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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_0617%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1988
- **Citation:** 485 U.S. 976

## Text

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(a) Supe Court, U.S, ¥

87-1070 7 FILED cay
MAR 3 1988 |

7

IN THE : F. SPANIOL, JR,’
or CLERK nui

Supreme Court of the United States

OCTOBER TERM 1987

FOREIGN CREDIT INSURANCE ASSOCIATION,

Petitioner,

v.

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

i
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.
.

il
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. ............

os

16

iv

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

Vv

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,

RE
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,

vi

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).

8
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

10

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

1]

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).

12

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.

13

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

14

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).

15

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.

16

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.

17

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.

18

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.

19

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).

20

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.

ee

nemnetemmtie

ed

21

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.

22

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

23

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

24

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

25

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.

26

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

Winkles, Trombley, Kynes &
Markman, P.A.

707 North Franklin Street

Tenth Floor

P.O. Box 3356

Tampa, Florida 33601

813/229-7918

Attorney for Respondent

Dated: March_~, 1988.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_0617%3A2. Public record. Not legal advice.