Free Declaration - District Court of Delaware - Delaware

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IN THE UNITED STATES BAHKÇRUPTCY COURT FOR THE DISTRICT 0F DELAWARE

In re

IChapter

il (PJW)

Oakwood Homes Corporation, et ai., Debtors.Case No. 02-13396 ____________________________ OHC Liquidation Trust, Plaintiff,i

Jointly Adrninistered

Credit Suisse (f/k/a. Credit Suisse First Boston, a Swiss banking corporation>, Credit Suisse Securities (USA), bbC iAdversary Proceeding (f/k/a Credit Suisse First Boston jN.0-76 N.0-76 LLC), Credit Suisse Holdings . (USA), Inc. (f/k/a !Civil Action No. 07-'799 First Boston, Inc.) Credit Suisse and Credit Suisse (USA>, Inc.I(JF (f/k/a Credit Suisse First Boston i (U.S.A.), Inc.), the subsidiaries and affiliates of each, and Does i through 100, De fendants.

DEC LARATION 0F BREND)AN J. MURPHY IN SUPPORT 0F DEFENDANTS'1 MOTION TO STRIKE: PLAINTIFF' S JURY TRIAL DEMAND

I, Brendan J. Murphy, declare as follows: 1. I amn an attorney associated with the law firm of I submit

Linkiaters LLP, counsel to Defendants in this action.

this Declaration in connection with Defendants' Motion to Strike Plaintif f's Jury Trial Demand.

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2.

Attached hereto as Exhibît A is a true and correct copy

of the Froof of Claim filied by Credit Suisse First Boston LLC
dated March 27, 2003.

3.

Attached hereto as Exhibit B is a true and correct

copy of the Objection to the Proof of Claim filied by Credit Suisse First Boston LLC; Counterclaims for (1) Breach of Fiduciary Duty; (2) Negligence; (3) Unjust Enrichment; (4>

Equitable Subordination;

(5) Avoidance and Recoxrery of 90 Day (G)

Preferential Transfers Pursuant to il U.S.C. §§ 547 and 550; Avoidance and Recovery of One Year Preferential Transters Pursuant to il 13.S.0. §§ 547 and 550;

(7) Avoidance and Recovery (8>

of Fraudulent Transfers Fursuant to il U.S.C. §§ 548 and 550; Avoidance and Recovery of Fraudulent Transfers Pursuant to il U.S.C. §§ 544 and 550 and Applicable State Law; (9) Breacli of

Implied and Express Contract; and (10> Deepening Insolvency; and Demand for Jury Trial dated Novernber 13, 2004. 4. Attached hereto as Exhibit C is a true and correct

copy of Plaintif f OHC Liquidation Trust's Supplement to its Rule 26(a) (1) Initial Disclosures dated May 1, 2006. 5. Attached hereto as Exhibit D is a true and correct

copy of the Transcript of the Proceedings Before the Honorable Peter J. Walsh United States Bankruptcy Judge on Septernber 25, 2006.

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6.

Attached hereto as Exhibit E is a true and correct

COpy of the Plaintif f and Defendants' Joint Status Conference Report submitted in connection with the October 4, 2007 status con ference. 7. Attached hereto as Exhibit F is a true and correct

copy of the Order of the Bankruptcy Court dated Noventer 15, 2007. 8. Attached hereto as Exhibit O is a true and correct

copy of the Memorandum opinion of the Bankruptcy Court dated November 15, 2007. 9. Attached hereto as Exhibit H is a true and correct

copy of the Class A Note Purchase Agreement dated February 9, 2001. 10. Attached hereto as Exhibit I is a true anid correct

copy of the Agreement dated February 9, 2001. 11. Attached hereto as Exhibit J is a true and correct

copy of the Report of Alan C. Shapiro, Ph.D. dated April 30, 2007. 12. Attached hereto as Exhibit K is a true a correct copy

of the Transcript of the Status Conference Before the Honorable Peter J. Walsh United States Bankruptcy Judge on October 4, 2007.

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13.

Attached hereto as Exhibit L is a true and correct

copy of the unreported decisions cited in Defendants' Opposition to Plaintif f's motion to Withdraw the Reference. I declare under penalty of perjury that the foregoing is true and correct.

Dated: February 6, 2008 New York, New York

Brendan J. Murphy, Esq.

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EXHIBIT A

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EXHIBIT B

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EXHIBIT C

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IN THE UNITED STATES EANKRUPTCY COURT FOR THE DISTRICT 0F DELAWARE

IEn re:

)Chapter )Case

il (PJW)

Oakwood Homes Corporation, et
Debtors. OHC Liquidation Trust, Plaintiff, V. Credit Suisse (f/k/a Credit Suisse First Boston, a Swiss banking corporation), Credit Suisse Securities (USA), LLC (t/k/a Credit Suisse First Boston bbC), Credit Suisse Holdings (USA), Inc. (t/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 i Ubrougli 100, Defendants.

No. 02-13396

Jointly Aclministered

Adversary Proceeding No. 04)57060 (PJW)

PLAINTIFF OHC LIQUIDATION TRUST'S SUPPLEMENT TO ITS RULJE 26(a)(1) INITIAL DISCLOSTJRES

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Plaintif f OHC Liquidation Trust ("Trust" or "Plaintif f'l), by and through its duly appointed trustee, Alvarez

& Marsal, LLC, hereby submits the following supplement to its Rule 26(a) (1) initial disclosures to Defendants 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), Ina. Suisse First Boston, Inc.), (f/k/a Credit (f/k/a

and Credit Suisse (USA), Inc.

