Edward Hansen, Inc. v. Kearny Post Office Associates

• Decision Date: 02 February 1979
• Citation: 399 A.2d 319,166 N.J.Super. 161
• Parties: EDWARD HANSEN, INC., a corporation of the State of New Jersey, Plaintiff, v. KEARNY POST OFFICE ASSOCIATES, a limited partnership of the State of NewJersey, and the Travelers Indemnity Company, a corporation authorized,licensed, or admitted to do and doing business in the State of New Jersey,Defendants.
• Court: New Jersey Superior Court

Page 161

166 N.J.Super. 161

399 A.2d 319

EDWARD HANSEN, INC., a corporation of the State of New Jersey, Plaintiff, v. KEARNY POST OFFICE ASSOCIATES, a limited partnership of the State of NewJersey, and the Travelers Indemnity Company, a corporation authorized,licensed, or admitted to do and doing business in the State of New Jersey,Defendants.

Superior Court of New Jersey, Chancery Division.

Feb. 2, 1979.

James M. Shashaty, Paterson, for plaintiff (Fontanella, Shashaty, Leonard & Harris, Paterson, attorneys).

Thomas B. Leyhane, Newark, for defendants (Shanley & Fisher, Newark, attorneys).

Roger P. Sauer, Newark, for Aetna Cas. & Sur. Co. (Lum, Biunno & Thompkins, Newark, attorneys).

Robert C. Hespe, Ridgefield Park, for Edward Hansen and Eugene Stano (Hespe & Hespe, Ridgefield Park, attorneys).

KENTZ, J. S. C.

After an absence of more than six years this matter returns to the court on defendants' motion for an order adopting the pleadings filed by the various parties while this case was in the United States District Court for the District of New Jersey (District Court) or in the alternative for an order granting leave to file an answer out of time.

This litigation was commenced in the Chancery Division of the Superior Court in September 1971 when Edward Hansen, Inc. (Hansen) filed a complaint seeking injunctive and declaratory relief. Hansen alleged that it had been wrongfully removed by defendant Kearny Post Office Associates (KPOA) from the construction site of the North Jersey Mail Handling and Vehicle Maintenance Facility in Kearny, New Jersey, and that the removal constituted a breach of Hansen's contract with KPOA.

Prior to answering, KPOA petitioned for removal of the case to the District Court pursuant to 28 U.S.C.A. § 1446. Immediately following removal Hansen filed a motion for remand but withdrew the motion before it was decided. ¹ KPOA subsequently answered the complaint and filed a counterclaim seeking relief against Hansen as well as its surety, Aetna Casualty and Surety Co. (Aetna) and three of the principals of Hansen. Hansen later amended its complaint by abandoning the request for injunctive relief (which had become moot with the completion of the project) and by making a claim for damages.

In October 1977 the District Court remanded the case to this court, holding that diversity of citizenship did not exist because of the then recent decision in Carlsberg Resources Corp. v. Cameria S. & L. Ass'n, 554 F.2d 1254 (3 Cir. 1977), and concluding that there was consequently no federal jurisdiction. ² In remanding the case Judge Meanor refused Aetna's request to dismiss the counterclaim against it since he apparently believed that the entire case, including all the parties, should return to the state court.

When the case returned to this court KPOA moved for an order transferring the matter to the Law Division since the only remaining relief sought was damages. Before a hearing on this motion was concluded Hansen raised the issue of whether a default should be entered against KPOA because it had never filed a responsive pleading in this court. Thereupon, KPOA filed the present motion. ³

The precise issue raised by this motion has apparently not been decided by the courts of this State and has seldom been addressed in other jurisdictions. Nor does the federal removal statute deal with the problem presented here. While 28 U.S.C.A. § 1447(b) provides that the District Court may require the party petitioning for removal to file copies of the state court record with the clerk of the federal court, it makes no provision for a similar procedure after remand. Instead, 28 U.S.C.A. § 1447(c) merely provides that If at any time before final judgment it appears that the case was removed improvidently and without jurisdiction, the district court shall remand the case, and may order the payment of just costs. A certified copy of the order of remand shall be mailed by its clerk to the clerk of the State court. The State court may thereupon proceed with such case.

Following a remand the effect to be given to pleadings filed in the federal court is a matter of state policy and is not subject to federal determination. In Ayres v. Wiswall, 112 U.S. 187, 5 S.Ct. 90, 28 L.Ed. 693 (1884), the Supreme Court affirmed a remand ordered by the Circuit Court and stated that "(i)t will be for the state court, when the case gets back there, to determine what shall be done with the pleadings filed and testimony taken during the pendency of the suit in the other (I. e., federal) jurisdiction." Id. at 190-191, 5 S.Ct. at 92, 28 L.Ed. at 695.

