Donald Shonk v. Fountain Power Boats

Filing 920090716

UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 08-1450

DONALD SHONK, Plaintiff - Appellant, v. FOUNTAIN POWER BOATS; YANMAR AMERICA CORPORATION; MERCURY MARINE, Defendants - Appellees, and MACK BORING & PARTS COMPANY, Defendant.

Appeal from the United States District Court for the District of Maryland, at Baltimore. William D. Quarles, Jr., District Judge. (1:07-cv-00257-WDQ)

Argued:

May 12, 2009

Decided:

July 16, 2009

Before WILKINSON and KING, Circuit Judges, and HAMILTON, Senior Circuit Judge.

Affirmed by unpublished per curiam opinion.

ARGUED: James Daniel Scharville, KAHN & ASSOCIATES, LLC, Cleveland, Ohio, for Appellant. William Charles Bailey, Jr., SIMMS & SHOWERS, LLP, Baltimore, Maryland, for Appellee Fountain Power Boats; Walter Laurence Williams, WILSON, ELSER, MOSKOWITZ,

EDELMAN & DICKER, LLP, McLean, Virginia, for Appellee Yanmar America Corporation; Scott Michael Trager, SEMMES, BOWEN & SEMMES, Baltimore, Maryland, for Appellee Mercury Marine. ON BRIEF: J. Bradley Winder, Jr., KAHN & ASSOCIATES, LLC, Cleveland, Ohio, for Appellant. Stephen S. McCloskey, SEMMES, BOWEN & SEMMES, Baltimore, Maryland, for Appellee Mercury Marine; Jason R. Waters, WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER, LLP, McLean, Virginia, for Appellee Yanmar America Corporation.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM: This is a breach of warranty case involving a thirty-eight foot power boat (the Boat). Almost one and a half years after

Donald Shonk (Shonk) purchased the Boat, he filed the present civil action against Fountain Power Boats (Fountain),

manufacturer of the Boat, Yanmar America Corporation (Yanmar), manufacturer (Mercury), of the Boat's of the engines, Boat's and stern Mercury drives. Marine Shonk

manufacturer

alleged claims for breach of warranty under the Magnuson-Moss Warranty--Federal Trade Commission Improvement Act (the MMWA), 15 U.S.C. §§ 2301-2312, breach of warranty under the Maryland Uniform Commercial Code--Sales (the Maryland UCC), Md. Code

Ann., Commercial Law §§ 2-101 to 725, and unfair or deceptive trade practices in violation of the Maryland Consumer Protection Act (the Maryland CPA), Md. Code Ann., Commercial Law §§ 13-301, 408. 1 Below, the district court resolved all claims adverse to Shonk. Shonk now appeals the district court's: (1) Rule

12(b)(6) dismissal of his claims against Yanmar and Mercury, see

Shonk also initially named a fourth defendant, Mack Boring & Parts Company, which defendant the district court dismissed without prejudice early in the litigation, pursuant to a motion by Shonk. Because Mack Boring & Parts Company is not a party in the present appeal, we will not discuss it further.

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Fed. R. Civ. P. 12(b)(6); (2) the district court's refusal, on the ground of futility, to grant him leave to amend his

complaint in an attempt to bring Yanmar and Mercury back into the case; and (3) the district court's grant of summary judgment in favor of Fountain with respect to his MMWA claim. in toto. We affirm

I. According to Shonk's opening brief on appeal, in August 2005, he "purchased from the [B]oat for a substantial in sum of

$325,751.76," Maryland. 2

American

Performance

Marine,

Edgewater,

(Shonk's Opening Br. at 5).

