Steve Oddo v. United Technologies Corporation

Filing 57

MINUTES (IN CHAMBERS) - DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' AMENDED CLASS ACTION COMPLAINT 40 by Judge Christina A. Snyder: The Court DISMISSES without prejudice claims 1 (to the extent plaintiffs plead breach of express warranty), 4, 9, 14, 18, 21, 24, and 27. The Court GRANTS Carriers motion to dismiss the following claims: 1 (to the extent plaintiffs plead breach of implied warranty), 10, 12, 15, 19, 22, 25, and 28. The Court DISMISSES claims 1, 10, 15, 19, 22, 25, and 28 wi thout prejudice, and DISMISSES claim 12 with prejudice. The Court DISMISSES without prejudice claims 2, 5, 6, 7, 8, 11, 13, 16, 17, 20, 23 and 26 to the extent such claims rely on alleged misrepresentations. To the extent Carrier's motion contes ts the specificity of plaintiffs' pleadings, the Court DENIES Carrier's motion to dismiss Oddo, Lamm, Kimball, Klinge, and Gallagher's fraudulent omission and concealment claims. However, the Court GRANTS Carrier's motion to dismi ss Reardon and LaSala's fraudulent omission and concealment claims and, therefore, DISMISSES without prejudice claims 2, 5, 11, and 13 in relation to Reardon and LaSala to the extent such claims rely on alleged omissions or concealment. The Cour t DENIES Carrier's motion to dismiss plaintiffs' fraudulent omission and concealment claims to the extent Carrier seeks dismissal on the basis of disclosure of the TXV issue. The Court DISMISSES without prejudice claims 2 and 5 with respect to Reardon, LaSala, and Lamm because those claims are barred by the economic loss doctrine. The Court DISMISSES with prejudice claims 2 and 5 with respect to Kimball and Gallagher because plaintiffs concede that these claims are barred by the econom ic loss doctrine. The Court DISMISSES without prejudice claims 6, 8, 11, 13, 16, 17, 20, 23, and 26 to the extent these claims are based on allegations that Carrier sold defective HVAC systems with an insufficient warranty and imposed "repairs&q uot; that caused further damage. The Court DISMISSES without prejudice claim 3 with respect to Reardon, LaSala, Lamm, Kimball, Klinge, and Gallagher. The Court DENIES Carrier's motion to dismiss claim 3 in relation to Oddo. Plaintiffs shall have 14 days from the date of this order to file a second amended complaint addressing the deficiencies identified herein. Court Reporter: Not Present. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

Present: The Honorable 
Catherine Jeang 
Deputy Clerk 

CHRISTINA A. SNYDER 

N/A 

Tape No.

Attorneys Present for Defendants: 

Not Present 
Court Reporter / Recorder

Attorneys Present for Plaintiffs: 

Not Present 
Not Present 
(IN CHAMBERS) - DEFENDANTS’ MOTION TO DISMISS
Proceedings:  
PLAINTIFFS’ AMENDED CLASS ACTION COMPLAINT (Dkt.
40, filed May 9, 2016)

I.

INTRODUCTION

On November 25, 2015, plaintiff Steve Oddo filed a putative class action against
defendant United Technologies Corporation (“UTC”) in this Court. Dkt. 1. On February
12, 2016, defendant UTC filed a motion to dismiss plaintiff’s complaint. Dkt. 19. On
February 18, 2016, both parties agreed that, in lieu of responding to the UTC’s motion,
Oddo would file an amended complaint pursuant to Rule 15. Dkt. 24. On March 7,
2016, Oddo and additional plaintiffs Rajene Reardon, Anthony LaSala, Linda Lamm,
Keith Kimball, Norman Klinge, and Dan Gallagher, filed the operative amended
complaint against UTC, and added defendants Arcoaire Air Conditioning and Heating
(“Arcoaire”), Carrier Corporation (“Carrier”), Bryant Heating and Cooling Systems
(“Bryant”), Comfortmaker Air Conditioning and Heating (“Comfortmaker”), and
International Comfort Products, LLC (“ICP”). Dkt. 27 (“AC”). In brief, plaintiffs allege
injury arising from manufacturing defects in heating, ventilation, and air conditioning
units (“HVAC units”) manufactured by ICP, which purportedly causes a sludge or tar to
form in the system, making it likely that the HVAC units will fail at some point in the
future. Id. ¶¶ 1–2.
Plaintiffs assert the following claims in the operative complaint: (1) violations of
the Magnuson-Moss Warranty Act (“MMWA”); (2) negligent misrepresentation;
(3) unjust enrichment; (4) breach of contract of warranty; (5) fraudulent concealment;
(6) violations of California’s unfair competition law (“UCL”), Cal. Bus. & Prof. Code
§§ 17200 et seq.; (7) false and misleading advertising, Cal. Bus. & Prof. Code §§ 17500
et seq.; (8) violations of the California Consumer Legal Remedies Act (“CLRA”);

