t=`~ 2~ · pdf file6/11/2017 · suann c. macisaac (sbn 205659) con~t'se~t~l~f~...

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V n 1 t =`~ . 0 2~ 3 4 5 6 ~ ,. a ~ 9 1 0 o ~ o~~ 11 ~ ~o~ 12 o ~~ ~ c~ao ' ~~M 13 ~ o J ~ ~~, 14 a m o , ~~0 15 o ~' ~ Q~ 16 0 o ~c~ 17 oo W ~ iS a a ~ 19 y ~.0 2 1 2 2 2 3 2 4 2 5 2 6 27 ' 28 KINSELLA WEITZMAN ISER KUMP & ALDISERT LLP M ICHAEL J. KUMP (5BN 100983) . m [email protected] S UANN C. MACISAAC (SBN 205659) CON~t'SE~t~l~f~ COPY' s [email protected] ~ . ORIGENAL Fl~ED 8 08 Wilshire~Bo~alevard, 3rd Floor s r;or court of catitorni~ ~ -ounty of Las Angeles Santa. Monica, California 90401. T elephone: 310.566.9goo ~ ~ NOV 0 6 2017 Facsimile: 310.566.9850 Sherri R. ~,a ~a~, r:~L~y, ~;aiiC6i'/(;~~fk A tt orneys for Plaintiffs ~y: , Deputy AIl~sss sofa S UPERIOR COURT OF THE STATE OF CALIFORNIA C OUNTY OF LOS ANGELES, CENTRAL DISTRICT T HE MANDEL COMPANY, TNC., d/b/a THE MANAGEMENT GROUP, a California c orporation; JOEL L. MANDEL, an i ndividual; an d ROBERT MANDEL, an i ndividual, Plaintiffs,_ v s. JOHN ~. DEPP R, an individual; EDWARD L . VV~IITE, as trustee of the Sweetzer Trust and- as trustee of the Mooh Investment Trust; a nd DOES 1 through 50, inclusive, Defendants. /// /// /// / // /// /// /// Case No. ~r+ ~ 8 `~ '~ $ ~ C OMPLAINT FOR JUDICIAL F ORECLOSURE OF DEEDS OF TRUST C OMPLAINT Deadline

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Page 1: t=`~ 2~ · PDF file6/11/2017 · SUANN C. MACISAAC (SBN 205659) CON~t'SE~t~l~f~ COPY' smacisaac@kwikalaw.COTri ~ . ORIGENAL Fl~ED ... and against Defendant Edward L. White ("White")

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KINSELLA WEITZMAN ISER KUMP & ALDISERT LLPMICHAEL J. KUMP (5BN 100983) [email protected]

SUANN C. MACISAAC (SBN 205659) CON~t'SE~t~l~f~ COPY'[email protected] ~ . ORIGENAL Fl~ED

808 Wilshire~Bo~alevard, 3rd Floor s r;or court of catitorni~~-ounty of Las Angeles

Santa. Monica, California 90401.Telephone: 310.566.9goo ~ ~ NOV 0 6 2017Facsimile: 310.566.9850

Sherri R. ~,a ~a~, r:~L~y, ~;aiiC6i'/(;~~fk

Attorneys for Plaintiffs ~y: , DeputyAIl~sss sofa

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF LOS ANGELES, CENTRAL DISTRICT

THE MANDEL COMPANY, TNC., d/b/a THEMANAGEMENT GROUP, a Californiacorporation; JOEL L. MANDEL, anindividual; and ROBERT MANDEL, anindividual,

Plaintiffs,_

vs.

JOHN ~. DEPP R, an individual; EDWARDL. VV~IITE, as trustee of the Sweetzer Trustand- as trustee of the Mooh Investment Trust;and DOES 1 through 50, inclusive,

Defendants.

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Case No. ~r+ ~ 8 ̀~ '~ $ ~

COMPLAINT FOR JUDICIALFORECLOSURE OF DEEDS OF TRUST

COMPLAINT

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Plaintiffs The Mandel Company, Inc., d!b/a The Management Group, a California

corporation ("TMG"), Joel Mandel and Robert Mandel (collectively "Plaintiffs"), by and through

their undersigned attorneys, bring this action for judicial foreclosure against Defendant John C.

