Lagrange v. Eagle, Inc. (E.D. La., Nov. 22, 2024)

Our plain-English summary of Lagrange v. Eagle, Inc. (U.S. District Court, Eastern District of Louisiana, November 22, 2024).

Irma Lee LaGrange sued Avondale (Huntington Ingalls) and other defendants, alleging she developed mesothelioma from asbestos exposure while laundering the work clothes of her husband, Allen. He worked at Avondale's Bridge City, Louisiana shipyard from 1973 to 1996 as a laborer, welder, and pipefitter. The case was removed from Louisiana state court under the federal officer statute. Ms. LaGrange died after removal, and her children were to be substituted as plaintiffs. Subcontractor Hopeman Brothers then filed for Chapter 11 bankruptcy, and the court stayed the case as to Hopeman. The question was whether to stay the whole case. The plaintiffs opposed; Avondale supported it. The court noted that the automatic stay does not by itself protect co-defendants, but it may grant a discretionary stay. It found that the balance of interests, the risk of inequity to co-defendants, and the limited duration supported a stay. It stayed all proceedings until March 11, 2025, then to be reassessed on motion.

We wrote this summary from the court's opinion with the help of AI. It is not the court's wording, and it is not legal advice. The full opinion is below.

The decision

• Court: U.S. District Court, Eastern District of Louisiana
• Decided: November 22, 2024
• Docket: Civil Action No. 23-628
• Stage: Bankruptcy
• State: Louisiana

Outcome. The court stayed the entire case against Avondale and the other defendants until March 11, 2025, because of co-defendant Hopeman Brothers' Chapter 11 bankruptcy, over the plaintiffs' objection and in line with Avondale's request, with a reassessment of the stay to follow on motion.

What the court held. The automatic bankruptcy stay does not automatically cover non-debtor co-defendants, but a court may grant a discretionary stay that rests on the balance of party interests, clear inequity to co-defendants, and reasonable limits on its length.

Issues decided: Asbestos Bankruptcies, Trial Procedure and Discovery.

The people and their exposure

• Irma Lee LaGrange (family member): mesothelioma; died

The defendants

• Huntington Ingalls Incorporated (Avondale) (employer)
• Hopeman Brothers, Inc. (contractor)
• Liberty Mutual Insurance Company (insurer)
• Wayne Manufacturing Corporation
• Eagle, Inc.

Other decisions in this case

Other rulings from the same court in the same case, in our library:

• Lagrange v. Eagle, Inc. (September 6, 2024). The court granted plaintiff Irma Lee LaGrange's motion for partial summary judgment, ruling that defendants Huntington Ingalls and Hopeman Brothers may not use the Government Contractor Defense, and denied Hopeman's motion for leave to file a surreply.
• Lagrange v. Eagle, Inc. (September 6, 2024). The court denied plaintiff Irma Lee LaGrange's motion to decline supplemental jurisdiction and remand to state court, so the case stays in federal court against Avondale (Huntington Ingalls), Hopeman Brothers and Liberty Mutual.

Decisions this opinion cites

Earlier decisions in our library that the court cited:

• Arnold v. Garlock, Inc. (U.S. Court of Appeals, Fifth Circuit, 2001). The Fifth Circuit denied Garlock's motions to stay the district courts' remand and dismissal orders pending appeal and dissolved its temporary stays, so the plaintiffs won and Garlock lost.
• Wedgeworth v. Fibreboard Corp. (U.S. Court of Appeals, Fifth Circuit, 1983). The Fifth Circuit affirmed the Fontenot order denying a stay and vacated the stays in Wedgeworth and Davis, so the plaintiffs' claims against the co-defendants proceed. On rehearing it held that the Wedgeworth court did not abuse its discretion in refusing to let plaintiffs add Johns-Manville's and Unarco's insurers as defendants.

The court's opinion

The text below is Google Scholar's copy of the court's opinion, a public record. Numbers in brackets, such as [*921], mark where each page of the printed reporter begins.

IRMA LEE LAGRANGE,

v.

EAGLE, INC. ET AL.

Civil Action No. 23-628.

November 22, 2024.

United States District Court, E.D. Louisiana.

SECTION: "J"(5)

CARL J. BARBIER, District Judge.

ORDER

Before the Court are memoranda related to whether this case should be stayed in its entirety. Plaintiffs file a Memorandum in Opposition to Stay of Entire Case Pending Bankruptcy Proceedings against Hopeman Brothers, Inc. (Rec. Doc. 140). In contrast, Defendant Huntington Ingalls Incorporated ("Avondale") files a Memorandum in Support of Stay of Entire Case Pending Bankruptcy Proceedings (Rec. Doc. 141). Having considered the legal memoranda, the record, and the applicable law, the Court finds that this case should be STAYED for a limited duration.

FACTS AND PROCEDURAL BACKGROUND

This matter arises from Plaintiff Irma Lee LaGrange's alleged contraction of mesothelioma as a result of asbestos exposure by laundering her husband's work clothes. Her husband, Allen C. LaGrange, worked at Avondale's Bridge City, Louisiana shipyard from 1973 until 1996. Allen was allegedly exposed to asbestos at the Avondale shipyard through his work as a laborer, welder, and pipefitter. This work created dust that accumulated on his clothes. Asbestos materials were used pursuant to contracts between the United States Government and Avondale, and a joiner contractor between Avondale and subcontractor Hopeman Brothers, Inc.

