Opinion
Case No. 07-2161-CM.
August 4, 2008
ORDER
I. Introduction
This is a breach of contract case. The defendant, T.E.N. Investments, Inc. ("T.E.N."), has filed a motion to strike certain post-deposition corrections made by the Fed.R.Civ.P. 30(b)(6) representative of the plaintiffs, Odessa Ford, LLC and Odessa Chrysler Jeep Dodge, LLC (doc. 155). T.E.N. has filed a supporting memorandum (doc. 156), plaintiffs have filed a response (doc. 163), and T.E.N. has filed a reply (doc. 169).
Significantly, the instant motion does not involve the fairly common situation where the court reporter simply misunderstood what the witness said during a deposition and as a result inaccurately transcribed the testimony, or mere typographical errors by the reporter in preparing the transcript. Nor is this a situation where the deponent claims he really meant to say "x" but just got mixed up and said "y." Instead, as explained in detail below, this motion involves wholesale changes to testimony on matters material to the merits of the case. Accordingly, the undersigned U.S. Magistrate Judge, James P. O'Hara, will strike all but two of the witness' challenged deposition changes.
II. Background
This litigation arises out of an asset purchase and sale agreement (the "Agreement") between Monopoly Acquisitions, LLC ("Monopoly") (as buyer) and T.E.N. (as seller). Monopoly assigned its interests in the subject assets (automobiles) to plaintiffs. Although many claims originally were asserted, all that remains is a breach of contract claim against T.E.N.
See docs. 48 113.
On February 4, 5, and 27, 2008, T.E.N. conducted a deposition of plaintiffs pursuant to Fed.R.Civ.P. 30(b)(6). The 30(b)(6) corporate representative whom plaintiffs chose to produce was Christopher S. Payne. Mr. Payne reviewed the reporter's transcript of his deposition testimony and made several changes on April 3, 2008 (see doc. 156, ex. B). On June 9, 2008, T.E.N. timely filed a motion for summary judgment (doc. 149), which now has been fully briefed and awaits a decision by the presiding U.S. District Judge, Hon. Carlos Murguia. T.E.N. filed the instant motion on June 20, 2008, requesting the court strike certain of Mr. Payne's changes.
III. Analysis Discussion
A. Plaintiffs' Procedural Arguments
Initially, the court rejects the plaintiffs' argument that T.E.N.'s motion is untimely. Plaintiffs rely on D. Kan. Rule 37.1(b), which requires "[a]ny motion to compel discovery in compliance with D. Kan. Rules 7.1 and 37.2 [to] be filed and served within 30 days of the default or service of the response, answer or objection which is the subject of the motion." Very simply, but ignored by plaintiffs, the instant motion to strike is not a motion to compel discovery. Therefore, it is not subject to D. Kan. Rule 37.1(b)'s thirty-day deadline.
Similarly, plaintiffs unpersuasively argue that the instant motion should be denied because T.E.N. failed to follow the meet-and-confer requirements under the court's local rules. D. Kan. Rule 37.2 provides:
The court will not entertain any motion to resolve a discovery dispute pursuant to Fed.R.Civ.P. 26 through 37, or a motion to quash or modify a subpoena pursuant to Fed.R.Civ.P. 45(c), unless counsel for the moving party has conferred or has made reasonable effort to confer with opposing counsel concerning the matter in dispute prior to the filing of the motion.
The instant motion simply is not a motion to resolve a discovery dispute. Nor is it a motion to quash or modify a subpoena. Therefore, T.E.N. was not required to comply with D. Kan. Rule 37.2's meet-and-confer requirement. In any event, defense counsel at least attempted to confer with plaintiffs' counsel by sending a letter regarding Mr. Payne's deposition changes (doc. 169, ex. 1), to which only a very brief response was provided (doc. 169, ex. 2).
The court flatly rejects plaintiffs' argument that it is necessary or appropriate to rule the objections made during Mr. Payne's deposition before deciding the instant motion. Plaintiffs' argument is unaccompanied by citation to any supporting authority in this regard. In any event, plaintiffs ignore that all objections made during their representative's 30(b)(6) deposition will be ruled, if necessary, closer to trial. There is no support for plaintiffs' request to first require T.E.N. to designate which of Mr. Payne's testimony it intends to offer at trial. Significantly, T.E.N. maintains that Mr. Payne may be compelled to testify live at trial and that his deposition testimony is critical for impeachment on cross-examination. The court agrees that Mr. Payne's deposition testimony may be important at trial even if T.E.N. never designates any of his deposition testimony at trial. The court rejects out of hand plaintiffs' unfounded and speculative accusation that T.E.N. intentionally waited until the close of discovery to file the instant motion to avoid having to reopen Mr. Payne's deposition.
