1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

4-15-1998

Hudson United Bank v. Litenda Mtg Corp

Precedential or Non-Precedential:

Docket 97-5074

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1998

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 1998 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"Hudson United Bank v. Litenda Mtg Corp" (1998). 1998 Decisions. Paper 80.

http://digitalcommons.law.villanova.edu/thirdcircuit_1998/80
Filed April 15, 1998 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 97-5074 

HUDSON UNITED BANK, banking corporation of the State 

of New Jersey, 

 Appellant 

v. 

LITENDA MORTGAGE CORP.; 

THEODORE H. HOWARD; 

LINDA M. HOWARD, his wife; 

FEDERAL HOME LOAN MORTGAGE CORPORATION, 

doing business as Freddie Mac; 

GARY S. YOUNG; 

YOUNG, DIMIERO & SAYOVITZ; 

RICHARD G. NORWALK AND NORWALK ASSOCIATES 

On Appeal from the United States District Court 

for the District of New Jersey 

(D.C. No. 96-cv-02204) 

Argued Thursday, December 11, 1997 

BEFORE: GREENBERG, ROTH, and GARTH, 

Circuit Judges 

(Opinion filed April 15, 1998) 
 Richard W. Mackiewicz, Jr. (Argued) 

 Burke & Mackiewicz 

 625 Washington Street 

 Hoboken, New Jersey 07430 

 Attorneys for Appellant 

 Lance J. Wolf (Argued) 

 Federal Home Loan Mortgage 

 Corporation 

 Legal Department 

 8200 Jones Branch Drive 

 McLean, VA 22102 

 Gerald T. Ford 

 Landman, Corsi, Ballaine & 

 Ford 

 One Gateway Center 

 Suite 500 

 Newark, NJ 07102 

 Attorneys for Appellees 

 Litenda Mortgage Corp., 

 Theodore H. Howard, 

 Linda M. Howard, his wife, 

 Federal Home Loan Mortgage 

 Corporation d/b/a Freddie Mac 

 Brian Corrigan 

 Law Office of Brian Corrigan 

 150 Morris Avenue 

 P.O. Box 476 

 Springfield, NJ 07081 

 Attorney for Appellees 

 Richard G. Norwalk and 

 Norwalk Associates 

 2 
OPINION OF THE COURT 

GARTH, Circuit Judge: 

This is an appeal of a district court order denying a 

motion for reconsideration filed by Hudson United Bank 

("Hudson"). The district court had dismissed Hudson's 

federal claims, and remanded the state claims to state 

court pursuant to 28 U.S.C. S 1367(c). When Hudson 

moved for reconsideration of the dismissal and attempted to 

amend its complaint, the district court held that it had lost 

jurisdiction to hear the case when the remand order was 

sent to state court. Accordingly, Hudson's motion was 

denied. 

We hold that the district court had jurisdiction to

entertain Hudson's motions. Thus, we reverse. 

I. 

On March 20, 1995, Theodore H. Howard, Linda M. 

Howard, and their company, LiTenda Mortgage Corp., 

(collectively, "LiTenda") borrowed almost two million dollars 

from the Hudson United Bank ("Hudson") tofinance 

LiTenda's mortgage selling and servicing business. At the 

time, LiTenda was a mortgage seller/servicer approved by 

the Federal Home Loan Mortgage Corporation ("Freddie 

Mac").1 As collateral for the loan, Hudson accepted

LiTenda's contractual rights to income derived from

servicing a portfolio of mortgages for Freddie Mac.

On May 2, 1996, Freddie Mac terminated LiTenda's 

eligibility as a seller/servicer. In a letter faxed to LiTenda, 

Freddie Mac stated that LiTenda's eligibility was revoked 

_________________________________________________________________ 

1. Freddie Mac is a federally chartered, sponsored, and regulated 

corporation that purchases home mortgages from lenders and sells 

securities to the public to fund the purchases. Mortgages are only 

purchased from, and serviced by, approved seller/servicers under the 

terms of contracts authored by Freddie Mac. See 12 U.S.C. S 1454 (1989 

& West Supp. 1997); American Bankers Mortgage Corp. v. Federal Home 

Loan Mortgage Corp., 75 F.3d 1401, 1404 (9th Cir. 1996). 

