The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JAMES GOODING et al CIVIL ACTION
VERSUS CASE NO. 20-1133
LIBERTY MUTUAL INSURANCE CO. et al SECTION: “G” (3)
ORDER AND REASONS
This litigation arises from an alleged asbestos exposure that occurred while Decedent
James Grant Gooding (“Mr. Gooding”) was employed at various shipyards, including Avondale
Shipyard, between 1970 and 1979.1 Plaintiffs Martha Gooding, Helen Leupold, and Caroline
Pendergast (collectively, “Plaintiffs”) bring survival and wrongful death claims against numerous
defendants, alleging that asbestos exposure caused Mr. Gooding to contract malignant pleural
mesothelioma ultimately resulting in his death.2 Pending before the Court is the “Motion to
Enforce Stay and Notice of Liquidation and Statutory Stay” filed by Defendant Lamorak Insurance
Company (“Lamorak”).3 Also pending before the Court is the related “Motion to Sever Claims
against Lamorak Insurance Company” filed by Plaintiffs. 4 Considering the motions, the
memoranda in support and opposition, the record, and the applicable law, the Court stays and
administratively closes the instant action for a period of 6 months and denies Plaintiffs’ motion to
1 Rec. Doc. 1-1.
2 Rec. Doc. 210.
3 Rec. Doc. 495.
4 Rec. Doc. 449.
1
sever.
I. Background
On March 4, 2020, Mr. Gooding filed a petition for damages in the Civil District Court for
the Parish of Orleans, State of Louisiana.5 In the Petition, Mr. Gooding alleged that he contracted
mesothelioma from occupational exposure to asbestos while working for the American Bureau of
Shipping on the premises of various shipyards, including Avondale Shipyard, from 1970 to 1979.6
Mr. Gooding was diagnosed with mesothelioma in January 2020.7 Mr. Gooding passed away on
March 22, 2020, after which Plaintiffs, Mr. Gooding’s surviving heirs, were substituted as
plaintiffs in the survival action and filed wrongful death claims.8
On April 7, 2020, the Avondale Interests and Defendant Lamorak Insurance Company
removed the case to this Court pursuant to the federal officer removal statute 28 U.S.C. § 1442(a).9
Plaintiffs filed a first supplemental and amending complaint on April 23, 2020, substituting
Plaintiffs as parties-in-interest for Mr. Gooding, who passed away on March 22, 2020.10 Plaintiffs
filed a second supplemental and amending complaint on June 29, 2020.11 Plaintiffs filed a third
supplemental and amending complaint on January 7, 2021.12
5 Rec. Doc. 1-1 at 1.
6 Id. at 11.
7 Id. at 10.
8 Rec. Doc. 38.
9 Rec. Doc. 1.
10 Rec. Doc. 38.
11 Rec. Doc. 145.
12 Rec. Doc. 241.
2
On April 26, 2021, Plaintiffs filed the instant “Motion to Sever Claims Against Lamorak
Insurance Company.” 13 Lamorak opposes the motion. 14 Defendants Huntington Ingalls
Incorporated and Albert L. Bossier, Jr. (collectively, the “Avondale Interests”) also oppose the
motion.15 On May 4, 2021, Lamorak filed the instant “Motion to Enforce Stay and Notice of
Liquidation and Statutory Stay.”16 On May 11, 2021, Plaintiffs filed an “Opposition to Motion to
Stay and Memo in Support of Motion to Sever.”17 On May 14, 2021, with leave of Court, the
Avondale Interest filed a supplemental memorandum in opposition to Plaintiff’s motion to sever.18
Also on May 14, 2021, with leave of Court, Lamorak filed a reply memorandum in support of the
motion to enforce stay.19 Several other named defendants adopt the motion to stay and opposed
Plaintiffs’ motion to sever.20
II. Parties’ Arguments
A. Lamorak’s Motion to Stay
In the instant motion to stay, Lamorak asserts that it has been declared insolvent and placed
into liquidation.21 Specifically, Lamorak avers that Bedivere Insurance Company (“Bedivere”), a
