Zufelt v. Isuzu Motors Am., L.C.C.

• Decision Date: 21 December 2009
• Docket Number: No. CIV 09-1004 JB/ACT,CIV 09-1004 JB/ACT
• Citation: 727 F.Supp.2d 1117
• Parties: Christine ZUFELT, as Personal Representative of Barbara Zufelt, deceased, Plaintiff(s), v. ISUZU MOTORS AMERICA, L.C.C.; Robert E. Luckel, and Sam Dell Nissan Corp. d/b/a Sam Dell Dodge Nissan, Defendants.
• Court: U.S. District Court — District of New Mexico

727 F.Supp.2d 1117

Christine ZUFELT, as Personal Representative of Barbara Zufelt, deceased, Plaintiff(s),

v.ISUZU MOTORS AMERICA, L.C.C.; Robert E. Luckel, and Sam Dell Nissan Corp. d/b/a Sam Dell Dodge Nissan, Defendants.

No. CIV 09-1004 JB/ACT.

United States District Court, D. New Mexico.

Dec. 21, 2009.

Gilbert Arrazolo, Arrazolo Law, P.C., Albuquerque, NM, James B. Ragan, Law Offices of James B. Ragan, Corpus Christi, TX, for Plaintiff.

Patrick Shay, Jeffrey M. Croasdell, Rodey, Dickason, Sloan, Akin & Robb, P.A., Albuquerque, NM, for Defendant Isuzu Motors America, LLC.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on the Plaintiff's Motion to Remand, filed November 6, 2009 (Doc. 4). The Court held a hearing on December 16, 2009. The primary issues are: (i) whether Plaintiff Christine Zufelt, as personal representative of Barbara Zufelt, deceased, fraudulently joined Defendant Sam Dell Nissan Corp. d/b/a Sam Dell Dodge Nissan ("Sam Dell Nissan") in this action; and (ii) whether Defendant Isuzu Motors America, LLC ("Isuzu LLC") has established complete diversity, permitting federal jurisdiction. Although the Court finds that the membership of Isuzu LLC does not disrupt complete diversity, because the Court finds that Isuzu LLC has not met its burden of demonstrating that C. Zufelt has fraudulently joined Sam Dell Nissan, the Court will grant Zufelt's motion and remand this case back to state court.

FACTUAL AND PROCEDURAL BACKGROUND

C. Zufelt filed this products liability action on behalf of B. Zufelt on September 14, 2009, in the First Judicial District of the State of New Mexico. The action arises out of a roll-over vehicle crash of a 2004 Isuzu Ascender, which occurred on Interstate 40 in Guadalupe County, New Mexico on July 28, 2008, and which resulted in fatal injuries to the passenger, B. Zufelt. The Complaint asserts claims of strict liability and negligence against Isuzu LLC, as manufacturer of the Ascender, claims of negligence for failure to inspect and failure to warn against Sam Dell Nissan, the dealer which sold the vehicle, and a claim of negligence against Defendant Robert E. Luckel, the owner and driver of the vehicle at the time of the roll-over crash. See Plaintiff's Complaint for Personal Injury ¶¶ 12-42 at 4-12 (Doc.-1-2).

Isuzu LLC removed the case to federal court, asserting federal diversity jurisdiction. See Notice of Removal of Action Under 28 U.S.C. § 1441(b) (Diversity), filed October 21, 2009 (Doc. 1)("Notice of Removal"). In its Notice of Removal, Isuzu LLC asserts that it believes C. Zufelt, a citizen of the state of New York, fraudulently joined Sam Dell Nissan, a New York corporation with its principal place of business in Syracuse, New York, solely to defeat diversity jurisdiction. See Notice of Removal at 2-3. Isuzu LLC did not seek consent from Sam Dell Nissan and Luckel before filing the Notice of Removal because, according to the state court docket and on Isuzu LLC's good faith belief, none of the other defendants in this action have yet been served. See Notice of Removal at 4.

C. Zufelt moves to remand the case to New Mexico state court. She contends that the Court should remand her case for two reasons: (i) there is no evidence of fraudulent joinder of Sam Dell Nissan; and (ii) Isuzu LLC has failed to demonstrate complete diversity. See Motion at 2. In her motion, C. Zufelt confirms that Isuzu LLC is the only defendant who has been served in this case, because C. Zufeltis in negotiations with Isuzu LLC and manufacturer General Motors over indemnification. See Motion at 2. C. Zufelt contends that she can establish a cause of action against Sam Dell Nissan because, as the dealer who sold the vehicle involved in the fatal crash, she can establish that it sold a defective vehicle or establish that it was some independent negligence on its own part with regard to warnings regarding the lack of crashworthiness of the vehicle. See Motion at 3. C. Zufelt also contends that Isuzu LLC has failed to establish diversity because it did not identify and prove the citizenship of each of Isuzu LLC's members. See Motion at 4-5.

