BOBBY N. HARMON
Louisville, Kentucky 40229
Respondent, pro se
THE ARBITRATION TRIBUNALS OF THE
AMERICAN ARBITRATION ASSOCIATION
In the matter of the Arbitration between MARY LOU WOO, Trustee, Claimant, and BOBBY N. HARMON, Respondent
Case No. 74 166 00491 03 JUSC
RESPONDENT’S OBJECTION TO CLAIMANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT; MEMORANDUM IN SUPPORT OF MOTION
Pretrial Conference
June 9, 2004
Arbitration Date
June 14 and 15, 2004
Arbitrator
Judith Neustadter
_______________________________
RESPONDENT’S OBJECTION TO CLAIMANT’S MOTION
FOR PARTIAL SUMMARY JUDGMENT
Respondent BOBBY N. HARMON hereby submits this OBJECTION TO CLAIMANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT.
Claimant MARY LOU WOO (“Claimant”), by and through her attorneys, Kessner Duca Umebayashi Bain & Matsunaga, on May 7, 2004, moved for an order for partial summary judgment in her favor and against Respondent BOBBY N. HARMON (“Respondent”) as to Disputed Issues 1 through 4 set forth in Attachment No. 1 to the Demand for Arbitration submitted herein on March 31, 2003.
Respondent hereby objects to this Motion, and is supported by the attached Memorandum, and such other evidence and argument as may be presented. This Objection is made pursuant to the Arbitration Schedule issued by the Arbitrator on April 30, 2004, the Commercial and Employment Rules of Arbitration issued by the American Arbitration Association.
DATED: Louisville, Kentucky, May 18, 2004
_________________________
BOBBY N. HARMON
pro se
MEMORANDUM IN OPPOSITION OF MOTION
Respondent BOBBY N. HARMON (“Respondent”) hereby submits this objection to Claimant MARY LOU WOO’s Motion for Partial Summary Judgment in her favor and against Respondent as to Disputed Issues 1 through 4 set forth in Attachment No. 1 to the Demand for Arbitration submitted on March 31, 2003.
By her Motion, the Claimant seeks a judgment from the Arbitrator which finds that:
1. Payment to Respondent of the settlement proceeds pursuant to the Settlement, Release and indemnification Agreement approved by the Bankruptcy Court in Chapter 7 Case on March 24, 2000 (“Settlement Agreement”) was a general payment of settlement funds in compromise of all issues presented by Respondent’s pre-bankruptcy litigation;
2. The settlement proceeds paid to Respondent pursuant to the Settlement Agreement was a general payment of settlement funds and did not constitute wages from the Kamehameha Schools and, as such, the payment is not entitled to treatment as wages or salary;
3. Respondent and his wife are responsible for all tax consequences associated with their receipt of the settlement proceeds; and
4. There is no conflict of interest, either previously or presently, between any of the parties to the Settlement Agreement and their counsel and, to the extent there may be an appearance of a conflict of interest, such appearance has not in the past and does not presently prejudice or harm the Respondent and/or his wife.
I. STATEMENT OF FACTS.
In her Statement of Facts, Claimant lists several pages of “facts” to which Respondent makes the following objections:
1. Regarding Respondent’s December 29, 1996, “settlement demand letter” Claimant states, “Attached to the demand letter were numerous confidential and privileged records and documents that Respondent had removed from KS in violation of the KS’ Employee Manual.” Respondent maintains that this letter and accompanying documents were presented to the former Bishop Estate Trustees as evidence of fraud and racketeering at high levels of management at Kamehameha Schools (“KS”) and P&C Insurance Company, Inc. (“P&C”). At that time, Harmon was the Risk, Insurance and Safety Manager of KS and President of P&C, and had the duty and legal responsibility to report any theft of assets of the estate or its subsidiaries to his superiors. This was also an instruction in the KS Employee Manual. To the best of Respondent’s knowledge, Claimant has never seen a copy of Harmon’s letter of December 29, 1999, or the KS Employee Manual, and thus has no direct knowledge of the contents of either. Therefore, Claimant’s statement is hearsay and not a Statement of Fact. If Claimant wishes to continue to present these allegations as Statements of Fact, Respondent believes that she should provide the arbitrator with a copy of the KS Employee Manual and Harmon’s letter, with all attachments, as Exhibits in this case.
