Heater v. General Motors LLCHeater v. General Motors LLC
Case Information
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA ROGER HEATER,
Individually and on behalf of
all others similarly situated ,
Plaintiffs, v. // CIVIL ACTION NO. 1:21CV24
(Judge Keeley) GENERAL MOTORS, LLC,
Defendant. MEMORANDUM OPINION AND ORDER GRANTING IN PART AND
This putative class action arises from an alleged engine defect existing in certain vehicles sold by the defendant, General Motors, LLC (“GM”) in West Virginia and nationwide. On February 10, 2021, the plaintiff, Roger Heater (“Heater”), filed a class action complaint alleging that, although GM knew its vehicles excessively consumed oil, it failed to disclose, and actively concealed, this defect from consumers. Pending is GM’s motion to dismiss Heater’s complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) (Dkt. No. 23). For the reasons that follow, the Court GRANTS IN PART and DENIES IN PART the motion.
I. BACKGROUND
In 2012, Heater purchased a 2011 Chevrolet Silverado equipped with GM’s Generation IV 5.3 Liter V8 Vortec 5300 LC9 engine (“Generation IV Engine”) and covered by GM’s Limited Warranty. Id.
at 8. [1] He alleges that his vehicle, like the other Class Vehicles, [2] excessively consumes oil, which can result in low oil levels, insufficient lubricity levels, internal engine component damage, and engine failure. Id. at 2, 5–7. The primary cause of this “Oil Consumption Defect” is that the “piston rings that GM installed within the [Generation IV Engine] fail to keep oil in the crankcase.” Id. at 3. Other issues with the Active Fuel Management System, the Positive Crankcase Ventilation (“PCV”) system, the Oil Life Monitoring System, and the oil pressure gauge indicator on the dashboard exacerbate the defect. Id. at 3–5. Together, these defects cause “drivability problems” and place occupants at an increased risk of injury or death. Id. at 5.
Heater alleges that GM became aware of the Oil Consumption Defect as early as 2008 because, among others, GM consumers had filed a significant number of complaints regarding excessive oil consumption in the Class Vehicles. In addition, GM had issued several Technical Service Bulletins (“TSBs”) to its dealers addressing excessive oil consumption in vehicles with the Generation IV Engine, and had abandoned the Generation IV Engine for its redesigned Generation V 5.3 Liter V8 Vortec 5300 LC9 engine (“the Generation V Engine”). Moreover, in 2009, Old GM [3] had investigated the root cause of excessive oil consumption. Id. at 5–6, 14, 22–28.
Despite this knowledge, GM did not publicly disclose the Oil Consumption Defect and continued to sell Class Vehicles equipped with the Generation IV Engine to consumers like Heater. Id. at 6.
Heater alleges that he first became aware of his vehicle’s defect when there were fewer than 50,000 miles on its odometer. Had GM disclosed the Oil Consumption Defect, Heater contends he would not have purchased the vehicle, or “certainly would have paid less for it.” Id. at 8.
Heater asserts six causes of action against GM: (1) violation of the West Virginia Consumer Credit and Protections Act (“WVCCPA”), (2) breach of express warranty, (3) breach of the implied warranty of merchantability, (4) fraudulent concealment, (5) unjust enrichment, and (6) violation of the Magnuson-Moss Warranty Act (“MMWA”). See Id. at 64–76. Heater asserts Counts One through Five on behalf of “[a]ll current and former owners or lessees of a Class Vehicle (as defined herein) that was purchased or leased in the state of West Virginia (‘the West Virginia Class’),” and purports to assert a claim in Count Six on behalf of a nationwide class consisting of “[a]ll current and former owners or lessees of a Class Vehicle (as defined herein) that was purchased or leased in the United States (‘the Nationwide Class’).” Id. at 61.
On April 13, 2021, GM moved to dismiss Heater’s complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), and to strike Heater’s nationwide class allegation pursuant to Federal Rule of Civil Procedure 12(f) (Dkt. No. 24). This motion is fully briefed and ripe for review.
II. MOTION TO DISMISS Federal Rule of Civil Procedure 12(b)(6) allows a defendant to move for dismissal on the grounds that a complaint does not “state a claim upon which relief can be granted.” When reviewing a complaint, the Court “must accept as true all of the factual allegations contained in the complaint.” Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007) (quoting Erickson v.
Pardus,
A court is “not bound to accept as true a legal conclusion
couched as a factual allegation.” Papasan v. Allain,
A. Violation of the West Virginia Consumer Credit and Protections Act (“WVCCPA”) – Count One Heater first alleges that GM violated the WVCCPA by omitting material facts about the Oil Consumption Defect (Dkt. No. 1 at 65– 66). GM opposes Heater’s WVCCPA claim on two bases: first, that he failed to sufficiently plead a cause of action; and second, that his claim is barred because he did not comply with the statute’s pre-suit notice requirement (Dkt. No. 24 at 14-16).
