# Schexnayder v. Avondale Industries, Inc.

> District Court, E.D. Louisiana · June 30, 2021

URL: https://www.frixlaw.com/law-library/cases/10186834

## Case

- **Court:** District Court, E.D. Louisiana
- **Decided:** June 30, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10186834

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

DENIS SCHEXNAYDER, JR. CIVIL ACTION

VERSUS NO: 20-775

HUNTINGTON INGALLS INC. ET AL. SECTION: “H”

ORDER
Before the Court is Defendants Albert Bossier, Jr. and Huntington
Ingalls Inc.’s Notice of and Motion to Enforce Statutory Stay (Doc. 201). For
the following reasons, the Motion is GRANTED.

BACKGROUND
In this action, Plaintiff Denis Schexnayder, Jr. brings claims against
multiple defendants arising out of his alleged asbestos exposure. On April 5,
2021, this Court received notice that one of the named defendants, Lamorak
Insurance Company (“Lamorak”), had been placed into liquidation by the
Pennsylvania Insurance Commissioner and that a Pennsylvania court had
issued a stay as to all claims against Lamorak.1 This Court thereafter issued
an Order staying all proceedings against Lamorak.2
Now before the Court is Defendants Albert Bossier, Jr. and Huntington
Ingalls Inc.’s (collectively “the Avondale Interests”) Notice of and Motion to

1 See Doc. 137-1. The Pennsylvania state court declared Bedivere Insurance Company
insolvent. See Doc. 201-3 at 1. As Lamorak was merged with and into Bedevire, the
Pennsylvania state court’s Order of Liquidation applied equally to Lamorak. See id. at 8.
2 Doc. 137.
Enforce Statutory Stay.3 In the Motion, the Avondale Interests assert that they
are insureds of Lamorak and that, in accordance with Louisiana law,
Lamorak’s insolvency dictates the staying of all proceedings in this matter—
not just those against Lamorak. Plaintiff opposes the Motion.

LAW AND ANALYSIS
In their Motion, the Avondale Interests argue that this matter should be
stayed in accordance with the Louisiana Insurance Guaranty Association Law
(“LIGAL”).4 The purpose of LIGAL, in relevant part, “is to provide for the
payment of covered claims under certain insurance policies with a minimum
delay and a minimum financial loss to claimants or policyholders due to the
insolvency of an insurer.”5 In conformity with this purpose, LIGAL creates the
Louisiana Insurance Guaranty Association (“LIGA”)—“a nonprofit,
unincorporated creation of state law, designed to reinsure the obligations of
insolvent insurers doing business in Louisiana.”6 “Under the provisions of
[LIGAL], when a claim is made against an insolvent insurer, LIGA steps into
the shoes of the insolvent insurer.”7 To allow LIGA “adequate opportunity to
review claims against the failed insurance company and enter a timely
defense,”8 Louisiana Revised Statute § 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

3 Since the filing of this Motion, Plaintiff has voluntarily dismissed his claims against Albert
Bossier, Jr. See Doc. 211.
4 LA. REV. STAT. § 22:051, et seq.
5 LA. REV. STAT. § 22:2052.
6 Sifers v. Gen. Marine Catering Co., 892 F.2d 386, 388 (5th Cir.), opinion modified on
reh’g, 897 F.2d 1288 (5th Cir. 1990).
7 Morris v. E. Baton Rouge Par. Sch. Bd., 826 So. 2d 46, 51 (La. App. 1 Cir. 2002).
8 Webb v. Blaylock, 590 So. 2d 643, 645 (La. App. 3 Cir. 1991), writ denied, 591 So. 2d 700
(La. 1992). See JAMES NORFLEET v. CBS CORPORATION., ET AL., No. CV 21-759, 2021
WL 2457141, at *2 (E.D. La. June 16, 2021).
the court from the date the insolvency is determined to permit
proper defense by the association of all pending causes of action.
Here, the Avondale Interests argue that, in accordance with Louisiana Revised
Statute § 22:2068(A), this matter should be stayed for at least six months from
the date of Lamorak’s insolvency, or until September 11, 2021, because an
insolvent insurer—Lamorak—is both a party in this action and obligated to
defend parties in this action—the Avondale Interests. In response, Plaintiff
argues that, because § 22:2068(A) is procedural and not substantive, this Court
is not bound to apply the statute in its application of the Erie doctrine.9
As a preliminary matter, the Court notes that many other sections of the
Eastern District of Louisiana have already analyzed the effect that Lamorak’s
insolvency should have upon their respective proceedings.10 Of these cases, this
Court finds the analyses in Gooding v. Liberty Mutual Insurance Company and
Cortez v. Lamorak Insurance Co. particularly noteworthy.11 In both Gooding
and Cortez, the court declined to directly address whether it was bound by
Louisiana Revised Statute § 22:2068(A) and instead looked to the purpose of
the statute while exercising its inherent discretion to stay all proceedings in
the case.12 Finding these cases instructive, this Court too now invokes its

