Rivet v. Regions Bnk of LA ( 1999 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 98-31340
MARY ANNA RIVET; MINNA REE WINER;
EDMOND G. MIRANNE; and EDMOND G. MIRANNE, JR.,
Plaintiffs-Appellees,
VERSUS
REGIONS BANK OF LOUISIANA, F.S.B.; ET AL.,
Defendants,
REGIONS BANK OF LOUISIANA, F.S.B.; WALTER L. BROWN, JR.;
PERRY S. BROWN; and FSA, L.L.C.,
Defendants-Appellants.
Appeal from the United States District Court
for the Eastern District of Louisiana
(95-CV-426-K)
November 4, 1999
Before POLITZ, DeMOSS, BENAVIDES, Circuit Judges.
DeMOSS, Circuit Judge:*
Defendants Regions Bank of Louisiana, Walter L. Brown, Jr.,
Perry S. Brown, and Fountainbleau Storage Associates (collectively,
the Regions Bank group or the defendants) appeal from final
judgment awarding plaintiffs Mary Anna Rivet, Minna Ree Winer,
Edmond G. Miranne, and Edmond G. Miranne, Jr. (collectively, the
Mirannes) costs and expenses, including attorney’s fees, in the
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
amount of $105,448.30 after a determination of improper removal
pursuant to 28 U.S.C. § 1447(c). We affirm.
I.
The Mirannes, as holders of a second collateral mortgage note
attached to a leasehold interest on certain Louisiana property,
sued the defendants comprising the Regions Bank group in Louisiana
state court. The Mirannes claimed that the defendants engaged in
certain property transactions that prejudiced the Mirannes’ rights
under the second collateral mortgage note. The defendants
answered, claiming that the Mirannes’ interest in the property was
extinguished by a prior federal judgment ordering the sale of the
subject property free and clear of the Mirannes’ second mortgage.
The defendants removed the case to federal court, alleging
federal question jurisdiction based upon the preclusive effect of
the prior federal judgment. The Mirannes moved to remand, arguing
that the prior federal judgment, which constituted an affirmative
defense, was insufficient to support the exercise of federal
question jurisdiction over their state law claims.
The district court erroneously denied the motion to remand on
the basis of dicta in Carpenter v. Wichita Falls Indep. Sch. Dist.,
44 F.3d 362 (5th Cir. 1995), which was not decided until two weeks
after the defendants’ removal of this case. Carpenter included
dicta to the effect that the preclusive effect of a prior federal
judgment might support federal question jurisdiction, but only when
the claims at issue are sufficiently “federal in character.” See
2
Carpenter, 44 F.3d at 368-69. Having denied the Mirannes’ motion
to remand, the district court then relied upon the preclusive
effect of the prior federal judgment, which extinguished the
Mirannes’ state law claims, to grant summary judgment in favor of
the Regions Bank group. See Rivet v. Regions Bank, No. 95-0426,
1995 WL 237019, at *2-4 (E.D. La. 1995), aff’d, 108 F.3d 576 (5th
Cir. 1997), rev’d, 118 S. Ct. 31 (1997).
This Court affirmed, likewise relying upon Carpenter. See
Rivet v. Regions Bank, 108 F.3d 576 (5th Cir.), rev’d, 118 S. Ct.
31 (1997). Judge Jones entered a vigorous dissent, arguing that
the Carpenter dicta was wrong because it was fatally inconsistent
with the well-pleaded complaint limit upon removal jurisdiction,
and further, that even if the Carpenter dicta was not wrong, it
would not in any event extend to support the exercise of federal
jurisdiction in this case, where the Mirannes’ claims were premised
upon state, rather than federal, law. Id. at 593-96.
The Supreme Court granted certiorari and reversed, holding
that “claim preclusion by reason of a prior federal judgment is a
defensive plea that provides no basis for jurisdiction.” Rivet v.
Regions Bank, 118 S. Ct. 921, 926 (1998). Applying that principle
to this case, the Supreme Court concluded that the potentially
preclusive effect of the prior federal court judgment extinguishing
the Mirannes’ state law claims did not provide an adequate basis
for the exercise of removal jurisdiction. Id. Removal was
therefore held to be improper, and the matter was remanded to this
Court for further proceedings. Id. at 925-26.
3
On remand, the Mirannes moved this Court to bypass the federal
district court by first making an appellate determination that the
Mirannes were entitled under 28 U.S.C. § 1447(c) to recover the
costs and expenses, including attorney’s fees, incident to the
defendants’ improper removal, and then remanding directly to the
appropriate state court. That motion was denied, and the cause was
remanded to the district court for further proceedings consistent
with the Supreme Court’s opinion. See Rivet v. Regions Bank, 139
F.3d 512 (5th Cir. 1998).
