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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWAR
In re:
) Civil Action No. 07-287 RLB ) Hon. Ronald L. Buckwalter
) United States Distrct Judge
) (by special designation)
W. R. GRACE & CO., et al.
Debtors.
) Banptcy Case No. 01-01139 (JK)
MOTION FOR LEAVE TO COUNTER-DESIGNATE AN ADDITIONAL ITEM IN THE RECORD ON APPEAL OF THE BANKRUPTCY COURT'S ORDER DISALLOWING 71 UNAUTHORIZED SPEIGHTS & RUNYAN CLAIMS
The above-captioned Debtors, by and through their counsel, in connection with the
Appellants' Notices of Appeal (Dkt. Nos. 15308, 15311, 15314, 15316, 15318, 15320, 15322,
15324, 15326, 15328, 15330, 15332, 15334, 15336, 15338, 15340, 15342, 15344, 15346, 15347, 15350, 15352, 15354, 15356, 15358, 15360, 15362, 15364, 15366, 15370, 15373, 15376, 15380,
15384, 15386, 15388, 15391, 15394, 15396, 15398, 15400, 15403, 15407, and 15410) of
the
Bankptcy Cour's April
17, 2007 Order Expunging 71 Asbestos Property Damage Claims for
Failure to Establish Written Authority Prior to the Bar Date (Dkt. No. 15210) and the
Memorandum Opinion relating thereto (Dkt. No. 15209), request leave to counter-designate an
additional item to be included in the record on appeaL.
Appellants' brief addresses substantive matters that were considered by the Banptcy
Cour during arguent on October 31,2005 in a related matter in Debtors' Chapter 11 case. For
puroses of
responding fully to Appellants' arguments, Debtors request leave to supplement the
record to include the relevant excerpts from the transcript of that hearng. The relevant pages,
which are taken from Bank. Dkt. 11025, are attached hereto as Exhibit A.
Debtors' request should be granted for several reasons. First, Debtors only request the
addition of one item, which was made relevant to this Appeal because Appellants' opening brief
goes beyond the scope of the Banptcy Court opinion that is the subject of
this Appeal and
1
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seeks to introduce arguments that were rejected by the Bankptcy Court during the October 31,
2005 hearng. Second, Debtor's counsel afforded Appellants advanced notice by contacting
Appellants' counsel and asking whether they would consent to having this item added to the
record; Debtors' counsel did not receive any response from Appellants' counsel. Third, allowing
the designation of an additional item is paricularly appropriate in the context ofthis Appeal,
where Debtors previously granted Appellants a substantial couresy by agreeing to a 32-day
extension of Appellants' deadline for fiing their opening brief. Finally, Debtors' request would
not prejudice Appellants, because (i) the one item that Debtors' seek to designate is an excerpt of
a Banptcy Cour transcript that Appellants already have and have had for some time; and
(Remainder of page intentionally left blank)
2
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(ii) given that Appellants' have 10 days until their reply brief
is due, Appellants will have ample
opportity to review the transcript for purposes oftheir reply. Therefore, the Debtors request
that the Cour grant Debtors leave to designate the attached excerpts as an additional item in the
record for this AppeaL.
Dated: August 20, 2007
Respectfully submitted,
KIAN & ELLIS LLP
David M. Bernick, P.C. Janet S. Baer Lisa Esayian Samuel L. Blatnck 200 East Randolph Drive Chicago, Ilinois 60601 (312) 861-2000
And
PACHUSKI STANG ZIEHL YOUNG JONES
,LLP
aura Da . Jones (Bar No. 2436)
71J
James . O'Neil, III (Bar No. 4042
919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, DE 19899-8705 (302) 652-4100
Co-Counsel for the Debtors and Debtors in Possession
3
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EXHfflT A
4212S-001\DCS _DE:637S.1
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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE
IN RE:
Case No. 01-1139 (JFK)
USX Tower - 54th ~loor 600 Grant Street Pittsburgh, PA 15219
W . R. GRACE & CO.,
Debtor.
. October 31, 2005 8:50 a.m.
TRANSCRIPT OF TRIAL BEFORE HONORABLE JUDI.TH K. FITZGERALD UNITED STATES BANKRUPTCY COURT JUDGE
APPEARANCES:
For the Dabtor:
Kirkland & Ellis, LLP
By: MICHELLE BROWDY
SAMUEL BLATNICK Aon Center 200 East Randolph Drive
Chicago, IL 60601
Reed Smith, LLP By: DOUGLAS E. CAMERON, ESQ. 435 Sixth Avenue
Pittsburgh, PA 15219
Co-Chair for the Property Damage Committee:
Speights & Runyon By: DAN SPEIGHTS, ESQ.
200 Jackson Avenue, East
P.O. Box 685
BUD FAIREY, ESQ.
Hampton, SC 29924
Audio Operator:
Janet Kozloski
Proceedings recorded by electronic sound recording, transcript produced by transcription service.
E-mail: ;;court~optonline.net
(609) 586-2311 Fax No.
(609) 587-3599
J&J COURT TRASCRIBERS, INC. 268 Evergreen Avenue Hamlton, New Jersey 08619
Docket #~
Date~
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APPEARANCES (CONT'D):
For W.R. Grace & Co.:
W.R. Grace & Co. (Legal Department) By: RICHARD C. FINKEi ESQ.
WILLIAM SPARKS, ESQ.
MARK SHELNITZ, ESQ.
(Telephonicaiiy)
7500 Grace Drive
Columbia
i MD 21044
For Readi Morgan & Quinn:
Stutzman, Bromberg, Esserman & Plifka, PC By; DAVID PARSONS, ESQ.
(Telephonically)
2323 Bryan Street, Suite 2200
Dallas, TX 75201
For ZAI Additional Special Counsel;
Scott Law Group By: Darrell Scott, Esq.
(Telephonically)
For the P.D. Committee:
Ferry, Joseph & Pearce, P.A. By: THEODORE TACCONELLI, ESQ. 824 Market Street, Suite 904 Wilmingtoni Delaware 19899
(Telephonic appearance)
For the Official Committee of Equity Security Holders:
Kramer, Levin, Naftalis &
Frankel i LLP
By: GARY M. BECKER, ESQ. 919 Third Avenue New York, NY 10022
For the Asbestos Claimants'
Commi ttee:
Campbeii & Levine, LLC By: MARK HURFORD, ESQ. 800 N. King Street, Suite 300
Wilmington, DE 19801
For David T. Austern, Future Claimants Rep:
Phillipsi Goldman & Spence, P.A. By: JOHN C. PHILLIPS, JR., ESQ.
(telephonically)
1200 North Broom Street
Wilmington, DE 19806
Telephonic Appearances:
John 01 Connell, Esq. David Seigel, Esq.
Jasamad Thomason, Esq.
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3 1 2
THE COURT: Good morning.
THE CLERK: All rise.
