Greenspan v. Orrick, Herrington & Sutcliffe 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 & 	) Nos. 08-3027 & 08-3028
Harrison LLP, 	)
)
Plaintiff, 	)
)
v. 	)
)
ORRICK, HERRINGTON & SUTCLIFFE LLP,)
et al., 	)
)
Defendants. )
___________________________________)
RONALD F. GREENSPAN, Chapter 7 	)
Trustee for Brobeck, Phleger & 	)
Harrison LLP, 	)
)
Plaintiff, 	)
)
v. 	)
)
DORSEY & WHITNEY LLP, et al., 	)
)
Defendants. )
___________________________________)
MEMORANDUM DECISION REGARDING JEWEL V. BOXER CLAIMS
AND FRAUDULENT TRANSFERS
I. INTRODUCTION
This case presents the court with a matter of apparent first
Signed and Filed: July 02, 2009
________________________________________
DENNIS MONTALI
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
July 02, 2009
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
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1 Unless otherwise indicated, all chapter, section and rule
references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1330, and
to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037, as
enacted and promulgated prior to the effective date of The
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,
Pub. L. 109-8, 119 Stat. 23.
2 As of January 1, 1999, the California Revised Uniform
Partnership Act found in Corp. Code § 16100 et. seq. (“RUPA”)
governs all California partnerships, including those formed before
January 1, 1997, thus replacing the former Uniform Partnership Act
(“UPA”) in its entirety. 	See RUPA § 16111. 	It is undisputed that
Brobeck, a limited liability partnership, is governed by RUPA.
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impression: a dramatic intersection of well-established and
necessary rules appropriate for the winding up and dissolution of
a law firm with the equally well-established principles
recognizing rights of third-party creditors that protect them from
the adverse financial consequences of an otherwise valid
transaction. 	In a time when the financial collapse of legacy
institutions can occur quickly, a last minute attempt at order
rather than chaos cannot prevail over the rights of that firm’s
creditors.
Plaintiff, Ronald F. Greenspan, chapter 7 1 trustee (the
“Trustee”) for the estate of former law firm, Brobeck, Phleger &
Harrison LLP (“Brobeck”), 2 seeks to invalidate eleventh hour
amendments to Brobeck’s partnership agreement, and to recover
allegedly fraudulently transferred profits from Brobeck’s
unfinished business and partnership opportunities from ten former
Brobeck partners (individually, “Partner Defendant,” collectively,
the “Partner Defendants”) who moved to either Defendant Orrick,
Herrington & Sutcliffe LLP (“Orrick”, collectively with its former
Brobeck partners, the “Orrick Defendants”) or Defendant Dorsey &
Whitney LLC (“Dorsey”, collectively with its former Brobeck
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3 This Memorandum Decision constitutes the court’s findings
of fact and conclusions of law pursuant to Rule 7052(a). 	While
findings of fact are not normally necessary on summary judgment
motions, it seems appropriate here to provide context. 	No
material facts described are in dispute.
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partners, the “Dorsey Defendants”) as well as from Orrick and
Dorsey (collectively the “Firms,” and together with the Partner
Defendants, the “Defendants”) following Brobeck’s dissolution.
The Trustee moves for partial summary judgment on claims for
relief 1, 3, 5, and 6 through 9 (“Claims”) in his complaints filed
in the above-captioned adversary proceedings. 	The Defendants move
for summary judgment on all nine of Trustee’s Claims.
For the reasons explained in the following discussion, the
court recognizes that attorneys in a failing firm can patch up
their differences with an agreement that is valid and proper under
applicable law and decide to go their separate ways. 	Accordingly,
the Trustee’s direct attack on their successful effort to avoid
the consequences of doing nothing must fail and Defendants are
entitled to summary judgment on Claims 1 through 5. 	But because
they did not guard against such failure until the firm succumbed
to insolvency, the Trustee’s alternative attack under the
fraudulent transfer laws must succeed, and he is entitled to
partial summary judgment on Claims 7 and 9 for constructive fraud
under state and federal law, except with respect to Partner
Defendants James P. Baker (“James Baker”), Grady Bolding
(“Bolding”), and Gabrielle M. Wirth (“Wirth”), as explained
further in the Memorandum Decision.
II. BACKGROUND3
Brobeck started business in 1926. 	It was a prominent
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national law firm with over 900 attorneys and offices in
California, New York, Colorado, Virginia, Texas, Washington D.C.,
and, through a joint-venture, in London, England. 	In the late
1990's and early 2000s, Brobeck enjoyed rapid growth, almost
doubling its number of attorneys in just over three years. 	This
was due primarily to its booming technology-sector practice. 	In
the course of its expansion, Brobeck incurred substantial debt as
well as lease obligations for several new offices. 	However, as
they say, all good things must come to an end.
In January 2002, Brobeck and its primary lender, Citibank,
F.S.B. (“Citibank”), executed a credit agreement by which Citibank
acquired liens on all of Brobeck’s accounts receivable, unbilled
time and other assets. 	During 2002, Brobeck was experiencing
financial difficulties, and in December 2002, after several
partners had left Brobeck, Citibank sent notice to Brobeck’s
management that it was in default under the agreement.
Brobeck and Citibank then renegotiated their credit agreement and
on January 22, 2003, entered into an amended security agreement in
favor of Citibank. 	At or around the same time, Brobeck pursued
merger negotiations with Morgan, Lewis & Bockius LLP (“Morgan
Lewis”). 	Also on January 22, 2003, Brobeck’s chairman sent an
email to all partners entitled “OUR FIRM: Restructuring Complete!”
However, on January 29, 2003, Brobeck’s discussions with Morgan
Lewis ended unsuccessfully and on January 30, 2003, management
announced to the partners that the merger had failed and Brobeck
would soon dissolve.
Meanwhile, Brobeck’s Policy Committee prepared a dissolution
agreement. 	Partner Defendant Bolding and others drafted what
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4 Jewel was decided under the UPA, which did not allow
partners to receive extra compensation for conducting post-
dissolution “wind-up” activities (except for surviving partners).
RUPA has changed this rule. 	It allows partners reasonable
compensation for services rendered in winding up the business of
the partnership. 	See Cal. Corp. Code § 16401(h).
Under the scheme of RUPA, the profits from a dissolved
partnership’s unfinished business would appear to consist of the
remainder from fees received minus overhead costs and reasonable
compensation to the partner responsible for winding up the
unfinished matter. 	For example, if a partner received $50,000 in
fees but incurred $40,000 of costs for overhead and the partner’s
reasonable compensation to generate that $50,000 in fees, the
profit for which that partner would have to account is $10,000.
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became Brobeck’s Final Partnership Agreement (“FPA”), effective
February 10, 2003. 	As part of the FPA, Brobeck’s Policy Committee
asked Bolding to address the unfinished business rule and any
Jewel-related liability, which stems from the seminal California
Court of Appeal decision, Jewel v. Boxer, 156 Cal. App. 3d 171
(1984) (“Jewel”).
The unfinished business rule provides that, in the absence of
an agreement to the contrary, partners have a duty to account to
the dissolved firm and their former partners for profits they earn
on the dissolved firm’s “unfinished business,” after deducting for
overhead and reasonable compensation. 4 	In other words, profits
realized by former partners at their new firms must be shared
among all partners of the dissolved firm in accordance with the
firm’s prior practice. 	The Jewel partners had no written
agreement to deal with the firm’s dissolution. 	The court’s
opinion chided them for that omission, and virtually invited law
partnerships to have such an agreement. 	Id. at 179-80. 	RUPA
expressly authorizes partners to do exactly that.
Many Brobeck partners, including the Partner Defendants, were
all too familiar with Jewel and the duty to account because a law
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5 Throughout this Memorandum Decision, the court will use the
Brobeck partners’ term “Unfinished Business” to describe what the
partners waived by the emphasized language, and the value of which
is part of what the Trustee seeks to recover.
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firm had recently sued Brobeck for an accounting of profits
Brobeck earned on unfinished business completed by former partners
of that firm who went to Brobeck.
As planned, the FPA included an unfinished business agreement
set forth in Section 9(e) (the “Jewel Waiver”). 	It states, in
relevant part:
Except 	as 	specifically 	set 	forth 	below, 	neither 	the
Partners 	nor 	the 	Partnership 	shall 	have 	any 	claim 	or
entitlement 	to 	clients, 	cases 	or 	matters 	ongoing 	at 	the
time of the dissolution of the Partnership other than the
entitlement 	for 	collections 	of 	amounts 	due 	for 	work
performed by the Partners and other Partnership personnel
on 	behalf 	of 	the 	Partnership 	prior 	to 	their 	departure
from 	the 	Partnership. 	The 	provisions 	of 	this 	Section
9(e) are intended to expressly waive, opt out of and be
in lieu of any right any Partner or the Partnership may
have to ‘unfinished business’ of the Partnership, as that
term is defined in Jewel v. Boxer, or as otherwise might
be 	provided 	in 	the 	absence 	of 	this 	provision 	through
interpretation 	or 	application 	of 	the 	California 	Revised
Uniform Partnership Act (emphasis added). 5
The Jewel Waiver provided that Brobeck’s partners would not
have a duty to account back to Brobeck or each other for Brobeck’s
Unfinished Business with two exceptions - two ongoing contingency
matters - the Western MacArthur (“Western”) insurance coverage
litigation and bankruptcy, and the Tickets.com litigation. 	Those
two matters were “carved out” of Section 9(e) as an exception to
Unfinished Business as follows:
(i) 	The 	Partners 	through 	the 	Partnership 	shall 	be 	and
remain entitled to amounts to which any former Partner or
Partners, or such former Partners’ partners, employer or
affiliates 	(collectively, 	the 	“New 	Entities”) 	may
otherwise become entitled in respect of amounts paid for
legal 	services 	conducted 	after 	the 	former 	Partner’s
dissociation from the Partnership upon dissolution of the
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Partnership, on ongoing business of Western MacArthur and
MacArthur 	relating 	to 	the 	Chapter 	11 	proceedings 	of
Western 	MacArthur 	Company 	and 	MacArthur 	Company 	and
ongoing asbestos insurance coverage litigation, provided
that 	in 	addition 	to 	offsetting 	costs, 	such 	New 	Entities
shall be entitled to retain an amount in consideration of
the value of the work performed 	on 	these 	matters 	by 	the
New Entities. 	For purposes of this subparagraph (i), the
value 	of 	the 	work 	so 	performed 	by 	New 	Entities 	after
assumption 	of 	the 	case 	shall 	be 	equal 	to 	one 	hundred
percent 	(100%) 	of 	the 	guideline 	hourly 	rates 	billed 	by
the 	New 	Entities 	for 	work 	performed 	by 	any 	timekeeper,
including 	the 	former 	Partner, 	and 	any 	member,
shareholder, 	associate, 	legal 	assistant 	or 	paralegal 	of
the 	New 	Entities, 	for 	the 	period 	in 	which 	the 	services
were performed, plus a portion of any additional amounts
earned above such hourly rates as follows . . . .
