Free Response in Opposition to Motion - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

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
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 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

PLAINTIFFS' RESPONSE TO KIRKLAND & ELLIS MOTION FOR SUMMARY JUDGMENT ON PROFESSIONAL MALPRACTICE CLAIM (Assigned to the Honorable Robert C. Broomfield) (Oral Argument Requested)

MICHAEL MAKINGS, Counterclaimant, vs.

22 23 24 25
H:\Leapsource\Pleadings\Response to K&E MSJ re Prof Malpractice.doc

LEAPSOURCE, INC., et al., Counterdefendants.

Case 2:02-cv-02099-RCB

Document 375

Filed 04/20/2006

Page 1 of 17

1 2 3 4 5 6

Plaintiffs submit the following response to Kirkland & Ellis's (K&E's) Motion For Summary Judgment Regarding Malpractice and Professional Negligence (Count 10). This Response is supported by the response to K&E's Statement of Facts in support of its motion, and the Statement of Additional Facts precluding summary judgment submitted contemporaneously with this response. At page 2 of its Motion, lines 15-23, K&E attempts to dismiss all of the evidence

7 8 9 10 11 12 13 14 15 16 LeapSource. All of that conduct by other K&E attorneys is a sufficient and independent 17 18 19 20 21 22 23 24 25
H:\Leapsource\Pleadings\Response to K&E MSJ re Prof Malpractice.doc

surrounding the conduct of David Eaton by referring to its earlier motion for partial summary judgment re Vicarious Liability, where it denies that Mr. Eaton was an agent of K&E. Of course, the liability of K&E for the acts of David Eaton is not based solely on a claim that Mr. Eaton was K&E's agent. Without regard to the question of Mr. Eaton's agency, he had a conflict of interest because he was of counsel to K&E, and K&E helped to place Mr. Eaton in a position of responsibility at LeapSource knowing of his conflict, and knowing that he could not act independently for the benefit of LeapSource if it meant taking a position adverse to GTCR, and intending that he would do GTCR's bidding in destroying

basis for K&E's liability for professional malpractice, in addition to the grounds argued in response to K&E's Motion for Summary Judgment with respect to the claims for aiding and abetting breaches of fiduciary duty and for tortious interference. K&E's Motion must be denied because it is based almost entirely upon a recital of alleged facts that are disputed, and upon inferences and conclusions to be drawn from the facts, including conclusions about the intent or belief or understanding of interested parties, which are particularly unsuitable for summary judgment. The predictable claims by K&E

Case 2:02-cv-02099-RCB

Document 375

2 Filed 04/20/2006

Page 2 of 17

1 2 3 4 5 6 7 8 9 10 11 12 13

lawyers that they were always and only acting as counsel for GTCR, and never for LeapSource ­ notwithstanding the evidence to the contrary ­ cannot be the basis for granting summary judgment on this claim: Summary judgment must be denied in part because so much of the evidence consists of deposition testimony from witnesses with obvious biases. Even when the facts are not disputed, the inferences to be drawn therefrom vary quite widely. First American Corp. v. Al-Nahyan, 17 F.Supp.2d 10, 27 fn. 19 (D.D.C. 1998). Here, the evidence is disputed. The inferences and conclusions to be drawn from the evidence are disputed. Summary judgment is inappropriate. I. K&E REPRESENTED BOTH LEAPSOURCE AND GTCR. Chris Kirk testified that Joe Nolan of GTCR told her that the company they were in the process of forming would use K&E as its counsel, and then she heard from Richard Clyne of K&E, who confirmed that understanding to her:

14 15 16 17 18 19 20 21 22 23 24 25
H:\Leapsource\Pleadings\Response to K&E MSJ re Prof Malpractice.doc

Q. Is it your testimony that you retained Kirkland & Ellis to represent the company between September 16 and September 27 [1999]? A. I was told by GTCR that I would use Kirkland & Ellis. **** Q. Do you remember any conversation with anyone from Kirkland & Ellis between September 16 and September 27 in which you, as the sole director, said in substance, "I would like to retain Kirkland & Ellis to represent LeapSource"? A. I recall a conversation with Richard Clyne where he said, "We will be doing all of the work for LeapSource. I am going to be faxing you things. You need to sign them and fax them back to me." See Response to K&E SOF, ¶ 29.

