Petition for Writ of Certiorari — Climax Chemical Co. v. Braun

Supreme Court brief1967

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. . Reasons for Granting BI WET 2c ccccesesseneecensesevsenes odianee Seleveseioeas 8

The Decision On Separate And Independent Causes -

a Action Conflicts, At Least In Principle, With

Prior Detisions Of The United States Supreme Court. 8

II. The Decision Gives No Effect To The Statutory Revi-

sions Made By 28 U.S.C. § 1441(c) And Departs From .\__

The “Surer Tests” Contemplated By The Finn Case :

In Removal IIE, cis ccsccenimccarcimnebainaadeannaledion 18

III. The Majority Opinion Of The Court of pan Con-

; flicts, At Least In Principle, With Its Own Prior

Decisions And With Decisions Of Other Courts Of

RIIEEEEE, : ccivsssieeciintvititnaheincniimmntaiiniatenitinitemtnaian ayrorveseveeees 14

IV. Construing 28 U.S.C. § 1441(¢) To Permit Removal

_ Of Separate And Independent Causes Of Action In

_ Absence Of Complete Diversity. of Citizenship of

Doubtful Constitutionality. ........ poilyminndinepeevenvedsesininieegelete _ 18

V. Whether The Removal Bond Of A Single Defendant

~ Can Effect Removal For Multiple -Co-Defendants Is

. An Important Federal Statutory Question Which Has

Not Been But Should Be Decided By The United

States Supreme Court. .......ccccssssesssseierceees i socmaeauniondpaiabaie 21

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Cases .

undies Fire-& Cas. Co. v. Finn, 341 US-6 (195178, 12, 13, 14, 17

_Anderson-v- Bellinger, 87 Ala. 334, 6 So. 82 (1889) wwe. = 23

. Charles Dowd Box. Co. v.: Fireman’ s Fund Ins. Co., 303 F.

Ge LR _—_| RR a e hed iane a 17, 20

Chicago, R.I. & P. R.R. v. Martin, 178 178 U.S. 245 (1900)

‘Donahue v. Warner Bros. Pictures, I Inc, 194 F. 2a 6 (10th

- Cir. 1952)

ROE EAN IE Rabe IG Sa

NOEL I APRESS re Vial cca Wace

oF era ee

8 ii

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' Fidelity & Deposit Co. ¥. Hobbs, 144 F. 245 (10th Cir. 1944) 12

Finn v; American Fire & Casualty Company, 207 F. 2d 113,

116 (5th Cir., 1953) sithinidadatanaiai Wp savenssnsenscsssessasennssssateescoseees 19, 20

-Gableman v. Peoria D. & E. RR., 179 U.S. 335 (1900) ........ 22

Gray v. New Mexico Military Institute, 249 F. 2d 28 (10th °

IER, BBBE) rcersrorrsintnveleoomensesiecqonninens i disiesiibcdinatinnasenamatenieuasiiaali ie

Lumbermen’s Mutual Cas. Co. Vv. Elbert, 348 U.S. 48 (1954) . 23

McLeod v. Cities Service Gas Co., “233 F. 2d 242 (10th Cir.

1956) _....:.. siinidialsicia etait aiaiadcnaniaaladdaaieandiindsediianaslmatiamamadiiaeiniaen 15

Martin v. Broderick, 177 F. 2d 886 (10th Cir, | eS

Nelson v. Peter Kiewit. Sons Co., 130 F. ‘Supp. 59 (D.N.J:

TEE eciercenistionisiehrtaiesniipnnpateonnstchaaueniainbs oveeticitins 22, *

O’Neale v. Long, 4 Cranch 60, 8 U.S. 37 CREF) sinvepsvigtones — Br

Richlin Advertising Corp. v. Central Florida Brosdeanting” Ce ke

Cog 122 F. Supp. 507 (S.D.N.Y. 1954) .......... ceunspehieuniainai a

Shamrock Oil & Gas Corp: v. Sheets, 313 U.S. 100 (1940): ee ae

Snow v. Powell, 189 F.2d 172° “(10th Cir. 1951). as. SETI 15 |

United ‘States v. Sinclair Prairie Ref. Co., 126 F. 2d 827

ae) S|) een RNs Sie ORAS VIA AE 12.

Willoughby v. Sinclair Oil & Gas Co., 188 F. 2d 902 (10th

Cir. anes inoue eae EERE cansesTiRtegseveepeneeeee Lnsssscsesscosssereceseensdiseezers AG

Statutes .

28 U.S.C ‘ te RPE E LESS SA bo Pe TT 3, 13, 18

/ De Een a ena a 3, 22

NG a oe 3, 22

: ‘Other Authorities \ xy f

~ Annot., “Liability of Surety”, 144 ALR 1266, “1267 ( 1943) 23 —

1 Barron & Holtzoff, Federal Practice & Procedure, § 107

1 pnntcaines ala omnia 22, 28

Cohen, Problems in the Removal ofa “Separate or bad

pendent, Claim or Cause of Action”, 46 Minn. L. —.. 2.

Lewin, 66 Harv. Lon 8... led aaiellsidhtsasttaialatindleieelidiaie 19

Williston, Treatise on Contracts, § 1240 a 8552-53 vececciee 23 ,

Wright, Federal Courts ( 1963). . :

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. AM.

ieee ee ros THE TENTH CIRCUIT - get

In a

_ Sayre Court of’ the a Stats ;

- Ooronmn Term 1966.

