Opinion
BK-03-52103-GWZ and BK-03-52790-GWZ, Jointly Administered under BK-03-52103-GWZ.
May 13, 2004
Craig D. Hansen (AZ Bar No. 007405), Thomas J. Salerno (AZ Bar No. 007492), Sean T. Cork (CA Bar No. 211963), SQUIRE, SANDERS DEMPSEY L.L.P. Phoenix, Arizona, and James D. Thomas SQUIRE, SANDERS DEMPSEY L.L.P., Cleveland, Ohio, Attorneys for Reorganized Debtors.
Bruce T. Beesley (NV Bar No. 1164), Bridget R. Peck (NV Bar No. 3143), BEESLEY, PECK MATTEONI, LTD Reno, Nevada, Co-Counsel for Reorganized Debtors.
This cause is before the Court on the Motion for Entry of an Order Directing the United States Securities and Exchange Commission to Appear Before this Court to Show Cause Why It Has Not Violated the Court's Order Confirming the First Amended Joint Plan of Reorganization Dated as of February 20, 2004 (Docket No. 796) (the "Motion") (Docket No. 835), filed by AMERCO and Amerco Real Estate Company ( "AREC" and, together with AMERCO, the "Reorganized Debtors"), the reorganized debtors and reorganized debtors-in-possession in the above-captioned Chapter 11 cases. Based upon the Motion, on March 22, 2004, 2004, the Court entered an Order Directing the United States Securities and Exchange Commission to Appear Before this Court to Show Cause Why It Has Not Violated the Court's Order Confirming the First Amended Joint Plan of Reorganization Dated as of February 20, 2004 (Docket No. 796) (the "Order to Show Cause") (Docket No. 837). A hearing was held on the Motion on April 26, 2004 (the "Hearing").
In preparation for the Hearing, the Court reviewed: (a) the Motion; (b) the response to the Motion dated April 5, 2004 (the "Response") (Docket No. 855) filed by the Securities and Exchange Commission (the "SEC"); (c) the Reorganized Debtors' reply dated April 20, 2004 (the "Reply") (Docket No. 873); (d) the Reorganized Debtors' supplemental reply dated April 23, 2004 (the "Supplemental Reply") (Docket No. 877); (e) theDisclosure Statement Concerning the Debtors' First Amended Joint Plan of Reorganization Under Chapter 11 of the United States Bankruptcy Code (the "Disclosure Statement") (Docket No. 598); (f) the First Amended Joint Plan of Reorganization of AMERCO and Amerco Real Estate Company (the "Plan"); (Docket No. 599); (g) the Findings of Fact and Conclusions of Law Regarding the First Amended Joint Plan of Reorganization, Debtors and Debtors-in-Possession entered on February 20, 2004 (the "Confirmation Findings and Conclusions") (Docket No. 795); (h) the Order Confirming First Amended Joint Plan of Reorganization entered on February 20, 2004 (the "Confirmation Order") (Docket No. 796); and (i) the Order to Show Cause. Based upon the Court's review of the above-described documents, and upon the arguments of counsel made at the Hearing,
THE COURT FINDS AND CONCLUDES THAT:
A. Jurisdiction and Venue. The Court has jurisdiction over the matters raised in the Motion under 28 U.S.C. § 157 and 1334, and under the retention of jurisdiction provisions of Article XIII of the Plan, as amended by Paragraph 52 of the Confirmation Order. Venue of this matter is proper pursuant to 28 U.S.C. § 1408 and 1409.
B. Core Proceeding. The matters raised in the Motion are related to and may arise under the United States Bankruptcy Code, 11 U.S.C. § 101-1330 (the "Bankruptcy Code") pursuant to 28 U.S.C. § 157(b)(2).
C. Petition Dates. AMERCO filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on June 20, 2003 (the "AMERCO Petition Date"). AREC filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on August 13, 2003 (the "AREC Petition Date").
