Court Opinion

ID: 70472
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:02:36+00
Date Added: 2024-06-11T12:17:48.973165
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United States Court of Appeals,

                        Eleventh Circuit.

                             No. 95-5008.

     In re FIRST NATIONAL BANK OF BOSTON, a national banking
association, Petitioner.

                          Nov. 30, 1995.

On Petition for Writ of Mandamus to the United States District
Court for the Southern District of Florida. (No. 95-8366-CIV-LCN),
Lenore C. Nesbitt, Judge.

Before KRAVITCH, BIRCH and BLACK, Circuit Judges.

     BIRCH, Circuit Judge:

     This petition for writ of mandamus requires us to decide

whether a district court can remand a case sua sponte within the

thirty-day period following a removal notice provided in 28 U.S.C.

§ 1447(c) for motions to remand.    The district court remanded the

removed case back to state court during this time period.     Because

we conclude that the 1988 amendments to section 1447(c) precluded

the district court from sua sponte remand, we grant the petition

for writ of mandamus.

                             I. BACKGROUND

     The origin of the present petition is the related federal case

filed in 1989 by Society for Savings in the Southern District of

Florida concerning a consumer loan, secured by a motor yacht,

extended to Jerome H. Rogers.    Society for Savings v. M/Y "CONJA",

No. 89-6167-CIV-PAINE (S.D.Fla.1989).        That case was settled by

surrender of the vessel to Society for Savings and the agreed

payment of $13,000, representing the difference in the value of the

vessel and the outstanding debt.        Thereafter, various credit

reporting agencies showed this loan as a bad debt.
     In 1995, Rogers sued petitioner First National Bank of Boston

("Bank of Boston"), which he alleges is the successor to Society

for Savings with offices in Palm Beach County, Florida, in the

Fifteenth Judicial Circuit for Palm Beach County, and claimed

damages exceeding $15,000 for Bank of Boston's failure to correct

credit information relating to Rogers.        Rogers v. Bank of Boston,

No. CL 95 347AB (Fla.Cir.Ct. filed Jan. 17, 1995).         Subsequently,

Rogers   filed   a   settlement   demand   requesting   compensatory   and

punitive damages of $650,000.        Bank of Boston filed an amended

answer   and     affirmative   defenses    that   denied   the   material

allegations of the complaint, including the allegation that Bank of

Boston maintained an office in Palm Beach County.            On June 13,

1995, Bank of Boston removed the case to federal court for the

Southern District of Florida pursuant to 28 U.S.C. §§ 1441 and 1446

and asserted complete diversity. Rogers v. Bank of Boston, No. 95-

8366-CIV-NESBITT (S.D.Fla. filed June 13, 1995) ("Rogers ").           Bank

of Boston represented that it is a national banking association

with its principal place of business in Massachusetts, making it a

Massachusetts citizen, that Rogers is a Florida citizen, and that

the amount in controversy exceeded $50,000 in compliance with 28

U.S.C. § 1332(a).

     On June 19, 1995, the district court sua sponte remanded the

case to the Eleventh Judicial Circuit for Dade County.                 The

district court determined that Bank of Boston's failure to allege

the state in which it is incorporated constituted an inadequate

showing of its citizenship for diversity jurisdiction:

          A review of the Notice of Removal reveals that Defendant
     has failed to adequately demonstrate that the controversy is
     between citizens of different states.        Defendant merely
     alleges that it is "a national banking association with its
     principal place of business in Boston, Massachusetts, and is
     therefore a Massachusetts citizen." (Not. of Removal at 1.)
     Defendant, however, fails to allege the state by which it has
     been incorporated. Therefore, because Defendant has failed to
     adequately allege its own citizenship, as is required in order
     to demonstrate the Court's original jurisdiction, it appears
     that the Court lacks subject matter jurisdiction over this
     case.

This order was filed in the clerk's office on June 22, 1995, and

the case was closed.

     On June 28, 1995, Bank of Boston moved for reconsideration and

vacation of the district court's remand order and for leave to

amend its notice of removal.      Bank of Boston explained that, as a

national banking association, it is not incorporated under any

state's law and that its citizenship is determined by its principal

place of business.     Bank of Boston also filed an amended notice of

removal stating this explanation of its citizenship and clarified

that it maintains no branch offices in Florida, although its

independent subsidiary mortgage corporation maintains at least one

branch office in Florida.       Bank of Boston subsequently filed an

affidavit   by   its   legal   supervisor   for   its   consumer   finance

department in support of the accuracy of these representations.

