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1
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REPLY MEMORANDUM IN SUPPORT OF LIQUIDATORS OBJECTIONS TO PROPOSED SETTLEMENT
|
EXTRACTED KEY WORDS
LIQUIDATOR COURT SETTLEMENT INSURANCE COMPANIES ILLINOIS RICO ACTION SUBSIDIARIES SUNSTATES OBJECTIONS TRANSACTIONS CONTROL PLAINTIFFS CLASS MEMBER MOTION DISMISS CLAIMS BELONGING LIQUIDATION ORDERS CASTLE COUNTY PROPOSED SETTLEMENT JURISDICTION AFFILIATES MONETARY CLAIMS PARENT COMPANY MEMORANDUM MASSIVE HARM DEFENDANTS CREDITORS DISCOVERY RELEASING CLAIMS FACTUAL CONNECTION MCA |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
:-
x ?--
. .
: 2'
IN RE SUNSTATES CORPORATION : CONSOLlDATED `;7:
SHAREHOLDER LITIGATION C.A. No. 13284 ; -. &
s i -
- -
:;:
.,>
./ ;
REPLY MEMORANDUM IN SUPPORT OF LIQUIDATOR'S `-i-a :`.
OBJECTIONS TO PROPOSED SETTLEMENT AND RELEASE
Substituting pointless vitriol for sound reasoning, Defendants' Brief in Support of the
Proposed Settlement tries to paint the Liquidator as determined to seize control of the claims
already litigated in the instant case and force Defendants to relitigate them in Illinois. Reality
elsewhere. As Defendants know, the Illinois RICO Action is intended to obtain relief for the
massive harm Defendants have inflicted on the Insurance Companies and their creditors and
policyholders. The Illinois RICO Action centers around transactions, not at issue here, that
resulted in the illegal removal of cash from the Insurance Companies, and is far more extensive
in scope than this case. It has survived a hard-fought motion to dismiss and the discovery taken
so far dramatically illustrates Defendants' misconduct.'
Because the Illinois RICO Action includes all claims that the Liquidator has the desire or
ability to bring at this time, he has never participated in the instant case, and with the exception
I To see this, the Court need only look at Exhibit G of the Exhibits in Support of
Liquidator's Objections to Proposed Settlement and Release. This schedule shows tens of
millions of dollars in premium dollars being transferred, on the same day, out of the Insurance
Companies, down into their Engle-controlled subsidiaries and then up to the Engle-controlled
parent companies, including Sunstates, which in turn used the money to pay parent company
obligations or to enrich Engle directly. At the time of these payments, the Insurance Companies
were precluded under Illinois law from transferring money to the parent companies. These
SNIPPETS:
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2
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DEFENDANTS BRIEF IN SUPPORT OF PROPOSED SETTLEMENT
|
EXTRACTED KEY WORDS
SUNSTATES DEFENDANTS COURT SHAREHOLDERS ENGLE LITIGATION LIQUIDATOR ILLINOIS DELAWARE PLAINTIFFS COUNSEL ATTORNEYS DERIVATIVE CLAIMS SUBSIDIARIES PROPOSED SETTLEMENT WEST TOUHY AVENUE HICKORY FURNITURE INSURANCE WILMINGTON TELCO CAPITAL CORPORATION COMPENSATION OBJECTION MANAGEMENT FEES LARRY SELANDER AUTHORITIES PRINCIPLE CORPORATE LAW AFFILIATES HOWARD FRIEDMAN |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
IN RE SUNSTATES CORPORATION CONSOLIDATED
SHAREHOLDER LITIGATION C.A. No. 13284
DEFENDANTS' BRIEF IN SUPPORT OF
THE PROPOSED SETTLEMENT
ASHBY & GEDDES
Stephen E. Jenkins
222 Delaware Avenue, 17th Floor
P.O. Box 1150
Wilmington, DE 19899
(302) 654-1888
Attorneys for Defendants
OF COUNSEL:
Sheldon Karon Gerald M. Tiemey, Jr., Esq.
Larry Selander 4433 West Touhy Avenue
Thomas Krebs Suite 3 10
Jeffrey A. Soble Lincolnwood, Illinois 60712
FOLEY & LARDNER Telephone: (847) 568-9246
One IBM Plaza Facsimile: (847) 2950390
330 North Wabash Ave. Attorney for Defendants Hickory Furniture
Suite 3300 Company, Telco Capital Corporation,
Chicago, Illinois 606 11 Harold Sampson, Robert J. Spiller and Lee
Telephone: (312) 755-1900 Mortenson
Facsimile: (312) 755-1925
Attorneys for Clyde Wm. Engle and
Howard Friedman
Dated: October 29,200l
101292.1
TABLE OF
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SNIPPETS:
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3
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PLAINTIFFS BRIEF IN SUPPORT OF PROPOSED SETTLEMENT AND APPLICATION FOR ATTORNEYS FEES
|
EXTRACTED KEY WORDS
FEES COURT SETTLEMENT SEW SUNSTATES PREFERRED STOCK EMPLOYMENT AGREEMENT TRANSACTION COUNSEL MANAGEMENT FEES PROPOSED SETTLEMENT CLASS ACTION CLAIM COMPENSATION DEFENDANTS EPERNAY ATTORNEYS SUBSIDIARIES DIRECTORS SUNSTATES BOARD ILLINOIS INSURANCE DEPARTMENT REPURCHASE SHAREHOLDERS LIQUIDATOR DEFENDANTS CONTEND COMPLAINT INFORMATION STATEMENT PREFERRED STOCKHOLDERS REASONABLENESS LITIGATION |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
______________________I_________________------------- x
IN RE SUNSTATES CORPORATION : CONSOLIDATED
SHAREHOLDERS LITIGATION : C.A. No. 13284
______________________I_________________------------- x
PLAINTIFFS' BRIEF IN SUPPORT OF PROPOSED SETTLEMENT
AND APPLICATION FOR ATTORNEYS' FEES AND EXPENSES
ROSENTHAL. MONHAIT, GROSS & GODDESS, P.A.
