Kalfsbeek Charter v. FCA US, LLC

• Decision Date: 19 May 2021
• Docket Number: CV 21-2799 DSF (AGR)
• Citation: 540 F.Supp.3d 939
• Parties: Elizabeth KALFSBEEK CHARTER, Plaintiff, v. FCA US, LLC, et al., Defendants.
• Court: U.S. District Court — Central District of California

540 F.Supp.3d 939

Elizabeth KALFSBEEK CHARTER, Plaintiff,

v.FCA US, LLC, et al., Defendants.

CV 21-2799 DSF (AGR)

United States District Court, C.D. California.

Signed May 19, 2021

Tionna Dolin, Daniel A. Law, Regina Lotardo, Strategic Legal Practices APC, Los Angeles, CA, for Plaintiff.

Scott Steven Shepardson, Sharon L. Stewart, Ongaro PC, San Francisco, CA, for Defendant FCA US LLC.

Order GRANTING Plaintiff's Motion to Remand (Dkt. 12)

Dale S. Fischer, United States District Judge Plaintiff Elizabeth Kalfsbeek Charter moves to remand this case. Dkt. 12 (Mot.). Defendant FCA US LLC opposes. Dkt. 16 (Opp'n). The Court deems this matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78 ; Local Rule 7-15. The hearing set for May 24, 2021 is removed from the Court's calendar. For the reasons stated below, the motion is GRANTED.¹

I. BACKGROUND

On February 28, 2020, Kalfsbeek Charter brought this action in Los Angeles County Superior Court. Dkt. 1 (Notice of Removal) ¶ 2. Her first amended complaint alleged claims for a violation of California Civil Code sections 1793.2(b), (d), and (A)(3) ; breach of express written warranty in violation of California Civil Code sections 1791.2(a) and 1794 ; breach of the implied warranty of merchantability, California Civil Code sections 1791.1, 1794, and 1795.5 ; fraud by omission; and violation of the Consumer Legal Remedies Act, California Civil Code sections 1750, et seq., Dkt. 1-4.

Kalfsbeek Charter originally brought the action against FCA and Defendant Hanlees Chrysler Dodge Jeep Ram Kia. Notice of Removal ¶ 1. On March 5, 2021, Kalfsbeek Charter dismissed Hanlees. Id. ¶ 5. Because Hanlees was a California entity, complete diversity did not previously exist, id. ¶ 7, but FCA asserts there is now complete diversity, id. ¶ 10. On April 1, 2021, FCA removed the case to federal court based on diversity of citizenship. Id. Kalfsbeek Charter now moves to remand the action to state court.

II. LEGAL STANDARD

"Federal courts are courts of limited jurisdiction" and "possess only that power authorized by [the] Constitution and statute." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). A defendant may remove an action to federal court if the federal court could exercise subject matter jurisdiction over the action. 28 U.S.C. § 1441(a). "The removal statute is strictly construed against removal jurisdiction," and "[t]he defendant bears the burden of establishing that removal is proper." Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009). If a defendant fails to meet its burden of establishing the Court has subject matter jurisdiction, the suit is remanded. 28 U.S.C. § 1447(c).

III. DISCUSSION

Kalfsbeek Charter moves to remand the case to state court because FCA's "Notice of Removal fails to meet its heavy burden of showing the amount in controversy satisfies the federal jurisdictional threshold, or that the bad faith exception to the one-year limit on removal is applicable." Mot. at 1. The Court agrees FCA has not met its burden of showing Kalfsbeek Charter acted in bad faith because she brought claims against Hanlees from the outset of the case, had a basis for believing she had a genuine claim against Hanlees, intended to take discovery from Hanlees, and had a legitimate, good faith reason for dismissing Hanlees from the action at the time she did.

A diversity case where the initial pleading is not removable "may not be removed more than 1 year after the commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action." 18 U.S.C. § 1446(c)(1); see also Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1316-18 (9th Cir. 1998) (only a case that "becomes removable sometime after the initial commencement of the action" is "barred by the one-year exception"); NKD Diversified Enters., Inc. v. First Mercury Ins. Co., No. 1:14-CV-00183-AWI, 2014 WL 1671659, at *3 (E.D. Cal. Apr. 28, 2014) ("[T]he one year limitation [is] procedural and can be excused upon a showing of bad faith."), report and recommendation adopted, No. 1:14-CV-00183-AWI, 2014 WL 2619599 (E.D. Cal. June 6, 2014). The bad faith exception was added to prevent plaintiffs from joining non-diverse parties to actions solely to prevent a defendant from removing to federal court. See Heller v. Am. States Ins. Co., No. CV 15-9771 DMG (JPRx), 2016 WL 1170891, at *2 (C.D. Cal. Mar. 25, 2016).

