H onor abl e A . W al l a c e Tas hi m a, Seni orJ udge of the U ni t ed * St at es C our tof A ppeal s forthe N inth C i r cui t , s i t t i ng by des i gnat i on. NO T PRECEDEN TI AL U N IT E D S T A T E S C O U R T O F A P P E A L S F O R T H E T H IR D C IR C U IT N o. 07- 3996 FI RST AM ERI CA N TI TLE I NS UR ANC E CO RP OR AT I ON

v. J P M O R G A N C H A S E & C O ., Succes s orbym er gert o B ank O ne, N A as T rust ee fo r the B enef i tof the C ert i fi cat e H older s U nderthe Pool i ng and Servi ci ng A gr eement R el at i ng t o the M ort gag e B acked P ass T hr ough C ert i fi cat es Ser i es 2002- 29; I DEA L SET TLEM ENT SERV I CES, LLC J P M o rg a n C h a s e & C o ., A ppel l ant

O n A p p ea l from the U n it ed S tat es D istri ct C o u rt forthe W es t ern D i s tr i ctof Penns y l vani a ( D . C . N o. 07- cv- 00544 ) D istri ct Ju d g e: H o n o rab le N o ra B . F isch er Subm i t t ed U nderT hi r d C i r cui tL A R 34. 1( a)

February11, 2010 B efore: S L O V ITE R , R O T H , and T A S H IM A , C i rcui tJudg es * ( Fi l ed : J une 10, 2010)2 ____ OP I NI ON

S L O V IT E R , C i r cui tJudge . J P M or gan C has e & C o. ( “J P M or gan”) appea l s fr om the or derof the D i s tr i ct C o u r tg r a n t i n g a t t o r n e y’ s f e e s a n d c o s t s u n d e r2 8 U . S . C . § 1 4 4 7 ( c ) t o th e a d v e r s e p a r ty, Fi r s tA m er i can Ti t l e I ns ur ance C orpor at i on, forr emovi ng the under l y i ng act i on fr om s t at e court . B eca us e the mer i t s of the part i es ’ cl ai m s agai ns teac h otherw i l l be dec i ded b yth e sta te c o u rt to w h ich th e D istric t C o u rt re m a n d e d th e a c tio n , w e a llu d e to th e m o n ly b ri e f ly, co n c e n tr a tin g in s te a d o n th e a w a rd o f f e e s a n d c o s ts . I . Backg r ound A l l i ed M or t gage G r oup, I nc. ( “A l l i ed”) m ade a $868, 500 l oan t o C hr i s t opher Fekos thatw as s ecur ed bya mort gage on a pr opertyow ned byFekos ( the “A l l i ed M or t gage” ) . A l l i ed pur chas ed t i t l e i ns ur ance fr om Fi r s tA m er i can, w hi ch i n turn as s i gned i t s a g e n t , I d e a l S e t t l e m e n tS e r v i c e s ( “ I d e a l ” ) , t o tr a n s a c tth e c l o s i n g a n d i s s u e th e p o l i c y. A lli e d late r a ss ig n e d th e m o rtg a g e a n d th e rig h t to b e in d e m n if ied u n d e r th e tit le i ns ur ance pol i cyt o B ank O ne, N A , w hi ch s ubs equent l ym er ged w i th J P M or gan, the A p p e llan t. Id e a l f a iled to p ro m p tlyre c o rd th a t m o rtg a g e , an d b e c a u se F e k o s s u b se q u e n tly3

obt ai ned tw o addi t i onal l oans fr om otherbanks , eac h of w hi ch w as s ecur ed bya mort gage o n th e F e k o s p ro p e rtya n d w a s re c o rd e d b e f o re th e A lli e d M o rtg a g e , w h e n th e p ro p e rty w a s e v e n tu a lly f