Under the WVCCPA, a consumer who suffers a monetary loss as
a result of an unfair or deceptive act may bring an action to
recover damages. See W. Va. Code § 46A–6–106(a). To state a claim
under the WVCCPA, a consumer must allege: (1) unlawful conduct by
a seller; (2) an ascertainable loss on the part of the consumer;
and (3) proof of a causal connection between the alleged unlawful
conduct and the consumer's ascertainable loss. White v. Wyeth, 705
S.E.2d 828, 837 (W. Va. 2010). But a consumer cannot bring a claim
for a violation of the WVCCPA “until [he] has informed the seller
. . . in writing and by certified mail of the alleged violation
and provided the seller . . . twenty days from receipt of the
notice of violation to make a cure offer.” Bennett v. Skyline
Corp.,
Code § 46A–6–106(b)). “[T]he plaintiff's failure to comply with the mandatory prerequisite set forth in Section 46A–6–106(b) bars [him] from bringing a [WVCCPA] claim.” Stanley v. Huntington Nat.
Bank,
Regardless of whether Heater has sufficiently pleaded a WVCCPA claim, he has not complied with the statute’s mandatory prerequisites because he did not inform GM of the Oil Consumption Defect or provide it twenty (20) days to make a cure offer before bringing this lawsuit. Thus, he is barred from asserting a WVCCPA claim in this action.
Heater, however, argues that he was exempt from the WVCCPA’s pre-suit notice requirement because West Virginia law does not require a plaintiff to perform a futile act as a pre-condition to seeking a remedy (Dkt. No. 29 at 17-18). In support, he cites to Carter v. City of Bluefield, 54 S.E.2d 747, 754 (W. Va. 1949), where, the Supreme Court of Appeals of West Virginia held that, “[a]s a general rule, the petitioner, before instituting a proceeding in mandamus, must demand performance of the act or the duty which he seeks to enforce; but when it appears that a demand would be useless or unavailable it need not be made.” [4] Id. at Syl.
Pt. 1, 754 (emphasis added) (“If mandamus be the proper remedy to obtain the relief to which the petitioners are entitled, they will not be required to do a useless or futile act before proceeding to invoke that remedy.”).
Heater attempts to apply the holding in Carter to his WVCCPA claim. He contends that, under that statute, he was not required to give GM prior notice of the Oil Consumption Defect because it had actively concealed the defect for years, and so any pre-suit notice would have been futile (Dkt. No. 29 at 17-18).
Heater is mistaken in his contention. He seeks damages under a statutory scheme containing specific notice requirements. Thus, whether a petitioner must complete certain actions prior to seeking mandamus relief is irrelevant. The WVCCPA unequivocally requires that, before bringing a claim for relief, a consumer such as Heater must put GM on notice of its violative conduct and give it an opportunity to cure the resulting harm. Because the WVCCPA makes no exception for futility, the Court GRANTS GM’s motion to dismiss his WVCCPA claim.
B. Breach of Express Warranty – Count Two Heater asserts that GM breached his vehicle’s Limited Warranty by failing to repair the Oil Consumption Defect (Dkt. No.
1 at 67–70). GM’s challenge to this claim raises three issues: (1) whether the Oil Consumption Defect is a manufacturing defect or a design defect; (2) whether the Limited Warranty covers both manufacturing defects and design defects, or only manufacturing defects; and (3) whether Heater’s express warranty claim is barred because he never sought, and GM never denied, repairs for the Oil Consumption Defect.
First, GM argues that the Oil Consumption Defect is a design defect to which the Limited Warranty does not apply (Dkt. No. 24 at 4-5). But Heater asserts that the Oil Consumption Defect is a manufacturing defect because it is caused by defective piston rings and piston ring coating, both of which are materials (Dkt. No. 29 at 7).
“Design defects are distinct from manufacturing defects.”
Martell v. Gen. Motors LLC,
— Also termed defective design. Cf. manufacturing defect.”), with Manufacturing Defect, B LACK ’ S L AW D ICTIONARY (11th ed. 2019) (“An imperfection in a product that departs from its intended design even though all possible care was exercised in its assembly.
Cf. design defect.”). “It is generally understood ‘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.’” Tucker v. Gen. Motors LLC,
v. CTB, Inc.,
Throughout the complaint, Heater contends that each Class
Vehicle contains the same defect because it is equipped with the
Generation IV Engine, which excessively consumes oil.
