This is a rush transcript from "On the Record," June 11, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Well, now it's time for her side of the story. 24 hours ago, the now former Miss California Carrie Prejean was stripped of her crown. Why? Well, they say she breached her contract. Moments ago, Prejean talked to our own Sean Hannity.


CARRIE PREJEAN, FORMER MISS CALIFORNIA: I honestly don't know what happened. All I know is yesterday morning, I was on my way to an event and I got a phone call from the media. And they said, "What's your statement, basically?" And I said, "About what?" And they said, "You know, about you getting fired?" And I could not believe it. I was absolutely speechless. I didn't know what to say.

SEAN HANNITY, "HANNITY" HOST: As far as you are concerned, no violation at all?

PREJEAN: I have not violated my contract. In fact, I have worked so hard since the press conference -- and I thank Donald Trump so much for all he's done for me. But I'd follow the contract to the tee and done everything possible to cooperate with the circumstances that I was under. So, I have not done anything to be in breach of contract, Sean.

HANNITY: You know, I -- the people from -- I guess, Miss California, the pageant -- this is not Donald Trump, by the way. The people that you were having conflicts from the very beginning, they got in contact with my office. I just wanted to make sure I saw these e-mails, this list of e- mails here. And one of the things I'm noticing, they didn't release the entire thread of e- mails. Have you seen the ones that have been released?

PREJEAN: Right. No, I haven't. And I mean -- of course, that's obvious that they're not going to release all of the information that was back and forth. But I know that there were about 70 e-mails back and forth from us, whether it was from my attorney to Keith Lewis' attorney, or from myself back to Keith or his assistant. So, there was constant communication. It just definitely was a miscommunication.

HANNITY: And they've released your private e-mail address, that they purposely --


HANNITY: Why would they do that? And how do you feel about that?

PREJEAN: Well, Sean, all I know is from the moment I give my answer on stage that night, I have had no support from Keith Lewis or Shannon Moakler, from anybody from the Miss California organization. I think that I was bold enough to take a stand that I took on that stage that night. I lost the crown I think because of my answer and whether or not people want to agree with me or not, but this is all happening right now because of the stance that I took and the boldness. This has nothing to do with me against any particular group or -- you know, this has nothing to do with me hating gays or whatever. I mean, this is -- bottom line, I answered a question at a beauty contest and now I am being punished. I am being dethroned because of the answer that I gave. I mean, this is what it comes down to. I'm not in breach of contract. I haven't signed any book deal or sign with any business proposal. Bottom line is: This is all happening because of the answer I gave, Sean. And I think the majority of Americans know it.


VAN SUSTEREN: So, is Prejean going to come out swinging and sue the California pageant? Joining us live is Carrie Prejean's lawyer, Chuck Limandri. Chuck, first of all, is there a book deal with a literary agent? Or is there a book deal with a publishing company?

CHUCK LIMANDRI, CARRIE PREJEAN'S ATTORNEY: My understanding, Greta, is that what she did was she retained a literary agent who's actually talking to various publishers. But there has been no actual contract signed with a publishing company to do the book at this point. And, in fact, Carrie and her literary agent were waiting until we got written approval from the Trump organization, which we were in the process of negotiating as recently as Monday, when out of the blue, she got the notice that she was being fired yesterday afternoon.

VAN SUSTEREN: Am I correct that in the discussion that the pageant wanted her to sign what's called a non-disparagement clause, making that if she wrote a book, she couldn't say anything bad about the pageant and that her thinking is, "Look, I need to be free to say everything as honestly as I see it"? Is that part of the dispute?

LIMANDRI: Yes, that's exactly right. And, really, it wasn't even a dispute at that point. When I sent the proposed agreement, I sent back an e-mail Monday night saying we needed clarification on that. Carrie really had no bone to pick with Mr. Trump or the Miss USA organization. But, of course, she wants to tell her side of the story. She never had a chance to defend herself against the unfair and unfounded allegations that were constantly being made against her by Keith Lewis and Shannon Moakler, and her book was opportunity to do that.

