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Singh v. American Honda Finance Corp.

United States Court of Appeals, Ninth Circuit

May 30, 2019

Harvinder Singh, Plaintiff-Appellant,
v.
American Honda Finance Corporation, Defendant-Appellee. Harvinder Singh, Plaintiff-Appellant,
v.
Soraya Motor Co.; Arianna Motor Company Inc.; Hooman H. Bodaghi, Dba Hinshaw's Honda; Honda of Auburn; Hooman Honda; Hooman Motors Group; Hinshaw Acura; Hooman Acura, Defendants-Appellees.

          Argued and Submitted March 4, 2019 Seattle, Washington

          Appeal from the United States District Court for the Western District of Washington John C. Coughenour, District Judge, Presiding D.C. No. 2:17-cv-00287-JCC

          Robert Joseph Gaudet Jr. (argued), Karin Gaudet-Asmus, Seattle, Washington; Hardeep S. Rekhi and Gregory Wolk, Seattle, Washington; for Plaintiff-Appellant.

          Sean Ashley Commons (argued), Sidley Austin LLP, Los Angeles, California; Aaron Paul Riensche (argued) and Jeffrey D. Dunbar, Seattle, Washington; Bruce Hamlin, Lane Powell PC, Seattle, Washington; Michael C. Andolina, Sidley Austin LLP, Chicago, Illinois; for Defendant-Appellee.

          Before: Ronald M. Gould and Richard A. Paez, Circuit Judges, and Cynthia A. Bashant, [*] District Judge.

         SUMMARY [**]

         Class Action Fairness Act

         The panel affirmed the district court's grant of summary judgment to defendants in a putative class action against the American Honda Finance Corporation and various car dealerships alleging defendants failed to provide plaintiff with add-ons that were promised in the Dealer Addendum when plaintiff bought his new Honda Accord.

         Plaintiff brought a putative class action in Washington state superior court, and defendant American Honda Finance Corporation removed the case to federal court under the Class Action Fairness Act. Plaintiff moved to remand, but the district court denied that motion. Plaintiff then amended his complaint to assert a federal claim under the Truth in Lending Act. After further motion practice and discovery, the district court granted summary judgment for defendants and dismissed plaintiff's claims.

         The panel first held that plaintiff preserved his objection that removal was improper because he timely moved to remand the case to state court following removal. The panel held that the district court did not have subject-matter jurisdiction over this action at the time of removal because the Class Action Fairness Act's home state exception barred the exercise of jurisdiction. The home state exception applied because the dealership defendants were the primary defendants responsible for the direct harm to consumers and two-thirds or more of the members of the proposed plaintiff classes in the aggregate were citizens of Washington State. The panel nevertheless held that the district court had subject-matter jurisdiction at the time it rendered a final decision on the merits, because plaintiff voluntarily amended his complaint to assert a federal Truth in Lending Act claim.

         On the merits, the panel held that the district court properly granted summary judgment to the dealership defendants and the American Honda Finance Corporation. The panel concluded that considering all the extrinsic evidence offered, plaintiff had not demonstrated a genuine issue of material fact as to whether he was promised an addon that he did not receive. The panel also determined that the district court did not abuse its discretion in denying plaintiff's request for more time for discovery.

          OPINION

          GOULD, Circuit Judge.

         Plaintiff-Appellant Harvinder Singh purchased a new Honda Accord from Hinshaw's Honda in Auburn, Washington. To finance his purchase, Singh obtained financing from Defendant-Appellee American Honda Finance Corporation ("AHFC").[1] Singh later brought this suit as a putative class action in Washington state superior court against AHFC and the Dealership Defendants. AHFC removed the case to federal court under the Class Action Fairness Act ("CAFA"). Singh moved to remand, but the district court denied that motion. Singh then amended his complaint to assert a federal claim under the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1667f. After further motion practice and discovery, the district court granted summary judgment for the Dealership Defendants and AHFC and dismissed Singh's claims.

         On appeal, Singh contends that the district court lacked subject-matter jurisdiction at the time of removal and, for that reason, erred when it denied his motion to remand. Singh also contends that the district court erred in granting summary judgment against him. Finally, Singh contends that the district court did not permit him sufficient discovery before granting summary judgment.

         We hold that the district court did not have subject-matter jurisdiction over this action at the time of removal because CAFA's home state exception barred the exercise of jurisdiction. However, the district court had subject-matter jurisdiction at the time it rendered a final decision on the merits, because Singh voluntarily amended his complaint to assert a federal TILA claim. "To wipe out the adjudication postjudgment, and return to state court a case now satisfying all federal jurisdictional requirements, would impose an exorbitant cost on our dual court system, a cost incompatible with the fair and unprotracted administration of justice." Caterpillar Inc. v. Lewis, 519 U.S. 61, 77 (1996). We decline to impose such a cost.

