Chapter 6

6.1 Complaint

Class Litigation Against Lenders for Campground Membership Fraud

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO

John GRAY and Laurie GRAY, residents of West Virginia, and Peter ISAAK and Susan J. ISAAK, residents of Ohio, on behalf of themselves and other persons similarly situated, Plaintiffs, [vs.] TRUMBULL SAVINGS AND LOAN COMPANY, a state chartered savings and loan in Ohio, Defendant. CIVIL ACTION NO. CLASS ACTION COMPLAINT NATURE OF THE ACTION This action is brought on behalf of all individuals who purchased interests (or memberships) in Ponderosa Park and The Landing At Clay's Park two Ohio recreational campground resorts pursuant to certain purchase money loans with Trumbull Savings And Loan Company (hereafter "Trumbull"). The Plaintiffs seek damages under Sections 1962(c) and 1962(d) of the Racketeering Influenced And Corrupt Organizations Act, 18 U.S.C. Sec. 1962 (RICO) for Defendant Trumbull's aiding and abetting of the campgrounds violation of RICO. The Plaintiffs also seek damages pursuant to contractual rights created by the Federal Trade Commissions [hereafter "FTC"] "holder provision" regulation as set forth at 16 C.F.R. 433.2. The Defendant, Trumbull, is or was the holder of the purchase money loan agreements made with Plaintiffs which are subject to this FTC regulation. As a holder, Trumbull is subject to "any claims" that the Plaintiffs have against the two sellers of campground resort services, Ponderosa Park and The Landing At Clay's Park. The Plaintiffs have pled six separate claims under federal and state law against Trumbull arising in part out of the conduct of Ponderosa and/or The Landing, two commonly owned and operated campgrounds respectively in Mahoning and Stark

Counties in Ohio. As set forth below Defendant Trumbull is liable for all federal and state claims under the contractual rights created by the FTC holder provision. JURISDICTIONAL STATEMENT 1. Counts II and III arise under 18 U.S.C. Section 1962(c) and 18 U.S.C. Section 1962(d) respectively. The remaining Counts arising under contract and the common law are properly asserted under this Court's pendent jurisdiction. PARTIES AND OTHERS 2. Representative Plaintiffs, John Gray and Laurie Gray [hereafter "Grays"], are residents of West Virginia and at all material times resided at 100 Main Street, Anytown, West Virginia. 3. Representative Plaintiffs, Peter Isaak and Susan J. Isaak [hereafter "Isaaks"], are residents of Ohio and at all material times resided at 100 Main Drive, Anywhere, Ohio. 4. Defendant, Trumbull Savings And Loan Company, is a state chartered savings and loan of Ohio and at all material times was located at 105 High Street, N.E., Warren, Ohio, 44482. 5. Ponderosa Park is a recreational campground located at 9362 Salem-Warren, Salem, Ohio 44460. Ponderosa Park previously was operated by Ponderosa Park, Inc., an Ohio corporation. In October 1988 Ponderosa Park, Inc. filed for bankruptcy. 6. The Landing At Clay's Park is a recreational campground located in Stark County, Ohio at 5540 Manchester Avenue, NW, North Lawrence, Ohio 44666. The Landing was previously operated by The Landing, Inc., an Ohio corporation which was owned and operated by the same shareholders who owned and operated Ponderosa Park. In October of 1988, The Landing also filed for bankruptcy. 7. The LiVorio-Sabatini Control Group is a group of interrelated corporations owned by the same principals which operated both Ponderosa Park and The Landing At Clay's Park and in addition Alpine Valley in Fayette County, Pennsylvania, another campground which also became financially insolvent in October of 1988. The Controlled Group consists of three commonly owned companies: Bo-Anthony Land Company, Inc., Eastern Resorts Corporation and Resort Consultants of America, Inc. Bo-Anthony Land Company, Inc. has two wholly owned

subsidiaries, Ponderosa Park Resort, Inc. and Ponderosa Park Music, Inc. Eastern Resort Corporation has three wholly owned subsidiaries, The Landing At Clay's Park, Inc., Landing Development Company, Inc. and Alpine Valley Resorts, Inc. STATEMENT OF THE CASE The Agreement To Purchase Campground Recreational Services 8. On January 3, 1987 the Representative Plaintiffs, John and Laurie Gray, purchased from Ponderosa Park, Inc. a 1/750th interest in Ponderosa Park for $4,495 as represented by the Agreement For Deed which is attached hereto as Exhibit A and the Facts And Regulations, Exhibit B. 9. On January 4, 1987 the Representative Plaintiffs, Peter and Susan J. Isaak, purchased from The Landing At Clay's Park, Inc. a 1/750th interest in The Landing for $5,220 as represented by the Agreement For Deed which is attached hereto as Exhibit C and the Facts And Regulations, Exhibit D [neither exhibit is reprinted infra]. 10. The Grays and the Isaaks purchased the right to use recreational Ponderosa and The Landing facilities or services as identified in the respective Agreement For Deeds and Facts And Regulations both form documents utilized by the Campgrounds in their selling schemes. 11. As represented by the Agreements For Deed and the Facts And Regulation Statements, the Grays received the right to use certain campground facilities and services. The Grays' purchase constituted only a limited right of access to property owned by Ponderosa and a right to use (or a membership to use) the recreational services to be provided by Ponderosa. Thus, in the Agreement For Deed, Ponderosa expressly reserved the right to limit and/or deny the Grays access to Phase 1-C of Ponderosa in the following manner: A. The Agreement For Deed provides that the Grays did not have the right to an exclusive use of any portion of Phase 1-C of Ponderosa. B. The Agreement For Deed provides that on certain holiday weekends the campsites would be allotted on a first come, first serve basis and that a campsite was not guaranteed to the Grays for such holiday weekends.

C.

The Agreement For Deed provides that the Grays' interest in Phase 1-C of Ponderosa was not transferable without the written consent of Ponderosa.

12. The Grays were never assessed nor did they ever pay any annual real estate taxes to any taxing authority on their interest as levied by Mahoning County or any other taxing authority. 13. Simultaneously with their purchase, the Grays received and executed the Facts And Regulations Statement (referenced in the Agreement For Deed) which contained contractual commitments that Ponderosa had constructed or would construct certain recreational facilities. The Grays Facts And Regulations attached hereto as Exhibit "B" provided: 2. Ponderosa Park now has, or under construction and proposed the following recreational amenities and activities available for your use;

Lounge & Restaurant Large Club House Supervised Activities For Youngsters, Teen & Adults Golf Driving Range Security Gate System Security Guard Patrol Indoor Heated Pool Outdoor Pool Children's Wading Pool Teen Center Recreational Game Room Table Tennis Modern Comfort Stations Softball Field Western Store Lake Fishing and Boating 4400 Seat Theater with Professional Entertainment Two Tennis Courts Basket Ball Court Volley Ball Court Badminton Court Shuffleboard Court Horseshoe Court Exercise Room Sauna Room Whirlpool Bath Ice Skating Snowmobile Trails Playgrounds Archery Range Hiking Trails Dances and Buffets Fact and Regulation No. 5 provided:

5.

Campsites in Phase 1-A will be provided with water, electricity, a driveway, a picnic table and a fire ring.

Fact and Regulation No. 13 provided: 13. There is a dump station located convenient to the campsites. Trash receptacles are located throughout the campground.

14. The Grays' right to use Ponderosa was not limited to the Phase I-C in which they were to receive a so-called warranty deed upon full payment of the purchase price but instead provided: 20. Phase I-C Owners may use campsites in any Phase of Ponderosa Park Resort where undivided interest memberships are sold on a basis similar to Phase 1-C and owners in those sections may use Phase 1-C campsites.

15. Ponderosa by the Facts and Regulations retained the right to limit and or exclude the Grays' guests from their interest: 7. As a Ponderosa Park Resort Owner, you may have guests visit you. No one but you or your immediate family may use your card. Guest passes will be issued by the Resort. If you have additional guests that wish to stay at another campsite, they will be charged $7.00 per day. Guest Campsite Reservations must be made in advance.

8.

16. The Agreements For Deed and the Facts And Regulations Statements of the Isaaks and all other class Plaintiffs contained the identical boilerplate contract provisions as the Agreement For Deed and Facts And Regulations used by The Landing at Clay's Park. Like the Grays they never paid real estate taxes. Trumbull Is Liable For All Claims Plaintiffs Have Against Ponderosa And The Landing

17. Pursuant to an Agreement with Ponderosa, Trumbull obtained the right to provide financing to purchasers of interests in Ponderosa. See Exhibit E [not reprinted infra]. The Landing also had a virtually identical financing agreement with Trumbull.

18. Simultaneously with execution of the Agreement For Deed, the Representative Plaintiffs also executed a document entitled a "Promissory Note" (See Exhibit F, Grays' Promissory Note and Exhibit G, Isaaks' Promissory Note) whereby the Grays and the Isaaks agreed to obtain loan financing to purchase their campground interests from Trumbull. 19. Under Federal Trade Commission Rule, 16 C.F.R. 433.2, Ponderosa and The Landing were both required to incorporate a contractual "holder provision" in the Promissory Note (which in fact under the FTC Rule was a "purchase money loan"). This FTC regulation provides, inter alia:

433.2 Preservation of Consumers' Claims and Defenses, Unfair or Deceptive Acts or Practices. In connection with any sale or lease of goods or services to consumers, in or affecting commerce as "commerce" is defined in the Federal Trade Commission Act, it is an unfair or deceptive act or practice within the meaning of Section 5 of that Act for a seller, directly or indirectly, to:

(b) Accept as full or partial payment for such sale or lease, the proceeds of any purchase money loan (as purchase money loan is defined herein), unless any consumer credit contract made in connection with such purchase money loan contains the following provision in at least ten point, bold face, type: NOTICE ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICE OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.

20. Ponderosa and The Landing were both sellers engaged in the selling of services to consumers in or affecting "commerce" as that term is defined by the Federal Trade Commission Act, 15 U.S.C. Sec. 41 et seq. 21. Trumbull drafted the purchase money loans executed by Plaintiffs but failed to incorporate the Federal Trade Commission holder provision required by 16 C.F.R. Section 433.2. 22. The FTC holder provision Rule is intended to provide individuals, including the Plaintiffs, with contractual rights of action against the holder of their purchase money loan agreements. 23. Despite its absence from the Grays' and Isaaks' purchase money loans, the holder provision is by operation of law deemed to be a term of the loans. The purchase money notes of the Grays and Isaaks thus must be deemed to contain the following implied contract provision: NOTICE ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICE OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER. 24. Trumbull is or was a "holder" of the Representative and Class Plaintiffs' purchase money loans. 25. As the holder of the Representative and Class Plaintiffs' purchase money loan agreements, Trumbull is liable under the "holder" provision for all claims the Representative and Class Plaintiffs have against Ponderosa and The Landing.

The RICO Claims Against Ponderosa And The Landing For Which Trumbull Under The Holder Provision Is Liable

26. Beginning on or about January 1, 1985 the owners of the Ponderosa and The Landing developed illegal schemes in the nature of a "bust-out" utilizing the United States wires and mails

to sell campground interests or memberships in the Ponderosa and The Landing. In these fraudulent schemes, Ponderosa and The Landing undertook the marketing of memberships in and development of recreational campgrounds. After Ponderosa and The Landing had partially developed the campgrounds and obtained millions of dollars in purchase money loan proceeds and other membership sales proceeds, the campgrounds were then looted by the LiVorio-Sabatini Control Group of all capital necessary to complete and operate the campgrounds by the principal owners and/or officers of the campgrounds. After only 3 years of operation, Ponderosa and The Landing were intentionally made insolvent and placed into bankruptcy. 27. The Representative and Class Plaintiffs were thus sold an interest in a campground that was undeveloped. The owners of the campgrounds then implemented and executed bust-out type schemes that would prevent the campgrounds from ever being "fully developed" as contractually provided for in the Plaintiffs' Agreement For Deed. 28. Ponderosa's and The Landing's schemes involved utilizing the United States wires and mails to attract potential campground purchasers to the undeveloped campgrounds, and then make a quick sale using high pressure sales tactics and on-site financing from Trumbull. Upon making the sales and arranging the financing on behalf of Trumbull, the campgrounds were then paid only a portion of the proceeds of the purchase money loans directly by Trumbull with the remainder of the proceeds being held by Trumbull in a "hold-back" account. 29. In disbursing the loan proceeds, Trumbull withheld a portion of the loan (either 10% or 60% of the amount of each loan). Trumbull's portion was credited to an account commingled in the general deposits of Trumbull. The remaining portion of the loan was paid directly to the Campgrounds. The Representative and Class Plaintiffs paid 18% interest on the full amount of the loan, including the portion never disbursed thus substantially increasing the amount of interest (and profit) to Trumbull in excess of that allowed by Ohio law. 30. Once the proceeds of the sales were collected and after virtually all capital had been looted from the Campgrounds, the LiVorio-Sabatini Control Group looted both Ponderosa and The Landing and caused them to be insolvent and then placed them into bankruptcy.

31. With reference to the Facts And Regulation (referred to in the Agreement For Deed), numerous contracted for recreational facilities have either never been constructed, were only partially constructed or have been or are being provided in such a condition as to make them completely unusable. 32. Plaintiffs' interests as set forth in the Agreement For Deed and the Facts And Regulations were rendered worthless when the LiVorio-Sabatini Control Group along with Ponderosa and The Landing developed and then implemented schemes to loot the campgrounds. In this connection, the campgrounds, even today, are not operational on a year round winter through summer basis offering winter use and activities but are now (at best) what they were prior to the illegal schemes, i.e., only seasonal rental campgrounds. Numerous contracted for recreational facilities and activities have not been provided. 33. Ponderosa and The Landing thereby obtained money by employing an illegal scheme in the nature of a "bust-out" in violation of the mail and wire fraud statutes. 34. Trumbull is subject to liability for Ponderosa's and The Landing's violation of Section 1962(c) of RICO, under the terms of the Federal Trade Commission holder provision which by operation of law is deemed to be included in Representative and Class Plaintiffs' purchase money loan agreements. Aiding And Abetting Liability Claim Against Trumbull 35. Trumbull had knowledge of and substantially participated in Ponderosa's and The Landing's pattern of racketeering from early 1987 to October 1988 when the schemes suddenly ended. 36. Ponderosa initiated its campground sales scheme in January, 1985 in Mahoning County, Ohio and The Landing's campground scheme was soon thereafter initiated in Stark County, Ohio in November 1985. In 1985 and 1986 Bank One of Youngstown contracted for the exclusive right to provide purchase money loans to purchasers of interests in both Ponderosa and The Landing. In this time period, Bank One extended millions of dollars in purchase money loans to purchasers of interests. In 1985 and 1986, the owners and officers of Ponderosa and The

Landing, including William LaVorio, Robert Sabatini (and others) looted from Ponderosa and The Landing millions of dollars needed to develop the then undeveloped campgrounds. Bank One thereafter cancelled its purchase money arrangements with both Campgrounds. 37. In 1987, Defendant Trumbull contracted to provide purchase money loans to purchasers of interests in Ponderosa and The Landing. In contracting to provide purchase money loans pursuant to this agreement, Trumbull had obtained and reviewed financial information on Ponderosa Park, The Landing and the LiVorio-Sabatini Control Group. Trumbull also provided other lines of credit and/or mortgage financing to the LiVorio-Sabatini Control Group and/or its individual officers and thus had knowledge of the financial condition of these corporations and their ability (or inability) to meet their financial obligations. It was contemplated by Trumbull at the Campgrounds that their financing relationship would continue for many years. 38. Trumbull knew (or was reckless in not knowing) about Ponderosa's and The Landing's fraudulent bust-out type bankruptcy schemes. In this connection, Trumbull (knew or acted recklessly in not knowing) that: A. The owners and officers of Ponderosa and The Landing had taken millions of dollars of capital from the Campgrounds in the years 1985 and 1986 (and since there were no owner personal guarantees from the owners were highly likely to continue to loot the campgrounds) which were in 1987 grossly undercapitalized. Such undercapitalization was concealed from Trumbull's purchase money loan borrowers, i.e., the Plaintiffs; B. Ponderosa and The Landing could not meet their debt obligation to other financial institutions and in addition its debt obligation to Trumbull as well as meet their contractual commitments; C. Ponderosa and The Landing never intended to honor their Agreement For Deed obligations with Plaintiffs; D. Ponderosa and The Landing could not (or would not) provide a "fully developed" campground as contracted for in the Agreements For Deed; and finally

E.

The owners of Ponderosa and The Landing had millions of dollars in other loans from and/or contingent liabilities to other financial institutions and they were using money generated from Ponderosa and The Landing to pay these other obligations instead of developing the undeveloped campgrounds.

39. Despite substantial knowledge or available information within its possession, Trumbull knowingly and substantially assisted Ponderosa and The Landing in committing a bustout type scheme which has damaged representative Plaintiffs interests in the two campgrounds as well as the interests of others. In this connection, Trumbull: A. Retained Ponderosa and The Landing as its credit arranger to facilitate the making of purchase money loans at the premises of the Campgrounds despite knowing about (or recklessly ignoring) the Campgrounds' illegal schemes; B. Withheld a portion of each purchase money loan to increase its loan profit without the knowledge of Plaintiff borrowers and credited only a portion of the loan directly to Ponderosa and/or The Landing pursuant to respective agreements. Using this "hold-back" method of purchase money lending enabled Trumbull to lend substantially less than agreed and receive interest greatly in excess of that contracted for in the purchase money loan agreement and in excess of that allowed by Ohio law; C. Consciously intended that Ponderosa and The Landing continue their fraudulent campground sales schemes in order for Trumbull to continue to receive its high illegal profits from its purchase money arrangement with Ponderosa and The Landing. In this connection, Trumbull sought continuation of its installment loan program with the Campgrounds despite knowing (or recklessly ignoring) that the campgrounds could not continue to fulfill their contractual obligations to Plaintiffs and others and by concealing this fact from Plaintiffs; D. Hired a former Bank One employee to implement and administer its purchase money loan program who had direct knowledge of the Campgrounds' illegal

schemes and the high profitability of the purchase money loan program used by Bank One at the Campgrounds; and E. Agreed with Ponderosa and The Landing not to incorporate the holder provision in the purchase money loan agreements so that Ponderosa and The Landing could perpetrate their schemes without subjecting Trumbull to liability under agreements that explicitly contained the holder provision. The Representative And Class Plaintiffs' Claims For Ponderosa's And The Landing's Bad Faith Conduct And Other Breaches Of Contract 40. In the Agreement For Deed and the Facts And Regulations, Ponderosa made explicit contractual commitments that the Representative and Class Plaintiffs were to be provided a fully developed campground: The Purchaser further understands and agreed that this purchase is on an "under development basis" and that the use of the fully developed campgrounds is not guaranteed until Ponderosa Park Resorts, Inc. is fully developed. Purchaser further understands and agrees that all purchases of a 1/750th interest in Ponderosa Park Resorts, Inc. shall be guaranteed the use of a campsite anytime during the year except for the following holiday weekends preceding and succeeding holidays: Memorial Day holiday weekend, July 4th holiday weekend and the weekend preceding and succeeding, and Labor Day holiday weekend. On the weekends listed in the preceding sentence, campsites shall be allotted on a first come, first serve basis or such other equitable basis as Ponderosa Park Resorts, Inc. shall establish from time to time.

41. Despite this contractual commitment and many others in the Facts And Regulations describing the facilities to be provided, Ponderosa Park, Inc. and The Landing, Inc. and the LiVorio-Sabatini Control Group embarked upon schemes to loot the campgrounds of the capital necessary to complete and operate the campgrounds. In the years 1985, 1986, 1987 and 1988 the LiVorio-Sabatini Control Group which owned and operated the Campgrounds looted millions of dollars from Ponderosa Park and The Landing at the same time they were engaged in an aggressive campaign to sell interests in the campgrounds and while the campgrounds were undeveloped. Ultimately, Ponderosa and The Landing simultaneously filed for bankruptcy in October 1988. 42. After millions of dollars of campground interests were sold, Ponderosa and The Landing were rendered insolvent by their owners and placed into bankruptcy. Ponderosa Park, Inc. and The Landing, Inc. through its owners and operators intentionally failed to fully develop and operate the campgrounds as contracted for with Plaintiffs. 43. The assets of Ponderosa and The Landing were purchased by Guardian Credit Corporation pursuant to a Plan of Reorganization approved in April 1991. Both Campgrounds are now being operated by Buckeye Resorts, Inc., a newly formed subsidiary of Guardian Credit. Notwithstanding this Plan of Reorganization, the Plaintiffs have been and continue to be damaged by the Campgrounds bad faith contract and breaches of contract. In this connection, many of the contracted for recreational facilities have never been built or completed and many others remain non-operational. The Campgrounds are not fully operational on a year round winter through summer basis. Plaintiffs cannot now obtain restitution from Ponderosa and The Landing for their illegal scheme given the Campgrounds' bankruptcies. 44. Ponderosa and The Landing during all material times, used substantially identical Agreements For Deed and Promissory Notes with the Grays, the Isaaks and all other Plaintiffs in connection with the selling of interests and the financing of loans with persons purchasing Ponderosa and The Landing interests.

CLASS ALLEGATIONS 45. This action is brought as a class action pursuant to Fed.R.Civ.P. Rule 23 on behalf of all persons who purchased interests in The Landing and Ponderosa Park and obtained financing for their purchase from Trumbull Savings And Loan Company pursuant to promissory notes. 46. The Class is believed to include thousands of persons, and is, therefore, so numerous as to make it impracticable to bring all members of the respective class before the Court. The exact number of purchasers is unknown to the representative Plaintiffs, but may be determined from the records maintained by Defendant Trumbull. In many instances, such persons are unaware that claims exist on their behalf or, having knowledge of such claims, have, in most instances, sustained damages in such amounts that when taken individually are too small in number to justify the expense and effort required to bring suit separately, but whose damages are of such a significant size, if taken as a group, that they do justify the taking of legal action. 47. Common questions of law and fact affect the rights of each member of the class and a common relief by way of damages for the Plaintiff class is sought. 48. Among the predominating common questions of fact and law are: A. Whether Trumbull aided and abetted the Campgrounds' violation of 18 U.S.C. Sec. 1962(c)? B. Whether Ponderosa Park, Inc. and The Landing, Inc. violated RICO, 18 U.S.C. Section 1962(c)? C. Whether Trumbull, Ponderosa and The Landing conspired to violate Section 1962(c) of RICO in violation of Section 1962(d)? D. Whether Ponderosa Park, Inc. and The Landing, Inc. breached their contracts with the Plaintiff class? E. Whether Ponderosa and The Landing violated their duties of good faith and fair dealing in performance of their contractual obligations with the Plaintiff class? F. Whether the FTC holder provision is by operation of law deemed to be a contractual term in the Plaintiff class' purchase money loan agreements?

G.

Whether Trumbull is subject to liability for the federal and state law claims Plaintiffs could have asserted against Ponderosa and The Landing under the FTC holder provision?

