The opinion of the court was delivered by: ROBERT W. SWEET
Plaintiff Mopaz Diamonds, Inc. ("Mopaz") has moved pursuant to 28 U.S.C. § 1447(c) to remand this action to the New York Supreme Court and for an order pursuant to Rule 11, Fed. R. Civ. P. and 28 U.S.C. § 1927 awarding Mopaz attorneys' fees and expenses incurred in connection with this motion.
For the reasons set forth below, the motion is granted.
Mopaz is a corporation duly organized and existing under the laws of the State of New York with its principal place of business in New York City.
The defendant, The Institute of London Underwriters ("Lloyds"), is a corporation organized and existing under the laws of the United Kingdom and transacts business in the United States.
Facts and Prior Proceedings
This is a diversity action on a jeweler's block insurance policy for the loss of diamonds resulting from an alleged burglary at Atlas Diamonds, Inc. ("Atlas") on the night of June 24-25, 1991 Mopaz consigned diamonds valued at $ 44,000 to Bon Almaz, Ltd., which, in turn, entrusted them to Atlas for safekeeping. The diamonds belonging to Mopaz and various other consignors were among those allegedly lost in the burglary.
After an investigation of the loss, Lloyds denied Mopaz coverage with respect to the loss, alleging that the burglary had been staged by the principals of Atlas and others acting in conspiracy with them as part of a scheme to defraud their insurers. The specific basis for Lloyds' denial of the claims was the dishonest entrustment provision contained in Mopaz's policy.
Following Lloyds' denial of the claim, Mopaz filed suit against Lloyds' in the Supreme Court, County of New York, asserting a cause of action for breach of contract arising out of Lloyds' failure to provide coverage to Mopaz pursuant to the terms of the policy. It is undisputed that the amount at issue in this action is $ 44,000 in lost diamonds.
On November 17, 1992, Lloyds filed a Notice of Removal ("Notice") to remove this action from the state court to federal court in an attempt to have it consolidated with actions brought by other consignors against Atlas and their insurers which are pending before this Court. The Notice of Assignment assigning this action to this Court was filed on December 9, 1992.
I. This Action Was Improperly Removed and Remand is Mandatory
A. The Legal Standards Governing Removal and Remand
Motions to remand venue from a federal district court to a state court are governed by 28 U.S.C. § 1447(c). The statute provides inter alia that:
If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.
Furthermore, as the Second Circuit has stated:
The right to remove a state court action to federal court on diversity grounds is statutory, and must therefore be invoked in strict conformity with statutory requirements. In light of the congressional intent to restrict federal court jurisdiction, as well as the importance of preserving the independence of state governments, federal ...