Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-09-06070/USCOURTS-ca10-09-06070-0/pdf.json

Parties Involved:
American Eagle Enter
Not Party
Kenneth Anai
Not Party
Gary Bower
Not Party
Cedar Ridge Estates
Appellee
Randy Durfrain
Not Party
Mark Gellenbeck
Not Party
Matthew Gellenbeck
Appellee
Lyle Wade George
Not Party
Tyler Gilliam
Not Party
Larry Hamilton
Not Party
Hardesty Properties LLC
Not Party
Shawn Ingle
Not Party
JT Management
Not Party
Jackie Knox
Not Party
Clayton Long
Not Party
James Lynch
Not Party
Charles Lynn
Appellee
Vesta McNulty
Not Party
Thomas Morgan
Not Party
Joseph Parmer
Not Party
Gene Porter
Not Party
Porter Trust
Appellee
Norma Rieker
Not Party
Rural Water Sewer and Solid Waste Management District No. 1, Logan County, Oklahoma
Appellant
Leola Scribner
Not Party
Kenneth Todd
Not Party
James Westbrook
Not Party

Document Text:

FILED

United States Court of Appeals

Tenth Circuit

June 9, 2010

Elisabeth A. Shumaker

Clerk of Court

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

PORTER TRUST; MATTHEW

GELLENBECK; CEDAR RIDGE

ESTATES; CHARLES LYNN,

Plaintiffs-Appellees,

GARY BOWER; LEOLA

SCRIBNER; SHAWN INGLE;

JT MANAGEMENT; KENNETH

TODD; CLAYTON LONG; JOSEPH

PARMER; VESTA MCNULTY;

TYLER GILLIAM; HARDESTY

PROPERTIES LLC; LARRY

HAMILTON; NORMA RIEKER;

KENNETH ANAI; JAMES LYNCH;

THOMAS MORGAN; LYLE WADE

GEORGE; JAMES WESTBROOK;

JACKIE KNOX; RANDY

DURFRAIN; MARK GELLENBECK;

AMERICAN EAGLE ENTER; GENE

PORTER,

Plaintiffs,

v.

RURAL WATER SEWER AND

SOLID WASTE MANAGEMENT

DISTRICT NO. 1, LOGAN COUNTY,

OKLAHOMA,

Defendant-Appellant.

No. 09-6070

Appellate Case: 09-6070 Document: 01018437331 Date Filed: 06/09/2010 Page: 1
* After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

1 Plaintiffs were styled “petitioners” or “petitioners/plaintiffs” in the district

court. 

-2-

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

(D.C. No. 5:08-CV-00925-R)

Submitted on the briefs:*

Steven M. Harris, Michael D. Davis, Doyle Harris Davis & Haughey, Tulsa,

Oklahoma, for Defendant-Appellant.

Jeff L. Todd, Lauren E. Barghols, McAfee & Taft, A Professional Corporation,

Oklahoma City, Oklahoma, for Plaintiffs-Appellees.

Before McKAY, Circuit Judge, BRORBY, Senior Circuit Judge, and EBEL,

Circuit Judge.

EBEL, Circuit Judge.

The plaintiffs are landowners whose property lies within the boundaries of

the water and sewer district served by the defendant, Rural Water Sewer and

Solid Waste Management District No. 1, Logan County, Oklahoma (“Logan 1”).1

Unhappy with the estimated cost of initiating and receiving services from

Logan 1, plaintiffs filed a petition with the Logan County Board of County

Appellate Case: 09-6070 Document: 01018437331 Date Filed: 06/09/2010 Page: 2
2 The petition pleaded the inapplicability of 7 U.S.C. § 1926(b), which

prohibits the curtailment or limitation of service by an association indebted to the

Secretary of Agriculture. It is Logan 1’s position that § 1926(b) prohibits

de-annexation in this instance. 

-3-

Commissioners (“Board”) seeking to de-annex their land from Logan 1. See

Okla. Stat. Ann. tit. 82, § 1324.21 (describing de-annexation petition procedure

under state law). The Board scheduled a hearing on the petition. Before the

hearing could be held, however, Logan 1 filed a notice to remove the proceeding

before the Board to the United States District Court for the Western District of

Oklahoma. 

