Armstrong v. Gen. Motors LLC

• Decision Date: 27 January 2020
• Docket Number: CIV. NO. 19-00480 LEK-RT
• Parties: SUSAN M. ARMSTRONG AND MURRAY ARMSTRONG, Plaintiffs, v. GENERAL MOTORS LLC, EAN HOLDINGS, LLC, ENTERPRISE FLEET MANAGEMENT, INC., CRAWFORD GROUP, INC., THE, JIMMY ROGERS, JOSHUA B. GREENWOOD, JOHN DOES 1-10, JANE DOES 1-10, DOE CORPORATIONS 1-10, DOE PARTNERSHIPS 1-10, DOE NON-PROFIT ENTITIES 1-10, DOE GOVERNMENTAL ENTITIES 1-10, Defendants.
• Court: U.S. District Court — District of Hawaii

SUSAN M. ARMSTRONG AND MURRAY ARMSTRONG, Plaintiffs, v. GENERAL MOTORS LLC, EAN HOLDINGS, LLC, ENTERPRISE FLEET MANAGEMENT, INC.,CRAWFORD GROUP, INC., THE, JIMMY ROGERS, JOSHUA B. GREENWOOD, JOHN DOES 1-10,JANE DOES 1-10, DOE CORPORATIONS 1-10, DOE PARTNERSHIPS 1-10,DOE NON-PROFIT ENTITIES 1-10, DOE GOVERNMENTAL ENTITIES 1-10, Defendants.

CIV. NO. 19-00480 LEK-RT

UNITED STATES DISTRICT COURT DISTRICT OF HAWAII

January 27, 2020

ORDER GRANTING PLAINTIFF'S MOTION TO REMAND CIVIL ACTION (CASE NO. 1:19-CV-00480 LEK-RT) TO STATE COURT

Before the Court is Plaintiffs Susan M. Armstrong and Murray Armstrong's ("Plaintiffs") motion to remand the instant case to state court ("Motion"), filed on October 4, 2019. [Dkt. no. 21.] Defendant EAN Holdings, LLC, doing business as Enterprise Holdings ("Enterprise"), filed its memorandum in opposition on October 25, 2019,¹ and Defendant General Motors LLC("GM") filed a substantive joinder in the memorandum in opposition on October 28, 2019. [Dkt. nos. 28, 29.] Plaintiffs filed their reply on November 1, 2019. [Dkt. no. 30.] This matter came on for hearing on November 15, 2019. Plaintiffs' Motion is hereby granted for the reasons set forth below.

BACKGROUND

Plaintiffs filed their Complaint on August 28, 2019 in the State of Hawai`i First Circuit Court. [Notice of Removal ("Notice"), filed 9/4/19 (dkt. no. 1), Exh. A at 5-21.²] In addition to GM and the Enterprise Defendants, Plaintiffs also name Joshua B. Greenwood ("Greenwood") and Jimmy Rodgers ("Rogers") as Defendants (all collectively "Defendants").

According to the Complaint, on September 3, 2017, Susan Armstrong was driving a 2007 Chevrolet Impala ("the Subject Impala") when Greenwood's 1995 Toyota 4Runner struck the Subject Impala on the driver's side ("the Incident"). Plaintiffs allege Greenwood was speeding and ran through a red light. Susan Armstrong was wearing her seat belt. [Complaint at ¶ 16.] Plaintiffs did not know that the side-curtainairbags, which they allege were a standard feature in the 2007 Impalas, "had been removed or 'deleted' from the [S]ubject Impala." [Id. at ¶ 17.] Plaintiffs allege that, because of the lack of side-curtain airbags in the Subject Impala, Susan Armstrong suffered more serious injuries than she otherwise would have suffered in the Incident. [Id.]

Plaintiffs allege GM agreed to sell the Subject Impala to Enterprise, without the standard side-curtain airbags, which saved Enterprise $140.00. [Id. at ¶ 19.] Plaintiffs argue this transaction was an example of "tens (if not hundreds) of thousands" of sale agreements "between GM and one or more of the other Defendants both before and after the sale of the [S]ubject Impala, involving multiple vehicle models over multiple model years." [Id. at ¶ 20.] Plaintiffs argue that, because Defendants knew how important airbags were to the safety of each vehicle, the pattern shown in these agreements was "callous and despicable, motivated solely by money and greed and demonstrated a pattern of conscious disregard and reckless indifference by the Defendants to the safety and rights of consumers, including [Susan Armstrong]." [Id.] Rogers sold the Subject Impala to Plaintiffs without warning them about the missing side-curtain airbags. [Id. at ¶ 27.]

Plaintiffs allege the following claims: negligence against Defendants ("Count I"); breach of express and impliedwarranties against GM, the Enterprise Defendants, and Rogers ("Count II"); failure to warn against GM, the Enterprise Defendants, and Rogers ("Count III"); negligent misrepresentation against GM, the Enterprise Defendants, and Rogers ("Count IV"); a strict products liability claim against GM, the Enterprise Defendants, and Rogers ("Count V"); and a loss of consortium claim against Defendants ("Count VI").

