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IN THE DISTRICT COURT IN AND FOR GARFIELD COUNTY, ..
STATE OF OKLAHOMA GARE ELD 6,
HILAND PARTNERS HOLDINGS
LLC, as successor-in-interest to
HILAND
PARTNERS, LP, HILAND
OPERATING, L.L.C., and HILAND
PARTNERS GP HOLDINGS, L.L.C.,
Case No. CJ-2016-178
Plaintiff,
Vv.
NATIONAL UNION FIRE
INSURANCE COMPANY OF
PITTSBURGH, PA. and AIG
CLAIMS, INC.,
Defendants.
PLAINTIFF’S MOTION TO COMPEL
Plaintiff Hiland Partners Holdings LLC (“Hiland”) hereby submits this Motion to Compel
a response from Defendant National Union Fire Insurance Company of Pittsburgh, P.A. (“AIG”)
to a highly relevant interrogatory request which, to date, AIG has evaded. Counsel for Hiland did
meet and confer with Counsel for AIG both telephonically and in person. On January 31, 2017,
Hiland sent a letter to AIG explaining the relevance of this interrogatory, narrowing its scope, and
requesting a response by February 2. See Exhibit 1. Unfortunately, AIG has not responded, thus
necessitating this motion, the basis of which is set forth below.
FACTUAL BACKGROUND
This motion to compel seeks evidence regarding whether AIG’s claims examiner,
Stephanie Holzback, made a material misrepresentation to Hiland about AIG’s purported success
in prior claims against the Chapmans’ lawyer, Robert Schuster, to justify AIG’s bad faith refusalto approach mediation of the Chapman action with reasonable settlement authority, which put
Hiland at risk of a catastrophic uninsured verdict.
As the Court is by now aware, Hiland brought this action against AIG for its bad faith
refusal to fully indemnify Hiland for its settlement of a catastrophic burn case arising out of an
explosion at natural gas processing plant, styled Lenny Chapman, et al. v. Hiland Partners GP
Holdings, et al., Case No. 1:13-CV-052-DLH-CSM (D.N.D.) (the “Chapman action”). The
Chapmans were represented in the underlying action by attorney Robert Schuster, a prominent
Wyoming trial lawyer and a former partner of Gerry Spence, who touts record breaking personal
injury jury verdicts in Wyoming, North Dakota and New Mexico. On the eve of mediation of the
Chapman action, AIG’s claims examiner, Ms. Holzback, told Hiland’s corporate counsel, Mike
Holmes, that AIG had twice “went to verdict” against Mr. Schuster and had “zeroed him out.” See
Exhibit 2. But even AIG’s appointed defense counsel, John Fitzpatrick, questioned Ms.
Holzback’s veracity on this contention, telling Mr. Holmes: “I guess it’s possible — sort of like
Santa really exists. “She said it to you — for credibility — you should ask for the case names and
venues. I don’t believe it.” Id. (emphasis added). Clearly, Ms. Holzback made this “zeroed out”
representation to convey to her insured that she had no concerns about walking out of mediation
with the Chapmans and taking the case to trial. But Ms. Holzback’s cavalier attitude and possible
misrepresentation about AIG’s prior success against Mr. Schuster presented potentially grave harm
to Hiland; specifically, if Hiland did not settle the Chapman action, and lost at trial, Hiland would
be exposed to uninsured loss, as AIG had previously rejected (erroneously) any coverage forpunitive damages, and maintained the right to even reject coverage for a compensatory damage
award at trial.' Simply put, Ms. Holzback was playing with Hiland’s money.
Hiland followed up on this issue through discovery, requesting that National Union:
Identify by case caption every lawsuit that involved one of Your insureds that went
to trial, in which Robert Schuster represented the plaintiff(s), and for each such
lawsuit, state the amount of damages awarded by the jury, if any.
Int. No. 23. National Union, however, objected to the discovery request on the bases of relevance
and burden, and refused to provide a substantive response.
ARGUMENT
Oklahoma law permits “discovery regarding any matter, not privileged, which is relevant
to the subject matter involved in any pending action.” 12 OK. St. Ann. §3226(b)(1)(a). The
information need not be admissible at trial so long as it “appears reasonably calculated to lead to
the discovery of admissible evidence.” Jd. “At the discovery phase of litigation, ‘relevancy’ is
broadly construed.” Morrison v. Chartis Prop. Cas. Co., No. 13-CV-116-JED-PIC, 2014 WL
840597, at *1 (N.D. Okla. Mar. 4, 2014) (unreported decision, copy attached). The party objecting
to discovery requests bears the burden to demonstrate that the information or material sought does
not fall within the broad scope of relevance. Jd. Here, Hiland’s Interrogatory No. 23 is plainly
relevant to Hiland’s bad faith claim.
While Hiland submits that AIG engaged in a multitude of bad faith actions during the
course of the Chapman claim, one of its contentions is that AIG refused to settle the Chapman
action at mediation, notwithstanding the substantial risk to Hiland of a potentially uninsured
punitive damages award, and possibly an uninsured compensatory damages award. Hiland, on
' At no time during the pendency of the Chapman action did AIG issue a coverage letter expressly
committing to cover Hiland for any and all compensatory damages award or otherwise reserving its rights
regarding coverage.multiple occasions, expressed to Ms. Holzback its desire to mediate and to settle the Chapman
matter sooner rather than later. Moreover, leading up to the mediation, AIG’s appointed defense
counsel advised Ms. Holzback of the risks to Hiland and the need to settle the claim at mediation
as soon as possible. Mr. Fitzpatrick, for instance, wrote to the adjuster:
Given Hiland’s sincere desire to settle this case, and some of the bad facts and
expert issues we have, another mediation attempt would be worthwhile and highly
advisable . . . I can’t tell you how strongly I recommend this action. The fact that
[Plaintiff's counsel] brought this up on his own is a huge signal to us that he wants
to resolve this. Our case will not get better — it will only get worse.
