[00:00:03] Speaker 02:
Good morning, and may it please the Court.

[00:00:04] Speaker 02:
John Patton, on behalf of the Appellants, I'd like to request three minutes that I'll reserve for rebuttal.

[00:00:13] Speaker 02:
The District Court erred in this case in granting summary judgment on a disputed issue over the party's intent in entering into a contract that on its face was plainly legal.

[00:00:26] Speaker 02:
We refer to those contracts in our briefing as the key documents.

[00:00:29] Speaker 02:
They are a shareholders agreement and a fiduciary agreement.

[00:00:33] Speaker 02:
The district court improperly weighed the evidence and decided as a matter of law that the parties entered into the key agreements with a single purpose or intent that was illegal, rendering them unenforceable and void.

[00:00:49] Speaker 02:
That was improper because the parties intent or purpose in entering into the key agreements is a fact issue that a jury must decide.

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And indeed, this court has on multiple occasions

[00:01:02] Speaker 02:
explicitly recognize that cases like this one that involve a matter of intent are particularly inappropriate for summary judgment.

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The result of the district court's decision is that Appellee is rewarded, gets out of an agreement that he made and acknowledged for years.

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And so we asked this court to reverse that decision.

[00:01:22] Speaker 02:
Today, in addition, of course, to answering any questions the court has, I want to focus on three points.

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First, for all the attention on the tax strategy part of entering into these key agreements, that the parties had a separate additional purpose or object in entering into them.

[00:01:42] Speaker 02:
that the District Court erred in treating the key documents as fraudulently backdated versus dated retroactively as of.

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And number three, that the secretly recorded calls that Mr. Muteguchi has presented and that the District Court relied on almost exclusively in deciding to grant summary judgment are far from dispositive in this case.

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So first of all,

[00:02:07] Speaker 03:
Can you start with the third point last, the third point first?

[00:02:11] Speaker 03:
That's the one that's most relevant for me.

[00:02:13] Speaker 02:
Yes, your honor.

[00:02:15] Speaker 02:
So I'll start there.

[00:02:16] Speaker 02:
The recorded calls, the district court pretty much decided the case based on the statements of Mr. Urso and Mr. Fulmer in those recorded calls.

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That was improper because there was substantial evidence

[00:02:33] Speaker 02:
to the contrary for the statements that the district court relied on in deciding that the recorded calls were end-of-story dispositive as a matter of law of the party's intent in entering into the key agreements.

[00:02:49] Speaker 03:
First of all... Well, first off, do you dispute that those calls were accurate and they occurred?

[00:02:57] Speaker 02:
We don't dispute that those calls contain conversations with Mr. Urso and Mr. Fulmer.

[00:03:05] Speaker 02:
We did in the summary judgment evidence and it is in their declarations that they're highly suspect that all of the recordings were provided and significantly that there are many other conversations that took place in the planning, brainstorming,

[00:03:22] Speaker 02:
an ultimate strategy that was developed that were omitted.

[00:03:28] Speaker 02:
So the recorded calls, it's highly contested that they contain the full record of all of the relevant conversations and statements by Mr. Urso and Mr. Fulmer and Mr. Mutoguchi.

[00:03:41] Speaker 01:
Well, you think there's a phone call out there that says, oh, never mind, we were just kidding?

[00:03:45] Speaker 02:
Well, I think, in fairness, it is, as Mr. Urso and Mr. Fulmer explain in their declarations, which are detailed and extensive, this was a strategy and a plan that evolved over time.

[00:03:58] Speaker 02:
And I think it's important to note that some of those statements on those calls, which I will concede are unsavory and certainly are evidentially valuable to the other side in arguing this was illegal.

[00:04:14] Speaker 02:
this is summary judgment and there's a whole nother side of it that's in my client's declarations those declarations detail uh... how this strategy evolved over time so don't you have case law that says like self-serving declarations is not enough to defeat summary judgment so that the case lawyer on from the ninth circuit is pretty clear that uh... declarations

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as long as they are not conclusory, are sufficient to defeat summary judgment.

[00:04:42] Speaker 02:
So even if it's self-serve, the case law pretty much recognizes most declarations are self-serving in the sense that it is... Why would you put it forward if it's not self-serving?

