|
1 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
2 IN AND FOR THE COUNTY OF SANTA CLARA
3 --oOo--
4
5 RALPH SIMPSON, )
Plaintiff, )
6 )
vs. ) No. 105CV053398
7 )
LOU RAE KAGEL, LYNN O'BRIEN, )
8 JAMES O'BRIEN, STONEHENGE )
PROPERTIES, INC., VALLEY OF )
9 CALIFORNIA, INC. dba COLDWELL )
BANKER, DOUGLAS REA and DOES )
10 ONE through TWENTY, inclusive, )
)
11 Defendants. )
)
12 AND RELATED CROSS-ACTIONS. )
13
14
15 DEPOSITION OF RALPH SIMPSON
16 Thursday, April 27, 2006
17
18
19
20
21 Taken before JANELL SOKOL, CSR, CM
License No. C-3443, State of California
22
23
DIABLO VALLEY REPORTING SERVICES
24 Certified Shorthand Reporters
2121 N. California Blvd., Suite 310
25 Walnut Creek, California 94596
925-930-7388 1
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 I N D E X
2 PAGE
3 EXAMINATION BY:
4 MR. KOSS 6
5 MR. GLASPY 213
6 MR. BLOYD 236
7 --oOo--
8 E X H I B I T S
9 NUMBER PAGE
10 1 PRDS Real Estate Purchase Contract 84
11 2 Freddie Mac Form 70 6-93 100
12 3 Uniform Residential Appraisal Report 100
13 4 PRDS As-Is Addendum 107
14 5 Counter Offer No. 1A 111
15 6 Counter Offer No. 2A 114
16 7 Counter Offer No. 3A 115
17 8 Addendum to Contract 120
18 9 PRDS Addendum No. 129
19 10 Addendum to Contract 130
20 11 PRDS Request for Contract Performance 135
21 12 Addendum to Contract 138
22 13 Addendum No. 4A 138
23 14 Extension Agreement 139
24 15 Escrow Instructions 140
25 (continued)
2
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 NUMBER PAGE
2 16 PRDS Addendum No. ___ 140
3 17 Walk-Through 141
4 18 Addendum to Contract 9/12/01 144
5 19 Addendum to Contract 9/25/01 147
6 20 8/25/01 PRDS Addendum No. 149
7 21 8/25/01 PRDS Addendum No. (unsigned) 149
8 22 Contingency Removal 150
9 23 Hold Harmless Agreement 151
10 24 Disclosure Obligations 171
11 25 Regional Disclosures 176
12 26 Real Estate Transfer Disclosure 180
Statement
13
27 PRDS Supplemental Seller's Checklist 181
14
28 6/9/03 letter to Ryan Iwanaga 183
15
29 Advertising brochure 193
16
30 Calwest Landscape Demo: 197
17 Estimate/Contract
18 31 Listing Data 200
19 32 E-mails between Douglas Rea/Ralph 202
Simpson
20
33 8/30/01 e-mail to Ralph from Doug Rea 205
21
34 E-mails between Douglas Rea/Ralph 206
22 Simpson
23 35 9/4/01 letter to Lou Rae 208
24 36 9/10/01 e-mail to Ralph from Doug Rea 209
25
--oOo-- 3
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 BE IT REMEMBERED, that pursuant to notice to the
2 respective parties, and on Thursday, the 27th day of April,
3 2006, commencing at the hour of 10:00 a.m. thereof, at the
4 Law Offices of GAGEN, McCOY, McMAHON & ARMSTRONG, 279 Front
5 Street, Danville, California, before me, JANELL SOKOL, a
6 Certified Shorthand Reporter, License No. C-3443, State of
7 California, there personally appeared:
8 RALPH SIMPSON,
9 called as a witness on behalf of the defendants, who, being
10 first duly sworn, was then and there examined and
11 interrogated as hereinafter set forth.
12
13 --oOo--
14
15 PAUL G. MINOLETTI, Attorney at Law, representing
16 the Law Offices of GREENE, CHAUVEL, DESCALSO & MINOLETTI,
17 951 Mariner's Island Boulevard, Suite 630, San Mateo,
18 California 94404, appeared as counsel on behalf of the
19 plaintiff;
20
21 CHARLES A. KOSS, Attorney at Law, representing the
22 Law Offices of GAGEN, McCOY, McMAHON & ARMSTRONG, 279 Front
23 Street, Danville, California 94526, appeared as counsel on
24 behalf of defendant Lou Rae Kagel;
25
4
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 PAUL C. GLASPY, Attorney at Law, representing the
2 Law Offices of GLASPY & GLASPY, INC., 1550 The Alameda,
3 Suite 200, San Jose, California 95126-2325, appeared as
4 counsel on behalf of defendants Lynn O'Brien, James O'Brien
5 and Stonehenge Properties, Inc.;
6
7 STEPHEN W. THOMAS, Attorney at Law, representing
8 the Law Division of NRT, Inc. - Western Region, 12657
9 Alcosta Boulevard, Suite 500, San Ramon, California 94583,
10 appeared as counsel on behalf of defendant Valley of
11 California, Inc. dba Coldwell Banker;
12
13 TED W. BLOYD, Attorney at Law, representing the
14 Law Offices of EDWARD L. BLUM, 201 19th Street, Suite 200,
15 Oakland, California 94612, appeared as counsel on behalf of
16 defendant Douglas Rea.
17
18 ALSO PRESENT was defendant LOU RAE KAGEL.
19
20 --oOo--
21
22
23
24
25
5
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 RALPH SIMPSON,
2 called as a witness on behalf of the defendants,
3 having first been duly sworn by the court reporter
4 to testify the truth, the whole truth and nothing
5 but the truth, testified as follows:
6 --oOo--
7 EXAMINATION
8 BY MR. KOSS:
9 Q. Good morning, Mr. Simpson. My name is Charles
10 Koss and I represent Lou Rae Kagel in an action you've
11 brought against her and others arising out of your purchase
12 of a home on Blanchard Drive in Monte Sereno. I'm here
13 today to ask you some questions about the facts and
14 circumstances that led up to your purchase and the things
15 that you believe are either misrepresented or wrong with
16 this house.
17 Before we get going, can you state your full name
18 and tell me your address.
19 A. Ralph Henry Simpson, 17682 Blanchard Drive in
20 Monte Sereno.
21 Q. Have you ever been deposed before?
22 A. No.
23 Q. Let me go through some of the ground rules just to
24 make sure we're on the same page. Okay?
25 A. Okay.
6
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Okay. First of all, as you can see we have a
2 court reporter that's taking down everything that you say
3 or I say or, indeed, anybody in this room says. You've
4 also again given an oath to tell the truth and even though
5 this is an informal setting, you understand that's the same
6 oath you'd be given in a court of law?
7 A. Okay.
8 Q. Okay. The same penalties of perjury attach to
9 that, so I suggest to you it's important to give full and
10 complete truthful testimony today. Fair enough?
11 A. Fair enough.
12 Q. You're quite good at this already, which surprises
13 me because most witnesses aren't, but court reporters have
14 difficulty taking down things when two people talk at the
15 same time. So if you could wait for me to finish my
16 question, I'll try and wait for you to finish your answer
17 so we're not talking at the same time. Fair enough?
18 A. Fair enough.
19 Q. Okay. And you're also quite good at this; you're
20 answering out loud instead of saying uh-huh or shaking your
21 head or that kind of thing. Obviously, in a written
22 transcript shakes of the head don't translate. So if I
23 prompt you for an answer, don't think I'm being rude. I'm
24 just trying to get a clear record. Okay?
25 A. Okay.
7
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. I'm not here to try and trick you or confuse you
2 or mislead you. If you don't understand my question,
3 please let me know and I will do my level best to give you
4 a question that you understand. Okay?
5 A. Okay.
6 Q. At the conclusion of the deposition, our court
7 reporter will type up into a written booklet form
8 everything that went on here today and you'll get a chance
9 to look that over for errors and, indeed, make any
10 corrections you want to make to that transcript. Okay?
11 A. Okay.
12 Q. I should caution you that if you make changes that
13 are substantive in nature, as an example, you change a yes
14 to a no, I might be able to comment on that change at trial
15 and that might affect your credibility. Okay?
16 A. Okay.
17 Q. Is there any reason why you can't give full and
18 complete testimony here today; you're not feeling well or
19 you're under medication or anything like that?
20 A. No, nothing like that.
21 Q. Okay. If you need to take a break, let me know.
22 I suspect this is going to take some time and breaks are
23 certainly appropriate. My only request is that you don't
24 ask to take a break when a question is pending. If you
25 could first answer the question, then we could take a break
8
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 after that. Okay?
2 A. Okay.
3 Q. Any questions about the process?
4 A. No.
5 Q. Good. If you could, please describe your
6 educational background.
7 A. Well, I've got bachelor degrees in math and
8 statistics.
9 Q. And where did you obtain those degrees?
10 A. The University of Idaho.
11 Q. And what year did you obtain those degrees, year
12 or years I guess?
13 A. I graduated in 1977.
14 Q. You got both degrees at the same time?
15 A. Yes.
16 Q. And any post graduate work?
17 A. No.
18 Q. Can you describe your employment history from the
19 time you graduated from the University of Idaho?
20 A. Yes. I graduated in December, started working at
21 the beginning of February of 1978 for IBM. I worked for
22 them for 16 years until February of 1994 and have been
23 working at Cisco Systems since then, since February of '94.
24 So it's pretty simple, just two companies.
25 Q. What's your current position with Cisco Systems?
9
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. I'm director for technical support.
2 Q. And briefly what does that job involve?
3 A. It involves planning our strategies and future for
4 our support organization. This is the organization that
5 helps customers solve problems, so it's remote support over
6 the phone.
7 Q. When did you first move to California?
8 A. I first moved to California in '94 to start with
9 Cisco. I moved away in '95 and was overseas for six years,
10 then came back in 2001.
11 Q. When you first moved to California, did you
12 purchase a home?
13 A. Yes, I did.
14 Q. Where was that home located?
15 A. It was in Almaden in San Jose.
16 Q. Do you recall the address?
17 A. No.
18 Q. Did you have a broker assist you in the purchase
19 of that property?
20 A. Yes, I did.
21 Q. Do you remember who that was?
22 A. No.
23 Q. At some point did you sell the Almaden property?
24 A. Yes, I did.
25 Q. And what year was that?
10
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. 1999.
2 Q. So I take it you rented it out for a number of
3 years before you sold it.
4 A. My daughter lived in it.
5 Q. Ah, okay. And at the time you sold it, did you
6 have a broker represent you in the sale of the property?
7 A. Yes, I did.
8 Q. And then the next house you purchased in
9 California, was that the Blanchard property?
10 A. Yes.
11 Q. Had you owned any homes prior to your purchase of
12 the Almaden property?
13 A. Yes.
14 Q. How many?
15 A. Prior to Almaden, five.
16 Q. Five houses?
17 A. Yes.
18 Q. And where were they located?
19 A. Federal Way, Washington, I owned two.
20 Gaithersburg, Maryland and Raleigh, North Carolina.
21 Q. When you moved overseas in 1995, did you purchase
22 a house overseas?
23 A. I did but not in '95. I rented at first.
24 Q. At some point you purchased a home?
25 A. Yes.
11
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. And did you own more than one home when you were
2 overseas?
3 A. No, just one.
4 Q. And where was that house located?
5 A. It was in Weybridge, U.K., outside of London.
6 Q. Let me start with the five houses that you owned
7 prior to moving to California. Did you experience any
8 issues with respect to nondisclosure of any issues?
9 A. No.
10 Q. On the purchase of those houses.
11 A. No, I did not.
12 Q. Did you experience any difficulties when you sold
13 the house in terms of the buyer claiming or alleging or
14 suggesting that you failed to disclose anything?
15 A. No.
16 Q. How about the house in Weybridge? When you bought
17 that house, did you learn of any facts after you purchased
18 the house which led you to believe that the sellers had not
19 fully disclosed things?
20 A. No.
21 Q. And how about the Almaden house?
22 A. No.
23 Q. There were no facts that you discovered after you
24 purchased it which led you to believe that things had not
25 been disclosed to you?
12
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. No.
2 Q. Now, in any of these five houses which you
3 purchased prior to the time you were in California, did you
4 do any remodeling?
5 A. Wait a minute. I'm sorry. I said five before --
6 Q. Yes.
7 A. It was five before the current house I'm in.
8 Q. Ah, okay.
9 A. I'm sorry. So it was four before, because I've
10 owned two in California.
11 Q. Okay. Two in Washington, one in Maryland, one in
12 North Carolina?
13 A. That's right.
14 Q. Okay.
15 A. So when I said five, I meant five before first
16 moving to California.
17 Q. Okay. Fair enough.
18 The four houses that you purchased prior to the
19 time you moved to California, did you do any remodeling to
20 those houses?
21 A. I don't know if it counts as remodeling. I
22 finished a basement room in one of my homes in Washington
23 State.
24 Q. Anything else other than finishing a basement?
25 A. In Maryland I put a deck, an outside deck, on a
13
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 home.
2 Q. And how about in the North Carolina property?
3 A. I didn't do anything to that.
4 Q. Didn't add a pool to any of those properties?
5 A. No.
6 Q. Didn't add an outside structure to any of those
7 properties?
8 A. No.
9 Q. In finishing the basement in Washington did you --
10 strike that.
11 The house in Washington, did you obtain any kind
12 of governmental approval for the work you did?
13 A. No, I didn't.
14 Q. So you didn't get a permit or anything like that?
15 A. No.
16 Q. How about for the deck in Maryland?
17 A. No.
18 Q. Did you do any improvements to the house in
19 Almaden, any kind of remodeling, additions, that sort of
20 thing?
21 A. No.
22 Q. Didn't add a pool?
23 A. I added a waterfall and landscaping. That was it.
24 Q. Did you get any permits for that work?
25 A. No.
14
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Is it correct that the first permits that you've
2 ever obtained for any work you've done to a house related
3 to work that you did on the Blanchard property?
4 A. That's correct.
5 Q. Let's start out with the two Washington houses.
6 Do you recall if you had brokers assisting you in the
7 purchase of those properties?
8 A. Yes, I did.
9 Q. On both of them?
10 A. Yes.
11 Q. And how about on the sale of those two properties,
12 did you have a broker assisting you?
13 A. Yes.
14 Q. And how about the Maryland property, did a broker
15 assist you in the purchase of that property?
16 A. Yes.
17 Q. And also with the sale of the Maryland property?
18 A. Yes.
19 Q. And how about the North Carolina property, did you
20 have a broker help you buy that property?
21 A. Yes.
22 Q. And did you also have a broker help you sell that
23 property?
24 A. Yes, I did.
25 Q. I'm not sure what the protocol is in the U.K., but
15
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 did you have a real estate broker helping you with that?
2 A. Yes, I did.
3 Q. And did you have a real estate broker helping you
4 with the sale of that property?
5 A. Yes.
6 Q. When did you learn that you were going to be
7 moving back to the U.S. from the U.K.?
8 A. It was in the summer of 2001.
9 Q. And I would understand or believe that at some
10 point then you started looking to buy a house here in
11 California, true?
12 A. Yes, yes.
13 Q. When did you first start doing that?
14 A. I don't recall.
15 Q. What steps did you take to find a house?
16 A. I looked on the internet first. I called up on a
17 few homes and then engaged with a broker from Alain Pinel
18 and he showed me around to several homes, because I was
19 interested in the Saratoga/Los Gatos area and he
20 specialized more in Saratoga; but we looked at dozens of
21 homes, I would say, and this was while my wife was still in
22 London. So I was travelling back and forth to the U.S. as
23 I was finalizing what job I would take in the U.S. and we
24 spent time in both locations, about half time during the
25 summer of 2001.
16
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Who was the broker from Alain Pinel that you
2 originally engaged?
3 A. Earl. I don't remember his last name.
4 Q. Do you remember what office he was in?
5 A. He was in the Saratoga office of Alain Pinel.
6 Q. Did you sign any kind of engagement agreement with
7 Earl?
8 A. No, I didn't.
9 Q. And when you first started looking at houses, did
10 you have any particular criteria in mind in terms of what
11 you were looking for?
12 A. Yes, I did.
13 Q. Can you tell me what the criteria was?
14 A. Well, there was a number of things that we desired
15 and some of these would be I guess negotiable you might say
16 or, you know, depending on what we found. But we were
17 looking for a new home or at least a newer home. Most of
18 the previous homes I had bought had all been new.
19 We were looking for four to five bedrooms,
20 obviously an upscale, you know, nice -- nice home with a
21 nice size property and we wanted either a pool or room for
22 a pool, and that was made clear to both Earl as well as the
23 selling broker, who was Douglas Rea from Coldwell Banker.
24 Q. Any other criteria that you were looking for?
25 A. There were other things that I described as
17
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 nice-to-haves but weren't mandatory, that if they had those
2 it would increase the value to me. For instance, a view we
3 desired but it wasn't mandatory. I let them know I liked
4 woodwork, you know, instead of painted trim and doors,
5 things like that, and again, not mandatory; and again, the
6 new home was desirable but not mandatory.
7 Q. Did you have any criteria in terms of garage
8 space?
9 A. Three-car garage.
10 Q. Did you have any particular hobbies that you
11 wanted to accommodate, like photography or woodworking or
12 auto working or any of that kind of stuff?
13 A. No.
14 Q. During the time you worked with Earl at Alain
15 Pinel, did you make any offers on any homes?
16 A. Yes, I did.
17 Q. How many?
18 A. One.
19 Q. Do you recall where that house was located?
20 A. I don't know the address, but it was in Saratoga.
21 Q. Do you still have any paperwork relating to that
22 offer?
23 A. I don't believe I saved any, no.
24 Q. Okay. Was your offer accepted?
25 A. No, it was not.
18
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Was there a counteroffer to your offer?
2 A. Yes.
3 Q. And to your understanding, why didn't that deal
4 come together?
5 A. I'm not sure I understand.
6 Q. Well, did you ever enter into a contract to
7 purchase that property in Saratoga?
8 A. I made an offer but it wasn't accepted.
9 Q. And they made a counteroffer and did you accept
10 the counteroffer?
11 A. No. I countered to the counter and then that was
12 not accepted.
13 Q. Was the issue price?
14 A. Yes.
15 Q. Do you recall what the listing price was?
16 A. I don't recall the exact listing price.
17 Q. Can you give me your best recollection?
18 A. My best recollection was it was in the mid 4
19 million range.
20 Q. And do you recall what your offer was?
21 A. My initial offer was in the low 3 million range.
22 Q. Do you recall what the counteroffer was?
23 A. I think it was in the high 3 million range.
24 Q. And then you submitted a counter to that counter,
25 correct?
19
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Right.
2 Q. And do you recall what that was?
3 A. I could be off by 100,000 or so, but I think it
4 was around 3.4 million was my counter.
5 Q. And it's your understanding that the sellers
6 deemed that too low and didn't counter?
7 A. No. At that point another buyer came in the
8 picture and I was told that other buyer would be offering
9 more than my 3.4 million, so I elected to drop out.
10 Q. And was there a reason why you elected to drop
11 out?
12 A. I felt that that was already getting toward the
13 maximum price that that home was worth and I didn't want to
14 get into a bidding war.
15 Q. Can you describe this Saratoga property for me
16 that you put an offer on?
17 A. Well, it was a brand new home. I recall it being
18 five-bedroom, four and a half bath, three-car garage with a
19 view on over one and a half acre, very close to the village
20 of Saratoga, so a desirable area; a brand new home with a
21 view and with the woodwork that I liked, you know, all the
22 wood trim and so forth.
23 Q. Do you recall the size of the house?
24 A. I recall it was in the -- I don't recall exactly.
25 It was in the mid 4,000 range.
20
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Did that property have a pool?
2 A. It did not.
3 Q. Did that property have room for a pool?
4 A. Yes, it did.
5 Q. At least it was represented it had room for a
6 pool?
7 A. Yes.
8 Q. In looking at that property, did you make any
9 investigation as to what it would cost to install a pool at
10 that Saratoga property?
11 A. I did not.
12 Q. In your mind in what ways was the Saratoga
13 property either nicer or less nice than the Blanchard
14 property?
15 A. Well, it had a view. It had larger -- it was a
16 larger property. It was over an acre and a half. I don't
17 remember the exact amount. The fit and finish was nicer.
18 It had nicer trim work. Doors and windows and all that
19 were solid stained wood. It was a more dramatic looking
20 property when you enter it. It looked nice. So I thought
21 it was a nicer property that way.
22 Q. Okay. How about location? Was the location any
23 better or worse than the Blanchard property?
24 A. I would say it was equivalent.
25 Q. Did the Saratoga property have a guest house?
21
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. It did not.
2 Q. In your mind does a guest house add some
3 difference between the two properties?
4 A. Yes.
5 Q. In your mind was that significant?
6 A. Yes, it was. It was significant.
7 Q. And then total square footage, would the Blanchard
8 house be larger than the Saratoga house you looked at?
9 A. If you add the guest house, yes.
10 Q. And what about the landscaping? Was the
11 landscaping comparable between the two properties?
12 A. Yes.
13 Q. Do you know what that house eventually sold for,
14 the Saratoga property?
15 A. I do not.
16 Q. Any other houses that you placed an offer on
17 during the time you looked at properties with Earl from
18 Alain Pinel?
19 A. No.
20 Q. At some point you stopped using Earl?
21 A. Well, after that deal fell through, then I
22 immediately offered on the Blanchard home and so, yes, I
23 stopped using Earl at that point.
24 Q. Why did you stop using Earl?
25 A. Well, it's a bit of a story here.
22
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. That's okay. Tell me the story.
2 A. Okay. Earl specialized in Saratoga homes and my
3 wife came from London to take a look at homes and so I
4 arranged for her to meet with Earl and look at these homes
5 while I was working, and so she spent several days looking
6 at homes with Earl and he showed her a lot of the homes
7 that I had already seen plus some others and they were all
8 in Saratoga; and she let Earl know that she was also
9 interested in the Monte Sereno and Los Gatos area, and he
10 recommended against that and basically said he specialized
11 in Saratoga, that's what he recommends.
12 So she, my wife, decided to call up on some homes
13 in Los Gatos, and so she saw an advertisement for a home in
14 Los Gatos. I'm not sure which one. But she called up the
15 Coldwell Banker office that was listing it and happened to
16 talk to Douglas Rea and Douglas met her immediately. He
17 was in the office. He met with her and showed her around
18 to some homes.
19 And so I went back to Earl and said my wife is
20 interested in Los Gatos, also, so if we look at a home in
21 Los Gatos from another realtor, we're going to buy that
22 home from that realtor. If we buy one that you've shown
23 us, we'll buy from you. So there's no mistake that -- or
24 no misunderstanding on how we're going to do business on
25 that.
23
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Okay. After your wife met with Mr. Rea, did Earl
2 show you any more homes?
3 A. Yes.
4 Q. You didn't make any offers on any more homes?
5 A. Well, we were looking at Los Gatos at the time we
6 made the offer, the first offer to the home in Saratoga.
7 Q. Ah, I see. Okay.
8 A. So we were looking at both together and trying to
9 determine which home to make an offer on.
10 Q. Okay. So at the time you made an offer on the
11 Saratoga home, you had already seen the Blanchard property?
12 A. Yes.
13 Q. Do you recall when you first -- let me get one
14 thing on the record.
15 Did Mr. Rea show you any homes other than the
16 Blanchard property? By you I mean just you, not your wife.
17 A. Well, not alone. With my wife he showed me many
18 homes, yes.
19 Q. Okay. How many homes do you think that Mr. Rea
20 showed you?
21 A. I don't recall, but over a dozen.
22 Q. So between the homes shown you by Mr. Rea and the
23 homes shown by Earl, you looked at maybe 24 homes?
24 A. Probably more than that.
25 Q. And out of those more than 24 homes that you
24
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 looked at, you ended up making offers on two houses,
2 correct?
3 A. Yes.
4 Q. Okay. Do you recall when you first looked at the
5 home on Blanchard?
6 A. Yes, I do.
7 Q. And who was there when you first looked at it?
8 A. Well, Douglas took my wife and I to see it. My
9 wife had already seen it herself with Douglas and they had
10 seen a number of homes, you know, the previous days, and
11 they narrowed it down to a few that they wanted to show me.
12 I believe this was a weekend. I'm not positive
13 but it was whenever I could get off work, either in the
14 evening or on a weekend; and so Douglas, my wife and I went
15 there and Lou Rae was there showing it as an open house.
16 Q. Before you saw the home, did Mr. Rea tell you
17 anything about the home on Blanchard?
18 A. Yes, he did.
19 Q. What did he tell you?
20 A. Well, he gave me a sheet of paper with a number of
21 homes that we were going to look at that day. So there was
22 a separate sheet, I recall, for each home that we looked at
23 that had a small map on where it was and some other
24 information. It looked like it was automatically generated
25 through the computer, but there was a separate page on each
25
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 home, and so there was a page on Blanchard. He didn't talk
2 a lot about it, but I asked him questions as we were
3 driving towards that home, and I had this sheet of paper in
4 my lap, you know, reading up on each home as we went to
5 those homes.
6 Q. Do you still have that sheet of paper?
7 A. No.
8 Q. What questions do you recall asking Mr. Rea as you
9 drove to the scene of the Blanchard property?
10 A. I don't recall.
11 Q. So I guess your general recollection is you had
12 some discussion with Mr. Rea about the Blanchard home and
13 its various attributes, but you don't remember specifically
14 what was discussed?
15 A. That's correct.
16 Q. Prior to the time you actually saw the house?
17 A. That's correct.
18 Q. Do you remember anything your wife told you about
19 the house prior to the time you actually saw the house?
20 A. The only thing I recall is she did like it and she
21 definitely wanted me to see this particular home, and I
22 believe it to be one of her top one or two homes that she
23 felt was something worth seeing.
24 Q. At the time you were driving to see the Blanchard
25 property, had you already seen the Saratoga property that
26
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 you had at some point made an offer on?
2 A. I don't remember.
3 Q. So as you sit here you're not sure which of the
4 two properties you saw first?
5 A. Oh. I know I saw the Saratoga property first. I
6 just don't recall if I made the offer before I saw the
7 Blanchard property or not. It was very close timing within
8 a matter of days because my wife was visiting from London
9 for only a week and a half, two weeks, during the early
10 part of August and she went back to London in mid August.
11 So I know there was not much time in there that we looked
12 at that and then made the offers.
13 Q. Okay. Well, I probably gave you an inartfully
14 phrased question because you told me exactly what I was
15 looking for.
16 You saw Saratoga first?
17 A. Yes.
18 Q. And then you saw Blanchard?
19 A. Right.
20 Q. And I take it the Saratoga property was high on
21 your list.
22 A. Yes, yes.
23 Q. And you just don't remember if you had already
24 made an offer at the time on the Saratoga property, at the
25 time you were going to look at the Blanchard property?
27
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Yes. I'm not positive on the timing there.
2 Q. When you arrived at the Blanchard property, you
3 were accompanied by Mr. Rea and your wife, correct?
4 A. That's correct.
5 Q. And what's your wife's name?
6 A. Tomasina.
7 Q. And how long have you been married?
8 A. Thirty-three years.
9 Q. Do you have kids?
10 A. Three children.
11 Q. At the time you were looking at these properties,
12 did you expect your children would be living with you?
13 A. One of them, yes.
14 Q. That was I suspect your youngest, just guessing?
15 A. Yes, right.
16 Q. Okay. And is that the one with the BMW?
17 A. Yes.
18 Q. Okay. When you arrived at the Blanchard property,
19 based upon your testimony I understand you met Lou Rae
20 Kagel, correct?
21 A. Yes.
22 Q. Did you engage in any discussion with Ms. Kagel at
23 your first visit to the Blanchard property?
24 A. Yes, I did.
25 Q. Can you describe for me those discussions?
28
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. I had a number of discussions with Lou Rae over
2 the ensuing weeks until the closing of the property. So
3 what we discussed on the initial visit versus other visits
4 I couldn't -- I couldn't distinguish.
5 Q. How many times have you met with Lou Rae Kagel?
6 A. I don't recall.
7 Q. In addition to meeting with her, have you also had
8 telephone discussions with her?
9 A. I don't remember any telephone discussions with
10 Lou Rae. I'm not saying I didn't have them. I just don't
11 recall ever picking up the phone and calling Lou Rae. But
12 I did meet her at the property a number of times.
13 Q. I'm not quite sure how to phrase this. Typically
14 if you have a broker and you have a question, you talk to
15 your broker and you figure he goes and does something?
16 A. Right.
17 Q. It would be unusual for you to call the seller
18 broker directly, right?
19 A. That's correct, yes.
20 Q. Okay. Do you have any reason to believe that you
21 actually did have telephone conversations with Lou Rae
22 Kagel?
23 A. No, I don't.
24 Q. On these number of occasions that you met with Lou
25 Rae Kagel, do you remember any of the discussions you had
29
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 with her?
2 A. Oh, yes, I do.
3 Q. Okay. Why don't you describe those discussions
4 for me.
5 A. Okay. There were a number of discussions around
6 the attributes of the home. So I recall when I first went
7 there, there were some brochures sitting in the kitchen and
8 I picked one up, and I still have a copy of that. It
9 described the home as 5300 square feet. It described three
10 zones of heating and cooling. It said that the city says
11 it's okay to build an 800 square foot structure in the back
12 yard and it said it had fiber optics communications, among
13 a number of other things.
14 And so I recall walking out to the back yard and
15 examining the pool house, the yard itself, and outside the
16 pool house there was a flip chart stand, you know, one of
17 those big pieces of paper, and on different days going out
18 there, there would be different things written on that flip
19 chart stand. I recall some of them being, for instance,
20 "Almost an acre," exclamation mark, "Room for a pool,"
21 "City says" -- or something about it's okay to build or
22 city says put in an 800-foot additional structure; and I
23 recall several conversations with Lou Rae discussing our
24 requirement for the pool.
25 So Lou Rae went into detail about the pool, for
30
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 instance, telling me that the ideal spot for the pool,
2 which was along the back fence where there was some
3 landscaping put in, including a couple of rows of
4 grapevines; and she described that as an ideal spot for the
5 pool because it was right outside the pool house and it was
6 also visible from the main house, which she pointed out.
7 She told me that the seller was going to put in a
8 pool but decided not to, and when I asked why she said,
9 well, the seller thought it would be better for whatever
10 buyer to design their own pool.
11 And so she walked out in the back yard with me and
12 my wife on a number of occasions, at least twice that I
13 recall, showing me that location; and when my wife
14 described possibly putting in a waterfall falling into the
15 pool, she said that would be great, so you could see it
16 from the family room of the house.
17 I recall she also told me that the seller was
18 planning on putting in a sport court but decided against
19 that, and I recall my wife asking Lou Rae and Lynn when
20 they were both there on one occasion about putting in both
21 the pool and the additional structure. They were both
22 there, both saying yes, you can do both, and my wife was
23 wondering, well, where would that go in this back yard.
24 And so we went out to the back yard and Lou Rae
25 and Lynn were both there pointing out where they would
31
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 recommend putting the pool as well as the 800-square-foot
2 structure, and what they pointed out was an area -- two
3 different areas for the 800-square-foot structure. One was
4 to the right-hand side of the rear yard, so as you exit the
5 rear door the pool would be straight ahead and the
6 800-square-foot structure I was told could be put just to
7 the right of that next to a large tree, or more ideally,
8 they recommended that I go behind the pool house.
