
resolution (17)
11:13;16:13;23:10;
25:21;31:6;33:4;40:11;
44:16;52:17;54:9;
76:20,25;77:3,10,13,
22;84:19
resolutions (2)35:17;77:8
resolved (1)9:24
resort (1)
66:1
resources (13)63:2,7,17;88:13,21;
96:3,15;97:11,16,17;
106:4,6,13
respect (7)73:8;75:18;90:6;
104:5;110:23;119:20;
121:22
respond (4)91:7,22;105:8;
119:17
response (4)60:22;61:20;74:24;
91:10
responses (1)9:12
responsibilities (2)78:17;107:17
responsibility (2)58:19,22
responsible (1)62:15
rest (2)
6:5;23:4
restricted (4)Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 236 of 244

80:4,11;81:6;82:2
restructure (4)46:11;93:13;96:8;
97:6
restructuring (2)
60:14;61:24
result (1)
95:17
resume (1)57:14Retired (1)110:8
retiree (1)40:4
retirees (3)15:5,8;55:8
retirement (4)54:19;58:20,24;
59:14
retroactively (1)76:8
returned (1)111:5
revenue (2)79:12,15
revenues (6)25:24;39:21,22;
63:10,12;88:9
reversed (1)70:25
review (1)98:19
reviewed (1)103:9
right (60)
5:8;6:7;7:4;10:1;
13:2;19:23;35:18;38:9;
56:7;57:20;63:1;64:23;
65:7;69:1,18,23;70:20;
71:9;75:14;76:21;77:1,
5,9,17;78:5;80:1;81:7,
12;82:11,22,24;83:4,5;
85:1,13,16;86:20;
87:15;88:4;90:17;92:1,
20;97:21;105:4;106:9;
107:5;110:24;114:1;
117:6,15,19;118:7;
119:8,13;124:1,2,13;
125:12;126:23;129:7
rights (11)8:1;9:25;10:9;15:17;
40:7;41:17;44:17;49:1;
54:5;64:1;84:11
ring (1)
107:21rise (1)
47:4
rising (1)
20:23
risk (1)
47:5
RIVERSIDE (2)5:1;56:18

save (1)45:10
saw (2)
20:10;54:23
saying (6)13:9;18:4;39:14;
56:21;101:24;128:22
SBPEA (5)8:13,19,22;9:13,14
schedules (1)
128:20scheduling (1)75:1school (1)95:3
scope (3)
18:19;51:4;53:18
screaming (1)
17:20
script (1)
12:20
scrutinized (1)44:12
seated (2)57:19;119:12
second (8)80:24;99:8;106:3;
111:13,14,14;113:22;
116:6
Secondly (3)83:17;114:21;118:3
section (4)13:6;21:19;25:2;
90:18
secured (1)
15:5
security (1)25:13
seeking (1)13:17
seeks (1)72:21
seem (2)58:11;100:15
S
seems (2)57:3;88:19
safe (1)self-inflicted (1)
13:20
89:10
safety (5)Senior (1)
24:12,13;39:4;47:5;
7:1
116:5
sense (3)same (9)55:10;71:6;113:24
18:18;29:25;38:23;
sent (2)48:7;87:6;109:5;
17:12;103:10
114:11;115:4;129:2
separate (2)San (20)
80:23;94:7
5:6;6:21;13:5,5;September (4)
15:11;20:6,23;42:14,
111:12;122:12;
16;56:17;57:21;60:23;
128:10;129:3
99:12;108:13;109:20;
110:3,9;119:14;124:5; serious (4)16:24;63:20;72:17;
125:17
105:21
satisfied (3)seriously (4)13:23;31:5;84:17

road (3)27:17;99:4;118:9
roadmap (1)108:13Robert (1)
6:24
role (1)58:18
rolled (1)
117:3
Ron (1)
109:19room (3)92:8;95:7;122:6
rule (24)
7:12;17:1;18:17,18;
30:3;33:1;37:7,12,15,
16,25;38:5;42:20;44:6;
48:9;53:7;57:11;58:10;
64:15,25;108:16;
116:4;118:10;122:3
ruled (9)17:10;27:1,5;53:12;
63:24;64:4,25;109:4,7
ruling (28)
5:16,18;7:5,17,18;
8:6;11:17;14:5;19:1;
29:8;32:25;37:20,24;
38:3,9;42:17;46:2;
53:9;55:2,20;57:10;
62:9;64:22;67:3;68:18;
108:22;117:5;122:22
rulings (1)19:1
run (1)
124:20running (1)65:10Ryan (1)
6:1
Ryan's (1)
95:23