13 Rec. Doc. 449.
14 Rec. Doc. 548.
15 Rec. Doc. 550.
16 Rec. Doc. 495.
17 Rec. Doc. 551.
18 Rec. Doc. 571.
19 Rec. Doc. 572.
20 Rec. Docs. 552; 553; 564; 565; 557; 561; 568.
21 Rec. Doc. 495-2 at 1.
3
foreign insurance company that includes by merger Lamorak, was declared insolvent and placed
into liquidation on March 11, 2021 by Judge Brobson in the Commonwealth Court of
Pennsylvania.22 Lamorak points to the Liquidation Order issued by the Commonwealth Court of
Pennsylvania, which states:
All above-enumerated actions currently pending against Bedivere in the courts of
the Commonwealth of Pennsylvania or elsewhere are hererby stayed; relief sought
in these actions shall be pursued by filing a proof of claim against the estate of
Bedivere pursuant to Section 538 of Article V, 40 P.S. § 221.38.23
Lamorak urges the Court enforce the permanent stay of claims against Lamorak instituted by the
Commonwealth Court of Pennsylvania.24
Lamorak also urges the Court to enforce the automatic statutory stay of claims against
Lamorak and any party Lamorak is obligated to defend.25 Lamorak points to Louisiana Revised
Statute § 22:2068 (“La. R.S. 22:2068”) to argue that a statutory six month stay of claims against
Lamorak and any party it is obliged to defend is appropriate because Lamorak is an insolvent
insurer.26
The Avondale Interests, Eagle Inc., the McCarty Corporation, and Main Ironworks adopted
the arguments set forth in the motion to stay, asserting that they were all insured by Lamorak.27
22 Id.
23 Rec. Doc. 495-3 at 7.
24 Rec. Doc. 495-2 at 2.
25 Id.
26 Id. at 2–7.
27 Rec. Doc. 552; Rec. Doc. 553; Rec. Doc. 556-1; Rec. Doc. 557.
4
B. Plaintiffs’ Opposition to Lamorak’s Motion to Stay and Plaintiffs’ Arguments in Support
of Severance
In opposition to Lamorak’s motion to stay, Plaintiffs do not set forth any arguments that
the case should not be stayed. However, in Plaintiffs’ separate motion to sever claims against
Lamorak, Plaintiffs assert that La. R.S. 22:2068 “is procedural in nature and not binding on this
federal court.”28
In opposition to Lamorak’s motion to stay, Plaintiffs instead request that the claims against
Lamorak and its insureds (the Avondale Interests and Main Iron Works) be severed.29 Plaintiffs
first assert that “severing the claims against the Avondale interests will avoid confusion with the
claims against the other shipyards.”30 Second, Plaintiffs contend that “[a]llowing the claims
against the non-Avondale defendants to go forward will expedite the proceedings as the Avondale
defendants cannot be part of a trial until at least September 2021.”31 Third, Plaintiffs argue that
severing the claims does not prejudice any defendants because all defendants have had the
opportunity to prepare their defenses and cross examine Plaintiffs’ expert witnesses.32 Finally,
Plaintiffs assert that the witness testimony and documentary proof that will be required in the
proposed severed cases will only be duplicative for the Plaintiffs.33
28 Rec. Doc. 449-1 at 1.
29 Rec. Doc. 551.
30 Id. at 2.
31 Id.
32 Id. at 3.
33 Id.
5
C. The Avondale Interests’ Arguments in Opposition to Severance
In opposition to Plaintiff’s motion to sever, the Avondale Interests contend that severance
is inappropriate because Plaintiffs’ claims against Lamorak and several other defendants, including
the Avondale Interests, arise from the same transaction or occurrence and involve common
questions of fact and law.34 The Avondale Interests further contend that severing the claims
against Lamorak will not promote settlement or judicial economy because the Court will be forced
to conduct two jury trials possibly resulting in inconsistent jury verdicts.35 The Avondale Interests
also note that “Plaintiffs claims against [the Avondale Interests] are inextricably intertwined with
the claims against Lamorak such that they cannot be settled separately.”36 In addition, the
Avondale Interests aver that severing the claims against Lamorak will result in undue prejudice to
the Avondale Interests and to Lamorak by hindering potential settlement negotiations and
increasing litigation costs for the Avondale Interests.37
III. Legal Standards
A. Legal Standard for a Motion to Stay
In Landis v. North American Co., the Supreme Court recognized that “the power to stay
proceedings is incidental to the power inherent in every court to control the disposition of the
causes on its docket with economy of time and effort for itself, for counsel, and for litigants.”38
