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AIGRETT LTD v ERNST & YOUNG Click to find out why . . .



Keywords & Phrases
CaseNo: ALVEY89119, CourtCode: SM, CourtName: NEW YORK STATE SUPREME COURT N2, Plaintiff: AIGRETT LTD, State: NY New York, UniqueCaseRef: LCD>ALVEY89119, Wells, Rogers, Ryan, Paragraph, Ernst, Aigrette, Dansk, Allegations, Agreement, Denies, York, Calculation, Lenox, Deferred Tax Benefit, Schedule, Purchase Price, Interrogatory, Admits, Purchase, Information Sufficient, Amount, Balance Sheet, Stock Purchase Agreement, Response, Dearborn, Tax, First Amended Complaint, Motion, Fas, Objections, Deferred Tax Benefits, Interrosatorv, Stock, Sale, Accounting, Deferred Tax, Request, Lost Deferred Tax, Defendant Rogers, Interrogatories, Negotiations , ContentID: 120243474

Case Documents
1 1997-09-19 PRE ARGUEMENT STATEMENT
[ see first page and extracted highlights below  ] ItemID: 107410
7 pages
PDF
2 1997-08-21 AFFIRMATIOM
[ see first page and extracted highlights below  ] ItemID: 107391
11 pages
PDF
3 1997-07-10 TRACEY AFFIRMATION
[ see first page and extracted highlights below  ] ItemID: 107484
7 pages
PDF
4 1997-06-24 SUPP AFFIRMATION
[ see first page and extracted highlights below  ] ItemID: 107483
5 pages
PDF
5 1997-06-24 POPE AFFIRMATION
[ see first page and extracted highlights below  ] ItemID: 107409
7 pages
PDF
6 1997-06-24 CONNELL AFFIRMATION
[ see first page and extracted highlights below  ] ItemID: 107398
5 pages
PDF
7 1997-06-12 REPLY MALONEY AFFIRMATION
[ see first page and extracted highlights below  ] ItemID: 107412
4 pages
PDF
8 1997-05-28 MALONEY AFFIRMATION
[ see first page and extracted highlights below  ] ItemID: 107403
2 pages
PDF
9 1997-05-14 Government Exhibit # 3RD PARTY ACTIONS
[ see first page and extracted highlights below  ] ItemID: 107388
12 pages
PDF
10 1997-03-13 STIPULATION
[ see first page and extracted highlights below  ] ItemID: 107482
4 pages
PDF
11 1997-03-13 REPLY MEM OF LAW RE TAX
[ see first page and extracted highlights below  ] ItemID: 107413
8 pages
PDF
12 1997-03-13 MALONEY AFFIRM 2
[ see first page and extracted highlights below  ] ItemID: 107402
11 pages
PDF
13 1997-03-13 E&Y MEM RE DEF TAX ASSETS
[ see first page and extracted highlights below  ] ItemID: 107400
10 pages
PDF
14 1997-02-19 MEMO OF LAW IN SUP OF PLF
[ see first page and extracted highlights below  ] ItemID: 107405
4 pages
PDF
15 1996-11-14 AMEND ANSR, AMEND CROSS C
[ see first page and extracted highlights below  ] ItemID: 107392
20 pages
PDF
16 1996-10-25 ANSWR TO 1ST AMENDED COMP
[ see first page and extracted highlights below  ] ItemID: 107394
15 pages
PDF
17 1996-10-18 CROSS CLAIM & COUNTER
[ see first page and extracted highlights below  ] ItemID: 107399
21 pages
PDF
18 1996-10-18 Government Exhibit # 3RD PARTY
[ see first page and extracted highlights below  ] ItemID: 107390
12 pages
PDF
19 1996-10-08 MALONEY RE VACATE NOTE
[ see first page and extracted highlights below  ] ItemID: 107404
8 pages
PDF
20 1996-09-05 RESP TO PLF 2ND NTPRODUCE
[ see first page and extracted highlights below  ] ItemID: 107481
4 pages
PDF
21 1996-09-05 RESP OF DEF TO 2ND INTERR
[ see first page and extracted highlights below  ] ItemID: 107414
14 pages
PDF
22 1996-09-05 R&W ANSWRS + OBJECTIONS
[ see first page and extracted highlights below  ] ItemID: 107411
25 pages
PDF
23 1996-09-05 PLF RESP TO 2ND INTERROGA
[ see first page and extracted highlights below  ] ItemID: 107408
11 pages
PDF
24 1996-08-23 Government Exhibit # 1ST AMENDED COMP
[ see first page and extracted highlights below  ] ItemID: 107385
16 pages
PDF
25 1996-07-11 Government Exhibit # 2ND NOTICE TO PRODUCE
[ see first page and extracted highlights below  ] ItemID: 107386
9 pages
PDF
26 1996-07-09 Government Exhibit # 2ND NTP TO PLFS
[ see first page and extracted highlights below  ] ItemID: 107387
6 pages
PDF
27 1996-06-24 PLF 2ND NOTICE TO PRODUCE
[ see first page and extracted highlights below  ] ItemID: 107407
9 pages
PDF
28 1996-06-24 E&Y MEMO OF LAW RE EVIDEN
[ see first page and extracted highlights below  ] ItemID: 107401
8 pages
PDF
29 1996-06-24 BRIDENDALL DEPO
[ see first page and extracted highlights below  ] ItemID: 107396
15 pages
PDF
30 1994-02-14 ANSWR TO 3RD PARTY COMP
[ see first page and extracted highlights below  ] ItemID: 107395
6 pages
PDF
31 1993-12-22 Government Exhibit # 3RD PARTY COMP
[ see first page and extracted highlights below  ] ItemID: 107389
7 pages
PDF
32 1993-06-14 NOTICE TO PRODUCE
[ see first page and extracted highlights below  ] ItemID: 107406
8 pages
PDF
33 1993-04-30 ANSWER + COUNTERCLAIMS
[ see first page and extracted highlights below  ] ItemID: 107393
9 pages
PDF
34 1993-03-23 COMPLAINT
[ see first page and extracted highlights below  ] ItemID: 107397
13 pages
PDF
Total Documents: 34 documents , 333 pages
Price: $ 184.95


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1 . PRE ARGUEMENT STATEMENT

EXTRACTED KEY WORDS
COURT
RYAN
CONTRACT
FAS
YORK
PLAINTIFFS-APPELLANTS
AIGRETTE
DEFENDANT-RESPONDENT
WELLS
JUDGEMENT
LANGUAGE
ROGERS
WARNING
ACCOUNTING
REVERSES
SUPPORT
PURCHASE PRICE
DRAFT
BUYER
LLP
PROPER
COUNSEL
PARK AVENUE
COUNTY
NEGLIGENT
JOHNSON
DANSK
COMMUNICATE
CALCULATION
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE DIVISION, FIRST DEPARTMENT
-     -    -    -    -    -    -    3    -    -    -    -    -    -    -    -    -    -    c
                                                                                           -X

AIGRETTE LIMITED and D.  RICHARD                                                                   
RYAN, JR.,                               Plaintiffs-Appellants  :
                          -against-                                                                
ERNST &  YOUNG and ROGERS &  WELLS,



ERNST &  YOUNG,                                                                                    
                                                                                                   
                                    Third-party Plaintiff,  :
                          -against-

ROGERS  &  WELLS,

                                    Third-party Defendant.  :
 -    -    -         -    -    -    -    -    -    -    -    -    -    -    -    -    c    -
                                                                                      -X
ROGERS &  WELLS,

           Third-party Plaintiff,
                          -against-                                                                
                                                                                                   
DEARBORN FINANCIAL INC. ,
           Third-party Defendant.
- - - - - - - - - - - - - - - - - - -  -X
ERNST &  YOUNG, LLP,

                          Third-Party'Plaintiff,

                          -against-                                                                
                                                                                                   
DEARBORN FINANCIAL, INC. ,


                          Pursuant  to Rule  600.17  of the Rules  of the Appellate
Division, First Department of the Supreme Court of the State of New
York, Plaintiffs-Appellants Aigrette Limited and D.  Richard Ryan,



Jr.  respectfully submit the  following  Pre-Argument Statement  in
support of  their appeal from the Judgment of the Court below:
           1.       The  proper  caption  6f  this  matter  is  set  forth

SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK APPELLATE DIVISION,
  • ERNST & YOUNG and ROGERS & WELLS,
  • - - - - - - - - - - - - - - - - - - -X ERNST & YOUNG, LLP,
  • The proper caption 6f this matter is set forth
  • This appeal is brought by Plaintiffs-Appellants Aigrette Limited and D. Richard Ryan,
  • Counsel f o r Plaintiffs-Appellants Aigrette Limited
  • Counsel f o r Defendant-Respondent Rogers & Wells is Gilbert, Segall and Young, LLP, 430 Park
  • This appeal is from the Judgment of the Supreme
  • Court of the State of New York, New York County, dated August 7, 1997, and entered in the
  • The nature of the action asserted by Plaintiffs-Appellants is f o r professional (legal and
  • The factual findings of the Court below that Plaintiff-Appellant Ryan and non-party E. Lewis
  • oral warnings about a $4.6 million contract issue concerning
  • Income Taxes) ("FAS 96") to a complicated formula f o r determining the sales price of
  • there is no factual or legal basis f o r imputing that warning to Aigrette.
  • The Court made no finding of fact to support its holding that Ryan was the agent of Aigrette
  • Defendant-Respondent Ernst & Young was negligent for failing to bring the FAS 96 issue
  • this issue at a meeting with Aigrette's representative to review the draft contract and a
  • Ryan and Aigrette's representative to review the draft contract and calculation held the day
  • language to reflect the agreement reached with the buyer; to address the correctness of the
  • reversed by this Court as to Ernst & Young and even if this Court reverses the finding below
  • Lewis Johnson, should be imputed to Aigrette and the Court below made no factual findings to

  • 2 . AFFIRMATIOM

    EXTRACTED KEY WORDS
    ERNST
    REPORTING SERVICES
    DAVIS
    SCOTT
    WEBER
    COSTS
    BRS INVOICE
    ENTITLED MATTER
    PETERS
    MADISON AVE
    CPLR
    EDWARDS
    KAVANAGH
    ATTENTION
    DEFENDANT
    DISBURSEMENTS
    FURNISHING
    EXAMINATION
    DENNIS
    ACCOUNT
    SUPREME COURT
    RICHARD RYAN
    CHARGE
    TRACEY
    BARRISTER REPORTING SERVICE
    BILL
    EBT
    JEROME
    GOLDMAN
    
    SUPREME COURT OF THE STATE OF NEW YORK
    COUNTY OF NEW YORK
    
    
    AIGRETTE LIMITED and                       : Index No. 107275/93
    D.  RICHARD RYAN, JR.,
    
                      Plaintiffs,              :  IAS Part'
                                                          62
                                               :  Justice Weissberg
         -  against -
    
    ERNST &  YOUNG and                         : AFFIRMATION
    ROGERS &  WELLS,
    
                      Defendants.
    
    
    
    and related third-party actions.
    
    
    
               JOHN HOUSTON POPE, an attorney duly admitted to
    
    practice in the courts of this state, affirms under penalty of
    
    perjury, pursuant to CPLR 2106,  as follows:
    
               1.  I am associated with the law firm of Davis,
    
    Scott, Weber &  Edwards, P.C., attorneys for the defendant Ernst
    
    &  Young LLP.     I make this affirmation in support of the
    
    defendant Ernst &  Young LLP's  attached bill of costs and
    
    disbursements.
    
               2.  The attached bill of costs and disbursements is
    
    in all respects just and true.
    
    
    
                3.     The  items of disbursements t h e r e i n   charged have
    
    been,  or will be necessarily incurred and are reasonable in
    
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • RICHARD RYAN, JR.,
  • I am associated with the law firm of Davis,
  • Scott, Weber & Edwards, P.C., attorneys for the defendant Ernst
  • The attached bill of costs and disbursements is
  • Costs before N o t e of Issue (CPLR 8201(1)).
  • BRS INVOICE 9513248A02
  • FOR REPORTING SERVICES RENDERED in the above entitled matter, held a t KAVANAGH, PETERS,
  • Furnishing you with one copy of the examination before t r i a l of ERNST & YOUNG, DEFENDANT,
  • DAVIS, SCOTT, WEBER & EDWARDS
  • TRACEY, 111, ES
  • FOR REPORTING SERVICES RENDERED in the above entitled matter, held at KAVANAGH, PETERS, 4 1 5
  • D I S K ENCLOSED / NO CHARGE
  • BARRISTER REPORTING SERVICE, INC.
  • Account #: Dl0974
  • ATTENTION: DENNIS H. TRACEY, I n, ES
  • ATTENTION: EBT DEPT.

  • 3 . TRACEY AFFIRMATION

    EXTRACTED KEY WORDS
    AIGRETTE
    COURT
    JUDGEMENT
    RELIEF
    PLAINTIFFS-COUNTERCLAIM DEFENDANTS
    FEES
    CONTRACT
    CPLR
    MOTION
    LIABILITY
    LAW
    OBLIGATION
    YORK
    SEVERANCE
    PLEADINGS
    COUNTERCLAIM
    REQUEST
    BALANCE SHEET
    PURSUANT
    CONNECTION
    ARBITRATION
    PURCHASE PRICE
    ANS
    CCLM
    BREACH
    AMOUNT
    EVIDENCE
    GRANT
    FACTS
    
     *                     3                    4                     3                                
                                                 .*A
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    SUPREME COURT OF THE STATE OF NEW YORK
    COUNTY OF NEW YORK
    _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - - - - - - - - - - - - - - - - -      --X
    
    AIGRETTE LIMITED and                                                             :  Index No. 1 0 7
    13.  RICHARD RYAN, JR. ,
    
                                    Plaintiffs,                                      :  IAS Part  62
                                                                                     :  Justice
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
  • motion pursuant to CPLR 4406 to amend the judgment in this case.
  • severally against plaintiffs-counterclaim defendants Aigrette
  • Ryan, a citizen of the State of Illinois.
  • As E&Yls counterclaim states, Aigrette and Ryan
  • jointly retained E&Y to provide services in connection with the
  • arbitration of the purchase price dispute.
  • (E&Y Ans.
  • Ryan with billings that divided the fees into 85-15 increments
  • at their request.
  • breach of contract in the amount of at least
  • & Cclm., 7 6 7) It is solely upon this prayer for
  • relief that plaintiffs-counterclaim defendants base their
  • Regardless of the pleadings,
  • CPLR § 3017states that "the court may grant
  • with the facts and the law, and it is apparent that there is
  • The evidence adduced at trial reflecting the
  • retention of E&Y likewise demonstrated that the obligation to
  • Balance Sheet, in preparation for the arbitration.
  • Ryan's liability for fees to their respective proportionate
  • express words of severance are present).

  • 4 . SUPP AFFIRMATION

    EXTRACTED KEY WORDS
    AUDIT
    EXHIBIT
    DANSK
    HERETO
    AFFIRMATION
    OBJECTIONS
    DOCUMENT REQUESTS
    BALANCE SHEET
    PLAINTIFFS
    MALONEY
    PREPARATION
    RYKOWSKI
    NEIDHARDT
    TAX
    PARAGRAPH
    DEWITT
    FAS
    SALE
    YORK
    DEFENDANT
    ATTORNEY
    CONVERSATIONS RELATING
    CONNELL
    INSTRUCTION
    EXPLANATION
    INTERROGATORIES
    PRODUCING
    REVIEW
    AGREEMENT
    
                    a
    
    
    
    
    SUPREME  COURT OF THE STATE OF NEW YORK
    COUNTY OF NEW YORK
    - - - - - - - - - - - - - - - - - - -  -X
    AIGRETTE LIMITED and D.  RICHARD              :  Index No.  93/107275
    RYAN,  JR.,            Plaintiffs,                  IAS Part 49
                 -against-                        :  (Cahn, J.)
    