[00:04:52] Speaker 02:
Exactly.

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But as long as it states facts and not conclusory statements.

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So what facts shows that what was recorded on the call is not what actually happened?

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There are a lot of facts in the declarations.

[00:05:06] Speaker 02:
So they go through that separately in other conversations with Mr. Mudoguchi that were not recorded later in time, closer to when the documents were signed, that they made clear to him not to lie to the NTA.

[00:05:22] Speaker 03:
And that the strategy that evolved- That's not inconsistent with the civil legal purpose.

[00:05:27] Speaker 02:
Well, Your Honor, I think that it is in the sense that the strategy overall, stepping back, was here to create documents that were retroactively effective, that captured, to my first point that I'll get to in a bit, that there was an intention among these parties for Mr. Osso and Mr. Fulmer to be part of TPP from the inception.

[00:05:51] Speaker 02:
The long history here between the two.

[00:05:52] Speaker 01:
From the inception in 2000, 2001?

[00:05:54] Speaker 02:
Correct, Your Honor.

[00:05:56] Speaker 02:
They had a relationship that went back to the 90s for business, and they helped Mr. Muruguchi come to the United States, set him up with a family who invested in his business.

[00:06:10] Speaker 02:
He then took those proceeds, and then they helped him get connected in Utah with some of these connections to companies he made investments in.

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And so he recognized over the years, this is in their declarations, as part of the details

[00:06:24] Speaker 02:
of how this relationship came that he recognized over the years.

[00:06:27] Speaker 02:
Hey, I owe you guys a lot and you are part of TPP and I will share in the success of TPP with you.

[00:06:34] Speaker 02:
So there was that prior intent that existed all the way back to the forming of the company.

[00:06:40] Speaker 03:
Is there any evidence of that prior intent from the time closer in time to when it occurred?

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Well, the declarations from Mr. Urso and Mr. Fulmer set out those facts, and there's statements of Mr. Muteguchi.

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And so, to circle back to your honor's question earlier, those declarations contain factual statements about things that Mr. Muteguchi said to them that the parties did.

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But what did they do back in 2000 that would cause him to give up 50% ownership in this company?

[00:07:17] Speaker 02:
Well, Your Honor, the whole success of TPP was in many ways born out of Mr. Muruguchi's relationship and friendship with Mr. Urso and Mr. Fulmer.

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And he acknowledged that over the years, that they helped him get a green card to come to Utah.

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They set him up.

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They connected him with the source of the Capitol.

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And I think it's important to note

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TPP is a company that just invests in startup companies.

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So it's not an operating business.

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So these are investments that essentially, Mr. Urso and Mr. Fulmer helped source.

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And Mr. Muruguchi recognized, hey, you have a lot of value you've added here.

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You have a lot of contribution.

[00:08:02] Speaker 02:
I owe you a lot.

[00:08:03] Speaker 02:
And so that is what justifies them sharing in it.

[00:08:07] Speaker 01:
You say help source, do you mean they put money into it?

[00:08:10] Speaker 02:
They did not, Your Honor.

[00:08:11] Speaker 02:
They helped source the investment that went into it.

[00:08:15] Speaker 02:
In other words, they connected him initially, and this is in the declaration of Mr. Urso, they connected him with a wealthy family that invested with him.

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And what you see through TPP is a snowball of... How much did he invest initially in 2000?

[00:08:30] Speaker 03:
I believe it's not in the record.

[00:08:33] Speaker 02:
I believe it's about $2 million.

[00:08:35] Speaker 03:
So he's going to invest $2 million, and he's going to give half of that to his friends just because of their friendship.

[00:08:44] Speaker 03:
It just seems not plausible.

[00:08:47] Speaker 02:
A couple points on that, Your Honor.

[00:08:49] Speaker 02:
Number one, I think, is that

[00:08:53] Speaker 02:
It starts from zero and the recognition is, hey, I wouldn't be here at all without the help of you guys.

[00:09:01] Speaker 02:
And so whether this turns into nothing or it turns into a home run, which it did, I'm going to share in that success with you.

