Summary
remanding on basis of DTPA claim because plaintiff's pleading of that claim satisfied one of the exceptions to a seller's immunity under § 82.003
Summary of this case from Agyei v. Endurance Power Prods., Inc.Opinion
3:04-CV-2343-M.
February 7, 2005
MEMORANDUM OPINION AND ORDER
On November 1, 2004, Defendants removed Plaintiffs' claims to this Court, pursuant to 28 U.S.C. §§ 1332, 1441 (2004). Plaintiffs filed a Motion to Remand on November 18, 2004. For the following reasons, the Court is of the opinion that Plaintiffs' Motion to Remand should be GRANTED. The Court DENIES Plaintiffs' request for attorneys' fees and costs.
Background
Plaintiffs William A. Brewer III ("Brewer") and John W. Bickel II ("Bickel") are lessees of Porsche 911 automobiles, which they leased from Defendant Park Place Motorcars ("Park Place"). The automobiles were manufactured and distributed by Defendant Porsche Cars North America ("PCNA"). Plaintiffs allege that their automobiles were produced with defective hood latches.
Plaintiffs claim that on October 2, 2002, the hood latch to Brewer's automobile failed as he was traveling on a highway. Brewer claims that the hood abruptly blew back against his windshield, and that he narrowly avoided a collision. He subsequently reported the incident to Defendants. After Defendants inspected Brewer's vehicle, Plaintiffs allege that Defendants' inspectors verbally informed Brewer that the incident was caused by a design defect. Plaintiffs claim they were injured by Defendants' failure to disclose the defect when they leased the automobiles.
Plaintiffs assert six claims against Defendants under the Texas Deceptive Trade Practices Act ("DTPA"), a products liability claim, and a "negligence through res ipsa loquitur" claim. Defendants removed this action from state court, arguing that the Court has subject matter jurisdiction because of the diversity of the parties' citizenship. PCNA is a Delaware corporation with its principal place of business in Georgia. Although Park Place is admittedly a citizen of Texas for diversity purposes, Defendants argue removal is proper because Park Place was fraudulently joined by Plaintiffs. Plaintiffs maintain that their claims against Park Place are permitted under Texas law, and that the case should therefore be remanded.
Analysis
As the parties removing Plaintiffs' claims to federal court, Defendants bear the burden of proving a basis for federal subject matter jurisdiction. Frank v. Bear Stearns Co., 128 F.3d 919, 922 (5th Cir. 1997). By arguing that the Court's subject matter jurisdiction is based on diversity of the parties' citizenship, Defendants must prove that "none of the parties in interest properly joined and served as defendants is a citizen of the State in which [this] action is brought." 28 U.S.C. § 1441(b). The Court evaluates all of the factual allegations in Plaintiffs' Petition in the light most favorable to Plaintiffs, and resolves all contested issues of substantive fact in their favor. See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 259 (5th Cir. 1995).
To defeat Plaintiffs' Motion to Remand by proving that Park Place's presence in this case is the product of fraudulent joinder, Defendants must demonstrate either: (1) outright fraud in Plaintiffs' pleading of jurisdictional facts, or (2) that Plaintiffs, as a matter of law, are unable to establish a cause of action against Park Place. Travis v. Irby, 326 F.3d 644, 646 (5th Cir. 2003). Defendants do not allege Plaintiffs fraudulently pleaded any jurisdictional facts, and therefore, the Court's inquiry is limited to whether Defendants can prove there is no "reasonable basis" for predicting that state law would allow Plaintiffs to recover against Park Place. See Badon v. RJR Nabisco Inc., 236 F.3d 282, 285-86 (5th Cir. 2000). Defendants bear the burden of proving the alleged fraudulent joinder by clear and convincing evidence. Dodson v. Spillada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1991).
