Summary
In Reynolds v. Ford Motor Co., 2004 WL 2870079 (N.D. Tex. Dec. 13, 2004), the plaintiff's daughter was killed in a "single vehicle rollover accident involving a 1998 Ford Explorer SUV."
Summary of this case from Evans v. Kawaski Motors Corp.Opinion
Civil Action No. 5:04-CV-085-C.
December 13, 2004
ORDER
On this date the Court considered the Motion to Remand filed by Plaintiff, Betty Reynolds ("Plaintiff"), on November 16, 2004. The Court further considered the Notice of Removal filed April 16, 2004, by Defendants, Ford Motor Company ("Ford") and McRee Ford Company, Inc. ("McRee"), and the Response filed by Ford on December 6, 2004, to Plaintiff's remand motion. Defendant McRee failed to file a timely response. After considering all the relevant arguments and evidence, this Court GRANTS Plaintiff's Motion to Remand and REMANDS this action to the 106th Judicial District Court of Garza County, Texas.
I. BACKGROUND
On April 16, 2004, Ford removed this lawsuit from the 106th Judicial District Court of Garza County, Texas. Ford asserted that Defendant McRee was fraudulently joined based upon new Texas law. This suit arises from a single vehicle rollover accident involving a 1998 Ford Explorer Sport SUV that occurred in Garza County, Texas on March 12, 2002. Plaintiff is the mother of Brandy Reynolds, who was killed in the accident. Apparently Ms. Brandy Reynolds was driving the vehicle at the time of the accident and Ms. Mara Miller, the vehicle's owner, was riding in the front passenger seat. See Pl. Ex. 3 at 2. Plaintiff alleges claims based on negligence, misrepresentation, fraud, and strict liability. Ford, in its Notice of Removal, relied on Texas law that Ford argues prevents dealerships from being liable merely for selling an automobile. See Tex. Civ. Prac. Rem. Code § 82.003. The new law, however, contains exceptions that, if applicable, allow for a dealership to be held liable. Id.
On November 16, 2004, Plaintiff filed her Motion to Remand based on one of the exceptions to section 82.003. Within the Notice, Ford contends that it has agreed to indemnify McRee in this lawsuit. Plaintiff argues that McRee was not fraudulently joined and the case should be remanded to state court. Plaintiff specifically argues that McRee had actual knowledge that the product involved, the 1998 Ford Explorer Sport sold by McRee, was defective in that it was prone to roll over when involved in an accident. Plaintiff argues that there is a reasonable possibility that she can recover against McRee. In support of her Motion to Remand, Plaintiff has submitted the affidavit of Mara Miller, see Pl. Ex. 3, to show that (1) McRee actually knew of a defect to the product at the time it supplied the product and (2) Plaintiff's harm resulted from the defect. Plaintiff bases her contention that McRee had actual knowledge of the defect on the fact that the 1998 Ford Explorer Sport contained a warning on the back of the vehicle's sun visor as well as within the owner's manual that warned of rollovers. Plaintiff further bases her contention that McRee had actual knowledge of the defect on the fact that the National Highway and Traffic Safety Administration ("NHTSA") only gave "a meager two stars" to the 2002 model year Ford Explorers. See Pl. Mot. Remand at 2; Pl. Ex. 1 and 2.
Apparently rollover ratings were not performed by NHTSA for 1998 models of the Ford Explorer. Plaintiff, however, argues that "it is clear, of course, that the manufacturer would not knowingly design and manufacture a more dangerous vehicle the longer the SUV is on the road." See Pl. Mot. Remand at 3. Thus, Plaintiff argues, the 1998 Ford Explorer driven by Ms. Brandy Reynolds and involved in the rollover accident in Garza County was at least as prone to rollovers as the 2002 year model, if not more so.
II. STANDARD
Once a case has been removed, the removing party bears the burden of proving that jurisdiction exists. Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1992) (citations omitted). Removal statutes are to be strictly construed and any uncertainty regarding jurisdiction is to be resolved in favor of remand. Brown v. Demco, 792 F.2d 478, 482 (5th Cir. 1986). If the removing party alleges jurisdiction on the basis that non-diverse parties have been fraudulently joined, then the removing party must prove the existence of fraud. Carriere v. Sears, Roebuck and Co., 893 F.2d 98 (5th Cir. 1990). To prove its allegation of fraud, the removing defendant must show either that there is no reasonable basis for predicting that state law would allow recovery against the in-state defendant in state court or that there has been outright fraud in the plaintiff's pleading of jurisdictional facts. B., Inc. v. Miller Brewing Co., 663 F.2d 545 (5th Cir. 1981); Badon v. RJR Nabisco Inc., 236 F.3d 282, 286 n. 4 (5th Cir. 2000); see also, Travis v. Irby, 326 F.3d 644, 648 (5th Cir. 2003) ("If there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved, then there is no fraudulent joinder. This possibility, however, must be reasonable, not merely theoretical.") (italics omitted; citation omitted).
