United States District Court, W.D. Kentucky, Louisville
JOHN MITCHELL, on behalf of himself and a Class of persons similarly situated, Plaintiffs,
GENERAL MOTORS LLC, Defendant.
CHARLES R. SIMPSON, III, Senior District Judge.
This matter is before the court on the motion of the defendant, General Motors LLC ("GM"), to dismiss the First Amended Complaint of the plaintiff, John Mitchell ("Plaintiff"). (DN 20). Plaintiff filed a response to the motion (DN 21), to which GM replied (DN 22). For the reasons set forth herein, we will grant GM's motion to dismiss (DN 20).
On or about April 28, 2011, Plaintiff purchased a 2011 Chevrolet Cruze from Bachman Chevrolet in Louisville, Kentucky for approximately $21, 000. GM is the manufacturer of the Chevrolet Cruze (hereinafter, "the Cruze" or "the vehicle"). The Cruze was sold pursuant to a written warranty provided by GM, in which GM warranted and represented that it would make any repairs necessary to correct defects in material or workmanship in the vehicle for three years or 36, 000 miles (the "Warranty"). The Warranty states that it "covers repairs to correct any vehicle defect related to materials or workmanship occurring during the warranty period, " and any warranty repairs will be made at no charge. (Mot. to Dismiss, DN 20-5, p. 10).
Plaintiff contends that in October 2012, the vehicle began to exhibit signs of a mechanical defect that allegedly caused antifreeze to leak from the radiator (hereinafter, "the alleged defect" or "the defect"). According to Plaintiff, the alleged defect causes mechanical problems and creates a "malodorous" smell that reaches the passenger compartment. Plaintiff alleges that he took the vehicle to Bachman Chevrolet for repair on five separate occasions after it purportedly began to exhibit signs of the alleged defect. Bachman was unable to repair the alleged defect, and Plaintiff does not assert that he was charged for any of these repair attempts. Plaintiff maintains that he alerted GM of the alleged defect by notifying Bachman Chevrolet, whom Plaintiff contends is an agent of GM.
The First Amended Complaint describes several alleged conversations between Plaintiff and representatives of Bachman Chevrolet regarding their purported denial-and subsequent acknowledgment-of the defect, and their apparently fruitless attempts to repair it. Most of Plaintiff's communications regarding the alleged defect were made with Bachman representatives; Plaintiff only communicated telephonically with GM employees via GM's toll free number. According to Plaintiff, Bachman representatives "admitted" that another Cruze owner had complained of the same defect experienced by Plaintiff and recommended that he trade in the Cruze for a new GM model. One representative allegedly loaned Plaintiff another vehicle because he did not "feel comfortable" with Plaintiff driving the Cruze. In April 2013, while the vehicle was still under the Warranty, Plaintiff traded it in for a new GM vehicle. GM gave Plaintiff a $3, 000 trade-in-credit on the new vehicle.
Plaintiff also argues that GM was aware of the alleged defect and issued at least two Service Bulletins designed to cure it. Plaintiff contends that GM, despite being aware of the defects with the Cruzes, "concealed the existence of this Antifreeze Leakage Defect and promised consumers that any known defects had been corrected." (DN 15, ¶ 12).
Plaintiff filed this lawsuit as a putative class action on May 16, 2013, and subsequently amended the complaint to include additional factual allegations to support his claims. In the First Amended Complaint, Plaintiff invokes this court's diversity jurisdiction pursuant to 28 U.S.C. § 1332(d). Plaintiff brings several claims for relief on behalf of a purported nationwide class, defined as all individuals and entities that allegedly purchased or leased a model year 2011 or newer Chevrolet Cruze. Plaintiff seeks to recover compensatory, punitive, and treble damages from GM for the following claims: (1) violation of the Kentucky Consumer Protection Act, KRS §§ 367.110 et seq. ("KCPA") (Count I); (2) violations of state unfair trade practice laws (on behalf of the state subclasses) (Count II); (3) breach of implied warranties of merchantability (Count III); (4) breach of express warranty (Count IV); (5) violation of the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301 et seq. (Count V); (6) breach of contract/common law warranty (Count VI); (7) fraudulent concealment (Count VII); (8) unjust enrichment (Count VII); (9) declaratory judgment, KRS § 418.040 (Count VIII); and (10) unconscionability (Count IX). In addition, Plaintiff asks that the court issue an injunction requiring GM to repair the alleged defect and recall all of the Cruzes that are subject to this litigation.
