Ellenburg v. Spartan Motors Chassis, Inc.

• Decision Date: 10 March 2008
• Docket Number: No. 06-1864.,06-1864.
• Citation: 519 F.3d 192
• Parties: Ralph ELLENBURG, Plaintiff-Appellee, v. SPARTAN MOTORS CHASSIS, INCORPORATED, Defendant-Appellant, and Tom Johnson Camping Center, Incorporated; Fleetwood Motor Homes of Indiana, Incorporated, Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

519 F.3d 192

Ralph ELLENBURG, Plaintiff-Appellee, v. SPARTAN MOTORS CHASSIS, INCORPORATED, Defendant-Appellant, and Tom Johnson Camping Center, Incorporated; Fleetwood Motor Homes of Indiana, Incorporated, Defendants.

No. 06-1864.

United States Court of Appeals, Fourth Circuit.

Argued: December 4, 2007.

Decided: March 10, 2008.

ARGUED: Edward Kriegsmann Pritchard, III, Pritchard & Elliott, L.L.C., Charleston, South Carolina, for Appellant. W. Grady Jordan, Olson, Smith, Jordan & Cox, Easley, South Carolina, for Appellee. ON BRIEF: Thomas B. Pritchard, Pritchard & Elliott, L.L.C., Charleston, South Carolina, for Appellant. William Ashley Jordan, Greenville, South Carolina, for Appellee.

Before NIEMEYER and GREGORY, Circuit Judges, and JAMES P. JONES, Chief United States District Judge for the Western District of Virginia, sitting by designation.

Reversed and remanded by published opinion. Judge NIEMEYER wrote the opinion, in which Judge GREGORY and Judge JONES joined.

OPINION

NIEMEYER, Circuit Judge:

The defendants in this products liability action, which was commenced in South Carolina state court, filed a Notice of Removal in the district court, pursuant to 28 U.S.C. §§ 1441 and 1446, alleging diversity jurisdiction under 28 U.S.C. § 1332. Six days later, the district court sua sponte entered an order remanding the case to state court, concluding that the Notice of Removal's allegation that the value of the matter in controversy exceeded the sum of $75,000 was "inadequate to establish" the jurisdictional amount, because it failed to "allege facts adequate to establish" the amount. The defendants appeal the remand order, and the plaintiff, in reply, urges that we dismiss the appeal pursuant to 28 U.S.C. § 1447(d), which provides that "[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise."

Because the sua sponte remand order of the district court did not rely on lack of subject matter jurisdiction, but rather on a procedural defect in pleading that was not timely raised by the plaintiff, indeed not raised at all by the plaintiff, we conclude that it does not fall within the scope of orders that are deemed unreviewable under 28 U.S.C. § 1447(d) and that therefore we have authority to review the court's remand order. See Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127, 116 S.Ct. 494, 133 L.Ed.2d 461 (1995) (limiting § 1447(d)'s prohibition to remands based on a lack of subject matter jurisdiction or a "timely raised defect in removal procedure" (emphasis added)). On the merits, we conclude (1) that the district court lacked authority to enter a remand order sua sponte based on a procedural defect in removal and (2) that, in any event, the Notice of Removal filed in this case satisfied the notice-pleading requirements of 28 U.S.C. § 1446(a) and, indirectly, Federal Rule of Civil Procedure 8(a). Accordingly, we reverse the district court's order of remand and remand this case to the district court for further proceedings consistent with this opinion.

I

Ralph Ellenburg commenced this action against Tom Johnson Camping Center, Inc. ("Johnson"), Fleetwood Motor Homes of Indiana, Inc. ("Fleetwood"), and Spartan Motors Chassis, Inc. ("Spartan") in the Court of Common Pleas in Pickens County, South Carolina, asserting four "causes of action" under South Carolina law: (1) a violation of the Enforcement of Motor Vehicle Express Warranty Act, S.C.Code Ann. § 56-28-10 et seq., known as South Carolina's "lemon law"; (2) negligence; (3) breach of warranty; and (4) breach of contract. He alleged in his complaint that on August 5, 2003, he purchased a 2003 American Eagle 40MS recreational motor vehicle from Johnson, which had been manufactured by Fleetwood and contained a chassis manufactured by Spartan. He claimed that within a few weeks of purchasing the vehicle, he discovered several defects in its design and manufacture and that he spent more than a year unsuccessfully attempting to have the defects corrected. The complaint sought actual, incidental, consequential, and punitive damages on the common law claims, and replacement of the vehicle or refund of the purchase price under the statutory claim. The complaint, however, stated no dollar amount for the value of the vehicle or the amount of damages claimed.

