Hanover Am. Ins. Co. v. Tattooed Millionaire ( 2022 )

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 22a0139p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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HANOVER AMERICAN INSURANCE COMPANY,
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Plaintiff-Appellee, │
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v. > No. 21-5671
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TATTOOED MILLIONAIRE ENTERTAINMENT, LLC, et al., │
Defendants, │
│
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JOHN FALLS, │
Defendant-Appellant. │
┘
Appeal from the United States District Court for the Western District of Tennessee at Memphis.
No. 2:20-cv-02834—Jon Phipps McCalla, District Judge.
Argued: April 28, 2022
Decided and Filed: June 28, 2022
Before: McKEAGUE, GRIFFIN, and READLER, Circuit Judges.
_________________
COUNSEL
ARGUED: Malcolm B. Futhey III, FUTHEY LAW FIRM PLC, Memphis, Tennessee, for
Appellant. Jeremy T. Grabill, PHELPS DUNBAR LLP, New Orleans, Louisiana, for Appellee.
ON BRIEF: Malcolm B. Futhey III, FUTHEY LAW FIRM PLC, Memphis, Tennessee, for
Appellant. Jeremy T. Grabill, Mark C. Dodart, PHELPS DUNBAR LLP, New Orleans,
Louisiana, for Appellee.
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 2
_________________
OPINION
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GRIFFIN, Circuit Judge.
Following a 2015 burglary and fire at the House of Blues music studio in Memphis,
Tennessee, a jury awarded $2.5 million to defendant John Falls pursuant to his insurance policy
with plaintiff Hanover American Insurance Company. Despite that judgment in Falls’s favor,
the parties continue to fight over whether Falls is entitled to that entire award. Falls filed suit
against defendants Christopher Brown and Tattooed Millionaire Entertainment, LLC (TME) in
Tennessee state court, and Hanover filed an interpleader action against Brown, TME, and Falls
in federal court. Hanover then moved the federal district court to enjoin Falls’s state-court
proceeding. The court granted the injunction, concluding that doing so was “necessary in aid of
its jurisdiction” under the Anti-Injunction Act, 28 U.S.C. § 2283. We disagree and reverse.
I.
This case stems from insurance fraud committed by Christopher Brown and TME, his
production company. A comprehensive recitation of the underlying facts is set forth in Hanover
Am. Ins. Co. v. Tattooed Millionaire Ent., LLC (Hanover I), 974 F.3d 767, 771–75 (6th Cir.
2020). In short, TME owned the House of Blues recording studio in Memphis and leased one of
the building’s studios to Falls. Hanover issued separate insurance policies to TME and Falls for
business personal property (BPP) and for lost business income (BI). In 2015, intruders broke
into the House of Blues, vandalized and burgled the studio, and committed arson. Hanover made
advance payments to both TME and Falls, but after an investigation, Hanover discovered that
Brown had submitted false receipts and had been the target of several similar arson and burglary
incidents in the past few years. Hanover sued Brown, TME, and Falls, seeking recovery of the
prepaid funds and a declaratory judgment that it did not owe any payments under the insurance
policies. Following trial, the jury found that Brown had made material misrepresentations and
thus returned a verdict against him, but it found Falls not liable for misrepresentations. Instead,
it found that Hanover had breached its contract with Falls and that Falls was entitled to recover
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 3
the full $2.5 million in BPP insurance and $250,000 in BI insurance as set forth in his policy.
Following the verdict, Hanover filed a motion under Fed. R. Civ. P. 50(b) seeking to overturn the
verdict in favor of Falls because TME was named as an additional insured on Falls’s policy and
language in his insurance policy voided coverage if “you or any other insured” misrepresented a
material fact. The trial court granted the motion.
