2007 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 1-24-2007 

# In Re: O nco In

v C o P r e c e de nt i al or N on-P r e c e de nt i al : N on-P r e c e de nt i al D ocke t N o . 05-4857

F o llow thi s and a dd it ion al work s at : http://d i git alc ommon s .l a w . vi ll anova . e du/thir dc ir c uit_2007

Thi s de c i sion i s br ou ght t o you for f r e e and ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. It h as be e n a c c ept e d for inclusion in 2007 D e c i sion s b y an author i z e d a dmini s tr at or of V i ll anova U nive r sity S choo l of L a

w Di git al Reposit ory

. F or mor e inform at ion, p le as e c ont a ct Be n j amin . C arl s on@l a

w . vi ll anova . e du . Re c omme nde d C it at ion
" In Re: Onc o In

v C o " (2007). 2007 D e cisio n s . P ape r 1750. http://d i git alc ommon s .l a

w . vi ll anova . e du/thir dc ir c uit_2007/1750NOT P RE CE DE NT I AL
I N TH E UN I TED STATES CO UR T

OF A PP EALS F O R T H E T H IR D C IR C U IT
N O . 05- 4857
I N R E: ON CO I NV ESTM ENT C OM PAN Y, ET AL. M W POST P OR TFOLI O FU ND LTD. ; DB DI STRES SED OPPORTU NI TI ES F UN D LTD . ; POST OPP OR TUN I TY FU N D L. P. ; PO ST TO TA L R ETU RN FU N D L. P. ; H FR DS OP P ORTUNI TY M AST ER T RUS T; OPP ORTUNI TY F UND LL C; M W POST OPP OR TUN I TY O FF SHO RE FUN D LTD . ; SOU TH DA KO TA I NV ESTM ENT C OU NC I L; CO NC OR DI A M AC 2 9 LTD; J M E OFFS HO RE

OP P OR T UNI T Y F UND L T D; OF F S HOR E OP P OR T UNI T Y F UND I I LT D; RES TORATI ON CAPI TAL M ANA GEM ENT LL C; RE S T OR AT I ON HOL DI NGS L T D. ; L I T E S P E E D M AS T E R F UND;

M W P O S T P O R T F O L IO F U N D L T D , E T A L .,

A p p e llan ts
v. NOR T HWES T BA NK MI NNE S OT A, NAT I ONAL AS S OC I AT I ON as I ndentur e Trus t ee f

orthe 10% Seni orSubor di nat e N ot es D ue F e b ru a ry1 , 2 0 0 9 o f

O g leb a yN o rto n C o m p a n ya lso k n o w n a s W e lls F a r g o Ba n k M N Na t i o n a l As s o c i a t i o n ; OGL E BA Y NOR T ON C OM P ANY;

DE P OS I T OR Y T RU S T CO M P ANY

A ppel l ees

O n A pp eal F rom the U nit ed S t at es

D istri ct C o u rt Forthe D i s t r i ctof D el aw ar e ( D . C . C i vi l A ct i on N os . 04- cv- 01543, 04- cv- 01544, 04- cv- 01545, 04- cv- 01546)

D i s t r i ctJ udge: H on. Sue L . R obi ns on2 A r gued: N ovember8, 2006 B E FO R E : SC I R I C A , C hi ef J udge, M cK E E and ST A PL E T O N , C i r cui tJ udges ( O pi ni on Fi l ed J anuary24, 2007)

B r i an A . Sul l i van Am yD. Br o wn W erb & Sul l i van 300 D el aw ar e A venue - 13 Fl oor th P. O . B ox 25046 W i l m i ngt on, D E 19899 and B ru c e B e n n e tt J ames O . J ohns t on ( A r gued) J os hua M . M es t er H enni gan, B ennett& D or m an 865 Sout h Fi guer oa St r eet- Sui t e 2900 L os A ngel es , C A 90017 A tto rn e y s f

o r A p p e llan ts W i l l i am W ei nt r aub L aur a D . J ones Pachul s ki , St ang, Z i ehl , Y oung, J ones & W ei ntr aub 919 N or t h M arketSt r eet- 16 Fl oor th P. O . B ox 8705 W i l m i ngt on, D E 19801 and R i char d W . R ei nt hal er D i anne F. C offi no ( A r gued) D ew eyB al l ant i ne 1301 A venue of

t he A m er i cas N ew Y or k, N Y 10019 A t t or ney s forA ppel l ees W el l s Far go B ank, N at i onal A s s oci at i on and O gl ebayN or t on C om pany3