No. sonpniicineinnion a

ee f = ss

Cumax CHemicaL Company,

ee ae Petitioner,

- a Vv. oan

7 .

a C. Fr. Braun: & Co., a corporatish;

. Pennsart Caetican Corporation, ‘a corporation;

J. T. Torre, Inc., a corporation;

Herywarp-ROBINSsON Company, a partnership ;

Bernard Goopman and ALEXANDER SomMER,

partners composing said partnership;

THERMAL ResearcH & ENGINEERING CoRPORATION, a

corporation; StePHENs-ApaMSoN ‘Mic. Co., a corporation;

‘StanparpD STEEL CorpPorRATION, a corporation; }

* and Beaumont Bircn Company, a corporation,

| Respondents.

_ PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS _

7 t

Petitioner, Climax Chemical Company, prays that a writ

of certiorari issue to review the opinion and order of the

United States Court. of Appeals for the Tenth Circuit (App.

B), which affirmed the order.of the United States District:

Court for the District of New Mexico (App. A), denying

plaintiff’s motion to remand this action to the District

Court of Lea County, New Mexico. The appeal from the

interlocutory order of the district court was perfected in

accordance with 28 ¥, S$.C.. ae (App. A, App. D,

App. E.).

tel

@® PF PRB GOO ME hee amr

Opinions Below

A copy of the order of the United States District Court

- for the District of New Mexico from which the interlocutory ©

° appeal was taken is copied herein as Appendix ‘A. The ma-

jority opinion of the United ‘States: Court of Appeals for

the Tenth Circuit affirming the order denying Petitioner’s

motion to’ remand i is copied herein as Appendix B. The dis-

senting opinion of Judge Kerr is'copied: herein as Appen--

dix ©. Thé order of the United States Court of .Appeals ~.

' for the Tenth Circuit allowing the interlocutory appeal on.

certification. and application under.15 U.S.C. § 1292(b) is

copied herein as Appendix D. The opinions pied herein as |

AppendixeB and Appendix C have not yet’ been: reported.

_ Jurisdiction

The order of thé United States District Court for the

District of New Mexico denying petitioner’s motion to’ re-

mand and certifying the ruling for appeal under 15 U.S.C.

. §1292(b) was signed. and entered on December 15, -1965

_ (Tr. 37-39). Petitioner’ s application for leave to file an in-

terlocutory appeal was filed in the United States Court.

. of Appeals for the Tenth Circuit and was granted by that

rt on January 19, 1966 (Tr. 39-40). Petitioner filed its

‘notice of appeal on January 24, 1966 (Tr. 40), and there- ‘

after duly perfected. such appeal. The opinion and order

_ of the United States Court of Appeals for the Tenth Circuit

. affirming the. order of the district court was filed on De-

_cember 29, 1966. ond

The ‘iid of this Court is invoked under 28 U. S. ie

§1254(1)._ > i °

Ty 3.

er QUESTIONS PRESENTED

Ter) Whether i in the absence of ‘total diversity of citizen- ¥

ship a state court action. against a single defendant for the

. entire. damages resulting from faulty engineering and de-

sign and faulty equipment rendering plaintiff’s chemical

_ plant totally inoperable and against the other defendants

for the portion of the total damages for which each is

alleged . to. be responsible | is properly removable to the

. United States District Court under 28, U.S.C. § 1441(c) as

& :

involving separate and pa claims or causes of ae

em. s aw

( 2) Whether 28-U. 1.8. C.§ 1441(c) when construed to per--

mit removal-of this action from the state court to the federal

‘ court in the absence of complete diversity of citizenship be-.

tween the plaintiff and the defendants contravenes the pro-—

visions of the United States Constitution limiting the juris-

diction of. federal courts. ) wens eee

(3) Whether-a removal. bond executed by a single de- —

feridant as principal and its. surety company is sufficient’to

constitute a removal.bond for all defendants“tnder 28 U.S.C. ,

'§ 1446(d) when the other defendants-filed separate instru-

ments purporting to join in the bond ‘during the statutory

period but the surety executed no agreement to their. addi-

tion to its bond as additiona? principals until long’ after the

expiration of the statutory paties, oy

‘STATUTES INVOLVED |

28 US.C. §1441(c): ~ on ee

_ » “Whenever aseparate and independent claim or-cause

of action, which would be removable if sued upon alone,

is joined: with onesor more otherwise non-removable |

claims or causes of action, the entire case may be re-

moved and the district court may ‘determine all issues

_ ‘therein, or, in its discretion, may remand all matters

‘not otherivise —— its original jurisdiction. ag

-, Article III, , Section 2 of the Constitution of the United

properly removed.”

States :

“Section 2.. Tht judicial power shall extend to all

casegyi in law and equity arising under this Constitution,

whith shall be made, under their authority; to all cases

tion; to controversies to which the United States shall

bea party ; to controversies betweén two or more states;

between a:state and citizens of another state; between

citizens of different states; between citizens of the same -

state claiming lands under grants of different states,

states, citizens ‘or r subjects. ae

BB US.0-5 1446(0) ce

“The petition for removal of a van action or pro-

* ceeding shall be filed within 20 days after the receipt

- by thé defendant, through service or otherwise, of a

copy of the initial pleading setting forth the claim for

relief upon which such action, or proceeding i is based,

’ ‘or’ within 20 days after-the service of summons upon

the defendant if such initial pleading has been ‘then

filed in court and is not required to be served on the

defendapt; whichever period is shorter.”