    ERNST &  YOUNG and  ROGERS  &  WELLS,
    
    
    
    ERNST &  YOUNG,                               :  Third Party  Index N o .
                                                        93/592912
                          Third-party Plaintiff,  :                           ,**
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                 -against-                        :  Third Party Index N o .
                                                        96/591719
    DEARBORN FINANCIAL INC.,
    
                          Third-party Defendant.  :
    - - - - - - - - - - - - - - - - - - -  -X
    ERNST  &  YOUNG, LLP,
    
                          Third-party Plaintiff,  :
                 -against-                        :  Third Party Index N o .
                                                        96/591722
    DEARBORN  FINANCIAL  I N C . ,
    
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • ERNST & YOUNG and ROGERS & WELLS,
  • SUPPLEMENTAL AFFIRMATION OF JAMES J. MALONEY,
  • I am a member of the firm of Kavanagh Maloney & Osnato LLP, attorneys f o r Plaintiffs and
  • I submit this affirmation in further support of the motion by Plaintiffs and Dearborn to
  • our Interrogatories and Document Requests in 1993.
  • Ernst & Young did not object to producing documents from its audit files.
  • Its attorney and document production led us to believe that any relevant audit files had been
  • By letter dated September 10, 1993 from Karen Stefflre of Ernst & Young to my associate David
  • The objections did not put us on notice that Ernst
  • Attached hereto as Exhibit B is a copy of a letter .-.
  • Attached hereto as Exhibit C is a copy of the Dansk Management Representation Letter dated
  • Attached hereto as Exhibit D is a one-page internal Ernst & Young memorandum dated June 18,
  • we thoroughly deposed Mr. Neidhardt for four days to learn of any communications he had
  • asked to do research by Ernst & Young tax partner DeWitt in November or December 1991 he was
  • May 17, 1991, the date the contract was signed, was to review workpapers with Brown-Fonnan
  • He never saw Schedule 2.3 or the language in paragraph 19 prior to November 1991 (pp. 30-331..
  • EY001074-76, 001085, 002640-46 which all appear to relate to the audit and do not appear on
  • 1991 is no different from any other audited balance sheet except that it is prepared in
  • Connell offers no basis upon which to distinguish documents o r conversations relating to the
  • Ernst & Young's response was not dependent upon the file in which they chose to place a piece
  • Connell offers no explanation as why some documents from the audit file were produced while

  • 5 . POPE AFFIRMATION

    EXTRACTED KEY WORDS
    CALCULATION
    TAX
    INTERROGATORIES
    MOTION
    OPINION
    DEFERRED TAX
    EVIDENCE
    DEFERRED TAX ASSET
    DAMAGES
    TESTIMONY
    CONTRACT
    DANSK
    OBJECTIONS
    PRECLUDE
    DEFENDANTS
    CHALLENGING PLAINTIFFS
    TAX BENEFIT
    FAS
    REASON
    REQUEST
    SUMMARY JUDGMENT
    EXPERT REPORT
    DISCLOSURE
    SPECULATION
    FACTS
    EXHIBIT
    HERETO
    RESPONSES
    EXCHANGE
    
    e                       a                     a                     a        e
    
    
    
    
    RYAN, JR.,
                                  Plaintiffs,           Index No.  93/107275
               - against -
    ERNST t YOUNG and ROGERS  &  WELLS,
                                  Defendants.
    
    
                                                        Third Party
                                                        Index No.  93/592912
    
    
    
    
    
                                                        Third Party
    
    
    
    
    
    
    
               - against -
    DEARBORN FINANCIAL, INC.,
                      Third-party Defendant.
    
            AFFIRMATION OF JOHN  HOUSTON POPE IN OPPOSITION TO
              PLAINTIFFS'  MOTION TO PRECLUDE  DEFENDANTS FROM
                   CHALLENGING PLAINTIFFS'  CALCULATION OF THE
                     DEFERRED TAX BENEFIT RECEIVABLE ASSET
    
    
    
    e                         a          a                    a
    
    
                  JOHN HOUSTON POPE, an attorney  admitted to practice
    before the Courts of this State, affirms under the penalty of
    perjury, pursuant to CPLR  2106, as follows:
                  1.     I am associated with the firm Davis Scott Weber &
    Edwards, P.C.,  attorneys f o r  defendant Ernst &  Young LLP  (" E&Y V1)
    in this action.  Based on my personal knowledge of the
    proceedings, I submit this affirmation in opposition to
    plaintiffs'  motion to preclude defendants from challenging
    
    SNIPPETS:
  • AFFIRMATION OF JOHN HOUSTON POPE IN OPPOSITION TO PLAINTIFFS' MOTION TO PRECLUDE DEFENDANTS
  • Based on my personal knowledge of the proceedings, I submit this affirmation in opposition to
  • Plaintiffs' motion seeks an order of preclusion regarding two issues: any evidence
  • The first part of plaintiffs' motion must be denied, as fully explained below, for it is
  • To the extent that plaintiffs rely on opinion evidence that is premised on an assumption that
  • any opinion testimony as to what deferred tax asset would have resulted from a consolidated
  • Specifically, the interrogatories at issue asked E&Y to calculate the amount of deferred tax
  • Interrogatories, Objections to Interrogatory No. 4, attached as Exhibit B hereto.)
  • this was a part of the impetus for the pending summary judgment motion.
  • Any expert testimony that E&Y might offer would be entirely in rebuttal to plaintiffs' expert
  • As to the information pursuant to CPLR 3101that was exchanged, at plaintiffs' request, the
  • Plaintiffs' expert report served that day was the first time plaintiffs disclosed their
  • Previously, in interrogatory responses, plaintiffs has explicitly deferred any calculation
  • For that reason, it is similarly impossible f o r E&Y to answer interrogatories seeking a
  • Nothing in the record supports plaintiffs' speculation that any such contract terms could

  • 6 . CONNELL AFFIRMATION

    EXTRACTED KEY WORDS
    PLAINTIFFS
    DANSK
    AUDIT
    RESPONSE
    SALE
    RELATING
    EXHIBIT
    DEFENDANT
    FINANCIAL STATEMENTS
    HERETO
    THIRD-PARTY
    MATTER
    REVIEW
    FIRST NOTICE
    CONNECTION
    STOCK
    DANSK INTERNATIONAL DESIGNS
    FAS
    BALANCE SHEET
    COMMUNICATIONS
    ROGERS
    WELLS
    ERNST
    ATTORNEY
    AFFIRMATION
    COUNSEL
    YORK
    RYAN
    LLP
    
    SUPREME COURT OF THE STATE OF NEW YORK
    COUNTY OF NEW YORK                             X
    AIGRETTE LIMITED and D. RICHARD                      Index No.
                                            ,                      93/10725
    RYAN, JR. ,
                        Plaintiffs ,  '
               -  against -
    ERNST &  YOUNG and ROGERS &  WELLS,
                        Defendants.
    
                                                   X
    
    ERNST &  YOUNG,                                      Third Party
                                                         Index No. 93/592912
                        Third-party Plaintiff,           AFFIRMATION OF
               -  against -                              PATRICIA A. CONNELL,
                                                         ESQ.
    ROGERS &  WELLS,
                        Third-party Defendant.
    
                                                   X
    
    ROGERS &  WELLS,
                        Third-party Plaintiff,
               -  against -                              F I L E D
    DEARBOF!N FINANCIAL INC.,                                                       i
                        Third-party Defendant.                                     I
                                                   X                          i
    
    ERNST &  YOUNG, LLP,
                        Third-party Plaintiff,                              8.
               -  against -
    DEARBORN  FINANCIAL INC.,
                        Third-party Defendant.
    
                                                   X
    
    
    
                PATRICIA  A.  CONNELL,  ESQ.,  an  attorney  admitted  to
    practice law in the State of  New York, affirms under penalty of
    perjury as follows:
    
                1.  I am an Assistant General Counsel of Ernst &  Young,
    
    LLP  (llE&Y1l)
                  , a defendant and third-party plaintiff in this action.
    This affirmation is based upon my personal knowledge, except as
    otherwise stated.
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK
  • - against -ERNST & YOUNG and ROGERS & WELLS,
  • Third-party Defendant.
  • ERNST & YOUNG, LLP,
  • I am an Assistant General Counsel of Ernst & Young,
  • This affirmation is based upon my personal knowledge,
  • From the commencement of this action until October 14, 1994, E&Y's counsel of record in this
  • I have been requested to submit this affirmation to address the document review that was
  • This action arises out of certain services performed by E&Y in connection with the sale by
  • The complaint in this action does not challenge any of the work performed in any audit of
  • E&Y maintains its files for its audit work separately from the files relating to the services
  • Plaintiffs served their first Notice to Produce in this action on or about June 14,
  • The Notice to Produce, a copy of which is attached hereto as Exhibit B, related primarily to
  • Thus, requests no. 5 through 10 and 14 relate specifically to the "Final Balance Sheet, which
  • The remaining requests sought documents relating to retainer agreements, fees, appointment
  • The request contained in the first Notice to Produce relating to communications regarding FAS
  • Exhibit A is not responsive to plaintiffs' First Notice to Produce because it does not relate
  • "All documents concerning any communications with Ryan, Olson, Othman or any employee of

  • 7 . REPLY MALONEY AFFIRMATION

    EXTRACTED KEY WORDS
    RYAN
    JUDGEMENT
    AIGRETTE
    FEES
    ERNST
    MALONEY
    PLEADING
    COUNTERCLAIMS
    AMOUNT
    SEEKING
    AFFIRMATION
    AGREEMENT
    MALONEY AFF
    CONTRACT
    COSTS
    DISBURSEMENTS
    EVIDENCE
    WHEREFORE CLAUSES
    ARBITRATION SUBMISSION
    COURT
    YORK
    ROGERS
    WELLS
    SUPPORT
    DIRECTING
    EXHIBIT
    SHARES
    OUTSTANDING FEES
    BREACH
    
    SUPREME COURT OF THE STATE OF NEW YORK
    COUNTY  OF NEW YORK
    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    I    C         -   
    
    AIGRETTE LIMITED and D.  RICHARD                                                                   
    RYAN,  JR.,                                            Plaintiffs,                                 
                                       -against-                                                       
    
    ERNST 6r  YOUNG and ROGERS &  WELLS,
    
    
    
    ERNST &  YOUNG,                                                                                    
                                                                                                       
                                                      Third-party Plaintiff,  :
                                       -against-
    ROGERS &  WELLS,
                                                      Third-party Defendant.  :
         -    -         -    -         -    -         -    -         *    -         -    -    -    -   
                                                                                                       
    ROGERS &  WELLS,
                   Third-party Plaintiff,
                                       -against-                                                       
                                                                                                       
    DEARBORN FINANCIAL INC.,
    
    
    
                                       Third-party Plaintiff,
                                       -against-                                                       
                                                                                                       
    DEARBORN FINANCIAL, INC.,
    
    
    
                                       JAMES J. MALONEY, an attorney duly licensed to practice
    law in the Courts  of  the State of  New  York, affirms under the
    penalties of perjury the following:
    
    
    
          1.       I am a member of the firm of Kavanagh Maloney &  Osnato
    LLP attorneys for Plaintiffs Aigrette Limited and D.  Richard-  Ryan
    in this action.  I submit this Reply Affirmation in support of the
    motion to correct the Decision of  this Court directing the clerk to
    enter judgment against Plaintiffs Aigrette and Ryan on Defendant
    Ernst  &  Young's  ("E&Y")  counterclaim  for  fees  jointly  and
    severally.
          2.       Nowhere in E&Y's first or second counterclaim f o r  unpaid
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • ERNST 6r YOUNG and ROGERS & WELLS,
  • I am a member of the firm of Kavanagh Maloney & Osnato LLP attorneys for Plaintiffs Aigrette
  • I submit this Reply Affirmation in support of the motion to correct the Decision of this
  • Nowhere in E&Y's first or second counterclaim f o r unpaid fees does E&Y state that it is
  • E&Y admits in its pleading that E&Y and Plaintiffs agreed to allocate E&Y's fees between
  • Paragraph 6 3 of E&Y's Answer and Counterclaims expressly alleges that "Aigrette and Ryan
  • E&Y's pleading further confirms this agreement by alleging that E&Y billed and was paid by
  • Maloney Aff.
  • both the First and Second Counterclaims state that E&Y is seeking to recover from Aigrette
  • Aigrette's breach of contract in the amount of
  • contract in the amount of at least $11,802.15,
  • costs and disbursements of this action.
  • Finally and it is respectfully submitted conclusively, E&Y's Wherefore Clauses seeks separate
  • the only "evidence" E&Y cites to support its argument that judgment should be entered jointly
  • This exhibit, however, is merely a cover letter to the arbitration submission which describes

  • 8 . MALONEY AFFIRMATION

    EXTRACTED KEY WORDS
    AIGRETTE
    RYAN
    PLAINTIFFS
    FEES
    COURT
    YORK
    AMOUNT
    ROGERS
    WELLS
    LLP
    AFFIRMS
    JUDGEMENT
    ALLEGE
    KAVANAGH MALONEY
    OSNATO LLP
    ATTORNEYS
    THIRD-PARTY DEFENDANT DEARBORN
    SUPPORT
    MOTION
    RICHARD RYAN
    SUBSTITUTE THEREFOR
    HERETO
    EXHIBIT
    FIRST AMENDED COMPLAINT
    SECOND COUNTERCLAIMS
    PARAGRAPHS
    WHEREFORE CLAUSE
    ADMIT
    ALLOCATION
    
    SUPREME COURT OF THE STATE OF NEW YORK
    COUNTY OF NEW YORK
    -    I         -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -    -   
    
    AIGRETTE LIMITED and D.  RICHARD                                                                   
    5
    RYAN, JR.,                                             Plaintiffs,                                 
                                       -against-                                                       
    
    ERNST &  YOUNG and ROGERS &  WELLS,
                                                           Defendants.
    -    -    -    -    -    -    -    -    -    -    -    -    -    I         -    -    -    -    -   
    
    ERNST &  YOUNG,                                                                                    
    o.
                                                                                                       
                                                      Third-party Plaintiff,  :
    
                                       -against-
    ROGERS &  WELLS,                                                                                   
                                                                                                       
                                                      Third-party Defendant.  :
    - - - - - - - - - - - - - - - - - - - - X
    ROGERS &  WELLS,
    
                                                      Third-party Plaintiff,  :
    
                                       -against-                                                       
    o.
                                                                                                       
    DEARBORN  FINANCIAL INC.  ,
                                                      Third-party Defendant.  :
    -    -         -         -    -         -    -    -         -    -         -    -         -    -   
                                                                                                       
    ERNST &  YOUNG, LLP,
    
                                                      Third-party Plaintiff,  :
                                       -against-                                                       
    o.
                                                                                                       
    DEARBORN FINANCIAL, INC. ,
                                                      Third-party Defendant.  :
    - - - - - - - - - - - - - - - - - - -  -X
    
                                       JAMES J. MALONEY, an attorney duly admitted to practice
    
    in the Courts  of the State of New York, affirms under penalty  of
    
    perjury as follows:
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • ERNST & YOUNG and ROGERS & WELLS,
  • in the Courts of the State of New York, affirms under penalty of
  • I am a member of the firm of Kavanagh Maloney & Osnato LLP, attorneys f o r Plaintiffs and
  • I submit this affirmation in support Of the motion by plaintiffs Aigrette Limited and D.
  • the direction to enter judgment in favor of Ernst & Young against
  • Aigrette and Ryan jointly and severally for $78,761 and to substitute therefor a direction to
  • Ernst & Young did not allege or prove at trial that
  • Young`s fees.
  • On the contrary, Ernst & Young alleged that it agreed that Aigrette was responsible f o r 85%
  • Ernst & Young's Answer to Plaintiffs' First Amended Complaint.
  • Both the First and Second Counterclaims (Paragraphs 48 through 75), and the Wherefore clause,

  • 9 . Government Exhibit # 3RD PARTY ACTIONS

    EXTRACTED KEY WORDS
    DEFERRED TAX
    FAS
    TAX BENEFITS
    DANSK
    PLAINTIFFS
    ACCOUNTING
    ERNST
    AGREEMENT
    PURCHASE PRICE
    BALANCE SHEET
    SCHEDULE
    AIGRETTE
    ROGERS
    WELLS
    BENEFIT RECEIVABLES
    SALE
    BROWN-FORMAN
    ASSET
    TRANSACTION
    STOCK
    EMST
    RYKOWSKI
    ACCORDANCE
    AMOUNT
    RECORDING
    COMPLAINT
    TESTIMONY
    TAX-EFFECTING
    ARBITRATION
    
                                              PlabtiKs,
                                                                            Index No.
                              - against -                                    107275193
    
    `ERNST & YOUNG and ROGERS  &WELLS,
                                                                            Third Party
                                              Defendants.                   Index Nos.
                                                                             592912193;
                                                                             591719196;
                                                                             591722196
    
    
    
    Weissberg, J.
    