Credit Suisse First Boston (USA), Incj) (collectively, "ICSFB" or "Defendants"l) as follows:
1. INTRODUCTION

The Court, in its Memorandum opinion entered on March 31, 2006, ordered the Trust to provide additional information regarding its preliminary damnage calculations pursuant to Federal Rule of Civil Procedure 26(a) (1) (C), made applicable to this adversary proceeding by Federal Rule of Bankruptcy Procedure 7026. For convenience, the Trust bas created the (a)

foilowing categories for its computation of damages:

Preferential and Fraudulent Transfers (the Pif th, Sixth, Seventh, and Eighth Counterclaims); (b) Breach of Fiduciary Duty (c) Unjust

and Negligence (the First and Second Counterclaims); Enrichment (the Third Counterclaim>;

(d) Breach of Implied and (e> Deepening

Express Contract

(the Ninth Counterclaim);

Insolvency (the Tenth Counterclaim>; and (f) objection to CSFB's dlaim and Equitable Subordination (the Fourth Counterclaim). Calculations of damages set forth herein are initial estimates based upon the best information currently available to the Trust

{D00 5963 )>1 5.1

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and are subject to modification. Fact discovery is stili ongoing in this adversary proceeding, and no depositions have taken place. Expert discovery will follow the compiletion of The Trust, therefore, reserves the riglit te

tact discovery.

anend, supplement, or modify its initial estimated damage calculations from time te time as additional information becomes available and additional analyses are perforrned. The Trust either bas already produced or will produce all documents in its possession, which are net privileged or pretected from disclosure, on which its computatien ef damages is based, including material bearing on the nature and extent of damnages sut tered. The Trust, however, will reproduce certain

principal documents bearing on its damnage calculations shortly after service et this supplement.1
Il. CATEGORY I. Preferential and Fraudu lent Trans fers CALCtIL&TION OF DAMAGES DAMlAGES SOUGHT AND GENERAL ANALYSIS

COUNTERCLkIM

Fitth Counterclaim (90 Day Transters)

Subject te any valid defenses, the Trust seeks to recever all transfers made te CSEB on or within 90 days et the petition date (the "90 Day Transfers") as preterential transfers pursuant to section 547(b) et Titie 11
the United States Code (the

____________of

1There are ether documents that may bear on the Trust's damage calculatiens. The Trust is merely grouping together and reproducing certain material documents as a ceurtesy te CSEB.

(D0059635;i

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CATEGORY

COTJNTERCLAIN

DAMAGES

SOUGET AND)GENERAL ANALYSIS

"Bankruptcy Code"), plus interest. The 90 Day Transfers, the sum of which is approximately $166,811,129.54, are described in paragraph 41 cf the Trust's objection to dlaim and counterclaims (the "Objection/Counterclaims"). sixth Counterclaim (One Year Transfers) The Trust asserts that CSFB was an insider ef the Debters. Accordingly, subjeet te any valid defenses, the Trust seeks te recover ail transfers made te CSFB on or within one year of the petition date (the "One Year Transfers") as preferential transfers pursuant to Bankruptcy Code section 547(b), plus interest. The One Year Transfers, the suri ef which is approximately $595,845,.154.45, are described in paragraph 42 cf the 2 Objection/Counterclaims . Subject te any valid defenses, the Trust seeks ta recover the One Year Transfers from CSFB as fraudulent transfers under Bankruptcy Code section 548(a) (1) (B), plus interest.

Seventh Counterclairi (Fraudulent Transfers under Bankruptcy Code section 548) Eighth Counterclaim (Bankruptcy Code section 544(b) and Applicable State Law)
_________1

Subject ta any valid defenses, the Trust seeks te recever the One Year Transfers from CSFB under applicable state fraudulent transfer and/or conveyance laws, plus interest. The Trust may also be entitled te recover transfers made te CSFB mere than one
lyear

prier to the petition date

2In

paragrapli 42 of the Objection/Ceunterclairis, the Trust listed $595,845,398.42 in transfers, which contains a minor mathematical errer. The proper suri of the One lear Transfers is $595,845,154.45.

{D005,9635;1

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CATEGORY

COtINTERCLPAIM

DANAGES SOUGHT AND GENERAL ANALYSIS

pursuant ta applicable state laws.

Breach of Fiduc îary Duty and Negligence

First Counterclaim (Breach of Fiduclary Duty)

The Trust asserts that as a resuit of the multl-layered and inulti-faceted relationship with the Debtors (as the lender, underwriter, powerful warrant holder, and tinancial/restructuring advisor), CSFB was an insider and owed the Debtors fiduciary duties. Moreover, because the Debtors were insolvent or within the zone or vicinity of insolvency up ta two or more years prior ta bankruptcy, CSFB owed the Debtors' creditors fiduciary duties. CSFB had access ta and knowledge of confidential and inside information. Despite its knowledge of the Debtors' failing financlal health, the Trust asserts that CSFB continued to underwrite asset-backed securitization offerings and tacilitated those offerings through extensions of credit under the warehouse facility. In addition, CSFB encouraged the Debtors' use of the Loan Assumption Program ("LAP"). CSFB acted for its own benefit, and at the detriment of the Debtors. As a resuit of these and other breaches of fiduciary duties, CSFB unjustly enriched itself, and 50 the Trust is entitled ta recover from CSFB ail fees and other remuneration paid ta CSFB and ta recover

____________consequential

and actual damages,

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CATEGORY

COtJNTERCLAIM

DAMAGES

SOUGHT AND GENERAL ANALYSIS

including, but not limited to: 1. Fees, costs, and expenses incurred by the Debtors for the LAF. The Trust estimates that the LAP cost the Debtors approximately $56.5 million. 2. In order to fund the LAP, the Debtors were torced to borrow more under their credit facilities. a. CSFB Warehouse Facility
i. Fees for establishing the warehouse facility wîth CSFB approximately $2.5 million.

ii. Approximately twenty-one payments of $416,666.67 in monthly maintenance fees to CSFB for the warehouse facility, for a total of approximately $8,750,000. interest payments for the warehouse facility for the period from February 2001 to the petition date - approximately $3,464,767.90.
iii.

iv. Other professional fees and costs incurred in connection with this facility. b. Servicer Advance Facility: costs of approximately $2.4 million. 3. Fees and Costs of Securitizations

a. Underwriting fees paid to CSFB (for the 1999-E; 2000- A, B, C, & D; 2001- B, C, D, & E; LOTUS II, III, & IV; and 2002- A, B, & C series of securitizations): approximately $11.93 million. ib. Fees and costs paid to various

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CATEGORY

COUINTERCLAIN

DAMAGES SOUGHT AND)GENERAL ANALYSIS

professionals related to securitizations and credit tacilities, including, but not lîmîted to, tees and costs paid to Hunton & williams; Loeb & Loeb; Rayburn Cooper & Durham; Richards Layton & Finger; Simpson Thacher & Bartiett; Sullivan & Worcester; and Wachtell, Lipton, Rosen & Katz. C. Fees paid to Chase Manhattan Bank (later JP Morgan Chase) as indenture trustee for REMICs: to be determined. d. CosU of running the Loan Origination Department for the LAP: approximauely $44.2 million. 4. The Debtors' obligations, including guarantee payments made, on account of defaults on REMILOs: to be determined. 5. Second Counterclaim (Negligence) Prejudgment interest.

