Case MFW Doc Filed 09/20/17 Page 1 of 15 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

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1 Case MFW Doc Filed 09/20/17 Page 1 of 15 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE x : In re: : Chapter 11 : WASHINGTON MUTUAL, INC., et al., 1 : Case No (MFW) : : (Jointly Administered) Debtors. : : x GRANT THORNTON S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW Grant Thornton LLP ( Grant Thornton ), by and through its undersigned counsel, hereby submits its Proposed Findings of Facts and Conclusions of Law in connection with the Evidentiary Hearing conducted on June 26-28, 2017 relating to Grant Thornton s Supplemental Motion 2 for An Order to Show Cause Why Sanctions Should Not Be Imposed Against Washington Mutual Liquidating Trust ( WMILT ) for Failure to Comply with the Court s Final Fee Order [Docket No ] ( Findings of Fact ). I. PRELIMINARY STATEMENT Over the course of the past two plus years, Grant Thornton and WMILT have been litigating issues relating to the payment of a $5,000,000 contingency fee ( Contingency Fee ) Grant Thornton contends it is owed for work it performed during the pendency of the abovecaptioned case pursuant to the terms of an engagement letter dated June 4, 2009 ( Engagement 1 The Debtors in these chapter 11 cases along with the last four digits of each Debtor s federal tax identification number are: (i) Washington Mutual, Inc. (3725); and (ii) WMI Investment Corp. (5395). The principal offices of WMI Liquidating Trust are located at 1201 Third Avenue, Suite 3000, Seattle, Washington The Supplemental Motion for An Order to Show Cause Why Sanctions Should Not Be Imposed Against Washington Mutual Liquidating Trust For Failure To Comply With The Court s Final Fee Order shall hereinafter be referred to as the Supplemental OSC Motion. 1

2 Case MFW Doc Filed 09/20/17 Page 2 of 15 Letter ). Payment of the Contingency Fee was approved by this Court on August 1, 2012 ( Final Fee App. Order ). [Docket No ]. Grant Thornton argues that WMILT s failure, despite repeated demand by Grant Thornton, to pay the Contingency Fee is a contemptuous violation of the Final Fee App. Order, which subjects WMILT to sanctions. With respect to the payment of the Contingency Fee, WMILT has argued that the Final Fee App. Order was improvidently granted because: (1) Grant Thornton s lead engagement partner, Steve Ryan, passed away during the engagement; (2) the Engagement Letter guaranteed a maximum fee; (2) the Engagement Letter was the product of a mutual mistake in that it did not reflect the parties true intent; and (4) the work performed by Grant Thornton did not provide any economic value. As it relates to Grant Thornton s request for sanctions, WMILT argues that payment of the Contingency Fee is the subject of a good faith dispute, thus not warranting the imposition of sanctions. Notwithstanding WMILT s attempts to justify its failure to comply with the Final Fee App. Order by refusing to pay Grant Thornton the Contingency Fee, the argument and evidence presented to this Court over the course of the aforementioned two years clearly demonstrates that WMILT has not and cannot meet its extraordinarily high burden of showing that the Contingency Fee was improvidently granted. Moreover, given the unambiguous language of the Final Fee App. Order, WMILT s good faith argument to support its violation of said order is unavailing. PROCEDURAL HISTORY A. The Court Frames the Issues to be Litigated 1. On or about April 27, 2015, Grant Thornton filed its Motion for an Order to Show Cause Why Sanctions Should not be Imposed Against WMILT for Failing to Comply with the Court s Final Fee Order [Docket No ] by Failing and Refusing to Pay Approved Professional Fees (the OSC Motion ). [Docket No ]. 2. On May 21, 2015, the Court conducted a hearing on the OSC Motion. The Court found that: (1) the California Engagement Letter was not ambiguous (See May 21,

