Velazquez v. Ford Motor Company

Filing 17

ORDER Granting #11 Plaintiff's Motion to Remand this Action for Lack of Subject Matter Jurisdiction, signed by District Judge Dale A. Drozd on 07/13/2021. Remanded to Kings County Superior Court. Copy of remand order sent. CASE CLOSED.(Maldonado, C)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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ARTURO VELAZQUEZ,

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No. 1:21-cv-00258-DAD-EPG

Plaintiff,
v.
FORD MOTOR COMPANY, et al.,
Defendants.

ORDER GRANTING PLAINTIFF’S MOTION
TO REMAND THIS ACTION FOR LACK OF
SUBJECT MATTER JURISDICTION
(Doc. No. 11)

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This matter is before the court on plaintiff’s motion to remand this action to the Kings

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County Superior Court. (Doc. No. 11.) Pursuant to General Order No. 617 addressing the public

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health emergency posed by the COVID-19 pandemic, plaintiff’s motion was taken under

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submission on the papers. (Doc. No. 13.) For the reasons explained below, the court will grant

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plaintiff’s motion to remand.

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BACKGROUND
On November 24, 2020, plaintiff Arturo Velazquez filed this action against defendants

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Ford Motor Company (“Ford”) and Does 1 through 10, inclusive, in the Kings County Superior

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Court. (Doc. No. 1-3.) Therein, plaintiff alleged the following. On or about December 18, 2018,

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plaintiff purchased a 2018 Ford Fiesta. (Doc. No. 11 at 7.) During the warranty period, the

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vehicle experienced serious defects related to the airbag system, the engine, the temperature
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sensor, the actuator, and other electrical system defects and nonconformities. (Id.) Plaintiff

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presented the vehicle to Ford’s authorized repair centers on four occasions in the hopes of

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repairing the vehicle, and he contacted Ford asking that Ford buy back the vehicle pursuant to

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California’s lemon law. (Id.) Ford refused to comply and failed to repair the vehicle. (Id.) As a

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result, plaintiff brought this civil action in state court asserting claims under California’s Song-

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Beverly Consumer Warranty Act against defendants for breach of express and implied warranty.

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(Id. at 3.)

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On February 24, 2021, defendant Ford removed the action to this court pursuant to
28 U.S.C. §§ 1332, 1441, and 1446, on the grounds that diversity jurisdiction exists because

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plaintiff and defendant Ford are citizens of different states and the amount in controversy is at

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least $75,000. (Doc. No. 1.)

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On March 26, 2021, plaintiff moved to remand this action to the Kings County Superior

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Court because defendant’s removal was untimely, diversity jurisdiction is lacking, and because

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principles of comity weight in favor of this matter remaining in state court. (Doc. No. 11 at 1–2.)

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Pursuant to 28 U.S.C. § 1447(c), plaintiff also requests that the court award him attorneys’ fees

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and expenses that he has incurred as a result of defendant’s allegedly defective and improper

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removal of this action to federal court. (Id. at 15.) On April 20, 2021, defendant Ford filed an

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opposition to plaintiff’s motion to remand. (Doc. No. 15.) On April 27, 2021, plaintiff filed a

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reply thereto. (Doc. No. 16.)

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LEGAL STANDARD
A suit filed in state court may be removed to federal court if the federal court would have

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had original jurisdiction over the suit. 28 U.S.C. § 1441(a). Removal is proper when a case

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originally filed in state court presents a federal question or where there is diversity of citizenship

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among the parties and the amount in controversy exceeds $75,000. See 28 U.S.C. §§ 1331,

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1332(a).

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“If at any time before final judgment it appears that the district court lacks subject matter

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jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). “The removal statute is strictly

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construed against removal jurisdiction, and the burden of establishing federal jurisdiction falls to
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the party invoking the statute.” California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th

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Cir. 2004) (citation omitted); see also Provincial Gov’t of Marinduque v. Placer Dome, Inc., 582

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F.3d 1083, 1087 (9th Cir. 2009) (“The defendant bears the burden of establishing that removal is

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proper.”). If there is any doubt as to the right of removal, a federal court must reject jurisdiction

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and remand the case to state court. Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089,

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1090 (9th Cir. 2003); see also Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1118 (9th Cir. 2004).