     On July 21, 1995, the district court entered an order striking

Bank of Boston's motion for reconsideration and leave to file an

amended notice of removal because it no longer had jurisdiction

over the case.    Bank of Boston then petitioned this court for a

writ of mandamus directing the district court to recall its remand

and to reinstate the case on its docket.      Pursuant to Federal Rule

of Appellate Procedure 21(b), we directed the district judge to

respond to Bank of Boston's argument that the district court's
remand was unauthorized under 28 U.S.C. § 1447(c).          By letter to

the Clerk of Court, the district judge stated that she did not

desire to appear in this proceeding other than through her orders

remanding the case to state court and striking Bank of Boston's

motion for reconsideration and leave to file an amended notice of

removal.     From her letter, it appears that the district judge

considers the response by respondent Rogers to be the response that

we required of her in accordance with Federal Rule of Appellate

Procedure 21(b).       Rogers's response argues that the district

court's    determination   of    subject   matter   jurisdiction   is   not

reviewable pursuant to 28 U.S.C. §§ 1447(c) and (d).

                               II. DISCUSSION

         Initially, we must determine if we have jurisdiction to

review the district court's remand order in this petition.          Under

28 U.S.C. § 1447(d), "[a]n order remanding a case to the State

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

otherwise."1    While we note that the district court remanded
                                                             Rogers

to the Eleventh Judicial Circuit for Dade County instead of the

Fifteenth Judicial Circuit for Palm Beach County, from which it

came, we do not limit our reviewability to this basis.       The Supreme

Court has proscribed a broad, literal interpretation of section

1447(d). Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 96

S.Ct.    584,   46   L.Ed.2d    542   (1976);   accord   Carnegie-Mellon

University v. Cohill, 484 U.S. 343, 108 S.Ct. 614, 98 L.Ed.2d 720

(1988). Reading sections 1447(c) and (d) in conjunction, the Court

     1
      Although § 1447(d) permits an exception to nonreviewability
for certain civil rights actions under 28 U.S.C. § 1443, this
exception is inapplicable here.
explained that "only remand orders issued under § 1447(c) and

invoking the grounds specified therein ... are immune from review

under § 1447(d)."      Thermtron, 423 U.S. at 346, 96 S.Ct. at 590.

Thus, mandamus is appropriate "where the district court has refused

to   adjudicate   a   case;   and   has   remanded   it    on   grounds   not

authorized by the removal statutes."       Id. at 353, 96 S.Ct. at 594;

see Page v. City of Southfield, 45 F.3d 128, 132 (6th Cir.1995)

(the interpretation of section 1447(d) in Thermtron "does not

prohibit us from determining whether the district court exceeded

its statutory authority by issuing the remand").                As we will

clarify, we can review the remand order presented by this petition

because the district court remanded Rogers sua sponte on procedural

grounds unauthorized by section 1447(c).       We are aided greatly in

our analysis by a Fifth Circuit case that is directly on point, In

re Allstate Ins. Co., 8 F.3d 219 (5th Cir.1993).          See Page, 45 F.3d

128 (reversing district court's sua sponte remand for a procedural

defect within thirty days after filing the notice of removal as

unauthorized under section 1447(c));        In re Continental Casualty

Co., 29 F.3d 292 (7th Cir.1994) (issuing writ of mandamus ordering

district court to reinstate case that it sua sponte remanded for a

procedural defect within thirty days after filing of the notice of

removal because the remand was unauthorized under section 1447(c)).

      As amended in 1988,2 section 1447(c) provides in pertinent

      2
      Prior to its amendment by the Judicial Improvements and
Access to Justice Act of 1988, Pub.L. No. 100-702, 102 Stat.
4642, 4670, § 1016(c), § 1447(c) allowed a district court to
remand a case to state court "[i]f at any time before final
judgment it appear[ed] that the case was removed improvidently
and without jurisdiction." 28 U.S.C. § 1447(c) (1973) (repealed
1988).
part:

          A motion to remand the case on the basis of any defect in
     removal procedure 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).      The district court based its                sua sponte

remand order on the lack of subject matter jurisdiction under

section 1447(c), specifically, absence of diversity.                    Bank of

Boston contends that it clearly explained the complete diversity

between it and Rogers in its notice of removal.

