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Eagle Star Insurance Co. Limited v. Highlands Insurance Co.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA


November 23, 2009

EAGLE STAR INSURANCE COMPANY LIMITED, A FOREIGN CORPORATION PLAINTIFF,
v.
HIGHLANDS INSURANCE COMPANY DEFENDANT/THIRD-PARTY PLAINTIFF
v.
PROPERTY & CASUALTY INSURANCE COMPANY, F/K/A AETNA INSURANCE COMPANY, IMPROPERLY IDENTIFIED AS ACE USA THIRD-PARTY DEFENDANT

The opinion of the court was delivered by: Hayes, Judge

ORDER

The matter before the Court is the motion for relief from stay to take the deposition to preserve testimony of non-party witnesses filed by Plaintiff Eagle Star Insurance Company Limited. (Doc. # 148).

On August 7, 2003, Plaintiff Eagle Star filed a First Amended Complaint alleging that Defendant Highlands has failed to pay its respective share of liability losses and claim expenses. On August 15, 2003, Defendant Highlands filed a Third-Party Complaint against ACE Property (as successor to Aetna Insurance Co.) alleging that to the extent Highlands has any liability to Eagle Star, ACE is obligated to indemnify Highlands.

On February 26, 2004, this Court issued an order (1) denying ACE's motion to stay/dismiss in favor of arbitration; (2) granting ACE's motion to dismiss Highlands' breach of contract cause of action; (3) denying ACE's motion to dismiss Highlands' unjust enrichment claim; (4) denying ACE's motion to strike; and (5) denying ACE's motion to sever and stay. (Doc. # 56). Third-Party Defendant ACE appealed the ruling regarding arbitration to the Court of Appeals for the Ninth Circuit. (Doc. # 57).

On March 30, 2005, the Court issued an order staying "Highlands' third party claims against ACE pending resolution of ACE's appeal to the Ninth Circuit Court of Appeals" of the ruling regarding arbitration. (Doc. # 100).

On January 27, 2006, the Ninth Circuit held that "dismissal or stay of Highlands' third-party complaint in favor of arbitration is required." 2006 WL 204783, at *1. Accordingly, the stay granted on March 30, 2005 of "Highlands' third party claims against ACE pending resolution of ACE's appeal to the Ninth Circuit Court of Appeals" of the ruling regarding arbitration is no longer in effect.

On September 24, 2007, Plaintiff Eagle Star moved the Court to stay its claims against Defendant Highlands pending the outcome of the Texas Court of Appeals proceedings pertaining to the settlement between Plaintiff Eagle Star and Defendant Highlands. Plaintiff explained that Plaintiff Eagle Star and Defendant Highlands "have reached a settlement but cannot consummate same so long as the appeal by third party defendant here, ACE Property Casualty Insurance Company . . . in the Texas Court remains unresolved." (Doc. # 132 at 1.)

On October 26, 2007, this Court granted the motion to stay filed by Plaintiff Eagle Star "so long as the appeal by third party defendant in the Texas Court of Appeals remains unresolved." (Doc. # 137).

On August 17, 2009, Plaintiff Eagle Star filed the motion now pending before this Court seeking limited relief from the stay in order to perpetuate the testimony of two witnesses in anticipation of the arbitration proceedings against Third-Party Defendant ACE. (Doc. # 148). Third Party-Defendant ACE filed an opposition to the motion for relief from the stay on the grounds that discovery matters should be resolved in the arbitration proceeding. (Doc. # 153).

On August 26, 2009, the Texas Court of Appeals issued a Memorandum Opinion resolving the action pertaining to the settlement between Plaintiff Eagle Star and Defendant Highlands Insurance Company. Accordingly, the stay granted by his Court on October 26, 2007 "so long as the appeal by third party defendant in the Texas Court of Appeals remains unresolved" is no longer in effect. (Doc. # 137).

On October 21, 2009, Plaintiff Eagle Star filed a status report stating that resolution of the Texas appeal is final and "the settlement negotiated between Eagle Star and [Highlands], which was substantially completed at the time approval was sought from the Texas court... can, hopefully, be concluded within the next 30 to 60 days." (Doc. # 158). The status report further states that Eagle Star will commence arbitration as directed by the Court of Appeals in order to pursue the rights of Defendant Highlands against Third-Party Defendant ACE. The Court concludes that discovery matters relating to the arbitration should be resolved in the arbitration proceeding.

IT IS HEREBY ORDERED that the motion for relief from stay to take the deposition to preserve testimony of non-party witnesses filed by Plaintiff Eagle Star Insurance Company Limited (Doc. # 148) is denied. The orders of this Court granting a stay of this action filed on March 30, 2005 and on October 26, 2007 are vacated. The parties shall proceed forthwith with the resolution of this action.

WILLIAM Q. HAYES United States District Judge

20091123

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