1035-00005 · Marguerite Delp · Expert Retention & Valuation

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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

TO: Howard Quinn, Responsible Partner Elliot Nguyen, Lead Associate

FROM: Grace Nakamura, Working Associate

DATE: March 1, 2023

RE: Summary of Pinnacle West Appraisal Group LLC Preliminary Valuation Findings — In re Estate of Teodoro R. Fonseca, Los Angeles County Superior Court Case No. 22STPB09714

MATTER NO.: 1035-00005

CLIENT: Marguerite D. Fonseca

I. Purpose and Scope

This memorandum summarizes the preliminary valuation findings received from Pinnacle West Appraisal Group LLC ("Pinnacle West"), our retained business valuation and intellectual property appraisal firm, as set forth in Pinnacle West's Preliminary Valuation Report dated February 20, 2023 (the "Preliminary Report"). The Preliminary Report was transmitted to this office on February 22, 2023, under cover of correspondence from Dr. Sandra Fujimoto, ASA, CVA, lead appraiser at Pinnacle West, and has been maintained on the firm's secure document management system under the above-referenced matter number.

Pinnacle West was retained on November 10, 2022, pursuant to a retention letter executed by Elliot Nguyen on behalf of Calderwood & Harkness LLP and addressed to Dr. Sandra Fujimoto at Pinnacle West's offices located at 4100 MacArthur Boulevard, Suite 200, Newport Beach, California 92660. The retention letter specified the scope of work, fee structure, and anticipated timeline for delivery of both preliminary and final valuation reports. Dr. Fujimoto's qualifications as an Accredited Senior Appraiser (ASA) and Certified Valuation Analyst (CVA) with over twenty years of experience in entertainment industry valuations make her well-suited to serve as the estate's retained expert should expert testimony become necessary in the probate proceeding.

The scope of the engagement encompasses the following categories of estate assets:

(a) Business valuation of Lumiére Canyon Studios LLC, a California limited liability company engaged in film and television production, with particular attention to the decedent's 50% membership interest;

(b) Valuation of the decedent's 35% membership interest in Pacific Rim Narrative Partners LLC, a California limited liability company operating as a media investment fund;

(c) Net present value appraisal of the decedent's intellectual property portfolio, consisting of royalty streams and residual income attributable to 14 feature films and 6 television series; and

(d) Fair market value appraisals of the two real properties held by the estate — the Beverly Hills residence located at 1847 Coldwater Canyon Drive, Beverly Hills, California 90210, and the Malibu Beach House located at 27100 Pacific Coast Highway, Malibu, California 90265.

The valuation date for all assets subject to this engagement is September 3, 2022, the date of death of the decedent, Teodoro R. Fonseca. This date is consistent with California Probate Code section 10309 and Internal Revenue Code section 2031, which generally require that estate assets be valued as of the date of the decedent's death for both probate administration and federal estate tax purposes.

In addition to summarizing the Preliminary Report's findings, this memorandum identifies areas of anticipated divergence between Pinnacle West's conclusions and those expected to be advanced by Hargrove & Linden Appraisals Inc. ("Hargrove & Linden"), the valuation firm retained by the contestants in this proceeding. Hargrove & Linden is led by Morton Linden, CFA, ASA, and is located at 2600 Michelson Drive, Suite 800, Irvine, California 92612. Hargrove & Linden was retained by Brennan, Ortega & Saldívar LLP, counsel for the contestants Rafael T. Fonseca, Isabela C. Fonseca-Greer, and Nicolás R. Fonseca, the decedent's three children from his first marriage. While we have not yet received a formal valuation report from Hargrove & Linden, informal representations made by opposing counsel during the January 2023 status conference, together with the contestants' preliminary asset characterization statements filed with the court, allow us to identify the likely contours of the valuation dispute.

II. Summary of Aggregate Probate Estate Valuation

Pinnacle West's preliminary aggregate valuation of the probate estate assets subject to this engagement is $71,112,000. The table below sets forth the preliminary value attributed to each asset category:

It should be noted that life insurance proceeds totaling $5,000,000 are non-probate assets payable directly to Ms. Fonseca as the named beneficiary under both policies and are therefore excluded from the probate estate total reflected above. Specifically, these proceeds consist of the following:

• A $3,000,000 term life insurance policy issued by Meridian Mutual Life Insurance Co., Policy No. GH-TL-2019-05582, with a policy effective date of April 1, 2019; and

• A $2,000,000 whole life insurance policy issued by Commonwealth Fidelity Assurance Corp., Policy No. GH-WL-2014-01247, with a policy effective date of September 15, 2014.

Both policies designate Marguerite D. Fonseca as the sole primary beneficiary. The contestants have not challenged the beneficiary designations on either policy, and we do not anticipate any dispute regarding these proceeds.

Based on informal representations from opposing counsel and the contestants' preliminary filings, we understand that Hargrove & Linden's aggregate estate valuation is approximately $68,750,000, reflecting alternative valuation conclusions and differing asset characterizations. The resulting discrepancy of $2,362,000 ($71,112,000 − $68,750,000) is discussed in detail in Section VIII below, along with an analysis of the anticipated areas of divergence.

III. Lumiére Canyon Studios LLC — Business Valuation

A. Entity Overview

Lumiére Canyon Studios LLC ("Lumiére Canyon" or the "Company") is a California limited liability company formed on March 18, 2009, and registered with the California Secretary of State under Filing No. 200906410337. The Company was co-founded by Teodoro R. Fonseca and Marguerite D. Fonseca during their marriage, which commenced on June 14, 2008. The Company's principal office is located at 4200 West Olive Avenue, Burbank, California 91505.

The Lumiére Canyon operating agreement, dated March 18, 2009, and executed by both the decedent and Ms. Fonseca as the sole members, provides for 50%/50% membership interests. The operating agreement designates both members as co-managers of the Company, with material decisions (including the approval of production budgets exceeding $500,000, the entry into distribution agreements, and the incurrence of debt) requiring the affirmative consent of both members.

Lumiére Canyon is a film and television production company that has developed, produced, and co-produced content for theatrical release, streaming platforms, and broadcast and cable television. The Company has maintained an active production slate throughout its operating history and has established distribution relationships with major studios and streaming platforms. Following the decedent's death, Ms. Fonseca has continued to serve as Chief Creative Officer and has managed the Company's ongoing operations, including the supervision of projects currently in various stages of development and post-production.

B. Valuation Methodology

Pinnacle West employed a combination of the income approach (Discounted cash flow analysis) and the market approach (guideline company method) to determine the enterprise value of Lumiére Canyon as of the valuation date. These primary approaches were supplemented by cross-checks against the asset-based approach (adjusted net asset value) to confirm the reasonableness of the conclusions reached under the income and market approaches.

Under the income approach, Dr. Fujimoto projected the Company's future cash flows based on the existing production slate, contracted distribution agreements, anticipated residual income from completed projects, and expected revenue from projects in the development pipeline. The projected cash flows were discounted to present value using a weighted average cost of capital reflecting the risk profile of an independent film and television production company operating in the current entertainment industry environment.

Under the market approach, Dr. Fujimoto identified guideline public companies and recent transaction multiples for comparable entertainment and media companies. While Lumiére Canyon is privately held and smaller than most publicly traded entertainment companies, the guideline company method provided a useful cross-check for the income approach conclusions, particularly with respect to revenue and EBITDA multiples.

The most recent internal valuation of Lumiére Canyon, prepared for purposes of the Company's annual financial review as of December 31, 2021, placed the Company's enterprise value at approximately $31,600,000. Dr. Fujimoto's preliminary analysis confirms this $31,600,000 enterprise value as of the September 3, 2022 valuation date. This confirmation reflects the relative stability of the Company's revenue streams, production pipeline, and distribution relationships during the period between the internal valuation date and the decedent's death, offset by certain adverse factors discussed below.

In arriving at the enterprise-level valuation, Pinnacle West considered the following adjustments and risk factors:

(i) Pending Production Pipeline. The Company had three projects in active production and five projects in various stages of development as of the valuation date. The income approach accounts for the expected revenue contribution of these projects based on comparable industry performance data and the Company's historical track record.

(ii) Key-Person Risk. The decedent served as the Company's primary creative executive and was instrumental in sourcing content, securing financing, and maintaining relationships with distribution partners. His death introduces key-person risk that could affect the Company's ability to maintain its historical revenue trajectory. Dr. Fujimoto applied a modest key-person risk adjustment at the enterprise level, though she notes that Ms. Fonseca's continued active involvement as Chief Creative Officer partially mitigates this risk.

(iii) Marketability and Minority Interest discounts. Because Lumiére Canyon is a privately held limited liability company with no established secondary market for membership interests, a limited marketability discount was considered and reflected in the enterprise-level valuation. The minority interest discount is addressed separately below in connection with the decedent's 50% interest.

C. Decedent's 50% Interest

Pinnacle West values the decedent's 50% membership interest in Lumiére Canyon at $15,800,000, calculated as the $31,600,000 enterprise value multiplied by the decedent's 50% membership interest.

Pinnacle West applied no additional minority interest discount to the decedent's 50% interest. This determination is based on the structure of the operating agreement, which provides both members with co-equal management and voting rights. A 50%/50% ownership structure, unlike a minority interest position, does not subject the interest holder to the unilateral decision-making authority of a controlling member. Dr. Fujimoto notes, however, that the 50%/50% structure does create a potential deadlock risk, which is partially reflected in the enterprise-level valuation.

A limited marketability discount was considered and reflected in the enterprise-level valuation, as noted above. No additional marketability discount was applied at the interest level, as the enterprise-level discount already accounts for the illiquidity inherent in Lumiére Canyon membership interests.

