GREGORY M. SALVATO (Cal. Bar. No. 126285), admitted pro

Reply in support of Motion for Relief from the Automatic Stay - Nonbankruptcy Forum

-i- In re Splash News & Picture Agency, LLC, Debtor Chapter 11 Case No. 21-11377-ABL

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28 Salvato Boufadel LLP

GREGORY M. SALVATO (Cal. Bar. No. 126285), admitted pro hac vice [email protected] JOSEPH BOUFADEL (Cal. Bar. No. 267312) [email protected] SALVATO BOUFADEL LLP 777 South Figueroa Street, Suite 2800 Los Angeles, California 90017-5826 Telephone: (213) 484-8400 SEAN K. CLAGGETT (Nevada Bar No. 008407) [email protected] JOSHUA A. DOWLING (Nevada Bar No. 012956) [email protected] CLAGGETT & SYKES LAW FIRM 4101 Meadows Lane, Suite 100 Las Vegas, Nevada 89107 Telephone: (702) 655-2346 Facsimile: (702) 655-3763 Attorneys for Creditor and Movant ESMERALDA SERVIN

UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEVADA

In re:

SPLASH NEWS & PICTURE AGENCY, LLC, Debtor.

Case No. 21-11377-ABL Chapter 11 (Subchapter V election) Esmeralda Servin’s Reply in support of Motion for Relief from the Automatic Stay to Continue Prosecution of Action in Non-Bankruptcy Forum; Declaration of Gregory M. Salvato, Esq. in Support Hearing Date: Date: June 7, 2021 Time: 1:30 p.m. Place: Courtroom 1 (3rd Floor) 300 Las Vegas Boulevard South Las Vegas, NV 89101

Case 21-11377-abl Doc 171 Entered 06/01/21 21:40:40 Page 1 of 37


-ii- In re Splash News & Picture Agency, LLC, Debtor Chapter 11 Case No. 21-11377-ABL

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TABLE OF AUTHORITIES

Federal Cases Page(s)

In re Aquaslide 'N' Dive Corp. 85 B.R. 545 (B.A.P. 9th Cir. 1987) ................................................................................ 8

Batista v. Redondo Constr. Corp. 2006 Bankr.LEXIS 3831 (Bankr. D. P.R. 2006) ........................................................... 7

In re Curtis 40 B.R. 795 (Bankr. D. Utah 1984) ......................................................................... 9, 10

Garcia v. Skar 626 B.R. 750 (Bankr. S.D.N.Y. 2021) ........................................................................... 7

In re Gary Brew Enters. Ltd. 198 B.R. 616 (Bankr. S.D. Cal. 1996) ........................................................................... 7

In re Ice Cream Liquidation, Inc. 281 B.R. 154 (D. Conn. 2002) ....................................................................................... 7

In re Kronemyer 405 B.R. 915 (B.A.P. 9th Cir. 2009) .............................................................................. 9

In re Santa Clara County Fair Ass’n 180 B.R. 564 (B.A.P. 9th Cir. 1995) .......................................................................... 1, 4

In re Smith 389 B.R. 902 (Bk. D. Nev. 2008) .............................................................................. 7, 8

California Cases Bihun v. AT&T Info. Sys. Inc.

13 Cal.App.4th 976 (1993) ........................................................................................... 7

Foster-Gardner, Inc. v. Nat'l Union Fire Ins. Co. 18 Cal.4th 857 (1998) .......................................................................................... 3, 4, 11

Gray v. Zurich Ins. Co. 65 Cal.2d 263 (1966) ....................................................................................... 1, 2, 4, 11



-iii- In re Splash News & Picture Agency, LLC, Debtor Chapter 11 Case No. 21-11377-ABL

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TABLE OF AUTHORITIES (Continued)

Federal Statutes & Rules 28 U.S.C. § 157(b)(5) ...................................................................................................... 7, 8

California Statutes Cal. Ins. Code § 11580(b)(1) ......................................................................................... 5, 11



-1- In re Splash News & Picture Agency, LLC, Debtor Chapter 11 Case No. 21-11377-ABL

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REPLY IN SUPPORT OF ESMERALDA SERVIN’S MOTION

FOR RELIEF FROM AUTOMATIC STAY

Movant Esmeralda Servin (“Servin”) respectfully submits this Reply to the

Opposition [Dkt. No.155] filed by Debtor Splash News & Picture Agency, Inc. (“Debtor”)

in support of her Motion for Relief from Automatic Stay to Continue Prosecution of United

States District Court Action filed by Creditor Esmeralda Servin (the “Motion”) [Dkt. No.