[5]
A plaintiff
asserting that a class of vehicles all have the same defect, has
alleged a design defect, not a manufacturing defect. Id. (citing
Freeman v. Toyota Motor Sales, USA, Inc.,
Heater also argues that the Oil Consumption Defect is a
manufacturing defect because it relates to defective materials
such as the selected piston rings and piston ring coating. But, as
discussed in Davidson v. Apple, Inc.,
Cal. July 25, 2017), a manufacturer’s choice of certain materials to construct a product is a “design decision,” not a defect in “materials and workmanship.” The piston rings and piston ring coating in each Generation IV Engine were part of GM’s intended design and any resulting defect from GM’s materials selection is a design defect. Because Heater challenges the adequacy of GM’s design of the Generation IV Engine’s design, rather than any departure from the intended design, the alleged Oil Consumption Defect is properly construed as a design defect.
Next, GM contends that the Limited Warranty covers only manufacturing defects and the Oil Consumption Defect thus is excluded from its warranty coverage (Dkt. No. 24 at 4–5). Heater, oil, resulting in low oil levels, reduced lubricity, and engine damage.”).
on the other hand, asserts that the Limited Warranty applies to manufacturing defects and design defects alike (Dkt. No. 29 at 7).
The Limited Warranty provides that GM will repair or replace defects in materials or workmanship free of charge if they become apparent during the warranty period (Dkt. No. 1 at 68). Specifically, it states:
The Warranty covers repairs to correct any vehicle defect, not slight noise, vibrations, or other normal characteristics of the vehicle related to materials or workmanship occurring during the warranty period.
Id.
This warranty language has been heavily litigated. One court interpreting the Limited Warranty as it relates to the Oil Consumption Defect summarized the parties’ positions as follows:
Plaintiff argues that the text of this clause includes, as it expressly states, “any vehicle defect” except for “slight noise, vibrations, or other normal characteristics of the vehicle related to materials or workmanship occurring during the warranty period.” Under Plaintiff’s reading, the phrase “related to materials or workmanship” modifies the “normal characteristics of the vehicle” that are excluded from coverage, and “slight noise” and “vibrations” are two examples of such “normal characteristics of the vehicle related to materials or workmanship.” Because the Oil Consumption Defect is not a normal characteristic of the vehicle related to materials or workmanship, similar to slight noise or vibrations, Plaintiff argues, that alleged defect is covered by the express warranty and not excluded.
GM, however, argues that “related to materials or workmanship” does not apply to the phrase or list immediately preceding that phrase, but instead modifies “any vehicle defect.” Under this reading, the clause would still exempt “slight noise, vibrations, and other normal characteristics of the vehicle” but the phrase “related to materials or workmanship” would not be read as limited to the modification of those items. . . .
Martell,
GM argues its position has been adopted by the “overwhelming majority of courts” (Dkt. No. 34 at 1). A survey of the cases interpreting GM’s Limited Warranty, however, establishes that a split exists among the courts that have addressed the question. As GM contends, some courts have read the plain language of the Limited Warranty to cover only defects in materials or workmanship, not design defects. See e.g., Nauman v. Gen. Motors LLC, 2021 WL
4502666, at *3 (W.D. Wash. Oct. 1, 2021); Harris v. Gen. Motors
LLC, 2020 WL 5231198, at *3 (W.D. Wash. Sept. 2, 2020), order
vacated in part on reconsideration,
Oct. 19, 2020); Szep v. Gen. Motors LLC,
In contrast, those courts that have carefully analyzed the Limited Warranty’s terms and grammar have concluded that it covers both manufacturing and design defects. See e.g., Martell, 2021 WL 1840759, at *6; Tucker, 2021 WL 2665761, at *2; McKee v. Gen.
Motors LLC,
This Court agrees.
Under West Virginia law, “[a] valid written instrument which expresses the intent of the parties in plain and unambiguous language is not subject to judicial construction or interpretation but will be applied and enforced according to such intent.” Syl.
Pt. 1, Cotiga Dev. Co. v. United Fuel Gas Co., 128 S.E.2d 626 (W.Va.1962); see also Syl. Pt. 2, Orteza v. Monongalia County Gen.
Hosp.,
The plain and unambiguous language of GM’s Limited Warranty supports Heater’s contention that its coverage is not limited to manufacturing defects. As explained by the court in Martell v.
General Motors:
First, the clause sets out a broad array of coverage (“This warranty covers repairs to correct any vehicle defect”). Then, a comma and the word “not” are used to separate that broad category of coverage from what is “not” covered (“This warranty covers repairs to correct any vehicle defect, not ...”). Next, the category of issues that are not covered is defined (“slight noise, vibrations, or other normal characteristics of the vehicle ...”). . . . [Finally,] the phrase “related to materials or workmanship” modifies the phrase “other normal characteristics of the vehicle” or, possibly, the longer phrase “slight noise, vibrations, or other normal characteristics of the vehicle.”
Martell,
GM contests this reading of its Limited Warranty, arguing that the phrase “related to materials or workmanship” actually modifies the earlier phrase “any vehicle defect,” not the warranty’s list of exclusions. This argument is unpersuasive. Such interpretation would require the Court to read into the contract a comma between phrases “vehicle” and “related to materials or workmanship.” Without punctuation between these terms in the Limited Warranty, there is no indication that they are not connected or should not be read together.