34 Rec. Doc. 550 at 3–5.
35 Id. at 5.
36 Id.
37 Id. at 6.
38 299 U.S. 248, 254 (1936).
6
The Supreme Court noted that “how this can best be done calls for the exercise of judgment, which
must weigh competing interests and maintain an even balance.”39 Therefore, a district court has
“discretionary power to stay proceedings before it in the control of its docket and in the interests
of justice.”40 Furthermore, a district court may exercise this discretionary power sua sponte.41
B. Legal Standard for a Motion to Sever
1. Legal Standard Under Rule 21
Motions to sever are generally governed by Federal Rule of Civil Procedure 21, which
provides that “any claim against a party may be severed and proceeded with separately.”42 This
Court has “broad discretion to sever issues to be tried before it.”43 Accordingly, a court’s decision
to sever a claim will be reviewed for abuse of discretion.44 Although courts have looked to Rule
20 for guidance in the absence of any standards in Rule 21,45 courts may sever claims even where
the requirements of Rule 20(a) for permissive joinder have been satisfied.46 To determine whether
a claim should be severed, a court may consider the following factors: (1) whether the claim arose
out of the same transaction or occurrence; (2) whether the claims present common questions of
law or fact; (3) whether settlement or judicial economy would be promoted; (4) whether prejudice
39 Id. at 254–55.
40 McKnight v. Blanchard, 667 F.2d 477, 479 (5th Cir. 1982).
41 See Begum v. Miner, 213 F.3d 639, at *1 n.1 (citing Murphy v. Uncle Ben’s, Inc., 168 F.3d 734, 737 n. 1
(5th Cir.1999) (“we have held that the district court may sua sponte stay a suit as a form of abstention.”)
42 Fed. R. Civ. P. 21.
43 Brunet, 15 F.3d at 505.
44 Acevedo, 600 F.3d at 520 (citing Jolley v. Welch, 904 F.2d 988, 994 (5th Cir. 1990)).
45 Id. at 521.
46 O’Neil, 709 F.2d 369.
7
would be averted by severance; and (5) whether different witnesses and documentary proof are
required for separate claims.47 It is notable that the first two factors track the “two-prong test”
created by Rule 20, which permits joinder of plaintiffs when “(1) the claims arise out of the same
transaction, occurrence, or series of transactions or occurrences and when (2) there is at least one
common question of law or fact linking all claims.”48 Therefore, application of these five factors
accounts for whether joinder was appropriate, but it also allows for the exercise of judicial
discretion in instances where joinder was permissible but severance is warranted.
2. Legal Standard Under Rule 42(b)
Federal Rule of Civil Procedure 42 gives a district court discretion, “[f]or convenience, to
avoid prejudice, or to expedite and economize, ... [to] order a separate trial of one or more separate
issues, claims, crossclaims, counterclaims, or third-party claims.”49 The Fifth Circuit has
explained that:
The procedure authorized by Rule 42(b) should be distinguished from severance
under Rule 21. Separate trials will usually result in one judgment, but severed
claims become entirely independent actions to be tried, and judgment entered
thereon, independently. Unfortunately, this distinction, clear enough in theory, is
often obscured in practice since at times the courts talk of separate trial and
severance interchangeably.50
Some district courts in the Fifth Circuit apply the same considerations to Rule 21 requests
47 Vaz, 2006 WL 2583733, at *1 (citing Morris v. Northrop Grumman Corp., 37 F.Supp.2d 556, 580
(S.D.N.Y. 1999)); Corkern, 2012 WL 2597561, at *2 (citing Kreger, 2011 WL 1594839, at *2).