9 I have a bit of a pie-shaped lot and it was
10 described that would be the ideal spot because there was
11 some room behind this pool house, and Lou Rae even told me
12 that I could extend my driveway and put a driveway -- put a
13 garage in this 800-square-foot structure and extend the
14 driveway to this garage; and in fact our driveway ends
15 abruptly and the pool house goes off on an angle, so it
16 does look like the driveway was made to continue on and
17 could continue on to the very rear of the property.
18 She also described three zones of heating and
19 cooling, so I asked what those three zones were. She told
20 me that one zone was the main living areas of the main
21 house, the second zone was the bedroom area of the main
22 house and the third zone was the pool house.
23 So I looked at the pool house and in fact it had a
24 thermostat that was identical to the one in the main house.
25 It has a switch for cooling and heating, so I turned it to
32
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 cooling just to see how the air conditioner would work, and
2 it didn't work.
3 So I went back into the house, into the main house
4 where Lou Rae was, and asked her about the air conditioning
5 in the pool house and she said, oh, it's there; and I said,
6 well, I didn't see an air conditioning unit and she said
7 did you look at the back of the pool house. I said yes, I
8 did. And so she said, no, it's there. Let's go there and
9 see.
10 So we walked around the pool house and of course
11 there was no air conditioning unit there. So she starts to
12 walk back into the main house and said, oh, it must be on
13 the roof.
14 And I said, Lou Rae, let's look again, because we
15 can see the entire roof if we walk around this house again.
16 So we walked around the house at a little wider angle and
17 it was obvious there was no air conditioning unit on the
18 roof.
19 At that point she said, well, it must be in the
20 garage or in the attic and, of course, I looked in the
21 garage; it wasn't there. She said, well, it's in the
22 attic. Don't worry about it, it's there. My husband is a
23 builder.
24 And when I -- well, before that I questioned
25 whether or not they would put an air conditioning unit -- I
33
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 said I had never heard of an air conditioning unit being
2 put in an attic before and she said don't worry, my husband
3 is a builder. I know that's commonly done. And that was
4 the end of the discussion and she walked back in the house.
5 Q. Anything else you remember discussing with Lou Rae
6 Kagel?
7 A. Let's see. I remember her saying for the pool, if
8 we put the pool where she recommended, we wouldn't have to
9 cut out any grass because it was all barked in and there
10 was some plants there, but it was -- it was -- the grass
11 was, you know, at an angle there where you would have room
12 to put a pool without removing any grass; and the grass, of
13 course, was sprinklered and all that, so it made a
14 convenient place to put the pool, and Lou Rae let me know
15 that that also made it an ideal spot to put the pool.
16 So we had a number of discussions around the pool.
17 It was very clear that this was a requirement. Douglas Rea
18 knew that it was a requirement. Earl knew that it was a
19 requirement for any house that we were looking at.
20 And so -- and my wife had a number of discussions
21 with Lou Rae in my presence and outside my presence,
22 because she went there a number of times without me and
23 those discussions were about the pool and other items.
24 Q. Well, where did you eventually install the pool?
25 A. In that same location Lou Rae recommended.
34
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. And the conversations you've now described to me
2 took place over what period of time?
3 A. From the time we first saw the property, and I
4 don't have the date for that but it was in August, the
5 first half of August, through until we closed on the
6 property at the end of September.
7 Q. The original offer you made on the Blanchard
8 property was on August 15, 2001?
9 A. Um-hum.
10 Q. Do you recall in relation to that date when you
11 first looked at the property?
12 A. It would have been within the previous I believe
13 two weeks or so.
14 Q. So these discussions you've described for me
15 now -- well, the closing was what, at the end of September?
16 A. Yes.
17 Q. So roughly a two-month period?
18 A. Right.
19 Q. And over that two-month period, can you give me an
20 estimate of how many times you had discussions with Lou Rae
21 Kagel?
22 A. I don't recall.
23 Q. Well, the first time you went was for an open
24 house, true?
25 A. Yes.
35
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Do you have an estimate of how many times you went
2 to the house after that open house but before the close of
3 escrow?
4 A. I'd be guessing, but my guess is -- I was staying
5 in the hotel in Los Gatos, so it wasn't too far away, but I
6 was working full time. I was also out of town -- I was out
7 of the country for a number of days during this period. I
8 went back to London for a week. I went to Hawaii for
9 several days. So if I take the entire two-month period, I
10 was gone for about a week and a half of that period out of
11 the country. For the rest of the period I was looking at
12 other homes, especially that first two weeks while my wife
13 was visiting.
14 So I would say after my wife -- or after I
15 returned from London, which was in late August, up until
16 the closing, I probably saw the property maybe every third
17 day or so. Just -- in some cases no one was there. It
18 would be late and it would be after work and I'd just walk
19 around the back just to see what it looked like, maybe look
20 in a few windows. Other times Lou Rae would be in and I'd
21 go in because it would be an open house and I'd take a look
22 around the property.
23 I recall my wife wanted me to get some
24 measurements of the windows once and so I measured some of
25 the windows for her, and asked me about wall space in a
36
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 couple of rooms to see if -- she was thinking about, you
2 know, placing furniture.
3 And I recall one time the seller was there instead
4 of Lou Rae, and actually this was with my wife there, also.
5 So one of the times we stopped by there sort of
6 unannounced, the seller was having an open house instead of
7 Lou Rae. So I don't know the exact numbers but it's in,
8 you know, that kind of range.
9 Q. It sounds like you went to at least three open
10 houses?
11 A. It would have been more than that probably. It
12 seemed like Lou Rae was there quite a lot, because I would
13 just drive by unannounced without setting up an
14 appointment, and without Douglas necessarily with me.
15 Douglas was there with me a few times. I would guess Lou
16 Rae was there maybe half a dozen times or thereabouts.
17 Q. So you think you went to half a dozen open houses
18 in which Lou Rae Kagel was there?
19 A. Well, I don't want to characterize them all as
20 open houses. One was a walk-through, so she was there for
21 a walk-through, I believe. So I'm not exactly sure what
22 the purpose was. You know, it may have been arranged by
23 Douglas for her to be there and it wasn't necessarily open
24 to the public. I don't know. I don't really recall.
25 Q. Okay.
37
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. But I'm just guessing somewhere around half a
2 dozen. I could be off on that.
3 Q. And then on one occasion you went to the property
4 and Lou Rae Kagel and the seller were there?
5 A. Yes.
6 Q. And by the seller, you mean Lynn O'Brien?
7 A. Yes.
8 Q. And on another occasion you went to the property
9 and Lynn O'Brien was there?
10 A. Yes.
11 Q. Any other occasions on which you met Lynn O'Brien
12 at the property?
13 A. No. Those were the only two that I met her.
14 Q. And on some of these occasions, Douglas Rea was
15 present, some he wasn't?
16 A. That's correct.
17 Q. Let me go through some of the stuff you said was
18 told to you by Lou Rae Kagel. You mentioned you picked up
19 her brochure and it had some information written on it?
20 A. Yes.
21 Q. And then you saw a flip chart and that had some
22 information written on it?
23 A. Yes.
24 Q. Those aren't discussions you had with Lou Rae
25 Kagel?
38
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Yes, they were.
2 Q. Did you go over the brochure with Lou Rae Kagel
3 kind of on a line-by-line basis to discuss the attributes
4 of the house?
5 A. No. She gave me the brochure though and she
6 discussed the attributes of the house non stop you might
7 say, to both myself and my wife.
8 Q. Did you ever have a discussion with Lou Rae Kagel
9 about the square footage of the house?
10 A. I don't recall.
11 Q. Did you ever have a discussion with Lou Rae Kagel
12 about the size of the lot?
13 A. I don't recall. I recall having those discussions
14 with Douglas Rea.
15 Q. Did you ever have any discussion with Lou Rae
16 Kagel about fiber optics?
17 A. I don't recall.
18 Q. What are fiber optics?
19 A. It's a communication cabling that uses light
20 instead of electricity, so it's much more secure and can't
21 be tapped like copper wiring, which is in the home, and
22 it's much faster, on the order of thousands of times
23 faster. So it's a way to provide future capabilities in a
24 home that would allow for video and audio over a computer
25 wire that is much faster than copper wire.
39
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. In looking at the house, to your understanding how
2 would one tell whether it does or doesn't have fiber
3 optics?
4 A. I don't know.
5 Q. To your understanding are there different switch
6 plates or anything like that that would signal a house has
7 fiber optics as opposed to some other cabling system?
8 A. I have not seen a switch plate for fiber optics,
9 so I would not have known.
10 Q. Were fiber optics of interest to you as an
11 attribute of the house at the time you looked at this
12 house?
13 A. Yes.
14 Q. For what reason?
15 A. Well, we're in Silicon Valley and obviously buying
16 a new home, I'd be in it for a number of years and this
17 would future-proof the home for any future technology that
18 comes along that requires higher band width; and the band
19 width of fiber optics I knew to be many, many times, in the
20 order of thousands of times faster than copper.
21 Q. At some point after you closed escrow, did you
22 discover that the house did not have fiber optics?
23 A. Yes, I did.
24 Q. How did you discover that?
25 A. I had a colleague come to my home who installed a
40
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 router in my home, which is a connection device to the
2 internet, and he had some test equipment that works on
3 electricity that he can test out which wires go to which
4 rooms, and he discovered that every wire in the house was
5 electrical copper wire, and he pointed that out to me.
6 Q. Who is that person?
7 A. His name is Steve Cunningham.
8 Q. Do you know what his employment is?
9 A. I believe he's still with Cisco.
10 Q. What kind of work does he do for Cisco?
11 A. I don't know his latest job. He's a personal
12 friend and he came over on the basis of being a personal
13 friend to help me out.
14 Q. Okay. I guess this is what I'm getting at. If I
15 came over to your house and said it doesn't have fiber
16 optics, I'd be talking through my hat.
17 How in your estimation does Steve know what he's
18 talking about?
19 A. He's a very technical person and that's why I
20 called him over, so he helped me configure my router, which
21 I didn't know how to do. I'm not that technical, but he's
22 very technical. In fact, the test equipment was his
23 personal test equipment, and he helps others in Cisco
24 connect up to the internet and connect up in fact directly
25 to Cisco; so that I have a direct connection, including IP
41
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 telephony and so forth, which means I can have a phone
2 service down to my home that goes through my office switch
3 and it's through data lines through DSL. All my long
4 distance calls, for instance, are free and so forth.
5 Q. Did you tell Mr. Cunningham that you had fiber
6 optics?
7 A. I asked him if I had fiber optics. I didn't tell
8 him I had it. I asked him.
9 Q. And at the time you asked him, did you have some
10 doubts about whether or not the house had fiber optics?
11 A. Yes, I did.
12 Q. And why did you have those doubts?
13 A. Because every wire I saw coming out of the wall
14 was copper wire and I didn't know if that meant it went to
15 fiber inside the wall somewhere, but I had my doubts.
16 Q. Okay. And when did you first notice that all the
17 wires coming out were copper wires?
18 A. I don't recall. I think it was in that period
19 before we closed on the house, though.
20 Q. Okay.
21 A. Because I mentioned this to Douglas Rea, that I
22 questioned that.
23 Q. And what was Mr. Rea's comment to you?
24 A. I don't recall.
25 Q. So let me try and nail down the fiber optics.
42
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 So at some point during the due diligence phase,
2 is that a fair characterization, you noticed that there
3 were copper wires coming out of the wall and you asked
4 Mr. Rea about that?
5 A. Um-hum.
6 Q. Correct?
7 A. Yes.
8 Q. Do you remember exactly what words you said to
9 Mr. Rea?
10 A. I don't recall, no.
11 Q. Can you paraphrase for me what you said to
12 Mr. Rea?
13 A. It was something to the effect of, you know, this
14 is advertised as having fiber optics and I don't see any
15 fiber optics; and I questioned him, do you know for sure if
16 fiber optics is installed, and I kind of doubt it, is what
17 I think I told him.
18 Q. Okay.
19 A. And he said no, he doesn't know. He didn't offer
20 to look into it. He didn't -- I don't recall him ever
21 coming back to me, verifying it either way.
22 Q. And you don't recall raising the issue of fiber
23 optics with Lynn O'Brien?
24 A. I don't recall that, no.
25 Q. And you don't recall raising the issue of fiber
43
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 optics with Lou Rae Kagel?
2 A. No.
3 Q. Have you ever met James O'Brien?
4 A. No.
5 Q. Have you ever talked to him?
6 A. No.
7 Q. Now, since you've configured your router with the
8 help of Mr. Cunningham, have you done anything to
9 investigate how you would install fiber optics in your
10 home?
11 A. No.
12 Q. Is there a reason why you haven't done that?
13 A. Because the cost -- I know that the cost of doing
14 so would be very prohibitive in a finished home. I'm not
15 an expert in fiber optics, but I do know that it's a much
16 more costly installation than wire, regular wire cable,
17 because you can only have bend radiuses of a certain amount
18 and you can't have a lot of pull on these kind of cables
19 because they're made of glass and you can break them very
20 easily.
21 And as you connect fiber together, you have to
22 have a specialist do this work. So it's quite a costly
23 thing and, you know, to put it into a home after it's
24 already built is -- I would call it very prohibitive.
25 Q. Did Mr. Cunningham tell you that the absence of
44
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 fiber optics would somehow lessen the performance of your
2 computer system and your router?
3 A. No.
4 Q. In your view does the absence of fiber optics
5 somehow impede your computer system or your router?
6 A. Not today. In the future very likely. But the
7 main thing is it reduces the value of the home.
8 Q. And why do you believe that?
9 A. Because, for instance, it was advertised on the
10 brochures and in the magazines and so forth as having fiber
11 optics. A home in Silicon Valley where there are a number
12 of high tech people, that's obviously a selling point; and
13 I've seen things on the internet which describe increasing
14 the value of your home at the time you build it.
15 Especially by putting in fiber optics will raise the value
16 of a home by many percent.
17 So it's a selling point. It future proofs your
18 home, or whatever capability comes in the future, we know
19 that networking is a very fast growing industry and band
20 width is growing rapidly and the needs for band width is
21 growing rapidly and fiber optics protects, you know, the
22 future that way.
23 It's also a more secure connection. It's not
24 influenced by electrical power surges and things like that,
25 so it's more reliable. So it's a much better connection
45
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 and that's why it was advertised, I'm sure. Otherwise, why
2 advertise fiber optics connectivity in the brochures?
3 Q. Do you have an opinion as to what difference fiber
4 optics would make in the value of your home at the time you
5 purchased it?
6 A. I was not sure. I don't know. But I felt that it
7 added value to the home, yes.
8 Q. Do you have an opinion in terms of the amount?
9 A. No, I don't know.
10 Q. Do you have an opinion today as to how the lack of
11 fiber optics affects the value of your home?
12 A. I don't know.
13 Q. Now, we went through a list of attributes when you
14 were looking at houses. Is it correct that fiber optics is
15 not one of the attributes you were looking for?
16 A. That's correct.
17 Q. It's something that was nice to have but wasn't a
18 significant feature to you?
19 A. It wasn't a required feature but it was definitely
20 nice to have.
21 Q. Prior to the time you closed escrow, did you have
22 any understanding as to how you could verify whether or not
23 there were fiber optics in the house?
24 A. I never had that discussion with anyone.
25 Q. As you sit here today, do you know how you would
46
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 verify whether or not there's fiber optics?
2 A. Yes, I know now, yes.
3 Q. And that would be you'd do whatever test
4 Mr. Cunningham did?
5 A. Yes.
6 Q. Let me get back to the discussions that you had
7 with Ms. Kagel. Did you discuss -- strike that.
8 You indicated that a pool was one of the
9 requirements you had in looking for a house, correct?
10 A. Yes.
11 Q. Did you discuss with Ms. Kagel what kind of pool
12 you envisioned?
13 A. I believe my wife did. I did not. Because I
14 remember her mentioning like a Jacuzzi and waterfall
15 features in a pool, but I don't know if they went into
16 details about what the design would look like.
17 I think my wife was -- had not made up her mind
18 yet on the exact design of the pool or anything like that.
19 Q. And you think your wife had this discussion, and
20 why do you think that?
21 A. Well, I was there when she had some of that
22 discussion. I remember her mentioning the waterfall and
23 seeing it from the family room. So the location that Lou
24 Rae pointed out, you know, was visible from the family room
25 looking straight out the rear glass doors.
47
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. And you think your wife may have also mentioned
2 something about a Jacuzzi but you're not sure?
3 A. I'm not sure about that.
4 Q. The pool you've installed, does it have a
5 waterfall feature?
6 A. Yes.
7 Q. And does it have a Jacuzzi feature?
8 A. Yes.
9 Q. Did you discuss with Ms. Kagel the size of the
10 pool you envisioned?
11 A. No, we did not.
12 Q. What size of a pool did you eventually put in
13 dimensions?
14 A. The dimensions? It's an odd dimension you might
15 say. There is a center rectangle with some half moons on
16 the end. The entire length is in the mid 40 feet range and
17 the width is low 20 feet, around 20 feet or 22 feet or
18 something like that at the widest section.
19 Q. And the discussion you had with -- about the pool
20 you had with Ms. Kagel, about there being a potential site
21 for a pool, correct?
22 A. Yes.
23 Q. And you also had that discussion with Lynn
24 O'Brien?
25 A. Yes.
48
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Who was present when you had the discussion with
2 Lynn O'Brien?
3 A. My wife and Lou Rae.
4 Q. Was Mr. Rea there, also?
5 A. I don't recall.
6 Q. Was the discussion you had when Ms. O'Brien was
7 there the first discussion you had with anybody about the
8 ability to put a pool on the Blanchard property?
9 A. No.
10 Q. You had previously had a discussion with Lou Rae
11 Kagel?
12 A. Yes.
13 Q. Is there a reason why you brought up this pool
14 issue with the seller?
15 A. My wife brought it up and that was when she asked
16 the question can we do both the pool and the
17 800-square-foot structure, and the answer that came back
18 was yes, and I was there. I don't recall whether it was
19 Lou Rae or Lynn that said yes, but whoever said yes, the
20 other person nodded vigorously in the affirmative.
21 Q. Okay.
22 A. And then we went out in the back yard, and the
23 reason my wife asked the question was she wasn't sure where
24 an 800-foot-structure would fit. If you put the pool where
25 it was described as the ideal location, that would be, you
49
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 know, a nice location for a structure that wouldn't block
2 windows and things like that, and that's when it was
3 described to me that we could put it in the right hand rear
4 of the property or in the very back left corner behind the
5 pool house.
6 Q. And who was the person who described to you that
7 you could put the 800-foot-structure on the right-hand side
8 of the property?
9 A. It was Lou Rae.
10 Q. And Ms. O'Brien was there at the time?
11 A. Yes.
12 Q. Did she have any suggestions on where the
13 800-foot-structure could be put?
14 A. I don't recall what she said.
15 Q. Was there any discussion about what was meant by
16 an 800-square-foot structure?
17 A. Yes.
18 Q. And who did you have those discussions with?
19 A. With Lou Rae.
20 Q. And that was in the presence of Ms. O'Brien?
21 A. I don't believe so. The use of the structure, I
22 had several conversations with Lou Rae, but that was not at
23 the time, I don't believe, with Lynn there.
24 Q. Now, have you put in an 800-foot structure?
25 A. I'm not allowed to.
50
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. So I take it then you haven't done that.
2 A. No.
3 Q. Have you made application to any government entity
4 to put in an 800-square-foot structure?
5 A. I was told I would not be allowed to, so it would
6 be useless to put, you know, anything in.
7 Q. At some point in the process, did you hire a
8 contractor to help you -- strike that.
9 At some point did you hire an architect or a
10 contractor to help you design and build a pool?
11 A. Yes.
12 Q. Who did you hire?
13 A. Swan Pools.
14 Q. Anybody else?
15 A. Well, we looked with a couple of other pool
16 companies and then we selected Swan Pools to actually do
17 the design and so forth. So we got quotes, you might say,
18 from two other companies.
19 Q. And when did you get a quote from Swan Pools?
20 A. I don't remember exactly when but it was in -- it
21 would have been late 2002 or early 2003. I believe it was
22 in late 2002 that we got the quote from Swan Pools.
23 Q. At the time you got the quote from Swan Pools, had
24 you already gotten quotes from other contractors?
25 A. We got all three of them around the same time, so
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 I don't remember exactly the time.
2 Q. When did you first start talking to contractors
3 about building a pool on the property?
4 A. It was a fairly long process, actually, so my wife
5 did all of this, so I didn't really speak much to them, six
6 to nine months before we got the quotes.
7 So in other words, she went to visit some of the
8 homes that they had built homes for -- I'm sorry, pools
9 for. So she wanted to see the type of work they did. She
10 got -- she talked over the phone to some of the people that
11 had pools built to see their satisfaction level and she
12 also spent some time going to look at different types of
13 tile, stone. I recall going to building supply places
14 looking at tile and stone a number of times.
15 So she was really heavily involved in the creative
16 design of the pool, including some of the features around
17 what types of heater and things like that would be
18 desirable and what type of surface to put inside. For
19 instance, a Pebble Tek is what we went with on the inside
20 of the pool.
21 So she did quite a bit of that type of work and
22 she enlisted my help in actually drawing it out. So she
23 did the final design of the Jacuzzi pool and the waterfall
24 feature and worked with Swan Pool at the end, but it was
25 our exact dimensions that we used, you know, in the final
52
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 construction of the pool.
2 Q. And after -- I assume you moved into the house
3 shortly after you closed escrow.
4 A. Yes.
5 Q. How long after you moved into the house did your
6 wife start investigating building the pool?
7 A. Probably within a few months.
8 Q. And then by the fall of 2002, you started getting
9 bids to build the pool?
10 A. Yes.
11 Q. And the contract you selected was Swan?
12 A. Yes.
13 Q. After you selected Swan, did they put together
14 drawings and plans for you?
15 A. Yes, they did.
16 Q. And I take it at some point you approved their
17 drawings and plans.
18 A. Yes.
19 Q. And after that were the drawings and plans
20 submitted to the City of Monte Sereno?
21 A. Yes.
22 Q. And is that when you discovered that there was a
23 problem?
24 A. Yes. It was quite a bit after that. It took
25 quite awhile after the submission of the plans before I
53
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 knew that there was a problem.
2 In other words, I authorized them to go forward.
3 I gave them an initial deposit so they could get started on
4 the work, and I don't recall how long but it was a month to
5 a month and a half later that I finally heard that there
6 was a problem in getting the building permit.
7 Q. Now, the plans that Swan did were for a pool with
8 a waterfall and Jacuzzi?
9 A. Yes.
10 Q. Did the plans also include an 800-square-foot
11 structure?
12 A. No.
13 Q. Is there a reason why they didn't?
14 A. Well, Swan only builds pools. They don't build
15 buildings.
16 Q. Did you investigate having someone design and
17 construct an 800-square-foot structure for you?
18 A. No.
19 Q. Is there a reason why not?
20 A. I wasn't in a hurry to do such a thing.
21 Q. As you sit here today, if you could put up an
22 800-square-foot structure, what would you envision that
23 structure to be?
24 A. Well, I would envision it to be similar to the
25 pool house we have. The pool house is a self-contained
54
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 apartment, you might say, which has a one-car garage, a
2 bedroom and a bath, a living room and a full kitchen, and
3 full meaning, you know, with a side-by-side refrigerator, a
4 microwave, a full range, dishwasher, slab granite
5 countertops. I mean it's fit and finish just like the main
6 house.
7 So I could envision -- and this pool house
8 including the pool is 900 square feet. So 800 could be
9 very similar, maybe without a kitchen. I don't know that
10 another kitchen is desirable, but I could then use it as
11 another spare bedroom and maybe an office, you know.
12 I recall having that conversation with Lou Rae
13 where she described this as the capabilities could be to
14 use it as a workshop, an artist studio. You could put in a
15 four-car garage and have a showroom and have antique cars,
16 which greatly interested my son. So there was a great deal
17 of discussion around what this additional structure could
18 be.
19 Q. Did you ever discuss with Lou Rae that you could
20 build an additional guest house structure like already
21 existed on the property?
22 A. It wasn't described as a guest house. She
23 described it as you could put in a spare bedroom, you could
24 put in an office. So she described a number of uses for
25 this structure.
55
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Now, before you closed escrow, did you talk to
2 anybody at the City of Monte Sereno in terms of what you
3 could put on the property?
4 A. No, I did not.
5 Q. Did you hire any consultants to find out what you
6 could put on the property?
7 A. No, I did not.
8 Q. Did you talk to any pool contractors in terms of
9 what kind of pool you could put on the property?
10 A. I did not.
11 Q. Now, up to the time that you approved the plans
12 with Swan, had you talked to anybody at the city?
13 A. I did not.
14 Q. Who was the person that made application to the
15 city to approve the plans for your pool?
16 A. Swan did.
17 Q. And who at Swan?
18 A. I don't know.
19 Q. Did you have a contact person at Swan?
20 A. I had a contact person, but I'm not sure if he's
21 the one that took it to the city.
22 Q. Who was your contact person at Swan?
23 A. Mike something. I don't recall his last name.
24 Q. Do you know where Swan Pools is located?
25 A. Yeah. I visited there, their office, but I don't
56
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 recall -- because I visited all three offices of these
2 companies that -- well, at least two of the three I can
3 recall going to, and so I don't recall the exact address of
4 Swan, but they're not too far from our house.
5 Q. Okay. So Los Gatos area?
6 A. Yeah, Los Gatos or -- it might have been Campbell
7 or somewhere within a few miles of our house.
8 Q. And at some point somebody from Swan Pools
9 reported back to you that there was an issue with the city
10 approving the plans?
11 A. Yes. I had to keep calling Swan to find out what
12 the delay was and they just said the city takes awhile
13 sometimes, and finally after bothering them maybe once a
14 week for a number of weeks they finally came back and said
15 we're having a problem with the building permit, and this
16 was maybe a month or a month and a half somewhere in that
17 range after they had already submitted the plans to the
18 city. So it took quite a while before they came back to me
19 and let me know that there was a problem. I think they may
20 have known before that, but I didn't know.
21 Q. When Swan Pools looked at your house, did they
22 indicate to you they thought there would be any problem in
23 getting the plans approved?
24 A. They didn't. Not that I know of, no.
25 Q. And he didn't mention any foreseeable problem with
57
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 too much impervious surface on your property?
2 A. No.
3 Q. And I take it that is what you found out was the
4 problem, was too much impervious surface on the property?
5 A. Yes.
6 Q. You were able to rectify that problem?
7 A. No. I was able to get a variance, you might say,
8 to that problem. It wasn't a true official variance, but I
9 negotiated with the city and they allowed me to put in the
10 pool in a way that -- in which I stayed over the impervious
11 structure limit but it gave me the ability to put in a
12 pool. So I had to negotiate with the city to do that.
13 Q. And is that something you personally did?
14 A. Yes.
15 Q. Do you remember who you met with at the city?
16 A. Yes. I met with Brian Leventhal. I'm not sure of
17 the spelling of that, but he is the -- he was described to
18 me -- I don't know his exact title in the city, but the
19 city is very small. I mean there's only a few people
20 there.
21 But he was described to me as the only person that
22 makes these kind of decisions at the city, and so I talked
23 to him over the phone. I talked to a couple of other
24 people at the city over a few days. But I was told I had
25 to come in and I had to meet with Brian in order to
58
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 understand what the options could be and there was nobody
2 else that was going to make that decision.
3 Q. And when you met with Brian Leventhal, did he
4 explain to you what the options might be?
5 A. Yes. But first he explained what the problem was.
6 Q. Okay. Why don't we start with that. What did
7 he -- this was on a phone conversation?
8 A. On the phone conversation, yes.
9 Q. And what did he tell you was the problem?
10 A. He told me that the problem was I was already over
11 the limits that were for impervious structure.
12 I had never heard the term "impervious structure"
13 to my knowledge at this point, so I didn't know what he was
14 talking about. Well, I can understand what impervious
15 structure means. I mean rain doesn't go through it and so
16 forth, but I didn't know exactly what would be included in
17 an impervious structure.
18 But he told me that I was already over the limit,
19 so in order to put in a pool or anything else that was
20 impervious, I would have to remove an equivalent amount of
21 hardscape.
22 And so -- and he said so in order to discuss this,
23 come out, we'll discuss it and I'll show you why, you know,
24 your application is being denied.
25 Q. Now, over the phone did Mr. Leventhal tell you how
59
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 he was able to make these calculations?
2 A. No.
3 Q. Did he tell you what documents he was looking at
4 which allowed him to make these calculations?
5 A. Well, he told me he was basing his -- he didn't
6 say it this way, but when I went there it was clear he was
7 basing it on the measurements given to him by Swan Pools.
8 Q. Okay. Well, why don't we move on to that.
9 You had a meeting with Brian Leventhal?
10 A. Yes.
11 Q. More than one or just the one?
12 A. I talked to him on the phone first and then I had
13 I believe just one in-person meeting with him.
14 Q. Can you describe for me what was discussed between
15 you and Mr. Leventhal at that meeting?
16 A. Okay. He first described -- he showed -- I recall
17 he showed me the map that Swan Pools had given him, which
18 was the same map that I had, which was a map of the
19 property and it showed the impervious structures on the
20 property; and he showed me that I was roughly 900 square
21 feet over the impervious structure limit already.
22 So what he told me was in order to put the pool
23 that I want on this property, I would have to first remove
24 900 square feet of impervious structure and then for every
25 square foot that I want to add for a pool, I have to take
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 away another foot of impervious structure.
2 The original plans we had was for over -- I don't
3 recall the exact amount but it was over 2,000 square feet
4 of impervious structure with the pool and the decking
5 around it, or the patio space around the pool, and so what
6 that meant was I was going to have to remove close to 3,000
7 square feet of impervious structure.
8 And so we discussed it a little bit and he quickly
9 told me that one of my options was to use cobblestone or
10 paver stones instead of solid concrete and he said paver
11 stones count as 50 percent of the impervious structure
12 instead of concrete. So for instance, the patio space that
13 I had envisioned around the pool which I was going to use a
14 combination of stone and concrete, he said if I used
15 cobblestone, that would count at half the amount.
16 And I said okay, that's one way to save some of
17 the space that's, you know, required for the pool; and he
18 said and also if you want to replace some of your patio
19 space or driveway with cobblestones, then you can do that.
20 So I looked at the amount of space that was --
21 would have been required and it would still have been very
22 difficult to install the pool as we had designed it. Even
23 including, you know, taking out the entire driveway,
24 including the turnaround in front of the house, I was still
25 short.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 And at this point I recall I took with me some of
2 the marketing brochures that Lou Rae had given me and said,
3 look, when I bought the property it was described to me as
4 being able to build a pool; and he just laughed at that and
5 said, well, you know, I'm sorry you're in this mess but
6 this is -- this is not -- you know, not the city's problem,
7 you know, so this is what it requires.
8 But he did, I could tell, feel sorry for me about
9 this and at some point said, okay, you're roughly,
10 whatever, 900 square feet over the limit. If you can
11 remove enough square footage of hardscape, replace it with
12 paver stone and stay no more than 900 square feet over the
13 limit, then I'll allow you to do that so you're not any
14 worse off than where you are today.