D. Approval of Disclosure Statement. On December 12, 2003, the Court entered an order that, among other things, approved the Disclosure Statement as containing adequate information as that term is defined in the Bankruptcy Code (the "Disclosure Statement Order") (Docket No. 610).
E. Confirmation of Plan. On February 20, 2004, the Court entered an order (the "Confirmation Order") (Docket No. 796) confirming the Plan. The Plan became effective on March 15, 2004 (the "Effective Date"). The SEC participated in the Plan confirmation process by requesting amendments to the Plan and Disclosure Statement.
F. SEC Investigation. On November 4, 2002, the SEC issued a formal order of private investigation entitled In the Matter of AMERCO, Commission File No. LA-2628, (the "Formal Order of Investigation").
G. Issuance of Administrative Subpoenas. Acting pursuant to the Formal Order of Investigation, the SEC issued several administrative subpoenas to AMERCO on January 7, 2003, January 23, 2003, and February 21, 2003, respectively, requiring AMERCO to produce various documents, including e-mails (collectively, the "Administrative Subpoenas").
H. Proof of Claim. On or about October 9, 2003, the SEC filed a contingent, unliquidated, unsecured proof of claim based on "claims for disgorgement and civil penalties arising out of securities law violations." (the "Claim"). The Claim relates to alleged violations of federal securities laws for the years 2000, 2001 and 2002, and, therefore, asserts a claim for activities that occurred before the AMERCO Petition Date.
I. Subjection to Bankruptcy Court Jurisdiction. By filing the Claim and participating in the Plan confirmation process, the SEC voluntarily subjected itself to the jurisdiction of this Court for all matters and actions against the Reorganized Debtors logically connected or relating to the Claim. Accordingly, this Court has jurisdiction to resolve the discovery dispute that has arisen in connection with the Administrative Subpoenas.
J. District Court Filing by SEC. On March 5, 2004, the SEC filed an Application and Motion For an Order Compelling Compliance With Administrative Subpoenas in the United States District Court for the District of Nevada (CV-N-04-0103-DWN-VPC) (the "District Court Action"). The SEC asserted that AMERCO failed to produce responsive e-mails by the deadline. The SEC sought an order from the District Court compelling compliance with the administrative subpoenas.
K. Compliance with Administrative Subpoenas. As of April 21, 2004, AMERCO completed its production of documents to the SEC as set forth in the Administrative Subpoenas, having produced approximately 1.4 million documents. AMERCO concedes that it has not yet produced a privilege log with respect to such documents, but this has not been the subject of contention. Accordingly, the Reorganized Debtors have complied with the Administrative Subpoenas with the exception of providing unproduced non-privileged e-mails that shall be produced on or before June 1, 2004.
L. Privilege Log. The SEC has requested, and AMERCO has agreed to provide, a privilege log identifying any emails and/or documents subject to the Administrative Subpoenas that AMERCO asserts is subject to a claim of privilege (the "Privilege Log"). The Reorganized Debtors and the SEC agree that June 1, 2004, is an acceptable deadline for the submission of the Privilege Log to the SEC. This June 1, 2004, deadline for submission of the Privilege Log is reasonable.
M. Oral Findings Incorporated. All oral findings of fact and conclusions of law entered by the Court at the Confirmation Hearing are incorporated herein by this reference, in accordance with Bankruptcy Rule 7052(a).
N. Notice. Proper, timely, adequate and sufficient notice of the Motion has been provided in accordance with Section 102(1) of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, 6006, 9014 and 9019, and in accordance with any applicable order of this Court.
O. No Further Notice Necessary. Adequate and proper notice of the Motion and the hearing thereon has been given and no other or further notice is necessary.
P. Objections. All objections to the relief requested in the Motion have been overruled as set forth in the Court's Order approving the Motion.
Q. Cause for Relief Shown. The relief requested in the Motion is in the best interest of the Reorganized Debtors, their estates, their creditors, and other parties-in-interest, and good and sufficient cause exists for the granting of the relief requested in the Motion as set forth herein and in the Order approving the Motion.