UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
________________________ FILED
January 21, 2009
No. 07-30313
Charles R. Fulbruge III
_______________________
Clerk
JAMES H. MOORE, JR., AND
KENNETH E. CARROLL,
Plaintiffs-Appellants,
v.
STATE FARM FIRE & CASUALTY
COMPANY AND STATE FARM
GENERAL INSURANCE COMPANY,
Defendants-Appellees.
____________________________
Appeal from the United States District Court
for the Middle District of Louisiana
__________________________
Before SMITH and PRADO, Circuit Judges, and YEAKEL, District Judge.*
LEE YEAKEL, District Judge:
This appeal arises from State Farm Fire and Casualty Company and State
Farm General Insurance Company’s (together “State Farm”) conversion of certain
Louisiana homeowner insurance policy forms, namely State Farm’s forms HO-1,
HO-3, and HO-5, to form HO-W, upon each existing policy’s expiration and
*
District Judge of the Western District of Texas, sitting by designation.
No. 07-30313
renewal by the policy holder. See La. Rev. Stat. Ann. § 22:635.4 (“Section
22:635.4”). James H. Moore, Jr. and Kenneth E. Carroll commenced this action
alleging that State Farm’s policy-form conversions are contrary to Louisiana law
and effectively constitute an improper cancellation or nonrenewal of the policies
originally issued on forms HO-1, HO-3, and HO-5.1 The district court, by
granting State Farm’s motion for partial summary judgment and motion for
judgment on the pleadings and denying Moore’s motion for summary judgment,
determined that State Farm’s policy-form conversions complied with Louisiana
law. Moore appeals, reiterating arguments presented to the district court. We
affirm the district court’s judgment.
I. BACKGROUND
A. Facts and administrative proceedings
On October 30, 2000, State Farm submitted to the Louisiana Insurance
Rating Commission (“Commission”) a request for approval of rates to be
associated with a new homeowner policy form, which would become known as the
HO-W form. On November 2, State Farm submitted for approval to the
1
Moore and Carroll commenced suit on behalf of themselves and a putative class of
insureds. As the district court noted, any precertification decision, although persuasive with
regard to claims of any other members of the putative class, binds only the named plaintiffs.
See, e.g., Floyd v. Bowen, 833 F.2d 529, 534 (5th Cir. 1987). Carroll died during the pendency
of this litigation, however, no substitution of parties occurred. Carroll appears as an appellant
in Appellants’ brief. The court will refer to Moore and Carroll collectively as “Moore”.
2
No. 07-30313
Louisiana Department of Insurance (“Department”) the HO-W policy form for
review. The Commission approved the rates and the Department approved the
HO-W form. After obtaining these approvals, State Farm began issuing policies
on the HO-W form on April 1, 2001, but only to new customers. To its existing
customers, State Farm continued to offer HO-1, HO-3, and HO-5 form policies,
all of which had rates previously approved by the Commission and forms
previously approved by the Department.
In February 2002, State Farm made a rate filing with the Commission for
new rates related to the HO-1, HO-3, and HO-5 forms. The Commission deferred
action on this filing, and on May 3 State Farm withdrew the request.
On May 22, State Farm submitted another rate filing requesting new rates
for all of its policy forms, including the HO-W form. The filing also included a
statement by State Farm that it intended to “commence converting all [policy
forms HO-1, HO-3, and HO-5] to the HO-W policy form.” The Commission
approved State Farm’s rate request, which became effective for all polices
renewed on or after August 1, 2002, including those using the HO-W policy form.
Although the rates were approved, James Donelon, the Acting Executive Counsel
for the Commissioner of Insurance, opined that current law prohibited State
Farm’s conversion to the proposed HO-W form. Although State Farm disagreed
3
No. 07-30313
with Donelon, it delayed conversion to the HO-W form, pending final judicial or
legislative resolution of the issue.
In April 2004, State Farm filed a declaratory-judgment action in Louisiana
state district court, seeking a declaration that the conversion to the HO-W form
would not violate Louisiana’s nonrenewal law. However, the 2004 session of the
Louisiana Legislature enacted Act 358.2 Act 358 provides that an insurer may
“convert an entire class of homeowner policies to another homeowner policy form
which has been submitted to and approved by the commissioner as those
homeowner policies are renewed,” and that such conversion “shall not constitute
a cancellation or nonrenewal of any policy.” Section 22:635.4. In light of the
legislation, State Farm dismissed the state court declaratory-judgment action.