Case 2:02-cv-02099-RCB

Document 375

3 Filed 04/20/2006

Page 3 of 17

1 2 3 4 5 6

K&E incorporated LeapSource. Response to K&E SOF ¶ 10, SOAF ¶ 107. K&E never explains how it is that K&E formed the corporation, and prepared the documents to do so, without being retained. K&E's Motion and Statement of Facts attempt to dismiss the actual incorporation of LeapSource as a merely "ministerial" act, but the evidence in the record reflects considerably more than that ­ including tax advice, and advice about terms to include in employment agreements. Moreover, even if it were true that some of K&E's work

7 8 9 10 11 12 13 14 15 16 Michele Matiski, an Arizona attorney formerly with Osborn Maledon, testified that 17 18 19 20 21 22 23 24 25
H:\Leapsource\Pleadings\Response to K&E MSJ re Prof Malpractice.doc

involved "ministerial" acts, the performance of "ministerial" acts for a corporation does not negate the existence of an attorney-client relationship. K&E's own expert, Mr. Peck,

admitted that if somebody at K&E had "screwed up the incorporation, and someone was damaged by that, might that someone have a claim against Kirkland & Ellis? Absolutely." Response to SOF ¶ 58 (emphasis added). K&E does not explain how there could ever be such a claim against Kirkland & Ellis in the absence of an attorney-client relationship. Clearly, the fact that a law firm is performing "ministerial" or "administrative" tasks is consistent with the existence of an attorney-client relationship.

her law firm was retained to provide legal services to LeapSource beginning in October 1999, after the "formation documents" had been executed. Ms. Matiski testified that Ms. Kirk told her at that time ­ long before the existence of any disputes that led to this litigation, and at a time when Ms. Kirk still believed that "GTCR is the best partner in the world" ­ that K&E had been retained to represent both GTCR and LeapSource in September 1999. See Response to K&E SOF ¶ 47. K&E billed LeapSource for that work. SOAF Exhibit 5. K&E was, in fact, LeapSource's counsel from the time of its creation.

Case 2:02-cv-02099-RCB

Document 375

4 Filed 04/20/2006

Page 4 of 17

1 2 3 4 5 6 7

The existence of an attorney-client relationship depends largely on the client's "belief that it exists." Louisiana State Bar Ass'n v. Bosworth, 481 So.2d 567, 571 (La.1986) (citing Matter of McGlothlen, 99 Wash.2d 515, 663 P.2d 1330 (1983), and E. Cleary, McCormick on Evidence § 88, at 208 (3d ed. [sic] 1972)). Therefore, where a person holds an objectively reasonable belief that a lawyer is acting as his attorney, relies on that belief and relationship, and the lawyer does not refute that belief, we will treat the relationship as one between attorney and client in bar disciplinary matters. Neville, 147 Ariz. 106, 708 P.2d 1297. In re Pappas, 159 Ariz. 516, 523, 768 P.2d 1161, 1168 (1988).

8 9 10 11 12 13 14 15 16 17 18
1

K&E has argued that LeapSource was unrepresented in September 1999. That is plainly inconsistent with what Ms. Kirk was told at the time, and repeated to Ms. Matiski in October 1999, before this dispute and litigation arose. It is also obviously inconsistent with Ms. Matiski's experience, as she testified that Ms. Kirk told her about K&E's role after Ms. Matiski asked her ­ "Who represents -- who represented LeapSource? And she said: Kirkland & Ellis took care of the transaction for everyone." Response to K&E SOF ¶ 47 (emphasis added). That answer was consistent with Mr. Nolan's (of GTCR) testimony that GTCR "frequently" used K&E to do such work for its portfolio companies.1

19 20 21

See SOAF ¶ 132: A. We use K&E a lot. They're familiar with our documents, and a lot of times it's -- they do work for our companies. That makes it easier to get the equity documents done. MR. STIRLING:

22 23 24 25 Q. When you say "they do work for our companies," do you mean the companies in which GTCR equity funds make investments? A. Yes. 5 Filed 04/20/2006

H:\Leapsource\Pleadings\Response to K&E MSJ re Prof Malpractice.doc

Case 2:02-cv-02099-RCB

Document 375

Page 5 of 17

1 2 3 4 5 6

Moreover, the evidence shows that K&E continued to perform services for LeapSource, generally with respect to matters sometimes described as "corporate maintenance" ­ corporate resolutions, minute books, and the like, but also reviewing the documents for a multi-million dollar loan, and other matters ­ after September 1999. Response to K&E SOF ¶ 52; SOAF Exhibit 5 includes the invoices from K&E, paid by LeapSource, reflecting the work performed by K&E.

