Gustafson v. Goodman Manufacturing Company LP et al
Filing
22
ORDER granting 10 Defendants' Motion to Dismiss. Plaintiff's claims are dismissed. Plaintiff is given leave to amend as to his breach of express warranty claim only. Plaintiff's amended complaint, should he choose to file one, shall be filed on or before May 19, 2014. Signed by Judge H Russel Holland on 4/28/2014.(ALS)
WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
JAMES GUSTAFSON, on behalf of himself
and all other persons similarly situated,
)
)
)
Plaintiff,
)
)
vs.
)
)
GOODMAN MANUFACTURING COMPANY )
L.P., and GOODMAN GLOBAL, INC.,
)
)
Defendants.
)
___________________________________________)
No. 3:13-cv-8274-HRH
(Prescott Division)
ORDER
Motion to Dismiss
Defendants move to dismiss plaintiff’s complaint.1 This motion is opposed.2 Oral
argument was requested but is not deemed necessary.
Background
Plaintiff is James Gustafson. Defendants are Goodman Manufacturing Company,
L.P. and Goodman Global, Inc.
1
Docket No. 10.
2
Docket No. 20.
-1-
Plaintiff alleges that “[i]n or around 2010, [he] purchased a remodeled home” and
that “[s]oon thereafter, [he] purchased two Goodman Products for the purpose of cooling
and heating his home” from Carey’s Air Conditioning, Heating & Plumbing.3 Plaintiff
alleges that he paid “approximately $16,000“ for the two Goodman Products.4 Plaintiff’s
Goodman Products came with a “Limited Warranty” which provides that “[t]his heating
or air conditioning unit is warranted by Goodman Manufacturing Company ... to be free
from defects in materials and workmanship that affect performance under normal use and
maintenance[.]”5 The Limited Warranty further provides that “Goodman will furnish a
replacement part, without charge for the part only, to replace any part that is found to be
defective due to workmanship or materials under normal use and maintenance.”6 The
Limited Warranty does “not apply to labor, freight, or any other cost associated with the
service, repair or operation of the unit.”7 The Limited Warranty applies for ten years if the
owner registers his unit, but only applies for five years if the owner does not register his
3
Class Action Complaint at 4, ¶ 12 & 13, ¶ 47, Docket No. 1.
4
Id. at 13, ¶ 47.
5
Limited Warranty at 1, Exhibit A, Class Action Complaint, Docket No. 1.
6
Id.
7
Id.
-2-
unit.8 Plaintiff has not alleged that he registered his unit, but plaintiff does allege that he
purchased “an Extended 10-Year Warranty covering parts and labor for the two Goodman
Products.”9
Plaintiff alleges that after he purchased the two Goodman Products, “[o]ver the next
24 months, [his] Goodman Products regularly failed to emit cool air and, therefore, failed
to cool his house.”10 Plaintiff alleges that he contacted Carey’s “no fewer than 12 separate
times to fix his Goodman Products....”11 Plaintiff alleges that each time, “a technician
would come out and repair the Goodman Units, either by replacing leaked Freon in the
Goodman Products, repair[ing] or replac[ing] any defective parts, or any other such repair
deemed necessary.”12 Plaintiff alleges that because his “Goodman Products were under
warranty, Carey’s did not charge for labor or the repairs it performed.”13 Plaintiff alleges
that in 2013, he “became so frustrated with the failure of his Goodman Products..., he
8
Id.
9
Class Action Complaint at 13, ¶ 47, Docket No. 1.
10
Id. at ¶ 48.
11
Id.
12
Id.
13
Id.
-3-
purchased a Bi-Annual Maintenance Agreement ... from River Valley Air Conditioning, Inc.
for both of his Goodman Products at a total cost of $266.00.”14
Plaintiff alleges that the leakage of refrigerant in the Goodman Products was caused
by defective evaporator coils.15 He further alleges that “the refrigerant leakage is due to
a defect in the design and manufacturing of the Goodman Products that existed from the
date of manufacture” and that “[d]efendants knew about the defects in the Goodman
Products.”16 Plaintiff alleges that “Goodman provided certain of its distributors a $300
allowance for each Goodman Product they sold because the refrigerant leakage problem
was so widespread.”17
Plaintiff alleges that he was not alone in his frustration with defendants’ products.
In his complaint, plaintiff includes numerous negative comments about defendants’
products that other consumers posted on the internet.18 Plaintiff also includes comments
posted by service technicians who “criticized the poor quality of Goodman products....”19
14
Id. at 13-14, ¶ 49.
