Ingman v. FCA US et al
ORDER granting 7 Motion to Remand; denying 7 Motion for Sanctions; denying 7 Motion ; denying 22 Motion to Transfer. Signed by Judge Brian Morris on 11/14/2017. (MMS)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
GREAT FALLS DIVISION
EDDIE MICHAEL INGMAN,
FCA US LLC, et al.,
Plaintiff Eddie Michael Ingman filed this action in Montana’s Eight Judicial
District Court, Cascade County on July 7, 2017. (Doc. 3.) Plaintiff named as
defendants FCA US LLC, Grimes Buick-GMC, Inc., and Does 1 through 100. Id.
FCA US removed this action to federal court on August 10, 2017, pursuant to 28
U.S.C. § 1452. (Doc. 1.)
Plaintiff filed a Motion to Remand, pursuant to 28 U.S.C.A. §§ 1441, 1447
on September 1, 2017. (Doc. 7.) Plaintiff additionally moved for sanctions and
costs, pursuant to 28 U.S.C.A. §§ 1446(a), 1447(c), and Fed. R. Civ. P. 11. Id.
Defendants filed a Motion to Transfer to the Southern District of New York,
pursuant to 28 U.S.C. § 1412 on September 14, 2017. (Doc. 22.) The Court
conducted a hearing on November 2, 2017. (Doc. 45.)
Chrysler, LLC (subsequently known as Old Carco LLC) and twenty-four of
its affiliated entities (collectively “Debtors”) filed for bankruptcy in April 2009.
(Doc. 1 at 2.) The Debtors and FCA US entered into a Master Transaction
Agreement (“MTA”) under which FCA US purchased substantially all of Debtors’
assets and assumed certain liabilities. Id. at 3. The United States Bankruptcy Court
for the Southern District of New York entered an order approving an asset sale to
FCA US (“Sale Order”) under the terms of the MTA on June 1, 2009. Id.
The Sale Order by the bankruptcy court makes clear that FCA US assumed
Chrysler’s notification and remedy obligations pertaining to pre-existing safety
defects in vehicles. (Doc. 1-2 at 21.) In an amendment to the MTA (“Amendment
No. 4”), FCA US agreed to assume liability for all product liability claims that may
arise on or after closing and are not barred by the statute of limitations. Amendment
No. 4 specifically excluded any product liability claims that alleged “exemplary or
punitive damages.” (Doc. 1 at 5.) The bankruptcy court approved Amendment No.
4 on November 19, 2009. Id.
Plaintiff alleges serious injuries from a single vehicle incident on March 5,
2017. Plaintiff was driving a 2001 Chrysler Jeep Wrangler Sahara/TJ Sahara on U.S.
Highway 89 in Cascade County, Montana. (Doc. 3 at 2.) Plaintiff alleges that FCA
US's predecessor, Chrysler Group LLC, defectively designed or manufactured the
vehicle. Id. at 6. Plaintiff alleges that sometime after the bankruptcy sale, FCA US
knew or should have known, that the vehicle had not been designed, manufactured,
sole, inspected, supplied, modified, and/or provided in a reasonable manner. Id. at
8. Plaintiff further alleges that after the bankruptcy sale, FCA US negligently,
carelessly, and/or maliciously failed to ensure that consumers had been warned of
the dangers associated with the design of the vehicle, including steps to remedy
and/or recall the product. Id. at 8. Plaintiff seeks punitive damages against FCA US
based on FCA US’s alleged post-bankruptcy sale conduct. Id. at 10.
FCA US filed a Notice of Removal on August 10, 2017. (Doc. 1.) Plaintiff
filed a Motion to Remand on September 1, 2017. Plaintiff asserts that the punitive
damages provision in Amendment No. 4 to the Sale Order addresses only claims that
arise from FCA’s conduct before the bankruptcy sale. (Doc. 7.) Plaintiff contends
that his punitive damages claim relies solely on FCA’s conduct that occurred after
the sale. Plaintiff seeks to have this case remanded to Montana’s Eight Judicial
District Court based on this Court lacks subject matter jurisdiction over the claims
alleged against the Defendants. (Doc. 7 at 2.)
FCA US filed a Motion to Transfer Venue on September 14, 2017. (Doc. 22.)
FCA US seeks to transfer this matter to the United States District Court for the
Southern District of New York, for referral to the bankruptcy court. FCA US
believes that the bankruptcy court sits in the best position to interpret and enforce
the meaning of Amendment No. 4. (Doc. 22 at 11.) FCA US further contends that it
would serve the interest of justice to allow the bankruptcy court to interpret its own
A defendant may remove an action from state court if it originally could
have been brought in federal court. 28 U.S.C. § 1441. A court must remand a case
removed from a state court “if at any time before final judgment it appears that the
district court lacks subject matter jurisdiction.” 28 U.S.C. § 1447(c). This Court
first must determine whether it possesses subject matter jurisdiction. Federal courts
operate “under an independent obligation to examine their own jurisdiction.”
Hernandez v. Campbell, 204 F.3d 861, 865 (9th Cir. 2000). A federal court may
not entertain an action over which it lacks jurisdiction. Id.
