Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_07-cv-00092/USCOURTS-caed-1_07-cv-00092-5/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

JANET ORLANDO, )

)

Plaintiff, )

)

vs. ) 

)

CAROLINA CASUALTY INSURANCE )

COMPANY, MONITOR LIABILITY )

MANAGERS, INC., et al., )

)

Defendants. )

 )

1:07-cv-00092-AWI-SMS

SCHEDULING CONFERENCE ORDER

 Phase 1 Discovery

Telephonic Discovery Status Conf:

12/6/07, 9:30am, Ctrm. 7/SMS

Non-Expert Discovery Deadline:

1/11/08

Cross-Motions for Summary

Judgment Filing Deadline:

1/25/08

Pre-Trial Conference Date:

4/4/08, 8:30am, Ctrm. 2/AWI

Trial Date: 5/12/08, 9:00am,

Ctrm. 2/AWI (JT ~ 5-10 days)

1. Date of Scheduling Conference:

October 4, 2007.

2. Appearances of Counsel:

Nicholas Wagner, Esq., of Wagner & Jones appeared on

behalf of plaintiff.

Louis H. Castoria, Esq., of Wilson, Elser, Moskowitz,

Edelman & Dicker, LLP, appeared on behalf of defendants.

Case 1:07-cv-00092-AWI -SMS Document 49 Filed 10/17/07 Page 1 of 16
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2

3. The Pleadings:

A. Summary of the Pleadings.

Plaintiff’s Contentions

In April 2006, a Fresno County Superior Court jury

awarded plaintiff a Judgment against Alarm One, Inc., in the amount

of $1.7 million dollars in Orlando v. Alarm One, Inc., et al.,

Fresno County Superior Court Case No. CE CG 3545 DSB (the

“Underlying Action”). Attorneys fees, interest, and costs were

included in the Judgment. The Judgment with interest currently

stands at approximately $2.1 million dollars. Following the

verdict, Alarm One filed an appeal. The parties then agreed to

mediate the matter.

Defendants are the liability insurers for Alarm One. 

Attorneys and claims adjusters for defendants attended and actively

participated in the mediation of the Underlying Action held on July

31, 2006.

At the July mediation, all parties to the Underlying

Action and all insurers, including defendants herein, agreed in

writing to settle the Underlying Action for $1.4 million dollars.

At the mediation, Alarm One thought that it might

not be able to legally bind itself to the settlement agreement

without the consent of an unnamed, necessary third-party creditor. 

As such, a sentence was added to an addendum to the settlement

agreement that stated the settlement was, “subject to Alarm One

obtaining necessary third party consents.” Thus, if Alarm One was

indeed legally required to obtain a necessary third-party’s consent

before entering into the settlement agreement, the settlement

required that Alarm One obtained that consent.

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Following the mediation and the execution of the

written settlement agreement by all parties to the Underlying

Action, plaintiff’s counsel attempted to obtain documentation

establishing that indeed Alarm One was required to obtain the

necessary third-party consent in order to enter into the settlement

agreement. Alarm One, Carolina Casualty, and Monitor Liability did

not produce any such documentation. Instead, several weeks after

the mediation, Alarm One and Carolina Casualty informed plaintiff’s

counsel that Alarm One was not going to obtain the necessary thirdparty consent, and informed plaintiff’s counsel that if plaintiff

still wanted to settle the case, she would have to accept a

settlement that was substantially less than what was agreed to by

the parties at the July mediation.

Feeling as though the “necessary third party

consent” clause was a ruse by defendants’ counsel and Alarm One in

order to obtain leverage to force a lesser settlement, plaintiff’s

counsel continued to attempt to obtain documentation from Alarm

One, Carolina Casualty, and Monitor Liability regarding the

identity of the “necessary third party” and any such documentation

that purportedly stated that Alarm One could not enter into the

settlement agreement without obtaining that necessary third-party’s

consent. Despite repeated requests, no such documentation was

provided. Subsequent to the breach of the settlement agreement,

defendants demanded that plaintiff settle the case for $800,000.

As recently as August 2007, the “necessary third

parties” (Alarm One’s creditors) gave their consent to the

settlement agreement. Therefore, demand has been made to pay the

settlement so that this case can be dismissed.

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4

Plaintiff’s First Amended Complaint includes two (2)

causes of action: Breach of Contract and Fraud. Plaintiff contends

that defendants breached the terms of the settlement agreement and

knowingly misrepresented material facts before, during, and after

mediation to induce plaintiff to enter into a written agreement to

settle the Judgment she was awarded, and to gain leverage over

plaintiff to force her to accept even less than the compromised

amount of her Judgment. Alarm One has not been made a party to

this action.

