Simmons v. Ford Motor Company

• Court: District Court, N.D. California
• Decided: March 10, 2020
• Docket: 5:19-cv-04802
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 MARIE TERESA SIMMONS, 8 Case No. 19-cv-04802-EJD Plaintiff, 9 ORDER GRANTING PLAINTIFF'S v. MOTION TO REMAND 10 FORD MOTOR COMPANY, et al., Re: Dkt. No. 14 11 Defendants. 12

13 Plaintiff alleges various state-law causes of actions against Defendants Ford Motor 14 Company (“Ford”) and Mossy Ford, Inc. (“Mossy”). Defendants contend that they properly 15 removed this action from state court to federal court and that this Court has jurisdiction pursuant 16 to 28 U.S.C. § 1332. Plaintiff disagrees and moves to remand the case, arguing that Defendant 17 Mossy destroys diversity. In response, Defendant Ford claims that Defendant Mossy is a sham 18 defendant and thus removal is proper. The Court disagrees. Because dismissing Mossy is 19 improper, complete diversity does not exist among the parties and the Court lacks jurisdiction. 20 Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 829 (1989). The Clerk is DIRECTED to 21 REMAND this case to Santa Clara County Superior Court and close the file. 22 I. BACKGROUND 23 A. Factual Background 24 On or about January 31, 2012, Plaintiff purchased a 2012 Ford Edge vehicle (the 25 “Vehicle”) from Defendant Ford. Complaint for Violation of Statutory Obligations (“Compl.”) at 26 ¶ 8, Dkt. 1-2, Ex. B. Plaintiff received an express written warranty with this purchase. Id. ¶ 9. 27 During the warranty period, the Vehicle contained or developed defects—specifically Engine- 1 defects—which substantially impaired the use, value, or safety of the Vehicle. Id. ¶ 10. Plaintiff 2 asserts seven causes of action, but only the sixth cause of action, which alleges that Defendant 3 Mossy negligently repaired the Vehicle, includes Defendant Mossy. Id. ¶ 31–35. The other six 4 causes of action are not asserted against Defendant Mossy and so are not at issue. See generally 5 id. 6 Plaintiff and Defendant Mossy are California residents. Id. ¶¶ 2, 5. Defendant Ford is a 7 citizen of Delaware. Id. ¶ 4. 8 B. Procedural Background 9 Plaintiff filed her Complaint in the Santa Clara County Superior Court on July 8, 2019. Id. 10 at 1. Defendant Ford removed the action to this Court on August 14, 2019, pursuant to 28 U.S.C. 11 §§ 1332, 1441, and 1446. Dkt. 1. On November 12, 2019, Plaintiff filed a motion to remand. 12 Plaintiff’s Notice of Motion to Remand (“Mot.”), Dkt. 14. Defendants filed an opposition on 13 November 26, 2019. Defendants’ Opposition to Plaintiff’s Motion to Remand (“Opp.”), Dkt. 19. 14 On December 3, 2019, Plaintiff submitted a reply. Plaintiff’s Reply in Support of Motion to 15 Remand (“Reply”), Dkt. 21. 16 II. LEGAL STANDARD 17 A. Motion to Remand 18 The party seeking removal bears the burden of establishing jurisdiction. Gaus v. Miles, 19 Inc., 980 F.2d 564, 566 (9th Cir. 1992). The Court strictly construes the removal statute against 20 removal jurisdiction. Id. Federal jurisdiction must be rejected if there is any doubt as to the right 21 of removal in the first instance. Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 22 1979). Indeed, federal courts are “particularly skeptical of cases removed from state court.” 23 Warner v. Select Portfolio Servicing, 193 F. Supp. 3d 1132, 1134 (C.D. Cal. 2016) (citing Gaus, 24 980 F.2d at 566). “If at any time before final judgment it appears that the district court lacks 25 subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). 26 B. Sham Defendant 27 While 28 U.S.C. § 1332 requires complete diversity of citizenship, see Caterpillar Inc. v. 1 Lewis, 519 U.S. 61, 68 (1996), one exception is where a non-diverse defendant has been 2 “fraudulently joined.” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). 3 Fraudulent joinder is a “term of art,” it does not imply any intent to deceive on the part of a 4 plaintiff or her counsel. Lewis v. Time Inc, 83 F.R.D. 455, 460 (E.D. Cal. 1979); McCabe v. Gen. 5 Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). Joinder of a non-diverse defendant is 6 fraudulent if: (1) the plaintiff fails to state a cause of action against a defendant and (2) the failure 7 is obvious according to the settled rules of the state. McCabe, 811 F.3d at 1339. 8 As a matter of general principle, courts presume that a defendant is not fraudulently joined. 9 Diaz v. Allstate Ins. Grp., 185 F.R.D. 581, 586 (C.D. Cal. 1998). Indeed, defendants who assert 10 fraudulent joinder carry a heavy burden of persuasion. Id. It must appear to a “near certainty” that 11 the joinder was fraudulent. Alexander v. Select Comfort Retail Corp., 2018 WL 6726639, at *2 & 12 n.4 (N.D. Cal. Dec. 21, 2018) (citing Diaz, 185 F.R.D. at 586). Merely showing that an action is 13 “likely to be dismissed” against that defendant does not demonstrate fraudulent joinder. Diaz, 185 14 F.R.D. at 586; Lieberman v. Meshkin, Mazandarani, 1996 WL 732506, at *2 (N.D. Cal. Dec. 11, 15 1996) (“The standard is not whether plaintiffs will actually or even probably prevail on the merits, 16 but whether there is a possibility that they may do so.”). The defendant must be able to show that 17 the individuals joined in the action cannot be liable under any theory. Calero v Unisys Corp., 271 18 F. Supp. 2d 1172, 1176 (N.D. Cal. 2003). In resolving the issue, the court must resolve all 19 ambiguities in state law in favor of the plaintiffs. Diaz, 185 F.R.D. at 586. 