         On the merits, we hold that the district court properly granted summary judgment to the Dealership Defendants and AHFC. We also hold that the district court did not abuse its discretion in denying Singh's request for more time for discovery. We affirm the district court's judgment in full.

         I

         In February 2016, Singh bought a new Honda Accord from Hinshaw's Honda in Auburn, Washington. The Accord had two stickers. The first sticker listed the car's standard features and a Manufacturer's Suggested Retail Price ("MSRP") of $28, 670.00.[2]

         (Image Omitted)

         The other sticker listed a "dealer price" of $29, 505.00, as well as individual costs for three dealer add-ons: "3M," "Pro Pak," and "New Car Detail & Dealer Prep" ("Dealer Prep").[3]With the add-ons, the listed price of the car was $30, 632.00.

         (Image Omitted)

         Singh negotiated the price of his new Accord down to $27, 356.97, before taxes and fees. Singh did not know what the add-ons were when he purchased the car, nor did anyone at Hinshaw's explain them to him. Singh nonetheless thought he was paying for the add-ons because they were listed on the Dealer Addendum and he was not given the chance to decline them. To finance his purchase, Singh obtained financing from AHFC.

         Singh signed three documents when he purchased his Accord: (1) a Purchase Order, (2) a Sales Contract, and (3) a Retail Installment Sale Contract ("RISC"). Singh also initialed a mandatory disclosure form. The Purchase Order listed the base price of the car as $27, 356.97-the price Singh negotiated. Under the heading "ACCESSORIES," it stated, "sold w/ prep" and "pro pkg (muds, tray, locks)." The Sales Contract listed the "Base Price of Vehicle and Options" as $27, 356.97. It did not list any items under the "Dealer Added or Deleted Options" heading. The RISC provided the terms of Singh's financing agreement with AHFC and listed the total vehicle price of the Accord, including taxes, licensing, and other fees. The RISC did not list any add-ons. Finally, on the "Mandatory Disclosure Statement," Singh declined additional services and protections, including "Rock Guard Chip Protect."

         Singh brought this putative class action in Washington state superior court.[4] Singh claimed that Hinshaw's did not provide him the three add-ons it promised on the Dealer Addendum-3M, Pro Pak, and Dealer Prep-and, if he had known what the add-ons were, he would have declined them and paid a lower price for his Accord. Singh claimed that the other Dealership Defendants engaged in similar unlawful practices. Singh further alleged that AHFC profits from the Dealership Defendants' nondisclosures because the nondisclosures lead to higher car prices, which lead to higher interest payments to AHFC from financing agreements with vehicle purchasers. Singh asserted four causes of action against the Dealership Defendants and AHFC: (1) breach of contract; (2) violation of the duty of good faith and fair dealing; (3) negligent supervision; and (4) violation of the Washington Consumer Protection Act ("WCPA").

         AHFC removed the case to federal court under CAFA. Singh moved to remand, contending that either the home state or the local controversy exception to CAFA barred the exercise of federal subject-matter jurisdiction. The district court rejected those arguments and denied Singh's motion. Singh then amended his complaint to assert a federal TILA claim.

         The Dealership Defendants moved for summary judgment and the district court granted that motion. On Singh's breach of contract claim, the district court explained that the contract between Singh and Hinshaw's consisted of "the Sales Contract . . . RISC . . . and possibly the Vehicle Purchase Order"-the documents Singh had signed. Because none of those documents mentions 3M, Pro Pak, or Dealer Prep, the district court held that those add-ons were not part of the bargain between Hinshaw's and Singh and, for that reason, Hinshaw's did not breach its contract with Singh even if it did not provide the add-ons.[5] The district court granted summary judgment against Singh on his WCPA claim because (1) Hinshaw's did not violate Washington's Auto Dealer's Practices Act[6] and (2) Singh did not demonstrate injury insofar as he paid less than the MSRP of the car. Finally, the district court granted summary judgment against Singh on his TILA claim because the contract did not include any add-ons and therefore their costs did not need to be itemized in the RISC.[7]

         Separately, AHFC moved to dismiss Singh's claims against it under Federal Rule of Civil Procedure 12(b)(6). As part of its motion, AHFC included a copy of the RISC. Singh had not attached the RISC to his complaint, so he objected to its consideration at the motion-to-dismiss stage. But Singh's response included ninety-one pages of declarations and exhibits, which likewise were not attached to his complaint. Because each party cited materials outside the complaint, the district court converted AHFC's motion to dismiss into a motion for summary judgment and "deferred consideration of the motion to allow Singh a reasonable opportunity to present all material that would be pertinent."

         After further discovery, Singh objected that he had not received adequate time for discovery. The district court declined to permit Singh more time because Singh had propounded discovery requests on the defendants for two months, he attached a slew of documents obtained in discovery to his responses to the motions for summary judgment, and he did not point to any facts that he lacked.

