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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE ARTHUR S. WEISSBRODT, JUDGE
In Re: ) Case No. 98-51326-ASW
) Chapter 13
)
HOWARD KEITH HENSON, )
) TRIAL
) Volume I
Debtor. ) Pages 1 to 179
)
)
) Friday, September 27, 2002
) San Jose, California
Appearances:
For the Debtor: Law Offices of Stanley A. Zlotoff
By: Stanley A. Zlotoff, Attorney at Law
300 South First Street, Suite 215
San Jose, California 95113
For Creditor Religious Moxon & Kobrin
Technology Center: By: Helena K. Kobrin, Attorney at Law
3055 Wilshire Boulevard, Suite 900
Los Angeles, California 90010
McPharlin, Sprinkles & Thomas
By: Elaine M. Seid, Attorney at Law
10 Almaden Boulevard, Suite 1460
San Jose, California 95113
Paul, Hastings, Janofsky & Walker LLP
By: Samuel D. Rosen, Attorney at Law
75 East 55th Street
New York, New York 10022-4597
Electronic Court United States Bankruptcy Court
Recorder: Clerk of the Court
Liz Armendariz
280 South First Street, Room 3035
San Jose, California 95113
(408) 535-5003
Certified Electronic Palmer Reporting Services
Transcriber: P. O. Box 30727
Stockton, California 95213-0727
Proceedings recorded by digital recording;
transcript produced by federally-approved transcription
service. I N D E X
Creditor's Motions: page 3
Opening Statement on behalf of the Creditor: page 32
Creditor's List of Exhibits: page 58
Debtor's Response to Creditor's Exhibits: page 92
Opening Statement on behalf of the Debtor: page 126
Witnesses:
Direct Cross Redirect Recross
Victoria Arel Lucas
By Mr. Zlotoff: 153
Exhibits: Received in Evidence
None.
3
1 Friday, September 27, 2002 9:09 o'clock a.m.
2 P R O C E E D I N G S
3 THE COURT: Thank you, ladies and gentlemen. Please
4 be seated.
5 Ms. Seid, I understand that there's some concern, that
6 you want to have use of some court equipment?
7 You need to be at a microphone, please.
8 MS. SEID: That's correct, Your Honor. We were
9 interested in having a television and a VCR made available this
10 morning.
11 THE COURT: First of all, those have to be ordered in
12 advance and set up. Nobody shows up the day of trial and asks
13 for them. And, secondly, is that on your exhibit list?
14 MR. ROSEN: The video -
15 THE COURT: You need the microphone, please.
16 MR. ROSEN: The videotape that we -
17 THE COURT: Oh, I'm sorry. Let me call the case and
18 get your appearances. I got into the technical problem first.
19 Keith Henson.
20 May I have appearances?
21 MR. ZLOTOFF: Stan Zlotoff for debtor.
22 MR. ROSEN: For creditor Religious Technology Center
23 Samuel D. Rosen, Paul, Hastings, Janofsky and Walker.
24 MS. KOBRIN: Helena Kobrin, Moxon and Kobrin, also for
25 the debtor.
4
1 THE COURT: What exactly is this - Ms. - Ms. Seid,
2 would you come forward to the microphone, please - what exactly
3 is the exhibit?
4 MS. SEID: First of all, I'll state my appearance.
5 Elaine Seid of McPharlin, Sprinkles and Thomas
6 appearing on behalf of the creditor.
7 I'm going to ask Mr. Rosen to respond to the Court,
8 Your Honor.
9 MR. ROSEN: The exhibit which is marked -
10 THE COURT: You don't have the microphone. You need
11 the microphone every time, or we won't get on the record -
12 MR. ROSEN: You know I'll tell you something. Many
13 years ago Judge Feinberg in the Second Circuit told me, "Mr.
14 Rosen, you're one of the few attorneys who appear here who do
15 not need the microphone."
16 THE COURT: Yeah. I was a law -
17 MR. ROSEN: My voice tends to carry.
18 THE COURT: I was a law clerk in that courthouse. I
19 know that court.
20 MR. ROSEN: In the Second Circuit?
21 THE COURT: I was a law clerk on the District Court -
22 MR. ROSEN: Oh.
23 THE COURT: - for Judge Demmick.
24 MR. ROSEN: In answer to your question we have marked
25 as an exhibit a video - and it's been in the exhibits since the
5
1 first joint pretrial order, a year and a half ago, - a videotape
2 of excerpts of deposition taken of Mr. Henson in the copyright
3 case. We want to play the videotape excerpts for this Court.
4 They relate to the issue - the videotape relates to the issue of
5 bad faith.
6 THE COURT: It's my understanding, and it hasn't been
7 briefed, and I had wanted any issue that might be of concern,
8 that that's a matter of discretion. There's certainly a
9 transcript available, but I don't know whether you object. If
10 you object, then I'd like to know about it.
11 MR. ZLOTOFF: Well, can coun- -
12 THE COURT: To the video, rather. I'm not talking
13 about the transcript. I'm just - I'm not talking about the
14 transcript yet. I'm just talking about the video.
15 MR. ROSEN: The video is the official record of the
16 deposition, not the transcript. And it was - and for that
17 reason at trial before Judge Whyte it was the video that was
18 shown to the jury, not the transcript.
19 And it's - by the way, it's a highlight reel. It's
20 certain sections of his deposition given over, I think, two or
21 three days. They were - it was approved by Judge Whyte as
22 appropriate excerpts to be shown to the jury. And, as I say,
23 because the video was the official record under the Federal
24 Rules, I think it's Rule 30, that the video was shown, not the
25 transcript read.
6
1 THE COURT: Was a copy of it provided to Mr. Zlotoff
2 in advance - of the video?
3 MS. KOBRIN: On August 1st, Your Honor.
4 MR. ROSEN: Yeah. And it's been listed since
5 September of 2001.
6 MR. ZLOTOFF: I don't remember getting a videotape. I
7 reviewed the - your exhibit list last night, and I noticed one
8 videotape that was designated. And I looked in - in the - to
9 the exhibit, and all I saw was like two pages of mostly, I won't
10 say redacted, but certainly not a complete excerpt of what - of
11 what the videotape purported to be.
12 MR. ROSEN: I don't have to put in an entire
13 videotape. I can put excerpts.
14 THE COURT: But you have to provide it to him.
15 MR. ROSEN: Yeah.
16 THE COURT: You have to provide him the full
17 videotape.
18 MS. KOBRIN: There were three separate -
19 THE COURT: Ms. Kobrin, I need to ask you to use the
20 mic. Even if Mr. Rosen has a big barrel voice, you don't.
21 MS. KOBRIN: I don't, I know.
22 There were actually three separate videotapes that
23 were included in the - in the exhibits that were given to him on
24 August 1st. There was a sleeve -
25 THE COURT: Two months ago.
7
1 MS. KOBRIN: - just - just like in your set, Your
2 Honor, or in here - whoops, sorry. There were sleeves, you
3 know, with the videotapes in them.
4 MR. ZLOTOFF: Oh.
5 MS. KOBRIN: In the set that was sent to Mr. Zlotoff.
6 MR. ZLOTOFF: All right. I - I may have overlooked
7 it. It's possible.
8 THE COURT: And where are they in the Judge's copy?
9 MR. ROSEN: Volume IV.
10 MS. KOBRIN: Volume IV, Exhibits 213, 214, and 2- -
11 no, I'm sorry - let's see. 2- - 213, 214, 215, I believe.
12 THE COURT: I don't see any sleeve in mine. Would you
13 look in the official?
14 MS. KOBRIN: Oh, we put it in one set, we didn't put
15 them in both on the Court copies.
16 THE COURT: Okay. Mr. Zlotoff, can you come up and
17 look at this because it would - it's fairly pronounced. Would
18 you have gotten this?
19 MR. ZLOTOFF: You know, Your Honor, I - I've probably
20 overlooked it. I'm not - I'm not going to state that I either
21 saw it or didn't see it, that I probably overlooked it.
22 THE COURT: Is your office close enough that if we
23 break for lunch you can go look?
24 MR. ZLOTOFF: Yes.
25 THE COURT: All right. So that's what we'll do.
8
1 We'll use it after lunch.
2 MR. ZLOTOFF: Well, -
3 THE COURT: And we'll have it set it up. That will
4 give us a chance to -
5 MR. ZLOTOFF: Well, Your Honor, could I - maybe I
6 should just address a threshold issue. It purports to be a 1996
7 deposition. And I don't understand what possible relevance that
8 would have.
9 THE COURT: When was this case filed?
10 MR. ZLOTOFF: '98.
11 THE COURT: What possible relevance could a 1996
12 deposition have to whether this case was filed in good faith?
13 MR. ROSEN: The standard of good faith is not limited
14 to the instant this case is filed, as Your Honor knows. There
15 has been a long pattern of misconduct by Mr. Henson, including
16 the misuse of the - of the Bankruptcy Court in the filing of the
17 petition in this case as part of his ongoing enterprise to
18 attack the Scientology religion.
19 This videotape shows his state of mind, his mens rea,
20 his intention to just for amusement and stature to attack RTC.
21 That carries forward in the - in the good faith-bad faith
22 argument and it's going to come forward under 1307 to his
23 conduct in the filing of this petition at a time when there was
24 only one creditor and there was no claim that had been - that
25 had been liquidated against him. And it's going to continue on
9
1 in terms of his misconduct during this case, the false
2 statements in his schedules and the like.
3 We also have - to the extent there's any question
4 about it, it's a totality-of-circumstances test, which I'm sure
5 Your Honor is aware of, and we have caselaw for that very
6 proposition.
7 We also have caselaw for the proposition that although
8 the filing of a bankruptcy petition for the purpose of derailing
9 a state court litigation -
10 THE COURT: Was there state court litigation that
11 was -
12 MR. ROSEN: No, no. This is a federal court. I'm
13 saying that there isn't - we found no case of - on the
14 proposition of - of filing a bankruptcy petition when you're not
15 in reality in financial need, for the purpose of derailing a
16 state court litigation. And we've got cases, controlling
17 authority from the Ninth Circuit and the Ninth Circuit BAP and
18 from the - another District Court in California for the
19 proposition that while that alone per se is not cause for
20 dismissal under 1307, it is certainly one of the elements that
21 the Court needs to look at in terms of determining cause and bad
22 faith.
23 So to get back to Mr. Zlotoff's contentions or his
24 question, the bad faith begins in 1996 with Mr. Henson stating,
25 admitting that the whole purpose of this exercise for his
10
1 amusement, the cost of litigation comes out of his, quote,
2 recreation budget. And his sole purpose - he's never been a
3 Scientologist - his sole purpose is to taunt Scientology.
4 And this is - I will tell you, I've been litigating
5 now in the federal courts 34 years. I have seen copyright cases
6 where the infringer's motive is to make money, you know, a
7 Napster type case. I've seen cases where infringements are
8 accidental, where somebody didn't know somebody had written
9 something, or whatever.
10 I have never seen, and there is no case I'm aware of
11 ever reported in any federal court where the copyright infringer
12 says, 'The reason I infringed was to taunt the - the copyright
13 owner.' This is one of a kind. I think the Judge, Judge Whyte,
14 fairly well found that himself and - and the jury certainly
15 found it. And, Your Honor, can -
16 THE COURT: Well, excuse me, Mr. Rosen, can I
17 interrupt for a second. The pl- - Mr. Zlotoff is going to go
18 first because he has to prove good faith, so I assume you're
19 going to go first on your plan.
20 MR. ROSEN: I'm not sure that's right, if I can
21 address it. If you'll bear with me for 30 seconds, I have a
22 couple of other issues to address.
23 Number one, I wanted to hand up to the Court on this
24 very issue of good faith-bad faith, the decision of Justice
25 Whyte entered on September 26th yesterday. Judge Whyte has put
11
1 this decision under file - under seal. And - and it cannot be
2 published outside the court obviously. I am not making it an
3 exhibit unless Your Honor will file it under seal because I
4 don't want to violate Judge Whyte's order. But I would like to
5 hand it up, and I think what Your Honor - it will show Your
6 Honor what I'm talking about.
7 There's only - it's a determination on a contempt
8 motion. There is one part of which is absolutely critical and
9 that is a footnote which appears on the bottom of page 5. Your
10 Honor's welcome to see the whole thing.
11 THE COURT: I'll take it. I'll look at it.
12 MR. ROSEN: And, Mr. Zlotoff, you have a copy, right?
13 MR. ZLOTOFF: This was the one Judge Whyte -
14 MR. ROSEN: Yesterday. Yesterday.
15 MR. ZLOTOFF: - from yesterday? Yes, that's fine. I
16 don't have any problem with that.
17 THE COURT: I've read the footnote. I haven't read
18 the whole decision, but I'm not going to take -
19 MR. ROSEN: Your Honor's welcome to. I think the
20 footnote -
21 THE COURT: That's fine.
22 MR. ROSEN: I rose also because of the question of who
23 goes first. While it - Your Honor set this as a trial on our
24 motion to dismiss for bad faith and indicated in the original
25 decision back two years ago that it would then be combined with
12
1 the objections to the plan.
