10000019747

11-22820-rdd
Doc 181
Filed 12/05/11 Entered 12/14/11 15:43:43 Pg 1 of 82
Main Document
Page 1
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 B E F O R E: HON. ROBERT D. DRAIN U.S. BANKRUPTCY JUDGE VERITEXT REPORTING COMPANY www.veritext.com UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - -x In the Matter of: THE CHRISTIAN BROTHERS' INSTITUTE, Debtors. - - - - - - - - - - - - - - - - - - - - -x L.W., et al., Plaintiffs, v. CORPORATION OF THE CATHOLIC ARCHBISHOP OF SEATTLE, Defendants. - - - - - - - - - - - - - - - - - - - - -x K.A., et al., Plaintiffs, v. CORPORATION OF THE CATHOLIC ARCHBISHOP OF SEATTLE, Defendants. - - - - - - - - - - - - - - - - - - - - -x United States Bankruptcy Court 300 Quarropas Street White Plains, New York October 25, 2011 10:30 AM Adv. Case No. 11-08321-rdd Adv. Case No. 11-08317-rdd Case No. 11-22820-rdd
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Main Document
Page 2
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 Doc. #21; Objection to Motion Doc. #18; Objection to Motion Doc. #17; Notice of Appearance in Adversary Proceeding Doc. #16; Motion to Dismiss Adversary Proceeding Doc. #21; Debtors' Objection to Motion for Approval and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only Doc. #18; Limited objection of Official Committee of Unsecured Creditors to Motion of the Catholic Archbishops of Seattle for Approval and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to Archdiocese Only Doc. #16; Motion for Approval and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only
212-267-6868
VERITEXT REPORTING COMPANY www.veritext.com
516-608-2400
11-22820-rdd
Doc 181
Main Document
Page 3
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 Doc. #107; Motion to Approve and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only filed by Michael A. Patterson on Behalf of Corporation of the Catholic Archbishop of Seattle Doc. #105; Motion to Approve and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only filed by Michael A. Patterson on Behalf of Corporation of the Catholic Archbishop of Seattle Doc. #100; Debtors' Motion for an Order Authorizing Implementation of Certain Noticing Procedure Doc. #98; Motion of the Official Committee of Unsecured Creditors for Entry of an Order Pursuant to Bankruptcy Rule 2004 Authorizing Examinations and Production of Documents Doc. #83; Objection to Motion to Allow for an Order Establishing Procedures for Interim Compensation and Reimbursement of Expenses of Professionals Doc. #69; Motion for Approval and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Main Document
Page 4
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 Doc. #121; Debtors' Response to Motion of Corporation of the Catholic Archbishop of Seattle Seeking Determination of the Extent of 11 U.S.C. Section 362 Stay with Regard to Edmund Rice Congregation of Christian Brothers-North American Province Doc. #120; Objection of Official Committee of Unsecured Creditors to Motions of the Catholic Archbishop of Seattle for Approval and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only Doc. #119; Response of Official Committee of Unsecured Creditors to Motion of the Catholic Archbishop of Seattle to Seek Determination of the Extent of 11 U.S.C. Section 362 Stay with Regard to Edmund Rice Congregation of Christian BrothersNorth American Province Doc. #116; Motion to Approve 11-22820-rdd The Christian Brothers' Institute Doc. #115; Motion to Approve and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Main Document
Page 5
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 Doc. #139; Amended Agenda of October 25, 2011 Hearing Doc. #127; Opposition Debtors' Response to Objection of Rev. Robert M. Hoatson to Debtors' Application to Employ Tarter Krinsky & Drogin LLP as Debtors' Counsel (related document(s) 83) Doc. #126; Debtors' Limited Objection to the Motion of the Official Committee of Unsecured Creditors for Entry of an Order Pursuant to Bankruptcy Rule 2004 Authorizing Examinations and Production of Documents Doc. #123; Declaration of Michael T. Pfau in Support of Plaintiffs K.A., John Doe, James Doe, T.J. and H.W.'s Response to Motions of the Catholic Archbishop of Seattle for Approval and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only Doc. #122; Plaintiffs K.A., John Doe, James Doe, T.J. and H.W.'s Response to Motions of the Catholic Archbishop of Seattle for Approval and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Main Document
Page 6
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 Transcribed by: Devora Kessin Doc. #139; Amended Notice of Agenda of October 25, 2011 Hearing Reply to Motion in Further Support of Motion for Approval and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only (related document(s) 105, 116, 107, 115) Doc. #136; Debtors' Objection to Motions for Approval and Enforcement of Settlement Agreements Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only (related document(s) 116, 115) Reply to Motion in Further Support of Motion of Corporation of the Catholic Archbishop of Seattle to Seek Determination of the Extent of 11 U.S.C. Section 362 Stay with Regard to Edmund Rice Congregation of Christian Brothers
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Main Document
Page 7 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 BY: MICHAEL A. PATTERSON, ESQ.

