UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

Transcription

1 John D. Fiero (CA Bar No. ) Kenneth H. Brown (CA Bar No. 00) Victoria A. Newmark (CA Bar No. ) Teddy M. Kapur (CA Bar No. ) PACHULSKI STANG ZIEHL & JONES LLP 0 California Street, th Floor San Francisco, California -00 Telephone: /-000 Facsimile: /-00 jfiero@pszjlaw.com kbrown@pszjlaw.com vnewmark@pszjlaw.com tkapur@pszjlaw.com PACHULSKI STANG ZIEHL YOUNG JONES & WEINTRAUB LLP 0 Attorneys for Heller Ehrman LLP, Debtor and Debtor in Possession In re: HELLER EHRMAN LLP, UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA Debtor. SAN FRANCISCO DIVISION Case No.: 0- Chapter DEBTOR S OBJECTION TO UNSECURED CLAIM OF JEFFREY FRANK RECTOR (CLAIM NO. ); MEMORANDUM OF POINTS AND AUTHORITIES [No hearing requested] 0 TO THE HONORABLE DENNIS MONTALI AND JEFFREY FRANK RECTOR: Pursuant to section 0 of title of the United States Code (the Bankruptcy Code ) and Federal Rule of Bankruptcy Procedure 00, debtor and debtor-in-possession Heller Ehrman LLP ( Heller or the Debtor ) hereby objects to (the Objection ) the claim of Jeffrey Frank Rector ( Rector or Claimant ), Proof of Claim number, in the general unsecured amount of $,0. (the Claim ) for the reasons set forth below. The Objection is based on the Declaration of Shelley Salinero in Support of Objection to Claim of Jeffrey Frank Rector (the Salinero Declaration ) filed herewith, and any other evidence properly submitted before the Court prior to or at any hearing on the Objection. -00\DOCS_LA:. OBJECTION TO UNSECURED CLAIM Case: 0- Doc# Filed: 0/0/0 Entered: 0/0/0 :: Page of OF JEFFREY FRANK RECTOR

2 I. FACTS In 00, Heller was an international law firm with offices located in several U.S. states and abroad. In May, 00, the firm invited Rector to join Heller as an associate in the Palo Alto office. Rector accepted the offer in June, 00. However, before Rector began work at Heller the firm announced it would dissolve and then ceased ordinary operations. A. Heller s Offer of Employment. In a letter dated May, 00, Heller extended Rector an offer of employment as an associate in the firm s Palo Alto office (the Employment Letter ). Rector formally accepted PACHULSKI STANG ZIEHL YOUNG JONES & WEINTRAUB LLP 0 Heller s offer on or about June, 00. The Employment Letter provides, among other things, that the firm would pay Rector s reasonable transportation and moving expenses in an amount not to exceed $0,000 plus reasonable transportation charges. The Employment Letter does not provide for an end date nor any guaranty that Rector would remain employed by the firm for a particular term. B. Heller s Dissolution and Bankruptcy Filing. The firm adopted a Plan of Dissolution (the Dissolution Plan ) on September, 00. Rector never performed any work for the firm either before or after its adoption of the Dissolution 0 Plan. Heller filed this bankruptcy case on December, 00. C. Rector s Proof of Claim. On or about April, 00, Rector filed Proof of Claim number asserting a general unsecured claim for the amount of $,0., which is composed of the following amounts: $,. Relocation expenses of $0,000 plus airfare of $,. (the Relocation Claim ) $,. Three weeks lost salary (the Lost Salary Claim ) $,. One year s difference between Heller s offer of employment and Rector s replacement salary at Orrick, Herrington & Sutcliffe LLP in San Francisco (the Salary Differential Claim ) OBJECTION TO UNSECURED CLAIM Case: -00\DOCS_LA:. 0- Doc# Filed: 0/0/0 Entered: 0/0/0 :: Page of OF JEFFREY FRANK RECTOR

