Free Appellee's Brief - District Court of Delaware - Delaware

Case 1:07-cv-00616-SLR

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

In re:

Chapter 11

STONE & WEBSTER , INC.

et at.

Case No. 00- 2142

(PJW)

Debtors.

Jointly Administered

THE SHAW GROUP , INC.
Appellant
- against -

A. No. :

07- 00616

(SLR)

THE SWE&C LIQUIDATING TRUST
Respondent.

RESPONDING BRIEF OF THE SWE&C LIQUIDATING TRUST TO THE MOTION OF THE SHAW GROUP INC. TO
SUPPLEMENT RECORD ON APPEAL rD. I.
151

1 The debtors are the Consolidated SWINC
more particularly set forth in Article VII(B) of the Third Amended Joint Plan of the Debtors in Possession , the Official Committee of Unsecured Creditors , Federal Insurance Company, Maine Yankee Atomic Power Company, and the Official Committee of Equity Security Holders with Respect to (I) Stone & Webster , Incorporated and Certain of its Subsidiaries and Affiliates and (II) Stone & Webster Engineers and Constructors , Inc. and Certain of Its Third J oint Plan ), certain debtor subsidiaries of Stone & Webster , Incorporated are merged into Stone & Webster , Incorporated , and their estates have been Consolidated SWINC Estate; and certain debtor subsidiaries of Stone & Webster Engineers and Constructors , Inc. are merged into Stone & Webster Engineers and Constructors , Inc. , and their estates have been substantively consolidated to become the Consolidated SWE&C Estate. As the Effective Date of the Joint Plan , all of the assets of the transferred to the SWE&C Liquidating Trust.
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TABLE OF CONTENTS
Page

1. INTRODUCTION AND CONCISE STATEMENT OF FACTS ............................................

II. NATURE

III.
IV. ARGUMENT

V.
TABLE OF AUTHORITIES
CASES
Exco Resources,

Inc. v. Milbank, Tweed, Hadley McCloy LLP (In re Enron Corp.), 02 Civ. 5638 (BSJ), 2003 U. S. Dist. LEXIS 1442 (S. Y. Jan. 28 , 2003) .................

EXDS, Inc. v. Ernst Young LLP (In re EXDS, Inc.), 316 B. R. 817 (Bankr. D. Del. 2004) ................................................................................ 4

In re Chambers Dev. Co.
148 F. 3d 214 (3d Cir 1998) ............................................................................................. 4

In re Neshaminy Office Bldg. Assocs.
62 B. R.

798 (E. D. Pa. 1986)............................................................................................

Metro North State Bank v. Barrick Group, Inc. (In re Barrick Group, Inc.),
100 B. R.

152 (Bankr. D. Conn. 1989) ............................................................................. 3

New Hampshire v. Maine 532 U. S. 742 (2001)..... ..... ........... ......................... ...... ..................... ........... ..... ..........
Saudi American Bank v. Shaw Group, Inc. (In re Stone

Webster, Inc.), Civ. No. 04- 834- SLR , 2005 U. S. Dist. LEXIS 7912 (D. Del. May 3 , 2005) .................... 4

United States v. Pelullo
399 F. 3d 197 (3d Cir. 2005) ............................................................................................

RULES
D. Del. LR 7. 3 ......................................................................................................................... 4

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The SWE&C Liquidating Trustee (" Trustee ), on behalf of the
Trust (" Trust" ),
as successor- in-

interest to plaintiff Stone & Webster

SWEC" ), hereby responds to the Motion Of The Shaw Group Inc. To Supplement Record On

Appeal (" Motion

). In opposition thereto ,

the SWE&C Liquidating Trustee states as follows:

I.
The Shaw Group, Inc. (" Shaw ) seeks supplementation of the appellate record with the
Debtors ' Disclosure Statement" from the underlying bankruptcy case , even though Shaw did
not argue the relevance of the Disclosure Statement in the bankruptcy court , did not ask the

bankruptcy court to consider the

s Motion To

Intervene and , in a final and fatal defect to its Motion , failed to ask the bankruptcy court if the
Disclosure Statement would have been relevant in considering the Motion To Intervene.
Shaw s argument is a transparent ploy to attribute an irrelevant statement , lacking any

foundation , to the Trust - which

accomplish this goal , Shaw first claims that the Trust created the need to supplement:

In its Responding Brief, the Trust for the first time rejects the admission by the Debtors ' former Chief Restructuring Officer , James P. Carroll. . first time , the Trust criticizes Shaw for failing to cite any evidence in support of

its statement that both Shaw and the Trust
assume the liability to SAMBA under the Asset Purchase Agreement.
But ,
in fact

, the alleged surprise is entirely of Shaw s making. In its
only

Intervene , Shaw attributed Mr. Carroll' s statements

to the Debtors: "At all relevant times

Debtors have agreed with Shaw that it did not assume the Guaranty or Payment Letter under the
(Asset Purchase Agreement) and have acted accordingly. 3 Then after repeatedly attributing the

2 Motion , ~ 7.

3 Motion To

, June 29 , 2007 (D. 1. 61 (Case No. 00- 2142 (PJW), Bankr. D. Del.)), ~ 22 (A3l8. ) References to page are to the Appendix To The Opening Brief Of Appellant The Shaw Group Inc.
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statement to the Debtors again
supporting intervention: " That

4 Shaw ascribed the

statement is binding upon the Trust since Mr. Carroll was the

Debtors ' principal officer at that time. 5 Until its Answering Brief, in this Court , the Trust has

had no opportunity to respond to this unsupported and insupportable argument.

Shaw does not explain anywhere - not in the underlying Reply, in its Brief to this Court

or ill

Debtors '"

statement (or ,

more

statement of a person who represented the Debtors) is binding on the Trust , which did not even
exist at the time the statements were made and had no ability to contest the statement.

Shaw does not stop with that sleight of hand. Shaw
fact that "the Official Committee of Unsecured Creditors , among others , were co- proponents
of

the Third Amended Plan and related Disclosure Statement " and that " (t)he Official Committee

of Unsecured Creditors were (sic)

' Chapter 11 Case by the
7 Once again

counsel that now

Shaw does not bother to explain the

relevance of these allegations , or cite to any authority that these allegations make the " Debtors

statements binding on the Trust. In fact , no authority exists for Shaw s eccentric theory.

4 The Shaw Group Inc. s Reply In Further Support Of Its Motion To Intervene , July 30 , 2007
(D. 1. 68 (Case No. 00- 2142 (PJW), Bankr. D. Del.)), ~ 3 (" Both the Debtors and Shaw said that contrary to the testimony of both Shaw and the the liability belonged solely to the Debtors Debtors ); ~ 4 (" Shaw. . . assumed the contrary ); ~ 10 (" the Debtors already acknowledged" (emphasis in original)) (A523- A527).

Id. ~ 10 (A528).

See , e. Motion , Exhibit A , at 73 (providing for the creation of the Trust " on the Effective Date " of the " Third Joint Plan " only if and after creditors and the bankruptcy court approved the Third Joint Plan 7 Reply Brief Of Appellant The Shaw Group Inc. , April 11 , 2008 (D. 1. 14), at 17 and n. 27.

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II.
Shaw is appealing from the bankruptcy court' s denial of Shaw s Motion To Intervene in

an action by the Trust against Saudi Arabian Oil Company. By its Motion To Supplement , Shaw

seeks to augment the
Appellant The Shaw

Shaw posits that the " Debtors "

made a

Disclosure Statement supporting the Third Joint Plan that allegedly supports Shaw s arguments
on appeal , and that this statement "binds "
the Trust.

III.
Shaw s Motion is defective
instance about the proper contents of the appellate record.

Shaw has

binding "

the Trust to the " Debtors

",

statements , and judicial estoppel would not arise under these facts because the Debtors did not

succeed in persuading a court to accept the Debtors ' position.

The Disclosure
proposes.

IV. ARGUMENT
Shaw s Motion suffers from a fatal defect: the Motion To
to the bankruptcy court.

See , e. , In re Neshaminy Office Bldg. Assocs.

62 B. R.

798 , 802 (E.

Pa. 1986) (" The Bankruptcy Court resolves disputes over the proper contents of the

record in the first instance. " (citations omitted));

Metro North State Bank v. Barrick Group, Inc.