3 Case MFW Doc Filed 09/20/17 Page 3 of 15 Transcript ( 5/21 Transcript ) at 56:13-14,); (2) Economic Value is not limited to any value WMILT may have received as a result of the work performed by Grant Thornton (Id. at 56:17-24); (3) Grant Thornton is entitled to 10% [capped at $5 million] of whatever Economic Value WMILT received as a result of the dispute with the FTB (Id. at 56:17-57:1); and (4) the Final Fee App Order approved the Contingency Fee (Id. at 57:2-8). In making these rulings, the Court plainly rejected WMILT s arguments that the California Engagement Letter was ambiguous and held that [t]he Statement of Work isn t limited to the treasury interest. (Id. at 39:13-14.) 3. Although the Court ruled that neither the Engagement Letter nor the Final Fee App. Order were ambiguous, the Court held that WMILT was not prohibited from arguing that the Contingency Fee was improvidently approved. (See 5/21 Transcript, page 57:8-16). Nevertheless, the Court cautioned that WMILT s burden in this regard is extremely high. (Id.). B. The Court Further Limits the Issues to be Litigated 4. On or about March 24, 2016, Grant Thornton filed a Motion for a Protective Order Limiting the Scope of WMILT Discovery after the Court s rulings on the OSC Motion ( MPO ) [Docket No ]. At the April 11, 2016 hearing on the MPO, and after considering the papers submitted with respect to the MPO, WMILT s objection thereto ( MPO Objection ), Grant Thornton s Reply to the MPO Objection ( MPO Reply ) and oral arguments at the hearing, the Court denied the MPO, but in doing so ruled that the mutual mistake argument, which WMILT raised for the first time in the MPO Objection, was relevant only to the issue of sanctions. The Court specifically refused to revisit her ruling from May 21, 2015 that the Engagement Letter was not ambiguous. (See April 11, 2016 Transcript ( 4/11 Transcript ) at page 20:7-16). 5. Moreover, the Court ordered the parties to finish discovery and then schedule an evidentiary hearing to determine whether the Contingency Fee was improvidently granted and whether sanctions should be imposed on WMILT. (Id. at 20:18-20). 3

4 Case MFW Doc Filed 09/20/17 Page 4 of 15 C. The Supplemental OSC Motion and WMILT s Request for an Evidentiary Hearing 6. On or about January 19, 2017, Grant Thornton filed its Supplemental OSC Motion. At the February 27, 2017 hearing on the Supplemental OSC Motion, and after considering the papers submitted with respect to the Supplemental OSC Motion, WMILT s Objection to the OSC Motion ( Supplemental OSC Objection ), Grant Thornton s Reply to the Supplemental OSC Objection ( Supplemental Reply ) and oral arguments at the hearing, the Court raised the following concerns: (1) How WMILT s mutual mistake argument was relevant in light of the Court s prior ruling that the Engagement Letter was not ambiguous (See February 27, 2017 Transcript ( 2/27 Transcript ), page 27:2-5); (2) How WMILT could prove that both parties shared the same mutual misunderstanding of the meaning of the Engagement Letter (Id. at 28:8-29:1); and (3) What events subsequent to Grant Thornton s engagement were incapable of being anticipated after the Engagement Letter was approved. (Id. at 64:14-22). FACTS RELEVANT TO THE ISSUE OF IMPROVIDENCE D. There was No Mutual Mistake as to the Parties Understanding of the Term Economic Value 7. The Court need not consider the extrinsic evidence submitted by WMILT because, as we have previously held in this matter, the terms of the Engagement Letter and the Court s Order approving Grant Thornton s retention were unambiguous 3. Nevertheless, the Court notes that the evidence submitted by WMILT does not convince the Court that our prior rulings should be revisited. 8. In late 2007 or early 2008, prior to the Petition Date, the Debtors Executive Vice President, Corporate Tax Curt Brouwer ( Brouwer ) was approached by Steve Ryan ( Ryan ) of Grant Thornton about the potential for Washington Mutual to challenge the constitutionality of taxation of interest. (See June 26, 2017 Transcript ( 6/26 Transcript ); page 21:4-22). Ryan 3 Notwithstanding WMILT s contention that the Court was somehow mislead by Grant Thornton at the hearing on May 21, 2015, the Court s determination that the Engagement Letter and Final Fee App. Order were not ambiguous was based on the clear language of the documents themselves, and not argument(s) made by counsel, which the Court does not consider evidence. 4

