COUNSEL. MICHAEL S. STEIN: YES, CHIEF JUSTICE, MICHAEL STEIN,
PASH MAN STEIN, ON BEHALF OF THE PETITIONER, A HAPPY NEW YEAR TO ALL AND CHIEF
JUSTICE I DO FEEL DUTY TEE BOUND TO VERY QUICKLY ACKNOWLEDGE THE EMPTY CHAIR
AND EXPRESS, I AM SURE ON BEHALF OF EVERYBODY, GRATITUDE AND APPRECIATION YAGS
FOR THE MORE THAN 20 YEARS OF WONDERFUL SERVICE OF JUSTICE LA VECCHIA.
CHIEF JUSTICE RABNER: THANK YOU, MR. STEIN AND I AM GOING
TO ASSUME THAT ALL COUNSEL ARE GOING TO MAKE A SIMILAR COMMENT AND WE'RE
INCORPORATING IT. MR. REISER. SCOTT E. REISER: THANK YOU,
YOUR HONOR, GOOD MORNING, HAPPY NEW YEAR AGAIN, COTTRELL SCOTT REISER WITH
LUM, DRAS ON BEHALF OF RESPONDENT KOGER, INC.. JOSEPH P. LA SALA:
GOOD MORNING, YOUR HONOR, JOSEPH LAST MAK EL ROI DIESH, HAPPY NEW YEAR ANYONE,
ALSO ON BEHALF OF RESPONDENT, RASTISLAV SIPKO. CHIEF JUSTICE RABNER:
WELCOME, COUNSEL, MR. STEIN, PLEASE 'GO AHEAD. MICHAEL S. STEIN:
MAY IT PLEASE THE COURT, THE QUESTION TO BE CONSIDERED ON THIS PETITION IS
WHETHER UNDER THE CIRCUMSTANCES PRESENTED A REMAND IS REQUIRED TO RECONSIDER THE
VALUATION OF KPS AND P P KDS, THE ANSWER TO THAT QUESTION IS IN INFORMED, CONSIDERABLY
I BELIEVE BY TWO LEGAL PRINCIPLES, FIRST ON THE SCOPE OF APPELLATE REVIEW
OF JUDGMENTS IN NONJURY CASES THIS COURT REAFFIRMED IN BALSAMIDES THE PARTICULAR
DEFENSE DUE A TRIAL JUDGE IN VALUATION DISPUTES OFFERING THE FOLLOWING
OBSERVATION AND I QUOTE, EXPERTS EXERCISE JUDGMENT IN MANY STAGES IN THE VALUATION
PROCESS, AS A RESULT THEIR CREDIBILITY AND RELIABILITY ARE CRITICAL. ONLY
THE TRIAL COURT HAS THE OPPORTUNITY TO SEE, HEAR AND QUESTION THE EXPERT WITNESS.
ADDITIONALLY THE TRIAL COURT'S FINDINGS ON VALUATION TYPICALLY ARE ONLY ONE
ASPECT OF THE OVERALL RESOLUTION OF THE MATTER, APPELLATE COURTS SHOULD TAKE CARE
IN ACCEPTING SOME AND REJECTING OTHER FINDINGS OF THE COURT AS THEY MAY
DISTURB THE LOGIC AND EQUITABLE BALANCE OF THE TRIAL COURT'S OTHER CONCLUSIONS,
ACCORDINGLY, WHERE DEFENSE IS DUE AT TRIAL COURT'S FINDING. THAT
STANDARD HAS PARTICULAR PERTINENCE HERE. FIRST, CHANCERY JUDGE,
ROBERT P BLANK, NOW RETIRED PRESITED OVER THIS MATTER FOR A DECADE FROM THE
FOLLOWING RS FILING OF THE COMPLAINT IN ON 7 THROUGH THE SIX DAY TRIAL IN ON 8,
DURING THE ENTIRETY OF THE REMAND PROCEEDING CULMINATING HIS EVEN, REMAND
DECISION IN JULY 2016 AND OF COURSE THEN DURING POST JUDGMENT PROCEEDINGS.
HE WAS ABLE TO EVALUATE THE CREDIBILITY OF EXPERTS AT TRIAL WHERE EACH EXPERT SPENT
A FULL DAY ON THE STAND SUBJECT TO CROSS-EXAMINATION AND EXTENSIVE
QUESTIONING FROM THE COURT. HE QUESTIONED OUR EXPERTS HUBERT KLEIN
AT LENGTH OVER THE QUESTION OF HOW, IF AT ALL, GEORGE'S CONTROL IN KPS AND
KPS'S DEPENDENCE ON KOGER AFFECTED VALUE, QUESTIONS TO WHICH MR. KLEIN PROVIDED
SUBSTANTIVE RESPONSES, I REFER TO THE TRANSCRIPT. HE WAS ABLE
TO ASSESS FOR CONTENT, RECORD EVIDENCE THAT IN 'ON 6 AND '07 ALONE, THE FIRST TWO
YEARS AFTER ROEB BETTER'S SPKS, ALMOST THE SAME AMOUNT AS THE $18 MILLION DOLLAR
VALUATION EVER ROBERT EQUITY TRINTS, INTERESTS. WE HEARD MR. CLIENT EXPLAIN HIS
RELIANCE ON BALSAMIDES AND LAWSON IN DETERMINING THAT A DISCOUNT WAS NOT
APPROPRIATE. IT WAS JUDGE CONTILLO, WHO STRUCK FROM THE RECORD DEFENDANT'S EXPERT
OPINION THAT A DISCOUNT SHOULD APPLY, SUPPORTED AS IT WAS BY NOTHING OTHER
THAN INSTRUCTIONS FROM COUNSEL. HE WAS THERE AT THE VERY FIRST REMAND
APPEARANCE WHERE DEFENDANT'S COUNSEL DECLINED AN INVITATION TO XHIRGS A
NEW EXPERT REPORT RESTING, INSTEAD ON THE STRATEGIC DECISION TO ARGUE THAT ROBERT
WAS ENTITLED TO NOTHING MORE THAN REINSTATEMENT AS AN OWNER OF COMPANIES
WHOSE VALUE HAD BEEN STRIPPED BY DEFENDANTS. JUDGE
CONTILLO BORE WITNESS TO THE FACT THAT NOT ONE, ONCE DURING THE REMAND PROCEEDING
DID THE DEFRNLS CHALLENGE MR. HUBERT'S CLUKZ, JUSTICE CON WAS IN THE BEST
POSITION TO CONCLUDE THAT MR. HUBERT'S EXPERT OPINION WAS CLEAR, CONVINCINGS AND
OF COURSE UNREBUT, A REMAND TO ANOTHER JUDGE MAKES NO SENSE.
APPELLATE DIVISION A QUESTIONS OF LAW AND THAT BRINGS ME TO THE SECOND LEGAL PRINCIPLE
I WOULD LIKE TO HIGHLIGHT. THIS COURT ENDED ITS ANALYSIS IN LAWSON WITH
THE FOLLOWING CONCLUSION AND, GN, I QUOTE, WHERE THE OPPRESSING SHAREHOLDER IN
STIGATES THE PROBLEM LEM, FAIRNESS DICTATES THAT THE OPPRESSING DICK, SHAREHOLDER
SHOULD NOT BENEFIT, OEPES, HARM HIS PARTNER AND BE REWARDED WITH AT THE TIME RIGHT
TO BUYOUT THAT PARTNER AT A DISCOUNT. THAT LEGAL PRINCIPLE
BEGS TWO QUESTIONS, WAS ROBERT OPPRESSED AND IF NOT, SHOULD THE PRINCIPAL
EXPRESSED IN BALSAMIDES AND LAWSON APPLY TO THOSE, BUT NOT OPPRESSION APPRECIATION.
IT IS, DECISION, LEFT UNDISTURBED THE FINDING OF NO
OPPRESSION, BUT THEN THERE WAS A THREE-YEAR REMAND PROCEEDING, COMPLETELY IGNORED
BY THE APPELLATE DIVISION WHICH IRREFUTABLY REVEALED THAT FROM THE
FILING OF THE COMPLAINT TO THE PRESENT DEFENDANTS HAVE ACTED FRAUDULENTLY IN A SINGULAR
EFFORT TO STOP ROBERT FROM, FIRST BY FRAUDLY BACK INDICATE R DATING STOCK
TRANSFER CERTIFICATES AN THEN BY CONTINUOUSLY DIVERTING TENSE OF MILLIONS OF DOLLARS
FROM KPS AND KPDZ RENDERING THEM VALUE LESS. JUDGE CONTILLO
DID NOT USE THE WORD OEP APPRECIATION TO DESCRIBE THE DEFENDANT'S CONDUCT IN HIS
REMAND DECISION, BUT THAT CONDUCT IS NOT OEP APPRECIATION, I DON'T KNOW
WHAT IS. AND REGARDLESS WE DON'T NEED A REMAND FOR THIS COURT TO MAKE CLEAR THAT
THE CONDUCT WAS AT THE E, AT THE LEAST FRAUDULENT AND AS, THE DEFENDANTS
ARE NOT ENTITLED TO THE BENEFIT OF A MARKETABILITY, DISCOUNT.
ONE FINAL POINT, ON TOP OF EVERYTHING ELSE THERE IS THE MATTER OF GEORGE'S AND RAS'S
UNPRECEDENTED CONTEMPTUOUS POST JUDGMENT CONDUCT. EQUITY AN, CANNOT ABDOMEN
SHOULD NOT ABIDE THAT CONDUCT. THE REMAND SHOULD BE VACATED, JUDGE CONTILLO'S
REMAND OPINION SHOULD BE AFIRMD IN ITS ENTIRETY. THAT'S THE END OF MY
OPENING REMARKS. CHIEF JUSTICE RABNER: MR. STEIN BEFORE YOU
GO FORWARD A QUESTION FOR YOU AND JUST A REMINDER TO COUNSEL TO MUTE YOURSELVES
DURING THE ARGUMENT EXCEPT FOR WHEN YOU'RE SPEAKING. MR. STEIN,
CAN YOU HELP UGS WITH A BACKGROUND QUESTION, IF I REMEMBER CORRECTLY, THERE WAS
SOME PROPERTY THAT WAS POSTED AND FORFEITED. CAN YOU TELL
US WHAT IS THE VALUE OF PROPERTY THAT IS AVAILABLE TODAY IF A SCOMBRUMENT WERE
ENTERED IN YOUR FAVOR. MICHAEL S. STEIN: YES, SO USING APPROXIMATE
NUMBERS, THROUGH TODAY, WE HAVE COLLECTED APPROXIMATELY 19 MILLION DOLLARS
AND THAT INCLUDES PROPERTIES THAT WERE FORFEITED PURSUANT TO THE FEBRUARY 13, 2017
ORDER AND THEN LIQUIDATED. THERE IS APPROXIMATELY, PREJUDGMENT ABOUT $7
MILLION LEFT TO BE COLLECTED, MAYBE A LITTLE BIT MORE AND THE ONLY ASSETS REMAINING
IN THE U.S. ARE A HOME OWNED BY RAS IN CONNECTICUT THAT WAS AMONG THE
PROPERTIES PLEDGED AND FORFEITED BY THE FEBRUARY 13 ORDER, BUT REMAINS OUT OF REACH
BECAUSE RAS CONSENTED TO A PREJUDGMENT ATTACHMENT IN A DIVORCE PROCEEDING,
ONGOING IN CONNECTICUT, IN WHICH WE ARE IN BLANK, SO THAT PROPERTY WHICH IS NOW
TITLED IN ROBERT'S NAME WE THINK IT MIGHT -- YOU KNOW, IT COULD BE WORTH $4 OR
$5 MILLION AND THE QUESTION IS ARE WE ENTITLED TO THE ENTIRETY OF THAT OR DOES
RAS'S WIFE RECEIVE AN EQUITABLE INTEREST. SHE HAS BEEN LIVING WITHIN THE HOUSE
WITH HER CHILDREN; THAT'S THE SUBJECT OF THE DIVORCE PROCEEDING.