However, we reversed on appeal, concluding that Hanover forfeited its Rule 50(b) motion
by not first filing a Rule 50(a) motion as to Falls. See Hanover I, 974 F.3d at 779–90. In doing
so, we declined to address Hanover’s alternative argument for affirmance that payment of the
$2.5 million in BPP insurance would violate Tennessee public policy, which dictates that “[n]o
one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to
found any claim upon his own iniquity, or to acquire property by his own crime.” Id. at 790
(quoting Box v. Lanier, 79 S.W. 1042, 1045 (Tenn. 1904)). But we explained that, even if
Hanover were correct, Falls still had some property interests and could be entitled to some
recovery. Id. at 790–91. Thus, we noted that “the proceeds will become the subject of an
interpleader action” between the parties:
This was the district court’s plan for how to handle the issue: Falls and TME
would “sue each other” in the event of a win, but not fight it out during the main
trial. Though Falls and Hanover both make interesting legal arguments as to the
dispositions of the funds, we see no reason to short-circuit that plan. Such
arguments can be made in whatever subsequent proceedings arise over this
payment.
Id. at 791. On remand, the district court entered judgment against Hanover and for Falls. That
judgment did not require Hanover to pay the $2.5 million into the court’s registry for later
distribution.
Before Hanover I was decided, Falls filed a complaint for monetary damages and
declaratory relief against Brown and TME in Tennessee state court. See Falls v. Brown, Case
No. CT-3322-20 (Shelby Cnty. Cir. Ct. Aug. 17, 2020). Three months later, Hanover filed a
complaint for interpleader and declaratory relief against Brown, TME, and Falls in federal court
under Fed. R. Civ. P. 22, requesting that the court find the $2.5 million BPP award void pursuant
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 4
to Tennessee public policy or, alternatively, determine to whom Hanover should pay the award
or any portion thereof.
Hanover then sought to enjoin Falls’s state court action, contending that the district court
could do so under the Anti-Injunction Act, 28 U.S.C. § 2283, as an injunction would be “in aid
of its jurisdiction.” Falls responded that the district court should deny the motion because that
exception did not apply. Falls also filed a motion to dismiss and a motion to stay the district
court proceedings until the state-court proceedings concluded. The district court denied Falls’s
motions and granted Hanover’s motion to enjoin the state-court proceedings, determining that
the “in aid of its jurisdiction” exception to the Anti-Injunction Act applied.
Falls now appeals the district court’s grant of Hanover’s motion to enjoin the state-court
action and its denial of his motion to dismiss.
II.
We begin with the principal issue in this appeal: whether the district court properly
enjoined the state-court proceedings under the Anti-Injunction Act. As he did before the district
court, Falls contends that the “in aid of its jurisdiction” exception to the Act does not apply. We
agree.
“We review de novo the district court’s legal determination as to whether an injunction
may issue under the Anti–Injunction Act.” Great Earth Cos., Inc. v. Simons, 288 F.3d 878, 893
(6th Cir. 2002). “However, the fact that an injunction may issue under the Act does not mean
that it must issue.” Id. (citation omitted). Thus, the “decision whether to issue an injunction that
does not violate the Act is reviewed for an abuse of discretion.” Id. (citation omitted).
The Anti-Injunction Act provides that “[a] court of the United States may not grant an
injunction to stay proceedings in a State court except as [1] expressly authorized by Act of
Congress, or [2] where necessary in aid of its jurisdiction, or [3] to protect or effectuate its
judgments.” 28 U.S.C. § 2283. The “Act is an absolute prohibition . . . against enjoining state
court proceedings, unless the injunction falls within one of [its] three specifically defined
exceptions.” Atl. Coast Line R.R. Co. v. Brotherhood of Locomotive Eng’rs, 398 U.S. 281, 286
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 5
(1970). The Act’s “message is one of respect for state courts,” namely that they should “remain
free from interference by federal courts.” Smith v. Bayer Corp, 564 U.S. 299, 306 (2011)
(citation omitted). As a result, its exceptions “are narrow” and should not “be enlarged by loose
statutory construction.” Id. (citations omitted).
This appeal focuses solely on whether the “necessary in aid of its jurisdiction” exception
applies.1 This exception has historically been applied when the federal court acquires “in rem”
jurisdiction over specific property such that it is “necessary” to prevent other courts from
interfering with a court’s disposition of that property. See 17A Charles A. Wright & Arthur R.