49. The representative Plaintiffs will assure the adequate representation of all members of the class, and have no conflict with class members in the maintenance of this action. Representative Plaintiffs' claims are not only typical but identical to the claims of the class members. They have no relationship with Defendant Trumbull except as borrowers pursuant to purchase money loans and are aware that they cannot settle their action without Court approval. Their interests in this action are antagonistic to the interests of Trumbull and they will vigorously pursue the claims of the Class. 50. The representative Plaintiffs can acquire the financial resources to litigate this action. Moreover, the Plaintiffs' undersigned counsel has agreed to pay all reasonable and necessary costs to litigate this action. 51. Retained counsel are experienced in litigating class actions and have handled many class actions in the state and federal courts (including a number of cases in this Court) for and on behalf of other representative Plaintiffs. Many of these cases were consumer class actions. Counsel are handling this case on a contingent basis and will receive compensation for their professional services only as awarded by this Court. 52. A class action provides a fair and efficient method of adjudicating this controversy. The substantive claims of the Representative and Class Plaintiffs are identical and will require evidentiary proof of the same kind and application of the same law. Since Trumbull has treated and are treating all Class members in a similar and/or identical manner equitable and declaratory relief is appropriate with respect to the Class. 53. Representative Plaintiffs believe and therefore aver that there are no unusual legal or factual issues which would cause management problems not normally and routinely handled in Class actions, and because damages may be calculated with mathematical precision, the cost of

administering the class fund will be minimized. The Representative Plaintiffs believe and therefore aver that because Class members are unaware that their rights have been violated, or, if aware, would be unable to secure counsel to litigate their claims on an individual basis because of the relatively small nature of their damages in relation to the value of the professional services which would have to be rendered, that a class action is the only proceeding in which they can recover. Individual actions, as a result of the doctrine of stare decisis, could substantially impair the rights of the purported Class members and an inconsistent adjudication would require Defendant Trumbull to treat similarly and/or identically treated Class members differently. 54. The representative Plaintiffs are unaware of any other similar litigation against Defendant Trumbull and believe that this action will further the public policies underlying federal and state law. This Court is an appropriate forum since Defendant Trumbull does business and is located within this forum. COUNT I RICO CLAIMS AGAINST PONDEROSA AND THE LANDING AND THEREFORE UNDER THE HOLDER PROVISION AGAINST TRUMBULL 55. The averments of the foregoing Paragraphs 1 through 54, inclusive, are incorporated. 56. For the purposes of this Count and Counts II and III, the LiVorio-Sabatini Group ("the Control Group") is an association in fact enterprise engaged in and/or the activities of which affect interstate commerce. In this connection, the Control Group was engaged in the business of establishing corporations to sell campground interests like Ponderosa, The Landing and Alpine Valley Resorts. 57. Ponderosa and The Landing were associated with the LiVorio-Sabatini Control Group and actively participated in the operations of the LiVorio-Sabatini Control Group. In this connection, Ponderosa and The Landing directed and controlled the selling of campground interests on behalf of the LiVorio-Sabatini Control Group. 58. Ponderosa and The Landing engaged in a pattern of mail and wire fraud violations by mailing and telephoning thousands of potential campground interest purchasers by offering them "free prizes" if they would visit and tour the undeveloped campgrounds. The contracts executed

by the representative and Class Plaintiffs contained a contractual commitment that Ponderosa and The Landing would be developed. Instead Ponderosa and The Landing engaged in a bust-out type scheme by looting The Landing and Ponderosa of capital necessary to complete development of and operate the Campgrounds. 59. In furtherance of the fraudulent schemes, Ponderosa and The Landing undertook the primary responsibility in Ohio for the marketing and selling of campground interests and for the execution of the bust-out type bankruptcy scheme. After The Landing and Ponderosa had successfully sold and obtained the proceeds for the sale of thousands of interests, millions of dollars in capital necessary for the development and operation of the campgrounds the campgrounds were "looted" by the officers and directors of the LiVorio-Sabatini Control Group. 60. The knowing and intentional conduct of Ponderosa and The Landing to defraud the Representative and Class Plaintiffs of their contracted campground interests and the use of a bust-out type bankruptcy scheme constituted violations of 18 U.S.C. Secs. 1341 and 1343. 61. As a direct and proximate result of the fraudulent conduct of Ponderosa and The Landing in violation of Section 1962(c) of RICO, Representative and Class Plaintiffs have suffered very substantial losses and damages to their property. 62. Defendant Trumbull's agreement with Representative and Class Plaintiffs by operation of law is deemed to have provided: NOTICE ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICE OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER. See C.F.R. Section 433.2.

63. By virtue of the foregoing, Defendant Trumbull is liable to the Representative and Class Plaintiffs for Ponderosa's and The Landing's violation of 18 U.S.C. Sec. 1962(c).

COUNT II AIDING AND ABETTING LIABILITY AGAINST TRUMBULL 64. The averments of the foregoing Paragraphs 1 through 63, inclusive, are incorporated. 65. Defendant Trumbull had knowledge of and knowingly and substantially participated in Ponderosa's and The Landing's pattern of racketeering activity. 66. Defendant Trumbull aided and abetted Ponderosa and The Landing by: A. Financially assisting Ponderosa and The Landing in its selling schemes by providing financing to the Plaintiffs with full knowledge of the illegal schemes being perpetrated; B. Intended and/or encouraged continuation of the illegal schemes so that Trumbull could continue to receive illegal excessive interest rates on its purchase money loans, which high interest were unknown to Representative and Class Plaintiffs and illegal under Ohio law; and C. Sent false loan statements to Plaintiffs concerning the true loan amount, true unpaid balance, true interest rates and concealed its hold-back accounts. 67. Defendant Trumbull's aiding and abetting Ponderosa's and The Landing's violation of RICO has caused substantial damage to Representative and Class Plaintiffs. COUNT III CONSPIRACY UNDER RICO SECTION 1962(d) TO VIOLATE RICO SECTION 1962(c) AGAINST TRUMBULL 68. The averments of the foregoing Paragraphs 1 through 67, inclusive, are incorporated. 69. The owners of Ponderosa and The Landing, Ponderosa, The Landing and Trumbull all agreed to participate in the affairs of the enterprise through the commission of at least two predicate acts under RICO, 18 U.S.C. Sec. 1962(c). In this connection, Trumbull agreed with Ponderosa and The Landing not to incorporate the FTC holder provision in the purchase money loan contracts in violation of FTC Regulations and then used the United States wire and mails in sending loan information to the Plaintiffs. In addition Trumbull agreed with Ponderosa and The

Landing that it would finance the Plaintiffs' purchase of interests knowing of the Campgrounds' illegal bust-out type schemes, to increase its own profits by use of its hold-back accounts. Trumbull thus agreed with Ponderosa and The Landing to commit violations of 18 U.S.C. Sections 1341 and 1343. 70. Trumbull as set forth above agreed to participate in and/or aided and abetted Ponderosa's and The Landing's violation of Section 1962(c). 71. Trumbull therefore conspired with Ponderosa and The Landing to violate Section 1962(c) of RICO and therefore has violated Section 1962(d) of RICO which makes it unlawful for any person to conspire to violate Section 1962(c). COUNT IV BREACH OF CONTRACT CLAIMS AGAINST PONDEROSA AND THE LANDING AND THEREFORE TRUMBULL 72. The averments of the foregoing Paragraphs 1 through 71, inclusive, are incorporated. 73. At the time of the purchase of their campsite interests in the campgrounds from Ponderosa and The Landing, the Grays, Isaaks and the Class Plaintiffs executed the Agreements For Deed (See Exhibits "A" and "C") setting forth the terms and conditions concerning their purchases. 74. Ponderosa and The Landing (and their owners) have failed to comply with the terms and conditions in their Agreements for Deed by failing to provide the contracted for fully developed campsite facilities but instead looted all or virtually all capital from the campgrounds and by causing the Campgrounds' bankruptcy. 75. Ponderosa and The Landing have therefore breached their agreements with the Grays, Isaaks and the Class Plaintiffs, and caused them to suffer substantial losses and damages. 76. Defendant Trumbull by its purchase money loans with the Representative and Class Plaintiffs, by operation of law agreed to be subject to any claim by a purchaser of a Ponderosa interest or Landing interest that could be asserted against Ponderosa and The Landing under the terms of the FTC "holder provision" which is deemed to be included in all the purchase money loans.

77. By virtue of the foregoing, Trumbull is liable to the Representative and Class Plaintiffs for Ponderosa's and The Landing's breach of their contracts with the Representative and Class Plaintiffs. COUNT V BREACH OF CONTRACT -- DUTY OF GOOD FAITH AND FAIR DEALING AGAINST THE CAMPGROUNDS AND THEREFORE TRUMBULL 78. The averments of the foregoing Paragraphs 1 through 77, inclusive, are incorporated. 79. The Plaintiffs' Agreements For Deed contain a duty that Ponderosa and The Landing exercise good faith and fair dealing in the performance of their contractual obligations. 80. In the Agreements For Deed executed by the Representative and Class Plaintiffs, Ponderosa and The Landing contracted to provide Plaintiffs a fully developed campground. 81. The Landing and Ponderosa failed to exercise good faith and fair dealing by looting the campgrounds of all or virtually all capital which was needed to develop and operate the campgrounds. In this connection, Ponderosa and The Landing acted in bad faith and unfairly dealt with the Representative and Class Plaintiffs by failing to develop and operate the campgrounds and intentionally causing their insolvency and eventual bankruptcy. 82. Defendant Trumbull in its purchase money loans with the Representative and Class Plaintiffs, by operation of law, is deemed to be subject to any claim by a purchaser of a Ponderosa interest or Landing interest that could be asserted against Ponderosa and The Landing under the terms of the FTC "holder provision." 83. By virtue of the foregoing, Trumbull is liable to the Representative and Class Plaintiffs for Ponderosa's and The Landing's breach of their contracts with the Representative and Class Plaintiffs. COUNT VI CONSPIRACY TO INTENTIONALLY OBSTRUCT OR DENY PLAINTIFFS A REMEDY PROVIDED BY FEDERAL TRADE COMMISSION LAW 84. The averments of the foregoing Paragraphs 1 through 83, inclusive, are incorporated.

85. Trumbull and Ponderosa and The Landing knew (or was reckless in not knowing) that the Federal Trade Commission required inclusion of the holder provision in Plaintiffs' purchase money loan contracts. In this connection, Ponderosa and The Landing arranged credit at the Campgrounds on behalf of Bank One of Youngstown in 1985 and 1986 for thousands of campground purchasers using purchase money loan contracts containing the holder provision. 86. Ponderosa and The Landing had a legal duty to incorporate the holder provision in the purchase money loan agreements utilized to finance the Plaintiffs' purchase. 87. Defendant Trumbull and Ponderosa and The Landing agreed that the holder provision not be incorporated in Trumbull's purchase money loan agreements in order to obstruct or prevent Representative and Class Plaintiffs from pursuing their rights under Federal Trade Commission rights as set forth in 16 C.F.R. 433.2. 88. Trumbull and/or Ponderosa and The Landing drafted and agreed to use and used the purchase money loan contracts without incorporating the required FTC holder provision. 89. Representative and Class Plaintiffs have been damaged as a result of the conspiracy by Trumbull, Ponderosa and The Landing to obstruct or attempt to deny their legal rights. PRAYER FOR RELIEF WHEREFORE, the Representative Plaintiffs, individually and on behalf of all other class members similarly situated, demand judgment against Trumbull as follows: 1. Judgment against Defendant Trumbull for Ponderosa's and The Landing's RICO violations and granting Plaintiffs the purchase price of their campground interests and any interest they paid thereon. (Count I) 2. Judgment declaring that Defendant Trumbull has aided and abetted Ponderosa and The Landing to violate RICO (thereby violating RICO itself) and granting Plaintiffs triple damages pursuant to 18 U.S.C. 1964(c), and an award of reasonable attorneys fees. (Count II) 3. Judgment declaring that Defendant Trumbull has violated 18 U.S.C. 1962(d) by conspiring with Ponderosa and The Landing to violate 18 U.S.C. 1962(c) and granting Plaintiffs triple damages pursuant to 18 U.S.C. 1964(c) and an award of reasonable attorney fees.

4. Judgment against Defendant Trumbull for Ponderosa's and The Landing's breach of contract and granting Plaintiffs the purchase price of their campground interest and the interest they paid on the purchase. (Counts III and IV) 5. Judgment against Trumbull for conspiracy to obstruct Plaintiffs' legal remedies and granting Plaintiffs damages in the amount of the purchase price of their interest and any interest they paid. (Count V) 6. Any and all such other relief as this Court finds fair and equitable.

Attorneys for the Representative Plaintiffs, John Gray and Laurie Gray and Peter Isaak and Susan J. Isaak, and the Class Plaintiffs DATED:

6.2

First Set of Interrogatories

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO

Peter ISAAK and Susan J. ISAAK, residents of Ohio, and John GRAY and Laurie GRAY, residents of West Virginia, on behalf of themselves and other persons similarly situated, Plaintiffs, [vs.] TRUMBULL SAVINGS AND LOAN COMPANY, a state chartered savings and loan in Ohio, Defendant. CIVIL ACTION NO. 4:93 CV 01121 (JUDGE DOWD) (Magistrate Streepy)

PLAINTIFFS' FIRST INTERROGATORIES TO TRUMBULL SAVINGS AND LOAN

NOW COMES the Representative Plaintiffs, Peter and Susan Isaak and John and Laurie Gray, by their undersigned counsel, pursuant to Fed.R.Civ.P. Rule 33 with their First Interrogatories to Defendant, Trumbull Savings and Loan Association ("Trumbull") to be answered fully, in writing and under oath. INTRODUCTION In these Interrogatories: 1. "Defendant: refers to Trumbull Savings and Loan ("Trumbull") including any present or former officers, management, employees, or members of the Board of Directors of Trumbull, its predecessors, successors, parents, subsidiaries, affiliates, segments or divisions. 2. "The Campgrounds" refers to The Landing at Clay's Park, an Ohio corporation which operated and sold interests in The Landing at Clay's Park campground and Ponderosa Park, Inc., an Ohio corporation which operated and sold "interests" in Ponderosa Park campground or any one such Campground. 3. "Borrowers" mean all persons who obtained financing for the purchase of an interest in the Campgrounds from Trumbull. 4. Eastern Resorts refers to Eastern Resorts, Inc. a Pennsylvania corporation, which was the parent corporation of The Landing. 5. "A 1/750 interest in [a Phase]" describes the nature of Plaintiffs' purchase as provided in the Agreements For Deed for each of the Campgrounds. 6. The Livorio-Sabatini Group refers to three commonly owned companies and their affiliates as identified below. The three companies are Bo-Anthony Land Company, Inc., Eastern Resorts Corporation and Resort Consultants of America, Inc. Bo-Anthony Land Company, Inc. has two wholly owned affiliates, Ponderosa Park Resort, Inc. and Ponderosa Park Music, Inc.

Eastern Resort Corporation has three wholly owned affiliates, The Landing at Clay's Park, Inc., Landing Development Company, Inc. and Alpine Valley Resorts, Inc. 7. The Agreements refers to the August 25, 1986 agreements between Trumbull and the Campgrounds whereby Trumbull agreed to provide loans to approved purchasers of interests at the Campgrounds. 8. Purchase Money Loan refers to those loans defined in 16 C.F.R. 433.1. 9. "Document" as used herein has the full extent of its meaning as provided in Fed.R.Civ.P. Rule 34(A), and includes any written, drawn, recorded, transcribed, filed or graphic matter, however produced or reproduced, and any drafts, revisions or amendments thereof. 10. The word "person(s)" means all entities, and, without limiting the generality of the foregoing, includes natural persons, joint owners, associations, companies, partnerships, joint ventures, corporations, trusts and estates. 11. The word "document(s)" means all written, printed, recorded or graphic matter, photographic matter or sound reproductions, video tapes and/or films, however produced or reproduced, pertaining in any manner to the subject matter indicated, including computer tapes, discs, or other electronically stored data. 12. The words "identify", "identity" and "identification", when used with respect to a person or persons, means to state the full name and present or last known residence and business address. 13. The words "identify", "identity" and "identification", when used with respect to a document or documents, means to describe the document or documents by date, subject matter, name(s) or person(s) that wrote, signed, initialed, dictated or otherwise participated in the creation of the same, the name(s) of the addressee or addressees (if any) and the name(s) and address(es) of each person or persons who have possession, custody or control of said document or documents. If any such document was, but is no longer, in your possession, custody or control, or in existence, state the date and manner of its disposition.

14. The word "identify", when used with respect to an act (including an alleged offense), occurrence, statement or conduct [hereinafter collectively called "act"], means to: (1) describe the substance of the event or events constituting such act; and to state the date when such act occurred; (2) identify each and every person or persons participating in such act; (3) identify all other persons (if any) present when such act occurred; (4) state whether any minutes, notes, memoranda or other documentation of such act was made; (5) state whether such document now exists; and (6) identify the person or persons presently having possession, custody or control of each document. 15. The term "you" or "your" refers to Defendants and any agents, employees, officers, or other representatives acting on each such Defendant's behalf. 16. Unless otherwise indicated, the time period for answering these Interrogatories shall be January 1, 1984 to the present. A. If the space provided for your answer is not sufficient, please use additional sheets, numbered, for example, in the case of Interrogatory No. 1, 1-a, 1-b, 1-c, etc., after each such interrogatory, and insert same in proper order in all copies served. B. Each of the following Interrogatories is intended to be a continuing Interrogatory and Plaintiffs hereby request that in the event, at any later date, you obtain any additional facts or form any conclusions, opinions or contentions different from those set forth in your answers to these Interrogatories, you should amend your answer to such Interrogatories promptly and sufficiently in advance of any trial to fully set forth such difference. INTERROGATORIES 1. Identify each person who was involved in negotiating and arranging the Agreements and the extension of loans and/or lines of credit for the purchase and/or development of the Campgrounds or to the Livorio-Sabatini Group for (a) you and (b) the Campgrounds or the Livorio-Sabatini Group. In answering this Interrogatory identify:

A.

Each person who was involved in the described negotiating or arranging credit on behalf of Trumbull;

B.

Each person who was involved in negotiating or applying for credit on behalf of the Campgrounds or the Livorio-Sabatini Group; and

C.

Each person from Bank One of Youngstown, Bank One of Columbus or Banc One Corporation who at any time contacted Trumbull about providing financing to purchasers of interests at the Campgrounds.

ANSWER: 2. Identify each person who participated or dealt with the Campgrounds and/or their principals in negotiating and/or managing or overseeing any and all agreements between Trumbull and the Campgrounds and/or its principals and/or the Livorio-Sabatini Group relating to the construction and development of the Campgrounds. In answering this Interrogatory identify: A. B. Each person who was so involved on behalf of Trumbull; and Each person who was involved on behalf of the Campgrounds or the LivorioSabatini Group. ANSWER:

3. Identify each person who participated or dealt with the Campgrounds and/or its principals in negotiating and/or managing or overseeing any and all agreements between Trumbull and the Campgrounds and/or its principals relating to the operation and maintenance of the Campgrounds or any loan relationship with the Campgrounds or the Livorio-Sabatini Group. In answering this Interrogatory identify: A. B. Each person who was so involved on behalf of Trumbull; and Each person who was so involved on behalf of the Campgrounds or the LivorioSabatini Group. ANSWER:

4. Identify each person who participated or dealt with the Campgrounds and/or its principals in negotiating and/or managing or overseeing any and all agreements between Trumbull and/or its principals relating to the sales and financing of interests in the Campgrounds. In answering this Interrogatory identify: A. B. Each person who was so involved on behalf of Trumbull; and Each person who was so involved on behalf of the Campgrounds.

ANSWER: 5. Identify each person who participated in or was engaged in negotiations with the United States trustee and/or any lending institutions relating to the proposed continued operation of the Campgrounds after the bankruptcy of Ponderosa and The Landing in October 1988. In answering this interrogatory, identify: A. B. The person involved in said negotiations on behalf of Trumbull; The person involved in said negotiations on behalf of the United States Trustee; and C. The person involved in said negotiations on behalf of any financial institutions or any other companies or individuals. ANSWER: 6. Identify each person who inspected or visited the Campgrounds on behalf of Trumbull at any time from 1984 until the present. In answering this interrogatory identify: A. B. C. D. The name of each such person; The date of the inspection or visit; The purpose for the inspection or visit; and Any documents, memoranda, notes and/or letters referring or relating to the inspection or visit. ANSWER: 7. Identify all Borrowers who obtained financing from Trumbull for the purchase of an interest in the Campgrounds. In answering this interrogatory, identify:

A. The name of such Borrower; B. C. D. The address and telephone number of such Borrower; The loan number; The amount of principal, interest, late fees and prepayment fees or other fees or charges paid to Trumbull by each such Borrower; E. F. G. The amount still alleged owing to Trumbull by each such Borrower; The documents that relate to each such Borrower; and Whether Trumbull is still the holder of the financing agreement.

ANSWER: 8. Identify all documents describing or tending to explain the nature of the Agreement For Deed which was used as a security interest in your financing agreement with persons who purchased Campground interests. ANSWER: 9. Identify all documents which refer to or relate to the plan or proposal to use reserve accounts or hold back accounts under the Agreements. 10. Identify all documents which refer to or relate to the operation and maintenance of the reserve accounts or hold back accounts under the Agreements. ANSWER: 11. Identify all your existing corporate and individual document retention and destruction policies, practices and procedures. ANSWER: 12. Identify your credit approval practices for analyzing and approving loan applications made by the Campgrounds and/or its principals which were to be used for the construction, development and maintenance of the Campgrounds. ANSWER: 13. Identify other customers of Trumbull that have established agreements with Trumbull similar to that established in the Agreements in which reserve or hold back accounts are used.

ANSWER: 14. Identify all appraisals, financial analyses, or financial projections performed either by Trumbull or an outside agency with respect to the Campgrounds or Trumbull's campground loan portfolio. ANSWER: 15. Identify each communication between Trumbull and any state or federal banking authority referring or relating to any one or more loans by Trumbull to the Campgrounds or their principals or the Livorio-Sabatini Group or referring to Trumbull's loan portfolio relating to the Campgrounds and/or the Agreements. ANSWER: 16. Identify the terminology used by Trumbull to delineate, according to degree of risk, the various classifications by which it categorizes loan risks, problem loans and loan applications. Identify any document defining these identifiable degree risks. ANSWER: 17. Identify by name, title and business address each past or present manager or board of director of Trumbull known to you who has knowledge or information concerning the following topics related to Trumbull, the Campgrounds, or the Livorio-Sabatini Group: A. Analyses, reports, plans, forecasts or any other documents concerning the condition of Trumbull's or Bank One's installment loan portfolio and/or problem and non-performing loans made to the Campgrounds or their principals; B. Trumbull's auditing and loan administration procedures implemented to monitor the quality of its loan portfolio with the Campgrounds or the Livorio-Sabatini Group, including, but not limited to, procedures for checking or reviewing the underlying loan and collateral documentation; C. D. The current financial condition of the Campgrounds; and The current operating condition of the Campgrounds.

ANSWER:

18. State whether you have ever been interviewed or investigated, either formally or informally, or have ever testified before or produced any documents at any proceedings conducted by, a grand jury, or any state agency in connection with loans made to the Campgrounds or the Livorio-Sabatini Group or regarding the development and operation of their Campgrounds, and if so, identify the following: A. The date and the place of each such examination, interview, investigation testimony or document production; B. C. D. The subject matter of each such proceeding; The person or persons conducting such proceeding; All transcripts of such proceedings and of each such examination, interview, investigation, testimony or document production; and E. All documents so produced.

ANSWER: 19. Identify the operating condition of the Campgrounds, by Campground, in 1985, 1986, 1987 and 1988. In your answer, by year, include: A. B. The amount of income generated by assessment of maintenance fees; The amount of loan proceeds paid to the Campgrounds pursuant to Trumbull's August 25, 1986 Agreements with the Campgrounds; C. D. The amounts credited to the reserve accounts under the Agreements; State separately the amount of loans or lines of credit made by Trumbull to each of the Campgrounds for the constructions and development of each of the Campgrounds; E. F. G. The recreational facilities or other construction which had been completed; The recreational facilities or other construction built within the calendar year; The recreational facilities or other construction which remained to be completed;

H.

Any projections, proposals, plans, appraisals, financial outlooks or other documents of similar kind done for or by Trumbull regarding the projected future operation of the Campgrounds;

I.

All documents referring or relating to the financial condition of the Campgrounds; and

J.

All persons preparing and/or providing the information or documents identified in this Interrogatory No. 18.

ANSWER: 20. Identify the operating condition of the Campgrounds, by Campground, in October 1988 and thereafter (by year). In your answer include: A. The amount of income generated by assessment of maintenance fees in: i. ii. iii. iv. v. vi. B. 1988; 1989; 1990; 1991; 1992; and 1993

The recreational facilities or other construction which had been completed by October 1988;

C. D.

The recreational facilities or other construction built within the calendar year; The recreational facilities or other construction which remained to be completed within the Campground after October 1988. In answering this interrogatory, identify: i. ii. iii. the facilities or other construction that were completed and/or undertaken; the cost of building or completing such facilities; and the lenders or any other entities or individuals involved in funding such building or construction; and

F. G.

All documents related to your answers to this Interrogatory No. 19; and All persons preparing and/or providing the information in this Interrogatory No. 19.

ANSWER: 21. Identify each present and former employee, officer, agent or consultant of Trumbull who has knowledge concerning the operating condition of the Campgrounds, by Campground, beginning in 1985 and each year thereafter. ANSWER: 22. In separate paragraphs numbered to correspond with the number paragraphs of the Defendant's Answer and Defenses, identify all persons who have knowledge of the matters alleged in each paragraph of Trumbull's Answer and Defenses. ANSWER: 23. Identify all documents sent to or received from Bank One relating to the Campgrounds or the Livorio-Sabatini Group. ANSWER: 24. In separate paragraphs numbered to correspond with the numbered paragraphs of Trumbull's Answer and Defenses, identify the persons whom you intend to call as witnesses at trial to establish the facts alleged in each paragraph of the Answer and Defenses. ANSWER: 25. In separate paragraphs numbered to correspond with the number paragraphs of Trumbull's Answer and Defenses, identify each document including, without limitation, correspondence which relates, refers or pertains to the allegations of each paragraph of the Answer and Defenses. ANSWER: 26. State whether any borrowers have made any complaints to you or known to you, either verbally or in writing, as to the Campgrounds. In answering this Interrogatory identify: A. The name and address of each borrower making such complaint; and

B.