28 U.S.C. § 1446(d) :

“Bach petition for removal of 4 civil action or pro-

ceeding, except a. petition in behalf. of the United

States, shall be accompanied by a bond with.good and

sufficient surety conditioned that the defendant or de- ~

fendants will pay all costs and disbursements incurred

by reason of the removal proceedings shguld it be de-

termined that the case was not removable or was im-

. the.laws of the United States, and treaties made, or

- - affecting ambassadors, other public ministers and con-: |

‘ suls; to all éases of admiralty and maritime’ jurisdic.

~ and between a state, or the citizens thereof, and foreign

‘Statement of the Case

Petitioner brought this action. against respondents C. F.

Braun & Co., et al, in the District Court, Fifth Judicial .

District, Lea County, New Mexico, seeking recovery of

$3,600,000 from the respondent Braun as the total damages

and seeking recovery. from the other respondents of por-

‘tions of.such total damages. suffered by petitioner because

‘of defective design and defective engineering of a salt cake

and muriatic:acid plant-designed and engineered by Braun

for Petitioner in Lea County,’New Mexico, and. because of

the purchase by Braun, for Climax, from the other respond-

ents of equipment defectively designed or engineered by _—

; them for such plant (Tr. 4-25).1 Respondent Braun by writ-

ten contract guaranteed that .the: plant when constructed

as designed and engineered would produce and process.

100 tons of salt cake and 150 tons of muriatic acid per

day. Because of such defective’ design, defective engineer-

ing, and defectively designed and engineered equipment

purchased by Braun for Climax from the other, respond- —

ents, the plant when completed was inoperable and incapa-

ble of producing either salt cake or muriatic acid in any

commercial quantities (Tr. 7). Respondent Braun by pur-

chase order or subcontract delegated to the other respond-

ents the furnishing of certdin of the design and engineer-

ing services. and the furnishing of certain of the.engineered

equipment constituting integral parts of the ‘single plant

project.’ Each of such other respondents i is sued for a part

but not’all of the total damages occurring as a consequence

of a single injury suffered by pciitioner, i.e., a completed

plant that would not function or produce’ the intended

products in any commercial quantity. In all instances the

other: respondents are sued for that part of the. total

1 All references herein to Tr. are to the printed Transcript of

. Record in the United States Court of Appeals. ee

Sen Pere re

Sieh NEY PIR Nt Onty oop g

oe.

damages attributable in each case to the defective design,

defective engineering, or the furnishing of defectively engi-

neered equipment by the particular respondent (Tr. 11).

- Complete. diversity of citizenship between petitioner and

respondents does not exist because petitioner and respond-

ent Thermal Research and Engineering Corporation are_

. both incorporated under the laws of the State of Delaware

(Tr. ¢, 33). However, the respondent Stephens-Adamson

Mfg. Co., filed its petition for removal executed by it alone

in the United States District Court for the Distri¢t of New

Mexico along with a removal bond executed by it alone as

. principal and by Western Surety Co. as surety (Tr. 25-29),

thé removal being predicated on claimed diver ‘sity of citi-

zenship, and five days thereafter Stephens-Adam’on Mfg..

Co. filed its amended petition for removal, executed by. it

alone, alleging as grounds the requisite jurisdictional

amount and diversity of citizenship between all respondents

and petitioner or, in the alternative, that there were sep-

arate. and independent claims or causes of action entitling

Stephens-Adamson Mfg. Co. to remove under 28 U.S.C.

<A> § 1441(c) (Tr. 29). Within 20 days after‘service of process

‘ upon them, each of the other‘ respondents separately filed

a so-called “jdinder in removal proceedings”, reciting in

each instance that each such respondent “accepts and agrees

to all.the terms and conditions of the petition for removal

and amended petition for removal and agrees to be bound

is by the*removal bond which has been filed in this cause, the

same as if this defendant had signed such bond in the first

instance” (Tr. 32-33). However, none of the other respond- —

ents either filed its own separate removal bond or signed

.the bond previously filed by Stephens-Adamson Mfg. Co.,

as principal, and Western Surety Company, as surety. The -

surety on the removal bond of Stephens-Adamson Mfg. Co.

executed no written consent or agreement to the other re- ‘1

spondents becoming principals on the :removal bond on |

which it was surety, nor did it in any manner ratify the

purported joinder of such other respondents as principals ©

on such bond.

_ Petitioner filed its motion to remand. including the...

grounds that’no respondent except Stephens-Adamson had

filed a removal bond as required by 28 U.S.C. § 1446(d)

and that the cause of action sued upon is not separate or

oo in the case of ‘any respondent, but rather there

s a single cause of action and each respondent is jointly,

‘i ne severally liable thereon for a part of the total-damages

flowing from a single injury (Tr. 34). The District Court -

- denied petitioner’s motion to remand but certified such ..

ruling for interlocutory appeal in accordance with § 1292(b) .

-of Title 28, United States Code (Tr. 37). The respondents

who failed to file removal bonds subsequent to the hearing

on the motion to remand under leave grafited by the Dis-

trict Court in denying such motion executed and attavhed

a rider to the removal bond of Stephens-Adamson in which .

the surety joined (Tr. 36-39). This rider, which only pur-

ports to be effective as of the date of its execution, was

exceuted and filed long after the expiration of the statutory |

period for filing the petition and bond for removal (Tr. 36).

