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CHAPPELL v. SCA SERVICES

May 3, 1982

DALE L. CHAPPELL; RICHARD AND FRANCES BALESTRI; DAVID AND PAMELA ZAKSAS; FRANK AND MARIE MOLINAR; JAMES AND BARBARA MUSSATTO; JAMES AND ROSETTA KILGORE; JOE AND SHARON BORGINI; ELVIN AND GLADYS SAWYER; JOE AND MARIE BERTETTO; DENNIS AND ALBENA BRUCKERT; GWEN MOLINAR; FRANK AND HELEN AGHETTA, AS REPRESENTATIVES OF A CLASS OF ALL RESIDENTS OF THE VILLAGE OF WILSONVILLE AND OWNERS OF UNINCORPORATED TERRITORY LOCATED WITHIN A 5 MILE RADIUS OF THE VILLAGE OF WILSONVILLE, PLAINTIFFS,
v.
SCA SERVICES, INC., EARTHLINE CORPORATION, AND JAMES DOUGLAS ANDREWS, DEFENDANTS.



The opinion of the court was delivered by: J. Waldo Ackerman, Chief Judge.

  ORDER

This matter is before the Court upon plaintiffs' motion to remand the case to the Macoupin County Circuit Court after defendant SCA Services, Inc. removed the case to this Court. The suit is a class action brought on behalf of the residents of the Village of Wilsonville, seeking damages for property losses and personal injury which resulted from the creation, maintenance and operation of a hazardous-chemical-waste landfill containing polychlorinated byphenyls (PCB's), together with other toxic waste substances, near Wilsonville. The Macoupin County Circuit Court, after 104 days of trial, concluded that the hazardous waste landfill constituted both a private and public nuisance. The court enjoined defendant SCA Services, Inc. from operating the landfill and ordered SCA to remove all toxic waste buried there and to restore and reclaim the site.

The Illinois Appellate Court for the Fourth District and the Illinois Supreme Court have affirmed the trial court's judgment. See 77 Ill.App.3d 618, 33 Ill.Dec. 163, 396 N.E.2d 552 (1979); 86 Ill.2d 1, 55 Ill. Dec. 499, 426 N.E.2d 824 (1981), respectively.

The instant action was filed to recover damages which have accrued as a result of this nuisance. The named defendants are SCA Services, Inc., a Delaware corporation with its principal place of business in Boston, Massachusetts; Earthline Corporation, a corporation which had been merged with SCA prior to the commencement of this action; and, James Douglas Andrews, a citizen of Illinois.

Count I of the Complaint seeks damages from SCA as a result of the nuisance it has operated near Wilsonville. Plaintiffs claim damages for actual interference with the enjoyment of their real property, including past and future damages to their crops, residences and underground water supplies, and for the substantial diminution in property value which has occurred because of the proximity of the landfill to the village. Count II of the Complaint is a claim for personal injuries which have resulted from the maintenance of this nuisance, including burning eyes, running noses, headaches, nausea and exposure to carcinogenic elements. Count III seeks punitive damages against SCA on the basis that it acted with reckless indifference to the safety of the public and on the basis of affirmative misrepresentations allegedly made to the village concerning the character of the wastes to be stored at the site. Count IV alleges that James Andrews organized Earthline Corporation to operate a landfill site for toxic wastes and then sold Earthline to SCA. Plaintiffs claim that Andrews conspired with Earthline Corporation to create and maintain a public and private nuisance. In furtherance of that conspiracy, plaintiffs contend that Andrews, inter alia, acquired an interest in land adjacent to the village; misrepresented to the Illinois Environmental Protection Agency (IEPA) and the United States Environmental Protection Agency (EPA) that the village was a safe location for a landfill operation; submitted false permeability studies to IEPA and EPA; and, submitted false reports concerning the likelihood of subsidence in the area.

Count IV also alleges that Andrews further conspired with Earthline and SCA to personally profit and to insulate himself and Earthline from all liability for creation of the nuisance by merging Earthline with SCA. As a result of the conspiracy to create and maintain this nuisance, plaintiffs claim compensatory and punitive damages for personal injuries and property losses.

Defendant SCA has removed this case pursuant to 28 U.S.C. § 1441, asserting that this Court has both diversity and federal question jurisdiction over this suit. 28 U.S.C. § 1332 and 28 U.S.C. § 1331, respectively. Defendant contends that there is a separate and independent claim against it which also supports removal of the entire case.

Diversity Jurisdiction

Generally speaking, for diversity of citizenship to serve as the basis for removal jurisdiction, it must exist both at the time the original action is filed in the state court, and at the time removal is sought. 14 Wright, Miller & Cooper, Federal Practice and Procedure § 3723 at 592 (1976); 1A Moore's Federal Practice, ¶ 0.161[1] at 207 (2d ed. 1981). Defendant contends that complete diversity existed at the time the petition for removal was filed, notwithstanding defendant Andrews' Illinois citizenship. It argues that Andrews had not been served with the complaint at the time the petition for removal was filed. Thus, SCA contends, he was not a defendant "properly joined and served" as required by 28 U.S.C. § 1441(b). Consequently, it argues that since the only resident, non-diverse defendant was not served at the time the petition for removal was filed, the case was properly removed.

This argument is completely lacking in merit.

