Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_19-cv-06750/USCOURTS-cand-3_19-cv-06750-0/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

ROBERT YEAGER,

Plaintiff,

v.

FORD MOTOR COMPANY; GOSCH 

FORD TEMECULA; and DOES 1 

through 10, inclusive,

Defendants.

No. C 19-06750 WHA 

ORDER REMANDING ACTION 

TO STATE COURT

INTRODUCTION

This is an automobile “Lemon Law” case brought under California law. Defendants 

removed. Plaintiff seeks remand. The crux is whether an in-state defendant was fraudulently 

joined. Finding recovery against the in-state defendant is possible, the motion to remand is 

GRANTED.

STATEMENT

Plaintiff purchased a Ford F-250 pickup truck in May 2014 from defendant Gosch Ford 

Temecula. The truck came covered by a three-year/36,000-mile express bumper-to-bumper 

warranty and a five-year/60,000-mile powertrain warranty (First Amd. Compl. ¶ 8). 

During the warranty period, multiple defects developed. In June 2014, plaintiff brought 

the truck to Gosch over excessive wobble while driving. Gosch’s technicians measured the 

truck’s tires, noted their good condition, and sent plaintiff on his way (id. ¶ 14). 

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He returned less than a month later with an illuminated check-engine light. Gosch 

technicians ran diagnostic tests, including a scan for fault codes that indicated an exhaust-gastemperature sensor failure. Using the repair procedure outlined in a Ford technical service 

bulletin, a technician replaced the sensor. During the visit, plaintiff repeated his excessive 

wobble concerns (id. at ¶ 15).

During a routine maintenance visit in October 2014, Gosch replaced “exhaust emission 

control” parts, according to records from the visit. No further notes were made (id. ¶ 16).

Five months later, plaintiff brought the truck in over excessive wobble for the third time. 

On this visit, Gosch technicians identified the wobble issue as a repeat concern, contacted 

Ford’s technical hotline, and replaced the truck’s tires (id. ¶ 17).

A month later, still within a year of purchase, the engine cranked, but failed to start. 

Plaintiff towed his truck back to Gosch. The technicians ran diagnostic tests and determined 

that the complete fuel system needed replacement. The technicians also reprogrammed the 

power control module and programmed new fuel-injector related codes (id. ¶ 18). Gosch 

represented that the truck had been repaired when plaintiff picked it up.

Plaintiff returned three more times. In April 2016, the primary radiator needed 

replacement following a coolant leak. In January 2018, the check-engine light illuminated, the 

camera ceased to work, and the coolant tanks needed flushing. In September 2018, the checkengine light came back on and Gosh technicians performed further repairs involving the 

exhaust system, as prescribed by a different technical service bulletin. Gosch continued to tell 

plaintiff the issues were repaired (id. ¶ 19, 20, 21).

Later, however, plaintiff learned that a part installed in his truck, the Ford CP4 highpressure fuel-injection pump, suffered a common defect that leads to various problems, such as 

deposits of metal shavings and debris in the fuel injection system, sudden engine failure, no 

start, and rough running (id. ¶¶ 49, 65). When he learned of defendants’ wrongful conduct in 

February 2019, plaintiff requested that defendants repurchase or replace the vehicle. 

Defendants refused (id. ¶ 65). 

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On September 12, 2019, plaintiff filed this action in state court claiming various 

violations of California’s Song-Beverly Consumer Warranty Act. Against Gosch, plaintiff 

alleged only a breach of the implied warranty of merchantability under the Song-Beverly Act. 

All defendants removed. Plaintiff filed the first amended complaint on November 18. 

Plaintiff now moves for remand. This order follows full briefing, extended oral 

argument, and supplemental briefing following the hearing (Dkt. Nos. 31, 32). 

ANALYSIS

A defendant may remove a case to federal court under diversity jurisdiction if the parties 

are diverse and the amount in controversy exceeds $75,000. 28 U.S.C. 1332, 1441. But, the 

defendant bears the burden to prove the circumstances supporting removal jurisdiction. There 

is a “strong presumption against removal jurisdiction” and all ambiguity is resolved in favor of 

remand. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). 

Although complete diversity is required under Section 1332, district courts may ignore 

the fraudulent joinder of nondiverse defendants in determining whether diversity jurisdiction 

exists. There are two ways to establish fraudulent joinder: (1) actual fraud in the pleading of 

jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the nondiverse party in state court. GranCare, LLC, v. Thrower, 889 F.3d 543, 548 (9th Cir. 2018). 

