Stampfli, Lance v. Paccar, Inc. et al
Filing
22
ORDER granting 6 Motion to Remand to State Court by Plaintiff Lance Michael Stampfli. Signed by District Judge William M. Conley on 5/21/218. (voc)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
LANCE MICHAEL STAMPFLI,
Plaintiff,
v.
OPINION AND ORDER
17-cv-751-wmc
PACCAR, INC. d/b/a KENWORTH
TRUCK COMPANY and WISCONSIN
KENWORTH, LLC d/b/a WISCONSIN
KENWORTH,
Defendants.
Plaintiff Lance Michael Stampfli originally filed a complaint against defendants
PACCAR and Wisconsin Kenworth in the Portage County Circuit Court for breach of
warranty. 1 (See dkt. #1-1.) The defendants filed a timely notice of removal to this court,
alleging diversity jurisdiction based on Stampfli’s fraudulent joiner of defendant Wisconsin
Kenworth. 2 (See dkt. #1.) Stampfli then sought remand (dkt. ##6-7), which defendant
PACCAR opposes. (Dkt. #10).
The parties are inconsistent in how they refer to the defendants. For consistency and clarity, the
court will refer to PACCAR, Inc. d/b/a Kenworth Truck Company as “PACCAR” and Wisconsin
Kenworth, LLC d/b/a Wisconsin Kenworth as “Wisconsin Kenworth.”
1
Despite receiving the notice of removal the Portage County Circuit Court scheduled a conference
for May 22, 2018. Following a request to adjourn that conference in early May, that court
recognized the notice of removal and ordered the state case be dismissed without prejudice within
20 days “unless good cause is shown.” (Stampfli v. PACCAR, Inc., No. 2017CV000256 Docket at
2.)
2
BACKGROUND 3
A. Truck Purchase
In September 2016, Stampfli, a Wisconsin resident, purchased a new 2017
Kenworth model t880 truck for $193,925 from Wisconsin Kenworth, a Wisconsin limited
liability company whose sole member, CSM Companies, Inc., is a Wisconsin corporation,
with its principal place of business in Madison, WI. Wisconsin Kenworth appears to be
an authorized dealer of Kenworth Truck Company (“Kenworth”) trucks, parts and service,
as well as PACCAR engines, parts and service. Plaintiff alleges that the truck he purchased
was manufactured or distributed by PACCAR, “a foreign business corporation licensed to
do business in the State of Wisconsin,” with its principal place of business in Bellevue,
Washington. (Compl. (dkt. #1-1) ¶¶ 2, 7.) 4
The motor vehicle purchase contract between Stampfli and Wisconsin Kenworth
states that the truck was “sold AS IS,” with “the dealer assum[ing] no responsibility for
any repairs” and “disclaim[ing] implied warranties of merchantability and fitness for a
particular purpose.” (Purchase Contract (dkt. #2-1) 1.) The contract also twice specifies
that the “[d]ealer is not a party to any manufacturer warranties.” (Id.)
Upon purchase, Stampfli also received a Kenworth Limited Warranty and a
PACCAR Engine Limited Warranty. The Kenworth limited warranty provides in part:
The following facts are derived from plaintiff’s complaint, the notice of removal, and the parties’
briefing on plaintiff’s motion to remand.
3
In its notice of removal, PACCAR specifies that it is incorporated in the state of Delaware. (Not.
Removal (dkt. #1) ¶ 10.)
4
2
(Kenworth Truck Warranty (dkt. #2-2) 1.) The PACCAR limited warranty provides:
(PACCAR Engine Warranty (dkt. #2-3) 1.) Both warranties are signed by Wisconsin
Kenworth’s “Director of Fleet Sales.” (Kenworth Truck Warranty (dkt. #2-2) 2; PACCAR
Engine Warranty (dkt. #2-3) 2, 4, 5.)
Nevertheless, PACCAR maintains that its
authorized dealer Wisconsin Kenworth was not a party to either warranty.