Miller, Fed. Prac. & Proc.: Jurisdiction 2d § 4225 (3d ed.). “Where the action is in rem the
effect is to draw to the federal court the possession or control, actual or potential, of the res, and
the exercise by the state court of jurisdiction over the same res necessarily impairs, and may
defeat, the jurisdiction of the federal court already attached.” Kline v. Burke Constr. Co., 260
U.S. 226, 229 (1922). As the Supreme Court has described:
The rule, therefore, that the court first acquiring jurisdiction shall proceed without
interference from a court of the other jurisdiction is a rule of right and of law
based upon necessity, and where the necessity, actual or potential, does not exist
the rule does not apply. Since that necessity does exist in actions in rem and does
not exist in actions in personam, involving a question of personal liability only,
the rule applies in the former but does not apply in the latter.
Id. at 235. The “necessary in aid of its jurisdiction” exception, codified in the 1948 revision
of the Anti-Injunction Act, is “fairly read as incorporating this historical in rem exception.”
Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 641 (1977) (plurality opinion).
1
In the district court, Hanover conceded that the first “authorized by Congress” exception does not apply
but argued that both the second “in aid of its jurisdiction” and third “to protect or effectuate its judgments”
exceptions did apply. The district court decided the case only under the second exception without addressing the
third. Regardless of whether such an argument was meritorious, Hanover could have raised the third exception as an
alternative ground for affirmance on appeal. See Dandridge v. Williams, 397 U.S. 471, 475 n.6 (1970). But it did
not do so, meaning that the issue has been abandoned on this appeal. See United States v. Johnson, 440 F.3d 832,
845–46 (6th Cir. 2006).
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 6
We have addressed this exception in three cases of note. First, in Martingale LLC v. City
of Louisville, 361 F.3d 297 (6th Cir. 2004), the parties disputed whether a federal court could
enjoin a state court condemnation lawsuit related to Big Four Bridge in Louisville, Kentucky.
Id. at 299. Louisville had passed a resolution authorizing condemnation of the bridge for use as
a pedestrian walkway; the bridge’s owner, Martingale, filed a declaratory action in federal court
before Louisville filed its state condemnation suit. Id. at 300. We determined that none of
the Anti-Injunction Act exceptions applied. Id. at 304. Regarding the second exception, we
clarified that “[c]ourts have applied this second exception in only two scenarios: where the case
is removed from the state court, and where the federal court acquires in rem or quasi in rem
jurisdiction over a case involving real property before the state court does.” Id. at 302. But,
there, neither scenario applied. Id. at 302–03. The suit involved property (the bridge),
but jurisdiction was “based on in personam, rather than in rem, principles.” Id. at 303 n.3. As
the Supreme Court has said, “when a state proceeding presents a federal issue, even a pre-
emptive issue, the proper course is to seek resolution of that issue by the state courts.” Id. at 303(quoting Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 149–50 (1988)). It also did not matter
that Louisville filed its state action after Martingale filed its federal action—the Anti-Injunction
Act could apply so long as the state court action was pending when Louisville sought the
injunction. Id. at 303–04. The “Act does not prevent a court from enjoining the parties
from commencing state court proceedings, as opposed to enjoining the parties from proceeding
with already-filed state actions.” Id. See also Roth v. Bank of the Commonwealth, 583 F.2d 527,
531–34 (6th Cir. 1978) (noting that a district court may enjoin parties from beginning state
proceedings but concluding that the Anti-Injunction Act may still apply when a state lawsuit
begins after the federal lawsuit).
Next, in In re Life Investors Insurance Company of America, 589 F.3d 319 (6th Cir.
2009), we vacated an order enjoining a state court action entered by the district court. Id. at 332.
The plaintiffs, a putative class of insurance customers, sued the defendant insurance company in
federal court. Id. at 322. But this was not the only lawsuit against the defendant—others,
including one in Arkansas, were also pending. Id. at 328. The defendant had reached a
settlement agreement in the Arkansas case, but the district court enjoined the Arkansas case
under the Anti-Injunction Act and the All Writs Act, 28 U.S.C. § 1651(a), because it believed
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 7
that doing so was “necessary in aid of its jurisdiction.” Id. at 329–30. We vacated the injunction
on appeal—following Martingale, we again explained that the exception applied only where the
case is removed or where the federal court acquires in rem or quasi in rem jurisdiction over real
property. Id. at 330. The district court’s injunction was thus not proper: “[b]ecause this case is
not an in rem action and was not removed from state court, all we have here is a parallel in
personam action in state court.” Id. Such “a simultaneous in personam state action does not
interfere with the jurisdiction of a federal court in a suit involving the same subject matter.”
