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. e du/thir dc ir c uit_2002/128Filed February 15, 2002

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 00-4205

U.S. EXPRESS LINES, LTD.; BRENT NOYES, M.D.; LEO HAMILTON; LENORE MYERS; FRANCIS MYERS, H/W;

MICHAEL PACOR; LLOYD FEIGENBAUM; LYNDA FEIGENBAUM, H/W; KENNETH DETATO; BRAD MOSES;

MARY POSSI; ERIC N. RUBINO; THOMAS CRAWFORD; SUSAN M. SIMPSON; JOHN BURKE; GREGORY REPPA;
LEO RASIS, M.D.; JEFFREY W. ALLEN; PATRICIA C. ALLEN; WARREN CONSTANTINE, JR.,

Appellants

v.

ANN-MICHELE HIGGINS, ESQ.; RAWLE & HENDERSON;
UNITED SHIPPING SERVICES THREE, INC.; UNITED SHIPPING SERVICES ONE, INC.; HACI ISMAIL KAPTANOGLU SHIP MANAGEMENT & TRADING CO., LTD.; HARRY G. MAHONEY, ESQ.; THOMAS C. SULLIVAN; DEASEY, MAHONEY & BENDER, LTD.; SUNRISE MARITIME INC; ZODIAC MARITIME AGENCIES, LTD.; A. ROBERT DEGEN, ESQ.; FOX, ROTHSCHILD, O'BRIEN & FRANKEL; TRADE SHIPPING MANAGEMENT,
S.A.; LAURENCE SHTASEL, ESQ.; JEFFREY S. MOLLER, ESQ.; BLANK ROME COMISKY & MCCAULEY,

Appellees

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. No. 99-cv-00992) District Judge: Honorable John R. Padova

Argued November 26, 2001

Before: ROTH, FUENTES and WEIS, Circuit JudgesFiled February 15, 2002

Thomas S. Myers, Jr., Esquire
(ARGUED)

1800 East Lancaster Avenue Paoli, Pennsylvania 19301

Vincent P. DiFabio, Esquire Platt, DiGiorgio & DiFabio

1800 East Lancaster Avenue Paoli, Pennsylvania 19301

Attorneys for Appellants

Robert B. White, Jr., Esquire
(ARGUED) Law Offices of Robert B. White, Jr.,

P.C. 1515 Market Street, Suite 1800 Philadelphia, Pennsylvania 19102

Jeffrey P. Lewis, Esquire McKissock & Hoffman, P.C.

P.O. Box 3086 West Chester, Pennsylvania 19381

William H. Lamb, Esquire Lamb, Windle & McErlane, PC

24 E. Market Street West Chester, Pennsylvania 19381

Albert P. Massey, Jr., Esquire Lentz, Cantor & Massey, Ltd. Chester County Commons 20 Mystic Lane Malvern, Pennsylvania 19355

Attorneys for Appellees

2OPINION OF THE COURT

WEIS, Circuit Judge.

In this appeal, we decide that the defendant lawyer s' decision to invoke federal case law, rather than a procedural rule, in persuading a district judge to issue a maritime attachment does not give rise to a cause o f action for malicious abuse of civil process under state la w. The lawyers did not act in bad faith because they discl osed the

existence of the alternative courses to the Court. We also conclude that the conflict between the procedural r ule and the opinion of a United States Court of Appeals rai ses a federal question sufficient to support removal of t he malicious abuse of process claim from the state cou rt to the

federal forum. We will affirm the District Court's judgment

in favor of the defendants.

Plaintiff U.S. Express Lines, Ltd. ("Express Lines" ) is a Pennsylvania corporation that chartered vessels fro m various shipowners to carry cargo for its customers . The company maintained its principal place of business in Paoli, Pennsylvania, within the Eastern District of Pennsylvania.

Express Lines had arranged financing through a line of credit from Founders Bank, secured by certificates of deposit purchased by the individual plaintiffs. Whe n the company encountered cash flow problems in 1997, it began negotiating for further financial support from othe r institutions. In January 1998, it advised its credi tors, including the defendant vessel owners, of the encou raging progress of its efforts.

Nevertheless, on February 11, 1998, one of the vess el owners, through its counsel, defendant Ann-Michele Higgins of defendant law firm Rawle & Henderson, ap plied

to the United States District Court for the Eastern District of Pennsylvania for the attachment of "all assets, goods, and chattels, belonging to" Express Lines. In seeki ng the attachments, the defendant attorneys cited as gover ning law an opinion of the Court of Appeals for the Elev enth

3Circuit, rather than the Supplemental Rules for Adm iralty

Claims. On February 17, 1998, the District Court or dered that the certificates of deposit at Founders Bank b e attached.

Other creditor vessel owners took similar action th rough their attorneys, defendants A. Robert Degen and the law firm of Fox, Rothschild, O'Brien, & Frankel, Ltd., Laurence Shtasel and Jeffrey S. Moller, both of defendant Bl ank Rome Comisky & McCauley, and Harry G. Mahoney and Thomas C. Sullivan, of the defendant law firm Dease y, Mahoney, & Bender, Ltd. As a result of these legal actions, Express Lines defaulted on its loan agreements and was forced to suspend and eventually cease its commerci al operations.

The District Court vacated the attachments on Novem ber 5, 1998, concluding that its decision to depart fro m the restrictions imposed by Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Fe deral Rules of Civil Procedure ("Supplemental Rule B") wa s in error. The Court then directed the parties to arbit ration in accordance with the terms of the charter party, ord ered that the assets that Founders Bank had deposited in an interpleader action remain in the Court's custody, and retained jurisdiction pending arbitration.

