The opinion of the court was delivered by: Prentice H. Marshall, District Judge.
In this case we must decide an important question of federal
jurisdiction — whether a third party defendant may remove an
action filed in state court to this court when the original
action is not removable.
On June 25, 1981, plaintiff Ford Motor Credit Corp. ("FMC")
filed a complaint against defendants-third party plaintiffs
Aaron-Lincoln Mercury, Inc. ("Aaron-Lincoln"), Elliott
Dulberger ("Dulberger") and Arthur Nelson ("Nelson")*fn1 in
the Circuit Court of McHenry County, Illinois. FMC sought to
hold Aaron-Lincoln liable on a financing contract, and
Dulberger and Nelson liable on their guarantees of the debts
Aaron-Lincoln owed on the contract. Since the defendants in
this action were all citizens of Illinois,*fn2 they could not
remove the action to this court. See 28 U.S.C. § 1441(b)
On July 29, 1982, the defendants in the state action filed
a second amended answer to the complaint which contained a
counterclaim against FMC and a third party complaint against
Ford Motor Co. ("Ford")*fn3 In the counterclaim and third
party complaint, it was alleged that Ford had induced the
franchisees to purchase a Ford dealership franchise by means
of false and misleading statements, and that FMC had not lived
up to its promise to provide the franchisees with adequate
financing. It was also alleged that Ford had violated the
Illinois Franchise Disclosure Act when selling the franchise.
The third party complaint was served on Ford that day, and on
August 27, 1982 it filed a timely petition to remove the case
to this court under 28 U.S.C. § 1446(b) (1976).
Removal in this case is predicated upon 28 U.S.C. § 1441(c)
(1976). Therefore, we turn first to the question whether this
case fits into that section.
Whenever a separate and independent claim or
cause of action, which would be removable if sued
upon alone, is joined with one or more otherwise
non-removable claims or causes of action, the
entire case may be removed and the district court
may determine all issues therein, or, in its
discretion, may remand all matters not otherwise
within its original jurisdiction.
The Supreme Court has construed § 1441(c)'s requirement of a
separate and independent claim as necessitating a claim not
based on the same wrongful conduct as that which gave rise to
the non-removable claims. See American Fire & Casualty Co. v.
Finn, 341 U.S. 6, 11-16, 71 S.Ct. 534, 538-541, 95 L.Ed. 702
(1951).*fn9 Where recovery in the allegedly removable claim is
dependent on the result in the non-removable claim, the claims
are not "separate and independent" within the meaning of §
Here, FMC seeks to recover money owed it. In the
franchisees' action against Ford, they attack Ford's conduct
in inducing the franchisees to purchase the dealership. The
course of conduct by which Ford induced the franchisees to buy
the dealership was entirely separate from FMC's conduct in
loaning the franchisees money.*fn11 Ford may well have
misrepresented facts and violated the Illinois Franchise
Disclosure Act's provisions but that in no way operates as a
defense to FMC's claim for money owed it. The two claims are
based on entirely separate contractual relationships — one
between the franchisees and their franchisor, Ford, and another
between the franchisees and their finance company, FMC. Ford's
liability is in no way dependent on the result in the action
between FMC and the franchisees.
Ted Lokey Real Estate Co. v. Gentry, 336 F. Supp. 741
(N.D.Tex. 1972) is similar to this case. There the plaintiff
sued on a contractual warranty, and the defendant filed a third
party action alleging that its breach of the warranty was
caused by the failure of the third party defendant to live up
to a separate contract it had entered with the defendant. The
court held that the third party action was a separate and
independent claim, since it was premised on a separate
contractual relationship from that between the plaintiff and
defendant. The same is true here. The third party action
against Ford is based on a separate relationship and a
different course of allegedly wrongful conduct — Ford's
inducements to get the franchisees to buy the dealership —
than is the original action against the franchisees which is
based on FMC's financing contract with them. The "separate and
independent claim" requirement of § 1441(c) is satisfied here.
For removal to be proper under § 1441(c), it must also be the
case that the third party action be "joined with one or more
otherwise non-removable claims." A number of courts have
concluded that this language refers only to claims "joined" by
the plaintiff, so that a removable claim added to the case by a
third party plaintiff fails to ...