Therefore, after carefully considering the parties’ arguments, the Court concludes that the Limited Warranty’s plain language indicates that it is not restricted to manufacturing defects, but rather covers repairs to correct any vehicle defect, except “slight noise, vibrations, or other normal characteristics of the vehicle related to materials or workmanship.” Accordingly, because the Oil Consumption Defect is a design defect that does not fall within one of the enumerated exceptions, it is within the scope of the Limited Warranty.
GM argues that this interpretation is an “overly strict
grammatical interpretation . . . not in line with West Virginia
law or reasonable consumer expectations (Dkt. No. 34 at 1). But,
under West Virginia law, contractual interpretation is governed by
the plain language of the contract and “it is unclear why [GM]
expects the consumer to expect something other than what the plain
English of the warranty promises.” Tucker
Moreover, it is unlikely that a reasonable consumer would opt to
reduce the scope of the Limited Warranty’s coverage to
manufacturing defects only. Martell,
Finally, GM contends that Heater’s express warranty claim
fails because the warranty limits his remedies to a right of
repair, and having not sought repairs during the warranty period
he is barred from asserting a claim for damages (Dkt. No. 24 at
7). An express warranty is created “when the affirmation of fact,
promise or description of the goods is part of the basis of the
bargain made by the seller to the buyer about the goods being
sold.” Syl. Pt. 7, Reed v. Sears, Roebuck & Co.,
Here, Heater can assert a claim for damages for GM’s breach
of express warranty only if his vehicle is inherently defective
and unusable because of the Oil Consumption Defect, and GM has
refused or has been unable to repair it. Appalachian Leasing, Inc.,
Heater asserts that any request for repairs would have been futile. But the attempts of other consumers to remedy the Oil Consumption Defect in their own vehicles cannot sustain his claim.
Because Heater has not sufficiently pleaded a breach of express warranty claim, the Court GRANTS GM’s motion to dismiss this cause of action.
C. Breach of Implied Warranty of Merchantability – Count Three Heater alleges that GM breached the implied warranty of merchantability by selling Class Vehicles that were unfit for their ordinary and intended use due to the Oil Consumption Defect (Dkt.
No. 1 at 70). GM opposes Heater’s claim as insufficiently pleaded and untimely (Dkt. No. 24 at 7–8).
Under West Virginia law, “a warranty of merchantability is
implied in any contract for sale of goods where the seller is a
merchant with respect to goods of that kind and assures buyer that,
among other things, goods are fit for ordinary purposes for which
they are used.” Mountaineer Contractors, Inc. v. Mountain State
Mack, Inc.,
Va. Jan. 5, 2018).
Here, Heater alleges that the Class Vehicles are unfit for their ordinary purpose due to the Oil Consumption Defect, which can lead to “drivability problems,” including engine damage, engine misfires, and total power loss (Dkt. No. 1 at 5, 70). Accordingly, the Oil Consumption Defect makes the Class Vehicles unreliable and places occupants at an increased risk of injury or death. Id. at 5. As to Heater’s own vehicle, although admitting he drove it without incident for some time, he alleges that it suffered early engine degradation, which compromised his safety.
Based on these allegations, it is plausible that the Class Vehicles were unfit for basic transportation when sold by GM. Therefore, Heater has sufficiently pleaded a claim for breach of the implied warranty of merchantability.
To avoid dismissal, however, Heater’s implied warranty claim also must be timely. West Virginia law establishes a five-step analysis for determining whether such a cause of action is time- barred:
First, the court should identify the applicable statute of limitation for each cause of action. Second, the court (or, if material questions of fact exist, the jury) should identify when the requisite elements of the cause of action occurred. Third, the discovery rule should be applied to determine when the statute of limitation began to run by determining when the plaintiff knew, or by the exercise of reasonable diligence should have known, of the elements of a possible cause of action. Fourth, if the plaintiff is not entitled to the benefit of the discovery rule, then determine whether the defendant fraudulently concealed facts that prevented the plaintiff from discovering or pursuing the cause of action. Whenever a plaintiff is able to show that the defendant fraudulently concealed facts which prevented the plaintiff from discovering or pursuing the potential cause of action, the statute of limitation is tolled. And fifth, the court or the jury should determine if the statute of limitation period was arrested by some other tolling doctrine. Only the first step is purely a question of law; the resolution of steps two through five will generally involve questions of material fact that will need to be resolved by the trier of fact.
Syl. Pt. 5, Dunn v. Rockwell,
Here, Heater’s implied warranty of merchantability claim is subject to a four-year statute of limitations. See Taylor v. Ford Motor Co., 408 S.E.2d 270, 273 (W. Va. 1991). This period runs from the date GM delivered Heater’s vehicle and is not impacted by the discovery rule. Id. Although he alleges that GM sold him an unfit vehicle in 2012, Heater did not bring his lawsuit until 2021. Therefore, his implied warranty claim is time-barred unless the limitations period has been tolled. He contends his claim is timely based on the doctrines of fraudulent concealment and class action tolling.