A P P E A R A N C E S : TARTER KRINSKY & DROGIN Attorneys for Debtors 1350 Broadway New York, NY 10018
BY:
SCOTT S. MARKOWITZ, ESQ. ANTHONY D. DOUGHERTY, ESQ.
PFAU COCHRAN VERTETIS AMALA Attorneys for Plaintiffs K.A., John Doe, James Doe, T.J. and H.W. 701 Fifth Avenue Seattle, WA 98104
BY:
JASON P. AMALA, ESQ.
PATTERSON BUCHANAN FOBES LEITCH & KALZER, INC., P.S. Attorneys for the Seattle Archdiocese 2112 Third Avenue Seattle, WA 98121
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Main Document
Page 8
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 BY: JUDITH F. GOODMAN, ESQ. GOODMAN & JACOBS LLP Attorneys for Pacific Insurance Co. 75 Broad Street New York, NY 10004 BY: JAMES STANG, ESQ. ILAN D. SCHARF, ESQ. KENNETH H. BROWN, ESQ., (TELEPHONICALLY) PACHULSKI STANG ZIEHL & JONES Attorneys for Official Committee of Unsecured Creditors 780 Third Avenue New York, NY 10017 BY: J. MICHAEL RECK, ESQ. MANLY & STEWART Attorneys for Rev. Robert Hoatson 845 Third Avenue New York, NY 10022
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Filed 12/05/11 Entered 12/14/11 15:43:43 Main Document THE CHRISTIAN BROTHERS' INSTITUTE Pg 9 of 82
Page 9
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 THE COURT:
P R O C E E D I N G S All right; Christian Brothers' Institute?
You all can sit down, unless you're speaking. MR. MARKOWITZ: THE COURT: Good morning, Your Honor.
Good morning. Scott Markowitz, Tarter Krinsky & I have
MR. MARKOWITZ:
Drogin for the debtors and debtors-in-possession.
Anthony Dougherty from my office too and we have Brother Kevin Griffith who is vice president of each of the debtors. THE COURT: Okay. Michael Patterson, Your Honor, on
MR. PATTERSON:
behalf of the Archdiocese of Seattle; from the law firm of Patterson Buchanan. MR. STANG: Good morning, Your Honor; James Stang,
Ilan Scharf, Pachulski Stang Ziehl & Jones for the official creditors committee and members of the committee may be on the phone as well Your Honor. THE COURT: Right; okay. Very well, thank you.
I have an agenda that the debtors' counsel provided. Do you want to go down -MR. MARKOWITZ: THE COURT: Yes.
-- down that agenda? Yes, Judge.
MR. MARKOWITZ:
Number one, the uncontested matter; my understanding is that's uncontested. We had filed a previous motion to
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 10
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
extend the exclusivity periods.
Your Honor had entered some
bridge orders in that matter and the bridge orders limited the -- I think you granted the motion with respect to all the parties, and left it open with respect to the committee. My
understanding is that the committee has no objection and now as time has gone by, that motion only sought an exclusivity period through I believe December 24th. I've seen no objection to
that, we'll probably be in a position to file another motion before that hearing but we think we've established cause; there's no objection. This case is somewhat of a complicated The bar date which
case because of all the moving issues.
we've been working towards resolving, we hope to have a hearing before Your Honor on that soon. claims agent. We've been working with a
There's schools in many states and trying to
come up with the best way to target a bar date on a costbenefit analysis; we can't spend a million dollars on a bar date in this case, Your Honor; we don't have it. So we're working towards that, we've given a draft bar date motion to the committee with various notices, sexual abuse survivor notices, they're somewhat tailored; we've gotten feedback from the committee on that recently; we're in the process of marking that up. So we're making progress on that
front, and we think we're making progress hopefully on other fronts and we think we've established cause; this is our first request for extension of exclusivity and I don't believe
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 11
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
there's any objections. THE COURT: this motion? MR. STANG: committee. Your Honor, the committee did not object to this motion not because of the debtor necessarily established cause, except to the extent that the bar date issues have not fully been resolved and the bar date has run. It would be impossible I do, Your Honor; James Stang for the Okay. Does anyone have anything to say on
in my opinion, for either the committee or the debtor or any party in interest to propose a serious plan to disclosure statement without that being done. Mr. Markowitz then went on to tell you a little bit about where we stand on bar date issues, and he is correct that the debtor and the committee have worked together in a fairly cooperative manner to get down to the very nitty gritty of what the notice will look like, where publication should occur, but his comment that we can't spend a million dollars for the bar date in this case because we can't afford it, frankly is not something that the committee necessarily agrees with. The
debtor is putting together the cost of a publication program. But this debtor operated throughout the United States and operated throughout Canada. It operated in what we can count
in over fifty institutions in the sense that its brothers staffed, administered or owned orphanages and schools where
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 12
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
abuse occurred.
If this debtor is in the process of selling at
least one high school building which will net the estate several millions of dollars and if adequate notice in this case requires that high six figures of noticing be spent, then the committee's going to request that. THE COURT: Okay. All right, I will grant the motion I think there is cause here
to extend the exclusive periods.
and I agree with both the debtor and the committee that primary cause here is the need to get a handle on the claims and in particular, the sexual abuse or related claims which potentially go back several decades. order to Chambers. We'll probably turn to this -- in fact, I think we definitely will turn to this -- issue later in the agenda, but I want to make sure that the parties are focusing on this and in particular, the debtor and the committee. In addition to the bar date, I hope you all are focusing on the issue of how best to liquidate the inevitable personal injury claims that get filed. This potentially a very So you can e-mail that
expensive process and while obviously parties rights shouldn't be stinted as part of that process simply because of the cost, there are good precedents for dealing with personal injury claims on a fair basis that don't lead the parties right into litigation over the claims. And I don't know whether you are
yet focusing on that or you're waiting to see what the bar date
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 13
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
brings in, but I think that just getting the claims in isn't the end of the story by any means and I'm sure you know that. MR. STANG: Honor? THE COURT: No, I just want to make sure that you all Do you want to discuss that now, Your
focus on it and again, I'm not saying that you haven't been; I'm assuming that you are, that that's the next item on your list. The other point on the bar date; I don't want to get into a back and forth on it because I know that you both recognize it's a very important step in the case. But I just
want to remind you that if you know or have reason to know of a claim, that person is entitled to actual notice unless you can't find him. So it's important for the debtors to look back
at their records to see whether in fact there have been notices in some way, shape or form -- and not necessarily just a litigation notice -- so that those people can get actual notice. And then as far as publication is concerned, you know, I'm sure you all are focusing on that, particularly given the experience in prior cases and also tailored to the debtors' connection with specific locations, specific schools and the like. So I guess that's all I really want to say on the bar
date; okay. MR. MARKOWITZ: We understand, Your Honor.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 14
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
THE COURT:
All right. There was another motion -- going
MR. MARKOWITZ:
along the agenda -- we had filed a motion to limit notice to certain types of matters. We had spoken with the committee
about that, the committee had issues with some of it in view of the fact that at this point we don't have tremendous amount of claims. We agreed with the committee, subject to Your Honor's
approval of course, that we would limit our request and submit an order to Your Honor that would limit notice for abandonments of certain personal property and assets of what we deem to be relatively modest value of 20,000 or less. The debtor will be, and has filed applications Your Honor has approved to sell some smaller pieces of property where brothers don't reside anymore; these are empty houses. There's other miscellaneous things like that where there's furnishings and things like, and we wanted to limit the cost of abandoning certain things and the committee is on board with that. So subject to Your Honor's approval in that, we would
just -- we said we would withdraw the request other than that and request that Your Honor enter an order limiting notice on abandonment of properties less that 20,000 -- personal property. THE COURT: So there would be a filing on the docket
describing abandonment? MR. MARKOWITZ: Correct.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 15
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
THE COURT:
Notice to parties who have an interest in
the property, which is why you'd be abandoning it -MR. MARKOWITZ: THE COURT: Right.
-- I'm assuming it's worth 20,000 but
there's a lien on it that's worth more than 20,000; is that the -MR. MARKOWITZ: THE COURT: Right.
-- okay. Or if it might be worth 3,000; if it's
MR. MARKOWITZ:
used furniture and we're going to donate it to the Salvation Army. THE COURT: Right; okay. I mean --
MR. MARKOWITZ: THE COURT:
And then notice to the committee -And then notice of the committee and
MR. MARKOWITZ:
anybody who files a notice of appearance. THE COURT: Okay. That seems reasonable to me. So
it's really more of a disposition motion at this point than a notice motion? MR. MARKOWITZ: THE COURT: MR. SCHARF: Correct.
All right. And Your Honor, we just ask to see the
form of notice before -- form of order -- before it's submitted? THE COURT: Yeah, okay.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 16
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
We'll do that of course.
All right.
Okay, I believe those are -THE COURT: as to value? notice? MR. MARKOWITZ: We're going to describe it; we're And who is going to make the determination
Is it that you're going to describe it in the
going to say generally, you know, five couches and twelve kitchen tables. THE COURT: Okay; all right. That are located a house in Chicago on
MR. MARKOWITZ:
Seeley Avenue or something. THE COURT: All right; okay. And if people want to come look at
MR. MARKOWITZ:
it -- most of the stuff, Your Honor, we think we'll just be donating to local charities in the area. THE COURT: All right. It's relatively modest stuff. Why don't you -- you need to
All right.
identify in the notice if it's going to go to an insider or if an insider is going to pick it up or something like that. MR. MARKOWITZ: THE COURT: Okay.
Okay. Now we're on to contested matters.
MR. MARKOWITZ:
Not in the term under the Bankruptcy Code, necessarily, but in
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 17
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
the term of not on consent. THE COURT: Right; okay. First one was the committee -- was
MR. MARKOWITZ:
their motion, so I guess they could be heard on that. MR. STANG: Good morning, Your Honor.
The committee's Rule 2004 motion addresses a range of discovery that is being sought against the debtors -- the two corporate debtors -- a territorial subdivision of the Congregation of Christian Brothers, which is sometimes referred to as a Province; Mount Sion, which is an entity created for the purpose of funding the expenses of certain brothers who constitute themselves as the leaders of this territorial subdivision; and also two entities which -- civil entities -which provide or hold retirement funding or health and welfare funding for older and ill or convalescent brothers. The Rule 2004 exam has a number of purposes but one of the main purposes is to get a better understanding of the relationship between these various entities. And Your Honor,
throughout today's hearing I'm going to be occasionally saying that I don't know what the relationship is between X and Y and Z, and one entity may be a civil entity under applicable civil American or New York law. Undoubtedly, the debtors will want
to talk about canon law entity, so I just want you to understand that when I talk about entities I'm using that term without any kind of legal conclusion necessarily.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 18
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
So the 2004 exam is meant to understand the relationships between those entities which will drive an analysis as to whether the corporate estates have any kind of legal remedies against any of these entities. From my
experience in other Church-related cases, including one religious order, the Society of Jesus, the retirement funds are a substantial importance to the brothers just given the demographics in aging and it's why we put those two entities within the Rule 2004 exam. The other -- we have been working with the debtor -excuse me -- since I think August on an informal basis to get discovery. For the most part, the discovery we have received
to date has been discovery that was produced in the prepetition litigation that occurred principally in the state of Washington and in Newfoundland, Canada. And plaintiffs'
counsel for the pre-petition litigants are present, Your Honor, and have been of great help to the committee since their clients are part of the committee membership. And today's
hearing you might want to call upon them; they're here both from Canada and from Washington. Your comment about the bar date and the need to give notice to those who the debtor knows about or have known, is also something that is coming out of the informal discovery and will also -- this Rule 2004 exam is essential a mirror of that informal discovery request. We have been concerned since the
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 19
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
beginning of the case -- and have expressed the concern to the debtor -- that they need to go beyond their complaints -- the formal litigation complaints. We have asked them to look at
the personnel files of all of the brothers because the personnel files -- and that term itself, by the way, is subject to interpretation; what is a personnel file in the context of a religious order -- but we've asked them to do a very thorough search. To date, they have supplied us the name -- a list of
names -- of institutions where brothers have worked since the 1940s and also a list of brothers that according to their records, are either substantially -- I'm sorry -- credibly accused or at least have been alleged in complaints. Plaintiffs' counsel has been of great assistance to us in supplementing that list and we have provided that supplementation to the debtor because we intend that the bar date notice will include a list of brothers or other people for whom the debtors are responsible, so that survivors can look at that list and be helped by seeing the names. We have been told
by the experts that that is something that really facilitates the recovery -- memory recovery -- process for survivors. And
as you pointed out some of these claims occurred decades ago and forgetting about issues regarding repressed memory or why such a traumatic effect might affect your memory, it's just been a long time ago. helpful. And so that kind of information is
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 20
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
Mr. Scharf has also had access to the leadership team minutes for the subdivision called Province for pre-1961. And
