Associates National Bank v. Erum

MEMORANDUM ** Pro se appellant Theodorico Erum, Jr. (“Erum”) appeals the district court’s award of costs and fees to appellee Associates National Bank (“ANB”). The district court awarded costs and fees pursuant to 28 U.S.C. § 1447 (c) and Ninth Circuit precedent controlling at the time ANB moved the court for the award. See Baddie v. Berkeley Farms, Inc., 64 F.3d 487, 490 (9th Cir.1995) (costs “incurred as a result” of an improper removal to federal court recoverable under § 1447(c)). After the district court rendered its decision on the issue, the United States Supreme Court issued an opinion in Martin v. Franklin Capital Corp., 546 U.S. 132 , 126 S.Ct. 704 , 163 L.Ed.2d 547 (2005), which resolved a split amongst the Circuit Courts and set forth the appropriate analysis for evaluating § 1447(c) awards. Based on Martin , we reverse the district court. In Martin , the Supreme Court affirmed a Tenth Circuit decision affirming a dis *668 trict court’s denial of a motion for costs and fees under § 1447(c). Although the district court determined the defendant improperly removed the case to federal court, it denied the plaintiffs motion for costs and fees because the defendant “had objectively reasonable grounds to believe the removal was legally proper.” 126 S.Ct. at 708 (quoting Martin v. Franklin Capital Corp., 251 F.3d 1284, 1294 (10 Cir.2001)). After Martin, whether a removal is improper is not controlling. Id. at 709 (“[Ijncorrectly invoking a federal right is not comparable to violating substantive federal law.”) (citing Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 , 114 S.Ct. 1023 , 127 L.Ed.2d 455 (1994)). Martin established the general rule that “[ajbsent 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 711. Erum had an objectively reasonable basis for removing the case to federal court. ANB’s complaint alleged Erum owed ANB money pursuant to an agreement governed by federal law. It alleged Erum owed ANB interest on that money based on an interest rate governed by federal law. A reasonable litigant in Erum’s position could have concluded federal court was a proper forum in which to litigate the dispute. The fact that Erum eventually agreed to a remand to state court does not make his initial removal objectively unreasonable, nor does the fact that the district court found the removal to be improper. Evaluated in light of Martin, Erum’s basis for the removal was objectively reasonable. There are no unusual circumstances to justify departing from Martin’s general rule. A decision to depart from the general rule should be “faithful to the purposes of awarding fees under § 1447(c),” i.e., to deter removals sought for the purpose of prolonging litigation and imposing costs on the opposing party, and to observe Congress’s basic decision to afford defendants a right to remove as a general matter. Id. at 711 (citing Fogerty, 510 U.S. at 534 , 114 S.Ct. 1023 ). There is nothing in the record to suggest Erum removed the case to federal court for an improper purpose, such as prolonging litigation or imposing-costs on ANB. Erum removed the case to federal court one month after ANB filed its complaint in state court. He filed his answer in the federal district court one week later. While it does appear from the record that Erum has, since losing on the merits in state court, employed various (and perhaps questionable) means to keep his claim alive and in the judicial system, the record does not suggest that at the time Erum removed the case to federal court he did so for the purpose of prolonging litigation or imposing costs on ANB. Furthermore, the record shows that after Erum removed the case to federal court, ANB never moved for remand. When the district court provided ANB with an opportunity to argue the issue, ANB declined to take a position. Under Martin, ANB’s failure to seek remand is not dispositive, but Martin does identify a plaintiffs “delay in seeking remand” as one factor that might affect a court’s decision in awarding fees. Id. at 711. The fact that ANB never moved for remand and declined to take a position on the issue reinforces the conclusion that under Martin’s general rule ANB was not entitled to costs and fees. REVERSED. This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3.