Opinion
No. 1:15-cv-00253-JAM-JLT
08-13-2015
BRETT GRASSI, individually and on behalf of all others similarly situated, Plaintiff, v. INTERNATIONAL COMFORT PRODUCTS, LLC, Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
Defendant International Comfort Products, LLC ("Defendant") promptly provided a replacement for a failing part in Plaintiff Brett Grassi's ("Plaintiff") air conditioning unit free of charge. Although these actions in fact complied with Defendant's warranty, Plaintiff brought this class action complaint alleging violations of warranties and consumer protection laws. Because Defendant adequately performed on its valid warranty and Plaintiff was not misled by any misinformation about the product, the Court dismisses each of Plaintiff's claims.
This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for August 5, 2015. --------
I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
Plaintiff bought a new home containing an air conditioning unit ("HVAC") manufactured by Defendant. FAC ¶ 51. The unit worked properly for two years, then "stopped blowing cold air." FAC ¶ 54. Plaintiff alleges that the failure resulted from a leak in the unit's copper coil. FAC ¶ 55. The leak allegedly resulted from "formicary corrosion" when the copper was exposed to certain indoor pollutants regularly found in residential houses. FAC ¶¶ 34, 39-43. According to reports referenced in the FAC, "the occurrence rate of these [copper coil] failures is low nationwide[.]" FAC ¶ 41 (alteration in original).
"Soon" after Plaintiff discovered the problem, Defendant replaced the coil with an aluminum coil - which, unlike copper, is "not susceptible to formicary corrosion." FAC ¶¶ 34, 58. Defendant informed Plaintiff that it would cover the cost of the part. FAC ¶ 56. Plaintiff paid to diagnosis the problem and labor to install the new coil, but the home builder agreed to reimburse Plaintiff for half these costs: $521.50. FAC ¶¶ 57-58.
At the time of repair, the unit was covered by Defendant's "parts" warranty, which stated:
International Comfort Products, LLC ("ICP") warrants this product against failure due to defect in material or workmanship under normal use and maintenance as follows. . . . If a part fails due to defect during the applicable warranty period ICP will provide a new or remanufactured part, at ICP's option, to replace the failed defective part at no charge for the part."Defendant's RJN Exh. A at 1; FAC ¶¶ 81-82.
Despite the fact that Plaintiff apparently experienced no further problems with his air conditioning, he sued Defendant in a class action complaint (Doc. #15) alleging nine causes of action: (1) Violation of the California Consumer Legal Remedies Act ("CLRA"); (2) Violation of Unfair Competition Law ("UCL"); (3) Violation of the California False Advertising Law ("CFAL"); (4) Breach of the implied covenant of good faith and fair dealing; (5) Breach of the implied warranty of merchantability under the Song-Beverly Consumer Warranty Act; (6) Breach of express warrant; (7) Unjust enrichment; (8) Fraudulent concealment; and (9) Declaratory relief. Plaintiff alleged federal diversity jurisdiction under the Class Action Fairness Act. FAC ¶ 7.
Defendant now moves to dismiss each of Plaintiff's claims (Doc. #26). Plaintiff opposes the motion, except as to his fourth cause of action (Doc. #42). The Court therefore dismisses the claim for breach of the implied covenant of good faith and fair dealing, and addresses the parties' arguments on the viability of Plaintiff's other causes of action below.
II. OPINION
A. Judicial Notice
As an initial matter, Defendant requests judicial notice of two documents: Defendant's written limited "parts" warranty and the pleadings in another case, Sumer v. Carrier Corporation, filed in the Northern District of California. Defendant's RJN at 2. Because Plaintiff apparently agrees that the first document is the written express warranty at issue in the FAC, see FAC ¶¶ 81-82; Opp. at 5, the Court considers the document to be incorporated by reference into Plaintiff's FAC, see Tietsworth v. Sears, 720 F. Supp. 2d 1123, 1131 (N.D. Cal. 2010) ("[T]he actual terms of the one-year limited warranty, [] properly may be considered under the incorporation by reference doctrine . . . .") (collecting cases).
