Opposition Brief — Foreign Credit Insurance v. Nu-Air Manufacturing Co.

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(a) Supe Court, U.S, ¥

87-1070 7 FILED cay

MAR 3 1988 |

IN THE : F. SPANIOL, JR,’

or CLERK nui

Supreme Court of the United States

OCTOBER TERM 1987

FOREIGN CREDIT INSURANCE ASSOCIATION,

Petitioner,

NU-AIR MANUFACTURING COMPANY,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

RESPONDENT’S BRIEF IN OPPOSITION

STUART C. MARKMAN

Winkles, Trombley, Kynes &

tec odt”

— -—Markman,;?P A—

707 North Franklin Street

Tenth Floor

P.O. Box 3356

Tampa, Florida 33601

813/229-7918

Attorney for Respondent

Nu-Air Manufacturing Company

QUESTIONS PRESENTED

1. Whether a private sector export insurer, acting as the sole

insurer cf commercial credit risk, is immune from suit for

negligent misrepresentations it makes to its commercial credit risk

customer.

2.. Whether established principles of waiver and estoppel apply

to a customer’s ordinary contract suit against a private sector

export insurer of commercial credit risk.

LIST OF PARTIES AND RULE 28.1 LIST

Respondent Nu-Air Manufacturing Company (‘‘Nu-Air’’)

has no parent companies, subsidiaries, or affiliates to list within

the meaning of Rule 28.1.

Pursuant to Rules 22.1 and 34.2, however, Nu-Air opposes

the Foreign Credit Import Association’s (‘‘FCIA’s’’) statement

of ‘‘Parties to the Proceeding and Rule 28.1 List’’ in that it

presents as a fact what is in reality an incorrect and argumentative

assertion. Specifically, FCIA contends that under an agreement

between it and the Export-Import Bank (‘‘Eximbank’’), FCIA’s

‘‘members have no financial interest in the outcome of this case.”’

Pet. p. ii. This seemingly benign remark, gratuitously inserted

by FCIA in the ostensibly neutral introductory section of its

petition, is really a legal argument that is integral to the new rule

FCIA hopes this Court will adopt on the merits.’ As this response

demonstrates, this precise argument has been uniformly and

categorically rejected by both of the Circuits that have considered

it. In any event, FCIA’s attempt to subtlely advance its legal

position outside of the argument section of its petition under the

guise of merely identifying the parties is inappropriate, and Nu-

Air opposes it.

1/ FCIA’s argument is that because in 1983 it entered into an agreement

under which it has the ability to seek reimbursement from Eximbank for certain

federal export insurance claims, Nu-Air’s suit is effectively against Eximbank

and the federal government. From this flawed premise, which has never been

accepted by any federal appeals court, springs FCIA’s self-serving conclusion

that its members are not ‘‘financially interested’’ in this proceeding. Pet. pp.

3, 11, 12, 16.

iii

TABLE OF CONTENTS

QUESTIONS PRESENTED .........cccccccccecceess

LIST OF PARTIES AND RULE 28.1 LIST ..........

TABLE OF CONTENTS ......cccccsccccccccccccees

TABLE OF AUTHORITIES ........cccccccccscccees

STATEMENT OF THE CASE .............--000005:

0 POT POPTETT TEE T TEE

BD, GN I 6 oc see ccc c cc ccccccccccscees

; Fie Geeereet Comrt’s Order 2... 2... cccees

2. The Eleventh Circuit’s Decision ..........

REASONS FOR DENYING THE WRIT ..........-.

Il.

The Eleventh Circuit’s Decision Does Not Conflict

With Any Other Federal Appellate Decision Holding

FCIA Immune From Suit In Tort..............

A. The Eleventh Circuit’s decision does not conflict

with the decisions of the Eighth and Ninth Cir-

re ae ie ic ccaaueeceeees

B. The Eleventh Circuit’s decision does not present

any reviewable holding regarding the immunity

CMe eevee Vee Welcunee scat sede

The Eleventh Circuit’s Decision Does Not Conflict

With Any Other Federal Appellate Decisions

Holding General Contract Principles of Waiver and

Estoppel Do Not Apply To FCIA. ............

III. The Eleventh Circuit’s Decision That FCIA Is Sub-

ject To Ordinary Contract Principles @f Waiver And

Estoppel And To Suit In Tort Does Not Present Any

Important Questions Of Federal Law That Should

Be Settled By The Supreme Court. ............ 19

A. FCIA’s Clearfield Trust argument is not proper-

ff ere 19

B. The Eleventh Circuit’s decisic n is not inconsis-

tent with Clearfield Trust.................. 21

C. The Eleventh Circuit’s decision does not present

any reviewable holding regarding application of

the federal common law to Eximbank....... 23

D. The Eleventh Circuit’s decision will neither

undermine federal insurance programs nor

reduce exports by U.S. Companies. ........ 24

CAA oc ccwccenisceduvbrdiedsdbessasaususes 26

TABLE OF AUTHORITIES

Anderson v. Occidental Life Insurance Company,

Ce ee ee Ee Gs hs 0 oo ccc ccncnvececs

Atlas Pallet, Inc. v. Gallagher,

Pee ee Ee Be no ncn cccccccccccass

Barr v. Matteo, 360 U.S. 564, 79 S.Ct. 1335,

on ce pec cccéndnsecscuns

Beverly v. Macy,

Pe I ED ce cccccecceccsscces

Bonner v. City of Prichard, Alabama,

661 F. 2d 1206 (11th Cir. 1981) (en banc)........

Brady v. Roosevelt Steamship Company,

317 U.S. 575, 63 S.Ct. 425, 87 L.Ed. 471 (1943)..

Brazil v. Giuffrida,

rp oes fo. fe | ee

Bushman v. Seiler,

ee i ED ls Es dds cadesceccscess

Butz v. Economou,

438 U.S. 478, 98 S.Ct. 2894, 57 L.Ed. 895 (1978).

Clearfield Trust Company v. United States,

318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838 (1943)..

Davis v. Scherer, 468 U.S. 183, 104 S.Ct. 3012,

ee I ss ca la ckadddeeneecsoscces

Delta Air Lines, Inc. v. August, 450 U.S. 346,

101 S.Ct. 1146, 67 L.Ed.2d 287 (1981) ..........

Doe v. McMillan, 412 U.S. 306, 93 S.Ct. 2018,

Federal Crop Insurance Corp. v. Merrill,

332 U.S. 380, 68 S. Ct. 1, 92 L.Ed. 10 (1947)....

Foster v. Day & Zimmermann,

RS ere

Franchise Tax Board of California v. United States

Postal Service, 467 U.S. 512, 104 S.Ct. 2549,

bE Pe

Gensplit Finance Corp. v. FCIA,

616 F. Supp. 1504, 1507 (D.C. Wis. (1985) ......

Hamilton Bank v. Export-Import Bank,

G34 ©. Seem. tee G. DD. Pa: 1906)... 2... c ees.

Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727,

Fe es ivddacnatoncaceutstes ane «

Keifer & Keifer v. Reconstruction Finance Corporation,

306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784 (1939)..

