The opinion of the court was delivered by: Chen, United States Magistrate Judge
ORDER FINDING DIVERSITY
JURISDICTION PROPERLY VESTS
WITH THE COURT
On January 12, 2000, John Brady leased from a dealer of Mercedes Benz
USA, Inc. (hereinafter referred to as "MBUSA"), a 2000 Mercedes Benz SLK
(hereinafter referred to as the "Automobile"). Comp.,
¶ 5. Pursuant to the lease agreement, Brady made a down payment in
the amount of $1449.99 (initial lease payment, license, registration and
document fees) and agreed to make thirty-five additional monthly payments
in the amount of $755.50. May 16, 2002 Decl. of Gregg M. Audet, ¶
4, Ex. B.
Brady received with the Automobile, an express written warranty which
provided, in relevant part, that in the event a defect developed with the
Automobile during the warranty period, Brady could deliver the Automobile
for repair to any MBUSA designated repair facility. Compl., ¶ 7.
According to Brady, within the warranty period, the "automobile
developed several non-conformities, defects, and conditions affecting the
safety, value, or use of this vehicle including, [a] defective
transmission, gear shifting devises and apparatuses, [b] defective air
conditioning, and [c] various other and related malfunctions and
defects." Compl., ¶ 8. Brady brought the Automobile to MBUSA
designated repair facilities, which were "unable to service or repair the
Automobile to conform to the applicable express warranties after a
reasonable number of attempts." Compl., ¶ 8.
The first repair order was dated July 22, 2000 and indicated mileage on
that date to be 7,381 miles. July 2, 2002 Decl. of Darrel C. Horsted,
On October 29, 2001, plaintiff Brady filed a complaint in San Francisco
Superior Court for, inter alia, violations of the Song-Beverly Consumer
Warranty Act, Cal. Civ. Code § 1794, et seq., against defendant
MBUSA. The Song-Beverly Consumer Warranty Act (hereinafter referred to as
the "Song-Beverly Act") applies to warranties given for many types of
consumer goods in addition to automobiles and is often referred to as
California's "lemon law." Cal. Civ. Code § 1794, et seq. It also
regulates express warranties, including service contracts, covering
consumer goods. Cal. Civ. Code § 1794, et seq. Enacted in 1970 to
improve the lot of consumers who purchase defective products, the
Song-Beverly Act contains substantive regulations of warranty terms,
disclosure requirements and strengthened consumer remedies. National
R.V., Inc. v. Foreman, 34 Cal.App.4th 1072, 1077 (1995).
Brady alleged that MBUSA:  failed to repair defects within
reasonable number of attempts;  failed to commence repairs within
reasonable time and failed to repair defects within 30 days;  violated
Cal. Civ. Code §§ 1793.2(a) and (b) (failure to maintain sufficient
service and repair facilities), § 1794 (failure to provide service
and repair facilities with sufficient literature and parts), and §
1791.2(b) (breach of express warranties created by sample or model); 
breached the express written warranty; and  breached an implied
warranty of merchantability.
Brady seeks: [i] general damages; [ii] a civil penalty of twice the
amount of Brady's total damages pursuant to Cal. Civ. Code §§ 1794(c)
and (e);*fn1 [iii] consequential and incidental damages; [iv] costs of
suit, reasonable attorney's fees and prejudgment interest at the legal
rate; and [v] such other relief as the Court may deem proper.
The Court, having reviewed the briefs, supporting documentation and
record in this case, as well as having heard the argument of counsel on
the June 26, 2002 hearing, finds that diversity jurisdiction properly
vests in this Court.
The removal statute, 28 U.S.C. § 1441, provides in part, "any civil
action brought in a State court of which the district courts of the
United States have original jurisdiction, may be removed by the defendant
. . . to the district court of the United States for the district and
division embracing the place where such action is pending."
28 U.S.C. § 1441(a). District courts have diversity jurisdiction over
all civil actions between citizens of different states where the amount
in controversy exceeds $75,000, exclusive of interest and costs.
28 U.S.C. § 1332; see Gibson v. Chrysler Corp., 261 F.3d 927, 934
(9th Cir. 2001), cert. denied, 122 S.Ct. 903 (2002); Lee v. Am. Nat'l
Ins. Co., 260 F.3d 997, 1004 (9th Cir. 2001), cert. denied, 122 S.Ct.
1299 (2002). While there is no dispute that the parties are from
different states, an issue exists as to the amount in controversy in the
case at bar.
1. Compensatory damages included in the amount in controversy
Brady seeks compensation as provided for in the Song-Beverly Act.
Specifically, Cal. Civ. Code § 1793.2(d)(2)(B) provides that the
measure damages in an action such as this one includes, inter alia,
restitution "in an amount equal to the purchase price paid or payable by
the buyer," reduced by that amount "directly attributable to use by the
buyer" prior to delivery of the vehicle back to the dealer for correction
of the problem that gave rise to the nonconformity with the warranty. The
set-off amount is determined by multiplying the "actual price of the new
motor vehicle paid or payable by the buyer . . . by a fraction having its
denominator 120,000 and having as its numerator the number of miles
traveled by the new motor vehicle prior to the time the buyer delivered
the vehicle" for correction of the problem. Cal. Civ. Code §
1793.2(d)(2)(C). The Song-Beverly Act applies to leases as well as
purchases of consumer goods. Cal. Civ. Code § 1794.4. The lessee is
provided the same rights against the lessor (if the leased goods are from
lessor's inventory) that the lessee would have had the goods been
purchased by the lessee. Cal. Civ. Code § 1795.4(c). Thus, the
Song-Beverly Act's provision that the consumer may obtain restitution of
the "actual price paid" under § 1793.2(d)(2)(B) applies to auto
leases as well as purchases.
However, the Act does not specifically explain how "actual price paid
or payable by the buyer" is defined in the context of an automobile
lease. Does the "actual price paid or payable" extend to only those
payments made in fact by the lessee or to all payments which might be due
for the remainder of the lease term? Should it include an early
termination fee provided in the lease? Does it include the estimate of
total title, license and registration fees and total sales tax ...