United States District Court, E.D. Louisiana
WALTER ALEXANDER MURCIA, ET AL.
SPIRIT COMMERCIAL AUTO RISK RETENTION GROUP INC., ET AL.
ORDER AND REASONS
S. VANCE, UNITED STATES DISTRICT JUDGE.
the Court are: (1) defendants' motion to stay and (2)
defendants' counsel's ex parte motion to
withdraw as counsel. Because defendant Spirit Commercial Auto
Risk Retention Group, Inc. (Spirit) has been put into a
receivership in Nevada state court, the Court grants the
case arises from a car accident. Plaintiffs-Walter Alexander
Murcia, Harley Curtis, and Walter Murcia on behalf of himself
and his minor child-allege that they were traveling on
Interstate 12 on March 21, 2018, when defendant Kent Orr
allegedly rear-ended their car. Plaintiffs filed a petition for
damages in Tangipahoa Parish on April 4, 2018, claiming
negligence against Orr, his employer WJ Express, Inc., and
his employer's insurance company, Spirit. Defendants
removed the case to this court on the basis of diversity
jurisdiction on May 15, 2018.
February 27, 2019, defendants filed a notice of temporary
receivership and a motion to stay the
proceedings. Defendants explained that a Nevada state
court had appointed a temporary receiver for Spirit, an
initial step in a rehabilitation or liquidation process for
troubled insurance companies, pursuant to state
As is typical, the Nevada court temporarily enjoined all
claims against Spirit seeking the company's
assets.The order appointing the temporary receiver
states, “all persons are immediately enjoined from the
commencement 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.” In light of the
injunction, defendants sought a temporary 60- day stay until
the temporary receivership proceedings
progressed. Plaintiffs did not respond to the
15, 2019, defendants' counsel, the Loeb Law Firm,
notified the Court that Spirit had been placed in a permanent
receivership and sought to withdraw as counsel due to unpaid
fees. Like the Nevada court's earlier
order, the order appointing the permanent receiver provides,
“all claims against the Property must be submitted to
the Receiver as specified herein to the exclusion of any
other method of submitting or adjudicating such claims in any
forum, court, arbitration proceeding, or tribunal subject to
the further Order of this Court.” The order
also permanently enjoins “persons or entities of any
nature including . . . claimants [and] plaintiffs” from
“[c]ommencing, bringing, maintaining, or further
prosecuting any action at law, suit in equity, arbitration,
or special proceeding against [Spirit] or its
state court puts a troubled insurance company into
receivership proceedings, that court has “the task of
providing for an orderly liquidation of an insolvent company
and the preservation of its remaining assets.”
Janak v. Allstate Ins. Co., 318 F.Supp. 215, 218
(W.D. Wis. 1970). To avoid interfering with these
proceedings, in which many claimants may be seeking to
recover funds from a limited pool of assets, the Fifth
Circuit has held that, “federal policy . . . directs
that the control over the insurance business remain 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 McDermott 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. Petrochemical 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, 105 Nev. 16, 18 (Nev. 1989) (“Nevada has
adopted the UILA . . . [which] authorizes the court in which
a delinquency proceeding was instituted to enjoin all claims
against the insurer, including claims existing prior to an
order of liquidation.”). Thus, in order to ensure an
orderly receivership 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.
stay shall apply to all litigation in this case. Plaintiffs
have not requested that the Court sever their claims against
Orr and WJ Express, Inc., and the Court finds that, in the
interest of the judicial economy, their claims should not be
severed given how closely connected the claims are. See
Nester v. Textron, Inc., 888 F.3d 151, 162 (5th Cir.
2018) (whether to sever certain claims in a matter “is
a matter within the sole discretion of the trial
court”). A finding of liability against Orr and WJ
Express, Inc. may affect the orderly distribution of assets
in the state proceeding if WJ Express makes a claim in that
proceeding against Spirit as a policy-holder to cover that
liability. Thus, the claims against the other defendants are
too closely related to a claim against Spirit's assets
for the Court to proceed on those claims while the
receivership proceedings are ongoing. See Blevins v.
Sheshadri, No. 02-43, 2003 WL 21145689, at *2 (W.D. Va.
May 16, 2003) (staying case against all defendants when
insurer was in receivership proceedings “because of the
close interrelation of the claims that are the subject of
this case”); Guar. Residential Lending, Inc. v.
Homestead Mortg. Co., No. 04-74842, 2009 WL 5214877, at
*3-*4 (E.D. Mich. Dec. 28, 2009) (staying all litigation due
to FDIC bank receivership because the claims were
“inextricably intertwined, ” and a stay against
all defendants was necessary “for the purposes of
judicial economy”). The Court therefore finds that the
case must be stayed against all defendants pending the
conclusion of receivership proceedings and reversal of the
injunction by the Nevada state court.
the Court also finds that the Loeb Law Firm has met the
requirements to withdraw under Local Rule 83.2.11.
Accordingly, J. Scott Loeb, Esq., Michael J. Gautier, Jr.,
and the Loeb Law Firm may withdraw as counsel for defendants.
light of the permanent injunction and order appointing a
permanent receiver of defendant Spirit Commercial Auto Risk
Retention Group, Inc. in the Eighth Judicial District Court
of Nevada, defendants' motion to stay and defendants'
counsel's ex parte motion to withdraw as counsel