Insurance Law Hawaii

Insured's and Insurer's Prior Acts Constitute Admissions of Wind and Flood Damage

    Senior Judge Senter from the Southern District of Mississippi continues to be on the front lines of the Katrina insurance coverage battles.  In a case headed for trial, Judge Senter recently denied motions by both the insured and insurer attempting to establish estoppel on coverage issues.  See Politz v. Nationwide Mut. Fire Ins. Co., No. 1:08CV18, 2009 U.S. Dist. LEXIS 39857 (S.D. Miss. May 11, 2009).

    After Hurricane Katrina, the insured applied for and received a grant from the Mississippi Development Authority (MDA).  Nationwide's motion argued this was an admission that at least some of the damage to the insured's home was caused by storm surge flooding.  The court held that applying for and accepting the MDA grant was an admission by the insured that property was damaged by storm surge.  But unlike the receipt of benefits from flood insurance, accepting the MDA grant did not indicate that the amount of flood damage was equivalent of the amount of the grant.  Accepting the grant would only be admissible if the insured argued that storm surge flooding played no part in damaging the property.

    The insured's motion sought to determine the payment of benefits by the insurer constituted an admission that the property sustained covered wind damage in the amount of the payment.  The insurer's payment of $30,339.57 was accompanied by a letter stating, "We are enclosing a check for the amount of damages which we believe we owe at this time for damages caused during Hurricane Katrina."  The insurer argued its payment was voluntary.  Based on the insurer's letter, the court disagreed.  Taking the insurer at its word, the payment was a best estimate of the amount owed the insured under the homeowners policy.  If the insurer attempted at trial to assert it owed nothing under the policy, the letter would be admissible for credibility purposes.

    Therefore, while Judge Senter did not find estoppel by either the insured or insurer, both acts were admissions which would be allowed into evidence should either party argue the damage was not caused by both wind and flood.

Fifth Circuit Finds Flood Exclusion Ambiguous in Excess Policy

    A mixed result for the insured and excess insurers was reached in Six Flags Inc. v. Westchester Surplus Lines Ins. Co., No. 08-30476, 2009 U.S. App. LEXIS 8273 (5th Cir. April 21, 2009)[here].  Although the Fifth Circuit determined most insurers had no further coverage obligation, the flood exclusion in one excess policy was found ambiguous.

    Six Flags operated a theme park in New Orleans.  Six Flags had multi-layers, all-risk first-party coverage arranged as follows: (1) a primary layer with $25 million in limits; (2) a first excess layer with $125 million in limits; (3) a second excess layer with $125 million in limits; and (4) a third excess layer with $250 million in limits.  Six Flags paid an annual premium of $5.7 million for this coverage.

     The Excess Insurers covered all risks, subject to certain limits.  The policies' Flood sublimit was "applicable to all loss or damage . . . per occurrence and in the term aggregate as respects Flood at any location in a Flood Zone A or V" as designated by FEMA.  The provision limited coverage for the first-layer excess policies to $2,500,000.  Six Flags' theme park was located in a Flood Zone A. 

    Finally, the polices lumped together all loss within a 72-hour window within a Weather Cat Occurrence which was defined as "All loss or damage occurring during a period of 72 hours which is caused by . . . [a storm named by the National Weather Service]."  Further, "storm" included all "weather phenomenon, . . . including, but not limited to Flood, wind, hail, sleet, tornadoes, hurricane or lightning." 

   One excess policy issued by Commonwealth Insurance replaced the definition of Flood with an endorsement defining Flood as "loss or damage caused by waves, tidal water or tidal wave, overflow of . . . bodies of water. . . all whether driven by wind or not." 

    After Hurricane Katrina caused extensive damage to its park, Six Flags submitted losses totaling $150 million to its insurers.  The primary-layer insurers paid $25 million, exhausting this level of coverage.  The Excess Insurers then capped their coverage at $2.5 million pursuant to the Flood sublimit. 

    Six Flags sued, arguing the Flood sublimit did not apply because of a separate peril of a Named Storm.  The district court granted summary judgment to the insurers, concluding the Flood sublimit was unambiguous and excluded excess coverage. 