Defendants’ Contentions

This is an action to enforce the terms and

conditions of a settlement agreement reached between plaintiff and

Alarm One, Carolina Casualty, and Monitor Liability. Alarm One is

not a party to the present action. That settlement agreement was

subject to numerous conditions which remain unsatisfied.

Plaintiff filed the Underlying Action after she and

others were spanked while at work at the Fresno office of Alarm

One. Although plaintiff’s case was consolidated with another

action, entitled Jessica P. Dakin, Kristy Moren, and Crystal

Melendez v. Alarm One, Rob Harland, and Dena Domanakis, Fresno

County Superior Court Case No. 04 CE CG 01288 DSB, she alone

proceeded to trial and verdict after the other plaintiffs settled. 

After the jury rendered its verdict, Alarm One timely filed a

Notice of Appeal from the resulting judgment. That appeal remains

pending in the California Court of Appeal, Fifth District.

Alarm One maintained a certain insurance policy

issued by Carolina Casualty. Plaintiff’s claim was adjusted by

Monitor Liability, a managing general underwriter for Carolina

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5

Casualty. Carolina Casualty, as Alarm One’s insurer, paid for

counsel to defend Alarm One in the Underlying Action.

Plaintiff, Alarm One, and Carolina Casualty (through

Monitor Liability) participated at a voluntary mediation on July

31, 2006, that was conducted by private Mediator, Jerome Spolter,

Esq. All participants at the mediation signed a Confidentiality

Agreement. At the end of the day, the participants signed a

“Stipulation for Settlement” (the “Stipulation”).

As the Stipulation recites, all parties were

represented by counsel. The Stipulation incorporates the terms of

“Attachment A,” a faxed memorandum from Alarm One’s Boston counsel

to plaintiff’s counsel, Nicholas “Butch” Wagner, dated July 21,

2006, which, among other things, states: “9. Settlement subject to

Alarm One obtaining necessary third party consents.” (Emphasis

added.) The secured creditors declined to agree to the Stipulation

dated September 18 and 19, 2006, respectively.

The July 21, 2006 memorandum also stated that as

part of the settlement proposal then being made, Alarm One would

give a “$200,000 subordinated note (“form and substance

satisfactory to lenders”) payable over 4 years in equal monthly

installments. The note was to accrue interest at “10% per annum,

to be paid monthly in arrears.” (Emphasis added.) To date, the

necessary third-party consents and the lenders’ approvals of the

subordinated note have never been obtained.

The Stipulation was also expressly subject to other

conditions precedent as contained in a separate Confidential

Agreement between Alarm One and Carolina Casualty. The Stipulation

begins, in relevant part:

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“1. $1.25 million up front, to be paid within

15 days of the complete execution of all the

documents described below, a confidential

agreement between Alarm One and the insurance

company, and a more formal settlement agreement

that will incorporate these terms and contain

other clauses typically included in settlement

agreements governed by California law. The

settlement agreement and all releases described

below will include a waiver of California Civil

Code section 1542.”

None of those conditions have been satisfied and, thus, the

Stipulation is not enforceable. Defendants therefore have not

breached the Stipulation.

On August 31, 2007 (over one year after the

mediation was conducted), plaintiff advised that she had obtained

certain lender consents to the Stipulation, and contended that the

Stipulation was “enforceable.” This is simply not the case. While

it appears that two of Alarm One’s secured creditors executed some

type of an agreement with plaintiff long after this present action

was filed (agreements which defendants contend is illusory), the

same two creditors, through their counsel, expressly refused their

consent. Plaintiff has not established that these were the only

“necessary third parties,” and taken in context of the entire

Stipulation it is clear that several conditions precedent remain

unfulfilled. As such, defendants have not breached the Stipulation

and plaintiff’s claims lack merit.

//

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7

Procedural History

On November 15, 2006, plaintiff filed the instant

complaint against defendants in Fresno County Superior Court. On

January 17, 2007, defendants removed the action to the United

States District Court for the Eastern District of California,

Fresno Division. On January 22, 2007, Carolina Casualty filed a

motion to dismiss and motion to strike plaintiff’s Complaint

because she failed to allege that two conditions precedent to the

settlement agreement were ever fulfilled; failed to allege facts

supporting her fraud claims with any substantive specificity; and,

completely failed to demonstrate any conduct which could arguably

give rise to the imposition of punitive damages. On March 13,

2007, this Court granted defendants’ motion to dismiss with leave

to amend on the basis that plaintiff (1) failed to allege the

satisfaction or performance of conditions precedent to the

enforcement of the Settlement Agreement; and, (2) failed to plead

with the requisite factual specificity any substantive support for

her fraud cause of action.

