MEMORANDUM AND ORDER
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
STATEMENT OF FACTS
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
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, or, the
defects may relate to the statutory procedure for the removal
itself under sections 1446 and 1447.
As Longwell concedes, the second action is one over which the
federal court has original jurisdiction pursuant to 28 U.S.C. § 1332:
Allstate is a foreign corporation organized under the
laws of Illinois, while Longwell is a citizen of the State of
New York, and the amount in controversy is $125,000, clearly in
excess of the $10,000 minimum requirement then in effect.
Furthermore, all of the statutory procedural requirements of
28 U.S.C. § 1446(a), (b), (d) and (e) and Civil Rule 25 of the
Southern and Eastern District Courts have been met.
Accordingly, Longwell has failed to establish any defect in the
removal. Longwell does not, however, challenge the removal on
procedural grounds. Rather, he claims the court should remand
on abstention grounds. Recognizing that "classic removal makes
little room for abstention," one respected commentator states
that "[a]lthough under § 1447(c) remand is proper only where a
case has been `improperly removed and without jurisdiction'
(which does not include abstention), we believe that after
removal has been effected a federal court, while retaining
jurisdiction of a case, may invoke principles of abstention in
any situation where they would be applicable in a case within
the court's original jurisdiction." Moore's, supra, ¶
0.157[1.-4] at 45-46 (parentheses in original).
In his supplemental letter to the Court, Longwell cites two
cases to support his abstention argument, which were not
to in his original memorandum of law in support of the remand:
Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 108 S.Ct. 614,
98 L.Ed.2d 720 (1988) and Corcoran v. Ardra Ins. Co., Ltd.,
842 F.2d 31 (2d Cir. 1988). Longwell's reliance on these cases is,
however, misplaced. In fact, Cohill does not involve
abstention, but rather discretionary remand of pendent state
claims. Cohill involved a case which was originally brought in
state court alleging state and federal causes of actions. 484
U.S. at 345, 108 S.Ct. at 616. The defendants removed the
entire case to the federal court on the basis of the federal
claim. Id. at 346, 108 S.Ct. at 616. After the removal, the
plaintiffs sought to amend their complaint to delete the sole
federal claim, which motion was granted by the district court.
Id. With no federal jurisdictional ground remaining, the
plaintiffs then sought a remand of the pendent state claims to
the state court, which the district court granted. Id. The
Supreme Court affirmed, stating that despite the lack of
explicit statutory authority, a district court could, in its
discretion, remand a removed case to state court when all
federal law claims have been eliminated from the action and
only pendent state law claims remain. Id. at 348, 354-57, 108
S.Ct. at 618, 620-22. The Court specifically differentiated a
removed case where there was no longer federal jurisdiction
from a removed case where there was diversity jurisdiction. Id.
at 356, 108 S.Ct. at 621 (discussing Thermtron Products Inc.
v. Hermansdorfer, 423 U.S. 336, 96 S.Ct. 584, 46 L.Ed.2d 542
(1976)). The Court stated that where there is diversity
jurisdiction, which is non-discretionary, the court may not
eliminate the case from its docket, whether by a remand or a
dismissal. Id.; see also Law Enforcement Ins. Co., Ltd. v.
Corcoran, 807 F.2d 38, 41 (2d Cir. 1986) ("And while there have
been many scholarly and judicial expressions of doubt as to the
desirability of its continuation, so long as Congress chooses
to have us exercise diversity jurisdiction, we must do so
unflaggingly."). In the instant cases, we have diversity
jurisdiction and thus Thermtron and not Cohill provides the
governing rule of law.
In Corcoran v. Ardra Ins. Co., LTD, 842 F.2d 31 (2d Cir.
1988), the Second Circuit examined Cohill in conjunction with
the abstention doctrine announced in Burford v. Sun Oil Co.,
319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), and
concluded by reasoning analogously that "if a district court
has the power to dismiss an action on grounds of abstention it
has the power to remand to the state court on those grounds."
Ardra, 842 F.2d at 36. The district court had remanded the
removed action to the state court relying principally on
Burford. The circuit court found that the Burford abstention
was appropriate because the complex regulatory "question before
the court [was] a novel one," Ardra, 842 F.2d at 37
(litigation involved the State Superintendent's power to
collect on reinsurance agreements entered into by a liquidated
company). It also concluded that it was proper to remand the
case in lieu of dismissing it. Ardra, 842 F.2d at 36.
Abstention pursuant to Burford is designed to avoid federal
court interference with specialized ongoing state regulatory
schemes. 319 U.S. at 327, 63 S.Ct. at 1104. In the case at bar,
unlike Ardra, the question before this court is not "novel" nor
does it involve, as defendant asserts, a specialized regulatory
scheme. Rather, we are called upon to interpret an insurance
policy in accordance with basic contract principles, with a
twist of federal constitutional law. Accordingly, a Burford
type abstention like that in Ardra would not be appropriate in
the instant case and the motion to remand on that ground is
Finally, Longwell contends that even though the court has
jurisdiction of the removed case, a federal court "may exercise
its discretion to remand where there is no federal issue and
there has been no substantial commitment of judicial resources
to any non-federal pendent claims." See Defendant's Memorandum
of Law in Support of Motion to Remand at 2. We have already
rejected most of this argument on the basis that there is
diversity jurisdiction. The other part of this contention, the
judicial economy aspect, implicates the arguments made by
Longwell in its
cross-motion to dismiss the first action. These arguments were
premised on the principles set forth in Colorado River Water
Conservation v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47
L.Ed.2d 483 (1976) and Moses H. Cone Memorial Hospital v.
Mercury Constr. Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d
765 (1983). These doctrines of abstention, however, are
predicated on the existence of pending state litigation on
parallel issues, and, thus, are inapposite since there is no
longer anything pending in the state courts — both lawsuits
are now here. Accordingly, the cross-motion to dismiss is
Plaintiff has moved for Rule 11 sanctions against Longwell
for the latter's filing of the motion to remand. We believe
that although the defendant's arguments on this motion were
extremely weak, they are not sanctionable.
B. Plaintiff's Motion For Summary Judgment
Allstate has moved for summary judgment pursuant to
Fed.R.Civ.P. 56. As this is a diversity action, this Court,
sitting in New York, must apply New York law including New
York's choice-of-law rules. Klaxon Co. v. Stentor Electric Mfg.
Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Erie R.
Co. v. Tompkins,