Damages for this Counterclaim are substantially similar to the damages sought for breach of tiduciary duty, which are discussed above. The sa-me tacts that support the breach ot fiduciary Counterclaim may support this Counterclaim. Nevertheless, this Counterclaim is a separate Cause of Action on which the Trust may recover damnages.

Un:just Enricbment

Third Counterclaim (Unjust Enricliment)
___________ ___________sought

For this Counterclaim, the Trust seeks restitution and disgorgement of profits from CSFB. With respect to the restitution component, the damages
are substantially similar to

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CATEGORY

COTJNTERCLAIM

DAMAGES SOUGHT AND)GENERAL ANALYSIS

the damnages sought for the breacli of fiduciary duty and negligence Counterclaims, which are discussed above. With respect to the second component, the Trust seeks the disgorgement of profits CSEB earned by using the funds that it illicitly received from the Debtors. As a resuit of CSFB's refusai to respond to interrogatories or produce documents related to its profits (including collateral profits, or so-called "profits on profits"), the Trust is unable to calculate this component of damnages. If the Trust prevails on its unjust enricbxnent dlaim, it may reguest that the Court order CSFB to disgorge its profits calculated based on the annual rate of return to CSFB's equity on a global/consolidated basis as reported in CSFB's SEC and other additional tilings, compounded annual ly.
IV. Breach of Implied and Express Contract

Ninth Counterclaim (Breach of Implied and Express Contract)

The Trust asserts that CSFB breached both its implied and express contract with the Debtors to act as their restructuring and financial advisors. The Trust alleges that CSFB breached its contractual obligations to the Debtors by, among other things, improperly prolonging the prepetition operations of the Debtors, failing to find a suitable debtor--in-possession financing and/or warehouse uine prior to the petition date, failing to adequately prepare the Debtors for the
f iling, and failing to

______________________bankruptcy

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CATEGORY

COTJNTERCLAIN

DAMlAGES SOUGHT AND)GENERAL ANALYSIS

adequately advise the Debtars that CSFB could flot act as a restructuring and tinancial advisor ta the Debtors once in bankruptcy as a resuit of CSFB's raie as underwriters for the Debtors. The Trust seeks to recover the tollowing damages, plus interest, from CSFE: 1. Express Contracts - approximately $l,811,129.54 paid by the Debtors ta CSEB under the Financial Advisory Agreement. 2. Excess cast af the debtor-inpossession financing ('WIP Financing"l): approximately $7.8 million. 3. Amaunts paid to ETI Consulting to arrange the DIP Financing as a resuit of CSFE's failure: at least $323,290 pursuant ta ETI Consulting's fee application. The Debtors and/or bankruptcy estates also incurred additional fees and costs ta Rayburn Cooper & Durham; Morris Nichols; Delaitte & Touche; Hunton & Williamns; and Akin Gump. 4. Ail ather expenses of reorganization: ta be determined. 5. Eostpetition warehouse Facility. It cast the Debtors approximately $2 million in tees ta restart the warehouse facility past-petition. 6. Implied contract damages. The Trust asserts that well betore the date of its written contract, CSFB acted as the financial advisor to the Debtors. The damages for breaching this implied contract include consequential damages suffered by the
___________Debtors

as a result of CSFE's failure

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CATEGORY

COUNTERCLAIN

DAMAGES

SOUGHT AND GENERAL ANALYSIS

te advise the Debtors to stop the asset-backed securitizations, which did net benefit the Debtors but only deepened their inselvency. The amount souglit for CSFB's breacli cf the implied contract is substantialtly similar to the damnage calculation for the Tenth Ceunterclaim (i.e., Deepening ]Insolvency), which is discussed below.

V.
Deepening Insolvency Tenth Counterclaim (Deepening Inselvency) Existing case law provides the Trust with several dit terent metheds for calculating its damnages for deepening insolvency, and the Trust's expert witness lias not yet cencluded lis analysis. Aithougli the Trust lias flot yet completed its calculation et damages for this Counterclaim, ans way to measure the damnages weuld be to calculate the anount needed to pay the Trust's constituents (i.e., the general unsecured creditors) in fuil, plus pre- and post-judgrnent interest and reirrbursement of expenses. As of the date et this supplement, the shertfall to general unsecured creditors is appreximately 59% of the value et the dlaims against the Debtors' estates .

3Due

ta active trading cf dlaims filed in these cases and instruments issued prier te bankruptcy, the Trust believes that it is unable te provide additional information regarding the shortfall without an agreement with CSFB that: (a) the information to be provided will be cevered by the Agreed Protective Order entered by the Court on October 21, 2005; and (b) CSFB will net use the information previded to engage in buying, selling, or trading ef any dlaims and/or instruments.

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CATEGORY VI. objection ta Claim and Ecraitable Subordination

COUNTERCLAIH

DAMlAGES SOUGHT ANDW GENERAL ANALYSIS

objection to Claim and Fourth Counterciaim (Equitabibe Subordination)

The Trust seeks to disallow CSFB's dlaim in the arnount of $3,288,391.54 (including a contingent dlaim asserted by CSFB) on the grounds that such amount was flot due or earned, pursuant to Bankruptcy Code section 502(d), and based on the facts supporting the Counterclaims. Alternatively, the Trust seeks to subordinate CSFB's dlaim to the other general unsecured

creditors as a resuit of CSFB's
inequitable conduct and unf air advantage, and the damnages caused to the Debtors, ail as discussed above. Dated: May 1, 2006 Wl lmingt on, De laware
«s! Maria R. Eskin
NARLA R. ESKIN (No. 2989) KATHLEEN CAMPBELL DAVIS (No. 4229) CAMPBELL & LEVINE, LLC 800 N. King Street, Suite 300 Wilmington, DE 19801 (302> 426-1900 and TONY CASTANýARES (CA SEN 47564) STEPHAN M. RAY (CA SBN 89853) CAROL CHOW (CA SBN 169299) SCOTT H. YUN (CA SEN 185190> WHITMAN L. HOLT (CA SEN 238198) STUTHAN, TREISTER & GLATT, P.C. 1901 Avenue of the Stars, 1 2 th Fl. Los Angeles, CA 90067

(310) 228-5600
Special Counsel for the OHC Liquidation Trust

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EXHIBIT D

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UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE

IN RE: OAKWOOD HOMES CORPORATION, et al., Debtors.

