Snapper, Inc. v. Redan, 97-9095

• Decision Date: 05 April 1999
• Docket Number: No. 97-9095,97-9095
• Citation: 171 F.3d 1249
• Parties: 12 Fla. L. Weekly Fed. C 680 SNAPPER, INC., Plaintiff-Appellee, v. Steven I. REDAN, Sheila A. Redan, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1249

171 F.3d 1249

12 Fla. L. Weekly Fed. C 680

SNAPPER, INC., Plaintiff-Appellee, v. Steven I. REDAN, Sheila A. Redan, et al., Defendants-Appellants.

No. 97-9095.

United States Court of Appeals, Eleventh Circuit.

April 5, 1999.

John K. Anderson, Arnold & Anderson, Atlanta, GA, Melvin Greenberg, Greenberg, Dauber & Epstein, Newark, NJ, for Defendants-Appellants.

John H. Williamson, J. Christopher York, Williamson & York, L.L.C., Atlanta, GA, for Plaintiff-Appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before ANDERSON and BARKETT, Circuit Judges, and HILL, Senior Circuit Judge.

ANDERSON, Circuit Judge:

This appeal presents an issue of first impression in this circuit: whether, since the 1996 amendment to 28 U.S.C § 1447(c) (1994), a district court's remand order is reviewable when the court issued the order to enforce a contractual forum selection clause. Because we conclude that appellate review is available in this context, we consider the district court's interpretation of the forum selection clause on the merits. We affirm.

I. FACTS

This case arises out of the business relationship between Snapper, Inc., a Georgia corporation, and two of its distributors, a New Jersey corporation known as KPM Distributors, Inc. and a New York corporation known as KPMNY Distributors, Inc. Snapper, a manufacturer of lawn, garden, and snow equipment, entered into an agreement with KPM Distributors in the late 1960's pursuant to which KPM Distributors marketed Snapper products in New Jersey. The relationship apparently proved successful because, in 1981, Snapper requested that the principals of KPM Distributors form KPMNY Distributors to market Snapper products in New York. The principals agreed. This new arrangement also seems to have been mutually satisfactory, for the two distributors (collectively, "KPM") reached another agreement with Snapper in 1991 to expand their distribution territory into the New England states.

As part of the New England expansion agreement, on October 30, 1991, three officers of KPM and their spouses entered into six identical security agreements, pursuant to which each individual assumed personal liability for all of KPM's obligations to Snapper. The six individuals thus made liable are Steven I. Redan, Sheila A. Redan, Anthony C. Troisi, Sandra A. Troisi, Donald A. Ehrgott, and Ruby Ehrgott (the "Guarantors"). A short time later, according to the Guarantors, Snapper demanded that KPM purchase more inventory than KPM could sell to its dealers so that Snapper would not have to close a manufacturing plant. Then, in 1995, the Guarantors claim that Snapper required KPM to liquidate its inventory to make room for new Snapper products. On August 22, 1995, Snapper terminated its relationship with KPM, citing the failure of KPM to pay for equipment provided by Snapper valued at approximately $2,000,000. That same day, KPM signed a termination agreement that included a provision partially forgiving KPM's debt.

On September 16, 1996, KPM filed a complaint in the United States District Court for the District of New Jersey against Snapper (the "New Jersey action"). In the suit, apparently still ongoing, KPM seeks $15,000,000 in damages and alleges that Snapper violated numerous provisions of New Jersey statutory and common law. Snapper answered on October 25, 1996, and filed a counterclaim based on the same alleged $2,000,000 debt that Snapper cited as its reason for terminating KPM's distributorship.

Snapper did not file a third-party claim in New Jersey against the Guarantors on this debt. Instead, on November 12, 1996, it instituted this litigation in the Superior Court of Georgia, Dekalb County on a $647,160.46 debt of KPM, ¹ naming the Guarantors, but not KPM, as defendants. The Guarantors timely and properly removed the case to the United States District Court for the Northern District of Georgia on February 11, 1997. Shortly thereafter, they filed a motion to change venue, seeking to have the case transferred to New Jersey to be consolidated with the New Jersey action. On March 7, 1997, Snapper moved to remand the case to state court and opposed the motion to change venue.

