Pacific Far East Line, Inc. v. Ogden Corp.

• Decision Date: 17 January 1977
• Docket Number: No. C-76-2063-CBR.,C-76-2063-CBR.
• Citation: 425 F. Supp. 1239
• Court: U.S. District Court — Northern District of California
• Parties: PACIFIC FAR EAST LINE, INC., a corporation, Plaintiff, v. OGDEN CORPORATION, a corporation, et al., Defendants.

425 F. Supp. 1239

PACIFIC FAR EAST LINE, INC., a corporation, Plaintiff, v. OGDEN CORPORATION, a corporation, et al., Defendants.

No. C-76-2063-CBR.

United States District Court, N. D. California.

January 17, 1977.

COPYRIGHT MATERIAL OMITTED

James D. Boughey, Peter A. Lindh, Gerald A. Buckosky, Dorr, Cooper & Hays, San Francisco, Cal., for plaintiff.

Mark O. Kasanin, Craig McAtee, William H. Armstrong, Thor Wilcox, McCutchen, Doyle, Brown & Enerson, San Francisco, Cal., Edward J. Koehl, Jr., Robert B. Acomb, Jr., Edith Brown Clement, Jones, Walker, Walchter, Poitevent, Carrere & Denegre, New Orleans, La., for defendants Ogden and Avondale.

Max Gillam, Joseph A. Wheelock, Jr., Philip F. Belleville, Latham & Watkins, Los Angeles, Cal., for defendants Talvar, Alliance and American Hydromath.

Richard M. Bryan, Lauren R. Poplack, Farella, Braun & Martel, San Francisco, Cal., for defendant Alliance.

Stephen J. Vergamini, George, Greek, King, McMahon & McConnaughey, Columbus, Ohio, Richard H. McConnell, San Francisco, Cal., for defendant Telmar.

Bartlett A. Jackson, John S. Siamas, Petty, Andrews, Tufts & Jackson, San Francisco, Cal., for defendant Babcock & Wilcox.

William C. Degarmo, Alameda, Cal., Harold C. Nachtrieb, Nachtrieb, Williams & Streitz, San Francisco, Cal., for defendant Paceco.

ORDER OF REMAND

RENFREW, District Judge.

Plaintiff Pacific Far East Line, Inc. ("PFEL"), filed this action in the Superior Court in and for the City and County of San Francisco on August 25, 1976, seeking damages according to proof from multiple defendants for breach of contract, including breach of express and implied warranties, and negligence. In its ninety cause of action complaint, PFEL also seeks punitive damages from Avondale Shipyards, Inc. ("Avondale"), and Ogden Corporation ("Ogden") for willful and malicious breach.

Avondale, the central defendant herein, entered into a written contract with PFEL on November 14, 1967, designated MA/MSB-66 by the Maritime Administration. Under the terms of the contract, Avondale was to construct six "LASH"¹ vessels for a total contract price of $127,956,000.00. PFEL alleges in its complaint that the ships constructed by Avondale failed to meet contract specifications in numerous fundamental respects.

In addition to Avondale, defendants include Ogden, Avondale's alleged surety, and ten subcontractors responsible for furnishing various appurtenances and component parts for the LASH vessels. PFEL alleges that these component parts have proven deficient during normal operations, subsequent to delivery of the vessels.

Avondale and Ogden removed the entire action to federal court on September 24, 1976, alleging federal jurisdiction based upon 28 U.S.C. § 1331 (federal question) and § 1442 (suits against federal officers).² Alliance Machine Company ("Alliance") Telmar, Inc. ("Telmar"), American Hydromath Co. ("Hydromath"), and Babcock & Wilcox Co. ("B & W") subsequently filed additional removal petitions, alleging federal jurisdiction based upon 28 U.S.C. § 1332 (diversity).³

On October 12, 1976, PFEL moved to remand the entire action⁴ to state court, arguing that removal was improvidently granted. In support of its motion to remand, PFEL advances the following arguments: (1) The complaint is based upon maritime theories and as such is shielded from removal by the so-called "saving to suitors" clause contained in 28 U.S.C. § 1333; (2) The action is not one which "arises under" federal law within the meaning of 28 U.S.C. § 1331; and (3) The claims against Alliance, Telmar, Hydromath, and B & W are not "separate and independent" within the meaning of 28 U.S.C. § 1441(c) and, because other defendants are non-diverse with respect to PFEL, federal jurisdiction cannot be based upon 28 U.S.C. § 1332.

THE "SAVING TO SUITORS" CLAUSE

PFEL characterizes its claim as maritime in nature and concludes that the "saving to suitors" clause of 28 U.S.C. § 1333(1) therefore bars removal.⁵ Section 1333 provides in relevant part that:

"The district courts shall have original jurisdiction, exclusive of the courts of the States, of:

"(1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled."

In essence, the statute enables maritime litigants to pursue available common law remedies, if they prefer them to those supplied in admiralty. Wunderlich v. Netherlands Insurance Co., 125 F.Supp. 877, 880 (S.D.N.Y.1954).