B. Alleged Breach of Express Warranty
Stampfli has identified thirteen problems that he alleges constitute “Warrantable
Failures”:
A. The Truck’s steering wheel is not straight.
B. The Truck drifts right or left when it should proceed
straight. . . .
C. Sometimes the power takeoff does not engage and it
does not engage above the third gear.
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D. Sometimes the Truck will not exceed approximately 2
mph [when] the power takeoff is engaged, making it
impossible to perform a typical “dump and run” . . . .
E. The Truck’s transmission “clunks” between the 7th and
8th [g]ears. The transmission sometimes “skips.”
F. The Truck’s heating system malfunctions . . . .
G. The Truck “clunks” on the right front especially when
loaded.
H. The Truck’s dashboard and upper console rattles and
the seatbelt squeaks at or near the driver post.
I. With foot on the Truck’s break, the Truck won’t start
and will not engage into gear.
J. The Truck’s brakes squeal and will start to grind when
moving in reverse and also, on occasion, when going
forward.
K. The Truck’s shift timing is not synchronized.
L. Sometimes the Truck will not move, requiring moving
the lever to “N” and then back to “D” or to manual.
M. If the Truck is stopped and put in “R” and the brakes
applied, “R2” displays and “dings” and the vehicle will
not move.
(Id. ¶¶ 10-11.) Plaintiff alleges that he provided notice of these breaches of warranty, but
the defendants “have not remedied or repaired the Warrantable Failures.” (Id. ¶ 13.)
C. Alleged Basis for Removal
In its notice of removal, PACCAR alleges that this court has jurisdiction over the
dispute based on the diversity of parties and the amount in controversy exceeding $75,000.
(See Not. Removal (dkt. #1) ¶ 4.) Specifically, PACCAR alleges that: (1) “Wisconsin
Kenworth’s citizenship is irrelevant for diversity purposes and should be disregarded
because plaintiff fraudulently joined it as a party for the sole purpose of defeating diversity
of citizenship in this case” (id. ¶ 5); and (2) Stampfli seeks in excess of $75,000 because
he is trying to recover “the reasonable costs of the repair or replacement of the alleged
warrantable failures, and the vehicle has a base purchase price of $193,925,” plus costs and
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attorneys’ fees (id. ¶¶ 13-14). Stampfli disputes both allegations.
OPINION
I. Fraudulent Joinder
In order for a federal court to have diversity jurisdiction, other than in a class action
setting, there must be complete diversity between the plaintiff(s) and defendant(s), and
the dispute must have at least $75,000 in controversy, exclusive of costs and interest. 28
U.S.C. § 1332(a). When a plaintiff brings suit in state court and these two requirements
are facially satisfied by the pleadings, a defendant may remove the case to federal court
under 28 U.S.C. § 1441(a). As is the case here, a defendant may seek to remove to federal
court where complete diversity is lacking on the face of the complaint, but would be
satisfied if the non-diverse party were shown to be “fraudulently joined.” See Kasal v.
Stryker Corp., No. 17-CV-1001-JPS, 2017 WL 4162312, at *2 (E.D. Wis. Sept. 19, 2017)
(citing Morris v. Nuzzo, 718 F.3d 660, 666 (7th Cir. 2013)) (“The fraudulent joinder
doctrine is an exception to the requirement of complete diversity.”).
