Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996)

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certiorari to the united states court of appeals for the ninth circuit

No. 95-244. Argued February 20, 1996—Decided June 3, 1996

Petitioner California Insurance Commissioner, as trustee over the assets of the Mission Insurance Company and its affiliates, filed a state court action against respondent Allstate Insurance Company, seeking, among other things, contract and tort damages for Allstate's alleged breach of reinsurance agreements. Allstate removed the action to federal court on diversity grounds and filed a motion to compel arbitration under the Federal Arbitration Act. The Commissioner sought remand to state court, arguing that the District Court should abstain from hearing the case under Burford v. Sun Oil Co., 319 U. S. 315, because its resolution might interfere with California's regulation of the Mission insolvency. Specifically, the Commissioner indicated that the issue whether Allstate could set off its own contract claims against the Commissioner's recovery was a question of state law currently pending before the state courts in another Mission insolvency case. Observing that the State's overriding interest in the uniform and orderly regulation of insurance insolvencies and liquidations could be undermined by inconsistent rulings from the federal and state courts, and determining that the setoff question should be resolved in state court, the District Court concluded that Bur-ford abstention was appropriate and remanded the case to state court without ruling on Allstate's arbitration motion. After determining that appellate review of the District Court's remand order was not barred by 28 U. S. C. 1447(d), and that the remand order was appealable under 28 U. S. C. 1291 as a final collateral order, the Ninth Circuit vacated the decision and ordered the case sent to arbitration. Concluding that Burford abstention is limited to equitable actions, the court held that abstention was inappropriate in this damages action.

Held: 1. An abstention-based remand order is appealable under 28 U. S. C. 1291. Section 1447(d)—which provides that "[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise"—interposes no bar to appellate review of the order at issue. Only remands based on grounds specified in 1447(c) are immune from review under 1447(d), and the District Court's order in this

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