o re c lo s e d th e A llie d M o rt g a g e w a s d is c h a rg e d w ith o u t r e c o v e ry. Fi r s tA m er i can, the t i t l e company , ant i ci pat ed thatJ P M or gan – the hol derof the m o rt g ag e a t th e ti m e the co m p lai n t w as f il ed – w o u ld su e to re co v er it s loss, an d there fo re Fi r s tA m er i can pr eempt i vel yfi l ed s ui ti n Penns y l vani a s t at e court . C ountO ne of the com plai nt s ou gh ta declar at oryj ud gm ent that Fi rs tA m eri can n eed n ot i nd em nifyJP M organ b ecause “B ank O ne, JP M organ’s predecessori n int eres t , fai l ed to provide Fir st A m e r i c a n w i th t i m e l y n o t i c e o f th e f o r e c l o s u r e a c t i o n a n d S h e r i f f ’ s S a l e o n th e p r o p e r ty, w hi ch pr ej udi ced Fi r s tA m er i can a nd vi ol at ed the not i ce pr ovi s i on of the Pol i cy . ” A ppel l ee’ s B r . at6- 7. C ountT w o s oughta dec l ar at oryj udgm entthat , i f Fi r s tA m er i can w as l i abl e t o J P M or gan, I deal m us ti ndemni fyFi r s tA m er i can f or“anyand al l l os s es in c u rr e d in c o n n e c tio n w ith [ th e ] d is p u te ” b e tw e e n J P M o rg a n a n d F ir s t A m e ri c a n . A ppel l ee’ s B r . at7. J P M or gan att empt ed t o r emove t he s ui tt o fede r al courtunder28 U . S. C . § 1441 on th e b a sis o f

d iv e rsityo f

c iti z e n sh ip b e tw e e n JP M o rg a n a n d F irst A m e ric a n , an d th e re is no s ugges t i on thattheyar e notdi ver s e. I deal , on the otherhand, i s des cr i bed i n the c o m p lain t as a P e n n sy lv a n ia lim ited liab ili tyc o m p a n y , an d a s s u c h its c iti z e n sh ip is “det erm i ned bythe ci t i zens hi p of i t s m ember s . ” Zam bel l iF i r ew orks M f g. C o. v. W

ood , 592 F. 3d 412, 420 ( 3d C i r . 2010) . T he D i s tr i ctC our tfound that“I deal i s , on the fa ce ofW e hav e j uri sdic ti on un der 28 U . S . C . § 1 29 1 to hear JP 1 M o r g a n ’ s a p p e a l o f

th e a war d o f

a t t o rn e y ’ s f

e e s u n d e r2 8 U. S . C. § 1 4 4 7 (c ). R oxbur

y C ondo. A s s ’ n v. A nthony S. C upo A gency , 316 F . 3 d 2 2 4 , 2 2 6 (3d C ir . 2 0 0 3 ). 4 the C om pl ai nt , a ci t i zen of . . . Penns y l vani a, ” A pp. at17 n. 4, a conc l us i on s har ed and re ite ra te d b yF ir s t A m e ri c a n o n a p p e a l, s ee A pp el l ee’s B r. at19 (“B ecause Ideal i s a ci t i zen of

Penns y l vani a . . . . ”) . Sect i on 1441( b) author i zes r emoval “onl yi f none of t he p a rties in in ter e st p ro p e rlyjo in e d a n d se rv e d a s d e f e n d a n ts is a c iti z e n o f

th e S tate in w hi ch s uch ac t i on i s br ought . ” R emoval al s o r equi r es unani m i tyamong defendant s , and th e re c o rd d o e s n o t r e f