15
Id. at 1, ¶ 3.
16
Id. at 1, ¶ 4 & 2, ¶ 8.
17
Id. at 2, ¶ 8.
18
Id. at 14-21, ¶ 52.
19
Id. at 21-22, ¶ 53.
-4-
On November 20, 2013, plaintiff commenced this action. Plaintiff brings this action
“on behalf of himself and all persons and/or entities in Arizona who purchased air
conditioners, air handlers, and heat pumps manufactured by Goodman Manufacturing Co.,
L.P. under the trade names Goodman® and Amana® ... between November 20, 2009 [and]
November 20, 2013, [and] who incurred damages as a result of having to repair their
Goodman Products due to leakage of refrigerant.”20 In his Class Action Complaint,
plaintiffs alleges a breach of express warranty claim and an Arizona Consumer Fraud Act
(ACFA) claim.
Pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure, defendants now move
to dismiss plaintiff’s claims.
Discussion
“Rule 12(b)(6) authorizes courts to dismiss a complaint for ‘failure to state a claim
upon which relief can be granted.’” In re Rigel Pharmaceuticals, Inc. Securities Litig., 697
F.3d 869, 875 (9th Cir. 2012) (quoting Fed. R. Civ. P. 12(b)(6)). “To avoid dismissal, the
complaint must provide ‘more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.’” Id. (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007)). “[A] plaintiff must ‘allege sufficient factual matter ... to state a claim
to relief that is plausible on its face.’” OSU Student Alliance v. Ray, 699 F.3d 1053, 1061 (9th
20
Id. at 1, ¶ 1 (footnote omitted).
-5-
Cir. 2012) (quoting Pinnacle Armor, Inc. v. United States, 648 F.3d 708, 721 (9th Cir. 2011)).
“In evaluating a Rule 12(b)(6) motion, the court accepts the complaint’s well-pleaded
factual allegations as true and draws all reasonable inferences in the light most favorable
to the plaintiff.” Adams v. U.S. Forest Srvc., 671 F.3d 1138, 1142-43 (9th Cir. 2012).
Defendants first argue that plaintiff has failed to state plausible claims because
plaintiff has not alleged that he suffered any damages. Damages are an essential element
of both plaintiff’s breach of express warranty claim and of his ACFA claim. See Dillon v.
Zeneca Corp., 42 P.3d 598, 602 (Ariz. Ct. App. 2002) (the plaintiffs’ breach of express
warranty claim based on statement made by sales rep failed because they suffered no loss
as a result of the statement); Grand v. Nacchio, 147 P.3d 763, 782 n.16 (Ariz. Ct. App. 2006)
(“element of consumer fraud action is showing of ‘consequent and proximate injury’”).
Defendants argue that plaintiff has not alleged any damages because he has alleged
that Carey’s did not charge for any labor or parts and thus he has not alleged that he
suffered any out-of pocket losses. Defendants argue that the $266 that plaintiff alleges he
paid for the preventative maintenance contract cannot be considered an out-of-pocket loss
because plaintiff chose to incur this cost voluntarily and because the Limited Warranty
provides that Goodman Manufacturing is not responsible for “normal maintenance” or for
“[d]amages or repairs required as a result of any improper ... maintenance....”21 Defendants
21
Limited Warranty at 1, Exhibit A, Class Action Complaint, Docket No. 1.
-6-
also argue that plaintiff’s damages cannot be based on any contention that he incurred
labor costs because the Limited Warranty provides that it does “not apply to labor, freight,
or any other cost associated with the service, repair or operation of the unit.”22
In U.C.C. cases, “damages in cases of breach of warranty are ordinarily measured
by the difference between the actual value of the article sold and its value if it were as
warranted.” Downs v. Shouse, 501 P.2d 401, 406 (Ariz. Ct. App. 1972). Actual damages
in a consumer fraud case include out-of-pocket expenses. Holeman v. Neils, 803 F. Supp.
237, 242 (D. Ariz. 1992) (citing Parks v. Macro-Dynamics, Inc., 591 P.2d 1005, 1009 (Ariz. Ct.
App. 1979)).
