EFTA01081024.pdf

1 1 IN THE CIRCUIT COURT OF THE FIFTEENTH JUDICIAL CIRCUIT, IN 2 AND FOR PALM BEACH COUNTY, FLORIDA 3 CASE NO.: 502009 CA 040800XXXMBAG 4 JEFFREY EPSTEIN, 5 Plaintiff, 6 vs. 7 SCOTT ROTHSTEIN, individually, BRADLEY J. EDWARDS, individually, 8 and L.M., individually 9 Defendants. / 10 11 12 HEARING BEFORE: THE HONORABLE DAVID F. CROW 13 DATE TAKEN: Wednesday, September 28, 2011 14 TIME: 8:15 a.m. - 8:45 a.m. 15 PLACE: Palm Beach County Courthouse 205 North Dixie Highway 16 West Palm Beach, Florida 33401 17 REPORTED BY: BARBARA L. KENT, RMR, RPR, FPR, CSR-MI Court Reporter and Notary Public 18 19 20 21 22 23 24 25 ORANGE REPORTING EFTA01081024  2 1 APPEARANCES 2 JOSEPH L. ACKERMAN, JR., ESQUIRE CHRISTOPHER E. KNIGHT, ESQUIRE 3 OF: Fowler, White, Burnett, P.A. 4 5 6 APPEARING ON BEHALF OF THE PLAINTIFF, 7 JACK SCAROLA, ESQUIRE OF: Searcy, Denney, Scarola, Barnhart & Shipley 8 9 10 APPEARING ON BEHALF OF BRADLEY J. EDWARDS. 11 12 ALSO PRESENT: Bradley J. Edwards. 13 14 15 16 17 18 19 20 21 22 23 24 25 ORANGE REPORTING EFTA01081025  3 1 PROCEEDINGS * * * * 2 3 THE COURT: Okay. Have a seat, please. 4 We're here on Epstein versus Rothstein, and 5 it's the Motion to Dismiss. I guess, the second 6 point, as well as your new Motion for Punitive 7 Damages. 8 I have read the motions. I have read all the 9 cases you guys provided to me, and I have read 10 them, too, when they were submitted to me earlier, 11 at least most of them. 12 So I think we should deal with the Motion to 13 Dismiss, first. 14 So, I guess, that is your motion. 15 Mr. Scarola. 16 MR. SCAROLA: Thank you, Your Honor. 17 With the Court's permission, may I address 18 the Court from counsel table? 19 THE COURT: That's fine, yes. Certainly. 20 MR. SCAROLA: Thank you very much. 21 Your Honor, what I think will be most helpful 22 is, if we went through the second amended complaint 23 and addressed what that complaint does or does not 24 do in some detail. 25 Obviously, the introduction, which is ORANGE REPORTING EFTA01081026  1 unnumbered, and does not constitute any of the 2 allegations against Mr. Edwards, is nothing more 3 than a press release incorporated into a pleading, 4 for purposes of cloaking it in litigation, in 5 unity. I think we can effectively ignore it. 6 The first five numbered paragraphs are, 7 basically, jurisdictional, and then paragraphs six, 8 seven, eight, nine, ten, 11, 12, 13, 14, all the 9 way through paragraph 22, are paragraphs that 10 describe in substantial detail the uncontested 11 misconduct of Scott Rothstein, and his involvement 12 in a Ponzi scheme. 13 Paragraph 21 alleges that Mr. Edwards was 14 aware that RRA's offices were monitored and 15 recorded various discussions. Obviously, that is 16 immaterial to any claim of abusive process. And 17 paragraph 22 talks about the level of 18 communications going on within the firm, relating 19 to the prosecution of what clearly was, and 20 continued to be, an extremely important case within 21 the firm. 22 The substantive allegations on which I 23 suggest we must focus, to the extent there's any 24 substance in them at all, begin at paragraph 23. 25 And that paragraph says that, that there were a lot ORANGE REPORTING EFTA01081027  5 1 of e-mails that went back and forth with regard to 2 the prosecution of this -- these major pending 3 cases within the law firm. There is nothing about 4 that exchange of e-mails that would suggest 5 Mr. Edwards' knowledge of, or involvement in an 6 Ponzi scheme. 7 Paragraph 24 describes a variety of events 8 that clearly have, from Mr. Edwards' perspective, 9 an entirely innocent explanation, and dove-tie him 10 into that Ponzi scheme. But as we're going to see, 11 even if Mr. Edwards were tied into the Ponzi 12 scheme, that's got nothing to do with any damage 13 suffered by the plaintiff, Mr. Epstein. 14 Paragraph 25 says that, given the 15 interdependence of so many RRA lawyers, 16 investigators, and other staff, the wide 17 communications that necessarily accompanied the 18 involvement of so many people, Edwards knew or 19 should have known, there was a Ponzi scheme going 20 on. 21 Well, that clearly is a conclusion that is 22 based upon the pyramiding of a variety of 23 inferences, and is not a reasonable conclusion, 24 based upon the preceding allegations about nothing 25 more than an exchange of e-mails and meetings going ORANGE REPORTING EFTA01081028  6 1 on, none of which, Edwards is alleged to have been 2 involved in, in terms of the -- the attempt to sell 3 investments. 4 Then we get to paragraphs 26, 27, and 28, and 5 we're back to Mr. Rothstein, again. And now we 6 have the abusive process claim against Mr. Edwards. 