Climax Chemical Company v. CF Braun & Co.

Decision Date29 December 1966
Docket NumberNo. 8654.,8654.
Citation370 F.2d 616
PartiesCLIMAX CHEMICAL COMPANY, Appellant, v. C. F. BRAUN & CO., a corporation, Pennsalt Chemical Corporation, a corporation, J. T. Thorpe, Inc., a corporation, Heyward-Robinson Company, a partnership, Bernard Goodman and Alexander Sommer, partners composing said partnership, Thermal Research & Engineering Corporation, a corporation, Stephens-Adamson Mfg. Co., a corporation, Standard Steel Corporation, a corporation, and Beaumont Birch Company, a corporation, Appellees.
CourtU.S. Court of Appeals — Tenth Circuit

C. Melvin Neal, Hobbs, N. M., and Leroy Jeffers, Houston, Tex. (Richard P. Keeton, Houston, Tex., Tom W. Neal, Hobbs, N. M., Vinson, Elkins, Weems & Searls, Houston, Tex., and Neal & Neal, Hobbs, N. M., on the brief), for appellant.

Daniel A. Sisk and James C. Ritchie, Albuquerque, N. M. (Kenneth L. Harrigan, Houston, Tex., and Modrall, Seymour, Sperling, Roehl & Harris, John B. Tittmann and Russell Moore and Keleher & McLeod, David A. Grammer, Jr., Duane C. Gilkey and Rodey, Dickason, Sloan, Akin & Robb, David G. Housman, Schall, Sceresse & Addis, and Willard F. Kitts, Albuquerque, N. M., on the brief), for appellees.

Before BREITENSTEIN and ALDRICH*, Circuit Judges, and KERR, District Judge.

ALDRICH, Circuit Judge.

This interlocutory appeal, here by virtue of 28 U.S.C. § 1292(b), raises the question of the propriety of the district court's refusal to remand to the state court an action brought by a single plaintiff against a number of defendants for breach of a number of contracts. The plaintiff, Climax Chemical Company, is a Delaware corporation. The principal defendant, C. F. Braun & Co., is a California corporation, and the other defendants are likewise alleged in the complaint, and in the removal papers, to be citizens of states other than Delaware, in which plaintiff was incorporated, and of New Mexico, where plaintiff had its principal place of business and where the action was brought. Following removal, however, it shortly appeared that one defendant, Thermal Research and Engineering Corporation, was incorporated in Delaware. Climax moved to remand for lack of complete diversity, and also because of defendants' alleged failure to comply with the statutory requirements regarding a removal bond. Upon the denial of its motion this appeal was allowed to be taken.

The motion for remand asserted, inter alia, "the claims or causes1 of action sued upon by plaintiff herein are not separate and independent * * * but * * * this is an action against the defendants in joint and several causes of action and each and all of the defendants are jointly and severally liable with the other defendants or some of them." (Italics supplied.) In its memorandum of decision the district court recited that there were a number of separate and independent claims or causes of action, all of which were removable except the one against Thermal, and that in the court's discretion it would, pursuant to the authority granted by 28 U.S.C. § 1441(c),2 retain that cause as well as the others.

In its complaint Climax alleged that it desired to construct a salt cake and muriatic acid plant of a certain capacity; that it engaged defendant Braun to undertake responsibility for designing, engineering and purchasing the necessary engineered equipment, that Braun guaranteed the overall operation, and that the other defendants each separately contracted to design, engineer and/or construct various components of said plant. It further alleged that all defendants performed negligently or otherwise improperly, as a result of which the plant proved to be "totally inoperable." Climax sought damages against Braun for both out-of-pocket expenses and operating losses with respect to the entire plant, and for various portions of these losses against the other defendants. More specifically, three of the defendants, Pennsalt, Thorpe, and Heyward-Robinson, together with Braun were alleged to be jointly and severally liable for damages due to the defective design and construction of the reactor portion of the plant; a fourth defendant, Stephens-Adamson Mfg. Co., was alleged to be jointly and severally liable with Braun for the defective design and construction of a conveyor system; a fifth, Standard Steel, was alleged to be jointly and severally liable with Braun for damages due to the defective design and manufacture of a combination rotary dryer-heater; and a sixth, Beaumont Birch, was alleged to be jointly and severally liable with Braun for the defective design and construction of some rotary valves to be used in the reactor. Finally, Thermal Research and Engineering Corporation, the nondiverse defendant, was alleged to be jointly and severally liable with Braun for the defective design and manufacture of some heating and evaporating equipment for use with the reactor. In the light of the dissenting opinion, it should be emphasized that each of the defendants is charged with making a separate, independent contract, and only one, Braun, agreed "to design, engineer, construct and equip `a plant * * * that would manufacture 100 tons per day * * * etc.'".