On January 28, 1999, Express Lines and the individu al owners of the certificates of deposit at Founders B ank filed suit in the Court of Common Pleas of Chester County

, Pennsylvania, against the vessel owners and their v arious counsel. The complaint sought compensatory and puni tive damages for abuse of process, conspiracy, wrongful use of civil proceedings, and other torts.

Plaintiffs contend that defendants secured the writ s of attachment in direct violation of Rule B, which pre cludes

the seizure of maritime assets if the debtor is fou nd within the district in which the litigation is commenced. They assert that defendants were well aware that Express Lines kept its principal office in the Eastern District o f Pennsylvania and thus, they acted in bad faith in s eeking

attachments in that district.

4The defendant vessel owners were never served with

process, and the claims against them were ultimatel y dismissed.1 The lawyer defendants removed the case to the District Court, and the plaintiffs moved to remand. The District Court refused, concluding that, based as i t was on the issuance of maritime attachments, "[t]he federa l element [of the litigation] cuts to the heart of ea ch of Plaintiffs' claims" and, therefore, federal questio n jurisdiction existed.

The District Court dismissed the case under Federal Rule of Civil Procedure 12(b)(6), holding that the defen dant lawyers' actions were privileged because they had n ot misled the Court as to the underlying facts or rele vant law in obtaining the attachment. The Court added that t here had been no abuse of process in the defendants' use of maritime attachments to collect debts whose legitim acy plaintiffs did not contest. Because the writs had b een issued with court authorization, the defendants had not acted in a grossly negligent manner or without prob able cause. Accordingly, the Court held that the plainti ffs had

failed to establish their state law claims.

In this appeal, plaintiffs contend that the defenda nt attorneys misled the Court in securing the attachme nts,
and that the efforts to obtain them were made in ba d faith because the charter party required that disputes be arbitrated. The plaintiffs also assert that the Dis trict Court erred in declining to remand the case to the state court.

The defendants deny that they engaged in any decept ion and argue that the state law claims fail as a matte r of law. Alternatively, they contend that because the challe nged activity occurred in a federal court, no state caus e of action may be applied to their conduct. Finally, defendant s assert that because of an omission in the plaintiffs' noti ce of appeal, this Court lacks appellate jurisdiction.

We exercise plenary review of the District Court's

dismissal for failure to state a claim under Rule 1 2(b)(6).

___________________________________________________ ______________

1. The plaintiffs have not contested the dismissal of the defendant shipowners and have treated this case as directed s olely against the lawyers. We will do likewise.

5Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F. 3d 1250,

1261 (3d Cir. 1994). When considering a Rule 12(b)( 6) motion, courts accept as true the allegations in th e complaint and its attachments, as well as reasonabl e inferences construed in the light most favorable to the plaintiffs. Id. Although a district court may not c onsider matters extraneous to the pleadings, "a document in tegral to or explicitly relied upon in the complaint may b e considered without converting the motion to dismiss into one for summary judgment." In re Burlington Coat Fa ctory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (in ternal quotations omitted); see also Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192 (3d Cir. 1993) (matters of public record).

We review de novo a district court's denial of rema nd. Angus v. Shiley Inc., 989 F.2d 142, 143 n.1 (3d Cir . 1993); see also Luckett v. Delta Airlines, Inc., 171 F.3d 295, 298 (5th Cir. 1999).

I.

We first address jurisdictional issues. The plainti ffs' complaint alleges violations of state law. Because the parties are not diverse, our jurisdiction, as well as that of the District Court, must rest upon the existence of a federal question. 28 U.S.C. SS 1331, 1441(b).

At the outset, we address an error in the defendant s' brief that cites Lusardi v. Xerox Corp., 975 F.2d 9 64 (3d Cir. 1992), as dispositive of our appellate jurisdi ction. Lusardi holds that, with certain exceptions not per tinent here, an appeal taken from a specified judgment or part of a specified judgment does not confer upon the court of appeals jurisdiction to review other judgments or p ortions not specified or inferred from the notice of appeal . 975 F.2d

at 971-72.

Defendants contend that because plaintiffs did not designate the order denying remand in their notice of appeal, we do not have authority to review that iss ue. This argument is oblivious to the duty of federal courts to examine their subject matter jurisdiction at all st ages of the litigation sua sponte if the parties fail to raise the issue.

6That obligation extends to removal cases, as well a s to

those originally filed in the district courts. Meri tcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 217 (3d Ci r. 1999); Trent Realty Assocs. v. First Fed. Sav. & Loan Ass' n of Phila., 657 F.2d 29, 30 (3d Cir. 1981). Clearly, Lu sardi is inapposite to the removal jurisdiction issue in thi s case.

Any civil action brought in state court may be remo ved by the defendant to the federal district court in t he district where such action is pending, if the district court would have original jurisdiction over the matter. 28 U.S. C. S 1441(a); Franchise Tax Bd. of Cal. v. Constr. Lab orers Vacation Trust for S. Cal., 463 U.S. 1, 7-8 (1983). Where the parties are not diverse, removal is appropriate onl y if the case falls within the district court's original"fed eral question" jurisdiction: "all civil actions arising under the Constitution, laws, or treaties of the United State s." 28 U.S.C. SS 1331, 1441(b); Franchise Tax Bd., 463 U.S . at 8.

In determining whether a case arises under federal law, courts are instructed to look to the plaintiff 's"w ell-pleaded complaint." Merrell Dow Pharm. Inc. v. Thompson, 47 8 U.S. 804, 808 (1986). It is not enough that a federal qu estion is or may be raised as a defense. Id.; Trent Realty, 6 57 F.2d at 33. "[T]he controversy must be disclosed upon th e face of the complaint, unaided by the answer or by the peti tion for removal." Westmoreland Hosp. Ass'n v. Blue Cross of W. Pa., 605 F.2d 119, 122 (3d Cir. 1979) (quoting Gull y v. First Nat'l Bank in Meridian, 299 U.S. 109, 113 (1936)). Attachments to the complaint are considered part of it.

