## United States Court of Appeals **For the Eighth Circuit**

___________________________ No. 21

- 3817

___________________________ M & B Oil, Inc.
Plaintiff - Appellant

v. Federated Mutual Insurance Company; City of St. Louis
Defendants - Appellees

____________ Appeal from United States District Court for the Eastern District of Missouri - St. Louis

____________ Submitted: December 13, 2022 Filed: May 1, 2023

____________ Before SMITH, Chief Judge, ARNOLD and STRAS, Circuit Judges.

____________ STRAS, Circuit Judge.

This case involves a rare procedural maneuver called snap removal. Federated Mutual Insurance Company removed an insurance dispute to federal court before the plaintiff, M & B Oil, Inc ., “properly joined and served” one of the defendants, the City of St. Louis. 28 U.S.C. § 1441(b)(2). The question is whether this

maneuver eliminates the requirement of complete diversity. See id. § 1332 (a). T he-2- answer is no, so we vacate the order denying remand and send this case back for a second look.

I.

M & B suffered a water leak that allegedly caused over $400,000 in property damage. After Federated denied coverage , M & B brought a state

- law claim for breach of contract based on a “[v]exatious refusal to pay” in Missouri state court. Mo. Rev. Stat. § 375.420 (emphasis omitted)

. It was, in other words, a run

- of

- the

mill insurance dispute.

Except for one thing: Federated was not the only defendant. M & B also sued St. Louis under a detrimental

- reliance theory for failing to “ shut off the water” as promised.

In an unusual procedural twist, however, Federated filed a notice of removal in federal court before M & B could properly serve St. Louis, the only non

- diverse defendant. Federated’s position was that complete diversity existed: it was a Minnesota corporation, M & B was a citizen of Missouri, and St. Louis was not yet part of the case. See 28 U. S.C. § 1332(a); see also id. § 1332(c)(1) (explaining that “a corporation shall be deemed to be a citizen of every State

. . . by which it has been incorporated”); id. § 1441(a) (allowing for the removal of civil suits within the “original jurisdiction” of the district courts).

The next procedural wrinkle was that M & B file d an amended complaint to add an inverse

- condemnation claim against St. Louis. See Byrom v. Little Blue Valley Sewer Dist. , 16 S.W.3d 573, 57 6–7 7 (Mo. banc 2000) ( describing inverse

condemnation claims ). The new claim alleged that St. Louis was responsible for the property damage due to its “unreasonabl e” use and maintenance of “the [building’s]
water [-] piping system .” See id.-3- Fresh off amending its complaint and serving St. Louis, M & B shifted its focus to returning th e case to state court. In a motion to remand, it argued that

s ubject

- matter jurisdiction was absent because there were Missouri citizens on both sides. See 28 U.S.C. § 1332(a) (1) ; s ee also Lincoln Prop. Co. v. Roche , 546 U.S. 81, 8 9 (2005) (explaining that § 1332(a)(1) “require[s] complete diversity between all plaintiffs and all defendants”).

A federal magistrate judge 1 denied the motion , but only because St. Louis did not officially become part of the case until after it was “properly joined and served,” which occurred after Federated had removed it. 28 U.S.C. § 1441(b)(2). The snap removal, in other words, had cured the lack of complete diversity

. And nothing that happened later, including the filing of an amended complaint, made any difference

. Ordinarily, a decision denying remand is not immediately appealable

. See id. § 1291; see also Caterpillar Inc. v. Lewis , 519 U.S. 61, 74 (1996) (explaining that “[a]n order denying a motion to remand, standing alone, is obviously

. . . not final and immediately appealable” (brackets and quotation marks omitted)). Here, however, the magistrate judge certified the order for immediate review under 28 U.S.C. § 1292(b). The case present s two novel question s : are “ ‘snap removals’ [] permitte d . .

. and, if so, under what circumstances [will] amendments ” to the pleadings “ warrant remand” ? See 28 U.S.C. § 1292(b) ( requiring “ a c ontrolling question of law as to which there is substantial ground for difference of opinion”). So w e allowed the appeal to proceed

.

II.

We are asked to decide whether this case can stay in federal court. Our review is de novo

. See ABF Freight Sys., Inc. v. Int’l Bhd. of Teamsters , 645 F.3d 954, 958 (8th Cir. 2011)

.

1 A magistrate judge heard the case by “consent of the parties.” 28 U.S.C. § 636(c) (1)

.-4- A.

Federal district courts have original jurisdiction over civil suits “between

. . . citizens of different States” when “the matter in controversy exceeds

. . . $75,000.” 28 U.S.C. § 1332(a). The statute contains an important judicial gloss: the parties
must be co mpletely diverse from one another. See Lincoln Prop

. , 546 U.S. at 8 9 (noting that courts have interpreted the nearly identically worded grant of jurisdiction in Article III differently ) ; see Strawbridge v. Curtiss , 7 U.S. (3 Cranch ) 267, 267

– 68 (1806). No plaintiff can be a citizen of the same state as any defendant. See Caterpillar , 519 U.S. at 68.

The presence of complete diversity and an amount in controversy over $75,000 gives plaintiffs the first crack at filing in federal court. See Lincoln Prop

. , 546 U.S. at 89. The defendants then get the second chance , a “corresponding opportunity” to transfer the case to federal court through a process called removal. Id.

