Eubanks v. Krispy Kreme Donut Co.

• Decision Date: 21 December 1961
• Docket Number: Civ. A. No. 3704.
• Parties: Herman L. EUBANKS v. KRISPY KREME DONUT CO., Inc., and Herman Miller.
• Court: U.S. District Court — Eastern District of Tennessee

208 F. Supp. 479

Herman L. EUBANKS v. KRISPY KREME DONUT CO., Inc., and Herman Miller.

Civ. A. No. 3704.

United States District Court E. D. Tennessee, S. D.

December 21, 1961.

Sinor & Sinor, Chattanooga, Tenn., for plaintiff.

Campbell & Campbell, Chattanooga, Tenn., for defendants.

FRANK W. WILSON, District Judge.

This is a suit for personal injuries originally filed in the Circuit Court of Hamilton County, Tennessee, and removed to this Court by the defendant Krispy Kreme Donut Co., Inc. (hereinafter referred to as "Krispy Kreme"), upon the basis of diversity of citizenship and amount in controversy.

It is undisputed that the amount in controversy exceeds the sum of $10,000, exclusive of interest and costs, that the plaintiff is a citizen of the State of Tennessee, and that the defendant Miller is a citizen of the State of Georgia. The plaintiff, however, asserts that diversity fails because the citizenship of Krispy Kreme is not adequately shown by the statement in the removal petition that "the defendant Krispy Kreme Donut Company, Inc. was at the time of the commencement of this suit and still is a citizen and resident of the State of North Carolina." It is the position of the plaintiff that this statement does not negative the possibility that Krispy Kreme is also a citizen of Tennessee. Krispy Kreme counters that the removal petition is sufficient in view of the allegation in the plaintiff's original pleading that Krispy Kreme "is a foreign corporation." Krispy Kreme further maintains that it should in any event be permitted to amend the removal petition to correct the alleged insufficiency, and suggests finally that the plaintiff has waived his right to move for remand.

Considering the issues thus raised in the order stated, the Court is of the opinion, first, that the removal petition is insufficient by reason of its failure to state Krispy Kreme's principal place of business.

The statute governing Federal diversity jurisdiction, Title 28 U.S.C.A. § 1332, was amended in 1958 to provide that, for purposes of diversity jurisdiction, a corporation may be a citizen of the State of its principal place of business as well as of the State of its incorporation:

"(c) For the purposes of this section and section 1441 the removal statute of this title, a corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business."

The procedure for effecting removal of cases from State to Federal courts is set forth in Title 28 U.S.C.A. § 1446, where it is provided that

"(a) A defendant or defendants desiring to remove any civil action or criminal prosecution from a State court shall file in the district court of the United States for the district and division within which such action is pending a verified petition containing a short and plain statement of the facts which entitle him or them to removal together with a copy of all process, pleadings and orders served upon him or them in such action."

Thus the question presented is whether the requirement of a "short and plain statement" of the facts entitling the petitioner to removal is satisfied by a statement that a corporate party is a citizen of a certain state, in view of the provision of Section 1332(c) that a corporation may be a citizen of two states for purposes of diversity jurisdiction.

In considering this question it is well to keep in mind that the removal statutes are to be construed strictly against removal. In the first place, removal jurisdiction

"is quite an anomalous jurisdiction, giving a defendant, sued in a court of competent jurisdiction, the right to elect a forum of his own choosing. Such a procedure was unknown to the common law. Nor is removal jurisdiction mentioned in the Constitution." 1 Barron & Holtzoff, Federal Practice and Procedure, sec. 101.