Carmella P. Keener
140 1 Mellon Bank Center
Wilmington, DE 19899
(302) 656-4433
BIGGS & BATTAGLIA
Robert Goldberg
1206 Mellon Bank Center
Wilmington, DE 19899
(302) 655-9677
Delaware Co-Liaison Counsel for Plaintiffs
Of Counsel:
POMERANTZ HAUDEK BLOCK GROSSMAN
& GROSS LLP
H. Adam Prussin
100 Park Avenue, 261h Floor
New York, N.Y. 10017
Plaintiffs' Lead Counsel
TABLE OF CONTENTS
TABLE OF AUTHORITIES . . . . . . , , . . . . . . . . . . . . . . . . . . . . . iii
NATURE AND STAGE OF PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . 1
SNIPPETS:
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4
.
MEMORANDUM IN SUPPORT OF LIQUIDATORS OBJECTIONS TO PROPOSED SETTLEMENT AND RELEASE
|
EXTRACTED KEY WORDS
INSURANCE COMPANIES LIQUIDATOR COURT ILLINOIS ENGLE SUNSTATES CORONET SUBSIDIARIES PROPOSED SETTLEMENT OBJECTIONS ILLINOIS RICO ACTION PARTIES DEFENDANTS LIQUIDATION ORDERS AUTHORITY CLASS MEMBERS STATUTORY CROWN CASUALTY COMPANY NATIONAL ASSURANCE INDEMNITY AGREEMENT MONETARY CLAIMS PLAINTIFFS SHAREHOLDERS DERIVATIVE CLAIMS AFFILIATES MEMORANDUM COMPROMISE CLYDE ENGLE INDIRECT SUBSIDIARIES |
IN THE COURT OF CHANCERY OF THE STATE OF
IN AND FOR NEW CASTLE COUNTY
:
IN RE SUNSTATES CORPORATION : CONSOLIDATED
S H A R E H O L D E R L I T I G A T I O N : C.A. No. 13284
x
MEMORANDUM IN SUPPORT OF LIQUIDATOR'S
OBJECTIONS TO PROPOSED SETTLEMENT AND RELEASE
This Memorandum is filed by Nathaniel S. Shapo, Director of Insurance of the State of
Illinois, acting solely in his capacity as statutory and court-affirmed Liquidator of Coronet
Insurance Company, Crown Casualty Company and National Assurance Indemnity Company
("the Liquidator"), in support of his objections to the proposed Stipulation and Agreement of
Compromise, Settlement and Release ("Settlement") of this case. Pursuant to paragraph 5 of this
Court's Scheduling Order dated August 28,2001, this Memorandum contains "a detailed
statement of [the Liquidator's] specific objections" and "the grounds for such objections."
INTRODUCTION
The Liquidator has exclusive authority to prosecute claims on behalf of the three now-
insolvent insurance companies identified above ("Insurance Companies") and otherwise stands in
their shoes. All three of the Insurance Companies were controlled by Clyde Engle and may still
be indirect subsidiaries of Sunstates Corporation ("Sunstates").' In 1998, the Liquidator sued
many of the defendants in the instant case, as well as Sunstates itself and numerous persons and
I Before the Insurance Companies were declared insolvent and placed into
liquidation, they were indirect subsidiaries of Sunstates. Clyde Engle has since indicated that the
Insurance Companies' stock has been transferred to another company he controls, Normandy
Holdings, and the Liquidator does not know where that entity is situated in Engle's complex
corporate network; it may well be a subsidiary of Sunstates.
entities who are not defendants here, in the United States District Court for the Northern District
SNIPPETS:
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5
.
STIPULATION AND AGREEMENT OF COMPROMISE SETTLEMENT AND RELEASE
|
EXTRACTED KEY WORDS
DEFENDANTS PLAINTIFFS COURT ENGLE PARTIES PREFERRED STOCKHOLDERS JUDGEMENT SETTLEMENT STIPULATION HICKORY APPROVALS SHAREHOLDER COMPLAINT PLAINTIFFS ALLEGE CONTEND SUBSIDIARIES MANAGEMENT FEES EMPLOYMENT AGREEMENT TRANSACTION BUSINESS JUDGMENT DISCOVERY MORTENSON ROBERT SPILLER FAIR MARKET DIRECTORS EPEMAY PROPERTY TELCO CAPITAL CORPORATION HOWARD FRIEDMAN SUMMARY JUDGMENT DISMISSING |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
____-______________.--------------------------------- X
IN RE SUNSTATES CORPORATION : CONSOLIDATED
SHAREHOLDERS LITIGATION : C.A. No. 13284
______-______-______.------------------------------.- X
STIPULATION AND AGREEMENT OF
COMPROMISE. SETTLEMENT AND RELEASE
After extensive discovery and pre-trial proceedings, the parties have agreed to
into this Stipulation of Settlement (the "Stipulation"), subject to approval of the Court.