 3 
because LiTenda had violated their contractual agreement 

in at least nine different ways--among them, by pledging 

LiTenda's contractual rights as collateral to secure the loan 

with Hudson.2 The termination letter directed LiTenda to 

return all files and mortgage documents to Freddie Mac, 

who in turn transferred its portfolio to another servicer. 

Left without Freddie Mac's business, LiTenda's financial 

condition deteriorated, and the loan with Hudson went into 

default.3 When Hudson sought the contract rights it

believed it was owed under the loan agreement with 

LiTenda, Freddie Mac rejected Hudson's claim. 

Hudson responded by filing a complaint in state court 

containing claims against both LiTenda and Freddie Mac.4 

Hudson's claims against Freddie Mac alleged that Freddie 

Mac was illegally withholding from Hudson the benefits it 

was due as collateral under the terms of its loan agreement 

with LiTenda. Freddie Mac then removed the case to federal 

court pursuant to 12 U.S.C. S 1452(f), which confers federal 

subject matter jurisdiction over any civil action to which 

Freddie Mac is a party. 

Once in federal court, Freddie Mac filed a motion to 

dismiss for failure to state a claim pursuant to Fed. R. Civ. 

_________________________________________________________________ 

2. The contractual relationship between Freddie Mac and LiTenda was 

governed by a Seller/Servicer Guidebook authored by Freddie Mac. The 

Guidebook set out the rights and duties to which LiTenda was subject as 

a seller/servicer of Freddie Mac's mortgages. The nine violations of the 

Guidebook that Freddie Mac alleged included: failure to account properly 

for the disposition of funds; failure to fund and safeguard funds 

properly; failure to comply with financial responsibilities; and failure 

to 

maintain qualified facilities and staff. 

LiTenda subsequently petitioned Freddie Mac for review of the 

termination decision. On August 1, 1996, Freddie Mac affirmed its 

decision to terminate LiTenda's eligibility, calling LiTenda's violations 

of 

the contract "especially egregious," and stating that LiTenda's "record at 

Freddie Mac was marginal at best." 

3. LiTenda filed a petition in the United States Bankruptcy Court for the 

District of New Jersey on November 21, 1996. 

4. Hudson also named several other parties as defendants. For the sake 

of clarity, however, we will focus our analysis here on the claims against 

LiTenda and Freddie Mac. 

 4 
P. 12(b)(6). Freddie Mac argued that Hudson had failed to 

state a claim against Freddie Mac because Hudson's claim 

under the loan agreement derived solely from LiTenda's 

rights, and LiTenda's contract rights had been extinguished 

when Freddie Mac revoked LiTenda's privileges as a 

seller/servicer. Because LiTenda had no rights against 

Freddie Mac, Hudson could not use its claim to LiTenda's 

rights to state a cause of action against Freddie Mac. 

On November 26, 1996, the district court granted Freddie 

Mac's motion to dismiss for failure to state a claim. 

Agreeing with Freddie Mac that Hudson had no claim 

against Freddie Mac because LiTenda had no such claim, 

the district court dismissed all of the counts against 

Freddie Mac under Fed. R. Civ. P. 12(b)(6).5 Left without an 

original basis for federal subject matter jurisdiction, the 

district court exercised its discretion under 28 U.S.C. 

S 1367(c), and remanded the remaining portions of the case 

against LiTenda. A certified copy of the remand order was 

mailed to the state court the next day, on November 27, 

1996. 

On December 6, 1996, Hudson filed several postdismissal motions in the district court. First, Hudson 

moved for the district court to reconsider its dismissal 

pursuant to Fed. R. Civ. P. 59(e) and Fed. R. Civ. P. 60(b). 

According to Hudson, the district court had wrongly

concluded that LiTenda's rights were extinguished when 

Freddie Mac revoked LiTenda's status as a seller/servicer. 

