     Case: 13-20528   Document: 00512831949        Page: 1   Date Filed: 11/10/2014




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT


                                    No. 13-20528                  United States Court of Appeals
                                                                           Fifth Circuit

                                                                         FILED
APRIL SCARLOTT,                                                   November 10, 2014
                                                                    Lyle W. Cayce
                        Plaintiff - Appellant                            Clerk

WEISBERG & MEYERS, L.L.C.; NOAH D. RADBIL,

                        Appellants

v.

NISSAN NORTH AMERICA, INCORPORATED; HURRICANE GLASS;
HURRICANE AUTO CARE & ACCESSORIES, INCORPORATED,

                        Defendants - Appellees



                Appeals from the United States District Court
                     for the Southern District of Texas


                      ON PETITION FOR REHEARING
Before KING, GRAVES, and HIGGINSON, Circuit Judges.
HIGGINSON, Circuit Judge:
      IT IS ORDERED that the petition for panel rehearing is GRANTED and
the opinion previously filed in this case is WITHDRAWN.              The following
opinion is substituted therefore:
      Plaintiff-Appellant April Scarlott and Appellants Weisberg & Meyers,
L.L.C. and Noah Radbil appeal the district court’s denial of Scarlott’s motion
to remand, grant of summary judgment in favor of Defendants-Appellees
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Nissan North American, Incorporated (“Nissan”) and Hurricane Auto Care &
Accessories, Incorporated (“Hurricane”), 1 as well as the district court’s final
judgment and various management orders.                 Appellants contend that the
district court lacked subject matter jurisdiction over this case. For the reasons
below, we REVERSE and REMAND for proceedings consistent with this
opinion.
                          FACTS AND PROCEEDINGS
       In December 2006, Scarlott purchased a 2006 Murano from a Nissan
dealership for $31,881, totaling $39,289 including all financing fees,
warranties, taxes, and costs. For safety reasons, Scarlott wanted to purchase
a car that had a HomeLink system built into the mirror, which would allow
her to sync her car with her home lights, alarm system, and garage door. The
salesman at the dealership assured Scarlott that the car she purchased had a
HomeLink mirror; however, when she attempted to program the mirror that
night, she realized that the car did not have the necessary system. The day
after she purchased the car, she went back to the dealership intending to
return the car. Instead, she agreed to bring the car to a local factory-authorized
installation center to have the HomeLink system and mirror installed. The
dealership arranged for Hurricane to perform this installation and gave
Scarlott a voucher so that she would not have to pay for it.
      Nine months later, in September 2007, the car began experiencing
electrical problems, including difficulty starting. Scarlott took the car to the
dealership, which replaced the car’s battery. The car continued to experience



      1  In Scarlott’s first amended complaint, she named “Hurricane Glass” as a defendant.
Scarlott later filed a second amended complaint correctly identifying “Hurricane Auto Care
& Accessories, Inc.” as the proper defendant. Only Hurricane Auto Care & Accessories, Inc.
has been served and joined in this lawsuit. However, throughout the record, parties and
witnesses frequently refer to “Hurricane Glass.” For the purposes of this opinion, we will
refer to both entities as “Hurricane.”
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intermittent electrical problems over the next two years, requiring Scarlott to
take her car to the dealership on seven occasions. The dealership replaced the
battery four times. In November 2009, the dealership monitored the car for
almost thirty days and then diagnosed the electrical problems as being caused
by the improper installation of the HomeLink mirror.               The dealership
contacted Hurricane, and Hurricane agreed to fix the problem.
      On October 19, 2009, Scarlott filed suit in Texas state court against
Nissan for breach of express warranty, breach of implied warranty, and
violation of the Texas Deceptive Trade Practices Act. Scarlott later amended
her complaint to add claims against the dealership, a Nissan distributor, and
Hurricane. On December 6, 2010, the defendants removed the suit to federal
court based on federal question and supplemental jurisdiction. The defendants
asserted federal question jurisdiction under the Magnuson-Moss Warranty
Act, 15 U.S.C. § 2301 et seq. (“MMWA”), which allows litigants to bring breach-
of-warranty claims in federal court if the amount in controversy is at least
$50,000. See 15 U.S.C. § 2310(d)(3)(B).
      Three months after removal, Scarlott raised the issue of subject matter
jurisdiction at a conference with the district court, expressing concern that the
amount in controversy did not meet the $50,000 threshold required by the
MMWA. The district court indicated that it would be disinclined to dismiss
the case for want of jurisdiction.
      Scarlott subsequently dismissed her claims against the dealership and
distributor, leaving only her claims against Nissan and Hurricane. On May 9,
2013, after the remaining parties had briefed a motion for summary judgment,
Scarlott filed a motion to remand the suit to state court for lack of subject
matter jurisdiction. Nissan and Hurricane opposed the remand. On August
28, 2013, the district court issued an order denying Scarlott’s motion to
remand, excluding Scarlott’s expert report, and granting summary judgment