Exhibit 3 (emphasis supplied). Steven Oertle, Mr. Fitzpatrick’s associate, likewise stressed to Ms.
Holzback the need to settle the claim at mediation “before we have to show our hand as to what
our liability exerts will say.” Exhibit 4.
But the urgency expressed by both Hiland and AIG’s appointed defense counsel was not
matched by Ms. Holzback. On August 12, days before the mediation, Ms. Holzback participated
in a call with Hiland’s corporate counsel, Mike Holmes of Vinson & Elkins, after which Mr.
Holmes reported, “Disconcerting to say the least. She’s coming with less than 10mm.” Exhibit 5.
Moreover, in an apparent effort to justify her valuation, Ms. Holzback informed Mr. Holmes that
there were two other cases where AIG had faced off against Chapman’s lawyer (Bob Schuster)
and had “zeroed him out” at trial. Exhibit 2. Ms. Holzback’s statement was clearly made to justify
AIG’s unreasonably low settlement authority. However, even Mr. Fitzpatrick, AIG’s appointed
counsel, questioned the honesty of Ms. Holzback’s contention — “I do not believe it” — and advised
Mr. Holmes to ask Ms. Holzback to identify the cases at issue. She never did.
The veracity of Ms. Holzback’s statements to Hiland’s attorneys, made on the eve of
mediation and in effort to assuage Hiland’s concerns about the need to settle, are clearly relevant
to Hiland’s bad faith claim. This information is not just “reasonably calculated to lead to thediscovery of admissible evidence;” rather, if Ms. Holzback in fact lied to Hiland about AIG having
“zeroed out” Mr. Schuster in prior cases, then, under the circumstances, this constitutes bad faith
conduct in-and-of-itself.
This issue — the veracity and honesty of Ms. Holzback — goes to the very heart of Hiland’s
bad faith claim against AIG. Ms. Holzback engaged in numerous acts of bad faith, all of which
center around her placing AIG’s interests over those of her insured, in order to minimize AIG’s
exposure regardless of the cost to Hiland. Whether Ms. Holzback lied to Hiland about AIG’s trial
track record against Mr. Schuster is another piece of the bad faith puzzle — one which Hiland is
entitled to explore. There simply cannot be any dispute of the relevancy of this information. AIG
must be compelled to respond to Interrogatory No. 23.
Finally, to the extent AIG has concerns regarding the burden of response, Hiland is willing
to narrow the scope of Interrogatory 23 simply to the case names / captions of the two matters
refenced by Ms. Holzback where AIG “zeroed out” Bob Schuster.
CONCLUSION
For the reasons set forth above, Hiland respectfully requests that this Court grant its Motion
to Compel, and enter an order compelling AIG to produce the information herein at issue and for
other relief appropriate under the circumstances.
+ Vt submitted,
RA dl. ALC Lh #16360
JOHN A. L. CAMPBELL, OBA #17590
Aston | Mathis | Jacobson i Campbell | Tiger PLLC
2642 E. 21% Street, Suite 250
Tulsa, Oklahoma 74114-1726
(918)949-9966 (0)
(918)949-9968 (f)BRIAN G. FRIEL (pro hac vice forthcoming)
TAB TURANO (pro hac vice forthcoming)
Miller Friel, PLLC
1200 New Hampshire Avenue, Suite 800
Washington, D.C. 20036
Certificate of Mailing
I, the undersigned, do hereby certify that on this day of February 2018, a true and
correct copy of the above and foregoing was sent by U.S. Mail, with proper postage thereon fully
paid, to:
William D. Perrine, Esq.
Perrine, Redemann, Berry, Taylor & Sloan, PLLC
P.O. Box 1710
Tulsa, OK 74101-1710
Attorney for Defendants
Rathpl C. MathisExhibit 1MILLER|JFRIEL
PLLC
Tab R. Turano
Tel: 202.760.3163
Turanot@millerfriel.com
January 31, 2018
VIA ELECTRONIC MAIL
William D. Perrine, Esq.
PERRINE, REDEMANN, BERRY, TAYLOR & SLOAN, P.L.L.C.
Spirit Tower Building
1800 S. Baltimore Ave., Ste. 900
Tulsa, OK 74101
WPerrine@pmrlaw.net
Re: _Hiland Partners Holdings LLC v. National Union Fire Insurance Company, et al.
Dear Bill:
This letter follows up on National Union’s response to Hiland’s Interrogatory No. 23.
Hiland requested National Union to:
Identify by case caption every lawsuit that involved one of Your insureds that went
to trial, in which Robert Schuster represented the plaintiff(s), and for each such
lawsuit, state the amount of damages awarded by the jury, if any.
National Union objected to the request on the bases of burden and relevance. These objections are
unfounded, and Hiland hereby requests that National Union reconsider its response.
We believe this request is highly relevant and not unduly burdensome. On a phone call on
or about August 13, 2014, shortly before mediation in the Chapman action, Stephanie Holzback
told Michael Holmes that AIG had twice gone to trial against Chapman’s lawyer, Bob Schuster,
and obtained defense verdicts. See KMHI0018160 (attached). Ms. Holzback’s statement was
clearly made to justify AIG’s unreasonably low settlement authority. John Fitzpatrick, AIG’s
appointed counsel, cast doubt on the legitimacy of Ms. Holzback’s contention. Jd. Accordingly,
the veracity of Ms. Holzback’s claim is directly relevant to Hiland’s bad faith action.