2 As I analyze it, it's one combined trial. And I'm not
3 sure it makes a great deal of difference except in the following
4 respect. Under 1307, as I have now been educated by my
5 bankruptcy co-counsel, to - since you know I'm not a bankruptcy
6 attorney - under 1307 if you find bad faith you must do one of
7 two things. You must either dismiss the petition or convert it
8 to a 7.
9 It strikes me that that is a threshold issue, because
10 if you find bad faith and then proceed to do one or the other of
11 the two options available, obviously the option that's not
12 available is to even hear a motion to confirm a 13 plan, then
13 the second part of the trial, which is the debtor's application
14 for confirmation of the 13 plan and our objections to it, truly
15 becomes moot. The -
16 THE COURT: How long will your trial go if you go
17 first?
18 MR. ROSEN: It's all - it's all exhibits. We have no
19 witnesses. I'm just going to walk you through the exhibits and
20 show you, you know, what the basis of the good faith-bad faith
21 argument is under 1307. In accordance with your order limiting
22 the amount of time, I can assure you it will not take me 20
23 hours to do that. I -
24 THE COURT: How long will it take?
25 MR. ROSEN: Oh, I expect probably an hour to an hour
13
1 and a half. Plus part of our presentation is this videotape,
2 which I think is 19 minutes. That - that is part of our case.
3 We would then rest on our motion for cause - to
4 dismiss for cause, if you will. I guess the statutory language
5 under 1307 is cause, but the caselaw says bad faith is cause.
6 We would then rest.
7 And if Your Honor wants to make a decision at that
8 point, that's fine, and we wouldn't have to deal with the motion
9 to - to confirm the 13. If you wanted - Your Honor doesn't want
10 to and wants to proceed with the rest of the trial, that's fine,
11 too. But I think that at least Your Honor should have the
12 option because the motion-to-confirm hearing is going to take
13 considerably longer.
14 I understand from Mr. Zlotoff, and he can correct me
15 if I'm wrong, but he intends to call a witness, Ms. Lucas, the -
16 from my conversations with Mr. Zlotoff, and we've been kind of
17 candid with each other, he's telling me what he's going to try
18 and prove. I've told him that he has major evidentiary
19 objections to overcome. This will take some amount of time. I
20 can't tell you how long because it's not my witness. I can tell
21 you the cross-examination will take three or four hours
22 probably. And we've got some battles over exhibits.
23 So, you know, I'll do whatever Your Honor wants. It's
24 a combined trial, so I'm not sure it makes all of that
25 difference, but if Your Honor of a mind to appreciate that, a
14
1 dismissal - a determination of bad faith or cause under 1307
2 moots the 13. Whereas the opposite is not true. The opposite
3 is not true because even if you deny the 13 you still have to
4 deal with the bad faith because under 1307 the - the remedy is
5 either dismissal or conversion. So denial of the 13 would not
6 moot our motion to dismiss, but the reverse is true.
7 One other thing I wanted to raise to Your Honor on a
8 preliminary basis is this. You issued a trial order - and this
9 is the last item I have to - to raise. You issued a trial order
10 on July 12th, I believe it was, that set forth in several
11 paragraphs things that had to be filed. And I think it was
12 paragraph 5 that said, "Failure to comply with the time limits
13 in this and the following requirements under this will result in
14 sanctions, including" -
15 THE COURT: Probably says "may result."
16 MR. ROSEN: - "may" - "may" - I'm sorry. You're right
17 - "may result in sanctions."
18 One of the requirements was the filing of a pretrial
19 brief on the 13th of September. We filed our pretrial brief.
20 Mr. Zlotoff filed none. In fact, he had no intention of filing
21 any until on September 20th we argued before Judge Whyte, came
22 up indirectly in terms of whether this trial's going to go
23 forward or not.
24 We said, "How is it going to go forward? The debtor
25 hasn't even complied. He hasn't even filed a pretrial brief."
15
1 And I think one of the specific sanctions in your order that -
2 for noncompliance is postponing the trial. Well, that's not a
3 sanction because that hurts us.
4 But, in any event, it's at that point that Mr. Zlotoff
5 said, "Okay, I'll file a pretrial brief."
6 As your own calendar for today notes, Mr. Zlotoff's
7 brief was not filed until the 23rd of September. And that's 10
8 days after your order and only after the prompting before Judge
9 Whyte, like - and Judge Whyte asked him the question, "Why
10 haven't you complied?"
11 So I would as a - and this is as a threshold matter,
12 Your Honor. I would ask you to do what your order says. I
13 think that is appropriate, to strike the brief. I think it is
14 appropriate to impose sanctions for counsel's failure to comply
15 with your order.
16 And I would hope that, you know, the - that Your
17 Honor's order meant what it said and that there is a balance in
18 this proceeding that Your Honor intends to hold the debtor and
19 his counsel to compliance, as Your Honor has held us.
20 And that's the last preliminary matter I have, Your
21 Honor.
22 MR. ZLOTOFF: Can I respond, Your Honor?
23 THE COURT: Mr. Zlotoff.
24 MR. ZLOTOFF: First of all, as to the brief, RTC
25 didn't file a quote-unquote brief either. They filed a two-page
16
1 statement which was nothing like a brief. It bas- - it didn't
2 have anything regarding facts. It didn't have anything
3 regarding issues. It didn't have anything regarding legal
4 argument. It basically was a list of items that it wanted Your
5 Honor to take notice of that had been filed previously. That's
6 not a brief. That's not responsive to the trial court's order
7 either.
8 In fact we were both of the same mind apparently, at
9 having just prepared voluminous documents just a few days
10 earlier with regard to motions in limine, motions for summary
11 judgment that we had papered this proceeding to death, and no
12 more need be done. That's exactly the course you took. So my
13 brief was as deficient as yours, even though your deficient
14 brief was filed on time. And that's what I told Judge Whyte.
15 MR. ROSEN: And Judge Whyte rejected that, Your Honor.
16 MR. ZLOTOFF: He didn't say a thing.
17 MR. ROSEN: Excuse me. Judge Whyte said -
18 THE COURT: Look, Mr. Rosen, one counsel is talking.
19 MR. ROSEN: Sorry.
20 THE COURT: He let you finish your argument. Now you
21 let him finish.
22 MR. ROSEN: I will, Your Honor. I apologize.
23 MR. ZLOTOFF: With regard to the argument as to
24 ordering of which side goes first, I don't know that it makes a
25 difference. I don't understand the argument, to be honest with
17
1 you. If I go first and I can't prove pick - I can't prove the
2 best-interests-of-creditors test, I lose. If I lose
3 confirmation -
4 THE COURT: Well, do you - do you lose if he's
5 unsecured - if he's not unsecured?
6 MR. ZLOTOFF: If my plan -
7 THE COURT: Does he have standing to raise that if
8 he's not - if he's a secured creditor?
9 MR. ZLOTOFF: Right. Well, pick another issue then.
10 Pick anything you want -
11 THE COURT: Well, you pick another issue.
12 MR. ZLOTOFF: Pick feas- -
13 THE COURT: It doesn't matter. But, anyway, if you
14 can't -
15 MR. ZLOTOFF: Pick feasibility -
16 THE COURT: If you can't make your case, -
17 MR. ZLOTOFF: If I can't prove my case in chief, then
18 I don't get a plan confirmed and it follows that you are either
19 going to say I can amend it or I can't amend it or it should be
20 dismissed or converted. I'm not sure we end up any - at a
21 different place regardless of who comes first. I mean bad faith
22 is one element -
23 THE COURT: Well, the way that works, as I understand
24 it logically, Mr. Zlotoff, is that you tried to confirm this
25 plan. And you asked for time to put forward another plan. And
18
1 Mr. Rosen says, "No, I want to go forward with my motion."
2 MR. ZLOTOFF: Right.
3 THE COURT: And so he would then, assuming that I was
4 going to let you go forward would another plan, -
5 MR. ZLOTOFF: Right.
6 THE COURT: - want to present his motion.
7 MR. ZLOTOFF: Yeah, but -
8 THE COURT: And that wouldn't necessarily be mooted by
9 your failure to prove your case in the first instance.
10 MR. ZLOTOFF: Right. But I take his issue with his
11 pronouncement that if you find bad faith you must necessarily
12 dismiss the case. I don't think that's true -
13 THE COURT: I don't have to necessarily dismiss the
14 case.
15 MR. ZLOTOFF: No. I've - I've been involved in cases
16 where bad faith has been fined - found on the basis that, for
17 example, two low of a percentage plan, so a judge would say -
18 THE COURT: But here's the problem with this, all of
19 this, and - when you're coming in. You come in the minute of
20 trial and say, "We want court equipment." Somebody else comes
21 in - or one of you is coming in and saying, "I want to go
22 first."
23 We met specifically a short time ago to iron out all
24 the pretrial problems. And none - nobody asked for equipment,
25 nobody said, "I want to go first." Nobody said, "If you decide
19
1 this, then you must do that." Nobody said any of that. So it's
2 all new, it's all on the morning of the trial, and here we are.
3 Do you want to go first?
4 MR. ZLOTOFF: Your Honor, I really don't care. It
5 doesn't matter to me except with regard to the tape. My only
6 concern about the tape is whether it's a complete tape or
7 whether it's been doctored, whether there have been excerpts. I
8 haven't seen it.
9 THE COURT: Well, okay, but -
10 MR. ZLOTOFF: And, quite frankly, I don't have a
11 machine in my office to look at it, in any event.
12 THE COURT: I'm not saying, but I at least want to
13 know that you received it. If you didn't receive it, then
14 they're not going to be able to present it. If you did receive
15 it, then I have a different question. I have the relevancy
16 question.
17 MR. ZLOTOFF: Right.
18 THE COURT: And I have - whether he has an absolute
19 right - see, you didn't brief that either - whether he has an
20 absolute right to play it because it's the, quote, official
21 record. If he does, that's one issue. If he doesn't, that's
22 another issue. None - none of this is briefed. So it's a
23 problem.
24 Now do you want to go first or not? If you say you
25 don't care and you want to have this document case presented
20
1 first, then I will adjourn for a couple of minutes to let you go
2 back to the office to make sure that you received this. And in
3 the meantime it would be nice if somebody gave me some authority
4 as to whether he has an absolute right to - to present it or
5 whether I have any discretion in the matter.
6 MR. ROSEN: I'm not in - I will be happy to do that,
7 except I don't understand the question. The - the tape is being
8 presented as -
9 THE COURT: Or is there an objection to the tape?
10 See, other than -
11 MR. ROSEN: Then one -
12 THE COURT: Wait, wait.
13 Is there an objection to the tape other than they may
14 not have given it to you? If there is none, then it's not an
15 issue.
16 MR. ZLOTOFF: Well, yeah, I had stated that I
17 questioned its relevancy.
18 THE COURT: Oh, I understand. But it -
19 MR. ROSEN: You just stated that now.
20 THE COURT: Please. No, he didn't. He discussed this
21 before.
22 Sit down, please, Mr. Rosen.
23 MR. ZLOTOFF: That's when we got into the discussion.
24 THE COURT: To save time, because I can't order briefs
25 at this point, I want to get this done. To save time I would
21
1 let him, if you have no objection, if you actually got it, I
2 would let him present the tape, but I wouldn't rule on its
3 admissibility until after the trial. And I will order briefs on
4 the admissibility of that document.
5 It can - I will hold the ruling on admissibility, but
6 to save time and to allow it to proceed, I will take it subject
7 to a ruling subsequently on admissibility. So that's what I
8 will do.
9 If you didn't get it, I won't let it in. And I'll let
10 him present the written transcript.
11 MR. ROSEN: Your Honor, can I just have 30 seconds?
12 Two things.
13 Number one, with respect to the filing of the brief,
14 your order doesn't require - doesn't specify what is required in
15 a pretrial brief. We filed a pretrial brief which said we
16 incorporate and we identified the documents. We've addressed
17 these issues to a fair-thee-well, to a redundancy. We have
18 killed I don't know how many trees starting in July of 2000 with
19 the first motion to dismiss and the summary judgment and the
20 supplemental brief, et cetera. We - it is a perfectly
21 appropriate thing, but that's not the issue.
22 Before Judge Whyte Mr. Zlotoff's answer was the same,
23 "Look what they filed." The Judge says, "No, you don't
24 understand. The question is not the sufficiency of what they
25 filed. You filed nothing. Why is that?" That was the
22
1 commentary.
2 We have - we have ordered the transcript -
3 THE COURT: Mr. Rosen, I've already heard you. Please
4 sit down.
5 MR. ROSEN: The second - the second, so I do press the
6 point on the request that Your Honor do what your order says you
7 would do, and impose sanctions on -
8 THE COURT: I didn't say what I would do. That's what
9 you keep - you - I think you've misled me the first time. You
10 said I will impose sanctions -
11 MR. ROSEN: No. I'm sorry, may -
12 THE COURT: The order says I may.
13 MR. ROSEN: Okay.
14 THE COURT: I didn't commit to doing anything.
15 MR. ROSEN: I ask you to do that.
16 And the second point is Your Honor made a misstatement
17 and I want to correct it now because it's going to permeate this
18 proceeding. You described us as a, quote, secured creditor.
