Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_04-cv-06737/USCOURTS-caed-1_04-cv-06737-14/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

AMERICAN EXPRESS TRAVEL RELATED

SERVICES COMPANY, INC., a New

York Corporation,

Plaintiff,

v.

D&A CORPORATION d/b/a

BAKERSFIELD WHOLESALE FOODS, a

California corporation, ABDO

AEZAH, an Individual, MALAKAH M.

AEZAH, an Individual, DAVID

AEZAH, an Individual,

BAKERSFIELD GROCERY WHOLESALE,

an unincorporated business

entity; DAVID AEZAH INVESTMENT,

INC., a California Corporation,

and DOES 1 through 100,

Inclusive,

Defendants.

 

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1:04-cv-6737 OWW TAG

SCHEDULING CONFERENCE ORDER 

Discovery Cut-Off: 6/29/07

Non-Dispositive Motion

Filing Deadline: 7/10/07

Dispositive Motion Filing

Deadline: 7/16/07

Settlement Conference Date:

7/11/07 10:00 Bakersfield

Pre-Trial Conference

Date: 9/24/07 11:00 Ctrm. 3

Trial Date: 11/14/07 9:00

Ctrm. 3 (JT-10 days)

I. Date of Scheduling Conference.

March 2, 2007.

II. Appearances Of Counsel.

Jaffe & Asher LLP by Ira N. Glauber, Esq., and Gubler & Ide

by Steven Koch, Esq., appeared on behalf of Plaintiff.

Wild, Carter & Tipton by Gary L. Huss, Esq., appeared on

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behalf of Defendants David Aezah, Bakersfield Wholesale Foods and

David Aezah Investments, Inc. 

III. Summary of Pleadings. 

1. In August 2005, a $3,683,320 default judgment (the

“Judgment”) was entered in this Court against Defendants D&A

Corporation d/b/a Bakersfield Wholesale Foods (“Bakersfield

Wholesale”) and Defendant Abdo Aezah (“Abdo”) in favor of

American Express. The judgment remains unsatisfied because both

Abdo and Bakersfield Wholesale have rendered themselves judgmentproof by transferring their assets to Abdo’s brother, Defendant

David Aezah (“David”). 

2. The Judgment at issue arose from the non-payment of

approximately $3.6 million in American Express credit card

charges. In November and December 2004, Bakersfield Wholesale

used its corporate American Express credit card accounts to

purchase more than $3 million worth of cigarettes from Costco

stores (the “Costco Cigarettes”). Abdo, who made the purchases

on behalf of Bakersfield Wholesale, has testified that he resold

the cigarettes for cash, but he has refused to turn over the

proceeds to American Express or reveal what he did with the

proceeds. Initially, American Express was frustrated in its

attempts to locate the proceeds by Abdo’s invocation of the Fifth

Amendment before this Court at an April 2005 contempt hearing and

his otherwise evasive testimony.

3. However, in the last six months, American Express has

untangled much of what has transpired, largely through document

productions and testimony by third parties:

• In August, 2004, David “purchased” Bakersfield

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Wholesale from Abdo in exchange for the forgiveness of

a $150,000 loan and for assuming a $300,000 mortgage,

and acquired title to Bakersfield Wholesale’s real

property. At no time did David disclose to American

Express that he had obtained this ownership interest in

the business.

• In November and December 2004, Abdo - who had the

authority to use Bakersfield Wholesale’s American

Express credit cards - used them to purchase some $3.6

million in cigarettes on behalf of the business at

Costco stores (the “Costco Cigarettes”).

• Immediately thereafter, Bakersfield Wholesale defaulted

on its American Express credit card accounts because of

a series of “bounced” checks. Bakersfield refused to

pay the $3.6 million which it owed to American Express,

despite due demand. At this point, the brothers set

upon a scheme to keep that money for themselves.

• In December 2004, David - who has perjuriously

testified during discovery in this lawsuit that he had

nothing to do with the cigarettes bought on the

American Express card - rented a unit at a storage

facility in Bakersfield, Fortress Self-Storage

(“Fortress”), where the brothers hid millions of

dollars worth of the Costco Cigarettes transported from

Bakersfield Wholesale’s warehouse. David’s rental of

the unit came just days after Bakersfield Wholesale had

finished its massive cigarette purchases.

• The brothers then immediately shut Bakersfield

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Wholesale down as a corporate entity, and in January

2005, David opened a cookie cutter successor business,

in the same location, with the same customers and

suppliers, but with a slightly different name,

“Bakersfield Grocery Wholesale.” It has continued to

do a landmark business, with Abdo frequently running

the store in David’s absence. In a police report dated

December 2005, Abdo stated that he and David were the

“co-owners” of the new business.

• After the Costco Cigarettes were hidden away at the

Fortress storage unit, David drew down on the

cigarettes for sale at the successor business on an “as

needed” basis, in an attempt to launder the proceeds

and to cheat American Express out of monies due to it.

• In July 2005, a fire at the storage facility damaged or

destroyed the remaining Costco Cigarettes, valued at

$340,000 - an amount which properly belonged to

American Express, but which was paid to David

personally by the insurance carrier and which David

deposited into the account of his successor business,

Bakersfield Grocery Wholesale.