Petitioner filed its application to appeal under § 1292(b),

Title 28, United States Code, within the time provided by

law and the United States Court of Appeals for the Tenth

Circuit. granted such application (App. D). Thereafter, *

Petitioner duly perfected: the appeal (App. E). The ma-

jority of the United States Court of Appeals affirmed the

order of the district court denying the motion to remand . ~

(App.), with Judge Kerr dissenting (App. C).

thr sahaatsanticiie’ WIRES eee RRR eee ANTE

Reasons For Granting The Writ

I. |

The Decision On Separate And Independent Causes

Of Action Conflicts, At Least In Principle, With

Prior Decisions Of The United States Supreme Court.

The $3,600,000 total damages for which the niinndiain’

Braun is sued includes the portions thereof. for which the —

other respondents are alleged to be also liable. The majority —

opinion of the Court of Appeals holds these portions of

the total damage for which the other respondents are also

‘liable to be “separate and independent causes of action”

because Respondent Braun placed separate portions ‘of the |

.total work with the other respondents under ‘separate: pur-

chase orders or subcontracts, emphasizing “in the light of

the dissenting opinion” thatseach separate respondent had

a “separate, independent contract” (App. B, p. 8a).. The

_ majority reasoned therefore that the suit against each re-

spondent was “a separate and independent cause of action”’.

This rationale misapplies and violates the ‘principle of :

American Fire & Cas. Co. v. Finn, 341 U.S. 6 (1951). In|

Finn, the suit was upon “separate and independent” con-

tracts of insurance entered into with separate defendants,

1. but this Court held that the suit was not upon “separate aid

independent causes of action” under Section 1441(¢) which

prevented removal in the absence of complete diversity. It

was so held even though the primary count im the resident

plaintiff's complaint was against a non-resident insurance | |

company defendant alleged to have issued a fire insurance

policy covering the plaintiff’s property which was destroyed

by fire, a second and alternative count was against another

non-resident insurance company defendant alleged to have

issued another fire insurance policy covering the destroyed

property, and the third alternative count'was by the resi-

ro €

_ dent plaintiff against the two non-resident insurance ¢om-

; pany defendants and a resident individual defendant alleged

to be the agent of both in which joint and several liability.

on the part of all three defendants was asserted. These

separate contracts and the three separate counts were held.

not to result in “separate and independent causes of action”

within the meaning of Section 1441(c). The fact that the

plaintiff Finn sought recovery of total damages against

a single defendant in the primary count, total damages

against a different single defendant in. the second alterna-

*. tive count, and total damages jointly and severally from .

three defendants.in the'third alternative count does not

’ distinguish the case in principle from the present case in

which the petitioner seeks recovery of total. damages from

the respondent Braun and seeks judgment against the other

respondents for portions but not all ‘of that same damage.

In Finn at 341 U.S. 16 the Court emphasized that there

was damage from a single fire and that “the facts in‘each .

_portion of the complaint involved” the. individual defend-

’ ant. Here, there is a single plant and_single total damages——_*

resulting because that plant was inoperable and incapable

of producing the products for which it was intended in any, -

_ commercial quantities. Here, too, “the facts in each portion

of the complaint involved” Braun. All of the respondents’

contributed integral parts of equipment or services to the

single plant and to the single injury, ‘i.e.; the inoperable

plant#each respondent contributed a portion, although the

respondent Braun was liable for the total.

The majority opinion @chieves its result of declaring

the action as to each respondent “a separate and independ-

ent cause of action” by isolating each unit or piece of plant

equipment upor which a partictlar respondent performed

services or furnished equipment as a “separate and inde-

pendent unit” divorced from all of the ,Temainder of the |

BRE PE OLE ROT MI Sen Ce ee

és

10,

plant and from the plant as a whole. The majority opinion:

does so in the following language:

“In the case at bar it is true that it is alleged that

plaintiff's plant, would not function, but in no real

sense was this a single loss. The plant was composed

of a number of separate units. Obviously, whether one

unit, or several, failed to function, the plant could-not

operate. The liability of the defendants other than

Braun was separate, distinct, and unrelated. With the

exception of Braun, no deféndant assumed responsi-

bility for other than its own unit, or was liable in any.

way for the failure of the others. ” (App. B, P. 9a)

(Emphasis Supplied. )

The Sucsahine statement, particularly the italicized

language, constitutes a finding of fact without any evidence

having been introduced and is completely without any sup-

port in the petitioner’ s pleadings. It is the theory of the

petitioner’ s.complaint that “the plant when completed would

“not ‘function or operate and could not be put to its intended

use of manufacturing salt cake and muriatic avid” (Tr. 8)

as the result of the totality ofthe defaults and defects in

engineering, design, and equipment on the part of the re-°

spondent Braun and all of the other ‘respondents. Petitioner

| , alleges i in paragraph 14 of its complaint (Tr. 8) that: the »

plant “would not produce any commercial - -quantity of

_ either salt cake or uturiatic acid” not only because of the

_ defective design and engineering by the defendartt Braun

but because of “the engineered equipment as purchased -

by the defendant Braun”. The “engineered equipment”

F which was defective and which in each instance contributed

to the.plant failure was purchased from the’ other re-

spondents. « 7

The allegations of the petitioner’s complaint with refer-

ence to the defective design, equipping, and construction

cys

. ? .

oe 11 -

- °. °

of the reactor are to the effect that the Respondents Braun,

Pennsalt, Heyward-Robinson, Bernard Goodman,. Alexan- ~

der Sommer, and Thorpe,.each and all committed defaults

that resulted in the reactor installed in the plant being

totally inoperable and worthless. (Tr. 12- 17). Subsequent

<<, of the complaint show that the respondent

hermal, the resident defendant,-was guilty of defective

and unsound design and construction of a. salt preheater

and salt evaporator . and an air acid heater engineered,.

