Wallace v. Louisiana Citizens Property Ins. Corp., 06-00009.

• Decision Date: 31 March 2006
• Docket Number: No. 06-00009.,06-00009.
• Citation: 444 F.3d 697
• Parties: James WALLACE; Rebecca Wallace; Sandra Quillin; Dellarene Hodges; Raphael Orgeron; Dianne Orgeron; Individually & On Behalf of All Others Similarly Situated, Plaintiffs-Respondents, v. LOUISIANA CITIZENS PROPERTY INSURANCE CORPORATION; et al., Defendants, Louisiana Citizens Property Insurance Corporation; ANPAC Louisiana Insurance Company; Louisiana Farm Bureau Casualty Insurance Co.; Louisiana Farm Bureau Mutual Insurance Co., Defendants-Petitioners.
• Court: U.S. Court of Appeals — Fifth Circuit

444 F.3d 697

James WALLACE; Rebecca Wallace; Sandra Quillin; Dellarene Hodges; Raphael Orgeron; Dianne Orgeron; Individually & On Behalf of All Others Similarly Situated, Plaintiffs-Respondents, v. LOUISIANA CITIZENS PROPERTY INSURANCE CORPORATION; et al., Defendants Louisiana Citizens Property Insurance Corporation; ANPAC Louisiana Insurance Company; Louisiana Farm Bureau Casualty Insurance Co.; Louisiana Farm Bureau Mutual Insurance Co., Defendants-Petitioners.

No. 06-00009.

United States Court of Appeals, Fifth Circuit.

March 31, 2006.

Allan B. Berger, Allan Berger & Associates, Randy Jay Ungar, Ungar & Byrne, Bruce L. Feingerts, Feingerts & Kelly, Patrick G. Kehoe, Jr., New Orleans, LA, Philip Francis Cossich, Jr., Cossich, Sumich & Parsiola, Belle Chasse, LA, Terrence J. Lestelle, Andrea S. Lestelle, Lestelle & Lestelle, William Peter Connick, Sr., Connick & Connick, Metairie, LA, J. Van Robichaux, Jr., Covington, LA, for Plaintiffs-Respondents.

Randall L. Kleinman, Roger Douglas Marlow, Hulse & Wanek, New Orleans, LA, for ANPAC Louisiana Ins. Co.

Harry Alston Johnson, III, Phelps Dunbar, Baton Rouge, LA, Andrew L. Plauche, Jr., Plauche, Maselli, Landry & Parkerson, New Orleans, LA, for Louisiana Farm Bureau Cas. Ins. Co. and Louisiana Farm Bureau Mut. Ins. Co.

John W. Waters, Jr., Bienvenu, Foster, Ryan & O'Bannon, New Orleans, LA, for Louisiana Citizens Property Ins. Corp.

Petition for Leave to Appeal Under 28 U.S.C. § 1453(c).

Before SMITH, GARZA and PRADO, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Louisiana Farm Bureau Mutual Insurance Company, Louisiana Farm Bureau Casualty Insurance Company ("Farm Bureau"), Louisiana Citizens Property Insurance Corporation ("LCPIC"), and ANPAC Louisiana Insurance Company ("ANPAC") (collectively "Petitioners") petition for this court to accept their appeal under 28 U.S.C. § 1453(c)(1), contending that the district court erred in remanding the underlying case to state court, because it was properly removed to federal district court under 28 U.S.C. § 1441(e)(1)(B).¹

I

The Insurers listed above are defendants in the action below ("the Wallace action"), a class action brought in Louisiana State court by individuals ("Plaintiffs") who incurred flood damage due to Hurricane Katrina. Farm Bureau (on behalf of themselves and the other defendants) removed to the United States District Court for the Eastern District of Louisiana, asserting that subject matter jurisdiction over the case existed under § 1441(e)(1)(B). This section, part of the Multiparty, Multiforum Trial Jurisdiction Act ("MMTJA"), provides, in part:

[A] defendant in a civil action in a State court may remove the action to the district court ... if ... the defendant is a party to an action which is or could have been brought . . . under section 1369 in a United States district court and arises from the same accident as the action in State court, even if the action to be removed could not have been brought in a district court as an original matter.

28 U.S.C. § 1441(e)(1)(B). Petitioners contend that they meet the requirements of § 1441(e)(1)(B) because they are parties to a separate class action based on 28 U.S.C. § 1369 ("the Chehardy action") which arises from the same accident (Hurricane Katrina) as the instant case.² Specifically, Petitioners are defendants in a currently-pending class action suit in the United States District Court for the Middle District of Louisiana, Chehardy, et al. v. Louisiana Ins. Comm., et al. In the Wallace action, they aver that because the District Court for the Middle District may exercise subject matter jurisdiction under 28 U.S.C. § 1369(a) over the Chehardy suit, a case that also deals with insurance claims flowing from Hurricane Katrina, the District Court for the Eastern District may exercise supplemental subject matter jurisdiction over the Wallace suit under § 1441(e)(1)(B).