20 III. DISCUSSION 21 A. Subject-Matter Jurisdiction 22 Defendants first argue that Plaintiff’s motion to remand is untimely. Opp. at 3. A motion 23 to remand must be filed within thirty days after filing of the notice of removal. 28 U.S.C. 24 § 1447(c). Defendants argue that Plaintiff’s motion to remand is untimely because it is late. Opp. 25 at 3. Of course, if this Court determines that it is without subject-matter jurisdiction, then the 26 thirty-day timeline in 28 U.S.C. § 1447(c) is inapplicable. See Ruhrgas AG v. Marathon Oil Co., 27 526 U.S. 574, 583 (1999) (“[S]ubject-matter delineations must be policed by the courts on their 1 own initiative . . . .”); Fed. R. Civ. P. 12(h)(3) (“Whenever it appears . . . that the court lacks 2 jurisdiction . . . the court shall dismiss the action.”). The crux of Plaintiff’s motion is that 3 Defendant Mossy destroys diversity and thereby this Court’s jurisdiction over this case. The 4 motion, thus, hinges on subject-matter jurisdiction, which is never untimely. See Steel Co. v. 5 Citizens for a Better Env’t, 523 U.S. 83, 93 (1998); Alvarez v. TransitAmerica Servs., Inc., 2019 6 WL 4644909, at *2 & n.1 (N.D. Cal. Sept. 24, 2019). Accordingly, Plaintiff’s motion to remand 7 is timely. 8 B. Sham Defendant 9 Defendants next argue that Defendant Mossy is a sham defendant because Plaintiff’s sole 10 cause of action against Defendant Mossy is barred by the economic loss rule and by the statute of 11 limitations. Opp. at 4. 12 1. Economic Loss Rule 13 Defendants first contend that Defendant Mossy is a “sham defendant” because Plaintiff’s 14 negligent repair claim against Defendant Mossy is barred by the economic loss rule. Opp. at 5. 15 Economic losses are “damages for inadequate value, costs of repair and replacement of the 16 defective product or consequent loss of profits—without any claim of personal injury or damages 17 to other property.” Jimenez v. Superior Court, 29 Cal. 4th 473, 482 (2002) (citation and quotation 18 marks omitted). Generally, under this rule, plaintiffs cannot recover in tort for economic losses. 19 Id. Defendants argue that because Plaintiff alleges only economic losses, like diminution in value 20 of the Vehicle and contract price damages, Plaintiff cannot state a valid claim for negligent repair. 21 California law, however, recognizes an exception to the economic loss rule that is 22 applicable in this case. “The economic loss rule does not necessarily bar recovery in tort for 23 damage that a defective product (e.g., a window) causes to other portions of a larger product (e.g., 24 a house) into which the former has been incorporated.” Id. at 483. Here, Plaintiff has alleged 25 problems with components of the Vehicle, such as the engine, and problems affecting parts 26 connected to the engine. See Compl. ¶ 10. Consistent with the economic loss rule, it is possible 27 that Plaintiff could show that the engine defect caused damage to other parts of the vehicle. See 1 Jimenez, 29 Cal. 4th at 483 (“[T]he economic loss rule allows a plaintiff to recover in strict 2 products liability in tort when a product defect causes damage to ‘other property,’ that is, property 3 other than the product itself.”); see also Madison v. Ford Motor Co., 2019 WL 3562386, at *2–3 4 (E.D. Cal. Aug. 6, 2019) (holding economic loss rule did not bar the plaintiffs’ negligent repair 5 claim); Lopez v. Ford Motor Co., 2019 WL 5444391, at *2 (C.D. Cal. July 18, 2019) (same). 6 Defendants use of Ruiz v. BMW of N. Am., 2017 WL 217746, at *2 (C.D. Cal. Jan. 18, 7 2017) is thus not persuasive because the Ruiz court “did not discuss the effect of Jimenez [or] the 8 caselaw allowing for recovery when a defective component damages a larger product in which the 9 component is incorporated.” Krasner v. Ford Motor Co., 2019 WL 1428116, at *4 (E.D. Cal. 10 Mar. 29, 2019). Indeed, the economic loss rule would not necessarily bar recovery for damage a 11 vehicle’s subcomponents caused. See Sabicer v. Ford Motor Co., 362 F. Supp. 3d 837, 842 (C.D. 12 Cal. 2019) (same); see also Lytle v. Ford Motor Co., 2018 WL 4793800, at *2 (E.D. Cal. Oct. 2, 13 2018) (“California law is not so settled that a plaintiff could not possibly recover against a 14 dealership for negligent repair of a vehicle.”). Accordingly, Defendants have not shown that the 15 economic loss rule renders recovery against Defendant Mossy impossible. 16 2. Statute of Limitations 17 Defendants next argue that the statute of limitations bars Plaintiff’s negligent repair claim 18 against Defendant Mossy. Under California law, the statute of limitations for a negligent repair 19 claim is three years.1 See Cal. Civ. Proc. Code § 338(c)(1). Defendants argue that this action is 20 untimely because Plaintiff expressed concerns with the Vehicle starting in 2012 and thus should 21 have brought this action earlier. Opp. at 7. Plaintiff argues that the discovery rule tolled the 22 statute of limitations. Compl. ¶ 7. 23 Pursuant to the discovery rule, however, Plaintiff could state a claim against Defendant 24 Mossy. As noted, for a remand motion, the relevant inquiry is whether Plaintiff could state a 25