         On the merits, the district court granted summary judgment against Singh on his breach of contract claim because Singh could not show that AHFC violated any financing terms of the RISC, the only contract between AHFC and Singh.[8] The district court granted summary judgment for AHFC on Singh's WCPA claim because AHFC was not directly involved in the allegedly deceptive practice of displaying the Dealer Addendum on vehicles.[9]Finally, the district court noted that Singh had abandoned his TILA claim against AHFC, although he reserved the right to seek reinstatement.

         Singh filed timely notices of appeal. He contends that the district court lacked subject-matter jurisdiction over this action at the time of removal and therefore erred when it denied his motion to remand. He asks that this case be remanded to Washington state court. In the alternative, Singh contends that the district court erred in granting summary judgment to the defendants, or that it erred in granting summary judgment without permitting him sufficient discovery.

         II

         We review de novo whether the district court had subject-matter jurisdiction. Chapman v. Deutsche Bank Nat'l Tr. Co., 651 F.3d 1039, 1043 (9th Cir. 2011) (per curiam). We review any factual findings relevant to jurisdiction for clear error. Id.

         We review de novo whether the district court properly granted summary judgment to the Dealership Defendants and AHFC. Hunt v. City of L.A., 638 F.3d 703, 709 (9th Cir. 2011). We review the district court's denial of Singh's "request for a continuance of summary judgment pending further discovery . . . for an abuse of discretion." Michelman v. Lincoln Nat. Life Ins. Co., 685 F.3d 887, 892 (9th Cir. 2012). We may affirm on "any ground supported by the record." Canyon Cty. v. Syngenta Seeds, Inc., 519 F.3d 969, 975 (9th Cir. 2008).

         III

         As an initial matter, the parties disagree whether the district court had subject-matter jurisdiction to render a decision on the merits. Singh contends that jurisdiction did not exist at the time of removal because two CAFA exceptions-the local controversy exception and home state exception-barred the exercise of federal subject-matter jurisdiction. The defendants contend that those exceptions are inapplicable. They alternatively contend, relying on Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996), and Retail Property Trust v. United Board of Carpenters and Joiners of America, 768 F.3d 938 (9th Cir. 2014), that this case should not be remanded to state court-even if subject-matter jurisdiction did not exist when AFHC removed the case- because Singh voluntarily amended his complaint after he was in federal court to assert a federal TILA claim, thereby establishing federal-question jurisdiction. Singh, relying on Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567 (2004), responds that jurisdiction must be determined as of the time of removal.

         To better understand the parties' dispute and the relevant law that frames our inquiry, we start with the Supreme Court's decision in Grubbs v. General Electric Credit Corporation, 405 U.S. 699 (1972). In Grubbs, General Electric Credit Corporation ("GECC") sued Grubbs in state court. Id. at 700. In response, Grubbs initiated a cross-action against the United States government. Id. The government removed the case to federal court. Id. GECC did not object to removal, and the case was eventually tried. Id. at 701. On appeal, the Court of Appeals raised the issue of jurisdiction sua sponte and dismissed. Id. at 702. The Supreme Court reversed. The Court explained that in situations where a removed case is tried and decided on the merits without objection, "the issue in subsequent proceedings on appeal is not whether the case was properly removed, but whether the federal district court would have had original jurisdiction of the case had it been filed in that court." Id. at 703. Applying that principle, the Court held that jurisdiction existed when the district court rendered its judgment and, for that reason, the Court of Appeals should not have dismissed the case. Id. at 704.

         In the wake of Grubbs, we held that a party challenging the propriety of removal had to preserve any such objection by timely moving to remand and then appealing any adverse remand determination. See, e.g., Gould v. Mut. Life Ins. Co. of N.Y., 790 F.2d 769, 774 (9th Cir. 1986); Lewis v. Time, Inc., 710 F.2d 549, 552 (9th Cir. 1983); Sheeran v. Gen. Elec. Co., 593 F.2d 93, 97-98 (9th Cir. 1979). "[W]hen there [was] no appeal of a denial of a remand motion and the case [was] tried on the merits, the issue on appeal [was] whether the federal court would have had jurisdiction had the case been filed in federal court in the posture it had at the time of the entry of the final judgment." Lewis, 710 F.2d at 552; accord Carpenters Health & Welfare Tr. Fund for Cal. v. Tri Capital Corp., 25 F.3d 849, 852 (9th Cir. 1994), overruled on other grounds by S. Cal. IBEW-NECA Tr. Funds v. Standard Indus. Elec. Co., 247 F.3d 920 (9th Cir. 2001). At least one other circuit applied a similar rule. See, e.g., Kidd v. Sw. Airlines, Co., 891 F.2d 540, 546 (5th Cir. 1990).