121], as follows:

The Debtor raises two main arguments in opposition to Servin’s Motion: (1) that

there would be an unfair cost imposed on the Debtor if the Court were to authorize Servin

to seek recovery from applicable insurance, and (2) that trial in the Bankruptcy Court

through the claims resolution process would be speedier and more efficient than

liquidating Servin’s claim in a non-bankruptcy forum. (Opposition at ¶ 1).

As discussed below, the Debtor’s arguments are flatly wrong. The fact that the

Debtor would bear some of the costs of defense of the litigation is not grounds for denying

relief. See In re Santa Clara County Fair Ass’n, 180 B.R. 564, 566 (B.A.P. 9th Cir. 1995)

(“Ordinarily, litigation costs to a bankruptcy estate do not compel a court to deny stay

relief”). Further, it is unlikely that this Bankruptcy Court, or the United States District

Court in Nevada, could readily schedule a 7 to 10-day jury trial on issues related entirely to

California employment law, nor is it likely those courts would want to do so. The most

efficient and expeditious way of dealing with this matter is to permit the parties to go

forward with their jury trial currently scheduled for February 22, 2022, in California.

The Debtor’s arguments are insufficient to justify denial of Servin’s Motion.

SPECIFIC RESPONSES TO THE DEBTOR’S ARGUMENTS

A. The self-insured retention amount of $100,000 in the Insurance Policy:

The Debtor contends that “[t]he Policy may provide coverage with respect to the claims

asserted by Servin against Splash.” (Opposition at ¶ 6). “Additionally, if Splash were

determined to be liable for monetary damages to Servin in the Lawsuit, Zurich [the

insurer] will not pay under the Policy until Splash has paid $100,000 toward either a




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settlement or judgment.” (Opposition at ¶ 7).

Movant’s Response: The Debtor misstates the situation. First, as acknowledged by

the Debtor, an Employment Practices Liability Insurance (EPLI) Policy (Policy No. EPL

6541325-10) (“Policy”)1 issued by Zurich American Insurance Company (“Zurich” or

“Insurer”) provides coverage for Servin’s action against the Debtor. (Opposition at ¶¶ 4, 7-

8). Zurich has accepted defense of the action under a reservation of rights letter (see

Motion at Exhibit 3 [Dkt. No. 122]) and has provided a defense to the Debtor since

November 2020.

The Insurer retained the law firm of Lewis Brisbois to represent the Debtor in the

non-bankruptcy forum, which firm has already incurred at least $55,000 in defense of the

lawsuit prior to the bankruptcy filing. (Opposition at ¶¶ 8 & 10). As indicated, the

Debtor’s liability for defense costs is capped at $100,000.

Second, the Insurer cannot deny coverage under the Policy, or payment in excess of

the self-insured retention (“S.I.R.”) amount, even if the Debtor has not paid the initial

$100,000 in defense costs to Lewis Brisbois. (Opposition at ¶¶ 6-7). That is, the Insurer’s

obligations to pay on any settlement or judgment is for all amounts in excess of the

$100,000 S.I.R. up to the policy limits. And the Insurer cannot deny a defense to the

Debtor simply because of its insolvency or commencement of a bankruptcy case. The

Debtor is incorrect in stating that “Zurich will not pay under the Policy until Splash has

paid $100,000 toward either a settlement or judgment.” (Opposition at ¶ 7). Rather, the

Insurer’s obligation is to pay all amounts in excess of $100,000 regardless of whether the

Debtor pays the initial $100,000 to the Movant. See Gray v. Zurich Ins. Co., 65 Cal.2d

263, 275 (1966) (California courts have long recognized that an insurance company “must

1 Although the Debtor did not submit a copy of the EPL insurance policy with its Opposition, after request from Servin’s counsel, the Debtor courteously provided a copy of the Policy, which is attached to the Declaration of Gregory Salvato, Esq. submitted herewith, as Exhibit 4.




