Free Statement - District Court of Arizona - Arizona

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Law Office of James Burr Shields 382 East Palm Lane Phoenix, Arizona 85004-1531 (602) 307-0780 (Office) (602) 307-0784 (Facsimile)
James Burr Shields II, State Bar #011711 John A. Conley, State Bar #016429 Blake Simms, State Bar #021595 Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT IN AND FOR THE STATE OF ARIZONA

) ) ) ) ) Plaintiffs, ) ) vs. ) ) 5. Home Mortgage, Inc., an ) Arizona corporation conducting ) business in Arizona, ) 6. Carl Brown; ) 7. Molly Brown; ) 8. Greg Brown; ) 9. Jane Doe Brown; ) 10. Does 1-10; ) 11. XYZ Corporations; ) 12. Black Partnerships; ) ) Defendants. ) _________________________________)

1. 2. 3. 4.

Cathleen Channel, Theresa Wharry, Stacie Hanson, Monique Nichols,

Case No. CIV 2003-0100 PHX ROS

PLAINTIFFS' SEPARATE STATEMENT OF FACTS IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANTS CARL BROWN AND MOLLY BROWN

Plaintiffs, Cathleen Channel, Theresa Wharry, Stacie Hanson, and Monique Nichols, pursuant to Rule 1.10(l) of the Rules of Practice of the United States District Court for the District of Arizona, hereby submit the following separate statement of specific facts in support of their Motion for Summary Judgment. 1. Plaintiffs, Cathleen Channel, Theresa Wharry, Stacie Hanson, and Monique

Nichols, are all seeking from Home Mortgage, Inc. ("HMI"), the judgment debtor in this matter, unpaid wages. [Exhibit 1, Plaintiffs collective declarations] 2. HMI is a foreign corporation registered to conduct business in Arizona.
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[Exhibit 2, HMI Corporation Commission Documents] 3. HMI was in the business of issuing home loans. [Exhibit 3, Deposition

Transcript of Carl Brown; page 67, lines 13-17.] 4. Defendant Carl Brown is and was, at all relevant times, an approximately 99%

owner of HMI. [Exhibit 4, Debtor's Examination Transcript of Carl Brown; page 9, lines 11-16.] 5. lines 6-12.] 6. Defendant Carl Brown's initial position with the company was President. Defendant Carl Brown, in 1996, founded the company. [Exhibit 4, p. 9,

[Exhibit 4, p. 10, lines 16-18.] 7. HMI, in or about November of 1999, merged with a company called The

Mortgage Bank, Inc. [Exhibit 4, p. 15, lines 3-8.] 8. Greg Brown, Defendant Carl Brown's son, was, at the time of the merger, a

shareholder in The Mortgage Bank. [Exhibit 4, p. 13, lines 20-23.] 9. lines 10-11.] 10. Carl Brown has always had complete authority over HMI's operations. Greg Brown, after the merger, became an officer of HMI. [Exhibit 4, p. 11,

[Exhibit 5, Affidavit of Greg Brown.] 11. Greg Brown, just after the merger, served HMI by supervising the company's

loan officers and branch managers. [Id.] 12. 13. Defendant Carl Brown was in control of the company's finances. [Id.] HMI eventually named Greg Brown President, but Defendant Carl Brown

remained in complete control of the company. [Id.] 14. Defendant Carl Brown is currently President/CEO, Secretary, Treasurer, and

Director of HMI. [Exhibit 2.] 15. Defendant Carl Brown, during the summer or fall of 2002, began entertaining

the idea of selling HMI. [Exhibit 4, p. 18, lines 1-3.] 16. A company named PlainsCapital McAfee ("McAfee") eventually expressed
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an interest in purchasing the company. [Exhibit 5.] 17. Greg Brown, at some point, agreed to become the intermediary in the

transaction between HMI and McAfee. [Id.] 18. This was due to McAfee's eventual refusal to have any further interactions

with Defendant Carl Brown. [Id.] 19. Greg Brown, on July 29, 2002, as part of the planned transaction with

