Opinion
2:20-CV-02303-RFB-DJA
10-25-2023
SECURITIES AND EXCHANGE COMMISSION; Plaintiff, v. CAPSOURCE, INC., et al. Defendants.
GREENBERG TRAURIG, LLP SECURITIES & EXCHANGE COMMISSION KARA B. HENDRICKS. TERRY MILLER KYLE A. EWING, DEFENDANT GREGORY P. HERLEAN, BRADLEY S. SLIGHTING, ESQ. SL1GHTING LAW
GREENBERG TRAURIG, LLP
SECURITIES & EXCHANGE COMMISSION
KARA B. HENDRICKS.
TERRY MILLER
KYLE A. EWING,
DEFENDANT GREGORY P. HERLEAN,
BRADLEY S. SLIGHTING, ESQ.
SL1GHTING LAW
STIPULATION AND ORDER TO LIFT STAY OF LITIGATION FOR A LIMITED PURPOSE
DANIEL J. ALBREGTS, UNITED STATES MAGISTRATE JUDGE
Plaintiff Securities and Exchange Commission and Receiver Geoff Winkler of American Fiduciary Services, in his capacity as court-appointed Receiver (the “Receiver”) for Defendant CapSource, Inc., stipulate and agree that:
1. On August 26, 2022, the Court issued its Order Appointing Receiver, in which the Court appointed Geoff Winkler receiver of Defendant CapSource, Inc. See ECF No. 17.
2. Prior to being voluntarily dismissed pursuant to Nev. R. Civ. Pro. 41(a)(1)(A)(i), CapSource was a defendant in a lawsuit pending in the Eighth Judicial District Court of the State of Nevada styled Vantage Holdings, LLC, et al. v. Capfactor LLC et al., Case No. A-22-850573-B (the “Vantage State Court Action”). Stephen J. Byrne and Gregory P. Herlean are and remain individually named as defendants in the Vantage State Court Action.
3. The Order Appointing Receiver includes a Stay of Litigation, (see ECF No. 17, ¶29), whereby all persons are stayed from commencing, prosecuting, or continuing, until further Order of this Court:
All civil legal proceedings of any nature...involving... (c) any of the Receivership Defendants, including subsidiaries and partnerships; or (d) any of the Receivership Defendants' past or present officers, directors, managers, agents, or general or limited partners sued for, or in connection with, any action taken by them while acting in such capacity of any nature, whether as plaintiff, defendant, third-party plaintiff, third-party defendant or otherwise...
4. The Vantage State Court Action is a civil legal proceeding formally involving CapSource as a defendant that would have been subject to the Stay of Litigation. The Vantage State Court Action also involves claims against Stephen Byrne and Gregory Herlean relating, in part, to actions taken by Byrne and Herlean as officers, directors, managers, or agents of CapSource.
5. Before defendants CapSource, Byrne, and Herlean responded to the complaint in the Vantage State Court Action, the Notice of the Order Appointing Receiver was filed, and the matter was stayed.
6. The parties in the Vantage State Court Action had ongoing discussions to determine if the matter may proceed without violating this Court's Stay of Litigation.
7. Accordingly, the plaintiffs in the Vantage State Court Action agreed to proceed to trial against all named defendants other than CapSource, who has been dismissed without prejudice, and plaintiffs agree that no claims against CapSource will be tried or determined in the Vantage State Court Action.
8. Additionally, to the extent the Vantage State Court Action asserts claims against Byrne and Herlean related to their roles as officers, directors, managers, or agents of CapSource, those claims will not proceed to trial and remain stayed. Plaintiffs may proceed with any claims against Byrne and Herlean to the extent that such claims are unrelated to their role as officers, directors, managers, or agents of CapSource. Plaintiffs may proceed with any claims and theories where purported transfers to and/or from CapSource are referenced. For example, claims and theories against Byrne and Herlean alleging they, as officers, directors, managers, or agents of Capfactor, LLC (“Capfactor”), a defendant in the Vantage State Court Action, breached fiduciary duties to Capfactor based on the purported transfers to and/or from CapSource. By limiting the scope of the claims in the Vantage State Court Action to exclude claims asserted against CapSource and against Byrne and Herlean as officers, directors, managers, or agents of CapSource, the parties believe the Vantage State Court Action may proceed without infringing upon the Receiver's ability to perform his duties in marshaling and preserving the assets of CapSource in this proceeding.
ACCORDINGLY, IT IS STIPULATED AND REQUESTED by the parties through their undersigned counsel of record that the Stay of Litigation be lifted for the limited purpose of permitting the Vantage State Court Action to proceed to trial: (I) against all parties other than Capsource, Inc. and (2) against Stephen J. Byrne and Gregory P. Herlean for claims that are unrelated to their roles as officers, directors, managers, or agents of CapSource as outlined in' this Stipulation.
IT IS SO STIPULATED AND AGREED:
IT IS SO ORDERED.