20,

Lovell Manufacturing v. Export-Import Bank of the

United States, 777 F. 2d 894 (3d Cir. 1985)... .8, 10, 17

Matranga v. Travelers insurance Company,

ye fe | gs Ls 12

Miree v. Dekalb County, Georgia,

433 U.S. 25, 97 S.Ct. 2490, 53 L.Ed.2d 557 (1977) 19

Nu-Air Manufacturing Co. v. Frank B. Hall & Company

of New York, 822 F. 2d 987 (11th Cir. 1987) .. . Passim.

Peterson v. Weinberger, 508 F. 2d 45 (Sth Cir.),

cert. denied, 423 U.S. 830 (1975) ............... 12

Rochester Methodist Hospital v. Travelers Insurance

Company, 728 F. 2d 1006 (8th Cir. 1984)........ 13

Sommerville v. United States, 376 U.S. 909

84 S.Ct. 663, 11 L.Ed.2d 608 (1964) ............ 22

United States v. Allegheny County, Pa., 322 U.S.

174, 64 S.Ct. 908, 88 L.Ed. 1209 (1944) ......... 7, 20

United States v. Asmar,

S27 FOG FOr Ga Ce. 1967). ccccccccccccccccss 21

United States v. Parish of St. Bernard, 756 F.2d 1116

(5th Cir. 1985), cert. denied, 474 U.S. 1070 (1986) 16

United States v. Seckinger, 397 U.S. 203,

90 S.Ct. 880, 25 L.Ed.2d 224 (1970) ............ 7, 20

West v. Harris, $73 F.2d 873 (Sth Cir. 1978),

cert. denied, 99 S.Ct. 1424, 440 U.S. 946 (1979) .. 16

Westfall v. Erwin, 484 U.S. _____, 108 S.Ct. 580,

2! ae OP eee 12

87-1070

IN THE

Supreme Court of the United States

OCTOBER TERM 1987

FOREIGN CREDIT INSURANCE ASSOCIATION,

Petitioner,

Vv.

NU-AIR MANUFACTURING COMPANY,

Respondent.

ON PET'TION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

RESPONDENT'S BRIEF IN OPPOSITION

STATEMENT OF THE CASE

The section of FCIA’s petition labeled ‘‘Statement of the

Case”’ bears little resemblance to the actual determinative facts

and issues on which the Eleventh Circuit based its thorough and

well reasoned decision in this summary judgment appeal. Over

one-half of FCIA’s Statement is in reality a summary of argument

coupled with a self-serving running commentary, without record

references, on its view of its relationship to two entities not even

before the Court, the federal government and Eximbank. Pet.

pp. 3-5. All but lost are the core facts on which the Eleventh

Circuit’s decision actually turned. These facts, which are plainly

stated and readily available in the Court of Appeal’s compre-

hensive twelve page published decision, Nu-Air Manufacturing

Co. v. Frank B. Hall & Company of New York, 822 F. 2d 987

(lith Cir. 1987), are incorporated by reference.

That there is no basis for this Court to grant discretionary

review in this case emerges despite FCIA’s recasting of the |

pertinent facts and issues. Because of FCIA’s strategy, however,

the following opposing statemerit of the case is presented to clarify

the record and correct the inaccuracies and omissions in FCIA’s

version. Rules 22.1, 34.2.

A. Statement of the Facts

Respondent Nu-Air Manufacturing Company is a Florida

corporation engaged in the business of assembling aluminum

goods. Nu-Air Manufacturing Co., 822 F. 2d at 989. Petitioner

FCIA is an association of private insurance companies that was

established in 1961 at the encouragement of the Eximbank. Nu-

Air, 822 F. at 989, n. 2. It issues insurance on behalf of the

Eximbank, a federal agency. /d. at 994. FCIA’s nineteen mem-

bers, which include Aetna, Continental, Fireman’s Fund, Hart-

ford, and Liberty Mutual, are among the very largest insurance

companies. Pet. p. Sla.

Nu-Air filed this diversity action in the Middle District of

Florida against Intercredit Agency, its insurance broker, and

FCIA, its export insurer.? This tort and contract suit was based

on FCIA’s denial of Nu-Air’s $311,846.32 insurance claim. Nu-

Air had made the claim under its export credit insurance policy

for a loss incurred when a Nigerian buyer failed to pay for custom

made aluminum doors and windows. /d. at 989-90.

2/ Although required by Rule 21.1(i), FCIA’s petition does not show the

basis for federal jurisdiction in the district court. Significantly, jurisdiction in

this case was founded on diversity of citizenship under 28 U.S.C.A. § 1332,

not on the existence of any federal question.

Against this background, the importance of correcting

FCIA’s inaccuracies and omissions is better understood. Had it

fully and fairly depicted the record, FCIA would have been forced

to acknowledge the bad facts from which it now seeks insulation

by attempting to stretch inapplicable principles of governmental

immunity and suspend the application of well settled rules of

waiver and estoppel. In its futile attempt to make this ordinary

insurance coverage dispute appear certworthy, FCIA has failed

to mention a number of the unfavorable facts that help show

both why this case does not qualify for review and why the result

reached in the Eleventh Circu!t was fair and just:

1. Under the specific terms of the policy involved in this

case, the Eleventh Circuit recognized and FCIA conceded that

FCIA was the exclusive insurer of ‘‘commercial risks,”’ while

Eximbank insured only ‘‘political risks.’’ Nu-Air, 822 F. 2d at

994; Pet. brief p. 3. Since Nu-Air’s claim was only under the

commercial risk provision of its policy, FCLA was the sole insurer

for the claim in issue. Jd. Indeed, neither Eximbank nor the

federal government is a defendant or even a party to this

proceeding.*'

2. It was not merely “‘understood’’ by Nu-Air that it needed

the SBCL to cover the Nigerian sale. Pet. p. 5. Instead, the parties

stipulated and the Eleventh Circuit acknowledged that it was only

because Nu-Air was actually told that the requested coverage was

3/ As noted, in 1983, the year before the occurrence of the events giving

rise to this litigation, Eximbank and FCIA entered into an agreement under

which FCIA can seek reimbursement for commercial risk claims paid. Nu-Air,

822 F. 2d at 924 n. 22; Pet. p. 3. Of course, Nu-Air is not a party to that separate

agreement, and the agreement did not even come into existence until after the

pertinent events giving rise to this litigation had already occurred. /d. In any

event, the reinsurance agreement does not affect the specific rights and

relationship between Nu-Air and FCIA. /d.

in place that it accepted the Nigerian order. Without coverage,

Nu-Air would have declined the order due to the order’s large

size and Nu-Air’s unfamiliarity with Nigerian practices. Nu-Air,

822 F. 2d at 989; R1-36-3; R2-43-21.

3. Contrary to FCIA’s statement, it was not established

and the Eleventh Circuit did not hold that FCIA acted as

Eximbank’s agent with respect to the specific transaction in issue

here. Pet. pp. 5-6. Instead, solely for the purpose of argument,

the Court of Appeals assumed the question in FCIA’s favor, since

FCIA’s claimed ‘‘agent of an agency’’ status made no difference

in the outcome of the case. Nu-Air, 822 F. 2d at 994 n. 22.

4. By stating only that it issued a policy quotation but

subsequently rejected Nu-Air’s application for an SBCL, Pet.

p. 5, FCIA fails to mention the legal validity of Nu-Air’s claim

for complete coverage for its loss. In this regard, the Eleventh

Circuit held there was ample record evidence, including sworn

testimony, for a jury to find FCIA and Nu-Air entered into a

binding, enforceable oral agreement for a// of the coverage sought,

including both the master policy and the SBCL. Nu-Air, 822 F.

