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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA Powered By Docstoc
					Civil Case No.: B158797

      IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                     SECOND APPELLATE DISTRICT
                            DIVISION TWO



MICO MAG CO., INC. dba GOURMET EDITIONS, a California
Corporation,
                                                     Plaintiff/Appellant,
vs.
WORLD NEWS, INC., a California corporation; LOOT, INC., a California
corporation; PARLIAMENT NEWS, INC., a California corporation;
AMERICAN ART ENTERPRISES, INC., a California corporation;
MARLOW SALES, INC., a California corporation; MERIDIAN EXPORTS,
INC., a California corporation; RITA GROSSMAN, an Individual; RITA
GROSSMAN, as Trustee of the Paul Wisner and Rita Grossman Trust; RITA
GROSSMAN, as Administrator of the Estate of Paul Wisner; DOES 1-50,
inclusive,
                                                Defendants/Respondents


       APPEAL FROM THE SUPERIOR COURT OF LOS ANGELES COUNTY
             THE HONORABLE IRVING S. FEFFER, PRESIDING
                 L.A.S.C. CASE NUMBER : BC 258 832


                    APPELLANT’S REPLY BRIEF




                                         H. Scott Leviant (Bar No. 200834)
                                         STANBURY FISHELMAN & WISNER, INC .
                                         9200 Sunset Boulevard, Penthouse 30
                                         Los Angeles, CA 90069-3601
                                         Telephone: (310) 278-1800
                                         Fax: (310) 278-1802

                                         Attorneys for Appellant
                                    TABLE OF CONTENTS



TABLE OF CONTENTS .......................................................................................... i

TABLE OF AUTHORITIES ................................................................................... iii

I.     INTRODUCTION ........................................................................................... 1

DISCUSSION............................................................................................................... 3

II.    THE “GLOBAL SETTLEMENT OF ALL CLAIMS” REFERENCED
       IN THE SETTLEMENT AGREEMENT FROM Wisner v. Loot, Inc.,
       et al. DOES NOT INCLUDE MICO MAG’S CLAIMS AGAINST
       RESPONDENTS. ............................................................................................ 3

       A.      “Global” Refers To All Existing Claims Between Alec Wisner
               And The Defendants In Wisner v. Loot, Inc., et al., Whether Or
               Not Those Claims Were Raised In That Action. ..................................... 4

       B.      Respondents Improperly Resort To Argumentum Ad Terrorem
               By Falsely Asserting That MICO MAG’s Appellate Position
               Undermines Settlements. ......................................................................... 7

III. RESPONDENTS’ CLAIMS OF UNJUST AND “GROTESQUE”
     PERSECUTION ARE FALSE. ....................................................................... 9

IV. MATERIAL OMISSIONS BY DEFENDANTS PRIOR TO THE
    SETTLEMENT OF Wisner v. Loot, Inc., et al. CONSTITUTE
    EXTRINSIC FRAUD THAT WOULD VITIATE ANY PUTATIVE
    RES JUDICATA EFFECT OF THAT SETTLEMENT. ............................... 14

       A.      Extrinsic Fraud, Not Susceptible To Simple Classification,
               Involves A Balancing Of Competing Policies, Which, In This
               Case, Weigh In Favor Of Preserving MICO MAG’s Claims. ............... 15

               1.      California Follows A Policy Of Liberality In Finding Fraud
                       Extrinsic......................................................................................... 15

               2.      Evaluation Of Competing Policies Demonstrates That
                       MICO MAG Should Be Permitted To Prove Its Claims. .............. 19




                                                        i
       B.      Respondents Misuse Decisional Authority In Their Arguments
               Relating To Extrinsic Fraud And Res Judicata. .................................... 22

V.     RESPONDENTS INCORRECTLY ARTICULATE AND APPLY
       THE CONCEPT OF “PRIVITY” AS IT APPLIES TO THE
       DOCTRINE OF RES JUDICATA. ............................................................... 24

       A.      Respondents Failed To Articulate Which Of The Many Concepts
               Of “Privity” They Were Asserting. ....................................................... 24

       B.      The “Sufficiently Close” Relationship Aspect Of “Privity” Is
               Limited By Due Process Rights. ........................................................... 26

       C.      Because MICO MAG’s Due Process Rights Were Not Protected
               By Wisner v. Loot, Inc., et al., MICO MAG Was Not In
               “Privity” With Alec Wisner And Res Judicata Cannot Apply. ............. 28

VI. THE ONLY “ADMISSIBLE EXTRINSIC EVIDENCE”
    REGARDING MICO MAG’S ROLE IN THE Wisner v. Loot, Inc., et
    al. SETTLEMENT AGREEMENT WAS OFFERED BY MICO
    MAG. ............................................................................................................. 29

       A.      Respondents Incorrectly Assert That MICO MAG Failed To
               Offer Any “Admissible Extrinsic Evidence”. ....................................... 30

       B.      Respondents Failed To Meet Their Burden Of Proof. .......................... 31

VII. RESPONDENTS INCORRECTLY ASSERT THAT MARLOW
     AND MERIDIAN HAVE STANDING TO RAISE THE
     SETTLEMENT AGREEMENT FROM Wisner v. Loot, Inc., et al. AS
     A DEFENSE AGAINST MICO MAG’S CLAIMS. ..................................... 32

VIII. RESPONDENTS’ ONLY ARGUMENT CONCERNING POST-
      SETTLEMENT DAMAGE TO MICO MAG IS PREDICATED
      UPON INACCURATE ASSERTIONS. ........................................................ 34

IX. CONCLUSION .............................................................................................. 35




                                                      ii
                                TABLE OF AUTHORITIES




CALIFORNIA CITATIONS

Allen v. Smith (2002) 94 Cal.App.4th 1270 ................................................ 31

Caldwell v. Taylor (1933) 218 Cal. 471 .................................... 15, 16, 17, 19

Cedars-Sinai Medical Center v. Superior Court (1998)

  18 Cal.4th 1 ........................................................................................ 22, 23

Clemmer v. Hartford Insurance Co. (1978) 22 Cal.3d 865 ................. passim

Estate of McGuigan (2000) 83 Cal.App.4th 639......................................... 20

General Motors Corp. v. Superior Court (1993) 12 Cal.App.4th 435 . 32, 34

Granzella v. Jargoyhen (1974) 43 Cal.App.3d 551 .................................... 15

Hess v. Ford Motor Co. (2002) 27 Cal.4th 516 .......................................... 31

In re Marriage of Modnick (1983) 33 Cal.3d 897 ....................................... 20

In re Marriage of Varner (1997) 55 Cal.App.4th 128 ................................ 20

Lama v. Comcast Cablevision (1993) 14 Cal.App.4th 59 ........................... 32

Lewis v. County of Sacramento (1990) 218 Cal.App.3d 214 ...................... 26

Lynch v. Glass (1975) 44 Cal.App.3d 943 ................................ 24, 25, 27, 29

Neverkovec v. Fredericks (1999) 74 Cal.App.4th 337 ................................ 32

Pentz v. Kuppinger (1973) 31 Cal.App.3d 590 ........................................... 18

Rynsburger v. Dairymen’s Fertilizer Coop., Inc. (1968)

  266 Cal.App.2d 269.................................................................................. 25




                                                     iii
Scott v. Dilks (1941) 47 Cal.App.2d 207 .............................................. 18, 19

Stenderup v. Broadway State Bank (1933) 219 Cal. 593 ............................ 17

Stratton v. First Nat. Life Ins. Co. (1989) 210 Cal.App.3d 1071................ 30

Vahle v. Barwick (2001) 93 Cal.App.4th 1323 ........................................... 32

Victa v. Merle Norman Cosmetics, Inc. (1993) 19 Cal.App.4th 454 .... 24, 27

Winet v. Price (1992) 4 Cal.App.4th 1159 ............................................ 5, 7, 8




STATUTES

Code of Civil Procedure, section 1859 .......................................................... 1




                                               iv
                        APPELLANT’S REPLY BRIEF

       “An empty bag cannot stand upright.” – Benjamin Franklin, Poor

Richard’s Almanac [1738]. November.