In August 2004, State Farm notified the Commissioner that it intended to
convert its insureds’ HO-1, HO-3, and HO-5 homeowner-insurance policy forms
to the HO-W policy form. State Farm advised the Commissioner that effective
February 1, 2005, as each of its insureds’ current homeowner-insurance policies
expired, State Farm would issue new policies, using the HO-W form. As the
Commissioner took no action to disapprove the conversion within the statutory
45-day period after State Farm’s notice, the conversion was deemed approved.
2
Act 358 was codified as La. Rev. Stat. Ann. section 22:635.4.
4
No. 07-30313
See Section 22:635.4. On February 1, State Farm began issuing new policies to
its insureds as each existing policy expired, using the HO-W form.3
By letters of February 25 and March 2, 2005, Moore requested a hearing
before the Commission, alleging that State Farm’s HO-W form conversion
constituted an improper de facto premium increase without the statutorily
required preapproval by the Commission. State Farm responded that the
conversion “could potentially effect a rate change.” The Commission held a
hearing on Moore’s allegations, and determined that the conversion potentially
could effect a rate hike, instituted unilaterally without Commission approval. On
May 6, State Farm requested a rehearing before the Commission. Following a
June 21 hearing, the Commission ruled that State Farm’s conversion did not
involve a rate increase.
B. Court actions
On May 11, 2005, Moore, on behalf of a putative class of Louisiana State
Farm homeowner insureds, filed this action in Louisiana state district court
against State Farm, naming as nominal defendants the Commission and the
State Attorney General, and seeking a declaratory judgment, injunctive relief,
damages, and a writ of mandamus. Moore alleges that State Farm violated
3
The HO-W conversion was concluded by January 2006.
5
No. 07-30313
Louisiana law by failing to provide notice to the Commission or Department or
to obtain either entity’s approval before implementing the conversion, and that
State Farm failed to submit for review the rate change associated with the
conversion. State Farm removed the action to federal court under the Class
Action Fairness Act. See 28 U.S.C. § 1453.4
On July 19, Moore filed a second class action against State Farm and the
Commission, appealing the June 21, 2005 decision of the Commission and
alleging the same claims and seeking the same relief as Moore I. State Farm
likewise removed the action to federal court.5
Asserting immunity from suit under the Eleventh Amendment, the state
defendants successfully moved to sever and remand to state court Moore’s claims
alleged against them, leaving the remaining parties Moore and State Farm. State
Farm moved for summary judgment in Moore I and partial summary judgment
and judgment on the pleadings in Moore II. Moore filed cross motions for partial
summary judgment. After extensive briefing and oral argument, the district
4
This action became know as Moore I. Moore v. State of Louisiana, No. 05-374 (M. D.
La. removed May 23, 2005).
5
This action became know as Moore II. Moore v. State of Louisiana, No. 05-1008 (M.
D. La. removed Aug. 8, 2005). On January 31, 2006, the district court ordered Moore I and
Moore II “consolidated” as Moore I. Although the January 31 order provides that the causes
were consolidated, the district court considered motions filed in each cause and rendered
dispositive orders that reference both cause numbers.
6
No. 07-30313
court rendered its Ruling and Order on November 17, 2006, which addressed both
causes.6
C. District-court rulings
The district court determined that, at the end of the day, the parties’
motions “boil down to the same issue: Whether or not State Farm’s conversion
of its HO-1, HO-3, and HO-5 homeowner policies to its HO-W homeowner policy
form, effective February 1, 2005, was in violation of Louisiana law?”