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defend a suit which potentially seeks damages within the coverage of the policy”).

Indeed, the Insurer’s duty to defend against the Employment Action is immediate

and without regard to any exhaustion of retention for defense expenses. The Insurer has

the right and duty to defend against covered claims and that right attached once the Debtor

provided the Insurer notice of the claims at issue. To the point, the Insurer retained Lewis

Brisbois to serve as defense counsel for the Debtor, and Lewis Brisbois has undertaken

defense of the Debtor. (Opposition at ¶¶ 8 & 10).

Furthermore, the retention provisions in no way limit the Insurer’s duty to defend.

The Insurer’s duty to defend against the claims is not contingent on the Debtor’s payment

of the defense costs; that duty is only “subject to” the general conditions regarding

Insurer’s defense obligations, and those obligations are to commence the defense

immediately and entirely in its own control. Whether and when the Debtor satisfies its

$100,000 S.I.R as to defense costs is not Ms. Servin’s concern and does not affect the

coverage obligation. The Insurer’s duty to defend is immediate and exclusive. See Foster-

Gardner, Inc. v. Nat'l Union Fire Ins. Co., 18 Cal.4th 857, 869 (1998).

If, for example, a judgment is entered for $1 million, the Insurer will only be

obligated to pay $900,000; whether the Debtor pays the initial $100,000 to Ms. Servin is

irrelevant to the amount and obligation of the Insurer to pay its share, and to its duty and

obligation to defend the Debtor.

B. Expending resources of the bankruptcy estate: The Debtor contends that

it “has very limited funds and it is prejudicial to the bankruptcy estate and other creditors

for Splash to devote significant time and money to the claims of a single general unsecured

creditor.” (Opposition at ¶ 1). The Debtor argues that it “has limited funds and cannot

afford to pay to administer this bankruptcy case and pay to defend the Lawsuit at the same

time.” (Opposition at ¶ 14).

Movant’s Response: The Debtor turns the logic of this argument on its head. The

Debtor has the benefit of the EPLI Policy, which has already been invoked to provide




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coverage and defense counsel to the Debtor. (Opposition at ¶¶ 3-4, 7-8 & 10). However,

litigating the employment action in the District Court in California—where the action

remains pending after removal from state court—is the most efficient and cost-effective

way to proceed.

The Debtor, the bankruptcy estate, and its creditors will benefit from the continued

prosecution of the action in California federal court instead of here. Litigating Servin’s

claim in the non-bankruptcy forum will save the bankruptcy estate time and resources

because defense of the employment claims is covered by insurance. Defense counsel has

already been retained by the Insurer on behalf of the Debtor, who has expended at least

$55,000 in fees. (Opposition at ¶ 10). Any judgment will be covered in an amount up to

the insurance policy limits (less the retention amount), and enforcement of any judgment

against the Debtor will remain stayed. The relatively small additional costs imposed on the

Debtor (which the Debtor will not have to pay except through a Plan of Reorganization)

are not sufficient grounds to deny Servin access to the insurance policy. In re Santa Clara

County Fair Ass’n, 180 B.R. 564, 566 (B.A.P. 9th Cir. 1995) (“Ordinarily, litigation costs

to a bankruptcy estate do not compel a court to deny stay relief”).

On the other hand, Debtor’s suggestion that Ms. Servin be required to litigate in

Bankruptcy Court, or District Court in Nevada, does not serve the interests of the

bankruptcy estate or its creditors. By arguing against lifting the automatic stay, the Debtor

is arguing against its own interests (and that of its creditors). Requiring the Debtor to

liquidate in this forum will increase the administrative costs to the estate, since Debtor’s

counsel will have primary responsibility of defending and contesting Servin’s claims in

this Bankruptcy Court or Nevada District Court. The estate will incur significant expense

to get “up to speed” in defending the litigation if it must be tried in bankruptcy court.

The Debtor fails to acknowledge that California law requires the insurer to continue

defending the Debtor now that Zurich has assumed its defense. See, supra, Gray v. Zurich

Ins. Co., 65 Cal.2d at 275; Foster-Gardner, Inc., 18 Cal.4th at 869. A bankruptcy filing or

insolvency does not relieve the Insurer of its obligations under the Policy; each insurance




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policy issued under California law (as is the Zurich policy in this case) is required to

contain the following mandatory language:

“A provision that the insolvency or bankruptcy of the insured

will not release the insurer from the payment of damages for

injury sustained or loss occasioned during the life of such

policy.”

