Case Doc 1280 Filed 10/03/13 Entered 10/03/13 18:23:02 Desc Main Document Page 1 of 9

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1 Document Page 1 of 9 UNITED STATES BANKRUPCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re EDISON MISSION ENERGY, et al., Debtors Chapter 11 Case No (JPC (Jointly Administered RESPONSE OF COTTONWOOD J20 HOLDINGS LLC TO THE DEBTORS FIRST OMNIBUS OBJECTION TO CERTAIN PROOFS OF CLAIM On June 17, 2013, Cottonwood J20 Holdings LLC ( Cottonwood filed a claim against Edison Mission Energy ( EME in the amount of $140,616, (the Claim. On September 16, 2013, EME filed its objection (the Objection to the Claim, listing the Claim on Schedule 4 of its objection ( Schedule 4 on the basis the Claim is reflected in the Debtors books and records as obligations of the Debtors non-debtor affiliates. On Schedule 4, the Objection specifically stated that the reason for disallowance was: Neither Edison Mission Energy nor any other debtor is a party to the applicable agreement. Cottonwood s Claim included the following explanation of the claims: The claim of Cottonwood Holdings LLC results from the causes of action filed against Edison Mission Energy in Cottonwood J20 Holdings, LLC v. Mission Minnesota Wind, LLC, Mission Minnesota Wind III, Inc., Edison Mission Energy, Jeffers Wind 20, LLC, Randolph Man and Gerry Loughman, pending before the District Court, Fourth Judicial District of Minnesota, File No. 27-CV The Complaint, attached hereto as Exhibit A, describes the pre-petition claims and the basis therefor. The calculation of the amount of the claim is based upon the calculations listed in Exhibit B. The total claim consists of $140,616,987, which is the total of the following from Exhibit B, (1 Finance/Management Fees of $2,880,000, (2 LLC Management Fees of $7,750,000, and (3 LLC

2 Document Page 2 of 9 Distributions of $129,986,987. Cottonwood s Claim included a copy of the complaint (the First Complaint filed by Cottonwood against EME and other parties dated August 3, 2012 in Cottonwood J20 Holdings, LLC v. Mission Minnesota Wind, LLC, Mission Minnesota Wind III, Inc., Edison Mission Energy, Jeffers Wind 20, LLC, Randolph Mann and Gerry Loughman, pending before the District Court, Fourth Judicial District of Minnesota, File No. 27-CV (the State Court Action. The other defendants in the State Court Action (the Non-EME Defendants are not Debtors in this proceeding. Since the filing of EME s bankruptcy petition, the State Court Action has continued against the Non-EME Defendants, but not EME. The Court should not grant the Objection because as stated in the First Complaint, EME was one of the main actors responsible for Cottonwood s damages. Contrary to EME s assertion in its Objection, EME was not only a party to various agreements, such as the turbine supply agreement, the turbine supply assignment agreement and various letter agreements that underlie Cottonwood s claims, but orchestrated the conspiracy to defraud Cottonwood. The confidential documents produced in the State Court Action and referenced below will show that to be the case. As stated in the First Complaint, the claims directly against EME (which have already survived a motion to dismiss and which support Cottonwood s Claim are for tortious interference, conspiracy to breach fiduciary duties, engaging in unlawful conflict of interest transactions, fraudulent and negligent concealment and unjust enrichment. The allegations contained in the First Complaint are incorporated herein by reference. Discovery in the State Court Action, which is still ongoing, has been underway for almost a year. Tens of thousands of pages of documents have been produced by the Non-EME 2

3 Document Page 3 of 9 Defendants in the State Court Action, almost all of which have been labeled as confidential by the Non-EME Defendants. The documentation and evidence of the Cottonwood Claim is subject to a protective order in the State Court Action. In order to avoid duplicative discovery procedures, Cottonwood and the Debtors have agreed to seek to enter into, and obtain Bankruptcy Court approval at the November 6, 2013, omnibus hearing of, a stipulation lifting the automatic stay for the sole purpose of amending the protective order in the State Court Action to allow for the use of certain confidential information produced in the State Court Action to be used by Cottonwood in prosecuting its Claim in this proceeding. Thereafter, Cottonwood intends to seek entry of a modified protective order in the State Court Action and, following entry of the amended protective order, to work with the Debtors to secure Bankruptcy Court approval of a protective order at the December 18, 2013, omnibus hearing to enable Cottonwood to utilize confidential information produced in the State Court Action to prosecute its claim in the Bankruptcy Court. Accordingly, the Debtors and Cottonwood have agreed, subject to Cottonwood filing this response by October 7, 2013, in accordance with the claims objection procedures approved by the Bankruptcy Court, to adjourn the hearing date with respect to the Cottonwood Claim to a later date to allow for the use of the confidential information in prosecuting its claim in this proceeding. For the reasons stated above, Cottonwood asks the Court to either deny the Objection without prejudice to re-filing at a later date when Cottonwood has the ability to use the confidential documents, or adjourn the hearing with respect to the Objection to the Cottonwood Claim until a date after the time that Cottonwood can use to confidential material produced in the 3

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5 Document Page 5 of 9 UNITED STATES BANKRUPCY COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re EDISON MISSION ENERGY, et al., Debtors Chapter 11 Case No (JPC (Jointly Administered DECLARATION OF THOMAS MELONE IN OPPOSITION TO THE DEBTORS FIRST OMNIBUS OBJECTION I, Thomas Melone, affirm the following statements to be true to the best of my knowledge and belief under the penalties of perjury. 1. I am fully familiar with the facts and circumstances related to the claims of Cottonwood J20 Holdings LLC ( Cottonwood against Edison Mission Energy ( EME. 2. I submit this affirmation in support of Cottonwood s response to the objection (the Objection filed by EME on September 16, On June 17, 2013, Cottonwood filed a claim against EME in the amount of $140,616, (the Claim. 4. Cottonwood s Claim included the following explanation of the claims: The claim of Cottonwood Holdings LLC results from the causes of action filed against Edison Mission Energy in Cottonwood J20 Holdings, LLC v. Mission Minnesota Wind, LLC, Mission Minnesota Wind III, Inc., Edison Mission Energy, Jeffers Wind 20, LLC, Randolph Man and Gerry Loughman, pending before the District Court, Fourth Judicial District of Minnesota, File No. 27-CV The Complaint, attached hereto as Exhibit A, describes the pre-petition claims and the basis therefor.

