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

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Grant H. Goodman, State Bar #009463 GRANT H. GOODMAN, PLLC 4156 N. 49th Street Phoenix AZ 85018 Phone: (602) 840-2393 [email protected] Attorney for Plaintiffs

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Bankruptcy "Core" Preemption/res judicata-issue/claim preclusion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA GRANT H. GOODMAN and TERI B. ) GOODMAN, husband and wife, (as ) Case No. CV-03-01587-JAT Guarantors-Sureties for GTI Capital ) Holdings, LLC, G.H. Goodman Invest. ) OMNIBUS REPLY TO: (1) GE/CITICAPITAL RESPONSE Co., LLC (Arizona limited liability ) & companies); West Highland Water & ) "JOINDER" Power, LLC (a Delaware limited liability ) company); ) ) Plaintiffs, ) ) FIRST VERIFIED CONSOLIDATED vs. ) INDEPENDENT ACTION ) GENERAL ELECTRIC CAPITAL CORP., as ) successor-in-interest, for and on behalf ) of, CITICAPITAL TECHNOLOGY FINANCE ) Fed.R.Civ.P. 60 INDEPENDENT ACTION CORP., CITICAPITAL LEASING CORP., et ) al., ) TO VACATE JUDGMENT; Fed.R.Civ.P & ) 65(a)(1)(2); INJUNCTIVE RELIEF LEWIS & ROCA, LLP; THE LAW OFFICES ) OF DAVID N. INGRASSIA, P.C., DAVID M.) REAVES, ESQ., TRUSTEE; MICHAEL W. ) CARMEL, ESQ., TRUSTEE'S SPECIAL ) COUNSEL, ) ) Defendants. ) ) ) ) ) ) ) )

Case 2:03-cv-01587-JAT

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INTRODUCTION General Electric, CitiCapital, Lewis & Roca, LLP, David Ingrassia P.C., Trustee David Reaves, Esq., and Trustee's Special Counsel, Michael W. Carmel, Ltd., have refused to respond to the Independent Action. 1 Extraordinary circumstances providing for plaintiffs underlying motion include, but are not limited to; the events, documents, agreements, negotiated compromises, and obligor (guarantor) waivers and releases of all GE/CitiCapital claims, judgments, and postjudgment maneuverings were not disclosed to the guarantors, until, at the earliest, in an adversary proceeding hearing of March 11, 2008. The Judgments, Orders, and Decrees incorporating the "Release and Compromise Settlement" arising out of that adversary proceeding hearing (ap-0700031-SSC) were entered March 17, 2008, and amended and entered April 7-9, 2008. The full release, compromise, and settlement, "forever" discharged and extinguished judgments, post-trial provisional remedies, and appellate discourse (post-dating by 18 months in this matter the guarantors appellate opening and reply briefs) which were unknowing, and unknowable to the guarantors in 2003, 2004, 2005, 2006, 2007, through March-April 2008. The Bankruptcy Court certified plaintiffs appeal to the BAP on June 5, 2008. Plaintiffs preserved their creditor Proof(s) of Claim exceeding $4,000,000.00. Plaintiffs preserved their objections as non-settling creditors to the settlement, release, and compromise, conversely waived by the settling creditors (GE/CitiCapital), through direct authorizations, ratification, and endorsement of the "Release" through the estate fiduciaries. Plaintiffs also preserved estate
Defendants' failure to address their combined post-judgment settlement, release, waiver, and compromise of the guarantors (obligors) through federally preemptive Judgments, Orders, and Decrees of August 30, 2007, March 11, 2008, March 17, 2008, and April 7-9, 2008 are confessions of reversible error. Defendants judicial admissions (and their failure to respond) contained within previously filed, bates stamped, and lodged Official Reporters' Transcripts of Proceedings from June 13, 2007, February 20, 2008, March 11, 2008, together with plaintiffs' en banc petition of June 12, 2008 in this evidentiary record cannot by the simple expedient of cognitive dissonance or faith based alchemy repeal the plenary grant of congressional authority granted to Article I Courts (Bankruptcy) in "core" proceedings.
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claims to recover $350,000.00 2 in attorney fees provided by GE/CitiCapital as consideration for the accord and satisfaction and novation. FED.R.CIV.P. 60(b)(3)(4)(5)(6); Savings Clause-Independent Action Repeal By Colorful Adjective Lewis & Roca's brief bank [stretching across three states, 200+ lawyers, give or take a few appointed as judges under "merit" selection, through Governor alum, the Hon. Janet Napolitano, or pushed through Democratic Party counsel, Marty Harper (also an alum)] alerted this court to the following: (1) The so-called appeal divests this court of "jurisdiction" on issues which could not have been addressed on appeal occurring two years post-trial and appeal, post-briefing and oral argument, without a mandate; (2) The Independent Action is "meritless", "untimely", "unfounded", and "leave to amend" the motion to assert "purported new claims" should be denied. Defendants' limited citation to Gould v. Mutual Life Ins. Co., and Davis v. Yageo Corp., are inapposite as explained infra. CASE POSTURE Plaintiffs' Fed.R.Civ.P 60(b)(5)(6), and Savings Clause Independent Action were filed within three weeks of Bankruptcy Court certification to the BAP related to the guarantor releases at issue. To the limited extent possible under these extraordinary circumstances plaintiffs have notified the 9th Circuit, En Banc, of the pending proceedings. The motion is not premised upon appellate arguments advanced by either party to the motion, nor is the issue raised in the motion

