Siebert v. Norwest Bank Minnesota

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
2-7-2006
Siebert v. Norwest Bank MN
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-4422
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-4422
ERIC J. SIEBERT; RUTH A. SIEBERT,
Appellants
v.
NORWEST BANK MINNESOTA, AS TRUSTEE FOR THE AMRESCO
RESIDENTIAL SECURITIES MORTGAGE LOAN TRUST 1998-2;
FIDELITY NATIONAL FORCLOSURE SOLUTIONS; WENDOVER
FINANCIAL SERVICES; RALPH CASALE;
CASALE & PELLEGRINO, L.L.C.
On Appeal from the United States District Court for the District of New Jersey
(D.C. Civil No. 02-cv-4356)
District Court Judge: Honorable Jose L. Linares
Submitted pursuant to Third Circuit L.A.R. 34.1(a)
January 30, 2006
Before: McKEE, VAN ANTWERPEN, and SILER,* Circuit Judges.
(Filed: February 7, 2006)
OPINION OF THE COURT
VAN ANTWERPEN, Circuit Judge.
*
The Honorable Eugene E. Siler, Jr., Senior United States Circuit Judge, United States
Court of Appeals for the Sixth Circuit, sitting by designation.
Appellants Eric and Ruth Siebert, plaintiffs below, challenge the Order of the District
Court denying their request for attorney fees and costs under 28 U.S.C. § 1447(c) following
remand of their case to state court. The Sieberts successfully challenged on procedural
grounds the defendants’ petition to remove the case to federal court. Following remand, they
sought fees and costs. The District Court referred the matter to a Magistrate Judge, who
denied the request; on appeal, the District Court affirmed. Because the District Court was
within its discretion to deny the fee request, we will affirm.
I
On July 29, 2002, the Sieberts filed a Complaint in the Superior Court of New Jersey,
Bergen County, naming as defendants Norwest Bank Minnesota as Trustee of a Mortgage
Trust, Fidelity National Foreclosure Solutions, Wendover Financial Services, Ralph Casale,
Esq., Casale & Pellegrino, LLC, and a John Doe. The lawsuit involved alleged misconduct
by the defendants in foreclosure proceedings against the Sieberts. In the Complaint, the
Sieberts included two New Jersey statutory consumer protection claims, and a federal claim
under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692. On September 6, 2002,
Wendover Financial Services filed a notice of removal indicating (1) that the District Court
had federal question jurisdiction under 28 U.S.C. § 1331, and removal was available under
28 U.S.C. § 1441; (2) that only Ralph Casale and Casale & Pellegrino had been served; and
(3) that they had “both indicated their consent to this removal.” Wendover alleged oral
consent only. After the time for filing for removal had passed, the defendants filed untimely
written consents to removal.
The Sieberts moved for remand on November 20, 2002. A Magistrate Judge issued
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a report on July 16, 2003 recommending remand based on the failure to obtain written
consent to removal from Casale individually and the firm of Casale & Pellegrino. The
Sieberts had included a request for fees and costs in their motion, but the report and
recommendation was silent on it; accordingly, they filed a limited objection renewing their
request for expenses. On October 6, 2003, the District Court, Judge Jose L. Linares,
reviewed the report and recommendation de novo, adopted it, and ordered remand. However,
he referred the Sieberts’ request for fees and costs to the Magistrate Judge.
The Sieberts argued below that they were entitled to attorney fees and costs under 28
U.S.C. § 1447(c), which provides that the court “may” order “payment of just costs and any
actual expenses, including attorney fees, incurred as a result of the removal.” They claimed
that because Wendover’s removal was procedurally improper, the Court should exercise its
discretion to award fees and costs for obtaining a remand to the Sieberts. In an August 12,
2004 Order, the Magistrate Judge denied the request, noting (1) that there was a sound legal
basis for removal – namely, federal question jurisdiction; and (2) that the law in the District
of New Jersey, the Third Circuit, and elsewhere was unsettled as to whether defendants could
orally consent to removal. The Sieberts appealed to the District Court. Reasoning that the
fee award determination was non-dispositive, it reviewed the Magistrate Judge’s Order
under the “clearly erroneous or contrary to law” standard set forth in the Magistrate Act, 28
U.S.C. § 636(b)(1)(A). Because § 1447(c) leaves the award of costs and fees in the
discretion of the court, the District Court also noted that it would only reverse for abuse of
discretion. The Sieberts argued that because the District Court had initially treated their
motion to remand as dispositive, and because that motion had included a fee request, the
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District Court should review the fee issue de novo. The District Court properly observed,
however, that the dispositive aspect of the case was the remand motion itself; not the fee
request. It went on to agree with the Magistrate Judge, and affirmed the denial of fees and
costs. It also noted that it would have affirmed even if review were de novo. The Sieberts
timely appealed.
II
Our jurisdiction lies pursuant to 28 U.S.C. § 1291. The substance of a remand to state
court under 28 U.S.C. § 1447(c) following a removal attempt is unreviewable. 28 U.S.C. §
1447(d); Mints v. Educ. Testing Serv., 99 F.3d 1253, 1258 (3d Cir. 1996). In contrast, fee
awards under that section are collateral issues over which federal courts retain jurisdiction
after remand. Id. The Sieberts incorrectly contend that our standard of review over the
award determination is de novo. Their argument is addressed infra, section III; for present
purposes, it suffices to note that the proper standard is abuse of discretion. Id. at 1260. “A
district court abuses its discretion by basing its decision on a clearly erroneous finding of
fact, an erroneous legal conclusion, or an improper application of law to fact.” Roxbury
Condominium Ass’n, Inc. v. Anthony S. Cupo Agency, 316 F.3d 224, 226 (3d Cir. 2003)
(citations and quotations omitted).
