IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 97-20417

MAGUIRE OIL COMPANY, et al.,

Plaintiffs,

MAGUIRE OIL COMPANY,

Plaintiff-Appellee,

versus

THE CITY OF HOUSTON,

Defendant-Appellant.

Appeal from the United States District Court

for the Southern District of Texas

June 18, 1998

Before JOLLY, WIENER, and STEWART, Circuit Judges. 

STEWART, Circuit Judge:

Defendant City of Houston (“the City”) appeals the district court’s order requiring the City

to pay $98,578.10 in sanctions to plaintiff Maguire Oil Company (“Maguire”) for “wrongfully

caus[ing] the removal of this case from state court to federal court and, thereafter, deliberately

conceal[ing]fromtheCourt and counselinformationpertinent to [the]Court’sjurisdiction.” Because

we find that the district court abused its discretion in imposing sanctions, we reverse.
1Maguire’s takings, or inverse condemnation, claim was premised on both (1) the Fifth and

Fourteenth Amendments to the United States Constitution and (2) Sections 17 and 19 of Article I of

the Texas Constitution. Maguire did not specify a constitutional or statutory basis for its

unreasonable discrimination claim. 

2According to the City, the permit was issued in violation of Section 23-102 of the Houston

Code, which prohibits the drilling of a well for the purpose of exploring for oil, gas and other

minerals within 1,000 feet of Lake Houston.

2

I.

FACTS AND PROCEDURAL HISTORY

On October 27, 1993, Maguire filed suit in Texas state court for damages and a declaratory

judgment against the City, alleging that certain actions taken by the City against mineral interests it

owned near Lake Houston amounted to, inter alia, (1) a taking without adequate compensation or

due pro cess of law; and (2) unreasonable discrimination against a mineral property owner.1 The

targeted City actions were not only dubious, but—asseen below—foretelling of further questionable

behavior on the City’s part (i.e., during the instant litigation);specifically, the City issued a stop-work

order on a Maguire-owned gas well that only months earlier it had authorized via permit.2 These

actions prompted Maguire to raise not only the aforementioned claims, but also claims of negligent

misrepresentation, promissory estoppel and estoppel.

Noting that Maguire had asserted “violations of [its] rights under the United States

Constitution,” the City timely removed the case to the United States District Court for the Southern

District of Texas on the ground that the court had “original jurisdiction [because the case was] a civil

rights action arising under the [C]onstitution, laws or treaties of the United States.” Trial thereafter

commenced on November 7, 1995. On November 13, 1995, the district court granted the City’s

motion for judgment as a matter of law on Maguire’s claims of negligent misrepresentation,
3On appeal, t he parties do not explain the fate of Maguire’s “unreasonable discrimination”

allegation. From our review of the record, it appears that Maguire did not pursue this claim with

diligence and thus it became overshadowed by the other asserted claims. 

3

promissory estoppel and estoppel, but denied the motion as to Maguire’s claim of inverse

condemnation.3 On November 15, 1995, a jury rendered a verdict in favor of the City, finding that

the City’s actions did not constitute inverse condemnation of Maguire’s mineral interests.

Maguire then filed a “Motion for New Trial on the Negligent Misrepresentation, Promissory

Estoppel, and Estoppel Claims,” followed by a “Renewed Motion for Judgment as a Matter of Law

and, in the Alternative, [a] Motion for New Trial on [the] Takings [Claim].” On September 6, 1996,

the district court granted Maguire’s motion for new trial as to the negligent misrepresentation claim

and requested further briefing on whether the inverse condemnation claim was barred by the

applicable statute of limitations.

