316 F.3d 224 | 3rd Cir. | 2003
Before: BARRY, AMBRO and COWEN, Circuit Judges (cid:13) (Opinion filed January 8, 2003)(cid:13) Charles W. Craven, Esquire(cid:13) Marshall, Dennehey, Warner,(cid:13) Coleman & Goggin(cid:13) 1845 Walnut Street(cid:13) Philadelphia, PA 19103(cid:13) Gerald J. Nielsen, Esquire (Argued)(cid:13) Nielsen Law Firm, LLC(cid:13) 2121 Airline Drive, Suite 200(cid:13) Metairie, Louisiana, 70001(cid:13) Attorneys for Appellant(cid:13) Michael S. Karpoff, Esquire (Argued)(cid:13) Hill Wallack(cid:13) 202 Carnegie Center(cid:13) Princeton, NJ 08543-5226(cid:13) Attorney for Appellee(cid:13) OPINION OF THE COURT(cid:13) AMBRO, Circuit Judge:(cid:13) Appellant Selective Insurance Company ("Selective")(cid:13) appeals an order requiring it to reimburse $13,135.50 in(cid:13) attorneys’ fees of Appellee Roxbury Condominium(cid:13) Association, Inc. ("Roxbury"). Under the circumstances of(cid:13) this case, that award was an abuse of discretion.(cid:13) I. Background(cid:13) In 1997, Roxbury approached the Anthony S. Cupo(cid:13) Agency ("Agency") to obtain condominium flood insurance.(cid:13) The Agency, acting through its agent, Stephen Subick(cid:13) ("Subick"), procured insurance on Roxbury’s behalf from(cid:13) Selective, which participates in the National Flood(cid:13) Insurance Program. While the Agency submitted(cid:13) information to Selective indicating that the value of the(cid:13) condominium was $12,731,000, the Agency obtained(cid:13) coverage of only $1 million. This oversight proved a problem(cid:13) in September 1999, when the condominium suffered flood(cid:13) damage. The policy that Selective issued contained a co-(cid:13) insurance clause that reduced the benefits paid to an(cid:13) insured if the policy’s coverage amount was less than 80%(cid:13) of the insured building’s replacement cost. Because of this(cid:13) co-insurance clause, Selective paid Roxbury only(cid:13) $36,197.89 for damage that exceeded $400,000.(cid:13) 2(cid:13) Roxbury filed suit in the Superior Court of New Jersey(cid:13) against the Agency and Subick for malpractice. The Agency(cid:13) and Subick subsequently filed a third-party complaint(cid:13) against Selective for indemnification and contribution,(cid:13) claiming that Selective was negligent and/or breached its(cid:13) agreement with the Agency by issuing a $1 million policy(cid:13) despite being informed of the condominium’s higher value.(cid:13) On May 14, 2001, Selective removed the case under 28(cid:13) U.S.C. S 1441 to the United States District Court for the(cid:13) District of New Jersey on the basis that Selective was acting(cid:13) as an agent for the Federal Emergency Management Agency(cid:13) ("FEMA") and thus any claim against Selective necessarily(cid:13) arose under the National Flood Insurance Act of 1968, 42(cid:13) U.S.C. SS 4001 et seq., and implementing regulations. On(cid:13) July 11, 2001, Roxbury moved to remand the case to state(cid:13) court, alleging the absence of federal subject matter(cid:13) jurisdiction. Roxbury also requested that the District Court(cid:13) award it attorneys’ fees pursuant to 28 U.S.C. S 1447(c).(cid:13) The District Court granted the motion to remand and(cid:13) awarded Roxbury attorneys’ fees because "Selective should(cid:13) have been aware that its basis for removal as a third party(cid:13) defendant was questionable, especially since the claim for(cid:13) indemnification was not separate and independent from(cid:13) Plaintiff ’s negligence claim."(cid:13) II. Discussion(cid:13) A. Jurisdiction and Standard of Review(cid:13) Our Court has jurisdiction under 28 U.S.C. S 1291 to(cid:13) entertain Selective’s appeal. We review an award of(cid:13) attorneys’ fees under section 1447(c) for abuse of(cid:13) discretion. Mints v. Educ. Testing Serv., 99 F.3d 1253, 1260(cid:13) (3d Cir. 1996). A district court abuses its discretion by(cid:13) basing its decision on "a clearly erroneous finding of fact,(cid:13) an erroneous legal conclusion, or an improper application(cid:13) of law to fact." LaSalle Nat’l Bank v. First Conn. Holding(cid:13) Group, L.L.C., 287 F.3d 279, 288 (3d Cir. 2002).(cid:13) B. Merits(cid:13) A court may award attorneys’ fees under 28 U.S.C.(cid:13) S 1447(c) as part of a remand order. 28 U.S.C.S 1447(c)(cid:13) ("An order remanding the case may require payment of just(cid:13) 3(cid:13) costs and any actual expenses, including attorney fees,(cid:13) incurred as a result of the removal."). Remand is warranted(cid:13) at any time before final judgment if the district court lacks(cid:13) subject matter jurisdiction. Id. However,"[a] motion to(cid:13) remand the case on the basis of any defect other than the(cid:13) lack of subject matter jurisdiction must be made within 30(cid:13) days after the filing of the notice of removal under section(cid:13) 1446(a)." Id.(cid:13) While 28 U.S.C. S 1447(d) precludes us from reviewing(cid:13) the District Court’s remand order for purposes of reversing(cid:13) it,1 "some evaluation of the merits of the remand order is(cid:13) necessary to review an award of attorney’s fees." Moore v.(cid:13) Permanente Med. Group, Inc., 981 F.2d 443, 447 (9th Cir.