Filed in Louisiana state court, this action was removed pursuant to federal officer jurisdiction of 28 U.S.C. § 1442(a)(1). Five months after removal, Ms. Lagrange passed away. Nearly eight months later, Avondale informed the Court of Ms. Lagrange's passing, and counsel for Plaintiff subsequently moved to substitute Ms. Lagrange's surviving children as party plaintiffs. In July of 2024, Hopeman filed notice of its voluntary petition of Chapter 11 bankruptcy in the United States Bankruptcy Court for the Eastern District of Virginia. In response, the Court stayed this action as to Hopeman and requested party briefing on whether this matter should be stayed in its entirety until the bankruptcy proceeding against Hopeman is completed.

LEGAL STANDARD

Pursuant to 11 U.S.C. § 362(a)(1), an automatic stay extends to proceedings against Chapter 11 debtors. As the Fifth Circuit has long clarified, this stay does not automatically apply to co-defendants of the Chapter 11 debtor: "The stay envisioned is `applicable to all entities,' § 362(a), but only in the sense that it stays all entities proceeding against the debtor. To read the `all entities' language as protecting codebtors would be inconsistent with the specifically defined scope of the stay `against the debtor,' § 362(a)(1)." Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (5th Cir. 1983). This automatic applicability to the debtor alone flows from the purposes of the stay, which are "to protect the debtor's assets, provide temporary relief from creditors, and further equity of distribution among the creditors by forestalling a race to the courthouse." GATX Aircraft Corp. v. M/V Courtney Leigh, 768 F.2d 711, 716 (5th Cir. 1985).

As to actions with other co-defendants, courts may consider a discretionary stay. See Wedgeworth, 706 F.2d at 545 (citing Landis v. North American Can Co., 299 U.S. 248, 254-55 (1936)). "Section 362 is rarely, however, a valid basis on which to stay actions against non-debtors." Arnold v. Garlock, Inc., 278 F.3d 426, 436 (5th Cir. 2001). Such a stay is proper only if founded on (1) the balance of party interests, (2) "a clear inequity" to the remaining co-defendants, and (3) a stay length "framed to contain reasonable limits on its duration." GATX Aircraft Corp., 768 F.2d at 716 (citations omitted). DISCUSSION

Plaintiffs insist no exception is present to stay the entirety of this matter. From their forecast, a stay related to Hopeman's bankruptcy would necessarily be indefinite, causing significant hardship to Plaintiffs. Although advocating for a full stay of the proceedings, Avondale does not completely tie this litigation to Hopeman's bankruptcy resolution, however. Instead, Avondale notes the bankruptcy court is currently weighing whether non-bankruptcy claims can proceed against Liberty Mutual Insurance Company, the insurer of Hopeman and Hopeman subsidiary Wayne Manufacturing Corporation. Liberty Mutual and Wayne are also parties to this asbestos litigation.

In the bankruptcy litigation, Avondale objected to Hopeman's request of a stay of proceedings as to Liberty Mutual. The bankruptcy court granted the request, issuing an Interim Order Extending the Automatic Stay to Asbestos-Related Actions Against Non-Debtor Defendants. In re Hopeman Brothers, Inc., No. 24-32428 (Bankr. E.D. Va. July 3, 2024), ECF No. 35. Over objections, the stay was issued for six months or until March 10, 2025. Id. ECF No. 181.

Accordingly, Avondale seeks a stay coterminous with the stay in place in the bankruptcy court. In three cases involving the same issue, judges in the Eastern District of Louisiana have stayed the entire case until the expiration of the bankruptcy stay. See Ditcharo v. Union Pacific Railroad Co., No. 23-7399 (E.D. La. Sept. 19, 2024), ECF No. 104 (Fallon, J.); Evans v. Taylor Seidenbach, Inc., No. 23-4241 (E.D. La. Sept. 19, 2024), ECF No. 146 (Fallon, J.); Rivet v. Huntington Ingalls Inc., No. 22-2584 (E.D. La. Sept. 23, 2024), ECF No. 412 (Papillion, J.). This Court similarly finds a limited stay of this matter appropriate.

Although sympathetic to Plaintiffs' desire for an expedient resolution, the balance of party interests favors a brief stay to permit the bankruptcy court to determine the status of co-defendants in this and similar actions. Denying a stay would risk co-defendants suffering the clear inequity of the enforcement of a standard at odds with the underlying bankruptcy action. Further, tying this stay to the bankruptcy court's resolution of the co-defendant question both provides a limited timeframe and promotes judicial economy.

CONCLUSION

Accordingly,

IT IS HEREBY ORDERED that all proceedings in the above-captioned matter are STAYED until March 11, 2025. At the end of this period, upon party motion, the Court will reassess whether a stay is still warranted.

Sources

• The opinion on Google Scholar
• Louisiana asbestos laws
• Louisiana asbestos exposure sites