Nicholson v. Jayco, Inc.

CHUCK NICHOLSON, et al., PLAINTIFFS, v. JAYCO, INC., et al., DEFENDANTS.

CASE NO. 5:15-cv-2010

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

September 29, 2016

JUDGE SARA LIOI

MEMORANDUM OPINION

This matter is before the Court upon the following:

(1) The motion of defendant Motor Home Specialist LP ("MHS") to dismiss the complaint of plaintiffs Chuck Nicholson ("Nicholson") and Chuck Nicholson, Inc. ("CNI") (collectively "plaintiffs") pursuant to Rule 12 of the Federal Rules of Civil Procedure. (Doc. No. 6 ("MHS Mot.").) Plaintiffs opposed the motion (Doc. No. 37 ("Opp'n to MHS Mot."), to which MHS replied (Doc. No. 44 ("MHS Reply")).¹

(2) The motion of defendant Jayco, Inc. ("Jayco") for summary judgment,² or alternatively, for judgment on the pleadings. (Doc. No. 18 ("Jayco Mot.").) Plaintiffs opposed the motion (Doc. No. 33 ("Opp'n to Jayco Mot.")), to which Jayco replied (Doc. No. 40 ("Jayco Reply")). Thereafter, both plaintiffs and Jayco filed supplemental information in support of their respective positions. (Doc. No. 45 ("Pl. Supp.") and Doc. No. 47 ("Jayco Supp.").)

(3) The motion of plaintiffs to amend the complaint pursuant to Rule 15 of the Federal Rules of Civil Procedure. (Doc. No. 30 ("P. Mot.").) Jayco opposed the motion to amend.³ (Doc. No. 38 ("Opp'n to P. Mot.").) Neither MHS nor defendant Spartan Motors Chassis ("Spartan") opposed the motion to amend.

For the reasons that follow, MHS' motion is granted, Jayco's motion is granted in part and denied in part, and plaintiffs' motion is denied.

I. BACKGROUND

This case revolves around a motor home that plaintiffs contend is defective. The subject vehicle is a 2014 Entegra Cornerstone ("RV"). The RV was manufactured by defendants Spartan and Jayco, and purchased new from defendant MHS.

Plaintiff Nicholson resides in Millersburg, Ohio. According to the complaint, Nicholson sometimes purchases consumer goods in the name of Chuck Nicholson Leasing, and/or Chuck Nicholson Leasing, Inc., and/or CNI (Doc. No. 1 ("Compl.") ¶ 4) in order to secure licensing, tax, and insurance benefits (Doc. No. 33-1 (Dec. 30, 2015 Affidavit of Chuck Nicholson ["12/30/15 Nicholson Aff."] ¶ 6). Even though Nicholson insists that the RV was purchased for his personal use and enjoyment, the RV was purchased by a Nicholson business. (Doc. No. 33-9 (Jan. 19, 2016 Affidavit of Chuck Nicholson ["1/19/16 Nicholson Aff."]) ¶¶ 3, 4.) Nicholson traveled to Texas to purchase and take delivery of the RV. (Doc. No. 6-1 (Declaration of Robert Brake Oct. 26, 2015 ["10/26/15 Brake Dec."]) ¶ 7.)

Spartan constructs chassis for motor homes and sells the chassis to Jayco. Jayco then constructs and finishes the motor homes, and sells the finished vehicles to retailers, such as MHS. MHS advertises the motor homes on the internet and sells them to the public. This was the path followed by the RV at issue in this case. (Id. ¶ 7.)

The RV was purchased on February 5, 2014 from MHS. (Id. ¶ 21.) Plaintiffs allege that MHS knew that the RV was intended for personal use, and that Nicholson told MHS that he was considering identifying the purchaser on the sales agreement as "Chuck Nicholson Leasing Inc." but that Nicholson "would personally sign as the purchaser of the subject RV and [MHS] assured him that it would be no problem to do it that way." (Id. ¶¶ 23-24.) The sales agreement with MHS for the RV identifies Chuck Nicholson Leasing Inc. as the purchaser and transferee of title. (Doc. No. 1-3 ("Sales Agreement").)

Plaintiffs allege that Jayco and/or Spartan warranted the RV in whole or in part. (Compl. ¶ 13.) With respect to Jayco, plaintiffs contend that Jayco advertised a 2 year warranty on the RV, but did not disclose any warranty limitations until after the RV was purchased, in violation of Ohio and Texas law. (Id. ¶¶ 18-19.)

About one month after purchasing the RV, plaintiffs contend that it developed malfunctions and defects which Jayco and Spartan failed to correct within a reasonable number of repair and service opportunities within a reasonable amount of time. (Id. ¶¶ 32-33, 36.) Plaintiffs further allege that they "gave up" on either Spartan or Jayco remedying the defects, that Spartan and Jayco failed to satisfy the warranties, and that when plaintiffs demanded their money back for the RV, Jayco refused. (Id. ¶¶ 34-35.) Additional facts are detailed below as relevant to the Court's analysis.

