Martinez v. Ford Motor Company

• Court: District Court, S.D. California
• Decided: November 19, 2019
• Docket: 3:19-cv-01029
• Status: Unknown

Opinion

1 2 3 4 5 UNITED STATES DISTRICT COURT 6 SOUTHERN DISTRICT OF CALIFORNIA 7 8 RICARDO MARTINEZ and ALLISON Case No.: 19cv1029 JM (BLM) MARTINEZ, 9 ORDER GRANTING PLAINTIFFS’ Plaintiffs, 10 MOTION TO REMAND THE v. ACTION TO THE SUPERIOR 11 COURT OF CALIFORNIA FOR THE FORD MOTOR COMPANY and 12 COUNTY OF SAN DIEGO KEARNY PEARSON FORD & KIA, 13 Defendants. 14

15 16 Plaintiffs Ricardo Martinez and Allison Martinez (“Plaintiffs”) move to remand this 17 action to the Superior Court of California for the County of San Diego. (Doc. No. 12.) 18 Defendants Ford Motor Company (“Ford”) and Kearny Pearson Ford & Kia (“Sunroad 19 Auto”)1 oppose the motion. (Doc. No. 17.) The motion has been briefed and the court 20 finds it suitable for submission without oral argument in accordance with Civil Local Rule 21 7.1(d)(1). For the reasons stated below, the motion is GRANTED. 22 I. BACKGROUND 23 In their Complaint, Plaintiffs state the following facts. On or about January 2, 2013, 24 Plaintiffs purchased a 2013 Ford Escape (“the vehicle”) from Sunroad Auto. (Doc. No. 1- 25 1 at 4.) Plaintiffs received written warranties on the vehicle. (Id. at 5.) On or about January 26

27 1 As explained by Ford, Kearny Pearson Ford & Kia is Sunroad Auto LLC doing business 28 as Kearny Pearson Ford. (Doc. No. 17 at 10.) 1 13, 2016, with 47,268 miles on the odometer, Plaintiffs presented the vehicle to 2 Defendants’ repair facility for various issues. (Id. at 7.) From about February 26, 2016 to 3 January 27, 2018, Plaintiffs repeatedly took the vehicle in for repairs, which eventually led 4 an engine replacement. (Id.) Problems with the vehicle persisted and in March of 2019, 5 Plaintiffs requested a buyback and/or restitution from Ford, but Ford declined. (Id. at 8.) 6 On April 29, 2019, Plaintiffs filed their Complaint in state court for violations of the 7 Song-Beverly Consumer Warranty Act (i.e., California’s Lemon Law), breach of the 8 express written warranties, breach of the implied warranty of merchantability, and fraud 9 by omission. (Doc. No. 1-1 at 8-15.) The only count brought against Sunroad Auto was 10 for breach of the implied warranty of merchantability. (Id. at 12.) Ford was served with a 11 copy of the Complaint on May 1, 2019, and Sunroad Auto was served on May 2, 2019. 12 (Doc. No. 1 at 2.) On May 31, 2019, Defendants filed a Notice of Removal based on 13 diversity jurisdiction. (Id. at 1.) On July 2, 2019, Plaintiffs filed the instant Motion to 14 Remand. (Doc. No. 12.) Defendants filed a Response in Opposition on September 5, 2019. 15 (Doc. No. 17.) Plaintiffs did not file a reply. 16 II. LEGAL STANDARD 17 Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. 18 of Am., 511 U.S. 375, 377 (1994). “A federal court is presumed to lack jurisdiction in a 19 particular case unless the contrary affirmatively appears.” Stock West, Inc. v. Confederated 20 Tribes of Colville Reservation, 873 F.2d 1221, 1225 (9th Cir. 1989). An action in state 21 court can generally be removed to federal court when the case could have originally been 22 brought in federal court. 28 U.S.C. § 1441; see Exxon Mobil Corp. v. Allapattah Services, 23 Inc., 545 U.S. 546, 563 (2005). The defendant bears the burden of proving removal 24 jurisdiction. Leite v. Crane Co., 749 F.3d 1117, 1121-22 (9th Cir. 2014). Any doubt 25 regarding removal jurisdiction is construed against the defendant and in favor of remanding 26 the case to state court. Gaus v. Miles, Inc. 980 F.2d 564, 566 (9th Cir. 1992); Hunter v. 27 Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (“[T]he court resolves all 28 ambiguity in favor of remand to state court.”). 1 Civil cases not arising under federal law are removable to federal court only if each 2 plaintiff’s citizenship is different from each defendant’s citizenship, and the amount in 3 controversy exceeds $75,000. 