3 PACHULSKI STANG ZIEHL YOUNG JONES & WEINTRAUB LLP 0 0 Exhibit A. $,000 Moving expenses from Palo Alto to Corte Madera after acceptance of position with Orrick (the Post-Dissolution Moving Expense Claim ) $,00 One month of COBRA coverage (the COBRA Coverage Claim ) A true copy of the Proof of Claim, without attachments or exhibits, is attached hereto as The Debtor objects to the Lost Salary Claim, the Salary Differential Claim, the Post- Dissolution Moving Expense Claim, and the COBRA Coverage Claim, totaling $,.0, on the grounds set forth below. II. RELIEF REQUESTED As a general matter, a proof of claim is usually prima facie allowable. Bankruptcy Code section 0, however, authorizes a debtor or any other party in interest to object to claims. Although a proof of claim is prima facie evidence of an allowed claim, once an objecting party has presented evidence to rebut the prima facie case, the ultimate burden of persuasion is on the claimant. In re Murgillo, B.R., (Bankr. th Cir. ). A claimant ultimately must establish by a preponderance of the evidence that its claim should be allowed. See Ashford v. Consolidated Pioneer Mortg. (In re Consolidated Pioneer Mortg.), B.R., (Bankr. th Cir. ), citing Spencer v. Pugh (In re Pugh), B.R., 0 (Bankr. th Cir. ). As demonstrated below and in the Salinero Declaration filed and served herewith, the evidence presented here rebuts the prima facie allowance of the Claim. A. Specific Objections to The Claim.. The Lost Salary Claim, the Salary Differential Claim, and the Post-Dissolution Moving Expense Claim Should Be Disallowed Because Heller s Offer Was For At-Will Employment. In the State of California, an employment agreement that is not limited by duration is generally terminable by either party at will, without liability to the terminating party. See Cal. Lab. Code (establishing rebuttable presumption of at-will employment where term is not specified); Mile v. California Growers Wineries, Cal. App. d, (); Division of Labor OBJECTION TO UNSECURED CLAIM Case: -00\DOCS_LA:. 0- Doc# Filed: 0/0/0 Entered: 0/0/0 :: Page of OF JEFFREY FRANK RECTOR

4 Law Enforcement, Dept. of Industrial Relations v. Mayfair Markets, 0 Cal App. d Supp., (); Levy v. Bellmar Enterprises, Cal. App. d, 0 (). Where the employee s acceptance of the offer and relocation was not conditioned upon permanent employment, then the employment relationship will be treated as at will. See Ferreyra v. E. & J. Gallo Winery, Cal. App. d () (at will employment found where employee did not condition leaving his job in Argentina to take a job in California upon a promise of permanent employment); Thacker v. American Foundry, Cal.App.d, () (... plaintiff has failed to direct our attention to evidence showing any declaration on his part that he would not give up present employment to work for defendants unless the latter would agree to permanently employ him PACHULSKI STANG ZIEHL YOUNG JONES & WEINTRAUB LLP 0 or any acquiescence by the employers to such terms. ). Here, none of the evidence establishes that Rector was offered permanent employment with Heller. Accordingly, Rector s claim for lost salary, one year of salary differential, and for costs to move from Palo Alto to Corte Madera upon accepting a job with Orrick are not valid claims and should be disallowed in their entirety.. The COBRA Coverage Claim Should Be Disallowed. Heller further objects to Rector s COBRA Coverage Claim. Rector never actually became an employee of Heller, so Heller had no COBRA coverage obligations to him. Further, while Rector submits a copy of a COBRA benefits form from his former employer Milbank Tweed & McCloy, 0 Rector has not submitted any evidence of having actually paid any premiums for COBRA coverage or health care expenses of any kind. As such, there is no proof that Rector has actually incurred the COBRA expense in the amount of $,00 for which he seeks recovery from the estate. Accordingly, for the foregoing reasons, the COBRA Coverage Claim should be disallowed in its entirety. B. Reservation of Rights. The Debtor reserves the right to amend, modify or supplement this Objection and to file additional objections to Rector s claim, or to any other claims or proofs of claim (filed or not) which may be asserted by the Rector against the bankruptcy estate. Should the grounds of objection specified herein by overruled or withdrawn, wholly or in part, the Debtor reserves the right to object to Rector s claims on any other grounds which the Debtor may discover or deem appropriate at any OBJECTION TO UNSECURED CLAIM Case: -00\DOCS_LA:. 0- Doc# Filed: 0/0/0 Entered: 0/0/0 :: Page of OF JEFFREY FRANK RECTOR

