Hartford Cas. Ins. Co. v. Borg-Warner Corp.
| Citation | 913 F.2d 419 |
| Decision Date | 18 September 1990 |
| Docket Number | No. 89-2920,BW-T,BORG-WARNER,89-2920 |
| Parties | HARTFORD CASUALTY INSURANCE COMPANY, Twin City Fire Insurance Company, Nutmeg Insurance Company, and Pacific Insurance Company Limited, Plaintiffs-Appellants, v.CORPORATION,ransmissions & Engine Components Corporation, Borg-Warner Equities Corporation, Borg-Warner Insurance Holding Corporations, Borg-Warner Insurance Services, Incorporated, and Borg-Warner Acceptance Corporation, Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
James I. Rubin, Sue Payne, Robert N. Hermes, Stephanie Leider, Butler, Rubin, Newcomer, Saltarelli & Boyd, Chicago, Ill., for plaintiffs-appellants.
Lee A. Watson, Donald E. Egan, Clay A. Tillack, Linda L. Cashmore, Katten, Muchin & Zavis, Chicago, for defendants-appellees.
Before WOOD, Jr., FLAUM, and KANNE, Circuit Judges.
The McCarran-Ferguson Act gives the states the power to regulate the insurance industry. See 15 U.S.C. Sec. 1012. As part of that power, Illinois, like most other states, has enacted a scheme for the liquidation or rehabilitation of insolvent insurers. See ILL.REV.STAT. ch. 73, pp 799-833.11. As creditors of an Illinois insurance company going through the rehabilitation process, Hartford Casualty Insurance Company and three of its subsidiaries have sued the insurance company's parent, Borg-Warner Corporation, and five of the parent's other subsidiaries. Because any federal court judgment in this case would upset the rehabilitation proceedings, we affirm the district court's decision to abstain.
In 1974, Borg-Warner formed Centaur Insurance Company to serve as its captive In September 1987, the Illinois director of insurance started rehabilitation proceedings against Centaur in the circuit court for Cook County. Exempt from the Bankruptcy Code's coverage, see 11 U.S.C. Sec. 109, insolvent insurers generally must turn to state courts for relief. See generally Lac D'Amiante du Quebec v. American Home Assurance Co., 864 F.2d 1033, 1038-41 (3d Cir.1988). The process is similar, however, to federal bankruptcy proceedings.
insurer. In addition, Borg-Warner allowed Centaur to write insurance and reinsurance policies for nonaffiliated entities. From 1981 through 1984, Hartford ceded, or reinsured, some of its policies to Centaur. Of course, for taking on part of Hartford's exposed risk, Hartford had to pay substantial premiums to Centaur. As early as 1984, Centaur had begun to default on obligations it owed to Hartford.
Pursuant to an agreed order of rehabilitation, the director of insurance took control of Centaur's business and assets. Simultaneously, the rehabilitation court issued an order enjoining all actions against Centaur, its directors, officers, or stockholders. On January 11, 1988, the Illinois circuit court modified that order to permit actions against Centaur's directors, officers, and stockholders; actions against Centaur itself are still enjoined.
Shortly after the stay order was lifted, Hartford filed this complaint against Borg-Warner and its subsidiaries for their role in Centaur's demise. Hartford advances four theories for recovery: abuses of the corporate structure that justify piercing of the corporate veil, fraud, reckless misrepresentation, and promissory estoppel. According to its own estimates, Centaur's insolvency will cost Hartford up to $15,000,000. In the rehabilitation proceedings, Hartford has filed a claim for reinsurance debts that it asserts Centaur owes. Any liability that Borg-Warner would have to Hartford will be the difference between the amount that Centaur owes to Hartford and the amount of the dividend from Centaur's rehabilitation. Thus, the amount that Hartford would be able to collect from Borg-Warner is dependent on the state court adjudicating claims against insolvent Centaur, but it is unlikely that Hartford will receive all of the money owed by Centaur. Borg-Warner's liability is also dependent on interpretation of Centaur's reinsurance treaties with Hartford.
As part of the rehabilitation process, Illinois law authorizes the director of insurance to file a reorganization plan. ILL.REV.STAT. ch. 73, p 804(3). The director filed a reorganization plan for Centaur in May 1988. The plan provided for reinsurance claims, such as those owing to Hartford, to be paid out of any funds left after paying administrative costs and the primary or direct claims of Centaur's policyholders. Later, the director filed a complaint with the Illinois state court seeking to convert the proceedings to a liquidation. Borg-Warner opposed this change, and the state court granted the director's motion to withdraw the liquidation complaint voluntarily. Subsequently, the director filed a progress report on the status of the rehabilitation proceedings, stating that approximately half of the work necessary to evaluate claims against Centaur has been completed. 1 Nevertheless, Hartford contends that it will be 1997 before the precise deficiency in Centaur's estate is known.