               This breach of contract and professional malpractice action arises out of the sale by
    
    p1aintSs Aigrette Ltd., and D. Richard Ryan, Jr., of all the stock of Dmsk International,
    
    Ltd., to Lenox kc., pursuant to a Stock Purchase Agreement ("Agreemeut") dated May
    
    17, 1991.  Rogers & Wells was the law h
                                                     which represented the sellers. Defendant Emst
    
    & Young were the accountants.
    
    Background
    
               Aigrette  is a Cayman Islands corporation. which purchased the stock of Dansk in the
    
    mid-1980's. It has no employees and sewed solely as a holding company for the  shares of
    
    Dansk. Its beneficial owner is Abdullah Bakhsh, a resident and citizen of Saudi Arabia.
    
    Aigrette owned S5%  of Dansk's stock at the time of the sale. Ryan was the President and
    
    Chief Executive Officer of Dansk. He owned or had options for the other 15% of Dansk's
    
    stock.
    
    
                                                      I
    
    
    
    I
    I             Sometime in the Spring or early S m e r  of 1990, Aigrette and Ryan decided that
    
          they would attempt to sell all of their Dansk shares. On October 25,  1990, the Brown-
    
    SNIPPETS:
  • `ERNST & YOUNG and ROGERS &WELLS,
  • Ltd., to Lenox kc., pursuant to a Stock Purchase Agreement dated May
  • Aigrette is a Cayman Islands corporation.
  • which purchased the stock of Dansk in the
  • Aigrette owned S5% of Dansk's stock at the time of the sale.
  • Ryan was the President and
  • On October 25, 1990, the Brown-Forman Corporation sent plaintiffs a proposed letter of intent
  • Dansk at a price which would be computed according to a balance sheet formula.
  • 1990 and continued until the Agreement was signed on
  • accordance with Schedule 2.3 ofthe Agreement.
  • Final Balance Sheet be prepared in accordance with generally accepted accounting
  • a deferred tax benefit receivable
  • Dansk had used FAS 96 since January 1,
  • these tax benefits would be included in the
  • purchase price so long as FAS 96 allowed them to be recorded as an asset on the Dansk
  • FAS 96 limited the amount of the deferred tax benefit as an includable asset and that
  • plaintiffs' $66.3 million estimate was incorrect.
  • recognize the full amount of the deferred tax benefit receivables iu the purchase price.
  • relating to the proper amouuts of reserves and accruals, was submitted to arbitration.
  • plaintiffs commenced this action against Emst & Young.
  • the complaint alleges that Ernst & Young committed professional malpractice
  • the court heard the testimony of 19 witnesses either in court or by
  • the employment of FAS 96 placed on the recording of deferred tax benefits and, if so, did
  • the conduct of Rogers & Wells h managing the transaction contribute to that failure.
  • which excluded application of FAS 96 and provided fox fidl tax-effecting..
  • accomt, Rykowski testified that he was in Ryan's office during the ph0n.e conversation,

  • 10 . STIPULATION

    EXTRACTED KEY WORDS
    TAX BENEFIT ASSET
    DEFENDANTS
    LIMITATIONS
    COUNSEL
    DEFERRED TAX BENEFIT
    FAS
    YORK
    THIRD-PARTY
    EVIDENCE
    CALCULATION
    ABSENCE
    FINANCIAL ACCOUNTING STANDARD
    CONTRADICTING
    CONSOLIDATED TAX
    OPPOSING
    YFAS
    AVIDENCS
    AXPERT
    OT9ERJISE
    EXPARK
    DANEK INTAMATIENAL DQFIIGN8
    BEME OPPOSING PAGERS
    DNTAD
    DAVIS
    SCOTT
    WEBER
    EDWARDS
    ERNST
    YCRRK
    
    SUPREME COURT OF THE STATE OF NEW YORK
    COUNTY OF NEW YORK
    -    -    -    -    -     -    -    -    -    -    -    -    -    -    I    -    -            -    
                                                                                                  -X
    
    AIGRETTE LIMITED and D.  RICHARD                                                                   
    RYAN,  JR. ,                         Plaintiffs,                                                   
                        -against-
    ERNST &  YOUNG and ROGERS  &  WELLS,
    
    
    
    ERNST &  YOUNG,                                                                                    
                                                                                                       
                                        Third-party Plaintiff,  :
                        -against-                                                                      
                                                                                          *I.     '
    ROGERS &  WELLS,                                                                                   
    
                                                                                                 
              Third-party Plaintiff,                                                                   
                        -against-                                                                      
                                                                                                       
    DEARBORN FINANCIAL INC.,
    
    
    
                        Third-party Plaintiff,
                             -against-                                                                 
                                                                                                       
    DEARBORN FINANCIAL, INC.,
                        Third-party Defendant.
                                                                                                  -X
    
                             IT IS HEREBY stipulated and agreed by and among the
    undersigned counsel f o r   the parties that the return date of
    Plaintiffs' motion, brought by Order to Show Cause dated February
    20, 1997, to preclude Defendants from offering evidence, expert
    
    
    
    or otherwise, with respect to the calculation pursuant to
    Schedule 2.3  to the Stock Purchase Agreement dated May  17, 1991
    of the deferred  tax benefit asset in the absence of the
    limitations imposed by Financial Accounting Standard 96  ("FAS
    
    96" )  or any evidence, expert or otherwise, contradicting
    
    Plaintiffs' expert that the limitations of FAS 96 would not have
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • Third-party Plaintiff,
  • IT IS HEREBY stipulated and agreed by and among the undersigned counsel f o r the parties
  • Plaintiffs' expert that the limitations of FAS 96 would not have applied to the calculation
  • Defendants shall serve opposing papers, if any, by hand on Plaintiffs' counsel on March 4,
  • of tha drfarrd tax benefit asset in the absence of the limitationr h o s e d by Financial
  • DefendsntS shall Beme opposing pagers, if any, by hand on Plaintifir' counsel on March 4,
  • Dntad: February a7, 1997
  • DAVIS, SCOTT, WEBER 6 EDWARDS, P -C P l a i n t i f f, Ernst h Young
  • New Ycrrk, NY 10017

  • 11 . REPLY MEM OF LAW RE TAX

    EXTRACTED KEY WORDS
    CALCULATION
    DEFERRED TAX
    DEFERRED TAX BENEFIT
    TESTIMONY
    PRECLUSION
    CPLR
    YORK
    COURT
    DEFENDANTS
    INTERROGATORIES
    RESPONSE
    ROGERS
    WELLS
    MOTION
    POPE AFF
    FAILURE
    MEMORANDUM
    ASSET
    OFFERING
    EVIDENCE
    CONTRADICTING
    AFFIRMATION
    TESTIFY
    EXPERT OPINION
    EXPERT WITNESS
    COUNSEL
    INTERROGATORIES SEEKING
    PROFFER
    HEREINAFTER
    
               SUPREME  COURT OF THE STATE OF  NEW YORK
               COUNTY  OF  NEW YORK
               , , , , , , , , - - , , , - , , , , , - x
    =, t
               AIGREWE  LIMITED  end  D.  RICHARD                                                      
               RYAN,  JR.,
       a #                                          Plaintiffs,                                        
                                                                                                  0    
                                        -against-                                                 :
               ERNST  &  YOUNG  and  ROGERS  h  WELLS,
                                                    Defendants.
               - - - - - - - - - - - - - - - - , , , " x
               ERNST  &  YOUHG,                                                                        
                                                                                                       
                                                   Third -party  Plaintiff,  t
                                        -against -                                                     
               ROGERS  &  WELLS,                         '                                        :
                                                   Third -party  Defendant.  :
               - - - - - - - - - - - - - -
               ROGERS  &  WEUS,
                                                   Third-Party
                                        -against-
               DEARBOW  FIHANCIAL INC.,
                                                   Third-party
               -    -    -    -    -    -     -    -     "          -    e -       "    -
               ERNST  C  YOWG,  LLF,
                                                   Third -party  Plaintiff,  :
                                        -against-                                                 : 
                                                                                                       
               DERRBORN FIWWCIAL,  IHC.,                                                          :
                                                   Third -party
               -    -    -    -    -     -    -     -          -    r    r    r    r    r
    
    
    
    
    
    
    
    
       9
    
    
    
    SUPREME  COURT OF THE STATE OF NEW  YORK
    COUNTY OF NEW  YORK
    - - - - - - - - - - - - - - - - - - -  -X
    AIGRETTE LIMITED and D.  RICHARD                                                           :  Index
    RYAN, JR.,                          Plaintiffs,                                                    
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • ERNST & YOUNG and ROGERS h WELLS,
  • ErZNST & YOUNG and ROGERS & WELLS,
  • REPLY MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS' MOTION TO PRECLUDE DEFENDANTS FROM
  • This memorandum is respectfully submitted in support of Plaintiffs' motion to preclude to the calculation of the deferred tax benefit asset if Brown-Forman Corporation filed a
  • Both Defendants have conceded that they will not offer any affirmative testimony, expert or
  • Affirmation of H. Barry Vasios, Esq., dated March 4, 1997 (hereinafter "Vasios Aff.
  • Affirmation of John Houston Pope, dated March 4 1997, rn8, 13 (hereinafter "Pope Aff ."
  • E&Y, however, has attempted to reserve the right to proffer expert testimony challenging
  • reasonable detail the subject matter on which each expert is expected to testify, the
  • Plaintiffs do not object to R&W`s reservation of right to cross-examine Plaintiffs' expert
  • E&Y has provided no basis f o r its failure other than it does not wish to provide Plaintiffs
  • The failure to provide good cause f o r the late retention and notice of expert testimony is
  • Plaintiff's counsel waited approximately five weeks until the week before trial to provide
  • 3101response, after having responded that claimant did not intend to call an expert, for a
  • E&Y, ignoring the fact that it agreed to provide a calculation of the lost deferred t a x
  • It has now taken the position that it cannot do so, and, therefore, both E&Y's witnesses and

  • 12 . MALONEY AFFIRM 2

    EXTRACTED KEY WORDS
    CALCULATION
    DEFERRED TAX BENEFIT
    LOST DEFERRED TAX
    DEFENDANTS
    MOTION
    AFFIRMATION
    COURT
    MALONEY
    CHALLENGING PLAINTIFFS
    LAW
    POPE AFF
    EXPERT TESTIMONY
    THIRD-PARTY PLAINTIFF
    PRECLUSION
    HEREINAFTER
    AGREEMENT
    INTERROGATORIES
    CPLR
    BROWN-FORMAN
    PRECLUDE
    FAS
    SCHEDULE EXPERT DEPOSITIONS
    ARBITRATION
    CONCEDES
    OPPOSING PAPERS
    MALONEY MOVING
    BUSINESS
    OBLIGATIONS
    STOCK PURCHASE AGREEMENT
    
     e                        e                    a            a
    
    
    SUPREME COURT OF THE STATE OF NEW YORK
    COUNTY OF NEW YORK
    - - - - - - - - - - - - - - - - - - -  - X
    AIGRETTE LIMITED and D. RICHARD             :  Index No. 93/107275
    RYAN, JR.,                                           IAS  PART 49
                                                         (Justice Cahn)
                        Plaintiffs,                REPLY AFFIRMATION OF  '
                -against-                       : JAMES J.  MALONEYI ESQ
                                                   IN SUPPORT OF
    ERNST &  YOUNG and ROGERS &  WELLS,         : PLAINTIFFS'  MOTION TO
                                                   PRECLUDE DEFENDANTS FROM
                                                : CHALLENGING PLAINTIFFS'
                                           - -  -X CALCULATION OF THE
                                                   DEFERRED TAX BENEFIT
    ERNST &  YOUNG,                             : RECEIVABLE
                        Third-party Plaintiff,  :  Third-party Index No.
                                                          93/592912
                -against-
    ROGERS &  WELLS,
    
    
    
           Third-party Plaintiff,
                -against-                       :  Third-party Index No.
                                                     96/591719
    DEARBORN FINANCIAL INC.,
    
    
    
                Third-party Plaintiff,
                -against-                       :  Third-party Index No.
                                                     96/591722
    DEARBORN FINANCIAL, I N C . ,
    
    
    
                JAMES J. MALONEY, an attorney duly licensed to practice
    law in the Courts of  the  State  of  New  York,  affirms under  the
    penalties of perjury the following:
    
    
    
     0
    
    
    
    
    SNIPPETS:
  • Third-party Plaintiff,: Third-party Index No.
  • JAMES J. MALONEY, an attorney duly licensed to practice law in the Courts of the State of New
  • I am a member of the firm of Kavanagh Maloney & Osnato LLP attorneys for Plaintiffs in this
  • I submit this reply affirmation in support of Plaintiffs' motion to preclude Defendants from
  • Rogers & wells (hereinafter "R&W") has consented to Plaintiffs' motion.
  • R&W concedes in its opposing papers that it has not retained any accounting expert and does
  • Pope Aff.
  • As set forth in the Reply Memorandum of Law submitted herewith, CPLR 3101 required that E&Y
  • ELY's counsel does not deny that E&Y agreed to provide a calculation of the lost deferred tax
  • "Maloney Moving Af f.
  • This explanation of the clients refusal to comply with Mr. Pope's agreement is quite baffling
  • Paragraphs 30 and 3 1 of the Complaint expressly state that it was the limitations of FAS 96
  • Nor can there be any dispute that E&Y knew that Plaintiffs would contend that the amount of
  • Moreover, it was E&Y itself which came ux) with the arqument in the arbitration that if
  • Annexed hereto as Exhibit B is a draft research memorandum, dated December 9, 1991 more than
  • EtY has admitted in the depositions that it did nothing to determine prior to the signing of
  • E&Y provides three purported reasons by which to excuse its failure to comply with its
  • The Court of Appeals more than thirty years ago held that a professional may not decline to
  • It is E&Y which declined to schedule expert depositions in February as agreed unless the
  • ELY's third and final argument against preclusion has nothing to do with whether Plaintiffs'

  • 13 . E&Y MEM RE DEF TAX ASSETS

    EXTRACTED KEY WORDS
    TAX
    MOTION
    DAMAGES
    OPINION
    INTERROGATORIES
    CALCULATION
    EVIDENCE
    DEFERRED TAX
    DEFENDANTS
    ASSET
    SPECULATION
    YORK
    PRECLUSION
    DANSK
    TESTIMONY
    DISCLOSURE
    OBJECTIONS
    IMPROPER
    CONTRACT
    CONSOLIDATED TAX
    REASON
    COURT
    TAX BENEFIT
    FAS
    BUYER
    AMOUNT
    EXCHANGE
    SUMMARY JUDGMENT
    BROWN-FORMAN
    
          SUPREME COURT OF THE STATE OF NEW  YORK
          COUNTY OF NEW YORK
          --c3 ----------------_I__________________  X
    e     AIGRETTE LIMITED and D.  RICHARD
          RYAN, JR.,                                         -
                                             Plaintiffs,           Index No.  93/107275
    
    
    a
    
          ERNST &  YOUNG,
                                  Third-party Plaintiff,           Third Party
                                                                   Index
                         -                                                  No.  93/592912
                               against -
    
    
    
          ROGERS &  WELLS,
                                  Third-party Plaintiff,              Third Party
                                                                      Index No.  96/591719
    a                    - against -
          DEARBORN FINANCIAL, I N C . ,
                                  Third-party Defendant.
          --------------------__I________I__c_____
                                                             X
          ERNST h  YOUNG LLP,
                                  Third-party Plaintiff,              Third Party
                                                                      Index
                         - against -
          DEARBORN FINANCIAL, INC.,
                                  Third-party Defendant.
          -----3c -------------I----------------------
                                                             X             c
    
    
    
    
                                                  DAVIS, SCOTT, WEBER &  EDWARDS, P.C.
    e                                             100 Park Avenue
                                                  New York, New  York 10017
                                                  (212) 685- 8000
                                                  Attorneys  for  Defendant  &  Third-
                                                  Party Plaintiff Ernst &  Young
    
    
    
