IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 08-60674

GLENN ALLEN ADAIR, doing business as Super D #229; DALLAS

LITTLE, doing business as Little's Pharmacy; SOUTHERN

DISCOUNT DRUGS OF CHARLESTON, doing business as Southern

Discount Drugs/Robert T Salmon; MAY'S PHARMACY, doing

business as Coldwater Pharmacy/James A May; ANIMAL MEDICAL

CENTER OF ELLISVILLE, INC; ET AL

Plaintiffs - Appellees

v.

LEASE PARTNERS, INC; BANCORPSOUTH BANK

Defendants - Appellants

FIRST BANK RICHMOND, S B, doing business as First Federal

Leasing and Interstate Financial

Appellant

Appeal from the United States District Court for the

Southern District of Mississippi

Before REAVLEY, JOLLY, and WIENER, Circuit Judges.

REAVLEY, Circuit Judge:

This is an appeal from the district court order remanding this case to state

court. The Federal Deposit Insurance Corporation ("FDIC") – an intervening

Defendant – had removed the case to federal court but was later dismissed as a

party. The district court held that once the FDIC was dismissed, only

United States Court of Appeals

Fifth Circuit

F I L E D

October 28, 2009

Charles R. Fulbruge III

Clerk
No. 08-60674

 By this time, the case had gone from state court to federal court and was once again 1

in state court.

2

supplemental jurisdiction remained over Appellees' remaining claims. The court

subsequently exercised its claimed discretion to remand the case. We reverse.

I.

This case is a collection of claims brought by many individual pharmacies,

pharmacists, veterinarians and veterinary clinics ("Plaintiffs") against

individual salesmen and different financial institutions ("Defendants").

Plaintiffs filed the case in 1996 in Mississippi state court, alleging state law

fraud, negligence, breach of contract, and usury claims. Plaintiffs allege that

Defendants participated in a Ponzi scheme in which Defendants leased Recomm

electronic advertising banners to Plaintiffs, fraudulently misrepresented their

identity as lessors, and charged usurious interest rates on the finance charges.

After more than eleven years of litigation, the FDIC entered the case in

2007 as a receiver for a successor bank to one of the original Defendants. The 1

FDIC timely removed the case to federal district court pursuant to 12 U.S.C.

§ 1819(b)(2). In 2008 Plaintiffs filed a motion to dismiss all claims against the

FDIC. Plaintiffs also filed a motion to remand the case to state court. The FDIC

joined in Plaintiffs' motion to dismiss but not in their motion to remand.

The district court granted both of Plaintiffs' motions. With the FDIC no

longer a party, the court held that no original federal jurisdiction remained over

Plaintiffs' remaining claims and that it retained only supplemental jurisdiction

over the remaining claims. As the court saw no reason to continue exercising

jurisdiction over a case composed of what it saw as predominantly state claims,

the court stated that it would exercise its discretion to remand the case to state

court.

Defendants appeal the district court's remand order.
No. 08-60674

See 28 U.S.C. § 1447(d). 2

 524 F.3d 627, 631 (5th Cir. 2008). 3

 517 U.S. 706, 715, 116 S. Ct. 1712, 1720 (1996). 4

549 F.3d 999, 1001 (5th Cir. 2008) (citing Hook v. Morrison Milling Co., 38 F.3d 776,

5

780 (5th Cir. 1994)).

See id. (citing Hook, 38 F.3d at 780). 6

 981 F.2d 816, 818 (5th Cir. 1993). 7

3

II.

An order remanding a case to state court is typically not reviewable on

appeal. However, this court has jurisdiction over a remand order where the 2

district court based its decision on an affirmative exercise of discretion rather

than on a finding of lack of jurisdiction. See Regan v. Starcraft Marine, LLC.

3

A district court's remand order is final for appeal purposes. Quackenbush v.

Allstate Ins. Co.4

Whether a district court has the discretion to remand a case to state court

is a legal question this court reviews de novo. See Poche v. Tex. Air Corps, Inc.5

If the district court has the discretion to remand a case, this court reviews its

decision for abuse of discretion.6

III.

