Unanue v. Caribbean Canneries, Inc.

• Decision Date: 24 February 1971
• Docket Number: Civ. A. No. 3852.
• Citation: 323 F. Supp. 63
• Parties: Charles UNANUE, also known as Ulpiano Unanue, Plaintiff, v. CARIBBEAN CANNERIES, INC., et al., Defendants.
• Court: U.S. District Court — District of Delaware

323 F. Supp. 63

Charles UNANUE, also known as Ulpiano Unanue, Plaintiff, v. CARIBBEAN CANNERIES, INC., et al., Defendants.

Civ. A. No. 3852.

United States District Court, D. Delaware.

February 24, 1971.

COPYRIGHT MATERIAL OMITTED

Henry M. Canby and Richard F. Balotti, of Richards, Layton & Finger, Wilmington, Del., and Lawrence S. Timen, New York City, of counsel, for plaintiff.

David A. Drexler and William O. LaMotte, III, of Morris, Nichols, Arsht & Tunnell, Wilmington, Del., for defendants.

OPINION

LATCHUM, District Judge.

This action was instituted on January 29, 1970 in the Court of Chancery of the State of Delaware in and for New Castle County. Thereafter, on February 27, 1970 the action was removed to this Court by the defendants. The removal petition alleged that the plaintiff, Charles Unanue ("Charles") was a "resident" of New York, that defendant, Caribbean Canneries, Inc. ("Caribbean") was a Delaware corporation, that defendants Joseph Unanue ("Joseph") and Anthony Unanue ("Anthony") were "residents" of New Jersey and that defendant Frank Unanue ("Frank") was a "resident" of Puerto Rico. The petition further alleged that, notwithstanding the fact that Caribbean was incorporated in Delaware, the state in which this action was originally brought, the defendants were entitled to remove on the basis of diversity of citizenship¹ either because Caribbean should be realigned as a party plaintiff, or alternatively, because the case involves separate and independent controversies, all of which were not between Charles and Caribbean.

On March 10, 1970, Charles moved to remand the case to the state court on several grounds, one of which was that the petition was defective in that it failed to allege the "citizenship" of the parties. Defendants moved on March 20, 1970 to amend the original removal petition to allege (a) that Caribbean's principal place of business was Puerto Rico, (b) that Charles was a citizen of New York, (c) that Frank was a citizen of Puerto Rico and (d) that Joseph and Anthony were citizens of New Jersey. Although no order was ever entered allowing the amendment, the Court concludes that the amendment should be permitted since there has been no showing of equitable considerations for denying the application. Handy v. Uniroyal, Inc., 298 F.Supp. 301, 302-305 (D.Del. 1969).

After the defendants moved to amend the removal petition, Charles filed an affidavit on April 6, 1970 in which he categorically denied that he was a New York citizen and averred that he was a domiciliary and citizen of Puerto Rico when this suit was filed and when it was removed to this Court.

Upon consideration of this Court's removal jurisdiction applicable to this case, the Court is of the opinion that the action must be remanded to the Delaware Court of Chancery. Two reasons exist for this conclusion.

First, putting aside the factual dispute of whether Charles' citizenship is New York or Puerto Rico, and accepting the defendants' contention that Charles is a New York citizen, the Court is convinced nevertheless that the case was improvidently removed to this Court.

28 U.S.C. § 1441(b)² provides that a diversity action may not be removed to a federal court when one or more of the defendants is a citizen of the state in which suit is brought. The petition acknowledges that defendant Caribbean is a Delaware corporation and that suit was instituted in the Delaware Court of Chancery. This alone is sufficient to prevent removal.

The defendants, however, in attempting to evade this statutory restriction on the Court's removal jurisdiction, first suggest that Caribbean should be realigned as a party plaintiff since it is a mere nominal and disinterested party. The Court disagrees. Caribbean's real interest in this litigation makes it a necessary party defendant, preventing its being realigned as a nominal party plaintiff. In this action, the plaintiff seeks relief from Caribbean by demanding that his stock interest in the company be properly registered in his name. Where a plaintiff seeks relief from a corporation, the corporation is a necessary party. 3A Moore, Fed.Practice, ¶ 19.031 (2d Ed.1967).

Furthermore the complaint in this suit charges that Caribbean has conspired with the individual defendants to deprive the plaintiff of his stock in Caribbean. In a conspiracy action involving corporate matters, the corporation is not aligned with the complainant. Smallen v. Louisville Fire and Marine Ins. Co., 80 F.Supp. 279, 280-281 (W.D. Ky.1948). Moreover, even in a diversity suit, where the management of a corporation opposes litigation the corporation is deemed to be antagonistic to the plaintiff and therefore cannot be realigned as a party plaintiff. Doctor v. Harrington, 196 U.S. 579, 587-588, 49 L. Ed. 606 (1905); Koster v. (American) Lumbermens Mutual Casualty Co., 330 U.S. 518, 523, 67 S.Ct. 828, 91 L.Ed. 1067 (1947).

