Harper v. Navistar, Inc.

STEPHEN B. HARPER, et al., Plaintiffs, v. NAVISTAR, INC. Defendant.

CIVIL ACTION NO. 2:15-cv-03558

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA CHARLESTON DIVISION

March 23, 2016

MEMORANDUM OPINION AND ORDER

Pending are Defendant Navistar, Inc.'s Motions to Dismiss [ECF Nos. 3 and 13]. The first seeks dismissal of Plaintiffs' original Complaint, while the second pertains to the superseding amended pleading. Also pending are Plaintiffs' Motion to Disqualify Counsel [ECF No. 7] and Motion for Leave to File Surreply to the initial motion to dismiss [ECF No. 12]. For the reasons set forth herein, the Court DENIES AS MOOT Navistar's Motion to Dismiss the Complaint [ECF No. 3] and Plaintiffs' accompanying Motion for Leave to File Surreply [ECF No. 12], DENIES the Motion to Disqualify Counsel [ECF No. 7], and GRANTS IN PART and DENIES IN PART the Motion to Dismiss the First Amended Complaint [ECF No. 13].

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

The Court takes the following factual allegations from the First Amended Complaint. This dispute centers on an allegedly faulty engine installed in Plaintiffs' 2012 Monaco Vesta motorhome. Plaintiffs Stephen B. and Laurie W. Harper purchased the motorhome on October 10, 2011 from Lazydays RV. Lazydays is a dealership located in Florida, but, at its request, the motorhome's purchase took place in the state of Georgia.¹ The purchase price, apart from dealer's fees and other miscellaneous expenses, was $251,357.00. The motorhome's engine is covered by a limited 5 year, 50,000 mile warranty issued by Navistar, the manufacturer of the engine and sole defendant in this matter. Defects in the motorhome's engine became apparent soon after purchase. The engine problems included loss of power, an illuminated malfunction indicator light, and emission of black smoke. Plaintiffs presented the motorhome to Navistar's authorized dealer six times in the three years following their purchase, but the problems have not been remedied. Plaintiffs allege that the engine defects have substantially impaired the vehicle's use, safety, and value.

Plaintiffs filed suit against Navistar in the Circuit Court of Kanawha County, West Virginia. Their Complaint contained two causes of action for alleged violations of West Virginia's lemon law, W. Va. Code § 46A-6A-1 et seq. (Count I) and the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2302, 2310 ("MMWA" or "the Act") (Count II). Following removal to this Court on grounds of diversity jurisdiction, Navistar filed its first motion to dismiss. In an attempt to meet the arguments raised in that motion, Plaintiffs amended their Complaint to omit the alleged lemon law violation.² Their First Amended Complaint is, save for a minor factual clarification, otherwise identical to the original. Under their MMWA claim, Plaintiffs allegebreach of the express engine warranty and breach of the implied warranty of merchantability. They seek rescission of the purchase contract and money damages.

Plaintiffs have also filed a motion to disqualify Shawn P. George, Esq., from representation of Navistar. Mr. George formerly represented Plaintiff Stephen Harper in an unrelated legal matter and has given legal advice to both Plaintiffs in years past. Plaintiffs fear that Mr. George obtained confidential information during the course of the prior representation that may be used to their detriment in this proceeding. As independent grounds for disqualification, they assert that Mr. George improperly initiated contact with Mr. Harper after this case was filed. These two outstanding motions are ripe for resolution.

II. MOTION TO DISMISS

a. Standard

Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Allegations "must be simple, concise, and direct" and "[n]o technical form is required." Fed. R. Civ. P. 8(d)(1).

