Opinion
21cv1214-L-WVG
03-29-2022
BRIAN TALLMAN, Plaintiff, v. FCA U.S. LLC; CARL BURGER DODGE CHRYSLER JEEP RAM; DOES 1 to 50; Defendants.
ORDER: GRANTING MOTION TO REMAND [ECF NO. 7]; DENYING MOTION TO DISMISS AS MOOT [ECF NO. 6] AND DENYING MOTION TO DISMISS AND STRIKE [ECF NO. 14]
Hon. M. James Lorenz, United States District Judge.
Pending before the Court is a Motion to Remand filed by Plaintiff Brian Tallman (“Tallman”), and two Motions to Dismiss filed by Defendant FCA U.S. LLC. [ECF Nos. 6, 12.]. The Court decides the matter on the papers submitted and without oral argument. See Civ. L. R. 7.1(d)(1). For the reasons stated below, the Court grants the Motion to Remand, denies the Motions to Dismiss.
I. Factual and Procedural Background
On February 4, 2020, Plaintiff purchased a 2019 Ram 1500 (hereafter Vehicle") which was manufactured, distributed, or sold by Defendant. The total consideration which Plaintiff paid or agreed to pay, including taxes, license, and finance charges is $43,554.21.
In connection with the purchase, Plaintiff received an express written warranty in which Defendant undertook to preserve or maintain the utility or performance of the Vehicle or to provide compensation if there was a failure in utility or performance for a specified period of time. The warranty provided, in relevant part, that in the event a defect developed with the Vehicle during the warranty period, Plaintiff could deliver the Vehicle for repair services to Defendant's representative and the Vehicle would be repaired. During the warranty period, the Vehicle contained or developed various defects, including, but not limited, to defects which cause the heater to not effectively warm the vehicle.
Plaintiff's agreement to purchase the Vehicle was memorialized in a written document which provides, among other things, that "ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF." Defendants DOES 10 through 19 are or, at one time, were holders of the contract and are thus subject to all claims and defenses which Plaintiff could assert against the seller. Plaintiff has rejected and/or justifiably revoked acceptance of the Vehicle, and has exercised a right to cancel the sale.
On May 28, 2021, Plaintiff filed a Complaint in the Superior Court of California, County of San Diego, alleging seven causes of action against Defendant FCA U.S. LLC: 1) Breach of Implied Warranty of Merchantability, Cal. Civ. Code §1794; 2) Breach of Implied Warranty of Fitness, Cal. Civ. Code §1794; 3) Breach of Express Warranty, Cal. Civ. Code §1794; 4) Failure to Promptly Repurchase Product, Cal. Civ. Code §1793.2(d); 5) Failure to Commence Repairs within a Reasonable Time and to Complete them within 30 Days, Cal. Civ. Code §1794; 6) Advertising Defective Merchandise without Disclosing Defects, Bus & Prof. Code §17531; §17353; and 7) Conversion. The first five causes of action are statutory claims pursuant to California's Lemon law (the Song-Beverly Consumer Warranty Action, Cal. Civ. Code §§1790 et. seq.). The Complaint seeks damages, civil penalties, attorneys' fees, and punitive damages against Defendant. Specifically, Plaintiff seeks damages in the amount of at least $43,554.21, restitution in the amount of at least $43,554.21, Plaintiff seeks a civil penalty in the amount of at least $87,108.42, punitive damages, consequential and incidental damages, and costs of the suit.
On July 2, 2021, Defendant removed the action to this Court on the basis of diversity jurisdiction pursuant to 28 U.S.C §§ 1332 and 1441(b) asserting that Plaintiff is a citizen of California and Defendant is a citizen of another state with its principal place of business in Michigan. (Notice of Removal at 3-4 [ECF No. 1.])