by going through those minutes -- which were given to us by the debtor -- he was able to identify individual brothers that should be added to the list; sometimes these leadership minutes refer to a brother who has been engaged in improper conduct without naming the brother; we have asked the debtor to go back and try to figure out what those names are and the debtor is allowing the committee counsel on a -- what I'll call confidential basis -- to look through the post-'61 minutes and that offer was made to have us start in fact this week so that we could further supplement the list. It's important for the
bar date process but it's also a reflection of what this 2004 exam does. Finally, Your Honor, the debtors' response was appropriate. I understood it to say issue the subpoenas but we
reserve the rights to object to the various evidentiary privileges. What concerns us is -- and this is going to be
another theme throughout this hearing -- is that debtors' counsel and the debtors have asserted the rights of people that are not represented, at least per employment applications; Mount Sion, they reserve the rights of Mount Sion; Mount Sion's not represented by this law firm. They reserve the rights of
the Community Support Corporation and the Christian Brothers' Foundation which are the two retirement funds; they are not
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 21
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
represented by this law firm.
They reserve the rights of the
subdivision known as a Province -- I think they do represent the Province -- but that will develop as well during the hearing. I expect that given the debtors' response, you will nonetheless issue -- allow us to issue -- the subpoenas but it is a problem for us that these two corporate debtors represented by this firm are reserving rights for parties have not made an appearance. Thank you, Your Honor. THE COURT: Okay. Your Honor, Mike Patterson again, on who
MR. PATTERSON:
behalf of the Archdiocese of Seattle. And the only reason I wanted to speak on this issue here was that we have made requests of the debtor for various records pursuant to a letter going back to July 18th, followed up with two reminders. We were told well we thought you were
working closely with the creditors' committee and sharing that information; but they obviously have a confidentiality agreement and I'm told by Mr. Stang that he cannot share those records with us. Given the concern that this Court has for the
expenditure of monies in this discovery phase, it would seem that we ought to, in light of our request, be given an opportunity to review those records that are being given to the creditors' committee so that we can answer the questions that
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 22
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
we need to answer and that is subject to our motion with regard to who is the North American Province and the Congregation, given that various representations have been made that are clearly at odds with one another and with regard to the insurance issues, which were intertwined with regard to various Christian Brother entities. THE COURT: Well, the debtor can provide documents
voluntarily, but there's a well-recognized limit on the Rule 2004 power which applies when the discovery could be used -- or would be used -- in connection with a pending proceeding -adversary proceeding -- or contested matter. So I don't fault
the debtors for being careful about what they agree to provide to the Archdiocese if it relates to the pending adversary proceeding, for example. There are differences between Rule
2004 and Rule -- Part VII discovery -- they're often not particularly recognized, but I'm not going to just say while we're on a blanket basis that the debtor should turn over to the Archdiocese everything its provided the committee on these issues because it may be that they're properly covered by discovery under the Part VII rules. MR. PATTERSON: THE COURT: It's -They can do
It's within their discretion.
it subject to the confidentiality agreements that they have with the committee, but they may not have to do it. MR. PATTERSON: But here's the conundrum I'm in, and
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 23
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
that is I've made a request -THE COURT: Make a -- you have discovery under Part
VII rules; you have an adversary proceeding pending. MR. PATTERSON: Right; okay. But I was also told
that, you know, essentially you could review those records that were provided the creditors and I'm told that by the debtor, Mr. Markowitz, and yet there's a confidentiality agreement so we cannot review those records. regard to -THE COURT: Well, I mean if that's the issue, then -So I guess I will proceed with
I mean, if it's a confidentiality agreement issue, I would assume that could be worked out. MR. PATTERSON: THE COURT: Okay; thank you, Your Honor.
Okay. Thank you, Judge.
MR. MARKOWITZ:
First of all, I'm not exactly sure what Mr. Patterson is talking about with what I told him. talking about. I'm not sure what he's
He told me that he wants the NAP -- the North
American Providence -- to file Chapter 11 and then he won't bother us anymore. So this seems to be his bigger issue. He's
asking for very targeted information, we're trying to work with him; we've been trying to focus on dealing with the committee because they're really the party in interest in the case and represent overall all the abuse claimants and have a fiduciary duty. We've been attempting to provide the documentation as
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 24
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
Mr. Stang points out; we have provided substantial documentation; thousands of pages of documents. We've given
them constitutions, minutes from board meetings, of provincial leadership team minutes; we have certain privacy issues; there's HIPAA concerns because -- for example they might say a brother who did a bad thing but a bad thing might be that he missed Mass. Not every person in the minutes of these minutes So we have to go through that carefully
is a credible abuser.
and we have to make sure that we don't accuse people that we have no notice of being accused and we've been careful in trying to do that. We're a small religious order, Your Honor; the office in New Rochelle has really one financial person, one or two brothers; other brothers are scattered around the country; they focus on teaching. So we are trying to produce -- we're not
saying that we represent those entities; those entities are very targeted entities. THE COURT: Mount Sion, for example --
Do they have their own -They'll have to have their own
MR. MARKOWITZ: counsel -THE COURT:
-- people who are capable of responding? Yes.
Okay. They'll have to respond. And that
MR. MARKOWITZ:
might be some of the same brothers that are involved with the
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 25
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
brothers of the debtor, but they could produce these documents. What we requested in the 2000 -- in our limited opposition -is that we orig -- they said in their motion that it would be subject to reasonableness and that we could -- a party in interest could object, we're not saying it would be us. We're
just saying that we can't respond maybe as quickly as they want it. THE COURT: process anyway. MR. MARKOWITZ: THE COURT: Right. Well, that's -- I mean that's part of the
So I viewed it as a very sort of 30,000
foot protect -- just to make sure that this will be treated like every other 2004 order. MR. MARKOWITZ: THE COURT: Right.
Which means that individual requests can
be opposed on the basis of undue burdensomeness that would be sufficient to justify a protective order and as well as on applicable privilege. MR. MARKOWITZ: That's all we're asserting; we're
going to continue to provide documents to the extent we control them; there's certain things that we don't control, for instance -THE COURT: I mean, what I am specifically finding
here is that the committee has shown cause for the issuance of a 2004 order for this information but that's still subject to,
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 26
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
as I said, applicable privilege. MR. MARKOWITZ: THE COURT:
And --
Under the --
-- a request for a protective order on And that includes
specific documents or a specific request.
where appropriate confidentiality under 9018 and 107. MR. STANG: Your Honor, Mr. Markowitz was starting to
talk about things that they have -- I think he said control over -- and then he stopped because appropriately you asked a question -THE COURT: MR. STANG: Well I interrupted him, yeah. -- and he responded to it, but perhaps he
could finish what he was thinking? MR. MARKOWITZ: simple example. Well, I was going to give a very
Some of the schools where brothers are located
are their own separate corporation which had been separated from the Brothers' for many, many years; they have very limited roles in, and if they, for example, want to do discovery against those school, maybe they want to look for insurance policies, things of that nature, they're going to have to go issue 2004 subpoenas of those schools -THE COURT: or control. Well, you know, it's within your custody
So you can ask them and if they don't give it to
you or you don't have an ability to get it from them because of some agreement, then you've done your best. MR. MARKOWITZ: Exactly. That was all we were trying
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 27
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
to make, the point. THE COURT: Okay; all right. So, I mean, don't
normally put that type of language in the 2004 order because -MR. MARKOWITZ: THE COURT: that. MR. MARKOWITZ: THE COURT: Okay. It's implicit.
-- it's implicit and the record's clear on
I think if -- it's also implicit that if
people do rely upon privilege or burdensomeness, they need to identify it -MR. MARKOWITZ: THE COURT: Right.
-- in their written response and say
what's applicable and/or first raise the issue of limiting the discovery if it's based on undue burdensomeness or confidentiality concerns with the committee and see if it's something that can't be resolved and if you can't then you make a protective motion. MR. MARKOWITZ: THE COURT: Correct.
Okay. That's all -- again, I don't think we
MR. MARKOWITZ:
were trying to impose heavily the motion, we were trying to -THE COURT: Right. Right, no, I read it as I said, so
you can submit that order, Mr. Stang. MR. STANG: Thank you, Your Honor. Okay, the next motion on the agenda is
MR. MARKOWITZ:
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 28
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
Mr. Patterson's motion on behalf of the Archdiocese of Seattle with respect to the applicability of the automatic stay with respect to the -- what we're calling the NAP, the North American Province. THE COURT: Okay. Thank you, Your Honor. The Seattle Archdiocese
MR. PATTERSON:
A little context for this.
has been a co-defendant in many lawsuits involving the Christian Brothers' and various entities in the State of Washington. At the time that the debtors filed for this
bankruptcy there were ten pending claims at that particular time and they followed a week-long mediation where we were attempting to settle those globally. We've since settled eight
of those and five of those are the subject of a motion to dismiss in this Court because of their transfer to this Court. But there are two -- we've settled eight of those cases out of the ten, and I'm talking about the Archdiocese solely, and there are two of those cases remaining. And they're basically
in limbo at this particular point in time because Judge Andrus has indicated that she is looking for guidance from the Bankruptcy Court with regard to a stay of the proceedings in those particular cases because of the involvement of the Christian Brothers. THE COURT: Court; those two? Those cases have not been removed to this
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 29
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
MR. PATTERSON: THE COURT:
They have not.
Okay. And so I've had -- maybe this is a
MR. PATTERSON:
little bit easier, but obviously the context of who the North American Province is, who the Congregation is, those sorts of issues have been represented in the State of Washington as though those were a separate organization; they've been answered in responses to discovery under oath; they've been represented to be separate organizations. Now being told that
they are part of CBI or they're a juridic person or whatever, and obviously the Court -- we've had many discussions with the creditors' committee -- and obviously the Court I think would have a difficult time, as anybody would have a difficult time, given the various representations and misrepresentations been made with regard to who those entities are, depending upon the jurisdiction you're in, that that is an issue that's going to have to be decided at some later date. But having said that Your Honor, and we would like to at least get some guidance with regard to the two pending cases in the State of Washington and Jason Amala is here, who represents the plaintiffs in those particular cases. And as I
understand it, there's no objection to those cases being held in abeyance; I'm not so sure we use the term stay because of the concern that Mr. Stang has and other have for the legal implications of that particular issue as it relates to the
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 30
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
entities there, but that we have an agreement whereby those two pending cases are going to be not litigated proactively pending certain rulings that are going to be made by this Court as it relates to NAP and the Congregation -THE COURT: Who is that agreement among? Pardon me?
Who is that agreement among, that the
cases will stay in abeyance? MR. PATTERSON: Certainly Mr. Amala is here and he
represents the plaintiffs in that particular case; as I understand, the -THE COURT: I thought there were two of them, though. There are.
But you said that particular case; I
thought there were two cases. MR. PATTERSON: THE COURT: other side? MR. PATTERSON: THE COURT: Yes, that's correct. Well, but they're combined -So he represents the
Okay; all right.
In both cases. And the creditors' committee as I
MR. PATTERSON:
understand it is okay with that and obviously I would think that the debtors are okay with that because they're not actively involved in those case out there. THE COURT: So the other defendants are amenable to
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 31
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
that? MR. PATTERSON: THE COURT: Right.
Is there any -- how is the outside date of
the abeyance described? MR. PATTERSON: particular point in time. guidance on our part. Well, it's not described at this Judge Andrus is looking for some
As I understand it, we would want to
certainly put those out to a point in time when the bar date -the commencement of the bar date -- and as I understand it, they're talking about some time next year for that. THE COURT: Okay. Well, I thought it was tied to -- I
mean, look, I -- most judges don't like to just have -- well, some judges do, I don't and it may be that the judge in Washington doesn't either -- like to have things just put on "a suspense docket" because then they get lost. So I like to have
an outside date, even if everyone agrees that it's going to be a long time, if ever, before litigation gets activated again. MR. PATTERSON: THE COURT: in this case? MR. PATTERSON: Your Honor, I would -- if we're going Would that be acceptable? Well, I --
But are you tying the date to some event
to use a date, I would put June 1st. MR. AMALA:
Good morning, Your Honor, Jason Amala from I think what we discussed is at
Pfau Cochran, for plaintiffs.
this point, agreeing outside date being the bar date, at which
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 32
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
point we would revisit what should happen. THE COURT: MR. AMALA: All right. And we agree with that. I do want to
