Simmons v. Ford Motor Company

Background

Marie Teresa Simmons alleged state-law claims against Ford Motor Company and Mossy Ford, Inc. She alleged that she purchased a 2012 Ford Edge from Ford, received an express written warranty, and experienced engine defects that substantially impaired the vehicle’s use, value, or safety. Her sixth cause of action alleged that Mossy negligently repaired the vehicle; the other six causes of action did not name Mossy.

Simmons filed the case in Santa Clara County Superior Court. Ford removed it to federal court under the diversity-jurisdiction statutes. Simmons moved to remand, arguing that Mossy defeated diversity because Simmons and Mossy were both California residents. Ford argued that Mossy was a sham defendant whose presence should be disregarded.

Timeliness of the Motion

The court held that Simmons’s motion was timely. Although motions to remand generally must be filed within 30 days after removal, the court explained that a challenge based on subject-matter jurisdiction is not barred by that deadline. Because Simmons argued that Mossy defeated the court’s jurisdiction, the court considered the motion.

Mossy Was Not a Sham Defendant

The court explained that a nondiverse defendant is fraudulently joined, also called a sham defendant in this opinion, only when the plaintiff cannot state a claim against that defendant and that failure is obvious under settled state law. The removing defendant bears a heavy burden, and the court must resolve ambiguities in state law in the plaintiff’s favor.

The court rejected Ford’s argument that the economic-loss rule made Simmons’s negligent-repair claim impossible. Although the rule generally prevents recovery in tort for economic losses alone, California law recognizes that a defect in one component may cause damage to other parts of a larger product. Simmons alleged problems involving the engine and connected vehicle parts, so the court found it possible for her to establish damage to other property within the vehicle. Ford therefore had not shown that the economic-loss rule made recovery against Mossy impossible.

The court also rejected Ford’s statute-of-limitations argument at the remand stage. The court stated that California provides a three-year limitations period for negligent-repair claims involving injury to personal property. Simmons alleged that the delayed-discovery rule applied, and the complaint did not state when she discovered that Mossy had failed to repair the vehicle according to industry standards. Because it was possible that the limitations period began later under that rule, Ford had not shown that Simmons’s claim against Mossy was necessarily time-barred.

Mossy Was Not Dropped From the Case

The court considered whether it could use Federal Rule of Civil Procedure 21 to drop Mossy and preserve diversity jurisdiction. It declined to do so. The court found that the claims against Ford and Mossy were factually and legally intertwined because Mossy performed many of the vehicle’s repairs. Separating the claims would be inconvenient and inefficient, and the court stated that dropping a nondiverse party merely to create federal jurisdiction should be done sparingly.

Diversity and Disposition

The court treated Simmons’s alleged California residence as evidence of her California domicile. Because Simmons and Mossy were both California residents, complete diversity did not exist. The court therefore concluded that it lacked subject-matter jurisdiction and did not address Simmons’s arguments concerning the amount in controversy.

The court granted Simmons’s motion to remand. The Clerk was directed to remand the case to Santa Clara County Superior Court and close the federal file. Judge Edward J. Davila signed the order on March 10, 2020.