Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 01-cv-02294) District Judge: Honorable Dennis M. Cavanaugh
Before: Barry, Ambro and Cowen, Circuit Judges
The opinion of the court was delivered by: Ambro, Circuit Judge
Argued September 24, 2002
Appellant Selective Insurance Company ("Selective") appeals an order requiring it to reimburse $13,135.50 in attorneys' fees of Appellee Roxbury Condominium Association, Inc. ("Roxbury"). Under the circumstances of this case, that award was an abuse of discretion.
In 1997, Roxbury approached the Anthony S. Cupo Agency ("Agency") to obtain condominium flood insurance. The Agency, acting through its agent, Stephen Subick ("Subick"), procured insurance on Roxbury's behalf from Selective, which participates in the National Flood Insurance Program. While the Agency submitted information to Selective indicating that the value of the condominium was $12,731,000, the Agency obtained coverage of only $1 million. This oversight proved a problem in September 1999, when the condominium suffered flood damage. The policy that Selective issued contained a co-insurance clause that reduced the benefits paid to an insured if the policy's coverage amount was less than 80% of the insured building's replacement cost. Because of this co-insurance clause, Selective paid Roxbury only $36,197.89 for damage that exceeded $400,000.
Roxbury filed suit in the Superior Court of New Jersey against the Agency and Subick for malpractice. The Agency and Subick subsequently filed a third-party complaint against Selective for indemnification and contribution, claiming that Selective was negligent and/or breached its agreement with the Agency by issuing a $1 million policy despite being informed of the condominium's higher value. On May 14, 2001, Selective removed the case under 28 U.S.C. S 1441 to the United States District Court for the District of New Jersey on the basis that Selective was acting as an agent for the Federal Emergency Management Agency ("FEMA") and thus any claim against Selective necessarily arose under the National Flood Insurance Act of 1968, 42 U.S.C. SS 4001 et seq., and implementing regulations. On July 11, 2001, Roxbury moved to remand the case to state court, alleging the absence of federal subject matter jurisdiction. Roxbury also requested that the District Court award it attorneys' fees pursuant to 28 U.S.C. S 1447(c). The District Court granted the motion to remand and awarded Roxbury attorneys' fees because "Selective should have been aware that its basis for removal as a third party defendant was questionable, especially since the claim for indemnification was not separate and independent from Plaintiff 's negligence claim."
A. Jurisdiction and Standard of Review
Our Court has jurisdiction under 28 U.S.C. S 1291 to entertain Selective's appeal. We review an award of attorneys' fees under section 1447(c) for abuse of discretion. Mints v. Educ. Testing Serv., 99 F.3d 1253, 1260 (3d Cir. 1996). A district court abuses its discretion by basing its decision on "a clearly erroneous finding of fact, an erroneous legal conclusion, or an improper application of law to fact." LaSalle Nat'l Bank v. First Conn. Holding Group, L.L.C., 287 F.3d 279, 288 (3d Cir. 2002).
A court may award attorneys' fees under 28 U.S.C. S 1447(c) as part of a remand order. 28 U.S.C.S 1447(c) ("An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal."). Remand is warranted at any time before final judgment if the district court lacks subject matter jurisdiction. Id. However,"[a] motion to remand the case on the basis of any defect other than the lack of ...