The state suit need not invoke a federal law in ord er to "arise under" it for removal purposes. It is suffic ient that the merits of the litigation turn on a substantial federal issue that is "an element, and an essential one, of the plaintiff 's cause of action." Gully, 299 U.S. at 1 12. The controversy must be "genuine and present . . . not merely . . . conjectural." Id. at 113. In short, the feder al law "must be in the forefront of the case and not collateral, peripheral, or remote." Merrell Dow, 478 U.S. at 813 n.11; see also United Jersey Banks v. Parell, 783 F.2d 360, 367 (3 d Cir. 1986) (no federal question existed because right to relief under state law did not require resolution of a sub stantial question of federal law). It need not, however, be a situation

7in which federal law completely preempts state law. See

Goepel v. Nat'l Postal Mail Handlers Union, 36 F.3d 306 (3d Cir. 1994) (discussing "complete preemption" doctri ne).

The case before us does not involve the "artful ple ading" doctrine, which requires a court to peer through wh at are ostensibly wholly state claims to discern the feder al question lurking in the verbiage. See, e.g., United Jersey Banks, 783 F.2d at 367. The complaint filed in the state court is quite detailed and is augmented by numerou s documents, such as the motions for attachment, the charter party, and the order attaching Express Line s' assets. The complaint and the documents affixed to it charge the defendants with malicious abuse of proce ss in causing the District Court to override Rule B's res trictions in erroneous reliance on a Court of Appeals opinion

.

The plaintiffs argue that the mere fact that the pr operty attachments were granted pursuant to maritime law i s an inadequate basis for removal. They point out that u nder the saving to suitors clause, 28 U.S.C. S 1333(1), fede ral and state courts have concurrent jurisdiction in mariti me matters. See Supplemental Rule B(1); Romero v. Int' l Terminal Operating Co., 358 U.S. 354 (1959); In re Dutile, 935 F.2d 61, 62-63 (5th Cir. 1991); Furness Withy (Chartering), Inc., Panama v. World Energy Sys. Ass ocs., Inc., 854 F.2d 410, 411 n.1 (11th Cir. 1985).

The saving to suitors clause "preserves alternative s of suing on the `law side' of the federal court or in state court, with admiralty and maritime law applied to the clai m." George K. Walker, Supplemental, Pendent & Ancillary Jurisdiction in Admiralty and Maritime Cases: The A LI Federal Judicial Code Revision Project and Admiralt y Practice, 32 J. Mar. L. & Com. 567, 568 (2001); see also id. at 568 n.8 (listing cases); Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 444-45 (2001) (explaining that saving to suitors clause preserves concurrent jurisdiction of state courts over some admiralty and maritime claims); 14 A Charles A. Wright et al., Fed. Prac. & Proc. S 3672 , at 301- 05 (3d ed. 1998). The plaintiffs' argument would ca rry weight if their state cause of action were a mariti me one. But it is not; it is a claim for malicious use of p rocess, a state tort not confined to admiralty.

8The Supreme Court, construing federal question

jurisdiction in the removal context, has held that admiralty cases do not fall within the scope of 28 U.S.C.S 14 41, which designates as appropriate for removal only th ose cases "arising under the Constitution, treaties or laws of the United States." Romero, 358 U.S. at 368-69. Thu s, an admiralty case filed in state court may only be rem oved if there exists some independent basis for federal jur isdiction, such as diversity of citizenship. Id. at 380-381. W e need not here discuss the logic or reasoning of Romero , whi ch has spawned more than its share of commentary.2 It is e nough for us to recognize its existence, because we concl ude that it is not applicable.

As we have noted, the removed case is not an admira lty action but one involving state tort law. Moreover, the federal question at the heart of this litigation is the applicability and construction of Supplemental Rule B. Although the Rule sets out procedures to be followe d in maritime attachments, it is in fact part of the Fed eral Rules of Civil Procedure, adopted under the authority of the Rules Enabling Act, 28 U.S.C. S 2072.

The Rules of Practice in Admiralty and Maritime Cas es, which took effect in 1920, were rescinded as of Jul y 1, 1966. At that time, admiralty rules were merged int o the

Rules of Civil Procedure. This consolidation was si milar to

that which abolished the distinction between law an d equity.

___________________________________________________ ______________

2. See, e.g., Kenneth G. Engerrand, Removal and Rem and of Admiralty Suits, 21 Tul. Mar. L.J. 383, 385 (1997) (discussin g removal of admiralty cases and stating that "[d]espite the fact that the `congressional language . . . is perfectly understandable in ordinary Engli sh,' the determination whether admiralty cases can be removed has been aff ected by historical accident rather than traditional principles of stat utory interpretation;"

id. at 386-90 (explaining Romero's effect on federal qu estion jurisdiction in admiralty claims); George Rutherglen, The Federal R ules for Admiralty and Maritime Cases: A Verdict of Quiescent Years, 2 7 J. Mar. L. & Com. 581, 590-92 (1996) (discussing complexities in savi ng to suitors clause actions resulting from Romero); David J. Sharpe, Th e Future of Maritime Law in the Federal Courts: A Faculty Colloquium, 31 J. Mar. L. & Com. 217, 232-34 (2000) (recognizing the confusion as to removal in admiralty).

9Since 1966, admiralty procedure has therefore been

governed by the Federal Rules of Civil Procedure. A ll rules governing these procedures are recommended by the Advisory Committee on Civil Rules and adopted in

accordance with the conventions of the Rules Enabli ng Act. Although Rule B delineates procedures that are part icularly applicable to the unique features of maritime attac hments, it is nonetheless an integral part of the Federal R ules of

Civil Procedure.