THE ONLY OTHER PROPERTY IS A MERRILL LYNCH ACCOUNT. IT WAS ORDERED TURNED OVER
BY JUDGE CONTILLO, BUT THEN IN THE NEXT BUSINESS DAY, RAS CONSENTED IN
CONNECTICUT. NO ONE HAD KNOWLEDGE OF THIS ADVANCE, TO A PREJUDGMENT ATTACHMENT
THAT HAS FROZEN THAT ACCOUNT. THERE WAS ABOUT A MILLION DOLLARS IN THAT ACCOUNT.
OUR BEST ESTIMATE IS THAT EVEN IF WE ARE COMPLETELY SUCCESSFUL IN CONNECTICUT,
WE WILL NOT OBTAIN FULL SATISFACTION OF THE JUDGMENT BASED ON ASSETS IN THE U.S.
FINALLY, CHIEF JUSTICE, THERE ARE A FEW PROPERTIES OWNED JOINTLY
BY GEORGE AND RAS IN SLOVAKIA. IN SLOVAKIA, YOU'RE NOT ENTITLED TO EVEN ATTEMPT
TO EXECUTE ON PROPERTY UNTIL FINAL JUDGMENT AND ALL APPEALS HAVE BEEN
EXHAUSTED SO THAT REMAINS SOMETHING IN THE WIND. CHIEF JUSTICE
RABNER: THANK YOU. MICHAEL S. STEIN: SO IN CONTINUING MY
ARGUMENT, NO. 1, I JUST WANT TO EMPHASIZE AND TALK A LITTLE MORE ABOUT THE FACT
THAT IN OUR VIEW, A REMAND IS WHOLLY UNNECESSARY TO DECIDE THE PURELY LEGAL
QUESTION OF THE MARKETABILITY DISCOUNT. AND, YOU KNOW, IN FOOTNOTE 17 OF THE
APPELLATE DIVISION 127, THERE WAS A SUGGESTION THAT BECAUSE THE WORDS OEP
APPRECIATION WERE NOT USED IN THE REMAND DECISION THERE MAY BE EVEN A
SUGGESTION THAT BECAUSE THE FINDING OF NO OEP APPRECIATION WAS LEFT UNDISTURBED
IN THIS COURT'S HAD 2013 OPINION CLOP 17 CLOP, THAT BALSAMIDES, THE LAWSUIT L
AND LAWSON DON'T APPLY AND TO THAT I JUST WANT TO SAY A COUPLE OF THINGS.
NO. 1, I THINK THE REMAND DECISION DESCRIBES OEP APPRECIATION. I MEAN, I CAN'T
THINK OF MORE OPPRESS S-CONDUCT THAN DIVERTING ALL THE REVENUE AND RENDERING
THE COMPANIES VALUE LESS THAT ROBERT HAD A 50 PERCENT INTEREST IN. THEY ARE
CERTAINLY FRAUDULENT. BUT TO THE EXTENT THIS COURT DISAGREES AND DOESN'T FIND THAT
TO BE OPPRESS S-CONDUCT, I THINK IT IS IMPORTANT TO LET THE BAR KNOW WHETHER
THIS CONDUCT, WLVR WORDS ARE USED TO DESCRIBE IT, FALL WITHIN THE AMBIT OF THE
CONCLUSIONS REACHED IN THE HOLDING SET FORTH IN THE BALSAMIDES AND LAWSON
CASE. I ALSO THINK THIS IS IMPORTANT, YOU KNOW, BOTH BALSAMIDES
AND LAWSON, THE COURTS THERE WRESTLED WITH THE EQUITY, OF COURSE FAIRNESS AN EQUITY
IS AT THE FOUNDATION. BUT IN BOTH THOSE CASES, WHAT WAS ANTICIPATED, IN
BALSAMIDES, THE OPPRESSOR WAS THE SELLER AND IT WAS THE OPPOSITE IN LAWSON, BUT
IN BOTH CASES THE COURT GRAP P LD WITH THE FACT THAT AFTER THE BUYOUT THERE WAS
AN EXISTING COMPANY THAT ONE DAY WOULD BE SOLD AND PERHAPS SUBJECT TO THE BURDEN
OF A LESS THAN FAIR MARKET KEL SLAL U PRICE BECAUSE OF MARKETABILITY ISSUES.
THAT IS NOT THE CASE HERE. WHAT WE HAVE HERE AND WHAT THE COURT
WELL KNEW GOING INTO THE REMAND WAS THE COMPANIES THAT ROBERT WAS ORDERED
EQUITABLY BOUGHT OUT OF WERE EMPTY SHELLS. THERE WAS NEVER GOING TO BE A SITUATION
WHERE GEORGE AND RAS WERE GOING TO TURN AROUND AND SELL THESE COMPANIES AND
BE BURDENED BY MARKETABILITY DISCOUNT BECAUSE THEY STRIPPED THE COMPANIES OF ALL
THEIR VALUE. AND THAT WAS A VERY SIGNIFICANT COMPONENT OF WHAT THE COURT HAD
TO WRESTLE WITH IN BALSAMIDES AND LAWSON. IT DOESN'T APPLY HERE WHICH
UNDERSCORES THE EQUITIES AND FAIRNESS OF THIS CASE AND THE RIGHTNESS OF JUDGE CONTILLO'S
DETERMINATION TO ACCEPT HUBERT BETTER KLEIN'S EXPERT OPINION INCLUDING NO
WORK ABILITY DISCOUNT. BUT AS A MATTER OF POLICY, THIS COURT SHOULD MAKE CLEAR
THAT FRAUD, LIKE OEP APPRECIATION, CAN MAKE A BAD ACTOR NOT ELIGIBLE FOR THE
MARKETABILITY DISCOUNT. THE NEXT POINT I WANT TO MAKE, THE APPELLATE
DIVISION -- JUSTICE ALBIN: MR. STEIN CAN I ASK YOU A
QUESTION ABOUT MARKETABILITY DISCOUNT? IS THAT FACTOR AVAILABLE BECAUSE
IT SOMEHOW DESCRIBES WHAT VALUE A PRACTICE OR PROPERTY OR COMPANY HAS ON
THE MARKET ITSELF? AND I KNOW IT'S CALLED A DISCOUNT, BUT WHEN YOU'RE TRYING TO
VALUE A COMPANY, IS THIS MARKETABILITY DISCOUNT JUST ANOTHER WAY OF SAYING
THAT'S THE WAY YOU VALUE THE COMPANY? ARE YOU FOLLOWING ME?
I AM TRYING TO UNDERSTAND WHAT THIS MARKETABILITY DISCOUNT ACTUALLY MEANS.
MICHAEL S. STEIN: WELL, I THINK THE MARKETABILITY DISCOUNT
IS AN ATTEMPT TO GRAPPLE WITH THE FACT THAT THE COMPANIES MIGHT HAVE A SMALLER
MARKET, BUT APPRAISERS THROUGHOUT OUR STATE HAVE, YOU KNOW, SINCE, 1999
HAVE READ BALSAMIDES AND LAWSON TO SAY THAT BE ABSENT EXTRAORDINARY CIRCUMSTANCES,
THERE IS NO CUT AN DRIED RULE, BUT GENERALLY, WHEN ASSESSING EQUITY AND
FAIRNESS, THE OPPRESSOR OUGHT NOT GET THE BENEFIT OF A DISCOUNT SO AS NOT TO INCENT
IVIZE OPPRESS S-CONDUCT. JUSTICE ALBIN: I UNDERSTAND THAT. I AM
JUST TRYING TO UNDERSTAND THE CONCEPT, WHETHER OR NOT THE CONCEPT OF DISCOUNT
IS A MISNOMER OR AM I MISTAKEN? IS IT A DISCOUNT OR IS THAT THE
WAY YOU'RE SUPPOSED TO ACTUALLY DETERMINE THE VALUE OF THE COMPANY?
ARE YOU FOLLOWING ME? MICHAEL S. STEIN: I AM NOT SURE, BUT IT
MAY GET TO THE DIFFERENCE BETWEEN FAIR MARKET VALUE AN FAIR VALUE THE LATER
OF WHICH HAS AN EQUITABLE COMPONENT INJECTED INTO IT. I AM NOT POSITIVE I AM
ANSWERING YOUR QUESTION SATISFACTORILY AND FOR THAT, I APOLOGIZE. MY
NEXT POINT I WANT TO MAKE IS THE ACTIVE REMAND PART OF THE DECISION FEELS A BIT
LIKE A GOD SEND AND I JUST WANT TO EXPLAIN WHY. ON REMAND THE DEFENDANTS
MADE A STRATEGIC DECISION. I MEAN WE ALL KNEW, WE WERE THERE FOR THREE YEARS,
TO DECLINE THE INVITATION ON THE VERY FIRST DAY OF REMAND. I REMEMBER LIKE
IT WAS YESTERDAY AND JUDGE CONTILLO SAID, YOU KNOW, WE NEED TO REOPEN THE RECORD.
I AM MINDFUL THAT THIS COURT HAD SAID TWICE IN ITS OPINION AND QUESTIONED THE,
YOU KNOW, YOU DON'T NEED A NEW EXPERT AND THEY SAID NO AND NOT ONLY DID
THEY DECLINE THAT INVITATION, BUT THEY NEVER CHALLENGED THE SUFFICIENCY OF OUR
EXPERT'S CONCLUSIONS OR HIS TESTIMONY DURING THE THREE YEAR REMAND PERIOD.
INSTEAD, THEY WENT ALL IN ON THEIR STRATEGIC DECISION AND THEIR
ARGUMENT THAT WE WEREN'T ENTITLED TO A BUYOUT BECAUSE THERE WAS NO OEP APPRECIATION
AND THAT THE ONLY REMEDY AVAILABLE TO US WAS REINSTATEMENT AS AN OWNER OF
VALUE LESS COMPANIES. THAT WAS A STRATEGIC DECISION THAT THEY MADE AND SO THE
QUESTION OF THE SUFFICIENCY OF HUBERT BETTER KLEIN'S UNREBUT OPINION WAS IN
THE,JUST NOT A PART OF THE REMAND DECISION AND IT IS NO WONDER THAT JUDGE CONTILLO
WAS RATHER SUCCINCT IN HIS EMBRACING OF THAT OPINION. I THINK
THAT IT IS AN IMPORTANT POINT BECAUSE, YOU KNOW, WE IN THE COURT BELOW SENT FOUR
YEARS AND MILLIONS OF DOLLARS IN ATTORNEY'S FEES IN RELICENSE,
RELICENSE ON THAT STRAT TEEJ JIKS DECISION AND ON THE POSITIONS THAT DEFENDANTS
TOOK DOWN BELOW AND IT WASN'T UNTIL THE APPEAL THAT THEY RAISED THESE ISSUES.
I ALSO WANT TO TOUCH JUST BRIEFLY ON THE IMPACT I THINK THAT
THE POST JUDGMENT CONDUCT SHOULD HAVE ON THIS AND THE INSTRUCTIONS ON REMAND WERE
FOR THE TRIAL COURT TO EXERCISE ITS BROAD EQUITABLE POWERS TO FASHION A
REMEDY THAT SERVED THE UNDERLYING CIRCUMSTANCES AND THAT'S PRECISELY WHAT JUDGE
CONTILLO DID. SO WE'RE TALKING ABOUT AN EQUITABLE REMEDY
HERE, AN EQUITABLE BUYOUT AND DEFENDANT'S HANDS ARE NOT JUST DIRTY, THEY ARE THE
DIRTIEST HANDS I'VE EVER, EVER SEEN COMING INTO AN ARGUMENT BEFORE THE SUPREME COURT.
THEY ARE FILTHY. AND THEY NONETHELESS WERE PROVIDED SUBSTANTIVE RELIEF
ON A DISCRETIONARY EQUITABLE DECISION RESTING ON THE CREDIBILITY OF EXPERT
WITNESSES WHO TESTIFIED NEARLY 15 YEARS AGO BEFORE A NOW RETIRED JUDGE.
EQUITY AND INTEREST OF JUSTICE, I WOULD ARGUE SHOULD NOT ABIDE A REMAND.
