Sterling v. Sterling Part 4: Trial Setting Conference

Hello, this is TwistNHook, from SBNation's Cal site, CaliforniaGoldenBlogs.  I've been working on a series about the Donald Sterling probate trial.  This is part 4 with the first 3 parts as follows:

Part 1:  The Basics

Part 2:  Mental Capacity And The Law

Part 3:  Shelly Sterling's Filings

In this post, I wanted to talk about the Trial Setting Conference, which took place on Monday, June 23, 2014.  At this time, the Judge considered several arguments about the nature of the Trial and set another hearing for Monday, June 30, 2014 to consider further issues prior to the July 7, 2014 trial.  In this post, I want to discuss the Trial Setting Conference and also Shelly Sterling's Witness List.  I was able to obtain a copy of that witness list.  I have not been able to obtain a copy of Donald Sterling's documents, including his Witness List and responsive documents objecting to the Ex-Parte Application filed by Shelly Sterling.  I can only rely upon media reports there, but will do my best to distill them down.

Before we get started here, let me TL; DR you for a moment here.  The TL; DR version of this post is as follows: Donald Sterling is attempting to delay the trial (presumably to ruin the sale to Ballmer) by claiming his expert doctor witness is out of town almost all of July.  The Judge is stating that this Trust is "unambiguous" and that the trial may take no more than 5 minutes with him ruling in favor of Shelly Sterling.

Trial Setting Conference

The first thing is that I may have wasted your time somewhat.  In Post 2 (linked above), I provided a significant amount of detail regarding California Probate Codes 810 and 811.  These sections are relevant, because they provide the legal underpinnings for finding somebody mentally incompetent to act as Trustee.  My point there was that the doctors who did the evaluations of Donald Sterling would be looking at the factors listed in there, such as rational thought processes and orientation to time and place.

However, we may not have needed any of that at all.  At the hearing on Monday, the Judge said that he may not take any testimony regarding the specifics of the doctor's evaluations.  He said that the case may depend on whether Shelly Sterling followed the appropriate steps in the Trust to remove a Trustee:

Shelly Sterling wants a judge to bless that determination, and [Judge] Levanas indicated at Monday's hearing that could be a simple process. Call the two doctors. Determine they are licensed and work in the field of assessing an individual's capacity. Confirm that they wrote reports after determining that Donald Sterling was suffering from dementia.

Those three steps, Levanas indicated, would satisfy a provision in the trust's governing documents that would allow Donald Sterling to be removed as a trustee.

"I could do this trial in five minutes - it's a checklist," he said. "I don't know why you need the court. Essentially, if the trustee has the power, they have the power."

So, the doctor would not need to testify as to why their report said that Donald Sterling had dementia.  All that matters is that they followed the terms of the Trust and prepared reports that *did* state he had dementia.  The Judge even stated that he did not want to potentially get deeper into that question:

Going to the deeper question of Donald Sterling's competency, he said, "troubles me to some extent."

However, as forceful as that seems, the Judge stopped short of just handing Shelly the keys to the castle:

Despite saying the trust language seemed to require only a brief recap of Shelly's assumption of control of the trust, Levanas said it made him uncomfortable to think of the "huge consequence" of a decision made with very little information.

On his end, Donald Sterling's attorneys argued that a previous version of the Trust had sections that allowed somebody to dispute the doctor's evaluations:

[Donald Sterling's attorneys] also asked Levanas to reinstate a provision of the Sterling trust that allowed a trustee "booted out" for incapacity to be reinstated, based on the word of additional experts. Attorney Max Blecher said that codicil "just disappeared" inadvertently and should be restored by the court to enable Sterling to have his side heard.

This is where I'd LOVE to actually have a copy of these responsive documents.  I want to read the previous Trust to see this purported section.  Presumably, it was in there and this is not a flat out lie by Donald Sterling's attorneys.  However, without the actual responsive filings, I cannot verify this personally.

My personal opinion is that this is a somewhat inane argument.  I often have people come into my office to execute estate planning documents who do not understand what is going on with all the legal mumbo jumbo.  I try to make it as approachable for them as possible.  I can understand how complicated these documents can seem.  However, the Sterlings have teams of highly paid attorneys.  It is the attorney's job to make sure that everything is perfectly attuned to the what the Sterlings want.  For them to say that a section "just disappeared" inadvertently seems *too* perfect for me.

Having said that, I'd be somewhat surprised if Judge Levanas truly determined this matter without giving Donald Sterling an opportunity to cross-examine the doctors or have his own witness testify.  This is a two billion dollar sale with the entire world watching.  Is he just going to summarily rule for Shelly Sterling "with very little information."

FOUR ISSUES

We will find out on Monday, June 30, apparently, because the Judge set another hearing for then and provided four issues for the attorneys to brief him on:

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?

We've discussed 1 and 2 above and I'll get into them a bit more when I look at the Witness List from Shelly Sterling.  4 is about whether Steve Ballmer's attorney gets to speak at the trial.  Steve Ballmer's interests are aligned with Shelly Sterling's interests, so the Judge may not want to double up on the attorneys.  We'll see what happens on Monday, June 30.

