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Duncan v. Nissan North America, Inc.

United States District Court, D. Massachusetts

March 29, 2018

SARAH DUNCAN, RICHARD SILVER, ANTHONY WEISSENBURGER, JUDY WEISSENBURGER, KEVIN FRY, SHAUN COONEY, CLINTON STEWART AND MICHELLE LIM STEWART, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, Plaintiffs,
v.
NISSAN NORTH AMERICA, INC., AND NISSAN MOTOR CO., LTD., Defendants.

          MEMORANDUM AND ORDER

          Denise J. Casper United States District Judge

         I. Introduction

         The Plaintiffs, eight owners of cars manufactured by the Defendants who seek to represent others similarly situated, bring claims against the Defendants, Nissan North America, Inc. and Nissan Motor Company, based upon an alleged defective component in the cars. Their claims include counts for breach of contract; breach of the implied covenant of good faith and fair dealing; breach of an express warranty; breach of an implied warranty of merchantability; unjust enrichment; violations of the consumer protection statutes of Oregon, Colorado, Texas, Massachusetts, and North Carolina; and a violation of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2310(d)(1). For the reasons discussed below, the Court ALLOWS the motion to dismiss with respect to Count I (Oregon Unlawful Trade Practices Act), Count II (Colorado Consumer Protection Act), Count III (Texas Deceptive Trade Practices Consumer Protection Act), Count V (North Carolina Unfair and Deceptive Trade Practices Act) and Count VII (breach of implied warranty of merchantability) and DENIES the motion with respect to the remaining counts.

         II. Factual Allegations

         The Court accepts all non-conclusory facts alleged in the complaint, D. 1, as true, Ocasio- Hernández v. Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011), and “draw[s] all reasonable inferences in favor of the plaintiff[].” Gargano v. Liberty Int'l Underwriters, Inc., 572 F.3d 45, 48 (1st Cir. 2009).[1]

         The Defendants manufacture and sell or lease cars. Certain models of these cars, identified as the “Class Vehicles, ” contain a defective Timing Chain Tensioning System (“TCTS”). ¶¶ 1, 2. As alleged, the defect in the TCTS causes the engine of the car to become damaged, necessitating expensive repairs, and potentially also posing a safety risk to the occupants of the car. ¶¶ 4, 59, 62, 101. The Defendants allegedly knew and should have known, at the time of sale or lease of the Class Vehicles, that the TCTS was defective. ¶¶ 5, 61, 71. However, instead of disclosing the defect in the TCTS, the Plaintiffs contend that the Defendants concealed information regarding the defect in the TCTS from consumers, while disclosing information to dealerships via Technical Service Bulletins (“TSBs”), regular publications to dealerships that are authorized to perform repairs on the Defendants' cars. ¶¶ 7-8, 61-62, 84-90. According to a mechanic at an authorized dealership, the defect in the TCTS stems from the fact that a particular component of the TCTS is made of an inferior plastic component, which may be worn away, even the part is supposed to last the lifetime of the car. ¶ 75. The Defendants subsequently improved the material of this particular component to remedy the defect in subsequent models of its cars. ¶ 76.

         The Defendants offer two warranty products on the Class Vehicles: first, the “Basic Warranty, ” which covered repairs during the first 36, 000 miles or 36 months (whichever occurs first), and second, the “Powertrain Warranty, ” which covered repairs during the first 60, 000 miles or 60 months (whichever occurs first). ¶ 6. The warranty covers repairs for defects in “materials and/or workmanship.” ¶ 127. The Plaintiffs allege that the Defendants intentionally set these warranty limits so that the warranty coverage would expire before the defect in the TCTS would manifest itself. ¶ 64.

         The named Plaintiffs all purchased or leased Class Vehicles manufactured by the Defendants from various dealerships. ¶¶ 14, 19, 24, 29, 34, 40, 45. Plaintiff Sarah Duncan is a citizen of Massachusetts who purchased a 2007 Nissan Maxima in Massachusetts in 2010. ¶14. In 2016, when her vehicle had approximately 127, 000 miles, she was informed by a technician at a Nissan dealership that the TCTS needed to be replaced at a cost of approximately $1, 500. ¶¶ 17-18. She was also informed that Nissan would not cover the cost of the repair. ¶ 18.

         Plaintiff Richard Silver is a citizen of Massachusetts who purchased a 2007 Nissan Maxima in Massachusetts in 2007. ¶ 19. In 2014, when his vehicle had approximately 74, 024 miles, he was informed by a technician at a Nissan dealership that the TCTS needed to be replaced, and that Nissan would not cover the cost of the repair. ¶¶ 22-23. He spent $1, 641.45 replacing the TCTS. ¶ 23.