Any documents relating to each complaint.

ANSWER: 27. Identify every expert retained or employed by Trumbull who will be a witness at trial, and, as to each, state: A. B. His present or last known business and residential address and telephone number; A complete identification of all documents examined, prepared, requested or made by such expert with respect to this case; C. His present or last known business or professional position (including his job title and a description of his job functions, duties and responsibilities); D. A chronological resume of the expert's educational and professional background, including the associations and societies of which is a member; E. A complete identification of all documentary materials published by such expert within his field; and F. The subject matter on which each such expert is expected to testify and the substance of the facts and opinions to which each expert is expected to testify, and a summary of the grounds for each opinion. ANSWER: Attorneys for the Representative and Class Plaintiffs DATED:

6.3

First Request for Production of Documents

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO Peter ISAAK and Susan J. ISAAK, residents of Ohio, and John GRAY and Laurie GRAY, residents of West Virginia, on behalf of themselves and other persons similarly situated,

Plaintiffs, [vs.]TRUMBULL SAVINGS AND LOAN COMPANY, a state chartered savings and loan in Ohio, Defendant. CIVIL ACTION NO. 4:93 CV 01121 (JUDGE DOWD) (Magistrate Streepy)

PLAINTIFFS' FIRST REQUEST FOR PRODUCTION OF DOCUMENTS TO DEFENDANT TRUMBULL SAVINGS AND LOAN

Pursuant to Fed.R.Civ.P. Rule 34 Representative Plaintiffs, Peter and Susan Isaak and John and Laurie Gray, by their attorneys, make this their First Request for Production of Documents to Defendant Trumbull Savings and Loan ("Trumbull"). A. DEFINITIONS Unless otherwise specified in or required by the context of a specified document request, the following definitions shall apply to this request for production of documents: 1. "Defendant" refers to Trumbull Savings and Loan ["Trumbull"] including any present or former officers, management, employees, or members of the Board of Directors of Trumbull, its predecessors, successors, parents, subsidiaries, affiliates, segments or divisions. 2. "The Campgrounds" refers to The Landing at Clay's Park, an Ohio corporation which operated and sold interests in The Landing at Clay's Park campground and Ponderosa Park, Inc., an Ohio corporation which operated and sold "interests" in Ponderosa Park campground or any one such Campground. 3. "Borrowers" mean all persons who obtained financing from Trumbull for the purchase of an interest in the Campgrounds.

4. Eastern Resorts refers to Eastern Resorts, Inc. a Pennsylvania corporation, which was a parent corporation of one or both of the Campgrounds. 5. "A 1/750 interest in [a Phase]" describes the nature of Plaintiffs' purchase as provided in the Agreements for Deed for each of the Campgrounds. 6. The Livorio-Sabatini Group refers to three commonly owned companies and their affiliates as identified below. The three companies are Bo-Anthony Land Company, Inc., Eastern Resorts Corporation and Resort Consultants of America, Inc. Bo-Anthony Land Company, Inc. has two wholly owned affiliates, Ponderosa Park Resort, Inc. and Ponderosa Park Music, Inc. Eastern Resort Corporation has three wholly owned affiliates, The Landing at Clay's Park, Inc., Landing Development Company, Inc. and Alpine Valley Resorts, Inc. 7. The Agreements refer to the August 25, 1986 agreements between Trumbull and The Campgrounds whereby Trumbull agreed to provide financing for approved purchasers of interests in the Campgrounds. 8. "Purchase Money Loan(s)" refers to those loans defined in 16 C.F.R. 443.1. 9. "Document" as used herein has the full extent of its meaning as provided in Fed.R.Civ.P. Rule 34(A), and includes any written, drawn, recorded, transcribed, filed or graphic matter, however produced or reproduced, and any drafts, revisions or amendments 10. "Refer to", "relate to" and "concerning" means, directly or indirectly, referring to, relating to, connected with, commenting on, impinging or impacting upon, affecting, responding to, showing, describing, analyzing, reflecting or constituting. 11. "Financial statements" include, but are not limited to the following, whether audited or unaudited, and whether final, interim, pro forma, complete or partial: consolidated and nonconsolidated balance sheets, statements of earnings, additional paid-in capital, retained earnings or source and application or use of funds; cash-flow projections; notes to each of such statements; and any other statements and notes that pertain to the applicable persons' past or present financial condition, including accountants' work papers.

B. INSTRUCTIONS 1. In responding to these requests, Trumbull shall furnish all responsive documents available at the time of production, and shall supplement its responses whenever necessary, in accordance with the requirements of Fed.R.Civ.P. Rule 26(e). 2. Where a claim of privilege is asserted in response to any document request, or subpart thereof, and a document is not provided on the basis of such assertion, for each document not provided: a. The party asserting the privilege shall in the objection to the document request, or sub-part thereof, identify the nature of the privilege (including work product immunity) which is being claimed; and b. The following information shall be provided in the objection: (1) the type of document (letter memorandum, etc.); (2) the general subject matter of the document; (3) the date of the document; (4) the author of the document; (5) the addressee(s) of the document; and (6) all recipients of the document.

3. If a document was prepared in several copies, or if additional copies were thereafter made, and if any such copies were not identical or are no longer identical by reasons of any notation or modification of any kind whatsoever, including without limitation notations on the front or back of any of the pages thereof, then each such non-identical copy is a separate document and must be produced. 4. It is requested that all requested documents be produced at Gallagher, Sharp, Fulton & Norman, Seventh Floor, Bulkley Building, 15012 Euclid Avenue, Cleveland, Ohio 44115, September 20, 1993, or at such other time and place mutually agreed to by the Parties. C. RELEVANT TIME PERIOD All requests herein refer to the period from January 1, 1984 to present, unless otherwise specifically indicated.

D. REQUEST FOR PRODUCTION OF DOCUMENTS 1. Any and all Documents, contracts, agreements, recourse agreements, corporate guarantees, personal guarantees or other materials by and between Trumbull and the Campgrounds and/or Trumbull and Eastern Resorts and/or Trumbull and William LaVorio, Robert Sabatini, Walter Dragelevich, Thomas Carney, Thomas LiVorio and/or Marc LiVorio or Eastern Resorts or with the Livorio-Sabatini Group or any one of its affiliated entities. 2. Any and all Documents, memoranda, plans, plats, business proposals, correspondence, minutes of any meetings, Financial Statements, notes, files, reports, etc. relating to: a. The construction and development of the Campgrounds including but not limited to Documents relating or referring to the Campgrounds including any proposal or plan to construct the Campgrounds; b. The operation of the Campgrounds including but not limited to documents or other material referring or relating to the recreational facilities and/or other facilities available or offered at the Campgrounds; and c. The sales procedure employed by the Campgrounds including but not limited to Documents relating to or referring to the Campground's plan to sell "1/750th interests." 3. Any and all Documents referring or relating to the finances of The Campgrounds, Robert Sabatini, Mary Ann Sabatini, Peter Livorio, Walter Dragelevich, Thomas Carney, Karen Livorio, Thomas Livorio, Marc Livorio, Eastern Resorts and the Livorio- Sabatini Group including but not limited to: a. Any and all files, credit files, loan agreements, loan applications, financial statements, memoranda, workout plans, borrowers statements, Financial Statements, correspondence, accounting records, minutes of any meetings, business proposals, plans, plats, property appraisals, constructions estimates, construction bids, credit reviews or other materials or documents of similar kind;

b.

Any and all documents of members of the Trumbull Board (or any Committee) discussing any loan related to said individual or entities;

c.

All communications or correspondence or other Documents sent to or received by Trumbull from Bank One of Youngstown , Bank One of Columbus, Banc One Corporation, Buckeye Union Insurance Company, GEICO, Terry Platthley or Platthley and Scheffler, the LiVorio-Sabatini Group, William LaVorio, Robert Sabatini, Walter Dragelevich, Thomas Carney, Marc LiVorio, Thomas LiVorio or Robert LiVorio related to the finances of the Campgrounds;

4. All Documents related to the construction and development of the Campgrounds. 5. All Documents referring or relating to the Borrowers including, but not limited to: a. All correspondence, contracts, agreements notices, claims, demands, Financial Statements maintained by Trumbull and/or sent to Borrowers; b. All correspondence claims, complaints, statements, sent to or communicated to Trumbull by Borrowers; c. All minutes of any meetings, notes, files, reports, correspondence, memoranda, communications or other documents of similar kind relating to or referring to Borrowers; and d. All pleadings, correspondence, notes, minutes of meetings, memoranda relating to or referring to lawsuits filed by Trumbull against Borrowers; e. The amount of principal, interest, late fees and prepayment fees paid to Trumbull by each one of the Borrowers including any amount charged off by Trumbull. f. The amount of principal, interest and late fees or other fees which Trumbull claims to be owed by the Borrowers. 6. All Documents sent to other lenders or financial institutions by Trumbull and Documents received by Trumbull from other lenders or financial institutions referring or relating to the Campgrounds, its officers and/or employees or the Livorio-Sabatini Group including but not limited to the following:

a. b. c. d. e. f. g. h. I.

FirstSouth Savings and Loan of Pittsburgh; Gallatin National Bank of Uniontown; Integra Financial; Cortland Banking and Savings Company; McKinley Federal Savings and Loan; Bank One of Youngstown; GEICO Financial Services, Inc; Bank One of Columbus; and Banc One Corporation.

7. All Documents sent to or received from any state or federal agency referring to or relating to the Campgrounds and/or its officers, agents or employees including, but not limited, to such governmental agencies or officers as: a. b. c. d. The Federal Trade Commission; The Pennsylvania Department of Banking; The Pennsylvania Attorney General; The United States Attorney, including all Trumbull documents subpoenaed by the United States Attorney; e. f. g. h. i. The Ohio Attorney General or any other official of the State of Ohio; The trustee in bankruptcy for The Landing and Ponderosa; The United States Comptroller of the Currency; The Internal Revenue Service; and Federal Bureau of Investigation.

8. All Documents identified in Trumbull's Answers to Plaintiffs' First Set of Interrogatories. 9. All analyses and/or projections done by or obtained by Trumbull referring to or relating to the development and operation of the Campgrounds.

10. All Documents concerning Trumbull's internal auditing or loan administration procedures for monitoring loans of or loan relationships. 11. All minutes, drafts of minutes, exhibits, summaries, memoranda, resolutions, notes or other Documents recording, concerning, or exchanged or distributed at any meeting of the Board of Directors, or any committee thereof, of Trumbull including any executive, finance, audit, loan or nominating committee referring or relating to: a. b. c. d. e. f. g. h. i. j. The Campgrounds; Terry Platthley or Platthley and Scheffler; Eastern Resorts; Peter Livorio; Robert Sabatini; Thomas Livorio; Marc Livorio; The Livorio-Sabatini Group; Walter Dragelevich; Thomas Carney.

12. All charts and other graphic presentations which list and/or describe the organization of Trumbull personnel at the managerial level and above, including all major departments of Trumbull and other subsidiaries including changes that have occurred throughout the relevant time period. 13. All Documents concerning any special financial audit or investigation of the accuracy of any Financial Statements prepared by or on behalf of the Campgrounds. 14. All Documents concerning any disagreement by Trumbull or any of its officers, directors or employees with the conclusions or recommendations contained in any report, Financial Statements, audit or analysis referring or relating to the operation of the Campgrounds. 15. All Documents referring or relating to Trumbull's Agreements including, but not limited to:

a)

All agreements, memoranda, analyses, projections related to the reserve accounts which were maintained by Trumbull pursuant to Paragraph 3 of the Agreements.

b)

All agreements with other Trumbull customers in which Trumbull has agreed to the use of reserve or holdback accounts, such as, but not limited to, car dealers, mobile home dealers, or recreational vehicle dealers.

c)

All analyses, studies, reports or projections prepared by Trumbull or received by Trumbull as to the yield or profit to be obtained or obtained on Trumbull's loan portfolio created by the Agreements.

d)

All reports, analyses, studies or other similar documents received by Trumbull or sent to other entities by Trumbull referring to or relating to the operation of reserve or holdback accounts on Purchase Money Loan arrangements with automobile dealers, mobile home dealers or recreational vehicle dealers, or other similar lending relationships of Trumbulls;

e)

All analyses, agreements, studies, reports, projections prepared by Trumbull or received by Trumbull as to the yield or profit obtained or to be obtained on Trumbull's arrangements with dealers of automobiles, mobile homes, recreational vehicles, home siding or other similar relationships where Trumbull has agreed to provide Purchase Money Loans to customers of said dealers.

f) g)

All Documents related to the negotiation of the August 25, 1987 Agreements; All Documents related to the negotiation of or attempts to obtain personal guarantee agreements with Peter Livorio and Robert Sabatini on the August 25, 1987 Agreements.

h)

All Documents reflecting how the yield on Trumbull's loan portfolio under the Agreements with the Campgrounds was calculated.

i)

All Documents related to the credit criteria established by or applied by Trumbull in providing loans under the Agreements.

j)

All Documents sent to or received from Bank One relating to the August 25, 1986 Agreements or the Campgrounds Attorneys for the Representative Plaintiffs, Peter Isaak and Susan J. Isaak and John Gray and Laurie Gray

DATED:

6.4

Second Set of Interrogatories

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO

Peter ISAAK and Susan J. ISAAK, residents of Ohio, and John GRAY and Laurie GRAY, residents of West Virginia, on behalf of themselves and other persons similarly situated, Plaintiffs, [vs.] TRUMBULL SAVINGS AND LOAN COMPANY, a state chartered savings and loan in Ohio, Defendant. CIVIL ACTION NO. 4:93 CV 01121 (JUDGE DOWD) (Magistrate Streepy) PLAINTIFFS' SECOND INTERROGATORIES TO TRUMBULL SAVINGS AND LOAN

NOW COMES the Representative Plaintiffs, Peter and Susan Isaak and John and Laurie Gray, by their undersigned counsel, pursuant to Fed.R.Civ.P. Rule 33 with their First

Interrogatories to Defendant, Trumbull Savings and Loan Association ("Trumbull") to be answered fully, in writing and under oath. INTRODUCTION In these Interrogatories: 1. "Defendant" refers to Trumbull Savings and Loan ("Trumbull") including any present or former officers, management, employees, or members of the Board of Directors of Trumbull, its predecessors, successors, parents, subsidiaries, affiliates, segments or divisions. 2. "The Campgrounds" refers to The Landing at Clay's Park, an Ohio corporation which operated and sold interests in The Landing at Clay's Park campground and Ponderosa Park, Inc., an Ohio corporation which operated and sold "interests" in Ponderosa Park campground or any one such Campground. 3. "Eastern Resorts" refers to Eastern Resorts, Inc. a Pennsylvania corporation, which was the parent corporation of The Landing. 4. "Floor Plan Financing" refers to any financing of multiple motor vehicles for an entity or person who is in the business of selling motor vehicles. 5. "The LiVorio-Sabatini Group" refers to three commonly owned companies and their affiliates as identified below. The three companies are Bo-Anthony Land Company, Inc., Eastern Resorts Corporation and Resort Consultants of America, Inc. Bo-Anthony Land Company, Inc. has two wholly owned affiliates, Ponderosa Park Resort, Inc. and Ponderosa Park Music, Inc. Eastern Resort Corporation has three wholly owned affiliates, The Landing at Clay's Park, Inc., Landing Development Company, Inc. and Alpine Valley Resorts, Inc. 6. "Loan" shall mean any form of financing, extension of credit, or the providing of monies for any reason whatsoever. 7. "Document" as used herein has the full extent of its meaning as provided in Fed.R.Civ.P. Rule 34(A), and includes any written, drawn, recorded, transcribed, filed or graphic matter, however produced or reproduced, and any drafts, revisions or amendments thereof.

8. The word "person(s)" means all entities, and, without limiting the generality of the foregoing, includes natural persons, joint owners, associations, companies, partnerships, joint ventures, corporations, trusts and estates that were employed by you or associated with you. 9. The word "document(s)" means all written, printed, recorded or graphic matter, photographic matter or sound reproductions, video tapes and/or films, however produced or reproduced, pertaining in any manner to the subject matter indicated, including computer tapes, discs, or other electronically stored data. 10. The words "identify", "identity" and "identification", when used with respect to a person or persons, means to state the full name and present or last known residence and business address. 11. The words "identify", "identity" and "identification", when used with respect to a document or documents, means to describe the document or documents by date, subject matter, name(s) or person(s) that wrote, signed, initialed, dictated or otherwise participated in the creation of the same, the name(s) of the addressee or addressees (if any) and the name(s) and address(es) of each person or persons who have possession, custody or control of said document or documents. If any such document was, but is no longer, in your possession, custody or control, or in existence, state the date and manner of its disposition. 12. The word "identify", when used with respect to an act (including an alleged offense), occurrence, statement or conduct [hereinafter collectively called "act"], means to: (1) describe the substance of the event or events constituting such act; and to state the date when such act occurred; (2) identify each and every person or persons participating in such act; (3) identify all other persons (if any) present when such act occurred; (4) state whether any minutes, notes, memoranda or other documentation of such act was made; (5) state whether such document now exists; and (6) identify the person or persons presently having possession, custody or control of each document.

44

13. The term "you" or "your" refers to Defendants and any agents, employees, officers, or other representatives acting on each such Defendant's behalf. 14. Unless otherwise indicated, the time period for answering these Interrogatories shall be January 1, 1984 to the present. A. If the space provided for your answer is not sufficient, please use additional sheets, numbered, for example, in the case of Interrogatory No. 11, 1-a, 1-b, 1-c, etc., after each such interrogatory, and insert same in proper order in all copies served. B. Each of the following Interrogatories is intended to be a continuing Interrogatory and Plaintiffs hereby request that in the event, at any later date, you obtain any additional facts or form any conclusions, opinions or contentions different from those set forth in your answers to these Interrogatories, you should amend your answer to such Interrogatories promptly and sufficiently in advance of any trial to fully set forth such difference. INTERROGATORIES 1. Identify each person who was involved in negotiating and arranging the Agreements and extension of loans and/or lines on credit for the purchase of any motor vehicle by MotorWorks One, LiVorio Motors, Livorio Enterprises, Inc., The Campgrounds, Robert Sabatini, Mary Ann Sabatini, Peter Livorio, Walter Dragelevich, Thomas Carney, Karen Livorio, Thomas Livorio, Marc Livorio, Eastern Resorts and the Livorio-Sabatini Group, or any other person associated with the Livorio-Sabatini Group. ANSWER: 2. Identify each person who monitored, serviced or otherwise handled the affairs associated with any loans made for motor vehicle for the persons or entities listed in your answer to Interrogatory 1. ANSWER: 45

3. Identify each person who audited, supervised or oversaw the motor vehicle loans identified in your answers to Interrogatories 1 and 2. ANSWER: 4. Identify each person who inspected, researched, or otherwise inquired into the financial affairs of the persons or entities listed in your answer to Interrogatory 1. ANSWER: 5. Identify each person who inspected or visited the business known as MotorWorks One or Livorio Motors at any time from 1984 to present. In answering this interrogatory identify: a. b. c. d. The name of such person; The date of the inspection or visit; The purpose of the inspection or visit; and Any documents, memoranda, notes and/or letters referring to or relating to the inspection or visit. ANSWER: 6. Identify each person who was involved in the extension, approval, servicing or review of installment loans during the relevant time period. ANSWER: 7. Identify, by account number, by vehicle description and by VIN number, all motor vehicles financed by Trumbull for any person or entity listed in your answer to Interrogatory 1. ANSWER: 8. Identify all manuals, guidelines, memoranda, instructions or similar materials that concern financing motor vehicles for individuals. ANSWER: 9. Identify all manuals, guidelines, memoranda, instructions or similar materials that concern financing motor vehicles for commercial entities, not including auto dealerships. ANSWER: 46

10. Identify all manuals, guidelines, memoranda, instructions or similar materials that concern financing motor vehicles for auto dealerships, including, but not limited to "floor plan financing" or similarly structured financing. ANSWER: 11. Identify all manuals, guidelines, memoranda, instructions or similar materials that concern "installment loans" or similar financing methods for all non-real property. ANSWER: 12. Identify all documents that reflect information related to the financing of motor vehicles for MotorWorks One or Livorio Motors or any one associated with the Campgrounds. In answering this interrogatory, please specifically identify which records reflect: a. b. The descriptions of the vehicles financed; Who purchased the motor vehicles, including the person signing the loan documents; c. Account histories, including initial amount loaned, payment history and payoff dates; d. Information related to what the vehicle was used for or by whom the vehicle was used; e. f. Information related to the security agreement on such financed motor vehicles; Information related to the financing agreements on such financed motor vehicles.

ANSWER: Attorneys for the Representative and Class Plaintiffs DATED:

47

6.5

Second Request for Production of Documents

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO

Peter ISAAK and Susan J. ISAAK, residents of Ohio, and John GRAY and Laurie GRAY, residents of West Virginia, on behalf of themselves and other persons similarly situated, Plaintiffs,

TRUMBULL SAVINGS AND LOAN COMPANY, a state chartered savings and loan in Ohio, Defendant. CIVIL ACTION NO. 4:93 CV 01121 (JUDGE DOWD/MAGISTRATE STREEPY) PLAINTIFFS' SECOND REQUEST FOR PRODUCTION OF DOCUMENTS Pursuant to Fed.R.Civ.P. 34 Representative Plaintiffs by their attorney make this their Second Request For Production Of Documents to Defendant Trumbull Savings And Loan Company ("Trumbull"). A. Definitions And Instructions Plaintiffs incorporate the Definitions, Instructions and Relevant Time Period set forth in their First Request For Production Of Documents. It is requested that all responsive documents be produced at Gallagher, Sharp, Fulton & Norman, Seventh Floor, Bulkley Building, 1501 Euclid Avenue, Playhouse Square, Cleveland, Ohio 44115, on February 22, 1994, or at such other time and place mutually agreed to by the Parties.

B. Request For Production 1. All documents related to Trumbull's loan policies and procedures including all loan policy manuals or procedures.

48

2. All loan policy procedures or manuals provided to or maintained or applicable to Peter Watson, Larry Shakley, James Izant, David Adkins, Todd Urmson and Thomas Pishotti. 3. All documents and files maintained by Peter Watson, Larry Shakley, James Izant, David Adkins or any other employee of Trumbull relating to the LiVorio-Sabatini Group, the Campgrounds, LiVorio Motors, MotorWorks One or Livorio Enterprises, Inc. 4. Any and all documents, contracts, agreements, recourse agreements, corporate guarantees, personal guarantees or other materials by and between Trumbull and MotorWorks One or LiVorio Motors or any person associated with those entities. 5. Any and all documents, memoranda, proposals, correspondence, minutes of any meetings, financial statements, notes, files, reports, etc. relating to: (a) The financing of motor vehicles for MotorWorks One, LiVorio Motors, LiVorio Enterprises, Inc. or any person or entity associated with them; and (b) The financing of motor vehicles for the Campgrounds, Robert Sabatini, Mary Ann Sabatini, William LaVorio, Walter Dragelevich, Thomas Carney, Karen LiVorio, Thomas LiVorio, Marc LiVorio, Eastern Resorts and the LiVorio-Sabatini Group. 6. Any and all documents, memoranda, notes, letters or reports, audits, credit reports, credit investigations, financial statements or financial information relating to any inspection, research or other inquiry into the financial affairs of MotorWorks One, LiVorio Motors, before monies were advanced for the purchase of motor vehicles by said entities. 7. Any and all documents or reports, relating to any inspection, research or other inquiry into the financial affairs of MotorWorks One, LiVorio Motors, LiVorio Enterprises after money was advanced for the purchase of motor vehicles, including but not limited to audits and wholesale floor plan recaps. 8. Any and all documents that identify all motor vehicles financed by Trumbull for MotorWorks One, LiVorio Motors or any other person listed in Request 5.

