In re Bissonnet Investments LLC

• Citation: 320 F.3d 520
• Decision Date: 04 February 2003
• Docket Number: No. 02-20053.,02-20053.
• Parties: In The Matter Of: BISSONNET INVESTMENTS LLC, Debtor. Bissonnet Investments LLC; Lava Corporation; Alfred J. Antonini, Trustee; Alfred J. Antonini, Appellants, v. John Quinlan, Substitute Trustee; John Quinlan; The Ireland Family Limited Partnership; Gary W. Gates; Melissa V. Gates; Gatesco Inc.; NHAPT LLC; APTNH LP, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

320 F.3d 520

In The Matter Of: BISSONNET INVESTMENTS LLC, Debtor Bissonnet Investments LLC; Lava Corporation; Alfred J. Antonini, Trustee; Alfred J. Antonini, Appellants, v. John Quinlan, Substitute Trustee; John Quinlan; The Ireland Family Limited Partnership; Gary W. Gates; Melissa V. Gates; Gatesco Inc.; NHAPT LLC; APTNH LP, Appellees.

No. 02-20053.

United States Court of Appeals, Fifth Circuit.

February 4, 2003.

Mark C. Harwell (argued), Cotham, Harwell & Evans, Houston, TX, for Appellants.

Marvin P. Isgur (argued), Floyd, Isgur, Rios & Wahrlich, Houston, TX, for Appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before EMILIO M. GARZA and CLEMENT, Circuit Judges, and DAVIS,^* District Judge.

CLEMENT, Circuit Judge:

A debtor brought suit in state court for breach of contract, fraudulent inducement, tortious interference, and civil conspiracy against the purchaser of the debtor's bankruptcy estate's assets. The purchaser removed the lawsuit to federal court pursuant to 28 U.S.C. § 1452 (1994), and the district court referred the case to bankruptcy court. The debtor unsuccessfully challenged the federal courts' subject matter jurisdiction in the bankruptcy and district courts, and now appeals to this Court. The purchaser, citing Sykes v. Texas Air Corp., 834 F.2d 488 (5th Cir.1987), argues § 1452 deprives this Court of appellate jurisdiction over all decisions not to remand a bankruptcy case to state court, even if the district court allegedly lacks subject matter jurisdiction under 28 U.S.C. § 1334 (1993). Because Sykes' analysis of § 1452 applies only to district court decisions to remand, and not to decisions not to remand, and because § 1447 only precludes appellate review of decisions to remand in the face of an alleged lack of jurisdiction (and not decisions to retain a case), we find appellate jurisdiction. We affirm the district court's finding of subject matter jurisdiction.

I. BACKGROUND

Alfred J. Antonini, Bissonnet Investments, and others (collectively "Antonini") brought this suit against John Quinlan, and others (collectively "Quinlan") in the 113th judicial district court of Harris County, Texas. The suit attacks Quinlan's actions before and after Antonini filed in bankruptcy court a contract between Antonini and Quinlan regarding the sale of various bankruptcy estate assets. Antonini alleged breach of contract, fraudulent inducement, tortious interference, and civil conspiracy. Quinlan removed the suit to the southern district of Texas pursuant to 28 U.S.C. § 1452 (1994), the bankruptcy removal statute. Antonini filed a motion to remand the suit, alleging lack of subject matter jurisdiction under 28 U.S.C. § 1334(b) (1993), which the bankruptcy court denied. Antonini took an interlocutory appeal of the bankruptcy court's denial of remand to the district court, and the district court affirmed the bankruptcy court's denial of remand. On the merits, the bankruptcy court granted partial summary judgment to Quinlan and, after a bench trial, issued a take nothing judgment. Antonini appealed the merits to the district court and re-appealed the subject matter jurisdiction decision. The district court affirmed on both issues. Antonini appeals the subject matter jurisdiction decision to this Court.

II. STANDARD OF REVIEW

We review questions of subject matter jurisdiction de novo. Lundeen v. Mineta, 291 F.3d 300, 303 (5th Cir.2002).

As an initial matter, we must determine whether we have appellate jurisdiction. Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 336 (5th Cir.1999). Several cases from this Court discuss the limits of this Court's ability to review district court decisions to remand, or not to remand, bankruptcy cases that have been removed to federal district or federal bankruptcy court. See Sykes v. Tex. Air Corp., 834 F.2d 488, 490 (5th Cir.1987); In re Rayburn Enters., 781 F.2d 501, 502 (5th Cir. 1986); Browning v. Navarro, 743 F.2d 1069, 1076 n. 21 (5th Cir.1984); In re Compton, 711 F.2d 626, 627 (5th Cir.1983). These cases implicitly analyze the interplay of the two restrictions on appellate review of remand decisions, 28 U.S.C. §§ 1447 and 1452(b).

