Free Memorandum - 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

STEVE BROWN & ASSOCIATES, LLC
1440 EAST MISSOURI, STE. 185 PHOENIX, ARIZONA 85014-2412 TELEPHONE (602) 264-9224

Steven J. Brown/010792 Co-Counsel for Trustee UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA 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

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PLAINTIFFS' RESPONSE TO KIRKLAND & ELLIS'S OBJECTIONS TO FORM OF ORDER RE DISMISSAL OF DEFENDANTS AEG AND EATON

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1 2 3 4 5 6 7 8 9 10 11 the Stipulation expressly recited that it was made: 12 13 14 15 16 17 (Emphasis added.) 18 19 20 21 22 23 24 25
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At page 2, lines 1-6 of its Objection to Plaintiffs' Proposed Order re Dismissal of AEG Partners, LLC and David Eaton (Docket No. 377), K&E objects: The stipulation of dismissal submitted by plaintiffs' counsel and counsel for AEG and Eaton makes no mention of any reservation of rights. Instead, the stipulation merely requests that the Court dismiss AEG and Eaton with prejudice, with the parties to bear their own costs and fees. The additional statement regarding plaintiffs' attempted reservation of rights plainly goes beyond the stipulation submitted by the parties. That is not true. The language in the form of order does not go beyond the stipulation for dismissal between the Plaintiffs and the Defendants AEG and Eaton, and the Stipulation does not "merely request that the Court dismiss AEG and Eaton with prejudice ..." In fact,

Pursuant to the terms and conditions of the Settlement Agreement between Plaintiffs, AEG Partners LLC and David Eaton and the terms of the Approval Order entered by United States Bankruptcy Court Judge James M. Marlar, a copy of which is attached hereto as Exhibit 1, said parties stipulate and request that all of plaintiffs' claims against defendants AEG Partners LLC and David Eaton, be dismissed with prejudice, each party to bear its/his/her own attorneys' fees and costs.

The language that K&E objects to is taken directly from the Settlement Agreement, and was included in the Approval Order entered by Bankruptcy Judge Marlar. The

Bankruptcy Court's Approval Order was attached to the Stipulation precisely so that this Court would know exactly what Bankruptcy Judge Marlar approved ­ the release of the Defendants AEG and Eaton ­ and what he did not approve ­ the release of any other claims against any other Defendants. The Court's Order in this case should conform to the

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Approval Order signed by Bankruptcy Judge Marlar and already entered in the Bankruptcy Court. This is the relevant part of the Settlement Agreement, which was provided to the Bankruptcy Court for its approval, showing where that language appears: 5. Release of AEG. ... provided, however, that the Trustee and Plaintiffs do not release and 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 than 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 of AEG 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. (Emphasis added.) The emphasized language was included in the Order approved by the Bankruptcy Court, and this is the relevant part of the Bankruptcy Court's Approval Order ­ attached as Exhibit 1 to the Stipulation for Dismissal With Prejudice (Docket No. 371) ­ where the same language appears: IT IS HEREBY ORDERED that said Motion is hereby granted. The terms and conditions of the Settlement Agreement entered
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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 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 alleged to be principals, agents, or joint tortfeasors as to one or more of the Trustee's reserved alleged Claims. (Emphasis added.) The language included in the form of order lodged by the Plaintiffs, and taken directly from the Settlement Agreement and the Bankruptcy Court's Approval Order, is necessary to state clearly which defendants and claims were released by the Settlement Agreement made with the Plaintiffs and approved by the Bankruptcy Court, and which defendants and claims were not released. If K&E did not believe that the Bankruptcy Court had the authority to approve the Settlement Agreement on the terms agreed to between the settling parties, and did not have the authority to enter the Approval Order approving a settlement as to AEG and David Eaton

20 21 22 23 24 25 alone, K&E had an opportunity and an obligation to make its objection in the Bankruptcy Court. Instead, K&E chose to lay in the weeds until after the Bankruptcy Court approved the Settlement Agreement, and only now seeks to argue in this Court that the Bankruptcy Court's Approval Order is contrary to "governing law" ­ an objection and an argument that K&E never made to Bankruptcy Judge Marlar when he was asked to approve the Settlement
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Agreement as written and as agreed between the parties to that settlement. In fact, the Approval Order is not contrary to law, but K&E's belated collateral attack on the Bankruptcy Court's Approval Order is certainly untimely and should be rejected. Conclusion. The Court should approve the form of Order submitted by the Plaintiff, which conforms to the Approval Order entered by the Bankruptcy Court on the same Settlement Agreement with AEG Partners and David Eaton. Dated this 4th day of May, 2006. BEUS GILBERT PLLC

By

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

STEVE BROWN & ASSOCIATES, LLC Steven J. Brown 1440 East Missouri, Suite 185 Phoenix, AZ 85014 Co-Counsel for Trustee

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CERTIFICATE OF SERVICE I hereby certify that on May 4, 2006, I electronically transmitted the attached 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] [email protected] Attorney for Defendant Michael Makings

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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]

__s/ Scot C. Stirling_______________________

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