The district court dismissed Hartford's complaint without prejudice. Because Borg-Warner's liability to Hartford would not be fixed until the end of the state court proceedings, the district court found Hartford's claims to lack ripeness. In addition, because of an identity of issues with the state court--Centaur's liability to Hartford--the district court also held that abstention would be appropriate. Finally, the district court sua sponte dismissed Hartford's alter ego claim for a lack of standing. Hartford now appeals, both from the district court's initial order and from its denial of reconsideration.
After oral argument, although no question about jurisdiction had been raised, we, as a matter of course, examined Hartford's notice of appeal. Doubts about its adequacy arose in view of developing case law. We therefore requested additional briefing. 2 Reproduced in its entirety, the notice of appeal reads:
v.
BORG-WARNER INSURANCE HOLDING CORP., BORG-WARNER INSURANCE
SERVICES, INC., and BORG-WARNER ACCEPTANCE CORPORATION, Defendants.
Notice is hereby given that the plaintiffs in this action, hereby appeal to the United States Court of Appeals for the Seventh Circuit from the following orders and judgement:
(1) The Memorandum Order and Judgement entered thereon dated April 17, 1989, dismissing plaintiffs' Complaint, without prejudice.
(2) The Memorandum Order dated August 9, 1989 denying plaintiffs' [sic ] Motion for Reconsideration of the April 17, 1989 Memorandum Order and Judgement entered thereon.
/s
At issue is whether the list of the appellants in the notice of appeal's caption coupled with the body's reference to "the plaintiffs" together satisfy FED.R.APP.P. 3(c)'s specificity requirement.
None of the parties dispute who intended to appeal from the district court judgment, but lack of confusion over the putative appellants is an irrelevant inquiry after Torres v. Oakland Scavenger Co., 487 U.S. 312, 108 S.Ct. 2405, 101 L.Ed.2d 285 (1988). See also Baucher v. Eastern Ind. Prod. Credit Ass'n, 906 F.2d 332, 334 (7th Cir.1990); FTC v. Amy Travel Serv. Inc., 875 F.2d 564, 577 (7th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 366, 107 L.Ed.2d 352 (1989). In Torres, sixteen plaintiffs had filed an employment discrimination action, which the district court promptly dismissed for failure to state a claim. All sixteen plaintiffs wanted to appeal, but through a clerical error, one of the plaintiffs, Jose Torres, was left out of the notice of appeal. 487 U.S. at 313, 108 S.Ct. at 2407. The Supreme Court ruled that the omission of Mr. Torres's name was more than just a clerical error: it was a failure to appeal that deprived the appellate court of jurisdiction over Torres. Id. at 314, 317, 108 S.Ct. at 2407, 2409. Moreover, the Court rejected the notion that use of the phrase "et al." sufficiently designated Mr. Torres as an appellant. Id. at 317-18, 108 S.Ct. at 2409-10.
After Torres, we have required "punctilious, literal and exact compliance" with FED.R.APP.P. 3(c)'s requirements for a notice of appeal. Allen Archery, Inc. v. Precision Shooting Equip., Inc., 857 F.2d 1176, 1177 (7th Cir.1988). Thus, we have rejected arguments that a caption containing names of putative appellants will save an ambiguous notice of appeal. See Barnett v. Stern, 909 F.2d 973, 977-78 (7th Cir.1990); Bigby v. City of Chicago, 871 F.2d 54, 56-57 (7th Cir.1989); Allen Archery, 857 F.2d at 1177. Contrary to suggestions by other circuits, however, we have never adopted a blanket rule that we always ignore the caption in deciding whether the notice of appeal is adequate. See Minority Employees of Tenn. Dep't of Employment Sec. v. Tennessee, 901 F.2d 1327, 1335 (6th Cir.1990), Mariani-Giron v. Acevedo-Ruiz, 877 F.2d 1114, 1116 (1st Cir.1989). Our case law stands for nothing more than the unremarkable proposition that where the caption and the body of the notice of appeal are ambiguous even when read together, it is inappropriate to consider as appellants parties named only in the caption. Torres compels nothing less; where the notice of appeal as a whole is ambiguous, it has failed to specify the party or parties taking the appeal as required by rule 3(c).
For example, in Allen Archery, the notice of appeal's caption listed "Precision Shooting Equipment, Inc. and Paul E. Shepley, Jr." as parties, but the body specified that only the corporation appealed from the judgment of the district...
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