I.BACKGROUND
A.Allepations of the ComDlaint
1. Plaintiffs' First Amended and Supplemental Consolidated Complaint (the
"Complaint") originally contained two counts. Count I asserts a shareholder derivative cause of
action on behalf of Sunstates Corporation ("Sunstates") against Clyde Engle, Lee Mortenson,
Howard Friedman, William Schubert, Howard Sampson, and Robert Spiller (collectively, the
"Director Defendants"), Hickory Furniture Company ("Hickory"), Telco Capital Corporation
("Telco"), Indiana Financial Investors, Inc., and RDIS Corporation (collectively, "Parent
Companies"). Count I is currently pending. Count II asserted a class action on behalf of Sunstates'
preferred stockholders. The sole defendant on the second cause of action was Sunstates. On May
2,2001, the Court granted defendants' motion for summary judgment dismissing Count II.
Count I - The Derivative Claim
2. The Complaint alleges that Engle, who served as Chairman and Chief Executive
OfficerofSunstates, was also Sunstates' controlling shareholder. The Complaint further alleges that
Engle, through the Parent Companies, controlled a majority ofthe shares of Sunstates' Common and
Class B Common stock, and as Chairman and Chief Executive Officer exercised actual control over
SNIPPETS:
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6
.
MEMORANDUM OPINION
|
EXTRACTED KEY WORDS
COURT ESQUIRE PREFERRED STOCK SUNSTATES DELAWARE DEFENDANTS ENGLE SUBSIDIARIES REPURCHASES AMENDED COMPLAINT CERTIFICATE PLAINTIFFS DIVIDENDS LIMITATION CONTRACT INCORPORATION CHANCERY WILMINGTON HAUDEK BLOCK GROSSMAN ATTORNEYS CHANCELLOR SPECIAL LIMITATION PURCHASES PREFERENCES CASTLE COUNTY ROSENTHAL MONHAIT GROSS ILLINOIS TELCO CAPITAL CORPORATION CLASS ACTION |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
.,
IN RE SUNSTATES CORPORATION ) Consolidated -I `.,,
SHAREHOLDER LITIGATION 1 C.A. No. 13284 .
/ hI, *
:.( I c:.3
: `: L-1
MEMORANDUM OPINION - L
Submitted: April 27, 2001
Decided: May 2, 2001
Carmella P. Keener, Esquire, ROSENTHAL MONHAIT GROSS & GODDESS,
P. A., Wilmington, Delaware; Robert D. Goldberg, Esquire, BIGGS &
BATTAGLIA, Wilmington, Delaware; H. Adam Prussin, Esquire,
POMERANTZ :HAUDEK BLOCK GROSSMAN & GROSS LLP, New York,
New York, Atto.meys for Plaintifls.
Stephen E. Jenkins, Esquire, Richard D. Heins, Esquire, ASHBY & GEDDES,
Wilmington, Delaware; Attorneys for All Defendants.
Sheldon Karon, Esquire, Larry Selander, Esquire, Thomas Krebs, Esquire,
Jeffrey A. Soble:, Esquire, FOLEY & LARDNER, Chicago, Illinois; Attorneys
for Clyde M. Engle and Howard Friedman.
Gerald M. Tierney, Jr., Esquire, Lincolnwood, Illinois, Attorneys for Defendants
Hickory Furniture Company, Telco Capital Corporation, Harold Sampson,
Robert J. Spiller, and Lee Mortenson.
LAMB, Vice Chancellor.
I.
Count IFI of the Amended Complaint is brought as a class action on
behalf of the owner of shares of Sunstates Corporation $3.75 Preferred
Stock. The complaint alleges that, between 1991 and 1993, and in
violation of its certificate of incorporation, Sunstates purchased shares of
SNIPPETS:
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7
.
REPLY IN SUPPORT OF MOTION TO AMEND ANSWERS
|
EXTRACTED KEY WORDS
DEFENDANTS PREJUDICE TRANSACTIONS SUNSTATES AMENDMENTS SUPPLEMENTAL COMPLAINT FACTS PARTY PARAGRAPHS AMEND PLEADINGS MOTION ADMISSIONS COURT CONTENTIONS SUBSIDIARIES SUPPORT DIRECTORS DISCOVERY EFFORTS BREACHES DUTY RESPONSE DELAWARE PLAINTIFFS ARGUE PROPOSED AMENDMENTS ALLEGATIONS PRIOR TILINGS SUFFER |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
____I_______________--------- x
IN RE: SUNSTATES CORPORATION : CONSOLIDATED
SHAREHOLDER LITIGATION C.A. NO. 13284 & ;f
. . ..F
x:
----_------------------------ >.; r -1
_ .-i ,;
_~ -0
.-
REPLY IN SUPPORT OF CERTAIN DEFENDANTS MD
DEFENDANT CLYDE ENGLE'S MOTION T O AMEND THEIR
ANSWERS TO PARAGRAPHS 40,42,44,49 AND 60 OF PLAINTIFFS' cn
FIRST AMENDED CONSOLIDATED AND SUPPLEMENTAL COMPLAINT
As set forth in the plaintiffs motion, ongoing investigation of the transactions that
are the subject of this lawsuit has brought to light new information indicating some of
defendants' answers to the Amended and Supplemental Complaint are inaccurate. Defendants
advised plaintiffs of their desire to amend the pleadings in February, 2001, and furnished the
documents upon wh.ich the proposed amendments are based. After a delay of almost 60 days,
plaintiffs responded that they objected to the amendments. Plaintiffs' contentions that they
would be prejudiced if defendants are allowed to amend their responsive pleadings dealing with
factual allegations are without merit. Each of plaintiffs arguments will be addressed below.
