Axis Surplus Insurance v. Geringer et al
MEMORANDUM DECISION AND ORDER granting Motion to Approve Settlement Between Trustee and William Warwick (motion was filed in bankruptcy court); granting 36 Motion to Intervene. Motion Hearing set for 9/9/2015 at 03:00 PM in Rm 3.400 before Judge Dale A. Kimball re 41 Plaintiff's MOTION for Summary Judgment and 63 MOTION to Defer Consideration re 41 Plaintiff's MOTION for Summary Judgment. Signed by Judge Dale A. Kimball on 7/17/15 (alt)
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
AXIS SURPLUS INSURANCE COMPANY,
ROBERT D. GERINGER; KIRBY D. COCHRAN;
ROBERT CLAWSON; DOUGLAS W. CHILD;
JEFF AUSTIN; WILLIAM H. DAVIDSON;
WILLIAM K. WARWICK; WILLIAM GRUNDY;
and KEITH GREEN,
Case No. 2:14CV244 DAK
This matter is before the court on the Trustee D. Ray Strong’s (the “Trustee”) Motion to
Approve Settlement and also on his Motion to Intervene. A hearing on the motions was held
on July 2, 2015. At the hearing, the Trustee was represented by Milo Steven Marsden and
Sarah E. Goldsberg. Plaintiff Axis Surplus Insurance Company (“Axis”) was represented by
Michael T. Skoglund and Heidi G. Goebel. Defendant Robert Geringer was represented by
George B. Hoffman; Defendants Jeff Austin, Keith Green, and William Grundy were
represented by David F. Olsky; Defendant Douglas Child was represented by Loren E. Weiss;
the Cochran Estate was represented by Phillip G Jones, and Defendants William Davidson and
William Warwick were represented by Oliver K. Myers. Before the hearing, the court carefully
considered the memoranda and other materials submitted by the parties. Since taking the
matter under advisement, the court has further considered the law and facts relating to these
motions. Now being fully advised, the court renders the following Memorandum Decision and
The Trustee and Defendant William Warwick have moved the court to approve their
settlement agreement (the “Settlement Agreement.”)1 The Settlement Agreement, as
amended, provides, among other things, that:
For and in consideration of the amount of Four Hundred Thousand Dollars
($400,000.00) (the “Settlement Amount”), the Trustee and Warwick will release
each other from any and all claims that the Parties may have against each other;
Upon execution of the Agreement, Warwick will pay Two Hundred
Thousand Dollars ($200,000.00) to the Trustee’s counsel to be held in trust for
the benefit of the Trusts until the date that the Court enters an Order approving
the Settlement Agreement, which amount has already been paid. The Trustee
shall seek further payment from the AXIS Policy;
Warwick has assigned to the Trustee any and all rights Warwick has under
the AXIS Policy, which includes, without limitation, Warwick’s right to pursue
claims against AXIS as an insured thereunder; and
Warwick agrees to cooperate with the Trustee in his administration of the
Debtors’ estates and the Trusts.
In determining whether to approve a proposed settlement, a court is not required to
conduct a “mini-trial” to decide the questions of law or fact raised by the settlement.2 Rather,
a court must determine whether the settlement is fair, equitable, and in the best interests of
See Docket No. 83, Attachment 1, (Amended Motion for Approval of Settlement
Agreement Between Trustee and William Warwick Under Federal Rule of Bankruptcy
Procedure 9091.); Docket No. 98, Attachment 2 (same).
Comm. of Unsecured Creditors v. Interstate Cigar Dist., Inc. (In re Interstate Cigar Co.),
240 B.R. 816, 822 (Bankr. E.D.N.Y. 1999).
the Debtor’s estate.3 Also, a court should approve a settlement agreement unless it falls
“below the lowest point in the range of reasonableness.”4 The Bankruptcy Appellate Panel for
the Tenth Circuit has established the following four factors (referred to as the “Kopexa
Factors”) that courts should consider in determining the propriety of a settlement for purposes
of approval under Bankruptcy Rule 9019:
(1) the probable success of the underlying litigation on the merits;
(2) the possible difficulty in collection of a judgment;
(3) the complexity and expense of the litigation; and
(4) the interest of creditors in deference to their reasonable views.5
In their motion, the Trustee and Mr. Warwick contend that an evaluation of the Kopexa
Factors demonstrates that the Settlement Agreement is fair, equitable, and in the best
interests of the Debtors and the Trusts.
Initially, Mr. Geringer objected to the settlement, but he has now withdrawn his
objection.6 Defendants Douglas W. Child, Jeffrey Austin, William Grundy, and Keith Green
(collectively,“Defendants”) have opposed the motion on the ground that the proposed order
violates the Private Securities Litigation Reform Act of 1995 (“PSLRA”) because it does not
contain a contribution bar and judgment credit provisions, which they contend are required.
See Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson,
390 U.S. 414, 424 (1967).
In re Carson, 82 B.R. 847, 853 (Bankr. S.D. Ohio 1987) (internal quotes omitted).
C.K. Williams, Inc. v. All Am. Life Ins. Co. (In re Kopexa Realty Venture Co.), 213 B.R.
1020, 1022 (B.A.P. 10th Cir. 1997).
Docket No. 24.
In their briefing, these Defendants offer various proposed changes to the Settlement
Agreement to bring it into compliance with the PSLRA, in their view. The Trustee and Mr.
Warwick, while not conceding that the proposed changes are required by the PSLRA, do not
oppose the proposed changes and have offered to work with these Defendants to revise the
Settlement Agreement to incorporate the revisions sought by these Defendants.
Defendants Child, Austin, Grundy, and Green are also opposed to the instant motion
because, they claim, it is not in the best interests of creditors (such as Austin and Grundy)
because the professional fees required to litigate the settlement will likely exhaust the cash
that Mr. Warwick will provide the Trustee.
The court, however, after considering the evidence and the arguments of counsel, finds
that the settlement is fair, equitable, and in the best interests of the Debtors and the Trusts.
For the reasons set forth in the Trustee’s supporting memoranda,7 the court finds that in
evaluating the evidence relating to the Kopexa factors, the evidence weighs in favor of
approving the settlement. Thus, the court approves the Settlement Agreement. The Trustee,
however, is directed to file an Amended Settlement Agreement that addresses the PSLRA
concerns of Defendants Child, Austin, Grundy, and Green.
Because the court has approved the Settlement Agreement, the court will also permit
the Trustee to intervene in this matter. Accordingly, the Trustee’s Motion to Intervene is
granted. The court will next hear Axis’ Motion for Summary Judgment and the Trustee’s
See Docket Nos. 98-2 & 123.
Motion to Defer Consideration of Axis’ Motion for Summary Judgment to Allow Discovery. The
motion hearing will be held on Wednesday, September 9, 2015 at 3:00.
For the foregoing reasons, IT IS HEREBY ORDERED that the Motion to Approve
Settlement is GRANTED.8 The Trustee is directed to file an Amended Settlement Agreement,
as discussed above, to address the PSLRA-related concerns of certain Defendants. In addition,
the Trustee’s Motion to Intervene [Docket No. 36] is GRANTED. A hearing on Axis’ Motion for
Summary Judgment [Docket No. 41] and the Trustee’s Motion to Defer Consideration of Axis’
Motion for Summary Judgment [Docket No. 63] is hereby set for hearing on Wednesday,
September 9, 2015 at 3:00 in courtroom 3.400.
DATED this 17th day of of July, 2015.
BY THE COURT:
DALE A. KIMBALL
United States District Judge
Docket Nos. 83-1 & 98-2.
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