Unpublished Disposition, 883 F.2d 1023 (9th Cir. 1989)

MEMORANDUM^*  AND ORDER

The following defendants-appellants filed a stipulated dismissal on April 12, 1989: Nevada County Builders Exchange, Inc., Donald A. Barry, E.R. Mitchell, R.E. Jeffery, Anthony D. Giannetta, Roland D. Carter, Floyd E. Reitz and William A. Mosely, L & H Associates, and Parichan, Renberg, Crossman & Harvey, APC. Defendant Robert Goss filed a notice of appeal in Case No. 88-2739 but did not file an appellate brief. Accordingly, the court hereby dismisses the appeals filed by these defendants in case numbers 88-2733, 88-2736, 88-2737, 88-2739, and 88-2741.

Defendants-Appellants Mutual Fire Marine and Inland Insurance Company ("Mutual Fire") and World Trade Insurance Service, Inc. ("World Trade") appeal the district court's entry of a mandatory preliminary injunction ordering all defendants to establish a $100,000 trust fund for the payment of plaintiff-appellee Thomas Peter Browne's medical bills. Browne is dying of bladder cancer.

Mutual Fire identifies four issues for appeal. First, it argues that by ordering Mutual Fire to disburse funds, the district court improperly has attempted to control the res presently subject to the in rem jurisdiction of the Commonwealth Court of Pennsylvania. This argument is meritless. While the district court ordered all defendants to pay $7,500 initially and $2,500 a month into a trust fund, the court accommodated Mutual Fire's special circumstances by directing it "to take all necessary action to seek, on an emergency basis, approval from the Pennsylvania Insurance Commissioner to pay" Browne's medical expenses.

This order does not undermine the jurisdiction of the Pennsylvania courts, nor does it conflict with a final judgment. The doctrine prohibiting competing in rem jurisdictions is inapplicable to judgments entered upon in personam claims. See Commonwealth Trust v. Bradford, 297 U.S. 613, 617 (1936) (doctrine no bar although federal court had entered an in personam judgment that money was "due and payable" from the res under the state court's jurisdiction).

Mutual Fire also argues that the district court erred by failing to find as an irreducible minimum that appellees had a fair chance of success on the merits. As we conclude that Mutual Fire has failed to present a persuasive argument that appellees do not have a fair chance of success on the merits, any deficiency in the district court's order is inconsequential. See Big Country Foods, Inc. v. Board of Education, 868 F.2d 1085, 1088 (9th Cir. 1989).

Third, Mutual Fire asserts that appellees' claims have no fair chance of success on the merits. Appellees allege that Mutual Fire has violated ERISA by failing to accept the conversion application. Mutual Fire argues that the application was untimely because it was not received until a few days after the 31-day period established by Cal.Ins. Sec. 12674. But appellees mailed a conversion application to Mutual Fire 29 days after the policy's termination.

Section 12674 requires that an application for conversion coverage be "made to the insurer" within 31 days of the termination of coverage. Mutual Fire cites no authority for the proposition that mailing a conversion application within the 31 day period is inadequate under section 12674. We intimate no view on the ultimate merits of appellees' claim, but we cannot say that appellees do not have a fair chance of success on the merits.¹ 

We also reject Mutual Fire's argument that appellees' alleged failure to exhaust administrative remedies undermines their fair chance of success on the ERISA claims. While a beneficiary seeking to recover benefits generally must exhaust available administrative remedies, see Amato v. Bernard, 618 F.2d 559, 566-67 (9th Cir. 1980), that requirement poses no obstacle here. In this case, appellants submitted a claim to Mutual Fire in 1985, but because of Mutual Fire's rehabilitation proceeding, no further action has been taken. The exhaustion requirement is designed to prevent "premature judicial intervention in decision-making processes." Amato, 618 F.2d at 567. We can say with some assurance that given the critical nature of Browne's health and the many years that have passed since he first submitted his claim, there is nothing premature about this lawsuit.

We cannot agree with appellees' position, however, that they have a fair chance of success in their claim pursuant to Cal.Ins. Sec. 790.03(h). See Kanne v. Conn. General, 867 F.2d 489 (9th Cir. 1988) (section 790.03(h) preempted by ERISA), cert. denied, 109 S. Ct. 3216 (1989). Appellees' fair chance for success lies in their ERISA claims, not their section 790.03(h) claim.

Fourth, Mutual Fire argues that the district court's entry of a mandatory preliminary injunction was an abuse of discretion. As we conclude that Mutual Fire has not presented a persuasive challenge to appellees' fair chance of success on the merits, we decline to find that the district court abused its discretion.

Finally, World Trade has filed an appeal "in order to assure [that] the right to appeal is not waived if applicable." Appellees did not serve World Trade until December 23, 1987, subsequent to the district court's hearing on the preliminary injunction but prior to the district court's ruling. The order directs "all defendants" to establish the trust fund, but given World Trade's inability to participate at oral argument, it surmises that it is not bound by the injunction.

We need not decide whether World Trade is bound by the preliminary injunction. First, World Trade does not ask us to do so. Second, it raises no special procedural or substantive challenges to its inclusion in the injunction order. Rather, World Trade filed this appeal to protect its position on the merits. As World Trade merely repeats two of the arguments raised by Mutual Fire, we hold that if it is subject to the mandatory injunction, the district court did not abuse its discretion by doing so.

AFFIRMED