Bobby N. Harmon, CPCU, ARM
10951 Southgate Manor Drive, Apt. #4 Tel & Fax No. (502) 964-0694
Louisville, Kentucky 40229-1655
August 13, 2003
VIA fax only @ 808-523-6001
Matt A. Tsukazaki, Esq.
Torkildson, Katz, Fonseca, Moore & Hetherington
700 Bishop Street, 15th Floor
Honolulu, HI 96813-4187
Re: Mary Lou Woo, Trustee vs. Bobby N. Harmon - 74 166 00491 03 JUSC
Dear Mr. Tsukazaki:
This responds to your letter dated August 11, 2003, which you begin by stating:
“I have received a copy of your August 2, 2003 letter and respond accordingly.
“There was a part of my August 1, 2003 letter that you failed to quote:
You are instructed that my firm and I are legal counsel for Kamehameha Schools and P & C Insurance concerning all current matters in which you are involved, and you are again instructed that any communication from you to either Kamehameha Schools or P & C Insurance must be sent to my office addressed to my attention.
“This sentence should make it very clear to you that ‘my firm and I are legal counsel for Kamehameha Schools and P & C Insurance concerning all current matters in which you are involved.’ No further verification is required nor owed to you.”
My response to this remains the same as in my letters dated July 7 and August 2, 2003, which clearly stated:
“In order for me to honor this request, I will require that you first provide me with copies of Attorney of Record letters from both Kamehameha Schools and P&C Insurance Company, Inc. authorizing your previous representation in my RICO and wrongful termination cases as well as for the Arbitration matter at hand.”
I dispute your claim that “No further verification is required nor owed to you.”
You continue in your letter of August 11th:
“Next, the scope of your arbitration with Trustee Mary Loo Woo will be defined by the arbitrator and the Trustee. But to the extent that you have failed to understand my instructions, let me make the matter very clear, “[i]n accordance with the Settlement, Release and Indemnification Agreement, you are not entitled to a W-2 or 1099 form.” Kamehameha Schools will not be issuing you a W-2 or 1099 for the proceeds you received under the Settlement, Release and Indemnification Agreement. It will also not respond to any inquiries about such forms, so you should stop asking. If you feel you need to pursue this claim any further, Kamehameha Schools will seek claims of indemnification and contribution against you and your wife for any and all costs incurred in defending what is a frivolous claim.”
In response to this, I quote from my letter dated March 1, 2003, addressed to Steven Guttman:
“This responds to your letter dated February 27, 2003.
“You refer to my position regarding Kamehameha Schools and the issuance of certain IRS forms (Forms W-2 and 1099-R, to be specific), and you state, ‘Correspondence has been sent to you regarding this issue but you have elected to continue to write letters regarding this subject despite repeated requests that you terminate the letter writing campaign on all issues related to the Settlement Agreement, including the tax related matters. You have refused to do so and in your letter of January 21, 2003, you reference the Settlement Agreement and request the Trustee to declare a breach of the Agreement to have occurred.’ I do not understand how the failure of Kamehameha Schools to issue the required IRS Forms W-2 and 1099-R can justify your request that I do not question their actions....”
“The unresolved TAX issues that I have written to you about are:
1) the fact that KAMEHAMEHA SCHOOLS did not pay THEIR required Social Security and Medicare taxes on the settlement amount, and
2) an accounting of the taxes already paid from the estate to the IRS and the State Tax Collector. This is factual information that should not be an issue for arbitration....”
I still maintain that these tax issues are a clearly a matter of Kamehameha Schools following the applicable tax, Social Security, and ERISA laws, and not a matter to be decided through arbitration. As I stated regarding Issue Number 2 in Trustee Mary Lou Woo’s Complaint:
“2. Whether the payment of settlement proceeds under the Settlement Agreement constitute wages from Kamehameha School and are entitled to such treatment.
“This is certainly a key issue; however, I believe that this is a factual issue for Kamehameha Schools to address with their tax attorneys rather than an issue to be addressed in arbitration.”
You continue in your letter of August 11th:
“Next, Kamehameha Schools and P & C Insurance have rejected your tender of defense and claim for indemnification of the Trustee’s arbitration against you. Under the Settlement, Release and Indemnification Agreement, Kamehameha Schools and P & C Insurance do not have any obligation to provide you with such coverage. No further communication on this issue is required. If you feel you need to pursue this claim further that always remains your decision. But please understand that Kamehameha Schools and P & C Insurance will seek claims of indemnification and contribution against you and your wife for any and all costs incurred in defending what is a frivolous claim.”
