Barnett Bank of Marion County, N.A. v. Gallagher, 93-3508

• Citation: 43 F.3d 631
• Decision Date: 30 January 1995
• Docket Number: No. 93-3508,93-3508
• Parties: BARNETT BANK OF MARION COUNTY, N.A., a national banking association, Plaintiff-Counter-Defendant, Appellant, Cross-Appellee, v. Tom GALLAGHER, Insurance Commission of the State of Florida, Fla. Dept. Insurance, a state agency, Defendants-Appellees, Cross-Appellant, Florida Association of Life Underwriters, Professional Insurance Agents of Florida, Inc., Florida Associations of Insurance Agents, Defendants-Counter-Claimant, Appellees-Cross-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 631

43 F.3d 631

63 USLW 2478

BARNETT BANK OF MARION COUNTY, N.A., a national banking

association, Plaintiff-Counter-Defendant, Appellant, Cross-Appellee, v. Tom GALLAGHER, Insurance Commission of the State of Florida,

Fla. Dept. Insurance, a state agency,

Defendants-Appellees, Cross-Appellant,

Florida Association of Life Underwriters, Professional

Insurance Agents of Florida, Inc., Florida

Associations of Insurance Agents,

Defendants-Counter-Claimant,

Appellees-Cross-Appellants.

No. 93-3508.

United States Court of Appeals,

Eleventh Circuit.

Jan. 30, 1995.

David M. Wells, Peter E. Nicandri, Jacksonville, FL, for appellant.

David J. Busch, Tallahassee, FL, Scott A. Sinder, Ann M. Kappler, Arti K. Rai, Washington, DC, J. Robert McClure, Jr., F. Townsend Hawkes, Tallahassee, FL, for appellee.

Virginia B. Townes, Akerman, Senterfitt & Eidson, P.A., Orlando, FL, Anthony J. Steinmeyer, Jacob M. Lewis, U.S. Dept. of Justice, Civ. Div., Appellate Staff, Washington, DC, Daniel Y. Sumner, Florida Dept. of Ins., Tallahassee, FL, for amicus, Florida Bankers Ass'n.

Appeals from the United States District Court for the Middle District of Florida.

Before COX, Circuit Judge, FAY, Senior Circuit Judge, and CARNES ^*, District Judge.

FAY, Senior Circuit Judge:

This appeal arises from a final order following a bench trial on the merits of plaintiff Barnett Bank of Marion County's ("Barnett Marion") suit for permanent injunctive and declaratory relief against Florida Insurance Commissioner Tom Gallagher and the Florida Department of Insurance. The Florida Association of Life Underwriters, Professional Insurance Agents of Florida, Inc., and the Florida Associations of Insurance Agents intervened in the district court. Appellant Barnett Marion alleges the district court erred in concluding that Fla.Stat. ch. 626.988 regulates insurance, and in concluding that 12 U.S.C. Sec. 92 ("section 92") does not relate to insurance. ¹ We disagree, and AFFIRM the district court judgment.

Appellee/Cross-Appellants Tom Gallagher and the Florida Department of Insurance allege the district court erred in holding section 92 permits national banks to sell insurance nationwide. Appellee/Cross-Appellants Florida Association of Life Underwriters, Professional Insurance Agents of Florida, Inc., and the Florida Associations of Insurance Agents allege the district court erred in finding that Appellant Barnett Marion was "located and doing business in a place with a population of less than 5000" pursuant to section 92. Based on our reading of the Federal and Florida statutes, we find it unnecessary to reach either of these issues.

I. BACKGROUND

Florida law precludes bank subsidiaries or bank holding company affiliates from conducting insurance activities in Florida. Fla.Stat. ch. 626.988 (1993). Federal law, however, allows national banks--despite their status as subsidiaries or affiliates--to act as insurance agents in localities with fewer than five thousand people. 12 U.S.C. Sec. 92 (1988).

Barnett Marion is a national-bank subsidiary of a bank holding company, Barnett Banks, Inc. Barnett Marion's principal place of business is Ocala, Florida, but it maintains a branch office in Belleview, Florida. Belleview's population is fewer than five thousand as shown by the last decennial census. Barnett purchased an insurance agency from Linda K. Clifford in Belleview. As a result, Ms. Clifford, a Florida licensed insurance agent, became an employee of Barnett Marion and maintained her office inside the bank.

The day of the purchase, Barnett Marion sought a declaration allowing it to use this branch office to "market insurance to existing and potential customers regardless of where the insurance customers are located." Barnett Marion argued that 12 U.S.C. Sec. 92 preempted Fla.Stat. ch. 626.988, and asked the district court to find that:

Barnett Bank and, specifically Barnett Bank Belleview, is authorized and empowered by federal law to act as an agent for any insurance company authorized by the State of Florida to do business in Florida.

(R1-1-7).

Four days later, the Florida Department of Insurance ("Department") issued an Immediate Final Order ("IFO") directing Linda Clifford and her associate agents to cease insurance agency activities other than selling credit life and credit disability insurance. Barnett Marion moved for a temporary restraining order ("TRO") and sought to enjoin the Department from acting on the IFO.