2. Regarding Claimant’s statement (p. 6), “Although the Settlement Agreement had been signed by all parties, including the Respondent, and approved by both the District Court and the Bankruptcy Court ...,” Respondent maintains that the Agreement was NOT COMPLETE and was NOT SIGNED by all parties when it was filed with the court, as detailed in RESPONDENT’S MOTION TO DISMISS COMPLAINT OR IN THE ALTERNATIVE FOR SUMMARY JUDGMENT filed in these proceedings on May 4, 2004.
3. Regarding Claimant’s comments about Harmon’s alleged “letter writing campaign”, Respondent contends that his letters were mainly to request information and the issuance of required IRS W-2 and 1099-R forms in accordance with the Settlement Agreement, and to inform law enforcement and regulatory agencies of ongoing criminal activities surrounding the operations of Kamehameha Schools, and was not an “incessant campaign of harassment through the writing and sending of letters to the Claimant, her counsel, KS, its agents, attorneys and affiliates, and various federal and State of Hawaii employees, and numerous private entities.”
Claimant states that Respondent essentially presented two issues. The first was Conflict of Interest, regarding which Claimant states: “Respondent believed the attorneys who represented the parties in the various underlying lawsuits and negotiations had a conflict of interest and the alleged conflict had not been fully disclosed. Respondent was repeatedly informed by Claimant’s attorney and his own bankruptcy counsel, Bradley Tamm, that there was no conflict among the attorneys.” Respondent contends that Claimant’s attorney, Steven Guttman, is one of the parties who had a conflict of interest, and that he and Harmon’s attorney, Bradley Tamm, conspired to cover-up their own errors and omissions in this case by not pursuing Harmon’s repeated requests for: 1) Attorney of Record letters from other parties to the Settlement Agreement; 2) a complete, signed copy of the Settlement Agreement; 3) the identities of those parties whose signatures on the Agreement were illegible; 4) the identity of the independent Claims Administrator(s) for Federal Insurance Company and XL Insurance Company; 5) a copy of the contract that Harmon signed with P&C that indemnified him in this matter.
The second issue, according to Claimant, is Settlement Proceeds as Wages: “Respondent complained that the settlement proceeds he received, which were paid through the bankruptcy estate, should have been treated as wages and that he should have received the appropriate tax-related documentation. It was explained to Respondent by Claimant’s counsel that the funds paid out in settlement were for general damages, not wages and, therefore, it was not appropriate for Respondent to be issued a W-2 relative to the payment.”
Respondent contends that the Claimant, and her attorney, erred in this matter for the reasons detailed in Respondent’s Motion to Dismiss. Basically, however, Respondent maintains that:
1) During the settlement negotiations, both of Harmon’s attorneys, Bradley Tamm and Arnold Phillips, represented to him that the settlement proceeds were to be characterized as wages; and Harmon’s understanding at the time he signed the Agreement was that the entire proceeds would be characterized as wages;
2) At no time prior to signing of the Settlement Agreement did KS’s attorney Matt Tsukazaki ever indicate that the settlement proceeds did not include wages;
3) If Kamehameha Schools had wanted to make it clear to all parties that the settlement did NOT include wages, they had the opportunity to clearly state this intent in the Settlement Agreement, since they were the drafter of the Agreement;
4) Claimant’s accountant, Michelle Tucker, who was not present at the Settlement Conferences, evidently based her tax opinion on false and erroneous statements made in Steven Guttman’s letter of December 22, 2000, addressed to Bradley Tamm (Claimant’s Exhibit 27), in which he stated:
“The Trustee is in the process of completing the tax related work and the accounting necessary to close the estate. In that regard, we know Mr. Harmon has requested a 1099 from the Trustee for the money that was paid over to him as his exempt asset. I am advised by the estate’s accountant that due to the Trustee serving as a conduit only for the money but never having an ownership interest in the money, the Trustee is not obligated to issue a 1099 to Mr. Harmon. The purpose of this letter is to inquire whether it remains his request that the Trustee issue to him the IRS form 1099. If that remains his request, we will proceed to do so.
