Court Opinion

ID: 167600
Source: CourtListenerOpinion
Date Created: 2010-08-14 09:59:27+00
Date Added: 2024-06-11T17:24:53.435058
License: Public Domain

F I L E D
                                                               United States Court of Appeals
                                                                       Tenth Circuit
                  UNITED STATES COURT OF APPEALS June 9, 2006

                                TENTH CIRCUIT                     Elisabeth A. Shumaker
                                                                      Clerk of Court

 CO LO RA DO INTER GOVERNM EN TA L RISK
 SHARING AGENCY, a Colorado resident,

           Plaintiff-Counter-Claim-Defendant-Appellee,

 v.

 NORTHFIELD IN SURANCE COM PANY, a
 M innesota Insurance Corporation, and TIG
                                                              Nos. 05-1186
 INSU RANCE COM PA NY, a California Insurance
                                                               & 05-1208
 Corporation,
                                                         (D.C. No. 04-M K-2612)
                                                                (D . Colo.)
           Defendants-Counter-Claimants-Cross-
           Claimants-Appellants,

 and

 C ITY O F SA LID A , C OLO RA DO,

           Defendant-Counter-Claimant-Cross-Claimant-
           Appellee.

                          ORDER AND JUDGMENT *

Before KELLY, SE YM OU R, and H ARTZ, Circuit Judges.

       *
       This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      Northfield Insurance Company (Northfield) and TIG Insurance Company

(TIG) (insurers), bring this appeal challenging the district court’s remand of the

instant action to state court. Because the court remanded for lack of subject

matter jurisdiction, see 28 U.S.C. § 1447(c), we do not have jurisdiction to review

the district court’s order. 28 U.S.C. § 1447(d). The appeal is therefore

dismissed.

      This case arises out of an insurance dispute. The City of Salida, Colorado

(the City), had a pool building which suffered substantial structural damage after

a severe snow storm. At the time of the damage, the City was one of several

members of the Colorado Intergovernmental Risk Sharing Agency (CIRSA), a

self-insurance pool. Under this group insurance agreement, CIRSA was obligated

to pay up to $250,000 to the City for property losses. The pool building damage

and related business losses exceeded $3 million, and CIRSA paid approximately

$1.3 million of these losses. The additional damage amounts were to be covered

by Northfield and TIG, 1 who provided insurance coverage to both the City and

CIRSA . Northfield and TIG declined to provide coverage for the excess damage

amounts, claiming the snow storm was not the cause of the damage to the pool

building.

      1
       Northfield is incorporated under the law s of the State of Iowa, and has its
principal place of business in M innesota. TIG is incorporated under the laws of
the State of C alifornia, with its principal place of business in Texas.

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      On December 19, 2003, the City filed a lawsuit against CIRSA , Northfield,

and TIG in Colorado state court regarding coverage issues arising under the group

insurance agreement as well as under the contracts with the insurers. On the same

date, CIR SA filed a separate but similar lawsuit against the City and the two

insurers. The two cases were subsequently consolidated because the cases

presented identical questions of law and fact, i.e.,

      [w]hether the alleged damages to the . . . pool, . . . were caused by a
      snow storm . . . . W hether the City . . . and CIRSA fulfilled their
      obligations under Northfield’s insurance contract. W hether CIRSA
      fulfilled its obligations under TIG’s insurance contract. . . [and the
      question of] N orthfield’s, CIRSA’s, TIG’s, and the C ity of Salida’s
      legal rights and responsibilities under their respective insurance
      contracts for the claims based on the alleged damage to the City[‘s] .
      . . hot springs pool.

Aple. App. at 2. Upon consolidation, and consistent with the caption of CIRSA’s

complaint, CIRSA was deemed the plaintiff, and Northfield, TIG and the City

were named as defendants.

      On December 17, 2004, nearly a year after this action was instigated,

Northfield and TIG filed a Notice of Removal in federal district court. The

insurers conceded “that the face of the pleadings exhibit[s] a lack of diversity . . .

.” A plt. App. at 433. However, they “incorporat[ed] by reference . . . arguments

in their Joint M otion for Realignment [claiming t]he parties in this action should

be realigned to reflect their true interests, thus establishing diversity.” Id.

Despite the insurers’ reference to a Joint M otion for Realignment, that document

                                           -3-
was not tendered to the district court until December 20, 2004, three days after

the Notice for Removal was submitted. The district court sua sponte rejected the

removal motion on December 27, 2004, noting the insurers failed to comply with

the local rules regarding motion filing. See D.C. C OLO . LC IV R 7.1; Aple. App. at

9. On December 29, 2004, nine days after the insurers filed their Notice of

Removal, they submitted an Amended Joint M otion for Realignment, claiming

“the City . . . should be recognized as a party plaintiff rather than, as indicated in

the caption, as a defendant in this action . . . .” Aplt. App. at 488. If realigned,

diversity would exist between the parties.