The Court faces a Motion to Remand competing with a Motion to Transfer
Venue. This Court lacks power to transfer a case without first having determined
that it possesses jurisdiction. The Complaint raise no federal question under §
1331. The allegations in the Complaint likewise demonstrate an absence of the
complete diversity requirement for jurisdiction under § 1332.
FCA US argues that this Court remains free to rule “in any order” when
faced with the competing motion to remand and the motion to transfer venue.
Another court in this District, Simonsen v. Tsunami Capital, LLC, 2009 WL
368651 (D. Mont. 2009), faced a similar quandary. Simonsen determined that it
should not exercise discretionary jurisdiction. The court instead recommended that
the matter be remanded to state court thereby rendering moot the motion to change
venue. Id. at 7. Significant overlap exists between these two issues in this case. The
Court agrees with Simonsen, however, that it first should assess Plaintiff’s Motion
to Remand and the corresponding issue of subject matter jurisdiction before
turning to FCA US’s Motion to Transfer Venue.
FCA US removed the case pursuant to the bankruptcy removal statute set
forth at 28 U.S.C. § 1452. Section 1452 authorizes a party to remove any claim or
cause of action in which the federal district court possesses jurisdiction under
§ 1334. A federal district court may refer a case to a bankruptcy court under § 1412
in the interest of justice, or for the convenience of the parties. 28 U.S.C. § 1412.
Section 1334(b) provides the district court with “original but not exclusive
jurisdiction of all civil proceedings arising under Title 11” of the bankruptcy code.
Section 1334(b) provides, in turn, for three types of bankruptcy jurisdiction:
“arising under,” “arising in,” and “related to” jurisdiction. Navistar Fin. Corp. v.
Jim Palmer Trucking, 2012 U.S. Dist. LEXIS 20510 at *6-7 (D. Mont. Feb. 17,
2012). Claims or causes of action that are said to “arise under,” or “arise in” Title
11 constitute “core” bankruptcy proceedings. Stern v. Marshall, 564 U.S. 462, 476
The Ninth Circuit adopted the “Pacor test” to assess the presence of “related
to” jurisdiction. In re Fietz, 852 F.2d 455, 457 (9th Cir. 1988). A civil proceeding
is “related to” bankruptcy when the “outcome could alter the debtor’s rights,
liabilities, options, or freedom of action and which in any way impacts upon the
handling and administration of the bankruptcy estate.” Pacor, Inc. v. Higgins, 743
F.2d 984, 994 (3d Cir. 1984). The Ninth Circuit also adopted a “close nexus” test
to analyze post-bankruptcy “related to” jurisdiction. In re Pegasus Gold Corp., 394
F.3d 1189, 1194 (9th Cir. 2005). The courts must examine whether a close nexus
exists to the bankruptcy plan or proceeding. Id.
FCA US contends that this Court possesses jurisdiction pursuant to 28
U.S.C. § 1334(b) because this proceeding arises in or “relates to” the bankruptcy
case of Old Carco LLC. (Doc. 25 at 12.) FCA US argues that the bankruptcy
court’s prior orders interpreting the MTA and Amendment No. 4 control the scope
of FCA US’s liability regarding Plaintiff’s negligence claim and potential punitive
damages. FCA US points to the fact that the MTA outlines FCA US’s potential
product liability for vehicles designed, manufactured, and sold before the
bankruptcy closing. FCA US further reasons that Amendment No. 4 controls the
scope of FCA US’s liability for punitive damages for claims based on those
The allegations in Plaintiff’s Complaint must be taken as true in determining
subject matter jurisdiction. Bates v. Mortg. Elec. Registration Sys., Inc., 694 F.3d
1076, 1080 (9th Cir. 2012). Plaintiff’s first cause of action for strict liability with
regard to the vehicle’s design falls squarely within the product liability claims
allowed in Amendment No. 4. (Doc. 3 at 8.) Plaintiff’s second cause of action
alleges negligence with regard to FCA US’s failure to warn consumers, recall
vehicles, or otherwise attempt to limit harm from the vehicle’s defective design.
This claim gives the Court pause.
Plaintiff’s second claim covers, however, FCA US’s alleged negligence “[a]t
all times mentioned, and specifically post-bankruptcy sale.” Amendment No. 4
refers to “all Product Liability Claims.” (Doc. 1-3 at 1.) Amendment No. 4 makes
no distinction between strict product liability claims and product liability claims
based on FCA US’s negligence after the sale. Id. Plaintiff attempted to make clear
at the hearing that he asserts no negligence claim against FCA US for any prebankruptcy conduct. The language of Plaintiff’s Complaint with regard to the
second claim and its reference to “specifically post-bankruptcy sale” supports
Plaintiff’s representations at the hearing.
Plaintiff’s punitive damage claim likewise would not be considered a core
proceeding arising in or arising under Title 11 of the bankruptcy code. Plaintiff’s
punitive damages claim would continue to exist independent of Title 11 as it
alleges punitive damages connected to FCA US’s post-bankruptcy conduct. No
“related to” jurisdiction exists due to the lack of any close nexus between the
allegations in Plaintiff’s Complaint and the bankruptcy plan or proceeding
sufficient to maintain bankruptcy court jurisdiction. Plaintiff’s Complaint alleges
actions or failures to take actions by FCA US that arose after the date of
Amendment 4. This alleged post-bankruptcy conduct by FCA US falls outside the
bankruptcy court’s rulings.