D ani el J . D eFr ance s chi R i char ds , L ayt on & Fi nger O n e R o d n eyS q u are P. O . B ox 551 W i l m i ngt on, D E 19899 and H eatherL ennox J ones D ay901 L akes i de A venue C l evel and, O hi o 44114 A t t or ney s forA ppel l ee O gl ebayN or t on C om pany M ark E . Fel ger J eff r eyR . W axman C ozen & O ’ C onnor 1201 M arketSt r eet- Sui t e 1400 W i l m i ngt on, D E 19801 and G r egg M . M as hber g ( A r gued) P roskauer R ose 1585 B r oadw ay N ew Y or k, N Y 10036 A t t or ney s forA ppel l ee D epos i t or yT rus tC o.

OPI NI ON O F THE COURT

ST A PL E T O N , C i r cui tJ udge:
A ppel l ant s ar e hol der s of Seni orN ot es i s s ued byO gl ebayN or t on C om pany ( “O gl ebay ”) undera Seni orSecur ed N ot e Pur chas e A gr eement( “Seni orN ot ehol der A g re e m e n t”) . A f

ter O g leb a yf

iled f o r C h a p ter 1 1 b a n k ru p tcy, a p p e llan ts c o m m e n c e d th is ad v ersa ryp roc ee d ing in the B an k rup tcyC o u rtto co n testtheir trea tm en t un d er O g leba y ’s p ro p o se d p lan o f

re o rg a n iza tio n . In a d d iti o n to O g leb a y , ap p e llan ts n a m e d a s d e f e n d a n tsA p p e llan ts d o n o t ch a llen g e th e D istric t C o u rt’s m o o tn e ss f in d in g w ith re sp e c t to th e ir 1 cl ai m fordecl ar at or yr el i ef. 4 W el l s Far go B ank ( “W el l s Far go”) , i n i t s capa ci t yas I ndentur e Trus t ee f orhol der s of
cert ai n s ubor di nat ed not es t hatO gl ebayhad i s s ued, and D epos i t oryT rus tC om pany ( “D T C ”) , i n i t s capa ci t yas di s bur s i ng agentforpr oper t yt o be di s t r i but ed t o t he
su b o rdin ated n o teho lders u n d er the p lan. A p p ell an ts sou g h t th ree fo rm s o f re li ef : ( 1 ) a decl ar at i on agai ns tal l defe ndant s t hatno di s t r i but i ons coul d be made t o s ubor di nat ed
n o teh o ld e rs u n d e r th e p lan u n les s a n d u n til O g leb a yf u lf ill e d a ll o f

its o b lig a tio n s to appel l ant s ; ( 2) an or derr equi r i ng W el l s Far go and D T C t o turnoveranypr oper t ythey
r ece i ved fr om O gl ebayfort he bene fi tof the s ubor di nat ed not ehol der s , t o t he ext ent necessaryt o sat i sfyO glebay ’s ob l i gati on s t o ap pell ants ; and (3) m on eydam ages ag ai nst W el l s Far go and D T C i n t he amountof the val ue of a nypr oper t ytheyr ece i ved fr om O g le b a yf

