Sterling Homes, Inc. v. Swope

• Citation: 816 F. Supp. 319
• Decision Date: 17 March 1993
• Docket Number: Civ. A. No. 1:CV-92-1679.
• Parties: STERLING HOMES, INC., Plaintiff, v. David A. SWOPE and Maria M. Swope, his wife, Defendants, v. Mary L. BECKMAN and Springettsbury Township, Third Party Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

816 F. Supp. 319

STERLING HOMES, INC., Plaintiff, v. David A. SWOPE and Maria M. Swope, his wife, Defendants, v. Mary L. BECKMAN and Springettsbury Township, Third Party Defendants.

Civ. A. No. 1:CV-92-1679.

United States District Court, M.D. Pennsylvania.

March 17, 1993.

John M. Garber, York, PA, for plaintiff.

Clyde W. Vedder, York, PA, for defendants David and Maria Swope.

Donald H. Yost, Blakey, Yost, Bupp & Kilgore, York, PA, G. Thomas Miller, Nancy P. Horn, McNees, Wallance & Nurick, Harrisburg, PA, for third-party defendants Mary L. Beckman and Springettsbury Tp.

MEMORANDUM

RAMBO, Chief Judge.

Before the court is Defendants' motion to remand the captioned action to state court. The matter has been fully briefed and is ripe for disposition.

Background

In 1990, First Party Defendants ("Defendants") purchased Lot No. 3 in Doersam Woods, an eleven lot subdivision in Springettsbury Township, York County, Pennsylvania. There is no public sewer for these lots. On May 21, 1991, Plaintiff and Defendants entered into a construction agreement by which Plaintiff agreed to construct a new home for Defendants on the purchased lot. Before beginning work, Plaintiff applied to Springettsbury Township for a building permit. On June 27, 1991, Beckman, an agent of Springettsbury, issued this permit. However, no request for a sewer permit had been made, and none was issued even though Springettsbury Code § 4-22(e) purportedly provides that: "No building permit shall be issued unless or until any required sewage permits have been issued." Defendants assert that the policy of the Township at this time was to permit the issuance of a building permit upon the showing of a successful "perk and probe test." Defendants also allege that third party defendant Beckman was responsible for this policy.

On July 1, 1991, Plaintiff began building the home. However, Plaintiff's subcontractor excavated a driveway on the only available site for a on-site septic system. Subsequently, the township revoked its building permit because the "work had not been progressing according to the plans submitted, particularly concerning the on-lot sewage system." Plaintiff then ceased construction and Defendants stopped making payments.

Plaintiff brought suit in the Court of Common Pleas in York County alleging that Defendants had breached the construction contract. Defendants subsequently joined third party defendants Mary L. Beckman, the Township planner/zoning officer, and Springettsbury Township, alleging that they violated Defendants' civil and constitutional rights by revoking the building permit.

On November 19, 1992, Third Party Defendants filed a Notice of Removal of the action to this court pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1441(c). Defendants then filed the instant motion for remand of this action back to state court.

Discussion

I. Introduction

Defendants assert that the captioned action —the combination of the third party and the underlying complaint—are non-removable, thus defeating jurisdiction in this court. Consequently, Defendants seek remand of this matter to state court.

Plaintiff's complaint is based wholly on state law—a contract dispute between a contractor and a buyer. The third party claims are based on federal law—claims pursuant to 42 U.S.C. § 1983, violations of the federal constitution, and a claim under the Fifth Amendment for a purportedly illegal taking without due compensation. Specifically, Defendants assert that Third Party Defendants have deprived them of the following:

(1) The right to be secure in their person and personal effects against improper seizure; (2) the right not to be deprived of property without due process or authority of law and without just compensation being first made or secured; (3) the right not to have their privileges and immunities abridged; (4) the right to equal protection under the law; (5) all rights under 42 U.S.C. § 1983; (6) the right to be free from inverse condemnation; and (7) the right to be free from an unconstitutional taking in violation of the Takings Clause under the Fifth Amendment of the United States Constitution.

(Third Party Complaint at ¶ 14.)

This court must first determine if the captioned action was properly removed from state to federal court. Corwin Jeep Sales & Serv., Inc. v. American Motors Sales Corp., 670 F.Supp. 591, 592 (M.D.Pa.1986) (J. Rambo). If it was not, then the action must be remanded pursuant to 28 U.S.C. § 1447(c). However, even if removal was proper, the court has the discretion to remand those portions of the case in which state law predominates. See 28 U.S.C. § 1441(c).

II. Split Among the Courts

The predominant question in the instant matter is whether a third party defendant may remove a case pursuant to 28 U.S.C. § 1441(c) when federal subject matter jurisdiction lies over the third party complaint but not over the original claims. Courts are irreconcilably divided on the instant issue; as one judge has announced, "it is not an exaggeration to say at least on the surface the field luxuriates in a riotous uncertainty." Harper v. Sonnabend, 182 F.Supp. 594, 595 (S.D.N.Y.1960).

