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Schechner v. Whirlpool Corp.

United States District Court, E.D. Michigan, Southern Division

February 14, 2017

TOBY SCHECHNER, et al., Plaintiffs,
v.
WHIRLPOOL CORPORATION, Defendant.

          OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS [11]

          STEPHEN J. MURPHY, III UNITED STATES DISTRICT JUDGE

         Plaintiffs filed a class-action complaint against Defendant Whirlpool Corporation. The Plaintiffs allege causes of action related to Whirlpool's "AquaLift" oven self-cleaning technology. Whirlpool moved to dismiss some of the counts for failure to state a claim. For the reasons stated below, the Court will grant the motion in part and deny it in part.

         BACKGROUND

         Ten people from six states brought suit against Whirlpool: Toby Schechner and Barbara Barnes from Florida; Laura Bliss from Michigan; Kathleen Jordan (she has already voluntarily dismissed her case) and Louise Miljenovic from New Jersey; Kathryn Limpede and Candace Oliarny from Idaho; Beverly Simmons from New Mexico; and Richard Thome and Mary Ellen Thome from Arizona. They allege 12 causes of action related to Whirlpool's AquaLift system, that arise under (1) Magnuson-Moss Warranty Act (MMWA) - Written Warranty, 15 U.S.C. § 2301; (2) MMWA - Implied Warranty, 15 U.S.C. § 2301; (3) Breach of Contract; (4) Breach of UCC Express Warranty; (5) Breach of UCC Implied Warranty of Merchantability; (6) Unjust Enrichment; (7) Michigan Consumer Protection Act (MCPA), M.C.L.A. § 445.902; (8) Florida Deceptive and Unfair Trade Practices Act (FDUTPA), Fla. Stat. § 501.204; (9) New Jersey's Consumer Fraud Act (NJCFA), N.J.S.A. § 56:8-1; (10) Arizona Consumer Fraud Act (ACFA), Ariz. Rev. Stat. § 44-1522; (11) Idaho Consumer Fraud Act (ICFA), Idaho Code § 48-603; and (12) New Mexico Unfair Trade Practices Act (NMUPA), New Mexico Statute § 57-12-3. Whirlpool's motion to dismiss followed.

         LEGAL STANDARD

         Federal Rule of Civil Procedure 12(b)(6) provides for dismissal of a complaint that fails to state a claim upon which relief can be granted. When evaluating a claim under Rule 12(b)(6), the Court views the complaint in the light most favorable to the plaintiff, presumes the truth of all well-pled factual assertions, and draws every reasonable inference in favor of the non-moving party. Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008). But "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court may only grant a 12(b)(6) motion to dismiss if the allegations are not "sufficient 'to raise a right to relief above the speculative level, ' and to 'state a claim to relief that is plausible on its face.'" Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007)). If "a cause of action fails as a matter of law, regardless of whether the plaintiff's factual allegations are true or not, " then the Court must grant dismissal. Winnett v. Caterpillar, Inc., 553 F.3d 1000, 1005 (6th Cir. 2009).

         DISCUSSION

         I. Breach of Contract Claim

         At the outset, the Court must address a threshold question: whether privity of contract exists between the Plaintiffs and Whirlpool. A contract requires an "offer, acceptance, consideration, and sufficient specification of essential terms." See, e.g., St. Joe Corp. v. McIver, 875 So.2d 375, 381 (Fla. 2004). Privity of contract exists between contracting parties and intended beneficiaries. See Montgomery v. Kraft Foods Glob., Inc., No. 1:12-CV-00149, 2012 WL 6084167, at *13 (W.D. Mich. Dec. 6, 2012), aff'd, 822 F.3d 304 (6th Cir. 2016).

