In re Labrum & Doak, LLP
| Decision Date | 03 August 1999 |
| Docket Number | Bankruptcy No. 98-10215DAS. Adversary No. 99-0082,99-0083. |
| Citation | 237 BR 275 |
| Parties | In re LABRUM & DOAK, LLP a Pennsylvania General Partnership, Debtor. Official Committee of Unsecured Creditors, on Behalf of the Estate of Labrum & Doak, a Pennsylvania General Partnership, Plaintiff, v. Perry S. Bechtle, Gerard Bruderle, Leslie M. Cyr, Carl R. Fogelberg, Albert E. Hart, Jonathan Herbst, James D. Hilly, Barbara L. Hollenbach, Mary M. Jacobs, William F. Keating, Douglas J. Kent, J. Stephen Kreglow, Michael H. Krekstein, John F. Ledwith, John D. Lucey, Jr., Edwin F. Mccoy, Kean K. Mcdonald, William J. Mckee, Scott H. Mustin, James M. Neeley, Peter J. Neeson, Samuel J. Pace, Jr., David J. Parsells, Daniel J. Ryan, John E. Salmon, John J. Seehousen, Paul M. Silver, Stephen J. Springer, Robert J. Stern, Robertson B. Taylor, Ronald J. Uzdavinis, Patrick R. Vitullo, John L. White, Merle A. Wolfson, Patricia And Luciano Lopes, Alliance 276*276 Consulting Group Associates, Inc., The Hill School, Charles C. Watson and John Does, 1 Through 100, The latter Being Fictitious but Intending to Designate Persons or Legal Entities of any Kind Whatsoever Who or Which Have, May Have, or Purport to Have Any Claims of Any Kind Against Any or All of the Debtor's Former or Current Partners, Either in their Capacities as Former or Current Partners of Debtor or Based Upon Any Alleged Liability for Obligations of the Debtor or its Estate, Defendants. Official Committee of Unsecured Creditors, on Behalf of the Estate of Labrum & Doak, a Pennsylvania General Partnership, Plaintiff, v. Perry S. Bechtle, Gerard Bruderle, Leslie M. Cyr, Carl R. Fogelberg, Albert E. Hart, Jonathan Herbst, James D. Hilly, Barbara L. Hollenbach, Mary M. Jacobs, William F. Keating, Douglas J. Kent, J. Stephen Kreglow, Michael H. Krekstein, John F. Ledwith, John D. Lucey, Jr., Edwin F. McCoy, Kean K. McDonald, William J. McKee, Scott H. Mustin, James M. Neeley, Peter J. Neeson, Samuel J. Pace, Jr., David J. Parsells, Daniel J. Ryan, John E. Salmon, John J. Seehousen, Paul M. Silver, Stephen J. Springer, Robert J. Stern, Robertson B. Taylor, Ronald J. Uzdavinis, Patrick R. Vitullo, John L. White, Merle A. Wolfson, Defendants. |
| Court | U.S. Bankruptcy Court — Eastern District of Pennsylvania |
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Neal D. Colton, Philadelphia, PA, for debtor.
Aris J. Karalis, Ciardi, Maschmeyer & Karalis, P.C., Philadelphia, PA, for Plan Administrator.
Paul Winterhalter, Philadelphia, PA, for Former Committee of Former Partners.
Joseph M. Toddy, Zarwin, Baum, DeVito, Kaplan & O'Donnell, P.C., Philadelphia, PA, for Home Insurance Cos.
James E. O'Neill, III, Stradley Ronon Stevens & Young, LLP, Philadelphia, PA, for Defendant Robert J. Stern.
Robert J. Lenahan, Adelman Lavine Gold and Levin, Philadelphia, PA, for Defendant John D. Lucey, Jr.
John Seehousen, Langhorne, PA, for Kevin Wright, defendant pro se.
Jonathan Herbst, Margolis Ledelstein, Philadelphia, PA, defendant pro se.
James D. Hilly, Marshall Dennehey Warner Coleman & Goggin, Philadelphia, PA, defendant pro se.
Leslie M. Cyr, Dugan Brinkman Maginnis Pace, Philadelphia, PA, defendant pro se.
Carl R. Fogelberg, Fogelberg & Assoc., New York City, defendant pro se.
James M. Neeley, c/o Marcia P. Neeley, New York City, defendant pro se.
Jay G. Ochroch, Fox, Rothschild, O'Brien & Frankel, Philadelphia, PA, for Kean McDonald.
Arnold Levin, Levin, Fishbein, Sedran & Berman, Philadelphia, PA, for Perry Bechtle & Daniel J. Ryan in Adv. 98-0861.
Shawn J. Lau, Bingaman, Hess, Coblentz & Bell, Reading, PA, for defendants Lopes.
J. Scott Victor, Saul, Ewing, Remick Saul, LLP, Philadelphia, PA, for defendants Scott H. Mustin and Michael H. Krekstein.
Robert Szwajkos, Lavin, Coleman, Finarelli & Gray, Philadelphia, PA, for defendant Hollenbach.
Nicholas J. Lepore, III, Schnader Harrison Segal & Lewis, Philadelphia, PA, for defendants Perry S. Bechtle & Daniel J. Ryan.
James M. Matour, Middleman & Matour, Philadelphia, PA, for defendant Samuel J. Pace, Jr.