19 THE COURT: Well, I think you may be. And I'll
20 explain to you why in a few -
21 MR. ROSEN: We are both secured and unsecured.
22 THE COURT: It depends upon the value of the house.
23 MR. ROSEN: No.
24 THE COURT: Well, we'll talk about in a minute.
25 MR. ROSEN: Our notice of -
23
1 THE COURT: Mr. Rosen, I have my papers on that issue
2 in my chambers, so I'll talk to you about that -
3 MR. ROSEN: Okay.
4 THE COURT: - issue in a couple of moments.
5 I had just come in to try to understand what was going
6 on with the request for equipment.
7 Now how far are you from here?
8 MR. ZLOTOFF: Across the street.
9 THE COURT: All right. So you'll go to your office,
10 you'll see whether you received this thing. And then you'll
11 tell me whether there's any objection - whether you want to go
12 first or you have no objection. If you have no objection, Mr.
13 Rosen gets to go first, and he's promised me an hour and a half
14 or so of taking me through exhibits.
15 And if you want to go first, you'll let me know that
16 when you come back. And I'll see you in about 15 minutes.
17 MR. ZLOTOFF: All right, Your Honor. Thank you.
18 MR. ROSEN: Thank you.
19 (Recess taken from 9:33 a.m. to 10:09 a.m.)
20 THE COURT: On the record, please. Let's resume.
21 Did you receive the tapes?
22 MR. ZLOTOFF: I have something that purports to be a
23 videotape, Your Honor, yes.
24 THE COURT: And, Ms. Kobrin, you make an offer of
25 proof if called to testify you would testify that you served all
24
1 of the videotape exhibits that are in the Court's official file
2 or the Court's official exhibits on Mr. Zlotoff?
3 MS. KOBRIN: Yes, on August 1st along with a list that
4 listed what they were as videotapes.
5 THE COURT: Thank you. That issue is resolved.
6 If you want to show the tape - I mean the video I'll
7 let you do it subject to what I said.
8 MR. ROSEN: Well, is there an objection now to the
9 video by counsel?
10 MR. ZLOTOFF: I -
11 THE COURT: You made a relevancy objection.
12 MR. ZLOTOFF: You know, I've - I've just, as were
13 taking a break, I read the transcript. I don't even have an
14 objection, yeah.
15 THE COURT: That's fine.
16 MR. ROSEN: Well, if, Your Honor, if I'm going first,
17 I will proceed to my opening statement on the motion to dismiss
18 and walk you through the exhibits.
19 THE COURT: That'll be fine.
20 MR. ROSEN: Your Honor, would it - may I have
21 permission to do it from here?
22 THE COURT: Yes, of course.
23 MR. ROSEN: Because I'm handling these volumes of
24 exhibits.
25 THE COURT: It's standard in my court. It's no
25
1 problem.
2 MR. ROSEN: Okay. Let me begin by - by
3 THE COURT: Let me interrupt you one second.
4 MR. ROSEN: Sure.
5 THE COURT: Whenever you want to talk about that
6 secured, unsecured issue, both of you, I can talk to you a
7 little bit about it. But we can do that after you're finished.
8 MR. ROSEN: I was going to address it in my - in the
9 presentation, but I'd certainly be interested in hearing Your
10 Honor's comments on it now.
11 THE COURT: The Court's Docket demonstrates that the
12 case was dismissed on April 28th, 1998, but the dismissal was
13 vacated by the Court's order of July 25th, 1998. My
14 understanding is that Creditor's Abstract of Judgment was
15 recorded in the middle of those two dates, on June 9th, 1998.
16 At that point Mr. Henson's case had been dismissed for
17 several weeks, but dismissal was later set aside. So there's a
18 legal issue as to whether the automatic stay was reimposed
19 retroactively when the dismissal order was vacated, in which
20 case the recondition violated the stay and is void under the
21 Schwartz case; or whether vacating the dismissal order did no
22 more than reimpose the automatic stay for the future, in which
23 the case the recondition did not violate the stay and is not
24 void.
25 The order vacating the dismissal says that it's done
26
1 prospectively. Also In re Kruger, 88 BR 238, Ninth Circuit BAP
2 1988, held that the automatic stay was in effect between
3 dismissal and an order vacating dismissal, but that holding was
4 based on the dismissal order being void as a violation of due
5 process.
6 In re Slyman (phonetic), 234 F.3d 1081, Ninth Circuit
7 2000, relied on Kruger to hold the same where the dismissal
8 order was based on failure to attend a hearing, and was vacated
9 upon debtor's claim that he received no notice of the hearing.
10 Here the Docket shows that the dismissal order was on the
11 trustee's request after debtor had failed to appear at the 341
12 meeting. But I don't - I don't believe there was an argument by
13 the debtor that he had no notice of the meeting.
14 I think, if I recall, he thought the case had already
15 been dismissed on his request that he made without legal advice,
16 but then realized that he did have to be in Chapter 13. So it
17 doesn't sound to me at this point as if the dismissal order was
18 void as having been issued for lack of due process. And that's
19 what both Kruger and Slyman rely on to find that the stay
20 continued in effect despite the dismissal order. Neither of
21 those cases holds that the effect of vacating a dismissal order
22 is to resurrect the stay retroactively. And, in fact, they
23 don't address that issue.
24 362(c)(2) provides that the stay expires as to the
25 debtor upon the earlier of the time the case is closed or
27
1 dismissed or discharge is granted or denied, while 362(c)(1)
2 provides that the stay expires as to estate property when the
3 property ceases to be estate property under 349(b)(3) - I'm
4 sorry - property. And 349(b)(3) provides that dismissal vests
5 all estate property in whomever owned it prepetition.
6 So a dismissal order that isn't void and is merely
7 voidable does terminate the stay for all purposes.
8 Accordingly, it appears as if the creditor's lien is
9 not void as a stay violation. And that means depending on what
10 the value of the house is, the creditor may be fully secured and
11 thus lack standing to object on the basis of the Chapter 7 test
12 or the disposable income requirement. Or the creditor may be
13 partly or wholly unsecured, thus not lack standing.
14 That's my - my preliminary remarks, and you can do
15 them with whatever you whose.
16 MR. ROSEN: Well, let me respond to them because I
17 agree with everything except the last sentence, and I'll tell
18 you why.
19 We have filed a notice of claim which - which I think
20 amounts to about two hundred - a little less than a quarter of a
21 million dollars. We've also - we also have additional claims
22 which some of these are postbankruptcy, including the judgment
23 that I just handed up to you of yesterday of Judge Whyte on the
24 latest contempt proceeding against Mr. Henson.
25 The point is that the - the Abstract of Judgment we
28
1 filed against the house, against the debtor's house is only in
2 the amount of $75,000, being the amount of the judgment that was
3 entered upon the jury verdict. The statement that you made that
4 if there was - let's say there's 200,000 or a half a million
5 dollars available from the sale of the house, available to the
6 creditor, and we have a stipulation there is only one creditor,
7 us, that we are, quote, secured is incorrect. Because since our
8 security filing, our Abstract of Judgment filing only is the
9 amount of the judgment that we were able to file at that time,
10 which was $75,000, we have additional claims and judgments
11 against the creditor [sic] which are - which are part of the
12 bankruptcy proceeding in that they arise from claims which -
13 which existed prior to the filing of the petition. For example,
14 the award of attorney's fees. We could not file those as an
15 abstract of judgment against the house because there was an
16 intervening order of this Court that you just mentioned
17 reinstating the bankruptcy petition.
18 So it is correct to say that if there is at least
19 $75,000 from the proceeds of the sale of the house available to
20 pay us, that we are a secured creditor for that 75,- or any part
21 of it. I don't believe it is correct to say that we are a
22 secured creditor for all of our claims. Because in the best of
23 circumstances we could only enforce our security to the amount
24 of $75,000. That's the amount of the lien. So we will always
25 be in this proceeding both as a secured creditor and an
29
1 unsecured creditor.
2 THE COURT: Do you agree, Mr. Zlotoff?
3 MR. ZLOTOFF: Not entirely, because what they've done
4 in their claim - I've talked to Ms. Seid. And Ms. Seid concedes
5 that a good chunk of the claim is for postpetition debt.
6 So the question is - for example, the contempt, I
7 don't know why that would be prepetition debt and subject to the
8 claim. And there are similar other contempt judgments or orders
9 that form part of the - whether the attorney's fee part is part
10 of the judgment is an interesting question. I suppose it
11 probably is -
12 THE COURT: I didn't mean to get into this because
13 we'll - we could spend a lot of time. I wanted to give you my
14 preliminary remarks. You've now given me your preliminary
15 remarks. I don't need to resolve this at this moment.
16 MR. ROSEN: Okay.
17 MR. ZLOTOFF: Could I just make one other comment,
18 Your Honor? Because I - I was - I was aware of the situation.
19 And actually there is a transcript of the hearing in which the
20 Court heard the debtor's request to reimpose the stay - or
21 reopen the case, I think is what it was - set aside the
22 dismissal.
23 And I think on page 51 and 52 - I faxed this to Ms.
24 Seid - the Court stated in connection with reopening the case
25 that it intended, as I recall, that the case be in the posture
30
1 that it was at the time of dismissal. So that the order is not
2 completely - is not completely in sync with the pronouncement,
3 the rendering that the Court made -
4 THE COURT: Who wrote the order?
5 MR. ZLOTOFF: Pardon me?
6 THE COURT: Who wrote the order?
7 MR. ZLOTOFF: I wrote the order.
8 MR. ROSEN: Your Honor, just so the record is complete
9 on this. Mr. Zlotoff faxed to us a sound bite of 51 and 52. He
10 has the transcript, by his own admission. He knows that in that
11 transcript at least two times, I think one of them is on page
12 53, Your Honor made it clear that the order that was not the
13 intention of the Court to retroactively criticize or set aside
14 anything that was done. And, in fact, Your Honor was aware at
15 the time of the hearing that there had been an Abstract of
16 Judgment filed.
17 Mr. Zlotoff unfortunately is giving the Court a sound
18 bite out of context, and he has the transcript and he knows that
19 that's what Your Honor said.
20 More importantly, whatever -
21 THE COURT: Mr. Rosen, let's stop. I don't want to go
22 on any further. You asked for my preliminary remarks. I didn't
23 want to turn this into an oral argument.
24 MR. ROSEN: Okay.
25 THE COURT: Let's proceed with the evidence, please.
31
1 MR. ROSEN: Okay. Your Honor, I might just address
2 your attention out of order to Exhibit 195. And I will not
3 argue your preliminary remarks further. I just ask you to note
4 that this is the amended proof of claim, and we have identified
5 the portions that are, we believe, are postpetition. So that
6 when Your Honor considers it further in a nonpreliminary manner,
7 if Your Honor would just make a note that Exhibit 195 is what
8 Your Honor needs to be addressing and in terms of certainly my
9 comments as to why we're both secured and unsecured.
10 With that, let me - what I would like to do, with the
11 Court's permission, is as follows. I will make my opening
12 statement now on our motion to dismiss the petition. And in the
13 course of it I think the best assistance I can give the Court is
14 to walk the Court through the exhibits so that the Court doesn't
15 have to guess, if you will, as to what exhibits relate to what
16 issue.
17 I should also -
18 THE COURT: As long as you do it in about an hour and
19 a half, that'll be fine.
20 MR. ROSEN: Yeah, I think I could do it.
21 I would also point out the following. We have not -
22 since this is one combined trial, we have not segregated
23 exhibits for the motion-to-dismiss part versus the Chapter 13
24 part. And, in fact, there is a substantial overlap.
25 So I'm - I'm putting all the exhibits in, but, for
32
1 example, exhibits on bad faith in the Chapter 13 proceeding,
2 discovery misconduct, et cetera, in our view are going to be
3 relevant to both. So I'm doing double duty here.
4 When I'm done with these I've put in indirectly, if
5 you will, my exhibits on both sides of the case.
6 THE COURT: It may be helpful for me if you then go
7 through it on your own when we recess and just tell me exhibits
8 you think apply to which issue.
9 OPENING STATEMENT ON BEHALF OF THE CREDITOR
10 MR. ROSEN: Okay. Let me give you - let me give you
11 the larger picture. The larger picture of our case and our
12 theory of the case is as follows.
13 Mr. Henson formed a plan in 19- - or late '95, early
14 '96. The plan was to taunt and to abuse the Scientology
15 religion and the various churches within it. Not for profit.
16 He's not an infringer who, like in Napster, who's trying to make
17 economic gain, but for his, as the evidence will show, for his
18 amusement, for just the fun of taunting a religion. And for,
19 most importantly, his stature.
20 And you're going to hear evidence about Mr. Henson's
21 little club that gives out awards for who can cause the church -
22 the Scientology religion the most pain or the most discomfort.