7 In paragraph 30, we learned that on 8 September 11, 2008, Mr. Edwards filed a state court 9 action on behalf of a client seeking damages. Now, 10 we know that those were legitimate claims. There's 11 no allegation anywhere in this complaint that they 12 were anything other than well-founded legitimate 13 claims. 14 30 B says that there was a federal court 15 complaint that was filed against somebody with a 16 different name, that because it was filed against 17 somebody with a different name, Mr. Epstein never 18 learned about it. Because not only was it filed 19 against somebody with a different name, it was 20 never served, according to the allegations in the 21 complaint on Mr. Epstein. 22 Now, clearly, there can be no abuse of 23 process, and no damages arising out of a complaint 24 against someone else with a different name that is 25 never served on this plaintiff. ORANGE REPORTING EFTA01081029  7 1 Then we have allegations in 30 C, that state 2 what Mr. Epstein believes about the federal 3 complaint; and he believes that it was filed to 4 show to prospective Ponzi scheme investors. Well, 5 again, assuming those -- assuming that belief to be 6 accurate, and a belief is not an allegation of 7 fact, except as to the subjective understanding of 8 Mr. Epstein. It doesn't say, this is what did 9 occur, it says that's what Mr. Epstein believed 10 occurred. 11 Even assuming that to be the case, the filing 12 of a federal court action to show to somebody else, 13 to defraud someone else, clearly cannot produce 14 damages to Mr. Epstein. And, in fact, when we get 15 to the damage allegations, the only allegation of 16 damages are, that Mr. Epstein was obliged to pay 17 attorney's fees to defend against state court 18 actions taken in the prosecution of the filed and 19 served state court claim. So there can be no 20 causal connection between what is alleged in 21 paragraph 30 C, and any damages to Mr. Epstein. 22 Now, the same is true when we get to 23 paragraph 32. Edwards also made illegal, improper, 24 and perverted use of civil process in order to 25 bolster the case to investors by using it to ORANGE REPORTING EFTA01081030  8 1 conduct unreasonable and unnecessary discovery, 2 making unfounded allegations, and we're going to 3 get to that. That clearly can't be the federal 4 court case, because the federal court case is never 5 served. So we must be talking about the state 6 court case, and paragraph 31 makes reference to the 7 state court case. 8 Then, we take a look at what it is that 9 Mr. Edwards is alleged to have done, that 10 constituted abuse of process. And we go to 11 subparagraphs one through ten, about actions 12 alleged to have been taken directly in the state 13 court action during the course of the prosecution 14 of the state court action, that are alleged to have 15 caused Mr. Epstein to spend money on attorney's 16 fees to defend against those actions alleged to 17 have been directly involved in the prosecution of 18 the state court claim. 19 Now, there is an allegation in paragraph 33 20 that Mr. Edwards had ulterior motives. 21 Significantly, there is no allegation that these 22 "ulterior" motives were the sole motives involved 23 in all of the actions described in paragraph 32. 24 And these ulterior motives are maintaining a Ponzi 25 scheme, of which Mr. Epstein was never, and could ORANGE REPORTING EFTA01081031  9 1 not have been a victim, because he didn't know 2 about it. So, that's got no relevance, and it's 3 not alleged that it was the sole motive. 4 And then there are two other very curious 5 motives alleged; obtaining funds for the continued 6 investigation and prosecution of the Epstein 7 actions, and obtaining operating revenues so that 8 RRA could continue to operate. 9 Now, I don't know how the plaintiff's law 10 firm business is conducted, but there isn't any law 11 firm that I'm aware of, that doesn't engage in the 12 practice of law for purposes of obtaining funds to 13 investigate and prosecute other cases; or to obtain 14 operating revenue so that the firm could continue 15 to operate. I don't know how that constitutes some 16 form of improper motive, that you are in business 17 to make a profit, and to continue to be able to 18 fund other cases to make profits. 19 So those allegations, even if they were 20 allegations that those were the sole motives, are 21 not allegations of some malicious and improper 22 motivation. 23 That's where the allegations of wrongdoing 24 end, and then paragraph 34 is the -- is the damage 25 paragraph, as a result of Mr. Edwards doing all of ORANGE REPORTING EFTA01081032  1 these things to prosecute his legitimate claims. 