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)

Download PDF
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: (213) 622-5555 5 Fax: (213) 620-8816 E-Mail: 6 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-

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?