                         I.      INTRODUCTION

       Much of Respondents’ Brief is nothing more than the oft-repeated

refrain of victimization. The remainder of Respondents’ Brief falls of its

own weight by either completely ignoring issues raised by Appellant MICO

MAG, or by advancing deficient arguments. For instance, Respondents

didn’t offer any explanation as to why the specific term of a unilateral debt

warranty was included in the Settlement Agreement, where such a term

would have been unnecessary if MICO MAG had executed a bilateral

release of claims in Wisner v. Loot, Inc., et al. In contracts, specific terms

control over general provisions. (Code Civ. Proc., § 1859, and other

authority cited in APPELLANTS’ OPENING BRIEF, at 20-21.)

       Respondents also had no answer for the proposition that their post-

settlement conduct demonstrated their belief that MICO MAG had not

provided them with a release. The logical explanation, offered by MICO

MAG, was that the refusal to turn over MICO MAG’s records

demonstrated a fear that MICO MAG would discover the financial

misconduct perpetrated by Respondents upon MICO MAG. (APPELLANTS’

OPENING BRIEF, at 27-29.) Such fear would only have been justified if



                                       1
MICO MAG retained viable claims against Respondents.

       Respondents also confused the language of a pleading with the

primary right asserted by the pleading. The fact that two complaints both

contain, for example, alter-ego allegations does not, ipso facto, indicate that

the two complaints seek to enforce the same primary rights. When MICO

MAG sued to recover on accounts stated and collect diverted assets, those

primary rights asserted by MICO MAG were far different from an

individual’s lawsuit for corporate dissolution and damages resulting from

disparate treatment as a shareholder.

       Respondents incorrectly applied the principle of privity, falsely

presuming that by holding 75% of the stock of a corporation, an individual

is rendered co-extant with the corporation. The corporate entity is separate

and distinct from its shareholders, and a shareholder lacks standing to

personally enforce a corporation’s claims, such as accounts stated owed to

the corporation by its customers.

       And Respondents’ Brief is riddled with arguments dependent upon

unsupported and improper attorney assertions. MICO MAG’s Opening

Brief identified instances where Respondents relied solely upon

incompetent attorney assertions, but Respondents’ Brief did not address

that discussion, and Respondents continued with their practice of

supporting arguments with meaningless attorney assertions.

       In short, Respondents’ arguments are factually incorrect, premised



                                        2
upon improper assertions or based upon false and incomplete syllogisms.

As to the notion that Respondents have been unfairly pilloried out of spite,

the histories and merits of the other proceedings identified, infra, at Part III,

speak for themselves. But if taking a wicked stepmother to task is wrong,

then lock up Cinderella and throw away the key.



                                 DISCUSSION



      II.    THE “GLOBAL SETTLEMENT OF ALL CLAIMS”

   REFERENCED IN THE SETTLEMENT AGREEMENT FROM

   Wisner v. Loot, Inc., et al. DOES NOT INCLUDE MICO MAG’S

                  CLAIMS AGAINST RESPONDENTS.

       Rather than address the merits, Respondents rely upon rhetoric and

fear to attack MICO MAG’s arguments concerning the correct reading of

the Settlement Agreement from Wisner v. Loot, Inc., et al. First,

Respondents claim that a “global” settlement isn’t “global” unless it

includes non-parties. But the long-standing practice of describing “full” or

“complete” releases (those including waivers of known and unknown

claims) as “general” or “global” releases dispatches Respondents’ rhetorical

legerdemain. Then Respondents fabricate an illusory “slippery slope”

argument, claiming that settlement agreements become unworkable if

“global” doesn’t include releases by non-parties. This argument evaporates



                                       3
with the simple observation that the only information required to create a

“global” release is the identity of each party issuing a release, and the party

or class of parties receiving that “global” release. In Wisner v. Loot, Inc., et

al., non-party MICO MAG was never identified as providing any sort of

release to any person or entity.



       A. “Global” Refers To All Existing Claims Between Alec Wisner

       And The Defendants In Wisner v. Loot, Inc., et al., Whether Or

       Not Those Claims Were Raised In That Action.

       Respondents incorrectly claim, ipse dixit, that “global”, as used in

the Settlement Agreement, creates a release by MICO MAG, in favor of the

Wisner v. Loot, Inc., et al. defendants and other entities.1 (See, e.g.,

RESPONDENTS’ BRIEF, at 6, 18.) In fact, “global” properly describes the

releases issued between Alec Wisner and defendants in that action. The

parties in Wisner v. Loot, Inc., et al. released one another from all existing

claims, whether asserted in that litigation or not, whether known or not.

Such a broad release is routinely characterized as a “global” or “general”


       1
         The Settlement Agreement itself disposes of Respondents’
overbroad construction of “global”. For example, the parties agreed to
preserve a profit sharing plan (Reporters’ Appellate Transcript [hereinafter
“REPORTERS’ APP. TRANS.”], at A-8:28 – A-9:5), despite Respondents’
assertion that the sole purpose of the Settlement Agreement in Wisner v.
Loot, Inc., et al. was to “effectuate a complete divorce” between Alec
Wisner and the Wisner v. Loot, Inc., et al. defendants. (RESPONDENTS’
BRIEF, at 9.)



                                       4
release. (See, e.g., Winet v. Price (1992) 4 Cal.App.4th 1159, 1162-63.)

However, the use of such a descriptor does not act to create releases by

non-parties to litigation, where such releases are not explicitly stated.

       As support for their rhetorical assertion, Respondents note that two

companies, Mag Corp. and Royce Corporation, were specifically excluded

from the Settlement Agreement. (Reporters’ Appellate Transcript

[hereinafter “REPORTERS’ APP. TRANS.”], at A-7:4-12.) Respondents’

observation, however, is inaccurately provided in a factual vacuum.

Missing from Respondents’ discussion is any information concerning the

ownership arrangements of Mag Corp. and Royce Corporation as compared

to MICO MAG and MARLOW SALES.

       As part of the consideration provided in the Settlement Agreement,

GROSSMAN assigned her shares in MICO MAG to Alec Wisner,

rendering him the sole shareholder of MICO MAG at the conclusion of the

Settlement Agreement.2 (REPORTERS’ APP. TRANS., at A-4:6-8.) In return,

Alec Wisner conveyed his shares in MARLOW SALES to Respondent

GROSSMAN. (REPORTERS’ APP. TRANS., at A-4:16-23.)

       However, unlike MICO MAG and Respondent MARLOW SALES,

which each had two shareholders (Respondent GROSSMAN and Alec


       2
       In that same transfer provision, the Wisner v. Loot, Inc., et al.
defendants provided a unilateral debt warranty concerning MICO MAG.
(REPORTERS’ APP. TRANS., at A-4:11-15.)




