Zwerling v. Ford Motor Co.

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PHILIP ZWERLING, Plaintiff, v. FORD MOTOR COMPANY, et al., Defendants.

No. 5:19-cv-03622-EJD

United States District Court, N.D. California, San Jose Division

April 10, 2023

ORDER GRANTING MOTION TO DISMISS Re: ECF No 106

EDWARD J. DAVILA UNITED STATES DISTRICT JUDGE

Plaintiff Philip Zwerling asserts claims against Defendants Ford Motor Company (“Ford”) and Does 1-10 for (1) breach of express warranty, (2) fraud by omission, (3) violation of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq. (“MMWA”), and (4) violation of the Texas Deceptive Trade Practices-Consumer Protection Act, Tex. Bus & Com. Code § 17.41 et seq. (“DTPA”). Second Am. Compl. (“SAC”), ECF No. 100. The Court previously dismissed Zwerling's complaint with leave to amend. See Order Granting Mot. for Judgment on the Pleadings (“Prior Order”), ECF No. 97. Zwerling then filed his SAC. Now before the Court is Ford's motion to dismiss the SAC for failure to state a claim under Rule 12(b)(6). Mot. to Dismiss (“Mot.”), ECF No. 106. The Court finds the motion appropriate for decision without oral argument. Civil L.R. 7-1(b). Having considered the parties' submissions, the Court GRANTS the motion to dismiss.

I. BACKGROUND

Ford is a motor vehicle manufacturer organized under Delaware law, and Zwerling is a California resident. SAC ¶¶ 2, 4. On October 26, 2013, Zwerling purchased an F-350 Super Duty SRW diesel-engine vehicle manufactured by Ford. Id. ¶¶ 5-6. Allegedly, the vehicle contained one or more defects in its diesel engine or exhaust system (the “Exhaust System Defect”). Id. ¶ 17. The Exhaust System Defect purportedly caused the vehicle's exhaust system to clog and led to reduced engine performance or loss of engine power. Id. Before Zwerling purchased his vehicle, he reviewed marketing and promotional materials from Ford, which failed to disclose the Exhaust System Defect. Id. ¶¶ 7, 79, 103. According to him, he would not have purchased his F-350 if Ford had disclosed the Exhaust System Defect. Id.

As a consequence of the alleged defect, Zwerling's vehicle has had a long repair history. The Prior Order contains a detailed summary of that repair history, and the Court will not repeat it in full here because the allegations regarding that history have largely not changed. See Prior Order at 2-3. The SAC includes only a single new allegation about repairs, describing an October 17, 2018 service appointment where a Ford technician evaluated the vehicle's regeneration function-a feature that burns off soot from the exhaust filter so that it does not become plugged. SAC ¶¶ 15, 40. Otherwise, the primary additions to the history of Zwerling's vehicle are allegations regarding occasions when he brought his vehicle to a repair facility for routine maintenance. Id. ¶¶ 29, 31-34, 36. In total, he now describes six new instances of routine maintenance between April 24, 2014 and July 25, 2018, each of which involved refilling diesel exhaust fluid and resulted in charges ranging from $25 to $430. Id.

Following that lengthy sequence of repairs, on January 30, 2019, Zwerling contacted Ford to request that it buy back his vehicle under its lemon law obligations. Id. ¶ 42. When Ford refused, he then reached out to Ford's BBB Autoline program in April 2019, but that program declined to assist Zwerling as well, citing the vehicle's age. Id. ¶ 43.

Shortly thereafter, on May 6, 2019, Zwerling filed this action in the Superior Court for the County of Santa Clara. Compl., ECF No. 1-2. On June 21, 2019, Ford removed the action to this Court. Notice of Removal, ECF No. 1. The parties stipulated to amendment, and on May 18, 2021, Zwerling filed his First Amended Complaint (“FAC”), ECF No. 39. Among other amendments, Zwerling added a new claim for violation of the MMWA. Compare FAC, with Compl. After answering, Ford moved for judgment on the pleadings, and on March 14, 2022, the Court granted its motion with leave to amend. Answer to FAC, ECF No. 41; Mot. to Dismiss FAC,^[1] ECF No. 42; Prior Order. Zwerling filed the operative SAC on April 4, 2022,^[2] adding new claims for breach of express warranty and violation of the DTPA. Compare SAC, with FAC. The instant motion to dismiss followed on April 19, 2022. See Mot.

In his SAC, Zwerling raises claims for breach of express warranty, fraud by omission, violation of the MMWA, and violation of the DTPA. SAC ¶¶ 45-115. These claims fall under three general categories. First, his fraud by omission and DTPA claims relate to alleged omissions and misrepresentations by Ford that purportedly misled Zwerling about the defects present in his vehicle. Second, his express warranty and MMWA claim relate to breach of a repair warranty in which Ford refused to pay for repairs. And third, his MMWA claim also relates to breach of the implied warranty of merchantability stemming from the presence of defects in his vehicle.

