Opinion
MEMORANDUM DECISION DENYING PLAINTIFF'S REQUEST FOR RECONSIDERATION AND GRANTING DEFENDANTS' MOTION FOR SANCTIONS.
JAMES W. MEYERS, Bankruptcy Judge
I
On June 11, 2010, the Court issued a Memorandum Decision Requiring Additional Briefing and Declarations for Sanctions ("June 11 Decision"). In the June 11 Decision, the Court concluded that it was appropriate to impose sanctions against the Plaintiff as requested by Defendants in the Discovery Motion and the Rule 9011 Motion. However, the Court requested additional briefing and declarations to determine the appropriate sanctions to impose.
Rather than repeat the relevant facts and background, or define terms included in the June 11 Decision, the Court incorporates that Decision in this Memorandum and will use the same terms herein.
In response to the June 11 Decision, the Defendants supplied declarations which itemized all fees and costs incurred as a result of the Complaint, and requested a minimum award of the full amount itemized as sanctions. The total fees at that time were $22,259.00. They also separately itemized fees of $7,672.50 incurred to pursue the Rule 9011 Motion and $704.00 for the Discovery Motion.
The Plaintiff did not object to the reasonableness of the fees and costs incurred by Defendants. Instead, the Debtor filed an Additional Brief on Defendants' Motion for Sanctions Under FRBP 9011 ("Additional Brief"). The Additional Brief asks the Court to reconsider the imposition of sanctions, or alternatively limit the monetary sanction to the amount for the Discovery Motion ($704.00) and the fees and costs related to the cancelled depositions ($2,495.29). The Debtor argued that the June 11 Decision was based on incomplete information, and submitted six declarations to support this position.
All references to Debtor or Plaintiff concerning papers filed and contentions or arguments made to the Court are intended to include the Smaha Law Firm, which signed, filed, submitted and advocated the positions set forth in the documents.
The declarations were signed by Tim Rost, Bruce Barnes, Diana Clegg, Christina Naugle, John L. Smaha and Lawrence Wodarski ("Six Declarations").
The Defendants filed objections to the Six Declarations as untimely and irrelevant to the issue of the amount of sanctions. Defendants also objected to various paragraphs of the Six Declarations as lacking foundation or personal knowledge, or as containing hearsay, improper opinion testimony and legal conclusions. The matter was taken under submission after a hearing. After significant review and reflection, the Court issues this Memorandum Decision denying Debtor's request for reconsideration and awarding sanctions against the Reorganized Debtor and the Smaha Law Firm for the full amount of fees and costs itemized by the Defendants.
II
FACTS AND PROCEDURAL BACKGROUND
In addition to the information set forth in the June 11 Decision, the following facts influenced the Court's decision. On November 15, 2006, the Debtor acquired Mortgage Net, USA ("Mortgage Net"), a mortgage company owned by Brian Pierce, Sr. The Debtor and Brian Pierce, Sr. entered a written employment contract dated November 16, 2006 ("Employment Agreement"). The Employment Agreement entitled him to a salary of $180,000.00 per year and other benefits. Paragraph 9 of the Employment Agreement provides:
9. Reimbursement of Expenses. The Employee may incur reasonable expenses for furthering the Company's business, including expenses for entertainment, travel, and similar items. The Company shall reimburse Employee for all business expenses after the Employee presents an itemized account of expenditures, pursuant to Company policy.
Brian Pierce, Jr. was also employed by the Debtor, but apparently did not have a written contract. The record indicates that Brian Pierce, Jr. was also reimbursed by the Debtor for expenses that he properly itemized during the term of his employment.
Based on e-mail correspondence dated January 8-10, 2008, between Christina Naugle and Brian Pierce, Jr., which was attached to the Debtor's July 15 Application.
The Defendants each filed a proof of claim in this Chapter 11 case for wages and reimbursement of expenses. Brian Pierce, Sr. filed Claim 28 for $46,790.82. The Debtor filed an objection to Claim 28. The first ground for the objection was that the employment agreement "provided Claimant with salary only, with no agreement to reimburse Claimant for any expenses." The remaining grounds referred to allegations in the Complaint. A copy of the Employment Agreement, including Paragraph 9, was attached to the Complaint and to the objection to Claim 28. Brian Pierce, Jr. filed Claim 27 in the amount of $32,480.15. The Debtor objected to Claim 27 on the same grounds recited in the objection to Claim 28.