48 Acevedo, 600 F.3d at 521 (citations omitted). Even when the test for joinder is satisfied, district courts
have the discretion to refuse joinder in the interest of avoiding prejudice and delay. Id. (citing Applewhite v.
Reichhold Chems, Inc., 67 F.3d 571, 574 (5th Cir. 1995)).
49 Fed. R. Civ. P. 42(b).
50 McDaniel v. Anheuser–Busch, Inc., 987 F.2d 298, 304 n. 19 (5th Cir.1993) (quoting 9 Wright & Miller,
Federal Practice and Procedure: Civil § 2387 (1971)).
8
for severance and Rule 42(b) requests for separate trials.51 However, other district courts in the
Fifth Circuit find that “[t]he standards for separate trials and severance differ, and although both
consider prejudice to the parties to be a key factor . . . the application of Rule 42(b) involves
primarily the consideration of convenience and fairness, [while] that of Rule 21 also presupposes
basic conditions of separability in law and logic.”52
IV. Analysis
Lamorak moves the Court to stay the claims pending against Lamorak and its insureds.53
The Avondale Interests, Main Iron Works, Eagle Inc., and the McCarty Corporation represent that
they are insureds of Lamorak and therefore adopt the arguments set forth by Lamorak in the instant
motion to stay.54 Several other defendants also adopt the arguments set forth by Lamorak in the
motion to stay and in opposition to Plaintiffs’ motion to sever.55
Lamorak asserts that it was declared insolvent and placed into liquidation by the
Commonwealth Court of Pennsylvania on March 11, 2021.56 Lamorak urges this Court to (1)
enforce the permanent stay of claims against it initiated by the Commonwealth Court of
Pennsylvania; and (2) enforce the automatic statutory six-month stay of claims against it and any
51 Beechgrove Redevelopment, L.L.C. v. Carter & Sons Plumbing, Heating & Air Conditioning, Inc., No.
CIV.A. 07-8446, 2009 WL 382713, at *5 (E.D. La. Feb. 11, 2009) (Barbier, J.); see also Abrams v. Integrated Pro
Servs., LLC, No. CV 07-8426, 2015 WL 7458604, at *2 (E.D. La. Nov. 24, 2015) (Lemelle, J.) (“As the concepts of
convenience and fairness fall under the prejudice umbrella and are not inapposite to the concept of separability, this
Court finds no need to apply different standards.”).
52 Id. (quoting David v. M & E Food Mart, Inc., 1995 WL 55306, *1 (E.D. Tex. Jan. 31, 1995)).
53 Rec. Doc. 495-2 at 2.
54 Rec. Docs. 547; 549; 556-1; 557.
55 Rec. Docs. 552; 553; 564; 565; 557; 561; 568.
56 Id. at 1.
9
party it is obligated to defend as set forth by La. R.S. 22:2068.57 La R.S 22:2068(A) provides:
All proceedings in which the insolvent insurer is a party or is obligated to defend a
party in any court in this state shall be stayed for six months and such additional
time as may be determined by the court from the date the insolvency is determined
to permit proper defense by the association of all pending causes of action.
In opposition, Plaintiffs briefly note that La. R.S. 22:2068 is procedural rather than substantive
and therefore not binding on this federal court proceeding.58
Plaintiffs devote the remainder of their briefing to urging the Court to sever the pending
claims against Lamorak.59 Plaintiffs contend that severance is proper pursuant to Rule 42 “and
any other Rule of Procedure that may be applicable.”60 In opposition, the Avondale Interests argue
that the Rule 21 factors weigh against severance in this case.61 In addition, Lamorak asserts that
“a severance should be accompanied with an Order staying the claims against Lamorak.”62
The Court first addresses Lamorak’s request for a stay of proceedings and then turns to the
issue of whether the claims against Lamorak and its insureds should be severed from the other
claims pending against several defendants in this litigation.