Typically, fraudulent joinder “involves a claim against an in-state defendant that
simply has no chance of success, [regardless of] the plaintiff’s motives.” Poulos v. Naas
Foods, Inc., 959 F.2d 69, 73-74 (7th Cir. 1992) (finding fraudulent joinder because plaintiff
had no chance of recovering against the in-state defendant in state court); Kasal, 2017 WL
4162312 at *2 (“‘[A]n out-of-state defendant’s right to removal premised on diversity
cannot be defeated by joinder of a nondiverse defendant against whom the plaintiff’s claim
5
has no chance of success.’” (quoting Morris, 718 F.3d at 666)). 5 The fraudulent joinder
doctrine allows a district court to “disregard, for jurisdictional purposes, the citizenship of
certain nondiverse defendants, assume jurisdiction over a case, dismiss the nondiverse
defendants, and thereby retain jurisdiction.” Kasal, 2017 WL 4162312 at *2 (quoting
Morris, 718 F.3d at 666). While the doctrine recognizes that a plaintiff should not be
allowed to “join a nondiverse defendant simply to destroy jurisdiction,” Schur v. L.A. Weight
Loss Ctrs., Inc., 577 F.3d 752, 763 (7th Cir. 2009), a defendant seeking removal on this
basis bears “a heavy burden to establish fraudulent joinder”; specifically, it “must show
that, after resolving all issues of fact and law in favor of the plaintiff, the plaintiff cannot
establish a cause of action against the in-state defendant,” Poulos, 959 F.2d at 73 (emphasis
in original) (internal citation omitted). “Put another way, there is a strong presumption
in favor of remand,” with the removal statute interpreted “narrowly” and deference shown
to plaintiff’s choice of “his or her forum.” Rutherford, 428 F. Supp. 2d at 846 (citing Doe
v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993)); Jones v. General Tire & Rubber Co.,
541 F.2d 660, 664 (7th Cir. 1976)). Moreover, a district court’s review “is even weaker
than that applied to a motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6),” meaning that the court should deny remand only if the claims asserted against
the nondiverse defendant are “wholly insubstantial and frivolous.”
Kasal, 2017 WL
Of course, “false allegations of jurisdictional facts may [also] make joinder fraudulent.” Poulos,
959 F.2d at 73. The Eleventh Circuit has recognized “fraudulent misjoinder,” an “‘egregious’
misjoinder of claims that is tantamount to fraudulent joinder,” although the Seventh Circuit has
not yet reason to recognize the fraudulent misjoinder doctrine. Rutherford v. Merck & Co., Inc., 428
F. Supp. 2d 842, 850-51 (S.D. Ill. 2006) (citing Tapscott v. MS Dealer Service Corp., 77 F.3d 1353
(11th Cir. 1996)).
5
6
4162312 at *2 (citing Batoff v. State Farm Ins. Co., 977 F.2d 848, 852 (3d Cir. 1992)).
In considering a claim of fraudulent joinder, the court may look beyond the
complaint. See Faucett v. Ingersoll-Rand Min. & Machinery Co., 960 F.2d 653, 655 (7th Cir.
1992) (nondiverse defendant repairman’s uncontradicted affidavit stating that he had
nothing to do with the injury-causing machine established fraudulent joinder). However,
even this inquiry is “strictly circumscribed” and “limited to uncontroverted summary
evidence which establishes unmistakably that a diversity-defeating defendant cannot
possibly be liable to a plaintiff under applicable state law.” Rutherford, 428 F. Supp. 2d at
847-48 (citations omitted). If doubt remains about the appropriateness of removal, the
case should be remanded. See Jones., 541 F.2d at 664 (explaining that for cases removed
under federal question jurisdiction, “the federal nature of the claim must be a basic issue
in the case” (internal citation omitted)); see also Schur, 577 F.3d at 758 (“The party seeking
removal has the burden of establishing federal jurisdiction, and federal courts should
interpret the removal statute narrowly, resolving any doubt in favor of the plaintiff’s choice
of forum in state court”). Notwithstanding defendants’ assertions to the contrary, this is
such a case.
PACCAR asserts that Wisconsin Kenworth was fraudulently joined because
“plaintiff has no reasonable probability of success against Wisconsin Kenworth for breach
of express warranty.” (Not. Removal (dkt. #1) ¶ 28.) Having reviewed the purchase
contract and the warranties, however, liability under the warranties would appear to flow
jointly and severally to either defendant and perhaps to Kenworth. Indeed, given that
Kenworth itself was not sued directly, plaintiff’s sole remedy for the myriad, alleged truck
7
defects subject to warranty, as opposed to engine defects, would appear to be against its
authorized truck dealer, defendant Wisconsin Kenworth, at least at this juncture in this
lawsuit.