2 It is alleged that the plaintiff suffered damages 3 by incurring additional and unnecessary attorney's 4 fees. 5 There are four cases that are entirely 6 dispositive of this third attempt to try to 7 fabricate some justification for the extortion 8 attempt that Mr. Epstein began back in 2009, and 9 continues to pursue today. 10 The first of those is, SI Investments versus 11 Payless Flea Market, it appears at tab 18 in the 12 notebook that Your Honor was provided by the 13 defendants. You might just make 14 THE COURT: Okay. Because I didn't see any 15 cases, other than the litigation for those cases 16 cited in your motion. 17 MR. SCAROLA: Your Honor, the Motion to 18 Dismiss incorporates the legal authorities that are 19 described in detail in the Motion to Assert a Claim 20 for Punitive Damages, and all of these cases are 21 cited by both parties. 22 So, SI Investments stands for the following 23 propositions, and these are quotes. Plaintiff must 24 prove that the process was used for an immediate 25 purpose other than that for which it was designed. ORANGE REPORTING EFTA01081033  11 1 Where the process was used to accomplish the result 2 for which it was intended, regardless of an 3 incidental or concurrent motive of spite or 4 ulterior purpose, there is no abusive process. 5 That's the case the defendants themselves are 6 relying upon. 7 So if you have two motives, one's a good one, 8 because what you want to do is, you want to recover 9 damages against Mr. Epstein for his serial abuse of 10 young children. if you have -- 11 THE COURT: Well, isn't the -- isn't the 12 distinction, or as I understand it, correct me if 13 I'm wrong, but the -- while the initial process may 14 be for profit purpose, the issue on abuse of 15 process is something occurring subsequent. Even 16 though it may be filed for legitimate purpose, the 17 abuse process occurs, as compared to malicious 18 prosecution when it's filed for an improper 19 purpose; right? 20 MR. SCAROLA: In order for an abusive process 21 claim. 22 THE COURT: Right. 23 MR. SCAROLA: To be based upon an initial 24 filing. 25 THE COURT: Right. ORANGE REPORTING EFTA01081034  1 MR. SCAROLA: It must be demonstrated that 2 the sole purpose was an improper purpose. And the 3 case law is, that subsequent use of process where 4 there is a concurrent legitimate purpose, does not 5 constitute an abuse of process. That's the Fourth 6 DCA, 2010 recent law, that clearly describes the 7 scope of an abuse of process claim and the elements 8 involved. 9 THE COURT: Well, it also says, the mere 10 filing of a complaint having process served is not 11 enough to show abusive process. The plaintiff must 12 prove improper use of the process after it issues. 13 MR. SCAROLA: Yes, sir, that's correct. 14 THE COURT: Okay. 15 MR. SCAROLA: Okay. And that's what they 16 attempt to do, when they lay out in paragraph 32, 17 all of these alleged improper uses of the 18 litigation. 19 THE COURT: Where -- where -- I mean, I don't 20 mean to cut you off, but I mean you're running 21 short of time here, and, you know, if we started 22 right on time -- but I do have to give them an 23 opportunity. 24 You said this is the dispositive -- SI 25 Investments is diapositive. I thought you were ORANGE REPORTING EFTA01081035  13 1 going to talk about damages, but is there something 2 about damages in here? 3 MR. SCAROLA: There are. Your Honor, there 4 are four cases, which together, I suggest are 5 dispositive. 6 THE COURT: Give me the names of them, 7 because I want to read them. 8 MR. SCAROLA: Yes, sir. 9 The next case, and I will hand Your Honor a 10 copy of these others. 11 THE COURT: Are they all in the book here? 12 MR. SCAROLA: They are. Two of them are in 13 the book, I think the third one is, as well. 14 THE COURT: Okay. 15 MR. SCAROLA: Tab number four 16 Levin-Middlebrook is tab number 18. 17 THE COURT: Gotcha. I've read that 1,000 18 times. 19 MR. SCAROLA: Yes, sir, I'm sure you have. 20 And -- 21 THE COURT: You can give it to me, again, 22 though. 23 MR. SCAROLA: I will be happy to do that. 24 THE COURT: Yeah. This deals with litigation 25 privilege. ORANGE REPORTING EFTA01081036  1 MR. SCAROLA: Yes, sir. It does deal with 2 litigation privilege. Echevarria also deals with 3 the litigation privilege, and Delmonico stands for 4 the proposition that the issues with regard for 5 privilege, are issues of law for the court to 6 determine. 