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ELSIS v. HERTZ CORP.

March 5, 1984

Donald ELSIS, Plaintiff,
v.
The HERTZ CORPORATION, Defendant; The HERTZ CORPORATION, Third-Party Plaintiff, v. TOYOTA LIMITED and Southeast Toyota Distributors, Inc., and Toyota of Hollywood, Inc., Third-Party Defendants; The HERTZ CORPORATION, Second Third-Party Plaintiff, v. TOYOTA CORPORATION and Toyota Motor Sales, U.S.A., Second Third-Party Defendants.



The opinion of the court was delivered by: WEXLER

MEMORANDUM AND ORDER

WEXLER, District Judge.

 On September 29, 1976, plaintiff Donald Elsis was driving a 1976 Toyota automobile rented from defendant Hertz Corporation (Hertz) when he collided with a tree. This was a one-car accident allegedly caused by a steering system malfunction or failure. On June 2, 1977 plaintiff instituted an action against Hertz in New York Supreme Court for Nassau County for personal injuries suffered in that accident. In 1983 Hertz instituted third-party actions against Toyota Limited, Southeast Toyota Distributors, Inc. and Toyota of Hollywood, Inc. (first third-party defendants) and Toyota Corporation and Toyota Motor Sales, U.S.A. (second third-party defendants). On August 29, 1983, the second third party-defendant Toyota Motor Corporation (Toyota Motor) petitioned to remove the entire action to this Court *fn1" pursuant to 28 U.S.C. Section 1441.The basis for original jurisdiction in this court was alleged to be diversity of citizenship between Hertz, a Delaware corporation, and Toyota Motors, which is incorporated under the laws of Japan. 28 U.S.C. Section 1332(a)(3) and (c).

 Plaintiff and Hertz now move for remand of the entire action to state court. They assert that there is no diversity of citizenship between plaintiff and defendant and that diversity of citizenship between plaintiff and third-party defendants or Hertz and third-party defendants is not an adequate basis for subject matter jurisdiction in this Court. Second third-party defendant Toyota Motor counters that the third-party action against it is a "separate and independent claim" which, paired with diversity of citizenship between Hertz and Toyota, is properly removed under 28 U.S.C. Section 1441(c).Therefore, according to Toyota Motor, the Court should retain subject matter jurisdiction over the entire matter or sever the original action, remanding it to state court, and retain the third-party action.

 Finally, Hertz moves for imposition of costs and attorneys' fees pursuant to 28 U.S.C. Section 1447(c) for the improper removal of the matter to this court. Hertz also moves for "vacature" of Toyota Motor's notices of discovery and interrogatories pursuant to Rule 26, Fed.R.Civ.P. as improper, abusive and harassing. The Court would cast this as a motion for a protective order pursuant to Rule 26(c), Fed.R.Civ.P.

 I.

 Section 1441 of Title 28 states the basis for removal of an action to federal district court by a defendant. In pertinent part it provides:

 (a) . . . any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by defendant or defendants. . . .

 (b) [any action not founded on a federal or constitutional question] shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

 The Court first discusses generally the issue of removal of the original action between plaintiff and Hertz. It is clear that under Section 1441 absent a federal question there must be diversity of citizenship between plaintiff and defendant, Macaluso v. Mondadori Publishing Co., 527 F. Supp. 1017 (E.D.N.Y.1981), defendant's citizenship must be in a state other than where the action is brought, and all defendants must join in the petition for removal, Bradford v. Harding, 284 F.2d 307 (2d Cir.1960). Plaintiff Elsis is a citizen of New York and Hertz is a Delaware corporation with its principal place of business in New York, hence a citizen of both states under 28 U.S.C. Section 1332(c). Thus, the controversy between Hertz and Donald Elsis cannot be removed independently to federal court, as there is no diversity of citizenship, Hertz is a citizen of New York, and Hertz does not ask for removal. Finally, it appears settled that a third-party defendant is not a "defendant" for purposes of removal pursuant to Section 1441(a). E.g., Knight v. Hellenic Lines, Ltd., 543 F. Supp. 915 (E.D.N.Y.1982). Therefore, Toyota Motor cannot properly petition under Section 1441(a) for removal of the original action.

 II.

 Section 1441(c) provides an alternate basis for removal. In pertinent part it declares: 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 all matters not otherwise within its original jurisdiction.

 Relying on this section Toyota Motor argues that the third-party action between it and Hertz is a separate and independent cause of action over which this Court has original jurisdiction based on diversity of citizenship. Accordingly, Toyota Motor contends this Court should retain the entire action for determination or retain the Hertz-Toyota Motor third-party action and remand the remaining controversies to state court.

 In positing the argument of an independent and separate third-party cause of action Toyota Motor has misapprehended the meaning under the statute of a "separate and independent claim." The Supreme Court definitively construed that pivotal phrase of Section 1441(c) in American Fire and Casualty Co. v. Finn, 341 U.S. 6, 71 S. Ct. 534, 95 L. Ed. 702 (1951). Noting at the outset that Congress intended to restrict removal in its 1948 revision of the section, the Court declared that a merely separable controversy is not an adequate ground for removal under the section. 341 U.S. at 11, 71 S. Ct. at 538. For removal under Section 1441(c) the controversy must be a separate and independent claim or action. Moreover, the Court chose a narrow interpretation of "separate and independent", requiring clear disassociation between the claim to be removed under Section 1441(c) and any otherwise unremovable claim. 431 U.S. at 12, 71 S. Ct. at 539. It concluded that claims arising from a single wrong or single invasion of a right are not separate and independent causes of action. Likewise, the Court declared that ...


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