         The intent of the contracting parties determines whether a third-party beneficiary is intended or incidental. See, e.g., Schmalfeldt v. N. Pointe Ins. Co., 670 N.W.2d 651, 655 (Mich. 2003). If the contracting parties "have undertaken to give or do something directly to or for" a third party, then the third party becomes an intended beneficiary. Montgomery, 2012 WL 6084167, at *18. And if the contracting parties have not done so, then the third party is an incidental beneficiary and lacks privity of contract. Id. "It is axiomatic in the law of contract that a person not in privity cannot sue on a contract." DAFCO LLC v. Stewart Title Guar. Co., 331 P.3d 491, 496 (Idaho 2014). Thus, "only intended, rather than incidental, third-party beneficiaries may sue when a contractual promise in their favor has been breached." Montgomery, 2012 WL 6084167, at *18.

         Here, the complaint alleges no facts to show that Whirlpool formed a contract with the Plaintiffs. Plaintiffs allege that they bought their ovens from third-party retailers, not directly from Whirlpool. Am. Compl. ¶¶ 14, 19, 24, 30, 37, 42, 48, 54, 58, ECF No. 5. Therefore "[n]o privity of contract exists between [Plaintiffs], who [bought] from a retailer, and [Whirlpool] who has not sold directly to the consumer." See Montgomery, 2012 WL 6084167, at *18.

         Plaintiffs contend, however, that they are the intended beneficiaries of any contract between Whirlpool and its retailers. The argument fails. Plaintiffs do not plead facts to identify the specific contract to which they claim privity. And Plaintiffs' allegations fail to show that Whirlpool and the retailers "intended in entering their contract to directly benefit" Plaintiffs. See Id. at *13-14. Moreover, Plaintiffs muster no authority to support the proposition that an end-user consumer is an intended beneficiary to a contract between a remote manufacturer and a retailer.

         Instead, Plaintiffs rely on a series of contradictory or inapposite cases. See Resp. 34-35, ECF No. 23. The most relevant case Plaintiffs cite to support their intended-beneficiary theory, Caretta Trucking, Inc. v. Cheoy Lee Shipyards, Ltd., 647 So.2d 1028, 1030 (Fla. Dist. Ct. App. 1994), involves a consumer who purchased a yacht from a manufacturer. The purchaser sued the manufacturer and a company that had been hired to paint the yacht. Id. The purchaser alleged he was the intended beneficiary of the contract between the manufacturer and painting company. Id. The Caretta court held that the purchaser lacked privity of contract with the parties because the manufacturer and paint company had not "expressly intended their contract benefit Caretta directly." Id. Thus, the holding in Caretta stands for the exact opposite proposition asserted by Plaintiffs here.

         Alternatively, Plaintiffs argue that a determination of privity is premature. Plaintiffs cite three cases in which courts declined to rule on privity in resolving motions to dismiss. But each case is distinguishable. In Date, an unresolved choice-of-law issue led to the court's decision not to address privity. Date v. Sony Elecs., Inc., No. 07-CV-15474, 2010 WL 3702599, at *8 (E.D. Mich. Sept. 16, 2010). The Date court had not yet determined which state law governed-New York or California. If New York law applied, then a lack of privity would have been "fatal to Plaintiffs' express warranty claims." Id. Under those uncertain circumstances, the court declined to address privity.

         In Yvon, the court declined to address privity because the complaint "[did] not state that either or both of defendants actually sold [a] boat to plaintiff." Yvon v. Baja Marine Corp., 495 F.Supp.2d 1179, 1183 (N.D. Fla. 2007). The Yvon court determined that "whether there was or was not privity is a factual question that cannot properly be resolved on the instant motion to dismiss." Id. Similarly, in Azek, the court declined to address privity because the plaintiffs had "alleged sufficient facts to raise a question of fact concerning whether Plaintiffs and Defendant [were] in privity." In re AZEK Bldg. Prod., Inc., Mktg. & Sales Practices Litig., 82 F.Supp.3d 608, 618 (D.N.J. 2015).