Logan 1 argued that removal was appropriate because the district court had

federal question jurisdiction. See 28 U.S.C. § 1441(a) (“[A]ny civil action

brought in a State court of which the district courts of the United States have

original jurisdiction, may be removed by the defendant or the defendants, to the

district court of the United States for the district and division embracing the place

where such action is pending.”). Logan 1’s jurisdictional argument was

predicated on the fact that plaintiffs’ case depended on a federal statute being

inapplicable to the proposed de-annexation.2

 

Plaintiffs moved to remand the case to the Board, arguing that the district

court lacked subject-matter jurisdiction over the case. The district court, noting

that the express language of § 1441 permits removal only of civil actions

“brought in a State court,” and opining that the Board was not a “State court”

Appellate Case: 09-6070 Document: 01018437331 Date Filed: 06/09/2010 Page: 3
-4-

under Oklahoma law, determined that it lacked subject-matter jurisdiction to

entertain the removed action. Accordingly, it remanded to the Board.

Plaintiffs then moved for attorney’s fees under 28 U.S.C. § 1447(c), which

provides that “[a]n order remanding the case may require payment of just costs

and any actual expenses, including attorney fees, incurred as a result of the

removal.” The district court found that the removal of the case had been

objectively unreasonable. It therefore awarded plaintiffs $8,634.17 in attorney’s

fees. Logan 1 appeals from this attorney fee award.

Although we generally lack jurisdiction over remand orders, we do have

subject-matter jurisdiction to review the district court’s order under § 1447(c)

awarding attorney’s fees to plaintiffs. Topeka Hous. Auth. v. Johnson, 404 F.3d

1245, 1248 (10th Cir. 2005). “A court’s decision to grant a fee award is reviewed

for abuse of discretion, while the underlying legal analysis is reviewed de novo.” 

Id. (quotation omitted). “[T]he standard for awarding fees should turn on the

reasonableness of the removal.” Martin v. Franklin Capital Corp., 546 U.S. 132,

141 (2005). “Absent unusual circumstances, courts may award attorney’s fees

under § 1447(c) only where the removing party lacked an objectively reasonable

basis for seeking removal. Conversely, when an objectively reasonable basis

exists, fees should be denied.” Id.

As the district court noted, the plain language of § 1441(a) allows removal

only of proceedings originating in a “state court.” The district court’s

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determination that the Board is not a “state court” is a question of statutory

construction that we review de novo. See Ore. Bureau of Labor v. U.S. West

Commc’ns, 288 F.3d 414, 417 (9th Cir. 2002). Contending for a broad reading of

the phrase “state court,” Logan 1 raises a number of arguments in favor of the

objective reasonableness of its attempted removal. But we do not find these

arguments persuasive. 

First, Logan 1 relies on an unpublished decision denying remand to the

Payne County Board of County Commissioners issued by the same district court

that ordered the remand in this case. See Payne County Bank v. Payne County

Rural Water Dist. No. 3, No. Civ-03-838-R (W.D. Okla. Aug. 6, 2003), Aplt.

App., Vol. 2, at 248-52. The jurisdictional issue in Payne County Bank, however,

involved whether a sufficient federal question existed to permit removal, not

whether removal could be accomplished from a board of county commissioners,

an issue on which the district court’s decision said nothing. Moreover, the

decision denying remand in Payne County Bank was unpublished and therefore

non-precedential.

Logan 1 next complains that in its remand order, the district court relied on

State ex rel. Tharel v. Board of County Commissioners, 107 P.2d 542, 549

(Okla. 1940), a case in which the Oklahoma Supreme Court stated that a board of

county commissioners “is not a court.” Logan 1 contends the district court erred

by focusing on Oklahoma law. Citing Shamrock Oil & Gas Corp. v. Sheets,

Appellate Case: 09-6070 Document: 01018437331 Date Filed: 06/09/2010 Page: 5
-6-

313 U.S. 100, 104 (1941), it contends that whether an action is a “civil action”

within a “state court” for § 1441 purposes turns on federal law, not state law. 

As Logan 1 appears to recognize, however--judging from its own citations to state

statutes and case law in support of this argument--a state’s characterization of its

own entity cannot simply be disregarded. The Oklahoma Supreme Court’s

reasons for characterizing a board of county commissioners as an executive body

rather than a court are entitled to consideration as persuasive authority. See

Comm’rs of Road Improvement Dist. No. 2 v. St. Louis SW Ry. Co., 257 U.S. 547,

558 (1922).