Almost one year later,

in July 2006, Shonk reported to American Performance Marine that the exhaust coupler on the Boat's starboard engine had failed, resulting in substantial damage to the Boat's engines. In

In support of this statement, Shonk cites to page 128 of the Joint Appendix, which is a document entitled "MARINE PURCHASE AGREEMENT." (J.A. 128). Such document, dated August 5, 2005, purports to be the written agreement whereby Shonk purchased the Boat from American Performance Marine. The document lists the retail price of the Boat at $427,455.58, but the cash sale price at $325,751.76. Although the point is not relevant to the issues on appeal, we note that in Shonk's initial complaint and in every version of the complaint he proposed thereafter, Shonk alleges either that the "price of the [Boat] and/or the total of payments is approximately $427,455.58," (J.A. 14-15, 75), or that "[t]he [B]oat was a substantial purchase for Plaintiff costing approximately $427,455.58," (J.A. 152). Shonk offers no explanation in his appellate briefing for the discrepancy.

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September

2006,

Shonk

hired

John

Zahn

(Zahn)

of

All

States

Marine Surveyors to inspect the Boat in order "to determine the cause of the failure of the exhaust coupler on the starboard engine and the extent of damage to both engines." In his written that report, Zahn stated, failure under of (J.A. 563). the the heading starboard

"Conclusion"

"[c]atastrophic

engine to exhaust system coupler, caused both engines to ingest large amounts of salt laden air, causing severe corrosion of the intake systems." (J.A. 564). And although Zahn reported under

the heading "Findings: General" that "[v]isual inspection of the damaged coupler revealed a split, 4 inches long in what appeared to be a seam from the manufacturing process[,]" he reported in the very next sentence that "[t]he cause of the split is

unknown." same

(J.A. 563). Zahn

Also in the "Conclusion" section of the that "[i]nspection of the exhaust

report,

stated

coupler revealed no cause of failure."

(J.A. 564).

On December 19, 2006, Shonk filed the present civil action in Maryland state on court, the which of Fountain timely of removed to

federal

court

basis

diversity

citizenship

jurisdiction. 3

See 28 U.S.C. § 1332.

We have satisfied ourselves that the district court correctly determined that it possessed subject matter jurisdiction pursuant to 28 U.S.C. § 1332.

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Shonk's initial complaint (the Initial Complaint) alleged one count under the MMWA, one count under the Maryland UCC, and one count under the Maryland CPA. In each count, Shonk

indiscriminately used the term "Defendant." Yanmar and Mercury each moved to be dismissed from the case for failure of the Initial Complaint to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). Shonk

opposed the motions, but in the alternative, moved for leave to file an amended complaint which pluralized the term Defendant throughout (the Proposed First Amended Complaint). The district court granted Yanmar and Mercury's respective Rule 12(b)(6) motions and denied Shonk's motion to amend as

futile.

Shonk and Fountain then consented to proceed before a

United States magistrate judge for all remaining proceedings, including entry of final judgment. See 28 U.S.C. § 636(c)(1).

The district court entered an order of reference in this regard. Id. Still hoping to get Yanmar and Mercury back in the case, Shonk filed a second motion to amend his complaint (the Proposed Second Amended newly Complaint). alleged that The Proposed Second Amended Boat,

Complaint

Fountain

manufactured

the

Yanmar manufactured the Boat's engines, and Mercury manufactured the Boat's stern drives. also listed Shonk's The Proposed Second Amended Complaint under - 6 the MMWA against Fountain,

claims

Yanmar,

and

Mercury

in

separate

counts.

The

other

claims

remained lumped together.

For example, Shonk's claims under the

Maryland UCC against Fountain, Yanmar, and Mercury were still listed in a single count. Of relevance in this appeal, Shonk's

claims against Yanmar and Mercury under the MMWA, the Maryland CPA, and the Maryland UCC continued to focus solely upon the Boat. The magistrate judge denied the motion without prejudice, because the motion failed to comply with the Local Rule

requiring a party to serve a copy of the amended pleading in which stricken and new material is identified. 103.6(c) (D.Md. 2004). See Local Rule