A. Lamorak’s Motion to Stay
Lamorak urges the Court to (1) enforce the permanent stay of claims against it initiated by
the Commonwealth Court of Pennsylvania; and (2) enforce the automatic statutory six-month stay
57 Id.
58 Rec. Doc. 449-1 at 1.
59 Id.; Rec. Doc. 551.
60 Rec. Doc. 449-1 at 1.
61 Rec. Doc. 550 at 3.
62 Rec. Doc. 548 at 2.
10
of claims against it and any party it is obligated to defend as set forth by La. R.S. 22:2068.63 La
R.S 22:2068(A) provides:
All proceedings in which the insolvent insurer is a party or is obligated to defend a
party in any court in this state shall be stayed for six months and such additional
time as may be determined by the court from the date the insolvency is determined
to permit proper defense by the association of all pending causes of action.
In opposition, Plaintiffs briefly note that La. R.S. 22:2068 is procedural rather than substantive
and therefore not binding upon this Court sitting in diversity.64
Fifth Circuit precedent holds that “insolvent insurers are subject to the comprehensive
oversight of state administrative agencies and courts” and “[f]ederal law consigns to the states the
primary responsibility for regulating the insurance industry.”65 Accordingly, the Fifth Circuit in
Clark v. Fitzgibbons held that “allowing a creditor or claimant to proceed against an insolvent
insurer in federal court while a state insolvency proceeding is pending would usurp [the state’s]
control over the liquidation proceeding by allowing [the claimant] to preempt others in the
distribution of [the insurance company’s] assets.”66 The Fifth Circuit, relying on the full faith and
credit clause of the United States Constitution, explained that “a federal court judgment against
[an Arizona insolvent insurer] inevitably would destabilize Arizona’s efforts to manage [the]
insolvency.”67
Similarly, in Anshutz v. J. Ray McDermott Co., Inc., an insurer was placed under a “Final
63 Rec. Doc. 495-2 at 1.
64 Rec. Doc. 449-1 at 1.
65 Clark v. Fitzgibbons, 105 F.3d 1049, 1051 (5th Cir. 1997) (citing the McCarran–Ferguson Act).
66 Id. (internal citation and quotation omitted)
67 Id. at 1053.
11
Order of Liquidation” by the Circuit Court of Cook County, Illinois while an appeal against it was
pending.68 The Fifth Circuit held that “[a]n orderly liquidation requires that this Court not interfere
with the order of the Circuit Court of Cook County,” explaining that “[r]ecognition by this Court
of the effectuation of the liquidation of this insurance company by the State of Illinois is in
accordance with federal policy which directs that the control over the insurance business remain
in the hands of the states.”69
Additionally, in State ex rel. Guste v. ALIC Corp, the Second Circuit Court of Appeal of
Louisiana explained:
Louisiana’s scheme for liquidating insolvent insurers is very similar to proceedings
in bankruptcy. Unlike bankruptcy proceedings, however, wherein all proceedings
involving the debtor are automatically stayed by operation of law, with certain
enumerated exceptions, the state district court wherein the receivership proceedings
are initiated has the authority to issue broad injunctions to insure that the integrity
of the receivership proceeding is maintained.70
In light of Louisiana’s comprehensive statutory scheme for regulating insolvent insurers
and Fifth Circuit precedent admonishing courts to avoid interfering with state administrative
processes involving insolvent insurers, the Court exercises its discretion to stay the claims pending
against Lamorak.71
B. Plaintiffs’ Motion to Sever Claims against Lamorak
Plaintiffs contend that “if the Court is inclined to grant relief to Lamorak Insurance
68 Anshutz v. J. Ray McDermott Co., 642 F.2d 94, 95 (5th Cir. 1981).
69 Id.
70 595 So. 2d 797, 799 (La. Ct. App. 1992) (internal citations omitted).
71 See also Olin Corp. v. Lamorak Ins. Co., No. 84-CV-1968 (JSR), 2021 WL 982426 (S.D.N.Y. Mar. 15,
2021) (staying an action in which Lamorak is a defendant in light of the Commonwealth Court of Pennsylvania’s
Liquidation Order in part under the “principles of comity.”).
