U.S. Express Lines Ltd. v. Higgins

• Citation: 281 F.3d 383
• Decision Date: 15 February 2002
• Docket Number: No. 00-4205.,00-4205.
• Parties: U.S. EXPRESS LINES, LTD.; Brent Noyes, M.D.; Leo Hamilton; Lenore Myers; Francis Myers, h/w; Michael Pacor; Lloyd Feigenbaum; Lynda Feigenbaum, h/w; Kenneth Detato; Brad Moses; Mary Possi; Eric N. Rubino; Thomas Crawford; Susan M. Simpson; John Burke; Gregory Reppa; Leo Rasis, M.D.; Jeffrey W. Allen; Patricia C. Allen; Warren Constantine, Jr., Appellants, v. Ann-Michele HIGGINS, Esq.; Rawle & Henderson; United Shipping Services Three, Inc.; United Shipping Services One, Inc.; Haci Ismail Kaptanoglu Ship Management & Trading Co., Ltd.; Harry G. Mahoney, Esq.; Thomas C. Sullivan; Deasey, Mahoney & Bender, Ltd.; Sunrise Maritime Inc; Zodiac Maritime Agencies, Ltd.; A. Robert Degen, Esq.; Fox, Rothschild, O'Brien & Frankel; Trade Shipping Management, S.A.; Laurence Shtasel, Esq.; Jeffrey S. Moller, Esq.; Blank Rome Comisky & McCauley, Appellees.
• Court: U.S. Court of Appeals — Third Circuit

281 F.3d 383

U.S. EXPRESS LINES, LTD.; Brent Noyes, M.D.; Leo Hamilton; Lenore Myers; Francis Myers, h/w; Michael Pacor; Lloyd Feigenbaum; Lynda Feigenbaum, h/w; Kenneth Detato; Brad Moses; Mary Possi; Eric N. Rubino; Thomas Crawford; Susan M. Simpson; John Burke; Gregory Reppa; Leo Rasis, M.D.; Jeffrey W. Allen; Patricia C. Allen; Warren Constantine, Jr., Appellants, v. Ann-Michele HIGGINS, Esq.; Rawle & Henderson; United Shipping Services Three, Inc.; United Shipping Services One, Inc.; Haci Ismail Kaptanoglu Ship Management & Trading Co., Ltd.; Harry G. Mahoney, Esq.; Thomas C. Sullivan; Deasey, Mahoney & Bender, Ltd.; Sunrise Maritime Inc; Zodiac Maritime Agencies, Ltd.; A. Robert Degen, Esq.; Fox, Rothschild, O'Brien & Frankel; Trade Shipping

Management, S.A.; Laurence Shtasel, Esq.; Jeffrey S. Moller, Esq.; Blank Rome Comisky & McCauley, Appellees.

No. 00-4205.

United States Court of Appeals, Third Circuit.

Argued November 26, 2001.

Filed February 15, 2002.

COPYRIGHT MATERIAL OMITTED

Thomas S. Myers, Jr. (Argued), Vincent P. DiFabio, Platt, DiGiorgio & DiFabio, Paoli, PA, Attorneys for Appellants.

Robert B. White, Jr. (Argued), Law Offices of Robert B. White, Jr., P.C., Philadelphia, PA, Jeffrey P. Lewis, McKissock & Hoffman, P.C., William H. Lamb, Lamb, Windle & McErlane, PC, West Chester, PA, Albert P. Massey, Jr., Lentz, Cantor & Massey, Ltd., Chester County Commons, Malvern, PA, Attorneys for Appellees.

Before: ROTH, FUENTES and WEIS, Circuit Judges.

OPINION OF THE COURT

WEIS, Circuit Judge.

In this appeal, we decide that the defendant lawyers' decision to invoke federal case law, rather than a procedural rule, in persuading a district judge to issue a maritime attachment does not give rise to a cause of action for malicious abuse of civil process under state law. The lawyers did not act in bad faith because they disclosed the existence of the alternative courses to the Court. We also conclude that the conflict between the procedural rule and the opinion of a United States Court of Appeals raises a federal question sufficient to support removal of the malicious abuse of process claim from the state court to the federal forum. We will affirm the District Court's judgment in favor of the defendants.

Plaintiff U.S. Express Lines, Ltd. ("Express Lines") is a Pennsylvania corporation that chartered vessels from various shipowners to carry cargo for its customers. The company maintained its principal place of business in Paoli, Pennsylvania, within the Eastern District of Pennsylvania.

Express Lines had arranged financing through a line of credit from Founders Bank, secured by certificates of deposit purchased by the individual plaintiffs. When the company encountered cash flow problems in 1997, it began negotiating for further financial support from other institutions. In January 1998, it advised its creditors, including the defendant vessel owners, of the encouraging progress of its efforts.

Nevertheless, on February 11, 1998, one of the vessel owners, through its counsel, defendant Ann-Michele Higgins of defendant law firm Rawle & Henderson, applied to the United States District Court for the Eastern District of Pennsylvania for the attachment of "all assets, goods, and chattels, belonging to" Express Lines. In seeking the attachments, the defendant attorneys cited as governing law an opinion of the Court of Appeals for the Eleventh Circuit, rather than the Supplemental Rules for Admiralty Claims. On February 17, 1998, the District Court ordered that the certificates of deposit at Founders Bank be attached.

