Free Reply to Response to Motion - District Court of Arizona - Arizona

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Law Office of James Burr Shields 382 East Palm Lane Phoenix, Arizona 85004-1531 (602) 307-0780 (Office) (602) 307-0784 (Facsimile)
James Burr Shields II, State Bar #011711 John A. Conley, State Bar #016429 Blake Simms, State Bar #021595 Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT IN AND FOR THE STATE OF ARIZONA

) ) ) ) ) Plaintiffs, ) ) vs. ) ) Home Mortgage, Inc., an ) Arizona corporation conducting ) business in Arizona, ) Carl Brown; ) Molly Brown; ) Greg Brown; ) Jane Doe Brown; ) ) Defendants. ) ____________________________)

Cathleen Channel, Theresa Wharry, Stacie Hanson, Monique Nichols,

Case No. CIV 2003-0100 PHX ROS PLAINTIFFS' CONTROVERTING STATEMENT OF FACTS/SEPARATE STATEMENT OF FACTS IN SUPPORT OF PLAINTIFFS' REPLY

Pursuant to Local Rule 1.10(l) Plaintiffs, Cathleen Channel, Theresa Wharry, Stacie Hanson, and Monique Nichols, by and through counsel undersigned, hereby submit their Controverting Statement of Facts and their Separate Statement of Facts in support of Plaintiffs' Reply. Plaintiffs object to the following paragraphs of Defendants' Separate Statement of Facts: 2. The Arizona Secretary of State's Office lists as the President and CEO of HMI

Defendant Carl Brown. [Exhibit 2 to Plaintiffs' Statement of Facts in Support of their Motion for Summary Judgment] 8. Defendant Carl Brown provided no specific testimonial evidence the proceeds
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of the McAfee sale went to satisfy debts of the company. [See Exhibit 1 hereto, Excerpts from Carl Brown's Deposition Transcript] 11. The bank statements of Defendant Carl Brown's personal bank account show

Defendant Carl Brown received into his personal bank account the proceeds of the McAfee sale. [Exhibit 9 to Plaintiffs' Statement of Facts in Support of their Motion for Summary Judgment] 13. Greg Brown provided an affidavit stating Defendant Carl Brown and

Defendant Molly Brown controlled the corporation. [Exhibit 5 to Plaintiffs' Statement of Facts in Support of their Motion for Summary Judgment] 18. Greg Brown provided an affidavit stating Defendant Carl Brown and

Defendant Molly Brown controlled the corporation. [Exhibit 5 to Plaintiffs' Statement of Facts in Support of their Motion for Summary Judgment] 19. The Arizona Secretary of State's Office lists as the President and CEO,

Treasurer, Secretary, and Director of HMI Defendant Carl Brown. [Exhibit 2 to Plaintiffs' Statement of Facts in Support of their Motion for Summary Judgment] 21. Plaintiffs' previous attorney, Patrick N. Chapin, on June 24, 2002, sent to

Defendants' counsel, Jeffrey Zimmerman, a demand letter requesting the wages Plaintiffs seek through this action. [See Exhibit 5, June 24, 2002, letter from Plaintiffs' initial Counsel to Defendants' initial counsel] 24. Greg Brown provided an affidavit stating Defendant Carl Brown and

Defendant Molly Brown controlled the corporation. [Exhibit 5 to Plaintiffs' Statement of Facts in Support of their Motion for Summary Judgment] STATEMENT OF FACTS IN SUPPORT OF REPLY 1. Defendant Carl Brown, who states he had previously given depositions, could

not remember approximately when he gave his most recent deposition. [Exhibit 1, Carl Brown's October 4, 2006, Deposition Transcript; page 9, lines 1-12] 2. He further stated he could not remember the subject matter of the suit for

which he gave that deposition. [Exhibit 1, p. 9, lines 13-15]
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3.

