Verastegui v. Ford Motor Company ( 2020 )

1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 8 STEVE M VERASTEGUI, Case No. 19-cv-04806-BLF 9 Plaintiff, ORDER DENYING MOTION TO REMAND 10 v. 11 [Re: ECF 16] 12 FORD MOTOR COMPANY, et al., 13 14 Defendants. 15 Before the Court is Plaintiff Steve Verastegui’s motion to remand for lack of diversity 16 jurisdiction. Mot. to Remand, ECF 16. Verastegui brings this suit against Ford Motor Company 17 and Chino Hills Ford (together, “Defendants”) alleging violations of the Song-Beverly Act and 18 negligent repair, respectively. Compl., ECF 1-2. Defendants removed this action from Santa 19 Clara Superior Court on diversity grounds. Not. of Removal, ECF 1. At issue is whether the 20 federal “amount in controversy” requirement has been satisfied. Pursuant to Civil Local Rule 7- 21 1(b), the Court finds that the matter is suitable for disposition without oral argument and 22 VACATES the hearing set on April 2, 2020. For the reasons discussed below, the Court DENIES 23 the motion to remand. 24 I. BACKGROUND 25 On or about August 2009, Verastegui purchased a 2010 Ford Focus (the “Vehicle”). See 26 Compl. ¶ 8. The purchase came with three express written warranties: (1) a 3-year/36,000 mile 27 express bumper to bumper warranty, (2) a 5-year/60,000 mile powertrain warranty which, inter 1 alia, covers the engine and transmission and, (3) an 8-year/100,000 mile hybrid electrical part 2 warranty. Id. ¶ 9. The warranties provided that in the event a defect developed with the Vehicle 3 during the warranty period, “Plaintiff could deliver the Vehicle for repair services to Defendant 4 [Ford]’s representatives and the Vehicle would be repaired.” Id. 5 During the warranty period, the Vehicle either contained or developed numerous defects 6 that substantially impaired its use, value, or safety. Compl. ¶ 10. For example, the Vehicle 7 contained or developed defects relating to the engine, powertrain control module, throttle body, 8 A/C, and battery, among others. Id. Verastegui alleges that “the Defendant and its representative 9 were aware that they were unable to service or repair” the Vehicle to conform to the applicable 10 warranties. Id. ¶ 13. At least once, Verastegui brought the Vehicle to Chino Hills Ford for 11 substantial repair. Id. ¶ 51. Verastegui alleges that Chino Hills Ford owed Verastegui a duty to 12 use ordinary care and skill to repair the Vehicle, and that Chino Hills Ford breached this duty by 13 failing to properly store, prepare, and repair the Vehicle in accordance with industry standards. Id. 14 ¶¶ 51-53. 15 On July 3, 2019, Verastegui filed a Complaint in Santa Clara County Superior Court 16 against Chino Hills Ford and Ford. See generally Compl. Based on the above allegations, 17 Verastegui asserts six causes of action against Ford alone for violating the Song-Beverly 18 Consumer Warranty Act and fraud by omission, and one cause of action against Chino Hills Ford 19 for negligent repair. Id. ¶¶ 12-54. Verastegui’s sole claim against Chino Hills Ford alleges that 20 Chino Hills Ford’s negligent breach of its duty proximately caused Verastegui’s damages. Id. ¶ 21 54. 22 On August 14, 2019, Defendants filed a notice of removal on the basis of diversity 23 jurisdiction. See Not. of Removal. Verastegui moved to remand this action back to state court on 24 December 16, 2019, claiming that the amount in controversy does not meet the jurisdictional 25 threshold. Mot. to Remand at 1. Defendants oppose the Motion to Remand, arguing that the 26 amount in controversy exceeds $75,000. Opposition to Motion to Remand (“Opp’n.”) at 1, ECF 27 19. II. LEGAL STANDARD 1 “[A]ny civil action brought in a State court of which the district courts of the United States 2 have original jurisdiction, may be removed by the defendant or the defendants, to the district court 3 of the United States for the district and division embracing the place where such action is 4 pending.” 28 U.S.C. § 1441(a). “A defendant may remove an action to federal court based on 5 federal question jurisdiction or diversity jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 6 1039, 1042 (9th Cir. 2009) (citing 28 U.S.C. § 1441(a)). 7 District courts have diversity jurisdiction over all civil actions between citizens of different 8 states where the amount in controversy exceeds $75,000, exclusive of interests and costs. 