In essence, this agreement waived Jewel claims Brobeck would
have had against its former partners and their new firms, and the
partners’ claims against one another, with the exception of
Western and Tickets.com.
On February 9, 2003, Brobeck’s Policy Committee circulated
the proposed FPA, a cover letter, and a two and one-half page memo
(the “Consent Memo”) explaining the FPA’s key provisions to all
partners. 	The Consent Memo solicited consents to the FPA, and
Paragraph 7 of that Memo references the Jewel Waiver and Jewel.
In Paragraph 7, the Policy Committee told partners that “[e]xcept
with respect to [Brobeck’s] interest in the Western MacArthur and
Tickets.com cases, the ‘unfinished business’ doctrine of Jewel v.
Boxer is waived” and that “[t]his allows all Partners to go on to
other law firms with their clients and matters and not be under a
cloud of having to account back to Brobeck or other Partners for
revenue they generate.” 	Brobeck’s right to receive profits from
work in Western and Tickets.com was not affected by the Jewel
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6 The Tickets.com matter ended up a total loss and its
exclusion from the Jewel Waiver is irrelevant to the matters
before the court.
7 Each Orrick Partner Defendant admits that he either
consented to the FPA or, if not, it should apply to him. 	The
Dorsey Partner Defendants generally did not recognize the
document, but either had no reason to believe it was not the FPA,
and/or relied on the FPA in his or her interrogatory responses.
8 It is undisputed that Partner Defendants Bolding, James
Baker, Jeffrey D. Hermann (“Hermann”) and Frederick D. Holden, Jr.
(“Holden”), all of whom went to Orrick, were partners at Brobeck
on January 30, 2003, when Brobeck’s management announced the
dissolution. 	After the dissolution announcement, but before the
dissolution date, Partner Defendants Baker, Bolding and Holden
resigned from Brobeck and accepted offers from Orrick; Hermann
joined Orrick after the dissolution.
Partner Defendants Patrick Arrington (“Arrington”), John S.
Baker (“John Baker”), Ellen S. Bancroft (“Bancroft”), David L.
Hayes (“Hayes”), Scott R. Santagata (“Santagata”) and
Wirth, all of whom went to Dorsey, were partners at Brobeck’s
Irvine, California office when Brobeck announced its dissolution
and on the dissolution date.
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Waiver. 6
Over the next two days, via email, telephone conferences and
other meetings, the partners discussed the proposed FPA and Jewel
Waiver, Brobeck’s liquidation plans, funding its liquidation
committee, capital calls, storage of client files and retirement
accounts. 	The partners then voted on the FPA.
On February 11, 2003, the Policy Committee certified that a
sufficient number of partners had consented to the FPA, and thus
it was approved. 7 	After 77 years in business Brobeck proceeded to
dissolve under RUPA § 16801 et. seq. 8
After Brobeck’s dissolution, but prior to its bankruptcy in
September 2003, several Brobeck partners moved on to various
firms, including Orrick and Morgan Lewis. 	Some of these Brobeck
partners were key counsel in the Western case while it was a
client of Brobeck. 	In order to ensure Brobeck would receive the
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Western contingency fees excluded from the Jewel Waiver, if any,
Brobeck, Morgan Lewis and Orrick entered into an agreement to
continue representation. 	As part of that agreement, the parties
implemented an incentive contingency bonus fee arrangement which
included three bonuses. 	In order for Brobeck to earn any of the
bonuses certain objectives had to be achieved, such as obtaining
the Western bankruptcy court’s approval of Western’s plan of
reorganization. 	Under the arrangement, the bonuses would be
allocated to Brobeck, Morgan Lewis and Orrick. 	However, Orrick’s
bonus was contingent upon any bonus being paid to Morgan Lewis:
Orrick would receive 50% of all bonus fees paid to Morgan Lewis,
up to a cap of $500,000. 	Additionally, if Morgan Lewis received
and retained less than $1 million, Orrick would receive only 50
cents for every dollar Morgan Lewis received. 	If Morgan Lewis
ended up with nothing, Orrick would recover nothing.
Ultimately, the goals in Western were achieved and Brobeck’s
share of Bonus 1, which came after Brobeck’s bankruptcy, was
allocated among the Brobeck estate, Morgan Lewis and Orrick.
Since Morgan Lewis received over $1 million in bonus fees from
Bonus 1, Orrick received its cap of $500,000 and thus received
nothing from Bonus 2 or 3. 	Those bonuses were allocated between
Brobeck’s estate and Morgan Lewis. 	Orrick contends that under the
fee arrangement, its bonus fees were to be paid directly from
Morgan Lewis; the Trustee contends that Orrick’s bonus was to come
from Brobeck’s estate, which it eventually did.
Although not pled specifically in his complaint against the
Orrick Defendants, it appears the Trustee seeks to recover
Orrick’s $500,000 bonus as a subset of Brobeck’s Unfinished
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9 Whether Partner Defendant Bolding completed Unfinished
Business is also in dispute.
10 Although the record is inconclusive as to whether Dorsey
realized any net profits from Unfinished Business, the court
rejects Dorsey’s unsupported contention that only files opened
within the first 90 days of Brobeck’s dissolution should be
considered in the profit/loss analysis.
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Business profits.
The record reflects that Partner Defendants James Baker,
Hermann and Holden, all of whom went to Orrick, were responsible
for and completed Unfinished Business for several former Brobeck
clients while at Orrick, for which Orrick received a confidential
amount of revenue resulting in some retained profit. 9 	Partner
Defendants Arrington, John Baker, Bancroft, Hayes, Santagata and
Wirth, all of whom went to Dorsey, completed Unfinished Business
for several former Brobeck clients while at Dorsey, for which
Dorsey received a confidential amount of “revenue.” 	Although the
Trustee alleges Dorsey had profits from Unfinished Business, the
Dorsey Defendants claim otherwise. 	The documents in evidence do
not conclusively establish whether Dorsey realized any profits
from Unfinished Business. 10
Other than Brobeck’s right to the potential profits from the
Western and Tickets.com contingency fee matters, on its face the
Jewel Waiver is not contingent upon receipt of any payment or
other consideration from the Brobeck partners, or their new firms.
It is undisputed that neither of the Firms nor any Partner
Defendant turned over any portion of Unfinished Business profits
or paid anything to the Trustee or Brobeck’s estate on account of
such profits.
Finally, for purposes of this proceeding, the Defendants do
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not contest that Brobeck was insolvent at the time of the Jewel
Waiver.
III. PROCEDURAL HISTORY
On September 17, 2003, certain of Brobeck’s creditors filed
an involuntary chapter 7 bankruptcy petition. 	Following his
election, the Trustee asserted claims against Morgan Lewis and
Clifford Chance LLP, the two firms that hired the largest numbers
of Brobeck partners, and commenced adversary proceedings against
222 individual Brobeck partners. 	By late 2004, the Trustee
settled all of his claims with Clifford Chance LLP and Morgan
Lewis, including a claim against Morgan Lewis on a Jewel theory
for its share of the profits earned on the Western representation.
That settlement resulted in Morgan Lewis returning almost all of
its share of the Western bonus fees.
Later, the Trustee entered into written settlement agreements
with nearly all of the remaining Brobeck partners, including each
Partner Defendant at Orrick and at Dorsey. 	Through those
agreements, he released the Partner Defendants from all claims,
except claims “arising out of, related to or in connection with,
or based in whole or in part on the decision in Jewel v. Boxer and
the provisions of UPA or RUPA that formed or that would form the
statutory underpinning of any Jewel v. Boxer-type claim.” 	In
September 2005, the Trustee and Defendants executed a tolling
agreement which tolled the statute of limitations applicable to
any Jewel claim the Trustee might assert against them.
On March 28, 2008, the Trustee filed two complaints alleging
the exact nine Claims against the Defendants, thereby commencing
these two adversary proceedings. 	Claim 1 seeks a declaration that
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11 Section 542 provides, in relevant part:
(a) an entity, other than a custodian, in possession,
custody, or control, during the case, of property that the
trustee may use, sell, or lease under section 363 of this
title . . . shall deliver to the trustee, and account for,
such property or the value of such property . . . .
12 The Trustee contends that partnership opportunities
includes profits received from business, apart from Unfinished
Business, handled by the Firms for a former Brobeck client which
had not previously been a client of the Firms (“Partnership
Opportunities”). 	He alleges that at least one Partner Defendant,
Holden, engaged in Partnership Opportunities for which Orrick
received profits.