    On appeal, the Fifth Circuit first analyzed the non-Commonwealth Excess policies.  Six Flags argued the Flood sublimit did not apply to Flood loss in a Weather Cat Occurrence because a Named Storm was a distinct peril not subject to the Flood sublimit.  In other words, the Weather Cat Occurrence subsumed all of the other perils defined and was subject only to sublimits expressly addressed to it.  The Fifth Circuit disagreed. The Flood sublimit clearly capped the liability of the Excess Insurers at $2.5 million for all loss or damage per occurrence, including a Weather Cat Occurrence, as respected Flood.     

    Turning to the Commonweatlh Policy, Six Flags argued the "Flood" definition endorsement clarified for the Commonwealth Policy and the other Excess Policies that Flood caused by the peril of a Named Storm was not considered in the application of the Flood sublimit.  The Fifth Circuit determined the Flood definition endorsement ambiguous.  A reasonable reading of the Commonwealth endorsement meant it excluded the applicability of the Flood sublimit to Flood that was caused by the peril of a Named Storm.  Therefore, the district court's order granting summary judgment to Commonwealth was reversed.

    Finally, Six Flags argued the definition of Flood in the non-Commonwealth policies should be read in light of the definition contained in the Commonwealth Flood definition endorsement.  The Fifth Circuit declined to modify the non-Commonwealth Policies to find an ambiguity. Under Louisiana law, the policies had to be reviewed as independent units. 

Gavelston Revisited - Seven Months After Hurricane Ike

    My wife and I were in Houston again last week.  Over the weekend, we drove to Galveston, continuing a chain of visits from both before and after Hurricane Ike.  [See prior posts here and here].  The Gulf Coast was in the Houston news last week because of former President George H.W. Bush's Saturday visit to Gilchrist on the Bolivar Peninsula, ground zero for Hurricane Ike and across the channel from Galveston.

    Seven months after Hurricane Ike struck, a visitor would notice little, if any, lingering Hurricane Ike-related damage in Houston.  Galveston is a different story.  Although restaurants and shops are open in the historic district along the Strand, many buildings remain dilapidated and uninhabited.  Apparently, several days of flood and a night of hurricane force winds caused serious damage to most trees, which have no leaves and give the appearance of a cold day in winter.  Many beach front homes appear unharmed, but they resemble a ghost town, as they are empty with boarded doors and windows, probably damaged internally from the storm surge.  Galveston Island State Park, which lost an administrative building to the hurricane on the beach side of the highway, is reopened on the marsh side.  Bird life through the marsh seems relatively normal, as we saw great white egrets, lesser terns, and two pink Roseate Spoonbills flying overhead.

    Along Interstate 45 to Galveston are billboards where law firms unabashedly advertise their ability to assist hurricane victims in recovering insurance proceeds.  But with many areas still devastated seven months after Hurricane Ike, one must assume many Galveston residents never had the insurance coverage they needed.

    

Anti-Assignment Clause Does Not Bar Post-Loss Assignment

    It's now late April.  Posting on a decision rendered in March, early March at that, breaches a blogger's protocol.  And In Re: Katrina Canal Breaches Consolidated Litigation; Pertains to: Road Home, Louisiana State, No. 05-4182, 2009 U.S. Dist. LEXIS 30406 (E.D. La. March 5, 2009), received press when issued.  The case allowed individual claims of homeowners to proceed with a class action suit even if they did not file individual suits by the deadline.  Nevertheless, because it involves hurricanes, flood damage and anti-assignment provisions, issues we follow with interest at this site, the latest installment of Katrina Canal Breaches deserves another look. 

    The Louisiana Road Home program was funded by a HUD grant to provide disaster relief to victims of Hurricanes Katrina and Rita.  Road Home grants were designed to compensate homeowners up to $150,000 for structural damage.  The Road Home program prohibited providing any relief funds that would duplicate payments from other sources.  Accordingly, recipients had to reimburse the State if they subsequently received any insurance payments from losses covered by their Road Home grants.  To facilitate reimbursement, the Road Home program required recipients to execute a Subrogation/Assignment, assigning the right to such duplicate funds to the State. 

    Approximately 90,000 Agreements were executed, making in excess of eight billion dollars of federal funds available to hurricane victims through the Road Home program.  The State filed a class action suit to recover those funds from Insurers to which Road Home recipients were entitled and which had been assigned to the State.

