Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-04071/USCOURTS-cand-3_05-cv-04071-1/pdf.json

Nature of Suit Code: 368
Nature of Suit: Asbestos Personal Injury - Prod.liab.
Cause of Action: 28:1332 Diversity-Asbestos Litigation

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

KARLIN K. BARNHILL,

Plaintiff,

 v.

A.W. CHESTERTON COMPANY, et al.,

Defendants /

No. C-05-4071 MMC

ORDER DENYING PLAINTIFF’S MOTION

TO REMAND; VACATING HEARING;

SETTING CASE MANAGEMENT

CONFERENCE

(Docket No. 8)

Before the Court is the motion, filed October 12, 2005, by plaintiff Karlin K. Barnhill

(“Barnhill”) to remand the above-titled action to the Superior Court of California for the City

and County of San Francisco (“San Francisco Superior Court”), pursuant to 28 U.S.C.

§ 1447(c). The motion to remand is made on the ground that complete diversity of the

parties did not exist when the case was removed by defendant A.C. Houston Lumber

Company (“ACH”). Defendant ACH has filed opposition to the motion, to which Barnhill has

filed a reply. Having considered the papers submitted in support of and in opposition to the

motion, the Court finds the matter appropriate for decision without oral argument, see Civil

L.R. 7-1(b), and hereby VACATES the October 28, 2005 hearing. For the reasons set forth

below the Court DENIES the motion. 

BACKGROUND

Barnhill alleges he was exposed to asbestos as a direct and proximate result of the
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defendants’ conduct, which “caused severe and permanent malignant injuries to [him],

including, but not limited to, mesothelioma and other lung damage.” (See First Amended

Complaint (“FAC”) ¶ 12.) 

On October 4, 2005, the parties appeared for trial in the San Francisco Superior

Court. (See Kaiser Decl. ¶ 3; Kaiser Supp. Decl. ¶ 2.) At that time, the following

defendants had not been dismissed from the case: ACH, a Nevada corporation;

Certainteed Corporation (“Certainteed”), a Pennsylvania corporation; and two California

corporations, Hamilton Materials, Inc. (“Hamilton”) and Kaiser Gypsum. (See Jenkins Decl.

¶ 8.) Additionally, Hamilton was a defendant to a cross-complaint asserted by ACH. (See

Jenkins Decl. ¶ 13.) Barnhill informed the trial court that he had settled with Hamilton and

Kaiser Gypsum, and that Hamilton remained in the case only because of ACH’s crosscomplaint against Hamilton. (See id. ¶ 8; see Kaiser Supp. Decl. ¶ 2.) 

On October 6, 2005, counsel for Certainteed “advised that a resolution had been

reached with Plaintiff.” (See Jenkins Decl. ¶ 10.) On October 5 or 6, Barnhill cancelled the

depositions of the expert witnesses for Hamilton, Kaiser Gypsum, and Certainteed. (See

id. ¶ 11.)

On October 7, 2005, Hamilton filed a motion for a determination that its settlement

with Barnhill was in good faith. (See id. ¶ 12 and Ex. E.) The motion included a settlement

agreement between Barnhill and Hamilton, and a request for dismissal of Barnhill’s claims

against Hamilton, each of which was signed by Barnhill and/or his counsel. (See id. ¶ 12

and Exs. B and C.)

On that same date, October 7, 2005, ACH dismissed its cross-complaint against

Hamilton, (see id. ¶ 13 and Ex. H), and removed the action to federal court on the basis of

diversity jurisdiction, stating it was the only remaining defendant in the case, (see Notice of

Removal ¶ 1).

In connection with the instant motion, Barnhill concedes that Barnhill and Hamilton

had orally agreed to a settlement before the date the case was removed to federal court. 

(See Kaiser Decl. ¶ 4.) Barnhill’s counsel attests, however, that at the time of removal, the
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settlement had not been finalized, and no dismissal had been filed. (See id. ¶ 4.) Similarly,

Barnhill concedes that Barnhill and Kaiser Gypsum had reached an oral settlement before

the case was removed to federal court. (See id. ¶ 6; see also Kaiser Supp. Decl. ¶ 2.) 

Barnhill’s counsel again attests, however, that at the time of removal, no settlement

agreement or release had been signed and Kaiser had not been dismissed from the case. 

(See Kaiser Decl. ¶ 6.)

Barnhill submits no evidence that Certainteed was still a defendant at the time of

removal.

