Luna v. BMW of North America, LLC et al

Filing 15

ORDER (1) denying 5 Motion to Remand to State Court ; and (2) granting 6 Motion to Dismiss the Fourth Cause of Action Without Prejudice. Signed by Judge Roger T. Benitez on 5/21/2018. (anh)

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FILED

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MAY 2 2 2018

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CLERK, U.ll DISTRICT COURT

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SOUT

N Oi~TR1Cl OF C»UFORNIA

BY

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DEPUTY

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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LEO LUNA, an individual,
Plaintiff,

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Case No.: 3:17-cv-02067-BEN-KSC

v.
BMW OF NORTH AMERICA, LLC, a
business entity form unknown, and DOES
1-30, inclusive,
Defendant.

ORDER:
(1) DENYING MOTION TO
REMAND, and
(2) GRANTING MOTION TO
DISMISS THE FOURTH CAUSE OF
ACTION
[Doc. Nos. 5-6]

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Before the Court is Plaintiff Leo Luna's ("Luna") Motion to Remand (Doc. No. 5)

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and Motion to Dismiss the Fourth Cause of Action (Doc. No. 6). The motions are fully

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briefed and judged appropriate for decision without oral argument. See Fed. R. Civ. P.

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78; L.R. 7 .1. Having considered the moving and opposing papers, and for the reasons

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stated below, the Court hereby DENIES Luna's Motion to Remand and GRANTS the

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Motion to Dismiss the Fourth Cause of Action.

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Ill

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BACKGROUND

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On January 7, 2017, Luna purchased a used 2013 BMW 328i sedan ("Vehicle")

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with 28,636 miles on it. (Doc. No. 5-1at2.) After experiencing numerous issues with

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the vehicle, Luna filed suit in the San Diego Superior Court on September 5, 2017. (Doc.

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No. 1at1.) The Complaint alleges six causes of action: (1) Violation ofSong-Beverly

6 Consumer Warranty Act- Failure to Repair Defect(s) within Reasonable Number of
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Attempts (Civil Code§ 1793.2(d)); (2) Violation ofSong-Beverly Consumer Warranty

8 Act - Failure to Commence Repairs or Repair Defect(s) within 30 Days (Civil Code §
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1793.2(b)); (3) Breach ofExpress Warranty pursuant to 15 USC.§ 2310(d) (Civil Code

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§ 1794); (4) Violation ofMagnuson-Moss Warranty Act; (5) Violation of Consumer Legal

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Remedies Act- Failure to Disclose Misrepresentation, Unfair and Deceptive Acts and

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Practices (Civil Code § 1770(a)); (6) Breach ofExpress and Implied Warranty, Civil

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Code§ 1790, et seq., The Song-Beverly Consumer Warranty Act (Id. at 5-11.) The

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Complaint seeks damages, rescission of the purchase contract and restitution of all

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monies expended, incidental and consequential damages, punitive damages, equitable

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relief, prejudgment interest, and reasonable attorneys' fees and costs. (Doc. No. 1-3, if

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45.)

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On October 16, 2017, BMW of North America, LLC ("BMW") removed the case

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based on federal question and diversity jurisdiction pursuant to 28 U.S.C. §§ 1332 and

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1441(a). (Doc. No. 1 at 2-8.) Luna filed a Motion to Remand to State Court together

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with a Motion to Dismiss Count Four of the Complaint (the only federal law claim) on

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October 23, 2017. (Doc. Nos. 5-6.) BMW filed oppositions to both Motions on

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November 16, 2017, to which Luna replied on November 22, 2017. (Doc. Nos. 8-11.)

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LEGAL STANDARD
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Remand Under 28 U.S.C. §§ 1447(c) and 1367(c)(3)

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A defendant in state court may remove a civil action to federal court so long as that

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case could originally have been filed in federal court. 28 U.S.C. § 144l(a); City of Chi. v.