Finally, plaintiffs argue the instant motion should be denied because T.E.N. never sought to take additional testimony from them or Mr. Payne after receiving his corrections. The case on which plaintiffs rely, Hayes v. Cosentino's Price Chopper Food Stores, Inc., does not stand for the proposition that a party must seek to reopen a deposition before requesting changes be stricken. It is true that the defendant in Hayes moved to reopen a deposition, asserting the deponent had made material changes after reviewing the transcript. That is, in lieu of seeking to strike the witness' changes to his deposition, the movant in Hayes merely sought to explore the deposition changes and the reasons therefor. At least in those few cases that are almost certain to be tried instead of the vast majority that are settled or resolved on summary judgment, Hayes reflects a sound tactical approach. That is, it can be very effective in setting up an adverse witness for impeachment with at least two (and usually more) different versions of his testimony on the same point. But regardless of the tactical options involved, the court finds as a matter of law that T.E.N. was not required to first try to reopen Mr. Payne's deposition or conduct any other discovery before filing the instant motion.
No. 03-2075, 2004 WL 1005283 (D. Kan. Apr. 13, 2004).
Id. at *1.
Id.; see also ICE Corp. v. Hamilton Sundstrand Corp., No. 05-4135, 2007 WL 4259484, at *2 (D. Kan. Dec. 3, 2007) (declining to follow Hayes, in part, because the movant did not seek to strike deposition changes).
B. Application of Governing Legal Standards
Fed.R.Civ.P. 30(e)(1) states:
On request by the deponent or a party before the deposition is completed, the deponent must be allowed 30 days after being notified by the officer that the transcript or recording is available in which: (A) to review the transcript or recording; and (B) if there are changes in form or substance, to sign a statement listing the changes and the reasons for making them.
"Rule 30(e) permits non-material changes to deposition testimony. . . . A change is material if it bears on an essential element of a claim or defense." Also permitted, though, are material changes but only provided they pass muster under the Tenth Circuit's test as articulated in Franks v. Nimmo which has been used in an analogous situation to determine whether an affidavit conflicting with earlier deposition testimony presents a sham issue for purposes of fending off a summary judgment motion. That is, factors to consider in determining whether to allow a change include "`whether the affiant was cross-examined during his earlier testimony, whether the affiant had access to the pertinent evidence at the time of his earlier testimony or whether the affidavit was based on newly discovered evidence, and whether the earlier testimony reflects confusion which the affidavit attempts to explain.'"
Summerhouse v. HCA Health Servs. of Kan., 216 F.R.D. 502, 508 (D. Kan. 2003). In Summerhouse, U.S. Magistrate Judge Donald W. Bostwick provides an exceptionally thorough and helpful review of the development of law on this point in the Tenth Circuit and District of Kansas.
796 F.2d 1230, 1237 (10th Cir. 1986).
Burns v. Bd. of County Comm'rs of Jackson County, Kan., 330 F.3d 1275, 1282 (10th Cir. 2003); Summerhouse, 216 F.R.D. at 507.
Burns, 330 F.3d at 1282 (quoting Franks, 796 F.2d at 1237).
The Tenth Circuit has also generally stated:
"[T]he Rule cannot be interpreted to allow one to alter what was said under oath. If that were the case, one could merely answer the questions with no thought at all then return home and plan artful responses. Depositions differ from interrogatories in that regard. A deposition is not a take home examination."
Id. (quoting Garcia v. Pueblo Country Club, 299 F.3d 1233, 1242 n. 5 (10th Cir. 2002)).
Actually, in a case such as this one where the witness is represented by counsel, allowing wholesale changes to sworn testimony is more akin to a take home examination assisted by one's private tutor. If allowed to go unchecked, this would subvert the mandate of Fed.R.Civ.P. 30(c)(1) that the examination and cross-examination during a deposition should proceed as they would at trial. That is, in the real world, when (not if) a client says something damaging on the witness stand during trial, his lawyer typically does not get to force a break in order to woodshed the client about the "correct" answer to opposing counsel's questions, and then expect the trier of fact to accept the lawyer's polished version of the client's testimony.
