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IN RE: NILHAN HOSPITALITY, LLC, Debtor. Good Gateway, LLC, et al., Plaintiffs, v. BKGD, LLC, et al., Defendants.
MEMORANDUM OPINION AND ORDER GRANTING MOTION FOR RECONSIDERATION OF TRANSMITTAL ORDER
THIS CASE came on for hearing on April 23, 2020 and February 9, 2021, at 10:00 a.m., on Good Gateway, LLC and SEG Gateway, LLC's motion for reconsideration of an order transmitting this Court's August 19, 2016 remand order to the Orange County Clerk of Court.1
As background, Good Gateway and SEG Gateway sued Chittranjan Thakkar; BKGD, LLC; and Orlando Gateway, LLC in state court.2 Thakkar removed the action to this Court.3 Good Gateway and SEG Gateway, in turn, asked the Court to remand the proceeding back to state court.4
At an August 11, 2016 hearing, Judge Jennemann (who was presiding over the proceeding at the time) orally ruled that she would be remanding the case back to state court.5 Judge Jennemann entered her remand order on August 18, 2016.6 The Clerk of Court, however, never mailed a copy of it to the state court clerk of court.
Even so, Thakkar's counsel filed the remand order with the state court two days later.7 And over the next three-and-a-half years, Thakkar litigated the action in state court. Along the way, a final judgment was entered against one of Thakkar's codefendants; the final judgment was upheld on appeal by the Fifth District Court of Appeal; and the Fifth District Court of Appeal ruled that Good Gateway and SEG Gateway were entitled to recover attorney's fees and costs from Thakkar and his codefendants under section 57.105, Florida Statutes.8
That's when it appears Thakkar or his counsel had an epiphany: as it turns out, there is authority for the proposition that a federal court is not divested of jurisdiction after remand until the clerk of court mails the remand order to the state court,9 which hadn't happened here. So, on March 3, 2020, Thakkar filed a notice in state court purportedly notifying the state court that it lacked jurisdiction over the dispute because the remand order hadn't been sent by certified mail to the state court and that, as a consequence, all its orders were void.10
The same day, Thakkar filed a motion with this Court asking the Court to order the Clerk of Court to transmit the remand order to the state court.11 Without advising this Court what had happened in the state court action, Thakkar's counsel uploaded an order that ordered the Clerk of Court to transmit the remand order to the state court clerk of court. Although the order looked innocuous on its face, Thakkar's counsel slipped a “finding” into the transmittal order finding that “[s]ince a certified copy of the order of remand was not mailed by the bankruptcy clerk to the clerk of the state court, jurisdiction remained in this court.” On March 13, 2020, the Court entered Thakkar's transmittal order,12 which he then filed with the state court.
Good Gateway and SEG Gateway are understandably concerned that by entering Thakkar's transmittal order, this Court has adopted the view, without hearing any argument, that it had retained jurisdiction over this removed proceeding until March 13, 2020, when the Clerk of Court mailed a certified copy of the remand order to the state court. If that were true, that could potentially jeopardize—indeed render moot—more than three years of litigation in state court. So Good Gateway and SEG Gateway ask the Court to reconsider its March 13 transmittal order.13
Remand in bankruptcy cases is governed by 28 U.S.C. § 1452. Section 1452 provides that the court to which a cause of action has been removed may remand such cause of action on any equitable ground.14 Section 1452, however, makes no mention of the clerk of court mailing a certified copy of the remand order.15
That requirement comes from 28 U.S.C. § 1447, which sets forth the procedure after removal generally. Under § 1447, a district court may remand a removed state court action back to state court. Section 1447(c) provides that the clerk of court shall mail a certified copy of the remand order to the state court:
A certified copy of the remand order shall be mailed by the clerk to the clerk of the State court. The State court may thereupon proceed with such case.16
Although § 1452 specifically governs bankruptcy cases, the Supreme Court recognized, nearly thirty years ago in Things Remembered, Inc. v. Petrarca, that § 1447 may apply in bankruptcy cases as well, noting that § 1447 “applies ‘not only to remand orders made in suits removed under [the general removal statute], but to orders of remand made in cases removed under any other statutes, as well.’ ”17 For our purposes, Things Remembered teaches that § 1447 and § 1452 should be read together when they can “comfortably coexist.”18
Since Things Remembered, at least two bankruptcy courts have refused to apply § 1447 when it did not “comfortably coexist” with § 1452.19 The Court is not convinced that § 1447 and § 1452 can comfortably coexist here, which, if true, would mean § 1447(c)’s mailing requirement would not apply in this case. But, even if §§ 1447 and 1452 can comfortably coexist, and therefore § 1447(c)’s mailing requirement does apply here, the outcome would still be the same because it is entry of the Court's remand order—not the date of mailing a certified copy of the order—that has jurisdictional significance.
