*The Honorable Roger L. Wollman succeeded the Honorable Pasco M. Bowman

as Chief Judge of the United States Court of Appeals for the Eighth Circuit at the end

of the day on April 23, 1999.

**The Honorable E. Richard Webber, United States District Judge for the Eastern

District of Missouri, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

_____________

No. 98-3097

_____________

Ann M. LaBarre, *

*

Appellant, *

*

v. *

* Appeal from the United States

Credit Acceptance Corporation, a * District Court for the District

Michigan corporation; Bankers & * of Minnesota.

Shippers Insurance Company, sued as *

"Bankers and Shippers Insurance * 

Company", a foreign corporation; First *

Lenders Insurance Services, Inc., a *

foreign corporation, *

*

Appellees. *

_____________

 Submitted: March 10, 1999

Filed: April 28, 1999

_____________

Before FAGG and WOLLMAN,* Circuit Judges, and WEBBER,** District Judge.

_____________
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FAGG, Circuit Judge.

Ann M. LaBarre appeals the district court’s dismissal of her complaint against

Credit Acceptance Corporation (CAC), Bankers & Shippers Insurance Company

(Bankers), and First Lenders Insurance Services, Inc. (First Lenders). We affirm in

part, reverse in part, and remand for further proceedings. 

LaBarre’s complaint alleges the following facts, which we assume to be true for

the purposes of LaBarre’s appeal. See Doe v. Norwest Bank Minnesota, N.A., 107

F.3d 1297, 1303-04 (8th Cir. 1997). When LaBarre purchased a used vehicle from a

Minnesota car dealer, she signed a retail installment contract that stated the dealer was

assigning the contract to CAC, a company which provides financing and collection

related services to car dealers. Because LaBarre bought the vehicle on credit, the

installment contract required LaBarre to maintain insurance on her car until the loan

was repaid and permitted LaBarre to fulfill this requirement by providing her own

insurance or by obtaining insurance through CAC. LaBarre directed CAC to purchase

limited physical damage (LPD) insurance on her behalf. From Bankers and First

Lenders, CAC had previously purchased vendor single interest/collateral protection

(VSI) insurance, which covered CAC for any loss in the amount of CAC’s interest in

the vehicles CAC financed. Rather than obtaining LPD insurance for LaBarre, CAC

simply billed LaBarre for its VSI insurance coverage on LaBarre’s car. 

LaBarre filed this class action lawsuit against CAC, Bankers, and First Lenders,

alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO)

and various state law causes of action. CAC, Bankers, and First Lenders filed motions

to dismiss LaBarre’s complaint for failure to state a claim upon which relief could be

granted, see Fed. R. Civ. P. 12(b)(6), and the district court dismissed LaBarre’s

complaint in its entirety. On appeal, we will affirm the district court’s dismissal of

LaBarre’s complaint only if it appears beyond a reasonable doubt that LaBarre can

prove no set of facts entitling her to relief. See Doe, 107 F.3d at 1304. 
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LaBarre first contends the district court committed error in dismissing her RICO

claims against CAC, First Lenders, and Bankers. LaBarre alleges in her complaint that

CAC, First Lenders, and Bankers engaged in a scheme to defraud purchasers such as

LaBarre by obtaining “VSI insurance for CAC instead of the property insurance

contracted for in the [p]urchasers’ retail [i]nstallment [c]ontracts.” Compl. ¶ 66.

LaBarre contends CAC, First Lenders, and Bankers “share[d] in the insurance charges

and overcharges obtained from the sale of undisclosed higher-costing VSI [insurance]

that had not been contractually authorized by [LaBarre].” Compl. ¶ 62. LaBarre

alleges these activities constitute a pattern of racketeering activity involving mail fraud

and wire fraud in violation of RICO. See 18 U.S.C. §§ 1962(c), (d) (1994). The

district court concluded the McCarran-Ferguson Act barred all of LaBarre’s RICO

claims. 

The McCarran-Ferguson Act states, “No Act of Congress shall be construed to

invalidate, impair, or supersede any law enacted by any State for the purpose of

regulating the business of insurance . . . unless such Act specifically relates to the

business of insurance.” 15 U.S.C. § 1012(b) (1994). In other words, the McCarranFerguson Act bars the application of a federal statute if the federal statute does not

relate specifically to the business of insurance, a state statute has been enacted to

regulate the business of insurance, and the federal statute would invalidate, impair, or

supersede the state statute. See Humana Inc. v. Forsyth, 119 S. Ct. 710, 716 (1999);

Doe, 107 F.3d at 1305. Because RICO does not relate specifically to the business of

insurance and because Minnesota has enacted a comprehensive statutory scheme to

regulate the business of insurance, see Doe, 107 F.3d at 1306, the decisive question is

whether RICO’s application to the activities of CAC, First Lenders, and Bankers would

invalidate, impair, or supersede Minnesota’s insurance laws. 

As to insurers First Lenders and Bankers, the answer to that question is yes, and

LaBarre’s arguments to the contrary are foreclosed by this court’s holding in Doe and

by the United States Supreme Court’s recent decision in Humana. The alleged
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activities of First Lenders and Bankers in scheming to sell LaBarre higher-priced VSI

insurance rather than LPD insurance are governed by Minnesota’s insurance law.

See Minn. Stat. § 72A.20 (1998). As we stated in Doe, Minnesota law permits only

administrative recourse for violations of § 72A.20 and, unlike RICO, does not provide

a private cause of action for violations of this provision. See Doe, 107 F.3d at 1306;

see also Morris v. American Family Mut. Ins. Co., 386 N.W.2d 233, 235-38 (Minn.