Enterprise removed the Complaint based on diversity jurisdiction, pursuant to 28 U.S.C. § 1441. [Notice at pg. 2.] Plaintiffs state they are Hawai`i citizens. [Complaint at ¶¶ 1-2.] Enterprise asserts that, for purposes of diversity jurisdiction: GM is a citizen of Delaware and Michigan; and each of the Enterprise Defendants is a Missouri citizen. [Notice at ¶¶ 2-5.] Plaintiffs allege Greenwood and Rogers are Hawai`i citizens. [Complaint at ¶¶ 7-8.] Enterprise asserts Greenwood's citizenship and Rogers's citizenship do not have to be considered either for purposes of the forum defendant rule or for purposes of complete diversity because, when Enterprise filed the Notice, Plaintiffs had not served either Greenwood or Rogers. [Notice at ¶¶ 6, 8.] As to the amount in controversy, Enterprise notes the Complaint does not plead a specific amount of damages, but Enterprise argues "it is clear from the face of the Complaint" that more than $75,000 is at issue in the case, excluding interest and costs. [Notice at ¶ 9.]

Enterprise filed an Amended Notice of Removal ("Amended Notice") on September 30, 2019. [Dkt. no. 18.] The Amended Notice alleges that Greenwood is a Utah resident for purposes of diversity jurisdiction. [Id. at ¶ 6.] In addition, the Amended Notice alleges Rogers's citizenship does not destroy diversity because he was fraudulently joined, since Plaintiffs' claim against him fails to state a claim. [Id. at ¶ 7.]

In the instant Motion, Plaintiffs argue Enterprise's "'snap removal' process" was improper because there is no diversity jurisdiction in this case, due to a lack of complete diversity. [Mem. in Supp. of Motion at 4-5.] Plaintiffs urge this Court to disregard the Amended Notice because Enterprise did not obtain leave of court to amend the Notice and because Enterprise did not obtain the consent of the defendants that had been served at the time the Amended Notice was filed. If the arguments in the Amended Notice are considered, Plaintiffs contend Rogers was not fraudulently joined, and the Amended Notice does not establish that Greenwood is a citizen of Utah for purposes of diversity jurisdiction.

STANDARD

I. General Removal Principles

The general statute governing removal, 28 U.S.C. § 1441, is "strictly construe[d] . . . against removaljurisdiction." Hansen v. Grp. Health Coop., 902 F.3d 1051, 1056 (9th Cir. 2018) (citations and quotation marks omitted).

If a district court determines at any time that less than a preponderance of the evidence supports the right of removal, it must remand the action to the state court. SeeGeographic Expeditions, Inc. v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1107 (9th Cir. 2010); California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th Cir. 2004). The removing defendant bears the burden of overcoming the "strong presumption against removal jurisdiction." Geographic Expeditions, 599 F.3d at 1107 (citation omitted).

Id. at 1057. The "'strong presumption against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper,' and that the court resolves all ambiguity in favor of remand to state court." Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (quoting Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per curiam)).

II. Diversity Jurisdiction and Fraudulent Joinder

Enterprise removed this case pursuant to 28 U.S.C. § 1332(a), which provides, in relevant part, that federal district courts "shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between - (1) citizens of different States." Diversity jurisdiction requires complete diversity of citizenship, i.e., that everyplaintiff be a citizen of a different state from every defendant. Grancare, LLC v. Thrower ex rel. Mills, 889 F.3d 543, 548 (9th Cir. 2018) (citing Caterpillar Inc. v. Lewis, 519 U.S. 61, 68, 117 S. Ct. 467, 136 L. E. 2d 437 (1996)). However, when determining if complete diversity exists, the district court disregards the citizenship of any fraudulently joined defendants. Id. (citing Chesapeake & Ohio Ry. Co. v. Cockrell, 232 U.S. 146, 152, 34 S. Ct. 278, 58 L. Ed. 544 (1914)).

There are two ways to establish fraudulent joinder: "(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court." Hunter v. Philip Morris USA, 582 F.3d 1039, 1044 (9th Cir. 2009) (quoting Smallwood v. Illinois Cent. RR. Co., 385 F.3d 568, 573 (5th Cir. 2004)). Fraudulent joinder is established the second way if a defendant shows that an "individual[] joined in the action cannot be liable on any theory." Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). But "if there is a possibility that a state court would find that the complaint states a cause of action against any of the resident defendants, the federal court must find that the joinder was proper and remand the case to the state court." Hunter, 582 F.3d at 1046 (quoting Tillman v. R.J. Reynolds Tobacco, 340 F.3d 1277, 1279 (11th Cir. 2003) (per curiam)) (emphasis added). A defendant invoking federal court diversity jurisdiction on the basis of fraudulent joinder bears a "heavy burden" since there is a "general presumption against [finding] fraudulent joinder." Id. (citations omitted).

. . . We have . . . upheld such rulings where a defendant presents extraordinarily strong evidence or arguments that a plaintiff could not possibly prevail on her claims against the allegedly fraudulently joined defendant. SeeMcCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987) (defendant's conduct was privileged under state law); United Comput. Sys. Inc. v. AT&T Corp., 298 F.3d 756, 761 (9th Cir. 2002) (plaintiff's claims against alleged sham defendant were all predicated on a contract to which the defendant was not a party); Kruso v. Int'l Tel. & Tel. Corp., 872 F.2d 1416, 1426-27 (9th Cir. 1989) (same). We have declined to uphold fraudulent joinder rulings where a defendant raises a defense that requires a searching inquiry into the merits of the plaintiff's

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