$350,000.00 was paid by Greenberg Traurig, LLP, Comerica Bank, and the settling creditors directly to Michael W. Carmel, Ltd. Judge Curley approved the fees as she released Greenberg Traurig, LLP, Comerica Bank, from fraud claims, etc., brought by Mr. Carmel as the Trustee's Special Counsel with court approval. The "fees" were "awarded" without the benefit of performing any analysis on the fee application---because it was non-existent. Mr. Carmel provided an after-the-fact one-page unrecorded recollection "summary" of possibly 100 hours, or over $3,000.00 an hour. Mr. Carmel and the settling creditors bestowing the estates largesse in a direct payment for consideration of their "Settlement and Release" have made Arizona legal fee economic history, undoubtedly skewing results published by the Arizona State Bar, Economics of Law Practice (2004) referenced in this court's opinion, Agster v. Maricopa County, 486 F.Supp.2d 1005 (D.C.Ariz. 2007-JAT). The commercial bribe, in part, goes to the heart of fraud on the court by officers of the court.
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relitigation previously decided by this court, or the 9th Circuit despite the en banc petition. Kinnear-Weed Corp. v. Humble Oil, 403 F.2d 437 (5th Cir. 1968). INDEPENDENT ACTION VALID IRRESPECTIVE OF PENDING APPEAL Leave of an appellate court is not required. The procedure has been declared cumbersome and counterproductive in ascertainment of colorable significant intervening circumstance claims under 60(b)(5)(6), Independent Action. Standard Oil Company of California v. U.S., 429 U.S. 17, 97 S.Ct. 31 (1976); Stone v. I.N.S., 514 U.S. 386 (1995); In re Levander, 180 F.3d 1114 (9th Cir. 1999); Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128, 1133 (9th Cir. 1995); In re Intermagnetics America, Inc., 926 F.2d 912 (9th Cir. 1991). The District Court maintains jurisdiction to hear this action, since an appellate mandate, if and when issued in this case, cannot and will not address issues never presented on appeal due to creditor lawyer obfuscations and concealment arising and maturing, literally, the day of oral argument in San Francisco. This Court must follow a mandate for what it specifically states, not for what it did not (and could not) decide. U.S. v. Kellington, 217 F.3d 1084 (9th Cir. 2000)(The Hon. Betty B. Fletcher authoring the panel decision). The "For Sale" sign placed around the necks of estate fiduciaries by these defendants, when the Trustee, Trustee's Special Counsel, and Greenberg Traurig, LLP were obligated to act in the interests of all creditors, by federal court order, (Curley Memorandum Decision August 30, 2007) as fiduciaries3, is conduct deserving of another look. Time limits are not an issue. Valerio v. Boise Cascade Corp., 80 F.R.D. 626, 640, (D.C.Cal. 1978) affirmed 645 F.2d 699 (9th Cir. 1981). Ancillary jurisdiction exists within the District Court, by law, for the last 60 years. Root Ref. Co., v. Universal Oil Products, 169 F.2d 514, 521-522, (3rd Cir. 1948); U.S.

