PROCEEDINGS (IN CHAMBERS): ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS [10]
Julie Barrera Courtroom Clerk
Before the Court is Defendants Goodman Company LP, Goodman Global Inc., and Goodman Manufacturing Company LP’s (together, “Goodman’s”) Motion to Dismiss Case (“Motion” or “Mot.”) (Dkt. 10). Having considered the Motion, the opposition, and the reply, the Court hereby GRANTS in part and DENIES in part the Motion.
I. BACKGROUND
The following facts are contained in Plaintiffs’ Complaint (Dkt. 1) and are construed in a light most favorable to them.
Sometime before August 2012, Anne and Archie MeViear (“the McVicars”) contracted with WCS Restoration to build a home in California. Compl. ¶¶ 55-56. During construction of the home, on behalf of the McVicars, WCS Restoration purchased and installed a Goodman-manufactured heating and air conditioning unit. Id.
In August 2012, the McVicars moved in. Id. ¶ 55. Approximately three weeks later, the heating and air condition unit began to fail. Id. ¶ 57. The unit did not produce cold air and would run only on “fan only” mode. Id.
WCS Restoration’s subcontractor inspected the unit and told the McVicars that the condenser unit was “weak” and should be replaced. Id. ¶ 58. In June 2013, the unit began to fail again and the McVicars had it inspected again. Id. ¶ 59. The evaporator coil had to be replaced at a cost of $550.00. Id. In the next month, the unit needed to be serviced two more times: first, a booster was installed at a cost of $350.00; and second, a stronger booster needed to be installed at a cost of $200.00. Id. ¶ 60. In all, the McVicars have spent $1,100 repairing their Goodman-manufactured heating and air conditioning unit. Id. ¶ 61.
B.Class Allegations
Goodman has sold, directly or indirectly, thousands of air conditioners in the State of California to homeowners, developers, contractors, and subcontractors. Id. ¶ 33. They also designed, manufactured, marketed, and advertised those ah' conditioners. Id. ¶ 35. With each air conditioner, Goodman provided an express warranty, along with warranting that the air conditioners were fit for the ordinary purpose for which air conditioners are used and were free from defects in materials and workmanship. Id. ¶ 38. The express warranties provided that the air conditioners would be “free from defects in materials and workmanship under normal use and maintenance” for periods ranging from five to ten years. Id. ¶ 41.
On its website, Goodman represents that, “[w]hen you choose a Goodman brand, you can rest assured that you’ll receive a refreshingly affordable product that’s covered by what many consider to be the best product warranties in the heating and cooling industry.” Id. ¶ 40. Goodman has also advertised that “[customers] will enjoy top quality, high-efficiency cooling,” and that Goodman “focused on the design, engineering, and manufacture of dependable products that have helped millions and millions of homeowners achieve reliable, high-quality, and affordable indoor comfort.” Id. ¶ 45.
Based on these facts, the McVicars seek to represent the following class:
All persons and entities in the State of California that have owned, own, or acquired homes, residences, buildings, or other structures, physically located in the State of California in which Defendants’ Goodman- and Amana-brand air conditioners have been installed.
Compl. ¶ 24.
C.Procedural History
The McVicars filed this putative class action on August 12, 2013. See generally id. The Complaint asserts eleven causes of action: (1) violation of California Business and Professions Code section 17200 for unfair, unlawful, and fraudulent business practices; (2) violation of California Business and Professions Code section 17500 for deceptive and false advertising; (3) violation of the California Consumer Legal remedies Act; (4) breach of contract; (5) breach of express warranty; (6) breach of the implied warranty of merchantability; (7) fraudulent concealment; (8) negligent misrepresentation; (9) violation of the Magnuson-Moss Consumer
On November 4, 2013, Goodman filed a Motion to Stay Case Pending a JPML Ruling. Mot. to Stay (Dkt. 18). On November 25, 2013, this Court granted the Motion to Stay, noting that “in consideration of the fact that the action is still in its nascent stages of development and out of deference to the JPML, the Court finds it prudent to temporarily stay this case pending a decision by the JPML.” Order, November 25, 2013,
On January 8, 2014, this Court lifted the stay following a decision by the JPML to decline consolidation of this case with others pending in other states. Order, January 8, 2014 (Dkt. 24). The Court now considers the pending Motion to Dismiss.
II. LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed when a plaintiffs allegations fail to set forth facts which, if true, would entitle the complainant to relief. Bell Atl. Corp. v. Twombly,
In evaluating a Rule 12(b)(6) motion, review is ordinarily limited to the contents of the complaint and material properly submitted with the complaint. Clegg v. Cult Awareness Network,
Dismissal without leave to amend is appropriate only when the court is satisfied that the deficiencies in the complaint could not possibly be cured by amendment. Jackson v. Carey,
III. ANALYSIS
A. Unfair Competition Law Claim
The McViears’ UCL claim asserts that Goodman’s conduct was unlawful, unfair, and fraudulent. Compl. ¶¶ 62-67.
California’s Unfair Competition Law (“UCL”), Business & Professions Code section 17200, provides relief for “unfair competition,” which is defined as “any un
Goodman first moves to dismiss the McVicars’ Unfair Competition Law claim for a host of reasons, including an argument that the McVicars’ lack of standing.
1. Standing
Under the UCL, standing extends to “a person who has suffered injury-in fact and has lost money or property as a result of the unfair competition[.]” Cal. Bus. & Prof.Code § 17204. This requirement is governed by a “simple test”: a party must “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” Kwikset Corp. v. Superior Court,
a. Economic Injury
Goodman argues that “[b]ecause WCS Restoration [the McVicars’ contractor]— not plaintiffs — purchased the Goodman brand air conditioner, plaintiffs lack standing to assert a claim under the UCL.” Def.’s Mot. to Dismiss 6-7; see also Def.’s Reply 4. The Court disagrees; there is no reason to think that UCL standing should be limited in such a way.
Goodman directs the Court’s attention to a set of cases that raise similar, but not precisely the same, issues as the one now before the Court. In those cases, plaintiffs attempted to bring UCL claims for products that they spent no money on. See, e.g., Lanovaz v. Twinings N. Am., Inc.,
However, this Court need not pick a side in the split. Those cases do not stand for the proposition that in order to have standing, plaintiffs must themselves purchase each product. Rather, at most, those cases stand for the proposition that in order to have standing, plaintiffs must be economically injured by each product that forms the basis of their UCL claim. For example, in Miller, the plaintiff asserted claims for misrepresentation of the contents of five chocolate products, but admitted that he had purchased only one,
Having established that Goodman’s cases are inapposite, the Court turns to whether the McVicars have standing under the UCL.
In 2004, California voters “substantially revised the UCL’s standing requirement[.]” Clayworth v. Pfizer, Inc.,
[Wjhere once private suits could be brought by ‘any person acting for the interests of itself, its members or the general public,’ now private standing is limited to any ‘person who has suffered injury in fact and has lost money or property’ as a result of unfair competition. The intent of this change was to confine standing to those actually injured by a defendant’s business practices and to curtail the prior practice of filing suits on behalf of ‘clients who have not used the defendant’s product or service, viewed the defendant’s advertising, or had any other business dealing with the defendant .... ’
While the voters clearly intended to restrict UCL standing, they just as plainly preserved standing for those who had had business dealings with a defendant and had lost money or property as a result of the defendant’s unfair business practices.
Id. (emphasis added) (internal citations omitted).
In Kivikset, the California Supreme Court explained that, “[i]f a party has alleged or proven a personal, individualized loss of money or property in any nontrivial amount,” then the UCL’s standing requirements have been satisfied.
