Free Motion for Leave to Appeal - District Court of Delaware - Delaware

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EXHIBIT A

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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE In re: Oakwood Homes Corporation, et al., Debtors. _______________________________ OHC Liquidation Trust, Plaintiff, vs. Credit Suisse (f/k/a Credit Suisse First Boston, a Swiss banking corporation), Credit Suisse Securities (USA), LLC (f/k/a Credit Suisse First Boston LLC), Credit Suisse Holdings (USA), Inc. (f/k/a Credit Suisse First Boston, Inc.), and Credit Suisse (USA), Inc. (f/k/a Credit Suisse First Boston (USA), Inc.), the subsidiaries and affiliates of each, and Does 1 through 100, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Chapter 11 Case No. 02-13396 (PJW) Jointly Administered

Adv. Proc. No. 04-57060 (PJW)

MEMORANDUM OPINION
Mark D. Collins Russell C. Silberglied Lee E. Kaufman Christopher M. Samis Richards, Layton & Finger, P.A. 920 North King Street Wilmington, DE 19801 Marla Rosoff Eskin Kathleen Campbell Davis Campbell & Levine, LLC 800 N. King Street, Suite 300 Wilmington, DE 19801

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2 R. Paul Wickes Mary K. Warren Michael J. Osnato, Jr. J. Justin Williamson LINKLATERS 1345 Avenue of the Americas New York, New York 10105 Attorneys for Defendants, Special Counsel for the OHC Liquidation Trust Tony Castanares Stephan M. Ray Scott H. Yun Whitman L. Holt Stutman, Treister & Glatt P.C. 1901 Avenue of the Stars 12th Floor Los Angeles, CA 90067

Date: November 15, 2007

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3 Walsh, J. This opinion is regarding the motion of OHC Liquidation Trust ("Plaintiff" or "Trust") for determination of Plaintiff's right to a jury trial (Doc. # 198) in this adversary proceeding. Credit Suisse (f/k/a Credit Suisse First Boston, a Swiss banking corporation), Credit Suisse Securities (USA), LLC,(f/k/a Credit Suisse First Boston LLC), and Credit Suisse (USA), Inc. (f/k/a Credit Suisse First Boston (U.S.A.), Inc.) (collectively,

"Defendants") oppose the motion. For the reasons stated below, the Court will grant the motion. Background Oakwood Homes Corporation ("OHC") together with its

subsidiaries and affiliates ("Debtors" or "Oakwood Companies") designed and manufactured various models of homes at a modest or affordable price. (Doc. # 202, Decl. Murphy, Ex. A, ¶ 12). As

part of their business, Oakwood Companies also provided their customers with mortgage financing or retail installment sales contracts Companies (collectively obtained the "installment necessary contracts"). for the Oakwood installment

funds

contracts through a two-step, asset-backed securitization process. (Doc. # 202, Decl. Murphy, Ex. A, ¶ 14). Defendants were the underwriter for this process. 14). (Doc. # 202, Decl. Murphy, Ex. A, ¶

The asset-backed securitization process was commenced by

Oakwood Companies using the installment contracts as collateral to

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4 borrow against the warehouse facility ("Warehouse Facility")1. Warehouse Facility was a short-term facility used specifically to fund the mortgages for manufactured home buyers. Decl. Murphy, Ex. A, ¶ 17.b). (Doc. # 202,

Once the Warehouse Facility had

accumulated a sufficient amount of installment contracts, usually about $150 million to $200 million, the installment contracts were bundled and sold to private and institutional investors through a real estate mortgage investment trust. Ex. A, ¶ 14). The Warehouse Facility was one of three lines of credit Oakwood Companies used to finance their operations; they also had a revolving line of credit and a servicer advance facility. # 202, Decl. Murphy, Ex. A, ¶ 17.a-c). (Doc. (Doc. # 202, Decl. Murphy,

The Warehouse Facility was

provided by an affiliate of Bank of America until 2001. (Doc. # 202, Decl. Murphy, Ex. A, ¶ 17.b). Starting in 1999 the manufactured home industry was going through a difficult period, and Oakwood Companies' businesses were struggling. By the second half of 2000, Bank of America wanted to (Doc. # 202, Decl. Murphy,

cease its role as the warehouse lender. Ex. A, ¶ 26).

This was a critical junction for Oakwood Companies,

if they did not have the Warehouse Facility, their securitization business would have collapsed. (Doc. # 202, Decl. Murphy, Ex. A,

Defendants refer to the Warehouse Facility as the Loan Purchase Facility.

1

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5 ¶ 26). Eventually after some negotiations, Defendants agreed to On

assume the role of lender and agent on the Warehouse Facility.

February 9, 2001, Oakwood Companies and Defendants signed various documents to finalize Defendants' new role. Murphy, Ex. A, ¶ 26). (Doc. # 202, Decl.

The main document was a Class A Note

Purchase Agreement ("Note Purchase Agreement"). The business continued to slump. On November 15, 2002,

Oakwood Companies filed petition for bankruptcy protection under chapter 11 of title 11 of the United State Code, 11 U.S.C. §§ 101 et seq. four (Doc. # 202, Decl. Murphy, Ex. A, ¶ 37). of claim, seeking payments of Defendants filed and expenses

proofs

fees

stemming from an August 19, 2002 letter agreement ("Engagement Letter"). Pursuant to the Engagement Letter, Oakwood Companies

employed Defendants as the exclusive financial advisor for the contemplated restructuring transaction. (Doc. # 202, Decl. Murphy, Ex. B, ¶ 3). On November 13, 2004, Plaintiff commenced the adversary proceeding by filing an Objection to the Proof of Claim and Counterclaims. The objections and counterclaims are: (1) breach of fiduciary duty; (2) negligence; (3) unjust enrichment; (4)

equitable subordination; (5) avoidance and recovery of 90 day preferential transfers pursuant to 11 U.S.C. §§ 547, 550; (6) avoidance and recovery of one year preferential transfer pursuant to 11 U.S.C. §§ 547, 550; (7) avoidance and recovery of fraudulent

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6 transfers pursuant to 11 U.S.C. §§ 544, 550, and applicable state law; (9) breach of implied and express contract; and (10)deepening insolvency. (Doc. # 201, pp. 2-3). The alleged facts giving rise

to this extensive list occurred both prior to and after the Engagement Letter. (Doc. # 198, p. 2).

Plaintiff is prepared to litigate various causes of action arising from two sets of distinct nucleus of operative facts. The first set of facts is centered around the parties' According to Plaintiff: (1)

relationship pre-Engagement Letter.

Prior to the Engagement Letter, Oakwood Companies and Defendants "enjoyed a close and intimate relationship," (Doc. # 198, p. 2), which presumably is because of Defendants' role as the underwriter and then a secured lender to Oakwood Companies. Murphy, Ex. A, ¶ 11). (Doc. # 202, Decl.

(2) Plaintiff alleged that the trust and

confidence between the parties created both a fiduciary duty and an implied advisory contract. (Doc. # 198, p. 2). (3) Defendants,

however, did not exercise reasonable care in carrying out their obligations. (Doc. # 198, p. 3).