The district court never ruled on the statute of limitationsissue, holding instead that it lacked

subject matter jurisdiction over the entire case. In so holding, the court noted that in Williamson

CountyRegional Planning Commission v. HamiltonBank, 473 U.S. 172, 195, 105 S.Ct. 3108, 3121,

87 L.Ed.2d 126 (1985), the Supreme Court held, inter alia, that a takings claim under the Fifth

Amendment is not ripe for review until “the owner [of the property at issue] has unsuccessfully

attempted to obtain just compensation through the procedures provided by the State for obtaining

such compensation.” See also Samaad v. City of Dallas, 940 F.2d 925, 934 (5th Cir. 1991) (“[I]f a

State provides anadequate procedure forseeking just compensation, the propertyowner cannot claim

a violation of the Just Compensation Clause until it has used the procedure and been denied just

compensation.” (quoting Williamson, 473 U.S. at 195, 105 S.Ct. at 3121)). The district court found

that because (1) Texas had adequate proceduresto remedy a deprivation of property by government
4

regulation and (2) Maguire did not first litigate the claim in state court, Maguire’s inverse

condemnation claim was not ripe for review. See Rolf v. City of San Antonio, 77 F.3d 823, 826-27

(5th Cir. 1996) (holding that Texas recognizes a cause of action for inverse condemnation when

property is directly restricted, and that “[a] state’s [remedial] procedure is adequate even though its

law is unsettled whether the claimant would be entitled to compensation.”). In addition, the court

held that because it did not have “jurisdiction over the federal claim asserted by Maguire,” it could

not exercise jurisdiction over Maguire’s state law claims. 

Before remanding the case to state court, however, the court observed that on December 8,

1995, the United States District Court for the Southern District of Texas had held—through a

different judge—that it lacked subject matterjurisdiction inTrailEnterprises, Inc. v. City of Houston,

907 F.Supp. 250 (S.D. Tex. 1995), a case that involved not only a virtually identical federal takings

claim, but also removal of the claim by the same defendant (the City) prior to the claim’s final

resolution in state court. Id. at 251 (citing Williamson, 473 U.S. at 193-94, 105 S.Ct. at 3120).

Because it appeared that “the City of Houston may have deliberately taken inconsistent positions on

the jurisdiction issue and may have caused an unnecessary duplication of time and expense in this

case,” the court invited Maguire to submit “any motion that [it] wish[ed] to file related to this matter

before a final order remanding the case [was] entered.” Maguire filed a motion for fees, costs,

and sanctions, citing three possible sources for the court’s authority to issue such an award: (1) the

court’s inherent sanctioning power, which may be invoked when a party has “acted in bad faith,

vexatiously, wantonly, or for oppressive reasons,” Chambers v. NASCO, Inc., 501 U.S. 32, 45-46,

111 S.Ct. 2123, 2133, 115 L.Ed.2d 27 (1991); (2) 28 U.S.C. § 1927, which supports an award

against an “attorney . . . who so multipliesthe proceedings in any case unreasonably and vexatiously
5

. . . .”; and (3) 28 U.S.C. § 1447(c), which states that “[a]n order remanding [a] case may require

payment of just costs and any actual expenses, including attorney’s fees, incurred as a result of the

removal.” In support of its motion, Maguire argued that the City wrongfully removed the case to

federal court, and thereafter, concealed the Traildecisionfromthe court’s attention. Maguire averred

that in November 1996, while preparing for an upcoming pretrial conference, its attorney uncovered

the Trail opinion and—despit e Maguire’s preference to have the retrial occur in federal

court—promptly brought the opinion to the court’s attention in accordance with his professional

responsibilities. Maguire added that “[d]espite the clear significance of [the Trail decision] to the

proceedingsin the case at bar, theCityofHouston neverinformed [anyone] about the decision”—and

thus deliberately concealed a jurisdictional “trump card” from the court’s(and Maguire’s) attention.

Maguire sought (2) $162,738 for fees and expenses incurred for non-reusable work devoted to the

November 1995 trial; (2) $98,578.10 for fees and expenses incurred during post-trial litigation

following the Trail decision; and (3) $98,578.10 as sanctions for the City’s misconduct.

The district court partially granted Maguire’s motion for sanctions in a brief order, the

pertinent part of which is reproduced below:

[T]he Court is of the opinion and finds that the City of Houston

wrongfully caused the removal of this case from state court to federal

court and, thereafter, deliberately concealed from the Court and

counsel information pertinent to this Court’sjurisdiction, all of which

caused a multiplication of proceedings and the needless duplication of

time and expense . . . . For these reasons, . . . [Maguire’s motion] is

GRANTED in part and the City of Houston is ORDERED to pay to

Maguire . . . the sum of $98,578.10 as partial reimbursement for

attorney fees, costs and litigation expenses needlessly incurred by

Maguire . . . as a consequence of the conduct of the City of Houston.