Indeed, “[t]he text of Proposition 64 establishes expressly that in selecting this phrase [injury in fact] the drafters and voters intended to incorporate the established federal meaning.” Kwikset,
Therefore, the Court finds that the McVicars have satisfied the economic injury requirement for UCL standing.
b. Causation
Goodman also argues that “to the extent plaintiffs ground their UCL claims upon alleged misrepresentations by the Goodman Defendants, such statements
In order to establish UCL standing, plaintiffs must not only show economic injury, but must also show that the “injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” Kwikset Corp.,
[W]e conclude that a plaintiff must plead and prove actual reliance to satisfy the standing requirement of section 17201 but ... is not required to necessarily plead and prove individualized reliance on specific misrepresentations or false statements where, as here, those misrepresentations and false statements were part of an extensive and longterm advertising campaign.
This Court begins by parsing out the McVicars’ theories of fraud. The first theory is that Goodman affirmatively misrepresented the quality of its air conditioners. See, Compl. ¶¶ 35-54; Opp’n at 12-15. The second theory is that Goodman purposefully concealed the defects in its air conditioners. Compl. ¶29; Opp’n at 12-15.
The McVicars clearly failed to establish standing under their first theory. The Complaint contains descriptions of several public representations by Goodman that would have induced reasonable reliance, but contains no allegation that either the McVicars or their contractor actually saw those public representations or that the public representations did induce reasonable reliance. Therefore, the Court finds that the McVicars failed to plead actual reliance on advertisements or public representations and, therefore, have not established standing. See Tobacco Cases,
The Court notes, however, that the standing requirement for fraud UCL claims is not as strict as the pleading requirements under Federal Rule of Civil Procedure 9(b). Under Rule 9(b), a fraud claim might be insufficiently pled if the plaintiff failed to identify specific misrepresentations upon which he relied. See Kearns v. Ford Motor Co.,
The McVicars also failed to establish standing under their second theory. Plaintiffs may predicate a fraud UCL claim on a defendant’s omission, but they must show that “had the omitted information been disclosed, one would have been aware of it and behaved differently.” Mirkin v. Wasserman,
This Court notes that Goodman has posited an array of alternative arguments for why the McVicars’ fraud UCL claim cannot go forward. The Court makes no ruling as to the merits of those arguments. It is enough that the McVicars lack standing.
In sum, the McVicars failed to allege facts to support causation and, therefore, failed to establish standing to assert a fraud UCL claim. The Court GRANTS Goodman’s Motion to Dismiss the McVi-cars’ fraud UCL claim and DISMISSES it WITHOUT PREJUDICE.
2. “Unlawful” Prong Claim
Goodman argues that plaintiffs failed to assert a claim under the “unlawful” prong of the UCL because “plaintiffs do not identify any state or federal law underpinning [such a] claim.” Mot. to Dismiss 8. The Court disagrees.
The “unlawful” prong of the UCL “ ‘borrows’ violations of other laws and treats them as unlawful practices.” Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co.,
The Complaint alleges that Goodman violated several laws, including breach of express warranty, California Commercial Code § 2313. As far as the Court can figure, the thrust of Goodman’s argument is simply to point out that under the section entitled “Count One: Violation of the California Business and Professional Code,” the McVicars do not specifically reference the other sections of the Complaint that identify unlawful business practices. See Mot. at 8; Reply at 8-9. The UCL does not create such a formalistic pleading requirement.
Therefore, the Court finds that the McVicars sufficiently pled a UCL claim under the “unlawful” prong and DENIES Goodman’s Motion as to that claim.
3. “Unfair” Prong Claim
Goodman next argues that the McVicars’ “unfair prong UCL claim does not remotely come close to pleading conduct on the part of the Goodman Defendants that ‘threatens an incipient violation of an antitrust law, or violates the policy or spirit of those laws.’ ” Reply at 9-10. The Court disagrees because it declines to adopt Goodman’s definition of “unfair.”
In Cel-Tech, the California Supreme Court criticized the prevailing definitions of “unfair,” but posited a new definition that was explicitly limited to the context of antitrust, not consumer, actions. See
The first test — the “balancing” test— defines an “unfair” business practice as one in which “the gravity of the harm to the victim outweighs the utility of the defendant’s conduct.” See, e.g., Smith v. State Farm Mut. Auto. Ins. Co., 93 Cal.