9 See Erie R. Co. v. Tompkins, 304 U.S. 64 (1938). “Under the Erie doctrine, federal courts
sitting in diversity apply state substantive law and federal procedural law.” Gasperini v. Ctr.
for Humans., Inc., 518 U.S. 415, 427 (1996).
10 See Doc. 182, Broussard v. Huntington Ingalls, Inc. et al., No. 2:20-cv-00836-MVL-MBN
(E.D. La. 5/25/21) (Lemmon, J) (granting stay); Doc. 68, Waguespack v. Avondale Industries,
et al., No. 2:20-cv-01986-JCZ-DPC (Zainey, J) (granting stay); Gooding v. Liberty Mut. Ins.
Co., No. CV 20-1133, 2021 WL 2002463 (E.D. La. May 19, 2021) (Brown, J) (granting stay);
Cortez v. Lamorak Ins. Co., No. CV 20-2389, 2021 WL 2018073 (E.D. La. May 20, 2021)
(Vance, J) (granting stay).
11 See Gooding, 2021 WL 2002463 (Brown, J) (granting Lamorak’s Motion to Stay and denying
Plaintiff’s Motion to Sever Claims Against Lamorak); Cortez, 2021 WL 2018073, at *3–4
(Vance, J) (grating Lamorak’s Motion to Stay and invoking the court’s “inherent power to
stay a proceeding” to stay the matter as to all parties).
12 See id.
discretionary authority to stay cases and finds that a brief stay of all claims is
proper.
“[T]he 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.”13 However, a court’s
discretion to stay proceedings is “not ‘unbounded.’”14 Rather, the Supreme
Court in Landis v. North American Co. has instructed courts to “weigh
competing interests and maintain an even balance.”15 In accordance with
Landis, courts within the Eastern District of Louisiana have considered the
following factors: “(1) any hardship imposed on the moving party by proceeding
with the action, (2) any prejudice to the non-moving party if the stay is granted,
and (3) the interests of judicial economy.”16
Here, the Court finds that the balance of factors weigh in favor of
granting the requested six-month stay. First, in considering the hardship to
the moving parties, the Court notes that Lamorak was providing defense to the
Avondale Interests and other defendants in this matter.17 As the pretrial
conference and trial in this matter are currently set for August 12, 2021 and
September 13, 2021, respectively, the Court finds that declining the requested
stay would prejudice LIGA and the Lamorak-insured parties in their ability to

13 Landis v. N. Am. Co., 299 U.S. 248, 254 (1936).
14 In re Beebe, 56 F.3d 1384 (5th Cir. 1995) (quoting Wedgeworth v. Fibreboard Corp., 706
F.2d 541, 545 (5th Cir. 1983)).
15 Id. at 254–55.
16 See Cortez v. Lamorak Ins. Co., No. CV 20-2389, 2021 WL 2018073, at *1 (E.D. La. May
20, 2021) (citing Maples v. Donzinger, No. 13-223, 2014 WL 688965, at *2 (E.D. La. Feb. 21,
2014); Strong ex rel. Tidewater, Inc. v. Taylor, No. 11-392, 2013 WL 81889, at *2 (E.D. La.
Mar. 5, 2013); Collins v. Angiodynamics, Inc., No. 13-5431, 2013 WL 5781708, at *2 (E.D. La.
Oct. 15, 2013)).
17 These “other defendants” are the McCarty Corporation (“McCarty”) and Eagle, Inc.
(“Eagle”). McCarty and Eagle have filed a separate Motion to Enforce Stay in this matter on
the same grounds. The McCarty and Eagle Motion, however, is not yet under submission. See
Doc. 210.
adequately and timely prepare their defenses. As to the second factor, Plaintiff
argues that he would be prejudiced in “how long he will have to await justice.”18
Although Plaintiff’s concern is legitimate, the Court does not find the proposed
stay unduly burdensome—particularly in light of the number of parties in this
matter impacted by Lamork’s insolvency. As to the third factor, the Court finds
that staying the matter as to some, but not all, of the defendants would result
in duplicative work for both the parties and the Court.19 Accordingly, it is in
the interest of judicial efficiency to stay all proceedings in this case.
In sum, this Court finds that the Avondale Interests have sufficiently
demonstrated the need for a brief stay in this matter. Moreover, the Court finds
that such a stay is in line with Fifth Circuit precedent cautioning courts from
interfering in state law regulatory schemes governing insurance companies
and related insolvencies.20

CONCLUSION
For the foregoing reasons, Defendants’ Motion is GRANTED.
IT IS FURTHER ORDERED that this matter is hereby STAYED
AND ADMINISTRATIVELY CLOSED until September 12, 2021.
IT IS FURTHER ORDERED that a telephone status conference is
SET for September 16, 2021 at 1:00 p.m.

18 Doc. 20-775.
19 See Gooding, 2021 WL 2002463, at *6 (declining to sever claims against Lamorak as doing
so would run the risk of inconsistent jury verdicts and increased cost).
20 See Clark v. Fitzgibbons, 105 F.3d 1049, 1052 (5th Cir. 1997) (“Federal law consigns to the
states the primary responsibility for regulating the insurance industry.”); Anshutz v. J. Ray
McDermott Co., 642 F.2d 94, 95 (5th Cir. 1981) (“Recognition 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.”).
New Orleans, Louisiana this 30th day of June, 2021.

TRICHE 44
UNITED STATES DISTRICT JUDGE

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10186834. Public record. Not legal advice.