Filed: Jan. 04, 2019
Latest Update: Mar. 03, 2020
Summary: Case: 18-30495 Document: 00514781596 Page: 1 Date Filed: 01/04/2019 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED No. 18-30495 January 4, 2019 Summary Calendar Lyle W. Cayce Clerk STACY MORGAN; A-PLUS CONTRACTORS, L.L.C., Plaintiffs - Appellants v. AMERICAS INSURANCE COMPANY, Defendant - Appellee Appeal from the United States District Court for the Eastern District of Louisiana USDC No. 2:16-CV-13900 Before DAVIS, HAYNES, and GRAVE
Summary: Case: 18-30495 Document: 00514781596 Page: 1 Date Filed: 01/04/2019 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED No. 18-30495 January 4, 2019 Summary Calendar Lyle W. Cayce Clerk STACY MORGAN; A-PLUS CONTRACTORS, L.L.C., Plaintiffs - Appellants v. AMERICAS INSURANCE COMPANY, Defendant - Appellee Appeal from the United States District Court for the Eastern District of Louisiana USDC No. 2:16-CV-13900 Before DAVIS, HAYNES, and GRAVES..
More
Case: 18-30495 Document: 00514781596 Page: 1 Date Filed: 01/04/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 18-30495 January 4, 2019
Summary Calendar
Lyle W. Cayce
Clerk
STACY MORGAN; A-PLUS CONTRACTORS, L.L.C.,
Plaintiffs - Appellants
v.
AMERICAS INSURANCE COMPANY,
Defendant - Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:16-CV-13900
Before DAVIS, HAYNES, and GRAVES, Circuit Judges.
JAMES E. GRAVES, JR., Circuit Judge:*
Appellant A-Plus Contractors, L.L.C. (“A-Plus”) and its owner, Appellant
Stacy Morgan (“Morgan”), appeal the district court’s dismissal with prejudice
of their lawsuit under Federal Rule of Civil Procedure 41(b). For the reasons
discussed below, we vacate the district court’s dismissal and remand for
further proceedings.
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 18-30495 Document: 00514781596 Page: 2 Date Filed: 01/04/2019
No. 18-30495
BACKGROUND
A-Plus was hired by Hollis Burton to repair and remediate damage to
Burton’s home after a fire occurred on Burton’s property. Burton had a
homeowner’s insurance policy with Americas Insurance Company (“AIC”)
which covered his property in the event of a fire. A-Plus completed the repairs
on Burton’s home in or around mid-2015 at a cost of approximately $93,000.
Burton paid a portion of the cost after receiving a disbursement from AIC,
which reduced the outstanding balance to about $43,000. In December 2015,
Burton executed an Assignment of Insurance Benefits Form wherein Burton
assigned his remaining insurance benefits related to the fire to A-Plus and
Morgan.
In March 2016, counsel for Appellants sent a demand for payment to
AIC. AIC’s counsel responded in April that AIC disputed the amount and
invoked the appraisal provision in the insurance policy. AIC also requested
examinations under oath (“EUO”) of both Burton and Morgan pursuant to the
policy. The EUO of Burton took place in May 2016; however, Morgan’s EUO
never occurred.
Appellants subsequently filed a petition for damages in June 2016 in
Louisiana state court and asserted Morgan did not need to submit to an EUO
because he was not an insured under the policy. AIC removed the case to
federal court and filed a motion to dismiss. Appellants filed a motion to
remand, and the district court ultimately denied both motions. In April 2017,
shortly after filing its answer, AIC filed a motion to compel EUO and appraisal
and requested a stay of litigation pending appraisal. The motion to compel also
requested the district court compel Appellants to provide documentation to
support their claim in conjunction with the EUO. On July 6, 2017, the district
court granted AIC’s motion and the case was stayed and administratively
closed pending completion of the appraisal process.
