Opinion
Case No. 02-85887-RGM
October 10, 2003
MEMORANDUM OPINION AND ORDER DENYING APPLICATION FOR EMPLOYMENT OF DELOITTE TOUCHE LLP
This case is before the court on the Debtors' Application to Retain and Employ Deloitte Touche LLP as Accountants, Tax, and Reorganization Services Providers to the Debtor Nunc Pro Tunc to May 8, 2003. The application will be denied.
The proposed order contains a finding that "The Debtor's employment of Deloitte in accordance with the Application, the Engagement Letter attached t the Application as Exhibit B (the "Engagement Letter") and this Order is in the best interest of the Debtor, its estate and creditors." The Engagement Letter, dated May 8, 2003, contains three questionable paragraphs.
Paragraph 6 contains a limitation on damages and an indemnification. It provides that Deloitte Touche and its personnel are not liable to the debtor except to the extent arising primarily from "bad faith or intentional misconduct." It also provides that in any event, presumably including matters involving bad faith or intentional misconduct, Deloitte Touche will not be liable for, among other types of damages, consequential or punitive damages. ¶ 6(a). In addition, the debtor is required to indemnify and hold Deloitte Touche from all claims except those resulting primarily frm bad faith or intentional misconduct. ¶ 6(b). If the exculpation provisions of paragraphs 6(a) or (b) are unavailable, Deloitte Touche seeks to limit its liability on a comparative fault basis with all other wrongdoers. ¶ 6(c). Paragraph 9 seeks to impose a contractual statute of limitations of one year from the accrual of the cause of action. This is modified in the case of non-payment to extend the limitation period to one year from the date the last payment was due. This, on its face, appears to benefit only Deloitte Touche since it is the sole recipient of payments under the proposed agreement. Finally, paragraph 14 waives the debtor's right to a trial by jury, if there is such a right.
Neither the notice mailed to creditors nor the text of the application refers to these items. No hearing was held on the application because there were no objections after notice. Neither the creditor body nor the United States Trustee had a fair opportunity to review all of the terms of the proposed employment. None of the questionable terms were highlighted for the creditors in the notice or the motion and would easily have been overlooked. There is no evidence that the terms are necessary or appropriate to this employment and the court has no basis to make the requested findings. Moreover, the court is concerned when a professional is not prepared to stand behind its work.
ORDER
The application for employment is denied.