United States District Court, E.D. Louisiana
DONNIE LANDRY, ET AL.
COVINGTON SPECIALTY INSURANCE COMPANY, ET AL.
ORDER AND REASONS
Covington Specialty Insurance Company and RSUI Group, and
defendant Houston Specialty Insurance Company filed the
instant two motions for summary judgment. Rec. Docs. 39, 40.
Plaintiffs timely filed a response in opposition to both
motions as well as a motion for voluntary dismissal. Rec.
Docs. 44, 50. Defendants filed reply memoranda. Rec. Docs.
52, 54, 59. For the reasons discussed below, IT IS
ORDERED that the motions for summary judgment are
GRANTED, dismissing claims against moving
defendants with prejudice.
IS FURTHER ORDERED that plaintiffs' motion to
dismiss without prejudice is DISMISSED as
BACKGROUND AND PROCEDURAL HISTORY
case arises out of a contract executed between JoAnna Landry
and Robert Dinger, as representative of R&N Pool Service,
Inc d/b/a Dinger pools, for the construction of a custom
swimming pool, hot tub, deck, and outdoor patio at
plaintiffs' home in Houma, Louisiana. Rec. Doc. 1-2 at 3.
Plaintiffs claim that Mr.
and R&N Pool Services performed the work specified under
the contract in an improper, negligent, and unworkmanlike
manner and seek compensation for physical damage to their
property and past and future mental and emotional suffering.
Id. at 6. Plaintiffs filed suit in Louisiana state
court in January 2018 directly against defendant insurance
companies, “[d]ue to the insured's bankruptcy
discharge.” Rec. Doc. 1-2 at 2 (citing La. Rev. Stat.
insurance companies Covington Specialty Insurance Group
(“Covington”), Houston Specialty Insurance Group
(“HSIC”), and RSUI Group Inc.
(“RSUI”) removed the case to federal court on the
basis of diversity jurisdiction in March 2018, stating that
no defendant is a citizen of Louisiana. Rec. Doc. 1.
Plaintiffs moved to remand, arguing that the defendants
assume their insured's Louisiana citizenship under
Louisiana's Direct Action Statute (“DAS”),
and therefore diversity of citizenship did not exist. Rec.
Doc. 9. Defendants argued that they do not assume Mr. Dinger
and R&N's Louisiana citizenship because
plaintiffs' claims sound in contract and not in tort,
meaning that Louisiana's Direct Action Statute
(“DAS”) does not apply. Rec. Docs. 11, 15. This
Court agreed with defendants and denied plaintiffs'
motion to remand, finding that defendants did not take on the
Louisiana citizenship of the insured because
“[p]laintiffs' claims sound only in contract and
Louisiana's direct action statute is inapplicable.”
Rec. Doc. 35 at 5.
sought to file an amended complaint adding three non-diverse
defendants to the lawsuit: R&N Pool Service, Inc, R&N
Dinger, Inc, and Vincent Watson, Sr. Rec. Doc. 19. Plaintiff
asserted that they had mistakenly believed that Mr.
Dinger's two businesses, R&N Pool Service, Inc. and
R&N Dinger, Inc., had been discharged in bankruptcy as
well as Mr. Dinger personally. Id. at 2. The
Magistrate Judge denied plaintiffs' motion, finding that
failing to identify a party was not a mistake of law,
plaintiff was dilatory in seeking to amend, and plaintiffs
would not be prejudiced by denial because claims against the
non-diverse parties filed in state court may be prescribed.
Rec. Doc. 36 at 6.
filed the instant motions for summary judgment, arguing that
plaintiffs have no viable claims remaining because this Court
previous ruled that their claims sound solely in contract,
which is not a basis for proceeding against an insurer
pursuant to the Louisiana Direct Action Statute, and there is
a lack of privity between plaintiff and
defendants. Rec. Docs. 39, 40. Plaintiffs timely filed
a response in opposition requesting that the Court abstain
from exercising its jurisdiction because of a parallel state
court proceeding against both the insured and the
defendant-insurers and arguing in the alternative that
defendants' motion for summary judgment should be denied.
Rec. Doc. 44. Plaintiffs additionally state that they have
filed a motion for voluntary dismissal without prejudice in
conjunction with their opposition to the instant motions due
to their pending lawsuit in Louisiana state court. Rec. Doc.
50. In their replies, defendants argue that the requirements
for abstention have not been met and that plaintiffs'
motion for voluntary dismissal is not appropriate at this
late stage of the proceedings. Rec. Docs. 52, 54.
argue that plaintiffs have no viable claims because their
claims sound solely in contract, which is not a basis for
proceeding against an insurer pursuant to the Louisiana
Direct Action Statue. Rec. Doc. 39-1 at 1. Defendants further
argue that because there is no privity between plaintiffs and
defendants, plaintiffs have no claim for breach of contract.
Rec. Doc. 40-1 at 4. Defendants assert that this Court
previously recognized that the plaintiffs' petition
affirmatively establishes that the underlying cause of action
for their claim against defendants is premised on the
insured's breach of contract. Rec. Doc. 39-1 at 5.
However, plaintiffs' cause of action against defendants
is under Louisiana's Direct Action Statute
(“DAS”), which grants a procedural right of
action against an insurer where the plaintiff has a
substantive cause of action against the insured. Id.
Defendants state that the DAS does not authorize direct
action against insurers based solely on a breach of contract,
but rather gives a special right of action specifically to
injured tort victims. Id. at 5-6. Given this
Court's previous finding that plaintiffs' claims
sound solely in contract, and the lack of privity between
plaintiffs and defendants, defendants argue that plaintiffs
have no viable claim against them. Rec. Doc. 40-1 at 6.