The issue of Caribbean's antagonism to the plaintiff is governed by the pleadings and the nature of the controversy. Smith v. Sperling, 354 U.S. 91, 96, 77 S.Ct. 1119, 1 L.Ed.2d 1205 (1957). The complaint shows that the plaintiff's controversy is with both Caribbean and the individual defendants who control the corporation. Where a plaintiff's controversy is with both a corporation and individual defendants, even when the corporation may benefit if the plaintiff prevails, the corporation is not realigned as a party plaintiff. Venner v. Great Northern Ry., 209 U.S. 24, 32, 28 S.Ct. 328, 52 L.Ed. 666 (1908). All the defendants are rightfully and necessarily made defendants, so none can, for jurisdictional purposes, be regarded otherwise than as defendants. Wichman v. R. H. Miller Texas Corp., 84 F.Supp. 123, 125 (S.D.Tex.1948), aff'd 174 F.2d 126 (C.A. 5, 1949). The case was improvidently removed under § 1441(b) since Caribbean, one of the defendants, is a citizen of Delaware, the state in which the action was brought.

In a second effort to support removal the defendants rely upon 28 U.S. C. § 1441(c).³ That section provides for removal of certain cases when complete diversity between plaintiffs and defendants is not present. The key determination under § 1441(c) is whether "a separate and independent claim or cause of action" exists. "In making this determination the Court looks to the plaintiff's pleading, which controls." American Fire & Casualty Co. v. Finn, 341 U.S. 6, 14, 71 S.Ct. 534, 540, 95 L. Ed. 702 (1951).

The present complaint expressly alleges a single underlying wrong by all of the defendants, including Caribbean, a family owned corporation. Paragraph 17 states that "the defendants have entered into a conspiracy to appropriate to Frank and Anthony two of the individual defendants plaintiff's ownership of one-fourth (¼th) of the total shares of Caribbean." Paragraph 18 of the complaint details some of the acts committed by the defendants in furtherance of the conspiracy: "A. Claimed that Frank and Anthony alone are the owners, each of 50% of all the shares of Caribbean; B. Refused to transfer Charles' shares of said stock to Charles' name despite a demand for such transfer * * *; C. Denied that Charles is the true and lawful owner of one-fourth of the shares of stock of Caribbean * * *; D. Retained and converted Charles' shares of said stock; E. Caused Charles to be removed as an officer and director of Caribbean; F. Refused to permit Charles to inspect the books of account, corporate minute books, stock ledger and stock transfer books of Caribbean."

Further, Caribbean is also named in paragraph 21 of the complaint which alleges: "The defendants, including the participating corporate defendant Caribbean are accountable as constructive trustees or trustees ex maleficio in respect to Charles' one-fourth (¼th) ownership of the total shares of Caribbean." In every respect, Caribbean is alleged to be an active participant in the underlying conspiracy.

Under Finn, the allegations of paragraphs 17, 18 and 21 of the complaint govern the determination of the question whether there are separate claims or causes of action under § 1441(c) and answer it in the negative. The thrust of the complaint is that the defendants, including Caribbean, have conspired and are continuing to conspire to wrongfully deprive the plaintiff of his ownership in one-fourth of the stock of Caribbean.

Even though there are several facts or transactions involved, this does not mean that for jurisdictional purposes there are separate and independent causes of action. "Where there is a single wrong to plaintiff, for which relief is sought, arising from an interlocked series of transactions, there is no separate and independent claim or cause of action under § 1441(c)." American Fire & Casualty Co. v. Finn, supra, 341 U.S. at 14, 71 S.Ct. at 540; Jury-Rowe Co. of Lansing, Mich. v. Teamsters & Chauffeurs Local Union, 97 F.Supp. 633, 634 (E.D.Mich.1951).

Defendants also point to the prayers for relief and argue that since in some instances different relief is sought from the various defendants, there are separate causes of action. There are two answers to this argument: (a) plaintiff's cause of action is not made into multiple causes of action by requesting multiple relief and (b) prayers E and G do seek the same relief from all the defendants. In any event, the determining issue is not the relief sought since "the prayer forms no part of the cause of action." Preas v. Phebus, 195 F.2d 61, 63 (C.A.10, 1952). Regardless of the relief requested in the present complaint, the underlying cause of action is a single wrong. It consists of the acts of all the defendants in wrongfully depriving the plaintiff of what he asserts to be his property. Accordingly, § 1441(c) has no application to this case.

Since Caribbean is a Delaware citizen and the complaint asserts a single underlying wrong against all of the defendants, the case is not removable under either § 1441(b) or (c) regardless of plaintiff's citizenship.

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