# Ferrari, Alvarez, Olsen & Ottoboni v. Home Insurance

> Court of Appeals for the Ninth Circuit · August 8, 1991 · 940 F.2d 550

URL: https://www.frixlaw.com/law-library/cases/8991781

## Case

- **Full name:** FERRARI, ALVAREZ, OLSEN & OTTOBONI, a California professional corporation Edward M. Alvarez, an individual, Plaintiffs-counter-defendants-Appellees v. The HOME INSURANCE COMPANY, a New Hampshire corporation, Defendant-counter-claimant-Appellant FERRARI, ALVAREZ, OLSEN & OTTOBONI, a California professional corporation Edward M. Alvarez, an individual, Plaintiffs-counter-defendants-Appellants v. The HOME INSURANCE COMPANY, a New Hampshire corporation, Defendant-counter-claimant-Appellees
- **Court:** Court of Appeals for the Ninth Circuit
- **Decided:** August 8, 1991
- **Citations:** 940 F.2d 550; 1991 WL 148311
- **Precedential status:** Published
- **Opinion:** Dissent by Noonan
- **Judges:** Canby, Noonan, Schroeder
- **Cited by:** 1 later opinions in the Frix Law Library

## Citator (automated)

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## Opinion text

NOONAN, Circuit Judge,
dissenting:
The district court remanded this case to the state court in these terms: “The district court may issue an order remanding a case, despite the existence of diversity jurisdiction, on the ground that the defendant waived the right to remove by seeking relief in the state court and such order is governed by the requirements of section 1447(c). Schmitt v. Insurance Co. of North America, 845 F.2d 1546, 1549 (9th Cir.1988).
“It is well established that a forum selection clause may act as a waiver of defendant’s right to remove an action to federal court....
“The Court further finds that the right to remove this case based on diversity of citizenship, which would be the only predicate for removal in most suits, was waived by the Defendant when it agreed to resolve disagreements arising out of the settlement in a state forum.”
The plaintiffs argue that the district court, therefore, remanded in accordance with 28 U.S.C. § 1447 (c), which provides in part: “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.”
This contention is fortified by the fact that after ordering the remand the district court declared, “Section 1447(c) authorizes the district court to award ‘just costs’ in connection with its remand order,” and went on to consider what costs would be just in this case. The district court clearly considered the question as one arising under section 1447(c).
The non-reviewability of a remand made, even erroneously, under section 1447(c) has been established by Congress in the clearest possible terms: “An order remanding a case to the State court from which was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court from which it was removed pursuant to section 1443 of this title [civil rights cases] shall be reviewable by appeal or otherwise.” 28 U.S.C. § 1447 (d).
*556 The pellucid direction of Congress was clouded by a decision of the United States Supreme Court in a case that struck the majority of that court as crying out for review — a case where the district court failed to invoke section 1447(c) at all but instead declared that the court was dismissing the case because of a crowded civil docket. In these unusual circumstances, the Court held that the remand order was reviewable. Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 350-51 , 96 S.Ct. 584, 592-93 , 46 L.Ed.2d 542 (1976). The court added: “In so holding we neither disturb nor take issue with the well-established general rule that § 1447(d) and its predecessors were intended to forbid review by appeal or extraordinary writ of any order remanding a case on the grounds permitted by the statute.” Id. at 351-52, 96 S.Ct. at 593-94 .
If Thermtron were the only case creating an exception, Home Insurance would have no basis for its appeal. The district court clearly invoked section 1447(c) and clearly found that it was without jurisdiction. Thermtron itself has no application.
Our court, however, building on Therm-tron, created a new exception to the pellucid statute. We held that when a contract, at issue in the case, contained a clause as to venue restricting jurisdiction to a state court, a decision by the federal district court that this clause of the contract was enforceable was “a substantive determination of contract law” which was reviewable by appeal. Pelleport Investors, Inc. v. Budco Quality Theatres, Inc., 741 F.2d 273, 277 (9th Cir.1984).
In Pelleport the district court in making the remand order had not referred to section 1447(c), so that, at least arguably, it did not apply. In Clorox v. United States District Court, 779 F.2d 517 (9th Cir.1985) we carried the Pelleport exception one step further. In that case, we said: “While the remand order does describe Stower’s motion as being ‘pursuant to 28 U.S.C. § 1447 (c),’ it does not purport to remand the case on any of the grounds specified in section 1447(c). In fact, the order gives no reason for the remand.” Id. at 520 .
We proceeded by “[ljooking beyond the language of the remand order” to find that the decision had been made “on the merits apart from any jurisdictional decision” because it was based on a holding that Clorox had waived its right to remove from the state court by a statement in its employee handbook. Id. We held that the bar of section 1447(c) did not apply. The approach taken by us in Pelleport and Clorox has been rejected by at least two circuits. Soley v. First National Bank of Commerce, 923 F.2d 406, 408 (5th Cir.1991); Glasser v. Amalgamated Workers Union Local 88, 806 F.2d 1539, 1540-41 (11th Cir.1986).
The erosion in the Ninth Circuit of the congressional command denying appealability of remand orders was stanched in Schmitt v. Insurance Company of North America, 845 F.2d 1546 (9th Cir.1988). In that case the district court remanded to the state court “on the grounds that INA’s petition for removal was untimely and that INA had waived its right to remove the case when it ‘voluntarily subjected itself to the jurisdiction of the state court by filing its permissive cross-complaint in December 1985.’ ” Id. at 1548 .
