FILED

United States Court of Appeals

Tenth Circuit

April 24, 2015

Elisabeth A. Shumaker

Clerk of Court

PUBLISH

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

_________________________________

WESTERN INSURANCE COMPANY, 

 Plaintiff - Appellee,

v.

A AND H INSURANCE, INC., a

Nevada corporation; A AND H

MANAGEMENT, INC., a Nevada

corporation; WESTERN THRIFT &

LOAN, a Nevada corporation; DICK

LAVELLE ROTTMAN; JEAN MARIE

ROTTMAN; JANICE LYNN

BOWMAN; RICHARD SCOTT

ROTTMAN; BRADLEY ALAN

PEARCE; CAROL BETH INGALLS;

THOMAS EDWARD GEISSLER;

DOUGLAS WAYNE CARSBURG, 

 Defendants - Appellants,

and

DONALD WARREN WINNE, 

 Defendant.

No. 14-4065

_________________________________

Appeal from the United States District Court 

for the District of Utah

(D.C. No. 2:13-CV-01064-RJS)

_________________________________

Brent D. Wride, (Michael R. Johnson with him on the briefs), of Ray Quinney &

Nebeker, P.C., Salt Lake City, Utah, for Defendants-Appellants.

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Scott M. Lilja, (Gerald H. Suniville and Mary Jane E. Galvin-Wagg, with him on

the briefs), of Van Cott, Bagley, Cornwall & McCarthy, P.C., Salt Lake City,

Utah, for Plaintiff-Appellee.

_________________________________

Before BRISCOE, Chief Judge, EBEL and TYMKOVICH, Circuit Judges.

_________________________________

BRISCOE, Chief Judge,

_________________________________

This is an appeal from an order remanding an ancillary proceeding to state

court. Western Insurance is insolvent and is being liquidated in Utah state court

pursuant to the Utah Insurer Receivership Act. As a part of that liquidation, the

Liquidator1

 brought an ancillary proceeding against several of Western’s

“affiliates” to recover funds Western had transferred to them. The Defendants2

removed the ancillary proceeding to federal district court pursuant to the court’s

diversity jurisdiction. The Liquidator responded by seeking a remand, which the

district court granted. 

Concluding that we lack appellate jurisdiction pursuant to 28 U.S.C.

§ 1447(d), we dismiss the appeal.

I

Insolvent insurers are exempt from federal bankruptcy protection. See

11 U.S.C. § 109(b)(2)-(3). As a result, states have their own laws and processes

1

 “Liquidator” refers to the Special Deputy Liquidator appointed by the

Utah Insurance Commissioner to conduct the liquidation of Western Insurance. 

2

 There are several defendants in this case. For convenience, this opinion

refers to them collectively as the “Defendants.”

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for winding down insolvent insurers. In Utah, this process is governed by the

Utah Insurer Receivership Act. See Utah Code § 31A-27a-101 et seq. (2007).

When a Utah insurer is liquidated under the Receivership Act, Utah appoints a

liquidator who is responsible for guiding the insurer through liquidation. See

Utah Code § 31A-27a-401, 405. Included among the liquidator’s responsibilities

is the recovery of assets “in the possession of another person [which] are

rightfully the property of the estate.” Utah Code § 31A-27a-501(1)(a). These

include certain assets transferred to “affiliates” of the insurer “at any time during

the five years preceding the filing date of the delinquency proceedings.” Utah

Code § 31A-27a-502(1)(a).

Seeking to recover claimed assets of the estate, the Liquidator filed the

present ancillary proceeding in the same state court where Western Insurance’s

liquidation is pending. When filed initially, federal diversity jurisdiction would

not have existed, as two of the defendants were residents of Utah. However,

these defendants settled with the Liquidator and were voluntarily dismissed. The

remaining Defendants then removed the ancillary proceeding to federal court,

where the Liquidator moved for remand. 