    The Insurers moved to dismiss on various grounds.  First, the Insurers argued the State had no standing because the assignments from the homeowners were invalid based on the policies anti-assignment clauses.  Louisiana law permitted the enforcement of anti-assignment clauses.  But here the Court was faced with a post-loss assignment, i.e., the homeowners assigned their rights under the policies to the State after loss from the hurricanes.  

    The Court decided that assignments were permitted under Louisiana law, despite anti-assignment clauses.  In other jurisdictions, courts generally permitted the assignment of an insurance claim despite an anti-assignment clause if the assignment occurred post-loss.  After the loss occurred, assignment of the claim did not modify the risk.  Therefore, there was no reason to limit the assignment of a claim, regardless of an anti-assignment clause.  Recall that in Del Monte Fresh Produce (Hawaii), Inc. v. Fireman's Fund Ins. Co., 117 Haw. 357, 183 P.3d 734 (2007), the Hawai`i Supreme Court held that transfer of a policy in disregard of an anti-assignment provision was invalid.  Del Monte dealt with a post-loss assignment loss, but an assignment made prior to the successor's entry of a Consent Decree under CERCLA with the EPA.

    The Katrina Canal Breaches court next agreed with the Insurers that any claims outside the contract, such as allegations of bad faith and breach of fiduciary duty, were barred because these claims had not been assigned to the State.

    Finally, the Court  dismissed the State's Valued Policy Law claims.  The State argued under Louisiana law, if any insurer placed a valuation on the property and used such valuation to determined the premium, the insurer had to indemnify the covered loss at such valuation without deduction or offset.  The Court agreed with the Insurers that Louisiana law only applied the Valued Policy Law to claims brought under fire insurance policies. 

Hurricane Damage Not Covered under Alaska Native Corporation's All Risk Policy

    I can't resist reading a decision regarding a dispute over hurricane coverage for property owned by an Alaska Native Corporation.  See Arctic Slope Regional Corp. v. Affiliated FM Ins. Co., No. 08-30050, 2009 U.S. App. LEXIS 6900 (5th Cir. April 2, 2009).  The Arctic Slope Regional Corporation, one of the few lucrative Native Corporations formed under the Alaska Native Claims Settlement Act of 1971, is based in Barrow, Alaska, the northern most city in the United States.  I was in Barrow one December, the time of year when the sun does not crack the horizon for two solid months.  But I digress. There are interesting insurance issues in Arctic Slope.

    One of Arctic Slope's ventures, an office and construction yard on the coast of Louisiana, was inundated by water after Hurricane Rita's storm surge in September 2005.  Coverage was denied under Arctic Slope's all risk policy. The policy covered damage caused by "wind and hail," but not by "flood" in the form of storm surge. 

    The policy defined "flood" as "surface water; tidal or seismic sea waive; rising (including overflowing or breaking of boundaries) of any body of water  . . . whether driven by wind or not . . . ."  "Wind/hail" was defined as "direct and/or indirect action of wind and all loss or damage resulting therefrom whether caused by wind, by hail or by an other peril . . . when water . . . is carried, blown, driven, or otherwise transported by wind onto or into said location."  Therefore, storm surge was arguably covered by the wind/hail provision, but excluded by the flood provision.

    The district court held the wind/hail provision had to be read in light of the entire policy.  Arctic Slope Regional Corp. v. Affiliated FM Ins. Co., No. 07-0476, 2007 U.S. Dist. LEXIS 64850 (W.D. La. Aug. 30, 2007).  When read in conjunction with the definition of "flood," it was apparent that storm surge was not encompassed by the definition of wind/hail.

    The Fifth Circuit affirmed, although on slightly different grounds.  Arctic Slope's first argument that the policy was ambiguous because it excluded coverage for storm surge damage within the flood definition while it authorized coverage for the same damage in the wind/hail provision, was rejected.  The policy covered all risks of direct physical loss or damage "except as excluded under this policy."   Therefore, the exclusion of storm surge as a flood event could not be reversed by its possible inclusion as a wind/hail event.

    Arctic Slope also argued there was an ambiguity under the policy's anti-concurrent causation clause preceding the excluded perils:

    This policy does not insure against loss or damage caused directly or indirectly or resulting from any of the following.  Loss or damage is excluded regardless of any other cause or event whether or not insured under this policy that contributes concurrently or in any sequence to the loss or damage.