designed, and furnished by it for use with this same 2 reactors

(Tr. 17-19). -Indeed the respondent. Thermal designed and -

furnished ail-of, the heating for the reactor ‘itself ‘and it

was defective and insufficient. Subsequent allegations of

petitioner’s complaint show that the respondent Stephens-

Adamson Mfg: Co. engineered, designed, and furnished _

cénveyors to convey salt to and from the. preheater de-

signed, engineered, and furnished by Thermal and to convey.

salt to, the reactor and salt cake from the reactor and that

- such conveyors were totally inoperable. and incapable of:--

performing their intended duties (Tr. 19-21). Petitioner’s

complaint next alleges that respondent Standard Steel Cor-

poration engineered, designed, and furnished a combination

rotary dryer-heater “intended to preheat the salt particles:

_ before they were conveyed into the reactor” again designed

to serve this same reactor and that the same “was not

_. designed and constructed in a good and workmanlike man-

ner, and in fact was not fit for the rposes for which it

was intended” (Tr. 21- 22). Finally, etitioner’s complaint.

_ alleges that«the respondent Beaumont Birch designed and

furnished four special rotary valves “required for use in

connection with feeding and discharging the reactor” and

that these valves furnished.to serve this same reactor.

“were unfit And unusable for such‘use and became com-

pletely inoperative and unusable after a few minutes use”

(Tr. 22-23). Petitione¥ averred not-only its reliance upon -

tt a, ee

"12

the “superior engineering skill and competence” ‘of the

respondent Braun but upon that of “its recommended sub-

contractors and suppliers” (Tr. 24), who were the other

respondents.

It is apparent from this summary of the petitioner’s. .

pleading, despite the statement quoted from the majority

opinion, that while separate purchase orders or subcon-

tracts were issued to eath respondent, their equipment and

‘services were so inextricably interrelated and intercon-

nected that the action against them cannot properly be re-

garded as “separate and -independent causes: of action”

against each of them, but only as /a single cause of action

based upon a single injury, i.e, an inoperable plant in-

capable of performing its intended purpose, for all of which

the respondent Braun is liable in total. damages and to

which, each other respondent contributed in part and is

liable-in_ part. As stated i in Finn at 341 U.S. 14:

“In making this determination we look to the’ plain-

tiff’s pleading, which controls. wg

In looking to the petitioner’ S pleading it must be concluded

here as in Finn “that where there is a single wrong.to plain-

tiff, for which relief is sought, arising from an interlocked oe

series of transactions, there is no separate and independent

claim or cause of action under Section 1441(c).”

“The majority opinion of the Court of Appeals totally

ignores ‘the fact, that the action is indisputably a single

- cause of action for total damages against the respondent

Braun and that the decisions would not permit splitting -

this cause of.action into a series of separate suits against

Braun. Martin v. Broderick, 177 F. 2d 886 (10th Cir. 1949) ;

Fidelity and ‘Deposit Co. v. Hobbs, 144 F: 2d 5 (10th Cir. ©

1944); and United States y. Sinclair Prairie Refining Co.,

126 F. 2d 827 (10th Cir. 1942). Being a single, inseparable

/ .

{ 2

cause of action against ‘the respondent Braun for the-total

damages, it necessarily follows that ‘it. cannot‘be split into

a series of so-called “separate and independent causes of

action” against the other respondents who caused part but .

not all of the single total injury and who are cane for part

but not all of the same total damages.

Il.

The Decision Gives No Effect To The Statutory

_ -Revisions Made By 28 U.S.C. § 1441(c) And Departs

7 From The “Surer Tests” Contemplated By The Finn

Case In Removal Cases.

‘The majority opinion declares:

“We take-Finn to mean that there must be substan-

tive separability, and no more.” (App. B, p. 10a).

Finn is sg limited and this test is ‘applied despite the re-

peated emphasis in Fim that “separability” has not been

_ the test since September 1, 1948; when 28 U.S.C. § 1441(c)

* superseded 28 U.S.C. (1946 ed.) § 71. Finn emphasizes that

_ -@h important Congressional purpose “was to limit removal

from state courts” and that in the revision made by Section

1441(¢) Congress “carried out its purpose to abridge the

‘right of removal” (341 U.S. 10). The effect of Section

1441(c) is then stated at 341 U.S. 11 as follows:

“A separable controversy is no longer an adequate

ground for removal unless it also constitutes a sep-

arate and independent claim or cause of action. * * *_

Congress has authdrized removal now under Section

1441(c) only when there is a separate and independent

claim or cause of action. Of course, ‘separate cause of

action’ restricts‘removal more than ‘separable contro-.

- versy’. In a suit covering multiple ‘parties ‘or issues

based on a single claim, there may be only. ohe cause

of action and yet be separable controversies. The addi-

SE NRMG, ile epee

“MRE DUR NOR ne OY eh

»>

"$14 ;

- tion of the word ‘independent’ gives emphasis to con-

gressional intention to require more complete disasso-.

ciation between the federally cognizable proceedings

_ and those cognizable. only i in state courts peters allow- -

ing person. a

The sosior ity opinion has given no effect to the revision

made in the removal test by Section 1441(c) as enunciated °

in the Finn case. It has permitted removal on the basis of

no more than the “separable aden ca rather than re-

quiring “separate. and indé@pendent cauSes-of action” as”

delineated in Finn.. '

It should be stated here as it was stated i in Finn at. 341)

U: s. 16: \ .