Pointing to the contract between Freddie Mac and LiTenda, 

Hudson noted that this was true only if LiTenda's status 

had been revoked "with cause." If the termination was 

"without cause," Hudson continued, then the contract 

entitled LiTenda (and thus Hudson) to a termination fee 

equal to the market value of LiTenda's servicing portfolio. 

Although Hudson had not raised this issue previously, 

_________________________________________________________________ 

5. Properly relying on Pension Benefits Guar. Corp. v. White Consol. 

Indus., 998 F.2d 1192, 1196 (3d Cir. 1993), the district court considered 

the portions of the Guidebook attached by the defendant and relied on 

by both parties. Those portions of the Guidebook made clear that 

LiTenda had no continuing rights in the servicing contract that Hudson 

could rely on, such that it was clear as a matter of law that Hudson was 

not entitled to relief. 

 5 
Hudson now argued that the termination was "without

cause." 

Hudson also moved to amend its complaint. The 

amended complaint contained what Hudson modestly 

termed "prophylactic" changes in its cause of action; in 

particular, the proposed amended complaint alleged for the 

first time that Freddie Mac had terminated LiTenda's 

portfolio "without cause."6 

The district court denied Hudson's motion in an order 

dated January 13, 1997. The district court quoted Trans 

Penn Wax Corp. v. McCandless, 50 F.3d 217, 225 (3d Cir. 

1995) for the proposition that "a district court loses 

jurisdiction over a case once it has completed the remand 

by sending a certified copy of the remand order to the state 

court." Id. Because a certified copy of the remand order had 

been sent to the state court on November 27, 1996, the 

district court concluded that its jurisdiction to hear 

Hudson's motion for reconsideration had been divested on 

that date. The district court denied Hudson's motion 

without reaching the merits. 

Hudson filed a timely appeal. 

II. 

Although neither party contests our appellate 

jurisdiction, we have an independent duty to ensure that 

we have jurisdiction over a case or controversy before we 

attempt to resolve it. See PAS v. Travelers Ins. Co., 7 F.3d 

349, 352 (3d Cir. 1993). In this case, the inquiry is 

complicated by the fact that there are three distinct orders 

that Hudson has attempted to appeal. 

The first is the November 26, 1996 order dismissing

Hudson's claims against Freddie Mac under Fed. R. Civ. P. 

12(b)(6), which we will refer to as "the dismissal order." The 

second is the November 26, 1996 order remanding the

remaining claims against LiTenda to state court pursuant 

_________________________________________________________________ 

6. Hudson also moved for a stay of the remand order. As the remand 

order had already been sent to state court, however, this motion was 

moot. 

 6 
to 28 U.S.C. S 1367(c), which we will refer to as "the 

remand order." The third is the January 13, 1997 order 

denying Hudson's motion for reconsideration, which we will 

refer to as "the reconsideration order." 

Our cases establish that we have appellate jurisdiction 

over the dismissal order pursuant to 28 U.S.C. S 1291. See 

Carr v. American Red Cross, 17 F.3d 671, 674-77 (3d Cir. 

1994) (holding that a dismissal order preceding aS 1367(c) 

remand order is reviewable by direct appeal pursuant to 28 

U.S.C. S 1291). The reasoning of Carr also makes clear that 

we have appellate jurisdiction over the reconsideration 

order pursuant to 28 U.S.C. S 1291. See id. 

Although we will resolve this case without reviewing the 

remand order, we note that we are authorized to exercise 

jurisdiction over the remand order as well. It is clear that 

28 U.S.C. S 1447(d) does not bar appellate review of the 

remand order, because it was issued not under S 1447(d), 

but rather pursuant to 28 U.S.C. S 1367(c). See, e.g., 

Pennsylvania Nurses Ass'n v. Pennsylvania State Educ. 