Shonk then refiled the motion; this time Yanmar inter

attempting to cure the violation of Local Rule 103.6(c). and Mercury opposed the refiled motion on the ground,

alia, that allowing Shonk to file the Proposed Second Amended Complaint Nonetheless, would the prejudice magistrate them judge and granted would the be futile. thus

motion,

permitting Shonk to file the Proposed Second Amended Complaint. Although Yanmar and Mercury had never consented to proceed before a magistrate judge, they filed timely objections to the magistrate judge's grant of Shonk's motion to file the Proposed Second Amended Complaint. See Fed. R. Civ. P. 72(a). At this

point, the district court vacated its earlier order of reference to the magistrate judge. Upon - 7 consideration of Yanmar and

Mercury's challenge to the magistrate judge's grant of Shonk's motion to file the Proposed Second Amended Complaint, the

district court concluded, in a Memorandum Opinion filed January 16, 2008, that the magistrate 593). In judge's reaching decision this was "clearly the

erroneous."

(J.A.

conclusion,

district court reasoned as follows: On June 26, 2007, this Court dismissed Yanmar and Mercury as defendants and denied [Plaintiff's] motion for leave to amend, asserting that the proposed amendment was futile because it failed to state a claim against Yanmar and Mercury. In ruling on dispositive matters, the Magistrate Judge must rely on this Court's prior adjudication of claims. The Magistrate Judge's order contradicted this Court's prior ruling and substantially prejudiced those dismissed from the case. Even if the Magistrate Judge had the authority to grant the amendment, the proposed amendment should have been denied as futile. There are no substantive differences between [Plaintiff's] proposed Amended Complaint, which was denied by this Court as legally insufficient, and his proposed Second Amended Complaint. Accordingly, Yanmar and Mercury's objections will be sustained. (J.A. 593-94). In an order accompanying its Memorandum Opinion,

the district court dismissed Yanmar and Mercury from the case. In the meantime, Shonk and Fountain had conducted

discovery. all claims.

Fountain ultimately moved for summary judgment on On March 5, 2008, the district court granted

Fountain summary judgment with respect to Shonk's claim under the MMWA (the only remaining that it federal only claim in the case). matter

Mistakenly

believing

possessed

subject

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jurisdiction over the remaining two state law claims against Fountain pursuant to 28 U.S.C. § 1367(a), the district court dismissed such claims pursuant to 28 U.S.C. § 1367(c). Shonk noted a timely appeal. On appeal, Shonk contends the

district court erred in dismissing his claims against Yanmar and Mercury as pleaded in the Initial Complaint. Alternatively, he

contends the district court abused its discretion in refusing to permit him to proceed in the case under the Proposed Second Amended court's Complaint. grant of Finally, summary Shonk in challenges favor of the district with

judgment

Fountain

respect to his claim under the MMWA.

II. We first address Shonk's contention that the district court erred in dismissing, pursuant to Rule 12(b)(6), his claims under the MMWA, the Maryland UCC, and the Maryland CPA, against Yanmar and Mercury, as pleaded in the Initial Complaint. that follow, Shonk's contention is without merit. We review Rule 12(b)(6) dismissals de novo. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). Giarratano v. For reasons

To survive a Rule

12(b)(6) motion, "a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937,

1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. - 9 -

544, 570 (2007)).

"A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "Threadbare recitals of the elements

of a cause of action, supported by mere conclusory statements, do not suffice." Id. Rather, "[f]actual allegations must be

enough to raise a right to relief above the speculative level . . . ." Twombly, 550 U.S. at 555.

Also of relevance to the district court's Rule 12(b)(6) dismissals Federal follows: Paragraphs; Separate Statements. A party must state its claims . . . in numbered paragraphs, each limited as far as practicable to a single set of circumstances. A later pleading may refer by number to a paragraph in an earlier pleading. If doing so would promote clarity, each claim founded on a separate transaction or occurrence . . . must be stated in a separate count . . . . Fed. R. Civ. P. 10(b). of Shonk's of Civil claims against Yanmar and Mercury provides is as

Rule

Procedure

10(b),

which

A.

Breach of Warranty Claims Under the MMWA Against Yanmar and Mercury.