THE COURT: Please be seated. This is the matter of
3
4 W.R. Gracei Bankruptcy No. 01-1139. Today is the time set for
5 an argument on certain obj ections to the claims filed by
6 Speights and Runyan on behalf of a numer of entities. The
7 participants I have listed by phone John 0' Connell, David
8 Seigel, Mark Schelnitzi David Parsons, William Sparks, Jasamad
9 Thomason (phonetic), Theodore Tacconelli, Daryl Scott, Mark
10 Hereford, Gary Becker and John Phillips. I'll take entries in
11 court. Good morning.
12
MS. BROWDY: Good morning, Your Honor. Michelle
13 Browdy on behalf of the debtors. With me is my colleague
14 Samuel Blatnick.
15 16
17 18
THE COURT: I'm sorry, would you say your name again?
MR. BLATNICK: Samuel Blatnick.
THE COURT: Thank you. Good morning.
MR. SPEIGHTS: Good morning, Your Honor. Dan
19
Speights
on behalf of Anderson and with me is my colleague, Bud
20 21
Fairey.
THE COURT: I'm sorry, I'm having trouble hearing the
22 second names. I apologize.
23 24
MR. SPEIGHTS: Dan Speights and Bud Fairey.
THE COURT: Bud Fairey, thank you.
25
MR. SPEIGHTS: Thank you, Your Honor.
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4 1
THE COURT: Okay.
MS. BROWDY: Thank you very much, Your Honor. Befo~e
2
3 we begin, I'd like to hand up an agreed order for the
4 withdrawal and expungement of 1,495 asbestos property damage
5 claims. These are the claims without product ID and it's
6 through the stipulation we're able to moot the issue of a
7 California conspiracy claims which was otherwise going to be
8 heard this morning.
9
THE COURT: All right. Thank you. This doesn't have
10 a docket number related to it. Obviously, there's only one
11 item on the agenda, but I need a docket numer.
12
MS. BROWDY: Yes, Your Honor. It would be related to
13 a 13th omnibus objection to the Speights and running claim
14 which would be Docket No. 9311.
15 16
17
THE COURT: Okay. Thank you.
MS. BROWDY: Thank you, Your Honor.
THE COURT: All right. That order's entered.
MS. BROWDY: Thank you, Your Honor. And as you can
18
19 see, I have a number of papers. If it's okay, I'd like to
20 address the Court from counsel table?
21 22
THE COURT: Sure.
MS. BROWDY: Thank you, Your Honor.
THE COURT: You can be seated if you'd like.
23
24
MS. BROWDY: I'll stand. Your Honor, we know pow
25 busy this Court is and we appreciate you taking the time to
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1 have this special hearing for us today. We wouldn't have asked
2 for it if we didn't think it was critically important to the
3 bankruptcy case. As we've told the Court before, we're
4 concerned, we believe that the Speights case -- the Speights
5 claims are really holding up the resolution of the Chapter 11.
6 And again, we wouldn't have asked for this special setting if 7 it wasn't of importance.
8
To walk through the claims issues this morning, I
9 have a few slides and I'd like to hand up a copy to Court and
10 to opposing counsel.
11
THE COURT: All right. Thank you.
MS. BROWDY: Your Honor, we've known for sometime now
12
13 that there are problems with the Speights claims. As we noted
14 for the Court in July that although there was only a handful of 15 property damage claims pending at the time of the filing of the
16 Chapter 11, in response to the notice of the bar date, we 17 received more than 4,000 claims and 3,000 of those, or 75
18 percent, were signed and filed by lawyers from the Speights
19 firm. We knew the numbers were off. We didn't understand
20 exactly why.
21
When the verified 29 team statement came in, we
22 started to realize there were some significant problems of the
23 authority to file those claims. We were able to report to the
24 Court by September that having dug more deeply into the
25 property damage claims and filed our objections, the onerous
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6
i objection to all claims, that, in fact, of the 4,000 claims,
2 only 3400 or so were what we call traditional asbestos property
3 damage claims. The remainder were things like Category Two
4 claims for milling and mining operations. There were people
5 who submitted medical monitoring requests on property damage 6 claims form and the like.
7
So really, again, it was just about 3400 claims that
8 were what we would call traditional property damage claims. 9 And the Speights firm was responsible for 85 percent of those
10 claims.
11 12
And as you can see in the third bar in this chart,
Your Honor, we have been working diligently to try to
claims without taking up
resolve
appeared
13
14
thi s Court's time.
In fact, we have
another 100 claims withdrawn just from the
last time I
tha t were
15 before Your Court -- this Court last week, Your Honor, and we 16
have gotten
rid of almost half of the
claims
filed.
i 7 And we're now to the point where there's roughly 1800 property
i 8 damage claims.
19
And still, even after withdrawing more than 1700
20 claims, including the 1500 that we handed up to Your Honor this
21 morning, Speights still has two-thirds of all property damage
22 claims filed in this case. That's not twice as many claims as
23 any other individual claimant. That means this firm signed and
24 filed twice as many claims as all the other traditional
25 property damage claimants in this bankruptcy put together.
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1 Something's wrong here.
2
Now, we've told Your Honor that we're going to try to
3 break this into manageable pieces and we think, again, there's
4 problems with all of these Speights claims. They're dealing
5 with the Anderson Memorial issue, allows us to address, again,
6 with a simple legal argument 600 claims, just, again, by virtue
7 of visiting wi th you here today. So, there's certainly
8 problems in the remaining Speights claims, but our focus this
9 morning is going to be on the Anderson Memorial claims.
10
Before we dive into the legal argument, Your Honor,
11 I'd like to give, again, the Court a flavor of how we tapped
12 into these Anderson claims and how we know that there are
13 problems in them.
14
As we told the Court in the 13th omnibus obj ection
15 which is challenging the authority of the Speights firm to file 16 these claims, we had so many claims from that firm, it was just
17 hard to get our arms around what was even in there. What do
18 you do with 3,000 claim forms.
19
So what we did over the sumer, Your Honor, was we
20 chose randomly 10 claims and we figured let's pull some claims
21 up, do some discovery, see what's in there and it will give us
22 a better flavor for what's in the mix of these 3,000 claim
23 forms. And one of the claims that we chose was the American
24 Medical Association. Again, we chose 10 or so, all spelled out
25 in our 13th omnibus objection.
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1
And like the other 3,000 claims submitted by the
2 Speights firm, this was signed by a Speights attorney. Again,
3 all the claims submitted by Speights were filed either by
4 were signed either by Dan Speights or his colleague. And
5 again, the claim form was approved by this Court. It has to be
6 signed under the penalty of perjury saying that the statements
7 are true, correct and not misleading.
8
And again, we took discovery of this handful of
9 claimants and found -- we've attached to the opening brief of
10 this matter in Exhibit 4 the responses we got to that
11 discovery. And I think you'll see that eight of the ten people
12 we asked said that Speights had not had permission from them to
13 file the claims. Änd I've chosen just one example here. It's
14 an affidavit from the American Medical Association. I've blown
15 up paragraphs three and four. But again, the whole affidavit
16 is attached to our opening brief as Exhibit 4.