None of the parties disputes that the district court had jurisdiction over

the case at the time of remand. The issue is whether the court was obligated to

retain jurisdiction and hear the case or whether it had discretion to remand. To

answer this question, we must determine what kind of jurisdiction existed at the

time of remand. See Buchner v. FDIC.7

When the federal court has original subject-matter jurisdiction over a

claim, that jurisdiction is "not discretionary with the district court" and "can
No. 08-60674

Id. at 820-21. 

8

See, e.g., 28 U.S.C. §§ 1367(c), 1441(c). 9

 § 1819(b)(2)(A)-(B). 10

4

neither be conferred nor destroyed by the parties' waiver or agreement."8

However, if a court has only supplemental jurisdiction over a claim, Congress

has granted authority to adjudicate the claim or remand the claim based on the

court's discretion. Appellants argue that the district court had no authority to 9

remand the case because 12 U.S.C. § 1819(b)(2) continues to provide original

jurisdiction over all claims in the case, even after the FDIC's dismissal.

Appellees argue that the district court had the discretion to remand the case

pursuant to 28 U.S.C. § 1367(c) because the court retained only supplemental

jurisdiction over the remaining claims once the FDIC was dismissed. Although

the district court had very good reasons for remanding, our precedent supports

the position of Appellants.

It is undisputed that the FDIC properly removed this case pursuant to 12

U.S.C. § 1819(b)(2). This statute states in relevant part:

(A) In general

[Except in situations irrelevant to the instant case], all suits of a

civil nature at common law or in equity to which the Corporation

[FDIC], in any capacity, is a party shall be deemed to arise under

the laws of the United States.

(B) Removal 

[Except in situations irrelevant to the instant case], the Corporation

may, without bond or security, remove any action, suit, or

proceeding from a State court to the appropriate United States

district court before the end of the 90-day period beginning on the

date the action, suit, or proceeding is filed against the Corporation

or the Corporation is substituted as a party.

10
No. 08-60674

 Pub. L. No. 101-73, 103 Stat. 183 (1989). 11

 960 F.2d 512, 514-15 (5th Cir. 1992) (en banc).

12

See id. 13

Id. (quoting and citing H.R. REP. NO. 101-54(I) 291, 310-11, reprinted in 1989 14

U.S.C.C.A.N. 86, 106-07).

Id. at 515 (citing Carrolltown-Farmers Branch Indep. Sch. Dist. v. Johnson &

15

Cravens, 13911, Inc., 889 F.2d 571, 572 (5th Cir. 1989); Triland Holdings & Co. v. Sunbelt

Serv. Corp., 884 F.2d 205, 207 (5th Cir. 1989)). 

Buchner, 981 F.2d at 819 (emphasis added); see also FSLIC v. Mackie, 962 F.2d 1144,

16

1150 (5th Cir. 1992) (recognizing removal jurisdiction over pendent party claims pursuant to

12 U.S.C. § 1730(k)(1) (repealed 1989), § 1819(b)(2)'s predecessor).

5

Congress enacted § 1819(b)(2) as part of the Financial Institutions Reform,

Recovery, and Enforcement Act ("FIRREA"). FIRREA is a comprehensive 11

regulatory scheme that Congress passed in response to the savings-and-loan

crisis of the late 1980s and early 1990s. See In re Meyerland Co. Pursuant to

12

FIRREA, the FDIC succeeded the Federal Savings and Loan Insurance

Corporation ("FSLIC") as conservator and receiver for defaulting

federally-insured financial institutions. FIRREA is specifically designed to 13

"'enhance and clarify enforcement powers of the financial institution regulatory

agencies,'" and "greatly expands the FDIC's role in regulating and supervising

such institutions."14

Among the many powers granted to the FDIC by FIRREA, "[t]he

power . . . to invoke federal jurisdiction and to remove from state court is

substantial." Pursuant to § 1819(b)(2)(A), all suits to which the FDIC is a party 15

and all component claims in those suits are "conclusively presumed to arise

under the laws of the United States, and thus . . . within the original subject

matter jurisdiction of the proper federal district court." Because a suit and all 16

its component claims are conclusively deemed to arise under federal law once the

FDIC is a party, § 1819(b)(2) provides jurisdiction over suits whose causes of
No. 08-60674

 See Meyerland, 960 F.2d at 518-19 (comparing the grant of jurisdiction under §

17

1819(b)(2) to that recognized in Pacific Railroad Removal Cases, 115 U.S. 1, 5 S. Ct. 113

(1885), and Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738, 822 (1824)).

