Murcia et al v. Spirit Commercial Auto Risk Retention Group, Inc, et al, No. 2:2018cv04938 - Document 23 (E.D. La. 2019)
Court Description: ORDER AND REASONS GRANTING 18 Motion to Stay; 22 Motion to Withdraw as Attorney. This case is hereby STAYED for the duration of the receivershipproceedings. Attorneys Michael Joseph Gautier, Jr and Jeffrey Scott Loeb terminated. Signed by Judge Sarah S. Vance on 5/24/2019. (jeg)
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Murcia et al v. Spirit Commercial Auto Risk Retention Group, Inc, et al Doc. 23 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA WALTER ALEXANDER MURCIA, ET AL. VERSUS CIVIL ACTION NO. 18-4938 SPIRIT COMMERCIAL AUTO RISK RETENTION GROUP INC., ET AL. SECTION “R” (1) ORD ER AN D REASON S Before the Court are: (1) defendants’ m otion to stay and (2) defendants’ counsel’s ex parte m otion to withdraw as counsel.1 Because defendant Spirit Com m ercial Auto Risk Retention Group, Inc. (Spirit) has been put into a receivership in Nevada state court, the Court grants the m otions. I. BACKGROU N D This case arises from a car accident.2 Plaintiffs—Walter Alexander Murcia, Harley Curtis, and Walter Murcia on behalf of him self and his m inor child—allege that they were traveling on Interstate 12 on March 21, 20 18, when defendant Kent Orr allegedly rear-ended their car.3 Plaintiffs filed a 1 2 3 R. Doc. 18; R. Doc. 22. R. Doc. 1-1. Id. at 2 ¶ 3. Dockets.Justia.com petition for dam ages in Tangipahoa Parish on April 4, 20 18, claim ing negligence against Orr, his em ployer WJ Express, Inc., and his em ployer’s insurance com pany, Spirit.4 Defendants rem oved the case to this court on the basis of diversity jurisdiction on May 15, 20 18.5 On February 27, 20 19, defendants filed a notice of tem porary receivership and a m otion to stay the proceedings.6 Defendants explained that a Nevada state court had appointed a tem porary receiver for Spirit, an initial step in a rehabilitation or liquidation process for troubled insurance com panies, pursuant to state law.7 As is typical, the Nevada court tem porarily enjoined all claim s against Spirit seeking the com pany’s assets.8 The order appointing the tem porary receiver states, “all persons are im m ediately enjoined from the com m encem ent or prosecution of any actions by or on behalf of the Insurer, or against the Insurer, and the receivership court will have exclusive jurisdiction over any actions involving the Receiver or Insurer.”9 In light of the injunction, defendants sought a tem porary 60 - 4 5 6 7 8 9 Id. ¶¶ 5-6. R. Doc. 1. R. Doc. 18. R. Doc. 18-2 at 1-2. Id. at 2. R. Doc. 18-1 at 2. 2 day stay until the tem porary receivership proceedings progressed.10 Plaintiffs did not respond to the m otion. On May 15, 20 19, defendants’ counsel, the Loeb Law Firm , notified the Court that Spirit had been placed in a perm anent receivership and sought to withdraw as counsel due to unpaid fees.11 Like the Nevada court’s earlier order, the order appointing the perm anent receiver provides, “all claim s against the Property m ust be subm itted to the Receiver as specified herein to the exclusion of any other m ethod of subm itting or adjudicating such claim s in any forum , court, arbitration proceeding, or tribunal subject to the further Order of this Court.”12 The order also perm anently enjoins “persons or entities of any nature including . . . claim ants [and] plaintiffs” from “[c]om m encing, bringing, m aintaining, or further prosecuting any action at law, suit in equity, arbitration, or special proceeding against [Spirit] or its estate.”13 10 11 12 13 R. Doc. 18-2 at 2. R. Doc. 22. R. Doc. 22-1 at 7 ¶ 10 . Id. at 8 ¶ 13. 