2d at 989-94. FCIA’s later attempt to reject this binding contract

because of economic conditions in Nigeria* did not undermine

its enforceability. Jd.

5. Relatedly, FCIA also neglects to mention that under the

written termination notice provision of the policy, FCIA’s belated

attempt to cancel coverage did not deprive Nu-Air of protection

for the Nigerian transaction. Nu-Air, 822 F. 2d at 992. Further,

4/ Apparently to make its refusal to honor its agreement with Nu-Air more

palatable, FCIA states it attempted to withdraw SBCL coverage due to ‘‘a virtual

economic collapse in Nigeria at that time,’’ Pet. p. 5. This so-called ‘‘collapse’’

was really only ‘‘import restrictions imposed by the Nigerian government.”’

Nu-Air, 822 F. 2d at 990.

it is undisputed that FCIA approved and never cancelled the

$200,000.00 master policy. Jd. at 990, n. 7.

6. FCIA also omits from its ‘Factual Background’’ the

inconsistencies between the reasons it gave for refusing to pay

Nu-Air’s claim at the time the loss was incurred and the reasons

it later gave for purposes of litigation. When Nu-Air made its

claim, the only reason FCIA ever articulated in rejecting it was

its unconditional denial that coverage had ever been in force. Nu-

Air, 822 F. 2d at 993. After suit was filed, however, FCIA relied

for the first time on the technical policy defenses of untimely

notice and tardy payment of premiums. /d.

As the Eleventh Circuit recognized, FCIA’s after the fact

reliance on these technical forfeiture defenses did not insulate

it from liability. To the contrary, because it unconditionally

denied coverage had ever existed and because it kept for itself

the premiums Nu-Air had paid, under general principles of waiver

and estoppel, FCIA had no right to to assert the forfeiture

defenses at all. Jd. at 993-94.5

B. Opinions Below

Just as FCIA’s ‘‘Factual Background’’ by-passed and inac-

curately depicted critical facts and issues, so too its ‘‘Opinions

Below”’ section blurred and misstated the actual holdings of the

district and appellate courts. As before, FCIA has apparently

taken this approach in furtherance of its effort to create the

appearance of reviewability. Before examining the specific legal

reasons why the writ would be denied, it is therefore necessary

to first accurately state the precise holdings below.

5/ Moreover, although the parties agreed on a number of facts, contrary

to FCIA’s contention they did not ever ‘‘stipulate’’ that Nu-Air ‘‘had breached’’

the policy. Pet. p. 6. The only record support given by FCIA for this assertion

is the order of the district court, which the Eleventh Circuit reversed on all

counts. See Pet. p. 6, citing 29a. Indeed, even FCIA conceded in the district

court that there was a disputed issue of fact as to the timeliness of the notice

of claim and proof of loss. R4-13. Further, FCLA admitted it was not prejudiced

by the asserted untimeliness. R5-13.

1. The District Court’s Order

Contrary to FCIA’s statement, the district court did not hold

“‘that Nu-Air’s conceded violations of the policy terms barred

its recovery.’ Pet. p. 7 (emphasis supplied). Although the parties

stipulated to a number of things, Nu-Air never stipulated or

conceded in any way that it had violated the terms of the policy.

See n. 5, supra. Instead, FCIA merely attempted to use the

stipulated facts to argue that Nu-Air had breached the policy,

and in an unpublished decision that cited no legal authority for

any of its conclusions, the district court agreed. Nu-Air, 822 F.

2d at 990 n. 9. Nevertheless, nothing in the district court’s order,

including the portions quoted by FCIA, Pet. p. 7, stated Nu-Air

““conceded”’ violating the policy. Jd.

2. The Eleventh Circuit’s Decision

Attempting to generate conflicts where none exist and inflate

this case with an artificial aura of federal importance, FCIA badly

overstates the limited reach of Eleventh Circuit’s narrow and

carefully drawn conclusions of law. So extensive are FCIA’s

overstatements that they fatally infect all of the arguments it later

raises in its petition. They must therefore be corrected at the

outset.

a. Immunity

FCIA faces an insurmountable obstacle in attempting to erect

a conflict among the Circuits based on the Eleventh Circuit’s

decision that FCIA is not immune from Nu-Air’s tort claim,

because no federal appellate court has ever held FCIA so immune.

Consequently, while FCIA is correct in stating that the Court

of Appeals decided it ‘‘was subject to suit for its alleged negligent

misrepresentations to Nu-Air,”’ it is totally incorrect in its further

assertion that in doing so, the Eleventh Circuit ‘‘specifically

declined’’ to follow other cases recognizing immunity in like

circumstances. The Eleventh Circuit did not ‘‘specifically decline’

to follow the cases FCIA cited. It simply reviewed those cases

and their holdings with approval, showing why they do not apply

to the specific facts at hand. Nu-Air, 822 F. 2d at 995-996.

Relatedly, FCIA dwells at length on the Eleventh Circuit’s

supposed conclusion regarding the immunity of Eximbank. Pet.

pp. 7-8. A careful reading of the Court of Appeals’ decision,

however, reveals the Eleventh Circuit reached no conclusion at

all on that issue, much less a reviewable one. Nu-Air, 822 F. 2d

at 996.

In this regard, the record and the Eleventh Circuit’s opinion

show that Eximbank was not a defendant below and is not a party

here. The Court of Appeals’ one sentence, qualified suggestion

that ‘‘there is no reason to think that Eximbank would be immune

from suit’’ is therefore only dictum. Jd. at 996. Moreover, this

remark is preceded by almost two pages of separate and inde-

pendent reasons why FCIA, who was a defendant and is a party

here, is not immune. Jd. at 995-96. Even if the Eleventh Circuit’s

comment concerning Eximbank had been erroneous, the Nu-Air

decision did not rest on that comment. It cannot now afford a

basis for review.

b. ‘Federal Common Law’”’

FCIA’s statement of the Eleventh Circuit’s holding on the

so-called ‘‘federal common law’’ issue is flawed in much the same

way as its statement of the Court’s immunity holding. Contrary

to FCIA’s suggestion, Pet. p. 8, the Court of Appeals did not

‘‘reject’’ any of the federal appellate decisions on which FCIA

relied. Indeed, as to several cases, it did not even have the

opportunity to do so, since those cases® are offered here for the

6/ Clearfield Trust Company v. United States, 318 U.S. 363 (1943); United

States v. County of Allegheny, 322 U.S. 174 (1944); United States v. Seckinger,

397 U.S. 203 (1970).

very first time in support of a point FCIA never raised in the

Eleventh Circuit. FCIA’s remaining cases were, as in the immunity

issue, only reviewed and distinguished. They were not ‘“‘rejected.”’

Nu-Air, 822 F. 2d at 994-95.’

REASONS FOR DENYING THE WRIT

In its ““Reasons for Granting the Writ,’’ FCIA elevates and

recyles two relatively minor fall back arguments® it unsuccessfully

advanced in the Eleventh Circuit. FCIA contends that because

it issues insurance on behalf of Eximbank, (1) it is immune from

Nu-Air’s tort claim, and (2) the generally accepted contract

principles of waiver and estoppel do not apply to it.

