American Fire & Casualty Co. v. Finn
In American Fire & Casualty Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951), the Supreme Court rendered what remains the most important, though far from comprehensive, interpretation of 1441(c).
Finn, a citizen of Texas, brought suit in a Texas court to obtain compensation for property lost as the result of a fire.
As defendants, she named two out-of-state insurance companies and their local agent, Reiss.
In her complaint Finn alleged that the three defendants were jointly and severally liable for her loss. She claimed that either she held a valid policy for fire loss from one of the insurers or alternatively that all three defendants were liable for the agent's negligent failure to secure insurance on her behalf.
Both of the insurers removed the case to federal court pursuant to 1441(c). Following a trial the district court entered judgment against one insurer, American Fire & Casualty Co. The insurer then reversed course, arguing on appeal that the case had been improperly removed from the state court.
The court of appeals rejected this contention but the Supreme Court reversed, agreeing with the insurer.
According to the Court in Finn, Congress meant to accomplish two objectives with the introduction of 1441(c) to simplify this corner of the district courts' removal jurisdiction and to "limit removal from state courts." 341 U.S. at 9-10, 71 S.Ct. at 537-538.
Mindful of these objectives, the Court then turned its attention to the meaning of "a separate and independent claim or cause of action."
Recognizing "that the phrase 'cause of action' has many meanings," the Court nevertheless set forth what it characterized as "an accepted description." Id. at 12, 71 S.Ct. at 539.
In American Fire & Cas. Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951), a single plaintiff sued two foreign insurance companies and their mutual resident agent for a fire loss.
Plaintiff sought one recovery and alleged her inability to say which defendant was liable. One of the nonresident insurors removed.
The Court said that the action was not removable because there was but a 'single wrong' to plaintiff 'arising from an interlocked series of transactions.' Ibid. at 14, 71 S.Ct. at 540.
In American Fire & Casaulty Co. v. Finn, 341 U.S. 6, 16, 71 S.Ct. 534, 541, 95 L.Ed. 702 (1951), the Court recognized that a district court judgment may be upheld, even if initial removal was improper. If the district court "would have had original jurisdiction of the controversy had it been brought in the federal court in the posture it had at the time of the actual trial of the cause or of the entry of judgment," then the estoppel that applies to prevent a party from raising the removal errors does not "endow the court with a jurisdiction it could not possess." Id. at 16-17, 71 S.Ct. at 541.