Matherne v. Huntington Ingalls Incorporated (2022)

Our plain-English summary of Matherne v. Huntington Ingalls Incorporated (U.S. District Court, Eastern District of Louisiana, October 28, 2022).

Roseanna Matherne was diagnosed with mesothelioma around December 1, 2021 and died on March 10, 2022. Her survivors sued several defendants, alleging she was exposed to asbestos from the clothes of her husband, who worked at Avondale Shipyards. They also sued the Louisiana Insurance Guaranty Association (LIGA) as the statutory obligor for policies issued by Lamorak Insurance Company. A Pennsylvania court had declared Lamorak's parent insurer, Bedivere, insolvent and set December 31, 2021 as the deadline for filing claims. The plaintiffs sued on July 6, 2022. LIGA moved for summary judgment, arguing the claims were not 'covered claims' under Louisiana law because they were filed after that deadline. The plaintiffs argued that applying the deadline was unconstitutional because their rights vested at the time of exposure. The court disagreed. It relied on Louisiana Supreme Court authority that a claim against LIGA vests when the insurer becomes insolvent. It also found the wrongful death claims arose only at her death, after the deadline. The court granted LIGA's 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: October 28, 2022
• Docket: Civil Action No. 22-2656
• Stage: Summary judgment
• State: Louisiana

Outcome. The court granted summary judgment for the Louisiana Insurance Guaranty Association (LIGA) and against the plaintiffs, holding that their claims were not timely 'covered claims' because they arose after the insolvent insurer's claim bar date.

What the court held. Under the Louisiana Insurance Guaranty Association law, a claim made after the claim filing deadline set by the insolvent insurer's liquidation court is not a 'covered claim' for which LIGA must pay. A claim against LIGA vests when the insurer becomes insolvent, not when the exposure occurred.

Issues decided: Wrongful Death and Survival, Insurance Coverage.

The people and their exposure

• Roseanna Matherne (family member): mesothelioma; died

Who	Work	Where	When	Products
Roseanna Matherne	wife of a shipyard worker (shipyards and maritime work); dust brought home	Avondale Shipyards	1965-1983

The defendants

• Louisiana Insurance Guaranty Association (LIGA) (insurer)
• Lamorak Insurance Company (insurer)

Other decisions in this case

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

• Matherne v. Huntington Ingalls Incorporated (March 2, 2023). The court denied LIGA's motion for entry of a Rule 54(b) final judgment on the earlier summary judgment in its favor, so LIGA must wait until the whole case ends to appeal; the plaintiffs prevailed on this motion.
• Matherne v. Huntington Ingalls Incorporated (January 2, 2024). The court granted in part and denied in part the plaintiffs' motion to compel a Rule 30(b)(6) deposition of Huntington Ingalls: Huntington need not present a witness, but must give the plaintiffs its litigation listing of prior cases within 14 days.
• Matherne v. Huntington Ingalls Incorporated (January 19, 2024). The court granted the plaintiffs' motion for partial summary judgment, so Avondale (Huntington Ingalls) and its insurers could not use the government contractor defense against the failure-to-warn and failure-to-enact-safety-measures claims.
• Matherne v. Huntington Ingalls Incorporated (January 19, 2024). The court granted Avondale's motion for partial summary judgment and dismissed plaintiffs' claims that Avondale assumed its insolvent insurers' obligations under the buy-back agreements; the plaintiffs lost this claim.
• Matherne v. Huntington Ingalls Incorporated (January 20, 2024). The court granted the plaintiffs' motion for partial summary judgment that Roseanna Matherne had mesothelioma and that it caused her death, over the defendants' off-topic oppositions.
• Matherne v. Huntington Ingalls Incorporated (January 24, 2024). The court granted Hopeman Brothers' motion for partial summary judgment on the plaintiffs' intentional tort, alter ego and manufacturer strict liability claims, ruling against the plaintiffs and Avondale.
• Matherne v. Huntington Ingalls Incorporated (February 21, 2024). The court granted Avondale's motion and quashed the trial subpoenas that Plaintiffs and Defendants General Electric, Foster Wheeler and Paramount Global had directed to Avondale as a corporate entity.

Decisions this opinion cites

Earlier decisions in our library that the court cited:

• Cole v. Celotex Corp. (Louisiana Supreme Court, 1992). The Louisiana Supreme Court affirmed the court of appeal: pre-comparative-fault (virile share) law governed, the nine executive officers counted as nine separate shares, and the insurer INA's annual policies could be stacked, so INA owed each of the three plaintiff workers $135,000 plus interest.

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.

TED J. MATHERNE, SR., ET AL.,

v.

HUNTINGTON INGALLS INCORPORATED, ET AL.

Civil Action No. 22-2656.

October 28, 2022.

United States District Court, E.D. Louisiana.

ORDER & REASONS

CARL J. BARBIER, District Judge.

