Allied World National Assurance Co., et al. v. SK PM Corp. et al.

Filing 131

AMENDED ORDER GRANTING IN PART Motion to Withdraw as Attorney of Record 118 ; AMENDED ORDER Directing Clerk to Update Docket and Serve Defendants, signed by Magistrate Judge Jennifer L. Thurston on 5/14/2013. (Hall, S)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

10
11
12

ALLIED WORLD NATIONAL
ASSURANCE COMPANY, et al.,
Plaintiffs,

13
14

v.
SK PM CORP., et al.,

15

Defendants.

16
17

)
)
)
)
)
)
)
)
)
)

Case No.: 1:10-cv-01262 LJO JLT
AMENDED ORDER GRANTING IN PART
MOTION TO WITHDRAW AS ATTORNEY OF
RECORD
(Doc. 118)
AMENDED ORDER DIRECTING CLERK TO
UPDATE DOCKET AND SERVE DEFENDANTS

On April 2, 2013, David Winton moved to withdraw as counsel for the defendants. (Doc. 118).

18

The Court held a hearing on May 13, 2013, and the motion was not opposed by any party. For the

19

reasons set forth below, the motion to withdraw as attorney of record is GRANTED IN PART.

20

I.

21

Background
Plaintiffs initiated this action by filing a complaint on July 14, 2010, seeking “to obtain a

22

judicial determination and declaration regarding the parties’ rights and obligations with respect to two

23

insurance policies.” (Doc. 1 at 8). Plaintiffs allege the defendants are insureds under Policy No.

24

C011427/001, issued by Allied World National to S.K. Foods PM Corporation for coverage that

25

commenced February 19, 2009 and ended on August 17, 2009 (“the Primary Policy”). Id. In addition,

26

Plaintiffs allege the defendants sought coverage from Allied World “under Excess Directors &

27

Officers Liability Insurance Following Form Policy No. C011818/001, which was to be issued to S.K.

28

Foods PM Corp. for the April 8, 2009 to February 19, 2010 Policy Period” (“the Excess Policy”).
1

1

(Doc. 1 at 8). However, Plaintiffs assert the defendants failed to pay the requisite premium for the

2

Excess Policy. Id.
According to Plaintiffs, the defendants represented to Plaintiffs during the underwriting

3
4

process for the Primary and Excess Policies that SK Food Group, encompassing entities owned and

5

operated by Scott Salyer and his family, “was in good financial health and had strong revenues and

6

profits.” (Doc. 1 at 9). However, Plaintiffs assert that the defendants knew this information was false,

7

and knew it would be necessary for several entities “to reorganize, through bankruptcy or otherwise,

8

and sell substantially all of their assets in order to satisfy debts owed. . .” Id. Plaintiffs allege neither

9

the Primary Policy nor Excess Policy would have been issued had they known the truth regarding SK

10

Food Group’s financial condition. Id. Therefore, Allied World seeks to rescind certain coverage

11

provisions of the Primary Policy. Id. at 8. Further, Plaintiffs seek “a declaration that the Excess

12

Policy was never effectively issued or delivered as a result of the Defendants’ non-payment of

13

premium, and is inoperative.” Id. In the alternative, Plaintiffs seek to rescind provisions of the Excess

14

Policy for misrepresentation and concealment of material facts. Id.
On April 29, 2010, Scott Salyer was indicted for racketeering, wire fraud, falsifying records,

15
16

and conspiracy in restraint of trade arising out of his operation of SK Foods. On April 28, 2011,

17

defendants filed a motion to stay the proceeding pending resolution of the criminal case pending

18

against Salyer (Doc. 59), which was granted by the Court on July 28, 2011. (Doc. 75).
The parties filed a joint status report on May 17, 2012, reporting that “Salyer pleaded guilty to

19
20

one count of racketeering and one count of price fixing,” and he was scheduled to be sentenced on

21

July 10, 2012. (Doc. 90 at 4-5). As part of the plea agreement, the remaining charges against Salyer

22

were to be dropped at the time of sentencing. Id. at 5. Plaintiffs informed the Court they intended “to

23

file an amended complaint adding Salyer’s admitted criminal conduct as an additional basis for

24

rescission of the policies.” Id. at 6. The stay was lifted on October 18, 2012. (Doc. 102).

25

II.

26

Legal Standards for Withdrawal of Counsel
Withdrawal of counsel is governed by the Rules of Professional Conduct of the State Bar of

27

California, and the Local Rules of the United States District Court, Eastern District of California. See

28

LR 182. The withdrawal of representation is permitted under the Rules of Professional Conduct if a
2

1

client “renders it unreasonably difficult for the member to carry our employment effectively.” Cal.

2

R.P.C. 3-700(C)(1)(d). Local Rule 182(d) provides:
Unless otherwise provided herein, an attorney who has appeared may not withdraw
leaving the client in propria persona without leave of court upon noticed motion and
notice to the client and all other parties who have appeared. The attorney shall provide
an affidavit stating the current or last known address or addresses of the client and the
efforts made to notify the client of the motion to withdraw.

3
4
5
6
7

Id. Likewise, California’s Rules require the notice of motion and declaration to be served on the client

8

and other parties who have appeared in the case. CRC 3.1362(d).
The decision to grant withdrawal is within the discretion of the Court, and withdrawal “may be

9
10

granted subject to such appropriate conditions as the Court deems fit.” LR 182; see Canandaigua Wine

11

Co., Inc. v. Moldauer, 2009 U.S. Dist. LEXIS 4238, at *2 (E.D. Cal. Jan. 13, 2009) (“The decision to

12

grant or deny counsel’s motion to withdraw is committed to the discretion of the trial court.”). Factors

13

the Court may consider include: (1) the reasons for withdrawal, (2) prejudice that may be caused to the

14

other litigants, (3) harm caused to the administration of justice; and (4) delay to the resolution of the

15

case caused by withdrawal. Canandaigua Wine Co., 2009 U.S. Dist. LEXIS 4238, at *4.