Id. at 519 (citation and footnote omitted).

18

 935 F.2d 691, 697 (5th Cir. 1991). 19

 178 F.3d 97, 100-01 (2d Cir. 1999). 20

6

action may otherwise largely depend on state law and which may not otherwise

be subject to federal-question jurisdiction under the general federal-question

statute of 28 U.S.C. § 1331. Ultimately, in enacting FIRREA, "Congress used 17

very strong language to afford the FDIC every possibility of having a federal

forum within the limits of Article III."18

The language of § 1819(b)(2)(A) states that all claims in a suit "arise under

the laws of the United States" when the FDIC "is a party." Nothing in the

statute specifically addresses what happens to a court's jurisdiction, if anything,

when the FDIC is dismissed as a party. Consequently, the circuits are split on

whether § 1819(b)(2) continues to provide original federal subject matter

jurisdiction over a case after the FDIC is dismissed. Only three circuits have

specifically addressed this issue. In the majority are the Fifth Circuit and the

Second Circuit, which hold that § 1819(b)(2) continues to provide federal

jurisdiction after the FDIC has been dismissed from a case or has transferred its

assets to a third party. See FSLIC v. Griffin; FDIC v. Four Star Holding Co. 19 20

In the minority is the Third Circuit, which holds that original federal jurisdiction

ceases with the dismissal of a FIRREA federal corporation and only
No. 08-60674

 While not expressly addressing the issue of continuing original jurisdiction, the 21

Eighth Circuit has reviewed a district court's remand for abuse of discretion in a case where

the Resolution Trust Corporation ("RTC") removed the case under an analogous statute but

was later dismissed, thus implicitly adopting New Rock's holding, if not its reasoning. See

Myers v. Moore Eng'g Inc., 42 F.3d 452, 455 (8th Cir. 1994) (holding the district court did not

abuse its discretion in denying remand when the RTC had previously removed pursuant to 12

U.S.C. § 1441a(l)(1)).

 101 F.3d 1492, 1494-95 (3d Cir. 1996). 22

See Griffin, 935 F.2d at 694-95. 23

Id.

24

Id.

25

Id.

26

Id. at 695. 27

Id. at 696. 28

7

supplemental jurisdiction remains. New Rock Asset Partners, L.P. v. Preferred 21

Entity Advancements, Inc.22

In Griffin, the FSLIC entered a state court action as receiver for the

plaintiff and subsequently removed the case to federal court pursuant to

12 U.S.C. § 1730(k)(1), a statute which was later repealed and retroactively

superseded by 12 U.S.C. § 1819. During the pendency of the case, Congress 23

passed FIRREA, and the FDIC succeeded the FSLIC as receiver. The district 24

court then granted Griffin's motion to dismiss its counterclaims against the

FDIC, but the court retained jurisdiction over the case between Griffin and the

FDIC's successor in interest, who had intervened against Griffin. The district 25

court ultimately held against Griffin. Griffin appealed to this court, arguing 26

that the federal court lacked jurisdiction once the FDIC was dismissed.27

We disagreed, holding that federal jurisdiction continued to exist pursuant

to § 1819 after the FDIC's dismissal. The court provided two rationales for its 28

decision. The court first stated that "[t]he power to remove is evaluated at the
No. 08-60674

Id.

29

Id.

30

Id.

31

Id.

32

 Id. at 697 (citing D'Oench Duhme & Co. v. FDIC, 315 U.S. 447, 62 S. Ct. 676 (1942)).

