United States Court of Appeals
For the First Circuit
No. 03-1091
DEBORAH MILLS AND PETER MILLS,
Plaintiffs, Appellants,
v.
HARMON LAW OFFICES, P.C., SALEM FIVE CENTS SAVINGS BANK,
DAVID A MARSOCCI, ESQ., DAVID M. ROSEN, ESQ.,
AND DANIEL J. FLYNN,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Reginald C. Lindsay, U.S. District Judge]
[Hon. Joyce London Alexander, U.S. Magistrate Judge]
Before
Boudin, Chief Judge,
Lipez and Howard, Circuit Judges.
Daniel A. Laufer, for appellants.
Melissa E. Darigan, Lisa M. Martinelli, and Partridge Snow &
Hahn LLP for appellees.
September 12, 2003
LIPEZ, Circuit Judge. This appeal presents a narrow
procedural question -- whether a case properly removed to federal
court pursuant to 28 U.S.C. § 1446 can be dismissed with prejudice
if the district court subsequently concludes that it lacks subject
matter jurisdiction over the dispute.
On January 9, 1987, appellants Deborah and Peter Mills
refinanced the mortgage on their home with defendant Salem Five
Cents Savings Bank ("Salem Bank"), which in turn assigned the
mortgage to the Federal Home Loan Mortgage Corporation ("Freddie
Mac"). The Mills were delinquent in their loan payments on
numerous occasions, prompting Salem Bank to initiate foreclosure
proceedings in May 1987. Appellants sought to enjoin foreclosure
in Rockingham County Superior Court in New Hampshire, and
thereafter filed for Chapter 7 bankruptcy protection in September
1987. On January 9, 1998, the bankruptcy court granted Salem
Bank's motion for relief from the automatic stay of foreclosure
proceedings, and the bank foreclosed on August 12, 1998. Freddie
Mac purchased the property at the foreclosure sale and commenced
eviction proceedings against appellants in Plaistow District Court
in New Hampshire. After a year of litigation, Freddie Mac obtained
a writ of possession on August 10, 1999. The Mills unsuccessfully
petitioned the Supreme Court of New Hampshire to quash the writ,
and subsequently returned to the bankruptcy court seeking to
invalidate the foreclosure by moving to vacate the bank's relief
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from the automatic stay. The bankruptcy court denied the motion,
and the Mills appealed the decision first to the United States
District Court in New Hampshire and then to this court, both times
unsuccessfully.
In July 2001, as that appeal was pending, the Mills filed
the underlying complaint in this matter in the Middlesex County
Superior Court in Massachusetts. Appellants alleged that (1) Salem
Bank was not the true owner of their mortgage, (2) Salem Bank's
attorneys fraudulently obscured the identity of the true mortgage
owner from the New Hampshire state courts, and (3) consequently,
the 1998 foreclosure was null and void. Because the plaintiffs
inter alia sought relief under the federal civil RICO statute, the
defendants successfully petitioned to remove the case to the United
States District Court in Massachusetts, citing the court's federal
question jurisdiction.
The district court assigned the case to a Magistrate
Judge, who sua sponte recommended dismissal pursuant to the Rooker-
Feldman doctrine. The Rooker-Feldman doctrine precludes courts
from exercising subject matter jurisdiction1 where the issues
presented in the case are "inextricably intertwined" with questions
1
Our prior jurisprudence establishes that the Rooker-Feldman
doctrine implicates the court's subject matter jurisdiction. As we
observed in In re Middlesex Power Equip. & Marine, Inc., 292 F.3d
61 (1st Cir. 2002): "The Rooker-Feldman doctrine is jurisdictional
in nature; if a case is dismissed because the Rooker-Feldman
doctrine applies, it means the court has no subject matter
jurisdiction to hear the case." Id. at 66 n.1.
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previously adjudicated by a state court, such that the federal
district court would be in the unseemly position of reviewing a
state court decision for error. See Hill v. Town of Conway, 193
F.3d 33, 39 (1st Cir. 1999) (noting that a federal claim is
"inextricably intertwined" with a state-court claim "if the federal
claim succeeds only to the extent that the state court wrongly
decided the issues before it."); see generally D.C. Ct. App. v.
Feldman, 460 U.S. 462 (1983); Rooker v. Fid. Trust Co., 263 U.S.
413 (1923); Wilson v. Shumway, 264 F.3d 120 (1st Cir. 2001).
Applying the Rooker-Feldman doctrine to the case at bar,
the Magistrate Judge concluded that
the substantive legal issues underlying the
plaintiffs' common law and state statutory
claims appear to derive from the same nuclei
of facts and legal issues presented to, and
decided by, the various New Hampshire state
courts . . . . In order to adjudicate the
allegations of the complaint en toto, the
district court would have to exhume the
averments presented to the New Hampshire
courts and dissect them again.
Alternatively, the Magistrate Judge found in a footnote "that the
plaintiffs have not properly plead the RICO count in their
complaint . . . . Accordingly, in the event that the district court
is not persuaded of the applicability of the Rooker-Feldman
doctrine, the complaint should be dismissed due to its deficiencies
in pleading the RICO claim."
The district court adopted the Magistrate Judge's Report
and Recommendation in its totality, agreeing that the Rooker-
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Feldman doctrine divested the court of subject matter jurisdiction,
and further concluding "that the report and recommendation was
correct in its ancillary determination that no pattern of
racketeering activity as defined in the RICO statute has been
pleaded and that plaintiffs have therefore not stated a claim on
which relief may be granted pursuant to the statute." Accordingly,
the district court dismissed the Mills' complaint with prejudice on
all counts.