23 You will also hear Mr. Henson testifying and admitting
24 about how the copyright infringement part, which was the
25 beginning of his - of his ongoing scheme of harassment of
33
1 Scientology for no reason other than amusement, was to see how
2 much money he could cause the church to spend. And you will
3 hear and see deposition testimony of, "It's great. I mean I'm
4 pro se. All it will cost me is I've got to go out and buy a
5 ream of paper every once in a while and I can cause them to
6 spend million dollars of dollars. Isn't that wonderful."
7 The reason I say this is because one has to put in
8 context in a totality of circumstances what this is about. This
9 - this kind of bizarre motivation, if you will, one of pure
10 malice to hurt the Scientology religion is the is the
11 underpinning of the entire proceedings that have been going on
12 now for almost seven years.
13 They start with the copyright infringement case. They
14 proceed then in the filing of this bankruptcy petition for the
15 purpose of - the stated purpose by Mr. Henson, admitted, of
16 derailing the trial of the federal - of the copyright case in
17 this very court before Judge Whyte.
18 Mr. Henson's overall scheme and enterprise of - of
19 hurting the Scientology religion continues with picketing, with
20 his activity of threats that resulted in his criminal conviction
21 in Riverside County for violation of the California Hate Crime
22 Statute, and then his fugitive status. And from his lair in -
23 in - outside this country, he continues to revel in the idea of
24 causing all kinds of discomfort to - and then costs to the
25 Scientology religion.
34
1 That has permeated this entire proceeding and, in
2 fact, continues right up to now. The September 26th order of
3 Judge Whyte, which I handed up at the beginning of this,
4 exemplifies it.
5 The - Mr. Henson's contempt and his willingness to do
6 things to - to injure the Scientology religion continues. It
7 has never abated. It is the one abiding motivation. Malicious
8 but abiding motivation that has permeated this entire
9 proceeding. That is our theory of the case, if you will, in
10 terms of the bad faith.
11 Now is that all that there is? No. Let's look at the
12 bankruptcy proceeding - proceeding itself.
13 Mr. Henson originally prepared the petition in
14 December of '97 to - to derail what was then the trial date set
15 by Judge Whyte for the copyright case. In February of - he
16 didn't file it because Judge Whyte put it off. In February of
17 '98 he did file it.
18 I want Your Honor to understand the circumstances that
19 existed in February of '98. Mr. Henson is making, according to
20 his schedule, $130,000 a year. He is - he has money in the
21 bank. He has no debts other than debts in the ordinary course.
22 He is current on his mortgage. He's current on his credit
23 cards. Okay.
24 What is he facing? He's facing a trial on statutory
25 damages in the copyright case. The statutory damages are - that
35
1 the jury could award - are anywhere from $500 for nonwillful
2 infringement to a maximum of $100,000. Mr. Henson certainly,
3 and he - and of course the maximum for - for without a finding
4 of willfulness is only $10,000, so it's $500 to 10,000 for
5 nonwillful. Could Mr. Henson have paid a judgment of that
6 amount? Of course.
7 Mr. Henson, as we have now stipulated, had equity in
8 his house over and above the mortgage, or what you call in
9 California I think the first deed of trust at that time of
10 approximately $160,000. So there was no impending claim, if you
11 will. There was unliquidated claim.
12 But the key part is the liquidate - the amount itself
13 of the potential claim, because a jury cannot award more than
14 10,000 for nonwillful and more than a hundred thousand for
15 willful under the Copyright Act, there was no need to file a
16 bankruptcy petition other than for the sole purpose of derailing
17 the trial.
18 Well, he filed it. And after Your Honor lifted the
19 stay to allow the bankruptcy petition - excuse me - the
20 copyright proceeding to go forward, Mr. Henson withdrew it and
21 he has admitted that the reason he filed his notice of
22 withdrawal in March of 1998 of his bankruptcy petition was
23 because it no longer served any purpose, because the stay had
24 been lifted. That was the only purpose for filing it in the
25 first place. Once that purpose was no longer available because
36
1 Your Honor lifted the automatic stay, he didn't have any need
2 for the bankruptcy petition anymore.
3 He knew ever at that time what he was facing was a
4 judgment which in the best of circumstances, willful
5 infringement maximum - and there has never been a case, there
6 has never been a case of a hundred thousand dollars maximum ever
7 awarded reported in the history of the United States. In fact,
8 the 75,000 that the jury ultimately awarded in this case itself
9 is a record. There has never been a copyright case in the
10 United - ever reported in the United States in which a single
11 infringed work gave rise to a judgment of $75,000 in statutory
12 damages.
13 And I think you'll see why when we show the tape as to
14 what motivated the jury to give what was an extraordinary award.
15 But the point is and the point that I don't want to miss is, in
16 the financial status, in the sense of need, in the sense of I
17 know an archaic notion, and it's not bankruptcy statute standard
18 of are his assets more than his liabilities. Could he not
19 afford to pay a judgment. The answer is clearly none. And that
20 only reinforces that his use of the bankruptcy proceeding was
21 solely for - was an abuse and was solely for purposes of - of
22 derailing the - the infringement trial.
23 Mr. Henson's bad faith then continues in the following
24 way. False statements in the bankruptcy petition and his
25 schedules. And we have detailed these before you and we will
37
1 present them as part of the Exhibits, Number 1, valuation of his
2 house. He knowingly valued - listed the value of his house as
3 the amount he paid for it. And he admits that he made no
4 inquiry as to whether there was a - any increase in value since
5 the time he paid. Nor did he make any - and not $1 allowance
6 for the amount of the - of the mortgage he had paid down. He
7 listed the mortgage in full as it was on the date that he got
8 the mortgage.
9 Everybody knows that even no matter what the
10 amortization table, you've - when you make a monthly payment,
11 might be 95 or 97 percent interest, but there is some portion of
12 every mortgage which is amortizing the debt. No attempt to even
13 compute this.
14 His position was, "Here's what I paid for the house."
15 What else? Life insurance. Mr. Henson not only
16 listed no life insurance policies in his bankruptcy petition,
17 but repeatedly denied it, repeatedly denied that he had any life
18 insurance policies.
19 In fact, and I don't fault my brother Mr. Zlotoff for
20 this because I'm sure he was relying only on what Mr. Henson
21 told him, based on what Mr. Henson told Mr. Zlotoff, you're
22 going to see three exhibits, 47, 56, and 67, in every one of
23 which, and this is well into the discovery, the representation
24 is made that Mr. Henson doesn't have any life insurance policy
25 other than a term policy.
38
1 Okay. Well, we found out that that was false, that he
2 has a whole life policy. That whole life policy had a cash
3 surrender value.
4 THE COURT: Of?
5 MR. ROSEN: It was approximately $7200 at the time.
6 It was not disclosed. And we had to ferret this out.
7 Nowhere in his - it's not just that he didn't put it
8 in his bankruptcy filing, it said he swore under oath he didn't
9 have any. And he has his counsel do his work for him and have
10 his counsel represent to us in three exhibits that there's no
11 such policy.
12 The next major riff on his - and I'm not going to go
13 over all of them because we have briefed you already on the
14 deficiencies in his filings, but the next one is stock. He
15 lists zero stock as - no stock as an asset. What do we find out
16 when we finally do get his records? We go through the records
17 and we see a check. He - I forget, some corporation, I don't
18 know what the name of it was, maybe Xanadu or something like
19 that. We ask him, "What is this?"
20 "Well, we bought stock in the company."
21 This was a private company that he was involved in. I
22 don't - I think it was only about $5,000, but the key is this
23 was within, I think, three months or four months. It was $7500,
24 I'm reminded. Within four months before he filed that
25 bankruptcy petition.
39
1 Now I would understand that perhaps over a period of
2 time he might say that, 'Well, I paid $7500 for the stock and it
3 went the way of the dot-coms and after a period of time it
4 became worthless,' but there isn't even a disclosure of it. And
5 he has no evidence that he was able to present that the stock
6 was worth was as of the time of the petition. So we have
7 another omission, a substantial omission from his schedules.
8 The next is the artwork. How do we find out about
9 artwork? Nothing - none of which is listed in his bankruptcy
10 schedule. We find out about it through an examination of - of
11 his wife. We find out about it from a home - home owner's
12 insurance policy which insures - which is in the name of Mr.
13 Henson and his wife which insures artwork.
14 THE COURT: For how much?
15 MR. ROSEN: What's the amount of the policy? I mean
16 what's the valuation?
17 I have it here. If you'll just give me a second I'll
18 tell you how much it is. It's in your brief.
19 Nine thousand two hundred and fifty dollars as of
20 1995. What was produced was an insurance policy that covered
21 1995, a home owner's with an art endors- - art insurance
22 endorsement.
23 So, again, I mean even apart from the fact that there
24 is no - that we don't know what the enhancement of any, and the
25 value was as of the time of the petition, the fact is this asset
40
1 is not even disclosed in his petition.
2 Okay. We go on. We find, we understand I guess, when
3 we get to the other side of it, the expenses, these numbers are
4 crazy, and Mr. Henson concedes when we ask him in deposition or
5 - I call it deposition. I know I'm not using the right
6 terminology, maybe 2004 exam, but I deal in depositions. To me
7 it's the same, although I know it's not to the Court.
8 We ask him about his expenses, and his testimony is
9 wild-ass guesses. He didn't sit down and go over records in
10 dealing with listing out his expenses. He took the short cut.
11 He said, "I'll just list my wild-ass guesses."
12 Now let's look at the rest of his bankruptcy petition.
13 What happens then? He intentionally omits any disclosure of
14 other debts. He had credit card debts that were in the ordinary
15 course. They weren't in default, but he was carrying credit
16 card balances. He didn't even disclose this in bankruptcy
17 petition.
18 THE COURT: But he had been paying them off every
19 month?
20 MR. ROSEN: Yes. He was current in the sense that
21 whatever the minimum amount - he was paying at least the minimum
22 amount each month, so he wasn't in default -
23 THE COURT: He wasn't paying the full amount each
24 amount?
25 MR. ROSEN: Correct. He was paying a portion. And he
41
1 explained, I think, and Your Honor I think heard this before,
2 that what he does is this is - use this for business and he has
3 to advance funds. Then he gets paid by his clients, or whatever
4 it is, so he can make up the - he's got to carry the float, if
5 you will, of paying the credit card company for expenditures
6 made in his business before he get reimbursed by his client.
7 He never disclosed any of that. There isn't a single
8 credit card debt disclosed in his - in his application.
9 THE COURT: How many were there?
10 MR. ROSEN: Thousands.
11 THE COURT: No. How many - he doesn't have thousands
12 of credit cards. How many credit cards are we talking about?
13 MR. ROSEN: In his own name or ones - including the
14 ones in his wife's name?
15 THE COURT: His own name.
16 MR. ROSEN: Or the ones in joint name? There are
17 three kinds -
18 THE COURT: Well, I guess but not his wife only.
19 MR. ROSEN: I believe there were four.
20 THE COURT: Four credit cards?
21 MR. ROSEN: Yeah. There were some in his name. There
22 were, I believe, one or two in joint name, and the rest were -
23 and then there were additional ones that were just in his wife's
24 name. None of this is disclosed in this petition.
25 Next - next comes the discovery. And I really ought
42
1 not have to spend a lot on this issue because Your Honor was
2 painfully aware of it. The work that we had to go through to
3 get discovery, Mr. Henson's obstruction of it. The number - the
4 Docket speaks volumes as to the number of motions, which I've -
5 unless I'm miss - I misrecollect, every single one was granted
6 by this Court. The number of motions we had to make to compel
7 discovery because Mr. Henson just stonewalled it.
8 Next we come to his admission in deposition:
9 Destruction of documents. It was a big joke. "Well, we had
10 this fireplace." Where's the underlying records for - it came
11 up in the context of a tax return. "Where are the underlying
12 records to support these expenditures?"
13 And it was a big joke. "Ah, we had a fireplace. It
14 was - you know, we needed some warmth. We threw in the
15 fireplace." That's his testimony.
16 THE COURT: This was after the subpoena was served, he
17 threw documents, or before?
18 MR. ROSEN: I don't know. I -
19 THE COURT: I'd like to know that -
20 MR. ROSEN: Yeah.
21 THE COURT: - at least at some point in your
22 presentation.
23 MR. ROSEN: Correct. I don't know what the answer is,
24 but I do know that the documents - we were dealing with a
25 current tax return. I think it was for 1997. Under the law
43
1 while Your Honor is addressing a spoilation issue, you know,
2 "Did you have notice when you threw it away"; under the law he's
3 required to keep it. The Internal Revenue Code requires -
4 requires that you retain copies of all documents which support
5 any claim for three years after filing date.
6 THE COURT: Yeah. With all due respect, the inference
7 vis-a-vis good faith or bad faith may - may be the distinction
8 between whether it was before or after the subpoena might be
9 relevant.
10 MR. ROSEN: Well, I - I don't -
11 THE COURT: So I'd like to know. I want to ask - I
12 don't want to argue. I just want to know if you know.
