Opinion
Case No. 02-2406-JWL
April 10, 2003
MEMORANDUM ORDER
This breach of warranty and fraud action stems from plaintiff's purchase of a used car. In addition to asserting several state law claims, plaintiff, a citizen of Kansas, asserts a claim against defendants, also citizens of Kansas, pursuant to the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., ("Magnuson-Moss" or "the Act"). Defendants move to dismiss plaintiff's complaint for lack of subject matter jurisdiction (doc. #11). Specifically, defendants maintain that plaintiff has failed to meet the Act's requirement that the amount in controversy be at least $50,000. As set forth below, defendants' motion is granted and plaintiff's complaint is dismissed in its entirety.
Magnuson Moss confers federal jurisdiction only when the amount in controversy is at least $50,000. See 15 U.S.C. § 2310(d)(1)(B) (d)(3)(B). To justify dismissal of the claim for lack of jurisdiction, it must appear to a legal certainty that the claim is really for less than the jurisdictional amount. St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). On the other hand, if, from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed, the suit must be dismissed. Id. In determining whether the jurisdictional amount is satisfied, the court looks to the face of plaintiff's complaint, as plaintiff's claim for damages controls if that claim is apparently made in good faith. See Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1340 (10th Cir. 1998) (citing St. Paul Mercury, 303 U.S. at 288-89).
In her complaint, plaintiff asserts that she has sustained actual damages in excess of $25,000. Specifically, plaintiff claims that she purchased a 2000 Toyota Echo from defendants for the sum of $9000. According to plaintiff, defendants represented to her that the vehicle was worth more than $9000 (she states that the previous owners of the vehicle were paid $12,500 as the "full value" of the vehicle after it was "totaled" in a collision) when, in fact, the vehicle was worth virtually nothing in light of prior extensive damage to the vehicle that defendants failed to disclose to plaintiff. Plaintiff also claims that defendants told her that the vehicle was covered by a 36-month warranty which would cover all repair costs when, in fact, the vehicle is not covered by the warranty. According to plaintiff, she has suffered damages in the amount of $1054.99 for repair costs and she continues to incur monthly expenses for the vehicle. In sum, plaintiff claims that the actual value of the vehicle, coupled with the value of the 36-month warranty and other damages that plaintiff continues to incur puts plaintiff's actual damages beyond $25,000. Plaintiff also seeks punitive damages in excess of $75,000.
In their motion to dismiss, defendants urge that plaintiff's complaint reveals, at the very most, a claim for $15,000 in actual damages and, thus, that plaintiff can satisfy the amount-in-controversy requirement only if her claim for punitive damages may be counted along with her claim for actual damages. According to defendants, plaintiff's claim for punitive damages cannot be used in calculating the jurisdictional amount because the relevant state law does not allow for the recovery of punitive damages for a breach of warranty. Plaintiff contends that state law does permit the recovery of punitive damages for a breach of warranty and, thus, her claim for punitive damages can be used in calculating the jurisdictional amount.
Both parties apparently agree that punitive damages may not be included in the calculation of the jurisdictional amount for purposes of Magnuson Moss unless the pertinent state law permits punitive damages for a breach of warranty action. See Boyd v. Homes of Legend, Inc., 188 F.3d 1294, 1298 (11th Cir. 1999) (court must look to state law, rather than federal law, to determine whether punitive damages are available under Magnuson Moss); Boelens v. Redman Homes, Inc., 748 F.2d 1058, 1069 (5th Cir. 1984) (punitive damages are recoverable under Magnuson Moss for breach of warranty only if they may be recovered in a breach of warranty action brought under the governing state law); In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106, 1132 n. 44 (7th Cir. 1979) (although not deciding the issue, surmising that punitive damages would be available under Magnuson Moss to the extent authorized by state law). Both parties also agree that the relevant state law in this case is that of Kansas. The question, then, is whether Kansas law permits the recovery of punitive damages for breach of warranty.
Under Kansas's version of the Uniform Commercial Code (UCC), which appears to govern the transaction in this case, punitive damages are not recoverable. Specifically, K.S.A. § 84-1-106(1) states that:
The remedies provided by this act shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neither consequential or special nor penal damages may be had except as specifically provided in this act or by other rule of law.
See also Boyd, 188 F.3d at 1299 (looking to Alabama's identical provision of the U.C.C. and concluding that it did not permit recovery of punitive damages and, thus, district court erred when it considered punitive damages in calculation of jurisdictional amount under Magnuson Moss). The court finds nothing in other Kansas statutes or in the Kansas common law that would authorize an award of punitive damages under Magnuson Moss in this case. Under Kansas common law, punitive damages are not recoverable for breach of contract, even if the breach is intentional and unjustified. See Farrell v. General Motors Corp., 249 Kan. 241, 247 (1991). However, punitive damages are allowable if there is some independent tort present, id. (citing Equitable Life Leasing Corp. v. Abbick, 243 Kan. 513, 516 (1988)), and it is this rule upon which plaintiff relies.
It is evident from a review of the cases, however, that Kansas law awards punitive damages for the accompanying tort, not for the breach of contract itself. See, e.g., W-V Enterprises, Inc. v. Federal Sav. Loan Ins. Corp., 234 Kan. 354, 369 (1983) (noting that jury's finding of fraud was what supported the award of punitive damages in breach of contract case); Guarantee Abstract Title Co. v. Interstate Fire Casualty Co., 232 Kan. 76, 79-80 (1982) (punitive damages must be predicated on an independent tort that results in additional injury). To recover punitive damages, an independent tort must be separately pleaded and proved. See Equitable Life Leasing, 243 Kan. at 516 ("Breach of contract, standing alone, does not call for punitive damages, but such damages are allowed if an independent tort of fraud is proven."); Bowman v. Doherty, 235 Kan. 870, 882 (1984) (punitive damages may be recovered for a breach of contract when an independent tort is proven).
Thus, Kansas law does not permit the recovery of punitive damages for a breach of warranty per se. Plaintiff therefore may not count her claim for punitive damages toward satisfaction of the jurisdictional amount in controversy. See Boelens, 748 F.2d at 1070-71 (even though Texas law permitted recovery of punitive damages for breach of contract if the breach is accompanied by an independent tort, those damages were for the tort and not the breach itself; plaintiffs could not recover punitive damages for breach of warranty per se and thus were not permitted to count their claim for punitive damages toward satisfaction of the jurisdictional amount). Because plaintiff claims only $25,000 in actual damages, then, she has failed to meet the requisite amount in controversy for federal jurisdiction under Magnuson Moss and her complaint must be dismissed.
Although plaintiff has also pleaded an independent cause of action for fraud — for which punitive damages are available under Kansas law — that cause of action is a pendent state law claim and cannot be used to confer jurisdiction. See Boelens, 748 F.2d at 1071.
IT IS THEREFORE ORDERED BY THE COURT THAT defendants' motion to dismiss plaintiff's complaint for lack of subject matter jurisdiction (doc. #11) is granted and plaintiff's complaint is dismissed in its entirety.
IT IS SO ORDERED.