For Defendants' alleged failures, Plaintiff claims that they earned massive fees and caused substantial economic damage to the Oakwood Companies. (Doc. # 198, p. 3). For Defendants'

alleged breach of fiduciary duty, negligence, and breach of implied contract claims, Plaintiff is requesting recovery of all fees and other remuneration paid to Defendants, and actual and consequential

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7 damages. (See Doc. # 201, pp. 4-5). The second set of facts is based on the performance under the Engagement Letter. Plaintiff accuses Defendants of not

fulfilling their obligations under the Engagement Letter; therefore their claim should be disallowed. Plaintiff wants to be awarded

additional damages, and recovery under 11 U.S.C. §§ 547 & 548. (Doc. # 198, p. 3). Plaintiff's complaint asserts a right to a jury trial. Plaintiff has moved to have a jury trial for the causes of action related to the first set of operative facts. (Doc. # 198, pp. 3-4). The causes of action related to the second set of facts are not covered by the motion because they relate to the allowance of Defendants' claims. (Doc. # 198, pp. 3-4). Discussion Generally, "the bankruptcy court is an appropriate

tribunal for determining whether there is a right to a trial by jury of issues for which a jury trial is demanded." Official Comm. Of Unsecured Creditors v. TSG Equity Fund L.P. (In re EnvisionNet Computer Servs.), 276 B.R. 1, 6-7 (D. Me. 2002); In re Wash. Mfg. Co., 128 B.R. 198, 200-01 (Bankr. M.D. Tenn. 1991). Defendants put forth a number of grounds contesting Plaintiff's motion. First, the types of claims and forms of relief Plaintiff is raising are equitable rights, thus there is no right to a jury trial attached. Second, even if Plaintiff has the right

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8 to jury trial it is unenforceable because the claims are part of the "claims-allowance process." Third, in connection with the Note Purchase Agreement, several of the Oakwood Companies executed contracts in which they waived the right to a jury trial. Finally,

Defendants argue that because Plaintiff brought these actions in a court of equity, Plaintiff has forfeited its right to a jury trial. Right To a Jury Trial The right to a jury trial in a civil case is preserved in the Seventh Amendment of the U.S. Constitution. It states: "In

suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved...." U.S. Const. amend. VII. As for the meaning of "suits at common

law," the Supreme Court has interpreted it to mean "'suits in which legal rights were to to be ascertained where and determined, alone in were

contradistinction recognized, and

those

equitable

rights

equitable v.

remedies 492

were U.S.

administered.'" 33, 40-41 (1989)

Granfinanciera,

S.A.

Nordberg,

(quoting Parsons v. Bedford, 3 Pet. 433, 447 (1830)).

In other

words, a right to a jury trial attaches to those cases involving legal right and not those involving only equitable claims and remedies. Billing v. Ravin, Greenberg & Zackin, P.A., 22 F.3d

1242, 1245 (3d Cir. 1994). The Supreme Court in Granfinanciera provided the

analytical framework to determine whether there is a right to a

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9 jury trial: First, we compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity. Second, we examine the remedy sought and determine whether it is legal or equitable in nature. The second stage of this analysis is more important than the first. If, on balance, these two factors indicate that a party is entitled to a jury trial under the Seventh Amendment, we must decide whether Congress may assign and has assigned resolution of the relevant claim to a non-Article III adjudicative body that does not use a jury as fact finder. Granfinanciera, 492 U.S. at 43. federal law. The determination is a matter of

Simler v. Conner, 372 U.S. 221, 222 (1963); Byrd v. When a

Blue Ridge Rural Elec. Coop., 365 U.S. 525, 537-39 (1958).

court is deciding if there is a right to a jury trial, it must remember that because "the right to jury trial is a constitutional one, . . . while no similar requirement protects trials by the court, [the court's] discretion is very narrowly limited and must, wherever possible, be exercised to preserve jury trial. Beacon

Theatres, Inc. v. Westover, 359 U.S. 500, 510 (1959); Turner v. Johnson & Johnson, 809 F.2d 90,99 (1st Cir. 1986)("[I]f we must err, we choose to do so on the side of preserving plaintiffs' right to a jury trial."); Prudential Oil Corp. v. Phillips Petrol. Co., 392 F.Supp. 1018, 1022 (S.D.N.Y. 1975)("[T]he inescapable teaching of recent Supreme Court decisions is that there is a clear federal policy in light of the Seventh Amendment favoring jury trials and that, in doubtful cases, that policy should be favored.").

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10 First Stage: Legal or Equitable Claims For the first stage of the Granfinanciera analysis, this Court must determine whether Plaintiff's claims of negligence, breach of implied contract, and breach of fiduciary duty would have been considered legal or equitable claims in 18th century English courts. Plaintiff characterizes the negligence and breach of

implied contract claims as historically legal actions, while the breach of fiduciary claim as an equitable claim. 10) (Doc. # 198, p.

Defendants do not challenge the characterization in their (Doc. # 201, pp. 7-8). They do, however, contest that

brief.

because the negligence and breach of implied contract claims arose from the same nucleus of operative facts as the breach of fiduciary duty claim they are not separate and independent causes of action. (Doc. # 202, p. 11-12). Rather, they are just breach of fiduciary

duty claim in different names, hence, are equitable claims. I disagree. The notion that a single act of malfeasance

can violate several distinct equitable and legal duties is a fundamental principle of Anglo-American jurisprudence. See Germain v. Conn. Nat'l Bank, 988 F.2d 1323, 1329 (2nd Cir. 1993) (stating that both legal and equitable claims can arise from the same fact). For example, it is possible that a jury could conclude that although the parties enjoyed a close relationship, it was not enough to create a fiduciary duty. Such a finding would not

preclude a finding of negligence or of breach of contract with

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11 respect to an implied advisory contract. always owed Oakwood Companies a duty of Likewise, Defendants reasonable care in

rendering their services, the breach of which could give rise to damages even in the absence of any fiduciary relationship. See,

e.g., Balaber-Strauss v. N.Y. Tel. (In re Coin Phones, Inc.), 203 B.R. 184, 200-01 (Bankr. S.D.N.Y. 1996). Thus, the claims are each separate and independent, and must be characterized individually. Plaintiff's characterization of each claim is accurate. It has been well settled that tort claims, such as negligence, are legal actions. See City of Monterey v. Del Monte Dunes, 526 U.S.