DELAY

In regard to the 3rd question, this stems from Donald Sterling's expert doctor witness,  Dr. Jeffrey Cummings.  Donald Sterling's attorneys argued that they needed to have this expert witness testify and that he could not testify during the set trial times due to a conference.  They even filed a 100+ page declaration stating this.  According to Shelly Sterling's attorneys, this was an attempt to delay the trial and kill the deal:

O'Donnell, Shelly Sterling's attorney, said they fear that any delay in the trial could scuttle the deal with Ballmer because it calls for it to be completed by July 15 - with a provision that date could be extended to Sept. 15.
"Delay is the enemy of this deal," O'Donnell said. "We believe there is substantial risk if we go beyond July 15."

In the original filings by Shelly Sterling, they gave the 9/15 date as the drop dead date.  If it is not sold by then, then the NBA will seize the team and sell it at auction.  The NBA does *not* want to start the 2014-2015 season with Donald Sterling in any way associated with the team.

It appears that the July 15 date stems from a meeting for the NBA Board of Governors to approve the sale:

Shelly Sterling and Ballmer want the trial to proceed on schedule, so that the NBA Board of Governors would have a chance to vote on the Clippers sale at its July 15 meeting.

So, the 7/15 date is not a drop dead date, it appears, but Shelly Sterling's attorneys are arguing that if the trial is moved back to August (as Donald Sterling requests), then they'll fail to obtain approval at the 7/15 board meeting and the uncertainty/time crunch may cause them to fail to meet the 9/15 date.

I am presuming that by putting the 3rd issue out there, the Judge somewhat does not buy Donald Sterling's arguments.  He sees other options, such as video testimony or by written statement, for the doctor's testimony.  We'll see on Monday whether he grants the continuance or not.  If he does grant the continuance, then that means he wants to go to the competence question.

Donald Sterling cannot win the trial this Monday, but he can lose it.  Even if the Judge rules in his favor on Monday, allowing him time for the witness to testify as to Donald Sterling's capacity, it does not mean that in the end the Judge will rule that Donald Sterling does have capacity.  If the Judge denies the motion for a continuance and says that the trial is on the limited issue of whether Shelly Sterling followed the Trust appropriately, then Donald Sterling's case may be DOA on July 7.

SHELLY STERLING WITNESS LIST

I was able to get ahold of a copy of Shelly Sterling's Witness List and I wanted to briefly go over it.  She splits up her witnesses into 3 separate sections, so let's take them in order.

1.  Following Trust Procedure

Here, they plan on calling four witnesses.  They will call an expert Trust attorney, who coincidentally I know professionally, to testify as to the terms of the Trust.  Then, they will call the doctors who prepared the evaluations.  Those doctors will testify as to the checklist, they are licensed, they performed the evaluation, and then prepared a report stating he had dementia.  They won't go into the how and whys of it, though.

2.  Donald Sterling Agreed To Sale

The Judge may not need testimony on this issue if he feels that issue #1 is sufficient.  However, if not (or if the Judge needs additional bases for his ruling), they are providing more witnesses on this issue.  Here, they are arguing that Donald Sterling delegated the power to sell the Clippers to Shelly Sterling by signing a letter agreeing to the sale.  Section 7.6c on page 46 of the Trust allows for one Trustee to delegate their powers to another Trustee.  Cal Probate Code 16001 says that a Trustee may follow the written instructions of another Trustee.  Basically, Shelly is arguing here that Donald said "Sell the team" with that written letter and she is just following the instructions.

Here, they will bring in that same Trust expert to testify as to how the above quoted sections work.  Then, they'll bring in all the attorneys here and Donald and Shelly to testify as to the letter and discussions on the sale of the Clippers.

3.  Best Interest Of The Trust

If the Judge needs even more information, then Shelly Sterling will argue about how the sale is in the best interest of the Clippers and to not sell now would be damaging to the Trust beneficiaries.  Here, they may introduce evidence of Donald Sterling's mental incapacity, not necessarily to remove him as Trustee, but instead to show that he is acting erratically and not in the best interest of the Trust.  Their main witness here is a NBA executive who will lay out what will happen if the sale falls through.  He will testify as to the team seizure and auction process.  Shelly Sterling will argue that this will lead to a worse price for the team.  They have an executive from Bank Of America listed as a witness who will testify as to the downsides of the auction process.

Donald Sterling contests this.  He states that the team will be worth more over time:

In court documents filed Monday, however, Donald Sterling argued that it is "equally or more likely that with the passage of time the Clippers will be worth more than the amount now being considered."

I do not find this argument persuasive, because there is no "passage of time" here.  The team will be seized in September, apparently, if not sold before then.  Even if this statement is correct, the assumptions underpinning it are not and so it is not relevant to this matter.

CONCLUSION

This case is very interesting as it could be extremely complicated or extremely simple.  We could have a trial introducing complex elements such as NBA auctions and Donald Sterling's capacity.  We could have a trial "in 5 minutes" that just goes to whether Shelly Sterling followed the terms of the Trust.  We could have the trial in July or August.

We'll find out this Monday.  I'm trying to get as many of the documents as possible and keep up to date on the Court hearings as much as possible.  That way I can try to distill it down into an approachable post.  If you have any questions or thoughts, leave them in the comments.  We've had some great discussions so far and I look forward to many more great discussions!