Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_02-cv-03838/USCOURTS-cand-3_02-cv-03838-8/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

In re:

CROWN VANTAGE, INC.,

Debtor 

CROWN PAPER COMPANY, et al.,

Plaintiffs

v.

FORT JAMES CORPORATION, f/k/a

JAMES RIVER CORPORATION OF

VIRGINIA, et al.,

Defendants /

No. C-02-3838 MMC

ORDER GRANTING PLAINTIFFS’

MOTION TO STRIKE PORTIONS OF

FORT JAMES’ AMENDED

COUNTERCLAIMS; VACATING

HEARING

Before the Court is the motion, filed April 20, 2006 by plaintiffs Crown Paper

Company, Crown Vantage, Inc., Jeffrey H. Beck, Liquidating Trustee, and Crown Paper

Liquidating Trust (collectively, “Crown”) to strike, pursuant to Rule 12(f) of the Federal

Rules of Civil Procedure, portions of the “First Amended Answer to Second Amended

Complaint; Counterclaims; and Jury Demand” (“FAA”), filed March 31, 2006 by defendants

Fort James Corporation, Fort James Operating Company, Fort James Fiber Company, and

Fort James International Holdings, Ltd. (collectively, “Fort James”). Fort James has filed

Case 3:02-cv-03838-MMC Document 120 Filed 05/26/06 Page 1 of 4
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“Liquidating Trust Action defendants” is a reference to “McGuireWoods, Robert

Williams, Clifford Cutchins, [ ] Stephen Hare, and professional service firms [named as

defendants] in Crown Paper Liquidating Trust v. Coopers & Lybrand, C 02-3836 MMC.” 

(See Order Granting in Part and Denying in Part Defs.’ Mot. for Leave to File Amended

Counterclaims at 2:11-13.) 

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“Settlement Agreement” is a reference to the March 1998 Option and Settlement

Agreement. (See FAA ¶ 40.a.)

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opposition, to which Crown has replied. Having considered the papers filed in support of

and in opposition to the motion, the Court deems the matter suitable for decision on the

papers, VACATES the hearing scheduled for June 2, 2006, and rules as follows.

By motion filed February 1, 2006, Fort James sought leave to amend its

counterclaims, and included therein its proposed new allegations. By order filed March 15,

2006, the Court granted in part and denied in part Fort James’ motion, specifically, the

Court afforded Fort James leave “to file its proposed FAA, with the exception of any claim

seeking declaratory relief with respect to the rights of the Liquidating Trust Action

defendants1 and with respect to any claim alleged by the Trustee on behalf of Crown’s

creditors.” (See Order Granting in Part and Denying in Part Defs.’ Mot. for Leave to File

Amended Counterclaims at 5:2-6.) Thereafter, on March 31, 2006, Fort James filed its

FAA. Crown now moves to strike three portions of the FAA, arguing Fort James did not

obtain leave to include such allegations.

First, Crown objects to the allegation that “[a]n actual controversy exists between

Fort James and Crown regarding the enforceability of the Settlement Agreement[ ]2 and the

rights and obligations of Crown and Fort James and the other released parties under the

Settlement Agreement” (see FAA ¶ 41.b), to the extent such allegation includes the rights

and obligations of other parties. As noted above, the Court denied Fort James leave to

seek declaratory relief with respect to the rights of third parties. Accordingly, the phrase

“and the other released parties” will be stricken from ¶ 41.b.

Second, Crown objects to the allegation that “Fort James is entitled to recover

attorneys’ fees and costs incurred by Fort James directly and on behalf of its indemnities in

connection with the California Actions and Crown Paper Liquidating Trust v. Coopers &

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Lybrand, et al. (“Liquidating Trust Action”) pursuant to Settlement Agreement § 2.3(b)” (see

FAA ¶ 41.g), to the extent the allegation includes fees and costs Fort James incurred on 

behalf of others. Crown argues Fort James did not seek, let alone receive, leave to amend

to include such claim. In its motion to amend, Fort James sought leave to amend to

include the following claim: “Fort James, McGuireWoods, Robert Williams, Clifford

Cutchins, Stephen Hare, and the professional service firms named in the Liquidating Trust

Action are entitled to recover their attorneys’ fees and costs incurred in connection with the

California Actions and the Liquidating Trust Action pursuant to Settlement Agreement

§ 2.3(b),” (see Defs.’ Mot. for Leave to File Amended Counterclaims at 3:27-4:3); as noted,

the Court denied leave to amend to allege the Liquidating Trust Action defendants were

entitled to recover their fees and costs. Fort James did not seek leave to allege its

entitlement to recover funds it expended on behalf of the Liquidating Trust Action

defendants, and, consequently, leave to amend to include such a claim has never been

granted.

Fort James asserts inclusion of such claim would be consistent with the Court’s

order, arguing, in effect, it received implicit permission to include it. The Court disagrees. 

The Court never considered the claim because the motion to amend made no reference,

direct or otherwise, to a claim based on indemnification agreements between Fort James

and other parties, nor did Fort James suggest Crown has any obligation under the

Settlement Agreement to reimburse Fort James for funds expended in its capacity as an

indemnitor. Accordingly, the phrase “and on behalf of its indemnities” and the phrase “and

Crown Paper Liquidating Trust v. Coopers & Lybrand, et al. (‘Liquidating Trust Action’)” will

be stricken from ¶ 41.g. See Fed. R. Civ. P. 15(a) (providing “party may amend the party’s

pleading only by leave of court or by written consent of the adverse party”).

Third, Crown objects to language, in the prayer for relief, essentially identical to the

above-referenced allegation concerning Fort James’ entitlement to fees expended in its

capacity as an indemnitor. (See FAA, prayer ¶ 3.) For the reasons stated above, the

phrase “and on behalf of its indemnities” and the phrase “and the Liquidating Trust Action”

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will be stricken from ¶ 3 of the prayer.

CONCLUSION

For the reasons expressed, Crown’s motion to strike is hereby GRANTED, and the

following portions of the FAA are hereby STRICKEN:

1. From ¶ 41.b, the phrase “and the other released parties”; 

2. From ¶ 41.g, the phrase “and on behalf of its indemnities” and the phrase “and

Crown Paper Liquidating Trust v. Coopers & Lybrand, et al. (‘Liquidating Trust Action’)”;

and

3. From ¶ 3 of the prayer, the phrase “and on behalf of its indemnities” and the

phrase “and the Liquidating Trust Action.”

IT IS SO ORDERED.

Dated: May 26, 2006 

MAXINE M. CHESNEY

United States District Judge

Case 3:02-cv-03838-MMC Document 120 Filed 05/26/06 Page 4 of 4