Ass'n, 90 F.3d 797, 801 (3d Cir. 1996) (holding that 

S 1447(d) is inapplicable to a remand order made pursuant 

to S 1367(c)), cert. denied, 117 S. Ct. 947 (1997). Second, 

although we would be able to review the remand order only 

through a petition for mandamus, see PAS, 7 F.3d at 353, 

we may treat Hudson's notice of appeal as a mandamus 

petition. See Korea Exch. Bank v. Trackwise Sales Corp., 66 

F.3d 46, 51 (3d Cir. 1995).7 

_________________________________________________________________ 

7. Judge Greenberg is of the view that when, as here, a district court 

dismisses the federal claims from a case removed from state court and 

remands the state claims to state court pursuant to 28 U.S.C. 

S 1367(c)(3), instead of exercising supplemental jurisdiction over them, 

that, upon reversal of the dismissal of the federal claims, the court of 

appeals may order that the state claims be reinstated without exercising 

mandamus jurisdiction. He believes that an appeal by the plaintiff in 

such a case is, in reality, from the dismissal order and not from the 

remand order, because the plaintiff may be content to litigate the state 

claims in state court where the plaintiff started the action. Therefore, 

the 

order from the court of appeals reinstating the state claims in federal 

court is merely incidental to the reversal of the dismissal and is 

authorized by 28 U.S.C. S 2106 which provides that after a reversal of a 

ruling by a district court, a court of appeals "may remand the cause and 

direct the entry of such appropriate judgment, decree or order, or require 

such further proceedings to be had as may be just under the 

circumstances." 

 7 
III. 

The question posed by this case is whether the district 

court had jurisdiction to adjudicate Hudson's motion for 

reconsideration. Our answer is yes. 

A. 

Congress has designed our federal court system so that 

it affords civil litigants ample opportunity to seek review of 

adverse decisions in the inferior courts. First, litigants may 

request reconsideration of an unfavorable result in the 

district court. See Fed. R. Civ. P. 59(e), 60(b). Second, 

losing parties are entitled to seek review of "all final orders" 

in the court of appeals. See 28 U.S.C. S 1291. Third, 

litigants may request rehearing by a full court of appeals. 

See Fed. R. App. P. 35. The animating concept behind this 

forgiving structure is that justice is best served by the 

checks and balances afforded by regular opportunities for 

judicial review. 

Despite this general design, the need to deter vexatious 

litigation has led Congress to carve out exceptions in which 

review is curtailed or even eliminated. One such exception 

is the rule against review of remand orders following 

improper removal to federal court, currently codified at 28 

U.S.C. S 1447(c) and (d).8 This longstanding rule divests the 

_________________________________________________________________ 

8. The text of 28 U.S.C. S 1447(c) and (d) reads as follows: 

 (c) A motion to remand the case on the basis of any defect other 

 than lack of subject matter jurisdiction must be made within 30 

 days after the filing of the notice of removal under section 

1446(a). 

 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. A certified copy of the order of remand shall be 

mailed 

 by the clerk to the clerk of the State court. The State court may 

 thereupon proceed with such case. 

 (d) An order remanding a case to the State court from which it was 

 removed is not reviewable on appeal or otherwise, except that an 

 order remanding a case to the State court from which it was 

 removed pursuant to section 1443 of this title shall be reviewable 

by 

 appeal or otherwise. 
 8 
federal courts of jurisdiction to review a district court's 

remand order when the order is based on a defect in

removal procedure or lack of subject matter jurisdiction. 

See Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 

336, 346, 96 S. Ct. 584, 590 (1976); Quackenbush v.

Allstate Ins. Co., ___ U.S. ___, ___, 116 S. Ct. 1712, 1718 

_________________________________________________________________ 

28 U.S.C. S 1447 (West Supp. 1997). 

Those attempting to divine the meaning of S 1447 from its text would 

do well to recall that sometimes "a page of history is worth a volume of 

logic." New York Trust Co. v. Eisner, 256 U.S. 345, 349, 41 S. Ct. 506, 

507 (1921) (Holmes, J.). In Thermtron Products, Inc. v. Hermansdorfer, 

423 U.S. 336, 96 S. Ct. 584 (1976), the Supreme Court examined the 

century-old history of Congress's bar to review of remand orders and 

concluded that the bar to review contained in S 1447(d) covered only 

remands issued because a case was removed improperly or the district 

court was without subject matter jurisdiction. See id. at 346-50; 96 S. 