Depp, II ("Depp" or "Defendant"), and against Defendant Edward L. White ("White") as trustee

of the Sweetzer Trust and trustee of the Mooh Investment Trust.

1. The real properties that are the subject of this lawsuit are commonly known as

(collectively, the

"Sweetzer Properties").

2. All of the Sweetzer Properties are owned by the Sweetzer Trust, except for

1486 Sweetzer Avenue, which is owned by the Mooh Investment Trust. As explained herein,

Defendant Depp is the settlor and sole beneficiary of both Trusts, and Defendant White is the

current trustee of both Trusts.

3. Pursuant to section 392 of the California Code of Civil Procedure, venue is proper

in the Los Angeles County Superior Court because the Sweetzer Properties are located in the City

of Los Angeles, the County of Los Angeles, and the State of California.

PARTIES

4. Plaintiff TMG is a corporation organized and existing under the laws of the State of

California, with its principal place of business located in Beverly Hills, California.

5. Plaintiff Joel L. Mandel is an individual principally residing in and working in Los

Angeles County, California.

6. Plaintiff Robert Mandel is an individual principally residing in and working in Los

Angeles County, California.

7. Defendant Depp is a world famous actor and an individual principally residing in

and often employed in Los Angeles County, California. Depp is the settlor and sole beneficiary of

the Sweetzer Trust and the Mooh Investment Trust, which together own all of the Sweetzer

~ Properties.

Co~La~rrT

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8. Plaintiffs are informed and believe, and based thereon allege, that White is an

individual principally residing in and working in Los Angeles County, California. As of March

2016, White became Depp's new business manager. On information and belief, on or about March

23, 2016, White became the trustee of the Sweetzer Trust and currently serves as trustee thereof.

On information and belief, on or about January 10, 2017, White became the trustee of the Mooh

Investment Trust and currently serves as trustee thereof.

9. Plaintiffs are informed and believe, and based thereon allege, that Does 1 through

29 hold some interest in the Sweetzer Properties, which interest is alleged to be junior to that of

Plaintiffs', or may have a lien, interest or claim in the Sweetzer Properties, said lien, interest or

claim being subordinate to Plaintiffs' prior lien, interest and claims in the Sweetzer Properties.

10. Plaintiffs are informed and believe, and based thereon allege, that Does 30 through

50, inclusive, and each of them, participated in the wrongful acts alleged-herein, and are liable for

those acts. Plaintiffs are informed and believe that Does 30 through 50, inclusive, knew and

participated in one or more of the specific acts committed by Defendants, and counseled

Defendants and other Doe Defendants in perpetrating those wrongful acts and/or aided and

counseled Defendants and other Doe Defendants in concealing those acts from Plaintiffs, as

alleged more fully herein.

BACKGROUND FACTS

The Parties' Business Relationship

11. For 30 years, brothers Joel and Robert Mandel, and their company, TMG, have

been trusted business managers to some of the most successful individuals and companies in the

entertainment business. Starting in 1999, TMG represented actor Depp, and did everything

possible to protect Depp from his own irresponsible and profligate spending.

12. By 1999, Depp was an established actor who had starred in several well-known

films, including Edward Scissorhands (1990), What's Eating Gilbert Gape (1993) and Sleepy

Hollow (1999). Depp and his then advisors decided to seek new business managers and conducted

a "beauty contest" in which they interviewed several business management fums and ultimately

hired TMG.

COMPLAINT

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13. Over a 17-year relationship, TMG and Joel Mandel ("Mandel") did everything

within their power to professionally and competently handle the vast array of transactions,

expenses, and demands made by Depp. TMG repeatedly warned and advised Depp to reduce his

spending and sell unnecessary assets. But ultimately, the decision whether and how to spend his

money was a decision for Depp to make. Depp listened to no one, including TMG and his other

advisors, and he demanded they fund a lifestyle that was ,extravagant and extreme.