Moreover, strict construction against removal both relieves against Federal court congestion, Browne v. Hartford Fire Insurance Co., D.C., 168 F.Supp. 796, and protects the jurisdiction of State courts, Roseberry v. Fredell, D.C., 174 F.Supp. 937. In accordance with this policy of construction, it is well-settled that a statement in a removal petition to the effect that a corporate party is a citizen of a given state is not sufficient to effect removal, in the absence of an express statement that the corporation was incorporated under the laws of such state. See Thomas v. Board of Trustees of Ohio State University, 195 U.S. 207, 25 S.Ct. 24, 49 L.Ed. 160; Hernandez v. Watson Bros. Transportation Co., D.C., 165 F.Supp. 720. By clear analogy, then, an express statement concerning a corporate party's principal place of business is required since the 1958 amendment of Section 1332(c). Browne v. Hartford Fire Insurance Co., D.C., 168 F.Supp. 796; Roseberry v. Fredell, D.C., 174 F.Supp. 937; Park v. Hopkins, D.C., 179 F.Supp. 671; Washington-East Washington Joint Authority v. Roberts & Schaefer Co., D.C., 180 F.Supp. 15; Adams v. Ralph L. Smith Lumber Co., D.C., 181 F.Supp. 729; Gobet v. Intercontinental Hotels Corp. (Ponce), D.C., 184 F.Supp. 171; F & L Drug Corporation v. American Central Insurance Company, D.C., 200 F.Supp. 718; Evans-Hailey Co., Inc. v. Crane Co., D.C., 207 F.Supp. 193. Cf. Brandt v. Bay City Super Market, D.C., 182 F.Supp. 937, holding that a plaintiff who invokes diversity jurisdiction against a corporate defendant must expressly allege such corporation's principal place of business in the complaint. Cf. also the recent amendment of Form 2, Federal Rules of Civil Procedure, 28 U.S.C.A., together with Explanatory Note 1, 368 U.S. at A-11: "1. Diversity of Citizenship. * * * An allegation regarding the principal place of business of each corporate party must be made in addition to an allegation regarding its place of incorporation."

The allegation in the plaintiff's original pleading that Krispy Kreme is a "foreign corporation" did not relieve Krispy Kreme of making allegations in accordance with the foregoing rules in its removal petition. The plaintiff's declaration was prepared for filing, and was in fact filed, in a Tennessee court, and under the law of Tennessee a corporation organized in another state is a "foreign corporation" regardless of the location of its principal place of business. The plaintiff's allegation will be given the meaning which it was intended to have in the State court, especially when removal to this Court was effected or sought by Krispy Kreme.

The next question is whether Krispy Kreme should be permitted to amend the removal petition to allege "that the main office and principal place of business of defendant corporation is in the State of North Carolina * * *."

It is undisputed that the motion to amend comes after the expiration of the twenty-day period allowed by Title 28 U.S.C.A. § 1446(b) for the filing of the removal petition, but the authorities are not in accord on the question of the permissibility of amendment after the expiration of such period. One court has indicated an unwillingness to allow amendment in a similar situation on the ground simply that a motion to amend is not timely after the expiration of the twenty-day period. Gobet v. Intercontinental Hotels Corp. (Ponce), D.C., 184 F.Supp. 171. Other courts, however, have allowed amendment upon the authority of Title 28 U.S.C.A. § 1653. Fireman's Insurance Co. of Newark, N. J. v. Robbins Coal Co., 5 Cir., 288 F.2d 349; Park v. Hopkins, D.C., 179 F.Supp. 671. Cf. McGuigan v. Roberts, D.C., 170 F.Supp. 372.

Section 1653 provides as follows:

"Amendment of pleadings to show jurisdiction Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts."

Despite the reference in its caption to amendment of "pleadings," it appears that this statute is properly to be regarded as applying to removal petitions. Hernandez v. Watson Bros. Transportation Co., D.C., 165 F.Supp. 720. Nevertheless, the rule has developed that Section 1653 authorizes amendment of removal petitions after the expiration of the twenty-day period only if the purpose of the amendment is to correct a defective allegation, rather than to supply an essential matter which has been omitted altogether. Browne v. Hartford Fire Insurance Company, D.C., 168 F.Supp. 796; Roseberry v. Fredell, D.C., 174 F.Supp. 937. The reasoning which supports the rule against allowing an amendment to supply an essential omission appears in Jackson v. Allen, 132 U.S. 27, 34, 10 S.Ct. 9, 33 L.Ed. 249:

"It appears from the record that the citizenship of the parties at the commencement of the actions, as well as at the time the petitions for removal were filed, was not sufficiently shown, and that therefore the jurisdiction of the state court was never divested. Stevens v. Nichols, 130 U.S. 230 9 S.Ct. 518, 32 L.Ed. 914. This being so, the defect cannot be cured by amendment. Crehore v. Ohio & Mississippi Railroad Co., 131 U.S. 240, 9 S.Ct. 692, 33 L.Ed. 144.

With regard, then, to the propriety of amendment, the ultimate question is whether the original petition is merely "defective," on the one hand, in which case amendment may be allowed, or entirely...