On July 15, 2021, Plaintiff filed a First Amended Complaint (“FAC”) adding Carl Burger Dodge Chrysler Jeep Ram (“Carl Burger”) as a defendant. On July 29, 2021, Defendant filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) and a Motion to Strike claim for Punitive Damages pursuant to Federal Rule of Civil Procedure 12(f). (MTD [ECF No. 6.]) On August 4, 2021, Plaintiff filed a Motion to Remand to State Court. (Mot. Remand [ECF No. 7.] On August 13, 2021, Plaintiff filed a Response in Opposition to the Motion to Dismiss. (Oppo. MTD [ECF No. 8.]) On August 30, 2021, Defendant filed a Response in Opposition to the Motion to Remand. (Oppo. Mot. Remand [ECF No. 9.]) On September 3, 2021, Plaintiff filed a Reply in response to Defendant's Opposition to the Motion to Remand. (Reply Mot. Remand [ECF No. 10.])
On November 3, 2021, Defendant filed a second, duplicative Motion to Dismiss and Motion to Strike. (MTD [ECF No. 12.]) On November 22, 2021, Plaintiff filed a Response in Opposition to the Motion to Dismiss. (Oppo. [ECF No. 13.]) On November 29, 2021, Defendant filed a Reply to the Response in Opposition. (Reply [ECF No. 14.])
II. Motion to Remand
“A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. §1447(c).
Upon a motion to remand to state court, the party asserting federal jurisdiction has the burden of proof. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir.1988). Complete diversity must exist as of the time the complaint is filed and removal is effected. Strotek Corp. v. Air transport Ass'n. of America, 300 F.3d 1129, 1131 (9th Cir. 2002); See Morongo Band of Mission Indians v. California State Bd. Of Equalization, 858 F.2d 1376, 1380 (9th Cir.1988) (diversity is determined by citizenship of parties as of filing of the original complaint); Newcombe v. Adolf Coors Co., 157 F.3d 686, 690 (9th Cir.1998) (diversity must exist when action is removed). Diversity jurisdiction requires complete diversity, meaning that no plaintiff can be from the same state any defendant. Abrego v. The Dow Chem. Co., 443 F.3d 676, 679 (9th Cir. 2006). III. Discussion
Plaintiff claims that Defendant has not met its burden to demonstrate removal was effectuated within 30 days of the service of the Complaint because it has not submitted any evidence showing the date Defendant was served with the Complaint. (Reply at 5 [ECF No. 10.]) In addition, Plaintiff argues that Defendant has not met its burden to submit evidence proving the citizenship of any of the parties as of the date the action was filed and the date the action was removed to this Court, therefore, the Motion to Remand should be granted. (Reply at 5 [ECF No. 10.])
Contrary to Plaintiff's assertion, Defendant filed the Notice of Removal within 30 days of its receipt of the summons and Complaint. “Each defendant shall have 30 days after receipt by or service on that defendant of the initial pleading or summons described in paragraph (1) to file the notice of removal.” 28 U.S.C. § 1446(b)(2)(B). Defendant FCA was served with the Complaint on June 2, 2021, according to FCA U.S. LLC's attorney Erin Hanson. (Notice Removal Hanson Dec. at ¶ 2 [ECF No. 1.]) The Notice of Removal was filed on July 2, 2021, making it timely.
Additionally, Defendant has filed admissible evidence regarding the domiciles of the parties. Defendant's attorney James Sheridan filed a declaration stating that FCA U.S. LLC is a Delaware limited liability company owned by FCA North America Holdings LLC, which is also a Delaware limited liability company. (Notice of Removal, Sheridan Dec. at ¶ 2-3 [ECF No. 1-6.]) FCA North America Holdings LLC is owned by FCA Holdco B.V., a company organized under the laws of the Netherlands. (Id. ¶ 4-5). In turn, FCA Holdco B.V. is owned by Stellantis N.V. (formerly known as Fiat Chrysler Automobiles N.V.), a publicly traded company incorporated under the laws of the Netherlands. (Id. at ¶5). Plaintiff is a resident of Jamul, California. (Notice Removal Hanson Dec. at ¶ 4 [ECF No. 1.]) Therefore, at the time Defendant removed this action to federal court, the parties were completely diverse for purposes of subject matter jurisdiction. See U.S.C. § 1332(a)(2).