THE LAST COUPLE THINGS THAT I WOULD LIKE TO TOUCH ON IS THE CRITICISMS, IF YOU
CAN CALL THEM THAT OF THE APPELLATE DIVISION. I THINK THEY WERE CENTERED ON
MARKETABILITY DISCOUNT, WHICH IT IS A LEGAL QUESTION AND THERE IS NO NEED FOR
A REMAND FOR THIS COURT TO EITHER AFFIRM JUDGE CONTILLO'S DECISION OR EXPLAIN WHY
A MARKETABILITY DISCOUNT IS APPROPRIATE, BUT THEY RAISED TWO OTHER ISSUES.
THEY CLAIM THAT MR. KLEIN DID NOT ACCOUNT FOR THE FACT THAT
KPS AND KDS WERE DEPENDENT ON KOGER IN FROM A ARE STRUCTURE AND DOMINATED BY GEORGE.
THAT'S JUST NOT SO. THERE WAS A LONG COLLOQUY BETWEEN THE COURT AND HUBERT
BETTER KLEIN AND IT IS A T 3, TRANSCRIPT NO. 3, PAGES 180 TO 186 WHERE THE ORIGINAL
TRIAL JUDGE CONTILLO WAS BOTHERED BY WHAT HE THOUGHT WAS THIS INTER#2K3E7BD
DENSE. IN FACT BECAUSE HE WAS SO BOTHERED BY IT IN THE FIRST GO ROUND HE FOUND
NO VALUE, BUT HUBERT BETTER CLIENT GAVE SUBSTANTIVE RESPONSES AN HE SAID
HEY, LOOK, BASICALLY, YOU GOT THESE CONTRACTS, YOU'VE GOT THESE REVENUE STREAMS
AND WHERE VALUE IN THE COMPANY BASED ON CAPITALIZATION OF EARNINGS, BASED ON
VALUE OF A DATE CERTAIN, IT WOULD BE INAPPROPRIATE TO TAKE INTO ACCOUNT SOMETHING
THAT MIGHT OR MIGHT NOT HAPPEN DOWN THE ROAD. SO THERE WAS
THIS SUBINSTANT TIF ANSWER THAT I DON'T THINK WAS APPRECIATED BY THE APPELLATE
DIVISION. AND FINALLY THE APPELLATE DIVISION SEEMED BOTHERED
BY THE FACT THAT THERE WAS A LACK OF TJ ABOUT THE UNDERLYING LICENSING AGREEMENTS
THAT GAVE RISE TO THE RE: NEWS STREAMS THAT GAVE RISE TO REVENUE STREAMS TO
KPS. NEITHER EXPERT RELIED ON THOSE LICENSING CONTRACTS IN
THEIR CAPITALIZATION OF EARNINGS APPROACH OR IN THEIR MARKET APPROACH TO VALUATION
AND NO. 2, WHAT THE COURT DIDN'T APPRECIATE IS THAT WE HAD SPENT YEARS
AND COUNTLESS MOTIONS AND COUNTLESS REQUESTS TRYING TO GET INFORMATION, FINANCIAL
INFORMATION FROM DEFENDANT, INCLUDING THESE LICENSING AGREEMENTS AND IT WAS NOT
UNTIL THE EVE OF TRIAL, AFTER EXPERT REPORTS HAD BEEN CIRCULATED, THE VERY
END OF NOVEMBER WITH A DECEMBER 8 BEGINNING OF TRIAL DATE, THAT WE GOT THOSE
LICENSING AGREEMENTS. AND AT THAT POINT, THEY -- THE REPORTS HAD ALREADY
BEEN DONE, THE CONCLUSIONS HAD ALREADY BEEN SUBMITTED. YOU KNOW,
IT'S GALLING TO ME, THAT DEFENDANTS DIDN'T RAISE THAT ISSUE ON REMAND, RAISED IT
ON APPEAL WITHOUT ACKNOWLEDGING THE EFFORTS WE HAD TO GO THROUGH AND THEIR
CONDUCT IN BLOCKING OUR EFFORTS TO OBTAIN DISCOVERY AND IN FACT WE DIDN'T GET ALL
THE FINANCIAL DOCUMENTS THAT WE SOUGHT IN THE UNDERLYING CASE BECAUSE THEY
DIDN'T PROVIDE EVERYTHING. JUSTICE PIERRE-LOUIS: MR. STEIN, AS YOU'VE
ALREADY MENTIONED, JUDGE CONTILLO OFFERED THE DEFENDANTS THE ABILITY TO
PRESENT THEIR OWN EXPERT ON REMAND AND THEY DIDN'T DO SO SO THESE ARGUMENTS WITH
REGARD TO THE CRITICISMS OF KLEIN'S EXPERT TESTIMONY COULD HAVE BEEN MADE
BY DEFENDANTS IF THEY CHOSE TO PRESENT THEIR OWN EXPERT, BUT CHOSE NOT TO DO SO.
AND CONTINUED TO MAINTAIN THAT THERE WAS, BAUFS THERE WAS NO QUESTION THERE WAS
NO REMEDY BEYOND DISSOLUTION OF THE COMPANIES. MICHAEL S. STEIN:
EXACTLY. I COULDN'T HAVE SAID THAT BETTER MYSELF. LOOK, MAYBE IN OUR BRIEFING
TO THE APPELLATE DIVISION, WE SHOULD HAVE SPENT MORE TIME EXPLAINING THE
SUPPORT IN THE RECORD FOR ALL OF THE CONCLUSIONS OF HUBERT BETTER KLEIN LIKE WE
TRIED TO DO IN THE SUR-PETITION, BUT IN OUR MIND, THESE WERE ISSUES THAT
HADN'T BEEN RAISED BELOW, THEY HAD CHOSEN A COURSE AND A STRATEGY AND, YOU KNOW,
WE THOUGHT THAT THOSE ISSUES WERE WAIVED AS YOUR HONOR JUST ARTICULATED.
I DO THINK THAT AS LAID OUT IN -- ON PAGES 18 TO 19 OF OUR PETITION, THERE IS
AMPLE SUPPORT FOR JUDGE CONTILLO'S ORIGINAL OPINION AND RECONSIDERATION
OPINION FOR HIS CONCLUSION, BUT, AGAIN, EVEN IF THIS COURT WERE TO FIND THAT THERE
WERE NOT, I THINK THAT IT'S WELL WITHIN THE AUTHORITY AND POWER OF THIS COURT TO
RENDER A DECISION ON THE MARKETABILITY DISCOUNT WHICH MAKES A WHOLE LOT MORE SENSE
THAN REMANDING TO A NEW JUDGE TO DO WHAT, TO GO THROUGH THE RECORD, TRY TO
DISCERN THE CREDIBILITY OF WITNESSES OF 15 YEARS AGO WHEN THIS NEW JUDGE DIDN'T
PRESIDE OVER THE TRIAL, TO RENDER A LEGAL CONCLUSION ON MARKETABILITY DISCOUNT
A REMAND ALLOWS THE DEFENDANTS AN OPPORTUNITY FOR MORE MISCHIEF. IT IS
TIME TO PUT AN END TO THIS CASE. THANK YOU VERY MUCH. AND I WOULD LIKE TO RESERVE
A COUPLE OF MINUTES, I I DIDN'T SAY THAT WHEN I STARTED MY ARGUMENT.
CHIEF JUSTICE RABNER: QUESTIONS, ANYONE HAVE ANY QUESTIONS FOR MR. STEIN, WE WILL
HAVE YOU BACK BRIEFLY FLOOR REBUTTAL, MR. REISER. SCOTT E. REISER:
MAY IT PLEASE THE COURT. I WOULD ASK THE COURT TO UPHOLD THE APPELLATE
DIVISION'S DECISION REMANDING THE MATTER TO THE TRIAL COURT FOR A NEW VALUATION
HEARING. WE'VE JUST HEARD FROM MR. STEIN ABOUT THE MARKET ABILITY DISCOUNT ISSUE
BUT I'D SUBMIT TO THE COURT THAT THE REMAND IS BROADER THAN JUST WHETHER
THE MARK ACT DISCOUNT SHOULD OR SHOULD NOT APPLY. PAGE 41 OF ITS DECISION THE
APPELLATE DIVISION HELD THAT BY SIMPLY ACCEPTING MR. KLEIN'S EXPERT OPINIONS
WHICH THE TRIAL COURT HAD REJECTED AT TRIAL AND THIS IS THE CRITICAL PART,
WITHOUT ANY SPECULATION FOR THE ACCEPTANCE OF THE REMAND THE JUDGE FAILED TO RAISE
A REASON TO SUPPORT THE CONCLUSION BY WEIGHING AND EVALUATING THE EXPERT'S
OPINION INCLUDING THEIR CREDIBILITY. THE APPELLATE DIVISION PANEL FOUND THIS TO
BE PROBLEMATIC IN LIGHT OF THE TESTIMONY OF THE FAMILY AN EXPERT, MR. SCHMIDT,
WHICH THE PANEL FOUND TO HAVE FOCUSED ON THE IMPACT THAT KOGER'S SUPPORT
AND INFRASTRUCTURE AND GOOD WILL HAD THE ON THE VIOLENCE ATTACHED TO KDS AND KPS.
MR. KLEIN'S EXPERT ADMITTED HE HAD NO KNOWLEDGE OF THE LICENSING AGREEMENT.
IF YOU REMEMBER MORE, THE APPELLATE DIVISION FOUND THAT MR. SCHMIDT'S TESTIMONY
WAS CREDIT TO DO SOME DEGREE BASED ON THE CONCLUSION THAT KDS AND KPS HAD
AND WERE, IN FACT, TOTALLY DEPENDENT ON KOGER. APPELLATE DIVISION NOTED THAT
DEFENDANTS HAD JUSTIFIED THE MARK ABILITY DISCOUNT DESPITE NOT SEPARATING
VALUE STATING THUS UNDER BALSAMIDES IT WOULD BE APPROPRIATE TO -- IN THE ABSENCE
OF SHAREHOLDER OPPRESSION. BECAUSE OF THAT THE COURT QUOTE, UNQUOTE, LUCK
TENANTSLY REMANDED THE MATTER FOR RECONSIDERATION OF THE VALUE OF PLAINTIFF'S
INTEREST IN KPS AND KDS AS A VALUATION DATE. THAT VALUATION DATE OF COURSE
HAS NEVER BEEN SOME DISPUTE IN THIS MATTER. NOW, THIS IS A WIDE RANGING REMAND. IN
OTHER WORDS, THE COURT DOES NOT SIMPLY REMAND THE MATTER FOR ENTRY OF
JUDGMENT, THE COURT DID NOT REMAND THE MATTER TO MY A MARK ACT DISCOUNTS. THE
APPELLATE DIVISION REMANDED THE MATTER TO THE TRIAL COURT AND SAID THAT THE COURT
SHOULD CONSIDER ALL SOURCES OF INFORMATION THAT AFFECT THE FAIRNESS AND
EQUITY OF CLIENTS SUGGESTED BY BALSAMIDES INCLUDING SCHMIDT'S CRITICISMS AND THE
EFFECT ON VALUATION. IN OTHER WORDS ON REMAND THE TRIAL COURT SHOULD ADDRESS
THE TESTIMONY OF MR. SCHMIDT FROM 2008. THE COURT ALSO NOTED THE TRIAL COURT'S
ABILITY IT NECESSARY TO DETERMINE A FAIR AND EQUITABLE BUY OUT REMEDY.