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

14:13,21;26:5;58:22
serve (1)56:1served (1)55:24
service (3)51:9;54:21;117:10
services (4)39:2,4;54:21;59:13
session (4)34:1,20;35:17;36:1
set (22)
5:5;8:5;13:21;14:20;
16:2,25;17:10;18:4;
32:9;37:21;59:5;65:20;
84:19,20;90:25;91:14;
97:6;104:13;105:1;
111:21;125:25;128:19
setting (3)108:11;113:9,12
settled (3)22:7;27:21;41:17
settlement (2)9:13;22:22
settlements (3)22:15;40:7;49:1
seven (4)54:17;78:3;82:15;
83:6
several (3)8:20;47:4;122:10
severity (1)93:16
shaking (1)
120:6
share (3)
98:10;105:19,23
shared (1)108:17sharing (3)41:7;61:25;120:12
sheet (13)23:8,12;41:23;51:19;
71:1;94:10;95:20;
111:24;112:14;118:6;
121:12;122:4,19
shift (1)49:25
shifting (1)
50:2
Shorett (1)
6:24
short (12)27:25;28:21,24;
93:25;94:2;105:14;
109:12;112:21;115:12;
119:18;124:16,21
shorter (1)
125:8
shortfall (1)
41:4
short-staffed (1)13:14(17) representatives - short-staffed
EXHIBIT A PAGE 231

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
short-term (2)39:21;114:25
show (5)27:21;43:12;44:2;
50:4;61:8
showed (2)41:1;55:15
shows (1)28:8
sic (1)
17:13
side (1)
91:2
sign (3)28:20;31:4;111:23
signal (1)88:24
significant (4)51:11;70:6;91:14;
120:23significantly (1)120:13signs (1)
100:22similar (1)47:13
simple (1)109:10simpler (1)
96:20
simply (4)43:13,18;91:10;92:9
Simpson (7)31:18,21,23;32:6;
33:6;78:2;81:19
Simpson's (1)33:6
single (1)44:20
sit (2)
69:9;79:9
sitting (4)35:25;71:20;81:20;
117:22
situation (12)13:3,19,25;45:12;
93:9,14;95:18;96:15;
98:11;101:2;104:4,7
situations (1)50:25
six (2)
33:9;52:13
size (2)
15:11;56:20
skipping (1)5:9
slightly (1)54:6
slim (1)25:22
sloughing (1)
24:14
slow (2)Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 237 of 244

46:12;108:4
slowly (2)28:23,24
smirk (1)
113:2
snapshot (1)78:19
Snyder (2)82:10,11Snyder's (1)82:12
sold (1)39:17
sole (1)58:15
solely (2)66:18;72:6
solitude (1)14:10
solvency (2)9:1;97:7
solvent (1)44:22
somebody (7)25:2;45:3;60:17;
64:18;71:22;96:6;
113:18somehow (2)
11:19;29:17
someone (1)113:19sometime (2)18:3;116:23
Sometimes (1)12:24
somewhat (3)26:10;38:23;98:12
somewhere (1)109:24soon (5)65:21;97:16,17;
100:8;103:23
sooner (2)93:15;95:12
sorry (5)34:19;97:22;106:10;
112:10;127:19
sort (4)7:18;80:19;86:24;
116:2
sorts (1)85:18sought (1)13:17
sounded (1)14:11
source (1)39:25
sources (1)117:7
spa (1)
92:8
space (5)45:19;47:22;53:25;
54:3,11spades (2)52:23;53:19
speak (3)16:4;73:25;102:12
SPEAKER (1)
103:24speaking (2)5:17;15:2
specific (3)
6:2;59:6;104:13
specifics (1)102:18
speculating (1)95:13
spell (2)
23:22;83:14
spend (1)48:13
spending (1)
51:9
spent (3)76:24;94:25;122:14
spiral (1)93:10
spoke (2)
72:18;111:4
Springs (1)12:25
square (1)85:19
stab (1)
124:9
staff (23)11:8;16:19;20:7;
23:25;24:1,15;28:21,
24;29:4;31:25;34:5;
38:17;39:3,7;42:3;
49:12;52:12;54:8;
64:18;99:16;103:9,20;
125:17stage (1)
121:7
stand (1)123:19standard (11)15:1,24;27:2;42:19;
59:6;60:2;67:4,5;
83:11,13;94:23
standards (1)71:24
standpoint (1)
120:22start (11)18:12;46:12;47:18;
58:14,17;91:25;
105:10;111:15;114:2;
121:12;125:24
started (3)29:6,6;75:7
starting (3)
18:24;120:16,21

starts (1)114:5
state (20)
8:15;10:24;11:8;
13:6;14:1;22:24,25;
33:18,19,23;43:1,8,11;
44:5;58:21;85:12;
92:13;97:14;101:7;
116:20stated (1)
91:19
statement (30)
8:2,21;15:14;16:2,7,
8;30:20;31:4,23,24;
36:9,20;37:5,18;40:14;
43:14,16,19;67:16;
73:12,18;79:25;80:11,
14;87:14;91:13;101:5;
102:19;108:24;111:10
statements (9)11:7;29:11;51:25;
55:12;75:4;76:3;80:4,
16;91:10
state's (1)58:23
stations (1)
46:25
status (14)8:10;17:25;18:2;
19:14;30:22;61:14;
62:14;69:14;79:22;
111:4;113:11;114:22;
119:14;128:10
statute (1)102:4
statutory (1)56:7
stay (2)
17:23;104:17
step (1)
100:5
steps (4)
21:11;39:20;54:13;
67:16
Steve (1)
109:22
Steven (1)7:2
still (13)17:17;50:3;70:3;
76:1;78:24;79:6;85:13;
86:7;94:15;100:4;
103:21;104:10;115:25
stipulate (1)62:14Stockton (13)13:4,11,15;33:19;
43:4;49:19;51:6;72:15,
15,21;82:7;98:5;100:3
stood (2)47:3;58:5
stop (1)50:13