                                 Preliminary Statement
    a               Defendant Ernst &  Young LLP (" E&Y 1l)  respectfully submits
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • -----3c -------------I----------------------this memorandum of law in opposition to
  • Plaintiffs' motion seeks an order of preclusion regarding two issues: any evidence
  • The first part of plaintiffs' motion must be denied, as fully explained below, for it is
  • Plaintiffs cannot avoid scrutiny of their expert's opinion by demanding preclusion after E&Y
  • To the extent that plaintiffs rely on opinion evidence that is premised on an assumption that
  • and thus any opinion testimony as to what deferred t a x asset would have resulted from a
  • Plaintiffs' motion is based on E&Y's refusal to answer interrogatories that seek to require
  • Plaintiffs must prove both the fact of damages and the amount with reasonably certainty.
  • E&Y has no intention of providing at trial its own method for calculation of what deferred
  • As to the information pursuant to CPLR 3 1 0 1 that was exchanged, at plaintiffs' request,
  • TO accommodate this timing issue, the parties had discussed and agreed to have depositions of
  • As E&Y demonstrated in its pending motion for summary judgment, plaintiffs' damage theory --
  • Any suggestion that plaintiffs could have negotiated a different contract would require not
  • For that reason, it is similarly impossible f o r E&Y to answer interrogatories seeking a
  • improper and the objections plainly were proper.
  • EXPERT TESTIMONY DISCLOSURE AS IT RELATES TO

  • 14 . MEMO OF LAW IN SUP OF PLF

    EXTRACTED KEY WORDS
    DEFERRED TAX BENEFIT
    DEFENDANTS
    CALCULATION
    FAILURE
    PRECLUDE
    TAX BENEFIT ASSET
    LIMITATIONS
    FAS
    DANSK
    INTERROGATORIES
    MALONEY AFF
    RESPONSE
    EVIDENCE
    BROWN-FORMAN CORPORATION
    CONSOLIDATED TAX
    REASONABLE DETAIL
    TESTIMONY
    SUMMARY JUDGMENT
    YORK
    COUNSEL
    ROGERS
    THIRD-PARTY
    OFFERING
    DISCLOSURES
    BASIS
    PARTY
    REFUSES
    OPINIONS
    TESTIFY
    
    AIGRETTE LIMITED and  D.  RICHARD                          :  Index No.  93/107275
    RYAN,  JR.,           Plaintiffs,                          :  IAS Part 49
                                                                     (Cahn, J. )
                    -against-                                  :
    ERNST  Q  YOUNG  and  ROGERS &  WEUS,
    
    
    ERNST L  YOUNG,                                            :  Third  Party  Index No.
                                                                     931592912
                         Third-Party Plaintiff,  :
                    -against -                                 :
    ROGERS &  WELLS,
    
    
    
    
    
    
    
    
    
    
                          Third-party P l a i n t i f f ,      :
                    -against-                                  :  Third  Party  Index No.
                                                                      96/591722
    DEARBORN FINAHCIAL, INC.,
                          Third -party  Defendant.             :
    - - - - - - - - - - , , , , , , , , , - x
    
    
    
    
    
                              scmnwwa MALaaEY  c  OsmT-0, LLP
                          Attorneys  for Blaintiffs and  Third-
                       Party Defendant  Dearborn  Pfoancial,  Inc.
                                       415  Madison Avenue
                                      Mew York, 11.Y.  10017
                                            219-201-8400
    
    
    
                            PRELIMINARY STATEMENT
                This memorandum is respectfully submitted in support of
    Plaintiffs' motion to preclude Defendants from offering evidence,
    expert or otherwise, with respect to the calculation pursuant to
    Schedule 2.3  to the Stock Purchase Agreement dated May 17, 1991 of
    the deferred tax benefit asset in the absence of the limitations
    imposed by  Financial Accounting  Standard  96  ("FAS 96")  or  any
    
    SNIPPETS:
  • ERNST Q YOUNG and ROGERS & WEUS,
  • Third-Party Plaintiff,:
  • This memorandum is respectfully submitted in support of Plaintiffs' motion to preclude pplied to the calculation of the deferred tax benefit asset if Brown-Forman Corporation filed a
  • Maloney Aff.
  • In addition, Defendants' interrogatory responses identifying their experts, the opinions to
  • Dansk had been included in a consolidated tax return with the
  • it is respectfully submitted that the Defendants be precluded from offering any evidence on
  • Where are party fails to show good cause for the failure to disclose in reasonable detail the
  • testimony in response to discovery demands,
  • discovery demands justified the Court's refusal to consider an expert affidavit on summary
  • response to Plaintiff's request warranted reversal of judgment f o r defendant after jury
  • E6Y's counsel has been promising this information to Plaintiffs f o r more than a- month and
  • R&W' s attempt to coattail on to ELY's expert's position does not provide it with any basis
  • Its failure to provide any notice in its response to Plaintiffs' expert interrogatories that
  • company, the Brown-Forman Corporation, provides a basis for preclusion at trial.
  • Dated: New York, New York

  • 15 . AMEND ANSR, AMEND CROSS C

    EXTRACTED KEY WORDS
    PARAGRAPH
    WELLS
    ROGERS
    RYAN
    ALLEGATIONS
    DENIES
    AIGRETTE
    PURCHASE
    DANSK
    AGREEMENT
    LENOX
    ADMITS
    FIRST AMENDED COMPLAINT
    ERNST
    STOCK PURCHASE AGREEMENT
    DEFERRED TAX BENEFIT
    COUNTERCLAIM
    DEFENDANT ROGERS
    INFORMATION SUFFICIENT
    RICHARD RYAN
    DENIES KNOWLEDGE
    NEGOTIATIONS
    BENEFIT RECEIVABLE ASSET
    FINANCIAL ACCOUNTING STANDARD
    THIRD PARTY
    PURCHASE PRICE
    OUTSTANDING STOCK
    BALANCE SHEET
    ATTORNEYS
    
    SUPREME COURT  OF THE STATE OF NEW  YORK
    COUNTY OF NEW  YORK
    
    AIGRETTE LIMITED and D.
    RICHARD RYAN, JR.,
                                      Plaintiffs,            ~, ',        !- 3996
                                                             \ ;:) `1
                        -against-                                            . ,   ..
                                                                                      . ..  ;.A
    
    ERNST &  YOUNG  AND ROGERS &  WELLS                AMENDED ANSWER TO
                                                      :  FIRST AMENDED COMPLAINT,
                                      Defendants.      AMENDED CROSS-CLAIM
    - - - - - - - - - - - - - - - - - - -  -X AND AMENDED COUNTERCLAIM
    
    ERNST &  YOUNG,
                        Third-party Plaintiff,  : Third Party
                                                       Index No. 93/592912
                        -against-
    ROGERS &  WELLS,
    
    
    
              Defendant Rogers &  Wells, by its undersigned attorneys,
    answers the First Amended Complaint herein as follows:
    
               1.  Denies knowledge or information sufficient to form
    
    a belief as  to the allegations of paragraph  2 concerning the
    state of residence of plaintiff D. Richard Ryan (IIRyanrl).
    
               2.     Denies the allegations of paragraph 7 except
    admits that negotiations .commenced between plaintiffs and  Brown-
    Forman Corporation (IIB-FII)  f o r  the purchase by Lenox, Incorporat-
    ed  (I1Lenox1l) of  all of the outstanding stock of Dansk during
    
    1990.
    
    
    
                                                                                                t
    
    
    
    
                                 3 .      Denies the allegations of paragraph 8  except
                      admits that Aigrette, Ryan and Lenox entered into a Stock Pur-
                      chase Agreement dated as of May 17, 1991 guaranteed by B-F  ("the
                      SPA") and respectfully refers  the Court to the SPA f o r  the
    
    SNIPPETS:
  • AIGRETTE LIMITED and D. RICHARD RYAN, JR.,
  • Defendant Rogers & Wells, by its undersigned attorneys, answers the First Amended Complaint
  • Denies knowledge or information sufficient to form
  • a belief as to the allegations of paragraph 2 concerning the state of residence of plaintiff
  • Denies the allegations of paragraph 7 except admits that negotiations .commenced between
  • that in connection with the transaction Ernst & Young was
  • to provide accounting and tax expertise and advice in the negotiation and drafting of the
  • Denies the allegations of paragraph 13, avers that the parties to the SPA agreed that the
  • Denies the allegations of paragraph 14 except admits that draft balance sheets were prepared
  • language, pertaining to the creation of a tax benefit receivable asset on the Final Balance
  • a belief as to the truth of the allegations of paragraph 25 except admits that E&Y was
  • repeats and realleges its answers to paragraphs 1 through 45 of the First Amended Complaint
  • Denies the allegations of paragraph 47 except admits that plaintiffs engaged Rogers & Wells
  • Denies the allegations of paragraph 48, except admits that Ernst & Young has asserted certain
  • E&Y agreed to provide accounting and tax expertise and advice in the negotiation and drafting
  • a deferred tax benefit receivable computed on a net present value basis will be provided for
  • Plaintiffs relied upon E&Y to review the proposed language relating to the creation of an
  • from E&Y for any amount of such judgment proximately caused by the fault of E&Y, including
  • As and For an Amended Counterclaim Against

  • 16 . ANSWR TO 1ST AMENDED COMP

    EXTRACTED KEY WORDS
    RYAN
    AIGRETTE
    PARAGRAPH
    ALLEGATIONS
    PLAINTIFFS
    DANSK
    DENIES
    INFORMATION SUFFICIENT
    ADMITS
    TAX
    YORK
    TRUTH
    AGREEMENT
    SCHEDULE
    SOLE SHAREHOLDERS
    ACCOUNTING
    INDEPENDENT AUDITS
    FINANCIAL STATEMENTS
    BALANCE SHEET
    PURCHASE PRICE
    COUNTERCLAIMS
    YORK CORPORATION
    FIRST AMENDED COMPLAINT
    PROFESSIONAL SERVICES
    CONNECTION
    TAX BENEFITS
    CALCULATION
    BROWN-FORMAN
    ARBITRATION
    
    AIGRETTE LIMITED and  D. RICJ3ARD
    RYAN, JR. ,
                                    Plaintiffs,          Index No. 93/107275
                 -  against -                            ANSWER TO FIRST AMENDED
                                                         COMPLAINT AND
    ERNST  &  YOUrjG  and ROGERS &  WELLS,               COUNTERCLAIMS
    
    
    
    
    
    
    
                 1.  Admits the allegations of paragraph 1.
                 2 .      Admits  having  a  belief  on  information  that  the
    allegations of paragraph 2 are true.
    
                 3.  Denies having knowledge o r  information sufficient to
    
    form  a belief as to the truth of the allegations of paragraph 3,
    except  admits  having  a  belief  on  information  that  as  of
    December 31,  1990 plaintiffs were the sole shareholders of Dansk
    International Designs, Ltd.  ("Dansk"), a New York corporation.
                 4.  Denies the allegations of paragraph 4, except admits
    that from 1985 up to the time Dansk was sold by plaintiffs Ernst &
    Young  was  a  partnership  engaged  in  the  practice  of  public
    accounting with an office at 277 Park Avenue, New York, New York,
    and that Ernst &  Young performed independent audits of Dansk's year
    end  financial  statements, prepared  Dansk's  tax  returns  and  was
    consulted  by  Dansk  with  respect  to  various  accounting  o r   tax
    matters.
    
    
    
              5 .       Admits  having  a  belief  on  information  that  the
    
    allegations of paragraph 5 are true.
    
    
    
    
    
               7 .      Denies having knowledge or information sufficient to
    
    form a belief as to the truth of the allegations of paragraphs 8 to
    
    1 0 ,   except admits having a belief on information that plaintiffs
    
    and  Lenox, Incorporated  (llLenoxll) entered  into a  Stock Purchase
    
    SNIPPETS:
  • AIGRETTE LIMITED and D. RICJ3ARD
  • RYAN, JR.
  • Admits having a belief on information that the allegations of paragraph 2 are true.
  • Denies having knowledge o r information sufficient to
  • form a belief as to the truth of the allegations of paragraph 3, except admits having a
  • Denies the allegations of paragraph 4, except admits that from 1985 up to the time Dansk was
  • the Agreement f o r its terms.
  • and tax advice and expertise in connection with the negotiations of the proposed sale of
  • Plaintiffs with Lenox and Brown-Forman; and Plaintiffs and/or Rogers & Wells were responsible
  • admits a belief on information that in the arbitration Lenox a-nd Brown-Forman Corporation
  • outstanding fees for services performed by Ernst & Young in connection with the arbitration,
  • SFAS 96 could limit the ability to record future tax benefits as assets on the balance sheet.
  • From 1985 up to the time Dansk was sold by Aigrette and Ryan, Ernst & Young performed
  • thereto set forth a procedure for calculating after the Closing the final purchase price to
  • professional services in connection with the post-closing procedures for calculation of the
  • If Ryan did not apprise Aigrette o r any of Aigrette`s advisors of the advice he had received

  • 17 . CROSS CLAIM & COUNTER

    EXTRACTED KEY WORDS
    PLAINTIFFS
    WELLS
    ROGERS
    RYAN
    ALLEGATIONS
    DENIES
    PURCHASE
    AIGRETTE
    AGREEMENT
    ADMITS
    LENOX
    FIRST AMENDED COMPLAINT
    INFORMATION SUFFICIENT
    YORK
    SCHEDULE
    DEFERRED TAX BENEFIT
    DEFENDANT ROGERS
    DENIES KNOWLEDGE
    STOCK PURCHASE AGREEMENT
    RESPECTFULLY REFERS
    NEGOTIATIONS
    SPA
    FINANCIAL ACCOUNTING STANDARD
    BENEFIT RECEIVABLE ASSET
    PURCHASE PRICE
    RICHARD RYAN
    BALANCE SHEET
    THIRD PARTY
    BROWN-FORMAN CORPORATION
    
    SUPREME  COURT OF THE STATE OF NEW YORK
    COUNTY OF NEW YORK
    _ - - _ _ - _ _ - - _ _ - - - _ - - -              -X
    
    AIGRETTE LIMITED and  D.                            :  Index No. 93/107275
    RICHARD RYAN, JR.,
                                       Plaintiffs,
                         -against-
    ERNST &  YOUNG AND  ROGERS &  WELLS                       ANSWER TO FIRST
                                                              AMENDED COMPLAINT,
                                                              CROSS-CLAIM AND
                                                              COUNTERCLAIM
    
    ERNST &  YOUNG,
                         Third-party Plaintiff,  :  Third Party
                                                              Index No. 93/5s912
                         -against-                                             a-
    
    ROGERS &  WELLS,
                         Third-party Defendant.  :
    
    
                Defendant Rogers &  Wells, by its undersigned aEorneys,
    
    answers the First Amended Complaint herein as  follows:
    
                1.  Denies knowledge or information sufficient to form
    
    a belief as to the allegations of paragraph 2  concerning the
    state of residence of plaintiff D. Richard Ryan  (llRyanl').
    
                2 .      Denies the allegations of paragraph 7  except
    admits that negotiations commenced between plaintiffs and Brown-
    Forman Corporation (''B -FII)  f o r  the purchase by Lenox, Incorporat-
    
    
    
                    3 .      Denies the  allegations of paragraph 8  except
          admits that Aigrette, Ryan and Lenox entered into a Stock Pur-
          chase Agreement dated as of May 17, 1991 guaranteed by B-F  ("the
          SPA") and  respectfully refers the Court to the SPA for the
          contents thereof.
    
                    4 .      Denies the allegations of  paragraph 9  and respect-
          fully refers t h e   Court to the provisions of section 2.2  of the
          SPA for the contents thereof.
    
                    5.       Denies the allegations of paragraph 10 and re-
          spectfully refers  the court to Section 2 . 3   of the SPA for the
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • RICHARD RYAN, JR.,
  • Third-party Plaintiff,: Third Party
  • Defendant Rogers & Wells, by its undersigned aEorneys,
  • a belief as to the allegations of paragraph 2 concerning the state of residence of plaintiff
  • Denies the allegations of paragraph 7 except admits that negotiations commenced between
  • Denies the allegations of paragraph 8 except admits that Aigrette, Ryan and Lenox entered
  • Denies knowledge or information sufficient to form a belief as to the allegations of
  • Denies the allegations of paragraph 18 asserted with respect to it except admits that a
  • except admits that preliminary calculations of t h e purchase price were exchanged by
  • Final Balance Sheet impossible,
  • realleges its answers to paragraphs 1 through 37 of the First Amended Complaint as if more
  • Defendant Rogers & Wells, for its cross-claim against co-defendant Ernst & Young, alleges as
  • a deferred tax benefit.receivable computed on a net present value basis will be provided f o
  • Plaintiffs relied upon E&Y to review the proposed language relating to the creation of an

  • 18 . Government Exhibit # 3RD PARTY

    EXTRACTED KEY WORDS
    DANSK
    PLAINTIFFS
    AIGRETTE
    ROGERS
    WELLS
    RYAN
    THIRD-PARTY PLAINTIFF ROGERS
    PURCHASE PRICE
    SCHEDULE
    YORK
    ERNST
    TAX BENEFIT RECEIVABLES
    LENOX
    SHARES
    THIRD-PARTY DEFENDANT
    COMPLAINT
    SHAREHOLDERS
    AGREEMENT
    PARAGRAPH
    DEFERRED TAX BENEFIT
    BENEFIT RECEIVABLE ASSET
    CERTIFIED PUBLIC ACCOUNTANT
    CALCULATION
    ESTIMATED PURCHASE PRICE
    BALANCE SHEET
    SUPREME COURT
    PRINCIPAL OFFICE
    ILLINOIS CORPORATION
    FINANCIAL ACCOUNTING STANDARDS
    
    SUPREME  COURT 0% THE STATE OF NEW YORK
    COUNTY OF NEW YORK
    -    -    -     -    -    -    -    -    -    -    -    -    -    -    -    -    -     -     *
                                                                                     -X
    
    AIGRETTE LIMITED and  D.                                                              :  Index No.
    RICHARD RYAN, JR.,
    
                                   Plaintiffs,
    
                                   -against-
    
    ERNST &  YOUNG  AND ROGERS &  WELLS
    
    - - -                          Defendants.
    