17
And the American Medical Association testified, but I
18 spoke with various representatives of the law firm of. Speights
19 & Runyon in late 2002 and early 2003. The subject of
20 discussion was whether Speights & Runyon would represent the
21 AMA in this bankruptcy proceeding. I informed Speights &
22 Runyon that the AM did not wish Speights .& Runyon to represent
23 it in this proceeding. Based on inquiry, I believe that no AM
24 representative authorized Speights & Runyon to file a proof of
25 claim on behalf of the AMA or otherwise represent the AMA in
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1 this or any other proceeding. And again, this is the AMA. We
2 saw the signed, submitted proof of claim form submitted by the
3 Speights firm. And again, this is just one of a handful of
4 examples that we got when we started to make this
5 investigation.
6
In response, Your Honor, we had briefing on the 12th
7 and 13th omnibus objections which were challenging the
8 authority of Speights to bring these claims. And what we got
9 was an admission from the Speights firm. This is a page from a
10 brief that they filed in August that says, you know what, for
11 1,000 of these claims, the individuals either haven't responded
12
to a request for expressed authorization or we haven't even
13 been able to locate them. So it took more than two years from
14 the time that claims came in for us finally get the admission
15 that what Speights had done was submit individual claim forms
16 on behalf of people they couldn't even contact, couldn't locate
17 and who had given them expressed authorization.
18
And that led, Your Honor, to the briefing and
19 argument that brings us here today. And we got the order from
20 this Court in September demanding that Speights identify with a 21 list of all pending product -- property damage claims filed by
22 Speights & Runyon for which Speights & Runyon relies on the
23 Anderson Memorial Hospital case as its sole authority to file
24 such PD claims.
25
So, that's how we got here and we've attached as
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1 Exhibits 1 and 2 of our opening brief the lists of claims that
2 the Speights firm produced in response to this order. Exhibit
3 1 is a list of the claims outside of the State of South 4 Carolina that are supposedly filed under the authority of
5 Anderson Memorial. And Exhibit 2 are the claims for billings
6 inside the State of South Carolina for which the Speights firm,
7 again, has no expressed authority, but in response to this
8 court order, said, we filed these unde~ the sole authority of
9 the Anderson Memorial case. So we're here today to disallow
10 and expunge the claims on Exhibit 1 and 2.
11
Now, as we indicated, I believe, in a footnote to our
12 opening brief, Your Honor, there's a little slippage, I think
13 there's about 50 additional claims that the debtor's believe
14 were filed under the authority of Anderson Memorial. I've
15 provided that list to the Speights firm and I'm sure we can
16 sort out those mechanical issues later on.
17
But again, this is how we ended up teeing up this
18 Anderson Memorial issue to be decided by the Court. Now,
19 there's been a lot in the briefs about the American Reserve
20 case and we certainly saw at some length in the Speights
21 response papers, gee whiz, American Reserve and other cases
22 made clear that you can have a class proceed in a bankruptcy.
23 And I think it's important to bear in mind, Your Honor, we're
24 not here on a referendum as to whether or not a class can
25 proceed in a bankruptcy. American Reserve and a numer of
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1 other cases say, or have said, that you can, but it's very
2 clear in American Reserve and the other cases; I would cite the
3 Ephedra case in our brief, I would cite the Zenith case in our
4 brief, I would cite the Kaiser and Weed cases that I believe
5 Mr. Speights cited; and, of course, the American Reserve
6 decision itself which is for those courts that do permit a
7 class action to go forward, you have to come to the bankruptcy
8 court and get permission. This is a decision that's in the
9 discretion of the bankruptcy court. None of these decisions
10 say that you can simply submit individual claim forms and sign
11 them under the penalties of perjury on behalf of claimants that 12 you've never met and that you don't represent.
13 Again, American Reserve makes very clear, you got to
14 come first to the bankruptcy court. And, Your Honor, this
15 Court recognized as much as well. In fact, we've attached as
16 Exhibit 3 some -- of our reply brief some excepts from the
17 February 25th, 2002 hearing, almost four years ago, where this
18 Court was expressly addressing the issue of the claims form,
19 the notice in the bar date for property damage claims. And
20 this Court could not have been more clear, page 107 to 108, ~If
21 you're going to request that a class proof of claim be filed, I
22 need an appropriate motion by a representative of the putative
23 class by a law firm that is competent to handle it. Until I
24 get such a motion, there will be no class proofs of claim
25 because I think that's what I need. n
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1
And the discussion went on to page 110, "Unless and
2 until I get that motion, there will be no class proofs of claim
3 because I think that's the way I need to get it raised." That
4 was almost four years ago. Again, the Coart was clear, if you
5 want to proceed on a class-wide basis, you've got to come to
6 me. And that's fairly consistent with American Reserve and the
7 other cases cited.
8
But Your Honor, that's not what Speights did. The
9 Speights firm, ignoring the dictates from this Court, submitted
10 Claim 1108 -- 11008, I'm sorry, an individual proof of claim
11 for Anderson Memorial Hospital itself. And in fact, Mr.
12 Speights response papers submit some apparent authorizations
13 that would suggest that individually, Anderson Memorial
14 Hospital is a proper claimant of Mr. Speights.
15
But then, again, ignoring what this Court said,
16 Speights submitted Claim 9911 and 9914, both of which are
17 attached to our reply briefs. They are purported class-w~de
18 proofs of claim, again, in direct violation to what this Court
19 said. 9911 is a purported class proof of claim for out-of-
20 state claims. 9914 is a purported class proof of claim for in21 state claims.
22
And, Your Honor, if that's all that Mr. Speights had
23 submitted, we probably could have brought this matter to the
24 attention of the Court months, if not years ago. But that's
25 not what Speights did. In addition to those, we got hundreds
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i upon hundreds upon hundreds of addi tional individual claims.
2 And again, it's taken us years to find out that these
3 additional, more than 600 out-of-state claims and more than 50
4 South Carolina claims, signed and filed as individual, separate
5 claim forms, that those are supposedly filed under the
6 authority of Anderson because again, that's not what Speights
7 came out and said he did. It took us -- again, discovery, it
8 took us the 2019 statement, it took us an order from this
9 Court, it took us years to figure out that that's what these
10 claims are.
11
And if there's any question, Your Honor, that Mr.
12 Speights had no authority from this Court to go forward on a
13 class-wide basis, Docket Entry 10014, the motion for class
14 certification filed a week ago last Friday proves it. I mean,
15 it was stunning. If you saw the response papers, one of the 16 exhibits was,
17 18
gee, 1'11 move now for
class certification.
The
Court told any claimant or the Court told the attorneys at that hearing in February of 2002, Mr. Speights was there, if you
And he waited
years after
19 want a class proof of claim, come to me.
till
20 years after the bar date had
passed, and
he had
21 signed and submitted these individual claim forms.
