The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SIGMUND SWENSON et al. CIVIL ACTION
VERSUS CASE NO. 22-1901
UNITED PROPERTY AND CASUALTY SECTION: “G”(1)
INSURANCE CO. et al.
ORDER
This litigation arises from an insurance coverage dispute related to Hurricane Ida. The
Court has received notice that Defendant Family Security Insurance Co., Inc. has been placed into
liquidation.1 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.”2 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.”3 Such a statutory scheme exists in Louisiana. Under Louisiana
law, “[a]ll 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.”4 Thus, this Court has authority under
1 See, e.g., No. 22-4243, Rec. Doc. 13.
2 Clark v. Fitzgibbons, 105 F.3d 1049, 1051 (5th Cir. 1997) (citing the McCarran–Ferguson Act).
3 Id. (internal citation and quotation omitted).
4 La. Rev. Stat. § 22:2068(A).
1
Louisiana law to stay this matter for six months sua sponte due to Defendant’s insolvency.
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 6th day of March, 2023.
NANNETTE JOLI TE BROWN
CHIEF JUDGE
UNITED STATES DISTRICT COURT
5 See Landis v. North American Co., 299 U.S. 248, 254 (1936).