Diversity Jurisdiction Supremacy over State-Law Venue Allocation in Landlord-Tenant Disputes

Introduction

This commentary examines the decision in 289 Kilvert, LLC v. SBC Tower Holdings LLC, 24-1156 (1st Cir. Mar. 20, 2025), where the U.S. Court of Appeals for the First Circuit addressed whether a Rhode Island statute (R.I. Gen. Laws § 8-8-3(a)(2))—which grants exclusive original jurisdiction over landlord-tenant disputes to Rhode Island district courts—can defeat removal of a diversity case to federal court. The parties, Kilvert (a Rhode Island lessor) and SBC Tower (a Texas/Delaware lessee), were in conflict over unpaid sublease payments under a commercial-tower lease. SBC Tower removed the action under 28 U.S.C. § 1441, invoking diversity jurisdiction, and Kilvert sought remand based on the state statute’s exclusivity language. The District of Rhode Island remanded; the First Circuit reversed.

Summary of the Judgment

The First Circuit held, by a vote of 3-0 (Judges Gelpí, Kayatta, Aframe), that R.I. Gen. Laws § 8-8-3(a)(2) allocates jurisdiction only among Rhode Island state courts and does not strip a federal court of diversity jurisdiction. The court concluded that only Congress can define the subject-matter jurisdiction of federal courts, and a state venue-allocation statute cannot override or impair the federal removal statute (28 U.S.C. §§ 1441–1447) or the diversity-jurisdiction grant (28 U.S.C. § 1332). Accordingly, the removal was proper, and the remand order was reversed.

Analysis

1. Precedents Cited

28 U.S.C. § 1441(a)–(b), § 1332: Statutory foundations for removal based on diversity of citizenship.
28 U.S.C. § 1447(c)–(d): Grounds for remand and limits on appellate review of remand orders.
Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224 (2007): Clarified that § 1447(d) prohibits review only of remand orders based on § 1447(c) grounds.
Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (1996) & Things Remembered, Inc. v. Petrarca, 516 U.S. 124 (1995): Further refined the scope of § 1447(d).
Marshall v. Marshall, 547 U.S. 293 (2006): State statutes cannot defeat federal court jurisdiction.
Emigrant Mortgage Co. v. Bourke, 127 F.4th 385 (1st Cir. 2025): Massachusetts statute granting exclusive Land Court jurisdiction did not bar federal diversity jurisdiction.
Nazario-Lugo v. Caribevisión Holdings, Inc., 670 F.3d 109 (1st Cir. 2012): Federal courts have an “unflagging obligation” to exercise jurisdiction.
Forum-selection-clause cases (Huffington v. T.C. Grp., 637 F.3d 18 (1st Cir. 2011); LFC Lessors, Inc. v. Pacific Sewer Maint. Corp., 739 F.2d 4 (1st Cir. 1984)): Confirm that forum clauses do not oust federal jurisdiction.

2. Legal Reasoning

The court’s reasoning unfolds in several steps:

Statutory Text and Context: R.I. Gen. Laws § 8-8-3(a)(2) grants exclusive original jurisdiction for landlord-tenant disputes among state district and superior courts. Read in isolation, the clause is ambiguous as to federal courts, but context within the broader § 8-8-3 scheme demonstrates the legislature’s intent to govern only state-court jurisdiction.
Federal Jurisdictional Prerogative: Under the Constitution’s Supremacy Clause (Art. VI) and precedents like Kontrick v. Ryan, Congress—and not a state legislature—defines federal subject-matter jurisdiction. Diversity jurisdiction under 28 U.S.C. § 1332 and removal under § 1441–1447 give federal courts power to hear properly removed cases.
Preemption of Conflicting State Law: A state statute cannot preclude or “divest” a federal court’s jurisdiction when diversity requirements are satisfied. Any conflict is resolved by applying federal law, as in Emigrant Mortgage and Marshall.
No Implicit Forum Agreement: The lease’s choice-of-law provision (Rhode Island law) did not contain an explicit forum-selection clause. Absent a clear forum-selection agreement, removal was proper and obligatory under the removal statutes.

3. Impact

Reinforces the principle that state venue or jurisdictional statutes cannot strip federal courts of diversity jurisdiction.
Guides lower courts in removal/remand disputes arising from state statutes allocating exclusive jurisdiction to particular state forums.
Warns litigants that choice-of-law clauses alone do not equal forum-selection clauses; explicit language is required to waive removal rights.
Preserves the federal judiciary’s role as a parallel forum for interstate commercial disputes, especially in landlord-tenant and real-property contexts.

Complex Concepts Simplified

Diversity Jurisdiction: Federal court power to hear suits between citizens of different states when the dispute exceeds $75,000.
Removal: The process by which a defendant transfers a qualifying state-court case into federal court under 28 U.S.C. § 1441.
Exclusive Original Jurisdiction: A grant of power to one court to be the first and only forum for certain types of cases (here, landlord-tenant disputes in Rhode Island district courts).
Forum-Selection Clause: A contractual provision specifying the court or jurisdiction where disputes must be litigated. It must be explicit to bind parties and does not by itself deprive federal courts of jurisdiction.
In Pari Materia: A canon of statutory interpretation requiring related statutes or different provisions of the same statute to be read together for consistent meaning.
Supremacy Clause: Constitutional principle (Art. VI) that federal law prevails over conflicting state law.

Conclusion

The First Circuit’s decision in 289 Kilvert, LLC v. SBC Tower Holdings LLC reaffirms that a state statute allocating exclusive forum for landlord-tenant cases among state tribunals cannot preclude a properly removed diversity action in federal court. Only Congress may define the scope of federal jurisdiction, and state laws cannot undercut that grant. This ruling preserves the integrity of the federal removal statutes, clarifies the limited reach of state venue-allocation provisions, and underscores the need for explicit forum-selection clauses to override removal rights in commercial leases.