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Real Estate Deception

Silicon Valley Homeowner Wins $450,000 Settlement in Real Estate Fraud Lawsuit!

Ralph Simpson's Deposition


        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
                                                                     51

                         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
                                                                     60

                         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.
                                                                     61

                         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.
                                                                     64

                         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?
                                                                     67

                         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
                                                                     68

                         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?
                                                                     69

                         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,
                                                                     70

                         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.
                                                                     71

                         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
                                                                     72

                         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.
                                                                     73

                         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
                                                                     74

                         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?
                                                                     75

                         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.
                                                                     76

                         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?
                                                                     77

                         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
                                                                     78

                         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
                                                                     79

                         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.
                                                                     80

                         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
                                                                     81

                         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?
                                                                     82

                         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
                                                                     84

                         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
                                                                     85

                         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
                                                                     86

                         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
                                                                     87

                         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
                                                                     88

                         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?
                                                                     89

                         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.
                                                                     90

                         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
                                                                     91

                         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
                                                                     92

                         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
                                                                     93

                         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
                                                                     94

                         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
                                                                     95

                         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
                                                                     96

                         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
                                                                     97

                         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.
                                                                     98

                         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
                                                                     99

                         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
                                                                    100

                         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
                                                                    101

                         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
                                                                    102

                         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.
                                                                    103

                         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
                                                                    104

                         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.
                                                                    105

                         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
                                                                    106

                         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
                                                                    107

                         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.
                                                                    108

                         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.
                                                                    109

                         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.
                                                                    110

                         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.
                                                                    111

                         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.
                                                                    112

                         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
                                                                    113

                         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
                                                                    114

                         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
                                                                    115

                         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?
                                                                    116

                         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.
                                                                    117

                         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.
                                                                    120

                         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?
                                                                    123

                         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?
                                                                    151

                         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
                                                                    162

                         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
                                                                    163

                         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.
                                                                    164

                         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,
                                                                    165

                         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.
                                                                    166

                         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
                                                                    167

                         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.
                                                                    168

                         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
                                                                    169

                         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
                                                                    170

                         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
                                                                    171

                         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.
                                                                    172

                         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.
                                                                    173

                         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
                                                                    174

                         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.
                                                                    175

                         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
                                                                    176

                         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
                                                                    177

                         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
                                                                    178

                         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
                                                                    179

                         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.
                                                                    180

                         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.
                                                                    181

                         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?
                                                                    182

                         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.
                                                                    184

                         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
                                                                    185

                         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
                                                                    187

                         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?
                                                                    188

                         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.
                                                                    195

                         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
                                                                    199

                         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
                                                                    231

                         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
                                                                    232

                         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?
                                                                    233

                         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.
                                                                    235

                         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
                                                                    238

                         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
                                                                    239

                         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
                                                                    241

                         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.
                                                                    242

                         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--

        5

        6

        7

        8

        9

       10

       11

       12

       13

       14

       15

       16

       17

       18

       19

       20

       21

       22

       23

       24           DATE                         RALPH SIMPSON

       25
                                                                    243

                         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.

       23

       24

       25
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                         DEPOSITION OF RALPH SIMPSON - 4/27/06