o r t h e b e n e f

it o f th e s u b o rd in a te d n o te h o ld e rs . T h e B a n k ru p tcy C o u rt ru led a g a in st a p p e llan ts o n th e m e rits o f th e ir c laim s in b o th the a d v ersa ryan d C h ap ter 11 p roc ee d ing s, an d su b seq u en tl yco n firm ed O g leba y ’s p rop o sed p lan o f re o rga n izati o n . A p p ell an ts th ere af ter ap p ea led th e B an k rup tcyC o u rt ’s fi nal j udgm enti n t he adve r s arypr ocee di ng t o t he D i s t r i ctC our t , butchos e nott o appea l th e C o n f ir m a tio n O rd e r e n te re d b yth e B a n k ru p tc yC o u rt in th e C h a p te r 1 1 p ro c e e d in g . T h e D istric t C o u rt d ism iss e d th e a p p e a l o n c o n stitu tio n a l m o o tn e ss g ro u n d s, a n d th is tim e lya p p e a l f

o llo w e d . W e w ill a f

f irm th e ju d g m e n t o f

th e D istric t C o u rt f

o r e ss e n tially 1 t he s ame r eas ons s etfor t h i n i t s w el l
- r eas oned opi ni on.5

W e agr ee w i t h t he D i s t r i ctC our tthatappel l ant s ’ cl ai m s forturnoverand money d a m a g e s a g a in st W e lls F a rg o a re m o o t. B e c a u se W e lls F a rg o w a s re p lac e d b yD T C in t he cha i n of pr opert ydi s t r i but i on, i tneverr ece i ved anypr oper t yunderthe Pl an forthe benef i tof the s ubor di nat ed not ehol der s . W e al s o agr ee w i t h t he D i s t r i ctC our tthat appel l ant s ’ tur novercl ai m agai ns tD T C i s m ootbeca us e D T C has , i n acc or dance w i t h t he P la n , a lr e a d yd is tr ib u te d a ll o f th e p ro p e rt ya t is s u e to th e s u b o rd in a te d n o te h o ld e rs . A l t hough appel l ant s s ucce s s ful l ynegot i at ed w i t h O gl ebayt o i ncl ude a “ s avi ngs cl aus e” in th e P lan w h ich a p p e llan ts in sis t w a s in ten d e d to p re se rv e th e ir rig h t to lit ig a te th is appea l , a j ur i s di ct i onal defe cts uch as m oot nes s cannotbe over come byagr eementof the p a rt ie s . See In re D iG io rg io , 1 3 4 F . 3 d 9 7 1 , 9 7 4 -75 (9th C ir . 1 9 9 8 ). Fi nal l y , w hi l e w e w oul d notchar act er i ze appel l ant s ’ cl ai m form oneydamages agai ns tD T C as “non-

j us t i ci abl e, ” as di d t he D i s t r i ctC our t , w e agr ee w i t h i t s obs ervat i on t hatappel l ant s have f

ai l ed t o s t at e a da m age c l ai m agai ns tD T C upon w hi ch r el i ef c an be g ra n ted . S im p lyp u t, ap p e llan ts h a v e f a iled to id e n tifyth e so u rc e o f th e d u tyD T C is
a lleg e d to h a v e v io late d . T h e yin sis t th a t D T C h a d a d u tyto tu rn o v e r th e p ro p e rtyit
re c e iv e d o n a c c o u n t o f

th e su b o rd in a ted n o teh o ld e rs ( o r p a yth e e q u iv a len t am o u n t in
m o n e yd a m a g e s) to a p p e llan ts u n d e r th e S e n io r N o teh o ld e r A g re e m e n t. D T C w a s n o t a par t yt o t he Seni orN ot ehol derA gr eement , how ever , and i t s r es pons i bi l i t yunderthe Pl an w a s lim ite d to m a k in g d is tr ib u tio n in a c c o rd a n c e w ith th e f in a l, c o u rt -a p p ro v e d P la n , a t as k w hi ch i tconce dedl yper form ed.6