Review of FCIA’s contentions under the specific facts of

this case reveals FCIA has vainly tried to force a garden variety

insurance claims dispute between private litigants into Rule 17’s

ill-fitting mold. In its struggle, FCIA relies on flawed factual and

legal premises and resorts to inapt analogies to inapplicable

authorities and circumstances. The resulting analysis is predictably

and markedly strained.

When stripped of distractions, two considerations of

paramount importance for certiorari purposes emerge from

FCIA’s petition. First, there is no basis for reviewing the Eleventh

Circuit’s decision on conflict grounds, because no federal appel-

late court has ever held that FCIA is immune from suit in tort,

or that ordinary contract principles of waiver and estoppel do

not apply to it. Second, FCIA’s newly devised but undocumented

7/ In a footnote, FCIA quarreled with the Third Circuit’s decision in Lovell

Mfg. v. Export-Import Bank, 777 F.. 2d 894 (3rd Cir. 1985), a case on all fours

and the only other federal appellate decision ever addressing the precise issue

involved here. The Third Circuit reached the identical conclusion the Eleventh

Circuit reached in Nu-Air. Nu-Air’s specific reliance on Lovell demonstrates

consistency and uniformity, not division, in the Circuits’ approach to the

question. Nu-Air, 822 F. 2d at 994-95.

8/ Both of these issues together occupied only a little more than four of

the 39 pages of FCIA’s Eleventh Circuit brief.

speculations notwithstanding, this case dees not present any

important questions of federal law this Court should decide. The

Petition for Writ of Certiorari should be denied.

I. The Eleventh Circuit’s Decisiion Does Not Conflict

With Any Other Federal Appellate Decision Holding

FCIA Immune From Suit In Tort.

FCIA seeks review of the Eleventh Circuit’s holding that

FCIA is not immune from Nu-Air’s negligent misrepresentation

claim on the ground that Nu-Air’s holding conflicts with the

Eighth Circuit’s decision in Bushman v. Seiler, 755 F. 2d 653,

655-56 (8th Cir. 1985), and the Ninth Circuit’s decision in

_encte-wAnderson v. Occidental Life Insurance Company, 727 F. 2d 855

(9th Cir. 1984). FCIA also asks for review of the Court of

Appeals’ ‘‘premise’’ that Eximbank is not entitled to sovereign

immunity from such suit on the ground that this determination

‘‘was wrong.”’ Pet. p. 16. Because no real, direct conflict exists

between the Eleventh Circuit’s decision and the decisions of the

Eighth and Ninth Circuits, and because the Eleventh Circuit’s

single remark regarding Eximbank is only dictum, there is no basis

for granting certiorari to review FCIA’s immunity argument.

A. The Eleventh Circuit’s decision does not conflict with

the decisions of the Eighth and Ninth Circuits.

The Eighth Circuit’s decision in Bushman and the Ninth

Circuit’s decision in Anderson do not conflict with Nu-Air. This

follows immediately from the fact that they have absolutely

nothing to do with the specific issue the Eleventh Circuit decided,

namely, whether FCIA is immune from its misrepresentation to

its customers regarding the existence of commercial credit export

risk coverage. Nu-Air, 822 F. 2d at 994-95.

Bushman and Anderson are medicare cases. They do not

involve federal export insurance, FCIA, or FCIA’s relationship

with Eximbank. Likewise, they do not involve any policy provi-

sion even remotely resembling the one in this case under which

FCIA, not Eximbank or the federal government, was the sole

insurer of the risk. Nu-Air, 822 F.2d at 994, 996. Instead, Bush-

man and Anderson are controlled by the distinct and specific body

of federal statutes, regulations, and cases governing the medicare

program, out of which the rule has evolved that medicare

intermediaries and carriers can be governmental agents for

immunity purposes. Bushman, 755 F. 2d at 655; Anderson, 727

at 856.

So different is the medicare setting from the foreign export

commercial credit insurance framework that it does not even

provide a useful analogy. Unlike FCIA, insurance companies

acting as medicare carriers are true fiscal intermediaries, subject

to extensive and specific federal regulations. More importantly,

the United States is the real party in interest when claims are made

against medicare carriers, because recovery would come from the

federal treasury. Bushman, 755 F.2d at 655; Anderson, 727 F.2d

at 856.

FCIA, on the other hand, is not even mentioned in Exim-

bank’s enabling statute or in any regulations governing it.

Eximbank’s own regulations contain no mention of required

policy terms. Further, as both Circuits considering the issue have

concluded, claims against FCIA under the specific commercial

credit provision in issue here are solely against FCIA, a private

entity. Unlike the medicare cases, they do not involve the United

States or the public fisc. Nu-Air, 822 F.2d at 994, 996; Lovell

Mfg. v. Export-Import Bank of U.S., 777 F. 2d 894, 899-901

(3rd Cir. 1985).

In sum, no federal appellate decision has ever held FCIA

immune from suit in tort based on the grounds FCIA asserts here

or on any other grounds.® For this reason, and because the Eighth

and Ninth Circuits’ medicare decisions are not even remotely

related to this specific issue, FCIA’s immunity argument presents

no conflict within the meaning of Rule 17.'°

That there is no true and direct conflict between Nu-Air and

Bushman or Anderson concludes the matter for certiorari pur-

poses. So seriously flawed is FCIA’s analysis of the immunity

issue, however, further response is required.

First, FCIA’s own inherent characteristics disable it from

claiming official immunity under the controlling decisions. Unlike

the high level federal government officials, officers, employees,

and others in government service in the cases it cites,"’ FCIA is

nothing more than an unincorporated association of large, private

insurance companies, combined for the specific purpose of

making a profit. It is not an agency, officer, or employee of the

federal government, and its member companies do not employ

federal officers or employees.

The significance of this distinction is that, as the Eleventh

Circuit stated, official immunity is extended only where the threat

of liability might inhibit the fearless, vigorous, and effective

9/ When challenged in the Eleventh Circuit to produce even one such case,

FCIA triumphantly cited the district court decision in Hamilton Bank v. Export-

Import Bank, 634 F. Supp. 195 (E. D. Pa. 1986), urging that the Hamilton

Bank court ‘‘accepted FCIA’s contention that FCIA should be held immune

from suit for any tortious conduct on its part.’’ Appellee’s Br. at 31. Review

of Hamilton Bank revealed, however, that FCIA constructed its argument from

a small sentence fragment it had wrenched from context. A reading of the entire

sentence revealed the district court in Hamilton Bank did not hold FCIA

immune, but instead only identified immunity as an argument FCIA was raising.

634 F. Supp. at 203. FCIA does not cite Hamilton Bank in this Court.

10/ To the contrary, Nu-Air reviews Bushman’s rationale with approval,

noting that it provides support for the conclusion that there is no basis for

extending official immunity to FCIA in the instant case. Nu-Air, 822 F.2d at 995.

11/ See Harlow v. Fitzgerald, 457 U.S. 800 (1982) (senior aides and advisors

of the President of the United States); Butz v. Economou, 438 U.S. 478 (1978)

(federal executive officials in the Department of Agriculture); Barr v. Matteo,

360 U.S. 564 (1959) (director of important government agency).

administration of government policies. Nu-Air, 822 F.2d at 995.

