Delaware bankruptcy court judge Mary Walrath appears determined to continue presiding over JPMorgan Chase’s ongoing battle with Washington Mutual Inc. According to a transcript of a hearing last Friday, available here, Judge Walrath called efforts by JPMorgan’s lawyers at Sullivan & Cromwell to challenge her jurisdiction “frivolous.”
The dispute between the two companies mainly concerns $4 billion in deposits that Washington Mutual Inc. had with Washington Mutual Bank, which was taken over by JPMorgan last September. Washington Mutual Inc., which is in bankruptcy, claims JPMorgan has wrongfully withheld the money. As we reported in June, Judge Walrath has already denied a request by JPMorgan to stay or transfer the proceedings. JPMorgan subsequently appealed that decision but continued to participate in the case, including by moving unsucessfully to dismiss WaMu’s counterclaims.
On Friday, JPMorgan’s lawyer at Sullivan & Cromwell, Robert Sachs, argued to Judge Walrath that his client’s appeal of her orders divests her of jurisdiction over adversary proceedings in the case. But Judge Walrath wasn’t having any of it.
“The fact that JPMC has continued to appear before me and continues to proceed with this adversary for the past four months, I think evidences an acknowledgment that really their position is frivolous,” she said, according to the transcript. “I think the decision of JPMC that I do not have jurisdiction is frivolous. The adversary proceedings will proceed until and unless the appellate court decides otherwise, but they need not be held up pending that appeal.”
David Elsberg of Quinn Emanuel Urquhart Oliver & Hedges, who argued at the hearing for Washington Mutual, told the Litigation Daily Tuesday that he was pleased with Judge Walrath’s decision to allow the case to go forward. “I’m delighted that the judge saw through JPMorgan’s invitation to ignore the controlling legal principles that have been established by both the 3rd Circuit Court of Appeals and the Supreme Court,” he said.
A spokesperson for JPMorgan declined to discuss the hearing, and Sachs did not immediately respond to our call seeking comment.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.