(INAUDIBLE). IMPROPERLY THE -- SOLELY FOR THE (INAUDIBLE) ISSUE
IN THIS MATTER. AND THEN PLAY TO CLAIMS THE REMAND RUNS AFOUL OF BALSAMIDES AND
LAWSON BECAUSE HE CLAIMS THAT THOSE CASES REQUIRE THE TRIAL COURT NOT TO
APPLY MARK ABILITY DISCOUNT TO A BUY-OUT VALUATION WHERE THERE IS THE PROPER OR
IN IN EQUITABLE CONDUCT WHICH IS NOT ADDRESSED. NOTHING IN THE DECISION
APPLIES THE TRIAL COURT TO APPLY A MARKET ABILITY DISCOUNT. RATHER THE REMAND
EXPRESSLY REQUIRES THE TRIAL COURT TO CONSIDER ALL SOURCES OF INFORMATION TO
AFFECT THE VALUATION. PRESUMPTION THAT GUIDANCE WOULD ALLOW THE TRIAL COURT TO
CONSIDER WHATEVER CONDUCT WOULD SHOW TO HAVE BEEN UNFAIR TO JUSTIFY A LACK
OF A MARKET ABILITY DISCOUNTS. SECOND THE PLAINTIFF ASKS THIS COURT TO CONSIDER
A POST REMAND CONDUCT OCCURRING NINE YEARS OR MORE AFTER THE VALUATION DATE
AS BEARING ON THE VALUATION OF THESE ENTITIES AS OF THE AGREED UPON VALUATION DATE
OF NOVEMBER 13, 2007 WHICH WAS THE DATE OF THE FILING OF THE COMPLAINT.
WHILE WE IN NO WAY INTENT FOR ATTEMPT TO MINIMIZE THE SERIOUSNESS OF THE ALLEGED
MISCONDUCT OF GEORGE AND RAS THE FACT IS ALL HAVE WEIGHED IN ON THE SIGNIFICANT
PENALTIES FOR THAT CONDUCT. UNDER THE DOCTRINE, RAS HAS BEEN INCARCERATED AND ALL
OF THE DEFENDANTS HAVE BEEN SANCTIONED FILING A SUBSTANTIAL MOTION PRACTICE
IN THE TRIAL COURT WITH REGARD TO THE JUDGMENT CONDUCT. KOGER HAS NEVER BEEN DO
YOU UNDERSTAND DEBLLY TO CAUSE SUCH ACTS. RATHER KOGER AS THE ONLY SOLVENT
ENTITY HAS BEEN REQUIRED IT PAY THE SANCTIONS AWARDS. FINALLY AND, MOST
IMPORTANTLY, FOR THIS COURT TODAY ALL OF THE ALLEGED MISCONDUCT HAS BEEN
ADDRESSED. IN 2013 THIS COURT INITIALLY REMANDED THE MATTER TO THE TRIAL COURT
FOR AN ASSESSMENT OF WHAT REMEDY, IF ANY, SHOULD BE APPLIED IN FAVOR OF
PLAINTIFF. AFTER ORDERING AN ACCOUNTING THE TRIAL COURT FOUND THAT REVENUE HAD BEEN
IMPROPERLY DAY VEERTD FROM KPS AND KDS TO KOGER BOTH BEFORE AND AFTER THE
VALUATION DATE. ACCORDINGLY BECAUSE OF THAT ALLEGED IMPROPER DIVERSION, KPS AND
KDS HAD NO VALUE AS OF 2016. THE TRIAL COURT THEN FOUND IT TO BE PROPER TO
IMPOSE A REMEDY THAT KOGER GEORGE AND RAS TO FUNDS THE BUY OUT. ACCORDINGLY THE
REMEDY WAS IMPOSED BASED ON ALLEGED MISCONDUCT FROM 2006 TO 2009. (INAUDIBLE)
WITH 26 NUMBERED PARAGRAPHS, 24 OF THOSE PARAGRAPHS ADDRESSED LIABILITY. IN
OTHER WORDS, THE TRIAL COURT CAREFULLY LAID OUT ITS REASONING FOR FINDING THAT
ROBERT WAS ENTITLED TO A BUY-OUT POSITION FROM KPS AND KDS AND THE SPECIFIC
MECHANICS FOR OBTAINING PAYMENT. IN OTHER WORDS THROUGH GEORGE, KOGER OR RAS.
YET IN THE TWO PARAGRAPHS IN WHICH THE TRIAL COURT DISCUSSED THE VALUATION,
THE TRIAL COURT SIMPLY FOUND THAT BECAUSE DEFENDANTS PURSE POTTEDLY HAD NOT PUT FORTH
AN APPROACH TO VALUATION WHICH CONSIDERED KPS AND KDS INDEPENDENTLY, THAT
THEIR APPROACH WAS NOT ACCEPTABLE. THAT DETERMINATION, HOWEVER, IMPROPERLY SHIFTED
THE BURDEN TO DEFENDANTS AND MORE IMPORTANTLY IGNORED THE TESTIMONY OF
BOTH TRIAL EXPERTS. THE CONCLUSION OPINES THAT QUOTE, UNQUOTE, ROBERT'S VALUE IS
NOT ZERO NO ALTERNATIVE BUT ZERO HAS BEEN PUT FORTH BY THE DEFENSE.
UNFORTUNATELY AND WHILE WE ARE BEFORE THIS COURT IS THAT THE TRIAL COURT DOESN'T
SHOW ITS WORK ON HOW IT ACCEPTED PLAINTIFF'S VALUATION THE CALCULATIONS IT
WOULD HAVE HAD TO CONSIDER IN ORDER TO REACH THE OPINION THAT MR. KLEIN'S VALUATION
IS PROPERLY ACCORDINGLY REMAND IS APPROPRIATE TO CORRECT THOSE ERRORS.
NOW, IN SUMMING UP MY OPENING STATEMENT I'M JUST REMINDED OF WHEN I WAS BEGINNING
MY CAREER AS A LAW CLERK IN GENERAL ED AND WHAT STICKS OUT TO ME WAS ONE OF THE
FIRST THING I LEARNED IS THAT WHEN YOU ARE A TRIAL COURT JUDGE HAVE YOU A TWO WEEK
MOTION CYCLE, DEAL WITH ANY NUMBER OF MOTIONS SOME OF WHICH ARE OPPOSED
SOME OF WHICH OF UNOPPOSED AND THE BURDEN ON THE TRIAL COURT EVEN THOUGH A MOTION
IS UNOPPOSED -- YOU ALWAYS HAVE TO REVIEW THE MOTION TO UNDERSTAND WHETHER OR
NOT THE MOVING PARTIES IS, IN FACT, BOITD IT THAT RELIEF. SO SIMPLY BECAUSE MANAGE
IS UNREBUTTED DOES NOT MEAN THAT THAT MOVING PARTY SHOULD GET THE RELIEF.
THE SAME PRINCIPLE APPLIES TO THE APPELLATE DIVISION'S REASONING IN THIS MATTER.
THE TRIAL COURT DID NOT HAVE EVIDENCE, IT HAD THE TESTIMONY OF MR. KLEIN.
IT HAD THE CROSS-EXAMINATION OF MR. KLEIN IN WHICH WE KNOW ALL THE DEFICIENCIES
IN HIS TESTIMONY AND THE TESTIMONY OF MR. SCHMIDT EVEN THOUGH HE OFFERED
DIFFERENT OPINION OF VALUE BASED ON VALUE OF KOGER AS ONE ENTITY, HE'S STILL HAD
-- AND WAS RETAINED ANDED TESTIFIED TO HIS CRITICISMS OF MR. KLEIN'S AND
PLAINTIFF'S EXPERT VALUATION OPINION. JUSTICE FABIANA PIERRE-LOUIS:
MR. REISER WHY DIDN'T YOU TAKE TRIAL COURT'S INVITATION TO OFFER AN
ADDITIONAL VALUATION ON REMAND ON THE VALUE OF KPS AND KDS. SCOTT E.
REISER: AS MR. STEIN IT WAS A STRATEGIC ISSUE. BUT MORE IMPORTANTLY WE WERE RELYING
ON THE TESTIMONY AT TRIAL THAT WE'RE RELYING ON TODAY. THAT MR. KLEIN'S
OPINION WAS DEFICIENT. IT DID NOT TAKE INTO ACCOUNT THE TRANSFER PRICE. IT VALUED
AN ENTITY, TWO ENTITIES BASED ROARLY ON REVENUE. BUT IT DID NOT VALUE --
IT DID NOT OFFER AN OPINION ON WAS THE COSTS ASSOCIATED WITH THAT REVENUE. BUT
THERE WAS. JUSTICE FABIANA PIERRE-LOUIS: IF -- YOU'RE CITING
DEFICIENCIES IN PLAINTIFF'S EXPERT IF. THAT WAS YOUR POSITION WHY DID YOU NOT
PRESENT YOUR OWN EXPERT TO TESTIFY TO THE VALUE OF THESE COMPANIES BECAUSE YOUR
EXPERT, SCHMIDT AT THE ORIGINAL TRIAL DID NOT TESTIFY AT ALL WITH REGARD
TO INDEPENDENT VALUE OF KDS AND KPS AS DIRECTED BY YOUR CLIENT SO YOU AT NO POINT
HAD PUT FORTH AN EXPERT TO PROVIDE ANY VALUATION OF THOSE COMPANIES. SO
ALL OF THESE CRITICISMS THAT YOU ARE ARGUING THAT ARE PRESENTED THROUGH AN EXPERT.
SCOTT E. REISER: YOUR HONOR, I SUBMIT THAT IT WAS PRESENTED
THROUGH AN EXPERT, NOT ON ANY DIRECT TESTIMONY OF MR. SCHMIDT AS TO THE VALUATION
BUT MR. SCHMIDT'S TESTIMONY AT TRIAL WITH REGARD TO THE DEFICIENCIES IN
MR. KLEIN'S REPORT. HE OFFERED A NUMBER OF CRITICISMS AND THAT I'D DIRECT YOUR HONOR
TO -- JUSTICE FABIANA PIERRE-LOUIS: BUT THE BASIS OF
MR. SUBMIT'S TESTIMONY AT THE TIME WAS THERE IS NO VALUE IN THESE COMPANIES. THESE
COMPANIES DO NOT HAVE INDEPENDENT VALUE AND THAT DETERMINATION WAS REVERSED
BY THIS COURT. SO THAT WAS THE CRUX OF HIS TESTIMONY, CORRECT?
SCOTT E. REISER: YES, YOUR HONOR. JUSTICE FABIANA PIERRE-LOUIS:
SO NOW YOU ARE ASKING THIS COURT AND THE COURT BELOW TO TAKE INTO CONSIDERATION
THE EXPERT TESTIMONY OF AN EXPERT WHOSE OPINION HAS BEEN REVERSED BY THIS COURT,
WHICH IS THE BASIS OF THE REMAND IN THE FIRST PLACE. SCOTT E.
REISER: WELL, YOUR HONOR, I RESPECTFULLY SUGGEST THAT MR. SCHMIDT'S CRITICISMS
OF MR. KLEIN'S OPINION WAS SEPARATE FROM HIS VIEW ENTITIES SHOULD BE VALUED
AS ONE. MR. KLEIN'S VALUATION IS PRESENTED LOOKING SOLELY AT REVENUE WITHOUT
ANALYZING ANY OF THE SIGNIFICANT COSTS THAT KOGER PROVIDED. THE TRIAL COURT
FOUND AND ALTHOUGH THIS COURT AND THE APPELLATE DIVISION INITIALLY REVERSED THE
HOLDING ABOUT WHETHER OR NOT KPS AND KDS WOULD BE VALUED SEPARATELY. BUT
AS A MATTER OF FACT THERE WAS AN INTERLOCKING CONNECTION BETWEEN ALL OF THESE COMPANIES
THAT WAS SUPPORTED IN -- JUSTICE ALBIN: MR. REISER, CAN I ASK YOU
A QUESTION? SCOTT E. REISER: YES. JUSTICE
ALBIN: WHY DOES THE TRIAL COURT VS. TO ACCEPT SCHMIDT'S CRITICISMS. THE TRIAL COURT
ACCEPTED KLEIN, REJECTED SCHMIDT, THAT'S WHAT TRIAL COURTS DO. THEY MAKE
FINDINGS OF FACT. THEY DETERMINE WHICH EXPERT IS MORE CREDIBLE THAN ANOTHER EXPERT.
YOUR EXPERT DIDN'T PUT ANY VALUATION ON KDS AND KPS AND KLEIN DID. AND
THE JUDGE ACCEPTED THAT. AND WHY SHOULDN'T THAT BE ACCEPTED BY THIS COURT?