In the district court, State Farm argued that, as a matter of law, conversion
to the HO-W form is proper under Section 22.635.4 and the Louisiana Legislature
enacted the provision for the very purpose State Farm seeks, to convert insurance
policy forms. Moore argued that the conversion constituted a cancellation or
nonrenewal of existing homeowner policies and violates the prohibitory laws of
6
Following the April 26, 2006 hearing before the Commission, the Commission
commenced a lawsuit in Louisiana state court against State Farm seeking a ruling regarding
the legality of State Farm’s policy-form conversion and Moore moved to intervene as plaintiff
in the action. After Moore’s intervention, the Commission moved to dismiss the entire case,
and the court dismissed only the Commission’s claims, leaving Moore’s claims viable. State
Farm then removed the action to federal court. James H. Moore, Jr. and Kenneth E. Carroll
v. State Farm Fire and Casualty Company, No. 05-1355 (M. D. La. removed Nov. 23, 2005)
(Moore III). The district court remanded Moore III to state court holding that the amount in
controversy for diversity jurisdiction was lacking.
After remand, Moore amended his state-court petition and sought additional relief.
Based on the amended petition, State Farm again removed the case to federal court alleging
subject-matter jurisdiction based on diversity. James H. Moore, Jr. and Kenneth E. Carroll v.
State Farm Fire and Casualty Company, No. 06-850 (M. D. La. removed Nov. 6, 2006) (Moore
IV). By order rendered May 10, 2007, the district court remanded the cause to state court and
enjoined Moore from proceeding further in the action in state court.
7
No. 07-30313
Louisiana, which disallow cancellation or nonrenewal of a homeonwer insurance
policy that has been in effect for more than three years. See La. Rev. Stat. Ann.
§§ 22:636.2(D), :635.3(C). Moore asserted that in passing Section 22:635.4, the
legislature did not rescind the prohibitory statutes, but rather specifically
recognized the application of the prohibitory laws to conversions of policy forms
by using the language that the conversion “shall not be grounds for the
cancellation or nonrenewal of any policy by the insurer.” La. Rev. Stat. Ann.
§ 22:635.4(C). Further, Moore urged that, because the conversion results in a
rate change, State Farm failed to comply with the statutory requirement that it
file a rate-change request with the Commission. See La. Rev. Stat. Ann.
§ 22:1401.
The district court concluded that the plain language of Section 22:635.4
supports the conversion. Specifically the district court concluded that Section
22:635.4 took an approved conversion outside the scope of the prohibitory
statutes. The district court found no genuine issues of material fact in dispute,
granted State Farm’s motions for summary judgment and denied Moore’s
motions. By separate orders, the district court granted State Farm’s motion for
an injunction regarding the remanded portions of Moore IV, thereby barring
Moore from seeking relief in state court on the same issue the federal court had
8
No. 07-30313
decided in State Farm’s favor. See 28 U.S.C. § 2283 (“Anti-Injunction Act”). The
district court also denied State Farm’s request for sanctions and denied Moore’s
motion for new trial. Moore appeals.
II. ANALYSIS
A. Standard of review
We review the grant of summary judgment de novo, applying the same
legal standards as the district court applied to determine whether summary
judgment was appropriate. See Am. Intern. Specialty Lines Ins. Co. v. Canal
Indem. Co., 352 F.3d 254, 259-60 (5th Cir. 2003). A district court’s determination
of state law is also reviewed de novo. Id. at 260. A summary-judgment motion
is properly granted only when, viewing the evidence in the light most favorable
to the nonmoving party, the record indicates that there is “no genuine issue as
to any material fact and that the moving party is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986).
This court also reviews de novo a district court’s application of the
relitigation exception of the Anti-Injunction Act. Harvey Specialty & Supply, Inc.
v. Anson Flowline Equip., Inc., 434 F.3d 320, 323 (5th Cir. 2005). The court
9
No. 07-30313
reviews the district court’s decision to render an injunction for abuse of
discretion. See Newby v. Enron Corp., 302 F.3d 295, 301 (5th Cir. 2002).
In a diversity case such as this one, we apply state substantive law, here
Louisiana law. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). To
determine Louisiana law, we look to the final decisions of the Louisiana Supreme
Court. See In re Katrina Canal Breaches Lit., 495 F.3d 191, 206 (5th Cir. 2007);
Transcon. Gas Pipe Line Corp. v. Transp. Ins. Co., 953 F.2d 985, 988 (5th Cir.
1992). In the absence of a final decision by the Louisiana Supreme Court, we
must make an Erie guess and determine, in our best judgment, how that court
would resolve the issue if presented with the same case. See Stanley v.