• American Express has succeeded in tracking down at

least some of the other cash proceeds from the sale of

the Costco Cigarettes. Documents subpoenaed by

American Express from Citibank (where David and the

successor business had checking accounts) demonstrate

that David sent more than $350,000 into his home

country of Yemen to various individuals (all of which

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he claims were “cash-checking” services).

• In December 2005, Abdo tried to throw American Express

off his track by making a false report to the police

that $2.3 million of the proceeds of the Costco

Cigarettes had been stolen from under his kitchen sink. 

The police never believed a word of his story, and Abdo

now claims his report was an “honest mistake.”

• Following this ruse, David and Abdo deposited $1.3

million in $100 dollar bills into the account of the

successor business, Bakersfield Grocery Wholesale, over

the course of two days in May 2006.

• On May 10, 2006, just one day after they deposited the

cash into Bakersfield Grocery Wholesale’s account at

Citibank, the brothers used the money to purchase a low

income apartment complex in Pascagoula, Mississippi

(the “Mississippi Property”). Only American Express’

prompt action in filing a lis pendens in the State of

Mississippi prevented a quick resale of the property

and further laundering of the cash proceeds of the

Costco Cigarettes. The value of this property is being

held in escrow pending the disposition of this lawsuit,

but it is not nearly enough to satisfy the Judgment of

$3.6 million.

• During his deposition in October 2006, David was unable

to document or explain how he obtained the massive sums

of cash transferred to Yemen or used to purchase the

Mississippi apartment complex. It is evidence that

these monies were the proceeds from the sale of the

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Costco Cigarettes and that David and Abdo have been

assiduously working to keep out of the reach of

American Express.

4. Based on the above facts - none of which can be

disputed - American Express has valid claims against David and

the company he now operates as the successor to Bakersfield

Wholesale (Bakersfield Grocery Wholesale, an unincorporated

entity) for fraudulent conveyance, alter ego liability (piercing

the corporate veil), successor liability, and conspiring to

defraud, among other claims. At trial, American Express intends

to prove that David and his company are equally as liable as his

brother Abdo for the $3,688,320 (plus interest) owed to American

Express.

Defendants’ Statement

1. This action was originally filed on December 21, 2004,

against Defendants D&A Corporation, doing business as Bakersfield

Wholesale Foods, Abdo Aezah, Fahd Aizah (Abdo Aezah’s father-inlaw), and Malakah Aezah (Abdo Aezah’s wife) by Plaintiff American

Express. Plaintiff then filed a First Amended Complaint on March

22, 2005 (Docket No. 44), and a Second Amended Complaint shortly

thereafter on June 8, 2005 (Docket No. 96). Defendant David

Aezah, Bakersfield Grocery Wholesale (an unincorporated business

owned and operated by David Aezah), and Dave Aezah Investments,

Inc., a California Corporation were named as Defendants in these

subsequent lawsuits. In its Second Amended Complaint, the

Plaintiff pled causes of action including breach of contract

(Bakersfield Wholesale), account stated (same), breach of

contract (all individual Defendants except David Aezah), book

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account (all Defendants except David Aezah), unjust enrichment

(all Defendants), common law fraud (Bakersfield Wholesale and

Abdo Aezah), piercing the corporate veil, and fraudulent

conveyance (Bakersfield Wholesale, David and Abdo Aezah.)

2. Bakersfield Wholesale Foods was a California

corporation that engaged in the wholesale grocery business, and

was owned and operated by Abdo Aezah. It sold candy, soda,

cigarettes, foodstuffs, and other products to mini marts, gas

stations, and other retail markets. In approximately May, 2004,

Abdo Aezah applied for, and was authorized and issued a corporate

credit card from American Express in the name of “Bakersfield

Wholesale” - the abbreviated name of his business (Bakersfield

Wholesale Foods). Several months later, Abdo applied for a

corporate purchase card account with Plaintiff American Express

on behalf of D&A Corporation, another of his businesses. Upon

his request, and with the full knowledge and approval of

Plaintiff American Express, he was issued three separate American

Express corporate credit cards - one in the name of Abdo

Aezah/Bakersfield Wholesale, one in the name of Malakah

Aezah/Bakersfield Wholesale; and one in the name of Fahd

Aizah/Bakersfield Wholesale. Upon Abdo’s request, Plaintiff also

issued a corporate purchase card in the name of D&A Corporation.

3. Defendant Abdo Aezah subsequently used these purchase

cards to purchase cigarettes from the Bakersfield Costco

wholesale. Abdo charged $351,384.38 in cigarettes to the account

in his name; $144,044.87 were charged to the account in the name

of Malakah Aezah; and $3,187,891.72 were charged to the account

in the name of Fahd Aizah. As part of the normal operation of

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Bakersfield Wholesale, Abdo then resold the cigarettes to other

businesses, and deposited the payments he received to his

business account. At the end of October 2004, American Express

informed Abdo there was a balance due of $46,834.26 for the

account in the name of Malakah, and a balance due of $35,033.75

for the account in the name of Fahd Aizah. On November 5, 2004,

American Express received a wire transfer payment for $46,834.26

- the full amount due on the Malakah account. Two days later,

American Express received another wire transfer payment in the

amount of $35,033.75 - the full amount due for the account in the

name of Fahd Aizah.

