Free Response to Motion - District Court of Arizona - Arizona

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BEUS GILBERT PLLC
ATTORNEYS AT LAW

4800 NORTH SCOTTSDALE ROAD SUITE 6000 SCOTTSDALE, ARIZONA 85251 TELEPHONE (480) 429-3000

Leo R. Beus/002687 ­ [email protected] Scot C. Stirling/005757 ­ [email protected] Steven E. Weinberger/015349 ­ [email protected] Attorneys for Individual Plaintiffs and Trustee

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STEVE BROWN & ASSOCIATES, LLC
1414 E. INDIAN SCHOOL ROAD, SUITE 200 PHOENIX, ARIZONA 85014-2412 TELEPHONE (602) 264-9224

Steven J. Brown/010792 ­ [email protected] Co-Counsel for Trustee UNITED STATES DISTRICT COURT

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DIANE MANN, as Trustee for the Estate of LeapSource, Inc., CHRISTINE V. KIRK, et al., Plaintiffs, vs. GTCR GOLDER RAUNER, L.L.C.; et al., Defendants.

Case No.: CIV-02-2099-PHX-RCB

RESPONSE TO KIRKLAND & ELLIS' SUPPLEMENTAL STATEMENT OF FACTS TO MOTION FOR SUMMARY JUDGMENT RE VICARIOUS LIABILITY (Assigned to Hon. Robert C. Broomfield)

MICHAEL MAKINGS, Counterclaimant, vs. LEAPSOURCE, INC., et al., Counterdefendants.

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Pursuant to LRCiv 56. 1 (a), Kirkland & Ellis submits this Supplemental Statement of Facts in Support of its Motion for Summary Judgment Regarding the Vicarious Liability of David Eaton and AEG Partners, L.L.C. 1. In a written agreement, LeapSource specifically agreed that its relationship

with AEG Partners, L.L.C. would be governed by Illinois law: This letter agreement is governed by and construed in accordance with the laws of the State of Illinois with respect to contracts made and to be performed entirely therein and without regard to choice of law or principles thereof. (Financial Advisory Engagement letter dated March 2, 2001, attached as Exhibit 1.) RESPONSE TO 1 Undisputed that the Financial Advisory Engagement letter dated March 2, 2001 contained the referenced provision. Deny, however, that said provision applied to David

13 14 15 16 17 18 19 20 21 22 3. 23 24 25 released Eaton and AEG from any and all liability and agreed to dismiss them from the case. (Settlement Agreement, attached as Exhibit 3, at ¶¶ 4, 5.) 2 Filed 05/18/2006 In the Settlement Agreement among plaintiffs, Eaton, and AEG, plaintiffs 2. Pursuant to that agreement, Eaton went to work for LeapSource, traveling back Eaton in his capacity as an "of counsel" attorney for Kirkland & Ellis.

and forth between Illinois and Arizona, and working in both states. (Excerpts of Deposition of David Eaton, attached as Exhibit 2, at 159:3-10, 199:7-14.) RESPONSE TO 2 Undisputed.

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RESPONSE TO 3 Undisputed that "on the terms and subject to the conditions contained [in the Settlement Agreement]", plaintiffs released Eaton and AEG from any and all liability and agreed to dismiss them from the case.

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In the Settlement Agreement, AEG agreed to assign roughly $200,000 in

insurance proceeds to plaintiffs. (Id. at ¶ 1.) RESPONSE TO 4 Undisputed that "on the terms and subject to the conditions contained [in the Settlement Agreement]", AEG agreed to assign roughly $200,000 in insurance proceeds to plaintiffs.

AEG and Eaton also agreed to cooperate with plaintiffs in the continued

prosecution of plaintiffs' case, including allowing plaintiffs' counsel to interview Eaton, who is presently a partner of K&E. (Id. at ¶ 3.)

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RESPONSE TO 5 Undisputed that "on the terms and subject to the conditions contained [in the Settlement Agreement]", AEG and Eaton agreed to cooperate with plaintiffs in the continued prosecution of plaintiffs' case, including allowing plaintiffs' counsel to interview Eaton, who is presently a partner of K&E.