The bar is high; a plaintiff’s inability to recover against the non-diverse party must be “obvious

according to the settled rules of the state.” Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 

(9th Cir. 1998). “If there is a possibility that a state court would find that the complaint states a 

cause of action against any of the resident defendants, the federal court must find that the 

joinder was proper and remand the case to the state court.” Hunter, 582 F. 3d at 1046. And, a 

“district court must consider . . . whether a deficiency in the complaint can possibly be cured 

by granting plaintiff leave to amend.” GranCare, 889 F.3d at 550.

Defendants contend that plaintiff’s implied-warranty claim against Gosch is hopeless 

because it is barred by the statute of limitations. Not so.

The Song-Beverly Consumer Warranty Act provides that “every sale of consumer goods 

that are sold at retail in [California] shall be accompanied by the manufacturer’s and the retail 

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seller’s implied warranty that the goods are merchantable.” Cal. Civ. Code § 1792. The Act 

does not have its own statute of limitations. Instead, Section 2725 of California’s Commercial 

Code applies for all violations of the Act. Mexia v. Rinker Boat Co., Inc., 174 Cal. App. 4th 

1297, 1305–06 (2009). Section 2725 provides: 

(1) An action for breach of any contract for sale must be 

commenced within four years after the cause of action has accrued . 

. . .

(2) A cause of action accrues when the breach occurs, regardless 

of the aggrieved party’s lack of knowledge of the breach. A breach 

of warranty occurs when tender of delivery is made, except that 

where a warranty explicitly extends to future performance of the 

goods and discovery of the breach must await the time of such 

performance the cause of action accrues when the breach is or 

should have been discovered.

Unlike the Commercial Code, under which the implied warranty could be breached only 

at the time of delivery, the Song-Beverly Act’s implied warranty is “coextensive in duration 

with an express warranty which accompanies the consumer goods . . . but in no event shall 

such implied warranty have a duration of . . . more than one year following the sale of new 

consumer goods to a retail buyer.” Cal. Civ. Code § 1791.1(c). “[B]y giving the implied 

warranty a limited prospective existence beyond the time of delivery, the Legislature created 

the possibility that the implied warranty could be breached after delivery.” Mexia, 174 Cal. 

App. 4th at 1309. 

At oral argument, defense counsel agreed that the duration of the implied warranty here

was one year but insisted that the claim for relief still accrued at the time of purchase. Even if 

counsel is wrong and plaintiff could tack on a year to the four-year limitations period, that is 

insufficient. Plaintiff brought this action more than five years after purchase.

The issue is whether a purchaser can sue more than five years after the purchase on the 

theory that a latent defect lurked within the vehicle not reasonably discoverable by him until 

after the year ran such that the four-year limitations period began only upon discovery.

The answer is yes. The implied warranty of merchantability may be breached by a latent 

defect undiscoverable at the time of sale. Mexia, 174 Cal. App. 4th 1297, 1304, 1308–10 

(2009). Section 1791.1 does not create a one-year deadline for discovery of the defect. Ibid. 

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Where a latent defect exists, the statute of limitations is tolled “until the plaintiff discovers, or 

has reason to discover, the cause of action[.]” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal.4th 

797, 807 (2005).

Defendants claim plaintiff is wrong on the applicable law (Dkt. No. 20 at 7). In doing so, 

defendants do not mention Mexia, let alone provide any California authority that disapproves 

of Mexia. Defendants do address an earlier decision that also seemingly applied a delayeddiscovery theory to an implied warranty claim, Krieger v. Nick Alexander Imports, Inc., 

234 Cal. App. 3d 205 (1991), but again, defendants fail to provide any California authority that 

disapproves of or overrules Krieger. No such decision exists. Instead, defendants provide a 

collection of district court decisions that conclude that Krieger was an outlier. These decisions 

are all unavailing. The question, as our court of appeals has pointed out, is whether California 

law — not federal courts’ interpretation of California law — obviously forecloses plaintiff’s 

claim. See GranCare, 889 F.3d at 550. 

Notably, our court of appeals reversed a district court decision granting summary 

judgment because the district court declined to follow Mexia’s holding that latent defects may 

breach the implied warranty even when the defects are not discovered within the implied 

warranty’s duration. Daniel v. Ford Motor Co., 806 F.3d 1217, 1222–23 (9th Cir. 2015). In so 

doing, Daniel expressly recognized the mixed treatment district courts have given Mexia. 

Daniel concluded that “we must adhere to state court decisions — not federal court 

decisions — as the authoritative interpretation of state law.” Id. at 1223. 