4. During the month of November, Defendant Abdo continued

to use the American Express card, and in fact was encouraged to

expand his use and indebtedness by the Plaintiff itself. In

response to Plaintiff’s encouragement to utilize the cards more,

Abdo purchased an additional $3,683.320.97 in cigarettes on the

American Express cards. On December 2, 2004, Plaintiff cancelled

the accounts. Two days later, on December 4, 2004, the bank that

had handled the wire transfer reversed the charges, due to the

fact that the checks that Abdo had deposited from other retailers

- for the purchase of the cigarettes at issue - had been returned

by their bank. Despite Plaintiff’s assertion that it cancelled

the account after it received notice that the wire transfers had

been reversed, Plaintiff’s own pleadings reveal that it cancelled

the account before it had received any notice of the reversal of

charges, or that Plaintiff would not be paid by Defendant.

5. During the same general time frame, Abdo desired to be

relieved of some of his other debt obligations. Towards that

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end, he entered into an agreement with Defendant David Aezah

wherein Abdo would turn over ownership of the premises located at

402 California Avenue, Bakersfield, California, in exchange for

David’s forgiveness of a $150,000 loan to Abdo and the assumption

by David of a $300,000 mortgage obligation. While Plaintiff

appears to feel this demonstrates some evil intent or motive on

David’s part, and points out that David never disclosed to

American Express that he had acquired the ownership of the

building, this is simply irrelevant and misleading. First, this

transfer took place BEFORE the cigarettes at issue were

purchased, and well before Plaintiff commenced this litigation. 

Further, the transfer document was a matter of public record, and

could have been easily discovered by Plaintiff during a title

check. Finally, there simply was no obligation on the part of

David to notify Plaintiff of his ownership - he had no connection

or relationship with Plaintiff. In December 2004, following

threats to seize all of his merchandise, the litigation filed by

Plaintiff, and the incurrence of significant amounts of

unrecoverable debt from clients, Abdo closed his business.

6. At some point, David began developing an interest in

creating a business to supply mini marts and gas stations. As he

had previously owned mini marts and gas stations, this was a

natural extension for him. He had also made significant sums of

money over the years buying and selling real estate investments. 

In January, 2005, he formed an unincorporated business,

Bakersfield Grocery Wholesale, and began to sell various

merchandise to mini marts, gas stations, and other businesses. 

As he owned the property at 402 California, having previously

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assumed the mortgage liability and forgiven Abdo’s debt, he

located his new business there. He installed signage in the name

of Bakersfield Grocery Wholesale, and commenced business under

that name.

7. While operating this business, he retained significant

amounts of cash in a safe located on the premises. Many of his

suppliers preferred to be paid in cash, and his faith also

prohibits riba - the acceptance of interest on a debt. In 2005,

David traveled to the country of Yemen for his son’s marriage. 

Before traveling to Yemen, he arranged for his brother to handle

any day-to-day business needs for Bakersfield Grocery Wholesale,

including the paying of invoices, the receipt and depositing of

money, the general supervision of the business activities, and

accepting freight deliveries. At no time did Abdo have any

management or ownership duties, nor was he a co-owner of

Bakersfield Grocery Wholesale - a fact that Abdo made clear in

the police report dated October 2005. While in Yemen, David

wrote checks on Bakersfield Grocery Wholesale’s - his business’ -

account. These checks were used to pay for his son’s wedding,

marriage and wedding gifts for his son and daughter-in-law, and

other purchases and gifts to family members in Yemen.

8. As part of David’s long established practice of buying

and selling properties, he located a property for sale in

Mississippi. David asked Abdo to look over the property and

provide his opinion - something Abdo had done on David’s other

purchases. Because David was out of the country (in Yemen)

during much of the time period associated with the purchase

negotiations, he directed his brother to perform certain duties

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on his behalf. The purchase of this property was subsequently

completed, and title transferred to David.

9. In the fall and early winter of 2005, while David was

out of the country, and due to a string of burglaries at the

business location, Abdo took several hundred thousands of dollars

in cash home with him for safekeeping. Upon returning home from

a day spent with his family, he and his family discovered that

their house had been burglarized, and the money stolen. He

reported this to the Bakersfield Police Department, and reported

that a significant portion of the money stolen belonged to his

brother. Upon receipt of the initial officer’s report, Abdo

identified several errors, including the statement that he was an

owner of Bakersfield Grocery Wholesale. Although the initial

officer was unable to explain these errors, and he admits that he

cannot remember whether Abdo even made the statement, Abdo

attempted to promptly correct this error and informed the

investigating detective that he was not, in fact the owner or

even a co-owner. Further, the investigation into this burglary

was terminated only after the detective had found no conclusive

evidence regarding a burglary either way, and Plaintiff, through

its attorneys, had willfully injected itself into the police

investigation and sought to sway and persuade the detective that

it was a false report. Plaintiff’s own actions render the police

report meaningless, as they intentionally sought to taint and

prejudice the investigating officer. 

