Watkins et al v. General Motors LLC et al. DO NOT DOCKET. CASE HAS BEEN REMANDED

Filing 9

MEMORANDUM AND ORDER GRANTED 5 MOTION to Remand.(Signed by Judge Nancy F. Atlas) Parties notified.(sashabranner, )

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

VIRGINIA WATKINS, and JOHNNY §
WATKINS,
§
Plaintiffs.
§
§
v.
§
§
GENERAL MOTORS, LLC, et al.,
§
Defendants.
§

CIVIL ACTION NO. H-11-2106

MEMORANDUM AND ORDER
This case is before the Court on Plaintiffs’ Motion to Remand [Doc. # 5], to
which Defendant General Motors LLC (“GM”) filed a Response in Opposition [Doc.
# 6], and Plaintiffs replied [Doc. # 7]. Having considered the full record and the
applicable legal authorities, the Court concludes that it lacks subject matter
jurisdiction over this dispute and grants the Motion to Remand.
I.

FACTUAL BACKGROUND
Plaintiff Virginia Watkins was injured in the rollover of a 2002 Chevrolet

Tahoe and subsequently filed suit against Defendant General Motors LLC (“GM”) and
Defendant Mac Haik Chevrolet (“Mac Haik”). Plaintiffs filed this case in Texas state
court on April 11, 2011. In their Original Petition [Doc. # 1-4], Plaintiffs assert claims
of strict product liability, negligence, and res ipsa loquitor against Defendant GM.
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Id. They also assert claims of strict product liability and negligence against Defendant
Mac Haik. Id. It is undisputed that GM is a citizen of Delaware and Mac Haik is a
citizen of Texas for purposes of diversity jurisdiction. Plaintiffs are Texas citizens.
On June 7, 2011, Defendant GM removed this case alleging that Defendant Mac
Haik had been improperly joined for the sole purpose of defeating diversity
jurisdiction [Doc. # 1]. Plaintiffs filed the instant Motion to Remand [Doc. # 5]
contending Plaintiffs had asserted “valid and viable claims for strict liability and
negligence against Mac Haik” under Texas law. Id. The Motion to Remand has been
fully briefed and is now ripe for decision.
II.

LEGAL STANDARDS
“‘Federal courts are courts of limited jurisdiction.’” Rasul v. Bush, 542 U.S.

466, 489 (2004) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,
377 (1994)); McKee v. Kansas City S. Ry. Co., 358 F.3d 329, 337 (5th Cir. 2004);
Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001). “‘They possess only
that power authorized by Constitution and statute, which is not to be expanded by
judicial decree.’” Rasul, 542 U.S. at 489 (quoting Kokkonen, 511 U.S. at 377
(citations omitted)). The court “must presume that a suit lies outside this limited
jurisdiction, and the burden of establishing federal jurisdiction rests on the party
seeking the federal forum.” Howery, 243 F.3d at 916 (citing Kokkonen, 511 U.S. at

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377), accord Bourne v. Wal-Mart Stores, Inc., 582 F. Supp. 2d 828, 832 (E.D. Tex.
2008). See also Boone v. Citigroup, Inc., 416 F.3d 382, 388 (5th Cir. 2005).
GM asserts that Mac Haik was improperly joined and that, as a result, the Court
should disregard Mac Haik’s Texas citizenship for purposes of diversity jurisdiction.
A non-diverse defendant may be found to be improperly joined if either there is
“actual fraud in the plaintiff’s pleading of jurisdictional facts” or if the removing
defendant demonstrates that the plaintiff cannot establish a cause of action against the
non-diverse defendant. Kling Realty Co., Inc. v. Chevron USA, Inc., 575 F.3d 510,
513 (5th Cir. 2009) (citing Campbell v. Stone Ins., Inc., 509 F.3d 665, 669 (5th Cir.
2007)).

There is no allegation of actual fraud in Plaintiffs’ pleading of the

jurisdictional facts in this case.
The test under the second prong “is whether the defendant has demonstrated
that there is no possibility of recovery by the plaintiff against an in-state defendant,
which stated differently means that there is no reasonable basis for the district court
to predict that the plaintiff might be able to recover against an in-state defendant.” Id.
(quoting Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en
banc)). The party asserting improper joinder bears a heavy burden of persuasion. Id.
at 514. “[A]ny doubt about the propriety of removal must be resolved in favor of
remand.” Gasch v. Hartford Acc. & Indem. Co., 491 F.3d 278, 281-82 (5th Cir.

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2007). Generally, if the plaintiff could survive a Rule 12(b)(6) challenge, joinder is
not improper. See Smallwood, 385 F.3d at 573. In conducting a Rule 12(b)(6)-type
analysis, “we must construe the complaint in the light most favorable to the plaintiff
and draw all reasonable inferences in the plaintiff's favor.” Elsensohn v. St. Tammany
Parish Sheriff's Office, 530 F.3d 368, 371-372 (5th Cir. 2008). The Court will resolve
“all contested factual issues and ambiguities of state law in favor of the plaintiff.”
Gasch, 491 F.3d at 281 (5th Cir. 2007).
III.

