2:08-bk-10315•Pure Weight Loss, Inc.
Testo completo
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF PENNSYLVANIA (PHILADELPHIA)
In re: PURE WEIGHT LOSS, INC.,
Debtor.
Case No.: 08-10315 (JKF)
CHAPTER 7
OPINION AND ORDER ON MOTION TO DETERMINE THAT CERTAIN
INSURANCE POLICY PROCEEDS ARE NOT PART OF THE BANKRUPTCY
//7b
AND NOW, this/!/;''day "f^ft^C 2008, upon consideration of the motion of
Zurich American Insurance Company("Zurich"), to determine that certain insurance policy
proceeds are not part of the bankruptcy estate and any response thereto, the Court makes the
following findings of fact and conclusions of law and enters the following order:
FINDINGS
1. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§ 157 and
1334.
2. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. The Court has the
power to grant the relief sought herein pursuant to 11 U.S.C. § 105.
1 This motion does not seek any coverage determination by Zurich American Insurance Company as to any request
for coverage made by Mr. Vahan Karian or any other person or entity, pursuant to any insurance policy. Nothing in
Zurich American Insurance Company's motion, nor this Opinion and Order constitutes an admission by Zurich
American Insurance Company that any obligation exists in favor of Mr. Vahan Karian or any other person or entity
against Zurich American Insurance Company, on account of any insurance policy or request for coverage
thereunder.
Case 08-10315-jkf Doc 268 Filed 07/16/08 Entered 07/17/08 14:56:44 Desc Main
Document Page 1 of 83. Zurich issued a "Private Company Directors, Officers and Employees Liability Policy" (the "Policy"), to LA Weight Loss Centers, Inc (a copy of which is annexed hereto as Exhibit A). 4. In the matter of the Commonwealth of Pennsylvania v. Vahan Karian, Individually, and as President and sole owner and sole shareholder of Pure Weight Loss, Inc. ; also f/k/a LA. Weightless Centers, Inc; and Pure Weightless, Inc., also f/k/a LA. Weight Loss Centers, Inc., indexed with the Commonwealth Court of Pennsylvania as 36 M.D, 2008 (hereinafter, the "Commonwealth Action"), Mr. Karian has been represented by Reed Smith, which has billed significant fees and costs representing Mr. Karian to date and expects it may bill significant fees and costs prospectively. 5. Mr. Karian is also a defendant in other actions (the "Other Actions") as to which he has requested coverage from Zurich pursuant to the Policy. 6. Zurich has at the present time based on the facts and the law as it understands them to be,2 determined that Mr. Karian is entitled to coverage for Defense Costs (including both reasonable and necessary fees and costs) for certain claims asserted against him in the Commonwealth Action and wishes to disburse to Reed Smith, its reasonable and necessary fees and costs incurred to date in defending Mr. Karian and such other and further reasonable and necessary fees and costs that Reed Smith may incur which Zurich concludes constitutes Defense Costs for those certain claims for which Zurich determines to provide coverage (said reasonable and necessary fees and costs, both accrued and prospective, shall be defined hereinafter as "Reed Smith Defense Costs"). 2 Zurich's provision of coverage, to the extent that it has determined to provide coverage, is without prejudice to any reservation of rights or determination to disclaim coverage that Zurich has or may choose to make. Case 08-10315-jkf Doc 268 Filed 07/16/08 Entered 07/17/08 14:56:44 Desc Main Document Page 2 of 8
