O 1 JS-6 2 3 4 5 6 7 United States District Court 8 Central District of California 9 10 11 WILLIAM GERALD BARNETT, SR. Case № 2:20-cv-03180-ODW (ASx) and DIANA T. BARNETT, 12 Plaintiffs, ORDER REMANDING ACTION 13 v. 14 FCA US LLC; H.W. HUNTER, INC.; 15 and DOES 1 through 10, inclusive, 16 Defendants. 17 18 I. INTRODUCTION 19 Plaintiffs William Gerald Barnett, Sr. and Diana T. Barnett (“Plaintiffs”) 20 initiated this action in the Superior Court of California, County of Los Angeles. 21 (Notice of Removal (“Notice”) ¶ 2, ECF No. 1; Decl. of Jennifer C. Koo, Ex. A 22 (“Compl.”), ECF No. 1-2.) Defendant FCA US LLC (“FCA”) removed the matter 23 based on alleged diversity jurisdiction. (See Notice at 3, 7.) After reviewing 24 Plaintiffs’ Complaint, FCA’s Notice of Removal, and the parties’ Responses to the 25 Court’s Order to Show Cause, the Court finds that it lacks subject matter jurisdiction 26 and consequently REMANDS this action.1 27
28 1 The Court deems the matter appropriate for sua sponte decision. United Inv’rs Life Ins. Co. v. Waddell & Reed Inc., 360 F.3d 960, 967 (9th Cir. 2004). 1 II. BACKGROUND 2 This is a Song-Beverly Consumer Warranty Act (“Song-Beverly”) action 3 concerning Plaintiffs’ 2017 Chrysler Pacifica, VIN 2C4RC1DG6HR653977 (the 4 “Vehicle”). (Compl. ¶ 8; Notice ¶ 16.) Plaintiffs allege the Vehicle “contained or 5 developed defects,” including with the Powertrain Control Module and a 6 “Transmission Defect.” (Compl. ¶¶ 10, 13.) On February 27, 2020, Plaintiffs filed 7 this action in the Superior Court of California, County of Los Angeles, Case 8 No. 20STCV08077. (See Compl.) Plaintiffs assert various causes of action against 9 FCA under Song-Beverly and for fraud by omission. (Compl. ¶¶ 26–57.) They also 10 assert claims against Defendant H.W. Hunter (“Hunter”) for breach of the implied 11 warranty of merchantability and negligent repair. (Compl. ¶¶ 45–49, 58–62.) 12 FCA removed the action based on alleged diversity jurisdiction. (See Notice 13 at 3, 7.) Plaintiffs appear to be California citizens. (See Compl. ¶ 2; Notice ¶ 27.) 14 FCA is a limited liability company organized under Delaware law with its principal 15 place of business in Michigan. (Compl. ¶ 4; Notice ¶ 28.) The membership-tree of 16 FCA’s limited liability company includes companies with citizenship in the 17 Netherlands and the United Kingdom. (See Notice ¶ 28.) Hunter is a California 18 entity2. (Compl. ¶ 5; Notice ¶ 30.) Accordingly, the Court ordered the parties to show 19 cause why the action should not be remanded for lack of diversity jurisdiction as it 20 appears Hunter is not diverse from Plaintiffs. (Min. Order, ECF No. 18.) The Court 21 has received and reviewed Plaintiffs’ and FCA’s responses. (See Pls.’ Resp., ECF 22 No. 22; FCA Resp., ECF No. 24.) 23 III. LEGAL STANDARD 24 Federal courts have subject matter jurisdiction only as authorized by the 25 Constitution and Congress. U.S. Const. art. III, § 2, cl. 1; see also Kokkonen v. 26 Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). A suit filed in state court may be 27 removed to federal court only if the federal court would have had original jurisdiction 28 2 The parties offer no information as to what specific kind of legal entity Hunter is. 1 over the suit. 28 U.S.C. § 1441(a). Federal courts have original jurisdiction where an 2 action arises under federal law or where each plaintiff’s citizenship is diverse from 3 each defendant’s citizenship and the amount in controversy exceeds $75,000. Id. 4 §§ 1331, 1332(a). The removal statute is strictly construed against removal, and 5 “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal 6 in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The 7 party seeking removal bears the burden of establishing federal jurisdiction. Id. 8 Federal courts have a duty to examine their subject matter jurisdiction regardless of 9 whether the parties raise the issue. United Inv’rs Life Ins. Co., 360 F.3d at 966. The 10 court must remand the action “[i]f at any time before final judgment it appears that the 11 district court lacks subject matter jurisdiction.” 28 U.S.C. § 1447(c). 12 IV. DISCUSSION 13 FCA invokes diversity as the basis of the Court’s subject matter jurisdiction. 