Schaal v. IAT Insurance Group Inc
2:25-cv-00221
E.D. Wash.Sep 2, 2025Background
- Plaintiff Florida Schaal (WA resident, personal representative of decedent) sued Transguard, IAT, and an adjuster in Spokane County Superior Court alleging wrongful denial of an accidental death claim and that Transguard used IAT (unlicensed in WA) to investigate.
- Defendants: Transguard (Illinois corp.), IAT (North Carolina corp., unlicensed in WA), and adjuster Jennifer Sais (Illinois resident). Complaint seeks at least $1,300,000 and asserts breach, negligence/bad faith, WCPA, WIFCA, fraud/unconscionability, estoppel/waiver.
- Defendants removed to federal court on diversity grounds (28 U.S.C. § 1332(a)(1)).
- Plaintiff moved to remand, arguing (1) the McCarran–Ferguson Act precludes federal jurisdiction because RCW 48.05.215(1) purportedly grants exclusive jurisdiction to Washington courts over unauthorized insurers, and (2) Burford abstention requires the federal court to decline jurisdiction.
- The district court (Judge Rebecca L. Pennell) denied the motion to remand, concluding RCW 48.05.215(1) is a long-arm statute (not an exclusive-forum statute), McCarran–Ferguson does not divest diversity jurisdiction, Burford abstention does not apply, and attorney fees were not warranted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McCarran–Ferguson bars federal diversity jurisdiction because RCW 48.05.215(1) grants exclusive jurisdiction over unauthorized insurers | RCW 48.05.215(1) confers exclusive jurisdiction to WA courts; federal diversity jurisdiction would be precluded by McCarran–Ferguson | RCW 48.05.215(1) is a long-arm/personal-jurisdiction provision, not an exclusive-forum statute; applying diversity jurisdiction does not invalidate, impair, or supersede state law | Court held McCarran–Ferguson does not divest jurisdiction; RCW 48.05.215(1) is a long-arm statute and diversity jurisdiction stands |
| Interpretation of RCW 48.05.215(1) — exclusive forum or long-arm | Statute should be read to require WA courts as exclusive forum for suits against unauthorized insurers | Statute’s “thereby submits” language aligns with long-arm provisions and does not create exclusive original jurisdiction | Court held the statute is a long-arm/personal-jurisdiction provision, not an exclusive jurisdiction grant |
| Whether Burford abstention requires dismissal of this federal diversity case | Insurance matters and WA’s insurance regulatory scheme warrant Burford abstention; WA designated its courts as proper forum | Burford not satisfied: WA did not集中 (concentrate) these suits in a particular court and retention would not disrupt state policy; issues are not unusually complex | Court denied Burford abstention — first and third Burford factors not met; case retained |
| Entitlement to attorney fees for removal | Plaintiff sought fees/costs for improper removal | Defendants argued removal was objectively reasonable based on diversity jurisdiction | Court denied fees because defendants had an objectively reasonable basis to remove |
Key Cases Cited
- Caterpillar Inc. v. Lewis, 519 U.S. 61 (discusses scope of federal diversity jurisdiction)
- Humana Inc. v. Forsyth, 525 U.S. 299 (McCarran–Ferguson does not bar federal law absent conflict with state insurance regulation)
- Prudential Ins. Co. v. Benjamin, 328 U.S. 408 (background on McCarran–Ferguson and state regulation of insurance)
- Burford v. Sun Oil Co., 319 U.S. 315 (establishes Burford abstention doctrine)
- Moore–Thomas v. Alaska Airlines, Inc., 553 F.3d 1241 (presumption against removal; defendant bears burden to show removal proper)
- Hawthorne Sav. F.S.B. v. Reliance Ins. Co. of Ill., 421 F.3d 835 (discusses whether diversity jurisdiction operation invalidates state insurance laws)
- Blumenkron v. Multnomah County, 91 F.4th 1303 (Ninth Circuit discussion of Burford abstention factors)
- Tucker v. First Maryland Sav. & Loan, Inc., 942 F.2d 1401 (application of Burford factors in insurance context)
- Martin v. Franklin Capital Corp., 546 U.S. 132 (standards for awarding fees after improper removal)
- Grimes v. Crown Life Ins. Co., 857 F.2d 699 (Tenth Circuit view that McCarran–Ferguson does not abrogate federal courts' ability to hear diversity insurance cases)
- Atl. & Pac. Ins. Co. v. Combined Ins. Co. of Am., 312 F.2d 513 (early circuit discussion that McCarran does not modify diversity jurisdiction)