“Please advise by January 4, 2000 [sic]. If we do not hear from you by that date, the Trustee will issue the 1099 in accordance with the prior request by Mr. Harmon.”
The statement in Mr. Guttman’s letter that Harmon had requested a 1099 from the Trustee is false. The true fact is that Harmon had requested Forms W-2 and 1099-R from his past employer, Kamehameha Schools – not a 1099-MISC from the Trustee. These are completely different forms and are issued for completely different reasons. This mistake is borne out from Claimant’s memo to Michelle Tucker dated February 1, 2001 (Claimant’s Exhibit 28), in which she states, “ I received your message this morning in which you advised that we have no obligation to provide a 1099 or W-2 since the funds were not estate property.” The fact of the matter is that the individual who had responsibility for determining how much of the settlement that was to be characterized as wages, and for drafting the Settlement Agreement, was negligent in advising Respondent’s employer of the amount that Kamehameha Schools was required to report to the IRS as wages. Although the person normally responsible for coordinating payments in situations such as this would be the insurance company’s Claim Adjuster, apparently in this case the person claiming responsibility was Matt Tsukazaki, of Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington. As Tsukazaki states in his letter of February 28, 2001, addressed to Harmon’s attorneys Arnold Phillips, Roy Hughes and Bradley Tamm (Claimant’s Exhibit 31):
“Enclosed please find a copy of a February 24, 2001 letter from Bobby N. Harmon to the Personnel Director of Kamehameha Schools....
“As you know under the Settlement, Release and Indemnification Agreement signed by Mr. Harmon, he agreed to maintain the confidentiality of his settlement (Section J) with Kamehameha Schools and its insurance carriers. We do not believe that Mr. Harmon intentionally sought to breach the confidentiality provision. Rather, we believe that he was not sure to whom he should address his letter and his inquiry. In the future to the extent that Mr. Harmon has any question about the settlement, please advise him that all inquires should be made by his attorneys. If your legal representation of Mr. Harmon has ceased, as confirmed by your respective offices to my firm, then Mr. Harmon should send all inquires he may have with Kamehameha Schools to my attention.
“In addressing Mr. Harmon’s letter, we note that the settlement payment was not classified as wages and was not compensation in return for services. Mr. Harmon will not be receiving a W-2 for that amount. Nor will he be receiving a Form 1099-R as the settlement would not have adjusted his total earned income at Kamehameha Schools and would not have affected the amount of his retirement benefits. Obviously, if the settlement payment was designated as payment for services, Mr. Harmon would be required to pay federal and state income taxes on the settlement payment and FICA and possibly other assessments would have to be withheld from the funds. It is our understanding that Mr. Harmon sought to avoid such treatment.”
Respondent’s letter of February 24, 2001, which was enclosed with Matt Tsukazaki’s letter, clearly states that Harmon was requesting Forms W-2 and 1099-R from Kamehameha Schools, and NOT a Form 1099-MISC from the Trustee.
In Respondent’s reply of March 4, 2001, to Mr. Tsukazaki (Claimant’s Exhibit 33), Harmon states, in part:
“You are correct that I did not intentionally seek to breach the confidentiality provision. In fact, as a layperson, I still do not understand how I would be breaching the confidentiality provision simply by writing directly to Kamehameha Schools to question why I had not received the W-2 and 1099-R forms needed to file my income taxes and to apply for Social Security Benefits.