Id. (quoting Roth, 583 F.2d at 535). In vacating the injunction, we also rejected the plaintiffs’
argument that the Court should expand the scope of the exception to a third use “under which
federal courts can essentially take ownership of complex, typically class action, cases to the
exclusion of the state courts.” Id. at 331. Those types of cases were “materially distinguishable”
as they involved circumstances “when numerous cases have been consolidated by the Multi–
District Litigation [MDL] panel, the MDL judge has put forth considerable effort coordinating
discovery or settlement discussions, and the state court action could potentially affect the federal
class and federal settlement.” Id. at 331 n.11. Thus, even if we “were inclined to expand our
interpretation of the scope of the ‘in aid of jurisdiction’ exception,” that case was not an
appropriate candidate for doing so, in part because the district court had not certified a class.
Id. at 331–32. “When there is no risk of harm to a party’s rights and no risk of harm to the rights
of a class that does not exist, we see no reason to extend the reach of the All Writs Act beyond
our prior precedents.” Id. at 332.
Our decision in Lorillard Tobacco Company v. Chester, Willcox & Saxbe, 589 F.3d 835(6th Cir. 2009), followed shortly thereafter. There, the parties were involved in a federal class
action suit related to treatment of smoking-related illnesses. Id. at 837–38. After an initial
settlement agreement was reached, a dispute arose over supplemental payments and the
distribution of attorneys’ fees—this dispute led to another class action suit during which the
plaintiffs deposited the disputed fee amount ($66.34 million) into the district court’s registry. Id.at 838–39. The second suit resulted in another settlement agreement that distributed the disputed
amount and provided that the federal court “shall retain exclusive jurisdiction over any and all
disputes relating to this Settlement Agreement, the enforcement of this Settlement Agreement
and any monies to be allocated, advanced or recouped pursuant to this Settlement Agreement.”
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 8
Id. at 840, 842–43. The final judgment reflected this language. Id. at 842. But prior to entry of
the settlement agreement, one of the defendants filed another suit in Florida state court, and
another party subsequently sought to enjoin that state action. Id. The district court entered an
injunction under the “in aid of its jurisdiction” exception, and we affirmed. Id. at 843, 851. That
“exception is applicable to a district court’s continuing authority to enforce a settlement
agreement where the agreement is either incorporated into the court’s final judgment or the court
expressly retains jurisdiction over the agreement in such judgment.” Id. at 844. The district
court order enjoined parties from bringing claims related to the subject matter of the settlement
agreement, and if “a court issues an injunction, it automatically retains jurisdiction to enforce it.”
Id. at 847 (citation omitted). Therefore, the district court’s injunction was “a proper means of
enforcing its previously entered permanent injunction.” Id. The agreement evidenced the
parties’ intent to confer broad enforcement powers on the district court. Id. at 847–48. Further,
“that this federal case involves a complex class settlement also provides an additional reason
why the district court’s injunction against the state-court litigation is proper.” Id. at 848. A class
action suit is “analogous to . . . an in rem action . . . where it is intolerable to have conflicting
orders from different courts.” Id. (quoting In re Baldwin-United Corp., 770 F.2d 328, 337 (2d
Cir. 1985)). Therefore, the injunction was “necessary to prevent the litigation of any claims
predicated on this factual determination in the state court and to protect the district court’s ability
to manage the distribution of the class settlement fund.” Id. at 848–49. Finally, because the
district court had exclusive control over the res at issue, the $66.34 million deposited by the
plaintiffs in the action, “any dispute regarding entitlement to the res that is brought before a
different court threatens ‘to defeat or impair the jurisdiction of the federal court’ to determine the
rights of the parties before it.” Id. at 849 (quoting Kline, 260 U.S. at 229).