“The past history om mui of ‘separable’ contro-

..versies, the effort of Congress- to create a‘ surer test,

_ and the intention of Congress to restrict the right of

removal leads us to the conclusion that separate and -

independent causes of action are not stated.”

ue Be

‘ rae III.

The Majority Opinion Of The Court Of Appeals |

_ Conflicts, At Least In Principle, With Its Own

Prior Decisions And With weetaone Of Other

Courts Of Appeals.’

Prior decisions of the United States Court’ of pane )

for the Tenth Circuit clearly delineated the distinction not

. observed in the majority opinion in the present case ‘be-

tween the “separable controversy” which would permit

removal under the prior statute and the “separate and

: independent claim or cause of action” required since Sep-

- tember -1, 1948, under 28 U.S.C.A. § 1441. '

In Willoughby v. Sinclair Oil & Gas Co.,188 F. 2d 902

~- (10th Cir. 1951), the court held that separate and distinct

5 \ ee od

acts of negligence on the part of each of the three defend-

ants which all caused or ‘contributed to causing a propane ~.

gas explosion ‘which resulted in a*single injury were not. °

“separate and independent claims, or causes of action”, ;

. stating at 188 F. 2d 905 that under. the statute a single

cause of action “may be stated in the alternative, hypo-

thetical or conditional, either, i in one or separate uate.

In Snow ¥, Powell, 189 F. 2d 172 (10th Cir. 1951), the

court held that an action against a non-resident defendant

‘Whose negligence was alleged to have resulted in a willful

assault on the plantiff by. the resident defendant did not

allege “separate and independent claims or causes of

action”, stating that while “the complaint: charged two

' wrongs” that such wrongs “eoacted to cause a single injury”

and that the two wrongs were not independent. _ The con-

curring opinion stated that an- action against multiple

defendants based upon aysingle injury for which but one |

recovery was sought could not constitute “separate and

iridependent claims gr causes of action” “no matter how

_ many defendants are’ said to be liable therefor, or how

~ diverse the basis: of their liability”. |

In Donahue v. Warner Bros. -Pictures, Pa 194 F.2d 6

(10th . Cir. 1952), the court. held that an ‘action against -

numerous defendants based upon a motion picture film .

which some defendants produced, other defendants dis-

tributed, and still othes defendants exhibited in numerous

different theaters, did not state separate and independent

claims or causes of’ action because “as pleaded all the

defendants joined in such wrong.”

In McLeod v. Cities Service Gas Co., 233 F. 2d. 249 (10th

Cir., 1956), the court held that a damage action for injuries

to plaintiff's, land alleged to have. been committed by the -

nonresident defendant in performing clean-up operations

~“

on the land as a lessee, and by the resident defendant in

performing certain work on three wells on the land under

contract from the nonresident defendant lessee, did not

allege separate g Ad independent claims or causes of action

“even though tHe alleged negligent acts of Miller and those

of Cities Servicéwere committed separately and at different

times, for they could have concurred to produce one wrong

‘for which they would be jointly or severally liable in one

judgment”. The ¢ urt further stated :

“At most the contract makes explicit the scpevabilit

of the acts of Miller and Cities Service.“ It does not

completely negate the concurrence of: the two acts to-

cause a single wrong, and it does not therefore mani-

fest a separate | and independent cause of action within

the méaning of Bection 1441(c)”, ‘

In Gray y. New Mesos Military Institute, 249 F. 2d 28

(10th Cir. 1957), the court: held that a damage action for

personal injuries containing one count against two resident |

defendants predicated on negligence | and a second count

against a non-resident defendant insurance company predi-

cated upon an alleged breach’ of a contract of insurance of

which the plaintiff was averred to be a third party bene-

ficiary did not ‘state separate and independent claims or

causes: of action because :

‘BA pleading which alleges but. one wrong, for which

single relief is sought, canriot constitute a separate and

independent claim, no matter how many defendants are

said to be liable therefor, or how diverse their basis of

liability”.

The majority opinion in the ieee case seems clearly con-

trary, at least in principle, to all of these priar decisions

of the United States Coen. of Appeals for the Tenth

-Cireuit. ”

Furthermore, the majority opinion in this case seems to

/ be in clear conflict with the. decision of the United States

Court of Appeals for the First Circuit in Charles Dowd .

Box Co. v. Fireman’s Fund.Insurance Co., 303 F. 2d 57

(1st Cir. 1962), in which an action against 39 insurance |

companies’ in 61.counts, each based on either a separate

fire insurance policy or a séparate business interruption

policy, was held not to state separate and’ independent

claims or ¢auses of action because the claims were all the

_ result of the total injury to plaintiffs’ property resulting

from two fires which occurred five days apart. The opintom

states in part: a

“The plaintiffs’ claims against the iad hacanine

_ company defendants aré separate and independent in

the sense that each claim against each insurance com-

‘pany is under a separate policy independently er

tiated. * * *”

After ‘discussing and quoting from the Finn case, the

opinion continues :

The two fires five days apart are, of course, to be

treated for present purposes as one and the wrong

alleged is the defendants’ failure to pay compensation -

for it, which is the same-wrong alleged by the plaintiff

in the Finn case. * * * Moreover the plaintiffs’ trans-

actions with ‘the insurance company defendants in’ this -

case are more ‘interlocked’ than in Finn. In fact the

transactions in the case at bar are not only interlocked

but,interwoven by reason of the identical pro-rata ‘and

co-insurance clauses” (303 F. baa 60, 61).

