## United States Court of Appeals FOR THE EIGHTH CIRCUIT

_____________ No. 95-2762MN

_____________ Liberty State Bank, a Minnesota * banking corporation, * * Appellant, *

* Appeal from the United States v. * District Court for the District * of Minnesota. Minnesota Life and Health Insurance * Guaranty Association; Minnesota * Commissioner of Commerce, * * Appellees. *

_____________ Submitted: May 14, 1998

Filed: July 13, 1998

_____________ Before RICHARD S. ARNOLD, JOHN R. GIBSON, and FAGG, Circuit Judges.

_____________ FAGG, Circuit Judge.
In this action to recover losses on municipal bonds backed by a defunct insurer, bondholder Liberty State Bank ap peals the district court’s grant of summary judgment to t he Minnesota Life and Health Insurance Guaranty Association and the Minnesota Commissioner of Commerce. We affirm.-2-

In 197 7, the Minnesota Life and Health Insurance Guaranty Association Ac t created the Minnesota Life and Health Insurance Guaranty Association, a nonprofi t entity consisting of all life and health insurance companies operating in Minnesota, to guaran tee the covered policies of member companies in the event of insolvency. See Minn

. Stat. §§ 61B.01-.16 (1992). Eight years later, the Minnesota legislatur e auth orized the issuance of a new type of insurance product known as a “fundin g a g reement.” See Minn. Stat. § 61A.276 (1996). Executive Life Insurance Company,
a C alifornia company operating in Minnesota, began selling municipal guarantee d investment contracts (“ muni-GICs”), investment and funding agreements that back the obligations of municipal bond issuers as a form of collateral, to the trustees of municipal bo nd issuers in Minnesota. Liberty invested in municipal bonds backed by Executive Life ’s muni-GICs. After Executive Life became insolvent and defaulted on payments owing to the trustees, the bonds lost value and Liberty suffered investment losses. In January 1992, Liberty sought reimbursement from the Association under the Act, and the Associ ation denied Liberty’s claim, stating the Act did not cover municipal bon d funding agreements. While Liberty’s administrative appeal was pending, the Minnesota legislature enacted a clarifying, r etroactive amendment expressly excluding muni-GICs from the Act’s coverage. See Minn. Stat. § 61B.03, s ubd. 5(d) (1992). Relying on the amendment, the Minnesota Commissioner of Commerce upheld the Associatio n’s denial in a final agency decision. Liberty appealed to the Minnesota Co urt of Appeals, and the Association removed the case to federal court. In the federal district court, the parties filed cros s motions for summary judgment bas ed on the agency record. Liberty asserted only that applying the amendment to its claim violates substantive due process because the amendment’s application deprives Liberty o f a protected property right to payment under the Act. The district cour t rejected Liberty’s claim. In response to a certified question posed by the district court, the Minnesota Supreme Court held the right to payment under the Act is a purel y statutor y right, see Honeywell, Inc. v. Minnesota Life & Health Ins. Guar. Ass’n , 518 N.W.2d 557, 563 (Minn. 1994), which can be retroactively modified or eliminated-3-

unless vested, see Hammond v. United States , 786 F.2d 8, 11-12 (1st Ci r. 1986). Based on its own analysis of the

Act, the district court decided any statutory right to payment did not vest until the Minnesota Commiss ioner of Commerce decided Liberty’s appeal. Be cause that did not happen until after the Act’s amendment, Liberty had no veste d right to payment under the pre-amendment Act, and the amendment’s retroactiv e applicat ion to Liberty’s claim did not deprive Liberty of a vested property right i n violation of substantive due process. Rather than challenging the basis for the district court’s decision, Liberty takes
a different approach for the first time on appeal. Liberty asserts application of th e retroactive amendment to its claim violates the Contracts Clause, U.S. Const. art. I, § 10, cl.1, because the amendment relieved the Association of its contractual obligation to guaranty payments based on muni-GICs. Liberty also contends the 1992 amendment vio lates due process for a new reason--because the amendment arbitrarily eliminate s cove rage for muni-GICs without furthering any legitimate state interest. Althoug h Liberty had raised a due process claim based on vested rights, the district cour t expressly noted that Liberty had not challenged the amendm ent’s purpose or rationality.
Because Li berty did not assert its claims in the district court, we need no t consider t hem. “A district court should be specifically informed of the precis e cons titutional issues that a litigant wants it to decide.” Norwest Bank Neb., N.A. v

