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In re Physiotherapy Holdings, Inc.

United States District Court, D. Delaware

July 3, 2019

In re PHYSIOTHERAPY HOLDINGS, INC. et al, Debtors.
v.
WATER STREET HEALTHCARE PARTNERS, L.P., et al, Defendants. PAH LITIGATION TRUST Plaintiff, PAH LITIGATION TRUST Plaintiff,
v.
WATER STREET HEALTHCARE PARTNERS, L.P., et al, Defendants. C. A. No. 18-1734-LPS

         JURY TRIAL

          MEMORANDUM ORDER

          HONORABLE LEONARD P. STARK UNITED STATES DISTRICT JUDGE

         Having reviewed the Proposed Joint Final Pretrial Order (D.I. 101) ("PTO") filed by Plaintiff PAH Litigation Trust ("Plaintiff or "Trust") and Defendants ("Defendants"), IT IS HEREBY ORDERED that:

         1. The Court ADOPTS Defendants' proposals that do not require exchanging disclosures of cross-examination exhibits (PTO at 7-8, 20, 24) and REJECTS Plaintiffs competing proposals.

         2. Any unresolved objections to admission of exhibits (PTO at 7, 20) or use of demonstratives (PTO at 24) shall be brought to the Court's attention no later than the morning the exhibit or demonstrative is intended to be used (i.e., 8:30 a.m., before the jury arrives at 9:00 a.m.), or the objection shall be deemed untimely and waived.

         3. The Court REJECTS Plaintiffs efforts to reserve rights to call additional witnesses (PTO at 8-9) and add exhibits (PTO at 22) and will only permit the parties to make such additions for good cause. Plaintiffs proposed examples of good cause may or may not be found to constitute good cause.

         4. The parties will exchange demonstratives to be used in opening statements by 12:00 p.m. on Saturday, July 20, 2019. (PTO at 24)

         5. Each side is allocated a maximum of fifteen (15) hours for its trial presentation. Opening statements and closing arguments will be counted as part of this fifteen hours. Defendants' request that the Court reconsider its allocation of time (PTO at 27) is DENIED. Having become further acquainted with the issues in dispute, the proposed exhibits, and the witness lists, the Court remains confident that it has provided each side more than adequate time to be fully and fairly heard on each issue to be tried before the jury.

         6. All exhibits and other information which are used at trial or whose contents have been displayed in open Court shall be treated as public materials. (PTO at 28)

         7. Plaintiffs motion in limine ("MIL") No. 1, to exclude evidence purportedly contradicting the damages ruling, will be discussed at the pretrial conference ("PTC") tomorrow.

         8. Plaintiffs MIL No. 2, to exclude evidence relating to the Noteholders, is DENIED. Such evidence is relevant at least to assessing the "totality of circumstances" and whether Defendants acted with intent to defraud; it also arguably supports Defendants' theory that PTA's management was not overstating the company's value. The probative value of the challenged evidence is not substantially outweighed by the risk of confusing the jury or unfair prejudice to Plaintiff.

         9. Plaintiffs MIL No. 3, to exclude evidence of agreements not binding on the Trust, is DENIED. Such evidence is relevant at least to assessing the "totality of circumstances" and whether Defendants acted with intent to defraud; that Court Square released its claims eight months after purchasing Physiotherapy arguably makes it less likely there was fraud here. Neither party will be permitted to "mislead" the jury.

         10. Defendants' MIL No. 1, to preclude use of settlement agreements, will be discussed at the PTC tomorrow.

         11. Defendants' MIL No. 2, to exclude references to bankruptcy proceedings for purposes of establishing liability, is DENIED. Such evidence is probative of the Debtor's financial condition at the time of the allegedly fraudulent transfer, notwithstanding that it occurred in November 2013, 19 months after Court Square's April 2012 purchase. As Plaintiff writes, "the bankruptcy is relevant to the Trust's constructive fraudulent transfer claims, under which the Trust must prove that the Debtor either (1) became 'insolvent' as a result of a transfer, (2) was left with 'unreasonably small capital' following a transfer, or (3) intended to incur or ...


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