MILLER FRIEL, PLLC ATTORNEYS AT LAW MILLERFRIEL.COM TEL: 202-760-3160 FAX: 202-459-9537
1200 NEW HAMPSHIRE AVE, NW SUITE 800 WASHINGTON, DC 20036Mr. William Perrine, Esq.
January 31, 2018
Page 2
To the extent AIG has concerns regarding the burden of response, Hiland is willing to
narrow the scope of Interrogatory 23 to the two matters refenced by Ms. Holzback where AIG
“zeroed out” Bob Schuster (as opposed to “every lawsuit”).
Please let us know by close of business on February 7 whether or not National Union
intends to provide Hiland the requested information. Barring National Union’s compliance,
Hiland intends to move the Court for an Order compelling a proper response.
_—
Tab R. Turano
Enclosure
MILLER FRIEL, PLLC ATTORNEYS AT LAW MILLERFRIEL.COM TEL: 202-760-3160 FAX: 202-459-9537
1200 NEW HAMPSHIRE AVE, NW SUITE 800 WASHINGTON, DC 20036From: Fitzpatrick, John
To: Derek G. Gipson
cc: Holmes, Michael; Joseph Griffin
Sent: 8/13/2014 8:52:56 PM
Subject: Re: Call
Great call. Just boarded plane - didn't get her.
But Mike - strongly recommend you ask her to please list the two cases where AIG went to VERDICT against Bob and zeroed him out. I guess
it's possible - sort of like Santa really exists - but our intel notes that Bob hasn't been to verdict lately. She said it to you - for credibility - you
should ask for the case names and venues. I don't believe it
Finally if that really happened - then the defense in those two cases had a liability defense. We don't. We only have a damage limitations - so
Bob won't be zeroed out - it will only be a matter of damages.
John Fitzpatrick
Cell: 720-212-7169
On Aug 13, 2014, at 3:58 PM. "Derek G. Gipson" wrote:
>
>
>
> From: Pam Wilson [imailto:pwilson@aaacourtreporters.com]
> Sent: Monday, August 11. 2014 3:58 PM
>To: glentz@ssdlawyers.com
> Subject: Jackson vs. Empire District
>
>
>
> Pam Wilson
> AAA Court Reporting Company
> 8001 Conser, Suite 200 + Overland Park, KS 66204
> (913) 385-2699
> (913) 385-2693 (Fax)
> (800) 205-7930 (Toll Free)
> Www.aaacourtreporters.com
>
> [aaalogosignatures]
>
>
>
>
>
>
KMHI0018160Exhibit 2From: Fitzpatrick, John
To: Derek G. Gipson
cc: Holmes, Michael; Joseph Griffin
Sent: 8/13/2014 8:52:56 PM
| Subject: Re: Call
Great call. Just boarded plane - didn't get her.
But Mike - strongly recommend you ask her to please list the two cases where AIG went to VERDICT against Bob and zeroed him out. I guess
it's possible - sort of like Santa really exists - but our intel notes that Bob hasn't been to verdict lately. She said it to you - for credibility - you
should ask for the case names and venues. I don't believe it
Finally if that really happened - then the defense in those two cases had a liability defense. We don't. We only have a damage limitations - so
Bob won't be zeroed out - it will only be a matter of damages.
i John Fitzpatrick
Cell: 720-212-7169
On Aug 13, 2014, at 3:58 PM, "Derek G. Gipson" wrote:
>
| >
>
> From: Pam Wilson [mailto:pwilson@/aaacourtreporters.com}
> Sent: Monday. August 11. 2014 3:58 PM
> To: glentzd@ssdlawyers.com
> Subject: Jackson vs. Empire District
>
>
>
> Pam Wilson
> AAA Court Reporting Company
> 8001 Conser. Suite 200 + Overland Park. KS 66204
> (913) 385-2699
> (913) 385-2693 (Fax)
> (800) 205-7930 (Toll Free)
> www.aaacourtreporters.coms
>
> [aaalogosignatures]
>
>
>
>
>
>
KMHIO0018160Exhibit 3From: Fitzpatrick, Jotin
To: Holzback, Stephanie,
Ce: Qertle, Steohen
‘Subject: Update - Chapman v Hiland
Date: ‘Saturday, June 28, 2014 1:56:13 PM
Attachments: imege004.0if
Image006. cif
image001.cif
image002.pn0
fmage003.pn0
PRIVILEGED AND CONFIDENTIAL
ATTORNEY CLIENT PRIVILEGE
Stephanie:
An update on a couple of issues:
First, Stephen has completed the draft response to the motion to amend and
you have that for review. Please let us know if you have any questions or
concerns.
Second, he and our liability expert, John Emory (along with one of John’s
partners, David Millican) inspected Hiland’s gas plant earlier in the week. The
inspection was very productive. While our experts came away with a much
better understanding of the facts in this case, and some of their concerns were
alleviated, others unfortunately remain. We almost certainly will not have a
defense to liability in this case, though they are still working through
documents to try to come up with a workable defense theory. It is also not
clear whether they will be able to defend Hiland against punitive damages if the
Court finds that the standard applicable to a claim that Hiland exhibited “actual
malice” is whether Hiland exhibited “conscious disregard” for the safety of
others. As the draft motion to amend response discusses, there is some case
law supporting that theory, though it is limited. They have a number of issues
that they are working through including the building of the load out facilities
for the condensate tanks downwind (by prevailing wind for the area) and the
intentional loading of potentially volatile “light ends” into the condensate tanks
without performing hazard analyses required in the industry. While at the
inspection, the experts uncovered evidence that Plaintiffs don’t have that the
condensate in the tanks contained as much as 25% light ends (e.g., propane and
butane) that made them extremely volatile — even if a jury accepts that the tanks
could appropriately be used to contain condensate, the levels of volatile
1353
HP001353hydrocarbons in the condensate could be an issue. They are laboring to find
solutions to these problems, but they are an issue. That percentage of propane is
a lot different than just “condensate” like we would like to characterize it and
really made the thing a bomb that was venting out volatile gases constantly, and
made it vulnerable to a “burp” like we think happened when Olson opened the
valve at the base of the tank. Also the downwind thing — they truly put the load
out line so that 9 months out of the year the wind is blowing those vapors
straight at the truck loading out. These are just very problematic facts.