The Liquidator’s memorandum in support of remand urged the district court

to abstain from hearing the case under Burford v. Sun Oil Co., 319 U.S. 315

(1943). The Burford abstention doctrine counsels that: 

[w]here timely and adequate state-court review is available, a federal

court sitting in equity must decline to interfere with the proceedings

or orders of state administrative agencies: (1) when there are difficult

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questions of state law bearing on policy problems of substantial

public import whose importance transcends the result in the case then

at bar; or (2) where the exercise of federal review of the question in a

case and in similar cases would be disruptive of state efforts to

establish a coherent policy with respect to a matter of substantial

public concern.

New Orleans Pub. Serv., Inc. v. Council of City of New Orleans (NOPSI), 491

U.S. 350, 361 (1989) (internal quotation marks omitted).

In the Liquidator’s reply briefing and at the remand hearing, the Liquidator

added an additional argument: that the McCarran-Ferguson Act, 15 U.S.C.

§ 1012(b), required remand. The McCarran-Ferguson Act provides that “[n]o 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, or which

imposes a fee or tax upon such business, unless such Act specifically relates to

the business of insurance.” 15 U.S.C. § 1012(b). Thus, the McCarran-Ferguson

Act gives rise to the doctrine of “reverse preemption,” which, if applicable, can

cause state insurance laws to trump federal laws that interfere with them. See

Davister Corp. v. United Republic Life Ins. Co., 152 F.3d 1277, 1280-81 (10th

Cir. 1998). Relying on the McCarran-Ferguson Act, the Liquidator argued that

the federal court’s exercise of diversity jurisdiction interfered with the Utah

Insurer Receivership Act. The Liquidator specifically argued that the exercise of

diversity jurisdiction here would interfere with the Receivership Act’s “recovery

from affiliates” provision, and that remand was therefore appropriate. 

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At the conclusion of the remand hearing, the district court granted the

Liquidator’s motion to remand. The court confirmed its oral ruling in a written

order remanding the case “[f]or the reasons stated on the record.” App. at 209. 

The Defendants timely appealed.

II

Before we can review the merits of the district court’s remand order, we

must first determine whether we have appellate jurisdiction. Butler v. Biocore

Med. Techs., Inc., 348 F.3d 1163, 1166 (10th Cir. 2003) (citing Steel Co. v.

Citizens for a Better Env’t, 523 U.S. 83, 94-95 (1998)). Under 28 U.S.C. §

1447(d), “[a]n order remanding a case to the State court from which it was

removed is not reviewable on appeal or otherwise . . . .” While the statutory bar

in 28 U.S.C. § 1447(d) limiting our review of a district court’s remand order is

seemingly broad, it has been construed to apply only to remands based on lack of

subject matter jurisdiction or on a timely raised defect in removal procedure. 

Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127-28 (1995).

Our appellate jurisdiction in this case therefore turns on the basis of the

district court’s remand order. If the remand order was based on abstention, we

have jurisdiction to review it as a final order. Quackenbush v. Allstate Ins., 517

U.S. 706, 712-13 (1996). However, if the remand order was based on lack of

subject matter jurisdiction, we do not have jurisdiction to review it. 28 U.S.C.

§ 1447(d); Things Remembered, Inc., 516 U.S. at 127-28. The parties agree that

the diversity statute, 28 U.S.C. § 1332, is the sole basis of federal subject matter

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jurisdiction in this case. If the district court concluded that the Utah Insurer

Receivership Act reverse preempts the diversity statute, then the district court was

left without subject matter jurisdiction. Thus, if reverse preemption under the

McCarran-Ferguson Act was the basis for the district court’s remand, then we

lack appellate jurisdiction. 28 U.S.C. § 1447(d). 

In its oral ruling, the district court made several contradictory statements

regarding the rationale supporting its remand. We first note that the district court

directly and clearly rejected the application of abstention when it stated: “I

conclude that Quackenbush forecloses the application of the Burford doctrine in

this case because the Liquidator asserts here legal claims. . . . Accordingly, I

conclude that Burford abstention and the factors identified in the Tenth Circuit’s

Grimes decision are inapplicable to this case and do not—do not support

abstention.” App. at 252-53. The district court also stated that reverse

preemption under the McCarran-Ferguson Act was a “completely different

consideration than an abstention doctrine.” Id. at 255.