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the profits the Firms received completing matters originating from
Brobeck belong to Brobeck pursuant to RUPA § 16404(b)(1) and
Jewel. 	Claim 2 seeks an accounting and turnover order under
section 542 with respect to such alleged Unfinished Business
profits. 11 	Claims 3 and 4 are similar to the first two, but
instead of Unfinished Business profits the Trustee seeks an
accounting and turnover of the profits the Firms earned on
partnership opportunities. 12 	Claim 5 seeks a declaration that the
Jewel Waiver was an “unlawful waiver” within the meaning of RUPA §
16103(b)(3). 	Claims 6, 7, 8 and 9 allege that the Jewel Waiver
effected an actual or constructive fraudulent transfer within the
meaning of state and federal law.
On February 27, 2009, the Trustee filed his combined partial
motion for summary judgment, moving for judgment on Claims 1, 3,
5, and 6 through 9. 	On that same date, the Defendants filed their
respective motions for summary judgment, moving for judgment on
all nine of Trustee’s Claims. 	The parties agreed to a bifurcation
of this litigation into liability and damages phases. 	Therefore,
if the Jewel Waiver is invalid, or if it was a fraudulent
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28 13 The adversary proceedings were consolidated for oral
argument and disposition.
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transfer, the Trustee must prove in phase two of this litigation
what damages he may recover.
The motions were set for oral argument on April 13, 2009. 13
On April 9, 2009, the court issued a Tentative Ruling (“TR”),
indicating summary judgment in favor of the Defendants on Claims
1, 2, 3, 4 and 5, and denial of all motions as to Claims 6, 7, 8
and 9. 	(See Dkt. No. 37 in A.P. 08-3027, and Dkt. No. 66 in A.P.
08-3028).
At the beginning of the April 13 hearing, the Trustee offered
to accept the TR and argue only for Claims 6, 7, 8 and 9 - the
various fraudulent transfer claims. 	Defendants declined this
offer and chose to argue on all nine Claims.
IV. DISCUSSION
Motions for summary judgment under Fed. R. Civ. P. 56 are
made applicable here by Rule 7056. 	Summary judgment should only
be granted “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law.” 	Fed. R. Civ. P. 56(c).
The evidence is construed in the light most favorable to the
nonmoving party, and the moving party bears the burden to show the
absence of any genuine issue of material fact. 	Hopkins v. Andaya,
958 F.2d 881, 884 (9th Cir. 1992). 	“However, once the moving
party demonstrates the absence of a genuine issue of material
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14 The Dorsey Defendants adopt all of the arguments raised by
the Orrick Defendants in opposition to the Trustee’s motion on
Claims 1 through 5.
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fact, the burden shifts to the nonmoving party to produce evidence
sufficient to support a jury verdict in [the nonmoving party’s]
favor.” 	Anderson v. Liberty Lobby Inc., 477 U.S. 242, 256-57.
Id. at 884-85.
No genuine issue of fact exists if the party opposing the
motion “fails to make a showing sufficient to establish the
existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.” 	Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A. 	Was The Jewel Waiver Valid?
The Trustee argues that he is entitled to the profits
realized on Brobeck’s Unfinished Business and Partnership
Opportunities for two reasons: (1) RUPA § 16404(b)(1) provides and
Jewel holds that unfinished business remains property of a law
partnership, unless there is a contrary agreement, and (2) the
contrary agreement here was an unlawful waiver of the Brobeck
partners’ duty of loyalty and invalid under RUPA §§ 16103(b)(3)
and 16404, or was manifestly unreasonable, triggering the default
rules of RUPA and Jewel and rendering Brobeck’s Unfinished
Business profits and Partnership Opportunities property of its
estate.
In opposition, the Defendants 14 argue that under Jewel
partners are permitted and encouraged to modify contractually
their duties to account for profits earned on Unfinished Business,
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15 In the alternative, the Defendants contend that the
Trustee’s Claims should be denied because he has failed to prove
they earned any recoverable Unfinished Business profits within the
applicable one-year time limit after Brobeck’s dissolution, citing
Official Comm. of Unsecured Creditors v. Ashdale (In re Labrum &
Doak, LLP), 227 B.R. 391 (Bankr. E.D. Pa. 1998).
The court rejects a time limit on recovery. 	In Labrum &
Doak, the recovery period was limited to one year simply because
that is all the creditor’s committee requested. 	Unfinished
business exists until it is finished, and therefore the Trustee,
if entitled, can recover any realized Unfinished Business profits
no matter when such business was or is concluded.
16 As to the Partnership Opportunities claim, in the TR the
court noted that Brobeck had no ability to exploit any such
opportunities once it dissolved. 	Furthermore, the Brobeck
partners could not be liable for taking on what would be
considered “new” business, even if that “new” business involved
representing former Brobeck clients. 	Based on that, the court
declined to address the statute of limitations issue.
The Trustee accepted the TR with respect to this Claim.
Consequently, as the Trustee conceded, there can be no accounting
or turnover of Partnership Opportunities profits that do not
exist, as he requested in Claim 4. 	Therefore, the Defendants are
entitled to summary judgment on Claims 3 and 4, and those Claims
will not be discussed further.
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that the Jewel Waiver complied with the provisions of RUPA, and it
was not manifestly unreasonable. 15 	More specifically, as to the
Partnership Opportunities claim, the Defendants argue that once a
partnership is dissolved it has no claim to “new” matters, even
matters from former clients, because such new matters do not
constitute Unfinished Business. 	They further contend that the
Trustee is barred from bringing such a claim because the previous
settlement agreements with the Partner Defendants carved out only
“Jewel-type claims,” and since Partnership Opportunities fall
outside of that definition, the relevant statute of limitations
had run. 16
In their own motions, with respect to Claims 1 through 5, the
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17 The Orrick Defendants adopt all of the arguments raised by
the Dorsey Defendants in support of Dorsey’s motion for summary
judgment on Claims 1 through 5, and vice versa.
18 The court agrees with Defendants. 	Because the FPA complied
with RUPA, the Trustee, on behalf of Brobeck, lacks standing to
assert claims for breaches of fiduciary duty (the essence of
Claims 1 through 5) since such claims can be prosecuted only by
partners against partners. 	Brobeck’s rights and powers are
defined by the partnership agreement that created and continues
it. 	Under section 541, the Trustee takes Brobeck’s pre-petition
powers and the limitation on those powers, and unless Brobeck
could sue the partners the Trustee cannot. 	3 Collier on
Bankruptcy § 323.03[2] at 323-9 (15th ed. rev. 2009)(trustee
stands in shoes of the debtor and can only assert those causes of
action possessed by the debtor). 	It is doubtful that Brobeck,
governed by the partners’ vote, could sue the very owners who
voted to change the partnership agreement.
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Defendants 17 contend that since the Jewel Waiver was valid and
enforceable and defined the extent of Brobeck’s interest in its
Unfinished Business, which is none with respect to hourly rate
matters, the Trustee lacks standing to even bring such claims. 18
Moreover, they believe that Jewel does not apply to them for five
reasons: (1) the Jewel Waiver precludes its application; (2) RUPA,
unlike the UPA, allows partners reasonable compensation for post-
dissolution work in completing unfinished business, and thus the
profit earned here is the reasonable compensation, at least on
hourly rate matters; (3) the California Supreme Court would not
apply Jewel as to non-contingency matters since after a
partnership has dissolved no one is left to complete the work; (4)
Jewel has only been applied against former partners and not to the
law firms those partners later join, so the Trustee has no claim
against the Firms; and (5) the rule cannot support a claim against
the Defendants because it fails to seek an accounting from all
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19 Cal. Civ. Proc. § 389(c) provides:
A complaint or cross-complaint shall state the names, if
known to the pleader, of any persons as described in
paragraph (1) or (2) of subdivision (a) who are not joined,
and the reasons why they are not joined.
Because the court concludes that the Jewel Waiver was valid
under Jewel and RUPA, there is no need to reach a conclusion on
this procedural issue. 	Nonetheless, the Trustee is free to sue
one, some, or all of the former Brobeck partners for fraudulent
transfer.
20 The court rejects the Defendants’ argument that under RUPA
unfinished business does not include hourly rate matters. 	See
Rothman, supra. 	Although Defendants cite a New York case,
Gottlieb v. Greco, 749 N.Y.S. 2d 19 (N.Y. App. Div. 2002), and
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160+ Brobeck partners as required by Cal. Civ. Proc. § 389(c). 19
Finally, they assert that the Brobeck partners thought that
eliminating the duty to account back to each other for their
hourly rate work would avoid years of litigation, thus benefitting
Brobeck and its creditors.
B. 	The Jewel Waiver Was Valid.
1. 	The Waiver Complied With Jewel.
Under California law, the unfinished business of a law
partnership is any business covered by retainer agreements between
the firm and its clients for the performance of partnership
services that existed at the time of dissolution. 	Rosenfeld,
Meyer & Susman v. Cohen, 146 Cal. App. 3d 200, 217 (1983). 	It
includes matters in progress but not completed when the firm is
dissolved, regardless of whether the firm was retained to handle
the matters on an hourly or a contingency basis; what constitutes
unfinished business must be determined on the date of dissolution
of the partnership, not based on events occurring thereafter.
Rothman v. Dolin, 20 Cal. App. 4th 755, 759 (1993). 20 	Absent an
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contend that its holding suggests courts generally apply the
unfinished business rule only to claims for a share of contingency
fees, the court disagrees with Defendants’ interpretation of that
case. 	In Gottlieb, the partner was suing for a division of
contingency fees, so how the court would have determined hourly
fees, which were not at issue, is unknown. 	Defendants cannot make
the leap, based on Gottlieb, that courts only apply the unfinished
business rule in disputes over contingency fees. 	Moreover, New
York is not governed by RUPA.