On remand, the district court entered an order remanding the
improperly removed case for lack of subject matter jurisdiction,
but sua sponte enjoining “any further proceedings in the state
court regarding the captioned cause, save its outright dismissal.”
The Mirannes responded by filing a writ of mandamus, arguing
that the district court lacked jurisdiction to issue the
injunction. This Court agreed, and issued an order granting the
writ of mandamus and vacating the injunction on further proceedings
in the state court. The Court’s brief mandamus order pointed out
that the district court did not have jurisdiction over the case,
and ordered the district court to remand the case to the
appropriate state court without attempting to rule on the merits in
the process. The balance of the order clarified the district
court’s remaining jurisdiction on remand, by providing that the
district court should “determine and require payment of the costs
and any actual expense, including attorney’s fees,” incurred as a
consequence of removal, but that the district court should not
4
otherwise “comment upon, rule on, or issue any directives or orders
as to” any other issue or controversy in the case. Regions Bank
group moved for a rehearing of the Court’s mandamus order, which
was denied.
On remand for the second time, the district court entered an
order remanding the case, but ordering the parties to either
resolve, or to submit evidence relating to, the remaining issue to
be decided by the district court; that is, the Mirannes’
entitlement to costs and expenses, including fees, under § 1447(c).
The Mirannes thereafter filed a petition for costs and fees.
The Regions Bank group opposed the motion, arguing that the
district court should exercise its discretion to refuse the
Mirannes’ petition for fees. The Regions Bank group also filed
specific objections to certain sums requested by the Mirannes. In
a carefully detailed twenty-three page order, the district court
considered each of the defendants’ objections, making certain
reductions in time, eliminating some requests, and ultimately
entering an order that reduced the Mirannes’ request for fees by
more than $60,000. The Regions Bank group appealed.
On appeal, the defendants contend that the district court’s
award of fees is improper for two reasons. First, the defendants
maintain that the district court’s decision is improper because
this is not an appropriate case for the award of fees. Second, the
defendants maintain that the district court’s award of fees is
improper because it was based upon this Court’s mandamus order,
rather than an independent exercise of the district court’s
5
discretion. We disagree on both counts.
II.
The district court’s award of fees and costs in this case was
made pursuant to 28 U.S.C. § 1447(c). Congress made substantial
changes to § 1447 in 1988. Prior to that time, the relevant
portion of § 1447(c) provided:
If at any time before final judgment it appears
that the case was removed improvidently and without
jurisdiction, the district court shall remand the
case, and may order the payment of just costs.
Thus, prior to 1988, § 1447(c) provided only for an award of “just
costs,” and even then only when the suit was “removed improvidently
and without jurisdiction.” See Hensgens v. Deere & Co., 833 F.2d
1179, 1181 (5th Cir. 1987). Under this older version of the
statute, bad faith was sometimes relied upon to support a finding
of improvident removal, and thus, an award of “just costs” under
the statute. See News-Texan v. City of Garland, 814 F.2d 216, 220
(5th Cir. 1987). Likewise, prior to 1988, the plaintiff was
required to demonstrate either bad faith, or some other exception
to the American Rule relating to attorney’s fees, before attorney’s
fees could be awarded on the basis of improper removal. See Davis
v. Veslan Enters., 765 F.2d 494, 498 n.6 (5th Cir. 1985); see also
Miranti v. Lee, 3 F.3d 925, 927 n.2 (5th Cir. 1993) (“fees were not
allowed under the former statute unless counsel proceeded in bad
faith or some other exception to the American rule applied”).
In contrast, the relevant portion of the current and here
applicable version of § 1447(c) provides:
6
If at any time before final judgment it appears
that the district court lacks subject matter
jurisdiction, the case shall be remanded. An order
remanding the case may require payment of just
costs and any actual expenses, including attorney
fees, incurred as a result of the removal.
Rather than being limited to an award of “just costs,” the current
version of § 1447(c) permits recovery of both “just costs” and
“actual expenses,” which is now expressly defined to include
“attorney fees.” Id. Moreover, the current version of § 1447(c)
no longer requires that removal be improvident or in bad faith.
Indeed, aside from requiring that removal be improper in the sense
that the district court lacked subject matter jurisdiction, the
statute does not expressly limit the availability of “just costs”
or “actual expenses, including attorney fees,” in any manner. See
Miranti, 3 F.3d at 928 (noting that an award of just costs or
actual expenses under the amended version of § 1447(c) depends
primarily upon whether removal was proper or improper).