Plaintiff opposes judicial notice as to the second document: the Sumer pleadings. Opp. at 11-12. The Court takes judicial notice of the fact that pleadings were filed in that case - as they are in the public record - but does not take statements in those pleadings as true or use their exhibits as evidence. See Harris v. Cnty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (noticing "matters of public record, including documents on file in federal or state courts") (citation omitted); Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (reiterating that a court "may not take judicial notice of disputed facts stated in public records") (emphasis in original); M/V Am. Queen v. San Diego Marine Const. Corp., 708 F.2d 1483, 1491 (9th Cir. 1983) ("As a general rule, a court may not take judicial notice of proceedings or records in another cause so as to supply, without formal introduction of evidence, facts essential to support a contention in a cause then before it.").
B. Analysis
1. Express Warranty
Defendant argues that it complied with its warranty, therefore precluding Plaintiff's express warranty claim. Mot. at 4. Plaintiff contends that Defendant in fact breached its warranty, and even if it did not, the warranty was unconscionable and invalid. Opp. at 5-8. The Court agrees with Defendant.
"A manufacturer's liability for breach of an express warranty derives from, and is measured by, the terms of that warranty." Stearns v. Select Comfort Retail Corp., 7 63 F. Supp. 2d 1128, 1144 (N.D. Cal. 2010) (quoting Cipollone v. Liggett Group, Inc., 505 U.S. 504, 525 (1992)). A plaintiff must plead the exact terms of the warranty. Id. at 1142.
The FAC here identifies a "five-year limited 'parts' warranty" that covered the replacement part, but did not cover "the cost of labor to replace the defective coil" or other "associated costs for diagnostics, inspection and refrigerant replacement[.]" FAC ¶¶ 81-82; Defendant's RJN Exh. A. For the first time in his brief, Plaintiff points to another warranty provision entitled "No Hassle Replacement™ limited warranty." Opp. at 5. That warranty apparently went further and promised to replace the entire HVAC unit if "the evaporator coil failed due to defect[.]" Opp. at 5:15-16.
The Court disregards the No Hassle warranty terms, because Plaintiff never mentioned it in the FAC, and moreover, it likely did not apply to Plaintiff. See Opp. at 5:17-18 (declining to advise whether this warranty applied, and instead stating hypothetically that "[i]f this warranty also applied" then Defendant would have breached it); Defendant's RJN Exh. A at 1 (showing that this "No Hassle Replacement™ limited warranty" only applied to a subset of HVAC units).
Measuring this case by the terms of the "parts" warranty then, Defendant fulfilled its obligations. That is, it replaced the part that failed (i.e., the coil) "at no charge for the part." See Defendant's RJN Exh. A at 1; Opp. at 5. The opposition brief contends that "Plaintiff contests whether [Defendant] charged Plaintiff or the builder for the replacement coil." Opp. at 5 n.3, 6. Yet this allegation appears nowhere in the FAC, and the FAC in fact resolves that issue in Defendant's favor: Defendant allegedly "stated to Plaintiff that they [sic] would cover the cost of the replacement coil itself," and the only costs Plaintiff alleges are in regards to the labor to inspect and replace the part. FAC ¶¶ 55-58.
Plaintiff also contends that Defendant's replacement of the part was "ineffective." FAC ¶ 106. But the FAC's other allegations contradict that statement. In particular, the FAC states that Defendant replaced the defective copper coil with an aluminum coil, which - according to the FAC - "is not susceptible to formicary corrosion[.]" FAC ¶¶ 34, 58. Plaintiff's allegations thus establish that Defendant fully performed on the warranty.
Plaintiff next argues that Defendant failed to perform as required by yet a different sentence (or rather, a fragment of a sentence) in the same warranty provision. See Opp. at 6 (alleging that Defendant violated warranty "against failure due to defect in materials or workmanship under normal use and maintenance"). The full context of that snippet indicates that the language refers to the same promise discussed above - which Defendant performed on by replacing the coil. See Defendant's RJN Exh. A at 1 ("International Comfort Products, LLC ('ICP') warrants this product against failure due to defect in material or workmanship under normal use and maintenance as follows. [Sentence describing duration of warranty.] If a part fails due to defect during the applicable warranty period ICP will provide a new or remanufactured part, at ICP's option, to replace the failed defective part at no charge for the part.").
