s oe an 10 u 12 B 14 15 16 17 18, 19 20 24 22 23 24 25, 26 27 28 Michael J. Aguirre, Esq., SBN 060402 Christopher S. Mortis, Fsq., SBN 163188 Maria C. Severson, Esq., SBN 173967 AGUIRRE, MORRIS & SEVERSON LLP 444 West C Street, Suite 210 San Diego, CA.92101-3597 Telephone: (619) 876-5364 Raymond P. Boucher, Esq., SBN 115364 Patrick DeBlase, Esq., SBN 167138 KIESEL BOUCHER & LARSON LLP 8648 Wilshire Boulevard Beverly Hills, CA 90211-2910 Telephone: (310) 854-4444 Patricia A. Meyer, Esq., SBN 109621 PATRICIA A. MEYER & ASSOCIATES, APC 550 West C Street, Suite 990 San Diego, CA 92101-3531 Telephone: (619) 235-8636 Attomeys for Plaintifis SUPERIOR COURT OF THE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES LINDA M. HARRIS, an individual; Case No. BC 414205 INDEPENDENT FINANCIAL GROUP, INC., a California corporation, PLAINTIFFS’ MOTION FOR Plaintiffs, PRELIMINARY INJUNCTION AGAINST AIG AND v. ‘AIG AFFILIATE DEFENDANTS; MEMORANDUM OF POINTS AND AMERICAN INTERNATIONAL GROUP, | AUTHORITIES IN SUPPORT a Delaware Corporation, et al. Defendants. Date: December 15, 2009 Time: 8:45 am. Dept: 28 Hon. Yvette M, Palazuelos Date Action Filed: May 21, 2009 Trial Date: None set ~ PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION; POINTS AND AUTHORITIES IN SUPPORTL u. WL. TABLE OF CONTENTS MOTION FOR PRELIMINARY INJUNCTION A. PLAINTIFFS’ REQUEST FOR INJUNCTION B. THE MOTION GROUNDS .. C. PLAINTIFFS DECLARATIONS AND EXHIBITS .. 1. Nature of Emergency/Great or Irreparable Injury .. 2. Nature and Approximate Size or Extent of Business. 3. Impact on Operations of Ongoing Business D. PERMISSION TO FILE A BRIEF IN EXCESS OF 15 PAGES.. MEMORANDUM OF POINTS AND AUTHORITIES BACKGROUND FOR INJUNCTION AGAINST AIG. A. AIG THE UNREGULATED HEGDE FUND B. AIG CALIFORNIA BUSINESS OPERATIONS C. _AIG’S RECORD OF PROHIBITED BUSINESS PRACTICES .. AIG OPERATED THE INTERNAL HEDGE FUND THROUGH A PATTERN OF UNLAWFUL BUSINESS PRACTICES A. AIG HEDGE FUND ~ SECURITIES LENDING... B. AIG HEDGE FUND -- INTER-AFFILIATE BORROWING AGREEMENTS17 C. AIG HEDGE FUND - SUPPORT AND GUARANTEE AGREEMENTS D. AIG REINSSURANCE AGREEMENTS WITHOUT ADEQUATE RESERVES... m AIG HEDGE FUND — CREDIT DEFAULT SWAPS.. F. AIG HEDGE FUND ~ DECEPTION... A PRELIMINARY INJUNCTION SHOULD ISSUE TO STOP AIG AND AFFILIATES’ PROHIBITED BUSINESS i -Cea AH eR OK 10 u 12 13 14 15 16 17 18 19 20 21 2 23 24 25 26 27 28 CONCLUSION, DEFENDANTS’ UNFAIR, FRAUDULENT AND UNLAWFUL BUSINESS PRACTICES we 21 CALIFORNIA LAW PROHIBITS DEFENDANTS’ UNFAIR, FRUADULENT AND UNLAWFUL BUSINESS PRACTICES... 22 1. Plaintiffs Have Standing Under Business & Professions Code 17200...25 THIS COURT HAS THE AUTHORITY TO ISSUE AN INJUNCTION UNDER BUSINESS AND PROFESSIONS CODE SECTION 17200 28 PLAINTIFF WILL LIKELY SUCCEED ON THE MERITS AND THE INTERIM HARM PLAINTIFF AND POLICYHOLDERS WILL SUFFER IS SUBSTANTIAL PLAINTIFF IS EXEMPT FROM A BOND REQUIREMENT.weer auaenn 10 i 12 1B 14 15 16 7 18, 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES CALIFORNIA CASES Aron v, U-Haul Co. of California (2006) 143 Cal. App. 4" 796, 802-03. Barquis v. Merchants Collections Assn. (1972) 7 Cal. 3d 94, 111... Butt v. California (1992) 4 Cal. 4" 668 California Association of Dispensing Opticians v. Pearle Vision Center (1983) 143 Cal. App. 34 419, 433-434. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal. 3d 197, 214. 24 Greenly v. Cooper (1978) 77 Cal. App. 3d 382, 390 Hall v, Time Inc. (2008) 158 Cal. App. 4 847, 852-55 Handy v. Samaha (1931) 117 Cal. App. 286, 288-89. Huong Que, Ine. v. Luu (2005) 150 Cal.App.4" 400, 408.... en ev 28,29 | Hummel v. Republic Fed. Savings & Loan Assn. (1982) 133 Cal. App. 34.49, 51 .. IT Corp. v. County of Imperial (1983) 25 Cal34 63, 69-70.. Krumme v. Mercury Ins. Co. (2004) 123 Cal. App. 4!" 