In the Motion to Remand, Plaintiff does not specifically claim that the addition of Defendant Carl Burger Dodge Chrysler Jeep Ram (“Carl Burger”), located in La Mesa, California, in the First Amended Complaint defeats diversity jurisdiction. Instead, he simply states that the Notice was untimely and Defendant has failed to meet its burden to show removal is proper. (Mot. at 8; Reply at 5-6). However, Defendant argues that the joinder of Carl Burger does not defeat diversity jurisdiction because it is a fraudulent joinder and Carl Burger is a sham defendant. (Oppo. at 4-5).
A post-removal joinder of a diversity-destroying defendant is viewed with scrutiny. Section 1447(e) provides that 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 State court.” 28 U.S.C. § 1447(e). “It is a commonplace that fraudulently joined defendants will not defeat removal on diversity grounds.” Ritchey, 139 F.3d at 1318 (9th Cir. 1998). “[T]here is a “general presumption” against fraudulent joinder.” Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). Fraudulent joinder can be established in two ways: “(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.” Hunter v. Phillip Morris USA, 582 F.3d 1039, 1044 (9th Cir. 2009) (internal quotation marks and citation omitted). “If the plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious according to the settled rules of the state, the joinder of the resident defendant is fraudulent.” Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998); Kruso v. Int'l Tel. & Tel. Corp., 872 F.2d 1416, 1426 (9th Cir. 1989); McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987).
A fraudulent joinder “must be proven by clear and convincing evidence.” Hamilton Materials, 494 F.3d at 1206. In fact, the party that invokes federal jurisdiction has a “heavy burden” to show fraudulent joinder. Hunter, 582 F.3d at1046. The Ninth Circuit has observed that “lower courts have been tasked with deciphering the doctrine's boundaries” because it has not had occasion to revisit the doctrine with any frequency. Weeping Hollow Avenue Trust v. Spencer, 831 F.3d 1110, 1113 (2016).
Courts consider the following factors when determining whether a party is fraudulently joined:
(1) whether the party sought to be joined as 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.McGrath v. Home Depot USA, Inc., 298 F.R.D. 601, 607 (Apr. 10, 2014)(citing IBC Aviation Services, Inc., v. Compania Mexicana de Aviacion, S.A. De C.V., 125 F.Supp.2d 1008, 1011 (N.D. Cal. 2000). Accordingly, Defendant bears the heavy burden to demonstrate that Plaintiff “obviously failed to state a cause of action against [Carl Burger]. Weeping Hollow, 831 F.3d at 1113.
Defendant argues that Carl Burger is not needed for just adjudication of the issues, the joinder was made in bad faith, Plaintiff unreasonably delayed amending the complaint, Plaintiff's negligence claims against Carl Burger are barred buy the economic loss rule, and that denial of joinder will not prejudice Plaintiff, citing McGrath, 298 F.R.D. at 607 in support. (Oppo. at 5-12).
The First Amended Complaint adds Defendant Carl Burger, and two additional claims for relief: Claim 8 alleging negligence against Carl Burger for breach of duty to adequately perform repairs and requesting monetary damages (FAC 43-46 [ECF No. 4]), and Claim 9 alleging negligence under Civil Code section 1796.5 against Carl Burger. (FAC 47-50 ). Plaintiff claims that the cabin heater of the truck did not work properly, and that the defects caused “the heater to not effectively warm the vehicle.” (FAC at ¶6). In the eighth cause of action, Plaintiff alleges that “[o]n or about February, March and April 2021, Plaintiff sought repairs from Defendant Dealer. However, Defendant Dealer breached its duty to Plaintiff to perform those repairs in a good and workmanlike manner.” (FAC at ¶ 45). Similarly, in the ninth cause of action, he alleges violation of California Civil Code section 1796.5: “[o]n or about February, March and April 2021, Plaintiff sought repairs from Defendant Dealer. However, Defendant Dealer breached their duty to Plaintiff to perform those services in a good and workmanlike manner.” (FAC at ¶49). He seeks damages for both causes of action.