On April 2, 2007, plaintiff filed her First Amended

Complaint (“FAC”) alleging the same two causes of action, breach of

contract and fraud, and seeking an award of punitive damages. On

April 11, 2007, defendants filed another motion to dismiss and, on

July 26, 2007, this Court denied defendants’ motion. On August 8,

2007, defendants timely filed their Answer to plaintiff’s

Complaint.

B. Orders Re: Amendment of Pleadings.

Subject to discovery, the parties do not contemplate

filing any further amendments to the pleadings at this time.

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8

4. Factual Summary:

A. Plaintiff’s Uncontested Facts.

(1) On December 13, 2004, plaintiff filed a

complaint against Alarm One in Fresno County Superior Court, Case

No. CE CG 3545 DSB, alleging, among other things, sexual harassment

and battery arising out of her employment with Alarm One.

(2) Plaintiff’s action, entitled Orlando v. Alarm

One, Inc. et al., Fresno County Superior Court Case No. CE CG 3545

DSB, was consolidated with another case entitled Jessica P. Dakin,

Kristy Moren, and Crystal Melendez v. Alarm One, Rob Harland, and

Dena Domanakis, Fresno County Superior Court Case No. 04 CE CG

01288 DSB. 

(3) Defendants settled with plaintiffs Dakin, Moren,

and Melendez prior to trial. Plaintiff’s claim was not settled.

(4) Following trial in the Underlying Action, the

jury returned a verdict awarding plaintiff $1,490,000, consisting

of $490,000 in compensatory damages and $1 million in punitive

damages as against Alarm One. Approximately $200,000 in attorneys

fees was also awarded.

(5) Judgment in the Underlying Action was entered

on May 9, 2006.

(6) As to Alarm One, the Superior Court awarded

plaintiff attorneys’ fees, costs, and post-judgment interest,

thereby increasing the Judgment to over $1.7 million against Alarm

One. 

(7) During the period that plaintiff was employed

by Alarm One, Carolina Casualty insured Alarm One under a

Management Liability Insurance Policy, number 6353324/1.

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(8) Pursuant to such policy of insurance, Carolina

Casualty defend non-party Alarm One, and several individual

defendants employed by Alarm One, under a written Reservation of

Rights in the Underlying Action.

(9) Monitor Liability was retained by Carolina

Casualty to administer and adjust the claims made by plaintiff and

the other plaintiffs against Alarm One in the Underlying Action.

(10) Monitor Liability is the agent of Carolina

Casualty.

(11) In addition to defending Alarm One in the

Underlying Action, Carolina Casualty conducted settlement

negotiations on behalf of Alarm One and paid to settle Kristy Moen,

Jessica Dakin, and Crystal Melendez’s claims against Alarm One.

(12) Following the entry of Judgment for plaintiff

in the Underlying Action, Alarm One timely filed a Notice of Appeal.

(13) On July 31, 2006, pending appeal in the

Underlying Action (Case No. 04 CE CG 03545), the parties and Alarm

One attended a mediation and, at the conclusion of the mediation,

signed a stipulation to settle the judgment and all claims that

plaintiff had against Carolina Casualty, Monitor Liability, and

Alarm One.

(14) The parties agreed to settle for the sum of

$1.4 million, subject to several contingencies, as referenced in

the Stipulation.

(15) On or about September 15, 2006, defendants (and

non-party Alarm One) informed plaintiff that the money owed to

plaintiff pursuant to the Stipulation would not be paid because

conditions to the Stipulation had not been met.

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(16) Defendants (and non-party Alarm One)

subsequently offered to settle with plaintiff for a lesser amount

than that set forth and agreed to in the Settlement Agreement.

(17) In August 2007, the necessary third-party

creditors gave their consent to the Stipulation, but did not

authorize any payment by Alarm One toward the settlement.

B. Plaintiff’s Contested Facts.

(1) All other facts.

C. Defendants’ Uncontested Facts.

(1) Plaintiff filed Orlando v. Alarm One, Inc., et

al., Fresno County Superior Court Case No. CE CG 3545 DSB, the

Underlying Action, after she and others were spanked while at work

at the Fresno office of Alarm One. Plaintiff’s case was

consolidated with Jessica P. Dakin, Kristy Moren, and Crystal

Melendez v. Alarm One, Rob Harland, and Dena Domanakis, Fresno

County Superior Court Case No. 04 CE CG 01288 DSB.