15 And so I did some calculations right there in his
16 office and said, okay, that means if I get rid of the
17 driveway and the turnaround in front of the home and
18 replace it with cobblestone, that's about the size of the
19 pool and the decking; if I use cobblestone for the decking,
20 also, that will that all work.
21 And he said yes, it will. And he said write that
22 up in a letter and if the numbers work out, he said, I will
23 approve that.
24 Q. Okay.
25 A. And so that's what I did.
62
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Okay. You sent him a letter saying here's what I
2 propose to do and then the city approved the pool?
3 A. Yes. And before I sent the letter, I did talk to
4 Swan Pools and we described what our options were. We did
5 look at, for instance, instead of replacing the driveway
6 and the turnaround, replacing the patio space. The patio
7 space was not enough. There was less patio space than the
8 driveway space.
9 And the patio space would have been more of a
10 problem, also, because the configuration of our house being
11 a U in the back, to remove that patio space -- there's a
12 second level stairway for a higher elevation, you know,
13 coming right out of the house all the way along the back
14 and then it steps down to the main part of the patio; and
15 so that's not conducive, you know, to putting in
16 cobblestone. Plus, you'd have to cut concrete and those
17 kind of things.
18 In addition, we did look at this but it wasn't
19 enough square footage. Some of the patio space was under a
20 roof and that, even if you remove the concrete, doesn't
21 help because the roof counts as impervious structure.
22 So we were down to very obviously the only thing
23 we could do was remove the driveway and the turnaround
24 space.
25 Q. Okay. And you spent some additional money doing
63
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 that, correct?
2 A. Yes.
3 Q. Okay. What was the surface that you originally
4 had envisioned for the pool decking?
5 A. I had envisioned a colored concrete with some
6 stone, a mixture of stone, you know, around the edging and
7 a few other places with colored concrete.
8 Q. And instead you had now cobblestone set on sand?
9 A. Yes.
10 Q. Is in your mind that a superior or inferior
11 finish?
12 A. Inferior.
13 Q. In what sense?
14 A. Well, from an esthetic point of view we don't
15 think it looks as nice, and from a functional point of
16 view, you know, you have chairs and lounge chairs and
17 things like that and, you know, it's a bit uneven when the
18 legs go into these crevices between the cobblestones.
19 And I have a maintenance issue. I've got to pull
20 out weeds between these things every once in a while.
21 Q. Could you use a surface other than cobblestone,
22 for instance, slate on sand or something like that?
23 A. That was not offered to me as an opportunity to do
24 that, no. I didn't ask, but Brian Leventhal only offered
25 the option of using pavers or cobblestones.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. And how long was your application process delayed
2 while you worked this out with Mr. Leventhal?
3 A. Well, with Mr. Leventhal I'm not sure how much it
4 was delayed before I got involved. But from the time I
5 first called Mr. Leventhal until I got an approval, it was
6 probably a couple of months.
7 Q. Okay. And when did the construction actually
8 start on the pool?
9 A. Much later. I got approval in May, I believe, and
10 so this would have been May of 2003. I wasn't sure what to
11 do next because the cost of the driveway replacement ended
12 up being much more than the cost of the pool. So my wife
13 and I had many discussions around, well, you know, we
14 hadn't envisioned paying this much money just to put in a
15 pool, and so that's when I negotiated with Coldwell Banker.
16 Ryan Iwanaga was the manager at Coldwell Banker that I
17 negotiated with to try to get them to pay for this driveway
18 replacement.
19 When that fell through, I then contacted my
20 current attorney, the company, anyway, and they were unable
21 to get agreement on having this paid for.
22 So at some point I decided to go ahead and do it
23 anyway, and this would have been in late 2003. But in
24 order to do it -- and the reason I did this was there was a
25 time limit on this approval for the pool and I knew if I
65
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 let the time limit expire -- which I believe was one year
2 but I don't recall exactly. But if I let this expire, my
3 thought was I wouldn't get this concession from the city
4 again in order to allow me to stay 900 square feet over the
5 limit.
6 And so I decided I'd go ahead and do this because
7 it was obvious we weren't going to come to any kind of
8 immediate resolution. So I went ahead and hired a company
9 to put in the driveway. They put this in in late 2003 and
10 early 2004. It took awhile to put that in. I believe they
11 finished in January and as soon as it was finished, then we
12 had the pool construction start.
13 Q. So I take it you could have gone forward with the
14 construction at any time after May of 2002 but were delayed
15 for the reasons you've just described to me.
16 A. Well, yes. And also after discussing this with
17 Swan Pools, they let me know that they had several other --
18 up until March they could have installed the pool in a
19 fairly short amount of time and we could have used it that
20 summer, including that spring and summer. But they let me
21 know as we dragged into May that they had a number of other
22 pools that they were building and ours would not be built
23 until the fall time.
24 And so having a pool built in the fall and just
25 watching it until the following spring, I wasn't in a hurry
66
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 to have it done right then. So we had it built over the
2 following winter so that it was available the following
3 spring.
4 Q. Well, how much time elapsed between the time you
5 first learned there was an issue with the city and your
6 meeting with Mr. Leventhal?
7 A. It was within two weeks and that was because I had
8 to wait -- I had to discuss this with a number of other
9 people in the city, at least two that I recall, and
10 Mr. Leventhal was not available when I first called and we
11 had to set up a meeting in which we were both available.
12 So it took a total of about two weeks. I believe that he
13 was not available that first week and I talked to a Howard
14 Bell at the city who was an inspector with the city, and I
15 talked to another individual who I don't recall her name
16 but she worked in the city office.
17 Q. The quote from Swan Pools that you accepted, do
18 you remember how much it was for?
19 A. It was in the $50,000 range.
20 Q. And did their work also include doing the decking
21 that you had contemplated?
22 A. No.
23 Q. That was to be done by another contractor?
24 A. Yes.
25 Q. And what contractor was that?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. That was the contractor that put in our driveway.
2 This is West Bay Landscaping.
3 Q. Did you get a quote from them to do the cement
4 decking around the pool?
5 A. No, no.
6 Q. Do you know how much it would have cost to put in
7 the cement decking around the pool that you had originally
8 envisioned?
9 A. No, I don't know.
10 Q. Do you know if it was more or less than the
11 cobblestone you eventually ended up with?
12 A. I don't know. That was not an option at the time
13 I went to West Bay, so I didn't even try to get a quote for
14 that.
15 Q. At the time you made application to the city, you
16 didn't know what it was going to cost to put in the cement
17 decking around the pool?
18 A. Well, I had an idea because we had called a few --
19 you know, a few companies. So we knew roughly what cement
20 would cost, but we didn't know what the stone would cost.
21 Q. Okay.
22 A. And I knew that would add to the cost of this, so
23 I had envisioned it would be greater than the cost of the
24 cobblestone but I didn't know how much.
25 Q. Now, at the time you went to the city, is it
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 correct that you had already seen plans that had been given
2 to you by the O'Briens, plans for the house?
3 A. Yes.
4 Q. And did those plans include a swimming pool?
5 A. I don't think so, no.
6 Q. Do you still have those plans, by the way?
7 A. Yes.
8 Q. Did you have any discussions with anybody about
9 the O'Briens or Stonehenge originally contemplating the
10 installation of a pool?
11 A. Yes.
12 Q. And who did you have those discussions with?
13 A. With Lou Rae.
14 Q. And that was what you told me before, is that they
15 decided to allow the seller to select whatever pool they
16 wanted to put in?
17 A. Yes.
18 Q. Did you ever learn that the O'Briens made
19 application to the city for a pool?
20 A. No.
21 Q. Did you ever learn that the O'Briens made
22 application to the city and were turned down for a pool?
23 A. No, I did not learn that.
24 Q. Did you have any discussions with Mr. Leventhal
25 about that?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. No.
2 Q. Do you have any information that the O'Briens were
3 aware that the property was already over the limit for
4 impervious surfaces?
5 A. Not at the time.
6 Q. Have you subsequently discovered information?
7 A. Yes, I have.
8 Q. And what have you discovered?
9 A. I discovered that in looking back -- and this was
10 after all of this was all over and we went ahead and put in
11 the pool. I happened to look back at the house plans, and
12 the house plans are the large construction drawings,
13 multiple pages of blueprints, and those were left in my
14 home and I had seen them and quickly looked through them
15 before but, you know, I'm not a construction person so I
16 didn't pay a lot of attention to it.
17 But I happened to go back through it and I found
18 that on the front page, in fact, highlighted with
19 highlighter was a little block of words that said
20 impervious structure limit or maximum, and it gave a number
21 for the amount of square feet of impervious structure, and
22 then it said impervious structure actual and it had the
23 exact same number.
24 So what it was purporting was it had the same
25 amount of impervious structure as the maximum allowable,
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 and it was in fact highlighted on this drawing, on this
2 blueprint.
3 In addition, I then noticed there was a letter
4 that was stuck inside the blueprint that came from the
5 architect and the architect had this letter addressed to
6 Stonehenge, I believe, to Lynn O'Brien, saying that the
7 house was -- or the property was already at the maximum
8 impervious structure limit; and that was the first I had
9 noticed that letter, was inside that blueprint. It was a
10 regular size piece of paper stuck inside these large pieces
11 of blueprint paper.
12 Q. Do you have any belief that Lou Rae Kagel knew
13 that the house was already over the impervious surface
14 limitation at the time you purchased the property?
15 A. I do not know.
16 Q. And how about Douglas Rea? Do you have any
17 information that he knew the property was already over the
18 impervious surface limitation?
19 A. I do not know.
20 Q. We've been going for a little while. Why don't we
21 take a break.
22 A. Sounds good.
23 (Recess at 11:42 a.m.)
24 (Resume at 12:01 p.m.)
25 MR. KOSS: Okay. Back on the record.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. What was the surface of your driveway before you
2 replaced it?
3 A. It was mainly concrete and there was some paver
4 stones in it.
5 Q. And now it's all paver stones?
6 A. Yes.
7 Q. In your opinion is that more or less desirable
8 than the way the driveway was originally constructed?
9 A. I would say it was slightly more desirable.
10 Q. It looks nicer?
11 A. Yes.
12 Q. Do you have an opinion as to how the inability to
13 construct this 800-foot-structure would impact the value of
14 the property at the time you bought it?
15 A. Well, I knew that there would be value in this
16 property, in this additional 800 square foot. I remember
17 having a discussion with Douglas Rea around that, not
18 specifically around this additional property but around
19 value of homes and the square footage.
20 So for instance, in the Los Gatos Saratoga area I
21 know that there's limitations on the square footage that
22 you're allowed to build based on the size of the lot, and
23 he described to me that, you know, the homes that I was
24 looking for, which were, you know, the higher, you know,
25 square footage type of homes, they demanded a premium
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 because you also needed a larger lot, and there weren't as
2 many of those around.
3 And so being able to build a home that had a
4 greater size than -- you know, adding 800 square feet, for
5 instance, would dramatically increase the value of the home
6 because there's fewer homes of that type of size in the
7 area.
8 Q. Can you quantify that value for me? Do you have
9 an opinion?
10 A. My opinion at the time was based on what I was
11 looking at, you know, around the area, and the area said
12 homes were going for, you know, it looked like in the 700
13 to 1,000 square foot range. So I quantified this to mean
14 if I built this 800-square-foot structure, it may be worth
15 another $800,000.
16 Q. And did you have an expectation as to how much you
17 would spend to build the structure?
18 A. I didn't know what it would cost to build it, but
19 I knew it would be a lot less than that. I mean
20 construction cost of something like this, that I was
21 expecting in the 100, $150 a foot range.
22 Q. So you expected that building this 800-square-foot
23 structure would increase the value by in excess of 20
24 percent?
25 A. Yes.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Do you have any plans to move from your present
2 home?
3 A. Yes.
4 Q. What are your plans?
5 A. I'm planning on building a new home and so I
6 bought -- I bought some property on an empty lot and I'm in
7 the process of designing that home now.
8 Q. And when do you think you'll start construction on
9 that new home?
10 A. Well, we haven't submitted anything to the city
11 yet, so I'm told that it may take up to a year to get
12 building approval. So we probably won't start construction
13 for a year or so.
14 Q. Where is the lot?
15 A. It's in Los Gatos.
16 Q. Have you hired an architect?
17 A. Yes.
18 Q. Who have you hired?
19 A. Craftsman Skilled.
20 Q. And is there a reason why you've decided to buy a
21 lot and build a home?
22 A. Well, the homes we've bought previously have all
23 been completed homes, most of them new, and we felt, you
24 know, it would be nice for once to build our own home, sort
25 of our dream home you might say, so we get to select
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 everything.
2 Q. Do you have at least preliminary drawings on what
3 you want to do?
4 A. Yes.
5 Q. Do you have finished drawings on what you want to
6 do?
7 A. No.
8 Q. And the preliminary drawings envision what size of
9 a house?
10 A. I'm envisioning over 8,000 square feet.
11 Q. Are there any auxiliary buildings envisioned?
12 A. Not right now. We may add that later, but
13 currently I'm only envisioning the main house.
14 Q. Do you envision installing a swimming pool?
15 A. Yes, I do.
16 Q. Do you envision installing a pool house?
17 A. That's open right now. We may or may not.
18 Q. As you sit here today, do you have some
19 expectation as to when your current house will go on the
20 market?
21 A. My expectation is maybe a couple of years from
22 now.
23 Q. Do you have an opinion as to how the lack of an
24 800-square-foot structure impacts the value of your house
25 today?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Today?
2 Q. Yes.
3 A. Well, it's much less desirable not having the
4 additional 800 square feet. You know, I mean 800 -- these
5 homes are looked at based on value -- or cost per square
6 foot. That's the way it was represented to me. So you
7 know, I would envision advertising 5,000 versus 5,800 would
8 have a pretty dramatic impact on the value of the home.
9 Q. Do you have an opinion as to what that dramatic
10 value would be in terms of dollars and cents?
11 A. Proportional to the current size, so 800 over
12 5,000 is the additional amount that I would expect.
13 Q. And I take it you would subtract from that the
14 amount it would cost to build the structure?
15 A. Yes.
16 Q. And it's correct, is it not, that you've never
17 gone to the effort to design any type of 800-foot structure
18 and that's because you were told about a year after you
19 bought the property that you couldn't do that?
20 A. That's correct.
21 Q. Have you ever investigated seeking some kind of
22 variance from the city from the impervious limit
23 requirements in order to build an 800-square-foot
24 structure?
25 A. Yes, I did.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. And what did you do to do that?
2 A. That was the day I talked to Brian Leventhal. I
3 asked him first could I get a variance, to which he laughed
4 at me and said you can always apply for that but it's not
5 going to happen.
6 Q. And did he say why it would not happen?
7 A. He said we just don't -- he said nowadays we're
8 not giving variances for this. So he said you can apply,
9 you can pay the money, but you'll be rejected.
10 Q. Did you show Mr. Leventhal the flier that said
11 something about being able to build a structure?
12 A. Yes, I did.
13 Q. And that didn't seem to have an impact on him?
14 A. Oh, it did have an impact on him.
15 Q. And that's why you think he let you slide, if you
16 will, on the amount of impervious surface when you came
17 around to building your pool?
18 A. That's my belief. I don't have any -- he didn't
19 say that, but he saw those things and we discussed it and
20 he made some comment about overzealous salespeople, real
21 estate people, and then he came up with the idea that I
22 could stay 900 square feet over the limit as long as I
23 reduced foot for foot what I wanted to put in for the pool.
24 Q. And you currently have how many square feet of
25 impervious decking?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Currently?
2 Q. Yes.
3 A. I don't know exactly. What I recall before we put
4 in the pool was the driveway was roughly 3,000 square feet
5 and the impervious decking, including sidewalks and
6 everything else, was around 2,400 square feet, if I recall
7 correctly; and so it wasn't quite enough but some of that
8 2,400 square feet I could not remove anyways because it was
9 under a roof so that didn't count, and some of it was
10 elevated so that you could walk out the door and walk onto
11 an elevated platform, and it was just not convenient
12 because it went right in the center of a U-shaped house in
13 the back.
14 So the total amount that I could really
15 effectively reduce would have been, you know, much less
16 than the 2,400. I don't know exactly how much.
17 Q. Do you have any understanding as to why the city
18 would have approved the original construction if it was 900
19 square feet over the impervious limit?
20 A. Yes. Brian told me that they would not have
21 approved it and he said that it's obvious to him that the
22 seller installed some additional impervious structure after
23 the approvals, to the property.
24 Q. Have you determined what that was?
25 A. No, no. But I have a hunch but I don't know for
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 sure.
2 Q. What's your hunch?
3 A. My hunch is that circular driveway in front of the
4 home I think is probably close to that 900 square feet and
5 maybe they added that, and I recall in earlier conversation
6 I believe with Lou Rae, it may have been with Lynn though,
7 who told me that they decided to add the circular driveway
8 later. So things kind of clicked for me to think that that
9 could be how they got the 900 square feet over.
10 Q. Have you ever looked at the plans to see whether
11 or not the driveway that's built is the way it's configured
12 on the plans?
13 A. I looked at it but I don't really recall today. I
14 believe it has the circular driveway on the plans, but I'm
15 not positive about that.
16 Q. Have you ever proposed to the city removing 1600
17 square feet of the impervious deck, inquiring whether or
18 not that would allow you to build an 800-square-foot
19 structure?
20 A. I did not ask them that, no. I'm not sure I would
21 have 1600 square feet to remove, frankly.
22 Q. Well, you indicated you had 2400 square feet of
23 deck.
24 A. Right. Some of that is under roof, in front of
25 the pool house, a large portion of it. So the total amount
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 I would really have to remove, I don't know how much it is
2 but it's much less than the 2400.
3 Q. Well, it sounds like if you could do that and get
4 approval, that would be economically viable, correct?
5 A. It's possible. It would also require, though,
6 another concession from the city because I'm currently
7 still 900 feet over the impervious structure limit.
8 Q. Correct. Do you have any reason to believe that
9 Lou Rae Kagel knew there was an issue with impervious
10 surface at the time she was discussing with you the
11 possibility of building a pool?
12 A. I do not know.
13 Q. Let me go over some ground that I'm not sure that
14 I covered and if I did I apologize.
15 Did you have discussions with Douglas Rea about
16 the possibility of putting a pool on the property?
17 A. Yes, I did.
18 Q. How many discussions did you have with Mr. Rea
19 about that?
20 A. I don't know. Several.
21 Q. Were they between you and Mr. Rea or were other
22 people present?
23 A. My wife was present at some of them.
24 Q. Anybody else?
25 A. Yes. My daughter, my son, Lou Rae.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Why don't you tell me what Mr. Rea told you about
2 the possibility of building a pool.
3 A. Well, he -- we basically described that yes, this
4 would be a nice place to build it, and he agreed and
5 thought that, you know, the location pointed out by Lou Rae
6 looked like a good place to build a pool; and my wife
7 described the kind of pool she had envisioned and he
8 thought that sounded great for this type of home.
9 So it was not so much can we build it. It was
10 here's the type of pool that we had envisioned and we could
11 envision living there in the back yard and taking advantage
12 of the pool.
13 Q. So I take it Mr. Rea did not express to you an
14 opinion about the feasibility of constructing a pool in
15 your selected location.
16 A. I would say his discussion with both my wife and I
17 led us to also believe that we could build a pool. He told
18 us we should go design that pool.
19 Q. Is there a reason why you didn't seek out someone
20 like Swan Pool before the close of escrow to determine
21 whether or not you could actually build a pool on the site?
22 A. Yes. First of all, you know, I didn't know which
23 pool company to go to. My wife was living in London at the
24 time and she was the one that did all of this work and
25 research and I knew she was the one that would want to do
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 this; and I was quite busy starting a new job back in the
2 U.S.
3 My son started high school, his final year of high
4 school, at the end of August, so before we moved into the
5 home, and so I had to move my son, you know, to the U.S.
6 from London. We were both living in a hotel there in Los
7 Gatos. He started school and so while I was working, and I
8 worked long hours, I would then meet up with my son after
9 school and after work and we'd have dinner. We'd have to
10 go out to dinner all meals because we were staying in a
11 hotel.
12 So we were very busy, you might say, getting him
13 enrolled in school, buying cars. We were just coming back
14 from Europe. We didn't have cars, so I had to buy three
15 cars right away.
16 And we did other types of research like what kind
17 of window coverings, you know, what size of windows. I
18 recall those kinds of things, and I didn't have to worry
19 about a pool at the time. I knew after we moved into the
20 house, then my wife would work on starting to design the
21 pool and hire the company.
22 Q. Well, it's correct, is it not, that the
23 representations about the ability to build a pool were in
24 fact accurate representations; your difficulty was with the
25 added cost that you had to incur?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. No, they were not accurate representations. If I
2 did not negotiate the deal with the city, I would not have
3 been able to put the pool in the house in that property at
4 all, and in order to do it I had to destroy a part of my
5 property.
6 So I didn't buy a brand new home thinking I would
7 have to destroy a part of the property to put in the pool.
8 Q. Well, the part of the property you've destroyed
9 was the driveway, which you've now said is slightly better
10 than it used to be.
11 A. Yes.
12 Q. And nobody told you how much you could -- it would
13 cost you to install a pool, correct?
14 A. No.
15 Q. Nobody told you what kind of permitting process
16 you might need to go through to get a pool installed?
17 A. No.
18 MR. KOSS: I want to go through some documents
19 that mostly you've produced in this case.
20 Let me go off the record a second.
21 (Discussion held off the record.)
22 MR. KOSS: Okay. Back on the record.
23 I think what we've decided to do is mark
24 Deposition Exhibits 1, 2, et cetera, sequentially, and with
25 that in mind let me show you what we'll mark for
83
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 identification as Deposition Exhibit 1.
2 (Whereupon, the document described
3 below was marked Exhibit No. 1 for
4 identification.)
5 BY MR. KOSS:
6 Q. Showing you Exhibit 1, do you recognize this
7 document?
8 A. Yes, I do.
9 Q. Is this the original offer you made on the
10 Blanchard Drive property?
11 A. Yes.
12 Q. Other than initials -- well, let me ask you, are
13 the initials and the signature on the second to the last
14 page your initials and signature?
15 A. Let me look through all these. Yes, they are.
16 Q. At the time you made this offer, had you already
17 made an offer on the Saratoga property?
18 A. Yes, I had.
19 Q. And had your offer already -- you had already gone
20 through that counter, counteroffer I think we talked about?
21 A. Yes.
22 Q. So you knew you weren't going to get that
23 property?
24 A. That's right.
25 Q. Is it correct that the Saratoga property was your
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 first choice?
2 A. Yes.
3 Q. And the Blanchard property I take it was your
4 second choice?
5 A. Yes.
6 Q. Did you have a third choice?
7 A. Yes.
8 Q. And you never made an offer on the third choice
9 because your offer was accepted on your second choice?
10 A. Right.
11 Q. At the time you made the offer here of $3 million,
12 what was your understanding was the listing price of the
13 property?
14 A. I recall it being 3.9 million.
15 Q. Who determined the offer of $3 million? Who
16 determined that?
17 A. My wife and I.
18 Q. Did you talk to Mr. Rea about that?
19 A. Yes.
20 Q. Will you describe those discussions for me.
21 A. Well, there wasn't a long discussion around it.
22 He said he thought that was a bit of a low offer but he was
23 happy to take forward any offer to see, you know, how
24 flexible the seller was.
25 So I determined to make it 3 million to bring it
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 out of the 2 million range and to see -- you know, to see
2 how serious the seller was in selling the property.
3 Q. Now, you had originally offered 3.4 on the
4 Saratoga property.
5 A. Right.
6 Q. Did you think that the Blanchard property was
7 worth $400,000 less than the Saratoga property?
8 A. No, I didn't think it was 400,000 less, but I
9 thought it was a few hundred thousand less.
10 Q. So this would give you some negotiating room?
11 A. Yes.
12 Q. And that was indeed your thought process at the
13 time?
14 A. Yes.
15 Q. Did you read through this document which we've now
16 marked as Exhibit 1 prior to the time you signed it?
17 A. No.
18 Q. Is there a reason why you didn't?
19 A. I just looked at the main titles and I recall
20 Douglas describing what each paragraph meant, and so based
21 on that I went ahead and signed it.
22 Q. Okay. Mr. Rea went through each of the paragraphs
23 in general with you and described what they meant?
24 A. Yes.
25 Q. How much time did you spend going over this
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 document with Mr. Rea before you actually signed it?
2 A. I don't know. Not very long.
3 Q. Directing your attention to paragraph 10, do you
4 recall seeing that language in bold within paragraph 10
5 that talks about the buyer has a duty to inspect the
6 property thoroughly for its present or planned use?
7 A. Yes.
8 Q. Do you recall seeing that at the time you signed
9 and initialed this document?
10 A. Yes.
11 Q. Did you have any discussions with Mr. Rea about
12 what those inspections might encompass?
13 A. We had -- yes, we did.
14 Q. Okay. Can you describe what you discussed in that
15 regard?
16 A. His recommendation was that I hire a separate
17 company to go through thoroughly the house to inspect the
18 roof, the foundation and the structure itself, and said
19 that, you know, we could have that in as part of the
20 conditions, you know, before we close.
21 And I see that he did write that in here
22 somewhere. Item 21 says, "Builder to provide a one-year
23 builders warranty, including a six-month walk-through and
24 miscellaneous repairs." No, that wasn't it.
25 In any case I recall him mentioning something
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 about having somebody inspect the property, and at the end
2 he arranged for that to happen, so we had somebody do a
3 termite and inspection type of report for me.
4 Q. So in essence you followed Mr. Rea's
5 recommendation?
6 A. Yes.
7 Q. Did that recommendation include hiring an expert
8 to determine exactly what kind of pool and/or
9 800-square-foot structure you could put on the property?
10 A. No.
11 Q. Did you consider hiring an expert to help you
12 determine exactly what those potential uses might be?
13 A. No.
14 Q. Is there a reason why you didn't do that?
15 A. I didn't think it was necessary. For instance, I
16 looked around the neighborhood and saw that of the five
17 adjoining properties to this property, all five had a pool.
18 All five were smaller than my property. So I didn't have a
19 reason to question that I could put a pool on my property.
20 Q. At some point prior to close of escrow, did you
21 get a key to the property?
22 A. No.
23 Q. Did you ever go visit the property by yourself?
24 A. Yes, but I didn't enter it unless Lou Rae was
25 there or somebody was there to let me in, because it was
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 always locked up.
2 Q. Paragraph 19 talked about a close of escrow of
3 September 19, '01.
4 A. Yes.
5 Q. How was that date determined?
6 A. Douglas Rea suggested that day saying that he
7 thought it would be impressive to have a quick close, and
8 that was relatively quick, but still allow time for me to
9 get all the necessary things done, like arranging for a
10 loan and getting insurance and things like that.
11 Q. In substance did Mr. Rea tell you that if you're
12 going to make a low offer, you need to offer favorable
13 terms?
14 A. Yes.
15 Q. And one favorable term would be a quick close?
16 A. Yes.
17 Q. Had you done any investigation to see how
18 motivated this seller was prior to the time you submitted
19 this offer?
20 A. No.
21 Q. Directing your attention to the next page, up at
22 the top there's a box that's checked "As-Is Addendum."
23 A. Yes.
24 Q. Did you have a discussion with Mr. Rea about what
25 that meant?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Yes.
2 Q. What did he tell you?
3 A. He warned me that I was giving up some of my
4 rights by doing that, but also this would show a fast close
5 and would be one of those things that could have offset a
6 low price, and so we had that discussion.
7 Also, this was a brand new home, so I was not very
8 concerned about an as-is offer for a brand new home, which
9 I knew had to go through a very stringent building process
10 with the City of Monte Sereno, and in fact that was part of
11 the desirability of this property.
12 Like I said, most of the homes I had bought
13 previously were brand new homes, because I did not want to
14 spend a lot of time worrying about and, you know, fixing up
15 things. So I thought an as-is was really a very low risk
16 thing since everything was brand new.
17 Q. Had you ever purchased any other properties an on
18 as-is basis?
19 A. Not that I recall.
20 Q. Did you discuss with Mr. Rea page 6 of this
21 document?
22 A. I don't recall. But we discussed most of the
23 things in the document, so I would imagine we did.
24 Q. Specifically paragraph B talks about square
25 footage being approximate and not verified.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Yes.
2 Q. Do you remember having a discussion with Mr. Rea
3 about that at the time you made this offer?
4 A. No.
5 Q. Do you recall Mr. Rea ever suggesting to you that,
6 look, if you have questions about the size of the property,
7 the lot size, you should have them measured?
8 A. Not the lot size. He went to the city, or went to
9 somewhere to get what was listed by the city as the square
10 footage of the lot and he sent that to me representing that
11 to be the size of the lot, and he said that you can be
12 assured of. This is the size of the lot.
13 But as far as the house itself goes, we did have a
14 discussion around what is the size of this house.
15 Q. Let's focus on the lot for a second. I'm not sure
16 I've seen that document.
17 What did the document from the city or county,
18 whoever it was -- what did that say the lot size was?
19 A. It said -- it gave us a very specific number of
20 square feet and I calculated it to be .61 of an acre.
21 Q. And when did you get that document from Mr. Rea?
22 A. I don't recall.
23 Q. Was it before or after close of escrow?
24 A. Before.
25 Q. Did you have any discussions with anybody at the
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 time you got that document and made the calculation of .61
2 acres about the previous flip chart you had seen that had a
3 one-acre representation?
4 A. Yes.
5 Q. Who did you discuss that with?
6 A. With Mr. Rea.
7 Q. And what was the discussion?
8 A. The discussion was, you know, I can understand
9 two-thirds of an acre being a bit of sales fluff and it
10 actually being .61, but when I first went to see the house
11 I told him I saw this sign that said something beautiful
12 home, something like that on one acre, exclamation mark,
13 and I said that's a total misrepresentation; and he agreed,
14 and he said, yes, that shouldn't have been that way, but
15 here is the real size. So this is the size of the lot.
16 Q. And have you seen representations about the
17 property which say it's two-thirds of an acre?
18 A. Yes.
19 Q. And the only time you saw the one-acre
20 representation was on this flip chart?
21 A. Yes. But I saw that first. So when I first saw
22 the home the very first time, I remember seeing -- going in
23 the back yard. It said one acre, and I looked around and
24 it -- and I had seen other homes on varying size lots. I
25 remember my comment to Douglas at the time was this doesn't
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 seem like an acre to me, you know, and he said, well, don't
2 worry about that. I'll get the exact square footage for
3 you.
4 And it was some days later, I don't recall when,
5 but he gave me something from the county or city or
6 something that showed the exact square footage.
7 Q. When you saw that document, was it before or after
8 you made this offer which we've now marked as Exhibit 1?
9 A. I believe it was before.
10 Q. So at the time you made the offer, anyway, you
11 knew the actual size of the lot?
12 A. Yes.
13 Q. Have you ever discovered that the size of the lot
14 in that document you saw from the city was the wrong
15 number?
16 A. I'm not positive, because I've seen two different
17 numbers now.
18 Q. What other number is that you've seen?
19 A. I don't know the numbers. They were off by just a
20 couple hundred feet, so I'm not sure why that that was the
21 case.
