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Sterling v. Sterling 13: FIN

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We had closing arguments and the BIG REVEAL!

Thearon W. Henderson

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 13 and here are the other 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

Part 5:  June 30 Trial Setting Conference

Part 6:  Day 1 of the Trial

Part 7:  Day 2 of the Trial

Part 8:  Day 3 of the Trial

Part 9:  Day 4 of the Trial

Part 10:  Day 5 of the Trial

Part 11:  Day 6 of the Trial

Part 12:  Day 7 of the Trial

And here we go!  It's all over.  By now, you've probably heard that the Judge ruled in favor of Shelly Sterling in yesterday's "oral tentative ruling."  He'll write up a written Order, but with his big reveal, the guesswork is over.  I wasn't sure if he would rule from the bench today, because I thought he would want to take his time to get the written ruling perfect.

So, what did the Judge rule on today and is there anything that DTS could have done differently?  First, let's look at the ruling itself.  The Judge had three issues to rule on today:

*Whether Donald was properly removed from the Sterling Family Trust.

*Whether Shelly can still execute the sale after Donald revoked the trust.

*Whether there is an urgent situation regarding imminent loss of value to the trust. If there is, Levanas can make a ruling under section 1310 (b) in the California probate code approving the sale and making his order essentially appeal-proof.

There is a certain logical order to these issues.  First, was DTS properly removed for the sale to be accomplished unilaterally?  Second, even if he was properly removed, did his purported revocation stop the sale in its tracks?  Third, even if the sale is appropriate, will this Order be stayed on appeal?  She has to win on all three to win at all.  Lose on any of these issues and Shelly could have gone down in flames.

Removal

So, what did the two attorneys talk about in closing for this section?  On Shelly's side, her attorney just reiterated all the evidence we've seen before about the professional job the two doctors did in evaluation DTS.  In response, DTS' attorney got really really angry.  Their approach today seemed to be in line with the old legal adage:

If you have the law, pound the law.  If you don't have the law, pound the table.


The more and more you yell as a lawyer, the more and more desperate you are.  It's been obvious to me throughout this whole process that DTS' attorneys were desperate to do something, anything to win.  They had all their attempts to delay the process and those failed.  They tried to impugn the name of one of the doctors and that appears to have failed.  Now, in their last hour, they just up and started yelling as if that would make the Judge more likely to believe them.

Judges want the facts, they don't want dramatics.  Whenever I appear in Court, I usually just try to focus as much as possible on the key specifics without a lot of big flourishes.  Let me tell you a story.  When I have a client in tow, I sometimes have to put on more of an act to make them feel like they are getting their monies worth.  One hearing, I included the line "[X bad thing for my client] has been occuring, but THIS.ENDS.NOW."  The Judge starts cracking up at me.  I'm going into the dramatics to make my client feel like he is being zealously represented, but the Judge isn't buying it.  I can tell the entire time, my antics are useless.

He orders us to go to the hallway to try to settle the matter with the opposing party.  Once we get out there, my client starts going on about how the Judge was laughing at the preposterous of the opposing parties' arguments.  Sure, client, that's EXACTLY what he was cracking up about.

So, I doubt the Judge here is going to get flim flammed into believing DTS' attorneys just because they talk at a slightly louder decibel level than normal and watched Game Of Thrones before the day started.  And now we know he didn't.

The Judge found all the facts in Shelly's favor that she needed.

This was a huge finding that beat down DTS' arguments.

So, there you go.  All the finds leading to an Order that the sale was appropriate, because DTS was appropriately removed.

Revocation

The next issue was not fact based, but technical in nature.  BORING!

What is 15410(A)(1)? This:

15410. At the termination of a trust, the trust property shall be disposed of as follows:

(a) In the case of a trust that is revoked by the settlor, the trust property shall be disposed of in the following order of priority:
(1) As directed by the settlor.

So, DTS' argument is that he as settlor (i.e. creator) of the Trust can revoke the Trust and then direct the disposition of the assets.  Of course, Shelly is also a settlor of the Trust.  Plus, on top of that there was already a binding contract in place to sell the team.  It would be chaos to allow a settlor of a Trust to abruptly terminate the Trust in an attempt to circumvent a legally binding contract.  The purposes of contracts are to create certainty in business relationships and that would defeat the very purpose of contracts.

So, the Judge did not buy it.


So, what does 15407(B) say? This:

(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.

Pretty straight forward.  The Trustee retains appropriate powers after a revocation to wind up the affairs.  That would include executing a legally binding sales contract.

So, Shelly won on the first issue and she won on the second issue, which means she essentially won the trial.  The third issue is another technical issue, but with more factual analysis. Let's get into that now.

