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15-percent range. With two positive and two negative elements,
Mr. Thompson appears to have selected the midpoint of the range,
or 10 percent.
As to the range itself, Mr. Thomson’s report states that the
numbers are “based on our experience with real property and
promissory notes”. When asked at trial whether he was aware of
any note transactions or published compilations of note
transactions to use as comparables, Mr. Thomson responded:
“Specific transactions? As a California real estate broker, I
get information all the time. I’m not specifically aware of any
source that necessarily tracks--are you saying trust deeds? * * *
[Counsel replies affirmatively.] I get brokers sending me stuff
all the time, but I don’t have anything specific to track them.”
Mr. Thomson also indicated that he could conceive of situations
where discounts would be 33 percent or greater, as where a note
was unsecured or bore a below-market interest rate.
Mr. Cronkite’s report states: “Mr. Marsh estimates that he
could only get $0.70 to $0.80 on the dollar for a 100% interest,
and perhaps $0.60 to $0.70 for a 45% interest (due to liquidity
factors).” These remarks would seem to refer to discount ranges
for interests in the $1 million note. Mr. Cronkite thus
apparently selected a discount for the Marsh note based on what
Mr. Marsh “estimate[d]” he could “perhaps” get for sales of the
$1 million note. Yet Mr. Cronkite at trial neither expounded
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