Ford Motor Co. v. Insurance Com'r of Com. of Pa.
| Decision Date | 05 May 1989 |
| Docket Number | 88-5077,88-5078 and 88-5121,Nos. 88-1339,s. 88-1339 |
| Citation | 874 F.2d 926 |
| Parties | FORD MOTOR COMPANY and Ford Motor Credit Company, and the American Road Insurance Company and Ford Life Insurance Company, and First Nationwide Financial Corporation and First Nationwide Bank v. INSURANCE COMMISSIONER OF the COMMONWEALTH OF PENNSYLVANIA. Appeal of PENNSYLVANIA ASSOCIATION OF INDEPENDENT INSURANCE AGENTS, Ulrich, John M., Jr., Professional Insurance Agents Association of Pennsylvania, Maryland and Delaware, Inc., Leach, Charles P., Jr., Pennsylvania Association of Life Underwriters and Alexander, Harold E., (Intervening Defendants) in 88-1339. UNITED SERVICES AUTOMOBILE ASSOCIATION, a Texas Reciprocal Interinsurance Exchange, USAA Casualty Insurance Company, a Texas Stock Insurance Company, USAA Life Insurance Company, a Texas Stock Insurance Company, and USAA Annuity and Life Insurance Comapany, a Texas Stock Insurance, v. MUIR, William J., III, Acting Insurance Commissioner of the Commonwealth of Pennsylvania. Appeal of PENNSYLVANIA ASSOCIATION OF INDEPENDENT INSURANCE AGENTS, John Ulrich, Jr., Professional Insurance Agents Association of Pennsylvania, Maryland and Delaware, Inc.; Charles P. Leach, Jr.,; Pennsylvania Association of Life Underwriters; and Harold E. Alexander, in 88-5077. UNITED SERVICES AUTOMOBILE ASSOCIATION, a Texas Reciprocal Interinsurance Exchange, USAA Casualty Insurance Company, a Texas Stock Insurance Company, USAA Life Insurance Company, a Texas Stock Insurance Company, and USAA Annuity and Life Insurance Company, a Texas Stock Insurance, v. MUIR, William J., III, Acting Insurance Commissioner of the Commonwealth of Pennsylvania, Pennsylvania Association of Independent Insurance Agents, John Ulrich, Jr., Professional Insurance Agents Association of Pennsylvania, Maryland and Delaware, Inc.; Charles P. Leach, Jr.,; Pennsylvania Association of Life Underwriters; and Harold E. Alexander, Intervenors. Appeal of Constance FOSTER, in 88-5078. UNITED SERVICES AUTOMOBILE ASSOCIATION, a Texas Reciprocal Interinsurance Exchange, USAA |
| Court | U.S. Court of Appeals — Third Circuit |
William R. Balaban, Balaban & Balaban, Harrisburg, Pa., Jonathan B. Sallet (argued), Miller, Cassidy, Larroca & Lewin, Washington, D.C., for appellants PA Assoc. of Ind. Ins. Agents in 88-1339 and 88-5077, and for appellees, PA Assoc. of Ind. Ins. Agents in 88-5121 and 88-5078.
Harvey Bartle, III (argued), Dechert, Price & Rhoads, Philadelphia, Pa., for appellee Ford in 88-1339.
John B. Knorr, III (argued), Chief Deputy Atty. Gen., Office of Atty. Gen., Harrisburg, Pa., for appellee, Constance Foster in 88-5121, 88-5077 and 88-5078.
Christopher K. Walters (argued), Reed, Smith, Shaw & McClay, Philadelphia, Pa., Robert B. Hoffman, Reed, Smith, Shaw & McClay, Harrisburg, Pa., for appellant United Services Auto. Ass'n, in 88-5121, 88-5077 and 88-5078.
Before HIGGINBOTHAM, MANSMANN and GREENBERG, Circuit Judges.
On these appeals we are revisited by significant questions concerning the appropriate applications of the doctrines of abstention and preemption, and of the dormant commerce clause of the United States Constitution. Although all such cases present issues that require delicate balancing, these cases are particularly sensitive because they concern both a federal scheme designed to assist the nation's failing savings and loans companies and the important state interest in regulating the state insurance industry. Upon our review of the contentions raised on these appeals, we conclude: (1) that the principles of Younger do not require abstention in these cases; (2) that Pennsylvania's statute that precludes companies that sell insurance in Pennsylvania from affiliation with savings and loan institutions is preempted to the extent that the state statute is applicable to companies authorized pursuant to federal legislation to purchase failing thrifts and (3) the state statute is not preempted in its application to other than failing thrifts and, in that application, does not violate the Commerce Clause. In our view, that statute neither discriminates impermissibly in favor of in-state residents, nor presents a burden on interstate commerce and, it therefore, does not present harm precluded by the Commerce Clause. Accordingly, we will affirm the decisions of the district courts in these cases in part and reverse in part.