49

9. All manuals, guidelines, memoranda, instructions, policies or similar materials that relate to financing motor vehicles for individuals. 10. All manuals, guidelines, memoranda, instructions or similar materials that concern financing motor vehicles for commercial entities, not including auto dealerships. 11. All manuals, guidelines, memoranda, instructions or similar materials that relate to financing motor vehicles for auto dealerships, including but not limited to "floor plan financing." 12. All manuals, guidelines, memoranda, instructions or similar materials that concern "installment loans" or similar financing for non-real property. 13. All documents related to: (a) (b) (c) (d) (e) (f) LiVorio Motors; LiVorio Enterprises, Inc.; Motorworks One; William LaVorio; Robert Sabatini; and Brian Sheehe.

13. All documents including all agreements, correspondence, notes, files, credit reports, credit analyses, loan applications, account records related to business or personal loans made to William LaVorio, Robert LiVorio, Marc LiVorio and Robert Sabatini. 14. All documents related to automobile installment loans made to William LaVorio personally and/or William LaVorio as President of LiVorio Motors, Inc., as president of LiVorio Enterprises, Inc. Attorneys for the Representative Plaintiffs, Peter Isaak and Susan J. Isaak and John Gray and Laurie Gray DATED:

50

6.6

Brief in Support of Class Certification

United States District Court Northern District of Ohio Eastern Division

Walter Slentz, et. al. Plaintiffs Cortland Savings and Banking Company Defendant Case No BRIEF IN SUPPORT OF REPRESENTATIVE PLAINTIFFS' MOTION FOR CLASS CERTIFICATION INTRODUCTION The Representative Plaintiffs, Walter Slentz, Sarah Slentz and Hope Brammer, have filed a motion pursuant to Fed.R.Civ.P. Rule 23 requesting class certification. They seek to represent a class defined as follows: All persons who purchased interests in The Landing and/or Ponderosa Park and obtained financing for their purchase from The Landing and/or Ponderosa and whose promissory notes were or are held by Cortland Savings and Banking Company. The claims made by the Representative Plaintiffs on behalf of the class are based upon the commission of a "planned bankruptcy" "bust-out" type scheme involving The Landing At Clay's Park, Inc. and Ponderosa Park, Inc., (the "Campgrounds"), two related recreational campgrounds in Ohio which simultaneously declared bankruptcy in October 1988. The claims arise from the Campgrounds schemes to sell Plaintiffs membership or interest in "to be developed" campgrounds and then abscond with the Campgrounds' capital, leaving Plaintiffs with worthless contractual interests. The claims also involve Defendant Cortland's knowing and substantial participation in the commission of the Campgrounds' "bust out" schemes. In a virtually identical case against Bank One of Youngstown and GEICO Financial Services, Inc. ("GEICO"), also involving Ponderosa and The Landing, this Court in Conley v. Bank One, et al., 91 CV 0251 (N.D.Ohio 1991) (Krenzler, J.) granted class certification (Exhibit 1 including denial of Bank One's request for reconsideration)1 to a class of individuals who purchased interests in Ponderosa and The Landing and who obtained financing for their purchase from Bank One. Thereafter Conley partially settled, contingent upon District Court approval, which settlement will provide a return of millions of dollars to class members. See Exhibit 2 order tentatively approving the Parties' Settlement with Bank One. Also see Gogola v. FirstSouth, No. 1121 of 1990 G.D. (Fayette Cty, PA) and Rudnik v. Cortland Banking and Savings Company, No. 1120 of 1990 (Fayette Cty, PA) where Judge William J. Franks certified separate classes of individuals who purchased interests in Alpine Valley (which was run by the same owners as The Landing and Ponderosa and which likewise sold 1/750th campground interests) and who have obtained financing from Cortland and FirstSouth Savings of Pittsburgh, respectively. See Exhibit 3. Alpine also became financially insolvent in October 1988 simultaneously with Ponderosa and The Landing.2

The referenced numbered Exhibits are those in the Accompanying Affidavit And Appendix filed simultaneously with this brief. Another class action against Bank One involving Alpine has been settled. See Zaazouh v. Bank one, 89-145 (W.D.Pa. 1989) (Final settlement hearing on $3.2 Million Settlement 51
2

In this case members of the class assert identical claims against Cortland that arise from identical standardized form contracts to purchase and finance their "1/750th interest" in The Landing or Ponderosa. See the Agreements for Deed of Slentz and Brammer and other individuals in the identified class. (Exhibit 4).3 To finance the purchase of their Campground interests representative class Plaintiffs entered into identical standardized form contracts with the Campgrounds entitled "Promissory Note." See Exhibit 6.4 Cortland contracted with The Landing and Ponderosa in 1987 to purchase certain promissory notes evidencing Plaintiffs' financing of interests in Ponderosa and The Landing. See Exhibit 7. The sale and financing of interests in the Campgrounds was subject to Federal Trade Commission Regulations set forth at 16 C.F.R. 433. See PRESERVATION OF CONSUMERS CLAIMS AND DEFENSES Promulgation of Trade Regulation Rule Statement of Basis and Purpose, 40 Fed. Reg. 233, Tuesday, November 18, 1975. (Exhibit 8) Section 433 requires that sellers engaged in the selling of goods or services to consumers pursuant to consumer credit contracts (i.e., the Promissory Notes) are required to include a contractual holder provision in the contracts which contractually subjects the holder to all claims a buyer has against the seller and which provides: ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER. Ponderosa and The Landing were in fact selling recreational services,5 however, unlike other financing of purchases at Ponderosa and The Landing (i.e., the financing by Bank One and GEICO), the Promissory Notes used by The Landing and Ponderosa that were purchased by Cortland did not expressly contain the holder provision in direct violation of FTC Regulations. Contrast the financing contracts used by Bank One or GEICO in financing the purchase of interests in the Campgrounds which do in fact incorporate the holder provision (Exhibit 11). The holder provision despite its absence is deemed to be included in Plaintiffs' Promissory Notes by operation of law. See, e.g., Lloyd v. Cincinnati Checker Cab, 36 N.E.2d 67, 67 Ohio App. 89 (Ham. Cty 1991) (statutory provisions made for the benefit of the public and required to be incorporated in contracts are considered to be written into such contracts by operation of law.) Cortland is therefore subject to all claims the Plaintiffs have against Ponderosa or The Landing under the terms of the holder provision. In October of 1988, Ponderosa and The Landing simultaneously declared bankruptcy. Ponderosa and The Landing failed to complete the development of the Campgrounds. In the scheduled for November 10, 1993). The Representative and Class Plaintiffs in Conley, Gogola, Rudnik, Zaazouh and Isaak executed virtually identical form Agreements For Deed. See Exhibit 5.
4 5 3

The Promissory Notes are "purchase money loan" contracts as defined by 16 CFR 433.1.

In State of Ohio, ex rel. Celebrezze v. Ponderosa, 88 CIV 141 (Columbiana Cty, Ohio) and State of Ohio Celebrezze v. The Landing, 88 CIV 315 (Stark Cty, Ohio) both Campgrounds admitted in Consent Judgments that they were engaged in selling services (Exhibit 9). In Conley v. Bank One, 91 CV 0251 (N.D.Ohio), Judge Krenzler by order dated July 2, 1992 rejected Bank One's and GEICO's summary judgment defense that real estate, not services, were sold by the Campgrounds. See also Gogola v. FirstSouth, 1121 of 1990 (Fayette Cty, PA) and Rudnik v. Cortland, 1120 of 1990 (Fayette Cty, PA) where the court held that services, not real estate, were purchased and Zaazouh v. Bank One, where Magistrate Lancaster held that the Pennsylvania Sales Act applied to the sale of 1/750th interests in Alpine Valley. See Exhibit 10.

wake of the Campgrounds' bust-out schemes numerous recreational facilities remain undeveloped. The Campgrounds had been and are rundown and only a small fraction of the original purchasers now even visit or use the Campgrounds. Cortland embarked upon its relationship with Ponderosa and The Landing in early 1987. In 1985 and 1986, the principals of the Campgrounds were looting the corporations of millions of dollars in capital necessary to develop the Campgrounds. Cortland, knowing (or recklessly ignoring) the campgrounds illegal schemes, agreed to purchase promissory notes that the Campgrounds used to finance purchases of Campgrounds' interest. Cortland had secret agreements with Ponderosa and The Landing in which Cortland discounted by 35% the purchase of the promissory notes it purchased. For each Promissory Note arranged by The Campgrounds, Cortland paid The Campgrounds 65% of the face value. This transaction enabled Cortland to yield or generate a very high yield or profit. Cortland failed to disclose The Campgrounds illegal schemes so that they would continue. Cortland's silence and inaction combined with its profitable lending schemes render Cortland liable as an aider or abettor. See, e.g., First Interstate Bank of Denver v. Pring, 969 F.2d 891 (10th Cir. 1992). Hundreds of purchasers have identical federal, state and contractual claims against Cortland. The Rule 23 class action procedure was designed to provide an efficient means to adjudicate exactly this type of case. For the reasons stated below, it is respectfully submitted that class certification be granted under Fed.R.Civ.P. Rule 23(b)(3). I. STATEMENT OF FACTS On July 6, 1987, the Representative Plaintiffs Frank and Sarah Slentz were given a tour of Ponderosa Park. After the tour, the Slentzs purchased a 1/750th interest in Ponderosa Park for $5,710 as represented by an Agreement For Deed (Exhibit 4) and a sheet of Facts and Regulations (Exhibit 12). The Slentzs also agreed to obtain financing for the purchase from Ponderosa Park by executing a Promissory Note (Exhibit 6). Pursuant to the terms of the Promissory Note, the Slentzs were obligated to repay the purchase price (less the downpayment) to Ponderosa over 84 monthly installments at 18% interest. On July 9, 1987 Melody Brammer was given a tour of The Landing at the end of which she also agreed to purchase a "1/750th interest" from The Landing for $6,220 as represented by an Agreement For Deed (Exhibit 4) and a Facts and Regulation (Exhibit 12). Ms. Brammer also agreed to obtain financing for her purchase from The Landing by executing a Promissory Note (Exhibit 6). The terms of the Promissory Note required Ms. Brammer to repay the purchase price (less down payment) to The Landing at 18% interest in 84 consecutive monthly installments. Hundreds of other individuals were given the same tour, executed the same contract documents and were subject to the same schemes as the Representative Plaintiffs as developed below. A. The Campgrounds' Schemes To Sell 1/750th Interests The history of the campgrounds known as the Landing at Clays Park and Ponderosa Park is well documented. See, Conley v. Bank One, 91 CV 0251 (N.D.Ohio 1991). See also, In Re Ponderosa Park Resort, Inc., No. 688-01441 (Bkrtcy Ct. N.D.Ohio 1988) and In Re The Landing, Inc., No. 688-01415 (Bkrtcy Ct. N.D.Ohio 1988) where a Disclosure Statement was filed with the Bankruptcy Court that included a section entitled "History of the Debtor/Description of the Debtor's Business/Reasons for Financial Difficulties." (Exhibit 13) As this History demonstrates, The Landing and Ponderosa were "inseparably intertwined" and, in fact, the same individuals operated the schemes to develop and sell so-called "1/750th interests" at each campground. The History succinctly explains the Campgrounds schemes to sell "1/750th interests." By way of example, the History thus describes Ponderosa's development: In May, 1985 Bo Anthony Land Company had conveyed a 6.2 acre parcel (Phase I), a 4.3 acre parcel (Ranch Club), and a 4.6 acre parcel (Recreation area) to Ponderosa Park Resorts, Inc., a wholly-owned subsidiary of Bo Anthony Land 53

Company. In September, 1985, John Paul Moss sold his 68 acres to Bo Anthony Land Company. In February 1986, Bo Anthony Land Company conveyed a 7.9 acre parcel (Phase I-A), a 6.3 acre parcel (Phase I-B), a 5.2 acre parcel (Phase IC), a 3.3 acre parcel (Phase II), a 6.3 acre parcel (Phase II-A), and another 3.3 acre parcel (Phase II-B) to Ponderosa Park Resort, Inc. Each of the seven "phases" transferred contained approximately 100 campsites.6 Once developed, "interests" were to be sold in each phase. The History thus describes this scheme: Up to 750 such interests could be sold in each phase. Prices ranged from $4,000 to $6,000 depending on promotional discounts being offered and additional options purchased, such as season tickets to concerts, membership in the Coast to Coast travel club, and access to the Ranch Club units. Buyers could pay the purchase price in cash or use the financing offered to them. Where they opted for the financing, buyers would submit credit information and sign an Agreement for Deed and a Promissory Note for the amount financed. Such notes were to be paid, with interest, in monthly installments over seven years. After the note was fully paid, the buyer was to receive a deed to a 1/750th undivided interest in a particular phase. Cash buyers received their deeds at or shortly after the sale. Both types of buyers were allowed to use the facilities. The only conditions imposed on cash buyers were that they obeyed the published rules and regulations and paid an annual "maintenance fee" of about $235. Buyers who financed their purchases were subject to the additional condition that they remain current with their monthly payments under their promissory notes. (Exhibit 13) The purchase of an "interest" entitled the buyer the right to use the campsites in any phase and the facilities in the resort: A buyer of an interest in one phase was permitted to occupy a campsite in any other phase. By virtue of easement rights granted by Bo Anthony Land Company, such "owner-campers" were permitted to use all the amenities of the resort, which eventually included an indoor pool, a swimming lake, a game room, a fishing lake, tennis courts, an exercise room and comfort stations. (Exhibit 13) As the History explains, The Landing was developed simultaneously in the same manner: Another corporation, The Landing at Clay's Park, Inc., was created in 1985. Eastern Resorts owned 80% of its shares. Dragelevich & Carney owned the other 20%. In May, 1985, The Landing at Clay's Park, Inc. proceeded to buy the 151 acre parcel adjacent to Clay's Park from the Clay family for cash and an $890,000 note which was secured by a mortgage on the property. Improvements were made, including the construction of roads and some 60 campsites, and the installation of 31 rental units (the "Bay Club"), a club house, an exercise room and an indoor pool. Four phases (I-6.8 acres, I-A-5.7 acres, I-B-7.3 acres, I-C-5.5

The History explains that each phase consisted of 100 campsites. Exhibit 13, page 5. Seven hundred and fifty (750) "interests" were sold in each phase. From this scheme arises the term a "1/750th interest" as used in the Agreements For Deeds. See Exhibit 4. 54

acres) were carved out. The Landing at Clay's Park, Inc. later changed its name to The Landing, Inc.7 (Exhibit 13) B. The Campgrounds' Standard Form Purchase Contracts (i.e., The Agreements For Deed) Neither Ponderosa nor The Landing negotiated and drafted individual contracts with each campsite purchaser in their mass selling campaigns. As the History demonstrates, they used standardized form settlement and financing documents of which the documents executed by the representative Plaintiffs are typical. See Exhibit 4 in the Appendix which includes Agreements For Deed of the Slentzs and Brammer. The representative Plaintiffs' Agreements For Deed confirm that the Plaintiffs and the Campgrounds all agreed to identical contract provisions. These provisions provide that the class Plaintiffs were purchasing a right to use the Campgrounds' recreational grounds and facilities. The Agreements For Deed provided, inter alia: The Purchaser understands that the use of recreation facilities can involve a certain degree of risk or injury or damage to person or property and the Purchasers and Purchaser's family and guest using the facilities of the Seller assume all risk of loss or injury or damage to persons or property resulting from such use. The Purchaser agrees to indemnify and hold harmless the Seller from all claims, liabilities, loss damage and expenses incurred by reason of injury to person or property or both, of the Purchaser, Purchaser's family and guests arising from the use of the Seller's properties, facilities or surrounding areas. (Emphasis added) (Exhibit 4) The Agreements For Deed also provided that the purchasers were purchasing the use of a campground: The Purchaser further understands and agrees that his purchase is on an "under developed basis" and that the use of the fully developed campgrounds is not guaranteed until Ponderosa Park (or Landing) is fully developed. Purchaser further understands and agrees that all purchases of a 1/750th interest in Ponderosa Park (or Landing) shall be guaranteed the use of a campsite any time during the year except for the following holiday weekends preceding and succeeding holidays; Memorial Day holiday weekend, July 4th holiday weekend and the weekend preceding and succeeding, and Labor Day holiday weekend. On the weekends listed in the preceding sentence, campsites shall be allotted on a first come, first serve basis or other such equitable basis as Ponderosa Park (or Landing) shall establish from time to time. If the Purchaser is not able to use a campsite on the holiday weekends set forth above, the Purchaser shall be guaranteed the use of a campsite in other similar phases or an unimproved parking site for his recreational vehicle. (Emphasis added) The History also states that the same scheme was employed at the same time in Pennsylvania at Alpine Valley campground. Like the Landing and Ponderosa, Alpine is financially insolvent. Gallatin Bank, the mortgagor, brought a Confession of Judgment action against Alpine. Class actions related to the Alpine scheme are certified and/or are in the midst of settlement proceedings. See Zaazouh v. Bank One, C.A. No. 89-145 (W.D.Pa. 1989) (Hearing on fairness of Settlement Agreement rescheduled for November 10, 1993); Gogola v. First South, No. 1121 of 1990 G.D. (Fayette Cty, PA 1990) (settled). 55
7

(Exhibit 4) In addition to receiving an Agreement For Deed, the Slentzs and Brammer received and were required to execute certain Rules And Regulations. (Exhibit 12)8 These Rules And Regulations informed all purchasers as to what was included in their Campground purchase. The Rules And Regulations provided, inter alia: Listed below are the facts and regulations that apply to Phase 1-A Owners. It is important that you understand this information so that you are clear about what your Ponderosa Park (or Landing) Ownership includes, and on the regulations that you will be required to adhere to. (Emphasis added) 2. Ponderosa Park (or Landing) now has, or under construction and proposed the following recreational amenities and activities available for your use:

Restaurant & Bottle Club Large Recreational Activity Center Supervised Activities For Youngsters, Teen & Adults Security Gate System Security Guard Patrol Indoor & Outdoor Heated Pool Children's Wading Pool Teen Center Recreational Game Room Table Tennis Modern Comfort Stations Softball Field Stream Fishing Tennis Courts Basketball Court Volleyball Court Badminton Court Shuffleboard Court Horseshoe Court Exercise Room Sauna Room Whirlpool Bath Ice Skating Roller Skating Rink Snowmobile Trails Playgrounds Archery Range Hiking Trails Dances and Buffets (Exhibit 12)

The Agreements For Deed (Exhibit 4) reference the Rules And Regulations as follows: "The purchaser acknowledges that he has received and read the Rules And Regulations of Ponderosa (or Landing) . . . ." 56

C. Cortland's Financing Agreement With The Campgrounds 1. The On-Site Financing Agreement At various times between 1985 and 1988 different financial institutions contracted for the right to provide on-site purchase financing at the Campgrounds. In 1985, Bank One of Youngstown contracted for the exclusive right to provide installment financing for purchasers of interests in Ponderosa, The Landing and Alpine Valley. (Exhibit 14) In September, 1986 Bank One, after making over $10 Million in installment loans to Campground purchasers, terminated this installment lending relationship. On August 25, 1986, Trumbull and each Campground entered into identical Agreements whereby Trumbull obtained the right to finance the purchase of interests in each Campground. (Exhibit 15) Unlike the Bank One Agreements, the Trumbull Agreements were not exclusive. Thus, in early 1987, Cortland entered into a similar agreement with the Campgrounds whereby Cortland would provide financing to purchasers pursuant to promissory notes provided to the Campgrounds by Cortland for on-site financing for purchases in the Campgrounds. See Exhibit 7. The Cortland Agreements granted each Campground the right to solicit prospective purchasers and required them to arrange for financing of the purchase of interests in the campgrounds through Cortland. The Agreement provided, inter alia: 2. A. OPERATOR or its agents will contact prospective owners (hereinafter sometimes referred to as "Owners"), and will obtain from them and forward to CORTLAND an executed application for credit on forms supplied by OPERATOR. OPERATOR or its agent will also obtain the execution of a promissory note (hereinafter sometimes referred to as "Owner Note") on forms supplied by OPERATOR. (Exhibit 7) In addition to obtaining execution of a promissory note, the Agreements required each Campground to supply to each purchaser certain documents relative to their purchase of an interest including a Rules and Regulations statement (Exhibit 12) and an Agreement For Deed (Exhibit 4). The Agreement provided, inter alia: B. OPERATOR will supply to each borrower a question and answer sheet, rules and regulations statement, Agreement for Deed, and other such pertinent documents conveying ownership of undivided interests in certain real property, which describe the terms and conditions of the borrower's rights and which have been executed by borrower. Said documents, as in effect from time to time, shall comply with all applicable State and Federal laws, rules and regulations.9 (Exhibit 7) All such documents were then to be delivered to Cortland, which would then directly pay to the Campground the proceeds of the loan: C. Upon delivery to CORTLAND of all documents, the application, owner note and any other related documents, CORTLAND will pay OPERATOR, by direct deposit into the appropriate account of CORTLAND as set forth hereafter; (Exhibit 7) Cortland required all documents provided by the Campgrounds to comply with applicable state and federal laws. However, the purchase money loan contracts provided to the Campgrounds by Cortland failed to comply with federal law in that the holder provision was not incorporated. Compare Bank One's loan forms and/or GEICO's loan contracts used at the campgrounds in 1988 which incorporate the holder provision (Exhibit 16) with Cortland's (Exhibit 6). 57
9

2. Cortland And The Campgrounds Split The Loan Proceeds Cortland did not pay The Landing and Ponderosa the amount financed reflected on the face of the Promissory Notes as owed. Instead, the Agreements provided that Cortland would pay the Campgrounds only 65% of the stated obligation under each note. This was accomplished by direct deposit into the Campground's commercial checking accounts. The remaining amount 35% that was withheld was placed in so-called reserve accounts in which The Campgrounds had no right title or interest. See Paragraphs 3.A, B and C, Exhibit 7 which provides: 3.A. An account will be established by CORTLAND as earned reserve account which shall earn interest at the rate then agreed upon by the parties from time to time. Such earned interest will be added to said reserve account. B. Deposits to the reserve account shall be made by CORTLAND on the basis of thirty-five per cent (35%) of the net original outstanding principal balance of all Owner Notes received by CORTLAND under this Agreement. The proceeds therefor, less the amounts deposited to the reserve account, as set forth below, shall be remitted by CORTLAND to a commercial checking account in the name of OPERATOR, within three (3) business days of receipt of the Note. C. Said reserve account will be reviewed every thirty (30) days by CORTLAND and when such review indicates that the balance in the reserve account exceeds thirty-five per cent (35%) of the principal balance, CORTLAND shall disburse the excess in the account to OPERATOR or its designee, by check drawn on CORTLAND and payable to OPERATOR or the designee on a quarterly basis. These financing schemes generated a huge profit for Cortland, well above the stated 18% interest rate contracted for by the Plaintiffs. Compare Angevine v. Midwest Finance Company, 174 Ohio St. 153, 187 N.E.2d 24 (1962). 3. The Standard Form Promissory Notes Each Promissory Note was not individually negotiated between the Campgrounds and the purchaser, but was a standard form document provided to the Campgrounds by Cortland. See Exhibit 6. The Campgrounds obtained execution of these documents by the purchasers. Exhibit 7, p. 1. For each purchaser, all provisions (except the purchase price to be filled in) were identical. Each Promissory Note was required to provide for an 18% annual percentage rate of interest. See Exhibit 7, page 3 of each Agreement. The contract notes omitted the required FTC "holder" provision. D. The Campgrounds Bust-Out Schemes Involved Both Wire And Mail Fraud The Slentz Complaint alleges that the Representative and Class Plaintiffs were the subject of a "Bust-out" scheme. At Paragraph 27-28, the Complaint describes the nature of these schemes: The RICO Claims Against Ponderosa And The Landing For Which Cortland Under The Holder Provision Is Liable 27. Beginning on or about January 1, 1985 the owners of the Ponderosa and The Landing developed illegal schemes in the nature of a "bust-out" utilizing the United States wires and mails to sell campground interests or memberships in 58

the Ponderosa and The Landing. In these fraudulent schemes, Ponderosa and The Landing undertook the marketing of memberships in and development of recreational campgrounds. After Ponderosa and The Landing had partially developed the campgrounds and obtained millions of dollars in purchase money loan proceeds and other membership sales proceeds, the campgrounds were then looted by the LiVorio-Sabatini Control Group of all capital necessary to complete and operate the campgrounds by the principal owners and/or officers of the campgrounds. After only 3 years of operation, Ponderosa and The Landing were intentionally made insolvent and placed into bankruptcy. 28. The Representative and Class Plaintiffs were thus sold an interest in a campground that was undeveloped. The owners of the campgrounds then implemented and executed bust-out type schemes that would prevent the campgrounds from ever being "fully developed" as contractually provided for in the Plaintiffs' Agreement For Deed. Critical to this scheme was the availability of on-site financing that Cortland agreed to provide to purchasers by its agreement to purchase promissory notes the campgrounds had executed with purchasers. The Complaint thus describes how Cortland assisted this financing and that Cortland paid only a portion of the stated principal amount while withholding the remainder: 29.Ponderosa's and The Landing's schemes involved utilizing the United States wires and mails to attract potential campground purchasers to the undeveloped campgrounds, and then make quick sales using high pressure sales tactics and on-site financing facilitated by the purchase money loan programs previously agreed to between the Campgrounds and Cortland. Upon making the sales and arranging the financing on behalf of Cortland the campgrounds were thereafter paid only a portion of the proceeds of the purchase money loans directly with the remainder of the proceeds being held by Cortland in "hold-back" reserve accounts. 30. Once the proceeds of the sales were collected the LiVorio-Sabatini Control Group looted both Ponderosa and The Landing and caused them to be insolvent and then placed them into bankruptcy. Using this method of sales and financing, the Campgrounds generated huge profits which were looted by the officers of the Campgrounds. The History of the Campgrounds describes the huge distributions to the Campground officers in 1987 and 1988: In spite of those problems, the principals continued to receive large salaries. William LiVorio received some $517,300 in salary from Eastern Resorts and RCA in 1987; some $664,700 in the first ten months of 1988. Robert Sabatini received some $222,000 from Eastern Resorts in 1987; some $184,050 in the first ten months of 1988. Marc LiVorio received some $200,200 from Eastern Resorts in 1987; some $292,000 in the first ten months of 1988. Robert LiVorio received some $147,300 from Eastern Resorts in 1987; some $292,000 in the first ten months of 1988. Thomas LiVorio received some $167,700 from Eastern Resorts in 1987; some $292,00 in the first ten months of 1988.10 (Exhibit 13)

