Diop v. BMW of N. Am., LLC

511 F.Supp.3d 679

Ibrahima DIOP, Plaintiff,

v.BMW OF NORTH AMERICA, LLC, Defendant.

CASE NO. 5:20-CV-00025-M

United States District Court, E.D. North Carolina, Western Division.

Signed January 6, 2021

Vlad Hirnyk, Lemberg Law LLC, Wilton, CT, Lawrence Brian Serbin, Law Offices of Jason E. Taylor, P.C., Hickory, NC, for Plaintiff.

Leslie Lane Mize, Jackson Dennis Wicker, Nelson Mullins Riley & Scarborough, LLP, Raleigh, NC, for Defendant.

ORDER

RICHARD E. MYERS II, CHIEF UNITED STATES DISTRICT JUDGE

This matter is before the court on Defendant BMW of North America, LLC's (hereinafter "BMW") Motion to Dismiss Plaintiff's First Amended Complaint Pursuant to Rule 12(b)(6) [DE-23]. For the reasons that follow, the motion will be denied.

I. Factual and Procedural Background

Plaintiff Ibrahima Diop (hereinafter "Diop") filed suit in this court in January 2020 alleging that BMW concealed a defect with his vehicle's N63 engine that caused the engine to consume excessive amounts of oil. See generally Compl., DE-1; First Am. Compl., DE-20. Diop purchased a 2011 BMW 750Li on April 25, 2013, from Foreign Cars International in Greensboro, North Carolina, for $65,743.12. DE-20 ¶ 15-16. Diop first noticed the excessive oil consumption within a few months of purchasing the car. Id. ¶ 17. When the problem persisted about six months after the car's purchase, Diop complained to a BMW authorized dealer. Id. ¶ 18. Diop complained to BMW directly approximately five years after the car's purchase. Id. ¶ 21. Diop has spent $17,500 in out-of-pocket expenses associated with the car's excessive oil consumption. Id. ¶ 24. The cost to repair the car's engine is estimated at anywhere from $12,500 to $15,000. Id. ¶ 23. Diop raises five causes of action in his suit against BMW: (1) breach of warranty pursuant to the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq. (hereinafter "MMWA"); (2) breach of implied warranty of merchantability pursuant to the MMWA and N.C. Gen. Stat. § 25-2-314 ; (3) breach of express warranties, pursuant to N.C. Gen. Stat. § 25-2-313 ; (4) violation of the Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1, et seq. (hereinafter "UDTPA"); and (5) fraudulent concealment. Id. ¶¶ 93-148.

A class action lawsuit raising similar claims regarding BMW's N63 engine was filed in the District of New Jersey in September 2015. Bang v. BMW of N. Am., LLC , No. 15-6945, 2016 WL 7042071, at *3 (D.N.J. Dec. 1, 2016). In December 2016, a motion to dismiss the second amended complaint was denied. Id. at *1, *8. Court-ordered mediation took place in July and August 2017. Order for Reference to Mediation, Bang v. BMW of N. Am., LLC , No. 15-6945 (D.N.J. June 26, 2017), ECF No. 74. The case ended in a class settlement on September 11, 2018. Order Granting Final Approval of Class Action Settlement, Bang v. BMW of N. Am., LLC , No. 15-6945 (D.N.J. Sept. 11, 2018), ECF No. 122. Diop opted out of the class action settlement on August 10, 2018. DE-20 ¶89.

After opting out of the Bang class action but prior to filing suit in the Eastern District of North Carolina, Diop joined thirty-nine plaintiffs from fourteen other states in filing suit in the District of New Jersey on December 3, 2018. Sarwar v. BMW of N. Am., LLC , No. 18-16750, 2019 WL 7499157, at *1 n.2 (D.N.J. Nov. 27, 2019) ; DE-20 ¶ 89. While that case is still ongoing, Diop's individual claims were severed, Sarwar , 2019 WL 7499157, at *2. Diop's claims were dismissed without prejudice and the District of New Jersey ordered that "the statute of limitations for any claim asserted in this case is deemed tolled during the pendency of this action and for a period of thirty (30) days from the date of this Order." Id. at *3. This timeline was later extended by an additional thirty-one days, through and including January 27, 2020. Order Granting Stipulation to Extend Tolling of Statute of Limitations, Sarwar v. BMW of N. Am., LLC , No. 18-16750 (D.N.J. Dec. 18, 2019), ECF No. 45.

Diop filed suit in this court on January 21, 2020. DE-1. BMW moved to dismiss the complaint for failure to state a claim. DE-16. By text order dated March 31, 2020, Diop was given up to and including April 22, 2020, to respond to BMW's motion or in the alternative to file an amended complaint. Diop filed a First Amended Complaint on April 21, 2020. DE-20. BMW's original motion to dismiss was denied as moot. DE-22. BMW filed a motion to dismiss the amended complaint on May 5, 2020. DE-23. Diop responded in opposition on May 26, 2020. DE-28. BMW replied in support on June 9, 2020 [DE-29] and the motion is ripe for ruling. In the interim, this court granted a consent motion to stay discovery pending resolution of the motion to dismiss [DE-27] and determined it had subject matter jurisdiction to hear this case [DE-40].