687, 710 (stating that the Seventh Amendment covers all actions that "sound basically in tort"); Arkwright Mut. Ins. Co. v. Phila. Elec. Co., 427 F.2d 1273, 1275 (3d Cir. 1970)(stating in common law a jury is required for negligence cases); § 38.30. parties. 8-38 MOORE 'S FED . PRACTICE

This is applicable to persons as well as to corporate See, e.g., Ross v. Bernhad, 396 U.S. 531, 542

(1970)(explaining how a corporation "would have been entitled to a jury's determination, at a minimum, . . . of its rights against its own directors because of their negligence"). Claims for breach of contract, expressed or implied, are also legal rights under the common law. Donovan v. Robbins, 579

F.Supp. 817, 822 (N.D. Ill. 1984) (claims seeking "money damages for breach of express or implied contracts . . . are clearly legal and [] the Seventh Amendment would require a jury trial as to

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12 them"); 8-38 MOORE 'S FED . PRACTICE § 38.30 ("Actions for money damages for breach of contract are legal in nature and are triable to a jury."). Claims for breach of fiduciary duty, however, are

historically equitable rights.

Pereira v. Farace, 413 F.3d 330,

338 (2d Cir. 2005), cert denied, 126 S. Ct. 2286 (2006); In re Hutchinson, 5 F.3d 750, 757 (4th Cir. 1993). The best evidence in

support, as Defendants point out in their brief, is that the Delaware Chancery Court still has exclusive jurisdiction to hear breach of fiduciary duty cases. Omnicare, Inc. v. NCS Healthcare,

Inc., 809 A.2d 1163 (Del. Ch. 2002). With two legal rights and one equitable right Plaintiff has a mixture of claims. In such situation "a party will not be

denied a jury trial just because other claims arising out of the same facts are equitable." Germain, 988 F.2d at 1329. The "right

to jury trial on the legal claims . . . must not be infringed either by trying the legal issues as incidental to the equitable ones or by a court trial of a common issue existing between the claims." requires Ross, 396 U.S. at 538. that all factual Meaning, "the Seventh Amendment common to these claims be

issues

submitted to a jury for decision on the legal claims before final court determination of the equitable claims." Allison v. Citgo

Petroleum Corp., 151 F.3d 402, 422-23 (5th Cir. 1998); Mirant Corp. v. Southern Co., 337 B.R. 107, 120 (N.D. Tex. 2006)("[J]oinder of

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13 equitable claims with legal claims does not deprive a party of the right to a jury trial on the legal claim."). Consequently, even

though Plaintiff asserts an equitable right, under the first prong of the Granfinanciera analysis it still retains its right to a jury trial as to the two legal rights. Second Stage: Legal or Equitable Relief The second stage of the Granfinanciera analysis requires this Court to characterize the type of remedy sought. is more important than the first stage. at 42. This stage

Granfinanciera, 492 U.S.

Plaintiff argues that the relief it seeks is a legal remedy (Doc. # 198, pp. 11-

because it is for compensatory money damages. 12).

Even though Plaintiff has a mix of legal and equitable

claims, he argues that when the relief for the breach of fiduciary duty claim is a legal remedy, the "action assumes legal

attributes."

Mirant, 337 B.R. at 120.

Plaintiff cites the Second Circuit Court of Appeals's Pereira case in support. In Pereira, the bankruptcy trustee of

Trace International Holding, Inc. ("Trace") sued several former officers and directors of Trace for breach of fiduciary duty under Delaware state law. various claims for 413 F.3d at 335-37. monetary damages, The trustee asserted including for amounts Id.

improperly transferred by Trace under the defendants' watch. at 336.

The defendants maintained "that they were entitled to a

jury trial on the [t]rustee's beach of fiduciary duty claim because

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14 the nature of the underlying action was legal and the remedy sought was compensatory damages, not equitable restitution." The district court rejected this argument. Id. at 337.

It classified the

remedy as restitution, thus, equitable, and the defendants were not entitled to a jury trial. See id. at 339. The Second Circuit

reversed the district court's holding. Applying the Granfinanciera test, the court concluded that for the first stage the breach of fiduciary duty claim "would have been equitable in 18th century England." Id. at 339. For the second stage, the Second Circuit

looked to Great-West Life & Annuity Insurance Company v. Knudson, 534 U.S. 204 (2002), for guidance. In Great-West, the Supreme

Court stated that "`for restitution to lie in equity, the action generally must seek not to impose personal liability on the

defendant, but to restore to the plaintiff particular funds or property in the defendant's possession.'" Pereira, 413 F.3d at 340 (quoting Great-West, 534 U.S. at 214). Because the trustee's claim was for compensatory damages, rather than any particular property in the defendants' possession, the second prong of the

Granfinanciera test rendered his suit legal in nature and required a jury trial. Id. at 341.

Here, Defendants contend that the relief sought is a mix of legal and equitable remedies, thus Plaintiff is not entitled to a jury trial. (Doc. # 202, pp. 8-11). Defendants try to

distinguish the Pereira case from the present case on account that

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15 the defendants in Pereira were not personally enriched from the breach of fiduciary duty, therefore, the relief was for damage. Whereas, in the present case Defendants enriched themselves and Plaintiff is seeking "classically equitable remedies, including disgorgement and equitable subordination." (Doc. # 201, p. 9).

For support, Defendants offer Cantor v. Perelman, No. Civ.A.97-586-KAJ, 2006 WL 318666 (D. Del. Feb.6, 2006). In Cantor, the trustee sued the directors of a corporation for breach of fiduciary duty and aiding and abetting in the breach. Id. at *2.

The trustee sought to recover "compensatory damages, including all benefits obtained by defendants as a result of their breaches of fiduciary duty or participation in breaches of fiduciary duty." Id. The court applied the Granfinanciera test. against right to a jury trial The first prong both of the The

weighed

because

plaintiff's claims were historically equitable.

Id. at *7.

second prong resulted in a mix of equitable and legal remedy. Id. at *9. The court concluded, after commenting on the Pereira

decision, that "compensatory damages" was legal in nature, while "benefits obtained by defendants" was an equitable remedy. *8-9. Id. at

In its final balancing the court held that where the claims

were equitable and the relief sought were both legal and equitable, it weighed against right to jury trial.

The Cantor case is not the proper comparison for the

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16 present case. First, in Cantor there were only two historically

equitable claims at issue; breach of fiduciary duty and aiding and abetting the same. The court noted that its analysis would have

been impacted "if at least one of Plaintiff's claims [had been] legal rather than equitable." here. Id. at *7 n.7. That is the case

Plaintiff has two causes of action that have always been Second,

legal in nature and one that is historically equitable.

the trustee in Cantor was clearly focused on recovering specific sums received by the directors in connection with certain See

transactions, see id. at *1, which made the remedy equitable. id. at *9.

