Velazquez v. Goodyear Tire & Rubber Company et al

Filing 35

ORDER Granting 7 Motion to Remand to State Court. Signed by Chief Judge Gloria M. Navarro on 3/4/2014. (Copies have been distributed pursuant to the NEF; CC: State court with certified Copies of Docket Sheet and Order - SLR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ARMANDO VELAZQUEZ, on behalf of
himself and LUIS VELAZQUEZ and
MAURICIO VELAZQUEZ, minors, the heirs
of VERONICA ABAD-TREJO, deceased,

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Plaintiffs,
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vs.
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LAURA IVON PAJAR, HECTOR PAJAR- )
MORALES, GOODYEAR TIRE & RUBBER )
CORP., an Ohio corporation, WAL-MART
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STORES, INC., a Delaware corporation,
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DOES I through V, and ROE BUSINESS
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ENTITIES I through XV, inclusive,
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Defendants.
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Case No.: 2:13-cv-01287-GMN-PAL
ORDER

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Pending before the Court is Plaintiffs’ Motion for Remand (ECF No. 7) filed on August

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15, 2013. Defendants Laura Pajar and Hector Pajar-Morales filed their Response to Plaintiffs’

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Motion for Remand (ECF No. 9) on August 22, 2013 in which they asserted several factual

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corrections to the Motion for Remand (ECF No. 7), but did not oppose the motion. On

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September 3, 2013, Defendant Wal-Mart Stores, Inc. (“Wal-Mart”) filed its Opposition to

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Plaintiffs’ Motion for Remand (ECF No. 15) contesting the remand on the merits. Plaintiffs

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filed a Reply Memorandum (ECF No. 17) supporting their Motion for Remand on September

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11, 2013. For the following reasons, the Court will GRANT the Motion to Remand (ECF No.

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7.)

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I.

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BACKGROUND
This case arises out of an automobile accident that occurred on August 20, 2010. (First

Amended Compl. ¶ 7, ECF No. 1-2.) On that date, Veronica Abad-Trejo was riding as a

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passenger in a 2003 Jeep Liberty, which was owned by Defendant Hector Pajar-Morales and

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was being driven by Defendant Pajar-Morales’s wife, Defendant Laura Ivon Pajar. (Id. at ¶¶ 7,

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8.) The Complaint alleges that the vehicle’s left rear tire, which was manufactured by

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Defendant Goodyear Tire & Rubber Corp. (“Goodyear”) and had previously been inspected by

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Wal-Mart, malfunctioned, causing the Jeep Liberty to leave the roadway and overturn. (Id. at ¶¶

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9, 10, 45.) Ms. Abad-Trejo died as a result of injuries sustained in the accident. (Id. at ¶ 10.)

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In June of 2012, Ms. Abad-Trejo’s surviving spouse, Plaintiff Armando Velazquez,

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brought the present action in Nevada state court on behalf of himself and the couples’ minor

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children, Plaintiffs Luis Velazquez and Mauricio Velazquez (the “Minor Plaintiffs”). (Mot. for

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Remand 2:5-11, ECF No. 7.) Wal-Mart was not named as a defendant in the original

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Complaint. (Id.) Wal-Mart was, however, a named defendant in a related case arising out of

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the same car accident. (Wal-Mart’s Resp. to Mot. for Remand 2:27-3:3, ECF No. 15.)

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Plaintiffs and Defendants Pajar-Morales and Pajar are citizens of the State of Nevada,

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Goodyear is a citizen of the State of Ohio, and Wal-Mart is a citizen of the State of Delaware.

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(Notice of Removal ¶¶ V, VI, ECF No. 1; First Amended Compl. ¶¶ 1-6, ECF No. 1-2.)

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Following the commencement of the suit, Defendants Pajar-Morales and Pajar sought to

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consolidate this action with two other lawsuits arising from the accident, including the suit in

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which Wal-Mart was a defendant. (Mot. for Remand 2:24-3:3, ECF No. 7.) The two individual

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defendants also entered into a settlement agreement with Plaintiffs, and on August 9, 2012,

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filed a Motion for Good Faith Settlement Determination, seeking an order from the court

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“determining the settlement agreement entered into between them and Plaintiffs constitutes a

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‘good faith’ settlement for all purposes of NRS 17.245, as well as dismissal of all claims for

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equitable indemnity/contribution asserted against Defendants, with prejudice.” (Exhibits to

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Mot. for Remand Ex. A-1, p. 2 ECF No. 8.) On December 31, 2012, the state court ordered the

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cases consolidated for the discovery phase only and denied consolidation for the trial phase.