C ont r aryt o appel l ant s ’ ar gum ent , the s avi ngs cl aus e of the Pl an di d notcr eat e or pr es erve anyl i abi l i t yon t he partof D T C . T hatcl aus e pr ovi ded: “N otw i t hs t andi ng anyt hi ng t o t he contr arycont ai ned i n thi s Sect i on X I . C . [r el at i ng t o t he t erm i nat i on of
cert ai n s ubor di nat i on r i ght s and s ett l ementof r el at ed cl ai m s and contr over s i es ] , anyand
a ll righ ts, a rg u m e n ts a n d d e f e n se s re latin g to th e su b o rd in a tio n p ro v isio n s c o n tain e d in t he [I ndentur e] ar e expr es s l ypr es erved s ol el yforthe hol der s of [the Seni orN ot es and a cl as s of the s ubor di nat ed not ehol der s ] , the D ebt or s , the R eor gani zed D ebt or s , the In d e n tu re T ru ste e a n d th e C re d ito rs’ C o m m itt e e a n d sh a ll b e e n f o rc e d in a c c o rd a n c e w ith a Fi nal O r derof the B ankrupt cyC our tr es ol vi ng the part i es ’ r es pect i ve r i ght s unders uch
su b o rd in a tio n p ro v isio n s.” A p p . at 1 1 8 . “F in a l O rd e r” is d e f in e d in th e P lan a s f

o llo w s: an or derorj udgm entof the B ankrupt cyC our t , orot hercour tof compet ent j ur i s di ct i on, as ent er ed on the docke ti n t he C hapt er11 C as es orthe docke t of anyot hercourtof compet entj ur i s di ct i on, thathas notbeen r ever s ed, s t ay ed, m odi fi ed oramended, and as t o w hi ch the t i m e t o appea l ors eek cert i or ar i orm ove fora new tr i al , r ear gum entorr ehea r i ng has expi r ed, and n o a p p e a l o r p e tit io n f

o r c e rtio ra ri o r o th e r p ro c e e d in g s f o r a n e w trial, r ear gum entorr ehea r i ng has been t i m el yt aken, oras t o w hi ch anyappea l t hathas been t aken oranypet i t i on forcert i or ar i thathas been t i m el yfi l ed has been w i t hdr aw n orr es ol ved bythe hi ghes tcour tt o w hi ch the or deror ju d g m e n t w a s a p p e a led o r f ro m w h ich c e rtio ra ri w a s s o u g h t o r a n e w trial, r ear gum entorr ehea r i ng s hal l have be en deni ed orr es ul t ed i n no m o d if ic a tio n o f

s u c h o rd e r. A pp. at99. T he savings cl ause en vis i on ed the foll ow i ng chrono l og yof ev ents : (a) app el l ants ’
su b o rdin ati o n ri g h ts an d arg u m en ts w o u ld b e f inallyreso lved an d en fo rce d b yco u rt
or der ; ( b) t he entr yof a f i nal or derr es ol vi ng appel l ant s ’ s ubor di nat i on r i ght s and7

arg u m en ts w o u ld cu t of f th e sa v ing s clau se; (c) th e P lan w o u ld b e c o n su m m ated ; and (d) D T C w oul d r ece i ve and di s t r i but e pr oper t yi n acc or dance w i t h t he Pl an. E vent s i n fac t unfol ded i n acc or dance w i t h t hi s chr onol ogy . A ppel l ant s aff i r m at i vel ychos e t o r ai s e the
s ubor di nat i on i s s ues i n t he C hapt er11 pr ocee di ng, as w el l as the adve r s arypr ocee di ng, a n d th e B a n k ru p tcy C o u rt p ro c e e d e d to a d ju d ica te th e m e rits o f

th o se iss u e s in b o th pr ocee di ngs . I tt hen i s s ued an or deri n t he C hapt er11 pr ocee di ng r es ol vi ng thos e i s s ues a n d c o n f irm in g th e P lan . T h a t o rd e r b e c a m e f in a l w h e n th e a p p e llan ts f a iled to a p p e a l it , and D T C t hen, qui t e pr oper l y , di s t r i but ed the pr oper t yi tr ece i ved i n acc or dance w i t h t he fi nal , cour t - appr oved pl an. A ppel l ant s have i dent i fi ed no bas i s fori m pos i ng damage l i abi l i t yon D T C , and w e per cei ve none. T he j udgm entof the D i s t r i ctC our tw i l l be af fi r m ed.