Holding: Plaintiffs’ allegations regarding Strojnik’s breaches of fiduciary duty to the estate and duty of candor to the Court, even if taken as true, are beyond the scope of special counsel’s required disclosure under Harris. To adopt Plaintiffs’ argued disclosure requirement would run contrary to the public policy rationale underlying Harris. The Court finds that Strojnik was sufficiently candid regarding its role as special counsel for the purpose of pursuing the Suit for the estate, that Strojnik acted within the scope of its appointment, that Debtor had notice, and that the Court approved its appointment. Strojnik is entitled to derived quasi-judicial immunity from Plaintiffs’ suit. The Complaint must be dismissed as to Strojnik.

UNDER ADVISEMENT ORDER Re: Defendants' Motion to Dismiss Adversary Complaint

ORDER RESOLVING DISCOVERY DISPUTE

Holding: Harris immunity extends to Ellett Law Offices and Ellett’s conduct while it was Chapter 11 counsel for Debtor. The same public policy considerations favoring immunity for trustees and court appointed attorneys in a Chapter 7 case also favor such immunity in a Chapter 11 case.  As to Continental’s Motion to Dismiss, Plaintiffs have standing to pursue their equitable subordination claims and Continental’s Motion is denied.