Carl Heck Engineers, Inc. v. Lafourche Parish Police Jury

• Decision Date: 23 July 1980
• Docket Number: No. 79-1388,79-1388
• Citation: 622 F.2d 133
• Parties: CARL HECK ENGINEERS, INC., Plaintiff, v. LAFOURCHE PARISH POLICE JURY, Defendant-Third Party Plaintiff-Appellant, v. MARYLAND CASUALTY COMPANY, Third Party Plaintiff Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 133

622 F.2d 133

CARL HECK ENGINEERS, INC., Plaintiff, v. LAFOURCHE PARISH POLICE JURY, Defendant-Third Party Plaintiff-Appellant, v. MARYLAND CASUALTY COMPANY, Third Party Plaintiff Defendant-Appellee.

No. 79-1388.

United States Court of Appeals,

Fifth Circuit.

July 23, 1980.

Jerome J. Barbera, III, Asst. Dist. Atty., 17th Judicial District, Thibodaux, La., for defendant-third party plaintiff-appellant.

Marian Mayer Berkett, Matt J. Farley, New Orleans, La., for third party plaintiff defendant-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before AINSWORTH and CHARLES CLARK, Circuit Judges, and HUNTER ^*, District Judge.

AINSWORTH, Circuit Judge:

This is an appeal by Lafourche Parish (Louisiana) Police Jury (Lafourche) from an adverse judgment in its third party action against Maryland Casualty Company (Maryland) growing out of a claim against appellant in a defaulted public road contract. Involved are two rulings of the district court in the third party action in which in the first instance the district judge granted the motion of third party defendant-appellee Maryland to sever the third party claim and remand the original cause of action to the state court from whence the entire matter had been removed. ¹ In its second ruling, the district judge, treating appellee Maryland's motion to dismiss as a motion for summary judgment, ² granted summary judgment in favor of Maryland and against third party plaintiff-appellant Lafourche dismissing appellant's third party claim. We affirm.

Appellant Lafourche entered into a contract with Donald G. Lambert Contractor, Inc. (Lambert), for the construction and repair of certain parish roads. The contract was secured by a payment and performance bond furnished by appellee Maryland and provided for retention of funds by Lafourche and payment to it of liquidated damages in the event Lambert defaulted. Lafourche also contracted separately with Carl Heck Engineers, Inc. (Heck), the plaintiff in the original claim against Lafourche, for engineering services on the project. The contract also provided for liquidated damages to be paid Heck out of the contract funds retained by Lafourche in the event of delay in project completion. Neither Lambert nor Maryland were parties to Lafourche's contract with Heck.

Prior to completion Lambert abandoned the project and Maryland assumed Lambert's contract under certain additional terms. Maryland agreed to provide a new contractor upon Lafourche's approval and Lafourche agreed to waive liquidated damages should the new contractor complete the work within a specified time, which extended beyond the period promised by Lambert and provided for in Lafourche's contract with Heck. Lafourche turned over to Maryland all contract funds, including those retained and Maryland agreed to hold Lafourche harmless "from any liabilities or loss resulting from claims made by persons . . . asserting a lien, privilege or ownership in the funds so released to Maryland . . . ." ³ The work provided in Maryland's relet contract was timely completed and the job was accepted by Lafourche.

Subsequently, however, Heck filed suit against Lafourche in a Louisiana state court seeking liquidated damages because the project had not been completed in the time provided for in Heck's contract with Lafourche. Lafourche then filed a third party claim against Maryland, contending that Maryland was required to defend Lafourche and hold it harmless from Heck's claim in accordance with Maryland's take-over agreement with Lafourche. Maryland by appropriate motion then removed the entire action to federal court. Once there it filed motions to sever the main and third party actions, to remand the main demand to state court and to dismiss the third party claim. Lafourche moved to remand the entire case to state court.

In granting Maryland's motions, the district court held that the action was properly removable to federal court under 28 U.S.C. § 1441(c). This section provides:

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.

In noting that there was diversity of citizenship between Maryland and Lafourche the district court found that the third party claim would be removable if sued upon alone. ⁴ It also held that although the question of Maryland's liability under its indemnity agreement with Lafourche was related to the circumstances surrounding Heck's claim for liquidated damages, the third party claim was separate and independent from the claim asserted in the main cause of action. Thus the court had jurisdiction over the entire matter under the provisions of section 1441(c). In its discretion, however, the court chose to sever the claims and remand the original cause of action of Heck to the state court.

Although the decisions are in conflict as to a third party defendant's right to remove a controversy under section 1441(c), the circumstances of this case justify the court's ruling that the cause of action was removable. A number of cases have held that a cause of action is not removable where the main claim could not have been brought originally in federal court and removal is sought solely on the basis of a third party claim. The cases turn principally on two theories, either the impleaded third party cause of action is merely incidental or ancillary to the main claim and is not a separable controversy, see, e. g., Hyde v. Carder, 310 F.Supp. 1340 (W.D.Ky.1970); Panzer v. Lyons Cafeterias, Inc., 21 F.Supp. 263 (E.D.N.Y.1937), or it is unjust to permit a party not sued by the plaintiff to compel the original plaintiff to a trial in a forum not of his own selection, see, e. g., Holloway v. Gamble-Skogmo, Inc., 274 F.Supp. 321 (N.D.Ill.1967); Burlingham, Underwood, Barron, Wright & White v. Luckenbach Steamship Co., 208 F.Supp. 544 (S.D.N.Y.1962); Brown v. Hecht Co., 78 F.Supp. 540 (D.Md.1947). Professor Moore agrees with these theories and interprets section 1441(c) to allow removal only by the original defendant where there is joinder of separate and independent claims by the plaintiff, adhering to the position that the statute does not authorize removal by a third party defendant. 1A Moore's Federal Practice P 0.167(10), at 413-20 (2d ed. 1979).

Several cases, however, have permitted removal on the basis of a third party claim where a separate and independent controversy is stated. See, e. g., Central of Georgia Ry. v. Riegel Textile Corp., 426 F.2d 935 (5th Cir. 1970); Gamble v. Central of Georgia Ry., 356 F.Supp. 324 (M.D.Ala.), rev'd on other grounds, 486 F.2d 781 (5th Cir. 1973); Ted Lokey Real Estate Co. v. Gentry, 336 F.Supp. 741 (N.D.Tex.1972); Wayrynen Funeral Home, Inc. v. J. G. Link & Co., 279 F.Supp. 803 (D.Mont.1968); Industrial Lithographic Co. v. Mendelsohn, 119 F.Supp. 284 (D.N.J.1954). This is to us the more rational view. If the removal statute is to be applied uniformly, "construction should not depend on the procedures of a particular state respecting third party practice." Industrial Lithographic Co., supra, 119 F.Supp. at 286. Furthermore, the language of the statute does not require only those causes of action joined by the original plaintiff to form the basis of removal. If the third party complaint states a separate and independent claim which if sued upon alone could have been brought properly in federal court, there should be no bar to removal.

Here, the claim for indemnity by...