Here, in contrast, the thrust of Plaintiff's case is on

remedying the alleged harm incurred by the Debtors, rather than on merely recovering illicit gains. from the present case. The more appropriate case for this Court to look to is Pereira. Plaintiff is seeking to recover fees and other Thus, Cantor is distinguishable

remuneration paid to Defendants, and actual and consequential damages. This relief is very similar to the relief the trustee in

Pereira sought; for monetary damage and improperly transferred fees. The Second Circuit held that to be legal relief. Applying

the Great-West test, the relief that Plaintiff is seeking is to impose personal liability on Defendants for the damage they have caused, it is not to recover any particular fund that Defendants have in their possession. Thus, the relief Plaintiff seeks is

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17 compensatory monetary damages, which is "the classic form of legal relief." Great-West, 534 U.S. at 210 (quoting Mertens v. Hewitt

Assocs., 508 U.S. 248, 255 (1993)); see also, e.g., Dairy Queen, Inc. v. Wood, 369 U.S. 469, 477 (1962) ("[W]e think it plain that [a] claim for a money judgment is a claim wholly legal in its nature however the complaint is construed."); Billing, 22 F.3d at 1245. Ultimately, this Court must weigh the claims against the relief sought, with more weight on the latter, and determine if Plaintiff has right to a jury trial. Plaintiff in this case has

presented two legal and one equitable claim and is seeking legal relief. Thus, the weighing clearly favors Plaintiff having the In sum, after balancing the two prongs of

right to a jury trial.

the Granfinanciera analysis, this Court holds that Plaintiff has the right to a jury trial. Third Stage: Claim-allowance Process or Not The third step in the Granfinanciera analysis is to determine whether this is a matter that Congress has assigned to a non-Article III court for adjudication without a jury. The Third

Circuit has extrapolated from this prong an embedded limitation on the Seventh Amendment right. Billing, 22 F.3d at 1247. The

limitation arises when a cause of action "falls within the process of the allowance and disallowance of claims." neither the debtor's estate nor the Id. at 1253. has a There, Seventh

defendant

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18 Amendment right to trial by jury "because [the] claim has been converted from a legal one into an equitable dispute over a share of the estate." Id.; Germain, 988 F.2d at 1330 ("For waiver to

occur, the dispute must be part of the claims-allowance process.... Even there the right to a jury trial is lost not so much because it is waived, but because the legal dispute has been transformed into an equitable issue."). This limitation originated from Katchen v. The Supreme Court in Katchen noted

Landy, 382 U.S. 323 (1966).

that part of Congress's intent for the Bankruptcy Act of 1898 was to place the resolution of disputed claims in summary proceeding in the bankruptcy court rather than proceeding at law. see Billing, 22 F.3d at 1247. It was intended Id. at 329; to promote

expediency and judicial efficiency.

See Katchen,382 U.S. at 328.

Plaintiff asserts that the subject counterclaims are not part of the claim-allowance process and offers two reasons in support. First, the causes of action are unrelated to the

Engagement Letter and are not products of the Bankruptcy Code. Instead, they are state law claims that could have been asserted by Oakwood Letter. Companies against Defendants prior to the Engagement

(Doc. # 198, p. 18). counterclaims

Second, the success or failure of not affect the allowance or

Plaintiff's

would

disallowance of Defendants' claims under 11 U.S.C. § 502(d). (Doc. # 198, p. 18). If Plaintiff succeeds or fails on its non-

bankruptcy legal claims, only the size of the Debtors' estate would

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19 be affected. Defendants hold the opposing view. They contend that

Plaintiff's counterclaims are in response to Defendants' proofs of claim, and the relief Plaintiff seeks is a resolution of Defendants claims. (Doc. # 201, p. 18). They also argue that when Plaintiff

requested the Court to disallow or otherwise equitably subordinate Defendants' proofs of claim it has invoked and submitted to the equitable jurisdiction of this Court. (Doc. # 201, p. 15).

According to Defendants, the fact that Plaintiff seeks affirmative recovery on his counterclaims and could have brought his

counterclaims in other forum does not affect their conclusion. (Doc. # 201 pp. 15, 18). Claim-allowance process means that "the resolution of the dispute in which a jury trial is sought must affect the allowance of the creditors's claim in order to be part of that process." Germain, 988 F.2d at 1327. An action that "would augment the

estate but which have no effect on the allowance of a creditor's claim simply cannot be part of the claims-allowance process." Id.

The action is only augmenting the estate "if [the trustee] wins, the estate is enlarged, and this may affect the amount . . . creditors ultimately recover on their claims, but it has no effect whatever on the allowance of the [defendant's] claim." Id. Id.

Generally, lender liability actions augment the estate.

The Court is persuaded that the subject counterclaims are

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20 not part of the claim-allowance process. As Plaintiff carefully

points out in its motion, the claims that Defendants assert arise from the Engagement Letter, whereas the subject counterclaims that Plaintiff asserts originate from the period prior to the Engagement Letter. The subject counterclaims are based on the financial

institutions' alleged misconduct, separate from Defendants' proofs of claim for services performed pursuant to the Engagement Letter. Furthermore, Plaintiff's subject counterclaims only augment the estate. Plaintiff may raise the counterclaims in a separate trial, under applicable state law, and succeed on some or all of the counterclaims, yet it would not affect the allowance of Defendants' claims. The only effect that will result is that if it wins, the

estate will be augmented by the compensatory monetary damage from Defendants. Thus, Plaintiff's counterclaims are not part of the

claim-allowance process, and do not limit its right to a jury trial. Legal Claims in a Court of Equity As for Defendants' argument that Plaintiff submitted itself to the equitable jurisdiction of this Court by raising these counterclaims, the Court does not agree. Defendants argue that the Trust's choice to combine claim objections with affirmative

litigation before this Court somehow makes the entire adversary proceeding part of the claims-allowance process or otherwise

triggered a categorical submission to the equitable jurisdiction of

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21 this Court. Circuits are split on Defendants' core proposal - that any adversary proceeding filed by the representative of a debtor's estate in a bankruptcy court, rather than in some alternative forum, categorically eliminates any and all of the estate's jury trial rights forever. See Germain, 988 F.2d 1330 ("We conclude

that neither precedent nor logic supports the proposition that either the creditor or the debtor automatically waives all right to a jury trial whenever a proof of claim is filed."); In re Jensen, 946 F.2d 369, 373-74 (5th Cir. 1991) (debtor's petition in the bankruptcy court does not affect its right to a jury trial). But see N.I.S Corp. v. Hallahan (In re Hallahan), 936 F.2d 1496, 1505 (7th Cir. 1991) (holding debtor consented to jurisdiction by filing bankruptcy petition and thereby waived right to jury trial); Bayless v. Crabtree Through Adams, 108 B.R. 299, 305 (Bankr. W.D. Okla. 1998), aff'd, 930 F.2d 32 (10th Cir. 1991) (holding legal assertions, otherwise subject to jury trial, brought by trustee or debtor are "open to adjudication in equity by Bankruptcy Judges under their power to afford complete relief"). The Third Circuit has not adopted Defendant's position. The fact that the debtor may have voluntarily submitted itself to the bankruptcy court's equitable jurisdiction does not complete the analysis. A court must also ask whether the resolution of the particular dispute at issue is necessarily part of the process of the disallowance and allowance of claims. See Katchen, 382 U.S. at 336, 86 S.Ct. at 476.