13 MR. ROSEN: I was going to say I don't disagree with
14 you. And I will - we will get that information as to when the
15 destruction occurred, according to Mr. Henson.
16 Next we have the remarkable proposition of Mr. Henson
17 saying to us on the record in the 2004 exam a demand for
18 extortion: "You want me to leave you alone. Give me $5
19 million." That's there in black and white. It's part of our
20 exhibits.
21 Next is we have Chapter 13 plan proposal, which
22 proposes to pay us nothing. And again I'm dealing in a context
23 of a secured, unsecured creditor, because we weren't at that
24 point talking about selling the house. We're talking about the
25 plan as originally proposed.
44
1 The plan on its face proposes four percent payment to
2 us gross, but it's a payment to the estate and it is subject to
3 the priority of the other claims of administration. The very
4 first fee application Your Honor approved for my brother at the
5 other table exceeded and wiped out the entirety. So as a - you
6 know one can say, 'Well, the plan provided a four-percent
7 payment to an unsecured creditor,' but that's nonsense. That's
8 form over substance. The plan provided zero.
9 The very first order I believe Your Honor entered, and
10 I don't think we even opposed it, for Mr. Zlotoff's fees, was
11 more than the $9,000 aggregate payments proposed under the plan.
12 The original plan that Mr. Henson filed was something like $75 a
13 month. And then there was another one. But the one that is -
14 was before you that he ultimately filed with Mr. Zlotoff's
15 assistance was $150 a month for 60 months. That's $9,000.
16 If he were not paying Mr. Zlotoff out of that money,
17 if he had made separate arrangements to pay Mr. Zlotoff on his
18 credit card, as he did with other people who he didn't put on
19 his bankruptcy petition, -
20 THE COURT: Yeah. Ms. Seid will tell you he can't do
21 that.
22 MR. ROSEN: He did it.
23 THE COURT: Paid Mr. Zlotoff separately from -
24 MR. ROSEN: No, no. He paid other attorneys
25 separately, oh, yeah.
45
1 THE COURT: During the bankruptcy?
2 MR. ROSEN: During the bankruptcy. Oh, sure. Put it
3 on his credit card.
4 That's how he paid his - Mr. Harr, a criminal attorney
5 who represented him in California, -
6 THE COURT: I see.
7 MR. ROSEN: - in Riverside County. Okay.
8 THE COURT: But he didn't pay Mr. Zlotoff that way?
9 MR. ROSEN: No, no, no. I don't suggest he did.
10 But the point I was making is knowing that he cannot
11 make a payment to Mr. Zlotoff while in bankruptcy other than
12 through the process of Mr. Zlotoff's application to the Court
13 for approval of his fees, from the get-go, it was even before
14 Your Honor issued the first order approving, it was a
15 zero-payment plan. There was no way in the world that one could
16 ever contemplate that the course of administration would leave
17 one nickel left. That's what he proposed: To pay us zero.
18 And, by the way, to the extent it is relevant and we
19 believe it is, that is exacerbated by the fact that this is not
20 a claim which is dischargeable in a 7. This is a claim for
21 willful infringement that is statutory punitive damages under a
22 federal statute for malicious conduct. So that makes it even
23 worse, to propose a payment of zero to a creditor who has a
24 claim of nature, which is exhibited in a federal court judgment
25 makes it even more offensive.
46
1 Okay. We go through the additional elements of bad
2 faith. And, again, I don't mean to cast aspirations across the
3 aisle. Even right now, before this Court, the debtor has put
4 in, and just - and put in also before Judge Whyte, the opinion
5 of Judge March, Bankruptcy Judge in Los Angeles, respecting the
6 dispute, the subpoenaed dispute, over the deposition of Henson's
7 daughter.
8 In both proceedings, both before this Court and before
9 Judge Whyte, we argued that is sanctionable conduct, to put in a
10 decision of a Bankruptcy Judge - of any judge - that was
11 reversed and you know it was reversed. We told you it was
12 reversed.
13 If Your Honor has not yet seen - I won't hand it up,
14 but if Your Honor has not yet seen Judge Whyte's decision of
15 February - excuse me - of September - what's the date on that?
16 (Creditor's counsel confer off record.)
17 MR. ROSEN: - September 24th on the motion for Mrs.
18 Kobrin to intervene and to withdraw the reference, there is a
19 discussion of this very issue by Judge Whyte. I'm not going to
20 quote it. You can read it yourself. But that's part of overall
21 egregious conduct and bad faith.
22 The final element - and I'm speaking only in broad
23 brushes, Your Honor, obviously. This is a highlight reel. The
24 final element is - oh, and what went with that is the
25 representation of Judge Whyte's order, an initial order on
47
1 attorney's fees, which everybody knew was reversed. And here
2 again you put in an order of a district court judge and you
3 don't disclose that the Ninth Circuit has reversed it. And I
4 just - you know, I won't say anything about my personal views on
5 - on that, but that certainly is part of it.
6 Before I get to the exhibits themselves, my last
7 comment, again this is a highlight reel, and the exhibits in our
8 briefs address some more issues, but I've given you what I think
9 are the highlights, if you will, as to what makes up the bad
10 faith claim for dismissal under - under the statute.
11 I want to just identify for you, Your Honor, what we
12 view is the legal framework in which this motion comes before
13 you. And I should say with all due respect, we are proceeding
14 to this trial under a reservation of rights obviously. We're
15 not waiving our appellate rights -
16 THE COURT: Well, nobody waives their appellate rights
17 when they go to a trial.
18 MR. ROSEN: I understand that.
19 THE COURT: Why would you tell a judge that?
20 MR. ROSEN: No, no. I just say I want the record to
21 be clear that -
22 THE COURT: The record is always clear. Mr. Rosen, -
23 MR. ROSEN: - that, you know, -
24 THE COURT: - you and I are experienced. We graduated
25 from law school at about the same time. And you don't need to
48
1 say that.
2 MR. ROSEN: Well, I don't know the rules in
3 bankruptcy. And I know the rules in bankruptcy when you appeal
4 a bankruptcy order are entirely different than the rules I'm
5 familiar with under 1291 and 1292, when you appeal from a
6 district court to a circuit court of appeals.
7 THE COURT: You don't have to warn any judge that you
8 could appeal them, Mr. Rosen.
9 MR. ROSEN: I wasn't warning. I was just saying we're
10 preserving.
11 THE COURT: Sure, I know. But you've already appealed
12 me two or three times. I know you know how to appeal, Mr.
13 Rosen. It's a - it's a bullying tactic.
14 MR. ROSEN: Well, I'm sorry, Your Honor, if you view
15 that as a bullying tactic. My comment was simply to state for
16 the record that we preserve our position respecting the summary
17 judgment motion that we had filed and why - and our view that we
18 thought it should have been granted. But that's okay. If you
19 consider that bullying, I - you know, that's in your perception,
20 not mine. I don't bully judges.
21 In any event, getting back to the proposition, the
22 legal framework in which we - we address this issue is as
23 follows. And I'm going to give you only three cases. I'd give
24 you many cases, but I'll give you the top line.
25 THE COURT: What are these cases supposed to show?
49
1 MR. ROSEN: This is the legal framework in which this
2 issue is being decided, the 1307 issue.
3 Number one is the Jennifer Ho, H-o, case. It's a
4 decision of the BAP of the Ninth Circuit. It is reported at 274
5 BR 867. The case stands for the unremarkable proposition - and
6 it's one of many cases I could cite to you for this, but just to
7 give you, you know, one case - stands for the proposition that
8 bad faith in filing a Chapter 13 petition is, quote, cause under
9 1307, even though cause, bad faith is not listed as a specific
10 statutory definition under the cause definition in that.
11 Secondly, it is again unremarkable in the - in setting
12 forth that a Court in determining whether under 1307 whether a
13 Chapter 13 petition was filed in bad faith should consider the
14 following. And I don't believe the list is exclusive, but it's
15 certainly illustrative. Number one, whether the debtor
16 misrepresented facts in petition or plan; or unfairly
17 manipulated Bankruptcy Code -
18 THE COURT: Mr. Rosen, this should have been in a
19 brief. Why are you doing this now?
20 MR. ROSEN: It is in our brief.
21 THE COURT: So why are you doing - why are you
22 repeating this?
23 MR. ROSEN: Well, it's part of my opening statement as
24 to what - as to the framework in which we're looking at this
25 evidence. And if Your Honor will bear with me, it's very short.
50
1 Number two, the debtor's history of filings and
2 dismissals, which depending on your view this is the second
3 versus the revitalized first one.
4 Number three, whether the debtor's purpose in filing
5 for Chapter 13 was to defeat state court litigation. Here again
6 it's not - the case makes it clear that that in and of itself is
7 not bad faith. However, it's a factor to be considered. And
8 here it's exacerbated by the fact that it is not state court
9 litigation. It is litigation in this district in the federal
10 court.
11 And number three [sic], other egregious behavior is
12 present. And that's really a kind of a catch-all thing. And
13 the Ninth Circuit says, and it's said several times, that the
14 Court's task is to look at the totality of the circumstances.
15 The case also stands for the proposition, again not
16 unremarkable, that if the Court finds bad faith under 1307 it
17 can do one of two things. It can either convert the 13 to a 7
18 or it can dismiss. And it sets forth the standard: The best
19 interest - the Court is - is directed to exercise its discretion
20 - its discretion on the following ground: What is in the best
21 interests of the creditors and the estate. And I'm reading from
22 page 9 of that decision.
23 This is critical because it is not what's in the best
24 interests of the debtor. It's what's in the best interests of
25 the creditors and the estate as to whether it should be
51
1 dismissal or conversion. In fact, the option that is given to
2 the Court under 1307 is to be exercised in favor of the
3 creditors and the estate against the debtor. This is there to
4 protect the creditors and, in fact, in a case which later
5 displays the issue, where, for example, the creditors might be
6 better off with a conversion because they would have rights to
7 set aside preferences and transfers that they would not have
8 with the bankruptcy petition dismissed.
9 In any event, the proposition is the Court's
10 discretion is to be exercised under 1307 in favor of the
11 creditors.
12 We also have here, as I said earlier, the proposition
13 - the stipulation that there is only one creditor, and that's in
14 the stipulated pretrial order that we submitted.
15 The second of three cases I'm going to bring to your
16 attention is the Leavitt case. The Leavitt case is cited in our
17 brief. And again it has an explication of bad faith, et cetera,
18 and cause for dismissal under 1307. And I certainly commend
19 that to Your Honor because that is the Ninth Circuit itself.
20 And that's the case that the BAP cites to in the Ho decision.
21 The Ho decision, by the way, I brought to your
22 attention because it is February 13th of this year. It's a very
23 current decision.
24 And the last of the three cases I want to bring to
25 your attention, which I think states the obvious as well, is a
52
1 decision of - of Judge Klein in the Eastern District of
2 California in a case called In re Staff Investment Co. And that
3 is cited at 146 BR 256.
4 THE COURT: Is that in your brief?
5 MR. ROSEN: No, this one's not. We just found this
6 one.
7 THE COURT: Give me the number again then, the -
8 MR. ROSEN: 146 BR 256.
9 THE COURT: Date?
10 MR. ROSEN: January 5, 1993.
11 MR. ZLOTOFF: What's the name of the case?
12 MR. ROSEN: In re Staff Investment Co.
13 The reason this case is interesting because it is
14 similar to our case in the sense that there was really only one
15 creditor, and the question of what the Court should do under
16 1307, dismiss versus convert to a - to a 7, the case is the only
17 one in this district, in the - California that we have found,
18 many others - there are cases in other districts, but I know
19 Your Honor's preference is for cases either in the Ninth Circuit
20 or in the courts of California -
21 THE COURT: Sort of. For cases that are binding on
22 me, I'm concerned about the Ninth Circuit. For cases that are
23 just persuasive or not persuasive on their merits, -
24 MR. ROSEN: Yeah.
25 THE COURT: - then a bankruptcy judge here versus a
53
1 bankruptcy judge somewhere else is probably pretty equal.
2 MR. ROSEN: Okay. Well, in any event, this is a
3 bankruptcy Judge sitting in the Eastern District of California,
4 and he -
5 THE COURT: Judge Klein, -
6 MR. ROSEN: Right, Judge Klein.
7 THE COURT: - whom I know.
8 MR. ROSEN: And I know from seeing the decisions, I
9 believe Judge Klein sits with some frequency in the BAP panels
10 as well. I think I've seen decisions of his from the BAP
11 panels. He addresses this very issue that I've just made, and
12 that is the standard for dismissal versus conversion, the best
13 interests of creditors and the estate. And he has an
14 extraordinarily good analysis of confirming what we all know and
15 what the courts have said, in that the estate does not include
16 the debtor.
17 And this issue - in this analysis and his balancing of
18 interests, the debtor's interests are not part of this equation.
19 It's the estate and the creditors.
20 So I give that to you only because I think it perhaps
21 states the obvious and it states a proposition which is not
22 remarkable, but it is the only case within the bankruptcy courts
23 in California we're aware that does make that explicit finding.
