Liberty Mutual Insurance Company v. Integrated Pro Services, LLC et al
Filing
153
ORDER AND REASONS denying 144 Motion to Lift Stay. Any party may move to reopen the matter within thirty (30) days of a final judgment in the related state court litigation or if additional unforeseen state court trial delay occurs. Signed by Judge Lance M Africk on 4/23/19. (sbs)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
LIBERTY MUTUAL INSURANCE CO.
CIVIL ACTION
VERSUS
No. 14-1418
INTEGRATED PRO SERVICES, LLC ET AL.
SECTION I
ORDER AND REASONS
Before the Court is plaintiff Liberty Mutual Insurance Company’s (“Liberty
Mutual”) motion1 to lift the stay in the above-captioned matter.
Defendants
Integrated Pro Services, LLC (“IPS”) and Gary and Karla Hess (“Mr. and Mrs. Hess”)
(together, “defendants”) oppose the motion. 2 For the following reasons, the motion is
denied.
I.
IPS is a construction contractor that obtained performance surety bonds from
Liberty Mutual so that IPS could submit bids for construction projects. 3 IPS entered
into a General Agreement of Indemnity (the “indemnity agreement”) with Liberty
Mutual, agreeing to reimburse Liberty Mutual for any payments, losses, or expenses
it incurred in connection with such bonds. 4 Mr. and Mrs. Hess held an interest in
IPS, and they signed the indemnity agreement as co-indemnitors. 5 Shortly after
R. Doc. No. 144.
R. Doc. Nos. 146, 147.
3 R. Doc. No. 79, at 1.
4 Id.
5 Id. at 2.
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signing the indemnity agreement, however, Mr. and Mrs. Hess sold their entire
interest in IPS. 6
IPS entered into a contract with Plaquemines Parish to construct a levee, and
Liberty Mutual issued payment and performance surety bonds in connection with the
project. 7 Plaquemines Parish later placed IPS in default under the contract, and IPS
was terminated from the project. 8 IPS contends that it was not in default and that
Plaquemines Parish wrongfully terminated the contract. 9 That dispute is being
litigated in state court. 10
Thereafter, Liberty Mutual entered into a takeover agreement with
Plaquemines Parish, agreeing to complete the construction project. 11 Liberty Mutual
filed the above-captioned lawsuit, asserting that it is entitled to indemnity from
defendants in connection with payment and performance of the surety bonds and
arranging work for completion of the project. 12
On April 14, 2015, Liberty Mutual filed motions for summary judgment against
defendants, requesting that the Court enter judgment in the amount of
$1,554,836.07, as well as an additional $1.5 million in collateral security. 13 IPS
opposed the motion, arguing that Liberty Mutual did not demonstrate that it was
Id.
Id.
8 Id.
9 Id.
10 Id.
11 Id.
12 Id. at 2–3.
13 R. Doc. Nos. 50, 51.
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entitled to indemnity for amounts that, IPS contended, Liberty Mutual was not
required to pay. 14 IPS asserted that it should not have been placed in default, that
the contract with Plaquemines Parish was wrongfully terminated, that Liberty
Mutual did not act in good faith when it entered into the takeover agreement, and,
therefore, that Liberty Mutual was not required to pay anything on the claims against
the surety bonds. 15 Liberty Mutual argued that issues related to the surety bonds
were irrelevant to the indemnity issue, 16 but the Court disagreed.
The Court ultimately found that genuine issues of material fact existed and
that those issues would likely be examined and resolved in the state court matter. 17
The Court also found that genuine issues of material fact existed as to the extent of
Liberty Mutual’s losses. 18 Accordingly, the Court denied Liberty Mutual’s motion for
summary judgment against IPS. 19
The Court also denied summary judgment as to Liberty Mutual’s claims
against Mr. and Mrs. Hess, finding that genuine issues of material fact existed as to
whether Liberty Mutual released Mr. and Mrs. Hess from their indemnity
obligation. 20 The Court stayed the above-captioned matter to allow the state court
litigation to proceed. 21
R. Doc. No. 79, at 7.
Id., at 7–8.