Finally, and most importantly, Stephen talked at length with Bob Schuster
today, primarily about deposition scheduling (both of Plaintiffs’ experts and of
Hiland’s CEO and CFO). In the course of that conversation, Schuster brought
up the mediation in Minneapolis and mentioned that he found Judge Boylan
less than effective. He commented that “don’t you think things would have
been different if we’d used Judge Downes instead.” Talk about a “gift from
heaven” — you should know that Stephen clerked for Judge Downes in the
District of Wyoming and Schuster has had cases'against him and used him as a
mediator over the years. Stephen asked if Schuster was serious — he is and he
would like to attempt another mediation before Judge Downes. Aside from
Stephen, our firm is very familiar with Downes — he’s a personal friend of mine
and of Mike O’Donnell, my partner, and many of my partners have used him in
tough mediations to great success. If there’s one thing he can be counted on
that Boylan didn’t do, it’s push hard on Schuster. Stephen checked with
Downes off the record - he is available on July 25 and 31 as well as several
dates in August and September. Given Hiland’s sincere desire to settle this
case, and some of the bad facts and expert issues we have, another mediation
attempt would be worthwhile and highly advisable. We could propose it along
with an extension of pertinent deadlines as well, which would give our experts
more time to come up with good reports and take the pressure off of scheduling
Plaintiffs’ expert depositions (which will result in significant expenses given
that we have to pay for their hourly rate for their depositions). I can’t tell you
how strongly I recommend this action. Hiland is obviously in favor of this
suggestion. The fact that Bob brought this up on his own is a huge signal to us
that he wants to resolve this. Our case will not get better — it will only get
worse.
If you are interested in pursuing a further mediation, we need to move quickly
to set it up given the scheduling issues. Are you available to talk on Monday?
1354
HP001354Fitz
7
|P 303.244.1800 F 303.244.1879
1355
HP001355Exhibit 4From: Fitzpatrick, John
To: Danielson, Melia
Sent: 71212014 4:41:13 PM
Subject: Fwd: AlG/Chapman (Claim #169-3843690)- mediation with Judge Downes
Attachments: image001 gif; image010.png; image0011 gif; image011.png; image0012.gif; image012.jpg;
image0013.gif; image013.jpg; image001 4.gif; image014.jpg; image0015.gif; imageoo1 6.gif;
image0017.gif; image0018.gif
Be sure to file
John Fitzpatrick
Cell: 720-212-7169
Begin forwarded message:
From: "Oertle, Stephen"
Date: July 2, 2014, 12:40:40 PM EDT
To: "Stephanie Holzback@AIG.com"
Ce: "Fitzpatrick, John"
Subject: AIG/Chapman (Claim #169-3843690)- mediation with Judge Downes
Stephanie:
Thad further conversations with Judge Downes’ office this week — he has agreed to hold July 31 for us through next Tuesday.
‘We don’t know if that date works for Plaintiff yet. If we don’t do a mediation on July 31, the next dates Downes has available
are in late August. The fact that Bob Schuster suggested this mediation is a positive sign - not to be overestimated, but positive
nonetheless. It certainly puts us in a strong position going into the mediation - we didn’t ask for it, he did.
Downes is a strong mediator, unlike our last one in Minneapolis, and both Bob and we have personal connections with him. If
we are going to get a deal done before the eve of trial, this is probably our best bet. Also, remember, our expert disclosures are
due on August | ~ while we have great damages experts lined up who will do their best to minimize Chapman's injuries, we are 1
not looking great on the liability front. We may be stuck admitting liability and combatting punitive damages only (and our
Punitive damages defense is not rock solid yet ~ our experts are still reviewing). If we could mediate before our expert
disclosures come out—before we have to show our hand as to what our liability experts will say—that would be enormously
beneficial.
Are you available July 31? Ideally we would Couple the mediation with a one month extension of our own expert disclosure
deadlines, but this is a deal we would need to wrap up sooner rather than later.
Stephen
tle
{0 nttp-/Awww.w Stephen E Oera
i 303.244 1959
sentledwtotriatcom
if http://www. wtotrial.com/images/wto_logo.,
570 Seventeenth Street Suite 4500 ee
aver. Colorado 80202-5647
303.244.1800 F 303.244.1879
KMHI0012167Exhibit 5From: Holmes, Michael
To: Joseph Griffin; Derek G. Gipson
Sent: 8/13/2014 1:14:53 AM
Subject: Insurance
Just talked to Stephanie. Disconcerting to say the least. She's coming with less than 10mm.
Can you please send me contact info of our broker. I want to arrange a call with underwriting tomorrow. We need to get out in front of this.