In determining whether the joinder of parties is fraudulent, the district court must evaluate all unchallenged factual allegations, including those in the complaint, in the light most favorable to the plaintiff, resolving all contested issues of substantive fact and ambiguities in state law in favor of the plaintiff. Griggs v. State Farm Lloyds, 181 F.3d 694, 699-702 (5th Cir. 1999).
However, the court must not "pre-try" substantive factual issues in order to answer the discrete threshold question of whether the joinder of an in-state defendant is fraudulent. B., Inc., 663 F.2d at 546. The court must not decide whether the plaintiff will actually or even probably prevail on the merits but must look only for a reasonable possibility that plaintiff may do so. Dodson, 951 F.2d at 42; Travis, 326 F.3d at 648. If the possibility exists that a plaintiff may prevail, then "a good faith assertion of such an expectancy in a state court is not a sham . . . and is not fraudulent in fact or in law." B., Inc., 663 F.2d at 550 (internal quotations and citations omitted). If, however, no possible claims exist against the non-diverse defendant, its presence must be disregarded for jurisdictional purposes. Tedder v. F.M.C. Corp., 590 F.2d 115, 116-17 (5th Cir. 1979).
III. DISCUSSION
The basis for Ford's argument that removal is proper is the contention that the non-diverse defendant, McRee, has been fraudulently joined, thus allowing the Court to ignore McRee's citizenship for the purpose of establishing diversity jurisdiction. Ford's contention of fraudulent joinder rests primarily on their argument that the Plaintiff has no reasonable possibility of recovery on her claims against McRee because of section 82.003. More precisely, Ford and Plaintiff argue whether Plaintiff can meet the "actual knowledge" exception outlined in section 82.003(a)(6) and thus meet the elements of Plaintiff's claims against McRee for products liability. See Tex. Civ. Prac. Rem. Code § 82.003(a)(6) (exception to the liability bar for sellers who actually knew of defect at time sold and the claimant's harm resulted from the defect).
Upon the passage of section 82.003, the legislature barred actions against car dealers for selling allegedly defective vehicles which they did not manufacture. See Tex. Civ. Prac. Rem. Code § 82.003(a) ("A seller that did not manufacture a product is not liable for harm caused to the claimant by that product. . . ."). The quoted statement is followed by the language "unless the claimant proves" one of seven enumerated exceptions. The only exception argued by Plaintiff is section 82.003(a)(6), which states that "(A) the seller actually knew of a defect to the product at the time the seller supplied the product; and (B) the claimant's harm resulted from the defect;. . . ." Tex. Civ. Prac. Rem. Code § 82.003(a)(6)(A) and (B).
The language of section 82.003 clearly requires actual knowledge of the defect on the part of the seller, in this instance McRee. Section 82.003 makes no reference to what a seller should have known or foreseen. See id. Rather, it only refers to what a seller actually knew. See id. However, a plaintiff's pleading that a dealership "knew" or had "full knowledge" of the alleged defect at the time of the sale is sufficient when viewed in a light most favorable to the plaintiff. See, e.g., McDonald v. Ford Motor Co. and Gullo Ford Mercury, Inc., No. H-04-1537 (S.D. Tex. July 12, 2004) (remand order by Werlein, J.). Here, Plaintiff's Original Petition, as included in Ford's Notice of Removal, states that "Defendants knew of" the alleged risk that the Ford Explorer SUV's defects created a high probability that it would be involved in rollover accidents. See Pl. Orig. Pet. at 5. Plaintiff also pleaded that "[t]he selling dealer actually knew of a defect to the product at the time the dealer supplied the product, and Brandy's harm resulted from such defect." Id. at 6. Plaintiff further pleaded that "Defendants knew the actual characteristics of the Ford Explorer SUV." Id. at 7. The Court thus finds that Plaintiff has sufficiently pleaded that Defendant McRee had actual knowledge of a defect at the time the dealer supplied the product and that Plaintiff's harm resulted from such defect. Under the facts pleaded and arguments presented, section 82.003 does not preclude Plaintiff's action against Defendant McRee.