                                       5
Wisner), Mag Corp. and Royce Corporation each had four shareholders.

Because their ownership structures were more complicated, Mag Corp. and

Royce Corporation were explicitly excluded from the Settlement

Agreement to avoid any confusion about realignments of corporate

ownership involving those two companies. (Augmented Clerk’s Transcript,

[hereinafter “AUGMENTED TRANS.”], at 684:9-17.)

      The cautionary exclusion of those two companies from the

Settlement Agreement should not be expanded into a general release of

known and unknown claims by a non-party.3 MICO MAG does not

challenge the breadth of releases issued between Alec Wisner and

defendants in Wisner v. Loot, Inc., et al. Rather, MICO MAG has

identified error where Alec Wisner’s “global” release was improperly

expanded to encompass the independently held claims of non-party

corporation MICO MAG.




      3
         See footnote 1 ante, page 4, further supporting the interpretation
that the exclusionary language related to Mag Corp. and Royce Corporation
was provided to clarify corporate ownership arrangements. The Settlement
Agreement did not effectuate a “complete divorce” between the parties as
Respondents allege. Rather, the parties affirmatively specified all terms,
including the flow of bilateral and unilateral releases. The Trial Court’s
implication of a release provision by non-party MICO MAG, where none
was affirmatively stated, was error causing profound injustice.




                                     6
       B. Respondents Improperly Resort To Argumentum Ad

       Terrorem By Falsely Asserting That MICO MAG’s Appellate

       Position Undermines Settlements.

       Retreating to argumentum ad terrorem, Respondents speciously

claim that if MICO MAG’s arguments were accepted, it would henceforth

be difficult or impossible to formulate a “comprehensive settlement”

agreement because of the difficult task of enumerating all possible claims.

(RESPONDENTS’ BRIEF, at 8.) Relying upon the fallacy of irrelevance, this

syllogism’s major premise is fatally flawed. The flawed premise (and

improper argumentum ad terrorem) in Respondents’ assertion is that all

claims must be enumerated in a settlement agreement if MICO MAG’s

appellate position prevails.

       In reality, the party providing a release is all that must be identified

to accomplish a “general” release. (Winet v. Price (1992) 4 Cal.App.4th

1159, 1162-63.) If, for example, Party 1 wishes to “globally” release Party

2, all that need be identified is the release of Party 2 (or the class in which

Party 2 exists), not each and every known or potential claim. Here,

defendants in Wisner v. Loot, Inc., et al. were simply derelict in requesting

and obtaining a release from non-party MICO MAG. Because of their

oversight, Respondents now appeal to fear by asserting that settlements will

be rendered unworkable if the settling parties are required to do a little

homework and specify, in some fashion, the entities providing releases.



                                        7
       Respondents incorrectly rely upon Winet as supporting their

argumentum ad terrorem, but Winet merely affirms the ability of a party to

a settlement agreement to provide a “general” release of known and

unknown claims pursuant to Civil Code section 1542. (Winet, supra, at

1162-63.) In Winet, attorney Price sued client Winet for unpaid legal bills.

(Ibid.) That matter was eventually settled, with Winet providing a

“general” release to Price. (Ibid.) However, Winet was later sued by his

partners, and Winet then cross-complained against Price for malpractice in

the drafting of their partnership agreement. (Ibid.) Price successfully

asserted the “general” release as a total defense.

       Using Winet and others, Respondents misstate MICO MAG’s

position as one assaulting “general” releases. But MICO MAG’s appellate

arguments would not inhibit the ability of parties to a litigation to enter into

a “global” settlement of all claims existing between each them, whether or

not set forth in that litigation or known at that time. MICO MAG agrees

that Alec Wisner, like Winet, probably entered into a “global” settlement of

all of his personal claims against defendants in Wisner v. Loot, Inc., et al.,

whether or not set forth in that litigation or known at that time. MICO

MAG only identifies the fact that it did not enter into any such settlement.

       Further, MICO MAG has never argued that a litigation settlement is

inherently limited to the parties to the litigation. Nor does MICO MAG

assert that a settlement cannot create third-party beneficiaries. Parties to a



                                       8
settlement agreement, if they so desire, can identify additional parties

included in their releases or create classes of released parties (giving rise to

third-party beneficiaries). MICO MAG was never explicitly included in

releases by the Wisner v. Loot, Inc., et al. parties. Instead, the Wisner v.

Loot, Inc., et al. defendants provided a unilateral debt release in favor of

MICO MAG, but they did not receive any release in return.

       The identification of parties is a relatively simple task when

compared to the complexity so often found in settlement agreements.4

Thus, the ability of litigants to formulate “global” settlements of all of their

claims remains undisturbed by MICO MAG’s arguments on appeal. As

between Respondents and MICO MAG, it is Respondents that should bear

the cost of failing to negotiate for and obtain releases from non-parties.



           III.   RESPONDENTS’ CLAIMS OF UNJUST AND

             “GROTESQUE” PERSECUTION ARE FALSE.

       MICO MAG is now owned by a very bad man, or so Respondents

assert. And, according to Respondents, they are simply victims of his ill

will. (RESPONDENTS’ BRIEF, at 2.) Because of this, Respondents’ argue,


       4
         Likewise, Respondents’ claim of unfair surprise is unfounded.
Respondents were aware that they were providing a debt warranty to MICO
MAG. Respondents could have requested and negotiated for a bi-lateral
release provision with MICO MAG, but they did not do so, instead electing
to address the “global” nature of the Settlement Agreement to all claims
(known and unknown) held personally by Alec Wisner.



                                       9
MICO MAG should be denied the right to pursue its claims.

       In support of their contention that MICO MAG’s claims are simply

part of a greater plot to torment them, Respondents identified a variety of

other proceedings, listed in their Respondents’ Brief and in their pleadings

included in the Clerk’s Transcript [hereinafter referred to as “CLERK’S

TRANS.”], that purportedly evidence this plot. These proceedings, their

factual underpinnings, and their significant outcomes are as follows:

              C.G.G.W. Development Co. v. London Press, Inc., et al.,

       L.A.S.C. Case No. BC 221850 (CLERK’S TRANS., at 317):

              C.G.G.W., a partnership that included both Alec Wisner and

       Rita Grossman as partners, sued London Press, Inc. and Respondent

       the Estate of Paul Wisner, for unpaid commercial building rent, a

       personal guarantee thereon, and damages resulting from the forced

       sale of a commercial property. A jury awarded roughly $750,000 to

       plaintiff C.G.G.W., and the court awarded attorneys’ fees, increasing

       the total verdict to roughly $1 million. That judgment was later

       satisfied through explicit inclusion in the Settlement Agreement

       from Wisner v. Loot, Inc., et al.; L.A.S.C. Case No. BC 226919.

       (REPORTERS’ APP. TRANS., at A-5:11-14.)

              American Express v. Al Robles, et al., L.A.S.C. Case No. PC

       026324 (CLERK’S TRANS., at 318):

              The original action was filed by American Express against



                                     10
WORLD and Al Robles (a former general manager of WORLD) on

an unpaid business credit card. Cross-complaints were filed seeking

indemnity, and then claims from World News, Inc. v. Al Robles, et

al., L.A.S.C. Case No. BC 243614 (dismissed on the ground of other

action pending), were re-filed in American Express v. Al Robles, et

al. Current appellate counsel for MICO MAG assumed

representation of defendant and cross-defendant Al Robles and three

cross-defendant retail stores. The credit card action was settled.