6 Document Page 6 of 9 The calculation of the amount of the claim is based upon the calculations listed in Exhibit B. The total claim consists of $140,616,987, which is the total of the following from Exhibit B, (1 Finance/Management Fees of $2,880,000, (2 LLC Management Fees of $7,750,000, and (3 LLC Distributions of $129,986, Cottonwood s Claim included a copy of the complaint (the First Complaint filed by Cottonwood against EME and other parties dated August 3, 2012 in Cottonwood J20 Holdings, LLC v. Mission Minnesota Wind, LLC, Mission Minnesota Wind III, Inc., Edison Mission Energy, Jeffers Wind 20, LLC, Randolph Mann and Gerry Loughman, pending before the District Court, Fourth Judicial District of Minnesota, File No. 27-CV (the State Court Action. The Other defendants in the State Court Action (the Non-EME Defendants are not debtors in this proceeding. 6. Since the filing of EME s bankruptcy petition, the State Court Action has continued against the Non-EME Defendants, but not EME. The Court should not grant the Objection because as stated in the First Complaint, EME was one of the main actors responsible for Cottonwood s damages. 7. Contrary to EME s assertion in its Objection, EME was not only a party to various agreements, such as the turbine supply agreement, the turbine supply assignment agreement and various letter agreements that underlie Cottonwood s claim, but orchestrated the conspiracy to defraud Cottonwood. The confidential documents produced in the State Court Action and referred to below will show that to be the case. 8. As stated in the First Complaint, the claims directly against EME (which survived a motion to dismiss and which support Cottonwood s Claim are for tortious interference, conspiracy to breach fiduciary duties, engaging in unlawful conflict of 2

7 Document Page 7 of 9 interest transactions, fraudulent and negligent concealment and unjust enrichment. 9. Discovery in the State Court Action, which is still ongoing, has been underway for almost a year. Tens of thousands of pages of documents have been produced by the Non-EME Defendants in the State Court Action, almost all of which have been labeled as confidential by the Non-EME Defendants. 10. The documentation and evidence of the Cottonwood Claim is subject to a protective order in the State Court Action. 11. In order to avoid duplicative discovery procedures, Cottonwood and the Debtors have agreed to seek to enter into, and obtain Bankruptcy Court approval at the November 6, 2013, omnibus hearing of, a stipulation lifting the automatic stay for the sole purpose of amending the protective order in the State Court Action to allow for the use of certain confidential information produced in the State Court Action to be used by Cottonwood in prosecuting its Claim in this proceeding. Thereafter, Cottonwood intends to seek entry of a modified protective order in the State Court Action and, following entry of the amended protective order, to work with the Debtors to secure Bankruptcy Court approval of a protective order at the December 18, 2013, omnibus hearing to enable Cottonwood to utilize confidential information produced in the State Court Action to prosecute its claim in the Bankruptcy Court. 12. Accordingly, the Debtors and Cottonwood have agreed, subject to Cottonwood filing its response by October 7, 2013, in accordance with the claims objection procedures approved by the Bankruptcy Court, to adjourn the hearing date with respect to the Cottonwood Claim to a later date to allow for the use of the confidential information in prosecuting its claim in this proceeding. 3

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9 Document Page 9 of 9 CERTIFICATE OF SERVICE I hereby certify that on October 3, 2013, I served via overnight Federal Express the foregoing RESPONSE OF COTTONWOOD J20 HOLDINGS LLC TO THE DEBTORS FIRST OMNIBUS OBJECTION TO CERTAIN PROOFS OF CLAIM on each of the following at the addresses set forth below: Edison Mission Energy 3 MacArthur Place #100 Santa Ana, CA Attn: Crystal Needham Edison Mission Energy Midwest Generation, LLC 440 South LaSalle Street #3500 Chicago, Illinois Attn: Daniel D. McDevitt McDonald Hopkins LLC 300 North LaSalle Street, Suite 2100 Chicago, Illinois Attn: David A Agay amd Joshua Gadharf Ropes & Gray LLP 1211 Avenue of the Americas New York, New York Attn.: Keith H. Wofford Ropes & Gray LLP Prudential Tower 800 Boylston Street Boston, MA Attn.: Stephen Moeller-Sally and Brian Rooder Kirkland & Ellis LLP 300 North LaSalle Street Chicago, Illinois Attn: David R. Seligman, P.C., Brad Weiland, and Gregory F. Pesce Kirkland & Ellis LLP 601 Lexington Avenue New York, New York Attn: Joshua Sussberg Akin Gump Stauss Hauer & Feld LLP One Bryant Park Bank of America Tower New York, New York Attn.: Ira S. Dizengoff, Arik Preis, and Jason Rubin Perkins Coie LLP 131 South Dearborn Street, Suite 1700 Chicago, Illinois Attn.: David M. Neff and Brian Audette Office of the U.S. Trustee, region South Dearborn Street, Room 873 Chicago, Illinois Attn.: Katy Gleason By: /s/ Michael Melone