Case No. 02-43582-H4-11, JOINTLY ADMINISTEREDUnited States Bankruptcy Court, S.D. Texas, Houston Division.
May 5, 2003
Elliott D. Olson, Bar No. 41501, Frederic F. Grannis, Bar 185119, Sedgwick, Detert, Moran Arnold, Los Angeles, California, Attorneys for Caterpillar Inc.
Alfredo R. Pérez, State Bar No. 15776275, Lydia T. Protopapas, State Bar 00797267, Andrew E. Costa, State Bar 24012460, Weil, Gotshal Manges, LLP, Houston Texas, Attorneys for Debtors and Debtors In Possession.
STIPULATION AND ORDER [This document pertains to matter number 529.]
WILLIAM R. GREENDYKE, United States Bankruptcy Judge
TO THE HONORABLE WILLIAM R. GREENDYKE, UNITED STATES BANKRUPTCY JUDGE:
Encompass Services Corporation (“Encompass Services”) and certain of its direct and indirect subsidiaries, as debtors and debtors-in-possession (collectively, the “Debtors”), and Caterpillar Inc. (“Caterpillar”) respectfully submit this Stipulation and Order (“Stipulation”):
RECITALS
WHEREAS, on or about February 29, 2002, Sarah C. Westmacott, individually and as guardian for Angelo Westmacott and as successor to Brian Westmacott, filed the wrongful-death lawsuit styled Sarah C. Westmacott v. Valero Refining Company-California, et al., Case Number C02-00632, pending in the Superior Court of California in and for the County of Contra Costa (the “California Action”), against, inter alia, the movant, Caterpillar Inc. (“Caterpillar”).
WHEREAS, Encompass Industrial Services Southwest, Inc. (“EncompassSouthwest”), formerly known as Gulf States, Inc., a subsidiary of Encompass Services, was previously a cross-defendant in the California Action, but has since been dismissed entirely from the California Action;
WHEREAS, on November 19, 2002 (“Petition Date”), Encompass Services and substantially all of its domestic direct and indirect subsidiaries (collectively, the “Debtors”). including Encompass Southwest, filed voluntary petitions for relief under chapter 11 title 11 of the United States Code (“Bankruptcy Code”). The Debtors continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code;
WHEREAS, Caterpillar has not filed or asserted any claims for damages against Encompass Southwest in the California Action. Caterpillar is, however, asserting against Encompass Southwest in the California Action all the affirmative defenses set forth herein in Paragraph 2, a through g, of this Stipulation;
WHEREAS, Caterpillar asserts in the California Action that it has no liability to Westmacott or to any other party;
WHEREAS, Encompass Southwest filed a Notice of Bankruptcy in the California Action stating that such action was stayed pursuant to section 362 of the Bankruptcy Code;
WHEREAS, on or about December 30, 2002, Caterpillar moved the Bankruptcy Court to modify the automatic stay to proceed with serving discovery on Encompass Southwest (“Caterpillar Motion”);
WHEREAS, Encompass Southwest and Caterpillar wish to resolve the issues raised by the Caterpillar Motion without the cost and expense of further litigation;
WHEREAS, Encompass Southwest and Caterpillar have negotiated this Stipulation in good faith and at arms’ length and, therefore, desire that it shall be binding upon each of them, their successors, heirs, and assigns; and
WHEREAS, Encompass Southwest and Caterpillar believe that this Stipulation is in their respective best interests.
In consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto stipulate and agree as follows:
STIPULATION
1. Caterpillar shall be permitted to obtain and enforce its right to obtain discovery, pursuant to the California Civil Discovery Act of 1986 (California Code of Civil Procedure section 2016 et seq.), from Encompass Southwest, Encompass Services, the Debtors, and the current and former employees, officers, directors, and agents of Encompass Southwest, Encompass Services, or the Debtors, in the California Action for the purpose of obtaining evidence relating to any and all defenses that Caterpillar has or might have to any claims, demands, actions, causes of action or rights of any kind asserted against it in the California Action.