This concern arises most frequently when the defendant is an

individual in public service, but seldom arises where, as here, the

defendant’s connection with the government is limited to a

business relationship. Jd., citing Doe v. McMillan, 412 U.S. 306

(1973); Barr v. Matteo, 360 U.S. 564, 79 S.Ct. 1335, 3 L.Ed.2d

1434 (1959); Bushman, 755 F. 2d at 656.

In other words, as this Court recently reiterated, the pro-

tection under official immunity that FCIA seeks in this case is

reserved for high level policy decision making by federal officials,

where it serves a legitimate government purpose. Westfall v.

Erwin, 484 U.S. ____, 108 S.Ct. 580, 98 L.Ed. 4087, 4080, 4089

(1988); Harlow, 457 U.S. at 807.'? As the Eleventh Circuit stated,

no worthwhile purpose would be served by affording FCIA

immunity from liability for misrepresentations it makes to

customers in selling and administering commercial credit risk

insurance. Nu-Air, 822 F.2d at 996. Keeping in mind FCIA’s

private status, its purely profit oriented objective, and its

responsibility as the sole insurer of the specific risk in this case,

there is no basis for concluding that the alleged misrepresentations

giving rise to this dispute come within the public service and public

benefit rationale of Barr and its progeny."*

Second, just as FCIA is not the sort of federal government

official or officer to whom official immunity has been extended,

12/ Moreover, even if official immunity applied to this case, it is only a

qualified immunity which FCIA cannot invoke on these facts because FCIA

has not made the requisite threshold showing of good faith in the performance

of a discretionary function, and it cannot do so. Harlow, 457 U.S. at 815; Butz,

438 U.S. at 486.

13/ In addition to Bushman and Anderson, FCIA relies on two other

medicare cases that are distinguishable on the same grounds, Matranga v.

Travelers Insurance Co., 563 F.. 2d 677 (Sth Cir. 1977) and Peterson v.

Weinberger, 508 F. 2d 45 (Sth Cir.), cert. denied, 423 U.S. 830 (1975). These

pre-October 1, 1981 decisions of the former Fifth Circuit are binding on the

Eleventh Circuit. Bonner v. City of Prichard, 661 F. 2d 1206 (11th Cir. 1981)

(en banc). In Nu-Air, the Court of Appeals specifically approved them, noting

that they present ‘‘wholly different considerations”’ from the instant case. Nu-

Air, 822 F.2d at 996.

so too Nu-Air’s tort claim is not the ‘‘harassing,”’ ‘‘unjustified,’’

“frivolous,” or ‘‘insubstantial’’ litigation against which FCIA’s

immunity cases are intended to protect. See Davis v. Sherer, 468

U.S. 183, 195 (1984); Harlow, 457 U.S. at 808. To the contrary,

the record shows Nu-Air’s misrepresentation claim is founded

on (1) sworn testimony by an insurance broker that FCIA

promised to provide full coverage for the Nigerian transaction;

(2) the parties’ stipulation that Nu-Air relied on the promised

coverage in consummating the Nigerian sale, and would not have

gone forward without it; (3) the parties’ stipulation that FCIA

retained and has never refunded the premiums Nu-Air paid for

the coverage; and (4) FCIA’s subsequent refusal to cover Nu-

Air’s loss. Indeed, FCIA has never even suggested Nu-Air’s

misrepresentation claim was ‘‘harassing,”’ “*unjustified,”’

“‘frivolous,’’ or ‘‘insubstantial.’’

Third, FCIA’s immunity argument fares no better when it

travels under the name ‘“‘derivative sovereign immunity.’’ Al-

though FCIA attempts to skirt the point by relying on its separate

reinsurance agreement with Eximbank, Pet. pp. 3, 11, 16, FCIA

cannot derive sovereign immunity because, as noted above, Nu-

Air’s commercial credit claim went solely to FCIA and did not

place the United States financially at risk. Nu-Air, 822 F.2d at

994, 996; Lovell Mfg., 777 F.2d at 899-901. As the Nu-Air and

Lovell decisions illustrate, contractual indemnity by the govern-

ment cannot artificially create sovereign immunity. Brady v.

Roosevelt Steamship Company, 317 U.S. 575, 583-84 (1943);

Rochester Methodist Hospital v. Travelers Insurance Company,

728 F. 2d 1006, 1014 (8th Cir. 1984); Foster v. Day and Zimmer-

mann, 502 F. 2d 867, 875 (8th Cir. 1974).

Fourth, as the Eleventh Circuit stated, the Supreme Court

has repeatedly recognized that immunity is not favored when a

government agency enters the commercial sphere. Franchise Tax

Bd. of California v. United States Postal Serv., 467 U.S. 512,

104 S.Ct. 2549, 81 L.Ed.2d 446 (1984). Certainly when as in the

instant case a private association of large, profit motivated

insurance companies seeks to immunize itself from its torts under

the theory that it is but an agent of such an agency, immunity

is even less favored. Keifer & Keifer v. Reconstruction Finance

Corporation, 306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784 (1939)."*

Finally, the very language of the insurance policy issued in

this case undercuts FCIA’s immunity claim. Article IX, ‘‘Action

Against Insurers,’’ specifically contemplates and provides for the

institution of actions against FCIA. Article LX does not limit such

actions to suits sounding in contract. Since under well-settled

principles of insurance law this provision must be construed

against FCIA as the party who drafted the contract, it must be

assumed that tort suits are authorized as well.

B. The Eleventh Circuit’s decision does not present any

reviewable holding regarding the immunity of

Eximbank.

FCIA also contends the Supreme Court should review this

case on the ground that the Eleventh Circuit ‘‘was wrong in

determining that Eximbank does not enjoy sovereign immunity

from negligent misrepresentation suits.’’ Pet. p. 16. Since the

Eleventh Circuit made no such determination, this argument needs

only brief response.

FCIA’s contention rests on the Eleventh Circuit’s single

passing remark that ‘‘there is no reason to think that Eximbank

would be immune from suit.’’ Nu-Air, 822 F. 2d at 996 (emphasis

14/ Of course, even as to other types of coverage in which FCIA is not

the direct, sole insurer and its participation is arguably more limited to its

involvement as Eximbank’s ‘‘agent,’’ it does not follow that it would derive

immunity through Eximbank. There is no federal appellate authority holding

Eximbank immune, and even if there was, such immunity would not

automatically encompass FCIA. ‘“The government does not become the conduit

of its immunity in suits against its agents or employees merely because they

do it to work.”’ Keifer & Keifer, 306 U.S. at 388. The mere fact that Congress

created Eximbank and authorized the export credit insurance program does

not mean that a suit on an insurance policy issued by FCIA necessarily involves

a question of federal law. See Gensplit Finance Corp. v. FCIA, 616 F. Supp.

1504, 1507 (D.C. Wis. (1985).

supplied). Even if this comment could be construed as an actual

holding that Eximbank is not immune, it cannot provide any basis

for review on conflict grounds, since no federal appellate court

has ever held otherwise.

This Court need not, however, address the question of

Eximbank’s immunity or the correctness of the Eleventh Circuit’s

comment. Eximbank is not a party to this litigation. The above

quoted passage is, at the very most, dictum. The Eleventh

Circuit’s actual holding regarding FCIA is supported by almost

two pages of independent reasoning. See Nu-Air, 822 F.2d at

995-96.

