The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CALLEN DEMPSTER, ET AL. CIVIL ACTION
VERSUS CASE NO. 20-95
LAMORAK INSURANCE CO., ET AL. SECTION: “G” (1)
ORDER AND REASONS
In this litigation, Plaintiffs Tanna Faye Dempster, Steven Louis Dempster, Janet Dempster
Martinez, Marla Dempster Loupe, Callen Dempster Jr., Annette Dempster Glad, and Barnett
Dempster (collectively, “Plaintiffs”)1 allege that Callen L. Dempster (“Mr. Dempster”) was
exposed to asbestos and asbestos-containing products that were designed, manufactured, sold,
and/or supplied by a number of Defendant companies while Mr. Dempster was employed by
Defendant Huntington Ingalls Incorporated (f/k/a Northrop Grumman Shipbuilding, Inc., f/k/a
Northrop Grumman Ship Systems, Inc., f/k/a Avondale Industries, Inc., and f/k/a Avondale
Shipyards, Inc.) (“Avondale”).2 Pending before the Court is a “Motion to Enforce Stay and Notice
of Liquidation and Statutory Stay” filed by Defendant Lamorak Insurance Company
1 On August 6, 2020, Tanna Faye Dempster, Steven Louis Dempster, Janet Dempster Martinez, Marla
Dempster Loupe, Callen Louis Dempster, Jr., Annette Ruth Dempster Glad, and Barnett Lynn Dempster were
substituted as plaintiffs for Louise Ella Simon Dempster. Rec. Doc. 239.
2 See Rec. Doc. 1-2; Rec. Doc. 1-8. In particular, Plaintiffs bring claims against Lamorak Insurance
Company, Huntington Ingalls Inc., Albert Bossier, Jr., J. Melton Garrett, Eagle, Inc., Bayer Cropscience, Inc., Foster-
Wheeler LLC, General Electric Co., Hopeman Brothers, Inc., McCarty Corporation, Taylor-Seidenbach, Inc., CBS
Corporation, Uniroyal, Inc., International Paper Company, Houston General Insurance Company, Berkshire Hathaway
Specialty Insurance Company, Northwest Insurance Company, United Stated Fidelity and Guaranty Company, Fist
State Insurance Company, The American Insurance Company, Louisiana Insurance Guaranty Association, and the
Traveler’s Indemnity Company. Rec Doc. 1-8 at 2–3.
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(“Lamorak”).3 Considering the motion, the memoranda in support and opposition, the record, and
the applicable law, the Court stays and administratively closes the instant action and sets a status
conference for September 15, 2021.
I. Background
In this litigation, Plaintiffs allege that Mr. Dempster was employed by Avondale from 1962
to 1994.4 During that time, Plaintiffs aver that Mr. Dempster was exposed to asbestos and
asbestos-containing products in various locations and work sites, resulting in Mr. Dempster
breathing in asbestos fibers and later developing asbestos-related cancer.5 Plaintiffs assert strict
liability and negligence claims against various Defendants.6
Mr. Dempster filed a “Petition for Damages” in the Civil District Court for the Parish of
Orleans, State of Louisiana, on March 14, 2018.7 Defendants Huntington Ingalls Incorporated and
Albert Bossier, Jr. (the “Avondale Interests”), J. Melton Garret, and Lamorak Insurance Company
removed the case to the United States District Court for the Eastern District of Louisiana for the
first time on June 21, 2018.8 On January 7, 2019, this Court remanded the case to the Civil District