5 Int'! Coll. OfSurgeons, 522 U.S. 156, 163 (1997). Thus, removal ofa state action may
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be based on either diversity or federal question jurisdiction. City of Chi., 522 U.S. at 163;

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Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Removal jurisdiction is based

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entirely on federal statutory authority. See 28 U.S.C. § 1441 et seq. These removal

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statutes are strictly construed, and removal jurisdiction is to be rejected in favor of

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remand to the state court if there are doubts as to the right of removal. Nev. v. Bank of

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Am. Corp., 672 F.3d 661, 667 (9th Cir. 2012). The defendant seeking removal of an

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action from state court bears the burden of establishing grounds for federal jurisdiction,

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by a preponderance of the evidence. Geographic Expeditions, Inc. v. Estate of Lhotka,

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599 F.3d 1102, 1106-07 (9th Cir. 2010). The district court must remand the case "[i]f at

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

16 jurisdiction." 28 U.S.C. § 1447(c); see also Smith v. Mylan, Inc., 761F.3d1042, 1044
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(9th Cir. 2014); Bruns v. NCUA, 122 F.3d 1251, 1257 (9th Cir. 1997) (holding that

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remand for lack of subject matter jurisdiction "is mandatory, not discretionary").'

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II.

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Voluntary Dismissal Under Rule 41(a)(2)

Federal Rule of Civil Procedure 41(a)(2) allows a plaintiff, with the approval of the

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court, to dismiss an action with prejudice at any time. The rule provides that: "an action

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may be dismissed at the plaintiff's request ... by court order, on terms that the court

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considers proper." Fed. R. Civ. P. 41(a)(2). A motion for voluntary dismissal under Rule

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An order remanding a case based on a lack of subject matter jurisdiction is not
appealable. 28 U.S.C. § 1447(d); Carlsbad Tech, Inc. v. HIF Bio, Inc., 556 U.S. 635,
638-39 (2009).
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1 41(a)(2) "is addressed to the district court's sound discretion and the court's order will
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not be disturbed unless the court has abused its discretion." Stevedoring Servs. ofAm. v.

3 Armilla Int'! B. V., 889 F.2d 919, 921 (9th Cir. 1989) (citing Sams v. Beech Aircraft Corp.
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625 F.2d 273, 277 (9th Cir. 1980)). Dismissal without prejudice is proper "so long as the

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defendant will not be prejudiced ... or unfairly affected by dismissal." (Id.) (internal

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citations omitted).

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When ruling on a motion to dismiss without prejudice, the district court must

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determine whether the defendant will suffer some legal prejudice as a result of the

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dismissal. West/ands Water Dist. v. United States, 100 F.3 94, 96 (9th Cir. 1996) (citing

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Hyde & Drath v. Baker, 24 F.3d 1162, 1169 (9th Cir. 1994)). Although case law does

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not articulate a precise definition of "legal prejudice," the cases focus on the rights and

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defenses available to a defendant in future litigation. (Id.) (citing 5 James W. Moore's

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Federal Practice~ 41.05[1] nn. 51-53).

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DISCUSSION

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The Court is confronted with two motions, a Motion to Remand to State Court and

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a Motion to Dismiss the Fourth Cause of Action. "Generally, jurisdiction is a preliminary

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matter that should be resolved before all others." Leeson v. Merck & Co., Inc., 2006 WL

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3230047, *2 (E.D. Cal. Jan. 27, 2006); see also Villarreal v. Chrysler Corp., 1996 WL

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116832, at *1 (N.D. Cal. Mar. 12, 1996) ("Judicial economy will best be served by

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addressing the remand issue [before a party's motion to dismiss] because a determination

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on this issue will facilitate litigation in the appropriate forum."). Moreover, "Post-

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removal amendments to the pleadings cannot affect whether a case is removable because

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the propriety of removal is determined solely on the basis of the pleadings filed in state

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court." Williams v. Costco Wholesale Corp., 471F.3d975, 976 (9th Cir. 2006) (citations

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omitted). Therefore, the Court will address the Motion to Remand first.

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3:17-cv-02067-BEN-KSC

1 I.

Motion to Remand

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Luna moves to remand this action to state court arguing BMW failed to meet the

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requirements for federal question and diversity jurisdiction. (Doc. No. 5 at 1.) BMW

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opposes remand and contends the Court possesses subject matter jurisdiction under both

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sections. (Doc. No. 9 at 2.)

