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James Luard Wallis, et al v. Centennial Ins. Co.

December 10, 2012

JAMES LUARD WALLIS, ET AL., PLAINTIFFS,
v.
CENTENNIAL INS. CO., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Allison Claire United States Magistrate Judge

ORDER

Pending before the court is plaintiffs Hygieia Biological Laboratories, Dale M Wallis, and James Luard Wallis's ("plaintiffs") December 6, 2012 ex parte application to extend discovery cut-off dates. Defendants Atlantic Mutual Insurance, Co., Inc. and Centennial Insurance Co., Inc ("defendants") oppose the plaintiffs' request in part. On review of plaintiffs' application, defendants' opposition, the history of this case, and good cause appearing therefor, THE COURT FINDS AND ORDERS AS FOLLOWS:

RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs initiated this action on October 27, 2008 alleging damages arising from defendant insurance companies' refusal to pay defense fees and costs in connection with an underlying intellectual property action.

On July 2, 2009, the Honorable William B. Shubb issued a scheduling order setting February 8, 2010 as the discovery deadline and scheduling a jury trial for July 27, 2010. See Doc. No. 53.

On September 16, 2010, defendants were placed into Rehabilitation status by the Superintendent of Insurance of the State of New York. See Doc. No. 122. Per the Order of Rehabilitation issued by the New York Supreme Court, both insurance companies were deemed insolvent and a stay was imposed for a period of 180 days in all actions and lawsuits in which defendants were obligated to defend a party pursuant to an insurance policy.

On April 27, 2011, the Supreme Court of the State of New York issued Orders of Liquidation for both defendant insurance companies, replacing the Rehabilitation Orders previously issued. Pursuant to Sections 6 and 7 of the liquidation orders, the state court stated that "All persons are enjoined and restrained from commencing or prosecution any actions" against defendants, and "are enjoined and restrained from obtaining preferences, judgments, attachments or other liens, or making any levy" against defendants.

On December 19, 2011, defendants filed a motion to stay this case in light of the liquidation proceedings in the New York state court. Doc. No. 130. Therein, defendants made a number of arguments in support of their motion, including the argument that participation in this case would render them in violation of Sections 6 and 7 the liquidation orders. Id. at 17-20.

On January 31, 2012, Judge Shubb denied defendants' motion to stay on the ground that state courts cannot enjoin in personam proceedings in federal court. Doc. No. 136.

On April 26, 2012, defendants filed a petition for certification under 28 U.S.C. § 1292(b) of Judge Shubb's January 31, 2012 order. Doc. No. 139.

On May 1, 2012, Judge Shubb denied defendants' request for certification both as untimely and on the merits. Doc. No. 141. Judge Shubb then lifted the stay in this case and issued a new scheduling order, setting September 28, 2012 as the date by which all discovery should be completed and February 20, 2013 as the new trial date.

On July 25, 2012, nearly three months after Judge Shubb lifted the stay in this case, plaintiffs propounded requests for admissions, the only discovery that they have propounded on the defendants in this case.*fn1

On July 30, 2012, defendants appealed Judge Shubb's January 31, 2012 order to the Ninth Circuit Court of Appeals. See Doc. No. 142. One month later, on August 28, 2012, defendants filed a motion for voluntary dismissal of their appeal, which was granted by the appellate court on August 29, 2012. See Doc. No. 146.

On August 9, 2012, during the pendency of the appeal to the Ninth Circuit, defendants propounded interrogatories, requests for admissions, and ...


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