*District Judge of the Northern District of Texas, sitting by designation. 

 

1The Liquidation Order provided as follows:

(a) That New England ... be and is placed in liquidation.

(b) That Douglas D. Green ... is vested ... with title to all property, contracts, and

rights of action with New England ...

United States Court of Appeals,

Fifth Circuit.

No. 91–3517.

BARNHARDT MARINE INSURANCE, INC., Plaintiff-Appellant,

v.

NEW ENGLAND INTERNATIONAL SURETY OF AMERICA, INC., Defendant,

Hendrik Rienstra, Defendant-Appellee.

May 26, 1992.

Appeal from the United States District Court For the Eastern District of Louisiana.

Before POLITZ, Chief Judge, SMITH, Circuit Judge, and FITZWATER,* District Judge.

POLITZ, Chief Judge:

Barnhardt Marine Insurance, Inc. appeals an order staying this case pending final resolution

of a state court proceeding. Concluding that Burford abstention is appropriate, we affirm.

Background

Barnhardt, an insurance broker and agent, obtained marine insurance through New England

International Surety of America, Inc. (NEISA). Barnhardt paid premiums to NEISA for its clients.

In April of 1989 the state court in Baton Rouge, Louisiana placed NEISA in rehabilitation upon

information from the Commissioner of Insurance that NEISA had abandoned its business operations

and ceased paying claims. The following September the state court ordered liquidation, placed

NEISA under the direction and control of the Commissioner, and stayed allsuits and seizures against

the insurer.1 In the liquidation, the policies Barnhardt had place were canceled, resulting in unearned
(c) That all suits and seizures against New England International Surety of

America, Inc. be and are hereby stayed to prevent any preference, judgment or lien

being rendered against New England International Surety of America, Inc.

Green v. New England International Surety, Inc., No. 342,555 (19th Judicial District

Court La. September 22, 1989) (unpublished order). 

premiums totaling $630,182.10. Barnhardt refunded the premiums to its clients and acquired their

rights as subrogee.

Barnhardt brought the instant suit in federal court to recover the premiums on the canceled

policies. NEISA and its President and Chairman of the Board, Heindrik Rienstra, were named as

defendants. The claim against NEISA is based on breach of contract and unjust enrichment.

Barnhardt alleges that Rienstra is personally liable because he depleted NEISA's funds by paying

claims which NEISA did not owe. Rienstra is also charged with controlling the NEISA accounts and

causing NEISA to be undercapitalized. NEISA and Rienstra filed third-party claims against the

Commissioner for canceling the policies. The Commissioner counterclaimed against Rienstra for

breach of his fiduciary duties to NEISA.

In a Minute Entry the district court administratively closed the case until all causes and

proceedings in the state court liquidation were concluded. The court ruled that because NEISA was

in liquidation, all claims had to be filed with the liquidator and given the proper priority in the state

court proceeding. The court reasoned that Barnhardt's claims against Rienstra violated the state court

stay because they were derivative of the contract and the unjust enrichment claims against NEISA.

Barnhardt moved for reconsideration of the administrative stay contending that the personal claims

against Rienstra were unaffected by the state liquidation proceedings. In a second Minute Entry the

court denied the reconsideration motion, explaining that pursuit of the derivative claims against

Rienstra would involve the same assets that the Commissioner was to distribute in NEISA's

liquidation. The district court concluded that Barnhardt's recovery in the federal suit would allow it

to leap ahead of NEISA's other creditors in a manner inconsistent with Louisiana's insurance
 

2But note Jones v. Celotex Corp., 857 F.2d 273 (5th Cir.1988) (where a signed separate

document entitled "Judgment" was entered, appeal had to be taken from the judgment and not

from an earlier Minute Entry). 

liquidation scheme. Barnhardt timely appeals.

Analysis

The decision of a district court to stay a suit pending state court proceedings is final for

purposes of appellate jurisdiction. Allen v. Louisiana State Board of Dentistry, 835 F.2d 100 (5th

Cir.1988)(citing MosesH.ConeMemorial Hospital v. MercuryConstructionCorp., 460 U.S. 1, 103

S.Ct. 927, 74 L.Ed.2d 765 (1983)); see also Idlewild Bon Voyage Liquor Corp. v. Epstein, 370 U.S.

713, 82 S.Ct. 1294, 8 L.Ed.2d 794 (1962) (stay entered on abstention groundsisfinal). Because the

administrative stay is an appealable order, the appeal in this case maybe taken fromthe district court's

Minute Entries. See Loeber v. Bay Tankers, Inc., 924 F.2d 1340 (5th Cir.), cert. denied, ––– U.S.

––––, 112 S.Ct. 78, 116 L.Ed.2d 51 (1991) (interlocutory appealfrom Minute Entry order); United

States v. 119.67 Acres of Land, 663 F.2d 1328 (5th Cir. Unit A 1981) (Minute Entry an appealable

order pursuant to the Cohen doctrine); Gloria Steamship Co. v. Smith, 376 F.2d 46, 47 (5th

Cir.1967) ("The Minute Entry dismissing the petition to implead was an appealable interlocutory

order.").2

The order in this case is not contained in a "separate document" as required by Fed.R.Civ.P.

58. See Theriot v. ASW Well Service, Inc., 951 F.2d 84 (5th Cir.1992) (appeal taken from a Minute

Entry without compliance with the separate document requirement). We consistently have

recognized, however, that the separate documentrequirement is not jurisdictional and maybe waived.