So, although she had no intention in the name-calling, she wanted to be, you know, fair and accurate in how she recounted those events. And to that extent that put them in the bad light, I mean, so be it. That's a true story. So, I just said, we want some clarification on how you would like her to proceed with writing about those issues, and instead, I got back yesterday, late morning, an e- mail saying, "Since you rejected our proposed agreement to do the book deal, there's going to be no further discussion. The agreement is off the table. That's it." Then, I got a call from TMZ late yesterday morning that she's fired. I haven't heard anything from the Trump people or Miss California people at that point.

VAN SUSTEREN: All right. So, in addition to this whole disagreement about the book or lack of book or lack of deal, one of the allegations from the organization is the breach of contract. They asked her to do events apparently and that she declined. Was she asked to do events having to do with same-sex couples? That's the first question. And did she decline to do those? And is this, in any way, related to the question at the pageant?

LIMANDRI: I'm sure it's related to the question of the pageant. And yes, she was asked to do that. She was asked to consider giving an apology and retracting her answer -- which certain people found to be hurtful, which, of course, it wasn't as you know, she was very gracious on stating her opinion. And then she was asked to attend an event in Hollywood which was a debut of a docu-drama promoting same-sex marriage and the people that wrote it were going to be there presenting and explaining their point of view as gay people coming out and wanted to get married.

And Carrie said she didn't feel comfortable. There's still a lot of animosity, particularly in the Hollywood community against her at that time and she didn't necessarily share the view points being expressed. So, on that occasion, she said, "No, I don't feel that would be appropriate." That's the only time that I'm aware of where she came out and said she would not do an event. And even that one, there weren't asking her to do it in an official capacity, only in a personal capacity. And since that time...


LIMANDRI: . she's got nothing but grief. Go ahead.

VAN SUSTEREN: We only have 20 seconds left. We only have 20 seconds left. Is the intention now to sue or to actively pursue that route? As well (ph) as she might -- and you have some other resolutions (ph) -- but do you intend to sue?

LIMANDRI: You know, at this point, if Keith Lewis keeps shooting his mouth off, attacking her, she might be left with no alternative. That was not her intention initially. We're still, you know, weighing those options, seriously considering. We think she's got a great suit, but she may well decide that's not how she wants to spend the next few years. But it may be inevitable if they keep acting the way they've been acting.

VAN SUSTEREN: Chuck, thank you.

LIMANDRI: You're welcome, Greta.

VAN SUSTEREN: Within hours of Carrie Prejean getting her pink slip, a new Miss California was crowned. Joining us live is the new Miss California, Tami Ferrell, and the executive director of the Miss California pageant, Keith Lewis. Tami, I guess I should say, at least, congratulations to you. You're sort of the -- you know, you're not really the one who's sort of driving this whole dispute. But then, certainly, you know, first runner-up and now Miss California. So, congratulations.


VAN SUSTEREN: Now, to you, Keith. You're welcome. Keith, to you, there -- it seems to me -- to be two sort of allegations in this dispute. One is whether or not there was a book deal. She says there is not. Is that any part of your decision to fire her? The book deal discussion.

KEITH LEWIS, EXEC DIRECTOR, MISS CA USA PAGEANT: Yes. I think that was part of it. And I think that Mr. Limandri was one of the individuals who actually told us that. I think that the may have misspoke and later came back and said something different. I'm not totally sure. As you know, there are attorneys that deal with it and I have an attorney. She has an attorney, and they deal with the issue.

VAN SUSTEREN: But, I mean, in terms of recommending that she get a pink slip, did you think she had a book deal?

LEWIS: Yes. I did believe she had a book deal.


LEWIS: I was told that that was one of the things that was disclosed to us last week.

VAN SUSTEREN: Did you ask that there'd be a non-disparagement cause, essentially telling her she can't write what she wants to? If she thought that it was unflattering to the pageant.

LEWIS: You know, not that she couldn't write what she wanted. You know, the people that have stepped in to this, and I think that it's -- one thing I want to address is the fact that he seems to keep coming back to this as same-sex marriage. And when Carrie Prejean was on your show, Greta, she didn't know how to answer the question on civil union. And one of the things that we have said, if she was going to go out and talk about these issues, she needed to have the information in hand. So, when we suggested to her ...