The district court denied Barnett Marion's motion for TRO and held a hearing on the motion for preliminary injunction. The court denied the motion for the preliminary injunction and set the case for trial.

The issues before this court are as follow: First, whether Fla.Stat. ch. 626.988 regulates insurance. Second, whether 12 U.S.C. Sec. 92 relates to insurance. Third, whether Barnett Marion is located and doing business in a place with fewer than five thousand people, and if so, whether the bank may sell insurance nationally or only within this small town. To answer these questions of law we must examine the history and purposes of these statutes.

II. JURISDICTION

Upon the Court's request at oral argument, each side briefed the issue of whether the district court had subject matter jurisdiction to decide the case. Based on Lawrence County v. Lead-Deadwood Sch. Dist., 469 U.S. 256, 259 n. 6, 105 S.Ct. 695, 697 n. 6, 83 L.Ed.2d 635 (1985) and Shaw v. Delta Airlines, Inc., 463 U.S. 85, 96 n. 14, 103 S.Ct. 2890, 2899 n. 14, 77 L.Ed.2d 490 (1983), we find subject matter jurisdiction. The United States Supreme Court specified in Shaw that:

The Court's decision today in Franchise Tax Board v. Construction Laborers Vacation Trust, ante, [463 U.S.] p. 1, [103 S.Ct. 2841, 77 L.Ed.2d 420] (1983) does not call into question the lower courts' jurisdiction to decide these cases. Franchise Tax Board was an action seeking a declaration that state laws were not pre-empted by ERISA. Here, in contrast, companies subject to ERISA regulation seek injunctions against enforcement of state laws they claim are pre-empted by ERISA, as well as declarations that those laws are pre-empted.

It is beyond dispute that federal courts have jurisdiction over suits to enjoin state officials from interfering with federal rights. See Ex parte Young, 209 U.S. 123, 160-162 [28 S.Ct. 441, 454-55, 52 L.Ed. 714] (1908). A plaintiff who seeks injunctive relief from state regulation, on the ground that such regulation is pre-empted by a federal statute which, by virtue of the Supremacy Clause of the Constitution, must prevail, thus presents a federal question which the federal courts have jurisdiction under 28 U.S.C. Sec. 1331 to resolve.

Id. at 96, n. 14, 103 S.Ct. at 2899, n. 14.

In accord with Supreme Court case law, we hold that a federal court has federal question jurisdiction to decide a claim against a state officer or agency alleging that a federal statute preempts a state statute under the Supremacy Clause and that the state statute cannot be enforced. This Court has appellate jurisdiction under 28 U.S.C. Sec. 1291.

III. STANDARD OF REVIEW

This appeal requires review of the district court's statutory interpretation. Such review is de novo. Centel Cable Television Co. of Fla. v. Thomas J. White Dev. Corp., 902 F.2d 905, 908 (11th Cir.1990); Keys Jet Ski, Inc. v. Kays, 893 F.2d 1225, 1227 (11th Cir.1990). We review the district court's fact findings in a bench trial for clear error. Fed.R.Civ.P. 52(a); Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985).

IV. ANALYSIS

A. Findings of Fact

While the parties dispute whether the trial court made findings of fact or merely conclusions of law, none of the parties alleges the trial court erred in its fact-finding. Appellant Barnett Marion's Initial Brief at 16; Appellee Gallagher's Initial Brief at 13; Appellee Underwriter's Initial Brief at 12. Accordingly, we review de novo the trial court's conclusions of law.

B. Conclusions of Law

1. McCarran-Ferguson

In the late 19th Century, the United States Supreme Court held insurance contracts were not in interstate commerce. Paul v. Virginia, 75 U.S. (8 Wall) 168, 183, 19 L.Ed. 357 (1868). The states then developed extensive insurance regulations. In 1944, the Supreme Court rejected that analysis in United States v. South-Eastern Underwriters Ass'n., 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944), holding Congress could regulate insurance under its Commerce Clause power. Id. at 553, 64 S.Ct. at 1173-74.

In response, Congress passed the McCarran-Ferguson Act, which proclaimed 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." 59 Stat. 34 (1945), 15 U.S.C. Sec. 1012(b) (emphasis added). This statutory scheme creates a reverse-preemption doctrine for insurance legislation. That is, a state statute that regulates insurance presumptively preempts a contrary Congressional statute unless the Congressional statute specifically relates to insurance. Congress declared this state regulation to be in "the public interest." 15 U.S.C. Sec. 1011.

With McCarran-Ferguson guiding our analysis, this Court first must ask whether Fla.Stat. ch. 626.988 regulates insurance, so as to presumptively preempt contrary federal law. Second, we must ask whether section 92 specifically relates to insurance, so that it will fit within the McCarran-Ferguson exception that reinstates federal law as supreme.

2. Florida Law

The state statute at issue, Fla.Stat. ch. 626.988, is part of the Unfair Insurance Trade Practices Act (Part X), located within the Florida Insurance Code. Florida Statute chapter 626.951 declares that:

The purpose of this part [X] is to regulate trade practices relating to the business of insurance in...