Greenspan v. Dorsey & Whitney LLP et al

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	) Bankruptcy Case
) No. 03-32715DM
BROBECK, PHLEGER & HARRISON LLP, 	)
)
Debtor. 	) Chapter 7
___________________________________)
RONALD F. GREENSPAN, Chapter 7 	) Adversary Proceeding
Trustee for Brobeck, Phleger & 	) No. 08-3027DM
Harrison LLP, 	)
)
Plaintiff, 	)
)
v. 	)
)
DORSEY & WHITNEY LLP, PATRICK 	)
ARRINGTON, JOHN S. BAKER, ELLEN S. )
BANCROFT, DAVID L. HAYES, SCOTT R. )
SANTAGATA and GABRIELLE M. WIRTH, 	)
)
Defendants. )
___________________________________)
MEMORANDUM DECISION RE DEFENDANTS’ MOTION FOR RECONSIDERATION
I. BACKGROUND
In its July 2, 2009 Memorandum Decision (the “Decision”), the
court granted partial summary judgment in favor of the Trustee as
to liability on his Seventh and Ninth Claims for constructive
fraudulent transfer against Former Partner defendants Arrington,
Baker, Bancroft, Hayes, Santagata, and Dorsey & Whitney LLP
(“Dorsey”)(collectively with the Former Partners, the “Dorsey
Signed and Filed: January 25, 2010
________________________________________
DENNIS MONTALI
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
January 26, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 08-03027 Doc# 71 Filed: 01/25/10 Entered: 01/26/10 10:24:18 Page 1 of 6

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1 The Trustee was not entitled to partial summary judgment as
to liability against Former Partner defendant Wirth because
whether she gave something of reasonably equivalent in exchange
for Brobeck’s Unfinished Business was in dispute.
2 In the Motion, the Dorsey Defendants expressed confusion
as to the definition of “Unfinished Business” used by the court in
the Decision. 	To state it again, as was made clear at the hearing
on December 11, 2009, Unfinished Business includes discreet
matters, whether hourly rate or contingency fee matters, handled
by a Former Partner while at Brobeck and completed by (or on
behalf of) that Former Partner at Dorsey for which Dorsey received
fees. 	It does not include “new” discreet matters of former
Brobeck clients that were initiated by a Former Brobeck Partner at
Dorsey.
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Defendants”). 1 	In the Decision, the court found that the Trustee
had established a prima facie case that the Dorsey Defendants took
Unfinished Business of Brobeck for which they did not provide
reasonably equivalent value in exchange. 	An order was entered to
this effect on July 28, 2009.
On August 26, 2009, the Dorsey Defendants filed a motion to
reconsider under Fed. R. Civ. P. 54(b), incorporated by Fed. R.
Bankr. P. 7054(b)(the “Motion”), contending, inter alia, that the
court erred in granting the Trustee’s motion because he had failed
to prove that any of the Dorsey Defendants actually took
Unfinished Business 2 of Brobeck. 	Although the Trustee had
provided exhibits indicating that the Former Partners had
continued to represent several of Brobeck’s former clients and for
which Dorsey received fees from Brobeck’s Unfinished Business, the
Dorsey Defendants contended that the exhibits did not necessarily
show Unfinished Business profits but rather only reflected that
Former Partners opened files at Dorsey for clients they had
represented at Brobeck. 	The Trustee opposed the Motion.
At the December 11, 2009 hearing on the Motion, the court
Case: 08-03027 Doc# 71 Filed: 01/25/10 Entered: 01/26/10 10:24:18 Page 2 of 6

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3 In the Dorsey Defendants’ response, Former Partner
Arrington conceded that he took at least one Unfinished Business
matter for which Dorsey, the immediate transferee, received fees.
Therefore, this is sufficient to deny reconsideration as to
defendants Arrington and Dorsey.
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directed the Trustee to file a supplemental brief pointing to
parts of the record proving that each of the Dorsey Defendants did
in fact take Unfinished Business of Brobeck. 	He filed the
supplement on December 21, 2009. 	The Dorsey Defendants filed
their response on January 8, 2010, and the matter was deemed
submitted.
Upon consideration of the supplemental brief and response,
the court DENIES the Motion with respect to Former Partner
defendants Arrington, 3 Bancroft, and Santagata, and defendant
Dorsey. 	However, it GRANTS the Motion with respect to Former
Partner defendants Baker and Hayes.
II. DISCUSSION
Although the Trustee notes that the Dorsey Defendants
admitted in Request for Admission no. 9 that one or more
Unfinished Business matters of Brobeck were taken to Dorsey, this
is not sufficient evidence with respect to each of the Former
Partners’ individual liability as he contends; it merely shows
that at least one of them brought Unfinished Business for which
that Former Partner and Dorsey may be liable if damages are proven
at trial.
In his supplemental brief, the Trustee did not mention Former
Partner defendants Baker and Hayes or point to anything in the
record proving that either of them actually took any Unfinished
Business. 	In the court’s review of deposition testimony submitted
Case: 08-03027 Doc# 71 Filed: 01/25/10 Entered: 01/26/10 10:24:18 Page 3 of 6