5 Case MFW Doc Filed 09/20/17 Page 5 of 15 proposed that Grant Thornton review Washington Mutual s federal and state returns to identify interest that would be subject to the constitutional challenge. (Id. at 22:23-23:2). Grant Thornton s proposed constitutional challenge relating to the taxation of interest was sometimes referred to by the parties as the Treasury Interest Issue. (Id. at 20:10-16). Although Ryan initially approached Brouwer about the Treasury Interest Issue, Brouwer also had meetings about said issue with other Washington Mutual employees, such as Jack Reed ( Reed ), and at least one other Grant Thornton employee, Paul Bogdanski ( Bogdanski ). (Id. at 21:4-15). During the discussions leading up to Washington Mutual s retention of Grant Thornton prior to bankruptcy, Ryan advised Brouwer that it was possible that California would be sensitive about the Treasury Interest Issue being publicized. As a result, Ryan advised Brouwer that there might be various ways that California may try and resolve the issue. (Id. at 34:24-35:5). Ryan further advised Brouwer that he was concerned that the State of California may want to avoid alerting other taxpayers to the issue and creating a deluge of similar claims. (Id. at 35:8-11). Ryan further opined that the State of California may try and do something similar to what the State Illinois did and that is not pay directly on the Treasury Interest Issue, but provide some other type of value. (Id. at 35:12-14). 9. After discussions amongst Ryan, Bouwer, Reed and Bogdanski, Ryan prepared and circulated a proposed statement of work related to the services they had discussed ( 2007 SOW ). (See 6/26 Transcript, page 26:4-12, Exhibit 12). In paragraph 2 of the 2007 SOW, Grant Thornton specifically warned Washington Mutual that it anticipated the FTB would deny the Treasury Interest Issue. (Exhibit 12, page 1, paragraph 2). 10. In terms of compensation for the work Grant Thornton proposed to do for Washington Mutual prior to the bankruptcy, it was a hybrid arrangement, whereby Grant Thornton would be paid based on its hourly fees, discounted by 50%, and capped at $100,000, plus out-of-pocket expenses ( Hourly Fees and Expenses ). (See 6/26 Transcript, page 34:3-14 and Exhibit 12, page 3, paragraph 12). Per the terms of the 2007 SOW, it was anticipated that 5

6 Case MFW Doc Filed 09/20/17 Page 6 of 15 the FTB would review the filing(s) submitted under the 2007 SOW, and, in connection with the FTB Findings, Washington Mutual would pay Grant Thornton percent (10%) of the Economic Value received, as defined herein, not to exceed $5 million, inclusive of the above-mentioned fee based on hourly standard rates and any out-of-pocket expenses ( Contingency Fee ). (See Exhibit 12, page 3, paragraph 12). 11. For purposes of the 2007 SOW, Economic Value included tax, interest, and penalty offsets, whether received by check, deposit, overpayment applied, credit, audit offset, or any other means. Further, Economic Value was defined to include any reduction of other assessments that were received pursuant to an agreement with the FTB to not file or to withdraw any refund claims. (See Exhibit 12, page 3, paragraph 12). 12. This broad definition of Economic Value was intentionally broad because: (1) it was uncertain how the State of California would react to the Treasury Interest Issue and (2) Grant Thornton wanted to ensure that, if Washington Mutual used the Treasury Interest Issue to leverage a settlement of its other issues with the FTB, Grant Thornton would get paid for it. (See June 27, 2017 Transcript ( 6/27 Transcript ); page 18:2-19:23 and June 28, 2017 Transcript ( 6/28 Transcript ), page 47:13-18 and 69:14-70:1). 13. The idea of how to generate leverage with the State of California was something the parties specifically discussed prior to executing the 2007 SOW. (See 6/28 Transcript, page 70:15-20). In fact, during a meeting in Seattle, Washington, prior to Washington Mutual retaining Grant Thornton, Bogdanski discussed his experience with the State of Illinois on a similar issue with, among others, Brouwer and Ryan, and based on his experience he advised how Washington Mutual could benefit from using the Treasury Interest Issue, including using the Treasury Interest Issue to reduce other assessments. (See June 28, 2017 Transcript ( 6/28 Transcript ); page 67:3-22). 14. Thus, so long as Washington Mutual used the Treasury Interest Issue in its amended returns or in settlement discussions with the FTB, and the use of the Treasury Interest 6