      The City and CIRSA moved for remand. In granting the motion, the

district court referenced the insurers’ concession that the pleadings failed to

exhibit the required diversity for federal jurisdiction and the insurers’ contention

      that perhaps the jurisdictional defect can be remedied by a
      realignment of the parties . . . .
             ....
             As a general rule, diversity of citizenship is determined at the
      commencement of the law suit. In this case, whether w e determine it
      at the commencement of the state lawsuit or we determine it at the
      time the notice of removal was filed makes no difference. The way
      the parties are configured, there is no diversity. If there is no
      diversity, this court cannot exercise jurisdiction to remedy the
      problem.

Aplt. App. at 943-44. Furthermore, in denying the insurers’ subsequent M otion

for Reconsideration, the court expanded upon its initial decision to remand the

action.

                                          -4-
      [E]ven if the Court agreed with the movants that it has the
      jurisdiction to realign parties in aid of removal, it would nevertheless
      find it inappropriate to do so in this case. In cases of removal, the
      federal court’s subject-matter jurisdiction is determined based on the
      contents of the Notice of Removal. Although the movants’ Notice of
      Removal in this case identifies the need to realign parties, it offers
      no argument for doing so; instead, it purports to incorporate by
      reference a Joint M otion for Realignment. However, the M otion for
      Realignment was not filed contemporaneously with the Notice of
      Removal; rather for reasons not present in the record, it was not filed
      until three days later. Because the M otion for Realignment was not
      in existence at the time of the Notice of Removal, the Court cannot
      consider it for the purpose of determining jurisdiction.
              . . . Thus, because the Notice for Removal offers no substantial
      argument warranting realignment, the Court lacks subject-matter
      jurisdiction over this action.

Aplt. App. at 966-67 (citations omitted). Northfield and TIG filed timely notices

of appeal from the remand order.

      In dismissing this action, we are guided by the federal removal statutes. In

particular, 28 U.S.C. § 1447(d) directs that “[a]n order remanding a case to the

State court from which it was removed is not reviewable on appeal or otherwise .

. . .” 28 U.S.C. § 1447(d). W hile section 1447(d) would appear to bar appellate

review of all remand orders, the Supreme Court has limited section 1447(d)’s

application to grounds specified under 28 U.S.C. § 1447(c). 2 According to the

      2
       Section 1447(c) provides:
      A motion to remand the case on the basis of any defect other than
      lack of subject matter jurisdiction must be made within 30 days after
      the filing of the notice of removal under section 1446(a). If at any
      time before final judgment it appears that the district court lacks
      subject matter jurisdiction, the case shall be remanded.
28 U.S.C. § 1447(c).

                                         -5-
Court,

         [a]s long as a district court’s remand is based on a timely raised
         defect in removal procedure or on lack of subject-matter jurisdiction
         – the grounds for remand recognized by § 1447(c) – a court of
         appeals lacks jurisdiction to entertain an appeal of the remand order
         under § 1447(d).

Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127-28 (1995).

         A district court’s decision to remand for lack of subject matter jurisdiction

or for a procedurally defective removal does not automatically render its decision

unreviewable by our court. Archuleta v. Lacuesta, 131 F.3d 1359, 1362 (10th Cir.

1997). Rather, “we will determine by independent review the actual grounds

upon which the district court believed it was empow ered to remand. The district

court need not be correct in its determination that it lacked subject matter

jurisdiction, however, so long as it made that determination in good faith.” Id.

(citing Flores v. Long, 110 F.3d 730, 732, 733 (10th Cir. 1997)). Therefore, “[i]f

a district court orders remand [for lack of subject matter jurisdiction, or improper

removal procedure], § 1447(d) absolutely prohibits appellate review of the order,

and we adhere firmly to this prohibition even where we believe that the district

court was plainly incorrect.” Kennedy v. Lubar, 273 F.3d 1293, 1297 (10th Cir.

2001) (citing Archuleta, 131 F.3d at 1363).

         A full review of the record compels the conclusion that the district court’s

remand of this action was predicated on the absence of subject matter jurisdiction

due to the parties’ lack of diversity. In granting the City’s M otion for Remand,

                                            -6-
the district court held that diversity was lacking both at the time the law suit

commenced and when the Notice for Removal was filed. See Laughlin v. Kmart

Corp. 50 F.3d 871, 873 (10th Cir. 1995) (jurisdiction should be determined from

allegations of complaint or allegations in notice of removal). The court therefore

concluded it lacked jurisdiction to realign the parties to create diversity. In

further denying the insurers’ M otion to Reconsider, the court explicitly stated it

did not have jurisdiction to realign the parties because the insurers’ Notice of

Removal provided only conclusory assertions that realignment was appropriate

and lacked any “substantial argument warranting realignment.” Aplt. A pp. at 967.

Even if, for the sake of argument, the district court should have exercised

jurisdiction to realign the parties, we cannot entertain the insurers’ claims on

appeal. The district court remanded this action based on its belief that it lacked

subject matter jurisdiction over the controversy. Section 1447(d) therefore bars

us from reviewing that ruling.

      Accordingly, the appeal is DISM ISSED.

                                        ENTERED FOR THE COURT

                                        Stephanie K. Seymour
                                        Circuit Judge

                                          -7-