See Cal. Ins. Code § 11580(b)(1) (discussing mandatory provisions in policies regarding

insolvency of the insured). The Policy is to be construed in accordance with, and governed

by, California law. (See Salvato Declaration, Exhibit 4 at p. 12, ¶ K).

In compliance with California law, the Zurich insurance policy in fact

contains the following language at p.11. § E:

“The bankruptcy, insolvency or inability to pay of an Insured

or of an Insured's estate will not relieve us of our obligations

under this policy. However, neither shall such bankruptcy,

insolvency or inability to pay increase our liability with respect

to the Self-Insured Retention, nor in any other way.” (emphasis

in original).

(Salvato Declaration at Exhibit 4).

Indeed, as in many such EPLI policies, the self-insured retention amount may also

be deducted from the ultimate settlement or liability amount, resulting in no out-of-pocket

payment from the Debtor. In such situations, the Insurer will have a claim for the defense

costs against the Debtor.

In summary, the balance of harms weighs in favor of Servin and in favor of granting

relief from the automatic stay to continue prosecution of her claims in the non-bankruptcy

forum.

//

//

//




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C. No proof of claim on file. The Debtor next argues that Ms. Servin’s claim

could most efficiently be resolved through the claims objection process: “Given its own

limited financial resources, Splash believes the claims resolution process of 11 U.S.C. §

502 and Fed. R. Bankr. P. 3007 provides a far more expeditious and effective manner for

resolving Servin’s alleged claim.” (Opposition at ¶ 18). Yet, in the very next paragraph,

the Debtor contends that the Court should delay ruling on the lift stay motion until Ms.

Servin has waived her right to a jury trial by filing a claim and until the Debtor has

objected to her claim: “At the very least, the Court should not rule on Servin’s Motion until

Servin has filed her proof of claim and Debtor has had an opportunity to seek to resolve

that claim through the normal claim resolution process.” (Opposition at ¶ 19).

Movant’s Response: The purpose of the lift stay Motion is continue prosecution of

Servin’s wrongful termination action to recover from insurance proceeds only. It is

inaccurate to state that the action can be tried more efficiently in Bankruptcy Court.

Additional discovery, including expert witness discovery, and depositions still need to be

completed. The parties anticipate a 7 to 10-day jury trial. The Bankruptcy Court does not

customarily handle employment claims based entirely on California law, nor does it appear

that the Bankruptcy Court has the time or resources to dedicate solely to a lengthy jury

trial.

Ms. Servin has not filed a Proof of Claim in this bankruptcy proceeding. The Court

has extended the deadline for Servin to file a Proof of Claim, should she choose to do so,

to June 14, 2021.

Whether Servin files a Proof of Claim or not, the “normal claim resolution process”

would not run its course by the upcoming June 21, 2021 deadline for the Debtor to propose

a Plan of Reorganization. What the Debtor seemingly fails to recognize—and which had

been suggested by counsel prior to the filing of the Motion—is that the Debtor can

estimate her claim for purposes of its Plan of Reorganization. As the policy indicates, the

Debtor’s maximum liability is the $100,000 S.I.R. amount in the Policy. Having removed

this original state court employment action to District Court on the basis of diversity




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jurisdiction, the Debtor has already conceded that Ms. Servin’s claim exceeded $75,000.

The Debtor can easily estimate its maximum liability at this time for purposes of its

forthcoming Plan of Reorganization. (Opposition at p. 6, ¶ 24).

D. Personal Injury Claims: The Debtor contends that Servin’s California law-

based wrongful termination claims do not constitute personal injury tort claims under 28

U.S.C. § 157(b)(5). (Opposition at ¶¶ 30-31). As a result, the Debtor argues that her

claims do not need to be tried by the U.S. District Court.