22 Q. And I can't remember if you told me on that flip
23 chart -- it's in my notes, whether or not there was a
24 number on the flip chart about the size of the house.
25 A. I don't recall if it had something on the size of
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 the house. It may have, but I don't recall that.
2 Q. Do you remember getting a brochure that said 5300
3 square feet?
4 A. Yes.
5 Q. Did you ever discover that that number was not
6 accurate?
7 A. Yes.
8 Q. And how did you make that discovery?
9 A. Douglas told me.
10 Q. When did he tell you that?
11 A. I don't recall exactly when, but I remember the
12 discussion.
13 Q. Why don't you tell me the discussion.
14 A. Okay. Because the discussion -- and I believe
15 this was over the phone but, you know, I mean this is
16 several years ago so I don't recall exactly. But I
17 remember that when I first went to see the house, you know,
18 we got the brochure and it said 5300. I thought going into
19 the house -- before I walked in I thought it was bigger
20 than that, in fact. Okay. But then I saw the brochure.
21 So the first time I saw it, it was represented to be 5300.
22 And then Douglas called me, I believe, and told me
23 that the size is actually now 5100. And I said, well, this
24 is an incredibly shrinking house then. What happened?
25 And he said, well, it's just further refined
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 numbers, and then I represented to him, well, then the
2 house isn't worth as much as I'm paying for it.
3 And he said, no, Ralph, the house is the same
4 house that you and your wife love, so you should go through
5 with the purchase. And I said but, you know, it's not
6 worth as much.
7 And he said, well, look, let me do some research
8 for you; and he did some research and responded back via
9 e-mail on the results of how he calculated that I was
10 paying a fair value for the house in his estimation.
11 Q. Okay. Did you discover this discrepancy, this 200
12 square foot discrepancy, before or after you had submitted
13 your offer, Exhibit 1?
14 A. I believe it was after.
15 Q. Do you know if it was before or after you had
16 entered into a contract to purchase the property that you
17 discovered what was a 200-square-foot discrepancy?
18 A. I don't recall the exact timing of either of
19 those.
20 Q. Did you ask for any price concessions as a result
21 of this discrepancy?
22 A. No.
23 Q. Is there a reason why not?
24 A. No. I don't know.
25 Q. Is it correct that you satisfied yourself that
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 whether it was 5100 or 5300, you still felt you were
2 getting a good deal on the house?
3 A. I was questioning the deal at the time. You can
4 call it buyer's remorse, but I was questioning the whole
5 deal, and as a result -- and I let Douglas know this and as
6 a result, Douglas did this research that I described and
7 sent me a very long e-mail around the value of homes
8 selling in the area.
9 Q. At the time you discovered that the house was --
10 well, strike that.
11 Today what do you believe is the square footage of
12 the house?
13 A. 5,005.
14 Q. And how did you figure out the actual square
15 footage?
16 A. Well, I base it on a couple of things. One is I
17 got an appraisal that was done by the seller and that
18 appraisal said it was 5,005, and today you can look on a
19 web site called zillow.com and it represents the house to
20 be 5,005; and I had my own appraisal done and it said it
21 was 5,039 when I bought the property. So my guess is it's
22 somewhere between those numbers.
23 Q. Okay.
24 A. The appraisal that I got from the builder was done
25 sometime in June of 2001. So they knew as early as June
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 that the house was actually 5,005 square feet, even though
2 when I saw the home for the first time in August it was
3 represented to me to be 5300 square feet.
4 Q. And do you know where the 5300 number came from?
5 A. No, I do not.
6 Q. Do you know whether it was through intentional
7 misrepresentation or mistake or --
8 A. I don't know.
9 Q. At the time you discovered this discrepancy, did
10 you believe that if you wanted to, you could have walked
11 away from the deal?
12 A. No.
13 Q. Is there a reason why not?
14 A. Well, I thought the deal was signed, we had a
15 contract, and while I may have been able to I could also
16 have been sued to do that, and so I didn't feel it was
17 really just a walk-away type thing. I thought I could have
18 legitimately been sued if I walked away.
19 Q. Did you believe that because of paragraph B on
20 page 6 of the agreement that representations of square
21 footage were simply approximations?
22 A. Well, I knew they were approximations. However,
23 on a brand new home I also know that a builder knows
24 exactly how many square feet they built to within some
25 level of tolerance that I expected to be much less than 300
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 square feet.
2 Q. So some tolerance was okay, but 300 square feet
3 was outside of that tolerance?
4 A. Yes.
5 Q. Did you have an opinion at the time you first
6 learned of this as to how these 300 square feet affected
7 the value of the house?
8 A. Yes, I did.
9 Q. And what was your opinion?
10 A. My opinion was from Douglas Rea's e-mail that I
11 paid for 5300 and I was getting at the time he told me
12 5100, but he made a calculation based on 5,000,
13 interestingly enough, to show me that the value really was,
14 even if it was only 5,000 square feet, still a good deal.
15 And so I felt I paid, you know, a proportional
16 amount to that 5300, in other words, 300 over 5,000 extra
17 for the property.
18 Q. And you made a conscious decision not to ask for a
19 price concession based upon this inaccuracy?
20 A. Yes.
21 Q. Did you ever have the house professionally
22 measured prior to the time of close?
23 A. I had an appraisal done, yes, because we were
24 getting a loan on the house. So I had an appraisal done
25 prior to close and it was measured.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. I have two appraisals that you submitted.
2 A. Okay.
3 Q. I have one that's dated August of 2001 and I have
4 one that's dated September of 2002.
5 A. Okay.
6 Q. Did you refinance in September of 2002?
7 A. I believe so, yes.
8 Q. Do you still have the -- strike that.
9 You got an appraisal in 2001?
10 A. Yes.
11 Q. Do you still have a copy of that?
12 A. Isn't that the one you just mentioned, August of
13 2001? I closed in September of 2001, so that must be the
14 first appraisal I had done.
15 Q. Let me show it to you.
16 A. Okay.
17 MR. KOSS: Actually, why don't we take a lunch
18 break and I'll come back to these afterwards, and I'll tell
19 you my dilemma now is that the appraisal is dated August 2
20 of 2001, which would mean that you got it appraised before
21 you made an offer, which seems unlikely.
22 THE WITNESS: No. No. I would have expected it
23 to happen in September.
24 MR. KOSS: We'll look at these after lunch.
25 Otherwise, it will be 5:00 and we still will not have
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 eaten.
2 THE WITNESS: Okay.
3 (Recess at 12:44 p.m.)
4 (Resume at 1:56 p.m.)
5 (Whereupon, the documents described
6 below were marked Exhibits Nos. 2
7 and 3 for identification.)
8 MR. KOSS: Back on the record.
9 Q. Mr. Simpson, you understand you're still under
10 oath?
11 A. Yes.
12 Q. Okay. I've now handed you some documents we've
13 marked as Deposition Exhibits 2 and 3. Why don't we start
14 out with Exhibit 2.
15 Do you recognize this appraisal?
16 A. I think I do. I think it was done by the builder
17 and this was something given to me. Although I see what
18 you say, the date on it says August 2.
19 I thought this appraisal was done earlier than
20 that, but this was not -- I did not pay to have this
21 appraisal done.
22 Q. Do you know how you received a copy of the
23 appraisal we've marked as Exhibit 2?
24 A. I was given a copy. I don't remember who gave it
25 to me. It was probably either Lou Rae or Doug that gave me
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 this copy, but I don't remember.
2 Q. And do you remember when in the process you
3 received this document, Exhibit 2?
4 A. All I remember, it was very late in the process.
5 Q. By very late what do you mean?
6 A. I mean as we got close to closing.
7 Q. Do you believe you received this document before
8 or after you had entered into a contract to purchase the
9 Blanchard property?
10 A. After.
11 Q. Did you read the appraisal once you received it?
12 A. Yes.
13 Q. And did you note that it described the square
14 footage of the property as 4,305 square feet?
15 A. Yes.
16 Q. Did you also note that it described the side area
17 as being 26,406 square feet?
18 A. I believe so, yes.
19 Q. And those are both things that you knew before you
20 closed escrow, correct?
21 A. I believe so.
22 Q. And as we've discussed I think before -- I
23 apologize if I've already asked you this -- you did not
24 consider asking for a price reduction based upon the
25 discrepancies you are now seeing with respect to the square
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 footage of the house?
2 A. I didn't ask for a price reduction. I expressed a
3 concern that I'm being cheated out of some money, and as
4 I've described before, that's when I remember I had those
5 discussions with Doug, and the first time was when I was
6 told it was 5100 square feet instead of 53 and Douglas said
7 but the house hasn't changed. It's the same house. You
8 should go ahead and go forward with it.
9 And my response was, yes, it's the same house but
10 it's smaller than I thought. Therefore, it's not worth as
11 much. You know, I'm paying based on the square foot.
12 And that's when he went through the exercise that
13 I mentioned before where he did that analysis of, you know,
14 recently sold homes in the area and listed homes in the
15 area.
16 Q. Okay. Directing your attention to page 2, did you
17 see that this appraiser gave an opinion that the fair
18 market value of this property was $4,250,000?
19 A. Yes. In fact, I gave this appraisal to my
20 mortgage company because I thought maybe I could avoid the
21 cost of doing my own appraisal since this was fairly
22 recently done, and my mortgage company said, no, they're
23 going to have to do their own appraisal; and when they got
24 their appraisal back, they said they're going to note the
25 name of this individual and make sure he's black-listed
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 from ever doing appraisals for their company because it was
2 so outlandish an appraisal.
3 Q. Which lender told you this?
4 A. It was Chris -- let me think. No, it wasn't
5 Chris. It was someone else. I forget. I forget the name.
6 It's probably in some of the documentation I've already
7 sent to you though.
8 Q. Okay. Well, you applied for some financing in
9 August/September of 2001, correct, somewhere in that time
10 frame?
11 A. Right.
12 Q. And in connection with that, an appraisal was
13 done?
14 A. Yes.
15 Q. Did you see a copy of that appraisal?
16 A. Yes.
17 Q. Do you still have a copy of that appraisal?
18 A. I don't know.
19 Q. Do you recognize Exhibit 3?
20 A. This was done a year after I purchased the
21 property. This was when I had it reappraised for another
22 loan. So I don't know if I still have that first appraisal
23 that was done.
24 I recall it appraising at the purchase price.
25 Q. Surprise, surprise.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Right, which is normal I guess.
2 Q. Who did you get the loan from?
3 A. I don't recall.
4 Q. Did you have any discussions with Mr. Rea after
5 you had an appraisal done when you obtained financing that
6 was substantially less than the appraised amount indicated
7 in Exhibit 2?
8 A. No. I mean it was clear to me and to Mr. Rea that
9 this appraised amount didn't bear any resemblance to
10 reality, and in fact their asking price was 3.9. So
11 obviously, you know, it's not worth 4.25.
12 Q. At one point their asking price had been
13 $6.9 million, wasn't it?
14 A. Yes, it was. Or 6.5, I think. I'm not sure if it
15 was 6.9. It may have been 6.5.
16 Q. At the time you purchased the property, did you
17 have an opinion of the fair market value of the property?
18 A. Yes.
19 Q. What was that?
20 A. I thought it was worth maybe slightly less than I
21 was agreeing to pay for it.
22 Q. So you thought you were paying a premium for the
23 property?
24 A. I thought I was, yes.
25 Q. And why were you willing to pay a premium for the
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 property?
2 A. Well, I felt that I made the deal before 9/11
3 happened. 9/11 also dramatically changed the marketplace.
4 But I thought I had made the deal, so I was going to go
5 ahead and honor that deal.
6 Q. Well, maybe my question had some vague aspects to
7 it. At the time that you submitted the counteroffer for
8 $3,250,000, what did you think the fair market value was?
9 A. That's what I thought the fair market value was at
10 the time I made that offer, thinking that the house was
11 bigger, that I could build the additional square footage,
12 that I could put in a pool and that it had fiber optics.
13 And as I discovered some of those things I
14 couldn't do even before the close, I felt I was overpaying;
15 and then after 9/11 I definitely felt I was overpaying, but
16 I went ahead and closed anyway.
17 Q. Is there a reason why you didn't seize on issues
18 such as the square footage of the house and the square
19 footage of the lot and say, look, I've now discovered this
20 isn't what was represented to me; I don't want to buy it?
21 A. I made some representation like that to Douglas,
22 not that strongly but that I questioned the value, and
23 that's when I said Douglas, you know, tried to counter
24 those with some -- you know, some documentation of what the
25 previous home sold for and the like.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Okay. So in essence you raised those issues and
2 then based upon what Mr. Rea was telling you, you became
3 comfortable with the value you were paying?
4 A. No. I was never comfortable with the value I was
5 paying really, but I was moving to the U.S. from Europe.
6 My son was already starting school in Los Gatos. I didn't
7 want to go through this whole hassle again, and even if I
8 paid a little more, I was willing to do it just to avoid
9 the hassle of trying to find the next home and negotiate
10 and buy it.
11 My wife had already packed up our furniture back
12 in London. It was on a ship coming back. I wanted to go
13 ahead and move into a home and be done with it, and
14 frankly, I just -- I felt it was not worth the hassle of
15 fighting all that.
16 Q. Do you have an opinion as to what the value of the
17 house would have been at the time you purchased it if you
18 had known the true size of the home, the true size of the
19 lot and that there wasn't room for an additional
20 800-square-foot structure and the problems with the pool
21 and the fiber optics?
22 A. Okay. If it was as advertised, you mean? My
23 assumption was it was worth about 3.25, which is what I
24 offered.
25 Q. Okay. What I'm asking you, do you have an opinion
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 as to what it would have been worth if it had been
2 advertised in its true condition, at least as you --
3 A. Oh, what I would have offered for it if it didn't
4 have those?
5 Q. Sure.
6 A. I don't know. I'm not sure.
7 MR. KOSS: Okay. Why don't we mark this as
8 Exhibit 4.
9 (Whereupon, the document described
10 below was marked Exhibit No. 4 for
11 identification.)
12 BY MR. KOSS:
13 Q. Let me know when you've had a chance to look at
14 Exhibit 4, and my question is going to be, do you recognize
15 this document?
16 A. Yes, I recognize it.
17 Q. And that's your signature on the bottom of Exhibit
18 4, the as-is addendum?
19 A. Yes, it is.
20 Q. Did you have any discussions with Mr. Rea about
21 this document?
22 A. Yes.
23 Q. Will you describe those discussions for me.
24 A. He cautioned me on signing an as-is document, but
25 we discussed it in terms of the trade-off. You know, we
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 could demonstrate to the seller that we're serious, we want
2 to close quickly, we're not going to let minor things get
3 in the way and that this would demonstrate that and, also,
4 it would help to make sure that we got as low a price, you
5 know, a final price, as possible.
6 And then also we discussed the fact that this was
7 a brand new home, so even though it's as is, it's really
8 not too big a risk to sign that, and so I decided to do
9 that.
10 Q. What did Mr. Rea say were the risks in signing an
11 as-is addendum?
12 A. I don't recall.
13 Q. Did you discuss the as-is addendum with anybody
14 other than Mr. Rea?
15 A. I believe my wife and that's it.
16 Q. Did you read it before you signed it?
17 A. Yes.
18 Q. Did Mr. Rea go through each paragraph with you
19 before you signed it?
20 A. I believe he did, yes.
21 Q. Did he go through the first paragraph, which in
22 substance at the end states that the house is being sold
23 without any warranties or representations, express or
24 implied, regarding its condition?
25 A. Yes.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. And did that concern you when you signed it?
2 A. Not too much.
3 Q. Why was --
4 A. Like I said, it was a brand new house, so many of
5 these warranties and things, for instance, on appliances
6 would be covered by the manufacturer anyway. I knew it had
7 to pass all the inspections that the city requires, so I
8 didn't feel there was a big risk on a brand new house.
9 If this was a used house, I would never have done
10 this, and I thought that was part of the premium I was
11 paying for a new house.
12 Q. Did you understand that under paragraph three that
13 you were in substance buying the property based upon your
14 own investigation and that you would have the opportunity
15 to investigate all matters affecting the use and condition
16 of the property?
17 A. Yes.
18 Q. Did that concern you?
19 A. No.
20 Q. Directing your attention to paragraph five, did
21 you understand that paragraph to in substance say that you
22 were relying entirely on your own investigation and you
23 were not relying on any information made by the seller or
24 by anyone acting on the seller's behalf?
25 A. Regarding the condition of the property, yes.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Were you concerned that there were representations
2 that had been made to you that you could no longer rely
3 upon based upon your signing the as-is addendum?
4 A. Say that again.
5 Q. Sure.
6 A. I'm not sure I understand.
7 Q. Were you concerned that there were representations
8 that had been made to you that you could no longer rely
9 upon, given that you had signed an as-is addendum?
10 A. Absolutely not. I felt that everything that was
11 told to me was still things that I had to rely on, told to
12 me in good faith, and the as-is is simply a condition of
13 the home. So you know, if I found later on that there was
14 a hole in the carpet or a hole in the wall, I couldn't come
15 back and say, you know, I demand fixing that hole.
16 But anything that was relayed to me as far as the
17 features and capabilities of the property I was buying, I
18 totally relied on and I didn't feel that an as-is addendum
19 would negate those things that were positively told to me.
20 Q. So in terms of the, for instance, the square
21 footage.
22 A. Yes.
23 Q. Despite the as-is addendum, you felt that you
24 could rely upon those representations?
25 A. Yes.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. And that you had no obligation to independently
2 verify those?
3 A. Correct.
4 Q. At least based upon the as-is addendum?
5 A. Correct. I felt that's what the Real Estate
6 Commission was all about. I was hiring professionals to
7 represent things for me so that I can rely on those
8 representations.
9 Q. Did you have any discussions with Mr. Rea about
10 any of those concepts about whether or not you could still
11 rely upon representations regarding the house that had been
12 made to you?
13 A. No.
14 Q. Now, the sellers made a counteroffer to you?
15 A. Yes.
16 Q. Let me show you a copy of that.
17 A. Okay.
18 (Whereupon, the above-described
19 document was marked Exhibit No. 5
20 for identification.)
21 BY MR. KOSS:
22 Q. Let me show you Exhibit 5. This is a counteroffer
23 that you received?
24 A. Yes.
25 Q. And I note it's dated the same date as your offer.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Right.
2 Q. Is that your recollection, you received it the
3 same day?
4 A. I didn't receive it because I was out of the
5 country and I believe I signed it after returning back. I
6 may have signed -- I may have faxed a version back, if I
7 remember correctly.
8 But I just know that the reason for the delay
9 here, it wasn't a delay on my part. It was more of a -- I
10 was out of the country for a week in London and then came
11 back, and I think I signed it very soon after coming back,
12 within a day or two.
13 Q. Okay. Because my question to you was going to be,
14 was there a delay involved because you were concerned about
15 the counteroffer being so much higher than your offer?
16 A. No.
17 Q. Did you have discussions with Mr. Rea about this
18 counteroffer?
19 A. Yes.
20 Q. What discussions did you have? Can you please
21 describe them.
22 A. It was mainly around the price. The
23 counteroffer -- this counteroffer says 3.7, right? Yeah,
24 3.7. I had offered originally three and we discussed what
25 the next offer should be.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 And frankly, I discussed it because I thought that
2 the counter was so high, I didn't know if I wanted to
3 counter back or, you know, what I should counter back at;
4 and we discussed several different numbers as far as what
5 to counter -- the recounter should be at, and that's mainly
6 what the discussion was about.
7 And he also did mention this other part about
8 removing the financing contingency and I said I was
9 comfortable with that.
10 Q. Did you ask Mr. Rea to do anything to try and
11 investigate the motivations of this seller and whether or
12 not a counter to this counter would be productive?
13 A. Yes.
14 Q. What did you ask him to do?
15 A. I don't know that I specifically asked him, but we
16 discussed it and what we could do and he described that he
17 would go back to Lou Rae to understand, you know, what the
18 interest level would be of a certain price.
19 But he also let me know that he didn't want to do
20 this verbally. He wanted to have a real offer because he
21 felt that was more -- more important to have it written
22 down in a true offer.
23 And he also let me know that Lou Rae questioned
24 every time about my ability to finance and purchase this
25 property. So he said if you had any proof of where the
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 down payment is coming from, that would strengthen the
2 offer.
3 So somewhere along here, it may have been the next
4 counter or the one after that, I'm not sure, but I did
5 supply to Douglas a copy of one of my savings or investment
6 accounts that I was going to be drawing the down payment,
7 which was going to be about one and a quarter million, and
8 it had more than that so he could see that I had that money
9 available to put down.
10 Q. And did you also provide some documentation about
11 the stock options, vested stock options you held in Cisco?
12 A. I don't know that I gave him that. I don't
13 remember. I remember I had to give that to the mortgage
14 broker, but I don't remember if I ever showed Douglas that.
15 MR. KOSS: Let me show you Exhibit 6.
16 (Whereupon, the document described
17 below was marked Exhibit No. 6 for
18 identification.)
19 BY MR. KOSS:
20 Q. Is Exhibit 6 a counteroffer that you submitted to
21 the sellers?
22 A. Yes.
23 Q. And in fact that was accepted by the sellers?
24 A. Yes.
25 Q. Between Exhibit 5 and Exhibit 6, to your
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 understanding did Mr. Rea have conversations with anybody
2 about the seller's motivations?
3 A. I don't recall.
4 Q. Upon your learning that the O'Briens -- that
5 Mr. O'Brien had signed Exhibit 6, did you feel you had a
6 contractual commitment to purchase the property?
7 A. Yes.
8 MR. KOSS: Let me show you some counteroffers that
9 come about after Exhibit 6 and let me ask you how those
10 came about.
11 Let me show you Exhibit 7.
12 (Whereupon, the above-described
13 document was marked Exhibit No. 7
14 for identification.)
15 BY MR. KOSS:
16 Q. Showing you Exhibit 7, is this a counteroffer that
17 you signed?
18 A. Yes.
19 Q. And is it your understanding it was also signed by
20 Mr. O'Brien?
21 A. Yes, I see that it is.
22 Q. Do you know how this counteroffer came about?
23 A. Let's see. Let me read it here.
24 Q. Sure.
25 A. I think it was to further define the fact that
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 there was not going to be any contingency as to the loan.
2 So I know in previous homes I've purchased there would be
3 contingencies that say, for instance, you know, this is
4 contingent on obtaining a loan with a certain percentage
5 rate, interest rate, as well as a certain percent down; and
6 so I was comfortable to say I wouldn't make it contingent
7 on any of that.
8 Q. Okay. And in fact that's what your original offer
9 had. It was contingent upon your obtaining a certain loan
10 at a certain interest rate?
11 A. I'm not sure if it said that, but I don't -- I
12 don't remember if it had a certain loan amount or -- but I
13 think it did say that there would be a loan, but this
14 clearly said there was no contingency on any loan.
15 So in other words, if I didn't qualify for a loan,
16 I would have to finance it myself, was my understanding.
17 Q. And you understood in signing this that the
18 counteroffer provided that there would be no extensions of
19 time or monetary considerations extended for purposes of
20 obtaining a loan?
21 A. Yes, right.
22 Q. What was the original scheduled date of close of
23 escrow, do you recall?
24 A. I recall it to be the 19th.
25 Q. And in fact it didn't close on that date, did it?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. It did not.
2 Q. And why was that?
3 A. Because in order to close I had to have my wife
4 sign the loan and sign some of the paperwork that was
5 required. She was scheduled to return to the U.S. from
6 London on the 12th of September and, as you recall, 9/11
7 happened the day before. So our furniture had been packed
8 up. She was in an empty house in London. The flight back
9 to the U.S. was cancelled and she could not get on a plane
10 to come back, so we could not close the loan and we could
11 not close on the home either.
12 There was some required paperwork that had to be
13 signed, according to our mortgage broker, that didn't have
14 to do with the loan but had to do with, you know, just her
15 being on the -- you know, on the title of the house; and so
16 since she couldn't come back, I sent an e-mail to Douglas
17 letting him know that due to circumstances beyond my
18 control, namely, this terrorist attack and the fact that
19 all flights from London were cancelled that we were going
20 to have to put off the loan.
21 And in fact my wife got on the next available
22 flight that she possibly could, which was -- I can't swear
23 to the date but it was around 9/22 and we closed on -- what
24 was it, 9/26 or 9/28, I forget. But we closed just days
25 after that.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 And in fact we had to pull some strings for her to
2 get on that particular flight because my company normally
3 just reimburses flights that are flown overseas through
4 United or American and she couldn't get on one of those
5 flights but found a British Airways flight, and I had to
6 get VP approval to go beyond normal in getting an exception
7 for her to get back even on the 22nd, and she was calling
8 daily to try to get on a flight back home.
9 So we did all we could to get her back home as
10 quickly as possible, despite, you know, what was going on
11 in the world at the time and we closed just days
12 afterwards.
13 In fact, one of the requirements of closing also
14 was that -- I found out during this time period that the
15 guest house did not have air conditioning as advertised and
16 as told to me, and so during the walk-through I identified
17 that this was a requirement, you know. That house is
18 advertised, I was told, that it had air conditioning and I
19 wanted the demonstrated air conditioning; and they said,
20 okay, and there was a big battle over this. I won't go
21 into all that now.
22 But at the end I was demonstrated air conditioning
23 about twelve hours before closing, and everybody in the
24 transaction knew a month ahead of time that I wanted to be
25 demonstrated air conditioning before we closed or I was
118
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 going to withhold some money so that I could have it done
2 myself, which I really didn't want to do but, you know, I
3 was going to do that as a fall back.
4 Q. You had your lender write a letter saying in
5 substance that because of events of 9/11, the mortgage
6 industry wasn't going forward, correct?
7 A. Right.
8 Q. And the reason for the delay was the delay in
9 getting a loan, correct?
10 A. Well, yes. They required some signatures on some
11 papers from my wife and she couldn't sign it, and in fact
12 it couldn't just be a notarized signature. It was
13 explained to me that it had to be notarized and then
14 stamped at the U.S. Embassy, and the U.S. Embassy wasn't
15 spending a lot of time with people worrying about houses,
16 buying overseas. You know, they were busy. So we couldn't
17 get any of that done.
18 Q. Were you concerned that you had signed an addendum
19 which said the closing wasn't going to be extended to
20 enable you to get a loan and then after 9/11 when you
21 couldn't get the loan, the closing was delayed?
22 A. No, I wasn't concerned about that. I thought that
23 was understood and Douglas let me know that he was going to
24 get the letter from me and from my mortgage company and it
25 would be fine, is the way that was described to me.
119
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. And in fact it worked out to be fine. The seller
2 went along with it?
3 A. Yes.
4 MR. KOSS: Let me show you Exhibit 8.
5 (Whereupon, the document described
6 below was marked Exhibit No. 8 for
7 identification.)
8 BY MR. KOSS:
9 Q. Let me know when you've had a chance to look at
10 Exhibit 8.
11 A. Yes, I recognize this.
12 Q. Okay. And that's your signature on Exhibit 8?
13 A. Yes.
14 Q. Who prepared this document, Exhibit 8, "Addendum
15 to Contract"?
16 A. Douglas Rea.
17 Q. The document is signed on September 8?
18 A. Yes.
19 Q. At that point had you done some walk-throughs of
20 the property?
21 A. Yes.
22 Q. How many had you done?
23 A. Well, one official walk-through.
24 Q. Who was present for that walk-through?
25 A. Douglas Rea was.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Anybody else?
2 A. I don't recall.
3 Q. Well, wasn't the contractor, Brian Oram, present?
4 A. I don't believe so.
5 Q. Let me direct your attention to a middle
6 paragraph, the large paragraph in the middle that says, "On
7 Friday, September 7, while at the property for the termite
8 inspection, it was disclosed by the contractor (Brian)," et
9 cetera.
10 A. Um-hum. I was not there.
11 Q. You were not there?
12 A. Yes.
13 Q. Okay. So you had a walk-through on what day and
14 with whom?
15 A. I believe my walk-through was with Douglas and I
16 don't know if Lou Rae was there or not. I just don't
17 recall. And I don't remember what day but it was around
18 this time. It may have been a day or two before this, but
19 I could not make the September 7 meeting and so I didn't
20 attend that particular walk-through. I did not meet Brian
21 until after I purchased the home.
22 Q. Why did you have an occasion to meet Brian at some
23 point after you purchased the home?
24 A. He came out because he was -- there was something
25 that needed to be fixed I think on the -- I forgot what it
121
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 was. It might have been on the door of the guest house.
2 But he came out for some reason and so I talked to him then
3 and that was the first time I had met him.
4 Q. Did you have any discussions with Brian about any
5 condition of the house?
6 A. No.
7 Q. Did you talk about fiber optics or the ability to
8 build a pool or any of that kind of stuff?
9 A. Well, like I said, I met him after we had already
10 moved into the house, so there was no reason to talk to him
11 about any of that.
12 Q. This document indicates that you had a termite
13 inspection. Do you believe you got inspections other than
14 a termite inspection?
15 A. Yes, I believe so.
16 Q. Do you believe you got some kind of property
17 inspection?
18 A. Yes. They put it under the guise of a termite
19 inspection, but they did inspect other things and noted
20 other conditions that needed to be fixed.
21 Q. And were those conditions brought up then in this
22 addendum to contract?
23 A. Yes, some of them, some of them were. Let's see.
24 Yes, the cellulose and construction debris in the crawl
25 space. I never went in the crawl space. It says the
122
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 termite inspector went there. Obviously, to look for
2 termites but also to note these things that needed to be
3 fixed.
4 Q. Were all these items that were noted in the
5 termite report repaired to your satisfaction?
6 A. Yes.
7 Q. How did you discover -- strike that.
8 How did you learn about the problem with the lack
9 of air conditioning in the guest house?
10 A. Well, I learned about it by turning on the air
11 conditioning, you know, just flipping the switch to cool,
12 and noting that there was no cold air coming out. So I
13 walked around the property to see, you know, if the air
14 conditioning unit had turned on. Maybe there was a circuit
15 breaker or something like that, I thought.
16 But I was surprised to find there was no air
17 conditioning unit on the outside of the house, and that's
18 when I went into the main house, Lou Rae was there, and I
19 asked her about the air conditioning, and we went through
20 that whole discussion earlier.
21 Q. We had that discussion earlier.
22 Do you know if that was before or after you made
23 an offer to purchase the property?
24 A. I believe it to be after.
25 Q. And it was before September 8?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. I believe so, yes.
2 Q. Did you specifically ask the termite inspector to
3 look for air conditioning in the guest house?
4 A. No. I never talked to the termite inspector.
5 Q. Okay. And at some point did Mr. Rea call you to
6 say, hey, it's been determined there's no air conditioning
7 in the guest house?
8 A. I don't recall that. I don't recall that.
9 What I recall was looking at the house, like I
10 said, looking on the roof, looking in the garage, and
11 seeing that there was no air conditioning, I let Douglas
12 know of that discussion we had, that I had with Lou Rae
13 about where the air conditioner could be; and I asked him
14 if he had ever heard of an air conditioner in the attic and
15 he said, well, he doesn't know. And I said okay.
16 Well, I said I don't really care where the air
17 conditioner is. You know, I just want it to be
18 demonstrated that cold air is coming out of the vents and
19 so far nobody has shown me that cold air is coming out of
20 the vents.