“Fraudulent concealment involves the concealment of facts by
one with knowledge or the means of knowledge, and a duty to
disclose, coupled with an intention to mislead or defraud.”
Trafalgar House Const., Inc. v. ZMM, Inc.,
Va. 2002). Where the plaintiff can demonstrate that the defendant
“fraudulently concealed facts which prevented the plaintiff from
discovering or pursuing the potential cause of action, the statute
of limitation is tolled.” Syl. Pt. 5, Dunn,
Heater contends the fraudulent concealment doctrine tolled the limitations period for his implied warranty claim from the date of his purchase in 2012 (Dkt. No. 29 at 10–12). He asserts that GM knew the Generation IV Engine contained the Oil Consumption Defect as early as 2008. And, despite this knowledge, and its duty to disclose the Oil Consumption Defect, GM “affirmatively and actively concealed the [defect] when it issued the TSBs . . . that instructed dealers to offer purported repairs that it knew would not cure the [defect]” (Dkt. No. 1 at 60). According to Heater, although he relied on GM to disclose the defect because it “was hidden and not discoverable through reasonable efforts,” GM intentionally concealed the defect so that it could continue to sell vehicles equipped with the Generation IV Engine (Dkt. No. 29 at 11).
Whether Heater’s limitations period was tolled by the
fraudulent concealment doctrine raises material questions that a
trier of fact must resolve. Syl. Pt. 5, Dunn,
But, at this early stage, Heater has pleaded sufficient facts to
survive GM’s motion to dismiss. Republican Party of N.C. v. Martin,
Heater also asserts that the class action tolling doctrine tolled his limitations period from February 27, 2017 until June 17, 2020 (Dkt. No. 10 at 21). “The commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the requirement of Rule 23(a)(1) been met.” Am. Pipe & Const. Co. v.
Utah,
On December 19, 2016, several plaintiffs filed a class action against GM in the Northern District of California, “the Sloan action,” regarding the same Oil Consumption Defect at issue in this case (Dkt. No. 29 at 10); see Sloan, et al. v. Gen. Motors LLC, 16-cv-07244-EMC (N.D. Cal.). On February 27, 2017, a plaintiff joined the Sloan action as a representative of a subclass of individuals who had purchased a Class Vehicle in West Virginia.
Id. Later, on June 17, 2020 the court narrowed this West Virginia subclass to exclude any vehicles manufactured on or after February 10, 2011. Id.
When the West Virginia plaintiff joined the Sloan action on February 27, 2017, he asserted several causes of action on behalf consumers like Heater who had purchased their Class Vehicle within the state of West Virginia, including a claim for GM’s breach of West Virginia’s implied warranty of merchantability. Accordingly, had the requirements of Federal Rule of Civil Procedure Rule 23(a)(1) been met, Heater would have been a member of the subclass in the Sloan action. He did remain a potential class member, however, until the court narrowed the subclass to exclude those West Virginia consumers who had purchased vehicles manufactured after February 10, 2011. Therefore, under the class action tolling doctrine, Heater is correct that his implied warranty of merchantability claim was tolled from February 27, 2017 through June 17, 2020.
Nevertheless, GM asserts that the four-year statute of limitations for Heater’s implied warranty claim may have expired prior to the commencement of the Sloan action (Dkt. No. 23 at 6). Heater’s claim is only timely if, prior to February 27, 2017, the limitations period had been tolled by the fraudulent concealment doctrine. As discussed earlier, Heater has sufficiently pleaded an implied warranty of merchantability claim and the timeliness of his claim under the fraudulent concealment doctrine raises material questions of fact. The Court therefore DENIES GM’s motion to dismiss this claim.
D. Fraudulent Omission – Count Four
Heater alleges that GM intentionally failed to disclose material information regarding the Oil Consumption Defect, thereby inducing him to purchase a vehicle with the defective Generation IV Engine (Dkt. No. 1 at 71–73). GM argues that Heater has failed to plead with particularity that it had pre-sale knowledge of the alleged defect or a duty to disclose this defect as required by Federal Rule of Civil Procedure 9(b) (Dkt. No. 24 at 9–14).
Pursuant to Rule 9(b), “[i]n alleging fraud or mistake, a
party must state with particularity the circumstances constituting
fraud or mistake.” The “‘circumstances’ required to be pled with
particularity are ‘the time, place, and contents of the false
representations, as well as the identity of the person making the
misrepresentation and what he obtained thereby.’” Harrison v.