Trinchard, 500 F.3d 411, 423 (5th Cir. 2007).7
When faced with unsettled questions of Louisiana law, we adhere to
Louisiana’s civilian decision-making process, by first examining primary sources
of law: the constitution, codes, and statutes. Katrina Canal Breaches, 495 F.3d
7
Moore’s motion requesting that we certify the questions raised in this appeal to the
Louisiana Supreme Court pursuant to Rule XII of the Louisiana Supreme Court Rules is
denied. Although we acknowledge that the Louisiana Supreme Court has not issued a
definitive ruling interpreting Section 22:635.4, the issues here are not so complex to warrant
certification. See, e.g., Patterson v. Mobil Oil Corp., 335 F.3d 476, 487 (5th Cir. 2003)
(declining to certify case to Supreme Court of Texas because Texas law at issue was
“sufficiently clear”). “Alone, the absence of a definitive answer from the state supreme court
on a particular question is not sufficient to warrant certification.” Jefferson v. Lead Indus.
Ass’n, Inc., 106 F.3d 1245, 1247 (5th Cir. 1997).
10
No. 07-30313
at 206; Lake Charles Diesel, Inc. v. General Motors Corp., 328 F.3d 192, 197 (5th
Cir. 2003). “[T]he primary basis of law for a civilian is legislation, and not (as in
the common law) a great body of tradition in the form of prior decisions of the
courts.” Transcon., 953 F.2d at 988 (internal quotation marks omitted). Stare
decisis is foreign to Louisiana civil law. Id. Therefore, although this Court will
not disregard Louisiana intermediate-appellate-court decisions unless we are
convinced that the Louisiana Supreme Court would decide otherwise, we are not
strictly bound by them. Katrina Canal Breaches, 495 F.3d at 206.
B. Louisiana statutory interpretation
This court is guided by principles of statutory construction set forth in the
Louisiana Civil Code. “When a law is clear and unambiguous and its application
does not lead to absurd consequences, the law should be applied as written and
no further interpretation may be made in search of the intent of the legislature.”
La. Civ. Code Ann. art. 9; Pumphrey v. City of New Orleans, 925 So. 2d 1202,
1210 (La. 2006). When the language of the law is susceptible of different
meanings, it must be interpreted as having the meaning that best conforms to the
purpose of the law, and the words of law must be given their generally prevailing
meaning. La. Civ. Code Ann. arts. 10, 11. When the words of a law are
ambiguous, their meaning must be sought by examining the context in which
11
No. 07-30313
they occur and the text of the law as a whole, and laws on the same subject
matter must be interpreted in reference to each other. La. Civ. Code Ann. arts.
12, 13.
The meaning and intent of a law is determined by considering the law in
its entirety and all other laws on the same subject matter and placing a
construction on the provision in question that is consistent with the express
terms of the law and with the obvious intent of the legislature in enacting it. In
re Succession of Boyter, 756 So. 2d 1122, 1129 (La. 2000).
The statute must, therefore, be applied and interpreted
in a manner consistent with logic and the presumed fair
purpose and intention of the legislature in passing it. .
. . Courts should give effect to all parts of a statute and
should not give a statute an interpretation that makes
any part superfluous or meaningless, if that result can
be avoided.
Id. (internal citations omitted). Under general rules of statutory construction,
the latest expression of the legislative will is considered controlling, and prior
enactments in conflict are considered as tacitly repealed in the absence of an
express repealing clause. La. Civ. Code Ann. art. 8; State v. Bd. of Comm’s of
Caddo Levee Dist., 175 So. 678, 681 (La. 1937).
With these guiding principles in mind, we turn to the issue of whether,
under Louisiana law, State Farm’s change to its homeowner policies was proper.
12
No. 07-30313
C. Louisiana law and analysis
The applicable Louisiana statute expressly provides:
A. With the approval of the commissioner of
insurance an insurer may convert an entire class
of homeowner policies to another homeowner
policy form, which has been submitted to and
approved by the commissioner, as those
homeowners policies are renewed. The terms and
conditions of such policies, subject to conversion,
shall be continued in full force and effect for the
term of the policy. The conversion provided for in
this Section shall not constitute the cancellation or
nonrenewal of any policy and shall not be grounds
for the cancellation or nonrenewal of any policy by
the insurer.