24 With that, Your Honor, I'm going to turn to the
25 exhibit books. And I've just - in the front of each exhibit
54
1 book -
2 THE COURT: I'm sorry, what?
3 MR. ROSEN: I say in the front of each volume there is
4 an index -
5 MS. KOBRIN: He has - the Judge has a separate index.
6 MR. ROSEN: You also have a separate index for - that
7 has them all.
8 THE COURT: I'm not aware of that.
9 (Creditor's counsel confer off record.)
10 THE COURT: Where would that be, Ms. Kobrin?
11 MS. KOBRIN: You -
12 THE COURT: The separate one?
13 MS. KOBRIN: No. The separate one is the exhibit list
14 that we sent over that was in the format that the Court asked
15 for.
16 THE COURT: You would have that, not me.
17 MS. KOBRIN: There were two copies of that sent over.
18 THE COURT: No, my Deputy keeps that so she -
19 MS. KOBRIN: Yes.
20 THE COURT: - can keep track of the exhibits. I don't
21 have that.
22 MR. ROSEN: Do we have another copy to give to the
23 Judge?
24 THE COURT: Oh, yes, I got it.
25 Ms. Kobrin, we found it. It was in the pocket of the
55
1 first exhibit book.
2 MS. KOBRIN: Okay.
3 MR. ROSEN: And, Judge, let me - as we walk through
4 this, let me just indicate what we've done here today and
5 hopefully make your job easier.
6 THE COURT: Do you have the list, Mr. Zlotoff, so you
7 can follow along?
8 MR. ZLOTOFF: The exhibit list? I do.
9 THE COURT: Thank you.
10 MR. ROSEN: Let me just explain what we've done so
11 we'll assist the Court in understanding this.
12 We have a description and an exhibit number of all of
13 the exhibits that are in the volumes. I will as we go through
14 them to the extent that they are being offered only for one case
15 versus the other, I think most of them are an overlap, but I
16 will tell you that because Your Honor did ask to distinguish if
17 they relate just to the 13 as opposed -
18 THE COURT: It all relates to the 13.
19 MR. ROSEN: These all relate - most of these relate to
20 the motion to dismiss as opposed -
21 THE COURT: The 13?
22 MR. ROSEN: Yeah. I meant the confirmation of the 13.
23 What we've done in addition is as follows. In front
24 of each exhibit that is being offered for only limited purposes
25 we have put in a page. If you could turn, Your Honor, just as
56
1 an example to Exhibit 20 you'll see that -
2 THE COURT: Do you want me to look at the exhibit or
3 the list?
4 MR. ROSEN: I want you to look at the tab in the book
5 of Exhibit 20.
6 THE COURT: Not offered for the TOMA, which is the -
7 MR. ROSEN: Truth of the matter asserted.
8 THE COURT: - truth of the matter asserted, offered -
9 MR. ROSEN: So every -
10 THE COURT: - only - offered only to show that video
11 excerpts were identified and shown to jury.
12 MR. ROSEN: Yeah. Every place - and this occurs
13 frequently. Every place where there is any question about the
14 offering of the exhibit, whether it's for all purposes or just
15 for limited purposes, not for TOMA, whether it's offered as an
16 admission only by Mr. Henson, we've tried to do that so Your
17 Honor has - we don't have to walk through it orally, and Your
18 Honor has an understanding of the purposes for which it's
19 admitted.
20 This also - what we have not done redundantly is to
21 reiterate Your Honor's rulings in the in limine. For example,
22 the - we don't have to say in here that the bankruptcy petition
23 of Mr. Henson and his schedules are offered not for TOMA, Your
24 Honor's already ruled on that. But we have done this wherever
25 an exhibit requires an explanation.
57
1 THE COURT: But for the appellate court, if this goes
2 to an appellate court, it's important to me to make a decent
3 record. So you should articulate when you introduce the exhibit
4 what you're introducing it for. Or if I've already ruled on it,
5 we ought to identify those so they don't have to go back and try
6 to figure out what you're talking about if this ends up.
7 MR. ROSEN: This is part of the record on appeal.
8 That's why we put in the exhibit books that we filed.
9 THE COURT: I don't know that your statement, typed
10 statement here is part of the record on appeal unless -
11 MR. ROSEN: It is. Because if I - if I stood up and
12 did it orally, if instead of doing it an efficient way, by
13 giving you the documents and offering them, in another way that
14 a case is tried, I would stand up and say, 'Your Honor, I offer
15 Exhibit 20. I offer it just for the limited purpose of x.' And
16 you would hear any objection, et cetera. And you would say,
17 "Okay, received into evidence."
18 The statement on the transcript, which shows the
19 limitation of what the exhibit is offered, is clearly part of
20 the record on appeal. What we're doing is instead of my
21 standing here and saying that to you, we've made it part of the
22 exhibits themselves, which we have filed. So there will be a
23 record in the appeal court that - as to whether at they were
24 offered for.
25 And have you written that you're relying on a motion I
58
1 made at a particular hearing on a particular date in these
2 little typed statements?
3 MR. ROSEN: No.
4 THE COURT: Well, how are they going to know that?
5 MR. ROSEN: The - the decision you made is always part
6 of the record. You have a transcript. You've made rulings on
7 the in limine motions.
8 THE COURT: Yeah, but I don't think that that's
9 sufficient. If I - if you're relying on a ruling I made, I
10 would prefer to keep the record straight here. And if you're
11 relying for a particular exhibit on a ruling I made, I want you
12 to do it orally since it's not written here. Tell me when I
13 made the order and what - what the date was and on what motion.
14 MR. ROSEN: Okay. Okay. Exhibit Number 1 - I'll now
15 start -
16 THE COURT: Are we now going through the exhibits? I
17 should start with Exhibit 1?
18 MR. ROSEN: Yeah, I'm going to go through them now.
19 THE COURT: Okay. Well, you were taking me through
20 this exercise with -
21 MR. ROSEN: Right.
22 THE COURT: - the list, and we're finished with that.
23 MR. ROSEN: Exhibit 1 is a cease-and-desist letter
24 from Ms. Kobrin to Mr. Henson that is being offered to show the
25 - we have to think of a shorthand way for me to describe the -
59
1 what I said earlier is the overarching enterprise, the entire
2 malicious intent of Mr. Henson from 1996. So I don't want to
3 have to keep repeating -
4 THE COURT: I think the overarching -
5 MR. ROSEN: Enterprise of - of -
6 THE COURT: - enterprise is a pretty good way to -
7 MR. ROSEN: - malice against the church.
8 THE COURT: Pardon me?
9 MR. ROSEN: Of intention - of intention to harm the
10 Church of Scientology.
11 THE COURT: That's fine.
12 MR. ROSEN: Okay. So Exhibit 1 is under that
13 category. Exhibit 2 is under that category. Exhibit 3 is under
14 that category.
15 Exhibit 4 is under that category of bad faith. This
16 is the - the - relates to the activities of Mr. Henson preparing
17 a bankruptcy petition in December to - of 1997 to - to derail a
18 trial that was then set at that time before Judge Whyte.
19 Number 5 is the minutes of the hearing on the
20 injunction in which Mr. Henson was enjoined from physical
21 assault against Reverend Barton. Again just another piece of
22 the ongoing misconduct and greater overall scheme, if you will,
23 common denominator - denominator of Mr. Henson's conduct.
24 Number 6 is the motion to continue the trial dates.
25 Again I've indicated what that applies to.
60
1 Number 7 is the transcript of the proceedings before
2 Judge Whyte in February of 1998.
3 Number 8 is the - Mr. Henson's - 7 and 8 both relate
4 to Mr. Henson's attempt to delay the trial. He made one
5 application after another to delay the trial. And when Judge
6 Whyte would not hear it any longer, that was when he used the
7 Bankruptcy Court to delay the trial.
8 Exhibit 9 is the voluntary petition filed by Henson.
9 The petition in bankruptcy, and that is one is pursuant to Your
10 Honor's ruling in the in limine motions on September 11th. That
11 comes in only to show what he told the Court and doesn't come in
12 for TOMA.
13 Exhibit 10 is a posting by Mr. Henson of February 25.
14 Exhibit 11 is again bad faith, et cetera. Exhibit 11,
15 the order on RTC's motion to modify the preliminary injunction
16 that had been entered against Mr. Henson.
17 And the reason for that is because even after, as
18 shown in the exhibit - I'm not testifying to this - as shown in
19 the exhibit, the reason this was necessitated was because Mr.
20 Henson in Exhibit 10 threatened to commit contempt, threatened
21 to violate Judge Whyte's preliminary injunction. We were
22 required to get another order from Judge Whyte on that. And
23 that's Exhibit 11.
24 Exhibit 12 is the - is the ex-parte application for
25 additional relief against Mr. Henson. This is yet an additional
61
1 threat to violate - to commit contempt.
2 Exhibit 13 is the order originally entered in this
3 Court compelling Mr. Henson to attend a 2004 exam. And as to
4 that, by the way, the same issue of delay, delay that Mr. Henson
5 exhibited in connection with the copyright trial before Judge
6 Whyte, was also in ready attendance here before Your Honor.
7 MR. ZLOTOFF: Can I - can I butt in here right now?
8 Because I don't - it sounds like we're halfway dealing with
9 exhibits and halfway dealing with argument. And so I'm a little
10 confused as to whether I'm supposed to be saying - I don't know
11 what we're doing, to be honest with you. Are we - are we
12 going -
13 THE COURT: Well, he's just saying this exhibit is
14 introduced on this issue and this exhibit is introduced on that
15 issue. And he's trying to say what he thinks each exhibit shows
16 to identify the issue.
17 Now there is a little argument in it, but it also
18 clarifies which issue the exhibit goes to.
19 MR. ZLOTOFF: And then when he gets to the end of 280,
20 then I go back over from 1 and I say -
21 THE COURT: If you want to do that as part of your
22 argument - your closing argument, I have no objection to your
23 doing that.
24 MR. ZLOTOFF: Okay.
25 MR. ROSEN: Number 14, I believe then, is the - yet a
62
1 further attempt to delay the proceedings from the Bankruptcy
2 Court.
3 THE COURT: Is there a 15?
4 MR. ROSEN: Number 15 is omitted. Your Honor, there
5 are some - and, if you can believe it, we actually trimmed this
6 back from our original exhibit list.
7 THE COURT: Okay. Just tell me when it's - again,
8 it's for the purpose of the record. So if you go - if you go
9 from 14 to 16, you should just tell me or give me a list - maybe
10 on the exhibit list it's clear that they're omitted.
11 MR. ROSEN: Yes.
12 THE COURT: That's fine. That's enough.
13 MR. ROSEN: You should have - you should not have a 15
14 on your exhibit list.
15 THE COURT: No, I don't. Okay. That's fine.
16 MR. ROSEN: Exhibit 15, the bankruptcy schedules filed
17 by Mr. Henson. This is per with the limitation of your in
18 limine ruling on this 11th of September.
19 Exhibit 17 is the same thing, on the in limine.
20 Exhibit 18, we've given you the special verdict form
21 from the trial. Again the purpose is to show that the jury
22 found willful infringement. And that - and the totality of the
23 circumstances we believe is a factor under 1307, and bad faith.
24 Number 20 is a transcript of certain of the
25 proceedings at trial. 20 and 21. These constitute admissions
63
1 by Mr. Henson of things like his purpose, his malicious purpose
2 in infringing. He didn't infringe because he wanted to make
3 money. He didn't infringe because -
4 THE COURT: That's a little much, Mr. Rosen. It's his
5 purpose in infringing.
6 MR. ROSEN: Yeah, okay.
7 THE COURT: You don't need to go into an argument on
8 each one -
9 MR. ROSEN: Yeah. I'm sorry. And I apologize. I'm
10 trying to help Your Honor as much as I can so you understand
11 what the exhibits refer to.
12 21 includes the statement from - by Mr. Henson from
13 the witness stand in response to his own attorney's question,
14 "Now that this has happened, would you do it again, would you
15 infringe again?"
16 And his answer was, "Well, I wouldn't do it out in the
17 open" and, you know, kind of wear a mask the next time I stick
18 up the 7-Eleven is the way we - has kind of characterized it.
19 And -
20 THE COURT: Come on. Come on. This is - I don't want
21 any of this, -
22 MR. ROSEN: Yeah, I understand.
23 THE COURT: - Mr. Rosen. None.
24 MR. ROSEN: Okay.
25 THE COURT: Okay. So -
64
1 MR. ROSEN: Got you.
2 THE COURT: - hold yourself in.
3 MR. ROSEN: I will try. It's -
4 THE COURT: And just -
5 MR. ROSEN: - just I get so - I get -
6 THE COURT: I'm sure you get very emotional, Mr.
7 Rosen, but be like a lawyer and hold yourself in and just tell
8 me the issue it goes to.
9 MR. ROSEN: Okay.
10 THE COURT: Don't describe the exhibit.
11 MR. ROSEN: Okay. Exhibit 22 is a judgment - first
12 judgment of contempt against Mr. Henson. And that goes to his
13 ongoing unitary plan of injuring - of attacking Scientology.