In relevant part, the MMWA provides that "a consumer who is damaged by the failure of a supplier [or] warrantor . . . to comply with any obligation under this chapter, or under a

written warranty [or] implied warranty . . . may bring suit for - 10 -

damages

and

other

legal

and

equitable

relief--

. . .

in

an 15

appropriate district court of the United States . . . ." U.S.C. § 2310(d) (emphasis added). "consumer," in relevant part, as

The MMWA defines the term "a buyer (other than for

purposes of resale) of any consumer product, any person to whom such product is transferred during the duration of an implied or written warranty . . . applicable to the product, and any other person who is entitled by the terms of such warranty . . . or under applicable State law to enforce against the warrantor

. . . the obligations of the warranty . . . ." (emphasis added).

Id. § 2301(3)

In turn, the MMWA defines the term "consumer

product," in relevant part, as "any tangible personal property which is distributed in commerce and which is normally used for personal, family, or household purposes . . . ." Id.

§ 2301(1)(emphasis added). The district court dismissed Shonk's claims under the MMWA against Yanmar and Mercury because the Initial Complaint failed to identify a consumer product supplied or manufactured by

Yanmar or Mercury. Mercury supplied

Implicitly conceding that neither Yanmar nor nor manufactured the Boat, Shonk argues on

appeal that the district court erred in dismissing his claims under the MMWA against Yanmar and Mercury, because "when a

specific boat is identified, Yanmar and Mercury should be able to determine what role they played in the manufacture of the - 11 -

specific

boat

by

tracing

a

serial

number

or

otherwise."

(Shonk's Opening Br. at 14). Shonk's First, it contention his is fatally at flawed Rule in two respects. stage to

ignores

burden

the

12(b)(6)

allege sufficient factual matter "to raise a right to relief above the speculative level . . . ." Twombly, 550 U.S. at 555.

At best, Shonk's allegations in the Initial Complaint pertaining to his claims under the MMWA against Yanmar and Mercury

constitute "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements," which

decisively fail to meet his pleading burden. at 1940. Second, Shonk's contention

Iqbal, 129 S. Ct. Rule 10(b)'s

ignores

mandate to state, in a separate count, each claim founded on a separate transaction or occurrence, "[i]f doing so would promote clarity." Fed. R. Civ. P. 10(b). Given the fact that Fountain

manufactured the Boat, Yanmar manufactured the Boat's engines, and Mercury manufactured the Boat's stern drives, each claim under the MMWA against Fountain, Yanmar, and Mercury should have been stated in a separate count. doubted that the district court Accordingly, it cannot be properly dismissed Shonk's

claims against Yanmar and Mercury under the MMWA, as pleaded in the Initial Complaint. We, therefore, affirm the district

court's dismissal of those claims.

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B.

Deceptive and Unfair Trade Practices Claims Under the Maryland CPA Against Yanmar and Mercury. relevant may bring part, an the Maryland to CPA provides for that or "any loss

In person

action

recover

injury

sustained by him as a result of a practice prohibited by this title." Md. Code Ann., Commercial Law § 13-408(a). As pleaded

in the Initial Complaint, Shonk's claims under the Maryland CPA all pertain to the sale of the Boat. that in connection with the sale For example, Shonk alleges of the Boat, "Defendant's

representation that the [Boat] contained a valid warranty, which would cause effective warranty repairs to be made within a

reasonable time and within the warranty period, was untrue." (J.A. 19). With one irrelevant exception, each violation of the

Maryland CPA alleged by Shonk in the Initial Complaint requires that the defendant have made the untrue representation about a "[c]onsumer good[]." Md. Code Ann., Commercial Law § 13-

301(2)(i), (iv). Here, the district court dismissed Shonk's claims under the Maryland CPA against Yanmar and Mercury, because the Initial Complaint failed to identify a consumer good sold to Shonk by Yanmar or Mercury. Shonk relies upon the same arguments in

challenge of the district court's dismissal of his claims under the Maryland CPA against Yanmar and Mercury as he does with respect to the district court's dismissal of his claims under

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the MMWA against Yanmar and Mercury.

