Sterry St. Auto Sales, Inc. v. Cummins Inc.

STERRY STREET AUTO SALES, INC., Plaintiff, v. CUMMINS INC., Defendants.

CIVIL ACTION NO. 1:20-10798-MPK¹

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

November 23, 2020

MEMORANDUM AND ORDER ON MOTION TO DISMISS BY CUMMINS INC. (#5).

KELLEY, U.S.M.J.

I. Introduction.

On April 10, 2020, plaintiff, Sterry Street Auto Sales, Inc., a Rhode Island corporation with a principal office in Attleboro, Massachusetts, filed a complaint against defendant, Cummins Inc., an Indiana corporation with a principal office in Columbus, Indiana, in the Massachusetts Superior Court, Bristol County. (#1-1.) On April 23, 2019, plaintiff filed an amended complaint, seeking a declaratory judgment (Count I), and alleging breach of contract (Count II) and unfair and deceptive trade practices pursuant to Mass. Gen. Laws ch. 93A, § 11 and 176D, § 3 (Count III). (#10 at 29-38.)² The following day, defendant filed a notice of removal to this court pursuant to 28 U.S.C. § 1332 (diversity of citizenship). (#1.)

On May 1, 2020, defendant filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). (#5.) The motion has been fully briefed. (## 6, 9-1, 13.)

II. Facts.

The court distills the following facts from plaintiff's amended complaint, the operative pleading. (#10 at 29-38.)

Plaintiff markets itself as a "towing and recovery service company with a significant fleet of vehicles operating throughout Southern New England." Id. at 30. Defendant is "an American Fortune 500 corporation[,]" which "designs, manufactures, and services engines and related equipment, and offers insurance contracts[.]" Id.

Around August 2017, Peter Tilley, a dealer account executive employed by defendant, contacted plaintiff, reviewed plaintiff's fleet, and "made a series of recommendations that included the purchase of [defendant's] Encore Xtra^TM warranty for its fleet of trucks." Id. Specifically, Tilley recommended that plaintiff purchase defendant's "[s]tandard extended warranty [and] aftertreatment coverage" for truck no. 92. Id. Defendant's brochure advertised the warranty as follows:

Encore Xtra is an in-service extended protection plan designed to reduce unexpected downtime and provide increased peace of mind.

Encore Xtra^TM Details:

• 1 year/100,000 option for ISX12, ISX15, ISX12 G, or ISLG

• 2 year/200,000 option for engines under 5 years/550,000 miles from DIS

• Coverage has no deductible

• Coverage is transferrable

• Coverage can be purchased by original or subsequent owners

. . . .

To qualify for the program, engines must pass a full inspection performed by an authorized [defendant] deal or distributor . . . . Encore Xtra coverage begins on the date the program is issued to the owner and ends at the time or miles specified on the Customized Assurance Plan certificate.

Id. at 30-31.

Around January 2019, after defendant allegedly "continued to pressure [plaintiff] to purchase warranty protection and advised that 'the price is increasing if the coverage hasn't been paid by Jan[uary] 1st[,]" plaintiff purchased warranty coverage on seven of its fleet vehicles, including truck no. 92. Id. at 31. It chose the Encore Xtra Plan 1 (the warranty or warranty coverage), which defendant advertised as the "most comprehensive package." Id. Plaintiff paid the cost of coverage, "$20,650 ($2,950 x 7 trucks)[,] upfront and in full[,]" as defendant "demanded" that it do so. Id. Defendant issued Assurance Plan certificates the same month. Id. "In connection with the issuance of warranty coverage, [defendant] inspected all seven of [plaintiff's] trucks, and all seven [, including truck no. 92,] passed inspection and qualified for coverage." Id.

On February 13, 2019, plaintiff brought truck no. 92 to a mechanic, the Peterbilt Store New England LLC ("the Pete Store") for diagnosis of a turbocharge failure. Id. at 29, 31. The turbocharger and piston were "specifically listed in [defendant's] literature as covered [engine] components[]" in the warranty, and the Pete Store's "branch manager, Brandon Merle, opened a technical service request, SR# 1-98531028352, to diagnose the cause of the failure." Id. at 31. Although truck no. 92 had passed inspection less than two months earlier, defendant claimed that, "[t]o move forward with [processing the warranty,] we need to get all service records [and] will have to look at all the potential components that could cause this type of failure and rule that they are intact or not." Id. at 32. Defendant's service manager, Shawn Hutchins, then determined that all of the components that would cause truck no. 92's turbo charge failure were intact. Id. On March 7, 2019, despite the fact that truck no. 92 passed defendant's engine inspection less than a month before, Hutchins concluded as follows:

I feel that a workmanship issue with the first turbo replacement is NOT the reason for the second turbo failure. These turbo failures are due to a previous repair event/failure where proper clean care and[/]or repair plan were not done correctly. This job should be a customer billable job. No warranty assistance.