28 9 U.S.C. § 1332. If the district court determines that it lacks jurisdiction, the action should be 10 remanded back to the state court. Martin v. Franklin Capital Corp., 546 U.S. 132, 134 (2005). 11 The Ninth Circuit recognizes a “strong presumption against removal.” Gaus v. Miles, Inc., 980 12 F.2d 564, 566 (9th Cir. 1992) (internal quotations omitted). Thus, “[f]ederal jurisdiction must be 13 rejected if there is any doubt as to the right of removal in the first instance.” Id. The court 14 “resolves all ambiguity in favor of remand.” See Matheson v. Progressive Specialty Ins. Co., 319 15 F.3d 1089, 1090 (9th Cir. 2003). 16 III. DISCUSSION 17 The parties do not meaningfully dispute that complete diversity of citizenship among the 18 parties has been established.1 The parties agree Ford is a citizen of Delaware and Michigan, and 19 Chino Hills Ford is a citizen of Nevada. Opp’n. at 2; Mot. to Remand at 6. Plaintiff is a resident 20 of California. Compl. ¶ 2. Therefore, the only issue in dispute is whether the amount in 21 controversy is satisfied. 22 “[W]hen a complaint filed in state court alleges on its face an amount in controversy 23 sufficient to meet the federal jurisdictional threshold, such requirement is presumptively satisfied 24 25 1 Plaintiff rejects Defendants’ argument, advanced in the Notice of Removal, that Chino Hills was 26 fraudulently joined because Plaintiff concedes that Chino Hills is a citizen of Nevada and, thus, Chino Hills was not joined to defeat diversity. Mot. to Remand at 6-7; see also Not. of Removal 27 ¶¶ 21-41. Defendants argue that Plaintiff’s residence in California established his citizenship, a 1 unless it appears to a legal certainty that the plaintiff cannot actually recover that amount.” 2 Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007). “Where it is unclear or 3 ambiguous from the face of a state-court complaint whether the requisite amount in controversy is 4 pled, . . . we apply a preponderance of the evidence standard.” Id. Further, when “the plaintiff 5 after removal, by stipulation, by affidavit, or by amendment of his pleadings, reduces the claim 6 below the requisite amount, this does not deprive the district court of jurisdiction.” St. Paul 7 Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 292 (1938). 8 The parties’ disagreement over the amount in controversy arises primarily from the 9 ambiguity in the Complaint regarding damages. In his Complaint, Plaintiff alleges “damages in an 10 amount that is not less than $25,001.00.” Compl. ¶ 11. The Complaint also alleged that “Plaintiff 11 is entitled to a civil penalty of two times Plaintiffs actual damages pursuant to Civil Code section 12 1794, subdivision (c).” Id. ¶ 15. Plaintiff argues that the word “damages” references Plaintiff’s 13 total damages, which include both actual damages and civil penalties, and that Defendants have 14 failed to demonstrate that these total damages exceed the jurisdictional threshold of $75,000. Mot. 15 to Remand at 4. Defendant, on the other hand, argues that “Plaintiff has alleged damages of 16 greater than $25,000 and a penalty of twice the amount of damages, or at least $50,000,” resulting 17 in an amount exceeding $75,000. Opp’n at 3. 18 The Court agrees with Defendants’ interpretation of the Complaint because Plaintiff’s 19 characterization of his claims for damages is contradicted by the Complaint. Plaintiff seeks “the 20 remedies provided in California Civil Code section 1794(b)(1), including the entire contract 21 price.” Compl. ¶ 21. The contract price of the vehicle was $36,580. Opp’n. Exh. A, ECF 19-2. 22 “Plaintiff’s claim for the full contract price of [his] Vehicle thus resolves any ambiguity regarding 23 damages—the allegation that [he] ‘suffered damages in a sum to be proven at trial in an amount 24 not less than $25,001.00’ must be interpreted to refer to actual damages exclusive of civil 25 penalties.” Covarrubias v. Ford Motor Co., No. 19-CV-01832-EMC, 2019 WL 2866046, at *6 26 (N.D. Cal. July 3, 2019); see also Compl. ¶ 11. 27 As for civil penalties, Plaintiff seeks “a civil penalty of two times [plaintff’s] actual 1 that “the civil penalty under the Song-Beverly Act is akin to punitive damages” and may be used 2 as such for the purpose of calculating amount in controversy. Brady v. Mercedes-Benz USA, Inc., 3 243 F.Supp.2d 1004, 1009 (N.D. Cal. 2002). Further, it is well established that the amount in 4 controversy for diversity jurisdiction may include punitive damages if recoverable under state law. 5 See Davenport v. Mutual Ben. Health & Acc. Ass’n, 325 F.2d 785, 787 (9th Cir. 1963) (“[P]unitive 6 damages may be included in computing amount necessary for federal jurisdiction.”). 