[00:09:08] Speaker 02:
Number two, part of the deal, as the record shows, was that Mr. Muruguchi had an option he could exercise

[00:09:16] Speaker 02:
to actually get effectively 90% of the economic benefits of TPP.

[00:09:22] Speaker 02:
So the idea that he just would give up half of that value is not really the deal.

[00:09:29] Speaker 02:
If he wanted to honor the agreements and exercise that option, he could.

[00:09:35] Speaker 01:
Wasn't your client a practicing lawyer at the time in 2000?

[00:09:39] Speaker 02:
I think he indicates in his declaration he was not a practicing lawyer.

[00:09:43] Speaker 02:
He was barred in 2000.

[00:09:44] Speaker 02:
But he was barred, and he had previously been a tax lawyer.

[00:09:48] Speaker 01:
And so his declaration states... It didn't occur to him to put all this stuff in writing in 2000.

[00:09:53] Speaker 02:
Well, I mean, I think the...

[00:09:57] Speaker 02:
The declarations indicate this is a close friendship.

[00:10:02] Speaker 02:
It's a trusting relationship at the time, obviously not so close that he was being secretly recorded, but well, that was certainly surprising and unfortunate to Mr. So Mr. Fulmer.

[00:10:15] Speaker 02:
Um, but I think

[00:10:17] Speaker 02:
You know, part of this, what I also want to emphasize before I concede and save some time for rebuttal is that it is very important that the way this strategy evolved was that the documents would state they were effective as of the prior date.

[00:10:33] Speaker 02:
And the district court essentially viewed that as synonymous with backdated fraudulently.

[00:10:39] Speaker 02:
And there's a key difference as our expert, Mr. Higawa from Japan, tax expert,

[00:10:47] Speaker 02:
put has in his expert report when you see language as of it should be a red flag that hey when was this when was this signed when when did you guys actually enter into this is it retroactively effective

[00:11:02] Speaker 02:
And that fact, I think, especially for summary judgment where the inferences go in our favor, is really important to show that if the purpose of these documents was to defraud the Japanese government, you would have fraudulently backdated them.

[00:11:16] Speaker 02:
You would have put on there a date, signed December 2000, and put the dates there.

[00:11:21] Speaker 02:
You wouldn't have said, entered into as of that date.

[00:11:25] Speaker 02:
And so this strategy was designed as the declaration's detail

[00:11:30] Speaker 03:
to come up with a strategy where you... Could you explain the one statement by Mr. Urso?

[00:11:35] Speaker 03:
We have to have a letter that says it's really 90-5-5, you know, not 50-25-25.

[00:11:40] Speaker 02:
How is that... How do you square that with anything that's... That is the option I referred to earlier, which is the option for Mr. Muteguchi to exercise where he gets 90 percent of the economic benefits of the company.

[00:11:58] Speaker 02:
And it's a recognition, as your honors pointed out and kind of recoiled that, why would my clients get 50% of the company?

[00:12:05] Speaker 02:
That's too much.

[00:12:07] Speaker 02:
And so ultimately where the strategy went with the advice of Japanese tax counsel was that in Japan, unlike in the United States, an option like that is not deemed exercised at the time

[00:12:20] Speaker 02:
that the NTA looks at it.

[00:12:22] Speaker 02:
So if the IRS looks at that, they deem it to be exercised.

[00:12:26] Speaker 02:
They would deem it that Mr. Mudoguchi owns 90%.

[00:12:29] Speaker 02:
But in Japan, it's different.

[00:12:31] Speaker 02:
In Japan, it's not deemed exercised, so you hold the 50% they needed.

[00:12:35] Speaker 03:
Okay, you're under three minutes.

[00:12:36] Speaker 03:
You want to serve the rest?

[00:12:37] Speaker 02:
I will.

[00:12:54] Speaker 00:
Good morning.

[00:12:55] Speaker 00:
May it please the court.

[00:12:56] Speaker 00:
My name is Andrew Devote and I represent the respondent Mr. Muruguchi.

[00:13:00] Speaker 00:
Your honors, we don't come before the court this morning to celebrate the conduct of any of the parties involved in this case.