    ERNST &  YOUNG,                                                                       :  Index No. 
    
                                   Third-party Plaintiff,  :
    
                                   -  against  -
    
    ROGERS  &  WELLS,
                                   Third-party Defendant.  :
                   _ _ _ _ - - - - - - _ _ _ _ _ _                                   -x  Third-party
    ROGERS &  WELLS,
                                   Third-party Plaintiff,  :  Third Party
                                                                                                Index
                                   -against-
    
    DEARBORN FINANCIAL,  INC.
    
                                   Third-party Defendant.  :
    
    
                         Third-party Plaintiff Rogers &  Wells,  f o r   its Third-
    
    Party Complaint  against Dearborn Financial, Inc.  ("Dearborn")
    
    alleges as follows:
    
    
    
                   t
                         r
    
    
                               1.  Third-party Plaintiff Rogers &  Wells is a New York
                partnership, engaged in the practice of law, with its principal
    
    SNIPPETS:
  • SUPREME COURT 0% THE STATE OF NEW YORK COUNTY OF NEW YORK
  • ERNST & YOUNG AND ROGERS & WELLS
  • Third-party Plaintiff Rogers & Wells, f o r its Third-Party Complaint against Dearborn
  • Third-party Plaintiff Rogers & Wells is a New York partnership, engaged in the practice of
  • Dearborn is an Illinois corporation with its principal office at
  • al, and Aigrette Limited, a Caymans Island corporation, were the sole shareholders of Dansk
  • Ryan, to provide advice in connection with the sale of their
  • shares in Dansk as described below.
  • During 1990 negotiations commenced between Aigrette and Ryan, on the one hand, and B-F, on
  • In connection with the negotiations f o r the.sale of Dansk, Aigrette appointed Dearborn its
  • As such financial advisor, Dearborn owed a duty to Aigrette to use reasonable care, skill,
  • Plaintiffs Ryan and Aigrette have brought an action against Defendants Rogers & Wells and E&Y
  • A copy of the First Amended Complaint in the action against Rogers & Wells and Ernst & Young
  • plated a contingent price which would be calculated pursuant to Schedule 2.3 to the Stock
  • Bakhsh did not rely upon the inclusion of any Tax Benefit Asset on a Final Balance Sheet in
  • In response to Ryan's request, John Bridendall of BF, a certified public accountant, assisted
  • Plaintiff Aigrette relied upon Dearborn to review the proposed language relating to the
  • The May 15, 1991 draft of Schedule 2.3, in paragraph 19 thereof, contained the following
  • At no time prior to J u l y 2, 1991 did anyone at Dearborn consult with Michael Rolhfs, a
  • Dearborn did not warn or advise any representatives of the seller of ri.sks associated with
  • Rogers & Wells recovery on its Third-party Comp l a i n t Against Third-party Defendant

  • 19 . MALONEY RE VACATE NOTE

    EXTRACTED KEY WORDS
    COURT
    RYAN
    DEFENDANTS
    DEARBORN
    PURCHASE PRICE
    STOCK
    ASSERT
    DISCOVERY
    COUNSEL
    COMPLAINT
    SCHEDULE
    STOCK PURCHASE AGREEMENT
    CALCULATION
    DANSK
    THIRD-PARTY
    PARTIES
    YORK
    POTENTIAL CONFLICT
    LENOX
    DRAFT
    CONFERENCE
    AIGRETTE
    READINESS
    ACCORDANCE
    ACCOUNTING
    ADVICE
    INDEPENDENT COUNSEL
    REQUEST
    PLEADINGS
    
    SUPREKE  COURT OF THE  STATE OF NEW  YORK
    COUNTY  OF NEW YORK
    -    -         -     -     -    -    -         -    -    -    -         -    -     -        I    - 
                                                                                                       
    AIGRETTE LIMITED  and D.  RICHARD                                                                  
    RYAN, J R . ,
                                                                                      Plaintiffs,      
                                                                                                       
                                              vs                                                       
                                                                                                       
    ERNST  &  YOUNG and ROGERS  &  WELLS,                                                              
                                                                                                       
                                                                                      Defendants.      
    
    - - - - - - - - - - - - - - - - - - -  -X
    ERNST  &  YOUNG,                                                                                   
                                                                                                       
                                                   Third-party
    Plaintiff,
                                                   vs .
    ROGERS  &  WELLS,
    
                                                   Third-party
    Defendant.
    
    -    -    -    -     -     I    -    -    -    -    -    -    -    -    -    -    -    -    -      
    
                                    JAMES J. MALONEY,  an attorney duly licensed to practice
    law in the Courts  of the State of New  York, affirms under the
    penalties of perjury the following:
                        1.          I am a member of the firm of Kavanagh Peters Powell &
    Osnato attorneys f o r   Plaintiffs in this action.  I submit this
    affirmation in support of Plaintiffs' motion to vacate the Note
    
    of Issue and Statement of Readiness filed by Defendant Ernst &
    Young ("E&Y") on the ground that this action is not ready for
    trial because a potential conflict of interest has developed
    between the two Plaintiffs which may necessitate the need to
    obtain  new  counsel.
    
    
    
         2.       This is an action for professional malpractice and
    breach of contract against E&Y and Rogers &  Wells  ("R&W") in
    connection with Plaintiffs' sale of their stock in Dansk
    International Designs, Inc.  ( l1DanskIf)
                                               .
         3.       Plaintiffs are the former  shareholders of Dansk.
    Plaintiffs sold their stock in Dansk to Lenox, Inc., a wholly
    
    SNIPPETS:
  • SUPREKE COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • I submit this affirmation in support of Plaintiffs' motion to vacate the Note
  • of Issue and Statement of Readiness filed by Defendant Ernst & Young on the ground that this
  • Plaintiffs are the former shareholders of Dansk.
  • Plaintiffs sold their stock in Dansk to Lenox, Inc., a wholly owned subsidiary of the
  • Final Balance Sheet, prepared in accordance with
  • E&Y and R&W were Plaintiffs' accountants and lawyers respectively throughout the transaction
  • Plaintiffs have sued E&Y for its failure to advise Plaintiffs about the consequences of
  • The provision of Schedule 2.3 which required the application of FAS 96 to the calculation and
  • E&Y, however, asserted a third-party claim against R&W alleging that if Plaintiffs prevail
  • Based upon these allegations and the discovery to date, Plaintiffs amended their complaint to
  • Neither EtY nor R&W asserted any affirmative claims for relief against either Plaintiff or
  • At a conference with the Court held on September 4, 1996, Defendant R&W informed the Court
  • of the claims which they intend to assert against Ryan and Dearborn, upon information and
  • claim that this alleged warning was given to Aigrette,
  • Mr. Vasios, R&W's counsel, has t o l d me that R&W plans to sue Dearborn "because there was
  • At a conference held on April 2 4, 1996, before the amended and proposed claims were
  • After learning of these proposed new claims at the conference, the Court directed R&W and E&Y
  • Thereafter, if Defendants persist in asserting these new claims, they were directed to return
  • Without these pleadings, I cannot properly advise my clients about the potential conflict
  • Ryan clearly needs to consult with independent counsel about this potential claim and to

  • 20 . RESP TO PLF 2ND NTPRODUCE

    EXTRACTED KEY WORDS
    RESPONSE
    STRAUSS
    TIME RECORDS
    MATTER
    PUBLICATIONS
    PLAINTIFFS
    PRODUCTION
    OBLIGATIONS
    UNDULY BURDENSOME
    REUUEST
    RESDONSE
    REAUEST
    SALE
    DANSK
    RECRUEST
    WAIVER
    ACCOUNTANT
    YORK
    YOUNG LLP
    DEFEND
    INSTRUCTIONS
    PURPORT
    REMEST
    INSURANCE BUSINESS
    NORMAN STRAUSS
    CONNECTION
    FAS
    FASB
    ARBITRATOR
    
                a           m
    
    
    SUPREME COURT  OF THE  STATE OF N E W   YORK
    COUNTY OF NEW YORK
    
    
    AIGRETTE LIMITED and D. RICHARD
    RYAN, JR. ,                                            Index No. 93/107275
                                   Plaintiffs,
               -  against -
    ERNST &  YOUNG LLP and
    ROGERS  &  WELLS,
                                   Defendants.       RESPONSE OF ERNST &  YOUNG
                                                         TO PLAINTIFFS'  SECOND
                                                         NOTICE TO PRODUCE
    
    
    
    
    
                                                           Third Party
                                                           Index No.  93/592912
    
    
               Defendant Ernst  &  Young LLP  (IIE&Y 1')  hereby submits its
    objections and  responses to Plaintiffs' Second Notice to Produce to
    Ernst  &  Young  and  First  Notice  to  Produce  to  Rogers  &  Wells.
    Documents will be produced pursuant to this response at a time and
    place to be mutually agreed upon among counsel.
                                  General Obiections
    
               1.     E&Y  objects to Definitions and Instructions E and I
    to the extent that they purport to require production of documents
    created or  received after the date of the  commencement of  this
    action on the ground  that such documents, if any, are irrelevant to
    the subject matter of this action.
    
    
    
    , *                        8
    
    
    
                2 .      E&Y  objects to Definitions and Instructions G and H
    to the extent that they purport to  impose obligations upon E&Y
    inconsistent with or greater than the obligations imposed by the
    New York Civil Practice Law and Rules.
    
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF N E W YORK COUNTY OF NEW YORK
  • Defendant Ernst & Young LLP hereby submits its objections and responses to Plaintiffs' Second
  • Documents will be produced pursuant to this response at a time and place to be mutually
  • E&Y objects to Definitions and Instructions E and I to the extent that they purport to
  • E&Y objects to Definitions and Instructions G and H to the extent that they purport to impose
  • E&Y objects to Definitions and Instructions J on the ground that plaintiffs' request that E&Y
  • A copy of each contract or policy of insurance pursuant to which any person carrying on an
  • ResDonse to Reauest No.1
  • The most current resume of Norman Strauss and all other documents used in connection with
  • qualified arbitrator with respect to issues concerning FAS 96 and other FASB Statements.
  • Without waiver of such objection, E&Y is not aware of any materials promoting the use of Mr.
  • Reuuest No. 3 All int,ernal E&Y publications, memoranda or correspondence concerning the
  • E&Y will produce certain publications made available to the public by E&Y directly addressing
  • Reauest No. 4 The AIPCA letter to the FASB concerning FAS 96 referenced at pages 16 and 17 of
  • any work done in connection with the sale of Dansk from October 1, 1990 through October 31,
  • Remonse to Remest No. 5 E&Y will produce documents responsive to this document request,
  • Reauest No. 6 All computerizedtime records for-Stephanie Shern for all work done in
  • Resaonse to Recruest No. 6 E&Y is conducting a search for any responsive documents and, if
  • All handwritten time records f o r Debra DeWitt which have not been already been produced f o
  • All time records concerning all time recorded by any E&Y accountant to any administrative

  • 21 . RESP OF DEF TO 2ND INTERR

    EXTRACTED KEY WORDS
    INTERROGATORY
    INTERROSATORV
    RESPONSE
    ERNST
    DANSK
    AMOUNT
    STOCK
    INTERROQATORV
    SALE
    WELLS
    CONNECTION
    ROGERS
    RESDONSE
    YORK
    BILL
    STOCK PURCHASE AGREEMENT
    DEFERRED TAX BENEFIT
    PURCHASE PRICE
    ENGAGEMENT
    DISCOVERY
    CALCULATION
    BALANCE SHEET
    YOUNG CONTENDS
    YOUNG LLP
    OBJECTIONS
    INTERROGATORY PURPORTS
    ESTIMATED PURCHASE PRICE
    ARBITRATION
    PROFESSIONAL SERVICES
    
                     a                     0           a               a -         @
    
    
    
    
    
    SUPREME COURT  OF THE STATE  OF NEW  YORK
    COUNTY OF N E W   YORK
    
    
    AIGRETTE  LIMITED and  D. RICHARD
    RYAN,  JR. ,                                             Index No. 93/107275
                                     Plaintiffs,'
                  -  against -
    ERNST &  YOUNG LLP and
    ROGERS &  WELLS,
    
                                     Defendants,
                                                        RESPONSE OF ERNST &  YOUNG
                                                      X  TO PLAINTIFFS'  SECOND
                                                         SET OF INTERROGATORIES
    ERNST &  YOUNG,
    
                           Third-party Plaintiff,
                  -  against -
    ROGERS  &  WELLS,
                                                             T h i r d   Party
                                                             Index No. 93/592912
    
    
    
                  Defendant Ernst &  Young LLP hereby submits its objections
    a z d  responses to Plaintiffs' Second Set of Interrogatories to E m s t
    
    &  Young.
    
                              Responses to Interrosatories
    
    Interroqatow No. 1
    
                  State  the  total  fees  and  disbursements  billed  to
    Plaintiffs and/or Dansk  for services rendered  in connection with
    the sale  of Dansk's  stock to Lenox from  October  1, 1990 through
    Gctober  31, 1992.  Include in your  response the date of each bill,
    t h e   amount of fees and disbursements charged  in each bill and t h e
    period covered  by each bill.
    
    
    
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF N E W YORK
  • - against -ROGERS & WELLS,
  • Defendant Ernst & Young LLP hereby submits its objections a z d responses to Plaintiffs'
  • State the total fees and disbursements billed to Plaintiffs and/or Dansk for services
  • Include in your response the date of each bill, t h e amount of fees and disbursements
  • ResDonse to Interrosatorv No. 1
  • Accordingly, all relevant information is in the possession of plaintiffs, and the burden of
  • Interrosatorv No. 3 State the total amount of fees and disbursements recorded in connection
  • State the amount and the method of calculation of the Deferred Tax Benefit Receivable which
  • S t a t e the amount and the method of calculation of the Deferred Tax Benefit Receivable
  • State the amount which Ernst & Young advised Plaintiffs on or about May 16 and 17, 1991 that
  • If Ernst & Young contends that it gave no advice on this subject to Plaintiffs, does it
  • to compensate for shortcomings in the contract, nor should you expect reasonable negotiation
  • Accordingly, it is clear t h a t E&Y did not express any opinion as to the estimated purchase
  • Interroqatorv No. 9
  • An E&Y accountant w a s requested on one occasion more than t w o months prior to the
  • t h a t Plaintiffs had to rely exclusively upon Rogers & Wells for professional advice with
  • This interrogatory purports to require E&Y to set forth all of the evidence that it intends
  • State the terms of Ernst & Young's engagement with Plaintiffs and/or Dansk in connection with

  • 22 . R&W ANSWRS + OBJECTIONS

    EXTRACTED KEY WORDS
    WELLS
    PLAINTIFFS
    INTERROGATORY
    OBJECTIONS
    RYAN
    WELLS OBJECTS
    ERNST
    SCHEDULE
    STOCK PURCHASE AGREEMENT
    AIGRETTE
    PURSUANT
    DRAFTS
    PARAGRAPH
    DEFERRED TAX BENEFIT
    PURCHASE PRICE
    WELLS CONTENDS
    GENERAL OBJECTIONS
    RESPONSIBILITY
    YORK
    DEFENDANT
    CALCULATION
    EXPERTISE
    FIRST AMENDED COMPLAINT
    PROFESSIONAL SERVICES TOTALING
    DISBURSEMENTS
    THIRD PARTY
    HYPOTHETICAL QUESTION
    TRANSACTION
    ESTIMATED PURCHASE PRICE
    
    a
    
    
    SUPREME  COURT OF THE STATE OF NEW YORK
    COUNTY OF NEW  YORK
    - - - - - - - - - - - - - - - - - - -  -X
    AIGRETTE  LIMITED and D.
    RICHARD RYAN, JR. ,
                                                   :     Index  No. 93/107275
                                   Plaintiffs,
                         -against-
    ERNST &  YOUNG  and ROGERS &  WELLS,
                                   Defendants.
    - - - - - - - - - - - - - - - - - - -  -x  Third Party  I
                                                         Index  No.  93/592912
    ERNST &  YOUNG,
    
                         Third-party Plaintiff,  :
                         -against-
    ROGERS &  WELLS,
    
                         Third-party Defendant.  :
    
    
    
                        ROGERS &  WELLS ANSWERS AND OBJECTIONS
                    TO PLAINTIFFS' FIRST SET OF INTERROGATORIES
    
          Defendant and  Third Party Defendant Rogers  &  Wells  ("Rogers
    
    &  Wells1') pursuant  to CPLR 3133, hereby states its Answers and
    
    Objections to Plaintiffs' First Set of Interrogatories to Rogers
    
    &  Wells.
    