The Debtor filed the Complaint and objections to claims on November 5, 2008. The Defendants requested a hearing on the objections to claims, and the initial hearing was conducted on January 9, 2009, at the same time as the hearing on objections to the Debtor's second amended disclosure statement. The objections to Claims 27 and 28 were consolidated with the Complaint, and continued to February 27, 2009, for a pre-trial conference. The disclosure statement was to be amended. The Fourth Amended Disclosure Statement was approved by order entered January 22, 2009 ("Disclosure Statement").
The Disclosure Statement described the source of the Debtor's financial difficulties arising from the losses incurred on seventeen loans after investment criteria changed, and the attempts to raise additional capital in early 2008. The final blow was dealt when the warehouse line provider stopped funding small mortgage banks, such as the Debtor, so the Debtor was no longer able to operate as a mortgage bank after March 31, 2008. The Disclosure Statement indicates this change led to the withdrawal of all the Debtor's Midwest Branches from the company on May 1, 2008.
On June 20, 2008, the Board of Directors authorized Lawrence Wodarski to file Chapter 11 as president of the Debtor. After the petition was filed, the Board of Directors conducted a telephonic conference, and elected Bruce Barnes as the president and secretary of the Debtor. The other directors on the board resigned, and Mr. Barnes acted as the responsible officer for the Debtor-in-Possession during the reorganization.
The Debtor filed it's original plan and disclosure statement on October 8, 2008, followed by four amended versions. Each version of the plan proposed to cancel the shares of the Debtor and issue new common stock in the Reorganized Debtor to Safe Harbor Homes, Inc. ("Safe Harbor"). After negotiations and several revisions, the Official Creditors' Committee supported the final version of the Plan and Disclosure Statement.
Safe Harbor bought the stock of Reorganized Debtor for a payment of $375,000.00. Bruce Barnes and Daniel Farnsworth were identified as the managing partners of Safe Harbor, as the two members of the initial Board of Directors, and as the President and Treasurer of the Reorganized Debtor. Diana Clegg was identified as the Secretary of the Reorganized Debtor.
The Plan called for a funding commitment of $400,000.00, but that amount was reduced by $25,000.00, an amount Safe Harbor had apparently provided to the Debtor for post-petition financing. There is no record on the docket that this financing was approved by the Court. The funding commitment in the initial plan was $100,000.00.
The Plan proposed to pay unsecured creditors a pro rata share of periodic distributions from a disbursement account maintained by a Plan Trust. The Reorganized Debtor would fund the Plan Trust from the $375,000.00 paid by Safe Harbor, plus 50% of the net recovery of avoidance actions. The Reorganized Debtor was entitled to keep the other 50% of net proceeds, and was responsible for litigation expenses if there was no recovery on an action. The Disclosure Statement identified avoidance actions with a total potential recovery of $1,000,000.00. This total included the $500,000.00 claim against the Defendants, so the claims in the Complaint were a significant portion of the amount the unsecured creditors could anticipate receiving.
The funds in the Plan Trust would be used to pay trust expenses of up to $15,000.00, with the balance disbursed to the unsecured creditors. The Disclosure Statement estimated the total amount of unsecured claims to share in the pro rata distribution at between $2,661,434.82 and $3,241,091.79. The Disclosure Statement projected the dividend to the unsecured between 9.2% and 18.7%. Bruce Barnes was identified as the trustee for the Plan Trust.
III
RECONSIDERATION OF THE JUNE 11 DECISION
The Debtor contends that the June 11 Decision was based on incomplete information and the additional background on the passwords needed to access the computer and available documents explained in the Six Declarations should convince the Court to reconsider the June 11 Decision. The Court disagrees. The Additional Brief and the Six Declarations continue to follow the same path as the Complaint, the objections to Claims 2 7 and 28, the July 15 Application and the Debtor's Opposition to the Rule 9011 Motion: by making arguments based on hearsay from unidentified sources or without sufficient foundation.
While the Six Declarations are marginally relevant to the issue of the amount of sanctions to award, most of the statements made in the declarations are not admissible. The detailed objections to the Six Declarations are well taken. Each declaration contains statements based on hearsay, information and belief, or lacks facts to explain what document or person is referred to, or where, when or how things happened. Rather than provide verified facts to support the allegations of the Complaint that the Defendants damaged the Debtor in an amount exceeding $500,000.00 by diverting funds and requesting false or overstated expense reimbursements, the Six Declarations and Additional Brief are filled with inferences and conclusions that are based on rumor, innuendo and supposition.
