Free Reply to Response to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-1263-PSF-MEH ROBERT M. FRIEDLAND, Plaintiff, v. TIC ­ THE INDUSTRIAL COMPANY and GEOSYNTEC CONSULTANTS, INC. f/k/a GEOSERVICES, INC., Defendants. _____________________________________________________________________________ GEOSYNTEC'S REPLY IN SUPPORT OF MOTION TO COMPEL DISCOVERY REGARDING PAYMENTS ALLEGEDLY MADE BY PLAINTIFF _____________________________________________________________________________ Defendant GeoSyntec Consultants, Inc. f/k/a GeoServices, Inc. ("GeoSyntec"), through its counsel, submits the following Reply in Support of Motion to Compel Discovery Regarding Payments Allegedly Made by Plaintiff. I. BACKGROUND Plaintiff Robert M. Friedland ("Friedland") seeks contribution from the Defendants for payments he allegedly made to resolve a CERCLA cost recovery action brought against him in 1996 (the "EPA Action"). To settle the EPA Action, Friedland claims to have paid approximately $20.7 million to the United States and the State of Colorado in or around December 2000. (Am. Compl. ¶ 4.) Although Friedland has already recovered from other parties approximately $4 million more than the $20 million he paid, he argues that most of these recoveries should not reduce the amount payable by these Defendants, because they were actually intended (although there is no evidence reflecting such an intent) to reimburse him for

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the defense costs he incurred in the EPA Action, which he claims totalled approximately $28 million. (Supp. Disc. Responses, attached to Mot. to Compel as Ex. 2 at 5-6.) However, through discovery, GeoSyntec learned that Friedland did not even pay the $28 million in defense costs to which he seeks to apply his prior recoveries. Rather, they were paid by Ivanhoe Capital Corporation ("Ivanhoe Capital"), one of many companies with which Friedland is affiliated. To investigate further, GeoSyntec requested information regarding such payments through a Fourth Set of Interrogatories and Requests for Production of Documents and Second Set of Requests for Admission to Plaintiff (the "Discovery Requests," attached to Mot. to Compel as Ex. 6). Plaintiff served unverified responses to the Discovery Requests on November 15, 2006 (the "Responses," attached to Mot. to Compel as Ex. 7). Not only were the Responses unverified, they failed to provide most of the information requested in the interrogatories, and were accompanied by no responsive documents. On January 15, 2007, GeoSyntec filed a Motion to Compel Discovery Regarding Payments Allegedly Made by Friedland (the "Motion to Compel"), seeking an order compelling Friedland to provide complete, verified responses to the Discovery Requests. On February 7, 2007, GeoSyntec received Friedland's Opposition to GeoSyntec's Motion to Compel (the "Opposition").1 In the Opposition, Friedland argued that he "has fully and completely responded to GeoSyntec's discovery requests" regarding his payment of response and defense costs. (Opposition at 1.) However, as described more fully below, Friedland's responses

Although Friedland was ordered to respond to the Motion to Compel by February 5, and apparently, filed his Response with the Court on that date, it was filed under seal. Consequently, GeoSyntec did not receive the Response until it arrived by mail on February 7, 2007. 2

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actually raise more questions than they answer. Friedland still has not provided critical information regarding the payment of his defense costs, the corporate structure and capitalization of Ivanhoe Capital, and most importantly, transfer of funds between Friedland and Ivanhoe Capital. Moreover, GeoSyntec should not have been forced to file a Motion to Compel to obtain verifications to Friedland's Responses that should have been provided nearly three months ago, with the original Responses. II. ARGUMENT Interrogatory No. 22: In Interrogatory No. 22, Friedland was asked, "[a]s of the date the settlement payment referred to in paragraph 4 of your Amended Complaint was made, state with respect to Ivanhoe Capital Corp.: (a) (b) (c) (d) Its principal business address; The number of shareholders; The names of all officers and directors; and The percentage of total shares held by You, and approximate value."

(Fourth Discovery Requests, Ex. 6 at 6.) Friedland argues that his Response to this interrogatory was complete. Yet, as the company's principal business address, he stated only that it is "headquartered in Vancouver, British Columbia;" rather than stating the names of all officers and directors, he merely stated that he "is and always has been its president and director" ­ without providing any indication of whether the company had additional officers or directors; and while he claims to own all stock in the corporation, he failed to provide any information regarding the value of his shares.