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A. Federal Question Jurisdiction

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Determination of federal question jurisdiction "is governed by the well-pleaded

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complaint rule, which provides that federal jurisdiction exists only when a federal

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question is presented on the face of plaintiffs properly pleaded complaint." Cal. v.

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United States, 215 F.3d 1005, 1014 (9th Cir. 2000).

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Luna's fourth cause of action asserts a claim under federal law, the Magnuson-

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Moss Warranty Act ("MMWA"), 15 U.S.C. § 231 O(d). Under§ 2310(d)(l )(B), "a

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consumer who is damaged by the failure of a supplier, warrantor, or service contractor to

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comply with any obligation under this chapter, or under a written warranty, implied

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warranty, or service contract, may bring suit for damages and other legal and equitable

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relief in an appropriate district court. However, before subject matter jurisdiction is

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invoked, the amount in controversy must be shown to be at least $50,000. 2 15 U.S.C. §

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2310(d)(3)(B).

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In drafting the MMWA, Congress, while providing a substantive right of action to

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consumers, did not specify the appropriate measure and type of damages that are

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available. This has led a number of courts, including the Ninth Circuit, to tum to the

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applicable state law to determine what remedies are available under the Act. See Kelly v.

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Fleetwood Enters., Inc., 377 F.3d 1034, 1039 (9th Cir. 2004) ("State law generally guides

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courts in determining whether punitive damages are available as a remedy for breach of

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warranty under the [Magnuson-Moss Warranty] Act."). Based on the allegations and

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The Act's amount in controversy excludes interests and costs. (Id.)
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facts presented, the Song-Beverly Consumer Warranty Act ("Song-Beverly Act"), Cal.

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Civ. Code § 1790 et seq., also known as California's "lemon law," is the appropriate state

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law.

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The Song-Beverly Act authorizes civil penalties of up to two times the amount of

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actual damages for violations. Cal. Civ. Code § 1794(c). While these civil penalties are

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not punitive damages per se, California courts have, on numerous occasions, analogized

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the two because both are intended to punish and deter defendants rather than compensate

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plaintiffs. See, e.g., Suman v. Super. Ct., 39 Cal. App. 4th 1309 (1995). This Court

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similarly believes that the Song-Beverly Act's civil penalties are akin to punitive

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damages and ought to be treated the same for the purposes of this analysis.
In an amount in controversy inquiry for diversity purposes, punitive damages,

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where authorized, are counted toward the requirement. See Bell v. Preferred Life

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Assurance Soc y, 320 U.S. 238 (1943) ("Where both actual and punitive damages are

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recoverable under a complaint each must be considered to the extent claimed in

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determining jurisdictional amount."); see also Brady v. Mercedes Benz USA, Inc., 243

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F.Supp.2d 1004, 1009 (N.D. Cal. 2002) (holding that Song-Beverly Act's civil penalties

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should be included in the amount in controversy requirement for diversity jurisdiction).

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Moreover, there is nothing in the text of the Magnuson-Moss Act that would indicate that

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the amount in controversy for that statute is assessed any differently than the diversity

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jurisdiction requirement found in title 28 U.S.C. § 1332. Thus, when the civil damages

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authorized by the Song-Beverly Act are combined with the actual damages alleged, the

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composite sum satisfies the Magnuson-Moss Act jurisdictional requirement.

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1. Actual Damages Under Song-Beverly
In an action brought pursuant to the Song-Beverly Act, a plaintiff may recover "in

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an amount equal to the actual price paid or payable by the buyer," reduced by "that

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amount directly attributable to use by the buyer." Cal. Civ. Code§ 1793.2(d)(2)(B)-(C).

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The actual price paid or payable includes paid finance charges. Mitchell v. Blue Bird
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3:17-cv-02067-BEN-KSC

1 Body Co., 80 Cal. App. 4th 32, 37-38 (2000). Moreover, the amount directly attributable
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to use by the buyer "shall be determined by multiplying the actual price of the new motor

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vehicle paid or payable by the buyer ... by a fraction having as its denominator 120,000

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and its numerator, the number of miles traveled by the new motor vehicle prior to the

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time the buyer first delivered the vehicle ... for correction of the problem that gave rise to

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the nonconformity." Cal. Civ. Code§ 1793.2(d)(2)(C).