It is understandable that FCIA wants immunity from its

torts. Operating in the commercial sphere in competition with

other private insurance companies issuing similar policies, the

protection of immunity would give FCIA an immense advantage

over other companies who would continue to be held accountable

for their similar conduct.

But the advantage FCIA seeks is unwarranted and unfair,

and this Court has not extended it in these circumstances. See

Franchise Tax Board of California v. United States Postal Serv.,

467 U.S. 512, 517 (1984). Perhaps even worse, the new rule FCIA

urges this Court to adopt is seemingly without limit. Logically

extended, it would immunize virtually all private persons, com-

panies, or other entities who ever act on behalf of statutorily

authorized agencies of the federal government. This result is

inconsistent with the rationale of the controlling Supreme Court

and Circuit Court cases, and should not be put in place here.

Il. The Eleventh Circuit's Decision Does Not Conflict

With Any Other Federal Appellate Decisions Holding

General Contract Principles of Waiver and Estoppel

Do Not Apply To FCIA.

FCIA also contends that the Eleventh Circuit’s decision

conflicts with decisions of the First, Fifth, and Ninth Circuits

holding federal common law can govern the rights and liabilities

of parties to an insurance contract issued under a federal govern-

ment insurance program even though private insurers actively

participate in it. Pet. p. 21, citing the flood insurance decisions

in Brazil v. Giuffrida, 763 F.2d 1072 (9th Cir. 1985), United States

v. Parish of St. Bernard, 756 F.2d 1116 (Sth Cir. 1985), cert.

denied, 474 U.S. 1070 (1986), and Atlas Pallet, Inc. v. Gallagher,

725 F.2d 131 (ist Cir. 1984)."* As before, FCIA’s conflict

argument cannot withstand scrutiny, because it is based on an

erroneous and overbroad depiction of the Eleventh Circuit’s

limited holding on the narrow issue before it.

In this regard, review of the Eleventh Circuit’s opinion shows

that contrary to FCIA’s assertion, the Court did not make the

sweeping declaration that state rather than federal law governs

insurance policies issued pursuant to federal government insurance

programs. It did not have to decide that broad issue, because

on the facts of this case, it was not presented.

The only issue actually before the Eleventh Circuit, and hence

the only issue it decided, was whether FCIA is entitled to avoid

the application of general state law contract principles of waiver

and estoppel in issuing commercial credit risk coverage on the

ground that it issues insurance on behalf of Eximbank. Nu-Air,

822 F.2d at 994. On this single, narrow question, the Eleventh

Circuit held only “‘that traditional principles of waiver and

estoppel apply.’’ Nu-Air, 822 F.2d at 995.

15/ FCIA’s list of purported conflict cases also includes Beverly v. Macy,

702 F.2d 931 (Lith Cir. 1983) and West v. Harris, $73 F.2d 873 (Sth Cir. 1978),

cert. denied, 440 U.S. 946 (1979). Beverly is, however, an Eleventh Circuit case

and cannot serve as the basis for a reviewable conflict. Likewise, West is a pre-

October 1, 1981 Fifth Circuit decision which the Eleventh Circuit has never

rejected. See Bonner v. City of Prichard, supra.

This precise issue - FCIA’s so-called ‘federal common law’”’

question - was not before the First, Fifth, or Ninth Circuits in

any of the flood insurance cases FCIA cites. As before, FCIA

cannot present the square, direct conflict required for conflict

review."®

FCIA’s misplaced reliance on the dissimilar flood insurance

scenario does not divert attention from a 1985 Third Circuit

decision on all fours that decided the precise issue before the Court

even before Nu-Air. In Lovell Manufacturing v. Export-Import

Bank of the United States, 777 F.2d 894 (3d Cir. 1985) the plaintiff

insured sued FCIA in a policy dispute arising out of commercial

credit risk coverage. Exactly as in this case, under the policy,

FCIA was the sole insurer of commercial credit risk and Exim-

bank was the sole insurer of political risk. Lovell, 777 F. 2d at

896. Like the plaintiff here, acting specifically in reliance on the

coverage, the Lovell plaintiff paid premiums and sold products

to a foreign purchaser, who eventually defaulted. Jd. Again

mirroring the instant situation, the district court granted FCIA’s

motion for summary judgment cn the ground that, as an agent

of Eximbank, higher standards for establishing estoppel against

the government applied. Lovell, 777 F.2d at 897.

The Third Circuit conducted an exhaustive review of all of

the same grounds for avoiding estoppel that FCIA has reasserted

in this case, including the agency and reinsurance agreements

between Eximbank and FCIA. Exactly as here, the Court of

16/ Other significant distinctions between the instant case and FCIA’s

national flood insurance program cases abound. In contrast to the instant

situation, the flood program has its own distinct and extensive statutory and

regulatory framework, and flood insurance policy terms are expressly dictated

by federal regulations, the implied waiver of which could arguably frustrate

specific governmental policies. Moreover, unlike the instant case in which FCIA

acts as the sole insurer of the commercial credit risk coverage in issue, under

the national flood insurance program, the federal government, not the insurance

companies, bears the risk. Significantly, even in the distinctly federal context

of flood insurance law, however, FCIA’s own cases acknowledge that ordinary,

standard insurance law principles apply. See Brazil, 763 F.2d at 1075; West,

$73 F.2d at 881; Beverly, 702 F.2d at 937; Atlas Pallet, Inc., 725 F.2d at 135.

Appeals rejected FCIA’s contentions and held traditional estoppel

principles, not more stringent government standards, apply to

FCIA as the sole insurer of commercial credit risks. Lovell

Manufacturing, 777 F. 2d at 899-901; cited in Nu-Air, 822 F.2d

at 994-95.

In direct refutation of FCIA’s argument that more rigid

government estoppel standards should apply because Eximbank

(and hence the federal government) are financially at risk under

the reinsurance agreements, Pet. pp. ii, 12, 16, the Lovel/ Court

stated: >

The reinsurance agreements only run _ between

Eximbank and FCIA. The fact that FCIA must now

look to Eximbank for recoupment on Lovell’s claim,

pursuant to an entirely separate agreement to which

Lovell was not a party, does not affect the duties owed

to Lovell by FCIA under the insurance policies it

issued. The obligation to Lovell resides with FCIA and

not with Eximbank. Moreover, it is FCIA’s potential

claim against the government under the reinsurance

agreements, and not Lovell’s, which is directed toward

public fisc; this is not the case before us.

777 £.2d at 901. The Eleventh Circuit specifically adopted this

analysis and conclusion in this case. Nu-Air, 822 F.2d at 994-95.

Lovell and Nu-Air vividly emphasize a unique feature of the

FCIA - Eximbank relationship that at once distinguishes all of

FCIA’s other authorities, dismantles FCIA’s federal common law

argument, and undermines its entire petition. Regardless of

whether FCIA is or is not Eximbank’s subordinate or agent with

respect to certain aspects of the issuance of export credit

insurance, as to the specific kind of insurance in issue here -

commercial credit risk coverage - it has been conclusively decided

by both of the federal appellate courts that have considered the

issue that FCIA is the independent and sole insurer of the risk.