Lawrence Wodarski was the Debtor's President when the Debtor acquired Mortgage Net and hired the Defendants as employees. He says he was personally involved with the decision and execution of shutting down the office controlled by the Defendants in December 2007. His declaration provides no evidence that the Defendants improperly diverted funds. The Wodarski declaration leaves the Court with more questions than answers. The Court is puzzled how the Board of Directors was going to freeze all accounts for the Tigard office in December 2007, but was not able to locate these same accounts during this litigation.
Mr. Wodarski mentions that the Defendants' agenda was to protect their family, they were insubordinate and refused to cooperate with the parent company. The declaration includes statements such as "a well known consultant spent a day with EFN early on in the acquisition period and he confided that the Pierces were turf takers' of the first magnitude" and "an officer of EFN observed employees taking bankers boxes out of the office". He explained that the server with financial information recovered from the Defendants was "unaccessible because passwords were not provided by the Pierces. Further requests to get those passwords were refused by the Pierces." The declaration does not state who made the requests, when or how the requests were communicated to the Defendants or how the Defendants responded.
The Declaration of the Debtor's Technology officer, Tim Rost, states the Debtor was never able to access the information stored on the computer for lack of a BIOS level password. Mr. Rost does not claim to have contacted the Defendants for the password, but provided this testimony based on his "understanding" that Mr. Wodarski requested the password(s) from the Pierces, and that to the best of Mr. Rost's recollection, the password was never provided to the Debtor.
The Barnes Declaration acknowledges that he has no personal knowledge of any wrong doing by the Defendants, but decided to sue the Defendants and object to their claims based on conversations he had with the other declarants. Rather than ask the Defendants to explain any problems with the Mortgage Net financial documents, he chose to request information from outside sources based on" a history of obfuscation from the Pierces" communicated to Mr. Barnes by other people. He attempts to justify the litigation with:
the simple fact that the Pierce's branch bank accounts were opened in unusual and confusing manner, with strange identifiers, is a strong indication of their efforts to hide facts and control all information. The accountants with whom EFN discussed the strange bank account identifiers informed EFN that this behavior could be indicative of people who are intent on keeping things hidden from transparent view.
The Barnes declaration lacks any foundation or explanation of the unusual and confusing manner by which the bank accounts were opened, what or how the identifiers were strange, and who the accountants were that speculated on the intent of the Defendants, or what else the behavior could have indicated. The declaration ends with the statement "the Debtor, finally, and reluctantly, concluded that trying to get the Pierces to be open and cooperative with the discovery of information that rightly belonged to [the Debtor] was a completely hopeless adventure." The Court finds it odd that Mr. Barnes reached this conclusion on the eve of the Defendants' depositions, and without interviewing or deposing the Defendants or apparently anyone else from the Tigard office.
Christina Naugle is the Human Resources Manager for the Debtor. She testifies that Brian Pierce, Sr. operated his office completely independent of the Debtor. The declaration then refers to executive level vacation the Pierce family members were accruing and questions hours and salary of Helen Allen (Mr. Pierce, Sr.'s daughter), during her maternity leave. It is apparent that the Board of Directors allowed Mr. Pierce to operate Mortgage Net as a separate unit. There is nothing in the record to enable the Court to discern whether the Board imposed any specific parameters on Mr. Pierce's ability to run the operations of Mortgage Net before they decided to take control of the subsidiary on December 7, 2007.
John Smaha supplies a declaration about issuing subpoenas to U.S. Bank, instructions he received from his client, settlement offers he relayed to the Defendants and background on why the depositions were cancelled at the last minute. The Court has already described the Exhibit to the Non-Opposition as fulfilling the purpose of initial disclosures. In spite of this finding, Mr. Smaha continues to point to the lack of initial disclosures in his declaration and in the Additional Brief as a reason to issue subpoenas for thousands of pages of bank records.
June 11 Decision, page 7 at lines 23-24, and page 14 at line 10.