SCOTT E. REISER: I THINK IT GOES BACK TO THE APPELLATE DIVISION'S
REASONING THAT ON PAGE 42 OF THE DECISION THAT THE APPELLATE DIVISION NOTED THAT
TRIAL COURT JUDGE OBVIOUSLY CREDITED THE IMPORT OF MR. SCHMIDT'S TESTIMONY
TO SOME DEGREE BECAUSE HE CLUED THAT KDS AND KPS HAD -- JUSTICE
ALBIN: LOOK -- WE PUT JUDGE CONTILLO IN A VERY DIFFICULT POSITION. BECAUSE HE
INITIALLY SAID THAT THERE WAS NO VALUE FOR KDS AND KPS AND THEN WE SAID
THAT THERE WAS AND WE TOLD HIM TO GO BACK AND PUT A VALUE ON THAT. AND NOW YOU'RE
CRITICIZING HIM FOR DOING THAT AND HE EXPLAINED IN HIS OPINION HOW IT
LOOKED. BUT HE SPECIFICALLY SAID I'M BOUND BY WHAT THE SUPREME COURT AND THE APPELLATE
DIVISION DID. THEY REMANDED THIS TO ME TO PUT A VALUE ON AND THAT'S PRECISELY
WHAT I'M GOING TO DO. AND NOW YOU'RE CRITICIZE CAN HIM BECAUSE HE DID THAT BECAUSE
HE DID PRECISELY WHAT WE TOLD HIM TO DO. SCOTT E. REISER:
YOUR HONOR, WE'RE SUPPORTING THE APPELLATE DIVISION'S FINDING THAT IN ISSUING
THE REMAND DECISION THE TRIAL COURT DIDN'T MAKE FINDINGS OF CREDIBILITY. IT DIDN'T
SHOW THE WORK THAT HE MAKES TO -- I'D SUBMIT JUST AS A MATTER OF PROPRIETY
THAT THE PARTIES ARE ENTITLED TO KNOW THE BASIS OF THE REPORT. IT CAN'T SIMPLY
BE THAT A TRIAL COURT CAN ACCEPT AN EXPERT'S OPINION IN LIGHT OF CONTRADICTORY
TESTIMONY WHICH WAS CREDITED THE FIRST TIME AROUND AND NOT COME TO A
CONCLUSION, NOT ANALYZE THE GROSS MARGIN RATE, THE EFFECT OF A TRANSFER PRICE AND
THE FACT THAT THESE ENTITIES OPERATED DESPITE THE FACT THAT THEY SHOULD
BE VALUED INDEPENDENTLY THAT THEY ARE INTERRELATED AND CONNECTED AND CONTROLLED
BY GEORGE SIPKO. THAT INFORMATION HAS TO BE IN THE TRIAL COURT'S OPINION
AND THAT'S WHY WE'RE SUPPORTING THE REMAND, THAT THE APPELLATE DIVISION CLEARLY
FOUND THAT THE TRIAL COURT HAD -- JUSTICE ALBIN: WHO ARE THE
PRINCIPALS OF KOGER? HERE THE PRINCIPALS OF KOGER? SCOTT E.
REISER: AT WHAT TIME, YOUR HONOR? JUSTICE ALBIN: WELL, AT THE TIME
THAT THIS ALL HAPPENED. SCOTT E. REISER: AND I DON'T MEAN
TO BE DISRESPECTFUL BUT KOGER'S BEEN SOLD AS OF 2020. JUSTICE
ALBIN: I'M TALKING ABOUT IN THE RELEVANT TIME PERIODS. WHO ARE THE PRINCIPALS
OF KOGER? SCOTT E. REISER: GEORGE SIPKO AND RAS SIPKO.
JUSTICE ALBIN: THE REASON WHY I ASK YOU THIS YOU TRY TO SEPARATE
YOURSELF OH KOGER ISN'T INVOLVED IN ANY OF THE STUFF. WE'RE DIFFERENT FROM
GEORGE AND RAS. BUT THEY'RE NOT DIFFERENT. THEY'RE ONE AND THE SAME. ARE WE
SUPPOSED TO BE LOOKING AT THEM DIFFERENTLY THAT KOGER IS CLEAN, IT'S GEORGE AND
RAS ARE DIRTY? SCOTT E. REISER: I SUBMIT THIS COURT
ADDRESSED AND THE APPELLATE DIVISION ADDRESSED PLAINTIFF'S MOTION TO DISMISS KOGER'S
APPEAL AND I THINK IT'S ACCURATE TO SAY THE CORPORATION IS A SUCCINCT SEPARATE
AND DISTINCT ENTITY FROM ITS SHAREHOLDERS. IT CAN ONLY ACT THROUGH THE
SHAREHOLDERS. BUT THE POST JUDGMENT CONDUCT, KOGER DID NOT PARTICIPATE IN ANY
TRANSFERS OF FUNDS OVERSEAS. THAT WAS PURELY ACTS OF GEORGE AND RAS AS THE TRIAL
COURT FOUND. KOGER DIDN'T PARTICIPATE IN THAT IN ANY OF THE POST REMAND
HEARINGS ON THOSE TRANSFERS. KOGER WAS THE CONDUIT AND KOGER IS THE ENTITY THAT
IS PAYING, THAT HAS PAID A SIGNIFICANT PORTION OF THE JUDGMENT ALREADY TO
DATE. AND THAT'S WHY YOU NOT SEPARATE THEM. IT IS A BIT OF OF A UNIQUE SITUATION.
I'LL MILT THAT. CHIEF JUSTICE RABNER: MR. REISER, IF THE
APPELLATE DIVISION DECISION WERE AFFIRMED AND THE CASE WENT BACK ON REMAND WOULD
YOU BE ABLE TO INTRODUCE EVIDENCE OF VALUATION? WOULD YOU BE ABLE TO TRUE AN
EXPERT REPORT IN YOUR VIEW. SCOTT E. REISER: I DON'T KNOW THAT
I CAN ANSWER THAT QUESTION, YOUR HONOR. ONLY BECAUSE AS AS FAR AS I'M AWARE
KOGER'S ASSETS WERE SOLD IN APRIL OF 2020. THERE IS A PENDING MOTION IN THE TRIAL COURT
RETURNABLE THIS FRIDAY PURSUANT TO (INAUDIBLE) ASKING THE TROOIRL LEAVE
FOR DISSOLVE KOGER. I FILED WHATEVER NECESSARY PAPERWORK WITH THE STATE OF NEW
JERSEY. SO I DON'T KNOW THAT THERE WILL BE A KOGER TO APPEAR IN A REMAND
DECISION. CHIEF JUSTICE RABNER: DO YOU BELIEVE IT WOULD BE
APPROPRIATE ON REMAND FOR YOU TO DO SO? SCOTT E. REISER: FOR KOGER?
I THINK IT DEPENDS ON IF KOGER WERE TO APPEAR SOMEHOW I THINK IT WOULD DEPEND
ON WHAT THE TRIAL COURT WOULD ALLOW. THE APPELLATE DIVISION'S REMAND IS VERY BROAD
AND ALLOWS FOR THE TRIAL COURT TO MARSHALL WHATEVER PROOFS THE TRIAL COURT
MIGHT NEED AND BECAUSE IT'S BEEN SO LONG, BECAUSE IT'S BEEN 15 YEARS. I MEAN THE TRIAL
COURT CAN'T LOOK AMOUNT A COLD RORED. MAYBE THE TRIAL COURT NEEDS A NEW
EXPERT. THAT'S CERTAINLY -- I CAN'T SAY WHAT KOGER WOULD ARGUE, THOUGH.
(SIMULTANEOUSLY CROSS-TALK). SCOTT E. REISER: I'M SORRY, YOUR HONOR.
CHIEF JUSTICE RABNER: IT SOUNDS LIKE KOGER IS PRESERVING ITS
RIGHT TO ARGUE FOR A SECOND BITE OF THE APPLE AS TO EXPERT VALUATION.
SCOTT E. REISER: AGAIN, YOUR HONOR, I DON'T HAVE A CLIENTS TO MAKE THAT STRATEGY
DETERMINATION. FROM AN OBJECTIVE STANDPOINT I WOULD DATE THAT AN ENTITY
IN OPPOSITION WOULD, IN FACT, MAKE WHATEVER PROOFS IT COULD. AND IF IT'S
LEGITIMATE NON-FRIVOLOUS ARGUMENT THEN CERTAINLY I WOULD THINK THAT WOULD BE
THE POSITION KOGER WOULD TAKE. BUT AGAIN BECAUSE I DON'T HAVE A CLIENT TO DISCUSS THIS
WITH, I CAN'T ANSWER THE QUESTION. JUSTICE ALBIN: MR. REISER,
DO YOU ACCEPT THE PRINCIPLE THAT A MARKET ABILITY BY THE CONTROLLING OR
PRESSING SHAREHOLDERS TO THE DETRIMENT OF THE MINORITY ARE THE PREVENT SHAREHOLDER,
DO YOU ACCEPT THAT. SCOTT E. REISER: I ACCEPT THAT BALSAMIDES
FOUND THAT A MARK ABILITY DISCOUNT IS APPLICABLE. I THINK YOUR HONOR'S
QUESTION TO SAY COUNSEL PRIOR ABOUT THE MARKET ABILITY DISC COUNT, IT'S NOT REALLY
A DISCOUNT FOR SO I BELIEVE IN ROSS AND MARTIN OR BALSAMIDES OR ONE. CASES
WE TALKED ABOUT THERE'S SOME ACADEMIC DISCUSSION THAT PERHAPS IT'S MORE OF A PRICE
ADJUSTMENT TO REFLECT THE -- JUSTICE ALBIN: I KNOW IT BOTHERS
BOTH WAYS. THAT'S THE REASON I ASKED MR. STEIN THAT. BUT BALSAMIDES SUGGESTS
THAT THERE'S AN IK PRINCIPLE AND IF IT IS AN EQUITABLE PRINCIPLE IT WOULD NOT SEEM
THAT YOUR CLIENT WOULD BE ENTITLED TO THE BENEFIT OF THAT BASED UPON THE
MULTITUDE OF WRONG DUEINGS DONE BY GEORGE AND RAS WHICH I'M NOT GOING TO BOTHER
TO ENUMERATE BECAUSE IT WOULD TAKE A LONG TIME TO DO THAT. SCOTT
E. REISER: I UNDERSTAND, YOUR HONOR, BUT I THINK THE COURT IN FAIRNESS SHOULD MAKE
A DISTINCTION BETWEEN THE POST JUDGMENT CONDUCT, THE POST REMAND JUDGMENT
CONDUCT FOR WHICH GEORGE AND RAS CERTAINLY HAVE SANCTIONED THE REPEATEDLY MAKE
THE DISTINCTION BETWEEN THAT CONDUCT AND WHATEVER HAPPENED PRIOR TO THE
INITIAL REMAND. JUSTICE ALBIN: THE PREJUDGMENT IS PRETTY BAD.
BACK DATING, COERCION AND -- I DON'T HAVE TO TELL YOU. SCOTT E.