5 time during the pendency of this case. Moreover, the Debtor expressly reserves the right to file any action to enforce any rights, remedies or other claims against Rector regarding her claims or any other claims (filed or not) which may be asserted by or against the bankruptcy estate. III. CONCLUSION WHEREFORE, the Debtor respectfully requests that the Court enter an Order:. Sustaining the Objection in its entirety;. Disallowing the Lost Salary Claim, the Salary Differential Claim, the Post- Dissolution Moving Expense Claim, and the COBRA Coverage Claim in every PACHULSKI STANG ZIEHL YOUNG JONES & WEINTRAUB LLP 0 respect; and. Granting such other relief as is just and proper. Dated: January 0, 00 PACHULSKI STANG ZIEHL & JONES LLP By /s/ John D. Fiero John D. Fiero Attorneys for Heller Ehrman LLP, Debtor and Debtor in Possession 0 OBJECTION TO UNSECURED CLAIM Case: -00\DOCS_LA:. 0- Doc# Filed: 0/0/0 Entered: 0/0/0 :: Page of OF JEFFREY FRANK RECTOR

6 Exhibit A Proof of Claim PACHULSKI STANG ZIEHL YOUNG JONES & WEINTRAUB LLP 0 0 OBJECTION TO UNSECURED CLAIM Case: -00\DOCS_LA:. 0- Doc# Filed: 0/0/0 Entered: 0/0/0 :: Page of OF JEFFREY FRANK RECTOR

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16 John D. Fiero (CA Bar No. ) Kenneth H. Brown (CA Bar No. 00) Miriam Khatiblou (CA Bar No. ) Teddy M. Kapur (CA Bar No. ) PACHULSKI STANG ZIEHL & JONES LLP 0 California Street, th Floor San Francisco, California -00 Telephone: /-000 Facsimile: /-00 PACHULSKI STANG ZIEHL & JONES LLP 0 jfiero@pszjlaw.com kbrown@pszjlaw.com mkhatiblou@pszjlaw.com tkapur@pszjlaw.com Attorneys for Heller Ehrman LLP, Debtor and Debtor in Possession In re: Heller Ehrman LLP, UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA Debtor. SAN FRANCISCO DIVISION Case No.: 0- Chapter CERTIFICATE OF SERVICE BY AND FIRST CLASS MAIL 0 CERTIFICATE OF SERVICE BY Case: -00\DOCS_SF:0. 0- Doc# - Filed: 0/0/0 Entered: 0/0/0 :: AND FIRST Page CLASS MAIL of

17 PROOF OF SERVICE STATE OF CALIFORNIA CITY OF SAN FRANCISCO ) ) ) PACHULSKI STANG ZIEHL & JONES LLP 0 0 I, Liset Alvarado, am employed in the city and county of San Francisco, State of California. I am over the age of and not a party to the within action; my business address is 0 California Street, th Floor, San Francisco, California -00. On January 0, 00, I caused to be served the. DEBTOR S OBJECTION TO UNSECURED CLAIM OF JEFFREY FRANK RECTOR (CLAIM NO. ); MEMORANDUM OF POINTS AND AUTHORITIES, (With Exhibit A attached);. DECLARATION OF SHELLEY SALINERO IN SUPPORT OF DEBTOR S OBJECTION TO UNSECURED CLAIM OF JEFFREY FRANK RECTOR (CLAIM NO. );. NOTICE OF DEBTOR S OBJECTION TO UNSECURED CLAIM OF JEFFREY FRANK RECTOR (CLAIM NO. ); MEMORANDUM OF POINTS AND AUTHORITIES in this action by placing a true and correct copy of said document(s) in sealed envelopes addressed as follows: Please see attached Service List (BY MAIL) I am readily familiar with the firm's practice of collection and processing correspondence for mailing. Under that practice it would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid at San Francisco, California, in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. (BY ) I caused to be served the above-described document by to the parties indicated on the attached service list at the indicated address. I declare under penalty of perjury, under the laws of the State of California and the United States of America that the foregoing is true and correct. Executed on January 0, 00, at San Francisco, California. /s/ Liset Alvarado Liset Alvarado, Legal Assistant CERTIFICATE OF SERVICE BY Case: -00\DOCS_SF:0. 0- Doc# - Filed: 0/0/0 Entered: 0/0/0 :: AND FIRST Page CLASS MAIL of