Movant’s Response: For every out-of-the-district case cited by the Debtor for the

proposition that employment harassment and discrimination claims are not personal injury

tort claims within the meaning of 28 U.S.C. § 157(b)(5), there are an equal number of out-

of-the-district cases holding that employment discrimination claims are personal injury

torts. California has so held. See, e.g., Bihun v. AT&T Info. Sys. Inc., 13 Cal.App.4th 976,

1004-05 (1993) overruled on other grounds (sexual harassment in the workplace is a

personal injury when it impairs the well-being or the mental or physical health of the

victim). And numerous cases in other districts have similarly ruled. See, for example, In re

Ice Cream Liquidation, Inc., 281 B.R. 154 (D. Conn. 2002) (sexual harassment claims

were determined to be personal injury torts, relief from stay and request for abstention

granted); In re Gary Brew Enters. Ltd., 198 B.R. 616 (Bankr. S.D. Cal. 1996) (under the

“broader” view, claims of race discrimination in the workplace are “personal injury tort

claims”); Garcia v. Skar, 626 B.R. 750 (Bankr. S.D.N.Y. 2021) (Section 157(b)(5) applies

to sexual harassment, assault and battery and gender -motivated violence); Batista v.

Redondo Constr. Corp., 2006 Bankr.LEXIS 3831 (Bankr. D. P.R. 2006) (age

discrimination claims are personal injury torts).

The Debtor gives short shrift to the leading case in this district of In re Smith, 389

B.R. 902 (Bk. D. Nev. 2008), regarding the power of the Bankruptcy Court to hear

“personal injury tort claims.” In Smith, Judge Bruce Markell ruled that the defamation

claims asserted in that action were “personal injury tort claims” but that the provisions of




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Section 157(b)(5) were “not jurisdictional in the sense that they deprive this court of the

power to hear the matter.” Id. at 906. That is, Section 157(b)(5) only spoke to the

allocation of cases between the District Court and the Bankruptcy Court and the ability of

a Bankruptcy Court to enter a final judgment on a particular matter. Id. at 910. In Smith,

Judge Markell held that the claimant Sheldon Adelson had in fact waived his right to

object to the Bankruptcy Court entering final orders in his action against the Debtor where

he had already filed a non-dischargeability action and a proof of claim in the bankruptcy

proceeding. Id. Had there not been a waiver, his personal injury tort claim would have

been tried in the District Court after pre-trial proceedings in the Bankruptcy Court.

Ms. Servin submits that her claims are personal injury tort claims requiring trial

either before the U.S. District Court in California—where the Employment Action is

pending—or before the District Court in Nevada—where this bankruptcy case is pending.

28 U.S.C. § 157(b)(5) [“The district court shall order that personal injury tort and wrongful

death claims shall be tried in the district court in which the bankruptcy case is pending, or

in the district court in the district in which the claim arose, as determined by the district

court in which the bankruptcy case is pending”]. Having this Bankruptcy Court conduct all

pre-trial proceedings only to have the trial take place in the District Court is a tremendous

waste of resources, and, contrary to the Debtor’s arguments, not the most efficient way to

proceed.

Yet, regardless of whether it constitutes a personal injury tort claim, the

Bankruptcy Court may estimate Ms. Servin’s claim for purposes of the Debtor’s proposed

Plan. As indicated above, Ms. Servin’s claim should be estimated at the Debtor’s

maximum liability under the Policy of $100,000 for purposes of proposing a Plan of

Reorganization. See In re Aquaslide 'N' Dive Corp., 85 B.R. 545, 549 (B.A.P. 9th Cir.

1987) (in estimating personal injury tort claims, “‘the bankruptcy court has the right and

duty only to estimate these [tort] claims for the purpose of confirming a plan under

Chapter 11, and that is a core proceeding’ … We likewise conclude that the bankruptcy

court below had the right and duty to estimate these claims and did not violate the




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[claimants’] right to a trial by jury for the tort claim in doing so”).

APPLICATION OF THE CURTIS FACTORS DEMONSTRATES CAUSE

EXISTS TO GRANT SERVIN’S LIFT STAY MOTION

As provided in the Motion and contrary to the Debtor’s contentions, the following

Curtis factors – adopted from the case of In re Curtis, 40 B.R. 795, 799-800 (Bankr. D.

Utah 1984) and endorsed in the Ninth Circuit by In re Kronemyer, 405 B.R. 915, 921

(B.A.P. 9th Cir. 2009) – weigh in favor of granting Ms. Servin’s Motion.