We reject such arguments

upon the same rationale that we just outlined in affirming the district court's dismissal of Shonk's claims under MMWA against Yanmar and Mercury. The Initial Complaint cannot be reasonably

read to identify a consumer good sold to Shonk by Yanmar or Mercury. of Accordingly, we affirm the district court's dismissal claims under the Maryland CPA against Yanmar and

Shonk's

Mercury.

C.

Breach of Warranty Claims under the Maryland UCC Against Yanmar and Mercury.

Shonk's claims under the Maryland UCC against Yanmar and Mercury are for breach of express and implied warranties. Code Ann., Commercial Law §§ 2-313 to 315. Md.

The express and

implied warranty provisions of the Maryland UCC relied upon by Shonk apply only "to transactions in goods . . . ." 102. See also id. §§ 2-313 to 315. The claims because warranted district under the by the court dismissed UCC Shonk's breach Yanmar to In of and warranty Mercury, a to good such Id. § 2-

Maryland

against failed

Initial Yanmar

Complaint or

identify challenge

Mercury.

dismissals, Shonk once again relies upon his arguments about how Yanmar and Mercury should be able to determine what role they played in the manufacture of the specific boat by tracing a

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serial number or otherwise.

We remain unimpressed with such

arguments and reject them on the same grounds that we previously rejected them in the context of his claims under the MMWA and the Maryland CPA against Yanmar and Mercury. affirm the district court's the dismissal Maryland of Accordingly, we breach Yanmar of and

Shonk's against

warranty Mercury.

claims

under

UCC

III. Shonk next challenges, as an abuse of discretion, the

district court's refusal to permit him to proceed in the case under the Proposed Second Amended Complaint. is without merit. Under Federal Rule of Civil Procedure 15(a)(2), the Shonk's challenge

district "court should freely give leave [to amend] when justice so requires." Fed. R. Civ. P. 15(a)(2). We have recognized

that leave to amend a complaint should be denied only when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would be futile. Edwards v. City of Goldsboro, 178 F.3d 231, We review a district court's denial of Id.

242 (4th Cir. 1999).

leave to amend a complaint for abuse of discretion.

Here, the district court refused to grant Shonk leave to proceed in the case under the Second Amended Complaint on the - 15 -

ground agree.

that

permitting

such

amendment

would

be

futile. 4

We

To be sure, the Proposed Second Amended Complaint is far

more detailed than the Initial Complaint or the Proposed First Amended Complaint. For example, the Proposed Second Amended

Complaint identified Fountain as the manufacturer of the Boat, Yanmar as the manufacturer of the Boat's engines, and Mercury as the manufacturer of the Boat's stern drives. Unfortunately for

Shonk, however, the additional detail is insufficient to render the Proposed Second Amended Complaint non-futile. Shonk's

claims against Yanmar and Mercury under the MMWA, the Maryland CPA, and the Maryland UCC continued to focus solely upon the Boat. warranty For example, although Yanmar Shonk under set the forth MMWA his in a breach of

claim

against

separate

count, he did not allege that the Boat's engines were consumer products under the MMWA. Rather, he alleged that the Boat

(which the Proposed Second Amended Complaint identifies Fountain as having manufactured and warranted) is a consumer product

under the MMWA.

Because neither Yanmar nor Mercury manufactured

nor warranted the Boat (per Shonk's allegations in the Proposed Second Amended Complaint), Shonk's sole focus on the Boat in his Because we uphold the district court's refusal to grant Shonk leave to proceed under the Proposed Second Amended Complaint on the ground of futility, we do not reach the district court's alternative holding that the magistrate judge overstepped his authority in initially granting Shonk leave to proceed under the Proposed Second Amended Complaint.
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claims against Yanmar and Mercury rendered the Proposed Second Amended Complaint futile. Accordingly, we uphold, as not an

abuse of discretion, the district court's refusal to grant Shonk leave to proceed under the Second Amended Complaint.