The Smaha declaration does not provide specific information about the contents of the subpoenas, or what records the Debtor reviewed to try and find the account information. The Exhibit disclosed that all accounts were transferred to Ron Oliveira on December 7, 2007. It also disclosed that all the accounts were established at the same U.S. Bank branch in Wilsonville, Oregon. Finally, the Defendants responses to interrogatories identified Emilee O'Neill at U.S. Bank in Wilsonville as the person responsible for opening or maintaining the accounts, and included her address and telephone number. The Smaha declaration does not indicate the Debtor or the law firm made any attempt to interview Mr. Oliviera or Ms. O'Neill while conducting discovery.
The Clegg Declaration complains that the Defendants did not comply with the Debtor's policies and procedures, reports were untimely and that her experience with the Senior Pierce was not positive. This declaration provides no facts to support the allegations of fraud, conversion or improper diversion of the Debtor's assets found in the Complaint. It does indicate that the Defendants did submit financial reports to the Plaintiff.
In short, the Debtor has provided no basis reconsider the June 11 Decision. The Debtor had the information in the Six Declarations before opposing the Rule 9011 Motion. To the limited extent the information in the Six Declarations is admissible, there are still no facts presented to the Court to show that the Debtor or the Smaha Law Firm conducted a reasonable inquiry to determine that the allegations in the Complaint had evidentiary support. The Debtor's last minute attempts to settle the case by walking away was too little, too late. The Debtor had the opportunity to do just that during the safe harbor period provided by Rule 9011. Rather than move to dismiss the Complaint without prejudice during the safe harbor period, the Debtor chose to conduct expensive discovery, filed emergency motions, and was granted lengthy extensions that it requested from the Court.
The Barnes declaration and the Additional Brief justify the filing of the Complaint before locating any evidence to support the allegations in the Complaint because "the Debtor felt a sense of obligation and responsibility to the creditors to recover money from individuals that knowingly caused material harm to the Debtor." The Debtor relied on the Complaint as a method of funding the Plan. This is at best an irrelevant basis to file a complaint without any evidence, and at worst an improper motive to influence creditors into voting for a Plan based on the potential distributions from a lawsuit that lacked evidentiary support.
IV
SMAHA LAW FIRM
The Additional Brief ends with the assumptions and understandings of Debtor's counsel by stating:
Finally, Debtor's counsel notes that the Court's Memorandum does not make any specific reference to the potential liability of Debtor's counsel. The Court did not identify any document that Debtor's counsel signed with an improper purpose by Debtor's counsel. As such, Debtor and Debtor's counsel have operated under the assumption that the finding of sanctionable activity has been limited to the actions of the Debtor and Debtor only. If the Court intended for Debtor's counsel to be sanctioned under Rule 9011, then Debtor's counsel would request specific findings as to why Debtor's counsel should be sanctioned and would respectfully request a further opportunity to respond to any such findings that would find fault with Debtor's counsel. It is Debtor's counsel (sic) understanding that the Court has found fault with Debtor's actions after the filing of the Complaint and not with the Complaint itself. If this understanding is mistaken, Debtor's counsel will hopefully have an opportunity to present further briefing on any such findings.
The Rule 9011 Motion and the June 11 Decision were directed at the lack of investigation and evidentiary support for the allegations in the Complaint. The Complaint was signed by Debtor's counsel. The Debtor's Opposition to the Rule 9011 Motion ("9011 Opposition"), was filed by the Smaha Law Group. The 9011 Opposition contained five sections and a conclusion. Section I, the statement of facts, was presented by "Plaintiff and their attorney John Smaha." Section II proclaims that "Rule 11 sanctions are inappropriate against Plaintiff and its counsel." Section III is titled "the allegation(s) in the complaint were and are supported by evidence." That section proceeds to explain that Mr. Barnes was aware of a number of alarming facts he gathered through diligent effort and included in an accompanying declaration. As previously noted, the Barnes declaration does not contain any facts to support the allegations in the Complaint. It merely recites conclusions and inferences based on rumor, innuendo and supposition.
The Rule 9011 Opposition concludes with the statement that" it is clear that the Debtor and its counsel presented the complaint in this action in good faith and conducted a reasonable inquiry into the facts prior to filing the same." The Smaha Law Firm was aware that the 9011 Motion and June 11 Decision were directed at both the Plaintiff and the Smaha Law Firm. The firm had an opportunity to submit evidence and argument after the June 11 Decision. The Court will not allow any further briefing on this matter.
