Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_19-cv-04806/USCOURTS-cand-5_19-cv-04806-0/pdf.json

Nature of Suit Code: 195
Nature of Suit: Contract Product Liability
Cause of Action: 28:1332 Diversity-Petition for Removal

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

STEVE M VERASTEGUI,

Plaintiff,

v.

FORD MOTOR COMPANY, et al.,

Defendants.

Case No. 19-cv-04806-BLF

ORDER DENYING MOTION TO 

REMAND

[Re: ECF 16]

Before the Court is Plaintiff Steve Verastegui’s motion to remand for lack of diversity 

jurisdiction. Mot. to Remand, ECF 16. Verastegui brings this suit against Ford Motor Company 

and Chino Hills Ford (together, “Defendants”) alleging violations of the Song-Beverly Act and 

negligent repair, respectively. Compl., ECF 1-2. Defendants removed this action from Santa 

Clara Superior Court on diversity grounds. Not. of Removal, ECF 1. At issue is whether the 

federal “amount in controversy” requirement has been satisfied. Pursuant to Civil Local Rule 7-

1(b), the Court finds that the matter is suitable for disposition without oral argument and 

VACATES the hearing set on April 2, 2020. For the reasons discussed below, the Court DENIES 

the motion to remand.

I. BACKGROUND

On or about August 2009, Verastegui purchased a 2010 Ford Focus (the “Vehicle”). See 

Compl. ¶ 8. The purchase came with three express written warranties: (1) a 3-year/36,000 mile 

express bumper to bumper warranty, (2) a 5-year/60,000 mile powertrain warranty which, inter 

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alia, covers the engine and transmission and, (3) an 8-year/100,000 mile hybrid electrical part 

warranty. Id. ¶ 9. The warranties provided that in the event a defect developed with the Vehicle 

during the warranty period, “Plaintiff could deliver the Vehicle for repair services to Defendant

[Ford]’s representatives and the Vehicle would be repaired.” Id.

During the warranty period, the Vehicle either contained or developed numerous defects 

that substantially impaired its use, value, or safety. Compl. ¶ 10. For example, the Vehicle 

contained or developed defects relating to the engine, powertrain control module, throttle body, 

A/C, and battery, among others. Id. Verastegui alleges that “the Defendant and its representative 

were aware that they were unable to service or repair” the Vehicle to conform to the applicable 

warranties. Id. ¶ 13. At least once, Verastegui brought the Vehicle to Chino Hills Ford for 

substantial repair. Id. ¶ 51. Verastegui alleges that Chino Hills Ford owed Verastegui a duty to 

use ordinary care and skill to repair the Vehicle, and that Chino Hills Ford breached this duty by 

failing to properly store, prepare, and repair the Vehicle in accordance with industry standards. Id.

¶¶ 51-53.

On July 3, 2019, Verastegui filed a Complaint in Santa Clara County Superior Court 

against Chino Hills Ford and Ford. See generally Compl. Based on the above allegations, 

Verastegui asserts six causes of action against Ford alone for violating the Song-Beverly 

Consumer Warranty Act and fraud by omission, and one cause of action against Chino Hills Ford 

for negligent repair. Id. ¶¶ 12-54. Verastegui’s sole claim against Chino Hills Ford alleges that 

Chino Hills Ford’s negligent breach of its duty proximately caused Verastegui’s damages. Id. ¶ 

54.

On August 14, 2019, Defendants filed a notice of removal on the basis of diversity 

jurisdiction. See Not. of Removal. Verastegui moved to remand this action back to state court on 

December 16, 2019, claiming that the amount in controversy does not meet the jurisdictional 

threshold. Mot. to Remand at 1. Defendants oppose the Motion to Remand, arguing that the

amount in controversy exceeds $75,000. Opposition to Motion to Remand (“Opp’n.”) at 1, ECF 

19.

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II. LEGAL STANDARD

“[A]ny civil action brought in a State court of which the district courts of the United States

have original jurisdiction, may be removed by the defendant or the defendants, to the district court 

of the United States for the district and division embracing the place where such action is 

pending.” 28 U.S.C. § 1441(a). “A defendant may remove an action to federal court based on 

federal question jurisdiction or diversity jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 

1039, 1042 (9th Cir. 2009) (citing 28 U.S.C. § 1441(a)).

District courts have diversity jurisdiction over all civil actions between citizens of different 

states where the amount in controversy exceeds $75,000, exclusive of interests and costs. 28 

U.S.C. § 1332. If the district court determines that it lacks jurisdiction, the action should be 

remanded back to the state court. Martin v. Franklin Capital Corp., 546 U.S. 132, 134 (2005). 