FCA US misplaces reliance on Dearden v. FCA US LLC, 2017 WL 1190980
(E.D. Penn. 2017). The amended complaint in Dearden alleged a negligence claim
and a claim for punitive damages against Chrysler. (Doc. 25-6 at 17-24.) The
amended complaint specifically defined “Chrysler” as including “FCA US, LLC
and Chrysler Group, LLC.” Id. at 6. The bankruptcy court conceivably could
determine that these claims involved the pre-bankruptcy conduct of Chrysler
Group, LLC. This interpretation would give the bankruptcy court jurisdiction over
the punitive damage claim because it would involve the bankruptcy court
interpreting its prior orders regarding the MTA and Amendment No. 4 with respect
to Chrysler Group, LLC’s pre-bankruptcy conduct.
This case proves more akin to the decisions in Mathias v. Fiat Chrysler
Automobiles, NV (“FCA”), 2016 WL 5109967 (N.D. Cal. 2016), and Rodriguez v.
FCA US LLC, et al, 2017 WL 278540 (N.D. Cal. 2017). The plaintiffs each alleged
causes of action for strict liability, negligence, and punitive damages against FCA
US. Mathias, 2016 WL 5109967 at 1; Rodriguez, 2017 WL 278540 at 1. The
courts granted plaintiffs’ motions to remand in both cases instead of the
defendants’ motions to transfer venue.
Each plaintiff alleged a negligence claim regarding FCA US’s postbankruptcy conduct. Mathias, 2016 WL 5109967 at 6; Rodriguez, 2017 WL
278540 at 7. The courts determined that the plaintiffs’ punitive damage claims
related to plaintiffs’ negligence claims. Mathias, 2016 WL 5109967 at 6;
Rodriguez, 2017 WL 278540 at 7. The courts reasoned the plaintiffs sought to hold
FCA US liable only for post-bankruptcy conduct. As a result, plaintiffs could not
be seeking punitive damages for any pre-bankruptcy conduct. The courts
concluded that plaintiffs’ punitive damage claim in the manner pled constituted an
“independent claim” rather than “core” claim arising under Title 11. Nothing
remained for the bankruptcy court to interpret in relation to this claim. The MTA
and Amendment No. 4 did not apply. Mathias, 2016 WL 5109967 at 8; Rodriguez,
2017 WL 278540 at 7.
The MTA and Amendment No. 4 also do not govern Plaintiff’s claims here.
The punitive damages allegations, in the manner pled in Plaintiff’s Complaint,
constitute an “independent claim” based only on FCA US’ “own post-closing
wrongful conduct.” In Re Motors Liquidation Co., 568 B.R. 217, 222 (Bankr.
S.D.N.Y. 2015). No “gatekeeper” role exists for the bankruptcy court to perform.
The bankruptcy court’s orders need no interpretation to assess alleged post-closing
wrongful conduct. Id.
FCA US has failed to establish that any basis existed to warrant removal
pursuant to § 1452. FCA US similarly failed to establish that this Court possesses
jurisdiction pursuant to § 1334. This Court lacks subject matter jurisdiction to
decide these claims. Plaintiff’s Motion to Remand must be granted. No need exists
to analyze Defendant’s Motion to Transfer Venue.
ATTORNEY’S FEES AND COSTS
Plaintiff has requested attorneys’ fees and costs under 28 U.S.C.A. § 1447(c)
and Rule 11. Plaintiff argues that FCA US blatantly ignored adverse decisions
issued from federal district courts in the Ninth Circuit. Plaintiff further argues that
FCA US ignored all efforts by Plaintiff to resolve this issue outside the Court’s
Section 1447(c) provides that an order remanding a case from federal court
to state court may require “just costs and any actual expenses, including attorney
fees, incurred as a result of removal.” 28 U.S.C. § 1447(c). The Supreme Court has
determined that a court may award attorneys’ fees, “absent unusual
circumstances,” only when the removing party possessed no objective reasonable
basis in pursuing removal. Martin v. Franklin Capital Corp., 546 U.S. 132, 141
The circumstances presented here do not warrant an award of attorneys’ fees
and costs. The courts’ decisions Mathias and Rodriguez represented persuasive
authority only that did not necessarily bind this Court. The parties presented the
Court with three decisions that addressed this identical question: Mathias and
Rodriguez, and the opposing decision in Dearden. Faced with this legal landscape,
FCA US possessed an objectively reasonable basis to seek removal and transfer.
Accordingly, IT IS HEREBY ORDERED:
1. Plaintiff’s Motion for Remand (Doc. 7), is GRANTED.
2. Plaintiff’s Motion for Sanctions and Costs (Doc. 7), is DENIED.
3. Defendant’s Motion to Transfer Venue (Doc. 22), is DENIED.
DATED this 14th day of November, 2017.
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