As a threshold matter, when a party amends a pleading in a Delaware civil action,
any admissions in the prior pleading cease to be conclusive judicial admissions but remain
admissible as evidentiary admissions. Bruce EM. vs. Dorothea A.M., 455 A.2d 866, 869 (Del.
1983) (,`. . . as a general rule the averments of a party . . . as well as pleadings which have been
superseded by amendment, withdrawn, or dismissed, may be taken as admissions against the
interest of the pleading party with respect to the facts alleged therein."). Delaware follows the
federal courts on this issue. See Contractor Utility Sales Company, Inc. vs. Certainteed Products
SNIPPETS:
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8
.
REPLY BRIEF IN SUPPORT OF DEFENDANTS MOTION FOR SUMMARY JUDGMENT ON COUNT II OF COMPLAINT
|
EXTRACTED KEY WORDS
SUNSTATES SUBSIDIARIES CERTIFICATE FACTS DEFENDANTS STOCK DELAWARE LAW CORPORATE VEIL FAITH ILLINOIS ENGLE PURCHASES FAIR DEALING IMPLIED COVENANT COURT ATTORNEYS STRICT CONSTRUCTION PREFERRED STOCK SUMMARY JUDGMENT CONTRACTUAL OBLIGATIONS PLAINTIFFS ALLEGE FIDUCIARY DUTIES PLAINTIFFS FAIL INCORPORATION RELEVANT PERIOD LEGAL THEORIES MORTENSON HOWARD FRIEDMAN AUTHORITIES |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
_________________------------- X
IN RE SUNSTATES CORPORATION CONSOLIDATED
SHAREHOLDER LITIGATION CA. No. 13284
_________--------------------- X
REPLY BRIEF IN SUPPORT OF DE:FENDANTS' MOTION
FOR SUMMARY JUDGMENT ON COUNT II OF PLAINTIFFS'
FIRST AMENDED CONSOLIDATED AND SUPPLEMENTAL C@IPLAINi-
ASHBY & GE:DDES :' .`.'
STEPHEN E. JENKINS ~--
RICHARD D. HEINS -I j
One Rodney Square .:I `j
P. 0. Box 1150 .I_ _
Wilmington, Delaware 19899
(302) 654-1888
Attorneys for all Defendants
OF COUNSEL:
SHELDON KARON GEICALD M. TIERNEY, JR., E~sQ.
LARRY SELANDER 4433 West Touhy Avenue
THOMAS KREBS Suite 310
JEFFREY A. SOBLE Lincolnwood, Illinois 60712
FOLEY & LARDNER Telephone: (847) 568-9246
One IBM Plaza Facsimile: (847) 295-0390
330 North Wabash Ave. Attorney for Defendants Hickory
Suite 3300 Company, Telco Capital
Chicago, Illinois 60611 Harold Sampson, Robert J. Spiller
Telephone: (312) `755-1900 Mortenson
Facsimile: (312) `755-1925
Attorneys for Clyde Wm. Engle and
Howard Friedman
April 16,200l
011.367550.3
SNIPPETS:
|
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9
.
CERTAIN DEFENDANTS MOTION TO AMEND THEIR ANSWERS
|
EXTRACTED KEY WORDS
SUNSTATES HICKORY FURNITURE PLAINTIFFS PARAGRAPHS MOTION AMEND AMENDED COMPLAINT SEW WREIT STOCK ATTORNEYS EXHIBITS SUBSIDIARIES AMOUNTS SUNSTATES EQUITIES HICKORY FURNITURE DEBENTURES HICKORY WHITE PRUSSIN SELANDER AMENDMENT OVERNIGHT DELIVERY DEFENDANT CLYDE SUPPLEMENTAL COMPLAINT ROBERT INCORRECT TELCO CAPITAL CORPORATION PURCHASE AMOUNTS PAID EMPLOYEES MANAGEMENT FEES |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
--_____-______-_______________ X
IN RE SUNSTATES CORPORATION CONSOLIDATED
SHAREHOLDER LITIGATION C.A. No. 13284
___-___-______-_______________ x - "
CERTAIN DEFENDANTS AND DEFENDANT CLYDE ENGLE'S MOTION TO
AMEND THEIR ANSWERS TO PARAGRAPHS 40,42,44,49 AND 60 OF
PLAINTIFFS' FIRST AMENDED CONSOLIDATED AND SUPPLEMENTAL
COMPLAINT
Defendants Hickory Furniture Company, Telco Capital Corporation,
Sampson, Robert J. Spiller, William Schubert, Lee Mortenson ("Certain Defendants")
Defendant Clyde Engle, by and through their attorneys, move for leave to amend
to paragraphs 4.0, 42, 44, 49 and 60 of Plaintiffs' First Amended Consolidated and
Supplemental Complaint ("Amended Complaint") as set forth in Exhibits A and B. In
of their motion, Certain Defendants state as follows:
1. In mid-February 2001, Certain Defendants attorneys, after
investigation of the claims in this matter, discovered that portions of Certain
answers to paragraphs 40, 42, 44, 49 and 60 of the Amended Complaint were incorrect.