D. Community vs. Separate Property Characterization Relevance

Lumiére Canyon was formed on March 18, 2009, during the marriage of the decedent and Ms. Fonseca, and the operating agreement was executed on the same date. On this basis, Ms. Fonseca asserts that the decedent's 50% membership interest is entirely community property under California Family Code section 760, which establishes a general presumption that property acquired during marriage is community property.

The contestants challenge this characterization, contending that Lumiére Canyon was funded substantially with pre-marital capital belonging to the decedent. Specifically, the contestants allege that the decedent contributed approximately $2,400,000 in pre-marital savings and pre-marital intellectual property rights to capitalize the Company at its formation, and that these contributions represent separate property that should be traced through the Company's subsequent appreciation.

Pinnacle West's valuation is expressly agnostic to the community property versus separate property characterization question. The Preliminary Report values the decedent's interest without regard to the ultimate characterization, noting that the source-of-funds analysis required to resolve the characterization dispute is a legal question outside the scope of the appraisal engagement. However, Pinnacle West's financial analysis does include data that will be relevant to the community property tracing, including a detailed breakdown of the Company's capital contributions, retained earnings, and sources of appreciation over the period from formation to the valuation date.

For a comprehensive analysis of the community property characterization issues pertaining to the Lumiére Canyon interest, please refer to the internal Memorandum re: Community Property Characterization of Lumiére Canyon Studios LLC Interest, dated December 5, 2022, prepared by the undersigned.

IV. Pacific Rim Narrative Partners LLC — Membership Interest Valuation

A. Entity Overview

Pacific Rim Narrative Partners LLC ("PRNP") is a California limited liability company formed in 2015 and registered with the California Secretary of State under Filing No. 201518720492. PRNP operates as a media investment fund that invests in film and television production, distribution, and intellectual property acquisition opportunities. As of the valuation date, PRNP had approximately $78,500,000 in assets under management ("AUM").

The managing member of PRNP is Victor Sandoval, whose offices are located at 8455 Beverly Boulevard, Suite 310, Los Angeles, California 90048. Mr. Sandoval is responsible for the day-to-day management of the fund, including investment sourcing, due diligence, portfolio management, and investor relations. The decedent, Teodoro R. Fonseca, held a 35% membership interest in PRNP and served as a non-managing member. The decedent's involvement in PRNP was primarily strategic in nature, leveraging his entertainment industry relationships and creative expertise to identify and evaluate investment opportunities for the fund.

B. Valuation Methodology

Given that PRNP operates as a media investment fund with a diversified portfolio of entertainment industry assets, Pinnacle West primarily employed a net asset value ("NAV") approach to value the decedent's membership interest. The NAV approach is the standard valuation methodology for investment fund interests and is widely accepted by courts and the IRS for estate valuation purposes. Under this approach, the value of a membership interest is determined by reference to the member's pro rata share of the fund's net asset value.

Pinnacle West supplemented the NAV approach with an analysis of the fund's track record, fee structure, and carried interest provisions to assess whether the NAV adequately captures the economic value of the decedent's interest. This supplemental analysis considered the fund's historical internal rate of return, the management fee structure (including any fees payable to the managing member), and the carried interest waterfall provisions that may affect the distribution of returns among members.

The fund's AUM of $78,500,000 as of the valuation date was confirmed through capital account statements and fund financial records obtained pursuant to an information request letter dated November 1, 2022, from Elliot Nguyen to Victor Sandoval. Mr. Sandoval provided responsive materials on a rolling basis between November 2022 and January 2023, though certain items — including the complete operating agreement and full distribution history — remain outstanding as of the date of this memorandum (see Section IX below).

C. Decedent's 35% Interest

Pinnacle West values the decedent's 35% membership interest in PRNP at $27,475,000, calculated as the fund's $78,500,000 AUM multiplied by the decedent's 35% membership interest ($78,500,000 × 0.35 = $27,475,000).

This valuation represents the single largest asset in the probate estate, constituting approximately 38.6% of the total estate value of $71,112,000. The significance of this asset to the overall estate valuation — and to the distribution outcomes for both Ms. Fonseca and the contestants — cannot be overstated.

Pinnacle West acknowledges in the Preliminary Report that this straight pro rata calculation may overstate the realizable value of the decedent's interest if significant transfer restrictions, rights of first refusal, or other provisions in the PRNP operating agreement limit the marketability of the interest. A discount for lack of marketability ("DLOM") and any adjustments for transfer restrictions could reduce this figure in the final valuation. However, Dr. Fujimoto determined that it would be premature to apply a specific DLOM or transfer restriction discount pending receipt and review of the complete PRNP operating agreement, which has not yet been produced by Mr. Sandoval. The Preliminary Report applies the straight pro rata calculation as a placeholder, with a clear notation that the final valuation may adjust this figure downward.

Additionally, Dr. Fujimoto flags that the final valuation may need to account for any carried interest clawback provisions that could affect the realizable value of the decedent's interest. If the PRNP operating agreement contains clawback provisions requiring members to return previously distributed carried interest in the event of subsequent fund losses, these provisions could create a contingent liability that would reduce the net value of the decedent's interest.

D. Characterization Note

PRNP was formed in 2015, during the marriage of the decedent and Ms. Fonseca. Ms. Fonseca asserts that the decedent's 35% membership interest in PRNP is community property under the general presumption of California Family Code section 760. The contestants, however, claim that the PRNP interest is the decedent's separate property, asserting that it was acquired with funds traceable to the decedent's separate property earnings or pre-marital assets. As with the Lumiére Canyon interest, Pinnacle West's valuation does not address the characterization issue, which is a legal question to be resolved by the court based on tracing evidence and applicable California community property law.

V. Intellectual Property Portfolio — Net Present Value Appraisal

A. Portfolio Composition

The decedent's intellectual property portfolio comprises royalty streams and residual income from 14 feature films and 6 television series produced or co-produced by Lumiére Canyon Studios LLC and, in certain cases, by the decedent individually prior to or outside of Lumiére Canyon. The portfolio is diverse in terms of genre, platform, and vintage, encompassing works released between approximately 2004 and 2022.

The income streams associated with this portfolio include the following categories:

• Domestic and international theatrical distribution royalties;

• Streaming platform licensing fees (including licenses to major domestic and international streaming services);

• Broadcast and cable television syndication residuals;

• Home entertainment distribution revenues (digital and physical media);

• Merchandising revenue associated with certain properties; and

• Ancillary licensing fees (including soundtrack licensing, novelization rights, and adaptation rights).

The portfolio's revenue composition has shifted significantly in recent years, reflecting broader industry trends, with streaming platform licensing fees now constituting the largest single revenue category, followed by international distribution royalties and domestic syndication residuals.

B. Valuation Methodology

Pinnacle West employed a discounted cash flow ("DCF") methodology to calculate the net present value ("NPV") of projected future royalty streams and residual payments attributable to the decedent's interest in the IP portfolio. The DCF methodology is the standard approach for valuing intellectual property with quantifiable future income streams and is consistent with the guidance provided in the American Society of Appraisers' Business Valuation Standards and the International Valuation Standards Council's IVS 210 — Intangible Assets.

The key inputs to the DCF analysis included:

• Historical Royalty Receipts (2017–2022). Dr. Fujimoto analyzed six years of historical royalty and residual income data to establish baseline revenue trends, seasonal patterns, and decay curves for individual properties within the portfolio.

• Contracted Distribution Agreements. The analysis incorporated the terms and remaining duration of existing distribution agreements, including minimum guarantees, revenue sharing percentages, and renewal options.

• Projected Streaming and Syndication Revenue. Future revenue projections were developed based on industry benchmarks for comparable media content, including data from the Motion Picture Association's annual reports and proprietary entertainment industry databases.

• discount Rate. An appropriate discount rate was applied to reflect the risk inherent in entertainment industry revenue streams, including content lifecycle risk, platform concentration risk, competitive displacement risk, and general economic conditions. The specific discount rate applied by Pinnacle West is detailed in the Preliminary Report and reflects a risk premium above the risk-free rate that is consistent with prevailing market expectations for entertainment intellectual property.

• Useful Economic Life. The useful economic life of individual properties within the portfolio was estimated based on genre, platform availability, audience demographics, and historical decay curves for comparable media content. Newer properties and properties with active streaming platform licenses were assigned longer useful lives, while older properties with declining viewership metrics were assigned shorter useful lives.

C. Preliminary NPV

Pinnacle West's preliminary NPV of the IP portfolio is $4,600,000. This figure reflects the aggregate present value of all future income streams attributable to the decedent's interest in the 14 feature films and 6 television series, net of anticipated distribution fees, platform revenue sharing arrangements, and guild and union residual obligations.

It should be noted that the IP portfolio valuation is separate from and in addition to the Lumiére Canyon enterprise valuation. While some of the IP in the portfolio was produced through Lumiére Canyon, the royalty streams and residual payments flow directly to the decedent (or, now, to the estate) under the applicable distribution agreements rather than through Lumiére Canyon's operating accounts. Dr. Fujimoto has been careful to avoid double-counting by excluding from the Lumiére Canyon enterprise valuation any income streams that are captured in the IP portfolio NPV, and vice versa.

D. Characterization Note

Ms. Fonseca asserts that the entirety of the IP portfolio is community property, on the basis that the works were created during the marriage or, in the case of pre-marriage works, that the royalty streams accrued during the marriage constitute community property income. The contestants challenge this characterization, contending that certain properties in the portfolio originated during the decedent's first marriage or were based on concepts, scripts, or treatments conceived by the decedent prior to his marriage to Ms. Fonseca. The contestants argue that these properties, or at least a proportional share of their value, constitute the decedent's separate property.