3 II. D ISCU SSION When a state court puts a troubled insurance com pany into receivership proceedings, that court has “the task of providing for an orderly liquidation of an insolvent com pany and the preservation of its rem aining assets.” Janak v. Allstate Ins. Co., 318 F. Supp. 215, 218 (W.D. Wis. 1970 ). To avoid interfering with these proceedings, in which m any claim ants m ay be seeking to recover funds from a lim ited pool of assets, the Fifth Circuit has held that, “federal policy . . . directs that the control over the insurance business rem ain in the hands of the states,” and “[a]n orderly liquidation requires that [federal courts] not interfere with the order” of the receivership court. Anshutz v. J. Ray McDerm ott Co., Inc., 642 F.2d 94, 95 (5th Cir. 1981). In these instances, a stay pending the conclusion of state receivership proceedings and dissolution of the state court injunction is “the proper course.” Id.; see also Indep. Petrochem ical Corp. v. Aetna Cas. and Sur. Co., 672 F. Supp. 1, 6 (D.D.C. 1986) (staying federal case for the duration of rehabilitation and liquidation proceedings); Integrity Ins. Co. v. Martin, 10 5 Nev. 16, 18 (Nev. 1989) (“Nevada has adopted the UILA . . . [which] authorizes the court in which a delinquency proceeding was instituted to enjoin all claim s against the insurer, including claim s existing prior to an order of liquidation.”). Thus, in order to ensure an orderly receivership 4 process and to avoid interference with the state court’s custody over Spirit’s assets, the Court orders this case stayed pending the conclusion of receivership proceedings and reversal of the injunction by the Nevada state court. This stay shall apply to all litigation in this case. Plaintiffs have not requested that the Court sever their claim s against Orr and WJ Express, Inc., and the Court finds that, in the interest of the judicial econom y, their claim s should not be severed given how closely connected the claim s are. See N ester v. Textron, Inc., 8 88 F.3d 151, 162 (5th Cir. 20 18) (whether to sever certain claim s in a m atter “is a m atter within the sole discretion of the trial court”). A finding of liability against Orr and WJ Express, In c. m ay affect the orderly distribution of assets in the state proceeding if WJ Express m akes a claim in that proceeding against Spirit as a policy-holder to cover that liability. Thus, the claim s against the other defendants are too closely related to a claim against Spirit’s assets for the Court to proceed on those claim s while the receivership proceedings are ongoing. See Blevins v. Sheshadri, No. 0 2-43, 20 0 3 WL 21145689, at *2 (W.D. Va. May 16, 20 0 3) (staying case against all defendants when insurer was in receivership proceedings “because of the close interrelation of the claim s that are the subject of this case”); Guar. Residential Lending, Inc. v. Hom estead Mortg. Co., No. 0 4-74842, 20 0 9 WL 5 5214877, at *3-*4 (E.D. Mich. Dec. 28, 20 0 9) (staying all litigation due to FDIC bank receivership because the claim s were “inextricably intertwined,” and a stay against all defendants was necessary “for the purposes of judicial econom y”). The Court therefore finds that the case m ust be stayed against all defendants pending the conclusion of receivership proceedings and reversal of the injunction by the Nevada state court. Finally, the Court also finds that the Loeb Law Firm has m et the requirem ents to withdraw under Local Rule 8 3.2.11. Accordingly, J . Scott Loeb, Esq., Michael J . Gautier, J r., and the Loeb Law Firm m ay withdraw as counsel for defendants. III. CON CLU SION In light of the perm anent injunction and order appointing a perm anent receiver of defendant Spirit Com m ercial Auto Risk Retention Group, Inc. in the Eighth J udicial District Court of Nevada, defendants’ m otion to stay and defendants’ counsel’s ex parte m otion to withdraw as counsel are GRANTED. This case is hereby STAYED for the duration of the receivership proceedings. 6 New Orleans, Louisiana, this _ _24th _ _ _ day of May, 20 19. _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 7
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