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No ‘Fraudulent Joinder’ in Auto Accident Case

In plaintiff’s suit alleging severe and permanent injuries after she swerved in her 1995 Mazda Miata to avoid an object in the road and the vehicle turned over because the vehicle allegedly failed to provide “reasonable occupant protection in the event of a rollover accident,” the Roanoke U.S. District Court remands the case to state court because defendant has failed to prove “fraudulent joinder” of a Virginia dealer as a defendant.

Under Hartley v. CSX Transp. Inc., 187 F.3d 422 (4th Cir. 1999), to prove fraudulent joinder the removing party must either show outright fraud in the plaintiff’s pleading of jurisdictional facts, or that there is “no possibility” that the plaintiff would be able to establish a cause of action against the in-state defendant in state court. The “no possibility” standard for removal remains the controlling standard in the 4th Circuit, and this court will analyze defendant manufacturer’s fraudulent joinder claim to determine whether plaintiff’s claim against defendant Holiday Motor Corporation, a Virginia company, has even the slightest possibility of success.

Because there is at least a “mere possibility” that plaintiff could be entitled to relief from Holiday on either the breach of warranty or the negligence claim, Holiday is not fraudulently joined and the court must remand the case to state court.

At oral argument, defendant MNAO admitted that defendant Holiday sold the Miata with an express written warranty as to the engine, transmission, drive axle and all internally lubricated parts, as denoted under the heading “systems covered” on the “Buyers Guide” that appeared in the window of the Miata at the time of sale (the “window sticker”). Also, under the heading “duration,” the window sticker stated “Three months from the effective date or when the odometer has registered 3,000 miles from that shown on the effective date, whichever comes first.” On the basis of this express warranty, MNAO now argues the implied warranty of merchantability is limited to those systems on the window sticker and/or is limited in duration by the three-month limitation on the window sticker.

Contrary to MNAO’s position, because Holiday provided an express written warranty to plaintiff, under the Magnuson Moss Act, Holiday was prohibited from disclaiming or limiting the duration of the limited warranty of merchantability that arises by operation of Virginia law pursuant to Va. Code § 8.2-314(1). MNAO’s argument that the implied warranty only arises as to the systems warranted finds no support in either federal or Virginia state law. The court finds that MNAO has not met its burden of proving there is “no possibility” that plaintiff may recover on a claim for breach of the implied warranty of merchantability.

MNAO argues the Virginia pleading standards are the same as the heightened federal pleading standards under Bell Atl. Corp. v. Twombly, 550 U.S. 522 (2007), and Ashcroft v. Iqbal 129 S.Ct. 1937 (2009). This argument fails because federal pleading standards do not control in this case, and Virginia pleading standards are not as exacting as federal standards.

It is possible the Roanoke City Circuit Court could find liability under the implied warranty of merchantability or under the negligence claim. Because Holiday was not fraudulently joined to avoid federal jurisdiction, complete diversity is lacking in this case, and this court does not have subject matter jurisdiction.

Walters v. Holiday Motor Corp. (Turk) No. 7:12cv00011, May 21, 2012; USDC at Roanoke, Va. VLW 012-3-204, 10 pp.

VLW 012-3-204

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