Section 1447 instructs federal district courts to remand cases that have been removed from state court if it appears that the district court lacks subject matter jurisdiction, and paragraph (d) expressly strips this Court of appellate review of a district court's decision to remand:

(a) In any case removed from a State court, the district court may issue all necessary orders and process to bring before it all proper parties whether served by process issued by the State court or otherwise.

....

(c) A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the case was removed improvidently and without jurisdiction, the district court shall remand the case ....

(d) An 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 (1994) (emphasis added). Section 1452 limits appellate review of decisions to remand or not to remand that are removed to federal district court under its § 1334 bankruptcy jurisdiction:

(a) A party may remove any claim or cause of action in a civil action ... to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.

(b) The court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground. An order entered under this subsection remanding a claim or cause of action, or a decision to not remand, is not reviewable by appeal or otherwise by the court of appeals under section 158(d), 1291, or 1292 of this title or by the Supreme Court....

28 U.S.C. § 1452(b) (1994) (emphasis added).

In In re Compton, the federal bankruptcy court found subject matter jurisdiction over a divorce case filed in state court. 711 F.2d at 626. On appeal, the federal district court disagreed that the bankruptcy court had subject matter jurisdiction and remanded the divorce case to state court. The debtor appealed the district court's decision to remand to this Court. We dismissed the appeal for lack of appellate jurisdiction: "Whether the remand order be viewed as one of abstention or as one grounded in a perceived want of jurisdiction, we are not empowered to review it." Id. at 627. The Court supported this statement by citing two sections dealing with abstention, § 1471 (superceded in 1984 by § 1334) and § 1478 (superceded in 1984 by § 1452), but not § 1447, dealing with the perceived want of jurisdiction.

The Court next discussed its appellate review of remand decisions in bankruptcy cases in Browning v. Navarro, 743 F.2d at 1076 n. 21. With reference to § 1478 (presently § 1452), the Court wrote: "Nonreviewability extends only to the discretionary decision to remand or not to remand a properly removed action, not to whether the bankruptcy court originally had jurisdiction over the matter." 743 F.2d at 1076 n. 21. While not discussing how § 1447 and § 1478 (presently § 1452) interrelate, Browning analogizes the two statutes: "The statute plainly prohibits our review of a bankruptcy court's remand order on direct appeal. This comports with the extensive jurisprudence under 28 U.S.C. § 1447(d), an analogous rule contained in the general remand provisions establishing that remand orders of a district court are unreviewable on direct appeal." Id. at 1077.

In re Rayburn dealt with a fact pattern similar to that in Compton: a debtor was involved in a state court lawsuit; the action was removed to federal court; a federal bankruptcy court found it had subject matter jurisdiction under the bankruptcy removal statute; an appeal was taken to the federal district court; and the district court remanded the lawsuit to state court. 781 F.2d at 502. This Court was asked to hear an appeal of the district court's decision in favor of remanding to state court. We started by noting that "[t]o a far greater degree than in most cases, appellate jurisdiction is by no means assured in bankruptcy matters." Id. Rayburn then cited § 1452(b) as an example of restricted appellate review, but slightly mis-characterized Compton as discussing only review of remand decisions based on abstention. "We ... reaffirm the Compton ruling and follow it. Because § 1452(b) therefore bars a consideration of this case's merits, the appeal is DISMISSED." Id. at 503.

The Court's longest scrutiny of its appellate jurisdiction is Sykes v. Texas Air Corp., 834 F.2d at 488. Sykes brought suit in state court and Texas Air removed the suit to federal district court, claiming Sykes' suit was related to the bankruptcy of Texas Air's subsidiary. Id.; see § 1334(b). The district court disagreed, finding no subject matter jurisdiction and remanding to state court. Texas Air appealed the district court's decision to remand. Texas Air buttressed its argument in support of appellate jurisdiction with Pacor, Inc. v. Higgins, 743 F.2d 984, 990-93 (3rd Cir.1984). Pacor found appellate jurisdiction for remand orders where the district court based its remand decision on a perceived lack of jurisdiction. To reach this conclusion, Pacor held that: (1) § 1447(c)-(d), which preclude review of remand decisions to state courts, does not apply to bankruptcy cases removed pursuant to § 1452(a); and (2) that § 1452(b) precludes review of remand decisions based on equitable grounds, but does not preclude review of remand decisions based on a perceived lack of jurisdiction. Id. Sykes bluntly rejected Pacor's reasoning and results: "The Pacor analysis turns on a sort of semantic crack in the statute rather than a...