CASE NUMBER 74 166 00491 03 JUSC
ANSWERING STATEMENT TO DEMAND FOR ARBITRATION
Under AAA Employment Arbitration Rules
Mary Lou Woo, Claimant
Bobby N. Harmon, Respondent
NATURE OF THE DISPUTE
Background
The Claimant’s description of the background for this case omits information that is pertinent to this arbitration process. It should be known that the “complaint filed in the U.S. District Court for the District of Hawaii against the Kamehameha Schools and its agents” was a Racketeer-Influenced Corrupt Organizations (RICO) lawsuit which named as Defendants:
FEDERAL INSURANCE CO., INC.; P&C INSURANCE COMPANY, INC.; MARSH & McLENNAN COMPANIES, INC.; PRICEWATERHOUSE, COOPERS & LYBRAND, LLP; TORKILDSON, KATZ, FONSECA, JAFFE, MOORE & HETHERINGTON, A LAW CORPORATION; HENRY H. PETERS, RICHARD S. H. WONG, LOKELANI LINDSEY, GERARD JERVIS AND OSWALD STENDER, TRUSTEES OF THE ESTATE OF BERNICE PAUAHI BISHOP; JOHN MULLEN & CO., INC.; NATHAN AIPA; LOUANNE KAM; RODNEY PARK; WILLIAM S. RICHARDSON; GILBERT TAM; AND PETER LOWE....
It should be noted that at the time of Harmon’s termination from his positions at Kamehameha Schools/Bishop Estate (“Bishop”) and P&C Insurance Company, Inc. (“P&C”), the Internal Revenue Service was engaged in an extensive audit of Bishop. This IRS audit ultimately led to the removal of the five trustees named in my RICO lawsuit, as well as substantial tax recoveries and surcharges against these trustees.
Settlement Agreement
The Claimant states that in 2000, the parties who had been involved in the various disputes and litigation entered into a Settlement, Release and Indemnity Agreement (‘Agreement’), and that due to the bankruptcy proceeding, approval by the Bankruptcy Court was required before the Agreement could become fully effective.
Harmon asks the Arbitrator to take note of the fact that the copy of the Agreement which was filed with the Court does not show an effective date and is not signed by any party except Bobby Harmon. It is Respondents’ opinion, therefore, that the Agreement should be declared invalid.
Harmon has requested, on numerous occasions, that certain attorneys who negotiated the Settlement Agreement provide evidence that they were, in fact, the Attorney of Record for the defendants they professed to represent in Harmon’s Wrongful Termination and RICO lawsuits. This evidence has never been provided.
Prior to the commencement of this arbitration, Harmon asks that the Trustee provide to the Arbitrator, and to the Respondents, Attorney of Record letters or similar instruments from all attorneys for the defendants in both of Harmon’s lawsuits.
Should any attorney be unable to produce evidence that they were, in fact, the Attorney of Record for the defendants they purported to represent, then it would appear that the question of interpretation of the Agreement would be moot, and this arbitration process should not proceed.
Post Agreement Activities
Under this heading, the Trustee states, “Although the Agreement had been signed by all parties, including Harmon, and approved by the Bankruptcy Court, Harmon initiated an active and incessant letter writing campaign to the Claimant, her counsel, the Kamehameha Schools and its agents, and various other entities, many of whom were not parties to the litigation, concerning various issues, some of which had been expressly addressed and resolved by the Agreement.”
As evidenced by the Trustee’s own attachment, this is a false statement. The Agreement, as filed with the Court, was signed by Bobby N. Harmon only. The fact that this document was not signed by all parties is an argument that this is not a valid contract.
Despite the fact that the Agreement may not be valid, Harmon denies that his “letter writing campaign” constitutes, in any way, a breach of the Agreement.
Disputed Issues
Respondents’ answer to the disputed issues listed by Claimant are as follows:
ISSUE 1
“Whether the payment of the settlement proceeds under the Settlement Agreement is a general payment of settlement funds in compromise of all issues presented by your litigation;”
Answer:
Respondents, in accordance with their reading and understanding of this statement, do not dispute this issue; however, we reserve the right to dispute Claimant’s interpretation of this statement if it is later used in a different context or in a manner not consistent with Respondents’ interpretation and understanding.
ISSUE 2
“Whether the payment of settlement proceeds under the Settlement Agreement constitute wages from Kamehameha School and are entitled to such treatment.”