On appeal, the Mills do not contest the district court's
application of the Rooker-Feldman doctrine, but claim that the
district court abused its discretion by dismissing the complaint
with prejudice after determining that it lacked subject matter
jurisdiction. We agree.
Under the relevant provision of the federal removal
statute,
[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. An order remanding the
case may require payment of just costs and any
actual expenses, including attorney fees,
incurred as a result of the removal. A
certified copy of the order of remand shall be
mailed by the clerk to the clerk of the State
court. The State court may thereupon proceed
with such case.
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28 U.S.C. § 1447(c) (emphasis added). The language of this
provision unambiguously precludes federal courts from reaching the
merits of a removed case when it lacks subject matter jurisdiction
over the dispute. We have historically construed this passage
strictly:
We think . . . that the district court erred
in departing from the literal words of §
1447(c), which, on their face, give it no
discretion to dismiss rather than remand an
action. And, we are unwilling to read such
discretion into the statute here, because we
cannot say with absolute certainty that remand
would prove futile.
Me. Ass'n of Interdependent Neighborhoods v. Comm'r, Me. Dep't of
Human Serv., 876 F.2d 1051, 1054 (1st Cir. 1989); see Smith v. Wis.
Dep't of Agric., Trade, and Consumer Prot., 23 F.3d 1134, 1139 n.
10 (7th Cir. 1994) ("[T]he point of section 1447(c) is that a
federal court does not have the authority to dismiss a claim over
which it never had jurisdiction in the first instance. The merits
of the . . . claim are therefore irrelevant to this
determination."); see also Christopher v. Stanley Bostitch, Inc.,
240 F.3d 95, 100 (1st Cir. 2001) ("When a federal court concludes
that it lacks subject matter jurisdiction over a case, it is
precluded from rendering any judgments on the merits of the
case.").
Appellees gamely attempt to evade this inevitable result,
arguing that a district court is entitled to dismiss a removed case
with prejudice if the removal itself "is procedurally and
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substantively proper," and the jurisdictional defect is revealed
only after the removal is perfected. This novel theory contradicts
the plain directive in 1447(c) that "[i]f at any time before final
judgment it appears that the district court lacks subject matter
jurisdiction, the case shall be remanded" (emphasis added).
Nothing in the language of this provision or the cases construing
it predicates the remand requirement on the nature of the defect in
the court's subject matter jurisdiction, or the timing of its
discovery. The existence of any subject matter jurisdiction defect
divests the court of authority to dismiss a removed case on its
merits,2 regardless of whether the jurisdictional flaw results from
an improper removal or arises from some other source, such as the
Rooker-Feldman doctrine.3 And whether or not section 1447(c)
2
While this rule precludes federal courts from considering the
merits of a case after identifying a defect in subject matter
jurisdiction, it in no way implies a "sequencing of jurisdictional
issues," see Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584-85
(1999), that obliges courts to resolve subject matter jurisdiction
before investigating other possible bases for disclaiming
jurisdiction (e.g., personal jurisdiction, discretionary abstention
grounds). The Supreme Court has expressly declined to adopt any
wooden rule to the contrary. See id., cited with approval in
Middlesex Power Equip., 292 F.3d at 66 n.1.
3
Appellees supplement their argument with a lengthy string
citation of cases in which the district court dismissed cases "with
prejudice" pursuant to the Rooker-Feldman doctrine. Our review of
those cases indicates that, without exception, they originated in
federal court and hence were not subject to the provisions of the
federal removal statute. Accordingly, those cases do not counsel
against the outcome we reach here. Of course, lack of subject
matter jurisdiction precludes a disposition on the merits even in
a non-removed action. However, a dismissal on Rooker-Feldman
grounds, although "with prejudice," is not intrinsically a
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contains an implicit exception for a case where a remand could be
said "with absolute certainty" to be futile, see Interdependent
Neighborhoods, 876 F.2d at 1054, we are unwilling to make such a
finding here, though we suspect that this case has little future.
The appellees are understandably frustrated with the
Mills' litigiousness:
The Mills have trampled through no less than
six Courts in pursuit of relief as a result of
a foreclosure that legally occurred due to
their indisputable Mortgage default and have
wasted endless judicial resources by
continuing to pursue this frivolous and
baseless claim. Clearly, this is a case of
litigants who have a demonstrated history of
vexatious litigation that if left unchecked,
will continue to spread across a new forum and
state.
While we are obliged to order the district court to remand this
case back to the Massachusetts Superior Court, we note that the
Mills' foray through the courts may be approaching its terminus.
The same bedrock principles codified in the Rooker-Feldman doctrine
that preclude federal district courts from revisiting questions
previously adjudicated by state courts, see Hill, 193 F.3d at 39,
compel state courts to give "full faith and credit" to the
judgments issued by other state courts. "In a practical sense,
full faith and credit establishes a rule of evidence requiring
recognition of a prior out-of-State judgment, giving it res
judicata effect and thus avoiding relitigation of issues in one
disposition on the merits.
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State which have already been decided in another." Luna v. Dobson,
763 N.E.2d 1146, 1150 (N.Y. 2001) (internal quotation marks
omitted); see U.S. Const. art. IV, § 1; Bassett v. Blanchard, 546
N.E.2d 155, 157 (Mass. 1989); Wright Mach. Corp. v. Seaman-Andwall
Corp., 307 N.E.2d 826, 831-32 (Mass. 1974). Accordingly, without
in any way presuming to direct the outcome in state court, we
anticipate that application of these principles is very likely to
lead the Massachusetts Superior Court to grant the dismissal with
prejudice that was unavailable to appellees in the federal forum.
The judgment of the district court is vacated, and this
case is remanded to the district court with instructions to remand
the case to the Middlesex County Superior Court.
So ordered.
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