Currently, there is a split of authority over whether a federal court is divested of jurisdiction on remand upon entry of the remand order or upon the clerk of court mailing the remand order to the state court.20
To date, the Eleventh Circuit has not weighed in.21 Thus, absent any binding authority, this Court concludes that the better reasoned approach, even if the minority view, is the one articulated by the Fourth Circuit Court of Appeals in In re Lowe.22 There, the Fourth Circuit held that it was the entry of the remand order that has jurisdictional significance:
“Logic also indicates that it should be the action of a court (entering an order of remand) rather than the action of a clerk (mailing a certified copy of the order) that should determine the vesting of jurisdiction.” To hold otherwise would impermissibly elevate substance over form. One party should not arbitrarily receive a second opportunity to make its arguments due to a clerical error. In sum, the plain language of the statute, the policy behind it, and logic all support the conclusion that § 1447 divests a district court of jurisdiction upon the entry of its remand order.23
Two years ago, in a well-reasoned opinion in In re Cunningham, Bankruptcy Judge Barbara Ellis-Monro reached the same conclusion.24
In Cunningham, the court remanded a removed proceeding back to state court sometime in the fall of 2018.25 But the clerk of court did not mail the remand order until March 4, 2019.26 Contending that the date of the mailing of the remand order is the operative date for jurisdictional purposes, the debtor argued that all actions taken by the state court before March 4, 2019 were void.27 Judge Ellis-Monro disagreed.28
After noting that courts are split over when a federal court is divested of jurisdiction on remand, Judge Ellis-Monro concluded that In re Lowe was the better approach.29 In doing so, Judge Ellis-Monro analogized the issue to notices of appeal under the Federal Rules of Bankruptcy Procedure: “it is the filing of a notice of appeal—not the clerk's transmission of the notice to the appellate court—that divests a lower court of jurisdiction over the subject matter of the appeal.”30
For what it's worth, Florida state courts appear to agree with this interpretation of § 1447(c): Florida courts have generally recognized that a “state court is allowed to resume jurisdiction of the removed case if, and only if, the federal court grants permission by entering an order of remand.”31 At least one court—the Fourth District Court of Appeal in Ricci v. Ventures Trust 2013-I-H-R—has gone so far as to explicitly state that the state court automatically resumes jurisdiction once the remand order is entered:
In Dharma Properties, we made clear that once an order of remand is entered by the federal court, state court jurisdiction resumes. We construe the principle of resumption of jurisdiction to be automatic, once the remand order is entered by the federal court. We view the situation concerning the effect of removal on state court case jurisdiction to be comparable to hitting the “pause” button on a recording device. The creation of the case record in state court is stopped until the “resume” button is pushed (the entry of the remand order). In our view, it does not matter whether state case jurisdiction is described as having “ceased,” “terminated,” or having been “suspended” while removal was in effect. Once the remand order is entered, the state court can resume its jurisdiction over the case as if the removal notice had never been filed.32
Based on the Fourth Circuit's decision in In re Lowe, the Court concludes that it was Judge Jennemann's entry of the remand order that revested jurisdiction back to the state court. This Court's March 13 transmittal could be read to suggest otherwise. The Court therefore concludes it is appropriate to reconsider its March 13 transmittal order. Accordingly, it is
1. Good Gateway and SEG Gateway's motion to reconsider the Court's March 13 transmittal order is GRANTED.
2. The Court's March 13 transmittal order is hereby VACATED.
3. Remand was effective as of August 19, 2016. This Court was divested of jurisdiction over the state court action as of that date.