7 Defendants argue that “Plaintiff has alleged damages of greater than $25,000 and a penalty 8 of twice the amount of damages, or at least $50,000” resulting in an amount-in-controversy that 9 exceeds $75,000. Plaintiff responds that Defendants “have proffered no evidence whatsoever that 10 Plaintiff is entitled to the maximum civil penalties allowed—or, indeed, any penalties at all[.]” 11 Reply at 2. That Plaintiff now asserts he might recover damages that are less than what he seeks in 12 his Complaint “does not change the fact that his Complaint put in controversy far more than that.” 13 Carlos v. Jaguar Land Rover N. Am., LLC, No. CV 19-1318-GW(FFMX), 2019 WL 2068465, at 14 *3 (C.D. Cal. May 10, 2019); see also Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 400 (9th Cir. 15 2010) (“The amount in controversy is simply an estimate of the total amount in dispute, not a 16 prospective assessment of defendant's liability.”); Fong v. Regis Corp., No. C 13-04497 RS, 2014 17 WL 26996, at *2 (N.D. Cal. Jan. 2, 2014) (“The ultimate inquiry is what amount is put ‘in 18 controversy’ by the plaintiff's complaint, not what a defendant will actually owe.”) (citing Korn v. 19 Polo Ralph Lauren Corp., 536 F. Supp. 2d 1199, 1205 (E.D. Cal. 2008)). The Court concludes that 20 Plaintiff has “put in controversy” civil penalties exceeding $50,000. 21 The Court recognizes that courts in this district have varying views as to whether the 22 maximum civil penalties should be considered when deciding the amount in controversy. Compare 23 Makol v. Jaguar Land Rover N. Am., LLC, No. 18-CV-03414-NC, 2018 WL 3194424, at *3 (N.D. 24 Cal. June 28, 2018) (“Simply assuming a civil penalty award is inconsistent with the principle that 25 the defendants must provide evidence that it is more likely than not that the amount in controversy 26 requirement is satisfied.”) (citation omitted) with Neville v. W. Recreational Vehicles, Inc., No. C- 27 07-3757MMC, 2007 WL 4197414, at *2 (N.D. Cal. Nov. 21, 2007) (“The Song-Beverly penalty of 1 minimum); Covarrubias, 2019 WL 2866046, at *6 (adding the maximum recoverable civil penalties 2 to the amount in controversy); Bernstein v. BMW of N. Am., LLC, No. 18-CV-01801-JSC, 2018 WL 3 || 2210683, at *2 (N.D. Cal. May 15, 2018) (“Two times Plaintiffs $25,000 valuation is $50,000 4 || which totals $75,000 exclusive of attorney’s fees.”). As discussed above, the Court is persuaded by 5 the decisions in which courts have considered the maximum recoverable civil penalties because that 6 || is what Plaintiff put in controversy. 7 Additionally, Plaintiff seeks attorneys’ fees pursuant to Civil Code section 1794, 8 subdivision (d). Compl., Prayer at (e). Attorneys’ fees may be included in the amount in 9 controversy if, as here, they are recoverable by statute. Galt G/S v. JSS Scandinavia, 142 F.3d 10 1150, 1155-56 (9th Cir. 1998). The Ninth Circuit recently explained that “when a statute or 11 contract provides for the recovery of attorneys’ fees, prospective attorneys’ fees must be included 12 || in the assessment of the amount in controversy.” Arias v. Residence Inn by Marriott, 936 F.3d 13 || 920, 922 (9th Cir. 2019). Defendants estimate that attorneys’ fees “in these type of cases” exceed 14 |} $50,000. Opp’n at 7, ECF 1-695. Plaintiff objects to Defendants’ estimate. Reply at 4. The 3 15 Court need not consider Defendants’ estimate because once actual damages and civil penalties are a 16 || added (as well as attorney’s fees in any amount), the total amount in controversy exceeds $75,000. 3 17 Although Lemon Law cases brought solely under California law are best litigated in state 18 court, Defendants have met their burden of proving, by a preponderance of evidence, that the 19 amount in controversy exceeds the jurisdictional threshold. Accordingly, Defendants have 20 || established both the diversity and amount-in-controversy prerequisites to invoking the Court’s 21 subject matter jurisdiction under 28 U.S.C. § 1332(a). 22 || IV. ORDER 23 For the foregoing reasons, the Court DENIES Plaintiff's Motion to Remand. 24 95 IT IS SO ORDERED 46 || Dated: February 7, 2020 kom Lh hon tn 27 Me BETH LABSON FREEMAN 28 United States District Judge