Cowart Iron Works, Inc. v. Phillips Const. Co.

• Decision Date: 09 February 1981
• Docket Number: Civ. A. No. 180-116.
• Parties: COWART IRON WORKS, INC., Plaintiff, v. PHILLIPS CONSTRUCTION COMPANY, INC., First Defendant, and The American Insurance Company, Second Defendant, and 7.879 acres of land, more or less, known as Richmond Plaza Shopping Center.
• Court: U.S. District Court — Southern District of Georgia

507 F. Supp. 740

COWART IRON WORKS, INC., Plaintiff, v. PHILLIPS CONSTRUCTION COMPANY, INC., First Defendant and The American Insurance Company, Second Defendant and 7.879 acres of land, more or less, known as Richmond Plaza Shopping Center.

Civ. A. No. 180-116.

United States District Court, S. D. Georgia, Augusta Division.

February 9, 1981.

COPYRIGHT MATERIAL OMITTED

Stanley C. House, Augusta, Ga., for plaintiff.

Glower W. Jones, Smith, Currie & Hancock, Atlanta, Ga., for Phillips and Am. Ins. Co.

William A. Trotter, III, Augusta, Ga., for Golden.

Richard A. Slaby, Augusta, Ga., for Rembrant, Inc.

Ellwood F. Oakley, III, Atlanta, Ga., for Lazenby Sprinkler Co., Inc.

ORDER

BOWEN, District Judge.

First defendant, Phillips Construction Company, Inc. Phillips entered into a general construction contract with one Donald D. Golden Golden to construct certain buildings and other improvements on property owned by Golden, described in plaintiff's original complaint as 7.879 acres of land, more or less, known as Richmond Plaza Shopping Center. American Insurance Company American, as surety for Phillips, executed a labor and material performance payment bond naming Golden as obligee. Plaintiff, Cowart Iron Works, Inc. Cowart, brought this action in Superior Court of Richmond County, Georgia, claiming $50,861.52 as an amount due under its contract. Although Golden was not named as a party defendant in the original state court complaint, he was personally served with process. Cowart seeks a general judgment against Phillips and American and the foreclosure of a special lien against the property of Golden. Thereafter, Phillips and American petitioned this Court for removal pursuant to 28 U.S.C. § 1446.

The pertinent subsequent procedural development of this action may be outlined as follows:

(1) Phillips and American moved to stay the proceedings in the main action pending arbitration.

(2) Donald D. Golden moved to intervene as a party defendant and filed a proposed answer.

(3) Intervener Golden moved to remand.

(4) Phillips and American filed a third-party complaint against Donald D. Golden.

(5) Phillips and American moved to stay all proceedings in the third-party complaint for arbitration and for consolidation of said arbitration with the previously moved for arbitration between plaintiff and Phillips and American.

(6) By order, the Court stayed any arbitration proceedings brought before the American Arbitration Association by Phillips and American.

(7) Third-party defendant Golden answered the third-party complaint of Phillips and American and included a two count counterclaim against defendants third-party plaintiffs.

(8) Stemming from third-party defendant Golden's counterclaim against defendants third-party plaintiffs Phillips and American, said third-party plaintiffs timely filed some 27 third-party complaints against various parties allegedly liable for all or part of third-party defendant Golden's claim.

(9) Phillips and American belatedly brought a third-party complaint against Southern Roadbuilders, Inc. and moved for leave to cause a summons and third-party complaint to be served on Southern Roadbuilders, Inc.

(10) Phillips and American dismissed without prejudice four third-party complaints.

(11) Third-party defendant Temperature Engineering Corporation moved to dismiss the third-party complaint filed by Phillips and American, or, in the alternative for a more definite statement or to strike certain parts of the third-party complaint.

(12) Because of the extensive third-party practice in this action, numerous crossclaims and counterclaims were filed.

(13) Phillips and American moved to stay proceedings for arbitration and to compel all parties, including third-party defendants, to submit their claims to arbitration.

Of concern at present are the motions by Phillips and American to stay proceedings for arbitration and consolidation of arbitration, and the motion of Golden to remand. The Court must resolve the subject matter jurisdiction issue raised by the motion to remand before deciding any other issues.

In support of the motion to remand, intervener Golden argues that he was a real and proper party in the original complaint, and, as such, was required to join in the removal petition filed by Phillips and American to effectuate removal pursuant to 28 U.S.C. § 1441(a). Phillips and American counter, in the alternative, that: (1) Golden was not named as a party defendant in plaintiff's original complaint, and, therefore, his joinder in the removal petition is unrequired; (2) plaintiff's foreclosure action, naming 7.879 acres of land, more or less, as defendant, was improperly brought and would be considered a nullity under Georgia law; or (3) assuming Golden was a proper party defendant for removal purposes, the case is properly before the Court under the provisions of 28 U.S.C. § 1441(c).

With respect to the last enumerated argument of Phillips and American, the Court previously considered the applicability of 28 U.S.C. § 1441(c) in a situation analogous to the present action in a companion case, Rembrant, Inc. v. Phillips Construction Co., Inc., 500 F.Supp. 766 (S.D.Ga.1980). In Rembrant, the Court recognized that section 1441(c) prescribed an exception to the general rule that all properly joined defendants must join in the removal petition, see Tri-Cities Newspapers, Inc. v. Tri-Cities P.P. & A. Local 349, 427 F.2d 325 (5th Cir. 1970), and concluded that:

action 1441(c) may be invoked only when the following elements are present: (1) separate and independent claims are joined in one action, (2) one of the claims would be removable if sued upon alone either on the basis of federal question or diversity jurisdiction, and (3) at least one of the claims is of a nonremovable character.

In ordering the Rembrant action remanded, the Court held that, even assuming separate and independent claims against the joining and nonjoining defendants, section 1441(c) did not sanction removal when, as was the case in Rembrant, neither claim was of a nonremovable character by itself and plaintiff asserted no other nonremovable claim.

A similar conclusion would follow in this case, assuming Golden is a proper party defendant for purposes of removal. Complete diversity of citizenship exists between Golden, a Kansas citizen, and Cowart, a Georgia citizen. Thus, both the purported claim against Golden as well as the claim against Phillips and American would be removable if sued on alone. The section 1441(c) "separate and independent claim or cause of action" exception to the requirement that all defendants join the removal petition would be therefore inapplicable.

Before considering the remaining arguments for removal advanced by Phillips and American, the Court reiterates certain fundamental tenets concerning removal as stated in Rembrant:

On a motion for remand, the burden of showing subject matter jurisdiction rests with the party seeking removal. 14 C. Wright & A. Miller, Federal Practice and Procedure § 3739, at 754 (1976). The right of removal is purely statutory, see Great Northern Ry. Co. v. Alexander, 246 U.S. 276, 280 38 S.Ct. 237, 239, 62 L.Ed. 713 (1918), and, as a congressionally imposed infringement on a state's power to determine controversies in their courts, removal statutes must be strictly construed. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941). Thus, "in a case where the basis for jurisdiction is doubtful, the Court should resolve such doubt in favor of remand." McCurtain County Production Corp. v. Cowett, 482 F.Supp. 809, 812 (E.D.Okl.1978).

The purpose of this judicial construction of the removal statutes is to prevent "exposing the plaintiff to the possibility that he will win a final judgment in federal court, only to have it determined that the court lacked jurisdiction on removal." C. Wright & A. Miller, supra § 3721, at 537.

As noted earlier, the general rule is that all defendants who have been served, with the exception of...