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I.

INTRODUCTION ..................................................................................................................... 1

II. FACTUAL AND PROCEDURAL BACKGROUND .............................................................. 3

A. UNDERLYING MALPRACTICE ACTION RESULTING IN JUDGMENT AGAINST

GAGGERO ............................................................................................................................ 3

B. ESTATE PLAN...................................................................................................................... 4

C. POST-JUDGMENT DISCOVERY EFFORTS ..................................................................... 6

III. DISCUSSION ............................................................................................................................ 7

A. THIS COURT HAS AUTHORITY TO AMEND THE JUDGMENT TO ADD

GAGGEROS ALTER EGOS AS JUDGMENT DEBTORS................................................ 7

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TABLE OF CONTENTS

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1. Courts Have Inherent Authority to Prevent Frustration, Abuse, Or Disregard of Their

Process ................................................................................................................................ 7

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2. Alter Ego Claims are Appropriate for Gaggeros Trusts and Business Entities................. 7

12

B. GIGANIN TRUST, ARENZANO TRUST, AND AQUASANTE FOUNDATION ARE

GAGGEROS ALTER EGO AND THE REAL PARTIES IN INTEREST ......................... 8

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15
16
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C. PACIFIC COAST MANAGEMENT IS GAGGEROS ALTER EGO AND THE REAL

PARTY IN INTEREST ........................................................................................................ 10
D. GAGGEROS LIMITED LIABILITY COMPANIES AND LIMITED PARTNERSHIPS
ARE HIS ALTER EGO AND THE REAL PARTIES IN INTEREST ............................... 11
E. PRESERVING THE SEPARATE EXISTENCE OF THE CORPORATIONS AND
GAGGERO WILL SANCTION A FRAUD AND PRODUCE AN UNJUST RESULT.... 13

19

F. REVERSE CORPORATE PIERCING IS APPOPRIATE TO ADD GAGGEROS

CORPORATION, LIMITED LIABILITY COMPANIES, AND LIMITED
PARTNERSHIPS ................................................................................................................. 13

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1. Pacific Coast Management Corporation ........................................................................... 14

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2. Limited Liability Companies and Limited Partnerships................................................... 14

18

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IV. CONCLUSION ........................................................................................................................ 15

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TABLE OF AUTHORITIES

Cases

Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d 39, 45.................................................... 7

Associated Vendors, Inc. v. Oakland Meat Co., Inc. (1962) 210 Cal.App.2d 825, 838-840 ............ 8

Fairfield v. Superior Court for Los Angeles County (1966) 246 Cal. App. 2d 113, 120 .................. 7

Galdjie v. Darwish (2003) 113 Cal.App.4th 1331, 1343 .................................................................. 8

Greenspan v. LADT LLC (2010) 191 Cal.App.4th 486, 517 ...................................................... 8, 13

Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300 ....................................................... 13

Misik v. DArco (2011) 197 Cal. App. 4th 1065, 1075 ..................................................................... 7

10

Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1518 ...................... 14, 15

11

Taylor v. Newton (1953) 117 Cal.App.2d 752, 75860 .................................................................. 14

12
13

Fleet Credit Corp. v. TML Bus Sales, Inc. (9th Cir.1995) 65 F.3d 119, 120 .................................. 14

14

In re Schwarzkopf (9th Cir.2010) 626 F.3d 1032, 10371040 .......................................................... 8

15

In re Turner, Bkrtcy. (N.D. Cal 2005) 335 B.R. 140, 146 .............................................................. 14

16
17
LFC Marketing Group, Inc. v. Loomis (2000) 116 Nev. 896, 903 ................................................. 14
18
19

Statutes

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Code Civ. Proc. 187 .................................................................................................................... 2, 7

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I.

INTRODUCTION

Judgment Debtor Stephen Gaggero, fifteen (15) years ago, transferred all of his personal

assets, worth $35,000,000, into corporations, general partnerships, limited partnership, limited

liability companies, and self-settled trusts as part of an estate plan. Implementing the estate plan

involved two steps. First, Gaggero transferred his assets into a limited liability company or limited

partnership in which he owned completely. Second, he transferred his ownership interest in those

entities to one of his trusts or foundation. Gaggeros primary residence, a 3,500 acre ranch, is also

owned by one of these trusts. By 1999 he had absolutely nothing in his personal name.

Consequently, he conducts all personal and business matters through his trusts or business entities.

10

Gaggero continues to exert full control over all of the assets in the estate as the asset manager

11

and has absolute authority to command payment of money by the trusts.

