White v. FCA US, LLC

• Decision Date: 16 November 2017
• Docket Number: Case Number 17–12320
• Parties: Susan WHITE, as Personal Representative of the Estate of Kayla White, deceased, and Cody Campbell, as Personal Representative of the Estate of Braedin Campbell, deceased, Plaintiffs, v. FCA US, LLC and Clarence Heath, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

579 B.R. 804

Susan WHITE, as Personal Representative of the Estate of Kayla White, deceased, and Cody Campbell, as Personal Representative of the Estate of Braedin Campbell, deceased, Plaintiffs,

v.FCA US, LLC and Clarence Heath, Defendants.

Case Number 17–12320

United States District Court, E.D. Michigan, Southern Division.

Signed November 16, 2017

Courtney E. Morgan, Jr., Dearborn, MI, for Plaintiffs.

Michael R. Williams, William E. McDonald, III, Cheryl A. Bush, Bush, Seyferth & Paige, PLLC, Troy, MI, for Defendants.

OPINION AND ORDER DENYING MOTION TO REMAND AND MOTION TO DISMISS

DAVID M. LAWSON, United States District Judge

The genesis of this case is a tragic automobile accident. Decedent Kayla White was immolated when the 2003 Jeep Liberty she was driving burst into flames after it was struck from the rear by another car. White was five months pregnant at the time. Her estate and the estate of her unborn fetus brought a product liability action in state court against the driver of the other vehicle and defendant FCA US, LLC, also known as Fiat Chrysler, US, LLC. The 2003 Jeep, however, was manufactured by Chrysler LLC, a company that ceased operating in 2009 after filing for bankruptcy. The plaintiffs allege that the present defendant, FCA US, LLC, purchased the assets from the "Old Chrysler" under a Master Transaction Agreement (MTA) that was approved by the bankruptcy court, in which FCA agreed to assume responsibility for product liability claims arising from a certain class of vehicles, which included the Jeep Kayla White was driving.

FCA removed the action to this Court under 28 U.S.C. § 1334(b), contending that the plaintiffs' product liability claim the "arises in" the Old Chrysler bankruptcy proceeding, because the Court will be required to interpret the MTA, especially the liability-transfer provision. FCA points to language in that provision that excludes "any claim for exemplary or punitive damages," and it argues that the plaintiffs are seeking that category of damages when they contend that the defendant had actual knowledge of the product defect when it sold the vehicle, which it willfully disregarded. The plaintiffs made those allegations on the way to their argument that they should not be restricted by the cap on damages under Michigan product liability law.

The plaintiffs insist that nowhere in their amended complaint have they sought exemplary or punitive damages, and they have filed a motion to remand the case to state court. They argue that Old Chrysler's bankruptcy case is not implicated because this Court need not be concerned with the exemplary and punitive damages restriction. Defendant FCA opposes the remand motion, and it has filed a motion of its own to dismiss the complaint on three grounds, one of which is that the plaintiffs are seeking damages from them which they did not assume any obligation to pay under the MTA.

In order to determine whether defendant FCA is liable for damages caused by a vehicle it did not manufacture, the Court inevitably must examine and interpret the MTA. Consequently, the case "arises in" the bankruptcy proceeding, and in fact is a core proceeding. Therefore, the Court has subject matter jurisdiction under 28 U.S.C. § 1334(b), and the motion to remand will be denied. Although the plaintiffs allege in the amended complaint that the defendant possessed scienter that may be consistent with a claim for punitive or exemplary damages, a plain reading of that pleading does not suggest those categories of damages are being sought. The amended complaint otherwise states valid claims. The motion to dismiss, therefore, likewise will be denied.

I

In early 2009, the "Old Chrysler" auto company entered into a highly publicized bankruptcy proceeding, which eventually involved a partial takeover of the company by the United States government and a transition sale of most of Chrysler's assets and operations to Fiat, SpA (the Italian car maker), via the formation of a new entity that became Fiat Chrysler, US, LLC (a/k/a FCA US, LLC). As part of the bankruptcy proceedings, Old Chrysler entered into an agreement to sell substantially all of its assets to the successor entity through a Master Transaction Agreement (MTA). The MTA executed between the parties to the bankruptcy sale on May 19, 2009 stated that FCA would assume certain liabilities for tort claims relating to vehicles made by Old Chrysler before the sale. On October 29, 2009, the parties to the sale executed an amendment which, among other things, altered section 2.08(h) of the Agreement to expand the scope of the assumed liabilities to include

all Product Liability Claims arising from the sale on or prior to the Closing of motor vehicles or component parts, in each case manufactured by Sellers or their Subsidiaries and distributed and sold as a Chrysler, Jeep, or Dodge brand vehicles or MOPAR branded parts, solely to the extent such Product Liability Claims (A) arise directly from motor vehicle accidents occurring on or after Closing, (B) are not barred by any statute of limitations, (C) are not claims including or related to any alleged exposure to any asbestos-containing material or any other Hazardous Material and (D) do not include any claim for exemplary or punitive damages.