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in favor of Nissan and Hurricane.       Scarlott timely appealed.     On appeal,
Scarlott raises several issues. Because we find that the district court erred in
its decision not to remand the case to state court, we will only address the
jurisdictional issue.
                                   STANDARD
      “Federal courts are courts of limited jurisdiction ‘hav[ing] only the
authority endowed by the Constitution and that conferred by Congress.’”
United States v. Hazlewood, 526 F.3d 862, 864 (5th Cir. 2008) (alteration in
original) (quoting Save the Bay, Inc. v. U.S. Army, 639 F.2d 1100, 1102 (5th
Cir. 1981)). “If at any time before final judgment it appears that the district
court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C.
§ 1447(c). “The party seeking to remove bears the burden of showing that
federal jurisdiction exists and that removal was proper.” Mumfrey v. CVS
Pharmacy, Inc., 719 F.3d 392, 397 (5th Cir. 2013).          “Any ambiguities are
construed against removal and in favor of remand to state court.” Id. “In
reviewing a district court’s denial of a plaintiff’s motion to remand a case from
federal court to state court, the Court of Appeals applies a de novo standard of
review.” Sherrod v. Am. Airlines, Inc., 132 F.3d 1112, 1117 (5th Cir. 1998).
                                   DISCUSSION
      I.    The Magnuson-Moss Warranty Act
      The MMWA grants federal courts jurisdiction to hear claims for breach
of express and implied warranty with the following limitation:
      No claim shall be cognizable in a suit brought [in federal court]. . .
      if the amount in controversy is less than the sum or value of
      $50,000 (exclusive of interests and costs) computed on the basis of
      all claims to be determined in this suit . . . .
15 U.S.C. § 2310(d)(3). Accordingly, federal question jurisdiction under the
MMWA is limited to breach-of-warranty claims for which the amount in
controversy is at least $50,000.

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      Generally, courts look to state law to determine the applicable measure
of damages, which informs the amount in controversy under the MMWA. See
Boelens v. Redman Homes, Inc., 748 F.2d 1058, 1069 (5th Cir. 1984) (applying
Texas law); see also MacKenzie v. Chrysler Corp., 607 F.2d 1162, 1166 (5th Cir.
1979) (“[T]he legislative history clearly implies that a resort to state law is
proper in determining the applicable measure of damages under the Act.”).
This court, however, has recognized several limitations in calculating the
amount in controversy under the MMWA. First, personal injury damages for
breach of warranty, which are not recoverable under the MMWA, may not be
counted to satisfy the jurisdictional amount. Boelens, 748 at 1069. Second,
attorneys fees may not be used to satisfy the jurisdictional amount, because
the MMWA requires that the amount in controversy be calculated “exclusive
of interests and costs.” Id.; see also Samuel-Bassett v. KIA Motors Am., Inc.,
357 F.3d 392, 402 (3d Cir. 2004) (“Nor may attorneys fees be considered in
calculating the jurisdictional amount.”). Last, damages for any pendent state-
law claims should not be included to satisfy the jurisdictional amount. Boelens,
748 F.2d at 1071 n.19. With those limitations in mind, we now look to the
substantive law governing Scarlott’s breach-of-warranty claims to guide our
calculation of the amount in controversy.
      II.   Damages for Breach of Warranty under Texas Law
      In the present case, the parties agree that Texas law applies to Scarlott’s
breach-of-warranty claims. Texas law allows recovery for the diminished value
of the good caused by the breach of warranty. In particular, Texas law states:
“The measure of damages for breach of warranty is the difference at the time
and place of acceptance between the value of the goods accepted and the value
they would have had if they had been as warranted, unless special
circumstances show proximate damages of a different amount.” Tex. Bus. &
Com. Code Ann. § 2.714(b).        Texas law additionally allows recovery of

