Rivet v. Regions Bank of Louisiana

RESPONDENT: Regions Bank of Louisiana
LOCATION: The White House

DOCKET NO.: 96-1971
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 522 US 470 (1998)
ARGUED: Jan 21, 1998
DECIDED: Feb 24, 1998

Charles L. Stern, Jr. - Argued the cause for the respondents
John G. Odom - Argued the cause for the petitioners

Facts of the case

In 1983, a partnership mortgaged its interest in the Louisiana equivalent of a leasehold estate on a parcel of real property in New Orleans to Regions Bank of Louisiana. The partnership then granted a second mortgage to Mary Anna Rivet, Minna Ree Winer, Edmond G. Miranne, and Edmond G. Miranne, Jr. Later, the partnership filed for bankruptcy. The Bankruptcy Court approved the sale of the estate to the Bank, which sold the property. Rivet filed suit in Louisiana state court, alleging that the transfer of the property without satisfying their rights under the second mortgage violated state law. The Bank removed the action to federal court, contending that federal-question jurisdiction existed because the prior Bankruptcy Court orders extinguished Rivet's rights. Denying Rivet's motion to remand, the District Court granted the Bank summary judgment. In affirming, the Court of Appeals concluded that removal is proper where a plaintiff's state cause of action is completely precluded by a prior federal judgment on a federal question.


May removal to federal court be predicated on a defendant's assertion that a prior federal judgment has disposed of an entire matter and thus bars plaintiffs from later pursuing a state-law-based case?

Media for Rivet v. Regions Bank of Louisiana

Audio Transcription for Oral Argument - January 21, 1998 in Rivet v. Regions Bank of Louisiana

William H. Rehnquist:

We'll hear argument now in Number 96-1971, Mary Anna Rivet v. the Regions Bank of Louisiana.

Mr. Odom.

John G. Odom:

Mr. Chief Justice, and may it please the Court:

The issue in this case, Your Honors, is whether a novel res judicata exception should be engrafted into the settled rules of Federal removal jurisdiction.

Before we address these removal issues, I believe it would be helpful to set out in the nature of the action that we filed in State court below on behalf of these petitioners.

Your Honors, my clients loaned $1.3 million in 1984 to other sophisticated individuals in a transaction at a time of high interest rates, at an interest rate of 20 percent with a note and a subsequent mortgage up to an amount of $5 million.

We took a note and we took a mortgage on the real property, or the leasehold estate which is at issue in this case.

Basically our State action filed 10 years later is a standard mortgage foreclosure action seeking either to recognize our mortgage or to have our debt paid.

It's a hybrid in personam in rem action which is permissible under Louisiana law.

There's a second aspect of our claim which is similar but distinct.

That is, a prior bankruptcy proceeding, as the Court is aware, had authorized the respondents in this action or their predecessors in interest to procure cancellation of our lien, which was duly recorded in the conveyance records of Orleans Parish, and it empowered them to do that.

They left bankruptcy court one day in 1986 with the right to have our lien canceled according to the Louisiana lien cancellation procedure.

They never took advantage of that right.

The bankruptcy court acknowledged, we take the position, Your Honors, implicitly Louisiana's procedure to have liens cancelled.

It acknowledged a two step process, because it not only ordered the subject property to be sold free and clear of all liens, it also ordered that the recorder of mortgages erase the liens.

This was never done and now, in a footnote, if you will, to this argument, they've waited too long and since the filing of this lawsuit their right to execute on those liens has expired under Louisiana law.

John Paul Stevens:

Am I correct in understanding you're explaining why res judicata won't bar your claim?

John G. Odom:

Your Honor, I'm just trying to give a little background to the facts, because I feel that... I feel that it would be important.

The facts are somewhat tangled and I thought it would be good to lay those out.

We don't feel it's... there are a variety of reasons why we don't believe res judicata would bar our claim and those we will all adjudicate below, assuming that it's remanded, of course.

Your Honors, it's important to remember in that connection that two of the four persons that we sued were not even present in the bankruptcy proceeding, and two of our four petitioners did not appear in the bankruptcy proceeding and received absolutely no notice of it.

We claim against these two--

John Paul Stevens:

May I ask, does that have anything to do with any issue except whether there's estoppel here?

I'm just a little puzzled why we have to get into the facts in this case.

John G. Odom:

--Your Honor, it's important for us, we believe, to show the Court exactly how far this doctrine will go if a res judicata exception is carved out on the facts of this case and, that being so, you would have to see that this is not even a proper res judicata situation, because two of the four persons were not even... two of the four persons we sued were not even a part of the bankruptcy proceeding.

Therefore, my point in bringing these to the Court's attention, Your Honor, is, look at how far this goes.

Where it's going is, if you have any part of a claim that a bankruptcy procedure has affected in any way someone, or that person's privity and interest in any way, or that can be alleged, that's going to be brought up by defendants as a res judicata exception.

It doesn't have to be a complete res judicata exception.

Indeed, it wasn't in this case.

John Paul Stevens:

But your point, as I understand your brief, is that even a narrow res judicata exception should not be recognized.