(In re Barrick

100 B. R. 152 , 154 (Bankr. D. Conn.

I therefore conclude

that the bankruptcy court should
designation of record on appeal played any part in its deliberations ,
and that this court retains

jurisdiction to consider and rule upon
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s objection. "

(citations omitted));

Exco

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Resources, Inc. v. Milbank, Tweed, Hadley
(BSJ), 2003 U. S. Dist. LEXIS 1442 , at *13 n. 3

McCloy LLP (In re Enron Corp.),

02 Civ. 5638

(S.

N.Y. Jan. 28 , 2003) (" On appeal , this Court
, therefore , will
). The

will only consider the record that was before the bankruptcy
disregard any argument or document that appears for the first time on this
bankruptcy court is in

consideration of the Motion To Intervene.
But Shaw s Motion suffers from the even more fundamental defect that it has established

neither the relevance of nor foundation for statements attributed to the " Debtors. "

This Court has

determined already that the " Debtors '" statements are inadmissible extrinsic evidence to prove
the meaning of an otherwise unambiguous contract.

See Saudi American Bank v. Shaw Group,

Inc. (In re Stone

Webster, Inc.), Civ. No. 04- 834- SLR , 2005 U. S. Dist. LEXIS 7912 , at *18-

*22 (D. Del. May 3 , 2005).
Shaw
s failure to articulate a

Debtors ' representative leaves the Trust only to speculate , and operates as a waiver under the
Local Rules of any argument that Shaw might try to raise in reply. See

D. Del. LR 7. 1.3(c)(2)

The party filing the opening brief shall not reserve material for the reply brief which should
have been included in a full and fair opening brief' ).
Ignoring

Debtors "

could bind the

Trust before the Trust even sprang

, the only theory that

implied but left unstated by Shaw is judicial estoppel:
Judicial estoppel , sometimes
inconsistent positions , is a

from asserting a position inconsistent with one that she previously asserted in the
same or in a

inconsistencies , however slight or litigants from playing fast and loose with the courts.

, it is
EXDS,
Inc. v.

In re
Ernst

148 F. 3d 214 ,

229 (3d Cir
817 ,

Young LLP (In re EXDS, Inc.), 316 B. R.

824 (Bankr. D. Del. 2004) (same).

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Judicial estoppel arises only on the satisfaction of several antecedent conditions:
First , a party' s later position must be clearly inconsistent with its earlier position. Second , courts regularly inquire whether the party has succeeded in persuading a court to accept that party' s earlier position , so that judicial inconsistent position in a later proceeding would create the perception that either

the first or the second court was misled. Absent
party' later inconsistent position introduces determinations , and consideration is whether the party seeking to assert an inconsistent position would

derive an unfair advantage or impose an unfair detriment on the opposing party if
not estopped.

United States v. Pelullo 399 F. 3d

197

222- 23 (3d Cir. 2005) (quoting

New Hampshire v. Maine

532 U. S. 742 , 750- 51 (2001)). Without

s theory is

wrong, one is unalterably dispositive: The " Debtors '" did not " succeed(J in persuading a court to
accept that party' s earlier position.
The Debtors '
statement is in a " Summary

of Material
(See

provided solely for the information of those who would vote on the Third Joint
Motion , Exhibit A , at 18 and 23. )
use that Shaw proposes here:
In fact ,

a prominent and early " Disclaimer" precludes the very

The information Amended Joint Plan acceptances of the Third Joint Plan and may not be relied upon for any purpose
other than to make a judgment with respect to , and determine how to vote on , the Third Joint Plan.

(TJhe statements contained in this Disclosure Statement are made only as of the
date hereof, and there can be no

will be correct at any time after the date hereof.

As to contested matters , adversary proceedings , and other actions or
actions , this Disclosure admission of any fact or liability, stipulation , or waiver , as to any plan proponent
but rather as a statement made in settlement negotiations.
(Id.
at iv. )

Shaw s attempt to attribute " Debtors '" statement to the Trust is wholly inappropriate.

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V. CONCLUSION.