The characterization of the IP portfolio will require a property-by-property analysis of the creation dates, development history, and applicable intellectual property ownership agreements. This analysis is beyond the scope of the Pinnacle West engagement and will be addressed in a separate internal memorandum.

VI. Real Property Valuations

A. Beverly Hills Residence — 1847 Coldwater Canyon Drive, Beverly Hills, CA 90210

Pinnacle West's preliminary fair market value of the Beverly Hills residence is $8,450,000 as of the September 3, 2022 valuation date.

The appraisal was conducted using the comparable sales approach as the primary methodology, supplemented by the income approach (based on potential rental value) as a cross-check. The comparable sales approach analyzed recent sales of comparable residential properties in the Coldwater Canyon area of Beverly Hills, with adjustments for differences in lot size, square footage, condition, amenities, and location. The income approach estimated the property's potential gross rental income based on comparable rental listings in the area and applied an appropriate capitalization rate to derive an indicated value.

The Beverly Hills residence is the marital home where Ms. Fonseca currently resides. The property consists of a single-family residence situated on a lot of approximately 0.72 acres, with approximately 6,800 square feet of living space, five bedrooms, six bathrooms, a home theater, a swimming pool, and detached guest quarters.

Title records obtained from Coastline Title & Escrow Co. (contact: Andrea Solis; 9401 Wilshire Boulevard, Suite 720, Beverly Hills, California 90212) confirm that the property was acquired during the marriage of the decedent and Ms. Fonseca. Title is held in the names of both spouses as community property with right of survivorship.

Ms. Fonseca asserts that the Beverly Hills residence is community property. The contestants assert that the property is partially separate property, contending that the down payment of approximately $1,200,000 was funded with the decedent's pre-marital funds held in a bank account that existed prior to the marriage. The characterization issue will require a tracing analysis to determine the source of the down payment funds, which is being addressed separately.

B. Malibu Beach House — 27100 Pacific Coast Highway, Malibu, CA 90265

Pinnacle West's preliminary fair market value of the Malibu Beach House is $6,200,000 as of the September 3, 2022 valuation date.

The appraisal was conducted using the comparable sales approach, which analyzed recent sales of oceanfront and ocean-adjacent residential properties along Pacific Coast Highway in Malibu, with adjustments for differences in lot size, ocean frontage, square footage, condition, and amenities. The Malibu Beach House is a single-family oceanfront residence with approximately 3,400 square feet of living space, four bedrooms, three-and-a-half bathrooms, and direct beach access.

The property was purchased on August 22, 2007, for $4,750,000 — approximately ten months prior to the marriage of the decedent and Ms. Fonseca, which took place on June 14, 2008. Title was taken in the decedent's name alone at the time of purchase, and title was never subsequently transferred to joint or community property form.

The contestants argue that the Malibu Beach House is the decedent's separate property, on the basis that it was acquired prior to the marriage with the decedent's own funds. Ms. Fonseca does not dispute that the property was acquired before the marriage but asserts that substantial community contributions to the property during the marriage entitle her to a proportional community interest under the Moore/Marsden line of cases. Specifically, Ms. Fonseca identifies the following community contributions:

• Community-funded renovation completed in 2016: $1,800,000 — A significant renovation and expansion project, funded from the couple's joint accounts, was completed in 2016. The renovation included an addition of approximately 800 square feet of living space, a full kitchen remodel, bathroom upgrades, new landscaping, and structural improvements to comply with updated coastal construction standards.

• Community-funded mortgage payments from joint accounts: Approximately 142 monthly mortgage payments of $14,200 each, made from the couple's joint Veltara Basin Bank checking account from June 2008 (the date of the marriage) through the final mortgage payoff in March 2020. The total community-funded mortgage payments amount to approximately $2,016,400.

• Total community contributions: $1,800,000 + $2,016,400 = $3,816,400.

• Community interest claimed: $3,816,400 ÷ $6,200,000 ≈ 61.6% of the property's current fair market value.

It should be noted that the Moore/Marsden apportionment methodology is more nuanced than a simple ratio of community contributions to current fair market value, as it requires an allocation of appreciation between the separate property component and the community property component based on the relative contributions of each. The simplified calculation above is presented for illustrative purposes only. Pinnacle West's role with respect to the Malibu Beach House is limited to establishing the property's fair market value as of the valuation date; the Moore/Marsden community property tracing analysis is addressed comprehensively in the separate internal Memorandum re: Community Property Tracing — Malibu Beach House, dated January 15, 2023, prepared by the undersigned.

VII. Financial Accounts and Personal Property

A. Veltara Basin Bank, N.A. Accounts

Information regarding the decedent's financial accounts at Veltara Basin Bank, N.A. was obtained from Franklin Ybarra, relationship manager, at the bank's offices located at 700 South Hope Street, Los Angeles, California 90017. Account information was provided pursuant to an account freeze and information request letter dated October 18, 2022, issued by this office in connection with the administration of the estate. Mr. Ybarra has been cooperative and responsive throughout the process.

The account balances as of the date of death (September 3, 2022) are as follows:

• Brokerage Account (ending -4782): $5,120,000 — This account consists of a diversified investment portfolio including domestic and international equities, fixed income securities, and alternative investment positions. The account was managed on a discretionary basis by the bank's wealth management division.

• Personal Checking Account (ending -3091): $342,000 — This account served as the primary operating account for the decedent's personal and household expenses.

• Money Market Account (ending -6155): $1,875,000 — This account held cash reserves and was used periodically for short-term liquidity needs and as a holding account for funds awaiting deployment into the brokerage account or other investments.

The total value of the Veltara Basin Bank accounts as of the date of death is $7,337,000.

These are liquid financial assets whose valuation is based on account statements and market values as of the date of death. No separate appraisal methodology is required, as the account balances and investment positions are objectively determinable from the bank's records. Pinnacle West's role with respect to these accounts was limited to confirming the balances reported on the account statements and ensuring consistency with the overall estate inventory.

Ms. Fonseca claims all three accounts as community property. The contestants challenge this characterization with respect to two of the three accounts. Specifically, the contestants claim that the brokerage account (ending -4782) is mixed community and separate property, asserting that a substantial portion of the investment capital in the account originated from the decedent's pre-marital assets. The contestants also claim that the money market account (ending -6155) is mixed, asserting that it received periodic deposits of income that the contestants characterize as the decedent's separate property. The checking account (ending -3091) is not disputed and is characterized by both sides as community property.

B. Personal Property

Pinnacle West's preliminary valuation of the decedent's personal property, consisting of art, vehicles, furnishings, and other tangible personal assets, is $1,250,000. This category encompasses the following:

• Art Collection. The decedent and Ms. Fonseca assembled a collection of contemporary art over the course of their marriage, including paintings, sculptures, and limited-edition prints by established and emerging artists. The art collection is housed primarily at the Beverly Hills residence, with a small number of pieces at the Malibu Beach House.

• Automobiles. The decedent owned several vehicles at the time of his death, including a luxury sedan, a sports car, and an SUV, all of which are located at the Beverly Hills residence.

• Household Furnishings. The household furnishings at both residences include designer furniture, custom fixtures, electronics, and other household items.

• Other Tangible Personal Assets. This category includes jewelry, watches, personal electronics, and miscellaneous personal items.

Both sides characterize the personal property as community property. No significant dispute is anticipated regarding either the valuation or the characterization of personal property, making this the least contentious asset category in the estate.

VIII. Comparison with Contestants' Valuation and Areas of Divergence

A. Aggregate Discrepancy

The aggregate valuation discrepancy between Pinnacle West and Hargrove & Linden is summarized as follows:

The $2,362,000 difference represents approximately 3.3% of the total estate value as determined by Pinnacle West. While this gap is meaningful in absolute dollar terms, it is relatively modest in the context of a $71 million estate and suggests that the core valuation dispute between the parties is narrower than might have been anticipated.

B. Anticipated Areas of Divergence with Hargrove & Linden

Based on information available to date — including the contestants' preliminary filings, informal representations by opposing counsel, and our familiarity with Morton Linden's valuation approach from prior proceedings — we anticipate the following areas of divergence between Pinnacle West and Hargrove & Linden:

Lumiére Canyon Studios LLC. Hargrove & Linden, under the direction of Morton Linden, is expected to apply more aggressive key-person and marketability discounts to the Lumiére Canyon enterprise valuation, potentially reducing the enterprise value below the $31,600,000 figure confirmed by Pinnacle West. The contestants may argue that the death of Teodoro Fonseca — who served as the Company's primary creative executive and was the driving force behind its most commercially successful projects — materially and permanently impaired the Company's ongoing enterprise value. While Pinnacle West acknowledges the key-person risk in its analysis, it applies only a modest adjustment on the basis that Ms. Fonseca's continued leadership as Chief Creative Officer provides meaningful continuity. We expect Hargrove & Linden to take a more pessimistic view of this factor.

Pacific Rim Narrative Partners LLC. Hargrove & Linden may apply a significantly deeper discount for lack of marketability and transfer restrictions on the decedent's 35% PRNP interest, reducing the value below the $27,475,000 straight pro rata figure. Depending on the provisions of the PRNP operating agreement — which, as noted above, has not been fully produced — Hargrove & Linden may identify transfer restrictions, rights of first refusal, buy-sell provisions, or other contractual limitations that would reduce the realizable value of the interest to a figure substantially below the pro rata NAV. Additionally, Hargrove & Linden may value the interest net of any carried interest allocations or management fee obligations that reduce the decedent's effective economic interest below 35%. The PRNP interest is the largest single asset in the estate, and even a modest percentage reduction in the applied discount could translate into a multi-million-dollar difference in the overall estate valuation.