        Although Bank of Boston stated in its removal notice that it

is a national banking association with its principal place of

business   in   Boston,   Massachusetts,     making    it   a   Massachusetts

citizen, the district court concluded that this representation was

insufficient    for    diversity   jurisdiction   because       the    place    of

incorporation    was    not   stated.      Diversity   citizenship        for   a

corporation is "either the corporation's state of incorporation or

principal place of business."        Taylor v. Appleton, 30 F.3d 1365,

1367 (11th Cir.1994) (citing 28 U.S.C. § 1332) (emphasis added);

see United Steelworkers v. R.H. Bouligny, Inc., 382 U.S. 145, 152,

86 S.Ct. 272, 276, 15 L.Ed.2d 217 (1965) ("[I]n 1958 Congress

thought    it   necessary     to   enact    legislation     providing       that

corporations are citizens both of the State of incorporation and of

the State in which their principal place of business is located.");

Jerguson v. Blue Dot Inv., Inc., 659 F.2d 31, 33 (5th Cir. Unit B

1981) ("[C]orporations can be citizens in two places: the State of

incorporation and the State of its principal place of business."),

cert. denied, 456 U.S. 946, 102 S.Ct. 2013, 72 L.Ed.2d 469 (1982).
Thus,    a   company   whose    principal   place   of   business    is   in

Massachusetts is a Massachusetts citizen under 28 U.S.C. § 1332(c).

Pay Tel Sys., Inc. v. Seiscor Technologies, Inc., 850 F.Supp. 276,

278 (S.D.N.Y.1994).       As to its status as a national banking

association, Bank of Boston cited in its removal notice Landmark

Tower Assocs. v. First Nat'l Bank of Chicago, 439 F.Supp. 195, 196

(S.D.Fla.1977), which states that "a national banking association

[is] organized under the laws of the United States....              Under 28

U.S.C. § 1348, national banks not chartered by any state are deemed
citizens of the states in which they are located.             See Fulton

National Bank of Atlanta v. Hozier, 267 U.S. 276, 45 S.Ct. 261, 69

L.Ed. 609 (1925)."     Id.     With this authority, it was inconsistent

and unwarranted for the district court sua sponte to have remanded

Rogers to state court because of the lack of Bank of Boston's

incorporation state, which is irrelevant because there is no

incorporation state for this national banking association.3

     Reasoning that "a "procedural defect' within the meaning of §

1447(c) refers to "any defect that does not go to the question of

     3
      Although the district court based its remand order solely
on Bank of Boston's failure to give its state of incorporation,
we additionally note that there is no actual evidence in the
record that Bank of Boston was "located" in Florida through a
branch office. See Rush v. Savchuk, 444 U.S. 320, 328, 100 S.Ct.
571, 577, 62 L.Ed.2d 516 (1980) (holding that "a corporation is
"present,' for jurisdictional purposes, wherever it does
business"). While Rogers's complaint in state court alleges that
Bank of Boston had offices in Palm Beach County, and that it is
the successor to Society for Savings, Bank of Boston denied these
allegations in its answer. To date, Rogers has not provided any
substantiation for these bare allegations, such as an address for
an alleged office of Bank of Boston in Palm Beach County or
anywhere in Florida. In its proffered amended notice of removal,
struck by the district court, Bank of Boston explains that its
independent subsidiary mortgage corporation maintains at least
one branch office in Florida, but that Bank of Boston does not.
whether the case originally could have been brought in federal

district court,' " the Fifth Circuit determined that failure to

allege the plaintiff's citizenship at the time of filing the

removal notice was a "procedural, rather than [a] jurisdictional,

defect."   In re Allstate, 8 F.3d at 221 (quoting Baris v. Sulpicio

Lines, Inc., 932 F.2d 1540, 1544 (5th Cir.), cert. denied, 502 U.S.

963, 112 S.Ct. 430, 116 L.Ed.2d 449 (1991)).    That court decided

that, although there had not been a demonstration of complete

diversity, there was no record evidence to show that diversity did

not exist factually.    Id.   Furthermore, "any qualms" that the

district court had concerning diversity jurisdiction should have

been resolved "by allowing Allstate to amend the removal petition

to cure the defect under 28 U.S.C. § 1653" instead of sua sponte

remanding the case to state court.   Id. at 222 n. 4.

     This petition is even stronger. The only possible omission by

Bank of Boston in its removal petition was not fully explaining

that, as a national banking association, it is not incorporated in

any state rather than merely citing supporting caselaw.    Bank of

Boston should not be deprived of its federal forum simply because

the district court neglected to research the status of national

banking associations to determine that principal place of business

governs corporate diversity citizenship.4

     4
      The dissent's position is disconcerting indeed. Although
conceding that the district court "erroneously" remanded Rogers
to state court, the dissent apparently would allow this obvious
error to stand and force Bank of Boston to litigate in state
court, when it is entitled to be in federal court. The dissent
bases its position on the In re Allstate dissent, which finds
that our analysis is contrary to congressional will in § 1447(c)
and Thermtron, decided before Congress amended § 1447(c), the
version of the statute at issue in this petition. See infra pp.
      We further agree with the Fifth Circuit's interpretation of