14 20- -
15 THE COURT: Okay. Let's just - let's call that
16 "unitary plan."
17 MR. ROSEN: That's what I asked you before.
18 THE COURT: No. Let's give it one word.
19 MR. ROSEN: Come up with a short -
20 THE COURT: Right. Let's give it one word.
21 MR. ROSEN: Okay. "Unitary plan."
22 THE COURT: Okay, fine.
23 MR. ROSEN: Two words. Okay, that's fine.
24 25 is the - self-explanatory. It's the Court of
25 Appeals affirmance.
65
1 27, these are the amendments to the schedules in
2 bankruptcy. Again this is important in the in limine. Not
3 offered for TOMA. Just offered to show this is what he told the
4 Court.
5 28 is the same thing. That's his Chapter 13 plan.
6 The same limitation.
7 29 is correspondence to Mr. Zlotoff. Let me just look
8 at this one for a moment, make sure I get this right.
9 This relates to our demands for discovery and the fact
10 that discovery was not forthcoming from Mr. Henson. The - the
11 letters are being offered for the purpose - and there's a whole
12 series of them - for the purpose of demonstrating that we had -
13 we had made demands, we had made remainders.
14 THE COURT: So they're offered for the truth? That's
15 problematic -
16 MR. ROSEN: Offered for the truth that we had made -
17 no. They're offered for the statement that here is our
18 demanding that you produce a certain document. The truth is -
19 and we asked for it before and you haven't given it to us.
20 THE COURT: But that's offering this hearsay document
21 for the truth.
22 MR. ROSEN: It's not hearsay.
23 THE COURT: Why isn't it hearsay?
24 MR. ROSEN: Ms. Seid is available to testify.
25 THE COURT: So it's an offer of proof?
66
1 MR. ROSEN: Well, it's also part of the record on -
2 THE COURT: Either she testifies or it's hearsay. Why
3 not?
4 MR. ROSEN: Okay. I - you know something, on
5 reflection I think Your Honor is right. I'll offer it not for
6 truth, but to show that we made demands for discovery.
7 THE COURT: Okay. Now which ones are these?
8 MR. ROSEN: There were going to be several of them.
9 The first one we came to was number 29.
10 THE COURT: Okay. Mr. Zlotoff, if you have agreed to
11 all of these, then I'm not going to say anything, so -
12 MR. ZLOTOFF: I understand.
13 THE COURT: I - I - hearsay can be admissible if
14 there's no objection.
15 MR. ZLOTOFF: I understand.
16 THE COURT: So if you don't object, I'll -
17 MR. ZLOTOFF: I'm biding my time because - that's why
18 I butted in earlier, so I'm going to let -
19 THE COURT: Why are you biding your time? You have to
20 make objections to any exhibits that you think are
21 objectionable. You can make your comments later, but then they
22 either come in or they don't come in.
23 MR. ZLOTOFF: I understand. He hasn't offered
24 anything into evidence yet -
25 MR. ROSEN: I'm going to offer them all when I'm done
67
1 with them, so you can hear -
2 THE COURT: Oh, I see. I misunderstood.
3 MR. ROSEN: - the - the objections all at once. I
4 think it makes for a more orderly presentation to the Court.
5 THE COURT: I see. I understand now. That's the
6 context in which this is -
7 MR. ROSEN: Okay. 30 -
8 THE COURT: - all occurring.
9 MR. ROSEN: Okay. 30 and 31 are - relate to the
10 discovery misconduct of Mr. Henson.
11 THE COURT: And not to the truth. 30 and 31 said not
12 offered for TOMA.
13 MR. ROSEN: Right.
14 32 is a transcript of the proceedings before the
15 Court, again to show that the admissions, that the discovery has
16 not been made, as well as Your Honor's rulings.
17 33 is an order of the Court compelling discovery.
18 34 is another order of the Court.
19 35 is a response by Mr. Henson to an - to the Court's
20 order on discovery, being offered to show again that - not for
21 the truth, but to show that he hasn't produced, hasn't complied
22 with the order, didn't produce documents.
23 36, the jury instruction in the copyright infringement
24 case. Before we had the jury verdict. This is the jury
25 instruction. Just so Your Honor understands, what the jury had
68
1 to find under the law, to find willful infringement.
2 37, this is a statement not being offered for the
3 truth again, but a statement by the debtor's wife respecting
4 documents that she had produced. Again more discovery
5 obstruction.
6 39 is a letter, not offered for the truth, to
7 demonstrate that further discovery demands - I should just
8 shortcut this and say discovery obstruction, or whatever,
9 because a lot of these refer to the same thing. That's true
10 with respect to 40, 41, 42, 43, 44, 46, 47, 48, 53, 54, 55, 56,
11 57, 58, 59.
12 60 is the transcript of the proceeding that occurred
13 before Your Honor on September 1, 1999.
14 61 is an order on a motion to compel, an order of the
15 Court.
16 62, again discovery. 65, discovery. 65, discovery.
17 66, discovery. 67, response to an order. Again it's a
18 discovery issue.
19 68, this is a separate category. 68 and 69, these are
20 applications by the debtor and his wife to the IRS for
21 extensions of time beyond the automatic extension to August for
22 additional extensions of time to file their tax returns on the
23 grounds that they don't want Scientology to find out about their
24 expenses and what's in their tax returns.
25 I would respectfully submit to you that the other
69
1 thing they didn't want the Scientology or the Court to find out
2 about in those tax returns -
3 THE COURT: This is going into argument or this is in
4 the exhibit? You are describing exhibits and telling me what
5 category they go into, -
6 MR. ROSEN: Okay.
7 THE COURT: - not giving me argument.
8 MR. ROSEN: Okay, fine. I thought I was giving you
9 argument as part of my opening statement, but -
10 THE COURT: Yes, and I took that as opening statement.
11 MR. ROSEN: This is part of it. This is my opening
12 statement.
13 THE COURT: No - well, no, I don't think so. This is
14 describing the exhibits to be admitted.
15 MR. ROSEN: Okay.
16 THE COURT: You - you - if you want to do an opening
17 statement and talk more about the opening statement, that's
18 fine.
19 MR. ROSEN: Okay.
20 THE COURT: But that would be improper use of an
21 opening statement.
22 MR. ROSEN: Okay. That takes us through 69 and that
23 brings us to Volume II. The first exhibit in Volume II is 76.
24 70- - excuse me - 72. I apologize.
25 72 is discovery. 73 is discovery. 75, 76, 77, -
70
1 THE COURT: I'm sorry. Yeah, I'm with you now.
2 MR. ROSEN: Yeah. I should say that the - some of
3 these may also contain admissions by Mr. Henson. Like, for
4 example, his letter, 76 is a letter to Mr. Hogan, but - you
5 know, which obviously comes in as an admission.
6 By saying it's discovery I don't mean to exclude an
7 admission by Mr. Henson that may be in addition to it. Any
8 doc- -
9 THE COURT: Confused -
10 MR. ROSEN: Huh?
11 THE COURT: How am I supposed to deal with this? If
12 you're - if you have something here that says not offered for
13 TOMA, and you intended as an admission, then put that in your
14 closing argument, so that - unless it says for -
15 MR. ROSEN: It says it in front of the exhibit.
16 THE COURT: For 76?
17 MR. ROSEN: Yeah.
18 THE COURT: I'm sorry. I didn't see that. Are we
19 talking about -
20 MR. ROSEN: 76.
21 THE COURT: Where it says, "Offered only to show
22 Henson's intentional underemployment."
23 MR. ROSEN: Right.
24 THE COURT: Okay. It doesn't say "admission." I
25 understand what you're saying at this point regarding this
71
1 exhibit.
2 MR. ROSEN: Well, anything - by definition under 801
3 anything Mr. Henson says is an admission.
4 Okay. 78, the transcript of the proceedings before
5 this Court.
6 80, 81, 82, 83 are all Henson postings which are
7 offered to show misconduct, bad faith, destruction of documents.
8 They're all marked on here in the front of each one as to the
9 particular purpose. None of them are offered for TOMA. They're
10 offered to show Mr. Henson's admissions with respect to certain
11 limited areas, as I've just indicated.
12 84 is Mr. Henson's r‚sum‚. This I think really
13 relates to the motion to confirm the plan, not to the bad faith;
14 because this goes to the issue of whether - primarily, whether
15 he was underemployed, what he was - the plan represents what he
16 was capable of earning.
17 86 is a declaration by Mr. Henson offered only to show
18 - this is only discovery.
19 87 is the - Mr. Henson's - is the log of Mr. Henson's
20 pickets of the church, which again goes to the fact that he's
21 spending all this time picketing. I think it probably goes more
22 to the motion to confirm the 13 plan, but it could have some
23 significance on the bad faith as well. Probably does, actually.
24 Okay. 89. 89 - 89 relates to the artwork that I told
25 you about and the amount that they - Mr. Henson paid for framing
72
1 of the - of the lithographs. It's about $1600 I think. This is
2 separate and apart from the value of the documents themselves -
3 excuse me - the value - value of the artwork itself, which is a
4 separate exhibit.
5 90 and 91 are the two appraisals that Your Honor's
6 already aware of. They've been stipulated in. The 410,- as of
7 the date of the petition and the 608,- as of July of 2000, of
8 the Henson home.
9 92 is Mr. Henson's amended Chapter 13 plan. Again
10 this is per your - part of your in limine ruling of September
11 11th, being offered not for TOMA.
12 93, posting by Mr. Henson. Offered to show
13 misconduct. These are - 94 goes as well on the misconduct.
14 95 is document production by Henson. This goes to
15 discovery misconduct.
16 96 - 96, I'm sorry, is a posting by Mr. Henson in
17 March of 1998. And this is an admission where he has picketing
18 activities.
19 97, a transcript of proceedings before this Court.
20 98 is a - Mr. Henson's telephone statement - telephone
21 bill of September 19th, 1999. This is a category we haven't
22 spoken about before, and I should address this.
23 Mr. Henson had in his schedule or in his plan a
24 certain allocation of projected expenses for telephone charges.
25 This is $534 for one month, by an order of magnitude greater
73
1 than what he had projected. It shows, A, that the - that the
2 expenses that were listed in the plan are - were way off.
3 It also goes to an issue of - I think of bad faith and
4 under Chapter 13 confirmation as follows. The bulk of this
5 bill, and you'll see it from - later on, when we get to the
6 depositions. The bulk of this is long-distance telephone calls
7 having nothing to do with his business.
8 If he wants to go to Florida and picket a Church of
9 Scientology, if he wants to go to Los Angeles and do that, and
10 if he wants to make telephone calls in connection -
11 THE COURT: This is argument.
12 MR. ZLOTOFF: Your Honor, you know, -
13 MR. ROSEN: It's argument, okay.
14 THE COURT: I don't want any argument.
15 MR. ZLOTOFF: You know, from a little - from a little
16 Pacific Telephone bill, it's amazing what he can get out of it.
17 I - I don't see any of that on there.
18 THE COURT: Right. It's - I'm going to - look, I want
19 to tell you, Mr. Rosen. If you do it more, I'm going to
20 sanction you. I want you not to make argument during this
21 portion of the evidence presentation.
22 MR. ROSEN: But this is part of my opening statement.
23 THE COURT: I told you it is inappropriate and I don't
24 want you to do it.
25 MR. ROSEN: Okay.
74
1 THE COURT: Your opening statement ended. And if you
2 want - if you want to leave and take a five-minute break, we'll
3 take a five-minute break. This is presentation of evidence. If
4 you want to make an opening statement, then it's not going to -
5 it's not going to be describing each of the exhibits and then
6 turn around and say, "I want to admit them." That's - we're
7 separating it out.
8 MR. ROSEN: What was the next one? We're up to 98.
9 99 is an order of Judge Whyte in the copyright case.
10 100 is an order of the Ninth Circuit.
11 104 is the deed of trust or mortgage on the Henson
12 property.
13 107 is a posting from Mr. Henson. It's offered simply
14 to show that he threatened to violate the injunction.
15 109, an order of Judge Whyte, which is
16 self-explanatory from the order.
17 110, an order from Judge Whyte granting attorney's
18 fees in connection with the - the copyright case, I believe.
19 Let me just check that to make sure. Yes, these are the
20 attorney's fees granted in the copyright case.
21 THE COURT: Excuse me, Mr. Rosen. I just realized
22 something. To make perfectly clear that opening statements are
23 over, I could have allowed you to make your opening statement
24 right after his opening statement, but we didn't do that. So
25 there's this - that's the way it's proceeded.
75
1 MR. ZLOTOFF: I was aware of that.
2 THE COURT: Yeah, well, you didn't say anything.
3 MR. ZLOTOFF: I'm content to postpone my opening
4 statement till - till later. At this point I don't think it
5 would serve any purpose for me to -
6 THE COURT: Okay.
7 MR. ROSEN: 111 are the findings and conclusions of
8 Judge Whyte in the contempt proceeding.
9 112 and 113 are postings. Unitary plan, I think is
10 the buzzword.