Ct. at 590-93. At the time of Thermtron, the text of S 1447(c) provided 

the 

textual hook for this interpretation. It then read:"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." Thermtron , 423 U.S. at 342, 96 S. Ct. 

at 589. Thus, the Court concluded that the bar to review contained in 

S 1447(d) applied only when the remand was based on the grounds 

specified in S 1447(c). See id. at 346; 96 S. Ct. at 590. 

Congress has since amended S 1447(c) several times, most recently in 

1996. The amendments have focused on creating and clarifying time 

limits concerning when a plaintiff can seek a remand following removal 

from state court. These amendments have slightly altered the grounds 

for remand "specified" in the text of S 1447(c): the statute now speaks of 

remands for lack of subject matter jurisdiction, and remands for "any 

defect other than lack of subject matter jurisdiction." 28 U.S.C. S 

1447(c) 

(West Supp. 1997). Rather than take this change in language as a 

wholesale rejection of Thermtron and a dramatic expansion of S 1447(d), 

we will assume that Congress did not mean to upset the Thermtron limits 

on S 1447(d), and that they remain in effect unchanged by the 

intervening textual modifications to S 1447(c). This conclusion is 

supported by the legislative history of the 1996 amendment. See H.R. 

REP. NO. 104-799 at 2-3 (1996), reprinted in 1996 U.S.C.C.A.N. 3417, 

3418-19 (suggesting that the textual changes were designed only to 

clarify Congressional intent on the timing of remands made for reasons 

other than lack of subject matter jurisdiction). 

 9 
(1996). The purpose of the rule is to prevent a party to a 

state lawsuit from using federal removal provisions and 

appeals as tool to introduce substantial delay into a state 

action. See Thermtron, 423 U.S. at 354-55, 96 S. Ct. at 

594-95 (Rehnquist, J., dissenting). Without S 1447(d), a 

party to a state action could remove the action to federal 

court, await remand, request reconsideration of the

remand, appeal, request rehearing, and then file a petition 

for a writ of certiorari, all before being forced to return to 

state court several years later. See Greenwood v. Peacock, 

384 U.S. 808, 832-33, 86 S. Ct. 1800, 1815 (1966) 

(contemplating the delay that would result if state criminal 

defendants could regularly seek removal under 28 U.S.C. 

S 1443, and then seek review of subsequent remand 

orders). To avoid this delay, Congress has fashioned an 

exception to the general rule of review, and made a district 

court's initial determination that removal was 

inappropriate, a nonreviewable one. 

B. 

In the present case, the district court issued a remand 

pursuant to 28 U.S.C. S 1367(c),9 rather than 28 U.S.C. 

S 1447(c). Section 1367(c) grants district courts the 

discretion to refuse to exercise supplemental jurisdiction 

when "values of judicial economy, convenience, fairness, 

and comity" counsel that the district court remand state 

claims to a state forum. See City of Chicago v. International 

College of Surgeons, ___ U.S. ___, ___, 118 S. Ct. 523, 534 

(1997) (quoting Carnegie Mellon Univ. v. Cohill , 484 U.S. 

343, 350, 108 S. Ct. 614, 619 (1988)). Because the original 

_________________________________________________________________ 

9. 28 U.S.C. S 1367(c) (1993) states: 

 (c) The district courts may decline to exercise supplemental 

 jurisdiction over a claim under [28 U.S.C. S 1367](a) if-- 

 (1) the claim raises a novel or complex issue of State law, 

 (2) the claim substantially predominates over the claim or claims 

 over which the district court has original jurisdiction, 

 (3) the district court has dismissed all claims over which it has 

 original jurisdiction, or 

 (4) in exceptional circumstances, there are other compelling 

 reasons for declining jurisdiction. 

 10 
basis of federal jurisdiction in this case was the presence of 

Freddie Mac as a party, see 12 U.S.C. S 1452(f), the district 

court exercised its discretion and declined to exercise 

supplemental jurisdiction over the state claims against 

LiTenda following the dismissal of the claims against 

Freddie Mac. See 28 U.S.C. S 1367(c)(3). 