    
          A .      General Objections
    
                   1.  Rogers &  Wells objects  to the Interrogatories to
    the extent that they seek to impose requirements or obligations
    
    
    
    I            I,                                 a          a -        m
    
    
    upon  Rogers  &  Wells inconsistent with the Civil-  Practice Law and
    Rules.
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • AIGRETTE LIMITED and D. RICHARD RYAN,
  • -against-ERNST & YOUNG and ROGERS & WELLS,
  • ROGERS & WELLS ANSWERS AND OBJECTIONS
  • Defendant and Third Party Defendant Rogers & Wells ("Rogers
  • Objections to Plaintiffs' First Set of Interrogatories to Rogers
  • Rogers & Wells objects to the Interrogatories to the extent that they are overly broad,
  • Rogers & Wells objects to the Interrogatories to the extent that they seek information
  • Rogers & Wells objects to paragraph 10 of the definitions and instructions insofar as it
  • The foregoing general objections and objections to instructions and definitions apply to, and
  • Include in your response the date of each bill, the amount of fees and disbursements charged
  • By invoice dated June 5, 1992, covering the period from September 1, 1991 through April 30,
  • Rogers & Wells objects insofar as the interrogatory seeks information regarding services
  • State the amount and the method of calculation of the Deferred T a x Benefit Receivable which
  • Rogers & Wells objects on the grounds that the interrogatory poses a hypothetical question,
  • State the amount and the method of calculation of the Deferred Tax Benefit Receivable which
  • Dansk sale transaction closed.
  • State the amount which Rogers & Wells advised Plaintiffs on or about May 16 and 17, 1991 that
  • Rogers & Wells did not advise Plaintiffs on or about May 16 and 17, 1991 as to the amount
  • If Rogers & Wells contends t h a t it gave no advice on this subject to Plaintiffs, does it
  • State each occasion on which Rogers & Wells placed either or both of the Plaintiffs or
  • The primary responsibility f o r negotiating the language of Schedule 2.3 was that of
  • Changes to the drafts of Schedule 2.3 were made by Brown-Forman following requests made by
  • Ernst & Young, and C. Lewis Johnson, the controller of Dansk.
  • Identify all documents which Rogers & Wells contends provide a basis for disputing the

  • 23 . PLF RESP TO 2ND INTERROGA

    EXTRACTED KEY WORDS
    RECEIVING
    INTERROGATORY
    AMOUNT
    LENOX
    DEFENDANTS
    PURCHASE
    PAYMENTS
    STOCK
    RESPONSE
    PURCHASE PRICE
    TAX BENEFIT RECEIVABLEN1
    DANSK
    EXHIBITS
    DEPOSITION
    ERNST
    ROGERS
    WELLS
    WORK PRODUCT
    TRANSACTION
    BATES
    FACTS
    SALE
    ACCOUNT
    AGREEMENT
    COMPLAINT
    DEFERRED TAX BENEFITS
    COUNSEL
    COURT
    EVIDENCE
    
    e     ' m             0                           a '
    
    
    
          SUPREME  COURT  OF THE STATE OF NEW YORK                     .
          COUNTY OF NEW YORR
                                                               -X
          AIGRETTE LIMITED and D.  RICHARD                                    Index No.  93/107275
          RYAN, JR. ,                                                            IAS P a r t   4 9
                                                                                (Justice Cahn)
                                             Plaintiffs,
                            vs .
          ERNST &  YOUNG  and ROGERS &  WELLS,
    
                                             Defendants.
    
    
          - - - - - - - - - - - - - - I    C    - - -          - X
          ERNST &  YOUNG,                                                    Third-party
                                                                             Index No.  93/592912
                                Third-party Plaintiff,
                                vs .
          ROGERS &  WELLS,
                                Third-party Defendant.
    
    
    
    
                                         PIAINTIFFS'  RESPONSE TO
                       ERNST  &  YOUNG'S  SECOND SET OF INTERROGATORIES
    
                       Plaintiffs hereby  object and respond to Ernst  &  Young's
          Second Set of Interrogatories dated July 9, 1996 as follows:
    
    
                                                OBJECTIONS
    
                1.     Plaintiffs  object  to  E m s t   &  Young's  Second  S e t   of
          Interrogatories  t o   the  extent  that  they  seek  -disclosure  of
          information  which  is  beyond  the  scope  of  that  required  to be
    
          disclosed by the Civil Practice Rules and Laws.
    
    
    
          2.     Plaintiffs object  t o  providing  any  responses which would
    require providing  information which  is protected by  the attorney
    client, attorney work product or any other applicable privilege.
          3.     Plaintiffs object  to the definition of  I 1P l a i n t i f f "  and
    
    SNIPPETS:
  • ERNST & YOUNG and ROGERS & WELLS,
  • ERNST & YOUNG'S SECOND SET OF INTERROGATORIES
  • Plaintiffs object to E m s t & Young's Second S e t of Interrogatories t o the extent that
  • Plaintiffs object t o providing any responses which would require providing information which
  • The total amount of compensation that plaintiffs have received directly or indirectly as a the Stock Purchase Agreement or schedules thereto.
  • The total amount of compensation that plaintiffs paid to Dearborn relating directly or
  • Plaintiffs a l s o object to the relevance of any payments made to them other than the
  • On July 2, 1991, Aigrette received $42,333,060.00 as the initial purchase price for its
  • In addition, Dick Ryan has received $5,000,000 in sixty monthly payments of $83,333.33 from
  • Defendants are referred to the document bates stamped EY/R03567 f o r
  • The specific amount of "deferred tax benefits receivable" that plaintiffs expected would be
  • receivablem1 set forth in response to subpart above that were not reflected on the Final
  • Plaintiffs also object to Interrogatory 2on the ground that it calls for a legal conclusion
  • Plaintiffs further object that all documents have been produced to all parties in this
  • Plaintiffs of determining which documents support the various claims and allegations of the
  • Even in cases in which a court requires a pre-trial order listing proposed trial exhibits,
  • Plaintiffs further object that a judge or a -jury must draw the ultimate factual conclusions
  • See e.q., Plaintiffs' Deposition Exhibit 120.
  • Consequently, Plaintiffs received $4,706,306.00 less for their Dansk stock than they

  • 24 . Government Exhibit # 1ST AMENDED COMP

    EXTRACTED KEY WORDS
    DEFERRED TAX BENEFITS
    SCHEDULE
    AGREEMENT
    PURCHASE PRICE
    LENOX
    BALANCE SHEET
    AMOUNT
    TAX BENEFIT RECEIVABLES
    DANSK
    DRAFT
    YORK
    ERNST
    DISTRIBUTION
    RELEVANT TIMES
    DEFENDANT ERNST
    LANGUAGE
    PARAGRAPH
    ACCOUNTING
    CALCULATION
    ESTIMATED PURCHASE PRICE
    FUTURE TAX BENEFITS
    SFAS
    PLAINTIFFS AIGRETTE
    RICHARD RYAN
    SHAREHOLDER
    EXPERTISE
    RESPONSIBILITY
    REASONABLE CARE
    MANUFACTURING
    
    SUPREME COURT OF THE STATE OF NEW  YORK
    COUNTY  OF  NEW  YORK
    - _ - - - - - - - - - - - - - - -  - -  -X
    AIGRETTE  LIMITED  and D.  RICHARD             :  Index No. -93/107275
    RYAN, JR.,             Plaintiffs,
                 -against-
    
    ERNST &  YOUNG  and ROGERS &  WELLS,
    
    
    
    ERNST &  YOUNG,                                :  Third Party Index No.
                                                        83/592912
                          Third-party Plaintiff,  :
                 -against-                         :  FIRST AMENDED  COMPLAINT
    
    
    
    
    
    
                 Plaintiffs Aigrette Limited  ( lwAigrette tl)  and D.  Richard
    Ryan,  Jr.  (IIRyan tt) , by  their attorneys  Kavanagh  Peters  Powell &
    Osnato, for their first amended complaint allege as follows:
                 1.  Plaintiff Aigrette is a  foreign corporation organized
    under the  laws of t h e   Cayman Islands.
    
                 2.  Plaintiff D.  Richard Ryan, Jr.,  is a resident of the
    
    S t a t e   of Illinois.
    
                 3 .      Plaintiffs  were  the  sole  shareholders  of  Dansk
    International  Designs,  Ltd.  (wwDanskwt),  a  New  York  corporation,
    which  was  in  the  business  of  manufacturing  and  distributing
    dinnerware, crystal and flatware.
    
                                           1
    
    
    
               4 .      Upon  information and  belief , at a11 relevant times
    defendant Ernst  &  Young  (l1E&YI 1)  was a partnership engaged  in the
    
    practice of public accounting which maintains offices at 277 Park
    Avenue, New  York, N.Y.  At all relevant times, from at least 1985,
    
    E&Y  was  the independent auditor and accounting firm which audited
    
    Dansk`s financial statements and also provided tax advice  to Dansk
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • Plaintiffs Aigrette Limited and D. Richard Ryan,
  • Plaintiffs were the sole shareholders of Dansk International Designs, Ltd., a New York
  • at a11 relevant times defendant Ernst & Young was a partnership engaged in the
  • E&Y was the independent auditor and accounting firm which audited
  • Lenox is in the business of manufacturing and distributing china and crystal.
  • Aigrette, Ryan and Lenox entered into a Stock Purchase Agreement dated as of May 17, 1991
  • amount equal to the stockholders' equity i n Dansk as of the Closing Date as reflected on a
  • with the Agreement and Schedule 2.3 of the Agreement.
  • Section 2.2 of the Agreement provided for payment of ninety percent of the estimated Purchase
  • calculation and propose whatever changes or additions were required in the Agreement and
  • by Plaintiffs and R&W agreed to provide legal services, expertise and advice to Plaintiffs in
  • It was further understood and agreed between Plaintiffs and R&W that R&W would advise
  • of a l l drafts and other relevant documents to Plaintiffs, ECY and any other necessary party
  • Agreement and Schedule 2.3, Dansk and EtY prepared interim draft balance sheets based on the
  • E&Y and R&W were aware that a substantial and material factor in Plaintiffs' decision to
  • ECY and R&W were aware that in order f o r Plaintiffs to obtain the expected Purchase Price
  • Sheet SO that only the after tax amount would reduce the amount of shareholder equity to be
  • E&Y and R&W were aware of the fact that preliminary calculations of the Purchase Price
  • Benefits Receivable would be significantly different from the estimated amount in the various
  • AGAINST ERNST & YOUNG
  • problems or uncertainties arising out of the proposed wording of Schedule 2.3; and failing to o the recording of future Deferred Tax Benefit Receivables and the fact that B-F and its
  • By reason of its engagement, E&Y was under a duty to exercise such reasonable care, skill,
  • Finally, it was understood and agreed that R&W was responsible f o r the distribution of all

  • 25 . Government Exhibit # 2ND NOTICE TO PRODUCE

    EXTRACTED KEY WORDS
    PLAINTIFFS
    REQUESTS
    REPRESENTATIVES
    DEARBORN
    RESPONSE
    STOCK
    CONTROL
    FAS
    DEPOSITION
    DANSK SALE TRANSACTION
    TELEPHONE RECORDS
    YORK
    DEPOSITION EXHIBIT
    PARTY
    EMPLOYEES
    FINANCIAL STATEMENTS
    BUSINESS
    ATTORNEY
    DEFENDANTS
    ROGERS
    WELLS
    ACCOUNTANT
    ERNST
    AGENTS
    REFERENCE
    BROWN-FORMAN
    PRIVILEGE
    POSSESSION
    CUSTODY
    
    SUPREME COURT  OF THE  STATE OF NEW YORK
    COUNTY OF NEW YORK
    _ - - _ _ - _ - - _ - - - - - , - - - - x
    AIGRETTE
    ..           LIMITED  and D.  RICHARD                              Index No.  93/107275
    RYAN,  JR.,
                                       Plaintiffs,                    PLAINTIFFS'                 
                                                                      NOTICE  TO  PRODUCE  TO
                         vs.                                          ERNST       &       YOUNG      AND
                                                                      FIRST             NOTICE        TO
    ERNST  &  YOUNG  and ROGERS  &  WELLS,                            PRODUCE           TO  ROGERS  &
                                                                      WELLS
                                       Defendants.
    - - - - - - - - -  - - - - -                   -
                                 I          -    , -
                                                         c  - x
    ERNST  &  YOUNG,                                                  Third-party
                                                                      Index No.. 93/592912
                          Third-Pa~y
                                        Plaintiff,  :
    
                          VS .
    
    
    
    
    
                                                              - X
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1996
    
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • E. The terns llplaintiffsll and lldefendant,ll as well as the parties full name or
  • affiliates, agents; representatives, and/or nominees.
  • Reference to the following shall include officers, directors, shareholders, employees,
  • "Brown-Forman" shall mean Brown -Fonnan Corporation;
  • llDearborn* l shall mean Dearborn Financial,
  • Balance Sheet as defined in the Stock Purchase Agreement8.
  • The word I1personl1 means any natural person or any business, legal or governmental entity or
  • E. Unless otherwise specified, the Document Requests set forth herein call for documents
  • F. If a document is withheld under the attorney-client privilege or any other privilege or
  • The Defendants are instructed to produce all responsive documents in their possession,
  • possession, custody or control of any .third-parties over whom she has control, including but
  • Defendants are further requested to execute such consents or other documents as may be
  • The most current resume of Norman Strauss and all other documents used in connection with
  • All documents concerning E&Y's annual review of Dansk's financial statements with Ryan,
  • The original document bates stamped EY 109343,-46 and marked as Plaintiffs' Deposition
  • All documents concerning t h e time, date and place of first communication between Mr. Matson
  • All documents concerning the meeting between Rogers & Wells and ELY in or about october- 1993
  • Produce to Ernst & Young, dated June 14, 1993, which have not previously been produced in
  • personal and business telephone records of each accountant who worked on the Dansk sale
  • This request further includes, but is not limited to, all personal and business telephone
  • All documents identified in response to Plaintiffs' Second Set of Interrogatories to Ernst &

  • 26 . Government Exhibit # 2ND NTP TO PLFS

    EXTRACTED KEY WORDS
    REQUEST
    RYAN
    PLAINTIFFS
    ERNST
    COMPLAINT
    THIRD-PARTY
    DEFENDANT
    RESPONDING
    LENOX
    DANSK
    PRIVILEGE
    ATTORNEYS
    RICHARD RYAN
    AGREEMENTS
    FAC
    PARTY
    BROWN-FORMAN
    DEARBORN
    CIVIL PRACTICE LAW
    PURCHASE
    EXHIBITS
    REFERENCES
    INTERROGATORIES
    PARAGRAPH
    TRANSACTION
    PARTIES
    ARBITRATION
    REFERRING
    PARTNERS
    
    0      *.                                            a
    
    
    
    
    
    
          SUPREME COURT OF THE STATE OF NEW  YORK
          COUNTY OF NEW YORK
    
    
          AIGRETTE LIMITED and D.  RICHARD
          RYAN, JR. ,
                                        Plaintiffs,            Index No.  93/107275
                                                                    (Cahn, J.)
                     - against -
          ERNST &  YOUNG,
    
                                        Defendant.
    