22
And, of cours.e, what Speights didn't tell you was,
23 again, look at Claim 9911 or 9914 which are attached to our
24 reply brief, in direct violation of this Court's order, they
25 submitted these class proofs of claims on behalf of buildings
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1 under supposedly the authority of the Anderson Memorial case.
2 But again, I don't think we'd have nearly the problems that we
3 do today if that's all that he had submitted because what
4 happens when you don't file the dictates of American Reserve,
5 what happens when you don't come to the bankruptcy court to try
6 to seek permission to go forth on a class-wide basis? Well,
7 we've learned that when you submit hundreds upon hundreds of 8 individual claim forms for people you don't represent, you have
9 problems.
10
You go -- and again, the opening brief at Exhibit 4,
11 you go and you talk to those claimants and they say, I never
12 approved this, I never authorized this claim to go forward.
13 You get claim forms submitted with false information. I've
14 given a couple examples that I'll go through here, but you can
15 look at thousands of claim forms submitted by the Speights firm
16 have false information. Question 18, when did you first know
17 of the presence of asbestos in the property of the Grace
18 product for which you're making this claim? Answer, 2003.
19 Question 20, when did you first learn that the Grace product,
20 for which you are making this claim, contained asbestos.
21 Answer, 2003. 22
Your Honor, this information was filled in on behalf
23 of what Speights has admitted was at least a thousand claimants
24 they've -- he's never met. They didn't respond to requests for
25 authorization. They couldn't find the addressees. How can you
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1 possibly know the date that this information became available.
2 This is purely fabricated information.
3
And, Your Honor, what's most telling is now Speights
4 is saying, well, I submitted all these individual claim forms
5 under the authority of the Anderson Memorial case. The
6 Anderson Memorial case was filed against Grace in 1992. So at
7 least if you were going to be honest about that and say these 8 individual claim forms were submitted on the basis of Anderson
9 Memorial, he should have written the date 1992. But instead,
10 this is, again, purely fabricated information. Of course,
11 these people didn't learn this information in 2003. We have no
12 idea what these claimants knew because Speights and the debtors
13 and the Court have never spoken with them. Speights simply
14 manufactured this information. And it's replete on thousands
15 of these claim forms.
16
They're asked when were renovations made? Oh, there
17 were multiple renovations over various years. What product do
18 you have? Only surface treatment. Who -- in what manner were
19 the Grace products modified or disturbed? Oh, it was affected
20 by numerous custodial and maintenance activities renovated --
21 in renovations. This is purely manufactured responses. You
22 can look at claim form after claim form after claim form and it
23 will have these same generic responses, or really generic non-
24 responses because Speights had to make it up because that's
25 what happens when you submit individual claim forms for
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1 claimants you've never met.
2
We also learned, for example, when we objected to a
3 number of these claims as having been previously settled, the
4 Speights firm came back to us and said, you know, prove it.
5 Where are these settlements. And that seemed a little odd
6 because you would think that if you had settled the claim, you
7 would know it. And then we realized that the problem arises
8 because, again, Speights submitted individual claim forms for
9 parties he doesn't represent. So you'll see we attached in
10 Exhibit 4 a letter response which says we've gone back to these
11 claims. The settlements we're talking about were executed with
12 other firms, not you. We can't disclose it to you. These are
13 confidential. That's what happens when you submit claim forms
14 on behalf of people you don't represent.
15
And we have another example in our opening brief at
16 Exhibit 4, a sample of a letter that we got back in December of
17 2004 where Laborers 310 said, gee, I noticed a claim that
18 appears to have been filed on behalf of my client without
19 authorization because again, these are the kinds of problems
20 that you run into when you don't file American Reserve and you
21 just go ahead and hand in thousands of claim forms on behalf of
22 people you've never met.
23
With that background, then, Your Honor, it takes us
24 to the two straightforward issues that the Court's being asked
25 to addressed today. First, did Speights have authority to file
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1 hundreds of out-of-state claims based on Anderson Memorial.
2 And then the second issue is whether Speights had authority to
3 file the South Carolina claims. So I'm going to focus first on
4 the out-of-state claims.
5 And again, we didn't learn until the verified 2019
6 statement that even what the purported was for the filing of
7 these claims. So let's start with the out-of-state claims.
8 If you go to the Speights' verified 2019, Speights
9 attaches the 1992 original complaint from the Anderson Memorial
10 case. And in the Anderson Memorial case, Speights went to its
11 home court, its home county of Hampton County, South Carolina,
12 filed a putative class action for essentially all the buildings
13 in the world. They're not even limited to U. S. buildings.
14 But, for simplification, let's say it sought class
15 certification for out-of-state buildings and in-state
16 buildings. And again, that was filed in the home state, South
17 Carolina, in 1992.
18 And again, if you look at the verified 2019
19 statement, it attaches a copy of this 1992 complaint and you'll
20 see that on slide 20, I've circled the little C because that's
21 the index that we're given in the 2019 statement because then
22 you look for entry after entry after entry and for those
23 buildings, if there's a little C, then those cases were
24 supposedly filed under the authority of this original complaint
25 from 1992.
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1
What Speights 2019 statement doesn't disclose to the
2 Court~ Your Honor, though, is that more than 10 years ago, the 3 Hampton County, South Carolina court was asked to certify the
4 class and struck all out-of-state buildings from the class.
5 This was the August 8th, 1994 opinion from the Hampton County
6 court. We've attached it to our opening brief at Exhibit 7.
7 That wasn't referenced in the 2019 statement. But this order
8 makes clear that the out-of-state buildings were not recognized
9 as a class in South Carolina.
10
Similarly, Speights' 2019 statement didn't tell you
11 that in May of 1996, the court in South Carolina, when asked to
12 reconsider the issue, said, no. The August 8th, 1994 opinion
13 is adapted in full 'through the execution of this order. So the
14 South Carolina court, not once, but twice rejected the notion
15 that out-of-state claims could go forward in South Carolina
16 and, in fact, struck those claims. And the basis for that,
17 Your Honor, is what they have down there called the door
18 closing statute that essentially an out-of-state claimant can't
19 use a state court to sue an out-of-state defendant. So again,
20 the Anderson Memorial state court opinion through out the out21 of-state claims.
22
What Speights didn't .tell you in the 2019 statement
23 is that the complaint the Speights firm attached is not even
24 operative. There's a second amended complaint from 1996 tha's
25 limited to in-state buildings. But that's not what Speights
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1 attached to 2019 statement. It was instead attaching the 1992
2 complaint that has been rejected and superceded.
3
Speights also didn't tell you in the 2019 statement
4 that in April 2003, more than a year and a half before that
5 2019 statement was due, that the South Carolina Supreme Court
6 in the Farmer v. Monsanto case held that the door closing
7 statute prevented non-residents whose cause of action did not
8 arise in state from joining class actions against foreign
9 corporation. The Supreme Court of South Carolina has addressed
10 this issue and agreed with the trial court in the Anderson
11 decision saying the door closing statute prevents these out-of12 state claims from going forward.
