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SCO Agrees to Pay the Constructive Trust Money to Novell Now - Updated 2Xs
Friday, June 04 2010 @ 04:31 PM EDT

It's a start! SCO fi...na...l...ly pays the constructive trust monies, what it owes Novell, to Novell: $625,486.90.

From the stipulation:
L. WHEREAS, the 2008 Stipulation provided, among other things, in paragraph 4 that “if Novell prevails in the Appeals with respect to the Constructive Trust Issue, the Agreed Constructive Trust Amount shall be paid to Novell . . . .”

M. WHEREAS, the Court approved the 2008 Stipulation via its Agreed Order [etc.] (filed December 29, 2008 as Dkt. No. 644) (the “2008 Stipulated Order”);

N. WHEREAS, pursuant to the 2008 Stipulation and 2008 Stipulated Order, SCO deposited the Constructive Trust Amount of $625,486.90 into the Constructive Trust Account (as defined in the 2008 Stipulation);

O. WHEREAS, the Appeals have been resolved and there has been a subsequent trial in the Litigation on various issues;

P. WHEREAS, the outcome of the Appeals occurring prior to the trial and of the trial are such that the Agreed Constructive Trust Amount is not subject to further challenge by SCO or modification on any further Appeals or other proceedings in the Litigation;

Q. NOW, THEREFORE, based upon the foregoing Recitals and the provisions of the 2008 Stipulation (including, without limitation, paragraph 4 thereof) and the 2008 Stipulated Order, the Parties agree;

1. Within one week of entry of an order approving this stipulation, SCO shall pay the Agreed Constructive Trust Amount plus the interest it has earned in the Constructive Trust Account to Novell.

2. This stipulation shall not affect any rights, claims or defenses of the Parties except such rights, claims and defenses as relate to or have been decided in connection with the Constructive Trust Issue.

What does it mean? That with respect to this one issue, the constructive trust, SCO cries uncle. There will be no appeal of this issue. Here's the document:
06/04/2010 - 1125 - Certification of Counsel Regarding Stipulation for Payment of Trust Fund to Novell (related document(s) 586 , 644 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 06/04/2010)

I'm imagining the Mofos pointing out, as only they can, the huge bills that Cahn is paying his firm and Ocean Park guys and perchance suggested a reevaluation of priorities? I wonder how much money SCO has left?

To give you an idea of what I mean, OPA wants $60,000 of the $100,000 that Liberty Lane paid to SCO for their patent, in addition to their "regular" services and expenses:

05/28/2010 - 1123 - Certificate of No Objection Re: Monthly Application for Compensation (Sixth) of Ocean Park Advisors, LLC for the Period of March 1, 2010 Through March 31, 2010 (related document(s) 1117 ) Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. (Fatell, Bonnie) (Entered: 05/28/2010)

05/28/2010 - 1124 - Monthly Application for Compensation of (Seventh) of Ocean Park Advisors, LLC for the period April 1, 2010 to April 30, 2010 Filed by Edward N. Cahn, Chapter 11 Trustee for The SCO Group, Inc., et al.. Objections due by 6/18/2010. (Attachments: # 1 Notice # 2 Exhibit A # 3 Exhibit B # 4 Certificate of Service) (Fatell, Bonnie) (Entered: 05/28/2010)

Come on, guys. At least now I can figure out why the price for the patent went up at the very last minute.

For history buffs someday, here's when the parties stipulated to the amount back in 2008, and here's where Novell asked the bankruptcy court to make SCO pay it back then, which was followed by SCO throwing some legal tacks on the road, after which the parties agreed "in principle" on when it would be paid, namely after all appeals were done. Then the Final Judgement in November of 2008 after the first trial in SCO v. Novell, the bench trial before Judge Kimball, ruled like this:

5. With respect to Novell's claims for Constructive Trust/Restitution/Unjust Enrichment (Count VI), Breach of Fiduciary Duty (Count VII), and Conversion (Count VIII), pursuant to the Court's Findings of Fact, Conclusions of Law, and Order dated July 16, 2008, Judgment is hereby entered in favor of Novell for $2,547,817, for the revenues from the 2003 Sun Agreement attributable to the unauthorized amendment of the SVRX confidentiality provisions in Sun's 1994 SVRX buyout agreement with Novell. Pursuant to the parties' agreement reflected in Novell's Unopposed Submission Regarding Prejudgment Interest dated August 29, 2008, that award is increased by $918,122 in prejudgment interest through August 29, 2008, plus $489 per diem thereafter until the date of this Judgment.

