Free Motion to Compel - District Court of Delaware - Delaware

Case 1:04-cv-01494-JJF Document 99-14 Filed 12/15/2006 Page1 of 4
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November 8, 2006
Bonnie Steingart, Esq, Via Email and First C/ass Mail
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza »
New York, NY l0004—l 980
RE: Magten Asset Management Corp. rz Hanson and Kiadt; CA No. 05 —0499—JJ F
Dear Bonnie:
We write in response to your letter of November 3, 2006 regarding the Responses and
Objections of Michael J. Hanson and Ernie J. Kindt to Plaintiff’ s First Request for Document
Production.
A First, all ofthe documents in the possession of either Mr. Hanson or Mr. Kindt are
documents that belong to either NorthWestern Corporation or Clark Fork and Blackfoot, LLC
and therefore must be reviewed by those entities prior to any production so that any appropriate
privileges may be asserted and preserved. As a result, we understand that NorthWestem recently
requested that you agree that production of documents by either NorthWestem, Hanson, or Kindt
will be deemed production for all such parties. Your agreement will streamline the production
and assertion of privilege process, and will avoid duplication of production or confusion in the
production process. It is our understanding that NorthWestern has informed you that it will
commence its rolling production on Thursday, November 9, 2006.
We do not believe that is necessary to produce documents that relate to the time period
subsequent to the date ofthe going—flat transaction, which occurred on November 15, 2002. For
example, in Request No. 14, Magten has requested documents relating to NorthWestem’s
financial condition "at any time between 2001 and the present? NorthWestern’s financial
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Case 1:04-cv-01494-JJF Document 99-14 Filed 12/15/2006 Page 3 of 4
Bonnie Steingart, Esq.
RE: Mugren Asset Management Corp. v. Hanson and Kind!
November 8, 2006
Page 2
condition post the going flat transaction is irrelevant to any issue in Magterfs case against
Hanson and Kindt. However, to the extent that non·privileged documents which are otherwise
responsive may have been generated after the date ofthe going-flat transaction but which refer or
relate back to the going—f1at transaction or the financial condition of Northwestern during the
relevant time, our objection would not apply.
We will withdraw our objection to Request No. 26 and produce responsive documents to
the extent any exist, subject to our general objections.
However, many ofthe remaining Requests to which we objected to the production of any
documents, are completely irrelevant to issue in Magten`s action against Hanson and Kindt j
which alleges that as officers of Clark Fork they breached a fiduciary duty owed to Clark Fork
creditors by permitting the consummation ofthe going-flat transaction. The objectionable
Requests deal primarily with issues surrounding the valuation and fairness ofthe going·flat
transaction (Nos. 3, 4, 6), the financial condition of Clark Fork (Nos. 16, 17, l8, 20, 28) and
compensation paid to outside advisors and Clark Fork officers in connection with, and since, the
going-flat transaction (Nos. 29, 30).
Magten can not ignore the impact of Judge Case’s decision which makes clear that
Magten does not have a fraudulent transfer action because the QUIPS holders are not creditors of
Clark Fork and so have no standing to assert such a claim. The relevant inquiry of this case is
whether Hanson and Kindt, as officers of Clark Fork, breached any fiduciary duty to the
creditors of Clark Fork. Thus, discovery of (a) what Hanson and Kindt knew at the time ofthe
going flat transaction, including whether they knew at the time ofthe going—flat transaction that
NorthWestern could not do that transaction based on its financial condition, and (b) whether
NorthWestem, as the sole membenmanager of the Clark Fork, directed the actions of Clark
Fork, is the only permissible scope of Magten’s case against Hanson and Kindt. Further, it
should be noted, that while Judge Farnan denied NorthWestnem’s motion for a protective order
and permitted discovery to continue, he did not rule that all of Magten’s discovery requests were
properly focused to address this issue in this case. For all of these reasons, we believe the
objections asserted by Hanson and Kindt are proper and urge you to reconsider your position on
this area of document production.
The remaining Requests to which Hanson and Kindt objected in total are either irrelevant
to any issue in the case, or could be narrowed substantially. Request No. 8, which seeks “All
documents concerning the QUIPS and/or the QUIPS lndenture", is so broad as to be
meaningless. lf there are specific documents or categories of` documents that can be identified by
Magten, we will of course consider such a narrowed request. Request No. l2 relates to a third
party and, in part, to a transaction unrelated to the going»tlat transaction. if Magten can explain
why communications with CSFB regarding the going·fiat transaction have anything to do with
Magten’s fraud theory, we will consider such a narrowed request. ,
We are available by phone to discuss the above. Of course, this letter is an attempt by
Hanson and Kindt to resolve these discovery issues without the need for the Court’s assistance.
ln the event we are compelled to seek the Court’s assistance or to defend a motion by Magten,
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, Case 1 :04-cv-01494-JJF Document 99-14 Filed 12/15/2006 Page 4 of 4
Bonnie Steingart, Esq.
RE: Magren .4:scz Mcmagemenr Corp. v. /·1'¢1n.s0¤ and K ind!
November S, 2006
Page 3 _
the above response is without prejudice to any other and further objections, responses or
arguments we may raise - and likewise for Magten.
Sincerely,
BROWNJNG, KALECZYC, BERRY & I-{OVEN, P.C.
By JZ /
Ki berly A. Beatty/’ /
cc: John E. James, Esq. (
Gary L. Kaplan, Esq.
John W. Brewer, Esq.
Bijan Amini, Esq.
Jesse H. Austin, lll, Esq.
Victoria W. Counihan, Esq.
Karol K. Demiiston, Esq.
Dennis E. Glazer, Esq.
David A. Jenkins, Esq.
Paul Spagnoletti, Esq.
Adam G. Landis, Esq.
Dennis A. Meloro, Esq.
Curtis S. Miller, Esq.
Kathleen M. Miller, Esq.
John V. Snellings, Esq.
Joseph D. Pizzurro, Esq.
Denise Seastone Kraft, Esq.
Dale R. Dube
235867__2.d0c/1674.044