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“incidental and consequential damages.” §§ 2.714(c), 2.715; see also Boelens,
748 F.2d at 1069 (calculating damages for the lost investment in a mobile home
plus the additional costs of alternative housing up to the time of trial). Texas
law does not, however, allow for punitive damages for breach-of-warranty
claims. Boelens, 748 F.2d at 1070-71. Accordingly, under Texas law, the
amount in controversy for Scarlott’s breach-of-warranty claims equals the
diminished value of the car plus incidental and consequential damages.
      III.   Scarlott’s Complaint and the Amount in Controversy
      The standard for determining the amount in controversy depends on
whether Scarlott demanded a specific amount of damages in her complaint. If
Scarlott did demand a specific amount, “[t]he amount stated in the complaint
is itself dispositive of jurisdiction if the claim is apparently made in good faith.”
Id. at 1069.   If Scarlott did not demand a specific amount, the removing
defendant has the burden of proving, by a preponderance of the evidence, that
the amount in controversy exceeds $50,000. See De Aguilar v. Boeing Co., 11
F.3d 55, 58 (5th Cir. 1993) (“When the plaintiff’s complaint does not allege a
specific amount of damages, the removing defendant must prove by a
preponderance of the evidence that the amount in controversy exceeds [the
jurisdictional requirement].”). There are two ways that this burden can be met.
“First, a court can determine that removal was proper if it is facially apparent
that the claims are likely above [the jurisdictional amount].” Allen v. R&H Oil
& Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995). Second, “[i]f it is not thus
apparent, the court may rely on ‘summary judgment-type’ evidence to
ascertain the amount in controversy.” White v. FCI USA, Inc., 319 F.3d 672,
675 (5th Cir. 2003) (quoting St. Paul Reinsurance Co. v. Greenberg, 134 F.3d
1250, 1253 (5th Cir. 1998)).
             a. Scarlott did not allege a specific amount of damages


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       Contrary to the district court’s reasoning, Scarlott did not demand a
specific amount of damages in her complaint. The first paragraph of Scarlott’s
first amended petition 2 states:
                            Discovery Control Plan
       1. Plaintiff intends that discovery in this case shall be conducted
       under Level One as set forth in Tex. R. Civ. P. Rule 190.1. This
       suit involves only monetary relief totaling $50,000 or less,
       excluding court costs, prejudgment interest and attorney’s fees.
This statement complies with Texas Rule of Civil Procedure 190.1, which
requires a plaintiff to select a discovery plan in the first paragraph of his or
her complaint. Tex. R. Civ. P. 190.1 (“A plaintiff must allege in the first
numbered paragraph of the original petition whether discovery is intended to
be conducted under Level 1, 2, or 3 of this Rule.”). The “Level 1” discovery plan,
which Scarlott selected, is available for certain “[e]xpedited [a]ctions and
[d]ivorces [i]nvolving $50,000 or [l]ess.” Tex. R. Civ. P. 190.2. Consistent with
Rule 190.1, the leading paragraph of Scarlott’s complaint served to select the
Level 1 discovery control plan, and her reference to “$50,000 or less” was
included to recite the terms of that discovery plan. Scarlott did not plead a
specific amount of damages in the first paragraph, or any subsequent
paragraph, of her complaint.
              b. Damages of $50,000 are not “facially apparent.”
       Examining the rest of the complaint, it is not “facially apparent” that
Scarlott’s breach-of-warranty claims meet the $50,000 threshold.                      Scarlott