. . . . . . .

Chapter 11 Case No. 02-13396(PJW) Jointly Administered Sept. 25, 2006 (11:30 a.m.) (Wilmington)

TRANSCRIPT OF PROCEEDINGS BEFORE THE HONORABLE PETER J. WALSH UNITED STATES BANKRUPTCY COURT JUDGE

Proceedings recorded by electronic sound recording; transcript produced by transcription service.

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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 Honor.

THE CLERK: Please rise. THE COURT: Please be seated. MR. MILLER: No problem. Sorry for the delay.

Good afternoon, Your

For the record, Curtis Miller from Morris, Nichols,

Arsht & Tunnell, on behalf of the OHC Liquidation Trust. We're here today for the omnibus hearing in this matter. Does Your Honor have a copy of the agenda? THE COURT: Yes. MR. MILLER: Okay. The first six items on the

agenda are all continued to a future omnibus hearing, so unless Your Honor has questions, we'll just move to 7. THE COURT: Okay. MR. MILLER: Agenda item number 7 was the motion of the Liquidation Trust to extend the claims and the claims objection deadline, and I understand from speaking with Your Honor's clerk that you've entered that order? THE COURT: Yes. MR. MILLER: Okay. Thank you, Your Honor. Agenda

item number 8 is the first of two contested matters listed as going forward. Agenda item number 8 is the Liquidation This was a

Trust's ninety-sixth omnibus objection to claims.

substantive omnibus objection and is going forward today with respect to a response received from Rudolph Rambo who is also in court today, Your Honor. The Trust objected to Mr.

Rambo's claim on the basis of § 502(d) of the Bankruptcy

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Code.

The Liquidation Trust filed a preference action

against Mr. Rambo and received a judgment against him on March 28th of 2006. As set forth in the affidavit attached to

the ninety-sixth omnibus objection, Mr. Rambo has not paid back the avoided transfers to these estates. Thus § 502(d) Mr.

of the Bankruptcy Code requires their disallowance.

Rambo has raised with me a question of whether or not he received adequate notice of the preference action, and I just wanted to briefly go through that with Your Honor to establish a record. First, the complaint and the summons

were served to Mr. Rambo at the same address at which the Trust served the ninety-sixth omnibus objection, thus, the Trust admits that if he was able to respond to the ninetysixth omnibus objection, he also received adequate notice of the complaint and summons. Despite this notice, Your Honor,

Mr. Rambo never complied with the ADR requirements that were entered. He never responded to the Liquidation Trust

discovery requests, and he never responded to the Trust's request for entry of default judgment. In addition, Mr.

Rambo's attorney, an attorney by the name of John Ethridge, sent various letters to the Trust's former counsel demonstrating that he did actually have notice of the preference action, and I have copies of those letters. THE COURT: Was an answer filed? MR. MILLER: No answer was ever filed, and that's

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why a default judgment was eventually entered.

And I have

copies of those letters from his counsel, if you would like to see those, Your Honor. THE COURT: Yes, let me see them. MR. MILLER: May I approach? THE COURT: Yes. MR. MILLER: The first three letters are from Mr. John Ethridge from the Gardner Law Firm in Florence, South Carolina, and the letters are dated October 21, December 3rd, and December 28th of 2004. The fourth letter in that packet,

Your Honor, is a letter from King & Spalding, the Liquidation Trust's former counsel that was handling the preference actions and was sent to both Mr. Ethridge and Mr. Rambo letting them know that he was in default by failing to respond to the complaint or file and otherwise respond to the pleading, and that was sent on December 31 of 2005. Despite

these notices, he never answered the complaint, never filed THE COURT: I'm sorry, when was the complaint filed? MR. MILLER: The complaint was filed on November 12th, 2004. THE COURT: Let's see. letter. MR. MILLER: Yes, Your Honor. THE COURT: Was this in response to a demand letter? MR. MILLER: I believe so, Your Honor. Our firm was I'm looking at the first

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not handling the preference actions, but I was forwarded these by counsel that was. THE COURT: Okay. MR. MILLER: And just a final note, Your Honor, the order that's previously been entered for other claims that were disallowed pursuant to § 502(d) provides a mechanism for the reinstatement of the claims if Mr. Rambo subsequently pays back the ordered transfers, and that's the same order, the proposed order that we have here. THE COURT: Okay, and how much was the judgment for? MR. MILLER: I believe it was in the range of $164,000, but I'm not sure if I have it with me. I don't

think I brought a copy of the complaint, but I think it was around $164,000, Your Honor. THE COURT: Okay, and what is this claim? MR. MILLER: There are two proofs of claims THE COURT: Okay, I see them. MR. MILLER: - that he filed. I think there's only I have the second

actually one that's in the agenda binder. one if you'd like to see it.

The claims are 3868 and 3869,

and I can bring up the second one if you'd like to see it, Your Honor. THE COURT: Okay. Okay. I already have 3868 in the

book, and then there's a smaller one; isn't there? MR. MILLER: Yes, I -

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THE COURT: Okay, I see both of them. MR. MILLER: 3869 is the THE COURT: I see both of them, the other one for

MR. MILLER: Yes, Your Honor. THE COURT: Okay. And that's essentially it from

Mr. Rambo, I believe, would like to make some

comments to the Court. THE COURT: Mr Rambo? MR. RAMBO: Yes, Your Honor. THE COURT: Do you wish to be heard? MR. RAMBO: Yes, sir if you don't mind. THE COURT: Yes. MR. RAMBO: How are you doing this morning? right, Your Honor, as you can see, they put a judgment against me, to start with. I'm just a little uncomfortable All

because I don't know too much about all this, and my lawyer, he's a good friend of mine. He's a criminal lawyer, so he

don't know too much about it, but he's just doing it to help me out is all he can. As you see, with the first three

pages, of these here letters that we've been writing, we've been pleading with Spalding to help us out, but the matters, you know, before all this judgment stuff come about, and if you'll read the letters, you'll see how hard that we was trying to work with these people, trying to get them to, you