(1) Whether the relief will result in a partial or contemplate resolution of

the issues in dispute.

The Debtor contends that granting relief will not resolve all of the issues between

the Debtor and Ms. Servin because the Motion only seeks liquidation of her claim, and not

how much the Insurer will have to pay on account of that claim. (Opposition at ¶¶ 34-38).

The Debtor’s argument is unavailing because what the Insurer may have to pay to Ms.

Servin is irrelevant for plan purposes. Again, the reason is that the Debtor can estimate

Servin’s claim at the maximum amount the Debtor may be liable for under the EPLI

Policy, $100,000. What the Insurer pays to Servin in excess of the $100,000 liability is

irrelevant for the Debtor’s forthcoming Plan. (Opposition at ¶ 7).2

(2) Lack of any connection with or interference with the bankruptcy case.

The Debtor acknowledges that “[a]lthough litigation costs to a bankruptcy estate do

not necessarily compel a bankruptcy court to deny stay relief” (Opposition at ¶ 40),

“[g]ranting relief here would greatly impact and interfere with this bankruptcy case.”

(Opposition at ¶ 41). Debtor’s argument is unavailing.

2 It should be noted that the Debtor has projected that it will pay only a minimal dividend to unsecured creditors under the Plan. (Opposition at ¶ 15). Such a de minimus payment to unsecured creditors makes the Debtor’s fervent opposition to the Motion that much more puzzling.




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As discussed above, granting the lift stay Motion to permit continued prosecution of

Servin’s claims in the non-bankruptcy forum, while permitting an estimation of Servin’s

claim for plan purposes at $100,000, is the most efficient and cost-effective means to

proceed.

The Debtor is represented by counsel retained by the Insurer in the Employment

Action, which representation would continue regardless of whether the Debtor can pay

defense costs up to the S.I.R amount. And, under California law and the provisions of the

Insurance Policy, the Insurer cannot deny coverage based on the Debtor’s inability to pay

the retention amount.

(4) Whether a specialized tribunal has been established to hear the

particular cause of action with the expertise to hear such cases.

Debtor argues that “the California District Court is not a special tribunal with

unique expertise to hear Servin’s claim” because “Federal District Courts are courts of

general jurisdiction in diversity cases.” (Opposition ¶ 45).

First, Ms. Servin originally commenced her employment action against the Debtor

in Los Angeles Superior Court. The Debtor then removed the action to Federal District

Court.

Second, contrary to the Debtor’s blanket assertion, California courts are uniquely

positioned to hear and apply California law to California causes of action for harm caused

within the state of California.

Third, Ms. Servin is entitled to a jury trial on her claims, which has already been

scheduled to begin in February 2022. Therefore, this factor weighs in favor of granting the

Motion.

(5) Whether the debtor’s insurance carrier has assumed full financial

responsibility for defending the litigation.

As the Debtor concedes, this may be the most important non-exclusive Curtis

factor. (Opposition at ¶ 47). The Insurer is obligated to provide a defense and is liable for

any amounts in excess of $100,000 under the Policy. To that end, defense counsel has




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already been retained by the Insurer and the Insurer has assumed the defense of the Debtor

in the non-bankruptcy forum. (Opposition at ¶¶ 8 & 10). The insurance coverage letter

attached as Exhibit 3 to the Debtor’s Motion establishes that Zurich has in fact assumed

the defense and liability, up to the limits of the Policy, for Ms. Servin’s claims.

Whether the Debtor has the ability to continue paying Lewis Brisbois is not a

relevant factor because the Insurer is obligated to provide a defense regardless of ability to

pay. (See, supra, Gray v. Zurich Ins. Co., 65 Cal.2d at 275; Foster-Gardner, Inc., 18

Cal.4th at 869; Cal. Ins. Code § 11580(b)(1) (insolvency of the insured will not release the

insurer from the payment of damages for injury sustained or loss occasioned during the life

of such policy”); see also Salvato Declaration at Exhibit 4: Debtor’s Policy, Coverage Part

C at p. 11, § E.) Importantly, the Debtor is better able to focus on confirming its Plan

because of the Insurer providing coverage and defense to the Debtor.

(7) Whether the litigation in another forum would prejudice the interests of

other creditors, the creditors’ committee and other interested parties.

