> By Christine Caulfield

> Law360, New York (July 02, 2009) -- Despite a bankruptcy judge's order
> greenlighting the request, Washington Mutual Inc.'s bid to get its
> hands on JPMorgan Chase & Co. records for evidence of sabotage
> continues, with WaMu now fighting the bank's request to have the order
> overturned.

> WaMu fired off an objection to JPMorgan's motion for reconsideration
> of the discovery order in the U.S. Bankruptcy Court for the District
> of Delaware on Wednesday, saying the bank's request amounted to a
> “desperate effort to foreclose discovery concerning its own allegedly
> tortious conduct.”

> Judge Mary F. Walrath signed off on WaMu's motion to examine
> JPMorgan's books on June 24; JPMorgan filed its reconsideration motion
> two days later, according to court documents.

> WaMu told the court it wanted access to JPMorgan's books to find
> evidence supporting allegations that it crafted a plot to undermine
> the one-time savings and loan giant prior to its 2008 collapse in
> order to buy up its banking assets cheaply.

> WaMu said in its filing this week that it had advised JPMorgan on June
> 29 of its intent to limit the scope of its examination to documents
> supporting business tort claims, but this compromise offer was
> “rebuffed,” it said.

> “JPMorgan insists on pressing ahead with their wasteful and meritless
> motion for reconsideration of this court's order,” WaMu said.
> “JPMorgan asks this court to throw out the baby with the bathwater,
> when the debtors have already taken steps to drain the bath.”

> WaMu's discovery request on May 1 sought production of documents and
> depositions connected to potential business tort claims, potential
> fraudulent transfer claims, potential turnover claims and potential
> preferential transfer claims against JPMorgan.

> JPMorgan objected to the request, stating that WaMu must seek the
> information it wanted in already pending litigation. JPMorgan
> contended in its objection filed May 13 that WaMu could not use Rule
> 2004 of the U.S. Bankruptcy Code to pursue discovery on issues that
> were involved in two separate lawsuits.

> WaMu filed an adversary proceeding in the Delaware bankruptcy court on
> April 27, seeking $4 billion in cash that was held in the deposit
> accounts of subsidiary Washington Mutual Bank at the time WMB was
> seized and sold by the Federal Deposit Insurance Corp. to JPMorgan for
> $1.9 billion.

> WaMu also sued the FDIC in the U.S. District Court for the District of
> Columbia, alleging that the purchase price was too low and that the
> agency sold assets it had no right to seize.

> JPMorgan, which intervened in that suit, also filed its own adversary
> proceeding against WaMu, seeking declaratory judgments asserting that
> it acquired the debtor in good faith and that it was the owner of the
> $7.9 billion in disputed assets.

> It was the last two suits that JPMorgan referred to as the operative
> pending proceedings.

> In granting WaMu's request over the bank's objections, Judge Walrath
> said JPMorgan had misapplied the pending proceeding rule, since WaMu's
> motion did not seek evidence related to the bank's adversary
> proceeding.

> “Simply because JPMorgan chose to include background information
> regarding the relationship of the parties involved in the JPMorgan
> adversary action in its complaint does not mean that any Rule 2004
> examination request dealing with those background facts is related to
> the JPM adversary action,” the judge said.

> “The court concludes that the debtors' motion does not seek the
> discovery of evidence related to the JPMorgan adversary action,” the
> judge added.

> Judge Walrath said JPMorgan's suit sought the court's declaration that
> it owned certain assets from the sale of WaMu, which occurred after
> WaMu's closure, while WaMu sought to investigate conduct that occurred
> before the closure.

> Further, the judge ruled, JPMorgan was not a party to WaMu's action
> against the FDIC, and the mere possibility that it could be permitted
> to intervene was insufficient to deny WaMu's motion.

> WaMu asked to conduct a Rule 2004 investigation into JPMorgan after a
> group of WaMu investors sued JPMorgan in the U.S. District Court for
> the Southern District of Texas. WaMu wants to investigate whether the
> allegations in the shareholder complaint are true, it said.

> The investors allege that JPMorgan deliberately drove down the value
> of WMB by abusing confidential information and that JPMorgan engaged
> in sham negotiations with WaMu throughout 2008 about buying the
> banking arm in order to obtain confidential information.

> JPMorgan then shared that information with WaMu bank customers to
> persuade them to withdraw their deposits, leaked information to the
> media to depress the bank's stock value and ultimately used it in its
> negotiations with the FDIC, allowing JPMorgan to acquire WaMu's bank
> assets for a "fire sale" price, the investors claim.

> WaMu filed for Chapter 11 protection on Sept. 26, citing approximately
> $33 billion in total assets and $8.2 billion in debts.

> WaMu is represented by Elliott Greenleaf and Quinn Emanuel Urquhart
> Oliver & Hedges LLP.

> JPMorgan is represented by Landis Rath & Cobb LLP and Sullivan &
> Cromwell LLP.

> The case is In re: Washington Mutual Inc., case number 08-12229, in
> the U.S. Bankruptcy Court for the District of Delaware.

> --Additional reporting by Jacqueline Bell and Brendan Pierson

> http://www.law360.com/articles/109471