Carrington Stonemasons, Inc. v. Ford Motor Company

Background

Carrington filed a state-law lemon-law action against Ford in Santa Cruz County Superior Court. The complaint asserted two claims under California’s Song-Beverly Consumer Warranty Act concerning Ford’s alleged failure to meet warranty and repair obligations for a 2019 Ford F-150 purchased on December 13, 2019. Carrington sought actual damages, unspecified additional damages, a civil penalty of up to twice its actual damages, attorneys’ fees and costs, and other relief.

The complaint did not state the vehicle’s purchase price or the attorneys’ fees and costs incurred. Ford obtained the retail installment sales contract after the complaint was filed and learned that the purchase price was $67,111.46. Ford removed the action to federal court based on diversity jurisdiction, asserting that Carrington was a California citizen and that Ford was a citizen of Delaware and Michigan.

Motion to Remand

Carrington moved to remand, meaning to return the action to state court. It argued that the amount in controversy was speculative, that principles of comity favored state court, and that Ford had not established complete diversity of citizenship. Ford opposed the motion. The court decided the motion without oral argument and vacated the hearing previously set for June 27, 2024.

Amount in Controversy

For diversity jurisdiction, the amount in controversy must exceed $75,000, and the removing defendant bears the burden of proving that threshold by a preponderance of the evidence. The court accepted Ford’s calculation of actual damages because Carrington did not file a reply disputing it. Ford calculated a $12,855.76 use offset based on the vehicle’s mileage before its first repair attempt. Subtracting that offset from the $67,111.46 purchase price produced actual damages of $54,255.70.

Carrington also sought a civil penalty of up to twice its actual damages. The court included the maximum requested penalty of $108,511.40, producing $162,767.10 in actual damages plus the civil penalty. The court explained that the amount in controversy concerns the amount at stake, not the amount Carrington was likely ultimately to recover. The court declined to resolve the broader question of whether a use offset should always be considered because Ford’s evidence already accounted for the offset.

Carrington also sought attorneys’ fees in an unspecified amount. Ford submitted evidence that fees in similar Song-Beverly Act cases usually total at least $35,000. Including $35,000 in fees, the court calculated the amount in controversy as $197,767.10.

Comity and Citizenship

The court rejected Carrington’s argument that it should decline to exercise diversity jurisdiction because state court was a more appropriate forum. It stated that federal courts generally have an obligation to exercise the jurisdiction given to them and found Carrington’s comity argument without merit.

The court also found that Ford established complete diversity. Carrington was alleged to be a California corporation, and evidence identified its principal place of business as California. Ford’s evidence showed that Ford was incorporated in Delaware and had its principal place of business in Michigan. The court therefore found that the parties were citizens of different states.

Disposition

The court held that Ford established diversity jurisdiction because the amount in controversy exceeded $75,000 and the parties were completely diverse. Judge Beth Freeman denied Carrington’s motion to remand. The order also terminated the motion docket entry, ECF 13.