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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Refusal to Provide Workers’ Compensation is Expensive
Post 5240
Read the full article at https://lnkd.in/guC9dnqA, see the video at https://lnkd.in/gVxz-qmk and at https://lnkd.in/gUTAnCZw, and at https://zalma.com/blog plus more than 5200 posts.
In Illinois Department of Insurance, Insurance Compliance Department v.USA Water And Fire Restoration, Inc., And Nicholas Pacella, Individually And As Officer, Nos. 23WC021808, 18INC00228, No. 25IWCC0467, the Illinois Department of Insurance (Petitioner) initiated an investigation after the Injured Workers’ Benefit Fund (IWBF) was added to a pending workers’ compensation claim. The claim alleged a work-related injury during employment with the Respondents who failed to maintain workers’ compensation Insurance.
Company Overview:
USA Water & Fire Restoration, Inc. was incorporated on January 17, 2014, and dissolved on June 14, 2019, for failure to file annual reports and pay franchise taxes. It then operated under assumed names including USA Board Up & Glass Co. and USA Plumbing and Sewer. The business ...
Arsonist Incompetently Moves Pro Se to Avoid Prison
Post 5239
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In Christopher A. Barosh v. Morris Houser, et al., Civ. No. 22-0769, United States District Court, E.D. Pennsylvania (November 25, 2025) a convicted arsonist and insurance fraudster moved the USDC acting in Pro se filed Objections to Magistrate Judge Reid’s Recommendation that the US District Judge dismiss his § 2254 Petition to avoid jail.
BACKGROUND
In October 2005, Barosh set fire to his girlfriend’s Philadelphia home — some 25 hours before the cancellation of the property’s insurance policy. Several witnesses saw Barosh leaving the property shortly before the fire erupted. After the fire, Barosh made “two separate admissions of guilt.”
He attempted to pay an acquaintance to provide him with an alibi for the time of the arson. The eyewitnesses, brother, and ...
Conditional Release Allows Supplemental Claims
Post 5238
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A Release Should Totally Resolve Dispute
In Harvey et al. v. Hall, No. A25A1774, Court of Appeals of Georgia, Fourth Division (December 3, 2025) Paul Harvey, an employee of Arthur J. Dovers (d/b/a 3D Mobile Home Services), drove a truck towing a trailer loaded with machinery and equipment. Harvey fell asleep, veered off the road, and crashed into a culvert, causing Lamar Hall serious injuries.
FACTS OF SETTLEMENT
On August 18, 2020, Hall signed a limited liability release under OCGA § 33-24-41.1, releasing Harvey, Dovers, and their insurer (Georgia Farm Bureau Insurance Company) from liability for the accident in exchange for $50,000, “except to the extent other insurance coverage is available which covers the claim.”
Dovers’s general liability insurer (Republic-Vanguard ...
The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
