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Daniels v. FCA U.S. LLC

United States District Court, D. South Carolina, Florence Division

July 26, 2018

Carl Mark Daniels as PR for the Estate of Delton Daniels, Plaintiff,
v.
FCA US, LLC f/k/a Chrysler Group, LLC, South Carolina Department of Transportation, and Nolan's Service Station. Defendants.

          ORDER AND OPINION

          A. MARVIN QUATTLEBAUM, JR. UNITED STATES DISTRICT JUDGE

         This matter is before the Court on a motion to remand filed by Plaintiff Carl Mark Daniels as Personal Representative for the Estate of Delton Daniels (“Plaintiff”) (ECF No. 10) and the motion to dismiss, or alternatively, motion to sever (ECF No. 3) filed by Defendant FCA U.S. LLC (“FCA”). These motions have been fully briefed and the Court held a hearing on the motions on June 5, 2018. For the reasons set forth below, the Court denies the motion to remand and denies the motion to dismiss, or alternatively, motion to sever and transfer.

         BACKGROUND AND PROCEDURAL HISTORY

         A. The Bankruptcy Case

         On April 30, 2009, Chrysler LLC[1] (“Chrysler”) filed a voluntary bankruptcy petition in the United States Bankruptcy Court for the Southern District of New York (“Bankruptcy Court”). (ECF No. 9, at 2.) On that same day, Chrysler and FCA entered into a Master Transaction Agreement (“MTA”), in which FCA agreed to purchase substantially all of Chrysler's assets and assumed certain liabilities of Chrysler. (ECF No. 1-3, at 2, 52.) On June 1, 2009, the Bankruptcy Court issued an Order authorizing the sale of Chrysler's assets to FCA (“Sale Order”). In the Sale Order, the Bankruptcy Court addressed the liabilities of Chrysler that FCA, as the newly-formed purchaser, would assume. (ECF No. 1-2.) Those assumed liabilities are at issue in FCA's motion to dismiss.

         Section 2.08(h) of the MTA originally provided that FCA shall assume liability for “all Product Liability Claims arising from the sale after the Closing of Products or Inventory manufactured by Sellers or their Subsidiaries in whole or in part prior to the Closing.” (ECF No. 1-2 at 8-9.) (emphasis added) The Sale Order states that except for the Assumed Liabilities in the MTA, FCA is not liable for any claim that “(a) arose prior to the Closing Date, (b) relates to the production of vehicles prior to the Closing Date or (c) otherwise is assertable against [Chrysler] or is related to the Purchased Assets prior to the Closing Date.” (ECF No. 1-2, at 53.) (emphasis added)

         However, on November 19, 2009, section 2.08(h) of the MTA was amended to expand the liabilities FCA agreed to assume to also include:

all Product Liability Claims arising from the sale on or prior to the Closing of motor vehicles or component parts, in each case manufactured by Sellers or their Subsidiaries and distributed and sold as a Chrysler, Jeep, or Dodge brand vehicle or MOPAR brand part, solely to the extent such Product Liability Claims (A) arise directly from motor vehicle accidents occurring on or after Closing, (B) are not barred by any statute of limitations, (C) are not claims including or related to any alleged exposure to any asbestos-containing material or any other Hazardous Material and (D) do not include any claim for exemplary or punitive damages.

Id. (emphasis added) The Bankruptcy Court approved this amendment to the Sale Order on November 19, 2009. (ECF No. 1-2).

