575 F.Supp. 1528 (N.D.Cal. 1983), C-83-20299, Visicorp v. Software Arts, Inc.

Docket Nº:C-83-20299-WAI.
Citation:575 F.Supp. 1528
Party Name:VISICORP, Plaintiff, v. SOFTWARE ARTS, INC., et al., Defendants.
Case Date:December 19, 1983
Court:United States District Courts, 9th Circuit, Northern District of California
 
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Page 1528

575 F.Supp. 1528 (N.D.Cal. 1983)

VISICORP, Plaintiff,

v.

SOFTWARE ARTS, INC., et al., Defendants.

No. C-83-20299-WAI.

United States District Court, N.D. California.

Dec. 19, 1983

Page 1529

Edmond C. Gregorian, Fenwick, Stone, Davis & West, Palo Alto, Cal., for plaintiff.

Theodore E. Orliss, Schroeder & Davis, Inc., Monterey, Cal., J. Thomas Lenhart, P.C., Philip J. Harvey, Shaw, Pittman, Potts & Trowbridge, Washington, D.C., for defendants.

ORDER

INGRAM, District Judge.

Plaintiff VISICORP, a California Corporation, moves to remand this action to state court on the basis of alleged defects in the removal petition. Defendants SOFTWARE ARTS, INC., and SOFTWARE ARTS PRODUCTS, INC., both Massachusetts Corporations, seek dismissal or alternatively to transfer the case to Massachusetts pursuant to a forum selection clause contained in an agreement between the parties.

The parties are engaged in the development and marketing of computer software. In 1979, VISICORP, through its predecessor company, Personal Software, Inc., a Massachusetts Corporation, entered into an agreement with SOFTWARE ARTS, INC., whereby the latter granted plaintiff an exclusive license to reproduce and sell the "VisiCalc" software program for the Apple II personal computer in exchange for royalties received pursuant to sales and other transactions in which plaintiff might become involved concerning "VisiCalc." The complaint, filed in October, 1982, in Santa Clara county superior court, San Jose, California, essentially charges defendants with violating the 1979 Agreement and seeks damages and declaratory relief under theories of breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, and negligent misrepresentation.

I. Propriety of Removal

Defendants are alleged to have improperly removed this action because 1) they failed to provide a proper removal bond and, 2) they failed to provide plaintiff with copies of discovery propounded in the state court from which this case was removed.

Defendants herein timely filed with this Court their Verified Petition for Removal, cash in the amount of $250.00, and a self-styled document entitled "Notice of Filing Cash in Lieu of Removal Bond." 1 Paragraph 8 of the Verified Petition states:

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Defendants ... are filing herewith, attached as Exhibit B, a $250.00 cash bond with good and sufficient surety conditioned, as provided by 28 U.S.C. § 1446(d), that they will pay all costs and disbursements incurred by reason of the removal proceedings hereby brought should it be determined that the case was not removable or was improperly removed.

Removal is governed by 28 U.S.C. § 1441, et seq., and removal bonds by 28 U.S.C. § 1446(d), which provides:

Each petition for removal of a civil action or proceeding, 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 defendants will pay all costs and disbursements incurred by reason of the removal proceedings should it be determined that the case was not removable or was improperly removed.

Local Rule 290-2(d) of the United States District Court for the Northern District of California allows the posting of a cash deposit provided a bond is signed by the principals of the removing defendants. The bond shall be in the amount of $250.00. Local Rule 290-4.

The intent of § 1446(d) seems rather clear: a removing defendant shall bear the ultimate financial responsibility for improvident removal. The terms used to convey this intent are equally clear. A "bond" is simply a sum of money as bail or surety. "Good and sufficient surety" is simply a pledge or formal promise made to secure against default. This Court sees no reason why cash lodged with the Clerk of the Court, a record of which has been recorded by the Clerk's financial section, and deposited in a separate interest bearing bank account under the name of "Clerk, U.S. District Court," together with the statement in the Petition for Removal, quoted herein, fails to comply with § 1446(d). The Court further finds that Local Rule 290-2(d), interpreted in light of commonly accepted agency principles and the reality that counsel herein have at least the apparent authority to act to remove this action and to do so correctly, does not bar an attorney from signing an instrument of surety, such as the Petition for Removal on file herein, in place of his client. 2

Plaintiffs have vigorously opposed this Court's adoption of any good faith, substantial compliance standard. However, the cases they have cited against the conclusion arrived at herein instead appear to support it. In Proteus Foods and Industries,...

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