Court Opinion

ID: 65991
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:05:24+00
Date Added: 2024-06-11T17:20:44.112639
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                            May 18, 2009

                                     No. 08-20582                      Charles R. Fulbruge III
                                   Summary Calendar                            Clerk

Wachovia Bank, N.A.

                                                   Plaintiff - Appellee
v.

PICC PROPERTY AND CASUALTY COMPANY LIMITED

                                                   Third-Party Defendant - Appellant
v.

HLP/GAC INTERNATIONAL INC

                                                   Third-Party Plaintiff - Appellee

                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:07-CV-1104

Before SMITH, STEWART, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
       PICC Property and Casualty Company Limited (“PICC”) appeals the
district court’s order dated August 13, 2008, remanding this third-party action
to state court. HLP/GAC International, Inc. (“HLP”) responded and also filed

       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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.
                                   No. 08-20582

motions to dismiss the appeal and for fees under Federal Rule of Appellate
Procedure 38.    For the reasons set forth below, we conclude that we lack
jurisdiction and therefore GRANT the motion to dismiss PICC’s appeal. We
DENY the motion for fees.

                                I. BACKGROUND
      Wachovia Bank, N.A., sued HLP/GAC International, Inc. (“HLP”), in the
55th Judicial Court of Harris County, Texas. HLP later sued PICC in a third-
party action in the same court. PICC subsequently removed the suit pursuant
to 28 U.S.C. § 1441, on the basis that diversity jurisdiction existed under 28
U.S.C. § 1332. HLP did not seek remand.
      In July 2008, over a year after removal, the district court issued an order
sua sponte raising the issue of the propriety of its removal jurisdiction and
requesting that PICC brief the issue of “whether [the district court] ha[d] subject
matter jurisdiction over the third-party action,” specifically, whether a third-
party defendant could remove a third-party action under § 1441 on the basis of
diversity jurisdiction. After receiving briefing from the parties, the district court
ruled on August 13, 2008, that “[u]pon review and consideration of the
aforementioned documents and the relevant legal authority, and for the reasons
set forth below, the Court finds that it lacks subject matter jurisdiction over the
instant case.”
      The reasons then set forth by the district court solely focused on whether
a third-party defendant is a “defendant” within the meaning of § 1441(a). After
thoughtfully analyzing § 1441(a) and various cases interpreting that provision,
the court concluded that third-party defendants are not entitled to remove under
§ 1441(a), following the majority of courts that have addressed the issue. The

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district court concluded its order by again stating that it found that subject
matter jurisdiction was lacking and that the suit was therefore remanded to the
state court where it was originally filed.
      PICC appealed. HLP moved to dismiss the appeal for lack of appellate
jurisdiction and moved for fees pursuant to Rule 38. The motions were carried
with the case.

                                II. DISCUSSION
      In 28 U.S.C. § 1447(d), Congress provided that: “An order remanding a
case to the State court from which it was removed is not reviewable on appeal
or otherwise.”   Although this language is broad, “the Supreme Court has
explained that this provision is to be interpreted in pari materia with § 1447(c),
such that only remand orders issued under § 1447(c) and ‘invoking the grounds
specified therein’ are immune from review.” Heaton v. Monogram Credit Card
Bank of Ga., 231 F.3d 994, 997 (5th Cir. 2000) (quoting Thermtron Prods., Inc.
v. Hermansdorfer, 423 U.S. 336, 345-46 (1976), abrogated on other grounds by
Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996)). Under § 1447(c), a case
may be remanded upon a motion made within thirty days after the filing of the
notice of removal “on the basis of any defect other than lack of subject matter
jurisdiction.” However, § 1447(c) goes on to require that “[i]f at any time before
final judgment it appears that the district court lacks subject matter jurisdiction,
the case shall be remanded.”
      It is well-established that “[a] § 1447(c) remand is not reviewable on
appeal even if the district court’s remand order was erroneous.” Heaton, 231
F.3d at 997; Thermtron, 423 U.S. at 343. This is true “even if a court employs
erroneous principles in concluding that it is without jurisdiction under §

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                                        No. 08-20582