14 (See Notice at 3, 7.) The Supreme Court “ha[s] consistently interpreted § 1332 as 15 requiring complete diversity: In a case with multiple plaintiffs and multiple 16 defendants, the presence in the action of a single plaintiff from the same State as a 17 single defendant deprives the district court of original diversity jurisdiction over the 18 entire action.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 19 (2005). Here, Plaintiffs allege that they are California citizens and that Hunter is a 20 California business entity. (Compl. ¶¶ 2, 5.) FCA agrees. (Notice ¶¶ 27, 30; FCA 21 Resp. 2–3.) Thus, complete diversity is destroyed. However, FCA argues that the 22 Court should disregard Hunter’s citizenship because Hunter was fraudulently joined. 23 (Notice ¶¶ 30–32; FCA Resp. 6–7.) The Court disagrees. 24 “An exception to the requirement of complete diversity exists where it appears 25 that a plaintiff has fraudulently joined a ‘sham’ non-diverse defendant.” Sanchez v. 26 Lane Bryant, Inc., 123 F. Supp. 3d 1238, 1241 (C.D. Cal. 2015). If a plaintiff 27 obviously fails to state a cause of action against a resident defendant according to the 28 settled rules of the state, “the joinder of the resident defendant is fraudulent.” 1 Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007) 2 (quoting McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)); see also 3 Padilla v. AT&T Corp., 697 F. Supp. 2d 1156, 1158 (C.D. Cal. 2009) (“[A] 4 non-diverse defendant is deemed a sham defendant if . . . the plaintiff could not 5 possibly recover against the party whose joinder is questioned.”). There is a general 6 presumption against fraudulent joinder and thus “[f]raudulent joinder must be proven 7 by clear and convincing evidence.” Hamilton Materials, 494 F.3d at 1206. 8 The standard for establishing fraudulent joinder is more exacting than for 9 dismissal for failure to state a claim. See Grancare, LLC v. Thrower by & through 10 Mills, 889 F.3d 543, 549–50 (9th Cir. 2018). If there is any “possibility that a state 11 court would find that the complaint states a cause of action against any of the resident 12 defendants, the federal court must find that the joinder was proper and remand the 13 case to the state court.” Id. at 549 (quoting Hunter v. Philip Morris USA, 582 F.3d 14 1039, 1046 (9th Cir. 2009)).
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O 1 JS-6 2 3 4 5 6 7 United States District Court 8 Central District of California 9 10 11 WILLIAM GERALD BARNETT, SR. Case № 2:20-cv-03180-ODW (ASx) and DIANA T. BARNETT, 12 Plaintiffs, ORDER REMANDING ACTION 13 v. 14 FCA US LLC; H.W. HUNTER, INC.; 15 and DOES 1 through 10, inclusive, 16 Defendants. 17 18 I. INTRODUCTION 19 Plaintiffs William Gerald Barnett, Sr. and Diana T. Barnett (“Plaintiffs”) 20 initiated this action in the Superior Court of California, County of Los Angeles. 21 (Notice of Removal (“Notice”) ¶ 2, ECF No. 1; Decl. of Jennifer C. Koo, Ex. A 22 (“Compl.”), ECF No. 1-2.) Defendant FCA US LLC (“FCA”) removed the matter 23 based on alleged diversity jurisdiction. (See Notice at 3, 7.) After reviewing 24 Plaintiffs’ Complaint, FCA’s Notice of Removal, and the parties’ Responses to the 25 Court’s Order to Show Cause, the Court finds that it lacks subject matter jurisdiction 26 and consequently REMANDS this action.1 27
28 1 The Court deems the matter appropriate for sua sponte decision. United Inv’rs Life Ins. Co. v. Waddell & Reed Inc., 360 F.3d 960, 967 (9th Cir. 2004). 1 II. BACKGROUND 2 This is a Song-Beverly Consumer Warranty Act (“Song-Beverly”) action 3 concerning Plaintiffs’ 2017 Chrysler Pacifica, VIN 2C4RC1DG6HR653977 (the 4 “Vehicle”). (Compl. ¶ 8; Notice ¶ 16.) Plaintiffs allege the Vehicle “contained or 5 developed defects,” including with the Powertrain Control Module and a 6 “Transmission Defect.” (Compl. ¶¶ 10, 13.) On February 27, 2020, Plaintiffs filed 7 this action in the Superior Court of California, County of Los Angeles, Case 8 No. 20STCV08077. (See Compl.) Plaintiffs assert various causes of action against 9 FCA under Song-Beverly and for fraud by omission. (Compl. ¶¶ 26–57.) They also 10 assert claims against Defendant H.W. Hunter (“Hunter”) for breach of the implied 11 warranty of merchantability and negligent repair. (Compl. ¶¶ 45–49, 58–62.) 