Court Opinion

ID: 3005263
Source: CourtListenerOpinion
Date Created: 2015-09-29 00:01:01.373995+00
Date Added: 2024-06-11T15:03:08.786769
License: Public Domain

Case: 14-11327      Document: 00513209894         Page: 1    Date Filed: 09/28/2015

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT

                                    No. 14-11327                         United States Court of Appeals
                                  Summary Calendar                                Fifth Circuit

                                                                                FILED
                                                                        September 28, 2015
UNDERWOOD COTTON COMPANY, INCORPORATED,                                    Lyle W. Cayce
                                                                                Clerk
                                          Plaintiff - Appellee

v.

CLARK FREIGHT LINES, INCORPORATED,

                                          Defendant - Appellant

                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 5:14-CV-96

Before DAVIS, JONES, and GRAVES, Circuit Judges.
EDITH H. JONES, Circuit Judge:*
       This appeal challenges the district court’s order dismissing appellant’s
counterclaim for lack of subject-matter jurisdiction.              The dismissal order
accompanied an order remanding this case to state court for lack of subject-
matter jurisdiction. For the reasons explained below, this appeal is dismissed
for lack of appellate jurisdiction.

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 14-11327    Document: 00513209894     Page: 2   Date Filed: 09/28/2015

                                 No. 14-11327
                              BACKGROUND
      In the fall of 2013, Appellee Underwood Cotton Company, Inc.
(“Underwood”) contracted with Texas Gulf Coast Logistics (“TGCL”) to unload
cotton that Underwood had shipped to TGCL’s facility in Houston, then load
that cotton into shipping containers, and deliver those containers to the Port
of Houston. In response to a series of unforeseen events, TGCL contracted with
Appellant Clark Freight Lines, Inc. (“Clark”) to complete the delivery of the
shipping containers to the port. Based on these deliveries, Clark made a
demand and subsequently invoiced Underwood for over $43,000 in shipping
services.
      Underwood filed suit in the 99th District Court in Lubbock County,
Texas seeking a declaratory judgment that it was not liable to Clark for those
shipping charges. On June 19, 2014, Clark removed the declaratory judgment
action to the United States District Court for the Northern District of Texas.
In Clark’s Notice of Removal, it asserted the federal district court had federal
question jurisdiction based on (1) “the federal common law which governs and
controls Underwood’s liability”, (2) “the whole preemption of the field of
interstate commerce and of marine commerce”, and (3) “the marine character
of the transit and based upon the absence of any concurrent Texas common law
remedy available to or saved to Underwood as a suitor.”
      Ten days later, Clark filed an answer to Underwood’s complaint and
asserted a counterclaim seeking payment of the shipping charges.          Clark
“assert[ed] that this counterclaim and Underwood’s declaratory judgment
action may only proceed in federal district court.”       Clark’s answer and
counterclaim based federal jurisdiction on (1) “the federal common law [which]
governs and controls the rights and obligations of both CFL and Underwood”
due to the movement of the cotton (2) “as part of an interstate . . . transit of