. W.R. Grace & C o.--Conn. , 960 F.2d 754, 757 (8th Cir. 1992). Thus, we do no t consider constitutional arg uments raised for the first time on appeal absent exceptional circu mstances, see id. , such as when the proper result is clear or when our failure t o cons ider the new issue would result in injustice, see Von Kerssenbrock-Praschma v

. Saunders , 121 F.3d 373, 376 (8th Cir. 1997). Liberty acknowledges its failure to raise the issues below, but asserts we should exercise our discretion to cons ider them because of the unique facts of this case. Liberty says the parties and the district court wer e aware of the issues because they had alr eady been raised in a case involving a different retroactive amendment to the same Act. See Honeywell, Inc. v. Minnesota-4-

Life & Health Ins. Guar. Ass’n , 110 F.3d 547, 556-57 (8th Cir.) (en banc) (holdin g retroactive amendment specifically excluding nonres ident benefit plan participants from Act’s coverage did not violate substantive due process or the Contract Clause), cert
. denied , 118 S. Ct. 156 (1997). A district court’s awareness of pot ential issues does not alleviate a party’s duty to raise them, however. Liberty adds that before we resolved the Honeywell

appeal en ba

nc, it was not clear that the rational basis test applied to its
su bstantive due process claim, see id. at 554-55, and the weight of authority held th e right to reimbursement under the Act was statutory rather th an contractual in nature, see id. at 557, 560 (concurring and dissenting opinions form majority concluding right t o reimbur sement

under Act is contractual, contrary to state court’s earlier holding)

. Parties are required to raise claims to preserve them, however, even when th e controlling law is unclear or the claims are against the weight of existing authority.

Un der Honeywell , Liberty’s claims fail on the merits anyway. To satisf y substantive due process, the amendment’s ret roactive application need only be justified by a rational legislative purpose. See id. at 555. As we said in Honeywell , Minnesota has a legitimate interest in regulating the insurance industry and in ensuring th e Asso ciation’s economic life. See id. We held the Minnesota legislature ca n ret roactively amend its guaranty association statute to cure drafting defects, to avoi d unintended benefits or consequences, and to assure adequate funding of th e Associati on’s operations. See id. We deemed retroactive amendment a rational way to achieve the state’s legitimate goals. See id. at 556. Further, to decide Liberty’ s Contra ctClause claim, we consider whether the amendment has a legitimate publi c purp ose, then defer to the Minnesota legislature’s judgments about the remedy’ s re asonableness. See id. at 559. “[I]t is reasonable to amend a statute to eliminat e unforeseen consequences or windfall benefits, eve n if [the amendment] impairs existing contracts.” Id.-5-

Like t he amendment in Honeywell , the amendment here was an appropriat e cur ative measure designed to clarify appropriate coverage for a product that wa s unanticipat

ed when the Act was initially passed in 1977. See id. at 555-56. Because funding agreements were not sold in Minnesota when the Act was first enacted, th e legi slature probably did not consider how the Act specifically applied to them, an d claims to recover investments in muni-GICs posed a substantial unforesee n consequence. See id. at 555-56, 559. Eliminating the unforeseen benefit that limited Association funds would be used to bail out losses incurred by bond traders like Liberty just ifies the retroactive amendment in this case. We thus conclude retroactiv e application of the amendment stating the Act does not cover muni-GICs does not violate substantive due process or the Contract Clause.
We affirm the district court. A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.