12

With the assistance of his attorneys, David Chatfield and Joseph Praske, Gaggero has used

13

this estate plan to avoid his obligation on a $1,520,943.30 judgment, now over $2,000,000, entered

14

against him by this Court. Gaggero has not only boldly touted his estate plan impenetrable, but he

15

and his attorneys have steadfastly refused to respond to post-judgment discovery claiming that the

16

information relating to his trusts or entities is irrelevant, invades third party privacy rights,

17

attorney client privilege, and other frivolous objections. When pushed - he simply claims to have

18

no responsive documents or information, then appeals. When ordered by this Court to provide

19

further responses - Gaggero disregarded it in its entirety. Gaggeros behavior is entirely consistent

20

with this Courts observations in the underlying trial. This Court, for example, found Gaggero,

21

was often argumentative or evasive or deliberately obtuse in his answers. Gaggero was wildly

22

evasive [w]hen asked about his various trusts, foundations, corporations and other entities

23

supposedly created as part of his estate plan. The Court noted similar credibility issues for

24

Gaggeros attorney, Chatfield. This motion seeks to remedy that tack.

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Judgment creditors Knapp, Petersen and Clarkes, Stephen Ray Garcias, Stephen Harris,

26

and Andre Jardinis (collectively referred to as KPC) efforts to obtain post-judgment discovery

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have been frustrated by steady stream of smoke and mirrors, carefully orchestrated by Gaggero

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and his counsel. Basic discovery designed to ferret out the structure of Gaggeros assets have

been met with frivolous responses and antagonism by Gaggero and his attorney, Chatfield. KPC is

further discouraged by the fact that the transfers occurred in 1997- beyond the limitations period

for fraudulent conveyance.

Ironically, the Court may recall, it was Gaggero who insisted on attorney fees provisions

in all his attorney-client retainer agreements (he has hired and fired dozens of lawyers), including

those with defendant, KPC, whom he according to the Gaggero script - sued for legal

malpractice for every matter they ever represented him. Gaggeros modus operandi was to use the

attorney fee provision to whipsaw his former counsel into favorable resolutions after he sued

10

them, yet when hoisted on his own petard, Gaggero unabashedly asserted that his assets were

11

impervious to execution. Such a one-way street cannot stand.

12

Fortunately, the California Legislature enacted Civil Code Section 187 to address precisely

13

this situation. Section 187 grants courts the authority to use all necessary means to carry its

14

jurisdiction into effect, even those not provided for by statute, to compel obedience to its

15

judgments, orders, and process. Under the plain language of Section 187 and case law interpreting

16

the statute this Court has broad authority to amend the judgment to add Gaggeros alter egos.

17

Pursuant to Section 187, KPC seeks to add Gaggeros trusts and foundation as judgment

18

debtors through Praske, as the trustee. KPC also seeks to pierce seven business entities controlled

19

by Gaggero: one corporation and six limited partnerships and limited liability companies. Pacific

20

Coast Management, a Nevada corporation, is in essence Gaggeros personal bank account, and

21

unmistakably his alter ego. The limited partnerships and limited liability companies were created

22

by Gaggero solely as a vehicle to transfer his ownership interest in properties to his trusts. The

23

entities have no business purpose other than to shield Gaggeros assets, thus, should be

24

disregarded and added as judgment debtors as Gaggeros alter ego. Finally, to the extent that

25

adding Gaggeros entities as judgment debtors requires the application of reverse-piercing this

26

Court has authority under Section 187 supported by case law.

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KPC, therefore, respectfully requests that this Court add Gaggeros alter egos and/or the

real parties in interest: Pacific Coast Management, Inc., 511 OFW, LP, Gingerbread Court, LP,

Malibu BroadBeach, LP, Marina Glencoe, LP, Blu House, LLC, and Boardwalk Sunset, LLC, and

Joseph Praske as trustee of the Giganin Trust, Arenzano Family Trust, and Aquasante Foundation.

This motion also seeks to add any successors to the entities, trusts, or foundation as judgment

debtors.

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II.

FACTUAL AND PROCEDURAL BACKGROUND

A. UNDERLYING MALPRACTICE ACTION RESULTING IN JUDGMENT
AGAINST GAGGERO

11

Gaggero retained the law firm of Knapp, Petersen & Clarke to handle a number of matters,

12

including five lawsuits that are the basis of the underlying judgment. The cases included: Gaggero

13

v. Venice North Beach Coalition (VNC) which involved a malicious prosecution case filed by

14

against a group of homeowners who unsuccessfully opposed one of his real estate developments.

15

The suit was dismissed as a result of an anti-SLAPP motion and VNBC was awarded

16

approximately $100,000 in attorneys fees (approximately 150,000 at the time Gaggero retained

17

KPC); Gaggero v. Stacey involved a lawsuit filed by Gaggero against the attorney who handled

18

the VNBC matter for legal malpractice. KPC obtained a $350,000 judgment for Gaggero; First

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Federal Bank v. Blanchard (First Federal 1) involved a deficiency judgment against Gaggero

20

(formerly known as Blanchard); Gaggero v. First Federal Bank (First Federal 2) involved a

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lawsuit filed by Gaggero against First Federal Bank for wrongful foreclosure. Gaggero was

22

awarded $200,000 in damages and $750,000 in attorney fees. Slocumb v. Gaggero involved a

23

lawsuit against Gaggero for attorneys fees in the amount of about $150,000 for work done on

24

First Federal 2. Declaration of Austa Wakily (A.W. Decl.), 2, Exh. A, A-2.