le c t I d e a l’ s c o n s e n t. S e e B a la zik v . C o u n ty o

f D a u p h in , 44 F. 3d 209, 213 ( 3d C i r . 1995) . A cknow l edgi ng thes e obs t acl es , J P M or gan moved t he D i s tr i ct C o u rt , in p art, to rea li g n Ide al as a co -plainti ff w ith F ir st A m erican b ec au se Id ea l’ s “i nt er es t s w oul d be pr ot ect ed i f Fi r s tA m er i can’ s i nt erpr et at i on of the pol i cyw as corr ect and J P M or gan . . . w as pr ecl uded fr om m aki ng a cl ai m . ” A ppel l ant ’ s B r . at8. T he D i s tr i ctC our tdeni ed the mot i on, r emanded the ca s e t o s t at e court , and aw arded F i rs tA m eri can $ 8, 45 6. 00 i n att orney ’s fees pu rs uan tt o 2 8 U . S . C . § 1 44 7(c) . JP M o rga n m o v ed fo r reco n side rati o n o f th e a tt o rne y ’s fe es a w ard o n ly . T h e D istri ct C o u rt deni ed thatm ot i on, s t at i ng that“a l ack of j ur i s di ct i on i s pl ai n i n thi s cas e and w oul d have been r evea l ed . . . w i th l i t t l e t o no r es ear ch, ” and a w ar ded Fi r s tA m er i can a n addi t i onal $ 8 ,9 9 2 .0 0 f

o r a tto rn e y ’s f

e e s a s s o c ia te d w ith litig a tin g th e re m a n d m o tio n . A p p . a t 2 5 . J P M or gan t i m el yappea l ed. 15 II. D i s cus s i on “W e r evi ew an aw ar d of att orney s ’ fee s unders ect i on 1447( c) forabus e of di s cr et i on. ” R oxbur

y C ondo. A s s ’ n, I

nc. v. A nthony S. C upo A gency , 316 F. 3d 224, 226 ( 3d C i r . 2003) ( ci t at i on om i t t ed) . T he Supr eme C our thas hel d that“[a ] bs entunus ual ci r cumst ance s , court s m ayaw ar d att orney ’ s fee s under§ 1447( c) onl yw her e the r emovi ng partyl acke d an obj ect i vel yr eas onabl e bas i s fors eeki ng r emoval . ” M ar t i n v. Fr a n k lin C a

p ita l C o r p ., 5 4 6 U . S . 1 3 2 , 1 4 1 (20 0 5 ). J P M or gan ar gues thati t s pos i t i on thatI deal coul d have be en r eal i gned w as obj ect i vel yr eas onabl e. W e agr ee. A s J P M or gan as s ert s , the pr i m arypurpos e of the u n d e rl y in g litig a tio n is “ to d e te rm in e w h e th e r F ir s t A m e ri c a n is lia b le o n its p o lic y ,” A ppel l ant ’ s B r . at18, w her eas “I deal [i s ] i n thi s cas e onl ybeca us e Fi r s tA m er i can a l l eges i f i ti s l i abl e . . . then I deal i s l i abl e overt o i tfornegl i gent l yconduct i ng the cl os i ng at w hi ch the l i en w as nott i m el yr ecor ded, ” A ppel l ant ’ s B r . at19. I deal and Fi r s tA m er i can are there fo re sim il arlysitu ated to “in su rers w h ich in su re the sam e risk.” A p p ell an t’ s R epl yB r . at3. W e hav e held that court s can real i gn such insurer s – even tho se w ho se i nter est s ar e pot ent i al l yoractual l yadver s e as t o cover age – t o be on the s ame si de of a l aw s ui tforthe purpos e of f i ndi ng ordefe at i ng di ver s i tyj ur i s di ct i on on the bas i s thatt hey s h a re a c o m m o n in te re s t in a v o id in g lia b ility to th e in s u re d . E m pl oyer s I ns . of W aus au v.W e do nothol d that the D i s tr i ct C our t m us t ors houl d have 2 r eal i gned I deal . W e onl yhol d thatI deal ’ s ar gum ent s foran e x te n s io n o f