21 Q. And at some point before the close of escrow,
22 somebody showed you that cold air was coming out of the
23 vents?
24 A. Twelve hours before the close of escrow.
25 Q. And the air conditioning was installed to your
124
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 satisfaction?
2 A. Yes.
3 Q. And it didn't cost you anything?
4 A. At the end it didn't. I was asked to pay for it.
5 I was demanded to pay for it, in fact, and I refused.
6 Q. When you say -- what's the difference in your mind
7 between asked and demanded?
8 A. Demanded means there is no plan to put an air
9 conditioner. I was told there was no plan ever to put an
10 air conditioner in the guest house despite the advertising,
11 so if you want it you have to pay for it.
12 Q. And how to your understanding was the issue
13 finally resolved?
14 A. To my understanding it was resolved somewhere
15 between the seller and Lou Rae. I didn't know. Douglas
16 offered to pay for it himself and I told him I refused to
17 allow him to pay for it because he had nothing to do with
18 the advertising of the air conditioning.
19 So I said so if I find out later that you paid for
20 it, I'm not going to be happy with you, Douglas. I said I
21 don't know how this advertising happened, but it was
22 between the builder and Lou Rae and let them work out who
23 pays for it.
24 I only found out through discovery that he did pay
25 for half of it.
125
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Now, in Exhibit 8 there is a reference here about
2 a Multiple Listing description that has the house at 5100
3 square feet.
4 A. Yes.
5 Q. Had you ever seen the Multiple Listing Service
6 which indicated the house was 5100 square feet?
7 A. Yes. The first Multiple Listing Service I saw
8 said it was 5300 and then I saw 5100 or -- I don't know if
9 it was a Multiple Listing. I saw something that said 5300.
10 Douglas and I had talked about that, and then I
11 later found out it was 5100, and it wasn't until the very
12 end that I got this appraisal that said it was actually
13 5005. So my first -- you know, my first understanding was
14 that it was 5300 square feet, and in fact that's the
15 brochure that was given to me by Lou Rae that said it was
16 5300 square feet, and that was in August.
17 Q. Then further down it talks about from inspection
18 of the building plans, buyer, which I assume is referring
19 to you, noted contradictions between the advertised and
20 actual size of both the main house and the lot.
21 A. Yes.
22 Q. That's something that you had determined by this
23 point, that is, September 8, 2001, the date of Exhibit 8?
24 A. Yes, but it was -- I was shown the building plans,
25 but it was there in the house so I couldn't take them with
126
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 me and, you know, building plans are those big drawings and
2 there's multiple pages of it. I noted on there that it did
3 say that it had -- it said it was -- it showed that the
4 square footage was, if I remember right, 5040 square feet,
5 and it was advertised as 5300.
6 Then later I got a brochure that said it was
7 advertised at 5100, and then I saw the building plans that
8 said it was 5040. Then I got the appraisal that said it
9 was 5005. All of this led me to call this my incredible
10 shrinking house. I kept discovering through the process of
11 multiple cuts here and it just kept shrinking.
12 Q. And all of this you knew before you decided to
13 close escrow?
14 A. Yes.
15 Q. And you closed escrow, anyway?
16 A. Yes.
17 Q. It also indicates in Exhibit 8 that says the lot
18 size stated in the building plan -- maybe I should try
19 reading that again.
20 The lot size as stated in the building plan says
21 26,018 square feet and advertised as two-thirds of an acre.
22 A. Yes.
23 Q. And that's what you had seen in the advertising,
24 was two-thirds of an acre?
25 A. Yes.
127
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. You had indicated seeing on a board in the back
2 yard it advertised as one acre.
3 A. Yes.
4 Q. You don't have a copy of what was on that board,
5 do you?
6 A. No. I'm talking about a big sheet of paper, a
7 flip chart, you know.
8 Q. Right.
9 A. I mean this was, you know -- there were several
10 pages on this flip chart and as I walked by the pages would
11 change. You know, I guess Lou Rae went out there or
12 somebody went out there and changed the flip chart, so it
13 was just different like advertising bullets, you know, to
14 say here is the size, here is the -- you know, you can
15 build an 800-foot structure and things like that.
16 So one of them did say acre. I noted -- I
17 remember that because that was the first time I saw the
18 property, so I thought it was an acre that I was looking at
19 but it seemed a little small for an acre. But I wasn't
20 sure, so I asked Douglas and he came back and gave me the
21 paperwork to show that it was .61 of an acre.
22 Q. Right. And we've already gone through you knew
23 that before you even made the offer.
24 A. Yes.
25 Q. Let me show you Exhibit 9.
128
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Oh, by the way, in Exhibit 8, do you know if the
2 seller ever signed Exhibit 8?
3 A. I don't know if they did or not.
4 (Whereupon, the document described
5 below was marked Exhibit No. 9 for
6 identification.)
7 BY MR. KOSS:
8 Q. Showing you Exhibit 9, do you recall receiving
9 this addendum?
10 A. I don't recall this.
11 Q. Well, let me clarify what you mean by that.
12 Is it your testimony that you never received this
13 prior to the close of escrow or you just don't remember one
14 way or the other?
15 A. I just don't remember one way or the other.
16 Q. Do you recall, directing your attention to
17 paragraph one -- and I know you didn't see this, so let me
18 try and refresh your recollection about it.
19 Do you recall at any point in the process being
20 advised that you should verify to your satisfaction sizes
21 concerning the building and the property?
22 A. I recall having a conversation with Douglas along
23 those lines. He said if I was concerned about the size, I
24 should have it professionally measured.
25 Q. And you thought that the appraisal was that
129
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 professional measurement, correct?
2 A. Yes.
3 Q. Thank you.
4 And I guess I should clarify. By that appraisal
5 we're talking about the appraisal you did for your loan in
6 September or August of 2001?
7 A. Yes, which I received just shortly before we
8 closed. So this happened at the very end of the whole
9 process.
10 (Whereupon, the document described
11 below was marked Exhibit No. 10 for
12 identification.)
13 BY MR. KOSS:
14 Q. Showing you Exhibit 10, is that your signature on
15 this document, "Addendum to Contract"?
16 A. Yes, it is.
17 Q. And I note this is dated September 13, 2001.
18 A. Yes.
19 Q. If you look at Exhibit 8, it was dated September
20 8, 2001.
21 A. Yes.
22 Q. But otherwise, it's similar in text?
23 MR. GLASPY: Excuse me. I don't believe they're
24 completely similar in text, if you compare.
25 MR. KOSS: That's what I'm going to get to.
130
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 They're similar but not the same.
2 MR. GLASPY: Oh, okay.
3 THE WITNESS: Also, between these dates I was out
4 of the country, also, so that may have been part of the
5 reason for some delays here. I recall coming back into the
6 country on the morning of 9/11, just before the terrorist
7 attack, and in fact heard the news of the terrorist attack
8 after landing and being in my rental car coming back to San
9 Jose. So I was out of the country just a couple of days,
10 or two or three days prior to this, coming back on the
11 11th.
12 BY MR. KOSS:
13 Q. The differences between Exhibit 8 and Exhibit 10,
14 it appears to me, is in Exhibit 8 the last paragraph in
15 Exhibit 8 is stricken and some handwritten stuff is put in
16 there instead of Exhibit 10 about box in power cable in
17 guest house.
18 A. Yes. I wrote the language there at the very
19 bottom of Exhibit 10.
20 Q. And why was the language about the lot size and
21 building size deleted from the Exhibit 10 version?
22 A. I don't know. I didn't write either one of these.
23 I only wrote that last handwritten section, so I don't know
24 why that was changed.
25 Q. Was that last paragraph in Exhibit 8 deleted from
131
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Exhibit 10 because you were now satisfied by September 13,
2 2001, as to the square footage of the house and the square
3 footage of the lot?
4 A. I was never satisfied with that because I was lied
5 to about it. So I went to closing agreeing to buy it, but
6 I was never satisfied, you know, that it's okay to lie to
7 me about the square footage of houses.
8 Q. Well, let me ask you about that. Who do you think
9 lied to you about the square footage of the house?
10 A. I think the seller and Lou Rae.
11 Q. When you say they lied, what do you mean?
12 A. I mean they told me one number when they knew it
13 was a different number. For instance, I was given in the
14 discovery an MLS document dated June sometime that the
15 square footage was 5100 square feet, yet when I first saw
16 the property in August, I still had a brochure that said
17 5300 square feet.
18 Q. How do you know that in putting together one of
19 the brochures at 5300 square feet, some innocent mistake
20 wasn't made?
21 A. Well, that was the only brochure on the property
22 and it clearly said 5300. I had that discussion around the
23 square footage with Douglas and I don't recall what I
24 discussed with Lou Rae about that. But clearly it said
25 5300. You know, there's not a whole lot else that was on
132
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 that document. There's not a lot of English words on it.
2 It was mainly a picture of the house. So obviously it was
3 misrepresented as 5300.
4 Q. And you saw that there was an MLS listing at one
5 time that had the house at 5300?
6 A. I saw a document so I can't swear to it that it
7 was an MLS listing, but it was some kind of automated
8 document that came from Coldwell Banker that said 5300.
9 Q. And then you saw other documents that had the main
10 house at 4400?
11 A. That was later, yes.
12 Q. And how are you certain that there wasn't some
13 error in the beginning that was later rectified?
14 A. Well, a number of things. For instance, when I
15 saw the plan it clearly said the maximum allowable square
16 footage of this property was 5040 square feet. So based on
17 city ordinances, they could not have built something
18 greater than 5040 square feet. They were not allowed to.
19 And that was in the house and Lou Rae and Lynn --
20 Lynn, of course, is the builder, so of course she knew
21 this. But Lou Rae showed me this plan. So she had access
22 to this well before and I saw it well after I agreed to
23 purchase.
24 Q. Do you know if Lou Rae Kagel ever looked at the
25 plans?
133
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. She showed me the plans, so -- and she knew where
2 they were, so she obviously had seen them before.
3 Q. Do you know if she ever unrolled them and looked
4 at them?
5 A. Oh, I don't know that for a fact, no.
6 Q. So at least from your viewpoint, someone was
7 intentionally misrepresenting the known facts about the
8 square footage of the house?
9 A. Yes. And to be honest, I couldn't say was it Lou
10 Rae or was it Lynn. But I knew between the two of them,
11 they knew.
12 Q. Did Mr. Rea tell you how he had discovered that
13 the property wasn't 5300 square feet?
14 A. No, he didn't tell me how. There was another
15 brochure that came out later that said 5100 and he gave
16 that to me. So I knew at that point it was 5100 and he let
17 me know this, and so that was basically it.
18 Q. So it was your understanding that at some point
19 people were intentionally lying and then later came clean
20 and started to represent the house more accurately at 5100
21 square feet?
22 A. Yeah. They were more accurate, but they still
23 didn't come clean. I mean it wasn't 5100 either so, you
24 know, it was 5005. So that's still, you know,
25 significantly away from 5100, that they should have
134
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 represented it at 5,000, if anything, if you're rounding.
2 Q. Getting back to my comparison of these two
3 documents, I'm not sure I got an answer to this.
4 Is it correct that the last paragraph in Exhibit 8
5 was deleted from Exhibit 10 because at that point you were
6 satisfied with the square footage --
7 A. No.
8 Q. -- of the house and of the lot?
9 A. No. I have no idea why it was deleted and didn't
10 notice that it was deleted.
11 Q. Was it deleted because at this point in time when
12 you're signing Exhibit 10 on September 13, 2001, you are
13 willing to close escrow despite finding out that the
14 property was not as represented in terms of square footage?
15 A. Yes, I was still willing to close escrow, but I
16 was never satisfied with that.
17 MR. KOSS: Why don't we mark this as Exhibit 11.
18 (Whereupon, the document described
19 below was marked Exhibit No. 11 for
20 identification.)
21 BY MR. KOSS:
22 Q. Showing you Exhibit 11, do you recall receiving
23 this document on or about September 17 of 2001?
24 A. I do not.
25 Q. Do you recall being told that the seller was
135
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 demanding to close escrow on the originally agreed date of
2 September 19, 2001?
3 A. I recall that, yes.
4 Q. Did you give any consideration to just not closing
5 in light of the discrepancies you were now seeing with
6 respect to this property?
7 A. I was planning on still closing, but I could
8 describe what happened at this time.
9 Q. Sure, go ahead.
10 A. Because I don't remember seeing this document but
11 I remember getting a call from Douglas, who told me that I
12 needed to close on the 19th because I'm going to be out of
13 contract and he relayed to me that the seller was going to
14 sue me if I did not close on the 19th; and I said, well, I
15 can't close on the 19th, as you know. You know that my
16 wife is still stuck in London at this time and so we will
17 close as soon as possible after that.
18 And so he said okay, write me an e-mail explaining
19 the circumstances. I'll get the same from the mortgage
20 lender. And it was a mortgage lender that Douglas
21 recommended that I use, so he knew this mortgage lender.
22 So he called the mortgage lender separately and got a
23 document from the mortgage lender.
24 But he relayed to me that since I'm going to be
25 out of contract and that I'm going to be legally
136
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 responsible for this that I should go ahead and assign
2 over -- his word was assign over my one and a quarter
3 million down payment to the seller and that would satisfy
4 them.
5 And so I said, you've got to be kidding me,
6 Douglas. Are you suggesting that I risk one and a quarter
7 million, giving it to a seller with nothing behind it? In
8 other words, I give it to the seller and the seller's
9 company could go bankrupt. The house could burn down. All
10 kinds of bad things could happen and you want me to put one
11 and a quarter million at risk without knowing what's going
12 to happen here.
13 And he said, well, I don't know the legal things
14 about that. You may want to check with a lawyer on this.
15 But at least, you know, we can argue that, you know, you're
16 complying as much as possible with your end of the bargain
17 on this. And I said I flatly refuse to give one and a
18 quarter million unsecured to a seller or to Coldwell Banker
19 or to anyone, you know. I'm going to keep it. I think I'm
20 in contract and I think that, you know, this delay is
21 beyond -- or due to circumstances beyond my control and I'm
22 going to close as soon as possible afterwards.
23 Q. And the circumstances beyond your control were
24 that your wife was stuck in London --
25 A. Yes.
137
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. -- couldn't get back to sign loan documents; you
2 couldn't get a loan, couldn't get the financing to close
3 the escrow?
4 A. Yes. And I understood it to be more than just
5 loan documents. There were other documents that had to be
6 signed by her beyond just loan documents in terms of, you
7 know, her being on the contract for the purchase of the
8 home.
9 MR. KOSS: Why don't we mark this as Exhibit 12.
10 (Whereupon, the document described
11 below was marked Exhibit No. 12 for
12 identification.)
13 BY MR. KOSS:
14 Q. Is Exhibit 12 the note that you wrote at Mr. Rea's
15 request?
16 A. No. That's what Mr. Rea wrote. I wrote him an
17 e-mail. The words were different but largely conveyed the
18 same message. He rewrote it to this. I wouldn't refer to
19 myself as buyer, for instance.
20 Q. Okay. That's your signature though, isn't it?
21 A. Yes, it is.
22 MR. KOSS: Okay. Let's call this Exhibit 13.
23 (Whereupon, the document described
24 below was marked Exhibit No. 13 for
25 identification.)
138
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 BY MR. KOSS:
2 Q. Do you recognize Exhibit 13?
3 A. No, I don't recognize this exhibit, but I do
4 recognize the points made in it.
5 Q. And those points being, one, the hold back of
6 $5,000 to deal with the air conditioning?
7 A. Yes, and if there wasn't a hold back that the air
8 conditioning had to meet certain requirements. For
9 instance, it should be of the same quality and be of
10 sufficient size to cool the guest house.
11 Q. And the next concept was you deposited into escrow
12 the balance of your down payment?
13 A. I never agreed to that, so that's probably why I
14 didn't sign this.
15 MR. KOSS: Let's call this Exhibit 14.
16 THE WITNESS: I never really remember seeing that
17 addendum.
18 (Whereupon, the document described
19 below was marked Exhibit No. 14 for
20 identification.)
21 BY MR. KOSS:
22 Q. Showing you Exhibit 14, do you recall seeing this
23 document?
24 A. No, I do not.
25 MR. KOSS: Why don't we take a short break.
139
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 (Recess at 2:56 p.m.)
2 (Resume at 3:08 p.m.)
3 (Whereupon, the document described
4 below was marked Exhibit No. 15 for
5 identification.)
6 BY MR. KOSS:
7 Q. Okay. Mr. Simpson, you're back on the record and
8 you understand you're still under oath?
9 A. Yes.
10 Q. Okay. Showing you Exhibit 15, do you recognize
11 this document?
12 A. No.
13 MR. KOSS: It makes it easy if you don't know the
14 document. I won't ask you any questions about it.
15 Let me show you Exhibit 16.
16 (Whereupon, the document described
17 below was marked Exhibit No. 16 for
18 identification.)
19 BY MR. KOSS:
20 Q. Showing you Exhibit 16. I will suggest this is a
21 document you have seen.
22 A. Yes.
23 Q. And that's because your signature is on it.
24 A. Yes. I remember this. And if you'll notice the
25 date, it was just a few days before we closed on the house.
140
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 So I viewed this to be a CYA document from the real estate
2 company.
3 Q. Is there a reason why you signed it?
4 A. Because I just wanted to move on, buy the house
5 and move on. My family was being disrupted. You know, we
6 were ready to move in. I had movers moving furniture from
7 London and I just wanted to be done with it.
8 Q. Directing your attention to the numbered paragraph
9 two, and again it refers to the square footage issues.
10 A. Yes.
11 Q. Is it correct that at this point, September 23,
12 2001, despite your unhappiness with the representations
13 that were made, you were willing to set aside those square
14 footage issues as an issue with respect to your purchase of
15 the property?
16 A. I was willing to go ahead with the purchase of the
17 home, despite my unhappiness with the misrepresentation.
18 Q. At the time you signed Exhibit 16 on September 23,
19 2001, was it your intent to ask for moneys after the close
20 of escrow because of the square footage issues?
21 A. No.
22 MR. KOSS: I'll show you Exhibit 17.
23 (Whereupon, the document described
24 below was marked Exhibit No. 17 for
25 identification.)
141
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 BY MR. KOSS:
2 Q. Let me give you an explanation about Exhibit 17
3 because I couldn't find a good copy of this document, but I
4 believe the first page of Exhibit 17 refers to a
5 walk-through and the second two pages -- in other words,
6 the second page is the same document and then the third
7 page is the second page of what I think was the original
8 document.
9 I don't know if any of that made any sense.
10 A. I don't think it does because the first page is
11 dated 9/23 and the second page is dated 9/25. It looks
12 like two separate documents to me. It looks like this page
13 1 of two, there is no page 2, because this one doesn't say
14 page 2 of 2 and it's dated a different date. So it looks
15 like you've mixed up some documents here.
16 Q. Okay. I can't find a good copy of the
17 walk-through then.
18 MR. THOMAS: Well, if I can say on the bottom of
19 the first page, page 1 of 2, page 2 is a reverse side.
20 It's just a checklist that wasn't copied.
21 THE WITNESS: Oh, okay. So the third page of this
22 exhibit then is a totally different document then.
23 MR. MINOLETTI: It's an addendum.
24 THE WITNESS: Yes.
25 MR. MINOLETTI: Just the top is cut off.
142
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 MR. KOSS: Oh, okay. Well, with everyone's
2 permission, I'm going to take off the last page of this
3 exhibit and say now Exhibit 17 is a two-page exhibit.
4 THE WITNESS: Okay.
5 MR. KOSS: So, Steve, you know these forms better
6 than I. There should be a checklist on the reverse?
7 Oh, I see, "See reverse side for checklist."
8 MR. THOMAS: Right.
9 BY MR. KOSS:
10 Q. I think we discussed before that you participated
11 in a walk-through of the property. Does this document,
12 this document being Exhibit 17 -- does that relate to that
13 walk-through?
14 A. No. This is a later -- I don't know if
15 walk-through is the right term here. I see that's what's
16 written at the top, but I had a walk-through with Douglas
17 and maybe this was another walk-through. I don't know.
18 I know this was just shortly before closing and
19 there were still a few items that needed to be addressed
20 that weren't and so we captured these here.
21 Q. My only question about that is, were all those
22 items addressed to your satisfaction?
23 A. These items?
24 Q. Yes.
25 A. Not at the date I signed this. In other words, I
143
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 identified that the air conditioning in the guest house was
2 still not there and it wasn't, and as I said, it was
3 demonstrated to me twelve hours before closing.
4 And then you'll notice I noted here a black framed
5 mirror above the powder room sink. The reason I noted this
6 was it was taken down and put in the living room along with
7 all the other furniture of the house which was going to be
8 sent back to the renting company that they borrowed it
9 from, and yet this was the only mirror in the powder room
10 and it was affixed to the wall solidly.
11 And so when I saw that was in the living room, I
12 noted it and said, hey, I bought that mirror, put it back;
13 and it took a few times going back and forth with the
14 seller to get her to agree to put that back.
15 Q. Okay.
16 A. But eventually they did put the mirror back.
17 Q. So it's correct, is it not, that all the items you
18 raised in this walk-through and are indicated on Exhibit 17
19 were addressed to your satisfaction, at least at some
20 point?
21 A. Yes, yes.
22 MR. KOSS: Why don't we call this Exhibit 18.
23 (Whereupon, the document described
24 below was marked Exhibit No. 18 for
25 identification.)
144
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 BY MR. KOSS:
2 Q. Showing you Exhibit 18, does this document bear
3 your signature?
4 A. Yes, it does.
5 Q. And it's dated on September 23, 2001.
6 A. Yes.
7 Q. And my question to you is, does this help you
8 remember when you got the plans for the property?
9 A. I got them when I moved into the property. They
10 were sitting -- it wasn't just the plans. There were a
11 number of brochures and documents around the different
12 appliances, you know, user's guides and those kinds of
13 things for the refrigerator, the furnace and those kinds of
14 things; and the plans were just laying on the kitchen
15 counter and they told me they would leave that there and
16 they did, and so I received them on the day I moved in.
17 Q. But you actually reviewed those plans at a date
18 much earlier than the date of Exhibit 18, that is, much
19 earlier than September 23, 2001?
20 A. Well, I think the proper word might be scanned it.
21 You know, I mean there was a bunch of documents there. I
22 kind of flipped through it. I didn't look at every page of
23 it. You know, there was a stack of blueprints. I just
24 looked at it, saw what they were, but didn't really try to
25 read it or understand it but just saw what they were and
145
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 said, oh, I'd like to make sure I keep that for future
2 reference. For instance, if I wanted to do any kind of
3 remodeling, it would be nice to know where the plumbing and
4 electrical features were inside the walls and things like
5 that.
6 Q. Well, let me ask the question again.
7 You in fact had scanned the plans much earlier
8 than the date of Exhibit 18?
9 A. Yes, yes.
10 Q. Okay. And in fact you scanned them to the point
11 you were able to determine this issue with the square
12 footage?
13 A. No, I didn't -- I'm not sure I understood the
14 square footage at the time I scanned it. That was later
15 when I read it and saw it in more detail.
16 Q. Have you since studied the plans in any detail?
17 A. Well, probably in the detail that I'm capable of.
18 I'm not a builder. So you know, as a lay person I scanned
19 it, yes.
20 Q. So from your later, more detailed inspection of
21 the plans, have you identified any other issues that you
22 think --
23 A. Well, that's when I noted the letter from the
24 architect saying that impervious structure limit was
25 already at the max and I also noticed that it said
146
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 impervious structure limit and actual number were the same
2 number, so as designed it was already at the maximum square
3 footage for impervious structure and for living square
4 footage. Those numbers were there.
5 MR. KOSS: Counsel, I don't think I've seen these
6 documents. Do you think you can get us copies of the
7 plans, the documents that Mr. Simpson is talking about?
8 MR. MINOLETTI: Yes, they're in my office.
9 MR. GLASPY: Let's go off the record if we could.
10 MR. KOSS: Sure.
11 (Discussion held off the record.)
12 MR. KOSS: Back on the record.
13 We've had a brief discussion and I guess, Paul,
14 you're going to take the plans and send them to somebody
15 that does this and we'll make arrangements to pay that
16 person and get copies.
17 MR. MINOLETTI: Right.
18 MR. KOSS: Okay.
19 MR. MINOLETTI: We'll use San Jose Blueprint or
20 somebody close to the office. I'll find somebody.
21 MR. KOSS: Great.
22 Why don't we mark this as Exhibit 19.
23 (Whereupon, the document described
24 below was marked Exhibit No. 19 for
25 identification.)
147
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 BY MR. KOSS:
2 Q. Okay. Let me show you Exhibit 19. Have you seen
3 this document before?
4 A. Yes.
5 Q. I think that's the page we tore off of the prior
6 exhibit, isn't it?
7 MR. BLOYD: It's this one all grown up.
8 THE WITNESS: Yes.
9 BY MR. KOSS:
10 Q. And that's your signature at the bottom of the
11 document?
12 A. Yes.
13 Q. And I think this also refers to concepts we've
14 discussed before about the $5,000 hold-back on the AC unit.
15 A. Right. And you'll notice this was signed I
16 believe the day before close, so it was my way to insure
17 that in case we went into close and the air conditioner
18 could not be demonstrated to me, then I would have a way to
19 get it fixed, or installed, I should say.
20 Q. Was your purpose in signing Exhibit 19 to come to
21 some kind of arrangement as to how you and the sellers
22 would address the air conditioning unit?
23 A. Yes.
24 Q. And did that address the issue to your
25 satisfaction?
148
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Well, this would have, but at the end it wasn't
2 agreed to.
3 Q. In what sense wasn't it agreed to?
4 A. They did not want me to hold back the 5,000. They
5 said they would install the air conditioner and so they
6 didn't want to hold back. So then later I signed another
7 addendum or something that said you can release that 5,000
8 hold.
9 MR. KOSS: I'm going to show you Exhibit 20.
10 (Whereupon, the document described
11 below was marked Exhibit No. 20 for
12 identification.)
13 BY MR. KOSS:
14 Q. Showing you Exhibit 20, is this the subsequent
15 document you just referred to?
16 A. Yes, that's right.
17 Q. And in here you say buyer is satisfied with the
18 central AC system. Is that what that says?
19 A. I don't think -- I can't read it. Buyer is
20 something with central AC system. Maybe it says satisfied.
21 But in any case, I agreed to not hold the 5,000, whatever
22 that says.
23 (Whereupon, the document described
24 below was marked Exhibit No. 21 for
25 identification.)
149
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 BY MR. KOSS:
2 Q. Okay. Let me show you Exhibit 21.
3 A. Oh, that's better.
4 Q. I had the same problem you did. I couldn't read
5 Exhibit 20 either.
6 A. Yes. I can see now it does say that, but I just
7 couldn't read it. But that's what I said.
8 Q. And indeed when you signed Exhibit 20, you were
9 satisfied with the central AC system in the guest house?
10 A. Yes.
11 Q. Are you still satisfied with it?
12 A. Yes.
13 MR. KOSS: Let me show you Exhibit 22.
14 (Whereupon, the document described
15 below was marked Exhibit No. 22 for
16 identification.)
17 BY MR. KOSS:
18 Q. Showing you Exhibit 22, this has your signature on
19 it?
20 A. Yes.
21 Q. To your understanding, what was the purpose of
22 this document?
23 A. I don't recall. I don't recall this document.
24 But it says "contingency removal," so we were removing some
25 contingency but I don't know which one it was. It's
150
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 strange I didn't date it.
2 Q. That's what was going to be my next question. Do
3 you know when this was prepared and when you signed it?
4 A. No. I can see it was after 9/13 because of the
5 previous paragraph referring to an addendum to the contract
6 dated 9/13, but I think it's odd I didn't date it. I don't
7 know why.
8 MR. KOSS: Let me show you Exhibit 23.
9 (Whereupon, the document described
10 below was marked Exhibit No. 23 for
11 identification.)
12 BY MR. KOSS:
13 Q. Exhibit 23 relates to the storage of your son's
14 car?
15 A. Yes.
16 Q. And that was an accommodation you asked the seller
17 to do?
18 A. Yes.
19 Q. And they did it?
20 A. Yes. We were staying in a hotel and the hotel
21 didn't have a lot of extra parking, you might say, in Los
22 Gatos. So I asked if I could just leave it in the garage
23 there until closing.
24 Q. Throughout the entire transaction, did you believe
25 the seller to be uncooperative?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Yes.
2 Q. In what sense?
3 A. Well, in the sense that I was continually lied to
4 and in several other instances. For instance, besides the
5 misrepresentation that we've been talking about all this
6 time, there were a number of other things, like the mirror
7 in the powder room that she tried to take away.
8 I pointed it out only because it was sitting there
9 in the living room about to be removed by the movers, and I
10 pointed it out to Douglas and Douglas called Lou Rae and
11 asked to have it remain and I was told no, that doesn't
12 stay with the house. It's like a picture.
13 Well, it wasn't hanging like a picture, you know,
14 with a wire. It was actually screwed into the wall and it
15 was flat up against the wall with no gap around it.
16 And of course, in a house of this type you expect
17 a nice mirror in the powder room. So they removed that
18 mirror and in fact took the screws out and all those things
19 and they were ready to remove it and I said, no, I want
20 that mirror.
21 After we purchased the home, a few weeks later the
22 seller shows up at my door with a cheap drugstore mirror
23 made out of bronze, which doesn't even match, you know, the
24 bathroom, and said she brought the mirror that she was
25 going to replace this mirror with, and my wife refused to
152
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 let her do that. But she attempted to do that.
2 Another thing she did that I thought was
3 particularly mean-spirited was that at the time we closed,
4 we closed and I verified with Douglas Rea that the money
5 was in the seller's account sometime around 10:00 a.m. I
6 don't remember the exact time but it was in the morning and
7 it was definitely before noon and I'm remembering around
8 10:00 a.m.
9 So I checked out of the hotel, packed up the car
10 that we had, and in fact I already had the mover scheduled
11 to arrive at noon. So on my drive over I get a call from
12 Doug saying the seller will not let me take possession
13 until 5:00 p.m., and I said I don't understand. I bought
14 the house. They have the money; the house is mine.
15 And he said, well, she's claiming there's a clause
16 in the contract, he said I don't know if it's legit, but
17 the claim in the contract is the seller relinquishes the
18 home at closing or at 5:00 p.m.
19 And I said, yeah, that makes sense. So if it's
20 going to close after 5:00 p.m., I still get possession by
21 5:00 p.m.; and he said that's not the way the seller is
22 reading it.
23 So I arrive at the house anyway because I've got a
24 mover coming, and this isn't all my furniture. This is an
25 air shipment of a pallet, a bunch of boxes of you might say
153
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 emergency supplies for kitchen and bedding and things like
2 that.
3 So I show up and I tell Doug, look, the mover is
4 coming, they're going to be here at noon. If you want me
5 to leave it outside in the front street, that's fine with
6 me. But if anything is missing I'm going to hold the
7 seller liable. If you let me put it in the garage, we'll
8 be done.
9 So the movers came, put it in the garage. I
10 noticed the seller was in the house, empty house, nothing
11 to do, but she was guarding her house so that I could not
12 enter until 5:00 p.m.