2. For example, in their answer to paragraph 40, Certisin
that Sunstates Corporation (" Sunstates") advanced about $500,000 to Hickory
Company ("Hick:ory Furniture") in 1992 on an unsecured basis, and that this
Hickory Furniture increased to about $777,584 as of December 31, 1994. Certain
have since discovered that Sunstates never made that advance. Certain Defendants
determined that Sew Simple Systems, Inc. ("Sew Simple"), a subsidiary of Sunstates,
011.367302.1
SNIPPETS:
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10
.
PLAINTIFFS MEMORANDUM IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT
|
EXTRACTED KEY WORDS
STOCK REPURCHASES PARENT DEL COURT RIGHTS DEFENDANTS DELAWARE FAIR DEALING SUBSIDIARIES PLAINTIFFS LEXIS ENGLE HAUDEK BLOCK SHARES DIVIDENDS SUMMARY JUDGMENT LEAD COUNSEL MASSIVE REPURCHASES CERTIFICATE CONSOLIDATED FINANCIAL STATEMENTS SHAREHOLDERS PREFERRED STOCKHOLDERS OBLIGATIONS INVESTMENT MANAGEMENT FEES GROSSMAN GROSS LLP |
ORIGINAL
IN THE COURT OF CHANCERY OlF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
IN RE SUNSTATES CORPORATION CONSOLIDATED
SHAREHOLDER LITIGATION C.A. No. 13284
i
PLAINTIFFS' MEMORANDUM IN OPPOSITION TO DEFENDANTS'
MOTION FOR SUMMARY JUDGMENT
- DfSMISSING COUNT II
a
ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.
Suite 1401, Mellon Bank Center
Wilmington, DE 19899
(302) 656-4433
BIGGS & BATTAGLIA
Suite 1206, Mellon Bank Center
Wilmington, DE 19899
(302) 655-9677
Counsel for Plaintiffs
OF COUNSEIL:
POMERANT:Z HAUDEK BLOCK
GROSSMAN & GROSS, LLP
100 Park Avenue 26'h Floor
New York, N.Y. ;OO 17
(212) 661-1100
Lead Counsel for Plaintiffs
Dated: April 6, 2001
SNIPPETS:
|
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11
.
OPENING BRIEF IN SUPPORT OF DEFENDANTS MOTION FOR SUMMARY JUDGMENT ON COUNT II OF FIRST AMENDED COMPLAINT
|
EXTRACTED KEY WORDS
CERTIFICATE PREFERRED STOCK SUBSIDIARIES DEL SUPPLEMENTAL COMPLAINT PLAINTIFFS INCORPORATION PURCHASE ATTORNEYS DIVIDENDS DEFENDANTS SUPR LEE LAW RIGHTS PREFERENCES DELAWARE LAW CLASS ACTION DIRECTORS SOBLE AFF SUMMARY JUDGMENT LANGUAGE STRICT CONSTRUCTION LIMITATIONS PREFERRED STOCKHOLDERS COUNSEL HAROLD SAMPSON MORTENSON HOWARD FRIEDMAN |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
________________---_---------- X
IN RE SUNSTATES CORPORATION CONSOLIDATED
SHAREHOLDER LITIGATION CA. No. 13284
________________---- ____------ x
OPENING BRIEF IN SUPPORT OF DEFENDANTS' MOTION FOR
SUMMARY JUDGMENT ON COUNT II OF PLAINTIFFS' FIRST
AMENDED CONSOLIDATED AND SUPPLEMENTAL COMPLAINT
STEPHEN E. JENKINS
ASHBY & GEDDES
One Rodney Square
P. 0. Box 1150
Wilmington, Delaware 19899
( 3 0 2 ) 6 5 4 - 1 8 8 8
Attorneys for all Defendants
OF COUNSEL:
SHELDON KARON GERALD M. TIERNEY, JR., ESQ.
LARRY SELANDER 4433 West Touhy Avenue
THOMAS KREBS Suite 3 10
JEFFREY A. SOBLE Lincohrwood, Illinois 60712
FOLEY & LARDNER Telephone: (847) 568-9246
One IBM Plaza Facsimile: (847) 295-0390
330 North Wabash Ave. Attorney for Defendants Hickory
Suite 3300 Company, Telco Capital Corporation,
Chicago, Illinois 60611 Harold Sampson, Robert J. Spiller
Telephone: (312) 7.551900 Mortenson
Facsimile: (312) 755-1925
Attorneys for Clyde Wm. Engle and
Howard Friedman
March 22,200l
924X8.1
011.360211.1
SNIPPETS:
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12
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PLAINTIFFS REPLY MEMORANDUM IN SUPPORT OF CROSS-MOTION TO JOIN NOMINAL DEFENDANTS AND SURREPLY ON MOTION TO DISMISS
|
EXTRACTED KEY WORDS
SUBSIDIARIES PLAINTIFFS COURT SEW TRANSACTION DELAWARE SUNSTATES MEMORANDUM EQUITIES NORMANDY EXHIBIT PARENT CHART JURISDICTION MOTION NOMINAL DEFENDANTS ACQUISITION INTEROFFICE MEMORANDUM DIRECTORS SPREADSHEET BOARD PACKAGE SUBSTANTIVE LEGAL RELATIONS INDISPENSABLE PARTY POMERANTZ HAUDEK BLOCK GROSSMAN GROSS LLP LEAD COUNSEL TRANSACTION STRUCTURE DEPOSITION EXHIBIT |
ORIGINAL
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
________________________________________---------- x
IN IZE SUNSTATES CORPORATION : CONSOLIDATED
S H A R E H O L D E R L I T I G A T I O N : C.A. No. 13284 R
____________________-------~---------------------- X !s 9
g? -l
m
-;: i-r
r-7 z
? -,- 0"
r-;.
p: c-2
m z: 2
3 I:...
a ;.::
PLAINTIFFS' REPLY MEMORANDUM 22 F
IN SUPPORT OF CROSS-MOTION TO JOIN -cm
NOMINAL DEFENDANTS AND SURREPLY ON
DEFENDANTS' MOTION TO DISMISS
ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.
