## F I L E D United States Court of Appeals Tenth Circuit 

### AUG 22 2001 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

MARSHALL HUFFMAN; VIRGINIA NEWTON,

Plaintiffs-Appellees,

v. SAUL HOLDINGS LIMITED PARTNERSHIP, a Maryland limited partnership,

Defendant-Appellant. No. 99-5239

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA

(D.C. No. 97-CV-602-H)

Submitted on the briefs: Bill V. Wilkinson and Andrew P. DeCann of WilkinsonLaw Firm, Tulsa, Oklahoma, for Plaintiffs-Appellees. Terry M. Thomas of Crowe & Dunlevy, Tulsa, Oklahoma , for Defendant-Appellant.

Before SEYMOUR and McKAY , Circuit Judges, and BRORBY , Senior Circuit Judge.

SEYMOUR , Circuit Judge.1 After examining the briefs and appellate record, th is panel has determined

unanimously to grant the parties’ request for a dec ision on the briefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. -2- This case involves an award of attorneys’ fees foll owing what should have been the conclusion, at least with respect to proce edings in the federal courts, of a case already marred by a lengthy procedural history. We hold that the district

court lacked authority to grant plaintiffs Marshall Huff man and Virginia Newton appeal-related fees and, in addition, erroneously f ailed to conduct an inquiry into the reasonableness of their fee application. Accor dingly, we reverse the decision of the district court with directions to vacate its award of appellate f ees and to conduct a hearing on the reasonableness of the rema ining portions of Huffman and Newton’s fee application. 1

I. Factual Background The roots of this dispute lie in a leaky roof. Huf fman and Newton leased space from defendant Saul Holdings Limited Partners hip to operate a retail furniture store in a shopping center near Tulsa, Ok lahoma. Saul disclosed the leaks during the lease negotiations and agreed to r epair the roof once the lease was signed. Despite Saul’s repeated attempts to make the necessary repairs, the leaks persisted. Ultimately Huffman and Newton mov ed to another location.2 While the untimeliness of the notice of removal by itself would not have

been sufficient to justify remand, the additional f act that the entry of summary judgment was improper warranted both reversal and remand to the state court. Id. at 1074-75, 1079-80. -3- Seeking damages for what they said were lost sales, they brought suit in state court against Saul, alleging breach of contract, re scission, and fraud. After filing an answer and counterclaim, and after engaging in several rounds of discovery, Saul removed the action to federal court. The district court denied Huffman and Newton’s motion for remand, and later granted summary judgment in favor of Saul. This court reversed the district court with respect to both rulings. See Huffman v. Saul Holdings Ltd. P’ship , 194 F.3d 1072 (10th Cir. 1999). We concluded not only that Saul’ s notice of removal was untimely, but, in addition, that the existence of d isputed, material facts precluded the entry of summary judgment. The panel instructed the district court to return the case to the state court. Id. at 1084. 2 Having secured a remand to state court, Huffman andNewton asked the federal district court to award them attorneys’ fee s pursuant to 28 U.S.C. § 1447(c), which authorizes costs and fees to a plaintiff who successfully resists a defendant’s removal effort, that is, obtains an o rder remanding the case to state court. Initially, the district court denied Huffman and Newton’s fee petition. Their petition, said the court , went beyond the allowable scope of § 1447(c), sin ce3 Huffman and Newton filed a motion to dismiss Saul’s notice of appeal.

Their motion charged that the notice was untimely, since it was filed more than thirty days after the district court entered final judgment. Saul sought leave to file a response to the motion out of time, noting that it had recently secured new counsel and that previous counsel inadvertently fai led to file such a response. We grant Saul’s request. In its response to the motio n, Saul pointed out that the thirtieth day after final judgment fell on a Saturd ay. Citing Fed. R. App. P. 26(a)(3), Saul further noted that when the last dayof a time period is a Saturday or a Sunday, those days are not included in any tim e computation. The record reflects that Saul filed its notice of appeal on th e following Monday. Pursuant to Fed. R. App. P. 26(a)(3), we deny Huffman and Newto n’s motion to dismiss. -4- it sought fees not just for efforts at opposing rem oval but for other matters as well. In response to the court’s ruling, Huffman and Newton filed an amended petition, seeking fees only for services related to remand. The amended petition requested slightly more than $1300 for fees incurred in the district court, approximately $4000 in appellate fees, and just ove r $1800 for preparing the fee application itself. The total amounted to $7099. The district court granted the petition in full. Saul appeals that ruling. 3