Plaintiffs demonstrate that the principals extracted much more capital out of the Campground in 1985, 1986, 1987 and 1988. 59

10

Significantly, William F. LiVorio, the President of Alpine, has admitted in criminal proceedings to looting of campground capital. The United States charged LiVorio for violation of 18 U.S.C. 1344. The indictment charged, inter alia: 10. It was a further part of said scheme and artifice to defraud that WILLIAM F. LIVORIO and others known and unknown to the United States Attorney paid themselves huge salaries and profit distributions despite their knowledge of the declining financial condition of the Corporations, the mounting direct and indirect indebtedness to Bank One and the depletion of the reserves Bank One had set aside for the campground installment paper; all in violation of Title 18, Section 1344, United States Code. (Exhibit 17) LiVorio, the chief Executive Officer of Eastern Resorts and the Campgrounds by his guilty plea has thus admitted that he and others were engaged in schemes to divert huge amounts of monies from Ponderosa Park (or The Landing). These "bust out" schemes to deprive class members of pre-existing contractual rights affected each class member in an identical manner. Whether Plaintiffs can prove planned "bust out" schemes present common questions of law and fact that are identical to each class member. E. The Injury To Class Plaintiffs There can be no serious doubt that the Class Plaintiffs have been severely damaged by the Campground's illegal schemes to deprive them of their 1/750 "interests." The class Plaintiffs did not receive the "guaranteed use" of a "fully developed" campground as promised in the Agreement For Deed. Each of the Agreements For Deed unequivocally provide that the Campgrounds were to be opened year round and were to be fully developed: The Purchaser further understands and agrees that this purchase is on an "under development basis" and that the use of the fully developed campgrounds is not guaranteed until Ponderosa Park Resorts, Inc. is fully developed. Purchaser further understands and agrees that all purchases of a 1/750th interest in Ponderosa Park Resorts, Inc. shall be guaranteed the use of a campsite anytime during the year except for the following holiday weekends preceding and succeeding holidays: Memorial Day holiday weekend, July 4th holiday weekend and the weekend preceding and succeeding, and Labor Day holiday weekend. On the weekends listed in the preceding sentence, campsites shall be allotted on a first come, first serve basis or such other equitable basis as Ponderosa Park Resorts, Inc. shall establish from time to time. If the Purchaser is not able to use a campsite on the holiday weekends set forth above, the Purchaser shall be guaranteed the use of a campsite in other similar phases or an unimproved parking site for his recreational vehicle. (Exhibit 4) Instead, the class Plaintiffs ended up with rights to "rundown," underdeveloped campgrounds. Appraisal Reports for both Ponderosa Park and the Landing commissioned in 1990 describes their bad condition: However, the property is inadequately maintained, and these members ended up with rights to a rundown park that is far less than what they expected at the time of purchase. See Exhibit 18, Ponderosa Appraisal, at p. 28 and The Landing Appraisal at p. 27 (Exhibit 19). Under the terms of the FTC "holder provision" the Plaintiffs have a right of restitution against 60

Cortland for this "bust-out scheme." See, Statement Of Basis And Purpose which explains that the principal purpose of the holder provision is to provide borrowers a Right Of Restitution against unscrupulous sellers. Exhibit 8 at p. 53,524. F. The Representative And Class Claims Are Based Upon The Standard Form Agreements For Deed And Purchase Money Loan Contracts Representative Plaintiffs filed a six count Complaint against Cortland. These claims arise directly out of and are based upon Ponderosa and The Landing's illegal "bust-out" schemes and the standard form written Agreements For Deed and Cortland's agreement to and subsequent purchase of the purchase money loan contracts. Each of the class members executed these agreements and each were subject to the campgrounds illegal bust-out scheme. All class members have identical claims against Cortland and the Campgrounds that present multiple common questions of law and fact. 1. The Claims Alleging Cortland's Liability Under The FTC Holder Provision Are Identical Counts I, IV and V allege contractual claims against Cortland based upon the Federal Trade Commission "holder provision." 16 C.F.R. Section 433. Count I alleges that Cortland is subject to contractual liability for the Campgrounds' violation of 18 U.S.C. Section 1962(c) (commission of bust-out schemes). Counts IV and V allege that Cortland is subject to liability under the "holder provision" for the campgrounds breach of contract and breach of the duty of good faith and fair dealing. In this connection, the Complaint at page 20-21 alleges the following common questions which each relate to Counts I, IV and V and Cortland's liability under the holder provision: 1. Whether Ponderosa Park, Inc. and The Landing, Inc. violated RICO, 18 U.S.C. Section 1962(c)? 2. Whether Ponderosa Park, Inc. and The Landing, Inc. breached their contracts with the Plaintiff class? 3. Whether Ponderosa and The Landing violated their duties of good faith and fair dealing in performance of their contractual obligations with the Plaintiff class? 4. Whether the FTC holder provision is by operation of law deemed to be a contractual term in the Plaintiff class' purchase money loan agreements? 5. Whether Cortland is subject to liability for the federal and state law claims Plaintiffs could have asserted against Ponderosa and The Landing under the FTC holder provision? 2. The Claims Alleging Cortland's Liability For Aiding And Abetting The Campgrounds' Violation Of 18 U.S.C. Section 1962(c) Are Identical Count II of the Complaint alleges that Cortland is liable to the Representative and Class Plaintiffs for aiding and abetting the Campgrounds' violation of RICO. At pages 15-16, the Complaint sets forth the facts supporting Cortland's aiding and abetting liability. It is alleged that Cortland "knew of and substantially participated" in the Campgrounds' violation of 18 U.S.C.

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Section 1962(c). The question of whether Cortland in fact aided and abetted the Campgrounds' violation of RICO thus involves the following common questions: 1. Whether Cortland knew (or was reckless in not knowing) about the Campgrounds taking millions of dollars in capital from the Campgrounds in 1985 and 1986? 2. Whether Cortland knew (or was reckless in not knowing) that Ponderosa and The Landing could not meet any of their debt obligations in 1986 as well as their contractual commitments? 3. Whether Cortland knew (or was reckless in not knowing) that the Campgrounds never intended to honor their Agreement For Deed obligations? 4. Whether Cortland knew (or was reckless in not knowing) that the Campground could not or would not provide a fully developed campground? 5. Whether Cortland knew and substantially participated in the Campgrounds' bustout schemes by: a. Retaining the Campgrounds as its credit arranger to facilitate the making of purchase money loans knowing about the Campgrounds' illegal schemes; b. By using a reserve method of loan financing to increase its own profit without disclosing the Campgrounds' illegal schemes to Plaintiff; c. By consciously intending continuation of the Campground schemes so that Cortland could continue its profitable purchase money loan program; and d. By deliberately not incorporating the FTC holder provision in its purchase money loan agreements in an effort to avoid accountability for its illegal profiteering. 3. Cortland's Liability For Conspiracy To Violate Section 1962(d) Of RICO Presents Common Questions

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Count III of the Complaint alleges that Cortland is liable to the Representative and Class Plaintiffs for conspiracy to violate 18 U.S.C. Section 1962(d) of RICO. The Complaint thus specifically alleges that Ponderosa, The Landing, their owners and Cortland all agreed to participate in the affairs of the RICO enterprise through the commission of at least two predicate acts under RICO, 18 U.S.C. Section 1962(c). The question of whether Cortland in fact conspired to violate RICO involves, at least, the following common legal and factual questions: A. Whether Cortland agreed to participate in the affairs of a RICO enterprise through the commission of predicate acts under Section 1962(c) of RICO? B. Whether Cortland agreed with Ponderosa and The Landing not to incorporate the FTC holder provision in the purchase money loan contracts? C. Whether Cortland used the United States wire and mails in sending loan information to the Plaintiffs? D. Whether Cortland, Ponderosa and The Landing agreed that it would finance Plaintiffs purchase of interests knowing of the Campgrounds' illegal bust-out schemes? And E. Whether Cortland aided and abetted the Campgrounds' violation of Section 1962(c) of RICO? 4. Cortland's Liability For Conspiracy To Intentionally Obstruct Or Deny Plaintiffs A Remedy Provided By Law Presents Common Questions

Count VI of the Complaint alleges that Cortland is liable for conspiring to intentionally obstruct Plaintiffs from obtaining a remedy by failing to incorporate the FTC holder provision. This Count sounds in tort and therefore presents the following common questions under Ohio law:

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A.

Whether under Ohio law Cortland can be held liable for the intentional obstruction of a remedy provided by law by failure to incorporate the FTC holder provision?

B.

Whether Cortland conspired with Ponderosa and The Landing to intentionally obstruct a remedy provided by law? And

C.

Whether Cortland had a duty to refrain from intentional conduct obstructing a remedy provided by law?

II. LEGAL ARGUMENT IN SUPPORT OF CLASS CERTIFICATION

This case involves hundreds of individuals whose Promissory Notes were purchased by Cortland and who purchased an interest in Ponderosa Park or The Landing. Each of individuals were subject to illegal schemes perpetrated by the Campgrounds and aided and abetted by Cortland. Cortland is liable for the commission of these illegal schemes under federal and state law and under its own contracts. The ultimate question presented here is whether these individuals, having been victims of the same "bust-out" schemes, can utilize the class action device to litigate their common claims against Cortland. It is exactly this type of case for which Rule 23 was enacted. The need to employ the class action device in this case is unquestionable since it provides a meaningful mechanism for hundreds of Cortland borrowers who could not otherwise afford to enforce their federal, state and contract rights. As recognized years ago in Esplin v. Hirschi, 402 F.2d 94, 101 (10th Cir.), cert. denied, 394 U.S. 928 (1969), "the interests of justice require that . . . any error, if there is to be one, should be committed in favor of allowing the class action." See also, Weathers v. Peters Realty Corp., 499 F.2d 1197 (6th Cir. 1974), (Rule 23 should not be so strictly applied that the policies underlying class actions would be undermined).

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It is respectfully submitted for the reasons stated above and below that class certification be granted. A. Plaintiffs Have Satisfied All Of The Prerequisites Of Class Rule 23(a)

For a class to be certified, all four requirements of Rule 23(a) must be satisfied and at least one of the subsections of Rule 23(b) must be satisfied.11 See Senter v. General Motors Corp., 532 F.2d 511, 522 (6th Cir.), cert. denied, 429 U.S. 870 (1976); Conley v. Bank One of Youngstown, 91 CV 0251 (N.D.Ohio 1991) (Krenzler, J.) (Exhibit 1); Jackshaw Pontiac v. Cleveland Press, 102 F.R.D. 183 (N.D.Ohio 1983) and Boggs v. Divested Atomic Corp., 141 F.R.D. 58, 63 (S.D.Ohio 1991). All Rule 23(a) requirements and the Rule 23(b)(3) requirements are satisfied in this case. 1. The Class Is So Numerous That Joinder Of All Members Is Impractical

Rule 23(a)(1) "numerosity" requirement has clearly been satisfied in this case. To satisfy the numerosity requirement, the class must be so numerous that joinder of all members is impractical. See Boggs v. Divested Atomic Corp., 141 F.R.D. 58, 63 (S.D.Ohio 1991), where the court explained that the numerosity requirement does not impose specific limitations:

11

Rule 23(a) provides: (a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class. 65

The key to determining whether the numerosity requirement of Rule 23(a)(1) is satisfied rests on the impracticability of joining potential class members. Satisfaction of the numerosity requirement does not require that joinder is impossible, but only that plaintiff will suffer a strong litigational hardship or inconvenience if joinder is required. See Arkansas Educ. Ass'n v. Board of Educ. of Portland, 446 F.2d 763 (8th Cir. 1971); Samuel v. University of Pittsburgh, 56 F.R.D. 435 (W.D.Pa. 1971). "The numerosity requirement requires examination of the specific facts of each case and imposes no absolute limitations." General Telephone Co. v. EEOC, 446 U.S. 318, 330, 100 S.Ct. 1698, 1706, 64 L.Ed.2d 319 (1980).

See also In Re Cardinal Industries, Inc., 105 B.R. 834 (S.D.Ohio 1989). Plaintiffs have identified many individuals within the defined class, even prior to class discovery. See Exhibit 20, which exhibit contains copies of documents obtained from the Campgrounds identifying numerous individuals whose Promissory Notes are or were held by Cortland. Plaintiffs have requested the loan files of all class members from Cortland and will soon be able to determine the exact number of class members but such a showing is not required at this juncture of the case. It is clear that Plaintiffs have satisfied Rule 23(a)(1). It is obviously impractical to join all individual class members in this case and courts routinely certify much smaller classes. See Samuel v. University of Pittsburgh, 56 F.R.D. 435 (W.D.Pa. 1971) (48 class members) and Philadelphia Electric Co. v. Anaconda American Brass Co., 43 F.R.D. 452 (E.D.Pa. 1968) (25 class members). 2. There Are Questions Of Both Law And Fact Which Are Common To The Class

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Rule 23(a)(2) requires that there be questions of law or fact common to the class. This requirement is satisfied as long as there exists at least one common question. See, e.g., In Re Cardinal Industries, Inc., 105 B.R. 834 (S.D.Ohio 1989). See also, Jackshaw Pontiac v. Cleveland Press, 102 F.R.D. 183 (N.D.Ohio 1984), where this Court explained the relation between commonality and typicality requirements:

2. Commonality and Typicality The Supreme Court has observed that: The commonality and typicality requirements of Rule 23(a) tend to merge. Both serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence. Those requirements therefore also tend to merge with the adequacy-of-representation requirement, although the latter requirement also raises concerns about the competency of class counsel and conflicts of interest. . . . General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147, 157 n. 13, 102 S.Ct. 2364, 2371 n. 13, 72 L.Ed.2d 740 (1982). The allegations of antitrust conspiracy contained in the Amended Complaint are sufficient to satisfy the requirement of Rule 23(a)(2) that a common question of law apply to the entire class. (Emphasis added)

The description of Plaintiffs' claims in the Complaint demonstrates that many significant common questions of law and/or fact are presented by Plaintiffs' claims. At the core of this action is the Campgrounds' commission of "bust-out" schemes against each of the class members and Cortland's alleged aiding and abetting and conspiracy in perpetrating these schemes. 67

These and other issues present significant questions which are common to each member of the class. The "commonality" requirement has been clearly satisfied. 3. The Claims Of The Named Plaintiffs Are Typical Of The Claims Of The Class

Rule 23(a)(3) requires that the claims of the Representative Plaintiffs be "typical" of the claims of the class. The court in Boggs v. Divested Atomic Corp., 141 F.R.D. 58 (S.D.Ohio 1991) explained the typicality requirement: The typicality requirement focuses on the type of injury suffered by the class members and the interests of the various class members. See Senter, 532 F.2d at 525. The commonality and typicality requirements are closely related in that they each serve to assist in the determination whether the claim of the named plaintiff and those of the class are so interrelated that the interests of the absent class members will be protected. General Telephone Co. v. Falcon, 457 U.S. 147, 157 n. 13, 102 S.Ct. 2364, 2370 n. 13, 72 L.Ed. 740 (1982).

The typicality requirement does not mandate that the class representative and class claims be identical but need only involve a common element of fact or law. See, Senter v. General Motors, 532 F.2d at 525, n.31:

To be typical, a representative's claim need not always involve the same facts or law, provided there is a common element of fact or law. See Eisen v. Carlisle & Jacquelin, 391 F.2d 555, 562-63 (2d Cir. 1968). See also Bateman v. Retail Credit Corp., 320 F. Supp. 1115, 1116 (N.D.Ga. 1970). See generally Moore Paragraph 23.07[2] at 23-371.

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A plaintiff's claim is typical if it arises from the same event or practice or course of conduct that gives rise to the claims of other class members and if the claims are based on the same legal theory. Patrykus v. Comiilla, 121 F.R.D. 357 (N.D.Ill. 1988). Both the representative Plaintiffs and the class members in this class have suffered the same injury, have been targets of the same illegal conduct, have executed virtually identical form contracts and have claims based on the same legal theories. Plaintiffs have demonstrated Rule 23(a)(3) typicality. 4. The Class Representatives Will Fairly And Adequately Represent The Class

A determination of "adequate representation" under Rule 23(a)(4) is premised upon two factors: 1) the representative must have a common interest with unnamed members of the class and 2) it must appear that representatives will vigorously prosecute the interests of the class. Senter v. General Motors, 532 F.2d 511, 524-25 (6th Cir.), cert. denied, 429 U.S. 870 (1976). Both prongs of this analysis are satisfied in this case. a. No conflict exists between the Representative Plaintiffs and the class

The claims of the representative Plaintiffs and the class are both common and typical as fully developed earlier in this brief. No intra-class conflict exists which would render the named Plaintiffs inadequate. There can be no dispute that the representative Plaintiffs have common interests with the class and adequately represent their interests. b. The Representative Plaintiffs will vigorously prosecute the interest of the class

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The principal Rule 23(a)(4) focus is on whether a representative plaintiff has sufficient knowledge and interest to "assist his counsel in the preparation and presentation of the case." See Bowen v. General Motors Corp., 542 F. Supp. 94, 99 (N.D.Ohio) citing Sonnier v. Engineers and Fabricating, 29 F.R.Serv.2d 1020 (S.D.Tex. 1980).12 The legal standard to be applied is whether the representatives have expressed an interest in the proceedings. See, e.g., In Re United Energy Corp., 122 F.R.D. 251, 258 (C.D.Calif. 1988). See also, Wolfson v. Riley, 94 F.R.D. 243 (N.D.Ohio 1981). The representative Plaintiffs have demonstrated their interest and understanding in these proceedings. The Representative Plaintiffs are interested in these proceedings, have provided assistance to counsel in the preparation of this case and are otherwise fulfilling their obligations as class representatives. Moreover, Mr. Slentz travelled over 200 miles from his home near Steubenville, Ohio to appear for the pre-trial conference in this case and Ms. Brammer traveled approximately 100 miles to appear in court for the pre-trial conference. The Slentzs and Brammer are excellent Representative Plaintiffs. B. This Class Action Should Be Certified Under Rule 23(b)(3)

An action may be certified as a class action if the prerequisites of Rule 23(a) are satisfied and one of the Rule 23(b) requirements is also met. This suit is thus maintainable as a class action pursuant to Rule 23(b)(3). Rule 23(b)(3) provides:

Rule 23(a)(4)'s requirement of vigorous prosecution also requires that the Plaintiffs' counsel be qualified and experienced in class action litigation. Plaintiffs' counsel have been lead or liaison counsel in numerous class actions including consumer class actions such as this one. If Plaintiffs' counsel's qualifications are disputed, additional submissions on this class prerequisite will be made. Undersigned counsel, Malakoff, Doyle & Finberg, served (or currently serve) as class counsel in Conley v. Bank One, Zaazouh v. Bank One, Gogola v. FirstSouth, and Rudnik v. Cortland have obtained over $7,000,000 in cash benefits and over $3,000,000 in non-cash benefits from lenders involved with Alpine, Ponderosa and/or The Landing. 70

12

(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition: (3) the court finds that the questions of law or fact common to the

members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action. (Emphasis added)

Thus, Rule 23(b)(3) provides two specific factors to be considered: 1) predominance of questions of law or fact common to the class over individual members and 2) that the class action mechanism is the superior method of adjudication. Predominance and superiority are both present in this case. 1. The Predominance Requirement Is Satisfied

Predominance exists because at the heart of this case are common illegal schemes perpetrated by the Campgrounds and their owners and Cortland. Related to these common schemes are numerous common issues of law and fact which are outlined above. All class members were subject to these illegal schemes and all have in common the issues of fact and law presented by Plaintiffs' Complaint. The courts have routinely found predominance of common questions where the claims relate to a common course of conduct. Esplin v. Hirschi, 402 F.2d 94 (10th Cir. 1968), cert. 71

denied, 394 U.S. 928 (1969); Green v. Wolf, 406 F.2d 94 (2d Cir. 1968), cert. denied, 395 U.S. 977 (1969). See also J.M. Woodhull Inc. v. Addressograph-Multigraph Corp., 62 F.R.D. 58, 60 (S.D.Ohio 1974) where the court found that the alleged conspiracy satisfied the Rule 23(b)(3) predominance requirement:

In deciding whether common issues of fact and law predominate over individual issues of fact and law, it is well settled that questions of liability can be separated from individual questions of damages. State of Illinois v. Harper & Row Publishers, 301 F. Supp. 484 (N.D.Ill. 1969); City of Philadelphia v. American Oil Company, 53 F.R.D. 45 (D.N.J. 1971). The Court finds that the alleged conspiracy and subsequent terminations present common issues of fact and law.

See also Gavron v. Blinder Robinson, 115 F.R.D. 318, 324 (E.D.Pa. 1987) where the court also recognized that allegations involving a common course of conduct present predominant common questions:

I find that common questions of law or fact predominate in this case. It is not essential that such questions be identical among members, only predominate. Cohen v. Uniroyal, 77 F.R.D. 685, 695 (E.D.Pa. 1977). Here, if each class member were to bring an individual action, each would have to develop proof of the existence of the same conduct by Blinder in order to prove liability; thus, the issues of whether defendant Blinder engaged in a scheme or course of conduct, or made a series of misrepresentations and material omissions, that deflated the market price of Stansburg stock, and whether defendant Blinder acted with a state of mind that establishes liability, unite class members. These liability issues are 72

central to the predominance question. Steiner v. Equimark Corp., 96 F.R.D. 603, 611-12 (W.D.Pa. 1983).

Just as in J.M. Woodhull and Gavron one central predominant issue is Cortland's liability for the commission of the "bust-out" schemes, Plaintiffs' claims are based upon a common course of conduct by both the Campgrounds and Cortland. Rule 23(b)(3) is clearly satisfied. 2. The Superiority Requirement Is Satisfied Rule 23(b)(3) also requires that four factors be analyzed to determine whether a class action is superior to other methods of adjudication. In this case, all four factors dictate that the only feasible method for adjudication this case is in the context of a class action. First, there is no interest by class members to individually control or litigate the prosecution of separate actions. Indeed, a purchaser of campground interest would be economically deterred from seeking redress in an individual action because any potential recovery would be exceeded by the litigation costs. See, e.g., J.M. Woodhull v. Addressograph, 62 F.R.D. 58, 61 (S.D.Ohio 1974). The very purpose of the class action procedure is to allow plaintiffs to pool claims which would be uneconomical to litigate individually. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 809 (1985). A class action is clearly indicated under this factor. Second, there is no other class litigation against Cortland to redress the claimed wrongs. Third, this is a desirable forum for litigating this class action. Cortland does business within this forum and most of the evidence and witnesses are located in this District. Fourth, this case presents far less manageability problems than most class actions. Here, the claims primarily turn on common legal or factual issues, the class is relatively small (under 2000 people) and the damages can be determined with mathematical precision. Moreover, as the Court recognized in Yaffe v. Powers, 454 F.2d 1362, 1365 (1st Cir. 1972):

73

Yet for a court to refuse to certify a class on the basis of speculation as to the merits of the cause or because of vaguely-perceived management problems is counter to the policy which originally led to the rule, and more especially, to its thoughtful revision, and also to discount too much the power of the court to deal with a class suit flexibly, in response to difficulties as they arise. See Committee's Criticism and Notes to Revised Rule 23, 3B Moore's Federal Practice 23.01[8][13] (2d ed. 1969).

