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City of Albuquerque v. Soto Enterprises, Inc.

United States Court of Appeals, Tenth Circuit

July 25, 2017

CITY OF ALBUQUERQUE, Plaintiff - Appellee,
v.
SOTO ENTERPRISES, INC., d/b/a Miracle Delivery Armored Services, Defendant-Appellant.

         Appeal from the United States District Court for the District of New Mexico (D.C. No. 1:16-CV-00099-JAP-WPL)

          Bradley H. Bartlett and David M. Mirazo, Mounce, Green, Myers, Safi, Paxson & Galatzan, P.C., El Paso, Texas, for Defendant-Appellant.

          Christopher J. Tebo, Assistant City Attorney (Jessica M. Hernandez, City Attorney, and Nicholas Bullock, Assistant City Attorney, with him on the brief), City Attorney's Office, Albuquerque, New Mexico, for Plaintiff-Appellee.

          Before MATHESON, PHILLIPS, and McHUGH, Circuit Judges.

          PHILLIPS, Circuit Judge.

         The district court remanded this case after concluding that the defendant had waived its right to remove by filing a motion to dismiss in state court. We hold that we have appellate jurisdiction over this appeal, and affirm.[1]

         BACKGROUND

         The City of Albuquerque ("the City") provides public-bus services to Albuquerque residents. As part of those services, the City charges a fare payable by cash or coin. The City hired Soto Enterprises, Inc., d/b/a Miracle Delivery Armored Services ("Soto") to count the fare money, transport it by armored car to the City's bank for deposit, and verify the daily deposit amount with the City.

         In the second half of 2014, the City noticed irregularities between the amount of fare money that it internally recorded and the amount Soto deposited. After investigating these irregularities, on October 30, 2015, the City sued Soto in New Mexico state court, alleging contract and tort claims. In its complaint, the City pleaded that it was a New Mexico municipal corporation and that Soto was a Texas corporation transacting business in New Mexico. The City claimed damages of $246, 057.54.

         On February 9, 2016, though the City had not yet served process on Soto, Soto filed three documents in state court in response to the complaint. At 2:18 p.m., Soto filed a partial motion to dismiss (the "motion to dismiss"), asserting that the City had failed to state a claim on its tort claims. At 2:23 p.m., Soto filed an answer. And at 3:38 p.m., Soto filed a notice of removal under 28 U.S.C. §§ 1441 and 1446, alleging diversity jurisdiction under 28 U.S.C. § 1332. So an hour and twenty minutes passed between Soto's motion to dismiss and its notice of removal.

         In federal court, the City moved for a remand to state court, arguing that Soto had waived its right to remove the case to federal court after participating in the state court by filing the motion to dismiss. The district court agreed with the City's position and remanded the case. Soto now appeals.

         DISCUSSION

         Recognizing that Congress has limited our appellate jurisdiction to review remand orders, the City filed a motion to dismiss Soto's appeal, arguing that we lack jurisdiction. So, before we can address whether the district court erred in its waiver ruling, we must determine whether we have appellate jurisdiction to do so. W. Ins. Co. v. A & H Ins., Inc., 784 F.3d 725, 727-28 (10th Cir. 2015). We review questions of our appellate jurisdiction de novo. Montez v. Hickenlooper, 640 F.3d 1126, 1130 (10th Cir. 2011).

         I. Appellate Jurisdiction

         To decide whether we have appellate jurisdiction to review the district court's waiver ruling, we are guided by two statutory subsections. The first is 28 U.S.C. § 1447(d), which provides as follows:

An order remanding a case to the State court from which it 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 1442 or 1443 of this title shall be reviewable by appeal or otherwise.

         Because Soto removed the case under § 1441, neither 28 U.S.C. § 1442 (which governs federal-officer removal) nor 28 U.S.C. § 1443 (which governs removal of civil-rights cases) applies here. On its face, § 1447(d) would lead us to believe that we lack appellate jurisdiction to review the district court's remand order, but we don't read that subsection in isolation. Instead, we read § 1447(d) in pari materia with its close neighbor, § 1447(c), and confine the reach of § 1447(d) to the two remands mentioned in § 1447(c). In re Stone Container Corp., 360 F.3d 1216, 1218 (10th Cir. 2004).

         Thus, the second guiding statutory subsection is 28 U.S.C. § 1447(c), which provides in 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.

So § 1447(c) speaks to two bases of remand: (1) those based on a lack of subject-matter jurisdiction, which have no time limit, and (2) those based on "any defect other than lack of subject matter jurisdiction, " which must be filed within 30 days of removal. This means that under the governing interpretation, § 1447(d) limits our jurisdiction "only when the district court remands on grounds permitted by § 1447(c)." In re Stone, 360 F.3d at 1218 (quoting Dalrymple v. Grand River Dam Auth., 145 F.3d 1180, 1184 (10th Cir. 1998)). When a district court remands on other bases, we have appellate jurisdiction to review those remand orders. Am. Soda, LLP v. U.S. Filter Wastewater Grp., Inc., 428 F.3d 921, 924 (10th Cir. 2005).

         Here, the district court remanded the case to state court on a ground not expressly specified in § 1447(c), namely, that Soto waived its removal right by filing a motion to dismiss in state court (which we will refer to as "waiver by participation").[2] Our sister circuits disagree about whether waiver by participation falls within either of § 1447(c)'s two bases, and, until now, this court has not "wade[d] into" that conflict. Harvey v. Ute Indian Tribe of the Uintah & Ouray Reservation, 797 F.3d 800, 804 (10th Cir. 2015) (noting circuit split). To determine whether § 1447(d) limits our jurisdiction, we must determine whether waiver by participation falls within either of the § 1447(c) bases-(1) lack of subject-matter jurisdiction, or (2) any defect.

         A. ...


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