ANALYSIS
GM argues that both Plaintiffs’ strict liability and negligence claims against

Mac Haik are barred entirely by Section 82.003 of the Texas Civil Practice and
Remedies Code which generally ensures non-manufacturing sellers immunity from
liability with select exceptions. Section 82.003(a) states that “a seller that did not
manufacture a product is not liable for harm caused to the claimant by that product
unless the claimant proves” that one of the enumerated exceptions applies. Plaintiffs
counter that they have pleaded Mac Haik’s knowledge of the alleged defect(s) in the
vehicle at the time of sale and thus, that their claim properly falls under the exception
found in Section 82.003(a)(6). This exception provides that a non-manufacturing
seller may be held liable if “(A) the seller actually knew of a defect to the product at

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the time the seller supplied the product; and (B) the claimant's harm resulted from the
defect.” TEX. CIV. PRAC. & REM. CODE ANN. § 82.003(a)(6) (West 2011).
In their Original Petition, Plaintiffs allege in pertinent part:
10.4 Defendant Mac Haik is liable for harm caused to the Plaintiffs
because Defendant Mac Haik knew of the defects in the 2002 Tahoe, as
listed above, at the time Defendant Mac Haik supplied the product to
Plaintiffs.
10.5 The above alleged negligent acts or omissions were in whole or in
part a direct and proximate cause of the injuries to Plaintiffs and the
damages suffered by Plaintiffs and the damages alleged herein.
Plaintiff’s Original Petition [Doc. # 1-4], ¶¶ 10.4-10.5.
GM argues that Plaintiffs have not adequately pleaded Mac Haik’s knowledge
because the allegation appears only within the section of Plaintiffs’ complaint
articulating the negligence claim. Because Plaintiffs did not formally plead Mac
Haik’s knowledge in conjunction with their strict liability claim, GM argues that the
Court cannot consider that allegation for purposes of improper joinder analysis. The
Court is not persuaded. As previously noted, in considering remand motions, the
Court construes plaintiffs’ pleadings liberally. Elsensohn, 530 F.3d 368, 371-372 (5th
Cir. 2008). The Court must essentially do a Rule 12(b)(6) analysis. See Smallwood,
385 F.3d at 573. In conducting a Rule 12(b)(6) analysis, the Court “must consider the
complaint in its entirety . . . .’” Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir.
2011) (quoting Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322
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(2007)). In a Rule 12(b)(6) analysis, the complaint must be liberally construed in
favor of the plaintiff, and all facts pleaded in the complaint must be taken as true. See
Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 725 (5th Cir. 2002).
“[R]andom selection and rejection of portions of the pleadings to best serve the
purpose [of the defendant] is not in keeping with the liberal intent of the Rules.”
Banco Cont’l v. Curtiss Nat’l Bank of Miami, 406 F.2d 510, 514 (5th Cir. 1969). The
United States Supreme Court has explained that in the Rule 12(b)(6) context, a court
must accept as true all factual allegations in a complaint and a complaint survives a
motion to dismiss if the complaint states a “plausible claim for relief.” Ashcroft v.
Iqbal, 129 S. Ct. 1937, 1949-50 (2009); see Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007).1 Factual allegations are assumed to be true, even if doubtful in fact.
Twombly, 550 U.S. at 555; Lindquist v. City of Pasadena, 525 F.3d 383, 386 (5th Cir.
2008).
GM next argues that Plaintiffs’ pleading on the issue of knowledge is
insufficient to trigger the knowledge exception in Section 82.003(a)(6). GM argues
that Plaintiffs’ pleading is too conclusory and only alleges that Mac Haik “should
have known” about the alleged defect(s) in the vehicle under issue. See GM’s
Response [Doc. # 6], at 15, 21. To the contrary, Plaintiffs allege unambiguously that
1

The Supreme Court stated that a district court need not accept a complaint’s legal
conclusions as true, but this principle is not of concern here.

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Mac Haik actually knew about the numerous defects alleged in their complaint.
Indeed, Plaintiffs’ pleadings contain all of the elements necessary for the exception
in Section 82.003(a)(6) to apply.2 Other than in claims for fraud or mistake, federal
pleading rules do not require specific factual allegations regarding knowledge. See
FED. R. CIV. P. 9(b), and compare FED. R. CIV. P. 8(a)(2) (“A pleading that states a
claim for relief must contain: . . . (2) a short and plain statement of the claim showing
that the pleader is entitled to relief”).
These allegations, when viewed in the light most favorable to Plaintiffs, are
sufficient to give rise to the possibility of Plaintiffs’ recovery against Mac Haik under
Section 82.003(a)(6). See, e.g., Reynolds v. Ford Motor Co., No. 04CV085-C, 2004
WL 2870079 (N.D. Tex. Dec. 13, 2004) (remanding the case after concluding that “a
plaintiff’s pleading that a dealership ‘knew’ or had ‘full knowledge’ of the alleged
defect in the vehicle at the time of sale is sufficient when viewed in a light most
favorable to the plaintiff”); Mawer v. DaimlerChrysler Corp., No. C-06-154, 2006
WL 2405030 (S.D. Tex. Aug. 10, 2006) (holding that plaintiff’s claim that the local
dealership knew about the vehicle’s defect at the time of sale was sufficient, despite
competing evidence, to find that plaintiff had a possibility of recovery against the
local dealership and remanding case); Brewer v. Porsche Cars North America, Inc.,
2