“The only predicate the sented opinion in the instant

- ease has for holding the cause of action against each re-

spondent to be separate and independent is that each claim

is under a “separate” purchase order or subcontract “in-

- 18

dependently negotiated” just-as was the case with the 61

separate and independent insurance policies sued upon m

the Dowd Box case: In the case at bar, as in that case, the

petitioner suffered a single loss, i.e., $3,600,000 damages

because of a totally inoperable plant that would not produce

the products for which it was intended. Under petitioner’s

pleadings, the defaults of each respondent contributed to

the single loss and the performance of each respondent

was interlocked and interwoven through purchase orders or

subcontracts with Braun for integral, interlocked, and inter-

woven parts of a single integrated plant: Here, as there,

the respondents other than.Braun are liable for part, but

not all, of the total damages flowing” from the single injury.

The two cases are in clear conflict at least in reasoning and

principle.

IV.

Construing 28 U.S.C. § 1441(c) To Permit Removal

Of Separate And Independent Causes Of Action In

Absence Of Complete: Diversity: Of ae Of

_ Doubtful Constitutionality.

Even if the cause of action against the Respondents

Braun and Thermal could properly be held to be separate

and independent from the cause of action against. Braun

and. the-other respondents, its removal from the state court

to the federal eourt would be of doubtful constititionality

because of the absence of complete diversity of citizenship.

Some leading authorities: have expressed grave doubts.

about the constitutionality of Section 1441(c) to the extent

that it permits. such removals, Wright, Federal Courts

§ 39, Cohen, Problems i in the Removal bd a “Separate or In-

. _ dependent.Claim or Cause of Action”, 46 Minn. L. Rev. 1,

‘- while others flatly: conclude that the stitee is unconstitu-,

tional under Article III, Section 2, of the Constitution of -

eee

the United ‘States, when so construed and applied, Lewin,

66 Harv. L. Rev..423. | if

Wright states at page 117:

“Only a handful of cases have been removed under

§ 1441(c) since the Supreme Court construed it in the

Finn case, and a strong argument can be made that in

» permitting removal in those cases the district courts

applied the statute erroneously, or that the removal

was unconstitutional. \

* * * inge: )

“Few, if. any, diversity: cases ean properly be re-

moved under this statute in the light of the construc- »

tion placed on it in the Finn ease. Writing in 1961,

_ Professor Cohen. listed 24 such cases in which removal

had been permitted but noted that there is substantial

doubt as to the propriety of removal, evidenced by

other cases denying removal in similar circumstances, ~ .

and many of those cases.”

Wright points out that the prior removal of “closely re-

lated” but separable controversies could be sustained on -

the ground of an ancillary or pendent jurisdiction over the

closely related controversy as to which diversity of citizen-

ship was absent but that ‘such a ground is “hardly avail-—

able under § 1441(c), where the criterion ‘for. removal is

that the claims are entirely unrelated”. He then concludes

at page 119 that, the statute: “Gf read literally, certainly .

"means that ‘there will be some cases where a federal court

will have jurisdiction of a non-federal claim, though di-

versity is absent and though the claim bears no relation to

any federal claim in the case. This poses a serious consti-

tutional question”.

- The Court of Appeals for the Fifth Circuit has expressed

doubt as to whether § 1141(c), so construed and applied, is

constitutional, Finn v. American Fire & Casualty Company,

et tae

207 F. 2d 113, 116 (Sth Cir. , 1953). The Court of Appeals.

_ for the First Circuit in Charles Dowd Box Co., Inc. v. Fire- °

man’s Fund Insurance Co., 303 F. 2d 57, 61 (1st Cir.) 1962),

stated that one of the considerations supporting its decision

that “separate and independent” claims or causes of action

weré not present was that “our conclusion avoids coming to

grips with thé argument, made by Lewin in the Harv. L.

:. Rev. article cited above, that Section 1441(c) exceeds the

constitutional limitation on the jurisdiction of the federal '

courts in both federal question and diversity cases.” |

The same considerations are equally applicable here. It

is admitted that all of the respondents in this case are

‘ properly joined as defendants. Wright at page 118 states

that proper joinder rules out the presence of “separate and

independent” causes of action, stating: )

“The relation which the joinder of parties rules re-

quire is just the kind of relation which, according to

the Finn case, bars resort to Section 1441(c).” »

The adoption’ of Wright’s criterion dee removal under >

_§ 1441(c) that the claims must be “entirely unrelated” pre-

_ vents the constitutional issue from ever being reached. It

cannot be. seriously contended that the claims; against the

* . various respondents in this case are “entirely unrelated”.

If it was so concluded, the removal of the action against

Braun and Thermal in the absence of complete diversity of

citizenship would probably*be unconstitutional.

Whether The Removal Bond:Of A Single Defendant

* Can Effect Removal For Multiple Co-Defendants Is

‘An’ Important Federal Statutory Question. Which

Has Not Been But Should Be Decided a The

United. States Supreme Court.

Respondent Stephens-Adamson Co. alone executed and.

filed a removal borid which’ in the first line thereof named

Stephens-Adamson Mfg. Co. alone as principal (Tr. 25-26).

