United States District Court, Central District of Illinois, Springfield Division
September 11, 1983
DELORA STEWART, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED; DELORA STEWART, ADMINISTRATOR OF THE ESTATE OF WILLIAM STEWART, DECEASED; DELORA STEWART; VERNADINE THACKER, ADMINISTRATOR OF THE ESTATE OF CHARLES A. THACKER, DECEASED; VERNADINE THACKER; BETTY J. REDMAN, ADMINISTRATOR OF THE ESTATE OF GEORGE E. REDMAN, DECEASED; BETTY J. REDMAN; AND, DELORA STEWART; VERNADINE THACKER, AND BETTY J. REDMAN ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
EGNEP (PTY) LIMITED; CAPE ASBESTOS FIBRES, LTD.; CAPE INDUSTRIES, LIMITED, DEFENDANTS, AND BANCA COMMERCIALE ITALIANA; CREDIT SUISSE; BARCLAYS BANK INTERNATIONAL LIMITED; BARCLAYS BANK PLC; CREDIT LYONNAIS; LLOYDS BANK INTERNATIONAL LIMITED; NATIONAL WESTMINSTER BANK PLC, GARNISHEES.
The opinion of the court was delivered by: J. Waldo Ackerman, Chief Judge.
On January 29, 1982, judgments were returned in favor of
Plaintiffs against Cape Industries, Ltd., Cape Asbestos
Fibres, Ltd., and EGNEP, Ltd., in the Circuit Court of the
Eleventh Judicial Circuit of Illinois. These default judgments
were entered in the amount of $56,825,000.00. None of the
Defendants filed answers or appeared in the cases. Plaintiffs
began garnishment proceedings in an attempt to collect their
judgment, and garnishment summonses were issued on January 29,
1982. On April 1, 1982, at the first hearing on Plaintiffs'
garnishment action, Plaintiffs' counsel filed a motion to
dismiss all the garnishment actions except the one against
Banca Commerciale Italiana ("BCI").*fn1
On January 12, 1983, Plaintiffs initiated new garnishment
actions against six garnishees (the "Banks"). On February 3
and 4 of that year, the Banks filed the petitions for removal
that Plaintiffs seek to have remanded to the state court. The
Banks, because their citizenship is different from that of
Plaintiffs, rely on 28 U.S.C. § 1332(a)(1) as the substantive
basis of their removal.
Plaintiffs do not dispute the Banks' contentions that the
disputed amount exceeds $10,000 or that the requisite
diversity exists. Rather, as to the Banks' removal petition,
they make two arguments. First, Plaintiffs contend that the
removal petition is not timely. Second, Plaintiffs argue that
a garnishment proceeding is not a separate and independent
civil action as defined by 28 U.S.C. § 1441.
Plaintiffs' argument that the removal petition was untimely
is without hope. Plaintiffs' voluntary dismissal of the
garnishment actions terminated the Banks' involvement in this
case. At that point in the litigation, the circuit court was
without power to enter orders affecting the Banks. Thus,
Plaintiffs' only recourse was to institute an entirely new
action against the garnishee Banks. Bettenhausen v. Guenther,
388 Ill. 487, 58 N.E.2d 550 (1945); People ex rel. Scott v.
Police Hall of Fame, 60 Ill. App.3d 331, 17 Ill.Dec. 519,
376 N.E.2d 665 (1st Dist. 1978). Since new garnishment proceedings
were filed on January 12, 1983, and the removal petitions were
filed on February 3 and 4, the case was removed within the
federal time limit. 28 U.S.C. § 1446(b).
Plaintiffs' argument that a garnishment proceeding is not a
separate civil action has two implications. One, only
independent civil actions, and not actions ancillary to the
main action, can be removed from a state court to a federal
court under 28 U.S.C. § 1441. Two, if the garnishment action is
not a separate and independent action, all of the Defendants
must seek removal, which has not been done in this case.