16

III.

17

Discussion and Analysis
David Winton asserts that his law offices are no longer able to represent the defendants in this

18

action.1 Mr. Winton asserts the defendant’s “conduct renders it unreasonably difficult” to carry out his

19

representation in an effective manner. (Doc. 118-1 at 3). In support of the motion, Mr. Winton filed a

20

declaration in which he asserts he is “currently in a position where it appears a withdrawal is proper and

21

necessary pursuant to the provisions of Rule 3-700(C)(1)(d).” (Winton Decl. ¶ 4, Doc. 118-2 at 3).

22

Mr. Winton reports he notified the defendants “about the need to find substitute counsel.” (Doc.

23
24
25
26
27
28

1

Curiously, in his request for withdrawal as counsel, Mr. Winton identified only Scott Salyer; Neal Alexander as
trustee for the Scott Salyer Revocable Trust; Robert Pruet as trustee for the Caroline Gazelle Salyer Irrevocable Trust and
Stefanie Anne Salyer Irrevocable Trust; SK PM Corp., also known as “S.K. Foods PM Corp.;” Blackstone Ranch; CSSS
LP, doing business as Central Valley Shippers; and SSC Farms III, LLC. (Doc. 118-1). However, Mr. Winton was listed
as the counsel of record for many other defendants named by Plaintiff in the operative complaint (Doc. 107). Thus, despite
that this motion will be granted, Mr. Winton remains as counsel of record for: 1.) SS Farms LLC, 2.) SARS, LLC, 3.)
SK Foods LLC, 4.) S.K. Foods PM Corp., 5.) SKF Aviation, LLC, 6.) SSC Farming, LLC, 7.) SSC Farms I, LLC, 8.)
SSC Farms II, LLC, 9.) SK Farm Services, LLC, 10.) SK Frozen Foods, LLC, 11.) Carmel Wine Merchants LLC
and 12.) Salyer American Cooling.

3

1

118-1 at 4). Mr. Winton asserts he “is informed and believed that new counsel has been retained for all

2

parties except the Scott Salyer Revocable Trust . . ., but that there is unexplained delay in obtaining

3

substitutions of attorney.” Id. Indeed, after Mr. Winton filed this motion, the Court granted a

4

substitution of attorney filed on behalf of The Caroline Gazelle Salyer Irrevocable Trust, and The

5

Stefanie Ann Salyer Irrevocable Trust by and through Robert Pruett, Trustee. (Docs. 124, 126). Thus,

6

as to these Defendants, the motion is MOOT.
The declaration and proof of service indicate Mr. Winton has served the parties with documents

7
8

required by the California Rules. No party has filed an opposition or a statement of non-opposition to

9

the motion to withdrawal, and it does not appear Plaintiffs would suffer prejudice as a result of the

10

withdrawal. Given that discovery remains open for several months, it appears any delay caused by the

11

withdrawal would be minimal and there is little risk of harm to the administration of justice.

12

IV.

13

Conclusion and Order
Mr. Winton followed the procedural and substantive requirements set forth in the California

14

Rules of Professional Conduct and the Local Rules in filing the motion to withdraw as counsel, and set

15

forth sufficient reasons for the withdrawal. Therefore, the Court is acting within its discretion to grant

16

the motion to withdraw. See LR 182.

17

The corporate defendants are warned that “[i]t is a longstanding rule that [c]orporations and

18

other unincorporated associations must appear in court through an attorney.” D-Beam Ltd. P’ship v.

19

Roller Derby Skates, Inc., 366 F.3d 972, 973-74 (9th Cir. 2004)

20

Accordingly, IT IS HEREBY ORDERED:

21

1.

22
23

The motion to withdraw is MOOT as to Defendant Robert Pruet as trustee for the

Caroline Gazelle Salyer Irrevocable Trust and Stefanie Anne Salyer Irrevocable Trust;
2.

The motion to withdraw is GRANTED as to Defendants Frederick Scott Salyer; Neal

24

Alexander as trustee for the Scott Salyer Revocable Trust; CSSS LP, doing business as Central Valley

25

Shippers; and SSC Farms III, LLC only. Mr. Winton remains as counsel of record for Defendants SS

26

Farms LLC; SARS, LLC; SK Foods LLC; S.K. Foods PM Corp.; SKF Aviation, LLC; SSC Farming,

27

LLC; SSC Farms I, LLC; SSC Farms II, LLC; SK Farm Services, LLC; SK Frozen Foods, LLC;

28

Carmel Wine Merchants LLC; and Salyer American Cooling;
4

1

3.

The Clerk’s Office SHALL TERMINATE David Winton as “Attorney to be Noticed”

2

for Defendants Frederick Scott Salyer; Neal Alexander as trustee for the Scott Salyer Revocable Trust;

3

CSSS LP, doing business as Central Valley Shippers; and SSC Farms III, LLC in the Court docket,

4

and update the docket to reflect their last known contact information as follows:
F. Scott Salyer
3903 Ronda Road
Pebble Beach, CA 93953

5
6
7

4.

Replacement counsel SHALL enter an appearance in this matter within 21 days; and

8

5.

Defendants are advised that failure to comply with the Local Rules, Federal Rules, or a

9

Court Order, will result in their answers being stricken and default entered against them.

10
11
12

IT IS SO ORDERED.
Dated:

May 14, 2013

/s/ Jennifer L. Thurston
UNITED STATES MAGISTRATE JUDGE

13
DEAC_Signature-END:

14

9j7khijed

15
16
17
18
19
20
21
22
23
24
25
26
27
28
5