S.W.S. Erectors, Inc. v. Infax, Inc.

• Decision Date: 17 January 1996
• Docket Number: No. 94-20937,94-20937
• Citation: 72 F.3d 489
• Parties: S.W.S. ERECTORS, INC. d/b/a, Southwest Signs, Plaintiff/Appellant, v. INFAX, INC., Defendant/Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 489

72 F.3d 489

33 Fed.R.Serv.3d 747

S.W.S. ERECTORS, INC. d/b/a, Southwest Signs, Plaintiff/Appellant, v. INFAX, INC., Defendant/Appellee.

No. 94-20937.

United States Court of Appeals, Fifth Circuit.

Jan. 17, 1996.

Andrew A. Layman, Houston, TX, for appellant.

Mary Jeanne Sommerfeld, Houston, TX, Jeffrey M. Kotz, Rosolio, Silverman & Kotz, Towson, MD, for appellee.

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

Before KING, DeMOSS and STEWART, Circuit Judges.

STEWART, Circuit Judge:

S.W.S. Erectors (d/b/a Southwest Signs) appeals the district court's judgments denying its motion to remand and granting Infax, Inc.'s motion for summary judgment. Finding

no error with these judgments, we affirm the district court's rulings.

FACTS

Infax, Inc. was the prime contractor hired by the City of Houston to construct and install signs at the Intercontinental Airport in Houston. Infax subcontracted some of its work to Triangle and Service ("Triangle"), and Triangle subsequently subcontracted Southwest Signs to perform work.

While on the job, Southwest was asked to perform work that exceeded the scope of its original contract with Triangle. Southwest performed the work although it had not received prior written consent from Triangle. Consent was not obtained contemporaneously with the request because Triangle's on-site supervisor was absent and because Triangle refused to sign and return a copy of the contract it made with Southwest.

Although Infax promised to pay Southwest for any work performed on the site which Triangle did not pay, the specifics of the promise are in dispute. Southwest's president, David Wilson, testified in his deposition that if Triangle did not come through with signing Southwest's contract that Infax would make sure that Southwest received payment and that Infax would take care of Southwest. Later, in an affidavit, he claimed that Infax unconditionally promised to pay if Triangle did not pay Southwest. Infax claims that it promised to pay Southwest directly only if Triangle did not sign the subcontract. It is undisputed that Triangle eventually did sign the contract.

After Southwest substantially performed its work, Triangle refused to pay. Southwest formally filed a claim against the surety that issued a payment bond on behalf of Triangle. When the surety denied Southwest's claim, Southwest sued Triangle in federal court. Southwest received a take nothing judgment in August 1992, which was affirmed by this court with no opinion. Southwest then sought payment from Infax. When Infax refused payment, Southwest filed suit in Texas state court on November 30, 1992. Infax was served on December 14, 1992.

Although the case evolves entirely around money allegedly owed for services, the complaint did not allege a specific amount of damages claimed by Southwest. The complainant simply alleged that Southwest had "been damaged in a sum in excess of the minimal jurisdictional limits of the court." Infax's general counsel, Robert Brazier, learned during a telephone conversation with Southwest's attorney that Southwest's damages exceeded $100,000. Brazier drafted an affidavit confirming the amount in controversy as speculated by the Southwest attorney.

Infax used the affidavit of its attorney and the diverse citizenship of the parties as the basis to attempt removal. Infax filed a notice to remove the action, under 28 U.S.C. Sec. 1446(b), to federal district court in the Galveston Division on December 31, 1992. Infax chose the Galveston Division because it was the court in which Southwest already had commenced a case regarding the same damages against Triangle.

Southwest immediately filed a motion to remand on the ground that the case had been removed to the wrong federal district court. The state court where the Infax action had originally been filed was not situated within the Galveston Division. The state court sat within the Houston Division. Infax asked the district court to transfer the case to the correct district upon realizing its error. However, before receiving a response from Infax, the district judge granted the motion to remand on the ground of removing to an improper division. The district court then issued a clarifying order indicating that it was not proper to transfer the case. The district court did not mention that the remand was based on lack of jurisdiction or comment on the amount in controversy despite the fact that Southwest had argued that the amount in controversy did not exceed the jurisdictional amount and that Infax did not have sufficient evidence of the jurisdictional amount. The March 5, 1993 order holds only that the court was remanding because the case was removed to the wrong division.