Applying those decisions to this case reveals that the district court erred in concluding
that an injunction here was “necessary in aid of its jurisdiction.” This exception applies in two
circumstances: 1) when the case is removed from state court or 2) where the federal court has in
rem or quasi in rem jurisdiction over specific property. It is undisputed that the first
circumstance does not apply. And, more pertinently here, this proceeding is not in rem. “In rem
proceedings encompass any action brought against a person in which the essential purpose is to
determine title to or affect interests in specific property located within the territory over which
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 9
the court has jurisdiction.” 1 Am. Jur. 2d Actions § 29 (May 2022 Update). Here, however,
there is no specific property. That this dispute centers around Falls’s $2.5 million BPP award
does not mean that this proceeding is in rem—those funds have not been identified and reduced
to specific property placed within the jurisdiction of the district court. Hanover could have
deposited those funds into the district court’s registry, thereby placing those funds within the
exclusive jurisdiction of the district court, to transform this case into an in rem proceeding. See,
e.g., Farmers’ Loan & Trust Co. v. Lake St. Elevated R.R. Co., 177 U.S. 51, 61 (1900)
(recognizing that a proceeding is in rem where the court has possession of the res); Republic
Nat’l Bank of Mia. v. United States, 506 U.S. 80, 84 (1992) (“[I]t long has been understood that
a valid seizure of the res is a prerequisite to the initiation of an in rem civil forfeiture
proceeding.”); De Korwin v. First Nat’l Bank of Chicago, 267 F.2d 337, 340 (7th Cir. 1959)
(concluding that the district court had in rem jurisdiction because it had “exclusive control and
jurisdiction over the entire corpus of the trust estate”). But Hanover did not do so. Instead, it
argues that it did not need to do so under Rule 22 while continuing to contest whether it is liable
to pay all or part of that award. That choice further reinforces the conclusion that this proceeding
is in personam because Hanover continues to litigate its own liability. “[A]n action is in
personam when its object is to obtain a personal judgment against the defendant, upon which a
general execution may be awarded directing the collection of the judgment out of any property of
the defendant anywhere to be found[.]” 1 Am. Jur. 2d Actions § 28 (May 2022 Update). Our
caselaw is clear—actions in personam, such as that here, do not fall within the ambit of the “in
aid of its jurisdiction” exception to the Anti-Injunction Act.
To avoid this conclusion, Hanover argues that our caselaw is not so clear. It points to
Lorillard, where we did not discuss this “in rem” framework and concluded that the district
court’s injunction was proper. It contends that Lorillard supports an injunction here because, as
in that case, the parties’ dispute here centers on a finite sum of money. Indeed, the district court
agreed with Hanover and concluded that Lorillard was analogous.
We disagree. While Lorillard never described the “in rem” requirement for the “in aid of
its jurisdiction” exception, that decision must be interpreted in light of Martingale and Life
Investors. Martingale and Life Investors both explained that the exception applies when the case
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 10
is removed or the district court has in rem jurisdiction. Each followed this framework, and
Lorillard did too, despite not mentioning either earlier case. There, the district court had control
over the res at issue—the $66.34 million deposited by the plaintiffs—and was authorized by the
settlement agreement to control the distribution of those funds. The federal court thus clearly
had in rem jurisdiction to determine the rights of the parties to the property at issue. The
settlement agreement explicitly confirmed this by giving the federal district court exclusive
control over distributing those proceeds. Lorillard, thus, further confirms that, absent removal,
the “in aid of its jurisdiction” exception requires in rem jurisdiction.
Consequently, because Lorillard was an in rem jurisdiction case, it is materially
distinguishable from this case. While there are some similarities between the settlement award
in Lorillard and the disputed BPP award here, those similarities do not bring this case within the
in rem jurisdiction required by the “in aid of its jurisdiction” exception. The parties—Brown,
TME, Falls, and Hanover—are still litigating who is responsible for paying the other. Hanover
has a personal judgment against it but has raised arguments based on Tennessee public policy
that it is not liable for all or part of that judgment. That there is a finite amount of money
contested does not mean that there is a “specific property,” i.e., a pool of specific funds, over
which the district court has control. See 1 Am. Jur. 2d Actions § 29. Further, the close
relationship between the state and federal actions does not render an injunction necessary here.
“[A] federal court does not have inherent power to ignore the limitations of § 2283 and to enjoin
state court proceedings merely because those proceedings interfere with a protected federal right
or invade an area preempted by federal law, even when the interference is unmistakably clear.”
