Eott Energy Operating Limited Partnership v. Winterthur Swiss Ins. Co., PLAINTIFF-APPELLEE

Decision Date20 July 2001
Docket NumberNo. 00-35293,DEFENDANTS-APPELLANTS,I-X,N,DEFENDANTS-APPELLEES,PLAINTIFF-APPELLANT,PLAINTIFF-APPELLEE,00-35293
Parties(9th Cir. 2001) EOTT ENERGY OPERATING LIMITED PARTNERSHIP,, v. WINTERTHUR SWISS INSURANCE COMPANY; COMPAGNIE EUROPEENE D'ASSURANCES INDUSTRIELLES S.A.; ST. KATHERINE INSURANCE COMPANY, LIMITED; YASUDA FIRE AND MARINE INSURANCE COMPANY, (UK) LIMITED; LEXINGTON INSURANCE COMPANY; CNA REINSURANCE OF LONDON, LIMITED; IMPERIO CAMPANHIA DE SEGUROS; THE DOMINION INSURANCE COMPANY, LIMITED; FOLKSAM INTERNATIONAL INSURANCE COMPANY, (UK), LIMITED; EISEN UND STAHL RUCKVERSICHERUNGS AKTIENGESELLSCHAFT; LLOYDS SYNDICATES 989, 279AND 918; GRANITE STATE INSURANCE COMPANY,, and WALBROOK INSURANCE COMPANY, EL PASO INSURANCE COMPANY, LIMITED; DART INSURANCE COMPANY, LIMITED; DART AND KRAFT INSURANCE COMPANY, LIMITED; BRYANSTON INSURANCE COMPANY, LIMITED; LOUISVILLE INSURANCE COMPANY, LIMITED; LUDGATE INSURANCE COMPANY, LIMITED; MUTUAL REINSURANCE COMPANY, LIMITED; BERMUDA FIRE AND MARINE INSURANCE COMPANY, LIMITED; INSURANCE CORPORATION OF IRELAND, LIMITED; ASSICURAZIONI GENERAL, S.P.A.; SCAN REINSURANCE COMPANY, LIMITED; PINE TOP INSURANCE COMPANY, LIMITED; ANCON INSURANCE COMPANY, (UK), LIMITED; BRITTANY INSURANCE COMPANY, LIMITED; INSCO, LTD.; ALLIANZ VERSICHERUNGS AKTIENGESELLSCHAFT; CHEMICAL INSURANCE COMPANY EMPLOYERS INSURANCE COMPANY OF WAUSAU; EVANSTON INSURANCE COMPANY; INSURANCE COMPANY OF FLORIDA; ZURICH INSURANCE COMPANY; INTERNATIONAL SURPLUS LINES INSURANCE COMPANY; GRANITE STATE INSURANCE COMPANY; SEDGWICK NORTH AMERICAN LIMITED; INTEGRITY INSURANCE COMPANY; IDEAL MUTUAL INSURANCE COMPANY; THE RIVER PLATE REINSURANCE COMPANY, LTD.; BRITACMO MENTOR INSURANCE COMPANY, (UK), LIMITED; PACIFIC AND GENERAL INSURANCE COMPANY, LIMITED; TRANSIT CASUALTY COMPANY; JOHN/JANE DOES; ABC COMPANIES; CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON, DEFENDANTS. EOTT ENERGY OPERATING LIMITED PARTNERSHIP,, v. WINTERTHUR SWISS INSURANCE COMPANY; COMPAGNIE EUROPEENE D'ASSURANCES INDUSTRIELLES S.A.; ST. KATHERINE INSURANCE COMPANY, LIMITED; YASUDA FIRE AND MARINE INSURANCE COMPANY, (UK) LIMITED;
CourtU.S. Court of Appeals — Ninth Circuit

Glenn E. Tremper, Church, Harris, Johnson & Williams, P.C., Great Falls, Montana, for the plaintiff-appellee-cross-appellant.

John G. McAndrews, Joseph J. Winowiecki, Mendes & Mount, New York, New York; Jack L. Lewis, Patrick R. Watt and Brian L. Taylor, Jardine, Stephenson, Blewett & Weaver, P.C., Great Falls, Montana; and L.D. Nybo, Conklin, Nybo, LeVque & Lanning, Great Falls, Montana, for the defendants-appellants-cross-appellees.

Before: Betty B. Fletcher, Melvin Brunetti and Raymond C. Fisher, Circuit Judges.