Court for the Parish of Orleans.9
Mr. Dempster passed away on November 24, 2018, and a First Supplemental and
3 Rec. Doc. 310.
4 Rec. Doc. 1-2 at 5.
5 Id.
6 Id. at 7–8.
7 Rec. Doc. 1-2.
8 Case No. 18-6158, Rec. Doc. 1 at 2.
9 Case No. 18-6158, Rec. Doc. 89.
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Amending Petition for Damages was filed in state court substituting Mr. Dempster’s heirs as
Plaintiffs on January 17, 2019.10 Trial was scheduled to begin before the state trial court on
January 13, 2020.11 However, on January 9, 2020, Avondale removed the case to the United States
District Court for the Eastern District of Louisiana for a second time.12 On January 28, 2020, the
Court denied the motion to remand, finding that this case was properly removed to this Court under
the federal officer removal statute.13
On May 5, 2021, Lamorak filed the instant “Motion to Enforce Stay and Notice of
Liquidation and Statutory Stay.”14 The Avondale Interests adopted the motion to stay.15 On May
25, 2021, Plaintiffs filed an opposition.16 On May 27, 2021, with leave of Court, Lamorak filed a
reply brief in further support of the motion to stay.17
II. Parties’ Arguments
A. Lamorak’s Arguments in Support of the Motion to Stay
In the instant motion, Lamorak requests a stay of the instant case and a continuance of the
October 25, 2021 trial date.18 Lamorak raises three arguments in favor of a stay. First, Lamorak
10 Rec. Doc. 1-8.
11 Rec. Doc. 1-12.
12 Rec. Doc. 1.
13 Rec. Doc. 17.
14 Rec. Doc. 310.
15 Rec. Doc. 314.
16 Rec. Doc. 317.
17 Rec. Doc. 320.
18 Rec. Doc. 310-2 at 7.
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asserts that it has been declared insolvent and placed into liquidation.19 Specifically, Lamorak
avers that Bedivere Insurance Company (“Bedivere”), a 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.20 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 hereby 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. § 221.38.21
Lamorak now urges the Court to enforce the permanent stay of claims against Lamorak instituted
by the Commonwealth Court of Pennsylvania.22
Second, Lamorak argues that under Louisiana Revised Statute § 22:2068 (“La. R.S.
22:2068”), claims against Lamorak and any party Lamorak is obligated to defend are subject to an
automatic statutory stay of claims.23 Lamorak contends that it is an “insolvent insurer” under the
terms of Louisiana Revised Statute § 22:2055(7), the Louisiana Insurance Guaranty Association
Law.24 Therefore, Lamorak asserts that the Louisiana Insurance Guaranty Association (“LIGA”)
“has all rights, duties and obligations of the insolvent insurer, herein Bedivere Insurance
Company/Lamorak, as if the insurer had not become insolvent, including the obligation to defend
19 Id. at 1.
20 Id.
21 Id. at 2.
22 Id.
23 Id.
24 Id. at 3.
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the insured(s).”25 Lamorak claims that as an insolvent insurer, La. R.S. 22:2068 mandates a stay
of claims against Lamorak and any party it is obliged to defend, including the Avondale Interests,
Eagle, Inc., and McCarty Corporation, for a period of six months or until September 11, 2021.26
Third, and finally, Lamorak argues that this Court “has inherent authority to stay
proceedings to control the disposition of the causes on its docket with economy of time and effort
for itself, for counsel, and for litigants.”27 Lamorak contends that a “stay of all proceedings is
justified under the court’s inherent authority.”28
The Avondale Interests adopted the arguments set forth in the motion to stay.29
B. Plaintiffs’ Arguments in Opposition to the Motion to Stay
Plaintiffs contend that a stay of this matter is not warranted given that deadlines for
discovery and the filing of dispositive motions has passed and therefore, “there is no risk of
discovery occurring without LIGA being able to participate.”30
Plaintiffs further claim that La. R.S. 22:2068 does not apply to this case because it is a state
procedural law.31 Even if the Louisiana statute is applied, however, Plaintiffs argue that it should
apply only to stay claims against Lamorak, not the entire matter.32 Plaintiffs contend that in the
