First Union Mortgage Corp. v. Smith , 229 F.3d 992 ( 2000 )

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
OCT 16 2000
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
FIRST UNION MORTGAGE
CORPORATION,
Plaintiff-Appellee,
No. 99-2238
v.
GALEN J. SMITH,
Defendant-Appellant,
and
GEORGE O. HELS; SHIRLEY E.
HELS, his wife; PATRICK J.
LACKEY; MONICA R. LACKEY, his
wife; ELISA MCDOWELL; JACK T.
MCDOWELL, husband and wife,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
(D.C. No. CIV-99-389-SC/LCS)
Submitted on the briefs: *
*
After examining the briefs and appellate record, this panel has
determined unanimously that oral argument would not materially assist the
determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G).
(continued...)
Kim A. Griffith and Timothy M. Sheehan of Sheehan, Sheehan & Stelzner, P.A.,
Albuquerque, New Mexico, for Plaintiff-Appellee.
Galen J. Smith, pro se.
Before BALDOCK , KELLY , and HENRY , Circuit Judges.
KELLY , Circuit Judge.
Defendant Galen J. Smith removed this action from state court to federal
court, and a magistrate judge then sua sponte ordered the case remanded to state
court. The question presented in this appeal is whether the magistrate judge had
the authority or jurisdiction to do so. Because the remand order disposed of the
case as it existed in federal court, we conclude that he did not. We therefore
reverse the district court’s order denying reconsideration of the magistrate judge’s
order and remand the case to the district court for further proceedings.
In February 1999, plaintiff First Union Mortgage Corporation filed a
foreclosure action against Smith and others in a New Mexico state court.
Proceeding pro se, Smith filed his notice of removal to the United States District
*
(...continued)
The case is therefore ordered submitted without oral argument.
-2-
Court for the District of New Mexico on April 5, 1999, citing as his basis for
removal 28 U.S.C. § 1443(1). The matter was referred to a magistrate judge, and
on April 8, the magistrate judge sua sponte issued a memorandum opinion and
order remanding the case to state court on the basis of lack of subject matter
jurisdiction under either 28 U.S.C. § 1331 or § 1332(a).
On April 13, Smith filed a notice stating that he refused to consent to
proceeding before a magistrate judge, and on April 19, he filed a motion for
reconsideration of the magistrate judge’s remand order. In his motion, Smith
contended that because the remand order was a dispositive ruling, the magistrate
judge lacked the authority to enter it. He also argued that even if the magistrate
judge had the authority, the remand was improper because the order ignored his
stated basis for removal, § 1443(1). On June 25, the district judge denied the
motion for reconsideration without explanation. Smith then filed a timely notice
of appeal indicating he is appealing both the magistrate judge’s remand order and
the district court’s denial of his motion for reconsideration. Alternatively, he
requests that we treat his appeal as a petition for a writ of mandamus if we
determine that there is no final decision from the district court on which to base
jurisdiction under 28 U.S.C. § 1291.
We first consider our appellate jurisdiction, an issue made more interesting
than normal by some unusual wrinkles in this case. The magistrate judge
-3-
remanded the case because of lack of subject matter jurisdiction, and ordinarily
such remands are not reviewable on appeal. See 28 U.S.C. § 1447(d); Things
Remembered, Inc. v. Petrarca , 516 U.S. 124, 127-28 (1995). Section 1447(d),
however, contains an exception to the prohibition on review for cases removed
pursuant to § 1443, as this one was. There is therefore no affirmative bar to our
review of the remand order. See Colorado v. Lopez , 919 F.2d 131, 132 (10th Cir.
1990).
The next question is whether there is a final decision on which to base
jurisdiction under 28 U.S.C. § 1291. A remand order puts the litigants
“‘effectively out of court,’” Quackenbush v. Allstate Ins. Co. , 517 U.S. 706, 714
(1996) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp. , 460 U.S.
1, 11 n.11 (1983)), and is reviewable both as a final decision and under the
collateral order doctrine, see id. at 712-15. However, because we conclude the
magistrate judge did not have authority to order the remand, the magistrate
judge’s order is not even a “final” remand order. Thus, we must look to the
district court’s order denying reconsideration to see whether there is a final
decision for jurisdictional purposes.