Plaintiff has adequately alleged that he suffered actual damages as a result of
defendants’ breach of warranty and violation of the ACFA.23 Plaintiff has alleged that he
had to have his Goodman Products repaired twelve times in a two-year period. A
reasonable inference that can be drawn from this fact is that the value of the products
plaintiff purchased may have been different from their value if they were free of defects as
warranted. Plaintiff has also alleged that he incurred out-of-pocket expenses in the amount
of $266. Although plaintiff voluntarily purchased the maintenance contract, he alleges that
he did so because of “the failure of his Goodman Products to perform as expected and
22
Id.
23
Because plaintiff’s allegations of actual damages are sufficient, the court need not
address defendants’ argument regarding incidental or consequential damages.
-7-
advertised[.]”24 Based on these allegations, it is plausible that plaintiff suffered actual
damages as a result of defendants’ alleged conduct. Whether or not plaintiff can prove the
damages he alleges is an issue to be determined when the merits of plaintiff’s complaint are
before the court.
But even if plaintiff has adequately alleged damages, which he has, defendants
argue that his breach of express warranty claim must still be dismissed because he has not
adequately alleged that defendants breached the Limited Warranty. The Limited Warranty
provides that “[a]s its only responsibility, and your only remedy, Goodman will furnish
a replacement part, without charge for the part only, to replace any part that is found to
be defective due to workmanship or materials under normal use and maintenance.”25 To
state a plausible breach of express warranty claim, defendants argue that plaintiff must
allege that defendants “refused or otherwise failed to pay” for any replacement parts.
Chaurasia v. General Motors Corp., 126 P.3d 165, 169 (Ariz. Ct. App. 2006); see also, Baba
v. Hewlett Packard Co., Case No. C 09–5946 RS, 2012 WL 5336971, at *7 (N.D. Cal. Oct. 26,
2012) (quoting Chaurasia, 126 P.3d at 169) (under Arizona law, “HP cannot have breached
the warranty if it upheld its obligation to repair or replace the defective product. On the
other hand, if HP ‘refused or otherwise failed to pay for the repair to a covered item,’ it
24
Class Action Complaint at 13, ¶ 49, Docket No. 1.
25
Limited Warranty at 1, Exhibit A, Class Action Complaint, Docket No. 1.
-8-
would stand in breach”). Defendants argue that the allegations in plaintiff’s complaint
show that Goodman Manufacturing lived up to its warranty obligations because plaintiff
has alleged that each time he experienced a problem with his Goodman Products, he was
not charged for any parts that were needed to fix the problem. Defendants insist that
because plaintiff has alleged that he did not pay for any parts, he has failed to allege that
the Limited Warranty was breached.
Defendants are essentially arguing that plaintiff will not be able to prove a breach
of the Limited Warranty, but the question of whether plaintiff will be able to prove a breach
of the Limited Warranty goes to the merits of plaintiff’s claim, not to the adequacy of
plaintiff’s pleading. The question here is whether it is plausible, based on plaintiff’s
allegations, that defendants breached the Limited Warranty.
As to that question, plaintiff’s complaint contains sufficient factual allegations to
make his claim that defendants breached the Limited Warranty plausible. Plaintiff
expressly alleges26 that defendants breached the provision of the Limited Warranty which
states that “[t]his heating or air conditioning unit is warranted by Goodman Manufacturing
... to be free from defects in materials and workmanship that affect performance under
normal use and maintenance[.]”27 Plaintiff alleges that defendants breached this provision
26
Class Action Complaint at 27, ¶ 67, Docket No. 1.
27
Limited Warranty at 1, Exhibit A, Class Action Complaint, Docket No. 1.
-9-
because the Goodman Products contained defective evaporator coils that caused the
refrigerant to leak from the units thereby preventing normal use. These allegations are
sufficient to suggest that defendants breached the Limited Warranty.
Defendants next argue that plaintiff’s breach of express warranty claim fails because
plaintiff did not give proper notice of the alleged breach. To maintain a breach of warranty
claim in a U.C.C. case, “[t]he buyer must within a reasonable time after he discovers or
should have discovered any breach notify the seller of breach or be barred from any
remedy[.]” A.R.S. § 47-2607(C)(1).
The alleged breaching party must be given direct
notice, which can be accomplished by the filing of a complaint. Burge v. Freelife Int’l, Inc.,
Case No. CV 09–1159–PHX–JAT, 2009 WL 3872343, at *6 (D. Ariz. Nov. 18, 2009). But, the
complaint must be filed without reasonable delay. “Ordinarily, whether notice was given
within a reasonable time is a question of fact for the jury, ‘unless it appears that only one
finding can legally be derived from the circumstances.’” Id. at *5 (quoting Pace v.
