Gruner v. Blakeman

• Decision Date: 19 June 1981
• Docket Number: Civ. No. H-81-342.
• Court: U.S. District Court — District of Connecticut
• Parties: Edwin GRUNER v. Janet L. BLAKEMAN, Florence R. Lauck, June L. Elzay, Joan L. Conroy and Litchfield Fabrics, Inc.

517 F. Supp. 357

Edwin GRUNER v. Janet L. BLAKEMAN, Florence R. Lauck, June L. Elzay, Joan L. Conroy and Litchfield Fabrics, Inc.

Civ. No. H-81-342.

United States District Court, D. Connecticut.

June 19, 1981.

Ralph C. Dixon, Scott P. Moser, Richard M. Reynolds, Day, Berry & Howard, Armand A. Korzenik, Hartford, Conn., for plaintiff.

Thomas C. Morrison, Christopher C. Angell, Patterson, Belknap, Webb & Tyler, New York City, and James W. Bergenn, Shipman & Goodwin, Hartford, Conn., for defendants Janet L. Blakeman, Florence P. Lauck & June L. Elzay.

Mark I. Fishman, Bridgeport, Conn., for defendant Joan L. Conroy.

RULING ON PLAINTIFF'S MOTION TO REMAND AND ON DEFENDANTS' MOTION TO TRANSFER

CLARIE, Chief Judge.

The plaintiff has moved to remand this case to the state court on the grounds that the removal was untimely and that requisite diversity of citizenship does not exist. Three of the defendants oppose such action, and have moved for an order transferring the case to the Eastern District of New York on the grounds that the action could have been brought there in the first place and that the interest of justice and the convenience of the parties would be best served thereby. The Court finds merit in the plaintiff's claim that the removal was untimely, and the motion to remand is granted. The contra-motion to transfer is, accordingly, denied.

Facts

Litchfield Fabrics, Inc. ("the Corporation") is a Connecticut corporation, having its home office and manufacturing plant in the Borough of Bantam, in the Town of Litchfield, while its executive office and its sales headquarters are in New York City. The plaintiff, Edwin Gruner, is the plant manager of the Corporation, and is the record owner of 18% of its outstanding stock. The remaining 82% of the stock was owned by Louis F. Lauck until his death in October of 1980. Mr. Lauck was also the Chairman of the Board, Treasurer, and Chief Executive Officer of the Corporation. The plaintiff contends that according to the bylaws of the Corporation, he had a preemptive right to buy Mr. Lauck's stock in the Corporation at book value. Mr. Lauck's Will, however, purportedly directs that his stock in the Corporation be allocated to his three daughters, Janet L. Blakeman, June L. Elzay, and Joan L. Conroy, all of whom are named as defendants in this action.¹

The underlying conflict between the bylaws and the Will was brought to the fore at a stockholders' meeting that took place on January 12, 1981, in Bantam. At that meeting Mrs. Blakeman, Mrs. Elzay, and Mrs. Conroy were named as the Board of Directors, and the bylaws were allegedly amended so as to destroy the plaintiff's preemptive right to purchase Mr. Lauck's stock. These actions were taken, the plaintiff claims, through the concerted efforts of Mrs. Blakeman and Mrs. Elzay. He asserts that Mrs. Conroy, whose husband William was at the time President of the Corporation, objected to her sisters' conduct and refused to sign the minutes of the meeting when Mrs. Blakeman asked her to do so.

Subsequently, on January 21, 1981, the newly constituted Board of Directors met and elected new corporate officers.² At a second meeting of the Board on February 13, 1981, Mr. Conroy was removed from the presidency and fired for disobedience and disloyalty. Mrs. Conroy appears to have taken no part in either of these meetings and to have disapproved of the actions taken at both of them.