6. Further with respect to Novell's claim for a Constructive Trust (Count VI), as reported in Novell's Submission Regarding the Entry of Final Judgment dated August 29, 2008, the parties have reached an agreement as to the amount of the constructive trust ($625,486.90), and the parties will be reporting that amount to the Bankruptcy Court in the related bankruptcy proceeding, if they have not already done so.

SCO appealed, but the appeals court confirmed that it owed Novell for the Sun deal ("For all these reasons, we affirm the district court's ruling with respect to SCO's liability from its 2003 agreement with Sun. "), and so here we all are. That's a hard-earned $625,486.90.

Update: A lot of you are asking about tracing law, so here is a page that explains it, and one more. And to answer your other question, yes, SCO still owes Novell more money than this, but this is a separate fund, representing not a debt but property that was always Novell's but SCO just sat on it and in fact partially used it up. It has priority over debts, because it never belonged to SCO in the first place, so it can be paid now. It's just Novell finally getting its own property back. If, for example, SCO had been the agent who was supposed to pick up a car for Novell and then deliver it, but instead it used it and wrongfully refused to hand it over, and then it sold its engine to somebody. Novell, after asking the court to put the car in constructive trust, then gets the car, minus the engine. To get the value of the engine it would either have to sue SCO some more, pant gasp pant, or more likely sue the guy who got the engine. That's my understanding, anyway.

The rest... well, in a perfect world, if SCO was flush with money, it would have to pay the rest eventually, because the court ordered it to, and the appeals court upheld the judgment. In real life, though, it's bankrupt, has spent its money and is now spending loaned money it is supposed to pay back, hardy har, so it's unlikely that Novell will see the rest. It's not like SCOfolk will take a second job just to pay off its debts. Snort.

Update 2: The judge has approved the stipulation, so Novell gets paid in a week:

06/07/2010 - 1126 - Order (AGREED) Approving Stipulation For Payment Of Trust Fund To Novell. (related document(s) 586, 644) Order Signed on 6/7/2010. (Attachments: # 1 Exhibit A) (JNP) (Entered: 06/07/2010)


  


SCO Agrees to Pay the Constructive Trust Money to Novell Now - Updated 2Xs | 410 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here please, if needed
Authored by: tiger99 on Friday, June 04 2010 @ 04:34 PM EDT
.

[ Reply to This | # ]

Off Topic stuff here please
Authored by: tiger99 on Friday, June 04 2010 @ 04:36 PM EDT
Interesting stuff not related to the main article should go here. Please
remember the posting policy, use of clickies, HTML mode, etc, and remember
always that preview is your friend.

[ Reply to This | # ]

Newspick discussions here please
Authored by: tiger99 on Friday, June 04 2010 @ 04:38 PM EDT
Please remember to identify which Groklaw newspick you are referring to in the
title of your post, and it may be useful to make a link too, so that when the
newspick scrolls off the bottom it can still easily be reached.

[ Reply to This | # ]

Comes comes here......
Authored by: tiger99 on Friday, June 04 2010 @ 04:40 PM EDT
I am feeling guilty. Need to set aside time to do some......

[ Reply to This | # ]

SCO Agrees to Pay the Constructive Trust
Authored by: tiger99 on Friday, June 04 2010 @ 04:44 PM EDT
This is good, very good. I sense that Chapter 7 will be next.....

But why did it take 2 years for SCO to pay into a constructive trust something that the court had ordered them to pay?

[ Reply to This | # ]

Is this the beginning of the end?
Authored by: rsteinmetz70112 on Friday, June 04 2010 @ 04:46 PM EDT
Is Cahn starting to wind down SCO?

Having lost at trial in anticipation the courts final rulings, it can't be
looking that good for SCO.