Applying these factors, courts have routinely determined that a class action is the superior method of adjudication. See, Boggs v. Divested Atomic Corp., 141 F.R.D. 58, 67 (S.D.Ohio 1991) where the court explained that it would be inefficient and unfair to all parties to require the individual litigation of the multitude of common claims:

Turning then to Rule 23(b)(3), defendants reiterate their position that individual issues dominate this case, so that no efficiency would be achieved by consolidating these claims in one judiciary proceeding.

As is evident from the discussion to this point, the Court has rejected defendants' view of the individualized nature of the plaintiffs' claims. Common issues of liability, causation, and remedies not only predominate but overwhelm individualized issues. If these claims were tried separately, the amount of repetition would be manifestly unjustified. To the extent that each claim of each plaintiff depends upon proof concerning the history of operations at the plant, the nature, timing, extent and cause of emissions, the kinds of remedies, if any, appropriate to address potential future emissions, the need for medical monitoring, are the generalized impact of the plant's operations on real property values, that 74

proof would be virtually identical in each case. It would be neither efficient nor fair to anyone, including defendants, to force multiple trials to hear the same evidence and decide the same issues. Clearly, a Rule 23(b)(3) class could properly be certified under these circumstances.

For the same reason, it would be manifestly unfair and exceedingly inefficient for each of the about 2000 class members to individually appear before this court and prove virtually identical claims against Cortland. The class action device has already been successfully employed in Conley v. Bank One, 91 CV 0251 (N.D.Ohio) (Exhibit 1); Zaazouh v. Bank One, 89125 (W.D.Pa.) and Gogola v. FirstSouth, No. 1121 of 1990 G.D. (Fayette Cty) (see Exhibit 2) to provide a meaningful procedure for individuals subject to the same illegal schemes to fairly and efficiently litigate their claims. As explained by the court in In Re Mellon Shareholder Litigation, 120 F.R.D. 58 (W.D.Pa. 1988) the class action device benefits the parties, the judicial system, the attorneys and the public at large:

Superiority must be looked at from the point of view (1) of the judicial system, (2) of the potential class members, (3) of the present plaintiff, (4) of the attorneys for the litigants, (5) of the public at large and (6) of the defendant. The listing is not necessarily in order of importance of the respective interests. Superiority must also be looked at from the point of view of the issues.

Katz v. Carte Blanche Corp., 496 F.2d 747, 760 (3d Cir.) (en banc), cert. denied, 419 U.S. 885, 95 S.Ct. 152, 42 L.Ed.2d 125 (1974). Here, all parties involved will benefit from class certification. The judicial system, the attorneys, the plaintiffs and the defendants will save a great deal of time and money by avoiding duplicative lawsuits. Further, the potential class members and the public will 75

have rights protected which would otherwise go unprotected due to the nature of the alleged fraud. We hold that plaintiffs have satisfied the superiority requirement.

Without the class action device, this litigation could not be litigated fairly and efficiently and to forego class certification would effectively bar numerous Campground purchasers and/or Cortland borrowers from seeking a remedy. A class action is the only method for Plaintiffs to obtain a remedy for the illegal schemes upon which this case is based. CONCLUSION For all the reasons stated above, Plaintiffs respectfully request that the class be certified pursuant to Rule 23(b)(3).

Attorneys for the Plaintiffs, Walter Slentz, Sarah Slentz and Hope Brammer

DATED: November 4, 1993

6.7

Brief in Opposition to Summary Judgment

United States District Court Northern District of Ohio Eastern Division

LLOYD WALLACE, et. al. vs. GEICO FINANCIAL SERVICES, et. al. Case No PLAINTIFFS' BRIEF IN OPPOSITION 76

Plaintiffs

Defendants

TO THE MOTION FOR SUMMARY JUDGMENT FILED BY DEFENDANT GEICO FINANCIAL SERVICES

I. INTRODUCTION

Defendant GEICO Financial Services, Inc. ["GEICO"] is the assignee of the installment loans of Representative Plaintiffs Lloyd and Diane Wallace and Richard and Judith Kuermerle and approximately 1500 other contracts of members of the Class who purchased "interests" in Ponderosa Park and The Landing. These persons will be referred to as the "GEICO Class." GEICO purchased the GEICO Class' installment loans in December of 1987 through a three party arrangement negotiated between the Campgrounds, Bank One and GEICO. In the transaction as it was structured among the parties, Bank One first sold the installment loans to the campground companies without recourse. They, in turn, sold the installment loans to GEICO with recourse.13 GEICO received a total of $254,436.42 as payments under Sections 2.2 of the two agreements. (GEICO's answers to Third Interrogatories, No. 4) Thereafter, GEICO received millions of dollars in principal and interest payments from the GEICO Class. GEICO Answers To Requests For Admissions Concerning Identity Of Class Members, GEICO App., Tab 6. The GEICO Class all signed installment loans with Bank One. The installment loans expressly stated in bold face type: Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained

See the Kuermerles' installment loan at Plaintiffs' S.J.Mtn App., Ex. 15. See also copies of the December 21, 1987 Purchase Agreements between GEICO, The Landing and Clay's Park, Inc., and between GEICO, Bo-Anthony Land Co., Inc. and Ponderosa Park Resort Inc. at Plaintiffs' GEICO App., Ex. 1. A separate Affidavit and Appendix is filed with this brief. References are to "GEICO App." Some references are to the Affidavits and Appendices filed in Response to Bank One's Motion For Summary Judgment ("Bank One App.") or to the Appendix filed in support of Plaintiffs' Motion For Summary Judgment as to Count V "S.J.Mtn App." 77

13

pursuant hereto or with the proceeds hereof. Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder. (See Plaintiffs' S.J.Mtn App., Ex. 15) Notwithstanding the plain and unambiguous language of the installment loans, GEICO asserts that it is not subject to any claims of the GEICO class of RICO violations by the campground sellers. (GEICO's Memorandum pp. 5-12) That argument eviscerates the purpose of the "holder" provision of the installment contracts, deprives the GEICO Class of the protection of the provision, and has previously been rejected by this Court by Order dated July 25, 1991. The GEICO Class all signed "Agreements For Deed" stating that they were purchasing "an undivided interest" in a "Phase" of Ponderosa Park or The Landing. GEICO erroneously refers to that which the members of the GEICO Class purchased through their installment loans throughout its Memorandum as "undivided interests in real estate" (See, e.g., GEICO's Memorandum pp. 1-2). Those "interests" as so-called real estate interests were illusory when sold to the members of the GEICO Class and continue to be so today. The GEICO Class have requested relief in the form of the repudiation of their agreements because they purchased these "interests" rendered worthless by the fraudulent bankruptcy bust-out schemes. GEICO contends that because both parks are open and operating on some purported basis, that Plaintiffs have no claims for the campgrounds fraudulent bust-out. Clearly, the fact that the parks are "open" does not remedy Plaintiffs' damage caused by the bust-out. It is very clear that there is a genuine issue of material fact as to whether the members of the GEICO Class have received that which they were promised, or whether, instead, they have been the victims of the fraudulent bankruptcy bust-out schemes. GEICO further asserts in contravention of all bankruptcy law precedents, and its own oral and written representations to Plaintiffs' Counsel, that the claims of the GEICO Class were released against it and Bank One, without consideration, and without any compliance with the provisions of Rule 23(e) in the bankruptcy proceedings. That defense is likewise meritless.

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This Brief will discuss the disputed factual issues and the applicable legal authorities which it is respectfully submitted would require this Court to deny GEICO's motion for summary judgment.

1. The Holder Provision In The Installment Loans Provides Plaintiffs The Opportunity To Raise Against GEICO The RICO Claims Which They Have Against The Sellers

GEICO has challenged the application of the Holder Provision in the installment loans to any RICO claims brought by the Plaintiffs arising from the fraudulent scheme of the sellers. Since this defense has also been raised by Bank One in its motion for summary judgment, Plaintiffs adopt herein that section of their Brief addressing this issue. See Plaintiffs' Bank One Brief, pp. 73-80.

2. The GEICO Class Have Paid Millions Of Dollars To GEICO For Illusory "Interests" In The Campgrounds

Members of the GEICO Class have paid millions of dollars under their installment loan agreements to GEICO. The loans upon which they have paid or are paying were made for purchase of "interests" in Ponderosa Park and The Landing. The campground operators intended to and did operate a bankruptcy fraud scheme, whereby they obtained a portion of the proceeds of each installment loan of the Plaintiffs which were used to finance the purchase of the "interests". The campground principals stripped the cash out of the campgrounds, and walked away, leaving the campground companies busted and the Plaintiffs' obligated to pay on their loans, while they held "interests" which had virtually no value.14 The installment loans of the GEICO class all purported to be secured by their "Agreements For Deed" (Bank One App., Vol. I, Ex. B). The "Agreements The bust-out bankruptcy scheme is described in depth in Plaintiffs' Statement Of Facts Brief In Response to Bank One's brief. 79
14

For Deed" are specifically described as the "collateral" for the loans. Bank One's December 1987 assignment of the Kuermerles' installment loan (See Plaintiffs' S.J.Mtn. App., Ex. 15, p. 101) is endorsed as follows: For value received, the undersigned does hereby sell, assign, and transfer to BoAnthony Land Co. and Ponderosa Park Resorts, Inc., its successors, and assigns without recourse all the right, title, and interest of the undersigned in and to the within security agreement and the property covered thereby and authorizes said company to collect and discharge same. Bank One of Eastern Ohio, N.A., Bo-Anthony Land Co., Inc. and Ponderosa Park, Inc. then immediately thereafter assigned the loan to GEICO endorsed as follows: For value received, the undersigned does hereby sell, assign and transfer to GEICO Financial Services, Inc.; its successors, and assigns with full recourse all the right, title, and interest of the undersigned in and to the within security agreement and the property covered thereby and authorizes said company to collect and discharge same. It is surprising, therefore, that according to the Affidavit of Cary M. Coulston, included in GEICO's Appendix, GEICO was never assigned any of the "Agreements For Deed". While Coulston's representation appears to directly contradict the explicit terms of the installment loan documents and assignments, Coulston's statement demonstrates the truth of Plaintiffs' contention that the loans were never intended to be or were secured by the "Agreements For Deed". Those Agreements For Deed, which promised to the Plaintiffs the issuance of "Warranty Deeds" upon their final payment of their installment loans, and for which the Plaintiffs paid thousands of dollars in principal and interest, were not considered as collateral by GEICO (or at an earlier point in time by Bank One). The representation in the installment loans that the "Agreements For Deed" served as "Collateral" and secured the payments on the loans was simply part of the Campgrounds selling scam. Bank One, the Parks and GEICO never considered the "Agreements For Deed" or the "Warranty Deeds" to have any value as real estate interests. They all knew that there were prior mortgages and liens covering the real estate of the two Parks which were recorded prior to any of the "interests" of the Plaintiffs and which greatly exceeded the appraised value of the underlying real estate, thus rendering any real ownership interest in the real estate illusory. The June 30, 1987 80

financial statements for the Campground principals show two mortgages to Bank One (Ponderosa) for a total of $866,031, on which the campground companies were at that time delinquent. In addition, John Clay was owed $655,150 and McKinley Federal was owed $138,300 on secured notes related to The Landing. (Ex. 238, Note I, See also Ex. 144, Bank One, Vol. I App.) Clay initiated foreclosure proceedings at least once prior to GEICO's purchase of the installment loans. (See Ex. 132, BAN 061186 S.J.Mtn App.) Bank One of Columbus' review of the Campgrounds' credit, which was signed off on by Bank One's officers on September 18, 1987 (prior to the sale of the installment loans to GEICO) expressly considered and discussed the problem of the underlying mortgages recognized that as a real estate "interest" the rights of the Plaintiffs were worthless because prior existing liens and mortgages greatly exceeded the value of the real estate: A collateral valuation based on the January 7, 1986, external appraisal is as follows: Appraised Value--Ponderosa Park and 70 adjacent acres $758,500 x 80% Less Bank debt Collateral deficiency Unsecured bank debt Total estimated exposure $606,800 $866,031 $259,231 $150,000 $409,231

(Ex. 132 BAN 061200 S.J.Mtn App.) The review continues: Of the three campgrounds in operation, this is the only one in which BANK ONE, EASTERN OHIO is the mortgage holder. This adds some comfort in a worse case scenario because BANK ONE, EASTERN OHIO would have some control in keeping the park open. In view of the lawsuit, delinquency and questionable ability to internally fund campground paper if outside sources cannot be found, the secured portion, $606,800 based on discounted appraisal is rated Substandard and estimated potential exposure, $409,231 is rated Doubtful. (Ex. 132 BAN 061200 S.J.Mtn App.) The review also states: Repayment of the campground loans is dependent upon the continued operation of the campgrounds. BANK ONE, EASTERN OHIO has a first mortgage on Ponderosa Park; however BANK ONE is not the mortgage holder on the other two campgrounds and would have no control in the maintenance and operation of these parks in the event of foreclosure. John Clay, previous owner and mortgage holder on Clay's Park, has initiated foreclosure once, but the complaint was eventually 81

dismissed. If foreclosure were to occur, installment paper from ... The Landing at Clay's Park would be potential loss if the mortgage holders were unwilling or unable to assist in the continued operations of the campgrounds. In addition, Bim Gander, who did the consulting work for the bank, feels that customers believe their ownership interest is subject to no liens even though the customer's agreement does state it is subject to other liens. In the case of foreclosure on the two parks in which BANK ONE, EASTERN OHIO is not the mortgage holder, the customers could lose their interests and possibly file class action suits claiming misrepresentation. (Ex. 132 BAN 061186 S.J.Mtn App.) GEICO had access to this information, so that it, too, knows that as real estate "interests," the interests were worthless. Notwithstanding that knowledge, GEICO asserts that the Wallaces, who paid thousands of dollars for their so-called "interest" at The Landing have no claims with respect to what the campgrounds did or did not do solely because of the Wallaces' failure to pay any annual fees. GEICO asserts this defense with respect to all of the GEICO Class members who have failed to pay their annual fees. (GEICO's Memorandum pp. 26-28) GEICO thus attempts to bifurcate the "interests" purchased by the Plaintiffs from their use of the campgrounds: Geico's position [is] that the Bank One loan paid for the real estate interest purchased by plaintiffs, and that any goods or services were covered by the maintenance fee. (Emphasis added) (GEICO's Memorandum p. 26, fn.12) In other words, under GEICO's "position", Plaintiffs paid thousands of dollars for so-called real estate which was completely owned by the campgrounds and mortgaged and liened to lenders for more than the value of the real estate, without any usage rights in the parks. If this Court chooses to accept that construction of the "Agreements For Deed", then the Court should hold that Plaintiffs purchased only illusory real estate interests in a campground scheme. In 1990, after the bankruptcies, GEICO commissioned appraisals for Ponderosa Park and The Landing. In recognition that any "undivided interests" would decrease the value of the campgrounds, the appraisers recognized in their valuation that any partial interests in the properties were no longer in existence and that no owners could assert or "fix any claim on the subject property." (Ex. 366, p. 2 GEICO App. Ex. 4, and Ex. 367 p. 2 GEICO App. Tab. 5) As an operating business, not subject

82

to any "partial interests", the value of Ponderosa was appraised at $2,100,000, while the value of The Landing was appraised at $1,600,000. The appraisers stated: [T]he highest and best use of the subject would be for a seasonal campground that is operated on a rental basis, and not a limited interest operation. For this reason, and due to the lack of meaningful recent data, a limited interest valuation was not undertaken. (Ex. 366, p. 3 GEICO App. Tab 4, Ex. 367, p. 3 GEICO App. Tab 5) The appraisers also state: [B]ecause the park can no longer generate a sufficient operating budget, the property that these limited interest members owned is insolvent. Under this premise, arguments can be made that the proportional debt on the property exceeds the value of each interest, and the interests can be taken back to where the entire subject can be marketed under a free and clear title. This is a key assumption for the appraisal. (Emphasis added)

(Ex. 366, p. 30 GEICO App. Tab 4, Ex. 367, p. 27 GEICO App. Tab 5) Given the operating history of the Campgrounds, the appraisers found no future for them as "limited interest campgrounds": In the analysis of the subject property, based on the foregoing market study, as well as through a review of the subject's past operating history, it is concluded that it would be very difficult to re-establish the subject property as a viable limited interest campground without extensive concessions and thorough involvement by all parties involved, such as the mortgage holders and limited interest lenders. At this late date it is disingenuous for GEICO to be asserting that the Plaintiffs purchased valuable "interests in real estate" with the proceeds of their installment loans. Any purported ownership in the underlying real estate represented by the "interests" was illusory. What the Plaintiffs received was an "interest" in only the use of the campgrounds which were always intended to, and, in fact, did go belly-up. II.PLAINTIFFS' COUNT IV BREACH OF CONTRACT CLAIMS WERE EXPRESSLY RESERVED BY AGREEMENT, AND COULD NOT BE BARRED BY THE CAMPGROUNDS' BANKRUPTCY PROCEEDINGS

1. Introduction And Summary

83

GEICO seeks summary judgment as to Plaintiffs' Count IV breach of contract claims. (GEICO Br., Section II, pp. 12-25). Bank One adopts GEICO's arguments.15 Significantly, GEICO does not argue that Ponderosa and Clay's Park did not breach their contracts with Plaintiffs, but argues only that the confirmed bankruptcy plans of reorganization cured such breaches, or in any event, bar further litigation under the doctrines of res judicata or collateral estoppel. GEICO's argument flies in the face of its written agreement -- on which Plaintiffs relied -that the bankruptcy proceedings would not affect Plaintiffs' claims against GEICO and Bank One. As developed below, GEICO and Bank One are now equitably estopped from reversing their position to Plaintiffs' detriment. This argument is more fully developed at pp. 12-20 of this Brief. Even if Defendants had not agreed to preserve Plaintiffs' claims, their defense would fail, as it is based on erroneous factual assumptions and a misunderstanding of the Bankruptcy Code. First, the Consumer Installment Loan And Security Agreements (herein, the "Loan Agreements") were entered between Plaintiffs and Bank One (and thereafter assigned to GEICO). Ponderosa and Clay's Park were not parties to those agreements. Plaintiffs' agreements with the Debtors Ponderosa and Clay's Park were Agreements For Deed. The trustee in bankruptcy could not, and did not, assume the Loan Agreements to which the Debtor campgrounds were not parties, but only assumed the Agreements For Deed. See this Brief at p. 20-23. Second, discharging a debtor in a bankruptcy case does not discharge the liabilities of other parties, even with respect to the same instrument. See this Brief, supra, at pp. 23-26. Third, Defendants' affirmative defenses of res judicata have not been properly raised (Brief, supra, pp. 27-32), and in any event would not provide a proper defense. (Brief, pp. 32-41) Fourth, GEICO's position would render meaningless federal law that specifically requires the holder provisions to protect consumers in precisely this situation. (Brief, pp. 44-45)

See Memorandum In Support Of Defendant Bank One's Motion For Summary Judgment And/Or Judgment On The Pleadings, pp. 4 and 22. For brevity, references herein are generally to "GEICO", but the same arguments apply to Bank One to the extent it has adopted GEICO's position. 84

15

Finally, GEICO's position is contrary to Fed.R.Civ.P. Rule 23(e). (Brief, pp. 45-48) GEICO contends, in effect, that the bankruptcy plans of which it was the proponent nullified the rights of Plaintiffs in this class action without notice that it would do so, without approval of this Court, without an opportunity for class members to opt out, without payment of any consideration, and without the agreement of Plaintiffs' counsel (and in fact, contrary to GEICO's agreement to preserve Plaintiffs' position).

2. GEICO And Bank One Agreed That Plaintiffs' Claims Against Them Would Be Preserved, And They Are Now Equitably Estopped From Asserting Otherwise

Defendants have inexplicably ignored, and would attempt to disavow, their explicit agreement with Plaintiffs that equitably estops them from taking their present position. This is the second time in which Defendants have, without full disclosure, made a back-door attempt to overcome Plaintiffs' rights in this action through the bankruptcy proceedings. Defendants' defense is not only wrong, but is in bad faith.

. . . . . . . . . . A. Defendants' Are Bound By Their Bankruptcy Proceeding Agreement With Plaintiffs

GEICO was the proponent of plans of reorganization filed in the Ponderosa and Clay's Park bankruptcy cases. The so-called proposed "Second Modified Plan" of reorganization was distributed to bankruptcy creditors (or holders of "interests"), including the class members in this action. The plans were not, however, distributed to Plaintiffs' counsel herein, or to this Court, and approval of this Court to send notices pursuant to Fed.R.Civ.P. Rule 23(e) was never sought. These facts are

85

significant because the proposed Second Modified Plan contained a very significant provision in Section 4.09: ". . . . The treatment of Owners' claim specified herein shall be in lieu of all other claims that Owners have against the Debtor, the Estate Trustee, Bank One of Youngstown, N.A. or members of the Lender Group." (Emphasis added) Id.16 Thus, GEICO sought complete exoneration for itself and Bank One under the plans. Yet, no notice of the Plans was provided to Plaintiffs' counsel, no Rule 23(e) notice and court approval was sought, and no consideration was paid. When Plaintiffs' counsel obtained a copy of the proposed Plans through their clients, they "hit the roof". Although believing the bankruptcy court in the Ponderosa and Clay's Park bankruptcy cases lacked jurisdiction to nullify Plaintiffs rights in this class action case against GEICO and Bank One, Plaintiffs' counsel immediately undertook to prevent the Plans from being approved in the form proposed. Plaintiffs' counsel, inter alia, telephoned GEICO's counsel, Mr. Merklin, and also faxed a letter to him which appears as Ex. B to Pietz Affidavit, GEICO App. Ex. 7.17 This letter proposed language that would expressly preserve all of Plaintiff's rights against GEICO and Bank One. The letter noted Plaintiffs' position that the bankruptcy court lacked the power to discharge claims against non-debtors, that the approval of this Court was required under Rule 23(e), and that such approval would be inappropriate as there was "no or inadequate" consideration. (Id. at p. 2). Plaintiffs' counsel also immediately prepared "Objections To Second Modified Plan Of Reorganization", which appears in its unfinished draft form as Ex. C to Pietz Affidavit, GEICO App. Ex. 7. On the following business day, GEICO agreed by letter dated April 2, 1991 (Ex. D to Pietz Affidavit) to modify the proposed plans to remove the language purporting to exonerate GEICO and Bank One. GEICO stated that Plaintiff's objections would now be "moot":

The "Lenders Group" included the Defendant herein, GEICO. Section 1.31 of the Plans. See GEICO, Ex. C.
17

16

See Exhibits attached to Affidavit of James Pietz, Esq. GEICO App. Ex. 7. 86

"With the removal in its entirety of the release language, I assume that your objections to the proposed Plans are now moot. Accordingly, I understand that you will not be filing any objections to the proposed Plans of Reorganization in consideration for our agreement to remove the language I have referenced." Id., p. 2. The Objection to Second Modified Plan (Ex. C to Pietz Affidavit) was never filed with the bankruptcy court because, in GEICO's own words, these objections were "moot" by reason of "the removal in its entirety of the release language."18 As promised, GEICO modified the Plans to remove the offending language in what became the Third Modified Plan, which the bankruptcy Court approved.19 Defendants are precluded, under both by their agreement and under the principles of equitable estoppel, from now reversing their position to argue that confirmation of the plans barred Plaintiffs' claims, contrary to their prior position on which Plaintiffs relied. Decisions of both the United States Supreme Court and the Court of Appeals For The Sixth Circuit mandate this result. B. Defendants Are Equitably Estopped By Their Conduct From Reversing Their Position As a result of GEICO's position taken in the bankruptcy confirmation proceedings -- that removing release language in the plans renders Plaintiffs' objections "moot" -- Defendants are now equitably estopped from changing their position to Plaintiffs' detriment. The doctrine of equitable estoppel was expressed by the Supreme Court of the United States in Union Mut. Ins. Co. of Maine v. Henry Wilkinson, 80 U.S. (13 Wall.) 222, 223, 20 L.Ed. 617 (1872):

As sponsor, GEICO modified the Plan, the provisions of which bound all participants. Bank One knew of and acquiesced in this modification in the portion of the reorganization plans that specifically referred to it. Further, Bank One's counsel, George von Mehren, was provided a copy of the April 2, 1991 Merklin letter, as shown by the "cc" on such letter. Mr. Pietz's presence at the confirmation hearing, to which defendants refer at GEICO Br., p. 17, n. 8, was to ascertain that the agreed modification was in fact made and to oppose the Plans if it was not. 87
19

18

"The principal is that where one party has . . . induced the other party to a transaction to give him an advantage, which it could be against equity and good conscience for him to assert, he would not in a court of justice be permitted to avail himself of that advantage." Id. The Court of Appeals for the Sixth Circuit has recently addressed the doctrine of equitable estoppel, in connection with the related but different doctrine of judicial estoppel, in Teledyne Industries, Inc. v. N.L.R.B., 911 F. 2d 1214, 1220 (6th Cir. 1990), as follows: "The difference between judicial and equitable estoppel stems from their different purposes. Judicial estoppel exists to 'protect the courts 'from the perversion of judicial machinery"' through a party's attempt to take advantage of both sides of a factual issue at different stages of the proceedings [citation omitted] In contrast, equitable estoppel serves to protect litigants from unscrupulous opponents who induce a litigant's reliance on a position, then reverse themselves to argue that they win under the opposite scenario [citations omitted] (Emphasis in original; boldface added) Id. Teledyne then stated the three elements of equitable estoppel as follows: ".... A party may invoke equitable estoppel to prevent the opposing party from changing positions if (1) the party was an adverse party in the prior proceeding; (2) the party detrimentally relied on the opponent's prior position; and (3) the party would be prejudiced if the opponent changed positions ...." [citations omitted]" Id.
20

These three elements of equitable estoppel are satisfied in this case. First, GEICO has itself argued that plaintiffs and GEICO were adverse parties in the bankruptcy proceeding. Of course, if this element were not satisfied, then GEICO's collateral estoppel and res judicata arguments would also fail for the same reason. The parties' adverse positions were not presented to the bankruptcy court through adversary proceedings, motions, or otherwise, and collateral estoppel and res judicata would therefore not apply. Plaintiffs, GEICO and Bank One were all parties to the bankruptcy proceedings as creditors (GEICO was even the proponent of the plans), and all had a right to be heard with respect to the reorganization plans.