26 1 Defendants cite California Code of Civil Procedure § 339 for the proposition that the statute of limitations is two years. “But section 339 deals with causes of action based on contract, not tort.” 27 Sabicer, 362 F. Supp. 3d at 842. For injury to personal property, a three-year statute of limitations applies. See Cal. Civ. Proc. Code § 338(c)(1). 1 claim for negligent repair against Defendant Mossy. Calero, 271 F. Supp. 2d at 1176; see also 2 Diaz, 185 F.R.D. at 586 (noting that court must resolve all ambiguities in state law in favor of the 3 plaintiffs). Under the delayed discovery rule, the statute of limitation begins to run only once 4 plaintiffs discover or should have discovered all facts essential to their cause of action. See Fox v. 5 Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 808–09 (2005). From the allegations in the 6 Complaint, Plaintiff’s negligent repair claim is not time barred on its face as the Complaint never 7 alleges when Plaintiff discovered that Defendant Mossy failed to repair the Vehicle in accordance 8 with industry standards. Reply at 8. Hence, Plaintiff could state a claim for negligent repair as it 9 is possible the commencement of the limitations period should be delayed. See Camsi IV v. 10 Hunter Tech Corp., 230 Cal. App. 3d 1525, 1536 (1991) (noting that under delayed discovery rule, 11 limitations period is postponed until the plaintiff discovers or should have discovered all facts 12 essential to his cause of action); see also Good v. Prudential Ins. Co. of Am., 5 F. Supp. 2d 804, 13 807 (N.D. Cal. 1998) (noting that even while the Plaintiff may not ultimately succeed on a 14 “delayed discovery” theory, the plaintiff need only show that success is possible). Accordingly, 15 Defendants have failed to prove that there is no possibility that Plaintiff could invoke the delayed 16 discovery rule to assert a negligent repair claim against Defendant Mossy. Calero, 271 F. Supp. 17 2d at 1176. 18 C. Indispensable Party 19 Federal Rule of Civil Procedure 21 allows a federal court, on just terms, to “add or drop a 20 party.” Rule 21 grants a federal district or appellate court the “discretionary power to perfect its 21 diversity jurisdiction by dropping a nondiverse party provided the nondiverse party is not 22 indispensable to the action under Rule 19.” Sams v. Beech Aircraft Corp., 625 F.2d 273, 277 (9th 23 Cir. 1980). Pursuant to Federal Rule of Civil Procedure 19, parties are indispensable if complete 24 relief cannot be afforded without that party, if the absent party’s interests will be prejudiced, or if 25 the absent party would have an inadequate remedy if they were dismissed for nonjoinder. Fed. R. 26 Civ. P. 19. 27 Courts in this District have held that auto dealerships “may be necessary for adjudication 1 of state law claims, for purposes of a § 1447(e) analysis.” Watson v. Ford Motor Co., 2018 WL 2 3869563, at *4 (N.D. Cal. Aug. 15, 2018); see also Tanner, 2019 WL 6269307 at *4. Indeed, 3 dismissal of dispensable nondiverse parties should be exercised sparingly after considering 4 whether such dismissal will prejudice any of the parties in the litigation. Newman-Green, Inc. v. 5 Alfonzo-Larrain, 490 U.S. 826, 837–38 (1989). 6 The circumstances of this case strongly militate against dismissing Defendant Mossy as a 7 dispensable party. First, the claims of both Ford and Mossy are sufficiently intertwined, factually 8 and legally, that severance would be inconvenient and inefficient. See Madison, 2019 WL 9 3562386 at *4 (noting that severance would defeat the purposes of permissive joinder as it would 10 create duplication and inefficiency). Considering Defendant Mossy performed many of the repairs 11 on the Vehicle, it would be much more convenient for Plaintiff to present any claims related to 12 repair in the same case. See Compl. ¶¶ 31–35; see also Sabicer, 362 F. Supp. 3d at 841. Second, 13 courts are reluctant to use Rule 21 “to contort the pleadings of a lawsuit merely to confer federal 14 jurisdiction.” Zee Med. Distrib. Ass’n, Inc. v. Zee Med., Inc., 23 F. Supp. 2d 1151, 1157 (N.D. 15 Cal. 1998). Accepting Defendants argument would be “an improper end-run around [the court’s] 16 rejection of the fraudulent misjoinder doctrine.” Madison, 2019 WL 3562386 at *4 (alteration in 17 original) (citation and quotation marks omitted). Accordingly, the Court declines to use Federal 18 Rule of Civil Procedure 21 to drop Defendant Mossy. 19 D. Plaintiff’s Domicile 20 “The place where a person lives is taken to be his domicile until facts adduced establish the 21 contrary; and a domicile, when acquired, is presumed to continue until it is shown to have been 22 changed.” Anderson v. Watts, 138 U.S. 694, 706 (1891); Hollinger v. Home State Mut. Ins. Co., 23 654 F.3d 564, 571 (5th Cir. 2011) (“Evidence of a person’s place of residence, however, is prima 24 facie proof of his domicile.”). 25 Plaintiff argues that Defendants have not established her domicile.2 Opp. at 13–15. The 26