IP Portfolio. Hargrove & Linden may employ a higher discount rate or project a shorter useful economic life for certain older film and television properties within the portfolio, resulting in a lower NPV than the $4,600,000 figure determined by Pinnacle West. In particular, older theatrical releases with declining viewership metrics and limited streaming platform interest may be assigned minimal or nominal values by Hargrove & Linden, while Pinnacle West's analysis may attribute residual value to these properties based on long-tail revenue assumptions that Hargrove & Linden considers overly optimistic.

Real Properties. Less divergence is expected on the Beverly Hills and Malibu property valuations, as the comparable sales data used in the appraisal of residential real estate is relatively objective and publicly available. However, minor differences may arise from the selection of comparable properties, the application of adjustments for differences in size, condition, or amenities, or the relative weighting of comparable sales and income approach indications. Any divergence on the real property valuations is likely to be modest — on the order of 2% to 5% of the property values — and is unlikely to materially affect the overall estate valuation.

Financial Accounts. No divergence is expected on the Veltara Basin Bank account balances, as these are based on objective account statements and market values as of a specific date. Both sides' appraisers rely on the same underlying data, and there is no methodological judgment involved in determining these values.

Personal Property. Minimal divergence is expected on the personal property valuation. While appraisers may reach slightly different conclusions regarding the value of individual items within the art collection or vehicle inventory, the aggregate personal property value of $1,250,000 represents a small fraction of the total estate and is unlikely to be a significant point of contention.

C. Implications for Settlement and Litigation Positioning

The $2,362,000 aggregate valuation gap, while significant in absolute terms, represents only approximately 3.3% of the total estate value. This relatively narrow gap suggests that valuation methodology, standing alone, is unlikely to be the dispositive issue in this proceeding. If the dispute were limited to the question of how much the estate is worth, the parties' positions would be close enough to facilitate a negotiated resolution.

However, the primary risk to Ms. Fonseca's position lies not in the valuation differences but rather in the separate property characterization arguments advanced by the contestants. This risk is concentrated in the two largest asset categories:

• The PRNP 35% membership interest ($27,475,000); and

• The Lumiére Canyon 50% membership interest ($15,800,000).

Together, these two assets comprise approximately $43,275,000, or 60.8% of the total probate estate. If the contestants' characterization arguments prevail — and if the premarital agreement is found valid and enforceable — the reclassification of these interests, even partially, as separate property could have a substantially more consequential impact on Ms. Fonseca's intestate share than any valuation discrepancy. For example, if the PRNP interest alone were reclassified as the decedent's separate property, Ms. Fonseca's community property share of the estate would be reduced by approximately $13.7 million (i.e., one-half of the $27,475,000 PRNP interest), an amount that dwarfs the $2,362,000 valuation gap.

Accordingly, while we must be prepared to defend Pinnacle West's valuation methodology and conclusions, our primary strategic focus should remain on the community property characterization issues, the validity and enforceability of the premarital agreement, and the tracing evidence necessary to support Ms. Fonseca's claim that the Lumiére Canyon and PRNP interests are community property.

IX. Outstanding Items and Next Steps

The following items require attention in order to advance the valuation process and prepare for the upcoming mediation and, if necessary, trial:

1. Final Valuation Report. Pinnacle West expects to deliver a final valuation report by approximately May 2023, pending receipt of additional financial records from PRNP (including the complete operating agreement and full distribution history) and updated production pipeline data from Lumiére Canyon Studios LLC. Dr. Fujimoto has indicated that the final report will refine the preliminary figures set forth herein, with particular attention to the PRNP marketability discount and the IP portfolio NPV. We should monitor the timeline closely to ensure that the final report is available well in advance of any trial setting.

2. PRNP Operating Agreement Review. The PRNP operating agreement is needed to assess transfer restrictions, tag-along and drag-along provisions, buy-sell provisions, and any other contractual limitations that may affect the marketability discount applied to the decedent's 35% membership interest. Victor Sandoval's response to the November 1, 2022 information request letter remains outstanding in part as of the date of this memorandum. A follow-up request should be issued promptly, and if Mr. Sandoval continues to delay, we should consider compelling production through subpoena or court order. The absence of the complete operating agreement is the single most significant data gap in the current valuation analysis.

3. Estate Accountant Coordination. We should coordinate with Dennis Chua, CPA, at Ridgeway Accounting Partners LLP (515 South Flower Street, Suite 3600, Los Angeles, California 90071) to reconcile Pinnacle West's valuation findings with the estate inventory and financial statements currently under preparation. Mr. Chua's work on the estate's financial accounting should be consistent with and informed by the valuation conclusions reached by Pinnacle West, and any discrepancies should be identified and resolved before the final report is issued.

4. Hargrove & Linden Report. We should request, through Brennan, Ortega & Saldívar LLP (attention: Damian R. Ortega and Lydia Kwan), a copy of Hargrove & Linden's preliminary valuation report when it becomes available, to facilitate a direct comparison with Pinnacle West's findings. This request may be addressed through the mediation process or, if the current informal standstill terminates, through formal discovery. Early access to the contestants' valuation report will allow us to identify specific methodological differences and prepare responsive analysis in advance of mediation and trial.

5. Ashford Fiduciary Services Reporting. Gerald Whitmore at Ashford Fiduciary Services Inc. (600 Wilshire Boulevard, Suite 1450, Los Angeles, California 90017), the neutral estate administrator appointed by the court, should be provided a copy of the Pinnacle West Preliminary Report for estate administration purposes. Mr. Whitmore's role as neutral administrator requires that he be kept informed of material valuation developments, and the Preliminary Report should be transmitted to him with an appropriate cover letter noting that the findings are preliminary and subject to revision in the final report.

6. Mediation Preparation. The preliminary valuation findings summarized in this memorandum should be incorporated into the mediation brief being prepared for the April 12, 2023 mediation session before the Honorable Constance Adler (Ret.) at Westside Dispute Resolution Center. The mediation brief should present Pinnacle West's findings in a manner that is accessible to the mediator and persuasive to the contestants, highlighting the relatively narrow valuation gap and framing the characterization issues as the primary area of dispute requiring resolution.

X. Conclusion

Pinnacle West's preliminary findings support Ms. Fonseca's position that the total probate estate has a fair market value of approximately $71,112,000 as of the September 3, 2022 valuation date. This figure is based on a thorough analysis of each asset category using generally accepted valuation methodologies appropriate to the nature of the assets involved, including income and market approaches for the business interests, discounted cash flow analysis for the IP portfolio, and comparable sales analysis for the real properties.

The Pinnacle West valuations are generally consistent with internal records and prior valuations available to the estate. Most notably, the Lumiére Canyon enterprise value of $31,600,000 confirmed by Dr. Fujimoto is consistent with the Company's most recent internal valuation as of December 31, 2021, which arrived at the same figure. This consistency lends credibility to the Pinnacle West analysis and supports its defensibility in the event that the contestants challenge the methodology or conclusions.

As discussed throughout this memorandum, the principal litigation risk facing Ms. Fonseca remains the characterization question — whether the Lumiére Canyon and PRNP interests, in particular, are community property or separate property — rather than the valuation disputes, which are comparatively narrow. Nevertheless, we should be fully prepared to defend Pinnacle West's methodology against the anticipated challenges from Hargrove & Linden, particularly regarding discount rates, key-person risk adjustments, and marketability discounts applied to the Lumiére Canyon and PRNP interests. Dr. Fujimoto's credentials, experience in entertainment industry valuations, and methodological rigor position her well to withstand cross-examination should expert testimony become necessary.

I recommend that we proceed to finalize the Pinnacle West engagement by facilitating the production of the outstanding PRNP documents and Lumiére Canyon production pipeline data, and that we incorporate these preliminary findings into our mediation strategy for the April 12, 2023 session. I am available to discuss these findings and the recommended next steps at your convenience.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the named recipients in connection with the legal representation of Marguerite D. Fonseca. Do not distribute, copy, or disclose this memorandum or its contents to any person outside of Calderwood & Harkness LLP without the prior written authorization of the responsible partner.

Prepared by:

________________________________________

Grace Nakamura Working Associate Calderwood & Harkness LLP

Reviewed by:

________________________________________

Howard Quinn, Responsible Partner Calderwood & Harkness LLP

________________________________________

Elliot Nguyen, Lead Associate Calderwood & Harkness LLP

Distribution: Internal only — Attorney Work Product / Privileged and Confidential

Calderwood & Harkness LLP 350 South Grand Avenue, Suite 4800 Los Angeles, California 90071

Matter No.: 1035-00005

Asset	Pinnacle West Preliminary Value
Beverly Hills Residence (1847 Coldwater Canyon Drive, Beverly Hills, CA 90210)	$8,450,000
Malibu Beach House (27100 Pacific Coast Highway, Malibu, CA 90265)	$6,200,000
Lumiére Canyon Studios LLC (decedent's 50% membership interest)	$15,800,000
Pacific Rim Narrative Partners LLC (decedent's 35% membership interest)	$27,475,000
Veltara Basin Bank Brokerage Account (ending -4782)	$5,120,000
Veltara Basin Bank Checking Account (ending -3091)	$342,000
Veltara Basin Bank Money Market Account (ending -6155)	$1,875,000
IP Portfolio (14 feature films, 6 television series — NPV)	$4,600,000
Personal Property (art collection, vehicles, furnishings)	$1,250,000
Total Probate Estate	$71,112,000

Amount

Pinnacle West total probate estate valuation	$71,112,000
Contestants' estimated total (Hargrove & Linden)	$68,750,000
Difference	$2,362,000