2
Case: 18-30495 Document: 00514781596 Page: 3 Date Filed: 01/04/2019
No. 18-30495
During the stay, AIC sent several requests to Morgan’s counsel for
possible dates to schedule Morgan’s EUO, at least two of which went
unanswered. Eventually Morgan’s counsel responded, saying he was a sole
practitioner who had just moved offices and had had an out of town trial during
that time. The parties agreed to conduct Morgan’s EUO on September 27, 2017
at Morgan’s counsel’s office in Metairie, Louisiana. However, two days prior to
the scheduled EUO, Morgan’s counsel canceled because Morgan was “stuck” in
Miami as a result of cleanup efforts related to Hurricane Irma. Morgan’s
counsel stated Morgan would be available in another 3-4 weeks. AIC filed a
motion to lift the administrative stay and to dismiss Appellant’s petition with
prejudice in October 2017. In support, AIC also mentioned that Appellants had
not complied with the appraisal process, having failed to appoint an appraiser
despite numerous requests.
The district court held a hearing on AIC’s motion in November 2017.
After hearing the parties’ arguments and excuses, the district court
acknowledged it had not put a deadline on the administrative stay and stated
it would lift the stay on December 8, 2017. If at that time the EUO and
appraisal process were not “well underway or done completely,” the court
would entertain the motion to dismiss. The district court stated the delays were
“unacceptable” and noted that Morgan needed “to be here very soon for the
examination under oath.”
That afternoon, Morgan’s counsel selected an appraiser and the parties
began coordinating Morgan’s EUO. The earliest Morgan was available was
November 22, but the parties eventually settled on November 30, 2017. The
morning of November 30, Morgan’s counsel notified AIC that Morgan could not
appear as scheduled, as he was arrested at the Dallas airport for leaving a gun
in his carry-on luggage. Morgan apparently offered to fly into New Orleans
after posting his bond, but his counsel told him that would be problematic.
3
Case: 18-30495 Document: 00514781596 Page: 4 Date Filed: 01/04/2019
No. 18-30495
On December 12, 2017, the district court lifted the stay and requested
supplemental briefing on whether Appellants had complied with the policy
requirements. AIC argued Morgan’s actions constituted contumacious conduct
and the district court agreed, citing Morgan’s last-minute cancellations of
scheduled EUOs and failure to respond to scheduling requests. The district
court highlighted Morgan’s failure to appear for an EUO after November 30th
and noted Appellants had not moved for approval of a late EUO.
Appellants now appeal the district court’s ruling.
STANDARD OF REVIEW
Rule 41(b) authorizes a district court to dismiss an action with prejudice
if a plaintiff fails to comply with court orders. Fed. R. Civ. P. 41(b); Nottingham
v. Warden, Bill Clements Unit, 837 F.3d 438, 440 (5th Cir. 2016). This court
reviews a district court’s Rule 41(b) dismissal for abuse of discretion.
Nottingham, 837 F.3d at 441. However, a dismissal with prejudice is an
extreme sanction and the district court’s discretion is therefore limited; we will
only affirm such a dismissal if the failure to comply with the court order is the
result of purposeful delay or contumacious conduct and the district court first
employs lesser sanctions. Berry v. CIGNA/RSI-CIGNA,
975 F.2d 1188, 1191
(5th Cir. 1992); Long v. Simmons,
77 F.3d 878, 880 (5th Cir. 1996) (citing
Burden v. Yates,
644 F.2d 503 (5th Cir. 1981)). Even in such instances, this
court will only affirm if one or more aggravating factors are also present:
1)delay caused by the plaintiff himself, not the attorney; 2) actual prejudice to
the defendant; or 3) delay caused by intentional conduct.
Berry, 975 F.2d at
1191 (quoting Price v. McGlathery,
792 F.2d 472, 474 (5th Cir. 1986)).
DISCUSSION
Appellants argue that the district court abused its discretion in
dismissing their lawsuit because there is no record of delay or contumacious
conduct. We agree.
4
Case: 18-30495 Document: 00514781596 Page: 5 Date Filed: 01/04/2019
No. 18-30495
As an initial matter, neither order was sufficiently clear to put Morgan
on notice that he had violated it. The first order did not have a deadline, and
therefore Morgan could reasonably have thought he had time to reschedule his
EUO. As for the second order, while the district court advised Morgan through
his counsel that it would consider a motion to dismiss if the appraisal and EUO
process were not “well underway” by December 8, the appraisal process had
begun by that date. 1 The order was therefore not clear enough to put Morgan
on notice that he had not complied, as Morgan may have reasonably believed
he was in substantial compliance with the district court’s order based on the
appraisal moving forward. Even if Morgan clearly violated both orders, more
is required for a dismissal with prejudice. Berry, 975 F.2d at 1192, n.6.