       2  Scarlott’s original complaint contained an almost identical first paragraph.
However, because Scarlott amended her complaint before it was removed to federal court, we
will examine her amended complaint for the purposes of evaluating federal jurisdiction. See
Boelens v. Redman Homes, Inc., 759 F.2d 504, 507 (5th Cir. 1985) (“It is a fundamental
principle of law that whether subject matter jurisdiction exists is a question answered by
looking to the complaint as it existed at the time the petition for removal was filed.” (quoting
IMFC Professional Services of Florida, Inc. v. Latin American Home Health, Inc., 676 F.2d
152, 157 (5th Cir. 1982))).
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requested damages for the diminished value of her car due to the defects. In
her complaint, she alleged that the total purchase price for her car was
$39,289, including all financing fees, warranties, and other costs.                    The
complaint does not allege the value of Scarlott’s car in its defective condition,
and thus does not give a basis for estimating the car’s diminished value.
Scarlott also requested incidental and consequential damages. The complaint
reflected that she had to take her car to the dealership for repairs on several
occasions. Although it is reasonable to infer that she incurred some incidental
costs, such as costs for alternative transportation while her car was in the shop,
the face of the complaint gives no indication of how much these damages
equaled. Therefore, it is not facially apparent that her total damages—the
diminished value of her car, which cost less than $39,289, plus the cost she
incurred associated with the repair efforts—meet the $50,000 threshold.
               c. Defendants have not met their burden
        Nissan and Hurricane have not met their burden of establishing, by a
preponderance of the evidence, that Scarlott’s damages amount to $50,000 or
more.       Neither Nissan nor Hurricane supplied any evidence, or even an
allegation, as to the value of the car in its defective condition. 3 See Golden v.
Gorno Bros., Inc., 410 F.3d 879, 884 (6th Cir. 2005) (“[T]he party asserting
federal jurisdiction must allege the . . . value of the allegedly defective vehicle
. . . .” (quoting Samuel-Bassett, 357 F.3d at 402)). While the purchase price,
which was $31,881 for the car itself, provides evidence of what the car was
worth as warranted, there is no evidence that allows us to determine the


        3 While a court can rely on expert testimony to determine the value of an allegedly
defective vehicle, Messana v. Mercedes-Benz of N. Am., Inc., 5 F. App’x 522, 524 (7th Cir.
2001), neither Nissan nor Hurricane presented expert evidence regarding the car’s value.
Scarlott did put forth an expert, Stephen Weaver, who estimated that the value of the car in
its defective condition was $23,910. The resulting figure for diminished value, $7,970, is a
far cry from $50,000. The district court, however, excluded Weaver’s expert report on Nissan
and Hurricane’s motion as unreliable under Federal Rule of Evidence 702 and Daubert.
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diminished value of the car, which is the core of Scarlott’s requested damages.
Without evidence as to the diminished value of the car, the court is unable to
determine the amount in controversy. See Voelker v. Porsche Cars N. Am., Inc.,
353 F.3d 516, 521-22 (7th Cir. 2003) (“Unfortunately, no party has provided us
with the relevant numbers to plug into the [] formula, and we are thus in no
position to conclude that jurisdiction under § 2301(d)(1)(B) existed over the
Magnuson-Moss claims.”); Diamond v. Porsche Cars N. Am., Inc., 70 F. App’x
893, 895 (7th Cir. 2003) (“[W]e cannot possibly determine whether the amount
in controversy has been met without knowing the value of the car with the
alleged defects.”).
      Even if we were to assume that the car was worthless with the defect—
a counter-factual assumption in light of Scarlott’s continued use of the vehicle
with the defect—Nissan and Hurricane still have not met their burden of
proving that her damages meet the $50,000 threshold. Nissan and Hurricane
submitted some evidence as to incidental and consequential damages.
Specifically, they claim that Scarlott had to pay $1,600 for rental cars, $225 for
a wrecker service, $1,700 for repairs, and $120 for a battery charger. Adding
these values to the full purchase price, even including all financing charges,
warranties, and costs, results in a maximum damages calculation of $42,934,
still below the $50,000 threshold.
      Nissan and Hurricane contend that Scarlott’s damages could exceed the
$50,000 threshold if she recovers damages for lost profits in her real estate job
due to car troubles. Texas law does allow for recovery of foreseeable lost profits
where the lost profits are “reasonably certain,” rather than speculative. See
Tex. Instruments, Inc. v. Teletron Energy Mgmt. Inc., 877 S.W.2d 276, 279 (Tex.
1994). Nissan’s and Hurricane’s attempt to put lost profits “in controversy”
fails for two reasons.    First, Nissan and Hurricane did not produce any
evidence that Scarlott is seeking damages for lost profits in this suit. Scarlott