7. With respect to the Other Actions, Zurich may determine based on the facts and the law as it understands them to be,3 that Mr. Karian is entitled to coverage for Defense Costs (including both reasonable and necessary fees and costs) for certain claims asserted against him in the Other Actions, for which Zurich may wish to reimburse Mr. Karian's counsel, if any, therein, for its (or their) reasonable and necessary fees and costs incurred in defending Mr. Karian and such other and further reasonable and necessary fees and costs as said counsel may incur which Zurich concludes constitutes Defense Costs for those certain claims for which Zurich has, to the extent it does, determined to provide coverage (said reasonable and necessary fees and costs, both accrued and prospective, shall be defined hereinafter as "Other Actions Defense Costs"). 8. In both the Commonwealth Action and the Other Actions, Zurich may, reserving all its rights and remedies, conclude that Mr. Karian is entitled to indemnification for money paid towards the settlement, if any, of certain claims brought in the Commonwealth Action and the Other Actions. Any such settlement payments shall be referred to hereinafter as "Settlement Payments". 9. The "Policy" in question is a "wasting policy", such that any payments made towards the Reed Smith Defense Costs, the Other Actions Defense Costs, and Settlement Payments, diminish the policy limits. 10. The Court concludes that the Policy proceeds, if any, necessary to pay the Reed Smith Defense Costs, Other Actions Defense Costs, and Settlement Payments, are not part of the bankruptcy estate in the above captioned bankruptcy proceeding. See, Miller v, McDonald (In re World Health Alternatives, Inc.), 369 B.R. 805 (Bankr. D. Del. 2007) 3 Zurich's provision of coverage, to the extent that it has determined to provide coverage, is without prejudice to any reservation of rights or determination to disclaim coverage that Zurich has or may choose to make. Case 08-10315-jkf Doc 268 Filed 07/16/08 Entered 07/17/08 14:56:44 Desc Main Document Page 3 of 8
WHEREFORE, the Court hereby Orders that: 1. Said Policy proceeds necessary to pay Reed Smith Defense Costs, Other Actions Defense Costs, and Settlement Payments, are not part of the bankruptcy estate in the above captioned matter and the Trustee, and all debtors, creditors, and any other person or entity having any interest in the above captioned bankruptcy proceeding are henceforth forever precluded from making any claim against Zurich on account of payment of Reed Smith Defense Costs, Other Actions Defenses Costs, and Settlement Payments as defined above (which are acknowledged to include prospective sums); and 2. The Court's Opinion and Order does not imply that any matter with respect to the Policy is necessarily within the jurisdiction of the Bankruptcy Court, other than whether the Reed Smith Defense Costs, Other Actions Defense Costs and Settlement Payments are within the bankruptcy estate. SO ORDERED: Attached Service List Case 08-10315-jkf Doc 268 Filed 07/16/08 Entered 07/17/08 14:56:44 Desc Main Document Page 4 of 8
SERVICE LIST Robert W. Seitzer, Esquire Paul B. Maschmeyer, Esquire Maschmeyer Karalis, P.C. 1900 Spruce Street Philadelphia, PA 19103 Barry D, Kleban, Esquire Eckert Seamans Cherin & Mellott, LLC Two Liberty Place 50 South 16th Street, 22nd Floor Philadelphia, PA 19102 David L. Pollack, Esquire Jeffrey Meyers, Esquire Ballard Spahr 1735 Market Street, 51st Floor Philadelphia, PA 19103 Mitchell B. Weitzman, Esquire Bean Kinney & Korman, P.C. 2300 Wilson Boulevard, 7th Floor Arlington, VA 22201 Howard Neil Greenberg, Esquire Philip J. Katauskas, Esquire Semanoff Ormsby Greenberg & Torchia, LLC 2617 Huntingdon Pike Huntingdon Valley, PA 19006 Andrew J. Shaw, Esquire Goodman & Shaw, P.C. 60 West Broad Street Suite 103 Bethlehem, PA 18018 Thomas J. Blessington, Esquire Deputy Attorney General Office of Attorney General 21 S. 12th Street, 2nd Floor Philadelphia, PA 19107 Ernie Z. Park, Esquire Bewley Lassleben & Miller, LLP 13115 E. Penn Street, Suite 510 Whittier.CA 90602-1797 David G. Ross, Esquire Ross & Gould-Ross 440 Reynolds Arcade 16 Main Street East Rochester, NY 14614 David M. KLlauder, Esquire Office of the U.S. Trustee 833 Chestnut Street Suite 500 Philadelphia, PA 19107 Lee M. Herman, Esquire Lee M. Herman, Esquire, PC 426-428 East Baltimore Pike P.O. Box 2090 Media, PA 19063 David B. Smith, Esquire Smith Giacometti, LLC 270 West Lancaster Avenue Building I Malvem,PA 19355 Case 08-10315-jkf Doc 268 Filed 07/16/08 Entered 07/17/08 14:56:44 Desc Main Document Page 5 of 8