Plaintiffs suggest that because only T.E.N. elected to rely on some of Mr. Payne's deposition testimony in its pending motion for summary judgment (see doc. 150), none of his deposition corrections should be stricken. However, it is now well-established in the Tenth Circuit that "whatever changes Rule 30(e) permits, they are permitted without regard to the pendency of a summary judgment motion." It follows that it is immaterial whether any party is relying on Mr. Payne's deposition testimony in a pending motion for summary judgment. Further, T.E.N. does not appear to rely on any of Mr. Payne's changed deposition testimony, or at least those changes at issue in the instant motion.
See Summerhouse, 216 F.R.D. at 507.
T.E.N. asserts that Mr. Payne was cross-examined during his deposition, and this assertion has not been challenged by plaintiffs. Therefore, this factor weighs on the side of striking his deposition changes.
Plaintiffs generally complain that T.E.N.'s counsel's examination style at the deposition was confusing to Mr. Payne, who is a lay witness and does not have a college degree. T.E.N. responds by noting that Mr. Payne did not ask for the questions at issue to be repeated, did not seek clarification of the questions or an opportunity to clarify his answers, and that plaintiffs' counsel did not follow up with questions designed to elicit any clarifications Mr. Payne now seeks to offer. T.E.N. also argues that Mr. Payne has the intelligence to understand the deposition questions, because he is the principal owner of or involved in multiple businesses, has been involved in the car business for more than ten years, and has engaged in multiple business transactions. The court is unpersuaded that Mr. Payne was so confused during the entire deposition that he needed to clarify so many answers. But the court will consider whether each of Mr. Payne's deposition answers at issue reflects confusion and whether his subsequent changes are attempts to clarify or explain his confusion.
For ease of reference, the court has attached an appendix to this order summarizing Mr. Payne's original deposition testimony and his proposed changes. The court will now proceed to discuss the materiality of Mr. Payne's changes to his deposition testimony and apply the remainder of the Franks factors to the extent necessary.
See ex. A.
Changes to testimony at 142:4-14: The court finds this change is material, at least arguably, to Mr. Payne's position regarding T.E.N.'s affirmative defense based on the limitations provision of the Agreement. As stated above, the court declines to rule on plaintiffs' counsel's objection to the form of this question at this time. Mr. Payne claims that his corrected answer was based upon the entire reading of section 11.1 of the Agreement, as opposed to a partial and limited reading during the deposition. But it is uncontroverted that Mr. Payne had access to the Agreement at the time of his deposition. Therefore, his changed answer is not based on newly discovered evidence. Further, Mr. Payne's deposition testimony does not reflect any confusion he attempts to explain with his changed answer. Mr. Payne did not hesitate in answering and did not request to review section 11.1 of the Agreement. Indeed, his changed answer is completely contrary to his answer at his deposition because he changed his previous answer of "yes" to "no." This change to Mr. Payne's deposition is stricken.
Changes to testimony at 241:21-22 241:23 to 242:5: The first four questions relate to Mr. Payne's property at the Lake of the Ozarks. Later questions relate to cross-collateralization of loans and long-term debt. Plaintiffs seem to argue that Mr. Payne's changes are not material to any of the claims or defenses in this case because he is not a plaintiff and there is no claim of damages related to his personal property, cross-collateralization of loans, or long-term debt in the pretrial order (doc. 147). Plaintiffs also argue that the corrections should not be used for impeachment of Mr. Payne. T.E.N. responds by arguing that, depending upon how the court rules T.E.N.'s pending motion to dismiss as a discovery sanction (doc. 122), and also depending on how the court rules on T.E.N.'s forthcoming motion in limine to exclude evidence of alleged damages not suffered by plaintiffs, these proposed changes are material to the issue of damages and affect T.E.N.'s ability to impeach Mr. Payne on the subject.
Judge Murguia referred the motion to dismiss as a discovery sanction to the undersigned magistrate judge (see doc. 134), and the undersigned issued a report and recommendation regarding the motion (doc. 164). Both plaintiffs and T.E.N. have filed objections to the undersigned's report and recommendation (docs. 168 170), which Judge Murguia will consider in ruling on the motion to dismiss. If Judge Murguia decides to impose sanctions on plaintiffs, he may dismiss this case, limit the damages evidence plaintiffs may present, and/or impose other sanctions on plaintiffs. Until then, however, the damages plaintiffs claim are far from clear.
See doc. 164, at 3-8.
In the pretrial order, plaintiffs claim damages for capital replacement. In their second supplemental answer to T.E.N.'s Interrogatory No. 16, plaintiffs describe their capital replacement damages, and state that Mr. Payne was required to sell his home, lake home, and boat to generate cash for capital replacement, as well as infuse the businesses with his liquid capital from other ventures. At this time, because plaintiffs' claimed damages are unclear and T.E.N.'s motion to dismiss remains pending, Mr. Payne's changes to his deposition regarding his lake home, cross-collateralization of loans, and long-term debt are material to plaintiffs' damages claims.
