Free Response to Motion - District Court of Arizona - Arizona

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Gary L. Birnbaum (#004386) [email protected] Charles S. Price (#006197) [email protected] Timothy J. Thomason (#009869) [email protected] Scot L. Claus (#14999) [email protected] MARISCAL, WEEKS, MCINTYRE & FRIEDLANDER, P.A. 2901 North Central Avenue, Suite 200 Phoenix, Arizona 85012-2705 Phone: (602) 285-5000 Fax: (602) 285-5100 Attorneys for Defendant Snell & Wilmer, LLP

9 IN THE UNITED STATES DISTRICT COURT 10 FOR THE DISTRICT OF ARIZONA 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 I. Defendant Snell & Wilmer, LLP ("Snell & Wilmer"), by and through undersigned counsel, hereby responds to plaintiff's "Motion in Limine Regarding Late Disclosure of Uniform Contribution Among Tortfeasors Act Defense". For the reasons set forth in the accompanying Memorandum of Points and Authorities, the Motion should be denied. MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION. Snell & Wilmer's original Answer, filed in March of 2003, and its subsequent answers to amended Complaints, all asserted comparative fault as a defense. On November 20, 2003, Snell & Wilmer filed a "Joinder in Notice of Non-parties at Fault" that stated: -1U:\ATTORNEYS\TJT\Snell & Wilmer adv. Visitalk\Snell Resp to Mo Limine re 01/11/2008 1-11-08 cml Snell Case 2:02-cv-02405-HRH Document 430 Filed Utaca 1-11-08\efiled Page 1 of 8 Resp to Motion In Limine Re Late Disclosure (SLC Additions) (5) 1-8-08.doc

BILTMORE ASSOCIATES, as Trustee for the Visitalk Creditors' Trust, Plaintiff, v. PETER THIMMESCH, et al., Defendants.

CASE NO. CIV 02 2405 PHX HRH RESPONSE TO MOTION IN LIMINE REGARDING LATE DISCLOSURE OF UNIFORM CONTRIBUTION AMONG TORTFEASORS ACT DEFENSE (Assigned to the Honorable H. Russel Holland)

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Defendant Snell & Wilmer, LLP hereby joins in the designation of the non-parties at fault submitted by any other party hereto and further designates (as) a non-party at fault any person ever named as a defendant herein and dismissed prior to trial. Plaintiff must have forgotten about these filings when it made the following statements in the recent motion in limine: Here the defendant failed to raise UCATA as a defense in its answer or any amendment thereto. Further, the defendant failed to disclose that it would use UCATA as a defense in either its initial disclosure statement or any supplement thereto. It was not until plaintiff's collaboration with the defendant on their joint pre-trial statement that the defendant alerted plaintiff to its use of UCATA as a defense. These bold proclamations by the plaintiff are simply false. specifically raised comparative fault several times during this case. Snell & Wilmer has Nonetheless, under

applicable law, fault is automatically apportioned amongst all responsible parties. II. PROCEDURAL BACKGROUND. This has always been a case about apportionment of fault. Plaintiff's Complaint

accused the former officers and directors of Visitalk.com, Inc. ("Visitalk") of breaching their fiduciary duties. Defendants in the case included Peter and Cynthia Thimmesch, Michael Cardwell and his wife (and current Superior Court Judge Margaret Mahoney), Raymond Gaston, Betty Gaston Allan Kaplan, Jeffrey Hirschberg, Michael and Marcia O'Donnell, Robert Corry, Michael Cooney and Giles Sommerville, all former officers or directors of Visitalk. Stephen Best, Visitalk's former general counsel, Stephen Best, P.C. and Mr. Best's former law firm, The Falk Law Firm, P.L.L.C., were also named as defendants. In addition, a company called MP3.com, Inc. ("MP3") was named as a defendant. The plaintiff accused MP3 of entering into fraudulent contracts with Visitalk. Visitalk's former accountants, Ernst & Young, LLC, were also defendants.

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In its original Answer filed in March of 2003, Snell & Wilmer asserted "comparative fault" as an affirmative defense. (See Paragraph 42 of Answer). The answers to the Amended Complaints have contained similar affirmative allegations. On December 3, 2003, MP3 filed a "Notice of Non-Parties at Fault", designating Stephen Best, Stephen A. Best, P.C., Michael Cooney and Giles Sommerville as non-parties at fault. Defendant Mark Cardwell did the same on December 2, 2003. On October 3, 2003, defendant Mark Cardwell designated Jeffrey Hirschberg and Allan Kaplan as non-parties at fault. As noted above, on November 20, 2003, Snell & Wilmer joined in the designation of non-parties at fault submitted by any person and further designated as a non-party at fault any person named as a defendant and dismissed prior to trial. In the "Joint Statement of Issues" submitted on December 20, 2007, Snell & Wilmer