         Here, though, unlike in Date, the Court faces no unresolved choice-of-law issues to hamper the analysis of privity. And no question of fact regarding privity exists. Each Plaintiff alleges they bought their oven from a third-party retailer, not from Whirlpool. Am. Compl. ¶¶ 14, 19, 24, 30, 37, 42, 48, 54, 58, ECF No. 5. And no Plaintiff alleges a specific contract between Whirlpool and the retailers with the express intent to directly benefit Plaintiffs. Unlike in Yvon and Azek, Plaintiffs here have not alleged a factual question of privity; the Court may resolve the issue as a matter of law. Because the Plaintiffs have pleaded insufficient facts to establish privity of contract between Whirlpool and the Plaintiffs, the Court will dismiss with prejudice Plaintiffs' breach of contract claim.

         II. Warranty Claims

         Plaintiffs allege-and Whirlpool moves to dismiss-four warranty-based causes of action: breach of UCC express warranty, breach of UCC implied warranty, breach of MMWA written warranty, and breach of MMWA implied warranty.

         A. UCC Warranty Claims

         Whirlpool argues that the Court should dismiss the UCC express and implied warranty claims of Barnes, Simmons, Oliarny, and the Thomes for lack of pre-suit notice. State law governs Plaintiffs' express and implied warranty claims. See In re Ford Motor Co. Speed Control Deactivation Switch Prod. Liab. Litig., No. MDL 1718, 2007 WL 2421480, at *6 (E.D. Mich. Aug. 24, 2007) ("[W]arranty claims asserted by the Florida, Texas and Illinois Plaintiffs are governed by those states' UCC statutes."); see also Schultz v. Tecumseh Prod., 310 F.2d 426, 428 (6th Cir. 1962) (holding that under Michigan conflict-of-law rules, "the law of the place of the sale determines the extent and effect of the warranties which attend the sale"); UCC § 1-105 cmt. 2 (stating that the UCC "applies to any transaction which takes place in its entirety in a state which has enacted" the Code). As a result, the Court will apply the law of the state where each Plaintiff purchased her oven.

         Under Florida, Arizona, Idaho, and New Mexico law, a buyer who seeks to assert a warranty claim "must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy." Fla. Stat. § 672.607(3)(a); Ariz. Rev. Stat. § 47-2607(C)(1); Idaho Code § 28-2-607(3)(a); N.M. Stat. § 55-2-607(3). Legally sufficient notice "let[s] the seller know that the transaction is still troublesome and must be watched." See U.C.C. § 2-607, cmt. 4; see, e.g., Malkamaki v. Sea Ray Boats, Inc., 411 F.Supp.2d 737, 742 (N.D. Ohio 2005).

         Barnes alleges she bought her Whirlpool oven in June 2013 and first tried to use the self-clean feature on her appliance in November 2013. Am. Compl. ¶¶ 118, 120, ECF No. 5. She was dissatisfied with the results because "the AquaLift did not effectively loosen the hardened debris, stains and cooking grease[.]" Id. ¶ 120. Yet she did not submit an online complaint to Whirlpool until June 2016-two and a half years after she first noticed a problem. Id. ¶ 123. The oven's written warranty provided that both the express and implied warranties expired one year from purchase. See Def. Exh. 2(B), ECF No. 11-3.

         Florida courts generally require a buyer to provide notice of a product defect within 18 months of discovering the defect. See In Re Vincent, 10 B.R. 549, 553 (Bankr. M.D. Fla 1981). Barnes provided notice two and a half years after she noticed a problem and three years after she purchased the oven. After taking the facts Barnes asserts as true, her claim cannot succeed as a matter of law due to untimely notice. The Court will dismiss without prejudice Barnes's express and implied UCC warranty claims.