28 U.S.C. § 1332(a)(1); Owen Equip. & Erection Co. v. 4 Kroger, 437 U.S. 365, 373 (1978). A defendant may remove a civil action that alleges 5 claims against a non-diverse defendant where the plaintiff has no basis for suing that 6 defendant. McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). Where 7 a non-diverse defendant has been “fraudulently joined” to an otherwise completely diverse 8 case, that non-diverse defendant’s citizenship is disregarded for diversity jurisdiction 9 purposes. United Computer Sys., Inc. v. AT&T Corp., 298 F.3d 756, 761 (9th Cir. 2002). 10 There is a general presumption, however, against fraudulent joinder. Hunter v. Philip 11 Morris USA, 582 F.3d 1039, 1046 (9th Cir. 2009). A defendant is fraudulently joined when 12 a “plaintiff fails to state a cause of action against a resident defendant, and the failure is 13 obvious according to the settled rules of the state.” McCabe, 811 F.2d at 1339); see also 14 Nasrawi v. Buck Consultants, LLC, 776 F. Supp. 2d 1166, 1169-70 (E.D. Cal. 2011) (“[A] 15 non-diverse defendant is deemed a sham defendant if, after all disputed questions of fact 16 and all ambiguities in the controlling state law are resolved in the plaintiff’s favor, the 17 plaintiff could not possibly recover against the party whose joinder is questioned.”). The 18 removing defendant bears the “heavy burden” of proving fraudulent joinder. See 19 GranCare, LLC v. Thrower, 889 F.3d 543, 548 (9th Cir. 2018) (citing Hunter, 582 F.3d at 20 1046); see also Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th 21 Cir. 2007) (“Fraudulent joinder must be proven by clear and convincing evidence.”). 22 III. DISCUSSION 23 The parties dispute whether removal based on diversity jurisdiction was proper. 24 Defendants contend removal is proper based on the court’s diversity jurisdiction even 25 though Plaintiffs and Sunroad Auto are all California citizens. (Doc. No. 1 at 1.) 26 Defendants argue that Sunroad Auto’s citizenship can be disregarded because the sole 27 cause of action against Sunroad Auto, i.e. breach of the implied warranty of 28 1 merchantability, is barred by the applicable four-year statute of limitations. (Id. at 6-7.) 2 Plaintiffs argue that the claim against Sunroad Auto is not time-barred because the statute 3 of limitations was tolled under the delayed discovery rule, repair doctrine, and Ford’s 4 fraudulent concealment of defects. (Doc. 12-1 at 13.) For the reasons stated below, 5 removal was improper. 6 A. Delayed Discovery Rule 7 Plaintiffs argue that the statute of limitations did not begin to run until they could 8 have reasonably discovered the breach, which occurred in March of 2019, after Defendants 9 failed to fix the vehicle a reasonable number of times. (Doc. No. 12-1 at 14-18.) In support 10 of their contention, Plaintiffs cite Krieger v. Nick Alexander Imports, Inc., 234 Cal. App. 11 3d 205 (Ct. App. 1991) and Mexia v. Rinker Boat Co., 174 Cal. App. 4th 1297 (2009). In 12 opposition, Defendants contend the statute of limitations began to run on the date of 13 delivery of the vehicle, regardless of the Plaintiffs’ knowledge of the breach. (Doc. No. 17 14 at 14.) In support of their contention, Defendants cite Cardinal Health 301, Inc. v. Tyco 15 Elecs. Corp., 169 Cal. App. 4th 116 (2008) and argue that Plaintiffs’ reliance on Krieger 16 and Mexia is misplaced. (Doc. No. 17 at 14-17.) Defendants also argue that Plaintiffs 17 were on notice of the defects more than four years prior to filing suit because of the 18 numerous concerns raised by Plaintiffs beginning in December of 2012.3 (Id. at 17-18.) 19 Courts have reached different conclusions on the applicability of the delayed 20 discovery rule in cases involving both express and implied warranties. See Cavale v. Ford 21

22 2 Plaintiffs do not dispute that the statute of limitations can be a basis for finding that 23 Sunroad Auto has been fraudulently joined. See Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1320 (9th Cir. 1998). The parties also do not dispute that the statute of limitations 24 is four years from the date the claim accrued. (Doc. No. 17 at 14.) 25 3 Plaintiffs allege they purchased the vehicle on January 2, 2013. (Doc. No. 1-1 at 4.) 26 Defendants claim that Plaintiffs purchased the vehicle on November 18, 2013. (Doc No. 27 12-1 at 15.) The difference in the parties’ allegations regarding the purchase date appears to be immaterial because it does not change the outcome of either party’s argument 28 concerning whether the April 29, 2019 Complaint was within the statute of limitations. 