He also stated he does not know whether he files tax returns. [Exhibit 1, p. 17,

lines 22-24; p. 18, lines 1-4; p. 23, lines 15-25; page 24, lines 1-24] 4. He stated he doesn't know whether either he or his wife receive bank account

statements. [Exhibit 1, p. 22, lines 25; p. 23, lines 1-3] 5. Defendant Carl Brown stated he had never, in his life, reviewed a bank

statement. [Exhibit 1, p. 149, lines 10-15] 6. He also stated he did not know whether he or his wife had any personal bank

accounts. [Exhibit 1, p. 27, lines 22-25; p. 28, lines 1-7; p. 29, lines 16-20] 7. Earlier in the deposition, Defendant Carl Brown stated he was aware his wife

did have a personal bank account. [Exhibit 1, p. 22, lines 17-24] 8. lines 13-15] 9. He later admitted he had with UBS such accounts and he received from UBS He stated he did not know where his wife might bank. [Exhibit 1, p. 30,

account statements. [Exhibit 1, p. 80, lines 6-20; p. 81, lines 5-7] 10. He further stated he did not remember receiving any money from the sale to

Plains Capital McAfee (McAfee) of HMI assets. [Exhibit 1, p. 33, lines 10-17] 11. This, despite the fact there is incontrovertible evidence he received from the

McAfee sale at least $700,000. [See Exhibits 9 and 10 to Plaintiffs' Statement of Facts in Support of their Motion for Summary Judgment] 12. He also stated he never deposited into a personal bank account HMI corporate

funds. [Exhibit 1, p. 31, lines 12-25, p. 32, lines 1-7] 13. Again, there is incontrovertible evidence he received into his personal account

at least $700,000 in connection with the McAfee sale. [See Exhibits 9 and 10 to Plaintiffs' Statement of Facts in Support of their Motion for Summary Judgment] 14. Defendant Carl Brown later stated he could not recall whether he received if

he received into his personal account these funds. [Exhibit 1, p. 91, lines 8-10] 15. Defendant Carl Brown testified he knew nothing of the HMI sale to First Palm

of certain assets. [Exhibit 1, p. 34, lines 10-20]
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16.

He later stated he had never heard of First Palm. [Exhibit 1, p. 142, lines 7-13;

p. 143, lines 22-23] 17. Defendant Carl Brown, however, in previous sworn testimony, informed

Plaintiffs' counsel he was aware of the sale to First Palm. [Exhibit 2, Excerpts from Carl Brown's August 4, 2003, Debtor's Examination Transcript, p. 21, lines 4-17] 18. Similarly, Defendant Carl Brown stated he had never heard of an entity called

Atlantic Mortgage. [Exhibit 1, p. 34, lines 21-24] 19. Defendant Carl Brown, however, in previous sworn testimony, disclosed to

Plaintiffs' counsel he was aware HMI sold to Atlantic Mortgage certain assets. [Exhibit 2, p. 21, lines 4-17] 20. When Plaintiffs' counsel questioned him regarding Realty Home Mortgage's

date of incorporation, Defendant Carl Brown indicated the incorporation took place less than five years from the date of the deposition. [Exhibit 1, p. 53, lines 5-10] 21. Just seconds later, he stated he did not recall whether that was the case.

[Exhibit 1, p. 53, lines 13-20] 22. Defendant Carl Brown maintained throughout his deposition he had no

involvement with HMI. [See, e.g., Exhibit 1, p. 56, lines 23-24; p. 57, line 1]. 23. Defendant Carl Brown, however, is a shareholder of the company. [Exhibit 1,

p. 57, lines 2-5] 24. He is also the secretary, a director and the treasurer of HMI. [Exhibit 2 to

Plaintiffs' Statement of Facts in Support of their Motion for Summary Judgment] 25. He expressed a belief a person could be an officer of a corporation and, yet,

not be "involved" in the company. [Exhibit 1, p. 60, lines 3-5] 26. Further, he acknowledged investing in the company approximately

$8,000,000. [Exhibit 1, p. 68, lines 5-7] 27. He later admitted using for HMI business HMI's corporate aircraft.

[Exhibit 1, p. 147, lines 4-12] 28. Defendant Carl Brown admitted playing a role in paying company bills.
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[Exhibit 1, p. 115, lines 1-3] 29. Defendant Carl Brown, despite all of this, continued to deny he had with the

company any involvement. [See, e.g., Exhibit 1, p. 56, lines 23-24; p. 57, line 1] 30. Defendant Carl Brown denied receiving from HMI any payments. [Exhibit 1,

p. 62, line 25; p. 63, lines 1-3] 31. Defendant Carl Brown, however, indisputably received in connection with the

sale to McAfee $700,00. [See Exhibits 9 and 10 to Plaintiffs' Statement of Facts in Support of their Motion for Summary Judgment] 32. Defendant Carl Brown went on to deny receiving from HMI any salary.

