Russell Corp. v. American Home Assurance Co.

Decision Date06 September 2001
Docket NumberNo. 00-13934,00-13934
Citation264 F.3d 1040
Parties(11th Cir. 2001) RUSSELL CORPORATION, Plaintiff-Appellee, v. AMERICAN HOME ASSURANCE COMPANY, COMMERCE AND INDUSTRY INSURANCE COMPANY, et al., Defendants, AETNA CASUALTY & SURETY INSURANCE COMPANY, INC., THE, a.k.a. Travelers Casualty and Surety Company, et al., Defendants-Appellants
CourtU.S. Court of Appeals — Eleventh Circuit

[Copyrighted Material Omitted] Appeals from the United States District Court for the Northern District of Alabama, D. C. Docket No. 99-03269-CV-N-S

Before DUBINA and KRAVITCH, Circuit Judges, DUPLANTIER*, District Judge.

DUBINA, Circuit Judge:

The Appellants in this case are a group of insurance companies (the "Insurers") who were sued in state court by Appellee Russell Corporation ("Russell"). The Insurers removed the case on diversity grounds, but the district court remanded for want of unanimous consent to removal. We affirm.

I. Background

Russell filed this action in the Circuit Court for Jefferson County, Alabama, seeking to determine whether there is insurance coverage for contamination to a lake and surrounding property allegedly caused by Russell. Russell claimed that the 23 Insurers breached their obligations to defend and indemnify Russell with respect to two civil actions for property damage and personal injury. Two of the Insurers timely removed the case to the United States District Court for the Northern District of Alabama, based on diversity jurisdiction. Russell, however, argued that a service of suit clause contained in its insurance policy with defendant First State Insurance Company ("First State") rendered First State's consent void. The service of suit clause provides:

It is agreed that in the event of the failure of this COMPANY to pay any amount claimed to be due hereunder, this COMPANY, at the request of the INSURED, will submit to the jurisdiction of any Court of competent jurisdiction within the United States and will comply with all requirements necessary to give such Court jurisdiction and all matters arising hereunder shall be determined in accordance with the law and practice of such Court.1

The district court agreed with Russell and found that the foregoing clause prevented First State from consenting to removal. Accordingly, the district court granted Russell's motion to remand pursuant to 28 U.S.C. § 1447(c) for want of unanimous consent to removal. The Insurers filed timely notices of appeal challenging the district court's remand order.

II. Issues

(1) Whether this court can review the district court's decision to remand for failure to comply with the unanimity requirement when the district court's decision was based on a service of suit clause that prevented one defendant from consenting to removal.

(2) If the remand order is reviewable, the remaining issue is whether the district court erred in interpreting the service of suit clause and concluding that the case was due to be remanded because all defendants did not consent to removal.

III. Standards of Review

This court has a duty to independently examine our appellate jurisdiction and dismiss when our jurisdictional limits are exceeded. See Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 382 (1884); Wahl v. McIver, 773 F.2d 1169, 1173 (11th Cir. 1985).

We review a district court's interpretation of a service of suit clause de novo. See Galindo v. ARI Mut. Ins. Co., 203 F.3d 771, 774 (11th Cir. 2000); McDermott Intern., Inc. v. Lloyds Underwriters of London, 944 F.2d 1199, 1204 (5th Cir. 1991).

IV. Discussion

As a preliminary matter, we must decide whether we have jurisdiction over this appeal. Because the district court's remand order constitutes a final judgment for the purpose of our appellate jurisdiction, we may review that order unless 28 U.S.C. § 1447(d) applies. Florida Polk County v. Prison Health Servs., Inc., 170 F.3d 1081, 1083 (11th Cir. 1999). 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 . . . ."2 Despite this broad provision, the Supreme Court has held that § 1447(d) bars appellate review only where the remand order is based upon grounds specified in § 1447(c). Thermtron Prods., Inc., v. Hermansdorfer, 423 U.S. 336, 346 (1976); see also Snapper, Inc. v. Redan, 171 F.3d 1249, 1260 (11th Cir. 1999). Section 1447(c) specifies two grounds for remanding a removed case: (1) lack of subject matter jurisdiction; or (2) procedural defect in the removal of the case. Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127-28 (1995); Florida Polk County, 170 F.3d at 1083. Therefore, in order to determine whether we have jurisdiction to review this appeal, we must decide whether the instant remand order was based upon either of those grounds.

