Dollar v. General Motors Corp.

• Decision Date: 13 January 1993
• Docket Number: No. 2:92cv165.,2:92cv165.
• Citation: 814 F. Supp. 538
• Parties: Tommy DOLLAR, Individually and on Behalf of All Others Similarly Situated, Plaintiff, v. GENERAL MOTORS CORPORATION, Stallworth Buick Pontiac GMC Truck, Inc., and Rex Brown, Jr. d/b/a Nehls Chevrolet Oldsmobile Cadillac, Defendants.
• Court: U.S. District Court — Eastern District of Texas

814 F. Supp. 538

Tommy DOLLAR, Individually and on Behalf of All Others Similarly Situated, Plaintiff, v. GENERAL MOTORS CORPORATION, Stallworth Buick Pontiac GMC Truck, Inc., and Rex Brown, Jr. d/b/a Nehls Chevrolet Oldsmobile Cadillac, Defendants.

No. 2:92cv165.

United States District Court, E.D.Texas, Marshall Division.

January 13, 1993.

COPYRIGHT MATERIAL OMITTED

Sam Baxter, Rosemary T. Snider, Jones, Jones & Curry, Marshall, TX, Timothy J. Crowley, Crowley, Marks & Douglas, Houston, TX, for plaintiff.

W. Richard Davis, Ernest R. Higginbotham, Strasburger & Price, Dallas, TX, Tracy Crawford, Ramey & Flock, Tyler, TX, James L. Ware, McLeod, Alexander, Powel & Apffel, Galveston, TX, for defendants.

ORDER

HALL, District Judge.

CAME ON TO BE HEARD THIS DAY the Plaintiffs' Motion to Remand and the Defendant General Motors Corporation's Motion for a Stay of Proceedings Pending Potential MDL Consolidation. This Court, after reviewing the Motions, finds that they are well taken in part and not well taken in part.

I. BACKGROUND

Plaintiffs' class action suit alleges that Defendant General Motors Corporation's sidemounted fuel tanks on 1973-1987 full-size Chevrolet and GM pickups are defective in that they are located below the cab and are mounted outboard of the truck frame rails. Plaintiffs also allege fraud, misrepresentation, and concealment of material facts in representations and advertisements for the sale of Chevrolet or GMC full-size pickups, "C" or "K" series, model years 1973-1987 by Defendants General Motors Corporation ("GM"), Stallworth Buick-Pontiac-GMC Truck, Inc. ("Stallworth"), and Rex Brown, Jr. doing business as Nehls Chevrolet, Oldsmobile, Cadillac ("Nehls"). Plaintiffs also allege causes of action against all Defendants under the Texas Deceptive Trade Practices— Consumer Protection Act, Tex. Bus. & Comm. Code § 17.41 et seq., and for breach of express or implied warranties. Plaintiffs seek compensatory and punitive damages, and injunctive relief.

This case was originally filed in the 71st District Court of Harrison County, Texas, on November 17, 1992. Defendant General Motors Corporation removed this case to this Court based on diversity jurisdiction on December 10, 1992, and Plaintiffs now seek a remand asserting that this case was improperly removed because the diversity of citizenship required by 28 U.S.C. § 1332 does not exist. Plaintiffs claim that they, Defendant Stallworth, and Defendant Nehls were all citizens of the State of Texas at the time that Plaintiff's Original Petition was filed in the state court. On November 10, 1992, Defendants filed a motion before the Judicial Panel on Multidistrict Litigation (MDL), pursuant to 28 U.S.C. § 1407 seeking an order transferring this case to the United States District Court for the Eastern District of Pennsylvania for consolidation with other cases involving similar factual allegations. Defendants now seek an order staying these proceedings pending potential MDL consolidation.

II. DISCUSSION

Section 2, Clause I of Article III of the United States Constitution gives Congress the authority to vest federal courts with diversity jurisdiction. This authority was first given to the federal courts by the Judiciary Act of 1789, and is presently provided by 28 U.S.C. § 1332 in cases where there is a controversy between citizens of different states or between a citizen of a state and an alien. Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d § 3601. There are three questions to be answered in determining whether diversity jurisdiction exists: 1) is there complete diversity among the parties; 2) is any defendant a citizen of the forum state; and 3) does the amount in controversy equal or exceed $50,000?

A. Complete Diversity

28 U.S.C. § 1332 requires only that there be diversity between the parties to the lawsuit. However, in Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806), Chief Justice Marshall interpreted the Constitution's requirement of diversity to require "complete" diversity, i.e., that every plaintiff be diverse from every defendant. In this case, Defendants claim that there is complete diversity since the citizenship of Defendant Stallworth and Defendant Rex Brown, Jr., both Texas GM dealerships, should be disregarded for purposes of determining diversity because they were fraudulently joined.

Where it is claimed that a plaintiff has joined a non-diverse defendant to defeat diversity, the Court may disregard that fraudulently joined defendant when determining diversity. The current standard in the Fifth Circuit for determining when a defendant has been fraudulently joined was set forth in B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir.1981):

In order to establish that an in-state defendant has been fraudulently joined, the removing party must show either that there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court, or that there has been outright fraud in the plaintiff's pleading of jurisdictional facts.

