United States District Court, N.D. California
ORDER GRANTING MOTION TO REMAND RE: DKT. NO.
10
VINCE
CHHABRIA UNITED STATES DISTRICT JUDGE
Ford
removed this case on the theory that complete diversity
exists because Cerritos Ford, a California corporation, was
fraudulently joined. But while the complaint's
allegations against Cerritos Ford are thin, it seems possible
that Escalante could succeed on his negligent repair claim
against the dealer - or that, at the very least, any
“deficiency in the complaint [could] possibly be cured
by granting the plaintiff leave to amend.”
Grancare, LLC v. Thrower by and through Mills, 889
F.3d 543, 550 (9th Cir. 2018).
Ford
argues that the negligent repair claim is barred by the
economic loss rule. But the contours of this rule under
California tort law are not clear enough to provide
“extraordinarily strong . . . arguments that
[Escalante] could not possibly prevail on [his] claims
against the allegedly fraudulently joined defendant.”
Id. at 548. California courts often conduct a
somewhat open-ended analysis when determining whether a
defendant can be held liable in negligence for particular
kinds of injuries. See Southern California Gas Leak
Cases, 7 Cal. 5th 391, 401 (2019) (“Deciding
whether to impose a duty of care turns on a careful
consideration of the sum total of the policy considerations
at play, not a mere tallying of some finite,
one-size-fits-all set of factors.”). Furthermore,
Escalante contends that his claim falls under the rule
articulated in Jimenez v. Superior Court, 29 Cal.4th
473, 483 (2002), that “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.” To be sure, it's uncertain whether
the Jimenez rule would apply to a claim for
negligent performance of services where the parties are in
privity. Cf. Aas v. Superior Court, 24 Cal.4th 627
(2000) (applying economic loss rule to claim involving
negligent performance of services). And it's also
questionable whether the facts of this case, as laid out in
the negligent repair section of the complaint, would support
such a claim. See Dkt. 1-1 ¶ 45 (alleging that
Cerritos Ford “fail[ed] to properly store, prepare, and
repair the Subject Vehicle in accordance with industry
standards”). But Escalante does elsewhere allege
problems with many distinct subcomponents of the vehicle,
which suggests that even if the current complaint does not
adequately state a Jimenez claim, it could perhaps
be amended to do so. See Id. ¶ 10. In sum,
determining the application of the economic loss rule here
would require “a searching inquiry into the merits of
the plaintiff's case”-an inquiry beyond the scope
of fraudulent joinder analysis. Grancare, 889 F.3d
at 549. Since there is “a possibility that a state
court would find that the complaint states a cause of action
against” Cerritos Ford, the dealership was not
fraudulently joined. See Id. (quoting Hunter v.
Philip Morris USA, 582 F.3d 1039, 1046 (9th Cir.
2009)).[1]
Ford
also requests that the Court sever Cerritos Ford to create
complete diversity, citing Rule 21 of the Federal Rules of
Civil Procedure and Sams v. Beech Aircraft Corp.,
625 F.2d 273 (9th Cir. 1980). But while some federal district
courts have contemplated the possibility of severance to
facilitate removal, such an application of Rule 21 seems
improper. See Allen v. FDIC, 710 F.3d 978, 984 (9th
Cir. 2013) (“[F]ederal jurisdiction is determined at
the time of removal.”); In re Roundup Products
Liability Litigation, 2019 WL 6122004 (N.D. Cal. Nov.
19, 2019) (“Federal Rule of Civil Procedure 21 does not
permit an end-run around the narrowly cabined doctrine of
fraudulent joinder and the already-questionable doctrine of
fraudulent misjoinder.”). Regardless, it's unclear
on the current record how closely related the claims against
Cerritos Ford are to the claims against Ford Motor Company,
which makes it impossible for the Court to assess whether
severance would even make sense.
Because
Ford has failed to establish complete diversity, this Court
lacks subject-matter jurisdiction over this action. The case
is ordered remanded to the Santa Clara County Superior Court,
and the Clerk of the Court is ordered to close the case.
IT IS
SO ORDERED.
---------
Notes:
[1] It's worth noting also that
California district courts have been virtually unanimous in
rejecting Ford's fraudulent joinder argument relating to
negligent repair and the economic loss rule. See,
e.g., Sabicer v. Ford Motor Co., 362 F.Supp.3d
837, 842 (C.D. Cal. 2019); Gayou v. Ford Motor Co.,
2019 WL 1325846, at *3 (C.D. Cal. Mar. 25, 2019); Ruiz v.
FCA U.S. LLC, 2019 WL 4137613, at *3 (C.D. Cal. May 31,
2019); McAdams v. Ford Motor Co., 2019 WL 2378397,
at *4-5 (N.D. Cal. June 5, 2019); White v. Ford Motor
Co., 2019 WL 6694735, at *4 (N.D. Cal. Nov. 21, 2019);
Millican v. Ford Motor Co., ...