Transport Indemnity Co. v. Financial Trust Co.

• Decision Date: 09 March 1972
• Docket Number: No. 71-2961-IH.,71-2961-IH.
• Citation: 339 F. Supp. 405
• Court: U.S. District Court — Central District of California
• Parties: TRANSPORT INDEMNITY COMPANY, a corporation, et al., Plaintiffs, v. FINANCIAL TRUST COMPANY, a corporation; Financial Programs, Inc., a corporation, Defendants.

339 F. Supp. 405

TRANSPORT INDEMNITY COMPANY, a corporation, et al., Plaintiffs, v. FINANCIAL TRUST COMPANY, a corporation; Financial Programs, Inc., a corporation, Defendants.

No. 71-2961-IH.

United States District Court, C. D. California.

March 9, 1972.

Ball, Hunt, Hart, Brown & Baerwitz, by Clarence S. Hunt, Long Beach, Cal., for plaintiffs.

Overton, Lyman & Prince, by Wayne H. Knight and Brenton F. Goodrich, Los Angeles, Cal., for defendants.

MEMORANDUM OPINION GRANTING PLAINTIFFS' MOTION TO REMAND

IRVING HILL, District Judge.

Plaintiffs' motion to remand the action to the State Court was granted by Order filed January 31, 1972, after a hearing on January 24, 1972. This memorandum states the nature of the case and the Court's reasons for ordering the remand.

This case presents the Court with what appears to be a question of first impression: In a two-Defendant diversity case, does non-action on the part of the first served Defendant (Defendant One herein) to remove within the thirty-day period provided by statute, bar a timely removal petition filed by another Defendant (Defendant Two herein) who was served more than thirty days after service on Defendant One, which removal petition is filed with the consent and concurrence of Defendant One?

The facts of the case may be simply stated. Plaintiffs sued the two named Defendants, both corporations, in the Superior Court of California. Both Defendant corporations are Colorado corporations having their principal place of business in Denver. Defendant Financial Programs, Inc. (hereinafter Defendant One) is the parent corporation. Defendant Financial Trust Company (hereinafter Defendant Two) is a wholly owned subsidiary of Defendant One. Both Defendants are represented by the same law firm in this litigation. Defendant One had had an authorized agent for the service of process in California for some time. The agent was one of the attorneys in the law firm representing Defendants. Defendant One was served by serving said attorney on October 7, 1971. Defendant Two at that time had no authorized agent for the service of process in this state. Thus, it was not served at the same time. After some correspondence and negotiations between the attorneys, the same local attorney was named by Defendant Two as the authorized agent for the service of process in California. Defendant Two was served by serving the attorney on November 16, 1971. Despite being fully aware of the presence of total diversity and the apparent right of removal of the action, Defendant One took no steps to remove the action within the thirty-day time limit of 28 U.S.C. § 1446(b). The petition to remove to this Court on grounds of diversity was filed by Defendant Two on December 15, 1971, within thirty days after it was served. Defendant One has given its consent and concurrence to the removal petition filed by Defendant Two.

It is necessary to investigate, as a threshold question, the nature of the thirty-day requirement of Section 1446(b). Professor Moore in his treatise, Federal Practice (hereinafter Moore), analyzes the thirty-day limitation in the following language:

"Removal proceedings are in the nature of process to bring the parties before the federal court; and mere modal or procedural defects are not jurisdictional. (citations) The limitation on the time for removal is not jurisdictional but is merely a formal and modal requirement which may be waived, or to which an objection may be precluded by estoppel. (citations) Under the prevailing view, a stipulation of the parties (citations) or an order of the state court (citations) extending the time to answer, move or otherwise plead does not extend the time for removal. The time is not subject to enlargement by the federal district court under Rule 6(b). (citations) Nor does Rule 6(e) enlarge the time for removal. (citations)" 1A Moore at 1245. Accord, 1 Barron & Holtzoff § 107.8, pp. 516, 517, 1969 pocket part p. 399.

It is my view based upon the above quotation and the cases which Professor Moore cites, that the thirty-day period may not be enlarged by act of the Federal Court, by act of the State Court or by mere consent of the Plaintiff to extend the time for removal. See Green v. Zuck, 133 F.Supp. 436 (S.D.N. Y.1965); Dutton v. Moody, 104 F.Supp. 838 (S.D.N.Y.1952); Robinson v. La Chance, 209 F.Supp. 845 (D.C.N.C. 1962). However, certain conduct on the part of the Plaintiff, which conduct is sometimes referred to as "waiver" and sometimes referred to as "estoppel", does preclude the Plaintiff from objecting to a late removal petition. See Mackay v. Uinta Development Co., 229 U.S. 173, 33 S.Ct. 638, 57 L.Ed. 1138 (1913); American Fire & Casualty Co. v. Finn, 314 U.S. 6, 71 S.Ct. 534, 95 L. Ed. 702 (1951); Green v. Zuck, supra. This conduct of the Plaintiff is almost always post-removal conduct. See Green v. Zuck, supra. However, although no cases have been found, it could also conceivably be pre-removal conduct.

This type of conduct which has been held to preclude objection is discussed by Judge Mansfield in Maybruck v. Haim, 290 F.Supp. 721 (S.D.N.Y.1968):

"To constitute a waiver or consent to the federal court's assumption of jurisdiction, however, there must be affirmative conduct or unequivocal assent of a sort which would render it offensive to fundamental principles of fairness to remand, as where the party seeking remand has been unsuccessful in litigation of a substantial issue, such as the right to a jury trial (citations) or the right to take depositions (citations) or has filed an amended complaint seeking further or different relief from the federal court. (citations)." 290 F.Supp. at 723, 724.

Note that all examples given are of post-removal conduct. See also Green v. Zuck, supra; Chevrier v. Metropolitan Opera Ass'n, 113 F.Supp. 109 (S.D.N.Y. 1953); Matter of Moore, 209 U.S. 490, 28 S.Ct. 585, 52 L.Ed. 904 (1907); Donahue v. Warner Bros. Pictures, Inc., 194 F.2d 6 (10th Cir. 1952).

I now progress to an examination of the post-removal conduct of Plaintiffs in the instant case to determine whether it constitutes "affirmative conduct or unequivocal assent of a sort which would render it offensive to fundamental principles of fairness" to remand the case. I find that no such conduct has taken place. Plaintiffs filed their motion to remand principally within a week after the removal petition was filed. Plaintiffs have sought no relief from the Federal Court nor have they litigated any issue here except their petition to remand. To protect their position, they did file in this Court for a jury trial but in so doing they expressly stated that their request was not to be considered as a waiver of the right to object to the removal.

Defendants, in pressing a claim that Plaintiffs are estopped to object to their removal of the case, rely on a pre-removal stipulation between counsel. The stipulation was negotiated by telephone and is evidenced by two letters, one from Plaintiffs' counsel to Defendants' counsel dated November 3, 1971, and the other from Defendants' counsel to Plaintiffs' counsel dated November 15, 1971. The stipulation as embodied in these documents is the usual form of stipulation used in the State Courts whereby one counsel grants to his opponent an extension of time in which to "move, answer or otherwise respond." Such an extension was originally granted on ...