Before the Court is a Motion for Summary Judgment (Rec. Doc. 4) filed by Defendant, Louisiana Insurance Guaranty Association ("LIGA"), as the alleged statutory obligor for policies issued by Lamorak Insurance Company to Eagle, Inc., McCarty Corporation, and Avondale executive officers. Plaintiffs oppose this motion (Rec. Doc. 30), and LIGA has filed a reply (Rec. Doc. 40). Having considered the motion and legal memoranda, the record, and the applicable law, the Court finds that the motion should be GRANTED.

FACTS AND PROCEDURAL BACKGROUND

Roseanna Matherne was diagnosed with mesothelioma on or around December 1, 2021 and died on March 10, 2022 as a result of the disease. Her survivors subsequently filed suit against numerous Defendants alleging that she contracted mesothelioma caused by her exposure to asbestos from the clothes of her husband who worked at Avondale Shipyards ("Avondale"). LIGA was sued as the alleged statutory obligor for policies issued by Lamorak Insurance Company ("Lamorak"), for the alleged liability of Eagle, Inc., McCarty Corporation, and Avondale's executive officers. LIGA first received notice of this claim on July 19, 2022.

On March 11, 2021, the Commonwealth Court of Pennsylvania issued an Order declaring Bedivere Insurance Company ("Bedivere") to be insolvent, and an accompanying Order of Liquidation. The Order of Liquidation of Bedivere specifically includes Lamorak (formerly OneBeacon America Insurance Company). The Order of Liquidation appointed the Pennsylvania Insurance Commissioner as the Statutory Liquidator of Bedivere and directed her to "take possession of Bedivere's property, business and affairs. . . and to administer them pursuant to the orders of this Court." The Liquidator was vested by the court with exclusive jurisdiction to determine, among other matters, "the validity and amounts of claims against Bedivere."

Pursuant to the Court's Order, the Liquidator mailed a Notice to policyholders, creditors, Insurance Commissioners, and the National Conference of Insurance Guaranty Funds, and published the claims filing procedure in the newspaper of general circulation where Bedivere had its principal place of business, and in a magazine recognized as a source of news and information for insurance professionals. The Notice provided, in boldface type in the center of the first page, "If you have and want to pursue a claim against BEDIVERE, you must file a proof of claim in order to have your claim considered. Proofs of claim must be filed no later than December 31, 2021."

Plaintiffs filed suit on July 6, 2022 in the Civil District Court, Parish of Orleans, and Avondale removed the suit to this Court. Subsequently, LIGA filed the instant motion for summary judgment.

LEGAL STANDARD

Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing FED. R. CIV. P. 56); see Little v. Liquid Air Corp., 37 F.3d 1069,

1075 (5th Cir. 1994). When assessing whether a dispute as to any material fact exists, a court considers "all of the evidence in the record but refrains from making credibility determinations or weighing the evidence." Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but a party cannot defeat summary judgment with conclusory allegations or unsubstantiated assertions. Little, 37 F.3d at 1075. A court ultimately must be satisfied that "a reasonable jury could not return a verdict for the nonmoving party." Delta, 530 F.3d at 399.

If the dispositive issue is one on which the moving party will bear the burden of proof at trial, the moving party "must come forward with evidence which would `entitle it to a directed verdict if the evidence went uncontroverted at trial.'" Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991). The nonmoving party can then defeat the motion by either countering with sufficient evidence of its own, or "showing that the moving party's evidence is so sheer that it may not persuade the reasonable fact-finder to return a verdict in favor of the moving party." Id. at 1265.

If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record is insufficient with respect to an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See id. at 324. The nonmovant may not rest upon the pleadings but must identify specific facts that establish a genuine issue for trial. See id. at 325; Little, 37 F.3d at 1075.

DISCUSSION

LIGA is a statutory body created by Louisiana Revised Statute § 22:2051, et seq. Its purpose is set forth in § 22:2052, which states that:

The purpose of this Part is to provide for the payment of covered claims under certain insurance policies with a minimum delay and a minimum financial loss to claimants or policyholders due to the insolvency of an insurer, to provide financial assistance to member insurers under rehabilitation or liquidation, and to provide an association to assess the cost of such operations among insurers.

(emphasis added). As a statutorily created entity, LIGA is liable for only those obligations provided by the Louisiana Insurance Guaranty Association Law ("LIGA Law"). La. R.S. 22:2051, et. seq. Under LIGA Law, when an insurer is determined to be insolvent, LIGA is deemed to be the insurer to the extent of its obligation on preinsolvency covered claims and has all the rights, duties, and obligations of the insolvent insurer as if that insurer had not become insolvent. La. Stat. Ann. §§ 22:2058(A)(1)(a), (A)(2). In addition, LIGA is obligated to the extent of covered claims arising after the determination of the insurer's insolvency but arising prior to the expiration of thirty days after the date of such determination of insolvency. Id § 22:2058(A)(1)(a)(i). A covered claim is any unpaid claim by or against the insured which arises out of and is within the coverage and not in excess of the applicable limits of an insurance policy to which LIGA Law applies. Id. § 22:2055(6). However,

Notwithstanding any other provision of this Part, a "covered claim" shall not include a claim filed with the association after the earlier of five years after the date of the order of liquidation of the insolvent insurer or the final date set by the domiciliary court for the filing of claims against the liquidator or receiver of an insolvent insurer.