More recent federal cases have not altered the rule announced in Ayres but have exhibited an expectation that the state court would on remand consider the entire case, including the federal pleadings. In Hirsch v. Bruchhausen, 284 F.2d 783 (2 Cir. 1960), for example, the court refused to disturb the District Court's pre-remand order substituting Hirsch and his business partners for the original corporate defendant. The court there said (at 786-787) that "(a)ll defenses on the merits now properly go before the state court for definitive adjudication; our function has been merely to pass on the procedural aspects of the proceedings as brought before us." Finding no irregularity in the District Court's order substituting defendants without requiring service of the amended pleadings on the new defendants, the court permitted the case to be remanded with the substituted defendants as parties, intending that the state court would consider the case in the posture in which it had left the federal court. ⁴ See also, Waco v. U. S. Fidelity & Guar. Co., 293 U.S. 140, 143, 55 S.Ct. 6, 7, 79 L.Ed. 244, 246 (1934); Kromer v. McNabb, 308 F.3d 863, 865 (10 Cir. 1962); In re Bear River Drainage Dist., 267 F.2d 849, 851 (10 Cir. 1959).

Various state courts have, after remand, dealt with the federal pleadings without discussing the propriety of their doing so. In Adams v. Hirsch, supra at note 4, the court dealt with the complaint as amended by the federal court in Hirsch v. Bruchhausen, supra, rather than with the original complaint filed in the New York court before removal. The trial court in Trinity Universal Ins. Co. v. Robison, 227 Ark. 482, 299 S.W.2d 833 (Sup.Ct.1957), accepted the parties' agreement to treat one of the answers filed in the federal court as if it had been filed in the state court. Although the Supreme Court's opinion there deals only with the propriety of the trial court's not having accepted the answers which were not the subject of the agreement, it nonetheless did not question the propriety of the trial court's adoption of the pleadings. See 227 Ark. at 482, 299 S.W.2d at 836.

The opinion in Citizens' Nat'l Bank v. First Nat'l Bank, Ind.App., 331 N.E.2d 471 (Ct.App.1975), directly addressed the trial court's right to decide motions to dismiss which had been filed in the federal court before remand and not refiled in the state court. After citing Ayres v. Wiswall, supra, the court determined that the trial court had acted properly in deciding the motions to dismiss. "(T)he irregularity in the case before us, if it be an irregularity at all, in failing to refile the Motions to Dismiss in the state court following remand from the federal court is * * * inconsequential." 331 N.E.2d at 476.

However, other state courts have not treated federal pleadings quite so hospitably. In Tracy Loan & Trust Co. v Mutual Life Ins. Co., 79 Utah 33, 7 P.2d 279 (Sup.Ct.1932), the court concluded that an answer filed in the federal court was "without effect as to the initiation of the contest because filed in a court without jurisdiction of the cause." Id. at 41, 7 P.2d at 282. Similarly, the court in Citizens' Light, Power & Tel. Co. v. Usnik, 26 N.M. 494, 194 P. 862 (Sup.Ct.1921), held that an answer filed in federal court was not effective as an answer which would forestall the entry of default against the defendant in the state court upon remand. Levine v. Lacy, 204 Va. 297, 130 S.E.2d 443 (Sup.Ct.App.), Cert. den. 375 U.S. 932, 84 S.Ct. 330, 11 L.Ed.2d 264 (1963), and Texas Gas Transmission Corp. v. Sigue, 163 So.2d 386 (La.Ct.App.), writ of review den. 246 La. 580, 165 So.2d 480 (Sup.Ct.1964), also represent cases in which the state court held that federal answers did not prevent the defendant from being considered in default in the state court.

Tracy Loan and Citizens' Light are distinguishable from the present case to the extent that those decisions were based on the premise that "where * * * after removal the federal court remands the cause for want of jurisdiction, and in the interim orders are made or judgment entered by the state court, these are valid notwithstanding they are made after an attempted removal," Tracy Loan, supra, 79 Utah at 40, 7 P.2d at 282. Thus, these courts held that a defendant who seeks removal "must assume the risk and consequences that follow if he is unsuccessful and in the meanwhile he has failed to protect and preserve his rights under the state statute and rules of practice prevailing in the state court." Id.; Citizens' Light, supra, 26 N.M. at 497, 194 P. at 863. This rationale has been eliminated by a provision of the modern removal statute, 28 U.S.C.A. § 1446(e), which prohibits any proceeding in the state court after removal and prior to remand. Any pleadings a party might try to file to "preserve his rights" in the state court would be void and of no effect, Levine v. Lacy, supra, 204 Va. at 298, 130 S.E.2d at 445; Allen v. Hatchett, 91 Ga.App. 571, 86 S.E.2d 662 (Ct.App.1955); Hopson v. North Amer. Ins. Co., 71 Idaho 461, 233 P.2d 799, 25 A.L.R.2d 1040 (Sup.Ct.1951).

Levine and Texas Gas may also be partially distinguished in that they involved cases in which defendants' time to answer the complaint had apparently lapsed prior to removal. By contrast, KPOA petitioned for removal of this case three days after Hansen's complaint...