II. LEGAL STANDARD

A motion to dismiss for failure to state a claim “tests the legal sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “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 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Factual allegations must be enough to raise a right to relief above the speculative level,” Twombly, 550 U.S. at 555, but courts are not required to accept conclusory allegations as true. Ashcroft, 556 U.S. at 678.

Claims sounding in fraud must also meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1102-03 (9th Cir. 2003); San Miguel v. HP Inc., 317 F.Supp.3d 1075, 1084 (N.D. Cal. 2018). Under Rule 9(b), a party “must state with particularity the circumstances constituting fraud.” Typically, Rule 9(b) requires the party alleging fraud to plead “the who, what, when, where, and how” of the misconduct. Vess, 317 F.3d at 1106 (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). For claims based on fraudulent omissions, the Rule 9(b) standard is “somewhat relaxed,” Clark v. Am. Honda Motor Co., 528 F.Supp.3d 1108, 1122 (C.D. Cal. 2021) (quoting Asghari v. Volkswagen Grp. of Am., Inc., 42 F.Supp.3d 1306, 1325 (C.D. Cal. 2013)), but a plaintiff must still “describe the content of the omission and where the omitted information should or could have been revealed.” Browning v. Am. Honda Motor Co., 549 F.Supp.3d 996, 1012 (N.D. Cal. 2021) (quoting Sims v. Kia Motors Am., Inc., No. SACV 13-1791-AG (DFMx), 2014 WL 12558251, at *4 (C.D. Cal. Oct. 8, 2014)).

III. DISCUSSION

A. Scope of Leave to Amend

When the Court issued its Prior Order, it granted leave to amend “to address the deficiencies described.” Prior Order at 18. Ford argues that Zwerling therefore did not have leave to add new claims and that his DTPA claim must be dismissed.^[3] Mot. at 16-17. In response, Zwerling argues that he had leave to add Texas claims because the Prior Order determined, for the first time in this matter, that Texas law applied. Opp'n to Mot. (“Opp'n”), ECF No. 112, at 20-21.

Ford is correct that courts in this district have determined plaintiffs may not add new claims when a previous order granted leave to amend to correct specific deficiencies. See Cover v. Windsor Surry Co., No. 14-cv-05262-WHO, 2016 WL 3421361, at *3 (N.D. Cal. June 22, 2016); DeLeon v. Wells Fargo Bank, N.A., No. 10-CV-01390-LHK, 2010 WL 4285006, at *3 (N.D. Cal. Oct. 22, 2010); see also Jameson Beach Prop. Owners Ass'n v. United States, No. 2:13-cv-01025-MCE-AC, 2014 WL 4925253, at *4 (E.D. Cal. Sept. 29, 2014). However, “the Federal Rules call for liberal amendment of pleadings before trial.” Brown v. Stored Value Cards, Inc., 953 F.3d 567, 574-75 (9th Cir. 2020). Dismissing Zwerling's claims as Ford suggests would be in tension with the policy of the Federal Rules of Civil Procedure, so the Court construes Zwerling's opposition as a belated motion for leave to amend. See Andrew W. v. Menlo Park City Sch. Dist., No. C-10-0292 MMC, 2010 WL 3001216, at *2 (N.D. Cal. July 29, 2010).

In these circumstances, the Court finds that leave to amend is appropriate. Zwerling did not have the benefit of the Court's choice-of-law ruling when he made earlier amendments to his complaint, and the new claims that he added to the SAC are based on the same facts as his fraud by omission and MMWA claims in the FAC. See Santana v. Holiday Inns, Inc., 686 F.2d 736, 739 (9th Cir. 1982)) (“Once the defendant is in court on a claim arising out of a particular transaction or set of facts, he is not prejudiced if another claim, arising out of the same facts, is added.”). Accordingly, the Court finds that Zwerling properly added his DTPA claim to the SAC and will not dismiss that claim on the basis that it exceeds the scope of leave to amend.

B. Choice of Law

In its Prior Order, the Court found that Texas law governs Zwerling's claims. Prior Order at 7-13. Neither party contests that finding, so the Court applies Texas law.

C. Statute of Limitations

A court may dismiss a claim as time-barred “[i]f the running of the statute [of limitations] is apparent on the face of the complaint.” Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980). Here, the relevant limitations periods are four years for Zwerling's warranty, fraud by omission, and MMWA claims, and two years for his DTPA claim. Stevens v. Ford Motor Co., No. 2:18-CV-456, 2020 WL 12573279, at *8 nn.4 & 5 (S.D. Tex. Nov. 2, 2020) (citations omitted).

Under Texas law, “[c]auses of action accrue and statutes of limitations begin to run when facts come into existence that authorize a claimant to seek a...