[Exhibit 1, p. 62, lines 20-22; p. 63, lines 6-7; p. 70, lines 9-13] 33. Defendant Carl Brown, however, in previous sworn testimony, admitted to

receiving from HMI a monthly salary of $15,000. [Exhibit 2, p. 25, lines 6-13] 34. Defendant Carl Brown stated he had no idea what kind of business HMI

conducted. [Exhibit 1, p. 67, lines 3-5] 35. He provided this testimony despite the fact he received a salary, was/is a

shareholder, was/is an officer, and invested in the company approximately $8,000,000. [Exhibit 2, p. 25, lines 6-13; Exhibit 1, p. 57, lines 2-5; Exhibit 2 to Plaintiffs' Statement of Facts in Support of their Motion for Summary Judgment; Exhibit 1, p. 68, lines 5-7] 36. 37. He also stated he had no idea how HMI started. [Exhibit 1, p. 66, lines 18-20] In previous sworn testimony, he stated his company eventually merged with

another entity, the Mortgage Bank, and formed the entity that conducted business until its insolvency. [Exhibit 2, p. 15, lines 3-19] 38. Defendant Carl Brown stated he could not remember whether any employee

(other than the Plaintiffs in the present action) of a company he owned and/or operated ever sued him in his individual capacity. [Exhibit 1, p. 76, lines 23-25; p. 77, lines 1-5] 39. He, upon prompting, stated another such employee, Paul Kueffer, sued him

in his personal capacity. [Exhibit 1, p. 77, lines 6-15] 40. He also stated he could not recall whether Mr. Kueffer had obtained against
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him a judgment. [Exhibit 1, p. 80, lines 5-13] 41. The fact Mr. Kueffer obtained against Defendant Carl Brown, individually,

a judgment of approximately $800,000 (a verdict he satisfied) makes Defendant Carl Brown's testimony on these matters extremely suspect. Superior Court docket report of Kueffer litigation] 42. Defendant Carl Brown refused to acknowledge Exhibits 8, 9, and 10, [Exhibit 3, Maricopa County

documents Plaintiffs received from Defendants' counsel, were bank statements. [Exhibit 1, p. 129, lines 10-20; p. 134, lines 1-22; p. 137, lines 2-21] 43. He, in the context of responding to Plaintiffs' counsel's question as to why the

funds for the HMI sale did not go into one of the company's many active bank accounts, stated he did not know whether the date September 17, 2002, fell between the dates August 30, 2002, and September 30, 2002.1 [Exhibit 1, p. 131, lines 8-15; p. 132, lines 16-25; p. 133, lines 1-5; p. 136, lines 13-16] 44. Defendant Carl Brown had several opportunities to revise his response to this

question but continued to state he did not know whether September 17, 2002, fell within the above date range. [Exhibit 1, p. 131, lines 8-15; p. 132, lines 16-25; p. 133, lines 1-5; p. 136, lines 13-16] 45. Defendant Carl Brown after stating he used to call on investors, buyers, and

realtors the company aircraft, stated he never used the aircraft for HMI business. [Exhibit 1, p. 147, lines 15-21] 46. He stated he used the aircraft only for personal trips, e.g., to watch his

thoroughbred horses race. [Exhibit 1, p. 147, lines 15-21]

September 17, 2002, was the date Defendant Carl Brown received into his personal bank account the funds from the McAfee sale. The HMI bank statements about which Plaintiffs' counsel questioned Defendant Carl Brown each covered the period of August 30, 2002, to September 30, 2002. Plaintiffs' counsel's implication was that the HMI bank statements demonstrated HMI, at the time of the deposit into Defendant Carl Brown's personal account, had active bank accounts into which Defendant Carl Brown could have deposited the money.
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RESPECTFULLY SUBMITTED this 12th day of January, 2007. LAW OFFICE OF JAMES BURR SHIELDS

____s/ W. Blake Simms__________________ James Burr Shields Blake Simms Attorneys for Plaintiffs CERTIFICATE OF SERVICE I hereby certify that on the 12th day of January, 2007, I electronically submitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: John E. Karow, Esq. 11350 North 104th Place Scottsdale, Arizona 85259 Attorney for Defendants Dennis Hall, Esq. 14614 North Kierland Boulevard, Suite 300 Scottsdale, Arizona 85254 Attorneys for Defendant Greg Brown ____s/ Gail Ivey___________________

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