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know, help us out, and all of a sudden, they send us this paper, and that was the end of it. respond to this line. We didn't know how to

My lawyer said we didn't receive this

here, but, you know, they got it here, so undoubtedly we must have got it somewhere, and it got mixed up or lost. still don't know for this here. But we

They filed a judgment on for

$164,000, that's for the last 90 days prior to them filing for bankruptcy. days. But they hadn't paid me for the following 45 I worked

You know, I worked strictly labor for them.

in them hot mobile homes trashing them out, fixing them back up, you know, degree weather, you know 120, 140 degrees. my gosh, they're small people. They work by the hour, and Oh

the only thing was, we just worked, you know, strictly labor, and for them to try to do us - I talked to a lady named Betty Jones that was handling this thing, and she told me the only way I could get out of this right here is to give her the social security numbers, the addresses, and the names of my employees so she could file a judgment on them. I come from, we don't do things like that. for my guys that work for me. for me. Well, where

I'm responsible

Therefore, owe was responsible

That's the way my granny always told me, an honest

dollar for an honest hour, and that's the way we always done it with them. I don't see it right, you know, for them

putting a judgment on me for $164,000 because it will take 20 years for me to pay that off. I work by the hour, you

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know, and that's just the way it is, and they owe me $72,000 - well, minus the little over 10,000 they've already paid me, you know, over the last four years, and this is just not right, and my lawyer told me I'm at the mercy of your judgment, whatever you want to do to me that's what we have to live with, but right's right, and wrong's wrong, and what they're trying to do to me is wrong. THE COURT: Well, you were represented by counsel, and counsel was certainly put on notice that if they didn't respond default judgment would be entered. MR. RAMBO: He does have a phone number for you to call in THE COURT: Pardon? MR. RAMBO: He can be reached right now where he says he doesn't have a copy of this default letter in the file at all. THE COURT: Well, but he certainly had knowledge of the claim being asserted and - let me just look at the second letter. MR. RAMBO: Yes, sir, if you're reading it, it's like we're trying to ask for all the help we can get, and they don't want to help us because we wrote them three different times, and they never wrote us back, and then all of a sudden we get this here default letter thing. We still

don't know what to do with it, you know, we're still a shot

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in the dark here. THE COURT: Well, I'm looking at the December 3 letter which was after the November 12 complaint was filed. So, I have to assume that your counsel received that complaint, and the address is on all the - all the letters are consistent with your attorney having knowledge MR. RAMBO: Yeah, just my attorney's, mine it's not. THE COURT: Pardon? MR. RAMBO: I said, my address was not correct on here, and they do know my correct one because they sent it to my post office box all the time. Well, the only thing I'm

telling you, Your Honor, we tried to talk - even after I left from here, I even tried to contact the people. through his office to start with, I do believe. the guys that was up here. I went I talked to

I can't exactly remember the name

because I didn't write them down, for some reason, but none of them wants to help us out whatsoever, at all. You know,

they told me, don't do nothing here, the last time I was here. Don't say nothing or anything, we'll just get it Here I am again. I'm 600 miles from home, still My lawyer don't even know what

postponed.

don't know what I'm doing. we're doing here.

All in fact we want -

THE COURT: It's your lawyer's responsibility to know what's going on. MR. RAMBO: He's just a good friend. He's not

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getting paid.

He's doing it for me free because I can't

afford an attorney, and the guys up here at Delaware that called me and they said, for the $164,000 judgment, that they got on me, which is incorrect to start with, because they don't - I didn't receive $164,000 in three months from them. That's only in 45 days, you know, if you count the time unless they're counting the money they owed me too, you know, against it, but it's not money they paid me for the 90 days, because that's incorrect. If you see their record you'd find

that out because I only made - in the last 90 days I worked for him, Your Honor, I think I cleared about $100,000 - Well, I didn't clear it, but that's what we turn, plus what they owed us, but I had to pay off all my guys, and I went bankrupt myself, you know, but I didn't file bankruptcy. just went out of business, and I'm out of business. So, I

therefore, them putting a judgment on me and me worrying about our, that means I can't own nothing the rest of my life for my three kids or nothing, for my wife, or anything. is just wrong. Please just help me, that's all I ask. Your lawyer This

THE COURT: Yeah, I can't help you out. was on notice and a default judgment was entered.

MR. RAMBO: We didn't never see this default judgment, Your Honor. We wrote these letters, and they never If not for that one little old The only way for me to

responded o none of them.

lady, and she just told me how I was.

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get out of this here is to give her the names and numbers of all the guys that worked for me, and they'll file a judgment against them, and I couldn't do that. have got families too. we slaved for Oakwood. asking them for a job. Because those guys You know,

This is not humanly right.

You know I didn't go to Oakwood They tracked me down for three weeks They asked me to do

to ask me to do this, to help them out.

everything for them, and I did, and the last 30 days prior to them filing bankruptcy, this was the notice I got for me. Rambo, something's coming up, within 30 days. house we got in the field finished up. as you can and get it done. We need every

Please work as hard

My guys worked anywhere from 12

to 16 hours a day in this hot, heat and cold where they was at. This is not right, you know, and I don't know why people You know, this is ridiculous.

think it is, but it's not.

You know, I can understand not paying me my money that you owed me, for them not paying money they owed me. Don't go

back and try to get me to pay them something that I don't owe them, that I earned, hard. I didn't show up for pay before.

I worked and I sweated and I froze my butt off for it, that's all there is to it. I just ask for mercy. I can't help you

THE COURT: Okay, well, I'm sorry. out. You were represented by counsel, and -

MR. RAMBO: Well, would you mind calling him? THE COURT: Pardon?

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MR. RAMBO: You can reach him by phone.

He'll show

you there's nothing, we never did get this default paper. Notice of default. I got 16 stacks of paper, this here high,

where they sent me, and I've looked through every one of them, and it's not in them. stacks of paper. I mean, literally, stacks and

And I've saved everyone of them. The only comment I can add, Mr.

THE COURT: Okay.

Rambo, is that in bankruptcies, a lot of people get hurt, including a lot of small businesses. MR. RAMBO: So, it's all right for them to come back on me like that? I can understand not paying me the money They

they owe me, which is small compared to what they want. want $164,000, which is not correct. Honor, it's not correct.