th e la w w e re n o t o b

je c tiv e ly u n re a s o n a b le . 6 C r ow n C ork & Seal

C o. , 9 4 2 F .2 d 8 6 2 , 8 6 3 -6 7 (3 d C ir. 1 9 9 1 ). It w a s n o t o b jec tiv e ly u n re a so n a b le f

o r JP M o rg a n to a rg u e th a t th is th e o ryo f re a lig n m e n t sh o u ld sim ilarly a p p ly in re m o v a l a c tio n s . See Chi . , R . I . & P. R . C o. v. St ude, 346 U . S. 574, 579- 80 ( 1954) (re a lig n in g d e f

e n d a n t as a p lain tiff

f o r p u rp o se s o f

§ 1 4 4 1 a n d a f

f irm in g re m a n d ); c

f. D ev. F in . C o r p . v . A lp h a H

o u s in g& He a lth C a r e , In c ., 5 4 F . 3 d 1 5 6 (3d C ir . 1 9 9 5 ) (“w h ere partydes i gnat i ons have j ur i s di ct i onal cons equenc es , ” a c our tm us t“al i gn the part i es befo re det erm i ning j uri sdi ct i on . ”) ( i nternal ci t at i on and qu otat i on om i t t ed). U nd er these ci rcum st ances, w e cann ot faul tJP M organ f or i t s effortt o real i gn the d efen dan t s. A s a r es ul t , w e w i l l nots us t ai n the D i s tr i ctC our t ’ s aw ar d of att orney ’ s fee s and c o sts a g a in st J P M o rg a n in c o n n e c tio n w ith th e re m o v a l ac tio n , an d it fo llo w s th a t w e w ill nots us t ai n the aw ar d i n connec t i on w i th the mot i on forr econs i der at i on. 2 III . C oncl usi on Forthe r eas ons s etfor th above, w e w i l l r ever s e the D i s tr i ctC our t ’ s or deraw ar di ng att orney ’ s fee s and cos t s t o Fi r s tA m er i can.T h e m ajorityd o es n o t add ress the D istri ct C o u rt ’s rejecti o n o f JP M o rga n ’s 1 fr audul entj oi nderdefe ns e. I t ake thi s as a conc es s i on thatfr audul entj oi nderdoes not c o n stitu te a n o b

jec tiv e lyre a so n a b le b a sis f o r re m o v a l. T A S H IM A , C i r cui tJudge , di s s ent i ng: O n t hi s appea l fr om an or derof the D i s tr i ctC our taw ar di ng att orney ’ s fee s and cos t s under28 U . S. C . § 1447( c) , as the maj or i tynot es , w e r evi ew the aw ar d forabus e of di s cr et i on. M aj . op. at4- 5 ( quot i ng R oxbur y C ondo. A s s ’ n, I

nc. v. A nthony S. C upo A gency , 3 1 6 F . 3 d 2 2 4 , 2 2 6 (3d C ir . 2 0 0 3 )). B ec au se I w o u ld af firm the D istri ct C o u rt ’s o rd e r u n d e r th a t sta n d a rd o f re v iew , I re sp e c tf

u llyd iss e n t. D efe ndantI deal Set t l ementSer vi ces , L L C , i s cl ear l yand i ndi s put abl ya ci t i zen of P e n n s y lv a n ia . See M aj . op. at3. T hi s fac tw oul d or di nar i l ydi s qual i fythi s cas e fr om bei ng r emoved under28 U . S. C . § 1441( b) , w hi ch pr ovi des thata ca s e maybe r emoved onl yi f none of

the def endant s “i s a ci t i zen of

the St at e i n w hi ch s uch ac t i on i s br ought . ” J P M or gan s oughtt o ci r cumventthi s l i m i t at i on i n tw o w ay s . Fi r s t , i tar gued thatI deal w as fr audul ent l yj oi ned as a def endanti n or dert o pr ecl ude r emoval . Second, i tar gued that I deal s ho uld be real i gn ed as a p l ai nti ff. T he D i stri ctC ou rtrej ect ed b oth ar gu m ents , rem and ed the case t o st at e cou rt , and aw arded fees t o F i rs tA m eri can u nd er § 144 7(c) . JP M or gan cont i nues t o pur s ue the s ame ar gum ent s on appea l as r eas ons w hythe D i s tr i ct C our tabus ed i t s di s cr et i on i n aw ar di ng att orney ’ s fee s t o Fi r s tA m er i can. Fr audul ent