Other creditor vessel owners took similar action through their attorneys, defendants A. Robert Degen and the law firm of Fox, Rothschild, O'Brien, & Frankel, Ltd., Laurence Shtasel and Jeffrey S. Moller, both of defendant Blank Rome Comisky & McCauley, and Harry G. Mahoney and Thomas C. Sullivan, of the defendant law firm Deasey, Mahoney, & Bender, Ltd. As a result of these legal actions, Express Lines defaulted on its loan agreements and was forced to suspend and eventually cease its commercial operations.

The District Court vacated the attachments on November 5, 1998, concluding that its decision to depart from the restrictions imposed by Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure ("Supplemental Rule B") was in error. The Court then directed the parties to arbitration in accordance with the terms of the charter party, ordered that the assets that Founders Bank had deposited in an interpleader action remain in the Court's custody, and retained jurisdiction pending arbitration.

On January 28, 1999, Express Lines and the individual owners of the certificates of deposit at Founders Bank filed suit in the Court of Common Pleas of Chester County, Pennsylvania, against the vessel owners and their various counsel. The complaint sought compensatory and punitive damages for abuse of process, conspiracy, wrongful use of civil proceedings, and other torts.

Plaintiffs contend that defendants secured the writs of attachment in direct violation of Rule B, which precludes the seizure of maritime assets if the debtor is found within the district in which the litigation is commenced. They assert that defendants were well aware that Express Lines kept its principal office in the Eastern District of Pennsylvania and thus, they acted in bad faith in seeking attachments in that district.

The defendant vessel owners were never served with process, and the claims against them were ultimately dismissed.¹ The lawyer defendants removed the case to the District Court, and the plaintiffs moved to remand. The District Court refused, concluding that, based as it was on the issuance of maritime attachments, "[t]he federal element [of the litigation] cuts to the heart of each of Plaintiffs' claims" and, therefore, federal question jurisdiction existed.

The District Court dismissed the case under Federal Rule of Civil Procedure 12(b)(6), holding that the defendant lawyers' actions were privileged because they had not misled the Court as to the underlying facts or relevant law in obtaining the attachment. The Court added that there had been no abuse of process in the defendants' use of maritime attachments to collect debts whose legitimacy plaintiffs did not contest. Because the writs had been issued with court authorization, the defendants had not acted in a grossly negligent manner or without probable cause. Accordingly, the Court held that the plaintiffs had failed to establish their state law claims.

In this appeal, plaintiffs contend that the defendant attorneys misled the Court in securing the attachments, and that the efforts to obtain them were made in bad faith because the charter party required that disputes be arbitrated. The plaintiffs also assert that the District Court erred in declining to remand the case to the state court.

The defendants deny that they engaged in any deception and argue that the state law claims fail as a matter of law. Alternatively, they contend that because the challenged activity occurred in a federal court, no state cause of action may be applied to their conduct. Finally, defendants assert that because of an omission in the plaintiffs' notice of appeal, this Court lacks appellate jurisdiction.

We exercise plenary review of the District Court's dismissal for failure to state a claim under Rule 12(b)(6). Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir.1994). When considering a Rule 12(b)(6) motion, courts accept as true the allegations in the complaint and its attachments, as well as reasonable inferences construed in the light most favorable to the plaintiffs. Id. Although a district court may not consider matters extraneous to the pleadings, "a document integral to or explicitly relied upon in the complaint may be considered without converting the motion to dismiss into one for summary judgment." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.1997) (internal quotations omitted); see also Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192 (3d Cir.1993) (matters of public record).

We review de novo a district court's denial of remand. Angus v. Shiley Inc., 989 F.2d 142, 143 n. 1 (3d Cir.1993); see also Luckett v. Delta Airlines, Inc., 171 F.3d 295, 298 (5th Cir.1999).

I.

We first address jurisdictional issues. The plaintiffs' complaint alleges violations of state law. Because the parties are not diverse, our jurisdiction, as well as that of the District Court, must rest upon the existence of a federal question. 28 U.S.C. §§ 1331, 1441(b).

At the outset, we address an error in the defendants' brief that cites Lusardi v. Xerox Corp., 975 F.2d 964 (3d Cir.1992), as dispositive of our appellate jurisdiction. Lusardi holds that, with certain exceptions not pertinent here, an appeal taken from a specified judgment or part of a specified judgment does not confer upon the court of appeals jurisdiction to review other judgments or portions not specified or inferred from the notice of appeal. 975 F.2d at 971-72.

Defendants contend that because plaintiffs did not designate the order denying remand in their notice of appeal, we do not have authority to review that issue. This argument is oblivious to the duty of federal courts to examine their subject matter jurisdiction at all stages of the litigation sua sponte if the parties fail to raise the issue. That obligation extends to removal cases, as well as to those originally filed in the district courts. Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 217 (3d Cir.1999); Trent Realty Assocs. v. First Fed. Sav. & Loan Ass'n of Phila., 657 F.2d 29, 30 (3d Cir.1981). Clearly, Lusardi is inapposite to the removal jurisdiction issue in this case.

Any civil action brought in state court may be removed by the defendant to the federal district court in the district where such action is...