II. Standard of Review At the outset, we reject Huffman and Newton’s insis tence that we review the ruling of the district court under an abuse of discretion standard. Granted, as Huffman and Newton note, we generally review a d istrict court’s decision to award fees for abuse of discretion. “[B]ut we revi ew de novo the district court’s application of the legal principles underlying that decision.” Nat’l Ass’n of4 They did not file their amended fee petition with this court. -5- Prof’l Baseball Leagues, Inc. v. Very Minor Leagues, Inc. , 223 F.3d 1143, 1146 (10th Cir. 2000). In particular, we extend de novo review to any statutory interpretation that provides the basis for the award of attorneys’ fees. Hoyt v. Robson Cos. , 11 F.3d 983, 984 (10th Cir. 1993).

III. Appellate Fees Saul argues first that the district court lacked ju risdiction to award Huffman and Newton appeal-related fees. We agree that the district court erred, but not for lack of jurisdiction. In the previous appeal, Huffman and Newton filed in this court the same request for attorneys’ fees, including appellate fe es, that they originally filed in the district court. 4In our decision reversing the district court, we expressly refused to award appellate fees to Huffman and Newt on, despite their success on appeal. We could not have been more clear. “Plaintiffs’ motion for attorneys’ fees and costs,” we said, “is DENIED.” Huffman , 194 F.3d at 1084 (emphasis in the original). “The parties must bear their own costs and fees,” we added. Id. Nevertheless, on remand the district court granted Huffman and Newton the very fee request we earlier had rejected. It d id so mindful of our injunction. “[T]he Tenth Circuit’s denial of Plaintiffs’ motionfor attorney fees,” said the5 In full, 28 U.S.C. § 1447(c) reads:

A motion to remand the case on the basis of any def ect other than lack of subject matter jurisdiction must be made wi thin 30 days after the filing of the notice of removal under section 1 446(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 cost s and any actual expenses, including attorney fees, incurred as a re sult of the removal. A certified copy of the order of remand s hall be mailed by the clerk to the clerk of the State court. The State court may thereupon proceed with such case. 28 U.S.C. § 1447 (c). -6- court, “does not bind the discretion of this court to award fees pursuant to 28 U.S.C. § 1447(c).” Aplt.’s App. at 327. Noting that its discretion rested on an interpretation of the controlling statutory language, the district court explained that § 1447(c) “specifically contemplates the award of such fees by the district

court that remands the case to state court.” Id. 5
The district court , of course, is correct. It does have discretion t o award fees and costs under § 1447(c), provided this court or some higher court has not limited the exercise of that discretion. Our earli er decision did just that. Indeed, our denial of Huffman and Newton’s request for appe llate fees was dispositive; it became law of the case and could not be reconsidered by the district court

. The law of the case “doctrine posits that when a co urt decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.” Arizona v. California , 460 U.S. 605, 618 (1983).-7-

The doctrine has particular relevance following a r emand order issued by an appellate court. “[W]hen a case is appealed and re manded, the decision of the appellate court establishes the law of the case andordinarily will be followed by both the trial court on remand and the appellate co urt in any subsequent appeal.” Rohrbaugh v. Celotex Corp. , 53 F.3d 1181, 1183 (10th Cir. 1995). The law of the case doctrine is intended to prevent “continued re -argument of issues already decided,” Gage v. Gen. Motors Corp. , 796 F.2d 345, 349 (10th Cir. 1986), and to preserve scarce court resources–to avoid “in short, Dickens’s Jarndyce v. Jarndyce syndrome.” McIlravy v. Kerr-McGee Coal Corp ., 204 F.3d 1031, 1035 (10th Cir. 2000). An “important corollary” to the law of the case do ctrine, “known as the ‘mandate rule,’ provides that a district court mustcomply strictly with the mandate rendered by the reviewing court.” Ute Indian Tribe v. Utah , 114 F.3d 1513, 1520-21 (10th Cir. 1997) (internal quotation omitted); see also Mason v. Texaco, Inc. , 948 F.2d 1546, 1553 (10th Cir. 1991) (“Under the ‘law of the case’ doctrine, the district court may not deviate from the appellate court’s mandate.”). Here the mandate rule prohibited the district court from departing from our earlier decision denying appeal-related fees to Huffman andNewton. In general, we repeat, few restraints cabin a district court’s ability to award statutory attorneys’-8-