In an attempt to bolster his reliance on the sentence fragment, Plaintiff cites Gustafson v. Goodman Manuf. Co., 2014 WL 1669069 (D. Ariz. Apr. 28, 2014). But that case is distinguishable. Although it involved a very similar "parts" warranty for an air conditioning unit, the unit in that case failed twelve times, followed by twelve separate replacements of the coil. Id. at *1. The Gustafson defendant apparently never resolved the issue, because the plaintiff eventually purchased a bi-annual maintenance agreement to have his unit continuously repaired. Id. Here, in contrast, Defendant fully and permanently repaired Plaintiff's unit on the first try. See FAC ¶¶ 34, 55-58.
Plaintiff moves on from trying to find a hole in Defendant's performance, and next argues that even if Defendant complied with the stated terms of the warranty, the warranty was nonetheless invalid. See FAC ¶¶ 81-85. Each of Plaintiff's three theories of invalidity fail.
Plaintiff first asserts that the warranty was invalid because it contradicted itself. Opp. at 7. Plaintiff does not explain, and the Court does not see, how the warranty terms "negat[ed] [its] express description[s]." See Opp. at 7:26.
Next, Plaintiff argues that the warranty "fail[ed] in its essential purpose" because the product is "destroyed by [its] own flaws[.]" Opp. at 8. As described above, this argument is unpersuasive because the FAC establishes that Defendant fully repaired Plaintiff's HVAC unit by replacing the failed part with a functioning part.
Finally, Plaintiff contends that the warranty was unconscionable. Opp. at 8-9. To succeed in this argument, Plaintiff must show that the warranty was both procedurally and substantively unconscionable. Marchante v. Sony Corp. of Am., Inc., 801 F. Supp. 2d 1013, 1022 (S.D. Cal. 2011). The warranty was not procedurally problematic; Plaintiff is incorrect in contending that the warranty resulted from "a complete inequality of bargaining power." See Opp. at 9 n.4. Indeed, the FAC alleges that Plaintiff had the option of "insist[ing] on the installation of a different brand of HVAC system[.]" FAC ¶ 64; see Tietsworth, 720 F. Supp. 2d at 1139 (finding no procedural unconscionability because complaint demonstrated that "other machines were available to Plaintiffs"). Nor was it substantively unconscionable, because the terms in no way "shock the conscience." See Sumer v. Carrier Corp., 2015 WL 758314, at *1 (N.D. Cal. Feb. 20, 2015) (concluding that this same "parts" warranty was not unconscionable).
Based on the allegations in the FAC, the warranty was valid and Defendant fully complied with its relevant terms. The Court therefore dismisses Plaintiff's express warranty claim with prejudice.
2. Implied Warranty
The parties disagree as to whether the malfunction in Plaintiff's HVAC unit falls within the one-year life of the implied warranty of merchantability. See Cal. Civ. Code. § 1791.1(c); Mot. at 10; Opp. at 10. Defendant asserts that Plaintiff's claim fails because his HVAC unit did not malfunction until two years after he purchased the home. See FAC ¶¶ 51, 55. Plaintiff in response characterizes the copper coil as a "latent defect" that rendered the unit unmerchantable at the time of sale, even though the problem did not manifest for two years. Opp. at 10.
The parties point the Court to Mexia v. Rinker Boat Company, Inc., 174 Cal.App.4th 1297 (2009) - which held that a delayed malfunction arising from a latent defect can fall within the one-year time limit - and a number of cases disagreeing about whether to follow Mexia. Opp. at 10; Reply at 6-7. The Court finds it unnecessary to decide whether to follow Mexia, because even if it does, Plaintiff's argument still fails.
In particular, Mexia requires a plaintiff to show that the product "became unfit during the warranty period." Jones v. Credit Auto Ctr., Inc., 237 Cal.App.4th Supp. 1, 10 (2015). "[I]t is the defect itself, rather than some theoretical imperfection, that must exist during the warranty period, and that defect must be so severe as to cause the product to fall below the 'minimum level of quality' guaranteed by the warranty." Parenteau v. Gen. Motors, LLC, 2015 WL 1020499, at *11 (C.D. Cal. Mar. 5, 2015). Falling below the minimum level of quality means the product "did not possess even the most basic degree of fitness for ordinary use." See Viggiano v. Hansen Natural Corp., 944 F. Supp. 2d 877, 896 (C.D. Cal. 2013) (citation and quotation marks omitted).