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

(9) breach of express warranty, Cal. Com. Code § 2313; (10) violations of the SongBeverly Act; (11) violation of the Arizona Consumer Fraud Act (“ACFA”); (12) breach
of implied warranty, Ariz. Rev. Stat. § 47-2314; (13) violations of the Florida Deceptive
and Unfair Trade Practices Act (“DUPTA”); (14) breach of express warranty, Fla. Stat.
§ 672.313; (15) breach of implied warranty of merchantability, Fla. Stat. § 672.314;
(16) violations of the Georgia Uniform Deceptive Trade Practices Act (“GA UDTPA”);
(17) violations of the Georgia Fair Business Practices Act (“GFBPA”); (18) breach of
express warranty, O.C.G.A. § 11-2-313; (19) breach of implied warranty of
merchantability, O.C.G.A. § 11-2-314; (20) violations of Indiana Deceptive Consumer
Sales Act (“IDCSA”); (21) breach of express warranty, Ind. Code Ann. § 26-1-2-313;
(22) breach of implied warranty of merchantability, Ind. Code Ann. § 26-1-2-314;
(23) violations of the Maryland Consumer Protection Act (“Maryland CPA”); (24) breach
of express warranty, Md. Com. Code § 2-313; (25) breach of implied warranty of
merchantability, Md. Com. Code § 2-314; (26) violations of Missouri Merchandising
Practices Act (“MMPA”); (27) breach of express warranty, Mo. Rev. Stat. § 400.2-313;
and (28) breach of implied warranty, Mo. Rev. Stat. § 400.2-314.
On May 9, 2016, defendants filed the instant motion to dismiss plaintiffs’ AC.
Dkt. 40 (“MTD”). Plaintiffs filed an opposition on June 10, 2016, dkt. 43 (“Opp’n”), and
defendants filed a reply on June 27, 2016, dkt. 44 (“Reply”).
Having carefully considered the parties’ arguments, the Court finds and concludes
as follows.
II.

BACKGROUND

Plaintiffs allege the following facts. UTC manufactures and distributes heating
ventilation and air conditioning (“HVAC”) systems through its subsidiary, ICP. AC ¶ 56.
ICP is a wholly owned subsidiary of UTC and manufactures HVAC brands including, but
not limited to, Carrier, Bryant, Arcoaire, Comfortmaker, and Heil.1 Id. ¶ 57.

1

Defendants assert that Carrier Corporation is the proper defendant in this action
because UTC, Carrier’s parent entity, does not manufacture HVAC units and Arcoaire,
Bryant, Comfortmaker, and ICP do business as Carrier. MTD at 3 n.1. As a result, both
parties refer to defendants as “Carrier.” See Opp’n at 1 & n.1. Accordingly, the Court
likewise refers to defendants collectively as “Carrier.”

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

Plaintiffs seek to recover damages that arose from an alleged manufacturing defect
in their HVAC systems that has caused widespread failures of Thermal Expansion Valves
(“TXVs”) used in the units. Id. ¶ 1. The TXV “is a precision valve that controls the
expansion of refrigerant central to the cooling process.” Id. Plaintiffs allege that
[t]he defect arises from a chemical rust inhibitor added to the manufacturing
process . . . which was incompatible with the refrigerant and lubricating oil
used in the HVAC systems. The rust inhibitor reacts with the refrigerant
and/or oil and causes a tar or sludge to form when the systems are put into
service. This sticky substance then circulates through the system, and builds
up layers of deposits on the inside of the system. . . . [T]he tar can cause the
TXV to become stuck, rendering the system inoperable.
Id. Plaintiffs further aver that Carrier was aware of the defect as early as 2013, but
continued to sell affected units “unabated.” Id. ¶ 4. Carrier admitted the existence of the
manufacturing defect in dealer service bulletins (“DSBs”) in 2014, but did not pull the
affected systems from the shelves of distributors. Id. Plaintiffs allege that Carrier did not
distribute the DSBs publicly, therefore consumers and contractors were not made aware
of the defect. Id.
Carrier’s HVAC systems are sold with a ten-year limited parts warranty if the
consumer registers the units, otherwise the limited warranty lasts five years. Id. ¶ 30.
According to plaintiffs, Carrier’s “purported solution for the manufacturing defect
under their warranty program does not cure the defect.” Id. ¶ 19. Carrier initially
provided replacement TXVs and a labor credit of $400 between July 2014 and October
2014. Id. ¶ 20. On October 23, 2014, plaintiffs allege that Carrier adopted a new
approach by providing to contractors a new chemical, A/C Re-New, that was supposed to
break apart the sludge in systems. Id. A/C Re-New was provided at no cost and in
conjunction with a $195 labor credit. Id. Plaintiffs contend, however, that both of these
courses of action fail to completely remedy the defect—the existence of chemical
impurities in the HVAC system. Id. ¶¶ 22–23. Moreover, plaintiffs assert that “A/C ReNew merely adds more contamination” and that “[t]he long-term effects of this so-called
fix are, at best, unknown. Id. ¶¶ 23, 25. Plaintiffs aver that “the injection of A/C ReNew itself may shorten the lifespan of the equipment or cause other issues in the future,
after the warranty has expired, while the original contamination still remains in the

