Late last week, the Northern District of California denied defendant Tesla Inc.’s motion to dismiss in a declaratory judgment action brought against it by Ajay Jain. The plaintiff brought the action to resolve the question of ownership of a Tesla that plaintiff allegedly bought on-line from a third party.
Jain alleges that he is a good faith purchaser for value of the car who is entitled to own it; Tesla, according to the plaintiff, has treated the car as stolen and taken steps to repossess it. By denying the motion, the court did not make any determination on the merits, and the action remains pending.
The opinion, written by Magistrate Nathanael Cousins, quotes heavily from the allegations in operative complaint, which is the First Amended Complaint filed in August 2022.
The plaintiff, a resident of California, alleges that he bought the Tesla on-line from a Texas resident. After initially finding the Tesla on “Facebook Marketplace,” the plaintiff alleges that he took numerous steps prior to making the purchase to confirm that the seller was the legitimate owner of the car, including communicating directly with Tesla. He claims that the vehicle ultimately arrived from Texas at his California home in February 2022 and that he then sent the seller a cashier’s check for $127,500.
At the time of payment, the plaintiff still apparently had not received the certificate of title. He alleges that the seller told him the certificate would be forthcoming, but he also alleges that he discovered from communications with authorities in Texas that there were no records of registration or title for the Tesla.
Also in this time frame, Jain alleges that he received a call from “Tesla’s fraud department.” From these communications and prior communications with the seller, the plaintiff began, in the Magistrate’s words, “to piece together the contours of the scheme”: the plaintiff alleges that the seller made a down payment, received the Tesla, and then made a “dishonored wire” for the remaining sum. Tesla apparently the reported the car as stolen to the Houston Police.
Jain also alleges that the Santa Clara Sheriff’s Department contacted him about repossessing the vehicle, and that the Sheriff’s Department has not taken action only because of the pending action to resolve the question of ownership. The plaintiff further alleges that the Sheriff’s Department has instructed him to keep the car in his garage pending resolution of the action.
The court summarily rejects Tesla’s arguments under FRCP 12(b)(1) regarding lack of subject matter jurisdiction. Tesla, per the opinion, argued that that there is no nexus between it and the plaintiff, and that plaintiff’s dispute is with other entities, such as the seller. “As far as reporting the Vehicle stolen, Tesla casts itself as a good Samaritan that simply informed the authorities of a crime.”
Under 12(b)(6), the court concludes that the seller “plausibly possessed voidable title” and that Plaintiff “plausibly alleges that he is a bona fide purchaser.” Although the court notes arguments to the contrary to both conclusions based upon various allegations, such arguments did not prevail at the motion to dismiss stage.
Plaintiff’s counsel is Structure Law Group.