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.