MR Crescent City, LLC v. Draper (In Re Crescent City Estates, LLC)MR Crescent City, LLC v. Draper (In Re Crescent City Estates, LLC)
Affirmed by published opinion. Judge WILKINSON wrote the opinion, in which Judge MICHAEL and Judge AGEE joined.
OPINION
This case presents a purely legal question: whether
I.
This case began in Maryland state court in February 2007. Several entities with an ownership stake in Crescent City Estates, LLC (collectively, appellants) brought a derivative suit against defendants Crescent City Estates, LLC and its managers, alleging that the managers had not accounted properly for approximately $12 to 15 million in insurance proceeds. In connection with the litigation, defendants retained as legal counsel the appellees in this case: attorneys Douglas S. Draper and William J. Murphy.
About six months after the suit’s commencement, defendants removed the state court action to the United States Bankruptcy Court for the District Court of Maryland. As lawyers for the defendants, appellees signed the notice of removal. Shortly thereafter, appellants filed a motion to remand the case back to state court. In doing so, appellants sought attorneys’ fees for improper removal under
The attorneys argued that they could not be liable, claiming that
II.
The statute,
As of yet, no circuit court has confronted this issue, and the district courts that have addressed it are badly divided.
Compare Creek Ventures, LLC v. World Parts, LLC,
Appellants argue that because
III.
The presumption that fee-shifting statutes apply only to parties unless they expressly state otherwise is consistent with the American Rule. Under the American Rule, “the prevailing litigant is ordinarily not entitled to collect a reasonable attorneys’ fee from the loser.”
Alyeska Pipeline Serv. Co. v. Wilderness Soc’y,
Congress is, of course, free to alter either or both of these premises through legislation.
See id.
However, departures from the American Rule require “explicit statutory authority.”
See Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep’t of Health & Human Servs.,
Absent explicit authorization from Congress, it is our duty to keep the American Rule intact. “Congress ha[s] not ‘extended any roving authority to the Judiciary to allow counsel fees ... whenever the courts might deem them warranted.’”
Buckhannon,
In this case, it is undisputed that Congress intended
We see no justification for the dramatic deviation from the American Rule advocated by appellants. Neither
Although the statutory text does not explicitly forbid fee awards against counsel, it does so implicitly. The statute speaks, by implication, only to parties.
In fact, the Supreme Court has repeatedly emphasized the “crucial connection” between liability on the merits and liability for attorneys’ fees under fee-shifting statutes.
See Indep. Fed’n of Flight Attendants v. Zipes,
Second,
our conclusion is confirmed by the legislative history. While such history cannot be used to override statutory text, it can serve as a useful supplement. Like the statute’s text, the legislative history here makes no express mention of attorney liability. It defies common sense to think that Congress wished to expand fee liability to encompass lawyers but failed to say anything at all about that wish, at any point, during the statute’s consideration. “Such a bold departure from traditional practice would have surely drawn more explicit statutory language and legislative comment.”
Fogerty v. Fantasy, Inc.,
To the contrary, the legislative history suggests that Congress anticipated that
The legislative history states that
IV.
Moreover, federal case law corroborates our holding. Indeed, the Supreme Court and other circuits have interpreted fee-shifting statutes with text materially indistinguishable from that of
For example, in
Roadway Express, Inc. v. Piper,
The presumption is widely held. As the Second Circuit summarized, “When a fee-shifting statute that authorizes the courts to award attorneys’ fees ... does not mention an award against the losing party’s attorney, the appropriate inference is that an award against attorneys is not authorized.”
Healey v. Chelsea Res., Ltd.,
These decisions interpret fee-shifting statutes with language remarkably similar to the language of
V.
Finally, the consequences of departing from sound statutory construction would be severe. For one thing, subjecting counsel to
Plus,
Additionally, exposing lawyers to personal monetary liability whenever they remove a case risks chilling the right of removal. Removal is a federal right, which Congress has long provided and which courts have long protected.
See Martin,
Furthermore, holding counsel responsible under
Thus, holding lawyers accountable under
To be sure, no one wishes to encourage improper removals. Wrongful or erroneous removals impose their own litigious burdens on the system. As the Supreme Court has noted, “[t]he process of remov
There are, however, cases where removal is not just erroneous but egregiously so. Where an attorney’s decision to remove
is
particularly blameworthy, courts do not need § 1447(c) to impose sanctions. For example, courts have at their disposal
We are asked here, however, to impose liability on lawyers solely on the basis of § 1447(c). We are asked further to import into law a species of liability that Congress has in no way seen fit to adopt. Lacking explicit direction from the legislative branch, we refuse to read § 1447(c) to authorize the imposition of legal fees upon attorneys for erroneous removals.
VI.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
Notes
Appellants argue that we must instead interpret § 1447(c) consistently with
For a number of reasons, however, we believe that these cases do not call into question the general presumption against attorney liability under fee-shifting statutes. First, not all of the cases squarely decided the issue. For example, this Court, in
Oum v. INS,
merely suggested that it might be willing to apply