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BROOKLYN HOSP. CENTER v. DIVERSIFIED INFORM. TECH.

March 8, 2001

BROOKLYN HOSPITAL CENTER, PLAINTIFF,
v.
DIVERSIFIED INFORMATION TECHNOLOGIES, INC., DEFENDANT/THIRD-PARTY PLAINTIFF, V. GRINNELL CORPORATION, ETC., THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Sifton, Senior District Judge.

MEMORANDUM AND ORDER

Plaintiff The Brooklyn Hospital Center ("BHC") brought this action against defendant Diversified Information Technologies, Inc., formerly known as Diversified Records Services, Inc. ("Diversified"), in the New York State Supreme Court, Kings County, seeking monetary relief based on claims of breach of contract, gross negligence, and recklessness. Defendant removed the case to this Court by filing a notice of removal on April 13, 2000. By notice of motion dated May 12, 2000, plaintiff moved to remand the case, arguing that defendant failed to file its notice of removal within thirty days following its receipt of plaintiff's initial pleading, as required by 28 U.S.C. § 1446(b).

On May 23, 2000, defendant filed a third-party complaint against third-party defendant Grinnell Corporation, sued individually and d/b/a Grinnell Fire Protection Systems Company ("Grinnell"), seeking contribution, indemnification, and damages based on claims of negligence, gross negligence, breach of contract, and breach of warranty. By notice of motion dated June 28, 2000, Grinnell moved to dismiss the third party complaint for failure to state a claim for which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) or, in the alternative, to stay the third-party action pursuant to 9 U.S.C. § 3 on the ground that Diversified's action is barred by enforceable contractual indemnification and arbitration clauses.

For the reasons set forth below, BHC's motion to remand the case to state court is granted. Because the original action is remanded, as improperly removed, I do not consider Grinnell's motion to dismiss.

BACKGROUND

The following facts are drawn from the submissions of the parties in connection with these motions and are undisputed except as noted.

Plaintiff BHC is a not-for-profit corporation incorporated under the laws of New York. BHC's principal place of business, at which BHC operates a hospital, is in New York. Defendant Diversified is incorporated under the laws of Pennsylvania, and its principal place of business is in Pennsylvania. Diversified engages in the business of records storage and document management. Third-party defendant Grinnell is incorporated under the laws of Delaware, and its principal place of business is in Florida. Grinnell engages in the business of providing fire protection products and services.

In 1996, BHC sent a portion of its medical and business records to Diversified for storage pursuant to a contract executed in May of 1996. A year later, on May 5, 1997, a fire occurred at Diversified's records storage facility in West Pittson, Pennsylvania (the "Facility"), at which BHC's records were stored. The fire destroyed all records stored at the Facility, including those of BHC.

Before the May 1997 fire occurred, Diversified engaged Grinnell to perform fire prevention and protection services. On October 23, 1995, Diversified and Grinnell entered into a written contract (the "inspection contract"), provided to the Court by Grinnell, according to which Grinnell agreed to provide inspection services for automatic sprinkler and other equipment located at the Facility. In this contract, Diversified agreed to "hold [Grinnell] harmless from any and all third party claims for personal injury, death or property damage, arising from [Diversified's] failure to maintain these systems or keep them in operative condition, whether based upon contract, warranty, tort, strict liability, or otherwise." (Inspection Contract, at 1.)

On August 5, 1996, Diversified and Grinnell entered into a second contract (the "construction contract"), pursuant to which Grinnell agreed to install a fire protection system and auxiliary equipment in building 8.2 of the Facility. This contract includes an arbitration clause, which provides:

At the option of [Grinnell], any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration in accordance with the Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof. Any arbitration proceeding shall be held in Providence, R.I.

(Construction Contract, at 2.)

After the fire occurred but prior to the commencement of this litigation by BHC, approximately seventeen other actions were commenced in relation to the fire. These actions have been consolidated and are pending in the court of common pleas in Luzerne County, Pennsylvania. Diversified and Grinnell are both parties to these consolidated proceedings.

On December 23, 1999, BHC commenced the present action by filing a summons with notice in state court, one of the ways by which a lawsuit under New York law may be commenced.*fn1 The summons with notice specified the nature of BHC's claim for relief and the nature of the relief sought, $3,000,000 in damages. The summons with notice erroneously stated that "[t]his action is brought in Kings County because defendant's principal place of business is 121 DeKalb ...


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