*District Judge of the Eastern District of Louisiana,

sitting by designation. 

1

United States Court of Appeals,

Fifth Circuit.

No. 93-3182.

Roosevelt E. COAR, Sr., Administrator of the Estate of the minor

child, Brian C. Coar, Plaintiff-Appellant,

v.

NATIONAL UNION FIRE INSURANCE CO., Defendant-Appellee.

April 26, 1994.

Appeal from the United States District Court for the Eastern

District of Louisiana.

Before JONES and DeMOSS, Circuit Judges, and SCHWARTZ,* District

Judge.

EDITH H. JONES, Circuit Judge:

The father of a boy who witnessed an airplane crash sued the

airline's liability insurer under Louisiana's direct action

statute. The district court ruled that it had jurisdiction over

the case under 28 U.S.C. § 1334 because it related to the

tortfeasor's pending bankruptcy case. The father appeals the

jurisdictional ruling and the amount of damages awarded. We

affirm.

BACKGROUND

Roosevelt Coar, Sr., acting on behalf of his son, Brian C.

Coar, brought suit against National Union Fire Insurance Company

under Louisiana's direct action statute, La.Rev.Stat. § 22:655, in

Louisiana state court. National Union insured L'Express, a small

Louisiana-based commercial airline operating in a Chapter 11
 

1The bankruptcy was later converted to a Chapter 7 case. 

2

reorganization.1 In July, 1991, its pilot attempted to land an

airplane in the midst of a thunderstorm and crashed into a

residential neighborhood in Birmingham, Alabama. Brian Coar, then

11 years old, witnessed the crash at close range and went near the

wrecked airplane to offer aid. He observed the grim results of the

crash, including the victims and a surviving passenger. He was

also exposed to flames and smoke when the airplane caught fire.

Roosevelt Coar, Sr. claims that his son suffers post-traumatic

stress disorder as a result of witnessing the crash, and he sought

damages for intentional and negligent infliction of mental

distress.

National Union removed the case to federal court in the

Eastern District of Louisiana pursuant to 28 U.S.C. § 1452,

asserting that the case related to the pending bankruptcy case of

L'Express under 28 U.S.C. § 1334(b). The district court denied

Coar's motion to remand, reasoning that the bankruptcy estate might

be affected by the outcome of the case against National Union. The

district judge later referred the case to a magistrate judge with

both parties' consent under 28 U.S.C. § 636(c). Such referral of

a non-core personal injury case was permissible under 28 U.S.C. §

636(c). Matter of Nix, 864 F.2d 1209, 1210-11 (5th Cir.1989).

National Union effectively stipulated that L'Express was negligent

at the pretrial conference. The magistrate judge held a hearing,

found for the plaintiff, and awarded $11,835 in damages. Coar

appeals the jurisdictional ruling and the amount of damages and
 

2The case was briefed and decided in the district court on

the question of § 1334 jurisdiction, and that is the issue we

decide. In oral argument, however, it was conceded by appellant

that diversity jurisdiction probably also exists. 28 U.S.C. §

1332(c)(1). 

 

3It is unclear whether the district judge knew the exact

number of pending claims. At oral argument counsel informed this

court that three suits are currently in litigation. 

3

attorney fees awarded.

DISCUSSION

28 U.S.C. § 1334 grants to the district courts "original but

not exclusive jurisdiction of all civil proceedings arising under

Title 11, or arising in or related to cases under Title 11." The

main question in this case is whether the appellant's direct action

against the debtor's insurer vested jurisdiction in the district

court as an action related to the bankruptcy of L'Express.2

In finding jurisdiction, the district judge discussed the

possibility that issues such as the extent of insurance coverage,

the insured's negligence, and the plaintiff's damages might all be

decided in such a way as to affect the bankruptcy estate. She did

not explicitly rule that the insurance policy or its proceeds were

the property of the debtor's estate. The district judge knew,

however, that other suits arising out of the airplane crash were

pending against L'Express or National Union.3 At the time of

removal the choice-of-law issue was in dispute. If Alabama's

wrongful death statute applied in these cases, punitive damages of

$5 million to $15 million per death were possible. National

Union's policy limits are $50 million.

The district judge was also aware of contemporaneous
 

4Compare two cases focusing on how the tort action affected

the bankruptcy estate; Wedgeworth v. Fibreboard, 706 F.2d 541,

546-48 (5th Cir.1983) (approves denying joinder of bankrupt

asbestos manufacturers' insurance companies under Louisiana

direct action statute in ongoing tort suit against other asbestos

4

proceedings occurring in the bankruptcy case (also filed in the

Eastern District of Louisiana). Coar's attorney had appeared at a

creditors' committee meeting for L'Express, had represented

Roosevelt Coar to be a creditor in papers filed with the bankruptcy

court, and had filed a motion with that court to dismiss the

bankruptcy proceedings. Finally, during the removal dispute the

bankruptcy judge issued an order requiring his approval for all

proposed settlements arising from the July 1991 crash.

Given the facts before us and before the district court, we

agree that Coar's lawsuit against the debtor's insurer "related to"

the pending bankruptcy case. As has been noted, there were

multiple claims on the liability policy, the possibility of very

high punitive damages awards to crash claimants, one or more

crash-related claims in the bankruptcy proceedings, and an order by

the bankruptcy judge compelling his approval of all proposed

settlements arising out of the crash. These circumstances

constituted a cognizable threat that unless the claims against the

policy were marshalled in accord with the bankruptcy proceeding,

the policy proceeds would not cover plaintiffs' claims and could

expose the debtor's estate. Houston v. Edgeworth, 993 F.2d 51, at

56 n. 21 (5th Cir.1993). As the district court put it, the

question here was not whether the bankruptcy affects the tort

action, but whether the tort action affects the bankruptcy.4 This
manufacturers); In re Davis, 730 F.2d 176, 184 (5th Cir.1984)

(bankruptcy court has power to stay actions against debtor's

insurers, officers and directors under certain circumstances). 

5

court need not go so far as to apply the broad definition of § 1334

"related to" jurisdiction alluded to by this court in Matter of

Wood, 825 F.2d 90, 93 (5th Cir.1987), in holding that under the

circumstances, the tort suit under Louisiana's direct action

statute "related to" the debtor's estate and therefore to its

pending bankruptcy proceeding so closely as to establish federal

court jurisdiction.

Appellant made no effort to support his conclusional argument

that the federal court should have abstained from hearing this case

under 28 U.S.C. § 1334(c)(1). We reject it.

Further, we have reviewed Coar's arguments concerning the

amount of damages and attorneys fees awarded but do not find any

abuse of discretion.

The judgment of the district court is therefore AFFIRMED.