13
Speights knew about the Farmer v. Monsanto, Speights
14 was on the brief for their respondents. And in fact, it's
15 interesting, Your Honor, if you look at the response brief that
16 the Speights firm submitted, instead they tried to hand up the
17 unpublished opinion from the trial court judge in the Farmer
18 case that got turned over by the South Carolina Supreme Court.
19 It was clear by the time the glorified 2019 statement was
20 submitted that there was no basis for going forward in a state
21 court class action against these out-of-state residents. It
22 was absolutely clear that there was no authority to file those
23 out-of-state claims.
24
I think we're also going to heard the word thrown a
25 lot -- thrown around a lot on the response argument. I was a
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1 fiduciary, I had a fiduciary responsibility to go forward on
2 behalf of these putative class members. And I would just point
3 out, Your Honor, the Court invited claimants in the 2002
4 argument, if you're going to go forward on a class, come to me,
5 I need a motion, I need to consider it. And Speights never did
6 that. Speights simply went ahead on his own and submitted
7 these individual claim forms that we had to dig through for
8 years to figure out what was the real basis.
9
And what I thought was interesting here, Your Honor,
10 is when we finally started to take discovery over the sumer
11 and started to get into what was behind these claims form, all
12 of a sudden Speight started to withdrawing, withdrawing claims 13 that were filed under the authority supposedly of the Anderson
14 Memorial decision. And I've attached a list of dozens of these
15 individual claims that got withdrawn in June and July while
16 supposedly Speights was representing these basis on -- these
17 claimants on a class basis. I mean, it just shows I'LL
18 represent them when its convenient, IT 11 pull them when it's
19 convenient.
20
And the last thing I want to address, Your Honor, on
21 the out-of-state claims is the issue of Central Wesleyan
22 because I expect that Speights is going t9 raise this as he has
23 in his papers and in the brief argument we did back in August.
24 In the Central Wesleyan decision, there you had a federal court
25 in South Carolina wedding on a conditional basis a Class 4
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21
1 forward. And the federal court said, well, the door closing
2 statute isn't going to apply to us. We can go forward. And
3 what Speights doesn't tell you is that not only the Farmer v.
4 Monsanto, the South Carolina Supreme Court, not only did they 5 expressly consider Central Wesleyan, but the Anderson Memorial 6 case, if you look at the final order, they expressly looked at
7 the Central Wesleyan decision and says, it doesn't apply here.
8 Central Wesleyan was what was going on in federal court. The
9 door closing statute talks about what you can do in the South
10 Carolina state courts.
11
Well, what Speights has told this Court in the 2019
12 statement and in the briefs I have the authority to go forward
13 in this bankruptcy court because I had permission from the
14 state court. Speights isn't bringing a federal court action
15 from South Carolina up to this court. He's trying to bring a
16 state court action and the state courts held Central Weslevan
17 doesn't apply, the door closing statute does, out-of-state
18 claims can't go forward.
19
So the bottom line, Your Honor, on the 600 or so
20 individual claims submitted from out-of-state supposedly under 21 the authority of Anderson Memorial, Speights has no state court
22 order certifying that class. He has no federal court order
23 certifying that class. He has no order from this Court
24 permitting those claims to go forward on a class basis. He has
25 no permission from the individual claimants to go forward on
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1 their behalf. And that class was never certified. There was
2 never notice and opportunity to opt out. It's -- essentially
3 what Speights is here saying, give full faith and credit to the
4 out-dated, rejected, superceded .1992 class action complaint
5
6 7 8
that I filed.
And
on that basis, I should have authority to
hundreds of claims for people I've never
in the
file
met.
hundreds upon
Totally flies
face of American Reserve and this
in 2002 and all of those
what this Court recognized
out-of-
9
state claims should
be disallowed and expunged.
10 I want to move on now to the in-state claims, Your
11 Honor. In support of filing dozens of South Carolina claim
12 forms on behalf of building orders that Speights had never met,
13 if you look at the verified 2019 statement, the Speights firm
14 cites and attaches three orders; a February 9th, 2001 order, a
15 June 18th, 2001 order and a July 5th, 2001 order. And those
16 are all attached to Speights verified 2019 statement.
17
And then if you go down the list of the individual
18 claims in the 2019 statement for all those South Carolina in-
19 state buildings, he'll cite to these three orders. And for the
20 Court's convenience, we've attached these as Exhibits 11, 12
21 and 13 to our opening brief.
22
But what Speights doesn't tell Your Honor is the
23 February 9th opinion was a conditional ex parte order and that
24 the June and July orders were ultra vires because they post-
25 date the filing of this bankruptcy and they would violate the
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1 automatic stay as to Grace. And I just want to visit a little
2 bit about a couple of these orders.
3
The February 2001 order, Your Honor, I think is worth
4 looking at. Remember, the Anderson complaint was originally
5 filed in state court in 1992. By 1994, the state court had
6 struck all out-of-state claims so the focus was just on in-
7 state buildings. But nearly 10 years have passed and there was
8 no order from the court granting certification of South
9 Carolina class.
10
And again, what the Speights 2019 attaches is this
11 February 9th order that says, I'm going to conditionally
12 certify this. And when you look at the first sentence, it
13 says, Anderson Memorial Hospital has petitioned this court for
14 emergency relief which is based on the verified petition of
15 counsel and the court decides that under the circumstances, the
16 court's going to take the ex parte request as okay. And he
17 again conditionally certifies the class.
18
But what's stunning, Your Honor, is the verified
19 petition, signed and submitted by Mr. Speights, that led to
20 this conditional ex parte offer -- order, and Your Honor, I
21 know you have a lot of reading to do, if you don't have a
22 chance to read anything else, I would commend to you Exhibit 10 23 of our opening brief which is Speights' request essentially to
24 avoid the automatic stay that is anticipated to be coming down
25 from this Court. If you look at -- again, remember the ex
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1 parte conditional emergency order is entered on February 9th.
2 What happened on February 8th of 2001 was that the Speights
3 firm submitted an emergency petition for a rule to show cause
4 why a conditional class should not be certified against W. R.
5 Grace and Company and W.R. Grace and Co. Corn.
6
And what's the basis for getting this emergency class
7 certification? And again, I'll quote the petition from
8 Speights. ~Grace disclosed last week that it may be forced to
9 file for bankruptcy protection and have to seriously consider
10 reorganization under Chapter 11. Once Grace files for
11 bankruptcy, this court may be deprived or jurisdiction." So
12 essentially, Speights is running into his home court in South
13 Carolina and saying, you know what, Grace is going to go into
14 the tank. If that happens, you're not going to be able to
15 certify the class, you're going to lose jurisdiction. So
16 you've got to go ahead and do it now.