Fisher, Circuit Judge:

OVERVIEW

We are presented with the question of whether there is subject matter jurisdiction in this case. Eleven years ago, Appellee EOTT Energy, then known as Enron, filed this action in Montana state court. Appellant Icarom, then the Insurance Corporation of Ireland ("ICI"), removed this action to federal court on the ground that it was an instrumentality of a foreign state as defined by the Federal Sovereign Immunities Act ("FSIA"). Since that time, this case has been up on appeal before us and back to the district court where summary judgment was granted on some claims and a trial was held on others. This appeal then ensued.

During the pendency of this appeal, Appellants filed a letter with this Court stating that they had recently become aware of our decision in Gates v. Victor Fine Foods , 54 F.3d 1457 (9th Cir. 1995), and suggesting that, applying Gates, we might lack subject matter jurisdiction under the FSIA. We ordered supplemental briefing and heard argument on the issue. Both Appellants and Appellee argued there was jurisdiction. We conclude that Icarom is not a foreign state under the "majority owned" prong of the FSIA, but we remand for further fact-finding to determine whether Icarom is an "organ" of the Irish government.

FACTUAL BACKGROUND

The parties and the underlying dispute are described in our previously published decision in Enron Oil Trading & Transportation Co. v. Walbrook Ins. Co., 132 F.3d 526 (9th Cir. 1997). We discuss here only the facts relevant to our determination of jurisdiction. These facts are taken primarily from three documents submitted in connection with the 1990 removal from state court: a declaration from Steve Guarnori, an Icarom employee; a 1985 press release from the Irish government; and a 1985 Act of the Irish Parliament. 1

Prior to 1980, EOTT, at the time named UPG, Inc., purchased an insurance policy backed by ICI among others. In 1981, the Allied Irish Banks ("AIB") purchased a 25 percent share of ICI. In 1983, AIB purchased full control. Soon afterwards, AIB became aware that ICI was in poor financial condition and began injecting capital into ICI to bolster its reserves. In 1985, it became clear that ICI's problems were quite serious and a major reorganization and capital funding were necessary.

At the time, 30 percent of ICI's policies were written for insureds in Ireland and ICI was the country's second largest holder of employer's liability and public liability insurance policies (similar to workers' compensation), holding 25 percent of all such policies. ICI also held 30,000 motor insurance policies in Ireland. The Irish government became concerned that if ICI were unable to cover its policies, there would be ramifications across the Irish economy. Therefore, Ireland took several steps to guarantee ICI's solvency.

On March 15, 1985, Ireland acquired ICI from Allied Irish Banks for a nominal sum. At the same time, Ireland created Sealuchis Arachais Teoranta ("SAT") through legislation for the purpose of holding the shares of ICI. The enabling legislation provided that every member of SAT holds the shares of ICI in trust for the Minister for Industry, Trade, Commerce and Tourism ("Minister") and that all monies and dividends collected by SAT are to be paid to the Minister. Further, all of SAT directors are Ministry employees.

On the very evening ICI was acquired and SAT was formed, ICI was placed under court "administration" -a process similar to United States federal bankruptcy procedures. The purpose of the administration was to ensure the continuation of the insurance business of ICI and the protection of all policy holders (Irish and otherwise). Administration involves an indefinite period of court monitoring and protection until the company is placed on a sound commercial and financial footing. An Irish court appointed an administrator who exercises his powers subject to court sanction and may apply to the court for directions as to matters arising from the administration. The Minister is a notice party to all applications placed before the Irish court.

Five years later, on August 1, 1990, ICI sold all of its "Irish Business"-a term not defined in the documents -along with the name "Insurance Corporation of Ireland " to the Assurances Generales De France. At the same time, the Administrator changed the name of the existing ICI to "Icarom, plc." As part of the transaction, Icarom kept and administered all prior policies written by ICI, including the policy at issue here, on a run-off basis. It is unclear from the record whether Icarom wrote any new insurance policies after August 1, 1990.

DISCUSSION

Although this case has been in federal court for over 11 years, we have an obligation to determine whether we and the court below have removal jurisdiction. See Fed. R. Civ. P. 12(h)(3) ("Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.") (emphasis added); California v. United States, 215 F.3d 1005, 1009 (9th Cir. 2000) ("An appellate court is under a special obligation to satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review, even though the parties are prepared to concede it . . . . [or] make no contention concerning it.") (internal quotations omitted). If removal jurisdiction is lacking, even if raised for the first time on appeal, the judgment below must be vacated, and the case remanded to the state court. Id. at 1015.

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