I'm telling you, Your

If they want to call it even

straight right now, I done took my lick, I done wrote mine off. I know I'll never get it, but don't go after me and my

future for my family just because it's not right. THE COURT: Okay. The only thing I can suggest to you is maybe you ought to file a motion to lift the default judgment and to reconsider your case on the merits. MR. RAMBO: How do I do that? THE COURT: You'll have to consult with a lawyer to

MR. RAMBO: So I have to come to Delaware lawyer for

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THE COURT: Not necessarily. MR. RAMBO: So, just tell them I want to file it, well, it's already put against me. THE COURT: Well, you're going to need legal advise to do what I'm suggesting you do. MR. RAMBO: Okay, Your Honor. MR. MILLER: Your Honor, I have a proposed order, if I may approach? THE COURT: Yes. MR. MILLER: Your Honor, the next item on the agenda

THE COURT: Let me hand these documents back to you. MR. MILLER: Sure. MR. RAMBO: Excuse me, Your Honor, can I say one more thing . . . (microphone not recording). part of this too? That's also

So they're going to expunge what they owed

me and then I still got to turn around . . . right? THE COURT: If you file an application to have the default judgment vacated and if you have a meritorious defense, and I allow you to make that defense, then that judgment will be vacated or dismissed and that will also trigger a reinstatement of your proof of claim. I don't know

what other objection they would have to your claim, but that issue would also come back for reconsideration. MR. MILLER: Thank you, Your Honor. Yes.

And just for

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the record, the order, the proposed order for the ninetyeighth omnibus objection does provide for a reinstatement of the claim. It set certain time provisions on the

reinstatement so that the Trust can continue to try to wind down the estate. THE COURT: Okay. copy of this order. MR. MILLER: I will, Your Honor. THE COURT: Okay. MR. MILLER: The next agenda item is the ninetyeighth omnibus objection, this is agenda item number 9. was a non-substantive claims objection. The Liquidation This Thank you. Well, make sure Mr. Rambo gets a

Trust received three responses to this omnibus objection, one of which is going forward, and this is a response - It's listed as response (a) from a Michael Asby. The Trust

objected to his claims being late filed, and the debtors did provide Mr. Asby with actual notice of the claims bar date, and I have an affidavit from the claims agent, BSI THE COURT: I'm sorry, when was the bar date? MR. MILLER: The bar date was January 7 of 2003, Your Honor, and this claim was filed on June 5 of 2006, over three years past the claims bar date. THE COURT: And you say actual notice was served on this? MR. MILLER: Yes, Your Honor, and I have an

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affidavit for you if you'd like to see it. THE COURT: Yes. MR. MILLER: May I approach? THE COURT: Yes. MR. MILLER: It `s the affidavit of Cathy Gerber of Bankruptcy Services, LLC, and I've highlighted the page for you, Your Honor. I also spoke with -

THE COURT: Let me ask you a question. MR. MILLER: Sure. THE COURT: The bar date notice was sent out February 12 of `03, and looking at the claimant's response, it appears that he didn't notice the problems until October of `05. Why would you have him on the mailing list in

January of `03? MR. MILLER: I'm not exactly sure of the reason why he was on the original claims or on the bar date notice mailing list, but he did also file a prior proof of claim, and he filed that claim on March 13th of `03, and that claim was disallowed pursuant to another order, Your Honor, not on the basis of late filed but on a substantive claim objection. THE COURT: Okay, that was filed when? MR. MILLER: March 13th of 2003, Your Honor. THE COURT: Of `03? MR. MILLER: Of `03. THE COURT: I gather it was for a different amount.

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MR. MILLER: It was.

But the Trust admits that that

clearly shows that he had notice of the bar date. THE COURT: And what was the basis for disallowing the first proof of claim? MR. MILLER: The first proof of claim was - the asserted basis on the proof of claim was that the interest rate that he was being charged was not the correct interest rate amount, and there was an allegation that the loan documents were forged. It was settled, essentially, out of

court, and pursuant to that, he agreed to withdraw the claim or just let the Trust move on with the objection, which is what happened. The basis -

THE COURT: I'm sorry, when was the settlement reached regarding the first proof of claim? MR. MILLER: It would have been right around March 13th of `03, Your Honor. I didn't handle it, and that was It essentially

based on looking at the omnibus objection.

said that the claim had been settled out of court, and that was the basis for it. Unfortunately, I didn't bring a copy

of the order which had the claims that were disallowed on it. THE COURT: But in opposition, he indicates that he first discovered this problem in October of `05. MR. MILLER: Yes, Your Honor. THE COURT: Which obviously he didn't have a claim until October of `05, and the bar date had long since passed.

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MR. MILLER: Well, that is what he says in his response, Your Honor. My understanding is that he filed a His

claim against his insurance company for water damage.

insurance company came out, inspected it, and said it was a manufacturer's defect. Because of that, his claim was

denied, I believe it was American Bankers, and then he filed this proof of claim. I discussed it with him. I think he

purchased the home in 1997, and so he's asserting a warranty claim against Oakwood for a home that he purchased in `97. My understanding is Oakwood never gave a manufacturer's warranty longer than one year, so he wouldn't have a manufacturer's warranty claim anyways, and I discussed both this and the fact that it was late filed with him and told him he could appear by phone, and I don't believe he did choose to be on the phone today. THE COURT: Okay, so you say there was only a oneyear warranty on this? MR. MILLER: I believe the manufacturer's actual warranty was only one year. Sometimes the independent third

party retailers would give longer warranties, maybe like a five-year warranty or something like that, but the manufacturer themselves gave one-year warranties on the homes. THE COURT: Okay, well, I think the - I don't think this claim should be disallowed as time barred. I think, if

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anything, it should be disallowed on the basis of no liability. MR. MILLER: Well, the Trust is more than willing to file a second objection to the claim on the basis of no warranty. THE COURT: Why don't you do that. MR. MILLER: Okay. THE COURT: And then you can spell it out in writing to the claimant. MR. MILLER: Yes, Your Honor. THE COURT: Okay. MR. MILLER: The last item on the agenda is a status conference in the adversary proceeding with OHC Liquidation Trust versus Credit Suisse First Boston, and this matter is being handled by Marla Eskin for the Trust, and so I'll just hand this over to her, Your Honor. THE COURT: Okay. MS. ESKIN: Good morning, Your Honor. Campbell & Levin for OHC Liquidation Trust. be handled by Tony Castanaris. pro hac vice to the Court. THE COURT: Okay. MR. CASTANARIS: Good morning, Your Honor. I am Marla Eskin,