McAfee, entered into with HMI a stock redemption agreement. [Exhibit 6, September 13, 2002, letter from Thomas Busch to Greg Brown.] 20. The stock redemption agreement included a provision giving Greg Brown the

right to purchase all of fixtures, furniture, and equipment of the company. [Id.] 21. Greg Brown, for the price of $700,000, did purchase the fixtures, furniture,

and equipment. [Id.] 22. Greg Brown then, as part of a planned transaction with McAfee, agreed to sell

to McAfee the fixtures, furniture, and equipment. [Id.] 23. Greg Brown also agreed to sell his goodwill and signed with McAfee an

employment agreement. [Id.] 24. McAfee, in exchange for the above, paid Greg Brown $950,000. [Exhibit 7,

Page 11 of the Asset Purchase Agreement between McAfee and Greg Brown.] 25. Greg Brown, on September 17, 2002, received from McAfee the first

$850,000. [Exhibit 8, September 19, 2002, Bank Transaction Receipt.] 26. Defendant Carl Brown, that same day, received into his personal, Bank One

bank account $700,000, reflecting HMI's share of the proceeds of the sale. [Exhibit 9, Greg Brown Deposit Slip and Exhibit 10, September 7, 2002, through October 4, 2002, Bank Statement.] 27. HMI, at this time, had several functioning business bank accounts.

[Exhibit 11, Bank Account Statement for account number 029781779 for period of August 31, 2002, through September 30, 2002; Exhibit 12, Bank Account Statement for account number 0192611281 for period of August 31, 2002, through September 30, 2002;
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Exhibit 13, Bank Account Statement for account number 0192611307 for period of August 31, 2002, through September 30, 2002.] 28. Defendant Carl Brown, however, decided to accept into his personal account

these corporate funds. [Exhibit 10.] 29. Defendant Carl Brown is unable to provide an explanation as to why he

received into his personal account, rather than an HMI business account, these funds. (Exhibit 3, p. 117, lines 2-4.] 30. 31. 32. HMI also owned a corporate airplane. [Exhibit 3, p. 146, lines 13-15.] The aircraft was a King Air model. [Id. at lines 16-17.] Carl Brown admitted using the corporate aircraft to travel to watch

Thoroughbred horse racing. [Id. at p. 147, lines 15-21.] 33. 34. These were events where Defendant Carl Brown's horses raced. [Id.] Defendant Carl Brown admitted these personal trips included travel to "Santa

Anita or Del Mar or Hollywood Park or Arlington, in Chicago, and [he] would fly there in order to watch [his] horses race." [Id. at lines 17-21.] 35. Defendant Carl Brown has also admitted HMI is in possession of no corporate

documents. [Exhibit 4, p. 42, lines 20-24; p. 43, lines 5-10.] 36. Defendant Carl Brown explains that the company's lack of corporate

documents was related to a dispute the company had with one of its landlords. [Exhibit 4, p. 43, lines 5-10.] 37. Defendant Carl Brown alleges the landlord destroyed all of these documents.

[Exhibit 4, p. 44, lines 7-16.] 38. Further, Defendant Carl Brown never attended an HMI shareholders' meeting

and is not sure HMI ever held any shareholders meetings. [Exhibit 3, p. 141, lines 9-14]. *** *** *** ***
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RESPECTFULLY SUBMITTED this 9th day of November, 2006. LAW OFFICE OF JAMES BURR SHIELDS

____s/ W. Blake Simms__________________ James Burr Shields Blake Simms Attorneys for Plaintiffs CERTIFICATE OF SERVICE I hereby certify that on the 9th day of November, 2006, I electronically submitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: John E. Karow, Esq. 11350 North 104th Place Scottsdale, Arizona 85259 Attorney for Defendants Dennis Hall, Esq. 14614 North Kierland Boulevard, Suite 300 Scottsdale, Arizona 85254 Attorneys for Defendant Greg Brown ____s/ Gail Ivey___________________

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