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Bioway Corporation Pte.Ltd, Honorable Joseph E. Irenas v. Opinion Bioway America

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY


December 6, 2010

BIOWAY CORPORATION PTE.LTD, HONORABLE JOSEPH E. IRENAS PLAINTIFF,
v.
OPINION BIOWAY AMERICA, INC., JOHAN VAN DIJK AND JOSEPH MURRAY, DEFENDANTS. BIOWAY AMERICA, INC., THIRD-PARTY PLAINTIFF,
v.
BONNO KOERS AND HAWAIIAN DREDGING CONSTRUCTION COMPANY, THIRD-PARTY DEFENDANTS.

The opinion of the court was delivered by: Joseph E. Irenas, S.U.S.D.J.

APPEARANCE: STARK & STARK, PC By: Kevin M. Hart P.O. Box 5315 Princeton, NJ 08543

Counsel for Plaintiff Bioway Corporation PTE.LTD JERRY & JERRY, LLP By: Harold A. Jerry, III 101 Poor Farm Road P.O. Box 310 Princeton, NJ 08542-0310

Counsel for Defendants Johan Van Dijk and Joseph Murray and Defendant and Third-Party Plaintiff Bioway America, Inc.

COLE, SCHOTZ, MEISEL, FORMAN & LEONARD, P.A. By: Michael R. Yellin, Esq. 25 Main Street P.O. Box 800 Hackensack, NJ 07602-0800

Counsel for Third-Party Defendant Hawaiian Dredging Construction Company.

IRENAS, Senior District Judge:

This matter comes before the Court on the Notice of Removal of Third-Party Defendant Hawaiian Dredging Construction Company ("HDCC"). This Court issued an Order to Show Cause on November 15, 2010, in order to determine if the Court had subject matter jurisdiction over the present matter. For the reasons set forth below, this Court finds that removal was improper because this Court lacks subject matter jurisdiction over the action.

I.

HDCC is the general contractor for a construction project in Hawaii. Defendant and Third-Party Plaintiff Bioway America, Inc. ("Bioway America") provided HDCC a quote for air purification work to be done on the construction project. Although HDCC accepted Bioway America's quote, Bioway America could not perform the work for HDCC. Instead, Plaintiff Bioway Corporation PTE.LTD ("Bioway Singapore") entered into a contract with HDCC to perform the work for which Bioway America had provided the quote. In connection with this arrangement, Bioway America and Bioway Singapore entered into an agreement pursuant to which Bioway Singapore would compensate Bioway America for procuring the contract.*fn1

Bioway Singapore initiated this case in New Jersey Superior Court. In its complaint (the "Original Complaint"), Bioway Singapore sued Bioway America and Defendants Johan Van Dijk and Joseph Murray for injunctive relief and money damages. The Original Complaint alleges that the Defendants attempted to hinder Bioway Singapore's completion of the project by making false, fraudulent and defamatory statements. On June 10, 2010, the Defendants filed a Notice of Removal of the Original Complaint in this Court. This Court found removal improper for lack of subject matter jurisdiction and remanded the Original Complaint to New Jersey Superior Court.

On September 2, 2010, Defendants Bioway America, Van Dijk and Murray filed a third-party complaint (the "Third-Party Complaint") in New Jersey Superior Court against HDCC and Third-Party Defendant Bonno Koers, alleging that HDCC failed to make payments allegedly due to Bioway America in relation to the project and that Koers interfered with Bioway America's contractual rights.*fn2

HDCC filed the Notice of Removal with this Court on October 26, 2010. This Court issued the Order to Show Cause on November 15, 2010.

II.

The question before this Court is whether, and if so, under what circumstances, a third-party defendant such as HDCC may remove a case to federal court.*fn3 This issue has been much analyzed. Judge Debevoise, in Patient Care, Inc. v. Freeman, 755 F. Supp. 644 (D.N.J. 1991), presented a particularly comprehensive analysis of the issue, much of which will not be duplicated in this Opinion.

