The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
PHILLIP PITRE CIVIL ACTION
VERSUS CASE NO. 22-2508
FAMILY SECURITY INSURANCE CO. SECTION: “G”
ORDER
On March 2, 2023, Defendant Family Security Insurance Co. (“Defendant”) filed a “Notice
of Filing Consent Order of Liquidation, Notice of Automatic and Permanent Stay.”1 In the notice,
Defendant informs the Court that Defendant merged with United Property and Casualty Insurance
Co. (“UPC”) and that UPC is the surviving entity.2 Defendant also notifies the Court that, after
the merger, UPC was declared insolvent and placed into liquidation.3
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.”4 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
1 Rec. Doc. 14.
2 Id. at 1 n.1.
3 Id. at 1.
4 Clark v. Fitzgibbons, 105 F.3d 1049, 1051 (5th Cir. 1997) (citing the McCarran–Ferguson Act).
1
insurance company’s] assets.”° Such a statutory scheme exists in Louisiana. Under Louisiana law,
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.’ Accordingly,
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 JOLIVETTE BROWN
CHIEF JUDGE
UNITED STATES DISTRICT COURT
5 Id. (internal citation and quotation omitted).
6 La. Rev. Stat. § 22:2068(A).
T See Landis v. North American Co., 299 U.S. 248, 254 (1936).