Brownsberger v. Delchamps Inc ( 2002 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
____________________
No. 01-31233
Summary Calendar
____________________
JEFFERY C BROWNSBERGER
Plaintiff - Appellee
v.
DELCHAMPS INC; ET AL
Defendants
SCOTTSDALE INSURANCE COMPANY; NATIONAL UNION FIRE
INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA
Defendants – Appellants
________________________________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
No. 01-CV-2144-M
_________________________________________________________________
August 27, 2002
Before KING, Chief Judge, and HIGGINBOTHAM and BENAVIDES, Circuit
Judges.
PER CURIAM:*
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
Plaintiff–Appellee Jeffery C. Brownsberger filed this
personal injury action in Louisiana state court.
Defendants–Appellants Scottsdale Insurance Company and National
Union Fire Insurance Company removed this case from the state
court on the ground that it was related to a case in bankruptcy.
The federal district court abstained from hearing the case and
remanded the case to the state court. Defendants–Appellants
appeal the district court’s remand order. Because we conclude
that we lack jurisdiction to hear this appeal, we DISMISS the
appeal. Brownsberger’s motion to dismiss the appeal as
frivolous, which was carried with the case, is DENIED as moot.
I. Factual and Procedural Background
On December 2, 1996, Plaintiff–Appellee Jeffery C.
Brownsberger slipped on a liquid spill and fell in a store owned
by Delchamps, Inc. (“Delchamps”). At the time of the accident,
Delchamps was self-insured for the first $250,000 of liability
and had an umbrella policy with Scottsdale Insurance Company
(“Scottsdale”) for all claims exceeding $250,000. On June 2,
1997, Brownsberger filed a personal injury suit against Delchamps
in Louisiana state court.
Jitney-Jungle Stores of America, Inc. (“Jitney-Jungle”)
purchased Delchamps after Brownsberger’s accident. On May 1,
1998, Jitney-Jungle acquired liability insurance from National
Union Insurance Company (“National Union”) covering the first,
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previously self-insured, $250,000 of liability for existing
worker’s compensation and general liability claims. This
coverage included Brownsberger’s claim then pending against
Delchamps and Jitney-Jungle. Delchamps and Jitney-Jungle filed
for bankruptcy under Chapter 11 on October 12, 1999. Because
Delchamps and Jitney-Jungle stopped paying the premiums owed to
National Union subsequent to the bankruptcy filing, National
Union cancelled its policy covering the first $250,000 of the
debtors’ pre-existing liability.
On May 29, 2001, Brownsberger amended the petition in his
state court personal injury action to add Jitney-Jungle,
Scottsdale, and National Union as defendants. On July 5, 2001,
Jitney-Jungle filed an adversarial proceeding in the pending
bankruptcy action, seeking a declaratory judgment addressing both
(1) the effect of National Union’s cancellation of its insurance
policy and (2) the rights of the named individuals, including
Brownsberger. On July 12, 2001, Scottsdale removed
Brownsberger’s personal injury suit to federal court,1 asserting
that the suit involves property of the bankruptcy estate of
1
Brownsberger served his amended petition on Scottsdale
and National Union on June 12, 2001. Thus, Scottsdale’s removal
of the case to federal court was timely. See 28 U.S.C. § 1446(b)
(stating that “a notice of removal may be filed within thirty
days after receipt by the defendant, through service or
otherwise, of a copy of an amended pleading, motion, order or
other paper from which it may first be ascertained that the case
is one which is or has become removable”).
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Delchamps and is related to the adversarial proceeding filed by
Jitney-Jungle in the bankruptcy action.
Brownsberger timely filed a motion to remand, and Scottsdale
and National Union filed a motion to refer the matter to
bankruptcy court for consolidation with the adversarial
proceeding. The district court granted Brownsberger’s motion to
remand and dismissed as moot Scottsdale and National Union’s
motion to refer the matter to bankruptcy court. Scottsdale and
National Union (collectively, the “Defendants–Appellants”) appeal
the district court’s judgment remanding this case to state court.
II. Analysis
A. Proceedings Before the District Court
In the notice of removal, Scottsdale asserted that it
removed this case to federal court pursuant to 28 U.S.C. § 1334(2000).2 Section 1334 states, in relevant part:
(a) Except as provided in subsection (b) of
this section, the district court shall have
original and exclusive jurisdiction of all
cases under title 11.