Michael Holmes
Vinson & Elkins LLP
Michael C. Holmes
Partner
Vinson & Elkins LLP
Attorneys at Law
2001 Ross Avenue, Suite 3700
Dallas, TX 75201-2975
Tel +1.214.220.7814
E-mail mholmes@velaw.com
CONFIDENTIALITY NOTICE: The information in this email may be confidential and/or privileged. This email is
intended to be reviewed by only the individual or organization named above. If you are not the intended recipient or an
authorized representative of the intended recipient, you are hereby notified that any review, dissemination or copying
of this email and its attachments, if any, or the information contained herein is prohibited. If you have received this
email in error, please immediately notify the sender by return email and delete this email from your system.
Thank You.
KMHI0018140
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IN THE DISTRICT COURT IN AND FOR GARFIELD COUNTY, .. STATE OF OKLAHOMA GARE ELD 6, HILAND PARTNERS HOLDINGS LLC, as successor-in-interest to HILAND PARTNERS, LP, HILAND OPERATING, L.L.C., and HILAND PARTNERS GP HOLDINGS, L.L.C., Case No. CJ-2016-178 Plaintiff, Vv. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. and AIG CLAIMS, INC., Defendants. PLAINTIFF’S MOTION TO COMPEL Plaintiff Hiland Partners Holdings LLC (“Hiland”) hereby submits this Motion to Compel a response from Defendant National Union Fire Insurance Company of Pittsburgh, P.A. (“AIG”) to a highly relevant interrogatory request which, to date, AIG has evaded. Counsel for Hiland did meet and confer with Counsel for AIG both telephonically and in person. On January 31, 2017, Hiland sent a letter to AIG explaining the relevance of this interrogatory, narrowing its scope, and requesting a response by February 2. See Exhibit 1. Unfortunately, AIG has not responded, thus necessitating this motion, the basis of which is set forth below. FACTUAL BACKGROUND This motion to compel seeks evidence regarding whether AIG’s claims examiner, Stephanie Holzback, made a material misrepresentation to Hiland about AIG’s purported success in prior claims against the Chapmans’ lawyer, Robert Schuster, to justify AIG’s bad faith refusalto approach mediation of the Chapman action with reasonable settlement authority, which put Hiland at risk of a catastrophic uninsured verdict. As the Court is by now aware, Hiland brought this action against AIG for its bad faith refusal to fully indemnify Hiland for its settlement of a catastrophic burn case arising out of an explosion at natural gas processing plant, styled Lenny Chapman, et al. v. Hiland Partners GP Holdings, et al., Case No. 1:13-CV-052-DLH-CSM (D.N.D.) (the “Chapman action”). The Chapmans were represented in the underlying action by attorney Robert Schuster, a prominent Wyoming trial lawyer and a former partner of Gerry Spence, who touts record breaking personal injury jury verdicts in Wyoming, North Dakota and New Mexico. On the eve of mediation of the Chapman action, AIG’s claims examiner, Ms. Holzback, told Hiland’s corporate counsel, Mike Holmes, that AIG had twice “went to verdict” against Mr. Schuster and had “zeroed him out.” See Exhibit 2. But even AIG’s appointed defense counsel, John Fitzpatrick, questioned Ms. Holzback’s veracity on this contention, telling Mr. Holmes: “I guess it’s possible — sort of like Santa really exists. “She said it to you — for credibility — you should ask for the case names and venues. I don’t believe it.” Id. (emphasis added). Clearly, Ms. Holzback made this “zeroed out” representation to convey to her insured that she had no concerns about walking out of mediation with the Chapmans and taking the case to trial. But Ms. Holzback’s cavalier attitude and possible misrepresentation about AIG’s prior success against Mr. Schuster presented potentially grave harm to Hiland; specifically, if Hiland did not settle the Chapman action, and lost at trial, Hiland would be exposed to uninsured loss, as AIG had previously rejected (erroneously) any coverage forpunitive damages, and maintained the right to even reject coverage for a compensatory damage award at trial.' Simply put, Ms. Holzback was playing with Hiland’s money. Hiland followed up on this issue through discovery, requesting that National Union: Identify by case caption every lawsuit that involved one of Your insureds that went to trial, in which Robert Schuster represented the plaintiff(s), and for each such lawsuit, state the amount of damages awarded by the jury, if any. Int. No. 23. National Union, however, objected to the discovery request on the bases of relevance and burden, and refused to provide a substantive response. ARGUMENT Oklahoma law permits “discovery regarding any matter, not privileged, which is relevant to the subject matter involved in any pending action.” 12 OK. St. Ann. §3226(b)(1)(a). The information need not be admissible at trial so long as it “appears reasonably calculated to lead to the discovery of admissible evidence.” Jd. “At the discovery phase of litigation, ‘relevancy’ is broadly construed.” Morrison v. Chartis Prop. Cas. Co., No. 13-CV-116-JED-PIC, 2014 WL 840597, at *1 (N.D. Okla. Mar. 4, 2014) (unreported decision, copy attached). The party objecting to discovery requests bears the burden to demonstrate that the information or material sought does not fall within the broad scope of relevance. Jd. Here, Hiland’s Interrogatory No. 23 is plainly relevant to Hiland’s bad faith claim. While Hiland submits that AIG engaged in a multitude of bad faith actions during the course of the Chapman claim, one of its contentions is that AIG refused to settle the Chapman action at mediation, notwithstanding the substantial risk to Hiland of a potentially uninsured punitive damages award, and possibly an uninsured compensatory damages award. Hiland, on ' At no time during the pendency of the Chapman action did AIG issue a coverage