Sagebrush Sales Co., 560 P.2d 789, 792 (Ariz. 1977)).
In Burge, the court held that complaints filed between 17 and 33 months after the
plaintiffs learned of the alleged breach were unreasonably delayed as a matter of law. Id.
at *6. In Hearn v. R.J. Reynolds Tobacco Co., 279 F. Supp. 2d 1096, 1116 (D. Ariz. 2003), the
court held that “two years constitutes unreasonably delayed notice.” And, in Pace, the
court found four months was an unreasonable delay. Pace, 560 P.2d at 792.
-10-
Here, plaintiff’s complaint was filed in 2013, at least two years after he discovered,
or should have discovered, the breach of warranty. Thus, as a matter of law, plaintiff’s
complaint was not filed within a reasonable time and it cannot serve as notice to
defendants.
Plaintiff contends, however, that his complaint was not the only direct notice he
gave. He contends that he provided direct notice to defendants in 2011 “when he spoke
to [d]efendants’ representatives in Texas about the problems he was experiencing with his
units.”28 Plaintiff contends that “[t]he Goodman claims representative provided [p]laintiff
with a reference case number for his complaints.”29 But, there are no allegations in
plaintiff’s complaint to support these contentions. Plaintiff’s complaint contains no
allegations about his having contacted defendants’ representatives in 2011.
Plaintiff also argues that defendants received direct notice of the problems he was
having with his Goodman Products each and every time Carey’s replaced a part because
defendants were providing the parts. But there are no allegations in his complaint to
support this contention. Plaintiff has not alleged that Carey’s had to contact defendants
each time it needed a replacement part and this would not be a reasonable inference to
draw from the factual allegations in plaintiff’s complaint. It is just as likely that Carey’s
28
Plaintiff’s Opposition to Defendants’ Motion to Dismiss the Complaint at 9, Docket
No. 20.
29
Id.
-11-
had a supply of parts on hand and had no need to contact defendants when it repaired
plaintiff’s units.
In sum, plaintiff has not alleged that he gave defendants notice of the alleged breach
of warranty within a reasonable time. Thus, plaintiff has not stated a plausible breach of
express warranty claim, and this claim is dismissed. Plaintiff will be given leave to amend
as to this claim because it is possible that he will be able to allege that he gave defendants’
direct notice of the alleged breach of warranty within a reasonable time.
Defendants next argue that even if plaintiff adequately alleged damages, which he
has, his ACFA claim still fails because it is barred by the statute of limitations. ACFA
claims are subject to a one-year statute of limitations. Murry v. W. Amer. Mortg. Co., 604
P.2d 651, 654 (Ariz. Ct. App. 1979). “A cause of action under the ACFA accrues when the
consumer discovered or with reasonable diligence could have discovered both the ‘what’
and ‘who’ elements of the fraud.” Burge, 2009 WL 3872343, at *7 (quoting Lawhon v. L.B.J.
Institutional Supply, Inc., 765 P.2d 1003, 1007 (Ariz. Ct. App. 1988)). This occurs when the
consumer knows whose products were involved and that the products were not
performing as expected. Id.
Plaintiff alleges that he bought his Goodman Products in 2010 and that over the next
24 months, he had to have them repaired twelve times. Based on these allegations, it is
clear that by at least 2011, plaintiff knew the “who” and “what” elements of his ACFA
-12-
claim. By at least 2011, plaintiff knew whose products were involved and that the products
were not performing as expected. Because plaintiff did not file his complaint until
November 2013, his ACFA claim is barred by the statute of limitations,30 and this claim is
dismissed. Plaintiff will not be given leave to amend as to this claim because any
amendment would be futile. Carrico v. City and County of San Francisco, 656 F.3d 1002,
1008 (9th Cir. 2011).
Conclusion
Defendants’ motion to dismiss31 is granted. Plaintiff’s claims are dismissed. Plaintiff
is given leave to amend as to his breach of express warranty claim only. Plaintiff’s
amended complaint, should he choose to file one, shall be filed on or before May 19, 2014.
DATED at Anchorage, Alaska, this 28th day of April, 2014.
/s/ H. Russel Holland
United States District Judge
30
Because plaintiff’s ACFA claim is barred by the statute of limitations, the court
need not consider defendants’ particularity and failure to disclose arguments or
defendants’ argument based on Sullivan v. Pulte Home Corp., 290 P.3d 446, 454 (Ariz. Ct.
App. 2012).
31
Docket No. 10.
-13-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?