7 And I've provided Your Honor with highlighted 8 copies, I'm providing opposing counsel with 9 highlighted copies, as well. 10 THE COURT: Okay. 11 MR. SCAROLA: The basic point here is, Your 12 Honor, that the litigation privilege is an absolute 13 privilege. Once it is established that the actions 14 occur within the course and scope of the 15 litigation, the privilege applies absolutely as a 16 matter of public policy. 17 The basis of those decisions is, that if 18 there's misconduct in the course of the litigation, 19 if you're taking improper discovery, if you're 20 filing improper motions, there are remedies that 21 are available to the court through the court's 22 inherent power to control its own litigation, 23 through the contempt powers of the court, through 24 Florida Statute 57.105, and through the filing of 25 bar grievances, and it will cripple the system, if ORANGE REPORTING EFTA01081037  15 1 litigants are obliged to respond to separate 2 litigation, just because somebody is alleged, you 3 notice the deposition that shouldn't have been 4 noticed, you filed a motion that shouldn't have 5 been filed. 6 THE COURT: Are you saying it's a matter of 7 law, there can be no abuse of process by an 8 attorney, then? 9 MR. SCAROLA: No, sir. I'm not saying as a 10 matter of law there can be no abuse of process by 11 an attorney. 12 THE COURT: Just the -- 13 MR. SCAROLA: Because if there -- because the 14 test is, it must be related to the litigation. So, 15 if I were to issue a subpoena to my next-door 16 neighbor in a pending case, just because I want to 17 inconvenience him and bring him down to the 18 courthouse, knowing that he just moved to Florida 19 two weeks ago, and this case involves an automobile 20 accident that occurred three years ago, that he 21 couldn't absolutely know anything about, that would 22 be an abuse of process. 23 THE COURT: Here's my question. 24 MR. SCAROLA: Yes. 25 THE COURT: Whether or not that litigation -- ORANGE REPORTING EFTA01081038  16 1 and generally speaking, a privilege is an 2 affirmative defense. Whether or not something is, 3 or is not within the process, or within the 4 lawsuit, and falls within the immunity, is 5 certainly something that the judge will have to 6 decide rather than the jury. But it may be 7 dependent on specific facts under specific 8 circumstances, may it not? 9 MR. SCAROLA: It may be. 10 THE COURT: Okay. But you're saying, as a 11 matter of law -- I'm sorry. 12 MR. SCAROLA: I am sorry. I didn't mean to 13 interrupt the Court. 14 THE COURT: I guess what you're saying, it's 15 a matter of law, these allegations are such that I 16 can determine from the law looking at the 17 pleadings themselves, that it falls within the 18 privilege? 19 MR. SCAROLA: First, absolute privilege, as 20 distinguished from qualified privilege. Qualified 21 privilege is -- almost always involves questions of 22 fact, but this is an absolute privilege. And 23 secondly, you can determine from the face of the 24 complaint, that this was related to the litigation 25 itself. ORANGE REPORTING EFTA01081039  17 1 THE COURT: Okay. 2 MR. SCAROLA: You can see that on the face of 3 the complaint. 4 THE COURT: Okay. 5 MR. SCAROLA: So that's the basis of -- of 6 this dismissal argument, and the -- the allegations 7 of the nature of the damages that were incurred, as 8 well. 9 The nature of the damages are, I had to incur 10 attorney's fees in the context of this litigation. 11 THE COURT: Yes, sir. 12 MR. ACKERMAN: Your Honor, it's our position 13 that the corrected second amended complaint 14 satisfies on its four corners, every element of the 15 tort of abuse of process. 16 We have alleged a misuse of the judicial 17 system through a legal, improper, perverted use of 18 process. We have set those examples out. 19 We have alleged in the complaint, that they 20 were for ulterior purposes, not intended by the 21 law, after the action was, that resulted in 22 damages. We can clearly show that, by looking at 23 paragraph 30 A-C, when the LM case is filed in 24 state court against Mr. Epstein, and it is pending 25 for some time, that this 234-page, 156-count ORANGE REPORTING EFTA01081040  18 1 complaint is filed in Federal Court seeking in 2 excess of $23 million in damages, and it was 3 against Mr. Epstein. We can prove that. And was 4 intended there, we believe, with highly charged 5 allegations, to assist Mr. Rothstein in attracting 6 investors to invest in the Epstein cases. 7 Mr. Epstein's damages include filing motions 8 to dismiss that. That occurred approximately nine 9 months later. So, on that -- on its face, that is 10 a process that is issued after LM, involving the LM 11 case. 12 We then proceeded to list 32 separate 13 instances of abuse of process, and not all of them 14 are in the state cases, a couple are in the federal 15 cases. 