12
Company, Plaintiffs request that the claims against Lamorak Insurance Company be severed” from
the claims pending against the several other defendants in this litigation.72 In support, Plaintiffs
argue that severance is appropriate under Rule 42(b) because: (1) “severing the claims against the
Avondale interests will avoid confusion with the claims against the other shipyards;” (2)
“[a]llowing the claims against the non-Avondale defendants to go forward will expedite the
proceedings as the Avondale defendants cannot be part of a trial until at least September 2021;”
(3) severing the claims does not prejudice any defendants because all defendants have had the
opportunity to prepare their defenses and cross examine Plaintiffs’ expert witnesses; and (4) the
witness testimony and documentary proof that will be required in the proposed severed cases will
only be duplicative for the Plaintiffs.73
In opposition, the Avondale Interests contend that severance is inappropriate under Rule
21 because Plaintiffs’ claims against Lamorak and several other defendants, including the
Avondale Interests, arise from the same transaction or occurrence and involve common questions
of fact and law.74 The Avondale Interests further contend that severing the claims against Lamorak
will not promote settlement or judicial economy because the Court will be forced to conduct two
jury trials possibly resulting in inconsistent jury verdicts.75 The Avondale Interests also note that
“Plaintiffs claims against [the Avondale Interests] are inextricably intertwined with the claims
72 Rec. Doc. 449-1 at 1.
73 Rec. Doc. 551 at 2–3.
74 Rec. Doc. 550 at 3–5.
75 Id. at 5.
13
against Lamorak such that they cannot be settled separately.”76 In addition, the Avondale Interests
aver that severing the claims against Lamorak will result in undue prejudice to the Avondale
Interests and to Lamorak by hindering potential settlement negotiations and increasing litigation
costs for the Avondale Interests.77
Under the overlapping standards applicable to Rule 21 and Rule 42(b), the Court finds that
severance is inappropriate in this case. First, severing the claims against only Lamorak without
severing the claims against its insureds would be highly prejudicial to Lamorak’s insureds who
have tendered their defenses to Lamorak. Additionally, the Avondale Interests are Lamorak’s
insureds, and the Avondale Interests have raised several cross-claims and third-party claims in this
litigation.
Second, severing the claims against Lamorak and its insureds while proceeding to trial
against the remaining defendants in this action would result in the risk of inconsistent jury verdicts.
Additionally, as noted by the Avondale Interests, Plaintiffs’ claims in this action arise from the
same transaction or occurrence, namely Mr. Gooding’s alleged asbestos exposure while working
for the American Bureau of Shipping in the 1970s. Consequently, all claims involve common
questions of fact and law, meaning that separate trials would likely frustrate judicial economy. In
addition, under the Louisiana law applicable to the survival claims raised in this case, damages are
allocated amongst defendants according to virile share principles.78 Severing claims against
certain defendants would therefore frustrate the parties’ ability to resolve this case as a whole and
76 Id.
77 Id. at 6.
78 See Cole v. Celotex Corp., 599 So. 2d 1058 (La. 1992).
14
may result in undue prejudice to both Plaintiffs and defendants, who would have to bear the
increased costs of litigating this case twice. Accordingly, the Court declines to sever the claims
against Lamorak from the claims against the remaining defendants in this litigation.
V. Conclusion
For the foregoing reasons,
IT IS HEREBY ORDERED that the “Motion to Enforce Stay and Notice of Liquidation
and Statutory Stay””’ filed by Defendant Lamorak Insurance Company is GRANTED.
IT IS FURTHER ORDERED that the “Motion to Sever Claims against Lamorak
Insurance Company”®? filed by Plaintiffs is DENIED.
IT IS FURTHER ORDERED that the above-captioned action is STAYED AND
ADMINISTRATIVELY CLOSED.
IT IS FURTHER ORDERED that a status conference is set for September 16, 2021 at
3:00 PM.
NEW ORLEANS, LOUISIANA, this 19thday of May, 2021.
NANNETTE JOLIVETTE BROWN |
CHIEF JUDGE
UNITED STATES DISTRICT COURT
Rec. Doc. 495.
8 Rec. Doc. 449.
15