“Next, I firmly disagree with your statement that ‘we note that the settlement payment was not classified as wages and was not compensation in return for services.’ During the final settlement conference in Judge Kurren’s chambers, Mr. Tamm definitely stated that the entire settlement could be ‘characterized’ as wages, and all the attorneys present agreed to accept this condition....
“I do concur with the portion of your statement that FICA and other assessments would have to be withheld from the funds if the payment was designated wages. This is the reason I requested the W-2 Form from Kamehameha Schools. Without this form, I have no way of knowing how much of the funds were withheld for Income Taxes, Social Security, Medicare and other benefits. These are the same reasons for my requesting the Form 1099-R. As the settlement would have adjusted my earned income at Kamehameha Schools for the year 2000, this would presumably affect the amount of my retirement benefits.
“If your firm was responsible for handling the settlement transactions, as you have indicated, then it appears that someone may have erred by not advising Kamehameha Schools of the agreement that the entire amount of the settlement was to be treated as wage income, which required the proper withholding of taxes, reporting, etc.”
II. RESPONDENT’S OBJECTIONS AND COUNTER-ARGUMENTS
Respondent, first of all, contends that Claimant’s seven-page Argument is moot since he was fraudulently induced to sign the Settlement Agreement, as detailed in his earlier Motion to Dismiss the Complaint. Also, Respondent provides these Objections to the following statements made by Claimant:
Claimant’ Argument: “Once the parties execute an instrument which contains their whole agreement, their previous negotiations and agreements are legally ineffective and evidence relating to those previous negotiations or agreements is irrelevant regardless of who offers it.”
Respondent’s Objection: The Agreement, at the time it was signed by Respondent, and at the time it was submitted to the Court, was not the WHOLE AGREEMENT. It was missing Exhibit 5, and had not been signed by all parties. As noted in Respondent’s Motion to Dismiss, there was evidence of a “side letter” between Federal Insurance Company and other unknown parties to the contract that was not made known to Respondent, or to the Court. In fact, this “side letter” was not issued until after the Court had approved the Settlement, and a copy of this letter has never been provided to Respondent.
Claimant’s Argument: “Courts must not draw inferences from a contract regarding the parties’ intent when the contract is definite and unambiguous, and must interpret terms according to their plain, ordinary meaning and accepted use in common speech.”
Respondent’s Objection: Respondent is interpreting the terms of the Agreement according to their plain, ordinary meaning and accepted use in common speech. It is Claimant who attempting to obscure and confuse the plain, ordinary meaning of the terms by citing numerous legal cases to which Respondent has no ready access. Respondent also believes that if the terms in the Settlement Agreement were not clearly stated in plain, ordinary language, then it is the Drafter of the document that should be held responsible for the lack of clarity.
Claimant’s Argument: “The parties further represent and certify that none of the parties, their agents, representatives or attorneys, have made any representations concerning the terms or effects of this AGREEMENT other than those contained in this AGREEMENT, that this agreement contains the entire AGREEMENT between the parties herein, and that this AGREEMENT fully supersedes any and all prior agreements or understandings between the parties...”
Respondent’s Objection: As stated previously, other parties to the Agreement have made representations concerning the terms or effects of this AGREEMENT other than those contained in this AGREEMENT, and these agreements were made AFTER the contract was signed by Respondent and approved by the Court.
Claimant’s Argument: “The Settlement Agreement is Clear and Unambiguous as to Issues Nos. 1, 2 and 3. The issues and concerns about the settlement do not require witnesses to testify. Resolution of four of the five arbitration issues simply require interpretation of the Settlement Agreement.... “
Respondent’s Objection: Respondent contends that a layperson’s interpretation of the Agreement would be that the settlement:
1) Is a general payment of settlement funds in compromise of all issues presented by Respondent’s litigation;
2) The settlement proceeds under the Agreement include wages from Kamehameha Schools and are entitled to such treatment;
3) Respondent and his wife are responsible for all tax consequences associated with the settlement proceeds.