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Howard Quinn, Responsible Partner Elliot Nguyen, Lead Associate
FROM: Grace Nakamura, Working Associate
DATE: March 1, 2023
RE: Summary of Pinnacle West Appraisal Group LLC Preliminary Valuation Findings — In re Estate of Teodoro R. Fonseca, Los Angeles County Superior Court Case No. 22STPB09714
MATTER NO.: 1035-00005
CLIENT: Marguerite D. Fonseca
I. Purpose and Scope
This memorandum summarizes the preliminary valuation findings received from Pinnacle West Appraisal Group LLC ("Pinnacle West"), our retained business valuation and intellectual property appraisal firm, as set forth in Pinnacle West's Preliminary Valuation Report dated February 20, 2023 (the "Preliminary Report"). The Preliminary Report was transmitted to this office on February 22, 2023, under cover of correspondence from Dr. Sandra Fujimoto, ASA, CVA, lead appraiser at Pinnacle West, and has been maintained on the firm's secure document management system under the above-referenced matter number.
Pinnacle West was retained on November 10, 2022, pursuant to a retention letter executed by Elliot Nguyen on behalf of Calderwood & Harkness LLP and addressed to Dr. Sandra Fujimoto at Pinnacle West's offices located at 4100 MacArthur Boulevard, Suite 200, Newport Beach, California 92660. The retention letter specified the scope of work, fee structure, and anticipated timeline for delivery of both preliminary and final valuation reports. Dr. Fujimoto's qualifications as an Accredited Senior Appraiser (ASA) and Certified Valuation Analyst (CVA) with over twenty years of experience in entertainment industry valuations make her well-suited to serve as the estate's retained expert should expert testimony become necessary in the probate proceeding.
The scope of the engagement encompasses the following categories of estate assets:
(a) Business valuation of Lumiére Canyon Studios LLC, a California limited liability company engaged in film and television production, with particular attention to the decedent's 50% membership interest;
(b) Valuation of the decedent's 35% membership interest in Pacific Rim Narrative Partners LLC, a California limited liability company operating as a media investment fund;
(c) Net present value appraisal of the decedent's intellectual property portfolio, consisting of royalty streams and residual income attributable to 14 feature films and 6 television series; and
(d) Fair market value appraisals of the two real properties held by the estate — the Beverly Hills residence located at 1847 Coldwater Canyon Drive, Beverly Hills, California 90210, and the Malibu Beach House located at 27100 Pacific Coast Highway, Malibu, California 90265.
The valuation date for all assets subject to this engagement is September 3, 2022, the date of death of the decedent, Teodoro R. Fonseca. This date is consistent with California Probate Code section 10309 and Internal Revenue Code section 2031, which generally require that estate assets be valued as of the date of the decedent's death for both probate administration and federal estate tax purposes.
In addition to summarizing the Preliminary Report's findings, this memorandum identifies areas of anticipated divergence between Pinnacle West's conclusions and those expected to be advanced by Hargrove & Linden Appraisals Inc. ("Hargrove & Linden"), the valuation firm retained by the contestants in this proceeding. Hargrove & Linden is led by Morton Linden, CFA, ASA, and is located at 2600 Michelson Drive, Suite 800, Irvine, California 92612. Hargrove & Linden was retained by Brennan, Ortega & Saldívar LLP, counsel for the contestants Rafael T. Fonseca, Isabela C. Fonseca-Greer, and Nicolás R. Fonseca, the decedent's three children from his first marriage. While we have not yet received a formal valuation report from Hargrove & Linden, informal representations made by opposing counsel during the January 2023 status conference, together with the contestants' preliminary asset characterization statements filed with the court, allow us to identify the likely contours of the valuation dispute.
II. Summary of Aggregate Probate Estate Valuation
Pinnacle West's preliminary aggregate valuation of the probate estate assets subject to this engagement is $71,112,000. The table below sets forth the preliminary value attributed to each asset category:
It should be noted that life insurance proceeds totaling $5,000,000 are non-probate assets payable directly to Ms. Fonseca as the named beneficiary under both policies and are therefore excluded from the probate estate total reflected above. Specifically, these proceeds consist of the following:
• A $3,000,000 term life insurance policy issued by Meridian Mutual Life Insurance Co., Policy No. GH-TL-2019-05582, with a policy effective date of April 1, 2019; and
• A $2,000,000 whole life insurance policy issued by Commonwealth Fidelity Assurance Corp., Policy No. GH-WL-2014-01247, with a policy effective date of September 15, 2014.
Both policies designate Marguerite D. Fonseca as the sole primary beneficiary. The contestants have not challenged the beneficiary designations on either policy, and we do not anticipate any dispute regarding these proceeds.
Based on informal representations from opposing counsel and the contestants' preliminary filings, we understand that Hargrove & Linden's aggregate estate valuation is approximately $68,750,000, reflecting alternative valuation conclusions and differing asset characterizations. The resulting discrepancy of $2,362,000 ($71,112,000 − $68,750,000) is discussed in detail in Section VIII below, along with an analysis of the anticipated areas of divergence.
III. Lumiére Canyon Studios LLC — Business Valuation
A. Entity Overview
Lumiére Canyon Studios LLC ("Lumiére Canyon" or the "Company") is a California limited liability company formed on March 18, 2009, and registered with the California Secretary of State under Filing No. 200906410337. The Company was co-founded by Teodoro R. Fonseca and Marguerite D. Fonseca during their marriage, which commenced on June 14, 2008. The Company's principal office is located at 4200 West Olive Avenue, Burbank, California 91505.
The Lumiére Canyon operating agreement, dated March 18, 2009, and executed by both the decedent and Ms. Fonseca as the sole members, provides for 50%/50% membership interests. The operating agreement designates both members as co-managers of the Company, with material decisions (including the approval of production budgets exceeding $500,000, the entry into distribution agreements, and the incurrence of debt) requiring the affirmative consent of both members.
Lumiére Canyon is a film and television production company that has developed, produced, and co-produced content for theatrical release, streaming platforms, and broadcast and cable television. The Company has maintained an active production slate throughout its operating history and has established distribution relationships with major studios and streaming platforms. Following the decedent's death, Ms. Fonseca has continued to serve as Chief Creative Officer and has managed the Company's ongoing operations, including the supervision of projects currently in various stages of development and post-production.
B. Valuation Methodology
Pinnacle West employed a combination of the income approach (Discounted cash flow analysis) and the market approach (guideline company method) to determine the enterprise value of Lumiére Canyon as of the valuation date. These primary approaches were supplemented by cross-checks against the asset-based approach (adjusted net asset value) to confirm the reasonableness of the conclusions reached under the income and market approaches.
Under the income approach, Dr. Fujimoto projected the Company's future cash flows based on the existing production slate, contracted distribution agreements, anticipated residual income from completed projects, and expected revenue from projects in the development pipeline. The projected cash flows were discounted to present value using a weighted average cost of capital reflecting the risk profile of an independent film and television production company operating in the current entertainment industry environment.
Under the market approach, Dr. Fujimoto identified guideline public companies and recent transaction multiples for comparable entertainment and media companies. While Lumiére Canyon is privately held and smaller than most publicly traded entertainment companies, the guideline company method provided a useful cross-check for the income approach conclusions, particularly with respect to revenue and EBITDA multiples.
The most recent internal valuation of Lumiére Canyon, prepared for purposes of the Company's annual financial review as of December 31, 2021, placed the Company's enterprise value at approximately $31,600,000. Dr. Fujimoto's preliminary analysis confirms this $31,600,000 enterprise value as of the September 3, 2022 valuation date. This confirmation reflects the relative stability of the Company's revenue streams, production pipeline, and distribution relationships during the period between the internal valuation date and the decedent's death, offset by certain adverse factors discussed below.
In arriving at the enterprise-level valuation, Pinnacle West considered the following adjustments and risk factors:
(i) Pending Production Pipeline. The Company had three projects in active production and five projects in various stages of development as of the valuation date. The income approach accounts for the expected revenue contribution of these projects based on comparable industry performance data and the Company's historical track record.
(ii) Key-Person Risk. The decedent served as the Company's primary creative executive and was instrumental in sourcing content, securing financing, and maintaining relationships with distribution partners. His death introduces key-person risk that could affect the Company's ability to maintain its historical revenue trajectory. Dr. Fujimoto applied a modest key-person risk adjustment at the enterprise level, though she notes that Ms. Fonseca's continued active involvement as Chief Creative Officer partially mitigates this risk.
(iii) Marketability and Minority Interest discounts. Because Lumiére Canyon is a privately held limited liability company with no established secondary market for membership interests, a limited marketability discount was considered and reflected in the enterprise-level valuation. The minority interest discount is addressed separately below in connection with the decedent's 50% interest.
C. Decedent's 50% Interest
Pinnacle West values the decedent's 50% membership interest in Lumiére Canyon at $15,800,000, calculated as the $31,600,000 enterprise value multiplied by the decedent's 50% membership interest.
Pinnacle West applied no additional minority interest discount to the decedent's 50% interest. This determination is based on the structure of the operating agreement, which provides both members with co-equal management and voting rights. A 50%/50% ownership structure, unlike a minority interest position, does not subject the interest holder to the unilateral decision-making authority of a controlling member. Dr. Fujimoto notes, however, that the 50%/50% structure does create a potential deadlock risk, which is partially reflected in the enterprise-level valuation.
A limited marketability discount was considered and reflected in the enterprise-level valuation, as noted above. No additional marketability discount was applied at the interest level, as the enterprise-level discount already accounts for the illiquidity inherent in Lumiére Canyon membership interests.
D. Community vs. Separate Property Characterization Relevance
Lumiére Canyon was formed on March 18, 2009, during the marriage of the decedent and Ms. Fonseca, and the operating agreement was executed on the same date. On this basis, Ms. Fonseca asserts that the decedent's 50% membership interest is entirely community property under California Family Code section 760, which establishes a general presumption that property acquired during marriage is community property.