25

Gaggero, in December 2002, filed a lawsuit against KPC alleging legal malpractice for

26

their handling of the above five (5) cases. Gaggero v. Knapp, Petersen & Clarke, at al, Los

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Angeles Superior Court (Case No BC286925). The case went to trial in 2007 and this Court ruled

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against Gaggero. (Id., 2, Exh. A). The ruling included an award of attorneys fees in KPCs

favor. Gaggero appealed the decision, which was subsequently affirmed. (Id., 2, Exh. A-2).

KPC filed an amended judgment on May 2010 including additional attorneys fees and costs on

appeal. (Id., 3, Exh. B). KPC has since been unsuccessful in enforcing the judgment against

Gaggero.

B. ESTATE PLAN

Gaggero, in or about 1997, began the creation of an estate plan to protect his substantial

wealth. (Id., 4, Exh. C at 94:10-15, 95:3-9). Gaggero worked with his estate planning attorney,

Praske, to transfer all assets and property he personally owned, including his 3,500 acre personal

10

residence, to various limited liability companies, general partnerships, limited partnerships, and

11

corporations. (Id., 7, Exh. F pp. 935-939). Gaggero first transferred all his assets into limited

12

liability companies and limited partnerships. (Id., 4, Exh. C at 96:9-19). Every asset that

13

Gaggero owned prior to the completion of his estate plan was owned 100% by him either by virtue

14

of his membership interest in the company, shares in the corporations, or direct title to the

15

property. (Id., 4, Exh. C at 100:10-14). Gaggero transferred approximately $35,000,000 to

16

$40,000,000 from his personal portfolio to an entity. (Id., 4, Exh. C at 104:22-26). Upon

17

Gaggeros transfer of his assets to the various entities he would transfer his full ownership

18

interests in those companies to one of his trusts. (Id., 7, Exh. F at 935:23-28, 936:1). At the end

19

of the day, all of Gaggeros property was held by either a limited partnership or a limited liability

20

company, which in turn, is owned by one of his trusts. (Id., 7, Exh. F at 937:1-7). As of 2005 the

21

value of the assets in the estate has increased substantially. (Id., 7, Exh. F at 942:8-10).

22

Gaggeros estate is comprised of three trusts (two trusts and one foundation), multiple

23

partnerships, and multiple corporations. (Id., 5, Exh. D at 309:19-21). The three trusts are the

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Giganin Trust, Arenzano Trust, and Aqua Sante Foundation. (Id., 7, Exh. F at 936:25-28). The

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Giganin Trust is qualified personal residence trust which has ownership of 1,500 acres of

26

Gaggeros personal residence. (Id., 7, Exh. F at 937:24-28). The 2,000 acres adjoining his

27

personal residence is owned by another one of Gaggeros trusts, either the Arenzano Trust or

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Aquasante Foundation. (Id., 4, Exh. C at 91:10-15). The Arenzano Trust is an off-shore trust

organized under the laws of Anguilla -known for its strong asset protection laws. (Id., 20, Exh. S

at 69:1-11). The Aqua Sante Foundation is the third trust identified by Praske and Gaggero as

comprising Gaggeros estate. (Id., 7, Exh. F at 936:25-28). All of Gaggeros assets have been

transferred to an entity that is owned by one of these three trusts. (Id., 7, Exh. F at 937:1-7). All

of Gaggeros personal and business matters are handled through his alter ego entities. In fact, one

of the entities owned by Gaggeros trusts pays his utility bills, food expenses, dogs veterinary

bills, and provides him with a car. (Id., 12, 13, 20, Exh. K at 69:22-28; Exh. L at 47:9-10; Exh.

S at 80:21-25, 81:1-4).

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Praske, as the trustee of the trusts, has control over all the entities and assets in the estate

11

plan. (Id., 5, Exh. D at 313: 12-14). Praske is the trustee of the trusts or foundation that owns the

12

shares to the corporations. (Id., 5, Exh. D at 313:1-8). He is the trustee, managing member, or

13

majority membership owner with 100% ownership of all the various entities. (Id., 5, Exh. D at

14

313:1-8). Praskes role, however, is limited to advice. (Id., 10, Exh. I at 4028:11-15).

15

Gaggero has retained control over his wealth as the asset manager of all the assets. (Id.,

16

5, Exh. D at 314:4-7) (emphasis added). In this capacity, Gaggero is in charge of refinancing,

17

dealing with tax issues, insurance issues, making decisions to. . . buy or sell the asset, to improve

18

the asset, overseeing any improvement to the asset, financing, designing some ultimate disposition

19

of the asset. (Id., 4, Exh. C at 110:12-19). Gaggero makes determination as to the highest and

20

best use of all the assets. (Id., 4, Exh. C at 115:15-20). He also represented the trust in

21

negotiating the purchase of a $1,500,000 ocean front property in Santa Monica. (Id., 4, Exh. C at

22

110:3-9). According to Praske, Gaggero is the decisionmaker with respect to all the real estate

23

held in the estate plan and he looks to him in making those determinations. (Id., 8, 10, Exh. G at

24

1002:25-28; Exh. I at 4028:2-19).