7 Case MFW Doc Filed 09/20/17 Page 7 of 15 Issue yielded any economic benefit to Washington Mutual, Grant Thornton would have been entitled to the Contingency Fee. See 6/27 Transcript, page 25:13-15 and 6/28 Transcript, page 47:13-21). 15. Based on the documentary evidence and testimony, the Court finds that WMILT has failed to establish by clear and convincing evidence that there was a mutual mistake. WMILT and/or its predecessors-in-interest, the Debtors, agreed to the Engagement Letter, prepared, filed and presented a motion seeking approval of the same. They also prepared and presented the motion seeking the very Order they now refuse to obey that is, the unambiguous Final Fee App. Order requiring WMILT to pay Grant Thornton s Contingency Fee. WMILT offered no evidence to explain what the Debtors mistake was, who made the mistake, how it was made, or what circumstances prevented WMILT from seeking relief from the court to address this mistake after it was allegedly discovered. Moreover, there was no evidence that the mistake, whatever it might have been, was mutual. Grant Thornton s witnesses never testified that the final form of the Engagement Letter failed to reflect the parties agreement. Instead, the testimony of Grant Thornton s witnesses confirmed that the definition of Economic Value in the Engagement Letter was deliberately broad and was intended to cover global settlements even if the settlements didn t specifically mention the Treasury Interest Issue. E. Washington Mutual Engaged Grant Thornton in the Bankruptcy Case Pursuant to 11 U.S.C. 328(a) and Based on Nearly Identical Terms to the 2007 SOW 16. After the Petition Date, the Debtors decided to re-engage Grant Thornton. (See 6/26 Transcript, page 43:14-25). There were further discussions between Brouwer, Ryan and Tim Cleary ( Cleary ), however the scope of the re-engagement did not change. The parties did discuss a change in fee structure. (Id. at page 46:21-47:6). 17. Other than some minor bankruptcy related issues, the only substantive differences between 2007 SOW and the Engagement Letter were the amount of the discount Grant Thornton agreed to apply to its normal hourly rates and the increased cap of said hourly fees. (See 6/28 7

