United Specialty Ins. v. State of Oregon ( 2019 )

FILED
NOT FOR PUBLICATION
MAR 12 2019
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED SPECIALTY INSURANCE No. 17-35899
COMPANY, a Delaware corporation,
D.C. No. 3:17-cv-00330-AC
Plaintiff-Appellee,
v. MEMORANDUM*
CLAY JONAK, an Oregon resident
(Default entered 5/15/17); ROGER ISON,
an Oregon resident (Default entered
5/15/17),
Defendants,
v.
STATE OF OREGON, acting by and
through its Department of State Land,
Intervenor-Appellant.
Appeal from the United States District Court
for the District of Oregon
Anna J. Brown, Senior District Judge, Presiding
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Submitted March 8, 2019**
Portland, Oregon
Before: GRABER and BERZON, Circuit Judges, and ROBRENO,*** District
Judge.
Intervenor-Appellant the State of Oregon ("the State") moved to intervene in
this action between Plaintiff United Specialty Insurance and Defendants Clay
Jonak and Roger Ison. Plaintiff sought rescission, avoidance, or reformation of a
pollution insurance policy that it had issued to Defendants, who were leasing land
from the State under a lease that required them to obtain and maintain such
insurance. The State filed a Motion to Intervene but did not raise the issue of
sovereign immunity until its supplemental briefing, which it filed after oral
argument on the Motion to Intervene. The district court ruled that the State was a
necessary party and that the State had waived its sovereign immunity. The State
now appeals that order. On de novo review, Coal. to Defend Affirmative Action v.
Brown, 674 F.3d 1128, 1133 (9th Cir. 2012), we affirm.1
**
The panel unanimously concludes this case is suitable for decision without
oral argument. Fed. R. App. P. 34(a)(2).
***
The Honorable Eduardo C. Robreno, United States District Judge for the
Eastern District of Pennsylvania, sitting by designation.
1
We have jurisdiction over a ruling that denies Eleventh Amendment
immunity from suit to a State. P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy,
Inc., 506 U.S. 139, 147 (1993).
2
A state’s immunity from suit is not absolute; a state may consent to suit in
federal court. Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd.,
527 U.S. 666, 675 (1999). The "test for determining whether a State has waived its
immunity from federal-court jurisdiction is a stringent one." Id. (quoting
Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 241 (1985), superseded by
statute on other grounds as stated in Lane v. Pena, 518 U.S. 187, 197–200 (1996)).
The Court generally "find[s] a waiver either if the State voluntarily invokes
[federal court] jurisdiction or else if the State makes a ‘clear declaration’ that it
intends to submit itself to [the Court’s] jurisdiction." Id. at 675–76 (citations
omitted).
We have emphasized that there is
no valid reason why a party should belatedly be permitted to assert
Eleventh Amendment immunity. A party knows whether it purports
to be an "arm of the state," and is capable of disclosing early in the
proceedings whether it objects to having the matter heard in federal
court. . . . Requiring the prompt assertion of an Eleventh Amendment
defense also minimizes the opportunity for improper manipulation of
the judicial process.
Hill v. Blind Indus. & Servs. of Md., 179 F.3d 754, 757–58 (9th Cir. 1999). And
"a state may waive its Eleventh Amendment immunity by conduct that is
incompatible with an intent to preserve that immunity." Id. at 758; see also
Fordyce v. City of Seattle, 55 F.3d 436, 441 (9th Cir. 1995) (holding that a state
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"waive[s its] Eleventh Amendment protection by voluntarily appearing and
defending on the merits" if the state "has been adequately notified of the pendency
of the suit and of the particular matters at issue").
Here, the State voluntarily sought status as a party in the federal action. The
State’s motion argued that the State
seeks to protect its interests in the state owned submerged and
submersible land at issue in the action and to protect its interests
arising under its lease with [D]efendants . . . . Plaintiff’s action will
impair the State of Oregon’s interests, and Defendants have failed to
protect those interests. For these reasons, the [district court] should
allow the State of Oregon to intervene in this lawsuit.
(Emphasis added.) Indeed, in arguing for status as a party in this action, the State
asserted an affirmative desire to litigate substantive issues: "The State of Oregon’s
interest in asserting its claim for coverage under Plaintiff’s insurance policy cannot
be adequately protected by the existing parties. . . . The State of Oregon’s rights
and interests may be impaired if it is not allowed to pursue its claim in the present
case . . . ." (Emphasis added.) Nothing in the State’s motion suggested that the
State sought to intervene for a limited purpose, nor did it argue that it was entitled
to dismissal, nor did it enter a special appearance. In short, the State’s affirmative
conduct was wholly incompatible with a claim of sovereign immunity, and its
attempt to assert immunity came too late.
AFFIRMED.
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