It is noteworthy that Romero was decided in 1959, p rior to the consolidation of the admiralty and civil rul es. Thus, any effect that Romero might have had on the constr uction of rules of admiralty procedure was abrogated by th at consolidation. Support for this position is found i n the language of the Rules Enabling Act itself, which pr ovides that "[a]ll laws in conflict with such rules shall be of no

further force or effect after such rules have taken effect." 28 U.S.C. S 2072(b); see Henderson v. United States, 5 17 U.S. 654 (1996) (holding that Fed. R. Civ. P. 4 supersed ed service provision in the Suits in Admiralty Act).

At the heart of each of the plaintiffs' state law c laims is

the assertion that the defendants acted in bad fait h by urging the District Court to disregard a federal ru le of procedure, which would have barred the attachments, and to rely instead on case law, which permitted the se izures. The plaintiffs have thus alleged a substantial ques tion of federal law involving an apparent clash between a procedural rule and a contrary holding by a United States Court of Appeals.3 Moreover, this conflict arises i n the area of maritime attachments, a subject of particular co ncern to the federal courts, and one where national uniformi ty is of some importance. See Yamaha Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199, 209-11 (1996) (discussing va rious contexts in which "vindication of maritime policies

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3. That the federal question was an essential, and ultimately dispositive, element is demonstrated by the fact that were we to decide that Leonhardt, discussed infra, was the correct stateme nt of the law, the plaintiffs' case could be dismissed on that basis a lone. Moreover, Express Lines sustained its injury at the time the attachments were

served and the assets seized. The District Court's decision vacating the attachments came too late to save the company.

10demanded uniform adherence to a federal rule of dec ision,

with no leeway for variation or supplementation by state law."). Although not determinative, it is worth not ing that this case also implicates the Federal Arbitration A ct, 9 U.S.C. S 1 et seq.

Fundamentally, the plaintiffs argue that the Eleven th Circuit opinion is incorrect, and it is that allege dly erroneous interpretation of federal law upon which their state claim depends. Where a plaintiff 's complaint requires the juxtaposition of a court of appeals decision an d an apparently conflicting procedural rule, the federal courts may properly claim jurisdiction. This is particular ly so where, as here, the decision in controversy has not been overruled or reversed. The Eleventh Circuit opinion is a carefully reasoned exposition, concluding that Rule B does not limit admiralty's historic jurisdiction. The Co urt did not overlook Rule B, but analyzed it and found that its restrictions did not apply.

We are persuaded that in the unique circumstances h ere, the federal issue set forth in the complaint is an essential element of the plaintiffs' cause of action. Accordi ngly, the case was properly removed and the District Court di d not err in denying the motion to remand.

II.

Having resolved the jurisdictional issue, we now co nsider the federal and pendent state claims on the merits. We invoke our discretion in choosing to first consider the

federal defenses to the state suit.

The fact that a federal question permits removal do es not go so far as to support the defendants' contention that preemption applies. They argue that because the eve nts complained of occurred in a federal court, the stat e claims are superseded and the plaintiffs are limited to th e relief afforded by Federal Rule of Civil Procedure 11, 28 U.S.C. S 1927, and the inherent powers of a court as expli cated in Chambers v. Nasco, Inc., 501 U.S. 32 (1991).

Not surprisingly, the plaintiffs disagree. They rel y on Pennsylvania's Dragonetti Act, 42 Pa. C.S.A.S 8351 et seq.,

11and common law, both of which provide a cause of ac tion

for the wrongful use of civil proceedings. The Act establishes liability when "[a] person who takes pa rt in the procurement, initiation or continuation of civil pr oceedings against another" acts "in a grossly negligent manne r" or without probable cause and primarily for an imprope r purpose. Id. S 8351(a). A plaintiff may recover und er the Act for harm resulting from interference with the advan tageous use of land, chattels or other things, and other ex penses which include reasonable attorneys' fees, harm to reputation, specific pecuniary loss resulting from the proceedings, emotional distress, and punitive damag es. Id.

S 8353.

The recovery under Dragonetti can be more expansive than the sanctions available under Rule 11, which a re generally limited to counsel fees or fines, or coun sel fees

alone under 28 U.S.C. S 1927. Even assessments made under the inherent power of the courts have not bee n held to cover such matters as consequential damages, los s to reputation, or emotional distress.4

The breadth of the remedy provided by the state sta tute is a strong indication of its substantive nature. U nder the Rules Enabling Act, 28 U.S.C. S 2072(b), procedural rules may not supplant substantive rights but the line be tween

___________________________________________________ ______________

4. The damages that might be awarded for wrongful a ttachment have not been fully explored. Neither party has raised or br iefed the preemption aspect in this context. A brief examination of the case law indicates that damages in this area, if awarded at all, generally consist of attorneys' fees, costs, and expenses "directly" attributable t o the attachment. See Furness Withy (Chartering), Inc., Panama v. World E nergy Sys. Assocs., Inc., 772 F.2d 802 (11th Cir. 1985) (no bad faith, therefore no damages awarded); Ocean Ship Supply, Ltd. v. MV Leah, 729 F .2d 971 (4th Cir. 1984) (same); Frontera Fruit Co., Inc. v. Dowling, 91 F.2d 293 (5th Cir. 1937) (same). See also Coastal Barge Corp. v. M/V M aritime Prosperity, 901 F. Supp. 325 (M.D. Fla. 1994) (damages assessed included attorneys' fees and expenses, direct and derivative damages); State Bank & Trust Co. of Golden Meadow v. Boat "D.J. Griffin, " 755 F. Supp. 1389 (E.D. La. 1991) (attorney's fees and lost profits a ssessed). We have not encountered an award of such items as consequential damages, loss of reputation, or punitive damages that are available under the Dragonetti

Act.

