Court Opinion

ID: 4060592
Source: CourtListenerOpinion
Date Created: 2016-09-29 19:51:18.694827+00
Date Added: 2024-06-11T14:32:01.627667
License: Public Domain

Dissenting Opinion on Denial of Motion for En Banc Rehearing filed
November 3, 2015.

                                      In The

                     Fourteenth Court of Appeals

                               NO. 14-14-00461-CV

                  HSIN-CHI-SU A/K/A NOBU SU, Appellant
                                         V.

                 VANTAGE DRILLING COMPANY, Appellee

                    On Appeal from the 295th District Court
                            Harris County, Texas
                      Trial Court Cause No. 2012-47755

 DISSENTING OPINION ON DENIAL OF
  MOTION FOR EN BANC REHEARING
      This appeal raises important issues regarding the jurisdiction of state courts
after removal of a case to federal court. In deciding the appeal, a panel of this
court has concluded that (1) a case may be remanded from a federal district court
to a state trial court without a remand order; (2) the absence of a remand order is a
procedural defect that does not affect the state court’s jurisdiction to proceed in a
case removed to federal district court; and (3) parties may waive the lack of the
state court’s subject-matter jurisdiction resulting from the failure to satisfy a
prerequisite to the revesting of jurisdiction in the state court if the parties
participate in the state court proceedings without objecting to the court’s lack of
jurisdiction. These conclusions conflict not only with precedent from this court but
also with longstanding precedent from the Supreme Court of Texas and the
Supreme Court of the United States. If for no other reason, en banc rehearing is
necessary to maintain uniformity of this court’s decisions.

                           Relevant Jurisdictional Facts

      Appellee/plaintiff   Vantage     Drilling   Company      filed   suit   against
appellant/defendant Shin-Chi-Su, a/k/a Nobu Su, on August 21, 2012, in the 295th
District Court of Harris County, Texas (the “State Court”). Two months later, Su
timely removed the case to the United States District Court for the Southern
District of Texas, Houston Division (the “Federal Court”).       The Federal Court
denied Vantage’s motion to remand. The United States Court of Appeals for the
Fifth Circuit allowed a permissive appeal from this ruling and determined that the
trial court erred in denying Vantage’s motion to remand. See Vantage Drilling Co.
v. Hsin-Chi-Su, 741 F.3d 535, 536 (5th Cir. 2014) (per curiam). The Fifth Circuit
rendered a judgment in which it reversed the Federal Court’s order denying
remand and remanded the case to the Federal Court with instructions to remand the
case to the State Court. See id. at 539. The Fifth Circuit did not reverse and render
an order remanding the case to the State Court. See id. On January 21, 2014,
before the Fifth Circuit issued its mandate, the Federal Court signed an order
remanding the case to the State Court. Two days later, while it had power to do so,
the Federal Court vacated its remand order. On February 3, 2014, the Federal
Court received the mandate from the Fifth Circuit instructing the Federal Court to

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remand the case to the State Court. But, the Federal Court did not sign a remand
order until almost seven months later.

         Meanwhile, despite the absence of a remand order from the Federal Court,
on February 14, 2014, Vantage amended its petition in the State Court and asked
the State Court to issue a temporary injunction against Su. Without any remand
order from the Federal Court, the State Court conducted a temporary-injunction
hearing over several days at the end of May 2014, and, on June 11, 2014, the State
Court granted a temporary injunction.          The following day, Su perfected this
interlocutory appeal from the injunction order. On August 29, 2014, Su filed a
motion in this court arguing that all of the State Court’s actions since the case was
removed to Federal Court — including the granting of the temporary injunction —
were void for lack of subject-matter jurisdiction because the Federal Court had
never remanded the case to the State Court. Six days later, the Federal Court
signed a remand order which reads in its entirety: “This case is remanded to the
295th District Court of Texas, Harris County. Signed on September 4, 2014 at
Houston, Texas.”1

               “Effectively Remanding” a Case Without a Remand Order

         In the panel opinion, the court concludes that, during the proceedings in the
State Court from February 2014 through June 2014, the State Court had subject-
matter jurisdiction because the case had been “effectively remanded” to the State
Court, even though the Federal Court had not signed a remand order. Hsin-Chi-Su
v. Vantage Drilling Co., —S.W.3d—,—, No. 14-14-00461-CV, 2015 WL
4249265, at *6 (Tex. App.—Houston [14th Dist.] July 14, 2015, no pet. h.). The
panel holds a remand order was unnecessary to revest jurisdiction in the State
Court before the temporary-injunction hearing and issuance of the temporary-
1
    (emphasis added).

