Continental Oil Company v. PPG Industries, Inc., Civ. A. No. 73-H-258.

• Decision Date: 22 March 1973
• Docket Number: Civ. A. No. 73-H-258.
• Citation: 355 F. Supp. 1183
• Parties: CONTINENTAL OIL COMPANY v. PPG INDUSTRIES, INC., et al.
• Court: U.S. District Court — Southern District of Texas

355 F. Supp. 1183

CONTINENTAL OIL COMPANY v. PPG INDUSTRIES, INC., et al.

Civ. A. No. 73-H-258.

United States District Court, S. D. Texas, Houston Division.

March 22, 1973.

John C. Snodgrass, Harry M. Reasoner, Vinson, Elkins, Searls, Connally & Smith, Houston, Tex., for plaintiff.

Raymond A. Cook, Andrews, Kurth, Campbell & Jones, Houston, Tex., for defendants.

Memorandum and Order:

SINGLETON, District Judge.

Plaintiff is Continental Oil Company who contracted with the various defendants to supply them with natural gas. On May 10, 1972, plaintiff filed suit in state court seeking to avoid having to deliver the full amount of gas called for in the contract to defendants and to allocate the gas available between the defendants. Originally, there were only two defendants, PPG Industries, Inc., and Olin Corporation. On June 17, 1972, PPG filed a petition for removal based upon diversity jurisdiction, and the suit was removed from state court to this court's docket. This court on June 20, 1972, remanded this case back to state court on the theory that there is not complete diversity and that therefore the case was not removable under 28 U.S.C.A. § 1441.

Back in state court defendant Olin moved the state court for severance, and on January 2, 1973, the state court announced its decision to grant Olin's motion for severance. This order, however, on January 9, 1973, was stayed pending plaintiff's efforts to obtain a writ of mandamus from the Supreme Court of Texas against the severance. The order provided that the stay of severance "shall terminate upon the Supreme Court refusing plaintiff Continental Oil Company's application or motion for leave to file in the Supreme Court of Texas a petition for a writ of mandamus." The plaintiff on January 2, the same day in which the state court granted defendant's motion for severance, filed its first amended original petition adding as new defendants Firestone Tire & Rubber Co., Wanda Petroleum, Inc. (later named as defendant Dow Chemical Company), and Big Three Industries, Inc. On February 14, 1973, the Supreme Court entered its order overruling Conoco's motion for leave to file a petition for writ of mandamus and therefore Olin's motion for severance was automatically granted. In the meanwhile, however, after the district court's stay but before the Supreme Court's order which terminated the stay, defendant PPG filed its second petition for removal, on January 31, 1973. On the following day, Judge Carl O. Bue, Jr., entered an order of remand remanding the action again to state court on the grounds that the attempt at removal was premature because of the 157th Judicial District Court's stay of the effectiveness of its order of severance during the pendency of Continental Oil Company's petition for writ of mandamus to vacate the order of severance.

Defendant PPG, however, filed a third petition for removal alleging diversity as its jurisdictional basis which again fell on this court's docket. Plaintiff again filed a motion to remand which this court is compelled to grant.

After so many trips back and forth from state to federal court, both plaintiff and defendant have filed extensive briefs on the subject of remand and removal. 28 U.S.C. 1441 has two major limitations on removal. Section 1441(a) provides that cases can be removed only if the United States District Court would have original jurisdiction. In other words, for the purposes of this suit, there must be complete diversity. Section 1441(b) provides that in diversity cases actions shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen in a state in which such action is brought. In other words, a resident defendant may not remove. Defendant therefore has significant problems in trying to remove this action to federal court. First, as long as Olin is joined as a party to the state court proceeding there is no complete diversity. As far as the three newly-added defendants are concerned, Dow and Conoco are both incorporated in Delaware and the defendant Big Three is a citizen of Texas, and, therefore, there is both no complete diversity and a resident defendant.

Defendant argues that since Olin has been severed in state court it is no longer a defendant and, therefore, this court should ignore it for removal purposes. This question brings us to the murky limits of a voluntary-involuntary rule followed by the Fifth Circuit in Weems v. Louis Dreyfus Corp., 380 F.2d 545 (5th Cir. 1967). In that case, Judge Hutcheson held that 28 U.S.C. § 1446(b) which reads as follows:

"(b) The petition for removal of a civil action or proceeding shall be filed within twenty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within twenty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

"If the case stated by the initial pleading is not removable, a petition for removal may be filed within twenty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable."

did not change the former law that the dismissal of a defendant could change an otherwise nonremovable case to a removable one only if the dismissal of the defendant was voluntary rather than an involuntary dismissal that might be overturned on appeal to a higher state court. In Weems the Fifth Circuit held that a directed verdict against one of the defendants could...