Courts charged with contract construction aim “to ascertain the true intentions of
the parties as expressed by the contractual language” with the purpose of “determin[ing]
what the parties contracted to do as evidenced by the language they saw fit to use.” State
ex rel. Journal/Sentinel, Inc. v. Pleva, 155 Wis. 2d 704, 711, 456 N.W.2d 359, 362 (1990).
Additionally, “an agreement should be given a reasonable meaning so that no part of the
contract is surplusage.” Id.
When contractual language is ambiguous, the court can
examine extrinsic evidence to determine what the parties intended. See Town Bank v. City
Real Estate Develop., LLC, 2010 WI 134 ¶ 33. Inconsistent provisions are ambiguous.
Spencer v. Spencer, 140 Wis.2d 447, 451, 410 N.W.2d 629 (Wis. App. 1987).
At the time Stampfli purchased the 2017 Kenworth T880 truck, he entered into a
motor vehicle purchase contract, as well as into the two warranty agreements.
(See
Purchase Contract (dkt. #2-1); Kenworth Truck Warranty (dkt. #2-2) 2; PACCAR Engine
Warranty (dkt. #2-3) 2.) All three agreements were executed on September 6, 2016, to
effectuate Stampfli’s truck purchase; accordingly, all three must be read together. In fact,
the motor vehicle purchase contract specifically references the “manufacturer warranties”
(Purchase Contract (dkt. #2-1) 1), further tying these agreements together. In fairness,
the purchase contract expressly provides that:
the “[d]ealer is not a party to any
manufacturer warranties”; the “[d]ealer disclaims implied warranties of merchantability
and fitness for a particular purpose”; and “this vehicle is sold AS IS and the dealer assumes
8
no responsibility for any repairs regardless of any oral statements about the vehicle.” (Id.)
Despite these admonitions however, the contemporaneous warranty agreements purport
to “LIST[] THE RESPECTIVE RIGHTS AND RESPONSIBILITIES OF YOU,
KENWORTH TRUCK COMPANY (‘KENWORTH’) [PACCAR INC. (‘PACCAR’)],
AND THE SELLING KENWORTH [PACCAR ENGINE] DEALER (‘SELLING
DEALER’).”
(Kenworth Truck Warranty (dkt. #2-2) 1 (emphasis added); PACCAR
Engine Warranty (dkt. #2-3) 1 (emphasis added).) Moreover, the truck purchaser is
advised that “YOUR SOLE AND EXCLUSIVE REMEDY AGAINST KENWORTH
[PACCAR] AND THE SELLING DEALER ARISING FROM YOUR PURCHASE AND
USE
OF
THIS
VEHICLE
[ENGINE]
IS
LIMITED
TO
THE
REPAIR
OR
REPLACEMENT OF ‘WARRANTABLE FAILURES’ AT AUTHORIZED UNITED
STATES AND CANADIAN KENWORTH [PACCAR ENGINE] DEALERS,” subject to
certain limitations. (Kenworth Truck Warranty (dkt. #2-2) 1 (emphasis added); PACCAR
Engine Warranty (dkt. #2-3) 1 (emphasis added).)
Even more inconsistent with
Wisconsin Kenworth’s disclaimers in the purchase contract, both warranty agreements
state: “This limited warranty is the sole warranty made by Kenworth [PACCAR] and the
Selling Dealer. Except for the above limited warranty, Kenworth [PACCAR] and the Selling
Dealer make no other warranties, express or implied.” 6 Finally, the director of fleet sales at
Wisconsin Kenworth also signed both agreements, as well as the purchase contract. (See
Even the disclaimers imply the joint and several nature of the warranties: “IT IS AGREED THAT
KENWORTH [PACCAR] AND THE SELLING DEALER SHALL NOT BE LIABLE FOR
INCIDENTAL OR CONSEQUENTIAL DAMAGES.” (Kenworth Truck Warranty (dkt. #2-2) 1
(emphasis added); PACCAR Engine Warranty (dkt. #2-3) 1 (emphasis added).)
