Wallis et al v. Centennial Insurance Company Inc et al

Filing 141

ORDER re 139 Defendants' Motion for Certification of Order for Appeal and Further Scheduling Order signed by Judge William B. Shubb on 5/1/2012: The Court orders that 139 Defendants' motion for certification of the Court's 1/30/201 2 Order for appeal pursuant to 28 U.S.C. § 1292(b) be, and the same hereby is, DENIED. It is further ordered that the stay imposed by the 74 Court's 12/10/2009 Order is hereby lifted as to all claims not subject to the 41 Court's 4/16/2009 Order compelling arbitration. The 53 Court's 7/2/2009 Scheduling Order is amended as follows: All discovery shall be completed by 9/28/2012. All pretrial motions shall be filed by 11/26/2012. The Final Pretrial Conference is RESET for 1/22/2013 at 02:00 PM in Courtroom No. 5. The Jury Trial is RESET for 2/20/2013 at 09:00 AM in Courtroom No. 5. (Kirksey Smith, K)

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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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DALE M. WALLIS, D.V.M., JAMES
L. WALLIS, and HYGIEIA
BIOLOGICAL LABORATORIES, INC.,
a California Corporation,

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Plaintiffs,

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NO. CIV. 08-02558 WBS GGH
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ORDER RE: MOTION FOR
CERTIFICATION OF ORDER FOR
APPEAL AND FURTHER SCHEDULING
ORDER

v.
CENTENNIAL INSURANCE COMPANY,
INC., a New York corporation,
ATLANTIC MUTUAL INSURANCE,
CO., INC., a New York
corporation,
Defendants,
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AND RELATED COUNTERCLAIMS AND
THIRD-PARTY COMPLAINT.
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----oo0oo---Plaintiffs Dale M. Wallis, James L. Wallis, and Hygieia

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Biological Laboratories Inc. brought this action against

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defendants Centennial Insurance Company, Inc. and Atlantic Mutual

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Insurance Co., Inc. alleging breach of insurance contract, breach

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of the implied covenant of good faith and fair dealing, and
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breach of fiduciary duty relating to plaintiffs’ professional

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liability insurance policy.

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on April 30, 2012, in which counsel for both parties were in

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attendance.

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January 30, 2012, Order, denying defendants’ motion to stay, for

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appeal pursuant to 28 U.S.C. § 1292(b).

The court held a Status Conference

Defendants now move for certification of the court’s

(Docket No. 139.)

On December 19, 2011, defendants filed a motion to

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indefinitely stay the proceedings in this case pursuant to the

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Orders of Liquidation issued by the Supreme Court of the State of

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New York.

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court denied defendants’ motion to stay this action pending the

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outcome of the liquidation proceedings in New York.

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136.)

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Ninth Circuit’s opinion in Hawthorne Savings F.S.B. v. Reliance

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Insurance Co. of Illinois, 421 F.3d 835 (9th Cir. 2005), amended

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by 433 F.3d 1089 (9th Cir. 2006), which held that neither the

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Full Faith and Credit Clause of the Constitution nor the Uniform

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Insurers Liquidation Act (“UILA”), Cal. Ins. Code § 1064.1-.12,

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required that in personam proceedings against an insolvent

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insurance company be stayed pursuant to orders issued by a state

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court.

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their petition for a § 1292(b) certification of the court’s

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January 30, 2012, Order.

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(Docket No. 130.)

In its January 30, 2012, Order, the

(Docket No.

In denying defendants’ motion, the court relied upon the

Three months later, on April 26, 2012, defendants filed

Orders denying motions to stay are not ordinarily final

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decisions from which appeal may be taken under 28 U.S.C. § 1291.

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See Mayacamas Corp. v. Gulfstream Aerospace Corp., 806 F.2d 928,

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930 (9th Cir. 1986).

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a district judge, in making in a civil action an order not

However, under 28 U.S.C. § 1292(b), “[w]hen

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otherwise appealable under [section 1292], shall be of the

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opinion that such order involves a controlling question of law as

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to which there is substantial ground for difference of opinion

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and that an immediate appeal from the order may materially

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advance the ultimate termination of the litigation, he shall so

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state in writing in such order.”

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states, it is then up to the Court of Appeals, in its discretion,

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to determine whether to permit an appeal to be taken from that

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order.

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When the district judge so

Id.
The court first considers the threshold issue of

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whether the motion for certification of interlocutory appeal was

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timely filed.