16 Paragraph 33 alleges the motives, and we 17 believe that Mr. Edwards was attempting to assist 18 Mr. Rothstein, which is why all the allegations of 19 Mr. Rothstein's conduct with Mr. Edwards' cases, 20 that Mr. Scarola clearly wants to dismiss as 21 unrelated, are appropriate. Because the Court can 22 see on the face of the complaint that there is a 23 link. Mr. Edwards' investigators, Mr. Edwards' 24 cases are ultimately involved with Mr. Rothstein, 25 with the Ponzi scheme. ORANGE REPORTING EFTA01081041  19 1 We've also alleged in paragraph 24, and I 2 believe if the Court looks at the 15 e-mails 3 in camera, the Court will see that link; and what 4 Mr. Scarola wants to clearly dismiss as e-mails on 5 a case, is on the day that there is contact with 6 Mr. Rothstein and the investors, Mr. Rothstein 7 extends an e-mail, which we've alleged, to the 8 investors, who subsequently invest in the Epstein 9 cases, which is the purpose we've alleged, not 10 recovering money on a cause of action, that state, 11 here are the causes of action we have against 12 Mr. Epstein. 13 And based on the privileged log information 14 that we've received, you can see Mr. Rothstein 15 asking Mr. Adler, and Mr. Edwards in August, and 16 then again in October, what are the causes of 17 action against Mr. Epstein? On the day that he 18 communicates -- the day that Mr. Rothstein 19 communicates with the investors, there's a series 20 of e-mails that involve Mr. Adler, that involve 21 Mr. Edwards, that involve investigators and other 22 people, contrary to what Mr. Edwards has testified 23 to, that show a clear link that they are providing 24 the information that Mr. Rothstein asked for -- on 25 the causes of action against Mr. Epstein, that he ORANGE REPORTING EFTA01081042  2" 1 subsequently gives to the investors. 2 Now, it is our position that links 3 Mr. Edwards to Mr. Rothstein's scheme. And that 4 therein, provides the necessary element that we can 5 prove that the actions that were taken, that we've 6 alleged to be an abuse of process, aren't protected 7 by any privilege, and were in furtherance of that 8 scheme, as alleged. 9 We've also alleged special damages. The law 10 is very clear, that if a person has to defend 11 themself against the conduct of another party, that 12 they are allowed to come in in separate litigation 13 and claim those damages as special damages. Those 14 have been specifically pled. And right now 15 everything that Mr. Scarola is arguing, are issues 16 of fact that need to be properly pled as 17 affirmative defenses. 18 THE COURT: Let me understand the damages 19 here. The damages are not the defending the 20 lawsuit, because nowhere in here do you contend 21 that the lawsuits are frivolous or not supported by 22 facts. 23 MR. ACKERMAN: No, the damages -- 24 THE COURT: Let me finish. 25 MR. ACKERMAN: I apologize, Your Honor. ORANGE REPORTING EFTA01081043  21 1 THE COURT: I think you know where I am 2 going. 3 MR. ACKERMAN: Yes, sir. 4 THE COURT: But there were things done in 5 those lawsuits that were outside of -- or that were 6 an abuse of process, that he had to respond to, or 7 otherwise defend, that he would not have defended 8 but for the alleged abuse of process. 9 MR. ACKERMAN: Correct. 10 THE COURT: Is that the gist of it? 11 MR. ACKERMAN: Yes, sir. 12 THE COURT: Okay. So not defending the 13 underlying lawsuit. 14 MR. ACKERMAN: No. It's defending the 15 specific acts that we have said were outside what 16 was permitted in the lawsuit, that Mr. Edwards did, 17 that we believe we can link to assisting 18 Mr. Rothstein in the Ponzi scheme. 19 THE COURT: Okay. Because the reason I ask 20 that is, because I've read the complaint in detail, 21 and nowhere in there -- because you're alleging an 22 attorney's abuse of defense, but nowhere in there, 23 did you allege that the actions were not not 24 frivolous, or something like that, that you had to 25 defend them. ORANGE REPORTING EFTA01081044  ^9 1 MR. ACKERMAN: I think we did allege that, 2 Your Honor. We alleged that -- 3 THE COURT: That -- the entire, the actions 4 themselves were -- 5 MR. SCAROLA: I think you missed the 6 question. 7 MR. ACKERMAN: I missed the question, Your 8 Honor. 9 THE COURT: Okay. 10 MR. ACKERMAN: I'm alleging that the 11 attorney's fees were incurred, and are claimed 12 defending the inappropriate -- 13 THE COURT: I got you. 14 MR. ACKERMAN: -- use of the system. 15 THE COURT: I understand. 