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Here, the sales contract attached to the Motion to Remand indicates Luna

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purchased a used 2013 BMW 328i Sedan for a total price of$23,549.26. (Doc. No. 5-3

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at 1-3.) This included a $5,916.46 down payment, financing $16,795.62 (term of 60

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months) and $837.18 in finance charges over the course of the loan. 3 (Id.) According to

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BMW's repair records, Luna first took the vehicle in for repairs on August 31, 2017.

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(See Doc. No. 1-5 at 2.) At that time, the vehicle's mileage was 35,410 miles. (Id.)

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However, since Luna purchased the vehicle with 28,636 miles on it, he was only

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responsible for 6,774 of those miles. Thus, the amount directly attributable to use by

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Luna is $1,294.52. Therefore, after Luna's mileage use setoffis deducted from the total

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sale price, the amount of actual damages Luna potentially could collect is $21,637 .56. 4

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2. Civil Penalties Under Song-Beverly

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A buyer who establishes a willful violation of the Song-Beverly Act may recover a

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civil penalty of "two times the amount of actual damages." Cal. Civ. Code § 1794(c).

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Here, Luna stood to potentially recover $21,637.56 in damages. As such, Luna may be

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entitled to an additional $43,275.12 in civil penalties. Combining Luna's potential

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The amount of finance charges actually paid is likely considerably less than $837.18,
given that the final payment under the sales contract is due on January 21, 2022. For
purposes of calculating the amount in controversy, the court will adopt an estimate of
$220 (finance charges incurred for nine payments beginning February 21, 2017) for a
total purchase price of $22,932.08.
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$22,932.08 (total purchase price) - $1,294.52 (Luna's mileage use setojj) = $21,637.56
(adjusted total purchase price).
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1 dainages and civil penalty results in a sum of$64,912.68, exceeding the $50,000
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threshold required to assert an MMWA claim.

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Accordingly, the Court has federal question jurisdiction over the MMWA claim

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and supplemental jurisdiction over the remaining state law claims under Title 28 U.S.C. §

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1367. Because the court concludes that the requirements for federal question jurisdiction

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are met, it need not address whether it has diversity jurisdiction as well.
Therefore, removal was proper and the Motion to Remand is hereby DENIED.

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II.

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Motion to Dismiss
Luna moves to dismiss his only federal law claim (cause of action four) without

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prejudice, for violation of the MMWA5 under Fed. R. Civ. P. 41(a)(2). (Doc. No. 6 at 3.)

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Specifically, "Luna requests an amendment to dismiss the fourth cause of action without

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prejudice only if the court finds that plaintiff's $20,000 vehicle meets the $50,000 amount

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in controversy threshold, under the MMWA." (Doc. No. 11 at 2.)

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Normally, the Court looks to see if granting dismissal would result in any legal

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prejudice to BMW. However, BMW has not presented any evidence indicating it will

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suffer legal prejudice ifthe motion is granted. In fact, BMW does not oppose the motion

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to dismiss, "If Luna wants to dismiss his Magnuson-Moss cause of action without

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prejudice, BMW NA will not stand in his way." (Doc. No. 8 at 3.) Moreover, as

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discussed supra, the Court found the $50,000 jurisdictional requirement satisfied and

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federal question jurisdiction proper over the MMWA claim.

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The Court is also cognizant that under 28 U.S.C. § 1331, federal courts have

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jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the

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United States." 28 U.S.C. 1331. [W]hen a defendant removes a case to federal court

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based on the presence of a federal claim an amendment eliminating the original basis for

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federal jurisdiction generally does not defeat jurisdiction." Rockwell Intern. Corp. v.

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Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301and2310.
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United States, 549 U.S. 457, 474 n.6 (2007) (citations omitted). Thus, despite Luna's

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tactical decision to seek dismissal of the MMWA claim, it will not divest this Court of

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jurisdiction, as it was determined at the time of removal.

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Accordingly, the Court GRANTS the Motion to Dismiss cause of action four
without prejudice.

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CONCLUSION
The Motion to Remand is DENIED and the Motion to Dismiss is GRANTED.

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ED.

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l O DATED: ~<!.__L_~LM~
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