7 8 9 10 11 12 13 14 15 16 K&E as evidence that K&E could not have been one of the law firms doing work for 17 18 19 20 21 22 23 24 25
H:\Leapsource\Pleadings\Response to K&E MSJ re Prof Malpractice.doc

When LeapSource was required to lay off employees in a reduction in force in January 2001, K&E was asked to review potential issues arising under the WARN Act (the Worker Adjustment and Retraining Notification Act of 1988), and that research and analysis was reflected in a bill for the period ending January 31, 2001. It is certainly true that LeapSource employed other counsel and law firms to assist it with a variety of matters from 1999 to 2001. However, none of that is inconsistent with the continued existence of an attorney-client relationship between LeapSource and K&E. The fact that other law firms also performed other services for LeapSource is somehow used by

LeapSource. But there is no reason why that should be true, and there is no evidence that, for example, any other law firm performed the work for LeapSource relating to the multimillion dollar Bank of Montreal / Harris Bank loan transaction. K&E's denials that it ever provided legal advice or direction to LeapSource are contradicted by the written record that was made at the time. Moreover, K&E has tried to bolster the denials by K&E attorneys that they ever acted as counsel for LeapSource with the highly biased opinion testimony of Tina Rhodes, who described herself as the person

Case 2:02-cv-02099-RCB

Document 375

6 Filed 04/20/2006

Page 6 of 17

1 2 3 4 5 6

responsible for "managing relations with legal counsel," K&E Motion at 8:7-9.

Ms.

Rhodes's unreliability and bias has been evident from the time of the events giving rise to this litigation, and is also apparent from her deposition testimony. See Response to K&E SOF ¶ 52. Her testimony that K&E never acted as counsel for LeapSource is also plainly contradicted by the obvious meaning of the documents she generated at the time, including her facsimile to Richard Clyne at K&E in March 2001, in which she passed on a letter from

7 8 9 10 11 12 SOAF Exhibit 28. Similarly, a demand by Tom Gilman as a shareholder of LeapSource to 13 14 15 16 17 18 19 20 21 22 never consulted by LeapSource in 2001. 23 24 25 In order to avoid needlessly repeating arguments made in response to the K&E Motion for Summary Judgment regarding Aiding and Abetting Breaches of Fiduciary Duty 7 Filed 04/20/2006 review the books and records of the company was passed on to Richard Clyne by David Eaton, who received this response from Mr. Clyne: "I think we will need to speak with GTCR before making any response." SOAF ¶¶ 234, 235. Thus, there is substantial contemporaneous and written evidence that K&E continued to be consulted about LeapSource legal matters, and concerning directions to LeapSource about how to respond to legal claims and demands on the company, even after Chris Kirk was removed as CEO of the company in February 2001. All of that evidence belies the claims now made by K&E attorneys that they never did represent LeapSource and were one of the Individual Plaintiffs concerning her termination and claim for compensation from LeapSource, with the message: Richard ­ I will call tomorrow. I have many items to discuss. Julie also sent a response, but I will have to forward Monday. It does not concern me, however, as she is not speaking with counsel.

H:\Leapsource\Pleadings\Response to K&E MSJ re Prof Malpractice.doc

Case 2:02-cv-02099-RCB

Document 375

Page 7 of 17

1 2 3 4 5 6

and Tortious Interference, the plaintiffs refer the Court to the arguments made in response to that Motion, the substantial evidence in the record with respect to that Motion of K&E's role in placing David Eaton at LeapSource beginning in February 2001, and the evidence of David Eaton ­ when he was supposed to be acting in his capacity as "Chief Restructuring Officer" of LeapSource ­ doing GTCR's bidding to the detriment of LeapSource. II. PROFESSOR HAZARD'S EXPERT OPINIONS AND TESTIMONY Professor Hazard's report is grossly mischaracterized in K&E's Motion and Statement

7 8 9 10 11 12 13 14 15 16 17 of certain facts (which the Plaintiffs' counsel understood would be contested), including the 18 19 20 21 22 23 24 25
H:\Leapsource\Pleadings\Response to K&E MSJ re Prof Malpractice.doc

of Facts. His report is found at SOAF Exhibit 45, a list of the documents provided to Professor Hazard for his review is found as SOAF Exhibit 59, and his curriculum vitae is found at SOAF Exhibit 61. Professor Hazard is the Trustee Professor of Law at the