8 Case MFW Doc Filed 09/20/17 Page 8 of 15 Transcript, page 70:22-71:1 and the Engagement Letter which is an attachment to Exhibit 16). Importantly, the definition of Economic Value remained the same. (Id. at page 71:2-4 and Exhibit 16). 18. Washington Mutual filed an employment application seeking to employ Grant Thornton under 11 U.S.C. 328(a) of the Bankruptcy Code pursuant to the terms set forth in the Engagement Letter ( GT Employment App. ), which the Court subsequently approved in an Order dated June 22, 2009 (the GT Employment Order ). (See 6/26 Transcript, page 75:22-25 and 6/28 Transcript, page 71:5-8, Exhibit 16). [Docket Nos. 1109, 1199]. The Court s docket shows that WMILT has never sought relief from this Order. F. WMILT Used the Treasury Interest Issue to Challenge the FTB Proof of Claim 19. From and after the Court approved Grant Thornton s employment, Grant Thornton assisted Washington Mutual in preparing amended tax returns, it assisted in drafting letters to the FTB on behalf of Washington Mutual, reviewed letters from the FTB, prepared various memos on the Treasury Interest issue, participated in settlement discussions with the FTB and assisted Washington Mutual in drafting the objection to the FTB s proof of claim ( FTB POC ). (See 6/28 Transcript, page 33, and 71:16-72:13). 20. Notwithstanding the FTB s consistent rejection of the Treasury Interest Issue, Washington Mutual and then WMILT, continued to push said issue with the hope of reaching a global settlement with the FTB. (See 6/26 Transcript, page 116:7-14). WMILT filed a formal objection to the FTB POC on December 31, 2013, which included a discussion regarding the Treasury Interest Issue ( FTB Objection) [Docket No ]. Thereafter, WMILT continued to use the idea in discussions with the FTB (See 6/26 Transcript, page 184:2-6). G. WMILT Enters into a Global Settlement Agreement and Release with the FTB 21. Two and a half months after WMILT filed the FTB Objection, which specifically raised the Treasury Interest Issue, WMILT filed a motion to approve a compromise between WMILT and the FTB ( 9019 Motion ) (See 6/26 Transcript, page 183:8-12 and Exhibit 125). 8

9 Case MFW Doc Filed 09/20/17 Page 9 of 15 The 9019 Motion was granted by the Court by Order dated May 21, [Docket No ] 22. Notwithstanding testimony from Brouwer and Brian Pederson ( Pederson ) that the Treasury Interest Issue was conceded prior to filing the 9019 Motion, which sought to approve the settlement between WMILT and the FTB (See 6/26 Transcript, page 151:8-9 and page 267:25-268:1, respectively,), at no point did WMILT file anything with the Court suggesting that the Treasury Interest Issue had been or was being conceded, or that any portion of the FTB Objection has been or was being withdrawn. (Id. at page 185:20-24 and page 273:19-274:12). Moreover, neither WMILT, Alvarez & Marsal nor the FTB ever advised Grant Thornton that WMILT had conceded the Treasury Interest Issue. (Id at page 267:15-17; Id at page 273:15-18 and 6/28 Transcript, pages 72:22-73:3). Furthermore, other than self-serving statements from Brouwer and Pederson, WMILT presented no evidence demonstrating that it ever advised the FTB that it was conceding the Treasury Interest Issue or any evidence that the FTB acknowledged that the Treasury Interest Issue had been or was being withdrawn or conceded Rather, the only evidence that suggests any issue was conceded, withdrawn or settled is the Settlement Agreement and Release attached as Exhibit A to the Order Approving the 9019 Motion, which makes no reference to any specific issue, much less the Treasury Interest Issue. (the Settlement Agreement ). (Id. at page 185:20-186:12 and 274:13-16; Exhibit 126). 23. The Settlement Agreement is a global settlement of all issues between WMILT and the FTB. (See 6/26 Transcript, page 181:17-182:25 and 274:17-21; Exhibit 126). The intent of the Settlement Agreement was to have a full and complete release by and between WMILT and the FTB, such that all issues raised in the FTB POC and the FTB Objection were fully and finally resolved. (See 6/26 Transcript, page 181:17-182:25). Nothing in the Settlement Agreement attributes value to any specific issue, including the Treasury Interest Issue. (See 6/26 Transcript, page 180:8-18). Paragraph 21 of the Settlement Agreement contained an integration clause setting forth that the Settlement Agreement contained the entire agreement between the parties and that it superseded all prior agreements and discussions regarding such 9