10. Following the filing of the Plaintiff’s First Amended

Complaint, they were informed that Abdo Aezah and Bakersfield

Wholesale did not intend to file an answer, and instead intended

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to allow the Plaintiff to take a default judgment against them. 

During oral argument, and in their pleadings, Plaintiff waived

any claim for attorney’s fees, and they subsequently were awarded

a default judgment against Abdo and Bakersfield Wholesale. 

Plaintiff then filed a Second Amended Complaint against David,

which included a claim to pierce the corporate veil/alter ego as

to David and Abdo and their associated businesses. David filed a

motion to dismiss pursuant to Federal Rules of Civil Procedure

12(b), and this motion was granted by the Court. Plaintiff chose

not to file a motion for reconsideration or to appeal this

decision, and subsequently chose not to file any amended

complaint within the time specified by the Court, and thus the

order became final and binding.

11. Plaintiff then chose to essentially abandon the case

for nearly a year and a half while they pursued essentially a

collection action against Abdo. They deposed Abdo on numerous

occasions, from which they learned that Abdo was, for all

purposes, essentially judgment proof. They then deposed David,

and learned that David has resources - including resources from

the purchase and sale of properties unrelated to the grocery

business, as well as the operation of Bakersfield Grocery

Wholesale. As such, Plaintiffs now seek to essentially go after

a different individual simply because this individual has money,

and has a business similar to that of Abdo’s. Further, the

Plaintiff attempts to elevate and transform normal family and

cultural beliefs, practices, and customs into a scheme to

defraud.

///

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IV. Orders Re Amendments To Pleadings.

1. American Express recently filed its Third Amended

Complaint. It does not anticipate any further amendments of the

Complaint. The Third Amended Complaint names two additional

Defendants: Bakersfield Grocery Wholesale, an unincorporated

business entity (which is the successor to judgment debtor

Bakersfield Wholesale), and David Aezah Investment, Inc. 

(“DAI”), a corporation wholly owned by Defendant David Aezah. 

American Express has requested that counsel for David Aezah

accept service of process on behalf of these two additional

Defendants, without prejudice to Defendants’ substantive rights. 

Mr. Huss has not yet responded to this request.

2. The Third Amended Complaint adds a claim for piercing

the corporate veil against David based upon documentary evidence

demonstrating his ownership interest in judgment debtor

Bakersfield Wholesale, and the fact that they act as alter-egos

of each other. It also adds new causes of action against David

and his companies for conspiracy to engage in fraudulent

transfers, and successor liability. There also is a new claim

for a declaratory judgment seeking a determination as to which

party is entitled to the proceeds from the sale of the property

in Mississippi which American Express claims was purchased as

part of Defendants’ fraudulent conveyance conspiracy.

3. Mr. Huss has been authorized by Mr. Aezah to accept

service of the Third Amended Complaint on behalf of Bakersfield

Grocery Wholesale, an unincorporated business entity, and David

Aezah Investment, Inc., a corporation. 

///

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V. Factual Summary.

A. Admitted Facts Which Are Deemed Proven Without Further

Proceedings. 

1. Defendant Bakersfield Wholesale was a corporation

organized and existing under the laws of the State of California

with its principal place of business located at 402 California

Avenue, Bakersfield, California. 

2. Bakersfield Wholesale was operated as a wholesale

grocery company that sold candy, soda, cigarettes, and other

products to mini marts and other retail grocery outlets.

3. Defendant Bakersfield Grocery Wholesale is an

unincorporated business entity which is owned and operated by

David Aezah and began operations on or about January 3, 2005. 

4. Prior to August 2004, Abdo Aezah owned Bakersfield

Wholesale and the warehouse where it operated at 402 California

Avenue, Bakersfield, California (the “Warehouse”).

5. On August 27, 2004, Abdo Aezah delivered a grant

deed to David Aezah transferring title to the warehouse to David

Aezah. The transfer was recorded with the Clerk of Kern County,

California, on September 14, 2004.

6. David Aezah and Abdo Aezah executed a written

declaration dated September 19, 2004, which stated among other

things: (1) that in exchange for the satisfaction of the $150,000

loan from David to Abdo, Abdo transferred the Warehouse located

at 402 California Avenue to David; and (2) the borrower Abdo, no

longer has an interest of any kind in this property or any

business within it.

7. On August 31, 2004, Bakersfield Wholesale opened a

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new checking account on which David was made a signatory. The

account statements were sent to David Aezah’s mailing address

rather than his brother’s. 

8. Bakersfield Wholesale purchased approximately $3.6

million worth of Costco Cigarettes in November and December,

2004, using American Express corporate accounts. Abdo has

admitted to making all such purchases on behalf of Bakersfield

Wholesale. 

9. On December 4, 2004, Bakersfield Wholesale had

three payments to American Express returned for lack of funds. 

At a time thereafter, American Express terminated Bakersfield

Wholesale’s American Express accounts and demanded payment in

full of the $3,683,320.97 total outstanding balance that is

claimed to be unpaid. 

10. No payments of the outstanding debt have been

made.

11. In January 2005, David commenced applying for

licenses to do business in the name of Bakersfield Grocery

Wholesale rather than Bakersfield Wholesale Foods. 