13 So I had to cool my heels for the next seven
14 hours. We drove around. We had lunch. We came back and
15 when we came back we started moving into our house, and so
16 the movers would have moved all those boxes into our house
17 and into the right rooms and all that, and some of them
18 were very heavy dishes and things like that. So we had to
19 move those in after 5:00 p.m. and while we were moving in,
20 I noticed the seller walked into our house without
21 knocking, walked through our house and exited the back
22 door.
23 So I called Doug and said, Doug, the seller broke
24 into our house. I'm not going to allow this anymore. You
25 know, this is our house. She obviously has a key, but I'm
154
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 not going to allow her in the house anymore.
2 And this was Friday night, I believe. Anyways, it
3 was at night. It was after 5:00 p.m.
4 And he said, well, you should get keys made, and I
5 said, well, I'm going to need some because I don't have a
6 key to the guest house; and because of this hassle with the
7 air conditioning, she refused to give me a key to the guest
8 house. So the guest house was locked. I could not gain
9 entrance.
10 Douglas called Lou Rae, Lynn -- this is what he
11 told me -- and nobody claimed to have a key to the guest
12 house. They said it was lost.
13 And so Douglas said, look, why don't you hire a
14 locksmith and change all your locks so you'll be safe. And
15 I said, well, that would be great but, you know, I'm busy.
16 I'm moving in right now. You know, I'm tired. I'm trying
17 to move boxes.
18 And I believe the next day was a Saturday and I
19 said and how do I get a locksmith on a Saturday. He said,
20 look, let me take care of all this for you. He said
21 normally I would give you a fruit basket or something. He
22 said let me get you a lock Smith instead. He said I will
23 feel safer if I got you a locksmith.
24 So he paid for the locksmith to come out the next
25 day, broke into my guest house, made keys for me, changed
155
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 all the locks.
2 So I would call that very mean-spirited, not
3 letting us in, not giving us the key to the guest house
4 that we bought and then trying to take our mirror after we
5 moved in.
6 Q. How did you come to the conclusion that the seller
7 declined to give you a key to the guest house because of
8 the air conditioning system?
9 A. That was my assumption. Admittedly, it's an
10 assumption. But it's suspicious that we had this hassle
11 just the day before about the guest house air conditioning,
12 and up until that point everybody seemed to have keys to
13 the guest house, and the day I closed, a day later, nobody
14 has a key to the guest house. Very suspicious.
15 Q. What was the hassle about the air conditioning the
16 day before?
17 A. Well, the air conditioning was demonstrated to me
18 the night before. So up until -- as you saw through
19 several of these walk-throughs I identified air
20 conditioning as an issue that needed to be demonstrated to
21 me, and so what I heard back was there was never a plan to
22 put air conditioning in this guest house, so the builder
23 never intended to.
24 And I said, well, that's not what the advertising
25 says, Douglas, and he agreed. He said you're right. The
156
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 advertising says it's got three zones of heating and
2 cooling. Lou Rae clearly told me one of the cooling zones
3 was the guest house.
4 So he went back to Lou Rae and said -- he tells me
5 that he let Lou Rae know that we've got to put air
6 conditioning in the guest house, and that's when they came
7 back and said, okay, it will cost some amount of money. I
8 think it was 2,500 or 5,000 or some amount of money.
9 And I said, well, I'm not paying a dime. And
10 Douglas said, okay, I'll pay for it or I'll supply it with
11 Lou Rae or I'll split it with the seller or something, but
12 we'll take care of it.
13 And I said I refuse to allow you to take care of
14 it. If Lou Rae and Lynn want to take care of it, that's
15 fine with me. But you had nothing to do with this
16 advertising and telling me it had three zones of heating
17 and cooling, so you know, let them take care of it. So he
18 came back to me later and said, okay, they've agreed to
19 take care of it.
20 And the reason for this other addendum of a
21 hold-back of 5,000 was it was never demonstrated to me that
22 it worked. I could see that there was an air conditioning
23 unit installed outside and I could see pipes coming into
24 the garage and all those things, but it never worked. I
25 turned it on and it never worked.
157
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 So we scheduled a final inspection on the evening
2 before we closed and that evening I showed up a little bit
3 before Douglas or Lou Rae, and it was a hot day but it was
4 late. I don't remember the time, probably 6:00, 7:00 p.m.,
5 but it was a hot day and the windows and doors had been
6 shut.
7 So I walked into the guest house and it was like a
8 sauna inside, very hot, which I thought great; this is a
9 good test for the air conditioner. I flipped it on and I
10 waited, and I could feel the vent and warm air was coming
11 out.
12 And so I waited and about half an hour later
13 Douglas shows up and he says, okay, is the air conditioner
14 working? And I said, no. What do you think? Come on in.
15 He came into the house and by now it was quite
16 cool outside, you know, as in, you know, nice, probably 70
17 or below 70 degrees. Inside it was steaming hot just like
18 a sauna. I'd have to go in and out occasionally just to,
19 you know, cool off.
20 And I checked the thermostat and the thermostat in
21 the half an hour I was there had dropped one degree, one
22 degree. So my response to Doug was, boy, this is a very --
23 it has very good insulation in this house. It's only
24 dropped one degree, but obviously the air conditioner isn't
25 working.
158
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 So he immediately called Lou Rae and Lou Rae came
2 over and her first response was, well, you can't expect
3 this to cool down in -- you know, just like that. It takes
4 awhile.
5 I said, okay, but now we've been waiting here
6 about an hour and it's dropped one degree, so obviously
7 there is something wrong.
8 And she became very combative to me and my wife
9 and said, well, look, it feels cool to me. She held her
10 hand up to the vent and said, this feel cools to me; and I
11 said, well, it doesn't feel cool to me and it doesn't feel
12 cool to the thermostat, you know, which has dropped one
13 degree in one hour.
14 And so we discussed it a little bit and she said,
15 well, they'll fix it later. And I said, no, I want it
16 fixed before closing, so if I have to delay closing I will
17 delay closing until they can demonstrate it to me; and then
18 she became very upset with me.
19 And I said, look, all I want is to see air
20 conditioning in this house. So if you can fix it tonight,
21 bring the people over. If you can fix it in the morning,
22 have them fix it. I will come back whenever you want
23 before closing. You know, I think we were scheduled to
24 close at 9:00 a.m. I said I'll come over at 7:00, 8:00,
25 8:30, whenever you want. Demonstrate it and we'll go right
159
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 to closing and close. But if you can't demonstrate it,
2 then I'll tell them to hold off.
3 So Lou Rae got real upset with me on this and
4 said, do you expect me to have the builder continue to run
5 the air conditioner all night? I said, what? And she
6 said, do you know how much that would cost? Do you want
7 her to pay for running an air conditioner the entire night?
8 I said, well, I don't think it's going to cost
9 that much, but, you know, if that's what it takes to show
10 that it's working. If you think it's working and it's
11 cooling down, I'll come back tomorrow and if it's cool
12 that's great.
13 She said, no, let's just open some windows.
14 Now, this is so ridiculous at this point, I just
15 couldn't believe it. I had to step out of the house. All
16 right? Open some windows to demonstrate the air
17 conditioner is working? That's what she told me.
18 And so I stepped out of the house to cool off, not
19 physically but mentally cool off, and my wife came out
20 there with me and said let's just be done with it. We'll
21 move in tomorrow. Let's forget about it.
22 So finally Lou Rae ended up calling Lynn and we
23 understood that we didn't set the thermostat in the right
24 way. It's a little bit of a tricky thermostat that I
25 didn't understand. There's a setting that says hold the
160
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 same temperature, and that setting isn't obvious. It's not
2 a setting. It's a click through a menu and you find this
3 think that says hold the same temperature. That's what it
4 was set to. So you can turn it to cool, but it will keep
5 whatever temperature you've got it at.
6 And so once we fixed that, it cooled down the
7 house in a matter of two or three minutes. You know, it
8 was cool.
9 So obviously the air conditioner worked at that
10 point. By now it's probably 9:00 p.m. and my wife and I
11 and my son who was there at that time went out to have
12 dinner and we closed the next morning.
13 And all of those things I take to be extremely
14 combative, extremely -- I've never been treated this way in
15 a business deal in my life, you know.
16 And anyway, at the end of all that I was just
17 ready to just put it behind me anyways and move in, but
18 then I still had these issues of, you know, not getting the
19 keys, having the seller come through my house after I
20 purchased it, not being able to move into the house when I
21 bought it, having her trying to replace a very nice mirror
22 with a cheap drugstore mirror.
23 And she was rather rude to my wife about it, too.
24 My wife just wanted to get rid of her and said, look, I've
25 got to ask my husband about this. And she said, oh, you've
161
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 got to ask your husband before you're allowed to make a
2 decision on a mirror.
3 And my wife said, no, you're right, I can make
4 that decision. See you later.
5 Q. Now, you showed up at the guest house that day
6 before close, before anybody else?
7 A. Yes.
8 Q. How were you able to get into the guest house?
9 A. It was unlocked.
10 Q. And I guess at the end of all this angst, it
11 turned out the air conditioning worked fine and you signed
12 off on the document saying I'm satisfied?
13 A. Yes, but that whole interaction definitely leaves
14 a bad taste in your mouth. Because your question
15 originally was did I feel, you know, that there was any
16 problems with the seller and so forth.
17 Q. That's what I wanted to get, was a complete list.
18 A. Yes, yes.
19 Q. Other than what you've already told me, anything
20 else that you think are incidents in which the seller
21 demonstrated, you know, an unwillingness to work with you
22 or any other criticisms you have of the seller?
23 A. Yeah, a couple.
24 Q. Why don't you give them to me.
25 A. Well, for instance, when they did end up putting
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 the air conditioner in the garage, it had to be in the
2 garage that she told me it was okay for my son to leave his
3 car, and Doug went over just to see what they were doing
4 and he tells me that they had -- this garage was very
5 narrow. It's a one-car garage. The workers had built
6 these ladders to put in the air conditioning up through the
7 roof, out through the ceiling and all that, and they were
8 hanging pipes that were hitting my son's car and did
9 scratch my son's car.
10 And I was at work so I had my son drop off the
11 keys for Douglas, who then moved the car out of the garage.
12 All it would have taken -- and this whole process took like
13 ten minutes because my son was right there in Los Gatos.
14 It would have just taken a quick call to see would we move
15 the car, but they didn't and so therefore they scratched
16 it. That's just one issue.
17 Another issue was --
18 Q. Let me stop you there.
19 A. Yes.
20 Q. How do you know that either of the O'Briens knew
21 what these workers were doing?
22 A. I don't know. They may not have.
23 Q. Okay. Another issue?
24 A. Another issue was when we bought the house, there
25 was cobblestone in the front. So in front of the
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 turnaround there was a section where you can park your car
2 in front of the house, you know, a couple of cars wide, and
3 it was all made out of cobblestone, so nice looking, you
4 know, going from blacktop to cobblestone. I don't know how
5 wide it was, maybe ten, twelve feet wide, and then you had
6 the curbing and the turnaround.
7 And after we purchased the property and after we
8 agreed, somewhere in there in the mid to late September
9 time frame, the builder blacktopped all of that.
10 And so I saw that and called up Douglas and said,
11 Douglas, what's going on? Why would they blacktop this
12 perfectly good cobblestone?
13 And his response -- he checked with Lou Rae, I
14 suppose -- that's what he told me -- and the response that
15 came back was, well, the city required it.
16 And I said, well, it's funny that they waited
17 until now, until the house was sold, not telling me that
18 they're going to blacktop this. You know, if it's a city
19 requirement I understand, but it would have been nice to
20 have told me before I purchased it that this would be
21 blacktopped when they knew that that doesn't meet city
22 code.
23 So I think they purposely didn't do that because
24 it looked nicer and then they could come back and then fall
25 back on the city requirement.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Do you have any knowledge as to when the O'Briens
2 or anybody from Stonehenge first learned that the
3 cobblestone needed to be blacktopped?
4 A. No. I guess we can ask them that.
5 Q. Do you have any reason to believe that in fact it
6 wasn't a requirement of the city to blacktop the
7 cobblestone?
8 A. No. I believe them. I have no reason not to
9 believe them but, you know, they probably knew well ahead
10 of time.
11 Q. Other than what you've told me, any other
12 criticisms you have of the O'Briens or anybody at
13 Stonehenge?
14 A. Okay. There's another small one.
15 Q. Well, I'm trying to get an exhaustive list.
16 That's fine.
17 A. Okay. It keeps going, right?
18 We had a very nice stove and the stove is one of
19 these gas ranges that has a grill on it and the grill is a
20 cast iron, so fairly heavy, and when we bought it, you
21 know, it had that grill on there and it had the burners and
22 everything.
23 After we purchased the home, Lynn comes by with a
24 different grill and she brings it into the house. She
25 knocks on the door and my wife lets her in and she says,
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 oh, I've got your grill to replace the one that's on there.
2 And my wife says, well, there's already a grill
3 here. And she says, well, that one doesn't go with the
4 house but I had to put it on there. It came from my house.
5 And my wife said, what do you mean by this? And
6 she said, well, here is the grill that goes with the stove,
7 and she put it on there and it was warped. I mean it
8 wouldn't sit flat.
9 And she said, what gives? Why are you giving me a
10 warped grill? And she said, well, this one wouldn't pass
11 the inspection so I used the one from my house to pass the
12 inspection, and now I'm taking it back.
13 And she took back her -- the grill that I bought
14 on my stove and gave me a warped one, which is still there
15 today.
16 Q. And this occurred after the close of escrow?
17 A. Yes.
18 Q. Is there a reason why you allowed her to take the
19 unwarped grill and replace it with a warped grill?
20 A. I didn't. I would not have allowed it. My wife
21 did, probably just at the shock of her bringing back
22 something like this.
23 I asked her that myself and she said, boy, I was
24 so shocked I didn't know what to think and before I knew it
25 she was out the door with her grill.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Any other criticisms that you have of the sellers
2 or anybody else at Stonehenge?
3 A. Let me think. There's got to be some more.
4 One criticism was that my wife and I went to the
5 property to look at it and Lynn O'Brien was there, the
6 seller, and she didn't identify herself as the seller. So
7 I thought she was, you know, working for Coldwell Banker or
8 working for Lou Rae as another agent, you know, assisting
9 in the showing of homes.
10 And she showed us through the entire house, every
11 room, gave me a nice brochure that was multi-page that had
12 all the same misrepresentations that we've been describing
13 here; but she made a few comments that I didn't catch but
14 my wife did saying we decided to do this and we decided to
15 do that about the house. I just took it to mean, you know,
16 it was the colloquial we.
17 But my wife as we left said, do you think that was
18 the builder? I said I thought she was a realtor, and she
19 said, no, she kept saying we decided this and that. It
20 sounded like that was the seller.
21 And I thought it was a little bit, you might say,
22 tricky not to tell me she was the seller instead of -- I
23 mean why not identify herself to me when I go in that she
24 is the builder of this house and the seller?
25 But I took it -- I mean I may have asked different
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 questions or I may have -- you know, took things a little
2 differently if I would have known that she was the actual
3 seller of the property versus somebody representing the
4 home for the seller, and I thought that was at the very
5 least a little tricky on her part.
6 Q. Have you now given me an exhaustive list -- when
7 did that happen that Lynn was being tricky?
8 A. It happened in the first half of August, because
9 my wife had left I think it was August 14 or 15 to go back
10 to London and she did not come back until after 9/11, and I
11 remember my wife was there, so it had to be in that first
12 two weeks of August.
13 Q. Have you now given me an exhaustive list of all
14 the criticisms you have of either the O'Briens or anybody
15 at Stonehenge?
16 A. As far as I can recall right now, yes.
17 Q. Now, let ask you about Lou Rae Kagel.
18 A. Um-hum.
19 Q. You have some criticisms about representations
20 concerning the size of the home, the size of the lot, the
21 air conditioning, the pool, this 800-foot structure, the
22 fiber optics. You have criticisms about her being
23 combative the night you guys tried to use the air
24 conditioning.
25 A. Yes.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Any other criticisms you have of Lou Rae Kagel as
2 a real estate agent?
3 A. Yes. I think she definitely put myself at risk as
4 well as Coldwell Banker by asking me to assign 1.25 million
5 dollars to the seller on 9/16 or 17, whenever that was that
6 she asked me to do this, so that we would not be out of
7 contract, as it was, as it was described to me; and it was
8 told to me in basically no uncertain terms that I would be
9 out of contract, I would be liable to be sued and they
10 could take it off the market, sell it to someone else and I
11 would have to pay any difference in price that they would
12 sell for if I did not put this one and a quarter million --
13 assign it to the seller; and that came from -- according to
14 Douglas, that came from Lou Rae in talking to the seller.
15 And the way it was described to me was the reason
16 for this was they were counting on the sale going through
17 on the 16th or the 19th, whenever we agreed. I think it
18 was the 19th. And since it wasn't going to happen on that
19 day -- she had a note, a construction loan that was due.
20 Q. She being Lynn O'Brien?
21 A. I'm sorry, yes, Lynn O'Brien had a construction
22 loan that was due.
23 And so it was very transparent that, you know,
24 both Douglas and Lou Rae were representing the seller
25 against me in this action, because even Douglas I was a bit
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 upset with about this, who I thought did a great job for
2 me. But I told him I'm not happy with you even asking me
3 for one and a quarter million, because you tell me what
4 would happen if Stonehenge would declare bankruptcy next
5 week. You know, I'd be out one and a quarter million plus
6 the one and a quarter earnest money that I put down.
7 Q. Was it conveyed to you that releasing this deposit
8 was something the seller wanted?
9 A. Yes, that's what it was conveyed as.
10 Q. Do you have a criticism of Lou Rae passing on the
11 seller's demands?
12 A. Yes. I would say not necessarily if it was any
13 demand, but this type of demand that would put my one and a
14 quarter million at risk which, you know, obviously it would
15 have.
16 Q. Do you have a criticism then of Douglas Rea for
17 passing on that demand to you?
18 A. Yes. Now, to Douglas' credit he then quickly
19 retracted and said, well, if we at least put it in an
20 earnest money account, then we could prove that we are
21 ready to close whenever the time is right when we close,
22 but it will be in an earnest money account.
23 And my response back to that was, well, how much
24 interest do I earn on an earnest money account and he said
25 zero, and I said, well, why would I do that then? Why not
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 keep it and continue to earn money on it until I close?
2 Q. Okay. Any other criticisms of Lou Rae Kagel other
3 than what you've already told me?
4 A. That's all I can recall from that.
5 Q. Let me ask you about Douglas Rea. In general you
6 were happy with Mr. Rea's work for you?
7 A. Yes.
8 Q. You have a criticism about him passing on this
9 suggestion that you release this money from escrow?
10 A. Yes.
11 Q. Any other criticisms of Mr. Rea?
12 A. The only other one was that he paid for half the
13 air conditioning unit, which I don't think he should have
14 and I told him not to.
15 Q. Anything else?
16 A. No, that's it.
17 MR. KOSS: Why don't we mark this.
18 (Whereupon, the document described
19 below was marked Exhibit No. 24 for
20 identification.)
21 BY MR. KOSS:
22 Q. Showing you Exhibit 24. This is a document you
23 produced and it indeed has your signature on it.
24 A. Yes.
25 Q. Do you recall receiving this document at the time
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 you made your initial offer?
2 A. I recall this document. I don't know if it was at
3 the same time as the offer, but it was very early on in the
4 cycle.
5 Q. Did you read it?
6 A. Yes.
7 Q. Did Douglas Rea go through and explain the various
8 provisions of this in any sense?
9 A. In a very cursory sense, yes.
10 Q. And in a cursory sense what did he tell you?
11 A. I don't recall. The essence of it was that both
12 the -- this was being represented as both the seller's and
13 buyer's agent being from the same company, if I recall, and
14 so there was some obligatory disclosure statements just so
15 that I realized that, you know, both agents are from the
16 same company.
17 Q. Well, did Mr. Rea say you shouldn't trouble
18 yourself with reading this document or was it irrelevant or
19 unimportant or anything along those lines?
20 A. I don't recall. It was one of hundreds I had to
21 sign.
22 Q. Okay. I'd direct your attention to the section
23 that talks about buyers about three-quarters of the way
24 down.
25 A. Yes.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. It says, "Buyers should not just rely on what
2 sellers or real estate agents tell them about the
3 property."
4 Did you understand that at the time you entered
5 into this transaction?
6 A. Yes.
7 Q. It goes on to say, "Required written disclosures
8 do not take the place of hiring expert inspectors to
9 evaluate the size and condition and use of the property,
10 including but not limited to governmental requirements and
11 limitations..."
12 Do you recall reading that at or about the time
13 you made your offer on this property?
14 A. I don't recall that, no.
15 Q. Did you think you had some obligation to go check
16 out with the City of Monte Sereno about what requirements
17 and limitations there might be in installing structures and
18 pool and that sort of thing?
19 A. I did not. I thought that's why I was paying real
20 estate brokers, to find that out for me, and I relied on
21 their expert advice.
22 Q. Well, did any of the real estate brokers tell you
23 that you could not only install a pool but you could put
24 cement decking around the pool?
25 A. We discussed the cement decking, yes.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Who did you discuss that with?
2 A. With Lou Rae.
3 Q. And what was discussed in that regard?
4 A. Where the cement deck would go, how it would
5 connect into the pool house, how we could have cement deck
6 around the Jacuzzi. Lots of discussions around that.
7 Q. And despite this disclosure, you thought you would
8 talk to Lou Rae about that as opposed to hiring a pool
9 contractor, someone like that to go to talk to the city
10 about what you could actually do?
11 A. That's correct. I felt that, you know, in
12 purchasing a home like this -- like I said, I saw that
13 every adjacent property, of which there are five, all had
14 pools. It was disclosed to me in marketing brochures and
15 in discussions that we could build a pool.
16 I had multiple discussions with Lou Rae. We had
17 the discussion with Lynn. Douglas sent me an e-mail
18 telling me we could put in a pool.
19 So I'm not sure how much more, you know, checking
20 I needed to do. In all of my purchases prior to this of
21 homes, I've never gone to a city, a county, to check on
22 anything about this. I relied on the expert advice of the
23 brokers I hired to do that.
24 Q. Well, we went through this at length this morning
25 about the discussion you had about the swimming pool with
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 these agents.
2 A. Yes.
3 Q. And with the seller.
4 A. Yes.
5 Q. And this morning you didn't mention anything about
6 they also promised you that not only could you install a
7 pool, but you could also install cement decking around the
8 pool.
9 A. Okay.
10 Q. Is that in fact something that they told you?
11 A. I don't think we ever said cement decking but we
12 talked about the decking around the pool. So at the time
13 we were kind of open to what it would be. It might have
14 been stone. But we talked clearly about having a decking
15 around the pool, yes.
16 Q. No one ever suggested to you prior to close of
17 escrow that you could put extensive impervious cement
18 decking around a swimming pool?
19 A. I never heard the term "impervious structure"
20 until I went to the city and they told me I was over on
21 impervious structure.
22 I had never heard that term before in this
23 context, so I never knew there was any limitation on
24 impervious structures.
25 MR. KOSS: I show you Exhibit 25.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 (Whereupon, the document described
2 below was marked Exhibit No. 25 for
3 identification.)
4 BY MR. KOSS:
5 Q. Showing you Exhibit 25, is this your signature on
6 page 3?
7 A. Yes.
8 Q. Did you receive this document at about the same
9 time you made an offer on the Blanchard property?
10 A. Yes, I did.
11 Q. What did you think the purpose of this document
12 was at the time you received it?
13 A. It looked like a big checklist on things like fire
14 hazards and, you know, different types of things to look
15 out for, I guess.
16 Q. Did you think it was important to read this
17 carefully?
18 A. No, I didn't.
19 Q. Why did you think it wasn't important to read it
20 carefully?
21 A. It looked like another one of these documents
22 that's just a laundry list of, you know, things to cover
23 sellers and agents around the purchase of a home.
24 I mean this wasn't the only one. I've got a whole
25 stack of documents, you know, around earthquake hazards
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 and, you know, hazardous spills and environmental hazards
2 and all kinds of things. There were multiple, multiple
3 pages, and so this was just one more of them, in my view.
4 I didn't see anything specific in here that yelled out
5 something that would have concerned me.
6 Q. Well, how about paragraph one? Let me direct your
7 attention to that.
8 A. Okay.
9 Q. Did you understand that at the time you were
10 making an offer to purchase this that representations as to
11 size, building size, location of property lines, property
12 size were not accurate and should not be relied upon?
13 A. Well, I see that they said that, yes. It sounded
14 like boiler plate, you know.
15 Q. Well, are you suggesting that despite this, you
16 said, well, I'm going to rely on those representations,
17 anyway?
18 A. Yes.
19 Q. It was certainly within your ability to verify
20 exactly what the square footage was, wasn't it?
21 A. Yes, I could have, yes.
22 Q. Paragraph two says that if you have -- I'm
23 paraphrasing -- that you should confer with an architect or
24 city officials regarding present future availability of
25 permits for construction, additions and other building
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 projects in current or future uses of the property.
2 Do you recall reading that language at the time
3 you purchased?
4 A. I don't recall that language. But even if I did,
5 when I see a positive representation that the city says
6 that I can build an 800-square-foot structure and in
7 talking to Lou Rae she tells me the city has already
8 approved an 800-square-foot structure, that the builder
9 just decided not to build it but it's already approved, I
10 didn't feel that this was all that relevant.
11 Q. But you subsequently found out with the pool that
12 the city says yes, you can build a pool, but you've got to
13 do these other things?
14 A. No, they didn't really do it that way.
15 Q. Well, isn't that in fact how it worked out?
16 A. That's how it worked out through negotiation. It
17 wasn't as though they were just forthcoming and said go
18 ahead and build the pool. I had to really -- I spent a
19 good amount of time discussing it with Brian Leventhal to
20 come up with an agreement on how to do this, and if he
21 didn't come up with that 900-foot concession, we wouldn't
22 have a pool today.
23 Q. Would you understand that's why real estate agents
24 and sellers give you disclosures such as this suggesting
25 that, look, if you have future uses, you ought to go down
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 to the city and make sure exactly you can do what they say?
2 A. That would be true if they didn't say the city
3 says you can put in a pool and it's already been approved.
4 The city has already approved this. If they didn't say
5 that, then yes, it would be on me to see what I could build
6 there. But when that positive representation was made to
7 me, there was no reason for me to go check with the city.
8 I relied on that advice from the realtor, from Lou
9 Rae and from Lynn, who both told me the city had already
10 approved this. So why would I go check behind their backs
11 with the city? I was a busy person. I didn't have time to
12 just go meet with the city all the time and figure these
13 other things out or hire people and so forth.
14 Q. Well, do you have any reason to believe that had
15 you gone down to talk to Brian Leventhal in August of 2001,
16 you would have learned that yes, you can put in a pool but
17 you're going to have to do some other work that's going to
18 cost some money?
19 A. Yes, we may have been able to come to that same
20 agreement that we ended up coming to later, in which case I
21 would have asked for a reduction in price in order to make
22 that happen, because it was already represented to me that
23 I could do these things.
24 Q. Well, no one represented to you what the cost
25 would be, did they? No one represented to you what the
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 hassles might be in getting a pool installed or how long it
2 would take to permit or what any of that process would
3 take, did they?
4 A. No. I think you're misrepresenting the situation.
5 If someone tells you you can put in a pool, I don't expect
6 I have to tear down part of my house to build a pool.
7 Okay? I bought a house. I bought a driveway. I bought,
8 you know, all the structures there, and if you're telling
9 me the only way I can build it is by tearing out some of
10 that and replacing it at huge cost, that of course is not a
11 truthful representation.
12 MR. KOSS: Let's mark this Exhibit 26.
13 (Whereupon, the document described
14 below was marked Exhibit No. 26 for
15 identification.)
16 BY MR. KOSS:
17 Q. Showing you Exhibit 26, do you recall receiving
18 this disclosure statement?
19 A. Yes.
20 Q. Have you ever come to the opinion or conclusion
21 that anything set forth in this document was an incorrect
22 representation of the condition of the Blanchard property?
23 A. I don't remember anything in here that struck me
24 as being inaccurate, no. You'll notice I got this after
25 close of the property, though.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 No, I'm sorry, I'm sorry. I got it on 8/29, not
2 9/29, so I did receive it before we closed. I believe this
3 to be accurate.
4 MR. KOSS: Okay. Let me show you Exhibit 27.
5 (Whereupon, the document described
6 below was marked Exhibit No. 27 for
7 identification.)
8 BY MR. KOSS:
9 Q. Do you recall seeing Exhibit 27 before today?
10 A. Yes.
11 Q. When do you believe you first saw Exhibit 27?
12 A. Is there a date on it? I don't really recall.
13 8/29. So that must be when I saw it.
14 Q. Do you recall the circumstances under which you
15 were given this document?
16 A. No, I do not.
17 Q. Do you know if any of the representations or
18 statements set forth in this document are inaccurate?
19 A. No, I don't. I don't know of any inaccuracies
20 here.
21 Q. Did you look through it at the time?
22 A. I did, yes.
23 Q. Let me direct your attention to the first page.
24 It talks about the approximate square footage of the house
25 being 4300 square feet.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Yes, that did catch my attention.
2 Q. Okay.
3 A. Because up to this point I was told it was 4100 --
4 I mean 4400. I'm sorry. This is the main house square
5 footage, right, 4400.
6 Q. But you had already seen the appraisal saying it
7 was --
8 A. I'm not sure I saw it before this point.
9 Just like the age saying less than one year. It
10 was brand new and I thought they were just throwing in a
11 number there that -- it did catch my attention that it was
12 lower than what it was represented to be at 4400. So I
13 thought that was odd, but I didn't pay attention to it
14 myself.
15 Q. Okay. In any event, you had set this lot size
16 issue and the house size issue aside by this date, at the
17 time you saw this, August 29?
18 A. I'm not sure when I set it aside. It may have
19 been after that.
20 Q. Okay. Let me direct your attention to the second
21 page, the bottom of that paragraph seven.
22 A. Yes.
23 Q. It talks about any high speed data line service
24 and the box checked is no. That was consistent with what
25 you thought about the house at the time of close?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Okay. Now, let's not confuse this with fiber
2 optics within the home. Data access line service to me
3 means access into the home, not within the home.
4 Q. Okay.
5 A. So I understood that yes, they did not connect to
6 it to a DSL or any kind of D-1 line or something like that.
7 But within the home I still understood it to have fiber
8 optics at this home.
9 Q. And you may be right that that's what it's
10 referring to, service to the home.
11 A. Exactly right. That's the way I read this, any
12 high speed data line service.
13 Q. So like a Comcast cable or something like that.
14 A. Exactly. Because some of the other things refer
15 to that, too. For instance, it says above active telephone
16 numbers. So of course that has to do with telephone lines
17 coming into the home, so that's the way I read all of that.
18 MR. KOSS: Let me show you Exhibit 28.
19 (Whereupon, the document described
20 below was marked Exhibit No. 28 for
21 identification.)
22 BY MR. KOSS:
23 Q. Showing you Exhibit 28, is this a document that
24 you prepared?
25 A. Yes, it is.
183
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. What was your purpose in preparing this document?