When Mr. Conroy refused to acknowledge the legitimacy of the actions taken by Mrs. Blakeman and Mrs. Elzay in their capacity as a quorum of the Board, Mrs. Blakeman, as executrix of her father's Will, filed an application in the Surrogate's Court that had admitted the Will to probate. Said application requested the court to compel Mr. Conroy to turn over the management of the Corporation to the newly constituted Board. The application was brought on February 17, 1981, and was amended and supplemented on February 24, 1981.³

On February 25, 1981, Surrogate Judge Radigan ordered Mr. Conroy to give Mrs. Blakeman access to the books of the Corporation, and on March 9, 1981, Judge Radigan temporarily restrained Mr. Conroy from withdrawing any funds from the Corporation and from causing any employee of the Corporation to make payments to him. This latter action was in response to the payment of almost two hundred thousand dollars of Corporate funds to Conroy earlier that month, as partial salary and bonus for the fiscal year ending October 31, 1980, a payment that did not conform to the dispersal procedures mandated by the newly constituted Board. Mr. Conroy was also ordered to place the sum he had received in an escrow account.

Meanwhile, on March 4, 1980, Mrs. Blakeman and Mrs. Elzay, in their capacity as Directors of the Corporation, brought an action against Mr. Conroy in the New York State Supreme Court. In that action they sought to compel Conroy to account for the alleged losses said to have resulted from his purported malfeasance and waste of corporate assets, to require him to deliver the corporate records to the newly constituted Board, and to cease interfering with their management of the Corporation.

On March 17, 1981, both the actions in Surrogate's Court and the action in the State Supreme Court were removed to the Federal Court for the Eastern District of New York. On April 9, 1981, Judge Nickerson, to whom the case had been assigned, preliminarily enjoined Mr. Conroy from having checks drawn on the Corporation's account for his benefit, and continued in effect Judge Radigan's escrow order. Subsequently, on April 21, 1981, Judge Nickerson issued a memorandum and order, 512 F.Supp. 325, in which he denied Mrs. Blakeman's motions to remand the case to the state courts. The Judge also denied Mr. Gruner's motion to dismiss or to stay the cases that had been removed from Surrogate's Court.

While the litigation just described was making its way through the New York courts, Mr. Gruner began this action in the Superior Court for the Judicial District of Litchfield, at Litchfield, Connecticut. In this action he named Mrs. Blakeman, Mrs. Lauck, Mrs. Elzay, Mrs. Conroy, and Litchfield Fabrics as defendants. He sought, in the first count, specific performance of the provision of the Corporation's bylaw, that allegedly gives him a right to purchase Mr. Lauck's stock; in the second count, determination of the validity of the actions taken at the stockholders' meeting on January 12, 1981; and, in the third count, which is in the nature of a stockholder's derivative action, payment to the Corporation from the estate of Mr. Lauck of sums that the latter allegedly diverted to his own use from the Corporation's assets during the last five years of his life. As part of his complaint, Gruner sought injunctive relief, and on the day the complaint was filed, Judge Walter M. Pickett, Jr. temporarily enjoined Mrs. Blakeman, Mrs. Elzay, and Mrs. Conroy from interfering with the management of the Corporation under claim of authority, as directors or officers until further order of the court. On May 18, 1981, Mrs. Blakeman, Mrs. Lauck, and Mrs. Elzay petitioned this Court to remove this case from the Superior Court to this Court, premising their petition on the diversity of citizenship that allegedly exists between the real parties in interest in this case, once those parties were properly aligned.

Discussion of Law

The removal of cases from state court to federal court is controlled by 28 U.S.C. § 1441 et seq. Section 1441 provides in part:

"(a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

(b) Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought."

Since this case is not "founded on a claim or right arising under the Constitution, treaties or laws of the United States," it is removable "only if none of the parties in interest properly joined and served as defendants is a citizen" of Connecticut. The plaintiff alleges in his motion for remand that two of the defendants are citizens of Connecticut, thereby prohibiting removal.⁴ The defendants claim that one of those two defendants, (the Corporation), is not a real party in interest in this case, and that the other defendant, (Mrs. Conroy) should be aligned with the plaintiff, thereby making the case removable.

Before the Court can address that dispute, however, it must address a prior procedural question: namely, whether or not the removal was timely. Section 1446(b) provides that:

"(b) The petition for removal of a civil action or proceeding shall be filed within thirty 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 thirty 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 thirty 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."

It is uncontested that the petition for...