Id. § 22:2058(A)(1)(c)(i).

Here, LIGA argues that Plaintiffs' claims against LIGA arising from the insolvency of Bedivere/Lamorak should be dismissed with prejudice because they do not constitute timely filed "covered claims." (Rec. Doc. 5-3, at 5). LIGA contends that anyone that wanted to pursue a claim against Bedivere had to file a proof of claim in order to have their claims considered, and proof of claims were required to be filed by December 31, 2021, the date set by the Statutory Liquidator of Bedivere. Id. Because Plaintiffs did not file suit until July 6, 2022, LIGA asserts that Plaintiffs' claims are time barred. Id. LIGA cites Thompson v. Citizens National Insurance Company, 729 So. 2d 709 (La. App. 1 Cir. 02/19/199) in support of this argument. In Thompson, the Louisiana First Circuit affirmed summary judgment in favor of the Texas Property & Casualty Insurance Guarantee Association ("TIGA"), the Texas equivalent of LIGA. The plaintiff was injured in a vehicle accident on

August 17, 1987, but the insurer she sued had been placed in liquidation in 1986, with an ultimate claim bar date of August 8, 1987. Id. at 711-12. The court held that plaintiff's vehicle accident did not constitute a covered claim since it was not filed before the claim bar date, and therefore, she could not recover from TIGA. Id.

LIGA also cites Brazan v. Lamorak Insurance Company, etal. 2018-C-0609, at [*2]-3 (La. App. 4th Cir. 07/23/18). In Brazan, the plaintiff filed suit against LIGA in 2017 alleging that he was exposed to asbestos in the course of his employment. Id. at 1. However, the date to file covered claims against the insolvent insurer had passed in 2004. Id. at 2. The Louisiana Fourth Circuit Court of Appeal reversed the trial court's judgment denying LIGA's peremptory exception of prescription, holding that §22:2058(A)(1)(c)(i) was clear and unambiguous and must be applied as written. Id. Therefore, it is well settled that claims arising after the claim bar date are not covered claims for which LIGA is obligated to pay.

In opposition, Plaintiffs argue that applying Louisiana Revised Statute § 22:2058(A)(1)(c)(i) to Plaintiffs' claim against LIGA would be unconstitutional. (Rec. Doc. 40, at 1). Plaintiffs assert that their survival action against Lamorak vested at the time Mrs. Matherne was exposed to asbestos between 1965 and 1983 and that their wrongful death claim vested upon her death, March 10, 2022. Therefore, Plaintiffs argue that their claim against LIGA existed far before the claim bar date, they just were not aware of the existence of that claim until after Mrs. Matherne's diagnosis. Plaintiffs argue that even though she was diagnosed with mesothelioma on or around December 1, 2021 before the claim bar date, applying La. R.S. § 2058(A) (1)(c)(i) would effectively extinguish their right of action against LIGA before they had a reasonable time to assert that right because they could not sue for her wrongful death until after she actually died. Id. at 3.

Plaintiffs, citing the Louisiana Supreme Court case Cole v. Celotex, 599 So. 2d 1058, 1071 (La. 1992), argue that their right of action against Lamorak vested at the time of the delict and is therefore a vested property right that cannot be constitutionally divested. (Rec. Doc. 40, at 5). Plaintiffs also assert that § 22:2058(A)(1)(c)(i) cannot be "applied to retroactively abolish plaintiff's vested rights." (Rec. Doc. 40, at 9). Plaintiffs argue that § 22:2058(A)(1)(c)(i) was enacted in 1999 while Mrs. Matherne's exposure to asbestos occurred years before that. (Rec. Doc. 40, at 10). They therefore assert that it would be unconstitutional to apply the LIGA law retroactively to their preexisting claims against Lamorak. Id. However, the Louisiana Supreme Court has held that a plaintiff's claim against LIGA vests at the time the insurer becomes insolvent rather than at the time the covered event occurred. Prejean v. Dixie Lloyds Ins. Co., 660 So. 2d 836, 837 (La. 1995). Therefore, even though Plaintiffs' survival action against Lamorak vested at the time of Mrs. Matherne's exposure to asbestos, their claims against LIGA did not vest until Lamorak was declared insolvent, and upon Lamorak's insolvency, all provisions of the LIGA law became applicable to Plaintiffs' claims against it, including the claim bar date. Furthermore, Plaintiffs' wrongful death claims did not arise until Mrs. Matherne died on March 10, 2022. Therefore, these claims arising after the claim bar date also cannot constitute covered claims.

LIGA, as a statutorily created entity, is only liable for those claims provided by the LIGA law. This law makes it clear and unambiguous that LIGA is only responsible for covered claims as defined in §22:2058(A)(1)(c)(i). Because Plaintiffs' claims against LIGA were not filed until after the claim bar date and are therefore not covered claims, LIGA cannot be responsible for them.

CONCLUSION

Accordingly,

IT IS HEREBY ORDERED that LIGA's Motion for Summary Judgment (Rec. Doc. 5) is GRANTED.

Sources

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