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did not allege that she lost any profits, nor does she request damages for lost
profits in her complaint. In fact, Scarlott’s complaint is devoid of reference to
her job. Second, even if Scarlott were seeking damages for lost profits, such
damages would be speculative and Nissan and Hurricane fail to provide a
realistic estimate as to their amount. Nissan and Hurricane point to Scarlott’s
deposition testimony to support their lost-profits theory, yet, contrary to their
assertion, Scarlott did not testify that she lost any clients or sales. When asked
if she lost any clients, Scarlott responded that she did not know, stating: “You
would have to ask them. . . . Some buyers flake, some buyers don’t. You know,
it’s not always – it’s not like every time you show a client a house, they buy
from you.” Nissan and Hurricane cannot identify a hypothetical source of
recovery that Scarlott does not seek, inconsistent with the facts of the case, in
order to raise the amount in controversy above the jurisdictional requirement.
See De Aguilar v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir. 1995) (“The
preponderance burden forces the defendant to do more than point to a state
law that might allow the plaintiff to recover more than what is pled. The
defendant must produce evidence that establishes that the actual amount in
controversy exceeds $50,000.” (footnote omitted)).
                                CONCLUSION
      For the foregoing reasons, the district court erred by denying Scarlott’s
motion to remand. Consequently, we REVERSE the order granting summary
judgment in favor of Nissan and Hurricane and denying the motion to remand.
We REMAND the case to the district court with instructions to remand the
case to state court. In light of our holding that the district court did not have
jurisdiction over this case, the district court should reconsider whether to
award attorneys’ fees and costs to the defendants; and if the court decides that
attorneys’ fees and costs are still appropriate, the court should reconsider the
amount of the award. See Hernandez v. Conriv Realty Associates, 116 F.3d 35,

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41 (2nd Cir. 1997). 4 Consequently we VACATE the district court’s attorneys’
fees and costs order and REMAND that matter for further proceedings.




       4 The panel takes no position at this time on the question of whether the attorneys’
fees and costs order can stand despite the district court’s lack of jurisdiction. Instead, we
give the district court an opportunity to reevaluate its attorneys’ fees and costs order in light
of our holding that it did not have jurisdiction over the lawsuit. Any future award by the
district court will be subject to appellate review and, as the dissent points out, will be
reviewed under an abuse of discretion standard.
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GRAVES, Circuit Judge, dissenting in part:
       I disagree with the majority inasmuch as it remands the issue of
attorneys’ fees and costs to the district court for reconsideration. Because I
would vacate the district court’s order awarding attorneys’ fees and costs
without remanding to the district court for reconsideration, I respectfully
dissent in part.
       Hernandez v. Conriv Realty Associates, 116 F.3d 35, 41 (2nd Cir. 1997),
although cited by the majority, supports the conclusion that this case should
not be remanded for reconsideration of attorneys’ fees and costs. In Hernandez,
after the defendant removed the case from state court to federal court, the
plaintiff committed various procedural violations, including failing to appear
as ordered to a follow-up conference. As sanctions, the district court dismissed
the plaintiff’s claims and ordered the plaintiff to pay attorneys’ fees “directly
related to the January 17, 1996 conference” at which the plaintiff failed to
appear as ordered.       Hernandez v. Conriv Realty Assocs., 1996 WL 97199
(S.D.N.Y. March 6, 1996). The fees directly related to the missed conference
were determined to be $627.75. Hernandez, 1996 WL 271783 (S.D.N.Y. May
22, 1996); and 1996 WL 345876 (S.D.N.Y. June 21, 1996).
       On appeal, the Second Circuit concluded that there was no federal
jurisdiction, vacated the judgment and remanded the case. The court also
concluded that the district court should reconsider whether to impose
sanctions “because a district court can validly impose sanctions for procedural
violations even though it lacks jurisdiction over the case.” Hernandez, 116 F.3d
at 37. 1 The court based its conclusion on Supreme Court precedent, saying, in
relevant part:




       I note that, on remand, the district court vacated the imposition of sanctions in the
       1

amount of $627.75. Hernandez, 1998 WL 63467 (S.D.N.Y. Feb. 17, 1998). The district court
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       Here, the district court ordered Hernandez to pay Conriv's
       attorney's fees related to the pretrial conference which Hernandez
       missed. Such an order is a procedural sanction that “does not
       signify [the] district court's assessment of the legal merits of”
       Hernandez's claims, [Willy v. Coastal Corp., 503 U.S. 131, 138, 112
       S.Ct. 1076, 117 L.Ed.2d 280 (1992),] and therefore, the order
       creates no constitutional concerns.