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The ownership interest of the trusts and business entities are identical. (Id., 10, Exh. I at

26

4035:4-7). Gaggero is the trustor of the Arenzano Trust, Aqua Sante Foundation, and Giganin

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Trust. (Id., 7, Exh. F at 936:25-28). He is in a class of beneficiaries in the Arenzano Trust and

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Aqua Sante Foundation. (Id., 7, Exh. F pp. 994-995). He is the beneficiary of the Giganin Trust

in the sense that it is his personal residence. (Id., 7, Exh. F at 937:24-28). Praske is the trustee of

all three trusts. (Id., 7, Exh. F at 995:18-19). Praske was retained by all of the entities that

comprised part of Gaggeros estate. (Id., 7, Exh. F at 905:1-2). The trusts own entities created

by Gaggero for the sole purpose of owning real property. (Id., 20, Exh. S pp. 40-49, 53-55).

Praske is the agent for service of process for all entities associated with Gaggero. (Id., 16-17,

Exh. O, P). The business addresses of the various entities are also identical. (Id., 16-17, Exh. O,

P). While there are numerous other entities and trusts that are part of Gaggeros estate, KPC, has

sufficient evidence to support the alter ego liability for the trusts and entities identified in this

10

motion. KPC will file additional motions to amend this judgment, as necessary, to pierce

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Gaggeros asset protection plan.

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C. POST-JUDGMENT DISCOVERY EFFORTS

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Because Gaggero transferred all ownership interest in his assets to various entities, trusts,

14

and foundation he refuses to respond to post-judgment discovery asserting that he has no

15

attachable interest. (Id., 18, Exh. Q). Gaggero further asserts that any information related to his

16

corporations, partnerships, trusts or foundation are irrelevant and violate the privacy rights of third

17

parties. (Id., 18-19, Exh. Q, R).

18

KPC, after numerous appeals and stays in the underlying matter, served post-judgment

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Special Interrogatories and Requests for Production of Documents (Set One) on April 25, 2011.

20

Despite a three week extension, Gaggero did not produce any documents in response to the

21

Requests. (Id., 18). With respect to the special interrogatories, Gaggero provided evasive and

22

frivolous responses. (Id., 18, Exh. Q). KPC filed a motion to compel further responses to post-

23

judgment special interrogatories on August 9, 2011. This Court granted the motion to compel on

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October 5, 2011 ordering Gaggero to provide further responses without objection and awarded

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sanctions against Gaggero and his counsel in the amount of $2,700. (Id., 15, Exh. N). Gaggero

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has ignored the courts order in its entirety.

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KPC served Gaggero with Request for Production of Documents (Set Two) on January 31,

2012. (Id., 19, Exh. R). The responses were due on March 6, 2012. (Id., 19). KPC granted

Gaggero and extension to March 20, 2012 to accommodate his travel/vacation schedule. (Id.,

19). Gaggero again failed to produce any documents including only boilerplate and improper

objections based on relevance and invasion of privacy. (Id., 19, Exh. R). Further post-judgment

discovery propounded to Gaggero will be similarly futile without amendment of judgment.

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III.

DISCUSSION
A. THIS COURT HAS AUTHORITY TO AMEND THE JUDGMENT TO ADD
GAGGEROS ALTER EGOS AS JUDGMENT DEBTORS
1. Courts Have Inherent Authority to Prevent Frustration, Abuse, Or Disregard
of Their Process

12
13

Every court has the power to compel obedience to its judgments, orders, and process in an

14

action or proceeding pending before it, and to use all necessary means to carry its jurisdiction

15

into effect, even if those means are not specifically pointed out in statutes. Code Civ. Proc. 187;

16

Fairfield v. Superior Court for Los Angeles County (1966) 246 Cal. App. 2d 113, 120 (emphasis

17

added). In order to see that justice is done, great liberality is encouraged in allowing amendments

18

brought pursuant to Section 187. Misik v. DArco (2011) 197 Cal. App. 4th 1065, 1075. Section

19

187 authorizes a court to amend its judgment to impose liability upon an alter ego who had control

20

of the litigation, and was therefore represented in it. Alexander v. Abbey of the Chimes (1980) 104

21

Cal.App.3d 39, 45. Here, Gaggero clearly has full control of the estate plan and continues to

22

access all its resources as he sees fit. The trusts and entities in Gaggeros estate are his alter egos

23

and should be added as judgment debtors. This Judgment has little, if any, effect without an

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amendment to the judgment piercing Gaggeros estate plan.

