Stewart v. Western Heritage Insurance Co.

Boardwalk Lounge, Inc. (Boardwalk) was previously sued for a patron’s wrongful death. Susie Pierce Stewart (plaintiff) was Boardwalk’s sole shareholder, officer, and registered agent, and Western Heritage Insurance Company (Western) (defendant) was Boardwalk’s insurer. Ultimately, default judgment was entered against Boardwalk in the action. Western denied having any obligation to defend or indemnify Boardwalk. Boardwalk and Stewart filed for bankruptcy. On October 23, 2003, Stewart filed this action against Western in a Mississippi federal district court, claiming breach of insurance contract and bad faith. The district court entered a case-management order, Western moved for summary judgment, and a trial date was set. On July 6, 2004, the bankruptcy trustee for Boardwalk filed a Mississippi state court action against Stewart and Western. The trustee’s complaint mirrored the federal complaint except for some additional claims. Western removed the action to federal court, and the trustee moved to remand. At a hearing in February 2005, the court stayed this action pending a ruling on the trustee’s motion to remand. On March 22, the trustee’s remand motion was granted. On March 31, the district court entered an order sua sponte, terminating all pending motions and staying this federal action until the trustee’s state court action was resolved. Western appealed.