12procedure and substance is notoriously difficult to draw. In

Burlington Northern Railway Co. v. Woods, 480 U.S. 1 (1987), the Supreme Court held that "Rules which incidentally affect litigants' substantive rights d o not violate" the Rules Enabling Act if they are "reason ably necessary to maintain the integrity of that system of rules." 480 U.S. at 5 (emphasis added).

Following that rationale, the Court later emphasize d that

Rule 11 was intended to deter frivolous suits in th e district courts. Business Guides, Inc. v. Chromatic Communic ations Enters., Inc., 498 U.S. 533, 552-53 (1991). In purs uing that goal, courts can impose sanctions by way of attorne ys' fees without reallocating the burdens of litigation, as prohibited by the American Rule set forth in Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975). Id.

Business Guides also rejected the argument that "Ru le 11 creates a federal common law of malicious prosecuti on." 498 U.S. at 553. Continuing, the Court stated, "[t] he main objective of the Rule is not to reward parties who are victimized by litigation," but to deter baseless fi lings. Id. Although it conceded that sanctioning a party might benefit its adversary, the Court was "confident that distri ct courts will resist the temptation to use sanctions as subs titutes for tort damages," id., and noted that in the event that a district court misapplied the Rule in a particular case, the error could be corrected on appeal. Id. at 554. Bus iness

Guides found no need for such a correction because there, the district court had properly declined to include consequential damages in awarding attorneys' fees a nd outof-pocket expenses. Id.

In Tarkowski v. County of Lake, 775 F.2d 173, 175 ( 7th Cir. 1985), the court held that the state tort law of malicious abuse of process applies to federal litig ation as well. Our experience in this field has been limited , but two of our opinions that we will discuss support that h olding.

The Bankruptcy Code provides more extensive sanctio ns than those afforded by the Rules of Civil Procedure or 27 U.S.C. S 1927. Section 303(i)(2) of the Code permit s the assessment of damages -- including those of a punit ive nature -- caused by a person who files a petition f or

13involuntary bankruptcy in bad faith. 11 U.S.C. S 30 3(i)(2).

Despite the broad scope of remedies available in th e Code and the general exclusivity of the federal courts i n bankruptcy, we have held that a state claim for mal icious abuse of process was not preempted. Paradise Hotel Corp. v. Bank of Nova Scotia, 842 F.2d 47, 51-52 (3d Cir. 1988).

In that case, we discovered that because of a gap i n the text the Code failed to provide a remedy against a creditor that had improperly filed an involuntary petition f or bankruptcy against a debtor. We concluded that Cong ress did not intend preemption to extend to the point of barring a debtor from the use of a state remedy.5 Id.; see also Silver v. Mendel, 894 F.2d 598 (3d Cir. 1990) (malicious f iling of involuntary petition for bankruptcy not protected b y judicial privilege).

Our review of extant case law persuades us that the Federal Rules of Civil Procedure do not preempt cla ims for abuse of process and similar torts providing relief for misconduct in federal litigation. Therefore, victim s of such misconduct may, in appropriate circumstances, bring suit to recover damages under state causes of action.

In a number of cases, district courts within this c ircuit have reached conflicting results on the preemption issue.6

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5. We recognize that the Court of Appeals for the N inth Circuit has held that the Bankruptcy Code completely preempts state actions for malicious use of process, Gonzales v. Parks, 830 F. 2d 1033 (9th Cir. 1987), and is thus in tension with Paradise Hotel.

6. Compare Mruz v. Caring, Inc., 39 F. Supp.2d 495 (D.N.J. 1999) (district court whose federal question jurisdiction has been invoked applies federal rather than state law on abuse of p rocess), and Thomason v. Lehrer, 183 F.R.D. 161 (D.N.J. 1998) (federal co urt is exclusive forum to seek redress for litigation abuses committed in a federal suit), with Fumo v. Gallas, 2001 WL 115460 (E.D. Pa. Feb. 6, 20 01) (federal law does not preempt state law claims), T.B. Proprietar y Corp. v. Sposato Builders, Inc., 1996 WL 674016 (E.D. Pa. Nov. 20, 1 996) (stating that neither Rule 11 nor 28 U.S.C. S 1927 preempts state law cause of action for abuse of process), Cannon v. Sheller, 825 F. Su pp. 722 (E.D. Pa. 1993) (Dragonetti Act not preempted by ERISA where action does not relate directly or indirectly to ERISA plan), and P lavin v. Bristol Borough, 1988 WL 100814 (E.D. Pa. Sept. 27,1988) (recognizin g that there is no federal tort of malicious prosecution, and state la w reaches litigation
abuses).

14We recognize that some of these courts have relied on

legitimate public policy concerns in concluding tha t the

federal rules foreclose state claims in the nature of abuse of process arising out of federal litigation. We also acknowledge that inevitably conflicts will arise be tween the

federal rules and state substantive claims.

Although federal preemption would forestall such controversies, the precepts of federalism and the congressional decision to restrict the sanctions av ailable within the federal system militate against such a r esolution of the problem. As in so many other overlapping are as of federal and state law, we must rely on the traditio nal comity between the two systems to deal adequately a nd innovatively with such common problems.

III.

Under Pennsylvania law, lawyers may be sued in thei r individual capacities for wrongful use of civil pro ceedings. E.g., Dietrich Indus., Inc. v. Abrams, 455 A.2d 119 (Pa. Super. 1982). That tort as applied in Pennsylvania

conforms with section 674 of the Second Restatement of Torts. Rosenfield v. Pennsylvania Auto. Ins. Plan, 636 A.2d 1138, 1141 (Pa. Super. 1994). The Dragonetti Act's definition of the tort is in agreement with that of the Restatement, Rosen v. American Bank of Rolla, 627 A .2d 190, 192 (Pa. Super. 1993), and an attorney who kno wingly prosecutes a groundless action to accomplish a mali cious purpose may be held accountable under the Act. Elec . Lab. Supply Co. v. Cullen, 712 A.2d 304 (Pa. Super. 1998 ).

