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RONALD S. GEORGE, P.A., Ronald George, #7721 attorney Weston Wade Sleater
389 N. Mink Creek Road
Pocatello, ID 83204
(208) 232-2515
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF UTAH

In re:
Chapter 7
BEDROCK MARKETING, LLC Bankruptcy No. 08-20308

Honorable
Gary E. Jubber, Chapter 7 Bankruptcy Trustee of Bedrock William T. Thurman
Marketing LLC, and Chapter 7 Bankruptcy Trustee of
Enlightened Management, LLC. Adversary No. 08-02077

v. MEMORANDUM IN
OPPOSITION TO
WESTON WADE SLEATER MOTION TO STRIKE

In opposition to plaintiff’ Motion to Strike Sleater respectfully submits the following:

1. THE STATEMENTS OF WHEELER ARE NOT HEARSAY.

Sleater stated in paragraph 2 of his declaration, “ Rex Wheeler was the manager of

and controlled Bedrock Marketing, LLC (Bedrock) and Enlightened Management, LLC.

(Enlightened)” This allegation has not been challenged by the trustee. In addition attached hereto

as Exhibit “A” are the bankruptcy petitions of Bedrock and Enlightened, in this case, setting out

that Rex Wheeler was the sole owner and manager of both.

Pursuant to Fed. R. Evid. 801(d)(2)(D), statements by a party opponent are not

hearsay. The pertinent portion of Fed. R. Evid. 801(d)(2)(D), states, “A statement is not hearsay

if . . . the statement is offered against a party and is . . . a statement by his agent or servant

concerning a matter within the scope of his agency or employment, made during the existence of
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the relationship. . . .” 801(d)(2)( C), allows a statement by a person authorized by the party to

make a statement concerning the subject. Rex Wheeler is the sole owner and manager of

Bedrock and Enlightened.

Significant involvement, either as advisor or other participant in a process leading

to a challenged decision, may suffice to establish agency for the purpose of rule 801; it is not

necessary that the declarant be the actual final decision maker. Equal Employment Opportunity

Commission v. Watergate at Landmark Condominium, 24 F.3d 635 (4th Cir. 1994) Of course

Rex Wheeler was the final decision maker and not just an advisor or participant.

It is obvious that all statements made to Sleater, as set out in Sleater’s

declaration, were made in his capacity as an agent of Bedrock and Enlightened at the time when

he owned and managed the entities. No one could occupy a stronger agency relationship with

Bedrock and Enlightened than their sole owner and manager. Nothing he did could be said to be

outside of his agency relationship when purporting to act on behalf of the entities and certainly

loaning out the funds of Bedrock and Enlightened are clearly within the scope of his agency and

made during the existence of the relationship and Wheeler was speaking with authority to make

the statements he did. The statements of Rex Wheeler are offered against Bedrock and

Enlightened to disprove the claims that Sleater is responsible for repayment of the funds and are

not hearsay.

2. THE PAROLE EVIDENCE RULE DOES NOT PRECLUDE THE

STATEMENTS.
A. THE NOTES ARE FACIALLY AMBIGUOUS.
Even if a contract is integrated parol evidence can be introduced to clarify a facial

ambiguity. Faulkner v. Farnsworth, Utah, 665 P.2d 1292 (1983) A contractual term or provision

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is ambiguous "if it is capable of more than one reasonable interpretation because of 'uncertain

meanings of terms, missing terms, or other facial deficiencies.'" WebBank v. Am. Gen. Annuity

Serv. Corp., 2002 UT 88, ¶ 20, 54 P.3d 1139 (quoting SME Indus., Inc. v. Thompson, Ventulett,

Stainback & Assocs., Inc., 2001 UT 54, ¶ 14, 28 P.3d 669). A contractual ambiguity can occur in

two different contexts: (1) facial ambiguity with regard to the language of the contract and (2)

ambiguity with regard to the intent of the contracting parties. Daines v. Vincent, 190 P.3d 1269,

2008 UT 51. The first context presents a question of law to be determined by the judge. Id.. The

second context presents a question of fact where, if the judge determines that the contract is

facially ambiguous, "parol evidence of the parties' intentions should be admitted." Id. Thus,

before permitting recourse to parol evidence, a court must make a determination of facial

ambiguity. Id.

