Mcvicar ex rel. Situated v. Goodman Global, Inc.

1 F.Supp.3d 1044

Annie McVICAR and Archie McVicar, Individually and on Behalf of All Others Similarly Situated

v.GOODMAN GLOBAL, INC., et al.

No. SACV 13–1223–DOC (RNBx).

United States District Court, C.D. California.

Feb. 25, 2014.

William M. Audet, Jonas Palmer Mann, Audet and Partners LLP, San Francisco, CA, for Annie McVicar and Archie McVicar.

Richard Joseph Grabowski, Jones Day, Irvine, CA, John A. Vogt, Jones Day Los Angeles, CA, for Goodman Global Inc., Goodman Manufacturing Company LP, Goodman Company LP.

PROCEEDINGS (IN CHAMBERS): ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS [10]

DAVID O. CARTER, District Judge.

Julie Barrera Courtroom Clerk

Before the Court is Defendants Goodman Company LP, Goodman Global Inc., and Goodman Manufacturing Company LP's (together, “Goodman's”) Motion to Dismiss Case (“Motion” or “Mot.”) (Dkt. 10). Having considered the Motion, the opposition, and the reply, the Court hereby GRANTS in part and DENIES in part the Motion.

I. BACKGROUND

The following facts are contained in Plaintiffs' Complaint (Dkt. 1) and are construed in a light most favorable to them.

A. The McVicars

Sometime before August 2012, Anne and Archie McVicar (“the McVicars”) contracted with WCS Restoration to build a home in California. Compl. ¶¶ 55–56. During construction of the home, on behalf of the McVicars, WCS Restoration purchased and installed a Goodman-manufactured heating and air conditioning unit. Id.

In August 2012, the McVicars moved in. Id. ¶ 55. Approximately three weeks later, the heating and air condition unit began to fail. Id. ¶ 57. The unit did not produce cold air and would run only on “fan only” mode. Id.

WCS Restoration's subcontractor inspected the unit and told the McVicars that the condenser unit was “weak” and should be replaced. Id. ¶ 58. In June 2013, the unit began to fail again and the McVicars had it inspected again. Id. ¶ 59. The evaporator coil had to be replaced at a cost of $550.00. Id. In the next month, the unit needed to be serviced two more times: first, a booster was installed at a cost of $350.00; and second, a stronger booster needed to be installed at a cost of $200.00. Id. ¶ 60. In all, the McVicars have spent $1,100 repairing their Goodman-manufactured heating and air conditioning unit. Id. ¶ 61.

B. Class Allegations

Goodman has sold, directly or indirectly, thousands of air conditioners in the State of California to homeowners, developers, contractors, and subcontractors. Id. ¶ 33. They also designed, manufactured, marketed, and advertised those air conditioners. Id. ¶ 35. With each air conditioner, Goodman provided an express warranty, along with warranting that the air conditioners were fit for the ordinary purpose for which air conditioners are used and were free from defects in materials and workmanship. Id. ¶ 38. The express warranties provided that the air conditioners would be “free from defects in materials and workmanship under normal use and maintenance” for periods ranging from five to ten years. Id. ¶ 41.

On its website, Goodman represents that, “[w]hen you choose a Goodman brand, you can rest assured that you'll receive a refreshingly affordable product that's covered by what many consider to be the best product warranties in the heating and cooling industry.” Id. ¶ 40. Goodman has also advertised that “[customers] will enjoy top quality, high-efficiency cooling,” and that Goodman “focused on the design, engineering, and manufacture of dependable products that have helped millions and millions of homeowners achieve reliable, high-quality, and affordable indoor comfort.” Id. ¶ 45.

Based on these facts, the McVicars seek to represent the following class:

All persons and entities in the State of California that have owned, own, or acquired homes, residences, buildings, or other structures, physically located in the State of California in which Defendants' Goodman- and Amana-brand air conditioners have been installed.

Compl. ¶ 24.