However, the court proceeded to mix the two doctrines by referring to

“abstention under the McCarran-Ferguson Act.” Id. at 250. Similarly, the court

found that “the McCarran-Ferguson reverse preemption applies,” id. at 261, a

conclusion that would suggest a lack of subject matter jurisdiction, but stated that

it “should abstain from hearing the case” and never referred to lack of subject

matter jurisdiction or cited 28 U.S.C. § 1447(d), id. at 250. Nevertheless, the

bulk of the district court’s analysis which followed its clear rejection of the

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applicability of abstention suggests that the court relied on reverse preemption

under the McCarran-Ferguson Act as the basis for its remand. In particular, the

district court offered a detailed analysis of our three-part test for reverse

preemption under Davister Corp., 152 F.3d at 1279 n.1 (quoting U.S. Dep’t of

Treasury v. Fabe, 508 U.S. 491, 500-01 (1993)).3

Given the district court’s analytical focus on reverse preemption under the

McCarran-Ferguson Act, we conclude that the district court’s ambiguous

statements regarding abstention are insufficient to provide appellate jurisdiction. 

While the district court stated that it “should abstain from hearing the case,” to

credit that statement while ignoring its context—a context strongly suggesting

that the remand was based on lack of subject matter jurisdiction—would be

contrary to our precedent. In Dalrymple v. Grand River Dam Authority, we held

that “[i]n order to evaluate the reviewability of the district court’s remand orders,

we must independently review the record to determine the actual grounds upon

which the district court believed it was empowered to act,” and that if the remand

order is “based to a fair degree” upon lack of subject matter jurisdiction, it is

nonreviewable. 145 F.3d at 1184. In the present case, the district court’s holding

that “McCarran-Ferguson reverse preemption applies,” App. at 261, along with its

3

 We express no opinion regarding the merits of the district court’s

McCarran-Ferguson analysis. Where remand is based on lack of subject matter

jurisdiction, “review is unavailable no matter how plain the legal error in ordering

the remand.” Kircher v. Putnam Funds Trust, 547 U.S. 633, 642 (2006) (quoting

Briscoe v. Bell, 432 U.S. 404, 413 n.13 (1977)); see also Moody v. Grand

Western Ry. Co., 536 F.3d 1158, 1163 (10th Cir. 2008). 

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extensive analysis of the McCarran-Ferguson factors, supports a conclusion that

the district court’s remand order was “based to a fair degree” upon lack of subject

matter jurisdiction. Dalrymple, 145 F.3d at 1184. 

The Supreme Court’s most recent ruling on this issue, Powerex Corp. v.

Reliant Energy Servs., Inc., 551 U.S. 224 (2007), is not inconsistent with our

conclusion. In Powerex, the Supreme Court held that appellate review is barred

when the district court “relie[s] upon a ground that is colorably characterized as

subject-matter jurisdiction.” 551 U.S. at 234. Consequently, we have recognized

that Powerex limits our authority to review the record in cases where the district

court purports to rely on lack of subject matter jurisdiction as a basis for remand. 

Moody v. Grand Western Ry. Co., 536 F.3d 1158, 1163 (10th Cir. 2008) (“If the

district court invokes subject-matter jurisdiction as the rationale for remand, and

subject-matter jurisdiction was a plausible rationale for that remand,” we are

barred from further review). Put differently, when a district court unambiguously

invokes lack of subject matter jurisdiction, we are permitted only to determine

whether that was a “plausible rationale.” Id. But we may engage in a more

searching review where, as here, the district court does not explicitly rely on lack

of subject matter jurisdiction. In such a case, the Dalrymple rule governs our

analysis and we conclude, after a more searching review of the district court’s

oral ruling, that the remand order was “based to a fair degree” on lack of subject

matter jurisdiction. Dalrymple, 145 F.3d at 1184. 

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We conclude that the district court relied on the McCarran-Ferguson Act as

the basis for its remand order. And, as a consequence, we lack appellate

jurisdiction. 28 U.S.C. § 1447(d); Things Remembered, Inc., 516 U.S. at 127-28.

IV

Because we lack appellate jurisdiction, we DISMISS the appeal. 

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