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filed within ten days of the court’s certification of the order

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for interlocutory appeal.

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limit for seeking certification, § 1292(b) provides for an

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‘immediate appeal,’ and ‘a district judge should not grant an

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inexcusably dilatory request.’”

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No. C-08-868 RMW, 2010 WL 54755, at *1 (N.D. Cal. Jan. 8, 2010)

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(quoting Richardson Elecs., Ltd. v. Panache Broad. of Pa., Inc.,

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202 F.3d 957, 958 (7th Cir. 2000)).

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Appeals brought under 28 U.S.C. § 1292(b) must be

“Though there is no specified time

Spears v. Wash. Mut. Bank FA,

“The ten-day limitation in section 1292(b) is not to be

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nullified by promiscuous grants of motions to amend.

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amendment that will have the effect of extending the limitation

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is proper only if there is a reason for the delay.”

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Propst, 915 F.2d 283, 287 (7th Cir. 1990); see also Spears, 2010

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WL 54755, a *2 (denying § 1292(b) certification where no reason

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was provided for a two and a half month delay); A.H.D.C. v. City

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of Fresno, No. CIV F 97-5498 OWW, 2003 WL 25948686, at *5 (E.D.
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An

Weir v.

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Cal. 2003) (dismissing certification requests as untimely because

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they were not filed within 30 days after the initial order was

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entered).

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Defendants have provided no reason for their three

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month delay in seeking certification of the court’s January 30,

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2012, Order denying their motion to stay the proceedings.1

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the lack of justification for their delay in seeking

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certification, the court denies the motion as untimely.

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Given

Furthermore, even if defendants had presented

10 sufficient justification for their delay in filing the motion
11 seeking certification, the court would have denied the motion on
12 its merits.

A district court may certify an order for

13 interlocutory appeal when the order: (1) involves a controlling
14 question of law as to which (2) there is substantial ground for
15 difference of opinion and (3) an immediate appeal from the order
16 may materially advance the ultimate outcome of the litigation.
17 28 U.S.C. § 1292(b); see also In re Cement Antitrust Litig., 673
18 F.2d 1020, 1026 (9th Cir. 1982).
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First, in the court’s experience, most orders from

20 which a party may seek to take an interlocutory appeal involve a
21 controlling question of law in the sense that deciding the issue
22 in favor of the moving defendants would materially affect the
23 outcome of the litigation.

In re Cement, 673 F.2d at 1026

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Defendants’ delay is especially notable due to the fact
that they notified the court in their April 16, 2012, Joint
Status Report that they intended to file the motion for
certification “well in advance of the status conference.” (Joint
Status Report at 5:5-6 (Docket No. 138).) Instead of immediately
filing their motion, defendants further delayed and filed the
motion only two court days before the scheduled status
conference.
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1 (“[A]ll that must be shown in order for a question to be
2 ‘controlling’ is that resolution of the issue on appeal could
3 materially affect the outcome of litigation in the district
4 court.” (citing U.S. Rubber Co. v. Wright, 359 F.2d 784, 785 (9th
5 Cir. 1966) (per curiam))).

This case is no exception.

The

6 question of law raised by plaintiffs is whether the court is
7 bound by a New York state court order staying all judicial
8 proceedings involving defendants.

The appropriateness of a stay

9 in this action will materially affect the outcome because
10 defendants represent that a stay of several years would likely be
11 required, at which point defendants may no longer have any
12 remaining assets.
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Second, in most seriously contested motions there is

14 also substantial ground for a difference of opinion.

Filing a

15 motion involves the expenditure of attorney time and client
16 resources.

Such motions are not generally pursued by competent

17 attorneys unless there is a substantial basis to believe they may
18 be granted.

The complexity of such motions is precisely why

19 courts write lengthy opinions explaining their decisions.
20 case, again, is no exception.

This

Defendants argue that several out-

21 of-state authorities support their interpretation that a stay is
22 required pursuant to UILA.

See, e.g., In re Ins. Affiliates,

23 Inc. v. O'Connor, 522 F. Supp. 703, 706 (D. Colo. 1981);
24 Integrity Ins. Co. v. Martin, 769 P.2d 69, 70 (Nev. 1989);
25 Vlasaty v. Avco Rent-A-Car Sys., Inc., 304 N.Y.S.2d 118, 120
26 (N.Y. S. Ct. 1969).
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This is not a case, however, in which there is an

28 absence of controlling Ninth Circuit case law.
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The court has

1 already undertaken a substantially similar analysis of the
2 likelihood of defendants’ success on appeal in its Order denying
3 defendants’ motion to stay.