Joseph Diorio, Philadelphia, PA, for defendants Peter J. Neeson, John E. Salmon, & Stephen J. Springer.
John A. Macoretta, Berry & Martin, Philadelphia, PA, for defendants Bruderle, Kent, Ledwith, McCoy, McKee, Silver & Vitullo.
Robert Lapowsky, Stevens & Lee, P.C., Philadelphia, PA, for defendant David J. Parsells.
Michael F.J. Romano, Woodbury, NJ, for defendant Ronald J. Uzdavinis.
Lewis G. Adler, Woodbury, NJ, for creditor.
Jonathan J. Bart, Philadelphia, PA, for Alliance Consulting Group, Inc.
David A. Eisenberg, Allentown, PA, for defendant Robertson B. Taylor.
Robert D. Sayre, Philadelphia, PA, for defendant Albert E. Hart.
Frederick Baker, Ass't U.S. Trustee, Philadelphia, PA, trustee.
The instant Opinion has two important aspects. Firstly, it endeavors to resolve all of the matters outstanding, at least at this trial level, in the contentious Chapter 11 bankruptcy case of a dissolved law partnership, LABRUM & DOAK, LLP ("the Debtor"). As a result, the within Order effecting our decisions schedules a status hearing to set tentative dates for completion of the plan implementation process and entry of a Final Decree in this case. Secondly, it addresses two important legal issues: (1) the extent of personal liability of the law partners ("the Defendant Partners") who have not settled with the Plan Administrator ("the Administrator") on account of the Debtor's deficiency to nonpartner creditors; and (2) whether we should enter a post-confirmation injunction preventing the Debtor's creditors from pursuing any of the Debtor's partners in other forums in the future on account of the Debtor's liability to them.
We hold, under applicable Pennsylvania partnership law, that the Defendant Partners, having failed to provide evidence of any sort of notice to creditors of the Debtor of their withdrawal from the Debtor or of their entering into an agreement regarding same are liable for all obligations arising after as well as during the duration of their partnership with the Debtor, although we find that the deficiency is not tremendously large and that one partner is not liable for any obligations which preceded her participation. We also hold that, in light of the limited opposition to same and its importance to the settlements effected, the entry of the requested injunction is most significant in effectuating the confirmed plan and is appropriate.
Our decisions combine to leave the Defending Partners in a worse status than the many settling partners. However, we attribute this result to the intransigence of the Defendant Partners. Unless the Defendant Partners are able to vindicate themselves on appeal, they would certainly be well-advised to attempt to join the ranks of the settling partners in light of these decisions.
Presently before us is the disposition of three matters arising in the Debtor's case. The first is Adversary No. 99-0083 ("the Deficiency Proceeding") instituted by the Administrator, created as a successor to the Official Committee of Unsecured Creditors ("the Committee") in the Debtor's case, pursuant to the terms of the Debtor's confirmed Chapter 11 liquidation plan ("the Plan"), of which the Committee was the proponent. The Deficiency Proceeding seeks to obtain a declaratory judgment that the Debtor's partners and former partners are jointly and severally liable for any deficiency of the Debtor's estate, to fix those deficiencies, to obtain an injunction protecting the Debtor's partners from any other litigation on account of the deficiencies, and an accounting of their assets from all partners. The second is Adversary No. 99-0082 ("the Injunction Proceeding"), also instituted by the Administrator, to obtain a temporary restraining order ("TRO"), preliminary injunction ("PI"), and permanent injunction preventing any purported creditors of the Debtor from pursuing any of the Debtor's partners on account of their personal liability as partners in any other forums in the future. The third matter is a number of objections ("the Objections") by the Administrator to all of the proofs of claim filed by the Debtor's partners and former partners in the Debtor's bankruptcy case.
Although the Complaints in the Proceedings name thirty-four (34) partners and former partners, and the Injunction Proceeding includes as defendants these former partners and several named and unnamed nonpartner creditors as well, it has been reported that settlements have been negotiated with all of the Defendants in both Proceedings except (1) LESLIE M. CYR, a partner who is now counsel to the law firm of Dugan, Brinkmann, Maginnis & Pace; (2) CARL R. FOGELBERG, a partner located in the Debtor's former New York City office who is now doing business in the same location as the law form Fogelberg & Associates, P.C.; (3) JONATHAN HERBST, a former partner now affiliated with the law firm of Margolis Edelstein; (4) JAMES D. HILLY, a former partner who is now a shareholder in the law firm of Marshall, Dennehey, Warner, Coleman & Goggin, P.C.; (5) JOHN D. LUCEY, JR., a partner now employed at the law firm of Schubert, Bellwoar, Cahill & Quinn, P.C.; (6) JAMES M. NEELEY, a former partner now associated with the United States Department of State who is presently in Europe or Asia; (7) JOHN J. SEEHOUSEN, a former partner now working as a sole legal practitioner in Langhorne, Pennsylvania; (8) ROBERT J. STERN, a partner now affiliated with the law firm of Stradley, Ronon, Stevens & Young, LLP; and (9) HOME INSURANCE COMPANIES ("Home"), the only non-partner creditor who has not settled with the Administrator. Of the foregoing, only Seehousen and Herbst were involved in most of the court proceedings. Cyr, Fogelberg, and Stern appeared only as witnesses called by the...
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