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                                 No. 14-11327
goods and as part of a marine transportation of goods.” “In this regard,” Clark
contended, (3) “the federal common law preempts any Texas law.”
      In a single opinion and order, the district court dismissed the
counterclaim for lack of subject matter jurisdiction and remanded the case to
state court. The court described the counterclaim as a “converse breach of
contract action to Underwood’s declaratory judgment action” and ruled that
Clark had “not proved that there is federal jurisdiction over the declaratory
judgment action and the counterclaims involved in this case.” After its motion
for reconsideration was denied, Clark timely appealed the dismissal of its
counterclaim.
                                DISCUSSION
      This Court has jurisdiction to determine whether its own appellate
jurisdiction exists. Fontenot v. Watson Pharms., Inc., 718 F.3d 518, 520 (5th
Cir. 2013). Under 28 U.S.C. § 1447(d) and the Supreme Court’s interpretation
of that statute, there is no appellate review of remand orders premised on lack
of subject-matter jurisdiction. Arnold v. State Farm Fire & Cas. Co., 277 F.3d
772, 775 & n.2 (5th Cir. 2001). This court, however, “may review any aspect of
a judgment that is distinct and separable from the remand proper.” Regan v.
Starcarft Marine, LLC, 524 F.3d 627, 631 (5th Cir. 2008) (quoting First Nat’l
Bank v. Genina Marine Servs, Inc., 136 F.3d 391, 394 (5th Cir. 1998)). In this
appeal, Clark noted carefully that it was not appealing the remand order itself,
but only the dismissal of its counterclaim for lack of jurisdiction. Thus, the
primary issue before this Court is whether the dismissal of Clark’s
counterclaim is “distinct and separable” from the remand order.
      An order is “distinct and separable” if it precedes the remand order “in
logic and in fact” and is “conclusive.” Id. An order precedes a remand “in logic
and in fact” when the prior order is what deprives the court of subject-matter
jurisdiction and necessitates the remand. See, e.g., Heaton v. Monogram Credit
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                                 No. 14-11327
Card Bank of Ga., 297 F.3d 416, 421 (5th Cir. 2002) (finding an order preceded
the remand in logic and in fact when the remand decision was “necessarily
predicated” on the order). An order is conclusive when “it will have a preclusive
effect in the state-court litigation and will not be subject to review there.”
Regan, 524 F.3d at 631 (quoting First Nat’l Bank, 136 F.3d at 394). A separate
order “does not just determine the forum in which a claim will be heard. It
. . . determines whether there is any claim to be heard in any forum.” Id. at
631–32.
      Both parties rely on Regan v. Starcraft Marine, LLC to support their
positions on appellate jurisdiction. Id. at 627. In Regan, the plaintiff sued
several private defendants in state court over a boating accident that occurred
at a military facility. Id. at 630. One of the private defendants filed a third-
party complaint against the United States under the Federal Tort Claims Act
(“FTCA”) and the government removed the case to federal court. Id. The
district court dismissed the complaint against the government under the Feres
doctrine, “which bars tort suits against the United States by or on behalf of
service members whose injuries arise out of activity incident to their military
service.” Id. (footnote omitted). The district court then remanded the case
back to state court. This court held that it had jurisdiction to consider the
order dismissing the United States from the suit. Id. at 633. In particular,
this court found the dismissal order to be conclusive because, unless there was
review, “there [would be] no claim to be heard anywhere against the United
States on these facts.” Id. at 632.
      The differences between Regan and this case demonstrate why there is
no appellate jurisdiction here. In Regan, the dismissal of the United States
preceded the remand in logic and in fact because as long as the government
remained in the lawsuit, there was federal jurisdiction.        Dismissing the
government from the lawsuit allowed the district court to subsequently
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                                 No. 14-11327
remand the case for lack of subject-matter jurisdiction. Furthermore, the
dismissal order was conclusive because the United States could not be made a
third-party defendant to an FTCA suit in state court. See 14 Charles Alan
Wright et al., Federal Practice & Procedure § 3658 (2013) (“The district courts
have exclusive jurisdiction over actions under the Federal Tort Claims Act.”).
In Regan, dismissing the government and remanding the case meant that the
United States would completely escape its potential liability.
      In this case, however, the dismissal of the counterclaims did not precede
the remand in logic and fact. Dismissing the counterclaims did not deprive the
court of subject-matter jurisdiction; the district court ruled it never had
jurisdiction to begin with. As demonstrated above and as the district court
found, the counterclaims were a mirror image of the declaratory judgment
action.   The district court’s determination that the counterclaims lacked
jurisdiction was a simultaneous recognition that the declaratory judgment
action lacked jurisdiction.
      Nor is the dismissal of the counterclaims conclusive or, at the very least,
any more conclusive than the remand order itself. In finding that there was
no federal jurisdiction over the counterclaims and the declaratory judgment
action, the district court was merely determining in which forum the claims
could be heard. Clark will be able to raise its counterclaims in state court.
Clark argues that the state court will likely give “issue-conclusive weight” to
the district court’s determination that there is no maritime commerce involved
in this action. There are two responses to this contention. First, this circuit’s
precedent establishes that jurisdictional determinations are not conclusive for
purposes of appellate jurisdiction over remand orders. See Dahiya v. Talmidge
Int’l, Ltd., 371 F.3d 207, 210 (5th Cir. 2004) (citing Doleac ex rel. Doleac v.
Michalson, 264 F.3d 470, 486 (5th Cir. 2001)).       Second, the jurisdictional
determination regarding the counterclaims in this case is no more conclusive
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                                 No. 14-11327
than the jurisdictional determination regarding the remand order. Where
Congress specifically excluded the latter from appellate jurisdiction, allowing
the counterclaim dismissal to be reviewed would be an end-run around this
explicit statutory limitation.
      This result is supported by Dahiya v. Talmidge International, Ltd.
371 F.3d at 207. In Dahiya, the defendants removed a case under a statute
allowing removal of certain actions subject to foreign arbitration agreements.
Id. at 208. The district court concluded that there was no valid arbitration
agreement, denied the defendant’s motion to compel arbitration, and
remanded the dispute to state court. Id. On appeal, this court refused to
review the denial of the motion to compel and dismissed for lack of appellate
jurisdiction. Id. at 209–10. This court stated that the district court’s ruling
that the arbitration agreement was invalid was jurisdictional and could be
“revisited by a state court upon remand.” Id. at 211. As such, it was not
conclusive and could not be reviewed independently of the remand order. Id.
A contrary rule, this court recognized, “would circumvent § 1447(d) by
affording review of remand orders issued in nearly every case removed” under
the arbitration removal statute. Id. at 210.
      The same is true in this case. Clark will have ample opportunity to be
heard on all its counterclaims in state court. A review of the dismissal of those
counterclaims by this court would operate as a review of the district court’s
remand order. Because the remand was for lack of subject-matter jurisdiction,
appellate review is prohibited by statute.
                                 CONCLUSION
      For the foregoing reasons, this case is DISMISSED for lack of appellate
jurisdiction.

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