Atl. Coast Line, 398 U.S. at 294. Rather, “when a state proceeding presents a federal issue, even
a pre-emptive issue, the proper course is to seek resolution of that issue by the state court.”
Martingale, 361 F.3d at 303 (quoting Chick Kam Choo, 486 U.S. at 149–50). And a
“simultaneous in personam state action does not interfere with the jurisdiction of a federal court
in a suit involving the same subject matter.” Life Investors, 589 F.3d at 330 (quoting Roth, 583
F.2d at 535).
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 11
Hanover presents two other arguments in support of its position that an injunction is
necessary here. First, at oral argument, Hanover contended that this proceeding is “quasi in rem”
and, therefore, falls within the exception. But this is an unpreserved issue—nowhere in
Hanover’s briefing before this court or the district court did it raise this issue. “[A] party does
not preserve an argument by raising it for the first time at oral argument[.]” United States
v. Huntington Nat’l Bank, 574 F.3d 329, 331 (6th Cir. 2009). Even if Hanover had properly
preserved this issue, it is without merit. An action quasi in rem is still an in rem proceeding—the
difference being that, rather than resolve the interests of all persons in designated property, a
quasi in rem proceeding resolves only the interests of particular persons, generally the parties to
the action, in the property. See Hanson v. Denckla, 357 U.S. 235, 246 n.12 (1958); 1 Am. Jur.
2d Actions § 30. Again, there is no specific property within the jurisdiction of the district court
at issue here, so, just as there is no in rem jurisdiction, there is likewise no quasi in rem
jurisdiction.
Second, Hanover argues that a strict application of the “in aid of its jurisdiction” analysis
is “a strong overstatement of the law” and that this exception “is certainly not limited to such
actions and has been applied more broadly by many courts.” But this argument is unavailing.
Hanover first cites Atlantic Coast Line’s description that “federal injunctive relief may be
necessary to prevent a state court from so interfering with a federal court’s consideration or
disposition of a case as to seriously impair the federal court’s flexibility and authority to decide
that case.” 398 U.S. at 295. But this statement is taken out of context. In Atlantic Coast Line,
the Supreme Court held that the Anti-Injunction Act did not authorize the federal court’s
injunction. Id. at 297. There, as here, both the state and federal courts had “concurrent
jurisdiction” and “neither court was free to prevent either party from simultaneously pursuing
claims in both courts.” Id. at 295. “[T]he state court’s assumption of jurisdiction over the state
law claims and the federal preclusion issue did not hinder the federal court’s jurisdiction so as to
make an injunction necessary to aid that jurisdiction.” Id. at 296.
Hanover also argues that other courts recognize a broader application of the “in aid of its
jurisdiction” exception, pointing to two district-court decisions from this circuit, In re
Columbia/HCA Healthcare Corporation Billing Practices Litigation, 93 F. Supp. 2d 876 (M.D.
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 12
Tenn. 2000), and In re Inter-Op Hip Prosthesis Product Liability Litigation, 174 F. Supp. 2d 648(N.D. Ohio 2001). Those two decisions relied on caselaw from other circuits to conclude that
the “in aid of its jurisdiction” also allowed a court to enjoin a state court proceeding in a
consolidated MDL case. See, e.g., Winkler v. Eli Lilly & Co., 101 F.3d 1196, 1202 (7th Cir.
1996) (“Other courts have extended the exception to consolidated multidistrict litigation, where a
parallel state court action threatens to frustrate proceedings and disrupt the orderly resolution of
the federal litigation.”). Life Investors recognized this caselaw as well. See 589 F.3d at 331 n.11
(citing cases). But while Life Investors did not disavow the possible applicability of the
exception to “coordinated class action[s] under the authority of the MDL panel,” it declined to
rule on the issue as that case did not involve either scenario. Id. The same is true here—while
the litigation between TME, Falls, and Hanover may be complex, it is neither a class action nor
under the authority of the MDL panel. So regardless of whether those decisions from our sister
circuits have merit, we follow the same path as Life Investors and reserve the issue for another
case. An extension of the “in aid of its jurisdiction” exception, whether supported by our
caselaw or not, is not warranted in this case.2
For these reasons, we hold that the district court erred when it enjoined Falls’s state-court
action. Because Hanover never deposited the $2.5 million into the district court’s registry, the
district court lacked the in rem jurisdiction needed for the “in aid of its jurisdiction” exception to
the Anti-Injunction Act to apply.3 We reach this conclusion with full understanding of its
2
Additionally, contrary to what the district court noted, Hanover I did not oblige the parties to pursue a
federal interpleader action rather than a similar state action. Our decision merely recognized that Hanover, Falls,
and TME could raise the public policy arguments in “whatever subsequent proceedings arise over this payment,”
including a possible interpleader action. 974 F.3d at 791. That decision thus left the door open for the parties to
pursue whatever action that followed, either state or federal.