The district court then remanded the case to state court. The City timely appeals the order imposing

sanctions. 
6

II.

DISCUSSION

On appeal, the City contendsthat the sanctionsimposed cannot be sustained under any ofthe

grounds identified by Maguire in its motion for fees, costs and sanctions. While a remand order

based on the lack of subject matter jurisdiction cannot be reviewed on appeal, see Mobil Corp. v.

Abeille GeneralInsur. Co., 984 F.2d 664, 665 (5thCir. 1993), a concomitant imposition ofsanctions

is not similarly shielded. Miranti v. Lee, 3 F.3d 925, 927-28 (5th Cir. 1993). 

“This Court reviews the imposition of sanctions for an abuse of discretion.” Matta v. May,

118 F.3d 410, 413 (5th Cir. 1997). “A court abuses its discretion to impose sanctions when a ruling

is based on an erroneous view of the law or on a clearly erroneous assessment of the evidence.” Id.

Because the abbreviated ruling at issue does not disclose under what legal authority sanctions were

imposed, we will examine each of the possible grounds offered by Maguire.

A. 28 U.S.C. § 1927

AlthoughMaguire invoked section 1927 as a possible basisforsanctions below, it wiselydoes

not urge affirmance of the district court’s award on that basis now. Section 1927 applies to an

“attorney or other person admitted to conduct cases in any court of the United States . . . who so

multiplies the proceedings in any case unreasonably and vexatiously,” 28 U.S.C. § 1927, and is

thus—by its own terms—available only against attorneys and not parties. See Matta, 118 F.3d at

413-14 (“[Section] 1927 sanctions are, by the section’s plain terms, imposed only on offending

attorneys; clients may not be ordered to pay such awards.”) (citation omitted). Because the award

at issue in this case was imposed against the City—and not any of the attorneys involved—it plainly

cannot be sustained under section 1927.
4Maguire aversthat the City has alreadybeen penalized for its “wrongfulremoval” ofthe case

by the district court’s order to remand.

7

B. 28 U.S.C. § 1447(c)

The City argues that irrespective of section 1447(c)’s allowance that “[a]n order remanding

[a] case mayrequire payment ofjust costs and anyactual expenses, including attorney’sfees, incurred

as a result of . . . removal,” 28 U.S.C. § 1447(c), the sanctions imposed in this case cannot be

sustained under section 1447(c) because the City did not “wrongfully remove” the case from state

court. While Maguire does not dispute that “the propriety of the defendant’s removal [is] central

in determining whether to impose fees[under 28 U.S.C. § 1447(c)],” Miranti, 3 F.3d at 928, Maguire

contends that because the district court’s order reimbursed it only for attorney’s fees and costs

incurred after the Trail decision was rendered—and did not impose sanctions for expenses incurred

prior to and during the November 1995 trial—the issue of whether the City wrongfully removed the

case is a red herring.4 Indeed, Maguire’s brief nowhere urges us to affirm the district court’s award

on the basis of section 1447(c).

While the district court’s limitation of the sanction award to expensesincurred after the Trail

decision wasrendered strongly suggeststhat theCitywassanctioned onlyfor failing to bring the Trail

decision to the court’s attention, the language of the sanction order itself explicitly references the

City’s “wrongful[] . . . removal” of the case as one of the reasons for granting Maguire an award.

Therefore, the City is more than justified in proffering an argument that it did not wrongfully remove

this action from state court, and that an award of sanctions is unwarranted under section 1447(c).

We agree with the City that section 1447(c) cannot sustain the award ofsanctions at issue in

this case. In Avitts v. Amoco Production Co., 111 F.3d 30, 32 (5thCir.), cert. denied, 118 S.Ct. 435,
8

139 L.Ed.2d 335 (1997), we stated:

[i]f a plaintiffbears a substantialshare ofthe responsibility for the case

remaining in federal court, a court abuses its discretion by awarding

the plaintiff any sums under § 1447(c). In other words, a plaintiff may

in certain cases be estopped fromrecovering costs and attorney’sfees

under § 1447(c) when his conduct after removal plays a substantial

role in causing the case to remain in federal court.