         Simmons bought her oven on August 5, 2015, Am. Compl. ¶ 160, ECF No. 5, and first noticed a problem with the self-cleaning technology "within a few weeks of purchase." Id. ¶ 163. Simmons does not allege she provided any individual notice to Whirlpool of the defect in the self-cleaning oven. Id. ¶¶ 160-66. Accordingly, the Court will dismiss without prejudice Simmons's express and implied UCC warranty claims.

         Oliarny first noticed a problem with her oven's self-cleaning system "[i]n or around March 2016." Id. ¶ 156. She alleges that she "tried to have the oven serviced" in or around April 22, 2016, "[i]n accordance with the terms of Whirlpool's 'One Year Limited Warranty." Id. ¶ 157. And again in August, 2016, another service company "paid a visit to Ms. Oliarny's home to address the inoperable Aqualift issue." Id. ¶ 158.

         Oliarny alleges that she sought warranty service, but appears to have contacted the retailer or another service company, not Whirlpool. She does not allege that she provided individual notice to Whirlpool or that she requested warranty service from Whirlpool. Plaintiffs' general assertion that "repair attempts by an authorized dealer fall within the realm of proper notice, " Mountain-Aire Refrigeration & Air Conditioning Co. v. Gen. Elec. Co., 703 P.2d 577, 580 (Ariz.Ct.App. 1985), is unavailing because Oliarny does not allege that the service companies were Whirlpool's authorized agents and, in any event, Idaho law applies to Oliarny's claim, not Arizona law. As a result, the Court will dismiss without prejudice Oliarny's express and implied UCC warranty claims.

         The Thomes first noticed a problem with the self-clean feature on their oven in November 2014. Am. Compl. ¶ 140, ECF No. 5. But the Thomes fail to allege that they provided any individual notice to Whirlpool that the product was troublesome. See Id. ¶¶ 138-44. Although in Arizona filing a lawsuit can-by itself-serve as notice, the Thomes's suit provided insufficient notice because 18 months had elapsed from the time they discovered the defect to when they filed the suit. Under Arizona law, this is an unreasonable delay. See Burge v. Freelife Int'l, Inc., No. CV09-1159-PHX-JAT, 2009 WL 3872343, at *6 (D. Ariz. Nov. 18, 2009) (dismissing buyer's warranty claim because plaintiff waited 17 months to provide notice after discovering defect because "such delays are unreasonable as a matter of law."). The Court will dismiss without prejudice the Thomes's express and implied UCC warranty claims.

         Plaintiffs argue that-regardless of whether they provided individualized notice-Whirlpool had actual notice that the AquaLift system was troublesome. According to Plaintiffs, the demand letter sent to Whirlpool three months before filing suit served as notice for the entire class. Plaintiffs cite to Seroyer v. Pfizer, Inc., 991 F.Supp. 1308, 1314-15 (M.D. Ala 1997) to support their position. But Seroyer does not bear the weight of Plaintiffs' argument. The Seroyer court noted only that plaintiffs intended their demand letter to serve as pre-suit notice. Id. The court did not, however, address the question of whether plaintiffs' demand letter actually satisfied the legal requirement of notice, nor was that question before the court. The notice requirement creates "individualized questions of fact" that cannot be met by a class-action demand letter. Cohen v. Implant Innovations, Inc., 259 F.R.D. 617, 642 (S.D. Fla. 2008) ("The buyer must notify the seller that the goods are nonconforming in order to recover damages for breach of either an express or implied warranty."). Plaintiffs' pre-suit demand letter failed to provide individualized notice and thus failed to provide sufficient legal notice to Whirlpool.

         Plaintiffs also argue that Whirlpool received notice from "countless dissatisfied consumers [who] complained directly to Whirlpool." Resp. 31, ECF No 23. The argument is without merit. The notice requirement is "a highly individualized factual determination" that cannot be established by pointing to complaints from other customers. See, e.g., Cohen, 259 F.R.D. at 642 (holding that, to meet the notice requirement, "each putative class member would have to show that he or she gave the defendant notice within a reasonable time").

         i. UCC Express ...


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