While there is no question that the first ground dealing with subject matter jurisdiction is not at issue in this case, the second ground is a different matter. Here, the district court remanded the case to state court because the "unanimity requirement" was not met. The unanimity requirement mandates that in cases involving multiple defendants, all defendants must consent to removal. Chicago, R.I. & P. Ry. Co. v. Martin, 178 U.S. 245, 247-48 (1900); In re Ocean Marine Mut. Protection and Indem. Ass'n, Ltd., 3 F.3d 353, 355-56 (11th Cir. 1993); In re Federal Savings & Loan Ins. Corp., 837 F.2d 432, 434 (11th Cir. 1988). We have held that a remand based solely on the unanimity requirement, "is clearly based on a defect in the removal process." In re Bethseda Mem'l Hosp. Inc., 123 F.3d 1407, 1410 & n.2 (11th Cir. 1997); In re Ocean Marine, 3 F.3d at 355-56. In other words, the general rule is that if a case is remanded for failure to comply with the unanimity requirement, the remand is based on the second ground set forth in § 1447(c). In re Ocean Marine, 3 F.3d at 356. Consequently, such a remand is normally not subject to appellate review. Id. The matter at hand, however, is not the normal case.

Here, the district court found that the unanimity requirement was not met only after it had interpreted the service of suit clause and determined that the clause rendered First State's consent void. In essence, the court made a substantive determination of a contractual provision, which was external to the removal process, and found that the provision precluded First State from removing or consenting to the removal of the state court action. As a result of this finding, the district court concluded that there was a lack of unanimous consent, which, as explained above, is considered a procedural defect. Thus, the remand order was based on a substantive determination outside of the removal process, which led the court to find a defect in the removal process.

This court recently addressed a similar situation in the case of Snapper, Inc. v. Redan, 171 F.3d 1249, 1260 (11th Cir. 1999). Snapper involved litigation over numerous security agreements, each of which contained the following forum selection clause:

The [Guarantor] agrees that any legal action or proceeding with respect to this instrument may be brought in the courts of the State of Georgia or the United States District Court, Northern District of Georgia, Atlanta Division, all as Creditor may elect. By execution of this instrument, the [Guarantor] hereby submits to each such jurisdiction, hereby expressly waiving whatever rights may correspond to it by reason of its present or future domicile.

Snapper, 171 F.3d at 1260. Snapper, Inc., the Creditor, instituted litigation in state court against each of the Guarantors. Id. at 1251. The Guarantors timely removed the case to the United States District Court for the Northern District of Georgia, Dekalb County. Id. However, the district court promptly remanded the case to state court finding that the forum selection clause in each of the security agreements signed by the Guarantors constituted a waiver of their right to remove. Id. at 1251-52.

On appeal, the Snapper court noted that § 1447(d) bars appellate review of a remand order based on a defect in the removal process. Id. at 1254 & 1259 (citing New v. Sports & Recreation, Inc., 114 F.3d 1092, 1095-96 (11th Cir. 1997)). However, the court determined that the remand order before it was based solely on the forum selection clauses, which were entirely separate from the removal process. Id. at 1253. The court reasoned that

[a] remand based on a forum selection clause depends on an adjudication of the meaning of the clause, a determination that is external to the removal process. The ultimate determination that the clause does not permit further adjudication in that particular federal forum does not render the removal "defective" in any ordinary sense of the word; it merely means that the federal court has held the parties to the terms of their agreement, as with any other contractual adjudication.

Id. In other words, the court concluded that the district court did not remand due to a defect in the removal process. Id. at 1260. Accordingly, the court in Snapper held that § 1447(d) did not bar appellate review. Id.

We recognize that Snapper is not directly on point to the case at bar because the unanimity requirement was not at issue there. However, Snapper does provide instruction that an appellate court may properly exercise jurisdiction over a remand order which was based on the district court's interpretation of a contractual provision between the parties. Id. Many of our sister circuits share this view. Karl Koch Erecting Co. v. New York Convention Center Dev. Corp., 838 F.2d 656, 658 (2d Cir. 1988) (reviewing on appeal a remand order based on a forum selection clause); Foster v. Chesapeake Ins. Co., 933 F.2d 1207 (3d Cir. 1991) (same); McDermott Intern., Inc. v. Lloyds Underwriters of London, 944 F.2d 1199, 1201 (5th Cir. 1991) (reviewing on appeal a remand order based on a service of suit clause); Regis Associates v....

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