The Debtor acknowledges “[a]ssuming Servin is determined to have a liquidated

claim against Splash, it will be simply a general unsecured claim with, at most, a potential

for recovery from Zurich under the Policy.” (Opposition ¶ 50). This is essentially correct—

Ms. Servin seeks a recovery, but only $100,000 can come from the Debtor and any

additional amounts are to be paid by the Insurer. But instead of stopping here, the Debtor

paints an unrealistic doomsday scenario with sapped resources and high administrative

expense costs. (Id. at ¶¶ 50 & 52).

To the contrary, if the Debtor defends this action in the Bankruptcy Court, then the

result would be greater administrative expenses (in that Debtor’s counsel would be

required to get up to speed, consult with prior employment counsel, review the complaint

and case file, object to claim, conduct discovery, etc.). But the opposite is true based on the

defense coverage already provided under the Policy.




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(10) The interests of judicial economy and the expeditious and economical

determination of litigation for the parties.

Judicial economy is served by granting relief to prosecute against insurance

proceeds while at the same time estimating Servin’s claim at $100,000 for plan purposes.

This would permit the Debtor to propose a plan by the June 21 deadline with a fixed

amount for Ms. Servin’s claim (contrary to the procedure requested by the Debtor to

require a claim to be filed while the Debtor goes through the long process of litigating her

claim in Bankruptcy Court).

The Debtor readily concedes that “[c]onducting an expedited and economical

claims estimation of Servin’s claims furthers the underlying policies behind the enactment

of Subchapter V of the Bankruptcy Code as well, because it will allow for a quick, cost-

effective reorganization as intended by Congress.” (Opposition at ¶ 59). We agree. The

Debtor can estimate Ms. Servin’s claim at any time, and that estimation proceeding is no

impediment to allowing her to seek recovery from applicable insurance.

CONCLUSION

For the foregoing reasons and those set forth in the Motion, cause exists to lift the

automatic stay so that Ms. Servin may continue prosecution of her California state law

causes of action in a California federal court.

Dated: June 1, 2021 SALVATO BOUFADEL LLP

/s/ Gregory M. Salvato By: ___________________________

Gregory M. Salvato Joseph Boufadel

Attorneys for Creditor and Movant ESMERALDA SERVIN




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DECLARATION OF GREGORY M. SALVATO, ESQ.

I, Gregory Salvato, declare:

1. I am an attorney at law licensed to practice in the State of California. I am a

Certified Specialist in Bankruptcy Law by State Bar of California, Board of Legal

Specialization. I am also the managing partner of Salvato Boufadel LLP, and counsel for

unsecured creditor Esmeralda Servin (“Servin”) in this bankruptcy case. I have been

admitted pro hac vice to appear before this Court. [Dkt. No. 170].

2. I submit my declaration in support of Ms. Servin’s Reply in support of

Motion for Relief from the Automatic Stay to Continue Prosecution of Action in Non-

Bankruptcy Forum. The following facts are known to me of my own personal knowledge

and if called as a witness, I could and would testify competently to the truth thereof.

3. Ms. Servin is the plaintiff in the pending employment litigation entitled,

Esmeralda Servin v. Splash News and Picture Agency, LLC, et al., Case No. 2:20-cv-

07131-MCS-E, before the United States District Court for the Central District of

California. She is the movant in the lift stay Motion scheduled to be heard in this Court on

June 7, 2021, at 1:30 p.m. [Dkt. Nos. 121-124]. She is also an unsecured creditor in the

Debtor’s bankruptcy case.

Debtor’s EPLI Insurance Policy

4. On May 21, 2021, Debtor Splash News & Picture Agency, Inc. (“Debtor”)

filed its Opposition to Ms. Servin’s lift stay Motion. [Dkt. Nos. 155-56]. The Debtor’s

Opposition, however, did not include a copy of the insurance policy at issue, Employment

Practices Liability Insurance (EPLI) Policy (Policy No. EPL 6541325-10) (“Policy”)

issued by Zurich American Insurance Company.

5. On May 21, 2021, I emailed Debtor’s counsel, Michael Fielding, requesting

a copy of the Policy. On May 24, Mr. Fielding responded to my email with a copy of the

Debtor’s Policy.