The district court remanded to state court, reasoning that the mandatory abstention provisions of § 1369(b) did not permit the suit to be heard in federal court.³ Farm Bureau now ask this court to accept consideration of their appeal, arguing on the merits that the district court erred when it read § 1369(b)'s limitations into the removal statute of § 1441(e)(1)(B).

II

Generally, the power of the federal courts to review a remand order is limited. 28 U.S.C. 1447(d); Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127, 116 S.Ct. 494, 133 L.Ed.2d 461 (1995). Petitioners argue, however, that we may hear the appeal under 28 U.S.C. § 1453(c)(1), part of the recently enacted Class Action Fairness Act ("CAFA"), which states:

Section 1447 shall apply to any removal of a case under this section, except that notwithstanding section 1447(d), a court of appeals may accept an appeal from an order of a district court granting or denying a motion to remand a class action to the State court from which it was removed if application is made to the court of appeals not less than 7 days after entry of the order.

We disagree that § 1453(c)(1) confers appellate jurisdiction over the instant appeal. The plain language of this provision indicates that its terms apply "to any removal of a case under this section," referring to § 1453, the provision of CAFA which permits the removal of class actions. Furthermore, the legislative history of CAFA also indicates that § 1453(c)(1) was enacted to ensure expeditious review of remand decisions in class action suits brought under the new legislation. See S.REP. No. 109-14, at 49 (2005). The application of § 1453(c)(1) is therefore limited to the context of CAFA. Farm Bureau based their notice of removal solely on § 1441(e)(1)(B), a provision of the MMTJA. Not only was the notice of removal based on the MMTJA, but their opposition to the plaintiffs' motion to remand expressly disavowed any reliance on CAFA. There is thus no nexus with CAFA that would justify the exercise of appellate jurisdiction under § 1453(c)(1). Accordingly, we lack appellate jurisdiction under § 1453(c)(1) and, therefore, do not reach the question whether to accept petitioner's appeal.

However, we may still possess appellate jurisdiction under 28 U.S.C. § 1291.⁴ The Supreme Court has recognized "a narrow class of collateral orders which do not meet th[e] definition of finality, but which are nevertheless immediately appealable under § 1291." Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996). Though ordinarily, 28 U.S.C. § 1447(d) bars consideration of a remand order, the Supreme Court has instructed us that the § 1447(d) limitation on appellate review of remands "must be read in pari materia with § 1447(c)." Quackenbush, 517 U.S. at 711-12, 116 S.Ct. 1712. An "abstention-based remand order does not fall into either category of remand order described in § 1447(c), as it is not based on lack of subject matter jurisdiction or defects in removal procedure." Id. at 712, 116 S.Ct. 1712. We thus have jurisdiction to review the remand order if it was premised on abstention. See Schexnayder v. Entergy Louisiana, Inc., 394 F.3d 280, 283 (5th Cir.2004) (citing Quackenbush, 517 U.S. at 712, 116 S.Ct. 1712).

The district court based its remand on § 1369(b), stating that "this court must abstain from exercising jurisdiction over" the Wallace action. The district court held that even if subject matter jurisdiction could be said to exist under § 1441(e)(1)(B), the abstention principles of § 1369(b) still applied and barred the district court from hearing the case. Plaintiffs argue that the remand was not abstention-based but rather based on a lack of subject matter jurisdiction and that therefore it is not reviewable on immediate appeal. They bolster their argument by pointing to a later order by the district court, which suggested that its prior remand order was rooted in a lack of jurisdiction.

Although the subsequent order states that the remand was based on lack of subject matter jurisdiction, the original remand order plainly refers to abstention under § 1369(b). See In re Digicon Marine, Inc., 966 F.2d 158, 160 (5th Cir.1992) (allowing appellate review of a remand order, explaining "[d]espite the district court's description of the remand as one based on a lack of subject matter jurisdiction in its order on reconsideration, the district court's original remand order clearly indicates on its face that the remand was not based upon lack of original subject matter jurisdiction"). Section 1369(b) is an abstention provision. It assumes subject matter jurisdiction under § 1369(a), but abstains where the "substantial majority" of the plaintiffs and the "primary defendants" are citizens of the same state and the claims at issue are "governed primarily by the laws of that State." It does not deprive federal courts of subject matter jurisdiction, but rather, acts as a limitation upon the exercise of jurisdiction granted in § 1369(a).

Abstention implies that there is subject matter jurisdiction but for some other policy reason, a court refrains from exercising that power to hear the merits of a case. See England v. Louisiana State Bd. of Medical Examiners, 375 U.S. 411, 415-16, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964) (observing that abstention "accord[s] appropriate deference to the respective competence of the state and federal court systems" while "recogniz[ing] that abstention does not, of course, involve the abdication of federal jurisdiction"). The only court to have parsed this relatively new statute also reads 28 U.S.C. § 1369(b) as a mandatory abstention provision. Passa v. Derderian, 308 F.Supp.2d 43, 56-57 (D.R.I., 2004). That court articulated the logic behind the abstention, explaining:

Congress identified certain exceptional circumstances in disaster litigation cases where the state court's interest in hearing the matter outweighs the federal interest in multidistrict, multiforum consolidation — namely, where the tragedy is sufficiently local in...