The first question posed by this case is whether the bar 

to review provided by S 1447(d) is even implicated when a 

district court enters a remand order pursuant toS 1367(c). 

The decisions of the Supreme Court, this court, and our 

sister circuits make clear that S 1367(c) remands, such as 

the one entered by the district court here, do not invoke the 

bar to review prescribed by S 1447(d). See, e.g., Cohill, 484 

U.S. at 355 n.11, 108 S. Ct. at 621 n.11 ("Section[ ] 1447(c) 

. . . do[es] not apply to cases over which a federal court has 

pendent jurisdiction. Thus, the remand authority conferred 

by the removal statute and the remand authority conferred 

by the doctrine of pendent jurisdiction overlap not at all."); 

Pennsylvania Nurses Ass'n v. Pennsylvania State Educ. 

Ass'n, 90 F.3d 797, 801 (3d Cir. 1996) (holding that 

S 1447(d) is inapplicable to a remand order made pursuant 

to S 1367(c)); Trans Penn Wax Corp. v. McCandless, 50 F.3d 

217, 224 (3d Cir. 1995) (same); PAS v. Travelers Ins. Co., 7 

F.3d 349, 352 (3d Cir. 1993) (same). See also Things 

Remembered, Inc. v. Petrarca, 516 U.S. 124, 130, 116 S. Ct. 

494, 498 (1995) (Kennedy, J., concurring) (noting that 

several other circuits have agreed that remands pursuant 

to S 1367(c) do not implicate the bar to review provided by 

S 1447(d)) (citing cases); Trans Penn, 50 F.3d at 224 (same) 

(citing cases from eight circuits). 

Although the sharp distinction between remands 

authorized by S 1367(c) and remands authorized by 

S 1447(c) is often misunderstood, the reason behind their 

different treatment is clear. Review of S 1447(c) remands is 

barred to keep parties to state actions from making

dubious allegations of federal jurisdiction in order to 

forestall the prompt resolution of state cases. Thus, 

S 1447(c) remands are warranted only when a federal court 

has no rightful authority to adjudicate a state case that has 

been removed from state court. In such cases, the statute 

provides a quick, permanent, and mandatory remedy to 

 11 
return a state case to state court. See International Primate 

Protection League v. Administrators of Tulane Educ. Fund, 

500 U.S. 72, 89, 111 S. Ct. 1700, 1710 (1991). 

By contrast, S 1367(c) serves no such corrective purpose. 

Remands authorized by S 1367(c) may be entered only when 

federal subject matter jurisdiction has been affirmatively 

established, via 28 U.S.C. S 1367(a), and are entered 

independently of whether the case originated in state or 

federal court. See International College of Surgeons, 118 S. 

Ct. at 530. Thus, a district court's decision to remand 

pursuant to S 1367(c) does not imply that the case was 

improperly filed in federal court. Rather, it reflects the 

court's judgment, reviewable on appeal for abuse of

discretion, see Sparks v. Hershey, 661 F.2d 30, 33 (3d Cir. 

1981), that at the present stage of litigation it would be best 

for supplemental jurisdiction to be declined so that state 

issues may be adjudicated by a state court. See United Mine 

Workers v. Gibbs, 383 U.S. 715, 726-27, 86 S. Ct. 1130, 

1139-40 (1966). In such circumstances, there is no 

pressing need to block the mechanisms of review that are 

generally afforded civil litigants. 

Thus, the bar to review codified at S 1447(d) is entirely 

inapplicable when the basis of the remand was the district 

court's discretion pursuant to S 1367(c). 

C. 

Freddie Mac contends that we should construe the cases 

holding that the S 1447 bar to review is inapplicable when 

a remand is issued under S 1367(c) as establishing that 

only appellate jurisdiction is available. Conceding our 

appellate jurisdiction, Freddie Mac argues that the bar to 

review should nonetheless apply to post-remand motions 

filed before the district court. In other words, Freddie Mac 

argues that the district court lacked jurisdiction to 

adjudicate the post-remand motions, but that we have 

appellate jurisdiction to review the merits of the district 

court's orders. 