This matter is before the court on GM's motion to dismiss the First Amended Complaint. Because this is a putative class action, Plaintiff must show that he has personally been injured. See Lewis v. Casey, 518 U.S. 343, 357 (1996) (internal marks and quotations omitted) ("[N]amed plaintiffs who represent a class must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent."); see also J & R Mktg., SEP v. Gen. Motors Corp., 549 F.3d 384, 390 (6th Cir. 2008) ("If it is found, prior to class certification, that the named plaintiffs' individual claims are without merit, then dismissal is proper."). For the purposes of this motion, we will evaluate whether Plaintiff's claims can survive GM's motion to dismiss.
II. CHOICE OF LAW
Neither party explicitly specifies which state's law applies to this dispute, but both parties cite to Kentucky law. Moreover, the Cruze that is the subject of this suit was purchased in Kentucky, the warranty was entered into in Kentucky, and the alleged defect arose in Kentucky. Courts interpret both parties' citations to the law of one state as indicative of the parties' consent to the forum state's law. Santa's Best Craft, LLC v. St. Paul Fire & Marine Ins. Co., 611 F.3d 339, 345 (7th Cir. 2010); accord Leininger v. Reliastar Life Ins. Co., 2007 WL 2875283, *7 (E.D. Mich. Sept. 28, 2007). Therefore, we will apply Kentucky law.
Pursuant to Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a short and plain statement of the claims showing that the pleader is entitled to relief. The pleading standard in Rule 8(a)(2) does not require detailed factual allegations, but "demands more than an unadorned, the defendant-unlawfully-harmed me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
To withstand a Rule 12(b)(6) motion to dismiss for failure to state a claim, it is not enough that the complaint contains "facts that are merely consistent with a defendant's liability;" rather, a plaintiff must allege "facts-not legal conclusions or bald assertions-supporting a plausible' claim for relief." Id. at 687 (quoting Twombly, 550 U.S. at 557)). A complaint that offers legal conclusions or a recitation of the elements of a cause of action will not meet this pleading standard. See id. "[C]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss." Mezibov v. Allen, 411 F.3d 712, 716 (6th Cir. 2005). The court must take all of the factual allegations in the complaint as true, but is "not bound to accept as true a legal conclusion couched as a factual allegation." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). If the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has not shown the pleader is entitled to relief. Id. at 677-78.
As a general rule, a district court may not consider matters outside the pleadings when ruling on a Rule 12(b)(6) motion to dismiss without converting the motion into one for summary judgment. J.P. Silverton Indus. L.P. v. Sohm, 243 F.Appx. 82, 86-87 (6th Cir. 2007) (unpublished); see Fed.R.Civ.P. 12(d) ("If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion."). However, "when a document is referred to in the complaint and is central to the plaintiff's claim... [, ] the defendant may submit an authentic copy [of the document] to the court to be considered on a motion to dismiss, and the court's consideration of the document does not require conversion of the motion to one for summary judgment." Greenberg v. Life Ins. Co. of Va., 177 F.3d 507, 514 (6th Cir. 1999) (quotation omitted). If a motion to dismiss is converted to a motion for summary judgment, "all parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed.R.Civ.P. 12(d).
Claims of fraud are subject to heightened pleading requirements under Rule 9(b). Fed.R.Civ.P. 9(b) ("In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally."). To satisfy Rule 9(b)'s specificity requirements, a plaintiff must "allege the time, place, and content of the alleged misrepresentation on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud." Bennett v. MIS Corp., 607 F.3d 1076, 1100 (6th Cir. 2010) (quoting Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 563 (6th Cir. 2003)). Rule 9(b) requires that the circumstances of the fraud, and not the evidence of the case, be pleaded with particularity. Michaels Bldg. Co. v. Ameritrust Co., N.A., 848 F.2d 674, 680 n.9 (6th Cir. 1988). The rule may be relaxed when there has been a lack of discovery and the opposing party exclusively holds the information needed for a plaintiff to achieve particularity. The main purpose behind Rule 9(b) is to provide the defendant with notice of the plaintiff's claim so that the defendant may prepare an informed responsive pleading. Id. at 679; Coffey v. Foamex, L.P., 2 F.3d 157, 162 (6th Cir. 1993).
A. Count I: Violation of the Kentucky Consumer Protection Act
In Count I of the First Amended Complaint, Plaintiff claims that GM violated the KCPA by misrepresenting the Cruze's safety and reliability "with the intent that Plaintiff and the proposed Class members rely on such representations in the deciding [ sic ] whether to purchase or lease the Chevrolet Cruze." (DN 15, ¶ 60). To maintain a claim for violation of the KCPA, Plaintiff must allege that GM engaged in "[u]nfair, false, misleading, or deceptive acts or practices in the conduct of any trade or commerce, " KRS § 367.170(1), and that such practices caused Plaintiff's harm. Morris Aviation, LLC v. Diamond Aircraft Indus., Inc., 730 F.Supp.2d 683, 698 (W.D. Ky. 2010). A person bringing a claim under KRS § 367.170 must file the action within two years after the violation. KRS § 367.220(5).