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(Exhibits to Mot. for Remand Ex. B, ECF No. 8.) On February 14, 2013, the state court found

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that the settlement agreement constituted a good faith settlement under Nevada law and granted

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Defendants’ Motion for Good Faith Settlement Determination. (Order Granting Settlement

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Determination, ECF No. 15-2).

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On April 19, 2013, Defendants Pajar-Morales and Pajar filed a petition to have their

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settlement approved by the Clark County District Court in regards to the claims of the Minor

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Plaintiffs pursuant to Nevada Revised Statutes section 41.200(1). (Docket Sheet, ECF No. 9-1.)

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On June 5, 2013, Plaintiffs filed their First Amended Complaint (ECF No. 1-2) adding Wal-

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Mart as a defendant. Then on July 19, 2013, prior to the state court’s approval of the settlement

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of the Minor Plaintiffs’ claims, Wal-Mart filed its Notice of Removal. (ECF No. 1.)

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II.

LEGAL STANDARD

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Federal courts are courts of limited jurisdiction, possessing only those powers

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granted by the Constitution and by statute. See United States v. Marks, 530 F.3d 799, 810 (9th

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Cir. 2008) (citation omitted). For this reason, “[i]f at any time before final judgment it appears

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that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. §

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1447(c). District courts have jurisdiction in two instances. First, district courts have subject

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matter jurisdiction over civil actions that arise under federal law. 28 U.S.C. § 1331. Second,

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district courts have subject matter jurisdiction over civil actions where no plaintiff is a citizen

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of the same state as a defendant and the amount in controversy exceeds $75,000. 28 U.S.C.

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§ 1332(a).

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A defendant may remove an action to federal court only if the district court has original

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jurisdiction over the matter. 28 U.S.C. § 1441(a). Furthermore, “removal is permissible only

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where original jurisdiction exists at the time of removal....” Sparta Surgical Corp. v. Nat’l

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Ass’n of Sec. Dealers, Inc., 159 F.3d 1209, 1211 (9th Cir. 1998) (citation omitted). “Removal

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statutes are to be ‘strictly construed’ against removal jurisdiction.” Nevada v. Bank of America

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Corp., 672 F.3d 661, 667 (9th Cir. 2012) (quoting Syngenta Crop Prot., Inc. v. Henson, 537

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U.S. 28, 32 (2002)). The party asserting federal jurisdiction bears the burden of overcoming

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the presumption against federal jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511

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U.S. 375, 377 (1994). Specifically, federal courts must reject federal jurisdiction “if there is

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any doubt as to the right of removal in the first instance.” Gaus v. Miles, 980 F.2d 564, 566 (9th

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Cir. 1992) (quoting Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979));

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see also Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090-91 (9th Cir. 2003)

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(per curiam) (noting that “[w]here it is not facially evident from the complaint that more than

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$75,000 is in controversy, the removing party must prove, by a preponderance of the evidence,

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that the amount in controversy meets the jurisdictional threshold”).

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III.

DISCUSSION

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In their motion, Plaintiffs assert two grounds for remanding this case back to state court.

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First, Plaintiffs argue that this Court does not have subject matter jurisdiction because the non-

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diverse defendants, Defendants Pajar-Morales and Pajar, have not been dismissed from the

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case. (Mot. for Remand 4:12-5:16, ECF No. 7.) Second, Plaintiffs argue that even if this Court

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does have subject matter jurisdiction, it should nevertheless abstain from exercising jurisdiction

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under the Colorado River Doctrine because this case has been consolidated with two other

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cases that are still pending in state court and such abstention would conserve judicial resources

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and avoid piecemeal litigation. (Id. 5:17-9:19); see also Colorado River Water Conservation

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Dist. v. U. S., 424 U.S. 800, 817 (1976) (“there are principles … which govern in situations

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involving the contemporaneous exercise of concurrent jurisdictions … by state and federal

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courts. These principles rest on considerations of ‘(w)ise judicial administration, giving regard

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to conservation of judicial resources and comprehensive disposition of litigation.’”) (citations

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omitted).

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Regarding the issue of complete diversity, Plaintiffs assert in their Motion for Remand

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that Defendants Pajar-Morales and Pajar were not dismissed from this case because in their

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Motion for Good Faith Settlement Determination they only requested “dismissal of all claims

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for equitable indemnity/contribution asserted against Defendants” rather than actual dismissal

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from the suit. (Id. 5:1-16) (emphasis in the original). Wal-Mart counters in their Opposition to

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Plaintiffs’ Motion for Remand that the state court’s Order granting of the Motion for Good

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Faith Settlement Determination effectively dismissed all the claims against Defendants Pajar-

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Morales and Pajar and that, even if the Order did not formally dismiss Defendants, the

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settlement agreement alone is sufficient to render the Defendants’ citizenship irrelevant for the

