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No. 93-4083

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Thomas A. Warmus, *

*

Appellant, *

*

v. * Appeal from the United States

* District Court for the

Lewis Melahn; James Oetting; * Western District of Missouri.

William Hobbs, *

*

Appellees. *

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 Submitted: January 16, 1997

 Filed: April 4, 1997

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Before HANSEN, Circuit Judge, FLOYD R. GIBSON and HENLEY, Senior Circuit

Judges.

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HENLEY, Senior Circuit Judge.

This case is on remand from the Supreme Court. In Warmus v. Melahn,

62 F.3d 252 (8th Cir. 1995), vacated and remanded, 116 S. Ct. 2493 (1996),

we upheld the district court’s dismissal of Warmus’s 42 U.S.C. § 1983

damages action on the basis of Younger abstention, which is premised on the

”longstanding public policy against federal court interference with state

court proceedings.” Younger v. Harris, 401 U.S. 37, 43 (1971). Warmus is

the owner of American Financial Security Life Insurance Company (AFSLIC),

a Missouri-based insurance company. The Missouri Department of Insurance

(MDI) found that as of September 30, 1992, AFSLIC was operating in a

hazardous condition, and after a period of administrative supervision

petitioned a state court for an order of 
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rehabilitation, Mo. Rev. Stat. § 375.1165(1), which was granted. See

Angoff v. AFSLIC, 869 S.W.2d 90 (Mo. Ct. App. 1993) (Angoff I) (upholding

rehabilitation order); see also Angoff v. AFSLIC, 891 S.W.2d 833 (Mo. Ct.

App. 1994) (Angoff II) (upholding denial of motion to terminate

rehabilitation). 

Warmus filed the instant suit against Melahn, the former director of

the MDI, and two of his subordinates (collectively referred to as “the

officials”), alleging that they conspired to force AFSLIC into

rehabilitation and drive Warmus out of the insurance business. We held

that abstention was proper because the action “might well have the

practical effect of undermining the validity and integrity of the statecourt rehabilitation proceedings.” 62 F.3d at 256. 

The Supreme Court, 116 S. Ct. at 2493, granted certiorari, vacated

our judgment, and remanded for reconsideration in light of Quackenbush v.

Allstate Ins. Co., 116 S. Ct. 1712 (1996). In Quackenbush, the Court

“decided that ‘federal courts have the power to dismiss or remand cases

based on abstention principles only where the relief being sought is

equitable or otherwise discretionary.’” Amerson v. Iowa, 94 F.3d 510, 512

(8th Cir. 1996) (quoting Quackenbush, 116 S. Ct. at 1728), cert. denied,

117 S. Ct. 696 (1997). In contrast, “in actions at law, the Court

explained, abstention principles permit federal courts only to enter an

order that stays the adjudication” pending completion of state proceedings,

“not one that dismisses the federal action altogether.” Id. However,

“[i]n Quackenbush, the Court preserved and distinguished the very limited

holding of Fair Assessment in Real Estate Ass’n, Inc. v. McNary, 454 U.S.

100, 115 (1981), where the Court dismissed a § 1983 damages case” in which

"[t]he plaintiff . . . sought damages from the allegedly unconstitutional

application of a state tax scheme." Amerson, 94 F.3d at 513. The 
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Supreme Court "dismissed the case, holding that the claim was akin to an

action for declaratory relief because the damages sought could not be

awarded without first, in effect, declaring that the state tax scheme was

unconstitutional.” Id. 

In this case, in light of the Supreme Court’s remand order, we

ordered supplemental briefing and heard oral argument on the effect of

Quackenbush on Warmus’s section 1983 damages action. Relying on Amerson

and Fair Assessment, the officials argue that Quackenbush does not

preclude the dismissal of Warmus’s action. In Amerson, this court affirmed

the district court’s dismissal on abstention principles of a plaintiff’s

claims for equitable and monetary relief in a section 1983 action arising

from termination of her parental rights. We explained:

Although the holding of Quackenbush precludes the dismissal on

abstention principles of a damages action, . . . a close

reading of the case indicates that a plaintiff’s incidental

insertion of a general claim for damages will not suffice to

prevent the dismissal of a § 1983 case where the damages sought

cannot be awarded without first declaring unconstitutional a

state court judgment on a matter committed to the states.

Id. at 513 (internal quotation omitted). In Amerson, “we recognize[d] that

the abstention holding of Fair Assessment is very limited.” Id. However,

we believed that the case was “very analogous to the case at hand[,]”

because plaintiff’s "claims in effect require[d] a preliminary declaration

that the state court judgment terminating her parental rights [wa]s

invalid.” Id. 