         B. Facts and Procedural History of the Instant Action

         Plaintiff filed a complaint in the Court of Common Pleas of Marlboro County on July 14, 2017, for claims arising out of a car accident that occurred on July 20, 2015 in Marlboro County, South Carolina. (ECF No. 1-1.) The complaint alleges that decedent Delton Daniels was a passenger in a 2009 Chrysler Dodge Durango when the driver lost control of the vehicle due to water in the roadway. (ECF No. 1-1, at ¶ 7). The vehicle overturned, and Mr. Daniels' front passenger side curtain airbag failed to deploy, causing his partial ejection in the rollover and, ultimately, his fatal injuries. Id. at ¶¶ 7-8, 12-13. Plaintiff is Mr. Daniels' father and brought this action as Personal Representative of his Estate. Plaintiff asserts product liability claims for negligence, breach of statutory express and implied warranties and strict liability claims against FCA as the purchaser of Chrysler's assets and certain liabilities (ECF Nos. 1-1, 1-2 at 50.) Plaintiff also asserts negligence claims against defendants South Carolina Department of Transportation (“SCDOT”) and Nolan's Service Station. (ECF 1-1.)

         FCA filed a notice of removal on August 29, 2017, asserting federal question jurisdiction under 28 U.S.C. § 1452 and 28 U.S.C. § 1334(b) on the grounds that Plaintiff's claims “arise in” and are “related to” the bankruptcy proceeding or alternatively, under 28 U.S.C. § 1331 because Plaintiff's state law claims are completely preempted by federal bankruptcy law (ECF No. 1, at 5-6.) On September 5, 2018, FCA filed a motion to dismiss Plaintiff's claims for negligence, breach of warranty and punitive damages, or, alternatively a motion to sever and transfer. (ECF No. 3.) The motion does not address Plaintiff's strict liability claim. (ECF No. 9 at 2.) On September 18, 2017, Plaintiff filed a motion to remand, asserting that the Court does not have jurisdiction under 28 U.S.C § 1334(b) because his claims did not arise in, arise under, or relate to the bankruptcy proceeding. (ECF No. 10.) The motion to remand further asserts that there is no jurisdiction 28 U.S.C. § 1331 because Plaintiff's state law claims are not completely preempted federal law. Id. at 10. On February 2, 2018, SCDOT also filed a motion to remand (ECF No. 27) on Eleventh Amendment grounds, asserting that it could not be hauled into federal court without its consent. Id. On October 2, 2017, FCA filed a response in opposition to Plaintiff's motion to remand. (ECF No. 18.) On June 5, 2018, a hearing was held on the motion to dismiss filed by FCA (ECF No. 3), the motion to remand filed by SCDOT (ECF No. 27), and the motion to remand filed by Plaintiff (ECF No. 34). At the hearing, this Court took the matters under advisement and requested additional briefing as to whether consent of all defendants is required if a case is removed on the basis of concurrent federal question jurisdiction. On June 18, 2018, SCDOT consented to removal (ECF No. 39), thereby rendering SCDOT's motion to remand (ECF No. 27) moot.

         STANDARDS OF REVIEW

         A. Removal

         The right to remove a case from state court to federal court derives from 28 U.S.C. § 1441, which provides that “any 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.” 28 U.S.C. § 1441(a). Title 28 U.S.C. 1334(b), in turn, provides that “the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.” If jurisdiction is proper under section 1334, “[a] party may remove any claim or cause of action in a civil action ... to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.” 28 U.S.C. § 1452(a).

         General principles of removal and remand apply to bankruptcy, as well as non-bankruptcy, actions. See Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 128 (1995). “Federal courts must construe removal statutes strictly, guard against expansion of removal jurisdiction by judicial interpretation, and resolve all doubts about the propriety of removal in favor of retained state court jurisdiction.” Branch v. Coca-Cola Bottling Co. Consol., 83 F.Supp.2d 631, 632 (D.S.C. 2000) (internal quotation marks omitted). “To insure that federal courts do not overstep constitutional bounds and delve into matters that are purely state law, federal precedent scrupulously confines removal jurisdiction. . . . Hence, removal is warranted only when absolutely essential under federal law.” Foster v. Roda Converting SA, 2007 U.S. Dist. LEXIS 7899, *2 (D.S.C. 2007) (unpublished) (internal quotation marks omitted). “If federal jurisdiction is doubtful, a remand is necessary.” Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994). “The burden of establishing federal jurisdiction is placed upon the party seeking removal.” Id. at 151.

         B. Rule 12(b)(6) ...


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