---
Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

Does this mean Novell can form the Creditor Committee now?
Authored by: Anonymous on Friday, June 04 2010 @ 04:53 PM EDT
I would assume that the rest of the $3M that was ruled converted now is firmly
counted as prepetition debt. So $2.3M more prepetition debt for SCO.

That puts Novell firmly in the seat as major creditor.

[ Reply to This | # ]

SCO Agrees to Pay the Constructive Trust
Authored by: bastiaan on Friday, June 04 2010 @ 05:12 PM EDT
To give you an idea of what I mean, OPA wants $60,000 of the $100,000 that Liberty Lane paid to SCO for their patent, in addition to their "regular" services and expenses:
After OPA's fee, $40,000 is left. That has probably all been eaten up by Blank Rome's fees in connection with the patent sale. So SCO sold their patent for no profit. Why did they do that?

[ Reply to This | # ]

I'll Believe It When the Check Clears...
Authored by: SK8TRBOI on Friday, June 04 2010 @ 05:31 PM EDT
WOW! I honestly never thought I'd see the day. Ever.

Clearly, Judge Cahn & Co. were quickly coming to the realization that
siphoning-off ALL the remaining cash to assorted and sundry law firms throughout
the country - without a dime going to Novell - was beginning to to, um,
"smell".

Let's hope the check 'clears'...

---
SK8TRBOI

[ Reply to This | # ]

SCO Pays out of the Constructive Trust to Novell
Authored by: webster on Friday, June 04 2010 @ 05:31 PM EDT
.

SCO had to put Novell money aside in an amount traceable from their then funds
on hand. They had to keep this money no matter what to pay Novell if the
related issues became final. They could have put it into a real trust, paid to
a third party or a court out of their control, or they could put it into a
"Constructive Trust" and keep it themselves with their lawyers' and
Court supervision. They did the latter thus a "constructive" not a
real or actual trust.

Cahn could have fought to hold on to it convincing young Judge Gross that it is
best to leave these funds in trust because: SCO would win another appeal and
retrial in the Circuit; SCO would win the retrial --by judge or jury back in the
District Court; win the third appeal by affirmation in the Circuit; oh, and have
the SCOTUS not grant cert in the current appeal; but if they do, win before the
supremes if its still relevant.

After all that the money in trust might be set off by what Novell will then owe
SCO. Also Imagine the interest that would accrue by 2015.

So Cahn must think that SCO isn't going to win anything soon that might cause an
offset of Novell's trust money. Fighting to hold on to it is not worth the
candle. Without the threat of a jury trial, one has to be reasonable.

One hears that Novell is for sale. They have some interesting litigation rights
developing themselves. They could shed some assets trim down above bankruptcy
range and wreak some revenge with veiled fairies. Sorry, it's been slow.

~webster~

.

[ Reply to This | # ]

Why $625,486.90 ?
Authored by: benw on Friday, June 04 2010 @ 06:25 PM EDT
That's roughly a quarter of what's owed -- how did they arrive at this figure?

[ Reply to This | # ]

About Time.
Authored by: SilverWave on Friday, June 04 2010 @ 08:34 PM EDT
:-)

---
RMS: The 4 Freedoms
0 run the program for any purpose
1 study the source code and change it
2 make copies and distribute them
3 publish modified versions

[ Reply to This | # ]

Something is wrong...
Authored by: proceng on Friday, June 04 2010 @ 10:31 PM EDT
1. Within one week of entry of an order approving this stipulation, SCO shall pay the Agreed Constructive Trust Amount plus the interest it has earned in the Constructive Trust Account to Novell.
2. This stipulation shall not affect any rights, claims or defenses of the Parties except such rights, claims and defenses as relate to or have been decided in connection with the Constructive Trust Issue.
So, The SCO Group pays Novell $625,486.90 (plus interest). Nowhere do I see that any action has been taken to pay the balance of the $2,547,817 (plus interest) awarded. A purist would claim that the difference of $1922330.10 (plus interest) would, by necessity be considered as "in connection with the Constructive Trust Issue".

