Scion Energy v. Signal Peak Energy


06/02/09 – 06/02/09


Hearing on a motion to stay discovery due to a pending motion to dismiss the second amended complaint, which the defendant asserted could narrow the litigation and focus discovery.

The plaintiff, Scion Energy, characterized the stay motion as "bizarre" and the dismissal motion as "baffling." According to the plaintiff, a discovery stay was inappropriate because discovery had already been underway for more than a year, and because dismissal was unlikely, given that the defendant had already twice answered less detailed complaints and had participated in discovery. In any case the dismissal motion would not dispose of the case.

In the underlying case, Scion allegedly had agreed to partially finance, and to obtain additional investors to provide, the $100M needed to fully develop the Bull Mountain coal mine. Scion claimed that the defendants, including entities related to the private equity fund Airlie, subsequently committed a tortious interference with contract by shutting Scion out of the financing opportunity and fraudulently transferring assets. Scion allegedly was entitled to a 48-cent per ton royalty on a mine producing 12 million tons of coal per year, plus $15M in fees, and expected to recover through the litigation in excess of $100M.

The court granted in part and denied in part the defendant's discovery stay motion pending the defendant's motion to dismiss. The Court allowed the plaintiff to proceed with currently outstanding written discovery requests, as well as subpoena duces tecum requests to Bull Mountain entities, who were central to the litigation. However, the Court stayed depositions until after the motion to dismiss be adjudicated.


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