The contestants challenge this characterization, contending that Lumiére Canyon was funded substantially with pre-marital capital belonging to the decedent. Specifically, the contestants allege that the decedent contributed approximately $2,400,000 in pre-marital savings and pre-marital intellectual property rights to capitalize the Company at its formation, and that these contributions represent separate property that should be traced through the Company's subsequent appreciation.
Pinnacle West's valuation is expressly agnostic to the community property versus separate property characterization question. The Preliminary Report values the decedent's interest without regard to the ultimate characterization, noting that the source-of-funds analysis required to resolve the characterization dispute is a legal question outside the scope of the appraisal engagement. However, Pinnacle West's financial analysis does include data that will be relevant to the community property tracing, including a detailed breakdown of the Company's capital contributions, retained earnings, and sources of appreciation over the period from formation to the valuation date.
For a comprehensive analysis of the community property characterization issues pertaining to the Lumiére Canyon interest, please refer to the internal Memorandum re: Community Property Characterization of Lumiére Canyon Studios LLC Interest, dated December 5, 2022, prepared by the undersigned.
IV. Pacific Rim Narrative Partners LLC — Membership Interest Valuation
A. Entity Overview
Pacific Rim Narrative Partners LLC ("PRNP") is a California limited liability company formed in 2015 and registered with the California Secretary of State under Filing No. 201518720492. PRNP operates as a media investment fund that invests in film and television production, distribution, and intellectual property acquisition opportunities. As of the valuation date, PRNP had approximately $78,500,000 in assets under management ("AUM").
The managing member of PRNP is Victor Sandoval, whose offices are located at 8455 Beverly Boulevard, Suite 310, Los Angeles, California 90048. Mr. Sandoval is responsible for the day-to-day management of the fund, including investment sourcing, due diligence, portfolio management, and investor relations. The decedent, Teodoro R. Fonseca, held a 35% membership interest in PRNP and served as a non-managing member. The decedent's involvement in PRNP was primarily strategic in nature, leveraging his entertainment industry relationships and creative expertise to identify and evaluate investment opportunities for the fund.
B. Valuation Methodology
Given that PRNP operates as a media investment fund with a diversified portfolio of entertainment industry assets, Pinnacle West primarily employed a net asset value ("NAV") approach to value the decedent's membership interest. The NAV approach is the standard valuation methodology for investment fund interests and is widely accepted by courts and the IRS for estate valuation purposes. Under this approach, the value of a membership interest is determined by reference to the member's pro rata share of the fund's net asset value.
Pinnacle West supplemented the NAV approach with an analysis of the fund's track record, fee structure, and carried interest provisions to assess whether the NAV adequately captures the economic value of the decedent's interest. This supplemental analysis considered the fund's historical internal rate of return, the management fee structure (including any fees payable to the managing member), and the carried interest waterfall provisions that may affect the distribution of returns among members.
The fund's AUM of $78,500,000 as of the valuation date was confirmed through capital account statements and fund financial records obtained pursuant to an information request letter dated November 1, 2022, from Elliot Nguyen to Victor Sandoval. Mr. Sandoval provided responsive materials on a rolling basis between November 2022 and January 2023, though certain items — including the complete operating agreement and full distribution history — remain outstanding as of the date of this memorandum (see Section IX below).
C. Decedent's 35% Interest
Pinnacle West values the decedent's 35% membership interest in PRNP at $27,475,000, calculated as the fund's $78,500,000 AUM multiplied by the decedent's 35% membership interest ($78,500,000 × 0.35 = $27,475,000).
This valuation represents the single largest asset in the probate estate, constituting approximately 38.6% of the total estate value of $71,112,000. The significance of this asset to the overall estate valuation — and to the distribution outcomes for both Ms. Fonseca and the contestants — cannot be overstated.
Pinnacle West acknowledges in the Preliminary Report that this straight pro rata calculation may overstate the realizable value of the decedent's interest if significant transfer restrictions, rights of first refusal, or other provisions in the PRNP operating agreement limit the marketability of the interest. A discount for lack of marketability ("DLOM") and any adjustments for transfer restrictions could reduce this figure in the final valuation. However, Dr. Fujimoto determined that it would be premature to apply a specific DLOM or transfer restriction discount pending receipt and review of the complete PRNP operating agreement, which has not yet been produced by Mr. Sandoval. The Preliminary Report applies the straight pro rata calculation as a placeholder, with a clear notation that the final valuation may adjust this figure downward.
Additionally, Dr. Fujimoto flags that the final valuation may need to account for any carried interest clawback provisions that could affect the realizable value of the decedent's interest. If the PRNP operating agreement contains clawback provisions requiring members to return previously distributed carried interest in the event of subsequent fund losses, these provisions could create a contingent liability that would reduce the net value of the decedent's interest.
D. Characterization Note
PRNP was formed in 2015, during the marriage of the decedent and Ms. Fonseca. Ms. Fonseca asserts that the decedent's 35% membership interest in PRNP is community property under the general presumption of California Family Code section 760. The contestants, however, claim that the PRNP interest is the decedent's separate property, asserting that it was acquired with funds traceable to the decedent's separate property earnings or pre-marital assets. As with the Lumiére Canyon interest, Pinnacle West's valuation does not address the characterization issue, which is a legal question to be resolved by the court based on tracing evidence and applicable California community property law.
V. Intellectual Property Portfolio — Net Present Value Appraisal
A. Portfolio Composition
The decedent's intellectual property portfolio comprises royalty streams and residual income from 14 feature films and 6 television series produced or co-produced by Lumiére Canyon Studios LLC and, in certain cases, by the decedent individually prior to or outside of Lumiére Canyon. The portfolio is diverse in terms of genre, platform, and vintage, encompassing works released between approximately 2004 and 2022.
The income streams associated with this portfolio include the following categories:
• Domestic and international theatrical distribution royalties;
• Streaming platform licensing fees (including licenses to major domestic and international streaming services);
• Broadcast and cable television syndication residuals;
• Home entertainment distribution revenues (digital and physical media);
• Merchandising revenue associated with certain properties; and
• Ancillary licensing fees (including soundtrack licensing, novelization rights, and adaptation rights).
The portfolio's revenue composition has shifted significantly in recent years, reflecting broader industry trends, with streaming platform licensing fees now constituting the largest single revenue category, followed by international distribution royalties and domestic syndication residuals.
B. Valuation Methodology
Pinnacle West employed a discounted cash flow ("DCF") methodology to calculate the net present value ("NPV") of projected future royalty streams and residual payments attributable to the decedent's interest in the IP portfolio. The DCF methodology is the standard approach for valuing intellectual property with quantifiable future income streams and is consistent with the guidance provided in the American Society of Appraisers' Business Valuation Standards and the International Valuation Standards Council's IVS 210 — Intangible Assets.
The key inputs to the DCF analysis included:
• Historical Royalty Receipts (2017–2022). Dr. Fujimoto analyzed six years of historical royalty and residual income data to establish baseline revenue trends, seasonal patterns, and decay curves for individual properties within the portfolio.
• Contracted Distribution Agreements. The analysis incorporated the terms and remaining duration of existing distribution agreements, including minimum guarantees, revenue sharing percentages, and renewal options.
• Projected Streaming and Syndication Revenue. Future revenue projections were developed based on industry benchmarks for comparable media content, including data from the Motion Picture Association's annual reports and proprietary entertainment industry databases.
• discount Rate. An appropriate discount rate was applied to reflect the risk inherent in entertainment industry revenue streams, including content lifecycle risk, platform concentration risk, competitive displacement risk, and general economic conditions. The specific discount rate applied by Pinnacle West is detailed in the Preliminary Report and reflects a risk premium above the risk-free rate that is consistent with prevailing market expectations for entertainment intellectual property.
• Useful Economic Life. The useful economic life of individual properties within the portfolio was estimated based on genre, platform availability, audience demographics, and historical decay curves for comparable media content. Newer properties and properties with active streaming platform licenses were assigned longer useful lives, while older properties with declining viewership metrics were assigned shorter useful lives.
C. Preliminary NPV
Pinnacle West's preliminary NPV of the IP portfolio is $4,600,000. This figure reflects the aggregate present value of all future income streams attributable to the decedent's interest in the 14 feature films and 6 television series, net of anticipated distribution fees, platform revenue sharing arrangements, and guild and union residual obligations.
It should be noted that the IP portfolio valuation is separate from and in addition to the Lumiére Canyon enterprise valuation. While some of the IP in the portfolio was produced through Lumiére Canyon, the royalty streams and residual payments flow directly to the decedent (or, now, to the estate) under the applicable distribution agreements rather than through Lumiére Canyon's operating accounts. Dr. Fujimoto has been careful to avoid double-counting by excluding from the Lumiére Canyon enterprise valuation any income streams that are captured in the IP portfolio NPV, and vice versa.
D. Characterization Note
Ms. Fonseca asserts that the entirety of the IP portfolio is community property, on the basis that the works were created during the marriage or, in the case of pre-marriage works, that the royalty streams accrued during the marriage constitute community property income. The contestants challenge this characterization, contending that certain properties in the portfolio originated during the decedent's first marriage or were based on concepts, scripts, or treatments conceived by the decedent prior to his marriage to Ms. Fonseca. The contestants argue that these properties, or at least a proportional share of their value, constitute the decedent's separate property.
