Convent Corporation v. City of North Little Rock, et al

Filing

PER CURIAM OPINION FILED - THE COURT: Lavenski R. Smith, Duane Benton and Bobby E. Shepherd (PUBLISHED) [4268825] [14-1912]

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 14-1912
___________________________
Convent Corporation, Individually and on behalf of all others similarly situated
lllllllllllllllllllll Plaintiff - Appellant
v.
City of North Little Rock, Arkansas, a Municipal Corporation; Joe Smith, Mayor,
Individually and in his offical capacity; Debi Ross, City Council Member,
Individually and in her official capacity; Beth White, City Council Member,
Individually and in her official capacity; Linda Robinson, City Council Member,
Individually and in her official capacity; Maurice Taylor, City Council Member,
Individually and in his official capacity; Steve Baxter, City Council Member,
Individually and in his official capacity; Bruce Foutch, City Council Member,
Individually and in his official capacity; Murry Witcher, City Council Member,
Individually and in his official capacity; Charlie Hight, City Council Member,
Individually and in his official capacity; Tom Wadley, Director, Code Enforcment
Division, Individually and in his official capacity; Felecia McHenry, Code
Enforcement Officer, Individually and in her official capacity
lllllllllllllllllllll Defendants - Appellees
____________
Appeal from United States District Court
for the Eastern District of Arkansas - Little Rock
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Submitted: January 12, 2015
Filed: April 27, 2015
[Published]
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Before SMITH, BENTON, and SHEPHERD, Circuit Judges.
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PER CURIAM.
Convent Corporation ("Convent") appeals the district court's1 denial of its
motion for attorneys' fees for improper removal against the City of North Little Rock
("City") and City officials2 (collectively, "defendants"). Because we conclude that
removal was not improper, we affirm.
I. Background
Convent filed suit against the defendants in the Circuit Court of Pulaski County,
Arkansas, seeking to appeal a resolution that the North Little Rock City Council
passed declaring Convent's property a nuisance and condemning the property. In the
same complaint, Convent
also br[ought] claims against [d]efendants pursuant [to] 42 U.S.C.
§§ 1983, 1985(3)[,] 1986[,] and 1988 and the Arkansas Civil Rights Act,
Ark. Code Ann. § 16-123-101, et seq., for violations of the Fifth, Fourth,
and Fourteenth Amendments to the United States Constitution, Article
2, Sections 15 and 22, and a common law claim of [t]respass.
The defendants removed the case to federal district court based on the federal claims
and then moved to dismiss the complaint for failure to state a claim pursuant to
Federal Rule of Civil Procedure 12(b)(6). The motion to dismiss provided, in relevant
part:

1

The Honorable James M. Moody, Jr., United States District Judge for the
Eastern District of Arkansas.
2