Answer:
Respondents believe that this is a factual issue for Kamehameha Schools to address with their tax attorneys rather than a matter of interpretation to be addressed in arbitration. Harmon asks that the Arbitrator take note of the fact that tax attorney for Kamehameha Schools / Bishop Estate at the time of the audit was the accounting firm of Price Waterhouse (now PricewaterhouseCoopers LLP), another defendant in Harmon’s RICO lawsuit. That said, however, Harmon argues that, at the time of his signing of the Agreement, his understanding from his attorney, Bradley Tamm, was that the entire settlement amount would be characterized as “wage income”.
Tamm proposed this characterization in a settlement meeting in the chambers of Judge Kurren, in the presence of attorneys my attorney, Arnold Phillips, and the attorneys for Kamehameha Schools/Bishop Estate. Steven Guttman was also present at this meeting. All parties agreed to this characterization, and Arnold Phillips recommended that I accept the settlement.
Black’s Law Dictionary defines Compensation as, “Indemnification; payment of damages; making amends; making whole; giving an equivalent or substitute of equal value. ... Remuneration for services rendered, whether in salary, fees, or commissions....”
Black’s defines Compensatory Damages in this manner: “Compensatory damages are such as will compensate the injured part for the injury sustained, and nothing more; such as will simply make good or replace the loss caused by the wrong or injury. Damages awarded to a person as compensation, indemnity, or restitution for harm sustained by him....”
These definitions clearly support Respondents’ interpretation and understanding that the Settlement proceeds include wages from the Kamehameha Schools and are entitled to such treatment.
ISSUE 3
“Whether Mr. and Mrs. Harmon are responsible for all tax consequences associated with the settlement proceeds.”
Answer:
Respondents have never questioned the fact that they are responsible for their taxes. The issue in dispute, in the Respondents’ opinion, is whether or not Kamehameha Schools has complied with its ERISA and employment tax liabilities.
ISSUE 4
“Whether a conflict of interest existed or presently exists between any of the parties and their counsel and if so, does or has such a conflict of interest prejudice or harm Mr. and Mrs. Harmon;”
Answer:
A number of conflict of interest issues have been raised by Respondents, and they are prepared to offer evidence of such conflicts. However, considering the fact that Mr. Guttman is one of the parties who has a possible conflict of interest which is to be decided through this Arbitration process, it would appear to be somewhat incongruous for Mr. Guttman to be representing the Claimant regarding his own conflict-of-interest issues.
Regarding the second part of this issue, “... if so, does or has such a conflict of interest prejudiced or harmed Harmon and/or his wife;” it would appear obvious that if an undisclosed conflict of interest existed or presently exists between any of the parties and their counsel, such conflict of interest would have substantially prejudiced the outcome of the settlement negotiations and the amount of compensation ultimately received by the Estate and by the Harmons.
Respondents, therefore, feel strongly that conflicts of interest did exist which substantially prejudiced the outcome of the settlement negotiations and the amount of compensation ultimately received by the Estate and by the Harmons.
ISSUE 5
“Whether Mr. Harmon’s letter writing campaign constituted a breached [sic] of the covenant of good faith and fair dealing and if so, whether he should be enjoined from writing such letters to the Trustee, her counsel, the parties to the Settlement agreement and their employees, representatives and others.”
Answer:
In a letter dated February 27, 2003, Guttman wrote, “Based upon this notice of a demand for arbitration, any future communication from you will be deemed to have been made with direct knowledge on your part that you are violating the Settlement Agreement and we continue to reserve the right to proceed with any and all relief available to the Trustee, including injunctive relief as to your intentional misconduct.”
On March 1, 2003, Harmon responded to this statement by saying, “I believe that this issue needs to be better defined. What exactly is meant by my ‘letter writing campaign’?” Guttman responded to this question on March 13, 2003, as follows: “Our position is that any communication you originate that relates to your former employment is a violation of the Settlement Agreement. [emphasis added]...”
Respondent Harmon argues that the Trustee’s interpretation of the Agreement is overly broad and not in accordance with the actual wording of the Agreement. That said, Harmon maintains that none of his correspondence can be considered to be a breach of the terms of the Settlement Agreement.
DATED: Louisville, Kentucky, May 13, 2003
Bobby N. Harmon, pro se
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