The Ninth Circuit has rejected the section 5 test in the consumer context, explaining that although “the California Supreme Court did reference FTC’s section 5 as a source of ‘guidance,’ that discussion clearly revolves around anti-competitive conduct, rather than anti-consumer conduct[.]” Lozano v. AT & T Wireless Servs. Inc.,
Otherwise, in the absence of an authoritative instruction, this Court is reticent to adopt either the balancing test or the public policy test. On the one hand, the California Supreme Court did criticize the balancing test — at least in the antitrust context — for being “too amorphous and providing] too little guidance to courts and businesses.” Cel-Tech,
Recently, the California Supreme Court has indicated that it will resolve this ambiguity soon. See Rose v. Bank of Am., N.A.,
Here, the McVicars allege that Goodman sold them defective air conditioners, which were warranted to be “free from defects in materials and workmanship,” and then refused to honor that warranty. Compl. ¶¶ 39-67. The Court is hard-pressed to imagine what possible utility would be generated by offering, then not honoring, warranties on defective products. But, the harm to the victim is clear; indeed, in this case, the harm amounted to over $1,000. Id.
Therefore, the Court finds that the McVicars sufficiently pled a UCL claim under the “unfair” prong, and DENIES Goodman’s Motion to Dismiss this claim.
The False Advertising Law (“FAL”), codified at California Business and Professions Code section 17500, provides:
It is unlawful for any person ... corporation or association, or any employee thereof ... to disseminate or cause to be so made or disseminated[,] any such statement as part of a plan or scheme with the intent not to sell that personal property or those services, professional or otherwise, so advertised at the price stated therein, or as so advertised.
Cal. Bus. & Prof.Code § 17500. Proposition 64, which narrowed the universe of those who may enforce the UCL, applied with equal force to the FAL. See Kwikset,
Therefore, this Court’s analysis in Section III.A.l.b applies to the MeVicars’ FAL claim. In other words, the MeVicars lack standing to assert a claim of false advertising because they have not alleged that they or their contractor viewed any advertising at all. Accordingly, the Court GRANTS Goodman’s Motion to Dismiss the MeVicars’ FAL claim and DISMISSES it WITHOUT PREJUDICE.
C. California Consumer Legal Remedies Act Claim
Goodman next argues, among other things, that the MeVicars’ California Consumer Legal Remedies Act (“CLRA”) claim must be dismissed because they failed to satisfy the affidavit requirement set forth in California Civil Code section 1780(d). The Court agrees.
The CLRA proscribes twenty-four “unfair methods of competition and unfair or deceptive acts or practices.” See Cal. Civ. Code § 1770. California Civil Code section 1780(d) provides that before filing a CLRA claim, plaintiffs must “concurrently with the filing of the complaint, ... file an affidavit stating facts showing that the action has been commenced in a county described in this section as a proper place for the trial of the action.” Cal. Civ.Code § 1780(d).
The MeVicars raise an interesting argument that section 1780(d) is a procedural requirement and, therefore, does not apply to CLRA claims asserted in federal court. Opp’n at 15-16. However, the majority of federal courts that have considered this requirement have applied it. See, e.g., Rideout v. Similasan Corp., No. 12-CV-0376,
The MeVicars do direct the Court’s attention to one federal court that held that the affidavit requirement was procedural. See Evans v. Linden Research, Inc.,
Under Erie, courts first consider whether a state rule is in direct conflict with a Federal Rule of Civil Procedure. Hanna v. Plumer,
The McVicars did not file such an affidavit. Accordingly, the Court GRANTS Goodman’s Motion as to the McVicars’ CLRA claim and DISMISSES it WITHOUT PREJUDICE.
D. Breach of Contract Claim
Goodman next argues that the McVicars’ breach of contract claim fails because they did not even allege that a contract existed. Mot. at 17. The Court agrees.