Doc. 147, at 17, para. 10(a).
Doc. 123, ex. 2, at 3.
These changes relate to whether Mr. Payne's house at the Lake of the Ozarks was investment property and whether he ever had a home there. Certainly, Mr. Payne had access to information about his property at the lake when he was deposed. His changes can therefore not be based on newly discovered evidence. Mr. Payne's deposition does not reflect any confusion. Mr. Payne's change that the property at 415 Regency Cove was not investment property directly conflicts with his original testimony that he had stayed at some his properties but they were not considered residences and were always for sale. Mr. Payne's explanation for changing his testimony based on it being a painful situation and not wanting to go into detail is an insufficient basis to alter his testimony that was given under oath. These changes are stricken.
Changes to testimony at 242:4-6: Here, Mr. Payne attempts to change his testimony to read that his home at the lake was not always for sale but his investment properties were always for sale. This directly conflicts with his previous testimony that the properties he owned at the lake have always been for sale. Mr. Payne's deposition does not reflect any confusion, and this answer is not based on newly discovered evidence. Again, Mr. Payne's explanation that this was painful and embarrassing to discuss is insufficient. This change is stricken.
Changes to testimony at 242:9-13: In response to a question about what his taxable gain was on the sale of a lake property, Mr. Payne's deposition response was, "I would say close to a hundred. I don't know. Those figures aren't — they haven't been calculated by my accountant or I." Mr. Payne now wishes to change his testimony to state that he and his wife lost approximately sixty thousand dollars. Mr. Payne seems to indicate that he thought about this calculation after his deposition. Although Mr. Payne may have thought about his gain only after the deposition, plaintiffs have failed to show that his calculation was based on newly discovered evidence. The court therefore finds that Mr. Payne had access to the pertinent evidence at the time of his deposition. The court once again finds Mr. Payne's deposition does not reflect any confusion, and therefore this change is stricken.
Changes to testimony at 247:3-6: This change relates to whether Mr. Payne had control of the inventory in 2007 with respect to Odessa Chrysler Jeep Dodge and is therefore material to plaintiffs' breach of contract claim regarding excess inventory. Mr. Payne's change is not based on newly discovered evidence. Mr. Payne's deposition does not reflect any confusion regarding the inventory about which Mr. Payne was being asked. Mr. Payne claims he did not have time to finish his answer before his attorney objected and T.E.N.'s attorney moved to the next question. Mr. Payne, however, did not ask to finish or clarify his answer. This change is stricken.
Changes to testimony at 260:3-13: Here, Mr. Payne attempts to change his answer regarding when Nathan Parker was employed by him. This change is material to whether inventory was ordered by Mr. Payne or his team. There is no indication this change is based on newly discovered evidence. The court finds, however, that Mr. Payne's change attempts to clarify his answer and correct confusion in his deposition. When asked whether Mr. Parker worked for him or his entities prior to November 14, 2005, Mr. Payne said "no." However, when asked whether Mr. Parker worked for him in any capacity prior to November 14, 2005, he answered "yes." It appears Mr. Payne was confused with when Mr. Parker was hired versus when he actually started working. His change merely clarifies his answer. This change is therefore not stricken.
Doc. 156, ex. A, at 7 (259:24 to 260:2).
Changes to testimony at 290:23 to 291:8; 291:9-12; 303:2-9; 307:7-14: These changes relate to cross-collateralization and long-term debt, which, as stated above, are material. These changes do not attempt to explain any confusion reflected in the original deposition testimony and are not based on newly discovered evidence. Although Mr. Payne classifies his changes as mere attempts to clarify his answers, he goes beyond mere clarification and attempts to materially alter his answers. These changes are stricken.
Changes to testimony at 362:2 to 363:3: This relates to whether Mr. Payne had knowledge about an exhibit prepared by Donna Smith, plaintiffs' now stricken expert. This change is clearly material to the calculation of plaintiffs' damages. This change is not based on newly discovered evidence and the original testimony does not reflect confusion. Mr. Payne's original testimony was that he did not recall seeing the exhibit before and did not prepare it. When asked what the exhibit was, Mr. Payne stated that it appeared to be a spreadsheet and it looked like somebody had analyzed by historical numbers. Mr. Payne then concluded that it was probably something that was produced by Donna Smith. When asked if the exhibit was something he had any personal knowledge about, he responded that "[s]ince the numbers are about me, I believe I would." Mr. Payne's changed answer is that he had "personal knowledge of this exhibit. [He] provided Donna Smith all the underlying facts and [he] worked with her as she created this document."