924... Notrica v, State Comp. Ins, Fund (1999) 70 Cal. App. 911 2210 i 12 B 14 15 16 7 18 19 20 2 22 23 24 25 26 27 28 Paul v. Wadler (1962) 209 Cal. App. 3d 615, 625 People ex rel. Bill Lockyer v. Fremont Life Ins. Co. (2002) 104 Cal. App. 4" 508 .. People ex rel. Mosk v, Nat'l Research Co. of Cal. (1962) 201 Cal. App. 2d 765, 775, 779 Podolsky v. First Healthcare Corp. (1996) 50 Cal. App. 4" 632, 647 Progressive West Ins. Co. v. Superior Court (2005) 135 Cal. App. 4% 263 .. R&B Auto Center, Inc. v. Farmers Group, Inc. (2006) 140 Cal. App. 4327 Redding v. St. Francis Medical Center 2 (1989) 08 Cal. App. 34 98, 101 . Robbins v. Superior Court (1985) 38 Cal. 3d 199, 205 ‘State Farm Casualty Co. v. Superior Court (1996) 45 Cal. App. 4% 1093, 1103... Surety Sav. and Loan Assn. v. National Automobile & Cas. Ins. Co. (1970) 8 Cal., App. 3d 752, 757 Troyk v. Farmers Group, Inc. (2009) 171 Cal. App. 4" 1305... Wickersham y, Crittenden (1982) 93 Cal. 17, 32 17 1 iv 28a auw sw 10 u 12 13 4 15 16 7 18 19 20 21 2 23 24 25 26 27 28 FEDERAL AUTHORITY Daghlian v. DeVry University, Inc. (CD. Cal. 2006) 461 F. Supp. 2d 1121, 1155-56. Laster v. T-Mobile USA, Inc. (SD. Cal, 2005) 407 F. Supp. 2d 1181, 1194. Monarch Plumbing Co. v. Ranger Ins. Co. (E.D. Cal, 2006) 2006 WL 2734391, *6.. ‘Southern Cal. Housing v. Los Feliz Towers Homeowners Assoc. (CD. Cal. 2005) 426 F. Supp. 2d 1061, 1969... Witriol v. LexisNexis Group (N.D. Cal. 2006) 2006 WL 4725713, *6-7. STATUTES Business and Professions Code § 17200... 3,4,21,22,23,24,25,26,30 25,28 Business and Profession Code § 17203. Cal. Ins. Code § 900... Cal. Ins. Code § 988. . Code of Civil Procedure § 527. 28 Code of Civil Procedure § 529. Code of Civil Procedure § 995.240.... California Rule of Court, Rule 3.1113.10 ul 12 13 14 15 16 7 18 19 20 2 23 24 25 26 27 28 Plaintiffs Linda Harris and Independent Financial Planning Group Inc., seek to obtain, preliminary injunction to halt defendant American International Group’s (AIG) unlawful, fraudulent, and unfair business practices pursuant to Business & Professions Code § 17203 and California Code of Civil Procedure section 527. AIG directly and through its subsidiary companies engages, has engaged, and continues to engage in unlawful, fraudulent, and unfair business practices. Plaintifié seek a preliminary injunction ordering AIG and its affiliated companies doing business in California from: (1) transferring, pooling and investing the bonds, stocks and funds of AIG insurance companies for the purpose of speculating in investments not permitted under applicable insurance regulations, including investing AIG insurance company pooled funds in leveraged, short positions in a single asset class; ? (2) issuing support agreement and guarantees by, to, and amongst AIG affiliated companies at amounts AIG or the AIG affiliated companies do not have the financial ability to pay; > (3) issuing reinsurance agreements to AIG affiliates without adequate bona fide reserves to make good on the reinsurance commitments:* (4) issuing credit default swap commitments at levels beyond AIG’s financial ability to pay, in light of support, guarantee, and reinsurance commitments; ° and (9) issuing annual and quarterly statements to California policy holders of AIG insurance companies, doing business in California, that misrepresent the financial condition of the issuing companies. * AIG merged the funds, stocks, and bonds of the insurance companies it controls into a hedge fund and then speculated wildly with other people's assets in ways that fall well outside ‘See My Final Opinions pp. 42-44 Thomas Gober Declaration TI (Gober II) See AIG Pooled and Speculated Unlawfully with Stocks, Bonds, Funds in AIG Hedge Fund pp 13- 28 Gober IL a See AIG Issued Support Agreements it Could not Pay pp. 28-30 Gober Il. See AIG Issued Reinsurance Agreements Without Adequate Reserves pp. 33-34 Gober II. See AIG Issued Credit Default Swaps In Amounts It Cold Not Pay pp. 30-33 Gober Il. See AIG Schemes of Deception pp. 10-13 Gober I 2 ‘PLAINTIFFS? MOTION FOR PRELIMINARY INJUNCTION; POINTS AND AUTHORITIES IN SUPPORT