letter expressly committing to cover Hiland for any and all compensatory damages award or otherwise reserving its rights regarding coverage.multiple occasions, expressed to Ms. Holzback its desire to mediate and to settle the Chapman matter sooner rather than later. Moreover, leading up to the mediation, AIG’s appointed defense counsel advised Ms. Holzback of the risks to Hiland and the need to settle the claim at mediation as soon as possible. Mr. Fitzpatrick, for instance, wrote to the adjuster: Given Hiland’s sincere desire to settle this case, and some of the bad facts and expert issues we have, another mediation attempt would be worthwhile and highly advisable . . . I can’t tell you how strongly I recommend this action. The fact that [Plaintiff's counsel] brought this up on his own is a huge signal to us that he wants to resolve this. Our case will not get better — it will only get worse. Exhibit 3 (emphasis supplied). Steven Oertle, Mr. Fitzpatrick’s associate, likewise stressed to Ms. Holzback the need to settle the claim at mediation “before we have to show our hand as to what our liability exerts will say.” Exhibit 4. But the urgency expressed by both Hiland and AIG’s appointed defense counsel was not matched by Ms. Holzback. On August 12, days before the mediation, Ms. Holzback participated in a call with Hiland’s corporate counsel, Mike Holmes of Vinson & Elkins, after which Mr. Holmes reported, “Disconcerting to say the least. She’s coming with less than 10mm.” Exhibit 5. Moreover, in an apparent effort to justify her valuation, Ms. Holzback informed Mr. Holmes that there were two other cases where AIG had faced off against Chapman’s lawyer (Bob Schuster) and had “zeroed him out” at trial. Exhibit 2. Ms. Holzback’s statement was clearly made to justify AIG’s unreasonably low settlement authority. However, even Mr. Fitzpatrick, AIG’s appointed counsel, questioned the honesty of Ms. Holzback’s contention — “I do not believe it” — and advised Mr. Holmes to ask Ms. Holzback to identify the cases at issue. She never did. The veracity of Ms. Holzback’s statements to Hiland’s attorneys, made on the eve of mediation and in effort to assuage Hiland’s concerns about the need to settle, are clearly relevant to Hiland’s bad faith claim. This information is not just “reasonably calculated to lead to thediscovery of admissible evidence;” rather, if Ms. Holzback in fact lied to Hiland about AIG having “zeroed out” Mr. Schuster in prior cases, then, under the circumstances, this constitutes bad faith conduct in-and-of-itself. This issue — the veracity and honesty of Ms. Holzback — goes to the very heart of Hiland’s bad faith claim against AIG. Ms. Holzback engaged in numerous acts of bad faith, all of which center around her placing AIG’s interests over those of her insured, in order to minimize AIG’s exposure regardless of the cost to Hiland. Whether Ms. Holzback lied to Hiland about AIG’s trial track record against Mr. Schuster is another piece of the bad faith puzzle — one which Hiland is entitled to explore. There simply cannot be any dispute of the relevancy of this information. AIG must be compelled to respond to Interrogatory No. 23. Finally, to the extent AIG has concerns regarding the burden of response, Hiland is willing to narrow the scope of Interrogatory 23 simply to the case names / captions of the two matters refenced by Ms. Holzback where AIG “zeroed out” Bob Schuster. CONCLUSION For the reasons set forth above, Hiland respectfully requests that this Court grant its Motion to Compel, and enter an order compelling AIG to produce the information herein at issue and for other relief appropriate under the circumstances. + Vt submitted, RA dl. ALC Lh #16360 JOHN A. L. CAMPBELL, OBA #17590 Aston | Mathis | Jacobson i Campbell | Tiger PLLC 2642 E. 21% Street, Suite 250 Tulsa, Oklahoma 74114-1726 (918)949-9966 (0) (918)949-9968 (f)BRIAN G. FRIEL (pro hac vice forthcoming) TAB TURANO (pro hac vice forthcoming) Miller Friel, PLLC 1200 New Hampshire Avenue, Suite 800 Washington, D.C. 20036 Certificate of Mailing I, the undersigned, do hereby certify that on this day of February 2018, a true and correct copy of the above and foregoing was sent by U.S. Mail, with proper postage thereon fully paid, to: William D. Perrine, Esq. Perrine, Redemann, Berry, Taylor & Sloan, PLLC P.O. Box 1710 Tulsa, OK 74101-1710 Attorney for Defendants Rathpl C. MathisExhibit 1MILLER|JFRIEL PLLC Tab R. Turano Tel: 202.760.3163 Turanot@millerfriel.com January 31, 2018 VIA ELECTRONIC MAIL William D. Perrine, Esq. PERRINE, REDEMANN, BERRY, TAYLOR & SLOAN, P.L.L.C. Spirit Tower Building 1800 S. Baltimore Ave., Ste. 900 Tulsa, OK 74101 WPerrine@pmrlaw.net Re: _Hiland Partners Holdings LLC v. National Union Fire Insurance Company, et al. Dear Bill: This letter follows up on National Union’s response to Hiland’s Interrogatory No. 23. Hiland requested National Union to: Identify by case caption every lawsuit that involved one of Your insureds that went to trial, in which Robert Schuster represented the plaintiff(s), and for each such lawsuit, state the amount of damages awarded by the jury, if any. National Union objected to the request on the bases of burden and relevance. These objections are unfounded, and Hiland hereby requests that National Union reconsider its response. We believe this request is highly relevant and not unduly burdensome. On a phone call on or about August 13, 2014, shortly before mediation in the Chapman action, Stephanie Holzback told Michael Holmes that AIG had twice gone to trial against Chapman’s lawyer, Bob Schuster, and obtained defense verdicts. See KMHI0018160 (attached). Ms. Holzback’s statement was clearly made to justify AIG’s unreasonably low settlement authority. John Fitzpatrick, AIG’s appointed counsel, cast doubt on the legitimacy of Ms. Holzback’s