741 F.2d 273 (9th Cir. 1984), 83-6228, Pelleport Investors, Inc. v. Budco Quality Theatres, Inc.

Docket Nº:83-6228, 83-7678.
Citation:741 F.2d 273
Party Name:PELLEPORT INVESTORS, INC., a corporation, Plaintiff-Appellee, v. BUDCO QUALITY THEATRES, INC., a corporation, doing business as Budco, Inc., Defendant-Appellant, and Does 1 through 100, Defendants. BUDCO QUALITY THEATRES, INC., Petitioner, v. UNITED STATES DISTRICT COURT FOR the CENTRAL DISTRICT OF CALIFORNIA, Respondent, Pelleport Investors, Inc.,
Case Date:August 24, 1984
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 273

741 F.2d 273 (9th Cir. 1984)

PELLEPORT INVESTORS, INC., a corporation, Plaintiff-Appellee,

v.

BUDCO QUALITY THEATRES, INC., a corporation, doing business

as Budco, Inc., Defendant-Appellant,

and

Does 1 through 100, Defendants.

BUDCO QUALITY THEATRES, INC., Petitioner,

v.

UNITED STATES DISTRICT COURT FOR the CENTRAL DISTRICT OF

CALIFORNIA, Respondent,

Pelleport Investors, Inc., Real Party.

Nos. 83-6228, 83-7678.

United States Court of Appeals, Ninth Circuit

August 24, 1984

Argued and Submitted March 8, 1984.

Page 274

Karen A. von Dreusche, Busch & Schramm, Bala-cynwdy, Pa., for defendant-appellant.

Page 275

Jay R. Ziegler, Buchalter, Nemer, Fields, Chyrstie & Younger, Los Angeles, Cal., for plaintiff-appellee.

On appeal from the United States District Court for the Central District of California.

Before SNEED and BOOCHEVER, Circuit Judges, and SOLOMON, [*] Senior District Judge.

BOOCHEVER, Circuit Judge:

Budco Quality Theatres, Inc. (Budco) appeals the district court's order, 569 F.Supp. 612, remanding this case to the state court from which it was removed. Budco additionally petitions this court for a writ of mandamus to prevent the remand. Both the appeal and petition question the enforceability of a forum selection clause governing disputes arising under a motion pictures rental agreement between the parties. We also must determine whether the remand order is reviewable. We conclude that we have jurisdiction of the appeal and we affirm the order.

FACTS

In April 1981 American Cinema Releasing (ACR), a motion picture supplier located in California, entered into a contract with Budco, a Pennsylvania corporation, for the rental and exhibition of certain motion pictures. The contract contained the following provision, which is at issue in this case:

Exhibitor [Budco] expressly agrees that any and all disputes arising out of or in connection with this Agreement shall be litigated only in the Superior Court for Los Angeles, California (and in no other), and Exhibitor hereby consents to the jurisdiction of said court.

ACR allegedly entered into similar rental agreements containing an identical forum selection clause with other exhibitors, designated as Does 1-100.

Through a bankruptcy discharge Pelleport Investors, Inc. (Pelleport), a New York corporation, became the assignee of ACR's interest in the rented films. On May 5, 1983, Pelleport brought an action in the California Superior Court against Budco and 100 Doe defendants, alleging that the defendants owed a total of $246,319.73 in rental fees. Pelleport served the complaint only on Budco.

On June 8, 1983, Budco petitioned the United States District Court for the Central District of California for removal of the case based on diversity of citizenship and filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), or, in the alternative, to transfer the action to the Eastern District of Pennsylvania pursuant to 28 U.S.C. Sec. 1404(a).

In response, Pelleport filed a motion to remand the case to state court on the grounds that the forum selection clause should be enforced and that the district court lacked subject matter jurisdiction, because the jurisdictional amount was not met with respect to each defendant, and diversity of citizenship was defeated by inclusion of the Does. Budco opposed the motion to remand on the ground that the forum selection clause did not apply to all defendants, was not enforceable by an assignor, was unenforceable as against public policy, and was unenforceable because unreasonable under the circumstances.

The district court indicated that diversity jurisdiction existed between Pelleport and Budco, the only defendant appearing in the action. The court granted Pelleport's motion to remand to state court on the grounds that the forum selection clause was valid and enforceable. Applying the standard established in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 1916, 32 L.Ed.2d 513 (1972), the court found the clause reasonable under the circumstances.

Budco appeals that determination and additionally seeks mandamus relief in this

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court to prohibit the district court from remanding the case to state court. Because we believe the district court's order is appealable under 28 U.S.C. Sec. 1291 as a collaterally final order, we need not discuss Budco's petition for a writ of mandamus under 28 U.S.C. Sec. 1651. See Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 933 n. 6, 74 L.Ed.2d 765 (1983) (extraordinary review by mandamus not available where same review may be obtained through contemporaneous ordinary appeal); Silberkleit v. Kantrowitz, 713 F.2d 433, 434-35 n. 1 (9th Cir.1983).

DISCUSSION

I. Jurisdiction

A. Reviewability of Remand Order

28 U.S.C. Sec. 1447(d) generally forbids review of remand orders:

An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court from which it is removed pursuant to section 1443 of this title shall be reviewable by appeal or otherwise. 1

In reliance upon section 1447(d), the district court denied Budco's motion to stay the remand order pending appeal. We do not agree with the district court's characterization of its decision as falling within the scope of the general non-reviewability rule of section 1447(d). The court had before it a remand motion based on two alternative theories: (1) that diversity was defeated by the inclusion of Doe defendants, and thus the district court lacked jurisdiction to hear the case, and (2) that the parties' agreement to litigate all contract disputes in state court was valid and enforceable. Had the district court based its remand order on the first theory, section 1447(d) would no doubt apply, because, even if clearly erroneous, a district court's decision that it lacks subject matter jurisdiction to hear a case is not reviewable. See Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 343, 96 S.Ct. 584, 589, 46 L.Ed.2d 542 (1976). But the court did not base its remand order on lack of subject matter jurisdiction. It relied instead upon the forum selection clause. The novel question before this court, then, is whether a remand order based on the enforceability of such a clause is reviewable. We believe it is.

The parties have framed the issue in this case around the applicability of the Supreme Court's decision in Thermtron. In Thermtron, the Supreme Court held that the extraordinary relief of mandamus was available to prevent a district court which had subject matter jurisdiction over a case from remanding it solely on the ground that its docket was more congested than that of the state court. The Court concluded that the appellate courts have the power "to correct a district court that has not merely erred in applying the requisite provision for remand but...

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