Failure to Prosecute Suit Required Dismissal
Post 5102
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When Litigant Ignores Court Orders its Suit Must Be Dismissed
In Kmart Corporation v. AIG Assurance Company et al, No. EDCV 15-1520-KK-DTBx, United States District Court, C.D. California (June 16, 2025) Kmart sued its insurers for breach of contract and failure to indemnify in a separate lawsuit.
The proceedings encountered multiple delays due to Kmart’s bankruptcy, resulting in a court-ordered stay.
Court’s Stay on Proceedings: On October 25, 2018, the court issued a stay on the case pending the resolution of Kmart’s bankruptcy, with instructions for counsel to provide updates to the court.
Lack of Communication: Kmart did not file timely status reports with the last communication dated December 14, 2022. Consequently, the court issued orders for updates in May and June 2025.
Factors for Dismissal: The court evaluated five factors regarding dismissal for failure to prosecute, including the public’s interest in resolution, management of the docket, potential prejudice to defendants, and the availability of less drastic sanctions.
Conclusion of Dismissal: Ultimately, the court dismissed the action without prejudice due to Kmart’s failure to comply with court orders and prosecute the case, thereby closing the matter.
On January 9, 2020, Plaintiff filed a status report stating the Chapter 11 Plan was approved, but no effective date was issued, and thus, the stay should remain in effect. On January 4, 2021, Plaintiff filed another status report stating no changes had occurred since the last update. Plaintiff has since been silent.
ANALYSIS
It is well established that district courts have sua sponte authority to dismiss actions for failure to prosecute or to comply with court orders.
In deciding whether to dismiss for failure to prosecute or comply with court orders, a district court must consider five factors:
1. the public’s interest in expeditious resolution of litigation;
2. the court’s need to manage its docket;
3. the risk of prejudice to the defendants;
4. the public policy favoring disposition of cases on their merits; and
5. the availability of less drastic sanctions.
The first two factors – public interest in expeditious resolution of litigation and the court’s need to manage its docket – weigh in favor of dismissal. The failure to prosecute and follow court orders hinders the Court’s ability to move this case toward disposition and suggests Plaintiff does not intend to litigate this action diligently.
The third factor – prejudice against defendants – also weighs in favor of dismissal.
The fourth factor – public policy in favor of deciding cases on the merits – ordinarily weighs against dismissal.
It is Plaintiff’s responsibility to move toward disposition at a reasonable pace and avoid dilatory and evasive tactics.
Plaintiff did not discharge this responsibility despite having been instructed on its responsibilities; granted sufficient time in which to discharge them; and warned of the consequences of failure to do so. Under these circumstances, the policy favoring resolution of disputes on the merits does not outweigh Plaintiff’s failure to obey court orders or to file responsive documents within the time granted.
The fifth factor – availability of less drastic sanctions – also weighs in favor of dismissal. The Court cannot move the case toward disposition without Plaintiff’s compliance with court orders or participation in this litigation. Plaintiff has shown it is either unwilling or unable to comply with court orders by failing to file responsive documents or otherwise cooperating in prosecuting this action.
Finally, while dismissal should not be entered unless Plaintiff has been notified dismissal is imminent, see West Coast Theater Corporation v. City of Portland, 897 F.2d 1519, 1523 (9th Cir. 1990), the Court has explicitly warned Plaintiff about the possibility of dismissal.
CONCLUSION
Accordingly, the Court dismissed the action without prejudice under Federal Rule of Civil Procedure 41(b) for failure to prosecute and comply with Court orders.
ZALMA OPINION
Kmart sought damages from its insurers because of a lack of defense or indemnity. That suit became an asset of the bankruptcy estate which asset was either determined to be worthless or not worth the expense needed to succeed. Rather than dismiss the case by the bankrupt estate it did nothing and forced the USDC to dismiss the action for failure to prosecute.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Court Understands the Importance of Appraisal
Post 5188
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Appraisal Clauses Provide A Less Expensive, More Efficient Alternative To Litigation For Resolving Insurance-Claim Disputes
In Rockbrook Place Townhomes Association, Inc. v. Lio Insurance Company, CIVIL No. 4:24-CV-1021-SDJ, United States District Court, E.D. Texas, Sherman Division (September 3, 2025) the USDC compels appraisal and stops litigation.
Summary:
This insurance-coverage dispute between Rockbrook Place Townhomes Association, Inc. (“Rockbrook”) and LIO Insurance Company (“LIO”). The dispute arises from alleged hail damage to Rockbrook’s property, the key points are as follows:
Background:
Rockbrook owns property in Lewisville, Texas, insured by LIO. Rockbrook requested a reinspection and demanded over $4.5 million for roof replacements, which ...
Life Insurer Took Advantage of Plaintiff But Damages not Proved
Post 5187
Read the full article at https://www.linkedin.com/pulse/insurer-liable-only-1-damages-barry-zalma-esq-cfe-chbnc, see the full video at https://rumble.com/v6yoz9y-insurer-liable-but-only-for-1-damages.html and at https://youtu.be/OaX51GsfLcg, and at https://zalma.com/blog plus more than 5150 posts.
In Malcolm Wiener v. AXA Equitable Life Insurance Company, No. 24-1316, United States Court of Appeals, Fourth Circuit (September 3, 2025) the Fourth Circuit’s opinion addressed the sufficiency of evidence for a jury’s damages award in a negligence case involving AXA Equitable Life Insurance and Malcolm Wiener. AXA was found liable for negligence yet the court affirmed the trial court’s conclusion that the jury lacked sufficient evidence to reasonably calculate Wiener’s damages beyond minimal damages.
AXA liable for negligence but damages unsupported:
The court affirmed AXA’s negligence liability but ruled the jury’s $16 million damages award was ...
In Georgia Stormwater is a Pollutant
Stormwater Alone—Even Uncontaminated—Constitutes a Pollutant
Post 5186
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In Auto-Owners Insurance Company v. Tabby Place Homeowners Association, Inc., et al., Civil Action No. 4:21-cv-346, United States District Court, S.D. Georgia (September 3, 2025) found no coverage.
The decision of the USDC presents a detailed judicial opinion on a declaratory judgment action involving Auto-Owners Insurance Company, Tabby Place Homeowners Association (HOA), and various property owners. The central issue concerned whether Auto-Owners had a duty to defend or indemnify the HOA in an underlying lawsuit brought by property owners alleging property damage from stormwater flooding linked to the HOA’s stormwater retention ponds.
BACKGROUND AND PARTIES INVOLVED
The underlying litigation involved property ...
How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma
See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.
The Dishonest Chiropractor/Physician
How a Need for Profit Led Health Care Providers to Crime
See the full video at and at
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
How Elderly Doctors Fund their ...
How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma
See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.
The Dishonest Chiropractor/Physician
How a Need for Profit Led Health Care Providers to Crime
See the full video at and at
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
How Elderly Doctors Fund their ...
Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 2025 Barry Zalma, Esq., CFE
When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...