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injunction order because it was “unmistakable” that the Federal Court intended to
remand the case to the State Court. See Hsin-Chi-Su, —S.W.3d at —, 2015 WL
4249265, at *6. Under the unambiguous language of title 28, section 1447(c) of
the United States Code and under precedent from the Supreme Court of Texas and
the Fourteenth Court of Appeals, a remand order from the remanding court is a
necessary requirement for a remand to occur. See 28 U.S.C. §1447(c) (West,
Westlaw through P.L. 114-51) (providing that, after the federal court signs a
remand order and sends it to the clerk of the state court, “[t]he State court may
thereupon proceed with such case”); Guilbot Serros de Gonzalez v. Gonzalez
Guilbot, 315 S.W.3d 533, 537–38 (Tex. 2010) (holding that “hand delivery of the
remand order in this case successfully effected the transfer of jurisdiction from
federal court to state court,” allowing hand delivery rather than mailing of the
order while still requiring a remand order, and stating that “what matters more is
what the federal court ordered, not what the federal clerk mailed”); Quaestor
Investments, Inc. v. State of Chiapas, 997 S.W.2d 226, 228–29 (Tex. 1999)
(holding that, although some courts of appeals, including the Fourteenth Court of
Appeals, had held that remand to the state court occurs when the federal court
signs the remand order, remand did not occur in that case until after the federal
court had signed the remand order and mailed a certified copy to the state court)
(per curiam); Reimer v. Scott, 666 S.W.2d 384, 385–86 (Tex. App.—Houston
[14th Dist.] 1984, writ dism’d) (stating that remand order was needed for case to
be remanded to state court), abrogated in part on other grounds by, Quaestor
Investments, Inc., 997 S.W.2d at 228–29. The panel’s novel conclusion — that the
Federal Court could effect remand by ostensibly forming an “unmistakeable”
intent to remand the case to the State Court without any remand order — conflicts
with these authorities.

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      The panel’s determination that the case was remanded at some point before
the proceedings leading up to the State Court’s signing of the temporary-injunction
order also conflicts with precedent from the Supreme Court of Texas and this court
requiring a court to follow the unambiguous language of a court order. See Wilde
v. Murchie, 949 S.W.2d 331, 332 (Tex. 1997) (per curiam); T.N. aka T.D. v. State,
No. 14-13-00012-CV, 2013 WL 6925028, at *3 (Tex. App.—Houston [14th Dist.]
Nov. 5, 2013, no pet.) (mem. op.). Under the plain wording of the Federal Court’s
September 4, 2014 remand order, the remand did not occur before that date. So,
the State Court had no subject-matter jurisdiction before that date.

               Absence of a Remand Order as a Procedural Defect

      The panel concludes that the absence of a remand order is a procedural
defect which Su could and did waive. See Hsin-Chi-Su, —S.W.3d at —, 2015 WL
4249265, at *7. In this part of its opinion, the panel relies on Tellez v. City of
Socorro, in which the Supreme Court of Texas stated that, although subject-matter
jurisdiction cannot be waived, procedural defects that do not affect subject-matter
jurisdiction may be waived. See 226 S.W.3d 413, 414 (Tex. 2007) (per curiam).
Thus, the panel appears to have concluded that the Federal Court’s failure to sign a
remand order is a procedural defect that does not affect the State Court’s subject-
matter jurisdiction. This holding conflicts with precedent from the Supreme Court
of the United States, the Supreme Court of Texas, and the Fourteenth Court of
Appeals, in which these courts conclude that upon removal to federal court, the
state court loses subject-matter jurisdiction to proceed any further in the case
unless and until the case is remanded, at which time the state court regains
jurisdiction. See Nat’l S.S. Co. v. Tugman, 106 U.S. 118, 122, 1 S. Ct. 58, 60, 27
L. Ed. 87 (1882) (concluding that upon removal to federal court, the state court
losses subject-matter jurisdiction and may proceed no further unless the case is

