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GREATER NEW YORK MUT. INS. CO. v. ANCHOR CONSTR. C

March 29, 1971

GREATER NEW YORK MUTUAL INSURANCE COMPANY
v.
ANCHOR CONSTRUCTION CO., Inc. and Lasker-Goldman Corporation


Troutman, District Judge.


The opinion of the court was delivered by: TROUTMAN

This is an action for an alleged breach of contract to pay certain premiums for a policy of workmen's compensation insurance. Presently before the Court is plaintiff's motion to remand the action to the Pennsylvania State Courts pursuant to 28 U.S.C. § 1447(c). The matter had previously been removed to this Court under 28 U.S.C. § 1441(c). At issue here is the interesting question of the removal rights of third-party defendants. This question has, to the extent of our research, not been the subject of written opinion by any court in this District or by the Third Circuit. The pertinent facts are as follows:

 Plaintiff, Greater New York Mutual Insurance Company, (hereafter "Greater New York Mutual") is a New York corporation with its principal place of business in New York. Plaintiff instituted an action in assumpsit in the Common Pleas Court of Lehigh County, Pennsylvania solely against defendant, Anchor Construction Company, Inc. (hereafter "Anchor"), a Pennsylvania corporation with its principal place of business in Pennsylvania. In the principal action, plaintiff seeks to recover $16,491.84, representing alleged unpaid premiums for a policy of workmen's compensation insurance issued by plaintiff to defendant in connection with a construction project at New Paltz, New York.

 Defendant's answer admitted non-payment of the premiums. However, it denied liability to plaintiff and alleged as "New Matter" under Pennsylvania practice, that the insurance related to work performed by Anchor as a subcontractor of Lasker-Goldman Corporation ("Lasker-Goldman"), a New York corporation with its principal place of business in New York. It was further alleged that Greater New York Mutual, Anchor and Lasker-Goldman orally agreed among themselves that the insurance premiums payable by Anchor would be deducted by Lasker-Goldman from progress payments due to Anchor and would be paid by Lasker-Goldman to New York Mutual.

 Anchor then joined Lasker-Goldman as an "additional defendant" under Pennsylvania practice. Specifically, in paragraphs 6 and 7 of Anchor's third-party complaint against Lasker-Goldman, defendant alleges that all three parties agreed among themselves that the premiums due for the insurance in issue would be paid by Lasker-Goldman rather than by Anchor. Consequently, according to Anchor's third-party complaint, Lasker-Goldman would be either solely responsible or jointly and/or severally liable to plaintiff for the insurance payments.

 The initial issue before this Court is the perplexing problem of whether a third-party defendant may remove under the Federal removal statute. If he may, we must, secondly, determine if removal is proper in the instant case; that is, whether there exists a "separate and independent claim" within the meaning of 28 U.S.C. § 1441(c).

 Lasker-Goldman in seeking to sustain the removal relies upon 28 U.S.C. § 1441(c) which provides as follows:

 
"(c) Whenever a separate and independent claim or cause of action, which would be removable if sued upon alone, is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion may remand all matters not otherwise within its original jurisdiction."

 Lasker-Goldman argues that the claim asserted against it by the original defendant Anchor constitutes a "separate and independent claim" which would have been removable if sued upon alone since there is more than $10,000.00 in controversy and there is diversity of citizenship between Anchor (Pennsylvania) and itself (New York). It is argued that there is a separate contract between Anchor and Lasker-Goldman which must be proved by facts, transactions and occurrences totally distinct from those supporting the claim of Greater New York Mutual against Anchor. Additionally, Lasker-Goldman contends that it should not be precluded from removal by the fortuity that it was joined as a third-party defendant rather than as an original defendant, especially where the plaintiff's original claim against the defendant is within the Federal diversity jurisdiction *fn1" and where the third-party claim of defendant against Lasker-Goldman would be removable if sued upon alone.

 Plaintiff, on the other hand, relies upon the view held by Professor Moore *fn2" that the removal statute does not permit removal by third-party or " ancillary" defendants. Furthermore, plaintiff contends that in any event no separate and independent claim is asserted which could make this a removable case.

 The resolution of the instant question is indeed not simple. *fn3" The cases are directly in conflict and cannot realistically be distinguished and reconciled. *fn4"

 The right to remove a case from State to Federal Court is a purely statutory right unknown to the common law and is dependent for its existence upon the will of Congress. 1 Barron & Holtzoff, Federal Practice & Procedure § 101, pp. 455-56 (Rules Ed. 1960). Our analysis of the instant case, therefore, must be guided by principles of strict statutory construction and by the underlying policy considerations relating to removal.

 The policy to narrow the right to removal and constrict rather than expand the scope of Federal jurisdiction is evident. See American Fire & Casualty Co. v. Finn. 341 U.S. 6, 71 S. Ct. 534, 95 L. Ed. 702 (1951). In 1875 the right to removal, at least in Federal question cases, was granted to "either party". However, the Judiciary Act of 1887-1888, restricted this broad rule to allow removal only by a "defendant or defendants". See Tennessee v. Union & Planters Bank, 152 U.S. 454, 14 S. Ct. 654, 38 L. Ed. 511 (1894). Mr. Justice Roberts in St. Paul Mercury Indemnity v. Red Cab Co., 303 U.S. 283, 288, 58 S. Ct. 586, 590, 82 L. Ed. 845 (1938) noted that in diversity cases "[the] intent of Congress drastically to restrict federal jurisdiction in controversies between citizens of different states has always been rigorously enforced by the courts". See also McSparran v. Weist, 402 F.2d 867 (3rd Cir. 1968) cert. denied 395 U.S. 903, 89 S. Ct. 1739, 23 L. Ed. 2d 217 (1969).

 In the latest revision of Section 1441(c) in 1948, Congress, by adopting the term "separate and independent claim" as the test for removability under Section 1441(c) in lieu of the prior language, "separable controversy", clearly evidenced an intent to further limit the right to removal from State courts. See American Fire & Casualty Co. v. Finn, supra, 341 U.S. at page 16, 71 S. Ct. 534. Clearly, therefore, the removal statute must be strictly and narrowly construed to effectuate the salutory policy of restricting the ...


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