Arguably, Rothman was decided under the UPA, and possibly
RUPA changed the landscape. 	However, recent California
unpublished decisions since Rothman governed by RUPA continue to
cite Rothman as the law in this state. 	See Kuist v. Hodge, 2008
WL 510075, ¶ 11 (Cal. App. 2 Dist. 2008). 	Furthermore, the plain
language of RUPA makes no distinction between contingency or
hourly rate matters in the context of unfinished business. 	The
court declines Defendants’ invitation to speculate as to how the
California Supreme Court would decide this issue.
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agreement to the contrary, partnership assets include attorneys
fees received by the partnership for cases in progress at
dissolution, and such fees, minus overhead and reasonable
compensation, must be shared among all partners in accordance with
the ownership interest of each, regardless of which partner
performs the services for winding up purposes. 	Jewel, 156 Cal.
App. 3d at 179. 	However, a critical distinction exists between
“unfinished business,” which remains a partnership asset and for
which each partner has a fiduciary duty to complete, and “new”
business which is not a partnership asset and may follow the
individual partner.
On February 9, 2003, the day before the FPA became effective
and the firm was a going concern, Brobeck had unfinished business
and an interest in the profits therefrom, and on February 10,
2003, Brobeck no longer had that interest. 	In the Jewel Waiver
itself, Brobeck and its individual partners waived certain rights.
The dispute lies in whether the Brobeck partners properly drafted
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around the default rules of RUPA and Jewel when they agreed not to
account for profits derived by each partners’ completion of
Brobeck’s Unfinished Business, and allowed the partners and their
respective firms to keep those profits.
Jewel involved a four partner law firm that had no
partnership agreement. 	The partners mutually agreed to dissolve
the partnership, and litigation later ensued over the proper
allocation of profits received from cases in progress at the time
of dissolution. 	The California Court of Appeal held that “absent
a contrary agreement, any income generated through the winding up
of unfinished business is allocated to the former partners
according to their respective interests in the partnership.”
Jewel, 156 Cal. App. 3d at 176. 	Therefore, to avoid this harsh
result, Jewel held that a partnership agreement can set forth
precise rules for completion of unfinished business. 	See Rothman,
20 Cal. App. 4th at 759 n.4 (“Of course, the parties were free to
enter into an agreement providing for the allocation of fees
relating to unfinished business in any manner they wished”).
Jewel and Rothman not only allow contrary agreements, they
encourage partners to enter into such agreements, which can only
aid in the timely and organized winding up of the partnership’s
affairs. 	Without an express agreement, especially in the context
of a law partnership where completion of ongoing partnership
business can be protracted, the default rules on unfinished
business can result in undesirable consequences between partners
and/or their former firm.
Therefore, the court concludes that the Brobeck partners were
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21 It is only the impact of such an agreement on creditors
where the Jewel Waiver creates a potential for liability of the
waiving partners and their new law firms.
22 RUPA § 16404(b)(1) states:
(b) A partner's duty of loyalty to the partnership and the
other partners includes all of the following:
(1) To account to the partnership and hold as trustee for it
any property, profit, or benefit derived by the partner in
the conduct and winding up of the partnership business or
derived from a use by the partner of partnership property or
information, including the appropriation of a partnership
opportunity (emphasis added).
RUPA § 16103(b)(3) in relevant part states:
(b) The partnership agreement may not do any of the
following:
(3) Eliminate the duty of loyalty under subdivision (b) of
Section 16404 . . . but, if not manifestly unreasonable, may
do either of the following:
(A) The partnership agreement may identify specific
types or categories of activities that do not violate
the duty of loyalty.
(B) All of the partners or a number or percentage
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free, and indeed encouraged, to enter into a contrary agreement on
how they wished to handle Brobeck’s Unfinished Business. 	The
Brobeck partners took the clear message from Jewel - an agreement
that immediately disposes of unfinished business and minimizes the
disruptive impact of a dissolution is appropriate, and the court
will not fault them for complying with this aspect of California
law. 21
2. 	The Waiver Complied With RUPA.
The analysis does not end here. 	The Trustee argues that in
order to be valid, the Jewel Waiver must also comply with RUPA §§
16404(b)(1) and 16103(b)(3). 22 	In sum, RUPA § 16404(b) sets forth
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specified in the partnership agreement may authorize or
ratify, after full disclosure of all material facts, a
specific act or transaction that otherwise would
violate the duty of loyalty.
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a partner’s limited duty of loyalty to the partnership and the
other partners, which includes, among others, the duty to account
for profits derived after dissolution. 	Further, RUPA § 16103(b)
does not allow a partnership agreement, which governs the
relationship among the partners and between the partners and the
partnership, to eliminate the duty of loyalty in RUPA § 16404, but
it does allow modification of this duty if not “manifestly
unreasonable” and in compliance with either part (A) or (B).
The Trustee argues that the Jewel Waiver was invalid because
it went outside the scope of the exceptions allowed under parts
(A) and (B). 	As to part (A), he asserts that the FPA does not
identify “specific types or categories of activities that do not
violate the duty of loyalty.” 	Specifically, he contends that
neither the FPA nor the Consent Memo makes any reference to the
Brobeck partners’ duty of loyalty, and further, those documents do
not indicate that keeping profits from Unfinished Business for
themselves and their new firms would violate that duty.
As to part (B), the Trustee asserts that without any
reference to the duty of loyalty, there could not have been an
effective ratification of the Jewel Waiver as a breach of that
duty because to be effective under California law there must be
“full disclosure of all material facts.” 	Skone v. Quanco Farms,
261 Cal. App. 2d 237, 241 (1968). 	Here, he argues, there was no
disclosure let alone “full disclosure of all material facts.”
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Alternatively, the Trustee argues that even if the Brobeck
partners satisfied the requirements of parts (A) or (B), the Jewel
Waiver’s terms were manifestly unreasonable because, with the
exception of Western and Tickets.com, it attempted a blanket
derogation of the partners’ duty to account to, and hold profits
in trust for, Brobeck on account of Unfinished Business without
sharing any of the profits with Brobeck. 	To make matters worse,
he argues, the FPA did not require the partners to provide
anything of value in exchange for being excused from that duty;
the partners benefitted themselves at the expense of Brobeck’s
creditors.
The court rejects the Trustee’s arguments. 	First, he offers
nothing to support his suggestion that the words “duty of loyalty”
must appear in the FPA to make it an effective modification.
Although it may be a prudent exercise, the court disagrees that
such language is required in order to make a valid modification to
a partnership agreement under RUPA §§ 16103(b)(3)(A) or (B).
Second, the contention of inadequate disclosure of the
material facts as between the parties is inaccurate. 	The record
reflects that not only did all of the relevant documents
explicitly disclose the details regarding Brobeck’s Unfinished
Business, but the partners engaged in substantial discussions
about the proposed FPA and its various provisions by way of email,
telephone conferences, and other meetings. 	The financial and
professional (and personal) crises confronting the 160+ partners
and their venerable law firm was fully understood, as were the
ramifications of ignoring Jewel’s warning and doing nothing.
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There is little doubt that they all knew what, and to whom, they
were giving up and what they were getting in return from each
other. 	This is not a case where a partner failed to disclose
material facts to his or her partners in order to take advantage
of what could have been a partnership opportunity to the
partnership’s detriment, or where a partner caused a wrongful
dissolution in order to abscond with an opportunity for his or her
own benefit. 	See Leff v. Gunter, 33 Cal. 3d 508 (1983).
Therefore, the FPA complied with RUPA §§ 16103(b)(3)(A) and (B).
Finally, the court does not find any part of the FPA,
including the Jewel Waiver, as manifestly unreasonable. 	RUPA does
not define what is “manifestly unreasonable” and the parties have
not cited, nor can the court locate, a decision that defines the
term. 	Absent case law or even a dictionary definition, the court
must rely on its common sense to recognize something as manifestly
unreasonable. 	The Jewel Waiver was not.
RUPA defines the relationships between and among partners and
their partnership. 	Further, by way of a partnership agreement, it
allows the partners and the partnership to change contractually
the rules of that relationship, which includes modifications to
their duty of loyalty. 	The Jewel Waiver did not eliminate the
partners’ duty of loyalty, it only modified the duty to account,
which is just one of the three duties of loyalty set forth in RUPA
§ 16404. 	The Brobeck partners had to account for certain matters,
Western and Tickets.com, but had no duty to account for others.
The Trustee argues that since Brobeck was insolvent at the
time of the Jewel Waiver and it benefitted only the partners at
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23 The California Uniform Fraudulent Transfer Act is contained
in Cal. Civ. Code §§ 3439 through 3449.
24 The Defendants also move for summary judgment on Claim 2 -
accounting and turnover of profits from Brobeck’s Unfinished
Business pursuant to section 542. 	Because the court has
determined that the Jewel Waiver was valid, no accounting or
turnover of profits is required as a matter of law and Defendants
are entitled to summary judgment on Claim 2.
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the expense of Brobeck’s creditors, then it was manifestly
unreasonable. 	RUPA does not, as the Trustee suggests, govern a
partner’s or a partnership’s relations to, or rights of, third
parties such as creditors. 	The California Legislature has enacted
other provisions regarding those relationships, one of which is
the Uniform Fraudulent Transfer Act. 23 	Therefore, solely in the
context of RUPA and the duty of loyalty to account, whether
Brobeck was insolvent at the time of the Jewel Waiver, whether the
partners provided anything of value in exchange for relieving each
other of that duty, or whether they benefitted from the Jewel
Waiver at the expense of Brobeck’s creditors is irrelevant.
