Acceptance Ins. Companies Inc. v. U.S.

• Decision Date: 02 October 2007
• Docket Number: No. 2007-1127.,2007-1127.
• Citation: 503 F.3d 1328
• Parties: ACCEPTANCE INSURANCE COMPANIES INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

503 F.3d 1328

ACCEPTANCE INSURANCE COMPANIES INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 2007-1127.

United States Court of Appeals, Federal Circuit.

October 2, 2007.

Lewis S. Wiener, Sutherland Asbill & Brennan, LLP, of Washington, DC, argued for plaintiff-appellant. Of counsel on the brief were Ronald R. Massumi and Carter Lee Williams, of Washington, DC, and Patrick B. Griffin, Kutak Rock, LLP, of Omaha, Nebraska.

Michael N. O'Connell, Trial Attorney, Commercial Litigation Branch, Civil Division United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Peter D. Keisler, Assistant Attorney General, Jeanne E. Davidson, Director, and Mark A. Melnick, Assistant Director.

Before RADER and SCHALL, Circuit Judges, and FARNAN, District Judge.^*

SCHALL, Circuit Judge.

Acceptance Insurance Companies, Inc. ("Acceptance") appeals the final decision of the United States District Court for the District of Nebraska denying its motion to retransfer to the United States Court of Federal Claims its suit against the United States alleging a taking of its property in violation of the Fifth Amendment to the Constitution. Acceptance Ins. Cos. v. United States (Acceptance III), No. 8:06CV609, 2006 WL 3538946 (D.Neb. Dec.7, 2006). The district court denied the motion after concluding that the action of the Court of Federal Claims transferring Acceptance's suit to it was plausible and therefore not clearly erroneous. The Court of Federal Claims transferred the suit after determining that the Federal Crop Insurance Act ("FCIA"), 7 U.S.C. §§ 1501 et. seq, as amended in 1980, Pub.L. No. 96-365, 94 Stat. 1312 (1980), divested it of jurisdiction over the suit and placed exclusive jurisdiction over the suit in district court. Acceptance Ins. Cos. v. United States (Acceptance II), 72 Fed.Cl. 299 (2006).

Because we hold that the FCIA did not divest the Court of Federal Claims of jurisdiction over Acceptance's Fifth Amendment takings claim, we reverse the order of the district court denying Acceptance's motion to retransfer. The case is remanded to the district court, which is instructed to transfer the case back to the Court of Federal Claims for adjudication of Acceptance's takings claim.

BACKGROUND

I.

The pertinent facts are either undisputed or are drawn from Acceptance's complaint.¹ At the time of the events giving rise to this suit, Acceptance was a publicly-traded insurance holding company. It held three wholly-owned subsidiaries, American Growers Insurance Company ("American Growers"); Acceptance Insurance Company; and American Agrisurance, Inc., through which it engaged in the crop insurance and property and casualty insurance businesses. American Growers, the first of these subsidiaries, was in the business of underwriting insurance policies within the federal crop insurance program.

The Federal Crop Insurance Corporation ("FCIC") is a wholly owned government corporation within the Department of Agriculture, established by Congress in 1938 to regulate the crop insurance industry. 7 U.S.C. § 1503. Under the FCIA, Congress directed that crop insurance be offered through private insurance providers and be reinsured (and regulated) by the FCIC. The FCIC offers Standard Reinsurance Agreements ("SRAs") to eligible private insurance companies. Under SRAs, the FCIC reinsures policies that private insurance companies issue to producers of agricultural commodities. 7 C.F.R. § 400.164. The Risk Management Agency ("RMA") is an agency within the Department of Agriculture whose purpose is to supervise the FCIC and to administer all programs authorized pursuant to the FCIA. 7 U.S.C. § 6933(a), (b)(1)-(2).² Pursuant to 7 U.S.C. § 1506(d), the FCIA provides for jurisdiction in the United States district courts for suits brought by or against the FCIC. Section 1506(d) states in pertinent part that "[t]he district courts of the United States . . . shall have exclusive original jurisdiction, without regard to the amount in controversy, of all suits brought by or against the [FCIC]."³

II.