The Supreme Court has held that removal actions concern the
interpretation of a federal statute, and that a state's
interpretation of the procedural provisions offered by its
statutes cannot control a federal right. Chicago, Rock Island,
and Pacific Railroad Co. v. Stude,
346 U.S. 574, 580, 74 S.Ct. 290, 294, 98 L.Ed. 317 (1954).
See also Federal Savings and Loan Insurance Corp. v. Quinn,
419 F.2d 1014, 1018 (7th Cir. 1969) (where the court stated that
"the question of whether or not a controversy is a separate
suit for removal purposes is ultimately a federal question
involving the interpretation application of the removal
statutes.") Therefore, the state courts' determination that the
garnishment proceedings are ancillary, see, e.g., Oppenheim v.
Circuit Court, 91 Ill.2d 336, 343, 63 Ill.Dec. 438,
438 N.E.2d 176 (1982), does not control this Court's decision.*fn2 In
this case, the garnishees apparently have interests and
defenses separate from those interests and defenses of the
judgment creditors. Under these circumstances, "cases following
[the] modern rule have universally held that garnishment
proceedings are `civil actions' which are removable where
diversity and jurisdictional amount are present." Moore v.
Sentry Insurance Co., 399 F. Supp. 929 (S.D.Miss. 1975). The
Banks are not attempting to defend against the allegedly
tortious actions of the judgment creditors. They apparently
intend to defend on the basis that garnishment is not proper.
This is an interest and defense that is separate from any
defense the judgment creditors could have made in the initial
action. If the proper requirements are met, these actions are
removable even though a state regards the garnishment action as
ancillary to the main suit. Randolph v. Employers Mutual
Liability Insurance Co. of Wisconsin, 260 F.2d 461, 463 (8th
Cir. 1958). Accordingly, Plaintiffs' motions to remand cases
83-3025, 83-3027, 83-3028, 83-3029, 83-3030, 83-3031, and
83-3032 are denied.
I will now discuss BCI's motion to dismiss. BCI is the only
garnishee before the Court who was not voluntarily dismissed
out of the original garnishment proceeding. In the state court
proceedings, BCI argued that it held no property of the
judgment debtors in Illinois. BCI objected to Plaintiffs'
demands for information concerning the deposits of the
judgment debtors outside the United States. On January 26,
1983, Plaintiffs moved for a fifty-six million dollar in
personam judgment against BCI because it refused to answer the
garnishment summons. Ill.Rev.Stat. ch. 110, § 12-706 allows a
court to enter a conditional judgment, for the amount due the
judgment debtor, against a garnishee who fails to appear or
answer. Section 12-706 permits a garnishee to answer the
conditional judgment summons, and demand "the same proceedings
as may be had in other cases." Thus, BCI now has a right to a
trial on the claim of fifty-six million dollars. Even though
BCI submitted itself to the state court's jurisdiction, it is
now faced with a substantially new and different cause of
action. Fletcher v. Hamlet, 116 U.S. 408, 410, 6 S.Ct. 426,
427, 29 L.Ed. 679 (1886); Cliett v. Scott, 233 F.2d 269, 271
(5th Cir. 1956); Hearst Corp. v. Shopping Center Network, Inc.,
307 F. Supp. 551, 555 (S.D.N.Y. 1969). For the first time BCI is
faced with fifty-six million dollars of personal liability,
instead of an order to turn over one of its depositor's assets.
In this case, where the trial has not started and there is
essentially a new lawsuit, there is no indication how BCI
might have fared in the state courts. Thus, removal grants BCI
no tactical advantage. Also, there is no waste of resources or
time where state proceedings have been insubstantial.
Compare, Wilson v. Intercollegiate (Big Ten) Conference
Athletic Association, 668 F.2d 962 (7th Cir. 1982). In
Northwest Federal Employees Federal Credit Union v. Dorothy
Barnett Ray, No. 79-C-67 (N.D.Ill. April 19, 1979), a case with
facts substantially similar to this one,
the court allowed removal. I find Judge Marovitz's logic
Accordingly, for the reasons previously stated, Plaintiffs'
motion to remand Case No. 83-3027 is denied.