So too here.

The one California decision defendants rely on to support their position is Cardinal 

Health 301, Inc. v. Tyco Electronics Corp., 169 Cal. App. 4th 116 (2008). Cardinal Health

addressed the “future-performance exception” of Section 2725, which provides that an 

implied-warranty claim may accrue upon discovery instead of delivery if the warranty in 

question “explicitly extend[s] to future performance of the goods.” Comm. Code § 2725. The 

dispute, importantly, arose in the context of a commercial sale. The Commercial Code, not the 

Song-Beverly Act, governed. The distinction matters here. Because implied warranties arise 

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by law, as defendants assert, they are limited by their statutory definition. The Commercial 

Code does not write in a prospective existence for the implied warranty of merchantability that 

it provides (Comm. Code § 2314), so, as Cardinal Health explains, an implied-warranty claim 

under the Commercial Code accrues at the time of the sale. The Song-Beverly Act, in a 

departure from the Commercial Code, writes in a prospective existence for implied warranties

governed by the Act, allowing for the claim to accrue later, upon discovery. Mexia, 174 Cal. 

App. 4th at 1309. Mexia was decided after Cardinal Health and cites Cardinal Health without 

disapproval. Defendants do not explain why Cardinal Health rather than Mexia applies here. 

Defendants do not mention Mexia at all. The omission is telling.

When pressed on Mexia during oral argument, defense counsel decided to address 

Krieger instead, never returning to Mexia. This order pauses to note that at the hearing,

supplementary briefing was ordered to address an unrelated issue. After quickly conceding the 

issue in its brief, defendant decided to use the allotted pages to rehash its statute of limitations 

argument. This time, however, for the first time ever, defendants cited Mexia. Nevertheless, it 

was to no avail. Defendants cited Mexia to support their contention that “as a matter of law, 

the ‘discovery rule’ does not apply to claims for breach of implied warranty” (Dkt. No. 32 

at 2). To the contrary, “[t]he implied warranty of merchantability may be breached by a latent 

defect undiscoverable at the time of sale.” Mexia, 174 Cal. App. 4th at 1304.

The binding California precedent here is Mexia: Plaintiff can sue more than five years 

after the purchase on the theory that a latent defect lurked within the vehicle not reasonably 

discoverable until after the year ran such that the four-year limitations period began only upon 

discovery. The first amended complaint alleges that discovery was in or around

February 2019, because, among other reasons, Gosch represented that the repairs had fixed the 

problems and plaintiff had relied on those representations (First Amd. Compl. ¶¶ 60, 65).

Defendants do not address these allegations and thus fail to meet their burden of showing 

that California law obviously forecloses plaintiff’s claim against Gosch. This order need not 

and does not reach plaintiff’s other tolling theories. The action must be remanded. Hunter, 

582 F.3d at 1046. 

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In a last-ditch effort, defendants assert that even if this order finds that the dealership was 

not fraudulently joined, the undersigned should exercise his discretion under Rule 21 to 

dismiss the dealership anyway, in order to “preserve” or “perfect” federal jurisdiction, because 

plaintiff can obtain complete relief from Ford (Dkt. No. 20 at 13–14). Ford’s only support for 

this argument is a district court decision denying joinder of a new defendant after removal

where the proposed party would destroy complete diversity (Dkt. No. 20 at 14, citing

Keledjian v. Jabil Circuit, Inc., 2017 WL 3437652 (S.D. Cal. Aug. 10, 2017) (Judge Michael 

Anello)). The question here is whether removal was authorized, not whether the district judge 

should tidy up the party alignment. If removal was improper — as it surely was — then 

remand is compulsory and there is no occasion or jurisdiction to tidy up the pleadings on a 

nunc pro tunc basis or any other basis.

CONCLUSION

For the foregoing reasons, plaintiff’s motion to remand is GRANTED. This order does not 

bless plaintiff’s allegations or conclude that his claim against Gosch was timely brought. It 

may well be that plaintiff should have discovered the breach earlier or even that California 

courts will abandon Mexia. These decisions, however, are for a California state court to 

decide. Defendants’ motions to dismiss (Dkt. Nos. 22, 23) are deemed as moot without 

prejudice to renewal by way of demurrer on remand. The clerk shall please CLOSE THIS FILE.

The Court will retain jurisdiction to determine whether attorney’s fees should be awarded 

after the forty-two other actions removed by Ford under similar circumstances and randomly 

assigned within our district have run their course.

IT IS SO ORDERED.

Dated: January 8, 2020.

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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