On appeal we held: “In cases where the basis or authority for remand is unclear, we look to the substance of the order to determine whether it was issued pursuant to section 1447(c). A remand order issued pursuant to section 1447(c) is immune from appellate review even if the district court does not expressly state that the matter was ‘removed improvidently and without jurisdiction.’ ” 1 Id. at 1549 .
*557 We went on to hold that a remand based on untimeliness was within the purview of section 1447(c) and also that a remand because the defendant had waived the right to remove by seeking relief in the state court was within section 1447(c). Id. We concluded that section 1447(c) barred the appeal. Id. at 1550 . We distinguished Clorox as a case where the remand order was based “on an adjudication of the merits of an issue presented in that ease.” Id.
The distinction made by Schmitt, it must be conceded, is razor-fine. There is nothing frivolous in Home Insurance contending that Pelleport and Clorox give it the right to appeal despite section 1447(d). But the fact that an appeal can be taken here with colorable argument merely goes to underscore the extent to which our extension of Thermtron has subverted the congressional purpose in enacting a general, pellucid bar to the review of remands.
In Thermtron itself — where there was no attempt to get around the explicit language of section 1447(d) as it applied to remands under section 1447(c) — it was acknowledged on all sides that the purpose of the barrier was “to prevent delay in the trial of remanded cases by protracted litigation of jurisdictional issues.” Thermtron, 423 U.S. at 351 , 96 S.Ct. at 593 (majority opinion). Appeal of remand orders “may become a device affording litigants a means of substantially delaying justice. It is clear that the ability to invoke appellate review, even if ultimately unavailing on the merits, provides a significant opportunity for additional delay.” Id. at 355 , 96 S.Ct. at 596 (Rehnquist, J. dissenting).
We have compounded the opportunity for unnecessary delay by creating exquisitely refined distinctions which invite appeal in litigation. For example, the remand order in Pelleport was dated August 12, 1983. We decided on August 24, 1984 that the remand was justified — the appellant had gained a year. In Clorox the date of the district court order was October 21, 1983. We heard argument and treated the case as submitted on April 13, 1984. We issued the final opinion on December 26, 1985. In Schmitt the district court remanded on December 21, 1987. We held that the remand was justified on May 6, 1988. In the instant case the district court remanded on August 25, 1989. It is now July 1991 and our decision has not yet issued.
We are bound by our precedent absent an en banc reversal of that precedent. The best approach would be for an en banc court to eliminate the Pelleport and Clorox exceptions. The second best approach is to adopt the path taken by Schmitt and find a distinction that permits the discouragement of an appeal from a remand order. In this case the distinction does exist: unlike either Pelleport or Clorox or Thermtron the district court clearly dismissed invoking section 1447(c). The statutory bar applies.
The majority, indeed, fails to follow binding precedent in the instant case. In Federal Savings & Loan Insurance Corp. v. Frumenti Development Corp., 857 F.2d 665 (9th Cir.1988), the district court decided to remand on the basis of lack of federal question jurisdiction, contrary to this court’s relevant precedent. We held that the “threshold and dispositive issue” was whether we could review the remand order. Id. at 667 . We held “reluctantly” that we could not. Id. In the instant case it could be argued as the plaintiffs did, that the court erroneously followed Schmitt, but nonetheless following Schmitt is what the court did. There can be no mistake about that. The majority thinks that Schmitt and Frumenti are distinguishable and that Clorox is binding. No doubt the contention is plausible. It is at least equally plausible that Clorox and Pelleport are distinguishable as cases where no reference was made by the district court to section 1447(c), whereas Schmitt and Fru-menti are binding in this case because, clearly enough, the district court did intend to invoke and actually succeeded in invoking section 1447(c). Despite the pellucid congressional command, the majority now reviews the remand based on section 1447(c).
The judges of this court often complain about the rising burden of litigation and the very large number of appeals it is their task to adjudicate. Often enough the bur *558 den is created by the court itself. Our jurisprudence on appellate review of remand orders is a textbook example. No good reason exists that we should review them at all. The appeals process becomes a way of delaying justice. As an old, fundamental and too often neglected axiom has it, justice delayed is justice denied. We circumvent a congressional enactment at the same time we do harm to the parties and unnecessarily burden ourselves.
As jurisdiction is lacking, I do not reach the merits of the appeal.
. At the time Schmitt and the other cases discussed were decided section 1447(c) provided: "If at any time before final judgment it appears that the case was removed improvidently and without jurisdiction, the district court shall remand the case.” In 1988 Congress amended the statute to read: "If at any time before final judgment it appears that the district court lacks jurisdiction, the case shall be remanded.” The amended version makes even clearer that a remand order based, erroneously or not, on the lack of subject matter jurisdiction is totally un-reviewable.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/8991781. Public record. Not legal advice.