The Ninth Circuit recognizes a “strong presumption against removal.” Gaus v. Miles, Inc., 980 

F.2d 564, 566 (9th Cir. 1992) (internal quotations omitted). Thus, “[f]ederal jurisdiction must be 

rejected if there is any doubt as to the right of removal in the first instance.” Id. The court 

“resolves all ambiguity in favor of remand.” See Matheson v. Progressive Specialty Ins. Co., 319 

F.3d 1089, 1090 (9th Cir. 2003).

III. DISCUSSION

The parties do not meaningfully dispute that complete diversity of citizenship among the 

parties has been established.1 The parties agree Ford is a citizen of Delaware and Michigan, and 

Chino Hills Ford is a citizen of Nevada. Opp’n. at 2; Mot. to Remand at 6. Plaintiff is a resident 

of California. Compl. ¶ 2. Therefore, the only issue in dispute is whether the amount in 

controversy is satisfied.

“[W]hen a complaint filed in state court alleges on its face an amount in controversy 

sufficient to meet the federal jurisdictional threshold, such requirement is presumptively satisfied 

 

1 Plaintiff rejects Defendants’ argument, advanced in the Notice of Removal, that Chino Hills was 

fraudulently joined because Plaintiff concedes that Chino Hills is a citizen of Nevada and, thus, 

Chino Hills was not joined to defeat diversity. Mot. to Remand at 6-7; see also Not. of Removal 

¶¶ 21-41. Defendants argue that Plaintiff’s residence in California established his citizenship, a 

notion that Plaintiff never disputed. Opp’n at 8-9. In any event, these arguments are irrelevant 

since neither party challenges diversity of citizenship.

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unless it appears to a legal certainty that the plaintiff cannot actually recover that amount.”

Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007). “Where it is unclear or 

ambiguous from the face of a state-court complaint whether the requisite amount in controversy is 

pled, . . . we apply a preponderance of the evidence standard.” Id. Further, when “the plaintiff 

after removal, by stipulation, by affidavit, or by amendment of his pleadings, reduces the claim 

below the requisite amount, this does not deprive the district court of jurisdiction.” St. Paul 

Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 292 (1938).

The parties’ disagreement over the amount in controversy arises primarily from the 

ambiguity in the Complaint regarding damages. In his Complaint, Plaintiff alleges “damages in an 

amount that is not less than $25,001.00.” Compl. ¶ 11. The Complaint also alleged that “Plaintiff 

is entitled to a civil penalty of two times Plaintiffs actual damages pursuant to Civil Code section 

1794, subdivision (c).” Id. ¶ 15. Plaintiff argues that the word “damages” references Plaintiff’s 

total damages, which include both actual damages and civil penalties, and that Defendants have 

failed to demonstrate that these total damages exceed the jurisdictional threshold of $75,000. Mot. 

to Remand at 4. Defendant, on the other hand, argues that “Plaintiff has alleged damages of 

greater than $25,000 and a penalty of twice the amount of damages, or at least $50,000,” resulting 

in an amount exceeding $75,000. Opp’n at 3.

The Court agrees with Defendants’ interpretation of the Complaint because Plaintiff’s 

characterization of his claims for damages is contradicted by the Complaint. Plaintiff seeks “the 

remedies provided in California Civil Code section 1794(b)(1), including the entire contract 

price.” Compl. ¶ 21. The contract price of the vehicle was $36,580. Opp’n. Exh. A, ECF 19-2. 

“Plaintiff’s claim for the full contract price of [his] Vehicle thus resolves any ambiguity regarding 

damages—the allegation that [he] ‘suffered damages in a sum to be proven at trial in an amount 

not less than $25,001.00’ must be interpreted to refer to actual damages exclusive of civil 

penalties.” Covarrubias v. Ford Motor Co., No. 19-CV-01832-EMC, 2019 WL 2866046, at *6 

(N.D. Cal. July 3, 2019); see also Compl. ¶ 11. 

As for civil penalties, Plaintiff seeks “a civil penalty of two times [plaintff’s] actual 

damages” pursuant to Civil Code Section 1794(e).” Compl. ¶ 16. Courts in this district have held 

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that “the civil penalty under the Song-Beverly Act is akin to punitive damages” and may be used 

as such for the purpose of calculating amount in controversy. Brady v. Mercedes-Benz USA, Inc., 

243 F.Supp.2d 1004, 1009 (N.D. Cal. 2002). Further, it is well established that the amount in 

controversy for diversity jurisdiction may include punitive damages if recoverable under state law. 