16 MR. ACKERMAN: Not the rest of the case. 17 THE COURT: I gotcha, okay. 18 MR. ACKERMAN: Okay. With regard to the 19 litigation privilege, if the Court looks at those 20 cases, the Court will see that this is an absolute 21 required. There is a predicate in all of those 22 cases that say that if -- if it is done, it must be 23 done as an act bearing -- having some relationship 24 to the proceeding here. We have alleged that is 25 not. ORANGE REPORTING EFTA01081045  23 1 The immunity only attaches if it's required 2 or permitted by the law. We have alleged that the 3 law does not permit these acts that we have 4 alleged. That is sufficient. And also, would 5 require the Court to make a factual finding, that 6 is sufficient to defeat Mr. Scarola's claim that 7 you can dismiss it, because an affirmative defense 8 appears on the face of the pleadings. 9 THE COURT: You would agree, that ultimately 10 it is a question of law for the Court, whether it 11 falls or does not fall within the -- within the 12 privilege? Perhaps not at this stage, but at some 13 point. 14 MR. ACKERMAN: Not at this stage, but the 15 Court may need to take facts. 16 THE COURT: I understand that. 17 MR. ACKERMAN: Take evidence. 18 THE COURT: The jury is not going to 19 determine whether or not this is -- 20 MR. ACKERMAN: That's correct. I believe 21 that's correct. 22 THE COURT: Okay. Briefly, Mr. Scarola, and 23 it looks like we don't have time for the motion -- 24 on the other -- the other motion, I got 8:45's 25 beginning. ORANGE REPORTING EFTA01081046  24 1 MR. SCAROLA: I would prefer to take the time 2 on the Motion for Punitive Damages, it will only 3 take me two minutes. Your Honor has read it. 4 THE COURT: I prefer not to do it today. 5 MR. SCAROLA: Okay. 6 THE COURT: And I will tell you why. And I'm 7 going to give you instructions as to why, after 8 reading the materials, I want some further -- 9 further thought on it. Okay? 10 So go ahead, if you want to spend any further 11 time on your motion, just -- I think I got -- i 12 understand both sides. I really do. 13 And this is not -- I mean I understand it, so 14 anything else you want me to know that -- 15 MR. SCAROLA: I would be pleased to answer 16 any other questions you have, or address any 17 concerns that you may have with regard to the 18 motion. 19 THE COURT: Here -- let me, on the punitive 20 damage aspects, here's what I want you to deal 21 with. Okay? 22 Aside from the facts of the allegations -- 23 and here's one of my concerns I want you to address 24 when you reset this hearing, and it's really 25 directed, I guess, at the counterclaim. ORANGE REPORTING EFTA01081047  25 I ruled on the Motion to Dismiss the Counterclaim, and I think it was 8:45, it may have been a short hearing. But after reading all this, I have serious concerns as to whether there is a cause of action for abuse of process as pled. And let me suggest to you the reason. As I understand the theory is, that this is, basically, what we used to call in products liability, you know, a slap-suit, or something like 10 that, against somebody. You know, your -- this 11 case, the plaintiff's case is. You're just doing 12 this for the purpose of preventing the valid 13 prosecution of Mr. Edwards' clients' rights. Okay? 14 As I -- and it really gets confusing, is that 15 may -- if that's true, that's a wonderful malicious 16 prosecution suit. I'm not sure it's an abuse of 17 process suit. If you win this case, and the jury 18 finds that this is -- this is a frivolous lawsuit, 19 or it's not valid, or whatever; then, there's a 20 malicious prosecution suit. But is it -- is it an 21 abuse of process suit? And if it's not an abuse of 22 process suit, because it -- where it gets confusing 23 to me -- again, I don't mean to -- because -- 24 because the elements, to give rise to punitive 25 damages, must arise out of the tort itself. Okay? ORANGE REPORTING EFTA01081048  26 1 And it -- if it -- 2 MR. SCAROLA: If there's no underlying tort, 3 there are no punitive damages. 4 THE COURT: And where the problem arises is, 5 is the maliciousness is in filing the lawsuit, I 6 guess, or filing the lawsuit that essentially is 7 frivolous, and intended for purposes -- so I'm not 8 making a ruling on it. That's one of the issues 9 that came up when I read this stuff. 10 So I would like you, before you reschedule, 11 to talk about that issue. Because it was -- it 12 really wasn't vetted, I guess, originally, to me, 13 anyway. 