Appeal

The issue here is whether there would be damage to Shelly if the ruling is stayed such that an unstayable order should be granted pursuant to California Probate Code 1310(b).  A stay is an Order from an Appeals Court blocking the lower Court's Order until the Appeals Court can rule in full, which could take years.  So, even if Shelly wins, if DTS appeals (assured), it wouldn't matter as time is of the essence here.

Shelly provided a lot of testimony regarding the potential valuation of the team plummeted in a "death spiral" if the radioactive DTS stays around.  Players won't want to play.  Coaches won't want to coach.  Sponsors won't want to spons!  You can see how it is.

DTS' attorney argued that the team was more popular than ever and that the "death spiral" was just a bunch of hooey promulgated by Shelly's team.  They used the lack of a boycott by the Clips against my beloved Dubs back in Game 4 as evidence.

DTS' attorney tried to argue that the massive tax would be bad.  What is odd is that DTS testified that he could get 5 bil if he sold the ClipShow.  5 bil has a lot more taxation than 2 bil, that is for sure.

So, what did the Judge do here?

He found the testimony of Shelly's experts about the valuation of the team more credible than DTS' expert.

So, there you go.  A clean sweep!  Shelly wins!  She's probably just as racist as DTS, but for a brief period of time, people love her!  USA!  USA!  USA! USA!

Next Steps

So, what are the next steps here?  Well, the Judge will draft his opinion and DTS will object to it.  That'll just delay things a bit, because I don't see the Judge going back on it.

Apparently, DTS might file a writ with the Appeals Court.  I'm not an expert on Appeals law, so I'm hesitant to go into detail here, especially since I do not know the ins and outs super well.  From my understanding is that a writ is different from a regular appeal, because it tends to be more narrow in scope and is based on the thought that the trial Court's ruling is clearly and obviously wrong.  One of my friends actually just told me how he got a writ and how pissed the trial Court Judge was after that (nobody likes to be told they are wrong).

So, this is not blocked by the 1310b ruling, but, according to some quick online research, writs are extremely unsuccessful.  It may be another option for DTS, but starts out with a slim chance of success and then goes from there.

Another option for DTS is to try to get an injunction in the civil case he just filed.  As I discussed in the last post, an injunction is an Order precluding the defendant from taking an action during the pendency of the litigation.  It would basically be another way to get an end around on the 1310(b) Order. Having done very little civil litigation and never requested a preliminary injunction, I cannot speak specifically to the chances here.  I suspect it is also very small, but we'll see.

Conclusion

If we are truly lucky, this is my last post here.  That would mean this is all over forevermore!  I'll return to attending European soccer games in Berkeley and you guys can return to not being Lakers fans.

This entire process seems to have been a long, slow moving car crash by DTS and his attorneys.  It seems like they didn't do a very good job at things.  Here are some things I thought they might have done differently throughout the process (and this isn't Captain Second Guess, because I've been saying this all case long).

1.  Bring some action against Shelly.  DTS was on the defensive from the start.  He never had any control over the process, really.  All of his attempts at delay were obvious and failed.  If he had filed a petition to try to remove Shelly for breaching her fiduciary responsibilities as Trustee, that would have been a losing argument, but it would have been something.  It would have muddied the waters.  It's not like they were adverse to losing arguments.

Plus, it gives DTS technical control over a Petition here.  Set it out for 3 months out and argue to the Judge that the Trial cannot occur until his matter is heard.  Their goal was delay, not victory.

2.  Don't take the medical details off the table.  The Judge had a hearing on June 30, 2014 to determine whether the trial would include information about DTS' mental state or just be limited to the Trust removal terms.  Before the Judge could make a determination, DTS' attorneys agreed to take mental state off the table.  Why?  I never figured that out.  Perhaps they feared the Judge would do it anyway.  At the time I was perplexed by it.  On the last day of trial, the Judge also expressed confusion as to why they did that.

3. Pick an argument(s). They were just all over the place.  They had so many arguments that they picked up and dropped.  There was language allowing DTS to contest the doctor's reports inadvertently left out of the Trust.  His federal HIPAA rights were violated.  His state HIPAA rights were violated.  There was a giant conspiracy.  Plan B.  etc etc etc.

They seemed to jump around a lot and not stick with some arguments.  You can try the spaghetti approach to law, but nothing was sticking.  At that point, just keep throwing the spaghetti against the wall.  When you abandon your horses mid-stream, it doesn't help you.

But these are just my thoughts.  Feel free to leave your own in the comments.  It's been a pleasure writing about this, although it almost killed me to write so much.  Hope you guys enjoyed it!  GO BEARS!