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22 Billing, 22 F.3d at 1252, n. 14. This Court believes that

Defendants' core proposal flies in the face of the Supreme Court's clear instruction that "legal claims are not magically converted into equitable issues by their presentation to a court of equity." Ross, 396 U.S. at 538. position. Contractual Waiver of Jury Trial The last ground that Defendants raise in opposition is that Plaintiff contractually waived its right to a jury trial. In Thus, the Court rejects Defendants'

connection with the Note Purchase Agreement, on February 9, 2001, two Oakwood Companies (OHC and Oakwood Acceptance Corporation, LLC) executed agreements with a Credit Suisse entity. contain a jury trial waiver whereby each party HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL ACTION OR PRECEDING RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR ANY OTHER DOCUMENT OR INSTRUMENT RELATED HERETO AND FOR ANY COUNTERCLAIM THEREIN. (Doc. # 202, Decl. Murphy, Ex. E, p. 6). According to Defendants, Those agreements

Plaintiff, in charge of liquidating the Debtors' estates, is the successor in interest to these two Oakwood Companies, and is prohibited by the waiver from seeking a jury trial on any claims "related directly or indirectly to the Note Purchase Agreement or any of the contracts related thereto under the loan purchase facility." (Doc. # 201, p. 22).

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23 There are several reasons why this contractual waiver does not apply here. parties. The first is the identity of the contracting

The purported waiver only involves two of the Debtors.

The Trust succeeded to the rights of fifteen Debtor entities2 pursuant to a plan of reorganization that effected a substantive consolidation of all the Debtors. The Credit Suisse entity that is a party to the two agreements bears the name of "Credit Suisse First Boston, New York Branch," as agent for the warehouse

facility.

(Doc. # 202, Decl. Murphy, Ex. "D" at signature page, None of Defendants here bear that

Ex. "E" at signature page.) name.

In their answer to the complaint (Doc. # 132), Defendants very carefully note their separateness. answer states: The Defendants' use of "Defendants" to refer to the named Credit Suisse affiliated defendants is used for convenience only and is not an admission that any one of the Defendants is not a distinct and separate entity, or that any one of the Defendants is responsible for the liabilities of any other Defendant. Nor is any reference to "Defendants" an admission that any Defendant named or referenced in the Complaint Footnote 1 on p. 2 of the

These are: Oakwood Homes Corporation, Oakwood Mobile Homes, Inc., Oakwood Acceptance Corporation, LLC, HBOS Manufacturing, LP, Suburban Home Sales, Inc., FSI Financial Services, Inc., Home Service Contract, Inc., Tri-State Insurance Agency, Inc., New Dimension Homes, Inc., Dreamstreet Company, LLC, Golden West Leasing, LLC, Crest Capital, LLC, Oakwood Shared Services, LLC, Preferred Housing Services, LP, and Oakwood MHD4, LLC.

2

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24 participated in any of the acts alleged in the complaint, except as specifically admitted herein. In their response to the motion, Defendants specifically identify "Credit Suisse Securities (USA), LLC" as the target of the jury trial counts: "The remaining claims - on which the Trust now seeks a jury trial - are claims arising out of the relationship between Oakwood and [Credit Suisse Securities (USA), LLC] prior to August, 2002." (Doc. # 201, p. 7). Obviously, Credit Suisse Securities

(USA), LLC is not a party to the two agreements containing the jury trial waiver and thus it has no standing to enforce the waiver even if the Trust were bound by the commitment of two of the fifteen Debtors. It is fundamental that, "[g]enerally, a jury waiver provision in a contract or lease affects only the rights of the parties to that contract or lease," Hulsey v. West, 966 F.2d 579, 581 (10th Cir. 1992) (guarantor of corporate loan was not bound by jury waiver in an agreement that he did not execute in his personal capacity). Thus, Defendants, including Credit Suisse Securities

(USA), LLC, cannot all claim shelter in a waiver signed only by Credit Suisse First Boston, New York Branch. Nor can that waiver

diminish the rights of thirteen Debtors that did not sign it rights that now belong to the Trust.

Even

if

one

were

to

ignore

the

"New

York

Branch"

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25 identification, the result remains the same. If the two agreements are read to intend that the Credit Suisse entity is simply "Credit Suisse First Boston, a Swiss banking corporation," the caption of this case identifies "Credit Suisse (f/k/a Credit Suisse First Boston, a Swiss banking corporation)" as a Defendant, but

Defendants acknowledge that the target of the jury trial counts is the Defendant "Credit Suisse Securities (USA), LLC (f/k/a Credit Suisse First Boston, LLC)." The second problem relates to the scope of the waiver itself. At its broadest, the waiver pertains only to an action

"relating directly or indirectly to" the agreements establishing the Warehouse Facility. But the legal claims are not about any

breach of those agreements, or about whether Credit Suisse First Boston, New York Branch adequately performed thereunder. Rather,

it is about whether Defendants breached far broader duties, not arising from any written contract, by partaking a myriad of alleged illicit transactions with the Oakwood Companies. Because this action is about much more than the Warehouse Facility and related agreements, it falls outside the scope of the purported waiver. Other courts have reached the same conclusion in similar circumstances. See, e.g., Nichols Motorcyle Supply Inc. v. Dunlop Tire Corp., 913 F. Supp. 1088, 1146-47 (N.D. Ill. 1995) (broad jury waiver in "Distributor Agreement" did not encompass any "claims that do not directly arise or have their basis in the

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26 Distributor Agreement"); Nat'l Acceptance Co. v. Myca Prods., Inc., 381 F. Supp. 269, 269-70 (W.D. Pa. 1974) (jury waiver in loan agreement purporting to affect "any action" between the parties did not apply to claim alleging breach of a separate oral agreement); see also OHC Liquidation Trust v. Credit Suisse First Boston (In re Oakwood Homes Corp.), 340 B.R. 510, 519-20 (Bankr. D. Del. 2006) (indemnification provision of August 19 Contract does not apply to actions for breach of independent, non-contractual duties). purported contractual waiver is far too limited to apply here. The final problem with Defendants' contractual waiver theory is that Defendants have not proffered any evidence to meet their burden of showing that there was no gross disparity in power between the two Oakwood Companies and Credit Suisse First Boston, New York Branch. The Supreme Court and the Third Circuit all agree that "because the `right of jury trial [in a civil case] is fundamental, courts [should] indulge every reasonable presumption against The

waiver.'" Tracinda Corp. V. DaimlerChrysler AG., 2007 U.S. App. LEXIS 22221, *22-23 (3d Cir. Sept. 18, 2007) (quoting Aetna, Inc. v. Kennedy, 301 U.S. 3890, 393 (1937)); Collins v. Gov't of Virgin Islands, 366 F.2d 279, 284 (3d Cir. 1966). A valid, enforceable

waiver clause must meet the knowing and voluntary standard, which requires that: (1) there was no gross disparity in bargaining power between the parties; (2) the parties are sophisticated business

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27 entities; (3) the parties had opportunity to negotiate the contract terms; and (4) the waiver provision was conspicuous. First Union

Nat'l Bank v. United States, 164 F.Supp. 2d 660, 663 (E.D. Pa, 2001); Tracinda Corp., 2007 U.S. App. LEXIS 22221 at *23. Given

the presumption against waiver "the burden of proving that a waiver was done knowingly and intelligently falls upon the party seeking enforcement of a waiver . . . clause." F.Supp. 2d at 663. In this case Defendants bear the burden of proving the waiver clause is enforceable. Looking at the factors, there is no First Union Nat'l Bank, 164

question as to the sophistication and intelligence of the parties who entered into the agreements. Question arises, however,

regarding the bargaining positions of the parties when they entered into the Note Purchase Agreement. Plaintiff points to a video deposition by Mr. Douglas R. Muir, a officer of OHC. In the deposition Mr. Muir stated that

finding a successor facility to its then credit providers, Bank of America, was critical and had to be done. Ex. B, at 52:13-16). (Doc. # 204, Decl. Holt,

However, there was not "a half a dozen credit

providers lined up at the door, each of which was offering to do [the] transaction. in town." (Doc. At the time [Defendants] w[ere] the only game # 204, Decl. Holt, Ex. B, at 51:13-16).