Carmella P. Keener (DSBA No. 2810)
Mellon Bank Center, Suite 1401
Wilmington, DE 19809
(302) 656-4433
BIGGS & BATTAGLIA
Robert D. Goldberg (DSBA No. 63 1)
1800 Mellon Bank Center
P.O. Box 1489
Wilmington, DE 19899
(302) 655-9677
Plaintiffs' Delaware Co-Liaison Counsel
OF COUNSEL:
POMERANTZ HAUDEK BLOCK
GROSSMAN & GROSS LLP
H. Adam Prussin
100 Park Avenue, 26"' Floor
New York, N.Y. 10017
(212) 661-1100
SNIPPETS:
|
|
13
.
REPLY BRIEF IN SUPPORT OF DEFENDANTS MOTION TO DISMISS
|
EXTRACTED KEY WORDS
SUBSIDIARIES PLAINTIFFS TRANSACTION NORMANDY SUNSTATES EQUITIES DEFENDANTS AMENDED COMPLAINT COURT SEW JURISDICTION INVOLVEMENT EXH DEL MOTION DELAWARE DERIVATIVE CLAIMS PURCHASES INDISPENSABLE PARTY COLLECTIBLES PREJUDICE AGREEMENT WORTHLESS SECURITIES ROLLS ROYCE INDISPENSABLE PARTIES PERSONAL JURISDICTION ALLEGATIONS PROCESS CLAUSE LASALLE BANK LOAN LONG-ARM STATUTE |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
___-______--_-_-____---------- x
5
IN RE SUNSTATES CORPORATION : CONSOLIDATED
J,$ m
SHAREHOLDER LITIGATION C.A. No. 13284 6.7
;;,, -
______________________________ x i-'
.-
REPLY BRIEF IN SUPPORT OF DEFENDANTS' MOTION ;c;\. 2.
,' I
TO DISMISS AND RESPONSE BRIEF IN
mDSITION TO PLAINTIFFS' MOTION TO AMEND
ASHBY oi. GEDDES
Stephen E. Jenkins
One Rodney Square
P. 0. Box 1150
Wilmington, Delaware 19899
(302) 654.-1888
Attorneys for all Defendants
OF COUNSEL:
Sheldon Karon Gerald M. Tierney, Jr.
Larry Selander 4433 West Touhy Avenue
Thomas P. Krebs Suite 3 10
Jeffrey A. Sable Lincolnwood, Illinois 60712
FOLEY & LARDNER (847) 568-9246
330 North Wabash Avenue Attorney for Defendants Hickory Furniture
Chicago, Illinois 60611-3608 Company, Telco Capital Corporation,
(312) 755-1900 William Schubert, Harold Sampson, Robert
Attorneys for Clyde Wm. Engle and Spiller, Jr. and Lee Mortenson
Howard Friedman
February 8, 2001
SNIPPETS:
|
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14
.
PLAINTIFFS BRIEF IN OPPOSITION TO MOTION TO DISMISS
|
EXTRACTED KEY WORDS
DEFENDANTS NORMANDY ENGLE PLAINTIFFS JOIN NORMANDY EXHIBIT DIRECTORS ACTON CORPORATION COURT MOTION CROSS-MOTION SEW SUNSTATES EQUITIES HERETO SUBSIDIARIES CLAIM BELONGS PURCHASES CORPORATE FACT BOOK GROSS LLP COMPLAINT TRANSACTION DEPOSITION INSURANCE NOMINAL DEFENDANTS COUNSEL POMERANTZ HAUDEK BLOCK GROSSMAN THIRD PARTY WORTHLESS SECURITIES |
.,:
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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IN RE SUNSTATES CORPORATION : CONSOLIDATED i `i
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SHAREHOLDERS LITIGATION : C.A. No. 13284 . _
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PLAINTIFFS' BRIEF IN OPPOSITION TO DEFENDANTS' MOTION TO DISMISS
AND IN SUPPORT OF CROSS-MOTION TO JOIN ADDITIONAL PARTIES
ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.
Mellon Bank Center, Suite 1401
P. 0. Box 1070
Wilmington, DE 19899
(302) 656-4433
Attorneys for Plaintiffs
OF COUNSEL:
POMERANTZ HAUDEK BLOCK
GROSSMAN & GROSS LLP
100 Park Avenue 26'h Floor
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15
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OPENING BRIEF IN SUPPORT OF DEFENDANTS MOTION TO DISMISS
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EXTRACTED KEY WORDS
SUNSTATES PLAINTIFFS SEW SUBSIDIARIES ALLEGATIONS DELAWARE TRANSACTION EXH FACTS AMENDED COMPLAINT CMPLT DEL CORONET DEFENDANTS HICKORY DERIVATIVE SUIT PURCHASES PREJUDICE PLAINTIFFS LIQUIDATOR SUNSTATES EQUITIES ENGLE AFF AGREEMENT INDIRECT SUBSIDIARIES DISMISSING COLLECTIBLES STOCKHOLDER SHAPE ACTION NATIONAL ASSURANCE CROWN CASUALTY |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
____________________---------- X
IN RE SUNSTATES CORPORATI0.N : CONSOLIDATED
SHAREHOLDER LITIGATION C.A. No. 13284
-A
OPENING BRIEF IN SUPPORT OF
ZlEFENDANTS' MOTION TO DISMISS
ASHBY & GEDDES
Stephen E. Jenkins
One Rodney Square
P. 0. Box 1150
Wilmington, Delaware 19899
(302) 654-1888
Attorneys for all Defendants
OF COUNSEL:
Sheldon Karon Gerald M. Tier:ney, Jr.