16 Id. at 8.
17 Id. at 8–9.
18 Id. at 9–10.
19 Id.
20 Id. at 11–12.
21 Id. at 12.
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On February 8, 2018, Liberty Mutual filed its first motion to lift the stay or,
alternatively, to request a status conference. 22 Liberty Mutual argued that the
purposes of implementing the stay—“furthering judicial efficiency and the interests
of justice”—were not being served by the stay because IPS was not furthering the
state court litigation. 23 The Court held a status conference on May 7, 2018 and
ordered that IPS set a trial date in the state court litigation by June 7, 2018 or the
Court would lift the stay. 24 IPS subsequently set trial in the state court litigation for
February 11, 2019, and the Court denied Liberty Mutual’s motion to lift the stay. 25
In the motion to lift the stay currently before the Court, Liberty Mutual argues
again that the purposes of the stay—judicial efficiency and the interests of justice—
are not being served because the state court litigation has been delayed. 26 The state
court trial date has since been continued to March 16, 2020. 27 Liberty Mutual
contends that while the delay was due to state court defendant Utility Contractors,
Inc.’s (“UCI”), reconventional demand, it was nonetheless IPS’s fault for allowing UCI
an extended period of time to file its answer—seven months after the Court ordered
IPS to set a trial date. 28
R. Doc. 136.
Id. at 1.
24 R. Doc. No. 141.
25 R. Doc. No. 143.
26 R. Doc. No. 144.
27 Id. at 1.
28 R. Doc. 146, at 2–3.
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Liberty Mutual argues that the continuance is a tactic employed by IPS to
prevent Liberty Mutual from recovering the indemnity that it is allegedly owed. 29
However, defendants oppose the motion and argue that the continuance in the state
court litigation was necessary to allow the parties to conduct discovery as to UCI’s
$1.4 million reconventional demand and that the March 2020 trial date accounted for
the parties’ and the court’s calendars. 30 Defendants maintain that a resolution of the
state court matter will resolve many of the issues before this Court and that Liberty
Mutual will not suffer prejudice as a result of continuing the stay. 31
“It is undisputed that a district court has inherent power to regulate the flow
of cases and ‘control the disposition of the causes on its docket with economy of time
and effort for itself, for counsel, and for litigants.’” Billiot v. Beavers, No. 12-2946,
2015 WL 4397108, at *1 (E.D. La. July 13, 2015) (quoting Landis v. N. Am. Co., 299
U.S. 248, 254 (1936)). “This authority includes the district court’s wide discretion to
grant a stay in a pending matter.” Id. (citing In re Ramu Corp., 903 F.2d 312, 318
(5th Cir. 1990)). “In considering whether to grant a stay, the Court weighs several
‘competing interests which will be affected by the granting or refusal to grant a stay.’”
Sream, Inc. v. Superior Discount, LLC, 17-8177, 2019 WL 1003053, at *7 (E.D. La.
Mar. 1, 2019) (Morgan J.) (quoting Fishman Jackson PLLC v. Israely, 180 F. Supp.
3d 476, 482 (N.D. Tex. 2016) (quoting CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir.
1962))).
Id. at 1, 5.
R. Doc. No. 146, at 4–6; R. Doc. No. 147.
31 R. Doc. No. 146, at 5–6.
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“These competing interests include the following: (1) ‘the
orderly course of justice measured in terms of the
simplifying or complicating of issues, proof, and questions
of law which would be expected to result from a stay’; (2)
‘the possible damage which may result from the granting
of stay’; and (3) ‘the hardship or inequity which a party may
suffer in being required to go forward.’”
Id. A district court’s action on a request for a stay is reviewed for abuse of discretion.
Exxon Corp. v. St. Paul Fire & Marine Ins. Co., 129 F.3d 781, 784 (5th Cir. 1997).
Even if the state court litigation is not dispositive of the above-captioned
matter, as Liberty Mutual contends, 32 the state court litigation will nonetheless
resolve many of the issues before the Court, namely the issues of fact that precluded
summary judgment. Liberty Mutual asserts that it has suffered a loss and that it is
owed indemnity from defendants, but it has not demonstrated that it continues to
incur additional losses as a result of the stay. 33 Lifting the stay will cause equal
hardship to IPS and Mr. and Mrs. Hess, requiring IPS to proceed in both courts
simultaneously and requiring Mr. and Mrs. Hess to proceed in litigation, which is
potentially unnecessary, depending on the outcome of the state court lawsuit. 34
After considering and balancing the competing interests, including the
temporary postponement of the state court trial date, the Court will exercise its broad
discretion and maintain the stay in the above-captioned matter. For the forgoing
reasons,
R. Doc. No. 152, at 2.
Id. at 3. Liberty Mutual argues that it is suffering a “financial burden,” but it is
clear that the only such non-specific “burden” it is suffering is its present inability to
pursue indemnification within its own time frame.
34 R. Doc. No. 146, at 7.
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IT IS ORDERED that the motion to lift the stay in the above-captioned
matter is DENIED. Any party may move to reopen the matter within thirty (30)
days of a final judgment in the related state court litigation or if additional unforeseen
state court trial delay occurs.
New Orleans, Louisiana, April 23, 2019.
_______________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE
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