The majority-view on this issue is that third-party defendants may never remove a case to federal court. See Patient Care, Inc., 755 F. Supp. at 646-47. Courts accepting the majority-view typically begin with the Congressional purpose of restricting the jurisdiction of federal courts on removal. Id. at 647. These courts then look to the text of the removal statute, 28 U.S.C. § 1441, and find that it refers to removable claims as being "joined" with a nonremovable claim, § 1441(c), and only allows removal "by the defendant or the defendants." § 1441(a). Because a third-party claim is not joined with the nonremovable claims (but is typically antagonistic to those claims), and because third-party defendants are not defendants, the text of § 1441 does not support third-party removal. See Patient Care, Inc., 755 F. Supp. at 647-48.

There also strong policy arguments in support of the majority-view. Allowing third-party defendants to remove to federal court would require the plaintiff to litigate in a forum that he did not choose, and in many instances in which he could not anticipate being forced to litigate.*fn4 Id. at 648. Finally, concerns of federalism warn against allowing removals by third-party defendants, as such removals may greatly expand the limits of federal judicial power and bring cases into federal courts which are not within federal courts' original jurisdiction. Id.

Judge Debevoise in Patient Care, Inc., though, opted to accept the minority view that third-party defendants may remove if the third-party complaint is "separate and independent" from the main cause of action. Judge Debevoise's opinion noted that § 1441(c), on its own terms, does not limit removal to those "joined" with non-removal claims. See Patient Care, Inc., 755 F. Supp. at 649. Further, the opinion notes that third-party defendants are in fact defendants under § 1441(a) in so far as they have been dragged into state court by service of process. Id.

Judge Debevoise also noted that third-party defendants have an interest in having federal claims against them heard in federal court, and that "the presence of removal jurisdiction should not turn on the fortuity of whether a party is impleaded or sued directly." Id. Judge Debevoise specifically questioned how the majority view could accommodate cases in which a third-party claim was within the exclusive jurisdiction of the federal courts. Id. at 649-50.*fn5

III.

Under either the majority or minority view, the present case must be remanded to state court. Even if this Court were to accept the minority view, HDCC has not shown that the third-party claim against it is "separate and independent" from the other claims in the action. Bioway Singapore's claim against Bioway America in the Original Complaint relates to an alleged attempt by Bioway America to hinder work Bioway Singapore was performing for HDCC. Bioway America brought the Third-Party Complaint against HDCC alleging that Bioway America was owed compensation related to the work of Bioway Singapore. The parties and their lawsuits are intertwined to such a great extent it would be impossible to consider the Third-Party Complaint separately or independently from the Original Complaint, and therefore remand is necessary.

Although this Court need not endorse either the majority view or minority view to determine whether remand is appropriate in the present case, the Court finds the arguments in support of the majority view persuasive.

The Court also notes that there is a tension between the rules which allow defendants to bring third-party claims and the minority view, which allows removal of third-party complaints that are deemed "separate and independent." Under the Federal Rules of Civil Procedure and most state rules, defendants can bring third-party complaints only if there is some relationship between the third-party complaint and the original complaint.

For instance, under the New Jersey Civil Practice Rules, a defendant as a third-party plaintiff may bring a third-party complaint against any person not a party to the original action "who is or may be liable to defendant for all or part of the plaintiff's claim against defendant...." R. 4:8-1(a).*fn6 Thus, by its very nature a third-party complaint is related to the dispute in the original complaint. To try to define a class of case in which the third-party complaint is related enough to the original complaint to justify a third-party complaint, yet is "separate and independent" enough to justify removal, will surely result in wasteful motion practice.*fn7

IV.

For the reasons set forth above, this case is remanded to the Superior Court of New Jersey. An appropriate Order accompanies this Opinion.

s/ Joseph E. Irenas


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