Sterling v. Sterling Part 5: Is It Over Before It Even Began?

Kirby Lee-USA TODAY Sports

The Judge narrows the issues prior to the July 7 trial in June 30th's pre-trial hearing

Hello, this is TwistNHook from SBN's Cal site, California Golden Blogs.  We've been taking a ponder at the impending Sterling trial for the last few weeks.  This is part 5 and here are the other first parts:

Part 1:  The Basics

Part 2:  Mental Capacity And The Law

Part 3:  Shelly Sterling's Filings

Part 4:  June 23 Trial Setting Conference

Today, we're going to look at the June 30, 2014 pre-trial hearing.  Before I move forward, let me TL: DR you here.

TL; DR Version:  The Judge said that the only issues are whether Shelly Sterling appropriately followed the Trust terms and how Donald Sterling's attempted revocation of the Trust affects matters.

At the hearing last week, the Judge stated four issues he wanted briefed for today's hearing.  Those four issues were as follows:

1. Is the trust's governing document "ambiguous" - and should he take testimony as to the meaning of its provisions?


2. Should the scope of the testimony be limited merely to whether the trust's provisions were followed, or should it get into the deeper question of Donald Sterling's competency?

3. Should a defense motion to delay the trial because an expert witness will be out of the country be granted - or could that physician simply testify under oath ahead of time?


4. Should Ballmer be granted standing in the case, meaning his attorneys could make arguments during the trial?

Let's see how the Judge ruled on these four issues, what issues are remaining for next week's trial, and what the arguments are from the parties.

Issues #1 and #2 - Trust Terms

So, last week, valued reader citizenjeff asked me my view on whether the Judge would allow testimony about Donald Sterling's capacity or would just limit testimony to whether the Trust terms were followed.  I said the following:

My opinion is that the Judge may allow the evaluation testimony.

Hes made many comments about how it could be "5 minutes," but this is a billion dollar sale. Is he really going to rule based on 5 minutes of testimony etc etc?

I’m sure I’ll be extremely wrong, tho!

In the Game of Trolls, you either troll or you die. 
CaliforniaGoldenBlogs: Read ItFollow ItLike ItWear It

LOLME

Picard-facepalm-o_medium

Yes, that's right, I'm wronger than wrong!

Next week's Sterling vs. Sterling probate trial, with the proposed $2 billion sale of the Los Angeles Clippers hanging in the balance, will not be about whether 80-year-old Donald Sterling can spell "world" backwards or draw a clock.

The lawyers representing Donald and Shelly Sterling, asked Monday by Judge Michael Levanas to work out a trial outline, returned to court and said they had stipulated that Donald Sterling's mental capacity was no longer an issue.

Well, I joke around that I was wrong, but it's not 100% clear what the Judge would have done.  You'll note that the article states that the parties stipulated to remove an issue from contention.  You'll recall that at last week's hearing, Donald Sterling argued that a recent change to the Trust led to the "inadvertent" removal of language that could have allowed Donald Sterling to provide counter-evidence about his capacity.  They even had another review done that apparently proved he has capacity.

Now, however, they've abandoned that argument.  Instead, they are arguing that the examinations were procured by fraud and undue influence.

Bobby Samini, one of Donald Sterling's attorneys, said, without getting into specifics, that he will show that the medical examinations of Donald arranged by Shelly were "not complete, that there was fraud and that the letters (the doctors' findings) do not conform to the terms of the trust."

AND

Earlier Monday, Sterling's lawyers filed papers with the court alleging that Shelly had "duped" and "blindsided" her husband in the process of having two doctors certify in writing that he is mentally incapacitated.

I've not been able to review Donald Sterling's filings, but thanks to the kindness of Pierce O'Donnell, Shelly Sterling's attorney, I've received copies of Shelly Sterling's filings and had an opportunity to review these.  They did file a brief regarding this argument.  We've seen some of the arguments in there before, namely that the examiners were done pursuant to California Probate Code 810 et seq and are all entirely appropriate.

