Free Letter - District Court of Delaware - Delaware

Case 1 :05-cv-00072-JJF Document 1 17 Filed 1 1/17/2006 Page 1 of 3
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ATTORNEYS AND COUNSELLORS AT LAW ·r5|;5pp-qq";
222 DELAWARE AVENUE °°Z`°°°"°°°
R. 0. Box uso ;,¤';;:i:;'§6,
WILMINGTON, DELAWARE 19899
November 17, 2006
VIA HAND DELIVERY AND ELECTRONIC FILING
The Honorable Joseph J. Farnan, Jr.
United States District Court
District of Delaware
J. Caleb Boggs Federal Building
844 N. King Street
Room 4124, Lockbox 27
Wilmington, Delaware 19801
Re: Wells Fargo Bank NA. v. Royal, Case No. 02-1294-JJF
Charles A. Stanziale, Jr., Chapter 7 Trustee of Student Finance Corp. v.
Pepper Hamilton, et al., Case No. 04-1 5 51-J JF
Charles A. Stanziale, Jr., Chapter 7 Trustee of Student Finance Corp. v.
McGladrey & Pullen LLP, et al., Case No. 05-72-JJF
Royal v, Pepper Hamilton, et al., Case No 05-165-JJF
Dear Judge Farnan:
We write on behalf of Royal Indemnity Company ("Royal") with respect to the Court’s
Order dated November 7, 2006 (D.I. 305). The Court has set a hearing in Case No. 05-165 on
November 29, 2006 on the expedited motion to compel Hled by McGladrey & Pullen LLP
("McGladrey"). That motion seeks to compel Royal, a Delaware corporation headquartered in
North Carolina, to produce documents that are in the actual possession of Royal’s ultimate parent
company, located in the United Kingdom; there are nine other entities between Royal and this
ultimate British parent.
But McGladrey’s motion to compel production of documents in the possession of a non-
party on another continent is only one of a number of pending motions which need speedy
resolution given the intensive discovery schedule. In setting the date for the hearing, counsel for
all parties in the four cases indicated their availability on the 29th. Accordingly, we respectfully
request the Court to also hear these other pressing matters on November 29. We describe these
additional matters below.

Case 1 :05-cv-00072-JJF Document 1 17 Filed 1 1/17/2006 Page 2 of 3
Honorable Joseph J. Farnan, Jr.
November 17, 2006
Page 2
Motions Addressing McGladrey’s Document Productions
1. Royal has moved to compel the production of McGladrey’s accounting manuals,
documents concerning the successor relationship between Freed Maxick and McGladrey (a topic
that Freed Maxick has placed at issue), documents concerning named defendant Michael
Aquino’s departure from McGladrey, other agreements entered into by the various defendants
with one another, and McGladrey personnel records comparable to personnel records already
produced by Royal. Royal’s Motion to Compel Production of Documents from Accountant-
Defendants is filed in Case No. 05-165 as docket nmnber 299, and is expected to be fully briefed
before November 29.
2. Royal challenged McGladrey’s confidentiality designation of an agreed upon
procedures report that McGladrey prepared for SFC. McGladrey moved to preserve the
document’s confidentiality designation. McGladrey’s Motion to Preserve Confidentiality
Designation and Limitation on Use and Disclosure was filed in Case No. 05-165 as docket
ntunber 218, and has been fully briefed by the parties.
Other Pending Matters
In addition, there are several other pending motions ready for disposition.
3. Pepper Hamilton LLP ("Pepper"), McGladrey and the other Accountant-
Defendants have moved to dismiss or for judgment on the pleadings. This motion concerns the
Third Circuit’s recent opinion in Seitz v. Detweiler, Hershey and Associates, P. C. (In re CitX
Corp.), 448 F.3d 672 (3d Cir. 2006) and its impact, if any, on claims based on "deepening
insolvency." While several motions originally were filed on this issue, the only currently
pending motion is against the Trustee in Case No. 04-1551. The motion has been fiilly briefed
by the parties. (See, e. g., Case No. 04-1551, D.I. 109).
4. Pepper filed a Motion to Compel Production of Communications Between the
Trustee and Royal, and Relating to the Trustee’s Compensation, filed in Case No. 04-1551 as
docket number 133. Pepper’s motion has been fully briefed by the parties. In responding to this
motion, the Trustee filed a Cross-Motion For Protective Order and to Compel Discovery from
Pepper, which seeks the production of certain documents logged by Pepper as privileged, as well
as documents relating to the compensation of Pepper partner and named defendant Roderick
Gagne. (Case No. 04-1551, D.I. 156). Briefing on the trustee’s cross-motion is scheduled to be
completed by December 1 1, 2006.
5. Case Management Order #2 set shorter discovery and other deadlines solely with
respect to the issues remanded by the Third Circuit. Case Management Order #2 contemplated
completion of document productions by June 30, 2006. Substantial document production has
occurred since and is ongoing. Therefore, Royal, MBLA and Wells Fargo (the only affected
parties) have agreed to a Second Amended Case Management Order #2, with extended deadlines

