Published: October 27, 2007 03:18 pm            

Lawyers have lawyers in Stipe-Phipps case

A court-appointed receiver could begin carving up the Phipps Enterprises, Inc. empire on Tuesday — or maybe not, depending on objections from attorneys who don’t like specific parts of his plan.

Since Steve Phipps recently signed his share of Phipps Enterprises Inc. stock over to his wife, the current owners of Phipps Enterprises are listed as Brenda Phipps and former state Sen. Gene Stipe.

During a hearing before Associate District Judge James Bland at the Pittsburg Courthouse on Thursday, there were so many attorneys involved that some of the lawyers had other lawyers on hand to represent them.

After listening at various points to most of the nine attorneys who were in the courtroom representing various interests, Judge Bland set a dissolution hearing for 1 p.m. on Tuesday.

The hearing is needed so the court-appointed receiver, attorney Kraettli Q. Epperson, can begin dissolving Phipps Enterprises, Inc. and distributing the assets to the owners.

The case, in which Stipe filed a lawsuit against his estranged business partner Steve Phipps and Phipps filed a counter-suit, has been wending its way through Pittsburg County District Court since 2005.

Snags could still occur on the receiver’s proposed dissolution of Phipps Enterprises to be presented Tuesday, as lawyers representing a myriad of interests will have an opportunity to object to various points in the plan.

One recent sticking point involved a request by the receiver, Epperson, through his lawyer, Stephen J. Moriarity, seeking attorney billing records from the Ryan, Whaley and Coldiron law firm for services the company provided on behalf of Phipps Enterprises.

One of the questions raised is whether Steve Phipps paid his criminal attorney in a federal case lodged against him with money from Phipps Enterprises — money which conceivably should be divided with Stipe when the PEI dissolution by the receiver is complete, according to some of the court arguments.

Partially to help answer that question, receiver Epperson wanted to see the RWC law firm billing records.

RWC objected, citing attorney-client privilege, a work product privilege and a joint-interest argument.

As the court-appointed receiver for Phipps Enterprises, Epperson could waive any privilege associated with the billing records which the RWC law firm presented to the company.

Trying to prevent that, McAlester attorney Mike Hogan, acting on behalf of the RWC law firm, filed documents seeking a protective order to prevent the receiver, Epperson, or his attorney, Moriarity, from distributing the billing information to Stipe, to Stipe’s lawyer, John Carwile, or any third party.

One of the arguments presented in the request for a protective order is an allegation that the billing records are apparently being sought by Stipe for use in his defense in a pending probation revocation hearing Stipe faces at the Eastern District of Oklahoma U.S. Courthouse in Muskogee, as well as in a criminal case connected to a federal grand jury indictment filed against Stipe and his brother, Francis Stipe.

McAlester attorney Allan Mitchell, who represents Steve Phipps in the Pittsburg County civil case, stood in Bland’s courtroom Thursday and wanted his opinion included in the record that efforts to obtain the attorney billing records are “a fishing expedition.”

Mitchell also asked for a protective order on the billing documents on behalf of Phipps.

Attorney Dan Webber, who’s represented Phipps in the criminal case filed against him in Muskogee, was in court Thursday, listening as Hogan spoke on behalf of RWC.

Billing records requested by the receiver relate to matters “of common interest” in RWC’s representation of both PEI in the Pittsburg County civil case and of Phipps in the federal grand jury investigation, according to legal arguments made on behalf of the law firm.

“An important overlapping issue in both the civil and criminal cases was the allegation that (Steve) Phipps transferred money from PEI to National Pet Products and more importantly, whether Stipe was aware of such interests and had an interest in NPP himself,” stated the argument Hogan filed of behalf of RWC. National Pet Products, or NPP, refers to the pet food plant on the north side of McAlester.

“Notably, the federal government’s indictment against (Gene) Stipe specifically alleges that NPP was a business in which Stipe maintained, at all relevant times, a financial interest,” court documents filed on behalf of the RWC firm state.

“Although Phipps has been invoiced separately for RWC’s services in defense of the criminal matter, the overlapping issues required a coordinated defense between Mr. Phipps in the criminal case” and the civil case, “particularly in light of Stipe’s motion for a receiver,” the argument filed on behalf of the RWC law firm continues.

“In fact, the plea agreement between Mr. Phipps and the United States specifically includes transactional immunity for PEI and its subsidiaries.”

Mitchell, in his court motion for a protective order on behalf of Phipps, also referred to the federal indictment against Stipe.

“The relevance of the indictment to these proceedings is that it alleges that PEI shareholder (Gene) Stipe, in an effort to personally benefit from ownership in National Pet Products, involved PEI, through its subsidiary, Pushmataha Abstract Company, in a criminal conspiracy, thereby jeopardizing the very existence of PEI,” Mitchell said in court documents.

“Stipe now seeks to assert his rights as a shareholder to obtain the attorney billing records detailing the defense of PEI made necessary by his own wrongful acts,” Mitchell alleged in his court motion.

In an effort to resolve the issue, attorneys delivered a copy of the sealed RWC billing records to Bland prior to the Thursday hearing.

In court Thursday, Stipe’s attorney, Carwile, noted the difficulty of taking the appropriate action to protect his client’s interest when he had no access to the information in the sealed records.

At the end of the Thursday hearing, it was determined that the receiver, Epperson, will get the RWC billing records to review them, with the condition that he can’t reveal the information to any other parties.

Also, the RWC law firm is to submit an affidavit with any information relevant to a common interest joint defense with Steve Phipps and Phipps Enterprises in regard to the civil case in Pittsburg County and the federal criminal case in Muskogee.

A determination on a final disclosure of the billing records is not expected to be decided until after the dissolution hearing.

In connection with his appointment as receiver to PEI, Epperson is also listed as the receiver for several abstract companies which have been listed in court documents as jointly owned by Stipe and Phipps. They include the Idabel Abstract Co., Pushmataha Abstract Co., Southern Abstract & Title Co., Choctaw County Abstract Co., Latimer County Abstract Co. and Stigler Abstract Co.

Those properties are also included in the dissolution plans.

Other lawyers in court on Thursday were Michael Brady and Ronald Schaulat, appearing for Corporate Finance Group, or CFG, another entity involved in the case.

“From October 2005 through May 10, 2006, RWC represented both PEI (Phipps Enterprises, Inc.) and Corporate Finance Group,” court documents state.

“CFG’s current counsel has insisted upon ‘its attorney-client privilege and work product privilege being enforced and protected ... ,’” according to court documents.

Another McAlester attorney, Buddy Neal, also briefly spoke on behalf of RWC in the courtroom on Thursday.

Gene Stipe and Steve Phipps have been cited in federal court documents related to the U.S. Eastern District of Oklahoma grand jury investigating corruption and related criminal matters.

Steve Phipps pleaded guilty to a single count of mail fraud last summer and is awaiting sentencing.

Court documents indicate he has been cooperating with federal prosecutors.

Stipe and his brother, Francis Stipe, were recently indicted by a federal grand jury on four counts, including conspiracy, mail fraud, witness tampering and illegal monetary transactions.

Their initial appearance arraignment on the charges in the indictment has been delayed until after a mental competency hearing set for Nov. 5, in which a federal judge is to determine whether Stipe is mentally competent to assist with his defense on efforts by federal prosecutors to revoke his probation.

Contact James Beaty at jbeaty@mcalesternews.com..

        

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