United States District Court, D. Idaho
MEMORANDUM DECISION AND ORDER RE PLAINTIFF'S
MOTION TO LIFT STAY AND FOR ENTRY OF PRELIMINARY INJUNCTION
Honorable Ronald E. Bush Chief U.S Magistrate Judge.
is Plaintiff's Motion to Lift Stay and for Entry of
Preliminary Injunction (Dkt. 216). The Court has carefully
considered the record and reviewed the briefing and
affidavits submitted in connection with this motion. The
Court also conducted a hearing on this motion on September
21, 2017. Being fully advised, the Court enters the following
Memorandum Decision and Order:
Idaho Trust Bank (“Idaho Trust”) alleges that
Defendants Continental Casualty Company (“CNA”)
and BancInsure, Inc. (“BancInsure”) were
required, but failed, to fully indemnify and defend Idaho
Trust from claims made against Idaho Trust by Inland Storage,
Inc. and James Hutchens. The case began in the Fourth
Judicial District of the State of Idaho, in and for the
County of Ada, on December 23, 2011 (Dkt. 1-1). BancInsure
removed the case to this federal court on January 24, 2012
(Dkt. 1). Defendant CNA was dismissed with prejudice by
stipulation on July 1, 2013 (Dkts. 81, 86).
this Court denied BancInsure's motion for summary
judgment and granted Idaho Trust's motion for summary
judgment. The effect of those rulings was to to establish
liability but not damages with respect to Idaho Trust's
claims against BancInsure. (Dkts. 95, 98, 132). A two-day
trial on damages was set for September 2, 2014. (Dkt. 139).
Then, less than a month before trial, BancInsure moved for a
temporary stay of this action and filed notice here that an
Oklahoma state court had placed it into liquidation and
appointed a receiver. (Dkt. 152). Reluctantly, the Court
granted the initial motion to stay (Dkt. 173) and the damages
trial was vacated. (Dkt. 176). Subsequent motions to continue
the stay have been granted, such that this case has been
stayed since August of 2014 - now well over three years ago.
(Dkts. 176, 183, 196, 200, 211).
2015, Idaho Insurance Guaranty Association
(“IIGA”) was permitted to intervene in this case
after its motion to substitute as defendant for BancInsure
was denied. (Dkts. 180, 193).
Trust now moves to lift the stay and for entry of a
preliminary injunction barring BancInsure's Receiver from
seeking to readjudicate Idaho Trust's claims in the
Oklahoma receivership proceeding. (Dkt. 216). Its primary
basis for this motion is that, despite this Court's
Memorandum Decision and Order granting summary judgment
against BancInsure on its liability to Idaho Trust, the
Receiver has recommended in the Oklahoma liquidation
proceeding that BancInsure have no liability to Idaho Trust
on the proofs of claim that correspond to the causes of
action raised here. (Dkts. 216, 216-1, 223). Through the
Receiver, BancInsure opposes the motion and defends its right
and duty to make recommendations in the receivership
proceeding as to filed claims. (Dkt. 224). IIGA likewise
opposes the motion. (Dkt. 225).
Idaho Trust's Motion for Preliminary Injunction Is
issue here is whether this Court is authorized to enjoin the
BancInsure Receiver from pursuing a particular legal strategy
in the Oklahoma receivership proceeding. Although federal
courts have the power to issue preliminary injunctions under
appropriate circumstances (Fed. R. Civ. P. 65; see
also 28 U.S.C. § 636(c)(1)), in cases such as this
one the authority is largely limited by the Anti-Injunction
Act, 28 U.S.C. § 2283. The Act provides that “[a]
court of the United States may not grant an injunction to
stay proceedings in a State court except as expressly
authorized by Act of Congress, or where necessary in aid of
its jurisdiction, or to protect or effectuate its
judgments.” The prohibition of the Act “cannot be
evaded by addressing the order to the parties” instead
of to the state court itself. Atl. Coast Line R.R. Co. v.
Bhd. of Locomotive Eng'rs, 398 U.S. 281, 287 (1970).
“Ordering the parties not to proceed is tantamount to
enjoining the proceedings.” Bennett v. Medtronic,
Inc., 285 F.3d 801, 805 (9th Cir. 2002).
exception to the Act permitting a federal court to enjoin
state court proceedings to “protect or effectuate its
judgments” is known as the relitigation exception.
Blalock Eddy Ranch v. MCI Telecomms. Corp., 982 F.2d
371, 375 (9th Cir. 1992). This exception is “designed
to implement well-recognized concepts of claim and issue
preclusion.” Smith v. Bayer Corp., 564 U.S.
299, 306 (2011) (quotation marks and citation omitted). It is
“narrow and [is] not to be enlarged by loose statutory
construction.” Chick Kam Choo v. Exxon Corp.,
486 U.S. 140, 146 (1988) (quotation marks and citation
omitted). “Deciding whether and how prior litigation
has preclusive effect is usually the bailiwick of the second
court. . . . So issuing an injunction under the relitigation
exception is resorting to heavy artillery.”
Smith, 564 U.S. at 307.
relitigation exception applies where there is the possibility
of a conflict between a state court judgment and a prior
federal judgment. Montana v. BNSF Ry. Co., 623 F.3d
1312, 1315 (9th Cir. 2010). But a conflict can only exist if
the federal court has decided the claims or issues presented
in the subsequent state action. Id. (citing
Blalock, 982 F.2d at 376); see also Smith,
564 U.S. at 306. Even so, however, “if no actual
conflict is possible, [an] injunction could still be proper
if res judicata would bar the state court proceedings.”
Blalock, 982 F.2d at 375. “Res judicata
applies when there is ‘(1) an identity of claims, (2) a
final judgment on the merits, and (3) privity between
parties.'” Montana v. BNSF Ry. Co., 623
F.3d at 1316 (quoting Tahoe-Sierra Pres. Council, Inc. v.
Tahoe Reg'l Planning Agency, 322 F.3d 1064, 1077
(9th Cir. 2003)).
“the fact that an injunction may issue under
the Anti-Injunction Act does not mean that it must
issue.” Chick Kam Choo, 486 U.S. at 151.
Moreover, “[a]ny doubts as to the propriety of a
federal injunction against state court proceedings should be
resolved in favor of permitting the state courts to proceed
in an orderly fashion to finally determine the
controversy.” Atl. Coast Line R.R. Co., 398
U.S. at 297. “[A]n injunction can issue only if
preclusion is clear beyond peradventure.”
Smith, 564 U.S. at 308.
Idaho Trust seeks a preliminary injunction prohibiting the
Receiver from seeking to adjudicate Idaho Trust's claims
in the Oklahoma receivership proceeding, on the grounds that
the Receiver has recommended denial of the claims in that
forum despite this Court's prior order on summary
judgment establishing liability on the very same claims. Mem.
in Supp. of Mot. to Lift Stay and for Entry of Prelim. Inj.
1-2 (Dkt. 216-1). Idaho Trust contends that by recommending
denial in the Oklahoma receivership proceeding, the Receiver
is violating Idaho and ...