On February 11, 2008, the court ordered plaintiffs' expert's report stricken and precluded her from testifying at trial for failing to comply with federal rules and previous court orders. See doc. 114.
Doc. 156, ex. A, at 11 (362:9-15)
Id. (362:18-22).
Mr. Payne suggests this is just a clarification of his prior answer. The court finds that Mr. Payne's change, though, is obviously much more than a clarification. His statement that he had personal knowledge of the exhibit directly conflicts with his previous testimony that did not recall even seeing the exhibit before. Further, Mr. Payne's statement that he worked with Donna Smith on the document directly contradicts his earlier statement that he did not prepare the document. Notably, plaintiffs' expert was stricken between the time of Mr. Payne's deposition and when he made his changes. The plaintiffs argue that Mr. Payne changed his answer to prevent T.E.N. from erroneously believing he did not have any knowledge of the information in the documents. But whether Mr. Payne had knowledge of the information contained in the documents is not the issue before the court. This change goes beyond a mere clarification and is stricken. Changes to testimony at 366:16-24: These changes are material because they relate to plaintiffs' breach of contract claim and allegation that excess vehicles were ordered outside the ordinary course of business. There is no indication Mr. Payne's changes are based on newly discovered evidence. While completely contradicting his original answers, Mr. Payne indicates that he misunderstood T.E.N.'s counsel's questions. But the record does not reflect any confusion by Mr. Payne. He answered the deposition questions unequivocally and without hesitation. These changes are stricken.
Changes to testimony at 387:13-22: These changes are material because they relate to the level of business of the dealerships before Mr. Payne's purchased them and whether they were operated outside the ordinary course of business. The deposition testimony does not reflect any confusion by Mr. Payne. Mr. Payne claims he remembered making two statements while he was reviewing documents during his deposition. There is no indication the documents Mr. Payne reviewed were newly discovered or that he did not have access to them at this point in the deposition. The court agrees with T.E.N. that Mr. Payne's changes fundamentally alter his testimony given under oath. These changes are therefore stricken.
Changes to testimony at 433:9 to 434:5: These changes are also material because they relate to plaintiffs' claims that excess inventory was ordered. Mr. Payne claims he remembered additional details later and is adding them to his answer to completely answer the question. The questions do not even ask about Mr. Parker's contacts with Chrysler. Mr. Payne's change that the Ford representative was aware excess inventory was ordered but did not know why it had been ordered contradicts his previous testimony that Mr. Parker did not tell him anything else about his contacts with Ford. The earlier testimony does not reflect any confusion. Mr. Payne cannot now add details to his previous answers while he is not under oath and cannot be further examined. These changes are therefore stricken.
Changes to testimony at 436:21 to 437:5: This change once again relates to excess inventory and is therefore material. Specifically, this question relates to whether Mr. Payne thought the Agreement specifically states that he would assume "open orders." In this line of questioning, counsel for T.E.N. used several other terms, including "incoming order — orders of vehicles" and "unfulfilled orders of vehicles." After Mr. Payne answered the question about the Agreement, he was asked whether there were other documents which required him to assume and pay for any unfulfilled orders of vehicles. T.E.N.'s counsel then clarified that he meant open orders. This testimony reflects some confusion which Mr. Payne's affidavit attempts to explain. This change is therefore not stricken.
Changes to testimony at 521:4-12; 521:13-16; 521:17-21; 524:1-4: These changes relate to excess inventory and are material. The deposition testimony does not reflect any confusion. Mr. Payne states that he wants to change his answers after reviewing a general ledger, his documents he brought to his February 27, 2008 deposition, and/or documents previously presented to T.E.N. There is no indication these documents are newly discovered evidence and that Mr. Payne did not have access to them at the time of his deposition. Indeed, in some cases, he even states that he reviewed documents he had brought with him to his deposition. The court also agrees with T.E.N. that Mr. Payne, as plaintiffs' 30(b)(6) representative, should have been prepared to testify to this information. T.E.N.'s 30(b)(6) notice states that the representative should be knowledgeable and able to testify with respect to issues listed in exhibit A, which specifically includes information as to excess inventory. These changes are stricken.
Doc. 82, at 2, 4.