In addition to the City, Convent sued Joe Smith, Mayor, individually and in his
official capacity; City Council Members Debi Ross, Beth White, Linda Robinson,
Maurice Taylor, Steve Baxter, Bruce Foutch, Murry Witcher, and Charlie Hight, each
individually and in his or her official capacity; Tom Wadley, Director of the Code
Enforcement Division, individually and in his official capacity; and Felecia McHenry,
Code Enforcement Officer, individually and in her official capacity.
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3. Plaintiff has appealed the decision of the North Little Rock City
Council while simultaneously filing suit against the Defendants alleging
numerous federal constitutional and Arkansas state tort claims.
4. However, each member of the City Council, as well as the
Mayor, is entitled to absolute legislative immunity from Plaintiff's
allegations.
5. Further, at this time, Plaintiff's prescribed statutory remedy is
its appeal of the City Council's decision.
6. There has been no final determination of Plaintiff's appeal of the
North Little Rock City Council's decision.
7. Therefore, Plaintiff has failed to exhaust its administrative
remedies as mandated by Ark. Code Ann. § 14-56-425 and Ark. Dist. Ct.
R. 9.
8. Plaintiff is not permitted to collaterally attack the Council's
decision with a complaint citing numerous federal civil rights violations
while its appeal has yet to be adjudicated.
9. Additionally, dispositive issues of law demonstrate Plaintiff has
failed to state facts upon which relief may be granted concerning its
allegations of federal constitutional violations, as well as state tort
claims.
The district court did not grant the defendants' motion to dismiss the complaint
but instead found that it lacked subject matter jurisdiction over Convent's claims based
on Convent's failure to exhaust its administrative remedies; as a result, the court
remanded the case to state court. Thereafter, Convent "move[d] the [federal district]
[c]ourt to enter an order requiring [d]efendants and their counsel to compensate
[p]laintiff for all costs, fees, and expenses incurred by [d]efendants' improper
removal" pursuant to 28 U.S.C. §§ 1447(c) and 1927 and the court's inherent power.
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II. Discussion
On appeal, Convent argues that it filed and perfected its appeal of the City's
condemnation action in the Circuit Court of Pulaski County, Arkansas, in compliance
with Arkansas District Court Rule 9. According to Convent, the defendants thereafter
improperly removed the action to federal court and "immediately argued that the
federal court lacked jurisdiction because [p]laintiff had failed to exhaust its
administrative remedies." Convent asserts that "[w]here the sole purpose of removal
to federal court is to have the federal court dismiss the claims for want of jurisdiction,
the removal is improper," and that it is entitled to an award of fees pursuant to 28
U.S.C. § 1447(c). Additionally, Convent argues that "because [d]efendants['] improper
removal and misrepresentations of both fact and law in various pleadings
unreasonably and vexatiously multiplie[d] this litigation, the [d]istrict [c]ourt should
have awarded fees and costs pursuant to 28 U.S.C. § 1927 and the [c]ourt's inherent
powers." Finally, it contends that because many of the defendants' "misrepresentations
. . . appear to be deliberate," the district court should have awarded all fees and costs
associated with the improper removal pursuant to the court's inherent powers.
"It is well established that a federal court may consider collateral issues after
an action is no longer pending. For example, district courts may award costs after an
action is dismissed for want of jurisdiction." Cooter & Gell v. Hartmarx Corp., 496
U.S. 384, 395 (1990) (citing 28 U.S.C. § 1919). A district court has "considerable
discretion" in determining whether to award attorney's fees pursuant to 28 U.S.C.
§ 1447(c). Wells Fargo Bank W., Nat'l. Ass'n. v. Burns, 100 F. App'x 599, 599 (8th
Cir. 2004) (per curiam) (citations omitted). Therefore, we review the district court's
determination under § 1447(c) for an abuse of discretion. Id.
Generally, "[a] civil case commenced in state court may . . . be removed by the
defendant to federal district court, if the case could have been brought there
originally." Martin v. Franklin Capital Corp., 546 U.S. 132, 134 (2005) (citing 28
U.S.C. § 1441). But 28 U.S.C. § 1447(c) requires the federal district court to remand
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the case to state court if the federal court lacks jurisdiction. Id. (citing 28 U.S.C.
§ 1447(c)). "An order remanding a removed case to state court 'may require payment
of just costs and any actual expenses, including attorney fees, incurred as a result of
the removal.'" Id. (quoting 28 U.S.C. § 1447(c)). The Supreme Court has instructed
that "the standard for awarding fees should turn on the reasonableness of the removal.
Absent unusual circumstances, courts may award attorney's fees under § 1447(c) only
where the removing party lacked an objectively reasonable basis for seeking removal.
Conversely, when an objectively reasonable basis exists, fees should be denied." Id.
at 141 (citations omitted). This rule notwithstanding, a district court "retain[s]
discretion to consider whether unusual circumstances warrant a departure from the
rule in a given case." Id. A district court may take into consideration "a plaintiff's
delay in seeking remand or failure to disclose facts necessary to determine
jurisdiction" in deciding whether to award attorney's fees. Id.
In determining whether the removing party lacked an objectively reasonable
basis for seeking removal, "the district court 'do[es] not consider the motive of the
removing defendant.'" Diaz v. Cameron Cnty. Tex., 300 F. App'x 280, 281 (5th Cir.
2008) (per curiam) (alteration in original) (quoting Valdes v. Wal-Mart Stores, Inc.,
199 F.3d 290, 292–93 (5th Cir. 2000)). "Rather, the court must consider the objective
merits of removal at the time of removal, irrespective of the ultimate remand." Id.
(citing Valdes, 199 F.3d at 292–93).
[A]ny civil action brought in a State court of which the district courts of
the United States have original jurisdiction, may be removed by the
defendant or the defendants, to the district court of the United States for
the district and division embracing the place where such action is
pending.
28 U.S.C. § 1441(a). "'[T]he presence of even one federal claim gives the defendant
the right to remove the entire case to federal court.'" Williams v. Ragnone, 147 F.3d

