United States Court of Appeals,
Fifth Circuit.
No. 95-40574.
W.H. AVITTS, et al., Plaintiffs-Appellees,
v.
AMOCO PRODUCTION CO., et al., Defendants-Appellants.
April 28, 1997.
Appeals from the United States District Court for the Southern
District of Texas.
Before DAVIS, SMITH and DUHÉ, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
Defendants-appellants appeal an order imposing costs and
attorney's fees against them for improper removal under 28 U.S.C.
§ 1447(c). We reverse the order and remand this case to the
district court for the limited purpose of taxing costs under
Fed.R.Civ.P. 54.
I.
Appellees are landowners who contend that their property was
harmed by Amoco's operations in the West Hastings Field. Appellees
initiated this litigation by filing separate suits in Texas state
district court.
In their state court complaints, appellees alleged that their
damages caused by Amoco were in violation of "not only State law
but also Federal law." Based on federal question jurisdiction,
Amoco removed the case to federal court in October 1990. The
district court then consolidated appellees' suits.
Along with its notice of removal, Amoco filed a Fed.R.Civ.P.
1
12(e) motion for a more definite statement, to determine what
federal law Appellees claimed Amoco had violated. The magistrate
judge summarily denied Amoco's motion, directing Amoco to seek this
clarification through interrogatories. Consistent with the
magistrate's direction, Amoco served appellees with interrogatories
asking appellees to specify their federal causes of action. In
response, appellees stated that they "believed" they had a claim
against Amoco under at least four, and maybe more, federal laws.1
Appellees filed the first of several amendments in July 1991.
The first amendment removed the reference to federal law contained
in the original complaint; nonetheless, appellees continued to
allege in their pleadings that the district court had jurisdiction
over these actions pursuant to 28 U.S.C. § 1331. Appellees' third
amendment, filed October 17, 1991, named for the first time Apache
Corporation ("Apache") and MW Petroleum Corporation ("MW") as
co-defendants.
After the pre-trial conference, all the defendants moved to
dismiss the action on grounds that the district court had no
federal question or diversity jurisdiction over any part of the
action. Appellees opposed the motion, arguing that the district
court had authority to entertain the action under its pendent
jurisdiction. Appellees persuaded the district court to deny the
motion to dismiss and retain the case in federal court. In fact,
1
Appellees cited "18 U.S.C. § 1962 ("RICO'), 42 U.S.C. § 300,
et. seq., ("Family Planning and Population Act'), 33 U.S.C. § 1251
("Clean Water Act 1977'), 42 U.S.C. § 7401, et. seq. ("Clean Air
Act'), as "applicable' to this suit."
2
the district court embraced the appellees' position and
characterized the defendants' jurisdictional arguments as
"meritless."
Four days after the trial began, the district court, on its
own motion, issued a mandatory injunction requiring Amoco, Apache,
and MW to conduct an environmental study of the relevant property.
The district court also awarded $644,141.99 in interim attorney's
fees and expenses to appellees under the authority of the Federal
Oil Pollution Act of 1990, 33 U.S.C. § 2701-2761. Amoco, Apache,
and MW appealed these orders. In Avitts v. Amoco Production Co.,
53 F.3d 690, 692 (5th Cir.1995), this court held that appellees had
never asserted a federal cause of action and as a result the
district court did not have subject matter jurisdiction. The
district court's orders were thus vacated and the case was remanded
to the district court with instructions to remand the case to state
court.
Upon remand to the district court, appellees moved for "just
costs and actual expenses, including attorney fees" under 28 U.S.C.
§ 1447(c). The district court overruled the defendants' objection,
granted the motion, and held Amoco, Apache, and MW jointly and
severally liable under § 1447(c) for $641,509.46, representing
appellees' costs and attorney's fees. The district court then
remanded the action to state court. Amoco, Apache, and MW timely
appealed the district court's § 1447(c) order.
II.
The question we face is whether the district court erred in
3
holding Amoco, Apache, and MW liable for attorney's fees and costs
under § 1447(c). We look first, of course, to the statute itself.
Section 1447(c) provides:
A motion to remand the case on the basis of any defect in
removal procedure 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.
An order remanding the case may require payment of just costs
and any actual expenses, including attorney fees, incurred as
a result of removal.
28 U.S.C.A. § 1447(c) (West 1994)(emphasis added).
Plaintiffs added Apache and MW as defendants after Amoco
removed this action to federal court. In Miranti v. Lee, 3 F.3d
925, 929 (5th Cir.1993), we held that a court's discretion to award
attorney's fees under § 1447(c) is triggered only if the court
first finds that the defendant's decision to remove was legally
improper. Id. at 929. As Miranti makes clear, the propriety of
the defendant's action in removing the case is central to the
determination of whether fees are awarded. Id. at 928. In
undertaking this analysis, we look only to "the complaint at the
time the petition for removal was filed." Id. Because neither
Apache nor MW played a role in the decision to remove, they are not
subject to an award under § 1447(c).
