470
OCTOBER TERM, 1997
Syllabus
certiorari to the united states court of appeals for the fifth circuit
No. 96-1971. Argued January 21, 1998—Decided February 24, 1998
After a partnership mortgaged its interest in the Louisiana equivalent of a leasehold estate to respondent Regions Bank of Louisiana (Bank), the partnership granted a second mortgage to petitioners, and later filed for bankruptcy. The Bankruptcy Court approved a sale of the leasehold estate to the Bank. Thereafter, the Bank acquired the underlying land and sold the entire property to respondent Fountainbleau Storage Associates (FSA). Petitioners then filed this action in Louisiana state court, alleging that transfer of the property without satisfying their rights under the second mortgage violated state law. Respondents removed the action to federal court, contending that federal-question jurisdiction existed because the prior Bankruptcy Court orders extinguished petitioners' rights. The District Court denied petitioners' motion to remand, concluding from the Fifth Circuit's decision in Carpenter v. Wichita Falls Independent School Dist., 44 F. 3d 362, that removal was properly predicated on the preclusive effect of the Bankruptcy Court orders. The court then granted summary judgment to, inter alios, the Bank and FSA. In affirming, the Fifth Circuit agreed that under Carpenter removal is proper where a plaintiff's state cause of action is completely precluded by a prior federal judgment on a federal question. The court thought Carpenter's holding was dictated by the second footnote in Federated Department Stores, Inc. v. Moitie, 452 U. S. 394, 397, n. 2.
Held: Claim preclusion by reason of a prior federal judgment is a defensive plea that provides no basis for removal. Such a defense is properly made in the state proceedings, and the state courts' disposition of it is subject to this Court's ultimate review. Pp. 474-478.
(a) Respondents invoked, in support of removal, the district courts' original federal-question jurisdiction under 28 U. S. C. § 1441(b). The presence or absence of such jurisdiction is governed by the "well-pleaded complaint rule," under which "federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U. S. 386,
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