In construing 28 U.S.C. § 1333(1) as a bar to removal, PFEL misapprehends the meaning and purpose of the section. The "saving to suitors" clause "has long been construed to afford litigants a choice of remedies, not of forums." Crispin Company v. Lykes Bros. Steamship Co., 134 F.Supp. 704, 707 (S.D.Tex.1955). As stated in The Moses Taylor, 4 Wall. 411, 431, 18 L.Ed. 397 (1867), "It is not a remedy in the common-law courts which is saved, but a common-law remedy." Because common-law remedies may be pursued equally well in federal as in state courts, removal does not work to frustrate the essential purpose underlying § 1333.

Romero v. International Term. Co., 358 U.S. 354, 79 S.Ct. 468, 3 L.Ed.2d 368 (1959), relied on by plaintiff, merely prohibits removal of a maritime action from state court to the admiralty side of federal court. Romero does not bar removal where an independent basis for federal jurisdiction such as diversity exists. See Wright, Law of Federal Courts § 38, p. 133 (2d ed. 1970); 1A Moore on Federal Practice, § 0.167(3-3).

In Crawford v. East Asiatic Company, 156 F.Supp. 571, 572 (N.D.Cal.1957), the court noted that:

"The `savings to suitors' language says nothing about a right to sue in a state court, nor does it contain any reference to removal of a state action. It cannot, therefore, be treated as an express provision by Congress against removal."

In sum, § 1333 bestows upon maritime suitors the right to pursue non-admiralty remedies, but does not foreclose the right of defendants to litigate in federal court if some basis for federal jurisdiction, other than admiralty, exists.

FEDERAL QUESTION JURISDICTION

PFEL characterizes the instant action as one based upon "standard state law breach of contract and tort notions not considered within federal jurisdiction * * *." Motion to Remand at p. 5. According to plaintiff, "The issue is simply whether equipment furnished was deficient and whether the contractors lived up to their warranty obligations. There is no direct federal interest in the outcome of the claims as suggested by the fact that the government has not intervened * * *." Reply Memorandum in Support of Motion to Remand at p. 2.

By contrast, defendants Avondale and Ogden assert that the United States is vitally interested in the instant dispute which, they allege, involves a contract dependent on federal law for its interpretation. Memorandum of Points and Authorities in Opposition to Plaintiff's Motion to Remand at p. 2.

In support of their contention that the instant action arises under federal law within the meaning of 28 U.S.C. § 1331, Avondale and Ogden advance the following arguments: (1) PFEL's claims "arise under" the Merchant Marine Act of 1936, which authorizes and governs the contract here at issue; (2) The interpretation of PFEL's contract with Avondale is, or should be, a matter of federal common law; (3) Federal law must be applied here to determine the respective roles of the courts and the Maritime Administration in resolving shipbuilding contract disputes; (4) The government's ongoing interest in the design of LASH vessels mandates application of federal law in an action drawing into question the soundness of government-approved plans and specifications for such vessels; and (5) The United States pecuniary interest in the outcome of the dispute justifies the application of federal, rather than state, law in interpreting the shipbuilding contract.

In considering the propriety of removal under 28 U.S.C. § 1441, a court may consider only "the well pleaded facts of the complaint standing alone and unaided by anticipated defenses, the answer, or the petition for removal." Eickhof Construction Co. v. Great Northern Railway Co., 291 F.Supp. 44, 47 (D.Minn.1968). See also Nello L. Teer Company v. J. A. Jones Construction Co., 160 F.Supp. 345, 347-348 (M.D.N. C.1958).

Where, as here, removal is predicated upon federal question jurisdiction, "a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action. Citations omitted. The right or immunity must be such that it will be supported if the Constitution or laws of the United States are given one construction or effect, and defeated if they receive another. Citations omitted." Gully v. First Nat. Bank, 299 U.S. 109, 112, 57 S.Ct. 96, 97, 81 L.Ed. 70 (1936). Federal question jurisdiction does not lie simply because a defense based on federal law is anticipated. Similarly, a general governmental interest in the subject matter of a dispute will not itself suffice to transform an action based on state-created rights into a federal case. With these precepts in mind, the arguments advanced by Avondale and Ogden will be examined seriatim.

Defendants first contend that "plaintiff's claims arise under the Merchant Marine Act of 1936 46 U.S.C. §§ 1101 et seq. which authorizes and governs the shipbuilding contract here at issue." Memorandum of Points and Authorities in Opposition to Plaintiff's Motion to Remand at p. 2. Plaintiff does not purport to assert rights based on the Merchant Marine Act, and its complaint contains no mention of that statute. Defendants must therefore rely on the argument that the Merchant Marine Act is nonetheless implicated, and that from an affirmative rather than a defensive standpoint.

Defendants fail utterly to substantiate their conclusion that the instant action is in fact a "dispute which will...