Overlook Gardens Props., LLC v. Orix United States, L.P.
927 F.3d 1194
11th Cir.2019Background
- Four Georgia developers (the Developers) obtained HUD‑insured loans using Red Mortgage as MAP‑approved lender; they signed commitment letters (quoting interest rates) and later executed loan documents (notes and security instruments).
- Commitment letters contained forum selection clauses designating courts in Texas or Ohio; the loan documents contained a contrary forum selection clause designating Georgia (the loan documents stated they superseded inconsistent commitment terms).
- Developers sued Red Mortgage and related entities in Georgia state court alleging state‑law fraud, breach, and RICO claims based on inflated interest rates; only Red Mortgage signed the contracts containing forum clauses.
- Defendants removed to federal court on diversity grounds; developers moved to remand, arguing the loan‑document forum clause (Georgia) controlled; district court agreed, found the loan documents governed, held Red Mortgage bound to Georgia forum, and remanded for lack of unanimous consent to removal.
- Defendants appealed; the Eleventh Circuit reviewed whether §1447(d) permits appellate review when a remand is grounded in enforcement of a forum selection clause that produces a procedural defect (lack of unanimous consent).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appellate review is available when a district court remands after enforcing a forum selection clause that results in lack of unanimous consent to removal | Developers: loan‑document forum clause (Georgia) supersedes commitment clause; district court properly enforced it and remand valid | Defendants: Thermtron and prior Eleventh Circuit precedent allow appellate review of remands based on forum‑clause enforcement; Powerex does not abrogate Russell | The Eleventh Circuit lacks jurisdiction under 28 U.S.C. §1447(d) because the district court colorably characterized the remand as based on a defect in the removal process (lack of unanimous consent), so appeal is dismissed |
| Whether Russell Corp. remains controlling precedent permitting review of such remands | N/A | Russell permits looking behind district court labels to review remand grounded on forum clause enforcement | Powerex limits Russell: to the extent Russell allowed disregarding a district court’s characterization, that part is abrogated; Russell still applies where no colorable procedural/jurisdictional label exists |
| Whether the district court’s characterization of its basis (lack of unanimity) is binding for §1447(d) purposes | N/A | The district court’s statement that remand followed from lack of unanimous consent is colorable and must be credited | Court accepts the district court’s characterization as colorable; §1447(d) bars appellate review |
| Whether any exceptions permit review here | Developers: remand is reviewable as forum‑clause enforcement | Defendants: Powerex limited; appellate review should be allowed | No exception applies; appeal dismissed for lack of jurisdiction |
Key Cases Cited
- Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336 (1976) (§1447(d) read with §1447(c): remands based on removal defects or lack of jurisdiction are generally unreviewable, but other remands may be reviewable)
- Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224 (2007) (appellate review of remand is limited to confirming that a district court’s jurisdictional characterization is colorable)
- Russell Corp. v. Am. Home Assurance Co., 264 F.3d 1040 (11th Cir. 2001) (held appellate courts may look behind a remand labeled as procedural to review enforcement of a forum selection clause)
- Snapper, Inc. v. Redan, 171 F.3d 1249 (11th Cir. 1999) (remands based on enforcement of forum selection clauses are not removal‑procedure defects and are reviewable)
- Hernandez v. Seminole Cty., 334 F.3d 1233 (11th Cir. 2003) (failure to obtain unanimous consent to removal is a defect in the removal procedure)