Case 1:05—cv—00072-JJF Document 117 Filed 11/17/2006 Page 3 of 3
Honorable Joseph J. Farnan, Jr.
November 17, 2006
Page 3
for matters such as the completion of fact discovery, and which will be submitted for the Court’s
approval in advance of the November 29 hearing.
6. McGladrey has refused to schedule any of its witnesses for depositions prior to
January 2007. Royal has moved to compel McGladrey’s compliance with this Court’s Case
Management Orders. This motion was tiled in Case No. 05-165 as docket number 196, and has
been fully briefed by the parties.
* * * *
We would appreciate the opportunity to address any or all of these additional pending
matters at the upcoming hearing.
Respectfully,
/s/ T yjhny Geyer Lydon
Tiffany Geyer Lydon
cc: cc: David C. McBride, Esq. (Counsel for Wells Fargo Bank N.A.) (e-mail)
Andre G. Castaybert, Esq. (Counsel for Wells Fargo Bank N.A.) (e-mail)
Michael Waters, Esq. (Counsel for Trustee) (e-mail)
James J. Rodgers, Esq. (Counsel for Trustee) (e-mail)
Donald Crecca, Esq. (Counsel for Trustee) (e-mail)
Daniel K. Astin, Esq. (Counsel for Trustee) (e-mail)
Veronica Rendon (Counsel for McGladrey & Pullen LLP and Michael Aquino) (e-mail)
John H. Eickemeyer, Esq. (Counsel for Freed Maxick & Battaglia CPAs, PC) (e-mail)
Stephen J. Shapiro, Esq. (Counsel for Pepper Hamilton LLP and W. Roderick Gagne)
(e-mail)
Elizabeth K. Ainslie, Esq. (Counsel for Pepper Hamilton LLP and W. Roderick Gagne)
(e-mail)
Neil G. Epstein, Esq. (Counsel for W. Roderick Gagne, Robert L. Bast, Pamela Bashore
Gagne and the Trusts) (e-mail)
Karen Lee Turner, Esq. (Counsel for W. Roderick Gagne, Robert L. Bast, Pamela
Bashore Gagne and the Trusts) (e-mail)
Michael R. Lastowski, Esq. (Counsel for McGladrey & Pullen LLP and Michael Aquino)
(e-mail)
William H. Sudell, Jr., Esq. (Counsel for Pepper Hamilton LLP and W. Roderick Gagne)
(e-mail)
J arnes L. Holzman, Esq. (Counsel for Freed Maxick & Battaglia CPAs, PC) (e-mail)
Thomas Selby, Esq. (Counsel for McGladrey & Pullen LLP) (e-mail)
Andrew Yao (U.S. Mail)
175302.1