The leading case on section 1441(c) is American Fire & Cas. Co. v. Finn, 1951, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702. In that case the Court held that a suit brought by a local plaintiff against two out-of-state insurance companies, and a local individual who was the agent for both companies, to recover for a fire loss did not involve "separate and independent" claims. It held this notwithstanding the fact that the parties were not jointly liable, but, rather, only one of them was liable and the purpose of joining them in the suit was to ascertain which of the three it was. The Court repeated its earlier definition of a cause of action as "a single wrongful invasion of a single primary right of the plaintiff * * * whether the acts constituting such invasion were one or many, simple or complex." Baltimore S. S. Co. v. Phillips, 1927, 274 U.S. 316, 321, 47 S.Ct. 600, 602, 71 L.Ed. 1069. It held that the case before it had been improperly removed, stating that "where there is a single wrong to plaintiff, for which relief is sought, arising from an interlocked series of transactions, there is no separate and independent claim or cause of action under § 1441(c)." 341 U.S. at 14, 71 S. Ct. at 540.

Plaintiff seeks to bring itself within this principle. We do not agree. Plaintiff's assertion of a single wrong overstates the rationale. In Finn there was one fire, and one single compensable loss. In the case at bar it is true that it is alleged that plaintiff's plant would not function, but in no real sense was this a single loss. The plant was composed of a number of separate units. Obviously, whether one unit, or several, failed to function, the plant could not operate. The liability of the defendants other than Braun was separate, distinct, and unrelated. With the exception of Braun, no defendant assumed responsibility for other than its own unit, or was liable in any way for the failure of the others. We think it clear that there was more than one primary right, and that more than a single wrong was alleged. Absent Braun as a defendant, it is inconceivable that plaintiff could, simply because all the units were to be installed in one plant, say that the separate claims against the several defendants were single and interdependent. Plaintiff would be utilizing local procedural joinder rules to determine inseparability in the diversity sense.

It is true that in 1 Barron & Holtzoff, Federal Practice and Procedure, § 105, at 494 (Wright ed. 1960) it is said, "It is difficult to see how there can ever be a diversity case properly removed under the statute in the light of the construction placed on it in the Finn case." We do not take such a morbid view. If the Court was sounding the death knell of section 1441(c) we believe it would have said so. The Court's statement, 341 U.S. at 10, 71 S.Ct. at 538, that one of the purposes of the then recent amendment of the statute was "to limit removal from state courts" was not an announcement that it was to foreclose it. We take Finn to mean that there must be substantive separability, and no more.

The only possible question is whether the addition of Braun as a party defendant changes the result. Broken down into its component parts, the complaint makes two kinds of claims against Braun. First, it is alleged to be jointly liable with each of the other defendants for defects in the performance by each defendant of its individual contract. Second, it is alleged to be solely liable for all damages stemming from the inoperable condition of the plant, due to its poor engineering and design, for which none of the other defendants is liable. It may be granted that this latter claim is a single cause of action. However, by its very nature it is separate and independent of the causes of action asserted against the other defendants. Its presence weakens, rather than strengthens, plaintiff's present position. Nor do we think, on any proper analysis, that the fact that Braun was, in effect, a guarantor of the separate performance of each of the other defendants destroyed the separate and independent nature of the claims asserted against each of those defendants. To be sure, Braun could not have removed had the case involved solely a claim against it and Thermal asserting joint liability for the defective furnishing of equipment for the plant. But, as already shown, this case involves a number of additional claims against Braun and the other defendants that are in no way related to the claim against Thermal. The fact that they related to the same plant is not enough. Cf. Greenshields v. Warren Petroleum Corp., 10 Cir., 1957, 248 F.2d 61, cert. den. 355 U.S. 907, 78 S.Ct. 334, 2 L.Ed.2d 262; McLeod v. Cities Service Gas Co., 10 Cir., 1956, 233 F.2d 242.

In Finn, after remarking that the facts alleged in each portion...

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