         Plaintiffs Anthony and Judy Weissenburger are citizens of Oregon who purchased a 2004 Nissan Maxima in Oregon in 2004. ¶ 24. In 2011, when their vehicle had approximately 39, 666 miles, they were informed by a technician at a Nissan dealership that the TCTS needed to be replaced and that Nissan would not cover the cost of the repair. ¶¶ 27-28. They spent approximately $1, 400 replacing the TCTS. ¶ 28.

         Plaintiff Kevin Fry is a citizen of Colorado who purchased a 2009 Nissan Frontier in Colorado on or about April 18, 2009. ¶ 29. On or about June 15, 2015, when his vehicle had approximately 58, 100 miles, he was informed by a technician at a Nissan dealership that the TCTS needed to be replaced and that Nissan would not cover the cost of the repair. ¶¶ 32-33. He spent approximately $1, 388.42 replacing the TCTS. ¶ 33.

         Plaintiff Shaun Cooney is a citizen of Colorado who purchased a 2007 Nissan Xterra in 2016 in Colorado. ¶ 34. Later in 2016, when his vehicle had approximately 78, 000 miles, he was informed by a technician at a Nissan dealership that the TCTS needed to be replaced and that Nissan would not cover the cost of the repair. ¶¶ 38-39. He spent approximately $928.01 replacing the TCTS. ¶ 39.

         Plaintiff Clifton Stewart is a citizen of Texas who purchased a 2006 Nissan Frontier in 2006 in Texas. ¶ 40. In 2016, when his vehicle had approximately 87, 333 miles, he was informed by a technician at a Nissan dealership that the TCTS needed to be replaced and that Nissan would not cover the cost of the repair. ¶¶ 43-44. He spent approximately $1, 625.77 replacing the TCTS. ¶ 44.

         Plaintiff Michelle Lim Stewart is a citizen of North Carolina who purchased a 2007 Nissan Pathfinder in North Carolina. ¶ 45. In 2015, when her vehicle had approximately 51, 000 miles, she was informed by a technician at a car repair shop that the TCTS needed to be replaced. ¶¶ 48-49. She paid approximately $1, 910 replacing the TCTS. ¶ 49.

         III. Procedural History

         On October 21, 2016, the Plaintiffs filed their complaint, D.1. The Defendants moved to dismiss, D. 14. This Court heard argument on the motion to dismiss and took the motion under advisement. D. 38.

         IV. Discussion

         A. Standard of Review

         On a motion to dismiss based upon Rule 12(b)(6), the Court will dismiss a complaint that fails to allege adequate facts “to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In reviewing the complaint, the Court can consider documents attached to or fairly incorporated into the complaint and facts susceptible to judicial notice. Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012).

         B. Choice of Law

         “A federal court sitting in diversity, ” as this Court does here, “applies state substantive law.” Levin v. Dalva Bros., Inc., 459 F.3d 68, 73 (1st Cir. 2006). “To determine the applicable substantive law, the federal court applies the choice-of-law principles of the forum state, here, Massachusetts.” Id. The Defendants assume that “the law of the state where each Plaintiff purchased and sought repair for his or her vehicle controls the substantive law claims of that particular Plaintiff.” D. 15 at 20. The Plaintiffs do not contest this position.

         C. Breach of Express Warranty (Count VI)

         In the complaint, the Plaintiffs allege that they entered into either the Basic Warranty or Powertrain Warranty with the Defendants and that the Defendants breached that warranty by failing to cover the cost of repairing the defective TCTSs. ¶¶ 170, 171.

         The Defendants first contend that the complaint fails to state a claim for relief because the warranty only covers “repairs needed to correct defects in the materials or workmanship, ” D. 15- 1 at 8; D. 15-2 at 10; D. 15-3 at 8; D. 15-4 at 8, [2] whereas the complaint only alleges a design defect. In support of this contention, they cite Bruce Martin Constr., Inc., v. CTB, Inc., 735 F.3d 750, 753-54 (8th Cir. 2013). In that case, the court interpreted an express warranty against “defects in material and workmanship” to exclude claims based on design defects. Id. The court reasoned that “defects in material and workmanship refer to departures from a product's intended design while design defects refer to the inadequacy of the design itself . . . where a product is manufactured correctly but designed inappropriately, the defect is one of design and not ‘material or workmanship.'” Id. at 753. The Defendants contend that both the structure of the TCTS and the material used in the TCTS constitute the “design” and not the “material or workmanship” of the TCTS, and, therefore, the complaint only alleges defects in the design rather than in the material or workmanship. D. 15 at 25-26.

         In response, the Plaintiffs contend that the Defendants mischaracterize the allegations in the complaint. D. 20 at 25. The complaint alleges that the “Defendants failed to adequately ensure proper materials selection, research, design, testing and/or manufacture of the [TCTS].” ¶ 82. Thus, even under the Defendants' interpretation of the phrase “material or workmanship, ” the complaint pleads facts sufficient to state a claim for breach of the express ...


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