The note is facially ambiguous because one cannot be both the maker and

guarantor of the same note. In his Reply Memorandum in Support of Plaintiff’s Motion for

Summary Judgment the trustee argues against the statement in Boise Cascade Corp. 655 P. 2d at

669, as being against the weight of authority. Boise Cascade Corp., supra, is in fact in accord

with the vast weight of authority. Material Partnerships, Inc. v. Ventura, 102 S.W.3d 252

(Tex.App. Dist.1 2003) held exactly as Boise Cascade Corp., supra, when the court stated, “If this

court adopted Lopez's construction of the September 25th letter, the agreement would be

meaningless. It simply makes no sense for Sacos to be both the account debtor and the "corporate

guarantor" because a guarantor is one who stands for the debt of another.” Other courts have

similarly held. Fehr Bros. v. Scheinman, 509 N.Y.S.2d 304; 121 A.D.2d 13. (a guarantee

agreement (is) whereby a third person undertakes to answer for the debt of another.); Kings

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County Sav. Bank v Fulton Sav. Bank, 268 App Div 452, 454.(A guarantee is distinguishable from

other forms of surety contracts in that it is a separate, independent contract between the guarantor

and the creditor-obligee and is collateral to the contractual obligation between the creditor-obligee

and the principal-obligor.)

In the case of James T. Bohart v. Universal Metals and Machinery, 523 S.W.2d

279, the court declared a contract ambiguous where the contention was made that there were

provisions showing the party to be both the maker and guarantor of the note. The court held that

the party could not be both the maker and guarantor of the note, and that the terms primary obligor

and guarantor are mutually exclusive, making the note Ambiguous. Sidney Michaels v. Chemical

Bank, 441 N.Y.S.2d 638; 110 Misc. 2d 74, citing Black’ Law Dictionary defined guarantee as an

obligation to answer for the debt of another, stating that it is a secondary obligation, contingent on

default by the primary obligor.

Since the notes purport to show Sleater as both the maker and guarantor of the

same note, and since it is not possible to be the maker and guarantor of the same note, there is a

facial ambiguity and parol evidence should be admitted to determine the intention of the parties to

the note.

B. PAROLE EVIDENCE CAN BE ADMITTED TO SHOW

LACK OF CONSIDERATION.
In Tangren Family Trust v. Tangren, 2008 UT 20, 182 P.3d 326, the court stated:

Where a contract by an explicit term purports to be integrated, we

will nevertheless allow extrinsic evidence in support of an argument that the
contract is not, in fact, valid for certain reasons that we have specified. We have
held that extrinsic evidence is appropriately considered, even in the face of a clear
integration clause, where the contract is alleged to be a forgery, a joke, a sham,

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lacking in consideration, or where a contract is voidable for fraud, duress,

mistake, or illegality.

The reason this is so is because by its very nature, lack of consideration, as a basis

for invalidation of a contract is not necessarily provable by reference to the contract itself. Id.

Finding of lack of consideration is not inconsistent with a finding that the contract is integrated

and therefore does not vary the meaning of the contract. Id. Other Utah cases have held that even

with an integrated agreement parol evidence can be introduced to show lack of consideration.

Dementas v. Talls, 764 P.2d 628, (Utah 1988).

Events which occur prior to the making of the promise and not with the purpose of

inducing the promise in exchange are viewed as "past consideration" and are the legal equivalent

of "no consideration." Id. This is so because "the promisor is making his promise because those

events occurred, but he is not making his promise in order to get them. There is no 'bargaining'; no

saying that if you will do this for me I will do that for you. Id. A benefit conferred or detriment

incurred in the past is not adequate consideration for a present bargain. Id.

The mere fact that one man promises something to another creates no legal duty

and makes no legal remedy available in case of non-performance. Id. The mere making of the

note and guarantee does not create a duty of Sleater to repay. There must be bargained for

consideration. Id. If there was no consideration at the time the note was signed, for Sleater’s

promise as contained in the note, then the note is invalid. Id.

Even though the trustee argues in his response to the opposition to summary

judgment that payment to Atlas Capital, LLC, is the same as payment to Sleater, no authority is

presented for that proposition. Sleater has stated in his declaration that Atlas Capital, LLC was a

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separate entity; that all formalities were observed, and that Sleater received none of the funds.

Sleater has the right to prove, by parole evidence, that there was no bargained for consideration or

consideration contemporaneous with the note by showing that all of the money claimed to be

owing by Bedrock and Enlightened had been loaned to Atlas Capita not Sleater. He has the right

to show that by a previous oral agreement between Sleater and Rex Wheeler, that set out the terms

of repayment by Atlas Capital, LLC, that Sleater was not responsible for return of the funds. He

is entitled to show, by parol evidence, that he received none of the funds, gave no promise, until

after the fact to be a responsible party, and that there was no consideration for the making of the

note in his own name or guaranteeing the note.

3. PERSONAL KNOWLEDGE CAN BE INFERRED

Personal knowledge may be inferred from declarations themselves, such as from

facts concerning a declarant's position and participation, Barthelemy v. Air Line Pilots Ass'n, 897

F.2d 999, 1018 (9th Cir. 1990) For example common sense dictates that if an affiant is an

employee of a company, she has personal knowledge of events and circumstances that occurred at

the company within her sphere of observation. Davis v. Valley Hospitality Services, LLC, 372 F.