    Arctic Slope argued the clause was ambiguous because there was only one cause of damage - storm surge - and not separate causes defined as separate perils in the policy.  Perhaps the correct analysis at this point would have been to simply state the anti-concurrent causation provision does not come into play until there are two separate causes of the same, identical damage.  If two or more forces cause different, distinct damage, only single causation exists and the anti-concurrent causation clause does not apply.  Here, as noted by the court, there was one cause of damage - storm surge.

    Nevertheless, the court addressed Arctic Slope's argument by determining the anti-concurrent causation clause was unequivocal and unyielding.  The storm surge, "whether driven by wind or not," was not covered by the policy.  Consequently, the anti-concurrent causation clause precluded coverage of the loss or damages under the wind/hail provision as water "carried, blown, driven or otherwise transported by wind."  Although only one peril was in play, the court determined the clause operated exactly as it was intended and was not ambiguous.

Insured's Motion for Summary Judgment on Bad Faith Denied

    The insured moved for summary judgment on bad faith because of the insurer's alleged delayed and incomplete payments after Hurricane Katrina destroyed property.  See Plaquemines Parish School Bd v. Indus. Risk Insurers, No. 06-7213, 2009 U.S. Dist. LEXIS 20004 (E.D. La. March 11, 2009). 

    School buildings operated by the insured School Board were damages by Hurricane Katrina in August 2005.  Policy limits were $15 million, and the School Board was paid $11.7 million.  The School Board filed suit against the insurer for additional proceeds under an "all risk" policy.  The suit sought the remainder of the policy limits and damages for bad faith.

    The insurer's adjusters had inspected the properties in September and October 2005, and provided detailed reports regarding the damage.  Substantial payments were made.  Nevertheless, the School Board argued the insurer failed to make timely payments once it had a sufficient proof of loss.  The School Board further argued payments for wind damage were insufficient and untimely. 

    Noting the Fifth Circuit's decision in Dickerson v. Lexington Ins. Co., 2009 U.S. App. LEXIS 2902 (5th Cir. 2009) [reviewed here], the District Court noted whether the insurer acted in good faith required a factual determination.  The School Board's evidence raised questions of material fact as to the timing and sufficiency of proof of loss in the insurer's possession and whether the insurer acted in good faith in delaying payment.  Therefore, the School Board's motion for summary judgment was denied.

    The court also considered whether the School Board's recovery from the insurer should be offset by amounts received from FEMA or in flood insurance proceeds to prevent a double recovery.  By statute, duplicate funding received from FEMA had to be returned.  The court held, however, that the School Board's receipt of FEMA funds had no bearing on the ability to recover from the insurer.  Nevertheless, the insurer would be entitled to an offset for any flood proceeds received by the School Board which the insurer proved was excluded from coverage.  At trail, the School Board would have the burden of proving the amount of damage caused by the covered peril of wind while the insurer would have the burden of proving the applicability of the exclusion for flood damage.

Fifth Circuit Rejects Constructive Total Loss Doctrine To Determine Loss

    At issue in Monistere v. State Farm Fire and Cas. Co., No. 07-31149 (5th Cir. Feb. 17, 2009) [here] was whether the insured homeowners recovered the appropriate amount under their flood policy for damage caused by Hurricane Katrina in August 2005.

    The State Farm policy covered: (1) buildings for the amount of the "direct physical loss," up to $227,600; and (2) increased cost of compliance, which had a limit of $30,000.  State Farm's adjuster initially estimated damage at $231,812.92, but this was later lowered to $133,212.  State Farm paid the insured this amount, less a $500 deductible.  The homeowner's submitted an estimate determining repairs would cost $154,843.  This estimate was later increased to $171,638.  State Farm never re-evaluated the premises nor paid any additional coverage for the building.  The insureds eventually rebuilt their home for $535,000.

    In January 2006, a state agency issued a "Substantial Damage Determination" letter, required the home to be rebuilt to a new height before flood insurance could be obtained.  State Farm paid the full $30,000 in compliance coverage because compliance costs would far exceed this amount.

    The homeowners sued in federal district court for inadequate coverage.  The court had to determine the "direct physical loss", which the policy defined as "loss or damage to the insured property, directly caused by a flood."  To determine "direct physical loss," the court used the judicially created "constructive total loss doctrine," and awarded the insureds their building coverage limits because there home was a constructive total loss by the flood damage.  Judgment was entered on behalf of the insureds. The remainder of the amount available under the policy, or $86,787, was awarded.