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6.

Plaintiffs also purported to reserve their rights to assert all claims against the

non settling defendants, including those that arose solely from the conduct of Eaton and AEG. The settlement agreement provided, in relevant part: ... provided, however, that the Trustee and Plaintiffs do not release an expressly reserve any Claims that she (in her capacity as Trustee) and Plaintiffs might have or claim to have against any person or entity other AEG, including, without limitation, the various persons and entities named as defendants or adverse parties in the Litigation or in any adversary proceeding in which the Trustee is or has been the plaintiff or other party asserting a Claim, that currently is pending in the U.S. District Court or the Bankruptcy Court, and that arises from or relates to the Litigation or the Debtor, including, without limitation, the Other Defendants, regardless of whether AEG, on the one hand, and any one or more of the Other Defendants, on the other hand, are or may be alleged to be principals, agents, or joint tortfeasors as to one or more of the Trustee's reserved alleged claims. This release does not constitute a full satisfaction or acceptance of full compensation for Claims for injuries and damages that the Trustee and Plaintiffs have alleged or may allege has been incurred as a consequence of any act or omission to act by any other person or entity, regardless of whether AEG is, or may be alleged to be, a joint tortfeasor as to such Claims. This Agreement constitutes and is intended to be a full and complete release of AEG only and is not a full satisfaction or release of Claims for injuries caused by other persons or entities. (Id. at ¶ 5.)

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RESPONSE TO 6 Undisputed that "on the terms and subject to the conditions contained [in the Settlement Agreement]", plaintiffs reserved their rights to assert all claims against the nonsettling defendants, including those that arise solely from the conduct of Eaton and AEG. It is further undisputed that United States Bankruptcy Judge James M. Marlar included the reservation of rights language in his Order of April 6, 2006.

7 8 9 10 11 12 13 14 15 16 Fourth Amended Compl. ¶ 29.) 17 18 19 20 21 22 23 24 25
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7.

AEG is an Illinois limited liability company. Its offices are located in Highland

Park, Illinois. (Eaton Dep., Ex. 2, at 56:2 5; Fourth Amended Compl. ¶ 30.) RESPONSE TO 7 Undisputed

8.

Eaton is a resident of the State of Illinois. For the times relevant to this case, he

maintained a regular office at AEG's location in Illinois. (Eaton Dep., Ex. 2, at 56:6 8;

RESPONSE TO 8 Undisputed that Eaton maintained an office in Illinois, but deny that Eaton did not perform much of his work for LeapSource pursuant to the Financial Advisory Engagement between AEG and LeapSource at LeapSource's offices in Arizona.

9.

LeapSource was incorporated in Delaware. The company had offices in

Phoenix, Arizona; Washington, D.C.; near San Diego, California; Los Angeles, California;

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and in Northern California. (Excerpts of Deposition of Christine Kirk, attached as Exhibit 4, at 478:18 - 479:14; Fourth Amended Compl. ¶ 170.) RESPONSE TO 9 Undisputed

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The individual plaintiffs are residents of Arizona, Michigan, and Illinois.

(Fourth Amended Compl. ¶¶ 35 38, 40 42; Excerpts of Deposition of Kelly Weekes, attached as Exhibit 5, at 7:21-22.) RESPONSE TO 10 Undisputed

