Charles Dowd Box Co. v. Fireman's Fund Insurance Co., 5911.

• Decision Date: 14 May 1962
• Docket Number: No. 5911.,5911.
• Citation: Charles Dowd Box Co. v. Fireman's Fund Insurance Co., 303 F.2d 57 (1st Cir. 1962)
• Parties: CHARLES DOWD BOX COMPANY, Inc., et al., Plaintiffs, Appellants, v. FIREMAN'S FUND INSURANCE COMPANY et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

303 F.2d 57 (1962)

CHARLES DOWD BOX COMPANY, Inc., et al., Plaintiffs, Appellants, v.FIREMAN'S FUND INSURANCE COMPANY et al., Defendants, Appellees.

No. 5911.

United States Court of Appeals First Circuit.

May 14, 1962.

Sumner H. Babcock, Boston, Mass., with whom Everett H. Parker and Bingham, Dana & Gould, Boston, Mass., were on the brief, for appellants.

John W. Burke, Boston, Mass., with whom Francis E. Dooley, Jr., Robert E. McCourt and Burke, Monaghan & McGrath, Boston, Mass., were on the brief, for appellees.

Before WOODBURY, Chief Judge, and HARTIGAN and ALDRICH, Circuit Judges.

WOODBURY, Chief Judge.

This is an appeal under § 1292(b) of Title 28 U.S.C. from an order denying a motion to remand an action against 39 insurance companies to the Superior Court of the Commonwealth of Massachusetts for the County of Suffolk where it originated.

The plaintiffs below, Charles Dowd Box Co., Inc., and Dowd Realty Co., are both Massachusetts corporations having their principal places of business in that Commonwealth, and are the named assureds in 51 fire insurance policies and 10 business interruption policies issued by the defendant insurance companies.The total face amount of the fire policies is $1,996,000; that of the business interruption policies is $155,000.All policies are in the Massachusetts standard form and as such each group contains identical pro-rata and co-insurance clauses.

On July 11, 1960, and again on July 16, 1960, the plaintiffs' premises were seriously damaged by fires.The 39 insurance companies refused to settle for the loss and within a year the plaintiffs brought a single action in 61 counts against them in the Superior Court of Massachusetts for Suffolk County.Each count of the complaint alleges the issuance of a single policy (51 allege the issuance of a fire policy and 10 the issuance of a business interruption policy), that the plaintiffs suffered loss within the coverage of the policy and that the defendant which issued the policy is liable thereon but despite demand has paid no part of its contractual obligation.

All the defendants joined in one answer consisting of a general denial, an allegation that the policies were suspended at the time of the fires and an allegation that the insureds had violated the automatic sprinkler clause.And at the same time, which was within the time provided by Title 28 U.S.C. § 1446 (b), 32 of the 39 defendants filed a single joint petition for removal of the action to the United States District Court for the District of Massachusetts.Four of the 7 defendant insurance companies not joining in the petition for removal are Massachusetts corporations and the remaining 3 had each issued only one policy in a face amount less than enough for federal jurisdiction.Promptly after the filing of the petition for removalthe plaintiffs-appellants filed a motion for remand, which the court below denied, and they thereupon perfected this appeal under Title 28 U.S.C. § 1292(b).

Federal question jurisdiction is not involved.The only possible basis for federal jurisdiction is diversity of citizenship and an amount in controversy in excess of $10,000.But diversity jurisdiction is not complete for as to some defendants the requisite amount is not in controversy and others are co-citizens of the plaintiffs.Since some of the partiesdefendant are citizens of the same state as the plaintiffs, original federal diversity jurisdiction of the action is lacking, Strawbridge v. Curtiss, 3 Cranch 267, 2 L.Ed. 435(1806), and removal is not authorized under the last sentence of § 1441(b) of Title 28 U.S.C., which provides that civil actions other than those founded on claims of federal right "* * 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."¹Therefore if the present action is removable at all it must be so under § 1441 (c) which 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 nonremovable 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."

Although the Court in American Fire & Casualty Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702(1951), did not advert to the point, it seems to have decided sub silentio, as it is generally held, that under this provision the splitting of joined causes of action and the separate trial of one part in the federal court and the other part in the state court is not permitted as a matter of right.²"Under Section 1441(c) the whole multiple issue or multiple party suit is removed to the federal court or none of it is, although after proper removal the federal court may in its discretion split off and remand `all matters not otherwise within its original jurisdiction.'"Lewin, Removal of Non-Federal Causes, 66 Harv.L.Rev. 423, 428(1953).Indeed, the statute makes this clear, for it specifically provides for removal of the "entire" case.Thus, contrary to what appears to have been the impression of the court below, if the petition of the 32 defendants for removal is effective it will remove the entire action into the federal court, even that part of it against the defendants over which the court lacked original jurisdiction.The question under § 1441 (c) is whether the case consists of "separate and independent" claims or causes of action.

In answering this question we do not pause to consider the subsidiary question whether the plaintiffs' claims against the insurance companies would be considered separate and independent under Massachusetts law, for the Court in Finn, without reference to the law of Texas, decided that point solely as a matter of interpretation of the federal statute.Contra, Kornegay v. Hardware Mutual Fire Insurance Co., 106 F.Supp. 347(E.D.N.C.1952);Baltimore Gas & Electric Co. v. United States Fidelity & Guaranty Co., 159 F.Supp. 738(D.Md.1958), 166 F.Supp. 703, rev'd on other grounds, 269 F.2d 138(C.A.4, 1959).Nor do we stop to inquire whether the plaintiffs below have a "separable controversy" with each individual insurance company, because with reference to the present statutethe Court in Finn said at page 11 of 341 U.S., at page 538 of 71 S.Ct.: "A separable controversy is no longer an adequate ground for removal unless it also constitutes a separate and independent claim or cause of action."

The plaintiffs' claims against the several insurance company defendants are separate and independent in the sense that each claim against each insurance company is under a separate policy independently negotiated.However, the same might have been said in Finn, where the plaintiff, a citizen of Texas, brought an action in a state court against two non-resident insurance companies and their local agent, a citizen of Texas, on separate and alternative theories of liability for a fire loss, but the Court nevertheless held that the claims were not separate and independent and so the action was not removable.

In reaching its decision in Finnthe Court first laid stress on two points.Referring to the Reviser's Notes it said at pages 9 and 10, 71 S.Ct. at page 538:

"One purpose of Congress in adopting the `separate and independent claim or cause of action\' test for removability by § 1441(c) of the 1948 revision in lieu of the provision for removal of 28 U.S.C. (1946 ed.) § 71,³ was by simplification to avoid the

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