Changes to testimony at 593:9-14: This change relates to excess inventory and T.E.N.'s defense that Mr. Payne approved the purchase of certain inventory because he wanted to grow the dealerships. This change is therefore material. Mr. Payne's change is not based on newly discovered evidence. Mr. Payne argues that T.E.N.'s counsel did not present the exhibit discussed during the deposition with its true content. The court does not find the deposition testimony reflects any confusion. Mr. Payne was asked whether he made a representation regarding his intent to expand in a letter to Ford Motor Company, and he agreed that he made such a representation. Now, Mr. Payne attempts to explain the representation in detail by adding how and when he intended to expand the dealerships. The court finds that Mr. Payne's change is more than a mere clarification and should therefore be stricken.
IV. Conclusion Order
In consideration of the foregoing,
IT IS HEREBY ORDERED:
1. T.E.N.'s motion to strike (doc. 155) is granted in part and denied in part.
2. Specifically, all of the deposition changes challenged by T.E.N. are stricken, except for those relating to Mr. Payne's deposition testimony at 260:3-13 and 436:21 to 437:5. APPENDIX Deposition Testimony Correction th th th st st
142:4-14. A. No, it's my understanding that the seller has an obligation indefinitely to indemnify Q. And it's your understanding that and to hold the buyer harmless for any after that one-year time the seller no damages caused by any breach of the seller longer has an obligation to that may occur within the first twelve month indemnify the defendant and hold period, starting from the date of contract. At the buyer harmless for any damages this point I was following Mr. Fallucca and caused by any breach — his partial and limited reading section 11.1. Ms. Smiley: Object to form. My answer is very different based upon the Q: — after that one year, correct? entire reading of section 11.1. Ms. Smiley: Sorry. I thought you were finished. Object to the form. A. Yes 241:21-22. A. Yes, my wife and I personally and jointly owned this property. It was our residence at Q. Is this your residence at the lake? the Lake of the Ozarks. Both our names A. It's investment property. appeared on the recorded deed and the mortgage. We both shared all expenses of this residence. Mr. Fallucca and I were discussing my investment properties for quite a while prior to this question about the 415 Regency Cove property and I inappropriately grouped this property in with the conversation. 241:23 to 242:3. A. Yes, my wife and I personally and jointly owned 415 Regency Cove. Prior to Q. Investment property. Did you purchasing the house, we stayed at investment ever have a home at the Lake of the properties that I owned at the Lake of the Ozarks? Ozarks. My investment properties were A. I've had the pleasure of staying always for sale. Our home at Regency was at some of the properties I owned at not "always" for sale and it was not our the lake but they weren't considered original intention to sell it. Once we realized residence. They've always been for that we needed to sell our home, we distanced sale. ourselves from the ownership and considered it an investment property. I apologize I didn't go into detail, it was a painful situation for us, especially my wife. It was our first house that we ever bought together and we had long term plans that included the house. 242:4-6. A. Our home at the Lake was not always for sale. My investment properties were always Q. They've always been for sale. for sale. It is painful and embarrassing to Okay. Did it sell? discuss it. A. Yes. 242:9-13. A. In thinking about it and figuring out how my wife and I came out financially on the sale Q. And what was the estimated of our home, we lost approximately sixty taxable — what was the taxable thousand dollars. At the time of Mr. gain? Fallucca's question, I stated I hadn't A. I would say close to a hundred. calculated any figures. I don't know. Those figures aren't — they haven't been calculated by my accountant or I. 247:3-7. A. Yes, in 2007 I had control of my 2007 year model inventory. However, I didn't have Q. Did you have control of the control of the approximately seventy 2006 inventory in 2007 with respect to year models that were left over and still had in Odessa Chrysler Jeep Dodge also? Odessa's inventory. I didn't have time to A. Yes finish my answer before my attorney objected Ms. Smiley: Object to the form. to the question and the defendant's attorney moved forward with the next question. 260:3-13. A. Nathan Parker was not officially employed by Odessa Ford, LLC and/or me prior to the Q. Did he work for you in any closing on November 14, 2005. I only had a capacity prior to November 14, verbal commitment from him prior to closing 2005? and I considered him to be part of the future A. Yes. management of Odessa Ford and Odessa Chrysler once the sales closed. Clarify my Q. Okay. In what role? answer. A. I would say approximately two to three weeks prior to that date I officially hired him. So his start date was not November 14. It would have been two or three weeks prior. Q. So you officially hired him sometime the end of October? A. Yes. 290:23 to 291:8. A. Yes. Odessa Ford, LLC has guaranteed other loans with other entities and/or myself. Q. Do you know whether Odessa I personally have several vehicles I use to Ford, LLC since September 12, work from daily and those vehicle liens are 2005 has any cross-collateralization guaranteed by Odessa Ford, LLC and myself. or guarantying of any loans with any I didn't think about these smaller loans. of your other entities? A. No. Q. You don't know? A. They do not. Q. Are you sure? A. No. The only loan they have is the floor plan and the only other guaranty on it is myself. 