Maguire does not dispute on appeal the City’s assertion that Maguire played a crucial role in

persuading the district court to retain jurisdiction over this case. Given that Maguire (1) alleged

violations of both state and federal law in its originalstate law complaint;(2) did not move to remand

after the case was removed; (3) alleged in its amended complaint that the district court had

jurisdiction over the case; and (4) persisted in arguing—even after informing the district court about

the Trail decision—that federal jurisdiction nevertheless existed under Lucas v. South Carolina

Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992), we find that Maguire

indeed played a substantial role in causing the case to remain in federal court after its removal. The

district court’s imposition of sanctions therefore cannot be sustained under section 1447(c).

C. THE COURT’S INHERENT POWERS 

We now turn to the primaryissue in this case—whetherthe district court’s award ofsanctions

may be sustained under the court’s inherent power to sanction deplorable conduct in litigation. See

Chambers v. NASCO, Inc., 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991). In Chambers, the

Supreme Court indicated that even if a statute or rule governs the imposition of attorney’s fees, a

court may “resort to its inherent power to impose attorney’s fees, as a sanction for bad faith

conduct.” Id. at 50, 111 S.Ct. at 2135. It is well-settled, however, that the threshold for the use of

inherent sanctioning power is high, and once the power is invoked, it must be “exercised with

restraint and discretion.” Chaves v. M/V Medina Star, 47 F.3d 153, 156 (5th Cir. 1995) (citations
5While the Trail court did not identify the specific City ordinance at issue, the City does not

dispute Maguire’s assertion that it was Houston Code Section 23-102, the very ordinance that

precipitated the instant litigation.

9

omitted). Accordingly, before imposing sanctions under its inherent power, a court must make a

specific finding that the sanctioned party acted in “bad faith.” Matta, 118 F.3d at 410.

In this case, the district court held that the City “wrongfully caused the removal of this case

. . . and, thereafter, deliberately concealed from the Court and counsel information pertinent to this

Court’s jurisdiction.” Although the district court’s holding is ambiguous in terms of specifying (1)

the particular City action that was taken in “bad faith” and (2) the precise information that was

“deliberately concealed,” the parties have raised no arguments along those lines, and instead have

narrowly framed the issue on appeal asfollows: whether the evidence was sufficient to show that the

City deliberately concealed the Trail decision from the district court’s attention, thus warranting an

imposition of sanctions under the court’s inherent powers. The parties’ focus on the Trail decision

is by no means unreasonable, given that the district court awarded Maguire only those fees, costs, and

expenses incurred after that decision was rendered. We thus turn our attention to the Trail decision

and the evidence presented on whether the City deliberately concealed it as a jurisdictional “trump

card.”

1. The Trail Decision

In Trail, the plaintiff—an oil and gaslessee of certain acreage in the vicinity of Lake Houston

(“TrailEnterprises”)—filed suit in state court, alleging that theCityofHouston had (1) enacted a city

ordinance pro hibiting the drilling of oil and gas wells within an area that encompassed its leased

acreage and (2) failed to respo nd to its request for a variance to permit it to drill wells within the

subject area. Trail, 907 F.Supp. at 251.5 Trail Enterprises alleged two causes of action. The first
10

action, for declaratory judgment that the ordinance was void, was based primarily on state law, but

included an allegation that the ordinance violated Article I, § 10, Clause 1 of the United States

Constitution. Id. The second action, for damages resulting from the inverse condemnation of its

property, was based on both the Texas and United States Constitutions. Id.

Based on the federal claimsthat were asserted, the City removed the case to the United States

District Court for the Southern District of Texas. Trail Enterprises then filed a motion to remand,

arguing that because state remedies had not yet been exhausted, the inverse condemnation claims

were not ripe. Id. The City responded that because Trail Enterprises invoked other provisions of the

federal constitution as a basis for relief, removal was proper. Id. The district court, relying on

Williamson, 473 U.S. at 193-94, 105 S.Ct. at 3120, held that because “the federal constitutional

claims of an uncompensated taking for public use [were] unripe, [it had] no federal question

jurisdiction over the federal takings claims.” Id. In addition, the court declined to entertain Trail

Enterprise’s declaratory judgment claim, noting that it was primarily based on state law. The court

remanded the entire case to state court on December 8, 1995.

