Crossroads Trucking Corp. v. 19TH Capital Grp.

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CROSSROADS TRUCKING CORP., Plaintiff, v. 19TH CAPITAL GROUP LLC AND TRUNORTH WARRANTY PLANS OF NORTH AMERICA LLC, Defendants.

No. 3:21-CV-00318-RJC-DSC

United States District Court, W.D. North Carolina, Charlotte Division

January 25, 2022

MEMORANDUM AND RECOMMENDATION

David S. Cayer United States Magistrate Judge

THIS MATTER is before the Court on “19th Capital Group LLC's Rule 12(b)(6) Motion to Dismiss Plaintiff's Complaint,” Doc. 15, filed August 30 2021.

The Motion has been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1) and is now ripe for the Court's consideration.

Having fully considered the arguments, the record, and the applicable authority, the undersigned respectfully recommends that Defendant's Motion to Dismiss be granted.

I. Procedural and Factual Background

This is an action for Breach of Contract, Unfair and Deceptive Trade Practices under N.C. Gen. Stat. § 75-1.1., Negligence Fraud, Negligent Misrepresentation, Breach of Fiduciary Duty/Constructive Fraud, and Civil Conspiracy. Plaintiff leased a freightliner truck from Defendant 19th Capital Group. The truck was covered under a warranty issued by Defendant TruNorth.^[1] After that truck suffered catastrophic engine failure, 19th Capital replaced it with a 9789 Freightliner. A Second Warranty was issued by TruNorth to cover the 9789 Freightliner. The 9789 Freightliner also suffered catastrophic engine failure and TruNorth denied the claim brought under the Second Warranty. Plaintiff seeks full reimbursement for all damages caused by Defendants' alleged breach of the Second Warranty. Plaintiff seeks compensatory and punitive damages, attorney's fees pursuant to N.C. Gen. Stat. § 75-16.1, treble damages pursuant to N.C. Gen. Stat. § 75-16 and costs.

Accepting the factual allegations of the Complaint as true, 19th Capital solicited Plaintiff via email, phone calls, and marketing communications offering a truck leasing agreement. Doc. 1 at 2-3. 19th Capital promised to procure a comprehensive, robust warranty package that would cover any engine failure. Id. Prior to execution of the first lease, a 19th Capital representative also made oral representations about the “robust warranty program” that would cover “any and all problems.” Doc. 1 at 16. 19th Capital further represented that it had a great warranty program that would “completely cover anything that went wrong with the trucks.” Doc. 1 at 4, 14. Plaintiff only agreed to lease the first truck in reliance on 19th Capital's representations about the warranty. Doc. 1 at 14. The First and Second Warranties were provided by TruNorth with Plaintiff as the sole beneficiary. Both TruNorth and 19th Capital's logos were on the Warranty's heading. Doc. 1 at 4-5. Both Warranties were titled “19th Capital All-Inclusive Component Breakdown Warranty Agreement.” Doc. 1 at 5.

The Second Warranty covering the substitute truck was substantially the same as the first. Doc. 1 at 6. On the Second Warranty, Plaintiff was listed as the “customer” and 19th Capital as “retailer.” Id. The customer signature line contained in the Second Warranty was not signed by Plaintiff, but by a representative of 19th Capital. Id. The Second Warranty was not provided to Plaintiff prior to its execution. Doc. 1 at 5. Plaintiff had received the Warranty four months prior to the second engine failure. Doc. 1 at 7. Plaintiff made its best efforts to comply with the Second Warranty when seeking repairs. Id. TruNorth denied Plaintiff's claim, alleging the check engine lights had illuminated 100 miles prior to the engine failure. Doc. 1 at 8. Plaintiff was not advised that the Second Warranty included an elaborate “claim procedure,” “breakdown responsibilities,” or contained “strict required maintenance” procedures until one month after it was executed. Id.

The Complaint also alleges a history of 19th Capital and TruNorth violating the law, leasing defective trucks, and denying warranty coverage for bogus reasons. Doc. 1 at 9. Plaintiff claims this relationship between 19th Capital and TruNorth amounted to civil conspiracy. Doc 1. at 19. Plaintiff further alleges 19th Capital was negligent in failing to provide a comprehensive warranty as promised in the lease agreement. Doc. 1 at 13.