(2) Defendants settled with defendants [sic] in

Jessica P. Dakin, Kristy Moren, and Crystal Melendez v. Alarm One,

Rob Harland, and Dena Domanakis, Fresno County Superior Court Case

No. 04 CE CG 01288 DSB.

(3) Plaintiff proceeded to trial in Orlando v.

Alarm One, Inc., et al., Fresno County Superior Court Case No. CE

CG 3545 DSB, and a jury verdict was returned in plaintiff’s favor.

(4) Alarm One timely filed a Notice of Appeal from

the resulting judgment, which remains pending in the California

Court of Appeal, Fifth District. 

(5) Alarm One maintained a certain insurance policy

issued by Carolina Casualty. Plaintiff’s claim was adjusted by

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Monitor Liability, a managing general underwriter for Carolina

Casualty. Carolina Casualty, as Alarm One’s insurer, paid for

counsel to defend Alarm One in the Underlying Action.

(6) Plaintiff, Alarm One, and Carolina Casualty

(through Monitor Liability) participated at a voluntary mediation

on July 31, 2006, that was conducted by private Mediator, Jerome

Spolter, Esq. At the end of the mediation, the participants signed

a “Stipulation for Settlement”. Expressly incorporated into the

Stipulation for Settlement was a faxed memorandum, dated July 21,

2006, that stated the settlement was subject to Alarm One obtaining

the necessary third-party consents. The memo also stated that, as

part of the settlement proposal then being made, Alarm One would

give a $200,000 subordinated note, the form and substance of which

had to satisfy Alarm One’s lenders.

(7) The Stipulation for Settlement was also

expressly subject to a confidential agreement being reached between

Alarm One and Carolina Casualty concerning how the settlement was

to be funded, i.e., the sale of certain of Alarm One’s assets to

fund its cash portion of the settlement. Pursuant to this Alarm

One/Carolina confidentiality agreement, Alarm One was required to

meet certain conditions before the Stipulation became enforceable,

none of which have been satisfied. 

(8) The necessary third-party consents and the

lenders’ approvals of Alarm One’s $200,000 subordinate note have

never been obtained.

(9) The secured creditors have not agreed to the sale

of any of Alarm One’s assets, a necessary condition to the agreement.

The creditors expressly objected to any sale of Alarm One’s assets.

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28 Counsel have stipulated to a total of five (5) depositions per side for Phase 1 of discovery.

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D. Defendants’ Contested Facts.

(1) All other facts.

5. Legal Issues:

A. Uncontested.

(1) All defendants have been served.

(2) Venue is proper and rests on 28 U.S.C. § 1441.

(3) Jurisdiction rests on diversity of citizenship,

28 U.S.C. § 1332.

B. Contested.

(1) All other material legal issues.

6. Consent to Magistrate Judge Jurisdiction:

This case will not be assigned for all purposes,

including trial, to the Honorable Sandra M. Snyder, United States

Magistrate Judge, as all parties do not so consent at this time.

7. Discovery Plan and Cut-Off Dates:

A. Pursuant to F.R.Civ.P.26(b), and except as the court

may order after a showing of good cause, the “(p)arties may obtain

discovery regarding any matter, not privileged, that is relevant to

the claim or defense of any other party.” 

B. Unless otherwise stipulated between the parties or

ordered by the court pursuant to F.R.Civ.P.26(b)(2), discovery

shall be limited as follows:

(1) Depositions:

a. Each side may take no more than ten (10)

depositions.1

// 

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Counsel have stipulated that each deposition will only take a total of no more than four (4) hours.

2

If W ordPerfect X3 is not available to the parties, then the latest version of W ordPerfect, or any other 3

word processing program in general use for IBM compatible personal computers, is acceptable.

13

b. A deposition shall be limited to one (1)

day of seven (7) hours. F.R.Civ.P.30(d).2

C. The parties are ordered to complete all discovery

pertaining to non-experts on or before January 11, 2008.

8. Pre-Trial Motion Schedule:

Cross-Motions for Summary Judgment shall be filed on or

before January 25, 2008, and are heard on Mondays at 1:30 p.m. in

Courtroom No. 2 on the Eighth Floor before the Honorable Anthony W.

Ishii, United States District Judge. In scheduling such motions,

counsel shall comply with Local Rule 78-230.

9. Pre-Trial Conference Date:

April 4, 2008 at 8:30 a.m. in Courtroom No. 2 on the

Eighth Floor before the Honorable Anthony W. Ishii, United States

District Judge.