12. In January 2005, David took checks which had been

made payable to Bakersfield Wholesale Foods for goods purchased

in 2004, many of which were issued in 2004 before Bakersfield

Grocery Wholesale was formed or licensed, and deposited them

directly into the account of Bakersfield Grocery Wholesale. 

13. On January 3, 2005, David filed a Notice to

Creditors of Bulk Sale with the Kern County Assessor on January

4, 2005. The Notice advised that on January 21, 2005,

Bakersfield Wholesale intended to transfer its entire inventory

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to David Aezah for $180,000. 

14. On January 15, 2005, David cancelled the bulk sale

because a TRO obtained by American Express was in effect in this

case. Abdo owns a residence at 2516 El Portal Drive,

Bakersfield, California. In early January 2005, following the

filing of this action in California, Abdo deeded title to the

home to David for no consideration. Abdo admitted under oath

that he put title in his house in his brother’s name in order to

attempt to prevent American Express from levying on the house. 

After American Express moved to hold Abdo in contempt for an

alleged fraudulent conveyance, the residence was deeded back to

Abdo by David. 

15. On December 6, 2004, one month before David claims

he commenced involvement with the business, David Aezah rented a

large unit at a storage facility in Bakersfield, California,

called Fortress Self-Storage. 

16. A fire broke out on July 4, 2005, at the Fortress

Self-Storage which damaged several storage units, including

David’s rental unit. As part of an insurance claim, David Aezah

submitted receipts showing the cost of the cigarettes. The

receipts submitted include November - December 2004 receipts for

the purchase of cigarettes by Bakersfield Wholesale at Costco,

using the American Express credit card. Based on these receipts,

the insurance carrier (Travelers) issued a check to David, in his

individual capacity, in the amount of $341,197.28. On or about

January 11, 2006, David deposited the insurance check into

Bakersfield Grocery Wholesale’s account at Citibank. 

17. Documents produced by Citibank pursuant to

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subpoena show that David wrote approximately $350,000.00 in

checks on his personal account and on the account of Bakersfield

Grocery Wholesale in the fall of 2005 through the spring of 2006

to various individuals who cashed checks in Yemen. David alleges

that the payees on the checks were people who provide “check

cashing” services and he spent the entire amount on his son’s

wedding in Yemen as well as the purchase of a car and furniture. 

American Express disputes this based on David’s lack of

specification how the entire amount of funds transferred to Yemen

had been spent.

18. In or about April 2006, David commenced

negotiations for purchase of the Carver Village Apartments, a

large apartment complex located at 1912 Live Oak Street,

Pascagoula, Mississippi (the “Mississippi Property”). In order

to pay for the property on May 9, 2006, Abdo and an employee of

Bakersfield Grocery, took $600,000.00 in $100.00 bills from a

safe at 402 California, and deposited the cash into a bank

account of Bakersfield Grocery Wholesale at Citibank. On May 10,

2006, Abdo and the employee deposited another $707,500 in $100.00

bills into this bank account. 

19. On or about May 17, 2006, David closed on the

purchase of the Mississippi Property, using the cash Abdo had

deposited into the Bakersfield Grocery account.

20. In August 2006, David learned that it would be

difficult to develop the Mississippi Property because the

buildings in question had been condemned or were in the process

of being condemned for violations of building codes. Therefore,

David began negotiations to sell the Mississippi Property to the

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Low Income Family Enrichment Foundation (the “Life Foundation”)

which had previously been interested in the property. The

parties negotiated a sale price of $1,450,000 and entered into a

contract of sale dated July 17, 2006. However, the sale

transaction did not close.

21. On September 19, 2006, American Express, having

learned about the proposed transaction from bank records produced

by Citibank, brought an action in the United States District

Court for the Southern District of Mississippi (the “Mississippi

Action”) in order to enjoin its sale and prevent the loss of the

proceeds of the proposed sale. American Express also filed a lis

pendens with the Clerk of the Chancery Court of Jackson County,

Mississippi, which gave notice of American Express’s claims to

the Life Foundation and other potential purchasers of the Carver

Village Apartments.

22. On November 13, 2006, American Express agreed to

lift its lis pendens and permit the sale of the Mississippi

Property to proceed, subject to the Agreement and Escrow

Instructions dated November 13, 2006, executed by American

Express, David and the Life Foundation (“Mississippi Property

Agreement”).

23. Under the Mississippi Property Agreement, American

Express obtained a deed of trust securing Life’s obligation to

pay $1.4 million to the party entitled to receive payment of such

funds. Pursuant to that agreement, when this Court makes a

determination as to whether American Express or David is entitled

to the funds, they will be paid over to the prevailing party.

///

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B. Contested Facts.

Plaintiff’s

1. Plaintiff contends that it is a successor-ininterest to Defendant Bakersfield Wholesale, and that it is owned

and operated jointly by David and Abdo. 

2. Plaintiff contends that in or about August 2004,

Abdo transferred 100% of the ownership of Bakersfield Wholesale

to David. 

3. Plaintiff will prove that the only thing that

changed about the business was the name, and that it operated at

the same address (402 California Avenue in Bakersfield) with the

same telephone and fax numbers, selling the same goods to the

same customers. 