25 Id.
26 Id. at 2–7.
27 Id. at 7 (internal quotation marks omitted).
28 Id.
29 Rec. Doc. 314.
30 Rec. Doc. 317 at 4.
31 Id.
32 Id. at 7.
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event a stay is issued until September 11, 2021, it should not affect the October 25, 2021 trial date
in this matter.33
C. Lamorak’s Arguments in Further Support of the Motion to Stay
In reply, Lamorak reasserts its argument that a stay of Plaintiffs’ claims against Lamorak
is “clearly necessary and authorized by law.”34 In addition to a stay, Lamorak argues that this
Court should continue the October 25, 2021 trial date in this matter.35 Lamorak claims that
because the proposed stay would expire a little more than a month prior to trial, it “is in the interests
of justice” to continue the trial to “protect the rights of the parties affected by the insolvency of
Lamorak.”36
Lamorak further argues that LIGA does not simply “step[] into the shoes” of Lamorak, but
instead has “additional limitations and defenses” that Lamorak did not have.37 Lamorak contends
that La. R.S. 22:2068 is “not merely a procedural stay” but instead “provides substantive rights to
insureds who are adversely affected by the insolvency of their insurer.”38 Lamorak claims that the
automatic stay under La. R.S. 22:2068 “prevents claims proceeding for a short period of time
against insureds who will be prejudiced by not having insurance to pay for the defense of the suit”
and also “provides the time necessary for LIGA to evaluate its obligations.”39
33 Id. at 2.
34 Rec. Doc. 320 at 1.
35 Id.
36 Id.
37 Id. at 2–3.
38 Id. at 3.
39 Id. at 4.
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III. 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.”40
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.”41 Therefore, a district court has
“discretionary power to stay proceedings before it in the control of its docket and in the interests
of justice.”42 Furthermore, a district court may exercise this discretionary power sua sponte.43
IV. Analysis
Lamorak moves the Court to stay all proceedings in the instant matter due to Lamorak
being declared insolvent and placed into liquidation by the Commonwealth Court of Pennsylvania
on March 11, 2021.44 Lamorak provides three bases to stay this matter, urging this Court to (1)
enforce the permanent stay of claims against it initiated by the Commonwealth Court of
Pennsylvania; (2) enforce the automatic statutory six-month stay of claims against it and any party
it is obligated to defend as set forth by La. R.S. 22:2068; and (3) use its inherent authority to stay
proceedings for judicial economy and allow LIGA time to determine its obligations in this
40 299 U.S. 248, 254 (1936).
41 Id. at 254–55.
42 McKnight v. Blanchard, 667 F.2d 477, 479 (5th Cir. 1982).
43 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.”).
44 Rec. Doc. 310-2 at 1–2.
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matter.45 Lamorak also seeks to continue the October 25, 2021 trial date.46 The Avondale Interests
represent that they are insureds of Lamorak and therefore adopt the arguments set forth by
Lamorak in the instant motion to stay.47
The Court will stay all proceedings against Lamorak pursuant to the liquation order of the
Commonwealth Court of Pennsylvania. As the Court recently noted in a similar case,48 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.”49 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.”50 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.”51
45 Id. 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.
46 Rec. Doc. 310-2 at 7.
47 Rec. Doc. 314.
48 Gooding v. Liberty Mutual Ins., et al., No. 20-1133, 2021 WL 2002463, at *1 (E.D. La. May 19, 2021)
(Brown, C.J.).
49 Clark v. Fitzgibbons, 105 F.3d 1049, 1051 (5th Cir. 1997) (citing the McCarran–Ferguson Act).
50 Id. (internal citation and quotation omitted)
51 Id. at 1053.
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Similarly, in Anshutz v. J. Ray McDermott Co., Inc., an insurer was placed under a “Final
Order of Liquidation” by the Circuit Court of Cook County, Illinois while an appeal against it was
pending in federal court.52 The Fifth Circuit stayed the appeal, holding that “[a]n orderly
liquidation requires that this Court not interfere with the order of the Circuit Court of Cook
County” and 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.”53 Thus, in light of
Fifth Circuit precedent admonishing courts to avoid interfering with state administrative processes
involving insolvent insurers, the Court will stay the claims pending against Lamorak.54
The Court will also exercise its inherent authority to stay this matter as to all other
defendants. There is no question that a district court has inherent power to “control the disposition
of the causes on its docket with economy of time and effort for itself, for counsel, and for
litigants,”55 and that this authority includes the district court’s wide discretion to grant a stay in a
pending matter.56 When “the interests of justice seem[] to require such action,” a court may
exercise its discretion to stay civil proceedings.57 In determining whether to grant a stay, courts