On November 18, 2002, Acceptance entered into a non-binding letter of intent with Rain and Hail, LLC ("Rain and Hail"), a limited liability company also in the crop insurance business and also regulated by the FCIC. The letter of intent detailed the terms of a proposed sale to Rain and Hail of certain of Acceptance's crop insurance assets for not less than $21.5 million. Acceptance alleges that, while structured as a sale of assets, the proposed transaction, in fact, was to be a sale by Acceptance of American Growers. According to Acceptance, because the insurance assets to be purchased by Rain and Hail were reinsured by the FCIC and were subject to the FCIC's general oversight authority over the crop insurance industry, the proposed transaction between Acceptance and Rain and Hail was subject to approval by the RMA. Compl. ¶ 13. Acceptance contends that the RMA rejected the proposed sale, finding it "detrimental" to the interests of farmers and taxpayers, and that, as a result, Rain and Hail and Acceptance did not complete the sale. Compl. ¶ 15-16. Subsequently, on November 22, 2002, the RMA ordered American Growers to cease and desist from the marketing and selling of any new insurance contracts under its SRAs with the FCIC. It also advised American Growers that the FCIC would not reinsure for it any new insurance contracts. Following the collapse of the proposed sale of assets to Rain and Hail, and in view of Acceptance's precarious financial position, the Nebraska Department of Insurance placed American Growers' business under supervision, and ultimately into liquidation. Acceptance contends that this allowed the RMA to take control of American Growers' crop insurance assets, and to ultimately distribute those assets among several RMA-accredited crop insurance companies. In short, Acceptance alleges that the RMA effectively put American Growers out of business. Compl. ¶ 18.

III.

Following the events described above, Acceptance filed a complaint in the Court of Federal Claims alleging that "[w]hen the RMA, acting as an agent of the United States, rejected the proposed Rain and Hail/Acceptance transaction in the `interests of the American taxpayer,' it effected a takings of Acceptance's property, namely certain of Acceptance's assets, which were to be sold to Rain and Hail, for public use." Compl. ¶ 24. Eventually, the government brought a motion to dismiss for lack of subject matter jurisdiction, arguing, inter alia, that 7 U.S.C. § 1506(d) placed exclusive jurisdiction in federal district court over Acceptance's takings claim. The Court of Federal Claims denied the motion, holding that "this is a claim against the United States alleging a Fifth Amendment takings. The Court of Federal Claims has jurisdiction to hear and determine takings claims against the United States." Acceptance Ins. Cos. v. United States (Acceptance I), No. 03-2794C, slip op. at 2 (Fed.Cl. Aug.3, 2004). The court reasoned that the purpose of the FCIA did not appear to be inconsistent with the Court of Federal Claims' Tucker Act jurisdiction to hear takings claims against the United States. Id. Thus, the court stated, "[a]s the two statutes are `capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective.'" Id. (quoting Blanchette v. Conn. Gen. Ins. Corps., 419 U.S. 102, 133-34, 95 S.Ct. 335, 42 L.Ed.2d 320 (1974)).

Subsequently, the case was transferred to a different judge within the Court of Federal Claims. In addition, this court issued its opinion in Texas Peanut Farmers v. United States, 409 F.3d 1370 (Fed. Cir.2005). In Texas Peanut Farmers, we held that because the true nature of the plaintiffs-appellants' breach of contract action against the United States was a breach of contract action against the FCIC, section 1506(d)'s grant of exclusive jurisdiction to the district courts over suits against the FCIC meant that the case had to be transferred from the Court of Federal Claims to a district court. In due course, the government renewed its motion to dismiss Acceptance's suit for lack of subject matter jurisdiction in light of Texas Peanut Farmers. This time, the Court of Federal Claims granted the motion. In doing so, the court held that the mandatory language of section 1506(d) left no room for concurrent Court of Federal Claims Tucker Act jurisdiction over Acceptance's suit and that exclusive jurisdiction lay in federal district court. Acceptance II, 72 Fed.Cl. at 303. The court read Texas Peanut Farmers to support its reading of section 1506(d) as divesting the Court of Federal Claims of jurisdiction over all suits involving the FCIC, including suits involving takings claims. Following its decision, the court transferred Acceptance's suit to the District of Nebraska. Id. at 303-04.

Following the transfer, Acceptance filed a motion to retransfer the case to the Court of Federal Claims under 28 U.S.C. § 1631. The district court denied the motion in Acceptance III. In its decision, the court reiterated the reasoning of the Court of Federal Claims and concluded that because the previous transfer decision was plausible, and therefore not clearly erroneous, its jurisdictional inquiry was at an end. Acceptance III, 2006 WL 3538946 at *2-4. Acceptance has timely appealed the district court's denial of its motion to retransfer.

DISCUSSION

I.

Pursuant to 28 U.S.C. § 1292(d)(4)(A), we have jurisdiction over an appeal from an interlocutory order of a district court denying a motion to transfer an action to the Court of Federal Claims under 28 U.S.C. § 1631. Our review of the district court's decision granting or denying transfer of an action to the Court of Federal Claims is de novo because the district court's underlying determination is one of jurisdiction. See Awad v. United States, 301 F.3d 1367, 1371...