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JOINT CASE MANAGEMENT STATEMENT; 

REQUEST TO VACATE TRIAL DATE; 

CASE NO. C 09-02492 JSW 

CROWELL & MORING LLP 

Ethan P. Schulman (eschulman@crowell.com) 

Nathaniel P. Bualat (nbualat@crowell.com) 

275 Battery Street, 23rd Floor 

San Francisco, CA 94111 

Telephone: 415.986.2800 

Facsimile: 415.986.2827 

Attorneys for Plaintiff 

CAPITAL TRUST, INC. 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

CAPITAL TRUST, INC., 

Plaintiff, 

v. 

WALTER R. LEMBI, individually and as 

trustee of the WALTER AND LINDA 

LEMBI FAMILY TRUST DATED JUEN 

30, 2004; FRANK E. LEMBI, individually 

and as trustee of the OLGA LEMBI 

RESIDUAL TRUST CREATED UNDER 

THE PROVISIONS OF PART THREE OF 

THE LEMBI FAMILY REVOCABLE 

TRUST DATED FEBRUARY 17, 1984, 

and as the trustee of the FRANK E. 

LEMBI SURVIVOR’S TRUST DATED 

FEBRUARY 17, 1984; BILLIE 

SALEVOURIS, individually, BILLIE Z. 

SALEVOURIS, as trustee for THE BILLIE 

SALEVOURIS TRUST DATED 

AUGUST 23, 1983 AS RESTATED ON 

MAY 24, 2002; DAVID M. RAYNAL, 

individually and as trustee for the DAVID 

M. RAYNAL REVOCABLE TRUST 

DATED MAY 9, 2002; RALPH DAYAN, 

individually and as co-trustee for the 

AMENDED AND RESTATED DAYAN 

FAMILY REVOCABLE TRUST DATED 

DECEMBER 31, 1991, 

Defendants. 

Case No. C 09-02492 JSW 

JOINT CASE MANAGEMENT 

STATEMENT; REQUEST TO VACATE 

TRIAL DATE 

Date: May 14, 2010 

Time: 1:30 p.m. 

Dept.: Courtroom 11, 19th Floor 

Judge: The Hon. Jeffrey S. White 

Case3:09-cv-02492-JSW Document76 Filed05/07/10 Page1 of 5

AND ORDER THEREON

Case 3:09-cv-02492-JSW Document 77 Filed 05/07/10 Page 1 of 5
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-1- 

JOINT CASE MANAGEMENT STATEMENT; 

REQUEST TO VACATE TRIAL DATE; [PROPOSED] 

ORDER; CASE NO. C 09-02492 JSW 

I. JOINT CASE MANAGEMENT STATEMENT 

Pursuant to Local Rule 16-10(d) and the Court’s Civil Standing Order No. 5, Plaintiff 

Capital Trust, Inc. (“Capital Trust”), Defendants Walter R. Lembi, individually and as trustee of 

the Walter and Linda Lembi Family Trust dated June 30, 2004, Frank E. Lembi, individually and 

as trustee of the Olga Lembi Residual Trust created under the provisions of Part Three of the 

Lembi Family Revocable Trust dated February 17, 1984, and as the trustee of the Frank E. Lembi 

Survivor’s Trust dated February 17, 1984, Billie Salevouris, individually, Billie Z. Salevouris, as 

trustee for the The Billie Salevouris Trust dated August 23, 1983 as restated on May 24, 2002, 

David M. Raynal, individually and as trustee for the David M. Raynal Revocable Trust dated 

May 9, 2002, Ralph Dayan, individually and as co-trustee for the Amended and Restated Dayan 

Family Revocable Trust dated December 31, 1991 (collectively, “Defendants”), and Plaintiffs-inIntervention LBUBS 2004-C8 VAN NESS LIMITED PARTNERSHIP, LBUBS 2004-C8 BAY 

CLAY LIMITED PARTNERSHIP, LBUBS 2004-C8 JONES STREET LIMITED 

PARTNERSHIP, LBUBS 2004-C8 LOMBARD STREET LIMITED PARTNERSHIP, LBUBS 

2004-C8 GOUGH STREET LIMITED PARTNERSHIP, LBUBS 2004-C8 BARTLETT 

STREET LIMITED PARTNERSHIP, LBUBS 2004-C8 MASON STREET LIMITED 

PARTNERSHIP, LBUBS 2004-C8 HYDE STREET LIMITED PARTNERSHIP, and LBUBS 

2004-C8 JOICE STREET LIMITED PARTNERSHIP (“Plaintiffs-in Intervention”)1

 (collectively 

with Capital Trust and Defendants, the “Parties”) submit this Joint Case Management Statement. 

A. Brief Summary of Case 

In its Amended Complaint, Capital Trust seeks damages for Defendants’ breach of various 

guaranty contracts. Capital Trust alleges that Defendants, through various Guaranties of 

 

1At a August 21, 2009 hearing, Capital Trust stipulated to Plaintiffs-in-Intervention’s 

limited intervention into this case for the sole purpose of opposing Capital Trust’s Motion for 

Right to Attach Order and Order for Issuance of Writ of Attachment against Defendants 

(“Attachment Motion”). Pursuant to the Court’s oral ruling at that hearing, all of Capital Trust’s 

arguments and objections with respect to Plaintiffs-in-Interventions’ intervention beyond 

opposing the Attachment Motion were expressly reserved. For the sake of efficiency, however, 

Plaintiffs-in-Intervention have been included in this joint submission. 