The determination of whether Amoco's removal of this case was
legally improper was decided in the earlier appeal and is not
before us. See Avitts, 53 F.3d at 693 (holding that "[n]o federal
cause of action has ever been asserted [by appellees], and it is
plain that removal jurisdiction under 28 U.S.C. § 1441 simply did
not exist"). But the determination that the removal was improper
4
does not end our inquiry. We still must determine whether under
the circumstances of this case the district court abused its
discretion by ordering Amoco to pay $641,509.46 in costs and fees.
Once a court determines that the removal was improper, thus
satisfying the Miranti threshold requirement, § 1447(c) gives a
court discretion to determine what amount of costs and fees, if
any, to award the plaintiff. Congress has plainly limited such an
award to those costs and fees "incurred as a result of removal."
See 28 U.S.C.A. § 1447(c)(West 1994). We interpret this language
to limit the litigation expenses that may be awarded under this
section to fees and costs incurred in federal court that would not
have been incurred had the case remained in state court. This
interpretation of the plain language of § 1447(c) is buttressed by
its legislative history. For example, the House Report states that
§ 1447(c) "will ensure that a substantive basis exists for
requiring payment of actual expenses incurred in resisting an
improper removal; civil rule 11 can be used to impose more severe
sanction when appropriate." H.R.Rep. No. 100-889, reprinted in
1988 U.S.C.A.N. 6033.
We conclude therefore that a party's costs of opposing
removal, seeking remand, and other expenses incurred because of the
improper removal may be awarded. By contrast, ordinary litigation
expenses that would have been incurred had the action remained in
state court are not recoverable because such expenses are not
incurred "as a result of the removal."
If the opinion ended here, we would remand this case to permit
5
the district court to reduce the award to compensate Appellees for
expenses incurred "as a result of the removal." But for reasons
that follow, we need not remand this case for that purpose.
If a plaintiff bears a substantial share of the responsibility
for the case remaining in federal court, a court abuses its
discretion by awarding the plaintiff any sums under § 1447(c). In
other words, a plaintiff may in certain cases be estopped from
recovering costs and attorney's fees under § 1447(c) when his
conduct after removal plays a substantial role in causing the case
to remain in federal court.
In Bankston v. Burch, 27 F.3d 164, 169 (5th Cir.1994), the
plaintiff, a limited partner in a limited partnership, sued the
general partner alleging fraud or negligent misrepresentation,
breach of fiduciary duty, mismanagement and waste of partnership
assets, and breach of contract. The plaintiff asserted all of his
claims as personal claims in his original petition. The general
partner, a citizen of California, removed the case based on the
diversity between himself and the plaintiff, a citizen of Texas.
Plaintiff did not seek remand. Shortly before trial, the defendant
filed a motion to dismiss on grounds that subject matter
jurisdiction was lacking. He argued, among other things, that the
plaintiff had failed to join the limited partnership and the
individual limited partners as indispensable parties. The district
court referred the motion to the merits and proceeded to trial. A
jury verdict was rendered primarily in favor of the plaintiff. In
a post-trial motion, the plaintiff admitted for the first time that
6
some of his claims were derivative in nature. Following entry of
judgment, the defendant appealed, and argued that the district
court had no jurisdiction over the plaintiff's derivative claims.
On appeal, this court concluded that the limited partnership,
a citizen of Texas and California, was an indispensable party to
the plaintiff's derivative suit, and therefore once its citizenship
was considered complete diversity was lacking. We then vacated the
district court's judgment and remanded the case with instructions
to remand to state court. The plaintiff in his brief asked this
court to award him costs and fees under § 1447(c) if the court
concluded that a remand was appropriate. We declined to make the
requested award on grounds that the plaintiff "himself bears a
substantial share of the responsibility for this case's lengthy but
futile sojourn in the federal courts." Id. at 169. We observed
that "[h]ad [the plaintiff] pleaded his derivative claims as
derivative claims, rather than attempting to cast them as personal
to himself, the indispensability of the partnership as a party
would have been immediately apparent." Id.
The same reasoning applies to this case. Given the active
role appellees took in persuading the district court to retain
jurisdiction of the case, fees are not appropriate. Appellees
alleged violations of both state and federal law in their original
state court complaint; did not move to remand; alleged that the
district court had federal question jurisdiction in each amended
complaint; opposed the defendants' motion to dismiss for lack of
jurisdiction, and persuaded the court it had jurisdiction to hear
7
the case. Because appellees bear a substantial share of the
responsibility for the case remaining in federal court, we conclude
that the district court abused its discretion in awarding fees and
costs to appellees under § 1447(c).
III.
For the reasons stated above, we reverse the § 1447(c) award
of fees and costs and remand this case to the district court to tax
costs under Fed.R.Civ.P. 54.
REVERSED and REMANDED.
8