American Fire, Theft & Collision Managers, Inc. v. Gillespie, 89-16210

• Decision Date: 08 May 1991
• Docket Number: No. 89-16210,89-16210
• Parties: AMERICAN FIRE, THEFT & COLLISION MANAGERS, INC., d/b/a American Pacific Autoplan, Plaintiff-Appellant, v. Roxani M. GILLESPIE, Individually and as Insurance Commissioner for the State of California, and Jon Tomashoff, individually and as an Investigator of the Department of Insurance of the State of California, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 816

932 F.2d 816

AMERICAN FIRE, THEFT & COLLISION MANAGERS, INC., d/b/a

American Pacific Autoplan, Plaintiff-Appellant, v. Roxani M. GILLESPIE, Individually and as Insurance

Commissioner for the State of California, and Jon Tomashoff,

individually and as an Investigator of the Department of

Insurance of the State of California, Defendants-Appellees.

No. 89-16210.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 13, 1991.

Decided May 8, 1991.

Andrew Goodman, Rosner & Goodman, New York City, for plaintiff-appellant.

Robert E. Murphy, Deputy Atty. Gen., San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before FLETCHER, NORRIS and TROTT, Circuit Judges.

FLETCHER, Circuit Judge:

Plaintiff American Fire, Theft & Collision Managers, Inc., d/b/a American Pacific Autoplan ("American Fire"), appeals the dismissal by summary judgment of its 42 U.S.C. Sec. 1983 action against Roxani Gillespie and Jon Tomashoff, officials of the State of California. The district court granted the defendants' motion for summary judgment on the ground that they were entitled to qualified immunity. Because the defense of qualified immunity is available only in actions for damages, and American Fire is not seeking damages, we reverse.

FACTS

American Fire was in the business of selling automobile repair service contracts that obligate it to pay for automobile repairs necessitated by damage from various causes, including collision, fire, vandalism, and theft. The automobile owner who enters into the contract pays for repairs primarily through an annual prepayment fee and renewal payments.

On August 28, 1987, the California Department of Insurance issued Bulletin No. 87-9 ("Bulletin"), which expressed the view that such automobile repair service contracts constitute automobile insurance under California law. The Bulletin noted that none of the sponsors of automobile repair service contracts reviewed by the Department of Insurance were licensed to engage in the insurance business in California. The Bulletin warned that those selling such contracts could be "subject to charges of violating Section 703 of the Insurance Code--aiding a non-admitted insurer to transact insurance business in this State."

On January 19, 1988, American Fire filed a complaint in federal district court pursuant to 42 U.S.C. Sec. 1983 (1988). ¹ The complaint alleged that Gillespie, by issuing the Bulletin, and Tomashoff, by distributing the Bulletin to insurance brokers and threatening to revoke the license of any broker who refused to stop selling the contracts, violated American Fire's rights under the due process clause of the fourteenth amendment. Essentially, American Fire claimed that the defendants drove it out of business by issuing and publicizing a regulation promulgated contrary to California administrative law. The complaint sought relief in the form of compensatory and punitive damages, attorney's fees and costs, and an order

enjoining Defendants, their agents, employees and/or representatives, from taking any action whatsoever against any individual or entity in regard to any sale of Plaintiff's contracts prior to the entry of any administrative or judicial order, entered in compliance with the United States Constitution and California law, adjudicating the propriety of the sale of Plaintiff's contract.

In their answer, Gillespie and Tomashoff asserted the affirmative defense of qualified immunity, and on August 16, 1989, the district court granted summary judgment in their favor on that ground although American Fire had abandoned its claim for damages. American Fire filed a timely appeal. We have jurisdiction under 28 U.S.C. Sec. 1291 (1988). We review de novo the district court's grant of summary judgment on the basis of qualified immunity. DiMartini v. Ferrin, 889 F.2d 922, 925-26 (9th Cir.1989), amended, 906 F.2d 465 (9th Cir.1990).

DISCUSSION

At the outset of its order granting summary judgment, the district court stated, "Plaintiff has dropped its claim for damages, and this is now an action only for declaratory relief." The district court record before us does not otherwise reflect that American Fire has abandoned its claim for damages. However, all the parties on appeal agree with this characterization of the case. We accordingly treat the action as not including a claim for damages. ²

With the case thus framed, a simple and well-established principle disposes of this appeal. "Qualified immunity is an affirmative defense to damage liability; it does not bar actions for declaratory or injunctive relief." Presbyterian Church (U.S.A.) v. United States, 870 F.2d 518, 527 (9th Cir.1989) (citing Harlow v. Fitzgerald, 457 U.S. 800, 806, 102 S.Ct. 2727, 2732, 73 L.Ed.2d 396 (1982)); see also Wood v. Strickland, 420 U.S. 308, 315 n. 6, 95 S.Ct. 992, 997 n. 6, 43 L.Ed.2d 214 (1975) ("[I]mmunity from damages does not ordinarily bar equitable relief as well.").

We elaborated on the rationales behind this principle in Hoohuli v. Ariyoshi, 741 F.2d 1169 (9th Cir.1984), where we found the defense of qualified immunity inapplicable in a section 1983 action brought to enjoin state officials in Hawaii from disbursing certain benefits only to aboriginal Hawaiians. Relying on Wood v. Strickland and Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), we identified two primary justifications for the doctrine of qualified immunity. First, immunity from personal monetary liability ensures that government officials will not "hesitate and react with indecision" when confronting a difficult problem that calls for a...