Shaw has not made a case to
requests that the Court deny Shaw s Motion.
Dated: April 30 , 2008 Wilmington , Delaware

THE SWE&C LIQUIDATING TRUST

By:

am G. Landis (No. 3407) Kerri K. Mumford (No. 4186) LANDIS RATH & COBB LLP 919 Market Street , Suite 600 Wilmington , DE Tel: (302) 467- 4400 Fax: (302) 467- 4450
- and -

:6JU

tPIffA-i/

Lorraine S. McGowen
Alyssa Englund

ORRICK , HERRINGTON & SUTCLIFFE LLP 666 Fifth Avenue New York , NY 10103- 0002 Tel: (212) 506- 5000
Fax: (212) 506- 5151

- and -

James E. Houpt ORRICK , HERRINGTON & SUTCLIFFE LLP 400 Capitol Mall , Suite 3000 Sacramento , CA 95814 Tel: (916) 447- 9200 Fax: (916) 329- 4900

Counsel to the SWE&C Liquidating Trust

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE
In re:
Chapter 11

STONE & WEBSTER , INC. et at.
Debtors.

Case No. 00- 2142

(PJW)

Jointly Administered

THE SHAW GROUP , INC.

Appellant
- against -

A. No. :

07- 00616

(SLR)

THE SWE&C LIQUIDATING TRUST
Respondent.

AFFIDAVIT OF SERVICE
STATE OF DELAWARE
) SS

NEW CASTLE COUNTY

Michael V. Girello , being duly sworn according to law, deposes and says that he is employed by the law firm of Landis Rath & Cobb LLP , attorneys for the SWE&C Liquidating Trust in the above referenced cases , and on the , 2008 , he caused a copy of the following:

1 The debtors are the Consolidated SWINC Estate and the Consolidated SWE&C Estate. As

forth in Article VII(B) of the Third Amended Joint Plan of the Debtors in Possession , the Official Committee of
Unsecured Creditors ,
Federal Insurance

, Incorporated and Certain of its Subsidiaries and Affiliates and (II) Stone & Webster Engineers and Constructors , Inc. and Certain ofIts Subsidiaries Third Joint Plan ), certain debtor subsidiaries of Stone & Webster , Incorporated are merged into Stone & Webster Incorporated , and their estates have been substantively consolidated to become the Consolidated SWINC Estate; and certain debtor subsidiaries of Stone & Webster Engineers and Constructors , Inc. are merged into Stone & Webster Engineers and Constructors , Inc. , and their estates have been substantively consolidated to become the Consolidated

Committee of Equity

SWE&C Estate. As of the Effective Date of the Joint Plan , all of the assets of the
were transferred to the SWE&C Liquidating Trust.

429. 001-20262.DOC

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RESPONDING BRIEF OF THE SWE&C LIQUIDATING TRUST TO THE MOTION OF THE SHAW GROUP INC. TO
SUPPLEMENT RECORD ON APPEAL (D. I.
15)

to be served upon the parties identified on the attached list in the manner indicated.

Y:

Michael V. Girello

fir-, 2008.

SWORN TO AND SUBSCRIBED before me this

Notary Public

d~(Jlt~~C/
LISA B. LESSIN

NOTARY PUBLIC STATE OF DELAWARE
My Commission

2010

- 2429. 001- 20262.DOC

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SERVICE LIST
Stephen E. Jenkins , Esq. Gregory A. Taylor , Esq. Catherine A. Strickler , Esq.
Ashby & Geddes

500 Delaware Avenue , 8th Floor Wilmington , DE 19801
(Counsel to the Shaw Group)

Lorraine S. McGowen , Esq. Alyssa D. Englund , Esq. Orrick , Herrington & Sutcliffe LLP 666 Fifth A venue New York , NY 10103 (SWE&C Liquidating Trust)

First Class Mail
Dennis A. Meloro , Esq. Greenberg Traurig, LLP
The Nemours Bldg. 1007 N. Orange Street , Suite 1200

Hand Delivery

James E. Houpt , Esq. Orrick , Herrington & Sutcliffe LLP 400 Capitol Mall , Suite 3000 Sacramento , CA 95814 (SWE&C Liquidating Trust)

First Class Mail
Cyrus Benson , III , Esq. White & Case LLP 115 5 Avenue New York , NY 10036 (Counsel to Saudi Arabian Oil Company)

Wilmington , DE 19801 (Counsel to Saudi Arabian Oil Company) Hand Delivery

First Class Mail

429. 001- 19754. DOC