Jacob Benson v. Continuing Care Risk Retention Group, Inc.

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS NOV 20 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT JACOB BENSON, an individual; JOSEPH No. 22-16829 BENSON; DEBORAH BENSON, husband and wife; K. B., a minor, by and through D.C. No. 2:18-cv-00006-DWL Jacob Benson, guardian ad litem, Plaintiffs-Appellees, MEMORANDUM* v. CONTINUING CARE RISK RETENTION GROUP, INC., Garnishee, Defendant-Appellant, and CASA DE CAPRI ENTERPRISES, LLC, an Arizona limited liability company; UNKNOWN PARTIES, named as John Does 1-20; ABC Corporations I-X; XYZ Partnerships I-X, Defendants.

Appeal from the United States District Court for the District of Arizona Dominic Lanza, District Judge, Presiding Argued and Submitted November 8, 2023 Phoenix, Arizona Before: HAWKINS and COLLINS, Circuit Judges, and S. MURPHY,** District Judge.

Continuing Risk Retention Group, Inc. (“CCRRG”) appeals the district court’s order denying its renewed motion to compel arbitration.1 We review de novo the district court’s denial of a motion to compel arbitration, Cape Flattery Ltd. v. Titan Mar., LLC, 647 F.3d 914, 917 (9th Cir. 2011), and affirm.

CCRRG argues that it is entitled to compel arbitration because the Liability Risk Retention Act (“LRRA”) preempts Arizona Revised Statutes (“A.R.S.”) section 12-1584 and the Arizona Supreme Court’s decision in Benson v. Casa de Capri Enterprises, LLC, 502 P.3d 461, 465 (Ariz. 2022), which both require a court to resolve all issues in a contested garnishment action. We disagree.

The LRRA “leaves regulation of [a risk retention group (“RRG”)] to the state where the RRG is chartered,” Atty’s Liab. Prot. Soc’y, Inc. v. Ingaldson Fitzgerald, P.C., 838 F.3d 976, 980 (9th Cir. 2016), and “broadly preempts the authority of nonchartering states to regulate the operation of risk retention groups within their borders,” Allied Pros. Ins. Co. v. Anglesey, 952 F.3d 1131, 1132 (9th Cir. 2020).

With several exceptions, the LRRA provides that foreign RRGs are “exempt from any [non-chartering] State law, rule, regulation, or order to the extent that such law, rule, regulation, or order would . . . make unlawful, or regulate, directly or indirectly, the operation of a risk retention group.” 15 U.S.C. § 3902(a)(1). Importantly, however, the statute also provides that “nothing in this section shall be construed to affect the applicability of State laws generally applicable to persons or corporations.” Id. § 3902(a)(4).

A.R.S. § 12-1584 and the Arizona Supreme Court’s decision in Benson provide that participants in an Arizona garnishment proceeding must adhere to a certain set of statutory procedures. See A.R.S. § 12-1584(E) (providing generally that, in a garnishment action, “[t]he court, sitting without a jury, shall decide all issues of fact and law”); Benson, 502 P.3d at 465 (holding that application of direct benefits estoppel in a garnishment action would “contravene the legislature’s directive that garnishment proceedings adhere to prescribed statutory procedures”).

Thus, contrary to CCRRG’s arguments, the challenged laws are not specific to regulation of the insurance business and are distinguishable from the law at issue in Allied Professionals Insurance Co. See 952 F.3d at 1132 (analyzing state insurance code provision governing limitations in insurance contracts, including arbitration clauses). Because the laws are non-specific to the insurance business and are generally applicable to all corporations and persons, they fall within § 3902(a)(4)’s savings clause. See Nat’l Warranty Ins. Co. RRG v. Greenfield, 214 F.3d 1073, 1081

AFFIRMED.