REISER: AND, YOUR HONOR, THIS COURT HAS NOT FOUND THAT THAT ALLEGED MISCONDUCT
AMOUNTS TO ON THAT PREGS AND IT COULD BE THAT THERE'S A REMEDILESS THAN
OPPRESSION. JUSTICE FABIANA PIERRE-LOUIS: A LOT OF THAT CONDUCT
BECAME CLEAR AFTER THE REMAND AS A RESULT OF THE ACCOUNTING THAT WAS DONE. SO
ALTHOUGH SOME OF THAT ACTIVITY THAT'S MISCONDUCT BECAME CLEAR POST REMAND
THAT WAS CONDUCT THAT OCCURRED WELL BEFORE THE REMAND AFTER THE COMPLAINT WAS FILED,
THE BACK DATEING AND THE TRANSFER OF SIGNIFICANT ASSETS TO KOGER FROM KDS
AND KPS. SO I THINK IT'S NOT NECESSARILY THE CASE THAT A LOT OF THAT INFORMATION
AND A LOT OF THAT MISCONDUCT WAS CONSIDERED PREVIOUSLY BECAUSE THE
ACCOUNTING IS WHAT REALLY SHED LIGHT ON ALL THE -- ALL THE MISCONDUCT THAT THE PARTIES
WERE ENGAGED IN; IS THAT RIGHT? SCOTT E. REISER: YES, YOUR HONOR
EXCEPT I WOULD ALSO MAKE ANOTHER DISTINCTION AND I BELIEVE CO-COUNSEL
WOULD BHAK THIS DISTINCTION AS WELL AND AS WE ARGUED IN THE -- IN OUR CROSS-PETITIONS,
FROM 2009 TILL 2011 KOGER WAS ACTING IN KOGER SHAREHOLDERS WERE ACTING
PURSUANT TO A FINDING THAT ROBERT WAS NOT A SHAREHOLDER AT THAT TIME. AND SO IT'S
UNFAIR AS WE ARGUE TO CRITICIZE THE CONDUCT WHEN, IN FACT, AS A MATTER OF
FACT DURING THAT TIME PERIOD AND I REALIZE YOU'VE BEEN STATED -- WHILE AS A MATTER OF
FACT DURING THAT TIME PERIOD ROBERT WAS NOT SHAREHOLDER. SO I THINK THE
MISCONDUCT IF ANY SHOULD BE VIEWED IN TERMS OF VALUATION IS REALLY WHAT HAPPENED
UNTIL THE VALUATION DATE. AND THAT'S UP TO THE TRIAL COURT ON REMAND TO
DECIDE WHETHER OR NOT SUCH CONDUCT IS SUFFICIENT TO DENY MARKET ABILITY DISCOUNT.
BECAUSE CLEARLY THE APPELLATE DIVISION WAS AWARE OF ALL THIS CONDUCT WHEN
IT ISSUED ITS DECISION AND DID NOT FIND THAT MARKET ABILITY DISCOUNT WAS NOT
AVAILABILITY TO THE VALUATION. JUST SAID YOU HAVE TO GO BACK AND SHOW YOUR
WORK. JUDGE JOSE L. FUENTES: MR. REISER YOUR DECISION OF THE
COMPANY WAS THAT THE OTHER TWO ENTITIES WERE NOT VALUABLE BECAUSE THEY WERE BASICALLY
ESTATE PLANNING ENTITIES. AND YOUR EXPERT DID HE CLIENT TWICE TO PARTICIPATE
IN THE VALUATION PROCESS. THE SAID -- TRIAL STRATEGY -- SHOULDN'T THAT BE
(INAUDIBLE) FROM TAKING A POSITION THAT YOU'RE ENTITLED TO BE JUDICIALLY
ESTOPPED FROM NOW SEEKING AN OPTION THAT IS OFFERED TO YOU MORE THAN ONCE AND YOU
DECIDED AS A MATTER OF TRIAL STRATEGY TO ADOPT? SCOTT E. REISER:
AGAIN, YOUR HONOR, I WOULD SAY TWO THINGS. NUMBER ONE, I DON'T KNOW WHAT THE
POSITION OF KOGER WILL BE IF IT'S, IN FACT, AN EXISTING ENTITY AT THE TIME OF REMAND.
CHIEF JUSTICE RABNER: WE WILL HEAR NEXT FROM MR. LA SALA. JOSEPH
P. LA SALA: HI, GOOD MORNING, YOUR HONOR, IF YOU WOULD INDULGE ME I AM GOING TO STAND
AND ADDRESS THE COURT. CHIEF JUSTICE RABNER: PLEASE GO AHEAD.
JOSEPH P. LA SALA: THANK YOU. THE APPELLATE DIVISION IN EIGHT CONCISE PAGES
SET FORTH THE ISSUE THE FACTS AND THE LAW ON THIS PETITION AND NO AMOUNT OF HIEB BER BOL
LY, VIT TREEL OR THE PASSAGE OF TIME CAN ALTER THE PRINCIPLE THAT THE APPELLATE DIVISION
RULED ON AND APPLIED. A DECISION THAT WAS RENDERED LOOKING THROUGH THE PRISM
OF A SELECTED VALUATION IN NOVEMBER 2007 AND EVENTS THAT TOOK PLACE BOTH BEFORE AND AFTER
THAT DATE. THE APPELLATE DIVISION AFFIRMED THE TRIAL COURT'S DECISION REGARDING
THE DEFENDANT'S LIABILITY FOR THE BUYOUT AND IF TWO NEW JERSEY CORPORATIONS, KPS AND
PDZ PDZ KPDZ, THE DECISION AS TO THE JUDGMENT THE APPELLATE DIVISION AND REMAND NO MATTER
FOR THE TRIAL COURT FOR THE VALUE AND DETERMINATION WHICH BRINGS ALL OF US HERE
TODAY. WE ASSERT TO THE COURT THAT IT WOULD CONTRAVENE FAIRNESS AN NEW JERSEY
LAW TO ALLOW ROBERT TO RECEIVE A WINDFALL BY AFFIRMING A VALUATION THAT R ERRONEOUSLY
AWE FAILED TO PROPERLY ASIS THE VALUE OF KPS AND KDS, THAT IS EXACTLY WHAT HE IS ASKING
THE COURT TO DO MENT. IT WOULD BE IMPROPER TO. IT IS THE OPINION
OF ROBERTES R EX SPESHT THAT A HYPOTHETICAL INVESTOR OR PURCHASER WOULD PAY $18 MILLION
FOR 50 PERCENT OF A COMPANY THAT HAD NONE V THEIR OWN PRODUCTS, KNOW INFRASTRUCTURE TO
PROVIDE CONTRACTUAL REQUIRED CUSTOMER SUPPORT AND, WHICH WOULD ENTIRELY RELY ON A THIRD
COMPANY FOR FUTURE LICENSING AND WAS AT THE MERCY OF THAT THIRD COMPANY FOR THE PRICE
AND CHARGE FOR SUPPORT AN INFRASTRUCTURE. INDEED THE CONCLUSION THAT A HYPOTHETICAL
PURCHASER WOULD EVER PAY $18 MILLION FOR 50 PERCENT OF SUCH A COMPANY IS CONTRADICTED
BY THE RECORD THAT WAS BEFORE THE TRIAL COURT WHICH INCLUDED SEVERAL OF THE FOLLOWING
FACTORS. GEORGE CONTROLLED KOGER, THE THIRD COMPANY AND EXERCISED DE FACTO
CONTROL OVER BOTH KPS AND KDS. THE FAMILY PRACTICE AND THESE WERE INDEED FAMILY
BUSINESSES WERE THAT GEORGE CONTROLLED THE INCOME FLOW. BOTH KPS AND KDS WERE
DEPENDENT UPON ASSETS INCLUDING TECHNOLOGY, INFORMALLY LICENSED WITH KOGER, WHICH WAS
CONTROLLED AGAIN BY JOJ. KPS AND KDS HAD NO BLANK OTHER THAN ROBERT AND RAS
OTHER THAN, OTHER THAN. ACCORDING. THE KPS AND KPDZ COULD ONLY
HAVE BEEN THE SUCCESS THAT THEY WERE BECAUSE OF THE VALUE MROITD THEM BY KOGER AN KOGER
ALONE. IN 2006, ROBERT VOLUNTARY TARLLY LEFT THE KOGER COMPANIES, IS YOUR
VEND R RENDERED HIS SHARES TO THE COMPANIES AN MOVED TO CALIFORNIA. ROBERT DID SO BECAUSE
HE UNDERSTOOD THAT HIS INTERESTS IN KPS AND KDS HAD NO ASCERTAIN ABLE VALUE AND HE PREDICTED
THAT THE COMPANIES WOULD NOT SURVIVE HIS DEPARTURE. AFTER ROBERT
VOLUNTARILY SURRENDERED HIS SHARES, LAS WAS LEFT ALONE TO RUN THE COMPANY, TO SHOULDER
ALL RESPONSIBILITIES, TO SHOULDER ANY CHECK HARDSHIP THAT WOULD COME OF IT AND THINK
ABOUT HOW TO PROVIDE THE REQUIRED LICENSE IF THAT WAS POSSIBLE UNDER THE NEW STRUCTURE.
AFTER THE TRIAL COURT RULED IN RAS'S NAIFR IN 2009 AND FOUND THAT ROBERT WAS
NO LONGER A SHAREHOLDER ROBERT DID NOT SEEK A STAY AND ALLOWED, STAY OF THAT RULING AND
ALLOWED THAT RULING TO STAY IN EFFECT. ROBERT HAS NEVER EXPLAINED HOW RAS
WAS SUPPOSED TO CONSIDER HIS ECONOMIC INTERESTS AFTER HIS VOLUNTARY DEPARTURE TO CALIFORNIA
IN 2006 AND INDEED BEFORE THE APPELLATE DIVISION DECISION REVERSED THE TRIAL COURT IN
MAY OF 2011. ALSO IN THE RECORD IT WAS ROBERT FALSELY REPRESENTING TO THE
TRIAL COURT THAT KPS AND KDS POSSESSED AN ENTERPRISE SOFTWARE. ROBERT
EXPERT PROVIDED A VALUATION WITHOUT REVIEWING ANY OF THE LOOIPSING AGREEMENTS.
ROBERT MISREPRESENTED TO HIS EXPERT AN CAUSED HIS EXPERT TO BELIEVE THAT KPS AND KDS OWN,
OWNED A PIECE OF TECHNOLOGY THAT WAS REALLY KOGER'S. ROBERT'S EXPERT NEVER
REVIEWED GEORGE OR ROBERT'S DEPOSITION TESTIMONY BEFORE OFFERING HIS EXPERT OPINION.
ROBERT'S EXPERT CONCEDED THAT THE COMPANIES REALLY OPERATED AS ONE ENTITY AND
FELT THAT IT WAS NECESSARY TO LOOK AT THE COMBINED ENTITY TO REALLY CAPTURE ALL OF WHAT
WAS GOING ON AND LOOK AT WHAT THE PROFITABILITY OF THE ENTITY WAS AS A WHOLE. A VERY
IMPORTANT CONCEPT BECAUSE THAT'S EXACTLY WHAT MR. SCHMIDT DID AND WHAT HE FELT COMPELLED
TO DO WAS TO VALUE THE COMPANIES AS A WHOLE. ACCORDING TO THE COURT'S PRIOR
OPINION, IN 2006, KPS AND KDS HAD NET INCOME OF APPROXIMATELY 12,100,000 TOGETHER.
1 MILLION 100,000, OF $246,000. IT, CAN THIS LOGICALLY SUPPORT A $36 MILLION
DOLLAR PRICE TAG. AN IF I CAN TISHG, NET INCOME PERCENTAGE TO THE COMPANY CAN
DUE TO WHAT HE REFERRED TO AS NORMAL SAGS ADJUSTMENTS WHICH INURED THE ECONOMIC REALITY
THAT GEORGE AND KOGER CONTROLLED THE INFRASTRUCTURE PRICING THAT WAS CHARGED TO
KPS AND KDS. IN FACT ROBERT'S EXPERT TESTIFIED THAT HE DID NOT KNOW WHAT EXPENSES KPS
AND KDS INCURRED TO GENERATE THEIR REVENUE AGAIN. IN RESPONSE TO ONE OF THE
TRIAL COURT'S QUESTIONS, ROBERT'S EXPERT CONCEDED THAT IN HIS OPINION A PURCHASER OF THESE
ENTITIES WOULD PROBABLY BUY EVERYTHING, MEANING THAT THEY WOULD HAVE TO BUY KOGER, KPS
AND KDS AND NOT JUST -- JUSTICE PIERRE-LOUIS: MR. LA SALA, ARE YOU ARGUING
BEFORE US THAT KPS AND KDS DON'T HAVE INDEPENDENT VALUE BECAUSE, IF SO, THAT DETERMINATION
WAS ALREADY MADE IN 2013. A LOT OF THE ARGUMENTS YOU'RE MAKING SOUND LIKE
ARGUMENTS THAT SHOULD HAVE BEEN PRESENTED THROUGH AN EXPERT ON REMAND. I AM
GOING TO ASK THE SAME QUESTION, WHY DID YOU NOT PRESENT AN EXPERT ON REMAND BECAUSE A
LOT OF THE ARGUMENTS YOU'RE MAKING RIGHT NOW SOUND LIKE SOMETHING THAT THE TRIAL COURT
COULD HAVE DIGESTED THROUGH AN EXPERT. JOSEPH P. LA SALA: WHAT THEY ARE
REALLY IS FACTORS AND ITEMS ON THE RECORD BEFORE JUDGE CONTILLO THAT ACCORDING TO THE
APPELLATE DIVISION OPINION SHOULD HAVE BEEN PART OF HIS REASONING AND NAR ANALYSIS COMING
UP WITH A VALUATION NUMBER. OUR ANSWER WOULD BE VERY SIMILAR TO WHAT MR.