In response to this, I quote from my August 2, 2003 letter addressed to you:
“In my thirty years in the insurance business, I have never seen a worse case of ‘bad faith’ than that you have just demonstrated. You categorize my submission of claims as ‘harassment of Kamehameha Schools and P&C Insurance.’ You use threats and intimidations to prevent my tendering defense of a claim to an insurance company that has Directors & Officers Liability insurance coverages for my protection. You are demanding that I must report claims or tender defense to your office and to your attention, and not directly to the insurance company. You are saying that it is not necessary for you to provide an Attorney of Record letter or other documentation to prove that you are actually authorized to act on the behalf of these entities. You will not divulge who P&C’s independent Claims Administrator is in this case - the person to whom you are supposed to be reporting. You claim it is permissible for you, on behalf of P&C, not to respond to any of my claims if you choose not to do so. Finally, you have denied my tender of defense on behalf of P&C even before I have presented my case.
“With this said, however, if you will provide evidence in the form of a valid Attorney of Record letter, or similar contract, proving that you are authorized to act as P&C’s Claims Administrator and their Attorney of Record, then I will agree to direct future correspondence to your attention. By voluntarily making this commitment to communicate with you under these terms, however, I do not waive any legal rights that I may have in these matters, or in any ‘bad faith’ lawsuit which I may bring against P&C Insurance Co., Inc.
“Regarding the arbitration process, I must mention that neither Kamehameha Schools, P&C Insurance Co., nor Torkildson, Katz, Fonseca, Jaffe, Moore & Hetherington are Complainants in these proceedings, although it is my understanding from Steven Guttman’s correspondence that certain employees from these firms may testify at the arbitration hearings. I question whether or not some conflicts of interest may exist in this situation, with Torkildson, Katz, who was also a Defendant in my RICO lawsuit, acting as the claims administrator for P&C as well as the attorney for Kamehameha Schools, P&C Insurance Co., and themselves in these proceedings. In any event, it is my understanding that the issue of whether or not my ‘letter-writing campaign’ is in violation of the Settlement Agreement is a matter to be decided by the appointed arbitrator, not by you or Mr. Guttman prior to the hearings....
“I look forward to receiving your Attorney of Record letters, or, if these do not exist, I expect to receive further communications from P&C’s actual independent Claims Administrator.”
Since you have refused to produce Attorney of Record letters from either Kamehameha Schools or P&C Insurance Company, or an admission that these do not exist, I maintain that I therefore have the right to pursue my claims directly with the insurance company, rather than going through your office as an intermediary.
You conclude your letter of August 11th by stating:
“Finally, your protestations are simply without any merit. You continue to ignore the facts and events, misinterpret and misstate such facts, and simply fail to understand what is being communicated to you. I repeat: All future communications (oral or in written form) with Kamehameha Schools and P&C Insurance, and its Trustees, directors, officers, and/or employees, must be addressed to my attention and sent to my office address. This includes your practice of copying various parties on your letters. If you want to send a copy of a letter, even a letter addressed to me, to someone at Kamehameha Schools or P&C Insurance, you must address it to my attention and mail the copy to my address – not to the individual addressee. You may not under any circumstance send a letter (original or copy) or other document to or communicate in any way with the Trustees of Kamehameha Schools and Mr. Clyde Mark, the President of P&C Insurance, as well as any director, officer and/or employee of Kamehameha Schools and P&C Insurance.”
Let me respond to this as clearly as I can. If the independent, third-party Claims Administrator for P&C Insurance Company had responded to my initial Report of Claim, as is the prescribed protocol, none of my subsequent correspondence would have been necessary. I wrote to Clyde Mark, President of P&C Insurance Company, on June 30, 2003, only in reply to his letter of June 20, 2003, in which he rejected, on behalf of P&C Insurance, my tender of defense. Again, if P&C’s authorized third-party Claims Administrator had been the party that issued this rejection, it would not have been necessary for me to direct my reply to Mr. Mark.