Joi nder 1

### -2 -

T h e f ra u d u le n t jo in d e r s ta n d a rd h a s b e e n w e ll- e s ta b lis h e d f o r m a n yy e a rs . See, e. g. , B oyerv. Snap- O n Tool s C or p. , 9 1 3 F .2 d 1 0 8 (3 d C ir. 1 9 9 0 ). T h e re , this c o u rt h e ld that“j oi nderi s fr audul ent‘ w her e ther e i s no r eas onabl e bas i s i n fac torcol or abl e gr ound su p p o rtin g th e c laim a g a in st th e jo in e d d e f e n d a n t, or n o re a l in ten tio n in g o o d f a ith to pr os ecut e the ac t i on agai ns tthe def endantors eek a j oi ntj udgm ent . ’ ” I d. at111 ( quot i ng A bel s v. Stat e Farm F i r e & C as . C o. , 7 7 0 F .2 d 2 6 , 2 9 (3 d C ir. 1 9 8 5 )). T h u s, “ [ i]f th e re is even a pos s i bi l i tythata s t at e courtw oul d fi nd the compl ai nts t at es a ca us e of a ct i on agai ns tanyone of the r es i dentdefe ndant s , the fe der al courtm us tfi nd thatj oi nderw as pr operand r emand t he ca s e t o s t at e court . ” Id . ( i nt ernal quot at i on m arks om i t t ed) . T he D i s tr i ctC our t , i n concl udi ng thatI deal w as notfr audul ent l yj oi ned, not ed that“[u] nder Penns y l vani a l aw , pl ai nt i ff pr oper l yr eques t ed dec l ar at oryr el i ef a gai ns tJ P M or gan and I deal . ” I n cont es t i ng thi s fi ndi ng, J P M or gan i gnor es bi ndi ng T hi r d C i r cui tcas e l aw and ci t es onl ya s t at e appe l l at e ca s e fr om T exas i n s uppor tof thi s ar gum ent . Such a s l ender re e d c a n n o t co n stitu te a n o b jec tiv e lyre a so n a b le b a sis f o r re m o v a l. R eal ignm ent

of I deal T hi s ci r cui tfol l ow s the “pr i m arypurpos e” appr oach i n det erm i ni ng how t o al i gn p a rt ie s . See Em

pl oyer s I ns . of W aus au v. C r ow n C ork & Seal C o. , 942 F. 2d 862, 864 ( 3d C i r . 1991) . T he D i s tr i ctC our tr ej ect ed J P M or gan’ s ar gum entthatI deal s houl d be r eal i gned as a pl ai nt i ff be caus e, underthe pr i m arypurpos e t es t , i ti s notpr opert o r eal i gn

### Ch i. , R oc k Is lan d &P. R . Co . v . Stu de346 U . S. 574 ( 1954 ), c ite d by 2 

### themaj ority , Ma

j . op. at 5, doe s no t su

ppor t JP Mo rg an ’ s po sit ion . T he re , the Co urt he ld that i n ac onde m natio n proc ee din g th e co nde m ne e railroa d w as the pla int if f an d, the re fo re , c oul d no t r emovean a ct ionto fe de ra l c ourt. N oth ingin Stu desup ports the r ea lignment of partie s inorde r to f

ac ili tate r emova l. -3 - p a rties “ w h e n th e re is a n a c tu a l co n tro v e rsy be tw e e n P lain tiff a n d th e n a m e d d e f

