535 F.Supp.3d 832
E.D. Wis.2021Background
- Three Wisconsin purchasers (Brame, Jager, Evans) bought GM vehicles (2010–2014 Gen IV 5.3L V8 engines) and allege excessive oil consumption caused by a design defect in piston-ring coating.
- Plaintiffs assert breach of GM’s express “Limited Warranty,” fraudulent nondisclosure in advertising, and unjust enrichment; they seek to represent a Wisconsin class of current/former owners/lessees.
- Complaint does not allege any plaintiff sought warranty repair from GM or a dealer during the warranty period, nor that any plaintiff gave GM pre‑suit notice of their alleged warranty claims.
- GM moved to dismiss under Rule 12(b)(6), arguing: warranty claims fail for lack of notice and scope; fraud claims are barred by the economic loss doctrine; unjust enrichment is improper given contractual remedies and purchase from dealers.
- The court accepted the complaint’s facts as true but dismissed all claims with prejudice, principally because plaintiffs failed to allege pre‑suit notice/repair (UCC § 402.607(3)(a)) and fraud claims were barred as economic losses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of express warranty — coverage | Warranty covers defects in material/workmanship; oil‑consumption is such a defect | Warranty requires defects to be reported/repaired during warranty; plaintiffs never sought repair or gave notice | Dismissed: plaintiffs did not allege they sought warranty repairs during the warranty period; even if a breach existed, plaintiffs failed to plead required pre‑suit notice to GM |
| Breach of express warranty — notice | Filing this suit (and prior Sloan suit) and ratification suffice as notice | UCC requires pre‑suit notice to seller/manufacturer; prior class filing or this suit is not individualized pre‑suit notice | Dismissed: pre‑suit, individualized notice to GM required; prior Sloan filing and present complaint do not satisfy UCC notice requirement |
| Fraudulent misrepresentation (fraud by omission) | GM’s advertising omitted known defect; fraud claim lies | Economic loss doctrine bars tort recovery for product quality claims; fraud relates to product quality | Dismissed: economic loss doctrine applies; alleged omissions concern product quality and are not extraneous to contract, so fraud in inducement exception does not apply |
| Unjust enrichment | Plaintiffs conferred benefit (purchase monies) and GM was unjustly enriched by selling defective vehicles | Plaintiffs received vehicles and legal remedies; unjust enrichment disfavored where contract/legal remedies exist | Dismissed: plaintiffs received a product and contractual remedies; unjust enrichment cannot supplant those remedies |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (apply plausibility; disregard conclusory allegations)
- Paulson v. Olson Implement Co., Inc., 107 Wis.2d 510 (Wis. 1982) (buyer must notify seller it considers seller responsible; purpose is to avoid unfair surprise)
- Tietsworth v. Harley‑Davidson, Inc., 270 Wis.2d 146 (Wis. 2004) (economic loss doctrine bars tort recovery for product failing to meet commercial expectations)
- Daanen & Janssen, Inc. v. Cedarapids, Inc., 216 Wis.2d 395 (Wis. Ct. App. 1998) (contract/warranty law better suited than tort for economic loss)
- Xechem, Inc. v. Bristol‑Myers Squibb Co., 372 F.3d 899 (7th Cir. 2004) (affirmative defenses ordinarily on the face of the complaint issue)
- O’Boyle v. Real Time Resolutions, Inc., 910 F.3d 338 (7th Cir. 2018) (leave to amend normally required unless amendment would be futile)
- Smith v. RecordQuest, LLC, 989 F.3d 513 (7th Cir. 2021) (unjust enrichment dismissed where adequate legal remedies exist)