Id. at 549 (emphasis in original); see also Carriere v. Sears, Roebuck & Co., 893 F.2d 98, 100 (5th Cir.1990), cert. denied, 498 U.S. 817, 111 S.Ct. 60, 112 L.Ed.2d 35 (1990); Green v. Amerada Hess Corp., 707 F.2d 201, 205 (5th Cir.1983) ("The removing party must prove that there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant in state court") (emphasis added). As there has been no allegation by the Defendants of fraud in the Plaintiffs' pleadings of jurisdictional facts, the Court looks only to see if the Defendants have proved that there is "absolutely no possibility" that the Plaintiffs may recover in state court on their claims against local GM dealers Stallworth and Nehls.¹

At the outset, the Court notes that the burden of proving fraudulent joinder is a heavy one. Green, 707 F.2d at 205. In evaluating fraudulent joinder claims, the Court must initially resolve all disputed questions of fact and all ambiguities in the state law in favor of the nonremoving party. Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir.1992). The motive of the Plaintiffs in joining the defendants is immaterial, provided that the Plaintiffs assert a good faith, cognizable cause of action against the resident defendants, upon a reasonable basis grounded in state law. Higgins v. Pittsburg-Des Moines Co., 635 F.Supp. 1182, 1184 (S.D.Tex.1986); see also Wright, Miller & Cooper, Federal Practice and Procedure § 3723 pp. 343-347; McAllister v. Chesapeake & O. Ry. Co., 243 U.S. 302, 37 S.Ct. 274, 61 L.Ed. 735 (1917); Chilton Private Bank v. Norsec-Cook, Inc., 99 B.R. 402 (D.C.Ill.1989) ("fraudulent joinder" is a misnomer —the motive of the plaintiff is immaterial —the issue is whether there is a reasonable basis for imposing liability). Nor is it sufficient for a defendant to merely label the joinder as "fraudulent." Chesapeake & Ohio Railway Co. v. Cockrell, 232 U.S. 146, 152, 34 S.Ct. 278, 280, 58 L.Ed. 544 (1914); B., Inc., 663 F.2d at 549. A claim of fraudulent joinder must be "pleaded with particularity," supported by "clear and convincing" evidence, and proven with "certainty." Parks v. New York Times Company, 308 F.2d 474, 478 (5th Cir.1962)²; Wright, Miller & Cooper, Federal Practice and Procedure § 3723.

With the above in mind, the Court must, therefore, examine the substantive law to ascertain whether there is "absolutely no possibility" of recovery against the resident defendants. Texas courts have long recognized that it is not only manufacturers, but also wholesale and retail dealers and distributors who may be liable for damages caused by defective products. 14 W. Dorsaneo, Texas Litigation Guide § 320.022b: see also Baldwin, Hare & McGovern, The Preparation of a Product Liability Case § 3.9 (2d ed. 1993). In addition, a car dealer can be held liable under the DTPA and for common law fraud for misrepresentations made in the sale of a vehicle. See, e.g., Town East Ford Sales, Inc. v. Gray, 730 S.W.2d 796 (Tex. App.—Dallas 1987, no writ). Purchasers of a vehicle can sue both the dealership and the vehicle's manufacturer for misrepresentations made regarding the vehicle's characteristics or qualities which the vehicle does not possess. Milt Ferguson Motor Co. v. Zeretzke, 827 S.W.2d 349, 355 (Tex.App.—San Antonio 1991, no writ).

Defendants argue that there are no "specific allegations" or "substantial factual allegations" that Defendants Stallworth or Nehls participated in the design or advertising of the 1973-1987 pickups. However, factual allegations that the local dealers participated in GM's designs or advertisements are not required to support the Plaintiffs' allegations regarding the dealers' misrepresentations and omissions of material fact as to the quality of the vehicle when the Plaintiffs, especially Tommy Dollar, purchased their vehicles at the dealerships. However, factual allegations that there was a purchase from the dealers is required. While Plaintiffs do allege that Plaintiff Tommy Dollar purchased a vehicle from Defendant Nehls, there are no allegations that any of the other named Plaintiffs purchased a vehicle from Defendant Stallworth. In addition, Defendant Stallworth alleges, and Plaintiffs have not disputed, that Stallworth sells only GMC model trucks, that none of the named plaintiffs purchased a 1973-1987 GMC model truck, and that Stallworth did not even begin selling GMC model trucks until July 19, 1988, which is well after the end of the 1987 model year that defines plaintiffs' class. Therefore, while the factual allegations in the Plaintiffs' pleadings supporting the allegations of misrepresentations and omissions against Defendant Nehls are sufficient to provide the factual support that was lacking in Carriere v. Sears, Roebuck and Co., 893 F.2d 98, 101 (5th Cir.1990) and Matthews v. Nissan Motor...