San Francisco law firm seeks dismissal of Thornburg lawsuit

Local Court News Posted on

A San Francisco law firm, which was sued by the bankruptcy trustee in charge of liquidating Thornburg Mortgage, has asked the court to dismiss the lawsuit, calling it "long on rhetoric but short on facts."

The trustee's lawsuit filed in March named attorney Karen Dempsey of Orrick, Herrington & Sutcliffe and the firm itself as part of an alleged conspiracy that involved four top Thornburg executives improperly paying themselves handsome bonuses just before the mortgage lender filed for bankruptcy last year.

In court papers filed on Monday, the law firm said the complaint did not show that Dempsy knew about the allegedly improper conduct of the executives.

"Using novel theories of conspiracy and aiding and abetting, the trustee seeks to impose what would be unprecedented 'vicarious' liability on special counsel for a debtor," the filing said.

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