This matter will

He has already been admitted

Tony Castanaris of Stutman, Treister & Glatt for the OHC Liquidation Trust, and, Your Honor, my associate Whitmon Holt

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who is a recent admittee to the bar happened to be in the neighborhood on another matter and came to court this morning. morning. THE COURT: Okay. MR. CASTANARIS: Thank you, Your Honor. Your Honor, It's my pleasure to introduce him to the Court this

we have - I think counsel for Credit Suisse should probably appear as well. MR. OSNATO: Good morning, Your Honor. Michael

Osnato from Linklakers on behalf of Credit Suisse. THE COURT: Okay. MR. CASTANARIS: Has Your Honor had an opportunity to review our joint status report? THE COURT: Yes, I did, briefly. MR. CASTANARIS: And, Your Honor, I think we are pleased to report that we've resolved most of the matters that - the discovery disputes before now. THE COURT: So I can get rid of 50 pounds of paper. MR. CASTANARIS: You're going to get rid of 50 MR. OSNATO: You can recycle that. MR. CASTANARIS: - and I think you've got a few that - We tried to summarize the one remaining dispute in our joint submissions that are Exhibits A and B, and aside from those matters, I don't know how Your Honor would like us to address those, if at all, this morning, but aside from those

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matters there are two other matters that we would like the Court's guidance on. As Your Honor may see from the joint

statement, we have agreed to additional schedule, if it's agreeable to the Court, through the briefing of dispositive motions in the case. We, on behalf of the Trust, would like,

if it's possible, to get additional schedule of pretrial and trial, if it's convenient to the Court. I'm prepared to The

address the reasons for that, if the Court would like.

defendant would prefer to defer that matter till later, and then there's one other issue regarding the number of depositions, which I think we're very close to agreement on. I would like to address that very, very briefly. I think

probably counsel would like to address it as well, and I think that it's not a matter that's been the subject of a discovery dispute, but we raised it because we didn't want to come here to Your Honor and tell you we resolved everything and then find out we had another dispute later and have to file another motion, and I believe that if the Court gives us a few words of guidance, it will help us reach an actual agreement on the matter rather than having a dispute. THE COURT: Okay. So you want more depositions?

MR. CASTANARIS: Your Honor, I don't know - It's confusing to us whether the FRCP rule limiting depositions to 10 applies in the Bankruptcy Court in Delaware or not. District Court Local Rule it doesn't apply at all. It's By

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unclear to us whether it applies here. following position: depositions.

We are in the

We are considering taking a few

We have taken four, and I believe the defense

has taken two at this point MR. OSNATO: Two. MR. CASTANARIS: - and has two more scheduled for -

one more scheduled this week and then two more scheduled in a couple of weeks. We are looking at about, something between

four and six additional depositions of the defendant and probably something like three or four potentially of third parties. So, we're looking at probably 13 or 14. I'm not

quite sure what the defense plans.

I raised this with the

defense because I thought it might possibly become a subject of dispute and we'd try to resolve it, and we've gotten this far with it, Your Honor. We ask that we just agree that we I don't think, if

be able to take a maximum of 15 each.

there's an agreement to that, that I'm going to use them, but just would avoid the need to come back here if there's a dispute. The defense has agreed to let us take 12 and then

if there's anything else, to address it on a case-by-case basis. My dissatisfaction with that is, I don't think any

lawyer wants to be in a position of having to ask the other side for permission to take a deposition or to explain why, and I think in good faith, Your Honor, we've resolved almost everything, and I don't think that we're going to have any

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bad faith on anybody's side, and I think we have a very good relationship at this point. I don't intend to take any

depositions I don't need to take, but I don't want to have to come back here with a dispute about it, so I would ask for the latitude within 15. I don't think I'll use them all, and

if the Court would give us some guidance on this, I think we will resolve it ourselves. MR. OSNATO: And, Your Honor, to provide some context to what Mr. Castanaris has put forth. The reason why

we have settled on 12, Your Honor, is although this is a complex case, admittedly, the cast of characters in this case is relatively small, and our concern is that if the number sets at 15, Your Honor, inexorably that will be the number of depositions taken when it's not necessary. So we propose to

go above the ten limit, give them two additional depositions, and, Your Honor, we fully would entertain any request in good faith for depositions beyond 12, but we would prefer to have a firm cap so that between now and November 30th, which is when fact discovery is closed, the parties focus on discovery at hand, conduct very focused depositions, and move on into expert discovery. That, Your Honor, is the basis for our

willingness to settle at 12. MR. CASTANARIS: Your Honor, I only say in response that if you told me that the ten deposition rule doesn't apply at all because of the local rules, or you said you can

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take a thousand if you want to, Mr. Castanaris.

I'm only

probably going to take 12 or 13 or 14, but I can't be certain today whether it is 12 or 13 or 14, and I just don't want to have to come back here with that, Judge. I'm not going to

take any depositions I don't think I need to take, but I must say, Your Honor, within my office, it's under discussion right now of what additional depositions we need to take. really haven't come to a final conclusion on it. I just We

don't want to have to come back to Your Honor with a motion. That's where we are. THE COURT: Well, there's not much difference between 12 and 15. So I'll allow 15, but with the

observation that I would hope that to the extent you're taking needless depositions, your client would step in and say, What are you doing? MR. CASTANARIS: I think that's clear, Your Honor. We have a very active client in the case, and I think that that would occur. THE COURT: Okay. MR. CASTANARIS: That leaves us then with the other two matters, Your Honor. The one that we provided the two

four-page submissions on and the issue of what additional scheduling should occur. THE COURT: Okay, let me hear from you briefly on the remaining issue that you summarized.

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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 defenses?

MR. CASTANARIS: All right, Your Honor. I'll go first.