14 So I will take a look at this and get you a 15 ruling out in a day or two, and you-all reschedule 16 the motion on punitive damages. I'd appreciate it. 17 Okay? 18 MR. SCAROLA: I will tell you, Your Honor, 19 that this has been extensively argued before the 20 Court. It wasn't just an 8:45 hearing, and the 21 Motion to Dismiss the Counterclaim was denied 22 following those arguments. But I understand that, 23 in effect, what you are saying is, you are 24 sui sponte, reconsidering that, and we'd be happy 25 to address it. ORANGE REPORTING EFTA01081049  27 1 THE COURT: Well, let me put it this way. 2 Maybe, perhaps, I didn't understand. I mean, the 3 Courts have problems, at least at the trial level, 4 on the differences, and the distinctions between 5 malicious prosecution and abuse of process, and 6 which ones are dichotomy that dovetail, and I just 7 want to make sure that that is completely vetted 8 before we get to the issue -- or when we get to the 9 issue of damages. 10 MR. SCAROLA: Yes, sir. 11 THE COURT: Okay. 12 MR. ACKERMAN: Thank you, Your Honor. 13 THE COURT: Thank you, guys. 14 (Hearing concluded at 8:45 a.m.) 15 (Court came back at 8:48 a.m., added to the 16 record, reported by Christine Phipps, Phipps Reporting, 17 85171 Legend Club Drive, West Palm Beach, FL, 33412, 18 888.811.3408.) 19 20 21 22 23 24 25 ORANGE REPORTING EFTA01081050  22 1 CERTIFICATE 2 3 STATE OF FLORIDA COUNTY OF PALM BEACH 4 5 I, Barbara L. Kent, RMR, RPR, FPR, CSR-MI, Court 6 Reporter, certify that I was authorized to and did 7 stenographically report the foregoing proceedings and 8 that the transcript is a true and complete record of my 9 stenographic notes. 10 Dated this 28th day of September, 2011. 11 12 13 14 15 16 434cuhautilitix 17 18 BARBARA L. KENT CERTIFIED COURT REPORTER 19 20 21 22 23 24 25 ORANGE REPORTING EFTA01081051  1 WORD INDEX 561 2:5, 9 19:10, 11, 17, 25 anyway. 26:13 57.105 14:24 25:5 apologize 20:25 <$> actions 7:18 8:11, APPEARING 2:6, 10 $23 18:2 <6> 16, 23 9:7 14:13 appears 10:11 23:8 686-6300 2:9 20:5 21:23 22:3 applies 14:15 <0> acts 21:15 23:3 appreciate 26:16 040800XXXMBAG <7> added 27:15 appropriate 18:21 1:3 777 2:4 additional 10:3 approximately 18:8 address 3:17 are 9:20 10:18, 20 < 1> <8> 24:16, 23 26:25 11:5 13:4 26:23 1,000 13:17 8:15 1:14 addressed 3:23 are, 4:6 11 4:8 6:8 8:45 1:14 25:2 Adler 19:15, 20 argued 26:19 12 4:8 26:20 27:14 affirmative 16:2 arguing 20:15 13 4:8 8:45's 23:24 20:17 23:7 argument 17:6 14 4:8 8:48 27:15 after 24:7 arguments 26:22 15 19:2 802-9044 2:5 again, 13:21 arises 26:4 156-count 17:25 85171 27:17 against 6:16 19:11 arising 6:23 18 10:11 888.811.3408. 27:18 ago 15:19, 20 as 16:19 17:7 18. 13:16 agree 23:9 18:20 20:16 <9> ahead 24:10 Aside 24:22 <2> 901 2:3 allegation 6:11 7:6, ask 21:19 2008 6:8 15 8:19, 21 asked 19:24 2009 10:8 <A> allegations 4:2, 22 asking 19:15 2010 12:6 a 6:15 13:9 14:15 5:24 6:20 7:1, 15 aspects 24:20 2011 1:13 15:9 16:10 18:22 8:2 9:19, 20, 21, 23 Assert 10:19 2011. 28:10 25:4, 19 26:14 16:15 17:6 18:5, assist 18:5, 17 205 1:15 a.m 1:14 27:15 18 24:22 assisting 21:17 21 4:13 a.m. 1:14 27:14 allege 21:23 22:1 assuming 7:5, 5, 11 2139 2:8 able 9:17 alleged 6:1 7:20 at 17:22 22 4:9, 17 about 5:3 8:9, 12, 14, 16 9:3, attaches 23:1 23. 4:24 absolute 14:12 5 10:2 12:17 15:2 attempt 6:2 10:6, 8 234-page 17:25 16:19, 22 22:20 17:16, 19 19:1, 7, 9 12:16 24 5:7 19:1 absolutely 14:15 20:6, 9 21:8 22:2, attempting 18:17 25 5:14 15:21 24 23:2, 4 attorney 15:8 26 6:4 abuse 6:22 8:10 alleged. 20:8 attorney. 15:11 27 6:4 11:9, 14, 17 12:5, 7 alleges 4:13 18:16 attorney's 7:17 28 1:13 6:4 15:7, 10, 22 17:15 alleging 21:21 8:15 10:3 17:10 28th 28:10 18:13 20:6 21:6, 8, 22:10 21:22 22:11 22 25:5, 16, 21, 21 allowed 20:12 attracting 18:5 <3> 27:5 ALSO 2:12 August 19:15 30 6:7, 14 7:1,21 abusive 4:16 6:6 am 21:1 authorities 10:18 17:23 11:4, 20 12:11 amended 3:22 authorized 28:6 31 8:6 A-C 17:23 17:13 automobile 15:19 32 7:23 18:12 accident 15:20 an 5:5 11:2 12:22 available 14:21 32, 12:16 accompanied 5:17 15:7 16:1 21:21 aware 4:14 9:11 32. 8:23 accomplish 11:1 25:20 33 8:19 18:16 accurate 7:6 and 1:8 3:4 4:14, <B> 33401 1:/6 2:4 ACKERMAN 2:2 16, 19 6:4 7:18 back 5:1 6:5 10:8 33409 2:8 17:12 20:23, 25 10:8 16:22 19:15 27:15 33412, 27:17 21:3, 9, 11, 14 22:1, 23:22 25:5 27:5 bar 14:25 34 9:24 7, 10, 14, 16, 18 28:7 BARBARA 1:17 23:14, /7, 20 27:12 answer 24:15 28:5, 18 <6> act 22:23 any 4:23 10:14 Barnhart 2:7 502009 1:3 action 6:9 7:12 24:16 based 5:22, 24 8:13, 14 17:21 ORANGE REPORTING EFTA01081052  2 11:23 19:13 CERTIFIED 28:18 contact 19:5 damage 5:12 7:15 basic 14:11 certify 28:6 contempt 14:23 9:24 24:20 basically 4:7 25:8 charged 18:4 contend 20:20 damages 6:9, 23 basis 14:17 17:5 children 11:10 context 17:10 7:14, 16, 21 10:2, be 7:5 16:6 22:22 Christine 27:16 continue 9:8, 14, 17 20 11:9 13:1, 2 be. 16:9 CHRISTOPHER 2:2 continued 4:20 9:5 17:7, 9, 22 18:2, 7 BEACH 1:2, 15, 16 CIRCUIT 1:1, 1 continues 10:9 20:9, 13, 13, 18, 19, 2:4, 8, 8 27:17 28:3 circumstances 16:8 contrary 19:22 23 24:2 25:25 bearing 22:23 cited 10:16, 21 control 14:22 26:16 been 6:1 15:3 civil 7:24 copies 14:8, 9 Damages. 