In re Commercial Financial Services, Inc., No. 98-05162-R
| Citation | 247 BR 828 |
| Decision Date | 18 February 2000 |
| Docket Number | No. 98-05162-R,98-05166-R. |
| Parties | In re: COMMERCIAL FINANCIAL SERVICES, INC., and CF/SPC NGU, Inc., Debtors. |
| Court | United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — Northern District of Oklahoma |
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Larry M. Wolfson, Jenner & Block, Chicago, IL, Neal Tomlins, Tomlins & Goins, Tulsa, OK, Jay Geller, Law Offices of Jay Geller, Chicago, IL, for Debtors.
Thomas Rice, Simpson Thacher & Bartlett, New York City, James Kincaid, Crowe & Dunlevy, Tulsa, OK, Michael Gibbens, Crowe & Dunlevy, Tulsa, OK, for Chase Securities.
Marc Kieselstein, Sachnoff & Weaver, Ltd., Chicago, IL, for Aegon Group and other interested parties.
Jack Stern, Barrett Gravante Carpinello & Stern LLP, New York City, Bradley K. Beasley, Boesche, McDermott & Eskridge, L.L.P., Tulsa, OK, for Bank of Austria AG and Bank of Scotland.
Kenneth Schacter, Richards & O'Neil, LLP, New York City, Carol Wood English, English & Wood, P.C., Tulsa, OK, for Alliance Capital Management.
Max Naegler, Tulsa, OK, Lucinda O. McConathy, Richards Spears Kibbe & Orbe, Washington, D.C., for Abbey Group and other interested parties.
ORDER GRANTING IN PART CFS'S MOTION FOR PROTECTIVE ORDER
On November 10, 1999, Commercial Financial Services, Inc. ("CFS"), filed Commercial Financial Services, Inc.'s Motion for Entry of Protective Order No. 2 Governing Limited Waiver of Privileges and Notice of Opportunity for Hearing (Docket # 1608) ("Motion" or "Motion for Protective Order"), to which is attached Protective Order No. 2 Governing Limited Waiver of Privileges by Commercial Financial Services, Inc. (the "Proposed Protective Order"). In response to the Motion for Protective Order, the following pleadings were filed on November 30, 1999:
A hearing on the matter was set for December 7, 1999, at which time the parties requested that the Court allow further briefing of the issues raised in the objections. The Court permitted further briefs and continued the hearing to January 25, 2000. On December 23, 1999, CFS filed its Response to Objections to Protective Order No. 2 Governing Limited Waiver of Privileges (Docket # 1797) ("CFS's Response"). On January 7, 2000, the objecting parties filed the following:
A hearing was held on January 25, 2000, at which CFS appeared though its president, Fred Caruso, and through its counsel, Larry Wolfson, Jay Geller, Robert Stauffer, and Neal Tomlins; Chase Securities, Inc. ("Chase") appeared through its counsel, Thomas Rice, James Kincaid and Michael Gibbens; the Aegon Group appeared through its counsel, Marc Kieselstein; and Alliance Capital Management LP ("Alliance") appeared through its counsel, Kenneth Schacter. Mr. Caruso, CFS's president and sole director, testified in support of the Motion. At the request of the Court, CFS provided the Court with a copy of the (1) Request for Production of Documents dated December 10, 1999, made pursuant to the Rule 2004 Order and initiated by Bankers Trust as Trustee, and (2) the Official Committee of Asset-Backed Securityholders' Supplemental Interrogatories dated December 3, 1999 (the "Discovery Requests"). The Court has reviewed the Discovery Requests.
Upon consideration of the pleadings, the testimony, the Discovery Requests, the arguments of counsel, the posture of the case (of which the Court takes judicial notice), and the applicable law, the Court makes the following findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052.
The Court has jurisdiction of this "core" proceeding by virtue of 28 U.S.C. § 1334; 28 U.S.C. § 157(a), (b)(2)(A) and (O); and Miscellaneous Order No.128 of the United States District Court for the Northern District of Oklahoma: Order of Referral of Bankruptcy Cases, effective July 10, 1984, as amended.
Some of the objecting parties have argued that CFS is seeking an advisory opinion as to the validity of privileges asserted as to documents that have not yet been identified, and that the Court cannot issue advisory opinions.1 The Court finds that CFS does not request a ruling on whether any document it proposes to produce or withhold is actually privileged. CFS seeks permission to make an offer to interested parties to disclose certain information that would otherwise be withheld as privileged on the condition that those interested parties agree to give up the right to assert subject matter waiver as to documents CFS does not desire to disclose. In order to further safeguard the undisclosed documents from parties who decline to give up their right to assert subject matter waiver, CFS requests that the Court make findings of fact and legal conclusions supporting the limitations on waiver that would be binding on non-consenting parties. The Court finds that a live controversy exists because discovery has been propounded upon CFS, that the discovery seeks potentially privileged information,2 that CFS believes that it is in the best interests of the estate to disclose certain privileged information but only if such disclosure does not compel CFS to disclose other privileged information, and that CFS is delaying compliance with the Discovery Requests pending the Court's consideration of its Motion for Protective Order. This controversy must be resolved before discovery may proceed.
The Court finds that notice of the Motion and the hearing was adequate under the circumstances, and all other notice is waived.
The objecting parties are involved in securities fraud litigation that was commenced in the United States District Court of the Northern District of Oklahoma (the "District Court Litigation").3 All objecting parties except Chase are plaintiffs in the District Court Litigation. These plaintiffs are holders of asset-backed securities that were acquired through complex securitization transactions that were initiated by and inured to the benefit of CFS. Chase is a defendant in the District Court Litigation4 and Chase alleges a contingent claim against the estate for indemnification in connection with its involvement in the District Court Litigation. CFS is not a defendant in the District Court Litigation because of its status as a chapter 11 debtor. CFS possesses and wishes to release information that is relevant to a meaningful evaluation of the strengths and weaknesses of creditors' prepetition claims against CFS and the estate. Some or all of this information is also relevant to the claims alleged by the plaintiffs against Chase and others in the District Court Litigation.
Neither the Official Committee of Unsecured Creditors nor the Official Committee of Asset-Backed Securityholders oppose the Motion for Protective Order.
Motion for Protective Order at p. 3, ¶ 9.
CFS has responded to the Discovery Requests and desires to make unprivileged documents and certain privileged documents available for review in the CFS...
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