Arguably, an order denying reconsideration of a nonfinal order would not
itself be a final order. Cf. Aerosource, Inc. v. Slater , 142 F.3d 572, 579 (3d Cir.
1998). Here, however, the sole purpose and effect of the district court’s order
-4-
was to end the litigation in federal court. In this sense, the court’s denial of
reconsideration, which it obviously had jurisdiction to do, was as final a decision
as if it had issued the remand order itself. We therefore conclude the court’s
order was a final decision for purposes of § 1291 and that we have appellate
jurisdiction. Moreover, even were we to find we lacked appellate jurisdiction, we
would take Smith’s alternative suggestion that we exercise mandamus
jurisdiction. As is evident below, we would reach the same result through that
route. See Pacificare of Okla., Inc. v. Burrage , 59 F.3d 151, 153 (10th Cir. 1995)
(mandamus is appropriate remedy “where the inferior court has acted wholly
without jurisdiction or so clearly abused its discretion as to constitute a judicial
usurpation of power”) (quotation omitted). We can now turn to the merits of the
appeal.
“[F]ederal magistrate[ judges] are creatures of statute, and so is their
jurisdiction.” NLRB v. A-Plus Roofing, Inc. , 39 F.3d 1410, 1415 (9th Cir. 1994).
Unlike district judges, they are not Article III judicial officers, and they have only
the jurisdiction or authority granted to them by Congress, which is set out in
28 U.S.C. § 636. See Ocelot Oil Corp. v. Sparrow Indus. , 847 F.2d 1458, 1461
(10th Cir. 1988). As applicable here where the parties did not consent to
proceeding before the magistrate judge, see § 636(c)(1), the district court may
designate a magistrate judge to consider various matters. See § 636(b). These
-5-
matters are generally categorized as “dispositive” or “non-dispositive,” cf. United
States v. Raddatz , 447 U.S. 667, 673 (1980); Fed. R. Civ. P. 72, and a magistrate
judge’s authority with respect to each category is different:
Magistrates may issue orders as to non-dispositive pretrial matters,
and district courts review such orders under a “clearly erroneous or
contrary to law” standard of review. 28 U.S.C. § 636(b)(1)(A).
While magistrates may hear dispositive motions, they may only make
proposed findings of fact and recommendations, and district courts
must make de novo determinations as to those matters if a party
objects to the magistrate’s recommendations. Id. § 636(b)(1)(B),
(C).
Ocelot Oil , 847 F.2d at 1461-62. Section 636(b)(1)(A) lists eight dispositive
matters for which the magistrate judge’s authority is limited, but this list is not
exhaustive. “[M]otions not designated on their face as one of those excepted in
subsection (A) are nevertheless to be treated as such a motion when they have an
identical effect.” Ocelot Oil , 847 F.2d at 1462. The question here is whether the
remand order should be considered dispositive or non-dispositive.
The magistrate judge’s memorandum opinion and order make it clear that
he thought a remand order was non-dispositive and that he had jurisdiction to
issue it:
Even if the parties do not consent to his assuming jurisdiction,
a federal magistrate judge may sua sponte order remand of a case if
he determines that federal jurisdiction is lacking. Haggard v. CCC
Autobody, Inc. , CIV. 98-1038 (D. N.M. Oct. 23, 1998).
Accordingly, IT IS ORDERED that this case be remanded to the
Second Judicial District Court for the County of Bernalillo, State of
New Mexico.
-6-
R. Doc. 2 at 3. The district court apparently thought the same thing; it did not
issue a separate remand order or any order other than the one denying the motion
for reconsideration.
Courts are split on whether a remand order is dispositive or non-dispositive
for purposes of a magistrate judge’s authority. A number of district courts have
held that it is a non-dispositive order. See, e.g. , Vogel v. U.S. Office Prod., Co. ,
56 F. Supp. 2d 859, 863-64 (W.D. Mich. 1999); Delta Dental v. Blue Cross &
Blue Shield , 942 F. Supp. 740, 744-45 (D. R.I. 1996); see also Unauthorized
Practice of Law Comm. v. Gordon , 979 F.2d 11, 12-13 (1st Cir. 1992) (noting
split in authority, but not deciding issue); cf. In Re Lowe , 102 F.3d 731, 732-33
(4th Cir. 1996) (treating magistrate judge’s remand order as order of district
court, without discussion of magistrate judge’s authority). These courts generally
find the order non-dispositive because it “does not address the substance of a
party’s claims or defenses,” and “effects no determination of the merits of the
case.” Vogel , 56 F. Supp. 2d at 863; see also Delta Dental , 942 F. Supp. at 745.
