Moore v. Sentry Insurance Company

• Decision Date: 17 September 1975
• Docket Number: Civ. A. No. E74-15.
• Citation: 399 F. Supp. 929
• Parties: C. R. MOORE, Plaintiff, v. SENTRY INSURANCE COMPANY, Defendant-Garnishee.
• Court: U.S. District Court — Southern District of Mississippi

399 F. Supp. 929

C. R. MOORE, Plaintiff, v. SENTRY INSURANCE COMPANY, Defendant-Garnishee.

Civ. A. No. E74-15.

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

September 17, 1975.

Laurel G. Weir, Philadelphia, Miss., for plaintiff.

Kenneth Watts, Snow, Covington, Temple & Watts, Meridian, Miss., for defendant-garnishee.

MEMORANDUM OPINION

NIXON, District Judge.

This action is before the Court on Motion of the plaintiff, C. R. Moore, to Remand this case to the Circuit Court of Leake County, Mississippi, and on Motion of the defendant, Sentry Insurance, for Summary Judgment. On January 24, 1975 the plaintiff recovered a $40,000 judgment in state court against a Mississippi company, the Cadillac Corporation, and thereafter by Writ of Garnishment, sought to collect the amount of that judgment from Cadillac's insurer, Sentry. Sentry removed this action to this Court on March 27, 1974, alleging that a garnishment proceeding is a civil case of which the Court has original jurisdiction and the matter in controversy exceeded the sum of $10,000, exclusive of interest and costs. Sentry is a corporation organized under the laws of the State of Wisconsin, having its principal place of business in Wisconsin. The plaintiff and judgment creditor, C. R. Moore, was and is now a resident citizen of Leake County, Mississippi.

It is the contention of the plaintiff in his Motion to Remand that a garnishment action is not removable, and secondly, that the resident insured, Cadillac Corporation, is a necessary party to this action, with the result that there is no diversity of citizenship. The Motion for Summary Judgment filed by the defendant is predicated on the propositions that the insured, Cadillac, did not comply with the policy conditions requiring notice of claim and suit in the state court action, and that, in any event, the policies issued by Sentry did not cover the loss on which plaintiff's suit was based.

This Court has carefully examined the records in this case, including the deposition of Mr. Weber W. Pharis, President of Cadillac, and the memoranda filed by the parties in this case in support of their respective positions, and reaches the following findings and conclusions.

Initially this Court must examine the jurisdictional question raised by the plaintiff's Motion to Remand. In so moving, plaintiff has raised the issues that (1) a garnishment action is not removable; and (2) the resident insured is a necessary party, thus resulting in lack of diversity.

In a number of early decisions Courts ruled that the question of whether a garnishment action was removable was to be decided by reference to state law. E. g., Toney v. Maryland Casualty Co., 29 F.Supp. 785 (W.D.Va.1939); Lawley v. Whiteis, 24 F.Supp. 698 (N.D.Okl. 1938). Among the criteria considered by these Courts were (1) whether the statutes made garnishment a suit in which an issue of fact was or might be joined (Baker v. Duwamish Mill Co., 149 F. 612 (W.D.Wash.1906)); and (2) whether the proceedings were adversary, calling for a judgment independent of the main cause. (Toney v. Maryland Casualty Co., supra; Joski v. Short, 28 F.Supp. 821 (W.D.Wash.1939)). However, recent decisions have generally held that Federal, and not State law, determines whether the state court action is a "civil action" and, specifically, whether garnishment is a civil action. Quinn v. Book Named "Sixty Erotic Drawings from Juliette", 316 F.Supp. 289 (D.Mass.1970); Clarise Sportswear Co. v. U & W Manufacturing Co., 223 F.Supp. 961 (E.D.Pa.1963). Cases following this modern rule have universally held that garnishment proceedings are "civil actions" which are removable where diversity and jurisdictional amount are present. Swanson v. Liberty National Ins. Co., 353 F.2d 12 (9th Cir. 1965); Randolph v. Employers Mutual Liability Ins. Co., 260 F.2d 461 (8th Cir. 1958), cert. den. 359 U.S. 909, 79 S. Ct. 585, 3 L.Ed.2d 573 (1959); Stoll v. Hawkeye Casualty Co., 185 F.2d 96 (8th Cir. 1950).

The Fifth Circuit has not had occasion to squarely consider and decide this question; however, the case of Rosen v. Godson, 422 F.2d 1082 (5th Cir. 1970) is interesting in light of the fact that jurisdiction is an issue which may be raised by the Court on its own motion. (See, e. g., Empire Coal & Transportation Co. v. Empire Coal & Mining Co., 150 U.S. 159, 163-164, 14 S.Ct. 66, 37 L.Ed. 1037 (1893)). In Rosen, the Fifth Circuit specifically noted that the case was a garnishment action which was removed on the basis of diversity jurisdiction. 422 F.2d at 1083.

Even if the Court were required to look to State law to determine whether a garnishment action is removable, Mississippi garnishment proceedings meet the criteria that the suit be one in which an issue of fact might be joined and which is an adversary proceeding calling for judgment independent of the main cause. Mississippi Code Annotated § 11-35-1 et seq., the statutes which govern garnishment proceedings, make it clear that these criteria are met in the Mississippi proceeding.

The Court next considers the plaintiff's contention that the resident insured is a necessary party to this action, thereby destroying diversity. The case of Randolph v. Employers Mutual Liability Ins. Co., supra, is squarely on point and disposes of this contention. In that case, the Eighth Circuit, after pointing out that the garnishment action involved was a totally separate cause of action independent of the original cause, stated, "It does not appear that Stokes, the defendant in the state court case, is a party to this proceeding. Even if he were to be considered a party to the present proceeding, he should be aligned for jurisdictional purposes with the plaintiff, as it would be to Stokes' interest to have the judgment against him satisfied by his insurer. In re Removal Cases, 100 U.S. 457, 468, 25 L.Ed. 593; Baker v. Duwamish Mill Co., C.C., 149 F. 612; 3 Moore's Federal Practice, para. 19.03." 260 F.2d at 464.

The Court finds the logic of the Eighth Circuit in Randolph persuasive. The Mississippi garnishment statutes, particularly Miss.Code Ann. § 11-35-47 (1972), clearly are permissive in nature and do not make the resident insured an indispensable party. Even if the resident insured were joined in this law suit, he would have to be aligned for jurisdictional purposes with the plaintiff, thus not affecting diversity.

We now turn to the defendant's Motion for Summary Judgment. The Court finds the uncontradicted deposition of Mr. Weber Pharis, President of Cadillac Corporation, to be persuasive in its consideration of this motion, and page references herein are to that deposition.

The three insurance policies in question, covering the period April 24, 1970 to October 1, 1972, were obtained through Earl Dimitry, Agent for Sentry (Exhibits 3, 4 and 5, pages 36-102) and were always in Cadillac's files (page 103).

In September, 1970, Cadillac sold a mobile home to Mr. and Mrs. C. R. Moore (page 10), transported it to the site selected by the customers, blocked it up, and attached water pipes (page 31). On or about October 19, 1972, a "fire accident" occurred in the mobile home (Exhibit 1, page 17), which is also described as "an explosion and...