See also Roth v. McAllister Bros., Inc., 316 F. 2d 143, 145 (2d Cir. 1963) ("a party having assumed a certain position in a legal proceeding and having succeeded in maintaining that position . . . may not thereafter assume a contrary position in a subsequent proceeding simply because its interest have changed . . . ."). 88

20

Any finding that the "prior party" element of equitable estoppel was not met would necessarily undermine GEICO's res judicata and collateral estoppel arguments as well. Second, the exchange of letters between Plaintiffs' counsel and GEICO's counsel (Pietz Affidavit Exs. B and D) clearly demonstrates Plaintiffs' detrimental reliance, as do Plaintiffs' draft objection to the reorganization plans (Ex. C), the removal of the offending language from the plans as finally approved,21 and the appearance of Mr. Pietz at the confirmation hearing in which the agreed to modification in the plans was made and approved. In addition, Mr. Pietz has

contemporaneously with this brief filed an Affidavit verifying the above facts, including reliance on Mr. Merklin's April 2, 1991 letter (Ex. D to Pietz Affidavit). This Court should find as a matter of law that detrimental reliance has occurred, and that equitable estoppel bars GEICO's defense.22 Third, Plaintiffs would clearly be prejudiced by GEICO's and Bank One's reversal of their bankruptcy position if their present defenses were found to have merit. The time for challenging the confirmation Plans has now passed, and Plaintiffs' breach of contract claims (if GEICO Defendants' arguments were accepted) would be barred.23 Two additional points regarding equitable estoppel should be noted. First, there need not be judicial acceptance, or even a ruling, on the prior position for equitable estoppel to apply: ".... Equitable estoppel may apply regardless of judicial acceptance of the party's original position, because equitable estoppel protects litigants instead of the integrity of the courts. Judicial estoppel [in contrast to equitable estoppel] may apply regardless of detrimental reliance by the opposing party because it exists to protect the integrity of courts instead of litigants." Teledyne, supra. Id.

Compare and contrast last sentence of Section 4.09 of the Second and Third Modified Plans, Pietz Affidavit Ex. A. GEICO Ex. C. Even if a factual issue were determined to exist, such factual issue would prevent summary judgment for Defendants. For reasons argued below, collateral estoppel and res judicata do not bar their claims in any event. However, because equitable estoppel bars Defendants' bankruptcy defense, the Court need not reach the additional issues presented below. 89
23 22

21

Second, actual fraud need not be shown. As stated in Kroner v. Kroner, 575 N.Y.S.2d 904 (A.d. 2 Dept. 1991): "It is not necessary that actual fraud be shown in order to establish equitable estoppel. It is only necessary to show that the person estopped by his conduct misled another to his prejudice. [citations omitted] Indeed, it has been held that estoppel may arise from the culpable negligence by which another has been misled [citations omitted]." Id. at 907. Here, GEICO had an interest in obtaining approval of the bankruptcy plans, through which it proposed to maximize its recovery as a creditor. Now, it has an interest in avoiding liability. However, GEICO cannot reverse its position, on which Plaintiffs relied, merely because GEICO's interests have now changed. See also, The Ohio and Mississippi R. Co. v. McCarthy, 96 U.S. 693, 696 (1878) ("Where a party gives a reason for his conduct and decision touching upon anything involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration.") In sum, GEICO agreed to remove from the reorganization plans language (and remand such language) that purported to exonerate GEICO and Bank One. In so agreeing, GEICO asserted that it had rendered Plaintiffs' objections "moot". Bank One watched and acquiesced in all of this. GEICO and Bank One cannot now claim that the reorganization plans destroyed Plaintiffs' rights against them, contrary to their agreement. Defendants' motions for summary judgment must therefore be overruled with respect to Plaintiffs' breach of contract claims. 3. GEICO's Defense Is Based On A Misconception Of A Critical Fact And Misapprehension Of The Plans Of Reorganization And The Bankruptcy Code Even if GEICO and Bank One were not equitably estopped from asserting their current defense, as demonstrated above, their defense would fail. Had GEICO and Bank One expressly preserved the right to argue that the Plan had a collateral estoppel effect, instead of positively asserting that withdrawal of the release language rendered Plaintiffs' concerns "moot", their defense is meritless. 90

Defendants overlook the guiding principal that a discharge of a bankruptcy debtor does not affect rights and obligations of other creditors vis-a-vis each other, at least where, as here, enforcement of those rights would not interfere with the administration of the bankruptcy plan. Moreover, Defendants have confused the Agreements For Deeds, which the trustee in bankruptcy assumed, with the consumer installment loan agreements, which the trustee did not (and could not) assume. Ponderosa and Clay's Park were parties only to the Agreements For Deeds, and were not parties to the consumer installment agreements between Plaintiffs and Bank One (and thereafter assigned to GEICO). The trustee could not, and did not, assume these consumer installment agreements to which the debtors Ponderosa and Clays Park were not parties. A. Plaintiffs' Consumer Credit Agreements With Bank One And GEICO Were Not Assumed By The Trustee In Bankruptcy Defendants' argument that Plaintiffs contractual rights were adjudicated is built upon an faulty foundation. Only Plaintiffs and Bank One entered into the Consumer Installment Loan And Security Agreements (herein, the "Loan Agreements"). See, e.g., GEICO Ex. B. Thereafter, the Loan Agreements were assigned to GEICO.24 The Affidavit of Cary M. Coulston (attached to GEICO's Appendix) asserts: "GEICO is not now, nor has it ever been, a signatory or party to or assignee of any Agreements For Deed involving The Landing or Ponderosa Park." The trustee in bankruptcy, standing in the shoes of Ponderosa and Clay's Park, therefore did not assume the Loan Agreements, but only assumed certain "Agreements for Deeds". As stated in the reorganization plans: ". . . (iii) Owners who have not received and recorded deeds as of the Effective Date, and who are not yet entitled to a deed as such Owners have not yet fully performed under their contract with the Debtor will have such contract assumed by the Estate Trustee and assigned to Buckeye under this section. As of the Effective Date, the Estate Trustee hereby assumes and assigns to Buckeye as part of the Sale Assets any executory contracts for deed between Owners and the Debtor. Upon the assumption and assignment of such contracts, Buckeye will be bound by all contracts so assumed The assignment was structured for Bank One to assign the loans first to the campgrounds which then assigned them to GEICO. 91
24

and assigned and by all contracts with Owners having a interest in the real property of the Debtor or Buckeye under a recorded deed." GEICO Ex. C, Section 4.09, pp. 12-13.25 The above quoted section is silent as to any Loan Agreements, and instead, speaks only of "executory contracts for deed between Owners and the Debtor." Id. Rightly so, because Ponderosa and Clay's Park were not parties to the Loan Agreements, at the time of the bankruptcy so the Trustee therefore could not assume the Loan Agreements. Under the reorganization plans, substantially all assets of the campgrounds were sold to Buckeye. These assets had either evolved onto the trustee by operation of bankruptcy law, or as to certain executory contracts, had to be expressly assumed by the trustee. Article V of each plan provides a comprehensive description of items sold or transferred to Buckeye. These items included cash, real property, equipment, furniture and vehicles, inventory, debts, tangible personal property, "know-how", trade names and trademarks, contracts, agreements, leases, licenses and phone numbers, and stock. GEICO Ex. C, pp. 13-15. Article V, Section (e) specifies that Buckeye purchased "all debts owing to Debtor arising out of Agreements for Deed to which the Debtor is a party . . .". Section (i) similarly refers to "All of Debtor's rights under any and all Agreements For Deeds" to which the Debtor is a party. (Emphasis added) Significantly, none of these provisions refers to the Loan Agreements between Plaintiffs and Bank One (or GEICO). Even if it were assumed for the sake of argument that the Debtors were parties to the Loan Agreements based on their brief assignment prior to the assignment to GEICO, any hypothetical interest of the debtors in such Loan Agreements were expressly rejected in Article VIII of the Plan (GEICO Ex. C, p. 16), which provides: "Any and all Executory Contracts and Unexpired Leases of the Debtor not expressly assumed under this Plan or otherwise by the Estate Trustee pursuant to order of the Bankruptcy Court on or prior to the Effective Date shall be deemed rejected and disaffirmed upon the Effective Date. ...." Id.

Owners who fully performed their Agreements for Deeds were entitled to receive deeds under Section 4.09 of the Plans. See GEICO, Ex. C and D, at pp. 12-13, Section 4.09. 92

25

In sum, (1) the Trustee lacked the power to assume any contracts to which the Debtors were not parties, (2) the Debtors were not parties to the Loan Agreements, (3) nothing in the Plan suggests any intention to assume such Loan Agreements, and (4) any agreements not expressly assumed in the Plan were rejected in Article VIII of the Plan. B. A Bankruptcy Discharge Does Not Affect Obligations Between Non-Bankrupt Parties It is a fundamental principal of bankruptcy law, clearly established both by the Bankruptcy Code and case law interpreting it, that a confirmed bankruptcy plan does not discharge debts or other obligations of entities other than the bankrupt. This fundamental principle is codified in Section 524(e) of the Bankruptcy Code, which provides: "Except as provided in subsection (a)(3) of this section, discharge of a debt of a debtor does not affect the liability of any other entity on, or the property of any entity for, such debt."26 As stated in Huddleston v. Nelson Bunker Hunt Trust Estate, 117 B.R. 231 (N.D. Tex. 1990): ". . . . This provision of the Bankruptcy Code was '"intended for the benefit of the debtor but was not meant to affect the liability of third parties or to prevent establishing such liability through whatever means required."' In re Jet Florida Sys., Inc., 883 F. 2d 970, 973 (11th Cir. 1989) (quoting 3 R. Babbitt, A. Herzog, R. Mabey, H. Novikoff & M. Sheinfeld, Collier On Bankruptcy, 524.01 at 524-16 (15th ed. 1987) (emphasis omitted). In its clearest application, 524(e) operates to ensure that a discharge in bankruptcy does not effect the liability of a guarantor on an underlying debt. See, e.g., Latham v. Wells Fargo Bank, N.A., 896 F. 2d 979, 984 (5th Cir. 1990)" [additional citations omitted]. Thus, a Chapter 11 plan purporting to release the proponents of the plan from all claims and causes of action held by persons distributing under the plan was held to violate Section 524(e) in In re Future Energy Corp., 83 B.R. 470, 486 (S.D.Ohio 1988). See also, In re Scranes, Inc., 67 B.R. 985, 989 (Bkrtcy, N.D. Ohio 1986) (Chapter 11 plan which discharges obligations of debtor to his creditor does not also discharge obligations owed by

The exception in Section 524(a)(3) pertains to certain community property in cases involving married individual debtors, and has no application to this case. 93

26

third-party guarantors to same creditor, notwithstanding language in plan purporting to do so); Mellon Bank v. Siegel, 96 B.R. 505 (E.D. Pa. 1989) ("discharge of a debtor's obligations by operation of the Bankruptcy Code does not discharge or affect in any way a guarantor's liability" (emphasis added) Id. at 506; The debtor's inability to pay is "precisely the situation for which Mellon negotiated and the guarantor agreed to protect against." Id.); and In re Grove, 100 B.R. 417 (Bkrtcy, C.D. Ill. 1989) (". . . a balancing test is inappropriate under Section 524(e). Section 524(a)(2) bars only actions to collect a debt as a personal liability of the debtor." (Emphasis added) Id. at 419).

A bankruptcy discharge is very limited in effect, as illustrated by In re Catania, 94 B.R. 250 (Bkrtcy. D. Mass. 1989). Catania permitted suit against the debtor on the discharged debt, not to recover the debt as a personal liability, but in order to recover the debt from a third party. Id. at 252. This concept that a bankruptcy discharge is personal to the debtor and does not effect rights among other parties has long been fundamental to bankruptcy law. As stated in In re Berry, 85 B.R. 367 (Bkrtcy.W.D. Pa. 1988) in connection with Section 524(e)'s predecessor, Section 14(f) of the Bankruptcy Act: " ... The cases are clear in construing Section 14(f) to mean that the effect of a discharge was simply to release a Bankrupt' personal liability for repayment of the debt. The discharge is not a payment or extinguishment of the debt itself. It simply bars future legal proceedings to enforce the discharged debt against the Bankrupts." [citations omitted]. Id. at 369. Moreover, enforcement of Plaintiffs' claims against GEICO and Bank One in no manner interferes with Buckeye, the operation of the campgrounds, or the operation of the Plans. Buckeye's obligations to GEICO and Bank One are established under the Plans, and will not be affected by the results in this case. The rule that claims against entities other than the bankrupt itself survive the discharge applies here too. First, this is expressly required by Section 524(e) of the Bankruptcy Code. Second, the bankruptcy plans themselves expressly follow this rule, and only purport to discharge the debtors, Ponderosa and Clay's Park. See Plans at GEICO Ex. C, Article IX, p. 17, which provide, 94

"Confirmation of the Plan shall operate to discharge the Debtor . . ." (Emphasis added)). Third, although GEICO and Bank One originally sought to have a broad release provision included in the second amended plans of reorganization, they expressly agreed to remove this provision from the final plans. Fourth, equitable estoppel prevents the discharge of Geico and Bank One, as demonstrated above. Fifth, the plans of reorganization only purported to assume the Agreements For Deeds, and did not (and could not) assume or affect the Loan Agreements to which the Debtors were not a party. 4. The Affirmative Defenses Of Res Judicata And Collateral Estoppel Have Not Been Raised And In Any Event Would Not Provide A Defense GEICO's affirmative defense to the Complaint, and also, to the Complaint of the Intervening Plaintiffs, do not raise the affirmative defenses of collateral estoppel or res judicata. Indeed, at the time the Answer and affirmative defenses were filed (March 20, 1992), these plans of reorganization had not yet been confirmed, and the requirement of those doctrines that judgment be final was not satisfied. The affirmative defenses, without elaboration or any reference to the bankruptcy proceedings, raise a vague defense that "Plaintiffs' claims are barred, in whole or in part, by the doctrines of waiver and estoppel." See GEICO Answer And Counterclaim, Para. 92, and Answer Of Defendant GEICO Financial Services, Inc. To Complaint Of Intervening Plaintiffs, Para. 99. Similarly, see second affirmative defense of Bank One. This defense at the time it was filed could only refer to Plaintiffs' conduct acting as an estoppel, and could not assert estoppel arising from the bankruptcy plan. The general reference to "estoppel" in the Answers does not specify whether judicial, collateral or equitable estoppel applies, and no supporting facts are pled in connection with this defense (nor is a reference to the bankruptcy proceedings made).

95

Since the reorganization plans had not yet been confirmed at the time of the Answers (March 20, 1991), this general allegation of estoppel cannot in any event be construed as referring to the collateral estoppel allegedly now arising from the bankruptcy proceedings. Defendants may not now raise on summary judgment an affirmative defense which has never been pled. Nor would it be proper for Defendants to amend their Answers, assuming they moved for permission to do so. While Rule 15(a) provides that "leave to amend should be freely given when justice so requires", here, justice not only does not require amendment, but prohibits one. As demonstrated above, such defense would contradict the written assurance given by GEICO's counsel in its April 2, 1991 letter that Plaintiffs' defenses would be preserved and that the issues raised by Plaintiffs' were "moot" as a result of modifications in the Plans. See Pietz Affidavit, GEICO App. Ex. 7. Since Defendants are equitably estopped from raising this defense, it is by definition inequitable, and unjust, to permit this defense to now be raised by amended or supplemental pleadings.27 Aside from being unjust, such an amendment or supplemental pleading at this time would be untimely and prejudicial. Specifically, the bankruptcy Plans, approved in April of 1991, have long been final. Moreover, if Defendants had sought to amend their Answers to raise the present defenses after confirmation of the Plans and after the lapse of the 10 day appeal period, Plaintiffs would have had available a mechanism to attack Defendants' reversal in position. Specifically, confirmation of a Plan may be revoked, if procured by fraud, by a motion filed within 180 days of the order confirming the Plan. 11 U.S.C. Section 1144. Such fraud in the procurement would be demonstrated by Plaintiffs' decision not to pursue their objections to the Plan because of GEICO's April 2, 1992 letter agreeing to modify the Plans and purporting to moot Plaintiffs' objections (but which Plans are now claimed to have destroyed, rather than mooted, Plaintiffs' contract claims).

Supplemental pleadings are governed by the same standard, i.e., "upon such terms as are just". Rule 15(b) 96

27

Of course, Plaintiffs previously had no reason to seek revocation of the Plans because the April 2, 1991 letter assured them that their rights were preserved. Had Defendants sought leave to add this defense within the 180 day post-confirmation period (although equitably estopped from doing so), at least Plaintiffs would have had the right to seek revocation of the Plans. It would be unjust and prejudicial to allow this amendment to the Answers at this late date, when a challenge to confirmation of the Plans would be untimely.

GEICO cites a gaggle of bankruptcy cases in support of its res judicata and collateral estoppel arguments. Extended discussion of each of these cases is not necessary, however, as analysis of a few of these cases illustrates the flaws in GEICO's analysis. For example, in In re Reardon, 51 B.R. 182 (S.D. Ohio 1985) (GEICO Br. at pp. 23-24), the Chapter 13 individual debtors petitioned to reject an executory service contract, which the court found to be burdensome. Money, Inc., which had been assigned the right to receive payment under the contract, objected to the rejection, contending that, as to it, the contract was not executory. The Court nevertheless permitted rejection, finding that Money, Inc.'s rights as assignee were derivative and could arise no higher than those of its assignor. GEICO complains that, since it "would be bound by a rejection of the Agreements For Deed" under Reardon, it "fails to understand, therefore, why the assumption of plaintiffs['] contract (and the implicit and necessary finding that the contract is deemed cured) is not binding on plaintiffs who still seek to declare the contract repudiated and breached." GEICO Brief, p. 24. GEICO, in referring to In re Reardon (and cases of similar ilk), has mixed apples with oranges. In Reardon, there was one contract, and the relationship of the parties was vertical. By breaking the link between the Debtors and the Original Contractor, the entire contract between Money, Inc. and the Debtors was broken.

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In the present case, the relationship is quite different, as there are two contracts plus a holder clause. Whether or not the path through Ponderosa (the Agreement For Deed) has been broken, a direct link between Plaintiffs and Bank One/GEICO remains under the holder clause in the Loan Agreement. Moreover, the holder clause, which is for the protection of the borrower -- not the lender -forms a one-way street. Even when the path through Ponderosa has been broken, Plaintiffs retain redress against Bank One/GEICO, but Bank One/GEICO may not pursue payment from Plaintiffs. This is clear from the language of the holder clause: ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER. Clearly, this clause protects the borrower ("Debtor"), but gives no rights to the holder. Such asymmetrical rights are entirely fair, and often arise where governmental regulation seeks to protect consumers by shifting the risk of loss from such individual consumers to the sophisticated lender institutions that are better able to protect themselves in the marketplace.

A. Plaintiffs' Contract Claims Are Not Barred By Res Judicata Or Collateral Estoppel

Although not pled, GEICO contends in its brief that Plaintiffs' breach of contract claims are barred by the doctrines of res judicata or collateral estoppel. GEICO apparently argues that because Plaintiffs could have made certain challenges to the Plan in the confirmation proceedings, they are now precluded by doing so. More specifically, GEICO contends that the Agreements For Deeds were assumed under the terms of the Plans, that such assumption was not permitted without "curing" prior defaults (nor if Plaintiffs' claims were impaired under the Plans), and further, that the

98

confirmation of the Plans by implication (according to GEICO) determined these issues. While the Plans state in section 4.09 that the Class 6A claims pertinent to owners are "unimpaired", the disclosure statement unequivocally states the exact opposite, and even gives the reason for its conclusion. Specifically, the disclosure statement provides:

". . . Classes 1C, 2, 3, 4 and 7 are unimpaired and will be deemed to have accepted the Plan. Classes 1A, 1B and 6A are impaired since their legal rights have been altered. . . ." Disclosure Statement, Pietz Affidavit, Ex. A. But see, contra, p. 18. GEICO's argument cannot succeed for several other reasons, including (1) that this defense was not pled, and amendment would be both untimely and unjust; (2) that Defendants are equitably estopped from making this argument because they agreed that Plaintiff's position would be preserved, and Plaintiffs did not challenge the Plan in reliance on Defendants' agreement; (3) that Section 524(e) of the Code prevents the discharge of claims against any parties other than the debtor; (4) that the Agreements for Deeds assumed under the Plans are separate and apart from the Loan Agreement; (5) that Rule 23(e) was not complied with; and (6) that notice was constitutionally insufficient and insufficient under Rule 23; Finally as is demonstrated below the elements of res judicata and collateral estoppel have not been met, even if these other obstacles referred to above could be overcome by Defendants.28

B. Res Judicata Has Not Been Established The essential elements of res judicata were stated in La Preferida v. Cerceceria Modelo, S.A. de C.V., 914 F. 2d 900 (7th Cir. 1990), as follows: ". . . 1) a final judgment on the merits in an earlier action; 2) an identity of the cause of action in both the earlier and later suit; and 3) an identity of the cause of parties or privies in the two suits." Id. at 907.