REISER SAID. OUR EXPERT WAS UNABLE TO SEPARATE OUT KPS AND KDS BECAUSE OF THE UNIQUE I
DIOSYNCRATIC RELATIONSHIP BETWEEN THE COMPANIES AND HOW THEY WERE STRUCTURED AND HOW THE
REVENUE STREAM WAS GENERATED AND HOW THE REVENUE STREAM FLOEED AND HOW IT WOULD BE AFFECTED
GOING INTO THE FUTURE. JUSTICE ALBIN: WE'RE BEYOND THAT. I MEAN, THIS
COURT HAS SAID THAT THESE TWO COMPANIES CAN BE INDEPENDENTLY VALUE INDEPENDENTLY EVAL
UATED. SO I DON'T KNOW WHY WE ARE RETURNING TO ARGUMENTS THAT HAVE LONG SINCE BEEN DISPOSED
OF. JOSEPH P. LA SALA: WE'RE RETURNING THERE JUSTICE BECAUSE THE APPELLATE
DIVISION HAS THE RECORD, BASED ON ITS REVIEW OF THE RECORD AND AS PART V IT'S OPINION,
THAT IN THE JUXTAPOSITION OF THIS CASE, IN THE JUXTAPOSITION OF IMPLICITLY REJECTING THE
ARGUMENT OF MR. KLEIN AND EX SUPPLIES AT THIS TIME SIT EXPLICITLY ACCEPTING IT TO THE
TUNE OF $24 MILLION WITHOUT ANY FURTHER ANALYSIS, WITHOUT ANY FURTHER CONSIDERATION,
WITHOUT LOOKING AT THE INFRASTRUCTURE, WITHOUT LOOKING AT THE GOODWILL, WITHOUT LOOKING
AT THE SUPPORT OF KOGER IS SOMETHING THAT IS CONTRARY TO THE LAW OF BALSAMIDES AN LAWSON
AN GENERALLY ESTABLISHED PRINCIPLES OF THE T STATE OF NEW JERSEY. JUSTICE
ALBIN: YOU ARE ARGUING TO US, IF I AM HEARING YOU CORRECTLY THAT THESE TWO COMPANIES HAVE
NO VALUE WHEN WE SAID THEY DO HAVE VALUE AND WE SENT IT BACK TO JUDGE CONTILLO TO PUT
A VALUE ON IT WHICH IS PRECISELY WHAT HE DID. NOW, HE ACCEPTED AN EXPERT THAT
YOU DON'T LIKE AND THAT IS BUT THAT'S WHAT HE DID. JOSEPH P. LA SALA: IT'S
NOT ABOUT NOT LIKING IT, YOUR HONOR. IT'S A MATTER OF ANALYZING AND DEALING WITH THE
APPELLATE JUDGMENT OPINION. WHAT JUDGE CONTILLO DID WAS TO ACCEPT AN EXPERT
LORT OR AN EXPERT VALUATION THAT HE HAD IMPLICITLY REJECTED BECAUSE OF NOT FINDING
THAT IT WAS A VALUATION -- JUSTICE ALBIN: HE DID WHAT WE TOLD HIM TO DO.
YOU CANNOT FAULT JUDGE CONTILLO FOR DOING WHAT WE TOLD HIM TO DO. WE TOLD HIM TO PUT
A VALUE ON IT THAT IT DOES HAVE A VALUE, THAT'S WHAT HE DID AND NOW YOU'RE FAULTING HIM
FOR DOING PRECISELY WHAT WE ASKED HIM TO DO. JOSEPH P. LA SALA: NO ONE HAS
A HIGHER REGARD FOR JUDGE CONTILLO THAN I DO JUSTICE, BUT YOU SENT THE CASE BACK TO COME
UP WITH A REMEDY, IF ANY. THE REMEDY COULD HAVE BEEN THE VALUE WAS ZERO.
THE REMEDY COULD HAVE BEEN THE VALUE WAS ZERO AND NOT HAVING A PROPER VALUE USING THE
PROPER METHODS AND THE PROPER DETERMINATION AT THE END OF THE DAY ADVERSELY AFFECTS THE
IN A VERY DRAMATIC WAY TO OUR CLIENT BECAUSE OUR CLIENT IS STILL SUBJECT TO ENFORCEMENT
PROCEEDINGS. OUR CLIENLT HAS GIVEN UP HIS SHARES IN KPS AND KDS TO SATISFY THE JUDGMENT.
THESE ARE VERY REAL THINGS THAT COULD BE IMPACTED BY THE NOW TRIAL COURT GOING BACK AND
LOOKING AT ALL OF THE FACTORS THAT THE APPELLATE DIVISION SUGGESTED THAT THEY DO.
IN VERY SHORT ORDER, FOLLOWING, SAYING THE ABILITY TO GET A NEW EXPERT WAS REBUFFED BEFORE
IT GOES ON TO SAY THAT JUDGE CONTILLO STILL SHOULD HAVE DONE XYZ AND THAT IS THE POINT.
THE POINT IS THAT THE TRIAL COURT IN THIS CASE, THE CHANCERY COURT, IN A CLOSE
LY HELD CORPORATE CASE INVOLVING VALUATIONS HAS A WIDE RANGE OF DISCRETIONS AVAILABLE TO
IT. ONE IS ACCEPT AN EXPERT REPORT, ONE IS REJECT AN EXPERT REPORT, ONE IS HAVE A
MODIFICATION. ONE EXPERT -- JUSTICE ALBIN: YOU'RE RIGHT. HE
HAD AN EXPERT REPORT, HE COULD ACCEPT IT, HE COULD REJECT IT HE COULD HAVE BEEN TAKEN
PART OF IT OR REJECTED PART OF THE IT. HE ACCEPTED ALL OF IT. WHY NOT, GIVE
YOUR CLIENT AN OPPORTUNITY TO PROVIDE AN EXPERT TO PUT ITS OWN VALUE ON IT.
JOSEPH P. LA SALA: OUR CLIENT WASN'T MUTE ON MUTE ON THE POINT. OUR CLIENT AN MR. SCHMIDT
WENT THROUGH THE PROCESS OF DETAILING A NUMBER OF CRITICISMS OF MR. KLEIN'S REPORT. THERE IS
NO REFERENCE WHATSOEVER TO JUDGE CONTILLO LOOKING AT ONE OF THEM. OUR EXPERT FOUND A
35 PERCENT MARKETABILITY DISCOUNT RATE ON THE ENTERPRISE AS A WHOLE. HUBERT BETTER KLEIN
SUGGESTED YOU COULD DO IT BEFORE YOU BACK OUT THE NUMBERS. THAT WASN'T DISCUSSED BY JUDGE
CONTILLO. JUSTICE PIERRE-LOUIS: AS YOU JUST SAID YOURSELF, THE TRIAL JUDGE
HAD WIDE DISCRETION HERE AND HE EXERCISED HIS DISCRETION TO SOAP MR. KLEIN'S EXPERT
TESTIMONY AN NOT ACCEPT THE CRITICISMS OF YOUR EXPERT FROM, YOU KNOW, THE PREVIOUS TRIAL.
YOU SAID IT YOURSELF, THERE WAS A WIDE DISCRETION HERE AN HE EXERCISED THE DISCRETION.
JOSEPH P. LA SALA: THE POINT I WAS TRYING TO MAKE, JUSTICE IS AT THE END
OF THE DAY, THE POINT IS HOW IS THE PROPER WAY TO GET TO THE END OF THE DAY, TO GET TO
THE EXERCISING YOUR DISCRETION, TO GET TO THE VALUATION AS THE FAIR EQUITABLE, REASONABLE
-- THEY QUOTED THE LANGUAGE OVER AND OVER AGAIN, THE REASONED, JUST AND FACTUALLY SUPPORTED
CONCLUSION BY EVALUATING THE OPINIONS AND CREDIBILITY WHICH IS I WHY THE ENTIRE
UNIVERSE OF THE CASE IS IMPORTANT. THERE MAY HAVE BEEN RULINGS THAT AFFECTED THAT BUT
THOSE ARE THE TYPE OF THINGS THAT JUDGE CONTILLO SHOULD HAVE LOOKED AT IN IMPLICITLY REJECTING
TO IMPLICITLY ACCEPTING AS A WHOLE, WITHOUT ANY CONSIDERATION; THAT'S THE POINT, THAT'S
EXACTLY WHAT THE COURT WAS SUPPOSED TO DO. JUSTICE SOLOMON: MR. LA SALA,
I TAKE IT -- I GATHER FROM YOUR ARGUMENT, IT'S CONSISTENT WITH WHAT MR. REISER SAID IS
SIMPLY THAT THE TRIAL COURT'S FINDINGS ARE NOT SUPPORTED BY THE RECORD, PERIOD.
JOSEPH P. LA SALA: I MEAN, THAT'S -- THAT OBVIOUSLY HAS TO BE A PART OF OUR ARGUMENT,
YOUR HONOR, BUT THE REAL JUXTAPOSITION OF THE ARGUMENT IS THAT JUDGE CONTILLO IN CHANGING
-- IN FOLLOWING THIS COURT'S INSTRUCTIONS TO PROVIDE A REMEDY, IF ANY, IN PROVIDING THAT
REMEDY FAILED TO COMPLY WITH NEW JERSEY LAW: JUSTICE SOLOMON: IT IS UNSPOERD
BY THE RECORD AND IT'S INCONSISTENT WITH NEW JERSEY LAW. JOSEPH P. LA SALA:
CORRECT. JUSTICE SOLOMON: I GOT YOU. JOSEPH P. LA SALA: TO
CONTINUE. IN, TO IMPOSE A VALUATION AGAINST RAS IS EVEN MORE UNFAIR AGAIN
WHEN COUPLED WITH THE CIRCUMSTANCES THAT LED THE TRIAL COURT TO HOLD THAT BUYOUT OF ROBERT'S
SHARE WAS REQUIRED. THE APPELLATE DIVISION HELD THAT AFTER THE APPELLATE
DIVISION FOLLOWED CLOSELY HELD NEW JERSEY CORPORATION AND WAS NO LONGER A SHAREHOLDER
THE REMAINING SHAREHOLDER IS STILL REQUIRED THE R TO CONSIDER THE ECONOMIC INTERESTS OF THE
VOLUNTARILY DPARD SHAREHOLDER BECAUSE IN THE CORPORATIONS -- JUSTICE ALBIN:
YOU KEEP ON REPEATING VOLUNTARILY DEPARTED, WHAT DOES THAT MEAN? WE FOUND
THAT HE DID NOT RELINQUISH HIS INTERESTS AND THE RECORD SUGGESTS REASONS WHY HE DIDN'T
RELINQUISH THE INTERESTS. NO CONSIDERATION AN COERCION. SO WHAT IS THIS
VOLUNTARILY WALKED AWAY I AM TRYING TO FIGURE THAT OUT. JOSEPH P. LA SALA:
JUDGE CONTILLO RIGHT UP TO THE LAST OF HIS OPINIONS FOUND BASED ON THE TESTIMONY BEFORE
HIM THAT ROBERT MADE A DETERMINATION BECAUSE OF FAMILY DIS HARM ME TO LEAVE. HE LEFT
AND LEFT THE CORPORATIONS BEHIND WITH THE STATEMENT THAT YOU'RE NEVER GOING TO MAKE IT
AND HE WAS RIGHT, BUT THAT'S WHAT HE DID, HE LEFT. I DON'T THINK THERE CAN
BE ANY DISPUTE IN THE RECORD THAT HE QUOTE UNQUOTE LEFT, UP UNTIL MAYBE NEVER HE WAS NOT
INVOLVED IN A SINGLE BILLS DECISION. HE WAS NOT INVOLVED IN ANY DECISIONS CONCERNING
THE DEBT OR ANY WAY TO HANDLE THE REVENUE STREAM; THAT'S WHAT I MEAN BY THAT JUSTICE.
