First Nat. Bank of Pulaski v. Curry
| Decision Date | 21 August 2002 |
| Docket Number | No. 00-6046.,00-6046. |
| Parties | FIRST NATIONAL BANK OF PULASKI, Plaintiff, v. John T. CURRY et al., Defendants/Counter and Third-Party Plaintiffs-Appellees, Henry, Henry & Speer, P.C., et al., Defendants/Third-Party Defendants-Appellants, William R. Horne et al., Third-Party Defendants. Johnnie M. Curry, Plaintiff-Appellee, v. First National Bank of Pulaski et al., Defendants, Henry, Henry & Speer, P.C., et al., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Charles W. Holt, Jr. (Argued), George B. Boston (briefed), Boston, Holt & Sockwell, Lawrenceburg, TN, for Defendants-Appellees.
Winston S. Evans (argued and briefed), William Burgin Hawkins, III (briefed), Evans, Jones & Reynolds, Nashville, TN, for Third Party-Appellants.
Before: MERRITT, BOGGS, and MOORE, Circuit Judges.
The Appellants in this appeal challenge the remand to state court of two cases consolidated by the district court ("the consolidated case"). The first case ("the removed case") was initiated in state court by the First National Bank of Pulaski ("the Bank") against various members of the Curry family as well as two Curry-owned partnerships (Appellees John T. Curry, Carroll M. Curry, Cathy Curry Connie G. Curry, C & T Partnership, and C & C Partnership, hereinafter "the Curry Family defendants"). The Curry Family defendants then counterclaimed and impleaded the Bank's president, William R. Horne ("Horne"), as a third-party defendant, and Horne removed the case to federal court. The second case ("the federal case") was filed in federal court by Appellee Johnnie M. Curry ("Johnnie Curry"), the mother (or mother-in-law) of John T. Curry, Carroll M. Curry, Cathy Curry, and Connie G. Curry. Appellants Henry, Henry & Speer, P.C., Robert C. Henry, and Joe W. Henry, Jr., ("the Henrys") were named as defendants in the second, federal-initiated action and added as third-party defendants in the first, state-initiated action; all of the claims against the Henrys, however, were state-law claims. After the dismissal of all other defendants, including Horne, and all federal claims, the district court remanded the state-law claims that remained against the Henrys in the consolidated case to state court. The Henrys now appeal, arguing that the district court should have dismissed, without prejudice, the Curry Family defendants' and Johnnie Curry's claims rather than remand them to state court.
Because we conclude that third-party defendants may not remove an action to federal court, and thus that the removed case was removed improperly to federal court, we AFFIRM the district court's remand of the case, on these grounds. However, we REVERSE the district court's remand of the remaining claims in the federal case, because a case initiated in federal court cannot be remanded to state court. For this reason, we REMAND to the district court for further proceedings in the federal case.
Robert M. Curry (hereinafter "Mike Curry") was formerly chief executive officer of the Bank. This position enabled him to operate a check kiting scheme involving a number of checking accounts that he and other members of the Curry Family controlled. As part of this scheme, Mike Curry allegedly executed a number of promissory notes in the names of other family members as well as of family-owned businesses. After some details of Mike Curry's scheme came to light, the Bank, on October 30, 1998, filed five lawsuits in Tennessee state court to collect on these notes against the Curry Family members whose signatures Mike Curry had allegedly forged. The Curry Family defendants counterclaimed against the Bank and impleaded certain Bank officers, including Horne. The Curry Family defendants alleged that Horne and the Bank had violated various federal banking laws. Third-Party Defendant Horne then removed the case to federal court based on that court's federal question jurisdiction on May 19, 1999. See Joint Appendix ("J.A.") at 46. Neither the parties nor the district court ever questioned the propriety of removal by Horne.
The district court subsequently dismissed four of the Bank's five cases against the Curry Family defendants and gave leave for the Bank to file an amended complaint in the removed case that would include all of its claims against the defendants. See J.A. at 399-402. This amended complaint was filed in September 1999.1 In August 1999, the Curry Family defendants2 moved the federal district court to permit them to amend their counterclaim in the removed case to add the Henrys as third-party defendants, alleging legal malpractice, gross negligence, recklessness, and duress against the Henrys. The district court granted this motion in February 2000. See J.A. at 459.