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6. Attached as Exhibit 4 is a true and correct copy of my email correspondence

with Debtor’s counsel Michael Fielding, Esq. on May 21 and May 24, 2021, which

includes a copy of the Policy.

I declare under penalty of perjury under the laws of the United States that the

foregoing is true and correct. Executed on June 1, 2021, at Los Angeles, California.

/s/ Gregory M. Salvato _______________________________

Gregory M. Salvato


EXHIBIT 4

EXHIBIT 4


From: Fielding, MichaelTo: Gregory SalvatoSubject: RE: Splash News / Sevrin - Request for copy of insurance policyDate: Monday, May 24, 2021 3:43:45 PMAttachments: 2019-2020 EPLI Policy - Coverage Part C (CA).pdf

Gregory, Attached is a copy of the policy that Splash received. It is my understanding that ADP and/or Zurichdid the redaction on the first page as it appears that is specific to ADP. The 100k SIRs that werementioned in Splash’s opposition to the stay relief motion are at Item VIII.B (p. 9) of the policy. Mike Michael D. FieldingPartnerDirect: [email protected]

From: Gregory Salvato <[email protected]> Sent: Friday, May 21, 2021 1:04 PMTo: Fielding, Michael <[email protected]>Cc: Joseph Boufadel <[email protected]>Subject: Splash News / Sevrin - Request for copy of insurance policy [EXTERNAL EMAIL]

To Michael Fielding, Esq. Mr. Fielding- Please send me a copy of the insurance policy providing coverage in thismatter: Zurich EPL 6541325-10 Thank you for your courtesy and prompt response. GMS> GREGORY M. SALVATO, ESQ. SALVATO BOUFADEL LLP Business litigation, bankruptcy, and real estate matters777 So. Figueroa Street, Suite 2800Los Angeles, CA 90017Telephone: (213) 484-8400


Cell Phone: (213) 400-4424E-mail: [email protected]


U-ADP_D-100-A NJ (06/17) (05/2019)

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U-ADP-101-A NJ Draft (06/17) ADP PEO Manuscript Policy – Coverage Part C

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EPL 6541325-10 08/01/2019 08/01/2020 08/01/2019 ---- ----

<Endorsement 1 Form Number> Page 1 of 1


<Endorsement 2 Manuscirpt> Page 1 of 1


<Endorsement 3 Manuscript> Page 1 of 1

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Case No. 21-11377-abl Certificate of Service Page 1 of 1 (Nevada Bankruptcy Court)

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CERTIFICATE OF SERVICE

I certify that:

I am employed in the County of Los Angeles, California, and I am over the age of

eighteen years of age and not a party to the matter concerning which service of process

was made. My business address is 777 South Figueroa Street, Suite 2800, Los Angeles,

California 90017.

On June 1, 2021, I served the following document(s) on the parties stated below:

1. Esmeralda Servin’s Reply in support of Motion for Relief from the Automatic Stay to Continue Prosecution of Action in Non-Bankruptcy Forum; Declaration of Gregory M. Salvato, Esq. in Support

(BY THE COURT VIA NOTICE OF ELECTRONIC FILING (“NEF”)) Pursuant to controlling General Order(s) and Local Bankruptcy Rule(s), the foregoing document(s) will be served by the court via NEF and hyperlink to the document. On June 1, 2021, I checked the CM/ECF docket for this bankruptcy case and determined that the following person(s) are on the Electronic Mail Notice List to receive NEF transmission at the e-mail address indicated below:

ROBERT E. ATKINSON Counsel for the Debtor [email protected],

[email protected] MICHAEL D FIELDING Counsel for the Debtor

[email protected], [email protected];[email protected];[email protected]

EDWARD M. MCDONALD [email protected] TIMOTHY W NELSON Subchapter V Trustee [email protected] STRETTO Claims Agent [email protected],

[email protected],[email protected] U.S. TRUSTEE - LV - 11 [email protected]

I declare under penalty of perjury under the laws of the United States of America

that the above is true and correct. Executed on June 1, 2021, at Irvine, California.

/s/ Joseph Boufadel _______________________

Joseph Boufadel


Documents

GREGORY M. SALVATO (Cal. Bar. No. 126285), admitted pro