27 2 As the Court noted in Tanner, this argument contradicts Plaintiff’s position that complete diversity does not exist. As in Tanner, Plaintiff spends a portion of his brief arguing that 1 Court disagrees. Pursuant to longstanding precedent, courts presume that a person’s “current 2 || residence is also his domicile.” 13E WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE 3 § 3612 & n.28 (3d ed. 2013) (collecting cases); see also Tanner, 2019 WL 6269307 at *5 4 (rejecting Metropoulos v. BMW of N. Am., LLC, 2017 WL 564205, at *1 (C.D. Cal. Feb. 9, 2017) 5 || decision that a plaintiffs residence does not establish the plaintiff's domicile). Plaintiff alleged in 6 || his Complaint that he is “a resident of California.” Compl. | 2. Accordingly, because both 7 Plaintiff and Defendant Mossy are California residents, complete diversity does not exist between 8 || the Parties and the Court must GRANT Plaintiffs motion to remand. 9 || IV. CONCLUSION? 10 Because Defendant Mossy is an indispensable and non-sham defendant, this Court lacks 11 subject-matter jurisdiction and must remand the action pursuant to 28 U.S.C. § 1447(c). The a 12 Court thus GRANTS Plaintiff’ motion to remand. The Clerk is DIRECTED to REMAND this

13 case to the Santa Clara County Superior Court and close the file.

v 14 IT IS SO ORDERED. © 15 || Dated: March 10, 2020 16 EDWARD J. DAVILA 17 United States District Judge

18 19 20 21 22 23 24 25 Defendant has not established his citizenship. This, however, undercuts his main argument that 26 || the inclusion of Defendant Mossy destroys diversity and mandates remand. Plaintiff needs to be a California citizen for Defendant Mossy’s citizenship to matter. 27 3 The Court does not address Plaintiff’ s amount-in-controversy arguments as it holds there is not complete diversity between the Parties. 28 || Case No.: 19-cv-04802-EJD ORDER GRANTING PLAINTIFF'S MOTION TO REMAND