17
And look at the verification. Again, this is what's
18 pretty stunning. Look at the verification that's attached to
19 that February 8th request for relief. It's submitted,
20 verified, Daniel Speights, being duly sworn, verifies the
21 following, and again this is all attached to our opening brief
22 at Exhibit 10. Speights tells the South Carolina court under
23 oath, ~based on my experience, representing asbestos property
24 damage claimants in bankruptcies filed by Johns-Mandville
25 National Judgement and Celotex, bankruptcy courts treat
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1 previously certified class claims much more favorably than
2 other claims. Absent conditional certification prior to
3 bankruptcy filing, a bankruptcy court may not gra?t the South
4 Carolina building owners the preferential class treatment this
5 court may determine they deserve. fi
6
And Your Honor, I just ask you to consider what the
7 -- Mr. Speights is doing here when he says, gee, I'm acting as
8 a fiduciary, I have to do this on behalf of the class. Compare
9 what he's doing with what American Reserve says. American
10 Reserve says, if you want to go forward in the bankruptcy, you
11 come to the bankruptcy court. The bankruptcy court has
12 discretion. It will take factors into account. Come to me and
13 I'll make the decision. And instead, you have Speights running
14 into court in South Carolina to try to deprive this Court from
15 making its decisions and to tell the South Carolina court, I
16 want to be treated more favorably. You better hurry up and
17 enter this order before the automatic stay goes into effect and
18 you lose jurisdiction. That's what this February Bth petition
19 is saying.
20
And then look to the other orders that Mr. Speights
21 attaches to the 2019 statement, they're from June and July of
22 2001, those are ultra vires, Your Honor. Those violate the
23 automatic stay. They're entered after Grace went into
24 bankruptcy. Those orders again are attached to the 2019
25 statement can't apply to Grace. They're, again, ultra vires.
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1 Speights also .doesn't mention, when he attaches these
2 to the 2019 statement that the South Carolina class was an opt3 out class that not notice or opportunity to opt out was ever
4 given.
5 And then, Your Honor, at the hearing we had in
6 August, Mr. Speights made a rather stunning revelation which is
7 I know all about this July order because I drafted it. And
8 Speights came and told the Court that's how it's done in South
9 Carolina, but honestly, I have no doubt that that is how it's
10 probably done in Hampton County, South Carolina. And Speights
11 says, the judge came to me and said draft the order and I did
12 it. 13 Well, after -- and again, he presented that order to
14 the Court at that August hearing. And afterwards, I went back
15 and got a full copy of that order. What that order says is,
16 please draw an order for my review and .stop the order
17 rather, it's a request from the South Carolina trial court to
18 Mr. Speights saying draft up this final order. But the court
19 tells Mr. Speights in this letter, it's attached as Exhibit 18
20 to our opening brief, "please draw an order for my review
21 granting plaintiff's motion for class certification as
22 requested. . The order should specifically state that the order
23 affects only the three remaining defendants due to the stay as
24 to W.R. Grace. I'm not sure, but my order may run afoul of the
25 stay. "
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1
So clearly the South Carolina court was concerned, we
2 can't make this ruling apply to Grace because they're in
3 bankruptcy. It would violate the automatic stay. But Speights
4 attached it, again, to his 2019 as part of the basis for his
5 authority for f~ling these claims for individual claimants in
6 this Court. Your Honor, there are two possibilities, either
7 that order supposedly applied to Grace and Mr. Speights drafted
8 it up and that was a willful violation of the automatic stay.
9 Or alternatively, Mr. Speights knew it didn't apply to Grace
10 and was trying to mislead the court, this Court, and the
11 debtors when he attached it to their filed 2019 statement.
12 There is no other explanation.
13
Of course Mr. Speights purports to rely on that
14 order. He attached it to the 2019 statement. He cited it in
15 his 2019 statement. He raised it with the Court. And it was
16 purely, Your Honor, in violation of the automatic stay. And,
17 Your Honor, as we indicated in our opening papers, Mr. Speights
18 should be particularly sensitive to this because we know from
19 the Dana (phonetic) opinion that we cited in our paper that
20 he's already been tagged by a federal court for having violated
21 the automatic stay, by running down to the Anderson court in
22 South Carolina and trying to get orders that violate the stay.
23
I -- just don't take my report. Read the Dana
24 decision which is cited in our opening pap~r. Speights knows
25 about this, knows there are problems with potentionally
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1 violating the automatic stay. He's represented to this Court
2 and to other courts, he's experienced bankruptcy counsel, he
3 should know better than this.
4
So the bottom
line is did Speights have the authority
5 to file claims for the in-state' claimants. The February 2001
6 order was conditional ex parte order designed to evade the
7 automatic stay. The other 2001 orders were ultra vires. They
8 were drafted by Speights in violation of the order -- of the
9 automatic stay. There was no order from this Court permitting
10 him to file on behalf of South Carolina claimants. He had no
11 permission from the claimants themselves. It was supposedly an
12 opt-out class. They had no notice of the opportunity to opt
13 out. Claimants rights -- didn't have authority to file those
14 claims for the South Carolina claimants.
15
I just have one more point to make, Your Honor, and
16 then I'll sit down. I want to discuss briefly the Celotex case
17 because I expect that Mr. Speights is going to raise it.
18 They've raised it in their papers and it was raised in the
19 August hearing. And as we indicated in our reply papers, I
20 just think that the Celotex orders have been thrown around by 21 the other side in a misleading way in this Court.
22
Speights now has twice cited to this Court a May 1996
23 order from Celotex and I sat in that hearing in August and I
24 thought it sounded like' he was saying that the Celotex court
25 has already decided in a bankruptcy context the issues that
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1 this Court is being asked to decide. And that would be pretty
2 persuasive authority, I would expect, Your Honor.
3
So we went back to look to try to figure out what
4 actually did happen in Celotex. And it turnes out that this
5 May 1996 order that Speights has now cited to the Court twice
6 is an agreed order that the parties agreed to entry of after
7 negotiations and it does reference the Anderson Memorial case.
8 But there was no adjudication by the Celotex court as to
9 whether or not Mr. Speights had authority to represent the
10 Anderson Memorial, quote, unquote, class claimants. It wasn't
11 a contested matter before Celotex.
12
And similarly, the December '96 order that Mr.
13 Speights cited in August and attached to his paper again, there
14 was no adjudication of the issues faced in this Court.
15 Instead, again, we had to go back and dig out these facts, but
16 we found, and we've attached it to our reply brief at Exhibit
17 5, that in fact there is a pending adversary complaint, a
18 proceeding in Anderson Memorial, challenging this very issue.
19 And again, we've attached a copy of this complaint at Exhibit
20 5. It was updated as recently as last month. I believe the
21 adversary proceeding was initiated in 2002. And it's an
22 amended complaint for declaratory relief as to asbestos
23 property damage claims submitted by Anderson Memorial Hospital.
24
And if Your Honor looked at the complaint, we've
25 pulled out in particular paragraph 21, but again, the whole
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1 thing is attached to our papers, what's been challenged here?