    The Fifth Circuit rejected use of the "constructive total loss doctrine."  Although the home was a total loss, this was due to costs that regulatory authorities imposed for rebuilding, not damage to the property caused by flood.  The compliance costs were capped in the policy at $30,000, and paid by State Farm. The district court could not attempt to balance the equities.  Congress had determined the maximum amount that would be paid - $30,000.

    Next, the court considered the amount of loss recovery to which the insureds were entitled under federal flood regulations.  State Farm's adjuster testified that the insureds' repair estimates did not evaluate what amounts were paid for repairs below the floodwater level and what amounts for damage above.  Other claims were also not well developed.  Only "direct physical loss" caused by flood was covered.  Therefore, recovery for the mold damage caused by water remaining in the home after flood waters receded was not covered.  There was no basis on which the district court could have awarded a specific additional sum or even have determined that more was owed.  Therefore, the Fifth Circuit reversed and judgment was rendered in favor of State Farm.

 

 

Fifth Circuit Again Holds in Favor of Policy Holder in Katrina-Related Dispute

    A prior post addressed Dickerson v. Lexington Ins. Co., 2008 U.S. App. LEXIS 26504 (5th Cir. Dec. 22, 2008), wherein the Fifth Circuit reversed its trend by issuing a Katrina-related decision in favor of the policy-holder.  The Fifth Circuit recently upheld another decision in favor of policy-holders after Hurricane Katrina destroyed their home.  See  Grilletta v. Lexington Ins. Co., 2009 U.S. App. LEXIS 276 (5th Cir. Jan. 8, 2009).

    The insured's policy covered damage from wind but excluded "water damage."  On November 13, 2005, Lexington's adjuster determined the damage was wind related and not caused by flood.  Consequently, he recommended Lexington pay the policy limits of $400,000 for the dwelling. 

    Lexington took no action until January 26, 2006, when it hired an engineering company to do a damage causation analysis.  The engineering company, in turn, hired a meteorologist who determined the storm surge was the proximate cause of the destruction, not wind.  Thereafter, Lexington paid only $191,674 for damage to the dwelling.

    Plaintiffs sued.  Plaintiffs' expert, an engineer, asserted that either a tornado or high winds destroyed the house, and that there was a small storm surge of ten to twelve feet.  On the other hand, Lexington's experts, the meteorologist and an engineer, stated there was no evidence of a tornado or winds strong enough to destroy the house.  Instead, a storm surge of at least fifteen feet caused the destruction.  The trial court determined Lexington had not met its burden to demonstrate the water damage exclusion applied.  Therefore, the court ruled the full $400,000 payment for loss of the house was appropriate.

    The Fifth Circuit affirmed.  Lexington's experts conceded that a tornado or high winds could have damaged the house.  The district court did not find conclusive Lexington's meteorological data suggesting water was the proximate cause of the damage.  Given the battle of experts, the trial court was free to choose among the competing explanations in rendering its decision. 

    The Fifth Circuit also affirmed an award of statutory penalties for arbitrarily failing to pay a claim within thirty days.  After receiving the first adjuster's report concluding that the wind caused the damage, Lexington took no action for over sixty days. 

    Hawaii's Unfair Claim Settlement Practices Act lists as an unfair practice the failure to offer payment within thirty days of affirmation of liability if the amount of the claim has been determined and it is not in dispute, Haw. Rev. Stat. 431:13-103 (a)(11)(F), but there is no statutory penalty for such delay.

Sixth Circuit Ponders Efficient Proximate Cause Doctrine

    Most of our prior posts regarding the efficient proximate cause doctrine arise from cases in Mississippi and Louisiana, two states heavily impacted by Hurricane Katrina.  See, e.g. posts here, here, and here.  Considering some creative arguments, the Sixth Circuit recently weighed in on the applicability of the efficient proximate cause doctrine under Michigan law.  See Iroquois on the Beach, Inc. v. General Star Indemn. Co., 2008 U.S. App. LEXIS 25864 (6th Cir. Dec. 23, 2008). 