C. Procedural History

The McVicars filed this putative class action on August 12, 2013. See generally id. The Complaint asserts eleven causes of action: (1) violation of California Business and Professions Code section 17200 for unfair, unlawful, and fraudulent business practices; (2) violation of California Business and Professions Code section 17500 for deceptive and false advertising; (3) violation of the California Consumer Legal remedies Act; (4) breach of contract; (5) breach of express warranty; (6) breach of the implied warranty of merchantability; (7) fraudulent concealment; (8) negligent misrepresentation; (9) violation of the Magnuson–Moss Consumer Products Liability Act; (10) unjust enrichment; and (11) declaratory relief. Id.

On November 4, 2013, Goodman filed a Motion to Stay Case Pending a JPML Ruling. Mot. to Stay (Dkt. 18). On November 25, 2013, this Court granted the Motion to Stay, noting that “in consideration of the fact that the action is still in its nascent stages of development and out of deference to the JPML, the Court finds it prudent to temporarily stay this case pending a decision by the JPML.” Order, November 25, 2013, 2013 WL 6212149 (Dkt. 22).

On January 8, 2014, this Court lifted the stay following a decision by the JPML to decline consolidation of this case with others pending in other states. Order, January 8, 2014 (Dkt. 24). The Court now considers the pending Motion to Dismiss.

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed when a plaintiff's allegations fail to set forth facts which, if true, would entitle the complainant to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (holding that a claim must be facially plausible in order to survive a motion to dismiss). The pleadings must raise the right to relief beyond the speculative level; a plaintiff must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)). On a motion to dismiss, courts accept as true a plaintiff's well-pled factual allegations and construes all factual inferences in the light most favorable to the plaintiff. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.2008). Courts are not required to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

In evaluating a Rule 12(b)(6) motion, review is ordinarily limited to the contents of the complaint and material properly submitted with the complaint. Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir.1994); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n. 19 (9th Cir.1990). Under the incorporation by reference doctrine, the court may also consider documents “whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994), overruled on other grounds byGalbraith v. County of Santa Clara, 307 F.3d 1119, 1121 (9th Cir.2002).

Dismissal without leave to amend is appropriate only when the court is satisfied that the deficiencies in the complaint could not possibly be cured by amendment. Jackson v. Carey, 353 F.3d 750, 758 (9th Cir.2003); Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir.2000) (holding that dismissal with leave to amend should be granted even if no request to amend was made). Rule 15(a)(2) of the Federal Rules of Civil Procedure states that leave to amend should be freely given “when justice so requires.” This policy is applied with “extreme liberality.” Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir.1990).

III. ANALYSIS

A. Unfair Competition Law Claim

The McVicars' UCL claim asserts that Goodman's conduct was unlawful, unfair, and fraudulent. Compl. ¶¶ 62–67.

California's Unfair Competition Law (“UCL”), Business & Professions Code section 17200, provides relief for “unfair competition,” which is defined as “any unlawful,unfair, or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof.Code § 17200; Zhang v. Superior Court, 57 Cal.4th 364, 370, 159 Cal.Rptr.3d 672, 304 P.3d 163 (2013); Cel–Tech Commc'n, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999).

Goodman first moves to dismiss the McVicars' Unfair Competition Law claim for a host of reasons, including an argument that the McVicars' lack of standing.

1. Standing

Under the UCL, standing extends to “a person who has suffered injury in fact and has lost money or property as a result of the unfair competition[.]” Cal. Bus. & Prof.Code § 17204. This requirement is governed by a “simple test”: a party must “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” Kwikset Corp. v. Superior Court, 51 Cal.4th 310, 322, 120 Cal.Rptr.3d 741, 246 P.3d 877 (2011).

a. Economic Injury

Goodman argues that “[b]ecause WCS Restoration [the McVicars' contractor]—not plaintiffs—purchased the Goodman brand air conditioner, plaintiffs lack standing to assert a claim under the UCL.” Def.'s Mot. to Dismiss 6–7; see also Def.'s Reply 4. The Court disagrees; there is no reason to think that UCL standing should be limited in such a way.

Goodman directs the Court's attention to a set of cases that raise similar, but not precisely the same, issues as the one now before the Court. In those cases, plaintiffs attempted to bring UCL claims for products that they spent no money on....