The Third Circuit Court of Appeals has not spoken directly to the question before the court. However, in a case involving a related issue,¹ the Third Circuit favorably discussed third party removal, quoting the court in Mignogna v. Sair Aviation, Inc., 679 F.Supp. 184 (N.D.N.Y.1988) which had stated: "To adopt an inflexible rule barring removal by third party defendants ... would have the curious effect of making a litigant's right to have a claim heard in a federal forum turn on the fortuity of being sued in a third party complaint rather than in a separate action." Thompson v. Wheeler, 898 F.2d 406, 409 (3d Cir.1990) (quoting Mignogna, 679 F.Supp. at 188).

Several district courts within the Third Circuit have decided, and split, on the instant issue. Compare Greater New York Mut. Ins. Co. v. Anchor Constr. Co., 326 F.Supp. 245 (E.D.Pa.1971); White v. Baltic Conveyor Co., 209 F.Supp. 716 (D.N.J.1962); Kaye Associates v. Board of Chosen Freeholders-County of Gloucester, 757 F.Supp. 486 (D.N.J.1991) (third party defendants may not remove action); with Columbia Casualty Co. v. Statewide Hi-Way Safety, Inc., 94 F.R.D. 182, 184 (D.N.J.1982) (third party defendant can remove entire action); with Bond v. Doig, 433 F.Supp. 243 (D.N.J.1977); Industrial Lithographic Co. v. Mendelsohn, 119 F.Supp. 284, 286 (D.N.J.1954); Patient Care, Inc. v. Freeman, 755 F.Supp. 644 (D.N.J.1991) (third party defendants may remove severed, separate, independent claim).

Three circuit courts² have decided the instant issue: the Seventh and Eighth Circuits have held that a third party defendant has no removal rights, see Thomas v. Shelton, 740 F.2d 478, 488 (7th Cir.1984); Lewis v. Windsor Door Co., 926 F.2d 729, 733 (8th Cir.1991) while the Fifth Circuit has held to the contrary, see Carl Heck Engineers, Inc. v. Lafourche Parish Police Jury, 622 F.2d 133, 135 (5th Cir.1980).

The majority view among courts is that third party defendants may not remove a case.³ This view is shared by the leading commentators. See 1A Moore's Federal Practice ¶ 0.16710 (2d ed. 1993) ("Moore's"); 14A Wright, Miller & Cooper, Federal Practice and Procedure § 3724 at 389 (2d ed. 1985) ("Wright").

The courts in the minority, permitting third-party removal, have done so in varying degrees. A very few have permitted removal of an entire case after finding that the third party complaint provided an independent grounds for jurisdiction.⁴ However, most courts permitting third party removal have done so only of the severed part.⁵ And several courts have in theory approved third party removal, but within the facts of the particular case, found that the third party claim was not sufficiently separate and independent to permit such removal.⁶ The court in Rozumalski v. Pierce, 707 F.Supp. 652, 654 (W.D. NY 1989), sidestepped the issue, first determining that the third party claim was not sufficiently separate from the original claim, thus ordering remand without first determining whether a third party defendant could remove.

III. Arguments For and Against Permitting Removal By Third Party Defendants⁷

Most courts which have held that third party defendants may not remove begin with a statutory analysis. Title 28 U.S.C. § 1441(c) governs the removal of federal question actions from state to federal court and provides:

Whenever a separate and independent claim or cause of action within the jurisdiction conferred by Section 1331 of this title,⁸ 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 in which State law predominates.

28 U.S.C. § 1441(c). Three statutory based arguments have prompted courts to disapprove of third party removal.

First, § 1441(c) was passed to restrict the right of removal. See American Fire & Casualty Co. v. Finn, 341 U.S. 6, 10, 71 S.Ct. 534, 538, 95 L.Ed. 702 (1951); Share v. Sears, Roebuck & Co., 550 F.Supp. 1107, 1109 (E.D.Pa.1982); Greater New York Mut. Ins. Co., 326 F.Supp. at 248-49; Cannon v. Goodyear Tire & Rubber Co., 241 F.Supp. 23, 25 (E.D.S.C.1965). Before 1948, when § 1441(c) was passed, removal required merely a separable controversy and diversity.⁹American Fire Casualty Co., 341 U.S. at 10, 71 S.Ct. at 534. However, the 1948 change added the requirement that a removal claim must be "separate and independent" from another nonremovable claim. Id. This required "more complete disassociation between the federally cognizable proceedings and those cognizable only in state courts before allowing removal." Id. at 12, 71 S.Ct. at 539. Two other changes also evidenced legislative intent to restrict removal: the Judiciary Act of 1887-1888 limited removal to defendants, rather than either party, see Greater New...