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The defendant seeking removal of an action from state court bears the burden of establishing

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grounds for federal jurisdiction by a preponderance of the evidence. Hunter v. Philip Morris

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USA, 582 F.3d 1039, 1042 (9th Cir. 2009). The district court must remand the case “[i]f at any

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time before final judgment it appears that the district court lacks subject matter jurisdiction.” 28

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U.S.C. § 1447(c); see also Smith v. Mylan, Inc., 761 F.3d 1042, 1044 (9th Cir. 2014); Bruns v.

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NCUA, 122 F.3d 1251, 1257 (9th Cir. 1997).

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DISCUSSION

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In moving for remand, plaintiff contends that defendant Ford fails to establish facts

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necessary to support this federal court’s diversity jurisdiction over the action. Diversity

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jurisdiction exists in actions between citizens of different states where the amount in controversy

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exceeds $75,000 exclusive of interest and costs. 28 U.S.C. § 1332.

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A.

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Amount in Controversy
In addition to diversity of citizenship, the party asserting diversity jurisdiction also bears

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the burden of proving by a preponderance of the evidence that the amount in controversy exceeds

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$75,000. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). The amount

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in controversy, which must be determined as of the date of removal, see Conrad Assoc. v.

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Hartford Accident & Indem. Co., 994 F. Supp. 1196, 1200 (N.D. Cal. 1998), “is simply an

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estimate of the total amount in dispute, not a prospective assessment of [the] defendant’s

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liability.” Lewis v. Verizon Comms. Inc., 627 F.3d 395, 400 (9th Cir. 2010). “In calculating the

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amount in controversy, a court must assume that the allegations in the complaint are true and that

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a jury will return a verdict for plaintiffs on all claims alleged.” Page v. Luxottica Retail North

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Am., No. 2:13-cv-01333-MCE-KJN, 2015 WL 966201, at *2 (E.D. Cal. Mar. 4, 2015) (citing

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Korn v. Polo Ralph Lauren Corp., 536 F. Supp. 2d 1199, 1205 (E.D. Cal. 2008)).

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In an action brought pursuant to the Song-Beverly Act, a plaintiff may recover “in an

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amount equal to the actual price paid or payable by the buyer,” reduced by “that amount directly

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attributable to use by the buyer.” Cal. Civ. Code § 1793.2(d)(B)–(C). Additionally, a buyer who

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establishes a willful violation of the Song-Beverly Act may recover a civil penalty of up to “two

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times the amount of actual damages.” Cal. Civ. Code § 1794(c).

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Defendant argues that plaintiff’s actual and consequential damages, plus the two-times
civil penalty and attorneys’ fees available under Song-Beverly, together satisfy the amount in

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controversy. (Doc. No. 15 at 10–13.) In the notice of removal, defendant contends that the

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purchase price of the vehicle in question plus the estimated incidental and consequential damages

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equals $26,983.33. (Doc. No. 1 at 6.) Defendant consequently asserts that the two-times civil

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penalty pursuant to Song-Beverly would equal $53,966.66 and that the civil penalty plus the

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actual damages would therefore total $80,949.99, surpassing the $75,000 threshold required for

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the amount in controversy requirement. (Id.) Finally, defendant argues that the amount in

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controversy includes reasonable estimates of attorneys’ fees, which would further bolster the

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amount in controversy here. (Id.)

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In his opposition, plaintiff argues that he is not requesting the original purchase price, but

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rather “‘plaintiff is entitled to reimbursement of the purchase price paid for the subject vehicle

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less that amount directly attributable to use by the plaintiff prior to the discovery of the

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nonconformities.”’ (Doc. No. 11) (citing Doc. No. 1-3 at ¶ 17) (emphasis in original). According

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to plaintiff, the mileage use offset in this case would be $2,309.73. (Doc. No. 11 at 13.)

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Moreover, plaintiff contends that defendant will seek deductions in this case for nonmanufacturer

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items installed by a dealer or the buyer, which in this instance amounts to “$2,995.00 for a service

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contract and $895.00 for a GAP insurance product.” (Id.) These offsets would bring the actual

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damages total to $17,283.60. (Doc. No 15 at 10.)

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In its reply, defendant acknowledges plaintiff’s $17,283.60 total but argues that “[t]he
amount in controversy is established by what a plaintiff demands by way of their Complaint, not
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by any reductions that a defendant might achieve through its defenses.” (Doc. No. 15 at 9) (citing

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Geographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1108 (9th Cir.