University of Pennsylvania Law School, and for more than twenty years before that was the Sterling Professor of Law at Yale University. Professor Hazard was provided with a number of documents relating to the claims made against K&E in this case, and with a narrative description of claims. Professor Hazard was told that, for the purposes of his opinion, he could assume that there would be evidence

fact that K&E was engaged to represent LeapSource in September 1999. K&E tries to pretend that there is something unusual or inappropriate about an expert being asked to assume certain facts as the basis for providing an expert opinion. See K&E's Motion at 11. Of course, there is nothing unusual or inappropriate about basing an expert opinion upon facts provided to the expert in this manner ­ and Professor Hazard never

Case 2:02-cv-02099-RCB

Document 375

8 Filed 04/20/2006

Page 8 of 17

1 2 3 4 5 6

pretended to be a fact witness with respect to any of the claims in this lawsuit. See Cunningham v. Gans, 907 F.2d 496 (2nd Cir. 1974). K&E has also attempted to undermine Professor Hazard's opinions ­ which are expressed in his written report at SOAF Exhibit 45 and not one of which was withdrawn or changed at his deposition ­ by misrepresenting what Professor Hazard has said or not said in his report and at his deposition.

7 8 9 10 11 12 13 14 15 16 associates." (Hazard Report, SOAF Exhibit 45, ¶ 5(e), emphasis added.) 17 18 19 20 21 22 23 24 25
H:\Leapsource\Pleadings\Response to K&E MSJ re Prof Malpractice.doc

It is simply not true that Professor Hazard did not express an opinion on the subject of proximate cause in his report. See the response to K&E SOF ¶¶ 87 and 96. In fact, Professor Hazard opined that assuming LeapSource would have survived as a functioning company and avoid bankruptcy if it had been properly advised and assisted, "it was reasonably foreseeable to Kirkland and Eaton that their course of conduct in the period from late 2000 through March 2001 would have material adverse affect on LeapSource and Ms. Kirk and her associates. On that basis, the inhibitions imposed by their conflicts of interest in my opinion were a substantial cause of injury to LeapSource and Ms. Kirk and her

With respect to the evidence that Professor Hazard assumed as the basis for that opinion, concerning LeapSource's viability if properly advised and assisted, Professor Hazard explained at his deposition that he relied principally upon the analysis done by Tom Gilman, which was reflected in Mr. Gilman's memorandum to the LeapSource board dated February 24, 2001 (the "Gilman Memorandum") (SOAF Exhibit 6). The Gilman Memorandum and Professor Hazard's report together establish the existence of conflicts of interest between LeapSource and GTCR, and a more than sufficient

Case 2:02-cv-02099-RCB

Document 375

9 Filed 04/20/2006

Page 9 of 17

1 2 3 4 5 6

basis to support a jury verdict that K&E's (and Eaton's) harmful and improper conduct in the face of those conflicts of interest was a proximate cause of the very foreseeable damage to LeapSource. Simply stated, K&E and Eaton had no right to choose sides in the disputes between GTCR and LeapSource, and to assist GTCR and the GTCR defendants (including directors of LeapSource) in their breaches of duty to LeapSource. That is in fact what they did.

7 8 9 10 11 12 13 14 15 16 Agreement at the end of February 2001 by a fax sent to Chris Kirk at the offices of a 17 18 19 20 21 22 23 24 25
Case 2:02-cv-02099-RCBMalpractice.doc Document 375 H:\Leapsource\Pleadings\Response to K&E MSJ re Prof

It is also not true that Professor Hazard "admitted that there is no proximate cause if LeapSource had independent legal counsel" ­ K&E's argument heading at page 13 lines 8-9, and page 17 lines 3-4 simply misrepresent what Professor Hazard said, and are not supported by the testimony cited by K&E in the discussion that follows those argument headings. In fact, the testimony with respect to the subject alluded to in K&E's motion is that Chris Kirk and Tom Gilman had a single meeting with an attorney at Osborn Maledon about GTCR's behavior toward LeapSource in January 2001. At that point, GTCR had not stopped funding LeapSource ­ it announced its decision to stop funding under the Purchase

company that was interested in purchasing LeapSource as a going concern, while she was meeting with them to discuss a potential purchase ­nor had the GTCR defendants terminated Chris Kirk or the other Individual Plaintiffs, nor yet sold valuable LeapSource assets to Michael Makings for insufficient consideration, nor yet blown up other opportunities to sell LeapSource to another company, or sold off the company's remaining assets to clients who were also GTCR portfolio companies.