3
Hanover notes that it did not need to deposit the funds to initiate a rule interpleader action under Rule 22
as opposed to a statutory interpleader action under 28 U.S.C. § 1335. This is correct. See, e.g., Aaron v. Mahl,
550 F.3d 659, 663 (7th Cir. 2008) (“Rule 22 interpleader . . . unlike statutory interpleader, does not require the stake
to be deposited in the federal court’s registry.”). Compare Fed. R. Civ. P. 22, with 28 U.S.C. § 1335(a)(2). But this
argument misses the point. While Hanover did not need to deposit the $2.5 million to initiate its action, its decision
not to do so is the reason why its requested injunction of the state-court proceedings must be denied. The outcome
boils down to Hanover’s choice. On one hand, Hanover can pay the $2.5 million into the district court’s registry,
giving the district court in rem jurisdiction and making an injunction necessary to aid the court’s jurisdiction. On
the other, Hanover can legitimately choose not to deposit the funds and continue to contest its liability to pay those
funds, but doing so deprives the district court of the jurisdiction needed to enjoin the state-court proceedings.
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practical consequences—it may be more efficient for the district court to oversee this case
without a concurrent state-court action. But the law allows an injunction only for necessity, not
simply for efficiency. And because the district court proceedings were not in rem, an injunction
was not “necessary” to aid the district court’s jurisdiction. See Kline, 260 U.S. at 235.
Therefore, we vacate the injunction entered by the district court.4
III.
We next turn to Falls’s motion to dismiss. Hanover argues that we lack jurisdiction over
Falls’s motion. Given our conclusion as to the district court’s injunction, we agree.
Under 28 U.S.C. § 1291, we have jurisdiction over “all final decisions of the district
courts.” Generally, “a district court’s decision is appealable under this section only when the
decision ‘ends the litigation on the merits and leaves nothing for the court to do but execute the
judgment.’” Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 275 (1988)
(quoting Catlin v. United States, 324 U.S. 229, 233 (1945)). But the denial of a motion to
dismiss “has no such effect: indeed, the order ensures that litigation will continue in the District
Court.” Id. Because of this, we lack jurisdiction over the denial of Falls’s motion to dismiss
under § 1291.
Falls contends that we may exercise pendent appellate jurisdiction in this instance. We
may do so if the issues are “inextricably intertwined” with the issues over which the court has
jurisdiction. See Swint v. Chambers Cnty. Comm’n, 514 U.S. 35, 44–46, 51 (1995); United
States v. Contents of Accts., 629 F.3d 601, 605–06 (6th Cir. 2011). A claim is “inextricably
intertwined” if “the pendent claim is coterminous with, or subsumed in, the claim before the
court on interlocutory appeal—that is, when the appellate resolution of the collateral
appeal necessarily resolves the pendent claim as well.” Mattox v. City of Forest Park, 183 F.3d
515, 524 (6th Cir. 1999) (citation omitted). But this is not the case here—no part of our
injunction analysis even considers, let alone resolves, any of the arguments presented by Falls in
4
Given our conclusion on this issue, we need not address Falls’s alternative arguments for reversal, such as
whether the district court erred by failing to cite an affirmative basis for issuing an injunction or whether a
consideration of the four preliminary-injunction factors is necessary to issue an injunction here.
No. 21-5671 Hanover Am. Ins. Co. v. Tattooed Millionaire Entm’t, et al. Page 14
his motion to dismiss. Therefore, the claims are not inextricably intertwined, and we lack
jurisdiction over those claims.
IV.
For these reasons, we reverse the judgment of the district court, vacate the injunction, and
remand for further proceedings consistent with this opinion.