Id. Neither Hutchins, nor any other employee of defendant, shared this determination with plaintiff for over six months, despite being asked multiple times and having several opportunities to do so. Id. at 32-33.

On September 18, 2019, plaintiff sent defendant the following message:

Good morning[,] we were just wondering what's going on with the truck that is at the Pete store in need of motor repair? [We have] provided all paperwork that [was] requested. . . . This truck has been down since February 15, 2019 (7 months) unacceptable. As all parties are aware this truck is under warranty as Peter [Tilley] instructed us [that] we would be covered in case of a failure.

PLEASE ADVISE US [AS] TO THE STATUS OF THIS CLAIM !!!!

Id. at 33. Plaintiff contacted defendant again on at least two different occasions following the September 18th message, to no avail. Id. Defendant did not respond to advise plaintiff that it would not cover the repairs to the truck until September 25, 2019. Id.

Over the course of the next several weeks, plaintiff "repeatedly sought documentation of the reason for" defendant's denial of warranty coverage, but defendant "steadfastly insisted" that all requests for additional information should go to the Pete Store. Id. at 34. On January 8, 2020, plaintiff sent defendant a Chapter 93A demand, to which defendant responded that the turbocharge failure was caused by a pre-existing failure and that the warranty plan "specifically states in relevant part [that] '[p]re-existing failures are not covered by [the] [p]lan." Id. Although the warranty states that it "covers failures of . . . [e]ngine components which result, under normal use and service, from defects in [defendant] material or factory workmanship[,]" the warranty does not contain this specific language. Id.³

Plaintiff claims that defendant's actions have caused it to incur damages for the purchase price of defendant's warranty plan, "plus the loss of use of truck no. 92 for nine months, and the cost to fix truck no. 92[.]" Id. Plaintiff seeks damages for the repair to the truck in the amount of $34,664, "consequential damages for the extended loss of use of truck no. 92 in the amount of $235,728"; "$20,650 for its purchase of the Encore Xtra Protection Plan coverage"; and "three times the actual damages of $291,042, plus statutory interest, costs, and statutory attorney's fees" under Mass. Gen. Laws ch. 93A, § 11. Id. at 35, 37. Plaintiff also seeks a declaratory judgment, stating that defendant "is obligated to provide coverage of the repairs to truck no. 92"; and granting plaintiff "all such further relief as justice may require[.]" Id. at 35.

III. Legal Standard.

A Rule 12(b)(6) motion to dismiss challenges a party's complaint for failing to state a claim. In deciding such a motion, a court must "treat all well-pleaded facts in the complaint as true and draw all reasonable inferences in favor of the plaintiff." In re Fin. Oversight & Mgmt. Bd. for P.R., 919 F.3d 121, 127 (1st Cir. 2019) (citing Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 7 (1st Cir. 2011)). When considering a motion to dismiss, a court "may augment these facts and inferences with data points gleaned from documents incorporated by reference into the complaint, matters of public record, and facts susceptible to judicial notice." A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013) (citing Haley v. City of Bos., 657 F.3d 39, 46 (1st Cir. 2011)).

In order to survive a motion to dismiss under Rule 12(b)(6), the plaintiff must provide "enough facts to state a claim to relief that is plausible on its face." See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The "obligation to provide the grounds of [the plaintiff's] entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555 (quotation marks and alteration omitted). The "[f]actual allegations must be enough to raise a right to relief above the speculative level," and to cross the "line from conceivable to plausible." Id. at 555, 570.

"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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556); see also Parker v. Landry, 935 F. 3d 9, 14 (1st Cir. 2019) (quoting Iqbal, 556 U.S. at 678) ("Plausibility is not equivalent to probability but it nevertheless demands a showing that is 'more than a sheer possibility.'")). The court is "not bound to accept as true a legal conclusion couched as a factual allegation." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). Simply put, the court should assume that well-pleaded facts are genuine and then determine whether such facts state a plausible claim for relief. Id. at 679.

IV. Discussion.

For the reasons...