[00:13:05] Speaker 00:
And but we do come before this court and ask this court to affirm the district court's grand summary judgment because it is clear from the evidence, including the more than four hours of phone calls, that the illegal purpose in this case was to mislead the Japanese tax authority as to the ownership of Omnicom in 2009 and the California law to the point of reward

[00:13:27] Speaker 00:
California law and the California Supreme Court has said in Heruko versus Heruko Takuchi versus Schmuck that the rule that the courts will not enforce the legal agreements is not applied in order to correct injustice between the parties, but from regard for a higher interest that the public whose welfare demands certain transactions be discouraged.

[00:13:46] Speaker 00:
I wanted to turn, Your Honor, Council talked about the declaration and the calls, and I wanted to talk a little about this with Your Honor.

[00:13:53] Speaker 00:
Those calls and the party's admissions demonstrate that illegal purpose.

[00:14:00] Speaker 00:
Your Honor, the District Court highlighted some of those calls.

[00:14:03] Speaker 00:
That opinion could have been two or three times longer.

[00:14:06] Speaker 00:
I would encourage Your Honors to listen to those four hours of calls if Your Honors haven't had the opportunity.

[00:14:10] Speaker 00:
They make clear chapter and verse from the start.

[00:14:13] Speaker 00:
I shouldn't say from the start after mr. Takagi the Japanese lawyer leaves at about 48 minutes Mr. Urso and mr. Fulmer key and exactly on the issue that they are going it's going to come down to quote creating fictional ownership and And they're brief and in their affidavit.

[00:14:28] Speaker 00:
They talk about their brainstorming.

[00:14:30] Speaker 00:
They are brainstorming in that first call They're absolutely brainstorming like the need to trial advocacy upside-down triangle.

[00:14:36] Speaker 00:
They start with

[00:14:37] Speaker 00:
We can't use a corporation because you can research when a corporation comes into effect.

[00:14:41] Speaker 00:
Quote, we should use public trust or trust because you don't file trust publicly.

[00:14:46] Speaker 00:
You can just create your own documents and say, hey, these were there since 2005.

[00:14:50] Speaker 00:
And then to your honor's point, they do go on Mr. Urso as a lawyer.

[00:14:54] Speaker 00:
And I think that is particularly important more than five times on that first call alone.

[00:14:59] Speaker 00:
Takagi can't be a part of this.

[00:15:01] Speaker 00:
Not only do they say he can't be a part of it, they say he can be a part of the residency question.

[00:15:05] Speaker 00:
So that knowledge and awareness, they are splitting between two tasks that will come up before the Japanese tax authority, a question of Mr. Muteguchi's residency versus this TPP issue.

[00:15:15] Speaker 00:
And he says, quote, so because he's a Japanese lawyer, he can't lie.

[00:15:20] Speaker 00:
We can't say to him, hey, no, Boo owns TPP capital.

[00:15:24] Speaker 00:
We're going to get creative and take it out of his name and put it someone else's name, blah, blah, blah.

[00:15:30] Speaker 00:
You don't want to put him in that position.

[00:15:32] Speaker 00:
He risks.

[00:15:33] Speaker 00:
This is a lawyer.

[00:15:34] Speaker 00:
He risks his entire career and his job.

[00:15:37] Speaker 00:
It's just too risky.

[00:15:39] Speaker 00:
And it's not just quotes like that, your honor.

[00:15:41] Speaker 00:
It's that those quotes throughout all of the calls will be fine if the three of us stick together.

[00:15:47] Speaker 00:
That Urso says he can't consult other tax experts because they have the same disclosure obligations as Mr. Sakagi.

[00:15:54] Speaker 00:
the same problem they run into and why they can't tell Mr. Takagi.

[00:15:58] Speaker 00:
And similarly, your honor, at the January 30th phone call has this particularly telling point when your honors were asking about the time and going back to 2000.

[00:16:06] Speaker 00:
Mr. Urso says, look, and it's a little bit of a distasteful quote, I apologize, but he says, I had to come up with a story.

[00:16:14] Speaker 00:
The guys in the US are just crazy freaking right wing radical guys, fear the government.

[00:16:19] Speaker 00:
I have enough ammunition to kill the whole city of Dallas.