On September 29, 1997, the district court granted Snapper's motion and remanded the case to the state court. In a brief opinion, the district court held that the forum selection clause in each of the security agreements signed by the Guarantors constituted a waiver of their right to remove. The court noted that the terms of the forum selection clause provided for litigation in the Georgia state courts or in the United States District Court for the Northern District of Georgia, at Snapper's election, and that the Guarantors waived any rights accruing to them by virtue of their domicile. Concluding that removal premised on diversity jurisdiction was a right based on domicile, the district court held that the Guarantors could not remove this action under the contractual provision. The district court therefore remanded the action to state court and dismissed the motion to change venue as moot. The Guarantors timely filed a notice of appeal. We hold today that the district court's interpretation of the forum selection clause is subject to appellate review and affirm the order on the merits.

II. REVIEWABILITY

There are two potential obstacles to appellate review in this case. First, we must consider whether the order satisfies the final judgment rule, which ordinarily bars consideration of non-dispositive rulings in an ongoing judicial proceeding. See Catlin v. United States, 324 U.S. 229, 233-34, 65 S.Ct. 631, 633-34, 89 L.Ed. 911 (1945). Second, even if the final judgment rule is satisfied, we must determine whether § 1447(d) of the Judicial Code bars appellate review. Because we conclude that the district court's order is final, and because we conclude that the exception to § 1447(d) first enunciated by the Supreme Court in Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976), is applicable, we find that we have jurisdiction over this appeal.

A. Finality Issues

Our holding that the district court's remand order satisfies the finality requirement is mandated by a very recent decision of this court, so holding on indistinguishable facts. See Florida Polk County v. Prison Health Servs., Inc., 170 F.3d 1081 (11th Cir.1999). Thus, we turn to the § 1447(d) issue.

B. Section 1447(d) and the Scope of Section 1447(c)

The second potential obstacle to appellate review in this case is 28 U.S.C. § 1447(d) (1994), 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...." ² Notwithstanding the provision's broad language, the Supreme Court has held that § 1447(d) bars appellate review only where the remand order is based upon the grounds specified in § 1447(c). See Thermtron, 423 U.S. at 346, 96 S.Ct. at 590. In the instant case, the remand order that appellants urge us to review is based upon a forum selection clause. Thus, the issue before us is whether a remand order based upon a forum selection clause fits within one of the grounds specified in § 1447(c). Accordingly, we must identify the scope of § 1447(c).

1. Language of Section 1447(c)

We begin, of course, with consideration of the language of the statute itself. The current version of § 1447(c), as amended in 1996, provides in relevant part as follows:

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 district court lacks subject matter jurisdiction, the case shall be remanded.

28 U.S.C.A. § 1447(c) (West Supp.1998). As is apparent from the text, § 1447(c) implicitly recognizes two bases upon which a district court may--and in one case must--order a remand: when there is (1) a lack of subject matter jurisdiction or (2) a defect other than a lack of subject matter jurisdiction. Because the first ground dealing with subject matter jurisdiction is not at issue here, ³ the key term to which we must give effect is "defect." Black's Law Dictionary defines "defect" as "[t]he want or absence of some legal requisite; deficiency; imperfection; insufficiency." Black's Law Dictionary 418 (6th ed.1990). Similarly, Webster's defines it as "[w]ant or absence of something necessary for completeness or perfection; deficiency." Webster's New International Dictionary of the English Language 686 (2d ed.1953). The "legal requisites" of removal are found in the removal statutes and include, inter alia, those enunciated in § 1446(a) (the filing requirements) and § 1446(b) (the timeliness requirement). The failure to comply with these express statutory requirements for removal can fairly be said to render the removal "defective" and justify a remand pursuant to § 1447(c).

Other grounds for remand exist, however, that are external to the removal process and do not depend on any "defect" in the removal itself. The most common examples of these grounds arise in the contexts of forum selection clauses, abstention, and supplemental jurisdiction. 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. Similarly, a determination that a federal court should abstain in a particular case or that it should refuse to exercise supplemental jurisdiction over pendent state claims after dismissal of all federal claims does...