Westinghouse Savannah River Co.,
This heightened standard “aims to provide defendants with fair
notice of claims against them and the factual ground upon which
they are based, forestall frivolous suits, prevent fraud actions
in which all the facts are learned only following discovery, and
protect defendants’ goodwill and reputation.” McCauley v. Home
Loan Inv. Bank, F.S.B.,
Under West Virginia law, “[f]raudulent concealment involves
the concealment of facts by one with knowledge or the means of
knowledge, and a duty to disclose, coupled with an intention to
mislead or defraud.” Resh v. Realty Concepts, Ltd.,
Although Heater has titled Count Four of his complaint as “Fraudulent Concealment/Omission,” this count appears to contain only a fraudulent omission claim (Dkt. No. 1 at 71). Allegations of fraudulent concealment are discussed in other areas of his complaint, [6] but Count Four is devoid of any allegation that GM knowingly concealed the Oil Consumption Defect, and discusses only GM’s nondisclosure of essential information to consumers. See id.
at 71–73. Moreover, in his response to GM’s motion to dismiss, Heater refers to Count Four as “Plaintiff’s fraudulent omissions claim” and only cites cases discussing nondisclosure (Dkt. No. 29 at 16). The Court therefore views Count Four as a fraudulent omission claim and will apply a more relaxed Rule 9(b) pleading standard.
For this claim to survive, Heater must have sufficiently alleged that GM knew about the Oil Consumption Defect and, despite its duty to do so, failed to disclose it to him. Heater alleges that GM had pre-sale knowledge of the Oil Consumption Defect from several sources. First, he states that GM received a significant number of consumer complaints regarding excessive oil consumption in vehicles equipped with the Generation IV Engine (Dkt. No. 1 at 6). According to Heater, these complaints were so numerous they prompted GM to launch an internal investigation in 2009. Id. at 22. Further, in 2010, the investigatory team reported that the piston ring assembly caused excessive oil consumption. Id. He also contends that GM made subsequent design changes to the Generation IV Engine before abandoning it for its redesigned Generation V Engine. Id. at 23-25.
As well, Heater contends that GM acknowledged the Oil Consumption Defect by issuing a series of TSBs to dealers addressing excessive oil consumption by the Generation IV Engine.
Id. at 16–17. At least two of these TSBs were issued before he purchased his vehicle. Id. Finally, Heater asserts that the Oil Consumption Defect was brought to GM’s attention because consumers filed a substantial number of complaints with the National Highway Traffic Safety Administration (“NHTSA”) regarding excessive oil loss and resultant engine damage in the Class Vehicles. Id.
GM vigorously disputes that its knowledge of the Oil Consumption Defect can be inferred from any of these sources (Dkt.
No. 24 at 11–13). It asserts that Heater failed to allege where or
how he specifically encountered GM communications, how he was
misled by such information, which facts GM concealed or omitted,
which GM employees were aware of these facts, when these employees
learned of these facts, and the actions these employees they took,
if any, to conceal the facts. Id. Rule 9(b) provides, however,
that knowledge “may be alleged generally.” Heater therefore is not
required to plead GM’s knowledge of the Oil Consumption Defect
with heightened particularity and, when viewed as a whole, his
factual contentions make GM’s knowledge facially plausible.
Twombly,
Heater was required to plead sufficient facts to establish that GM owed him a duty to disclose the Oil Consumption Defect.
Under West Virginia law, a seller has a duty to disclose a defect
in property where it is aware of a defect affecting the value of
the property and the purchaser would not have discovered it by a
reasonably diligent inspection. Logue v. Flanagan,
Based on all this, the Court concludes that Heater has alleged
facts, with sufficient particularity where required, to support
his claim that GM fraudulently omitted material information about
the Oil Consumption Defect. This conclusion is also supported by
Fourth Circuit precedent cautioning district courts to “hesitate
to dismiss a complaint under Rule 9(b) if [it] is satisfied (1)
that the defendant has been made aware of the particular
circumstances for which [it] will have to prepare a defense at
trial, and (2) that plaintiff has substantial pre-discovery
evidence of those facts.” McCauley,
Because GM currently is litigating several cases across the country that are substantively identical to this case, and because some of these cases have progressed through discovery and summary judgment, GM is uniquely aware of the circumstances under which it must prepare its defense. And, based on his counsel’s participation in those cases, Heater has substantial pre-discovery information concerning his claims. The Court therefore DENIES GM's motion to dismiss Heater’s fraudulent omission claim as insufficiently pleaded pursuant to Rule 9(b).
E. Unjust Enrichment – Count Five
Heater asserts that GM sold Class Vehicles at an artificially inflated price based on the Oil Consumption Defect and, so, retained unjust benefits (Dkt. No. 1 at 73). GM argues that Heater cannot recover under a theory of unjust enrichment because an express contract exists between the parties (Dkt. No. 24 at 16).
