IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEBRASKA

GRANITE REINSURANCE

COMPANY, LTD, A Barbados

Corporation, 

Plaintiff,

v.

ANN M. FROHMAN, Director of

Insurance, in her capacity as

Liquidator, FEDERAL CROP

INSURANCE CORPORATION, a

Corporation within the United States

Department of Agriculture, and RISK

MANAGEMENT AGENCY, an

agency of and within the United

States Department of Agriculture,

Defendants.

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8:08CV410

MEMORANDUM AND ORDER

The plaintiff, Granite Reinsurance Company, Ltd, (“Granite”) filed suit against

defendants Federal Crop Insurance Corporation and Risk Management Agency

(“FCIC/RMA”), and Ann M. Frohman, Director of Insurance, in her capacity as

Liquidator for an insolvent insurer, American Growers Insurance Company

(“Growers”). The plaintiff’s complaint alleges Growers owes Granite for unpaid

reinsurance premiums; FCIC/RMA accepted responsibility for Growers’ liabilities,

including the unpaid premium debt owed to Granite, in exchange for receiving

Growers’ assets and funds; and FCIC/RMA has refused to pay Granite for Growers’

unpaid premiums. The complaint seeks an order requiring FCIC/RMA to pay the

Liquidator the amount Growers owes to Granite, and once that payment is made, an

order requiring the Liquidator to pay the funds she received from FCIC/RMA to

Granite. Filing No. 1-2, at CM/ECF p. 12. 
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The case was filed in the District Court of Lancaster County, Nebraska and

pursuant to 28 U.S.C. § 1442, was removed to federal court by FCIC/RMA. The

Liquidator and Granite moved for remand, both parties arguing the state court has

exclusive jurisdiction over actions arising from Growers’ insolvency action pursuant

to the McCarran-Ferguson Act, 15 U.S.C. § 1011 et seq. The court held the

McCarren-Ferguson Act did not divest the federal court of jurisdiction over Granite’s

claim against the FCIC/RMA and the case was properly removed.

FCIC/RMA has moved to transfer this case to the United States District Court

for the District of Columbia. Filing No. 46. FCIC/RMA claims Granite, a Barbados

Corporation, is not a Nebraska resident and does not engage in business in Nebraska,

and therefore the United States District Court for the District of Columbia is the

proper venue for this case. 7 U.S.C. § 1506(d). Granite does not oppose

FCIC/RMA’s motion to transfer. Filing No. 53.

The Liquidator has moved to dismiss Granite’s case against the Liquidator for

lack of subject matter jurisdiction and for failure to state a claim. Filing No. 47. Any

claim Granite may have against the Liquidator is contingent upon prevailing against

FCIC/RMA. If Granite fails to recover against FCIC/RMA, Granite has no claim

against theLiquidator. If Granite obtains a judgment against FCIC/RMA, the amount

of that judgment must be paid to the Liquidator, and if that occurs, Granite can seek

recovery from the Liquidator. 

Although this case was properly removed, in the event Granite prevails against

FCIC/RMA, a federal court cannot enter Granite’s requested judgment against the

Liquidator. Under Nebraska law, the District Court of Lancaster County, Nebraska

is the sole forum for handling the assets of the Growers’ insurance liquidation,

(Nebraska Insurers Supervision, Rehabilitation and Liquidation Act (“Nebraska

Receivership Act”),(Neb. Rev. Stat. §44-4801 et seq). This court cannot enter an

order for distribution of any FCIC/RMA judgment proceeds without interfering with
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the authority and jurisdiction of the liquidation court in violation of the

McCarran-Ferguson Act. 

By moving to dismiss, the Liquidator has advised this court that she claims no

interest in the outcome of Granite’s litigation against FCIC/RMA, and she will

therefore forego any right she may have to remain in this litigation as an interested

or intervening party. See e.g., Fed. R. Civ. P. 24(a)(2) & (b)(2). The Liquidator’s

motion to dismiss seeks dismissal under Rules 12(b)(1) and 12(b)(6) of the Federal

Rules of Civil Procedure. Rather than dismissing Granite’s claim against the

Liquidator, the court will remand the claim, along with any arguments for dismissal

for failure to state a claim, to the District Court of Lancaster County, Nebraska. See

e.g., Rivera-Carrion v. Miranda 529 F. Supp. 2d 296, 300 (D. P. R. 2008)(upholding

removal of plaintiffs’ claims against only the federal defendants pursuant to 28 U.S.C.

§ 1442, while the claims against the non-federal defendants remained pending in state

court); Somers v. Luterbach, 2008 WL 1780936, 1 (E.D. Wis. 2008)(remanding state

claims to state court once the claims against the federal government, removed to

federal court pursuant to 28 U.S.C. § 1444, were resolved in the federal forum).

Pursuant to 7 U.S.C. § 1506(d), and with the agreement of FCIC/RMA and

Granite, Granite’s claim against FCIC/RMA will be transferred to the United States

District Court for the District of Columbia. 

Accordingly,

IT IS ORDERED:

1) The motion to dismiss filed by defendant Ann M. Frohman, Director of

Insurance, in her capacity as Liquidator for an insolvent insurer,

American Growers Insurance Company (“Growers”), (filing no. 47), is

denied. However, the claim by Granite Reinsurance Company, LTD

against the Liquidator is remanded to the District Court of Lancaster
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County, Nebraska. The Clerk shall mail by certified mail return receipt

requested a copy of this memorandum and order to the Clerk of the

District Court of Lancaster County, Nebraska so that the state court is

apprised of the remand of Granite’s claim against the Liquidator.

2) The motion to transfer filed by defendants Federal Crop Insurance

Corporation and Risk Management Agency, (filing no. 46), is granted,

and the claim by Granite Reinsurance Company, LTD against 

defendants Federal Crop Insurance Corporation and Risk Management

Agency shall be transferred to United States District Court for the

District of Columbia.

3) The Clerk is directed to transmit the file in this action to the United

States District Court for the District of Columbia. 

4) There being nothing further required of this Court in this forum, the

Clerk shall terminate this case for statistical purposes.

DATED this 26 day of October, 2009. rd

BY THE COURT:

Richard G. Kopf

United States District Judge