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2. Alter Ego Claims are Appropriate for Gaggeros Trusts and Business Entities

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If an entity is the alter ego of an individual, the assets of the entity may be determined to

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be the assets of the individual for the purpose of satisfying a claim. Greenspan v. LADT LLC

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(2010) 191 Cal.App.4th 486, 517. Although the doctrine is most often applied to corporations, it

also applies to trusts. Id at 520-521; In re Schwarzkopf (9th Cir.2010) 626 F.3d 1032, 10371040.

Because a trust is not a legal entity, the proper procedure to reach trust property is to sue the

trustee in his or her representative capacity. Galdjie v. Darwish (2003) 113 Cal.App.4th 1331,

1343. Additionally, equitable ownership in a trust is sufficient to meet the ownership requirement

for purposes of alter ego liability. Id at 1339. KPC, therefore, seeks to add Joseph Praske, as

trustee of Gaggeros trusts.

Alter ego liability exists when two conditions are met: First, there is such a unity of interest

and ownership that the individuality, or separateness, of the individual and corporation has ceased;

10

and, Second, adherence to the fiction of the separate existence of the corporation would sanction a

11

fraud or promote injustice. Greenspan, supra 191 Cal.App.4th. at 511. Factors suggesting an alter

12

ego relationship include, in part: the identical equitable ownership in the two entities; the

13

treatment by an individual of the assets of the corporation as his own; the use of the same office

14

or business location; the employment of the same employees and/or attorney; the use of a

15

corporation as a mere shell, instrumentality or conduit for a single venture or the business of an

16

individual or another corporation; the concealment and misrepresentation of the identity of the

17

responsible ownership, management and financial interest, or concealment of personal business

18

activities; the disregard of legal formalities and the failure to maintain arm's length relationships

19

among related entities; the diversion of assets from a corporation by or to a stockholder or other

20

person or entity, to the detriment of creditors, or the manipulation of assets between entities so as

21

to concentrate the assets in one and the liabilities in another and; commingling of funds and other

22

assets and failure to segregate funds of the separate entities. See Associated Vendors, Inc. v.

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Oakland Meat Co., Inc. (1962) 210 Cal.App.2d 825, 838-840 (citations omitted). Because no

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single factor is determinative a court must evaluate all the circumstances to determine whether to

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apply the doctrine. Id at 838.

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B. GIGANIN TRUST, ARENZANO TRUST, AND AQUASANTE FOUNDATION

ARE GAGGEROS ALTER EGO AND THE REAL PARTIES IN INTEREST

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Applying the above factors, there is no doubt that the trusts comprising Gaggeros estate

plan are his alter egos. As stated above, the plan took several months to implement and involved

two key steps. First, Gaggero transferred all his assets to corporations, limited liability companies,

or limited partnerships in which he had 100% ownership interest. (Id., 4, Exh. C at 100:10-14).

Second, Gaggero transferred his ownership interests in the various business entities in one of his

three self-settled trusts. (Id., 4, 7, Exh. C at 100:10-14; Exh. F pp. 936). Gaggero, at the end of

the day, concealed all his assets in an entity owned by his trusts. By implementing the estate plan

Gaggero is forcing his creditors to penetrate multiple layers of sham entities in order to ultimately

pierce his estate plan. All of his personal and investment matters are handled through the sham

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entities that are owned by his trusts.

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Gaggeros various trusts, foundation, and business entities are all part of one estate plan

12

(his estate). The trusts and entities in his estate plan constitute a single enterprise and have no

13

separate identity. (Id., 6, Exh. E at 617:8-14). When asked how he would take title to a property,

14

Gaggero stated I could take this asset in my name, transfer it to an entity, a limited liability

15

company, a limited partnership, a general partnership, or a corporation, and then have one of the

16

trusts or the foundation subsume. . . that entity into the estate plan, just like I did the other

17

properties in 1997 and 1998. (Id., 6, Exh. E at 617:8-14). Gaggero does not distinguish between

18

the different trusts or foundation in the estate plan, nor does he distinguish between the entities in

19

the estate plan. Gaggero, in purchasing a property or asset, looks at the liquidity of the trust at the

20

time in determining how to acquire the property within his estate. (Id., 4, Exh. C at 119:13-23).

21

Finally, all gains on the properties flow through Gaggeros tax returns via the trusts and all other

22

entities. (Id., 10, Exh. I at 4035:4-7).

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Gaggero also has retained full control over all assets in the trusts as the asset manager. (Id.,

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4, 9, Exh. C at 120:2-6, 121:22-23; Exh. H pp. 3426). Gaggero testified that he always had

25

the ability to borrow money against the assets in the trust or pull cash directly out of the

26

trust. (Id., 4, Exh. C at 120:2-6, 121:22-23). With respect to his ability to purchase a

27

$1,100,000 ocean front property Gaggero testified that [a]t all times I commanded the

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resources to purchase this all cash or with a mortgage, and if there happened to be a 1031

exchange opportunity available, I would have exchanged it into one of the entities that were

owned by my trust. (Id., 9, Exh. H pp. 3426-3427). Again, Gaggero looked at the estate as a

whole in determining how to acquire additional property.

