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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