1986) (no private cause of action for § 72A.20 violation). Accordingly, we held in Doe

that the McCarran-Ferguson Act barred the application of RICO to an insurer which

allegedly violated § 72A.20 because “the extraordinary remedies of RICO would

frustrate, and perhaps even supplant, Minnesota’s carefully developed scheme of

regulation.” Doe, 107 F.3d at 1308. The Supreme Court applied similar analysis in

Humana and stated the McCarran-Ferguson Act precludes the application of RICO

when RICO directly conflicts with a state’s insurance statutes, frustrates any declared

state policy, or interfere’s with a state’s administrative regime. See Humana, 119 S.

Ct. at 717. Thus, guided by our decision in Doe, the district court correctly concluded

that the McCarran-Ferguson Act barred LaBarre’s RICO claims against First Lenders

and Bankers.

We disagree with the district court, however, that LaBarre’s RICO claims

against CAC should be dismissed. Taking the factual allegations in LaBarre’s

complaint as true, LaBarre asserts CAC, a financial services company, participated in

the scheme by purchasing insurance for itself from First Lenders and Bankers to protect

its own security interest and by then passing the cost of this insurance coverage on to

LaBarre without LaBarre’s authorization. As pleaded, CAC’s alleged activities are not

governed by Minnesota’s insurance statutes, see Minn. Stat. §§ 72A.17-.32 (1998), and

do not involve the business of insurance within the framework of the McCarranFerguson Act, see Securities & Exchange Comm’n v. National Sec., Inc., 393 U.S.

453, 459 (1969) (“The McCarran-Ferguson Act was an attempt . . . to assure that the

activities of insurance companies in dealing with their policyholders would remain

subject to state regulation”); Kenty v. Bank One, Columbus, N.A., 92 F.3d 384, 393
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(6th Cir. 1996) (McCarran-Ferguson Act did not protect bank from RICO action when

bank purchased insurance to protect its own security risk and then passed those costs

on to plaintiffs). Thus, based on the allegations in LaBarre’s complaint, the McCarranFerguson Act does not prohibit LaBarre’s RICO claims against CAC, and the district

court should not have dismissed these claims. Additionally, we disagree with CAC’s

assertion that LaBarre failed sufficiently to plead the predicate offenses of mail fraud

and wire fraud. See Murr Plumbing, Inc. v. Scherer Bros. Fin. Servs. Co., 48 F.3d

1066, 1069 (8th Cir. 1995).

Next, LaBarre contends the district court improperly dismissed her state law

claims against CAC for the car dealer’s alleged breach of contract, violation of the

Minnesota Motor Vehicle Retail Installment Sales Act (MVRISA), and breach of

fiduciary duty. As required by the Federal Trade Commission (FTC), see 16 C.F.R.

§ 433.2 (1998), LaBarre’s installment contract contained the FTC’s Holder Rule, which

provides in relevant part, “Any holder of this consumer credit contract is subject to all

claims and defenses which the debtor could assert against the seller of goods or

services obtained pursuant hereto or with the proceeds hereof.” Id. (capitalization

omitted). Based on this language, LaBarre alleges in her complaint that CAC, as the

designated assignee in the installment contract, is liable for the car dealer’s breach of

contract, MVRISA violations, and breach of fiduciary duty. See Compl. ¶¶ 78, 86, 90,

95. We disagree. 

Although the Holder Rule allows consumers to assert sale-related claims and

defenses against any holder of a consumer contract, see 40 Fed. Reg. 53,524 (1975),

“[t]he words ‘Claims and Defenses’ . . . are not given any special definition by the

[FTC]. The phrase simply incorporates those things which, as a matter of other

applicable law, constitute legally sufficient claims and defenses in a sales transaction.

Appropriate statutes, decisions, and rules in each jurisdiction will control. . . .” 41 Fed.

Reg. 20,023-24 (1976). Minnesota law subjects any assignee of a consumer credit

contract to all of the consumer’s claims and defenses against the seller arising from the
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sale, but also limits the consumer’s rights, allowing those rights to be asserted only as

a “defense to or set off against a claim by the assignee.” Minn. Stat. § 325G.16, subd.

3 (1998). Thus limited, LaBarre could not affirmatively bring these state law causes

of action against CAC as the assignee of the dealer. Instead, LaBarre could only raise

these claims as a defense in an action brought against her by CAC, and the district

court properly dismissed these causes of action against CAC. 

Finally, LaBarre contends the district court committed error in dismissing her

claim that CAC, Bankers, and First Lenders tortiously interfered with her contractual

relationship with the car dealer. Again, we disagree. To establish a tortious

interference with contract claim, LaBarre must show the existence of a contract, the

alleged wrongdoers’ knowledge of the contract, their unjustified and intentional

procurement of its breach, and resulting damages. See R.A., Inc. v. Anheuser-Busch,

Inc., 556 N.W.2d 567, 570 (Minn. App. 1996). We believe the district court correctly

dismissed this claim because, at best, LaBarre pleaded that CAC, First Lenders, and

Bankers intentionally procured the breach of their own contracts with LaBarre to

provide her with LPD insurance. See Bouten v. Richard Miller Homes, Inc., 321

N.W.2d 895, 900-01 (Minn. 1982) (a party cannot tortiously interfere with its own

contract). 

We affirm the district court’s dismissal of LaBarre’s claims against Bankers and

First Lenders and LaBarre’s tortious interference, breach of contract, MVRISA, and

breach of fiduciary duty claims against CAC, but we reverse the district court’s

dismissal of LaBarre’s RICO claims against CAC and remand for further proceedings

consistent with this opinion.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.