         Then came Caterpillar Inc. v. Lewis, 519 U.S. 61, the case on which the defendants rely. The plaintiff there had filed suit in state court on personal injury claims. Id. at 64. "The case was removed to a federal court at a time when . . . complete diversity of citizenship did not exist among the parties." Id. The plaintiff moved to remand the case, but the district court denied the motion. Id. Before trial, the nondiverse defendants settled, and at the time of trial, complete diversity existed between the parties. Id. The defendant prevailed at trial, but "[t]he Court of Appeals vacated the judgment, concluding that, absent complete diversity at the time of removal, the District Court lacked subject-matter jurisdiction." Id.

         The Supreme Court reversed. The Court first held that the plaintiff, "by timely moving for remand, did all that was required to preserve his objection to removal." Id. at 74. The Court then explained that the flaw in the case was a "statutory flaw-Caterpillar's failure to meet the [28 U.S.C.] § 1441(a) requirement that the case be fit for federal adjudication at the time the removal petition is filed"-not a "jurisdictional defect." Id. The jurisdictional defect, the lack of complete diversity at the time of removal, was cured when complete diversity was established before trial. Id. at 73. The Court noted that if the jurisdictional defect had remained through the time when the judgment was entered, however, the judgment would have to be vacated. Id. at 76- 77. But the Court concluded that the district court properly exercised subject-matter jurisdiction notwithstanding the initial statutory flaw. The Court explained: "Once a diversity case has been tried in federal court, with rules of decision supplied by state law under the regime of Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), considerations of finality, efficiency, and economy become overwhelming." Id. at 75. It went on: "To wipe out the adjudication postjudgment, and return to state court a case now satisfying all federal jurisdictional requirements, would impose an exorbitant cost on our dual court system, a cost incompatible with the fair and unprotracted administration of justice." Id. at 77.

         The Supreme Court revisited this line of authority in Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, the case on which Singh relies. There, the parties were nondiverse when the plaintiff filed its complaint in federal court because the plaintiff was a partnership with "two partners who were Mexican citizens, "[10] while the defendant was a Mexican corporation. Id. at 569. Despite the initial lack of diversity, complete diversity was achieved just before trial when the two Mexican partners left the partnership. Id. The case proceeded to a six-day trial. Id. The Supreme Court framed the question before it as "whether a party's post-filing change in citizenship can cure a lack of subject-matter jurisdiction that existed at the time of filing in an action premised upon diversity of citizenship." Id.

         Answering that question negatively, the Court held that federal subject-matter jurisdiction was lacking. Id. at 572- 76. The Court started with the proposition that "[i]t has long been the case that 'the jurisdiction of the court depends upon the state of things at the time of the action brought.'" Id. at 570 (quoting Mollan v. Torrance, 9 Wheat. 537, 539 (1824)). The Court then distinguished Caterpillar, explaining that "Caterpillar broke no new ground," the "jurisdictional defect [there] had been cured by the dismissal of the party that destroyed diversity"-a "method of curing a jurisdictional defect [that] had long been an exception to the time-of-filing rule." Id. at 572. The Court further explained that the "holding of Caterpillar . . . is only that a statutory defect-'Caterpillar's failure to meet the § 1441(a) requirement that the case be fit for federal adjudication at the time the removal petition is filed'-did not require dismissal once there was no longer any jurisdictional defect," in light of "considerations of finality, efficiency, and economy." Id. at 574 (quoting Caterpillar, 519 U.S. at 73, 75). Finally, the Court noted that it had "never approved a deviation from the rule . . . that where there is no change of party, a jurisdiction depending on the condition of the party is governed by that condition, as it was at the commencement of the suit." Id. (quotation, emphasis, and alteration omitted). Because the "[t]he purported cure" to the jurisdictional defect in Grupo Dataflux "arose not from a change in the parties to the action, but from a change in the citizenship of a continuing party"- a cure the Court had refused to permit "for the past 175 years"-the Court held that federal subject-matter jurisdiction did not exist. Id. at 575-76.

         Under Grubbs, Caterpillar, and Grupo Dataflux, our inquiry is three-fold when, as here, it is alleged that federal subject-matter jurisdiction did not exist at the time of removal but existed at the time of final judgment. First, has the party contesting jurisdiction preserved the contention that removal was improper? Second, was there a jurisdictional defect at the time of removal and, if so, was it properly cured before the entry of final judgment so that federal subject-matter jurisdiction existed at the time of final judgment? Third, if no jurisdictional defect remained at the time of final judgment, do "considerations of finality, efficiency, and economy," outweigh the statutory defect in the case-a party's "failure to meet the [28 U.S.C.] ยง 1441(a) requirement that the case be fit for federal adjudication at the time the removal ...


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