Under West Virginia law, “if benefits have been received and
retained under such circumstance that it would be inequitable and
unconscionable to permit the party receiving them to avoid payment
therefor, the law requires the party receiving the benefits to pay
their reasonable value.” Copley v. Mingo County Board of Education,
466 S.E.2d 139 (W. Va. 1995). “Because an action for unjust
enrichment is quasicontractual in nature, it may not be brought in
the face of an express contract.” Bright v. QSP, Inc., 20 F.3d
1300, 1306 (4th Cir. 1994) (citations and quotations omitted);
Gulfport Energy Corp. v. Harbert Priv. Equity Partners, LP, 851
S.E.2d 817, 822 (W. Va. 2020) (“The existence of an express
contract covering the same subject matter of the parties’ dispute
precludes a claim for unjust enrichment.” Federal Rule of Civil
Procedure 8, however, permits a plaintiff to plead alternative
claims. “When the terms of a contract are disputed,” a plaintiff
may plead a claim of unjust enrichment as an alternative to a
breach of contract claim. Span Constr. & Eng'g, Inc. v. Uwharrie
Builders, LLC,
GM is correct that its Limited Warranty is an express contract between the parties. But because GM and Heater dispute the terms of this warranty and its applicability to the Oil Consumption Defect, dismissal of Heater’s unjust enrichment claim is not appropriate at this time. Although Heater may not recover under both breach of contract and unjust enrichment theories, he is entitled to plead them in the alternative at this point of the litigation. The Court therefore DENIES GM’s motion to dismiss Heater’s unjust enrichment claim, subject to renewal at a later time.
F. Violation of the Magnuson-Moss Warranty Act (“MMWA”) – Count Six
Finally, Heater alleges that GM violated the MMWA and brings a claim for damages “individually and on behalf of the other members of the nationwide class” (Dkt. No. 1 at 74–76). The MMWA regulates warranties on consumer products distributed in interstate commerce and “provides that, subject to certain statutory requirements, an injured consumer can seek damages in a civil action for warranty violations.” Wolf v. Ford Motor Co., 829 F.2d 1277, 1278 (4th Cir. 1987) (citing 15 U.S.C. § 2310(d)). GM argues that Heater’s MMWA claim fails because he has not pleaded a viable state law warranty claim, nor has he satisfied the MMWA’s “100-named plaintiff requirement” [7] (Dkt. No. 24 at 8–9). Regardless of whether these arguments have merit, Heater’s class MMWA claim fails because he lacks standing to represent a nationwide class.
Before a court may address the merits of a plaintiff’s claim, “it has an obligation to assure itself that the merits question is presented in a proper Article III ‘case’ or ‘controversy.’” Daimler Chrysler Corp. v. Cuno, 57 U.S. 332, 332 (2006). Under this requirement, plaintiffs “must establish that they have standing to sue.” Clapper v. Amnesty Intern. USA, 568 U.S. 398, 408 (2013) (quotation omitted). To have standing, “the plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). The burden to establish standing is on the party asserting it. Id. at 560-61. Here, Heater attempts to assert claims on behalf of a nationwide class of purchasers for violations of the express and implied warranty statutes of all fifty states (Dkt. No. 1 at 74).
The Fourth Circuit has not addressed whether a plaintiff has standing to bring nationwide class action allegations based on violations of individual state statutes, or whether this issue must be reserved for the class certification stage. Other courts, however, have found that the “class-certification analysis may precede [the] standing analysis when the class certification issue [is] ‘logically antecedent’ to the standing issue.” McKee, 376 F.
Supp. 3d at 755 (citations and quotation marks omitted).
Furthermore, the “‘logical[ly] antecedent’ language should be
construed in a manner that permits consideration of the standing
issue . . . prior to class certification.” Smith v. Lawyers Title
Ins. Corp.,
“District courts within the Fourth Circuit have consistently
held that plaintiffs do not have standing to bring claims under
the statutes or laws of a state where they: (1) do not reside;
and, (2) have not been harmed.” Knapp v. Zoetis Inc., 2021 WL
1225970, at *9 (E.D. Va. Mar. 31, 2021) (collecting cases).
Likewise, district courts in other circuits have applied this
principle to class action allegations. See In re Packaged Ice
Antitrust Litig., 779 F. Supp. 2d 642, 657 (E.D. Mich. 2011)
(“[N]amed plaintiffs lack standing to assert claims under the laws
of the states in which they do not reside or in which they suffered
no injury.”); In re Flonase Antitrust Litig.,
Heater resides in, purchased his Class Vehicle in, and
discovered the Oil Consumption Defect in West Virginia. While in
Counts One through Five he brings claims under West Virginia law
on behalf of a West Virginia Class, in Count Six he seeks to bring
a MMWA claim on behalf of a nationwide class of current and former
owners or lessees of a Class Vehicle (Dkt. No. 1 at 74). He has
not alleged, however, that he suffered an injury under the warranty
statute of any other state, and so “is not entitled to have this
Court decide the merits of hypothetical violations of other states’
. . . laws.” Hassan,
He therefore lacks standing to bring claims on behalf of a
nationwide class. See e.g., Szep, 2020 WL 5834876, at *6
(dismissing MMWA claim brought on behalf of nationwide class for
lack of standing), Weiss, 418 F. Supp. 3d at 1180–81 (holding
same), McKee,
GM also has moved to strike Heater’s nationwide class action allegations pursuant to Federal Rule of Civil Procedure 12(f) because they would be governed by the laws of fifty states and the substantive variations in state laws would defeat Federal Rule of Civil Procedure 23’s requirements of commonality, predominance, and superiority (Dkt. No. 24 at 16-18). Because the Court has dismissed Heater’s nationwide class allegations, it DENIES AS MOOT GM’s motion to strike these allegations.
