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Mau v. Twin City Fire Insurance Co. v. Eagle Operating, Inc.

United States District Court, D. North Dakota

August 23, 2017

Robert Mau, Eagle Well Services, Inc., Plaintiffs/Counterclaim Defendants,
v.
Twin City Fire Insurance Company, Defendant/Counterclaim Plaintiff,
v.
Eagle Operating, Inc., Counterclaim Defendant.

          ORDER

          Charles S. Miller, Jr., Magistrate Judge United States District Court.

         Before the court is Twin City Fire Insurance Company (“Twin City”)'s Motion to Stay Discovery, (Doc. No. 55), wherein Twin City seeks a stay in discovery until the pending motions for summary judgment have been resolved. (Doc. No. 27, 47). Robert Mau, (“Mau”), Eagle Well Services, Inc., (“EWS”) and Eagle Operating, Inc. (“EOI”) (collectively “Plaintiffs”) oppose the motion, arguing discovery should be allowed to go forward. (Doc. No. 60)

         1. BACKGROUND

         The following facts are either undisputed or simply assumed to be true for purposes of this motion. EOI entered into an insurance contract with Twin City that was effective from April, 2013 through April, 2014. This contract covered certain losses stemming from any EOI “subsidiary.” The contract contained a number of attached endorsements, the most pertinent of which is Endorsement 2, which defined “subsidiary” as including EWS, Star Well Services, Inc., and MW Industries, Inc. (“MW”) (Doc. No. 27-4). The policy generally provided coverage for the directors of the defined subsidiaries. During its effective period, Mau served as President of MW and was on its board of directors. Mau was also the President of EWS and a shareholder.

         A. Sun Well, EWS Sale and Litigation

         In February 2012, Sun Well Services, Inc., through one of its predecessors, purchased assets from EWS. The Asset Purchase Agreement (“APA”) consummating the sale, which Mau signed as the President and shareholder of EWS, contained a noncompete clause. In April 2012, MW sold two well servicing rigs to American Well Services, LLP, (“AWS”), which Mau owned with Gregory Wiedmer. At the time of this sale, Mau was President of MW. On December 27, 2013, Sun Well sued Mau, AWS, EWS, and Wiedmer, alleging MW's sale of these servicing rigs was on terms so favorable as to constitute competition violating the noncompete clause in the APA. As is relevant here, Sun Well pled causes of action for breach of contract relating to the APA's noncompete provision, fraud, and civil conspiracy against both Mau and EWS.

         B. Insurance Claim

         On January 17, 2014, Mau submitted a notice of claim to representatives for Twin City. (Doc. No. 27-9). Mau also forwarded a copy of the Sun Well complaint. On June 6, 2014, Twin City denied coverage for the lawsuit. (Doc. No. 27-12). From that point, Mau represented himself in the Sun Well litigation, which, although not completely clear, ended in a settlement.

         C. Current Litigation

         On August 17, 2016, Mau and EWS initiated the current action in state district court in Ward County. (Doc. No. 1-1). In the complaint, Mau and EWS pled a cause of action for declaratory relief seeking a declaration they were insureds under the contract with Twin City, pled a cause of action for breach of the implied duty of good faith and fair dealing, and pled a cause of action for breach of contract. (Doc. No. 1). Twin City removed on September 8, 2016. (Doc. No. 1).

         Plaintiffs moved for partial summary judgement on January 27, 2017. (Doc. No. 27). In the motion, the Plaintiffs seek summary judgment insofar as the court should declare, as a matter of law, Twin City owed a duty to defend Mau in the Sun Well litigation and Twin City breached that duty. Twin City also filed a motion for summary judgment. (Doc. No. 46-1). In the motion, Twin City seeks summary judgment, arguing that, as a matter of law, Twin City did not owe a duty to defend or indemnify Mau in the Sun Well litigation. Alternatively, Twin City argues that, if it had such a duty, its failure to abide by that duty was not in bad faith as a matter of law.

         II. DISCUSSION

         In the motion currently before the court, Twin City seeks an order staying discovery until resolution of the pending motions for summary judgment. (Doc. Nos. 27, 46-1). Twin City argues discovery should not go forward because the pending motions for summary judgment will, in essence, either dispose of this case or significantly reduce the matters in dispute and possibly render any further discovery wasteful. The Plaintiffs contest the motion, arguing the current motion is a delay tactic and further discovery is necessary to ...


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