    The insured owned a seasonal hotel built in 1903 on Mackinac Island, Michigan.  Several additions had been made, the last of which was in 1979 or 1980.  An inspection was made in 2005 because the back of the building would not hold paint and the windows did not open and close properly.  Decay was discovered in several areas of the 1979/1980 addition.  The inspector determined water had entered the building because an insufficient steel frame had failed to protect the building in windy conditions. 

    The insured submitted a notice of loss to General Star, its insurer under an "all risk" policy.  Coverage was denied based upon an exclusion for "continuous or repeated seepage or leakage of water . . . that occurs over a period of 14 days or more."   The insured sued.  Relying on this exclusion, the district court granted General Star's motion for summary judgment.

    On appeal, the insured argued the exclusion was inapplicable because windstorms, a covered loss, initiated the sequence of events that resulted in water damage, and the policy had no anti-concurrent causation clause.  Therefore, the insurer intended to cover loss caused by wind if it was the first or last step leading to water damage.  In other words, the insured argued the doctrine of efficient proximate cause should apply: when two or more identifiable causes, at least one of which is covered and at least one of which is excluded under the policy, contributed to a single loss, there was coverage. 

    The Sixth Circuit was unpersuaded.  Although many jurisdictions have adopted the doctrine of efficient proximate cause, Michigan was not one of them.  Instead, under the default rule in Michigan, a loss is notcovered when it is concurrently caused by the combination of a covered cause and an excluded cause.  Accordingly, the exclusion for water damage for at least fourteen days was dispositive in this case.

    Moreover, the absence of an anti-concurrent causation clause from General Star's policy was irrelevant.  Since Michigan did not follow the doctrine of efficient proximate cause, adding an anti-concurrent causation clause to a policy would be mere surplusage. 

Does Homeowner Have a Cause of Action for Incorrect Flood Zone Determination?

     Two recent cases address a homeowner's ability to sue for an incorrect flood zone determination.  Both cases confirmed the homeowner has no private cause of action under the National Flood Insurance Program for an alleged inaccurate flood determination.  The door was left open, however, for state, common law claims under Mississippi law.

    In the first case, Paul v. Landsafe Flood Determination Inc., 2008 WL 6051629 (5th Cir. Dec. 2, 2008), Landsafe was hired by the mortgage lender to ascertain whether plaintiff's home was located in a flood zone.  When Landsafe determined the home was not situated in a flood zone, the lender did not require plaintiff to obtain flood insurance.  After Hurricane Katrina damaged her home, plaintiff learned she was indeed situated in a flood zone.  Plaintiff sued Landsafe, alleging negligence and negligent misrepresentation.  The district court granted summary judgment to Landsafe.  The Fifth Circuit, acknowledging that some aspects of its decision had not yet been addressed by Mississippi law, reversed.  The court explained,

. . . issues arising in Mississippi from flood-zone determinations are similar to those in the termite inspection and auditor report precedents.  Admittedly, reliance is a different issue when flood insurance is required and is not an option.  We do not consider what reliance would mean in circumstances such as this.  It is enough to hold that the erroneous flood-zone determination was the kind of professional opinion, developed in the course of a party's business and supplied for the guidance of others in a transaction, on which justifiable and detrimental reliance by a reasonably foreseeable person might be shown to have occurred.

Id. *7.  Landsafe, therefore, failed to demonstrate its entitlement to judgment under Mississippi law.  The case was remanded for further proceedings.

    Just three days later, a federal district court in Mississippi reached virtually the same decision in Kelly v. Washington Mutual, 2008 U.S. Dist. LEXIS 98653 (S.D. Miss. Dec. 5, 2008).  Based on Washington Mutual's (WaMu) determination her home was not within a flood zone, the homeowner canceled her flood policy.  Thereafter, Hurricane Katrina severely damage plaintiff's property.  Plaintiff then discovered her property was actually located within the special flood hazard area.  Plaintiff sued WaMu for negligence, misrepresentation and breach of contract.  WaMu moved to dismiss on the grounds that plaintiff had no private right of action against it and that no duty was owed to plaintiff regarding the flood zone determination. 

    The district court first noted the National Flood Insurance Act did not create a private cause of action for alleged inaccurate flood determination.  Turning to the state common law claims, the court noted the recent decision in Paul.  In the end, given the absence of NFIA claims, the court declined to exercise supplemental jurisdiction over plaintiff's remaining state law claims.  Therefore, these claims were remanded to the state court.