United States Court of Appeals For the Second Circuit

August Term 2021

Argued: June 6, 2022 Decided: March 23, 2023

No. 21-1748

LECHASE CONSTRUCTION SERVICES, LLC,

Plaintiff-Appellee,

v.

ARGONAUT INSURANCE COMPANY,

Defendant-Appellant,

UNITED STRUCTURES OF AMERICA, INC.,

Defendant.

Appeal from the United States District Court for the Western District of New York No. 20-cv-6915, Elizabeth A. Wolford, Judge.

Before: CALABRESI, LOHIER, and SULLIVAN, Circuit Judges.

Argonaut Insurance Company (“Argonaut”) appeals from an order of the district court (Wolford, J.) remanding this breach-of-bond action, brought by LeChase Construction Services, LLC (“LeChase”), to New York state court after Argonaut removed it on the basis of diversity jurisdiction. The district court purported to issue its remand order pursuant to 28 U.S.C. § 1447(e), which authorizes remand if, after removal, a plaintiff joins defendants whose inclusion would destroy diversity jurisdiction. The district court expressly acknowledged that section 1447(e) is facially inapplicable here, as LeChase was not seeking to join a non-diverse defendant or otherwise contesting the existence of diversity jurisdiction. Nevertheless, the district court reasoned that, since remand would facilitate this case’s consolidation with two related actions then pending in New York state court, thus conserving judicial resources and avoiding the risk of inconsistent outcomes, it was appropriate under the “rubric” of section 1447(e).

On appeal, we are primarily tasked with deciding two issues: (1) whether we have appellate jurisdiction over the district court’s remand order notwithstanding 28 U.S.C. § 1447(d), which precludes review of remands based on the grounds specified in other subsections of section 1447; and (2) if we do, whether the district court issued such order in excess of its statutory authority under section 1447(e). We conclude, as a matter of first impression, that “[section] 1447(d) permits appellate review of a district-court remand order that dresses in [section 1447(e)’s] jurisdictional clothing a patently nonjurisdictional ground,” such as the prudential considerations invoked by the district court here. Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224, 234 (2007) (reserving this question). Assured of our appellate jurisdiction, we conclude – for essentially the reasons acknowledged by the district court itself – that its remand order here was unauthorized under section 1447(e). As a result, we VACATE the district court’s order, and REMAND the case for further proceedings.

VACATED AND REMANDED.

KEVIN F. PEARTREE, Ernstrom & Dreste, LLP, Rochester, NY, for Plaintiff-Appellee LeChase Construction Services, LLC.

CHAD W. FLANSBURG, Phillips Lytle LLP, Rochester, NY, for Defendant-Appellant Argonaut Insurance Company.

2 RICHARD J. SULLIVAN, Circuit Judge:

Argonaut Insurance Company (“Argonaut”) appeals from an order of the district court (Wolford, J.) remanding this breach-of-bond action, brought by LeChase Construction Servic