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| 2d Cir. | May 10, 2017Background
- In October 2013 Maya Pyskaty bought a certified pre‑owned BMW from Wide World of Cars (WWC) for $51,195, financing part of the purchase with BMW Bank.
- Shortly after purchase the car exhibited persistent defects (engine problems, loss of power steering, door lock malfunctions, excessive oil consumption); Pyskaty paid for repairs and ultimately parked the car off the road.
- An AutoCheck obtained after the problems revealed an August 2012 rear‑impact collision contrary to the CARFAX WWC had shown.
- Pyskaty sued WWC and BMW Bank in federal court under the Magnuson‑Moss Warranty Act (MMWA) for breach of express and implied warranties (seeking actual damages or, alternatively, rescission), and asserted related New York state claims.
- WWC moved to dismiss for lack of federal subject‑matter jurisdiction, arguing the MMWA $50,000 amount‑in‑controversy requirement was not met; the magistrate judge dismissed the case.
- The Second Circuit reversed, holding the value of Pyskaty’s rescission claim under the MMWA (measured by the contract price) exceeds $50,000 and thus federal jurisdiction exists.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether state‑law claims may be aggregated with MMWA claims to meet the $50,000 jurisdictional minimum | Pyskaty urged the amount should be computed on the basis of all claims in the suit | WWC argued only MMWA claim value counts for MMWA jurisdictional test | Court did not decide (resolved the appeal on other grounds) |
| Whether the value of a rescission remedy for amount‑in‑controversy is measured by the full contract price or by the current value of the defective product | Pyskaty: rescission value equals the contract price paid (no offset) | WWC: rescission value should be measured by the vehicle’s value or barred by contractual limitation to repair/replacement | Held: rescission value is measured by the contract’s full value (contract price) and here exceeds $50,000, supporting jurisdiction |
| Whether punitive damages claimed under the MMWA may be counted toward the jurisdictional amount | Pyskaty sought leave to amend to add punitive damages to raise amount in controversy | WWC opposed; argued punitive damages unavailable and speculative | Held: amendment to add punitive damages futile under NY law; punitive damages cannot be counted toward jurisdictional amount |
| Whether the contract’s limited warranty precluded rescission as a remedy | WWC: purchase contract limited remedies to repair/replacement, so rescission unavailable | Pyskaty: contract language did not clearly make those remedies exclusive and rescission is equitable and not easily waived by contract | Held: factual and legal doubts about enforceability of an exclusive remedy clause; court cannot say to a legal certainty rescission is unavailable, so rescission claim may be valued for jurisdictional purposes |
Key Cases Cited
- Motor Vehicle Mfrs. Ass'n v. Abrams, 899 F.2d 1315 (2d Cir. 1990) (describing MMWA's consumer‑protection purpose)
- Colavito v. N.Y. Organ Donor Network, Inc., 438 F.3d 214 (2d Cir. 2006) (presumption that complaint’s claimed amount in controversy is made in good faith)
- Tongkook Am., Inc. v. Shipton Sportswear Co., 14 F.3d 781 (2d Cir. 1994) (plaintiff must show a reasonable probability that jurisdictional amount is met)
- St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (Sup. Ct.) (legal‑certainty standard for dismissing claims for lack of amount in controversy)
- Rosen v. Chrysler Corp., 205 F.3d 918 (6th Cir. 2000) (rescission claim valued at contract price for amount‑in‑controversy purposes)
- Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324 (3d Cir. 2009) (same: rescission claim equals full purchase price)
- MacKenzie v. Chrysler Corp., 607 F.2d 1162 (5th Cir. 1979) (MMWA looks to state law to determine measure of damages under limited warranties)