Id. 116 F.3d at 41. The court then analyzed whether the orders were proper
under the Federal Rules of Civil Procedure before determining that remand
was appropriate.
       In Willy, the district court granted Rule 11 sanctions for sanctionable
conduct unrelated to the petitioner’s effort to establish that the district court
did not have subject matter jurisdiction. The amount of sanctions was the
amount of attorneys’ fees ($19,307) that the respondents had incurred in
responding to the petitioner’s sanctionable conduct. Willy, 915 F.2d 965 (5th
Cir. 1990).
       Here, there were no such procedural violations. The attorneys’ fees and
costs directly resulted from the district court’s assessment of the legal merits
of Scarlott’s claims and represented the total billable case hours of 1,065 hours
over four years by Nissan and the total fees incurred by Hurricane. 2 Also, the
procedural posture here was on summary judgment, not on dismissal for
failure to state a claim. The district court not only decided the merits of the
case on summary judgment, but the transcript of the hearing on the motion for
sanctions is replete with commentary on the legal merits of the case. Thus,
there is no basis for remanding this issue to the district court for


also took further action addressing the dismissal that was subsequently vacated on appeal.
Hernandez, 182 F.3d 121 (2nd Cir. 1999).
       2 The district court declined to order additional costs in the total requested by Nissan,

saying “Nissan North America will recover $180,000 in attorney’s fees and costs because I
don’t want to audit the costs.” Hurricane received the total it requested of $15,765.50 plus
an additional $500 for the hearing on sanctions.
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reconsideration and the order should simply be vacated. Choo v. Exxon Corp.,
764 F.2d 1148, 1153 n.4 (5th Cir. 1985).
        In Hernandez, after determining that the award did not signify the
district court’s assessment of the merits of the case, the court said: “Although
we have concluded that the district court’s orders created no constitutional
concerns, we must nevertheless determine whether the orders were proper”
before concluding the district court should reconsider in light of the lack of
jurisdiction. Hernandez, 116 F.3d at 41. That was not done by the majority
here.
        Unlike Willy, this case did not involve Rule 11 sanctions. Here, the
district court ordered the attorneys’ fees and costs under 28 U.S.C. § 1927,
which says:
        Any attorney or other person admitted to conduct cases in any
        court of the United States or any Territory thereof who so
        multiplies the proceedings in any case unreasonably and
        vexatiously may be required by the court to satisfy personally the
        excess costs, expenses, and attorneys' fees reasonably incurred
        because of such conduct.


28 U.S.C. § 1927.
        With regard to section 1927, this court has said:
        Punishment under this statute is sparingly applied, and except
        when the entire course of proceedings were unwarranted and
        should neither have been commenced nor persisted in, an award
        under 28 U.S.C. § 1927 may not shift the entire financial burden
        of an action’s defense. We therefore require a detailed finding that
        the proceedings were both unreasonable and vexatious.


Meadowbriar Home for Children, Inc. v. Gunn, 81 F.3d 521, 535 (5th Cir. 1996).
(Internal citation and marks omitted).
        Sanctions under section 1927 are reviewed under the abuse of discretion
standard. See Browning v. Kramer, 931 F.2d 340, 344 (5th Cir. 1991). “We

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have characterized awards under § 1927 as penal in nature.                    Strict
construction of this statute is necessary so that the legitimate zeal of an
attorney is representing her client is not dampened.” Id. (Internal citations
omitted).   Section 1927 permits awards only against attorneys or others
admitted to conduct cases and does not permit the court to sanction a party.
Id. Further, section 1927 allows the award of only excess costs. Id. As this
court said in Browning:
      Under the “American rule,” each party must bear its own expenses
      during litigation. Attorneys’ fees are not ordinarily recoverable by
      the prevailing litigant in the absence of statutory authorization.
      By its terms this statute does not authorize the wholesale
      reimbursement of a party for all of its attorneys’ fees or for the
      total cost of the litigation. Under § 1927, only those fees and costs
      associated with “the persistent prosecution of a meritless claim”
      may be awarded. Except when the entire course of proceedings
      were unwarranted and should neither have been commenced nor
      persisted in, an award under § 1927 may not shift the entire
      financial burden of an action’s defense.