e n d a n ts ov er the is sue of

P l ai nti ff’s r i gh t s and D efen dan t s’ ob l i gati on un der theiragreem ents ” ( ci t i ng E m

ployers Ins. , 942 F. 2d at865) . T he D i s tr i ctC our tcorr ect l yfound that“the pri m aryi ssue i s JP M organ’s and Ideal’ s obli gati on s t o P l ai nti ff u nd er the D efen dan t s’ resp ec ti v e a g ree m en ts w ith P lai n ti ff. ” T h u s, u n d er E m ployers Ins. , i ti s cl ear that J P M o rg a n d o e s n o t sa tisf

yth e p rim a ryp u rp o se tes t f o r re a lig n m e n t. T h is, to o , w a s c lea rly es t abl i s hed Thi r d C i r cui tl aw atthe t i m e J P M or gan moved t o r eal i gn I deal as a pl ai nt i ff. 2 The Standar d f

orA t t or ney’s Fees T he Supr eme C our thas hel d thatfee s under§ 1447( c) m aybe aw ar ded w hen the r emovi ng partyl acks “an obj ect i vel yr eas onabl e bas i s fors eeki ng r emoval . ” M ar t i n v. Fr ankl i n C api talC or

p. , 546 U . S. 132, 141 ( 2005) . T hi s s t andar d does notr equi r e “a s how i ng thatthe uns ucce s s ful party ’ s pos i t i on w as ‘ fr i vol ous , unr eas onabl e, orw i thout foundat i on. ’ ” I

d. a t 1 3 9 . N e ith e r d o e s it r e q u ir e a s h o w in g o f b a d f a ith . Mi nt

s v. E duc. Tes t i ng Ser v. , 99 F. 3d 1253, 1260 ( 3d C i r . 1996) . A l l thati s r equi r ed forthe exe r ci s e of the D i s tr i ctC our t ’ s di s cr et i on i n favorof the aw ar d of fe es i s that“the as s ert i on i n the r emoval pet i t i on thatthe di s tr i ctcourthad j ur i s di ct i on w as . . . atbes ti ns ubs t ant i al . ” I d.N o r is th e tes t o f w h e th e r th e D istric t C o u rt a b u se d its d isc re tio n in 3 aw ar di ng fee s under§ 1447( c) w hetherw e ca n s ubj ect i vel yconcl ude that“w e ca nnot faul tJ P M or gan fori t s eff or t s t o r eal i gn the def

endant s . ” M aj . op. at6. 

### -4 - at1261. N ei therof J P M or gan’ s ar gum ent s i n s uppor tof r emoval cons t i tut es an o b jecti v elyrea so n ab le ba sis fo r rem o v al un d er c o n tr o ll ing T h ir d C ir cu itlaw – b o th are “a t bes t i n su b stan ti al. ” T h at an arg u m en t cou ld b e m ad e f o r th e “ ex tens ion o f [ T h ir d C i r cui t ] l aw , ” M aj . op. at6 n. 2, does notequat e t o an abus e of di s cr et i on bythe D i s tr i ct C o u rt. 3 A s w e s ai d i n Min ts , i n t hes e ci r cumst ance s , “w e ca nnotpos s i bl yconcl ude thatt he di s tr i ctcourtabus ed i t s di s cr et i on i n or der i ng [the r emovi ng defe ndant ] t o pay[the pl ai nt i ff’ s ] att orney ’ s fee s and cos t s w i th r es pectt o the mot i on t o r emand and for r econs i der at i on. ” I

d. ( footnot e omi t t ed) . B eca us e, underourcas e l aw and s t andar d of re v iew , I se e n o b a sis f

o r c o n c lu d in g th a t th e D istric t C o u rt a b u se d its d isc re tio n , I w o u ld af firm the a w ard o f a tt o rne y ’s fe es a n d co sts un d er § 1 4 4 7 (c).