Infax deposed Southwest's president, David Wilson, and received a copy of the deposition transcript on April 28, 1993. Wilson testified that Southwest's actual damages Southwest filed a motion to remand claiming that the order of remand was res judicata as to Infax's right to seek removal. Southwest also claimed that it was not possible to determine whether the amount in controversy exceeded $50,000 despite the deposition testimony of its president. The district court denied the motion to remand. Soon after the denial, Infax sought and obtained summary judgment against Southwest. Southwest appeals the denial of the motion to remand and the grant of summary judgment.

fell between $70,000 and $80,000. Using the deposition transcript as "other paper" that made known the removableness of the case, on May 3, 1993 Infax again filed notice of removal under 28 U.S.C. Sec. 1446(b). This time the action was removed to the Houston Division.

DISCUSSION

A. DENIAL OF THE MOTION TO REMAND.

1. Standard Of Review.

We review the denial of a motion to remand de novo. Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1336 (5th Cir.1995); Leffall v. Dallas Indep. Sch. Dist., 28 F.3d 521, 524 (5th Cir.1994); Garrett v. Commonwealth Mtg. Corp. Of America, 938 F.2d 591, 593 (5th Cir.1991). Generally, we begin our review by applying the "facially apparent" test, which requires us to look only at the face of the complaint and ask whether the amount in controversy exceeds $50,000. Allen, 63 F.3d at 1336. If the amount in controversy is not readily apparent from the complaint, then we review summary-judgment type of evidence to determine the amount in controversy at the time of removal. Id. Our evaluation in the present case does not involve whether Infax has satisfied the elements for removal; instead the issue is whether Infax was entitled to attempt a second removal after its first removal failed. Nevertheless, we review this issue de novo.

2. Twice Removed On The Same Ground.

Southwest argues that Infax could not remove the case more than once on the same ground. It asserts that because both removals were based on diversity of citizenship, both removals were made on the same ground.

Infax counters that 28 U.S.C. Sec. 1446(b) permits more than one notice of removal. A remand order is conclusive only regarding the matters actually adjudged. The district court remanded because it had been removed to the wrong division. Infax contends that because the district court did not address whether federal diversity existed, Infax is not precluded from seeking removal on this ground. Further, Infax claims that Infax could not know that the controversy exceeded $50,000 until it received Wilson's deposition transcript.

We find that Infax reacquired the right to file a second petition to remove. The Fifth Circuit recognizes a defendant's right to seek subsequent removals after remand. See Browning v. Navarro, 743 F.2d 1069, 1079-80 n. 29 (5th Cir.1984) (noting that second removal petitions are permitted). As a general rule, once a case is remanded to state court, a defendant is precluded only from seeking a second removal on the same ground. ¹ The prohibition against removal "on the same ground" does not concern the theory on which federal jurisdiction exists (i.e., federal question or diversity jurisdiction), but rather the pleading or event that made the case removable. See O'Bryan v. Chandler, 496 F.2d 403, 410 (10th Cir.), cert. denied, 419 U.S. 986, 95 S.Ct. 245, 42 L.Ed.2d 194 (1974); see also One Sylvan Road North Assocs. v. Lark Int'l, Ltd., 889 In O'Bryan, the defendant sought removal under 28 U.S.C. Sec. 1442(a)(3) in both removal petitions, and the district court specifically held in the remand order that the action was not removable pursuant to 28 U.S.C. Sec. 1442(a)(3). When explaining that the Supreme Court's use of the phrase "same grounds" did not refer to the claim for relief alleged in the plaintiff's petition, the Tenth Circuit noted that "different grounds more precisely mean a different set of facts that state a new ground for removal." Because the court allowed the second removal petition, which was based on the same statute providing federal jurisdiction (e.g., Sec. 1442(a)(3)), the O'Bryan court impliedly indicated that section 1446(b) contemplates a valid second petition for removal that alleges new facts in support of the same theory of removal.

F.Supp. 60, 62, 63 (D.Conn.1995) ("the fact that a case was initially removed and remanded does not itself preclude removal a second time around. A defendant who fails in an attempt to remove on the initial pleadings can file a second removal petition when subsequent pleadings or events reveal a new and different ground for removal.... By adding the second paragraph of Sec. 1446(b), Congress intended that a party be permitted successive removals" [emphasis added] [citations and quotations omitted].

Similarly, in One Sylvan Rd., the defendant sought removal on diversity jurisdiction in both petitions for removal. 889 F.Supp. at 62. The district court's first order of remand concluded that "only possession of the premises was at issue and that, therefore, the amount in controversy did not exceed...