point out that one issue we can either address now or later is the Congregation of Christian Brothers has been named as a defendant in these cases, included two of the cases that have been removed to this Court. It never answered in the State
Court, it has not answered in this Court within seven days of removal as required by -- I forget the rule off the top of my head -- so as far as these parties agreeing to stay until the bar date, that's one thing, but we have one party who has not answered yet and perhaps Mr. Dougherty who represents the Congregation in other matters might let us know when the Congregation will be answering in the cases that have been removed here. THE COURT: MR. STANG: Okay. Your Honor, regarding the bar date; the
debtor and the committee have agreed that it will be a duration of five months. What we haven't fixed is when that five months
starts because they are still working on various aspects of the notice program, including who will get the direct notice that you referred to earlier. THE COURT: MR. STANG: THE COURT: Right. So -We're probably talking about at least the
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 33
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
beginning of May, right? MR. STANG: THE COURT: I would think so, Your Honor. Okay, fine. That's why I mentioned June 1, Your
MR. PATTERSON:
Honor; at least for some -THE COURT: okay. MR. MARKOWITZ: Judge, we filed papers as Your Honor Well maybe we're a month difference there;
knows; I mean we think that it's one of those cases where the relationship is close enough that if the stay does apply but if everyone's willing to agree on the plaintiffs -THE COURT: Right, it doesn't matter. -- what's a little confusing is
MR. MARKOWITZ: that -THE COURT:
It doesn't matter then. -- and you can look at their motion --
MR. MARKOWITZ:
the plaintiffs made a motion in State Court shortly after the case was filed. stay. And the Archdiocese opposed the motion for the
Now they've taken the position the stay applies; okay. THE COURT: They didn't win on that motion, did they? It's attached to their motion --
In State Court? -- it says --
No, but they didn't win in State --- they didn't win; they didn't win.
MR. MARKOWITZ:
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 34
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
THE COURT:
All right, so they changed their mind. -- the judge tried the Ninth Circuit
MR. MARKOWITZ:
case, saying it's within the province of the Bankruptcy Court to determine the scope of the automatic stay. THE COURT: All right; okay. And say give you X amount of time to
MR. MARKOWITZ:
go to the Bankruptcy Court. THE COURT: All right. And Your Honor, here was the concern
MR. PATTERSON:
that we had, and legitimately so, is that it was represented once again that the North American Province, the Congregation of the Christian Brothers was a separate entity there -THE COURT: I don't care; you all didn't win. There's
no judicial estoppel and, you know -- so -MR. PATTERSON: They did defer to this Court. Our
concern was that they would have an entity -- North American Province Congregation -- that would be subject to the jurisdiction of the courts of the state of Washington, we would have to continue to litigate with a party that at least the debtors are saying, may be in bankruptcy. THE COURT: Okay. Is the -- don't want to forget --
MR. PATTERSON: THE COURT: didn't answer.
I'm sorry.
-- the question about the defendant that Or
Is that a defendant that has a civil life?
is that just a question that will throw everyone into a tizzy?
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 35
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
MR. MARKOWITZ:
Which def -- I'm con -- I have to --
I'm sorry, I'm a little confused; I have to ask one quick question. THE COURT: The Congregation, right? Doe your firm represent all the
MR. MARKOWITZ:
plaintiffs in the non-removed two actions -- there's two lawsuits that were not removed; four of them were removed. THE COURT: answer was yes. MR. MARKOWITZ: both of those? MR. AMALA: Correct. Okay. So which defen -- so are you And he represents the plaintiffs in Yeah, no, I asked that. I think the
MR. MARKOWITZ:
saying as part of a stipulation that would be approved by Judge Drain, that on behalf of the plaintiffs, the entire action will be stayed until June 1st to see where we go with the bar date? Is that what you agree to? MR. AMALA: I think what the Court has asked is there
in the four cases, there are two that were removed to this Court, and there's two that remain in State Court. THE COURT: MR. AMALA: four cases. In all four cases the Congregation of Christian Brothers is a named defendant; they've been served. They never Right. We represent all the plaintiffs in the
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 36
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
answered in State Court, they have not answered in the two cases that have been removed to this Court. THE COURT: Okay. Your Honor, it's Anthony Dougherty.
MR. DOUGHERTY:
It's our position that the Congregation has never been served. I'm not sure how they served it or what process they We do not represent the Congregation. If
used to serve it.
they're using the term as we understand it, the Congregation being a juridic entity located in Italy. We have never
received papers; we don't represent the Congregation and, therefore, any process that they -- and I don't know, maybe Jason can explain to us -- to whom did he serve these papers on. We don't represent the Congregation. THE COURT: MR. AMALA: Okay; all right. Your Honor, if I may; Mr. Dougherty's firm I would -- so --
actually -- and this may be addressed by committee counsel shortly -- does represent the Congregation in some other litigation. aside -THE COURT: MR. AMALA: But they didn't accept service, right? They have been served and a certificate of I believe in District Court in the state. That
service was filed in State Court, but they never answered. THE COURT: But did they accept service in these four
actions on behalf of the Congregation? MR. AMALA: The Congregation is controlled by a
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 37
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
congregational leadership team; one of its members resided in New York. He was served; his residence was served, proper The certificate of service --
service was effected on him.
affidavit of service -- was filed in Washington, stating as much -THE COURT: on that. Well it seems to me we may have an issue But I also think that the stay
It's all I can say.
should be in place as to them until we resolve that issue. MR. AMALA: answered. My only concern was that they haven't
They're a party to the case -THE COURT: Well, but it sounds like -- well, okay.
We're really getting into the pre-trial of that adversary -the two that are in front of me. MR. STANG: I'd sit down. THE COURT: MR. STANG: ready to hear from -THE COURT: All right; okay. Well -It was a bit like whack-a-mole there. I would like to say something when you're Your Honor, everyone stood up, I thought
MR. PATTERSON:
I guess the question before the Court
is what do we tell the State Court judge in question -THE COURT: I think you tell the State Court that
there are serious issues raised by this motion that everyone decided shouldn't be decided in the context of this motion except for there to be an agreement by the parties in the
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 38
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
litigation, that the litigation not be actively conducted until -- it's either May 1st or June 1st, I'm not sure what the agreement is there. MR. PATTERSON: THE COURT: All right, thank you, Your Honor.
Because I agree with both the debtor and
the committee that there are issues implicated in this motion that are in the nature of seeking a declaratory judgment with regard to property of the estate and I don't want to do it in this context. On the other hand it appears to me that there is
enough of an issue as to the legal status of certain of the asserted non-debtor defendants that may well merit extending the automatic stay or issue a 105 injunction but since the parties are in de facto agreeing to that anyway -- actually expressly agreeing to that anyway -- without putting the sections behind it, there's no need to issue an injunction. There's no prospect of irreparable harm because the parties are agreeing. MR. MARKOWITZ: So would we submit some sort of How do you --
stipulation or is it on the record here? THE COURT:
I think -- obviously the judge in
Washington State wants to know what the status of her litigation is and I am treating the motion as I am based upon the representations of the parties that they'll tell her that they've agreed to stay it voluntarily until May 1st or June 1st? What do we --
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 39
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 parties.
MR. MARKOWITZ:
Against all Christian Brothers'
THE COURT: would be stayed.
Against the -- well, the whole litigation
MR. MARKOWITZ: trying to get to. THE COURT: MR. AMALA:
Whole litigation; that's what I'm
Yeah. And just so we're all clear, I think the
idea would be to stay it until the bar date and at that point -THE COURT: MR. AMALA: THE COURT: All right. So no --
-- we'll resume issues. -- why don't we phrase it this way; no
earlier than May 1st unless the -- and later, if the bar date is later. Okay. MR. AMALA: MR. STANG: Thank you. Your Honor, you cut through quite a bit of
what I wanted to say about this motion because I thought was the vehicle for dealing with who's who and what's what. not going to give you the whole spiel. THE COURT: MR. STANG: a juridic entity. Okay; good. But, Mr. Dougherty stood up and said it's My dictionary does not have that word in it So I'm
and to paraphrase Judge Perez (ph.) from the Jesuit case -THE COURT: Right.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 40
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
MR. STANG: THE COURT: MR. STANG: THE COURT:
-- I don't do canon law. Well -I don't know what that is. I guess the issue -- the only message I
want to make on this is that ultimately there is an issue underlying all of these contentions based on standing and I don't know whether ultimately I will have to rule as Judge Perez had to rule on these issues, but if we're talking about anything like veil-piercing or alter ego, then there's a threshold standing issue and I think it also should be separate and apart from that as both the debtor and the committee pointed out, if this issue is to be decided as opposed to just postponed, i.e. the separateness of these various entities or designations, then it really should be done as part of an adversary proceeding so that everyone is on notice and the adversary proceeding rules apply so that we reach a determination that is going to be properly put before the Court. MR. STANG: Your Honor, I would just like to point out
that while the committee is considering alter ego, subsequent consolidation, and thus has standing issues as you pointed out, we are also looking at whether some of these ecclesiastical entities even exist under civil law -THE COURT: MR. STANG: Right, well that's separate. -- and there may be agency principal
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 41
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
relationships beyond just the alter ego concept. THE COURT: That's right; I mean if it's -- I'll --
something being a division as opposed to a separate subsidiary. MR. STANG: THE COURT: MR. STANG: THE COURT: Yes. Okay. Right; thank you. I understand that. All right, so that -- just so I'm
MR. MARKOWITZ:
clear, that resolves the issue on consent; the two remaining cases -THE COURT: I think the way this motion should be
dealt with is that it's denied without prejudice on the basis that at least for the next several months it's moot; based upon the representations made in Court as to the communication that the parties in the two Washington State litigations will make to the judge that they've all agreed to not prosecute the matters before her until no earlier than May 1st and later if the bar date in this case is later. MR. MARKOWITZ: Can we memorialize that in an order
and submit that order that denied or just -THE COURT: I mean the record's clear. Okay; fine.
If you want to, you can do that, but -I just didn't want to on a cleaned up We take the
MR. MARKOWITZ:
on that anyway; but that's fine, Judge.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 42
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
representations and we're happy that it stayed, that's the whole point in trying to resolve all these claims. THE COURT: Okay; all right. Because again, we may get into this Because these
MR. MARKOWITZ:
later and it comes under the insurance policies.
debtors are the debtors that have funded settlements and these are where the assets are coming from. THE COURT: strings come -MR. MARKOWITZ: THE COURT: Exactly. Okay. If you pull one string, other
-- get affected. That's our point.
All right, okay. Okay. Next motion, we're on to the
MR. MARKOWITZ: MR. MARKOWITZ: settlement motion. THE COURT:
Right.
Well they were brought as a
settlement motion, but as I read the reply, it seems to me that at this point, all the Archdiocese is seeking is an order dismissing them from the case? MR. PATTERSON: THE COURT: Correct.
From the adversary proceedings? Correct.
MR. PATTERSON: THE COURT: certain --
The two that you've settled with regard to
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 43
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
Yes, there are two cases --
-- certain plaintiffs. -- five individuals, Your Honor.
Right. And once again, the context of that
MR. PATTERSON:
is, is that -- and we've had some subsequent discussions since that motion has been filed -- and at least as I understand, the input regarding this is there are three of the -- one of these cases -- which involves three individuals and that's the K.A. case. There were insurance proceeds from Maryland-Zurich (ph.)
policy which was a policy that not only had the Archdiocese as a named insured but also the Congregation of the Christian Brothers. And we'd actually entered into an agreement, Your
Honor, on the last day of that mediation on March 23rd wherein the Christian Brothers, the Congregation, had agreed to split those policies for purposes of settling. There was a 300,000
dollar limit and we utilized 150,000 of those based upon that agreement which was firmed up and signed on April 28th. And
all that we are seeking is a dismissal of those two cases, five individuals, because they've been transferred to this Court; we're not asking for approval and my understanding is that there would be no objections, provided that this does not impact any future issues as it relates to the insurance policies and the ownership and the division of those policies. And certainly we are agreeable to that as long as we get the
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 44
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
dismissal on these particular cases.
And we're also agreeable,
Your Honor, because there's been a declaratory judgment action filed by the Archdiocese of Seattle as it relates to those policies; even stay that deck action until such time as the bar date so that we can iron out some of the issues as it relates to the entities, the insurance policies and various issues of that nature. THE COURT: Okay. I guess the one point I want to
make sure I understand is in dismissing this action, it should be clear -- as to the settling parties -- it should be clear that I'm not adjudicating any rights as to insurance; past or future. MR. PATTERSON: THE COURT: Correct.
Okay. And two of these -- the one case, the
MR. PATTERSON:
L.W. case, involves two individuals, that there's no insurance involved, so that is moot with regard to those. it applies on the K.A. case. THE COURT: Okay. All right; so I think that cuts But certainly
through a lot of the -MR. MARKOWITZ: THE COURT: other parties. MR. STANG: Your Honor, your statement regarding what With that we don't have an objection.
-- opposition, but I'll hear from the
the order won't do is really what the committee was trying to
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 45
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
achieve.
