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SENTRY MARKETING v. UNISOURCE WORLDWIDE

March 4, 1999

SENTRY MARKETING, INC., PLAINTIFF,
v.
UNISOURCE WORLDWIDE, INC. D/B/A SENTRY CIRCUIT PRODUCTS; PAPER CORPORATION OF THE UNITED STATES; AND INSULECTRO, DEFENDANTS.



The opinion of the court was delivered by: Hurd, United States Magistrate Judge.

MEMORANDUM — DECISION AND ORDER

I. INTRODUCTION

Plaintiff, Sentry Marketing, Inc. ("Sentry" or "plaintiff"), moved to remand this action to state court, which defendant Unisource Worldwide, Inc. ("Unisource") opposes. Plaintiffs motion was submitted for decision without oral argument.

II. BACKGROUND

Sentry commenced this action on October 5, 1998 in the Supreme Court of the State of New York, County of Oneida, asserting several causes of action against the defendants involving the breach of a purported oral joint venture agreement for the manufacture, sale, distribution, merchandising, and development of a release film used in the production of multi layer boards in the printed circuit industry.*fn1 (Compl. at 2.) In addition to various forms of equitable relief, plaintiff seeks punitive damages, and attorneys fees and costs.

Unisource filed a notice of removal on November 12, 1998, alleging federal court jurisdiction under 28 U.S.C. § 1332. On December 10, 1998, plaintiff moved to remand, pursuant to 28 U.S.C. § 1447(c), on three grounds. First, plaintiff claims that there is no complete diversity because defendant Paper Corporation of the United States ("Paper Corporation") is a citizen of the State of New York. Second, plaintiff claims that the notice of removal is defective because it was not signed or consented to by all of the defendants. Finally, plaintiff contends that the notice of removal was not timely filed. Plaintiff requests costs and attorneys fees incurred in bringing this motion.

III. DISCUSSION

The removal statute authorizes remand on the basis of any defect in removal procedure or because the court lacks subject matter jurisdiction. See 28 U.S.C. § 1447(c); Town of Moreau v. State Dep't of Envtl. Conservation, No. 96-CV-983, 1997 WL 243258, at *1 (N.D.N.Y. May 5, 1997) (citing LaFarge Coppee v. Venezolana De Cementos, S.A.C.A., 31 F.3d 70, 72 (2d Cir. 1994)). The burden is on the removing party to prove that it has met the requirements for removal. Avon Products, Inc. v. A/J Partnership, Nos. 89 Civ. 3743(PNL), 89 Civ. 8032(PNL), 1990 WL 422416 at *1 (S.D.N.Y. March 1, 1990); Maybruck v. Haim, 290 F. Supp. 721, 724 (S.D.N.Y. 1968).

A. Removability in Diversity Cases

An action not involving a federal question is 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." 28 U.S.C. § 1441(b). In other words, removal based upon diversity jurisdiction requires all the defendants to be citizens of different states than the plaintiff. Owen Equip. and Erection Co. v. Kroger, 437 U.S. 365, 373-74, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978); Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 68 (2d Cir. 1990). Diversity is generally ascertained at the time the lawsuit is commenced and at the time of removal. Pullman Co. v. Jenkins, 305 U.S. 534, 537, 59 S.Ct. 347, 83 L.Ed. 334 (1939); United Food & Commercial Workers Union, Local 919, AFL — CIO v. CenterMark Properties Meriden Square, Inc., 30 F.3d 298 (2d Cir. 1994).

The complaint alleges that: Plaintiff is a corporation organized under the laws of the State of New York, Unisource is a corporation organized under the laws of Delaware and doing business in the State of New York, and defendant Insulectro is a corporation organized and existing under the laws of California and doing business in the State of New York. (Compl. at ¶¶ 1-3.) The complaint also alleges that Paper Corporation was organized under the laws of the State of New York and merged into Unisource on August 29, 1995. (Comp. at ¶ 2.)

Unisource claims that, since Paper Corporation merged into Unisource, it has the same citizenship as Unisource. Sentry concedes that Paper Corporation merged into Unisource. However, it unexplainably proceeds to analogize Paper Corporation to a dissolved corporation and a subsidiary corporation. However, plaintiff cannot have it both ways. A corporation cannot be merged, dissolved, and a subsidiary all at the same time. A merger consists of uniting two or more corporations by the transfer of all property to an existing corporation which survives the absorption. See Akwell Corp. v. Eiger, 141 F. Supp. 19, 21 (S.D.N.Y. 1956). Paper Corporation undisputedly merged into Unisource, as evidenced by the Certificate of Ownership and Merger filed on August 29, 1995 with the Secretary of State of the State of Delaware. The issue then becomes the effect of merger on the merged corporation. In Meadows v. Bicrodyne Corp., 785 F.2d 670, 672 (9th Cir. 1986), the court looked to the statute of the state of the merged corporation, which was California. The court determined that under California's statute, the separate existence of the merged corporation ceases and its citizenship becomes that of the surviving corporation. Id. Similarly, in New York, a merged corporation ceases to exist as a separate corporate entity and the continuing corporation succeeds to the rights of the absorbed corporation. See N.Y.Bus. Corp.Law §§ 906(b)(2), (3), 907(i) (McKinney 1986); Akwell, 141 F. Supp. 19 (holding that where a Delaware corporation absorbed a New York corporation by merger, claim of the merged New York corporation against the defendant passed to the Delaware corporation and therefore, the Delaware corporation was a proper party to the action.) Therefore, the citizenship of the surviving corporation should be determinative for diversity purposes. In this case, the surviving corporation, Unisource, is a citizen of Delaware and therefore, diversity has been established.

B. Consent

Generally, all defendants must join in the notice of removal. Chicago, Rock Island & Pac. Ry. Co. v. Martin, 178 U.S. 245, 20 S.Ct. 854, 44 L.Ed. 1055 (1900); Bradford v. Harding, 284 F.2d 307 (2d Cir. 1960); Town of Moreau, 1997 WL 243258. However, "[w]hile courts generally do not require all defendants to sign the removal petition itself, most courts have required some form of unambiguous written evidence of consent to the court in timely fashion." Town of Moreau, 1997 WL 243258, at *4 (quoting Michaels v. New Jersey, 955 F. Supp. 315, 321 (D.N.J. 1996)); see also Miller v. First Sec. Invs., Inc., 30 F. Supp.2d 347, 351 (E.D.N.Y. 1998). In other words, "[e]ach [defendant] must independently and unambiguously file notice of its consent and its intent to join in the removal within the thirty day period." Henderson v. Holmes, 920 F. Supp. 1184, 1187 (D.Kan. 1996); see also Town of Moreau, 1997 WL 243258, at *4. The thirty day period for removal commences when the initial pleading is received by the first defendant. Town of Moreau, 1997 WL 243258, at *6; Botelho v. Presbyterian Hospital in New York, 961 F. Supp. 75 (S.D.N.Y. 1997). ...


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