Western Insurance v. A and H Insurance
784 F.3d 725
10th Cir.2015Background
- Western Insurance, insolvent, is in liquidation under the Utah Insurer Receivership Act; a Special Deputy Liquidator brought an ancillary state-court action to recover transfers to affiliates.
- The ancillary suit originally included Utah-resident defendants; after two Utah defendants settled and were dismissed, remaining defendants removed the case to federal court based on diversity jurisdiction.
- The Liquidator moved to remand; he argued Burford abstention and, later in reply/hearing, that the McCarran–Ferguson Act (reverse preemption) required remand because federal jurisdiction would interfere with the Utah Receivership Act’s recovery-from-affiliates scheme.
- The district court granted remand, making mixed statements: it explicitly rejected Burford abstention but also held that McCarran–Ferguson reverse preemption applied and said it “should abstain,” producing an ambiguous rationale.
- Defendants appealed. The Tenth Circuit evaluated whether it had appellate jurisdiction under 28 U.S.C. § 1447(d), which bars review of remand orders unless the remand was based on abstention rather than lack of subject-matter jurisdiction.
- After reviewing the record, the court concluded the district court’s remand was based “to a fair degree” on McCarran–Ferguson reverse preemption (i.e., lack of subject-matter jurisdiction) and therefore the appeal was not reviewable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court should abstain under Burford from hearing the ancillary receivership suit | Liquidator: Burford abstention appropriate because state liquidations and regulatory scheme present complex state-law issues and implicate substantial state interests | Defendants: Federal diversity jurisdiction is proper; Burford abstention inapplicable to legal claims seeking recovery for the estate | District court rejected Burford; Tenth Circuit found district court did not rely on abstention as primary basis for remand |
| Whether McCarran–Ferguson reverse preemption bars federal jurisdiction and requires remand | Liquidator: McCarran–Ferguson causes reverse preemption of federal diversity jurisdiction because federal adjudication would impair Utah’s insurance receivership statute (esp. recovery-from-affiliates) | Defendants: Diversity jurisdiction controls; McCarran–Ferguson does not defeat federal jurisdiction here | District court concluded McCarran–Ferguson reverse preemption applied; Tenth Circuit found remand was based to a fair degree on that conclusion and thus non-reviewable |
| Whether the court of appeals has jurisdiction to review the remand order under 28 U.S.C. § 1447(d) | Liquidator: Remand was proper and not reviewable if based on lack of jurisdiction; urges dismissal | Defendants: Remand was based on abstention (reviewable); appeal should be heard on merits | Tenth Circuit held it lacked appellate jurisdiction because the remand was grounded in lack of subject-matter jurisdiction (reverse preemption) |
| Standard for assessing reviewability when district court gives mixed rationale | Liquidator: focus on district court’s substantive analysis of McCarran–Ferguson supports non-reviewability | Defendants: ambiguous oral statements invoking abstention enable appellate review | Tenth Circuit applied Dalrymple to review the record and concluded remand was "based to a fair degree" on lack of jurisdiction, so appeal dismissed |
Key Cases Cited
- Burford v. Sun Oil Co., 319 U.S. 315 (1943) (established federal abstention when federal review would disrupt state efforts to resolve complex state regulatory matters)
- New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350 (1989) (clarified Burford abstention factors)
- Things Remembered, Inc. v. Petrarca, 516 U.S. 124 (1995) (§ 1447(d) applies to remands based on lack of subject-matter jurisdiction or timely procedural defects)
- Quackenbush v. Allstate Ins., 517 U.S. 706 (1996) (remands based on abstention are reviewable)
- Davister Corp. v. United Republic Life Ins. Co., 152 F.3d 1277 (10th Cir. 1998) (three-part test for McCarran–Ferguson reverse preemption)
- Dalrymple v. Grand River Dam Authority, 145 F.3d 1184 (10th Cir. 1998) (court must independently review record to determine grounds for remand; remand based "to a fair degree" on lack of jurisdiction is nonreviewable)
- Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224 (2007) (appellate review barred when remand relies on a ground colorably characterized as subject-matter jurisdiction)
- Moody v. Grand Western Ry. Co., 536 F.3d 1158 (10th Cir. 2008) (discusses limits on appellate review when district court invokes subject-matter jurisdiction as rationale for remand)
- Kircher v. Putnam Funds Trust, 547 U.S. 633 (2006) (if remand rests on lack of jurisdiction, review is unavailable regardless of legal error)
- Briscoe v. Bell, 432 U.S. 404 (1977) (quoting principle on nonreviewability of jurisdiction-based remands)