Re: Dunn v. LLC III (2025)

Dear Counsel:

This letter is to address the Patriarch Stakeholders’ request to modify the current scheduling order governing the above-referenced consolidated adversary proceedings so that they may file a partial summary judgment motion following the close of fact discovery concerning alleged time-barred or other facially deficient claims. If I allow the early summary judgment, the Patriarch Stakeholders seek a stay of expert discovery while the motion is pending. They acknowledge the unusual nature of the relief that they seek but contend it will provide significant efficiencies and cost savings to these proceedings in keeping with the goals of summary judgment. Specifically, the Patriarch Stakeholders contend that a successful partial summary judgment motion would resolve almost half of the 45 pending claims, eliminate 80% of the damages sought by the Plaintiff, and save at least $4-5 million of expert discovery costs.

The Plaintiff opposes the relief, describing the Patriarch Stakeholders’ request as a transparent delay tactic. Cutting through the negative rhetoric common to both parties’ submissions to this Court throughout these proceedings, Plaintiff asserts that the partial summary judgment motion will fail, ultimately bringing no meaningful value to this proceeding. It also argues that partial summary judgment will be an inefficient use of time and resources because additional summary judgment motions will be filed following the close of expert discovery unrelated to the claims at issue in the partial summary judgment motion. Therefore, it submits that allowing partial summary judgment not only duplicates efforts but also unnecessarily delays resolution of this adjudication by months if not a full year.

The governing scheduling order sets a discovery completion date of November 21, 2025, after which dispositive motions are due January 23, 2026.¹ Rule 16(b)(4) of the Federal Rules of Civil Procedure, made applicable to these proceedings by Rule 7016 of the Federal Rules of Bankruptcy Procedure, allows me to modify this schedule “for good cause”.² I have carefully considered the Patriarch Stakeholders’ reasoning in seeking their relief but do not believe it warrants good cause.

The merits of any summary judgment motion are not for my consideration today. However, it is true that the claims in this action will be narrowed, and costs avoided, if partial summary judgment were granted in favor of the Patriarch Stakeholders on the alleged time barred and deficient claims. But it is equally true that the motion may fail and that even if successful, a majority of the claims will continue with a need for expert discovery, unrelated summary judgment motions, and possibly trial. Therefore, if I grant the Patriarch Stakeholders’ request, the ultimate adjudication of these 5-year-old proceedings will be indefinitely delayed and the momentum gained throughout the discovery process lost.

I am also mindful that the governing schedule has been set consensually by the parties, with a most recent eighth amendment in April, weeks before the Patriarch Stakeholders’ motion. It would be unfair to disturb this stipulated schedule when the Patriarch Stakeholders have known of their statute of limitations defenses for years but have never sought bifurcated summary judgment.³ Finally, I do not believe that allowing partial summary judgment would minimize the use of judicial resources. Because many issues may be presented on summary judgment, I have ordered the parties to meet and confer regarding appropriate page lengths for briefing and to present a joint recommendation for my consideration. An opportunity for partial summary judgment would complicate my intention to develop a fair and efficient method of addressing the parties’ summary judgment motions while balancing my limited resources and the need to advance these cases to completion.⁴

Accordingly, I will deny the relief requested by the Patriarch Stakeholders. An order will follow. A review of the docket reveals that briefing is underway on a separate motion by the Patriarch Stakeholders to amend the scheduling order to extend certain deadlines due to ongoing discovery disputes. I will consider that relief following completion of briefing.

Sincerely,

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

In re: Zohar III, Corp.,¹ Debtor.

DAVID DUNN, AS LITIGATION TRUSTEE FOR ZOHAR LITIGATION TRUST-A, Plaintiff,

v.

PATRIARCH PARTNERS, LLC; PATRIARCH PARTNERS VIII, LLC; PATRIARCH PARTNERS XIV, LLC; PATRIARCH PARTNERS XV, LLC; PHOENIX VIII, LLC; OCTALUNA LLC; OCTALUNA II LLC; OCTALUNA III LLC; ARK II CLO 2001-1, LIMITED; ARK INVESTMENT PARTNERS II, LP; ARK ANGELS VIII, LLC; PATRIARCH PARTNERS MANAGEMENT GROUP, LLC; PATRIARCH PARTNERS AGENCY SERVICES, LLC; and LYNN TILTON, Defendants,

and

180S, INC.; BLACK MOUNTAIN DOORS, LLC; CROSCILL HOME, LLC; DURO TEXTILES, LLC; GLOBAL AUTOMOTIVE SYSTEMS, LLC; HERITAGE AVIATION, LTD.; INTREPID U.S.A., INC.; IMG HOLDINGS, INC.; JEWEL OF JANE, LLC; MOBILE ARMORED VEHICLES, LLC; SCANOPTICS, LLC; SILVERACK, LLC; STILA STYLES, LLC; SNELLING STAFFING, LLC; VULCAN ENGINEERING, INC; and XPIENT SOLUTIONS, LLC, Nominal Defendants.