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

stopped (1)94:10
stopping (1)50:20
Stradling (1)
6:20
straightened (1)128:15strategy (2)50:13,21
streets (2)39:6,6
stringing (1)72:10
strong (1)54:7
stronger (1)
92:4
struck (2)101:25;102:7
structured (1)
10:7
struggled (1)101:18
stupid (1)
25:11
subject (2)34:20;92:9
subjective (22)
10:14,18,19;11:2,2,4,
4;33:15,25;42:18,21,
22;43:2,6;50:5,24,24;
52:15;67:4,18;68:4;
83:25
subjective/objective (1)67:6
subjectively (1)52:18
subjects (1)32:7
submit (1)95:18
submitted (4)92:21,22;96:25;97:2
subpoint (1)
115:14subsections (1)31:10
subsequent (1)35:15
successful (1)39:15
sudden (3)
20:21,24;100:21
sue (1)
45:2
Suffice (1)64:12
sufficient (4)63:7;65:9;66:2;
107:22suggest (2)92:8;112:13(18) short-term - suggest
EXHIBIT A PAGE 232

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
suggested (3)62:13;76:1;118:10
suggesting (1)116:10suggestion (2)43:24;75:10
Sullivan (3)50:7,10,15
sum (1)
121:18summarize (1)117:13summary (17)
5:11,22;7:14;8:6;
9:12;10:7;17:8,10;
19:2;37:21;57:21;
90:10,23;91:18;
108:24;129:5,6
sun (1)
127:24
sundown (3)127:17,21;128:2
supplying (1)113:12
support (16)17:2;31:14;32:4;
35:10,11;36:20;38:15;
59:16;60:4;61:23;
63:13;66:2;72:11;
73:11;76:11;91:1
supported (6)16:3;43:4;45:19;
51:5;68:14;71:15
supporting (4)55:13;71:14;74:10;
91:2
supportive (3)68:16;69:11;76:10
supports (8)17:5;20:3;33:23;
59:10;69:10;70:4;
73:24;74:2
suppose (3)5:6;73:13;75:9
supposed (4)12:7;18:19;28:5,5Sure (12)6:16;20:18;36:9;
49:22;53:19;54:7;56:3;
59:12;71:21;91:17;
116:14;128:25
surprise (2)17:4,16
surprisingly (1)47:14
survive (1)24:8
suspect (1)
115:18suspense (1)7:11
sustain (2)35:9;37:6
Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 238 of 244

25;112:14;115:2,12,
12;118:6;121:12;
122:4,19
terminate (3)25:8,13;102:2
terminated (2)
17:22;49:2
Ttermination (1)102:5
table (3)terms (6)60:12;111:17;128:17
67:5;69:24;100:19;
tactic (2)102:9;104:8;114:24
44:22;105:19
test (1)tail (1)
98:25
24:2
tested (2)talk (30)
13:6;14:2
22:9;33:14;36:16;
42:22;60:1;62:6;63:6; testify (1)36:3
67:2,18;68:3;70:6;
80:9;83:9,12;84:1,3,4; testimony (2)66:16;105:12
96:1;105:13;106:18;
108:21;109:15;113:17; Texas (1)
51:6
116:11;117:24;118:1,
Thanks (1)8,17,21;129:1
118:25talked (12)that'll (2)63:8;65:12;72:14;
87:21;126:5
73:14;79:20,22;82:6,8;
therefore (11)
86:14;87:5,6;119:1
12:17;23:13;24:21;
talking (10)29:8;31:10;32:15;
15:1;64:7;67:13;
34:20;38:2;40:9;47:9;
68:10;79:23;80:17;
109:16
96:16;112:24;115:6;
thereon (1)118:22
8:9
talks (2)thinking (11)33:21;97:3
8:25;26:13;61:17,20;
TAs (1)
63:13;71:11,15;72:16;
25:6
112:21;122:17;127:14
task (1)third (1)
60:17
11:16
tax (1)
thirteen (4)39:23
10:6;61:12;71:20;
tee (2)
95:20
18:17;19:16
thirty (3)telephone (1)120:19;123:7,7
126:7
though (2)telling (6)94:12;96:2
30:25;71:21,23;84:8;
thought (35)
86:21;107:6
9:1;14:10,13;18:9,
tells (3)12;19:1,7;31:15;35:3;
29:15;44:10;47:7
37:22;39:18;46:10,16;
temporary (4)49:20;54:22;58:5,6;
48:1;83:14,17;87:19
60:16;62:15;64:21;
ten (1)
70:5;71:13;74:16;
57:13
78:24;85:10,11;88:23;
tentative (11)95:9;98:9;99:10,11;
5:16;7:4,9;57:9,11;
103:13,14;110:21;
65:1;108:16;116:12;
127:10
117:2,5;121:11
thoughts (2)ten-year (1)11:7;26:6
103:11
threat (3)term (20)
15:16;102:4,5
23:7,12;41:22;51:19;
threatened (1)54:7,23;69:19;71:1;
85:9
86:25;95:20;111:24,
swallow (1)108:22system (8)53:24;57:8;58:21,24;
59:1,5,8,14