Plaintiffs advise the Court that they have filed a new state
court lawsuit against both the insured and the defendant
insurance companies, based on their recent discovery of the
insured's regained solvency and resumption of business
activity. Rec. Doc. 44 at 1. Plaintiffs therefore request
that the Court abstain from exercising its jurisdiction in
this matter due to the parallel pending state court
proceeding under the Supreme Court's doctrine of
Colorado River Abstention. Id. Alternatively,
plaintiffs assert that they have filed a motion for voluntary
dismissal without prejudice pursuant to Fed.R.Civ.P.
41(a)(2), which they request this Court grant along with a
denial of the instant motions. Id. at 2. Finally,
defendants argue that the instant motions for summary
judgment should be denied because they are premature due to
outstanding discovery requests, and because plaintiffs have
viable claims under the direct-action statute which have not
yet been prescribed. Id.
argue that abstention is not warranted because this case is
not parallel to the newly filed state court case and no
exceptional circumstances are present. Rec. Doc. 54 at 2-3.
Defendants assert that there is not an identity of parties as
the state court case names the insured as a defendant while
the present case does not. Id. at 2. Defendants note
that the supposedly duplicative litigation is of
plaintiffs' own making because plaintiffs mistakenly
assumed the R&N entities were insolvent and therefore
failed to include them as defendants in their original
complaint in this case as required under the DAS. Rec. Doc.
52 at 6. Additionally, the only issue before the Court in the
present case is whether plaintiffs have a viable contract
claim against defendants, whereas the state court proceedings
are also premised on tortious and negligent conduct of the
insured. Id. at 3. Therefore, defendants assert that
the state court proceeding is not a parallel action to this
federal proceeding and Colorado River abstention is
not appropriate. Id. Furthermore, defendants argue
that the factors relevant to determining whether the
‘exceptional circumstances' exist weigh in favor of
denying abstention. Id. at 3-4. Defendants also
argue that the instant motions are not premature as
outstanding discovery requests are not pertinent and would
not alter the result. Rec. Doc. 54 at 5. Finally, defendants
assert that voluntary dismissal pursuant to Fed.R.Civ.P.
41(a)(2) is not warranted at this stage, given that this case
was filed nearly a year ago and substantial motion practice
has occurred. Rec. Doc. 52 at 9. Defendants argue that a
ruling on the instant summary judgment motions is
judgment is appropriate when “the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of
law.” Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986) (quoting Fed.R.Civ.P. 56(c)). A genuine issue of
material fact exists if the evidence would allow a reasonable
jury to return a verdict for the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). When the movant bears the burden of proof, it must
“demonstrate the absence of a genuine issue of material
fact” using competent summary judgment evidence.
Celotex, 477 U.S. at 323. But “where the
non-movant bears the burden of proof at trial, the movant may
merely point to an absence of evidence.” Lindsey v.
Sears Roebuck & Co., 16 F.3d 616, 618 (5th Cir.
1994). When the movant meets its burden, the burden shifts to
the non-movant, who must show by “competent summary
judgment evidence” that there is a genuine issue of
material fact. See Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986). All
reasonable inferences must be drawn in favor of the
nonmovant, but “a party cannot defeat summary judgment
with conclusory allegations, unsubstantiated assertions, or
only a scintilla of evidence.” See Sec. & Exch.
Comm'n v. Arcturus Corp., 912 F.3d 786, 792 (5th
have no viable claims against defendants because their claims
sound solely in contract and there is a lack of privity
between plaintiffs and defendants. This Court previously
found that “[p]laintiffs' claims sound only in
contract and Louisiana's direct action statute is
inapplicable. Rec. Doc. 35 at 5. We held that the negligent
acts and omissions alleged in plaintiffs' complaint
“all relate to Dinger's construction of the pool,
which was governed by the contract between [p]laintiffs and
Dinger.” Id. Although we recognized that
“the violation of a contract can potentially give rise
to claims in contract and in tort, ” we
ultimately held that “the alleged duties that were
breached are both explicitly and implicitly set forth in the
contract between the parties and there are no general tort
duties alleged which do not arise as a result of the
existence of the contract.” Id. at 6.
(internal quotations omitted). The Court sees no basis for
revising this holding, and plaintiffs have offered no
arguments other than to assert that the defendant insurance
companies “are liable for damages resulting from the
specified tortious and negligent conduct of the
insured.” Rec. Doc. 44 at 10. As the Court previously
held, plaintiffs' claims all arise because of their
contract with Mr. Dinger and therefore do not sound in tort.
Rec. Doc. 35 at 5. Therefore, the Court maintains its prior
holding that the Direct Action Statute, which only applies
tort victims, is inapplicable to plaintiffs' claims.
See Rec. Doc. 35 at 5; Holland Am. Ins. Co. v.
Succession of Roy,777 F.2d 992, 994-995 (5th Cir.1985)
(holding that “the Louisiana Direct Action Statute
applies only to torts and not to contract disputes”)
(internal citation omitted). Since plaintiffs cannot proceed
against defendants under the Direct Action Statute on their
contractual claims, plaintiffs have no viable basis for their
claims against defendants. There is no genuine dispute as to
the fact that a contract did not exist between plaintiffs and
defendants. Neither party alleges that such a contract
existed. The contract that formed the basis for the
underlying dispute in this case was between plaintiffs and