Plaintiff filed this action on July 1, 2021. 19th Capital moved to dismiss all claims against it on August 30, 2021, arguing Plaintiff failed to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) or to comply with heightened pleading standards required by Federal Rule of Civil Procedure Rule 9(b).

II. Discussion

A. Standard of Review

In reviewing a Rule 12(b)(6) motion, “the court should accept as true all well-pleaded allegations and should view the complaint in a light most favorable to the plaintiff.” Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993); see Priority Auto Grp., Inc. v. Ford Motor Co., 757 F.3d 137, 139 (4th Cir. 2014). The plaintiff's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint.” Id. at 563. A complaint attacked by a Rule 12(b)(6) motion to dismiss will survive if it contains enough facts to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570); see Robinson v. Am. Honda Motor Co., Inc., 551 F.3d 218, 222 (4th Cir. 2009). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

In Iqbal, the Supreme Court articulated a two-step process for determining whether a complaint meets this plausibility standard. First, the court identifies allegations that, because they are no more than conclusions, are not entitled to the assumption of truth. Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555) (alleging that government officials adopted a challenged policy “because of” its adverse effects on the protected group was conclusory and not assumed to be true). Although the pleading requirements stated in “Rule 8 [of the Federal Rules of Civil Procedure] mark [] a notable and generous departure from the hyper-technical, code-pleading regime of a prior era . . . it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at 678-79.

In Iqbal, the Court determined that Rule 8 “demands more than an unadorned, the defendant-unlawfully-harmed-me-accusation” Id. at 678. This “plausibility standard” requires “more than a sheer possibility that a defendant has acted unlawfully.” Id. Thus, a complaint falls short of the plausibility standard where a plaintiff pleads “facts that are ‘merely consistent with' a defendant's liability.” Id.; see E. Shore Mkts. Inc. v. J.D. Assocs., LLP, 213 F.3d 175, 180 (4th Cir. 2000) (explaining that while the court accepts plausible factual allegations made in a claim as true and considers those facts in the light most favorable to plaintiff in ruling on a motion to dismiss, a court “need not accept as true unwarranted inferences, unreasonable conclusions, or arguments”).

Second, to the extent there are well-pleaded factual allegations, the court should assume their truth and then determine whether they plausibly give rise to an entitlement to relief. Iqbal, 556 U.S. at 679. “Determining whether a complaint contains sufficient facts to state a plausible claim for relief “will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. “Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief,'” and therefore should be dismissed. Id. (quoting Fed.R.Civ.P. 8(a)(2)).

The sufficiency of the factual allegations aside, “Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law.” Sons of Confederate Veterans v. City of Lexington, 722 F.3d 224, 228 (4th Cir. 2013) (quoting Neitzke v. Williams, 490 U.S. 319, 327 (1989)). Indeed, where “it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations, a claim must be dismissed.” Neitzke, 490 U.S. at 328; see Stratton v. Mecklenburg Cnty. Dept. of Soc. Servs., 521 Fed.Appx. 278, 293 (4th Cir. 2013)). The court must not “accept as true a legal conclusion couched as a factual allegation.” Anand v. Ocwen Loan Servicing, LLC, 754 F.3d 195, 198 (4th Cir. 2014).

B. 19th Capital is Not a Party to the Second Warranty

Under North Carolina law, a warranty is interpreted applying principles of contract law. Allen v. Roberts Const Co., 138 N.C.App. 557, 570-71, 532 S.E.2d 534, 542. “The word ‘warranty' by definition implies a contractual relation between the party making a warranty and the beneficiary to the warranty.” Murray v. Bensen Aircraft Corp., 259 N.C. 638, 641, 131 S.E.2d 367, 370 (1963). A breach of contract claim requires the plaintiff to allege the existence of a contract, specific provisions breached, the facts of the breach, and damages resulting from the breach. Sides v. Athene Annuity & Life Co., 2020 WL 2114380 at *3 (W.D. N.C. May 4, 2020). A contract cannot be formed unless two parties mutually assent “to the same thing in the same sense.” Id. at 139 (quoting Yeager v. Dobbins, ...