The Uniform Contribution Among Tortfeasors Act ("UCATA"), A.R.S. § 12-2506, provides that "[e]ach defendant is liable only for the amount of damages allocated to that defendant in direct proportion to that defendant's percentage of fault." UCATA applies in this case to all of plaintiff's claims sounding in tort. Id. If Visitalk is found to have sustained any compensable damages, then the Court must apportion fault among all parties and non-parties that caused or contributed to such damages, including: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. Visitalk.com, Inc. Bryan Cave Gibson, Dunn & Crutcher Lynn Stodghill The Falk Law Firm Dickstein Shapiro Stephen Best, P.C. Lyons & Lyons Ernst & Young, LLC Peter Thimmesch Cynthia Thimmesch Raymond Gaston Allan Kaplan Jeffrey Hirschberg Richard Rothwell Michael O'Donnell Marcia O'Donnell Robert Corry Michael Cooney -3U:\ATTORNEYS\TJT\Snell & Wilmer adv. Visitalk\Snell Resp to Mo Limine re 01/11/2008 1-11-08 cml Snell Case 2:02-cv-02405-HRH Document 430 Filed Utaca 1-11-08\efiled Page 3 of 8 Resp to Motion In Limine Re Late Disclosure (SLC Additions) (5) 1-8-08.doc

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20. 21. 22.

Mark Cardwell Giles Sommerville MP3.com, Inc.

All of the foregoing, except Bryan Cave, Gibson, Dunn & Crutcher, Lynn Stodghill, Dickstein Shapiro and Lyons & Lyons were, or are, defendants in this case. III. LEGAL ANALYSIS. Joint and several liability has been abolished in Arizona. As the Arizona Supreme Court recently recognized:
The 1987 amendment [to UCATA], codified at A.R.S. § 12-2506, establishes a system of comparative fault, making "each tortfeasor responsible for paying his or her percentage of fault and no more." State Farm v. Premier Mfg. Sys., 173 P.3d 410, ___, 2007 Ariz. Lexis 142, *7 (2007) (citing Dietz v. Gen. Elec. Co., 169 Ariz. 505, 510, 821 P.2d 166, 171 (1991)) (emphasis in original).

The mandate of A.R.S. § 12-2506 is clear and categorical: in any "action for personal injury, property damage or wrongful death, the liability of each defendant for damages is several only and not joint, . . ." A.R.S. § 12-2506(A). Indeed, allocation of fault amongst all parties at fault is now "automatic" in Arizona. The relevant statute provides: Each defendant is liable only for the amount of damages allocated to that defendant in direct proportion to that defendant's percentage of fault . . . A.R.S. § 12-2506(A). A.R.S. § 12-2506(B) continues: In accessing percentages of fault, the trier of fact shall consider the fault of all persons who contributed to the alleged injury, death or damage to property, regardless of whether the person was, or could have been, named as a party to the suit. Negligence or fault of a nonparty may be considered if the plaintiff entered into a settlement agreement with the non-party or if the defending party gives notice before trial, in accordance with requirements established by court rule, that a non-party was wholly or partially at fault.

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Finally, A.R.S. § 12-2506(C) provides: The relative degree of fault of the claimant, and the relative degrees of fault of all defendants and non-parties, shall be determined and apportioned as a whole at one time by the trier of fact. In sum, the trier of fact must apportion fault amongst all responsible parties. State Farm, 170 P.3d at ___, 2007 Ariz. Lexis 142 at *7-9. A.R.S. § 12-2506(B) provides that the trier of fact "shall" consider the fault of all persons who contributed to the injury. There is no statutory requirement that any notice be given prior to trial that fault should be apportioned. Rather, apportionment is a matter of right under the statute amongst all parties to the case and persons with whom "the plaintiff entered into a settlement agreement" and other persons identified as a non party at fault "in accordance with requirements established by court rule". Therefore, it is very clear that fault must be apportioned between the plaintiff, Snell & Wilmer and Peter Thimmesch, Cynthia Thimmesch, Raymond Gaston, Allan Kaplan, Jeffrey Hirschberg, Michael and Marcia O'Donnell, Robert Corry, Michael Cooney, Mark Cardwell, Giles Sommerville, Stephen Best, Stephen Best, P.C., The Falk Law Firm, MP3 and Ernst & Young. All of these persons or entities are defendants or former defendants with whom plaintiff has settled.1 Despite the fact that apportionment of fault is automatic, notice was provided to Visitalk by Snell & Wilmer that fault should be apportioned to all parties who settled or were dismissed. As noted above, Snell & Wilmer advised plaintiff as early as November of 2003 that it was joining in any other parties' designations of non-parties at fault and was designating as a non-party at fault any defendant dismissed prior to trial. As such, it is abundantly clear that, in the event of a finding of liability, fault must be apportioned amongst the plaintiff, Snell & Wilmer and existing or any settling defendants.2