PATRIARCH PARTNERS VIII, LLC; PATRIARCH PARTNERS XIV, LLC; PATRIARCH PARTNER XV, LLC; OCTALUNA LLC; OCTALUNA II LLC; OCTALUNA III LLC; PATRIARCH PARTNERS AGENCY SERVICES, LLC; and PATRIARCH PARTNERS, LLC, Counterclaim and Third-Party Claimants,

v.

ZOHAR CDO 2003-1, LIMITED; ZOHAR CDO 2003-1, CORP.; ZOHAR II 2005-1, LIMITED; ZOHAR II 2005-1, CORP.; ZOHAR III, LIMITED; ZOHAR III, CORP., Counterclaim and Third-Party Defendants.

DAVID DUNN, as Litigation Trustee for Zohar Litigation Trust-A, Plaintiff,

v.

LYNN TILTON, PATRIARCH PARTNERS, LLC, PATRIARCH PARTNERS VIII, LLC, PATRIARCH PARTNERS XIV, LLC, PATRIARCH PARTNERS XV, LLC, PATRIARCH PARTNERS AGENCY SERVICES, LLC, PATRIARCH PARTNERS MANAGEMENT GROUP, LLC, OCTALUNA LLC, OCTALUNA II LLC, ARK II CLO-2001-1 LIMITED, ARK INVESTMENT PARTNERS II, L.P., LD INVESTMENTS, LLC, ZOHAR HOLDING LLC, AND ZOHAR HOLDINGS, LLC, Defendants.

Chapter 11

Case No. 18-10512 (KBO)

(Jointly Administered)

Adv. Proc. No. 20-50534 (KBO)

Related to Docket No. 941

Adv. Pro. No. 20-50776 (KBO)

ORDER DENYING PATRIARCH STAKEHOLDERS’ MOTION FOR LEAVE TO AMEND THE SCHEDULING ORDER AND TO FILE A MOTION FOR PARTIAL SUMMARY JUDGMENT

For the reasons set forth in the accompanying Letter, it is hereby ordered that the relief requested in the Patriarch Stakeholders’ Motion for Leave to Amend the Scheduling Order and to File a Motion for Partial Summary Judgment [D.I. 941] is DENIED.

Dated: June 6, 2025 Wilmington, Delaware

Karen B. Owens Chief Judge

FOOTNOTES

1.   D.I. 878.

2.   In re Fine Paper Antitrust Litig., 685 F.2d 810, 817 (3d Cir. 1982) (“[M]atters of docket control and conduct of discovery are committed to the sound discretion of the district court.”).

3.   See Neology, Inc. v. Fed. Signal Corp., No. 11-672, 2012 WL 4342070, at *2 (D. Del. Sept. 21, 2012) (denying motion for leave to file motion for partial summary judgment and noting, in part, that the scheduling order was “carefully negotiated between parties a mere three weeks before the filing of the motion” and that “ ‘the purpose of a scheduling order is to provide concrete deadlines on which the parties can rely in planning their respective litigation strategies.’ ” (quoting McLaughlin v. Diamons State Port Corp., No. 03-617, 2004 WL 2958664 (D. Del. Dec. 21, 2004))).

4.   Westinghouse Air Brake Techs. Corp. v. Siemens Mobility, Inc., No. CV 17-1687, 2019 WL 126192, at *1 (D. Del. Jan. 8, 2019) (“A district court must assess each case on its own merits, and must also be mindful of its responsibility to keep its docket moving, so that it can provide litigants with timely and effective resolution of their claims.”).

1.   The Debtor in this chapter 11 case, along with the last four digits of its federal tax identification number, is Zohar III, Corp. (9612). The Debtor's address is c/o Province, LLC 70 Canal Street, Suite 12E, Stamford, CT 06902. In addition to Zohar III, Corp., the Debtor's affiliates include the following debtors whose bankruptcy cases have been closed prior to the date hereof, along with the last four digits of their respective federal tax identification numbers and chapter 11 case numbers: Zohar II 2005-1, Corp. (4059) (Case No. 18-10513); Zohar CDO 2003-1, Corp. (3724) (Case No. 18-10514); Zohar III, Limited (9261) (Case No. 18-10515); Zohar II 2005-1, Limited (8297) (Case No. 18-10516); Zohar CDO 2003-1, Limited (5119) (Case No. 18-10517). All motions, contested matters, and adversary proceedings that remained open as of the closing of such cases, or that are opened after the date thereof, with respect to such closed-case debtors, are administered in this remaining chapter 11 case.

Karen B. Owens Chief Judge