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Plan Committee v. PricewaterhouseCoopers

April 20, 2007

THE PLAN COMMITTEE, ET AL., PLAINTIFFS,
v.
PRICEWATERHOUSECOOPERS LLP, DEFENDANT.



The opinion of the court was delivered by: Thomas F. Hogan Chief Judge

MEMORANDUM OPINION

INTRODUCTION

Pending before the Court is Defendant PricewaterhouseCoopers, LLP's ("PwC") motion to dismiss the Amended Complaint filed by the Plan Committee, Elliott R. Wolff, and Stanley Zupnik (collectively, "Plaintiffs"). Upon careful review of PwC's Memorandum in Support of its Motion to Dismiss the Amended Complaint, Plaintiffs' Opposition, PwC's Reply thereto, and the entire record, the Court will grant PwC's motion to dismiss.

BACKGROUND

The United States Bankruptcy Court for the District of Columbia established the Plan Committee to oversee bankruptcy proceedings on behalf of the unsecured creditors of the Greater Southeast Healthcare Providers ("Greater Southeast"). Plan Committee v. Price WaterhouseCoopers, LLP, 335 B.R. 234, 239 (D.D.C. 2005) (Roberts, D.J.). "Under the Second Amended Joint Plan ('Plan') of liquidation for the bankruptcy proceedings of Greater Southeast, approved by the bankruptcy court in a Confirmation Order in 2001, [the Plan Committee] was established to '[c]ommence, prosecute, and if appropriate, settle all causes of action vested on behalf of creditors . . . and prosecute all causes of action of the Debtors' Estates, the Committee, the Plan Committee, or on behalf of the creditors of an Estate generally,' among other responsibilities." Id. at 240-41 (alteration and ellipsis in original) (quoting Second Amended Plan, attached as Exhibit 4 to Plaintiff's Opposition to PwC's Motion to Dismiss Original Complaint [dkt. #19]).

In 2002, the Plan Committee filed suit against PwC alleging PwC negligently conducted its independent audits of Greater Southeast's accounts and breached its contract to provide accounting and audit services in compliance with Generally Accepted Auditing Standards and Principles. Id. at 241; see Complaint [dkt. #1]. PwC filed a motion to dismiss the complaint on several grounds: (1) Plaintiff lacks capacity under Federal Rule of Civil Procedure 9; (2) Plaintiff fails to state a claim for negligence or breach of contract under Rule 12(b)(6); (3) Plaintiff's claims are barred by Greater Southeast's contributory negligence; and (4) Plaintiff's claims are barred by the statute of limitations despite the parties' tolling agreements. 335B.R. at 240-41; see Memorandum of Points and Authorities of Defendant PricewaterhouseCoopers in Support of its Motion to Dismiss [dkt. #12]. Judge Richard W. Roberts denied PwC's motion to dismiss on the latter three grounds, but found that the Plan Committee lacked capacity to sue. Id. Because the Plan Committee "stated that it would move to join another party who does have capacity to sue," the Court granted Plaintiff leave to amend its complaint. Id. at 239, 246.

The Plan Committee then filed an Amended Complaint that raised the same claims but joined as plaintiffs Elliot R. Wolff and Stanley Zupnik, each "as Non-Bondholder Representative on the Plan Committee and as Trustee of the Greater Southeast Litigation Liquidating Trust c/o 1100 Connecticut Avenue, N.W., Suite 800, Washington, D.C. 20036." See Amended Complaint ("Am. Compl.") [dkt. #27].

The Amended Complaint describes Plaintiffs Wolff and Zupnik as follows:

7. Plaintiff, Elliot R. Wolff, is president of Advantage Healthplan Inc., an unsecured creditor in the subject bankruptcy. Mr. Wolff is a member of the Plan Committee where he serves as a Non-Bondholder Representative of the unsecured creditor, Advantage Healthplan Inc. Mr. Wolff also serves as Trustee for the Non-Bondholders of the Greater Southeast Litigation Liquidating Trust (the "Greater Southeast Trust"). The Plan Committee has assigned, transferred and conveyed all of the Plan Agent's rights, title and interest in and to this cause of action including all proceeds of this lawsuit to the Greater Southeast Trust. The Trustees of the subject Trust act on behalf of the Non-Bondholders who are the beneficiaries of the subject Trust.

8. Plaintiff, Stanley Zupnik, is president of Welcome Homes, Inc., an unsecured creditor in the subject bankruptcy. Mr. Zupnik is a member of the Plan Committee where he serves as a Non-Bondholder Representative of the unsecured creditor, Welcome Homes , Inc. Mr. Zupnik also serves as Trustee of the Greater Southeast Trust.

Am. Comp. ¶¶ 7-8.

The Amended Complaint also includes the following paragraph that did not appear in the original complaint:

9. By unanimous resolution pursuant to Section III.P. of the Plan Agreement, the Plan Committee has agreed that the Non-Bondholders' Representatives on the Plan Committee, plaintiffs Wolff and Zupnik, will have the full authority of the Plan Committee and be the sole decision-makers in respect to this cause of action.

Am. Compl. ¶ 9.

Lastly, the Amended Complaint states that "[t]he Confirmation Order specifically provides that notwithstanding anything contained in the Plan, the Plan Committee shall have the right and the standing to commence, prosecute, and pursue any and all causes of action of the Debtors." Am. Compl. ΒΆ 6. This language appears ...


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