In its response, Isuzu LLC argues that C. Zufelt cannot establish a valid cause of action against Sam Dell Nissan and cannot recover against Sam Dell Nissan in New Mexico, because it is not subject to personal jurisdiction in New Mexico. Isuzu LLC therefore concludes that C. Zufelt fraudulently joined Sam Dell Nissan. See Defendant Isuzu Motors America, LLC's Response to Plaintiff's Motion to Remand at 4, filed November 20, 2009 (Doc. 5) ("Response"). Isuzu LLC represents that Isuzu North America Corporation, which is incorporated and has its principal place of business in California, wholly owns Isuzu LLC. Thus, no members of Isuzu LLC are residents of New Mexico. See Response at 4. Isuzu LLC contends that, without considering Sam Dell Nissan, whom C. Zufelt has fraudulently joined, there is complete diversity in the case, and the Court should remand the case to state court.

In reply, C. Zufelt argues that, although Isuzu LLC states that Isuzu North America Corporation is the sole owner of Isuzu LLC, it did not address the citizenship of the members of the limited liability company and therefore Isuzu has failed to meet its burden of showing complete diversity. See Plaintiffs' [sic] Reply to Defendant's Response to Plaintiff's Motion to Remand at 2, filed December 4, 2009 (Doc. 7).

In the hearing on the motion, C. Zufelt's counsel, James B. Ragan, confirmed that Sam Dell Nissan has not been served, does not have counsel, has not entered an appearance in the case, nor has it consented to the removal. See Transcript of Hearing at 5:8-11 (taken December 16, 2009) ("Tr.")(Court, Ragan).¹ In response to Isuzu LLC's argument that C. Zufelt fraudulently joined Sam Dell Nissan because of lack of personal jurisdiction, Mr. Ragan argued that the issue is separate from whether there is a cause of action. See Tr. at 6:15-16 (Ragan). He argued that personal jurisdiction is in the control of the dealership's defense and that it is conceivable that the dealership could waive personal jurisdiction for strategic reasons, for example, if the laws of New Mexico are more favorable to the dealership than the laws of New York. See Tr. at 6:16-7:1 (Ragan).

Isuzu LLC's counsel, Jeffrey M. Croasdell, argued that "claim" is much more narrow than "cause of action" and that Zufelt must have a valid cause of action. Tr. at 13:20-14:6 (Croasdell). Mr. Croasdell also expressed concerns that, if the Court remands and then Sam Dell Nissan files a motion to dismiss for lack of personal jurisdiction and wins, Isuzu LLC will not be able to remove the case again to federal court. See Tr. at 15:10-17 (Croasdell). Mr. Croasdell argues that there is enough on the record for the Court to determine that courts in New Mexico lack personal jurisdiction over Sam Dell Nissanand that, if there was a motion for summary judgment or a motion to dismiss pending for lack of personal jurisdiction, the Court would have to find that there is no personal jurisdiction over Sam Dell Nissan, and thus the Court should make the same determination when determining whether there is fraudulent joinder. See Tr. at 24:8-13 (Croasdell). Mr. Croasdell also addressed the issue of the citizenship of members that C. Zufelt raised. Mr. Croasdell made representations to the Court that Isuzu LLC is a wholly owned subsidiary of Isuzu North America and that Isuzu North America is the sole member in the limited liability company. See Tr. at 25:15-27:8 (Court, Croasdell).

LAW REGARDING REMOVAL AND REMAND

If a civil action filed in state court satisfies the requirements for original federal jurisdiction, the defendant may invoke 28 U.S.C. § 1441(a) to remove the action to the federal district court "embracing the place where such action is pending." 28 U.S.C. § 1441(a); See Huffman v. Saul Holdings Ltd. P'ship., 194 F.3d 1072, 1076 (10th Cir.1999)("When a plaintiff files in state court a civil action over which the federal district courts would have original jurisdiction based on diversity of citizenship, the defendant or defendants may remove the action to federal court ....")(quoting Caterpillar Inc. v. Lewis, 519 U.S. at 68, 117 S.Ct. 467). Under 28 U.S.C. § 1332(a), a federal district court possesses original subject-matter jurisdiction over a case when the parties are diverse in citizenship and the amount in controversy exceeds $75,000.00. See Johnson v. Rodrigues, 226 F.3d 1103, 1107 (10th Cir.2000); 28 U.S.C. § 1332(a). Diversity between the parties must be complete. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 68, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996); Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1225 (10th Cir.2004).

Subsection (b) of 28 U.S.C. § 1441 specifies that suits arising under federal law are removable without regard to the citizenship of the parties; all other suits are removable "only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441(b). To remove a case based on diversity, the diverse defendant must demonstrate that all of the prerequisites of diversity jurisdiction contained in 28 U.S.C. § 1332 are satisfied. On a related issue, Congress has, by statute, prohibited a district court from exercising jurisdiction over a suit in which any party has been improperly or collusively joined to manufacture federal diversity jurisdiction. See 28 U.S.C. § 1359 ("A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court.").

"It is well-established that statutes conferring jurisdiction upon the federal courts, and particularly removal statutes, are to be narrowly construed in light of our constitutional role as limited tribunals."...