Notice of Removal, Ex. 3, Am. No. 4 to Master Trans. Agrmt. dated Oct. 29, 2009 (Pg ID 188). The amendment to the sale agreement was approved by an order of the bankruptcy court on November 19, 2009.

On June 13, 2017, plaintiffs Susan White and Cody Campbell, as personal representatives for the estates of their respective decedents Kayla White and Braedin Campbell, filed a lawsuit against defendants FCA and Clarence Heath in the Oakland County, Michigan circuit court. Susan White is the mother of the deceased Kayla White, and Cody Campbell was the fiancé of Kayla White and father of their unborn fetus Braedin Campbell. After the case was removed to this Court by the defendant, White filed an amended complaint. The facts that follow are stated as alleged in that amended complaint.

In 2006 Kayla White's father Rusty White bought a 2003 model year Jeep Liberty (KJ), which as part of its design had a fuel tank located behind the rear axle, close to and hanging slightly below the rear bumper. Some time in 2013, Kayla White's parents gave the 2003 Jeep Liberty to her. In June 2014 Kayla White became pregnant. In August 2014, in response to a number of rear-end collisions that resulted in fires as a result of spilled fuel from the rear-mounted tanks igniting, FCA issued a recall notice for model year 2002 through 2007 Jeep Liberty (KJ) vehicles with rear-mounted fuel tanks. FCA advised affected owners that the rear-mounted tanks would be replaced at FCA's expense, but that owners should await a further notice from the company about when to bring their vehicles in for a recall repair.

On November 11, 2014, at around 4:30 p.m., Kayla was driving to work in the Jeep through the City of Southfield, Michigan, when she was forced to slow down due to heavy traffic. Her car was struck from behind by a car driven by Clarence Heath. Heath failed to brake in time to avoid the slowing cars in front of him. White's Jeep was pushed into the car in front of her, which in turn was pushed into another vehicle. The front bumper of Heath's car entered a "nosedive" due to Heath's heavy braking effort just before impact, which caused the front of the car to go under the Jeep's rear bumper, striking the fuel tank, and also flipping the Jeep over to rest on the driver side, pinning the driver side door shut. The rear hatch of the Jeep also popped open from the impact. However, White and her unborn fetus were not seriously injured by the initial collision. The fuel tank of the Jeep was broken open by the impact, and spilled gasoline from the tank quickly ignited. White was unable to escape the Jeep due to the rollover pinning the driver side door shut and the spread of flames into the vehicle through the open rear hatch, although she tried for several minutes to open the exposed passenger door without success. It was determined that White died from burns and smoke inhalation while still trapped inside the Jeep.

The complaint pleads claims against defendant Heath for negligence (Count VII), and against defendant FCA for (1) product liability under Michigan Compiled Laws § 600.2947(3) (Count I); (2) defective design under Mich. Comp. Laws §§ 600.2946(2), 2946a(3), 2949a (Count II); (3) failure to warn under Mich. Comp. Laws § 600.2946(2) (Count III); (4) breach of the implied warranty of fitness for use (Count V), and (5) "negligent recall" (Count VI).

In each of the substantive counts of the complaint against defendant FCA, the plaintiffs alleged that the defendant's gross negligence in designing and subsequently failing to repair the Jeep Liberty or adequately warn about its defects, and its willful disregard of the hazards of the Jeep's design, caused the wrongful deaths of their decedents, for which the plaintiffs assert that they are entitled to recover damages under the Michigan Wrongful Death Statute including for:

a. The deaths of Kayla White and Braedin Campbell;

b. Conscious pain and suffering;

c. Loss of society and companionship;

d. Pain, suffering[,] and emotional distress, past, present and future;

e. Humiliation, mortification, [and] fright, past, present and future;

f. Medical expenses;

g. Lost wages, compensation, and earning capacity, past, present and future;

h. Emotional and mental suffering, past, present and future;

i. Loss of enjoyment of life, past, present and future;

j. Attorney fees and legal costs;

k. Any and all other injuries and damages found to be appropriate by the trier of fact.

Am. Compl. ¶¶ 104, 112, 117, 122. The plaintiffs also alleged in Count IV of their amended complaint that, because the defendant had actual knowledge of the Jeep's fuel tank design defect and willfully disregarded the risk that the design would cause the deaths of Kayla White...