Hinson v. Norwest Financial S. Calorlina

• Decision Date: 02 November 2000
• Docket Number: No. 99-1087,99-1087
• Parties: (4th Cir. 2001) CHRISTOPHER J. HINSON, on behalf of himself and all others similarly situated; SUSAN HINSON, on behalf of herself and all others similarly situated; GREGORY W. MOON; DEBORAH MOON; BEATRICE WOODEN WASHINGTON; JOHN THOMPSON, JR.; MARSHA THOMPSON; JOE W. COLLINS; LINDA COLLINS, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. NORWEST FINANCIAL SOUTH CAROLINA, INCORPORATED, Defendant-Appellant. . Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 611

239 F.3d 611 (4th Cir. 2001)

CHRISTOPHER J. HINSON, on behalf of himself and all others similarly situated; SUSAN HINSON, on behalf of herself and all others similarly situated; GREGORY W. MOON; DEBORAH MOON; BEATRICE WOODEN WASHINGTON; JOHN THOMPSON, JR.; MARSHA THOMPSON;

JOE W. COLLINS; LINDA COLLINS, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. NORWEST FINANCIAL SOUTH CAROLINA, INCORPORATED, Defendant-Appellant.

No. 99-1087.

UNITED STATES COURT OF APPEALS, FOR THE FOURTH CIRCUIT.

Argued: November 2, 2000.

Decided: February 6, 2001.

Appeal from the United States District Court for the District of South Carolina, at Rock Hill.

Joseph F. Anderson, Jr., Chief District Judge. (CA-95-2346-0-17) COUNSEL: ARGUED: Benjamin Rush Smith, III, NELSON, MULLINS, RILEY & SCARBOROUGH, L.L.P., Columbia, South Carolina, for Appel-lant. Steven Walker Hamm, RICHARDSON, PLOWDEN, CARPEN-TER & ROBINSON, Columbia, South Carolina, for Appellees. ON BRIEF: William C. Hubbard, John T. Moore, NELSON, MULLINS, RILEY & SCARBOROUGH, L.L.P., Columbia, South Carolina, for Appellant. Bradford P. Simpson, B. Randall Dong, D. Michael Kelly, SUGGS & KELLY LAWYERS, P.A., Columbia, South Carolina, for Appellees.

Before NIEMEYER, LUTTIG, and TRAXLER, Circuit Judges.

Affirmed by published opinion. Judge Niemeyer wrote the opinion, in which Judge Traxler joined and Judge Luttig joined in part. Judge Luttig wrote a concurring opinion.

OPINION

NIEMEYER, Circuit Judge:

After all the federal claims were settled in this truth-in-lending case, the district court remanded the State law claims to the State court from which the case had previously been removed. We are presented with the question of whether the district court abused its discretion in doing so. In affirming, we reject the defendant's argument that the remaining State law claims could not be remanded to State court on the ground that the parties asserting them joined the case only after it had been removed to federal court.

I

Christopher and Susan Hinson commenced this class action in June 1995 in South Carolina State court against Norwest Financial South Carolina, Inc. ("Norwest"), alleging that when they borrowed money from Norwest on the security of a mortgage on their home, Norwest failed to inform them "of their right to be represented by counsel of their choice at the closing." They also alleged that misrepresentations were made with respect to the stated rate of interest and the pay-off amount and that Norwest otherwise failed to comply with South Carolina's truth-in-lending act. Their complaint alleged that this conduct violated South Carolina statutory and common law.

Norwest removed this action to the federal court based on its assertion that one count stated a cause of action under the federal Truth in Lending Act, 15 U.S.C. S 1601, et seq.

After Norwest filed its answer in federal court, the Hinsons moved to amend their complaint under Federal Rule of Civil Procedure 15(a) to join seven additional parties plaintiff who were also borrowers of Norwest, alleging that despite the fact that they did receive some attorney preference information from Norwest, the notice, and other actions taken by Norwest, did not comply with State law. Over Norwest's objection, which was based on the futility of the new plaintiffs' claims, the district court granted the motion to amend. In so ruling, the court stated:

From my experience most of the time when I [have] denied a motion to amend on futility, it has been a situation where the statute of limitations has clearly expired or the statute clearly does not provide right of action or something where it is a slam dunk. It is not going anywhere.

Here it is pretty involved. You may well be right. You may convince me this form is acceptable even though it is not in the format drafted by the Department of Consumer Affairs.

In the context of that doubt, the court granted the motion to amend.