Defendants argue that Plaintiffs' claims against Park Place are precluded by TEX. CIV. PRAC. REM. CODE § 82.003 (Vernon 2005). The statute insulates sellers of goods, in many circumstances, from products liabilities claims. It provides: "a seller that did not manufacture a product is not liable for harm caused to the claimant by that product," unless the seller satisfies one of six exceptions. Under one such exception, a seller is not insulated from liability if: (a) it actually knew of a defect in the product at the time it supplied the product; and (b) the purchaser's harm resulted from the defect. TEX. CIV. PRAC. REM. CODE § 82.003(a)(6) (Vernon 2005). Defendants assert that Plaintiffs' eight claims are all subject to TEX. CIV. PRAC. REM. CODE § 82.003, since they all stem from a products liability dispute. They argue that Plaintiffs' claims against Park Place are deficient because the statute provides Park Place with a defense to liability, and the facts alleged in Plaintiffs' Petition do not implicate any of the exceptions to the statute. Defendants tacitly concede that if the Court finds that any one of Plaintiffs' eight causes of action against Park Place is not precluded by § 82.003, then Park Place is a proper party and the absence of diversity of citizenship requires the Court to remand the case to state court. See Green v. Amerada Hess Corp., 707 F.2d 201, 208 (5th Cir. 1983).
The Court cannot conclude that there is no reasonable basis for predicting that Plaintiffs' fourth cause of action, alleging a violation of Tex. Bus. Com. Code § 17.46(b)(24), is not actionable in state court against Park Place. In that claim, Plaintiffs state that "Defendants violated the Texas DTPA because Defendants failed to disclose information known at the time of the leases about the vehicles with the intention to induce Plaintiffs into transactions they otherwise would not have entered . . ." By this language, Plaintiffs plainly allege that both Defendants possessed actual knowledge of a defect in the Porsche 911 at the time such vehicles were leased to Plaintiffs, and that the defect is the cause of their damages. Consequently, the facts pled in Plaintiffs' Petition satisfy the exception to a sellers' immunity found in TEX. CIV. PRAC. REM. CODE § 82.003(a)(6). Since the seller's immunity would be unavailable to Park Place were that claim proven, Defendants have failed to meet their burden of proving that Park Place was fraudulently joined. See Reynolds v. Ford Motor Co., ___ F.3d ___, 2004 WL 2870079 (N.D. Tex. Dec. 13, 2004) (remand of a products liability suit, for lack of diversity, because the petition alleged that the in-state seller had actual knowledge of a product defect at the time of the sale, and was therefore unprotected by TEX. CIV. PRAC. REM. CODE § 82.003). Therefore, the Court lacks subject matter jurisdiction to adjudicate this dispute.
Plaintiffs' Petition erroneously cites Tex. Bus. Com. Code § 17.46(b)(23), rather than § 17.46(b)(24). Under § 17.46(b)(23), it is unlawful for a seller of goods to file a breach of contract suit against a purchaser of goods in any county other than the county in which the purchaser resides, or the county in which the goods were sold. It is clear to the Court that Plaintiffs intended their Petition to reference § 17.46(b)(24), which provides that a seller commits a deceptive trade practice by "failing to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed."
Defendants introduce evidence, by affidavit, that Park Place had no knowledge of any defect in the Porsche 911, and did not make any misrepresentations to Plaintiffs regarding the leased vehicles. When a defendant alleges an action is removable on account of fraudulent joinder, the Court may receive evidence for the limited purpose of determining whether the plaintiff's claims are legally cognizable against the non-diverse defendant. Burden v. General Dynamics Corp., 60 F.3d 213, 216 (5th Cir. 1995). The Court may not consider evidence pertaining to the merits of the dispute. Id. The Court concludes that Defendants' affidavit goes to the merits, not the legal cognizability of the claims, assuming the truth of Plaintiffs' allegations. Therefore, the Court's decision to grant Plaintiffs' Motion to Remand is based on the allegations in the Petition, and not on a resolution of disputed facts.
Conclusion
For the aforementioned reasons, the case is hereby REMANDED to the 192nd Judicial District Court of Dallas County, Texas. The Court, in its discretion, DENIES Plaintiffs' request for fees and costs. 28 U.S.C. § 1447(c); See also Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 292 (5th Cir. 2000).SO ORDERED.