Consequently, since there are no genuine issues of material
fact in dispute regarding the validity of the Jewel Waiver, the
Defendants are entitled to summary judgment on Claims 1 and 5. 24
C. 	Was The Jewel Waiver A Fraudulent Transfer?
Even if the court determines that the Jewel Waiver was lawful
and valid under RUPA, the Trustee asserts it is nevertheless
avoidable as an actual or constructive fraudulent transfer under
the Bankruptcy Code and California Uniform Fraudulent Transfer
Act. 	Consequently, he argues that under section 550(a), and/or
Cal. Civ. Code § 3439.07 and section 544(b)(1), he can recover for
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25 Under section 550(a), a trustee may recover the property
transferred, or, if the court so orders, the value of such
property from the initial transferee of such transfer, or any
immediate or mediate transferee of such initial transferee.
Under Cal. Civ. Code § 3439.07, in an action for relief under
Cal. Civ. Code §§ 3439.04 and 3439.05, a creditor may obtain
“[a]voidance of the transfer or obligation to the extent necessary
to satisfy the creditor’s claim,” and under Cal. Civ. Code §
3439.09, such action must be brought within four years after the
transfer. 	And, under section 544(b)(1), the trustee “may avoid
any transfer of an interest of the debtor in property or any
obligation incurred by the debtor that is voidable under
applicable law by a creditor holding an unsecured claim that is
allowable under section 502 . . . .”
26 Given the Trustee’s position, the court is not determining
in this Memorandum Decision what profits the Trustee is entitled
to, if any, or how such profits will be calculated.
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the benefit of Brobeck’s estate its Unfinished Business profits
from the Partner Defendants, the initial transferees, and the
Firms, the immediate transferees. 25 	The Trustee has not conceded
that the RUPA calculation of profits would apply for purposes of
what he is entitled to recover from a fraudulent transfer, but
asserts that “the means of quantifying profits that can be
recovered by the Trustee will be the subject of the next phase of
this litigation,” and “will likely involve expert testimony.” 26
The fraudulent transfer doctrine prevents debtors from
placing property beyond the reach of their creditors when those
assets should legitimately be made available to satisfy creditor
demands. 	See Chichester v. Mason, 43 Cal. App. 2d 577, 584
(1941). 	It is that doctrine that vindicates creditors’ rights
notwithstanding the valid Jewel Waiver.
1. 	Unfinished Business Profits Were Property Of Brobeck.
Before the court can determine whether there was a
“transfer,” it must first determine that Brobeck’s Unfinished
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27 Section 541 defines property of the estate as “all legal or
equitable interests of the debtor in property as of the
commencement of the case.”
28 The Dorsey Defendants adopt all of the arguments raised by
the Orrick Defendants in their motion for summary judgment on
Claims 6, 7, 8 and 9, and vice versa.
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Business profits were “property” of Brobeck. 	Wood v. Bright (In
re Bright), 241 B.R. 664, 666 n.3 (9th Cir. BAP 1999). 	Both the
“property” and “transfer” elements apply whether the claim is one
for actual or constructive fraudulent transfer.
While the Bankruptcy Code does not define “property,” Black’s
Law Dictionary defines it as “[t]he right to possess, use, and
enjoy a determinate thing.” 	Black’s Law Dictionary, 1252 (8th ed.
2004). 	Although the Bankruptcy Code determines what is “property
of the estate” under section 541, 27 state law determines the nature
and extent of a debtor’s interest in property. 	Butner v. U.S.,
440 U.S. 48, 54 (1979).
The Trustee contends that Unfinished Business (and the profit
therefrom) is property under RUPA and Jewel, and that Brobeck had
an interest in that property. 	The Defendants 28 contend that
Brobeck’s interest in its Unfinished Business profits arises only
if the partnership agreement is silent, and since the Brobeck
partners had a contrary agreement as of the date of dissolution,
Brobeck’s rights to Unfinished Business profits (other than those
from Western and Tickets.com) were precluded and never “sprang”
into existence. 	In other words, they analogize the Jewel Waiver
to a disclaimer, a legal fiction which eliminates any property
interest that a disclaimant previously held in the disclaimed
property. 	A disclaimant neither transfers nor possesses an
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interest in disclaimed property, and, consequently, creditors are
unable to reach the disclaimed interest, even if the debtor is
insolvent at the time the disclaimer is executed. 	Gaughan v.
Edward Dittlof Revocable Trust (In re Costas), 555 F.3d 790, 793-
94 (9th Cir. 2009), relying on U.S. v. Irvine, 511 U.S. 224
(1994). 	Therefore, if no property interest exists there can be no
transfer, and the mere fact of insolvency cannot create a property
interest where there was none to begin with under state law.
The Defendants’ argument is circular. 	They do not deny that
profits from a firm’s work in process are a property right of the
partnership, at least when there is no partnership agreement to
the contrary. 	Clearly, on February 9, 2003, the day before the
Jewel Waiver, Brobeck had a right to recover such profits from any
departing partner under its existing partnership agreement. 	On
February 10, 2003, via the Jewel Waiver, Brobeck no longer had
that right. 	The court rejects Defendants’ argument that Brobeck’s
right to its Unfinished Business profits never “sprang” into
existence because such a right did not exist until dissolution;
the right was there all along, until the Jewel Waiver.
Furthermore, although Defendants make an interesting analogy,
the court rejects their notion that the Jewel Waiver functioned
like a disclaimer. 	The California Legislature has explicitly
provided special treatment for disclaimers (see Cal. Probate Code
§§ 275-288, 295), and if it wished to treat waivers of rights to
unfinished business profits in the same manner it would have done
so.
Therefore, the Unfinished Business profits were property of
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Brobeck at the time of the Jewel Waiver.
2. 	The Jewel Waiver Transferred Brobeck’s Unfinished
Business To The Partners.
The Bankruptcy Code broadly defines transfer to encompass
every “mode, direct or indirect, absolute or conditional,
voluntary or involuntary, of disposing of or parting with property
or with an interest in property . . . .” 	11 U.S.C. § 101(54).
The hallmark of a “transfer” is a change in the rights of the
transferor with respect to the property after the transaction.
Towers v. U.S. (In re Feiler), 218 B.R. 957 (Bankr. N.D. Cal.
1998), aff'd 218 F.3d 948 (9th Cir. 2000). 	Waiver of an interest
in property constitutes a “transfer.” 	Kapila v. U.S. (In re
Taylor), 386 B.R. 361, 369 (Bankr. S.D. Fla. 2008)(debtor’s waiver
of an NOL carryback constitutes a transfer).
The Dorsey Defendants argue that if “the profits Defendants
received” constitute the transferred property, no transfer
occurred as they received no profits from Unfinished Business in
the aggregate. 	This argument too is circular and conflates what
is transferred with its value. 	In a claim for fraudulent
transfer, the value of the property transferred does not undo the
fact that there was a transfer for which the transferee may be
liable. 	Here, if what was transferred has no net value, then the
Trustee will ultimately recover nothing. 	However, since these
adversary proceedings have been bifurcated into two phases,
liability and damages, what the Trustee may or may not recover
remains for another day.
Undisputedly, Brobeck (through the execution of the Jewel
Waiver by its partners), waived its interest in its Unfinished
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29 Section 548(a)(1)(A), as applicable in these proceedings,
states:
(a)(1) the Trustee may avoid any transfer of an
interest of the debtor in property, or any obligation
incurred by the debtor, that was made or incurred on or
within one year before the date of the filing of the
petition, if the debtor voluntarily or involuntarily -
(A) made such transfer or incurred such obligation with
actual intent to hinder, delay, or defraud any entity to
which the debtor was or became, on or after the date
that such transfer was made or such obligation was
incurred, indebted . . . .
30 It is undisputed that the Jewel Waiver occurred within one
year of Brobeck’s bankruptcy petition. 	The date the partners gave
the Jewel Waiver is the date of the transfer for purposes of
fraudulent transfer. 	See section 548(d).
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Business profits, thereby changing its rights with respect to
those profits. 	The Jewel Waiver legitimately and effectively gave
what was otherwise property of Brobeck to the Brobeck partners.
The court concludes that Brobeck had a property interest in
its Unfinished Business profits, and that the Jewel Waiver
transferred that interest to the Brobeck partners. 	The court now
turns to each of the Trustee’s fraudulent transfer claims.
D. 	The Jewel Waiver Was A Fraudulent Transfer.
1. 	Claim 6: Actual Fraudulent Transfer Under Section
548(a)(1)(A).
For a claim under section 548(a)(1)(A), 29 the Trustee has the
burden of proving, by preponderance of the evidence, that
Brobeck’s Unfinished Business profits were property of Brobeck,
that the transfer of such profits occurred within one year prior
to the filing of Brobeck’s bankruptcy petition, and that such
transfer was made with the actual intent to hinder, delay, or
defraud Brobeck’s creditors. 30 	Brandt v. nVidia Corp. (In re 3dfx
Interactive, Inc.), 389 B.R. 842, 863-64 (Bankr. N.D. Cal. 2008).
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In light of the court’s previous rulings in ¶¶ C., 1 & 2, the
Trustee need only show this last element.
Generally, the party attacking the transfer must show the
debtor/transferor acted with actual intent to hinder, delay, or
defraud when engaging in the transfer. 	However, in cases where
the transferee controls or is in a position to control the
debtor/transferor’s disposition of its property, then the
transferee’s intent can be imputed to the debtor/transferor.
Acequia, Inc. v. Clinton (In re Acequia, Inc.), 34 F.3d 800, 806
(9th Cir. 1994), citing Consove v. Cohen (In re Roco Corp.), 701
F.2d 978, 984 (1st Cir. 1983). 	This is such a case.
The Trustee contends that the transfer represented by the
Jewel Waiver was made with actual intent to hinder, delay or
defraud Brobeck’s creditors because the Brobeck partners knowingly
entered into it to get around the default rules of RUPA and Jewel,
and each was well aware of the effect it would have on creditors
via the Consent Memo - two factors that provide clear proof of an
actual intent to deny creditors the profits to which they were
entitled.