In order to prevail on a breach of contract claim, plaintiffs must show: “(1) the existence of the contract, (2) plaintiffs performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” Oasis West Realty, LLC v. Goldman,
The McVicars allege only that “Defendants have uniformly breached their contracts and warranty agreements.” Compl. ¶ 94. But, there is no allegation that a contract existed between the McVicars and Goodman.
In their opposition, they first argue that “[u]nder California law, as elsewhere, supplying a buyer with a defective product is a breach of contract.” Opp’n at 18 (citing NuCal Foods, Inc. v. Quality Egg LLC,
In the alternative, the McVicars argue that they are third-party beneficiaries of the contract between Goodman and their contractor, WCS Restoration. First, no such allegation is made in the Complaint. Second, there is not even an allegation that a contract existed between Goodman and WCS Restoration.
In short, the McVicars’ breach of contract claim is woefully underpled. The Court GRANTS Goodman’s Motion to Dismiss the breach of contract claim and DISMISSES it WITHOUT PREJUDICE.
E. Breach of Express Warranty Claim
Goodman next provides a variety of reasons why the McVicars’ breach of warranty claim is defective. The Court disagrees with them all.
Both parties posit the following elements of a claim for breach of express warranty: (1) the exact terms of the warranty; (2) reasonable reliance; and (3) a breach that proximately caused actual injury. Williams v. Beechnut Nutrition Corp.,
Here, the McVicars have plainly satisfied its pleading obligations under the first and third elements: they allege that Goodman expressly promised that its air conditioners would be “free from defects in materials and workmanship under normal use and maintenance,” Compl. ¶41, and that the air conditioners were unable to function during normal use, Compl. ¶49-54.
However, there remains a question as to whether Goodman’s representations were “part of the basis of the bargain.” “Section 2313 focuses on the seller’s behavior and obligation — his or her affirmations, promises, and descriptions of the goods — all of which help define what the seller ‘in essence’ agreed to sell.” Id. at 1229,
Finally, Goodman argues that the McVicars failed to plead that they provided Goodman with pre-suit notice of the breach. See Cardinal Health 301, Inc. v. Tyco Elec. Corp.,
Accordingly, the Court DENIES Goodman’s Motion to Dismiss the McVicars’ breach of express warranty claim.
F. Breach of Implied Warranty Claim
Goodman next argues that the McVicars’ breach of implied warranty claim is defective because the McVicars do not allege that the warranty was breached within one year. Mot. at 21. The Court agrees.
“The duration of the implied warranty of merchantability and where present the implied warranty of fitness shall be coextensive with an express warranty which accompanies the consumer goods[, but] ... in no event shall such implied warranty have a duration of less than 60 days nor more than one year[.]” Cal. Civ.Code § 1791.1. The McVicars argue that because the air conditioner defects are latent, the one-year limitation does not bar them. Opp’n at 21 (citing Mexia v. Rinker Boat Co., Inc.,
Here, the McVicars make no such allegations. Indeed, the McVicars’ complaint lacks many details concerning dates of purchase, such that it is difficult for this Court to assess the adequacy of then-pleadings. Accordingly, the Court GRANTS Goodman’s Motion to Dismiss the McVicars’ breach of implied warranty claim and DISMISSES it WITHOUT PREJUDICE.
G. Magnuson-Moss Warranty Act Claim
Goodman next argues that the McVicars’ claim under the MagnusonMoss Warranty Act (MMWA) claim “must be dismissed because it depends upon plaintiffs’ express and implied warranty claims” and because they do not plead that they “afforded a reasonable opportunity to cure[.]” Mot. at 23-24. The Court disagrees with the former argument, but agrees with the latter.
The MMWA provides a consumer remedy to enforce the terms of an implied or express warranty. 15 U.S.C. § 2310(d). It defines a written warranty as:
Any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buy which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect-free or will meet a specified level of performance over a specified period of time.