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JOINT CASE MANAGEMENT STATEMENT; 

REQUEST TO VACATE TRIAL DATE; 

CASE NO. C 09-02492 JSW 

Payments (“Mezzanine Guaranties”), are the guarantors of various Mezzanine Loan Agreements 

(“Mezzanine Loan Agreements”), which have been assigned to Capital Trust. Capital Trust 

further alleges that the borrowers on the Mezzanine Loan Agreements (“Mezzanine Borrowers”) 

defaulted on their payment obligations to Capital Trust, and have not made any required payment 

since March 11, 2009. On or about June 2, 2009, Capital Trust served a Notice of Event of 

Default and Acceleration and made a demand on Defendants for payment pursuant to the 

Mezzanine Guaranties. Defendants deny, among other things, that Mezzanine Borrowers 

defaulted under the Mezzanine Loan Agreements and that they are obligated to make any 

payments to Capital Trust pursuant to the Mezzanine Guaranties. 

In their Complaint in Intervention, Plaintiffs-in-Intervention seek a declaratory judgment 

and injunctive relief. Plaintiffs-in-Intervention allege that they are parties to a series of loans 

(“Senior Loans”) between them and several entities (“Senior Borrowers”) that are related to both 

the Mezzanine Borrowers and Defendants. In connection with the Senior Loans, Defendants 

executed various guaranties with respect to the Senior Borrowers’ obligations pursuant to the 

Senior Loans (“Senior Guaranties”). Plaintiffs-in-Intervention further allege that they and Capital 

Trust are parties to a written contract whereby Capital Trust’s rights with respect to the 

Mezzanine Loans and Guaranties are subordinated to Plaintiffs-in-Intervention’s rights with 

respect to the Senior Loans and Guaranties (“Intercreditor Agreement”). According to Plaintiffsin-Intervention, Capital Trust has taken positions in this case that are contrary to the terms of the 

Intercreditor Agreement and as a consequence a live controversy exists regarding the terms of 

that agreement. Capital Trust denies, among other things, that it has taken positions that are 

contrary to the terms of the Intercreditor Agreement and that there is a live controversy regarding 

the terms of that agreement. 

B. Status 

On September 16, 2009, this Court issued an Order granting Capital Trust’s Application 

for Right to Attach Order and Writ of Attachment. At the end of that Order, the Court strongly 

urged the parties to continue to meet and confer in order to reach a mutually agreeable resolution 

of this dispute. In urging the Parties to settle this matter, the Court noted that there likely is a 

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JOINT CASE MANAGEMENT STATEMENT; 

REQUEST TO VACATE TRIAL DATE; 

CASE NO. C 09-02492 JSW 

limited pool of assets available for such a settlement. 

Since the Court’s issuance of its September 16, 2009 Order, although Capital Trust has 

identified certain non-exempt assets that are subject to attachment under that Order, it has not 

attached such assets because it is attempting to reach a business resolution of this matter. As 

reported in the parties’ March 25, 2010 Joint Case Management Statement, the parties have 

engaged in workout negotiations that have not yet resulted in a settlement of this action. 

Currently, Capital Trust is considering a potential sale of its interest in the Mezzanine Loans to a 

third party, and is engaged in negotiations with potential third party purchasers. Capital Trust 

believes that in the event it is successful in selling its interest in the Mezzanine Loans, a sale is 

likely to close within a period of 60 to 90 days. Such a sale may render a trial and any further 

proceedings in this action unnecessary, and may lead to the dismissal of the action. 

C. Appropriateness of ADR (See Local Rule 16-10(d)) 

The Parties’ current view is that no form of ADR is appropriate at this time. 

II. REQUEST TO VACATE TRIAL DATE 

Because Capital Trust’s potential sale of the Mezzanine Loans may resolve this action and 

avoid the need for the Court and the Parties unnecessarily to expend limited resources preparing 

for trial, the Parties respectfully request that the Court: (1) vacate the May 14, 2010 case 

management conference, the June 7, 2010 pretrial conference, the June 28, 2010 trial date and all 

deadlines related to the current trial date; and (2) set a further case management conference at 

least 90 days from the date of this request to address the status of any settlement or business 

discussions and the need, if any, to set a new trial date. 

This Joint Case Management Statement and Request to Vacate Trial Date is filed 

electronically by Capital Trust’s counsel who hereby attests, in accordance with General Order 45 

Section X(B), that Defendants and Plaintiffs-in-Intervention concur in its filing. 

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JOINT CASE MANAGEMENT STATEMENT; 

REQUEST TO VACATE TRIAL DATE; 

CASE NO. C 09-02492 JSW 

Dated: May 7, 2010 CROWELL & MORING LLP

/s/ Ethan P. Schulman

Ethan P. Schulman 

Attorneys for Capital Trust, Inc. 

Dated: May 7, 2010 FRIEDMAN DUMAS & SPRINGWATER LLP

/s/ Ellen A. Friedman

Ellen A. Friedman 

Attorneys for David Raynal, Billie Z. Salevouris, and 

Ralph Dayan 

Dated: May 7, 2010 LEMBI GROUP LEGAL DEPARTMENT 

/s/ Edward C. Singer, Jr.

Edward C. Singer, Jr. 

Attorneys for Defendants Walter R. Lembi and 

Frank E. Lembi 

Dated: May 7, 2010 DUANE MORRIS LLP

/s/ Phillip K. Wang

Phillip K. Wang 

Attorneys for Plaintiffs-in-Intervention 

119046\0002001\902069439.1 

Case3:09-cv-02492-JSW Document76 Filed05/07/10 Page5 of 5

The parties' request to vacate the May 14, 2010 case management conference and the pretrial 

and trial dates is GRANTED. This matter shall be set down for a further conference on 

Friday, August 13, 2010. If this matter has not been dismissed by that date, the parties shall 

submit a Joint Status Conference Statement with proposed dates for a pretrial conference and 

trial. 

IT IS SO ORDERED this 7th day of May, 2010.

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