Gaggero as the asset manager has authority to negotiate on behalf of the trust to purchase

properties. (Id., 4, Exh. C at 110:3-9). He is in charge of refinancing, dealing with tax issues,

insurance issues, making decisions to buy or sell the asset, to improve the asset, overseeing any

improvement to the asset, financing, designing some ultimate disposition of the asset. (Id., 4,

Exh. C at 110:12-19). Gaggero makes all decisions with respect to all the real estate held in the

10

estate plan and Praske follows his recommendations. (Id., 8, Exh. G at 1002:25-28). Ultimately,

11

all assets in the estate plan are controlled by Gaggero, as the equitable owner and asset manager.

12

(Id., 8, Exh. G at 1002:16-28, 1003:1-3).

13

Finally, both Gaggero and Praske refer to the trusts, foundation, entities, and its assets as

14

constituting Gaggeros estate plan or Gaggeros personal estate. (Id., 7, 9, Exh. F at

15

936:25-28; Exh. H at 3426: 5-8). Gaggero refers all assets within the estate plan as his assets or

16

my assets. (Id., 6, Exh. E at 617:3-7). Praske also refers to the trusts as belonging to Gaggero.

17

(Id., 7, Exh. F pp. 936-937). For example, in a declaration Praske stated that he is the trustee of

18

Gaggeros personal estate which has funds well in excess of $1,100,000. (Id., 14, Exh. M).

19

Praske also described the Arenzano Trust, Giganin Trust, and Aqua Sante Foundation as the three

20

Trusts that are part of Gaggeros estate. (Id., 7, 14, Exh. F at 936:24-28; Exh. M). Gaggero

21

should not be permitted to access the funds and resources in his estate plan, which are clearly

22

under his control when it is to his benefit, but hide behind the same estate plan when it is to his

23

detriment. The Giganin Trust, Arenzano Trust, and Aqua Sante Foundation, should therefore be

24

added as judgment debtors via Praske as the trustee.

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26

C. PACIFIC COAST MANAGEMENT IS GAGGEROS ALTER EGO AND THE REAL

PARTY IN INTEREST

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-10NOTICE OF MOTION AND MOTION TO AMEND JUDGMENT TO ADD JUDGMENT DEBTORS

One of the corporations identified by Gaggero as part of the estate plan is Pacific Coast

Management (PCM). (Id., 12, Exh. K at 39:17-21). Gaggero uses his alter ego, PCM to write

checks on his behalf so as to avoid retaining any assets in his personal name, including a personal

bank account. (Id., 13, Exh. L at 47:9-10). Gaggero provides PCM money and PCM writes

check on his behalf. (Id., 13, Exh. L at 47:9-10). Checks were written by PCM. I paid for it. I

give PCM the money. PCM writes the checks. They write checks for me. They pay my utilities.

They pay my credit card, they pay for my dogs vet bills. I mean PCM manages my life. They

are a management company for me personally. (Id., 12, Exh. K at 69:22-28(emphasis added). .

. . P.C.M. only manages my estates, entities, and assets (Id., 13, Exh. L. at 47:9-10)

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10

(emphasis added).

11

Although PCM pays for all of Gaggeros personal expenses and manages his life

12

Gaggero could not answer basic questions relating the entity. Gaggero did not know whether PCM

13

had Articles of Incorporation, whether there were officers or directors, if he was a director, and

14

when it was formed. (Id., 12, Exh. K pp. 37- 39). PCMs in house counsel, Chatfield, similar

15

did not know basic information relating to the entities, including the ownership, place of

16

incorporation, and the entities that retained him as an in-house counsel. (Id., 2, Exh. A pp. 13-

17

14). PCM, clearly was established by Gaggero as part of the estate plan designed to evade

18

creditors and has been used as his alter ego. Since PCM is willing to provide Gaggero money and

19

resources to pursue countless lawsuits, PCM should not have a problem paying adverse judgments

20

that arise from those lawsuits. PCM, therefore, should be added as a judgment debtor.

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22

D. GAGGEROS LIMITED LIABILITY COMPANIES AND LIMITED PARTNERSHIPS

ARE HIS ALTER EGO AND THE REAL PARTIES IN INTEREST

23

Gaggeros limited liability companies and limited partnerships were created for the sole

24

purpose of taking legal title to his real property. As discussed above, this was his first step in

25

creating the estate plan. The following entities have been identified as Gaggeros alter egos: Blu

26

House, LLC, Boardwalk Sunset, LLC, Malibu Broad Beach, LP, Marina Glencoe, LP, 511 OFW,

27

LP, and Gingerbread Court, LP. (Id., 4, 10, 20, Exh. C, I, S).

