Class Plaintiff's Response to Automatic Stay - equitatus

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Case 11-03620-bjh Doc 40 Filed 02/21/12 Entered 02/21/12 23:34:41 Desc Main Document Page 2 of 34 TABLE OF CONTENTS INTRODUCTION .....................................................................................................................1 PROCEDURAL BACKGROUND ..............................................................................................2 FACTUAL BACKGROUND .......................................................................................................3 LEGAL ARGUMENT ..................................................................................................................8 I. SECTION 362 DOES NOT APPLY BECAUSE THE CLAIMS ALLEGED AGAINST GREENBERG IN THE CALIFORNIA CLASS COMPLAINT BELONG TO CALIFORNIA CLASS PLAINTIFFS, NOT THE ESTATE................. 8 A. Legal Standard ........................................................................................................ 8 B. California Class Plaintiffs Own the Claims in the Consolidated Complaint Under California Law.......................................................................... 9 PAGE 1. Class Plaintiffs Do Not Allege Legal Malpractice .................................... 11 2. Each of the Claims are Direct and Therefore Belong to Class Plaintiffs ............................................................................................. 13 a) Class Plaintiffs’ Aiding and Abetting Claims (Breach of Fiduciary (First Cause) and Fraud Claim (Fifth Cause)) Are Direct Claims................................................... 13 b) The Securities Fraud Claim (Second Cause) is an Individual Claim ....................................................................... 15 c) The Common Law Fraud Claims (Third and Fourth Causes) and the Negligent Misrepresentation Claim (Seventh Cause) are Direct Claims ................................................ 15 d) The Violation of California’s Unfair Competition Law (Cause Six) is a Direct Claim....................................................... 16 e) The Claims Relating to MF08 Could Not Possibly Belong to the RE Loans Bankruptcy Estate..........................................1 6 II. THERE IS NO LEGITIMATE BASIS FOR ENJOINING THE CALIFORNIA CLASS LITIGATION UNDER § 362 OR 105 ...................................... 16 i
Case 11-03620-bjh Doc 40 Filed 02/21/12 Entered 02/21/12 23:34:41 Desc Main Document Page 3 of 34 A. Unusual Circumstances Do Not Exist Because the California Class Litigation Does Not Harm the Debtor’s Ability To Reorganize .....................18 B. An Injunction is Unwarranted Under Section 105 as it Would Cause Significant Harm to The California Class Litigation and Provide No Benefit to the Debtor’s Reorganization Efforts................................................21 1. The California Class Litigation Will Not Cause Any Harm to The Debtor’s Reorganization Efforts[MM1]....................................21 2. California Class Plaintiffs Face Significant Injury from an Injunction.................................................................................................22 3. No Public Interest Will Be Served By An Injunction. .........................23 III. NEITHER SECTIONS 362 NOR 105 AUTHORIZE THIS BANKRUPTCY COURT TO HEAR THE CALIFORNIA CLASS LITIGATION .............................24 ii
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Class Plaintiff's Response to Automatic Stay - equitatus

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