The Court finds that Defendant has failed to satisfy its burden to prove Carl Burger is a fraudulently added defendant. Carl Burger is necessary for the just adjudication of this action. “Federal Rule of Civil Procedure 19 requires joinder of persons whose absence would preclude the grant of complete relief, or whose absence would impede their ability to protect their interests or would subject any of the parties to the danger of inconsistent obligations.” Clinco v. Roberts, 41 F.Supp.2d 1080, 1082 (C.D. Cal. 1999); Fed.R.Civ.P. 19(a). The resolution of Plaintiff's negligence claims requires inclusion of the car dealership that attempted to fix the defects in order to avoid “separate and redundant actions, ” to the extent Plaintiff can plead sufficient causes of action against Carl Burger. See Sabag v. FCA US, LLC, 2016 WL 6581154, at *4 (C.D. Cal. Nov. 7, 2016). Moreover, there is no evidence that Plaintiff joined Carl Burger in bad faith, nor that the amendment of the complaint was unreasonably delayed, as Defendant contends.
Denial of Plaintiff's Motion to Remand would cause prejudice to Plaintiff because he would have to choose to abandon the claims against Carl Burger, or proceed with litigation of the same legal issues and facts as in this case in state court. See Taylor v. Honeywell, 2010 WL 1881459, *4 (N.D. Cal. 2010).
The key inquiry in a fraudulent joinder analysis is whether there is any possibility of recovery against the non-diverse defendant. McCabe, 811 F.2d at 1339. Defendant has failed to show that the additional claims are barred under the economic loss rule. Under California law, the economic loss rule precludes recovery for economic losses including “damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits, without any claim of personal injury or damages to other property.” Jimenez v. Superior Court, (2002) 29 Cal.4th 473, 482. The rule “requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise.” Robinson Helicopter, 34 Cal.4th 979, 988 (2004). “[I]n actions arising from the sale or purchase of a defective product, plaintiffs seeking economic losses must be able to demonstrate that either physical damage to property (other than the defective product itself) or personal injury accompanied such losses; if they cannot, then they would be precluded from any tort recovery in strict liability or negligence.” North American Chemical Co. v. Superior Court, 59 Cal.App.4th 764, 780 (1997).
However, “the economic loss rule does not necessarily bar recovery in tort for damage that a defective product (e.g., a window) causes to other portions of a larger product (e.g., a house) into which the former has been incorporated.” Jimenez, 29 Cal.4th at, 483. The Jimenez Court noted “that ‘the concept of recoverable physical injury or property damage' had over time ‘expanded to include damage to one part of a product caused by another, defective part.'” Id. at 483-84(citing Aas v. Superior Court, 24 Cal.4th 627, 641 (2000).
Plaintiff has not alleged in the FAC that a physical injury occurred or that property was damaged as a result of the defective heater, however, he states that “the first time that the heater failed in my vehicle was when I was driving in Missouri with my family. . . It was snowy, it was below 10 degrees Fahrenheit, and I was very concerned for the safety of my wife, my children, and myself.” (Oppo. Motion to Dismiss, Brian Tallman Declaration [ECF No. 8.]) In addition, it is unclear whether the defective heater also caused damage to other components of the Vehicle. Defendant has not shown that Plaintiff cannot allege or produce evidence that he suffered damage sufficient to support his negligence claims. Because it is not obvious that Plaintiff cannot recover against Carl Burger under any legal theory, Carl Burger is not a fraudulent defendant. See McCabe, 811 F.2d at 1339. As a result, there is not complete diversity among the Parties and the Court lacks jurisdiction under 28 U.S.C. § 1332. For these reasons, the Court grants Plaintiffs Motion to Remand.
In its Opposition, Defendant anticipated that Plaintiff would argue that his negligent repair claim could proceed under the narrow exception set forth in Robinson Helicopter Co, supra, however, Plaintiff did not advance this argument. Accordingly, the Court refrains from addressing the applicability of Robinson to Plaintiffs negligent repair claim.
IV. Conclusion and Order
For the foregoing reasons, the Court GRANTS Plaintiffs Motion to Remand [ECF No. 7] and DENIES Defendant's Motions to Dismiss and Motion to Strike, [ECF No. 6, 14] as moot. "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). This action is therefore remanded to the Superior Court of the State of California, County of San Diego.
IT IS SO ORDERED.