Likewise, if I had been contacted by P&C’s Claims Administrator as I had requested in my letter dated July 28, 2003, to Jill Miura, Aon Insurance Managers (the third-party captive insurance company manager for P&C), instead of you, it would not have been necessary for me to direct this response to you. There would have been no need for me to have contacted anyone at Kamehameha Schools, including the Trustees, or Clyde Mark, or any director, officer and/or employee of Kamehameha Schools and P&C Insurance.
Finally, if it was to P&C’s third-party Claims Administrator that I am writing this letter, it would not be necessary for me to send copies of this correspondence to any “laundry list” (as Mr. Guttman characterizes it) of individuals who have unnecessarily become involved in this matter.
The problem which initiated in my “letter writing campaign” at issue in the instant Demand for Arbitration, was, in my opinion, caused by the fact that my original Wrongful Termination lawsuit, and my subsequent Racketeer Influenced Corrupt Organizations (RICO) lawsuit, were handled, not by P&C’s independent, third-party Claims Administrator, but by your office directly with Nathan Aipa, Colleen Wong and Louanne Kam, employees of Kamehameha Schools and, as in the case of Nathan Aipa and Louanne Kam, officers of P&C.
This is not only highly unwise from a risk management standpoint, but it also disregards P&C’s Procedure Manual, and violates IRS regulations requiring that for-profit subsidiaries operate at “arms-length” from their tax-exempt, non-profit parents. For this violation, I believe that you and your office, along with Colleen Wong and Louanne Kam, are placing Kamehameha Schools’ tax-exempt status at risk by pursuing your claim that you are acting on behalf of both Kamehameha Schools and P&C Insurance Company in this arbitration matter.
Would not it have been far safer, more practical, and less costly for your office and everyone involved, if you had excused yourselves from this claim due to conflicts of interest, rather than pursuing it in the aggressive and intimidating manner you have exhibited? In fact, if your office were not handling these matters, which are the sole responsibility of P&C’s third-party Claims Administrator, then this current Demand for Arbitration would not have been made necessary.
With all this said, however, I will honor your request that I do not communicate directly with Kamehameha Schools and P&C Insurance, and its Trustees, directors, officers, and/or employees. In lieu of this, however, I am sending copies of this letter, and all future correspondence regarding this matter, to P&C’s independent, third-party Claims Administrator, which I understand is John Mullen & Co., Inc.
Since there is a due date of August 18, 2003, for payment of initial fees to the American Arbitration Association in this case, your immediate reply to this letter is requested.
Sincerely,
Bobby N. Harmon, CPCU, ARM
cc’s: Terry Mullen, CEO/President, John Mullen & Co.
VIA fax @ 808-531-0053
Julie A. Schermerhorn, Supervisor & Justin Schuck, Case Manager, AAA
VIA fax @ 559-490-1919
Mary Lou Woo, Trustee, c/o Steven Guttman, Esq.
VIA fax @ 808-529-7177
Attorney General Mark Bennett, State of Hawaii
VIA fax @ 808-586-1239
Dr. Randy Roth, Office of the Governor, State of Hawaii
VIA fax @ 808-586-0006
Mr. J. P. Schmidt, Hawaii Insurance Commissioner
VIA fax @ 808-586-2806
Internal Revenue Service, Criminal Investigation Div., Tempe Office
VIA fax @ 602-207-8010
Benjamin M. Matsubara, Esq.
Kamehameha Schools Master
888 Mililani St., 8th Floor
Honolulu, HI 96813-2918
Janet S. Hughes, Mgr., Employee Plans & Exempt Organizations, IRS
VIA fax @ 303-844-3596
Billy Beaver, Pension & Welfare Benefit Administration
VIA fax @ 626-229-1098
Casimer A. Fidele, Jr., Claims Dept., Island Insurance Company, Ltd.
VIA fax @ 808-521-7489
Federal Insurance Company, Claims Dept., Attn: Winnona Donaldson
VIA fax @ 213-833-5200
John Goemans, Esq.
VIA fax @ 808-887-1099
Arnold T. Phillips, Esq.
VIA fax @ 808-528-5006
Greg Dunn, Esq., & Bradley R. Tamm, Esq.
VIA fax @ 808-524-4844
Robert S. Tameler, Esq., Attorney’s Liability Protection Society
VIA fax @ 406-728-7416
Ralph F. Boyd, Jr., et al., U.S. Department of Justice
VIA fax @ 202-514-1116
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