Because of the numerous issues presented in these briefs, and since Defendants are clearly barred under the principle of equitable estoppel from making this claim in view of Plaintiffs' reliance on their agreement with defendants to preserve claims, these issues will be addressed only briefly. 99

28

Sure-Snap v. State Street Bank & Trust Co., 948 F. 2d 869 (2d Cir. 1991) states the test for res judicata as requiring the same parties (or their privies) to be litigating the same cause of action. 948 F.2d at 874. "The test for deciding sameness of claims requires the same transaction, evidence, and factual issues be involved." Id. Sure-Snap also finds dispositive to a finding of preclusive effect is whether an independent judgment in a separate proceeding would "impair or destroy rights or interests established by the judgment entered in the first action." Id.29 Here, a finding that GEICO and Bank One are liable to plaintiffs would in no manner interfere with the operation of the bankruptcy plan. (1) There Was Not An Adjudication On The Merits Assuming, arguendo, that a confirmed plan of reorganization can amount to an adjudication on the merits, here, where the parties expressly agreed that Plaintiffs rights were preserved, see April 2, 1991 letter of Merklin, Pietz Affidavit, Ex. D, GEICO App. Ex. 7, issues affecting such rights cannot be deemed to be adjudicated. Nor, in any event, did the bankruptcy Court have the power to adjudicate issues the effect of which would be to settle Plaintiffs' claims. In fact, there was no actual litigation over, or adjudication of, the issues essential to GEICO's defense. Significantly, GEICO has not seen fit to obtain or present the transcript of the confirmation hearings (Plaintiffs are not aware of that hearing being transcribed). Essentially, the confirmation hearing consisted of a description of the plan provisions, and testimony as to Buckeye's background and experience with campgrounds, i.e., matters relevant to Buckeye's qualifications and the feasibility of the plan. As to the assumption of the deeds by the Trustee and assignment of them to Buckeye, no objections were filed, as GEICO acknowledges. (GEICO Br., p. 17) Such objections

In re Justices Oaks II, Ltd., 898 F. 2d 1544 (11th Cir. 1990) provides no support for GEICO and Bank One. In Justice Oaks, there was actual litigation between the parties. As Justice Oaks recognizes, claim preclusion requires four essential conditions to be satisfied: (1) a prior judgment rendered by a Court of competent jurisdiction; (2) the judgment must be final and on the merits; (3) there must be identity of the parties or of their privities; and (4) the later proceeding must involve the same cause of action as the earlier proceeding. Id. at 1550. These elements are not satisfied in this case. 100

29

were not filed because the proposed provisions that would purport to discharge all claims against GEICO and Bank One were withdrawn when Plaintiffs' counsel notified Defendants that they would object to the Plan and oppose such provisions unless withdrawn. Significantly, in modifying the Plan, GEICO explicitly asserted that Plaintiffs' concerns were thereby rendered "moot." This could only be true if Plaintiffs' claims were not adjudicated against Plaintiffs. The Plan, under these circumstances, cannot be deemed to be an adjudication of rights which the parties agreed would be preserved for resolution in this Court.30 Moreover, since the bankruptcy court did not have the power to discharge GEICO or Bank One (see Brief argument at pp. 23-26), the Court did not, and could not adjudicate those claims. See 11 U.S.C. Section 1141(d)(3), which provides that confirmation of a plan does not discharge a debtor if the plan provides for the liquidation of all or substantially all of the property of the estate, the debtor does not engage in business after consummation of the plan, and the debtor would be denied a discharge under Section 727(a) if the case were under chapter 7. Here, all assets were immediately transferred to Buckeye -- i.e., the Debtors were liquidated or substantially all liquidated; the debtor did not engage in business thereafter (newly formed Buckeye did); and the debtor would not be entitled to a discharge in that it engaged in fraudulent practices, and even more fundamentally, was not an individual. See Section 727(a). Therefore, such adjudication of rights cannot be claimed since the bankruptcy court lacked jurisdiction to discharge rights other than those of the Debtor. (2) There Is Not An Identity Of Cause Of Action Of course, since the legal issues between Plaintiffs and Defendants were preserved by agreement, no cause of action, as between these parties, were litigated in the bankruptcy court. Even as to those issues that Defendants contend were inherent in the bankruptcy confirmation (e.g., cure), It appears that in all of the cases cited by Defendants, the issues, as to which preclusion is claimed, were the subject of adversary or motion proceedings in addition to confirmation of the plan itself. Here, the parties never engaged in any actual litigation in the bankruptcy Court. To the extent that they could have done so, they agreed that there rights would be reserved for another day. In those circumstances, the plan could not be deemed to have an adjudicative effect. 101
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and even had the parties not agreed to preserve their claims, the nature of the confirmation process is such that these issues cannot be deemed to have been litigated. Compare and contrast In re Justice Oaks II, Ltd., 898 F.2d 1544 (11th Cir. 1990) and SureSnap Corp. v. State Street Bank and Trust Co., 948 F.2d 869 (2d Cir. 1991), where the parties were held to be collaterally estopped because they had faced off head to head with their rights among themselves directly at issue. Stated otherwise, plaintiffs did not here have "a full and fair opportunity to raise their objection", since all issues between the Parties were preserved by agreement. Contrast Sure-Snap, where the chapter 11 debtor brought an unsuccessful adversary action challenging the validity of liens held by certain banks, contending that one of the lenders was not appropriately licensed. A year after emerging from bankruptcy, Sure Snap sought to bring another action against the banks, now based on lender liability theories. This subsequent action was held barred by the bankruptcy proceedings, which had provided a forum in which all of the rights and liabilities between the banks and the debtor could have in fact been determined. In contrast, in the present case, the Parties did not litigate any issue in the bankruptcy court, and that Court did not have the power to adjudicate the matters pending before this court. Moreover, confirmations of plans do not necessarily adjudicate rights -- to a large extent they represent the acceptance of a satisfactory "deal". Whether or not truly satisfied with a Plan, a party may choose to accept it because it appears better than no plan. Moreover, even if a party perceives a clear legal right to challenge a plan, there is a risk that buyers, facing a delay, will back off. Merklin's April 2, 1991 letter acknowledges such a risk existed in this case, which is one of the reasons GEICO's agreed to modify the Plans and preserve Plaintiffs' claims for litigation another day. Moreover, it is the preservation of rights (both through Section 524(e) of the Code, or by agreement) as discussed below that creditors compromise through the implementation of plans, and such compromise is in the public interest. Confirmation of an unopposed plan that assumes a contract means, not that all prior defaults of that contract are cured, but at most, that the affected party consented to taking less than he might have insisted upon. 102

See In re Harry C. Partridge, Jr. & Sons, Inc. ("Partridge"), 43 B.R. 669 (Bkrtcy S.D. N.Y. 1984). In Partridge, the Chapter 11 debtor was engaged in the business of prison construction. A creditor (Dauphin County, Pa.) filed a motion to force the debtor to elect whether to assume or reject its pre-bankruptcy contract to construct a prison facility, in its papers alleging that the debtor had previously been in material breach of contract. In its answering papers, the debtor sought an order determining that there had been no prior breach. At the hearing on the motion, the County, declaring that time was of the essence due to overcrowded jail conditions, stated its willingness to forego its rights under 11 U.S.C. Sec. 365(b)(1) to compel the debtor to cure or to provide adequate assurance that it would promptly cure any contract defaults. The debtor, in turn, then took the position that it would not make assurance unless a judgment was rendered on its cross-motion (reflecting its fear of elevating such damage claims to an administrative priority). The bankruptcy Court concluded that there was no right to force such a determination: ". . . This condition [requiring cure or adequate assurances] is intended to provide protection for the other party to the contract or unexpired lease and is inapplicable if no default exists . . . Moreover, if the condition is excused, as in the case where the debtor either waives or is deemed to waive the condition for purpose of 11 U.S.C. Section 365, an assumption of the executory contract or unexpired lease may be ordered without regard to the cure and adequate assurance requirements. . . . [citations omitted] (emphasis added) Id. at 671. The Court further held that since the County waived its right to compel the debtor to cure, or to provide adequate assurance of future performance (i.e., to waive a provision for its own benefit), the court could order the debtor to assume or reject the executory contract without reaching the issue pertaining to the alleged prior default -- i.e., the order need not be conditioned on the debtor receiving a declaratory judgment that it was not previously in default. In the context of the present case, a party can acquiesce in a plan -- i.e., waive its right to insist on a cure or adequate assurances -- and thereby accept a plan that provides less than the creditor might insist upon (but which might never be available). Doing so does not mean that all

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defaults were necessarily, and in fact, cured, but only that the creditor preferred half a loaf to no loaf at all. Partridge then proceeded to hold that a motion for an election to assume or reject an executory contract or unexpired lease is not an adversarial proceeding: ". . . This nonadversarial procedure involving a bankruptcy issue . . sharply contrasts with related, or 'non-core' proceedings.' In the latter case, Section 104(a) . . . provides that the bankruptcy judge must submit proposed findings of fact and conclusions of law ...." Of course, in the context of a plan, the treatment of all liabilities must be provided for, so that must be a discharge provision for discharge of the debtor. As noted, however, such discharge is personal to the debtor, and, in any event, would not constitute an adjudication of rights against others. Indeed, if parties had to worry that such a discharge would extinguish their rights against guarantors, joint tort-feasors, or others third parties, plans would be plagued with endless objections, and never be confirmable, no matter how reasonable a "business deal" they represented. The Bankruptcy Code structure of preserving third-party claims from discharge or other extinguishment is a policy conducive to confirmation, that should not be disturbed. Permitting a creditor to waive its right to insist on cure from the debtor in no manner prejudices third parties which might also be liable. By allowing the Plan to proceed, at least some future damage is minimized. Cf., In re Easebe Enterprises, 900 F. 2d 1417 (9th Cir. 1990), where the Court held that a party might be found to have waived a right under Section 365 of the Code enacted for its benefit (section 365(c)(2)). Similarly, Cukierman v. Mechanics Bank of Richmond (In re J.F. Hink & Son), 815 F. 2d 1314, 1318 (9th Cir. 1987) (Section 365(f)(3) may be waived "by those for whose benefit it has been enacted"). Here, waiver by creditors of provisions written for their benefit cannot be deemed to harm GEICO, which proposed the Plan and desired that owners accepted it. As noted, waiving strict enforcement of their rights for the sake of receiving half a loaf helps, and does not hurt, Defendants 104

herein. Clearly, however, there was no waiver of rights against GEICO and Bank One, as Plaintiffs' counsel exacted the April 2, 1991 Merklin letter to ensure that the Plan would not adversely affect their rights. (3) There Is No Identity Of Adverse Parties Although both Plaintiffs and Defendants were creditors of Ponderosa and Clay's Park, and were in that sense were all parties to the bankruptcy proceeding, given their voluntary choice to not litigate in that forum, but to preserve their fight for another day in this Court, they did not, in fact, have an adversarial posture in the bankruptcy court. The issues between them could not have been raised in any event, in view of the limitations of the bankruptcy court's jurisdiction.

C. The Bankruptcy Confirmation Does Not Constitute Collateral Estoppel

Collateral estoppel is described in In re Bereolos, 126 B.R. 313, 320 (Bkrtcy, N.D. Ind. 1990), as follows: " . . . Under collateral estoppel, once an issue is actually and necessarily determined by a court of competent jurisdiction, that determination is conclusive in subsequent suits based on a different cause of action involving a party to the prior litigation. . . . " (Emphasis added) Of course, here there is no collateral estoppel as to Plaintiffs because the Parties agreed to preserve their rights. GEICO and Bank One are thus equitably estopped from so arguing, for that reason and the other reasons presented above. However, even if some adjudications were deemed to have occurred, analysis of the issues "actually and necessarily" litigated demonstrates that such adjudications did not conclusively determine the issues disputed here.

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Defendants thus make a leap of logic when they argue that certain issues must have been adjudicated. Their arguments that because there must have been a cure of any prior breaches under the plans, and because Plaintiffs claims were "unimpaired" under the plan (in order to have been assumed by the debtor) contradicts the record evidence. The confirmation did not determine that the debtors had not previously breached the agreements of deeds when the campgrounds were not operating, or that the bankruptcies would not have occurred absent fraudulent stripping of the Campgrounds by the principals. Whether such breaches -- and damages -- occurred was neither in dispute nor disputable. 5. GEICO's Position Would Render Meaningless Federal Law Requiring Holder Provisions To Protect Consumers

The Loan Agreements Plaintiffs entered into with Bank One and which were subsequently assigned to GEICO contain the following holder liability provision: ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER. This provision effectively eliminates any possibility of a holder in due course status. The clear purpose of this provision is to entitle purchaser/borrowers to stop making payment or recover their payments when there has been seller non-performance. The provision's remedial nature is designed to protect consumers. The holder clause is required by Federal Trade Commission regulations designed to protect individual consumers. See State-ment of Basis and Purpose for the FTC Preservation of Consumer Claims and Defenses Rule, 40 Fed. Reg. No. 223, P. 53506 (Nov. 18, 1975) which explains that it is the holder (i.e., Bank One or GEICO) and not the buyer/borrower that must bear the risk of a seller's bankruptcy:

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We believe that a rule which compels creditors to either absorb seller misconduct costs or return them to sellers, by denying sellers access to cut-off devices, will discourage many of the predatory practices and schemes discussed above in chapter III. Creditors will simply not accept the risks generated by the truly unscrupulous merchant. The market will be policed in this fashion and all parties will benefit accordingly. Where applicable economies militate against a creditor effort to return misconduct costs to a particular seller, due to the limited or irregular nature of such costs, the rule would require the creditor to absorb such costs himself. That is, where a consumer claim or defense is valid, but limited in amount a creditor may choose to accept less payment from the consumer to save transaction costs associated with pursuing the seller whose conduct gave rise to the claim. (Emphasis added) Id. at 53511. Similarly, see In re Paradise Palms Vacation Club, 41 B.R. 916 (D.C. 1984)(Washington's Retail Installment Sales Act is a risk-shifting statute in that it transfers the burden of seller misconduct from consumer to third-party financier).

Clearly, it would frustrate FTC policy to allow the holder provisions to be overcome whenever there is a confirmed plan of reorganization, regardless of the seller's intentional repudiation of its contract or the extent of the consumer's loss of the benefits of its bargain. 6. GEICO'S Position Is Contrary To Fed.R.Civ.P. 23(e) And Constitutional Due Process Requirements

GEICO's position is also contrary to Fed.R.Civ.P. Rule 23(e), as GEICO would purport to destroy the rights of Plaintiffs in this action without notice, approval of this Court, opportunity to opt out, or payment of any consideration. Rule 23(e) requires that a class action: "shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs." Id. Any attempt to dismiss this class action or claim that it was compromised without notice to the class members and approval of this Court violates Rule 23(e) and is therefore a nullity. Class members are entitled to notice describing the claims being dismissed, an opportunity to be heard by this Court, and in a Rule 23(b)(3) action such as this, the right to opt out. All of these basic rights 107

were ignored by the Defendants in their back-door attempt to effect release of the Plaintiffs' claims against them. The notice of the bankruptcy confirmation hearing was not a substitute for Rule 23 notice approved by this Court. That bankruptcy notice made no reference to this suit, or the now asserted potential release of claims against persons who were not the debtors, did not describe the nature of these proceedings or the claims presented, did not have the input of the Court, provided no opportunity to opt out, made no disclosure that no consideration was being paid, gave no opportunity to be heard by this Court, and was otherwise deficient for Rule 23 purposes. "Notice" that does not describe, or even note the existence of, a class action -- let alone describe the nature of the claims made in that action -- is not only insufficient under Rule 23(e), but is constitutionally deficient as well. As stated in Greenfield v. Villager Industries, Inc., 483 F. 2d 824, 831 (3d Cir. 1973): "A procedure such as the class action, which has a formidable, if not irretrievable, effect on substantive rights, can comport with constitutional standards of due process only if there is a maximum opportunity for notice to the absentee class member, i.e., '[T]he best notice practicable under the circumstances including individual notice. . . . '" See also Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314-15 (1950) (notice must be "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections"; where "[t]he individual interest does not stand alone but is identical with that of a class . . . notice reasonably certain to reach most of those interested in objecting is likely to safeguard the interests of all").

Cf. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1293 (9th Cir. 1992) (court approved notice upheld on appeal where the notice, inter alia, contained a description of the litigation). Defendants' attempt to obtain release of claims against them without proper notice should not be countenanced. The bankruptcy judge had no authority to even hear a RICO and breach of contract class action case involving non-bankrupt parties, and was not authorized to approve settlement of 108

this action. Nor is there any indication that the bankruptcy judge was even aware of this action, or that he intended the bankruptcy plans to have any effect on this action. In short, there has been no compliance with Rule 23(e), or due process considerations which are intended to provide procedural safeguards to protect the claims of class members. 7. GEICO's Objection To The Standing Of The Wallaces And Other Class Members To Pursue Their Claims Is Unfounded And Unsupported By The Law and The Evidence GEICO argues that Plaintiffs lack "standing" to assert a breach of contract claim -- with respect to the "Agreements For Deed" signed by the Plaintiffs. (GEICO Brief, pp. 26-29) Plaintiffs obviously have "standing" to enforce their loan contracts. GEICO also claims that because the Campgrounds might have been able to assert defenses or claims against the Plaintiffs under the Agreements For Deed prior to the reorganization, that this somehow now provides GEICO a defense on its installment loan contracts. This argument is wrong. Defendants now claim that what the Plaintiffs purchased with the proceeds of their installment loans and downpayments was an "undivided interest in real estate." They further assert that what the Plaintiffs purchased with annual maintenance fees provided for in their Agreements For Deeds, were membership usage rights or services. (See, e.g., GEICO's Memorandum, p. 6, fn. 4) With this defense, of course, they are attempting to avoid any responsibility to the Plaintiffs under the express holder provision of the installment loan agreements which state that any holder is "subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained pursuant hereto or with the proceeds hereof." The language of the Agreement For Deed does not support the Defendants' interpretation, since it requires payment of the annual maintenance fee "regardless of whether the facilities are used or not." (Wallaces' Agreement For Deed, Bank One App. Vol. I, Ex. B) See also the Rules and Regulations which were issued to the Wallaces which state that "owner members are assessed this annual fee, regardless of how often they use the facilities." (Bank One App. Vol. I, Ex. C) The maintenance fee was for maintenance, not for the right to use the facilities themselves. 109

Moreover, the maintenance fees were not used by the Campgrounds for their intended purposes, i.e. "for the maintenance and operation of the facilities." This problem was noted by Bank One during its 1986 discussions with the Campground principals. (Bank One App., Ex. 95) Subsequently, in 1988, Bank One negotiated and obtained an agreement from GEICO to use the maintenance fees for debt service on Bank One's mortgage. (Bank One App., Ex. 140) Thus, Defendants' defense that there was a complete bifurcation of the "interests" purchased by the Plaintiffs into "real estate interests" financed by the installment loans and "memberships" financed by the maintenance fees is not only contrary to the terms of the governing documents, but belied by their own conduct. However, if one accepted the defense as true, that what the Plaintiffs purchased with their installment loans were exclusively "interests" in real estate, without any "membership" or usage rights, then Plaintiffs would have to prevail on their bankruptcy fraud-RICO claims, because Bank One and GEICO knew that as "real estate" interests, the "interests" were illusory. They were subordinate to prior recorded mortgages on the parks far exceeding the value of the Parks. Moreover, if the "interests" were only "interests in real estate" then each sale diminished the value of all of the previously held "interests" because it constituted a further cloud on title. Arguably, in the "membership" and usage concept of the "interests" (as argued by Plaintiffs, each "interest" contributed to the potential sustained viability of the resort, at least to the extent the maintenance monies were retained to pay for operational expenses.31 GEICO's defense that the Wallaces and certain other Plaintiffs are precluded from obtaining any relief in connection with their claims of breach of contract by their failure to pay maintenance fees which, if paid, would not have been used for maintenance is in error for other reasons. It is GEICO which has "standing" problems in making the argument. GEICO is only the holder of the GEICO Class' installment loans. The obligation to pay the maintenance fees under the terms of the

The capitalization expenditures needed to build the Campground facilities, however, were not to be paid for from the maintenance fees. 110

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Agreements For Deed ran from the Plaintiffs to the Campgrounds.32 It was not part of the installment loan obligations which ran from the Plaintiffs directly to Bank One, which were then assigned to GEICO. While the installment loan agreements grant the GEICO Class the right to assert against GEICO their claims against the sellers, GEICO has failed to articulate any basis for its right to assert purported claims of the seller Campgrounds against the Plaintiffs related to obligations which were not part of the installment loan obligations. Contrary to GEICO's position, the installment loan agreements and Agreements For Deed clearly contemplated that the right to sue over the maintenance fees would remain with the sellers, while the right to sue over the installment loan proceeds (and be subject to claims available against the sellers) was invested in the holder of the installment loan. Here, GEICO attempts to interject itself into the shoes of the seller with respect to rights and obligations never assumed by it and, in any event, with respect to rights the Campgrounds no longer have. Under the express terms of the installment loan agreements, members of the GEICO Class are permitted to assert their claims that there were material breaches of their agreements with the campgrounds (including a planned bankruptcy bust-out of the campgrounds, and no intent by the sellers to permanently operate the parks for the enjoyment of purchasers of "interests") against GEICO which is a holder of the installment loans and is subject to the holder Notice provision. GEICO's attempt to evade its express written obligations under the installment loan agreements while asserting purported rights which it never had because it was not the seller or privy to the now bankrupt seller with respect to the collection of maintenance fees, should be rejected by this Court. CONCLUSION This Court should deny Defendant GEICO's motion for summary judgment and permit Plaintiffs to proceed to trial with respect to their substantial claims against it.

The Campgrounds, in their bankruptcy plans, elected not to sue for maintenance fees, but instead determined that any Plaintiff desiring to use the Campgrounds had to satisfy pre-existing maintenance fee obligations before using the Parks. These Plan determinations are clearly financial and binding. 111

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DATED: May 26, 1992 PLAINTIFFS' SECOND REQUEST FOR PRODUCTION OF DOCUMENTS

Pursuant to Fed.R.Civ.P. 34 Representative Plaintiffs by their attorney make this their Second Request For Production Of Documents to Defendant Trumbull Savings And Loan Company ("Trumbull"). A. Definitions And Instructions Plaintiffs incorporate the Definitions, Instructions and Relevant Time Period set forth in their First Request For Production Of Documents. It is requested that all responsive documents be produced at Gallagher, Sharp, Fulton & Norman, Seventh Floor, Bulkley Building, 1501 Euclid Avenue, Playhouse Square, Cleveland, Ohio 44115, on February 22, 1994, or at such other time and place mutually agreed to by the Parties.

B. Request For Production 1. All documents related to Trumbull's loan policies and procedures including all loan policy manuals or procedures. 2. All loan policy procedures or manuals provided to or maintained or applicable to Peter Watson, Larry Shakley, James Izant, David Adkins, Todd Urmson and Thomas Pishotti. 3. All documents and files maintained by Peter Watson, Larry Shakley, James Izant, David Adkins or any other employee of Trumbull relating to the LiVorio-Sabatini Group, the Campgrounds, LiVorio Motors, MotorWorks One or Livorio Enterprises, Inc. 4. Any and all documents, contracts, agreements, recourse agreements, corporate guarantees, personal guarantees or other materials by and between Trumbull and MotorWorks One or LiVorio Motors or any person associated with those entities.

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5. Any and all documents, memoranda, proposals, correspondence, minutes of any meetings, financial statements, notes, files, reports, etc. relating to: (a) The financing of motor vehicles for MotorWorks One, LiVorio Motors, LiVorio Enterprises, Inc. or any person or entity associated with them; and (b) The financing of motor vehicles for the Campgrounds, Robert Sabatini, Mary Ann Sabatini, William LaVorio, Walter Dragelevich, Thomas Carney, Karen LiVorio, Thomas LiVorio, Marc LiVorio, Eastern Resorts and the LiVorio-Sabatini Group. 6. Any and all documents, memoranda, notes, letters or reports, audits, credit reports, credit investigations, financial statements or financial information relating to any inspection, research or other inquiry into the financial affairs of MotorWorks One, LiVorio Motors, before monies were advanced for the purchase of motor vehicles by said entities. 7. Any and all documents or reports, relating to any inspection, research or other inquiry into the financial affairs of MotorWorks One, LiVorio Motors, LiVorio Enterprises after money was advanced for the purchase of motor vehicles, including but not limited to audits and wholesale floor plan recaps. 8. Any and all documents that identify all motor vehicles financed by Trumbull for MotorWorks One, LiVorio Motors or any other person listed in Request 5. 9. All manuals, guidelines, memoranda, instructions, policies or similar materials that relate to financing motor vehicles for individuals. 10. All manuals, guidelines, memoranda, instructions or similar materials that concern financing motor vehicles for commercial entities, not including auto dealerships. 11. All manuals, guidelines, memoranda, instructions or similar materials that relate to financing motor vehicles for auto dealerships, including but not limited to "floor plan financing." 12. All manuals, guidelines, memoranda, instructions or similar materials that concern "installment loans" or similar financing for non-real property. 13. All documents related to: 113

(a) (b) (c) (d) (e) (f)

LiVorio Motors; LiVorio Enterprises, Inc.; Motorworks One; William LaVorio; Robert Sabatini; and Brian Sheehe.

13. All documents including all agreements, correspondence, notes, files, credit reports, credit analyses, loan applications, account records related to business or personal loans made to William LaVorio, Robert LiVorio, Marc LiVorio and Robert Sabatini. 14. All documents related to automobile installment loans made to William LaVorio personally and/or William LaVorio as President of LiVorio Motors, Inc., as president of LiVorio Enterprises, Inc. Attorneys for the Representative Plaintiffs, Peter Isaak and Susan J. Isaak and John Gray and Laurie Gray DATED:

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