1. Adv. Doc. No. 19. Chittranjan Thakkar, BKGD, LLC, and Orlando Gateway, LLC have objected to Good Gateway and SEG Gateway's motion. Adv. Doc. No. 20.
2. Adv. Doc. No. 1-4. The action, which was styled Good Gateway, LLC, et al. v. Chittranjan K. Thakkar, et al., Case No. 2016-CA-005038-O, was filed in the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida.
3. Adv. Doc. No. 1.
4. Adv. Doc. No. 5.
5. Adv. Doc. No. 12 at p. 62, l. 12 – p. 63, l. 3.
6. Adv. Doc. No. 10.
7. Adv. Doc. No. 19, Ex. C.
8. Id. at Exs. A & B.
9. FDIC v. Santiago Plaza, 598 F.2d 634, 636 (1st Cir. 1979) (“The law in this circuit is clear that once a district court has decided to remand a case and has so notified the state court, the district judge is without power to take any further action.”); Shapiro v. Logistec USA, Inc., 412 F.3d 307, 312 (2d Cir. 2005) (“Section 1447(d) establishes that once a section 1447(c) remand order has been mailed to the state court pursuant to the latter section, federal jurisdiction is at an end. Section 1447(c), however, ‘is not self-executing.’ ‘This provision creates legal significance in the mailing of a certified copy of the remand order in terms of determining the time at which the district court is divested of jurisdiction.’ ”) (quoting Arnold v. Garlock, Inc., 278 F.3d 426, 437 – 38 (5th Cir. 2001)) (citations omitted); Agostini v. Piper Aircraft Corp., 729 F.3d 350, 355 – 56 (3d Cir. 2013) (“In our view, the text of 28 U.S.C. § 1447(c) establishes that jurisdiction remains with the district court until the jurisdiction-transferring event has occurred: ‘[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.’ ”).
10. Adv. Doc. No. 19 at ¶ 10.
11. Adv. Doc. No. 16.
12. Adv. Doc. No. 17.
13. Adv. Doc. No. 19.
14. 28 U.S.C. § 1452(b) (“The court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground.”).
16. 28 U.S.C. § 1447(c).
17. 516 U.S. 124, 128, 116 S.Ct. 494, 133 L.Ed.2d 461 (1995) (quoting United States v. Rice, 327 U.S. 742, 752, 66 S.Ct. 835, 90 L.Ed. 982 (1946)).
18. Id. at 129, 116 S.Ct. 494.
19. See, e.g., Billington v. Winograde (In re Hotel Mt. Lassen, Inc.), 207 B.R. 935, 939 (Bankr. E.D. Cal. 1997) (“The imposition of § 1447(c)’s strict 30–day deadline for challenging procedural defects would be uncomfortably inconsistent with the liberal, ‘any equitable ground’ approach to bankruptcy remands. Hence, § 1447(c) does not preempt § 1452(b).”); Texas Gulf Trawling Co., Inc., v. RCA Trawlers & Supply, Inc. (In re Ciclon Negro, Inc.), 260 B.R. 832, 836 (Bankr. S.D. Tex. 2001) agreeing with In re Hotel Mt. Lassen and holding that “§ 1447(c) does not preempt the remand procedures pursuant to § 1452(b) in this adversary”).