Deep Had To Continually Borrow Substantial Sums To

Finance His Extravagant Lifestyle

14. As a result of Depp's uncontrollable spending, which exceeded the net income he

received from his films, Depp was forced to borrow large sums of money to fund a lifestyle that

continued to become more and more extravagant over the years. At the outset, this borrowing was

in the form of advances from various movie studios, primarily Disney.

15. Depp also entered into commercial loans over the years primarily with City

National Bank ("CNB"), as well as obtaining residential mortgages from CNB and First Republic

Bank. After monies were borrowed, TMG discussed with Depp and Elisa Christi Dembrowski

("Dembrowski")—who is Depp's sister, personal manager, and the president of his production

company—how the monies could be best repaid, which often ended up being a futile exercise

because Depp consistently refused to change his lifestyle in any meaningful way.

TMG Loaned Deng $5 Million To Avoid A Public Financial Crisis

16. Up until 2012, these commercial loans were generally available to Depp on

~ favorable interest rates and terms. However, with increased borrowing, CNB became more

reluctant to make favorable loans to Depp.

17. This came to a head in December 2012, when Depp was about to default on a

multi-million dollar loan with CNB, which would have caused a devastating public financial

crisis. At that time, CNB demanded payment on a $5 million loan, but Depp did not have the

funds to repay it, which was the direct result of Depp's refusal to curb his profligate spending.

18. In or about October 2012, Mandel and Depp's long-time personal attorney,

Jake Bloom, had athree-hour "come to Jesus" meeting with Depp at one of his homes in

COMPLAINT

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Hollywood. During this meeting, Mandel went over all of Depp's financial issues..During the

meeting (and thereafter), Depp finally agreed with the recommendation of Mandel and Bloom that

immediate action be taken to prevent his public financial collapse. Depp agreed to sell his yacht

and possibly other assets to help restructure his debt.

19. Time, however, was of the essence because CNB was placing the loan in default if

it was not promptly repaid; the bank was not willing to provide Depp with any further leeway.

There was not enough time to sell the yacht before CNB took action and no other bank would

timely lend to Depp. With no available options, CNB offered to allow apass-through whereby

TMG—which had excellent credit—essentially substituted itself on CNB's books for Depp's due

and unpaid $5 million loan.

20. TMG agreed to come to the aid of its long-tune client. The idea behind this

arrangement, which was designed to save Depp from a public and devastating financial collapse,

was that Depp would pay TMG what TMG was required to pay CNB under the loan. At least at

the time, Depp and his sister, personal manager, and the president of his production company,

Dembrowski, were very grateful to TMG for coming to Depp's aid and helping him to avoid a

public financial collapse. In fact, three years later, Depp used the fact that TMG had lent him

money to pressure his long-time agent, United Talent Agency, to guarantee a further multi-million

dollar loan from Bank of America.

The TMG/Depp Loan Documents

21. In December 2012, TMG borrowed $5 million from CNB, which was then used to

solely pay off the previous Depp/CNB loan. TMG never received any cash or any other

consideration in the transaction—instead, TMG stepped into Depp's shoes with respect to the

$5 million loan from CNB.

22. In return,- on or about December 7, 2012, TMG, Joel Mandel and Robert Mandel,

on the one hand, and Depp, on the other hand, entered into a lending agreement (the "Loan

Agreement") for $5,000,000. The Loan Agreement, which is signed by Depp and attached hereto

as Exhibit "A," provides in relevant part that—

COMPLAINT

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A. TMG provides, and for many years has provided, full servicebusiness management and related services to Depp (the "Services").

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B. Depp is presently the obligor under a promissory note with CityNational Bank ("CNB"), which requires the repayment, by Depp to CNB,of the sum of five.million dollars ($5,000,000.00) (the "CNB/Depp Note")on or before December 1, 2012. Depp was not able to pay the CNB/DeppNote when due.