BMW primarily argues that the various applicable statutes of limitations preclude Diop's claims from proceeding and that no tolling doctrines apply to save any claim. Alternatively, BMW argues that (1) Diop has failed to allege the critical element of reliance to support his North Carolina breach of express warranty claim, (2) Diop has failed to plead his UDTPA and fraud claims with the requisite particularity, and finally (3) Diop's UDTPA and fraud claims are barred by the economic loss rule.

II. Motion to Dismiss Legal Standard

In considering a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure for "failure to state a claim upon which relief can be granted," a court must determine whether the complaint is legally and factually sufficient. Fed. R. Civ. P. 12(b)(6) ; see Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Giarratano v. Johnson , 521 F.3d 298, 302 (4th Cir. 2008).

In doing so, the court must accept all well-pled allegations in a complaint as true and must construe all factual allegations in the light most favorable to the plaintiff. Mylan Labs., Inc. v. Matkari , 7 F.3d 1130, 1134 (4th Cir. 1993). However, a court need not accept a complaint's legal conclusions, elements of a cause of action, and conclusory statements. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ; see also Giarratano , 521 F.3d at 302. Nor must a court accept as true "unwarranted inferences, unreasonable conclusions, or arguments." E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship , 213 F.3d 175, 180 (4th Cir. 2000). To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain facts sufficient to "state a claim to relief that is plausible on its face." Twombly , 550 U.S. at 570, 127 S.Ct. 1955.

III. Statute of Limitations Affirmative Defense at the Motion to Dismiss Stage

As a general rule, "a defense based on the statute of limitations must be raised by the defendant through an affirmative defense, see Fed. R. Civ. P. 8(c), and the burden of establishing the affirmative defense rests on the defendant." Goodman v. Praxair, Inc. , 494 F.3d 458, 464 (4th Cir. 2007). A defendant's statute of limitations affirmative defense can be raised in a Rule 12(b)(6) motion to dismiss; however, it is seldom appropriate to do so. See Richmond, Fredericksburg & Potomac R.R. Co. v. Forst , 4 F.3d 244, 250 (4th Cir. 1993) ("A motion under Rule 12(b)(6) is intended to test the legal adequacy of the complaint, and not to address the merits of any affirmative defenses."). Accordingly, a statute of limitations defense must "clearly appear[ ] on the face of the complaint." Id. In other words, the complaint must clearly allege "all facts necessary to the affirmative defense." Goodman , 494 F.3d at 464. When the facts necessary to the affirmative defense are not apparent on the face of the complaint, discovery is appropriate. See Cruz v. Maypa , 773 F.3d 138, 146-47 (4th Cir. 2014) (reversing in part the district court's decision to grant the defendant's motion to dismiss because the plaintiff's claims were time-barred and remanding for discovery so the district court could determine if any or all of plaintiff's claims were equitably tolled).

A. Warranty-Based Claims

Because the MMWA does not contain a statute of limitations itself, "when evaluating timeliness of claims under the MMWA, courts are directed to use the applicable state law." Ferro v. Vol Vo Penta of the Ams., LLC , No. 5:17-CV-194-BO, 2017 WL 3710071, at *2 (E.D.N.C. Aug. 28, 2017). Under North Carolina law, which the parties agree is applicable in this case, a breach of warranty claim for the sale of goods is subject to a four-year statute of limitations. N.C. Gen. Stat. § 25-2-725(1). The limitations period begins to run when tender of delivery is made, unless the goods are sold with a warranty for future performance. See N.C. Gen. Stat. § 25-2-725(2). If goods are sold with a warranty for future performance, the period runs from the date on which the breach is or should have been discovered. Id.

Here BMW's promise to repair or replace defective components for a limited period of time is not the same as a warranty that a product will be free from defects. Thus, it is not a future performance warranty and the accrual occurred upon the date of delivery. Compare Haywood Street Redevelopment Corp. v. Harry S. Peterson, Co. , 120 N.C. App. 832, 836, 463 S.E.2d 564, 566 (N.C. Ct. App. 1995), review denied 342 N.C. 655, 467 S.E.2d 712 (N.C. 1996) (finding that a warranty which provided that waterproofing would be free of certain defects for period extending into future constituted a prospective warranty, guaranteeing future performance) with Cohan v. Pella Corp. , Nos. 2:14-mn-00001-DCN, 2:14-mn-03704-DCN, 2015 WL 6465639, at *10 (D.S.C. Oct. 26, 2015) ("While a warranty that states that the product will be free from defects in materials and workmanship for a period of five years explicitly extends to future performance, a warranty that states ‘we promise to repair the product if it malfunctions...