1447(c),” not merely if the court employs the correct reasoning and reaches an
erroneous outcome. Smith v. Texas Children’s Hosp., 172 F.3d 923, 925 (5th Cir.
1999) (citing Gravitt v. Southwestern Bell Tel. Co., 430 U.S. 723, 723-24 (1977)
(per curiam)).
       HPL argues that this appeal must be dismissed because the remand order
states that the district court concluded that it lacked subject matter jurisdiction,
and we need not look further.            PICC argues that this court has appellate
jurisdiction because the district court’s conclusion that a third-party defendant
is not a “defendant” for § 1441(a) purposes, and therefore cannot remove an
unsevered third-party action, was a procedural defect that was waived when
HLP did not raise it within thirty days, not a lack of subject matter jurisdiction.
       A plain reading of Judge Harmon’s remand order makes clear that
§ 1447(c) was the basis for remanding this case. The court specifically concludes,
and reiterates at the end of the order, that the district court lacked subject
matter jurisdiction over the action. Contrary to PICC’s assertion, the district
court did not “clearly stat[e]” that “remand was based on a defect in the removal
procedure.” Rather, the district court held that the removal defect – that third-
party defendants are not “defendants” as that term is used in § 1441(a) –
deprived it of subject matter jurisdiction. PICC takes issue with the
determination that the identified defect is one of subject matter jurisdiction,
rather than a waivable procedural error.                  That is certainly a plausible
argument,1 but it does not affect our analysis. Even if the district court erred in

       1
         In this Circuit, any objection to removal that does not involve whether the action could
have originally been brought in federal district court is a procedural error that may be waived
by a litigant’s failure to object to removal within the 30-day period provided in § 1447(c),
rather than a lack of subject matter jurisdiction. See Williams v. AC Spark Plugs Div. of Gen.
Motors Corp., 985 F.2d 783, 787 (5th Cir. 1993); but see First Nat’l Bank of Pulaski v. Curry,
301 F.3d 456, 461, 467 (6th Cir. 2002) (holding third-party defendant did not have the power

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                                    No. 08-20582

perceiving § 1441(a) to be an issue of subject matter jurisdiction rather than a
procedural defect, it does not mean that the instant remand order is appealable.
      PICC further argues that the district court’s statement that it lacked
subject matter jurisdiction was a “mere incantation” that does not immunize an
improper remand that PICC asserts was only based on a defect in the removal
procedure, relying on In re Digicon Marine, Inc., 966 F.2d 158, 160 (5th Cir.
1992).   That reliance is misplaced.       In Digicon Marine, the district court’s
original remand order “clearly indicate[d] on its face that the remand was not
based upon lack of original subject matter jurisdiction but on the lack of
authority to remove a maritime case . . . [,]” and only in its order denying
reconsideration did the district court describe the remand as based on lack of
subject matter jurisdiction.      Digicon Marine, 966 F.2d at 160.            We have
previously rejected similar arguments that we should look beyond the language
of the remand order’s stated § 1447(c) reason for remand and determine the
“real” basis for the district court’s order. See Heaton, 231 F.3d at 998; Smith,
172 F.3d at 926-27. In Heaton, we rejected an argument based on Digicon
Marine similar to that made by PICC, concluding that “[j]ust as in Digicon
Marine, in this case we need only look to the face of the remand order to
determine [the district court’s] reasons for remanding.” Heaton, 231 F.3d at 999.
      Rejecting the argument that we should determine the “true” basis for a
district court’s remand order, this court examined Bogle v. Phillips Petroleum
Co., and noted that court looked only at the face of the remand order. Heaton,
231 F.3d at 998 (discussing Bogle, 24 F.3d 758, 762 (5th Cir. 1994)). The Bogle
court stated: “The magic words ‘this case does not contain a federal claim’

to remove under § 1441 and that, as a result, the district court never had subject matter
jurisdiction).

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                                  No. 08-20582

rendered the district court’s remand order unreviewable.” 24 F.3d at 762. Here,
as in Heaton, the district court identified a lack of subject matter jurisdiction as
the basis for remand, and “[w]e cannot read the remand order to say that the
court ‘clearly and affirmatively’ relied on a non-§ 1447(c) basis as required. . .”
to make the order appealable. Heaton, 231 F.3d at 999. “Instead, we will only
review remand orders if the district court affirmatively states a non-§ 1447(c)
ground for remand.” Smith, 172 F.3d at 927 (internal quotation omitted).
      Because the district court’s remand order was based on a lack of subject
matter jurisdiction, it was a § 1447(c) remand, and therefore it is unappealable
under § 1447(d).
                               III. CONCLUSION
      For the foregoing reasons, the motion to dismiss this appeal is GRANTED,
and the motion for fees is DENIED.

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