Opinion
CIVIL ACTION NO. 02-0117 SECTION "N"
April 26, 2002
ORDER AND REASONS
Before the Court is a Motion to Dismiss or Alternatively Stay Proceedings, filed by Tim Wagner, in his capacity as Director of Insurance of the State of Nebraska, as Liquidator of Am West Surety Insurance Company (the "Am West Liquidator"). For the reasons that follow, the motion is GRANTED IN PART and DENIED IN PART.
I. BACKGROUND
Plaintiff, Safeway Steel Products, Inc. ("Safeway"), brings this Miller Act suit against PI Construction Corporation ("PI"), Ranger Insurance Company, the Am West Liquidator, the acting Commissioner of Insurance for the State of Louisiana in his capacity as ancillary liquidator of Am West (the "ancillary liquidator"), and Insurance Guaranty Association. Plaintiff seeks payment under a Miller Act Bond for $4,300.54 allegedly owed for the lease of equipment used by PI to work on the Hale Boggs Federal Building in New Orleans, Louisiana. Am West is allegedly one of the sureties on the bond. However, on June 7, 2001, the Am West Liquidator obtained an order from a Nebraska state court, authorizing the liquidation of Am West on the ground of insolvency. See Movant's Brief, Exh. A. This order enjoins all persons other than the Liquidator from instituting proceedings against or obtaining judgments against Am West. Id. at ¶ 8. The ancillary liquidator obtained an similar order from a Louisiana state court on January 8, 2002. See Movant's Brief, Exh. B.
II. LAW AND ANALYSIS
The Am West Liquidator asserts two arguments in support of his motion: (1) that plaintiffs claim should be dismissed or stayed under the Burford abstention doctrine; and (2) that the McCarran-Ferguson Act deprives this Court of jurisdiction over plaintiffs claim. Neither argument is well founded.
See 15 U.S.C. § 1012 (b) ("No Act of Congress shall be construed to invalidate, impair, or supercede 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.").
This case does not fit the strictures of the Burford abstention doctrine. As the Supreme Court has made clear, " Burford allows a federal court to dismiss a case only if it presents "`difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar,' or if its adjudication in a federal forum "would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.'" Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 726-27 (1996) (quoting NOPSI v. Council of City of New Orleans, 491 U.S. 350, 361 (1989)) (internal quotations omitted). A decision to abstain under Burford must be "based on a careful consideration of the federal interests in retaining jurisdiction over the dispute" and ultimately represents a determination "that a dispute would best be adjudicated in a state forum." Id. at 728. This is a Miller Act suit. It presents no difficult questions of state law, and it may be adjudicated only in a federal forum. See discussion infra. Moreover, " Burford abstention is permissible only when the district court has discretion to grant or deny relief" Munich American Reinsurance Co. v. Crawford, 141 F.3d 585, (5th Cir.) (citing Quackenbush, 517 U.S. at 716-18), cert. denied, 525 U.S. 1016 (1998). The relief sought here is not committed to the Court's discretion. Thus, for all of these reasons, abstention is not a viable option.
The movant's second argument (that the McCarran-Ferguson Act deprives this Court of jurisdiction) likewise fails. "Congress vested exclusive jurisdiction over Miller Act suits in federal courts." USFG v. Hendry Corp., 391 F.2d 13, 18 (9 Cir.) (refusing to enforce state court judgment because state courts have no jurisdiction to adjudicate Miller Act claims), cert. denied, 393 U.S. 978 (1968); see also, e.g., United States ex. rel. BD Mechanical Contractors, Inc. v. St. Paul Mercury Ins. Co., 70 F.3d 1115, 1118 (10th Cir. 1995), cert. denied, 517 U.S. 1167 (1996); United States ex. rel. PCC Construction, Inc. v. Star Ins. Co., 90 F. Supp. 2 d 512, 516 (D.N.J. 2000) ("federal courts are in virtual unanimity that Miller Act jurisdiction is exclusively federal" and that state courts are not empowered "to exercise jurisdiction over these exclusively federal claims"). Nothing in the Nebraska and Louisiana statutes cited by the movant (investing the respective state courts with authority over the liquidation proceedings) purports to deprive this Court of this jurisdiction or to endow either state court with jurisdiction to adjudicate plaintiff's cause of action. Thus, contrary to the arguments of both plaintiff and movant, this is not a matter of conflicting jurisdictional statutes, and the Court need not determine at this juncture whether the Miller Act "specifically relates to the business of insurance," thereby removing it from the McCarran-Ferguson Act's "special anti-pre-emption rule".
See Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25, 27-28 (1996).
However, the Nebraska and Louisiana courts each have issued orders enjoining all persons other than the Liquidator from instituting proceedings against or obtaining judgments against Am West. See Movant's Brief, Exh. A and B. These orders are entitled to full faith and credit in this Court. See 28 U.S.C. § 1738A; see also United States ex rel Bernard Lumber Co. v. Lanier-Gervais Corp., 896 F.2d 162, 169 (5th Cir. 1990) ("We, as a court . . . are bound to give full faith and credit to the [injunction] orders of the liquidating court."). Although the Nebraska and Louisiana statutes do not invest the state courts with jurisdiction to adjudicate Miller Act claims, they do empower those courts to decide how the liquidation will proceed, including when claimants will be allowed to prosecute such claims, the ranking of such claims, etc. Accordingly, in the interest of federalism and comity, and consistent with the federal policy respecting the states' regimes for liquidating insolvent insurance companies, this Court will defer proceeding with plaintiffs claims against the two liquidators pending a modification of the state court injunctions to allow plaintiff to proceed in this Court.
III. CONCLUSION
For the foregoing reasons, IT IS ORDERED that the Am West Liquidator's Motion to Dismiss or Alternatively Stay Proceedings is GRANTED IN PART, in that plaintiffs claims against the Am West Liquidator, the ancillary liquidator, and Insurance Guaranty Association are temporarily stayed pending modification of the injunction orders of the Nebraska and Louisiana state courts permitting plaintiff to pursue in this Court its claims against the Am West Liquidator and the ancillary liquidator, and DENIED IN PART, in that it is denied in all other respects. This Court will retain jurisdiction over all claims, and plaintiffs claims against PI Construction Corporation and Ranger Insurance Company shall proceed without regard to the stay.