Ten (10) days prior to the Pretrial Conference, the

parties shall exchange the disclosures required pursuant to

F.R.Civ.P. 26(a)(3). 

The parties are ordered to file a JOINT Pretrial

Statement pursuant to Local Rule 16-281(a)(2). The parties are

further ordered to submit a digital copy of their Joint Pretrial

Statement in WordPerfect X3 format to Judge Ishii’s chambers by 3

e-mail to AWIOrders@caed.uscourts.gov.

Counsels' attention is directed to Rules 16-281 and 16-

282 of the Local Rules of Practice for the Eastern District of

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California as to the obligations of counsel in preparing for the

Pre-Trial Conference. The Court will insist upon strict compliance

with those Rules.

10. Trial Date:

May 12, 2008 at 9:00 a.m. in Courtroom No. 2 on the

Eighth Floor before the Honorable Anthony W. Ishii, United States

District Judge.

A. This is a jury trial.

B. Counsels' Estimate of Trial Time: 

5-10 days.

C. Counsels' attention is directed to Rule 16-285 of

the Local Rules of Practice for the Eastern District of California.

11. Settlement Conference:

Should the parties desire a Settlement Conference, they

will jointly request one of the Court, and one will be arranged. 

In making such a request, the parties are directed to notify the

Court as to whether or not they desire the undersigned to conduct

the Settlement Conference or to arrange for one before another

judicial officer.

12. Request for Bifurcation, Appointment of Special Master,

or other Techniques to Shorten Trial:

Not applicable at this time.

13. Related Matters Pending:

There are no pending related matters.

14. Compliance with Federal Procedure:

The Court requires compliance with the Federal Rules of

Civil Procedure and the Local Rules of Practice for the Eastern

District of California. To aid the Court in the efficient

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administration of this case, all counsel are expected to

familiarize themselves with these Rules, and to keep abreast of any

amendments thereto. The Court must insist upon compliance with

these Rules if it is to efficiently handle its increasing caseload. 

Sanctions will be imposed for failure to follow the Rules as

provided in both the Fed.R.Civ.P. and the Local Rules.

15. Compliance with Electronic Filing Requirement:

On January 3, 2005, the United States District Court for

the Eastern District of California became an electronic case

management/filing district (CM/ECF). Unless excused by the Court,

or by Local Rule, attorneys shall file all documents electronically

as of January 3, 2005 in all actions pending before the court.

While Pro Se Litigants are exempt from this requirement, the court

will scan in all documents filed by pro se litigants, and the

official court record in all cases will be electronic. Attorneys

are required to file electronically in pro se cases. More

information regarding the Court’s implementation of CM/ECF can be

found on the court’s web site at www.caed.uscourts.gov, including

the Court’s Amended Local Rules effective January 3, 2005, the

Court’s CM/ECF Final Procedures, and the Court’s CM/ECF User’s

Manual.

While the Clerk's Office will not refuse to file a

proffered paper document, the Clerk's Office will scan it and, if

improperly filed, notify the Court that the document was filed in

an improper format. An order to show cause (OSC) may be issued in

appropriate cases regarding an attorney's disregard for the

requirement to utilize electronic filing, or other violations of

these electronic filing procedures. See L.R. 11-110, 5-133(d)(3).

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If counsel has not already done so, counsel must register

for CM/ECF as soon as possible. On-line registration is available

at www.caed.uscourts.gov. Once registered, counsel will receive a

login and password in approximately one (1) week. Counsel must be

registered to file documents on-line. See L.R. 5-135(g). Counsel

are responsible for knowing the rules governing electronic filing

in the Eastern District. Please review the Court’s Local Rules

effective January 3, 2005, available on the Court’s web site.

16. Effect of this Order:

The foregoing Order represents the best estimate of the

Court and counsel as to the agenda most suitable to bring this case

to resolution. The trial date reserved is specifically reserved

for this case. If the parties determine at any time that the

schedule outlined in this Order cannot be met, counsel are ordered

to notify the Court immediately so that adjustments may be made,

either by stipulation or by subsequent status conference.

Stipulations extending the deadlines contained herein

will not be considered unless they are accompanied by affidavits or

declarations and, where appropriate, attached exhibits which

establish good cause for granting the relief requested.

FAILURE TO COMPLY WITH THIS ORDER SHALL RESULT IN THE

IMPOSITION OF SANCTIONS.

IT IS SO ORDERED.

Dated: October 16, 2007 /s/ Sandra M. Snyder 

icido3 UNITED STATES MAGISTRATE JUDGE

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