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PLAINTIFFS STATEMENT OF ADDITIONAL FACTS On January 13, 2006 K&E was electronically served with a copy of the Motion of Trustee and Plaintiffs to Approve Settlement With David Eaton and AEG Partners, L.L.C. (Motion of Trustee and Plaintiffs to Approve Settlement With David Eaton and AEG Partners, L.L.C., attached as Exhibit 1) On January 13, 2006 K&E was also electronically served with a Notice of Motion of Trustee and Plaintiffs to Approve Settlement with David Eaton and AEG Partners, L.L.C. (Notice of Motion of Trustee and Plaintiffs to Approve Settlement with David Eaton and AEG Partners, L.L.C. , attached as Exhibit 2) On February 2, 2006 K&E filed a document entitled "Notice of Reservation of Rights" with the United States Bankruptcy Court in connection with the LeapSource, Inc. bankruptcy proceedings. In this document K&E represented it "does not object to the approval of the proposed settlement in this Court." (Notice of Reservation of Rights, attached as Exhibit 3) On April 6, 2006 United States Bankruptcy Court Judge James M. Marlar signed an Order Granting Motion of Trustee and Plaintiffs to Approve Settlement Agreement With David Eaton and AEG Partners, L.L.C. (Order dated April 6, 2006, attached as Exhibit 4) Judge Marlar's Order reads as follows: IT IS HEREBY ORDERED that said Motion is hereby granted. The terms and conditions of the Settlement Agreement entered into by and between the parties are hereby approved and deemed to be in the best interests of the Debtor. By the express terms of the Settlement Agreement, the Trustee and Plaintiffs do not release and expressly reserve any Claims that she (in her capacity
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as Trustee) and Plaintiffs might have or claim to have against any person or entity other than AEG and Eaton, including, without limitation, the various persons and entities named as defendants or adverse parties in the Litigation or in any adversary proceeding in which the Trustee is or has been the plaintiff or other party asserting a Claim, that currently is pending in the U.S. District Court or the Bankruptcy Court, and that arises from or relates to the Litigation or the Debtor, including, without limitation, the Other Defendants, regardless of whether AEG and/or Eaton, on the one hand, and any one or more of the Other Defendants, on the other hand, are or may be alleged to be principals, agents, or joint tortfeasors as to one or more of the Trustee's reserved alleged Claims. (Order dated April 6, 2006, attached as Exhibit 4) 16. In their Settlement Agreement with Plaintiffs, AEG and Plaintiffs agreed to the following "14. Governing Law. This agreement shall be governed, construed and enforced according to the laws of the State of Arizona without regard to conflicts of laws principles." (Settlement Agreement, attached as Exhibit 3 to K&E Supplement) Dated this 18th day of May, 2006. BEUS GILBERT PLLC

By

s/ Steven E. Weinberger Leo R. Beus Scot C. Stirling Steven E. Weinberger 4800 North Scottsdale Road Suite 6000 Scottsdale, AZ 85251 Attorneys for Individual Plaintiffs and Trustee

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STEVE BROWN & ASSOCIATES, LLC Steven J. Brown 1414 E. Indian School Road, Suite 200 Phoenix, AZ 85014 Co-Counsel for Trustee

CERTIFICATE OF SERVICE I hereby certify that on May 18, 2006, I electronically transmitted the attached

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 document 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: Kevin A. Russell David S. Foster Nicholas B. Gorga LATHAM & WATKINS LLP [email protected] [email protected] [email protected] Attorneys for Defendants GTCR Golder Rauner, LLC, GTCR Fund VI, LP, GTCR VI Executive Fund, LP, GTCR Associates VI, Joseph P. Nolan, Bruce V. Rauner, Daniel Yih, David A. Donnini and Philip A. Canfield Don P. Martin Edward A. Salanga QUARLES & BRADY STREICH LANG, LLP [email protected] [email protected] Attorneys for Defendants GTCR Golder Rauner, LLC, GTCR Fund VI, LP, GTCR VI Executive Fund, LP, GTCR Associates VI, Joseph P. Nolan, Bruce V. Rauner, Daniel Yih, David A. Donnini and Philip A. Canfield Merrick B. Firestone Veronica L. Manolio RONAN & FIRESTONE, PLC [email protected]
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[email protected] Attorney for Defendant Michael Makings

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 __s/ Steven E. Weinberger______________________ 17 18 19 20 21 22 23 24 25
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Richard A. Halloran Jon Weiss LEWIS & ROCA, L.L.P. [email protected] [email protected] Attorneys for Defendants David Eaton and AEG Partners LLC John Bouma James R. Condo Patricia Lee Refo SNELL & WILMER LLP [email protected] [email protected] [email protected] Attorneys for Kirkland & Ellis Steven J. Brown STEVE BROWN & ASSOCIATES, LLC Co-Counsel for Trustee [email protected]

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