Additionally, there was pressure from Bank of America to take it out of the facility, or it would have charged Oakwood Companies

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28 large fees. (Doc. # 204, Decl. Holt, Ex. B, at 52:6-12). Given

the critical nature of the transaction, the lack of candidates, and the pressure from Bank of America, there is a good argument that the two Oakwood Companies were at a severely disadvantaged

bargaining possession.

Thus, they did not have any leverage to

fairly negotiate the terms of the Note Purchase Agreement. Because Defendants did not offer any evidence to the contrary, Defendants failed to meet its burden of proof that the parties had equal bargaining position. Consequently, because this Court must

construe the waiver narrowly and any ambiguity is to be decided against the waiver, the waiver is not enforceable here. Conclusion For the reasons stated above, Plaintiff's motion for determination of Plaintiff's rights to a jury trial is granted. Plaintiff does have the right to a jury trial on three of its 10 counts.

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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE In re: Oakwood Homes Corporation, et al., Debtors. _______________________________ OHC Liquidation Trust, Plaintiff, vs. Credit Suisse (f/k/a Credit Suisse First Boston, a Swiss banking corporation), Credit Suisse Securities (USA), LLC (f/k/a Credit Suisse First Boston LLC), Credit Suisse Holdings (USA), Inc. (f/k/a Credit Suisse First Boston, Inc.), and Credit Suisse (USA), Inc. (f/k/a Credit Suisse First Boston (USA), Inc.), the subsidiaries and affiliates of each, and Does 1 through 100, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Chapter 11 Case No. 02-13396 (PJW) Jointly Administered

Adv. Proc. No. 04-57060 (PJW)

ORDER
For the reasons set forth in the Court's memorandum opinion of this date, the motion of OHC Liquidation Trust for determination of Plaintiff's rights to a jury trial (Doc. # 198) is granted to the extent that three of the 10 counts in the complaint are entitled to a jury trial.

Peter J. Walsh United States Bankruptcy Judge Date: November 15, 2007

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EXHIBIT B

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE ) ) Oakwood Homes Corporation, et al., ) ) Debtors. ) ) ) ) ) ) OHC Liquidation Trust, ) ) Plaintiff, ) ) v. ) ) Credit Suisse First Boston, a Swiss banking ) corporation, Credit Suisse First Boston LLC, a ) Delaware limited liability corporation, Credit ) Suisse First Boston, Inc., Credit Suisse First ) Boston (U.S.A.), Inc., a Delaware corporation ) and a wholly owned subsidiary of Credit Suisse ) First Boston Inc., the subsidiaries and affiliates ) of each, and Does 1 through 100, ) ) Defendants. ) ) In re: Chapter 11 Case No. 02-13396 (PJW) Jointly Administered

JURY TRIAL DEMANDED

Adversary Proceeding No. 04-_________ (PBL)

OBJECTION TO PROOFS OF CLAIM FILED BY CREDIT SUISSE FIRST BOSTON LLC; COUNTERCLAIMS FOR (1) BREACH OF FIDUCIARY DUTY; (2) NEGLIGENCE; (3) UNJUST ENRICHMENT; (4) EQUITABLE SUBORDINATION; (5) AVOIDANCE AND RECOVERY OF 90 DAY PREFERENTIAL TRANSFERS PURSUANT TO 11 U.S.C. §§ 547 AND 550; (6) AVOIDANCE AND RECOVERY OF ONE YEAR PREFERENTIAL TRANSFERS PURSUANT TO 11 U.S.C. §§ 547 AND 550; (7) AVOIDANCE AND RECOVERY OF FRAUDULENT TRANSFERS PURSUANT TO 11 U.S.C. §§ 548 AND 550; (8) AVOIDANCE AND RECOVERY OF FRAUDULENT TRANSFERS PURSUANT TO 11 U.S.C. §§ 544 AND 550 AND APPLICABLE STATE LAW; (9) BREACH OF IMPLIED AND EXPRESS CONTRACT; AND (10) DEEPENING INSOLVENCY; AND DEMAND FOR JURY TRIAL

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TABLE OF CONTENTS Page(s) I. JURISDICTION AND VENUE.................................................................................................... 1 II. THE PARTIES ............................................................................................................................. 1 A. B. Plaintiff...................................................................................................................... 1 Defendants. ............................................................................................................... 3

III. INTRODUCTORY ALLEGATIONS COMMON TO ALL OBJECTIONS AND COUNTERCLAIMS FOR RELIEF ............................................................................ 6 A. B. C. D. Brief background of the Debtors' business. .............................................................. 6 The financing of retail home sales. ........................................................................... 6 Funding for short-term liquidity needs. .................................................................... 9 CSFB encouraged the Debtors to ramp-up the loan assumption program. .................................................................................................................. 10 1. 2. 3. 4. 5. Manufactured housing faced challenging market conditions. .................... 10 CSFB encouraged Debtors to aggressively use the loan assumption program. ................................................................................... 11 CSFB provided underwriting services in connection with the Debtors' public term securitizations from 1994 through 2002.................... 14 Beginning in 2001, CSFB took on the added role of the Oakwood Companies' lead lender on the warehouse facility. .................... 15 In exchange for agreeing to provide the warehouse facility, among other things, CSFB demanded and received warrants in the Debtors with a value just under 20%. ............................................... 17 At all relevant times, CSFB provided the Debtors with restructuring and financial advisory services.............................................. 18

6. E. F. G.

Debtors' road to bankruptcy.................................................................................... 21 CSFB's proofs of claim. .......................................................................................... 22 Transfers to CSFB. .................................................................................................. 23