6
9
Kenworth Truck Warranty (dkt. #2-2) 2; PACCAR Engine Warranty (dkt. #2-3) 2;
Purchase Contract (dkt. #2-1) 1.) 7
Parol evidence could be used to determine the parties’ intentions and resolve this
ambiguity, however, that would go beyond this court’s limited review at the remand stage.
See Rutherford, 428 F. Supp. 2d at 847-48 (describing inquiry as “extremely narrow,”
“strictly circumscribed,” and “limited to uncontroverted summary evidence”); Kasal, 2017
WL 4162312 at *2 (describing review as “even weaker than that applied to a motion to
dismiss”); cf. Faucett, 960 F.2d 653, 655 (relying on nondiverse defendant’s uncontradicted
affidavit to establish fraudulent joinder); see also Warren W. Fane, Inc. v. Tri-State Diesel,
PACCAR argues that “Wisconsin Kenworth’s representative signed both Warranties for a limited
purpose, namely to attest to the date of delivery to . . . the plaintiff, and to verify that pre-delivery
items had been performed.” (Opp’n (dkt. #10) 2-3.) However, the warranties do not appear to
support that interpretation. Wisconsin Kenworth’s director of fleet sales signed below PACCAR’s
director of warranty and the date of sale, next to plaintiff’s acknowledgements; only after the
signatures, did the dealer’s representative check off and initial pre-delivery items.
7
(Kenworth Truck Warranty (dkt. #2-2) 2; see also PACCAR Engine Warranty (dkt. #2-3) 2;
Purchase Contract (dkt. # 2-1) 1.)
10
Inc., No. 1:12-cv-1903, 2014 WL 1806773 (N.D.N.Y. May 7, 2014) (noting that the
selling dealer had “disclaimed all warranties not contained in the written document,” but
explaining that “[t]he warranty clearly applies to [the selling dealer], as well as to
Kenworth”). 8 Thus, plaintiff has a reasonable probability of recovering against Wisconsin
Kenworth. Indeed, as a practical matter, even if Kenworth is ultimately liable to Wisconsin
Kenworth to reimburse it for any parts and service covered by the warranty, it is Wisconsin
Kenworth that will have the customer interaction and perform the warranty work.
PACCAR relies on Goudy v. Yamaha Motor Corp., 2010 WI 55, for the proposition
that a dealer may sell a service contract without becoming a party to it (Not. Removal (dkt.
#1) ¶ 27), but Goudy is distinguishable on its facts. In Goudy, it was undisputed that the
seller had not entered into a service contract with the dealer, likely because the service
contract was expressly between Yamaha and Goudy: “PLEASE READ THIS CONTRACT
The Kenworth Warranty considered by the District Court for the Northern District of New York
in Warren W. Fane appears identical in all material respects to that at issue here:
• “YOUR SOLE AND EXCLUSIVE REMEDY AGAINST KENWORTH AND THE
SELLING DEALER ARISING FROM YOUR PURCHASE AND USE OF THIS VEHICLE
IS LIMITED TO THE REPAIR AND REPLACEMENT OF ‘WARRANTABLE FAILURES’
AT AUTHORIZED UNITED STATES AND CANADIAN KENWORTH DEALERS . . . .”
2014 WL 1806773, at *8.
• “IT IS AGREED THAT KENWORTH AND THE SELLING DEALER SHALL NOT BE
LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES . . . .” Id.
• “This limited warranty is the sole warranty made by Kenworth and the Selling Dealer.
Except for the above warranty, Kenworth and the Selling Dealer make no other warranties,
express or implied.” Id. at *13.
(See Kenworth Truck Warranty (dkt. #2-2) 1.) In Warren W. Fane, the agreement was signed by
Kenworth Truck Company, the purchaser “and a representative of the authorized dealer.” 2014
WL 1806773, at *13. Nevertheless, in Warren W. Fane, the selling dealer, Tri-State, argued that
“the only warranty that can apply . . . is the express warranty provided by Kenworth”; and “TriState offered no distinct warranty separate from the Kenworth warranty.” Id. at *11. While the
Warren W. Fane court ultimately granted summary judgment to Tri-State and Kenworth on
plaintiff’s warranty claims because Kenworth had not breached the express warranty, it obviously
viewed both to be legitimate defendants.