10 Case MFW Doc Filed 09/20/17 Page 10 of 15 settlement. (See Exhibit 126). Therefore, the Treasury Interest Issue was not conceded as WMILT s witnesses testified; but rather it was settled pursuant to the 9019 Motion and the Order granting same. 24. As a result of the Settlement Agreement, whereby the FTB agreed to, among other things, withdraw its $280 million claim and make a payment of $45 million directly to WMILT, there was an Economic Benefit to WMILT in excess of $300 million. (See 6/26 Transcript, page 275:2-8). Per the terms of the Settlement Agreement, the FTB Claim was deemed withdrawn with prejudice, and FTB agreed to a $225 million cash payment to JPMC and WMILT, with WMILT receiving a $45 million cash payment. (See Exhibit 126). Notwithstanding the benefit conferred upon WMILT as a result of the Settlement Agreement, at no point prior to the Court s approval of the 9019 Motion, did anyone from WMILT or Alvarez & Marsal communicate or advise Grant Thornton that WMILT had settled with the FTB (See 6/28 Transcript, page 73:5-15). Rather, Grant Thornton did not learn about the Settlement Agreement until after the Order approving the 9019 Motion was entered, and still it was neither WMILT or Alvarez & Marsal who advised Grant Thornton of said settlement (Id. at page 73:13-21). 25. The Court finds that the Treasury Interest Issue was not conceded and thus was still a live issue when the Settlement Agreement was entered into. As a result, WMILT received an Economic Benefit in excess of $50 million, which, pursuant to the terms of the Engagement Letter, entitles Grant Thornton to the full amount of the Contingency Fee. 26. Furthermore, the Court finds that none of the documentary evidence or testimony supports a finding that the Contingency Fee was improvidently approved. First, although unfortunate, Mr. Ryan s passing, though unfortunate and not anticipated, was not incapable of being foreseen. Second, notwithstanding Mr. Ryan s untimely passing, WMILT has failed to establish that Grant Thornton simply stopped working as a result thereof. In fact, the evidence establishes that Grant Thornton continued working under the terms of the Engagement Letter until the Settlement Agreement was reached. Third, the Engagement Letter did not guarantee a 10

11 Case MFW Doc Filed 09/20/17 Page 11 of 15 maximum recovery because had the FTB not entered into a global settlement, but rather chose to litigate the Treasury Interest Issue, and prevailed, Grant Thornton would likely not be entitled to anything more than the hourly fees billed. Fourth and finally, we find that WMILT s argument that mutual mistake provides grounds for a finding of has no merit. As noted above, WMILT has failed to prove by clear and convincing evidence that there was a mutual mistake. In addition, assuming arguendo a mutual mistake existed -- i.e., that the Engagement Letter did not accurately reflect the parties true intent then that mutual mistake existed when the GT Employment Order was presented to this Court and approved. However, because the analysis regarding the existence of a mutual mistake is hindsight driven, by definition a mutual mistake cannot be a basis for a finding of improvidence, which is foresight driven. FACTS RELEVANT TO THE ISSUE OF SANCTIONS 27. On August 1, 2012, the Court entered an Omnibus Order Awarding Final Allowance of Compensation for Services Rendered and for Reimbursement of Expenses ( Final Fee App. Order ). (See Exhibit 36). 28. WMILT was aware of the Final Fee App Order and Exhibit A attached to it because both were drafted by WMILT s lawyers. (See 6/26 Transcript, page 187:6-11 and page 188:1-10). 29. Footnote 3 on Exhibit A to the Final Fee App Order, states that "The application of Grant Thornton, LLP also requests final approval and allowance of a contingency fee equal to ten percent of the economic value of any refund or reduction received by the Debtors, subject to a $5 million cap and credit for any amounts paid by the Debtors in respect of hourly fees to be paid, consistent with that certain order, dated June 22, 2009, approving the expansion of the scope of their retention to include with the Debtors pursuit of certain refund claims against the California Franchise Tax Board. (See Exhibit 36). 30. Notwithstanding the fact that WMILT was aware of the Final Fee App. Order, WMILT never advised Grant Thornton that it settled with the FTB or that per the terms of the 11