We agree with the district court’s assessment that, in all material respects, the factual and

procedural backdrop of the Trail case is virtually identical to that in the instant case, and that once

the Trail court decided that it did not have jurisdiction over the asserted claims, the district court

should have been informed of that decision. Both cases involved not only the City as a defendant,

but claims of inverse condemnation that were: (1) based on the same City ordinance; (2) removed to

the United States District Court for the Southern District of Texas prior to being adjudicated in state

court; and (3) asserted in conjunction with primarily state law claims. The fact that Maguire sought

the return of a drilling permit that had previously been issued, whereas Trail Enterprises sought a
11

drilling permit for the first time (i.e., through variance procedures), is a distinction without a

difference to the crucial issue of whether federal subject matter jurisdiction existed over Maguire’s

claims. Indeed, the City conceded below that once the Trail court decided that jurisdiction was

lacking over the claims asserted, the attorneys assigned to the Maguire case were under an

obligation—if they were aware of that decision—to disclose it to the court below. We do not

disagree with that assessment.

2. Evidence of the City’s Deliberate Concealment of the Trail Decision

While the district court understandably was perturbed that the City failed to inform it of the

Trail decision, it nonetheless could not impose sanctions for the City’s ineptitude unless it first made

a specific finding that the City acted in “bad faith.” Chaves, 47 F.3d at 156 (“In order to impose

sanctions . . . under its inherent power, a court must make a specific finding that the [sanctioned

party] acted in “bad faith.”). Although the court purported to make such a finding in its brief order

imposing sanctions—“[the City] deliberately concealed . . . information pertinent to this Court’s

jurisdiction”—our review of the record reveals that this finding was based on a clearly erroneous

assessment of the evidence. Indeed, nothing in the record indicates that the City deliberately

concealed the Trail decision from the district court’s attention between December 8, 1995 (the date

the Trail decision was rendered) and November 14, 1996 (the date the court below was informed of

that decision). Consequently, the imposition of the sanctions at issue cannot be sustained under the

court’s inherent powers.

Suffice it to say, the fact that the City was the defendant in Trail and should have known for

some time that federalsubject matter jurisdiction was problematic in the instant case causes us much

concern, particularly with regard to the City’s coordination (or lack thereof) in handling its litigation
6The City’s behavior is especially perplexing in light of the fact that the Trail case and the

instant case were docketed in the same courthouse.

12

activities.6 To say that the proverbial “left hand did not know what the right hand was doing” is an

understatement. Nonetheless, the City argues, as it did below, that “the attorneys who handled this

case were not the same attorneys who handled the Trail [Enterprises] case,” and that there was no

evidence that it “deliberately failed to disclose any information to the [court below].” As part of its

opposition to Maguire’s motion for sanctions, the City introduced the affidavits of four City

attorneys—Jocelyn Labove (“LaBove”), an Assistant Attorney for the Defense Litigation Division;

Robert Cambrice (“Cambrice”), the Chief of the Defense Litigation Division; Judy Hatfield

(“Hatfield”), an Assistant Attorney for the Business Litigation Division; and Gene Locke (“Locke”),

the City Attorney—who collectively attested to the following facts: 

(1) the City Attorney’s office is divided into ten divisions, including the Defense

Litigation Division and the Business Litigation Division; 

(2) the Maguire case, upon its filing in late 1993, was assigned to the Defense

Litigation Division, whereasthe subsequentlyfiled TrailEnterprise case was assigned

to the Business Litigation Division; 

(3) the attorneys responsible for the Maguire case (including LaBove and Cambrice)

were unaware of “the specifics [of the Trail case]”—most notably its procedural

history (i.e., that it was originally filed in state court, then removed and

remanded)—until counsel for Maguire presented the Trail decision to the district

court in November 1996; 

(4) the attorneys responsible for the Trail case (including Hatfield) did not
7The City assures us that corrective measures have since been implemented to ensure that,

“absent extraordinary circumstances, cases involving substantially related matters [are] handled out

of the same division.” According to Locke, these measures should reduce the likelihood of a repeat

of the questionable conduct exhibited by the City during this case.