(b) Notwithstanding any Act of Congress that
confers exclusive jurisdiction on a court or
courts other than the district courts, the
district courts shall have original but not
exclusive jurisdiction of all civil
proceedings arising under title 11, or
arising in or related to cases under title
11.
2
The caption of Scottsdale’s notice of removal
incorrectly refers to “28 U.S.C. § 1332.” However, the body of
the notice states that the removal is “pursuant to 28 U.S.C.
§ 1334.”
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28 U.S.C. § 1334(a) & (b). Contrary to the
Defendants–Appellants’ assertions, § 1334 does not authorize the
removal of this case. Rather, § 1334 merely provides for federal
district court jurisdiction over bankruptcy cases and related
cases. Scottsdale should have premised its removal of this case
on 28 U.S.C. § 1452 (2000), the statute which provides for the
removal of claims related to bankruptcy cases.
For the purposes of our analysis, we shall assume that
Scottsdale intended to seek removal under § 1452 rather than
under § 1334. Section 1452(a) provides for the removal of claims
related to bankruptcy cases as follows:
A party may remove any claim or cause of
action in a civil action . . . to the
district court for the district where such
civil action is pending, if such district
court has jurisdiction of such claim or cause
of action under section 1334 of this title.
28 U.S.C. § 1452(a). Thus, § 1452(a) provides for the removal of
this case if the district court has jurisdiction over the case
pursuant to § 1334.
In a hearing before the district court on Brownsberger’s
motion to remand, the Defendants–Appellants argued that, because
Brownsberger’s claims are “related to” the Jitney-Jungle
bankruptcy case, the district court should exercise jurisdiction
over Brownsberger’s claims under § 1334. Brownsberger countered
that, pursuant to § 1334(c)(2), the district court must abstain
from exercising jurisdiction over Brownsberger’s state law
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claims. Section 1334(c)(2) provides for mandatory abstention as
follows:
Upon timely motion of a party in a proceeding
based upon a State law claim or State law
cause of action, related to a case under
title 11 but not arising under title 11 or
arising in a case under title 11, with
respect to which an action could not have
been commenced in a court of the United
States absent jurisdiction under this
section, the district court shall abstain
from hearing such proceeding if an action is
commenced, and can be timely adjudicated, in
a State forum of appropriate jurisdiction.
28 U.S.C. § 1334(c)(2). Under the law of this circuit, mandatory
abstention under § 1334(c)(2) is a proper basis for a federal
court to remand to state court a case that was removed pursuant
to § 1452. Southmark Corp. v. Coopers & Lybrand, 163 F.3d 925,
929 (5th Cir. 1999). The district court sided with Brownsberger
and remanded the case to state court after abstaining under
§ 1334(c)(2).
B. Appealability of the Remand Order
This court must first determine whether our limited
jurisdiction encompasses the instant appeal. Webb v. B.C. Rogers
Poultry, Inc., 174 F.3d 697, 699 (5th Cir. 1999). We must be
particularly careful when faced with an appeal of a remand order
because “Congress has placed broad restrictions on the power of
federal appellate courts to review district court orders
remanding removed cases to state court.” Things Remembered, Inc.
6
v. Petrarca, 516 U.S. 124, 127 (1995). For the following
reasons, we conclude that we lack jurisdiction over this appeal.
First, in addition to requiring mandatory abstention in
certain circumstances, § 1334 provides that:
Any decision to abstain or not to abstain
made under this subsection (other than a
decision not to abstain in a proceeding
described in subsection(c)(2)) is not
reviewable by appeal or otherwise by the
court of appeals . . . .
28 U.S.C. § 1334(d). Thus, the district court’s decision to
abstain under § 1334(c)(2) is not reviewable by this court. See
Southmark, 163 F.3d at 929 (noting that “[f]or bankruptcy cases
commenced after the 1994 amendments to the bankruptcy law,
decisions either to abstain or not to abstain are not, with very
limited exceptions, reviewable on appeal”); Webb, 174 F.3d at
699-700 (same).
In addition, § 1452, the statute providing the right to
remove cases related to bankruptcy proceedings, also prohibits
appeal of the district court’s remand order in this case.
Section 1452(b) provides that:
The court to which such claim or cause of
action is removed may remand such claim or
cause of action on any equitable ground. An
order entered under this subsection remanding
a claim or cause of action, or a decision to
not remand, is not reviewable by appeal or
otherwise by the court of appeals . . . .
