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IRVING TRUST CO. v. CENTURY EXPORT & IMPORT

January 31, 1979

IRVING TRUST COMPANY, Plaintiff,
v.
CENTURY EXPORT & IMPORT, S.A., Century Commodities, Inc., and Harry Steinfeld,Defendants. Banco de Colombia, Intervenor, and Eduardo Ospina Fernandez, Individually and on behalf of Century Export& Import, S.A., Intervenor



The opinion of the court was delivered by: HAIGHT

MEMORANDUM OPINION AND ORDER

This litigation, started in state court and removed pursuant to 28 U.S.C. § 1441, raises substantial questions concerning this Court's jurisdiction under the removal statute and the removing party's compliance with statutory conditions precedent to removal. The right of removal is a matter of legislative grace, Great No. Ry. Co. v. Alexander, 246 U.S. 276, 38 S. Ct. 237, 62 L. Ed. 713 (1914); Martin v. Hunter's Lessee, 1 Wheat. 304, 14 U.S. 304, 4 L. Ed. 97 (1816), and Congress has directed that:

 
"If at any time before final judgment it appears that the case was removed improvidently and without jurisdiction, the district court Shall remand the case . . .." 28 U.S.C. § 1447(c) (emphasis added).

 Accordingly, although none of the parties to this litigation has moved for a remand *fn1" (indeed they urge that removal was proper here), I must, on my own motion, inquire into the questions of subject matter jurisdiction and the propriety of the removal. Nixon v. O'Callaghan, 392 F. Supp. 1081 (S.D.N.Y.1975); see 1A Moore, Federal Practice, P 0.157(11) at p. 136 (2d ed. 1974). While resolution of these issues is not altogether free of doubt, I have concluded that the case should be remanded. My analysis begins with a summary of the proceedings to date.

 I.

 Plaintiff Irving Trust Company, a New York corporation with its principal place of business in New York, brought suit in New York State court against three defendants: (1) Century Export & Import, S.A. (CEI), a Panamanian corporation whose principal place of business is Colombia; (2) Century Commodities Inc. (CCC), a New York corporation with its principal place of business in New York; and (3) Harry Steinfeld, a citizen and resident of New York. Irving Trust's complaint sought damages for breach of contract: counts 1 through 16 alleged claims against CEI as the "maker" of a series of unpaid demand notes *fn2" executed "to the order of Irving Trust" and held by Irving Trust; counts 17 and 18 alleged claims against CCC, as guarantor of the CEI debts referred to above, pursuant to a contract of guaranty between CCC and Irving Trust; counts 19 and 20 alleged claims against Harry Steinfeld, as guarantor, similar to those asserted against CCC. *fn3"

 The opening gambit in the state court litigation was Irving Trust's request for an order to show cause for a temporary restraining order. Irving sought to "restrain itself" from honoring a certificate of deposit (the Certificate) in the amount of $ 1 million issued by Irving to CEI, and further requested an order of attachment, see N.Y.C.P.L.R. §§ 6201, 6212(a), with respect to the Certificate proceeds, i. e. the $ 1 million which CEI had deposited in return for the Certificate. Irving hoped to freeze these proceeds pending the outcome of the litigation so that it could eventually apply them in satisfaction of CEI's debt.

 In response to Irving's complaint, Steinfeld filed an answer, ostensibly on behalf of all three defendants, admitting liability for the debts but contesting the fee claims. Steinfeld also joined in Irving's request for the TRO. *fn4" At this point, Banco de Colombia (Banco), a foreign corporation which allegedly had become holder of the Certificate immediately after its issuance, moved to intervene as a defendant, asserting that it was entitled to the proceeds. *fn5" This motion was ultimately granted and Banco counterclaimed against Irving for $ 1 million, representing the Certificate proceeds.

 A second motion to intervene, individually and on behalf of CEI, was made by one Eduardo Ospina Fernandez (Ospina), president, chairman and co-owner (with Harry Steinfeld) of CEI. Ospina sought to strike or amend the answer filed by Steinfeld insofar as it related to CEI.

 Shortly before Ospina moved to intervene, Irving moved for partial summary judgment *fn6" on its claims against CEI, CCC, and Steinfeld, on the basis of the admissions in Steinfeld's answer. Banco also moved for summary judgment dismissing Irving's and Steinfeld's "claims" to the Certificate proceeds and sought an order directing Irving to honor the Certificate. Steinfeld opposed Ospina's motions and supported Irving's motions for partial summary judgment.

 In response to this battle of motions the state court rendered an opinion and order: (1) granting Irving's motion for partial summary judgment against Steinfeld; *fn7" (2) denying Irving's motion for partial summary judgment against CEI and CCC; (3) denying Banco's motion for summary judgment; and (4) granting Ospina's motion to intervene and amend CEI's answer.

 Ospina received notice of the state court order on March 8, 1978; on March 22, 1978 he filed the petition for removal on his own and CEI's behalf. Pursuant to a stipulation and order of this Court dated April 25, 1978, the attorneys for Steinfeld and CCC were permitted to withdraw as counsel; there has been no substitution of counsel to date. The parties represent that Steinfeld has disappeared and that CCC is for all practical purposes defunct.

 II.

 In determining the propriety of a removal several principles must be borne in mind. Because removal ousts a state court of jurisdiction, "Due regard for the rightful independence of state governments, which should actuate federal courts, requires that they scrupulously confine their own jurisdiction to the precise limits which the (removal) statute has defined." Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S. Ct. 868, 872, 85 L. Ed. 1214 (1941) (Quoting Healy v. Ratta, 292 U.S. 263, 270, 54 S. Ct. 700, 78 L. Ed. 1248 (1934)). The trend of both congressional enactment and judicial decision has been to restrict and limit removal jurisdiction. See generally Wright, Miller, Cooper, Federal Practice and Procedure: Jurisdiction § 3721 (hereinafter Wright Treatise). The burden of establishing that a case is within the federal court's removal jurisdiction is on the removing defendant (see cases cited in Wright Treatise, Supra, at note 65) and the removal statutes are to be strictly construed, Shamrock Oil & Gas Corp., supra, 313 U.S. at 108-09, 61 S. Ct. 868. With the caveat that doubts as to federal jurisdiction will be resolved against removal, *fn8" Lowe v. T. W. A., 396 F. Supp. 9 (S.D.N.Y.1975); Maybruck v. Haim, 290 F. Supp. 721 (S.D.N.Y.1968) (per Mansfield, D.J.); Lance Internat'l, Inc. v. Aetna Cas. & Sur. Co., 264 F. Supp. 349 (S.D.N.Y.1967), I turn to an examination of the jurisdictional basis in this case.

 III.

 Initially, the parties contend that removal jurisdiction attached by virtue of 28 U.S.C. § 1441(c). That section provides:

 
"(c) Whenever a separate and independent claim or cause of action, which would be removable if sued upon alone, 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 ...

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