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4 Santagata will be permitted to present evidence at trial to
prove that the second closing was a “new” matter.
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by the Trustee in his initial motion for partial summary judgment,
Baker’s testimony is inconclusive as to whether he took any
Unfinished Business. 	The same is true for Hayes. 	This disputed
material fact prevents partial summary judgment regarding their
liability, and therefore the Motion is GRANTED as to Former
Partner defendants Baker and Hayes, and the July 27, 2009 order
granting partial summary judgment in favor of the Trustee and
against Former Partner defendants Baker and Hayes is VACATED.
As for Former Partner defendant Santagata, the Trustee points
to Santagata’s deposition testimony where he discussed performing
a closing on an IPO for a Brobeck client after Brobeck dissolved,
but for which Brobeck received over $200,000 in fees. 	However,
after joining Dorsey, Santagata performed what he referred to as a
“second closing” on the IPO matter for the same client, for which
Dorsey received fees. 	The Dorsey Defendants contend that the
second closing was a “new” matter and thus is not Unfinished
Business. 	The court believes the second closing constitutes
Unfinished Business. 	Consequently, as to Former Partner defendant
Santagata, the Motion is DENIED. 4
The case of Former Partner defendant Bancroft is more
difficult. 	According to her deposition testimony, Bancroft joined
Dorsey on February 17, 2003. 	The Trustee points to Bancroft’s
testimony where she stated that she provided ongoing advice to
clients on certain subject matters. 	Such testimony is
insufficient as proof that she took Unfinished Business of Brobeck
to Dorsey.
Case: 08-03027 Doc# 71 Filed: 01/25/10 Entered: 01/26/10 10:24:18 Page 4 of 6

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5 Along with the Motion, Former Partner defendants Bancroft
and Santagata offered declarations elaborating about what Brobeck
matters they worked on and what they gave in exchange for the
Jewel Waiver. 	The Trustee opposed these declarations, contending
they were impermissible second bites regarding facts that were
well known to the defendants when they litigated the cross summary
judgment motions, and further contended that they failed to
otherwise support reconsideration under Rule 54(b). 	The court
agrees that the Bancroft and Santagata declarations do not provide
a basis for reconsideration, and it therefore disregards them.
However, even if considered, they would not cause the court to
change its ruling on the Motion.
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However, in his initial motion and his supplement, the
Trustee also points to a February 2, 2003 email in which Bancroft
states that she “ha[s] ongoing deals and clients are freaking
out.” 	When questioned about the email, Bancroft could not recall
any specifics. 	The Dorsey Defendants contend that just because
deals were “ongoing” on February 2, does not mean that these deals
were still ongoing by the time Bancroft joined Dorsey on February
17, and completed at Dorsey.
Although the court’s ability to make inferences at the
summary judgment stage is limited, it seems highly unlikely that
every one of Bancroft’s “ongoing deals” for “clients” as of
February 2, 2003, were completed by the time she joined Dorsey
only fifteen days later. 	Further, Bancroft admitted at deposition
that there may have been some “small items” of Unfinished Business
that she took to Dorsey. 	Consequently, as to Former Partner
defendant Bancroft, the Motion is DENIED. 5
III. CONCLUSION
The Motion is DENIED as to Former Partner defendants
Arrington, Bancroft, and Santagata, and defendant Dorsey, and is
GRANTED as to Former Partner defendants Baker and Hayes. 	The
court is concurrently entering an Order consistent with this
Case: 08-03027 Doc# 71 Filed: 01/25/10 Entered: 01/26/10 10:24:18 Page 5 of 6

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Memorandum Decision.
**END OF MEMORANDUM DECISION**
Case: 08-03027 Doc# 71 Filed: 01/25/10 Entered: 01/26/10 10:24:18 Page 6 of 6