Our cases analyzing the propriety of an award of costs or
attorney’s fees under the current version of § 1447(c), likewise,
confirm that nothing more is absolutely required to support an
award of attorney’s fees under § 1447(c) than a showing that
removal was in fact improper because subject matter was lacking at
the time that the case was removed. See Avitts v. Amoco Prod. Co.,
111 F.3d 30, 32 (5th Cir.), cert. denied, 118 S. Ct. 435 (1997);
Miranti, 3 F.3d at 928-29. Once the determination of improper
removal is made, the only issue remaining for determination by the
relevant court is the quantum of costs and fees, if any, that are
justified by the record in the case. See Avitts, 111 F.3d at 32
7
(“Once a court determines that the removal was improper, thus
satisfying the Miranti threshold requirement, § 1447(c) gives a
court discretion to determine what amount of costs and fees, if
any, to award the plaintiff.”). This make sense because Congress,
by expressly recognizing attorney’s fees as a recoverable expense,
by eliminating any reference to improvident removal, and by failing
to impose textual restrictions upon the availability of costs and
expenses, clearly intended to create a statutory scheme in which,
at least as a general rule, the burden of an improper removal falls
upon the removing defendant.2
The Supreme Court’s opinion in this matter dispositively
settles the fact that removal was improper because the district
court lacked subject matter jurisdiction. See Rivet, 118 S. Ct. at
925-26. Thus, the conditions for application of § 1447(c) are
satisfied, and there is no indication that the fee award was in
error.
The defendants attempt to avoid this conclusion, by contending
that the district court must, in the first instance, apply some
2
The only qualification that has developed with regard to
the general rule that a defendant’s improper removal supports an
award of fees is that we have declined to permit an award of fees
relating to improper removal when the plaintiff seeking those fees
“bears a substantial share of the responsibility for the case
remaining in federal court.” Maguire Oil Co. v. City of Houston,
143 F.3d 205, 209 (5th Cir. 1998); Avitts, 111 F.3d at 32; see also
Bankston v. Burch, 27 F.3d 164, 169 (5th Cir. 1994). That
qualification has no application in this case because there is no
indication, either in the arguments of the parties or the record
itself, that the Mirannes, who promptly moved for remand and have
vociferously fought continuing federal jurisdiction over their
state law claims, have contributed in any manner to the extended
delay in getting this case back to state court.
8
multi-factoral analysis to determine whether fees are appropriate
at all. Specifically, in the defendants’ rendition of a proposed
test, the district court should consider whether the law governing
the removal was complex or relatively straightforward, whether the
law governing removal was unsettled or fairly well-established, and
finally, whether there is record evidence tending to establish that
the defendants removed the case in good faith or, at least, in the
absence of bad faith. According to the defendants, a § 1447(c)
award of costs and expenses, including fees, is “disfavored when
the law governing removal in a particular case is complex, when the
law governing the jurisdictional issue is unsettled, or when the
removing defendants have acted in good faith.”
There are several problems with remanding for failure to apply
the defendants’ proposed test. First, there is no support for such
an analysis in the plain text of the statute. Indeed, to embrace
such a test would arguably render the 1988 amendments to § 1447(c)
nugatory by reinjecting the concept that costs and expenses cannot
be awarded when the defendant has removed the case on the basis of
an erroneous but good faith belief that removal is proper.
Second, there is no support for such a test in the applicable
precedent. To the contrary, the defendants have pieced the
proposed test together from snippets appearing in a variety of
district court cases from around the country. We do not think it
wise to remand this ancient case for failure to apply some newly-
minted and unprecedented multi-factoral test which is not obviously
drawn from the plain language of the statute or our own precedent.
9
To do so both creates new law and comes perilously close to
replacing the relatively broad discretion permitted by the plain
language of § 1447(c) with a mechanistic and potentially under-
inclusive, multi-factoral analysis. See Mints v. Educational
Testing Serv., 99 F.3d 1253, 1260 (3d Cir. 1996) (eschewing any
mechanistic analysis of when costs and attorney’s fees are
appropriate under § 1447(c)); see also Morris v. Bridgestone/
Firestone, Inc., 985 F.2d 238, 240 (6th Cir. 1993); Morgan Guar.
Trust Co. v. Republic of Palau, 971 F.2d 917, 924 (2d Cir. 1992)
(both stating that the wide discretion afforded in revised
§ 1447(c) requires affirmance when the award is “fair and
equitable” under the circumstances).