Heater also alleges an individual MMWA claim. The MMWA creates a cause of action for consumers damaged by “the failure of a supplier, warrantor, or service contractor to comply with any . .
. written warranty, implied warranty, or service contract,” 15 U.S.C. § 2310(d), “provided that all individual claims have at least $25 in controversy and the total amount in controversy, aggregated across all claims, is at least $50,000.” Lincoln v.
Ford Motor Co.,
“The MMWA allows consumers to ‘enforce written and implied
warranties in federal court’ by ‘borrowing state law causes of
action.’ Thus, a court's ‘disposition of the state law warranty
claims determines [its] disposition of the [MMWA] claims.’” Lessin
v. Ford Motor Co.,
2004)); see also Lincoln,
III. CONCLUSION
For the reasons discussed, the Court:
1. GRANTS GM’s motion to dismiss Heater’s WVCCPA claim (Count One);
2. GRANTS GM’s motion to dismiss Heater’s express warranty claim (Count Two);
3. DENIES GM’s motion to dismiss Heater’s implied warranty of merchantability claim (Count Three); 4. DENIES GM’s motion to dismiss Heater’s fraudulent omission claim (Count Four);
5. DENIES GM’s motion to dismiss Heater’s unjust enrichment claim (Count Five); and
6. DISMISSES Heater’s nationwide class MMWA claim for lack of standing (Count Six);
7. DENIES AS MOOT GM’s motion to dismiss Heater’s nationwide class MMWA claim (Count Six); 8. DENIES GM’s motion to dismiss Heater’s individual MMWA claim (Count Six); and
9. DENIES AS MOOT GM’s motion to strike Heater’s nationwide class allegations.
It is so ORDERED .
The Clerk SHALL transmit copies of this Order to counsel of record by electronic means.
DATED: October 20, 2021
/s/ Irene M. Keeley_________ IRENE M. KEELEY UNITED STATES DISTRICT JUDGE
Notes
[1] The Court takes the facts from the complaint and construes them in the
light most favorable to Heater. See De'Lonta v. Johnson,
[2] The Class Vehicles include the 2011-2014 model year Chevrolet Avalanche, Chevrolet Silverado, Chevrolet Suburban, Chevrolet Tahoe, GMC Sierra, GMC Yukon, and GMC Yukon XL equipped with the Generation IV Engine. Id. at 1-2.
[3] Old GM refers to General Motors LLC prior to its bankruptcy. Old GM developed, manufactured, and sold vehicles equipped with the Generation IV Engine it filed Chapter 11 bankruptcy in 2009. Id. at 10. After the defendant GM acquired Old GM’s assets and emerged from bankruptcy, it continued to manufacture and sell vehicles equipped with this engine.
[4] In Carter, a landowner sought to build a business in a residential zoning area. Id. at 751–53. Prior to construction, however, a city ordinance required any landowner to first obtain a zoning permit, and then a building permit. Id. at 753-54. After the city denied his application for a zoning permit, the landowner, without having also applied for a building permit, filed a mandamus action challenging the city’s zoning ordinance. Id. The city opposed his petition because he had not filed, and the city had not refused, his application for a building permit. Id. Observing that the city would have denied the landowner’s building permit application because he had not first obtained a zoning permit, West Virginia’s highest court held that the landowner was not required to “pursue a vain and futile course,” or apply for a building permit, prior to bringing his mandamus action. Id.
[5] See e.g., ¶ 115 (“GM abandoned the design flaws causing excessive oil consumption in the Class Vehicles in its redesigned Generation V Vortec 5300 Engines.”); ¶ 225 (“The Oil Consumption Defect is a uniform design defect that is related to materials.”); ¶ 274 (The Generation IV Engine is “designed so as to prematurely consume an abnormally large amount of
[6] Heater discusses GM’s efforts to conceal the Oil Consumption Defect in connection with the timeliness of warranty claims, GM’s violations of the WVCCPA, and GM’s unjust enrichment.
[7] To assert a MMWA claim in a class action, there must be one hundred or more named plaintiffs. 15 U.S.C. § 2310(d)(3)(C).