threatening (1)74:17
three (14)19:25;28:12,16;
31:13;40:13;49:11;
79:21;82:1,5;87:4,6;
92:14;113:18;118:12
throughout (2)9:1;34:19
Thursday (3)126:1,11,24
thus (1)
107:23tie (3)
53:22;114:15;117:25
tied (2)70:10,12
tilt (1)
48:13
timely (2)42:1;62:3
times (6)14:9;23:16;33:7;
35:15;47:4;78:23
timetable (1)89:15
timing (6)82:7;85:2,6;111:10;
119:20;122:15
today (19)18:18;37:25;59:25;
69:9;70:3;71:23;79:4,
10;90:24;105:18,18;
109:21;113:15;115:19;
117:5;118:9;124:23;
128:10;129:12
today's (1)114:9
together (7)51:22;63:4,15;
101:13,14,15;116:19
told (6)38:8;74:11,21;87:11,
15;115:18
tomorrow (2)45:14;124:22
took (8)16:21;17:18;21:12;
36:1;46:12;74:13;78:3;
100:4
tools (1)
107:11
top (1)
34:1
totally (2)98:22;114:25
toward (3)28:22;55:16;101:16
towards (3)61:9;63:2;69:23
Town (4)12:25;48:4,17;51:6
track (3)eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

100:2,20;101:13
trade (5)15:5,7;29:23;40:8;
55:9
train (1)116:9transaction (1)88:14transfer (1)24:25transfers (5)21:9;24:17,20;49:3;
52:5
Travis-Miller (6)16:7;31:3,9;33:3;
35:21;73:12
Travis-Miller's (1)73:21
treat (2)29:25;125:21
tremendous (2)102:1,6
trial (7)19:12;20:22;50:23;
108:12;121:3,4,6
tried (2)26:5;36:17
troublesome (1)26:10
true (29)
20:5,15;23:13,17;
24:18,22;26:19;28:19;
29:3,21;30:18;32:20;
34:13,24;37:12,24;
38:11;41:16;42:9;62:8;
69:18;73:24;84:1;
91:19,20;92:21;
106:10,15,20
truly (1)
16:9
trustee (1)107:14try (6)
19:3;28:15;45:11;
59:20;63:3;109:6
trying (13)24:8;25:11;45:4;
47:20;58:1;76:24;
80:24;81:23;84:17;
102:8;114:19;117:25;
129:1
Tuesday (4)126:1,13,17;127:12
turn (2)63:22;83:9
turned (2)5:7;117:1
Turner (1)
109:22turns (1)
10:24
twelve (1)10:6(19) suggested - twelve
EXHIBIT A PAGE 233

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
twenty-two (1)95:13
two (16)
18:2;21:5,9;41:20;
49:3;77:8;85:19;94:3;
105:7,11;111:7;114:8,
15;118:10;120:16,22
two-page (1)
28:7
two-thirds (1)
21:18
type (3)9:6;30:25;34:15

U
ultimate (1)
25:18
Um-hum (18)66:3;68:22;71:12;
73:3;77:25;78:14;81:9;
84:5;85:24;86:11;
87:17,20,23;94:8;
96:11,13,21;124:3
unable (1)29:16
unanswered (1)57:3
unaudited (1)
120:25
unavailability (1)118:3
unbalanced (1)46:14
unchallenged (1)
14:4
uncomfortable (2)22:15,16
uncommon (1)100:12
uncontested (1)
14:5
uncontroverted (20)
7:13;16:2,8,25;27:4;
31:19,23;35:10;36:10,
20;37:5,18;38:11,14;
40:2,25;41:14;47:9,12;
49:18
under (40)
8:14,16,17,17;9:16;
12:11,23;15:24;20:22;
21:15,19;22:25;23:1;
27:1,12;31:9;38:4;
42:10;44:4,14;45:8;
46:7,7;47:10;49:23;
50:3,8;51:14;53:23;
55:3;56:6;71:10;85:8,
8;89:17;90:17;91:3;
92:12;94:23;103:4
understood (1)75:14
undertake (2)111:6,8
Min-U-Script®

