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March 7, 1990


The opinion of the court was delivered by: Conboy, District Judge:


This action arises out of a dispute between an insurer and an insured as to whether the insured, who invoked his Fifth Amendment right against self-incrimination rather than answer questions relating to a claimed loss, complied with his duty of cooperation under the insurance policy, which obligation the insurer maintains is a condition precedent to recovery thereunder.


Allstate Insurance Company ("Allstate") issued a homeowner's insurance policy, number 003 206 244 (the "policy"), to the defendant, Robert Longwell ("Longwell") beginning January 21, 1987, for a one year term. On March 3, 1987, a fire destroyed Longwell's home located at 7 Depew Court, Peekskill, Westchester County, New York.

At the time of the fire, the premises were insured by Allstate, with a coverage of $180,000 for the building and $90,000 for the contents. On April 13, 1987, Longwell executed a sworn statement claiming a $42,193.02 loss under the policy with respect to personal property (contents). See Exhibit A, Affidavit of Robert J. Brennan, sworn to March 4, 1988, in Support of Motion for Summary Judgment ("Brennan 3/4/88 Aff.").*fn1 Allstate had good reason to believe that Longwell falsified this sworn statement in order to increase the amount of his claim. See Affidavit of Michael Lane, sworn to February 24, 1988 ("Lane Aff."), at ¶¶ 5-10 (insurance investigator relating facts of bribe by Longwell in exchange for fraudulently inflating claim).

On August 7, 1987, Longwell submitted to an Examination Under Oath ("EUO") pursuant to a clause in the insurance policy. During the EUO, Longwell refused to answer certain questions concerning some items in the personal property claim inventory and proof of loss. He based his refusal on Fifth Amendment grounds due to the criminal matter pending against him at the time stemming from the submission of the allegedly inflated loss claim. See infra at 1193.

On November 2, 1987, Allstate, in a letter to Longwell, denied Longwell's claims. On the same date, Allstate filed a complaint in this Court, Civil Action No. 87 Civ. 7818, seeking declaratory relief that the insurance policy was void on the basis of fraud by the insured and a breach of certain policy provisions by the insured. On March 2, 1988, Longwell commenced an action in New York State Supreme Court, Westchester County, seeking to recover on the policy in the amount of $125,000, the alleged amount of property damage. Allstate, then, on March 7, 1988, moved for summary judgment in the federal action, seeking an order declaring that they have no obligation to pay any policy proceeds to Longwell. On March 18, Longwell cross-moved to dismiss the federal action in deference to the similar, though later filed, action pending in state court.

Prior to Longwell's cross-motion to dismiss, Allstate had, on March 14, removed the state court action to this federal court, and claims to have given the requisite notice to this effect to Longwell. The removed action was given the civil action number of 88 Civ. 1746. On April 11, 1988, in response to the removal, Longwell, in the first-filed federal action (87 Civ. 7818), made a motion to remand the second action (88 Civ. 1756) to the state court. On April 27, 1988, Allstate sought an order awarding attorney's fees under Fed.R.Civ.P. 11 solely with respect to Longwell's motion to remand.

In June of 1989, while the above-described motions were sub judice before the judge to whom they were assigned, both actions were transferred to us. We held a pre-trial conference in the cases and allowed the parties to submit any new developments in the law during the pendency of the motions. The last of these letters was received in September 1989. We also held a telephone conference in an attempt to track down papers that had not been filed with the Clerk.


A. Defendant's Motion to Remand and Cross-Motion to Dismiss

As indicated above, Longwell moves in the first action to have the second action remanded to the New York State Supreme Court, Westchester County, pursuant to 28 U.S.C. § 1447(c). Section 1447(c) provides in relevant part that:

  A motion to remand the case on the basis of any
  defect in removal procedure must be made within 30
  days after the filing of the notice of removal
  under section 1446(a). If at any time before final
  judgment it appears that the district court lacks
  subject matter jurisdiction, the case shall be

As is obvious by its unambiguous language, this section is directed toward "defects in the removal procedure." 1A J. Moore, B. Ringle, and J. Wicker, Moore's Federal Practice ¶ 0.157[1.-4] at 45. These defects may involve the improper removal of an action which does not fit one of the categories described in 28 U.S.C. § 1441 or one of the other removal sections, and hence the lack of federal jurisdiction, ...

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