CA, Inc.'s Answer and Counterclaim - Reed Smith

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From the state tax library of Reed Smith LLPwww.reedsmith.com/DEtaxfor other related documents, please email ksollie@reedsmith.com35. On or about July 28, 2005, CA made its initial VDA presentation to the State incompliance with the VDA.36. The State purported to be dissatisfied with CA’s calculations and demanded thatCA increase its calculated liability.37. From 2005 through July 2007, the State further extended the time limit for CA'sperformance under the VDA by requesting additional information and/or materials from CA inconnection with CA's VDA. CA provided the requested materials to the State.38. During the two-year period where time extensions were granted by the State toCA, CA repeatedly and in good faith kept the State apprised of its progress in locating theinformation and materials requested by the State. Because of the years involved and theextensive records requested, it took CA considerable time to locate the records sought by theState.CA's Updated Submission and Offer of Payment39. In or about August 2007, CA provided the State with an updated calculation ofthe abandoned and unclaimed property owed to the State by CA in compliance with the VDA(the "Updated Submission").40. The Updated Submission identified the amount of abandoned and unclaimedproperty potentially owed by CA to the State pursuant to the VDA as $2,323,880.08. Thisamount contained within it many compromises that CA was prepared to make in the State’sfavor in order to come to a resolution with the State.41. Upon receipt of CA's Updated Submission, the State purported to remaindissatisfied with CA's fulfillment of its obligations under the VDA program. Once again, despitethe fact that CA had provided detailed information from its books and records to support the- 44 –
From the state tax library of Reed Smith LLPwww.reedsmith.com/DEtaxfor other related documents, please email ksollie@reedsmith.comUpdated Submission, the State demanded even more information concerning CA's accountsreceivable and acquisitions.The State's Efforts to Take Money Owed to Other States42. In preparing reports and gathering information in connection with the VDA, CAaccumulated books and records regarding obligations owed to other states in connection withabandoned and unclaimed property.43. The priority rules of escheatment are clearly set forth by the United StatesSupreme Court in Texas v. New Jersey, 379 U.S. 674 (1965) and Delaware v. New York, 507U.S. 490 (1993). Pursuant to those cases, to the extent Owners of abandoned property cannot belocated, a Holder first is obligated to escheat abandoned and unclaimed property to the state ofthe Owner’s last known address, as shown by the Holder’s books and records. Only if theHolder’s books and records do not disclose an Owner’s address does the Holder escheat theabandoned and unclaimed property to its state of incorporation, which in this case, for CA, isDelaware.44. This Court follows the same principle, as stated in Nellius v. Tampax, Inc., 394A.2d 233 (Ct. Chancery 1978), where the Court ruled that the State Escheator must give priorityto the state of the last known address of the creditor "as shown by the debtor's books andrecords," and that the State may not demand monies by "resort[ing] to evidence beyond thedebtor's books and records."45. Yet, throughout the VDA process, the State has, in an arbitrary and capriciousmanner and without basis in fact or law, demanded that these clear rules of priority be ignored.46. Among other things, without any authority under the law, on April 18, 2006, theState, through Mark Udinski, demanded that CA "not file prior year liabilities with the otherstates until [CA] has resolved [its] liability with [the State]." The State did not explain how or- 45 –
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CA, Inc.'s Answer and Counterclaim - Reed Smith

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