Some distinction has been drawn between malicious u se of process and abuse of process. Malicious use has to do with the wrongful initiation of civil process, as c ontrasted with abuse, which is concerned with perversion of p rocess after litigation has begun. Dumont Television & Rad io Corp. v. Franklin Elec. Co. of Phila., 154 A.2d 585, 587 (Pa. 1959).

Whatever may have been the importance of that distinction before the Dragonetti Act was adopted, it appears that both torts are subsumed within the gen eral scope of the Act, which includes persons who take p art in the procurement, initiation or continuation of civi l

15proceedings for wrongful purposes. 42 Pa. C.S.A.S 8 351(a).

Liability attaches to those who act in a grossly ne gligent manner or without probable cause and primarily for a purpose other than adjudication of a claim. Id . In addition, the proceeding must have been terminated in favor o f the person who invokes the Act. Id. S 8351(a)(2).

It may be seen that a party seeking redress under Dragonetti bears a heavy burden. Here, it is somewh at questionable whether the allegedly offending proced ure was terminated in favor of the plaintiff. Although the attachments have been dissolved, the District Court , as noted earlier, retained jurisdiction pending arbitr ation. Thus, no final judgment has been entered in favor o f the plaintiffs. Section 674(b) of the Restatement, howe ver, makes an exception from the finality rule in ex par te proceedings. In view of the somewhat unusual status of the earlier litigation and in the interests of judicial economy, we will assume arguendo that we may, under state law, proceed to the merits because the ex parte attachme nt proceedings had been terminated in favor of the pla intiffs.

The plaintiffs' first contention is that seeking ma ritime attachments, despite the arbitration clause in the charter party, demonstrated bad faith. This argument is utt erly lacking in merit. The Federal Arbitration Act provi des that in admiralty actions, "the party claiming to be agg rieved may begin his proceeding . . . by libel and seizure of the vessel or other property of the other party accordi ng to the usual course of admiralty proceedings, and the cour t shall then have jurisdiction to direct the parties to pro ceed with

the arbitration . . . ." 9 U.S.C. S 8.

Indeed, so fundamental is the right to attach that the parties cannot consent in advance to forego that re medy. In The Anaconda v. American Sugar Refining Co., 322 U. S. 42, 43 (1944), the charter party provided for arbitrati on but specifically precluded application of section 8. Ne vertheless, the aggrieved party began legal process by foreign attachment. The Supreme Court held that although th e parties had agreed to arbitrate, the attachment rem edy

could be enforced. Id. at 45-46. See also Marine Tr ansit Corp. v. Dreyfus, 284 U.S. 263, 275 (1932) ("By the express terms of S 8, the libel and seizure are authorized as an

16initial step in a proceeding to enforce the agreeme nt for

arbitration . . . ."). Clearly, the defendants in t his case did not act in bad faith by carrying out procedures aut horized by the Federal Arbitration Act.

The plaintiffs next argue that the defendants, know ing that Federal Rule B did apply, nevertheless secured the writs of attachment by improperly prevailing up on the District Court to follow the opinion in Schiffahartsgesellschaft Leonhardt & Co. v. A. Bott achi S.A. De Navegacion, 773 F.2d 1528 (11th Cir. 1985) (en b anc). The District Court later released the attachments, believing that Rule B, rather than Leonhardt, provided the co ntrolling law. The plaintiffs seize on this reversal by the D istrict Court of its earlier ruling as evidence of the defe ndants' bad faith in misleading the court.

We cannot accept the plaintiffs' argument. The Leon hardt opinion was written by a distinguished judge of the

Eleventh Circuit for an en banc court. The Court wa s fully aware of Rule B, but after reviewing the history of admiralty law determined that federal courts are empowered to apply maritime procedures as they existed at the time of the Constitution's adoption. Leonhardt, 773 F.2d at 153 3. In the Court's view, Rule B was not intended to be the

exclusive source of maritime attachments available to the court, nor was it intended to limit or impair the t raditional power of the court in exercising admiralty jurisdic tion. Id.

The defendants' motions for issuance of a writ of attachment stated, "This court has the power apart from

Rule B to issue a maritime attachment" and cited Leonhardt. The defendants, therefore, did not misin form the District Court as to the interplay between Rule B a nd the Court of Appeals opinion. In announcing the decisio n to vacate the attachments, the District Judge acknowle dged, "The Court may have been wrong but there was no deception on the Court."

There is a paucity of case law on this particular p oint, and it reaches the point of absurdity to contend th at competent attorneys were guilty of bad faith in urg ing the District Court to follow this respectable authority . The fact

that the District Court later reversed its reliance on the

17Eleventh Circuit case and concluded that Rule B gov erned

does not establish that the lawyers exercised bad j udgment, let alone bad faith. Indeed, in a number of cases, Rule B has been attacked as being unconstitutional. See , e.g., Polar Shipping Ltd. v. Oriental Shipping Corp., 680 F.2d 627, 642-45 (9th Cir. 1982) (Byrne, J., dissenting).

We conclude that the plaintiffs have failed to esta blish bad faith as required under the Dragonetti Act and Pennsylvania common law. Accordingly, we affirm the

District Court's dismissal of the state law claims.

Having explored the background at length and conclu ded that the plaintiffs have not shown bad faith on the part of the defendants, we find it unnecessary to resolve t he

conflict between Leonhardt and Rule B. On the facts , the plaintiffs cannot recover under either version of t he law. Consequently, we will affirm the District Court's d ismissal

of the entire case.

The judgment of the District Court will be affirmed

.

