Opinion
No. 2:20-CV-00716 WBS AC
06-25-2020
CARMEN MENJIVAR GUARDADO, Plaintiff, v. FORD MOTOR COMPANY; HAYWARD FORD, INC.; and DOES 1 through 50, inclusive, Defendants.
MEMORANDUM AND ORDER RE: PLAINTIFF'S MOTION TO REMAND AND DEFENDANT FORD MOTOR COMPANY'S MOTION TO DISMISS
Plaintiff Carmen Menjivar Guardado filed this action against defendants Ford Motor Company ("Ford Motor"), Hayward Ford, Inc. ("Hayward Ford"), and Does 1 through 50, alleging various warranty and negligent repair claims arising out of the sale of a defective Ford vehicle. Before the court are plaintiff's motion to remand (Docket No. 13) and defendant Ford Motor's motion to dismiss (Docket No. 12).
I. Factual and Procedural Background
Plaintiff purchased a 2017 Ford Focus (the "vehicle"). (First Amended Complaint ("FAC") ¶ 8 (Docket No. 5).) In connection with the purchase of the vehicle, plaintiff received an express written warranty which provided, in relevant part, that in the event the vehicle developed a defect during the warranty period, plaintiff could deliver the vehicle for repair services to defendant Ford Motor's "representative" and the vehicle would be repaired. (Id. ¶ 11.) During the warranty period, plaintiff's vehicle developed defects in its engine, battery, emission, and transmission. (Id. ¶ 13.) Plaintiff delivered the vehicle for repair services, but defendant Ford Motor and its representative were unable to repair the vehicle. (Id. ¶ 16.) As a result, the use and/or value of the vehicle was substantially impaired. (Id. ¶ 17.)
Plaintiff filed suit in state court against only defendant Ford Motor alleging the following causes of action: (1) failure to replace or reimburse after reasonable number of repair attempts, Cal. Civ. Code § 1793.2(d); (2) failure to commence repair within a reasonable time, Cal. Civ. Code § 1793.2(b); (3) failure to make available to its authorized service and repair facilities sufficient service literature and replacement parts to effect repairs, Cal. Civ. Code § 1793.2(a)(3); (4) breach of express written warranty, Cal. Civ. Code § 1791.2(a); and (5) breach of the implied warranty of merchantability, Cal. Civ. Code § 1791.1. (See generally Complaint (Docket No. 1-2).)
Defendant Ford Motor removed the action based on diversity jurisdiction. (Docket No. 1.) Plaintiff subsequently filed a first amended complaint naming Hayward Ford as a defendant and alleging an additional claim against only Hayward Ford for negligent repair. (See generally FAC.) Because Hayward Ford is a California corporation (id. ¶ 4), such that its involvement in this action destroys complete diversity, plaintiff moves to remand for lack of subject matter jurisdiction. (Mot. to Remand at 1.) Defendant Ford Motor in turn moves to dismiss only plaintiff's negligent repair claim against Hayward Ford. (Mot. to Dismiss at 8-11.)
I. Motion to Remand
"[T]he proper standard for deciding whether to allow post-removal joinder of a diversity-destroying defendant is set forth in 28 U.S.C. § 1447(e)." Boon v. Allstate Ins. Co., 229 F. Supp. 2d 1016, 1020 n.2 (C.D. Cal. 2002). Under Section 1447(e), a "district court has two options in dealing with an attempt to join a non-diverse party" after removal. Newcombe v. Adolf Coors Co., 157 F.3d 686, 691 (9th Cir. 1998). "If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court." 28 U.S.C. § 1447(e); id. "The language of § 1447(e) is couched in permissive terms and . . . the decision regarding joinder of a diversity-destroying-defendant is left to the discretion of the district court." Newcombe, 157 F.3d at 691.
In evaluating whether to deny joinder or to permit joinder and remand under Section 1447(e), the court considers the following factors: "(1) whether the party sought to be joined is needed for just adjudication and would be joined under Federal Rule of Civil Procedure 19(a); (2) whether the statute of limitations would preclude an original action against the new defendants in state court; (3) whether there has been unexplained delay in requesting joinder; (4) whether joinder is intended solely to defeat federal jurisdiction; (5) whether the claims against the new defendant appear valid; and (6) whether denial of joinder will prejudice the plaintiff." Flynn v. Wells Fargo Bank, N.A., No. 2:19-CV-00116 WBS KJN, 2019 WL 2249600, at *4 (E.D. Cal. May 24, 2019) (citing IBC Aviation Servs. v. Compañia Mexicana de Aviacion, S.A. de C.V., 125 F. Supp. 2d 1008, 1011 (N.D. Cal. 2000)).
On balance, these factors weight against permitting joinder. With respect to the first factor, Hayward Ford is not a necessary party under Federal Rule of Civil Procedure 19(a) because plaintiff can obtain "complete relief" from defendant Ford Motor. See Fed. R. Civ. P. R. 19(a). If plaintiff is successful on the warranty claims against Ford Motor, "nothing precludes Plaintiff from recovering the full amount of damages requested in the Complaint, even in the absence of [the local dealer]." See Goines v. BMW of N. Am., LLC, No. LA 16-CV-09271 JAK EX, 2017 WL 10676597, at *3 (C.D. Cal. July 14, 2017) (denying joinder of local car dealership where plaintiff alleged warranty claims); Newcombe, 157 F.3d at 691 (affirming the district court's denial of joinder where plaintiff sought damages that "could be fully satisfied by the other defendants"). "Conversely, if Defendant is found not to have breached the implied or express warranty of merchantability, Plaintiff can still seek to recover from [the local dealer] in a separate action" in state court. See Goines, 2017 WL 10676597, at *3. Defendant Hayward Ford is therefore not necessary for just adjudication of this action.