Michael J. Barrie, Esquire Schnader Harrison Segal & Lewis, LLP 1600 Market Street, Suite 3600 Philadelphia, PA 19103 Kevin M. Newman, Esquire Menter Rudin & Trivelpiece, P.C. 308 Maltbie Street Suite 200 Syracuse, NY 13204 Gilbert B. Weisman, Esquire Becket & Lee, LLP 16 General Warren Boulevard P.O. Box 3001 Malvem,PA 19355 Cheryl A. Dow, Esquire The Dow Law Office, P.C. 2060 N. Tustin Avenue Santa Ana, CA 92705 Armen Tamzarian, Esquire Case Knowlson Jordan & Wright, LLP 2029 Century Park East, Suite 2500 Los Angeles, CA 90067 Joseph J. Bodnar, Esquire Law Office of Joseph J. Bodnar 2101 N. Harrison Street Suite 101 Wilmington, DE 19802 Arthur P. Liebersohn, Esquire 924 Cherry Street Fourth Floor Philadelphia, PA 19107 Michael G. Menkowitz, Esquire Fox Rothschild, LLP 2000 Market Street 10th Floor Philadelphia, PA 19103 Heather D. Dawson, Esquire Kitchens Kelley Gaynes, PC Eleven Piedmont Center, Suite 900 3495 Piedmont Road, NE Atlanta, GA 30305 Frederick D. Elias, Esquire Elias & Elias, P.C. 5777 W. Maple Road Suite 120 West Bloomfield, MI 48322 Dana S. Plon, Esquire Sirlin Gallogly & Lesser, PC 1529 Walnut Street Suite 600 Philadelphia, PA 19102 Leslie Beth Baskin, Esquire Kristin T. Mihelle, Esquire Spector Gadon Rosen 1635 Market Street, 7th Floor Philadelphia, PA 19103 Case 08-10315-jkf Doc 268 Filed 07/16/08 Entered 07/17/08 14:56:44 Desc Main Document Page 6 of 8
Terrence A. Killer, Jr., Esquire Kupelian Ormond & Magy, PC 25800 Northwestern Highway Suite 950 Southfield, MI 48075 Sarah Siegel, VP and General Counsel Dierbergs 16690 Swingley Ridge Road P.O. Box 1070 Chesterfield, MO 63006-1070 Jill Lockikar Bradley, Esquire Cohen & Grigsby, P.C. 11 Stanwix Street 15th Floor Philadelphia, PA 15222 Ronald L. Phillips, Esquire City Cresent Buidling, 3rd Floor 10 S.Howard Street Baltimore, MD 21201 Kenneth E. West, Esquire Douglass West & Associates 830 Lansdowne Avenue Drexel Hill, PA 19026 James W. Hennessy, Esquire Jennifer L. Maleski, Esquire Dilworth Paxon, LLP 1735 Market Street, Suite 3200 Philadelphia, PA 19103 Ronald K. Brown, Jr., Esquire Law Office of Ronald K. Brown, Jr. 901 Dove Street, Suite 120 Newport Beach, CA 92660 John E. Hilton, Esquire Carmody MacDonald, PC 120 S. Central Suite 1800 Clayton, Missouri 63105 Christopher E. Soukup, Esquire Ziegler, Metzger & Miller, LLP 925 Euclid Avenue Suite 2020 Cleveland, OH 44115-1441 Kenneth F. Carobus, Esquire Morris & Adelman, P.C. 1920 Chestnut Street, 3rd Floor P.O. Box 030477 Philadelphia, PA 19102-8477 James W. Wallace, Esquire Griffith McCague & Wallace, PC The Gulf Tower, 38th Floor 707 Grant Street Pittsburgh, PA 15219 Michael Reed, Esquire McCreary Veselka Bragg & Allen, P.C. P.O. Box 1269 Round Rock, TX 78680 Case 08-10315-jkf Doc 268 Filed 07/16/08 Entered 07/17/08 14:56:44 Desc Main Document Page 7 of 8
Jay W. Hurst, Esquire Assistant Attorney General c/o Sherri K. Sampson, Esquire Attorney General's Office Bankruptcy & Collections Division P.O. Box 12548 Austin, TX 78711-2548 Tracy Hudson Spicer, Esquire EEOC - Washington Field Office 1801 L Street, NW Suite 100 Washington, DC 20507 Elizabeth Banda, Esquire Perdue Brandon Fielder Collins & Mott P.O. Box 13430 Arlington, TX 76094-0430 Martha A. Romero, Esquire Romero Law Firm BMR Professional Building 6516 Bright Avenue Whittier, CA 90601 John T, Banks, Esquire Perdue Brandon Fielder Collins & Mott, LLP 3301 Northland Drive, Suite 505 Austin, TX 78731 Alexander Kerr, Esquire McCarter & English, LLP Mellon Bank Center Suite 700 Philadelphia, PA 19103 John D. McLaughlin, Esquire The Brandywine Building 1000 West Street, 17th Floor P.O. Box 391 Wilmington, DEI 9801 Jeffrey J. Graham, Esquire One Indiana Square Suite 3500 Indianapolis, IN 46204 K, Kirk Karagelian, Esquire 15 West Front Street P.O. Box 1440 Media, PA 19063 Case 08-10315-jkf Doc 268 Filed 07/16/08 Entered 07/17/08 14:56:44 Desc Main Document Page 8 of 8
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