2 A. I did it at the request of Ryan Iwanaga. So Ryan
3 is Lou Rae's manager in the Coldwell Banker office in Los
4 Gatos. After I found out in March of 2003 that I could not
5 build the pool that I wanted, I negotiated with Brian
6 Leventhal and then I talked to Ryan Iwanaga and said, Ryan,
7 I've got a problem with this house I purchased. You know,
8 I can't build the pool that you represented I could build.
9 So if you're willing to pay for the cobblestone for my
10 driveway, then I will forgive all these other lies that
11 your agent told me.
12 And so I negotiated with him and he said, okay,
13 but, Ralph, I'm going to need some things from you. I need
14 the price quotes on the driveway replacement and I need a
15 letter from you, and this was after going back and forth
16 for several weeks. I kept calling him up and asking him
17 and he said that he would see what he could do but this was
18 beyond his signature authority to pay.
19 And so I prepared this document at his request and
20 that's how it got to him.
21 At the time as you can see, I just wanted to get
22 in the pool. I was quickly running out of runway to get
23 the pool built for that summer or fall, and at this point
24 it was already too late but I wanted to see if I could
25 hurry up and get it in.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 And I also knew that the concession I got from the
2 city had a sunset date on it. So I felt if I could get
3 this done, I'd go ahead and concede all these other lies
4 that were told to me about the house, because I knew my
5 wife wanted the pool. I had a very young grandson who
6 didn't know how to swim yet and I wanted to get him in the
7 pool, and my son, also, you know, wanted a pool.
8 So I said, okay, let's just move on. Let's forget
9 about everything. I thought this was quite a concession
10 and I let Ryan know that.
11 And basically after I gave this to him, I checked
12 back with him about every two or three days and he kept
13 saying he had no response from his legal team, and I asked
14 him to give me the name and phone number and I'll be glad
15 to try to negotiate with the legal team; and he said, no,
16 he's not allowed to do that; he has to do it.
17 So finally after some period of time -- I don't
18 recall exactly how long but it was probably about a week
19 and a half or so, I said, look, I can't just keep waiting
20 for this. I'm losing the opportunity to get my pool built,
21 so I'm going to give you a deadline and here is what the
22 deadline means to me. If you don't pay this money and
23 agree to it and allow me to go forward with the pool, then
24 I'm going to stop negotiation, I'm going to hire a lawyer
25 and I'm going to sue you for all the other items on this
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 page beyond the pool, and I can tell you these other items
2 on the page are worth much more than the pool. So it's up
3 to you.
4 And the deadline I gave him was around June 20, I
5 believe. I could be off by a day or two, but it was around
6 June 20, and he did call me back on the morning of June 20
7 and said, Ralph, I have no answer for you. And I said, so
8 is that a no? He said, no, it's not a no, it's not a yes;
9 I just have no answer. So do what you have to do.
10 So that day I called Paul Minoletti's law offices
11 and arranged for a meeting with --
12 MR. MINOLETTI: That's enough. You don't need to
13 tell him any more than that.
14 BY MR. KOSS:
15 Q. No, I don't want you to describe the discussions
16 you had with your lawyers.
17 A. Okay.
18 Q. Okay. So your purpose in writing this letter was
19 to in essence ask Coldwell Banker to reimburse you for some
20 of the expenses you were looking at?
21 A. Yes. And by the way, this was not going to be the
22 entire expense for the driveway. I knew this. The entire
23 expense for the driveway ended up being over -- it was in
24 the mid 60,000 range.
25 Q. Your purpose in writing Exhibit 28, were you
186
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 attempting to carefully and accurately describe the facts
2 to Mr. Ryan Iwanaga?
3 A. Yes, that was my attempt.
4 Q. Directing your attention to the first paragraph,
5 you make a statement in there that Lou Rae told us we could
6 build a pool plus have a garage or a workshop.
7 A. Yes. Well, it was more than that. You know, I
8 just -- she said the city says it's okay to build an
9 800-square-foot structure. I didn't go into the entire
10 description in this letter, but I did let Ryan know by
11 voice in several calls that, you know, we couldn't build an
12 800-square-foot structure.
13 It wasn't articulated that there was limitations
14 on that structure and in fact it was described that I could
15 build bedrooms, I could build an office, I could build a
16 garage plus an office, I could build an artist studio, you
17 know, a lot of different things with this 800-square-foot
18 structure.
19 Q. And that's my question to you. Is there a reason
20 why you didn't put down all the things that Lou Rae told
21 you you could build and instead you limited it to a garage
22 and workshop?
23 A. Oh, those are just two of the things. There was
24 no particular reason other than the letter was already
25 getting pretty long and, you know, there's a lot of other
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 things I could have put in here in detail, but I elected to
2 just keep it short, or relatively short.
3 Q. Now, in the bottom paragraph you refer to some
4 issues about square feet --
5 A. Yes.
6 Q. -- and the representations about that.
7 A. Yes.
8 Q. Why were you raising those issues?
9 A. Well, I was raising all of -- several of the
10 issues that had to do with misrepresentation so that Ryan
11 would know and whoever he presented this to would know that
12 I'm trying to settle on something very minor, which was to
13 get the pool installed, and there was a resolution that I
14 negotiated with the city that allowed us to do it very
15 inexpensively, but yet if you don't agree to these things,
16 there's a number of other things that I think I was -- that
17 were misrepresented about the home that I'm then going to
18 come back to you with later, which is what we're doing
19 today.
20 Q. Including the square footage?
21 A. Including the square footage, yes.
22 Q. On page 2, if I could direct your attention to
23 that, you reference Lou Rae Kagel going to the city.
24 A. Yes.
25 Q. What do you know about that?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. This was in -- I never talked to Lou Rae after
2 purchasing the home, so this came directly from Ryan
3 Iwanaga. I let Ryan know that I could not build this home
4 and he said, well, have you negotiated with the city?
5 And at this point I was in the negotiations with
6 the city, so I don't think when I first started talking to
7 him I had arranged that agreement, or we at least did not
8 have sign-off on that, and I got sign-off on it in late
9 May.
10 And so as I was working through that he let me
11 know that he talked to Lou Rae and he said Lou Rae says I
12 can build a pool on this property, and so I said okay, if
13 she can get me, you know, the okay to build a pool, that's
14 great. Go for it. And he said, okay, I'll have her go to
15 the city and see what we can do.
16 So I called him a few days later and he said, yes,
17 Lou Rae tells me she went to the city and your pool will be
18 approved, but you might have to change the design a little
19 bit.
20 And I said, so what does that mean, and he said,
21 well, you know, maybe the size has to be reduced a little
22 bit, but you will be able to build a pool on your property.
23 And I said, well, that's interesting because I talked to
24 Brian Leventhal and his words to me were, "Ralph, I can't
25 authorize you to put a stepping stone on your property."
189
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 That's what he told me.
2 So I said, so what Lou Rae just told you, Ryan, is
3 that she's lying to you as well as she's been lying to me.
4 And Ryan was very quiet after that.
5 Q. Did you ever try and verify who Lou Rae spoke to
6 at the city, if she spoke to anyone?
7 A. No, I did not.
8 Q. Did you ever talk to Brian Leventhal about whether
9 or not he had a conversation with Lou Rae Kagel?
10 A. No, I did not. I did not feel that was my
11 position to try to backtrack on what Lou Rae may or may not
12 have done. She may not have gone to Brian. I don't know.
13 But in any case, what Ryan relayed to me was an
14 outright lie. There was no way that Brian would have
15 articulated any kind of agreement that I could build a pool
16 when he told me I could not put a stepping stone on my
17 property. Those are his -- that's his quote, I could not
18 put a stepping stone on my property. I don't know how much
19 clearer he could have been.
20 Q. And so you discount from your analysis that maybe
21 Lou Rae Kagel was told something different by somebody
22 else?
23 A. Yes. And the reason I say that is there are only
24 a few people in this office and they were very, very clear
25 to me, each one of them, that Brian Leventhal was the only
190
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 person there to make any decisions like this, and they all
2 deferred to Brian Leventhal, and so there was nobody else
3 that would have made any other representation.
4 I'm very comfortable in saying that because the
5 other folks in the office all said Brian is the planner, he
6 is the person that you have to get any kind of agreements
7 from.
8 Q. Now, up at the top of page 2 you talk about Lou
9 Rae Kagel being a liar and you refer to the air
10 conditioning situation.
11 A. Yes.
12 Q. Do you have any reason to believe that when Lou
13 Rae Kagel told you that the pool house was air conditioned,
14 she did it in good faith and honestly believed that it was
15 air conditioned?
16 A. I don't know. But after I pointed out that it
17 wasn't, she still argued that it was even until twelve
18 hours before closing when there was no heat coming out of
19 the vents.
20 And even after it was positioned and she knew that
21 it didn't have air conditioning, her feedback back through
22 Douglas was the builder never intended to put air
23 conditioning in, so there will not be any air conditioning,
24 and in fact a pool house doesn't need air conditioning, is
25 the words I heard back through Doug.
191
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. And that was the position of the seller or the
2 position of Lou Rae Kagel or both, do you know?
3 A. Both, both.
4 Q. Do you have any reason to believe that Lou Rae
5 Kagel wasn't as surprised as you were to find out that the
6 pool house didn't have air conditioning?
7 A. She may have been. I don't know. She never
8 represented that to Douglas.
9 Q. Now, you attached to this letter, Exhibit 28 --
10 the letter you had sent to Mr. Leventhal.
11 A. Yes.
12 Q. And I think we discussed this earlier.
13 Mr. Leventhal asked for a letter to be sent. Is this now
14 that letter?
15 A. That is the letter, yes.
16 Q. And in response to this, does Mr. Leventhal
17 somehow approve your plans?
18 A. Yes, he did. He stamped this particular letter
19 approved and he gave it back to me in late May.
20 So it took awhile to get it approved and I had to
21 discuss it with him on the phone one more time, I recall,
22 and he had some questions about it and then in late May he
23 did approve it; and that's why the letter that you have at
24 the front here, June 9, that I sent to Mr. Iwanaga.
25 MR. KOSS: Let me show you Exhibit 29.
192
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 (Whereupon, the document described
2 below was marked Exhibit No. 29 for
3 identification.)
4 BY MR. KOSS:
5 Q. Showing you Exhibit 29.
6 A. Yes.
7 Q. Were these attached to the letter you sent to
8 Coldwell Banker, Exhibit 28?
9 A. I know I attached some documents. I believe
10 these -- I believe these are the documents, yes, that I
11 attached, and I can tell you specifically where I received
12 these documents.
13 Q. Sure. Why don't we do that. Where did you get
14 them?
15 A. Okay. Well, the first page was a brochure that
16 was in the home and handed to me by Lou Rae when I first
17 went to look at the home, and as you can see, it says 5300
18 square feet; it says three zones of heating and cooling; it
19 says fiber optics keep you in touch and it says room for a
20 pool and/or other building. All four of those turned out
21 to be lies.
22 The second page is a different brochure that I got
23 later that was in the house in another trip that I went
24 there, and as you can see here it says 4400 square feet for
25 the main house and 700 for the guess house, which adds up
193
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 to 5100. So it was somewhere around when I received this
2 that I found out that now they're representing it to be
3 5100 square feet.
4 But the third page is the back of this brochure
5 and there -- I believe, and there you can see it says again
6 three zones of heating and air conditioning, fiber optics
7 for better communications, and it says at the very bottom,
8 and this is very specific to me and that's why I did not
9 feel I needed to go to the city -- it says city says space
10 in back for an additional 800-square-foot structure.
11 I mean that is very specific to me.
12 Okay. Now, the next page is an MLS listing and it
13 shows possible pool site, which I know to be the term used
14 in all of these MLS listings. It says, you know, there's
15 room somewhere to put a pool.
16 And the rest of the document now is --
17 Q. Well, let me stop you. How did you get the
18 Infolink printout?
19 A. I got this from Douglas.
20 Q. And is this a document you got as you drove to the
21 property?
22 A. I don't believe so. I got this later.
23 Is there a date on the top of this? August 15.
24 So obviously it's later because I first saw the property in
25 I believe the first week of August and this was August 15
194
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 at the time we -- close to the time we -- in fact, I may
2 have received it after the 15th. It was printed on the
3 15th, so I'm not sure what day I actually received this
4 document.
5 Q. Okay. And the next document, where did you get
6 this?
7 A. Okay. The next document is several pages. All of
8 the rest of these represent one document, all the rest of
9 the pages, and this document is a very thick piece of
10 paper, very nicely printed, that I received from Lynn
11 O'Brien directly. She handed this to me from her hand to
12 mine as she represented the property in an open house.
13 There was nobody else in the home other than my
14 wife, myself and Lynn and she handed this to me and she
15 described each room and walked through it, and here you can
16 see there's representation in this case of 5100 square
17 feet, but it also says again three zones of heating and air
18 conditioning, fiber optics for better communications; and
19 I'm not sure what else it has in here but, you know, a lot
20 of marketing type of information here.
21 Q. And do you recall if you received this packet of
22 documents before or after you put an offer in on the
23 Blanchard property?
24 A. I don't recall. I believe it was right around the
25 time.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. You may have seen this before you actually put in
2 the offer?
3 A. I may have. I don't recall the exact timing here.
4 It could have been -- if I did it would have been, you
5 know, like days before, days after, something like that,
6 but it was close to that time.
7 Q. Directing your attention to the first page of
8 Exhibit 29, there's a reference to total square feet.
9 A. Um-hum.
10 Q. Did you have any reason to believe that Lou Rae
11 Kagel didn't honestly but mistakenly believe that the house
12 had 5300 square feet?
13 A. At the time I didn't but now I do know she knows
14 that it was not, because in discovery I see that she filled
15 out MLS documentation that claimed it was 5100 square feet
16 back in June. So she knew as early as June at the latest
17 that it was 5100 square feet. Yet this was the document I
18 received in August saying it was 5300.
19 Q. Do you have any reason to believe that at the time
20 you received this document that Lou Rae Kagel didn't
21 honestly but mistakenly believe there was three zones of
22 heating and air conditioning?
23 A. She may have.
24 Q. Do you have any reason to believe that at the time
25 you received this document that Lou Rae Kagel didn't
196
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 honestly but mistakenly believe there was fiber optics in
2 the house?
3 A. Yes, she may. She may have just been mistaken on
4 that. I don't know.
5 Q. And at the time you received Exhibit 29, do you
6 have any reason to believe she didn't honestly but
7 mistakenly believe there was room for a pool and/or other
8 building?
9 A. I don't know on that. I would have thought she
10 would have known that because she had access to the
11 architectural drawings. She had talked to Lynn. And the
12 way she represented it wasn't I think or maybe you can or
13 anything like that. It was very definitive, the city says
14 you can do this. There's already an approval from the city
15 for a building permit for an 800-square-foot structure.
16 The builder just decided not to do it.
17 Q. Okay. Do you have any reason to believe that at
18 the time you received the third flier that Lou Rae Kagel
19 didn't honestly but mistakenly believe that the city would
20 allow an additional 800-square-foot structure?
21 A. I don't know what due diligence she did to
22 determine this.
23 (Whereupon, the document described
24 below was marked Exhibit No. 30 for
25 identification.)
197
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 BY MR. KOSS:
2 Q. Showing you Exhibit 30, are these estimates that
3 you provided to Coldwell Banker together with your
4 correspondence that we've marked as Exhibit 28?
5 A. Yes.
6 Q. The first page is an estimate from Calwest
7 Landscape.
8 A. Yes.
9 Q. Did you have them do the work described in this
10 estimate?
11 A. No, I did not.
12 Q. Is there a reason why not?
13 A. Because they were only going to do the demolition
14 work and I was going to have somebody else do the paving
15 stonework, and I ended up going with one company to do all
16 of it for me.
17 Q. I'll direct your attention to the second page,
18 which is an estimate from -- actually, it says "Agreement"
19 from Interlocking Pavers Specialist.
20 A. Yes.
21 Q. Did you hire Interlocking Pavers Specialist to do
22 the work described in this document?
23 A. No.
24 Q. Is there a reason why not?
25 A. As I recall, we had a couple of different quotes
198
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 from different landscapers on doing the driveway. This was
2 one of them and this was the lower priced one, so this was
3 what I included.
4 And if you'll notice, on the front it even says
5 they'll try not to damage the curb. The way this was
6 described to me is that by cutting through the curb -- the
7 curb and the driveway was a one-piece structure and the way
8 they described is as they cut through they will determine
9 if they can keep the curb. If they can keep the curb, all
10 of this is what it will be, and if there is no rebar in the
11 curb and so forth. If any of that happens, the price goes
12 up here and the price goes up on the second item, and so I
13 knew this 42,000 roughly was minimum cost, assuming I could
14 keep my cement curb.
15 Now, what they told me on the side was they didn't
16 think so. They thought that it looked like it was a
17 one-piece, in other words, a false curb that was just
18 sitting on top of the ground, and they said if that was
19 truly the case, which it looks like it is, then the cost is
20 going to actually be greater because I have to replace the
21 curb; and that's in fact what happened and that's why the
22 cost went up.
23 And in order to get all that done from one company
24 so I could get it done more quickly and I didn't have the
25 hassle of having to coordinate two different companies, I
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 hired one company to do it and that ended up being West Bay
2 Landscaping.
3 Q. Do you have documents that show what you paid to
4 do that work?
5 A. I have most of the documents and I'm still looking
6 for one of them, and so I need to pull all that together.
7 But I recall the cost to be in the 65,000 range.
8 MR. KOSS: Counsel, I don't think we got those
9 documents either, so maybe if you could get those to us.
10 MR. MINOLETTI: I don't have them yet.
11 THE WITNESS: I still need to find them. I'm
12 looking through my documentation. I found most of them,
13 but there's one additional document for the actual
14 cobblestones themselves that I'm still looking for. So I'm
15 basing some of this on recollection, but I recollect it to
16 be in the 65,000 range, give or take $5,000.
17 MR. KOSS: Why don't we mark this as next. I
18 think we're up to 31.
19 (Whereupon, the document described
20 below was marked Exhibit No. 31 for
21 identification.)
22 BY MR. KOSS:
23 Q. Showing you Exhibit 31, I'll represent to you that
24 by the Bates number I can tell this is a document you
25 produced. Do you know where you got this document?
200
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. I don't know. I would -- I don't know where I
2 received it, no.
3 Q. Do you recall if this was the document that you
4 saw as you drove to first look at the Blanchard property?
5 A. I don't believe so, and the reason I say that is
6 it shows a list price of 6.5 million and I knew the list
7 price at the time was 3.9, at the time of going to it,
8 because I probably would not have looked at a $6.5 million
9 house.
10 Q. If you'll look down at the section towards the
11 bottom, it says "Internet Copy," there's a bullet one,
12 approximately 5100 square feet.
13 A. Yes.
14 Q. Did you ever come to the conclusion that somehow
15 some mistake was made in the square footage that was later
16 corrected?
17 A. It wasn't corrected at the time I first saw the
18 house, so -- and you can see the date of this thing is
19 April of 2001. There was, you know, an appraisal of the
20 house that showed it was 5005 square feet in June. There
21 was an MLS listing that says it was 5100 square feet and
22 yet I went in August and still got the brochure that said
23 it was 5300 square feet.
24 That's the basis of my argument and why are they
25 still saying 5300 square feet in August when they knew as
201
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 early as at least June. So between April and June maybe
2 there was a mistake, but somewhere along the line they had
3 to know this.
4 And in fact I would even argue in April they
5 already knew that it was not 5100 square feet because the
6 limitation, according to the blueprint, was 5040 as the
7 maximum square footage allowed on this property. So 5300
8 would have been out of spec for this particular property.
9 MR. KOSS: Let me just go through some of the
10 e-mails that you've produced here starting with Exhibit 32.
11 (Whereupon, the above-described
12 document was marked Exhibit No. 32
13 for identification.)
14 BY MR. KOSS:
15 Q. Before I talk to you about these, what I want to
16 do is ask you, what did you do to try and find e-mail
17 correspondence which relate to your purchase of this
18 property?
19 A. What did I do?
20 Q. Yes.
21 A. I went into my e-mail program on my PC and had
22 these on my PC.
23 Q. Did you have a custom and practice of deleting
24 e-mails from time to time?
25 A. Yes.
202
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. And were somehow you able to reconstruct e-mails
2 that had been deleted?
3 A. No.
4 Q. You had saved these e-mails?
5 A. I saved those, right.
6 I also have a practice of saving particularly
7 e-mails I send, not necessarily the e-mails I receive. I
8 receive upwards of 100, sometimes 200 e-mails a day, and so
9 I typically delete almost all of those. In fact, I, like
10 everybody, have, you know, junk mail programs that I never
11 even see them. They go into junk files.
12 But I do receive a number of them that I respond
13 to and I respond to probably on the order of 20, 30 e-mails
14 a day. So we're an e-mail driven business and typically
15 the e-mails I send out, I tend to save just as a matter of
16 course. It doesn't take up much space on a PC nowadays.
17 Q. Are you confident that you saved and produced all
18 the e-mail correspondence that would relate to the purchase
19 and sale of your home?
20 A. No, I'm not. Typically I would save them, but in
21 the midst between buying this home and today, I got a new
22 PC and part of the reason was I crashed my hard drive and
23 so I had to reconstruct my hard drive from a server
24 somewhere and I noticed that I did -- something happened to
25 that server and I'm not sure exactly what happened, but I
203
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 don't necessarily have every e-mail.
2 Q. Do you have -- if there are missing e-mails, can
3 you think of any way that you might be able to retrieve
4 those?
5 A. Not from this long ago, no.
6 Q. Okay.
7 A. That PC is long gone.
8 Q. Okay. What I'm trying to get at is I don't want
9 to have you, you know, say the day before trial, hey, I
10 just found some more e-mails and here they are.
11 A. Oh, I have more e-mails that I did not print out.
12 Q. That relate to the purchase and sale of the house?
13 A. Yes.
14 Q. How did you decide which ones to print off or
15 which ones not to print off?
16 A. Well, some of them are just redundant or not
17 necessarily all that informative. They were just
18 agreements with Doug on when we would meet, you know,
19 scheduling time to meet on a weekend.
20 Like I said, I spent time in London and Hawaii and
21 I would send messages back and forth and that's how I would
22 tend to communicate with Doug, agreeing to fax a document,
23 agreeing to meet at a certain time; and those kind of
24 things I just ignored. This was more substantive and I
25 printed it out.
204
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. So what you did is you looked through e-mails,
2 decided which ones were substantive and which ones were
3 just --
4 A. Yes.
5 Q. -- scheduling meetings and the like?
6 A. Yes.
7 Q. Can you print off all of them again for me so I
8 can make my own decision about whether they were important
9 or not?
10 A. Sure, sure.
11 Q. Okay.
12 A. If you'll make a note of that for me.
13 Q. Now, in discussing the potential sale with Mr.
14 Rea -- strike that. I don't have any questions about 32.
15 (Whereupon, the document described
16 below was marked Exhibit No. 33 for
17 identification.)
18 BY MR. KOSS:
19 Q. Okay. Showing you Exhibit 33, do you recall
20 getting this e-mail from Doug Rea?
21 A. Yes.
22 Q. In his e-mail Mr. Rea talks about the most
23 accurate way to determine the size of the property was from
24 the appraisal and he says he gave you his original and
25 didn't keep a copy.
205
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Yes. That was not true. He thought he gave me a
2 copy but I never received it at this time.
3 I did get a copy much later, but I did not -- I
4 didn't know what he was talking about here. I did not
5 receive a copy of it.
6 Q. Okay. And that was going to be my question.
7 You did not get a copy of the appraisal prior to
8 the date of this e-mail, that is, August 30, 2001?
9 A. Right.
10 Q. The last paragraph Mr. Rea suggests if you're
11 still concerned, then we should hire our own appraiser to
12 measure the home.
13 A. Um-hum.
14 Q. And in a roundabout way you in fact did that,
15 correct?
16 A. Yes. But I got back that inspection after the
17 contingency had to be released, as he said here.
18 Q. Is there a reason why you didn't hire someone to
19 measure it before your contingency periods expired?
20 A. I was busy. I didn't have time to arrange all
21 these things.
22 MR. KOSS: Let me show you Exhibit 34.
23 (Whereupon, the document described
24 below was marked Exhibit No. 34 for
25 identification.)
206
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 BY MR. KOSS:
2 Q. This appears to be some questions that someone had
3 about the house, the Blanchard house.
4 A. Yes.
5 Q. Is it Mr. Rea that came up with this list or did
6 he come up with this list from talking to you?
7 A. From talking to me he came up -- he wrote down
8 this list from a phone conversation we had and then he put
9 it together in this e-mail and sent it to me, not -- I'm
10 sorry. It wasn't a phone conversation. I think we were
11 actually at the property and he wrote it down as we walked
12 through it.
13 But in any case, he wrote this. He sent it to me
14 in an e-mail and, as you can see, I say I added my comments
15 in blue. So you really can't tell what's blue here, but
16 there's some words here I recall writing like "Are they on
17 the same timer as the outdoor lights?" three-fourths of the
18 way down the first page, and then I put on the last page, I
19 said, "Also, the air conditioning did not seem to operate."
20 That was kind of tongue in cheek. I knew there
21 was no air conditioning and I told him that, but I wrote it
22 that way.
23 Q. Okay. So as of September 4 you knew there was no
24 air conditioning in the guest house?
25 A. Yes.
207
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 MR. KOSS: Let me show you Exhibit 35.
2 (Whereupon, the document described
3 below was marked Exhibit No. 35 for
4 identification.)
5 BY MR. KOSS:
6 Q. Is this the response you got to the list of
7 questions that were set forth in 34?
8 A. I don't remember getting this.
9 Q. Then I won't ask you about it. Let's move on to
10 Exhibit --
11 A. In fact, I would have been surprised because I
12 notice here Lou Rae signed it and said, "I know the air con
13 works," as of September 4. It says right here, "We can
14 turn this on. I know the air con works," very clearly.
15 She knows it works somehow.
16 And in fact I saw this in the discovery document
17 and this is the first time I saw this and was quite
18 surprised to see that she's representing that she knows it
19 works here, when I already had her walk around the house
20 and she showed me -- I mean I showed her that it did not
21 exist.
22 Q. Let me show you Exhibit 35.
23 A. You mean 36.
24 Q. 36. You're better at this than I am.
25 A. No. I just have 35 in front of me.
208
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 (Whereupon, the document described
2 below was marked Exhibit No. 36 for
3 identification.)
4 BY MR. KOSS:
5 Q. Now, I think we discussed this concept before that
6 you had concern about the value of the property, given the
7 square foot issues, and you wanted Doug Rea to do some work
8 for you.
9 A. I didn't really ask him to do work for me. I just
10 said I had concerns and he said, look, let me go back and
11 see what we think the value is here, and so he did this on
12 his own. I didn't -- I don't remember specifically asking
13 for it, but I did say that I was concerned that I'm
14 overpaying for this and I have this incredibly shrinking
15 house.
16 And when he made the comment that, you know, the
17 house didn't shrink, it's the same size as when I first saw
18 it, I said yes, but, you know, I was counting on a certain
19 size in order for resale value and so forth. And he said,
20 well, let me come back to you on this.
21 So he wrote this, as you can see, long document,
22 and he called me up right after he sent it to me and we
23 went through it together in detail and he made a number of
24 interesting, I think, revelations about this having to do
25 with value of property in Saratoga versus Los Gatos, the
209
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 value of property based on the size of the lot, and he
2 clearly represents it all in square footage. He doesn't
3 make any distinction between the main house and the guest
4 house.
5 And he also clearly says somewhere in here -- let
6 me read it so I don't misquote what he said. "You don't
7 have to worry about" -- okay. After that. It's in the
8 second page, the next to the last long paragraph there, the
9 last sentence.
10 It says, "You don't even have to worry about
11 landscaping. Instead, you can apply your time to planning
12 the swimming pool I know your wife and daughter want."
13 Then the second to the last paragraph says, "I
14 hope the contradictions and lack of detailed organization
15 on behalf of the listing agent haven't prejudiced you
16 against the home. It's truly a beautiful place and I think
17 you guys will be very happy there. My offer stands to take
18 care of the air conditioning situation." So here again he
19 offered to pay for that. "It's not something I've ever
20 done in an escrow, but then I usually have more luck with
21 unreasonable listing agents. Besides, I don't mind! You
22 guys put a lot of trust in me and I would like to show my
23 appreciation by helping out with a sticky situation."
24 So he sent this to me on September 10 and he said,
25 "Have a safe flight home." Obviously, I flew back that
210
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 night on a red eye coming back on the 11th. This is
2 September 11, 2001, just before the terrorist attack.
3 Q. Have you ever come to the opinion or belief that
4 anything that Mr. Rea put in this memo to you was
5 inaccurate?
6 A. No. It looked very accurate to me and it matched
7 with some of the other things that I had seen, because I
8 saw some of these houses that he mentioned. He showed me
9 in fact some of these houses and in fact he even mentions
10 do you remember this and do you remember that.
11 So he showed me many of these homes, so it seemed
12 entirely reasonable what he was saying. In fact, I would
13 say I probably saw most of these homes that he's mentioned
14 here.
15 Q. So even as of today you have no criticism of the
16 research and opinions that Mr. Rea came to back in
17 September of 2001?
18 A. I think this is his representation of what he
19 thought, you know.
20 Q. Right.
21 A. I don't necessarily agree with everything he said
22 here, no. I mean this is a pretty long document so, no, I
23 don't necessarily agree with everything he said here. But
24 I would say, you know, he tried to be as accurate as
25 possible in how he represented it to me. So I don't feel
211
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 he tried to mislead me in this document.
2 Q. Okay. I want to pick up on one thing you said.
3 Do you think that there should be a different square
4 footage attributed to the main house as opposed to a guest
5 home?
6 A. I don't know. The way it was presented to me, it
7 was always presented as one. So -- and in fact Douglas, I
8 remember he even mentioned that the guest house is of the
9 same fit and finish.
10 So, for instance, the main house has 12-foot
11 ceilings, which is quite high ceilings. The guest house
12 also has 12-foot ceilings. The kitchen has granite counter
13 tops and the living room kitchen has marble floors.
14 So I mean it's very nicely done and I would say to
15 the same spec, after they put in the air conditioning, at
16 least, as the main house. So I thought it was valid to
17 include it as, you know, one -- one number for square
18 footage.
19 Q. Did you ever walk through the house with Brian
20 Oram?
21 A. I don't know Brian Oram.
22 Q. He was a contractor on the project. Have you ever
23 met him or do you know him?
24 A. Okay. He was the guy that -- okay. I only knew
25 his first name, Brian. Okay. That was the foreman.
212
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. I don't know.
2 A. If it's the same Brian that I met after I
3 purchased the property. That could be. But I don't
4 remember his last name.
5 Q. You never met him prior to the close of escrow?
6 A. That's correct.
7 MR. KOSS: Why don't we take a break. I don't
8 think I need to go through the rest of these documents.
9 (Recess at 4:53 p.m.)
10 (Resume at 5:07 p.m.)
11 MR. KOSS: Okay. I'm going to pass the
12 questioning for now.
13 EXAMINATION
14 BY MR. GLASPY:
15 Q. Mr. Simpson, my name is Paul Glaspy. I represent
16 Stonehenge and the O'Briens in this matter.
17 A. Yes.
18 Q. What I would like to get from you, sir, if I
19 could -- well, let me backtrack just a little bit.
