Mitchell v. Southern Farm Bureau Casualty Ins. Co., Civ. A. No. 1580.

• Decision Date: 12 April 1961
• Docket Number: Civ. A. No. 1580.
• Citation: 192 F. Supp. 819
• Parties: J. D. MITCHELL, Plaintiff, v. SOUTHERN FARM BUREAU CASUALTY INSURANCE COMPANY and Mary Imelda Stanton, Administratrix of the Estate of William A. Stanton, Deceased, Defendants.
• Court: U.S. District Court — Western District of Arkansas

192 F. Supp. 819

J. D. MITCHELL, Plaintiff, v. SOUTHERN FARM BUREAU CASUALTY INSURANCE COMPANY and Mary Imelda Stanton, Administratrix of the Estate of William A. Stanton, Deceased, Defendants.

Civ. A. No. 1580.

United States District Court W. D. Arkansas, Fort Smith Division.

April 12, 1961.

Harper, Harper, Young & Durden, Ft. Smith, Ark., for plaintiff.

Daily & Woods, Ft. Smith, Ark., for defendant Stanton.

Hardin, Barton & Hardin, Ft. Smith, Ark., for defendant Southern Farm Bureau Cas. Ins. Co.

JOHN E. MILLER, Chief Judge.

This case is before the court on plaintiff's motion to remand. The record reflects that the action was originally filed in the Fort Smith Division of the Sebastian Chancery Court on February 13, 1961, and was removed by the defendant, Southern Farm Bureau Casualty Insurance Company, hereinafter referred to as Southern, on March 3, 1961. The plaintiff filed a motion to remand on March 11, 1961, and Southern filed its response on April 5, 1961. Briefs have been received from the parties in support of their respective contentions and have been considered by the court.

The following facts appear from the pleadings to be undisputed. The plaintiff, J. D. Mitchell, is a citizen of Arkansas and a resident of Fort Smith. The defendant, Mary Imelda Stanton, Administratrix of the Estate of William A. Stanton, deceased, is likewise a citizen of Arkansas and a resident of Fort Smith. The defendant Southern is an insurance company, incorporated and existing under the laws of the State of Mississippi, with its principal place of business in that State.

On July 14, 1959, Southern issued to the plaintiff its policy of liability insurance for the purpose of indemnifying the plaintiff for bodily injury up to and including $10,000 and for property damage up to and including $5,000, which the plaintiff might become liable to pay by reason of the operation of his 1955 Ford station wagon. The insurance was in full force and effect at all times material herein.

On December 30, 1959, Mitchell was driving his station wagon and was involved in a collision with an automobile driven by William A. Stanton. Mr. Stanton died as a result of injuries received in the collision. The defendant, Mary Imelda Stanton, as Administratrix of her husband's estate, made a claim against the plaintiff and Southern for damages sustained as a result of the collision. Mrs. Stanton's claim was denied by Southern, and in January 1960 she brought suit against Mitchell in the Sebastian County Circuit Court, seeking damages in the amount of $150,000. Prior to the trial Mrs. Stanton offered to settle the litigation for $10,000, and the plaintiff Mitchell requested that Southern settle within the limits of the policy. Southern refused to settle, and the case proceeded to trial on June 1, 1960, and a jury returned a verdict for $37,500 in favor of Mrs. Stanton. Mitchell has demanded that Southern pay the full amount of the judgment, but Southern declined and has paid only the amount of $11,500. Therefore Mitchell is indebted now to Mrs. Stanton in the sum of $26,000 on the judgment obtained.

In effect, the plaintiff is seeking judgment against Southern for the balance of the judgment against him on the ground that Southern did not act in good faith, and did not exercise due and ordinary care to protect his interest; that throughout the litigation between Mrs. Stanton and Mitchell, Southern was negligent and acted in bad faith and solely for its own interest, and as a result of Southern's negligence and bad faith in failing to settle within the policy limits, plaintiff has suffered and continues to suffer a personal judgment against him in the amount of $26,000, plus interest.

The present action was filed in the form of a suit for declaratory judgment, and the plaintiff prays for the following relief:

"Wherefore, plaintiff prays:

"That the Court enter its judgment declaring the rights of the parties;

"That the Court declare that said judgment and interest should be paid by Southern Farm Bureau Casualty Insurance Company;

"That the Court declare that the payment and satisfaction of said judgment and interest are the sole obligation of the defendant, Southern Farm Bureau Casualty Insurance Company, as between that defendant and this plaintiff, and that the Court decree that said defendant pay said judgment and interest to the defendant, Mary Imelda Stanton, Administratrix, and thereby relieve the plaintiff of any further obligation to the latter defendant;

"That the said Administratrix be enjoined from any attempt to collect said judgment from the plaintiff during the pendency of this action;

"That the plaintiff recover judgment against the defendant, Southern Farm Bureau Casualty Insurance Company, for the statutory penalty of 12% and a reasonable attorney's fee, together with the costs of this action;

"That upon payment of said judgment by the defendant, Southern Farm Bureau Casualty Insurance Company, to the defendant, Mary Imelda Stanton, Administratrix, the Court decree that the latter defendant satisfy in full her judgment against J. D. Mitchell in Civil Action No. 2717 in the Sebastian Circuit Court;

"And plaintiff prays for all other relief to which he may be entitled either in law or in equity."

Despite the lack of diversity of citizenship between the plaintiff Mitchell and the defendant Stanton, Southern contends that the cause was properly removed to this court on the following grounds: (1) that a separate and independent claim is asserted by plaintiff against it; (2) Mrs. Stanton was fraudulently joined as a defendant in this action; (3) that she is not an indispensable party; and (4) that the court should realign the parties as the interests of the plaintiff Mitchell and the defendant Stanton are identical.

The statute authorizing the removal of suits involving separate and independent claims is found in 28 U.S.C.A. § 1441 (c), which provides:

"(c) Whenever a separate and independent claim or cause of action, which would be removable if sued upon alone, is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters not otherwise within its original jurisdiction."

The leading case construing this statute is American Fire & Casualty Co. v. Finn, 1951, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702. The action was brought in a Texas state court by a citizen of Texas against two foreign insurance companies and a mutual agent, a citizen of Texas, seeking damages for a fire loss on property allegedly insured. Under plaintiff's pleaded theory liability lay among the three defendants, but she was uncertain which one was liable. After removal by the nonresident companies, plaintiff obtained judgment against one of them, and the other defendants were absolved. The Court of Appeals, 5 Cir., 181 F.2d 845, holding that the case has been properly removed, affirmed. The Supreme Court, however, held that although the judgment debtor had sought the federal court by removal, it was not thereby precluded from seeking reversal and remand, and that the case had been removed without warrant. The court noted that Congress, in eliminating the separable controversy as a basis for removal and in substituting the "separate and independent" claim or cause of action test for removability, sought to simplify removal and intended to abridge the right of removal. After stating that a separate controversy is, in itself, no longer an adequate ground for removal, Justice Reed continued at pages 12, 13 and 14 of 341 U.S., at page 539 of 71 S.Ct.:

"Of course, `separate cause of action' restricts removal more than `separable controversy.' In a suit covering multiple parties or issues based on a single claim, there may be only one cause of action and yet be separable controversies. The addition of the word `independent' gives emphasis to congressional intention to require more complete disassociation between the federally

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