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2010)). Additionally, defendant emphasizes that even if the court were to consider the lower

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amount in actual damages, “[w]hen factoring in Plaintiff’s claims for attorney’s fees, the amount

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in controversy clearly exceeds $75,000.00.” (Doc. No. 15 at 10.)

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As plaintiff correctly points out, his complaint seeks only the purchase price less the

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amount attributable to use of the vehicle by him prior to the discovery of the nonconformities.

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Thus, the court concludes that the lesser $17,283.60 total does stem directly from what plaintiff

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demands in his complaint. Consequently, as defendant’s own calculations make evident,

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plaintiff’s total potential damages are $51,850.80 after factoring in the two-times civil penalty.1

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(Doc. No. 15 at 10.) This is $23,149.20 short of satisfying the necessary amount in controversy

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for purposes of diversity jurisdiction.
The Song-Beverly Act does provide for an award of attorney’s fees. Cal. Civ. Code.

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§ 1794(e). “[W]here an underlying statute authorizes an award of attorneys’ fees, either with

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mandatory or discretionary language, such fees may be included in the amount in controversy.”

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Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998). Moreover, “a court must

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include future attorneys’ fees recoverable by statute or contract when assessing whether the

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amount-in-controversy requirement is met.” Fritsch v. Swift Trans. Co. of Ariz., LLC, 899 F.3d

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785, 794 (9th Cir. 2018). Nevertheless, the Ninth Circuit in Fritsch also concludes that “district

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courts are well equipped to determine whether defendants have carried their burden of proving

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future attorneys’ fees, and to determine when a fee estimate is too speculative because of the

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likelihood of a prompt settlement.” Id. at 795. In this regard, the Ninth Circuit requires “a

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removing defendant to prove that the amount in controversy (including attorneys’ fees) exceeds

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the jurisdictional threshold by a preponderance of the evidence.” Id. Here, the court concludes

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that defendant’s attorney fee estimate is too speculative to establish the threshold amount in

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See Lee v. FCA US, LLC, No. CV 16-5190 PSG (MRWx), 2016 WL 11516754, at *2 (C.D.
Cal. Nov. 7, 2016) (“The Song-Beverly Act also permits Plaintiff to recover a civil penalty in the
amount of two times the restitution.”).
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controversy by a preponderance of the evidence. Defendant has submitted considerable evidence

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of attorneys’ fees sought by plaintiff’s counsel in other Song-Beverly cases. However, plaintiff

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has submitted evidence that in this case he requested a $45,155.16 settlement at the outset of this

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litigation, which included all damages, attorneys’ fees, and costs. (Doc. Nos. 11-1 at 17; 15 at

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12.) Because there is a strong presumption against removal jurisdiction, defendant has the burden

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of proving the jurisdictional amount is sufficient to confer jurisdiction. Gaus v. Miles, Inc., 980

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F.2d 564, 566 (9th Cir. 1992). Thus, as noted above, any doubt regarding the existence of subject

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matter jurisdiction must be resolved in favor of remanding the action to state court. Id. Absent

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pure speculation as to the amount of attorneys’ fees to be incurred by plaintiff, the court cannot

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conclude that defendant has met its burden of establishing that the amount in controversy satisfies

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the jurisdictional threshold. See Cox v. Kia Motors America, Inc., No. 20-cv-02380-BLF, 2020

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WL 5814518, at *5 (N.D. Cal. Sept. 30, 2020). Consequently, the court will grant plaintiff’s

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motion to remand.
However, the court will deny plaintiff’s request for an award of $4,025.00 in attorneys’

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fees incurred in bringing this motion. (Doc. No. 11 at 15.) “Absent unusual circumstances,

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courts may award attorney’s fees under § 1447(c) only where the removing party lacked an

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objectively reasonable basis for seeking removal. Conversely, when an objectively reasonable

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basis exists, fees should be denied.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005).

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Here, the court concludes that defendant’s basis for removal was objectively reasonable.

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Accordingly, plaintiff’s request for attorneys’ fees will be denied.

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CONCLUSION

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For the reasons set forth above,

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1.

Plaintiff’s motion to remand this action (Doc. No. 11) is granted;

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2.

Plaintiff’s request for attorneys’ fees (Doc. No. 11) is denied;

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This action is remanded to the Kings County Superior Court, pursuant to 28
U.S.C. § 1447(c), for lack of subject matter jurisdiction; and

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The Clerk of the Court is directed to close this case.

IT IS SO ORDERED.
Dated:

July 13, 2021
UNITED STATES DISTRICT JUDGE

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