Securities and Exchange Commission v. BIC Real Estate Development Corporation et al

Filing 174

STIPULATION and ORDER to Release Wrongful Death Action from Litigation Stay signed by Chief Judge Lawrence J. O'Neill on 03/21/2017. (Flores, E)

1 DAVID R. ZARO (BAR NO. 124334)
JOSHUA A. DEL CASTILLO (BAR NO. 239015)
2 PETER A. GRIFFIN (BAR NO. 306201)
ALLEN MATKINS LECK GAMBLE
3 MALLORY & NATSIS LLP
865 South Figueroa Street, Suite 2800
4 Los Angeles, California 90017-2543
Phone: [phone]
5 Fax: [phone]
E-Mail: [e-mail]
[e-mail]
6
[e-mail]
7
Attorneys for Receiver
8 DAVID P. STAPLETON
9

UNITED STATES DISTRICT COURT

10

EASTERN DISTRICT OF CALIFORNIA

11
12 SECURITIES AND EXCHANGE
COMMISSION,
13
Plaintiff,
14
v.
15
BIC REAL ESTATE DEVELOPMENT
16 CORP., et al.,

Case No. 1:16-cv-00344-LJO-JLT
STIPULATION TO RELEASE
WRONGFUL DEATH ACTION
FROM LITIGATION STAY; ORDER
THEREON

Defendants.

17
18
19
20

STIPULATION
The following Stipulation to Release Wrongful Death Action from Litigation

21 Stay (the "Stipulation") is made by and between (1) David P. Stapleton (the
22 "Receiver"), the Court-appointed receiver for Defendants BIC Real Estate
23 Development Corporation ("BIC") and its subsidiaries and affiliates, including but
24 not limited to, WM Petroleum; Target Oil & Gas Drilling, Inc. dba Target Drilling
25 Company ("Target Drilling"); Tier 1 Solar Power Company; Tier 1 Solar Power
26 Company, LLC; and Home Sweet Holdings (collectively, the "Receivership
27 Entities"); (2) Plaintiff Securities and Exchange Commission (the "SEC"); (3)
28 Defendant Daniel R. Nase ("Mr. Nase"); and (4) the plaintiffs (the "Morales
LAW OFFICES

Allen Matkins Leck Gamble
Mallory & Natsis LLP

Case No. 1:16-cv-00344-LJO-JLT
1064736.10/LA

1 Plaintiffs") in the action styled Morales v. Target Oil & Gas Drilling, Inc., et al.,
2 pending in the Kern County Superior Court as case number BCV-16-100657 (the
3 "Morales Action") (collectively, with the Receiver, the SEC, and Mr. Nase, the
4 "Parties"), by and through their respective counsel of record, and in reliance on and
5 with respect to the following facts:
6

A.

On April 8, 2016, this Court entered its Stipulated Preliminary

7

Injunction and Orders (1) Freezing Assets, and (2) Appointing a

8

Permanent Receiver (the "Appointment Order") (Dkt. No. 42).

9

B.

Among other things, the Appointment Order appointed the Receiver as

10

the permanent receiver for the Receivership Entities and imposed a

11

preliminary injunction and litigation stay, which stay precludes all

12

persons and entities from commencing, prosecuting, continuing or

13

enforcing any suit or proceeding against any of the Receivership

14

Entities (the "Litigation Stay"), without permission from this Court.

15

C.

The Morales Action was filed on March 24, 2016, before the entry of

16

the Appointment Order, by Benny Morales; Brandon Morales; Anthony

17

Ochoa; Jacob Ochoa; Mercedes Ochoa; all minors, by and through their

18

Guardian Ad Litem, Angela Ochoa (again, collectively, the "Morales

19

Plaintiffs"). In their Complaint in the Morales Action, the Morales

20

Plaintiffs allege that certain Receivership Entities and affiliated entities,

21

including Target Drilling; WM Petroleum; Bakersfield Investment

22

Club; BIC; and BIC Solo 401k Trust (collectively, the "Morales

23

Defendants") are liable for the wrongful death of Bernardo Morales, Jr.

24

("Mr. Morales").

25

D.