The purported joinder of the other respondents in the re-

. moval bond was in no way approved, ratified, or agreed to

_ by the surety on the removal bond (Tr. 32-33). The other

_ Tespondents did not undertake to become additional prin-

cipals to the removal bond until December 3, 1965, and the

surety company in no way ratified or agreed to their be-~

coming such principals until that date, when the rider to

the removal bond was filed (Tr. 36); long subsequent to the

expiration of the statutary 20-day period ome which

petition and bond for removal must be'filed. . —

The majority opinion nevertheless holds the bond to be

sufficient to effect removal for all respondents simply be-

cause the word “petitioners” is used in one’ point in the

bond even though it is clear from the first line in the bond

> and from the execution thereof (Tr. 25-26) that only Ste-

phens-Adamson Mfg. Co. is ‘a principal to the bond. The

word “Principals” also appears at the end of the bond un-

der the signature of the single principal. The obviously

inadvertent .and inaccurate use of the words “Petitioners” °

_ and “Principals” when on the face of the instrument there

is only one is a farfetched and feeble point indeed upon

which to ed a holding.

i>.

‘ .

‘ surety company did not assent until- more

1 22

- It is well established that all defendants must join in the

removal, 28 U.S.C. § 1441(a) ; Gableman v. Peoyia D. & #.

R.R., 179 U.S. 335 (1900) ; Chicago, RI. & P. R.R. v: Mar-

tin, 178_U.S,..245 (1900)....At.the time -of..this attempted _

removal 28 U.S.C: ¢ 1446(b) required that a petition for

removal be filed within 20 days after service of* complaint

or summons. This 20- day. time period is mandatory and

jurisdictional. 1 Barron & Holtzof’, Federal Practice &

Procedure, § 107 (Wright - ed. 1963). 28 U.S.C. § 1446(d)

makes it-mandatory that “each petition for removal” of a

case from the state court to the United States District

Court “shall bé accompanied by a bond with good and suf-

ficient. surety” and such bond must be “conditioned that

the defendant or defendants will pay all costs and disburse- -

ments incurred by reason -of the. removal proceedings -

should it be determined that the case was not removable

or. was improperly removed”. It has been held that. filing

of the bond -‘within the time limited for peer, along

with the removal petition “is essential to .‘effect the re-

moval’ ”. Nelson v. Peter Kiewit Sons Co., 130 F. Supp. 59

(D.N.J. 1955) ; Richlin Advertising Corp.v. Central Florida

~~ Broadcasting Co., 122 F. Supp. 507 (8.D.N.Y. 1954). Hence,

it clearly appears that the filing of the rider to the removal —

bond ‘in which the other respondents for the first time

became prineipals upon the removal bond and in which the

surety company for the first time agreed to their being

' principals was totally ineffectual since it came long after

the expiration of the 20-day statutory period and after

hearing on petitioner’ s motion to remand the ease to the

state court.

The purported siblioe by the other respondents in‘ the

removal bond of Stephens-Adamson Mfg. os which the

3 an 60 days

later, either was totally ineffectual to-make the other re-

was’ effectual, under universally recognized principles of

-. by reason of the addition of further principals without its

——-. assent. _Annot., “Liability of -Surety”’, 144 ALR at 1267

_ (1948) ; Williston, Treatise on Contracts, § 1240 at 3552-

53;.O’Neal v. Long, 4 Cranch 60, 2 L. Ed. 550 (1807);

Anderson v. Bellinger, 87 Ala. 334, 6 So. 82 (1889). In

either event the respondents other than Stephens-Adamson

_ Mfg. Co. had no removal bond during the 20-day statutory

period and for more than 60 days thereafter because either

‘a bond on which they are,not principals or a bond from

which the surety has been discharged by their addition as

principals’ i is the equivalent of no bond. _

The United States Supreme Court bins not decided the

question of whether a removal bond perfected by a single

defendant as principal can effect the removal for other de-

fendants who have no removal bond during the statutory ‘ “*

period. No previous case has ever construed”28 U.S.C.

_ §1446(d) as requiring a removal ‘pond from only one de-

-fendant-among multiple defendants. The question.is cer-

tainly an important question of federal law and of federal

statutory construction as it involves a significant point of

federal procedure and a substantial question as to the ju-.

risdiction of the federal courts. This. is particularly true

in view of the general rule that removal procedures must,

be strictly followed in cases based upon diversity because

it is the policy of the federal courts to restrict diversity

jurisdiction and-to remand doubtful removal cases to the

state courts. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S.

100 £1940) ; Wright, Federal Courts, § 23, at 64-69 (1963) ;

1 Barron & H oltzoff, Federal Practice & Prégedure, § 107

(Wright ed. 1963) ; Lumbermen’s Mutual Cas. Co. v. Elbert,

348 U.S. 48 (1954).

SON tan? “ By:

ov RRA NEL PO TN AS CRIT

3 i of record.

B ahativamats

“It is raspectfully submitted that the petitions: for writ of

certiorari should be gra .

irst City National Bank

Sy eg ne Building .

A eas oy Houston, Texas 7 7002

C. Metvin Neat

Tom W. NEauL

Box 278 :

Hobbs, New Mexico 88240

7 Attorneys for Petitioner

Climax Chemical Company

Vinson, ELKINs, Weems & SEARLS . ne ' a

First City National Bank Bullding

_ Houston, Texas 7 7002

Ne EAL AND NEAL

Box 278 i.

Hobbs, New Mexico 88240

Of Counsel for Petitioner

Climax Chemical Company

CERTIFICATE OF SERVICE

3 J

; Copies of this petition for writ of certiorari have been .

attorneys of record for. he respondents at their addresses

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.