20. Compare FDIC v. Santiago Plaza, 598 F.2d 634, 636 (1st Cir. 1979) (“The law in this circuit is clear that once a district court has decided to remand a case and has so notified the state court, the district judge is without power to take any further action.”); Shapiro v. Logistec USA, Inc., 412 F.3d 307, 312 (2d Cir. 2005) (“Section 1447(d) establishes that once a section 1447(c) remand order has been mailed to the state court pursuant to the latter section, federal jurisdiction is at an end. Section 1447(c), however, ‘is not self-executing.’ ‘This provision creates legal significance in the mailing of a certified copy of the remand order in terms of determining the time at which the district court is divested of jurisdiction.’ ”) (quoting Arnold v. Garlock, Inc., 278 F.3d 426, 437 – 38 (5th Cir. 2001)) (citations omitted); and Agostini v. Piper Aircraft Corp., 729 F.3d 350, 355 – 56 (3d Cir. 2013) (“In our view, the text of 28 U.S.C. § 1447(c) establishes that jurisdiction remains with the district court until the jurisdiction-transferring event has occurred: ‘[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.’ ”) with In re Lowe, 102 F.3d 731, 736 (4th Cir. 1996).
21. Although the Eleventh Circuit has not weighed in, the Fifth Circuit has held that jurisdiction in a removed criminal case revested back in a Texas state court after remand even though the record did not disclose when, if ever, the remand order was mailed to the state court. Johnson v. Estelle, 625 F.2d 75, 78 (5th Cir. 1980). In Estelle, the defendant removed a burglary case to federal court. The federal court orally remanded the criminal case to state court on April 14, 1975. Id. at 76 – 77. Two days later, the defendant was tried and convicted for burglary. On appeal, the Fifth Circuit noted that 28 U.S.C. § 1447(c)’s mailing requirement posed a potential problem because there was no evidence the remand order had been mailed to the state court before the defendant was tried. Id. at 77. Ultimately, the Fifth Circuit concluded that “substance must control form.” Id. at 78. The Fifth Circuit noted that both parties received notice of the remand, and the parties tried the burglary case in state court without any objection. Id. On those facts, the Fifth Circuit concluded there was “sufficient compliance with the statute then applicable to vest jurisdiction to proceed in the Texas district court.” Id. Because Estelle was decided before October 1, 1981, it is binding on this Court. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981). Arguably, the Fifth Circuit's conclusion that jurisdiction revested in state court is dicta. This Court need not decide whether Estelle is binding precedent because it reaches the same result even if Estelle is not binding.
22. 102 F.3d 731 (4th Cir. 1996).
23. Id. at 735 (quoting Van Ryn v. Korean Air Lines, 640 F. Supp. 284, 285 (C.D. Cal. 1985)). It's obvious the reference to impermissibly elevating “substance over form” is a scrivener's error. In Van Ryn v. Korean Air Lines, the case the Fourth Circuit relied on, the court there observed that “substance should prevail over form.” Id. at 285. Presumably, the phrases “substance should prevail over form” and “elevating form over substance” simply got mixed up during the drafting process. Surely the Fourth Circuit meant to say impermissibly elevating “form over substance.”
24. Najarian Cap., LLC v Cunningham (In re Cunningham), 600 B.R. 898, 904 – 905 (Bankr. N.D. Ga. 2019).
25. Id. at 900.
26. Id. at 902.
28. Id. at 905.
30. Id. (citing In re Ocean Warrior, Inc., 835 F.3d 1310, 1318 (11th Cir 2016); Dorsey v. U.S. Dep't of Educ., 870 F.3d 359, 362 (5th Cir. 2017)).
31. Preston v. Allstate Ins. Co., 627 So. 2d 1322, 1324 (Fla. 3d DCA 1993) (explaining that “the state court is allowed to resume jurisdiction of the removed case if, and only if, the federal court grants permission by entering an order of remand”); City of Delray Beach v. Dharma Props., Inc., 809 So. 2d 35, 36 (Fla. 4th DCA 2002) (quoting Preston for the same proposition).
32. Ricci v. Ventures Trust 2013-I-H-R by MCM Cap. Partners, LLC, 276 So. 3d 5, 9 – 10 (Fla. 4th DCA 2019).
Michael G. Williamson, United States Bankruptcy Judge
Response sent, thank you
Docket No: Case No. 6:15-bk-03447-MGW
Decided: March 04, 2021
Court: United States Bankruptcy Court, M.D. Florida,
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