The Litigation Stay presently bars the continued prosecution of the

26

Morales Action by the Morales Plaintiffs against any Receivership

27

Entity.

28
LAW OFFICES

Allen Matkins Leck Gamble
Mallory & Natsis LLP

Case No. 1:16-cv-00344-LJO-JLT
1064736.10/LA

-2-

1

E.

In accordance with his authority under the Appointment Order, upon

2

learning of the Morales Action, the Receiver filed a Notice of Pending

3

Receivership in the Morales Action, advising the parties thereto of the

4

Litigation Stay. As of the date of this Stipulation, the Parties

5

understand that the Morales Action has been stayed as to the

6

Receivership Entities in accordance with the requirements of the

7

Appointment Order.

8

F.

At the time of Mr. Morales' death, and as it relates to the Morales
Action, the Parties understand and have asserted that Target Drilling

9
10

was the beneficiary of an insurance policy (policy number ZPP-

11

11P82019-14-N4 [the "Travelers Policy"]) issued by Travelers dba

12

St. Paul Fire & Marine Insurance Company (the "Insurer").

13

G.

The Receiver, as the legal representative of Target Drilling, has

14

tendered the defense of Target Drilling in the Morales Action to the

15

Insurer.

16

H.

The Insurer has engaged counsel to defend its named insured, "Target

17

Drilling Company", in the Morales Action, but has disputed the timing

18

and effect of any pre-receivership tender, and has not confirmed

19

whether its acceptance of a tender, if any, has been or will be without a

20

reservation of rights. Out of an abundance of caution, and as reflected

21

in Recital G, above, the Receiver has tendered the matter to the Insurer.

22

The Insurer has contested whether the Receivership Entity Target Oil &

23

Gas Drilling, Inc. and its insured, "Target Drilling Company", are the

24

same entity, and has not advised whether the Receiver's tender of the

25

matter has been accepted and, if so, whether it has been accepted

26

without a reservation of rights.

27
28
LAW OFFICES

Allen Matkins Leck Gamble
Mallory & Natsis LLP

Case No. 1:16-cv-00344-LJO-JLT
1064736.10/LA

-3-

1

I.

The Morales Plaintiffs have requested that the Receiver, the SEC, and

2

Mr. Nase agree to release the Morales Action from the Litigation Stay

3

in order to enable its continued prosecution.

4

J.

After meeting and conferring, the Parties have agreed that, subject to

5

approval by this Court, the Morales Action may be released from the

6

Litigation Stay provided that the Morales Plaintiffs agree to:

7

(i) proceed with the prosecution of the Morales Action such that any

8

damages or payment due to them from the Receivership Entities, by

9

way of damages, indemnity, or otherwise, will be paid by the Travelers

10

Policy, up to its policy limit, exclusively; and (ii) conditionally release

11

the Morales Defendants, including the Receivership Entities, from any

12

and all claims arising from or in connection with the facts underlying

13

the Morales Action, as detailed further below.

14
15

STIPULATION AND AGREEMENT
Accordingly, and in consideration of the foregoing facts, the Parties hereby

16 STIPULATE and AGREE as follows:
17

1.

This Court has jurisdiction over the Morales Action and the claims

18

alleged therein pursuant to 28 U.S.C. § 754 and the doctrines of

19

pendent and ancillary jurisdiction;

20

2.

The Morales Action shall, conditioned on the below, be released from

21

the Litigation Stay imposed by the Appointment Order, without further

22

order of this Court;

23

3.

Within ten (10) business days of the entry of an order from this Court

24

approving this Stipulation, the Receiver shall file a Notice of Release of

25

Litigation Stay in the Morales Action, advising the presiding court and

26

the parties that the Litigation Stay imposed pursuant to the

27

Appointment Order has been released with respect to the Morales

28

Action;

LAW OFFICES

Allen Matkins Leck Gamble
Mallory & Natsis LLP

Case No. 1:16-cv-00344-LJO-JLT
1064736.10/LA

-4-

1

4.

In the event that the Morales Plaintiffs obtain a judgment against Target

2

Drilling, or any Receivership Entity, in the Morales Action, their

3

recovery on that judgment shall be solely limited to any proceeds due

4

and payable from the Policy;

5

5.