33

Congress partially codified D'Oench Duhme in 12 U.S.C. § 1823(e).

Id. at 696. 34

See 178 F.3d at 101. 35

Id. at 99.

36

Id. at 100. 37

8

time of removal." Although § 1730(k)(1) controlled when the FSLIC removed, 29

FIRREA was enacted to "correct any possible jurisdictional defects existing at

the time of removal." Accordingly, the enacting of § 1819(b)(2) after removal 30

and the FDIC's later dismissal from the case "cannot defeat this intent." The 31

court then cited federal policy interests which favored recognizing jurisdiction

over the FDIC's successor in interest. Specifically, the court recognized the 32

need to provide federal protection to successors in interest to the FDIC under the

D'Oench Duhme doctrine, which is designed to "protect[] the FDIC and its

assignees from unrecorded side agreements not reflected in the bank's

records[.]" The court concluded its discussion of the issue by stating, "federal 33

jurisdiction is proper in this case because according to . . . § 1819, the case arises

under federal law. Since federal jurisdiction exists, federal law applies."34

The Second Circuit followed Griffin in Four Star Holding. In Four Star 35

Holding, the FDIC brought a foreclosure action in federal court pursuant to

§ 1819(b)(2)(A) but then transferred all its interests to a third party. On

36

appeal, the defendants argued that with the transfer of the FDIC's interest in

the case to another party, no federal jurisdiction remained. However, the 37
No. 08-60674

See id. (citing Griffin, 935 F.2d at 969; Newman-Green, Inc. v. Alfonzo-Larrain, 490

38

U.S. 826, 830, 109 S. Ct. 2218 (1989); Freeport-McMoRan, Inc. v. K N Energy, Inc., 498 U.S.

426, 428, 111 S. Ct. 858 (1991) (per curiam)).

Id. at 100-01. Although the Second Circuit follows Griffin in Four Star Holding,

39

other Second Circuit cases have not recognized original jurisdiction over pendent state claims.

See, e.g., King v. Crossland Sav. Bank, 111 F.3d 251, 255-56 (2d Cir. 1997) (finding exercise

of supplemental jurisdiction appropriate over pendent party claims pursuant to § 1367 in case

removed pursuant to § 1819(b)(2)); Mizuna, Ltd. v. Crossland Fed. Sav. Bank, 90 F.3d 650, 657

(2d Cir. 1996) (same). However, because original jurisdiction pursuant to § 1819 applies to all

cases in a "suit," these latter cases inconsistently apply § 1819(b)(2).

See New Rock Asset Partners, L.P., 101 F.3d at 1502.

40

Id. at 1495. Section 1441a(l)(1) states: 41

Notwithstanding any other provision of law, any civil action, suit, or proceeding

to which the Corporation is a party shall be deemed to arise under the laws of

the United States, and the United States district courts shall have original

jurisdiction over such action, suit, or proceeding.

9

Second Circuit held that jurisdiction continued pursuant to § 1819, and it cited

both the time-of-filing doctrine and the federal policy rationales set forth in

Griffin as justifications for retaining jurisdiction. Synthesizing the 38

time-of-filing rationale with additional federal policy concerns, the Second

Circuit stated:

"Adopting a rule which would make federal jurisdiction contingent

on who owned an interest in certain property at a particular time

'could well have the effect of deterring normal business transactions

during the pendency of what might be lengthy litigation,'" CIT, Inc.

v. 170 Willow Street Assoc., No. 93 Civ. 1201 CSH, 1997 WL 528163,

at *7 (S.D.N.Y. Aug. 26, 1997) (quoting Freeport-McMoRan, Inc., 498

U.S. at 428), and could also deter transactions by FDIC that

presumably are in the public interest.39

Meanwhile, the Third Circuit expressly rejected the Griffin court's holding

that original federal jurisdiction continues pursuant to § 1819(b)(2) after the

FDIC is dismissed from a case. In New Rock, the Resolution Trust Corporation 40

("RTC"), which Congress created under FIRREA, filed a case in federal court

pursuant to 12 U.S.C. § 1441a(l)(1). The RTC then sold its interests to a 41
No. 08-60674

Id.