They specifically allege that Mac Haik had (1) actual knowledge of the defect(s),
(2) at the time of sale, and that (3) those defects caused injury.

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No. 3:04-CV-2343-M, 2005 WL 292417 (N.D. Tex., Feb. 7, 2005) (remanding case
where plaintiffs alleged local defendant had actual knowledge of a defect in the car
at the time of lease).
GM also asks the Court to pierce the pleadings and consider the affidavit of
Terry Shields, Director of Dealer Operations for Mac Haik. Shields states in pertinent
part that “at no time prior to sale of the Subject Vehicle was Mac Haik Chevrolet
actually aware of any defect or alleged defect to the Subject Vehicle.” Affidavit of
Terry R. Shields [Doc. # 6-1], ¶ 6. This conclusory and self-serving averment is not
dispositive. There are issues about the basis for Shields’ purported knowledge, how
he reaches his conclusion, and whether his views can be impeached by third party or
other evidence.

See Mawer, 2006 WL 2405030, at *2 (“However, because

DaimerChrysler only provided a single, conclusory affidavit, the Court finds that it
has failed to show that [local defendant’s] knowledge of the defect at the time the Jeep
was sold is a discrete and undisputed fact.”). Moreover, in deciding a motion to
remand, “the focus of the inquiry must be on the joinder, not the merits of the
plaintiff’s case.” Smallwood, 385 F.3d at 573. The Shields affidavit raises a fact issue
that goes directly to the merits of this case. “The Fifth Circuit has held that a defense
upon which fraudulent joinder is based that requires a determination of the merits
should be disposed of by the state court.” Moore v. Ford Motor Co., No. 08-02092,

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2008 WL 3981839, at *3 (S.D. Tex. Aug. 22, 2008) (quoting Reynolds v. Ford Motor
Co., No. 5:04-CV-085-C, 2004 WL 2870079, at *4 (N.D. Tex. Dec. 13, 2004) (citing
Smallwood, 342 F.3d at 405)). This circumstance indicates that remand is warranted.
Smallwood, 385 F.3d at 574 (“[T]he inability to make the requisite decision [regarding
an alleged improper joinder] in a summary manner itself points to an inability of the
removing party to carry its burden.”). “The Court must not ‘pre-try’ substantive
factual issues in order to answer the discrete threshold question of whether the joinder
of an instate defendant is fraudulent.” Reynolds, 2004 WL 2870079, at *2. In sum,
this early stage is not the time to resolve a central disputed fact in this case. The
question is merely whether there is a “possibility” of Plaintiffs’ recovery. See
Engelbecht v. DaimlerChrysler Corp., No. G–06–CV–800, 2007 WL 1040886, at *2
(S.D. Tex. Apr. 2, 2007) (quoting Burden v. Gen’l Dynamics Corp., 60 F.3d 213, 216
(5th Cir. 1995)). Accordingly, the disputed factual issue of Mac Haik’s knowledge
is properly reserved to the state court.
Because Plaintiffs pleadings indicate they possibly could recover against Mac
Haik under Texas state law, Mac Haik was not improperly joined. As Mac Haik and
Plaintiffs are both citizens of Texas, there is not complete diversity of citizenship in
this case and this Court lacks subject matter jurisdiction.3
3

Plaintiffs also advance other exceptions to Section 82.003’s bar against non(continued...)

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IV.

CONCLUSION AND ORDER
Based on the foregoing, the Court concludes that GM has not satisfied its heavy

burden to establish that Mac Haik was improperly joined as a Defendant in this case.
As a result, the Court will not disregard Mac Haik’s Texas citizenship and concludes
there is not complete diversity in this case. Accordingly, the Court lacks subject
matter jurisdiction in this case and it is hereby
ORDERED that Plaintiff’s Motion to Remand [Doc. # 5] is GRANTED.
SIGNED at Houston, Texas, this 12th day of August, 2011.

3

(...continued)
manufacturing seller liability. Because the Court finds that Plaintiffs properly pleaded
the Section 82.003(a)(6) exception, Plaintiffs have shown a possibility of recovery
against Mac Haik and the Court need not address these alternative theories.

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