11 114 is an order of Judge Ware, I believe it is,
12 dismissing the case against the - the IRS. I think it's Judge
13 Ware. Yeah.
14 Okay. 115 -
15 THE COURT: It's -
16 MR. ROSEN: - is a decision of the Ninth Circuit.
17 THE COURT: Wait a second. 1- -
18 MR. ROSEN: 115.
19 THE COURT: 114 is granting the motion of the IRS,
20 right?
21 MR. ROSEN: Yeah. It's Judge Ware's decision
22 dismissing Henson's suit against the IRS.
23 THE COURT: Yes, okay. Thank you.
24 MR. ROSEN: And the order itself - if Your Honor's not
25 aware of it, the order itself tells you what the relevance is.
76
1 It's, quote, unitary plan.
2 115 is the Ninth Circuit order of affirmance in the
3 copyright case, one of them.
4 116 is a posting by Mr. Henson. Unitary plan.
5 121 is a posting - give me a second, Your Honor,
6 please.
7 (Creditor's counsel confer off record.)
8 MR. ROSEN: I have to explain this. 121 is the
9 document which is referred to on the tape we're going to show of
10 the deposition. It's identified in the videotape of the
11 deposition that Mr. Henson is authenticating and reading from in
12 it. So since the document's not on camera, this is the one that
13 - this is the document that goes with it.
14 THE COURT: 121 or 122?
15 MR. ROSEN: 121.
16 THE COURT: Thank you.
17 MR. ROSEN: 122 is a proceeding before this Court of
18 September 13th, 2000 - a transcript, rather.
19 124 is the posting by Mr. - is a posting by Mr.
20 Henson. Unitary plan.
21 125 - I'm not sure that we really have to make this an
22 exhibit, but for the convenience of the Court we did. We had
23 separately submitted the model plans of other districts on the
24 issue of valuation date. And we made them part of the record
25 here in the exhibit. I think that they're a matter of public
77
1 record, anyway, but this was just for convenience to make them
2 an exhibit, to collect them in one place.
3 126, let me just - this is the - this goes with it.
4 This is the email showing the - that relates to these plans.
5 THE COURT: I didn't hear what you said. What did you
6 just -
7 MR. ROSEN: Huh?
8 THE COURT: I missed what you said.
9 MR. ROSEN: 126 is the - is the email from EZ Filing
10 that relates to these plans.
11 THE COURT: Okay.
12 MR. ROSEN: So Exhibit 125, -
13 THE COURT: Thank you.
14 MR. ROSEN: - the model plans of other districts.
15 127 is the objection we filed originally, preliminary
16 objection to confirmation back in '98.
17 128 is an order of this Court which speaks for itself.
18 129 is the docket sheet from the criminal proceeding.
19 People of the State of California against Keith Henson. That is
20 the court docket sheet.
21 The next one - that's unitary plan, to use the
22 shorthand.
23 133 -
24 THE COURT: You're in another volume, and I need a
25 minute.
78
1 MR. ROSEN: Say again?
2 THE COURT: You're in another volume. I need a
3 minute.
4 MR. ROSEN: Yup, we're up to Volume III. Correct.
5 THE COURT: I'm ready.
6 (Creditor's counsel confer off record.)
7 MR. ROSEN: Oh, I'm sorry. I am corrected in
8 something. The Exhibit 110 was supposed to be removed from
9 this, so I withdraw the exhibit. It was the original order by
10 Judge Whyte on the fees, which was then reversed and substituted
11 with another one. So -
12 (The Court confers with the Clerk.)
13 MR. ROSEN: - I misspoke and I - it should have been -
14 it should not have been included in the exhibits, Your Honor. I
15 apologize.
16 THE COURT: 110 is withdrawn.
17 MR. ROSEN: Okay. 133 and 134, these go together.
18 133 is a posting by somebody, a stranger. It's only there to
19 show that it was posted, not for TOMA, because 134 is a response
20 to it. So if I give you 134 without 133, it makes no sense.
21 135, posting by Henson. Again general category of
22 unitary plan.
23 140, all the way down from 140 through 159, that's all
24 the same category of Mr. Henson's misconduct, unitary plan.
25 160, this is the appraisal of the etching for
79
1 insurance that Your Honor asked me about before, how much was
2 it. And this is 1985. This is for insurance purposes.
3 164, '65, '66, '67, more postings by Henson. Unitary
4 plan, misconduct, attacking the Scientology, et cetera.
5 168 is under the same category. It's an order of the
6 Court in the copyright case on respecting a protective order on
7 a deposition.
8 171 is the errata sheet that Mr. Henson purported to
9 make with respect to the transcript of this February 18th 2004
10 examination. Let me just check that a second, if I could.
11 This is not offered for the truth nor is it offered
12 for an admission. It's offered solely for the purpose of
13 showing under the category of bad faith that Mr. Henson
14 attempted to change his testimony from yes to no, or whatever it
15 may be.
16 173 is the final judgment in the copyright case.
17 174 is Mr. Henson's application -
18 THE COURT: Wait.
19 MR. ROSEN: I'm sorry?
20 THE COURT: Okay. That's fine. Go ahead.
21 MR. ROSEN: '73 is the final -
22 THE COURT: I was - I was missing something for a
23 moment. I thought I was missing an exhibit, but I wasn't.
24 MR. ROSEN: Okay. '73 - 173 is the final judgment in
25 the copyright case.
80
1 174 is Mr. Henson's application to proceed informa
2 pauperis. That has an admission in it as to his income. And I
3 believe - well, I'm just going to say that. I - I won't argue
4 from it.
5 177 is - this is the transfer of the Whole Life policy
6 that Mr. Henson owned. The one that we talked about before that
7 has a cash surrender value.
8 178 relates to the same thing. It's his ability -
9 shows his ability to get the policy back after signing it for
10 the payment of $25.
11 179 is a declaration of Mr. Henson in connection with
12 the dispute over the deposition of his daughter. It is only
13 offered to show - not for TOMA. It's only offered to show the
14 representations Mr. Henson made in that respecting his expenses
15 as compared to those that are in his - in his bankruptcy filings
16 with this Court.
17 180 is a history of the loan statement from the
18 mortgagee, World Savings for 1998, which shows, again as I
19 mentioned earlier in my opening, some amount of the original
20 mortgage as paid down as of the date of the petition.
21 182 is a schedule of personal property endorsement on
22 the home owner's policy. And this is the one I believe I
23 referred to earlier that has the identification of the artwork
24 in it.
25 183 is the charging documentation in the criminal
81
1 proceeding against Mr. Henson.
2 184 is a response - okay. Well, it's a response to
3 summary judgment - a summary judgment motion by RTC in the
4 copyright case. It's being offered to show - well, excuse me -
5 unitary plan.
6 185 is - this is an exhibit which we've just added.
7 We added a couple of exhibits yesterday and gave Mr. Zlotoff not
8 only the copies but we gave them the letter identifying what
9 they were. You have two stipulated appraisals, for the petition
10 date and June of 2000. This is the appraisal - as of June of
11 2000 for the house.
12 This is a current appraisal which was attached to our
13 opposition papers on the motion to sell the house. We think it
14 - to the extent it's important or may be relevant to determine
15 what it is today. Like, for example, for conversion purposes,
16 what the value of the house is today, we would ask that this be
17 included. Obviously we couldn't include it before. It just -
18 it just came up. So I wanted to indicate to Your Honor that
19 as -
20 THE COURT: Now we're getting about the admissibility
21 of this. And Mr. Zlotoff hasn't told us what his position is.
22 MR. ROSEN: I understand. And I'm telling - I -
23 MR. ZLOTOFF: Well, I'll tell you - I'll tell you
24 right now I object because it's hearsay.
25 THE COURT: Okay, that's fine.
82
1 MR. ZLOTOFF: It's as simple as that.
2 MR. ROSEN: Okay.
3 THE COURT: But I don't need to deal with that now.
4 MR. ZLOTOFF: No.
5 THE COURT: I assume Mr. Zlotoff is going to review
6 the exhibit.
7 MR. ROSEN: I - I was d- -
8 THE COURT: I don't want to do them piecemeal.
9 MR. ROSEN: I was doing it for another reason. I
10 wanted to tell you what we had told Mr. Zlotoff in a letter
11 yesterday. I didn't want you to get the impression that we had
12 done something improper, because I'm identifying for you
13 exhibits that were not on our original exhibit list, -
14 THE COURT: That's perfectly appropriate.
15 MR. ROSEN: - but which have come up since then and
16 we've included.
17 THE COURT: It's perfectly appropriate to call them to
18 my attention.
19 MR. ROSEN: Okay. 186, portions of the transcript of
20 July 10th. That's another one that comes under that same
21 category, as is 187, 188, and 189. These all deal with the
22 sale-of-the-house issue and the motions that were before you.
23 189 - I'm sorry. That should have been to 188.
24 189 is a posting which relates to money being received
25 by Mr. Henson from some contributors.
83
1 191, these are the documents respecting the insurance
2 policy that we spoke about earlier, the Whole Life policy. And
3 it shows the - this is a document that answers Your Honor's
4 question as to what the cash surrender value was at the time of
5 the petition.
6 194 is a proof of claim we filed originally.
7 195, I've indicated that's your earlier - that's the
8 amended proof of claim which was both pre- and postpetition
9 debts.
10 196 is Your Honor's earlier order. That was referred
11 to before granting the trustee's motion to dismiss.
12 197 is an order - is the order of actual dismissal, I
13 guess, from Your Honor.
14 198 is the trustee's final report, and that was part
15 of that earlier proceeding that was terminated.
16 199 is the - the one Your Honor referred to earlier, I
17 guess, final decree of dismissal of May of 1998.
18 2000 is the closing - Exhibit 200, rather, is a
19 closing bankruptcy report on file in this Court.
20 2001 is a transcript of proceeding of July 13th -
21 THE COURT: Not 2001.
22 MR. ROSEN: 201. I'm getting bleary-eyed from reading
23 these. 2- - Exhibit 201 is a transcript of the proceedings of
24 July 13th. That, I believe, is the one we were referring to
25 earlier when Your Honor - yeah. That's the transcript that
84
1 we're referring to earlier that Your Honor explained what you
2 were doing in issuing the order to reinstate the bankruptcy.
3 2002 is Your Honor's order on that.
4 2003, trustee's objection - excuse me. Did I say
5 "2003"? 203. I'm sorry, Judge. I'm getting a little punch
6 drunk on these.
7 204 is the - I think that's a redundancy. It looks to
8 be the same -
9 THE COURT: Wait a second. I don't have a 204.
10 (Creditor's counsel confer off record.)
11 MR. ROSEN: Good. You shouldn't have it. It's
12 redundant of 194.
13 205, a transcript of the proceedings before this Court
14 on November 12th, '88 [sic]. I just want to check something on
15 that, Your Honor. Yeah, this goes - this is related to
16 discovery misconduct.
17 THE COURT: Really on the official - we need to mark
18 that there is no 204.
19 THE CLERK: I'll fix that.
20 THE COURT: Go ahead.
21 MR. ROSEN: 206 is the trustee's objection to the -
22 second objection, I think, to the confirm plan filed by the - by
23 the debtor.
24 207, a transcript of the proceedings before this Court
25 of July 6th.
85
1 And I should say, Your Honor, if I may just
2 parenthetically add something, as you can see, we have put in by
3 way of exhibits materials that are always before the Court.
4 It's the Court's own orders, it's the transcripts, et cetera.
5 We've done it solely to make it convenient so Your Honor doesn't
6 have to go through the files and say, "Where is that transcript
7 from this date."
8 THE COURT: I appreciate that. That's helpful.
9 MR. ROSEN: Okay. But I should also say that within
10 the context of transcripts, obviously they're not being offered
11 for the truth of - if - if one of our side or Mr. Zlotoff makes
12 a representation of fact that's not being offered. They're
13 being offered to show either admissions or to show Your Honor's
14 rulings or Your Honor's comments. And then of course all the
15 transcripts of the court hearings. 209 - or admissions by Mr.
16 Henson, I guess.
17 209 is the - is Your Honor's order lifting the
18 automatic stay to allow the copyright trial to go forward. 210
19 relates to that same thing.
20 And 211 is Mr. Henson's notice of voluntary withdrawal
21 of the petition in March of 1998.
22 We go to Volume IV. Volume IV -
23 THE COURT: Can you help him with that mic, so - you
24 keep hitting into it.
25 MR. ROSEN: Yeah. We go to Volume IV. Volume IV
86
1 contains three videotapes. We're going to - that we've
2 discussed earlier today. We're going to show one of them.
3 We're only going to offer one of them. We're going to offer 213
4 - is that the right one?
5 (Creditor's counsel confer off record.)
6 MR. ROSEN: To make it easy, and we will withdraw 212
7 and 214 as proposed exhibits. And we will show that immediately
8 after we move these in with Your Honor's permission. This
9 videotape runs 15 and a half minutes.
10 Exhibit 215 and 216, these are postings by Mr. Henson.
11 Unitary plan, discovery obstruction.