Browning, 931 F.2d at 344-45. (Internal citations omitted).
      By its very nature, section 1927 involves assessing the merits of the
claim, which establishes the inappropriateness of the district court’s order in
light of the lack of jurisdiction. However, even looking beyond the nature of
section 1927, the record in this matter does not support the award of attorneys’
fees and costs.
      As an initial matter, the district court not only ordered Scarlott’s counsel
liable for fees and costs jointly and severally, but also found Scarlott liable for
the amount of money held in the registry of the court for her benefit. Section
1927 does not permit the court to sanction a party. See 28 U.S.C. § 1927; and
Browning, 931 F.2d at 344.        Thus, the district court clearly abused its
discretion in sanctioning Scarlott.


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       Additionally, the district court authorized the wholesale reimbursement
of all of the attorneys’ fees which is not authorized by section 1927. Id. at 344-
45. Moreover, the district court’s order fails to provide a detailed finding that
the proceedings were both unreasonable and vexatious. See Meadowbriar, 81
F.3d at 535. Though the order fails to provide the necessary finding and the
district court abused its discretion, I will briefly address possible findings.
       Based on the transcript of the hearing, the district court took great issue
with Scarlott’s counsel for a variety of reasons but appeared to be most focused
on the length of the litigation. While acknowledging that the case did not meet
the federal threshold, the court said: “A 35,000 maximum dispute has been
prolonged by the addition and subtraction and replacement of the parties and
constantly evolving, a series of arguments.”
       A review of the record, including the district court docket, does not reveal
any vexatious or sanctionable conduct on the part of Scarlott. 3 This case was
pending in state court over a year before the defendants improperly removed
it to federal court. At least some of the conduct discussed by the district court
at the hearing occurred while the matter was in state court. The district court
cannot award sanctions for conduct that occurred in state court. See Willy, 915
F.2d 965, 968 n. 8, (5th Cir. 1990); and Choo, 764 F.2d 1148. The district court
docket reveals various scheduling, conference and other orders entered by the
court, which clearly indicate the court’s participation in and management of
the length of the litigation. There is no indication that Scarlott violated any of
the district court’s orders or failed to appear at any conferences or hearings.
The number of Scarlott’s filings, which included the expected and required



       3 However, the record arguably reveals sanctionable conduct on the part of Nissan
with regard to a filing, which was later stricken upon the request of Scarlott’s counsel and
motion by Nissan, containing a defamatory and admittedly unsupported allegation that
Scarlott’s counsel was misusing narcotics and referencing his congestive heart failure.
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    Case: 13-20528    Document: 00512831949      Page: 17   Date Filed: 11/10/2014


                                  No. 13-20528

matters, did not approach the numerous filings by the defendants, which
included motions, supplements, answers, reports, designations, counterclaims,
disclosures, notices of vacations, etc.
      Despite the district court’s conclusion that “a reasonable counsel would
advise his client to replace the mirror at her own expense; and if that cures the
problem, if nothing else, she has a fixed car,” Scarlott’s car was under warranty
with Nissan. That warranty required any repairs to be performed by an
authorized dealership. As stated previously, under Browning, an award under
section 1927 may not shift the entire financial burden “[e]xcept when the entire
course of proceedings were unwarranted and should neither have been
commenced nor persisted in.” Browning, 931 F.2d at 45. Any such proposition
that the entire course of proceedings were unwarranted or should not have
been commenced is disputed by counsel for Nissan’s characterization of this as
“a good case.” Further, there is an invoice from the Nissan dealership that
states “*NEW CAR WE OWE* INSTALL REAR VIEW MIRROR WITH
HOMELINK” and says that “All Nissan Factory Parts and Service are covered
for 12 Months or 12,000 Miles.” Nissan was the manufacturer of the mirror.
Hurricane installed the mirror. This is in no way a statement on the merits or
lack thereof of the case, but rather added support for the proposition that it is
impossible to say, at this point, whether the entire course of the proceedings
were unwarranted and should not have been commenced.
      Accordingly, for the reasons stated herein, I would vacate the district
court’s order awarding attorneys’ fees and costs without remanding to the
district court for reconsideration. Therefore, I respectfully dissent in part.




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