4. American Express contends that thereafter, David

drew upon Costco Cigarettes stored at Fortress in order to stock

the inventory of the successor business, Bakersfield Grocery

Wholesale. 

Defendants’ Contested Facts

1. Defendant David Aezah disputes any allegation that

he is responsible for the debt incurred by Abdo Aezah and/or D&A

Corporation. Defendant further disputes any allegation that he

was involved in any scheme, conspiracy, plan, or effort to

defraud Plaintiff and/or to conceal, hide, secret, or otherwise

make unavailable any funds or items belonging to Plaintiff. 

Defendant further disputes any allegation or claim that he

received and retained any sums of money from Abdo and/or D&A that

he knew was due, or legally belonged to Plaintiff. Defendant

further disputes any allegation that the sums of money used to

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purchase the Mississippi property derived from the proceeds of

the sale of the cigarettes purchased by Abdo and D&A using the

American Express cards issued to them. Defendant disputes any

allegations that he actively assisted Abdo in unlawfully

concealing assets from American Express. Defendant further

disputes any allegations that he fraudulently concealed any

assets belonging to American Express, or that he engaged in any

conspiracy with Abdo or any other Defendant to conceal any

assets.

VI. Legal Issues.

A. Uncontested.

1. Jurisdiction exists under 28 U.S.C. § 1332. 

2. Venue is proper under 28 U.S.C. § 1391.

3. As to supplemental claims, the parties agree that

the substantive law of the State of California provides the rule

of decision in this diversity action. 

B. Contested. 

1. American Express has asserted meritorious claims

for fraudulent transfer against David, Abdo, Bakersfield

Wholesale, and Bakersfield Grocery. American Express also has a

claim against David for being a co-conspirator to Abdo’s

fraudulent transfers. David actively participated in Abdo’s

attempt to put Bakersfield Wholesale’s assets outside the reach

of American Express and this Court. Accordingly, David is liable

not only for the damage to American Express that he directly

caused, but for any fraudulent transfer which Abdo undertook in

connection with this conspiracy.

2. American Express also has a claim against

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Defendants for successor liability. Neither David nor Abdo makes

any pretense that Bakersfield Grocery Wholesale’s business

differs in any way from that of its predecessor business,

Bakersfield Wholesale. Their attempts to claim that the

businesses were independent of each other failed completely when

American Express learned that David had deposited checks from

Bakersfield Wholesale’s customers into the successor business’s

account; when it learned that David sold Costco Cigarettes

purchased by Bakersfield Wholesale through his new business, and

when it learned that the successor business’s accounts had been

used to launder money for the purchase of Mississippi property.

3. In addition, American Express has asserted claims

against Defendants for alter ego liability. The evidentiary

facts clearly show that David was 100% owner of Bakersfield

Wholesale at the time that the American Express debt at issue in

this lawsuit was incurred; that Abdo, David and Bakersfield

Wholesale were alter egos of each other; and that Bakersfield

Wholesale and its successor entity, Bakersfield Grocery

Wholesale, are shell entities that are insufficiently

capitalized, fail to observe corporate formalities, are used for

fraudulent purposes, and are so totally dominated and controlled

by Abdo and David as to have no separate and independent

existence of their own.

Defendants’ Statement

1. Defendant disputes Plaintiff’s claim of fraudulent

transfer, and Plaintiff’s claim that David was a “co-conspirator

to Abdo’s fraudulent transfers.”

2. Defendant disputes any successor liability. The

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company owned and operated by David, Bakersfield Grocery

Wholesale, was created after the events at issue here (to wit,

the purchase of the cigarettes.) It engages in the sale of

merchandise to convenience stores - a business with a very

finite, discrete set of customers. As such, Defendant contends

that the fact that it services customers who were also customers

of Abdo’s business is irrelevant - there are only so many

potential customers in the area served by Bakersfield Grocery

Wholesale.

3. Defendant disputes any alter ego liability. 

Defendant further notes that this issue has previously been

addressed by the Court, which granted Defendants’ FRCP 12(b)(6)

motion to dismiss Plaintiff’s prior alter ego theory and piercing

the corporate veil claim. As part of the Court’s Order,

Plaintiff was afforded an opportunity to amend its Complaint, but

Plaintiff chose not to amend the Complaint. Plaintiff further

elected not to file a motion for reconsideration of this Court’s

decision, and it also chose not to appeal the Order to a higher

court. As such, the decision became final ten days after it was

entered.

4. Defendant disputes the existence or right to any

attorneys’ fees. Plaintiff has previously waived its rights to

attorneys’ fees, and this waiver was affirmed when Plaintiff

itself drafted and filed the Default Judgment. Furthermore, this

is a case governed by California law, which provides that

attorneys’ fees are not recoverable unless an exception applies. 

Here, no exceptions apply, as there is no contract providing for

the award of attorneys’ fees, and Plaintiff is not acting as a

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private attorney general for the benefit of the public at large.

VII. Consent to Magistrate Judge Jurisdiction.

1. The parties have not consented to transfer the 

case to the Magistrate Judge for all purposes, including trial.