contention. Jd. Accordingly, the veracity of Ms. Holzback’s claim is directly relevant to Hiland’s bad faith action. MILLER FRIEL, PLLC ATTORNEYS AT LAW MILLERFRIEL.COM TEL: 202-760-3160 FAX: 202-459-9537 1200 NEW HAMPSHIRE AVE, NW SUITE 800 WASHINGTON, DC 20036Mr. William Perrine, Esq. January 31, 2018 Page 2 To the extent AIG has concerns regarding the burden of response, Hiland is willing to narrow the scope of Interrogatory 23 to the two matters refenced by Ms. Holzback where AIG “zeroed out” Bob Schuster (as opposed to “every lawsuit”). Please let us know by close of business on February 7 whether or not National Union intends to provide Hiland the requested information. Barring National Union’s compliance, Hiland intends to move the Court for an Order compelling a proper response. _— Tab R. Turano Enclosure MILLER FRIEL, PLLC ATTORNEYS AT LAW MILLERFRIEL.COM TEL: 202-760-3160 FAX: 202-459-9537 1200 NEW HAMPSHIRE AVE, NW SUITE 800 WASHINGTON, DC 20036From: Fitzpatrick, John To: Derek G. Gipson cc: Holmes, Michael; Joseph Griffin Sent: 8/13/2014 8:52:56 PM Subject: Re: Call Great call. Just boarded plane - didn't get her. But Mike - strongly recommend you ask her to please list the two cases where AIG went to VERDICT against Bob and zeroed him out. I guess it's possible - sort of like Santa really exists - but our intel notes that Bob hasn't been to verdict lately. She said it to you - for credibility - you should ask for the case names and venues. I don't believe it Finally if that really happened - then the defense in those two cases had a liability defense. We don't. We only have a damage limitations - so Bob won't be zeroed out - it will only be a matter of damages. John Fitzpatrick Cell: 720-212-7169 On Aug 13, 2014, at 3:58 PM. "Derek G. Gipson" wrote: > > > > From: Pam Wilson [imailto:pwilson@aaacourtreporters.com] > Sent: Monday, August 11. 2014 3:58 PM >To: glentz@ssdlawyers.com > Subject: Jackson vs. Empire District > > > > Pam Wilson > AAA Court Reporting Company > 8001 Conser, Suite 200 + Overland Park, KS 66204 > (913) 385-2699 > (913) 385-2693 (Fax) > (800) 205-7930 (Toll Free) > Www.aaacourtreporters.com > > [aaalogosignatures] > > > > > > KMHI0018160Exhibit 2From: Fitzpatrick, John To: Derek G. Gipson cc: Holmes, Michael; Joseph Griffin Sent: 8/13/2014 8:52:56 PM | Subject: Re: Call Great call. Just boarded plane - didn't get her. But Mike - strongly recommend you ask her to please list the two cases where AIG went to VERDICT against Bob and zeroed him out. I guess it's possible - sort of like Santa really exists - but our intel notes that Bob hasn't been to verdict lately. She said it to you - for credibility - you should ask for the case names and venues. I don't believe it Finally if that really happened - then the defense in those two cases had a liability defense. We don't. We only have a damage limitations - so Bob won't be zeroed out - it will only be a matter of damages. i John Fitzpatrick Cell: 720-212-7169 On Aug 13, 2014, at 3:58 PM, "Derek G. Gipson" wrote: > | > > > From: Pam Wilson [mailto:pwilson@/aaacourtreporters.com} > Sent: Monday. August 11. 2014 3:58 PM > To: glentzd@ssdlawyers.com > Subject: Jackson vs. Empire District > > > > Pam Wilson > AAA Court Reporting Company > 8001 Conser. Suite 200 + Overland Park. KS 66204 > (913) 385-2699 > (913) 385-2693 (Fax) > (800) 205-7930 (Toll Free) > www.aaacourtreporters.coms > > [aaalogosignatures] > > > > > > KMHIO0018160Exhibit 3From: Fitzpatrick, Jotin To: Holzback, Stephanie, Ce: Qertle, Steohen ‘Subject: Update - Chapman v Hiland Date: ‘Saturday, June 28, 2014 1:56:13 PM Attachments: imege004.0if Image006. cif image001.cif image002.pn0 fmage003.pn0 PRIVILEGED AND CONFIDENTIAL ATTORNEY CLIENT PRIVILEGE Stephanie: An update on a couple of issues: First, Stephen has completed the draft response to the motion to amend and you have that for review. Please let us know if you have any questions or concerns. Second, he and our liability expert, John Emory (along with one of John’s partners, David Millican) inspected Hiland’s gas plant earlier in the week. The inspection was very productive. While our experts came away with a much better understanding of the facts in this case, and some of their concerns were alleviated, others unfortunately remain. We almost certainly will not have a defense to liability in this case, though they are still working through documents to try to come up with a workable defense theory. It is also not clear whether they will be able to defend Hiland against punitive damages if the Court finds that the standard applicable to a claim that Hiland exhibited “actual malice” is whether Hiland exhibited “conscious disregard” for the safety of others. As the draft motion to amend response discusses, there is some case law supporting that theory, though it is limited. They have a number of issues that they are working through including the building of the load out facilities for the condensate tanks downwind (by prevailing wind for the area) and the intentional loading of potentially volatile “light ends” into the condensate tanks without performing hazard analyses required in the industry. While at the inspection, the experts uncovered evidence that Plaintiffs don’t have that the condensate in the tanks contained as much as 25% light ends (e.g., propane and butane) that made them extremely volatile — even if a jury accepts that the tanks could appropriately be used to contain condensate, the levels of volatile 1353 HP001353hydrocarbons in the condensate could be an issue. They are laboring to find solutions to these problems, but they are an issue. That percentage of propane is a lot different than just “condensate” like we would like to characterize it and really made the thing a bomb that was venting out volatile gases constantly, and made it vulnerable to a “burp” like we think