Objection to K&L Gates, Le-Nature's Accord Withdrawn

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K&L GATES

Less than 24 hours after the trustee for Le-Nature's said an accounting firm's objection to his $23.75 million settlement with K&L Gates was unfounded, the objection has been withdrawn.

Accounting firm Pascarella & Wiker filed last week objections to the settlement, arguing it didn't protect the firm's ability to offset certain potential damages levied against it by the amount for which co-defendant K&L Gates would jointly be responsible.

The settlement was reached in the state-court action Kirschner v. K&L Gates in the Allegheny County Court of Common Pleas, but needs to be approved by the judge overseeing Le-Nature's bankruptcy, U.S. Bankruptcy Judge Thomas P. Agresti of the Western District of Pennsylvania.

Trustee Marc Kirschner argued in a filing in bankruptcy court Tuesday that Pascarella & Wiker's objection was baseless because the firm lacked any right to indemnification by K&L Gates for potential contract claim damages, and, even if the accounting firm did have such a right, it was protected by the settlement in other ways, making its concerns moot. He further noted the accounting firm declined his offer to modify the settlement to address the firm's concerns.

Kirschner said in his Tuesday filing that he made a good-faith effort earlier this month to modify the settlement language to allay the firm's concerns. Pascarella & Wiker initially rejected that proposal and declined to provide its own suggested changes, Kirschner had said. He said the accounting firm argued there was no way to amend the order to fully protect Pascarella & Wiker's rights.

That appears to have changed literally overnight. In a filing Wednesday afternoon, Pascarella & Wiker has withdrawn its objection to the settlement, noting the parties had resolved their differences. The firm said it did not oppose approval of the settlement.

Patricia L. Dodge of Meyer, Unkovic & Scott in Pittsburgh represents Pascarella & Wiker and did not respond to a request for comment. Sigmund S. Wissner-Gross of Brown Rudnick in New York represents Kirschner and Craig D. Singer of Williams & Connolly in Washington, D.C., represents K&L Gates. They both declined comment.

As part of the settlement between K&L Gates and Kirschner reached last month, the parties said nonsettling defendant Pascarella & Wiker would have the benefit of a Griffin release. Such a release means the settling defendant, in this case, K&L Gates, would concede joint tortfeasor liability in order for the nonsettling defendants to have a right of setoff, Pascarella & Wiker said in its opposition to the settlement.

Pascarella & Wiker had argued a Griffin release only protects parties in actions that sound in negligence, not breach of contract actions, which is one of the remaining claims against the accounting firm.

Pascarella & Wiker argued in its memorandum that while the settling parties fashioned a remedy to protect the accounting firm from paying full damages on the tort-based claims, the settlement seeks the court's approval to bar Pascarella & Wiker from asserting any claims for contribution or indemnity, not just for those that sound in negligence. The firm said there was no case law to show such a release would apply to contract claims.

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