The characterization of the IP portfolio will require a property-by-property analysis of the creation dates, development history, and applicable intellectual property ownership agreements. This analysis is beyond the scope of the Pinnacle West engagement and will be addressed in a separate internal memorandum.
VI. Real Property Valuations
A. Beverly Hills Residence — 1847 Coldwater Canyon Drive, Beverly Hills, CA 90210
Pinnacle West's preliminary fair market value of the Beverly Hills residence is $8,450,000 as of the September 3, 2022 valuation date.
The appraisal was conducted using the comparable sales approach as the primary methodology, supplemented by the income approach (based on potential rental value) as a cross-check. The comparable sales approach analyzed recent sales of comparable residential properties in the Coldwater Canyon area of Beverly Hills, with adjustments for differences in lot size, square footage, condition, amenities, and location. The income approach estimated the property's potential gross rental income based on comparable rental listings in the area and applied an appropriate capitalization rate to derive an indicated value.
The Beverly Hills residence is the marital home where Ms. Fonseca currently resides. The property consists of a single-family residence situated on a lot of approximately 0.72 acres, with approximately 6,800 square feet of living space, five bedrooms, six bathrooms, a home theater, a swimming pool, and detached guest quarters.
Title records obtained from Coastline Title & Escrow Co. (contact: Andrea Solis; 9401 Wilshire Boulevard, Suite 720, Beverly Hills, California 90212) confirm that the property was acquired during the marriage of the decedent and Ms. Fonseca. Title is held in the names of both spouses as community property with right of survivorship.
Ms. Fonseca asserts that the Beverly Hills residence is community property. The contestants assert that the property is partially separate property, contending that the down payment of approximately $1,200,000 was funded with the decedent's pre-marital funds held in a bank account that existed prior to the marriage. The characterization issue will require a tracing analysis to determine the source of the down payment funds, which is being addressed separately.
B. Malibu Beach House — 27100 Pacific Coast Highway, Malibu, CA 90265
Pinnacle West's preliminary fair market value of the Malibu Beach House is $6,200,000 as of the September 3, 2022 valuation date.
The appraisal was conducted using the comparable sales approach, which analyzed recent sales of oceanfront and ocean-adjacent residential properties along Pacific Coast Highway in Malibu, with adjustments for differences in lot size, ocean frontage, square footage, condition, and amenities. The Malibu Beach House is a single-family oceanfront residence with approximately 3,400 square feet of living space, four bedrooms, three-and-a-half bathrooms, and direct beach access.
The property was purchased on August 22, 2007, for $4,750,000 — approximately ten months prior to the marriage of the decedent and Ms. Fonseca, which took place on June 14, 2008. Title was taken in the decedent's name alone at the time of purchase, and title was never subsequently transferred to joint or community property form.
The contestants argue that the Malibu Beach House is the decedent's separate property, on the basis that it was acquired prior to the marriage with the decedent's own funds. Ms. Fonseca does not dispute that the property was acquired before the marriage but asserts that substantial community contributions to the property during the marriage entitle her to a proportional community interest under the Moore/Marsden line of cases. Specifically, Ms. Fonseca identifies the following community contributions:
• Community-funded renovation completed in 2016: $1,800,000 — A significant renovation and expansion project, funded from the couple's joint accounts, was completed in 2016. The renovation included an addition of approximately 800 square feet of living space, a full kitchen remodel, bathroom upgrades, new landscaping, and structural improvements to comply with updated coastal construction standards.
• Community-funded mortgage payments from joint accounts: Approximately 142 monthly mortgage payments of $14,200 each, made from the couple's joint Veltara Basin Bank checking account from June 2008 (the date of the marriage) through the final mortgage payoff in March 2020. The total community-funded mortgage payments amount to approximately $2,016,400.
• Total community contributions: $1,800,000 + $2,016,400 = $3,816,400.
• Community interest claimed: $3,816,400 ÷ $6,200,000 ≈ 61.6% of the property's current fair market value.
It should be noted that the Moore/Marsden apportionment methodology is more nuanced than a simple ratio of community contributions to current fair market value, as it requires an allocation of appreciation between the separate property component and the community property component based on the relative contributions of each. The simplified calculation above is presented for illustrative purposes only. Pinnacle West's role with respect to the Malibu Beach House is limited to establishing the property's fair market value as of the valuation date; the Moore/Marsden community property tracing analysis is addressed comprehensively in the separate internal Memorandum re: Community Property Tracing — Malibu Beach House, dated January 15, 2023, prepared by the undersigned.
VII. Financial Accounts and Personal Property
A. Veltara Basin Bank, N.A. Accounts
Information regarding the decedent's financial accounts at Veltara Basin Bank, N.A. was obtained from Franklin Ybarra, relationship manager, at the bank's offices located at 700 South Hope Street, Los Angeles, California 90017. Account information was provided pursuant to an account freeze and information request letter dated October 18, 2022, issued by this office in connection with the administration of the estate. Mr. Ybarra has been cooperative and responsive throughout the process.
The account balances as of the date of death (September 3, 2022) are as follows:
• Brokerage Account (ending -4782): $5,120,000 — This account consists of a diversified investment portfolio including domestic and international equities, fixed income securities, and alternative investment positions. The account was managed on a discretionary basis by the bank's wealth management division.
• Personal Checking Account (ending -3091): $342,000 — This account served as the primary operating account for the decedent's personal and household expenses.
• Money Market Account (ending -6155): $1,875,000 — This account held cash reserves and was used periodically for short-term liquidity needs and as a holding account for funds awaiting deployment into the brokerage account or other investments.
The total value of the Veltara Basin Bank accounts as of the date of death is $7,337,000.
These are liquid financial assets whose valuation is based on account statements and market values as of the date of death. No separate appraisal methodology is required, as the account balances and investment positions are objectively determinable from the bank's records. Pinnacle West's role with respect to these accounts was limited to confirming the balances reported on the account statements and ensuring consistency with the overall estate inventory.
Ms. Fonseca claims all three accounts as community property. The contestants challenge this characterization with respect to two of the three accounts. Specifically, the contestants claim that the brokerage account (ending -4782) is mixed community and separate property, asserting that a substantial portion of the investment capital in the account originated from the decedent's pre-marital assets. The contestants also claim that the money market account (ending -6155) is mixed, asserting that it received periodic deposits of income that the contestants characterize as the decedent's separate property. The checking account (ending -3091) is not disputed and is characterized by both sides as community property.
B. Personal Property
Pinnacle West's preliminary valuation of the decedent's personal property, consisting of art, vehicles, furnishings, and other tangible personal assets, is $1,250,000. This category encompasses the following:
• Art Collection. The decedent and Ms. Fonseca assembled a collection of contemporary art over the course of their marriage, including paintings, sculptures, and limited-edition prints by established and emerging artists. The art collection is housed primarily at the Beverly Hills residence, with a small number of pieces at the Malibu Beach House.
• Automobiles. The decedent owned several vehicles at the time of his death, including a luxury sedan, a sports car, and an SUV, all of which are located at the Beverly Hills residence.
• Household Furnishings. The household furnishings at both residences include designer furniture, custom fixtures, electronics, and other household items.
• Other Tangible Personal Assets. This category includes jewelry, watches, personal electronics, and miscellaneous personal items.
Both sides characterize the personal property as community property. No significant dispute is anticipated regarding either the valuation or the characterization of personal property, making this the least contentious asset category in the estate.
VIII. Comparison with Contestants' Valuation and Areas of Divergence
A. Aggregate Discrepancy
The aggregate valuation discrepancy between Pinnacle West and Hargrove & Linden is summarized as follows:
The $2,362,000 difference represents approximately 3.3% of the total estate value as determined by Pinnacle West. While this gap is meaningful in absolute dollar terms, it is relatively modest in the context of a $71 million estate and suggests that the core valuation dispute between the parties is narrower than might have been anticipated.
B. Anticipated Areas of Divergence with Hargrove & Linden
Based on information available to date — including the contestants' preliminary filings, informal representations by opposing counsel, and our familiarity with Morton Linden's valuation approach from prior proceedings — we anticipate the following areas of divergence between Pinnacle West and Hargrove & Linden:
Lumiére Canyon Studios LLC. Hargrove & Linden, under the direction of Morton Linden, is expected to apply more aggressive key-person and marketability discounts to the Lumiére Canyon enterprise valuation, potentially reducing the enterprise value below the $31,600,000 figure confirmed by Pinnacle West. The contestants may argue that the death of Teodoro Fonseca — who served as the Company's primary creative executive and was the driving force behind its most commercially successful projects — materially and permanently impaired the Company's ongoing enterprise value. While Pinnacle West acknowledges the key-person risk in its analysis, it applies only a modest adjustment on the basis that Ms. Fonseca's continued leadership as Chief Creative Officer provides meaningful continuity. We expect Hargrove & Linden to take a more pessimistic view of this factor.
Pacific Rim Narrative Partners LLC. Hargrove & Linden may apply a significantly deeper discount for lack of marketability and transfer restrictions on the decedent's 35% PRNP interest, reducing the value below the $27,475,000 straight pro rata figure. Depending on the provisions of the PRNP operating agreement — which, as noted above, has not been fully produced — Hargrove & Linden may identify transfer restrictions, rights of first refusal, buy-sell provisions, or other contractual limitations that would reduce the realizable value of the interest to a figure substantially below the pro rata NAV. Additionally, Hargrove & Linden may value the interest net of any carried interest allocations or management fee obligations that reduce the decedent's effective economic interest below 35%. The PRNP interest is the largest single asset in the estate, and even a modest percentage reduction in the applied discount could translate into a multi-million-dollar difference in the overall estate valuation.