12 Case MFW Doc Filed 09/20/17 Page 12 of 15 Settlement Agreement, the FTB withdrew the FTB POC and actually paid WMILT $45 million dollars (See 6/28 Transcript, page 73:4-9 and Exhibit 126). Rather than hearing directly from WMILT, it was a director in Grant Thornton s Minnesota office, who was not engaged in the instant case, who happened to discover the Settlement Agreement when he was checking the Court s docket. (Id. at page 73:16-22). 31. After learning of the Settlement Agreement between WMILT and the FTB, Grant Thornton reached out to WMILT to inquire as to the payment of the Contingency Fee. (See 6/28 Transcript, page 73:22-74:17). There were numerous conversations between WMILT representatives, Brouwer and Pederson, and Grant Thornton representatives, Bogdanski, Bryan Murphy ( Murphy ), Don Corbett ( Corbett ) and Scott Grierson ( Grierson ). (Id. at page 74:5-17). During these conversations, Brouwer advised Grant Thornton that there was value associated with the Treasury Interest Issue. (Id. at page 74:18-23 and page 102:1-3). Despite admitting that there was value associated with the Treasury Interest Issue, WMILT decided not to pay the Contingency Fee. (Id. at page 189:10-14). 32. Based on WMILT s interpretation of the GT Employment Order and Final Fee App Order, WMILT unilaterally determined that Grant Thornton was not entitled to the Contingency Fee. At no point after Grant Thornton demanded payment of the Contingency Fee, did WMILT seek any type of relief from this Court from the Final Fee App Order or the GT Employment Order. (Id at page 189:21-190:20). 33. Based on the documentary evidence and testimony presented, the Court finds that the Final Fee App. Order was a valid and binding order, that WMILT was aware of said order and that WMILT did not to comply with the Final Fee App. Order. Further, the Court finds that WMILT s excuse for non-compliance, i.e., that its interpretation of the Final Fee App. Order and the GT Employment Order did not require it to pay the Contingency Fee, is not a sufficient basis to disobey a valid and binding Court order. 34. For the foregoing reasons, the Court finds that WMILT shall be sanctioned for 12

13 Case MFW Doc Filed 09/20/17 Page 13 of 15 violating the Final Fee App. Order, in an amount to be determined after Grant Thornton files a subsequent motion for its fees and costs incurred in seeking payment of the Contingency Fee and interest that has accrued from the date the payment of the Contingency Fee came due. II. CONCLUSIONS OF LAW 1. WMILT has failed to meet the high hurdle in establishing that the GT Employment Order was improvidently granted 4. Each of the grounds which WMILT has asserted for a finding of improvidence consists of facts, or allegations of facts, which existed at the time the GT Employment Order was presented to the Court and approved. See 11 U.S.C. 328(a) Contrary to WMILT s claims, Steve Ryan s passing, though unfortunate and unexpected, was not incapable of being foreseen. Moreover, the Engagement Letter does not guarantee the maximum amount of the Contingency Fee because if WMILT never used the Treasury Interest Issue in its dispute with the FTB, Grant Thornton would not be entitled to the Contingency Fee. Additionally, had the FTB decided to litigate the Treasury Interest Issue, rather than enter into the Settlement Agreement, and the FTB prevailed in said litigation, Grant Thornton likely would not have been entitled to the Contingency Fee. Finally, it was entirely foreseeable that the Treasury Interest Issue would be heavily litigated, as the terms of the Engagement Letter specifically advised WMILT that it was anticipated that the FTB would reject said arguments. 3. As to the issue of mutual mistake, not only has WMILT failed to prove by clear 4 The party seeking to revise the terms governing compensation ex post facto faces a high hurdle in doing so. In re Smart World Techs., LLC, 552 F.3d 228, (2d Cir.2009). 5 The court may allow compensation different from what was previously approved if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of fixing of such terms and conditions. 11 U.S.C. 328(a). Once the terms of compensation are set, the court may not stray from them at the end of the engagement unless developments subsequent to the original approval that were incapable of being anticipated render the terms improvident. In re ASARCO, LLC, 702 F.3d 250, (5 th Cir. 2012). The improvident test under section 328 is foresight-driven, not hindsight-determinative. In re Argose, Inc., 372 B.R. 705, 710 (Bankr. D. Del. 2007) on reconsideration, (Bankr. D. Del. 2007) 377 B.R