Does this mean that The SCO Group is getting a pass on the balance, or is this where the grenade lands1

1 "“It's not a matter of where you throw the grenade; it's where the grenade lands,'' Anthony Sanchez said" Court takes testimony on student Web posts

---
And ye shall know the truth, and the truth shall make you free.
John 8:32(King James Version)

[ Reply to This | # ]

Sudden cold front in hades
Authored by: Anonymous on Friday, June 04 2010 @ 11:23 PM EDT
And a peculiar aroma of fish.

[ Reply to This | # ]

  • Defiantly - Authored by: Anonymous on Saturday, June 05 2010 @ 01:16 AM EDT
CASH ONLY no checks
Authored by: Anonymous on Saturday, June 05 2010 @ 12:53 PM EDT
Please !

[ Reply to This | # ]

SCO Agrees to Pay the Constructive Trust
Authored by: Anonymous on Saturday, June 05 2010 @ 12:58 PM EDT

So when SCO finally goes belly up, who gets the Unix/Unixware business?

[ Reply to This | # ]

If the rest of the money is ¨not traceable¨
Authored by: Anonymous on Saturday, June 05 2010 @ 06:22 PM EDT
If the rest of Novells money is not traceable then what happened to it? There
has to be a legal term, say ¨money laundering" or something for why the
money is untraceable.

[ Reply to This | # ]

SCO - Updated - Questions
Authored by: rsteinmetz70112 on Saturday, June 05 2010 @ 11:51 PM EDT
Does anyone know the priority of claims against SCO?

- Ralph has a super priority for the loan.

- Novell has a claim for their converted money

- There are other unsecured claims.

Does Ralph come before Novell's claim for converted funds? Does Novell's claim
outrank regular unsecured creditors?

---
Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

Still No Bilski
Authored by: Steve Martin on Monday, June 07 2010 @ 10:13 AM EDT
The Supreme Court has handed down three opinions this morning, none of which
were Bilski. So we're still waiting.


---
"When I say something, I put my name next to it." -- Isaac Jaffe, "Sports Night"

[ Reply to This | # ]

What happens now with Sun/Oracle?
Authored by: turambar386 on Tuesday, June 08 2010 @ 10:20 AM EDT
I had always expected that when this day finally came that Novell would go to
Sun and say something like:

"You licensed all of these rights from SCO when they were not authorized to
grant those rights. If we had gotten our fair share of the proceeds from that
license, we might have ratified the agreement, but we only got $600K out of the
more than $2M that we should have gotten. Therefore either please pay up the
rest of the money or else we will return this $600K and cancel the
license."

My expectation is that they would have negotiated an extra payment out of Sun
with that, but I'm not sure if it would work with Oracle or if they would even
try.

Thoughts?

[ Reply to This | # ]

Will Novell break even?
Authored by: Anonymous on Tuesday, June 08 2010 @ 11:29 AM EDT
You have to wonder if this even comes close to paying Novell's legal costs.

Karl O. Pinc <kop@meme.com>

[ Reply to This | # ]

SCO trial
Authored by: Anonymous on Tuesday, June 08 2010 @ 08:30 PM EDT
How much time does the judge have for his ruling? Is there any date set?

cb

[ Reply to This | # ]

  • SCO trial - Authored by: Anonymous on Thursday, June 10 2010 @ 05:07 PM EDT
Mofos?
Authored by: Anonymous on Wednesday, June 16 2010 @ 12:58 AM EDT
Groklaw Comment Policy states in rule #3:
No foul language or links to porn or other such things. That includes initials and ****s. I can figure it out, and it is no different in effect therefore.
Wikipedia has a few definitions for disambiguation. Perhaps pj meant "Mozilla Foundations"?

UrbanDictionary is much more direct and to the point.

Now I understand that this is pj's site and whatever she says goes and that perhaps the draconian rules that she uses to remove accounts for posting exactly the same type of comment as this, do not apply to her just because it is her website. I understand all that. I really do.

I just am disgusted by the hypocrisy of it all. For shame.

[ Reply to This | # ]

  • Mofos? - Authored by: bprice on Wednesday, June 16 2010 @ 04:28 AM EDT
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