section 1447(c).   The phrasing of the statute that " "[a] motion to

remand the case ... must be made,' implies that only a party to the

---- - ---- & n. 2. As we explain in this opinion, Congress
specifically changed the language in § 1447(c) to permit the
district court to remand pursuant to a motion by a party alleging
a defect in the removal procedure, and not the court on its own
motion, within the first thirty days following a removal notice.
See infra pp. ---- - ----. Under the majority's analysis and
that of the Fifth Circuit in In re Allstate, the Sixth Circuit in
Page, and the Seventh Circuit in In re Continental Casualty Co.,
the district court was not authorized under § 1447(c) to remand
sua sponte for a defect in the removal procedure during this
thirty-day period.

          There clearly was complete diversity in Rogers. Bank
     of Boston stated that it was a national banking association
     with its principal place of business in Boston,
     Massachusetts, making it a Massachusetts citizen, and it
     gave supporting authority. The district court erred in
     failing to perform basic legal research, which would have
     confirmed that Bank of Boston's corporate citizenship is
     Massachusetts as enunciated by the Supreme Court and our
     circuit. See infra pp. ---- - ----. This lapse in
     responsibility by the district court has caused an
     unnecessary expenditure of judicial time and effort, when
     Bank of Boston factually and legally exhibited diverse
     citizenship. This is not consistent with congressional
     intent. See infra note 5.

          The dissent chooses to condone the district court's
     error and would uphold its remand simply because the
     district court decided that it "appear[ed]" to lack subject
     matter jurisdiction, the "magic words" to trigger §§ 1447(c)
     and (d). For us to allow this clearly incorrect remand to
     stand would be shirking our review responsibility and would
     result in an injustice for Bank of Boston in the selection
     of its federal forum. The district court's wrongful remand
     should not be shielded and effectuated by our refusal to
     perform our review responsibility to the disadvantage of
     Bank of Boston, a litigant expecting the federal courts to
     review its case fairly. The dissent's view would establish
     a review standard that would preserve and perpetuate similar
     abuses of discretion by district courts and preclude our
     review. The majority cannot endorse that this would ever be
     the intent of Congress or the Supreme Court. Therefore, we
     join the analyses adopted by the Fifth, Sixth, and Seventh
     Circuits in interpreting § 1447(c) in our review of this
     petition.
case may initiate it" within the thirty-day period after the filing

of a removal notice under the plain language of section 1447(c).

Id. at 223 (quoting 28 U.S.C. § 1447(c));                accord Page, 45 F.3d at

133 ("Not only did Congress incorporate the word "motion' in the

1988 amendments where it had previously been absent, but it did so

only in the first sentence, i.e., for procedural defects."); In re

Continental Casualty Co., 29 F.3d at 294 ("[I]f a motion for remand

is essential to action under the first sentence of § 1447(c), then

the lack of a motion deprives a district judge of power to return

a case to state court.").               Thus, the first sentence of section

1447(c)       "consigns      procedural    formalities      to   the   care   of   the

parties," while the second sentence "assigns to the court concern

for its jurisdictional prerequisites."               In re Allstate, 8 F.3d at

223.        Considering this to be a "wise and warranted distribution,"

supported by legislative history, the Fifth Circuit concluded that,

"where       subject   matter       jurisdiction   exists    and   any   procedural

shortcomings may be cured by resort to § 1653, we can surmise no

valid        reason    for    the     court   to   decline       the   exercise    of

jurisdiction."5        Id.

        5
      The Fifth Circuit determined that congressional intent
sanctioned this result from the legislative history for the 1988
amendments, which states that

                [s]o long as the defect in removal procedure does not
                involve a lack of federal subject matter jurisdiction,
                there is no reason why either State or Federal courts,
                or the parties, should be subject to the burdens of
                shuffling a case between two courts that each have
                subject matter jurisdiction.

        In re Allstate, 8 F.3d at 223 (quoting H.R.Rep. No. 889,
        100th Cong., 2d Sess. 72 (1988), reprinted in 1988
        U.S.C.C.A.N. 5982, 6033); see FDIC v. Loyd, 955 F.2d 316,
        323 (5th Cir.1992) ("Because there was subject matter
         On the bases of statutory interpretation and the policy