We realize that a remand order is “not dispositive of a claim or defense of a
party,” Rule 72(a). We do not believe, however, that “dispositive” can be limited
to a party’s claims and defenses without running into Article III concerns.
Section 636 and Rule 72 must be read, where possible, so as to avoid
constitutional problems, and “[t]he Constitution requires that Article III judges
-7-
exercise final decisionmaking authority.” Ocelot Oil , 847 F.2d at 1463. A
remand order is a final decision in the sense that it is “dispositive of all the claims
and defenses in the case as it banishes the entire case from the federal court.” In
Re U.S. Healthcare , 159 F.3d 142, 146 (3d Cir. 1998). It is thus very similar in
effect to an involuntary dismissal--an action a magistrate judge may not take
under § 636(B)(1)(A)--for lack of subject matter jurisdiction. There is no claim
preclusion effect, and the claims may be pursued in state court. As the Third
Circuit explained:
It is clear that 28 U.S.C. § 636(b)(1)(A) does not in terms
preclude a magistrate judge from hearing and determining a motion
to remand a case to a state court. Nevertheless, because a remand
order is dispositive insofar as proceedings in the federal court are
concerned, the order is the functional equivalent of an order of
dismissal for purposes of that section. While we recognize that after
a remand a case may go forward in the state court, still the order for
remand conclusively terminates the matter in the federal court against
the will of the party who removed the case.
....
We do not think that anyone would argue seriously that a magistrate
judge, without consent of the parties, could hear and determine a
motion to dismiss the federal action, predicated on an absence of
subject matter jurisdiction, on the theory that the motion is
nondispositive because a parallel action is pending in the state court.
Yet in a practical sense an order of remand predicated on a lack of
subject matter jurisdiction is no less dispositive than an order of
dismissal in the circumstances we describe as both orders have the
exact same effect by permitting the case to proceed in the state rather
than the federal court. In sum, we believe that even if it could do
so, Congress never intended to vest the power in a non-Article III
-8-
judge to determine the fundamental question of whether a case could
proceed in a federal court.
Id. at 145-46 (footnote omitted).
We agree with the Third Circuit--the only other circuit to have expressly
addressed the issue--that a remand order is a final decision or dispositive action
that must ultimately be made by the district court to survive Article III scrutiny.
That means that a magistrate judge may recommend a remand “‘so long as the
ultimate decision is made by the district court.’” Ocelot Oil , 847 F.2d at 1463
(quoting Raddatz , 447 U.S. at 683).
Thus, the magistrate judge here had authority to recommend the case be
remanded to state court, but he did not have authority to order it himself. When
Smith objected to the magistrate judge’s order through his motion for
reconsideration, the district court was obligated to make a de novo determination
of the basis for the order. See id. at 1462. Because the court viewed the remand
as a non-dispositive matter, it ostensibly limited its review to the “clearly
erroneous or contrary to law” standard. See id. ; § 636(b)(1)(A). As we noted in
Ocelot Oil , the difference between these two types of review is “significant.” See
847 F.2d at 1464. Moreover, the court erred in its consideration of the two key
issues Smith raised in his motion for reconsideration: the magistrate judge’s lack
of authority to issue the remand order, and the fact that the remand order failed to
-9-
consider § 1443 as the basis for the removal. We express no opinion on whether
the removal was proper under § 1443.
Because the magistrate judge lacked the authority to issue the remand
order, and the district court did not make an independent determination of the
basis for the order in light of Smith’s challenges, we REVERSE the district
court’s denial of Smith’s motion for reconsideration, and REMAND the case to
the district court with directions to vacate the magistrate judge’s remand order
and for further proceedings not inconsistent with this opinion.
-10-