Weiner v. Sorenson

• Decision Date: 28 February 1972
• Docket Number: No. 71-C-474 to 71-C-478.,71-C-474 to 71-C-478.
• Citation: 341 F. Supp. 397
• Parties: Harold WEINER, Plaintiff, v. James H. SORENSON, Defendant. Morris SHECHTMAN, Plaintiff, v. James H. SORENSON, Defendant. Morris SHECHTMAN and Gertrude Shechtman, his wife, Plaintiffs, v. J. SHAPIRO COMPANY, a foreign corporation, and Jerome H. Shapiro, Defendants. Morris SHECHTMAN, Plaintiff, v. J. SHAPIRO COMPANY, a foreign corporation, and Jerome H. Shapiro, Defendants. Harold WEINER, Plaintiff, v. J. SHAPIRO COMPANY, a foreign corporation, and Jerome H. Shapiro, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

341 F. Supp. 397

Harold WEINER, Plaintiff, v. James H. SORENSON, Defendant.

Morris SHECHTMAN, Plaintiff, v. James H. SORENSON, Defendant.

Morris SHECHTMAN and Gertrude Shechtman, his wife, Plaintiffs, v. J. SHAPIRO COMPANY, a foreign corporation, and Jerome H. Shapiro, Defendants.

Morris SHECHTMAN, Plaintiff, v. J. SHAPIRO COMPANY, a foreign corporation, and Jerome H. Shapiro, Defendants.

Harold WEINER, Plaintiff, v. J. SHAPIRO COMPANY, a foreign corporation, and Jerome H. Shapiro, Defendants.

Nos. 71-C-474 to 71-C-478.

United States District Court, E. D. Wisconsin.

February 9, 1972.

On Reconsideration February 28, 1972.

Samson, Friebert, Sutton & Finerty, Milwaukee, Wis., for Shechtmans.

Marvin Resnick, Milwaukee, Wis., for Weiner.

Quarles, Herriott, Clemons, Teschner & Noelke (George K. Whyte and Stephen Z. Surridge, on reconsideration), Milwaukee, Wis., for J. Shapiro Co. & Jerome Shapiro.

Reinhart, Boerner, Van Deuren & Norris, Milwaukee, Wis., for Sorenson.

On Reconsideration of No. 71-C-476 February 28, 1972.

DECISION AND ORDER

MYRON L. GORDON, District Judge.

The plaintiffs in each of the above-entitled actions allege that, as a result of the defendants' solicitations, they purchased various amounts of 6% convertible subordinated debentures of Quarterback Sports Federation, Inc., and Dart Investment Corp. In each case, the plaintiffs assert that the debentures were not registered with the Wisconsin Department of Securities as required by chapter 189 of the Wisconsin statutes (1967); in addition, the plaintiff in the case numbered 71-C-477 contends that the offering which included the Quarterback debentures purchased by him was not registered under the Securities Act of 1933 and that the defendants falsely represented that the Quarterback debentures would be listed on the American Stock Exchange by the late spring of 1969 and would be redeemed until that time. Each plaintiff seeks repurchase by the defendants of the debentures sold to him.

All of the actions were commenced in a state court and were removed by the defendants to this court, pursuant to 28 U.S.C. § 1441; removal jurisdiction is based upon diversity of citizenship. Each of the plaintiffs has moved to remand the actions to the state court, and each of the defendants has moved to dismiss, to transfer, or to stay. The plaintiffs' motions will be considered first.

MOTIONS TO REMAND

The plaintiffs state that actions involving the same parties and arising out of the same transactions are pending in the circuit court for Milwaukee county and that such actions were filed prior to the commencement of the present ones. They contend that the instant actions were filed to enable them to make the specific assertion that the defendants failed to comply with certain provisions of the Wisconsin securities law, an allegation "inadvertently omitted" from the pleadings in the initial actions.

The plaintiffs argue that the present actions are "supplementary" ones and have no independent existence for removal purposes since they are "continuations of," or were commenced "to add another element to," the previously-filed state court actions. They assert that it is likely that all the actions will be consolidated if the present cases are remanded to the state court, and they argue that retention by this court of the cases now before it will result in "fractionalization" of the lawsuits, inconvenience to the parties, and added expense.

The plaintiffs also state in their briefs that commencement of separate actions, instead of amendment of the complaints in the original state court actions, was necessitated in part by the fact that an appeal has been taken from a decision with regard to jurisdiction in two of the state cases; the state court no longer has jurisdiction to hear a motion to amend, the plaintiffs argue, and the running of the statute of limitations precluded delay until after the resolution of the appeal. Finally, the plaintiffs in case 71-C-476 declare that the requisite jurisdictional amount is lacking.