Supp.2d 641, 653 (M.D. Ga. 2005) In this case Sleater was the sole owner and manager of Atlas

Capital, LLC, and he would have personal knowledge concerning the dealings of Atlas Capital,

LLC. Since all dealings with Bedrock and Enlightened were between Rex Wheeler and Sleater he

would have personal knowledge of these dealings.

4. FACTS MUST ONLY BE ADMISSIBLE AT TRIAL.

To survive summary judgment, a party does not necessarily have to produce

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evidence in a form that would be admissible at trial, as long as the party satisfies the requirements

of Federal Rules of Civil Procedure 56; Fed. Deposit Ins. Corp. v. N.H. Ins. Co., 953 F.2d 478,

485 (9th Cir. 1991) The statements of Rex Wheeler are not hearsay, but even if they were they

would be proper in the declaration of Mr. Sleater because Rex Wheeler could be called at trial to

testify. In Williams v. Borough of West Chester, 891 F.2d 458 (3d Cir.1989)

5. THE DECLARATION SHOULD NOT BE HYPERCRITICALLY

VIEWED.
If a party opposing summary judgment fails to comply with the formalities of Rule

56, a court may choose to be somewhat lenient in the exercise of its discretion to deal with the

deficiency. School District No. 1J, Multnomah County, OR v. ACandS, Inc., 5 F.3d 1255, 1261

(9th Cir. 1993) (citation omitted). Such leniency, however, cannot be exercised so that Rule 56

becomes meaningless. Id.

6. NONE OF THE STATEMENTS EXCEPT PARAGRAPH 20

SHOULD BE STRICKEN.
On pages 8-10 of the Memorandum in Support of Motion to Strike the trustee

outlines portions of paragraph that are claimed to be objectionable for various reasons. Sleater

will address each such paragraph as follows:

1. Paragraphs 3 and 7 are objected to on the basis of hearsay and parol

evidence. In these two paragraph Sleater simply sets out conversations
with Rex Wheeler admissible pursuant to Fed. R. Evid. 801(d)(2)(C)(D),
to show lack of consideration and otherwise to prove the notes are facially
ambiguous.
2. Paragraphs 8 and 9 are objected to, in addition to hearsay and parol
evidence by claims of legal conclusions, irrelevant information and
unilateral mistake. Even if some claim could be made that the statement,
“...I, as manager of Atlas Capital, LLC, and not individually signed a
promissory note between Bedrock and Atlas Marketing, LLC”, the balance
of the statement is not hearsay, inadmissible parole evidence, legal

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conclusions, trying to establish unilateral mistake or irrelevant information.

The balance of the statement simply reiterates that money had been loaned
to Atlas Capital, LLC, pursuant to an oral agreement between Sleater and
Rex Wheeler and that there was no agreement or requirement that thereafter
Sleater would be the maker or guarantor of the notes.
3. Paragraph 10 is objected to based upon lack of personal knowledge. Since
Sleater was the sole owner of Atlas Capital and a 50% owner of Atlas
Marketing it is obvious that he would have personal knowledge of what
entity the money was loaned to and that it was a mistake in the note to
name Atlas Marketing. In any event whether there was a mistake and
whether the money was loaned to Atlas Marketing or Atlas Capital is
irrelevant to Sleater’s liability.
4. Concerning paragraph 11, Sleater can testify from personal knowledge that
he did not notice that the purported maker of the note was Atlas Marketing
rather than Atlas Capital and that he thought he was signing for Atlas
Capital. In any event whether it was intended that Atlas Capital or Atlas
Marketing be the maker is irrelevant to Sleater’s liability.
5. Concerning paragraph 16, and putting aside that Sleater can testify to
conversations with Rex Wheeler, Sleater can testify from personal
knowledge that there was no intention of any of the parties that Sleater
would at some time in the future be a maker of a note or a guarantor of a
note in his own name. This goes hand in hand with his testimony that the
terms of the return of the money were agreed to by Sleater and Rex
Wheeler and that there was no agreement that Sleater would thereafter be a
maker or guarantor of a note.
6. Concerning paragraph17 the trustee challenges the statement that Sleater
did not intend to have a personal obligation to return the funds when they
were advanced to Atlas Capital, LLC. The basis of the objection is
irrelevance or unilateral mistake. Since the statement does not concern the
notes but rather the previous advance of the funds it is hard to see how
unilateral mistake applies. What the affiant’s intent was can be properly set
out in an affidavit. In the case of Janky v. Lake County Convention &
Visitors Bureau, No. 3:05-CV-217-PRC (N.D.Ind. 2006), the court held
that it was proper for an affiant to testify concerning their intent concerning
joint ownership of a song. In In re French, 499 F.3d 345
(4th Cir. 2007), the court accepted an affidavit which stated there was no
intent to defraud.
7. Concerning paragraph 20 Sleater concedes it is a legal conclusion.