291:9-12. A. Yes. I've used the assets of Odessa Ford, LLC as collateral. My bank, First National Q. Have you ever used Odessa Ford Bank of Missouri, has an Assignment of or any of its assets as collateral for Rents of Odessa Ford, LLC attached to the any other loan for any of — any of Odessa dealership and Odessa parking lot that your other entities? Monopoly Acquisitions, LLC leases to A. No. Odessa Ford, LLC. 303:2-9. A. No, the Odessa dealerships do not have any outside long term debt, other than the Q. Well, the dealerships have long- Odessa dealerships have a long term debt to term debt, don't they? Monopoly Acquisitions, LLC and myself. A. Not unless the actual dealership Clarify answer. isn't the tenant of the property and owns the property. Q. Do the Odessas have long-term debt? A. No. Q. None whatsoever? A. No. 307:7-14. A. Monopoly Acquisitions LLC and myself have loaned the Odessa dealerships several Q. Have any of your other entities million dollars since 2005. I have on ever borrowed money from the occasion had Odessa pay Monopoly and/or Odessa dealerships? myself back for the loans to the Odessa A. I don't believe so. dealerships. I do not consider this borrowing from Odessa, but consider it repayment. Q. Pardon me? Clarify answer. A. I don't — no, absolutely not. Q. So as you sit here today you're saying no? A. No. 362:2 to 363:3. A. Yes, I have personal knowledge of this exhibit. I provided Donna Smith all the Q. Let me go back if I can, please, underlying facts and I worked with her as she to Exhibit Number 42. Have you created this document. Clarify Answer. seen that document before? A. I don't recall seeing this document before. Q. What is it? A. It appears to be a spreadsheet. Q. You don't know what it is? A. It appears to be a spreadsheet. It looks like something that I would — somebody has analyzed by historical numbers. So it was probably something that was produced by Donna Smith. I can't honestly tell you if I've seen it before. Q. It's not something you prepared? A. No. Q. And it's not something that you have any personal knowledge about? Ms. Smiley: Object to the form. A. Since the numbers are about me, I believe I would. Q. You didn't prepare the document, did you? A. No. Q. Okay. And you don't recall seeing it before today's date, correct? A. I don't recall. 366:16-24. A. Yes, I asked Angie Frye to verify the accuracy of the document. She said she Q. Did you speak to anyone from checked the document against our records and Chrysler after you received that everything matched. I misunderstood Mr. document? Fallucca's original question. A. No. A. Yes, I believe the document to be accurate. Q. Did you do anything to verify the Again, I misunderstood Mr. Fallucca's accuracy of that document? original question. A. No. Q. So you don't know whether that document is accurate or not, do you? A. No. 387:13-22. A. Yes. I did represent to Ford Motor Company that Heritage was doing to [sic] Q. Did you ever represent to Ford very little business. While reviewing Motor Company that the Heritage documents during my deposition, I dealership was doing very little remembered I had made that statement. business? A. No. A. Yes. I did represent to Ford Motor Company that Heritage was doing nothing to Q. Pardon me? increase its business. Again, while reviewing A. No. documents during my deposition, I remembered I had made that statement. Q. Did you ever represent to Ford Motor Company that the Heritage dealership was doing nothing to increase its business? A. No. 433:9 to 434:5. A. I remember Nathan Parker telling me that he had talked with both the Ford Q. Did Nathan Parker as you put it representative, Rachelle Kennedy and the go after Ford? Chrysler representative, Tim Eastland. He A. Yes, he said he did. He said he said that both representatives were aware of took calls. He didn't say who. the excess inventory that Heritage had He'd be happy to tell you in ordered, but neither knew as to why the deposition. excess inventory had been ordered. In an effort to answer the defendant's question Q. I want you to tell me what he completely, I remembered these details and told you. volunteer the details to be added to my A. He said he did inquire. One, we testimony. were unable to find out because it was privileged information to a separate company. Even though we had bought it Ford did not recognize us as having any — no more — no greater than asking information of another Ford dealer. Then I asked is there any other way to look through our records and he said no, we cannot. We do not have the dealer access codes for Heritage