WORLD claimed that Al Robles, the stores, and unnamed parties

had stolen millions of dollars from WORLD, but in a court trial

before Hon. L. Jeffrey Wiatt, cross-defendants proved that Paul

Wisner had embezzled millions of dollars of customer cash

payments and manipulated the books of WORLD to hide his

embezzlement. The court then found that Paul Wisner (deceased)

was the alter-ego of WORLD. Cross-complainant WORLD took

nothing on its claims, a defense verdict was entered and a statement

of decision was filed that included the alter-ego finding and findings

related to embezzlement by Paul Wisner. Pursuant to Local

Appellate Rule 5, Appellant is considering the filing of a separate

Motion requesting that this Court take judicial notice of the

judgment and Statement of Decision in American Express v. Al

Robles, et al., L.A.S.C. Case No. PC 026324.



                              11
       World News, Inc. v. Al Robles, et al., L.A.S.C. Case No. BC

243614 (CLERK’S TRANS., at 318):

       Current appellate counsel for MICO MAG assumed

representation of defendant Al Robles and three co-defendant stores.

Most of WORLD’s claims were dismissed subsequent to a demurrer

(on the ground of another action pending) and later re-filed in

American Express v. Al Robles, et al. After WORLD’s transplanted

claims were rejected at trial in American Express v. Al Robles, et al.,

WORLD, of its own volition, dismissed its remaining claim of an

unpaid loan to Al Robles on the eve of trial after evidence was

produced that demonstrated how WORLD’s books had been

manipulated to falsely create that loan. Pursuant to Local Appellate

Rule 5, Appellant is considering the filing of a separate Motion

requesting that this Court take judicial notice of the dismissal in

World News, Inc. v. Al Robles, et al., L.A.S.C. Case No. BC 243614.

       Wisner v. Loot, Inc., et al.; L.A.S.C. Case No. BC 226919:

       The record herein contains a copy of the Verified First

Amended Complaint from that action. (CLERK’S TRANS., at 91-

120.) The defendants in that action (many of which are Respondents

herein) settled that action for cash value of roughly $1.5 million after

court orders granted plaintiff Alec Wisner access to seven years




                               12
       worth of defendants’ banking records.5 That settlement produced

       the Settlement Agreement underpinning this appeal.

       The outcomes of these proceedings depict something other than a

plot to torment Respondents. Instead, they verify a pattern of widespread

financial misconduct by Respondents, who fervently seek to prevent MICO

MAG from obtaining its own, independently held entitlements that are well

in excess of $6 million.

       Moreover, Respondents and their related business interests have

gone to great lengths in order to conceal their financial misconduct. For

example, in the bankruptcy matter In re: London Press, Inc., Case No. SV

01-10585-KL, Respondent RITA GROSSMAN went so far as to contribute

her personal assets towards the termination of that bankruptcy, paying

Appellant MICO MAG $36,692.00 in the process, despite having

contended that the decision on appeal herein, and the Settlement Agreement

in Wisner v. Loot, Inc., et al., barred MICO MAG’s claims against London

Press, Inc.6 Respondents opted to fund a bankrupt debtor, rather than face

the inevitable audit of Respondents’ business transactions involving


       5
         The $1.5 million in cash value included the settlement and
satisfaction of the judgment in C.G.G.W. Development Co. v. London
Press, Inc., et al., as well as value for Alec Wisner’s share in Loot, Inc.
       6
       London Press, Inc. is a wholly owned subsidiary of Respondent
LOOT, INC. and a defendant from Wisner v. Loot, Inc., et al. that was in
bankruptcy at the time of the Settlement Agreement in that matter.




                                      13
London Press, Inc., Respondent WORLD and others.7 Pursuant to Local

Appellate Rule 5, Appellant is considering the filing of a separate Motion

requesting that this Court take judicial notice of the terms of the Order

dismissing In re: London Press, Inc., Case No. SV 01-10585-KL.

       Abandoning the merits, Respondents resort alternately to

argumentum ad hominem, directed at a non-party, and argumentum ad

misericordiam, depicting themselves as maltreated to gain sympathy

thereby. But the bare facts put the lie to Respondents’ pleas. Without

question, it is MICO MAG that has been injured by Respondents. Justice

will be served only if Respondents are held accountable for the millions of

dollars improperly withheld or diverted from MICO MAG.



IV.    MATERIAL OMISSIONS BY DEFENDANTS PRIOR TO THE

      SETTLEMENT OF Wisner v. Loot, Inc., et al. CONSTITUTE

  EXTRINSIC FRAUD THAT WOULD VITIATE ANY PUTATIVE

           RES JUDICATA EFFECT OF THAT SETTLEMENT.

       Respondents assert, for the first time in Respondents’ Brief, that


       7
        Respondents contributed funds towards the termination of the
London Press, Inc. bankruptcy shortly after the trial of American Express v.
Al Robles, et al., L.A.S.C. Case No. PC 026324, resulted in the finding that
Paul Wisner (deceased) was the alter-ego of Respondent WORLD and
banking records were produced showing conclusively that funds had been
embezzled by Paul Wisner from WORLD and then immediately “loaned”
to London Press, Inc. by Paul Wisner and Respondent RITA GROSSMAN.




                                      14
MICO MAG cannot avoid the putative res judicata effect of the Settlement

Agreement from Wisner v. Loot, Inc., et al. because fraud alleged by MICO

MAG was intrinsic, not extrinsic. A thorough review of relevant authority

demonstrates the error in Respondents’ argument. MICO MAG’s claim of

fraud overcomes the Settlement Agreements’ preclusive effects, and it was

error to deny MICO MAG the opportunity to prove that extrinsic fraud.8



       A. Extrinsic Fraud, Not Susceptible To Simple Classification,

       Involves A Balancing Of Competing Policies, Which, In This

       Case, Weigh In Favor Of Preserving MICO MAG’s Claims.

              1. California Follows A Policy Of Liberality In Finding

              Fraud Extrinsic.

       “A study of the decisional law on the subject shows that the courts

are liberal in determining facts which constitute extrinsic fraud”.

(Granzella v. Jargoyhen (1974) 43 Cal.App.3d 551, 556.) That policy can

be traced back at least to Caldwell v. Taylor (1933) 218 Cal. 471,

acknowledged (by Granzella, supra, at 554) as “the leading case in

California on the subject of extrinsic fraud.”


       8
         The argument concerning the res judicata effect of the Settlement
Agreement is only relevant if this Court determines that MICO MAG
released its claims against Respondents in the Settlement Agreement from
Wisner v. Loot, Inc., et al. If MICO MAG did not release its claims, then
the Settlement Agreement, by its very nature, has no preclusive effect.




                                      15
       In Caldwell, plaintiff alleged that his father was induced to marry

Taylor by her representations that she was a widow of good character and

reputation. After plaintiff’s father died, leaving his estate to Taylor, she

repeated the same representations to plaintiff, inducing him to forego a

timely will contest. Plaintiff later learned that at the time Taylor married

his father she was already married and was “an immoral woman of the

streets” with a police record. The Supreme Court distinguished between

the allegations of the original fraud and those of the later fraud, which it

called “extrinsic and collateral” (id., at 478):

       “Although it is true that, in a manner of speaking, the
       deliberate and intentional falsehood made by defendant,
       Leonore Taylor, to plaintiff for the purpose of concealing
       her real identity, her past record, and her marital status, was
       the same specie of fraud as that designedly practiced upon
       the testator, plaintiff’s father, and was but the final step in
       the plan of fraud as originally conceived and executed,
       which step was necessary to prevent the entire structure of
       falsehood and deceit from collapsing, it is, in fact, not an
       actual part and parcel of the original fraud which was the
       subject matter of the contest of the will. That fraud was
       fraud practiced upon the testator; the fraud stated in the
       above allegation was practiced upon the plaintiff with the
       intent and purpose of misleading him and thereby preventing
       him from presenting to the court the actual facts with
       reference to the fraud which would, if established, vitiate the
       will.”