1 Motor Co., Case No. 18cv680 (LJO) BAM, 2018 WL 3811727, at *3 n.5 (E.D. Cal. Aug. 2 9, 2018) (listing cases). Furthermore, as Plaintiffs point out, district courts have repeatedly 3 rejected the same or similar arguments made by Ford in support of removal. See, e.g., 4 Phillips v. Ford Motor Co., Case No. 19cv1423 EJD, 2019 WL 5188259, at *3 (N.D. Cal. 5 Oct. 15, 2019) (listing cases); Klawiter v. Ford Motor Co., Case No. 19cv1889 WHO, 2019 6 WL 2484321, at *2 (N.D. Cal. June 14, 2019) (“Ford makes the same arguments that 7 several courts have rejected in prior cases.”). Therefore, it is not obvious that there is 8 absolutely no possibility that the delayed discovery rule, or any other of Plaintiffs’ tolling 9 theories, do not apply to Plaintiffs’ claim or that Plaintiffs could not amend their Complaint 10 to state a viable tolling theory. See, e.g., Less v. Ford Motor Co., Case No. 18cv1992 11 MMA (AGS), 2018 WL 4444509, at *3 (S.D. Cal. Sept. 18, 2018) (noting that the court 12 must find there is “absolutely no possibility” that any tolling doctrine applies and it must 13 be “obvious” that plaintiff cannot state a claim against the dealership or amend the 14 complaint to allege a viable tolling theory). Both parties make persuasive arguments 15 supported by different authority. At best, the grounds for removal are ambiguous, which 16 is itself grounds for remand. See Gaus, 980 F.2d at 566-67 (“All doubts concerning the 17 sufficiency of a cause of action because of inartful, ambiguous or technically defective 18 pleading must be resolved in favor of remand.”). Additionally, the question of law raised 19 by the parties is one best resolved by means other than an order on a motion to remand. 20 See Jimenez v. Ford Motor Co., Case No. CV 18cv3558 JFW (ASX), 2018 WL 2734848, 21 at *2 (C.D. Cal. June 5, 2018) (“Ford’s arguments that Plaintiff’s claim is barred by the 22 statute of limitations is better raised in a demurrer, motion to dismiss, or motion for 23 summary judgment rather than a notice of removal.”); Cavale, 2018 WL 3811727, at *3. 24 B. Repair Doctrine 25 Plaintiffs argue that the statute of limitations was tolled because Defendants 26 unsuccessfully attempted to repair the vehicle. (Doc. No 12 at 19.) In support of this 27 argument, Plaintiffs cite Aced v. Hobbs-Sesack Plumbing Co., 360 P.2d 897 (1961) and 28 A & B Painting & Drywall, Inc. v. Superior Court, 30 Cal. Rptr. 2d 418 (1994). In 1 opposition, Defendants argue that these cases are outdated or inapplicable and that the 2 statute of limitations is not tolled on an implied warranty claim. (Doc. No. 17 at 20.) 3 Defendants may be correct that the unsuccessful attempt to repair the vehicle did not 4 toll the statute of limitations. It stands to reason, however, that some form of equitable 5 tolling might apply where a consumer reasonably relies on statements by an automobile 6 dealership that a vehicle will be repaired. See Audo v. Ford Motor Co., Case No. 18cv320 7 L (KSC), 2018 WL 3323244, at *2 (S.D. Cal. July 6, 2018) (finding it plausible that 8 plaintiffs could not have reasonably discovered the breach while they were still in the 9 process of trying to get the vehicle repaired). As stated by another district court, while 10 “[t]his rule may not ultimately be applicable here, it is not obvious on the face of the 11 complaint that tolling would not apply and that such tolling would not bring the case within 12 the limitations period.” Cardenas v. Ford Motor Co., Case No. 18cv1090 DSF (PLAx), 13 2018 WL 2041616, at *1 (C.D. Cal. Apr. 23, 2018). 14 C. Fraudulent Concealment 15 Plaintiffs argue that the limitations period was tolled by Ford’s fraudulent 16 concealment of the vehicle’s defects because Plaintiffs sufficiently alleged in their 17 Complaint that Ford failed to disclose and actively concealed the defects. (Doc. No. 12-1 18 at 19-20 (citing Doc. No. 1-1 at ¶¶ 12-28, 52-67).) Defendants argue that the doctrine of 19 fraudulent concealment does not apply because Plaintiffs admit they were aware of the 20 defects by pleading that “[a]t the time of purchase, or within one-year thereafter, the 21 Vehicle contained or developed the defects.” (Doc. No. 17 at 19-20 (citing Doc. No. 1-1 22 at ¶ 50).) 