VAN SUSTEREN: All right. Let me -- let me ask you this. I mean, that's something separate. I'm trying to get to the contract dispute for which she's been fired.

LEWIS: OK. Well, let's go through the contract dispute because he ...

VAN SUSTEREN: Let me ask you -- did you ask her to attend a documentary in Hollywood that promoted same-sex couples? Did you ask her to attend that?

LEWIS: You know what? We gave her lots and lots of lists of things that she could attend. That was one of the things in the list that we gave her more information.

VAN SUSTEREN: Is that a yes or no?

LEWIS: It is a yes, but it needs to be clarified that we didn't ask her to do it officially. We didn't ask her to go as Miss California or to be announced as it. And I think that what getting really sidetracked.

VAN SUSTEREN: Here's the problem, Keith. Here's the problem.

LEWIS: And this is what mister ...

VAN SUSTEREN: No, I don't think that's right because, basically, and I once asked Tami this question (ph). Look, the whole point -- and Tami is going to tell you, is to represent the state. And Tami wants to go out and represent the state and do a good job.

LEWIS: Absolutely.

VAN SUSTEREN: You do not throw them into a fire. And you know that if you put her in West Hollywood, doing that same-sex couple, you know they're going to throw apples and oranges and tomatoes at her. But so -- and so, that's a really awkward position.

LEWIS: If she's going as an official from Miss California, then I agree with you.

VAN SUSTEREN: Well, I don't think she'd go any other way.

LEWIS: I would like to address the fact that ...

VAN SUSTEREN: Let me -- let me ask, Tami.

LEWIS: . there were 52 appearances that she was offered, that she declined. So, I think that Mr. Limandri needs to look at those things as well.



VAN SUSTEREN: Tami, let me go to you -- let me switch to you. I'm not going to put you on the hot seat like Keith. I was just going to ask you -- are you excited about being the new Miss California?

FERRELL: You know, I am excited about it. I didn't want to step into the line of fire, but I know that comes with the title right now and all the controversy. But I'm excited to shed positive light on some of the different aspects of the program.

VAN SUSTEREN: All right. You're going to be asked this question. So, let me ask you. What's your view on same-sex marriage? Because that is now become part of the Miss California, whether you like it or not. What's your view on same-sex marriage?

FERRELL: Well, first of all, I just think it's hilarious. I just keep going back to this. The fact that the world is asking beauty queens the answers to political question, I don't --that's not something that I want to take a stance on.


FERRELL: But honestly, I think it's a personal decision and I think it's a civil rights issue. And I think that we let the voters decide.

VAN SUSTEREN: So, if the voters of California have said no to it, do you support that? Is that what you're saying? You say that there should be no same-sex marriage.

FERRELL: I'm saying that I support everybody having the right to say their own opinions. I'm not saying that I am right or I'm with them or against them. I'm just saying that I want to come in right now and have my own causes, my own issues to champion. I didn't want to step into this platform. I know that there's a lot of controversy going on, but I have other things that I want to champion. We're aligned with so many amazing charities and that's where I want to start my focus.

VAN SUSTEREN: And actually, I didn't want to put on the hot seat. I probably should not to put you on the hot seat on that one. So, Tami, I apologize to you.



VAN SUSTEREN: Keith, you are a very good sport. All right.

LEWIS: Put on the hot seat, Greta.

VAN SUSTEREN: I put on hot seat, you ought to come back. Will you come back next week, Keith? We've got so much to talk about.

LEWIS: You bet I will come. I have been back to you three times and I love being on your show. So, no matter what.

VAN SUSTEREN: I know. I know, you are a good sport, you're very good sport. You're all -- you know, this is an interesting issue. Tami...

LEWIS: I have all of these papers.

VAN SUSTEREN: All right. Bring her back next week. I'm sorry to tell you, but we got to go. Thank you both.

LEWIS: I will.

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