The Defendants contend that even if the Jewel Waiver
constituted a transfer of an interest in property, the Trustee has
failed to meet his burden to prove the Brobeck partners intended
to defraud creditors, especially when the Partner Defendants have
testified to the contrary. 	Furthermore, even though they agree
with the Trustee’s facts regarding the Jewel Waiver, they argue
that such facts do not show an actual intent to hinder, delay or
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31 Orrick and Dorsey argue that Trustee’s claims against the
Firms must fail because, unlike the Partner Defendants, there was
never any fiduciary or contractual relationship between Brobeck
and the Firms. 	Accordingly, Brobeck (and thus the Trustee) cannot
recover against the Firms for fees earned on work done by non-
Brobeck personnel or by attorneys who were not partners of Brobeck
at the time of dissolution.
The court rejects this argument. 	While this may be true for
an accounting and turnover claim, a fiduciary or contractual
relationship is unnecessary for a successful fraudulent transfer
claim. 	Here, the Firms are immediate transferees of the Brobeck
partners. 	Therefore, if the Trustee can recover profits from
Brobeck’s Unfinished Business, he can recover from not only the
Partner Defendants but from the Firms as well, subject to any
defenses available to the Firms in section 550(b)(1).
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defraud Brobeck’s creditors. 31 	The court agrees.
As Defendants note, the mere fact of considering and entering
into the Jewel Waiver, along with the Consent Memo, does not show
actual intent because California law expressly permits and
encourages Jewel agreements, which is necessarily inconsistent
with actual fraud. 	Furthermore, although the Trustee provided
email discussions among the Brobeck partners asking questions
about the Jewel Waiver’s potential effect on creditors, he
presented no evidence suggesting that any Brobeck partner believed
approving the Jewel Waiver would delay, hinder or defraud any
creditor. 	In fact, Partner Defendants Bolding and Hermann
testified that they believed the Jewel Waiver would benefit
creditors, and Hermann testified that he favored the Jewel Waiver
because it benefitted creditors, even though he, personally,
likely was giving up more than he was getting by it. 	Finally, the
Trustee produced no evidence on which of Brobeck’s 160+ partners
voted to approve the Jewel Waiver, or what reasons they had for
voting to approve it.
“Actual intent” is a question of fact reserved for the jury
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32 The parties also rely on a “badges of fraud” argument,
listing the traditional components of that theory to support or
defeat the actual fraudulent claims, both under the Bankruptcy
Code and California law. 	However, the inquiry is inherently fact-
driven, and the court will not grant summary judgment to either
party for the reasons stated above.
33 However, the court grants Partner Defendant James Baker
summary judgment on Claim 6, as explained in the following
discussion of Claim 7.
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or trial court (Slater v. Bielsky, 183 Cal. App. 2d 523, 527
(1960)), and summary judgment in the Trustee’s favor on Claim 6
would be appropriate only if “the evidence, viewed in a light most
favorable to the non-moving party, presents [no] genuine issues of
material fact.” 	Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th
Cir. 1995). 	Given the subjective nature of actual intent and the
evidence presented by the parties, the court cannot say that “the
record taken as a whole could not lead a rational trier of fact to
find for the non-moving party.” 	See Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Therefore, the court denies Trustee’s motion for partial
summary judgment as to all Defendants on Claim 6. 	The same is
true for the Defendants with respect to their motions for summary
judgment on Claim 6. 	On this record, the court cannot
conclusively determine that a trier of fact could not find in the
Trustee’s favor. 32 	As a result, the court denies the Defendants’
motions on Claim 6. 33
2. 	Claim 7: Constructive Fraudulent Transfer Under Section
548(a)(1)(B).
In the alternative, the Trustee argues that the Jewel Waiver
constitutes a constructive fraudulent transfer under section
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34 Section 548(a)(1)(B) provides, in relevant part:
(a)(1) The trustee may avoid any transfer of an interest of
the debtor in property, or any obligation incurred by the
debtor, that was made or incurred on or within one year
before the date of the filing of the petition, if the debtor
voluntarily or involuntarily
. . . .
(B)(i) received less than a reasonably equivalent value
in exchange for such transfer or obligation; and
(ii)(I) was insolvent on the date that such
transfer was made or such obligation was incurred,
or became insolvent as a result of such transfer or
obligation . . . .
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548(a)(1)(B). 34 	At trial, and on his motion, the Trustee has the
burden of proving, by preponderance of the evidence, that: (1)
Brobeck had an interest in its Unfinished Business; (2) a transfer
of that interest occurred within one year of the filing of the
bankruptcy petition; (3) Brobeck was insolvent at the time of the
transfer or became insolvent as a result thereof; and (4) Brobeck
received “less than a reasonably equivalent value in exchange for”
the Jewel Waiver. 	3dfx, 389 B.R. at 863; Spear v. Global Forest
Prods. (In re Heddings Lumber & Bldg. Supply, Inc.), 228 B.R. 727,
729 (9th Cir. BAP 1998).
Conversely, on the Defendants’ summary judgment motions, once
the Trustee has made a prima facie case that Brobeck received less
than a reasonably equivalent value, the Defendants have the burden
to show they provided Brobeck a reasonably equivalent value in
exchange for the Jewel Waiver. 	Johnson v. Drew, 218 Cal. App. 2d
614, 619 (1963).
Since the first three elements have been established, only
the fourth element is at issue in these motions.
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a. 	Reasonably Equivalent Value.
Determining whether a debtor received a reasonably equivalent
value is a two-step process. 	Jordan v. Kroneberger (In re
Jordan), 392 B.R. 428, 441 (Bankr. D. Idaho 2008); Barber v.
Dunbar (In re Dunbar), 313 B.R. 430, 437 (Bankr. C.D. Ill. 2004).
First, the court must determine that the debtor received
value in exchange for the transfer. 	Id. 	“Value” is defined by
the Bankruptcy Code for fraudulent transfer purposes as “property,
or satisfaction or securing of a present or antecedent debt of the
debtor . . . .” 	See 11 U.S.C. § 548(d)(2)(A); Wyle v. C.H. Rider
& Family (In re United Energy Corp.), 944 F.2d 589, 595 (9th Cir.
1991). 	A transfer is for value if one is the quid pro quo of the
other. 	Pummill v. Greensfelder, Hemker & Gale (In re Richards &
Conover Steel, Co.), 267 B.R. 602, 612 (8th Cir. BAP 2001);
Christians v. Crystal Evangelical Free Church (In re Young), 82
F.3d 1407, 1415 (8th Cir. 1996) vacated on other grounds, 521 U.S.
1114 (1997)(the language “in exchange for” in section 548
contemplates a quid pro quo).
Second, if there was value in exchange, the court must
determine whether the value of what was transferred was reasonably
equivalent to what the debtor received. 	Jordan, 392 B.R. at 441;
Dunbar, 313 B.R. at 437. 	“In determinating whether a transfer has
been for an exchange of reasonably equivalent value, the court
analyzes all the circumstances surrounding the transfer.” 	3dfx,
389 B.R. at 862, citing 5 Collier on Bankruptcy ¶ 548.05[1][b] at
548-35 (15th ed. rev. 2002). 	See Jordan, 392 B.R. at 441 (holding
and citing same). 	The determination of reasonable equivalence
must be made as of the time of the transfer. 	BFP v. Resolution
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Trust Corp., 511 U.S. 531, 546 (1994).
Reasonable equivalence does not require exact equality in
value, but means “approximately equivalent” or “roughly
equivalent.” 	Id. at 540 n.4. 	Indirect benefits, those which come
from one other than the recipient of the payments, along with
direct benefits, may constitute value if sufficiently concrete and
identifiable. 	Frontier Bank v. Brown (In re N. Merch., Inc.), 371
F.3d 1056, 1058 (9th Cir. 2004).
“Because the policy behind fraudulent transfer law is to
preserve assets of the estate, reasonably equivalent value is
determined from the standpoint of creditors; it is not determined
from the defendant’s perspective.” 	3dfx, 389 B.R. at 863, citing
N. Merch., 371 F.3d at 1059 (proper focus is on the net effect of
the transfers on debtor’s estate and the funds available to
unsecured creditors). 	See Kirkland v. Risso, 98 Cal. App. 3d 971,
977 (1979)(California courts apply same standard).
However, despite this broad analysis, “the requirement that
the debtor must have ‘received’ the value in question expresses a
temporal condition demanding an element of contemporaneity in the
determination of whether something close to the reasonable
equivalence has been exchanged.” 	Jackson v. Mishkin (In re Adler,
Coleman Clearing Corp.), 263 B.R. 406, 466-67 (S.D. N.Y. 2001).
Items of value coming to the debtor after the transfer must be
excluded as any part of consideration, at least when it was not
bargained for at the date of the original transaction. 	5 Collier
on Bankruptcy ¶ 548.05[1][b] at 548-38.
b. 	Contentions.
The Trustee dismisses the Defendants’ contention that the
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following activities amount to value in exchange for the Jewel
Waiver: assisting with collecting pre-dissolution accounts
receivable, executing mutual waivers releasing each other and
Brobeck from any claims relating to Unfinished Business, relieving
Brobeck of the obligation to complete Unfinished Business and/or
account for it, avoiding malpractice claims against Brobeck or
disputes that would have arisen had Brobeck retained the
Unfinished Business, enabling Brobeck to complete the work in
Western, expending significant time preparing Western fee
applications for Brobeck without compensation, assisting former
Brobeck employees to find jobs, and assembling and returning files
back to Brobeck clients. 	These activities, he argues, are either
pre-existing fiduciary duties required by RUPA § 16404, ethical
obligations of Rule 3-700(D) [Papers, Property and Fees] of the
California Rules of Professional Conduct (“CRPC”), or are mere
admirable gestures, none of which have any value or constitute
consideration in exchange.