C. TMG has agreed to borrow the sum of five million dollars($5,000,000.00) from CNB pursuant to that certain Promissory Note andrelated documents dated December 7, 2012 (the "CNB/TMG Note") and toapply the proceeds therefrom to the repayment of the sums due under theCNB/Deep Note. Depp agrees to repay the CNB/TMG Note, whichagreement shall be memorialized, in part, by this Agreement but, primarily,by a promissory note (the "TMG/Depp Note") secured by deeds of trust (the"Deeds of Trust"), of even date herewith, granting a security interest inthose certain parcels of real property located at

(the "SweetzerProperties"). The Sweetzer Properties are owned by trusts, however, thebeneficial owner is Depp.

3. Deeds of Trust. The Parties acknowledge that the SweetzerProperties are owned as follows: is owned by the MoohInvestment Trust, Elisa C. Dembrowski ("Dembrowski") is the Trustee andDepp is the Trustor and Beneficiary;are owned by the Sweetzer Trust, Joel L. Mandel is the Trustee and Depp isthe Trustor and Beneficiary. Depp hereby specifically authorizesDembrowski and Joel L. Mandel to execute the Deeds of Trust, pledgingthe Sweetzer Properties as security for the TMG/Depp Note and Depp doeshereby agree to indemnify and hold Dembrowski and Joel L. Mandelharmless for and from any and all acts in any manner related to theauthorizations hereby granted.

4. Conflicts of Interest. Without in any manner limiting the generalityof the foregoing, the Parties acknowledge that Joel L.1Vlandel, as Trustee ofthe Sweetzer Trust, will be granting a security interest in the propertiesowned thereby in order to secure a loan made by TMG, of which Joel L.Mandel is an owner, and Depp hereby waives any and all conflicts ofinterest respecting TMG (including, without limitation, Joel L. Mandel,Robert A. Mandel, The Mandel Company, Inc. and their officers, directors,shareholders, employees, agents, representatives, predecessors andsuccessors) which are potentially, actually or apparently created thereby, orelsewhere in the transaction, series of transactions contemplated hereby orresulting therefrom, specifically acknowledging that the CNB/TMG Note,TMG/Depp Note and related Deeds of Trust are being created/entered intoat Depp's specific request and for his sole benefit.

5. Promissory Notes. The repayment terms and conditions of theTMG/Depp Note are intended to reflect, as closely as possible, therepayment terms of the CNB/TMG Note. TMG will not, under anycircumstances, make any profit or incur any costs, of any naturewhatsoever, by virtue of the TMG/Depp Note or Deeds of Trust, demanding

COMPLAINT

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only those payments from Depp under the TMG/Depp Note as CNB isdemanding from TMG under the CNB/TMG Note.

15. Professional Fees. In the event it becomes necessary for TMG toretain legal counsel for the enforcement of this Agreement or any of itsterms, Depp promises and agrees to pay, on demand, all costs and expensesof such enforcement, including reasonable attorneys' fees incurred byTMG, whether or not suit is filed.

23. On or about December 7, 2012, and consistent with the Loan Agreement, Depp

also executed and delivered to TMG a secured promissory note for $5,000,000 (the "TMGlDepp

Note"). The TMG/Depp Note, which is attached hereto as Exhibit "B," provides in relevant part

that—

Borrower shall make payments of interest only on the last day of themonths of December, 2012 through December, 2013 inclusive, with allPrincipal and accrued but unpaid interest to be paid on or before January 31,2014. All payments shall be first applied to accrued and unpaid interest andthen to Principal. Borrower has the unlimited right to make pre-payments ofPrincipal.

To secure the prompt, full and faithful performance by Borrower ofall of the provisions to be kept, observed or performed by Borrower underthis Note and/or any other agreement, instrument or document heretofore,riow and/or from time to time hereafter delivered by or on behalf ofBorrower to Lender, Borrower grants to Lender deeds of trust of even dateherewith (the "Deeds of Trust"), as modified from time to time, on the realproperties located at

(the "Collateral"). It is understood that the Deeds of Trust

securing this indebtedness shall be in second position to institutional firstmortgages, and Borrower agrees not to further encumber the Collateral.