Plaintiff has not made such a showing here. He alleges that his HVAC unit contained a copper coil, which had a "low" "occurrence rate" of causing corrosion, leading to leakage of refrigerant. FAC ¶¶ 21, 41. The unit functioned properly for over two years. See FAC ¶¶ 51, 55. Then, "[s]oon" after the malfunction, Defendant fixed the problem by replacing the coil with an aluminum one, which was "not susceptible to formicary corrosion[.]" FAC ¶¶ 34, 58. Defendant's product thus meets at least the "minimum level of quality." See Sumer, 2015 WL 758314, at *1 (rejecting nearly identical implied warranty claim for copper coil defect). The Court dismisses the implied warranty claim with prejudice, because the FAC establishes that Defendant complied with the implied warranty.
3. CLRA
Defendant argues that the Court should dismiss Plaintiff's CLRA claim because he does not explain what statements he saw before purchase and cannot plead reliance. Mot. at 14. The Court agrees.
The CLRA prohibits "unfair methods of competition and unfair or deceptive acts or practices[.]" Cal. Civ. Code § 1770(a). A CLRA claim may be premised on either an affirmative misrepresentation or a material omission that "deceive[s] reasonable consumers." Doe v. SuccessfulMatch.com, 70 F. Supp. 3d 1066 (N.D. Cal. 2014). A plaintiff must plead reliance on the misrepresentation or omission. Princess Cruise Lines, Ltd. v. Superior Court, 179 Cal.App.4th 36, 46 (2009). To show reliance, the misrepresentation must relate to the allegedly defective part. See Tietsworth v. Sears, 720 F. Supp. 2d 1123, 1138 (N.D. Cal. 2010) (dismissing CLRA claim for misrepresentations, because the "affirmative representations pled in the SAC are either puffery or do not relate to the Machine's allegedly defective Electronic Control Boards"). Under an omission theory, the plaintiff must show that he "would have been aware" of the omitted information. Jekowsky v. BMW of N. Am., LLC, 2013 WL 6577293, at *5 (N.D. Cal. Dec. 13, 2013).
Plaintiff here appears to allege both a misrepresentation and an omission - namely, that Defendant advertised its products to be "of a particular quality which they are not" and that it failed to disclose the corrosion problem. See FAC ¶ 89. But both theories fail, because Plaintiff cannot plead any actual reliance. First, none of the misrepresentations alleged in the FAC relate to the defective coils, but rather are general statements about the HVAC machine. See FAC ¶¶ 41, 50. As to the alleged omission, Plaintiff has not explained how he would have been aware of the information about the coils even if Defendant had disclosed it. Indeed, Plaintiff does not explain what information he reviewed about this particular HVAC unit before purchasing his house, or even whether he knew what kind of air conditioning unit the house contained.
Plaintiff bases the omission claim on certain written information provided to him about the unit. See Opp. at 16; FAC Exhs. D & E (containing "Installation Instructions" and "Homeowner's Information"). But according to the FAC, he received this information "[a]long with his HVAC unit[.]" FAC ¶¶ 52-53. Therefore, Plaintiff was not aware of this information before he purchased the house, and - even if it contained the proper disclosures - it could not have changed his decision about whether to buy his house or how much to pay for it. See FAC ¶ 64. See also Sumer v. Carrier Corp., 2015 WL 3630972, at *2-*3 (N.D. Cal. June 10, 2015) (rejecting CLRA claim based on nearly identical theory in part because "this particular plaintiff never read" the statements allegedly misrepresenting and omitting information about the coils).
Plaintiff argues that a relaxed standard should apply for pleading an omission and that reliance should be "presumed." Opp. at 14-16. But these arguments are irrelevant, because the FAC itself forecloses a claim of reliance in stating that Plaintiff only received the allegedly deficient documents after he purchased the home. See FAC ¶¶ 52-53.
Because Plaintiff has identified no misrepresentations about the coils, and because he would not have been aware of any omitted warning (had it been disclosed), the Court dismisses Plaintiff's CLRA claim with prejudice. Given this conclusion, the Court does not reach the parties' further arguments about whether Defendant did actually disclose the problem to consumers and whether the alleged misrepresentations were mere puffery. Mot. at 11-15.