I think

The issue, Your Honor, is our attempt to take

some discovery on affirmative defenses provided by defendant, and I want to focus - there are a lot of affirmative defenses, but I want to focus and our submission basically focuses on specific ones because a number of them are really sort of legal defenses, and a number of them are basically denials of insolvencies. THE COURT: Are there any affirmative defenses that were not asserted? MR. CASTANARIS: I'm not certain, Your Honor. THE COURT: I mean, in the universe of affirmative

MR. CASTANARIS: Well, I mean, there's no contributory negligence or no assumption of risk, but on the other hand - okay. I mean there are some affirmative

defenses that do exist, but I think Your Honor's observation implicitly shows that some of these may be kitchen sink sort of affirmative defenses, and I think all lawyers have thrown in waiver, estoppel, and latches in answers, and if there's I think one of two things is true. Either there is substance

behind these allegations or there is not, and if there's not, then I think the defendant should say so forthrightly. If

there is any substance behind them, for example, if somebody said at some point, we waived these claims or did something

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that would constitute an implicit waiver of these claims, all I really want to know is what it is they're claiming it was so I can go take discovery on it, and I think what their position is, is they're not going to tell us that until all fact discovery is closed and all expert discovery is closed, and therefore, I'm never going to take discovery on it. So

if somebody claims to have heard, for example, the trustee of my trust, or an officer of Oakwood say, We waive these claims, some of these claims we've heard that said, I'm never going to know who it was. Or if somebody claims that - if

they claim that by reason of estoppel, they acted in detrimental reliance and were damaged by it, I'm never going to know what that detrimental reliance was or who claims to know about it until after discovery, and I simply think that the rule - the spirit of the rules is that one takes discovery of claims and defenses during the discovery period and not after discovery is closed, and it applies as much to claims as defenses, and to me it's just as much as if we had alleged in this case that they trespassed upon land, and they have now asked us what land, who committed the trespass, and when did it happen, and we said, we're not going to tell you until discovery is closed. I don't think that's the way They have put up a big

discovery is supposed to work.

strawman that we're asking them to supplement this every five minutes. We have never asked them to supplement it. All I

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really want to know is, what they now know so that I can take discovery on it. That is essentially our position on this

dispute, and it applies, really, to waiver, estoppel, latches, and the 547©) defenses that speak, for example, of, to the extent that they have knowledge of their own ordinary course of business, they should have that knowledge now, and I want to know who it is at their place of business, if we dispute it, that I can take that deposition or I can find out what documents support it. Whatever they know about it now,

they don't tell us, but they should know something about it now if they pled it. Thank you, Your Honor.

THE COURT: Okay. MR. OSNATO: Your Honor, at the risk of stating the obvious, this is not a complicated issue, and if I may, just take a step back, the motion before the Court that this issue pertains to does not go to these four affirmative defenses alone. It goes to a contention interrogatory that says to

defendants, Marshal all of the facts that underpin your affirmative defenses and tell us what they are. And in

conjunction with that, give us a 30(b)(6) deponent, a fact witness that you will prepare as to all of the legal arguments that underpin it, narrow the facts, and also give us that witness. So the reason why we objected is because we

thought that was extraordinarily burdensome and a duplicative way to proceed, and instead, consistent with the cases in

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this Circuit and in fact leading treatises, we said, There will be no surprises here. The parties know what the claims They're perfectly They've done

are and they know what the defenses are.

capable of going out and conducting discovery.

that, and if there are particular claims or defenses that either party is concerned about, they have the wherewithal to make targeted requests or ask specific questions in depositions, Your Honor. Now, if we can, and I'm pleased

that the dispute has crystalized around these three - or excuse me, four defenses. them. We can talk for a moment about

I think that there's a fundamental disconnect here,

Your Honor, between how affirmative defenses get pleaded and therefore proven or not proven in the course of discovery. Our job as defendants is to look at the claims in the complaint and make an informed assessment about what we think discovery could yield and then to go out and attempt to gain facts to either support or not support those defenses. We do

that for a couple of reasons, chief among them, Your Honor, is the notion of waiver. If at some point in this case we

learn that someone from Oakwood waived this claim, we would have done our client a great disservice by not having put it in as an affirmative defense, and to draw an analogy, Your Honor, to claims. When Your Honor decided the motion to

dismiss in this claim Your Honor rightfully cited notice pleading. It's enough to put the other party on notice of

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your claims so they can go and conduct discovery, and as to these four affirmative defenses, we're not stonewalling, Your Honor. We're happy to entertain discovery requests that go If counsel is concerned that the chief

to these issues.

executive officer of Oakwood waived the right to one of my client's employees, there's nothing that constrains him from in a deposition saying, Did anyone from Oakwood ever waive a right? witness. If not, cross it off and you move onto the next The reason, Your Honor, why we think what we're

proposing is fair and that is to answer consolidated mutual contention interrogatories at the close of discovery is, it's sensible and efficient, and importantly, Your Honor, the parties in this case have an agreement that if this case proceeds to trial, no witness will be put on by either side unless the adversary has an opportunity at pretrial to depose them. So there's not a package of affirmative defenses that At

we're keeping off to the side to spring on them at trial. trial every witness will have had the opportunity to be deposed, and if there are particular questions about

defenses, we will gladly let plaintiff's counsel inquire into them. Finally, Your Honor, if I could just speak to the Discovery on that point is underway.

ordinary course issue.

We've produced a massive amount of documentation that goes to payment terms in the course of dealing between the parties. The reason why we hesitate at answering a contention

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interrogatory at this point, Your Honor, is really twofold: (A) we anticipate that we may use experts to help establish that defense in a particular industry standard. We can't

answer an interrogatory on that point because that discovery is many months away, and to the extent we put a witness on at trial who will speak to ordinary course, they will have had the opportunity to have deposed that individual, and we will tell them in advance THE COURT: Well, in response to that interrogatory on ordinary course, I think an appropriate response would be, We're going to retain an expert who will testify to these facts. MR. OSNATO: Couldn't agree more, Your Honor. THE COURT: At some point we'll identify that expert, show you his report, and you can depose him. MR. OSNATO: Could not agree more, Your Honor, and ultimately where we end up is, the parties should go through comprehensive and fair discovery, both fact and expert, and at some point, well in advance of trial, 60 days, 90 days, 120 days, exchange comprehensive mutual contention interrogatories that say, List all the facts that you intend to prove at trial as to each claim or defense. At that

point, Your Honor, if in good faith we conclude the record has not yielded evidence of latches, of course, we're going to withdraw that claim. We're merely pleading those

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