2 To the extent that Anderson filed the disputed claims as a
3 representative for a putative class action or a group claimant
4 as defined by the PO Claims Procedures, the PO Claims 5 Procedures do not provide any specific right or authority for
6 Anderson to file the disputed claims on behalf of the owners of
7 the buildings. It's the same contested issue that we have
8 here. The Celotex court hasn't decided this yet.
9 Speights hasn't told you, also, that Celotex isn't
10 paying on the disputed Anderson claims and we have a letter to
11 that effect attached as Exhibit 6. And Speights also doesn't
12 tell you, by the way, that if you look at the disputed claims
13 attached to that adversary proceeding in the Celotex case and
14 you look at the claims he's submitted here, there are dozens
15 where he's' seeking double recovery. He's telling both sides
16 that they provided the fire proofing in the same buildings.
17 There are all kinds of problems with Speights references to the
18 Celotex, Your Honor, and we can only imagine what else we'd
19 learn if we get the opportunity to take discovery of Speights
20 firm.
21
The bottom line, Your Honor, is that we're asking
22 this Court to disallow and expunge all claims purportedly filed
23 on the basis of the Anderson Memorial complaint. That's Claims
24 9911 and 9914 which are purported class proofs of claim filed
25 expressly in violation of this Court's order. But it's also
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1 the hundreds of individual claims identified as Exhibits 1 and
2 2 of our opening briefs which are the claims that Mr. Speights
3 admitted, based on the court order entered on September 23rd of
4 this year saying you've got to tell us what claims were filed
5 solely under the authority of Anderson Memorial. Those are his
6 lists attached to Exhibit 1 and 2.
7
We also ask Your Honor, we think that fees and costs
8 are appropriate for all this investigation. There's just so
9 much improper behavior going on on the other side that we think
10 clearly we make the statutory basis for receiving fees and
11 costs.
12
And finally, Your Honor, we think that the October
13 21st motion for class certification, Docket 10014 should be
14 struck. The Court framed the issues on the PD class and the
15 notice and the like -- the PD notice and claim forms in 2002.
16 The claims have been in since 2003. This is just another
17 attempt by Speights to delay, to stretch out these proceedings. 18 This motion for class certification is three years too late.
19 We shouldn't have to spend the time and money of the estate
20 responding to that motion. Thank you, Your Honor.
21
22
THE COURT: Mr. Speights.
MR. SPEIGHTS: May it please the Court, I came here
23 to argue the law, Your Honor. I came here to argue the law 24 because that's what we agreed to hear first. And I say at
25 almost at every turn, that I'm going to refrain from dealing
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1 with all of these spurious, factual allegations that not only,
2 in many cases, are false or incomplete or misleading, but which
3 have nothing whatsoever to do with the two purely legal issues
4 which are before you today.
5
That's why I was so careful when we were together in
6 Wilmington the last time when we scheduled this to tell Your
7 Honor that they can tee up whatever they want. We have agreed
8 to tee up the legal issues first which require no discovery.
9 And if they go into facts of discovery, I'm going to stand up
10 at this hearing on October 31 and say, wait a minute, Your
11 Honor, all we have is two legal issues. And I have my 12 argument. I actually typed it yesterday when I got into
13 Pittsburgh which is purely the law of whether we had the legal
14 authority to file those class claims on behalf of Anderson
15 state and Anderson putative.
16
But at some point, Your Honor, I've got to say
17 something about all of this. Actually, I was thinking as I
18 heard counsel go on and on and was trying to write down
19 feverishly all the misstatements, that what I would really like 20 is a copy of this transcript so that I could annotate it for
21 Your Honor and tell you at every turn -- what Grace says is
22 either .wrong or misleading or incomplete. And that's not what
23 we should be doing today, but I just wrote down feverishly just
24 a few points.
25
We have gotten rid of 1,000 claims or whatever. I'm
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1 the one who ~alled W. R. Grace and suggested to do what I had
2 suggested doing with Mr. Fink, the gentleman in the first row
3 here who I've dealt with for a number of years, of dealing with
4 those conspiracy claims. It wasn't Grace. It had nothing to
5 do with authority. It had to do with my views on conspiracy.
6 And I would be glad to explain that, if it were relevant.
7
They say, we couldn't get our arms around this, there
8 were so many problems. They didn't have problems getting their
9 arms around this, Your Honor. The fact is, I've been talking
10 -- the fact is the claims themselves refer to Anderson Memorial
11 Hospital, all of these buildings, 600 buildings in dispute,
12 referred to Anderson Memorial Hospital complaint. The fact is
13 that I was talking' to Grace. The fact is that in November of 14 2003, shortly after the bar date, I met with Mr. Fink and he
15 already had one of his spr~dsheets and he had all of these
16 objections analyzedi et cetera, et cetera.
17
They knew what was going on. And what happened was,
18 after the deal fell through for reasons not my fault, I
19 supported the deal. After the deal fell through, Kirkland and.
20 Ellis, maybe rightly, maybe wrongly, I'm not here to criticize
21 them, decided to go to war. And so my discussions with Mr.
22 Fink and Mr. Beber (phonetic) in early 2005, where we were
23 deailng with these claims and sharing information, all of a
24 sudden that door is slammed shut. They had the information.
25 They had it all along.
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1
They throw out to you, Your Honor, Toledo, this
2 Toledo order and say, I should have -- I violated some stay.
3 That could not be further from the truth, Your Honor. First of
4 all, there was no automatic stay involved. Secondly, I was
5 defending the bankruptcy court against a district court who
6 didn't like what the bankruptcy court did. Thirdly, the order 7 they cite makes no finding whatsoever as to me. One of my co8 counsel wrote a letter and the district judge wouldn't too
9 happy with him. And lastly, Your Honor, the order they cite to
10 you was vacated. They're up here citing an order that was
11 vacated to you as -- which doesn't deal with a bankruptcy stay
12 as supposedly some more mud to sling on me.
13
They sling mud on the judiciary of South Carolina.
14 What's interesting is they sling mud on Judge Hayes who lives
15 200 miles from me and who has statewide jurisdiction of all
16 asbestos cases because he's one of the best judges in the state
17 and the Chief Judge Jean Toal appoints the top judges to deal
18 with this mess and I think Your Honor can understand why you
19 need somebody to deal with this mess. Judge Hayes, who had
20 never appeared before before the Anderson case.
21
Judge Hayes did say to write an order. He told me
22 what to put in it. He changed it around. He was careful with
23 the order itself which is attached. It explicitly states that 24 it does not affect Grace. I was not trying to get around some
25 automatic stay. Judge Hayes was explicit on that.
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1
2
What's interesting is the door closing order, which I
don' t particularly like, as you might gather, was granted by
3 Judge Howard, Judge Hayes predecessor, and it was drafted by
4 Grace and the other defendants in the same manner. They
5 drafted a letter from Judge Howard, but they don't stand up
6 here and tell you that Judge Howard is somehow -- some 7 backwards southern judge because the order was written or typed
B by the law firm. In fact, Judge Howard is not from Hampton,
9 he's from Charleston. He's about 75 or 80 miles from where I
10 live.