(Id., at 479.)

       Noting that “[t]he distinction between extrinsic fraud and intrinsic is

quite nebulous,” the high court said: “The main requirement to establish

extrinsic fraud is that the unsuccessful party was prevented by his adversary




                                       16
from presenting all of his case to the court.” (Id., at 479, emphasis in

original.)

       The same court followed up in the same year with Stenderup v.

Broadway State Bank (1933) 219 Cal. 593, in which, as in the present case,

the underlying action involved a claim for an accounting of assets. 9

Pursuant to judgment following trial, defendant Bank turned over to the

plaintiff certain defaulted notes, concealing from him, however, the fact

that it had already collected a substantial portion of what the debtors owed.

After discovering that concealment the plaintiff sought to set aside the

judgment, alleging that the concealment amounted to extrinsic fraud. The

Supreme Court held that the plaintiff stated a cause of action because:

       “If this conduct was, as alleged, for the fraudulent purpose
       of preventing information as to the status of these notes from
       reaching plaintiff, and to deceive him and the court, it was
       conduct extrinsic and collateral to the issue made by the
       pleadings and authorized relief under the rule relating to
       extraneous fraud, recently discussed, and perhaps extended
       by, this court in the case of Caldwell v. Taylor, 218 Cal.
       471. . . .”

(Stenderup, supra, at 596-597.)

       The fact that plaintiff Stenderup’s first action was tried (id., at 595)

demonstrates that having had a “day in court” does not preclude a finding


       9
         Wisner v. Loot, Inc., et al. involved claims that included
involuntary corporate dissolution of LOOT, an accounting of assets related
thereto, and fraud related to the sequestering of LOOT’s assets by
defendants therein. Wisner v. Loot, Inc., et al. is the “underlying” action to
this matter, giving rise to the Settlement Agreement.




                                       17
of extrinsic fraud.10 Fraud has been found extrinsic even where the

defrauded party participated fully throughout all proceedings, including an

appeal, and where no fiduciary relationship was involved. (Pentz v.

Kuppinger (1973) 31 Cal.App.3d 590.) Here, however, MICO MAG did

not participate in Wisner v. Loot, Inc., et al., and was discussed by the

parties at the Settlement Agreement only for the purpose of transferring

shares and providing a unilateral debt warranty by defendants. Moreover, a

fiduciary relationship existed between Respondent GROSSMAN, who had

usurped control over MICO MAG, and Alec Wisner, who had been shut out

of the operation of MICO MAG by GROSSMAN and her husband, Paul

Wisner. MICO MAG identified its claim of fraud to the trial Court below

(REPORTERS’ APP. TRANS., at 29:21-31:5, 31:15-25), but the Court erred by

denying MICO MAG the opportunity to establish that it should not be

bound to any purported release on the ground of extrinsic fraud.

       In Scott v. Dilks (1941) 47 Cal.App.2d 207, a case analogous to the

present one, the plaintiff sought to set aside a stipulated judgment of

partnership dissolution by showing that his former partner induced the

stipulation by using deceptive books to conceal assets. The appellate court

found such fraud “extrinsic” to the stipulated judgment because “there was

no judicial examination of the facts prior to judgment in the former case . . .


       10
            MICO MAG has yet to have its day in court.




                                      18
The issues were as effectually withdrawn from any judicial consideration as

if they had never been submitted to the court.” (Id., at 209.)

       Here, MICO MAG’s claims were never before Hon. S. James Otero

in Wisner v. Loot, Inc., et al. (CLERK’S TRANS., at 91-120.) Moreover, the

fraud perpetrated upon MICO MAG was, if anything, more significant than

that perpetrated in Scott. The defendant in Scott only utilized deceptive

books, whereas MICO MAG’s book were concealed entirely despite

repeated demands for them (AUGMENTED TRANS., at 678:13 – 679:1), were

then withheld after a unilateral debt warranty (REPORTERS’ APP. TRANS., at

A-4:6-15) was coupled with a promise to produce them (CLERK’S TRANS.,

at 284-289), were produced (in part) after an Order by Hon. S. James Otero

compelled defendants to turn over those promised books and records

(AUGMENTED TRANS., at 678:13 – 679:9) and were then found to have been

fraudulently manipulated (CLERK’S TRANS., at 51-56).



               2. Evaluation Of Competing Policies Demonstrates That

               MICO MAG Should Be Permitted To Prove Its Claims.

       Fifty years after deciding Caldwell, the California Supreme Court

reaffirmed its liberality in the finding of extrinsic fraud, stating that

“[e]xtrinsic fraud is a broad concept that ‘tends to encompass almost any

set of extrinsic circumstances which deprive a party of a fair adversary

hearing’” (In re Marriage of Modnick (1983) 33 Cal.3d 897, 905), a



                                       19
description that continues to be used. (See, e.g., Estate of McGuigan

(2000) 83 Cal.App.4th 639, 649.) In Marriage of Modnick, supra, the high

court still found a definition elusive and distinguished extrinsic from

intrinsic fraud in terms of balancing that liberal policy against a competing

policy of finality in litigation:

               “No abstract formula exists for determining whether a
       particular case involves extrinsic, rather than intrinsic, fraud.
       ‘It is necessary to examine the facts in the light of the policy
       that a party who failed to assemble all of his evidence at the
       trial should not be privileged to relitigate a case, as well as
       the policy permitting a party to seek relief from a judgment
       entered in a proceeding in which he was deprived of a fair
       opportunity fully to present his case.’ ”

(In re Marriage of Modnick, supra, 33 Cal.3d at 905). Here, MICO MAG, a

non-party in Wisner v. Loot, Inc., et al., was never afforded the right to

assemble its evidence. Many of MICO MAG’S core business records

concerning Respondents were only produced to MICO MAG’s new

management after an Order by Hon. S. James Otero compelled the Wisner

v. Loot, Inc., et al. defendants to turn over those promised books and

records. (AUGMENTED TRANS., at 678:13 – 679:9.)

       In re Marriage of Varner (1997) 55 Cal.App.4th 128 further

addressed those competing policies when the court said:

       “ ‘Fraud is intrinsic and not a valid ground for setting aside a
       judgment when the party has been given notice of the action
       and has had an opportunity to present his case and to protect
       himself from any mistake or fraud of his adversary, but has
       unreasonably neglected to do so. [citation.] Such a claim of
       fraud goes to the merits of the prior proceeding which the




                                      20
       moving party should have guarded against at the time.
       Where the defrauded party failed to take advantage of liberal
       discovery policies to fully investigate his or her claim, any
       fraud is intrinsic fraud.’ ”

(Id., at 140.) Those policy considerations establish that when a plaintiff

seeks to avoid the res judicata barrier imposed by a concluded action on the

basis that the result was induced by fraud, the reasonableness of the failure

to discover the fraud is a critical factor. If such ignorance was a result of

unreasonable failure to conduct adequate discovery and assemble evidence,

such culpable ignorance causes the courts to deem the fraud “intrinsic” as a

means of denying a reopening. But where there existed no reasonable basis

for conducting discovery on the facts underlying the fraud, the fraud is held

“extrinsic” to the underlying action.