23 The fact that Plaintiffs allege the defects existed at or soon after the time of purchase 24 does not constitute an admission that Plaintiffs were aware of the defects or that Sunroad 25 Auto did not fraudulently conceal material facts. To the contrary, Plaintiffs plead that they 26 were unaware of the defects when they purchased the vehicle and they remained unaware 27 until shortly before the action was filed. (Doc. No. 1-1 at 8, ¶ 27); Cavale, 2018 WL 28 3811727, at *3 (finding the same allegation in the complaint to be sufficient grounds to 1 remand); Chipley v. Ford Motor Co., No. 18cv1161 YGR, 2018 WL 1965029, at *3 (N.D. 2 Cal. Apr. 26, 2018). 3 The Complaint can also be fairly read to allege that Defendants fraudulently 4 represented that the vehicle had been repaired or was in proper working condition when 5 sold. (See, e.g., Doc. No. 1-1 at 7, ¶ 23 (“Plaintiff continued to experience coolant loss and 6 other symptoms of the Engine Defect, despite Defendant’s representations that the Vehicle 7 had been repaired.”).) Moreover, the fact that Plaintiffs were aware of defects, if true, does 8 not make it impossible for Plaintiffs to amend their Complaint in a manner that truthfully 9 supports the applicability of the doctrine of fraudulent concealment. See Cavale, 2018 WL 10 3811727, at *3 (“Even if the allegations concerning fraudulent concealment are not 11 sufficiently pled, Ford has not shown that Plaintiff would not be able to amend the 12 complaint to allege a viable tolling theory applies to Plaintiff’s claim.”). 13 D. Plaintiffs’ and Defendants’ Other Arguments 14 Plaintiffs also argue that Defendants failed to show that the amount in controversy 15 exceeds $75,000 or that Plaintiffs are citizens of California. (Doc. No. 12-1 at 22-26.) This 16 court has previously rejected similar arguments. See Roehm v. Ford Motor Co., No. 17 18CV1278 JM (JMA), 2018 WL 4520542, at *2 (S.D. Cal. Sept. 21, 2018) (“While 18 residence is not necessarily the same as domicile, the ‘place where a person lives is taken 19 to be his [or her] domicile until facts adduced establish the contrary.’”) (citation omitted). 20 Furthermore, based on the above, it is not necessary to reach those issues to resolve the 21 instant motion. See, e.g., Cavale, 2018 WL 3811727, at *4 (declining to reach similar 22 issues); Chipley, 2018 WL 1965029, at *3 n.2 (same). 23 Defendants also argue that the court should exercise its discretion to drop Sunroad 24 Auto as a party under Federal Rule of Civil Procedure 21 because (1) it is not an 25 indispensable party under Rule 19 and (2) Sunroad Auto has a statutory right to indemnity 26 from Ford. (Doc. No. 17 at 21-22.) As pointed out by Plaintiffs, courts have repeatedly 27 found that dealerships are indispensable parties in similar suits against automobile 28 manufacturers. See, e.g., Less, 2018 WL 4444509, at *2 (“Numerous courts have found 1 ||amplied warranty claims against dealerships to be valid, and the dealerships to be necessary 2 parties, in connection with claims under the Song-Beverly Act.”). Courts have also 3 || previously rejected the same Rule 21 argument made by Ford. See, e.g., Phillips, 2019 WL 4 115188259, at *3. Additionally, multiple courts have found that a right to indemnity does 5 invalidate an implied warranty claim. See, e.g., Sandhu v. Volvo Cars of N. Am., LLC, 6 || Case No. 16cv4987 BLF, 2017 WL 403495, at *4 (N.D. Cal. Jan. 31, 2017) (“Volvo does 7 ||not cite any authority that joinder of an indemnitee is unnecessary, or somehow renders an 8 |}otherwise valid claim invalid, simply because its indemnitor is already a party.”). 9 || Accordingly, the court declines to drop Sunroad Auto as a party. 10 IV. CONCLUSION 11 For the foregoing reasons, Plaintiffs’ Motion to Remand is GRANTED. The case 12 hereby REMANDED to the Superior Court of California for the County of San Diego. 13 || The Clerk of the Court is directed to close the case. 14 IT IS SO ORDERED. 15 || DATED: November 19, 2019 Higgs 16 Y T, ILLER ited States District Judge 17 18 19 20 21 22 23 24 25 26 27 28