We cannot agree. It is difficult to understand how we can 

exercise appellate jurisdiction over the merits of a case if 

the district court in which the notice of appeal wasfiled did 

 12 
not itself have jurisdiction when the notice of appeal was 

filed. Federal jurisdiction cannot be "lost" by the district 

court one day and then "found" by the court of appeals 

later on. Rather, jurisdiction that is originally and properly 

vested in the district court becomes vested in the court of 

appeals when a notice of appeal is filed. See Venen v. 

Sweet, 758 F.2d 117, 120 (3d Cir. 1985) ("As a general rule, 

the timely filing of a notice of appeal is an event of 

jurisdictional significance, immediately conferring

jurisdiction on a Court of Appeals and divesting a district 

court of its control over those aspects of the case involved 

in the appeal.") Thus, if S 1447(d) does not deny an 

appellate court jurisdiction to review a remand order, it 

cannot deny the district court jurisdiction to entertain a 

motion for reconsideration before the notice of appeal is 

filed. See, e.g., J.O. v. Alton Community Unit Sch. Dist. 11, 

909 F.2d 267, 273-274 (7th Cir. 1990) (holding that a 

district court has the power to reconsider its order following 

a S 1367(c) remand during the time allowed forfiling a 

notice of appeal). 

D. 

We next address whether the mailing of the S 1367(c) 

remand order to state court divested the district court of 

jurisdiction. The primary support for this view derives from 

language in Trans Penn Wax Corp. v. McCandless, 50 F.3d 

217, 224 (3d Cir. 1995), which could be read (and was 

read, by the district court) to suggest that the answer to 

that question is "yes." However, such a reading of the dicta 

in Trans Penn would ignore the sharp distinction between 

S 1447(c) remands and those remands authorized by 

S 1367(c). Accordingly, we conclude that the mailing of a 

remand order does not divest a district court of jurisdiction 

to entertain a motion for reconsideration following a 

remand order issued under S 1367(c). 

Trans Penn was a labor action brought by employees in 

state court against their employer. Following the employer's 

removal to federal court, the employees withdrew their 

federal claims and asked the district court to remand the 

remaining state claims to state court. The district court did 

so, exercising its discretion according to S 1367(c). 

 13 
Subsequently, the employer filed a motion for 

reconsideration, which was denied on the merits. The 

employer then petitioned our court for a writ of mandamus, 

arguing that the remand was inappropriate because federal 

issues remained lurking within the remaining state claims. 

Before reaching the merits, we addressed at length 

whether the district court had jurisdiction to reconsider its 

remand order on the merits. We began by noting correctly 

that the S 1447(d) bar to review was inapplicable because 

the remand order was issued pursuant to S 1367(c). See id. 

at 224. Nonetheless, the court suggested, there was a 

question as to whether the district court had jurisdiction to 

reconsider its own remand order. Our own precedent, the 

court intimated, was "inconclusive." Id. at 226. First, there 

was a "general rule . . . that a district court loses 

jurisdiction over a case once it has completed the remand 

by sending a certified copy of the remand order to the state 

court." Id. at 225. Second, remands authorized by S 1367(c) 

were generally reviewable. Finding no evidence that a 

remand order had been sent to the state court, and noting 

that the S 1367(c) remand did not implicateS 1447(d), we 

held that the district court retained jurisdiction to 

reconsider its order of remand. See id. at 227. 

The conclusion we have reached in this case is in accord 

with the holding of Trans Penn. In both cases, the district 

court retained jurisdiction to reconsider its remand order. 

To the extent that dicta in Trans Penn could be read as 

suggesting a different result would be warranted if the 

remand order had been sent to state court before the 

motion for reconsideration was filed, we disavow that 

notion. Indeed, the law in our circuit is clear. The mailing 

of a remand order divests the district court of jurisdiction 

when the remand is authorized by S 1447(c). See Hunt v. 