Nu-Air, 822 F.2d at 994; Lovell, 777 F.2d at 901.'? Because FCIA

is a private entity’® and the public treasury is not at risk from

Nu-Air’s claim, traditional equitable principles of waiver and

estoppel apply. Jd.

III. The Eleventh Circuit’s Decision That FCIA Is

Subject.To Ordinary Contract Principles Of Waiver

And Estoppel And To Suit In Tort Does Not Present

Any Important Questions Of Federal Law That Should

Be Settled By The Supreme Court.

Although it is difficult to classify FCIA’s remaining argu-

ments with precision, their apparent purpose is to attempt to show

that the Eleventh Circuit’s decision in Nu-Air presents important

federal questions worthy of this Court’s attention and time.

Specifically, FCIA complains that (1) Nu-Air is at odds with

Clearfield Trust Company v. United States, 318 U.S. 363 (1943),

and its progeny; (2) in a footnote to its opinion, the Eleventh

Circuit wrongly left open the question of the extent to which

federal law governs insurance contracts issued on behalf of Exim-

bank; and most remarkably, (3) the Nu-Air decision will cause

U.S. companies to reduce their exports abroad. Pet. pp. 4, 8,

9, 16-20. All three arguments suffer from the same two decisive

defects. They present no grounds for review, and they are just

plain wrong.

A. FCIA’s Clearfield Trust argument is not properly before

this Court.

Apparentiy equating the instant garden variety insurance

17/ In a footnote, FCIA claims only that Lovell was wrongly decided.

It does not contest that Lovell’s critical facts are virtually indistinguishable from

the instant case and that its holding is directly opposed to the position FCIA

takes here.

18/ When a dispute involves only the rights of private litigants, with no

substantial rights or duties of the federal government being directly involved,

it is inappropriate to develope federal rules of decision. Miree v. Dekalb County,

Georgia, 433 U.S. 25 (1977).

policy dispute between two private entities with a ‘‘contract

through which the United States is exercising its constitutional

function,’’ Pet. p. 17, FCIA contends the Eleventh Circuit’s

decision runs afoul of the goal of uniformity expressed in

~ Clearfield Trust Company v-United States, 318 U.S. 363 (1943).

FCIA’s reliance on Clearfield Trust, however, comes too late.

Since FCIA never presented its national uniformity argument at

any time in the Court of Appeals, it cannot now urge that it

provides a basis for review by the Supreme Court. Delta Air Lines

v. August, 450 U.S. 346, 362 (1981). Indeed, before filing its

petition for certiorari, FCIA had never even cited Clearfield Trust

or the other two cases it presents in the context of its Clearfield

Trust argument, United States v. County of Allegheny, 322 U.S.

174 (1944) and United States v. Seckinger, 397 U.S. 203 (1970).

Evidently in tacit recognition of this jurisdictional dilemma,

FCIA’s petition carefully refrains from claiming Clearfield Trust

conflicts with the Eleventh Circuit’s decision in Nu-Air. Obvious-

ly, no such conflict argument is possible, since the Court of

Appeals did not mention and never even had the opportunity to

consider FCIA’s Clearfield Trust argument. Given FCIA’s

reliance on the medicare and flood cases, its readiness to use

remote and badly strained analogies has already been demon-

strated. It can therefore reasonably be assumed that if FCIA had

thought Clearfield Trust properly before this Court, it would have

based a conflict argument on it as well, even though that case

involves federal commercial paper, not insurance.

= FCIA’s reliance on Clearfield Trust is telling for the addi-

tional reason that it signals FCIA’s virtual abandonment of the

main argument it used below in support of its federal common

law theory. In the Eleventh Circuit, FCIA’s attempt to escape

the application of general contract principles of waiver and

estoppel rested on Federal Crop Insurance Corp. v. Merrill, 332

U.S. 380 (1947). FCIA urged under that decision that strict

technical compliance with all policy terms was compelled because

Nu-Air’s policy was ‘‘issued pursuant to a federal government

insurance program.’’ Appellee Br. at 28.

nemnetemmtie

In Nu-Air, the Eleventh Circuit considered Federal Crop

Insurance Corp. v. Merrill carefully and at length. Nu-Air, 822

F.2d at 994. Having done so, it reached the identical conclusion

that the Third Circuit had reached in Lovell - that ‘‘traditional

equitable principles of waiver and estoppel apply.’’ Jd. at 995.

That FCIA has now relegated Federal Crop Insurance Corp. v.

Merrill to a single mention in a footnote evidences its unspoken

concession that it cannot effectively challenge the Court of

Appeals’ thorough analysis.

B. The Eleventh Circuit’s decision is not inconsistent with

Clearfield Trust.

Even if Clearfield Trust and its progeny were now properly

before this Court, the result in this case would be unaffected.

The fear that FCIA now expresses for the first time - that Nu-

Air will subject all federal government insurance programs to

“*the vagaries’’ of ‘‘over 50 set of rules, procedures, statutes and

regulations’’ - is not rooted in reality. The Eleventh Circuit’s

decision does not impact on all federal government insurance

programs. Indeed, it does not even impact on all foreign credit

export insurance or insurers. Instead, it applies strictly to FCIA,

a private association of large insurance companies, and even then

only to FCIA’s contractual liability under the commercial credit

risk provision of its export credit policies. In fact, FCIA not only

concedes the limited reach of the Eleventh Circuit’s opinion, it

even complains about it."®

FCIA’s new found anxiety is further deflated by the reality

that the application of state rules of estoppel and waiver to the

specific type of coverage in issue here will yield few, if any,

different results. The majority of the Circuits do recognize

estoppel even against the government. United States v. Asmar,

827 F.2d 907, 911 (3rd Cr. 1987). As FCIA’s own authorities

19/ Although Eximbank is not a party to this case, FCIA complains that

the Eleventh Circuit has left open the question of the extent to which federal

common law governs insurance contracts issued on Eximbank’s behalf. Pet.

p. 18.

recognize, even in the context of the federal flood insurance

program, federal courts apply standard, general principles of

insurance law. There is nothing to indicate that the ordinary,

-traditional estoppel and waiver principles applied here are not

such standard, general principles.

Relatedly, although FCIA gravely warns of ‘‘the vagaries’’

of over ‘‘50 sets of rules,’’ it does not cite even a single case

showing the instant result would be different under another state’s

estoppel and waiver rules. For that matter, FCIA has not cited

and cannot cite even one federal appellate decision declining to

apply ordinary estoppel and waiver rules where, as here, a private

insurer participating in a federal insurance program is the sole

insurer of the specific risk under consideration. See, Nu-Air, 822

F. 2d at 994; Lovell, 777 F.2d at 901. FCIA’s assertion of

‘‘vagaries’’ and ‘‘over 50 sets of rules’’ notwithstanding, at least

with respect to the single issue presented here, it is the ordinary,

general state law rules that are settled and consistent, and the

so-called federal common law that is unknown and vague.”°

Of course, as a practical matter, FCIA’s entire discussion

is only conjecture and speculation. At this juncture, it cannot

be conclusively said that on remand it will even be necessary for

Nu-Air to resort to waiver and estoppel principles. Nu-Air has

never conceded breaching the policy, and as there is no binding

ruling in this case that it has. The district court opinion concluding

Nu-Air violated the policy terms was reversed on all counts. The

Eleventh Circuit’s decision merely noted FCIA’s policy defense

arguments, but never held them meritorious. Nu-Air, 822 F.2d

at 993; see n. 5, supra.