Simmons v. Willcox, 911 F.2d 1077, 1080–81 n. 6 (5th Cir.1990); Nagle v. Lee, 807 F.2d 435 (5th

Cir.1987); Hanson v. Flower Mound, 679 F.2d 497 (5th Cir.1982); Ringwald v. Harris, 675 F.2d

768, 769 n. 2 (5thCir.1982). Here, neither party has insisted upon a separate document nor objected

to the lack thereof. We deem the requirement waived.
 

3Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). 

 

4With one exception, the Courts of Appeals are in unanimous agreement with Martin on the

issue of Burford-type abstention. See Gonzalez v. Media Elements, Inc., 946 F.2d 157 (1st

Cir.1991); Law Enforcement Insurance Co. v. Corcoran, 807 F.2d 38 (2d Cir.1986), cert.

denied, 481 U.S. 1017, 107 S.Ct. 1896, 95 L.Ed.2d 503 (1987); Lac D'Amiante du Quebec Ltee

v. American Home Assurance Co., 864 F.2d 1033 (3d Cir.1988); Hartford Casualty Insurance

Co. v. Borg–Warner Corp., 913 F.2d 419 (7th Cir.1990) (insurance company in rehabilitation); 

Grimes v. Crown Life Insurance Co., 857 F.2d 699 (10th Cir.1988), cert. denied, 489 U.S. 1096,

109 S.Ct. 1568, 103 L.Ed.2d 934 (1989). But see Bilden v. United Equitable Insurance Co., 921

F.2d 822 (8th Cir.1990). 

We conclude that the administrative closure was a proper application ofBurford abstention.3

The Burford doctrine is appropriate in two circumstances. First, the federal court should abstain from

difficult questions of state law bearing on policy problems of substantial public import whose

importance transcends the result in the particular case at bar. New Orleans Public Service, Inc. v.

Council of New Orleans, 491 U.S. 350, 109 S.Ct. 2506, 105 L.Ed.2d 298 (1989) (citing Colorado

River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483

(1976)). Second, the federal court should abstain if the exercise of federal jurisdiction over the

question in the case would disrupt state effortsto establish a coherent policy with respect to a matter

of substantial public concern.

The states have primary responsibility for regulating the insurance industry. See 15 U.S.C.

§ 1011 (declaration ofCongressional policy for the McCarran–Ferguson Act). Louisiana's insurance

laws provide a comprehensive framework for the liquidation of insolvent insurance companies and

the resolution of claims against them. See La. R.S. 22:731–756; Uniform Insurers Liquidation Act,

La. R.S. 22:757–763. Burford-type abstention is appropriate in an action against an insurance

company which is the subject of a Louisiana liquidation proceeding. Martin Insurance Agency, Inc.

v. Prudential Reinsurance Co., 910 F.2d 249 (5th Cir.1990).4

Barnhardt vigorously maintains that its claims are against Rienstra and not against the

insolvent insurer. Because Barnhardt seeks to recover the same assets, litigation of Barnhardt's

claims in federal court would usurp Louisiana's control over the liquidation proceeding by allowing
Barnhardt to preempt others in the distribution of NEISA's assets. This result would be inconsistent

with the McCarran–Ferguson Act and with the comity rationale promoted by the Burford doctrine.

See Hartford Casualty Insurance Company v. Borg–Warner Corp., 913 F.2d 419 (7th Cir.1990)

(Burford abstention exercised in action against parent company of an insolvent insurer).

In addition, Barnhardt's claims against Rienstra encroach upon the exclusive power that

Louisiana has granted to the Commissioner in his capacity as liquidator. Barnhardt proffers three

theories for Rienstra's liability: (1) Rienstra depleted NEISA's funds by paying claims for which

NEISA was not liable, (2) Rienstra controlled the NEISA accounts, and (3) Rienstra caused NEISA

to be undercapitalized. Each theory seeks to hold Rienstra liable for NEISA's duty to refund the

unpaid premiums. Compare this to the duty of the liquidator of an insolvent insurer to identify,

gather, and liquidate the assets of the insurer and to use t hose assets to satisfy debts. Green v.

Champion Insurance Co., 577 So.2d 249 (La.App.), cert. denied, 580 So.2d 668 (La.1991) (citing

La.R.S. 22:731–764). In granting the liquidator the power to gather the assets properly within the

liquidation, Louisiana law veststhe concomitant power to pursue assetsin the hands of non-insurers.

Green, 577 So.2d at 259–60 (citing La.R.S. 22:737). For example, the liquidator may avoid

fraudulent transfers and may recover fraudulently conveyed assets of the insolvent insurer. See

La.R.S. 22:745.

The Commissioner is the appropriate party to bring all such claims; the state court is the

appropriate forum to exercise jurisdiction over all such claims. The Louisiana Legislature clearly

intended this result in fashioning the laws controlling the distribution of an insolvent insurer's assets.

Louisiana's insurance liquidation laws "apply to all insurers or persons purporting to be doing an

insurance business in this state...." La.R.S. 22:732 (emphasis added). A state court presiding over

a liquidation proceeding has authority to issue injunctions or other orders necessary to prevent

interference with the Commissioner'stitle, rights, or interestsin the insurer's assets. La.R.S. 22:734.

The state court'sinjunctive power extendsto the insurer's "officers, agents, directors, employees and
all other persons." In using this broad language, the Louisiana Legislature clearly empowered state

courts to issue all orders made necessary by the myriad circumstances arising in a liquidation

proceeding. Green, 577 So.2d at 260. Persons who may have access, control, or possession of the

insurer's assets are properly before the state court. The allegations against Rienstra should be

resolved in the state liquidation proceeding, with all of NEISA's creditors equally benefiting from

Louisiana's insurance liquidation protocols.

For the reasons assigned, the decision of the district court is AFFIRMED.