However, there are some new arguments that are now relevant to the proceedings.  For example, Donald Sterling argues that the doctors fraudulently obtained his cooperation and that he did not realize the results would lead to him being removed as Trustee.  Shelly Sterling's argument is that if Donald Sterling did not realize the results could lead to him being removed, that is his own damn fault.  The Trust, which Donald Sterling signed, specifically requires the Trustees to cooperate with examinations about their capacity in Section 7.5c (found on page 70 of this PDF).

Shelly Sterling argues that Donald Sterling cannot claim fraud when he agreed to cooperate all along.  It's not Shelly Sterling fault if Donald Sterling plain forgot he was supposed to cooperate all along!  Moreover, he had no right to refuse the examinations.  Pursuant to the Trust, he has to cooperate, so even if he knew that they could lead to his removal as Trustee, he still had to cooperate with them.

Additionally, I've reviewed the doctor's evaluations personally and I'd be surprised if the Judge found fraudulence.  For example, Dr. Spar's report (starting on page 104 of the above PDF) notes that Shelly Sterling was present at the examination and they had an extensive discussion about Alzheimer's Disease and how he was there to determine whether Donald Sterling had Alzheimer's Disease.

In her evaluation, Dr. Platzer notes that the entire examination took 80 minutes.  That is a significant period of time and enough for Donald Sterling to consider the ramifications of the test.  Then again, I've been wrong before and I look forward to being wrong again!

So, this issue will be heard at the trial next week.

*Did Shelly Sterling properly comply with the terms of the Sterling Family Trust in having Donald removed as a co-trustee, or was Donald defrauded by Shelly and/or two doctors who examined him and found him to be mentally incapacitated?

Issue #3 - Continuance

The next issue relates to whether the trial should start on July 7 or be continued a month so that Donald Sterling's preferred expert could testify as to his competency.  Since there will not be any testimony about capacity, then this issue became moot.  The Judge ended up ruling that there was no need for the continuance, thus, and so the trial will start on July 7.

Levanas also rejected a request by Donald Sterling's attorneys for more time, meaning the hearing will start July 7.

I suspect that the judge's comments the week prior about the Dr testifying by writing or by video provided leverage to Shelly Sterling's attorneys to negotiate the stipulation discussed in Issues #1 and #2 above.  Shelly Sterling's briefs indicate that the doctor is actually on vacation for part of July and not at a conference (as stated previously) that would make the Judge even less likely to provide the continuance.  If Donald Sterling's attorneys do not think that they can get their preferred expert to testify and their delay tactic will not work, then they lack leverage in negotiations.  That gives Shelly Sterling's attorneys the upper hand in obtaining the preferential stipulation.

Issue #4 - Ballmer

This issue was about whether Steve Ballmer's attorney should be able to speak at the trial.  I cannot find any media reports that ouch on this topic.  That probably means that the Judge does not have much interest in hearing from Ballmer's attorneys.  Ballmer is rattling his sabre, though:

O'Donnell and Ballmer's lawyer, Adam Streisand, repeatedly hinted Monday that the former Microsoft chief executive would sue if Donald Sterling upends the sale

That is just to create more negotiating leverage for Shelly Sterling.  It is unclear if additional negotiations will take place prior to the July 7 trial, though.

Additional issue - Revocation

There is one more issue that the Judge is going to discuss at the trial, how Donald Sterling's purported revocation affects the trust/trial:

*After Donald exercised his right to revoke the trust agreement on June 9, did Shelly have the legal right to go ahead with the sale of the Clippers to billionaire former Microsoft CEO Steve Ballmer?

This is an extremely technical legal issue.  Here, Donald Sterling is arguing that he revoked the Trust on June 9 and that means Shelly Sterling, presumably as sole Trustee, has to immediately turn over all of Donald Sterling's personal interest in the Trust (including 50% of the Clippers).  Then, Shelly Sterling would not have the unilateral ability to sell the team.  This would also preclude the Court from having jurisdiction (aka power) over the case, because if there is no Trust, there is no Trust trial.