Larry Selander 4433 West Touhy Avenue
Thomas P. Krebs Suite 3 10
Jeffrey A. Soble Lincolnwood, Illinois 60712
FOLEY & LARDNER (847) 568-9246
330 North Wabash Avenue Attorney for Defendants Hickory
Chicago, Illinois 60611-3608 Company, Telco Capital Corporation,
(3 12) 755-1900 William Schubert, Harold Sampson,
Attorneys for Clyde Wm. Engle and Spiller, Jr. and Lee Mortenson
Howard Friedman
December 20,200O
011.340126.1
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PLAINTIFFS REPLY BRIEF IN FURTHER SUPPORT OF MOTION FOR CLASS ACTION CERTIFICATION
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EXTRACTED KEY WORDS
CERTIFICATION CLASS MEMBERS COURT DEL MOTION SUNSTATES DELAY DEFENDANTS PREJUDICE SUPPORT GOODRICH COUNSEL CHANDLER SHARES CHANCERY DELAWARE SUNSTATES CORPORATION CONSOLIDATEDLITIG SHAPIRO COMPLAINT SHAREHOLDERS PREFERRED STOCKHOLDERS DEFENDANTS ARGUE DECLARATORY RELIEF POMERANTZ HAUDEK GROSSMAN GROSS LLP WEST IDUS HUTTON GROUP |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
IN RE SUNSTATES CORPORATION ) Consolidated
SHAREHOLDER LITIGATION > CA. No. 13284
PLAINTIFFS' REPLY BRIEF IN FURTHER SUPPORT OF THEIR
MOTION FOR CLASS ACTION CERTIFICATION
ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.
Kevin Gross
Carmella P. Keener
Mellon Bank Center, Suite 1401
Wilmington, DE 19899
(302)656-4433
BIGGS & BATTAGLIA
1206 Mellon Bank Center
P.O. Box 1489
Wilmington, DE 19899
Counsel for Plaintiffs
OF COUNSEL:
POMERANTZ HAUDEK BL'OCK GROSSMAN
& GROSS LLP
100 Park Avenue 26'h Floor
New York, N.Y. iOOl7
Lead Counsel for Plaintiffs
TABLE OF CONTENTS
NATURE AND STAGE OF THE PROCEEDINGS . . . . . . . . . . . . . . . . . . . . 1
ARGUMENT
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DEFENDANTS RESPONSE TO MOTION FOR CLASS CERTIFICATION
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EXTRACTED KEY WORDS
CLASS CERTIFICATION CLASS MEMBERS COURT DEFENDANTS PROCESS RIGHTS MOTION FAILURE CERTIFY LITIGATION CLASS ACTION COMPLAINT DELAWARE MEMORANDUM PREFERRED STOCK PREJUDICE DEL RELEVANT PERIOD SUNSTATES RAISED SIGNIFICANT QUESTIONS SAFEGUARD LEE COMPLAINT DENYING CLASS CERTIFICATION LEAD COUNSEL SHAREHOLDERS REPRESENTATIVES CLASS DEFINITION MONETARY DAMAGES ATTORNEYS ASHBY NOTTINGHAM PARTNERS |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
________-______------ _ _ _ _ _ _ _ - - X
IN RE SUNSTATES CORPORATION CONSOLIDATED
SHAREHfOLDER LITIGATION CA. No. 13284
_______________________ _ _ _ _ _ _ _ X .
DEFENDANTS' RESPONSE TO
PLAINTIFFS' MOTION FOR CLASS CERTIFICATION
Defendants, through their attorneys Ashby & Geddes and Foley & Lardner,
oppose Plaintiffs' Motion for Class Certification. ln support of their opposition, Defendants
Respond to Plaintiffs' Motion for Class Certification as follows:
ZXJMMARY OF THE ARGUMENT
As this Court recognized on July 24, 2000, Plaintiffs' failure to move timely for
class certilication has raised significant questions concerning whether the due process rights of
class members can be protected. Plaintiffs ignored this issue in their Motion for Class
Certification and supporting Memorandum. They did so for good reason: the class members'
clue process rights cannot be safeguarded here.
It is inappropriate for the Court to certify the class now after the class
have had no notice and no opportunity to participate in the litigation for seven years. Such a
certification would violate the class members' due process rights. Plaintiffs' failure adequately to
identify the class only exacerbates this already fatal due process problem. Without a proper class
definition, it is impossible to identify each class member and comply with due process
requirements. In fact, Plaintiffs' failure to properly identify the class is grounds alone for
certification.