The occurrence of any one of the following events shall constitute adefault by the Borrower ("Event of Default") under this Note: (a) ifBorrower fails to pay any sums due hereunder when due and payable ardeclared due and payable (whether by scheduled maturity, requiredpayment, acceleration or otherwise); (b) if Borrower fails or neglects toperform, keep or observe any term, provision, condition, covenant, warrantyor representation contained in this Note . or (k) if Depp ceases toremain a full service business management client of Lender (dba TheManagement Group) as understood by the Parties and as reflected by theParties relationship at the date of the making of this Note.

COMPLAINT

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Borrower agrees to pay, immediately upon demand by Lender, anyand all cost, fees and expenses (including Lender's reasonable attorneys'fees, costs and expenses) incurred by Lender (i) in enforcing any ofLender's rights hereunder, and (ii) in representing Lender in any litigation,contest, suit or dispute, or to commence, defend or intervene or to take anyaction with respect to any litigation, contest, suit or dispute (whetherinstituted by Lender, Borrower or any other person) in any way relating tothis Note, the Collateral or any other documents relating thereto, and to theextent not paid the same shall become part of the sums due hereunder.

24. As explained above, the TMG/Depp Note was meant to be a short-term bridge loan

for Depp that would be paid off no later than January 31, 2014, and would allow Depp time to sell

his yacht and various other assets needed to repay his creditors. As evidenced in the above quoted

language, in addition to having a January 2014 due -date, the TMG/Depp Note also provided that

an event of default included "Depp ceasing] to remain a full service business management client

of [TMG]."

25. As expressly provided for in both the Loan Agreement and the TMG/Depp Note,

and to secure the $5 million loan, Joel Mandel as the trustee of the Sweetzer Trust, and Depp's

sister, personal manager, and the president of his production company, Dembrowski, as trustee of

the Mooh Investment Trust, executed two deeds of trust (the "Deeds of Trust"), which were

recorded with the Los Angeles County Records Office. The Deed of Trust executed by Mandel as

the trustee of the Sweetzer Trust was recorded on January 15, 2013, with the document number

20130067909, and is attached hereto as Exhibit "C." The Deed of Trust executed by Dembrowski

as the trustee of the Mooh Investment Trust was also recorded on January 15, 2013, with a

document number 20130067908, and is attached hereto as Exhibit "D." The Loan Agreement,

TMG/Depp Note, and the Deeds of Trust are collectively referred to herein as the Loan

Documents.

26. There was nothing about the TMG/Depp loan that benefitted TMG—it was done

purely as a short-term accommodation to Depp and to prevent his public financial collapse.

Depp Fails To Pav Off the TMG/Depp Note and Fires TMG

27. As was typical for Depp—once a crisis. was averted, he continued to spend on his

extravagant lifestyle and left TMG to try to deal with the resulting financial mess. TMG never

COMPLAINT

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agreed with Depp to modify any of the terms of the TMG/Depp Note and Depp did not have the

funds to repay the Note by its January 2014 due date.

28. Thus, TMG requested further time from CNB to pay off the TMG/CNB loan and

worked on internal amortization schedules designed to forecast how-the TMG/Depp Note could

possibly be paid off if Depp continued to refuse to sell assets and if CNB allowed TMG's $5

~ million loan to be extended into the future.

29. Depp paid interest and some principal payments under the TMG/Depp Note until

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he terminated TMG as his business manager on March 14, 2016. After that date, Depp and his

new business manager, White, have refused to pay any interest or principal on the loan. Well over

$4.4 million is due and owing under the TMG/Depp Note. Although Depp is refusing to pay his

debts, he does not and cannot dispute that he received the full benefits of the TMG/Depp Note by

avoiding a public calamity in 2012. Nor can he dispute that TMG gained nothing from the

transactions and instead, became indebted to CNB for $5 million. However, in Depp's self-

centered world, "no good deed goes unpunished."

FIRST CAUSE OF ACTION

(Judicial Foreclosure Against All Defendants)

30. Plaintiffs incorporate by reference all of the foregoing allegations of this

Complaint, as though fully set forth herein.

31. At all relevant times mentioned herein, the Loan Documents were and now are in

effect. Plaintiffs are the lawful holder of the TMG/Depp Note and are the lawful beneficiaries

~ under the Deeds of Trust encumbering the Sweetzer Properties.