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700, 703 (8th Cir. 1998) (alteration in original) (quoting Gaming Corp. of Am. v.
Dorsey & Whitney, 88 F.3d 536, 543 (8th Cir. 1996)).
In the present case, Convent's complaint
br[ought] claims against [d]efendants pursuant [to] 42 U.S.C. §§ 1983,
1985(3)[,] 1986[,] and 1988 and the Arkansas Civil Rights Act, Ark.
Code Ann. § 16-123-101, et seq., for violations of the Fifth, Fourth, and
Fourteenth Amendments to the United States Constitution, Article 2,
Sections 15 and 22, and a common law claim of [t]respass.
"'[A]lmost by definition, a claim under § 1983 arises under federal law and will
support federal-question jurisdiction' pursuant to [28 U.S.C.] § 1331." Grapentine v.
Pawtucket Credit Union, 755 F.3d 29, 32 n.1 (1st Cir. 2014) (quoting Alberto San,
Inc. v. Consejo De Titulares Del Condominio San Alberto, 522 F.3d 1, 3 (1st Cir.
2008)). "By raising claims that arise under federal law, [Convent] subjected [itself] to
the possibility that the defendants would remove the case to federal court." Williams,
147 F.3d at 703 (citation omitted).
Nevertheless, Convent argues that "[w]here the sole purpose of removal to
federal court is to have the federal court dismiss the claims for want of jurisdiction,
the removal is improper." (Citing Baas v. Elliot, 71 F.R.D. 693 (E.D.N.Y. 1976);
Johnson v. Smith, 630 F. Supp. 1, 5 (N.D. Cal. 1986).) In Baas, the district court held
that where the defendant "concede[d] that the sole purpose of removal to federal court
was to have the federal court dismiss the case for want of jurisdiction," "[s]uch a
frivolous, self-defeating invocation of federal procedure [would not] be
countenanced." 71 F.R.D. at 694. As a result, the defendant was ordered to pay the
plaintiff's costs in connection with the federal court proceedings, including but not
limited to attorneys' fees. Id. In Johnson, the "defendants removed th[e] action
asserting that it presented issues to be resolved under federal law," but when the court
asked the defendants to provide an explanation for "the basis for federal jurisdiction
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in the present action, defendants argued against jurisdiction, asserting that the only
possible basis for federal jurisdiction (29 U.S.C. § 793) contained no private right of
action, and moved to dismiss plaintiff's 'federal' claims and to remand the state law
causes of action." 630 F. Supp. at 5. The district court determined that the defendants'
removal of the case to federal court merited an award of costs. Id. at 6.
Both Baas and Johnson were decided prior to the Supreme Court's Martin
decision setting forth the "objectively reasonable" standard. In any event, both cases
are distinguishable from the present case. Here, following removal, the defendants did
not move to dismiss the complaint solely because Convent failed to exhaust its
administrative remedies, which would require dismissal for want of jurisdiction. In
addition to arguing that Convent failed to exhaust its administrative remedies, the
defendants' primary argument was that the district court should dismiss the complaint
on the basis of the city officials' absolute legislative immunity. And, the defendants
argued that "dispositive issues of law demonstrate [p]laintiff has failed to state facts
upon which relief may be granted concerning its allegations of federal constitutional
violations, as well as state tort claims."
Furthermore, Convent never requested remand to the state court; instead, it filed
numerous pleadings, including a motion for class certification and a motion for partial
summary judgment. Convent's failure to seek remand further supports the district
court's denial of fees under § 1447(c). See Martin, 546 U.S. at 141.
Because the defendants had an objectively reasonable basis for removal of this
action to federal court, we necessarily hold that the district court did not abuse its
discretion in denying fees and costs to Convent pursuant to 28 U.S.C. § 1927 and its
inherent powers. See Tenkku v. Normandy Bank, 348 F.3d 737, 743–44 (8th Cir. 2003)
("Section 1927 warrants sanctions when an attorney's conduct 'viewed objectively,
manifests either intentional or reckless disregard of the attorney's duties to the court.'
. . . 'We review the district court's factual findings for clear error and its decision to
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award sanctions for an abuse of discretion.'" (citations omitted)); Anderson v.
CitiMortgage, Inc., 519 F. App'x 415, 417 (8th Cir. 2013) (per curiam) ("'We review
a district court's imposition of sanctions under its inherent power for an abuse of
discretion.' . . . A party may demonstrate bad faith [warranting an award of fees to the
moving party under the court's inherent power] when it delays or disrupts litigation."
(citations omitted)).3
III. Conclusion
Accordingly, we affirm the judgment of the district court.
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3

The defendants argue that the district court did not issue a ruling on Convent's
request for sanctions pursuant to the district court's inherent powers; however, in
denying Convent's motion, the district court acknowledged in its order that it had
"considered" Convent's motion for attorney's fees in which Convent "seeks the award
of fees under 28 U.S.C. § [1447](c), 28 U.S.C. § 1927, and the Court's 'inherent
powers.'" (Emphasis added.)
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