IV. OBJECTIONS TO CSFB-LLC CLAIMS ................................................................................ 25

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V. COUNTERCLAIMS.................................................................................................................. 26 FIRST COUNTERCLAIM FOR RELIEF (Breach Of Fiduciary Duty Against All Defendants)...................................................................................................... 26 SECOND COUNTERCLAIM FOR RELIEF (Negligence Against All Defendants) ......................................................................................................................... 28 THIRD COUNTERCLAIM FOR RELIEF (Unjust Enrichment Against All Defendants)................................................................................................................... 28 FOURTH COUNTERCLAIM FOR RELIEF (Equitable Subordination Against Defendant CSFB-LLC) ......................................................................................... 29 FIFTH COUNTERCLAIM FOR RELIEF (Avoidance And Recovery Of Preferential Transfers, 11 U.S.C. §§ 547 and 550 Against All Defendants) ...................... 30 SIXTH COUNTERCLAIM FOR RELIEF (Avoidance and Recovery of Preferential Transfers to an Insider, 11 U.S.C. §§ 547 and 550 Against All Defendants) ......................................................................................................................... 31 SEVENTH COUNTERCLAIM (Recovery of Fraudulent Transfer, 11 U.S.C. §§ 548 and 550 Against All Defendants).......................................................... 32 EIGHTH COUNTERCLAIM (Fraudulent Transfer Under 11 U.S.C. § 544 And State Law Against All Defendants) ........................................................................... 33 NINTH COUNTERCLAIM (Breach of Implied and Express Contract Against All Defendants)...................................................................................................... 34 TENTH COUNTERCLAIM (Deepening Insolvency Against All Defendants In The Event This Is Determined To Be A Separate Claim For Relief Rather Than A Form Of Damages).......................................................................... 35 VI. PRAYER FOR RELIEF ........................................................................................................... 36 DEMAND FOR JURY TRIAL ...................................................................................................... 38

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In support of its objection to the proofs of claim filed by Credit Suisse First Boston LLC, successor to Credit Suisse First Boston Corporation, and counterclaims against those and other entities within the Credit Suisse Group (as defined below), the OHC Liquidation Trust ("Liquidation Trust" or "Plaintiff") by and through its duly appointed trustee Alvarez & Marsal, LLC, hereby alleges as follows: I. JURISDICTION AND VENUE 1. This Court has subject matter jurisdiction over this action under 28 U.S.C.

§§ 1334 and 157, in that this adversary proceeding is a civil proceeding arising under and/or relating to cases arising under title 11 of the United States Code, jointly administered under In re Oakwood Homes Corporation, et al., Case No. 02-13396 (PJW) (collectively, the "Bankruptcy Cases"). 2. Venue in this District is proper under 28 U.S.C. § 1409 because the

Bankruptcy Cases to which this action relates are pending before this Court. 3. This action is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Plaintiff

demands a jury trial of any issue triable by a jury. II. THE PARTIES A. Plaintiff. 4. Oakwood Homes Corporation ("OHC," and together with all of its

subsidiaries and affiliates the "Oakwood Companies") and certain of its subsidiaries and affiliates are the above-captioned reorganized debtors (collectively, the "Debtors") in the Bankruptcy Cases

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currently pending in the United States Bankruptcy Court for the District of Delaware (the "Court"). The Debtors' Bankruptcy Cases are jointly administered under Case Number 02-13396 (PJW). OHC Liquidation Trust, defined earlier as "Liquidation Trust" is Plaintiff and is authorized to bring and prosecute this adversary proceeding, as described below. 5. OHC was a North Carolina corporation with its principal place of business

in Greensboro, North Carolina. At all times relevant to this adversary proceeding, the Debtors designed, manufactured, marketed, and, in some instances, financed, manufactured and modular homes. At the time of the chapter 11 filing, the Debtors had manufacturing plants in multiple states including Texas, North Carolina, Georgia, Indiana, Oregon, Arizona, Pennsylvania, California, Colorado, Kansas, Minnesota and Tennessee. The homes manufactured by the Debtors were sold under the registered trademarks "Oakwood," "Freedom," "House Smart," "Golden West," "Schult," "Crest," "Marlette," and the trade name "Victory." 6. On November 15, 2002 (the "Petition Date") certain of the Debtors filed

with Court voluntary petitions for relief under chapter 11 of the Bankruptcy Code. The remaining Debtors filed for chapter 11 protection on March 5, 2004. 7. By order ("Confirmation Order") entered on March 31, 2004, the Court

confirmed the Debtors' "Second Amended Joint Consolidated Plan of Reorganization of Oakwood Homes Corporation and Its Affiliated Debtors and Debtors in Possession" ("Plan"). The Plan became effective as to all but one of the Debtors on April 13, 2004 (the "Effective Date"), and for the remaining Debtor on April 27, 2004. 8. Pursuant to Paragraph 40 of the Confirmation Order, Section 6.3(b) of the

Plan, and the Liquidation Trust Agreement dated April 13, 2004 (the "LTA"), the executed version

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of which was annexed to the Plan Supplement filed on April 14, 2002 [Docket No. 3972], the Liquidation Trust was deemed established as of the Plan's Effective Date. 9. Pursuant to the Confirmation Order, the Plan, and the LTA, the Liquidation

Trust holds the right to prosecute, compromise, and settle all of the Debtors' Estate's Claims and Causes of Action (as defined in Sections 1.1(54) and 1.1(52) of the Plan, respectively). This objection and the related counterclaims against Defendants described below are properly brought by the Liquidation Trust pursuant to the above provisions of the aforementioned documents. Each of the counterclaims are Claims or Causes of Action with which the Liquidation Trust was vested as of the Effective Date, and which the Liquidation Trust has full right and title to prosecute, compromise, and/or settle. B. Defendants. 10. Defendant Credit Suisse First Boston is a Swiss banking corporation

("CSFB-Swiss"). CSFB-Swiss is identified in a certain note purchase agreement dated February 9, 2001, as the agent. Plaintiff is informed and believes, and on that basis alleges, that CSFB-Swiss is the indirect parent of Defendant Credit Suisse First Boston (USA), Inc. and certain of its subsidiaries and affiliates. Plaintiff is informed and believes, and on that basis alleges, that CSFBSwiss, directly and through its subsidiaries and affiliates, engaged in the conduct described in the allegations below. Plaintiff is informed and believes, and on that basis alleges, that each and all of the Credit Suisse First Boston entities named as defendants or involved in any fashion in this adversary proceeding are related to CSFB-Swiss under the umbrella designation of the Credit Suisse Group. If that understanding is error, these pleadings shall be amended to correct this information.

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Defendant Credit Suisse First Boston, LLC ("CSFB-LLC"), the successor to Credit Suisse First Boston Corporation, is the "creditor" identified on the proofs of claim to which the Liquidation Trust hereby objects. Plaintiff is informed and believes, and on that basis alleges, that CSFB-LLC, directly and through its subsidiaries and affiliates, engaged in the conduct described in the allegations below. Defendant Credit Suisse First Boston (USA), Inc. ("CSFB-USA"), a Delaware corporation, and its subsidiaries and affiliates, is an integrated investment bank serving institutional, corporate, government and high-net worth individual clients. This Defendant provides its clients with a broad range of products and services that includes securities underwriting, sales and trading, financial advisory services, restructuring advisory services, private equity investments, full-service brokerage services, derivatives and risk management products and investment research. Plaintiff is informed and believes, and on that basis alleges, that Defendant CSFB-USA is the parent of various subsidiaries relevant to this adversary proceeding. Plaintiff is informed and believes, and on that basis alleges, that CSFB-USA, directly and through its subsidiaries and affiliates, engaged in the conduct described in the allegations below. Defendant Credit Suisse First Boston, Inc. ("CSFBI") owns all of the outstanding voting Common Stock of Credit Suisse First Boston (USA), Inc. Plaintiff is informed and believes, and on that basis alleges, that CSFBI, directly and through its subsidiaries and affiliates, engaged in the conduct described in the allegations below. Collectively, the Credit Suisse Group of Defendants shall be referred to throughout as "CSFB" or "Defendant" unless specific delineation is known and otherwise material.

