T & M Solar & Air Conditioning, Inc. v. Lennox International Inc.
83 F. Supp. 3d 855
N.D. Cal.2015Background
- T & M Solar & Air Conditioning (T & M), two individual customers (the Newberrys and the Chans), and others bought Lennox’s Enphase SunSource systems marketed to operate through HVAC (not via home electrical panels); systems allegedly failed to meet National Electric Code (NEC) requirements and could not be installed as represented.
- T & M purchased six systems for customers after Lennox representatives made written and oral assurances (e.g., inspection form stating NEC compliance; in-person guarantees by representatives Peter Martinez and Stu Quinn).
- T & M alleges breach of contract (written), breach of implied contract, breach of express and implied warranties, and fraud; individual plaintiffs assert warranty and fraud-based harms from unusable systems and related business losses.
- Lennox moved to transfer/dismiss T & M’s claims based on a forum-selection clause Lennox says was in T & M’s credit applications (requiring Dallas County, Texas); T & M disputes that the Texas clause was part of the executed paperwork and offers a different “point-of-sale” venue clause.
- The court found genuine disputes of material fact about which Terms were included in the credit applications and deferred venue transfer, ordering an evidentiary hearing; it addressed 12(b)(6) sufficiency and dismissed some claims with leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a forum-selection clause in T & M’s credit application requires transfer to Dallas County, Texas | T & M: the Texas clause was not part of the executed applications; at most a point-of-sale clause applied; factual dispute precludes transfer | Lennox: the Terms attached to the credit applications include a broad Texas forum-selection clause covering all suits arising from the account | Court: factual dispute exists about which Terms were executed; defers venue motion and sets evidentiary hearing to resolve enforceability |
| Whether Plaintiffs plead breach of an implied contract | Plaintiffs: conduct and assurances created implied contracts to provide NEC-compliant systems and to remedy failures | Lennox: alleged promises are oral and/or covered by express agreements; implied contract not pleaded or duplicative of express contract | Court: dismissed implied-contract claim (duplicative/oral nature); granted leave to amend to replead as implied-by-conduct or oral contract |
| Whether Plaintiffs adequately pleaded warranty claims (express and implied) | Plaintiffs: written inspection form and reps created express and implied warranties (merchantability; fitness for particular purpose) | Lennox: privity issues for individual buyers; many statements are non-specific puffery; no particular-purpose showing | Court: express warranty claim may proceed based on the written inspection form stating NEC compliance; implied warranty of merchantability survives; implied warranty of fitness for a particular purpose dismissed with leave to amend; privity pleaded sufficiently at this stage for individuals |
| Whether fraud was pleaded with required particularity under Rule 9(b) | Plaintiffs: Lennox made actionable false representations (NEC compliance, existing user in Sacramento, promises to reimburse/repair) | Lennox: fraud is inadequately pled; economic loss rule may bar tort recovery | Court: fraud claim fails Rule 9(b) (insufficient who/what/when/where/how); dismissed without prejudice; may replead with particulars |
Key Cases Cited
- Atlantic Marine Constr. Co. v. United States Dist. Ct., 134 S. Ct. 568 (2013) (forum-selection clauses govern §1404(a) transfer analysis and are presumptively enforceable)
- Doe 1 v. AOL LLC, 552 F.3d 1077 (9th Cir. 2009) (forum-selection clauses are presumptively valid; party seeking to avoid bears heavy burden)
- Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133 (9th Cir. 2004) (district courts may hold evidentiary hearings to resolve factual disputes about forum-selection clauses)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must plead facts sufficient to state plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (labels/conclusions insufficient; plausibility standard)
- Petersen v. Boeing Co., 715 F.3d 276 (9th Cir. 2013) (remand for evidentiary hearing appropriate where factual disputes exist about enforceability of forum-selection clause)