Finally, there is no indication that the defendants would be
entitled to relief even if the multi-factoral test they propose
were applied. The defendants argue that an award of costs and
expenses under § 1447(c) was inappropriate in this case because the
law governing the removal of this case was unsettled at the time it
was removed. We disagree. The defendants seek to capitalize upon
ambiguity arising from an “enigmatic” footnote in Federated Dep’t
Stores, Inc. v. Moitie, 101 S. Ct. 2424 (1981).3 See Carpenter, 44
3
Moitie addressed the Ninth Circuit’s failure to apply the
res judicata doctrine in the context of federal antitrust claims
that were first dismissed in federal court, then refiled in state
court and removed to another federal court. Thus, Moitie was a res
judicata case, rather than a case directly involving removal
jurisdiction. See Carpenter, 44 F.3d at 369. Nonetheless,
footnote two of that opinion suggested that some of the claims
pleaded as state law claims might be sufficiently “federal in
nature” to support removal jurisdiction. Moitie, 101 S. Ct. at2427 n.2.
10
F.3d at 369. To be sure, Moitie was the source of some confusion
concerning whether the potentially preclusive effect of a prior
federal judgment on a matter of federal law might permit removal of
artfully pleaded state law claims that were, in essence, the same
as the previously adjudicated federal claims. See Carpenter, 44
F.3d at 368-71; Doe v. Allied-Signal, Inc., 985 F.2d 908, 911-13
(7th Cir. 1993); Ultramar American Ltd. v. Dwelle, 900 F.2d 1412,
1415-17 (9th Cir. 1990); Sullivan v. First Affiliated Sec., Inc.,
813 F.2d 1368, 1370-76 (9th Cir. 1987). But none of these cases
cited by the defendants tortured the Moitie footnote to the extent
that removal jurisdiction might be premised upon the potentially
preclusive effect of a prior federal judgment disposing, as in this
case, of claims premised upon rights arising under state law. To
the contrary, the cited cases expressly decline to go that far.
Carpenter, 44 F.3d at 368-70; Allied-Signal, 985 F.2d at 911-13;
Ultramar, 900 F.2d at 1415-17; see also Rivet, 108 F.3d at 593-96(Jones, J., dissenting). Thus, we agree with the Mirannes that the
defendants may not rely upon the unsettled meaning of the Moitie
footnote to defeat the Mirannes’ fee petition in this case. Stated
simply, the defendants have not cited any authority, either in this
Circuit or any other, supporting their removal of a state law claim
on the basis that Moite, prior to the Supreme Court’s disposition
in Rivet, permitted removal of an artfully pleaded state law claim
on the basis that it was precluded by a prior federal judgment on
an issue of state law. The defendants also maintain that this
case should be remanded for a factual determination of their
11
relative good or bad faith. As with the defendants’ argument that
§ 1447(c) requires a separate layer of analysis as to the
appropriateness of fees, and their argument that some confusing
Supreme Court precedent created confusion in their case, the
defendants’ argument that factual determinations are better made in
the district court once again has us tilting at windmills. Stated
simply, there is no genuine issue relating to the defendants’ bad
faith, or lack of good faith, that requires remand. Leaving
litigation rhetoric to one side, the Mirannes have not offered any
significant evidence that would support a finding that the Regions
Bank group proceeded in bad faith when removing the case.
Likewise, the Regions Bank group has not responded with any factual
evidence that would unambiguously establish that they were acting
in good faith. In such a case, there simply are no factual issues
that the district court would be better suited to resolve.
To be clear, we do not say that the factors identified by the
defendants may not appropriately inform a federal court’s
discretion when passing on the issue of a fee award under
§ 1447(c). But we will not hold, in the absence of any binding
authority, and on the face of a record which does not suggest that
the award of fees was infected by any unfairness or other legal
error, that such an analysis is a necessary prerequisite that must
appear for formality’s sake in every court decision awarding fees
for improper removal. We conclude that there can be no reversible
error based upon the district court’s failure to apply the
defendants’ proposed three-factor test in this case. Section
12
1447(c) requires no more in the ordinary case than that removal be
improper. The Supreme Court’s decision conclusively settles that
removal was improper. Moreover, even if we were to accept the
defendants’ novel argument in favor of an extra-textual and
unprecedented threshold test for determining whether fees are
appropriate, the defendants have not demonstrated any error that
may be predicated thereon.