Removal has its own set of rules

. Perhaps the most imp ortant one is that it is only available if “original jurisdiction” exists . 28 U.S.C. § 1441(a). By original jurisdiction, we mean the case must satisfy the same requirements as if it had

“ initially been file d” here : complete diversity and over $75,000 in controversy

. Krispin v. May Dep’t Stores Co. , 218 F.3d 919, 922 (8th Cir. 2000). No one disputes that the amount in controversy exceeds $75,000 , and both the magistrate judge and Federated thought that complete diversity exist ed because removal occurred before M & B served St. Louis.

There is only one problem: service does not matter in evaluating the diversity of the parties. See Pecherski v. Gen. Motors Corp. , 636 F.2d 1156, 1160

– 61 (8th Cir. 1981); see also 16 James Wm. Moore et al., Moore’s Federal Practice § 107.52[1] (3d ed. 2023) (declaring that “whether defendants have been served is irrelevant; diversity for purposes of removal is based on the citizenship of all the parties named in the complaint”). The citizenship of “all named plaintiffs and all-5- named defendants” count , Lincoln Prop. , 546 U.S. at 84, “regardless of service,” Pecherski , 636 F.2d at 1161

. Under that rule, today’s case is “a fish out of water” in federal court. Am. Fiber & Finishing, Inc. v. Tyco Healthcare Grp., LP , 362 F.3d 136, 139 (1st Cir. 2004). From the beginning, M & B sued two defendants: St. Louis and Federated. One of them is a fellow Missourian , so there has never been complete diversity. And without complete diversity, there is no “original jurisdiction

. ” 28 U.S.C. § 1441 (a)

.

B.

Snap removal has nothing to do with the complete

- diversity requirement. It offers a potential solution to a different problem: the forum

- defendant rule. See Holbein v. TAW Ente rs., Inc. , 983 F.3d 1049, 1053 (8th Cir. 2020) (en banc) ; see also Couzens v. Donohue , 854 F.3d 508, 513 (8th Cir. 2017)

. First enacted in 1887, the forum

- defendant rule keeps certain “otherwise [-] removable” cases in state court if any “ properly joined and served ” defendant “ is a citizen of the state in which such action is brought.” 28 U.S.C. § 1441(b)(2); see Holbein , 983 F.3d at 1057.

So what happens if the action is removed before the plaintiff “properly join[s] and serve[s]” the forum

- state defendant ? 28 U.S.C. § 1441(b)(2). Although we have yet to weigh in on the question , many courts have held that the forum

- defendant rule does not apply. A defendant can rem ove the case to federal court, assuming there is “original jurisdiction,” if the forum

- state defendant has yet to be “ properly

. . . served

. ” Id. ; s ee Tex. Brine Co. v. Am. Arb. Ass’n , 955 F.3d 482, 485

– 87 (5th Cir. 2020); Gibbons v. Bristol

- Myers Squibb Co. , 919 F.3d 699, 704

– 07 (2d Cir. 2019); Encompass Ins. Co. v. Stone Mansion Rest. Inc. , 902 F.3d 147, 151

– 54 (3d Cir. 2018); McCall v. Scott , 239 F.3d 808, 813 n.2 (6th Cir. 2001).

Even if we assume these courts are right , snap removal cannot cure a lack of complete diversity. Remember that t he forum

- defendant rule only applies when the case is , in the words of the statute, “otherwise removable ,” meaning there is “original-6- jurisdiction.” 28 U.S.C. § 1441 (a), (b)(2). It then adds a further limitation based on the citizenship of the defendant. It does not subtract the requirement that the parties be completely diverse. See Pecherski , 636 F.2d at 1160; see also In re Levy , 52 F.4th 244, 247 (5th Cir. 2022) (per curiam) (describing the f orum

- defendant rule as a “further limitation” on the right to remove).

Indeed, as we recently explained, the forum

- defendant rule is not jurisdictional at all. See Holbein , 983 F.3d at 1053. V iolating it does not destroy jurisdiction. Id. Complying with it cannot create jurisdiction either. See Pecherski , 636 F.2d at 1160; Levy , 52 F.4th at 247

– 48. Snap removal or not, an absence of complete diversity makes a federal forum unavailable. See 28 U.S.C. §§ 1441(a), 1447(c).

C.

Except in one situation: when a plaintiff has fraudulently joined a non

- diverse defendant

. See Filla v. Norfolk S

. Ry. Co. , 336 F.3d 806 , 809

– 11 (8th Cir. 20 03 ). There is reason to doubt that any fraudulent

- joinder argument will succeed now that M & B ha s amended its complaint to include an inverse

- condemnation claim against St. Louis. See Owen Equip. & Erection Co. v. Kroger , 437 U.S. 365, 374 (1978) ( noting that the addition of a claim against a non

- diverse third

- party defendant destroyed complete dive rsity “just as surely as if [the plaintiff] had sued [the third

party defendant] initially”) ; Bailey v. Bayer CropScience L.P. , 563 F.3d 302, 307 (8th Cir. 2009) (recognizing that joinder of a non

- diverse defendant following removal defeats diversity juris diction). Still, given that no court has addressed it , we leave it to the magistrate judge to do so in the first instance. See Meyers v. Iowa Bd. of Regents , 30 F.4th 705, 710 (8th Cir. 2022); see also BP p.l.c. v. Mayor & City Council of Balt. , 141 S. Ct. 1532, 1543 (2021).-7- III.

We accordingly vacate the order denying remand and return the case to the magistrate judge for reconsideration

.

______________________________