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 239 of 244

undisputed (8)16:4;17:13;22:9,11;
23:7;32:22;37:23;
64:15
undoubtedly (2)24:14;25:7
unexpected (2)
20:21,24
unfettered (2)117:16;118:2
unfortunately (3)98:1;100:11,12
unfunded (1)56:10
UNIDENTIFIED (1)
103:24
union (5)8:13;9:13;26:21;
86:21;121:24
unions (20)
24:13;26:23,25;27:6;
28:12,16;36:16;39:11;
41:5,8;46:19;49:7;
54:17;55:7;87:3,9,11,
16;97:14;116:4
union's (1)8:14
unless (7)21:20;28:14;53:8;
92:9;94:17;99:1,2
unlike (4)89:7;99:14,14,21
unprecedented (1)
89:19
unreasonable (1)
125:2
unreliable (2)42:7;52:2
unring (1)107:13
unsecured (1)
15:7
unusual (2)17:3,4
unwarranted (1)
109:3
up (42)
5:7;9:7;12:24;14:6;
17:17;18:17;19:16;
24:3;28:15;29:25;
31:13;37:20,21,25;
47:3;48:20;53:22;
54:22,24;55:15;58:5;
62:8;65:20;71:25;74:4;
84:20,20;85:19;95:21;
98:3;101:6;103:21;
106:25;109:2;115:12;
116:16;117:11;123:19;
125:7,22;127:24;
128:19updates (1)36:8
upon (1)50:18
upset (2)
19:20;22:22
Urban (1)
6:25
urge (2)104:13,25
urgent (1)
60:6
use (8)41:6;49:14;76:11;
82:25;84:2;86:6;88:13;
90:20
used (5)22:3;56:17;69:17,19;
84:3
using (3)
21:17;71:3;88:9
usually (2)29:5;30:14
UYEDA (2)
110:7,7V
vacuum (1)
27:15
Vallejo (12)13:4;14:7,20;15:1,
24;42:12,14,21;43:14;
70:22;71:7;113:2
valuation (1)123:17various (3)15:5,6;36:4
verify (2)121:3;123:23
versa (1)
116:4
versus (2)67:12;126:9
viable (1)13:20
vice (1)
109:23vice- (1)
116:3
victory (1)115:25view (2)98:24;101:8
Virginia (1)
6:24
vis- (1)
102:9
vis-a-vis (1)114:13vote (3)
21:18;39:23,24
voted (1)
78:12

August 28, 2013

43:21
Westlake (1)51:6Wwait (2)
121:9;123:15
waived (1)64:1
walk (2)89:23;113:24
walked (1)
83:24
wants (6)17:1;42:5;56:13;
76:4;111:18;128:11
Washington (3)43:21;116:20;117:7
water (17)20:22,23;21:13,17,
19;22:2,4;41:19;48:11,
12;88:7,9,13,14,16,20,
24
way (28)
12:2;13:7,8,10,11;
15:4,8;24:7;25:24;
26:1;27:20;32:14;
37:25;38:9;45:25;
46:10;52:23;57:2;
59:11;60:12;81:23;
87:6;93:12;99:16;
108:6;109:7;113:24;
118:11ways (1)
25:12
Wednesday (3)126:2,12;127:13
week (10)124:22,22,23,23;
125:25;126:18,19;
128:18;129:2,13
weekend (1)
126:16weeks (1)78:3
weigh (5)38:4,4;52:14,20;
54:25
weight (2)67:22;73:16
Weil (1)110:19Weinberg (1)33:11
welfare (2)24:12;47:5
Wells (1)
6:9
Wendy (1)
6:23
weren't (9)22:17;25:10;27:17,
19;46:23;48:17;52:11;
54:10;97:11
western (1)eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc

what-does-this-word-mean-type (1)11:1
what's (4)60:2;111:11;125:20;
128:10
Whereupon (1)129:14
wherever (1)
24:3
whole (5)35:1;67:22;73:16;
83:1;128:20
willfully (1)66:5
willing (9)24:21;31:18;42:8;
49:18;50:3;90:24;
111:6,8;121:13
willingness (2)90:15,21
Wilson (1)33:10
win (1)
58:8
wish (5)19:25;57:10;64:9;
91:7;97:19
wished (3)19:15,24;54:6
withdrawal (1)8:23
withdrawn (6)8:22;9:14;14:3,8,8,
12
withdrew (1)
8:19
withheld (5)30:21;60:19;102:23;
105:12,17
withholding (2)30:23;61:5
withholds (1)89:12
within (12)21:10,20,25;24:20;
47:24,25;50:25;52:22;
83:6;100:14;104:1;
123:7
without (24)
15:9,12;21:18;24:8,
11;27:22;28:1,23;
30:24;32:17;51:11;
52:20,24;54:2;64:24;
66:20;89:10,11,24;
91:20;107:6;111:15;
112:3;124:2
wondered (2)
22:17;123:18
wonderful (1)117:10(20) twenty-two - wonderful
EXHIBIT A PAGE 234

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 240 of 244

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ
woods (1)82:9
word (6)
10:18;41:17;42:8;
50:24;69:17;112:3
words (5)11:4;41:6;45:18;
49:25;61:16
work (15)28:24;45:20;46:21;
60:10,11;66:25;71:22;
81:23;83:15;93:13;
95:7;116:1;121:4,6;
126:15working (12)69:23;83:7;95:1;
97:15;101:10,15;
102:21;103:12,19,20;
104:2;120:5
work-out (1)
15:9
world (4)95:1,8;106:22;117:3
worry (2)61:1;99:22
worse (2)66:15;100:23
worst (1)48:8
worth (1)
107:22worthy (2)59:4,4
wreck (1)
116:9
write (1)
109:1
writing (2)
109:6;118:22
written (3)15:4;50:11;109:1
wrong (4)13:13;25:15;44:19;
117:2
wrote (4)12:3;42:13;70:22;
109:4