Mr. Carmel, Ltd. had been retained in 2004 to represent the interests of plaintiffs individually as "insiders", and as creditors in the bankruptcy. Irrespective of that continued fiduciary relationship, Mr. Carmel was never at liberty as an estate fiduciary to connive or collude with these defendants and their lawyers at his clients defeat by corruptly selling out the plaintiffs' interests in exchange for a $3,000.00 an hour bribe. See, e.g., Luttrell v. U.S., 644 F.2d 1274 (9th Cir. 1980).
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v. Beggerly, 524 U.S. 38 (1998). 4 Relief is properly sought in the District Court or State Court system rendering the underlying judgment. U.S. v. Fluor Corp., 436 F.2d 383, 385, (2nd Cir. 1970). POST-JUDGMENT SETTLEMENTS Settlements reached post-judgment impacting propriety of the underlying judgment are warranted under Fed.R.Civ.P. 60(5)(6). Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375 (1994); McAlpin v. Lexington 76 Auto Truck Stop, Inc., 229 F.3d 491 (6th Cir. 2000); Davis v. Magnolia Lady, Inc., 178 F.R.D. 473 (D.C.Miss. 1998); Trade Arbed Inc., v. African Express MV, 941 F.Supp. 68 (D.C.La. 1996); See, e.g., McCormick V. City of Chicago, 230 F.3d 319 (7th Cir. 2000). Repudiation of a settlement agreement is an extraordinary circumstance where the agreement terminated litigation pending before the instant court, according to the Ninth Circuit. Keeling v. Sheet Metal Workers Int'l Assoc., 937 F.2d 408 (9th Cir. 1991). The U.S. Supreme Court recently announced that bankruptcy approved settlement agreements with "broad" release language preempt and extinguish each and every state law claim under issue/claim preclusion principles addressed in the settlement agreements under novation principles. Archer, ET UX., v. Warner, 538 U.S. 314 (2003) 5.
Evidence fabrication, perjury, subornation of perjury and a lawyers conspiracy to produce same occurred on March 11, 2008 in open court when the Trustee, and Trustee's Special Counsel avowed under oath that the "Release" and "fee" were estate fiduciary prerogative under the "business judgment rule" in consultation with Mr. Ingrassia (trial counsel for defendants), and Brent Gardner of Lewis & Roca, LLP. On cross-examination by the objecting creditors here, the "Release and Settlement" by the estates and the non-objecting creditor lawyers was premised exclusively upon the Trustee's testimony that Greenberg Traurig lawyers had given consideration by releasing a purported unadjudicated unliquidated "lien" on roughly $650,000.00 in sequestered Registry Funds. The evidence and court orders on file here reflect that the Trustee, a week prior to the hearing and his testimony of March 11, 2008, had judicially admitted that the Registry funds were "unencumbered funds and property of the estates" expressly not subject to any claims, liens, or prospective settlement with Greenberg Traurig lawyers. The Trustee Order was "GRANTED" without objection, modification, or amendment by any of the lawyers here. 5 The dissent and plurality agreed on this key issue. The only disagreement was whether a fraudulent participant in bankruptcy proceedings may be pursued beyond the express terms of the "settlement"---the Court ruled a cause of action exists in those circumstances.
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INDEPENDENT ACTION ANCILLARY EQUITABLE JURISDICTION: ATTORNEYS ARE PROPER PARTY DEFENDANTS For example, "....parties who seek to vacate a judgment on the ground of fraud on the court are allowed to join as defendants in the second suit persons who were attorneys, not parties, in the first suit." Cresswell et al., v. Sullivan & Cromwell, et al., 922 F.2d 60, 70 (2nd Cir. 1990) 6; Valerio v. Boise Cascade Corp., supra. PLENARY PREEMPTIVE BANKRUPTCY "CORE" PROCEEDING JUDGMENTS, ORDERS, AND DECREES The "Release" and settlement authorized by the estate fiduciaries and nonobjecting creditors occurred in the context of a "core" adversary proceeding. Issue/claim preclusive judgments authored by the bankruptcy court are unassailable unless properly objected to, and appealed, or upon a narrow range of collateral attacks immaterial here. The "core" proceeding judgments do not transform state law claims into "removable" federal claims, but rather extinguishes them entirely. Rivet v. Regions Bank of Louisiana, 522 U.S. 470 (1998). Other than for specific enforcement and injunctive purposes related to the "Release", this court may not abstain under Rooker-Feldman, or any other abstention doctrine supplanting core proceeding judgments incorporating the "Release and Settlement" at issue. In re Gruntz, 202 F.3d 1074 (9th Cir. 2000). Bankruptcy Courts are empowered to, as here, avoid state court judgments. Id. Post-petition state judgments (which this is) are not binding on the bankruptcy court to establish an amount of so-called debt. Id. Final judgments in state courts are not preclusive in bankruptcy adversary proceedings comprised of the same parties (or those in privity), the same claimed damage, from the same contracts, on identical issues preclusively and preemptively decided by the bankruptcy court. Id.
The Hon. Betty B. Fletcher sitting by designation from the 9th Circuit in Cresswell v. Sullivan & Cromwell was part of the panel authorization to file the En Banc Petition lodged with this court.