3:7 26:3 began 10:8 claim 4:16 6:6 copy 13:10 27:9 beginning. 23:25 7:19 10:19 12:7 corners 17:14 DATE 1:13 BEHALF 2:6, 10 6:9 20:13 23:6 correct 11:12 23:20 Dated 28:10 belief 7:5, 6 claim. 8:18 11:21 correct. 12:13 21:9 DAVID 1:12 believe 18:4, 17 claimed 22:11 23:21 day 19:5, 17, 18 19:2 21:17 23:20 claims 6:10 corrected 17:13 26:15 28:10 believed 7:9 claims. 6:13 10:1 could 8:25 DCA 12:6 believes 7:2, 3 clear 19:23 20:10 counsel 3:18 14:8 deal 3:12 14:1 between 27:4 clearly 4:19 5:8, 21 Counterclaim 25:2 24:20 bolster 7:25 6:22 7:13 8:3 26:21 deals 13:24 14:2 book 13:11, /3 12:6 17:22 18:20 counterclaim. 24:25 decide 16:6 Boulevard 2:8 19:4 COUNTY 1:2, 15 decisions 14:17 BRADLEY 1:7 2:10, client 6:9 28:3 defeat 23:6 12 clients 25:13 couple 18:14 defend 7:17 8:16 Briefly 23:22 cloaking 4:4 course 8:13 14:14, 20:10 21:7, 25 bring 15:17 Club 27:17 18 defendants 10:13 Burnett 2:3 come 20:12 COURT 1:1, 17 3:3, 11:5 business 9:10, 16 communicates 18, 19 6:8, 14 7:12, Defendants. 1:9 by 15:10 20:21 19:18, 19 17, 19 8:4, 4, 6, 7, defended 21:7 communications 13, 14, 18 10:14 defending 20:19 <C> 4:18 5:17 11:11, 22, 25 12:9, 21:12, 14 22:12 CA 1:3 compared 11:17 14, 19 13:6, 11, 14, defense 16:2 21:22 call 25:8 complaint 3:22, 23 17, 21, 24 14:5, 10, 23:7 camera 19:3 6:11, 15, 21, 23 7:3 21, 23 15:6, 12, 23, defenses. 20:17 can 18:21 20:4 12:10 16:24 17:13, 25 16:10, 14 17:1, defraud 7:13 CASE 1:3 4:20 19 18:1, 22 21:20 4, 11, 24 18:1, 21 Delmonico 14:3 7:11, 25 8:4, 4, 6 complaint. 17:3 19:2, 3 20:18, 24 demonstrated 12:1 11:5 12:3 13:9 complete 28:8 21:1, 4, 10, 12, 19 denied 26:21 15:16, 19 17:23 completely 27:7 22:3, 9, 13, 15, 17, Denney 2:7 19:5 25:11, 11, 17 concerns 24:17, 23 19, 20 23:5, 9, 10, dependent 16:7 case. 8:7 18:11 25:4 15, 16, 18, 22 24:4, deposition 15:3 22:16 concluded 27:14 6, 19 26:4, 20 27:1, describe 4:10 cases 3:9 5:3 conclusion 5:21 11, 13, /5 28:5, 18 described 8:23 9:13, 18 10:5, 15, conclusion, 5:23 Court. 16:13 10:19 15, 20 13:4 18:14, concurrent 11:3 Courthouse 1:15 describes 5:7 12:6 24 19:9 22:20, 22 12:4 15:18 designed. 10:25 cases, 18:19 conduct 8:1 18:19 Courts 27:3 detail 4:10 10:19 cases. 18:6, 15 20:11 Court's 3:17 14:21 detail, 21:20 causal 7:20 conducted 9:10 cripple 14:25 detail. 3:24 cause 19:10 25:5 confusing 25:14, 22 CROW 1:12 determine 16:16, 23 caused 8:15 connection 7:20 CSR-MI 1:17 28:5 23:19 causes 19:11, 16, 25 constitute 4:1 12:5 curious 9:4 determine. 14:6 certainly 16:5 constituted 8:10 cut 12:20 dichotomy 27:6 Certainly. 3:19 constitutes 9:15 did 7:8 28:6 <D> ORANGE REPORTING EFTA01081053  3 did, 21:16 Epstein 3:4 6:17 firm 4:18 5:3 9:10, <H> differences 27:4 7:2, 8, 9, 14, 16 11, 14 hand 13:9 different 6:16, 17, 8:15, 25 9:6 10:8 firm. 4:21 happy 13:23 26:24 19, 24 11:9 17:24 18:3, 6 first 4:6 10:10 have 8:14 15:4 directed 24:25 19:8, 17, 25 16:19 23:3 25:2 directly 8:12, 17 EPSTEIN, 1:4 first. 3:13 have. 13:19 discovery 14:19 Epstein. 5:13 6:21 five 4:6 he 15:20 19:17, 25 discovery, 8:1 7:21 19:12 FL 27:17 HEARING 1:12 discussions 4:15 Epstein's 18:7 Flagler 2:4 24:24 25:3 26:20 Dismiss 3:5, 13 ESQUIRE 2:2, 2, 7 Flea 10:11 27:14 10:18 18:8, 20 essentially 26:6 FLORIDA 1:2, 16 helpful 3:21 19:4 23:7 25:1 established 14:13 2:4, 8 14:24 15:18 highlighted 14:7, 9 26:21 Even 11:15 28:3 highly 18:4 dismissal 17:6 events 5:7 focus 4:23 Highway 1:15 dispositive 10:6 evidence. 23:17 following 10:22 him 5:9 12:24, 25 examples 17:18 26:22 Honor 3:21 10:12, dispositive. 13:5 excess 18:2 for 14:3, 4 17 13:3, 9 14:7, 12 distinction 11:12 exchange 5:4, 25 foregoing 28:7 17:12 22:2 24:3 distinctions 27:4 explanation 5:9 form 9:16 Honor, 26:18 distinguished 16:20 extends 19:7 forth 5:1 Honor. 3:16 20:25 Dixie 1:15 extensively 26:19 four 10:5 13:4, 15 22:8 27:12 do. 24:12 extent 4:23 17:14 HONORABLE 1:12 doing 9:25 25:11 extortion 10:7 Fourth 12:5 don't 12:19 extremely 4:20 Fowler 2:3 <I> dovetail 27:6 FPR 1:17 28:5 I 4:22 16:15 19:1 dove-tie 5:9 <F> frivolous 20:21 24:1/ 26:5 Drive 2:4 27:17 fabricate 10:7 21:24 25:18 26:7 if 11:12 14:/7, 25 face 16:23 17:2 fund 9:18 ignore 4:5 <E> 18:9, 22 23:8 funds 9:5, 12 illegal 7:23 E 28:1 fact 7:7, 14 16:22 further 24:8, 9, 10 I'm 24:6 earlier, 3:10 20:16 furtherance 20:7 immaterial 4:16 Echevarria 14:2 facts 16:7 24:22 immediate 10:24 EDWAR