III
The Sieberts argue that this Court should review the District Court’s decision
affirming the denial of fees and costs by the Magistrate de novo. We disagree. There is no
authority for this Court to review decisions on the award of fees under § 1447(c) for anything
other than abuse of discretion. This is so because award of fees under § 1447(c) is
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discretionary: the statutory language, which states that remand orders “may require” payment
of fees is plain in this respect. 28 U.S.C. § 1447(c). This Court has held as much. Mints,
99 F.3d at 1260 (holding that court of appeals reviews counsel fees following remand for
abuse of discretion); see Anjelino v. New York Times Co., 200 F.3d 73, 88 (3d Cir. 1999)
(reviewing district court’s affirmance of magistrate’s ruling on non-dispositive discovery
motions for abuse of discretion).
The Sieberts also argue that de novo review is called for because the Magistrate Judge
and the District Court adjudicated the fee issue on the basis of a strictly legal question –
namely, whether or not it is settled law that defendants must consent to removal in writing.
This confuses entitlement to fees under § 1447(c) in the first instance with the subsequent
– and discretionary – decision whether to award them. As discussed below, the clarity of
procedural law governing removal is a factor a court may consider when determining
whether to grant fees upon remand; not a question of law regarding entitlement to fees in the
first instance. See Mints, 99 F.3d at 1260 (district courts have broad discretion in fee awards
under § 1447(c)).
IV
Predicated on their belief that our review is de novo, the Sieberts argue that the
District Court erred in denying their request for fees. As discussed, our review is for abuse
of discretion, and the record reveals no such abuse. As we have noted, § 1447(c) grants
district courts broad discretion in determining whether to award fees following a remand.
Mints, 99 F.3d 1260. Bad faith on the part of the removing party is not a prerequisite to an
award of attorneys fees, but it is a consideration. Id. Similarly, where the substantive basis
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for the removal petition was “frivolous” or “insubstantial,” a district court may exercise its
discretion to award fees. See id. at 1261 (where basis for removal “was, if not frivolous, at
best insubstantial,” district court did not abuse its discretion by awarding fees). We have not
had occasion to examine in a precedential opinion the significance of fatal procedural flaws
like those here when determining post-remand fee awards,1 but the answer is nonetheless
plain.
The Sieberts argue that it was an abuse of discretion to deny their fee request in light
of defendants’ collective failure to provide timely written consents that gave rise to the
remand. To the contrary, however, it is not necessarily an abuse of discretion to deny a fee
request where a removal attempt failed for procedural reasons; rather the issue is within the
discretion of the district court, which must weigh the circumstances of the case before it.
Mints, 99 F.3d 1260. The Sieberts also argue that the law is settled in the District of New
Jersey that removal petitions on behalf of multiple defendants must include timely written
consent by all,2 and that defendants’ failure to comply necessitates an award of fees. Again,
that plaintiffs may be able to obtain fees and costs because defendants have procedurally
bungled removal does not mean that such fee awards are automatic. Rather, district courts
must exercise their discretion in view of the circumstances of the case. We find no reason
1
We did, however, hold in a recent unpublished opinion with similar facts that a
district court was within its discretion to deny fees where several defendants failed to
provide written consent to removal, even though the substantive basis for removal was
sound. Hammer v. Scott, 137 Fed. Appx. 472, 475 (3d Cir. 2005).
2
At least two District of New Jersey cases do hold that timely written consents are
required. E.g., Michaels v. New Jersey, 955 F. Supp. 315 (D.N.J. 1996). However, the
Third Circuit has not visited the issue, and it is the subject of some disagreement among
federal courts nationwide.
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to disturb the judgment of the District Court, where it determined that even if Wendover
should have obtained written consents to removal, the law on that procedural issue was
debatable.
Furthermore, because the Sieberts included a federal claim in their Complaint, the
removal petition was substantively sound, and neither frivolous nor insubstantial. They
allege neither clearly erroneous fact finding, nor misapplication of law to fact. Nor do they
assert an actual legal error. They do claim that the District Court erred in determining the
legal standard for awarding fees, but the argument is specious. The District Court’s
enunciation of the standard accords with the Third Circuit’s precedent in Mints, set forth
above. Accordingly, the District Court was within its discretion to deny the fee request.
V
The Sieberts also argue that the District Court should have reviewed the Magistrate
Judge’s denial of their fee request de novo, rather than determining whether it was “clearly
erroneous or contrary to law” and applying abuse of discretion review. This claim is
unavailing. Any error would be harmless because the District Court’s decision would have
been the same under either standard of review. In reviewing the denial for abuse of
discretion, the District Court stated that it “would not reach a different outcome were it to
treat this matter as dispositive under [the Magistrate Act], allowing de novo review of a
magistrate’s proposed findings and recommendations.” It went on to make a full review of
the issue, and affirmed. We therefore need not, and do not, reach the issue of the correct
standard of review: doing so would not change the result. See Forrest v. Beloit Corp., 424
F.3d 344, 349 (3d Cir. 2005) (error harmless where highly probable that it did not affect
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outcome of the case).
VI
For the foregoing reasons, we will affirm the Order of the District Court. We have
considered all other arguments advanced by the parties, and conclude that further discussion
is not warranted.
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