       Confusion arises when, as here, the underlying action included a

claim of fraud, and then a separate claim of fraud is asserted against a

dismissal or settlement. Respondents’ argument is deficient in that it

ignores this distinction and thus rests upon a flawed categorical syllogism

that interchangeably utilizes two species of fraud (the fraud alleged by

plaintiff in Wisner v. Loot, Inc., et al. regarding treatment of his shares in

LOOT and the fraudulent omissions by those defendants at the settlement

conference regarding the finances of MICO MAG) without separately

defining them. Fraudulent omissions regarding MICO MAG’s finances are

extrinsic to the fraud complained of in Wisner v. Loot, Inc., et al.




                                        21
       In this circumstance, injustice will result if MICO MAG is precluded

from litigating claims on the grounds that it, as a non-party to Wisner v.

Loot, Inc., et al., failed to conduct discovery about its finances, or that Alec

Wisner failed to conduct discovery concerning MICO MAG’s finances,

when MICO MAG was not at issue in his action for dissolution of LOOT.



       B. Respondents Misuse Decisional Authority In Their

       Arguments Relating To Extrinsic Fraud And Res Judicata.

       Respondents, citing to Cedars-Sinai Medical Center v. Superior

Court (1998) 18 Cal.4th 1, assert the proposition that “WISNER” cannot

state a claim for fraud against Respondents. (RESPONDENTS’ BRIEF, at 16-

17.) The errors in Respondents’ assertion are numerous. “WISNER” is not

stating any claim in this action; Appellant MICO MAG, the Plaintiff below,

asserts that its claims cannot be barred on the basis of a fraudulently

induced settlement term.11 By arguing that “WISNER” cannot state certain

claims, Respondents are again improperly ignoring the distinction between

an individual and a corporate entity.

       This misidentification of parties extends further to a misuse of


       11
          MICO MAG strenuously denies that it provided any release to
Respondents in Wisner v. Loot, Inc., et al. However, assuming, arguendo,
that a release was obtained, MICO MAG asserts that its release of claims
was obtained by fraud, and should not be enforced against it. This claim
was raised to the Trial Court. (REPORTERS’ APP. TRANS., at 29:21 – 31:5.)




                                        22
Cedars-Sinai, supra, 18 Cal.4th 1. The Supreme Court in Cedars-Sinai

stated the question for review as follows:

              “At the threshold of this case stands the question of
       whether this court should recognize a tort remedy for the
       intentional spoliation of evidence by a party to the
       underlying cause of action to which the evidence is relevant
       (what we shall term a ‘first party’ spoliator) when, as here,
       the spoliation is or reasonably should have been discovered
       before the trial or other decision on the merits of the
       underlying cause of action.”

(Cedars-Sinai, supra, 18 Cal.4th at 5, emphasis added.) Answering that

question, the Supreme Court said:

              “Accordingly, we hold that there is no tort remedy for
       the intentional spoliation of evidence by a party to the cause
       of action to which the spoliated evidence is relevant . . . .”

(Cedars-Sinai, supra, 18 Cal.4th at 17.) Cedars-Sinai limits its analysis to a

subsequent action in which a party to the original action claimed

subsequent tortious damage resulting from spoliation of evidence by

another party to that original action. Because MICO MAG was never a

party in the matter of Wisner v. Loot, Inc., et al., any holding from Cedars-

Sinai is inapposite.

       Finally, the claim asserted by MICO MAG is not that evidence was

spoliated in a prior proceeding to which it was a party. Rather, MICO

MAG has asserted that its claims cannot be barred on the grounds of res

judicata because of the fraudulent concealment of material facts relating to

any putative release obtained from non-party MICO MAG.




                                     23
    V.       RESPONDENTS INCORRECTLY ARTICULATE AND

 APPLY THE CONCEPT OF “PRIVITY” AS IT APPLIES TO THE

                     DOCTRINE OF RES JUDICATA.

                “Res judicata, and its component of collateral
         estoppel, foreclose relitigation of a cause of action or issue
         that was determined in a prior case, involving the same party
         or one in privity to it, and which ended in a final judgment
         on the merits.”

(Victa v. Merle Norman Cosmetics, Inc. (1993) 19 Cal.App.4th 454, 459.)



         A. Respondents Failed To Articulate Which Of The Many

         Concepts Of “Privity” They Were Asserting.

         In California, “privity” has evolved and expanded over time into an

amalgamation of diverse concepts. Noting this evolution, one Court

observed, “Privity is essentially a shorthand statement that collateral

estoppel is to be applied in a given case; there is no universally applicable

definition of privity.” (Lynch v. Glass (1975) 44 Cal.App.3d 943, 947.) In

the seminal case of Clemmer v. Hartford Insurance Co. (1978) 22 Cal.3d

865, the California Supreme Court agreed with the Lynch Court’s analysis,

stating, “Privity is a concept not readily susceptible of uniform definition.”

(Clemmer, supra, at 875.)

         “Privity” traditionally indicated a transaction whereby a successor

(purchaser, inheritor, etc.) acquired an interest in the subject matter of




                                       24
litigation from or under one of the litigants after rendition of judgment.

(Clemmer, supra, at 875.) The concept of “privity” has since expanded to

include representative relationships, as where a governmental body, acting

on behalf of its citizens, obtains a judgment that in conclusive as to those

citizens (Clemmer, supra, at 875, citing Rynsburger v. Dairymen’s

Fertilizer Coop., Inc. (1968) 266 Cal.App.2d 269, and others), and, more

recently, to situations in which the “relationship between the party to be

estopped and the unsuccessful party in the prior litigation . . . is

‘sufficiently close’ so as to justify application of the doctrine of collateral

estoppel.”12 (Clemmer, supra, at 875, citing Lynch v. Glass (1975) 44

Cal.App.3d 943.)

       Here, there was no post-litigation acquisition in the subject matter of

the litigation, nor was there a representational relationship created by Alec

Wisner’s personal lawsuit for corporate dissolution. Hence, the “privity”

alleged by Respondents is restricted to the last situation (“sufficiently




       12
           For example, “collateral estoppel was applied against a
corporation which was a mere alter ego of an individual party in the first
action.” (Lynch v. Glass (1975) 44 Cal.App.3d 943, 949.) In this instance,
no Court has ever determined that Alec Wisner was the alter-ego of MICO
MAG, and, the factual record demonstrates that Alec Wisner was denied
access to MICO MAG, precluding any possibility of such an alter-ego
finding. (CLERK’S TRANS., at 510-518.) It should also be noted that Alec
Wisner, the party from the prior litigation, was not an “unsuccessful” party
in that litigation. (Clemmer, supra, at 875.)




                                       25
close” relationship) identified by the Clemmer Court.13 But, on the factual

record here, Respondents’ assertion of “privity” must be rejected on due

process grounds, and, with “privity” absent, the doctrine of res judicata

cannot preclude MICO MAG’s claims.



       B. The “Sufficiently Close” Relationship Aspect Of “Privity” Is

       Limited By Due Process Rights.

       Due process limits the extent to which a prior judgment (or

settlement) can bar subsequent claims by other parties. Succinctly stating

this limitation, one Court held, “[D]ue process requires that the party to be

estopped must have had a fair opportunity to pursue his claim the first

time.” (Lewis v. County of Sacramento (1990) 218 Cal.App.3d 214, 218.)

       Courts have considered various factors when determining whether

due process concerns outweigh a finding of “privity”. Reviewing those due

process considerations, one Court said:

       “ ‘Due process requires that the nonparty have had an
       identity or community of interest with, and adequate
       representation by, the losing party in the first action.
       [Citations.] The circumstances must also have been such that
       the nonparty should reasonably have expected to be bound

       13
         But see footnote 12, observing that Alec Wisner was not an
“unsuccessful” party in the prior litigation. The paramount policy
consideration is that unsuccessful litigants not obtain second-chance
opportunities. Here, Alec Wisner obtained a successful settlement of his
personal claims, but MICO MAG has been denied that same judicial
access.