B. A conversion by an insurer shall be deemed
approved by the commissioner unless
disapproved within forty-five days of the filing of
the proposed conversion with the commissioner.
C. All homeowner insurance policies, which have
been properly filed and converted pursuant to
this Section and the conversion of which will
result in a rate change, shall be subject to the
laws governing rate changes under Subpart A of
Part XXX of this Chapter, R.S. 22:1401, et seq.
La. Rev. Stat. Ann. § 22:635.4 (emphasis added). Moore contests the district
court’s interpretation of the last sentence of subsection A. Specifically, Moore
contends that the term “shall not constitute” was intended by the Louisiana
13
No. 07-30313
Legislature to mean “is not to be” or “is prohibited from being” a cancellation or
nonrenewal. Moore maintains that the district court’s conclusion is inconsistent
with the Louisiana Legislature’s intent to prohibit cancellation or nonrenewal
of a homeowner policy that has been in effect for more than three years. Moore’s
basis for this argument is that, with certain very limited exceptions, Louisiana
law prohibits the cancellation of homeowner policies that have been in effect for
such period. See La. Rev. Stat. Ann. §§ 22:635.3(C), 22:636.2(D).8 Moore argues
that, based on the district court’s interpretation, an insurer may, by using the
term “conversion,” avoid a cancellation or nonrenewal and render the prohibitory
statutes meaningless.
State Farm responds that Section 22:635.4 clearly and unambiguously
provides that conversion is neither a cancellation nor a nonrenewal, and that
such conversion is allowed when the insurer’s form is filed with and approved or
deemed approved by the Commissioner. We agree.
Having considered the plain meaning of Section 22:635.4, the arguments,
and the applicable law, we hold that the district court reached a well-reasoned
8
Both provisions provide, “No insurer providing property, casualty, or liability
insurance shall cancel or fail to renew a homeowner’s policy of insurance or to increase the
policy deductible that has been in effect and renewed for more than three years” unless certain
specifically listed events occur or special exceptions apply. La. Rev. Stat. Ann. §§ 22:635.3(C),
22:636.2(D).
14
No. 07-30313
interpretation of Section 22:635.4. Under the statute, a properly approved or
deemed approved conversion of forms is not considered a prohibited cancellation
or nonrenewal. The legislative purpose behind the enactment of Section
22:635.4 is to permit an insurer company to convert its insureds’ policies without
violating Louisiana’s cancellation and nonrenewal laws. As the legislature
creates the laws, so too can the legislature create an exception. The district
court’s analysis appropriately accords the full effect to Section 22:635.4 that
Louisiana principles of statutory construction require.
D. Impairment of private contracts
Moore contends that the district court’s decision leads to the
unconstitutional and unauthorized impairment of private contracts.9 Moore
initially raised this contention by motion for new trial, which State Farm
contends comes too late and results in Moore’s having waived the contention.
Assuming without deciding that Moore did not waive the argument, the
record reflects that on each occasion that State Farm converted an insured’s
homeowner policy to the HO-W form, State Farm did so upon expiration of the
existing policy. Accordingly, we hold that the HO-W conversion does not even
9
“No State shall . . . pass any . . . Law impairing the Obligations of Contracts.” U.S.
Const. art. I, § 10, cl.1. “No . . . law impairing the obligation of contracts shall be enacted.”
La. Const. art. 1, § 23.
15
No. 07-30313
tangentially implicate a violation of the contracts clause of either the United
States or Louisiana Constitution.
E. Abstention and application of the relitigation exception of
the Anti-Injunction Act
The district court concluded that the relief sought by Moore in the related
proceeding remanded to Louisiana state court–a declaration regarding the
legality of State Farm’s conversion to the HO-W form–was identical to the issue
before the federal district court. Invoking the exception to the Anti-Injunction
Act, the district court enjoined the state-court proceeding. See 28 U.S.C. § 2283.
Moore contends that the district court should have abstained from deciding the
state-law issues in this case. See Burford v. Sun Oil Co., 319 U.S. 315, 332
(1943); R.R. Comm’n of Tex. v. Pullman, 312 U.S. 496, 499-500 (1941).