(cid:13) 1992). Because the District Court awarded attorneys’ fees(cid:13) based on two perceived defects -- (1) that the third-party(cid:13) claim was not separate and independent within the(cid:13) meaning of S 1441(c) (the general removal provision used by(cid:13) Selective in removing this case to federal court) 2 and (2)(cid:13) that a third-party defendant cannot remove a case under(cid:13) S 1441(c) -- we evaluate those bases for remand in deciding(cid:13) whether the attorneys’ fee award was proper.(cid:13) Section 1441 is a procedural rather than a jurisdictional(cid:13) statute. See Korea Exch. Bank, N.Y. Branch v. Trackwise(cid:13) Sales Corp., 66 F.3d 46, 50 (3d Cir. 1995) ("[T]he Supreme(cid:13) Court clearly suggested, even if it did not directly hold, that(cid:13) it does not view the removal statute as imposing(cid:13) independent jurisdictional restrictions on the federal(cid:13) _________________________________________________________________(cid:13) 1. 28 U.S.C. S 1447(d) provides that "[a]n order remanding a case to the(cid:13) State court from which it was removed is not reviewable on appeal or(cid:13) otherwise, except that an order remanding a case to the State court from(cid:13) which it was removed pursuant to section 1443 of this title shall be(cid:13) reviewable by appeal or otherwise." Section 1443, which concerns civil(cid:13) rights cases, does not apply here.(cid:13) 2. Section 1441(c) reads as follows:(cid:13) Whenever a separate and independent claim or cause of action(cid:13) within the jurisdiction conferred by section 1331 of this title is(cid:13) joined with one or more otherwise non-removable claims or causes(cid:13) of action, the entire case may be removed and the district court may(cid:13) determine all issues therein, or, in its discretion, may remand all(cid:13) matters in which State law predominates.(cid:13) 4(cid:13) courts."); see also Am. Fire & Cas. Co. v. Finn, 341 U.S. 6,(cid:13) 19 (1951) ("Mere irregularity in the removal may be waived(cid:13) where the suit might originally have been brought in the(cid:13) Federal District Court.") (Douglas, J., dissenting) (citing(cid:13) Baggs v. Martin, 179 U.S. 206 (1900)). Removal jurisdiction(cid:13) under section 1441 is therefore wholly derived from original(cid:13) federal jurisdiction. Korea Exch. Bank, 66 F.3d at 50 ("[I]n(cid:13) considering whether jurisdictional defects existed, the(cid:13) relevant inquiry is whether the case could have been filed(cid:13) originally in federal court."). This interpretation is further(cid:13) supported by the fact that S 1441 lies outside the portion of(cid:13) Title 28 entitled "District Courts; Jurisdiction," which(cid:13) comprises sections 1330 to 1368. Thus, when the District(cid:13) Court remanded the case back to state court for Selective’s(cid:13) failure to satisfy S 1441(c)’s "separate and independent(cid:13) claim" requirement and because of its doubts whether a(cid:13) third-party defendant may remove an action under(cid:13) S 1441(c), the remand was for non-jurisdictional reasons.(cid:13) The District Court certainly had the power to remand the(cid:13) case if the Agency’s third-party claim did not arise under(cid:13) federal law. However, it did not have the power to remand(cid:13) for a procedural defect once the 30-day statutory period(cid:13) lapsed. In re FMC Corp. Packaging Sys. Div., 208 F.3d 445,(cid:13) 450 (3d Cir. 2000) (stating that the district court"had no(cid:13) statutory authority to issue the remand order after the 30-(cid:13) day period because the defect was in the removal procedure(cid:13) rather than a lack of subject matter jurisdiction, which(cid:13) could be raised at any time."). Without this power, it follows(cid:13) that the District Court abused its discretion by imposing(cid:13) attorneys’ fees under S 1447(c).(cid:13) Timeliness issues aside, we are nonetheless concerned(cid:13) that the District Court chose to impose attorneys’ fees(cid:13) based on Selective’s colorable removal claim in an area of(cid:13) unsettled law. The Third Circuit has not yet decided(cid:13) whether an indemnification claim is separate and(cid:13) independent or whether a third-party defendant may(cid:13) properly remove under S 1441(c). Other courts disagree on(cid:13) these questions. Compare Monmouth-Ocean Collection Serv.,(cid:13) Inc. v. Klor, 46 F. Supp. 2d 385, 394 (D.N.J. 1999) ("[A]ny(cid:13) third-party claim for indemnification is not a claim(cid:13) ‘separate and independent’ from the main action, and(cid:13) 5(cid:13) therefore is not removable by the third-party defendant(cid:13) under S 1441."), with Jones v. Petty-Ray Geophysical(cid:13) Geosource, Inc., 954 F.2d 1061, 1066 (5th Cir. 1991)(cid:13) (indemnification claims based on a separate contract are(cid:13) separate and independent); Thomas v. Shelton, 740 F.2d(cid:13) 478, 487-88 (7th Cir. 1984) (third-party defendants may(cid:13) not remove), with Carl Heck Eng’rs, Inc. v. Lafourche Parish(cid:13) Police Jury, 622 F.2d 133, 135-36 (5th Cir. 1980)(cid:13) (authorizing third-party removal if the claim is separate and(cid:13) independent from the plaintiff ’s original claim). Under(cid:13) these less than bright-line circumstances, we believe that,(cid:13) even if Roxbury had timely moved to remand the case, the(cid:13) District Court would have abused its discretion by(cid:13) awarding attorneys’ fees. Accordingly, we reverse that(cid:13) award for this reason as well.(cid:13) A True Copy:(cid:13) Teste:(cid:13) Clerk of the United States Court of Appeals(cid:13) for the Third Circuit(cid:13) 6