VIII. Corporate Identification Statement.

1. Any nongovernmental corporate party to any action in

this court shall file a statement identifying all its parent

corporations and listing any entity that owns 10% or more of the

party's equity securities. A party shall file the statement with

its initial pleading filed in this court and shall supplement the

statement within a reasonable time of any change in the

information. 

IX. Discovery Plan and Cut-Off Date.

Plaintiff’s Discovery Plan

1. Document production by Defendants and third-parties has

taken place and is virtually complete. American Express recently

served counsel for David with a supplemental set of

interrogatories and a supplemental document request. American

Express requests that counsel for David respond to these requests

within 30 days.

2. Defendant recently served American Express with a

document request that American Express will respond to within 30

days.

3. American Express has taken approximately one dozen

depositions. The following depositions remain:

a. American Express wishes to depose Defendant David

Aezah for one additional day with respect to documents and facts

uncovered after David was deposed in October 2006.

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b. American Express wishes to depose several people

in Mississippi with respect to their dealings with David and Abdo

about the purchase and sale of property there using the proceeds

from the sale of the cigarettes at issue in this action.

c. American Express proposes that all discovery be

concluded by May 31, 2007.

Defendants’ Discovery Plan

1. This Court has previously issued a Scheduling Order

which required that all discovery be conducted by August 31, 2005

(Scheduling Conference Order, filed April 6, 2005). After the

specified discovery cutoff date had passed, Plaintiff twice

obtained an order regarding discovery. More than a year after

the discovery cutoff period had passed, Plaintiff deposed David

Aezah on two separate occasions. Approximately 20 months after

the discovery cutoff period had passed, Plaintiff deposed

approximately 6 individuals in January, 2007. Following these

depositions, Plaintiff indicated that they wanted to depose David

Aezah yet again, despite the fact he had been deposed three

separate times in these proceedings.

2. All pre-trial disclosures are believed to have already

been made.

3. There are no contemplated or proposed changes on the

limits of discovery as imposed by FRCP Rules 26(b); 30(a), 2a, b,

or c; 30(d) or 33(a).

4. Protective Orders:

a. Plaintiff has previously subpoenaed Defendant’s

corporate and personal income tax statements for various years. 

These statements were introduced as deposition exhibits during

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the depositions of various witnesses. In the event that

Plaintiff seeks to introduce or utilize these at trial, Defendant

reserves the right to seek an appropriate protective order.

b. In the event that Plaintiff seeks to discover

and/or introduce any information pertaining to any trade secret

or other protectable interest, Defendant reserves the right to

seek an appropriate protective order.

c. Plaintiff has indicated it intends to seek to

depose Defendant David Aezah yet again. Plaintiff has previously

deposed Defendant David Aezah on three separate occasions. 

During at least one of these occasions, Plaintiff conducted

additional discovery, and proceeded to depose Defendant upon this

newly discovered information at the succeeding deposition. 

Plaintiff now wishes to repeat this procedure of deposing the

Defendant, going out and discovering additional information, and

then returning and deposing the Defendant upon any new 

information discovered. Defendants contend that Plaintiff made a

strategic decision to depose Defendant early in the discovery

process, and Defendant has been more than cooperative in agreeing

to two additional depositions. Plaintiff’s request to depose

Defendant yet again is burdensome, excessive, and demonstrative

of Plaintiff’s abuse of the discovery process. Should Plaintiff

seek to depose Defendant, Defendant intends to seek an

appropriate protective order. 

d. No issues are currently anticipated related to the

timing, sequencing, phasing or scheduling of discovery.

e. As previously noted, the Plaintiff has previously

deposed both Abdo and David Aezah on numerous occasions. 

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Plaintiff has recently indicated they intend to depose David

Aezah yet again. As this would constitute the fourth deposition

of David Aezah, Defendant David Aezah intends to resist this

further, unwarranted deposition by seeking a protective order,

and the Plaintiff will be required to obtain a court order to

take this deposition.

f. Defendant does not anticipate any discovery taking

place outside of the United States.

g. Defendant anticipates there is a strong likelihood

of discovery involving electronic, digital, magnetic and/or

optical data, and Defendant has requested the production of

documents from Plaintiff and third-party witnesses that could

include the production of electronic, digital, magnetic and/or

optical data.

5. The parties are ordered to complete all discovery on

or before June 29, 2007.

6. The parties are directed to disclose all expert

witnesses, in writing, on or before May 1, 2007. Any

supplemental or rebuttal expert disclosures will be made on or

before June 1, 2007. The parties will comply with the provisions

of Federal Rule of Civil Procedure 26(a)(2) regarding their

expert designations. Local Rule 16-240(a) notwithstanding, the

written designation of experts shall be made pursuant to F. R.

Civ. P. Rule 26(a)(2), (A) and (B) and shall include all

information required thereunder. Failure to designate experts in

compliance with this order may result in the Court excluding the

testimony or other evidence offered through such experts that are

not disclosed pursuant to this order.

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7. The provisions of F. R. Civ. P. 26(b)(4) shall 

apply to all discovery relating to experts and their opinions. 

Experts may be fully prepared to be examined on all subjects and

opinions included in the designation. Failure to comply will

result in the imposition of sanctions. 