32. Plaintiffs have performed all of the terms and conditions required on its part to be

performed pursuant to each of the Loan Documents, except as excused by Depp's defaults.

33. Depp has defaulted under the TMG/Deep Note and the other Loan Documents by,

among other things, failing, and continuing to fail, to pay all amounts due under the TMG/Depp

Note, including the entire outstanding principal amount now due and interest payments as well.

34. Depp has failed to pay and owes an amount in excess of $4,449,000 in principal,

~ interest, and other charges under the TMG/Depp Note and the other Loan Documents, an amount

COMPLAINT

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which continues to increase with interest and other charges pursuant to the Loan Documents.

35. The Loan Documents also provide for recovery of all costs, including attorneys'

fees incurred by Plaintiffs in enforcing the terms of the TMG/Depp Note, the Deeds of Trust, and

the Loan Agreement. As a further result of Depp's defaults, Plaintiffs have been damaged in that

they have and will be required to incur attorneys' fees and costs to enforce their rights under the

Loan Documents.

36. Pursuant to the Deeds of Trust, Plaintiffs are entitled to judgment that (a) the rights,

claims, ownership, liens, titles and demands of all Defendants and all persons or entities claiming

under any of them are subject to the liens of the Deeds of Trust; (b) the Deeds of Trust are

foreclosed and the Sweetzer Properties shall be sold according to law by a sheriff or marshal or

other party appointed by the Court; (c) when the time for redemption has passed, if any, the

commissioner or trustee shall execute and deliver deeds to the purchasers of the Sweetzer

Properties at the foreclosure sale and that said purchasers shall be put into the possession of the

Sweetzer Properties upon delivery of said deeds; and (d) for judgment against Depp for any

deficiency.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs pray for judgment against Defendants, as follows:

1. For a declaration of all amounts owing-and unpaid under the TMG/Depp Note, the

Deeds of Trust and the Loan Agreement, which amount is in excess of $4,449,000,

an amount which will continue to increase, and is to be proved at the time of trial to

include all principal, interest, costs, attorneys' fees and other charges permitted by

law and the TMG/Depp Note, the Deeds of Trust and the Loan Agreement;

2. For an adjudication that the Deeds of Trust be foreclosed; that judgment be made for

sale of the Sweetzer Properties according to law by a sheriff, marshal or other person

appointed by this Court; that the sale proceeds be applied in payment of the amount

due to Plaintiffs; that any and all entities and persons claiming an interest in the

Sweetzer Properties, whether as owners, lien claimants, junior creditors, claimants

COMPLAINT

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under a junior deed of trust, purchasers, encumbrances or otherwise, be barred and

foreclosed from all rights, claims, interests, or equities of redemption of the Sweetzer

Properties and ever part thereof when the time for redemption, if any, has passed;

and for any deficiency after sale permitted by law and the Loan Documents;

3. For an adjudication that the rights, claims, ownership, liens, encumbrances, title,

estate, interest and demands of Defendants are subsequent and subordinate to

Plaintiffs' interest as beneficiaries under the Deeds of Trust; for an adjudication that

Plaintiffs or any other party to this lawsuit may be permitted to become a purchaser

at the foreclosure sale and that Plaintiffs may credit bid upon the Sweetzer

Properties;

4. For an adjudication that, when the time for redemption, if any, has passed, the sheriff

or marshal or other person appointed to sell the Sweetzer Properties shall execute a

deed and other required documents necessary to transfer title to the purchaser of the

Sweetzer Properties at the foreclosure sale, and that the purchaser shall be permitted

to take possession of the Sweetzer Properties upon production of the deed and other

appropriate documents of title;

5. For Judgment against Depp for any deficiency;

6. For. prejudgment interest as provided by the Loan Documents;

7. For attorneys' fees and for costs of suit; and

8. For such other and further relief as the Court may deem just and proper.

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~ DATED: November 6, 2017

/405494

KINSELLA WEITZMAN ISER KUMP& ALDISERT LLP

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By:M' chael J. KumpSuann C. MacIsaacAttorneys for Plaintiffs

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