IP Portfolio. Hargrove & Linden may employ a higher discount rate or project a shorter useful economic life for certain older film and television properties within the portfolio, resulting in a lower NPV than the $4,600,000 figure determined by Pinnacle West. In particular, older theatrical releases with declining viewership metrics and limited streaming platform interest may be assigned minimal or nominal values by Hargrove & Linden, while Pinnacle West's analysis may attribute residual value to these properties based on long-tail revenue assumptions that Hargrove & Linden considers overly optimistic.
Real Properties. Less divergence is expected on the Beverly Hills and Malibu property valuations, as the comparable sales data used in the appraisal of residential real estate is relatively objective and publicly available. However, minor differences may arise from the selection of comparable properties, the application of adjustments for differences in size, condition, or amenities, or the relative weighting of comparable sales and income approach indications. Any divergence on the real property valuations is likely to be modest — on the order of 2% to 5% of the property values — and is unlikely to materially affect the overall estate valuation.
Financial Accounts. No divergence is expected on the Veltara Basin Bank account balances, as these are based on objective account statements and market values as of a specific date. Both sides' appraisers rely on the same underlying data, and there is no methodological judgment involved in determining these values.
Personal Property. Minimal divergence is expected on the personal property valuation. While appraisers may reach slightly different conclusions regarding the value of individual items within the art collection or vehicle inventory, the aggregate personal property value of $1,250,000 represents a small fraction of the total estate and is unlikely to be a significant point of contention.
C. Implications for Settlement and Litigation Positioning
The $2,362,000 aggregate valuation gap, while significant in absolute terms, represents only approximately 3.3% of the total estate value. This relatively narrow gap suggests that valuation methodology, standing alone, is unlikely to be the dispositive issue in this proceeding. If the dispute were limited to the question of how much the estate is worth, the parties' positions would be close enough to facilitate a negotiated resolution.
However, the primary risk to Ms. Fonseca's position lies not in the valuation differences but rather in the separate property characterization arguments advanced by the contestants. This risk is concentrated in the two largest asset categories:
• The PRNP 35% membership interest ($27,475,000); and
• The Lumiére Canyon 50% membership interest ($15,800,000).
Together, these two assets comprise approximately $43,275,000, or 60.8% of the total probate estate. If the contestants' characterization arguments prevail — and if the premarital agreement is found valid and enforceable — the reclassification of these interests, even partially, as separate property could have a substantially more consequential impact on Ms. Fonseca's intestate share than any valuation discrepancy. For example, if the PRNP interest alone were reclassified as the decedent's separate property, Ms. Fonseca's community property share of the estate would be reduced by approximately $13.7 million (i.e., one-half of the $27,475,000 PRNP interest), an amount that dwarfs the $2,362,000 valuation gap.
Accordingly, while we must be prepared to defend Pinnacle West's valuation methodology and conclusions, our primary strategic focus should remain on the community property characterization issues, the validity and enforceability of the premarital agreement, and the tracing evidence necessary to support Ms. Fonseca's claim that the Lumiére Canyon and PRNP interests are community property.
IX. Outstanding Items and Next Steps
The following items require attention in order to advance the valuation process and prepare for the upcoming mediation and, if necessary, trial:
1. Final Valuation Report. Pinnacle West expects to deliver a final valuation report by approximately May 2023, pending receipt of additional financial records from PRNP (including the complete operating agreement and full distribution history) and updated production pipeline data from Lumiére Canyon Studios LLC. Dr. Fujimoto has indicated that the final report will refine the preliminary figures set forth herein, with particular attention to the PRNP marketability discount and the IP portfolio NPV. We should monitor the timeline closely to ensure that the final report is available well in advance of any trial setting.
2. PRNP Operating Agreement Review. The PRNP operating agreement is needed to assess transfer restrictions, tag-along and drag-along provisions, buy-sell provisions, and any other contractual limitations that may affect the marketability discount applied to the decedent's 35% membership interest. Victor Sandoval's response to the November 1, 2022 information request letter remains outstanding in part as of the date of this memorandum. A follow-up request should be issued promptly, and if Mr. Sandoval continues to delay, we should consider compelling production through subpoena or court order. The absence of the complete operating agreement is the single most significant data gap in the current valuation analysis.
3. Estate Accountant Coordination. We should coordinate with Dennis Chua, CPA, at Ridgeway Accounting Partners LLP (515 South Flower Street, Suite 3600, Los Angeles, California 90071) to reconcile Pinnacle West's valuation findings with the estate inventory and financial statements currently under preparation. Mr. Chua's work on the estate's financial accounting should be consistent with and informed by the valuation conclusions reached by Pinnacle West, and any discrepancies should be identified and resolved before the final report is issued.
4. Hargrove & Linden Report. We should request, through Brennan, Ortega & Saldívar LLP (attention: Damian R. Ortega and Lydia Kwan), a copy of Hargrove & Linden's preliminary valuation report when it becomes available, to facilitate a direct comparison with Pinnacle West's findings. This request may be addressed through the mediation process or, if the current informal standstill terminates, through formal discovery. Early access to the contestants' valuation report will allow us to identify specific methodological differences and prepare responsive analysis in advance of mediation and trial.
5. Ashford Fiduciary Services Reporting. Gerald Whitmore at Ashford Fiduciary Services Inc. (600 Wilshire Boulevard, Suite 1450, Los Angeles, California 90017), the neutral estate administrator appointed by the court, should be provided a copy of the Pinnacle West Preliminary Report for estate administration purposes. Mr. Whitmore's role as neutral administrator requires that he be kept informed of material valuation developments, and the Preliminary Report should be transmitted to him with an appropriate cover letter noting that the findings are preliminary and subject to revision in the final report.
6. Mediation Preparation. The preliminary valuation findings summarized in this memorandum should be incorporated into the mediation brief being prepared for the April 12, 2023 mediation session before the Honorable Constance Adler (Ret.) at Westside Dispute Resolution Center. The mediation brief should present Pinnacle West's findings in a manner that is accessible to the mediator and persuasive to the contestants, highlighting the relatively narrow valuation gap and framing the characterization issues as the primary area of dispute requiring resolution.
X. Conclusion
Pinnacle West's preliminary findings support Ms. Fonseca's position that the total probate estate has a fair market value of approximately $71,112,000 as of the September 3, 2022 valuation date. This figure is based on a thorough analysis of each asset category using generally accepted valuation methodologies appropriate to the nature of the assets involved, including income and market approaches for the business interests, discounted cash flow analysis for the IP portfolio, and comparable sales analysis for the real properties.
The Pinnacle West valuations are generally consistent with internal records and prior valuations available to the estate. Most notably, the Lumiére Canyon enterprise value of $31,600,000 confirmed by Dr. Fujimoto is consistent with the Company's most recent internal valuation as of December 31, 2021, which arrived at the same figure. This consistency lends credibility to the Pinnacle West analysis and supports its defensibility in the event that the contestants challenge the methodology or conclusions.
As discussed throughout this memorandum, the principal litigation risk facing Ms. Fonseca remains the characterization question — whether the Lumiére Canyon and PRNP interests, in particular, are community property or separate property — rather than the valuation disputes, which are comparatively narrow. Nevertheless, we should be fully prepared to defend Pinnacle West's methodology against the anticipated challenges from Hargrove & Linden, particularly regarding discount rates, key-person risk adjustments, and marketability discounts applied to the Lumiére Canyon and PRNP interests. Dr. Fujimoto's credentials, experience in entertainment industry valuations, and methodological rigor position her well to withstand cross-examination should expert testimony become necessary.
I recommend that we proceed to finalize the Pinnacle West engagement by facilitating the production of the outstanding PRNP documents and Lumiére Canyon production pipeline data, and that we incorporate these preliminary findings into our mediation strategy for the April 12, 2023 session. I am available to discuss these findings and the recommended next steps at your convenience.
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the named recipients in connection with the legal representation of Marguerite D. Fonseca. Do not distribute, copy, or disclose this memorandum or its contents to any person outside of Calderwood & Harkness LLP without the prior written authorization of the responsible partner.
Prepared by:
________________________________________
Grace Nakamura Working Associate Calderwood & Harkness LLP
Reviewed by:
________________________________________
Howard Quinn, Responsible Partner Calderwood & Harkness LLP
________________________________________
Elliot Nguyen, Lead Associate Calderwood & Harkness LLP
Distribution: Internal only — Attorney Work Product / Privileged and Confidential
Calderwood & Harkness LLP 350 South Grand Avenue, Suite 4800 Los Angeles, California 90071
Matter No.: 1035-00005
Asset | Pinnacle West Preliminary Value
Beverly Hills Residence (1847 Coldwater Canyon Drive, Beverly Hills, CA 90210) | $8,450,000
Malibu Beach House (27100 Pacific Coast Highway, Malibu, CA 90265) | $6,200,000
Lumiére Canyon Studios LLC (decedent's 50% membership interest) | $15,800,000
Pacific Rim Narrative Partners LLC (decedent's 35% membership interest) | $27,475,000
Veltara Basin Bank Brokerage Account (ending -4782) | $5,120,000
Veltara Basin Bank Checking Account (ending -3091) | $342,000
Veltara Basin Bank Money Market Account (ending -6155) | $1,875,000
IP Portfolio (14 feature films, 6 television series — NPV) | $4,600,000
Personal Property (art collection, vehicles, furnishings) | $1,250,000
Total Probate Estate | $71,112,000
Amount
Pinnacle West total probate estate valuation | $71,112,000
Contestants' estimated total (Hargrove & Linden) | $68,750,000
Difference | $2,362,000

MEMORANDUM

MATTER NO.: 1035-00005

Record

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