X
XIII (1)21:16
XVI (1)
21:19

Yyear (25)
18:10;21:21;26:2;
28:3;32:4;38:21;73:2;
76:5,7;87:22;88:3;
98:4;100:1,4;103:21,
25;104:2;106:12;
Min-U-Script®

120:3,4,6;122:8,18,18;
124:1
years (5)20:25;39:11;56:20;
82:17;93:10
yesterday (1)124:23
Yocca (1)
6:20
York (3)6:10;43:20;51:15

Z
Zive (5)111:4,22,24;125:24;
128:21
Zive's (1)113:221
1 (3)32:20;34:22;40:4
1.2 (1)
86:1
1:30 (4)5:1,5;117:5;127:15
10 (5)
34:14,25;77:10;
78:25;128:5
100 (1)
31:9
109 (1)64:7
109c (2)49:19,23
109c1 (1)
13:22
109c2 (6)8:14;9:15;20:19;
32:15;63:24;64:3
109c3 (3)8:16;9:15,20
109c4 (7)
8:17,18;9:16;35:7;
42:11;47:13;71:10
109c5 (6)9:19;14:22;15:23;
63:24;64:2;70:8
109c5C (1)
15:15
109c5D (1)
15:16
10th (7)76:17,17;78:10,11;
92:16,17,25
11 (14)
33:25;34:14,25;43:5;
45:12;72:10;93:19;
95:14,15;107:16;
128:5,8,11;129:4
11's (1)

60:13
11th (1)103:11
12 (2)
34:14;124:1
12- (1)
103:25
13 (3)
34:14;45:10;104:1
13/'14 (1)
76:9
14 (1)
35:4
15 (1)
35:4
16 (3)
32:10;34:22;35:4
16th (5)77:12,12;92:17,18,25
17 (1)
34:22
18 (5)
21:20;34:22;77:12,
13;79:1
18th (14)23:11;25:21;38:17;
40:12;44:16;52:18;
54:4;76:22;77:4;92:14,
19,20;93:1,25
19 (1)
34:22
1st (8)
11:21;26:1;40:3;
44:15;52:19;74:13;
79:2;94:1

2
2 (2)
34:22;53:20
2:30 (1)
127:1520 (1)
34:22
20- (1)
103:22
2007 (5)
11:19;12:9;20:1,12;
41:17
2007/2008 (1)
12:142008 (5)
11:19;12:9;20:11;
39:12;65:18
2009 (2)12:9;20:14
2010 (4)
11:19;20:2,11,12
2011-'12 (1)103:22
2011-2012 (2)120:17;121:11

2012 (14)7:22;11:21;13:10;
20:4;23:11;35:15;
38:16,17;39:12;40:18,
23;49:4;72:22;74:15
2012/'13 (1)76:8
2012/2013 (1)
21:23
2012-2013 (2)26:2;38:21
2012-206 (2)31:6;40:11
2013 (4)5:1;40:24;41:8;42:3
2018 (2)65:18;79:13
21 (1)
34:22
22 (1)
5:9
22nd (4)36:24;40:24;103:7,7
23 (2)
5:10;34:25
23rd (1)
96:24
24 (1)
34:25
24th (2)
7:21;40:16
25 (1)
35:4
26 (1)
35:4
26th (3)27:9;40:23;74:14
27 (2)
35:4;111:3
28 (2)
5:1;35:4
28th (1)
41:8
29 (1)
35:4
29th (1)103:7
2nd (1)
128:7

3
3 (1)
34:14
3:04 (1)57:15
3:21 (1)
57:15
30 (2)
35:4;124:1
30th (2)
27:17;40:18
31 (1)

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

Desc
August 28, 2013

35:4
31st (1)
94:5
35 (1)
35:4
36 (1)
34:25
362 (1)
115:19365 (4)
5:10;27:2,2;115:19

4
4 (1)
34:14
4:03 (1)103:11
4:44 (1)
119:1145.8-million-dollar (1)38:22
4th (5)
127:13;128:6,8,10;
129:3

5
5 (4)
34:14;60:21;69:13;
119:9
5:17 (1)
119:11
5:32 (1)
129:14506 (1)100:356d (7)
12:12;16:5;17:2;
19:21;26:16;31:14;
37:16
5th (3)
127:5,7,9

6
6 (2)34:14;53:18
600,000 (2)85:21;86:4
6th (1)
127:9

7
7 (1)
34:14
7:30 (2)127:24;128:2
790-page (1)72:15(21) woods - 790-page
EXHIBIT A PAGE 235

Case 6:12-bk-28006-MJ

CITY OF SAN BERNARDINO
Case No. 6:12-28006MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 241 of 244

Desc
August 28, 201388 (3)34:14,22;93:25
80s (1)50:9

99 (47)
5:5;7:15,20;10:19;
12:1,21;13:11;25:21;
26:3,5;30:7;31:7;
34:14,24;40:12;43:1,
13;44:19,21;45:16;
47:23;48:1;50:11,15;
51:1,2;52:23;53:4;
54:10;55:25;56:16;
57:7;59:4,5,8;60:13;
71:14;72:12;83:14,23;
89:8,17;92:7;93:21;
98:7;107:11;122:7
904 (2)
27:12;90:18
90s (1)50:9
921 (11)
8:17,18;9:17;19:7;
20:17;35:7;38:13;
47:11;51:14;55:3;90:9921c (2)50:3,8926 (1)
25:2
9th (4)
38:16;78:4;92:23,24