fees. This does not hold, however, where an appell ate court has issued a mandate that specifically limits the district court’s discr etion. Thus, the district court lacked authority, not jurisdiction, to award appel late fees. Its jurisdiction flowed from both § 1447(c) itself, which allows courts in certain cases to consider an award of attorneys’ fe es, and our remand order, which returned the mandate in this diversity case to the district court . The district court’s authority, however, was circumscribed by th e terms of the mandate and the law of the case doctrine, neither of which is jurisdictional. United States v. Gama-Bastidas , 222 F.3d 779, 784 (10th Cir. 2000) (“Neither the law of the case doctrine nor the mandate rule is jurisdictional.”). In contrast to a jurisdictional defect, exceptions to both rules exist. For instance, a district court may deviate from the mandate “under exceptional circumstances, including (1) a dramatic change in c ontrolling legal authority; (2) significant new evidence that was not earlier o btainable through due diligence but has since come to light; or (3) if blatant erro r from the prior . . . decision would result in serious injustice if uncorrected.” United States v. Webb , 98 F.3d 585, 587 (10th Cir. 1996) (quotation omitted). Non e of these exceptions is present here. Similarly, three “exceptionally narr ow” grounds justify departing from the law of the case doctrine: “(1) when the e vidence in a subsequent trial is substantially different; (2) when controlling autho rity has subsequently made6 Hoyt was clear that an application for appellate fees m ust “first” be made to

this court, unless there is an “explicit” statutoryor other provision to the contrary. Id. It did not endorse what Huffman and Newton did he re: they submitted identical fee applications, seeking both appellate and district court fees, in our court and the district court

. -9- a contrary decision of the law applicable to such i ssues; or (3) when the decision was clearly erroneous and would work a manifest injustice.” McIlravy , 204 F.3d at 1035. Again, the district court faced none of these exceptions, nor do we. Our conclusion rejecting Huffman and Newton’s claim s for appellate fees mirrors the Third Circuit’s opinion in Yaron v. Township of Northampton , 963 F.2d 33 (3d Cir. 1992). The court held there that once the court of appeals “has entertained an application for appellate attorneys’ fees, a district court may not.” Id. at 37. Jaron rested its ruling exclusively on the mandate rule. We adopt that reasoning and extend it to include, as w ell, the complementary doctrine of law of the case. Additionally, our conclusion u nderscores the rule we announced in Hoyt v. Robson Cos. There we held that an application for appellate fees must first be made to our court. Hoyt , 11 F.3d at 985. “Should we decide that it is appropriate to award such fees , we may then remand to the district court to determine an award of reasonable fees.” Id. On occasion, as this case demonstrates, we disagree with the district court s about the appropriateness of a fee award. Adhering to the Hoyt rule will prevent such disagreements from resulting in unnecessary appeals. 6-10- IV. Reasonableness of the Attorneys’ Fees In addition to challenging Huffman and Newton’s ent itlement to appellate fees, Saul objected to numerous time entries on the ir fee application with respect to fees in the district court . For example, Saul questioned the reasonableness of a four-hour trip to the federal courthouse to retriev e a document and file a motion. Saul also claimed that the $1800 charged to prepare the fee application, representing 25 percent of the total amount sought in the petition, was excessive. From our perspective, these objections are not with out merit; at a minimum, it seems to us, they demand a response from Huffmanand Newton. Yet the district court refused to consider Saul’s objections, stating that “the statute [§ 1447(c)] permits recovery of actual fees incurred as a result of the removal rather than allowing a reasonable fee to be determined by the Court.” Aplt.’s App. at 327-28 (emphasis added). Consequently, the district court granted the fee petition in full, without conducting an independentinquiry into the reasonableness of the fees demanded. In eschewing such a role, the court erred. No doubt the district court intended to interpret the statute literally. Henc e its focus on the statute’s use of the word “actual. ” To be sure, § 1447(c) declares that an order remanding a case to state court “may require payment of just costs and any actual expenses, including attorneys’ fees. ” 28 U.S.C. § 1447(c). But the district court was selectively literal in its interpretation. Th e statute immediately-11-