Barnhill now moves to remand the action on the ground that both Hamilton and

Kaiser Gypsum remained in the case at the time of removal, and, consequently, complete

diversity among the parties did not exist.

LEGAL STANDARD

“If the case stated by the initial pleading is not removable, a notice of removal may 

be filed within thirty days after receipt by the defendant, through service or otherwise, of a

copy of an amended pleading, motion, order or other paper from which it may first be

ascertained that the case is one which is or has become removable, except that a case

may not be removed on the basis of [diversity of citizenship] more than 1 year after

commencement of the action.” 28 U.S.C. § 1446(b). Where, as here, removal is based on

diversity jurisdiction, the action may be removed “only if none of the parties in interest

properly joined and served as defendants is a citizen of the State in which such action is

brought.” See 28 U.S.C. § 1441(b).

Once an action has been removed, “[i]f at any time before final judgment it appears

that the district court lacks subject matter jurisdiction, the case shall be remanded.” See

28 U.S.C. § 1447(c). In considering the propriety of removal, a district court must “strictly

construe the removal statute against removal jurisdiction,” and jurisdiction “must be

rejected if there is any doubt as to the right of removal in the first instance.” See Gaus v.

Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). This “‘strong presumption’ against removal

jurisdiction means that the defendant always has the burden of proving that removal is
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proper.” See id. 

DISCUSSION

Relying on Mertan v. E.R. Squibb & Sons, Inc., 581 F. Supp. 751 (C.D. Cal. 1980),

Barnhill argues removal was improper because, at the time of removal, he had not formally

dismissed his claims against Hamilton and Kaiser Gypsum and, thus, complete diversity did

not exist at that time. In Mertan, the defendant removed after plaintiffs “orally and in open

court” settled with the remaining non-diverse defendant. See Mertan, 581 F. Supp. at 752-

53. Because the state court had not entered an order dismissing the non-diverse

defendant, the district court held diversity was lacking at the time of removal, noting that 

under California law and court rules, “the written [d]ismissal is the only effective order the

State Court can make or that is legally enforceable.” See id. at 753 (citing Cal. Code Civ.

Proc. § 581d); see also Sanabria v. Embrey, 111 Cal. App. 4th 422, 425 (2001) (“Entry of

dismissal terminates the action against the dismissed defendants.”)

As ACH correctly points out, however, the Ninth Circuit has recently found removal

appropriate in a case where a non-diverse defendant had not been formally dismissed from

the state court action at the time of removal. See Harris v. Bankers Life and Casualty Co.,

2005 WL 2456929 at *5 (9th Cir. Oct. 6, 2005). In Harris, the plaintiff, Harris, filed suit in

state court against his insurer and an insurance agent; although Harris and the plaintiff

were of diverse citizenship, the citizenship of the agent was not alleged in the complaint. 

See id. at *1. Several months prior to the trial date, the insurer filed a motion to continue

the trial because Harris had not yet served or dismissed the agent. See id. at *2. When

Harris sent the insurer a letter opposing any effort to continue the trial date, the insurer

concluded that Harris had effectively abandoned his claims against the agent, as Harris

could not have met the pretrial deadlines if he pursued his claims against the agent. See

id. The insurer thereafter wrote Harris a letter, asking whether Harris intended to pursue

his claims against the agent, and when Harris did not respond, the insurer filed a notice of

removal, contending that the thirty-day time period for removal began to run on the date of

Harris’s letter opposing a continuance of the trial date. See id. The Ninth Circuit agreed,
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finding the case became removable “when it became apparent that Harris had abandoned

his claims against [the agent],” as “[a]t that point, the complete diversity between the

remaining parties first became ascertainable.” See id. at *5. Significantly, the Ninth Circuit

did not require formal dismissal of the non-diverse party as a prerequisite to removal. 

Indeed, the Ninth Circuit expressly relied on Southern Pacific Co. v. Haight, 126 F.2d 900

(9th Cir. 1942), in which the Ninth Circuit held removal was appropriate at the time the

plaintiff announced her intent to proceed to trial without having served the non-diverse

defendants, even though the non-diverse defendants had never been formally dismissed

from the lawsuit and one of the resident defendants was served the day after removal. See

Harris, 2005 WL 2456929 at *5 (citing Southern Pacific, 126 F.2d at 905); see also

Southern Pacific, 126 F.2d at 904 (“[P]laintiff in the instant case having petitioned the court

to set the case for trial and having announced that she was ready to proceed with the trial

against the Southern Pacific Company, each at a time when only the latter defendant had

been brought into court, had abandoned the joint character of her action, and rendered the

cause immediately removable to the District Court.”)