42

Id. at 1501-02 (citing Mill Invs., Inc. v. Brooks Woolen Co., 797 F. Supp. 49 (D. Me. 43

1992)).

Id. at 1503-04. 44

Id.

45

Id. at 1504. 46

See Griffin, 935 F.2d at 696 ("In sum, federal jurisdiction is proper in this case 47

because according to . . . § 1819, the case arises under federal law.") (emphasis added); Four

Star Holding, 178 F.3d at 101 (following Griffin to hold that FDIC's dismissal "does not divest

the court of subject matter jurisdiction under Section 1819") (emphasis added); New Rock Asset

Partners, L.P., 101 F.3d at 1502, 1504 (disagreeing with Griffin and holding that supplemental

jurisdiction, not original jurisdiction, existed after RTC's dismissal).

10

private third party and was dismissed from the case. Analogizing § 1441a(l)(1) 42

to § 1819(b)(2), and citing to Griffin's analysis, the Third Circuit held that

§ 1441a(l)(1) "precludes continuing jurisdiction over an action where the RTC is

no longer a party" because "the policy reasons for federal jurisdiction [under

FIRREA] end when the FDIC or RTC leaves the case." The court further held 43

that the time-of-filing doctrine was insufficient to retain jurisdiction under

FIRREA because the doctrine was more closely associated with diversity cases

than federal-question cases. Moreover, the court noted that other courts had 44

inconsistently applied the time-of-filing doctrine in federal-question cases.

45

Ultimately, however, the New Rock court concluded that while original

jurisdiction was lacking, a district court could retain supplemental jurisdiction

over state claims pursuant to 28 U.S.C. § 1367(c).46

All three of these cases make it clear that a court following Griffin will

recognize continued federal jurisdiction when the FDIC removes a case but is

later dismissed, and that this jurisdiction is pursuant to 12 U.S.C. § 1819 and

not any other statute. As Griffin is Fifth Circuit precedent, we are bound by 47

its holding.
No. 08-60674

See § 1819(b)(2)(A) ("suit" shall "arise under the laws of the United States"); 48

Meyerland, 960 F.2d at 518-19; Buchner, 981 F.2d at 819; see also Mackie, 962 F.2d at 1150

(holding that the term "suit" in § 1730(k)(1) covers the "entirety of the civil proceeding");

Brockman v. Merabank, 40 F.3d 1013, 1015-16 (9th Cir. 1994) (holding that the term "suit" in

§ 1441a(l)(1) includes all claims in a case, and that the addition of RTC to the action

"transformed the 'entire suit' into one that arose under federal law.") (citation omitted); Spring

Garden Assoc. v. RTC, 26 F.3d 412, 415-16 (3d Cir. 1994) (same). Indeed, as even courts that

disagree with the Fifth Circuit recognize, the disputed issue in the circuits regarding

§ 1819(b)(2) is ultimately one of jurisdictional "duration" rather than of jurisdictional

"breadth." See New Rock Asset Partners, L.P., 101 F.3d at 1499 n.4 (distinguishing the

question before it from the holding in Spring Garden). 

See Buchner, 981 F.2d at 821. 49

See Griffin, 935 F.2d at 696. 50

See id.; see also Four Star Holding, 178 F.3d at 100. 51

See Griffin, 935 F.2d at 696. 52

See, e.g., Bank One Tex. Nat'l Ass'n v. Morrison, 26 F.3d 544, 547 (5th Cir. 1994)

53

(citing the time-of-filing rationale in Griffin as the sole basis for continued jurisdiction despite

D'Oench Duhme being at issue in guarantor's defense); Walker v. FDIC, 970 F.2d 114, 120 (5th