Finally, FCIA’s own behavior refutes its Clearfield Trust

argument. FCIA laments that Nu-Air’s estoppel and waiver

holding makes the world of commercial credit export insurance

too vague, uncertain and unpredictable for it to conduct business.

20/ Of course, if as FCIA’s cases suggest the same result will be reached

whether federal or state law is applied, no ground for review is presented. See

Sommerville v. United States, 376 U.S. 909 (1964).

itn

AE a dap

If FCIA’s argument had any validity at all, its member companies

would have disbanded the association, or at least restructured

FCIA’s contract with Eximbank when the Third Circuit reached

the identical conclusion three years ago in Lovell. FCIA is still

writing commercial credit risk coverage, and contrary to its

suggestion, the federal government’s export credit insurance

program has not screeched to grinding halt.

Relatedly, FCIA cannot reasonably argue that it will face

an insurmountable task in determining the applicable state law

when it issues commercial credit export coverage. Even assuming

that there are states following rules of waiver and estoppel

differing from Florida’s, it will not be a burdensome or even an

unusual task for Aetna, Continental, Fireman’s Fund, Liberty

Mutual and FCIA’s other member companies to find the

controlling rules. These large insurance companies do business,

issue policies, and engage in litigation across the country every

day. Determining the specific law in a particular locality is neither

difficult nor new to them.

C. The Eleventh Circuit’s decision does not present any

reviewable holding regarding application of the federal

common law to Eximbank.

FCIA stages a strawman attack on the footnote in Nu-Air

that specifically leaves open the question of the extent to which

federal law governs insurance contracts issued on behalf of

Eximbank. Nu-Air, 822 F.2d at 995 n.24. Essentially, FCIA

makes the broad argument that in refraining from deciding the

question, the Eleventh Circuit’s decision will plunge the totality

of the law governing export credit insurance into uncertainty.

Pet. pp. 18-20. Such histrionics cannot withstand even superficial

scrutiny.

First, although the point is almost lost in FCIA’s petition,

Eximbank is not a party to this litigation. Accordingly, that the

Eleventh Circuit’s Nu-Air opinion refrains from reaching any legal

conclusions specifically regarding Eximbank is only proper. The

footnote that is the target of FCIA’s attack merely clarifies that

the Eleventh Circuit has fulfilled its duty of deciding only the

specific case and controversy before it.

Second, FCIA stands on its head the reality of the situation

with its suggestion that in leaving open the question of the ap-

plicability of the federal common law to Eximbank, the Eleventh

Circuit has ‘‘artificially divided’’ export credit risk into political

and commercial coverage. Pet. p. 18. It was FCIA and Eximbank,

not the Court of Appeals, who decided to divide export credit

coverage into political and commercial components and who

decided that FCIA would be the sole insurer of the latter.

Presumably in making this distinction FCIA and Eximbank did

not intend it to be legally meaningless. Having specifically agreed

to this unique division uf responsibilities and risks, FCIA’s present

expressions of shock, alarm, and fear that it will be impaired in

performing its function because it cannot discern the legal

standards applicable to it, Pet. pp. 12, 19, 20, cannot be taken

seriously.

In other words, even if as FCIA asserts this separation of

risks is ‘‘artificial,’’ ‘‘absurd,’’ ‘‘untenable,’’ ‘‘inconceivable,”’

and ‘‘makes no sense,’’ Pet. p. 18-20, FCIA cannot be heard to

complain. It agreed with FCIA to apportion the risks in this

fashion, and at least since Lovell was decided in 1985, both entities

have been well aware of the legal consequences of doing so.

In the final analysis, FCIA’s petition protests too much.

Bloated by gross misstatements of the Eleventh Circuit’s holdings,

far fetched analogies to clearly distinguishable cases and circum-

stances, and reliance on issues that are not even before his Court,

FCIA’s strained arguments collapse under their own weight.

D. The Eleventh Circuit’s decision will neither undermine

federal insurance programs nor reduce exports by U.S.

Companies.

Apparently in furtherance of its effort to give the Eleventh

Circuit’s Nu-Air decision the appearance of having the broad

federal importance that it lacks, FCIA’s petition is riddled with

unsupported speculations and colorations. For example, attempt-

ing to emphasize its contention that it was a mere ‘‘agent’’ of

Eximbank, FCIA states without citing any authority that ‘‘federal

government control of the export credit insurance program is

complete.’’ Pet. p. 3. Yet FCIA is not mentioned in any relevant

federal statutes or regulations, and as to the commercial credit

coverage in issue here, it is well settled that FCIA is the sole

insurer. Similarly, relying on argument by negative implication,

FCIA boldly declares that ‘‘there is not a shred of evidence’’ that

_in establishing the foreign credit export insurance program,

*‘Congress was doing anything less than defining paramount

interests.’’ Pet. p. 20. Even if this sweeping generalization had

any relevance to the specific facts of this case, there ‘‘not a shred

of evidence’’ that in setting up Eximbank, Congress intended to

immunize an unmentioned private entity such as FCIA from its

torts, or place it above general principles of waiver and estoppel.

Distractions aside, this case involves nothing more than the

Eleventh Circuit’s carefully considered reversal of the district

court’s erroneous granting of a summary judgment. The real

impact of this holding is confined to the instant private parties’

rights and responsibilities with respect to a very specific type of

insurance protection, commercial credit risk coverage. As to those

rights and responsibilities, the Eleventh and Third Circuits are

in complete agreement, and no other federal appellate court has

ever ruled differently.

Because it relies so heavily on hyperbole and misstated

premises, FCIA is inevitably tripped by its own excesses. This

is perhaps best illustrated in FCIA’s extraordinary assertion that

if not reversed, the Eleventh Circuit’s decision will ultimately

reduce foreign exports by American companies. Pet. pp. 4, 9-12,

16.

Like FCIA’s Clearfield Trust contention, this argument was

never made in the Eleventh Circuit and is without record support.

Further, it is utterly illogical. It cannot reasonably be believed

that a company like Nu-Air, or any company for that matter,

will be motivated to increase production and exports if, as FCIA

asks this Court to hold, its commercial credit export insurer can

wrongly refuse to pay a covered loss, retain the premiums that

were paid in good faith, and be shielded from suit in tort and

contract. Instead, to the extent that reasonable speculation on

the point is possible, it must be assumed that under the result

FCIA desires, exports would decline because U.S. companies will

fear that they will lack legal recourse against their insurer when

policy claims are wrongly denied.

The district court’s order cited no legal authority of any kind

to support its conclusions, Nu-Air, 822 F.2d at 990 n. 9, and the

Eleventh Circuit’s thorough, well-reasoned and comprehensive

opinion in Nu-Air was correct in reversing it. For the reasons

articulated in the Court of Appeals’ decision and in this response,

FCIA’s petition for certiorari presents no grounds for review.

It should be denied.

CONCLUSION

For the foregoing reasons, FCIA’s petition for Writ of

Certiorari should be denied.

Respectfully submitted,

Stat MNal—

Stuart C. Markman