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(Responses, Ex. 7 to Motion to Compel at 6, Resp. No. 22.) Friedland must be ordered to provide a complete response to this interrogatory, and to produce all documents he relied upon to support the response. (See id. at 12, Req. for Prod. No. 16 (seeking production of "all documents identified in, relied upon in preparing, or related to your responses to the foregoing interrogatories").) Interrogatory No. 23: In Interrogatory No. 23, Friedland was asked to provide the same four items of information regarding Ivanhoe Capital Corp., as of January 1st of each year during which he claims to have incurred the $28 million in defense costs he claims to have paid. (Ex. 7 to Mot. to Compel at 6-7, Resp. No. 23.) The same deficiencies exist with respect to this interrogatory as with respect to No. 22. Friedland must be ordered to provide a complete response to this interrogatory, and to produce all documents supporting his response. Interrogatory No. 24: In his Opposition, Friedland contends that he provided complete responses to Interrogatories No. 22 and 23 in his response to No. 24, by stating: Robert Friedland paid the subject defense costs through his company, Ivanhoe Capital Corporation. Ivanhoe Capital Corporation has no source of income or cash flow other than as received from or directed to the company by Robert Friedland, and serves no purpose other than to facilitate and process payments due from or receivables due to Robert Friedland. (Opposition at 3.) This statement not only fails to respond to Interrogatories No. 22 and 23, as Friedland argues, it completely fails to respond to Interrogatory No. 24. As an initial matter, it is interesting to note that on his corporate website for Ivanhoe Energy Corp., Friedland touts the fact that he is "Chairman of Ivanhoe Capital Corporation, his family's private, Singapore-based

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company that specializes in venture capital and project financing," thus contradicting his assertions that (a) Ivanhoe Capital is based in Vancouver, B.C.; (b) Ivanhoe Capital is wholly owned by Friedland, rather than by his family; and (c) that its sole purpose is to facilitate payments by and for Friedland, rather than to "specialize in venture capital and project financing." (See Web Page for Ivanhoe Energy, attached to Mot. to Compel as Ex. 5.) Under these circumstances, it is hardly surprising that GeoSyntec is unwilling to accept Friedland's bald assertions and evasive responses. More importantly, Friedland failed to provide important information requested in Interrogatory No. 24, regarding the payment of his defense costs. In that interrogatory, he was asked to state not only the total amount of defense costs paid by Ivanhoe Capital Corp., but "[a]s to each check, draft, wire transfer or other form of payment through which Ivanhoe Capital Corp. or another entity paid such defense costs . . . whether [Friedland] reimbursed the entity for the amount, and if so, the date, amount and mode of reimbursement. (Responses, Ex. 7 to Mot. to Compel at 7-8, Int. No. 24 (emphasis added).) Friedland's response, as quoted above, fails to identify a single payment or reimbursement in response to this inquiry. Friedland's response, that Ivanhoe Capital has no source of income "other than as received from or directed to the company by Robert Friedland" is wholly evasive. If Friedland paid funds to Ivanhoe Capital which were then used to pay the defense costs at issue, he is required to identify every such payment. If he cannot trace particular payments he made to the payment of any particular defense costs, then he must identify all of his payments to Ivanhoe Capital during the relevant time period, to determine whether these payments can ultimately be tied to the payment of the defense costs at issue. GeoSyntec is entitled to specific documentation

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proving that Friedland did, ultimately, pay the defense costs ­ it is not required to rely on his bald assertion that all payments to Ivanhoe Capital were made by him. Perhaps the most cryptic phrase in the Responses is Friedland's assertion that Ivanhoe Capital has no source of funds other than as received from "or directed to the company" by Friedland. (Id. at 8, Resp. No. 24 (emphasis added).) It is impossible to determine what this means. Funds "directed to the company" could come from any source. Friedland must specifically identify the source of all funds used to pay his defense costs. Simply put, if Friedland did not pay these defense costs, it will be extremely difficult, if not impossible, for him to prove that the payments he personally received from the settling parties were intended as reimbursement for "defense costs" rather than for the "response costs" he actually paid and seeks in this action. Friedland must be ordered to provide a full and specific response to this interrogatory, and to produce all documents upon which he relies to support his answer. Request for Production No. 18: In this request, Friedland was asked to "[p]roduce a copy of all documents establishing the identity of the payor of the $20,723,181 in response costs referred to in paragraph 4 of the Amended Complaint, including but not limited to, any bank statements, copies of cancelled checks, or wire transfer confirmations evidencing the payment(s)." (Fourth Discovery Requests, Ex. 6 at 9, Req. No. 18.) In response, Friedland stated: "Plaintiff will produce cancelled checks or wire transfer instructions if such can be located without undue effort." (Responses, Ex. 7 at 14, Resp. No. 18.) On January 22, 2007, after the Motion to Compel had been filed, Friedland produced six pages of documents related to wire transfers from Friedland's account. GeoSyntec

