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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Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Proof of Highly Contaminated Water is Required for Extra Payments
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In Lee Lifeng Hsu and Jane Yuchen Hsu v. State Farm Fire And Casualty Company, C. A. No. N24C-09-020 CLS, Superior Court of Delaware (February 27, 2026) a claim to State Farm who paid approximately $61,000 after assessments but denied coverage for additional items including ceramic tiles, the kitchen floor ceiling, underlayment plywood, and numerous personal property items resulted in suit by the Hsu’s acting in pro per.
Facts
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Insurance Condition Requires Following the Intent of the Parties
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Principles of Contract Interpretation Compels Reading Contract as Written
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In Eastside Floor Supplies, Ltd. v. SCS Agency, Inc., Hanover Insurance Company, et al., No. 2024-01501, Index No. 609883/19, 2026 NY Slip Op 01488, Supreme Court of New York, Second Department (March 18, 2026)
In May 2019, a fire damaged business personal property belonging to the plaintiffs, which was stored in portable storage containers at their Manhattan premises. At the time of the fire, the plaintiffs were insured under a businessowners insurance policy (BOP) issued by the defendant Hanover Insurance Company which provided general coverage for business personal property, and which included a specific extension for “Business Personal Property Temporarily in Portable Storage Units” (the portable storage ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
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Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
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ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