8. Concerning paragraph 21 the trustee makes a challenge on the basis of

parol evidence, irrelevant information and unilateral mistake, Sleater’s
statement that before the notes were signed he had no discussions with any

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representatives of Bedrock or Enlightened that he would personally be the

maker of the notes or that he would sign a guarantee. As proof of lack of
consideration this testimony would definitely be appropriate parol evidence
to show lack of consideration and would not be irrelevant. Since it is not
intended to vary the terms of the notes, but rather show lack of
consideration, unilateral mistake does not apply.

9. Concerning paragraph 22, Sleater states that there was no previous

agreement that Sleater would be the maker of guarantor of the funds and
that he signed the notes only because they were presented to him. This
statement is relevant to proving lack of consideration because past
consideration is not sufficient and it has to be shown that there was
bargained for consideration for Sleater personally obligating himself for
funds that had been advanced to Atlas Capital, LLC.. If the funds had been
advanced with a promise that Sleater as well as Atlas Capital, LLC, would
be liable for return of the funds, then there might be consideration for the
subsequent signing, by Sleater, of the note and guarantee. Evidence that
there was no previous agreement that Sleater would be the maker or
guarantor of a note to be subsequently drafted negates consideration for the
subsequent notes.

10. Concerning paragraph 23 and 24, the statement of Sleater that he received
nothing of value and that Bedrock or Enlightened suffered no detriment for
the making of the notes or the guarantee form the heart of the defense of
lack of consideration. These statements dovetail with the statements in
paragraphs 21 and 22. Taken together these four paragraphs, if proven to
be true at trial, would be a complete defense to liability on the notes. To
prove lack of consideration Sleater is entitled to show that the funds were
loaned only to Atlas Capital, LLC, and were used only be Atlas Capital,
LLC, with no intention or agreement that Sleater would have any liability
or that he would thereafter personally sign and note and guarantee. If in fact
the funds were loaned to Atlas Capital, LLC, on an oral agreement that
provided that only Atlas Capital, LLC, would be liable for return of the
funds, and since it is shown that this agreement was negotiated by Mr.
Sleater and Rex Wheeler, then Sleater would have personal knowledge of
the terms and the information is neither irrelevant or based upon lack of
personal knowledge. As previously stated showing lack of consideration is
appropriate parol evidence.
It certainly is not a legal conclusion that Sleater received no legal
consideration or anything of value for making the note or signing the
guarantee. It is simply a restatement of the fact that all funds were
advanced to Atlas Capital, LLC and that Sleater received none of the funds.
As well as his statements that there was no previous agreement that Sleater

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would have any liability and that the only reason he signed the notes is that
they were presented to him after all funds had been loaned to Atlas Capital,
LLC. The word consideration is defined in Webster’s Dictionary as
“recompense , payment <a consideration paid for legal services> b: the
inducement to a contract or other legal transaction ; specifically : an act or
forbearance or the promise thereof done or given by one party in return for
the act or promise of another.” Consideration in fact is a synonym for
“anything of value”. The statement that Bedrock or Enlightened likewise
suffered no detriment is a common term. Wester’s Dictionary defines
detriment as damage or injury. It should be obvious that Bedrock or
Enlightened suffered no detriment when they presented a note that
contained all of the same terms of payment that had previously been orally
agreed to and in addition provided personal liability of Sleater, which
previously had not been bargained for. An affidavit need not excise from
its pages every word found in Black's Law Dictionary in order to comply
with Rule 56(e). Bailey v. USF Holland, Inc., 444 F.Supp.2d 831
(M.D.Tenn. 2006)

5. THERE IS NO BASIS TO STRIKE THE ENTIRE DECLARATION.

When an affidavit contains inadmissible evidence, the court may strike the

inadmissible portions of the affidavit and consider the rest. Story v. Sunshine Foliage World, Inc.,

120 F. Supp.2d 1027, 1031 (M.D. Fla. 2000). There is little if any inadmissible evidence in

Sleater’s declaration and no basis whatsoever to strike the entire declaration.

6. CONCLUSION.

Except for paragraph 20 the court should deny the trustee’s motion to strike and

should consider all other evidence set out in the declaration.

DATED: February 10, 2009.

/s/ Ronald George, attorney for Sleater

CERTIFICATE OF SERVICE

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I certify that on February 10, 2009, the foregoing was served VIA/ECF and by

email as follows:

Gary E. Jubber
Douglass J. Payne
Clint R. Hansen
FABIAN & CLENDENIN, a Professional Corporation
215 S. State St.
Salt Lake City, UT 84111

/s/ Ronald George

EXHIBIT “A”
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