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Plaintiff is apparently now arbitrating with Ernst & Young. Many of the defendants in this action have admitted fault in settlements and stipulated judgments entered into with the plaintiff. -52
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There has been no specific designation, prior to the "Joint Statement of Issues," with respect to the fault of Bryan Cave, Gibson Dunn & Crutcher, Lynn Stodghill, Dickstein Shapiro and Lyons and Lyons.3 However, no federal rule of procedure imposed a deadline or time limit for the designation of a non-party at fault. Though Rule 26(b)(5) of the Arizona Rules of Civil Procedure provides a deadline in state court action, no such deadline exists in the applicable Federal Rules of Civil Procedure or local rule. As such, the designation in the Joint Statement of Issues was timely. Nonetheless plaintiff cannot legitimately claim surprise. Plaintiff has long been aware that Visitalk and its officers consulted with the lawyers at Gibson Dunn & Crutcher and Lynn Stodghill about the "Founders Warrants" at the November 1999 board meeting. (See Minutes, attached hereto as Exhibit "A".) Visitalk relied on these other attorneys in adopting the "solution" to the Founders Warrant problem, which plaintiff takes issue with in this case. If there was fault in recommending the Founders Warrants "solution," the fault rests with these other law firms. As such, Visitalk cannot legitimately claim any "surprise" by the assertion that these parties are at fault. In addition, plaintiff has long known that, to the extent there is any fault with respect to the documentation of the Founders' Warrants, the fault rests with the law firm of Bryan Cave. Bryan Cave was general securities counsel to Visitalk in 1998 when the company was formed and the Founders' Warrants were issued. Most, if not all, of the securities issues that Snell & Wilmer confronted were because of mistakes by Bryan Cave. Indeed, plaintiff's standard of care expert witness, Boyd Lemon, has testified that Bryan Cave made numerous errors and violated the standard of care. (See Lemon Deposition, pp. 138-141, Exh. "B" hereto.) Mr. Lemon also offered an opinion about Gibson, Dunn & Crutcher's adherence to the applicable standard of care. (Id. at 166:4-168:16.) Finally, Mr. Lemon was also asked about Lynn Stodghill's compliance with the applicable standard of

These parties are all lawyers who represented Visitalk at one time or another. -6-

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care. (Id. at 168:17-169:6.). These questions were asked and answered without objection. Visitalk's former general counsel, Stephen Best, testified that he has no idea why Visitalk has not pursued claims against Bryan Cave. (See Deposition of Steven Best, p. 155, Exh. "C" hereto.) As such, the designation of these parties as non-parties at fault could come as absolutely no surprise to the plaintiff. And, as noted above, there is no procedural rule designating a deadline for naming non-parties at fault. If there is a finding of liability, fault must be apportioned amongst all tortfeasors, whether parties or not. State Farm, 2007 Ariz. Lexis 142 at *8-9. IV. CONCLUSION. As previously noted, this has always been an apportionment of fault case. Fault is to be apportioned amongst the parties to a negligence case, including defendants dismissed before trial. Snell & Wilmer made sure that plaintiff understand that fault would be apportioned amongst all parties, including dismissed defendants. The designation of certain non-parties at fault was timely. Comparative fault was asserted as an affirmative defense in the Answer. For all of these reasons, plaintiff's Motion should be denied. RESPECTFULLY SUBMITTED this 11th day of January, 2008. MARISCAL, WEEKS, McINTYRE & FRIEDLANDER, P.A.

By: s/ Thomthy J. Thomason Gary L. Birnbaum Timothy J. Thomason Charles S. Price Scot L. Claus Attorneys for Defendant Snell & Wilmer, LLP

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CERTIFICATE OF SERVICE Biltmore Associates v. Peter Thimmesch, et al. (Case No. CV 02-2405-PHX-HRH) I hereby certify that on January 11, 2008, a copy of the foregoing will be sent via FedEx Judge H. Russel Holland UNITED STATES DISTRICT COURT 222 West 7th Avenue No. 54 Anchorage, AK 99513 907-677-6251 I hereby certify that on January 11, 2008, I electronically transmitted the attached document(s) to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: I hereby certify that on January 11, 2008, I caused the attached document to be served by first class mail on the following, who are not registered participants of the CM/ECF System: Peter Thimmesch 11329 Stonehouse Place Potomac Falls, Virginia 20165-5123 Defendant Pro Se

By: s/ Cheryl Lostracco 16 17 18 19 20 21 22 23 24 25 26 -8U:\ATTORNEYS\TJT\Snell & Wilmer adv. Visitalk\Snell Resp to Mo Limine re 01/11/2008 1-11-08 cml Snell Case 2:02-cv-02405-HRH Document 430 Filed Utaca 1-11-08\efiled Page 8 of 8 Resp to Motion In Limine Re Late Disclosure (SLC Additions) (5) 1-8-08.doc