18FUENTES, Circuit Judge, dissenting:

I respectfully dissent because, in my view, this ca se presents no federal element sufficient to confer 28 U.S.C. S 1441(b) "arising under" jurisdiction. Since this case was improperly removed to federal court, the District C ourt had no underlying jurisdiction to adjudicate the merits of Express Lines's action, and we are without appellat e jurisdiction to address the merits of the appeal. I would agree with the Ninth Circuit, which held, under sim ilar circumstances, that a previously dismissed federal action does not cause a subsequently filed state action fo r malicious prosecution to "arise under" federal law. See Berg v. Leason, 32 F.3d 422 (9th Cir. 1994).

The majority concludes that the conflict between a federal procedural rule and an opinion of the Eleventh Circ uit "raises a federal question sufficient to support re moval of the malicious abuse of process claim from the state court to the federal forum." See Maj. Op. at 3. Express L ines's underlying state court action, however, was filed o nly after the federal action had been dismissed, and thus onl y after it was no longer necessary to resolve any conflict between Leonhardt and Rule B. As the majority notes, Leonha rdt has not been overturned by the Eleventh Circuit. At bes t, it remains the jurisprudence of another circuit, and i t is undisputed that it is simply not the law of this Ci rcuit. To my knowledge, the only time Leonhardt has been invo ked by any court in this Circuit was by the District Co urt in the underlying attachment action here. The District Cou rt, as previously noted, ultimately rejected Leonhardt , a nd its own earlier reliance on it, and this decision has not b een appealed by either party. Therefore, any purported conflict between Leonhardt and the Federal Rules does not pr esent a sufficient federal question upon which to predica te jurisdiction.

It is well settled that "[o]nly state-court actions that originally could have been filed in federal court m ay be removed to federal court by the defendant." Caterpi llar Inc. v. Williams, 482 U.S. 386, 392 (1987) (citing 28 U. S.C. S 1441(a)). Additionally, we have held that the rem oval statute should be strictly construed against remova l and that if there is any doubt as to the propriety of a removal,

19a case should not be removed to federal court. See, e.g.,

Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990); Abels v. State Farm Fire & Cas. Co., 770 F.2 d 26, 29 (3d Cir. 1985).

In considering a motion to remand where federal que stion jurisdiction is at issue, three recognized requirem ents must be satisfied: (1) the federal question must arise f rom a wellpleaded complaint, see, e.g., Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 475 (1998); Westmoreland Hospital Ass'n v. Blue Cross of Western Pennsylvani a , 605 F.2d 119, 122 (3d Cir. 1979); (2) federal law must be an essential element of the plaintiff 's cause of acti on, see, e.g., Rivet, 522 U.S. at 475; and (3) the federal questio n must be substantial. See, e.g., City of Chicago v. Internat ional College of Surgeons, 522 U.S. 156, 164 (1997). I do not believe that any of these removal requirements were

satisfied in this case.

1. The Well-Pleaded Complaint Rule

As the Supreme Court has held on several occasions, "[t]he presence or absence of federal-question juri sdiction is governed by the `well-pleaded complaint rule,' whic h provides that federal [question] jurisdiction exist s only where a federal question is presented on the face o f the plaintiff 's properly pleaded complaint." Caterpill ar Inc., 482

U.S. at 392. See also American National Red Cross v . S.G. and A.E., 505 U.S. 247, 258 (1992); Oklahoma Tax Co m'n v. Graham, 489 U.S. 838, 840-41 (1989). Thus, the asserted federal question must arise from a well-pl eaded complaint, and not from the answer, the petition fo r removal, or an actual or theorized defense. Under t he wellpleaded complaint rule, if a complaint is premised upon state law, federal question jurisdiction may be est ablished only if "some substantial, disputed question of fed eral law is a necessary element of one of the well-pleaded s tate claims," or that, due to complete preemption, the p laintiff 's claim is "really one of federal law." See Goepel v. National Postal Mail Handlers Union, a Division of Luna, 36 F.3d 306, 310 (3d Cir. 1994) (internal quotations and ci tations omitted). Also, a state case may arise under federa l law " `where the vindication of a right under state law necessarily turn[s] on some construction of federal law.' "

20See Merrell Dow Pharmaceuticals Inc. v. Thompson, 4 78

U.S. 804, 808 (1986) (quoting Franchise Tax Board v

. Construction Laborers Vacation Trust, 463 U.S. 1, 9 (1983)). "[T]he vast majority of the cases brought under the general federal question jurisdiction of the federal courts are those

in which federal law creates the cause of action." Id.

Here, however, none of Express Lines's causes of ac tion were created by federal law, and nothing in the all egations Express Lines presented in its complaint calls for a resolution of any tension between the Eleventh Circ uit's decision in Leonhardt and the Federal Rules. As pre viously noted, no genuine conflict exists in this Circuit b etween Leonhardt and the Federal Rules. To prevail in its case, Express Lines needs to show only that based upon wh at Defendants knew and believed, which are factual que ries, they proffered Leonhardt without probable cause and for a purpose other than obtaining the proper adjudicatio n of their claim. See 42 Pa. C.S.A. S 8351 (stating that "[a] person who takes part in the procurement, initiatio n or continuation of civil proceedings against another i s subject to liability to the other for wrongful use of civil proceedings, . . . [if h]e acts in a grossly negligent manner or without probable cause and primarily for a purpose other th an that of securing the proper discovery, joinder of partie s or adjudication of the claim in which the proceedings are based . . ."); Silver v. Mendel, 894 F.2d 598, 603- 04 (3d Cir. 1990) (finding that, under the Dragonetti Act, the "imposition of liability for the wrongful use of ci vil proceedings [in Pennsylvania] occurs only when liti gation is instituted both without probable cause and primaril y for a purpose other than that of securing the proper adju dication of the claim in which the proceedings are based"). In other words, Express Lines needs to show only that Defend ants acted either negligently or without probable cause, and without a proper purpose in proffering Leonhardt .1

Since no genuine conflict exists between Leonhardt and the Federal Rules in this Circuit, any legal assert ions as to

___________________________________________________ ______________

1. Since I do not believe we have the requisite jur isdiction to address

this case on its merits, I will refrain from commenting on the strength of Express Lines's claims or evidence.