Fleetwood and Johnson filed a timely "Notice of Removal" to the district court, and Spartan consented to the removal. In the Notice of Removal, the defendants asserted removal jurisdiction based on diversity of citizenship, alleging that upon information and belief Ellenburg was a citizen of South Carolina and that the defendant companies were incorporated and had their principal places of business in States other than South Carolina. See 28 U.S.C. §§ 1332(a), 1332(c)(1), 1441. With respect to the value of the matter in controversy, they alleged:

The value of the matter in dispute in this case, upon information and belief, exceeds the sum of Seventy Five Thousand and No/100 ($75,000.00) Dollars, exclusive of interest and costs, as it appears from the allegations contained in Plaintiff's Complaint. Defendants' counsel believes in good faith that the amount in controversy in this case meets and exceeds the $75,000 limit required for diversity jurisdiction.

In addition, the Plaintiff claims entitlement to punitive damages. Consequently, this action is one over which the District Court of the United States has original jurisdiction pursuant to 28 U.S.C. § 1332.

Six days after the defendants filed their Notice of Removal, the district court sua sponte entered an order of remand, without having given the parties prior notice and an opportunity to respond. The court, observing that "a question of subject-matter jurisdiction may be raised at any point during the proceedings and may even be raised by the Court sua sponte," proceeded to consider whether the Notice of Removal sufficiently established the existence of federal jurisdiction. Observing that "the amount in controversy [was] not apparent from the face of the Complaint," the court held that the allegation of the amount in controversy in the Notice of Removal, "without more, [was] inadequate to establish that the amount in controversy exceeds the jurisdictional amount" and that therefore the defendants "failed to bear the burden of establishing that the Court ha[d] jurisdiction over the matter for purposes of removal." Accordingly, the court remanded the case to state court pursuant to 28 U.S.C. § 1447(c). Nowhere in its opinion, however, did the court actually find that subject matter jurisdiction over this case did not in fact exist. Rather, it held that the Notice of Removal alleging that the value of the matter in controversy exceeded $75,000 was insufficient "to establish that the jurisdictional amount ha[d] been satisfied."

Fleetwood and Johnson promptly filed a motion to alter or amend the court's order pursuant to Federal Rule of Civil Procedure 59(e), arguing that they could "unequivocally demonstrate that the amount in controversy exceeds the federal court jurisdiction threshold." They attached to their motion an affidavit from a Johnson employee and the bill of sale for Ellenburg's recreational vehicle, both establishing that the sales price of the vehicle was $327,669. The district court denied the defendants' motion because a Rule 59(e) motion cannot be used "to raise arguments which could have been raised prior to the issuance of the judgment," Pacific Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir.1998), but it failed to recognize that it had entered the remand order without giving the defendants an opportunity to oppose the order "prior to the issuance of the judgment." The court reiterated that the Notice of Removal "failed to present a sufficient factual basis on which the Court could make an informed decision as to whether Plaintiff can or cannot recover damages in excess of $75,000 in this case."

From the district court's orders remanding the case to state court and denying the motion to alter or amend, Spartan filed this appeal, presenting the single issue of whether the district court erred in remanding the case.

II

At the outset, we must determine, because of 28 U.S.C. § 1447(d), whether we have the authority to review the district court's remand order. 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), and we are precluded from reviewing such an order, "whether or not that order might be deemed erroneous by [us]," Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 351, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976). The important policy carried in this provision disfavors prolonged interruptions to litigation created by litigating which of two otherwise legitimate courts should resolve the disputes between the parties. See Kircher v. Putnam Funds Trust, 547 U.S. 633, 126 S.Ct. 2145, 2152-53, 165 L.Ed.2d 92 (2006). Even though that policy is important, however, the protection against delay caused by review is tightly circumscribed to cover only remand orders within the scope of 28 U.S.C. § 1447(c), based on (1) a district court's lack of subject matter jurisdiction or (2) a defect in removal "other than lack of subject matter jurisdiction" that was raised by the motion of a party within 30 days after the notice of removal was filed. See 28 U.S.C. § 1447(c); see also Powerex Corp. v. Reliant Energy Servs., Inc., ___ U.S. ___, 127 S.Ct. 2411, 2415, 168 L.Ed.2d 112 (2007) (noting that "we have interpreted § 1447(d) to cover less than the words alone suggest"); Thermtron, 423 U.S. at 346, 96 S.Ct. 584 (holding that "only remand orders issued under § 1447(c) and invoking the grounds specified therein . . . are immune from review under § 1447(d)"). Stated otherwise, § 1447(d) bars our review of a district court's remand order only if the...