18 SERVICE LIST PACHULSKI STANG ZIEHL & JONES LLP 0 0 United States Trustee Donna S. Tamanaha Assistant U.S. Trustee Pine Street, Suite 00 San Francisco, CA 0 Donna.S.Tamanaha@usdoj.gov Counsel to Committee of Unsecured Creditors Steven H. Felderstein, Esq. Thomas A. Willoughby, Esq. FELDERSTEIN FITZGERALD WILLOUGHBY & PASCUZZI, LLP 00 Capitol Mall, Suite 0 Sacramento, CA sfelderstein@ffwplaw.com twilloughby@ffwplaw.com Counsel for Schiff Hardin LLP Jeffrey V. Commisso, Esq. SCHIFF HARDIN LLP One Market, Spear Street Tower nd Floor San Francisco, CA 0 jcommisso@schiffhardin.com VIA FIRST CLASS MAIL Counsel to State of Washington, Dept. of Revenue Zachary Mosner, Esq. Assistant Attorney General BANKRUPTCY & COLLECTIONS UNIT 00 Fifth Avenue, Suite 000 Seattle, WA 0- Counsel to 0 La Jolla Village LLC Dean P. Sperling, Esq. LAW OFFICES OF DEAN P. SPERLING 0 East Sandpointe, Suite 0 Santa Ana, CA 0- Dean@sperlinglaw.com Counsel to BofA David Minnick, Esq. Leo Crowley, Esq. PILLSBURY WINTHROP SHAW PITTMAN LLP 0 Fremont Street San Francisco, CA 0- Tdminnick@pillsburylaw.com Leo.crowley@pillsburylaw.com VIA FIRST CLASS MAIL Claimant Jeffrey Frank Rector Granada Drive Corte Madera, CA PARTIES REQUESTING SPECIAL NOTICE Counsel for Schiff Hardin LLP Jason M. Torf, Esq. SCHIFF HARDIN LLP 00 Sears Tower Chicago, IL 00- jtorf@schiffhardin.com Counsel to 0 K Street Associates Limited Partnership, A District of Columiba limited partnership Edward J. Tredinnick, Esq. GREENE RADOVSKY MALONEY SHARE & HENNIGH LLP Four Embarcadero Center, Suite 000 San Francisco, CA -0 etredinnick@greeneradovsky.com Counsel for Adworks, Inc. Howard Ross, Esq. SHULMAN, ROGERS, GANDAL, PORDY & ECKER, P.A. Rockville Pike, Suite 00 Rockville, MD 0 hross@srgpe.com Counsel to Citibank, N.A. Larry Peitzman, Esq. Louis E. Kempinksy, Esq. PEITZMAN, WEG & KEMPINSKY LLP 000 Santa Monica Blvd., Suite 0 Los Angeles, CA 00 lpeitzman@pwkllp.com lkempinsky@pwkllp.com Counsel for AD, LP Michael S. Kogan, Esq. ERVIN, COHEN & JESSUP LLP 0 Wilshire Boulevard, th Floor Beverly Hills, CA 0 mkogan@ecjlaw.com Counsel to Pension Benefit Guaranty Corporation Marc S. Pfeuffer, Esq. Office of the Chief Counsel PENSION BENEFIT GUARANTY CORPORATION 00 K Street, N.W. Washington, DC pfeuffer.marc@pbgc.gov efile@pbgc.gov In-House Counsel fo CB Richard Ellis, Inc. Laurie Gomez, Esq. Senior Counsel Litigation CB RICHARD ELLIS, INC. 00 Park Avenue New York, NY 0 laurie.gomez@cbre.com CERTIFICATE OF SERVICE BY Case: -00\DOCS_SF:0. 0- Doc# - Filed: 0/0/0 Entered: 0/0/0 :: AND FIRST Page CLASS MAIL of