consideration of judicial efficiency, we agree with the Fifth

Circuit that district courts are without discretion to remand sua

sponte for procedural defects within the thirty-day period after

filing a removal notice.6   Id. at 223-24;   see In re Continental

Casualty Co., 29 F.3d at 295 ("The 30-day limit serves a function

similar to § 1447(d)—it prevents shuttling of cases between state

and federal court, and it prevents extended litigation that does no

more than determine where litigation shall proceed.").    District

judges' careful review of removed cases to identify defects in

     jurisdiction, the district court had no valid interest in
     remanding the case under § 1447(c).").
     6
      Rogers argues in responding to this court's request of the
district judge to respond to the petition for mandamus that
Bregman v. Alderman, 955 F.2d 660 (11th Cir.1992) (per curiam)
precludes our review of the remand order in this petition. We
distinguish Bregman factually and analytically. The sua sponte
remand order in Bregman occurred more than two and one-half years
following removal or "911 days after the expiration of the
thirty-day time period contemplated by § 1447(c)." Id. at 663.
Clearly, Bregman did not concern the specific issue in this
petition of whether a district court can sua sponte remand a case
to state court under § 1447(c) within thirty days after removal.
Additionally, the district court in Bregman remanded that case
pursuant to § 1447(c) because of the failure to allege the
citizenship of the plaintiffs and the defendants, whereas the
diverse citizenship of Rogers and Bank of Boston was alleged in
the notice of removal in Rogers.

          Analytically, Bregman relied on Gravitt v. Southwestern
     Bell Tel. Co., 430 U.S. 723, 97 S.Ct. 1439, 52 L.Ed.2d 1
     (1977) (per curiam), which was decided pursuant to the
     former version of § 1447(c) and not the present form of the
     statute at issue here after congressional amendment in 1988.
     Furthermore, Gravitt cannot be directly applicable because
     there is no indication that it addressed precisely the issue
     before us: sua sponte remand under the current version of §
     1447(c) within thirty days of filing the removal notice.
     Gravitt arose from the Fifth Circuit, which clearly did not
     consider it an obstacle in deciding In re Allstate. We
     agree with the post-amendment rationale of the Fifth Circuit
     in In re Allstate.
removal is important to litigants and the efficient functioning of

our legal system.

     But because not all potential problems are fatal, the court
     should alert the parties before ... remanding the cases.
     Litigants may have sufficient answers to the court's
     concerns.... Quick notice is a boon; quick action without
     inviting the parties' submissions may illustrate the adage
     that haste makes waste. The remand in this case has stopped
     this litigation dead in its tracks. It should now get back
     under way, and in federal court.

In re Continental Casualty Co., 29 F.3d at 295;   see Page, 45 F.3d

at 132 ("If a sua sponte remand is unauthorized by § 1447(c), ...

we may vacate the remand order and direct the district court to

reinstate the case to its docket.").

                            III. CONCLUSION

     Following the district court's sua sponte remand of Rogers to

state court within thirty days after it filed a notice of removal,

Bank of Boston petitioned this court to mandamus the district court

to reinstate Rogers on the district court docket.      As explained

herein, we conclude that the district court was not authorized to

remand Rogers sua sponte for a procedural defect within thirty days

of the notice of removal.    Accordingly, we grant Bank of Boston's

petition and direct the issuance of a writ of mandamus instructing

the district court to recall the remand and to reinstate Rogers on

its docket.

     BLACK, Circuit Judge, dissenting:

     I respectfully dissent.    This is a classic example of the old

adage that "bad facts make bad law."   The case is difficult because

the district court erroneously remanded it to state court, but I

believe the majority stands to do even greater harm in attempting

to rectify this mistake.
     As stated in the dissent of the opinion relied upon by the

majority, In re Allstate Ins. Co., 8 F.3d 219 (5th Cir.1993):

     The majority opinion expands our power to review remand
     orders, contrary to the will of Congress in section 1447(c)
     and of the Supreme Court in Thermtron Products.

Id. at 224 (Higginbotham, J., dissenting).
                                                                    1
     In my view, the issue in this case is jurisdictional.              The

jurisdictional nature of a remand order cannot hinge on the depth

of the district court's inquiry into jurisdiction.            Even when a

remand order is erroneous, § 1447(d) prohibits appellate review if

the district court issued the order under § 1447(c).             Thermtron

Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 342-44, 96 S.Ct. 584,

589, 46 L.Ed.2d 542 (1976).      By classifying the issue in this case

as procedural rather than jurisdictional, the majority circumvents

this rule by allowing appellate review of a district court's remand

order    issued   under   §   1447(c)   to   determine   if   jurisdiction

"factually" exists.       Such a practice permits an end run around

Thermtron Products and undermines judicial discretion.

     1
      The amendment to § 1447(c) impacted only remand orders for
procedural defects. My position is therefore unaffected by the
amendment. I am in accord with the jurisdictional analysis in
the Allstate dissent, also written subsequent to the amendment.