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Defendants, Does 1 through 100 ("Does") are believed to be the subsidiaries or affiliates of the CSFB defendants. Plaintiff is informed and believes, and on that basis alleges, that the Doe defendants acted in concert with and at the direction of the CSFB defendants as CSFB agents. Throughout this complaint, by this reference, the conduct ascribed to CSFB shall also be ascribed to the Doe defendants. Should there be an error or mistake as to the name of the entities for which culpable conduct may be ascribed, these pleadings will be amended to correct that mistake by correctly identifying a Doe defendant. 11. Since at least 1994, CSFB was the Oakwood Companies' securities

underwriter. In this capacity, CSFB wrote more than approximately $7.5 billion in Oakwood Companies' securities, including underwriting more than $1.5 billion in Oakwood Companies' securities while also serving as the Oakwood Companies' primary lender and the Debtors' restructuring and financial advisor. In or about February 2001, CSFB became a secured lender to the Oakwood Companies pursuant to what is commonly referred to as the $200 million "CSFB Warehouse Facility." In connection with becoming the Oakwood Companies' warehouse lender, CSFB demanded and received, in or about February 2001, warrants to purchase OHC's common stock (the "CSFB Warrants"), which, if exercised by CSFB, would have a value of just under 20% of the then-outstanding common stock of OHC. Plaintiff is informed and believes, and on that basis alleges, that CSFB stood in the role of restructuring and financial advisor since at least in or about 2000. On or about August 19, 2002, CSFB formalized a role it had held implicitly for some time and, pursuant to a letter agreement, CSFB became the Debtors' exclusive restructuring and financial advisor. As described in more detail below, in these various capacities, Defendants occupied both a fiduciary position, and that of an "insider" of the Debtors as that term is defined in Bankruptcy Code section 101(31) and applicable state law. Moreover, because the Debtors were

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within the vicinity or zone of insolvency since at least 2000, and because CSFB occupied both a fiduciary position and that of an insider vis-à-vis the Debtors, CSFB also occupied a fiduciary position and duty to the Debtors' creditors. III. INTRODUCTORY ALLEGATIONS COMMON TO ALL OBJECTIONS AND COUNTERCLAIMS FOR RELIEF A. Brief background of the Debtors' business. 12. From their origin in 1947, the Oakwood Companies provided modest or

affordably priced housing. The Debtors designed and manufactured a number of models of homes, including single- and double-wide units. As of September 30, 2002, the Debtors sold manufactured homes through 224 company-owned and -operated sales centers located in 26 states, primarily in the Southeast and Southwest United States. The Debtors also sold their homes to approximately 600 independent retailers located throughout the United States. B. The financing of retail home sales. 13. The Oakwood Companies served as the mortgage lender, or "bank," for the

majority of the homes sold through the Debtors' retail sales centers and a portion of the homes sold through independ ent dealers. During the Debtors' fiscal year 2002, approximately 72% of the units sold through the Debtors' retail centers were financed by mortgage loans provided to the purchaser of the home by the Debtors. 14. The Oakwood Companies' ability to offer their customers mortgage

financing or retail installment sales contracts (collectively, "RICs") was dependent on the amount of funds available to the Debtors. The Debtors obtained the funds necessary to provide their customers with financing primarily through a two-step, asset-backed securitization process

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conceived, arranged, controlled, implemented and underwritten by CSFB. Initially, the Debtors obtained financing on the RICs by using the RICs as collateral to borrow against the warehouse facility (beginning in 2001 CSFB, was a lender and agent on the CSFB Warehouse Facility). Once the Warehouse Facility had accumulated a sufficient amount of RICs (typically $150 million to $200 million), the RICs would be bundled through a series of complex transfers and transactions involving various of the Oakwood Companies which included both Debtor and nonDebtor affiliates and others1 for sale to private and institutional investors through a real estate mortgage investment trust ("REMIC") which issued "REMIC Certificates." For example, during fiscal 2001, $854 million of the Oakwood Companies' REMIC Certificates were sold and underwritten by CSFB, and during 2002, $853 million of the Oakwood Companies' REMIC Certificates were sold and underwritten by CSFB. In theory, the Debtors were not to have credit exposure with respect to these securitized contracts, REMIC Certificates, except (i) with respect to breaches of representations and warranties, (ii) to the extent of any retained interest in a REMIC, (iii) with respect to required servicer advances, (iv) with respect to the servicing fee (which was subordinated), and (v) with respect to any REMIC security the Debtors had guaranteed. In practice, under the loan assumption program, described below, the Debtors shouldered a much greater credit exposure. 15. Payments of principal and interest on the REMIC Certificates were funded

by payments of principal and interest that were made by obligors on the underlying RICs (i.e., the

1

Oakwood Acceptance Corporation ("OAC"), one of the Debtors, sold the RICs to Ginkgo Corporation. Ginkgo Corporation, in turn, sold them to Oak Leaf Holdings, LLC. Oak Leaf Holdings, LLC then sold them to OMI Note Trust, which pledged them to OMI Note Trustee under the terms of an indenture, to secure the trust's debt to CSFB and its affiliates under the 2001-A Class A Notes. Ginkgo Corporation, Oak Leaf Holdings, LLC and OMI Note Trust

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purchasers of the homes). 2 Each REMIC trust typically issued various tranches of REMIC Certificates, each with a different level of seniority and credit quality. Although the entire pool of RICs owned by a particular REMIC trust would fund payments on all REMIC Certificates issued by that trust, the credit quality and seniority of a particular tranche of REMIC Certificates would vary; that was determined in advance of purchase by a "waterfall" of payment priorities. In exchange for higher risk that followed from agreeing to subordinate their payment priority to senior tranches, holders of subordinated tranches generally received higher interest rates. Generally speaking, the Debtors, with CSFB's assistance and participation, would sell the higherrated tranches of REMIC Certificates in a public offering and sell the most subordinated tranches of REMIC Certificates (collectively, the "B-Piece REMIC Certificates") in a private offering. When the underwriters were unable to sell the B-Piece REMIC Certificate resulting from a particular securitization, that piece would be transferred to a special purpose subsidiary, Oakwood Financial Corporation ("OFC"), in exchange for cash in the amount of its fair market value. 16. To enhance the marketability of the B-Piece REMIC Certificates, OHC

provided a limited guaranty of principal to an aggregate amount of approximately $275 million plus interest on certain of the B-Piece R