28 U.S.C. § 1452(b). The provision of § 1452(b) limiting the
appealability of remand orders applies where, as in this case,
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the district court bases its decision to remand on mandatory
abstention grounds. See Cathedral of the Incarnation in the
Diocese of Long Island v. Garden City Co., Inc., 90 F.3d 28, 33-
34 (2d Cir. 1996) (holding that § 1452(b) applies to remands on
abstention grounds).
Section 1452(b) prohibits an appeal of a remand order based
on “any equitable ground.” 28 U.S.C. § 1452(b). Along with most
other courts of appeals, this court broadly construes the phrase
“any equitable ground” and, thus, we liberally apply § 1452(b)’s
limit on the appealability of remand orders. See Sykes v. Tex.
Air Corp., 834 F.2d 488, 490-92 (5th Cir. 1987) (concluding that
a remand due to a lack of federal jurisdiction is not appealable
under § 1452(b)); see also In re U.S. Brass Corp., 110 F.3d 1261,
1265 (7th Cir. 1997) (noting that the phrase “any equitable
ground” means “any appropriate ground”); Cathedral of the
Incarnation, 90 F.3d at 32-33 (declining to adopt “the law/equity
distinction” in interpreting § 1452(b)); but see Pacor, Inc. v.
Higgins, 743 F.2d 984, 993 (3d Cir. 1984) (holding that, while
remand orders based on equitable grounds are not appealable under
§ 1452(b), remand orders based on other grounds (such as a lack
of jurisdiction) are fully appealable). Under our construction
of § 1452(b), “[w]hether the remand order [is] viewed as one of
abstention or as one grounded in a perceived want of
jurisdiction, we are not empowered to review it.” Crocker Nat’l
Bank v. Rayburn, 781 F.2d 501, 502-03 (5th Cir. 1986) (internal
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citations and quotations omitted). Thus, § 1452(b) prohibits
appeal of the district court’s order to remand this case to state
court.
Defendants–Appellants rely on 28 U.S.C. § 1447(d) (2000) to
argue that the district court’s remand order is appealable.
Section 1447(d) provides that “[a]n order remanding a case to the
State court from which it was removed is not reviewable on appeal
or otherwise . . . .” 28 U.S.C. § 1447(d). The Supreme Court
has interpreted § 1447(d) to prohibit review of remand orders
that are based on a lack of subject matter jurisdiction or on a
defect of removal procedure. See Quackenbush v. Allstate Ins.
Co., 517 U.S. 706, 711-12 (1996). However, § 1447(d) does not
prohibit review of remand orders, like the instant order, that
are based on grounds other than a lack of jurisdiction or a
defect of removal procedure. Id. (holding that a district
court’s remand order was appealable because the “abstention-based
remand order . . . is not based on lack of subject matter
jurisdiction or defects in removal procedure”).
Thus, there appears to be some conflict between § 1447(d)
and § 1452(b). Nevertheless, the fact that the district court’s
remand order in this case is appealable under § 1447(d) does not
help the Defendants–Appellants. In Things Remembered, the
Supreme Court clarified the interplay between §§ 1447(d) and
1452(b). 516 U.S. at 127-29. In that case, the defendant
removed the case from state court to federal district court under
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§ 1452(b), and the case was remanded to state court due to
untimely removal. Id. at 126. On appeal, the Supreme Court
concluded that the remand order, which based the remand on a
defect in removal procedure, was not appealable under § 1447(d).
Id. at 129. Because § 1447(d) barred the appeal, it was not
necessary for the Court to determine whether § 1452(b) also
precluded review. In reaching its conclusion, the Court noted
that “[t]here is no reason §§ 1447(d) and 1452 cannot comfortably
coexist in the bankruptcy context. We must, therefore, give
effect to both.” Id. We apply the Supreme Court’s reasoning in
Things Remembered to the instant case and conclude that the
remand order in this case is appealable only if it is appealable
under both §§ 1447(d) and 1452(b). Because the district court’s
remand order is not appealable under § 1452(b), we lack
jurisdiction over this appeal even though review is not
prohibited by § 1447(d).
III. Conclusion
For the foregoing reasons, we lack jurisdiction to hear this
appeal. We therefore DISMISS the appeal. Brownsberger’s motion
to dismiss the appeal as frivolous, which was carried with the
case, is DENIED as moot. All other outstanding motions are
DENIED.
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