Min-U-Script®

eScribers, LLC | (973) 406-2250
operations@escribers.net | www.escribers.net

EXHIBIT A PAGE 236(22) 8 - 9th

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 242 of 244

Desc

PROOF OF SERVICE OF DOCUMENT
I am over the age of 18 and not a party to this bankruptcy case or adversary proceeding. My business address is: 10100
Santa Monica Blvd., 7th Floor, Los Angeles, CA 90067
A true and correct copy of the foregoing document entitled (specify): __ CALPERS’ MOTION FOR LEAVE TO APPEALFILED PURSUANT TO FRBP 8001(b)________________________________________ will be served or was served (a)on the judge in chambers in the form and manner required by LBR 5005-2(d); and (b) in the manner stated below:
1. TO BE SERVED BY THE COURT VIA NOTICE OF ELECTRONIC FILING (NEF): Pursuant to controlling General
Orders and LBR, the foregoing document will be served by the court via NEF and hyperlink to the document. On (date)____10/22/12___, I checked the CM/ECF docket for this bankruptcy case or adversary proceeding and determined thatthe following persons are on the Electronic Mail Notice List to receive NEF transmission at the email addresses statedbelow:• Jerrold Abeles abeles.jerry@arentfox.com, labarreda.vivian@arentfox.com• Franklin C Adams franklin.adams@bbklaw.com,
arthur.johnston@bbklaw.com;lisa.spencer@bbklaw.com;bknotices@bbklaw.com• Joseph M Adams jadams@adamspham.com• Andrew K Alper aalper@frandzel.com, efiling@frandzel.com;ekidder@frandzel.com• Thomas V Askounis taskounis@askounisdarcy.com• Julie A Belezzuoli julie.belezzuoli@kayescholer.com• Anthony Bisconti tbisconti@bmkattorneys.com, admin@bmkattorneys.com• Brett Bissett brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com• Brett Bissett brett.bissett@klgates.com, carolyn.orphey@klgates.com;klgatesbankruptcy@klgates.com• Jeffrey E Bjork jbjork@sidley.com• Michael D Boutell mdbell@comerica.com• J Scott Bovitz bovitz@bovitz-spitzer.com• John A Boyd fednotice@tclaw.net• Jeffrey W Broker jbroker@brokerlaw.biz• Deana M Brown dbrown@milbank.com• Michael J Bujold Michael.J.Bujold@usdoj.gov• Shirley Cho scho@pszjlaw.com• Alicia Clough alicia.clough@kayescholer.com, managingattorneyofficeassignments@kayescholer.com• Marc S Cohen mcohen@kayescholer.com, dhernandez@kayescholer.com• Ronald R Cohn rcohn@horganrosen.com• Christopher H Conti chc@sdlaborlaw.com, sak@sdlaborlaw.com• Christopher J Cox chris.cox@weil.com, janine.chong@weil.com• Christina M Craige ccraige@sidley.com• Alex Darcy adarcy@askounisdarcy.com, akapai@askounisdarcy.com• Susan S Davis sdavis@coxcastle.com• Robert H Dewberry robert.dewberry@dewlaw.net• Todd J Dressel dressel@chapman.com, lubecki@chapman.com• Chrysta L Elliott elliottc@ballardspahr.com, manthiek@ballardspahr.com• Scott Ewing contact@omnimgt.com, sewing@omnimgt.com;katie@omnimgt.com• John A Farmer jfarmer@orrick.com• Brian W Freeman brian@pedigolaw.com, brian@brianwfreeman.com• Victoria C Geary victoria.geary@boe.ca.gov• Paul R. Glassman pglassman@sycr.com• Robert P Goe kmurphy@goeforlaw.com, rgoe@goeforlaw.com;mforsythe@goeforlaw.com• David M Goodrich dgoodrich@marshackhays.com, ecfmarshackhays@gmail.com• Christian Graham cgraham23@dlblaw.net• Everett L Green everett.l.green@usdoj.gov• Chad V Haes chaes@marshackhays.com, ecfmarshackhays@gmail.com• James A Hayes jhayes@jamesahayesaplc.com• M Jonathan Hayes jhayes@srhlawfirm.com,
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
June 2012