The plaintiffs' argument that "supplementary" actions are not generally removable, even though diversity of citizenship and jurisdictional amount are present, finds support in 1A Moore's Federal Practice ¶ 0.1574.-11, at 176 (1965), where it is stated:

"That an action is in form an independent suit is not determinative. It has been held that the Bondurant v. Watson, 103 U.S. 201, 278, 281, 26 L. Ed. 447 (1880) doctrine does not warrant removal where the now-plaintiff was in privity with the defendant in the original action and the matter now made the basis of the independent suit could have been pleaded in the prior original action; or, where proceedings at law and equity are distinct, the subsequent suit in equity is to complete or perfect the right adjudged at law."

However, as the defendants point out, the question of whether a suit is "supplementary" arises most often in connection with actions which attempt to enforce or enjoin a prior state court decree. Furthermore, a distinction must be drawn between the proposition under discussion and the "separate and independent claim or cause of action" language of 28 U.S.C. § 1441(c). See 1A Moore's Federal Practice, supra, at 171.

In Roby v. Maine Central R. R., 243 F.Supp. 153 (N.H.1965), two New Hampshire citizens each brought separate actions in a state court against the estate of a New Hampshire citizen and against a railroad, a citizen of Maine, for damages arising out of a single automobile accident. When the railroad removed the actions against it, the plaintiffs moved to remand, arguing — by using the language of § 1441(c) — that none of the four actions had an existence independent from the others. The court denied the plaintiffs' motions, stating (at page 155):

"... the court concludes that it should not recast the plaintiffs' original pleadings, which presented no barriers to the railroad's removal. To do so would deprive the railroad of a right conferred on it by statute to remove actions against it which involve diversity of citizenship and an amount in controversy exceeding $10,000.

"Plaintiffs were masters of their own pleadings; nothing forced them to bring separate writs against the railroad and against Bedard's estate. It is settled that removability depends to a great extent on how the plaintiff draws his pleadings."

See also Federal Savings & Loan Ins. Corp. v. Quinn, 419 F.2d 1014, 1019 (7th Cir. 1969); but see Fugard v. Thierry, 265 F.Supp. 743 (N.D.Ill.1967).

Regardless of the defendants' motives in removing the instant actions, I am of the opinion that the motions to remand (except in case 71-C-476, for reasons discussed below) must be denied. Notwithstanding the plaintiffs' contention that the present cases involve the same parties and events as the original state court actions, I believe that the cases at bar are sufficiently independent to warrant their retention by this court.

It is possible, as the plaintiffs contend, that "fractionalization" and added expense will occur; however, the plaintiffs' decision to commence separate lawsuits in the state court set in motion the defendants' statutory right to remove such actions. Furthermore, the fact that the defendants apparently chose not to remove the initial actions in no way affects their right to have the present actions heard by this court. Adams v. Western Steel Buildings, Inc., 296 F.Supp. 759, 761 (Colo.1969).

As already noted, the plaintiffs in case 71-C-476 argue that the amount in controversy does not exceed "the sum or value of $10,000, exclusive of interest and costs." 28 U.S.C. § 1332. The complaint in that case alleges that each of the two plaintiffs purchased $5,000 in 6% convertible subordinated debentures of Dart Investment Corp. The plaintiffs ask that the defendants "be adjudged to repurchase said ... debentures for the sum of Ten Thousand Dollars ($10,000)."

The defendants argue that, because the plaintiffs purchased "6% convertible subordinated debentures," "if repurchase were to be required, Plaintiffs would be entitled to the face amounts aggregating $10,000, plus accrued interest at the contractual rate of 6% to date of such repurchase." Since the 6% interest is "exacted as the agreed upon price for the hire of money," and not "imposed as a penalty for delay in payment," the defendants contend that the amount in controversy exceeds $10,000 and that this court has jurisdiction.

The defendants' argument ignores the actual language of the ad damnum clause of the complaint; the plaintiffs simply seek repurchase of the debentures "for the sum of Ten Thousand Dollars." In Powers v. Fultz, 404 F.2d 50, 52 (7th Cir. 1968), the court stated:

"We are of the view that plaintiff's allegation with respect to the existence of the requisite jurisdictional amount and the prayer for judgment combine to constitute at most a defective allegation of the existence of diversity jurisdiction. The limitation of the principal sum of the judgment sought to $10,000 is entirely consistent with the allegations of the complaint with respect to the amount of the gift ($10,000) intended to be made. If plaintiff had intended to assert a claim for $10,081.25 based on the defendant-appellee's withdrawal of that amount from the account (the $81.25 apparently represents interest ...) the plaintiff should have amended his complaint to assert such a claim .... And the complaint sought recovery of but $10,000 with interest thereon from a specific date. No claim in excess of $10,000, exclusive of interest and costs, was asserted."

The motion to remand case 71-C-476 to the state court will be granted.

MOTIONS TO DISMISS

All of the defendants were served with process in Minnesota, and each has filed a motion to dismiss, pursuant to Rule 12(b) (2), Federal Rules of Civil Procedure, on the basis that this court lacks personal jurisdiction over him. The motions are accompanied by the affidavits of the individuals named...