8
11
CAREFULLY.
IT CONTAINS THE ENTIRE AGREEMENT BETWEEN YAMAHA
MOTOR CORPORATION, U.S.A. AND YOU.” Goudy, 2010 WI 55 ¶ 22 (emphasis
added). The Wisconsin Court of Appeals explained that “not only is the service contract
expressly between Yamaha and Goudy only, it also disavows any notion that
Winnebagoland [the seller] could alter the terms of the contract in any way.” Id. In
contrast, as detailed above, the two manufacturer’s warranties at issue here repeatedly
inform the purchaser that the limited warranties are provided by the manufacturer “and
the selling dealer.”
(See Kenworth Truck Warranty (dkt. #2-2) 1 (emphasis added);
PACCAR Engine Warranty (dkt. #2-3) 1 (emphasis added).)
At most, by pointing out arguably inconsistent language in the parties’ purchase
agreement, PACCAR has created some doubt as to whether this express language means
what it says, but that is not enough to meet its “heavy burden to establish fraudulent
joinder.” Poulas, 959 F.2d at 73. Accordingly, the case must be remanded to the state
court. 9
II. Attorneys’ Fees & Expenses
In his motion to remand, plaintiff requests “payment of just costs and actual
expenses, including attorney’s fees, incurred by the plaintiff as a result of the removal, as
provided by 28 U.S.C. § 1447(c).” (Br. Supp. Mot. Remand (dkt. #7) 6.) Section 1447(c)
requires a district court lacking subject matter jurisdiction to remand a case and permits
the remanding order to “require payment of just costs and any actual expenses, including
Because the court finds that remand is appropriate, it need not address defendant’s argument
concerning the amount in controversy.
9
12
attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). Accordingly, a
district court may only award fees and costs “when such an award is just” -- “where the
removing party lacked an objectively reasonable basis for seeking removal.” Martin v.
Franklin Capital Corp., 546 U.S. 132, 138, 141 (2005); Bourdeau v. Credit Acceptance Corp.,
No. 16-cv-397-wmc, 2016 WL 7217863, at *2 (W.D. Wis. Dec. 13, 2016) (“A district
court may award fees and costs under [§ 1447(c)], however, only where the removing party
lacked an objectively reasonable basis for seeking removal.” (citing Martin, 546 U.S. at
136); Shakespeare Theatre Co. v. Lansburgh Theatre, Inc., No. 12-1030(RJL), 2012 WL
3018049, at *2 (D.D.C. July 24, 2012) (“An order remanding a case may, of course, require
an award of attorney’s fees and costs where the removing party lacked an ‘objectively
reasonable basis for seeking removal.’” (quoting Martin, 546 U.S. at 141)).
The Seventh Circuit has restated this “general rule” as follows:
[I]f, at the time the defendant filed his notice in federal court,
clearly established law demonstrated that he had no basis for
removal, then a district court should award a plaintiff his
attorneys’ fees. By contrast, if clearly established law did not
foreclose a defendant’s basis for removal, then a district court
should not award attorneys’ fees.
Lott v. Pfizer, Inc., 492 F.3d 789, 793 (7th Cir. 2007). In this case, the dearth of even
persuasive case citations in the parties’ briefs on the question of Wisconsin Kenworth’s
potential liability for breach of warranty underscores what the court essentially explained
above: there is no “clearly established law demonstrat[ing] that [PACCAR] had no basis
for removal.” Id. Thus, plaintiff’s request is denied.
13
ORDER
IT IS ORDERED that plaintiff’s motion to remand (dkt. #6) is GRANTED, but his
request for costs and expenses under § 1447(c) is DENIED.
Entered this 21st day of May, 2018.
BY THE COURT:
/s/
__________________________________
WILLIAM M. CONLEY
District Judge
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