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remanded); Meyerland Co. v. F.D.I.C., 848 S.W.3d 82, 83 (Tex. 1993) (stating that
once removal is effected the state court must proceed no further unless and until
the case is remanded and that state court action after the removal of a case to
federal court is void) (order); Guilbot Serros de Gonzalez, 315 S.W.3d at 536–38
(equating the effective remand of the case from federal court to state court with the
“revesting” of jurisdiction in the state court); Quaestor Investments, Inc., 997
S.W.2d at 228–29 (stating that a remand from federal court to state court
terminates the jurisdiction of the federal court over the case and revests the state
court with jurisdiction to act in the case); Gonzalez Guilbot v. Estate of Gonzalez y
Vallejo, 267 S.W.3d 556, 559 (Tex. App.—Houston [14th Dist.] 2008) (stating
“[i]f a party follows the proper procedure for removing a case to federal court, the
state court loses jurisdiction and may not proceed further unless the case is
remanded”), aff’d in part, rev’d in part on other grounds, and remanded by,
Guilbot Serros de Gonzalez, 315 S.W.3d at 534–41; Academy Corp. v. Interior
Buildout & Turnkey Constr., Inc., 21 S.W.3d 732, 737 (Tex. App.—Houston [14th
Dist.] 2000, no pet.) (equating the remand of the case from federal court to state
court with the “revesting” of jurisdiction in the state court).          Under these
precedents, the Federal Court’s failure to sign a remand order is not a non-
jurisdictional procedural defect but the failure of a prerequisite to the State Court’s
exercise of jurisdiction. See Tugman, 106 U.S. at 122, 1 S. Ct. at 60; Meyerland
Co., 848 S.W.3d at 83; Guilbot Serros de Gonzalez, 315 S.W.3d at 536–38;
Quaestor Investments, Inc., 997 S.W.2d at 228–29; Gonzalez Guilbot, 267 S.W.3d
at 559; Academy Corp., 21 S.W.3d at 737. The lack of a remand order is not a
trifling thing. The remand order is essential. Its absence is not a procedural defect.
It is a fatal defect.

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      No Waiver of Complaint to State Court’s Subject-Matter Jurisdiction

      The panel also concludes that Su waived his complaint to the State Court’s
proceeding in the absence of a remand order from the Federal Court because Su
did not voice this complaint in the trial court and because Su participated in the
State Court proceedings. See Hsin-Chi-Su, —S.W.3d at —, 2015 WL 4249265, at
*6–7. This part of the panel opinion conflicts with precedent from the Supreme
Court of the United States, the Supreme Court of Texas, and the Fourteenth Court
of Appeals. These courts uniformly hold that one may not waive a lack-of-subject-
matter-jurisdiction complaint either by failing to object or by participating in
proceedings before a court that lacks subject-matter jurisdiction. See Tugman, 106
U.S. at 122–23, 1 S. Ct. at 60–61 (stating that, even if a party participates in state
court proceedings without objecting to the state court’s lack of subject-matter
jurisdiction because of a removal to federal court and no remand, the party has not
waived its complaint that the state court lacked jurisdiction); In re Crawford &
Co., 458 S.W.3d 920, 928, n.7 (Tex. 2015) (holding that a party cannot waive a
complaint regarding the trial court’s lack of subject-matter jurisdiction); Glassman
v. Goodfriend, 347 S.W.3d 772, 783 (Tex. App.—Houston [14th Dist.] 2011, pet.
denied) (en banc) (stating that subject-matter jurisdiction cannot be conferred by
consent or waiver); Univ. of Tex. Health Science Center at Houston v. Cheatham,
No. 14-14-00628-CV, 2015 WL 3878111, at *2, n.4 (Tex. App.—Houston [14th
Dist.] June 23, 2015, no pet.) (holding that prerequisites to subject-matter
jurisdiction of the trial court are never presumed and cannot be waived) (mem.
op.); In re S.A.H., 465 S.W.3d 662, 665 (Tex. App.—Houston [14th Dist.] 2014,
no pet) (stating that subject-matter jurisdiction is essential to a court’s power to
decide a case and cannot be conferred by consent, estoppel, or waiver). If the trial
court fails to note its lack of subject-matter jurisdiction and no one raises the issue

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until long after substantial litigation, the court and the litigants may have lost
valuable time and resources, but the loss does not change the result — the
proceedings are void for lack of subject-matter jurisdiction. Arguments
championing efficiency and judicial economy do not give parties a means to avoid
the consequences of a lack of subject-matter jurisdiction. See, e.g., Cheatham,
2015 WL 3878111, at *2, n.4 (holding that party did not waive complaint to lack
of a prerequisite to subject-matter jurisdiction, even though party waited nearly
four years to assert this complaint in the trial court, because the trial court’s
jurisdiction is never presumed and cannot be waived). When a court lacks subject-
matter jurisdiction, the proceedings are void.

                         Necessity for En Banc Rehearing

      Although en banc rehearing is disfavored, it is appropriate and necessary to
resolve the conflicts between the panel opinion and the prior precedents of this
court. See Tex. R. App. P. 41.2. Therefore, this court should grant appellant’s
motion for en banc rehearing. Because it does not, and instead lets the panel
opinion stand, I respectfully dissent.

                                         /s/       Kem Thompson Frost
                                                   Chief Justice

(Justice Christopher joins this dissenting opinion; Justices Boyce, Jamison, Busby,
Donovan, Brown, and Wise vote to deny the motion for en banc rehearing) (Justice
McCally not sitting).

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