20 You realize, of course, that you have brought
21 litigation against the various defendants in this case
22 claiming that they misrepresented certain facts to you; is
23 that correct?
24 A. That's correct.
25 Q. What I would like to get from you is a list of the
213
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 facts you believe were misrepresented to you by whatever
2 defendant. We'll get into specifics in a moment.
3 A. Okay. The specific facts were the square footage
4 of the house, which was represented to be 5300 and it ended
5 up being 5005; the fact that I could build a pool in the
6 back yard, which the city would not allow me to do without
7 destruction of the current property; the fact that it had
8 fiber optics communications, which it does not; the fact
9 that it had three zones of cooling and heating, which it
10 did not; and, of course, the city says that we would be
11 allowed to install an 800-square-foot structure in the back
12 yard, which we could not and still cannot.
13 Q. Okay. So my list contains five items. Is that an
14 exhaustive list of the misrepresentations you contend were
15 made?
16 A. Well, let me think. We discussed a number of
17 other things here today. I don't know if you count some of
18 these as misrepresentations, like the mirror over the
19 powder room sink, you know, that was misrepresented but
20 then it got fixed. So, you know, I did keep that mirror,
21 but I had to install it myself. Basically they took it
22 down and tore the screws out of the wall.
23 I feel the front approach to the house that was
24 cobblestone that they blacktopped later was an intentional
25 misrepresentation, that they purposely waited until after
214
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 the close of, you know, contingencies and close of
2 walk-through and everything. Then they blacktopped it.
3 The size of the property itself being two-thirds
4 of an acre and it ended up being .61 of an acre, and let me
5 rephrase that. Originally it was said that it was one acre
6 on the flip chart stand and then in the brochure it says
7 two-thirds of an acre and then it turned out to be .61
8 acre. So that's all I recall for now.
9 Q. Okay. The square footage in the house, you've
10 said on a couple of occasions that it is in fact 5005
11 square feet, and you base that upon an appraisal that you
12 obtained from the seller?
13 A. Yes.
14 Q. And in fact you've got your own appraisal that
15 lists the house square footage as greater than 5005 square
16 feet, correct?
17 A. Yes, slightly. 5039 I believe.
18 Q. So how is it that you are able to say with
19 certainty that the house is in fact 5005 rather than 5030
20 something?
21 A. It could be 5030 something. All I know is I went
22 on the web site on Zillow.com. I don't know where they get
23 their data, but just enter my address and enter Z-i-l-l-o-w
24 dot com and you will see it's listed at 5005.
25 Q. As you sit here today, you don't personally know
215
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 exactly how many square feet your home is, correct?
2 A. That's correct.
3 Q. And prior to closing you realized that the home
4 was not 5300 square feet, correct?
5 A. That's correct.
6 Q. So at the time you closed on the sale, you were
7 not relying upon the representation that the house was 5300
8 square feet, correct?
9 A. Yes, that's correct.
10 Q. The square footage of the property has been
11 discussed at length earlier and, again, you were aware
12 prior to closing that the actual size of the lot was
13 approximately .6 tenths of an acre, correct?
14 A. Yes, that's correct.
15 Q. I wasn't a math major, unfortunately.
16 So again, at the time you closed on the sale of this
17 property, you were not relying upon the representation that
18 the size of the lot was greater than .6 tenths of an acre,
19 correct?
20 A. That's correct.
21 Q. The three zones of air conditioning, in fact the
22 home did have three zones of heating at the time you
23 entered into the contract to purchase this property,
24 correct?
25 A. That's correct.
216
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. And it had, as you understood it, two zones of air
2 conditioning, correct?
3 A. That's correct.
4 Q. And both of those zones were in the main home?
5 A. Right.
6 Q. At the time you closed on the sale of this house,
7 the air conditioning was installed in the guest house and
8 operable, correct?
9 A. That's correct.
10 Q. So at the time you closed on the sale of this
11 house, you were not relying upon the representation -- the
12 previous representation that it in fact had three zones of
13 heating and air conditioning; is that correct?
14 A. That's correct. I just thought that was a very
15 instructive example of another way that the home was
16 misrepresented to me and I had to really insist and fight
17 to get that installed, despite the best efforts from Lou
18 Rae and Lynn to charge me for that air conditioning.
19 Q. This I'll call it the mirror incident.
20 A. Okay.
21 Q. You've listed that as --
22 A. That's a funny incident. Okay? I don't mean to
23 try to make any more than that out of it, but it just shows
24 the antagonism and mean-spiritedness of the seller, I
25 think.
217
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. But at the time you closed on the sale of this
2 home, the mirror was part of the home furnishings, correct?
3 A. It was, although it was uninstalled so I had to go
4 to the hardware store and buy some brackets and install it
5 myself.
6 Q. Was it ever represented to you by anyone that this
7 mirror in the powder room would be part of the furnishings
8 provided with the home upon its sale?
9 A. No, but they also didn't tell me the refrigerator
10 and stove went with it, but certain things are common,
11 standard things that when you buy a home, you buy a powder
12 room and it has a mirror with it, and that mirror was flat
13 up against the wall and it was not movable. It was
14 absolutely immovable on the wall and mounted directly by
15 screws into the wall, not with a picture frame string or
16 anything like that.
17 So while nobody represented it, I don't feel
18 anyone needed to. I think any reasonable person seeing
19 this mirror would assume that it goes with the house.
20 Q. Did you ask either Mr. Rea or anyone else, for
21 that matter, whether the mirror came with the house?
22 A. No.
23 Q. Before I forget, as I understand it you didn't
24 have any communication whatsoever with Mr. James O'Brien,
25 correct?
218
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. No, I did not. I have never met him to this day,
2 to my knowledge.
3 Q. And as far as you know, title to this house was
4 held by Stonehenge Properties, correct?
5 A. That's correct.
6 Q. And as far as you know, Stonehenge Properties was
7 the builder of this home, correct?
8 A. That's correct.
9 Q. Is it your understanding that Lynn O'Brien was
10 acting in her capacity as an employee or officer of
11 Stonehenge Properties?
12 A. My understanding was it was owned by Lynn and Jim
13 O'Brien.
14 Q. How did you come to that understanding?
15 A. I don't know. Somebody --
16 Q. You did find out that title was held by Stonehenge
17 Properties, correct?
18 A. Yes, correct. But I don't know if it was Lynn --
19 I mean if it was Lou Rae or if it was Douglas who told me
20 that the property was Stonehenge but Stonehenge is owned by
21 Lynn and Jim O'Brien, and they're the ones who signed all
22 the contracts.
23 Q. Well, whenever a corporation in your experience
24 enters into a contractual agreement, an officer or employee
25 of that corporation has to sign?
219
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. No, I understand. What I meant was they weren't
2 represented to me as officers. They were represented to me
3 as the sole owners of Stonehenge.
4 Q. By whom?
5 A. I don't remember. It was either Lou Rae or
6 Douglas.
7 Q. But not by Mr. or Ms. O'Brien, correct?
8 A. No, no.
9 Q. The front approach that you believe was
10 cobblestone, do you know if in fact that front approach was
11 cobblestone rather than a stamped asphalt surface?
12 A. Yes.
13 Q. And how do you know that?
14 A. Because I saw it. It had -- stamped concrete has
15 a certain look to it where the crease goes and this one
16 clearly had sand in between and, in fact, had a few weeds
17 growing in between and things like that that doesn't
18 typically happen with stamped concrete.
19 Q. Did you ever consult with the city as to their
20 requirements for that front approach area?
21 A. No. It was too late. They already blacktopped
22 it.
23 Q. Okay. Do you have any reason to believe that the
24 city did not require the builder to put a smooth asphalt
25 surface on that location?
220
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. I believe they probably did require it.
2 Q. It's your assumption or your belief that the
3 builder waited until after this property was in escrow to
4 do that work though, correct?
5 A. Yes, correct.
6 Q. Do you have any factual basis for that assumption?
7 A. No.
8 Q. The front approach was covered with smooth asphalt
9 prior to your close of escrow, though, correct?
10 A. Yes.
11 Q. Do you have any understanding as to the -- strike
12 that. Let me start over.
13 You indicated earlier that it was your belief
14 based upon representation that the home was pre-wired for
15 fiber optics, correct?
16 A. Correct.
17 Q. Do you have any personal knowledge as to how well
18 a fiber optics system would work in a home when the
19 connection with outside utilities is not fiber optic?
20 A. I don't have personal knowledge of this, although
21 I know that you can connect within a home in fiber optics.
22 You just have to go between wire and fiber optic.
23 And so within the home it can be fiber optic
24 without connecting to a fiber optic connection outside the
25 home, but it does position you better when fiber optics is
221
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 available outside the home to have a direct fiber to fiber
2 connection, which is more efficient and faster than going
3 between fiber and wire.
4 Q. Were you ever contacted by anyone who claimed to
5 have pre-wired this home during its construction?
6 A. No.
7 Q. Was there any literature or cards present in the
8 home when you took the possession advertising any entity as
9 having pre-wired this home?
10 A. I believe there was.
11 Q. And did you retain that documentation?
12 A. I don't think so.
13 Q. Did you ever contact that entity as to the
14 pre-wiring?
15 A. No, I didn't.
16 Q. Do you recall what the literature said in regards
17 to the pre-wiring?
18 A. No. I think it just gave a name and phone number
19 of whoever did the work. So there was a list of
20 contractors, subcontractors of the home so that if I had
21 any issues I could go back to the air conditioning person
22 or the person that did, you know, the cabling of the home
23 and things like that.
24 But I don't -- you know, I don't think I kept
25 that. I may have but I don't have immediate access to it.
222
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 I probably threw it away, I think.
2 Q. Have you searched for that documentation?
3 A. No.
4 MR. GLASPY: Counsel, this would be one other area
5 obviously that we would be interested in, and I believe
6 that would be inclusive in the document request.
7 THE WITNESS: Okay. Although Lynn would probably
8 know who they hired to do this.
9 MR. GLASPY: Well, you would think.
10 THE WITNESS: Rather than asking me.
11 BY MR. GLASPY:
12 Q. I believe you indicated earlier that you recall
13 meeting with Lynn on two occasions.
14 A. Yes.
15 Q. And what I would like to get from you, if I could,
16 sir, would be a description of each of those occasions.
17 A. Okay.
18 Q. If we could start with approximately when the
19 first one occurred.
20 A. Both were in the first two weeks of August, and
21 the reason I know that is my wife was with me on both
22 occasions and she was only in town for that first two weeks
23 of August and she then went to London, where she stayed
24 until after 9/11 and just before close of the house.
25 So the first occasion was the occasion that I
223
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 mentioned when my wife and I went to the home. She was the
2 only one in the home. There was no other visitors. It was
3 an open house. I thought she was a realtor showing the
4 house on behalf of Lou Rae. She just introduced herself
5 with her name. I don't recall getting a business card or
6 anything from her, but I did get one of those exhibits that
7 you handed me, that multiple page, very thick paper. I
8 still recall that and I still have the original, by the
9 way, thick paper, multiple page, about eight or nine pages,
10 a document that she handed to me.
11 And we walked through each room of the house and
12 the outside, where we discussed at length the entire house
13 and the outside of the house, where the pool would go,
14 where -- we discussed an 800-square-foot building and so
15 forth. So that was the first occasion.
16 The second occasion was still in that first two
17 weeks. My wife and I went back again and this time Lynn
18 and Lou Rae were both there and as I recall there were
19 other people milling around and, you know, I believe this
20 to be a weekend but I don't know the exact date, and we
21 went back to the house to take another look; and as we
22 walked through I remember my wife was talking to both Lynn
23 and Lou Rae and she was asking them questions, and as one
24 answered, the other would bob her head affirmatively very
25 vigorously.
224
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 And my wife came to me and said, I feel like I'm
2 in the twilight zone. There's the Bobsey Twins here. I
3 ask a question. One says yes and the other bobs her head
4 vigorously, and the next question the other one answers yes
5 and the other one bobs her head.
6 And anyway, so one of the questions she asked in
7 my presence was can we put both the pool and the
8 800-square-foot structure in the back yard, because I don't
9 see where they would go, and they both answered yes, both.
10 One answered yes, the other nodding vigorously, as I said,
11 yes.
12 So on that point we went outside and I recall Lou
13 Rae showing me a couple of different spots that we could
14 put this 800-square-foot structure. We described what the
15 structure could do, what its purpose could be. As some
16 examples -- she threw out examples and she also described
17 that it would be perfect to put it in the back rear behind
18 the pool house because that's exactly in line with the
19 driveway, and take a look. You can just extend the
20 driveway right up to this house, put a garage here and
21 drive right in and have a little turnaround here. And she
22 described all of that to me on that particular day in the
23 first two weeks of August.
24 Q. And Lou Rae showed you where this 800-foot
25 structure could go?
225
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Um-hum.
2 Q. Your wife was present?
3 A. Yes.
4 Q. You were present?
5 A. Yes.
6 Q. Was Lynn O'Brien still present at that point?
7 A. She was present. I'm not sure if she walked all
8 the way to the back corner, because at one point we walked
9 all the way to the back corner and that may have only been
10 Lou Rae and myself at that point. I don't recall.
11 But I know we all walked outside. We were looking
12 around and Lou Rae wanted to show me this place that was
13 behind the pool house.
14 Now, behind the pool house was not landscaped, so
15 it was raw dirt with tall weeds and things like that, and I
16 remember walking back there and she showed me, you know,
17 this back corner and we looked down and I sited the
18 driveway and it looked all logical to me. Yes, you could
19 just extend the driveway, it looked like, just keep
20 continuing it along the fence and bring it right up to the
21 very back corner of the property and build an
22 800-square-foot structure.
23 So those were the two occasions that I was there
24 that Lynn O'Brien was there.
25 Q. I believe you indicated earlier on the second
226
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 occasion when Lynn and Lou Rae were present, you recall one
2 of them telling you that you could put in a pool and the
3 structure, but you're not sure who that was; is that
4 correct?
5 A. One of them said it and the other nodded their
6 head.
7 Q. And are you able to identify who said it and who
8 nodded?
9 A. I don't recall, because they were alternating
10 answering.
11 Q. Okay. Going back to the first occasion when you
12 met with Lynn O'Brien, you talked about her giving you some
13 literature.
14 A. Yes.
15 Q. And excuse me if I move over here.
16 A. I can show you the literature. It was in this
17 group that I gave to -- it starts right here, which is
18 Exhibit 29, and on the bottom it says page 9. Starting
19 there through the end, that's the document she gave me.
20 Q. So if I could for the record, the documentation
21 you got from Lynn O'Brien on that first occasion is
22 included within Exhibit 29, beginning on the document
23 marked P9?
24 A. Right.
25 Q. And continuing on to the end, which is marked P10?
227
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Yes, yes, P9 and P10, and there's a bunch of them
2 in between.
3 Q. The P doesn't necessarily represent the pages. I
4 was just using that for the identification.
5 A. Oh, okay. Yes.
6 MR. THOMAS: But, you know, there's a lot of P9's
7 in there. The first page is P9 as well.
8 BY MR. GLASPY:
9 Q. Let's do this. Why don't you count for me --
10 A. I'll count the pages. So starting on page 5 in
11 this exhibit, which is Exhibit, again, No. 29, starting on
12 page 5, 6, 7, 8, 9, 10, 11, 12 and 13. Those were the
13 pages that she gave me.
14 MR. KOSS: I suspect that this is Bates stamped 90
15 something and the next one was 100 and some of the Bates
16 stamp got cut off.
17 THE WITNESS: Oh, I see. Okay.
18 BY MR. GLASPY:
19 Q. And included within that documentation given to
20 you by Ms. O'Brien on that visit, the only items that I
21 believe you have highlighted which you believe were
22 inaccurate are contained on page 2 of the information given
23 to you by Ms. O'Brien, which relate to the three zones of
24 heating and air conditioning and the fiber optics; is that
25 correct?
228
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. That's correct.
2 Q. And the remainder of the information contained in
3 that document you have no quarrel with?
4 A. No, other than, again, the square footage is
5 incorrect. It still says 5100 square feet.
6 Q. Well, it doesn't say 5100 square feet, but rather
7 the addition of the two?
8 A. Yes, correct.
9 Q. Okay. In your job presently as director for
10 technical support, do you get involved in the negotiation
11 of contractual arrangements between Cisco and other
12 entities?
13 A. I do sometimes, yes.
14 Q. Maybe you can describe for me your involvement in
15 such negotiation.
16 A. My involvement is the business side of that
17 negotiation. So we have professional contract negotiators
18 within the company and they negotiate what I'll call the
19 normal terms and conditions to protect Cisco's intellectual
20 property rights and risks and things like that.
21 My negotiation is over what I need in terms of the
22 business function and how much I'm willing to pay, those
23 kinds of things. So for instance, I may negotiate with a
24 company to provide technical services for me in support of
25 my customers and I pay them on a certain basis, whether
229
DEPOSITION OF RALPH SIMPSON - 4/27/06
1 it's per person, per hour or per job function that's
2 completed, and we'll negotiate those and I'll get involved
3 in those kind of negotiations.
4 Typically I have people that negotiate that and I
5 get involved at the very end and sign the contracts and so
6 forth.
7 Q. And you're able to sign on behalf of Cisco?
8 A. Yes.
9 Q. And before you sign such contracts, do you read
10 the documents?
11 A. I rely a lot on my team to do that and we have
12 lawyers and they -- so what I do is I typically don't read
13 the entire document. I read the portions that have to do
14 with the business function that I feel I'm responsible for,
15 and the part that has to do with contractual P's and C's
16 and other things, I rely on my expert people to do. They
17 know much more than I do.
18 And maybe I should explain a little further. To
19 say that I negotiate may be a stretch. I've got people
20 that negotiate for me. You know, I may get involved, you
21 know, to help set the tone of what we want to accomplish,
22 to have some initial meetings, maybe to break some ties at
23 the end. But you know --
24 Q. The buck stops with you?
25 A. Yeah. On some of these contracts, yes.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. Did Ms. O'Brien in either of the two meetings you
2 had with her at the house ever inform you that the city had
3 not yet approved a pool for this site?
4 A. No.
5 Q. Did Ms. O'Brien advise you in either of those two
6 meetings that you would have to obtain city approval for a
7 pool or a structure?
8 A. No.
9 Q. You knew at the time prior to closing on the house
10 that you would have to obtain city approval to put in a
11 pool or additional structure though, correct?
12 A. I knew that I would have to do that, but I was
13 told that the approval had already happened. So obviously
14 if I put in a different design, that would also have to be
15 approved.
16 But my understanding was the 800-square-foot
17 structure and the pool were already agreed to and approved,
18 but the builder just decided not to do it.
19 Q. How is it in your understanding that a city could
20 approve a hypothetical 800-foot structure?
21 A. I have no idea.
22 Q. Okay. Do you believe it's realistic for a city to
23 approve a structure or a pool without any plan sets or
24 submittals to the city?
25 A. Well, I didn't know that there weren't any plan
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 sets. I assumed that they had plan sets that they
2 submitted to the city and got approval for them.
3 Q. Okay. Did you ask for them?
4 A. No.
5 Q. Did you ask what the specifications were on them?
6 A. I was told. I was told 800 square feet, you know,
7 for the structure, and the pool. You know, I didn't ask
8 for the design because I knew my wife wanted her own
9 design.
10 So I was also told, by the way, that they were
11 planning on putting in a sport court in the back yard.
12 Q. Who told you that?
13 A. Lou Rae.
14 Q. And by they, who is they?
15 A. The builder.
16 Q. Did Lou Rae tell you how she came to that
17 knowledge?
18 A. No, she did not.
19 Q. Did Lou Rae tell you that a sport court had in
20 fact been approved by the city?
21 A. Yes.
22 Q. Did you ask to see such approval?
23 A. No, because I did not intend to install a sport
24 court, so I didn't feel that was necessary.
25 Q. Earlier in your testimony you stated that you
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 believed Lynn O'Brien knew the property was over its
2 impervious limit at the time of its sale.
3 A. Yes.
4 Q. And in support of that you cited the plans which
5 were highlighted and stated that the actual impervious was
6 the same as the limit.
7 A. Yes.
8 Q. My question to you is, if that's what the plans
9 said, that the actual construction is the same as the
10 permitted impervious limit, how does that show knowledge
11 that it was in fact greater?
12 A. It shows that there is no more ability to build
13 anything else on the property.
14 Q. Okay.
15 A. So it doesn't show that it's greater. It just
16 says that they're already at the limit.
17 Q. That's what I'm trying to clarify. It may have
18 been my misunderstanding, but my understanding is you used
19 that as support for the contention that Ms. O'Brien knew it
20 was already over.
21 A. Okay. I'm sorry. She already knew it was at the
22 limit, I should have said, yes.
23 Q. All right.
24 A. She may have known it was over, also.
25 Q. That's an assumption on your part, correct?
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 A. Correct.
2 Q. Earlier in your testimony I believe you stated
3 that it was your understanding that the as-is addendum that
4 you attached to your sales contract simply related to the
5 condition of the home.
6 Do you recall that?
7 A. Yes.
8 Q. Who gave you that understanding, if anyone?
9 A. I only talked to Douglas Rea, so it must have come
10 from either Douglas or me reading that addendum. I don't
11 know. I did not talk to Lynn or to Lou Rae about that
12 addendum.
13 Q. I believe you testified earlier that one of the
14 problems that ensued near the close was the 9/11 disaster.
15 A. Yes.
16 Q. And the fact that your wife had trouble getting a
17 flight back, correct?
18 A. Correct.
19 Q. When was it that your wife -- you were also
20 waiting to get your furniture from England, too, correct?
21 A. Yes, correct.
22 Q. When did your wife arrive finally?
23 A. I believe it was 9/22.
24 Q. And how about your furniture?
25 A. It arrived -- well, we got the initial shipment on
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 the day -- I mean it arrived a few days earlier. We air
2 shipped it and I'm not sure how that got through, but I
3 think we air shipped it before 9/11, and so it arrived in
4 time and it was waiting at a warehouse in San Francisco.
5 And so it arrived to the house on the day of
6 closing, and so I arranged to have them ship it by truck
7 down from the warehouse to the home on the day of closing.
8 The rest of the furniture, which was put on a boat
9 in one of those big metal containers, didn't arrive for
10 another I think month and a half or something like that.
11 It got delayed because of 9/11, also, and they went through
12 a lot of extra inspections, you might say, of this property
13 and ruined some of the goods as they did that inspection.
14 Q. It's your understanding that the guest house on
15 this property is approximately 700 square feet?
16 A. That's my understanding.
17 Q. And how did you come to that understanding?
18 A. Well, that was what the marketing brochure said,
19 but also the appraisals that I've had after that also say
20 700 square feet.
21 Q. I believe you testified earlier that your wife
22 needed to be present not only to sign the loan
23 documentation but also the sales contractual documentation,
24 correct?
25 A. Yes, correct.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 Q. The sales contract is with you individually and
2 not you and your wife though, correct?
3 A. Right.
4 Q. So when the sale was consummated, it was only you
5 that signed for the sale; is that correct?
6 A. That's correct. And we did that because we knew
7 my wife would be going back to London, and in order to
8 execute all of these amendments and things like that, we
9 thought that it would needlessly delay things for her to
10 try to fax back documents and things like that. So we did
11 it that way on purpose.
12 Q. So in fact the only documentation your wife needed
13 to sign to close this deal would be the loan documentation,
14 correct?
15 A. I recall there was something else that needed to
16 be signed now. I don't recall exactly what that was, but
17 it was my understanding there was something else that
18 needed to be signed beyond the loan. But regardless, the
19 loan document did need to be signed, that's true.
20 MR. GLASPY: All right. I think that's all I have
21 pending any additional production.
22 MR. MINOLETTI: Okay.
23 EXAMINATION
24 BY MR. BLOYD:
25 Q. I've got a couple of things here. We've been over
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 a great deal. My name is Ted Bloyd. I represent Doug Rea.
2 A. Okay. Hello, Ted.
3 Q. I'd like to at first, if we could, look at Exhibit
4 3, which is the residential appraisal report dated 2002, I
5 believe, 9/14/2002.
6 A. Right.
7 Q. Can you tell me who commissioned this appraisal?
8 A. Well, I commissioned it, you might say.
9 Q. This was in conjunction with the refinance?
10 A. A refinance, yes. So I don't think I hired this
11 particular appraiser. The company I hired to do the
12 refinance selected the appraiser.
13 Q. Okay. I'd just like to -- on the first page of
14 that appraisal, if you'll take a look about just above mid
15 page, the approximate dimensions of the site.
16 A. Um-hum.
17 Q. Have you noted that number before, 28,314 square
18 feet?
19 A. Okay. Like I said, I've seen different numbers
20 here. I've seen 26,000 and something I believe and 28,000.
21 So I'm not sure exactly what the true size of my property.
22 Q. Do you know from personal knowledge offhand how
23 many square feet there are in an acre?
24 A. I can calculate it because a square foot has -- I
25 mean a square mile has, if I remember right, 640 times 4
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 acres. So you do the division and the mileage and all that
2 and you come up with a number around 45,500 something.
3 Q. 43,460?
4 A. 43,500, yes.
5 Q. And I've just done the math here and this number
6 on the closest thing we have today to an appraisal that was
7 commissioned by you or your agent comes out to .65 acres.
8 A. Okay. But also if you take a look at some other
9 documents in here, you'll see that it was 26,000 and
10 something, and so that's why I said I'm still not sure what
11 the real size of my property is; and I believe Douglas gave
12 me something that said it was 26,000 and something.
13 And I have a feeling this 28,000 may include some
14 other -- you know, some of the front part of the property
15 that's actually street or something like that. You know, I
16 don't really know.
17 Q. Have you ever investigated the limits of your
18 property line? Does it run to the middle of the street?
19 A. I don't know.
20 Q. Okay. I'd like to look at Exhibit 28 briefly,
21 which was your letter to Mr. Iwanaga.
22 A. Yes.
23 Q. Also, your letter to Mr. Leventhal attached as the
24 third page. On the third page, I was initially confused
25 here. This shows the residence at just over 5100 square
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 feet and the guest house at 920 square feet. I'm assuming
2 that that also includes the garage space.
3 A. Yes, exactly. Because when you talk about
4 impervious coverage, it's more than living space. It's the
5 other space, also.
6 Q. Yes. Have you ever confirmed any of these numbers
7 that the city is relying on or was relying on to deny your
8 permit application independently?
9 A. I had Swan Pool verify these numbers.
10 Q. Okay.
11 A. So it was Swan Pool that gave me these numbers.
12 Q. So Swan Pool came up with the actual square
13 footage of the entire residence?
14 A. Yes.
15 Q. And the guest house?
16 A. Yes.
17 Q. And driveway and concrete patios, who came up with
18 the lot size that's included on that number?
19 A. I believe I got that from the city itself. They
20 told me what my impervious structure limit would be and it
21 turns out to be 40 percent of the lot size. So I used
22 their numbers, I believe, in coming up with this.
23 So I met with Brian Leventhal before just writing
24 him this letter and we kind of came to an agreement and he
25 just wanted me to document that agreement to send back to
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 him, and that's what I did here.
2 Q. Okay. Did you have any discussions -- I assume
3 you had discussions with Mr. Leventhal as to what the City
4 of Monte Sereno considers pervious versus impervious
5 structures.
6 A. Yes. For instance, I was surprised to hear that a
7 pool is impervious structure.
8 Q. Well, I was surprised to hear that as well, since
9 I assume these regulations have to do with contributions to
10 runoff.
11 A. That's exactly right. But it's still considered
12 impervious for some reason, and I didn't understand that
13 either, but Brian Leventhal assured me that it is.
14 Q. Okay. Does the city, if you know from your
15 conversations with Mr. Leventhal -- does the city consider
16 wood decks to be pervious or impervious?
17 A. I didn't ask him because I did not plan on any
18 wood decks.
19 Q. Okay. I was just thinking with respect to the
20 patio in the U-section of your house that you said would be
21 impractical to jack up because of the step up situation.
22 If you had a step down deck there, you could pick
23 up a significant amount of space, could you not?
24 A. A wood deck would look very unusual in this type
25 of house. It's an Italian villa type of home and that
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 would look like a rustic type of look, which would not go.
2 My wife would never go for a wooden deck there.
3 Q. In the second page of your letter to
4 Mr. Iwanaga --
5 A. Yes.
6 Q. -- could you read the very last short paragraph
7 for me.
8 A. Sure. I said, "By the way, the selling agent was
9 Douglas Rea, who did a stellar job and who I would not
10 hesitate in recommending or using again."
11 Q. And that's an accurate representation of the work
12 Mr. Rea did for you at the time?
13 A. Yes.
14 Q. And do you still feel that way about the work that
15 Mr. Rea did for you?
16 A. Yes.
17 Q. Okay. And I don't want to mischaracterize your
18 testimony, but just going back, you were asked for your
19 criticisms of the job that Mr. Rea did for you and you gave
20 us two items.
21 A. Yes.
22 Q. And one of those was Mr. Rea paying for one-half
23 the cost of the air conditioning.
24 A. Yes. And that's not -- that's not a hard
25 criticism, you know. I told him not to and I felt he
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 shouldn't, and I know he just wanted to make the deal
2 happen, so he did it with the best intent.
3 So I don't really hold it against him, but I feel
4 he shouldn't have done that.
5 Q. So just let me confirm that your only real
6 criticism of the job that Mr. Rea did for you was the fact
7 that he passed along a proposal that you release your down
8 payment prior to the close of this house so that the
9 builders could make their construction loan payment?
10 A. Exactly, yes.
11 Q. I have nothing further.
12 A. And by the way, after seeing the discovery
13 documents I can see why he did that, because of some of the
14 documentation coming from Lou Rae claiming that they were
15 going to sue me for non performance and so forth.
16 So he didn't give me all the detail of this, but I
17 could see that he was under pressure within his own office.
18 Q. Thank you.
19 A. Thank you.
20 MR. THOMAS: I have no questions.
21 MR. KOSS: No more questions.
22 MR. MINOLETTI: Good. We're done.
23 MR. KOSS: Subject again to your producing those
24 additional documents.
25 MR. MINOLETTI: Yes.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 MR. THOMAS: Off the record.
2 (Whereupon, the deposition of RALPH SIMPSON was
3 concluded at 5:49 p.m.)
4 --oOo--
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DEPOSITION OF RALPH SIMPSON - 4/27/06
1 STATE OF CALIFORNIA )
) ss.
2 COUNTY OF CONTRA COSTA )
3
4
5 I, JANELL SOKOL, CSR, License No. CSR 3443, State of
6 California, do certify:
7 That RALPH SIMPSON, the witness in the foregoing
8 deposition, was by me first duly sworn to testify the
9 truth, the whole truth and nothing but the truth in the
10 within-entitled cause;
11 That said deposition was reported at the time and
12 place therein stated by me, a Certified Shorthand Reporter,
13 and thereafter transcribed into typewriting;
14 I further certify that I am not interested in the
15 outcome of said action, nor connected with, nor related to,
16 any of the parties of said action or to their respective
17 counsel.
18 IN WITNESS WHEREOF, I have hereunto set
19 my hand this day of April, 2006.
20
21 JANELL SOKOL, CSR, CM, License No. 3443,
22 State of California.
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DEPOSITION OF RALPH SIMPSON - 4/27/06
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