[00:16:22] Speaker 00:
I'm just kidding, but I just saying I was trying to find a story because no boo.

[00:16:27] Speaker 00:
If they go back over 14 years of history and the documents that were disclosed, they never see us.

[00:16:33] Speaker 00:
I'm just thinking ahead.

[00:16:34] Speaker 00:
We have to have a position.

[00:16:36] Speaker 00:
similar your honor it's not just them talking it's the effort mister or so put in to prepare mister mutaguchi for at interacting with the japanese tax authority your honor it is uh... particular in january twenty ninth in the january thirtieth call

[00:16:50] Speaker 00:
which, with all respect, they objected to your honors hearing them live.

[00:16:54] Speaker 00:
They said snippets.

[00:16:55] Speaker 00:
They said that we quote snippets and that these are off-hand comments.

[00:16:59] Speaker 00:
And when we went to move the tapes in their entirety, they objected and said the snippets were enough.

[00:17:03] Speaker 00:
But when you hear this, Mr. Urso says, I wrote every one of those questions and answers for a reason.

[00:17:09] Speaker 00:
Go memorize them.

[00:17:10] Speaker 00:
Study them.

[00:17:11] Speaker 00:
Answer the questions based on the answers I gave.

[00:17:14] Speaker 00:
And if you get a question that goes outside those,

[00:17:18] Speaker 00:
He helps him understand how basically how to stall and back up.

[00:17:22] Speaker 01:
It's clear that neither side here has clean hands.

[00:17:24] Speaker 00:
Yes, sir.

[00:17:25] Speaker 00:
Yes.

[00:17:25] Speaker 00:
Yes, your honor.

[00:17:26] Speaker 00:
I apologize.

[00:17:26] Speaker 00:
Yes, you're on.

[00:17:26] Speaker 01:
You didn't represent Mr. Moody made a Gucci back in 2018 when he filed the false affidavit in the federal court there.

[00:17:34] Speaker 00:
I did not, your honor.

[00:17:35] Speaker 01:
What consequences is your client going to suffer when it's all said and done?

[00:17:38] Speaker 00:
Yes, your honor.

[00:17:38] Speaker 00:
Well, first of all, so he does regret that.

[00:17:41] Speaker 00:
And similarly with the statement to the IRS, he has since told the IRS the truth and that case has been resolved.

[00:17:46] Speaker 00:
There's a document, a document number 129 where the IRS says you told us you're 50%.

[00:17:52] Speaker 00:
Then you told us that 100% we believe the second version of your story.

[00:17:56] Speaker 00:
But your honor, you're right that in this context, Mr Muteguchi received a benefit from this.

[00:18:02] Speaker 00:
But I think it comes back to the point that the California Supreme Court said in the case that I cited that

[00:18:07] Speaker 00:
And in additional cases where the California Supreme Court says, the parties have to know that they don't get to run to the courts when they engage in an illegal agreement.

[00:18:15] Speaker 00:
And that if they have to rely on each other's goodwill, then maybe then they won't engage in this conduct.

[00:18:20] Speaker 00:
So again, I'm not here to celebrate any aspect of this, Your Honor, but I do think that the law is clear for the integrity of the courts and the public's interest.

[00:18:28] Speaker 00:
The idea of rewarding one side or the other, as they say in Empire Delicto, even though that's not, that they stay where they lay.

[00:18:34] Speaker 00:
And that's where we are.

[00:18:36] Speaker 00:
Your Honor, respectfully, similarly, there's that document.

[00:18:41] Speaker 00:
I think it's really important.

[00:18:41] Speaker 00:
Council mentioned this idea of an evolving plan.

[00:18:44] Speaker 00:
I think it's really important, a couple of points on that.

[00:18:46] Speaker 00:
There's a question and answer, Your Honor, that was put together, and it's in the record.

[00:18:50] Speaker 00:
As you said, you go to see it.

[00:18:52] Speaker 00:
There's a specific question in there, number 26, and it says, how are they formed?

[00:18:57] Speaker 00:
How are these companies formed?

[00:18:58] Speaker 00:
In what order?

[00:18:59] Speaker 00:
And Mr. Urso specifically has him say, it says, what was the sequence of formation of these entities?

