Court Opinion

ID: 2667010
Source: CourtListenerOpinion
Date Created: 2014-04-04 13:04:38.849226+00
Date Added: 2024-06-11T13:02:48.937458
License: Public Domain

IN THE UNITED STATES DISTRICT COURT
                     FOR THE DISTRICT OF NEBRASKA

GRANITE REINSURANCE                  )
COMPANY, LTD, A Barbados             )
Corporation,                         )
                                     )
                    Plaintiff,       )                    8:08CV410
                                     )
             v.                      )
                                     )
ANN M. FROHMAN, Director of          )         MEMORANDUM AND ORDER
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.      )

      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.
      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 the Liquidator. 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 26rd day of October, 2009.

                              BY THE COURT:

                              Richard G. Kopf
                              United States District Judge

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