Public Utility Dist. No. 2 of Grant County v. Illinois Employers Ins. of Wausau

• Citation: 15 F.3d 1088
• Decision Date: 02 November 1993
• Docket Number: No. 92-35272,92-35272
• Parties: NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. PUBLIC UTILITY DISTRICT NO. 2 OF GRANT COUNTY, Plaintiff-Appellee, v. ILLINOIS EMPLOYERS INSURANCE OF WAUSAU, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1088

15 F.3d 1088

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

PUBLIC UTILITY DISTRICT NO. 2 OF GRANT COUNTY, Plaintiff-Appellee, v. ILLINOIS EMPLOYERS INSURANCE OF WAUSAU, Defendant-Appellant.

No. 92-35272.

United States Court of Appeals, Ninth Circuit.

Submitted Nov. 2, 1993. ^*

Decided Jan. 13, 1994.

Before: TANG, FARRIS, and RYMER, Circuit Judges.

MEMORANDUM ^**

Illinois Employers Insurance of Wausau ("Wausau") seeks reversal of the district court's order remanding to the Washington State court an action by Public Utility District No. 2 of Grant County ("Grant PUD") against Wausau (the "Grant action") and staying Wausau's parallel federal court action (the "Wausau action").

Wausau argues that a settlement agreement between the parties, relating to third party claims against Grant PUD, allows it to seek a determination of its rights and obligations by a federal or state court in either San Francisco, California, or Spokane, Washington, under a directors and officers liability insurance policy it issued Grant PUD ("Grant policy"). Grant PUD charges that this appeal is moot. Grant PUD also argues that a consent to jurisdiction clause in the Grant policy requires Wausau to submit to the jurisdiction of any court chosen by Grant PUD for resolution of disputes under the policy.

Because the district court's decision is based on an analysis of contract language and the application of principles of contract interpretation, we review the decision de novo. Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d 75, 77 (9th Cir.1987). To the extent our inquiry focuses on extrinsic evidence of related facts, however, the district court's conclusions shall not be reversed unless they are clearly erroneous. Miller v. Safeco Title Ins. Co., 758 F.2d 364, 367 (9th Cir.1985).

I

Addressing Grant PUD's claim first, Grant PUD contends that this appeal is moot for three reasons: (1) the remand of the Grant action to the state court divested the federal district court of jurisdiction; (2) the transfer of the Grant action to the Spokane County Superior Court, one of the jurisdictions in which Wausau claims it could have filed its action, eliminates the prejudice Wausau claims; and (3) Wausau's counterclaims in the Grant action, which the parties state are the same as its claims in the Wausau action, have been dismissed by the state courts.

Grant PUD's first contention is meritless. A remand order pursuant to 28 U.S.C. Sec. 1447(c) (lack of subject matter jurisdiction) is not subject to appellate review. 28 U.S.C. Sec. 1447(d); Seedman v. United States Dist. Court for Cent. D. of Cal., 837 F.2d 413 (9th Cir.1988) (per curiam). Here, the district court remanded the case based on the consent to jurisdiction clause in the underlying policy. A remand order based on a consent to jurisdiction clause is not subject to Sec. 1447(d), and hence, is subject to appellate review. Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273, 276-77 (9th Cir.1984). ¹

Next, Grant PUD contends that the transfer of the Grant action to the Spokane County Superior Court, one of the jurisdictions in which Wausau claims it could have filed its action, eliminates the prejudice Wausau claims on this appeal. This contention is not persuasive. The record indicates that the Grant County Superior Court dismissed several of Wausau's counterclaims prior to transferring the action to Spokane County Superior Court. Thus, Wausau still has a viable claim of prejudice--a court other than one of those specifically noted in the purported agreement between the parties dismissed several of Wausau's claims.

Finally, Grant PUD contends that even if this Court were to permit Wausau to proceed with its claims in federal district court, its claims for affirmative relief have already been disposed of by the two Washington state courts' dismissals of Wausau's counterclaims in the Grant action. To say that this appeal is moot in light of the dismissals of Wausau's counterclaims ignores the interest Wausau has in defending itself against Grant PUD's claims. We reject the argument.

II

Turning to Wausau's claim, Wausau charges that the remand order fails to recognize the parties' modification of the consent to jurisdiction clause contained in the Grant policy. Before any conclusions can be reached regarding the effect of any alleged modification, however, the effect of the consent to jurisdiction clause itself must be considered.

The general consent to jurisdiction clause the parties agreed to is one that has been the focus of much litigation over the past forty years beginning with General Phoenix Corp. v. Malyon, 88 F.Supp. 502 (S.D.N.Y.1949). The clause, which is often referred to as the forum selection clause, states, in effect, that Wausau agrees to submit to the jurisdiction of any court within the United States when a dispute arises as to the payment of sums alleged to be due under the policy. As a result of Wausau's agreement to this clause, Grant PUD charges, Wausau waived its right to remove an action filed by Grant PUD.

Since the decision in Malyon holding that the policy provision before it "restrict[ed] the defendant to the Court in which suit [was] first begun against it, be it Federal or State," 88 F.Supp. at 503, courts have consistently recognized that a party to an agreement may waive its right to remove. See Foster v. Chesapeake Ins. Co., Ltd., 933 F.2d 1207, 1217 (3rd Cir.), and the cases cited therein, cert. denied, --- U.S. ----, 112 S.Ct. 302 (1991). Indeed, numerous cases have found that an agreement to the general consent to jurisdiction clause involved in this case waived the right to remove. See id.; see also City of Rose City v. Nutmeg Ins. Co., 931 F.2d 13, 15-16 (5th Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 301 (1991). In Pelleport Investors, we held that a party that agreed to a forum selection clause stating that disputes over the underlying agreement "shall be litigated only in the Superior Court for Los Angeles California (and in no other)," 741 F.2d at 275, waived its right to remove a state-court action to federal court, id. at 279-81. Wausau cites no authority or rationale compelling us to rule contrary to these precedents. Wausau's agreement to the consent to jurisdiction clause was a waiver of its right to removal.

The next question, therefore, is whether Wausau's right to removal was somehow revived. It was not.

In agreeing to fund a portion of the third party claims against Grant PUD, Wausau apparently sought a...