  A party whose presence would destroy diversity
  must be formally dropped as a matter of record to
  permit removal. It is insufficient, for example,
  that service of process simply has not been made
  on a nondiverse party; the case may not be
  removed until that party actually has been
  dismissed.

14 Wright, Miller & Cooper, Federal Practice and Procedure § 3723 at 597-98 (1976). The fact that service has not yet been made on the resident defendant is insufficient to allow his citizenship to be disregarded. Pullman Co. v. Jenkins, 305 U.S. 534, 541, 59 S.Ct. 347, 350, 83 L.Ed. 334 (1939); 1A Moore's Federal Practice, ¶ 0.161[2] at 210-11 (2d ed. 1981). Accord, Pecherski v. General Motors Corp., 636 F.2d 1156, 1160 (8th Cir. 1981); Preaseau v. Prudential Insurance Co., 591 F.2d 74, 78-9 (9th Cir. 1979); Armstrong v. Monex International, Ltd., 413 F. Supp. 567, 570-71 (N.D.Ill. 1976).

This is not a case where a plaintiff joins a resident defendant, but fails to ever serve him and commences trial without completing service of process on him. Here, the complaint was filed in state court on February 2, 1982. Plaintiff requested that summons be issued as to all defendants. The petition for removal was filed on February 12, 1982. In fact, the petition was filed prior to service of the complaint on SCA itself.

This case is a prime example of why the citizenship of an unserved resident defendant should not be ignored. Simultaneous service of multiple defendants is rarely possible. Thus, removal could be proper one day when service of the nonresident defendant was completed, but improper the next day when service had been completed on all defendants. The rule thus avoids unnecessary jurisdictional problems. Pecherski v. General Motors Corp., 636 F.2d 1156, 1161 n.6 (8th Cir. 1981); 1A Moore's Federal Practice, ¶ 0.168[3-2] at 451 (2d ed. 1981).

SCA also contends that diversity exists because James Andrews, the resident defendant, was fraudulently joined to defeat removal jurisdiction. SCA argues that the complaint so clearly fails to state a cause of action under Illinois law that it is frivolous and should be regarded as fraudulent. First, SCA asserts that the complaint merely charges Andrews with conspiracy to create and maintain a nuisance. It contends that conspiracy is not an actionable tort in itself under Illinois law and, therefore, there can be no recovery against Andrews.

Plaintiffs do not dispute that conspiracy in and of itself is not actionable. However, plaintiffs have charged the defendants with conspiracy to create and maintain a public and private nuisance. In other words, plaintiffs contend that the defendants agreed to do an actionable wrong together. Ammons v. Jet Credit Sales, Inc., 34 Ill.App.2d 456, 181 N.E.2d 601 (1960), a case relied on by SCA, does not support its position. In that case, the acts which defendants allegedly conspired to do were not actionable wrongs. Therefore, conspiring to do them was not actionable. The court there said:

  In a civil case the wrongful acts alleged to have
  been done in pursuance of a conspiracy, and not
  the fact of the conspiracy itself, is the gist of
  the action for damages . . . The charge of
  conspiracy is merely an aggravation of the
  alleged wrongful acts; it serves the purpose of
  associating all the defendants with the acts
  done, and the declarations made, by any one of
  the defendants in pursuance of the
  conspiracy . . . Inasmuch as the acts of the
  defendants in this case were neither criminal nor
  civil wrongs for which damages can be recovered,
  the charge of conspiracy adds nothing to the
  amended complaint.

Id. at 465, 181 N.E.2d 601. (Citations omitted). Accordingly, the allegations of this complaint sufficiently allege an actionable conspiracy, since creation of a nuisance is itself an actionable wrong.

Next, SCA maintains that the complaint is fatally deficient because it alleges that only Andrews and Earthline conspired to create and maintain a public and private nuisance. Under Illinois law, a corporation cannot conspire with its officers and agents. Friendship Medical Center, Ltd. v. Space Rentals, 62 F.R.D. 106, 112 (N.D.Il. 1974). Consequently, since Andrews was an officer of Earthline, he could not have conspired with it, and thus, defendant contends, the complaint fails to state a claim.

Plaintiffs agree that in Illinois, a corporation cannot conspire with its officers. They contend, though, that the complaint merely omitted SCA's name and that it should read that defendant Andrews conspired with Earthline and SCA to create and maintain this nuisance. Further, plaintiffs state that a defect in their pleadings should not support removal, but rather that defendant SCA, in order to support its claim of fraudulent joinder, must show that under no set of facts pleaded could plaintiffs recover from defendant Andrews under Illinois law.

  The joinder may be fraudulent if the plaintiff
  fails to state a cause of action against the
  resident defendant, and the failure is obvious
  according to the settled rules of the state. If
  there is a possibility that the plaintiff has
  stated a cause of action, the joinder is not
  fraudulent, and the cause should be remanded. Nor
  will a merely defective statement of the
  plaintiff's action warrant removal. If the
  plaintiff has stated a cause of action against
  the resident defendant, that is normally
  sufficient to prevent removal. The motive for
  joining such a defendant is immaterial, even when
  the defendant is judgment-proof, or when the
  plaintiff is ultimately found not to have had a
  cause of action against the defendant. Bad faith
  in bringing the action is not material; bad faith
  in the joinder is necessary. The defendant may
  show bad faith in joinder by proving that the
  plaintiff stated the facts knowing them to be
  false, or with enough information within reach so
  that he should have known them to be false.

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