happened when Olson opened the valve at the base of the tank. Also the downwind thing — they truly put the load out line so that 9 months out of the year the wind is blowing those vapors straight at the truck loading out. These are just very problematic facts. Finally, and most importantly, Stephen talked at length with Bob Schuster today, primarily about deposition scheduling (both of Plaintiffs’ experts and of Hiland’s CEO and CFO). In the course of that conversation, Schuster brought up the mediation in Minneapolis and mentioned that he found Judge Boylan less than effective. He commented that “don’t you think things would have been different if we’d used Judge Downes instead.” Talk about a “gift from heaven” — you should know that Stephen clerked for Judge Downes in the District of Wyoming and Schuster has had cases'against him and used him as a mediator over the years. Stephen asked if Schuster was serious — he is and he would like to attempt another mediation before Judge Downes. Aside from Stephen, our firm is very familiar with Downes — he’s a personal friend of mine and of Mike O’Donnell, my partner, and many of my partners have used him in tough mediations to great success. If there’s one thing he can be counted on that Boylan didn’t do, it’s push hard on Schuster. Stephen checked with Downes off the record - he is available on July 25 and 31 as well as several dates in August and September. Given Hiland’s sincere desire to settle this case, and some of the bad facts and expert issues we have, another mediation attempt would be worthwhile and highly advisable. We could propose it along with an extension of pertinent deadlines as well, which would give our experts more time to come up with good reports and take the pressure off of scheduling Plaintiffs’ expert depositions (which will result in significant expenses given that we have to pay for their hourly rate for their depositions). I can’t tell you how strongly I recommend this action. Hiland is obviously in favor of this suggestion. The fact that Bob brought this up on his own is a huge signal to us that he wants to resolve this. Our case will not get better — it will only get worse. If you are interested in pursuing a further mediation, we need to move quickly to set it up given the scheduling issues. Are you available to talk on Monday? 1354 HP001354Fitz 7 |P 303.244.1800 F 303.244.1879 1355 HP001355Exhibit 4From: Fitzpatrick, John To: Danielson, Melia Sent: 71212014 4:41:13 PM Subject: Fwd: AlG/Chapman (Claim #169-3843690)- mediation with Judge Downes Attachments: image001 gif; image010.png; image0011 gif; image011.png; image0012.gif; image012.jpg; image0013.gif; image013.jpg; image001 4.gif; image014.jpg; image0015.gif; imageoo1 6.gif; image0017.gif; image0018.gif Be sure to file John Fitzpatrick Cell: 720-212-7169 Begin forwarded message: From: "Oertle, Stephen" Date: July 2, 2014, 12:40:40 PM EDT To: "Stephanie Holzback@AIG.com" Ce: "Fitzpatrick, John" Subject: AIG/Chapman (Claim #169-3843690)- mediation with Judge Downes Stephanie: Thad further conversations with Judge Downes’ office this week — he has agreed to hold July 31 for us through next Tuesday. ‘We don’t know if that date works for Plaintiff yet. If we don’t do a mediation on July 31, the next dates Downes has available are in late August. The fact that Bob Schuster suggested this mediation is a positive sign - not to be overestimated, but positive nonetheless. It certainly puts us in a strong position going into the mediation - we didn’t ask for it, he did. Downes is a strong mediator, unlike our last one in Minneapolis, and both Bob and we have personal connections with him. If we are going to get a deal done before the eve of trial, this is probably our best bet. Also, remember, our expert disclosures are due on August | ~ while we have great damages experts lined up who will do their best to minimize Chapman's injuries, we are 1 not looking great on the liability front. We may be stuck admitting liability and combatting punitive damages only (and our Punitive damages defense is not rock solid yet ~ our experts are still reviewing). If we could mediate before our expert disclosures come out—before we have to show our hand as to what our liability experts will say—that would be enormously beneficial. Are you available July 31? Ideally we would Couple the mediation with a one month extension of our own expert disclosure deadlines, but this is a deal we would need to wrap up sooner rather than later. Stephen tle {0 nttp-/Awww.w Stephen E Oera i 303.244 1959 sentledwtotriatcom if http://www. wtotrial.com/images/wto_logo., 570 Seventeenth Street Suite 4500 ee aver. Colorado 80202-5647 303.244.1800 F 303.244.1879 KMHI0012167Exhibit 5From: Holmes, Michael To: Joseph Griffin; Derek G. Gipson Sent: 8/13/2014 1:14:53 AM Subject: Insurance Just talked to Stephanie. Disconcerting to say the least. She's coming with less than 10mm. Can you please send me contact info of our broker. I want to arrange a call with underwriting tomorrow. We need to get out in front of this. Michael Holmes Vinson & Elkins LLP Michael C. Holmes Partner Vinson & Elkins LLP Attorneys at Law 2001 Ross Avenue, Suite 3700 Dallas, TX 75201-2975 Tel +1.214.220.7814 E-mail mholmes@velaw.com CONFIDENTIALITY NOTICE: The information in this email may be confidential and/or privileged. This email is intended to be reviewed by only the individual or organization named above. If you are not the intended recipient or an authorized representative of the intended recipient, you are hereby notified that any review, dissemination or copying of this email and its attachments, if any, or the information contained herein is prohibited. If you have received this email in error, please immediately notify the sender by return email and delete this email from your system. Thank You. KMHI0018140