Both Ford and Plaintiff have offered evidence by way of affidavits to support their arguments. This Court may pierce the pleadings and look to summary judgment-type evidence in determining a claim of fraudulent joinder. See Sid Richardson Carbon Gasoline Co. v. Interenergy Res., Ltd., 99 F.3d 746, 751 (5th Cir. 1996). Plaintiff offers the affidavit of Ms. Mara Miller as evidence that Plaintiff has a reasonable possibility of recovery against McRee. Ms. Miller's affidavit states that negotiations for the purchase of the vehicle at issue were conducted by her mother and father. See Pl. Ex. 3. Ms. Miller further avers that Mr. Powell, the salesman for McRee who negotiated the sale, would have had to know about the rollover warning on the back of the Ford Explorer sun visors and that the handling defect pointed out on the warning was the cause of Brandy Reynold's death. See Pl. Ex. 3; Pl. Mot. Remand at 4.
Defendant Ford has offered evidence, by way of three separate affidavits, that neither McRee nor any of its salespersons actually knew at the time of the sale of any defect. See Def. Resp. App. A-C. Specifically, Jimmy D. Powell avers that he was the salesman who dealt with the Millers at the time of sale. See Def. Resp. App. C at 1. He further avers that he did not make any representations about the 1998 Ford Explorer Sport's safety, stability, or maneuverability. See id. at 2. Finally, Mr. Powell avers that he was not aware at the time of sale of facts that would support any contention that the vehicle's design, manufacture, or marketing were unsafe or defective. See id. at 2.
Only the affidavit of Mr. Jimmy Powell appears to be of relevance to the issue presently before this Court. The other two affidavits appear to be from salesmen who dealt with prior sales of the vehicle involved in the accident. However, it appears from the arguments and the affidavits that neither of the two salesmen was involved in the sale of the vehicle to the Millers.
As such, the evidence that is presently before the Court amounts to competing affidavits. The Fifth Circuit has held that a defense upon which fraudulent joinder is based that requires a determination of the merits should be disposed of by the state court. See Smallwood v. Illinois Central R.R. Co., 342 F.3d 400, 405 (5th Cir. 2003) ( en banc hearing granted on other grounds); see also B., Inc., 663 F.2d at 546; Travis, 326 F.3d at 648. Therefore, viewing all facts in the light most favorable to Plaintiff, Ford has established only that a fact issue exists which would require resolution by a jury. Ford has not established that Plaintiff cannot possibly recover against McRee. Accordingly, this Court cannot determine that McRee has been fraudulently joined based on Ford's arguments. State court, and not this Court, is the proper forum for determining the merits of whether Plaintiff has sufficient evidence, circumstantial or direct, to be able to persuade a jury that McRee had actual knowledge that the 1998 Ford Explorer was a defective product. See Smallwood, 342 F.3d at 405. Defendant argues that the quality of Plaintiff's evidence, the affidavit of Mara Miller, is inadequate to create a reasonable possibility of recovery against McRee. Defendant's removal of this action is simply an attempt to circumvent the state court's jurisdiction by having this Court rule on a no-evidence motion for summary judgment guised as a removal action. The joinder of Defendant McRee is therefore "not a sham . . . and is not fraudulent in fact or in law." B., Inc., 663 F.2d at 550 (internal quotations and citations omitted). Therefore, removal is improper and remand under these circumstances is required.
IV. CONCLUSION
For the foregoing reasons, the Court cannot conclude that there is no reasonable possibility that Plaintiff has stated a claim cognizable in state court against Defendant McRee Ford Company, Inc. Thus, Defendants have failed to meet their heavy burden of proving fraudulent joinder as to McRee, and this Court cannot ignore its citizenship for the purpose of determining diversity jurisdiction. Absent complete diversity, removal is improper and remand is required. After considering all the relevant arguments and evidence, this Court GRANTS Plaintiff's Motion to Remand and REMANDS this action to the 106th Judicial District Court of Garza County, Texas. Pursuant to 28 U.S.C. § 1447(c), the Court finds that it lacks jurisdiction over this case. Costs of removal are taxed against Defendant Ford Motor Company. The Clerk of this Court shall mail a certified copy of this order to the District Clerk of Garza County, Texas.
SO ORDERED.