In their first claim—Breach of Warranty—plaintiffs maintain that because Spartan and Jayco failed to repair the RV's defects, Spartan and Jayco breached their express and implied warranties and committed unfair, deceptive, and unconscionable trade practices with respect to the RV, and that any limitations on the warranty lack consideration and/or are unconscionable. (See id. ¶¶ 37-48.)

On these same facts, plaintiffs allege in their second claim that Jayco and Spartan violated the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq. (Id. ¶¶ 49-52.) Finally, in the third claim, plaintiffs contend that the defendants' actions with respect to the manufacture, advertisement, sale, and service of the RV violates Ohio's Consumer Sales Practices Act, and/or Texas' Deceptive Trade Practices Consumer Protection Act, and/or one or more state unfair and deceptive acts and practices laws. (Id. ¶¶ 53-68.) Specifically, plaintiffs allege that Spartan's chassis, and the house constructed on the chassis by Jayco, are defective, and defendants failed to satisfy their representations and warranties regarding the RV. With respect to MHS, plaintiffs allege that defendant made false and deceptive representations about the RV and applicable warranties in connection with the advertising and sale of the RV.

The pending motions may be summarized as follows. MHS argues that it should be dismissed from this lawsuit for lack of personal jurisdiction and improper venue. Jayco's primary argument on summary judgment is that motor homes used for a commercial purposes are excluded from Jayco's warranty. Jayco contends that there is no warranty on the RV because it was purchased by and titled to a Nicholson business, and, therefore, subject to Jayco's commercial purpose warranty exclusion. Finally, plaintiffs' motion to amend seeks to add an allegation in their third claim that defendants violatedthe Ohio Nonconforming New Motor Vehicle law (Ohio Rev. Code § 1345.71 et seq.), and to add a new fourth claim by CNI for violation of the Ohio Deceptive Trade Practices Act (Ohio Rev. Code § 4165.01 et seq.).

II. MOTOR HOME SPECIALISTS' MOTION TO DISMISS

MHS argues that it should be dismissed from this lawsuit pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction under Ohio's Long-Arm Statue, Ohio Rev. Code § 2307.382, and pursuant to Rule 12(b)(3). Because MHS' Rule 12(b)(2) motion is granted, the Court need not address the parties' arguments regarding venue pursuant to Rule 12(b)(3).

A. Standard of Review—Rule 12(b)(2)

Federal Rule of Civil Procedure 12(b)(2) provides for dismissal of a defendant for lack of personal jurisdiction over the defendant. Where the Court's subject matter jurisdiction arises, as it does in this case, under 28 U.S.C. § 1331, plaintiffs must satisfy the forum state's requirements for personal jurisdiction. Chapman v. Lawson, 89 F. Supp. 3d 959, 970 (S.D. Ohio 2015) (citing Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002)). "Under Ohio law, personal jurisdiction exists only if: (1) Ohio's long-arm statute confers jurisdiction, and (2) the requirements of the federal due process clause are met." Id. (emphasis in original) (citations omitted).

Plaintiffs bear the burden of establishing the existence of personal jurisdiction over MHS. Compuserve Inc. v. Patterson, 89 F.3d 1257, 1262-63 (6th Cir. 1996). In the face of a supported motion to dismiss, plaintiffs may not rest upon their pleadings, but must, by affidavit or otherwise, set forth specific evidence supporting jurisdiction. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). In considering a properlysupported motion to dismiss for lack of personal jurisdiction, a district court has discretion to decide the motion upon the affidavits alone, permit discovery in aid of deciding the motion, and/or conduct an evidentiary hearing to resolve any apparent factual questions. Theunissen, 935 F.2d at 1458 (citing Serras v. First Tenn. Bank Nat'l Ass'n, 875 F.2d 1212, 1214 (6th Cir. 1989)). Here, no party has requested further discovery or an evidentiary hearing, and Court concludes that a hearing is not necessary in order to rule on MHS' motion.

Where a district court decides the issue solely on the basis of written materials and affidavits, "the burden on the plaintiff is relatively slight, ... and the plaintiff must make only a prima facie showing that personal jurisdiction exists in order to defeat dismissal[.]" Air Prods. & Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 549 (6th Cir. 2007) (internal quotation marks and citations omitted). A plaintiff can meet his burden by "establishing with reasonable particularity sufficient contacts between [the defendant] and the forum state to support jurisdiction." Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002) (internal quotation marks and citation omitted).

When making a personal jurisdiction determination, the district court "must view the pleadings and affidavits in the light most favorable to [the plaintiff] and not consider the controverting assertions of [the defendant]." Calphalon, 228 F.3d at 721. This rule "prevent[s] non-resident defendants from regularly avoiding personal jurisdiction simply by filing an affidavit denying all jurisdictional facts[.]" Theunissen, 935 F.2d at 1459. However, defendants' undisputed factual assertions may be considered. Conn v. Zakharov, 667 F.3d 705, 711 (6th Cir. 2012).

In support of its motion, MHS submits the declarations of Robert Brake, MHS' Chief Operating Officer and General Manager. Plaintiffs...