[00:19:04] Speaker 00:
First, we created the three family trusts as BVI trusts on 27 December 2000.

[00:19:10] Speaker 00:
And Your Honor, this is, you can find these

[00:19:13] Speaker 00:
This Q&A is at 4ER 622 through 68.

[00:19:17] Speaker 00:
And I mention that because counsel mentioned the declarations and that there's a lot of facts in the declaration.

[00:19:22] Speaker 00:
They say one of them is don't lie.

[00:19:24] Speaker 00:
Well, respectfully, the district court did not weigh the evidence in an improper way.

[00:19:28] Speaker 00:
The district court looked at all of the evidence.

[00:19:30] Speaker 00:
So an affidavit or declaration to your honor's point about what is required, there are general and vague statements in that affidavit.

[00:19:38] Speaker 00:
There are a number of paragraphs with background information.

[00:19:40] Speaker 00:
But on the key points,

[00:19:41] Speaker 00:
When they actually, there's three paragraphs in particular, 10, 12, and 14.

[00:19:45] Speaker 00:
When they actually get close to the truth respectfully, and I know my client has his own issues, your honor, but it blows up in their face.

[00:19:53] Speaker 00:
They have a problem with dealing with the actual reality.

[00:19:56] Speaker 00:
In paragraph 14, excuse me, 10, council mentioned a big deal of as of versus not backdated.

[00:20:02] Speaker 00:
Your honors, in footnote six of the district court's opinion, the judge says, excuse me for saying you backdated, because you guys on the call say you're backdating.

[00:20:12] Speaker 00:
And it's Mr. Urso, a lawyer who says, no boo, it would be a terrible, these are exact words, terrible, terrible mistake to tell the Japanese tax authority that we're just creating the documents.

[00:20:23] Speaker 00:
Tell them we've got the documents.

[00:20:25] Speaker 00:
If someone finds out that we backdated, his words, not mine, not counsel's, then we'll either A,

[00:20:31] Speaker 00:
say we've always had this relationship, and now we're just documenting it, or B, we lost the documents in this tri-star move, this company.

[00:20:38] Speaker 00:
But then he says, but they're never going to know who's going to tell them.

[00:20:42] Speaker 00:
It goes back to the three of us, stick together.

[00:20:45] Speaker 00:
Respectfully, there are some

[00:20:46] Speaker 00:
some points in there that Mr. Takagi knew something they told him.

[00:20:49] Speaker 00:
If your honors just listen to the entire call the way the district court does, it's not working hard for this side.

[00:20:54] Speaker 00:
It's listening to the whole call and that's appropriate in summary judgment.

[00:20:57] Speaker 00:
It's not twisting and turning or making credibility determinations.

[00:21:00] Speaker 00:
One of the calls where they say Mr. Takagi is fine, he feels fine or he agrees.

[00:21:05] Speaker 00:
I believe it's the January 30th call your honor.

[00:21:07] Speaker 00:
That same call is the call

[00:21:09] Speaker 00:
where they are talking about the three of us stick together, the three of us stick together and we'll be fine.

[00:21:13] Speaker 00:
The district court judge is not required to put blinders on and take what counsel says, one snippet of a call, respectfully, you know, creates a genuine issue of material fact.

[00:21:23] Speaker 00:
Matsushita, at the end of the day, lays down the law in this context, which is when the court looks at the record as a whole, unless the rational trier of fact could find for that non-moving party, there is no genuine issue for trial.

[00:21:37] Speaker 00:
and there isn't here.

[00:21:38] Speaker 00:
And going back to the declarations, in paragraph 14, they mentioned the 2018 IRS audit.

[00:21:45] Speaker 00:
They keep referencing in both their briefs, well, we got a clean bill of health from the IRS.

[00:21:48] Speaker 00:
Well, they don't tell you anything they said to the IRS.

[00:21:51] Speaker 00:
And I think if your honors look at document number 129, which was discussed at summary judgment hearing, the US government will tell you what Mr. Urso and Mr. Fulmer told them about TPP.

[00:22:01] Speaker 00:
And that is that they were leery of submitting fraudulent documents to Japan.