                                      26
       by the prior adjudication . . . . [¶] A nonparty should
       reasonably be expected to be bound if he had in reality
       contested the prior action even if he did not make a formal
       appearance,’ for example, by controlling it. (Lynch v. Glass
       (1975) 44 Cal.App.3d 943, 948- 949, 119 Cal.Rptr. 139;
       accord, Clemmer, supra, 22 Cal.3d at p. 875, 151 Cal.Rptr.
       285, 587 P.2d 1098.)”

(Victa v. Merle Norman Cosmetics, Inc. (1993) 19 Cal.App.4th 454, 464.)

As described below, MICO MAG had no expectation that it was

represented in Wisner v. Loot, Inc., et al., had no expectation that it would

be bound by any outcome in Wisner v. Loot, Inc., et al., and did not control

the litigation of Wisner v. Loot, Inc., et al.14

       This due process rein on res judicata/collateral estoppel application

requires that competing rights and interests must be balanced against each

other. Describing this balancing, the Clemmer Court said:

       “Thus, in deciding whether to apply collateral estoppel, the
       court must balance the rights of the party to be estopped
       against the need for applying collateral estoppel in the
       particular case, in order to promote judicial economy by
       minimizing repetitive litigation, to prevent inconsistent
       judgments which undermine the integrity of the judicial
       system, or to protect against vexatious litigation.”

(Clemmer, supra, 22 Cal.3d at 875.) Here, the balance strongly favors


       14
         Courtney v. Waring (1987) 191 Cal.App.3d 1434 provides a sound
analysis of a situation, much like this one, in which similar litigation goals
do not comprise “control” of the first action by a non-party. In Courtney, it
was asserted that franchisee claims were barred as having been adequately
represented by a trustee in a prior action. The Court concluded that just
because “the trustee was seeking to represent the claims of the franchisees,
however, does not establish that he was legitimately acting in a
representative capacity.” (Id., at 1446.)




                                        27
MICO MAG’s right to due process. MICO MAG’s lawsuit does not create

any risk of inconsistent judgments, irrespective of whether or not MICO

MAG prevails on the merits of its claims. MICO MAG has not had any

opportunity to litigate its rights, thus the need for judicial economy cannot

weigh against MICO MAG’s right to due process. And, as shown fully,

supra, at Part III, Respondents’ assertion of vexatious litigation is false.15



       C. Because MICO MAG’s Due Process Rights Were Not

       Protected By Wisner v. Loot, Inc., et al., MICO MAG Was Not In

       “Privity” With Alec Wisner And Res Judicata Cannot Apply.

       During the litigation of Wisner v. Loot, Inc., et al., Alec Wisner sued

for the involuntary dissolution of Loot, Inc. (CLERK’S TRANS., at 107 –

108.) At that time, Alec Wisner was concerned with maximizing the true

value of Loot, Inc. (CLERK’S TRANS., at 107 – 112.) But, unbeknownst to

Alec Wisner, MICO MAG was owed huge sums of money by Loot, Inc.

and its subsidiaries. (CLERK’S TRANS., at 58, 64; AUGMENTED TRANS., at

683 – 684.) Thus, Alec Wisner’s interests in Wisner v. Loot, Inc., et al.

were antithetical to those of MICO MAG, in that Alec Wisner sought to

maximize the potential buyout value associated with LOOT, not identify


       15
          Aside from this erroneous decision, actions against Respondents
have been uniformly successful, while Respondents’ suits have met with
regular failure.




                                       28
debts owed by LOOT. Moreover, during that litigation, any financial

recovery obtained by MICO MAG against LOOT and its subsidiaries

would have conferred ancillary benefits upon MICO MAG shareholder

RITA GROSSMAN, who was, at the same time, a defendant in Wisner v.

Loot, Inc., et al.16 Such a result would have been inconsistent with Alec

Wisner’s position that RITA GROSSMAN should disgorge ill-gotten

profits and discriminatory dividends.

       MICO MAG did not have “adequate representation” of its interests,

or a “fair opportunity” to pursue its claims during Wisner v. Loot, Inc., et

al. Applying the Lynch v. Glass analysis of “adequate representation” here,

the record establishes that MICO MAG did not direct or control the

litigation of Wisner v. Loot, Inc., et al., which defeats the essential element

of privity in any res judicata analysis.



    VI.     THE ONLY “ADMISSIBLE EXTRINSIC EVIDENCE”

 REGARDING MICO MAG’S ROLE IN THE Wisner v. Loot, Inc., et

al. SETTLEMENT AGREEMENT WAS OFFERED BY MICO MAG.

       Misdirection is a recurrent theme in Respondents’ Brief. For

example, Respondents allege that MICO MAG failed to provide

       16
          Throughout the Wisner v. Loot, Inc., et al. action, until the entry of
the Settlement Agreement, MICO MAG was jointly owned by Alec Wisner
and defendant RITA GROSSMAN. (RESPONDENT’S BRIEF, at 14;
AUGMENTED TRANS., at 683 – 684.)



                                       29
“admissible extrinsic evidence” of intent to exclude MICO MAG from the

bilateral general releases issued in the Wisner v. Loot, Inc., et al. Settlement

Agreement. Betrayed by their own Brief, it is only Respondents that failed

to offer extrinsic evidence. MICO MAG alone produced “substantial

evidence” that offers a “reasonable construction” for the Settlement

Agreement. (Stratton v. First Nat. Life Ins. Co. (1989) 210 Cal.App.3d

1071, 1084.)



       A. Respondents Incorrectly Assert That MICO MAG Failed To

       Offer Any “Admissible Extrinsic Evidence”.

       As if an afterthought, Respondents incorrectly assert, in their

Conclusion, that “MICO MAG has not offered any admissible extrinsic

evidence establishing” the intention to exclude non-party MICO MAG

from the Settlement Agreement between Alec Wisner and the Wisner v.

Loot, Inc., et al. defendants. (RESPONDENTS’ BRIEF, at 18.) This

unsupported and incongruous claim is contradicted by Respondents’ own

Brief, which cites, for example, to the Declaration of Bruce C. Fishelman

(RESPONDENTS’ BRIEF, at 7) that was attached as Exhibit “5” to Plaintiff

MICO MAG’s Opposition To Defendants’ Motion For Judgment On The

Pleadings. (AUGMENTED TRANS., at 604, 675-680.)

       MICO MAG provided uncontested evidence regarding the intentions

of Alec Wisner and his counsel, Bruce C. Fishelman, to exclude MICO



                                      30
MAG from any bilateral releases issued pursuant to the Settlement

Agreement. (AUGMENTED TRANS., at 682-684.) Because the evidence

offered by MICO MAG established that Alec Wisner and his counsel were

unwilling to agree to any releases by MICO MAG, and, instead, demanded

a unilateral debt warranty from GROSSMAN (AUGMENTED TRANS., at

676:18 – 677:5), the intention to exclude MICO MAG from bilateral

release provisions was adequately disclosed to the Wisner v. Loot, Inc., et

al. defendants. (Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 529-530.)

       Respondents filed no objections to Declarations offered by MICO

MAG. And Respondents offered no evidence of their own about whether

MICO MAG participated in the bilateral general releases issued in the

Wisner v. Loot, Inc., et al. Settlement Agreement.17 MICO MAG’s

evidentiary offering provided the only competent, extrinsic evidence

establishing the intent to exclude MICO MAG from those bilateral general

releases.