Although section 1446(c)(1) prevents a plaintiff from acting in bad faith to avoid federal jurisdiction, "it is well established that the plaintiff is ‘master of her complaint’ and can plead to avoid federal jurisdiction." Lowdermilk v. U.S. Bank Nat'l Ass'n, 479 F.3d 994, 998-99 (9th Cir. 2007), overruled on other grounds by Rodriguez v. AT & T Mobility Servs. LLC, 728 F.3d 975, 981 (9th Cir. 2013). Accordingly, courts strictly construe a defendant's ability to remove a case from state court to federal court. Provincial Gov't of Marinduque, 582 F.3d at 1087. In the context of awarding sanctions, the Ninth Circuit has determined that bad faith "carries with it a high threshold and entails actions tantamount to recklessly raising a frivolous argument or disrupting and hindering court proceedings." Escalante v. Burlington Nat. Indem., Ltd., No. 2:14-CV-7237-ODW, 2014 WL 6670002, at *3 (C.D. Cal. Nov. 24, 2014) (citing Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 649 (9th Cir. 1997) and Hutto v. Finney, 437 U.S. 678, 689 n. 14, 98 S.Ct. 2565, 57 L.Ed.2d 522 (1978) ). "The presumption against removal, coupled with Ninth Circuit precedent holding that bad faith in the sanctions context is a high burden, leads the Court to conclude that defendants face a high burden to demonstrate that a plaintiff acted in bad faith to prevent removal." Heacock v. Rolling Frito-Lay Sales, LP, No. C16-0829-JCC, 2016 WL 4009849, at *2-3 (W.D. Wash. July 27, 2016) (citing Heller, 2016 WL 1170891, at *2 ).

The Ninth Circuit has "yet to address the applicable standard for the bad faith exception under section 1446(c)." Heller, 2016 WL 1170891, at *2. In determining whether a plaintiff acted in bad faith, district "courts have considered the timing of naming and dismissing the non-diverse defendant, the explanation given for dismissal, and whether the plaintiff actively litigated the case in ‘any capacity’ against a non-diverse defendant before dismissal." Torres v. Honeywell, Inc., No. 2:20-CV-10879-RGK-KS, 2021 WL 259439, at *3 (C.D. Cal. Jan. 25, 2021) (citing Heacock, 2016 WL 4009849, at *3 and Aguayo v. AMCO Ins. Co., 59 F. Supp. 3d 1225, 1263 (D.N.M. 2014) ). Determining whether a plaintiff has acted in bad faith to prevent removal necessarily involves looking into the plaintiff's subjective intent, as the text of section 1466(c)(1) "strongly suggest[s] intentionality and purpose." Aguayo, 59 F. Supp. 3d at 1266.

Several factors weigh in favor of a finding of bad faith. First, Kalfsbeek Charter dismissed Hanlees from the case one year and five days after filing the case. Dkts. 1-2 (Stewart Decl.) ¶¶ 4, 12; 1-4. The dismissal was 4 months after Hanlees filed its motion to compel arbitration. Stewart Decl. ¶ 12. This timing could suggest bad faith retention of Hanlees as a defendant solely for jurisdictional purposes. Second, Kalfsbeek Charter "propounded voluminous written discovery" on FCA, served a notice of deposition of the person most knowledge and demand for production of documents on FCA, and moved to compel further responses regarding its demand for production of documents from FCA. Id. ¶ 9; dkts. 1-27-32. The failure to serve any discovery on Hanlees weighs in favor of a finding of bad faith.

But other factors weigh against a finding of bad faith. First, Hanlees was named as a defendant from the outset of the case. See Heacock, 2016 WL 4009849, at *3 (citing NKD Diversified Enters., 2014 WL 1671659, at *4 ) (noting adding a non-diverse defendant in response to an attempt to remove an action, and subsequently dismissing the defendant shortly after the deadline for removal expired, supported a finding of bad faith).

Second, although Kalfsbeek Charter had not yet taken any discovery from Hanlees at the time of dismissal, its filings in the superior court case indicate it intended to depose Hanlees’ technicians. Aguayo, 59 F. Supp. 3d at 1275 (noting that while discovery is often the most relevant factor, "the plaintiff can satisfy the standard even if he or she did not take discovery if he or she engaged in any other form of active litigation"). In preparation for a June 30, 2020 case management conference, Kalfsbeek Charter stated it propounded written discovery on and noticed the PMQ deposition for FCA, but still needed to schedule the dealership technician depositions. Dkt. 1-14 at 4. At the June 30, 2020 status conference, the court ordered the parties to complete mediation by March 30, 2021 and set the final status conference for May 3, 2021 in preparation for trial on May 24, 2021. Dkt. 1-17 at 2. On March 10, 2021, the parties stipulated to continue the trial date to August 23, 2021 because all parties had outstanding discovery. Dkt. 1-44 at 2-3. Kalfsbeek Charter still had ample time to depose Hanlees’ technicians when FCA removed the case, and her filings support that she intended to do so. Heacock, 2016 WL 4009849, at *4 (noting that while plaintiff's discovery practice suggest one of the defendants was the primary defendant and plaintiff may have been motivated in part by a desire to stay in state court, the minimal discovery efforts prevented a finding that the desire to remain in state court was the but-for cause of naming a defendant).

Third, Kalfsbeek Charter demonstrated a legally viable basis for bringing claims against Hanlees. Other district courts have recognized there is a "growing body of case law" supporting "that local dealerships can be...