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The congressional grant of plenary authority to bankruptcy courts relative to core adversary proceedings is such that federal agencies, states, and other federal courts act at their own peril rendering judgments void, ab initio. Id. Presently, the non-objecting creditors, the estates, and the bankruptcy court have "Released" or otherwise settled plaintiffs state law and federal claims, by endorsement and ratification of the judgment holders themselves. There were no exceptions to the "broad release" afforded the creditors, the lawyers, and as a consequence, the primary obligor, and thus, the guarantors are seeking specific enforcement of the settlement against the settling parties, as they wished, as they wrote, as they testified, and as they waived by consent, "intelligently, voluntarily, and knowingly". Federal and/or state courts may not extinguish a presumptively valid core proceeding judgment, decree, or in this case, a release, settlement, and compromise directed to the plenary Article I authority vested in bankruptcy courts by congressional mandate. See also, In re McGhan, 288 F.3d 1172 (9th Cir. 2002) 7; Nathanson v. Hecker, 99 Cal.App.4th 1158, 121 Cal.Rptr.2d 773 (2002). ACCORD AND SATISFACTION/NOVATION Described above, and irrespective of the preclusive mechanics applied to the case at bar, common law principles bar and extinguish guarantor liability under the Arizona law of accord and satisfaction. Frank Culver Electric, Inc., v. P.O. Jorgenson, 136 Ariz. 76, 664 P.2d 226 (App.1 1983). On the issue of novation Golden Peanut Co., v. Neon Bass, 547 S.E.2d 637 (2001) provides a reasoned analysis which comports to the facts here. The bankruptcy court in its August 30, 2007 Memorandum Decision held Comerica Bank responsible for all creditor damage caused by its fraudulent and misleading conduct. The non-exclusive list of those entitled to a complete damage
These cases do, however, recognize that a bankruptcy discharge through settlement, or adversary proceeding extinguishing former judgments, or as in this case, both, that these recognized complete defenses exist under state law. Thus, it is not that the state courts (or other encroaching forum) lack formal jurisdiction, but that the state courts, for example, are not free to manipulate, modify, or through jurisdictional alchemy amend or alter in any fashion, the core proceeding judgment, order, or decree. In re Lenke, 249 B.R. 1 (Bankr.D.Ariz. 2000).
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overhaul and debt rearrangement, included GE/CitiCapital, all other secured, unsecured, priority, or administrative claimants, which included the estates as the guarantors' primary obligor. In effect, the Bank was, by operation of law, a joint obligor at a minimum, and based upon the Order and Findings, was, as of August 30, 2007, the primary and singular obligor responsible for its own conduct in the unlawful liquidation and bankruptcy of the guarantors' primary obligor, GTI Capital. The Order and Memorandum Decision is crystal clear, and was not appealed. The damages incurred by the guarantors in prior proceedings in this court must be offset against the "Release and Settlement" for all damage claims and Proof(s) of Claim proffered by GE; then released by GE. WTI v. All-American Golf Center, Inc., 139 P.3d 858 (2006). "All damages" means all damages. GE is not entitled to execute a complete discharge of the joint obligor (the Bank), in a preemptive release, and then claim entitlement to ever more damage claims it had imprudently released. The end of this type of forum shopping, double recoveries, and overlapping claims is at an end. Id. Once Carmel cashed the check, and moved to implement the release and settlement on behalf of the Bank, the non-objecting creditors, and the lawyers, were a tender to all obligees, with consideration, discharging the guarantors here. Four Strong Builders, Inc., v. U.S. 52 Fed.Cl. 587 (2002); See, e.g., Summit Properties, Inc., v. Public Service Co., of New Mexico, 118 P.3d 716 (2005); BUC Int'l Corp., v. Int' Yacht Counsel Ltd., 517 F.3d 1271 (11th Cir. 2008) (one satisfaction rule); Vairo v. Clayden 153 Ariz. 13, 734 P.2d 110 (App.1 1987) (one satisfaction rule) CONCLUSION The Independent Action should proceed. GE has presented no plausible countervailing authority, on any issue. Plaintiffs request setting an OSC together with a consolidated hearing on the merits under Fed.R.Civ.P. 65. There exist no jurisdictional impediments, and there exist no legal defenses to the law framed above. GE faced with the same authority in the underlying motion attempted the now famous "Bay of Pigs" saving face ploy adopted by the Kennedy administration. Bobby Kennedy astutely pretended the U.S. never received the Russians first demand for immediate withdrawal, instead ignoring the demand as
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if it never existed at all. GE and its lawyers may feel themselves politically astute, politically well connected, or they simply do not understand the law. Pretending that the documents on file in court orders do not exist does not work as well when your machinations are not concealable as a matter national security.

Dated this 11th day of July 2008. GRANT H. GOODMAN, PLLC /s/ Grant H. Goodman (SBN 009463) ______________________________ Grant H. Goodman

Plaintiffs have served this date (7.11.2008) through the Arizona District Court ecf system, on all subscribing parties. Plaintiffs have also sent by electronic means this REPLY to all named defendants at their respective email domains of record.

CERTIFICATION OF SERVICE _______________________________________________________________________

DATED this 11th day of June 2008. /s/Grant H. Goodman (SBN 009463) Grant H. Goodman

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