State of Louisiana v. RLI Insurance Company, LLC
Court Type : District
Case Type : Commercial Suretyship
Case Subtype : Reclamation
State : Louisiana
Case Date : 30/09/2020
Surety – Commercial Suretyship – Reclamation
Surety – Surety Rights – Jurisdiction, Venue, Indispensable Partiers, Procedural Issues
Bankruptcy – Jurisdiction and Withdrawal of Reference by District Court
In State of Louisiana v. RLI Insurance Company, LLC, 2020 U.S. Dist. Lexis 179794 (M.D. La. September 30, 2020), the principal on bonds guaranteeing that certain oil and gas wells would be plugged and abandoned filed for bankruptcy and abandoned the wells covered by the bonds. The Louisiana Department of Natural Resources (DNR) sued the surety in Louisiana state court, and the surety removed the case to federal court. The court adopted the Report and Recommendation of the Magistrate Judge dated, September 15, 2020, and remanded the case. The DNR was an alter ego of the State and, therefore, not subject to diversity jurisdiction. The suit was not a core proceeding in the bankruptcy matter, and even if it were "related to" the bankruptcy proceeding "both permissive abstention, 28 U.S.C. §1334(c), and equitable remand, 28 U.S.C. §1452(b), apply here and support remand of the State’s cause of action."