IV. Lastly, Shonk challenges the district court's grant of

summary judgment in favor of Fountain with respect to his breach of warranty claim under the MMWA. Plaintiff's challenge is

without merit. We review the district court's grant of summary judgment de novo. (4th Blaustein & Reich, Inc. v. Buckles, 365 F.3d 281, 286 Cir. 2004). the A motion for the summary judgment and should be

granted

"if

pleadings,

discovery

disclosure

materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." 56(c). Fed. R. Civ. P.

"In determining whether a genuine issue of material fact

exists, we must view the evidence in the light most favorable to the nonmoving party." 78, 82 (4th Cir. 2009). In analyzing the merits of Fountain's motion for summary judgment with respect to Shonk's breach of warranty claim under the MMWA, the district court first concluded that resolution of - 17 American Arms Int'l v. Herbert, 563 F.3d

whether

the

Boat's

engines

and

the

exhaust

coupler

were

defectively designed or manufactured required knowledge beyond that of average Next, laymen, the and therefore, court held required that the expert expert

testimony.

district

testimony of Zahn of All States Marine Surveyors proffered by Shonk did not carry his burden of proof on the issue. We affirm on the reasoning of the district court. First,

we agree with the district court that the manufacturing and/or design defects at issue in this case required specialized

knowledge in the fields of mechanics and engineering "beyond the ken of the average layman." Virgil V. Kash N' Karry Serv. Second, we

Corp., 484 A.2d 652, 656 (Md. Ct. Spec. App. 1984).

agree with the district court that the proffered testimony of Shonk's expert witness Zahn was insufficient to carry his burden of proof. Although Zahn conducted an inspection of the Boat "to

determine the cause of the failure of the exhaust coupler on the starboard engine and the extent of the damage to both engines," he could not identify 343). the the cause In of the Zahn exhaust coupler's that, of

failure.

(J.A. of

fact, coupler

concluded no

"[i]nspection

exhaust

revealed

cause

failure." (J.A. 344).

As such, Zahn could not give any opinion,

beyond sheer speculation, as to whether any defect in the Boat existed when it left Fountain's control.

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In sum, we affirm the district court's grant of summary judgment in favor of Fountain with respect to Shonk's breach of warranty claim under the MMWA. 5

V. In conclusion, we affirm: (1) the district court's Rule 12(b)(6) dismissals of Shonk's claims against Yanmar and

Mercury; (2) the district court's refusal to permit Shonk to proceed in the case under the Proposed Second Amended Complaint; and (3) the district court's grant of summary judgment in favor

We note that, in a footnote in its Memorandum Opinion of March 5, 2008, the district court mentioned an alternative ground for granting summary judgment in favor of Fountain with respect to Shonk's breach of warranty claim under the MMWA. Specifically, the district court held that "[e]ven if Shonk had demonstrated that the engine and exhaust were defective, these components are not covered by Fountain's warranty." (J.A. 620). Given our holding, we need not and do not reach this alternative ground.

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of Fountain with respect to his breach of warranty claim under the MMWA. 6 AFFIRMED

One last matter, not raised by either party, is worthy of attention. The district court possessed original jurisdiction over all claims in this case pursuant to diversity jurisdiction. See 28 U.S.C. § 1332. Accordingly, when the district court declared that it "obtained supplemental jurisdiction over Shonk's state law claims based upon his MMWA claim," (J.A. 621 n.7), the district court was mistaken. Concomitantly, the district court was mistaken in believing that it possessed discretion under 28 U.S.C. § 1367(c)(3) to dismiss Shonk's claims under the Maryland UCC and the Maryland CPA against Fountain. The district court should have addressed such claims on the merits. We nonetheless affirm the district court's adverse disposition of these claims, because they are merely derivative of Shonk's failed breach of warranty claim under the MMWA against Fountain.

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