See Davenport v. Mutual Ben. Health & Acc. Ass’n, 325 F.2d 785, 787 (9th Cir. 1963) (“[P]unitive 

damages may be included in computing amount necessary for federal jurisdiction.”). 

Defendants argue that “Plaintiff has alleged damages of greater than $25,000 and a penalty 

of twice the amount of damages, or at least $50,000” resulting in an amount-in-controversy that 

exceeds $75,000. Plaintiff responds that Defendants “have proffered no evidence whatsoever that 

Plaintiff is entitled to the maximum civil penalties allowed—or, indeed, any penalties at all[.]” 

Reply at 2. That Plaintiff now asserts he might recover damages that are less than what he seeks in 

his Complaint “does not change the fact that his Complaint put in controversy far more than that.” 

Carlos v. Jaguar Land Rover N. Am., LLC, No. CV 19-1318-GW(FFMX), 2019 WL 2068465, at 

*3 (C.D. Cal. May 10, 2019); see also Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 400 (9th Cir. 

2010) (“The amount in controversy is simply an estimate of the total amount in dispute, not a 

prospective assessment of defendant's liability.”); Fong v. Regis Corp., No. C 13-04497 RS, 2014 

WL 26996, at *2 (N.D. Cal. Jan. 2, 2014) (“The ultimate inquiry is what amount is put ‘in 

controversy’ by the plaintiff's complaint, not what a defendant will actually owe.”) (citing Korn v. 

Polo Ralph Lauren Corp., 536 F. Supp. 2d 1199, 1205 (E.D. Cal. 2008)). The Court concludes that 

Plaintiff has “put in controversy” civil penalties exceeding $50,000. 

The Court recognizes that courts in this district have varying views as to whether the 

maximum civil penalties should be considered when deciding the amount in controversy. Compare

Makol v. Jaguar Land Rover N. Am., LLC, No. 18-CV-03414-NC, 2018 WL 3194424, at *3 (N.D. 

Cal. June 28, 2018) (“Simply assuming a civil penalty award is inconsistent with the principle that 

the defendants must provide evidence that it is more likely than not that the amount in controversy 

requirement is satisfied.”) (citation omitted) with Neville v. W. Recreational Vehicles, Inc., No. C07-3757MMC, 2007 WL 4197414, at *2 (N.D. Cal. Nov. 21, 2007) (“The Song-Beverly penalty of 

twice the actual damages therefore pushes the amount in controversy to well over the” statutory 

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minimum); Covarrubias, 2019 WL 2866046, at *6 (adding the maximum recoverable civil penalties 

to the amount in controversy); Bernstein v. BMW of N. Am., LLC, No. 18-CV-01801-JSC, 2018 WL 

2210683, at *2 (N.D. Cal. May 15, 2018) (“Two times Plaintiff’s $25,000 valuation is $50,000 

which totals $75,000 exclusive of attorney’s fees.”). As discussed above, the Court is persuaded by 

the decisions in which courts have considered the maximum recoverable civil penalties because that 

is what Plaintiff put in controversy.

Additionally, Plaintiff seeks attorneys’ fees pursuant to Civil Code section 1794, 

subdivision (d). Compl., Prayer at (e). Attorneys’ fees may be included in the amount in 

controversy if, as here, they are recoverable by statute. Galt G/S v. JSS Scandinavia, 142 F.3d 

1150, 1155–56 (9th Cir. 1998). The Ninth Circuit recently explained that “when a statute or 

contract provides for the recovery of attorneys’ fees, prospective attorneys’ fees must be included 

in the assessment of the amount in controversy.” Arias v. Residence Inn by Marriott, 936 F.3d 

920, 922 (9th Cir. 2019). Defendants estimate that attorneys’ fees “in these type of cases” exceed 

$50,000. Opp’n at 7, ECF 1-6 ¶ 5. Plaintiff objects to Defendants’ estimate. Reply at 4. The 

Court need not consider Defendants’ estimate because once actual damages and civil penalties are 

added (as well as attorney’s fees in any amount), the total amount in controversy exceeds $75,000.

Although Lemon Law cases brought solely under California law are best litigated in state 

court, Defendants have met their burden of proving, by a preponderance of evidence, that the 

amount in controversy exceeds the jurisdictional threshold. Accordingly, Defendants have 

established both the diversity and amount-in-controversy prerequisites to invoking the Court’s 

subject matter jurisdiction under 28 U.S.C. § 1332(a).

IV. ORDER

For the foregoing reasons, the Court DENIES Plaintiff’s Motion to Remand.

IT IS SO ORDERED

Dated: February 7, 2020

______________________________________

BETH LABSON FREEMAN

United States District Judge

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