Acromed Corp., 961 F.2d 1079, 1082 (3d Cir. 1992). When 

the remand is authorized by S 1367(c), the bar to review is 

inapplicable and the district court may reconsider its 

remand order just as it would any other order. See Trans 

Penn, 50 F.3d at 227; Thomas v. LTV Corp., 39 F.3d 611, 

616 (5th Cir. 1994); Alton Community Unit Sch. Dist. 11, 

909 F.2d at 273-274. 

 14 
Because the remand in this case was authorized by 

S 1367(c), the mailing of the remand order to state court did 

not divest the district court of jurisdiction to entertain 

Hudson's motion for reconsideration. 

IV. 

Having determined that the district court retained 

jurisdiction to adjudicate Hudson's motion for 

reconsideration, we must next decide whether to proceed to 

the merits of the case or reverse and remand to the district 

court. Hudson argues that we should reverse the 

reconsideration order of the district court, and remand this 

case to the district court so it may entertain Hudson's 

motion on the merits. Freddie Mac contends that in the 

name of judicial economy we should address the merits of 

the motion for reconsideration in this appeal. 

When a district court has failed to reach a question below 

that becomes critical when reviewed on appeal, an appellate 

court may sometimes resolve the issue on appeal rather 

than remand to the district court. See, e.g., Chase

Manhattan Bank, N.A. v. American Nat'l Bank and Trust 

Co., 93 F.3d 1064, 1072 (2d Cir. 1996) (summary 

judgment). This procedure is generally appropriate when 

the factual record is developed and the issues provide 

purely legal questions, upon which an appellate court 

exercises plenary review. In such a case, an appellate 

tribunal can act just as a trial court would, so nothing is 

lost by having the reviewing court address the disputed 

issue in the first instance. See Otto v. Variable Annuity Life 

Ins. Co., 814 F.2d 1127, 1138 & n.11 (7th Cir. 1986). 

Such a procedure may be inappropriate, however, when 

the issue to be addressed is not a purely legal question. 

When the resolution of an issue requires the exercise of 

discretion or fact finding, for example, it is inappropriate 

and unwise for an appellate court to step in. As the 

Supreme Court has stated, "the proper role of the court of 

appeals is not to reweigh the equities or reassess the facts 

but to make sure that the conclusions derived from those 

weighings and assessments are juridically sound and

supported by the record." Curtiss-Wright Corp. v. General 

Elec. Co., 446 U.S. 1, 10, 100 S. Ct. 1460, 1466 (1980). 

 15 
The merits of Hudson's motion for reconsideration and to 

amend its pleadings fall within the zone of discretion and 

judgment that is best addressed initially by the district 

court. A district court's decision to deny a motion for 

reconsideration is placed within the sound discretion of the 

district court; factual determinations supporting its 

decision are reviewed by us under a clearly erroneous 

standard. See North River Ins. Co. v. CIGNA Reinsurance 

Co., 52 F.3d 1194, 1203 (3d Cir. 1995). Similarly, a district 

court's decision to grant or deny leave to amend pleadings 

is reviewed for abuse of discretion. See Heyl & Patterson 

Int'l, Inc. v. F.D. Rich Housing, 663 F.2d 419, 425 (3d Cir. 

1981). It is not our place to exercise the discretion normally 

afforded the district court. 

Accordingly, we will not reach the merits of Hudson's 

motion, and instead will remand to the district court so 

that the district court can take whatever steps are

necessary to entertain Hudson's post-dismissal motions. If 

Hudson's reconsideration motion is granted, and if it is 

permitted to amend its complaint, the district court will 

need to vacate the remand order and give appropriate 

notification to the state court. If Hudson's motions are 

denied, however, no such steps will be necessary: it would 

be a waste of judicial effort (indeed, a needless spinning of 

wheels) to reclaim the state action from state court, only to 

have to order a remand again immediately thereafter. Of 

course, we do not express any opinion as to the merits of 

Hudson's motions, leaving it to the sound discretion of the 

district court as to how it regards allegations in Hudson's 

original and amended complaint, as well as the timeliness 

of Hudson's "without cause" theory. 

The January 13, 1997 order of the district court will be 

reversed, and remanded to the district court for further 

proceedings consistent with this opinion. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 16