V
VIOLATIONS OF RULE 9011
By submitting a pleading, motion or other paper to the Court, one is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, that the allegations and other factual contentions have evidentiary support or are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. Rule 9011(b)(3). The person is also certifying that the document is not being presented for any improper purpose. Rule 9011(b)(1).
In response to the assumptions and understanding of Mr. Smaha set forth in the Additional Brief, the Court again reviewed all the documents filed in connection with this adversary proceeding and the objections to Defendants' Claims 27 and 28, which were consolidated with the Complaint.
The Rule 9011 violations began with the filing of the Complaint and the objections to Claims 27 and 28. The objection that there was no agreement by the Debtor to reimburse Brian Pierce, Sr. for expenses is frivolous on its face. After requesting and receiving lengthy extensions, the Debtor failed to uncover any evidence to support the allegations of fraud, conversion and damages asserted in the Complaint. The only specific facts of a potential dispute relate to salary. These issues would have been dealt with in the objections to Claims 2 7 and 28.
In addition to the Complaint, it appears that the July 15 Application, the September 16 Application for extension, the Six Declarations and the Additional Brief were filed without an adequate review of the documents in the Debtor's possession.
VI
APPROPRIATE AMOUNT OF SANCTIONS
The central purpose of Rule 9011 is to deter baseless filings in bankruptcy courts and thereby streamline the administration and procedure of the federal courts. Cooter & Gell v. Hartmarx Corp. , 496 U.S. 384, 393 (1990).
The Court has significant discretion in determining the appropriate sanction to award for a violation of Rule 9011, subject to the principle that the sanctions should not be more severe than necessary to deter repetition of the conduct by the offending person, or similarly situated people. In re DeVille , 361 F.3d 539, 553 (9th Cir. 2004). Some factors relevant to determine an appropriate amount of monetary sanctions include the reasonableness of the amount requested, the minimum necessary to deter a repetition of the conduct, the ability to pay the sanction, and things such as the offending party's history, experience, the extent malice or bad faith played in the violation, and the risk of chilling the type of litigation involved. White v. General Motors Corp., Inc. , 908 F.2d 675, 684-85 (10th Cir. 1990).
The Defendants itemized their fees and expenses and request the sanction include payment of these amounts to the Defendants, plus any additional penalty to the Court that the Court deems appropriate. As noted earlier, there was no objection to the reasonableness of the lodestar calculation of fees and expenses incurred by the Defendants. The Court has reviewed the itemization and finds the amounts to be reasonable under a lodestar analysis, both the hourly rate charged and the amount of time spent on this matter. All of these fees and expenses result from the sanctionable conduct in filing and pursuing the Complaint without adequate investigation and in failing to dismiss the Complaint during the safe harbor period.
The Court concurs with Defendants. The minimum appropriate sanction is payment to the Defendants of the full amount of fees and costs they itemized to defend this proceeding. The Court recognizes that Rule 9011 is not a fee shifting statute. However, anything less would not effectively deter repetition of the violations by the Debtor, the Smaha Law Firm, or those similarly situated. The Debtor and the Smaha Law Firm have proven they were undeterred after the June 11 Decision.
A lack of experience offers no excuse. The Smaha Law Firm has been representing debtors before bankruptcy courts for many years. The attorneys have a duty as officers of the court to act as the gatekeeper to prevent a client from filing frivolous pleadings. The firm had to satisfy itself that there were facts to support the allegations in the Complaint. Blind reliance on the client is seldom a sufficient inquiry. In re Kunstler , 914 F.2d 505, 514 (4th Cir. 1990). It is definitely not so in a case like this where there was no pressure from a statute of limitations, and the Plaintiff had already seized control of the subsidiary almost year earlier.
The Court may consider the ability of a party to pay the sanction when deciding the appropriate amount to award. Gaskell v. Weir , 10 F.3d 626, 629 (9th Cir. 1993). The sanctioned party has the burden to produce evidence of the inability to pay. Id. The Debtor did not provide any evidence of an inability to pay, and only made a passing reference that is was "obviously a reorganized debtor with scarce resources." The Court considered imposing an additional penalty payable into Court, but has decided against doing so, in large part because the Smaha Law Firm was denied a portion of their fees requested in this Chapter 11. The conduct in submitting, filing and advocating the papers in this case is exacerbated by the arguments presented in the Additional Brief and the lack of admissible evidence found in the Six Declarations. The inappropriate advocacy reaches a crescendo with the request for a further opportunity to present briefing if Mr. Smaha's assumptions and understandings are mistaken. The Debtor and the Smaha Law Firm were provided ample time to submit all declarations and briefing on the amount of sanctions after the June 11 Decision.