GM first argues that this count must be dismissed because Plaintiff's claim is time barred under KRS § 367.220(5). GM maintains that Plaintiff's claim accrued in April 2011-when Plaintiff purchased the vehicle-because that is the time at which GM made the alleged misrepresentations and omissions that serve as the basis of Plaintiff's KCPA claim. According to GM, the statute of limitations in this action expired in April 2013, two years after the April 2011 purchase, but Plaintiff did not file this action until May 16, 2013. In response, Plaintiff argues that his claim against GM for violation of the KCPA did not accrue until he suffered an "ascertainable loss." Plaintiff contends that this loss did not occur until he noticed the alleged defect in October 2012. Accordingly, Plaintiff argues that he filed his claim within the applicable limitations period.
We find that Plaintiff's KCPA claim accrued in April 2011 when he purchased the vehicle. In reaching this conclusion, we consider the specific allegations in Plaintiff's First Amended Complaint. In Count I, Plaintiff alleges that his injury occurred when GM misrepresented the Cruze's safety and reliability with the intent that Plaintiff would rely on these representations in purchasing the vehicle. (DN 15, ¶ 60). Because Plaintiff relied on these purported misrepresentations when he made the decision to purchase the vehicle in April 2011, he had to bring any KCPA claim based on these representations by April 2013.
GM further argues that neither the discovery rule nor the fraudulent concealment doctrine toll the statute of limitations in this instance and, as such, Plaintiff's KCPA claim must be dismissed because it was brought after the expiration of the limitations period. Plaintiff contests GM's assertion that the discovery rule does not toll the running of the limitations period in this action. In Plaintiff's view, Kentucky law encourages a broad application of the discovery rule.
This court has held that "the discovery rule does not apply to the KCPA because it is a legislatively enacted cause of action." Bennett v. Ford Motor Co., 2008 WL 920745, *3 (W.D. Ky. Apr. 3, 2008) (citing Cook v. State Farm Mut. Auto. Ins. Co., 2004 WL 2011375, *3-4 (Ky. Ct. App. Sept. 10, 2004); Hathaway v. Cont'l Assurance Co., 2006 WL 83436, *3 (W.D. Ky. Jan. 10, 2006)); see Helton v. Am. Gen. Life Ins. Co., 946 F.Supp.2d 695, 701 (W.D. Ky. 2013)). Moreover, this court has also held that "the fraudulent concealment doctrine does not apply to causes of action arising under the KCPA." Hathaway, 2006 WL 83436, at *3 ("The KCPA is a purely statutory creation, and there is no reason to believe that the Kentucky legislature intended the fraudulent concealment doctrine to apply to it."). As such, we find that neither the discovery rule nor the fraudulent concealment doctrine toll the statute of limitations in this action.
As we have determined that Plaintiff's claim for violation of the KCPA is time barred, we need not address GM's argument that Plaintiff did not plead the claim with particularity under Rule 9(b). Therefore, we find that Plaintiff cannot maintain a claim for violation of the KCPA.
B. Count II: Violations of State Unfair Trade Practice Laws
GM seeks to dismiss Count II on the basis that Plaintiff lacks standing to sue for the alleged violations of other states' consumer protection statutes. GM further argues that the First Amended Complaint fails to provide basic information about the causes of action in this count, including information about the other states' consumer protection statutes, what conduct these statutes prohibit, and how GM allegedly violated these statutes. Plaintiff contends that it is premature to dismiss this count, and he argues that the court should postpone its ruling on the validity of this claim until the class certification stage.
The U.S. District Court for the Eastern District of Missouri addressed similar claims in a multidistrict product liability action brought against car manufacturers for allegedly designing a defective anti-lock brake system. In re Gen. Motors Corp. Anti-Lock Brake Prods. Liability Litig., 966 F.Supp. 1525 (E.D. Mo. 1997). The defendant manufacturers sought to dismiss the plaintiffs' claim for violations of various state consumer protection statutes. Id. at 1529. In granting the defendants' motion to dismiss that count, the court held that
The pleading requirements of Rule 9(b) apply to claims based on state consumer fraud statutes. See FDIC v. Bathgate, 27 F.3d 850, 876 (3rd Cir. 1994); See also NCC Sunday Inserts, Inc. v. World Color Press, Inc., 692 F.Supp. 327, 330 (S.D.N.Y. 1988) (holding requirements of Rule 9(b) apply to state based deceptive trade practices claims because Rule 9(b) is a procedural rule). Plaintiffs have failed to plead these claims with the specificity required by Fed.R.Civ.P. 9(b). Each state's statute ...