These appeals are taken from the judgments of district courts in two declaratory actions that were filed to determine the constitutionality of Sec. 641 of the Insurance Department Act of 1921, as amended, P.L. 1148 (1987), codified at 40 Pa.Stat.Ann. (Purdon 1987 Supp.). 1 Although the cases are wholly separate and were filed independently, they were consolidated for the purposes of appeal because of the commonality of the underlying facts and the significant identity of the issues presented for review. The facts of neither case are in dispute. For the purposes of this discussion, we review the facts and procedural histories of each case briefly:
A. Pennsylvania Ass'n of Independent Insurance Agents v. Ford Motor Co. ("Ford")
In December 1985, Ford Motor Company ("Ford") acquired the First Nationwide Financial Corporation ("FNFC") which is a California based savings and loan holding company. Ford also acquired FNFC's subsidiary, First Nationwide Savings which Ford renamed First Nationwide Bank ("FNB"). At that time, FNB had offices located in California, New York, Florida and Hawaii.
In June 1986 Ford, through its new subsidiaries FNFC and FNB, arranged to purchase two Ohio based savings and loan companies, ("S & L's") that were failing and had been placed into receivership with the Federal Savings and Loan Insurance Corporation ("FSLIC"). FSLIC had solicited applications for the purchase of these S & L's pursuant to federal statutory guidelines designed to limit liability exposure for these failed companies which were federally insured. See 12 U.S.C. Sec. 1730a (1982). 2 The failing Ohio S & L's were merged with FNB to create a larger national savings and loan entity. Subsequently, in February 1987, Ford requested and was granted permission by the Federal Home Loan Bank Board to open two additional branches of the newly constituted FNB. One of these new branches was in Pennsylvania.
Among the numerous subsidiary companies that are owned and controlled by Ford are the American Road Insurance Company ("American Road"), which is a wholly owned subsidiary of Ford, and the Ford Life Insurance Company ("Ford Life"), which is wholly owned by American Road. Both of these companies are licensed to sell insurance in Pennsylvania and have been engaged in that business for over twenty years. Ford's simultaneous ownership of these insurance companies and FNB, however, placed it in violation of Sec. 641 of the Pennsylvania insurance act.
Accordingly, in June 1987, three months after FNB's Pennsylvania branch office was opened, Ford filed a complaint in the United States district court for declaratory relief from Pennsylvania's enforcement of that statute which, Ford alleged, was unconstitutional on several grounds. Ford claimed, inter alia that, to the extent that the statute placed a restriction upon its ownership of a savings and loan institution, it was preempted by 12 U.S.C. Sec. 1730a(m) (1987). Additionally, Ford contended that Sec. 641 was constitutionally infirm because it was violative of the dormant commerce clause of the United States Constitution. The Insurance Commissioner of the State of Pennsylvania ("Insurance Commissioner" or "the Commissioner") filed a reply challenging the merits of the contentions raised by Ford. The Commissioner was joined by the appellants in this case, the Pennsylvania Association of Independent Insurance Agents ("Insurance Agents") who had successfully petitioned the district court for leave to intervene. Together with that motion to intervene, the Insurance Agents also filed a motion to dismiss Ford's complaint in which it petitioned the district court to abstain from adjudication of the complaint pursuant to the Younger doctrine of abstention. 3 Prior to intervening in the case, the Insurance Agents had filed a complaint with the Insurance Commissioner initiating an administrative proceeding that sought the revocation of American Road's and Ford Life's insurance licenses because those companies were in violation of Sec. 641. Subsequent to the insurance agents' intervention in this case, Ford filed a motion in the district court seeking an injunction of the state administrative proceedings.
Ford also filed a motion for summary judgement on three grounds: it contended that the statute was unconstitutional as a violation of the equal protection clause, that federal legislation preempted the entire field concerning the acquisition and ownership of savings and loans and that federal legislation that specifically addressed the acquisition of failing savings and loan institutions preempted Sec. 641.
The district court concluded that...
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