10 Filed 04/20/2006

Page 10 of 17

1 2 3 4 5 6

When GTCR committed those acts, it started by firing Chris Kirk and replacing her with the defendant Michael Makings, who was not about to challenge GTCR's conduct with respect to LeapSource while he was negotiating for a sweetheart deal for the return of the ICG business to himself. Therefore, it is a complete red herring to suggest that the company LeapSource in fact had independent counsel or advice with respect to any of those subjects, when there was nobody to act in the company's interests as those acts of GTCR developed

7 8 9 10 11 12 13 14 15 16 LeapSource for work done in January 2001, including work relating to the WARN Act, and 17 18 19 20 21 22 23 24 25
Case 2:02-cv-02099-RCBMalpractice.doc Document 375 H:\Leapsource\Pleadings\Response to K&E MSJ re Prof

and were assisted by Eaton and K&E after Chris Kirk and Tom Gilman and the other Individual Plaintiffs were gone from the company. K&E has also attempted to confuse the legal argument by falsely denying that there is any "substantial relationship" between the work performed by K&E and the issues that arose in 2001. Of course, a "substantial relationship" is only required in the case of a

representation affecting a former client. It has nothing to do with the test for liability when a law firm chooses sides in a dispute between two existing clients, and in the first quarter of 2001, LeapSource was a current client of K&E, as evidenced by K&E's last bill to

concerning reductions in force (RIFs) involving layoffs of LeapSource employees. (K&E apparently thought better of sending additional bills to LeapSource after January, but the absence of bills addressed to LeapSource after the decision was made to bankrupt the company is not dispositive of the existence of a continuing attorney-client relationship.) The fact that interested parties deny that LeapSource was continuing to consult K&E about legal issues affecting the company is also not dispositive of anything, when the evidence of such continuing consultations is preserved in the record.

11 Filed 04/20/2006

Page 11 of 17

1 2 3 4 5 6

Tina Rhodes was an employee of LeapSource in February and March 2001. Ms. Rhodes was kept on by the defendants and compensated by GTCR after Ms. Kirk and the other Individual Plaintiffs were fired in late February and early March 2001. Although Ms. Rhodes and Mr. Clyne denied that K&E was consulted by or provided legal advice to LeapSource after Ms. Kirk and the other Individual Plaintiffs were fired, the jury is not obliged to believe their denials, especially in the face of the evidence to the contrary. It was

7 8 9 10 11 12 13 14 15 16 responding to Tom Gilman's request to inspect LeapSource documents. Fax from Richard 17 18 19 20 21 22 23 24 25
Case 2:02-cv-02099-RCBMalpractice.doc Document 375 H:\Leapsource\Pleadings\Response to K&E MSJ re Prof

after Chris Kirk was terminated as CEO that Tina Rhodes looked to K&E for advice about the termination of Individual Plaintiffs and their claims against the company. SOAF Exhibit 28 ("Richard ­ I will call tomorrow. I have many items to discuss...") When Tom Gilman, as a shareholder in LeapSource, requested access to the books and records of that company (see Letter from Ann Uglietta of Cohen Kennedy Dowd & Quigley to LeapSource Custodian of Records, dated April 25, 2001, with attached Affidavit of Thomas F. Gilman, Deposition Exhibit 142, SOAF Exhibit 40), the request was forwarded by David Eaton to K&E, and K&E and David Eaton worked together in

Clyne of K&E to David Eaton dated April 30, 2001, Bates KE003278-3279, Deposition Exhibit 142, SOAF Exhibit 40, with Mr. Clyne advising Mr. Eaton "I think we will need to speak with GTCR before making any response". The evidence of K&E's representation of LeapSource and GTCR together, notwithstanding its conflicts of interest, and its decision to take the side of GTCR against LeapSource when the disputes that led to this litigation arose, both before and after Chris Kirk was removed as CEO of LeapSource ­ which was three days after GTCR received and