19 PACHULSKI STANG ZIEHL & JONES LLP 0 0 Consel to Creditors Darryl L. Snider and John S. Skilton Maria K. Pum, Esq. HENDERSON, CAVERLY, PUM & CHARNEY LLP P.O. Box San Dieguito Rd., Suite - Rancho Santa Fe, CA 0- mpum@hcesq.com Robert G. Badal, Esq. WILMERHALE, LLP 0 S. Grand Avenue, Suite 00 Los Angeles, CA 00 robert.badal@wilmerhale.com Counsel to Constellation NewEnergy, Inc. Bruce J. Ruzinsky, Esq. D. Elaine Conway, Esq. JACKSON WALKER L.L.P. 0 McKinney Street, Suite 00 Houston, Texas 00 bruzinsky@jw.com econway@jw.com Christine R. Etheridge IKON FINANCIAL SERVICES Bankruptcy Administration Bass Road P.O. Box 0 Macon, GA 0-0 christine.etheridge@ikonfin.com Aseem S. Gupta 0 rd Street San Francisco, CA 0 aseemsgupta@gmail.com Counsel for Robert G. Badal and Nancy Sher Cohen David A. Gill, Esq. Richard K. Diamond, Esq. DANNING, GILL, DIAMOND & KOLLITZ, LLP 0 Century Park East, Third Floor Los Angeles, CA 00 dgill@dgdk.com rdiamond@dgdk.com Counsel to Constellation NewEnergy, Inc. Heather M. Forrest, Esq. JACKSON WALKER L.L.P. 0 Main Street, Suite 000 Dallas, TX 0 hforrest@jw.com Counsel for Iron Mountain Information Management, Inc. Frank F. McGinn, Esq. BARTLET HACKETT FEINBERG P.C. Federal Street, th Floor Boston, MA 00 ffm@bostonbusinesslaw.com Counsel for Creditor Paravue, Inc. Scott H. McNutt McNUTT LAW GROUP LLP The Embarcadero, Suite 00 San Francisco, CA 0 smcnutt@ml-sf.com Monte M. Lemann MANATT, PHELPS & PHILLIPS, LLP West Olympic Boulevard Los Angeles, California 00 mlemann@manatt.com Nancy Sher Cohen, Esq. PROSKAUER ROSE, LLP 0 Century Park East, Suite 00 Los Angeles, CA 00 ncohen@proskauer.com Vicky Namken IBM CORPORATION 00 Diplomat Dr. Dallas, TX vnamken@us.ibm.com Paul Sugarman 00 Sunnyhillls Road Oakland, CA 0 sugars@pacbell.net Mr. Ken Higman Sr. Default & Recovery Analyst HEWLETT-PACKARD COMPANY E. Katella Ave., Suite 00 Anaheim, CA 0 ken.higman@hp.com Alan D. Smith PERKINS COIE LLP 0 Third Avenue, th Floor Seattle, WA 0-0 ADSmith@perkinscoie.com Counsel for Oracle USA, Inc. and Oracle Credit Corporation Shawn M. Christianson, Esq. BUCHALTER, NEMER, A PROFESSIONAL CORPORATION Market Street, th Floor San Francisco, CA 0- schristianson@buchalter.com Counsel for Wham-O, Creditor Chris D. Kuhner, Esq. KORNFIELD, NYBERG, BENDES & KUHNER PC Harrison Street, Ste. Oakland, California c.kuhner@kornfieldlaw.com Counsel for Creditor Paravue, Inc. William Gwire Ujvala Singh GWIRE LAW OFFICES Market Street, Suite 0 San Francisco, CA 0 gwire@gwirelaw.com singh@gwirelaw.com CERTIFICATE OF SERVICE BY Case: -00\DOCS_SF:0. 0- Doc# - Filed: 0/0/0 Entered: 0/0/0 :: AND FIRST Page CLASS MAIL of

20 Ivan L. Kallick MANATT, PHELPS & PHILLIPS, LLP West Olympic Boulevard Los Angeles, California 00 Attorney for Jones Day Brian O Neill JONES DAY South Flower Street Fiftieth Floor Los Angeles, CA 00 boneill@jonesday.com G. James Landon Streusand & Landon, LLP Congress Ave., Ste. Austin, TX 0 landon@streusandlandon.com PACHULSKI STANG ZIEHL & JONES LLP 0 Counsel for Guckenheimer Enterprises, Inc. Jeffrey A. Snyder Thoits, Love, Hershberger & McLean Hamilton Avenue, Suite 00 Palo Alto, CA 0 jsnyder@thoits.com Attorneys for Orrick Herrington & Sutcliffe LLP PAMELA PHILLIPS JONATHAN W. HUGHES HOWARD RICE NEMEROVSKI CANADY FALK & RABKIN A Professional Corporation Three Embarcadero Center, th Floor San Francisco, California -0 pphillips@howardrice.com jhughes@howardrice.com Attorney for Jones Day Tobias S. Keller JONES DAY California Street, th Floor San Francisco, CA 0 tkeller@jonesday.com Attorneys for Parties In Interest Douglas Schwab, Paul Sugarman & Kevin Kelly Michael D. Cooper Jeffrey C. Wurms WENDEL, ROSEN, BLACK & DEAN LLP Broadway, th Floor Oakland, CA 0 mcooper@wendel.com jwurms@wendel.com 0 CERTIFICATE OF SERVICE BY Case: -00\DOCS_SF:0. 0- Doc# - Filed: 0/0/0 Entered: 0/0/0 :: AND FIRST Page CLASS MAIL of