Brady v. Occidental Fire & Casualty Company of North Carolina

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

ROBERT BRADY * CIVIL ACTION

VERSUS * NO. 23-7005

IAT INSURANCE GROUP, ET AL. * SECTION “J” (2)

ORDER AND REASONS

Pending before me is Defendant Occidental Fire & Casualty Company of North Carolina’s

Motion to Opt Out of Streamlined Settlement Program. ECF No. 35. Although the deadline for

filing an Opposition Memorandum expired on Tuesday, December 31, 2024 under Local Rule 7.5,

Plaintiff did not file an Opposition Memorandum until Friday, January 3, 2025. ECF No. 40.

Defendant filed a Reply Memorandum. ECF No. 41.

Having considered the record, the submissions and arguments of counsel, and the

applicable law, Defendants’ Motion to Opt Out (ECF No. 35) is DENIED for the reasons stated

herein.

I. BACKGROUND

Plaintiff Robert Brady filed suit in state court on August 28, 2023, seeking to recover for

losses incurred as a result of Hurricane Ida and alleging coverage under an insurance policy

allegedly issued by Defendant IAT Insurance Group. ECF No. 1-1 ¶ 5. After removal, on March

13, 2024, Plaintiff filed an Amended Complaint naming Occidental Fire & Casualty Company of

North Carolina and alleging that it was his insurer. ECF No. 15 ¶ 5.

On August 23, 2024, Judge Barbier denied Defendant Occidental’s motion to dismiss under

Federal Rules of Civil Procedure 4(m), 12(b)(5) and 12(b)(6) as premature based on the Court’s

Hurricane Ida Case Management Order’s automatic stay pending the parties’ participation in the

Streamlined Settlement Program (“SSP”) because no party timely sought to opt-out of same. ECF

No. 25; see also ECF No. 18. Judge Barbier denied Occidental’s Motion for Certificate of

Appealability on October 2, 2024. ECF Nos. 26, 29.

Plaintiff requested issuance of Summons to Occidental, and within 15 days of service,

Occidental filed this Motion to Opt-Out. ECF Nos. 30, 34, 35. Occidental argues that it has good

cause to opt-out of the SSP to pursue its dispositive motion. ECF No. 35-1 at 5-6. It argues that

Plaintiff failed to timely serve it, and Plaintiff’s claims are prescribed and do not relate back to his

original suit against IAT. Id. at 6. Thus, it seeks leave to opt out of the SSP to pursue its dispositive

motion. ECF No. 35.

In his late Opposition, Plaintiff argues that, because counsel represents both IAT and

Occidental and no party filed a responsive pleading within 60 days of IAT’s removal, as required

by section 3 of the CMO, this Motion to Opt-Out is untimely. ECF No. 40 at 1-2. Plaintiff further

argues that Occidental has otherwise failed to comply with the CMO. Id. at 2-3.

In Reply, Occidental argues that Plaintiff’s Opposition Memorandum is untimely and that

it timely sought to opt-out within CMO’s 60 day response period. ECF No. 41 at 1-3.

II. APPLICABLE LAW & ANALYSIS

Initially, Plaintiff failed to file a timely Opposition. Although the Court has authority to

grant a motion as unopposed, it is not required to do so.1

On August 26, 2022, this Court adopted CMO No. 1 to govern Hurricane Ida claims. CMO

No. 1 includes provisions for certain mandatory initial disclosures as well as a SSP that requires

parties to engage in informal settlement conferences as well as court-ordered mediation. See

Sections 1, 3. Although parties may generally not opt out of the mandatory initial disclosures set

1 Edward H. Bohlin Co. v. Banning Co., 6 F.3d 350, 356 (5th Cir. 1993). Particularly with regard to dispositive

motions, the Fifth Circuit has made clear that the failure to oppose a motion alone is insufficient to support the granting

of same. See, e.g., Johnson v. Pettiford, 442 F.3d 917, 919 (5th Cir. 2006); Braly v. Trail, 254 F.3d 1082 (5th Cir.

2001); John v. State of La. (Bd. of Trs. for State Colls. & Univs.), 757 F.2d 698, 709 (5th Cir. 1985).

forth in Section 1, within 15 days of the responsive pleading or entry of the CMO, a party may

seek to opt-out of the SSP in Section 3 upon a showing of good cause. See Section 3.

Requiring the parties to proceed with the SSP when the plaintiff is alleged to have no viable

claim has been found to be contrary to the goals of the CMO.2 Thus, while the CMO does not

define the term “good cause,” courts have found good cause to opt-out of the SSP when an

insurance policy contains a mandatory arbitration provision enforceable under the Convention of

the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”), 9 U.S.C. §§

201-09,3 or when there is a threshold issue of whether the plaintiffs are covered insureds under a

policy.4 Thus, when a case involves a preliminary, determinative legal issue such as coverage,

allowing the parties to opt-out to obtain a decision on that issue makes sense. When, however, the

potentially determinative motion practice involves disputed factual or legal issues such as that

inherent in the Rule 15(c) analysis, that is the type of costly and time-consuming motion practice

that the CMO was designed to avoid. The parties may factor the risks associated with whether the

claim relates back into their settlement positions during the SSP process.

2 Okpalobi v. Am. Nat’l Prop. & Cas. Co., No. 23-6691, 2024 WL 838464, at *9 (E.D. La. Feb. 28, 2024) (Brown,

C.J.).

3 See Dupuy Storage & Forwarding, LLC v. Certain Underwriters at Lloyd’s, Civ. No. 22-4546 (E.D. La. Dec. 16,

2022), ECF No. 13 at 5 (citing McDonnel Grp., L.L.C. v. Great Lakes Ins. SE, UK Branch, 923 F.3d 427, 430–31 (5th

Cir. 2019) (citing LA. REV. STAT. § 22:868(A)(2); Doucet v. Dental Health Plans Mgmt. Corp., 412 So. 2d 1383,

1384 (La. 1982) (holding that classification of a contract as an insurance contract renders the arbitration provisions

unenforceable under § 22:868))); City of Kenner v. Certain Underwriters at Lloyd's London, No. 22-2167, 2022 WL

16961130, at *2 (E.D. La. Nov. 16, 2022) (Vance, J.) (citation omitted). In S.K.A.V., L.L.C. v. Indep. Specialty Ins.

Co., 103 F.4th 1121 (5th Cir. 2024), the Fifth Circuit made an Erie guess that LA. REV. STAT. § 22:868 voids arbitration

provisions in contracts for surplus lines insurance. While this decision would impact the continued viability of

arbitration motions, it does not impact this Court’s “good cause” analysis.

4 Jupiter v. Tower Hill Prime Ins. Co., No. 23-4862, 2024 WL 1092921, at *1 (E.D. La. Mar. 13, 2024) (citing

Okpalobi, 2024 WL 838464, at *9) (finding good cause where motion to dismiss raised threshold coverage issue).

Il. CONCLUSION

Accordingly, for the foregoing reasons,

IT IS ORDERED that Defendant’s Motion to Opt-Out of the Streamlined Settlement

Program (ECF No. 35) is DENIED.

New Orleans, Louisiana, this 8th day of January, 2025.

rus PHILL CURRAULT

UNITED STATES MAGISTRATE JUDGE