X. Pre-Trial Motion Schedule.

1. All Non-Dispositive Pre-Trial Motions, including any

discovery motions, will be filed on or before July 10, 2007, and

heard on August 17, 2007, at 9:00 a.m. before Magistrate Judge

Theresa A. Goldner in Bakersfield. 

2. In scheduling such motions, the Magistrate

Judge may grant applications for an order shortening time

pursuant to Local Rule 142(d). However, if counsel does not

obtain an order shortening time, the notice of motion must comply

with Local Rule 251. 

3. All Dispositive Pre-Trial Motions are to be

filed no later than July 16, 2007, and will be heard on August

20, 2007, at 10:00 a.m. before the Honorable Oliver W. Wanger,

United States District Judge, in Courtroom 3, 7th Floor. In

scheduling such motions, counsel shall comply with Local Rule

230. 

XI. Pre-Trial Conference Date.

1. September 24, 2007, at 11:00 a.m. in Courtroom 3, 7th

Floor, before the Honorable Oliver W. Wanger, United States

District Judge. 

2. The parties are ordered to file a Joint PreTrial Statement pursuant to Local Rule 281(a)(2). 

3. Counsel's attention is directed to Rules 281 

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and 282 of the Local Rules of Practice for the Eastern District

of California, as to the obligations of counsel in preparing for

the pre-trial conference. The Court will insist upon strict

compliance with those rules.

XII. Trial Date.

1. November 14, 2007, at the hour of 9:00 a.m. in

Courtroom 3, 7th Floor, before the Honorable Oliver W. Wanger,

United States District Judge. 

2. This is a jury trial.

3. Counsels' Estimate Of Trial Time:

a. 10 days.

4. Counsels' attention is directed to Local Rules

of Practice for the Eastern District of California, Rule 285. 

XIII. Settlement Conference.

1. A Settlement Conference is scheduled for July 11, 2007,

at 10:00 a.m. in Bakersfield before the Honorable Theresa A.

Goldner, United States Magistrate Judge. 

2. Unless otherwise permitted in advance by the

Court, the attorneys who will try the case shall appear at the

Settlement Conference with the parties and the person or persons

having full authority to negotiate and settle the case on any

terms at the conference. 

3. Permission for a party [not attorney] to attend

by telephone may be granted upon request, by letter, with a copy

to the other parties, if the party [not attorney] lives and works

outside the Eastern District of California, and attendance in

person would constitute a hardship. If telephone attendance is

allowed, the party must be immediately available throughout the

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conference until excused regardless of time zone differences. 

Any other special arrangements desired in cases where settlement

authority rests with a governing body, shall also be proposed in

advance by letter copied to all other parties. 

4. Confidential Settlement Conference Statement. 

At least five (5) days prior to the Settlement Conference the

parties shall submit, directly to the Magistrate Judge's

chambers, a confidential settlement conference statement. The

statement should not be filed with the Clerk of the Court nor

served on any other party. Each statement shall be clearly

marked "confidential" with the date and time of the Settlement

Conference indicated prominently thereon. Counsel are urged to

request the return of their statements if settlement is not

achieved and if such a request is not made the Court will dispose

of the statement.

5. The Confidential Settlement Conference

Statement shall include the following: 

a. A brief statement of the facts of the 

case.

b. A brief statement of the claims and 

defenses, i.e., statutory or other grounds upon which the claims

are founded; a forthright evaluation of the parties' likelihood

of prevailing on the claims and defenses; and a description of

the major issues in dispute.

c. A summary of the proceedings to date.

d. An estimate of the cost and time to be

expended for further discovery, pre-trial and trial.

e. The relief sought.

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f. The parties' position on settlement,

including present demands and offers and a history of past

settlement discussions, offers and demands. 

XIV. Request For Bifurcation, Appointment Of Special Master, 

Or Other Techniques To Shorten Trial. 

1. None. 

XV. Related Matters Pending.

1. There is a related case in Mississippi that has been

filed by American Express that has been withdrawn and the parties

have stipulated that the trial in this District will resolve

which party is entitled to the proceeds from the sale of the

Mississippi property.

XVI. Compliance With Federal Procedure.

1. The Court requires compliance with the Federal

Rules of Civil Procedure and the Local Rules of Practice for the

Eastern District of California. To aid the court in the

efficient administration of this case, all counsel are directed

to familiarize themselves with the Federal Rules of Civil

Procedure and the Local Rules of Practice of the Eastern District

of California, and keep abreast of any amendments thereto.

XVII. Effect Of This Order.

1. The foregoing order represents the best

estimate of the court and counsel as to the agenda most suitable

to bring this case to resolution. The trial date reserved is

specifically reserved for this case. If the parties determine at

any time that the schedule outlined in this order cannot be met,

counsel are ordered to notify the court immediately of that fact

so that adjustments may be made, either by stipulation or by

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subsequent scheduling conference. 

2. Stipulations extending the deadlines contained

herein will not be considered unless they are accompanied by

affidavits or declarations, and where appropriate attached

exhibits, which establish good cause for granting the relief

requested. 

3. Failure to comply with this order may result in

the imposition of sanctions. 

IT IS SO ORDERED.

Dated: March 6, 2007 /s/ Oliver W. Wanger 

emm0d6 UNITED STATES DISTRICT JUDGE

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