2. Caterpillar shall be entitled to use any discovery it obtains from Encompass Southwest, Encompass Services, the Debtors, and the current and former employees, officers, directors, or agents of Encompass Southwest, Encompass Services, or the Debtors to establish any and all defenses it has or might have to any of the claims, demands, actions, causes of action or rights of any kind asserted against it in the California Action or in any other action, including but not limited to defenses based upon the following:
a. The comparative fault of the decedent, Brian Westmacott;
b. The comparative fault of Encompass Southwest. Encompass Services, or the Debtors, and their current and former employees, officers, directors, and agents;
c. The comparative fault of any other party;
d. Assumption of the risk by the decedent, Brian Westmacott;
e. A set-off under Witt v. Jackson (1961) 57 Cal.2d 57
and the current law regarding recovery of worker’s compensation benefits to reduce any recovery by the plaintiff in the California Action, in proportion to the fault attributable to Brian Westermacott’s employer and co-workers,
f. A set-off under Witt v. Jackson (1961) 57 Cal.2d 57
and the current law regarding recovery of worker’s compensation benefits to reduce, in proportion to the comparative fault attributable to Brian Westmacott’s employers and co-workers, the amount of any claim or right of action by any employer or workmen’s compensation insurance carrier under California Labor Code sections 3852 or 3853 to recover benefits, medical payments, compensation, salary, wage, pension, or other emolument paid or to be paid as a result of Brian Westmacott’s death;
g. A set-off under Witt v. Jackson (1961) 57 Cal.2d 57
and the current law regarding recovery of worker’s compensation benefits, to reduce the amount of any workmen’s compensation lien asserted under California Labor Code section 3856, subdivision (b), in proportion to the comparative fault attributable to Brian Westmacott’s employers and co-workers;
h. The reasonableness and necessity of any worker’s compensation benefits, medical payments, compensation, salary, wage, pension, or other emolument paid or to be paid as a result of the death of Brian Westmacott.
3. No transcript of deposition testimony or other discovery obtained by Caterpillar pursuant to this Stipulation shall be admissible into evidence in support of any claim (as defined in section 101(5) of the Bankruptcy Code) by Caterpillar for damages against Encompass Southwest, Encompass Services, or the Debtors, or their current and former employees, officers, directors, and agents, except as provided for in Paragraph 2 of this Stipulation. This Stipulation applies to all of the Debtors’ directors, officers, employees, and other agents except for the decedent in the California Action and his estate.
4. Nothing in this Stipulation shall be construed as a release or waiver by Caterpillar Inc. of any claims, demands, actions, causes of action or rights of any kind that it has or might have against Encompass Southwest, Encompass Services, the Debtors, or the current and former employees, officers, directors, and agents of Encompass Southwest, Encompass Services, or the Debtors. Nor shall this Stipulation be construed as a limitation or waiver of Caterpillar Inc.’s right to obtain and use discovery from Encompass Southwest, the Debtors, and the current and former employees, officers, directors, and agents of Encompass Southwest and the Debtors in any other action or proceeding.
5. Encompass Southwest and Caterpillar agree and state that they have read the entire Stipulation and know and understand its contents, and that they have had the opportunity to consult, and have consulted with, their attorneys retained to represent them in this matter. on terms and implications of this Stipulation and that they have executed this Stipulation under their own free will and action.
6. This Stipulation is the entire agreement between the parties with respect to the subject matter of the Caterpillar Motion.
7. This Stipulation may be executed in any number of counterparts, and all such counterparts, taken together, shall be deemed to constitute one and the same instrument.
8. This Stipulation may not be modified, except in a written instrument signed by each of the parties hereto, which modification, if material in the discretion of Encompass Southwest and Caterpillar, shall be subject to the approval of this Bankruptcy Court.
9. Counsel for both Encompass Southwest and Caterpillar represent that they are authorized to execute this Stipulation, subject to this Bankruptcy Court’s approval.