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a civil complaint. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). "[I]t does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citing 5A C. Wright & A. Miller, Federal Practice and Procedure 1356 (1990)). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court decides whether this standardis met by separating the legal conclusions from the factual allegations, assuming the truth of only the factual allegations, and then determining whether those allegations allow the court to reasonably infer that "the defendant is liable for the misconduct alleged." Id. A motion to dismiss will be granted if, "after accepting all well-pleaded allegations in the plaintiff's complaint as true and drawing all reasonable factual inferences from those facts in the plaintiff's favor, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief." Edwards, 178 F.3d at 244.

b. Analysis

The MMWA regulates warranties on consumer products distributed in interstate commerce. See Wolf v. Ford Motor Co., 829 F.2d 1277, 1278 (4th Cir. 1987). Under the Act, consumers have a private right of action for the failure of a warrantor "to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract," and "may bring suit for damages and other legal and equitable relief." 15 U.S.C. § 2310(d)(1). Since the MMWA adopts, rather than supplants, state contract law, the Court must from the outset determine which state's laws govern Plaintiffs' MMWA claim. See Carlson v. Gen. Motors Corp., 883 F.2d 287, 291 (4th Cir. 1989) (noting that the MMWA "operates in conjunction with state law to regulate the warranting of consumer products" (emphasis in original)); Naparala v. Pella Corp., 106 F. Supp. 3d 715, 727 (D.S.C. 2015) ("The MMWA does not create a warranty itself but is instead a vehicle for enforcing warranties created by state law." (citing cases)). Plaintiffs believe that West Virginia law should govern the dispute, while Navistar favors the law of either Florida (the location of the seller), or Georgia (the place of the contract's execution). The Court's attempts to resolve the issue have been frustrated by the failure of the parties to presentthe correct version of the engine warranty.³ Choice of law principles apply only in the absence of a contractual choice of law by the parties, Barnes Group, Inc. v C&C Prods., Inc., 716 F.2d 1023, 1029 (4th Cir. 1983) (citation omitted), and while neither party suggests that Navistar's engine warranty contained a choice of law provision, the Court is unable to confirm the matter. By nature, the choice of law inquiry is fact-intensive. The Court recognizes that the process of discovery may reveal facts that bear on the question and pull the analysis in another direction. Navistar's motion to dismiss requires a preliminary resolution of the issue, however, and the Court will endeavor to resolve the choice of law based on the facts currently before it.

Under the rule in Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496 (1941), a federal court sitting in West Virginia applies West Virginia's choice of law rules. Under West Virginia law, "[t]he law of the state in which it was made and to be performed governs a contract'sconstruction when it is involved in litigation in the courts of this State." Michigan Natl. Bank v. Mattingly, 212 S.E.2d 754, 756 (W. Va. 1975). Where a contract is executed in one jurisdiction but calls for performance in another, disputes over the manner or method of performance are resolved by the law of the place where the contract is to be performed. See Jones v. Tri-Cty. Growers, Inc., 366 S.E.2d 726, 729 (W. Va. 1988) ("Matters bearing on the performance of a contract are determined by the law of the place in which the contract was to be performed."); see Restatement (First) of Conflict of Laws § 413 (1934) ("The measure of damages for a breach of contract is determined by the law of the place of performance."). Plaintiffs' claims allege a failure on the part of Navistar to comply with its performance obligations under the engine warranty, something one may infer would occur after the purchase and largely in West Virginia. The Court will find for the purposes of the motion to dismiss, acknowledging the minimal force of this holding for the reasons mentioned above, that it is against West Virginia's substantive law that it must measure the Plaintiffs' allegations.

Having resolved, at least for the time being, the choice of law question, the Court turns to the substance of Navistar's arguments in support of dismissal. Those arguments fall into two main groups. First, Navistar suggests that Plaintiffs may be obliged to pursue alternative dispute resolution before instituting the present action. It points to Florida statutory law and the provisions of the MMWA itself as sources of law that may independently require resort to this procedure as a prerequisite to litigation. Second, Navistar claims that the First Amended Complaint seeks to impose obligations and recover remedies that are outside the scope of the limited engine warranty. The Court begins by responding to the first argument.

Under Florida's Motor Vehicle Warranty Enforcement Act, certain disputes arising from alleged defects in a motor vehicle must be submitted to a qualified mediation and arbitration program before the vehicle's purchaser can file a civil lawsuit. Fla. Stat. § 681.1097. The intricacies of the statutory scheme need not be delved into here because, for reasons identified by Pla...