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Michael J. Dobson, et al v. Twin City Fire Insurance Company

December 14, 2011

MICHAEL J. DOBSON, ET AL
v.
TWIN CITY FIRE INSURANCE COMPANY,



The opinion of the court was delivered by: The Honorable David O. Carter, Judge

CIVIL MINUTES - GENERAL

Julie Barrera Not Present Courtroom Clerk Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS:

NONE PRESENT NONE PRESENT

PROCEEDING (IN CHAMBERS): ORDER (1) GRANTING DEFENDANTS' MOTION FOR A

RULE 16 PRE-TRIAL CONFERENCE AND APPOINTMENT

OF SPECIAL MASTER; (2) DENYING PLAINTIFFS' MOTION TO COMPEL

Before the Court is (1) Defendants' Motion for a Rule 16 Pre-Trial Conference and the Appointment of a Special Master (Dkt. 60), and (2) Plaintiffs' Motion to Compel Production of Documents (Dkt. 63). The Court finds this matter appropriate for decision without oral argument. Fed.

R. Civ. P. 78; Local Rule 7-15. Accordingly, the motions hearing set for December 22, 2011 at 8:30 a.m. is vacated for the purpose of hearing the motions. However, the parties are ordered to appear at that time for the purpose of conducting the requested Rule 16 conference regarding discovery.

After considering the moving, opposing and replying papers thereon, and for the reasons stated below, the Court hereby (1) GRANTS the Motion for a Rule 16 Conference and Appointment of Special Master, and (2) DENIES the Motion to Compel.

I. BACKGROUND

Plaintiffs Michael J. Dobson, Richard D. Teasta, and Allen F. Braun (collectively, the "Insureds") are the former officers of EZ Lube, LLC ("EZ Lube"). The Insureds allege they are covered under a Director and Officers insurance policy ("D&O Policy") effective from April 22, 2009, to November 13, 2015, ("Policy Period") and underwritten by Defendant Twin City Fire Insurance Company ("Twin City") and its parent company Hartford Financial Services Group, Inc., ("Hartford") (collectively, "Defendants"). Pursuant to the D&O Policy, the Insureds are allegedly covered in their capacity as directors and officers of EZ Lube with a $10,000,000 aggregate limit of liability.

The Insureds allege that, under to the D&O Policy, they are covered for "[l]oss on behalf of the Insured Persons resulting from an Insured Person Claim first made against the Insured persons during the Policy Period . . . for a Wrongful Act by the Insured Persons . . . ." They also allege that the D&O Policy defines "loss" as "the amount that the Insureds are legally liable to pay solely as a result of a Claim . . . including Defense Costs, compensatory damages, settlement amounts, pre- and post-judgment interests, costs awarded pursuant to judgments . . . ."

On December 9, 2008, EZ Lube filed a voluntary petition under Chapter 11 Bankruptcy. The Joint Plan of Reorganization confirmed by the Bankruptcy Court allegedly established a Plan of EZ Lube and Xpress Lube-Tech, Inc. (the "Plan") for the benefit of the unsecured creditors of the Debtors (the "Committee"). On August 6, 2010, Invotex, Inc., ("Invotex") as trustee for the Plan trust, filed a Complaint (the "Invotex Complaint"), SACV 10-1189 DOC, ("Invotex Action") alleging claims arising from a transaction involving EZ Lube that occurred in December 2005 ("LBO Transaction"). In the Invotex Complaint, Invotex alleges that the Insureds, as former officers and directors of EZ Lube, breached their fiduciary duties instructing and consummating the LBO Transaction and received fraudulent transfers. Pursuant to the Invotex Complaint, Invotex ...


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