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MILLER | LLP

Blu House, LLC and Boardwalk Sunset, LLC was created on May 23, 1997. (Id., 17,

Exh. P). Blu House, LLCs business purpose was ownership of property located at 523 Ocean

Front Walk, Venice, California. (Id., 4, 20, Exh. C at 104:16-21; Exh. S at 45:4-24). Boardwalk

Sunset, LLCs business purpose was ownership of property located at 601 Ocean Front Walk,

Venice, California. (Id., 4, 20, Exh. C at 104:16-21; Exh. S at 47:6-25, 47:1-6). Gaggero was

the owner of properties located at 523 and 601 Ocean Front walk, Venice, California. (Id., 4, 20,

Exh. C at 96:9-19; Exh. S at 45:4-24). Praske is the agent for service of process for both

companies. (Id., 17, Exh. P). Both companies have as their address 1473F South Victoria Ave,

Ste., 201. (Id. 17, Exh. P). Blue House, LLC and Boardwalk Sunset, LLC are two of the entities

10

created as part of Gaggeros estate plan for the sole purpose of moving his property out creditors

11

reach. The entities, thus, should be disregarded and added as judgment debtors. (Id., 4, Exh. C at

12

96: 9-19, 104:16-21).

13

Less than one year after establishing the above companies, Gaggero established Malibu

14

Broad Beach, LP and Marina Glencoe, LP. These limited partnerships were created on February 5,

15

1998 and have Praske listed as the agent for service of process. (Id., 17, Exh. P). Malibu

16

Broadbeach, LP and Marina Glencoe, were established for the purpose the ownership of property

17

previously owned personally by Gaggero. (Id., 4, 10, 20, Exh. C at 104:16-21; Exh. I pp. 4031-

18

4032 ; Exh. S at 53:3-25). Malibu Broadbeach, LP is associated with ownership of a house owned

19

by Gaggero in Malibu, on Broadbeach. (Id., 4, 10, Exh. C at 96:14; Exh. I pp. 4031-4032).

20

Additionally, Malibu Broadbreach, LP is associated with the Aqua Sante Foundation. (Id., 4, 8,

21

Exh. C at 96:14; Exh. G pp. 1003-1005). Marina Glencoe, LPs business purpose was ownership

22

of property Gaggero owned in Marina del Rey on Glencoe. (Id., 20, Exh. S at 54:15-20, 55:7-

23

16). Both entities were created by Gaggero as a means of shielding personal assets from creditors.

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The entities should be added as judgment debtors as Gaggeros alter ego.

25

One month later, Gaggero created two more limed partnerships. These are 511 OFW, LP

26

and Gingerbread Court, LP. Both were created on March 12, 1998. (Id., 17, Exh. P). Both have

27

as the agent for service of process Praske. (Id., 17, Exh. P). Both were established for the

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-12NOTICE OF MOTION AND MOTION TO AMEND JUDGMENT TO ADD JUDGMENT DEBTORS

purpose of owning property. (Id., 20, Exh. S pp. 40-44). 511 OFW, LP had as its business

purpose the ownership of 511 Ocean Front Walk, Venice, California. (Id., 4, 20, Exh. C at 96:9-

19; Exh. S at 40:22-25, 41:1-2). Gingerbread Court, LP had as its business purpose the ownership

of 517 Ocean Front Walk, Venice, California. (Id., 20, Exh. S at 43:11-17, 44:2-11). Gaggero

owned both 511 and 517 Ocean Front Walk, Venice, California and transferred those assets to

these limited partnerships. (Id., 4, 20, Exh. C at 96:9-19, 103:2-5; Exh. S pp. 41-44). These

entities are Gaggeros alter ego and created for the sole purpose of shielding personal assets from

creditors. OFW, LP and Gingerbread Court, LP should be added as judgment debtors as Gaggeros

alter ego.

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E. PRESERVING THE SEPARATE EXISTENCE OF THE CORPORATIONS

AND GAGGERO WILL SANCTION A FRAUD AND PRODUCE AN UNJUST
RESULT

13

The second requirement for application of the alter ego doctrine is finding that the facts are

14

such that adherence to the fiction of the separate existence of the corporation would sanction a

15

fraud or promote injustice. Greenspan, supra 191 Cal.App.4th. at 511. The test for this

16

requirement is that if the acts are treated as those of the corporation alone, it will produce an unjust

17

or inequitable result. Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300. In this case

18

allowing Gaggero to avoid his obligation through the use of his estate plan, set up to shield his

19

personal assets from creditors, will result in an injustice to KPC and other creditors. Gaggero

20

created the estate plan 15 years ago foreclosing claims for fraudulent conveyance. Additionally,

21

piercing Gaggeros estate plan is likely to deter his continued disregard of this Courts orders and

22

other court orders.