But I really think there needs to be some context of
what happened vis-a-vis these coverage agreements and the insurance agreements to -THE COURT: I don't think I could have any context now
because it's just lawyers talking to me. MR. STANG: THE COURT: Well -No disrespect to the lawyers, but I think
that there obviously are -- it seems to me at least -- based upon the pleadings that were filed, serious issues about what happened to the insurance. that. And I think it should be left at
I mean, I don't think that -- I think the committee has
been very clear that -- and consequently everyone is on notice -- that it takes the view that any agreements to "split the insurance" or anything else are under a microscope and they'll be dealt with in the future. MR. STANG: I would then just like to make one point
because some documents were submitted as exhibits to the motion for whatever that means, since this is not an evidentiary hearing, but -THE COURT: MR. STANG: Right. -- there was some suggestion by Mr.
Patterson in his last papers on this issue, that the committee was throwing some skunk oil on these coverage agreements because we said they were signed either the day of the petition -- be it before the petition or after -- they were
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 46
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
signed by the insurance companies the day after the petition and he said oh no, no, you don't know that this was actually done weeks before. And the fact of the matter is that whenever
they were signed they were signed shortly before the petition was filed. And Brother Kevin Griffith, who signed the typed
agreements, did so wearing a hat of the leadership team for this territory known as the Province, notwithstanding the clear involvement of Christian Brothers' Institute given that he signed schedules. But the document that was hand-signed weeks
before is signed not by Brother Griffith but by another brother, a Brother Murphy (ph.) on behalf of the leadership team of the Christian Brothers' subject to the approval of the provincial leadership team. It says nothing about approval of
the board of directors of Christian Brothers' Institute, an entity that within sixty days said it had an interest in the policy. So it wasn't just that they did it on the eve or after the bankruptcy, but rather they are ignoring their fiduciary duties as corporate officers or at least the corporate niceties. THE COURT: Well, you're also saying that it may have So it just
been signed in one capacity and not in the other. seems to me this is an open issue.
It may, if things work out
properly, be moot, depending on what the claims are and the treatment of them. But clearly no one's rights should be
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 47
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
affected regarding this issue by the dismissal of this lawsuit. So that -MR. STANG: THE COURT: MR. AMALA: Thank you, Your Honor. Okay. Your Honor, if I may very briefly; on
behalf of the plaintiffs, there was something in the Archdiocese's reply papers that I just wanted to make sure I have an opportunity to respond to. And was again a suggestion
that plaintiffs had any idea if there was a side agreement between the debtors and the Archdiocese or that this would have any impact on insurance that's available. We did not know
that, we did not understand that; there's reference to past dealings and again, we had no knowledge whatsoever that that was happening and in fact the release very clearly makes every effort possible to confirm that it would not impact insurance. So again, just given some of the things that were said in the reply, I wanted to have an opportunity to say that on the record. THE COURT: Okay. Well -- I mean again, hopefully
this doesn't become an issue in the future, but I'm not making the determination one way or the other on that. I mean --
look, I have a very limited jurisdiction over this matter as it pertains to the settling plaintiffs and the Archdiocese. committee's right; this is not a motion that implicates directly and therefore -- property of the estate -- and The
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 48
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
therefore it's not something I'm approving under 363 and 9019. It's just -- I'm signing an order dismissing the lawsuit as to the Archdiocese. So I understand everyone wants to make it
clear they're reserving all their rights and you don't want there to be implications that you agree with what someone else said, but it's clear. MR. PATTERSON: Okay, Your Honor, so as I understand
it then there will be a dismissal but obviously without prejudice to anybody's rights as it relates to the insurance policies which will be determined at some later time. THE COURT: If need be. And Your Honor, with regard to the
MR. PATTERSON:
declaratory judgment action that's been filed by the Archdiocese, it was my suggestion that that would be put on hold or stayed until such time as the bar date pending -THE COURT: month, right? Well, we have a conference now on for next
November 12th? December 6th, Your Honor.
Oh, it's December? I believe it's December 6th.
Right; if you all agree and you want to But I don't know if you've thought
adjourn it, that's fine.
about it enough to agree to adjourn it. MR. STANG: Your Honor, I'm not sure that both the
insurance companies are even in the court room.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 49
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
MR. PATTERSON: THE COURT: MR. STANG:
Yeah, I think --
Well, one of them is, I think. I knew one was, I wasn't sure -They both are.
UNIDENTIFIED SPEAKER: MR. STANG: THE COURT: Both are? Okay.
So -- look, that may make sense,
it's just that we're not really teed up for that today. MR. PATTERSON: THE COURT: Okay; you bet.
If you want to adjourn the pre-trial
conference because you've all decided you want to talk about that more that's fine. MR. PATTERSON: All right. And just to comment with
regard to -- and then I'll sit down -- Mr. Amala's comment about the fact they didn't know that this was happening; they did in fact receive a check for 150,000 dollars from the insurance company which they cashed, so -THE COURT: Okay. -- that was half the policy.
MR. PATTERSON: THE COURT: MS. GOODMAN:
All right. Your Honor, my name is Judith Goodman of
the firm of Goodman & Jacobs; I represent Pacific Insurance -Pacific Indemnity Company, which is a defendant in the declaratory judgment action. I was going to -- I had come to court asking for a week or so for Pacific to be able to put in papers on this
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 50
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
motion because I was concerned about any possible effect on the insurance coverage issues. It sounds to me like what Your
Honor is saying is that your order is going to specifically state that there will be no impact on insurance coverage issues and if that is the case, we don't need to put in papers; but if that is not the case -THE COURT: the order. UNIDENTIFIED SPEAKER: THE COURT: Yeah, that -No, I think we should put that proviso in
It's not your normal dismissal order at Enough parties have
least in that respect, makes it clear.
been concerned about that issue I think we should put that in the dismissal order. MS. GOODMAN: Okay. And can you specifically list the
two -- you know -- all insurance companies -THE COURT: Why don't you circulate the order
before -- to the counsel for the insurers as well as the committee and the counsel for the settling plaintiffs and of course the debtors before you e-mail it to Chambers? MS. GOODMAN: Thank you; and I also -- I'm not sure
whether we ought to stay the declaratory judgment action. Normally it's -THE COURT: ruling on that today. MS. GOODMAN: Okay; thank you. Talk about it among yourselves; I'm not
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 51
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 think.
THE COURT:
Okay. And by the way, Pacific Indemnity is
MR. PATTERSON:
not involved in any of the dismissals -THE COURT: In this one? -- that you've just examined here.
Okay; all right.
Okay, so that -- there were two motions -- I mean they're two different settlements but is there any reason why this resolution shouldn't apply to both of them. Even though
as you're saying, you're telling me that there's no insurance involved at all in the second one, but might as well -MR. PATTERSON: THE COURT: You know, there is no --
-- do the same thing though; I don't
MR. MARKOWITZ: MR. PATTERSON: the LI-2 -THE COURT:
We think it should be the same. There is no policy as it relates to
All right so then you don't have to name
any policies, you can just say it doesn't affect the debtor's insurance anyway. All right. MR. MARKOWITZ: I think we're on to -- we had filed a Okay.
motion earlier on the case to approve the monthly compensation order procedures. THE COURT: Right.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 52
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
MR. MARKOWITZ:
Reverend Hoatson appeared pro se at
that hearing; he raised some issues; Your Honor entered the order, he filed an affidavit; he wrote a letter to Your Honor which was docketed. We interpreted that to be more of an
objection to our firm's retention than anything else because if we're retained, obviously we'd get paid. THE COURT: Well, except that the same
disinterestedness/adverse interest rules apply to compensation as well, so -MR. MARKOWITZ: Right, so -- if you're not going to
allow us to be retained we're not getting paid, vice versa, sort of kind of rolls into each other, we thought. we filed some papers. But again,
We believe we're disinterested; we filed
our retention application; we filed two supplemental declarations; I know the U.S. trustee has seen it. I don't
believe the committee at this point is seeking any relief against us; there is nothing on. We believe we made full
disclosure, we can address any issues that Your Honor has and talk about them but we -- Mr. Hoatson has been in litigation with in essence, the debtors, for lack of a -THE COURT: Hoatson here? REV. HOATSON: THE COURT: Yes. Well, let me interrupt; is Reverend
Okay. Yes, Your Honor.
REV. HOATSON:
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 53
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
THE COURT: MR. RECK:
All right. Good morning, Your Honor; Michael Reck; I'm
new counsel on behalf of Reverend Hoatson. THE COURT: MR. RECK: Okay. The paperwork that the Court has reviewed I'm here today;
was filed pro se prior to my involvement.
Reverend Hoatson is present today, to the extent you want oral argument, we're at your disposal, however you want to handle it. THE COURT: to the objection. I took it as an objection to compensation as opposed to retention because I entered the order approving retention. But generally the same issues apply to compensation and on that score I need to determine whether debtors' counsel has or represents an adverse interest to the debtors. And while I Well, okay. Let me give you my reaction
understand the objection's point that counsel has been actively involved in representing the debtors in defending against numerous claims asserted against the debtors, that in and of itself I don't think is a basis for saying that the firm has an adverse interest. That I think leaves, to my mind, whether there is enough suggested to show that there's either one of two things. First -- and this would be of the greatest concern -- a potential -- more than a -- well, the phrase Judge Brozman uses
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 54
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
in Leslie Fay is a potential actual conflict as opposed to a potential, potential conflict. So a potential actual conflict
based upon the firm's own potential actual liability for that representation. Which is pretty difficult to show, I think.
And then secondly -- and this is also I think difficult to show although it has been shown in the past in certain instances -- that the firm is so biased against these claimants that it cannot independently exercise judgment on behalf of the estate. That is frankly, very hard to show. I'm
aware of only one case that did it where a trustee's counsel basically -- again according to Judge Brozman -- took the position that the debtor simply could not be believed in anything without really basing it on anything. disqualified him for that reason. So at least based upon the letter and the objection, I am not at the point where I can say that the firm has a disabling conflict. MR. RECK: I understand Your Honor, and I don't have And she
any intention of making any extended argument on the issue. THE COURT: MR. RECK: Okay. The only -- luckily I don't have to make
that call, you get paid to make the hard decisions. THE COURT: MR. RECK: Okay. The only position I'm in is the position
where I have a client who has filed these materials and I will
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 55
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
also be representing as the underlying claims. these pro se.
He did file
I think he may have a right to be heard on it
and to the extent the Court will allow him to do so, I know he would like the opportunity. THE COURT: Okay; well, again, I've reviewed them. I
took them seriously obviously, I scheduled a hearing on it. But if he wants to speak briefly, I'll hear him on it. MR. RECK: THE COURT: Thank you, Your Honor; I appreciate that. Okay. Sure.
REV. HOATSON: THE COURT:
Good morning, Your Honor.
Good morning. Your Honor, I think the debtors'
REV. HOATSON:
attorney, Anthony Dougherty, cannot separate himself as an attorney from the representation of the debtor and the justice that is due the creditors, perhaps. Mr. Dougherty has been
adverse -- severely adverse -- as in other cases and he has maligned me because for simply filing claims. He's maligned me
for filing frivolous lawsuits and yet Justice Sonia Sotomayor, when we went to the Appellate Division, said to my attorney why didn't you bring the RICO charge back to me? And my lawyer
said well, Your Honor, I have just been bashed by Judge Crowdie (ph.) in the other court with an 8,000 dollar fine; I wasn't going to risk that here. So whether what I have done in the
past in terms of litigation bears on your decision, I think it should be known that it's a badge of honor for anybody to go
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 56
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
forward with claims like this, even though there are ministerial exceptions and First Amendment issues that really make it very hard for us to get anywhere. So Mr. Dougherty claimed that in 2003 when I filed a complaint with the Christian Brothers' it was an internal complaint and that was to Brother Walsh (ph.), the Provincial at the time. But Brother Walsh turned that over to Mr.
Dougherty by asking me to sit with him and tell him my story. So Mr. Dougherty is an insider there. The ruling was made by It was not made by
Mr. Dougherty about my claim -- my report.
Brother Walsh to whom I had made the initial report. And so I believe Mr. Dougherty is ruling on internal matters and, therefore, is not disinterested; he's very much a part of the rulings of the Christian Brothers' at every turn. One of my abusers became a Provincial. It was known
in the province when I was still a member of the Irish Christian Brothers' that that person purged the files. I can't
see how that could have been done without an attorney's -- at least approval or affirmation. disinterest there either. I sat with Mr. Dougherty at length and gave him the names of many, many Christian Brothers that I believe -because he asked me, I did not do that voluntarily -- he asked me would you mind telling me what you know about sexual abuse among the Christian Brothers. And I poured my heart out and I don't think there's
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 57
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
told him a lot of information and some of those brothers still remained in ministry; I don't know if they were investigated. I know one man was put back into ministry after having had another issue and then it was only a matter of the Daily News exposing him as a principal of a high school that I believe his accuser went ballistic and told the Christian Brothers that you promised me he would never be back in ministry. It was at that