12 FCA removed the action based on alleged diversity jurisdiction. (See Notice 13 at 3, 7.) Plaintiffs appear to be California citizens. (See Compl. ¶ 2; Notice ¶ 27.) 14 FCA is a limited liability company organized under Delaware law with its principal 15 place of business in Michigan. (Compl. ¶ 4; Notice ¶ 28.) The membership-tree of 16 FCA’s limited liability company includes companies with citizenship in the 17 Netherlands and the United Kingdom. (See Notice ¶ 28.) Hunter is a California 18 entity2. (Compl. ¶ 5; Notice ¶ 30.) Accordingly, the Court ordered the parties to show 19 cause why the action should not be remanded for lack of diversity jurisdiction as it 20 appears Hunter is not diverse from Plaintiffs. (Min. Order, ECF No. 18.) The Court 21 has received and reviewed Plaintiffs’ and FCA’s responses. (See Pls.’ Resp., ECF 22 No. 22; FCA Resp., ECF No. 24.) 23 III. LEGAL STANDARD 24 Federal courts have subject matter jurisdiction only as authorized by the 25 Constitution and Congress. U.S. Const. art. III, § 2, cl. 1; see also Kokkonen v. 26 Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). A suit filed in state court may be 27 removed to federal court only if the federal court would have had original jurisdiction 28 2 The parties offer no information as to what specific kind of legal entity Hunter is. 1 over the suit. 28 U.S.C. § 1441(a). Federal courts have original jurisdiction where an 2 action arises under federal law or where each plaintiff’s citizenship is diverse from 3 each defendant’s citizenship and the amount in controversy exceeds $75,000. Id. 4 §§ 1331, 1332(a). The removal statute is strictly construed against removal, and 5 “[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal 6 in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The 7 party seeking removal bears the burden of establishing federal jurisdiction. Id. 8 Federal courts have a duty to examine their subject matter jurisdiction regardless of 9 whether the parties raise the issue. United Inv’rs Life Ins. Co., 360 F.3d at 966. The 10 court must remand the action “[i]f at any time before final judgment it appears that the 11 district court lacks subject matter jurisdiction.” 28 U.S.C. § 1447(c). 12 IV. DISCUSSION 13 FCA invokes diversity as the basis of the Court’s subject matter jurisdiction. 14 (See Notice at 3, 7.) The Supreme Court “ha[s] consistently interpreted § 1332 as 15 requiring complete diversity: In a case with multiple plaintiffs and multiple 16 defendants, the presence in the action of a single plaintiff from the same State as a 17 single defendant deprives the district court of original diversity jurisdiction over the 18 entire action.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 19 (2005). Here, Plaintiffs allege that they are California citizens and that Hunter is a 20 California business entity. (Compl. ¶¶ 2, 5.) FCA agrees. (Notice ¶¶ 27, 30; FCA 21 Resp. 2–3.) Thus, complete diversity is destroyed. However, FCA argues that the 22 Court should disregard Hunter’s citizenship because Hunter was fraudulently joined. 23 (Notice ¶¶ 30–32; FCA Resp. 6–7.) The Court disagrees. 24 “An exception to the requirement of complete diversity exists where it appears 25 that a plaintiff has fraudulently joined a ‘sham’ non-diverse defendant.” Sanchez v. 26 Lane Bryant, Inc., 123 F. Supp. 3d 1238, 1241 (C.D. Cal. 2015). If a plaintiff 27 obviously fails to state a cause of action against a resident defendant according to the 28 settled rules of the state, “the joinder of the resident defendant is fraudulent.” 1 Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007) 2 (quoting McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)); see also 3 Padilla v. AT&T Corp., 697 F. Supp. 2d 1156, 1158 (C.D. Cal. 2009) (“[A] 4 non-diverse defendant is deemed a sham defendant if . . . the plaintiff could not 5 possibly recover against the party whose joinder is questioned.”). There is a general 6 presumption against fraudulent joinder and thus “[f]raudulent joinder must be proven 7 by clear and convincing evidence.” Hamilton Materials, 494 F.3d at 1206. 