[00:22:05] Speaker 00:
That's their case.

[00:22:06] Speaker 00:
That's not me.

[00:22:07] Speaker 00:
That's not counsel.

[00:22:08] Speaker 00:
That's the U.S.

[00:22:09] Speaker 00:
government saying Mr. Fulmer and Mr. Urso told us that.

[00:22:13] Speaker 00:
And similarly, your honor, just one other example in the declarations, going back to Mr. Takagi, there's in paragraph 12, there's reference to an email and that that email shows that Mr. Takagi knew what was going on.

[00:22:27] Speaker 00:
If your honors look at that paragraph, it's a company called Wasatch.

[00:22:30] Speaker 00:
And I mentioned this just because of the liberties I think that are taken here.

[00:22:34] Speaker 00:
Wasatch is a separate company, it's a Singaporean entity.

[00:22:37] Speaker 00:
It's an ER-237, it's an email.

[00:22:40] Speaker 00:
And Mr. Muteguchi says that Takagi's feeling aggressive.

[00:22:44] Speaker 00:
That paragraph is clearly about a separate issue, a company called Wasatch, and that's a tax issue on a permanent establishment.

[00:22:51] Speaker 00:
There are at least three or four other records in summary judgment, four ER-622, three ER-447, and even Mr. Urso's own deposition testimony, two SER-330, where he makes clear

[00:23:04] Speaker 00:
He knows what law such is.

[00:23:06] Speaker 00:
So they don't avoid summary judgment by saying, this email says this, and if they disagree, it creates a genuine issue of material fact when that email on its face, along with documents they actually submitted or testimony they gave, recognizes and puts that in context.

[00:23:20] Speaker 00:
You never really answered my question about what consequences your client has faced.

[00:23:24] Speaker 00:
Yes, your honor.

[00:23:25] Speaker 00:
With respect to the declaration in Arizona, he has not faced any consequences for that.

[00:23:29] Speaker 00:
That's right.

[00:23:30] Speaker 00:
He has not.

[00:23:31] Speaker 00:
And with the IRS, he has.

[00:23:33] Speaker 00:
uh... that document document one twenty nine will show at the penalties that he was assigned uh... based on uh... reporting but uh... again and and there's that's those are just facts but i think in terms of whether or not summary judgment was appropriate and under california law there's just clear that this unlawful purpose and you know your honor's question about ninety five five again those are my words counsel's words it's not just the numbers in the call

[00:24:01] Speaker 00:
It's really 95-5.

[00:24:03] Speaker 00:
It's not 50-50.

[00:24:05] Speaker 00:
And that goes to your honor's question.

[00:24:07] Speaker 00:
I mean, we're actually talking about a company now worth tens of millions of dollars, and it only underscores your honor's question about why he would do that.

[00:24:14] Speaker 00:
And respectfully, this notion of another purpose to reward the district court, the district court summed it up best at hearing and talking to Council Mr. Tilliston, it's a gratuitous promise.

[00:24:24] Speaker 00:
It was a gratuitous promise at best.

[00:24:26] Speaker 00:
There was nothing to it.

[00:24:27] Speaker 00:
And at their own depositions, Your Honor, there are some key admissions, and we have these in our brief, some key admissions at their depositions that they did not believe at any point from December 2000 through November 2013 that they individually or their family trusts had a 25% interest in TPP.

[00:24:45] Speaker 00:
My colleague asked them that directly, and that site for Mr. Erso is at 2SER 328 and 329.

[00:24:55] Speaker 00:
You know, and that goes to the other, uh, council laid out three topics.

[00:24:58] Speaker 00:
I just wanted to address the third one, unless your honors had any other questions.

[00:25:00] Speaker 00:
And that's a separate purpose.

[00:25:02] Speaker 00:
First of all, it was a gratuitous promise and nothing more.

[00:25:04] Speaker 00:
And the fact that when you look at those declarations, it's not enough under this court's cases under any court's cases and certainly under Matsushita.

[00:25:11] Speaker 00:
Um, I also think the analogy of the Hughes case.

[00:25:15] Speaker 00:
The tape recordings do blatantly, blatantly contradict the general statements that these guys make in their affidavits.