The court’s Order relies directly on

4 the Ninth Circuit’s decision in Hawthorne Savings, in which the
5 Ninth Circuit decided a substantially similar motion.

Thus,

6 while there are grounds for disagreement, this is not a matter of
7 first impression in this circuit.
Third, whether an immediate appeal would materially

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9 advance the ultimate outcome of this litigation usually depends,
10 of course, on whether the appeal is successful.

Defendants argue

11 that an immediate appeal from this court’s Order “may” materially
12 advance the ultimate outcome of this litigation, but it is
13 unclear that would be the case.2

To the contrary, in this case,

14 it is denial of defendant’s petition for an interlocutory appeal
15 that will most likely materially advance the ultimate outcome of
16 this litigation.

If the appeal is unsuccessful, there will be

17 further delay in litigating this matter.

If on the other hand

18 the appeal is successful, the effect will be to indefinitely stay
19 this action pending the outcome of the defendants’ liquidation
20 proceedings in New York.

It is unclear at this time whether that

21 will terminate the matter or merely delay its resolution.3
But there is more to the analysis than that.

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The

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Defendants argue that a successful appeal “will
effectively bring to a close” this action. (Pet. to Dist. Ct.
for § 1292(b) Certification at 12:1.) Defendants motion to stay
may effectively close this case, however defendants would be
subject to additional litigation if and when plaintiffs move to
lift the stay.
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It is similarly unclear whether appeal of the court’s
Order would consume less litigation resources than proceeding
with this litigation.
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1 Supreme Court has construed the 1958 amendments to § 1292(b) “to
2 confer on district courts first line discretion to allow
3 interlocutory appeals.”
4 35, 47 (1995).

Swint v. Chambers Cnty. Comm’n, 514 U.S.

The Ninth Circuit further tells us that § 1292 is

5 to be used “only in exceptional situations in which allowing an
6 interlocutory appeal would avoid protracted and expensive
7 litigation.”

In re Cement, 673 F.2d at 1026 (citing U.S. Rubber

8 Co., 359 F.2d at 785).

Such an exceptional situation does not

9 exist in this case because there is applicable Ninth Circuit
10 precedent and the appeal will fail to materially advance the
11 ultimate outcome of this matter.
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Furthermore, the purpose of defendants’ motion to stay

13 was to delay adjudication of this action.

If the court were to

14 certify the motion for interlocutory appeal and the matter were
15 to be stayed pending the outcome of the appeal, then defendants
16 would achieve their desired delay regardless of their success on
17 appeal.

The court is under an independent obligation to move its

18 calender forward and will not permit defendants to circumvent
19 this duty.

Accordingly, the court will deny defendants’ motion

20 for certification of order for appeal.
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At the Status Conference held on April 30, 2012,

22 plaintiffs requested that the court lift the stay over all claims
23 not subject to the court’s April 16, 2009, Order compelling
24 arbitration, (Docket No. 41).

This stay was originally ordered

25 by the court pursuant to plaintiffs’ motion to stay and
26 defendants’ non-opposition to the motion.

(Docket No. 74.)

27 Because plaintiffs no longer wish the matter to be stayed pending
28 the outcome of the arbitration hearings, the court will lift the
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1 stay.
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IT IS THEREFORE ORDERED that defendants’ motion for

3 certification of the court’s January 30, 2012, Order for appeal
4 pursuant to 28 U.S.C. § 1292(b) be, and the same hereby is,
5 DENIED.
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IT IS FURTHER ORDERED that the stay imposed by the

7 court’s December 10, 2009, Order, (Docket No. 74), is hereby
8 lifted as to all claims not subject to the court’s April 16,
9 2009, Order compelling arbitration.
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The court’s July 2, 2009, Scheduling Order, (Docket No.

11 53), is amended as follows: All discovery shall be completed by
12 September 28, 2012.
13 November 26, 2012.

All pretrial motions shall be filed by
The Final Pretrial Conference is RESET for

14 January 22, 2013, at 2:00 p.m. in Courtroom No. 5.

The trial is

15 RESET for February 20, 2013, at 9:00 a.m. in Courtroom No. 5.
16 DATED:

May 1, 2012

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