          --l-----------l-----___________II_______  X          SECOND NOTICE TO
                                                               PRODUCETOPLAINTIFFS
          ERNST &  YOUNG,
    
                              Third-party Plaintiff,           Third Party
                                                               Index No.  93/592912
                     - against -
          ROGERS  &  WELLS,
    
                              Third-party Defendant.
    
    
    
    
                     PLEASE TAKE NOTICE  that, pursuant  to Rule  3120 of  the
    
          Civil Practice Law and Rules, defendant and  third-party plaintiff,
    
          Ernst  &  Young,  demands  that  plaintiffs  produce  and  permit
    
          inspection and copying by Ernst .&  Young  of the documents and things
          responsive  to t h e  Document Requests set forth below at the off ices
    
          of Davis, Scott, Weber &  Edwards, P.C.,  100 Park Avenue, New York,
    
          New  York  10017 at 1O:OO  a.m.  on July 30,  1996.
    
    
    
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • Civil Practice Law and Rules, defendant and third-party plaintiff,
  • Ernst & Young, demands that plaintiffs produce and permit
  • The term ttAgreementtt shall mean the Stock Purchase Agreement dated as of May 17, 1991 among
  • 1993, and I1FACtt shall mean the proposed First Amended Complaint, which is undated and about
  • References in the text of these Interrogatories shall be made to the Complaint with a
  • The term "Final Balance Sheet" shall be defined as set forth in paragraph 7 of the Complaint
  • The term "the Transaction" shall be defined as the purchase of Dansk by Lenox, from the
  • plaintifftt and "third-party defendant," as well as the parties',full name o r abbreviated
  • employees, partners, parent, subsidiaries, affiliates, agents, representatives, and/or
  • The word "Document shall have the broadest meaning accorded it under the Civil Practice Law
  • Q. If an objection is raised that the attorney-client privilege or any other privilege or
  • Request No. 1.
  • All documents concerning any telephone conversation, teleconference, meeting, conference,
  • All agreements between Ryan and Lenox, including but n o t limited to the consulting and
  • All documents identified in plaintiffs' responses to the Interrogatories propounded by Ernst
  • To t h e extent not previously produced, a l l documents relating to FAS 96, including but n
  • Attorneys f o r Third-party

  • 27 . PLF 2ND NOTICE TO PRODUCE

    EXTRACTED KEY WORDS
    REQUEST
    PLAINTIFFS
    FAS
    SALE
    DEPOSITION
    RESPONSE
    STOCK PURCHASE AGREEMENT
    ROGERS
    WELLS
    REPRESENTATIVES
    DEARBORN
    ACCOUNTANT
    YORK
    RYAN
    DEFENDANTS
    ATTORNEYS
    EXHIBIT
    PARTY
    EMPLOYEES
    OFFICERS
    LENOX
    BROWN-FORMAN
    FINANCIAL STATEMENTS
    BUSINESS
    CONTROL
    CONNECTION
    STRAUSS
    DANSK SALE TRANSACTION
    WELCH
    
                                               a                 a                                a    
    
                                                                                                       
                                                                                                       
    
    
    
    
    
    
    
    
    
    SUPREME COURT OF THE  STATE OF NEW YORK
    COUNTY  OF NEW  YORK
    _ _ _ - - - I    c - I    c - I    - I     I      - - -            - X
    AIGRETTE  LIMITED  and  D .   RICHARD                                        Index  No.  93/107275
    RYAN, JR.,
                                                plaintiffs,                     PLAINTIFFS'            
                                                                                NOTICE  TO  PRODUCE  TO
                          vs                                                    ERNST       &     
                                                                                FIRST            
    ERNST &  YOUNG  and  ROGERS  &  WELLS,                                      PRODUCE           TO
                                                                                WELLS
                                                Defendants.
    
    
                                                                                Third-party
                                                                                Index No..93/592912
    
    
    
    ROGERS  &  WELLS,
    
                              Third-party Defendant.
    
    
    
    
    
    
                     PLEASE  TAKE  NOTICE t h a t  pursuant  to CPLR  3101 (f) and  3120
    of the  Civil  Practice Law and  Rules, plaintiffs Aigrette  Limited
    and  D.  Richard Ryan
                                 -  . . -. demand
                                       . .            that you produce  and  permit  inspection
    and -copying  by  the  above plaintiffs  and  their attorneys  of  the
    documents and things  responsive to the Document Requests  set  forth
    
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • PLEASE TAKE NOTICE t h a t pursuant to CPLR 3101 and 3120 of the Civil Practice Law and
  • The " Stock Purchase Agreement v1 shall mean the Stock Purchase Agreement dated as of May 17,
  • The terms I1plaintiffst1 and Ildefendant," as well as t h e parties full name or abbreviated
  • "Brown-Fomanut shall mean Brown-Forman Corporation;
  • flDearborn t fshall mean Dearborn Financial,
  • The word llperson ll means any natural person or any business, legal or governmental entity
  • The word Ifandtt as well as Ilor ll shall be construed either disjunctively or conjunctively
  • The Defendants are instructed to produce.al1 responsive documents in their possession,
  • Defendants are further requested to execute such consents or other documents as may be
  • In the event a party claims that a document has already been produced, the documents should
  • The most current resume of Norman Strauss and all other documents used in connection with
  • The AICPA letter to the FASB concerning FAS 96 referenced at pages 16 and 17 of Norman
  • All time records for all time billed by Kirk Robinson f o r 'any work done in connection w i
  • All time records concerning all time recorded by any E&Y accountant to any administrative
  • All documents concerning E&Y's annual review of Dansk's financial statements w i t h Ryan,
  • The original document bates stamped EY 109343-46 and marked as Plaintiffs' Deposition Exhibit
  • All documents concerning t h e meeting between Rogers *i Wells and E&Y in o r about October
  • numbers Of all telephone calls made by any E&Y accountant to any representative of
  • personal and business telephone records of each accountant who worked on the Dansk sale

  • 28 . E&Y MEMO OF LAW RE EVIDEN

    EXTRACTED KEY WORDS
    REQUEST
    FAS
    DANSK
    PRODUCTION
    PRECLUSION
    DISCOVERY
    DEPOSITION
    PRIVILEGE
    DEFERRED TAX
    EXH
    JOHNSON
    RESPONSE
    POPE AFF
    ROGERS
    WELLS
    DEFENDANT
    WITHHELD
    WITNESSES
    LEWIS JOHNSON
    MOTION
    DISCLOSURE
    RYAN
    MEMORANDUM
    EVIDENCE
    SUFFICIENT REASON
    PRIOR
    FINANCIAL STATEMENTS
    COURT
    YORK
    
          RYAN, JR.,
                                            Plaintiffs,                 Index No.  93/107275
                      - against -
          ERNST &  YOUNG and ROGERS
    a                                       &  WELLS,
                                            Defendants.
          -----------ccc--------------------------
                                                                  X
          ERNST &  YOUNG,
                                Third-party Plaintiff,                  Third Party
                      -                                                 Index No.  93/592912
                            against -
          ROGERS  &  WELLS,
    
    a                           Third-party Defendant.
          --------------------_IIIII____C_________
                                                                  X
          ROGERS  &  WELLS,
    
                                Third-party Plaintiff,                  Third Party
                      -                                                 Index No.  96/591719
                            against -
          DEARBORN FINANCIAL, INC.,                          -.
                                Third-party Defendant.
          ERNST L  YOUNG LLP,         .
                                Third-party Plaintiff,                  Third Party
                                                            '     :
                      - against -
          DEARBORN  FINANCIAL, INC. ,                                              JUN  2 4
    
                ERNST  L  YOUNG08  MEMORANDUM  OF  LAW
                PLAINTIFFS0 MOTION TO PRECLUDE  DEFENDANTS PROM OFFERING                         +  .,<-
                                                                                                      *a
                TESTIMONIAL  OR  DOCUMENTARY                EVIDENCE  CONCERNING
                DISCUSSIONS WITH PLAINTIFFS OR LEWIS JOHNSON CONCERNING
                FAS 96
    
                                                  DAVIS, SCOTT,  WEBER &  EDWARDS, P.C.
                                                  100 Park  Avenue
                                                  New York, New  York 10017
                                                   (212) 685- 8000
                                                  Attorneys  f o r   Defendant  &  Third-
                                                  Party  Plaintiff Ernst &  Young
    
    
    
                        Defendant Ernst &  Young LLP  (8tE&Y 11)  respectfully
    a     submits this memorandum in opposition to plaintiffs'  motion to
          preclude defendants from offering testimonial or documentary
    
    SNIPPETS:
  • RYAN, JR.,
  • - against -ERNST & YOUNG and ROGERS
  • against -ROGERS & WELLS,
  • Defendant Ernst & Young LLP respectfully a submits this memorandum in opposition to
  • Plaintiffs' contention that one document (reflecting a May 10, 1991 conversation with Dansk
  • The first instance in which plaintiffs made a request t h a t called for the production of
  • plaintiffs should not be permitted to seek the equitable relief of preclusion over an
  • E&Y has maintained throughout this litigation, and intends to demonstrate at trial, that E&Y
  • This motion is not addressed to any of the advice given to plaintiffs in the context of the
  • (Pope Aff., Exh.
  • Such discussions are part of the ordinary a course of the audit of financial statements,
  • The document was not responsive to those requests, and one would not reasonably expect to
  • it cannot be said that the plaintiff suffered any real surprise or prejudice as a result offf
  • Plaintiffs have not set forth any basis on which to conclude the document was deliberately or
  • To the extent that the Court believes that Plaintiffs e should be entitled to question
  • Plaintiffs' I'unclean handstt are good and sufficient reason to deny them the equitable
  • Plaintiffs also have continuously asserted false and unsupported claims of attorney-client
  • Dated: New York, New York

  • 29 . BRIDENDALL DEPO

    EXTRACTED KEY WORDS
    INCOME
    TAX
    FINANCIAL STATEMENTS
    FOOTNOTE
    BROWN-FORMAN
    ACCOUNTING
    SELLERS
    EXHIBIT
    SFAS
    PUBLICATIONS
    PARAGRAPH
    TEMPORARY DIFFERENCES
    RECORDING
    READER
    FINANCIAL STATEMENT PURPOSES
    BUYER
    BROVN-FOMAN
    REFERRING
    RECOGNITION
    EXPENSE
    KNOWLEDGEABLE READER
    ELECTION
    CRITERIA
    PLAINTIFFS
    REASONS
    TRACEY
    BALANCE SHEET
    DIVERGE
    DANSK
    
               e             *
    
                                                SUPREME COURT
                                      COUNTY  OF NEW  YORK
    
    
    AIGRETTE  LIMITED AND                            )  I n d e x   No.  93/107275
    RICHARD RYAN,  JR.                               )  Third-party  Index N o .
                                                     )  93/592912
                      Plaintiffs,                    1
    v s .                                            1
    ERNST  &  YOUNG,                                 1 1
                       D e f e n d a n t .
    
    
                               DEPOSITION FOR PLAINTIFFS
    
    
                                     * * *   * * *   * * *
    
    DEPONENT  :                      JOHN  PHILIP BRIDENDALL
    
    DATE :                           June 26,  1996
    
                                     * * *   * * *   * * *
    
    
    Larry A.  Smith,  CSR/RPR
    C o u r t   R e p o r t e r
    
    
                                                                                DISK
                                                                             ENCLOSED
    
    
    
                                          LARRY A .   SMITH
                                          COURT REPORTER
                     1710 NEW  ALBANY/CHARLESTOWN  R O A D  #82
                        JEFFERSONVILLE,  INDIANA  47130
                                          (812) 284-4131
    
    
    
     a                  a               a          a          e          a           a                a
                                                                                           2 0 8
    
    
             restrictions on the recording  of t h e   deferred  t a x
    
    SNIPPETS:
  • DEPOSITION FOR PLAINTIFFS
  • restrictions on the recording of t h e deferred t a x
  • all of any conversations you had with t h e sellers?
  • 5 Brown-Forman on t h e s u b j e c t of whether the u l t i m a t e
  • final balance sheet might diverge from the estimate
  • 11 Mr. Tracey read you on page R-3 from Defendant's
  • 12 Exhibit 231, where was SFAS 96 highly publicized?
  • Anyone who's involved in accounting or --15 virtually all accounting firms put out
  • Brown-Forman's consolidated financial statements.
  • Let's l o o k at the, footnote.
  • 18 6 what the draftsman is referring t o in Defendant's
  • that there was not consolidated tax returns.
  • this paragraph --7 of his objection.
  • 10 reader t h a t Brown-Forman does not file consolidated
  • 15 temporary differences and t h e recognition of certain
  • 15 differences between income tax financial statements
  • 22 and financial statement purposes.
  • 21 or expense because you're following different
  • 4 knowledgeable reader of t h i s f o o t n o t e could well
  • I n c o r p o r a t e d, as Buyer
  • a l s o claim that Buyer either files a consolidated tax r e t u r n or hast h e ability to
  • criteria are n o t r e r for t h e reasons dis.cussed below.
  • rezurn is certainly a significant cost t o Brovn-Foman Corporation
  • vkich would encor,pass only the operations of Buyer and Dansk.

  • 30 . ANSWR TO 3RD PARTY COMP

    EXTRACTED KEY WORDS
    YORK
    PARAGRAPH
    DENIES
    ALLEGATIONS
    ERNST
    DEFENDANT
    RESPECTFULLY REFERS
    ADMITS
    COURT
    PLAINTIFF
    COUNTY
    AGREEMENT
    THEREOF
    ROGERS
    WELLS
    STOCK PURCHASE
    RESPONSE
    SWORN
    DEPOSITING
    SALE
    DANSK
    DAMAGES
    CONNECTION
    BROWN-FORMAN
    CONTEXT
    BALANCE SHEET
    BREACH
    NEGLIGENCE
    MALPRACTICE
    
    SUPREME COURT OF THE  STATE OF NEW YORK
    COUNTY OF NEW YORK
    
    
    
    
    
    
    
                                                         . :._, . ,.  .  i  -,
                                                            * .
                                                              ,,  ,:<  ,     .  -  ' ,    \         '
                                                ANSWER TO THIRD-PARTY
                                                       COMPLAINT
    
    
                                                     Third Party
                                                Index No.  93/592912
    
    
    
                           4.  Admits that a Stock Purchase was entered into with
    respect to the sale of  Dansk,  and  that a closing occurred on or
    about July 2,  1991 with respect thereto, respectfully refers the
    Court to the  stock Purchase Agreement for the content thereof, and
    otherwise denies the allegations of paragraph 9 of the Third-party
    Complaint.
                           5.     Respectfully refers the Court to the Stock Purchase
    
    Agreement  for  the  contents  thereof  and  otherwise  denies  the
    allegations of paragraph 10 of the Third-party Complaint.
                           6.     Denies the allegations of paragraphs 11, 12, and 13
    of the Third-party Complaint except admits that it was  retained to
    provide,  and  did  provide,  legal  advice  and  legal  services  in
    connection with the sale of Dansk to Brown-Forman.
                           7.     Denies the allegations of paragraphs 14, 15, 19, 2 0 ,
    
    30,  33,  35, and 36 of the Third-party Complaint.
    