The officials assert that Amerson is applicable here because

resolution of Warmus’s damages claims would require a declaration that the

state court rehabilitation order was invalid. Warmus responds that Amerson

is distinguishable. He first notes that 
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unlike Amerson, his damages claims are not incidental to equitable claims,

but are his only claims. He points out that in Amerson this court

observed “that it appear[ed] beyond dispute that most all of [plaintiff’s]

claims for relief [were] equitable in nature.” Id. at 512. Moreover,

Warmus argues that resolution of his damages claims will not invalidate the

order of rehabilitation. Warmus asserts that he is not attacking the

rehabilitation order, conceding that as of September 30, 1992 AFSLIC was

operating in a hazardous condition. Rather, Warmus asserts that his

federal action challenges the actions of the officials preceding the

rehabilitation order. He acknowledges that he challenged the conduct of

MDI officials during the state court rehabilitation proceedings. However,

Warmus argues that the conduct was not “so inextricably intertwined with

the state court determination [as to rehabilitation] as to necessitate

review of that decision.” Id. at 513 (citing District of Columbia Court

of Appeals v. Feldman, 460 U.S. 462, 482 & n.16 (1983)). Warmus notes that

a special master agreed with him that because of certain conduct, the MDI

was estopped from disapproving an accounting methodology and that the

master’s factual findings were not reviewed because the state trial and

appellate courts found them irrelevant as a matter of law. See Angoff II,

891 S.W.2d at 836 (“[r]egardless of this Special Master’s finding,” AFSLIC

still operating in a hazardous condition); Angoff I, 869 S.W.2d at 92

(estoppel could not be “asserted for the creation of a right”) (internal

quotation omitted). 

We agree with Warmus that his case does not fall within the “very

limited” Amerson/Fair Assessment exception to Quackenbush, Amerson, 94 F.3d

at 513, and thus dismissal of his action is not permitted. Warmus asserts

that a stay is unnecessary because resolution of his claims would not

interfere with the ongoing rehabilitation proceedings. However, he admits

that there is no 
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record evidence in support of his assertion and recognizes that a remand

to the district court for consideration of the question whether an

abstention-based stay is warranted may be appropriate. 

The officials assert that a remand would be unnecessary if this court

were to hold that the officials are entitled to qualified or absolute

immunity. The officials note that they raised the immunity defenses in the

district court, but that the court did not address them, and that this

court may affirm on any basis appearing in the record. See Sawdon v.

Uniroyal Goodrich Tire Co., 100 F.3d 91, 93 (8th Cir. 1996). The officials

claim that by placing AFSLIC into rehabilitation, they were performing

discretionary functions in good faith and thus are immune. Warmus responds

that he is not challenging the officials' decision to place the company

into rehabilitation, but their alleged bad faith actions which caused

AFSLIC to become insolvent. 

We recently noted that “whether an officer is entitled to qualified

immunity [often] requires a 'fact-intensive' inquiry.” Prosser v. Ross,

70 F.3d 1005, 1006 (8th Cir. 1995) (quoting Reece v. Groose, 60 F.3d 487,

490 (8th Cir. 1995)). In addition, the Supreme Court has made clear “that

a defendant, entitled to invoke a qualified-immunity defense, may not

appeal a district court’s summary judgment order insofar as that order

determines whether or not the pretrial record sets forth a 'genuine' issue

of fact for trial.” Johnson v. Jones, 115 S. Ct. 2151, 2159 (1995). The

Court noted that "the existence, or non-existence of a triable issue of

fact--is the kind of issue that trial judges, not appellate judges,

confront almost daily[,]” id. at 2157, and concluded that “wise use of

appellate resources[] argue in favor of limiting interlocutory appeals of

'qualified immunity' matters to cases presenting more abstract issues of

law.” Id. at 2158. Thus, we decline to “consider the qualified immunity

defense in the first instance, 
At oral argument, counsel advised the court that Warmus is in 1

bankruptcy. On remand, in addition to considering immunity and

abstention issues, the district court may wish to explore the

effect, if any, Warmus’s bankruptcy has on this proceeding.

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particularly as genuine disputes of material fact may exist with respect

to it.” Nelson v. Jashurek, 1997 WL 118452, at *5 (3d Cir. Mar. 18,

1997).

Accordingly, we remand this matter to the district court for further

proceedings.1

A true copy.

Attest:

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