Barnhill contends that Harris is distinguishable on two grounds. First, noting that

Harris originated in Montana state court, see Harris, 2005 WL 2456929 at *1, Barnhill

argues that Harris does not set forth controlling authority as to when a case first becomes

removable from a California state court. Harris, however, did not rely on Montana law in

determining removal was appropriate, but rather relied entirely on Southern Pacific, a Ninth

Circuit case that originated in California state court. See id. at *5. Southern Pacific

likewise did not rely on state law in determining removal was appropriate therein. See

Southern Pacific, 126 F.2d at 905. Consequently, the fact that Harris originated in Montana

state court is not material to the instant analysis.

Barnhill next argues that Harris is distinguishable because it involves a defendant

who was never served, see Harris, 2005 WL 2456929 at *2, rather than a defendant who

was served and subsequently settled. Southern Pacific likewise involves a defendant who

was never served. See Southern Pacific, 126 F.2d at 902. The Ninth Circuit has held,
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 The Court also notes that the doctrine of fraudulent joinder authorizes removal

before a non-diverse defendant has been formally dismissed from the complaint. See, e.g., Morris v. Princess Cruise Lines, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001).

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 The court further notes that courts outside the Ninth Circuit have expressly held

that removal is appropriate when the plaintiff has settled with all non-diverse defendants,

even when those defendants have not yet been dismissed from the case. See, e.g., Chohlis v. Cessna Aircraft Co., 760 F.2d 901, 903 n.2 (8th Cir. 1985) (finding settlement

with non-diverse defendant “final enough to support removal”); Martineau v. Arco Chemical

Co., 25 F. Supp. 2d 762, 764-65 (S.D. Tex. 1998) (finding notification to court of settlement

in principle sufficient to trigger right to removal); Mancari v. AC & S Co., Inc., 683 F. Supp.

91, 93 (D. Del. 1988) (finding settlement with non-diverse defendants sufficient to trigger

right to removal; finding no requirement that dismissal of non-diverse defendants “be in

writing or formalized”); Lesher v. Andreozzi, 647 F. Supp. 920, 921-22 (M.D. Pa. 1986)

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however, that the citizenship of defendants who have not been served must be taken into

account in determining whether complete diversity exists for purposes of removal. See

Clarence E. Morris, Inc. v. Vitek, 412 F.2d 1174, 1176 (9th Cir. 1969) (holding “[w]henever

federal jurisdiction in a removal case depends upon complete diversity, the existence of

diversity is determined from the fact of citizenship of the parties named and not from the

fact of service”); see also Southern Pacific, 126 F.2d at 905 (“[T]he fact of non-service of

the resident defendant was not a sufficient ground for removal, and it was therefore not

until the plaintiff took some affirmative action to sever the cause of action that the right to

remove the cause arose.”) In short, nothing in either Harris or Southern Pacific suggests

that the results therein would have been different if the non-diverse defendants had been

served and settled with the plaintiffs prior to removal.1

In light of Harris and Southern Pacific, the Court finds Barnhill’s October 4, 2005

statement to the Superior Court that he had settled with Hamilton and Kaiser Gypsum

constituted notice that Barnhill had abandoned his claims against those defendants. 

Similarly, the undisputed settlement with Certainteed, and Barnhill’s cancellation of the

depositions of Certainteed’s expert witnesses, constituted notice that Barnhill was no longer

pursuing his claims against Certainteed. Consequently, once ACH dismissed its crossclaim against Hamilton, the only relevant parties to the lawsuit for purposes of removal

were Barnhill and ACH. See Harris, 2005 WL 2456929 at *5; see also Southern Pacific,

126 F.2d at 904.2

 It is undisputed that Barnhill and ACH are of diverse citizenship.
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Accordingly, Barnhill’s motion to remand the instant action will be denied.

CONCLUSION

For the reasons set forth above, plaintiff’s motion to remand the action is hereby

DENIED. In light of both parties’ stated interest in having the action promptly set for trial,

the parties shall appear for a Case Management Conference on November 4, 2005 at

10:30 a.m. and shall file a joint case management statement no later than Monday,

October 31, 2005.

This order terminates Docket No. 8.

IT IS SO ORDERED.

Dated: October 27, 2005 

MAXINE M. CHESNEY

United States District Judge