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purpose of diversity. (Opp. to Plaintiffs’ Mot. for Remand 3:25-5:22, ECF No. 15.) In support

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of its position, Wal-Mart cites to several Federal District Court decisions and one Eighth

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Circuit decision that have found that “a settlement between [the non-diverse parties] was

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enough to support removal.” Id. (citing Chohlis v. Cessna Aircraft Co., 760 F.2d 901, 903 n.2

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(8th Cir. 1985)); see e.g. Erdey v. Am. Honda Co., Inc., 96 F.R.D. 593, 599 on reconsideration

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in part, 558 F. Supp. 105 (M.D. La. 1983) (“entering the settlement agreement was an act

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which made the case removable under 28 U.S.C. § 1446(b)”).

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The Ninth Circuit has not yet addressed the question of whether an enforceable

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settlement agreement against all non-diverse parties is sufficient to permit removal of an action.

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However, the Court does not need to reach this question in order to resolve the issue of remand

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in this case. As Plaintiffs point out in their Reply Memorandum, two Plaintiffs in this case are

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minors, and under Nevada law, the settlement of a disputed claim held by a minor is not

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effective until it is approved by the Court. (Reply in Supp. of Remand 2:23-3:3, ECF No. 17);

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Nev. Rev. Stat. § 41.200(1) (“If an unemancipated minor has a disputed claim …, either parent

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… has the right to compromise the claim. Such a compromise is not effective until it is

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approved by the district court … upon a verified petition in writing, regularly filed with the

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court.”); see also Haley v. Dist. Ct., 273 P.3d 855, 859 (Nev. 2012) (“A compromise [of a

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minor’s claim] is not effective until approved by the district court upon a verified petition in

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writing.”). At the time of removal in this case, Defendants’ Petition for Settlement Approval

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had not yet been granted by the state court. As a result, the settlement was still voidable and

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not yet binding on the Minor Plaintiffs. See Dacanay v. Mendoza, 573 F.2d 1075, 1080 (9th

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Cir. 1978) (“since the enforceability of a contract in settlement of litigation involving a minor

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party depends upon the approval of a court, … such a contract is voidable at the election of the

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minor … unless and until the court’s imprimatur has been placed on it.”). Therefore, the claims

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held by the Minor Plaintiffs against Defendants Pajar-Morales and Pajar could not have been

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effectively settled or dismissed at the time Wal-Mart’s Notice of Removal (ECF No. 1) was

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filed.

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In Guerrero v. Gen. Motors Corporation, the Court for the Northern District of

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California faced a similar set of circumstances where the claims of four minor plaintiffs against

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non-diverse defendants arising out of a car wreck were settled, and the remaining diverse

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defendant then attempted to remove the case to federal court prior to the state court’s approval

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of the settlement. Guerrero v. Gen. Motors Corp., 392 F. Supp. 2d 1133 (N.D. Cal. 2005). The

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Guerrero Court found that because a settlement by minor plaintiffs is not final or binding until

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it is approved by the court under California law, the defendants whose claims were purportedly

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released under that settlement were still defendants at the time of removal, preventing complete

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diversity. Id. at 1135-36.

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Like the Court in Guerrero, this Court finds that because the settlement agreement was

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not effective against the claims of the Minor Plaintiffs at the time the Notice of Removal (ECF

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No. 1) was filed, Defendants Pajar-Morales and Pajar were still parties to the case whose

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presence destroyed complete diversity. Id. The ineffectiveness of the settlement agreement to

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the Minor Plaintiffs’ claims prior to court approval renders this case factually distinct from the

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cases cited by Wal-Mart finding a settlement agreement sufficient for supporting removal. Id.;

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see also Moore v. Goodyear Tire & Rubber Co., CV-11-01174-PHX-NVW, 2011 WL

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3684508, at *2 (D. Ariz. Aug. 23, 2011) (noting the distinction between cases where a

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settlement agreement was effective and where it was not effective at the time notice of removal

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was filed). Furthermore, even if the settlement agreement has now been approved by the state

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court, in order for the removal to have been proper, original jurisdiction must have existed at

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the time removal was filed. Sparta Surgical Corp., 159 F.3d at 1211. Therefore, Wal-Mart has

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failed to meet its burden in showing that this case is removable on the basis of diversity

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jurisdiction.

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As the Court has determined that this case should be remanded to the state court for lack

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of jurisdiction, the issue of abstention is moot.

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IV.

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CONCLUSION
IT IS HEREBY ORDERED that Plaintiffs’ Motion for Remand (ECF No. 7) is

GRANTED.

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The Clerk of the Court shall enter judgment accordingly.

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DATED this 4th day of March, 2014.

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___________________________________
Gloria M. Navarro, Chief Judge
United States District Judge

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