Moreover, despite clear requirements to file a motion for class certification "as
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H. FRIEDMANS ANSWER TO FIRST AMENDED CONSOLIDATED AND SUPPLEMENTAL COMPLAINT
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EXTRACTED KEY WORDS
PARAGRAPH DENIES FRIEDMAN SHARES STOCK TRUTH COMMON STOCK SUBSIDIARIES ENGLE HICKORY SEW INSURANCE DIRECTORS DEFENDANTS SALE LACKS INFORMATION KNOWLEDGE SUFFICIENT FIRST SENTENCE PLAINTIFFS MANAGEMENT FEES CABLE SYSTEM TRANSACTION INVESTMENT FURNITURE MANUFACTURING ANNUAL MEETING WREIT PARENT COMPANIES NEGOTIATION SPECIAL COMMITTEE |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE, :
IN AND FOR NEW CASTLE COUNTY
__________-_____--__---------- X
IN RE SlJNSTATES CORPORATION : CONSOLIDATED
SHAREHOLDER LITIGATION C.A. No. 13284
____________-_______---------- i
DEFENDANT HOWARD FRIEDMAN'S ANSWER TO PLAINTIFFS' FIRST
AMENDED CONSOLIDATED AND SUPPLEMENTAL COMPLAINT
Defendant Howard Friedman ("Friedman"), by and through his attorneys,
answers IPlaintiffs' First Amended Consolidated and Supplemental Complaint as follows:
1. Plaintiffs Richard M. Frank, Robert A. Lee (as beneficiary of
Alton Lee IRA), and Hubert M. Tibbets collectively own shares of common stock, $3.75
Cumulative Preferred Stock (the "Preferred Stock"), and Class B Accumulating Convertible
Stock (" Class B Stock") of defendant Sunstates Corporation (" Sunstates" or the "
formerly known as Acton Corporation. Plaintiffs have owned Sunstates stock continuously
during all relevant times.
ANSWER: Friedman lacks information and knowledge sufficient to
belief as to truth of the allegations contained in paragraph 1 and therefore denies same.
2. Sunstates is a Delaware corporation and, during the relevant
engaged,, through its subsidiaries, in property and casualty insurance, furniture
military footwear manufacturing, the design and manufacture of automated textile
real estate development, and cable television broadcasting.
ANSWER: Friedman admits that Sunstates is a Delaware corporation
certain subsidiaries of Sunstates, at various times, engaged in property and casualty
furniture manufacturing, military footwear manufacturing, the design and manufacture of
011.333400.1
automated textile machinery, real estate development, and cable television broadcasting.
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19
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CERTAIN DEFENDANTS ANSWER TO FIRST AMENDED CONSOLIDATED AND SUPPLEMENTAL COMPLAINT
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EXTRACTED KEY WORDS
HICKORY PARAGRAPH SHARES STOCK DEFENDANTS DENY TELCO PREFERRED STOCK SUBSIDIARIES COMMON STOCK ENGLE MORTENSON SEW DIRECTORS SALE INSURANCE LACK INFORMATION PLAINTIFFS SHAREHOLDERS FURNITURE MANUFACTURING INVESTMENT WREIT MANAGEMENT FEES TRANSACTION RECEIVABLES ANNUAL MEETING NEGOTIATION SUBPARAGRAPH STOCKHOLDERS ACCUMULATING CONVERTIBLE STOCK |
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE -`.
IN AND FOR NEW CASTLE COUNTY
___________--____-_----------- X
IN RE SUNSTATES CORPORATION : CONSOLIDATED ' ;. _
SHAREHOLDER LITIGATION C.A. No. 13284
___________----__------------- X
CERTAIN DEFENDANTS' ANSWER TO PLAINTIFFS' FIRST AiVDZNDED
CONSOLIDATED AND SUPPLEMENTAL COMPLAINT
Defendants Hickory Furniture Company, Telco Capital Corporation, Harold
Sampson, Robert J. Spiller, William Schubert and Lee Mortenson ("Certain Defendants"), by
and through their attorneys, answer Plaintiffs' First Amended Consolidated and Supplemental
Compla:int as follows:
1. Plaintiffs Richard M. Frank, Robert A. Lee (as beneficiary of
Alton L,ee IRA), and Hubert M. Tibbets collectively own shares of common stock, $3.75
Cumulaltive Preferred Stock (the "Preferred Stock"), and Class B Accumulating Convertible
Stock ("Class B Stock") of defendant Sunstates Corporation ("Sunstates" or the "Company"),
formerly known as Acton Corporation. Plaintiffs have owned Sunstates stock continuously
during a.11 relevant times.
ANSWER: Certain Defendants deny that Plaintiffs are registered
shareholders of Sunstates, but lack information and knowledge sufficient to form a belief
truth of the remaining allegations contained in paragraph 1 and therefore deny same.
2. Sunstates is a Delaware corporation and, during the relevant
engaged, through its subsidiaries, in property and casualty insurance, furniture
military footwear manufacturing, the design and manufacture of automated textile machinery,
real estate development, and cable television broadcasting.
011.3351301N
ANSWER: Certain Defendants admit that Sunstates is a Delaware
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C. ENGLES ANSWER TO PLAINTIFFS FIRST AMENDED CONSOLIDATED AND SUPPLEMENTAL COMPLAINT
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EXTRACTED KEY WORDS
ENGLE PARAGRAPH SHARES STOCK DENIES PREFERRED STOCK SUBSIDIARIES COMMON STOCK HICKORY SEW INSURANCE DIRECTORS SALE TELCO LACKS INFORMATION TRUTH KNOWLEDGE SUFFICIENT REAL ESTATE FINANCIAL STATEMENTS CABLE TELEVISION MILITARY FOOTWEAR MANUFACTURING INVESTMENT WREIT MANAGEMENT FEES TRANSACTION RECEIVABLES PLAINTIFFS DEFENDANTS ANNUAL |