11

Because federal jurisdiction continues in this case pursuant to

§ 1819(b)(2), that jurisdiction extends to all claims in the "suit," regardless of

their state or federal origin. As the district court retained original jurisdiction 48

over all claims in this case, remand for any claim was inappropriate.49

We recognize that the party in Griffin arguing for federal jurisdiction was

a successor in interest to the FDIC, and no successor in interest remains in the

instant case. In addition, the Griffin court expressly cited the existence of a 50

successor in interest as part of its rationale for continued jurisdiction.51

However, the Griffin court clearly relied on the time-of-filing rationale for

recognizing federal jurisdiction under its interpretation of § 1819(b)(2), with the

federal policy concerns it cited as "[f]urther" justifications. Moreover, Fifth

52

Circuit cases following Griffin exclusively cite the time-of-filing rationale as their

reason for recognizing original jurisdiction, and they make no mention of the

policy concerns the Griffin court also relied on. In at least one case, a prior 53
No. 08-60674

Cir. 1992); First Gibraltar Bank, FSB v. Bradley, 98 F.3d 1338, No. 95-20500, 1996 WL

556852, at *5 (5th Cir. Sep. 10, 1996) (unpub.) (citing Morrison, 26 F.3d at 547-48).

See Walker, 970 F.2d at 120. 54

Buchner, 981 F.2d at 820 (citing Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 55

336, 345, 96 S. Ct. 584, 590 (1976), abrogated on other grounds by Quackenbush, 517 U.S. at

714-15, 116 S. Ct. at 1720).

See Buchner, 981 F.2d at 821. 56

 Because we find original federal jurisdiction over all claims in the instant case 57

pursuant to § 1819(b)(2), we do not address whether Appellees' federally preempted usury

claims also provide continuing federal jurisdiction, or whether the state fraud and negligence

claims are "separate and independent" so as to otherwise be subject to remand under 28 U.S.C.

§ 1441(c).

12

Fifth Circuit panel has recognized original jurisdiction based on § 1819(b)(2)

when no successor in interest to the FDIC remained. Accordingly, a successor 54

in interest to the FDIC is not necessary for original jurisdiction to continue

pursuant to § 1819(b)(2).

IV.

We follow the rule that "a district court exceeds its authority if it remands

a case on grounds not expressly permitted by controlling statute." Despite the 55

FDIC's dismissal, all claims in the instant case continue to "arise under the laws

of the United States," pursuant to § 1819(b)(2). Therefore, original jurisdiction

remains, and the exercise of that jurisdiction was mandatory for the district

court. Accordingly, the district court had no discretion to remand the case and 56

erred in doing so.57

The Judgment of Remand is Reversed. The cause is reinstated in the

federal court.
No. 08-60674

13

E. GRADY JOLLY, Circuit Judge, concurring in the judgment:

I fully appreciate the efficient and judicially economical approach of the

majority. I am unable, however, to agree that our precedent or the text of § 1819

requires that state claims cannot be remanded when no party to the case is a

successor-in-interest to the FDIC and no federal interests remain in the case.

Although the court clearly has jurisdiction over the case, including all state

claims, that fact does not in itself mean that the court lacks discretion to remand

state claims. Whether to remand is a discretionary matter subject to the abuse

of discretion standard. Regan v. Starcraft, 524 F.3d 627, 631 (5th Cir. 2008).

Once the FDIC and its interests have been dismissed, there is no federal

character in the state claims. See FSLIC v. Griffin, 935 F.2d 691, 696 (5th Cir.

1991) (justifying continued federal-question jurisdiction based on presence of

successor-in-interest to FSLIC). The statute gives original jurisdiction to cases

in which the FDIC “is a party.” 12 U.S.C. § 1819(b)(2)(A). The statute does not,

through some feat of alchemy, make the case’s state-law claims federal-law

claims. Nor does the text “is a party” mean that all state-law claims in any case

to which the FDIC ever was a party continue to arise under federal law after

dismissal of all federal interests. 

Here, I concur in the result reached by the majority because there remain

federal usury claims and related state-law claims, which cannot be remanded.

Laurents v. Arcadian Corp., No. 94-41183, 1995 WL 625394, at *2, 69 F.3d 535

(5th Cir. Oct. 4, 1995) (setting forth rule that properly removed questions of

federal law cannot be remanded under 28 U.S.C. § 1441(c)).