13

communicate the Trail court’s December 8, 1995, holding regarding subject matter

jurisdiction to the attorneys responsible for the Maguire case, because—to the best

of their knowledge—the Maguire case was conclusively decided in favor of the City

in November 1995; and

(5) the lack of communication between the two divisions stemmed from the cases

being assigned to different divisions and likely “would [not] have [occurred] if the

cases had been handled out of the same division.”

In addition, the City conceded in its opposition motion that the above-noted miscommunication

between its attorneys rose to the level of negligence, and that the district court should have been

informed about the Trail decision as soon as it was rendered. Unfortunately for Maguire, however,

mere negligence does not trigger a court’s inherent sanctioning power.7

To its fatal detriment, Maguire presented no rebuttal evidence to suggest that the City’s

actions went beyond mere negligence to constitute intended deceit, i.e., bad faith. In particular,

Maguire introduced no evidence to suggest that theCity deliberately withheld the Traildecision from

the attorneys working on the Maguire case, or that the Maguire attorneys were aware ofthe decision

and failed to disclose it to the district court. Instead, Maguire merely asserted, as it does on appeal,

that the City was generally “aware” of the Trail decision through the imputed knowledge of the

attorneys who worked on that case, and that the City failed to disclose the decision to the court

below. The City does not dispute these assertions, however, and reiterates on appeal that its failure
8

In a footnote in its brief, Maguire asserts that LaBove’s affidavit—in which LaBove admits

to disclosing the names of experts used in the Maguire case to Hatfield—“inadvertently proves” that

the City was aware of the district court’s lack of jurisdiction, and that it deliberately concealed this

fact from the court’s attention. In that affidavit, LaBove stated:

At no time prior to the date of [November 14, 1996] was I aware that the Trail case

had been removed from the state district court to federal [court] or that it had been

remanded in December 1995 for lack of subject matter jurisdiction. As best as I can

recall, I conveyed the names of experts that we used in the Maguire case at trial to

Judy Hatfield, the attorney handling for the City the Trail[] case. This, however, if

it occurred, did not occur until sometime after the trial in the referenced case.

Essentially, Maguire claims that this affidavit establishes (1) that LaBove was made aware

(presumably through Hatfield) about the challenge made to the Trail court’s subject matter

jurisdiction, and (2) that the attorneys working on the instant case were thus cognizant of the district

court’s precarious jurisdictional reach over the claims asserted.

We disagree with Maguire’s interpretation of LaBove’s affidavit. To begin, the affidavit

provides no indication that LaBove’sinteraction with Hatfield occurred after December 8, 1995, the

date the Trail court remanded for lack of subject matter jurisdiction. More importantly, there is no

indication that LaBove was made privy to the challenge that had been made to the Trail court’s

jurisdiction (i.e., assuming her interaction with Hatfield occurred before December 8, 1995), or to

the Trail court’s ultimate decision to remand for lack of subject matter jurisdiction (i.e., assuming

their interaction occurred after December 8, 1995). Without more damning evidence concerning the

substance ofthe conversation betweenLaBove andHatfield, we decline to discount LaBove’s explicit

assertion that she was unaware of the Trail decision until November 14, 1996, the date the court

below was informed of it. Maguire’s effort to “grab at straws” in this manner makes more evident

our conclusion that the record contains no evidence of active misconduct on the City’s part.

14

to disclose the Trail decision was negligent. It argues, however, that the record does not support

a finding that it deliberately concealed its “awareness” of the Trail decision from the district court,

and we agree.8 The City’s explanation for its actions—albeit establishing its conduct during this

litigation to be slipshod—was plausible, and was neither rebutted in the least by Maguire nor

discounted by any fact-finding on the part of the district court. Because the record cannot support

a finding that the City acted in “bad faith,” we conclude that the district court improperly invoked its

inherent sanctioning power against the City.

III.
15

CONCLUSION

For the foregoing reasons, we hold that the district court’simposition ofsanctions against the

City cannot be sustained under (1) 28 U.S.C. § 1927, (2) 28 U.S.C. § 1447(c), or (3) the court’s

inherent sanctioning power. There being no further arguments of the parties to consider, the

judgment of the district court is REVERSED.