Moreover, he contends, even if those activities amount to
value, nothing conditions the Jewel Waiver upon the former
partners’ collection of pre-dissolution accounts receivable,
assisting in the orderly transition of client work, or anything
else, or suggests that the Jewel Waiver was linked in any way to
the satisfaction of those independent obligations. 	Finally, the
Trustee rejects the Dorsey Defendants’ contention that taking over
Brobeck’s former office space in Irvine, California is value
because, again, nothing in the FPA or Jewel Waiver makes reference
to assuming the lease in exchange.
In response, the Defendants contend that the activities the
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35 As noted previously, this argument is irrelevant as to
claims for fraudulent transfer.
36 The Defendants also argue that the testimony of Trustee’s
designated witness under Fed. R. Civ. P. 30(b)(6), testimony to
which the Trustee is bound, was that the Trustee has not performed
any investigation on value and does not know whether Brobeck
transferred away more value than it received, or received more
than it transferred, or which scenario was more likely than the
other, and therefore he cannot meet his burden to establish that
Brobeck received less than a reasonably equivalent value.
Since this is only the liability phase of these adversary
proceedings, such evidence is not necessary. 	At trial, the
Trustee will have to prove how much, if any, profit he is entitled
to.
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Trustee asserts have no value are not what they are relying on to
show value. 	Even if they were, the pre-existing duty rule does
not apply here because mutual agreement between parties to
substitute new duties is adequate consideration for their second
agreement. 	Second, each Brobeck partner and Brobeck agreed there
would be no duty to account for future Unfinished Business profits
(with the exception of Western and Tickets.com) and elimination of
claims or compromises of disputes can constitute reasonably
equivalent value given in exchange for a transfer. 	Third, the
Trustee is considering only a small portion of Brobeck’s
Unfinished Business, and only a small number of partners. 35
Finally, the Trustee fails to recognize that Brobeck received $19
million in fees from Western that it would not have received
absent the Jewel Waiver, while the confidential amount Orrick
received pales in comparison, and Dorsey contends it received no
profits. 36
c. 	Step 1: Whether Brobeck Received Value In Exchange
For The Jewel Waiver.
The court concludes that even if what the Partner Defendants
provided Brobeck constitutes value, such value was not “in
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37 Partner Defendant Wirth is the exception to this rule. 	The
court cannot conclusively determine that what she provided Brobeck
did not constitute value in exchange for the Jewel Waiver, as will
be discussed later in this Memorandum Decision.
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exchange for” the Jewel Waiver. 37 	Defendants either provide no
evidence that any of the items they contend benefitted Brobeck
were actually bargained for in exchange for the Jewel Waiver, or
even if some of them were, such items are required by law or
professional ethics rules and hence do not constitute value in
exchange.
The Partner Defendants rely heavily on the fact that by
carving Western out of the Jewel Waiver, Brobeck received $19
million in fees it would have not received otherwise, and since
the confidential amount Orrick received pales in comparison, and
Dorsey contends it received no profits, then Brobeck actually got
the better end of the deal. 	This reliance is misplaced. 	On
February 9, 2003, Brobeck’s inventory of work in process was
property of Brobeck. 	That included Western. 	The critical words
of the Jewel Waiver bear repeating:
[N]either the Partners nor the Partnership shall have
any claim to . . . matters ongoing . . . other than the
entitlement for collections of 	amounts due for work
performed 	. 	. 	. 	prior 	to 	their 	departure 	. 	. 	. 	. 	The
provisions of this Section 9(e) are intended to expressly
waive, opt out of and be in lieu of any right . . . the
Partnership may have to ‘unfinished business’. . . .
The Brobeck partners, via Section 9(e)(i) of the FPA, chose
to deal with Western in a different manner than Brobeck’s other
cases by carving it out of what section 9(e) defined as Unfinished
Business and keeping it for themselves:
The Partners through the Partnership shall be and remain
entitled to amounts to which any former Partner . . . may
otherwise become entitled in respect of amounts paid for
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legal 	services 	conducted 	after 	the 	former 	Partner’s
dissociation from the Partnership . . . (emphasis added).
Thus, on the transfer date of February 10, 2003, Brobeck
still had Western. 	The Brobeck partners did not have Western to
trade; it was Brobeck’s property all along. 	The Partner
Defendants cannot defend a fraudulent transfer claim by asserting
that they gave Western to Brobeck in exchange when they had no
right to Western in the first place. 	Consequently, the
Defendants’ pre-existing duty rule argument fails as well. 	Since
the Brobeck partners did not have Western to give, the release of
their claims against Brobeck for the $19 million in fees cannot
constitute value, or “new consideration,” in exchange for the
Jewel Waiver.
Several of the Partner Defendants also claim that in exchange
for the Jewel Waiver the Brobeck partners released claims they may
or would have had against one another for Unfinished Business
profits, and this constitutes value to Brobeck. 	Although waiving
or compromising disputed claims between parties can be considered
reasonable equivalent value (see Jordan, 392 B.R. at 442), and the
Brobeck partners certainly benefitted from their mutual waivers,
the court cannot determine how Brobeck benefitted from this
arrangement. 	Furthermore, even if Brobeck did benefit, the
Defendants failed to quantify its value. 	The court cannot
quantify it either, and therefore it cannot constitute value for
purposes of these motions.
The same is true with their argument that taking on
Unfinished Business to their new firms, as opposed to leaving
these matters with Brobeck, avoided malpractice claims against
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Brobeck. 	Such claims are speculative and none of the Partner
Defendants attempted to quantify the value of these alleged
avoided malpractice claims or what economic value they provided to
Brobeck.
As to Defendants’ other activities (e.g., collecting accounts
receivables), even though the FPA obligated the Brobeck partners
to assist in billing all unbilled time and expenses and in
collecting all receivables in cases for which that partner is or
was the responsible billing partner, no evidence exists in the
record that a partner had to perform any of these tasks in
exchange for the Jewel Waiver. 	Additionally, the obligation to
assist in billing time and expenses, collecting pre-dissolution
receivables, assembling and returning files to clients, assisting
in the orderly transition of client work and other related
activities, are not only obligations imposed on all partners of a
law partnership whether in dissolution or a going concern, but
also ethical obligations imposed on all attorneys under CRPC 3-
700(D), and the Bus. & Prof. Code § 6068 (“BP”). 	See Lister v.
State Bar, 51 Cal. 3d 1117, 1126 (1990) (citing CRPC 3-700(d),
before withdrawing attorneys must take “reasonable steps” to avoid
foreseeable prejudice to client’s rights, and such steps include
giving the client “due notice,” allowing time for employment of
other counsel, and returning client files and papers); Matter of
Brockway, 4 Cal. State Bar Ct. Rptr. 944, 951 (2006)(failing to
take action on client’s behalf and abandoning client matter is
tantamount to withdrawal, justifying attorney discipline); and see
BP § 6068(m)(attorneys have a duty to keep clients reasonably
informed of significant developments in their matters). 	The court
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believes these several obligations would exist upon a law firm’s
dissolution.
If for some reason all of the Brobeck partners were rendered
unable to perform these activities, the foregoing law and ethical
obligations mandates the completion of these tasks by someone,
with or without the Jewel Waiver. 	Furthermore, Citibank had a
lien on Brobeck’s pre-dissolution receivables and the Partner
Defendants were personally liable for a significantly large sum of
money, thus providing an alternative incentive to bill and collect
receivables having nothing to do with the Jewel Waiver. 	Because
of these extraneous obligations, combined with the lack of any
evidence of an explicit agreement, the court rejects the Partner
Defendants’ assertion that these activities were “in exchange for”
the Jewel Waiver.
The court now addresses the specific position of each
Partner Defendant. 	Partner Defendant Arrington testified that in
exchange for the Jewel Waiver in his favor, he only provided the
mutual waiver in favor of all the other Brobeck partners. 	As
stated above, the court cannot determine how Brobeck benefitted
from the partners’ mutual waiver, and thus that does not
constitute value for him.
Partner Defendant John Baker testified that he completed many
tasks which “assisted” the estate, such as obtaining employment
for all of the Irvine office employees, and assisting in defending
WARN Act claims against the estate, thereby avoiding or reducing
claims or lawsuits against Brobeck. 	However, he did not testify
that any of these tasks were done “in exchange for” the Jewel
Waiver. 	Further, he did not attempt to quantify what these
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potential claims or lawsuits were worth or what economic value
they provided to Brobeck.
In addition to the mutual waiver theory just rejected by the
court, Partner Defendant Bancroft testified that Brobeck failed to
provide her (and other Brobeck partners) compensation for December
2002, and January and February of 2003. 	However, she did not
testify that she waived this compensation claim against Brobeck,
or that she waived it in exchange for the Jewel Waiver.
Besides engaging in collection efforts and providing the
mutual waiver, Partner Defendant Hayes testified that in exchange
for the Jewel Waiver he waived his claim against Brobeck for
fraudulently inducing him to leave a solvent firm for an insolvent
one, but then later testified that he had not waived that claim.
Partner Defendant Santagata raises a similar claim. 	He
testified that in exchange for the Jewel Waiver he gave up his
right to a guaranteed payment Brobeck owed him from 2002 (that was
eliminated through an amendment of the FPA) but then stated that
he could be wrong about that fact.
Partner Defendant Wirth testified that she provided value to
Brobeck in exchange for the Jewel Waiver by assisting, primarily
at her own expense, the estate in defending WARN act claims filed
by former Brobeck employees and numerous other related activities.
Wirth has presented sufficient evidence for purposes of these
motions that she may have given Brobeck value in exchange for the
Jewel Waiver.