                           8.     Denies the allegations of paragraph 16 of the Third-
    Party Complaint except admits that Ernst  &  Young attended one or
    more  meetings at which it provided advice on subjects to which it
    was engaged to advise with respect to the proposed sale of Dansk to
    Brown-Forman and  respectfully  refers the Court to the documents
    referred to in said paragraph for their contents and context.
                           9.     Respectfully  refers  the  Court  to  the  documents
    referred to in paragraphs 17, 18 and 21 of Third-party Complaint
    for  their contents and context and otherwise denies the allegations
    of said paragraphs.
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
  • Admits that a Stock Purchase was entered into with respect to the sale of Dansk, and that a
  • Denies the allegations of paragraphs 11, 12, and 13 of the Third-party Complaint except
  • Denies the allegations of paragraph 16 of the Third-Party Complaint except admits that Ernst
  • submitted its Final Balance Sheet, respectfully refers the Court to the Final Balance Sheet
  • a belief as to the truth of the allegations of paragraph 26 of the Third-party Complaint
  • through 26 of the Third-party Complaint as its response to paragraphs 27 and 32 of the
  • Respectfully refers the Court to the Complaint against defendant Ernst & Young f o r its
  • action against Rogers & Wells.
  • No part of the damages sought by the plaintiffs from the defendant and third-party plaintiff,
  • JUDITH M. REILLY, being duly sworn, states:
  • 10017, by depositing a true copy thereof enclosed in a postpaid, properly addressed wrapper

  • 31 . Government Exhibit # 3RD PARTY COMP

    EXTRACTED KEY WORDS
    AIGRETTE
    ERNST
    WELLS
    ROGERS
    AGREEMENT
    LENOX
    TAX
    SCHEDULE
    PURCHASE PRICE
    AMOUNT
    PRINCIPAL ACTION
    BALANCE SHEET
    TAX BENEFITS
    YORK
    DANSK
    LANGUAGE
    BROWN-FORMAN
    NEGOTIATIONS
    PARAGRAPH
    PLAINTIFFS
    CALCULATION
    DRAFTS
    DEFERRED TAX BENEFITS
    FUTURE TAX
    ASSETS
    RECORDING
    TAX EFFECTING
    PROPER
    REASONABLE CARE
    
          SupaEME COURT OF THE STATE  OF NEW YORK
          COUNTY OF NEW YORK
    
          AIGRETI'E LIMImD and D. RICHARD                                 :  Index  No. 931107275
          RYAN, JR.,
                                               Plaintiffs,                :  THIRD-PARTYCOMPlLAINT
    
          ERNST  & YOUNG,
                                               Defendant.
    
          ERNST  & YOUNG,
                                               Third-party Plaintiff,
                                -against -
          ROGERS  & WELLS,
                                               Third-party Defendant.
    
    
            ,         . ...
    
    
            ,.'     Third-party plaintiff Ernst  & Young, for its Third -party  Complaint, alleges as
          follows upon knowledge as to itself and its o w n  acts and upon information and belief
          as to all other matters:
    
                    1.          Third-party plaintiff Ernst & Young is a partnership engaged in the
          practice of public accounting that maintains offices at 787 Seventh Avenue, New
          York,  New York.
    
                    2.          Third-party defendant Rogers & Wells is a partnership engaged in the
          practice of law that maintains its principal place of business at 200 Park  Avenue,
    I     New York, New York.
    
    
    
    1     -
    
                                                      0
    
                    3.     Aigrette Limited ("Aigrette") is a foreign corporation organized under
         the  laws of the  Cayman Islands.  Aigrette is one of the  plaintiffs in the  principal
         action against Ernst & Young.
    
                    4.     D. Richard Ryan, Jr. ("Ryan") is an individual residing in the State of
         Connecticut.  Ryan  is one of  the plaintiffs in the principal action against Ernst &
         Young.
    
                    5.     Venue lies in New York  County pursuant to CPLR 6 503 because third-
         party  defendant maintains its principal office here.
    
    
    SNIPPETS:
  • SupaEME COURT OF THE STATE OF NEW YORK
  • ERNST & YOUNG,
  • Aigrette Limited is a foreign corporation organized under the laws of the Cayman Islands.
  • Aigrette is one of the plaintiffs in the principal action against Ernst & Young.
  • D. Richard Ryan, Jr.
  • During 1990, Aigrette and Ryan began discussions with Lenox, Inc. and Brown -Forman
  • During 1990, Aigrette and Ryan engaged Rogers & Wells, and Rogers & Wells agreed, to provide
  • Aigrette and Ryan and Lenox over the calculation of the purchase price.
  • The purchase price for the stock was to be the lesser of seventy million dollars or an amount
  • Rogers & Wells' services included advising Aigrette and Ryan on the structure of the proposed
  • Aigrette and Ryan relied on Rogers & Wells to review the proposed language of the Agreement
  • These issues included but were not limited to the inclusion of a specific floor for the
  • Another issue raised by Ernst & Young arose out of the fact that Schedule 2.3 as then drafted
  • However, Schedule 2.3 did not expressly require the inclusion in the F'inal Balance Sheet of
  • Ernst & Young also pointed out that Statement of Financial Accounting Standards 96 could
  • Paragraph 19 of the final version of Schedule 2.3 of the Agreement provided as follows:
  • In or about November 1991, Lenox submitted its Final Balance Sheet which calculated the
  • Lenox, Brown-Forman, Aigrette and Ryan were unable to agree upon various differences
  • The arbitrator's award did not include the recording of such deferred benefits claimed by
  • Aigrette and Ryan now contend that as a result of errors in advice concerning tax effecting
  • By reason of its engagement, Rogers & Wells and its partners and employees owed a duty to

  • 32 . NOTICE TO PRODUCE

    EXTRACTED KEY WORDS
    REQUESTS
    DEFENDANT
    DANSK
    COMMUNICATION
    LENOX
    STOCK PURCHASE AGREEMENT
    BALANCE SHEET
    RESPONDING
    RELATING
    THEREOF
    CALCULATION
    ARBITRATION
    YORK
    REFERRING
    NOUN
    PEAUEST
    REAUEST
    PRIVILEGE
    NEGOTIATION
    INTERPRETATION
    SFAS
    FASB
    AMOUNT
    DEFERRED TAX BENEFITS
    ATTORNEYS
    NECESSARYTO
    MATTER
    SCOPE
    PREPARATION
    
                     L
    C    '
    
    
    
    
    
    
    
    
    
    
    
                   SUPREME COURT  OF THE  STATE  OF NEW  YORX
                   COUNTY  OF NEW YORK
                   I    - - - I    - - I    - - c - - I    - c - - -         -X
                   AIGRETTE LIMITED and D.  RICHARD                                 Index No.  93/107275
                   RYAN, JR.,
                                                             Plaintiffs,            NOTICE TO PRODUCE
                                       vs .
                   ERNST  &  YOUNG,
    
    
    
    
    
                   SIRS:
    
                           '       PLEASE  TAKE  NOTICE that: pursuant to Rule 3120 of the Civil
    
                   Practice Law  and Rules, plaintiffs .Aigrette Limited and D.  Richard
                   Ryan demand that you produce and permit inspection and copying by
                   the above  plaintiffs and their attorneys of the documents and things
                   responsive to the Document Requests set f o r t h  below  at the  offices
                   of Wright Manning Rips &  Maloney, 641 Lexington Avenue, New York,
                   NY 10022 at 1O:OO  a.m.  on July 6, 1993.
    
    
    
                           5                            .     .     t
    
                1'
    
    
    
    
    
    
    
    
    SNIPPETS:
  • COUNTY OF NEW YORK
  • plaintiffs .Aigrette Limited and D. Richard
  • either disjunctively or conjunctivelyas necessaryto make the request inclusive rather than
  • A plural noun shall be construed as a singular noun, and a singular noun shall be construed
  • E. Unless otherwise specified, the Document Requests set forth herein call for documents
  • F. If an objection is raised t h a t the attorney-client privilege or any other privilege or
  • Provide sufficient further information concerning the document and the circumstances thereof
  • The responding parties are instructed to produce all documents in their possession, custody
  • To the extent that any document is not-presently within the possession, custody or control
  • All statements or b i l l s for fees and disbursements rendered to plaintiffs or to Dansk,
  • Peauest No. 3.
  • RichardRyan andBrown -Formanand/orLenox relating to the purchase by Lenox of the stock of
  • interpretation or effect of SFAS or FASB 96 on the Final Balance Sheet and the calculation
  • All documents concerning the calculation or amount of the deferred tax benefits receivable
  • Reauest No. 9.
  • documents concerning any communication between defendant and plaintiffs concerning the
  • All drafts of the Stock Purchase Agreement.
  • All documents concerning the arbitration between plaintiffs and Lenox concerning the purchase
  • All documents concerning communication with or work done by Ogden, Newel1 b Welch relating to

  • 33 . ANSWER + COUNTERCLAIMS

    EXTRACTED KEY WORDS
    RYAN
    AIGRETTE
    PARAGRAPH
    ALLEGATIONS
    DANSK
    AGREEMENT
    PLAINTIFFS
    DENIES
    BALANCE SHEET
    PURCHASE PRICE
    CLOSING
    SCHEDULE
    TAX
    ADMITS
    AMOUNT
    LENOX
    PAID
    TRUTH
    ARBITRATION
    COUNTERCLAIM
    CALCULATION
    EXPENSES
    REQUEST
    ACCOUNTING
    INFORMATION SUFFICIENT
    ADJUSTMENTS
    PURSUANT
    YORK
    PROFESSIONAL SERVICES
    
    SUPREME COURT OF THE STATE OF m W
                                                     YORK
    COUNTY OF NEW Y O N
    
    AIGRElTE LIMITED and D. RICHARD                            :  Index No. 93/107275
    RYAN,
           JR.,
                                Plaintiffs,                    :  ANSWER AND COUNTERCLAIMS
                 -against-
    ERNST & YOUNG,
    
    
    
    
    
    
          1.     Admits the allegations of paragraph 1.
    
          2..  Admits  having  a  belief  on  information  that  the  allegations  of
    paragraph 2 are true.
    
          3.        Denies having knowledge or  information sufficient to form a belief as
    to the truth of the allegations of paragraph  3, except admits having  a belief on
    information that as of December 31, 1990 plaintiffs were the sole shareholders of
    Dansk International Designs, Ltd. ("Dansk"),
                                                    a New York  corporation.
    
          4.        Admits the allegations of the first sentence of paragraph 4 and denies
    the allegations  of the second sentence of paragraph 4, except admits that from 1985
    up to the time Dansk was sold by plaintiffs Ernst & Young performed independent
    audits of Dansk's year end financial statements, prepared Dansk's tax returns, and
    was consulted by Dansk with respect to various accounting or tax matters.
    
          5.        Denies having knowledge or information sufficient to form a belief as
    to the truth of the allegations of paragraphs 5 and 6.
    
    
    
          6.     Denies having  knowledge or information sufficient to form  a belief as
    to the truth of the allegations of paragraphs 7 to 9, except admits having a belief on
    information that plaintiffs and Lenox, Incorporated ("Lenox") entered into a Stock
    Purchase Agreement dated as of May  17, 1991 (the "Agreement"), and refers to the
    Agreement for its terms.
    
          7.     Denies the allegations of paragraphs 10-16.
    
          8.     Admits the allegations of paragraph 17.
    
          9.     Denies  the  allegations  of  paragraph  18,  except  admits  that  a
    
    SNIPPETS:
  • Admits having a belief on information that the allegations of paragraph 2 are true.
  • the allegations of the second sentence of paragraph 4, except admits that from 1985 up to the
  • to the truth of the allegations of paragraphs 5 and 6.
  • Denies having knowledge or information sufficient to form a belief as to the truth of the
  • a March 22,1991 draft Agreement sent to Ernst & Young did not address a number of those
  • Denies having knowledge or information sufficient to form a belief as to the truth of the
  • Denies having knowledge or information sufficient to form a belief as to the truth of the
  • Defendant and counterclaimant Ernst & Young, for its counterclaim against plaintiffs
  • Counterclaimant Ernst & Young is a partnership engaged in the practice of public accounting.
  • It maintains offices at 277 Park Avenue, New York, New York.
  • Counterclaim defendant Aigrette is a foreign corporation organized under the laws of the
  • Article 2.3 of the Agreement and Schedule 2.3 thereto set forth a procedure for calculating
  • The purchase price for the stock was to be the lesser of $70 million or an amount equal to
  • Aigrette and Ryan retained Ernst & Young to provide professional services in connection with
  • Aigrette and Ryan agreed to pay Ernst & Young for these professional services at Ernst &
  • Aigrette paid $136,000 of the first invoice, as adjusted.
  • Aigrette and Ryan breached their agreements with Ernst & Young by failing and refusing to pay

  • 34 . COMPLAINT

    EXTRACTED KEY WORDS
    DEFERRED TAX BENEFITS
    SCHEDULE
    AGREEMENT
    PURCHASE PRICE
    BALANCE SHEET
    LENOX
    AMOUNT
    CALCULATION
    B-F
    ASSET
    RYAN
    FINANCIAL ACCOUNTING STANDARD
    FUTURE TAX BENEFITS
    PARAGRAPH
    SFAS
    SUPREME COURT
    ACCORDANCE
    ESTIMATED PURCHASE PRICE
    PROVISIONS
    INCLUSION
    DEDUCTIBLE EXPENSES
    EXPENSE ACCRUALS
    COMPLAINT
    CAYMAN ISLANDS
    RICHARD RYAN
    SHAREHOLDER EQUITY
    CONSOLIDATED TAX
    ACCOUNTANTS
    CONNECTION
    
    SUPREME COURT  OF THE  STATE OF NEW YORH
    COUNTY  OF  NEW YORR
    
    
    
    
    
    
    
    
    
                                              -          - -  -x
    
                   Plaintiffs Aigrette Limited  ("Aigrette") and  D .
    
    R i c h a r d   Ryan,  Jr.,  ( " R y a n " ) ,   by  their a t t o r n e y s ,   Wright: Manning
    
    R i p s   &  Maloney,  f o r   their complaint  al!.ege  2s  foXlows:
    
                   3 .   P l a i n t i f f   A i g r e t t e   i s   a  f o r e i g n   corporation
    
    c r y a n i z e d   under  t h e   laws of  t h e   Cayman Islands.
    
                   2.  Plaintiff D. Richard Ryan, Js., is a  resident  of
    
    t~~~
          S1::atci  of  C o n n e c t i c u t .
    
                   3 .   P l a i n t i f f s   vrere  the  sole zh.arebo7ders z.f  D a n s k
    
    I n t e r -n a t i o n a l   Designs,  Ltd.  (" Dansk")  a.  New  York c o r p o r a t i o n
    
    w h i k h   :is  it:  the  business  of  rnarluf acku.ri:1?;  a n d   distI:iIsut:ing
    
    
    
    New Yorlc,  N.Y.               A t   a l l   r e l e v a n t   times,  from,  a t   l e a s t   1 9
    
    was  t h e   independent  auditor  and  a c c o u n t i n g   firm  which  a u d i t e d
    
    Dansk's  financial s t a t e m e n t s   and  also provided t a x   a d v i c e   t o
    
    Dansk  i n  t h e   p r e p a r a t i o n   of  its t a x   returns.
    
                      5 .   Brown-Forman C o r p o r a t i o n   ('*&-E''')  i s   t h e   p a r e n t
    
    company of  Lenox,  I n c o r p o r a t e d   ("Lenox") , a  New  Jersey
    corporation.  Lenox  is i n  t h e   business  of  manufacturing  and
    
    
    SNIPPETS:
  • SUPREME COURT OF THE STATE OF NEW YORH COUNTY OF NEW YORR
  • Plaintiffs Aigrette Limited and D.
  • R i c h a r d Ryan, Jr.,, by their a t t o r n e y s, Wright:
  • R i p s & Maloney, f o r their complaint al!.ege 2s foXlows:
  • c r y a n i z e d under t h e laws of t h e Cayman Islands.
  • Plaintiff D. Richard Ryan, Js., is a resident of
  • company of Lenox, I n c o r p o r a t e d, a New Jersey corporation.
  • between p l a i n t i f f s and B-F f o r the purchase by LLenox of a l l of the autstandiny
  • e e t t o be p r e p a r e d in accordance with t h e Agreement and Schedule 2.3
  • of the Agreement (h e r e i n a f t e r Final Balance Sheet).
  • Lenox would prepare the Final Balance Sheet for Dansk which Lenox would have audited by its
  • and t h e calculation of the Purchase Price pursuant to the Agreement and Schedule 2.3.
  • p r o p o s e whatever changes o r additions were required in the Agreement and Schedule 2.3
  • factor in plaintiffs' decision t o agree to the sale of their: stock was their reliance on t
  • which amount was necessary to obtain a Purchase Price of approximately $66,000,000.
  • E&Y f o r accounting and tax advice concernix?g how the provisions
  • Balance Sheet so that only the after tax amount would reduce the amount of shareholder equity
  • and Lenox were tax adjusted in the manner alleged in paragraph 15 hereof.
  • contained various p r o v i s i o n s requiring expense accruals and reserves for future tax
  • E&Y assured plaintiffs and their counsel t h a t t h e proposed language was satisfactory t o r even problematic.
  • SFAS 96 o r f o r any o t h e r reason.
  • cot include as an asset any other future tax benefits.
  • advising them in connection with accounting and t a x matters affecting the calculation of
  • failed to investigate and determine all facts pertinent to the question of whether under SFAS not intend to do so in t h e future; and failed t o inform plaintiffs before the Agreement was
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