8 The standard for establishing fraudulent joinder is more exacting than for 9 dismissal for failure to state a claim. See Grancare, LLC v. Thrower by & through 10 Mills, 889 F.3d 543, 549–50 (9th Cir. 2018). If there is any “possibility that a state 11 court would find that the complaint states a cause of action against any of the resident 12 defendants, the federal court must find that the joinder was proper and remand the 13 case to the state court.” Id. at 549 (quoting Hunter v. Philip Morris USA, 582 F.3d 14 1039, 1046 (9th Cir. 2009)). Courts should decline to find fraudulent joinder where “a 15 defendant raises a defense that requires a searching inquiry into the merits of the 16 plaintiff’s case, even if that defense, if successful, would prove fatal.” Id. at 549–50. 17 FCA fails to show that there is no possibility Hunter can be liable on Plaintiffs’ 18 claims. Plaintiffs assert two claims against Hunter, breach of implied warranty of 19 merchantability and negligent repair. (Compl. ¶¶ 45–49, 58–62.) As to the negligent 20 repair claim, the “elements of negligence are duty, breach, causation, and damages.” 21 Sabicer v. Ford Motor Co., 362 F. Supp. 3d 837, 840 (C.D. Cal. 2019) (citing Burgess 22 v. Superior Court, 2 Cal. 4th 1064, 1072 (1992)). Plaintiffs allege that they delivered 23 the Vehicle to Hunter for repairs; Hunter owed them a duty to use ordinary care and 24 skill in the storage, preparation, and repair of the Vehicle; Hunter breached its duty by 25 failing to properly store, prepare, and repair the Vehicle in accordance with industry 26 standards; and this breach caused Plaintiffs’ to suffer damages. (Compl. ¶¶ 58–62.) 27 Although FCA argues the allegations against Hunter are thin, any potential deficiency 28 could easily be cured by granting Plaintiffs leave to amend. See Grancare, 889 F.3d 1 at 549; Revay v. Home Depot U.S.A., Inc., No. 2:14-CV-03391-RSWL (ASx), 2015 2 WL 1285287, at *3 (C.D. Cal. Mar. 19, 2015) (emphasis added) (quoting Hunter, 582 3 F.3d at 1044) (“If there is ‘any possibility that the state law might impose liability on a 4 resident defendant under the circumstances alleged in the complaint,’ or in a future 5 amended complaint, ‘the federal court cannot find that joinder of the resident 6 defendant was fraudulent, and remand is necessary.’”). 7 FCA also fails to show the economic loss rule precludes Plaintiffs’ negligent 8 repair claim. (See FCA Resp. 8–9.) Plaintiffs allege defects to various components, 9 including the fuel pressure sensor, powertrain control module, and transmission, and 10 that Hunter failed to “properly store, prepare and repair” the Vehicle, which caused 11 them damages. (Compl. ¶¶ 10, 13, 61–62.) “The economic loss rule would not 12 necessarily bar recovery in tort for damage that these subcomponents cause to the 13 engine as a whole or for damage that the engine caused to the Vehicle in which it has 14 been incorporated.” Lopez v. Ford Motor Co., No. CV 19-4779-GW (FFMx), 2019 15 WL 5444391, at *2 (C.D. Cal. July 18, 2019) (internal quotation marks omitted) 16 (citing Sabicer v. Ford Motor Co., 362 F. Supp. 3d 837, 841 (C.D. Cal. 2019)). 17 Notably, FCA studiously ignores the “growing body of case law recognizing that local 18 dealerships can be liable to plaintiffs who assert negligent repair claims.” See 19 Valenciano v. FCA US LLC, No. CV 20-03197-CJC (ASx), 2020 WL 1699552, at *3 20 (C.D. Cal. Apr. 8, 2020) (collecting cases). 21 FCA has not met its burden to establish by clear and convincing evidence that 22 joinder of Hunter was fraudulent. Accordingly, the Court cannot disregard its 23 citizenship and the parties are not completely diverse. The action was improperly 24 removed and must therefore be remanded to the Los Angeles County Superior Court. 25 See 28 U.S.C. § 1447(c). 26 V. CONCLUSION 27 For the reasons discussed above, the Court REMANDS the action to the 28 Superior Court of the State of California, County of Los Angeles, Stanley Mosk 1 | Courthouse, 111 North Hill Street, Los Angeles, CA 90012, Case No. 20STCV08077. 2 || The Clerk of the Court shall close the case. 3 4 IT IS SO ORDERED. 5 6 May 18, 2020 7 . Gud dai 9 OTIS D. WRIGHT, II 0 UNITED STATES DISTRICT JUDGE
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