The Morales Plaintiffs, for themselves and their successors and assigns,

6

shall completely and unequivocally release the Receiver, in his

7

personal capacity and his capacity as the Receiver, as well as the

8

Morales Defendants, including the Receivership Entities, from any and

9

all claims, demands, debts, obligations, liabilities, costs, expenses,

10

rights of action causes of action, awards and judgments arising from, or

11

in connection with, the Morales Action and the facts underlying the

12

Morales Action, provided that such release shall not be effective until

13

such time as the Morales Action is settled or otherwise resolved by a

14

payment of proceeds from the Travelers Policy;

15

6.

In the event that: (a) the Insurer denies the Receiver's tender of the

16

defense of Target Drilling in the Morales Action; (b) the Morales

17

Plaintiffs submit a written request for assignment to the Receiver; or

18

(c) the Receiver determines it is otherwise appropriate, the Receiver

19

will assign Target Drilling's rights under the Travelers Policy to the

20

Morales Plaintiffs, along with any rights the Receivership Entities have

21

in claims associated with the procurement of the Travelers Policy,

22

including against brokers and insurance agents. In the event of such an

23

assignment by the Receiver, the Morales Plaintiffs shall assume all risk

24

attendant to and arising from any assignment of the Travelers Policy

25

and any associated rights, and the Travelers Policy itself, and neither

26

the Receiver or the Receivership Entities shall retain any liability in

27

connection with or arising from the assignment of the Travelers Policy,

28
LAW OFFICES

Allen Matkins Leck Gamble
Mallory & Natsis LLP

Case No. 1:16-cv-00344-LJO-JLT
1064736.10/LA

-5-

1

the effectiveness of the assignment, the Travelers Policy, or the

2

Morales Litigation;

3

7.

Notwithstanding the language of Paragraph 5, above, the Morales

4

Plaintiffs may file a claim against the Receivership Entities in

5

connection with and pursuant to any claims process developed by the

6

Receiver and approved by the Court, provided that such claim shall be

7

compensable, if at all, exclusively from Travelers Policy proceeds; and

8

8.

All other provisions of the Court's prior orders shall remain in full force
and effect and the Parties shall retain any and all rights not addressed

9

by this Stipulation.

10
11
12

SO STIPULATED.

13
14 Dated: March 20, 2017
15
16
17

ALLEN MATKINS LECK GAMBLE
MALLORY & NATSIS LLP
DAVID R. ZARO
JOSHUA A. DEL CASTILLO
PETER A. GRIFFIN
By:

18
19
20 Dated: March 20, 2017
21

U.S. SECURITIES AND EXCHANGE
COMMISSION
By:

22

/s/
Joshua A. del Castillo
JOSHUA A. DEL CASTILLO
Attorneys for Receiver
DAVID P. STAPLETON

23
24

/s/
John B. Bulgozdy
JOHN B. BULGOZDY
Attorneys for Plaintiff
SECURITIES AND EXCHANGE
COMMISSION

25
26
27
28
LAW OFFICES

Allen Matkins Leck Gamble
Mallory & Natsis LLP

Case No. 1:16-cv-00344-LJO-JLT
1064736.10/LA

-6-

1 Dated: March 20, 2017

VICK LAW GROUP APC
SCOTT VICK

2
By:

3
4
5
6 Dated: March 20, 2017
7
8

/s/
Scott Vick
SCOTT VICK
Attorneys for Defendant
DANIEL NASE

LAW OFFICES OF YOUNG
WOOLDRIDGE, LLP
NED DUNPHY
By:

9
10

/s/
Ned Dunphy
NED DUNPHY
Attorneys for
MORALES PLAINTIFFS

11
12 IT IS SO ORDERED.
13

Dated:

/s/ Lawrence J. O’Neill _____

March 21, 2017

UNITED STATES CHIEF DISTRICT JUDGE

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
LAW OFFICES

Allen Matkins Leck Gamble
Mallory & Natsis LLP

Case No. 1:16-cv-00344-LJO-JLT
1064736.10/LA

-7-