11
I mean, there's not some vast conspiracy going on in
12 South Carolina. They say, Your Honor, there was an -- this
13 order is ex parte. That's what they say, ex parte
14 certification order. And they know that. All Judge Hayes did
15 was to -- it's like a TRO in a domestic dispute. Judge Hayes
16
had had this case for years and years. The record was closed.
17 He had heard all the evidence. The only thing he was waiting
18 on was a transcript because Grace, in about four to five months
19 of time, because they said we want to file another brief after
20 the transcript's here.
21
There's not one bit of evidence that was put before
22 Judge Hayes after he signed that conditional order in February.
23 But what they know and what they don't tell you is that he
24 said, come and we'll have a hearing to see whether to keep this
25 order in place. And then we had a hearing and Grace's South J&J COURT TRASCRIBERS, INC.
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1 Carolina counsel and Grace's New York counsel, now federal
2 judge Kevin Castel, Grace's counsel appears in South Carolina
3 and argues vehemently, would not tell the judge whether they
4 were going to file bankruptcy or not, but argues against the
5 entry of the order. And Judge Hayes, at the end of the
6 hearing, said, having heard fully from both of you, I will
7 continue the order.
8
They keep throwing out Celotex. I could talk about
9 Celotex for three days, Your Honor. And I assure you that we
10 have been consistent about what we've said about Celotex.
11 Celotex was a plan of reorganization and this one had the
12 maximum numer of votes. Celotex is Anderson claims have been
13 allowed in large part, some have been rejected by the claims
14 administrator in Ce1otex. The trustees in Celotex, chosen by
15 the bodily injury committee, we were crammed down in Celotex,
16 chosen by them in an action supported by Mr. Insulbuck
i 7 (phonetic) and Mr. Rice and all -- they had intervened in it,
18 of trying to keep many property damage claims from being paid.
19
New York City and the State of Utah and the State of
20 Illinois, et cetera, et cetera, they're trying to stop the
21 payment because we have a common trough, we have a common fund
22 in Celotex. And they believe that the more money -- the less
23 money that's paid to putative claimants, not just Anderson, but
24 I represent Clemson. I've done more work on Clemson there than
25 I have on Anderson in that bankruptcy. The more money -- or
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1 the less money that goes into the payment of PD claims, the
2 more money goes to PI claims. So, yes, there's Ii tig a tion down
3 there and yes, the trustee's are challenging, and yes, the
4 excuse me, Your Honor.
5
And yes, Your Honor, two bankruptcy judges, Judge
6 Thomas Baynes who got so infuriated after having the case for
7 12 years and after ruling against the trust and saying pay a
8 lot of these PD claims, it's the claims administrator who
9 decides, recused himself after 10 or 12 years on the case. The
10 case then went to Judge Glenn, Judge Paul Glenn who has now
11 issued orders in every situation, upholding the property damage
12 claims administrator. Anderson just hadn't gotten up yet. It
13 will probably get up very soon.
14
And in addition, Judge Glenn has now been affirmed by
15 the district court in Florida that the trustees did not have
16 the authority to fail or refuse to pay these claims. I mean,
17 Your Honor, I can go on and on.
18
Perhaps the one I should address because I believe
19 this is the fourth or fifth hearing in which, after the claim
20 has been withdrawn, the fourth or fifth hearing that
and I
21 want a legal hearing to argue about American Reserve and
22 Charter and what the fiduciary responsibilities are. The
23 fourth or fifth hearing -- the AMA comes up again. The claim
24 was withdrawn in early sumer. And they use that one as
25 supposedly -- the others they've known about for three or four
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1 years, that I filed claims under the Anderson umrella. But
2 they claim, it's not what the affidavit says, they claim that 3 the AMA -- I was told or more appropriately, I guess, or more
4 accurately, my associate was told not to file the claim. And
5 Your Honor, in July 29, I think that date's right or maybe it
6 was 21st -- maybe July 20th. When I was on that plane to
7 California, you got real upset when somebody told you that
8 somebody told my firm not to file a claim and we did so. And I
9 don't blame you for getting upset. And it did not happen. And
10 I'm prepared to meet that factual assertion.
11
12
THE COURT: Wait just a second.
MR. SPEIGHTS: I've had an affidavit from Ms.
13 Stenmeyer (phonetic) in my bag since we met two hearings ago.
14 But Your Honor also said that claim's been withdrawn. We're in
15 an expungement process and today we're here dealing with facts.
16 And I am assured from my records
17
~
THE COURT: You lost me for one second, Mr. Speights.
18 What didn't happen. You never got a phone call from -19 somebody in your firm never was told by the AM not to file a
20 claim? What is it that didn't happen?
21
MR. SPEIGHTS: We were not told not to file, I know
22 that's a double negative. From my investigation, I wasn't
23 involved in it. You know, this one -- there's so many slight
24 of hands. Just one of the curiouser ones is if you look at
25 their -- if you look at their fee records and you see Speights
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i & Runyon, it's always S&R. That's the way we've been referred
2 to, like K&E. Well, now, we're not K&E, but we've been
3 referred to as S&R since 1987. But if you go in all the briefs
4 they've filed here, it's always Speights & Runyon, quote,
5 Speights because they know that and I take responsibility for
6 my firm and I'm not backing away from what my people did and I
7 believe what my people did was honoring their duties tQ this
8 class, but they know that I don't have firsthand knowledge.
9
Once they raised this issue, I have an affidavit from
10 Ms. Stenmeyer and I have the factual investigation into the
11 matter. The claim was always going -- a factual investigation
12 into the matter which convinces me that the American Medical
13 Association did not tell us not to file the claim. There were
14 a numer of discussions about the claim. And ultimately, the
15 AMA decided not to go forward with the claim and told Speights
16 & Runyon to withdraw the claim. Now, that's a factual issue. 17
THE COURT: But the question -- but the real
it is
18 a factual issue. But the real question isn't whether you were
19 told not to file it, it's whether you were told to file it.
20 That's how you get authority. It's expressed authority that's
21 required. You just don't go willy-nilly filing claims on
22 behalf of entities and buildings in any bankruptcy. case just
23 because you can.
24
MR. SPEIGHTS: And that brings us to the legal issue,
25 Your Honor. That is the legal issue. Whether we have the
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1 legal authority because at the end of the day, while AM has
2 been expunged and is not before you, there are claims here, and 3 I believe 500 and something claims, which are members of a
4 putative class or certified class. And we believe that we have
5 the authority to file those as a matter of law. And that's
6 what I carne to argue today and hopefully I can convince you of
7 that, Your Honor. But I just had to address some of these
8 factual assertions and there are many, many more, if I get the
9 transcript, I can annotate it for you, which try to obfuscate
10 the nar