Meanwhile, parallel litigation involving many of the same parties was initiated in the Middle District of Tennessee in August 1999 when Appellee Johnnie Curry sued the Bank, the Henrys, and other defendants on a number of theories, including the violation of federal banking laws and, against the Henrys, legal malpractice.
Thus, the Henrys, Appellants in the present case, and other parties were being sued by both Johnnie Curry and the Curry Family defendants, Appellees in the present case, in two separate cases in the Middle District of Tennessee. These cases were consolidated by court order on February 1, 2000. See J.A. at 459. The Bank, the Curry Family defendants, and Johnnie Curry, as well as other parties, subsequently settled most of their claims. The district court dismissed the settled claims in orders issued in April and May 2000. As a result, the only remaining claims in the consolidated case were the state-law claims of the Appellees, the Curry Family defendants and Johnnie Curry, against the Appellants, the Henrys.
The Henrys subsequently filed a motion to dismiss for lack of subject matter jurisdiction on May 24, 2000. See J.A. at 645-46. The Henrys argued that, because the federal claims against the Bank and its officers had been dismissed, the federal district court "no longer [had] subject matter jurisdiction" over the Curry Family defendants' remaining claims. J.A. at 646. More precisely, the Henrys argued that, although the district court retained supplemental jurisdiction over the Curry Family defendants' state-law claims, "there [wa]s no reason why [the district court] should exercise supplemental jurisdiction over" those claims. J.A. at 646.
The district court "granted" the Henrys' motion in an order issued on June 21, 2000, which both dismissed, without prejudice, the Curry Defendants' pending claims and remanded those claims to state court. In explaining its decision, the district court alternated between stating that it "lack[ed] jurisdiction to adjudicate the remaining state claims," and stating, in the next sentence, that "the Court declines to exercise pendent jurisdiction on the state law claims." J.A. at 654. The district court then stated that "[t]he discretion to remand to state court" was within its authority. J.A. at 654 (citing Long v. Bando Mfg. of Am., Inc., 201 F.3d 754 (6th Cir.2000)). The district court exercised this discretion in remanding the Curry Family defendants' remaining state-law claims, despite its asserted dismissal of those same claims in the same order. The disposition made no reference to Johnnie Curry's claims against the Henrys.
The Henrys then moved the district court to alter or amend its remand order, arguing that the district court had failed to dismiss Johnnie Curry's claims against them in its previous order and that, as the court had dismissed the Curry Family defendants' claims, there was nothing left to remand to state court. See J.A. at 658-59. The Henrys thus requested that the district court amend the order to dismiss Johnnie Curry's claims against them and to state that none of the claims against them had been remanded to state court. See J.A. at 659-60. The district court responded to this motion by reinstating all of the Curry Family defendants' claims against the Henrys, noting again that it lacked subject matter jurisdiction over those claims, dismissing those claims, and then remanding "all remaining claims against the Henry defendants to the Chancery Court of Giles County." J.A. at 323.
This appeal followed. The Henrys argue on appeal that the district court lacked the authority to remand the remaining state-law claims against them to state court and thus that the district court should have dismissed, without prejudice, the remaining claims against them.
Appellate review of remand orders is limited by 28 U.S.C. § 1447(d). That provision states, in relevant part: "An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise...." We have held, however, that § 1447(d) means only that a remand order is unreviewable on appeal when the case was remanded based on the district court's conclusion that it lacked subject matter jurisdiction over the removed case at the time of removal. Thus, a remand order is reviewable on appeal when the district court concludes that the action was properly removed but that the court lost subject matter jurisdiction at some point post-removal. See Long v. Bando Mfg. of Am., Inc., 201 F.3d 754, 758-59 (6th Cir.2000) (); see also Van Meter v. State Farm Fire & Cas. Co., 1 F.3d 445, 450 (6th Cir.1993) (); Baldridge v. Ky.-Ohio Transp., Inc., 983...
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