Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_99-cv-05583/USCOURTS-caed-1_99-cv-05583-10/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES FIDELITY &

GUARANTY COMPANY, a Maryland

corporation,

Plaintiff,

v.

LEE INVESTMENTS LLC d.b.a. THE

ISLAND, a California limited

liability company and DIANA

CONLEY, an individual,

Defendants.

________________________________

AND RELATED COUNTER-CLAIM AND

THIRD-PARTY ACTIONS.

 

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1:99-cv-5583 OWW SMS 

ORDER ON MOTIONS RE ISSUES

FOR TRIAL HEARD ON NOVEMBER

13 AND 20, 2006

(DOCS. NO. 270, 278, 273,

288, 289, 291, 302)

The following motions came on regularly for hearing before

the undersigned on November 13 and 20, 2006:

1. Lee’s motion to disqualify the firm of Charleston,

Revich & Chamberlin LLP and Bruce Smyth, from further

representation of USF&G, American Specialty Insurance Services,

Inc. and American Specialty Risk Management Services, Inc. in

this action (Doc. Nos. 271 and 272);

2. Lee’s motion for order severing third party complaints

Case 1:99-cv-05583-LJO-SMS Document 395 Filed 12/21/06 Page 1 of 5
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and counter-claims (No. 270);

3. Aon’s counter-motion to same (Doc. No. 288);

4. USF&G’s motion for separate trial of complaint and

original answer and alternative motion (Doc. 289);

5. USF&G’s motion in limine for judgment and Lee’s crossmotion for summary judgment (Doc. Nos. 291 and 302);

6. USF&G’S motion to strike newly-alleged affirmative

defenses or in the alternative for summary judgment (Doc. No.

278); and 

7. USF&G’s motion to dismiss Counter-Claim, to strike

immaterial allegations and motion for summary judgment (Doc. No.

273).

Having reviewed the papers and evidence submitted by the

parties and having considered oral argument, and good cause

appearing, the Court now makes the following orders:

IT IS ORDERED that the oral statement of decision of the

Court on November 13, 2006, shall become the statement of

decision denying Lee’s motion to disqualify Charleston, Revich &

Chamberlin LLP and Bruce Smyth of that firm. That recusal motion

is DENIED.

Re Doc. Nos. 291 and 302 (Motion and Cross-Motion for

Judgment on Complaint)

IT IS ORDERED that USF&G’s motion in limine for judgment as

to its complaint and Lee’s cross-motion for summary judgment are

denied without prejudice to a party’s right to seek judgment

under FRCP 50 after the first phase trial. 

Re Doc. Nos. 270, 288 and 289 (Motions re Separate Trial)

FURTHER ORDERED that issues shall be separately tried as

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follows:

A. Except as set forth below, and subject to any

subsequent rulings on motions in limine, the first jury trial

shall include: (1) USF&G’s Amended and Supplemental Complaint for

rescission; (2) Lee’s Answer thereto, and Lee’s second, third,

fourth, fifth, sixth, seventh and eighth affirmative defenses;

(3) Lee’s amended and supplemental counter-claim against USF&G

and American Specialty, and the answer of USF&G and American

Specialty and their answer and defenses related to foundation,

performance, and breach of the insurance policy in dispute,

except for Lee’s claims of breach of written contract and breach

of the implied covenant of good faith and fair dealing (insurance

bad faith); which shall be tried in any second phase trial; and

(4) Lee’s third party complaint against Aon and Aon’s counterclaim thereto related to issuance of the disputed insurance

policy. 

B. The second phase of the trial shall be tried before a

separate jury and shall address the claims of: (1) USF&G against

the alleged alter ego Defendants Richard K. Ehrlich, Rexford

Properties, LLC and Rexford Development Corporation; (2) if there

is no rescission, Lee’s claims for breach of written contract and

breach of the implied covenant of good faith and fair dealing

(insurance bad faith), and the third party complaint of USF&G and

American Specialty for indemnity and/or contribution against Aon

and Aon’s answer and counter-claim and USF&G’s and American

Specialty’s answer to counter-claim and affirmative defenses.

Re Doc. No. 278 (Motion re Lee’s Answer)

FURTHER ORDERED that USF&G’S motion to strike Lee’s new

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affirmative defenses numbered nine through fifteen in its answer

to USF&G’s amended and supplemental complaint is GRANTED, without

prejudice to Lee’s assertion of facts, issues and theories

properly asserted under its original affirmative defenses; and

that USF&G’s alternative motion for summary judgment on Lee’s

ninth and fourteenth affirmative defenses is DENIED as moot as

those affirmative defenses have been stricken.

Re Doc. No. 273 (Motion re Lee’s Counter-Claim)

FURTHER ORDERED that USF&G’s and American Specialty’s motion

to dismiss, or alternatively to strike, Lee’s amended and

supplemental Counter-Claim is DENIED except that the Court orders

that the claim for conspiracy to defraud is not a separate claim,

jurisdiction is reserved on Lee’s claim for declaratory relief,

and the claims for breach of written contract and tortious bad

faith denial of insurance benefits shall be separately tried in

the second phase as ordered above. 

FURTHER ORDERED that USF&G’s and American Specialty’s

alternative motion for summary judgment regarding Lee’s CounterClaims is DENIED WITHOUT PREJUDICE and shall be renoticed and

heard after the first trial.

FURTHER ORDERED that USF&G’s and American Specialty’s motion

to strike Lee’s Counter-Claims is DENIED, except that the Court

orders that the claim for conspiracy to defraud is not a separate

claim, and reserves jurisdiction on Lee’s claim for declaratory

relief;

FURTHER ORDERED that at the conclusion of the first trial,

the Court will set a scheduling conference TO SET A TRIAL DATE

respecting the issues remaining to be tried in the second trial,

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and for discovery, if necessary, respecting USF&G’s alter ego

claims and respecting Lee’s claims for bad faith denial of

insurance benefits and breach of the duty to defend.

FURTHER ORDERED that except as stated above, the respective

motions of the parties set forth above are otherwise denied

without prejudice.

FURTHER ORDERED that the Court will not hear disguised

motions for summary judgment as motions in limine before the

first phase jury trial. 

DATED: December 21, 2006.

/s/ Oliver W. Wanger

_____________________________

Oliver W. Wanger

UNITED STATES DISTRICT JUDGE

Case 1:99-cv-05583-LJO-SMS Document 395 Filed 12/21/06 Page 5 of 5