The second factor similarly weighs against permitting joinder. Plaintiff concedes that the relevant statute of limitations would not prevent her from bringing a cause of action against Hayward Ford in state court. (Mot. to Remand at 7.)
With respect to the third factor, plaintiff correctly asserts that the amended complaint was filed only two months after plaintiff filed her initial complaint. (Reply at 4-5 (Docket No. 18).) A "minimal" delay, however, is not necessarily "justified." See Flynn, 2019 WL 2249600, at *4. In determining whether there was "unexplained delay," "courts must consider whether the 'moving party knew or should have known the facts and theories raised by the amendment in the original pleading.'" Murphy v. Am. Gen. Life Ins. Co., 74 F. Supp. 3d 1267, 1284 (C.D. Cal. 2015) (quoting Jackson v. Bank of Hawaii, 902 F.2d 1385, 1388 (9th Cir. 1990)). Plaintiff's explanation for the delay here is that she investigated the "corporate structure" of Hayward Ford to "determine that it was not a subsidiary or the alter-ego of Defendant [Ford Motor]." (Reply at 5.)
This argument is not persuasive. Plaintiff's initial complaint specifically states that the warranty required the local dealer -- Ford Motor's "representative" -- to repair the vehicle, and that the dealer failed to do so. (Compl. ¶¶ 10, 15.) Therefore, it was Hayward Ford's failure to properly repair the vehicle that prompted plaintiff to file suit. Plaintiff's alleged confusion regarding the relationship between the two defendants does not explain why plaintiff, knowing that Hayward Ford failed to repair the vehicle, as well as all facts necessary to allege a claim for negligent repair, did not name Hayward Ford in the initial complaint. Because plaintiff "knew or had reason to know of [the dealer's] involvement long before" amending the complaint, this factor weighs against remand. Cf. Goines, 2017 WL 10676597, at *4.
The court similarly concludes that the fifth factor weighs against remand because several issues raise concerns as to whether the claims against Hayward Ford were asserted for the purpose of defeating diversity jurisdiction. First, as explained above, success on the negligent repair claim against Hayward Ford does not afford plaintiff any additional relief. Cf. Murphy, 74 F. Supp. 3d at 1286. Plaintiff does not refute this point and does not articulate an alternative legitimate reason to join Hayward Ford after removal.
Second, the economic loss rule bars tort claims for purely economic losses. NuCal Foods, Inc. v. Quality Egg LLC, 918 F. Supp. 2d 1023, 1028 (E.D. Cal. 2013) (citing Seely v. White Motor Co., 63 Cal. 2d 9, 18 (1965)). In order to recover on a claim for negligence, plaintiff must prove that the negligence caused "physical harm to person or property." UMG Recordings, Inc. v. Global Eagle Entm't, Inc., 117 F. Supp. 3d 1092, 1103 (C.D. Cal. 2015) (quoting Giles v. General Motors Acceptance Corp., 494 F.3d 865, 873 (9th Cir. 2007)). Here, plaintiff claims only economic losses and does not allege that the defective vehicle harmed other property. (See FAC ¶ 30.) Further, plaintiff merely asserts in conclusory fashion that the claim is "facially legitimate" and does not respond to defendant's contention that the economic loss rule would preclude recovery here. (See Mot. to Remand at 6; see also Opp'n to Mot. to Dismiss at 5-6 (Docket No. 19).) Accordingly, the court cannot discern any reason, other than the destruction of diversity, for the joinder of Hayward Ford at this stge of the proceeding. The fifth factor therefore weighs against remand.
Finally, because plaintiff will not be prejudiced if the amendment is not granted, the sixth factor also weighs against remand. "[P]rejudice to a plaintiff 'exists if the proposed defendant is crucial to the case' and 'does not exist if complete relief can be afforded without that defendant.'" Bird v. Wells Fargo Bank, N.A., No. 16-cv-01130, 2017 WL 2797854, at *6 (E.D. Cal. Jun. 27, 2017) (quoting McCarty v. Johnson & Johnson, No. 1:10-cv-00350, 2010 WL 2629913, at *9 (E.D. Cal. 2010)). As previously discussed, plaintiff can obtain complete relief even if Hayward Ford is not a named party. Further, because the economic loss rule appears to preclude recovery against Hayward Ford, plaintiff cannot be worse off if the court does not permit joinder. Cf. Vasquez v. Wells Fargo Bank, Nat'l Ass'n, 77 F. Supp. 3d 911, 923 (N.D. Cal. 2015) (finding no prejudice to plaintiff where "Plaintiff fails to state viable claims against" the joined defendant). Accordingly, because this factor, like the rest of the Section 1447(e) factors, weighs against remand, the court will exercise its discretion to deny plaintiff's joinder of Hayward Ford. See Newcombe, 157 F.3d at 691. For the same reasons, the court will deny plaintiff's motion to remand and grant Ford Motor's motion to dismiss the negligent repair claim. Cf. id. ///
IT IS THEREFORE ORDERED that plaintiff's motion to remand (Docket No. 13) be, and the same hereby is, DENIED.
IT IS FURTHER ORDERED that defendant's motion to dismiss this action as against defendant Hayward Ford, Inc. only (Docket No. 12) be, and the same hereby is, GRANTED. Dated: June 25, 2020
/s/_________
WILLIAM B. SHUBB
UNITED STATES DISTRICT JUDGE