F 9013-3.1.PROOF.SERVICE

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 243 of 244

Desc

roksana@srhlawfirm.com;carolyn@srhlawfirm.com;shawnj@srhlawfirm.com;rosarioz@srhlawfirm.com;jhayesecf@gmail.com;j@alkazian.com• D Edward Hays ehays@marshackhays.com, ecfmarshackhays@gmail.com• Eric M Heller eric.m.heller@irscounsel.treas.gov• Jeffery D Hermann jhermann@orrick.com• Jeffery D Hermann jhermann@orrick.com• Bonnie M Holcomb bonnie.holcomb@doj.ca.gov,
rosita.eduardo@doj.ca.gov;zenaida.bigno@doj.ca.gov• Whitman L Holt wholt@ktbslaw.com• Michelle C Hribar mch@sdlaborlaw.com• Steven J Katzman SKatzman@bmkattorneys.com, admin@bmkattorneys.com• Jane Kespradit jane.kespradit@limruger.com, amy.lee@limruger.com• Mette H Kurth kurth.mette@arentfox.com• Mette H Kurth kurth.mette@arentfox.com• Sandra W Lavigna lavignas@sec.gov• Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com• Michael B Lubic michael.lubic@klgates.com, jonathan.randolph@klgates.com• Richard A Marshack rmarshack@marshackhays.com,
lbergini@marshackhays.com;ecfmarshackhays@gmail.com• David J McCarty dmccarty@sheppardmullin.com• Reed M Mercado rmercado@sheppardmullin.com• Fred Neufeld fneufeld@sycr.com• Aron M Oliner roliner@duanemorris.com• Scott H Olson solson@seyfarth.com• Mark D Potter mark@potterhandy.com, rhondahandy@potterhandy.com;kevin@potterhandy.com• Dean G Rallis drallis@sulmeyerlaw.com• Christopher O Rivas crivas@reedsmith.com• Kenneth N Russak krussak@frandzel.com, efiling@frandzel.com;dmoore@frandzel.com• Gregory M Salvato gsalvato@salvatolawoffices.com, calendar@salvatolawoffices.com• Mark C Schnitzer mschnitzer@rhlaw.com, mcschnitzer@gmail.com• Diane S Shaw diane.shaw@doj.ca.gov• Ariella T Simonds asimonds@sidley.com• Leonard Steiner ls@steinerlibo.com, jasoncarter@steinerlibo.com;aam@steinerlibo.com• Jason D Strabo jstrabo@mwe.com, cnorris@mwe.com• Cathy Ta cathy.ta@bbklaw.com, Arthur.Johnston@bbklaw.com;lisa.spencer@bbklaw.com• Sheila Totorp stotorp@clausen.com, jbrzezinski@clausen.com• Benjamin R Trachtman btrachtman@trachtmanlaw.com, sstraka@trachtmanlaw.com• Matthew J Troy matthew.troy@usdoj.gov• United States Trustee (RS) ustpregion16.rs.ecf@usdoj.gov•
Anne A Uyeda auyeda@bmkattorneys.com• Annie Verdries verdries@lbbslaw.com, Autodocket@lbbslaw.com• Brian D Wesley brian.wesley@doj.ca.gov• Kirsten A. Worley kw@wlawcorp.com, admin@wlawcorp.com• Clarisse Young youngshumaker@psmlawyers.com, sally@psmlawyers.com• Pamela Jan Zylstra zylstralaw@gmail.com
See NEF for confirmation of electronic transmission to the U.S. trustee and any trustee in this case, and to any attorneys
who receive service by NEF.
Service information continued on attached page
2. SERVED BY UNITED STATES MAIL:
On (date) _______10/22/13________, I served the following persons and/or entities at the last known addresses in thisbankruptcy case or adversary proceeding by placing a true and correct copy thereof in a sealed envelope in the UnitedStates mail, first class, postage prepaid, and addressed as follows. Listing the judge here constitutes a declaration thatmailing to the judge will be completed no later than 24 hours after the document is filed.
This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
June 2012

F 9013-3.1.PROOF.SERVICE

Case 6:12-bk-28006-MJ

Doc 837 Filed 10/22/13 Entered 10/22/13 18:32:10
Main Document
Page 244 of 244

Desc

City Attorney
300 North “D” Street, Sixth Floor
San Bernardino, CA 92418
Counsel for Debtor
City of San Bernardino
Paul R. Glassman
Fred Neufeld
Laura L. Buchanan
Kathleen D. DeVaney
Stradling Yocca Carlson & Rauth
100 Wilshire Blvd., Suite 440
Santa Monica, CA 90401
Trustee
Office of the U.S. Trustee
3801 University Ave., Suite 720
Riverside, CA 92501-3200(951) 276-6990
Service information continued on attached page
3. SERVED BY PERSONAL DELIVERY, OVERNIGHT MAIL, FACSIMILE TRANSMISSION OR EMAIL (state method
for each person or entity served): Pursuant to F.R.Civ.P. 5 and/or controlling LBR, on (date)______10/22/2013_________, I served the following persons and/or entities by personal delivery, overnight mail service,or (for those who consented in writing to such service method), by facsimile transmission and/or email as follows. Listing
the judge here constitutes a declaration that personal delivery on, or overnight mail to, the judge will be completed no later
than 24 hours after the document is filed.
Overnight Delivery
Hon. Meredith A. Jury
US Bankruptcy Court
Central District of California
3420 Twelfth Street, Suite 325
Courtroom 301
Riverside, CA 92501-3819
Service information continued on attached pageI declare under penalty of perjury under the laws of the United States that the foregoing is true and correct.

10/22/13

Brett Bissett/s/ Brett Bissett

Date

Printed Name

Signature

This form is mandatory. It has been approved for use by the United States Bankruptcy Court for the Central District of California.
June 2012

F 9013-3.1.PROOF.SERVICE