52 Anshutz v. J. Ray McDermott Co., 642 F.2d 94, 95 (5th Cir. 1981).
53 Id.
54 See also Olin Corp. v. Lamorak Ins. Co., No. 84-1968 (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.”).
55 Landis, 299 U.S. at 254.
56 In re Ramu Corp., 903 F.2d 312, 318 (5th Cir. 1990).
57 United States v. Kordel, 397 U.S. 1, 12 n.27 (1970); see also, Mayo v. Tri-Bell Indus., 787 F.2d 1007,
1012 (5th Cir. 1986).
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consider the following factors as set out in Landis v. North American Co.: “(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.”58 Applying the Landis
factors here, the Court finds a stay is warranted.
Under the first factor, as noted above, because Lamorak, the moving party, was declared
insolvent in liquidation proceedings, “a stay is required so as not to interfere with its orderly
liquidation.”59 Moreover, Lamorak is obliged to defend the Avondale Interests, Eagle, Inc., and
McCarty Corporation. Staying claims against Lamorak but proceeding against Lamorak’s insureds
would be highly prejudicial to such insured parties. Furthermore, “absent a stay, LIGA would not
have sufficient time to investigate the claims against Lamorak, now that LIGA stands in Lamorak’s
shoes as to those claims.”60 Given that the Court should “take into account the hardships these
litigants and LIGA would experience were litigation to proceed before LIGA had the opportunity
to prepare a defense” in weighing a stay,61 the Court finds that the first Landis factor favors a stay.
Under the second Landis factor, Plaintiffs do not make any arguments regarding the
prejudice they may face if the case is stayed. Regardless, even if there is a level of prejudice to
Plaintiffs, the third Landis factor again weighs in favor of granting a stay. Proceeding with this
case against parties other than Lamorak would frustrate judicial economy. Plaintiffs’ claims
58 Cortez v. Lamorak Ins. Co., No. 20-2389, 2021 WL 2018073, at *4 (E.D. La. May 20, 2021) (Vance, J.)
(quoting Maples v. Donzinger, No. 13-223, 2014 WL 688965, at *2 (E.D. La. Feb. 21, 2014)) (internal quotation
marks omitted).
59 Id.
60 Id.
61 Id.
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against the non-Lamorak parties in this action all arise from the same transaction or occurrence,
namely Mr. Dempster’s alleged asbestos exposure while working for Avondale from 1962 to 1994.
Consequently, all claims involve common questions of fact and law. A stay against only Lamorak
would result in litigation “proceed[ing] in a haphazard and inefficient manner.”62 Accordingly,
considering the three Landis factors, the Court finds that a stay against all parties is necessary.
Finally, Lamorak requests a continuance of the October 25, 2021 trial date in this matter.
In opposition, Plaintiffs correctly note that all discovery and motions deadlines have passed, and
the case is ready for trial. Therefore, it would be premature to continue the trial date in this matter
at this time. Accordingly, the Court will schedule a status conference for September 15, 2021 to
discuss the status of the case.
V. Conclusion
For the foregoing reasons,
IT IS HEREBY ORDERED that the “Motion to Enforce Stay and Notice of Liquidation
and Statutory Stay”63 filed by Defendant Lamorak Insurance Company is GRANTED.
IT IS FURTHER ORDERED that the above-captioned action is STAYED AND
ADMINISTRATIVELY CLOSED.
62 Id.
63 Rec. Doc. 310.
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IT IS FURTHER ORDERED that a status conference is set for September 15, 2021 at
3:00 PM.
NEW ORLEANS, LOUISIANA, this ‘13thay of July, 2021.
\ereette. slut
CHIEF JUDGE
UNITED STATES DISTRICT COURT
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