But even if federal law ultimately supplies the test for determining what

is a “state court,” Logan 1 must still show that it had an objectively reasonable

basis under federal law for seeking removal. In an effort to make this

showing, Logan 1 cites a decision of this court noting that when determining

de-annexation, an Oklahoma board of county commissioners acts in a judicial or

quasi-judicial capacity. Pittsburg County Rural Water Dist. No. 7 v. City of

McAlester, 358 F.3d 694, 702, 708 (10th Cir. 2004). This factual assertion, of

course, does not resolve the entire inquiry. Logan 1 must also show that as a

legal matter, an administrative entity like the Board that exercises judicial

functions should be treated as a “state court” for purposes of § 1441(a).

Appellate Case: 09-6070 Document: 01018437331 Date Filed: 06/09/2010 Page: 6
-7-

To make this showing, Logan 1 contends that under federal law, it is the

function exercised by an entity rather than its formal structure that determines

whether that entity is a “state court.” But as will be seen, Logan 1’s “functional

test” is incompatible with the plain language of the removal statute.

In support of the functional test, Logan 1 cites a number of older cases,

most of which involve removal from state administrative agencies, contending

that their reasoning that focuses on function rather than form also applies to the

Board. Kolibash v. Committee on Legal Ethics, 872 F.2d 571, 576 (4th Cir. 1989)

(applying 28 U.S.C. § 1442(a)); Floeter v. C.W. Transp., Inc., 597 F.2d 1100,

1101-02 (7th Cir. 1979); Baughman v. Bradford Coal Co., 592 F.2d 215, 217-19

(3d Cir. 1979); Volkswagen de Puerto Rico, Inc. v. Puerto Rico Labor Relations

Bd., 454 F.2d 38, 43-44 (1st Cir. 1972); Corwin Jeep Sales & Service, Inc. v.

Am. Motors Sales Corp., 670 F. Supp. 591, 594 (M.D. Pa. 1986); Tool & Die

Makers Lodge No. 78 Int’l Ass’n of Machinists v. Gen. Elec. Co. X-Ray Dep’t,

170 F. Supp. 945, 949-50 (E.D. Wis. 1959). None of these cases involves a board

of county commissioners adjudicating a de-annexation proceeding. Moreover, in

light of the plain language of § 1441, which permits removal only from a “state

court,” we do not find their legal reasoning persuasive.

More recent authority has rejected or severely limited the “functional” test

in favor of a standard application of the canons of statutory construction. This

better analysis begins (and ends) with § 1441’s plain language, which permits

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-8-

removal only from a “state court,” “which necessarily implies that the entity must

be a court . . . [not] an administrative agency . . . that . . . conducts court-like

adjudications.” Ore. Bureau of Labor, 288 F.3d at 418. Even courts that once

applied the functional test now appear to have repented to some degree. See Sun

Buick, Inc. v. SAAB Cars USA, Inc., 26 F.3d 1259, 1261-67 (3d Cir. 1994)

(casting serious doubt on “functional” test; distinguishing Baughman in § 1441(a)

removal context); Borough of Olyphant v. Pa. Power & Light Co.,

269 F. Supp. 2d 601, 602-03 (M.D. Pa. 2003). Cf. Wirtz Corp. v. United

Distillers & Vintners N. Am., Inc., 224 F.3d 708, 713 (7th Cir. 2000) (limiting

holding in Floeter to particular facts of that case). 

Having determined that the appropriate test involves application of the

plain language of § 1441(a) rather than a functional test, we now apply that plain

language to the facts of this case. Although the Board exercises a judicial

function in de-annexation proceedings, it is an administrative rather than a

judicial entity. Under the plain language test, it does not fit the definition of a

“state court” for purposes of § 1441(a).

We conclude that neither the unpublished case cited by Logan 1, nor the

“federal” nature of the characterization of what is a “state court,” nor application

of the “functional” test, provides Logan 1 with the required showing of an

objectively reasonable basis for seeking removal sufficient to require reversal. 

Logan 1 has failed to demonstrate an abuse of discretion by the district court in

Appellate Case: 09-6070 Document: 01018437331 Date Filed: 06/09/2010 Page: 8
-9-

awarding attorney’s fees to plaintiffs based on an objectively unreasonable

removal.

The judgment of the district court is therefore AFFIRMED.

Appellate Case: 09-6070 Document: 01018437331 Date Filed: 06/09/2010 Page: 9