Norwest and the Hinsons, as well as the class members whom they purported to represent, then reached a settlement of their claims, including the federal claim on which removal was based, leaving in the case only the seven added plaintiffs, whose claims derived solely from State law. After the settlement was approved, these seven plaintiffs filed a motion under 28 U.S.C. SS 1367(c) and 1441(c) to remand the case to State court, arguing

that the case was initially removed on the basis of federal question jurisdiction; that the federal question and other claims of Christopher and Susan Hinson have since been compromised, settled and released with prejudice; and that State law predominates in the remaining causes of action of the above-named Plaintiffs.

The district court granted the motion and entered an order remanding the case to the State court from which it was removed. In doing so, the court concluded that the State law claims predominated, and it rejected Norwest's argument that the court lacked the power to remand under 28 U.S.C. S 1447(c) because the motion to remand was made more than 30 days after the filing of the notice of removal. The court said that the 30-day limitation applied only to "motions to remand on the basis of procedural irregularities in the process of removal."

Norwest appeals this ruling, contending that the district court lacked the power to remand in the circumstances of this case. It also challenges the district court's related ruling that permitted the seven new plaintiffs to join the federal action.

II

We begin with the question of whether we have jurisdiction to review the district court's remand order. Section 1447(d) of Title 28 provides, "An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise . . . ." But this seemingly broad restriction on the appellate review of remand orders is limited to remands based on the grounds specified in S 1447(c), authorizing remands based on a defect in the removal or on a lack of subject matter jurisdiction. See Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 711-12 (1996). Remand orders that are not subsumed under the S 1447(d) prohibition may be appealed pursuant to 28 U.S.C. S 1291, which provides for appeals of final judgments. See Quackenbush, 517 U.S. at 715 (permitting appeal of an abstention-based remand order under S 1291 and disavowing a previous decision's broad statement that "an order remanding or removed action does not represent a final judgment reviewable on appeal" (quoting Thermtron Prods., Inc. v. Hermansdorfer , 423 U.S. 336, 352-53 (1976)).

Forecasting our holding below that the remand authority in this case is not derived from S 1447(c), but is inherent in the authority of a district court to decline to exercise jurisdiction under 28 U.S.C. S 1367(c), we conclude that we have jurisdiction to review the remand order under 28 U.S.C. S 1291. And if the scope of this review does not include the review of all orders entered before the remand order, we would have pendent appellate jurisdiction to review the district court's earlier joinder order because that order is inextricably linked to the outcome of the remand issue. See Roberson v. Mullins, 29 F.3d 132, 136 (4th Cir. 1994); see also Clinton v. Jones, 520 U.S. 681, 707 n.41 (1997) (citing Swint v. Chambers County Comm'n, 514 U.S. 35, 51 (1995)).

III

On the principal question of whether the district court had authority to remand this case to State court, Norwest contends that the district court lacked such power because the only parties remaining in the case joined the action while the case was pending in federal court, rather than State court, and when a plaintiff first files its claim in federal court, remand is not an option. See Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 351 (1988). Norwest also contends, again relying on Carnegie-Mellon, see id. at 357, that the district court abused its discretion in failing to consider "the values of economy, convenience, fairness, comity, and whether plaintiffs attempted to manipulate the forum" when it decided to remand the case. We address these two points in order.

A

The Hinsons' complaint, which was originally filed in South Carolina State court, stated both a federal cause of action and State causes of action arising out of the Hinsons' loans from Norwest. Norwest, relying on the federal claim, removed the case to federal court on the basis of 28 U.S.C. S 1441(a), which provides for removal of civil actions "of which the district courts of the United States have original jurisdiction." The district court had jurisdiction over the Hinsons' State law claims under 28 U.S.C. S 1367, which confers supplemental jurisdiction over State law claims that "are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." And whether the federal-law claims and State-law claims are part of the same case is determined by whether they"`derive from a common nucleus of operative fact' and are `such that [a plaintiff] would ordinarily be expected to try them all in one judicial proceeding.'" Carnegie-Mellon, 484 U.S. at 349 (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966)) (alteration in original).

When, after the case had been removed to federal court, the district court granted the Hinsons' motion to amend to join seven additional parties plaintiff, it must have relied on 28 U.S.C.S 1367(a) for its jurisdiction over the newly joined plaintiffs' claims because these plaintiffs only alleged State law claims. See 28 U.S.C. S 1367(a) (providing, in part, that "supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties"). Of necessity, therefore, the Hinsons' claims (originally filed in State court) and the seven new plaintiffs' State-law claims (added after the case was removed to federal court)...