Additionally, Moore challenges the district court’s enjoining the remanded state-
court proceeding and contends that the court improperly applied the exception
to the Anti-Injunction Act.
Burford abstention applies when a case involves a complex issue of
unsettled state law that is better resolved through a state’s regulatory scheme.
319 U.S. at 332. To determine if Burford abstention applies, a court considers
five factors:
16
No. 07-30313
(1) whether the cause of action arises under federal or
state law; (2) whether the case requires inquiry into
unsettled issues of state law or into local facts; (3) the
importance of the state interest involved; (4) the state’s
need for a coherent policy in that area; and (5) the
presence of a special state forum for judicial review.
Wilson v. Valley Elec. Membership Corp., 8 F.3d 311, 314 (5th Cir. 1993)
(internal citations omitted). Moore offers only general conclusions that this
action meets each of these factors. Moore is correct that this action arises under
state law and requires an inquiry into an unsettled state-law issue, as no
Louisiana court has interpreted Section 22:635.4. However, Moore fails to show
that Louisiana has a significant interest in this case beyond a general assertion
that insurance law is important to the state, has a particular need for a coherent
policy, or has a special regulatory scheme that could more adequately decide the
issue. Wilson, 8 F.3d at 314. Moore has also failed to demonstrate that this
action involves a complex issue of unsettled state law that would be better
resolved through Louisiana’s regulatory scheme.
Pullman abstention applies when an interpretation of an unclear state law
will preclude the need to decide a federal constitutional issue. 312 U.S. at 499-
500. Here, however, Moore fails to convince this court either that the state law
17
No. 07-30313
at issue is unclear or that the resolution of the state law will preclude the need
to decide a federal constitutional issue.
The Anti-Injunction Act generally prohibits federal courts from granting
injunctions that stay state-court proceedings. See 28 U.S.C. § 2283. In three
instances, however, a federal court may enjoin a state-court proceeding: (1)
when expressly authorized by federal statute; (2) when necessary to assert
jurisdiction; and (3) when necessary to protect or effectuate a prior judgment by
a federal court. Id. The relitigation exception is intended “to prevent state
litigation of an issue that previously was presented to and decided by the federal
court.” Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 147 (1988). In
determining whether the relitigation exception applies, the district court
employs a four-part test: (1) parties in the later action must be identical to or
in privity with the parties in the previous action; (2) judgment in the prior action
must have been rendered by a court of competent jurisdiction; (3) the prior action
must have concluded with a final judgment on the merits; and (4) the same claim
or cause of action must be involved in both suits. See New York Life Ins. Co. v.
Gillispie, 203 F.3d 384, 387 (5th Cir. 2000). There are two related doctrines of
preclusion: (1) claim preclusion, referred to as res judicata, and (2) issue
preclusion, known as collateral estoppel. See Montana v. United States, 440 U.S.
18
No. 07-30313
147, 153 (1979). Although complete identity of all parties is not required, the
party against whom the collateral estoppel would be applied generally must
either have been a party or privy to a party in the prior litigation. See Vines v.
Univ. of La. at Monroe, 398 F.3d 700, 705 (5th Cir. 2005).
As complete identity of all parties is not required, the party against whom
the collateral estoppel would be applied, here Moore, is the same party as in the
federal proceeding. In applying each of the provisions of the relitigation
exception de novo, we hold that the district court did not err in its application.
III. CONCLUSION
We hold that the district court adhered to Louisiana’s civilian decision-
making process and affirm the district court’s conclusion that State Farm’s
conversion of its homeowner policies to the HO-W form was lawful. Additionally,
we hold that the HO-W conversion does not violate the contracts clause of either
the United States or Louisiana Constitution. We also find no error in the district
court’s declining to apply the Pullman or Burford abstention doctrines. Finally,
we hold that the district court’s decision to enjoin the related, remanded state-
court action was not an abuse of discretion.
The district court’s judgment is AFFIRMED.
19
Moore v. State Farm Fire & Casualty Co.
Court: Court of Appeals for the Fifth Circuit
Date filed: 2009-01-21
Citations: 556 F.3d 264
Copy Citations