The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JJ&J ENTERPRISES, LLC CIVIL ACTION
VERSUS CASE NO. 22-1706
SOUTHERN FIDELITY INSURANCE CO. SECTION: “G”
ORDER
This litigation arises from an insurance coverage dispute related to Hurricane Ida. The
Court has received notice that Defendant Southern Fidelity Insurance Co. has been declared
insolvent and placed into liquidation.1 This Court has authority under Louisiana law to stay this
matter for six months sua sponte due to Defendant’s insolvency.2
The Fifth Circuit has recognized 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.”3 Accordingly, the Fifth Circuit has
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.”4 Such a statutory scheme exists in Louisiana. Under Louisiana law,
1 See Case No. 22-660, Rec. Doc. 12.
2 Id. at 1; La. Rev. Stat. § 22:2068(A).
3 Clark v. Fitzgibbons, 105 F.3d 1049, 1051 (5th Cir. 1997) (citing the McCarran–Ferguson Act).
4 Id. (internal citation and quotation omitted).
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proceedings in which the insolvent insurer 1s a party or is obligated to defend a party in any
court in this state shall be stayed for six months.”°
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 Defendant for a period of six months.°
IT IS HEREBY ORDERED that the above-captioned action is STAYED AND
ADMINISTRATIVELY CLOSED for a period of six months. The case shall be reopened upon
a motion of a party at the conclusion of the six-month period.
NEW ORLEANS, LOUISIANA, this Sth. day of October, 2022.
DV \errette. Yobuvette Brown
NANNETTEAOLIVETTE BROWN
CHIEF JUDGE
UNITED STATES DISTRICT COURT
5 La. Rev. Stat. § 22:2068(A).
® See Landis v. North American Co., 299 U.S. 248, 254 (1936).