Partner Defendant Hermann testified that although he believed
he benefitted little from the Jewel Waiver, the value he provided
in exchange was the mutual waiver and those tasks the court has
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determined were required by law and professional ethics rules.
Thus, they do not constitute value in exchange.
Partner Defendant Bolding offered no testimony on what he
provided to Brobeck in exchange for the Jewel Waiver. 	Partner
Defendant Holden, whose diligent efforts undoubtedly enabled
Brobeck to receive its $19 million in fees from Western, presents
a slightly more compelling case of “in exchange for.”
Nonetheless, his case is problematic. 	Holden admits taking
Unfinished Business with him to Orrick. 	He offers no testimony on
what he provided to Brobeck in exchange for the Jewel Waiver,
other than testifying extensively as to his acknowledged
successful efforts in Western. 	As stated above, Western was never
part of Brobeck’s Unfinished Business. 	Further, the work Holden
performed on Western was dictated by another agreement, which has
not been challenged as a fraudulent transfer. 	Therefore, Holden’s
efforts on Western, if that is what he asserts as value he
provided to Brobeck, including those activities for which he
received compensation and those for which he did not, could not
have been value provided in exchange for the Jewel Waiver.
Partner Defendant James Baker testified that he provided value
to Brobeck by helping his assistant and two associates find
employment. 	Since James Baker is entitled to summary judgment for
the reasons stated below, the court need not reach a conclusion on
this issue.
Finally, as to immediate transferee Dorsey and its claim that
taking over Brobeck’s former Irvine, California office space was
value to Brobeck, while perhaps benefitting the estate, there is
nothing on this record indicating that it was done in exchange for
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28 38 As will be explained later, Partner Defendant James Baker
is also entitled to summary judgment on Claims 8 and 9.
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the Jewel Waiver.
d. 	Step 2: Whether The Value Of The Jewel Waiver Was
Reasonably Equivalent To What Brobeck Received.
The court has determined that Dorsey Defendants Arrington,
John Baker, Bancroft, Hayes, and Santagata, and Orrick Defendants
Bolding, Hermann and Holden gave no value to Brobeck “in exchange
for” the Jewel Waiver. 	Thus the court does not need analyze
whether they gave reasonably equivalent value for what they
received. 	This is because, as a matter of law of this case, they
gave nothing in return for whatever profits they realized on
Unfinished Business. 	All that remains for the Trustee to prove at
trial is the amount, if any, of those profits.
However, if any of the Defendants in support of their own
motion have shown that they took no Unfinished Business with them,
or that what they did take resulted in no profits, and the Trustee
failed to sufficiently rebut this evidence, then that Defendant
can prevail on summary judgment as to all fraudulent transfer
claims. 	There is one such Defendant.
The record shows that Partner Defendant James Baker took
Unfinished Business with him, that he may or may not have given
value in exchange for that business, but due to the largest
billing client’s failure to pay its bill, there was no net profit
as to him. 	The Trustee has not rebutted this evidence.
Therefore, Defendant James Baker is entitled to summary judgment
on Claim 7. 38
The court also notes that even though Defendant Bolding
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offered no testimony as to what value he provided Brobeck in
exchange for the Jewel Waiver, he also testified that he took no
Unfinished Business with him. 	The documents Orrick submitted are
inconclusive on that fact. 	In one exhibit, which reflects the
Unfinished Business matters each of the former Brobeck partners
worked on at Orrick between February 1, 2003 and February 28,
2005, Bolding’s name appears as being responsible for five
matters. 	Yet, in another exhibit reflecting essentially the same
information but dated from February 1, 2003 to July 31, 2008,
Bolding’s name and the five matters are absent. 	This presents a
material fact in dispute. 	Consequently, Bolding is not entitled
to summary judgment on Claim 7, nor is the Trustee is entitled to
partial summary judgment as to Bolding on Claim 7. 	At trial, the
Trustee will have to prove both liability and damages regarding
Bolding on this claim.
Finally, since Partner Defendant Wirth testified that she
took Unfinished Business with her but provided what the court
determines could be value to Brobeck in exchange for the Jewel
Waiver, the Trustee is not entitled to partial summary judgment as
to liability against Wirth. 	At trial, the Trustee will have to
prove both liability and damages regarding Wirth on this claim.
As to the remaining Partner Defendants Arrington, John Baker,
Bancroft, Hayes, Santagata, Hermann and Holden, because they
failed to provide value to Brobeck in exchange for the Jewel
Waiver, the Trustee is entitled to partial summary judgment as to
liability against all of them on Claim 7.
As to the immediate transferee Firms, since some of the
initial transferee Partner Defendants failed to provide value to
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39 Cal. Civ. Code § 3439.04, as applicable in these
proceedings, states:
(a) A transfer made or obligation incurred by a debtor
is fraudulent as to a creditor, whether the creditor's
claim arose before or after the transfer was made or
the obligation was incurred, if the debtor made the
transfer or incurred the obligation as follows:
(1) With actual intent to hinder, delay, or defraud any
creditor of the debtor.
(2) Without receiving a reasonably equivalent value in
exchange for the transfer or obligation, and the debtor
either:
(A) Was engaged or was about to engage in a business or
a transaction for which the remaining assets of the
debtor were unreasonably small in relation to the
business or transaction.
(B) Intended to incur, or believed or reasonably should
have believed that he or she would incur, debts beyond
his or her ability to pay as they became due.
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Brobeck in exchange for the Jewel Waiver, and because the Firms
have not asserted any good faith defense available under section
550(b) - taking for value without knowledge of the fraudulent
transfer - the Trustee is entitled to partial summary judgment as
to liability against the Firms on Claim 7. 	At trial, the Trustee
must prove the amount he is entitled to recover, if any.
3. 	Claim 8: Actual Fraudulent Transfer Under Cal. Civ. Code
§ 3439.04.
In addition to the elements of an actual fraudulent transfer
under section 548(a)(1)(A), Cal. Civ. Code § 3439.04 39 requires
that the Trustee prove Brobeck failed to receive reasonably
equivalent value in exchange for the transfer.
As with Claims 6 and 7, because of the uncontroverted
evidence presented by Partner Defendant James Baker, the court
grants him summary judgment on Claim 8.
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40 Cal. Civ. Code § 3439.05, as applicable in these
proceedings, states:
[a] transfer made or obligation incurred by a debtor is
fraudulent as to a creditor whose claim arose before
the transfer was made or the obligation was incurred if
the debtor made the transfer or incurred the obligation
without receiving a reasonably equivalent value in
exchange for the transfer or obligation and the debtor
was insolvent at that time or the debtor became
insolvent as a result of the transfer or obligation.
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For the reasons stated above regarding Claim 6, the court
denies Trustee’s motion for partial summary judgment on Claim 8
due to the lack of evidence of actual intent. 	Likewise, the court
denies summary judgment on Claim 8 as to all remaining Defendants.
4. 	Claim 9: Constructive Fraudulent Transfer Under Cal.
Civ. Code § 3439.05.
For a successful claim under Cal. Civ. Code § 3439.05, 40 the
Trustee must prove essentially the same elements as those in
section 548(a)(1)(B).
As with Claims 6, 7 and 8, because of the uncontroverted
evidence presented by Partner Defendant James Baker, he is
entitled to summary judgment on Claim 9.
For the same reasons discussed in Claim 7, the Trustee is
entitled to partial summary judgment as to liability against the
Firms and the remaining Partner Defendants on Claim 9, with the
exception of Partner Defendants Bolding and Wirth. 	At trial, the
Trustee will have to prove both liability and damages regarding
these two Partner Defendants on Claim 9.
5. 	Orrick’s $500,000 Bonus.
The Trustee also seeks to recover, as part of Brobeck’s
Unfinished Business, the $500,000 Orrick received under the bonus
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41 Because the court has determined that the Trustee is not
entitled to Orrick’s $500,000 bonus, it need not address Orrick’s
Objections To Evidence Submitted In Support Of Trustee’s
Opposition To Defendants’ Motion For Summary Judgment, or Orrick’s
arguments regarding estoppel and the Trustee’s release of Morgan
Lewis.
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arrangement in Western. 	By definition, the fees earned in Western
are not part of Brobeck’s Unfinished Business. 	Accordingly, the
Trustee’s claim must fail.
On February 10, 2003, the Brobeck partners divided the
universe of its work in process into two categories: Western and
Tickets.com., and Unfinished Business. 	Although the Trustee
argues that Western is Unfinished Business, which is the subject
of his fraudulent transfer claims, based on Section 9(e)(i)
Western was treated as something other than Unfinished Business,
and therefore falls outside of the Section 9(e) definition.
Furthermore, the Trustee has not argued that he can recover
Orrick’s bonus under any theory other than Unfinished Business.
If, in fact, he is asserting a fraudulent transfer claim against
Orrick for its bonus, his claim fails because the Western fee
arrangement was under an entirely separate agreement which has not
been challenged as a fraudulent transfer.
Consequently, the Trustee is not entitled to Orrick’s
$500,000 bonus it received for services rendered in Western. 41
V. CONCLUSION
The Jewel Waiver was valid under California law and cannot be
set aside by the Trustee. 	All Defendants are entitled to summary
judgment on Claims 1, 2, 3, 4 and 5. 	The Jewel Waiver was a
transfer of interests in Brobeck’s property while it was
insolvent, and as such can be challenged as a fraudulent transfer
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under applicable Bankruptcy and California law. 	Defendants (other
than James Baker) are not entitled to summary judgment and the
Trustee is entitled to partial summary judgment as explained in
this Memorandum Decision.
Counsel for the Trustee should prepare and serve proposed
orders consistent with the foregoing, and comply with B.L.R. 9021-
1.
The court will conduct a status conference in these two
adversary proceedings on August 7, 2009, at 2:30 P.M.
* * * 	END OF MEMORANDUM DECISION 	* * *
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