point that they removed that brother as a principal of a Catholic high school. So I don't think there's disinterest and I believe in that case of that brother that Mr. Dougherty was intimately involved in that reassignment; or at least saying yeah, there's no problem, let's wait for things to die down and put him back in. THE COURT: Well, what is your basis for saying that? Well, because he had already been
REV. HOATSON:
accused in another state and there was litigation surrounding that. I don't know if Mr. Dougherty was the lawyer at the
time, but he certainly, you know, would have been familiar with that file. And that same Christian Brother was then brought
back to this area; lived around here for a while and then because the heat was off, he was reassigned as a principal. THE COURT: But lawyers normally don't make the And what's missing for
client's business decisions for them.
me is something to establish that in fact the firm or one of
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 58
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
its partners was actually making those decisions for the debtor. And at least on what I have before me -- that's why I
say I don't think that we get to the level of the potential actual conflict that Judge Brozman talks about in the Leslie Fay case. MR. RECK: Your Honor, I understand completely where
the Court's going with this and I think that what Reverend Hoatson might be seeking is a request that the Court -- that there be an evidentiary hearing, should the Court require that before ruling on the motion. THE COURT: I think there's a certain level of
evidence that needs to be set forth to go forward on this before I schedule an evidentiary hearing on it. So my inclination is to deny the motion without prejudice to anyone. This is an ongoing requirement; you don't
get paid each time if someone says, with good reason, that you're not entitled to it because you have a conflict. But
based upon the record before me -- including the allegations in the letter and the objection -- I don't see it as rising to that level. And I'm not basing this, Reverend Hoatson, on what I do
the response said about the merits of your own claims.
take seriously whether you have claims based on the prior rulings, but I'm not even ruling on that basis because I haven't made up my mind on that; that really hasn't been brought to the fore enough because I just -- it just seemed to
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 59
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
me that there was not a sufficient degree of a conflict shown. I mean, debtor's lawyers are authorized to be retained and paid, notwithstanding the fact that they represented the debtors pre-bankruptcy; I mean that happens all the time. it's often very adversarial. And
You know, debtor's lawyer will
say to the bank no, we are not going to give you the lien that you want. We're going to file Chapter 11 instead. And it's
not a case of abuse, but the bank feels pretty ticked off when the lawyer says that. So that's not a disabling factor. So I
really focused on the issues that identified at the beginning of the hearing and I don't think there's that link that I would need to have here between a lawyer acting as a lawyer and a lawyer acting basically as someone beyond that. MR. RECK: Your Honor, based on your tentative ruling
without prejudice, I think that gets us where we need to go to. THE COURT: Okay. Now I understand -- maybe this is
why Mr. Stang is getting up -- he has alleged separate issues about disinterestedness in one of his responses and my ruling, obviously doesn't deal with any of that. MR. STANG: standing up. THE COURT: MR. STANG: Okay. Your Honor, the committee is not today Thank you, Your Honor; that was why I was
asking that you go back and disapprove the Tarter firm's employment. But they are engaged in representing the
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 60
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
Congregation of Christian Brothers in a matter that is currently on appeal before the Second Circuit and in which they, as trial counsel, represented the Congregation. Mr. --
because we were doing some research in connection with Mr. Patterson's motion, we went back and Google searched again Christian Brothers' and litigation; it came up with this Alule (ph.) case. And we were very concerned about the Alule case
because one of the trial court's rulings went to the relationship between the Congregation of Christian Brothers, who was represented by the Tarter firm -- all the pleadings say they represent the defendant, the Congregation -- the appendix to the appeal has transcripts; Mr. Dougherty was representing the Congregation as a defendant, not the Province -- North American Province -- was not even named as a defendant in the case. And on October 8th we notified probably Mr. Markowitz -- maybe Mr. Dougherty, I'm not sure -- that we found this decision and that we were concerned about what they were doing. And it wasn't until -- I guess it was the 18th -- that So I went back
Mr. Dougherty filed the supplemental affidavit.
and I looked at looked at his initial disclosures to the Court regarding employment; I looked at the supplement and then I looked back at what they had said in the Alule case. And on
May 10th -- they submitted their employment application on May 11th and that's the initial employment application -- and Mr.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 61
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
Dougherty's initial employment affidavit was May 11th. before he notarizes an affidavit for Brother Murphy who
The day
represents what the relationship is between the Congregation, what the relationship is between Provinces -- these territorial -- he characterizes it by the way as territorial divisions, I'm not just trying to antagonize the debtor when I say that -- and relationship with brothers. In the pleading signed by Mr. Dougherty the day before his affidavit is submitted, he says the Rome Congregation -that's the Congregation of Christian Brothers, that's his shorthand in the pleading in the Southern District -- is a separate and distinct entity from the NAP. He says there is no
agency relationship between the Congregation and any Province. He says in this pleading there is no jurisdiction over the Congregation in New York. And he says there is no relationship
between the Congregation in New York that warrants Congregational jurisdiction which could have implications here regarding this estate's potential claims against the Congregation. In his supplemental declaration, he does not say anything about the relationship between the Province and the Christian Brothers, in fact I think if you read a lot of their initial pleadings, you don't even know that a Province exists -- or maybe even a congregation exists. He discloses
for the first time that the firm represented the Eastern
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 62
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
American Province, which was a predecessor province to the one that currently exists. He says that -- and I don't know that
this necessarily goes to the relationship issue -- but he says that the case was resolved by the district Court, solely on the basis of lack of personal jurisdiction; that's not true. The
reported decision also dismissed the case based on statute of limitations. He reiterates that his firm will continue in the
appeal, on the jurisdictional issue -- this is in his second affidavit -- but they'll only drop out if they lose. Well,
frankly -- how should I say -- I don't want -- the committee is not served by a Second Circuit decision on the relationship between the Congregation and its Provinces and the jurisdictional nexus, if any, between the Congregation and this district with the debtors' law firm handling that fight. They
shouldn't be representing the Congregation from this moment forward; they shouldn't be representing the Province in anything from this moment forward. Mr. Dougherty's focus, Mr. Markowitz's focus, should be on the role as counsel for the debtor-in-possession and Brother Griffith can wear -- might be able to wear -- multiple hats; someone told me I should analogize it to him wearing a Red Sox cap when he pitches and wearing a Yankee cap when he catches the ball. we'll see. You know, whether that works or not, I guess They cannot be
But the law firm can't do this.
before the Second Circuit arguing that the Congregation has no
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 63
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
jurisdictional nexus here when it is clear from just the pleadings filed by Mr. Patterson that there are insurance policies in which the debtor has an interest -- they admit that on the schedules -- might have an interest; and the Congregation is a named insured on the insurance policy. can they do that? So I'm not trying to get them bounced out of here but they shouldn't be handling that appeal for any purpose going forward. And if it's not crystal clear to me to what extent How
they are representing the Province, though clearly they are doing it in some capacity in the underlying pre-petition litigation. But I think there needs to be a third supplemental
disclosure regarding each and every matter in which they represent the Province with case name and case number and they need to do the same thing for the Congregation; and they shouldn't be allowed to continue in those representations. Thank you, Your Honor. THE COURT: Okay. Well, I think the last part -- or You should be disclosing the
next to last part is easy.
representations of the related entities. MR. MARKOWITZ: THE COURT: this: We think we've done that, so --
Okay; well, and then the harder point is
I think you have to use your judgment as to whether
there is an adverse interest implicated by those representations. And given the issues that were flagged in
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 64
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
today's pleadings relating to on the one hand, potentially subsuming -- or causing the debtor to be liable for acts of others -- if you take one position on behalf of the others or alternatively wanting the others to be so tied to the debtors that the insurance is available -- I mean it's kind of a mine field; so I think using that judgment, it's probably a lot wiser to err on the side of being very cautious than to go forward. But I'll leave it at that. MR. MARKOWITZ: where to proceed. I just wanted to make one point that I think is important. We think we have made disclosure and secondly, the We're going to discuss that and decide
litigation in the Second Circuit, the only real issue that was internal, was whether or not service -- service of process in New York and New Jersey on the Province gives jurisdiction over the world-wide Congregation in Rome. THE COURT: That was the issue.
But that's an important issue; because if
they're the same thing then service is okay. MR. MARKOWITZ: THE COURT: I understand.
So that's -- I mean, that's why I'm
talking about a mine field. MR. MARKOWITZ: THE COURT: Okay.
But, you know, of the appeal were solely
on statute of limitations grounds, then it's probably not a mine field. But you just have to use your judgment on that.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 65
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 record.
MR. DOUGHERTY:
Your Honor, I just want to clear the
It was a personal jurisdiction issue with respect to the Congregation. The statute of limitations issue was with
another defendant. Once the Court finds -THE COURT: No, but I'm saying the service issue is
not just a simple issue of -- at least it seems to me, and I'm not ruling on this -- but it seems to me it's not just a simple issues of you know, you served Bill Smith and you should have served Tom Jones, because the argument is Bill Smith and Tom Jones are the same guy. And if you're trying to say they're
not in the Second Circuit, but it's in the debtor's interest to say they are the same guy -MR. DOUGHERTY: THE COURT: Understood.
-- then, you know, that's a problem. We understand; we'll--
MR. MARKOWITZ: THE COURT: MS. GOODMAN:
Okay. Your Honor, I apologize for speaking out
of turn, but I'd like to go back to contested matter number three for a moment. THE COURT: MS. GOODMAN: THE COURT: MS. GOODMAN: I know that I said earlier -What's that? -- yeah. The settlement -That --
-- motion -- the dismissal motion? --yeah. What I'm concerned about here
is that while we certainly want the settlement to go forward,
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 66
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
Pacific Indemnity has two insureds, one of which is not -according to what we know, but apparently contested here -- one of which, the Congregation of Christian Brothers, is not a party to this bankruptcy proceeding; is not a debtor. So we
want the settlement to go forward, but we need it to go forward with the approval of both of our insureds, which is the Catholic Archbishop of Seattle, and the Congregation of Christian Brothers. And at the very least we need to put in
some papers on this subject or it can be -THE COURT: I'm just dismissing the lawsuit; I'm not There's nothing
making any determinations about your policy.
really teed up to me except for the potentially the adversary proceeding on that issue. MS. GOODMAN: THE COURT: Archdiocese. MS. GOODMAN: Well, what concerns me is what effect You're dismissing the entire lawsuit? No, no; I'm dismissing it as to the
that might have on our other insured. THE COURT: Well, I understand, but that's -- what I'm
doing today doesn't have any impact on that one way or another. You know, people are going to have to look at the policy and look at the underlying issues. with by a number of courts. MS. GOODMAN: At the very least, can we have a week to These issues have been dealt
put in papers on this issue?
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 67
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
THE COURT:
I'm just dismissing the case, I'm not -I'm not doing anything on the
as to the Archdiocese. insurance.
I'm not construing the insurance policy; I'm not
construing your client's obligations, plus which, counsel says your client's policy isn't even involved. MS. GOODMAN: THE COURT: It is in one of the -- L.W. concerns -Well, leave that aside. I'm not
construing the policy. don't know what it says. policy, I'll do that -MS. GOODMAN: THE COURT: MS. GOODMAN:
I don't know if there's a waterfall; I If people want me to construe the
No. -- but that's not really in front of me. So you're leaving the Christian Brothers
in the action and dismissing only as to the Archdiocese? THE COURT: MS. GOODMAN: Correct. Even though the Christian Brothers is
not a party to -- is not a debtor here? THE COURT: with them. MS. GOODMAN: THE COURT: There is. No. There's no settlement with the They're not being -- there's no settlement
UNIDENTIFIED SPEAKER: Christian Brothers. THE COURT: Archdiocese.
No, the settlement is just with the
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 68
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 sure.
MR. PATTERSON:
Yes, and the only case you're involved
where there's a split policy, is one of the two we haven't been able to settle so that's at least not a ripe issue -MS. GOODMAN: MR. PATTERSON: MS. GOODMAN: Are you speaking about the D.P. case? Yes. Okay; all right. Just wanted to make
THE COURT:
All right.
So --
MR. MARKOWITZ:
We understand your points, Your Honor
and we will consider that carefully and decide how to proceed. THE COURT: Okay; all right. So on the motion that's
in front of me then, the debtor should submit an order denying the motion based on the allegation of the motion and the record without prejudice to any party's right, obviously in the future, to raise an objection under Section 330 which incorporates the other applicable provisions of 327 and 328. MR. MARKOWITZ: So the only other thing on the
calendar, Your Honor, would be the initial pre-trial conference on the removed adversary proceedings. THE COURT: Great. I don't know whether you want me to go
MR. MARKOWITZ:
through them really quickly, but I can -THE COURT: Well, I -- let me just find it here. Okay.
Here it is -- no, that's not it.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 69
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
MR. MARKOWITZ:
We gave you an inordinate amount of
binders with the pleadings. THE COURT: No, I had taken it out -- obviously this
is the debtor's filing, and no one else is filing, but I received from the debtor's counsel four filings; each of which is in one of the separate adversary proceedings, headed summary of State Court proceedings. MR. MARKOWITZ: THE COURT: Right.
Which listed among other things, matters
that were pending at the time of removal; so I have that and I've reviewed that. I have not reviewed the two boxes of the
entire record of each of the pleadings. MR. MARKOWITZ: Well, maybe one way to make this
easier, potentially, is as with the other litigations, potentially the plaintiff's counsel would be willing to put these matters on hold. No one's filed a motion to remand; no I know the committee,
one seems to be in a hurry to proceed.
for example, has said they don't really want the debtor liquidating claims until the bar date's set because it could prejudice certain things, maybe voting, different things. We
don't necessarily agree if we could settle things that we think make sense when you bring them to Your Honor, we'll have to have that -- not before you today. But on these adversary
proceedings, I mean I could go through them quickly and the -THE COURT: Well there are two that are different I
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 70
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
think than the others in that they're related solely whether there was a binding settlement or not. MR. MARKOWITZ: Right, the fraud -- like the one the
adversary proceeding R.P. -THE COURT: Right. So those two are --
MR. MARKOWITZ: trying -THE COURT:
Those are fraud cases they're
I certainly understand the view -- which I
share -- that the debtors, now being in bankruptcy, no one's going to get a race to the assets -- no one's going to win that race. claims. So it's just a question of how best to liquidate these And obviously when you're talking about liquidating
claims, you're also talking about the possibility of settlement. And as I'd said at the beginning of this set of
hearings, it seemed to me that the debtors and the committee and individual claimant's counsel and plaintiff's counsel should consider whether it makes sense to have a set of procedures in place whereby parties exchange information and pursue sort of a series of escalating approaches to actual litigation; starting with exchanging settlement offers and maybe going to mediation and then if that doesn't work, litigation as a way to streamline this process and save money, frankly. MR. MARKOWITZ: Honor. That's what we would like to do Your
We would participate in any of that mediation and
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 71
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
whether that would be pursuant to a plan after the bar date or whether we would start now in that process, we could discuss with the committee -THE COURT: Well --- and discuss with the plaintiffs how
MR. MARKOWITZ:
they would like to proceed. THE COURT: Now again, there's a -- there are these
four adversary proceedings that are in front of me and everyone is sort of talking in generalities beyond that. somewhat depends on what claims come in. And that
It did seem to me
that the settlement agreement adversaries might be susceptible to summary judgment on it -- there were pending summary judgment motions, so they may be separate; I'd like to hear from both sides on that one; if they're here, represented. No? They're not here? Well -We do not represent the
MR. MARKOWITZ:
UNIDENTIFIED SPEAKER:
plaintiffs in the GWRP cases, so I can't comment on their behalf. THE COURT: All right. Not in the G.W. or the R.P., that's
MR. MARKOWITZ: Ms. Roe, right? THE COURT: that with her at all? MR. MARKOWITZ:
All right.
Well, so have you talked about
We have --
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 72
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
THE COURT:
That notion of whether we want to go ahead
with summary judgment or -MR. MARKOWITZ: THE COURT: We haven't had extensive --
I mean it said discovery wasn't complete
on one of them -- one of the two -- so I'm not sure -- and yet there were summary judgment motions pending. MR. MARKOWITZ: I think it was partial summary
judgment motions on various issues of, you know, the scope of releases because releases were granted I believe -THE COURT: Okay. -- I have to go back and refresh on
MR. MARKOWITZ: all those issues.
But we have not had extensive discussions in
that regard because it was my understanding -THE COURT: today, wasn't it? Well, the pre-trial was on for those two Or maybe I'm wrong. Yeah, the pre-trial's on for today.
Okay. So she knew about it, I mean we e-
MR. MARKOWITZ:
mailed with her about the dates. THE COURT: Okay. It was my understanding that the
MR. MARKOWITZ:
plaintiffs were sort of willing to kind of hold these -THE COURT: Including on those two? -- hold these things in abeyance --
All right.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 73
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
MR. MARKOWITZ:
-- maybe Mr. Stang can address some of
that; pending trying to resolve these things on a global basis. MR. STANG: THE COURT: MR. STANG: The little bit I know, Your Honor. Okay. Mr. Lehman (ph.), who is an attorney from And this
Washington, represents one of the committee members.
particular committee member -- I don't know if he's one of the people named in these adversaries -- but he has one of these fraudulent settlement claims. And Mr. Lehman participates with
the committee and his client in committee deliberations. Generally speaking, Mr. Lehman seemed to be in favor of pushing the removed adversary proceedings over until we could see what the bar date looks like. THE COURT: All right. And frankly -- you know,
actually, it's possible that there's going to be more than two of these if it's gotten on some people's word processors and there may be -- so maybe it makes sense to put these removed cases -- adversary proceedings -- on hold while we see where the bar date comes in and whether there's going to be a claims resolution process. MR. AMALA: Your Honor -- again, Jason Amala on behalf
of the plaintiffs in the two of the K.A. and L.W. case -- we are agreeable to putting these on hold until the bar date. THE COURT: MR. AMALA: All right. Although I do want to say that we are
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 74
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
looking at the fact that the Congregation has not answered and so I guess -THE COURT: obviously. No, I think people should focus on that,
If there's a legitimate default then there's no But on the other hand I'm not
reason to put that on hold.
ready to -- I'm sure if there were a motion for a default judgment -MR. AMALA: THE COURT: to that. MR. AMALA: And that's all I meant, is by agreeing to Someone would appear. -- there probably would be some opposition
put it on hold that we may be looking at that issue -THE COURT: MR. AMALA: that. Thank you. THE COURT: Okay. All right, you know I have entered Right; okay. -- and want to make sure we don't preclude
several orders setting out claims resolution procedures; I just did one in A&P on personal injury claims. Obviously, these
types of claims are in some ways unique, but the same concepts could apply. I don't know whether -- I haven't checked the
dockets in other cases around the country -- whether there have been similar processes in place in those cases. MR. STANG: I can't -- I think if you count this as
two cases there have been eleven -- I'll call Church cases -filed. And I can't speak to Tucson, which was the second
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 75
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
one -- in Portland, Judges Velure and Hogan, that's a district court judge and a state court judge did a case by case mediation because there was enough insurance and diocese and assets to pay those claims in full even at the expectations of the plaintiffs. THE COURT: MR. STANG: counsel. Okay. The other cases I've been committee
And generally what has happened is that there has
been a mediation resulting in the consensual plan -- or a dismissal in the case of San Diego -- with the insurance carriers and the debtor. THE COURT: MR. STANG: THE COURT: MR. STANG: You're talking about an overall pot -Overall pot of money. -- as opposed to individual cases. And then the position that has prevailed
is that you folks are writing your check; given the nature of these claims we don't want you participating in how they divide it up; you're not going to tell us that a sodomy claim is worth more or less than a masturbation claim, we will decide that. The committees have engaged very -THE COURT: MR. STANG: debtor -THE COURT: themselves -No, no, when I say we will -- in the cases When you say "we" who is the we? Well, the committee does not want the
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 76
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
MR. STANG:
Then I'm saying to you -- so the
committees have gone out and retained people who have become expert in the evaluation of sexual abuse claims. There are
two -- one was the -- there are two that seem to be dominating in the area; she was a former United States Attorney for the Western District of Washington; and a former retired California Superior Court judge. And they have sat down with the
committees -- all within the plan of disclosure statement -have come up with criteria and allocation plans and they take the settlement pot and divide it up. THE COURT: And what happens if the parties disagree?
Then the judge decides? MR. STANG: The sole right of appeal is to this
arbitrator or mediator if you want to call it that. THE COURT: MR. STANG: Okay; all right. That's how it's worked; whether it works
in this case, I don't know. THE COURT: Well you need to see what the claims are
and what the insurance is. MR. STANG: You have to see what the claims are and
whether it's worthwh -- maybe the carriers or the debtors will -- well, the debtor will say the carrier is directed the defense as they're entitled to, we needed to object to some of these claims because we're just not paying on some of this stuff.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 77
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 today.
THE COURT: MR. STANG:
Right. But that will happen once we determine
whether the settlement pot discussions are large enough. THE COURT: All right. So it does make sense to me
then to defer the pre-trial conferences in these cases with the one possible exception of someone who hasn't answered to at least the bar date. And perhaps, thereafter, if there are
meaningful discussions on a pot plan and a global settlement that has a mechanism like that in it. And I guess my
suggestion to the parties, think about how to liquidate these claims should be taken as a broader suggestion as opposed to focusing on actual procedures to liquidate them as opposed to a process for resolving them which could include an overall resolution of the pot of assets that would be devoted to solving them. Okay. So we'll --
So schedule a pre-trial conference -For some time in June or something?
-- in May -- in mid-May on all four of
these adversary proceedings. MR. MARKOWITZ: Okay, I think that covers everything
THE COURT:
Okay.
I do want to go -- there's one You'll recall that I
point that I wanted to go back on.
mentioned that you should make sure you're giving actual notice
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 78
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
to people who you think have claims? MR. MARKOWITZ: THE COURT: Right.
Mr. Stang said, you know, we're trying to
develop lists of brothers who may have been identified as potential perpetrators. MR. MARKOWITZ: THE COURT: Correct.
And that's really not what I was saying;
it may make sense but you have to be very careful obviously, in putting someone on a list that goes out on wide notice to people. I mean I would think very hard before I approve that
unless I was, you know, unless that person had truly been identified as having done -MR. MARKOWITZ: THE COURT: We would --
-- bad things. We appreciate that and what we were
MR. MARKOWITZ:
doing it more was to try and rather than -- it was a suggestion earlier in the case, it was a pre-trial conference, the first time we were in front of Your Honor when we were trying to get a handle on things and we've had much discussion. So we've
given a list of schools for example, that the brothers were involved with so rather than taking an alumni record which we don't control and sending it out 1.5 million notices or something to every kid who ever went to the school between 1940 and 1980, what we tried to do is try to do targeted, say okay, here's a list of people that we think are the most credibly
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 79
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
accused -- we'll say that list was thirty people, just making up numbers -- and let's look at the schools that they worked in and if we had no other knowledge of claims whether being made or litigated, we didn't think it was a good use, we can get it in some bar date notice -THE COURT: Look you all can talk about that, I just
didn't want it to go by that -- I mean, I could see maybe listing everybody -- every brother -- because then, you know, it's like -MR. MARKOWITZ: THE COURT: Every brother's listed?
Right, every bother's listed and,
therefore, no one is specifically singled out as an abuser. But I would be very nervous about -- unless obviously there have been payments or there have been judgments and that's a different story then. MR. MARKOWITZ: There's a handful -- for lack of a And those
better term - of guys who did very bad things, okay? we think -THE COURT: understand my point. MR. STANG:
Well, you know, anyway, I think you
Your Honor, I don't know about the handful
reference, but I do know about -THE COURT: MR. STANG: Well, whatever it is; but I don't -I just want to explain one dynamic of this Maybe you're response is the right
issue of listing people.
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Page 80
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
one which is list all of the brothers. THE COURT: MR. STANG: Yeah. If I'm a survivor and I'm looking at a
list and I don't see my abuser on there, what I -- what some survivors process is, they're telling me it didn't happen to me and they're not willing to admit it. THE COURT: I mean, then consider listing them all and
saying this is not an accusation of anyone but they're all here. MR. STANG: Well, we'll have to discuss that; that's
an interesting approach that hadn't occurred to us, Your Honor. Thank you. THE COURT: Okay. All right, anything else?
MR. MARKOWITZ:
No, thank you, Your Honor.
(Whereupon these proceedings were concluded at 12:08 PM)
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Main Document
Page 81
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 Debtors' Motion to Extend the Exclusivity Periods, Granted Motion to Limit Notice to Certain Types of Matters, Granted Committee's Motion for Entry of a 2004 Order, Granted Motion for Automatic Stay, Denied Without Prejudice Motion for Approval of Settlement Agreement and Dismissal of Archdiocese, Granted Without Prejudice Motion to Approve Monthly Compensation Order Procedures, Denied Without Prejudice Pre-trial Conferences on Adversary Cases Deferred to Mid-May 78 19 69 12 52 21 42 12 17 28 23 23 RULINGS Page 13 Line 6 I N D E X
212-267-6868
516-608-2400
11-22820-rdd
Doc 181
Main Document
Page 82
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 Date: November 23, 2011 Veritext 200 Old Country Road Suite 580 Mineola, NY 11501 I, Devora Kessin, certify that the foregoing transcript is a true and accurate record of the proceedings. C E R T I F I C A T I O N
Devora Kessin
DEVORA KESSIN
______________________________________
Digitally signed by Devora Kessin DN: cn=Devora Kessin, o=Veritext, c=US Date: 2011.12.05 14:12:05 -05'00'
212-267-6868
516-608-2400