14 Case MFW Doc Filed 09/20/17 Page 14 of 15 and convincing evidence that there was a mutual mistake regarding the terms of the Engagement Letter, but mutual mistake, by its definition, is not and cannot be a basis for modifying the terms of the Engagement Letter under 11 U.S.C As the evidence demonstrated, the definition of Economic Value was intentionally broad, as one of the strategies discussed by Grant Thornton and Washington Mutual, prior to entering the 2007 SOW was to use the Treasury Interest Issue as leverage to resolve other issues between WMILT and the FTB. The testimony revealed that Grant Thornton always understood that the payment of the Contingency Fee was not predicated solely upon the success of the Treasury Interest Issue, but rather the overall Economic Benefit said issue had on the resolutions of issues with the FTB. 4. As to the issue of sanctions, the clear and convincing evidence demonstrated that: (1) there was a valid order of the Court requiring WMILT to pay the Contingency Fee, that is, the Final Fee App. Order; (2) WMILT was aware of the Final Fee App Order, and (3) WMILT failed to comply with the Final Fee App. Order. Roe v. Operation Rescue, 54 F.3d 133, 137 (3d Cir.1995) (citation and internal quotations omitted). While WMILT contends their refusal to pay the Contingency Fee is due to a good faith dispute as to the interpretation of the Engagement Letter and Final Fee App Order, WMILT s failure to seek any relief or clarification from the Court after Grant Thornton s demand for payment of the Contingency Fee suggests otherwise. 6 A written instrument will not be reformed on the ground of mistake unless the evidence that it does not express the intention of the parties is such as will strike all minds alike as being unquestionable and free from reasonable doubt. The remedy of reformation on account of an alleged mistake is never granted upon a probability, nor upon a mere preponderance of the evidence, but only upon evidence amounting to a certainty. Almer Coe &Co. v. American Nat. Bank & Trust Co. of Chicago, 194 N.E. 2d 14, 17 (Ill. App. 1963) (internal citations omitted). 14

15 Case MFW Doc Filed 09/20/17 Page 15 of 15 Date: September 20, 2017 CROSS & SIMON, LLC By: /s/ Joseph Grey Joseph Grey (ID 2358) 1105 North Market Street, Suite 901 Wilmington, DE (320) Telephone and Ian S. Landsberg, Esq. Casey Z. Donoyan, Esq. Lisa Skaist, Esq. LANDSBERG LAW, APC 9300 Wilshire Blvd, Suite 565 Beverly Hills, CA (310) Telephone Attorneys for Grant Thornton LLP 15

16 Case MFW Doc Filed 09/20/17 Page 1 of 1 CERTIFICATE OF SERVICE I, Joseph Grey, hereby certify that on this 20th day of September, 2017, and in addition to the service provided under the Court s CM/ECF system, I caused copies of Grant Thornton s Proposed Findings of Fact and Conclusions of Law to be served on the parties listed below via first class mail. Marcos A. Ramos, Esq. Cory D. Kandestin, Esq. Katherine M. Devanney, Esq. RICHARDS, LAYTON & FINGER, P.A. One Rodney Square 920 North King Street Wilmington, Delaware Brian S. Rosen, Esq. PROSKAUER ROSE LLP Eleven Times Square Eighth Avenue and 41st Street New York, New York John P. Mastando III, Esq. WElL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York /s/ Joseph Grey Joseph Grey (No. 2358)