qualifies the capacious language quoted above by pl ainly limiting “actual expenses” to those “incurred as a result of the removal.” Id. Pursuant to this limiting language, it is fair to c haracterize Saul’s argument as presenting a question: were certain of Huffman and Newton’s time entries incurred “as a result of the removal,” or instead, as Saul alleges, were they incurred as a result of unreasonable billing practi ces? If it is the latter, the billing entries are not compensable under the statute; if i t is the former, they are. The district court must make the determination. We see no way for the court to perform this task without conducting an inquiry int o the reasonableness of the time entries contained in the fee petition submitte d by Huffman and Newton. Our ruling in this regard reflects what district court s have long presumed. That is, they are duty-bound to ensure that an awar d of attorneys’ fees pursuant to § 1447(c) is reasonable. See, e.g., Braco v. MCI Worldcom Communications,
Inc. , 138 F. Supp. 2d 1260, 1271 (C.D. Cal. 2001) (“[T] he Court retains discretion (and presumably a duty) to ensure that the amount of attorneys’ fees requested is ‘reasonable’”); Mehney-Egan v. Mendoza , 130 F. Supp. 2d 884, 885 (E.D. Mich. 2001) (“The Court’s directive to the pl aintiff to present evidence of her just costs and expenses was not an invitation t o indulge in overreaching. Rather, the statutory prescription to award ‘just’ costs incorporates the concept of reasonableness in assessing a claim for attorney fees.”); Park Nat’l Bank of-12-

Houston v. Kaminetzky , 976 F. Supp. 571, 584 (S.D. Tex. 1996) (“Section 1447(c) awards payments of just costs and reasonable attorn ey’s fees incurred as a result of an improper removal.”); Summit Mach. Tool Mfg. Corp. v. Great N. Ins. Co. , 883 F. Supp. 1532, 1533 (S.D. Tex. 1995) (“In computing an attorney fees award under § 1447(c), the Court first multiplies the number of hours reasonably expended on the litigation by a reasonable hourly r ate.”). Two circuit court cases, both in unusual circumstan ces, have addressed the award of attorney’s fees under § 1447(c), see Wisconsin v. Hotline Indus. Inc. , 236 F.3d 363 (7th Cir. 2000); Gotro v. R & B Realty Group , 69 F.3d 1485 (9th Cir. 1995). In Hotline Industries , Wisconsin sought an injunction in state court to enjoin Hotline from building a marina on Lake Superior. After Hotline removed the case to federal court, Wisconsin succes sfully obtained an order remanding it to state court. The district court aw arded Wisconsin attorneys’ fees based on the prevailing rate in the area (Madison, Wisconsin) for lawyers specializing in similar work. The court rested its market rate approach on the general rule for calculating fee awards made pursuant to various fee-shifting statutes calling for a “reasonable” fee, e.g. 42 U.S.C. § 1988. In reversing, the Seventh Circuit noted what it sai d was the “unusual” and “significant” language contained in § 1447(c), focu sing on “actual” and “incurred.” Id. at 366-67. The court concluded that only actual outlays incurred-13-

by the government lawyers as a result of removal ar e recoverable; in other words, market indicated substitutes for actual outlays are not. Id. The court remanded the matter to the district court to determine the a ctual outlays incurred by the state as a result of Hotline’s improper removal. Id. at 368.
In Gotro , the issue was whether an attorney’s fee could be awarded under § 1447(c) in a remanded case where the attorney hadtaken the case on a contingent fee basis and would recover nothing if the case was lost on the merits.
See 69 F.3d at 1487. Ultimately the Ninth Circuit de scribed the issue as whether Congress had intended by using the words “‘any actual expenses, including attorney’s fees, incurred ’ . . . to remove the discretion of the district co urt to award fees in certain cases, such as contingent fee or pro bono cases, where the client had not actually ‘incurred’ the obligation to pay her attorney’s fees.” Id. (emphasis added). The court concluded Congress hadnot so limited the district court’s discretion. The reasonableness of the requ ested fee was not disputed. We think both these decisions bolster our conclusio n here. Our holding is that the statute’s limit on actual fees to those “i ncurred as a result of removal” requires the district court to conduct some sort of reasonableness inquiry. Our balanced emphasis on the terms “actual” and “incurr ed” mirrors the commonsense approaches taken in both Hotline and Gotro . We have concluded that the phrase “incurred as a result of removal” informs an d narrows the meaning of-14-

“actual expenses, including attorney fees.” Nothing in either Hotline or Gotro suggests that courts are compelled to award unreaso nable, if actual, fees to plaintiffs who successfully obtain an order of remand. To be compensable, their fees must be actually “incurred,” that is, they mus t reflect efforts expended to resist removal. As we said above, and repeat here, unreasonably high fees are not “incurred” as a result of removal; rather, excessiv e fee requests flow from, and accumulate by means of, improper billing practices, and will not be recoverable under § 1447(c). We REVERSE the judgment of the district court and REMAND for further proceedings consistent with this opinion. We GRANTSaul’s request for leave to file a response to Huffman and Newton’s motion to d ismiss, and we DENY the motion to dismiss. Each party shall bear its own c osts and fees on appeal.