       B. Respondents Failed To Meet Their Burden Of Proof.

       Respondents bear the burden of proving that the Settlement

Agreement is susceptible to the meaning asserted by them. In particular,

       17
         However, Respondents’ Brief is unrelenting in its improper efforts
to support arguments with attorney assertions of fact. (Allen v. Smith
(2002) 94 Cal.App.4th 1270, 1281; General Motors Corp. v. Superior
Court (1993) 12 Cal.App.4th 435, 442.)



                                     31
Respondents bear the burden of proving that release provisions include

unnamed third parties. (See, e.g., Neverkovec v. Fredericks (1999) 74

Cal.App.4th 337, Vahle v. Barwick (2001) 93 Cal.App.4th 1323, 1331-

1332, distinguishing Lama v. Comcast Cablevision (1993) 14 Cal.App.4th

59 and General Motors Corp. v. Superior Court (1993) 12 Cal.App.4th

435.) Having failed to provide any extrinsic evidence concerning the intent

to include non-party MICO MAG in bilateral general release provisions

contained in the Wisner v. Loot, Inc., et al. Settlement Agreement,

Respondents are not entitled to Judgment, and the Trial Court erred when

issuing Judgment in Respondents’ favor.



VII.   RESPONDENTS INCORRECTLY ASSERT THAT MARLOW

        AND MERIDIAN HAVE STANDING TO RAISE THE

 SETTLEMENT AGREEMENT FROM Wisner v. Loot, Inc., et al. AS

           A DEFENSE AGAINST MICO MAG’S CLAIMS.

       As another example of argument premised upon a flawed syllogism,

Respondents assert that since the Settlement Agreement in Wisner v. Loot,

Inc., et al. was intended to benefit Respondents MARLOW and

MERIDIAN, they may enforce that Settlement Agreement against MICO

MAG as third-party beneficiaries. (RESPONDENTS’ BRIEF, at 9.) Assuming

that the Settlement Agreement was, in fact, intended to benefit Respondents

MARLOW and MERIDIAN (an unsubstantiated hypothetical premise in



                                     32
itself), who were not defendants in Wisner v. Loot, Inc., et al., any benefit

is limited to a waiver of claims by an individual (Alec Wisner) against

those two companies.

       The fallacy in Respondents’ premise is starkly exposed when

Respondents’ argument is extended. Under Respondents’ premise, if Alec

Wisner owned stock in General Motors Corporation, for example, then

General Motors Corporation must have waived any claims it might have

against Respondents MERIDIAN and MARLOW. The flawed assumption,

then, is that MICO MAG and Alec Wisner are one and the same, rendering

any act by Alec Wisner as an act by MICO MAG. But the record

establishes that Alec Wisner was affirmatively prevented from taking

informed actions on behalf of MICO MAG. Many of MICO MAG’S core

business records concerning Respondents were only produced to MICO

MAG’s new management after an Order by Hon. S. James Otero compelled

the Wisner v. Loot, Inc., et al. defendants to turn over those books and

records. (AUGMENTED TRANS., at 678:13 – 679:9.) Respondents

improperly based their argument upon the incorrect premise that MICO

MAG and Alec Wisner are somehow the same legal entity. 18

       General Motors Corp. v. Superior Court (1993) 12 Cal.App.4th 435,

       18
          While Paul Wisner (deceased) and WORLD have been found to
be alter-egos of each other by the Court in American Express v. Al Robles,
et al., L.A.S.C. Case No. PC 026324, no such finding has been made by
any Court regarding Alec Wisner and MICO MAG.



                                      33
cited by Respondents for the proposition that a settlement agreement may

create third-party beneficiaries (General Motors, supra, at 443-444), is

inapposite here. The possible existence of third-party beneficiaries to Alec

Wisner’s release of claims in the Settlement Agreement is irrelevant to the

issue of whether non-party MICO MAG affirmatively provided any release

of claims. Appellant MICO MAG has correctly identified error when the

Trial Court dismissed MICO MAG’s claims against MARLOW and

MERIDIAN.



VIII. RESPONDENTS’ ONLY ARGUMENT CONCERNING POST-

SETTLEMENT DAMAGE TO MICO MAG IS PREDICATED UPON

                     INACCURATE ASSERTIONS.

       MICO MAG identified error where the Trial Court dismissed claims

that did not exist and had not arisen as of the date of entry of the Settlement

Agreement. As their only argument in opposition, Respondents asserted,

without supporting authority, that MICO MAG’s claims were “nothing

more than an allegation of a breach of the” Settlement Agreement.

(RESPONDENTS’ BRIEF, at 17, fn. 6.) This assertion mischaracterizes MICO

MAG’s claims arising from Respondents’ tortious, post-settlement conduct.

MICO MAG complained of Intentional and Negligent Interference With

Prospective Economic Advantage, as well as Conversion of tangible assets.

(CLERK’S TRANS., at 63-67.) These tort claims stand independent to any



                                      34
putative contractual obligation owed by Respondents to MICO MAG.

       Respondents also asserted that Hon. S. James Otero retained

jurisdiction over “any disputes arising out of settlement.” (Ibid.) This

assertion deceptively suggests that Hon. S. James Otero retains some

jurisdiction over non-parties to Wisner v. Loot, Inc., et al. In fact, Hon. S.

James Otero explicitly rejected that proposition when he denied defendants’

Motion to enforce the Settlement Agreement, stating that “the party in the

case before Judge Feffer was not a party in the case before Judge Otero.”

(AUGMENTED TRANS., at 668:9-10, emphasis added.) MICO MAG pursued

its remedy for post-settlement injury in tort, not contract, and jurisdiction

over those claims does not lie with Hon. S. James Otero.



                           IX.    CONCLUSION

       For the foregoing reasons, Appellant respectfully requests that the

appeal be granted, that the Judgment of Dismissal be reversed with respect

to all Respondents/Defendants, and that the matter be remanded forthwith

to the Superior Court for continued proceedings consistent with this Court’s

rulings and findings.



Dated this 28th day of January 2013.       Respectfully submitted ,
                                           STANBURY FISHELMAN & W ISNER, INC.
                                           9200 Sunset Boulevard, Penthouse 30
                                           West Hollywood, CA 90069-3601




                                      35
 By:
       H. Scott Leviant, Esq.,
       Attorneys for Plaintiff/Appellant
       MICO MAG CO., INC. dba
       GOURMET EDITIONS




36
                           CERTIFICATION



Line Spacing:       Appellants Brief was double spaced, except for

                    indented quotations and footnotes, which were all

                    single-spaced.

Typeface and Size: The typeface selected for this Brief is 13 point Times

                    New Roman. The font used in the preparation of this

                    Brief is proportionately spaced.

Word Count:         The word count for this Brief, excluding Table of

                    Contents, Table of Authorities, Proof of Service, and

                    this Certification is approximately 9,041 words. This

                    count was calculated utilizing the word count feature

                    of Microsoft Word 2002.



Dated this 28th day of January 2013.         Respectfully submitted,
                                             STANBURY FISHELMAN & W ISNER, INC.
                                             9200 Sunset Boulevard, Penthouse 30
                                             West Hollywood, CA 90069-3601


                                       By:
                                             H. Scott Leviant, Esq.,
                                             Attorneys for Plaintiff/Appellant
                                             MICO MAG CO., INC. dba
                                             GOURMET EDITIONS




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