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F. REVERSE CORPORATE PIERCING IS APPOPRIATE TO ADD GAGGEROS

CORPORATION, LIMITED LIABILITY COMPANIES, AND LIMITED
PARTNERSHIPS

25
To the extent this case requires the application of reverse piercing- the use of a
26
corporations assets to satisfy a shareholders personal debt- it is fully justified and within this
27
Courts inherent power to prevent abuse of its process and supported by California case law.
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-13NOTICE OF MOTION AND MOTION TO AMEND JUDGMENT TO ADD JUDGMENT DEBTORS

1. Pacific Coast Management Corporation

Pacific Coast Management is a Nevada corporation. (Id., 19, Exh. R). Nevada law

recognizes reverse corporate piercing as an appropriate avenue to impose liability on a judgment

debtors alter ego. The application of the doctrine is especially appropriate when the judgment

debtor uses an entity to hide assets or secretly conduct business as part of an attempt to avoid his

pre-existing liability. LFC Marketing Group, Inc. v. Loomis (2000) 116 Nev. 896, 903. As

discussed in detail above Pacific Coast Management, as an entity that manages Gaggeros life, is

clearly subject to alter ego liability. Because it is a Nevada corporation, and Nevada recognizes

reverse corporate piercing, Pacific Coast Management can properly be added as a judgment

10

debtor.1
2. Limited Liability Companies and Limited Partnerships

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12

Under California law an entity or series of entities created with no business purpose and

13

simply as a means of shielding personal assets from creditor is viewed as the alter ego of the

14

individual debtor and will be disregarded to prevent injustice. In re Turner, Bkrtcy. (N.D. Cal

15

2005) 335 B.R. 140, 146. California also recognizes the application of reverse-piercing to impose

16

alter ego liability against a corporation for a judgment incurred by its sole shareholder. Taylor v.

17

Newton (1953) 117 Cal.App.2d 752, 75860; See e.g. Fleet Credit Corp. v. TML Bus Sales, Inc.

18

(9th Cir.1995) 65 F.3d 119, 120 (it is beyond cavil that an inequitable result would follow were

19

the Court to permit the judgment debtor to shield himself with corporate form); But see Postal

20

Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1518 (court refused to apply

21

reverse piercing where judgment creditors sought to use corporate assets to collect on a former

22

shareholders personal debt).

23

California more recently addressed reverse-piercing in Postal Instant Press, Inc. supra,

24

162 Cal.App.4th at 1518. The judgment creditors in Postal Instant Press sought to use a

25

corporations assets to satisfy the personal debt of a former shareholder. Id. The court refused to

26
27

If PCM is subject to Californias law on reverse-piercing the same analysis applicable to

Gaggeros limited partnerships and limited liability companies will apply, in which case reversepiercing of PCM is also proper in this case.

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-14NOTICE OF MOTION AND MOTION TO AMEND JUDGMENT TO ADD JUDGMENT DEBTORS

a..
....J
....J

0:::

apply reverse piercing because (1) the corporate form was not being misused; (2) innocent

shareholders of the corporation would be adversely affected by a decision that would require a

corporation to pay for the debts of an individual shareholder, and (3) the judgment creditors had

sufficient

Postal Instant Press does not address the situation, as is here, where an individual uses a

corporation or other entity as an alter ego to shelter personal assets rather than the other way

around. Postal Instant Press is inapposite.

l~gal

remedies to pursue without the necessity of reverse piercing. Id. at 1522-1523.

Assuming, however, that Fostal Instant Press applies to Gaggero's business entities, KPC

meets the standards to justify its application. Postal Instant Press recognized that there may be

10

circumstances in which reverse piercing is acceptable. Id. at 1524. To apply reverse piercing KPC

11

must show that innocent creditors would be adequately protected and that there are inadequate

12

legal remedies. Id. Here, there are no innocent shareholders. The trusts, foundation, and entities

13

are part of Gaggero's "estate plan" and are merely his alter ego. He established the entities to

14

shelter his wealth and continues to have full access and control over his assets. (Id.,

15

120:2-6, 121 :22-23). Second, because the transfers occurred in 1997 KPC cannot pursue claims

16

for fraudulent transfer. Thus, to the extent this case involves the application of reverse corporate

17

piercing, it is appropriate and within this Court's authority.

18

IV.

4, Exh. C at

W
....J
....J

CONCLUSION

19

For the foregoing reasons, judgment creditors KPC, respectfully request this Court to

20

amend the judgment to add Gaggero's alter egos and/or the real parties in interest to the judgment.

21
22

Dated: April 10, 2012

MILLERLLP

23
24
25

26

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By:

~iA W~~

RANDALL A. MILLER, ESQ.

AUSTA WAKILY, ESQ.
Attorneys for Defendants, KNAPP, PETERSEN &
CLARKE, STEPHEN RAY GARCIA, STEPHEN M.
HARRIS and ANDRE JARDINI

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-15NOTICE OF MOTION AND MOTION TO AMEND JUDGMENT TO ADD JUDGMENT DEBTORS