10000019747

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

10000019747

Uploaded by

Copyright:

Available Formats

11-22820-rdd

Filed 12/05/11 Entered 12/14/11 15:43:43 Pg 1 of 82

Filed 12/05/11 Entered 12/14/11 15:43:43 Pg 2 of 82

VERITEXT REPORTING COMPANY www.veritext.com

Filed 12/05/11 Entered 12/14/11 15:43:43 Pg 3 of 82

VERITEXT REPORTING COMPANY www.veritext.com

Filed 12/05/11 Entered 12/14/11 15:43:43 Pg 4 of 82

VERITEXT REPORTING COMPANY www.veritext.com

Filed 12/05/11 Entered 12/14/11 15:43:43 Pg 5 of 82

VERITEXT REPORTING COMPANY www.veritext.com

Filed 12/05/11 Entered 12/14/11 15:43:43 Pg 6 of 82

VERITEXT REPORTING COMPANY www.veritext.com

Filed 12/05/11 Entered 12/14/11 15:43:43 Pg 7 of 82

Page 7 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 BY: MICHAEL A. PATTERSON, ESQ.

SCOTT S. MARKOWITZ, ESQ. ANTHONY D. DOUGHERTY, ESQ.

JASON P. AMALA, ESQ.

Filed 12/05/11 Entered 12/14/11 15:43:43 Pg 8 of 82

VERITEXT REPORTING COMPANY www.veritext.com

P R O C E E D I N G S All right; Christian Brothers' Institute?

Good morning. Scott Markowitz, Tarter Krinsky & I have

Drogin for the debtors and debtors-in-possession.

-- down that agenda? Yes, Judge.

VERITEXT REPORTING COMPANY www.veritext.com

extend the exclusivity periods.

Your Honor had entered some

case because of all the moving issues.

There's schools in many states and trying to

VERITEXT REPORTING COMPANY www.veritext.com

VERITEXT REPORTING COMPANY www.veritext.com

If this debtor is in the process of selling at

to extend the exclusive periods.

VERITEXT REPORTING COMPANY www.veritext.com

date; okay. MR. MARKOWITZ: We understand, Your Honor.

VERITEXT REPORTING COMPANY www.veritext.com

All right. There was another motion -- going

describing abandonment? MR. MARKOWITZ: Correct.

VERITEXT REPORTING COMPANY www.veritext.com

Notice to parties who have an interest in

-- I'm assuming it's worth 20,000 but

-- okay. Or if it might be worth 3,000; if it's

MR. MARKOWITZ: THE COURT:

All right. And Your Honor, we just ask to see the

VERITEXT REPORTING COMPANY www.veritext.com

MR. MARKOWITZ: THE COURT:

We'll do that of course.

Is it that you're going to describe it in the

MR. MARKOWITZ: THE COURT:

Okay. Now we're on to contested matters.

Not in the term under the Bankruptcy Code, necessarily, but in

VERITEXT REPORTING COMPANY www.veritext.com

VERITEXT REPORTING COMPANY www.veritext.com

VERITEXT REPORTING COMPANY www.veritext.com

VERITEXT REPORTING COMPANY www.veritext.com

VERITEXT REPORTING COMPANY www.veritext.com

represented by this law firm.

They reserve the rights of the

VERITEXT REPORTING COMPANY www.veritext.com

It's within their discretion.

VERITEXT REPORTING COMPANY www.veritext.com

Okay. Thank you, Judge.

He told me that he wants the NAP -- the North

VERITEXT REPORTING COMPANY www.veritext.com

Do they have their own -They'll have to have their own