(“Generally, where a plaintiff has failed only to comply with a few court orders
or rules, we have held that the district court abused its discretion in dismissing
the suit with prejudice.”) (collecting cases).
It also is not apparent that the district court considered lesser sanctions
other than to say they “would not be effective.” See Callip v. Harris County
Child Welfare Dep’t., 757 F.2d 1513, 1521 (5th Cir. 1985) (finding the district
court’s considerations must be apparent on the record “for our consideration of
the inevitable argument that the dismissal was an abuse of discretion.”
(quoting Hornbuckle v. Arco Oil & Gas Co.,
732 F.2d 1233, 1237 (5th Cir.
1984)). While the court gave a warning, it was not explicit enough to constitute
lesser sanctions. See
Nottingham, 837 F.3d at 442 (stating explicit warnings
can constitute lesser sanctions).
Second, only two delays after this lawsuit was filed were attributable to
Morgan himself rather than his attorney. The first EUO was canceled
1 While the district court’s dismissal order stated Morgan did not move for approval
of a late EUO, in Appellants’ supplemental briefing, Morgan apologized to the court and
asked the court to allow him another chance to submit to the EUO.
5
Case: 18-30495 Document: 00514781596 Page: 6 Date Filed: 01/04/2019
No. 18-30495
intentionally by Morgan for business reasons (not, as he implied in his opening
brief, because he was a victim of a natural disaster). However, the second
cancellation, while concededly “careless, inconsiderate, [and] understandably
exasperating,” was unintentional and did not amount to contumacious conduct.
Millan v. USAA General Indem. Co., 546 F.3d 321, 327 (5th Cir. 2008) (quoting
McNeal v. Papsan,
842 F.2d 787, 791 (5th Cir. 1981)). “[I]t is the ‘stubborn
resistance to authority’ which justifies a dismissal with prejudice,” and such
stubbornness was not present here.
Id. (quoting McNeal, 842 F.2d at 791). The
district court did not find Morgan’s arrest to be intentional, and it was
Morgan’s attorney who advised him not to fly out after he posted bond. Further,
while Morgan’s counsel did not respond to AIC’s counsel’s requests for dates to
schedule the EUO, there is no evidence that Morgan himself was the cause of
the failure. In fact, the record appears to support otherwise.
While AIC argued it was unduly prejudiced by Morgan’s delay, it was
only in July 2017 that the district court determined Morgan was required
under the policy to submit to the EUO. Delay warranting a dismissal with
prejudice must be longer than just a few months and must generally be
characterized by “significant periods of total inactivity.” Millan, 546 F.3d at
326–27 (quoting
McNeal, 842 F.3d at 791). The delay here did not include
significant periods of inactivity, and there is no factual support in the record
that AIC was unduly prejudiced by the delay. Even if AIC was prejudiced, part
of the reason for the initial delay was the motion to remand and motion to
dismiss filed by the parties—motions which each party was entitled to file.
Lastly, the district court also stated dismissal was proper because
Morgan failed to comply with the insurance policy. However, the case it relied
6
Case: 18-30495 Document: 00514781596 Page: 7 Date Filed: 01/04/2019
No. 18-30495
upon, 2 and the additional cases cited by AIC in its brief, 3 were all decided on
motions for summary judgment and are therefore inapplicable in a Rule 41(b)
analysis.
CONCLUSION
While we do not condone Morgan’s behavior and we understand the
district court’s frustration, on this record we conclude the district court abused
its discretion in employing the draconian sanction of dismissing Appellants’
suit with prejudice. Accordingly, the district court’s order of dismissal is
VACATED and the case is REMANDED for further proceedings.
2 Mosadegh v. State Farm Fire & Cas. Co., 330 F. A’ppx 65 (5th Cir. 2009).
3 Brantley v. State Farm Ins. Co., 865 So. 2d 265 (La. App. 2 Cir. 2004); Hamilton v.
State Farm Fire & Cas. Ins. Co., 477 F. App’x 162 (5th Cir. 2012); Assaf v. Allstate Indem.
Co.,
2011 WL 3178551 (E.D. La. Jul. 7, 2011).
7