21the validity of Leonhardt, if made at all, would on ly properly

be made by Defendants in their Answer or in their d efense. Neither invocation, according to the Supreme Court, is adequate to confer federal question jurisdiction.

2. The "Essential" Element Requirement

In accordance with Supreme Court jurisprudence, fed eral law must be an essential element of a plaintiff 's cause of action in order to confer federal subject matter ju risdiction. The meaning of the "essential element" requirement is best stated in Hunter v. United Van Lines, 746 F.2d 635 (9th Cir. 1984):

[A court must] determine whether the federal element in the claim was "basic" as opposed to "coll ateral," and "necessary" as opposed to "merely possible."

. . . . Similarly, courts have looked to whether the federal element in the claim was "pivotal," . . . or "substantial," . . . as opposed to merely "incidental[ ]," . . . or whether it was "direct and essential" as opposed to "attenuated," . . . or "paramount" as oppose d to "collateral," . . . . Thus, the resolution o f the federal question must play a significant role in the proceedings.

Id. at 646 (internal citations omitted). Here, far from showing that a federal issue played a "significant role in the proceedings," the majority determined that it was "unnecessary" to resolve the issue asserted by Defe ndants as the basis for removal. See Maj. Op. at 18. That this case may be decided without resolving any alleged tensio n between Leonhardt and Rule B severely undermines th e idea that this issue was essential to evaluating pl aintiff 's claims. The majority correctly states that a federa l issue sufficiently essential to invoke federal jurisdicti on must be "genuine and present, [and] not merely . . . conjec tural." See id. at 7 (citing Merrell Dow, 478 U.S. at 813-1 4 & n.11). Yet, it is difficult to understand how an issue cou ld be any more conjectural or any less essential than one who se disposition is explicitly deemed "unnecessary."

3. The "Substantial" Federal Question Requirement

As the majority notes, the federal law present in a properly removed case "must be in the forefront of the case

22and not collateral, peripheral, or remote." Yet fro m the

outset, Express Lines's case was clearly comprised solely of state law claims, and the majority's ability to res olve this case without addressing the purported federal issue only highlights the fact that any federal issue in this case is "collateral, peripheral, or remote."

Further, in Merrell Dow, the Supreme Court held tha t no substantial federal question existed where the plai ntiff alleged a violation of a federal statute as an elem ent of a state cause of action. The Court explained that"[we have] sometimes found that formally federal causes of act ion were not properly brought under federal-question jurisdi ction because of the overwhelming predominance of state-l aw issues." Merrell Dow, 478 U.S. at 814 n. 12. Invoki ng an earlier ruling, the Court noted that "the violation of the

federal standard as an element of state tort recove ry did not fundamentally change the state tort nature of the a ction." Id. (citing Moore v. Chesapeake & Ohio R. Co., 291 U.S. 205, 216-17 (1934)). The Court also noted that "S 1 331 [federal question] decisions can best be understood as an evaluation of the nature of the federal interest at stake." Id. (emphasis in original).

Here, as in Merrell Dow, the state law nature of Ex press Lines's claims is fundamentally unchanged by the as serted

tension between Leonhardt and the Federal Rules. Th ere is also little, if any, cognizable federal interest in having a federal court in our Circuit assess the legitimacy of an Eleventh Circuit case whose viability is not an ope n issue anywhere in this Circuit.

Following the guidance of Merrell Dow, the Ninth Ci rcuit has held in a case very similar to ours that an und erlying prior federal action does not render a fundamentall y state law action cognizable in federal court. In Berg , t he plaintiff brought a malicious prosecution action in state cou rt after successfully defending himself in a federal court p roceeding in which he was accused of violating federal securi ties and racketeering laws. The defendant removed to federal court, and the District Court denied the plaintiff 's Moti on to Remand. On appeal, the Ninth Circuit held that "the federal element is insufficiently substantial to confer`ari sing under' jurisdiction because the malicious prosecution cour t need

23only decide whether the underlying claim was `legal ly

tenable[;]' the cause of action is created by state law, and state law controls the standard by which the streng th of the federal claim in the underlying action is measured. " Berg,

132 F.3d at 423. The Ninth Circuit elaborated that" federal law cannot be controlling when the degree of substa nce in the federal claim necessary to trigger the state-la w cause of action is a question of state law." Id. at 425. Ult imately, then, "federal law is not dispositive because the d egree of strength required to put the underlying claim over the probable cause threshold is determined by state law ." Id. The same conclusion applies here.

In examining the state law elements of the plaintif f 's claim, the Ninth Circuit noted that, far from the c ase requiring a legal resolution of federal questions," [a]

factfinder must determine what the defendant knew o r believed about the facts." Id. Similarly, here, the subjective beliefs, purpose, and purported bad faith of the De fendants are at issue, and "the court looks at the merits of a claim for malicious prosecution through the prism of stat e law."

Id.

This case only asks whether Defendants' underlying claim, that Leonhardt could trump the Federal Rules , was legally viable enough to have been asserted legitim ately and not in contravention of the Dragonetti Act. Express Lines's case presents no real or substantial question of fe deral law that compels resolution in a federal court. Rather, their case was, from the outset, a state case that was pr operly brought in state court originally.

For the aforementioned reasons, I would find that t his case was improperly removed to federal court, that the District Court had no underlying jurisdiction to ad judicate the merits of Express Lines's claim, and that we ar e thus without appellate jurisdiction to entertain this ap peal. I respectfully dissent.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

24