and they most likely have been dissolved or voided by them. Q. Did he tell you anything else about his contacts with Ford Motor Company? A. No. Q. That's all you can recall? A. Yes. 436:21 to 437:5. A. As stated in testimony, "I don't see anywhere in the document where it specially Q. Can you show me in the asset points out that I would assume any open purchase agreement where it orders." I believe it's important to mention indicates that Odessa Ford or that Mr. Fallucca's opening question about Odessa Chrysler is obligated to the documents, was that he was asking about accept all open orders of Ford or "incoming order — orders of vehicles" and I Chrysler vehicles? answered his question by stating "yes" and Ms. Smiley: Object to form. then I answered again by stating that the Q. It's the next document. Here it incoming orders were referenced in the "the is, Exhibit 16. buy-sell." Mr. Fallucca asked me show me A. I don't see anywhere in the where in the document it indicates "all open document where it specifically orders." Mr. Fallucca changed the direction points out that I would assume any of the question by switching from "incoming open orders. orders — orders of vehicles" to "all open orders." There is a difference between the two terms. In an effort to answer Mr. Fallucca's original question, yes I believe that Odessa Ford and Odessa Chrysler were obligated to accept all incoming orders of Heritage's. Section 6.2 states that the Buyer shall not have a material breach with the franchise. Furthermore, in Section 8.3, it states that "Buyer agrees to perform Seller's preparation and delivery duties and obligations under and with respect to each unfilled New Motor Vehicle order assigned to Buyer by Seller" an "unfilled order" is a vehicle that was ordered by the dealer from the franchise and that has not been received yet by the dealer. Then Mr. Fallucca continued with the next question and asked if I was aware of any other documents that had any requirement of the buyer assuming and paying for "unfulfilled orders of vehicles." This being the third and different term used in his questions, I asked him did he mean open orders? He answered yes. At this point, I was very confused because he'd referenced at least three different terms. 521:4-12. A. Correction, the last new 2006 vehicle that was considered part of the surplus inventory Q. (By Mr. Fallucca) Okay. When was a 2006 Ford Ranger with the VIN were all of these what you 1FTYR44U46PA46766 and it was sold on considered new surplus vehicles October 12, 2007 for a loss of $4,695.41. I liquidated by Odessa Ford and was able to confirm this after reviewing Chrysler? Odessa's general ledger and/or my documents Ms. Smiley: Object to the form. that I had brought with me to my Feb. 27, A. When? 2008 deposition. Q. Yes. A. When was the last one we sold? Q. Sure. A. I believe it was in July of `07. 521:13-16. A. Correction, the Odessa dealerships still had three left over from the surplus vehicles. Q. Okay. And how many new cars Again, I was able to confirm this after — new surplus vehicles as you call reviewing Odessa's general ledger and my them were in your inventory in July document that I had brought with me to my of 2007? Feb. 27, 2008 deposition. A. I believe one. 521:17-21. A. There were three surplus vehicles left in Odessa's inventory in July 2007. All three Q. Do you know for a fact? vehicles being 2006 year models. A Ford A. Yes. Explorer with the VIN of 1FMEU53K17UA01399, a Ford light truck Q. Which one? with the VIN of IFTRF145X6NA61840, and A. There was one left. It was a a Ford Ranger with a VIN of 2006 Ranger, Ford Ranger. 1FTYR44U46PA46766. Likewise, I was able to confirm this after reviewing Odessa's general ledger and/or the documents previously presented to the defendants. 524:1-4. A. There were sixty eight 2006 year models in inventory on Jan. 1, 2007. Of that total, Q. Okay. How many new car what thirty four were 2006 surplus vehicles. I want you consider surplus vehicles were to clarify my answer after looking at the in the inventory of Odessa on general ledger and/or the documents January 1 of 2007? previously presented to the defendants. A. 68 593:9-14. A. Yes, I stated to Mr. Baack our intentions of expanding. Our intentions of expanding had Q. Okay. And then you state to Mr. no definite time frame and would ONLY Bath our intentions are to expand occur at some time after the closing of the the existing new car and new truck buy/sell. Furthermore, our intentions were inventory, the showroom, the parts only to occur if Odessa had increased sales of department, and the service center new vehicles. We did not increase new for the Ford dealership. Did you vehicles sales, they actually were decreased. represent that to Mr. Bath? As it stands, the only expanding of new A. Yes. vehicle inventory was done, was prior to the closing the buy/sell and by Heritage Motors. Our original intensions (sic) still stand today as it is represented in our new vehicle levels. With the lower new vehicle sales, the Odessa dealerships have less than two million dollars in new vehicle inventory as of today. I don't believe Mr. Fallucca presented the entire document with its true content.