If Claimant would be willing to accept this “plain language” interpretation, Respondent would seriously consider settlement of these three issues.
Claimant’s Argument: “Disputed Issue No. 4 is also Addressed by the Settlement Agreement.... It is Respondent’s position that the various attorneys representing KS and its subsidiary had a conflict of interest in representing KS that somehow prejudiced or injured Respondent. This claim is nonsensical. Again, the Settlement Agreement identified the parties to the agreement and the particular attorneys who represented their interests.”
Respondent’s Objection: Respondent contends that Trustee Woo should have disclosed that Susan Tius, Esq., who represented Kamehameha Schools in the Bankruptcy proceedings, had previously been associated in business with Trustee Woo, and was the wife of Guido Giacometti who was a previous executive at Kamehameha Schools and prominently mentioned in Respondent’s RICO lawsuit against Bishop Estate. Respondent has previously pointed out that Steven Guttman was the bankruptcy attorney for Summit Communications, and that Sandwich Isles Communications was a major creditor of Summit, and that two of the officers of Sandwich Isles are Gil Tam, who was a director of P&C Insurance Company and a party named in Harmon’s RICO lawsuit; and Robert Kihune, who is also a trustee of Kamehameha Schools, and who may be one of the unidentified signatories to the Settlement Agreement.
In the DECLARATION OF MARY LOU WOO, she falsely states, “Following the disbursement of the $84,190.00, by the bankruptcy estate to Respondent on his exemption claim, Respondent first demanded that he be issued a 1099. Subsequently, he demanded that he be issued a W-2 in regards to the $84,190.00. Because the $84,190.00 payment was not related to a claim for wages, Declarant refused to issue a W-2 to Respondent. Due to Respondent’s incessant demands that he be issued some type of tax-related documentation evidencing his receipt of the $84,190.00, Declarant issued to Respondent a 1099-MISC....”
Respondent has NEVER demanded that the TRUSTEE issue to him either a Form W-2 or 1099. His requests have always been directed to KS, which is the only entity in this case that has the responsibility and legal authority to issue these I.R.S. forms. Trustee Woo wrongly declares that the $84,190.00 payment was not related to a claim for wages. As Steven Guttman, in his letter of December 20, 1999, to Magistrate Judge Barry M. Kurren (Claimant’s Exhibit 13), clearly states: “The base claim originating from the employment termination as to lost wages and benefits appear to total approximately $365,000. If these damages qualify under RICO, there is a triple damage liability in addition to paying for the attorneys’ fees and costs and interest on the $365,000 principal balance. For RICO, the predicate act is the improper discharge. For settlement purposes, the Trustee will accept the direct damages of $365,000 that Mr. Harmon could prove as his lost wages and benefit package with Bishop Estate.”
In the DECLARATION OF STEVEN GUTTMAN, he states (p.4), “Attached hereto as Exhibit H is a true and correct copy of Declarant’s April 27, 2001 letter to Respondent responding to his ongoing inquiries regarding tax-related documentation of the settlement distribution and the characterization of those funds and again informing Respondent that his letter writing campaign to individuals unrelated to the global settlement was preventing the Trustee from moving the Chapter 7 Case to conclusion.”
Harmon’s letter to Guttman dated May 1, 2001 (attached hereto as Respondent’s Exhibit A), which was in response to Guttman’s letter of April 27, 2001, further refutes many of Claimant’s declarations contained in her MOTION FOR PARTIAL SUMMARY JUDGMENT.
III. CONCLUSION
Based on the factual information and the objections set forth above, Respondent requests that the Arbitrator DENY Claimant’s motion for summary judgment.
DATED: Louisville, Kentucky, May 18, 2004.
_____________________________
BOBBY N. HARMON, pro se
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