12 Filed 04/20/2006

Page 12 of 17

1 2 3 4 5 6

forwarded to K&E the Gilman Memorandum ­ is clear, although K&E may persist forever in disputing it. The fact remains that LeapSource was destroyed after an attorney who was of counsel to K&E was made Chief Restructuring Officer of the company, in the face of obvious conflicts of interest. The responsibility of K&E and the GTCR defendants for the damage done to LeapSource with their cooperation is a question for the jury. Notwithstanding K&E's memorandum, which simply ignores the relevant evidence of

7 8 9 10 11 12 13 14 15 16 On that basis, the inhibitions imposed by their conflicts of interest in my opinion were a 17 18 19 20 21 22 23 24 25
Case 2:02-cv-02099-RCBMalpractice.doc Document 375 H:\Leapsource\Pleadings\Response to K&E MSJ re Prof

K&E's and Eaton's conduct, the Plaintiff's evidence of causation is not limited to the existence of a conflict of interest. It is based upon the overwhelming evidence of K&E's and Eaton's direct assistance to GTCR in conduct that resulted in the destruction of LeapSource ­ including the sale of the ICG assets to an insider without consideration, and the breaches of duty described in the Gilman Memorandum even before Chris Kirk was removed as CEO of LeapSource. Professor Hazard correctly stated that "it was reasonably foreseeable to

Kirkland and Eaton that their course of conduct in the period from late 2000 through March 2001 would have material adverse affect on LeapSource and Ms. Kirk and her associates.

substantial cause of injury to LeapSource and Ms. Kirk and her associates." (Hazard Report, SOAF Exhibit 45, ¶ 5(e), emphasis added.). With knowledge of the conflicts between GTCR and LeapSource (made unmistakably clear by the Gilman Memorandum), K&E recommended Eaton for a position of trust and responsibility at LeapSource, and caused him to be engaged at LeapSource, knowing that he could not take any position on behalf of LeapSource that would be adverse to GTCR. Kirkland & Ellis' "Of Counsel" Agreement with David Eaton expressly states:

13 Filed 04/20/2006

Page 13 of 17

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

With respect to representing persons or entities outside the context of your `Of Counsel' relationship with the Firm, during your `Of Counsel' relationship with the Firm, you'll not undertake any employment, representation, or consultancy that is adverse to any Kirkland & Ellis client. Of Counsel Agreement dated June 11, 1999 at KE000294, SOAF Exhibit 14. K&E partner Kevin Evanich testified that David Eaton, while performing work for LeapSource, could not have taken a position adverse to GTCR: Q. As an of-counsel attorney at the time David Eaton was working for -- let me rephrase that. As an of-counsel attorney for Kirkland & Ellis at the time David Eaton was working for LeapSource, could he have taken a position adverse to GTCR absent a conflict waiver? MS. REFO: I'm sorry? Could you read that back. (Question from page 29, lines 19 through 22, read.) MS. REFO: I object to the form. THE WITNESS: May I answer? MS. REFO: Sure. A. SOAF ¶¶ 200, 201. To argue in the face of that evidence that there is no evidence of causation from K&E's conduct in the face of a clear conflict of interest to LeapSource's destruction is simply not credible. By the standard of the authorities cited by K&E in its memorandum, I don't think he could have.

21 22 23 24 25
Case 2:02-cv-02099-RCBMalpractice.doc Document 375 H:\Leapsource\Pleadings\Response to K&E MSJ re Prof

there are genuine issues of material fact and sufficient evidence to support a jury verdict against K&E on Count 10 of the Complaint.

14 Filed 04/20/2006

Page 14 of 17

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

CONCLUSION. The K&E Motion for Summary Judgment must be denied. Dated this 20th day of April, 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 1414 E. Indian School Road, Suite 200 Phoenix, AZ 85014 Co-Counsel for Trustee

Case 2:02-cv-02099-RCBMalpractice.doc Document 375 H:\Leapsource\Pleadings\Response to K&E MSJ re Prof

15 Filed 04/20/2006

Page 15 of 17

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

CERTIFICATE OF SERVICE I hereby certify that on April 20, 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

Case 2:02-cv-02099-RCBMalpractice.doc Document 375 H:\Leapsource\Pleadings\Response to K&E MSJ re Prof

16 Filed 04/20/2006

Page 16 of 17

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 __s/ Scot C. Stirling_______________________ 17 18 19 20 21 22 23 24 25
Case 2:02-cv-02099-RCBMalpractice.doc Document 375 H:\Leapsource\Pleadings\Response to K&E MSJ re Prof

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]

17 Filed 04/20/2006

Page 17 of 17