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S&T Bank v. Safeco Insurance Company of America

March 17, 2008

S&T BANK, PLAINTIFF,
v.
SAFECO INSURANCE COMPANY OF AMERICA, GENERAL INSURANCE COMPANY OF AMERICA, FIRST NATIONAL INSURANCE COMPANY OF AMERICA, AND SAFECO NATIONAL INSURANCE COMPANY AND A&L, INC., DEFENDANTS.



The opinion of the court was delivered by: Judge Nora Barry Fischer

MEMORANDUM ORDER

This matter is before the Court on the following motions: Plaintiff's Motion to Remand Case and Strike Removal for Lack of Jurisdiction [DE 5], filed by Plaintiff S&T Bank on October 9, 2007; and Motion to Remand [DE 17], filed by Defendant A&L, Inc. on November 2, 2007.

PROCEDURAL HISTORY

The instant matter tangentially relates to two other federal lawsuits, all of which arise out of (at least in part) an "Intercreditor and Mutual Subordination Agreement," entered into between S&T Bank (referred to therein as "Lender") and the Safeco Defendants (referred to therein as "Creditor") (hereinafter, "Intercreditor Agreement"). In said Intercreditor Agreement, A&L is referred to as the "Borrower."

First, on August 8, 2007, Safeco Insurance Company of America, General Insurance of America, First National Insurance Company of America, and Safeco National Insurance Company filed a Complaint in federal court against A & L, Inc., Gal Construction, Inc., Bojalad Holdings, Inc., Louis D. Ruscitto, and Carol A. Ruscitto, in which they allege claims for breach of contract, assumpsit, reimbursement, specific performance, and interference with contractual relations arising out of a indemnity agreement. On October 3, 2007, after Defendants filed a Motion to Dismiss or in the Alternative, Strike Based on Rule 12(b)(1), 12(b)(6) and 12(b)(7) of the Federal Rules of Civil Procedure, the Plaintiffs filed an Amended Complaint, in which they added S&T Bank as a defendant. This action is styled as Civil Action No. 07-01086.

Second, on September 17, 2007, S&T Bank filed a Complaint for Declaratory Judgment and Accounting against Safeco Insurance Company of America, General Insurance of America, First National Insurance Company of America, and Safeco National Insurance Company in the Court of Common Pleas of Indiana County, Pennsylvania, at Case No. 11728-CD-2007 ("first state court case"). On or about September 24, 2007, Plaintiff served the Complaint upon the Defendants. On the morning of October 1, 2007, Plaintiff filed a Praecipe to Settle and Discontinue Without Prejudice, pursuant to Pennsylvania Rule of Civil Procedure 229(a). During the afternoon of the same day, Defendants filed a Notice of Filing of Notice of Removal, effectively removing Case No. 11728-CD-2007 to this Court. This first state court case is styled as Civil Action No. 07-01324.

Third and finally, on October 1, 2007, S&T Bank filed a Complaint for Declaratory Judgment and Accounting in the Court of Common Pleas of Indiana County, Pennsylvania, at Case No. 11811-CD-2007 ("instant Complaint"), against the following defendants: Safeco Insurance Company of America, General Insurance Company of America, First National Insurance Company of America, and Safeco Insurance Company (collectively hereinafter, "Safeco Defendants") as well as A&L, Inc ("second state court case"). On the same day, Plaintiff served the Complaint upon all Defendants. On October 3, 2007, the Safeco Defendants filed a Notice of Filing of Notice of Removal, effectively removing Case No. 11728-CD-2007 to this Court, which precipitated the filing of the instant pending motions to remand by Plaintiff S&T Bank and Defendant A&L. This second state court case is the instant action.*fn1

PENDING MOTIONS

As a result of the Safeco Defendants' notice of removal in this action, on October 9, 2007, Plaintiff filed its motion to remand and strike removal, proffering two arguments in support of remand: (1) Defendants are contractually precluded from removing the instant action; and, or in the alternative, (2) there is no complete diversity amongst the Defendants and thus this Court lacks jurisdiction over this matter. On October 18, 2007, the Safeco Defendants filed Safeco's Response in Support of Removal Due to Fraudulent Joinder, in which Defendants argue that (1) removal is permissible under the Intercreditor Agreement; and (2) Plaintiff fraudulently joined Defendant A&L in order to destroy diversity. On October 30, 2007, Plaintiff filed Plaintiff, S&T Bank's Reply Brief to Safeco's Response in Support of Removal.

Subsequently thereafter, on November 2, 2007, Defendant A&L filed its motion to remand, arguing that "[t]his Court cannot exercise jurisdiction over the subject matter of the [instant matter] based on diversity because A&L and S&T are adverse parties who share a common, non-diverse citizenship." (Docket No. 17 at ¶21). On November 15, 2007, the Safeco Defendants filed Safeco's response to A&L's Motion to Remand. On November 21, 2007, Plaintiff S&T filed Plaintiff, S&T Bank's Response in Support of Defendant, A&L, Inc.'s Motion to Remand. Five days later on November 26, 2007, Plaintiff S&T filed an Amendment to the same in order to correct a typographical error. Also on November 26, 2007, upon leave of Court, Defendant A&L filed Defendant A&L, Inc.'s Reply Brief in Support of Motion to Remand. And finally, on December 11, 2007, the Safeco Defendants filed their Reply Brief of Safeco.

Needless to say, both motions are fully briefed and ripe for disposition. Because the Court finds that the Safeco Defendants have failed to meet their burden to establish fraudulent joinder, the Court declines to address whether the Safeco Defendants waived the right of removal in the Intercreditor Agreement.

ANALYSIS

Federal court are courts of limited jurisdiction, as outlined in Article III of the U.S. Constitution. In conformity with this well-established principle, "[t]he removal statutes 'are to be strictly construed against removal and all doubts should be resolved in favor of remand.' " Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990) (citations omitted); see also Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992). 28 U.S.C. §1441, entitled "Action removable generally," provides, in pertinent part:

Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought. 28 U.S.C. §1441(b) (emphasis added). Because there is no federal question here, this Court does not have original jurisdiction over this action, i.e., the first sentence of section 1441(b) does not apply. Therefore, according to the second sentence of section 1441(b), a state court action is removable "only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought", i.e., the Commonwealth of Pennsylvania. Id. Here, the face of the instant Complaint filed at No. 11811-CD-2007 in the Court of Common Pleas of Indiana County plainly reveals that Plaintiff S&T is a state bank organized and existing under the laws of the Commonwealth of Pennsylvania, with its principal office within the Commonwealth of Pennsylvania as well, and Defendant A&L is a Pennsylvania Corporation with its principal place of business within the Commonwealth of Pennsylvania. (See Docket No. 5, Exh. 2, at ¶1,3) ("Complaint for Declaratory Judgment and Accounting"). Because the citizenship of a corporation is determined according to where it is incorporated and the location of its principal place of business, ...


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