[00:25:24] Speaker 00:
But even if the court's cases are clear that when the central purpose is unlawful, that infects the entire agreement.

[00:25:33] Speaker 00:
And they cite a case where there's a severance, it's Cohen.

[00:25:35] Speaker 00:
But Cohen actually cites a California case where it says the purpose and the motivation to avoid a sever if you can,

[00:25:43] Speaker 00:
is only if you have some sort of contractual relationship that is unlawful.

[00:25:47] Speaker 00:
So for those reasons, Your Honor, if you don't have, if there are no further questions from Your Honors, I respectfully ask Your Honors to affirm the trial court's grand assembly judgment.

[00:25:54] Speaker 03:
Let me just check with Judge Gould.

[00:25:55] Speaker 03:
Do you have any questions, Judge Gould?

[00:25:57] Speaker 03:
No questions.

[00:25:59] Speaker 00:
Thank you for your time this morning, Your Honors.

[00:26:09] Speaker 02:
So in rebuttal, this is simply not a summary judgment case.

[00:26:14] Speaker 02:
Illegality is often decided as a matter of law.

[00:26:17] Speaker 02:
And there's a lot of cases cited by the district court and opposing counsel that say that.

[00:26:22] Speaker 02:
But none of those cases involve a hotly disputed fact issue over the purpose of the parties entering into the contract.

[00:26:29] Speaker 02:
And so there is no authority out there that has been cited that supports what the district court did here in resolving that fact dispute.

[00:26:37] Speaker 02:
In fact, the California pattern jury charge even has a provision for potentially deciding whether a contract had an illegal purpose at trial as a matter for the jury to decide.

[00:26:53] Speaker 02:
I would direct the court to the SEC versus FAM case, which talks extensively about a declaration and what is sufficient in a declaration to raise a fact issue.

[00:27:02] Speaker 02:
I think that case is very instructive that it is facts stated in a declaration on summary judgment have to be taken as true.

[00:27:10] Speaker 02:
All inferences from them have to be taken as true.

[00:27:13] Speaker 02:
And in that case, it was an SEC case alleging

[00:27:17] Speaker 02:
securities fraud, and they accepted as true the defendant's characterization of the transaction in the declaration.

[00:27:27] Speaker 02:
Same thing here.

[00:27:27] Speaker 02:
The declarations of Mr. Urso and Mr. Fulmer set out in detail their version of this transaction and the facts that support that.

[00:27:36] Speaker 02:
and so the court cannot resolve that on summary judgment.

[00:27:40] Speaker 02:
On the recordings, two important points to leave the court with on the recordings.

[00:27:46] Speaker 02:
Number one, temporally they are out of whack with when the key documents were signed.

[00:27:51] Speaker 02:
That is really important here because it is not

[00:27:54] Speaker 02:
as if there are recordings when they're sitting at the signing table, signing the documents and saying, oh, here's what we're going to tell the NTA or not tell them what we're going to do.

[00:28:02] Speaker 02:
They're months prior.

[00:28:04] Speaker 02:
The declarations set that out.

[00:28:06] Speaker 02:
That alone raises a fact issue as to whether or not that can be sufficient as a matter of law.

[00:28:11] Speaker 02:
Number two, I'll leave the court with Mr. Mutoguchi's own characterization of those recordings, because when asked in his deposition,

[00:28:20] Speaker 02:
about a statement he made that he would rather have my clients own 50% of TPP than pay taxes to the NTA.

[00:28:26] Speaker 02:
His response was, oh, that was a joke.

[00:28:29] Speaker 02:
Those recordings were casual conversations among friends.

[00:28:32] Speaker 02:
You shouldn't take that seriously.

[00:28:34] Speaker 02:
That is in the record at

[00:28:40] Speaker 02:
That is critical because his own characterization of these recordings shows that they are not the kind of evidence that the court can rely on for summary judgment.

[00:28:50] Speaker 02:
As a result, we would ask the court to reverse the district court's grant of summary judgment.

[00:28:54] Speaker 03:
Thank you, counsel.

[00:28:55] Speaker 03:
This case is submitted, and we are adjourned for the week.