4. CFAL
Defendant argues that it cannot be liable for false advertising because the alleged statements forming the basis for this claim are mere puffery. Mot. at 15. Plaintiff counters that his allegations include "quantifiable statements of fact." Opp. at 7:3. Defendant's argument is correct.
A CFAL claim fails if the alleged advertising statements are puffery. In re Song Grand Wega KDF-E A10/A20 Series Rear Projection HDTV Television Litig., 758 F. Supp. 2d 1077, 1089 (S.D. Cal. 2010). The statements alleged in this case are that the HVAC units were "manufactured to some of the industry's toughest standards and are covered by some of the best warranties in the industry." FAC ¶ 41; Opp. at 7. These statements are indeed puffery. See, e.g., Fisher v. Monster Beverage Corp., 2013 WL 4804385, at *13 (C.D. Cal. July 9, 2013) (collecting cases identifying nonactionable puffery, including averments that a product is the "best technology," the best in the world, the "best quality ever," or is the "best mortgage rate possible," or that a company provides "better customer service" than its competitor); Tietsworth, 720 F. Supp. 2d at 1137 ("To the extent that Plaintiffs base their claim on the representations that Defendants did make, for example that the Machines were 'designed, manufactured and tested for years of dependable operations,' such representations are mere puffery . . . ."). See also Sumer, 2015 WL 758314, at *2 ("Carrier's general statements about the reliability and quality of its evaporator coils are non-actionable puffery."). Plaintiff's CFAL claim therefore fails.
5. Fraudulent Concealment
Plaintiff's claim for fraudulent concealment fails for the same reasons as his CLRA claim. That is, he cannot show that he relied on any misinformation. See Sumer, 2015 WL 3630972, at *1-*2 (rejecting similar claim for lack of reliance).
6. UCL
Plaintiff alleges that Defendant violated the unlawful and unfair prongs of the UCL. FAC ¶ 98. He cannot maintain this claim under the unlawful prong, because as described above, this Court has rejected all of Plaintiff's predicate claims. See Jordan v. Paul Fin., LLC, 745 F. Supp. 2d 1084, 1098 (N.D. Cal. 2010).
His claim for unfair practices fares no better. Plaintiff bases that claim on "promises that [the HVAC units were] 'durable, reliable, and easier to install and maintain.'" FAC ¶ 104. This alleged "promise" is puffery that cannot support a UCL claim. In re Sony Grand Wega, 758 F. Supp. 2d at 1089. He also bases the claim on the allegation that the coil replacement was "ineffective and merely delayed the ultimate complete failure of the HVAC unit[]." FAC ¶ 106. But that statement is fatally contradicted by the FAC's other allegations, namely that Defendant provided an aluminum coil, thus solving the corrosion problem. See FAC ¶¶ 34, 58. Plaintiff's UCL claim therefore fails in its entirety.
7. Unjust Enrichment
The parties contest whether unjust enrichment is a viable cause of action. Mot. at 19-20; Opp. at 20 (citing Johnson v. Harley-Davidson Motor Co. Grp., LLC, 2011 U.S. Dist. LEXIS 80011 (E.D. Cal. July 22, 2011)). Even assuming that it can be a cause of action, it fails here because Plaintiff has not adequately pled any predicate claim. See Johnson, 2011 U.S. Dist. LEXIS 80011, at *18 ("Unjust enrichment [] is not a separate cause of action, but depends upon the viability of the other claims. Since Plaintiffs plead viable claims for strict products liability, unfair business practices, fraudulent business practices, negligent design, breach of warranty, and violations of the CLRA, the unjust enrichment claim survives as an alternative theory of recovery.") (citing Sanders v. Apple, Inc., 672 F. Supp. 2d 978, 989 (N.D. Cal. 2009)).
8. Declaratory Relief
Plaintiff bases his declaratory relief claim on the "actual controversy . . . regarding marketing and sale of [Defendant's] defective HVAC units." FAC ¶ 157. As described above, there is no "actual controversy" because Plaintiff has failed to state any claim on which relief could be granted. The Court dismisses this claim as well.
III. ORDER
For the reasons set forth above, the Court GRANTS WITH PREJUDICE Defendant's motion to dismiss all of Plaintiff's claims.
IT IS SO ORDERED. Dated: August 13, 2015
/s/ _________
JOHN A. MENDEZ,
UNITED STATES DISTRICT JUDGE