Shelly Sterling has argued that Donald Sterling lacked capacity to validly execute this revocation document.  However, she has also argued that even if he did have capacity, revocation of a Trust doesn't just immediately halt all Trust activities.  The Trustee has to wrap up the Trust business, including, in this instance, fulfilling the terms of a previously agreed to NBA team sale.  Shelly Sterling's argument is that even if there was a valid revocation, she still has to finalize the sale of the Clippers in her wrapping up.

Shelly Sterling argues that the Trust specifically states that the Trustee has to retain sufficient assets to fulfill all liabilities.  Additionally, California Probate Code 15407b echoes that language:

(b) On termination of the trust, the trustee continues to have the powers reasonably necessary under the circumstances to wind up the affairs of the trust.

Shelly Sterling's brief cites a significant amount of case law and other authorities that support this analysis.  It is not an "immediate cessation of Trust activities" when a Trust is terminated.  Additionally, Shelly Sterling cites *more* authority involving cases where a Trust was terminated and then a dispute arose and the court retained jurisdiction to settle the matter.  I have not been able to read Donald Sterling's brief on this, but Shelly Sterling's brief notes that he provides no cites to prove his points.

Shelly Sterling also argues that it would be disastrous for Trust revocations to cancel commercial contracts.  She cites a case that specifically notes a time when a sale was finalized after a revocation.  Additionally, she notes that if contracts could be cancelled by revocation, people would undertake revocations to get out of contract they did not like and it would create financially uncertainty.  Contracts are designed to create financial certainty and so that is wildly counter productive.

I will note that Shelly Sterling's witness list included a witness who would testify as to some sort of financial calamity that would befall the Sterlings (due to a 350 million line of credit) if the Trust was revoked.  I do not know much more than that.  I can guess that if the Trust is revoked, the line of credit would be called and they would be personally liable to pay a substantial sum of money back?  Unclear.

Conclusion

So, most, if not all, of the pre-trial wrangling is over.  We now have our two issues set for next Monday:

*Did Shelly Sterling properly comply with the terms of the Sterling Family Trust in having Donald removed as a co-trustee, or was Donald defrauded by Shelly and/or two doctors who examined him and found him to be mentally incapacitated?

*After Donald exercised his right to revoke the trust agreement on June 9, did Shelly have the legal right to go ahead with the sale of the Clippers to billionaire former Microsoft CEO Steve Ballmer?

A two billion dollar sale is going to be determined without any evidence about the legal capacity of Donald Sterling.  Instead, they are going to argue over *how* the evaluations were performed instead of the results thereof.  This is a clear cut victory for Shelly Sterling, because even if the later doctor's evaluation that found he had capacity was 100% valid, it would not matter.  Donald Sterling is starting from behind the eight ball in arguing away the bad results without any counter evidence.

As for the second issue, that is extremely technical.  It seems clear cut for Shelly Sterling, but I have only had the opportunity to review her brief and not Donald Sterling's brief on the issue.  This leads me to believe that the ballgame may be over before it even began.  Shelly Sterling's attorneys may have out maneuvered Donald Sterling's attorneys in these pre-trial phases and put her in a stronger position to succeed.

But enough about my thoughts!  What do you think about these issues?  Who is going to win?  Leave your thoughts in the comments and GO BEARS!

X
Log In Sign Up

forgot?
Log In Sign Up

Forgot password?

We'll email you a reset link.

If you signed up using a 3rd party account like Facebook or Twitter, please login with it instead.

Forgot password?

Try another email?

Almost done,

By becoming a registered user, you are also agreeing to our Terms and confirming that you have read our Privacy Policy.

Join Clips Nation

You must be a member of Clips Nation to participate.

We have our own Community Guidelines at Clips Nation. You should read them.

Join Clips Nation

You must be a member of Clips Nation to participate.

We have our own Community Guidelines at Clips Nation. You should read them.

Spinner.vc97ec6e

Authenticating

Great!

Choose an available username to complete sign up.

In order to provide our users with a better overall experience, we ask for more information from Facebook when using it to login so that we can learn more about our audience and provide you with the best possible experience. We do not store specific user data and the sharing of it is not required to login with Facebook.

tracking_pixel_9347_tracker