TO CONTINUE. WHAT ROBERT IS NOW ASKING THIS COURT TO ENFORCE
IS THE ERRONEOUSLY VALUATION AGAINST RAS. WHEN PRESENTED WITH THE VALUATION THE FIRST
TIME AGAIN THE TRIAL COURT REJECTED IT AN THEN NOW FINDS THAT IT IS BOTH COHERENT AN
CONVINCING WITHOUT ANY OTHER DETAILED ANALYSIS TLAS REQUIRED. I THINK IT IS
IMPORTANT TO -- AND HI KNOW THE COURT HAS READ THE OPINION AND I KNOW THE COURT HAS READ
THE CRITICAL LIMITATIONS BUT JUST TO HIGHLIGHT SOME OF THE LANGUAGE IN THE APPELLATE
DIVISION OPINION. FOR EXAMPLE THE CRITICAL FINDING WAS THAT BY SIMPLY ACCEPTING
THE OPINION OF ROBERT'S EXPERT WHICH THE TRIAL COURT IMPLICITLY REJECTED AT TRIAL WITHOUT
ANY CONSIDERED EXPLANATION FOR ACCEPTANCE ON REMAND THE JUDGE FAILED TO REACH A REASONED
JUST AND FACTUALLY SUPPORTED CONCLUSION. BY WEIGHING AND EVALUATING EXPERT'S
OPINIONS INCLUDING CREDIBILITY. AGAIN I KNOW THE COURSE IS DEAD BUT THAT IS
PRECISELY WHAT JUDGE, JUDGE CONTILLO DID NOT DO. WHAT THE APPELLATE DIVISION HAS CRITICIZED
HIM FOR DOING AND WHAT THE APPELLATE DIVISION WANTS CORRECTED. JUSTICE ALBIN:
JUDGE CONTILLO SAID HE FOUND IT WAS COHERENT AN CON ADVICING? WHAT MORE
DO YOU EXPECT OF HIM. JOSEPH P. LA SALA: YOUR HONOR, AGAIN, HE IMPLICIT
LY REJECTED KLEIN'S OPINION WHEN HE WROTE HIS INITIAL DECISION. WHEN IT COMES TO THE POINT
OF LOOKING AT IT AN RENDERING A DIFFERENT OPINION HE DOES IT WITH TWO WORDS HIS OPINION
IS COHERENT AN CONVINCING, PERIOD. THAT'S IT. THERE IS THE JUXTAPOSITION OF THE ARGUMENT,
RIGHT THERE, COHERENT AN CONVINCING. WHY? WHY DID IT SUDDENLY
BECOME COHERENT AND CONVINCING? WHAT PURPOSE DID YOU MARTIAL?
WHAT FINANCIAL INFORMATION DID YOU LOOK AT? WHAT IRS REGULATIONS DID YOU
TAKE A LOOK AT? ALL OF THOSE THINGS ARE ABSENT AND THEY ARE STILL ABSENT
TODAY; THAT'S THE POINT. SO THE LIMITED REMAND IS TO ADDRESS ALL OF THAT TO
MAKE SURE THAT AT THE END OF THE DAY ALL OF THE FACTORS ARE CONSIDERED INCLUDING THE
APPROPRIATE DISCOUNTS OR, I WOULD CALL THEM ADJUSTMENTS, ALONG THE LINES THAT YOU WERE
ASKING EARLIER, JUSTICE ALBIN; THAT'S THE POINT. AND AGAIN, THE PTI PROGRAM
DIVISION DID NOT DO THIS. THEY DID NOT BROKER A REMAND WITH INSTRUCTIONS. IT IS VERY
SPECIFIC AND VERY CLEAR ABOUT WHAT IT WANTED CLEARED UP. THE COURT ON REMAND
IS TO CONSIDER ALL SOURCES OF INFORMATION THAT AFFECT THE FAIRNESS AND EQUITY OF ROBERT'S
EXPERT'S SUGGESTED BUYOUT PRICE INCLUDING DEFENDANT'S CRITICISM, THE IDIOSYNCRATIC
RELATIONSHIP BETWEEN KOGER, KPS, AND KDS AS A FAIR VALUATION IN THE RULE OF CIRCUMSTANCES
OF THE CASE. SO NOT ONLY ONLY IS IT REVERSED, NOT ONLY IS IT REMANDED BUT
THERE ARE SPECIFIC INSTRUCTIONS AS TO SOME OF THE THINGS THAT THE TRIAL COURT WILL HAVE
TO LOOK AT TO MAKE SURE THAT AT THE END OF THE DAY THIS OPINION AS ACCEPTED AS COHERENT
AND CONVINCING WITHOUT ANY EXPLANATION IS THE RIGHT ONE, THE WRONG ONE OR SOMEPLACE IN
BETWEEN. YES, JUSTICE SOLOMON. I'M SORRY I SAW YOUR LIGHT GO ON. I AM SORRY.
AND JUST TO -- I KNOW I AM RUNNING OUT OF TIME. THE WHOLE QUESTION
ABOUT BLANK. ROB SHG ROBERT CON TENDED THAT THE TRIAL COURT WAS REQUIRED TO
ACCEPT THE EVALUATION OF HIS EXPERT. THE TRIAL COURT FOUND, WRONGLY FAILED TO CONSIDER
THE NUMEROUS CRITICISMS AND THE APPLICATION OF AT LEAST THE DISCOUNT FOR MARKETABILITY.
AGAIN, I WOULD SAY AND SUBMIT TO THE COURT THAT THE LAW IS CLEAR THAT THE
TRIAL COURT SH NOT REQUIRED TO ACCEPT THE VALUATION REPORT OF EITHER EXPERT AND R
RATHER THE COURT MASS, MUST ASCERTAIN THE FAIR MARKET VALUE. JUST A COUPLE
OF QUICK POINTS, IF I MIGHT. IN ADDITION TO ITS ORIGINAL REPORT, WHICH HE
CALLED PRELIMINARY, KLEIN IS PUTTING TWO SUPPLEMENTAL REPORTS AND IN THOSE TWO
SUPPLEMENTAL REPORTS HE DIDN'T PROVIDE ANY OPINION REGARDING THE LICENSE OR SUPPLEMENTAL
OPINIONS REGARDING THE LICENSE. ROBERT COULD HAVE ALSO SUPPLEMENTED HIS
EXPERT REPORT TO FULL IN THE GAPS. THERE WERE MANY GAPS FOUND BY THE APPELLATE DIVISION
TO EXIST IN THE EARLIER REPORT. HE DID NOT DO SO. AND EVEN THE OEP APPRECIATION
STATUTE UNDER WHICH RAS AND KOGER WERE ORIGINALLY SUED ALLOWS ADJUSTMENTS IN ORDER TO
GET TO FAIR VALUE, ADJUSTMENTS UP, ADJUSTMENTS DOWN TO GET TO FAIR VALUE FOLLOWING AN
ANALYSIS, A COMPLETE ANALYSIS OF ALL THE RELEVANT FACTORS. WITH THAT, I WOULD
-- IF THE COURT HAS NO FURTHER QUESTIONS, I WOULD REST. CHIEF JUSTICE RABNER:
THANK YOU, MR. LA SALA, MR. STEIN DID YOU WANT TO OFFER A BRIEF REBUTTAL. MICHAEL
S. STEIN: JUDGE, I TEMPTED TO SAY NOTHING. I WILL BE VERY BRIEF. I FEEL LIKE I'M IN
A TIME WARP BACK TO 2008 ALL OVER AGAIN THAT COULD HAVE BEEN CLOSING ARGUMENT AS IF
NOTHING HAS HAPPENED BETWEEN NOW AND THEN. WHAT MR. LA SALA SAYS HIS EXPERT
APPLIED 35 PERCENT MARKETABILITY DISCOUNT, HE NEGLECTS TO MENTION THAT JUDGE CONTILLO
ACTUALLY CONSIDERED IT AND ACTUALLY STRUCK THAT TESTIMONY FROM THE RECORD BECAUSE THE
ONLY SUPPORT WAS ADVICE -- INSTRUCTIONS FROM COUNSEL, AT DEPOSITION, MR. SCHMIDT WAS NOT
FROM NEW JERSEY, HAD NEVER HEARD OF BALSAMIDES AN NEVER HEARD OF LAWSON. MR.
LA SALA SAYS THAT HIS EXPERT, SCHMIDT WAS UNABLE TO SEPARATE KPS AND KDS AT TRIAL AND TO
INDEPENDENTLY VALUE THEM, PUTTING ASIDE THAT THIS COURT IN 2013 SAID, YES, YOU CAN.
AT TRIAL, IN TESTIMONY, MR. SHIFT, SCHMIDT ACKNOWLEDGED THAT HE COULD HAVE INDEPENDENTLY
VALUED THOSE COMPANIES, BUT HE WAS INSTRUCTED NOT TO. I DON'T UNDERSTAND FULLY
THE SIGNIFICANCE OF THE PERIOD OF TIME IN 2009 AND 2011 AND THE PROCEDURAL POSTURE OF THE
CASE SHURD FORGIVE WRONGDOING DURING THAT TIME PERIOD, BUT IT IS A RED HERRING IF IT MAKES
SENSE TO ANYONE BECAUSE WHAT JUDGE CONTILLO FOUND ON REMAND, NONE OF WHICH WAS UNDISTURBED
BY THE APPELLATE DIVISION IS THAT THE WRONGFUL CONDUCT IN BACKDATING IN DIVE VERSION OF
REVENUE BEGAN IN 2007 WHEN THE COMPLAINT WAS FILED, CONTINUED WHILE WE WERE LITIGATING
DOWN PLAINTIFF JUDGE CONTILLO DURING THE TRIAL, THROUGH THE APPEAL PROCESS, AFTER ROBERT
WAS REINSTATED AS AN OWNER OF KPS AND KDS AND OF COURSE THE EFFORTS TO DEPRIVE ROBERT
OF THE FAIR VALUE OF HIS EQUITABLE INTEREST CONTINUES TO THIS DAY JUDGE CARCHMAN
DESCRIBED THIS AS BIBLICAL IN THE NATURE OF THE PREVAILING DISPUTE AN IT IS TRAGIC. TWIN
BROTHERS AN A FARE, BUT TWIN BROTHER AND FATHER MADE A DECISION THEY WOULD RATHER BURN
THE WHOLE THING DOWN THAN GIVE A DIME TO ROBERT AND THAT'S WHY 15 YEARS INTO IT WE ARE
STILL LITIGATING. IT'S TIME TO PUT AN ENDS TO THIS AND IT'S TIME TO PUT AN END TO IT
NOW. I JUST WOULD REFER THE COURT TO PAGES 18 AND 196 OUR ORIGINAL PETITION
WHICH LAYS OUT JUDGE CONTILLO'S EXPLANATION, COHERENT EXPLANATION OF WHAT HAD CHANGED
BETWEEN 2008 AND THE REMAND DECISION AND HOW THAT AFFECTED THE WAY HE VIEWED THE TESTIMONY
AT TRIAL AND NOTHING, I HAVE NOTHING FURTHER TO ADD, THANK YOU VERY MUCH. CHIEF
JUSTICE RABNER: THANK YOU, MR. STEIN, THANK YOU COUNSEL.