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should not have been forced to file a Motion to Compel to receive even these minimal documents relating to Friedland's payment of the EPA settlement. Request for Production No. 19: In this request, Friedland was asked to "[p]roduce a copy of all documents establishing the identity of the payor of the $28,144,048 in defense costs referred to in the spreadsheet labeled RMFried 078360 and any additional defense costs You claim to have incurred, including but not limited to, any bank statements, copies of cancelled checks, or wire transfer confirmations evidencing the payment(s)." (Fourth Discovery Requests, Ex. 6 at 9, Req. No. 19.) In response, Friedland neither produced nor identified any documents, but merely stated that "[d]ocuments sufficient to establish Ivanhoe Capital Corporation as the payor of the defense costs identified on the referenced spreadsheet are included among the defense cost documents previously made available to GeoSyntec." (Responses, Ex. 7 at 15, Resp. No. 19.) This response is insufficient. GeoSyntec is entitled to bank records establishing each payment of defense costs by Ivanhoe Capital, assuming that this entity paid all of the costs. III. CONCLUSION Friedland claims that even though he has already recovered over $4 million in excess of the $20 million he paid to settle the EPA Action, he is still entitled to recover nearly all of this $20 million from the Defendants in this case. If he is going to pursue this remarkable theory, particularly given the magnitude of the amounts at issue, he must be prepared to back up his claims with hard evidence as to which entity made the settlement payment and which entity paid his defense costs. Yet, throughout this litigation, Friedland has performed a tap dance regarding the payments made to settle the EPA Action, the transactions through which his defense costs

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were paid, and the payments he has already received in settlement. His argument that GeoSyntec should accept his sweeping statement, that he "paid the subject defense costs through his company," is absurd. In essence, he suggests that a payment by Ivanhoe Capital should be deemed a payment by him, without a shred of supporting evidence ­ no corporate documents identifying its shareholders, officers or directors; no documents suggesting that Ivanhoe Capital is his "alter ego," as he suggests; no documents reflecting any payments from Friedland to Ivanhoe Capital; and perhaps most importantly, no documents refuting publicly-disseminated statements by one of Friedland's other companies, Ivanhoe Energy, that Ivanhoe Capital is in fact a Singapore-based company with offices throughout the world, owned by Friedland's family and engaged in massive venture capital projects. Friedland's game must be put to an end. For all of the foregoing reasons, GeoSyntec is entitled to an order compelling Friedland to provide full, complete, verified responses to the specified interrogatories and to produce the requested documents, or in the alternative, that it preclude Friedland from introducing any evidence at trial of his alleged payment of EPA Action defense costs. In addition, GeoSyntec is entitled to an award of its expenses incurred in connection with the Motion to Compel, including reasonable attorneys' fees, pursuant to Rule 37(a)(4), Fed. R. Civ. P.

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DATED this 12th day of February, 2007. Respectfully submitted, By: s/ Terence M. Ridley Terence M. Ridley Marian L. Carlson Wheeler Trigg Kennedy LLP 1801 California Street, Suite 3600 Denver, Colorado 80202-2617 Telephone No.: 303-244-1800 Telecopier No.: 303-244-1879 E-Mail: [email protected] [email protected] Paul J. Sanner Hanson, Bridgett, Marcus, Vlahos & Rudy LLP 333 Market Street, Suite 2100 San Francisco, CA 94105-2122 Telephone No.: 415-995-0517 Telecopier No.: 415-541-9366 E-Mail: [email protected] Attorneys for Defendant GeoSyntec Consultants, Inc.

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CERTIFICATE OF SERVICE I hereby certify that on February 12, 2007, I electronically filed the foregoing GeoSyntec's Reply in Support of Motion to Compel Discovery Regarding Payments Allegedly Made by Plaintiff with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following email addresses:
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Lauren C. Buehler [email protected] [email protected] Marian Lee Carlson [email protected] [email protected] Colin Christopher Deihl [email protected] [email protected] Leslie Ann Eaton [email protected] [email protected] [email protected] Michael Stephen Freeman [email protected] [email protected] [email protected] Jon Bernhardt [email protected], [email protected], [email protected]

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Perry L. Glantz [email protected] [email protected] Steven Matthew Kelso [email protected] [email protected] Kristina I. Mattson [email protected] [email protected] Richard Kirk Mueller [email protected] [email protected] Terence M. Ridley [email protected] [email protected]

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and I hereby certify that a copy of the document has been served to the following non-CM/ECF participant via E-Mail: Paul J. Sanner - [email protected] Delmar R. Ehrich - [email protected] By: s/ Terence M. Ridley Terence M. Ridley Marian L. Carlson Wheeler Trigg Kennedy LLP 1801 California Street, Suite 3600 Denver, Colorado 80202 Telephone No.: 303-244-1800 Telecopier No.: 303-244-1879 E-Mail: [email protected] [email protected] Attorney for Defendant GeoSyntec Consultants, Inc.

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