15 U.S.C. § 2301(6)(A). In order to assert a claim under the MMWA, plaintiffs must also “afford[] a reasonable opportunity [for the defendant] to cure” the failure to comply with the warranty. 15 U.S.C. § 2310(c).
As explained in Section III.E, the McVi-cars have properly asserted a claim for a breach of express warranty. However, the McVicars fail to allege that they “afforded a reasonable opportunity to cure” Goodman’s alleged failure to comply with its express warranty. They argue only that they requested replacement parts from Goodman, and that satisfied the requirement of 15 U.S.C. § 2310(c). Opp’n at 22 (citing Compl. ¶¶ 57-59). In Tietsworth v. Sears, Roebuck and Co.,
The Court GRANTS Goodman’s Motion to Dismiss the McVicars’ MMWA claim and DISMISSES it WITHOUT PREJUDICE.
H. Fraudulent Concealment and Negligent Misrepresentation Claims
Goodman next argues that the McVicars’ claims for fraudulent concealment and negligent misrepresentation are insufficiently pleaded. Mot. at 22-23. The Court agrees.
To state a claim for fraudulent concealment, a plaintiff must allege: “(1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to
“Negligent misrepresentation is narrower than fraud.” Platt Elec. Supply, Inc. v. EOFF Elec., Inc., 522 F.3d 1049, 1055 (9th Cir.2008) (quoting Shamsian v. Atl. Richfield Co.,
Here, as explained above, the Court finds that the McViears have not alleged justifiable reliance. Quite simply, they do not allege that anyone — neither they nor their contractor — relied on any representations made by Goodman.
The Court makes no ruling as to the other arguments posited by Goodman, but expresses deep skepticism regarding its argument that a negligent misrepresentation claim is subject to Federal Rule of Civil Procedure 9(b)’s heightened pleading standard. As this Court previously explained, “the Ninth Circuit ‘has not yet decided’ the issue,” and there are several reasons to believe that Rule 9(b) does not apply to such a claim. See Petersen v. Allstate Indem. Co.,
But, because the McViears have not plausibly alleged reliance, the Court GRANTS Goodman’s Motion to Dismiss both the fraudulent concealment and negligent misrepresentation claims and DISMISSES both claims WITHOUT PREJUDICE.
I. Unjust Enrichment Claim
Goodman next argues that the McViears’ unjust enrichment claim is not, in fact, a claim. Mot. at 24-25. The Court agrees.
“Courts consistently have held that unjust enrichment is not a proper cause of action under California law.” In re Toyota Motor Corp. Unintended Acceleration, Mktg., Sales Practices, & Prods. Liab. Litig.,
Therefore, the Court GRANTS Goodman’s Motion to Dismiss the McViears’ unjust enrichment claim. Because it is, in fact, not a claim at all, the Court DISMISSES it WITH PREJUDICE.
J. Declaratory Relief Claim
Finally, Goodman argues that the McVi-cars’ declaratory relief claim is “deficient, superfluous, and unsustainable.” Mot. at 25. The Court agrees.
“Courts may choose not to permit a claim for declaratory relief when resolution of other claims would sufficiently resolve the controversy.” Kho v. Wells Fargo & Co., No. CV 12-0847,
Therefore, the Court GRANTS Goodman’s Motion to Dismiss the McVicars’ declaratory relief claim. Furthermore, the Court DISMISSES the claim WITH PREJUDICE.
IV. DISPOSITION
For the reasons explained above, the Court GRANTS in part and DENIES in part Goodman’s Motion to Dismiss. The Court orders the following:
1. The McVicars’ claims for unjust enrichment and declaratory relief are DISMISSED WITH PREJUDICE.
2. The McVicars’ claims for UCL fraud, FAL, CLRA, breach of contract, breach of implied warranty, MMWA, fraudulent concealment, and negligent misrepresentation are DISMISSED WITHOUT PREJUDICE.
3. The McVicars have leave to file a First Amended Complaint on or before March 31, 2014.
The Clerk shall serve this minute order on the parties.