For the foregoing reasons, the defendants’ argument that this
is an inherently inappropriate case in which to award costs and
expenses under § 1447(c) is without merit.
III.
The defendants’ second argument is in fact related to their
first. The defendants maintain that the district court’s order
granting the Mirannes’ request for costs and expenses should be
reversed, and the matter remanded for redetermination by the
district court, because the district court erroneously believed
that this Court’s mandamus order directed the district court to
award costs and expenses, leaving only the quantum to be awarded in
the district court’s discretion. Thus, the defendants reason, the
district court did not exercise its discretion with respect to the
mandatory and independent determination of whether fees were
appropriate under the three-factor test, in the first instance,
before proceeding to the independent analysis of the quantum of
costs and fees, if any, that were justified by the Mirannes’
petition for fees, in the second instance. The defendants rely
13
upon language in this Court’s mandamus order, as well as the
district court’s order awarding costs and expenses, for their
position.
We are not persuaded by the parties’ reading of this Court’s
mandamus order. The Court’s mandamus order was intended to address
only the issues presented to the Court in that proceeding; that is,
whether the district court possessed the power to remand for lack
of subject matter jurisdiction, while simultaneously trying to rule
from beyond the borders of Article III on the merits. The Court’s
holding was that the district court’s lack of subject matter
jurisdiction placed any attempt to rule upon the merits of the case
beyond the district court’s power. The Court added a brief
statement clarifying that the district court’s remaining
jurisdiction on remand would be limited to consideration of the
costs and expenses that might be awarded under § 1447(c).
We note that there was no live pleading requesting costs and
expenses under § 1447(c) before this Court on the writ of mandamus.
Indeed, the mandamus order was entered less than two months after
the Court expressly declined to bypass the district court by making
an appellate determination concerning the Mirannes’ entitlement to
costs and expenses. See Rivet, 139 F.3d at 513. (denying the
Mirannes’ motion to make an award of costs and expenses under
§ 1447(c) on appeal). There is nothing in the mandamus order,
which addressed only the issues raised in that separate appeal,
that demonstrates a retreat from that position. Although
defendants point to the Court’s use of the directive that the
14
district court “shall determine” fees, that directive was broad
enough, when viewed in the appropriate procedural and textual
context, to permit the district court’s determination on remand, if
appropriate, that no such fees should be allowed.
The defendants also point to language in the district court’s
order awarding costs and expenses, which indicates the district
court’s view that this Court had already exercised the statutory
discretion granted in § 1447(c) by requiring that the district
court award any costs and expenses justified by the Mirannes’ fee
petition. Assuming, for the sake of argument, that there is any
reasonable support for the proposition that the district court’s
lengthy and detailed order does not reflect that court’s
independent discretion about the appropriateness of fees in this
case, the fact that the district court felt so constrained does not
independently give rise to reversible error in this case.
First of all, it bears repeating that there is no textual or
precedential support for the proposition that every § 1447(c) fee
award must necessarily reflect some separate, independent decision
regarding whether fees are appropriate at all. Such a decision may
be implicit in the particulars of or the mere fact of the awarding
court’s decision itself. We are, therefore, loathe to find
reversible error on the basis that the district court erroneously
believed it was constrained from making a dispensable, threshold
analysis, particularly where, as here, the defendants’ arguments
fail to call the fundamental fairness or propriety of the district
court’s decision into question.
15
Second, the current version of § 1447(c) simply provides that
a remand order may include an award of costs and fees. The statute
does not provide, as did the pre-1988 version, that a “district
court” may order such an award. While we have expressed a
preference for permitting the district court to rule upon the
propriety of fees and costs in the first instance, this is a
prudential rule typically resting upon the inherently factual
nature of the determination as to the quantum of fees to be
awarded. There is nothing in § 1447(c) that precludes a
determination that fees are appropriate by an appellate court,
particularly where, as here, the propriety of the award itself does
not depend upon any genuine issues of disputed fact that are more
appropriately resolved, at least as an initial matter, in the
district court. See Bankston, 27 F.3d at 169 (declining
plaintiffs’ request for fees pursuant to § 1447(c) without
requiring consideration of that request as an initial matter by the
district court).
For the foregoing reasons, we conclude that, without regard to
what this Court intended when it entered the mandamus order and
without regard to what the district court felt or intended when it
entered the order granting (in part) the Mirannes’ fee petition,
there is no reversible error presented in the record of this case.
CONCLUSION
The district court’s order awarding costs and expenses,
including attorney’s fees, pursuant to 28 U.S.C. § 1447(c) is
16
AFFIRMED.
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