Additional Brief, page 7, line 4.
Given the lack of investigation before filing the Complaint, the apparent failure to review the documents in their possession, the inaction during the safe harbor period, and continued arguments presented in the July 15 Application and the Additional Brief, these sums are necessary to deter repetition of similar actions. These sanctions are awarded against the Reorganized Debtor and the Smaha Law Firm. The sanctions amount is not to come from the Plan Trust held for the benefit of the creditors.
Although the Complaint was filed before the Plan was confirmed, it was Bruce Barnes, the Reorganized Debtor and the Smaha Law Firm that had the opportunity to dismiss the Complaint during the safe harbor period. Had they dismissed the Complaint during that period, they could have avoided all liability. Instead, they chose to proceed with the Complaint, and ignore the reminders and reasonable questions raised by Mr. Thompson in the correspondence between him and Mr. Bravo during May and June 2008. They continued to pursue the Quixotic quest after the Court issued the June 11 Decision.
Copies of these letters are attached to the declaration of Harold Thompson filed in support of the Discovery Motion on July 6, 2009.
VII
CONCLUSION
Debtor's request for reconsideration of the June 11 Decision is denied. Defendants' Rule 9011 Motion is granted. Monetary sanctions payable to the Defendants and their attorney, for the full amount itemized by Defendants in the declarations are awarded against the Reorganized Debtor and the Smaha Law Firm, jointly and severally. Counsel for Defendants is instructed to submit a judgment consistent with this Decision within 14 days.
Similarly, the declaration states that the Debtor "continually made inquiries to the Pierces related to its operations, revenues and expenses. However, the Pierces made every effort to obfuscate a detailed examination of the income flow of their operations." Again, the Declaration lacks any facts about who made the inquiries, when or how they were communicated to the Defendants or what efforts the Pierces made to obfuscate an examination of the income flow of the operations.
The Wodarski declaration states that the Debtor's auditing firm noted serious deficiencies in the Pierces' internal controls, and refers to a report from the accountants dated April 5, 2007 ("Report"). The Report does note inadequate internal controls in the segregation of duties of the Mortgage Net subsidiary, and recommends the Debtor implement procedures and oversight to correct the deficiency. The Report also concluded that "no adjustment to reported financial statement balances resulted from the condition noted", and that the cause of the condition was "the Company purchased Mortgage Net, USA... and did not undertake the necessary review of its internal control procedures." The Report also noted deficiencies in the Debtor's manual journal entries and capital stock records, which were not related to the Mortgage Net subsidiary.
The Wodarski declaration also mentions that the board had directed Brian Pierce, Sr. to find a buyer for his branch network or face action that could include closing the Tigard operation. To support this statement, he attached a letter dated November 13, 2007, which Mr. Wodarski sent to Mr. Pierce. The letter leads the reader to understand that the Board of Directors had authorized the Pierces to operate Mortgage Net as a separate subsidiary, and that the Board and the Defendants were in the process of modifying their relationship in November 2007. These changes ultimately resulted in the take over of the Tigard location on December 7, 2007, and termination of the Defendants by letters delivered on December 8, 2007.
The Wodarski declaration also mentions that Brian Pierce, Sr. had the Mortgage Net accounting department increase his salary in violation of written instructions from the Debtor. The Employment Agreement provided Mr. Pierce with an annual salary of $180,000. The only evidence of an instruction to reduce salary was in the letter dated November 13, 2007, mandating Mr. Pierce to reduce his salary to that of Mr. Wodarski, $7,500.00 per month. The declaration does not indicate any other changes in the salary, or how the employer could unilaterally modify the salary amount included in the Employment Agreement.
Mr. Wodarski then discusses events concerning the December 7, 2007, closure of the Tigard office. It is not clear from the declaration that Mr. Wodarski was present for these events or how he knows what the U.S. Bank manager may have done without knowledge of the Debtor's employee or consultant. This entire discussion appears to be based on hearsay.