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

system.” Id. ¶ 25. One of Carrier’s DSB even warns that a second injection of A/C ReNew “could have negative long term system effects.” Id. ¶ 26.
According to plaintiffs, an adequate remedy would have included “flushing the
contaminated refrigerant and oil from the systems, replacing filters, and replacing TXV
valves.” Id. ¶ 27. However, Carrier is allegedly refusing to provide non-defective
replacements and/or fully compensate consumers and contractors. Id. ¶ 32. Plaintiffs
aver that Carrier’s inadequate warranty program shifts the costs associated with the
manufacturing defect onto consumers and contractors. Id. ¶ 27. Plaintiffs further assert
that limitations on their warranties are unconscionable because the defective HVAC units
fail within weeks or months of their installation and because customers “unknowingly
agreed to a grossly one-sided, warranty contract of adhesion, which they had no
opportunity to negotiate.” Id. ¶ 32.
Plaintiffs allege that Oddo, a resident of California, purchased a new Arcoairebranded HVAC system in May 2015. Id. ¶ 36. Plaintiffs aver that, “[p]rior to his
purchase, Oddo extensively reviewed Arcoaire’s website and marketing materials . . . .
The materials that Oddo reviewed advertised that Arcoaire systems are “ BUILT TO
LAST” and that the system he purchased was “high efficiency” and capable of up to a 16
Seasonal Energy Efficiency Ratio (“SEER”). Id. None of those materials disclosed the
existence of a manufacturing defect. If they had, Oddo would not have purchased the
system. Id. In addition, Oddo was unaware of Carrier’s DSBs at the time of his
purchase. Id. In August 2015, Oddo’s system failed as a result of a “sticking TXV,” and
per the manufacturer’s recommendation, Oddo had his HVAC unit injected with A/C ReNew. Id. ¶ 37. Oddo claims that, due to the manufacturing defect in his HVAC system,
his energy bills have increased and he has incurred out-of-pocket expenses for the
injection of A/C Re-New. Id. On September 8, 2015, Oddo—through his counsel—sent
a certified letter “to Warranty Claims, P.O. Box 4808, Syracuse, NY 13221, stating that,
‘UTC and/or its subsidiaries have failed to comply with the terms of their express
warranties by failing to replace the defective systems and/or component parts.’” Id. ¶ 38.
In the letter, which is attached to the operative complaint, Oddo stated that UTC has
violated the California Consumer Legal Remedies Act, the Magnusson-Moss Warranty
Act, and other state statutory and common law. Dkt. 27-1 (“Oddo Letter”). Oddo
demanded, inter alia, that UTC “[r]eplace the defective HVAC Systems, or all such parts
(including refrigerant and oil) as are necessary to fully remove all contaminants” and

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

“[c]ompensate Claimant and all purchasers and contractors who incurred costs and/or
labor to repair defective systems.” Id.
Reardon, a resident of Arizona, purchased a new home in October 2013 which
came with two brand-new Carrier HVAC systems included. Id. ¶ 39. Plaintiffs allege
that Reardon received product information from her home builder regarding the HVAC
systems indicating that they were capable of up to 16 SEER. Id. However, this
information did not disclose the existence of the manufacturing defect. Had the
information disclosed a defect, plaintiffs aver that Reardon would have insisted that her
home builder provide a non-defective system. Id. In addition, Reardon was unaware of
Carrier’s DSBs at the time of her purchase. Id. Soon after Reardon began using the
systems in April 2015, she allegedly noticed that one of the systems was blowing hot air
and contacted an authorized contractor. Id. ¶ 40. On May 1, 2015, the contractor
replaced the TXV, pumped out the refrigerant, added new refrigerant, and then installed a
new filter so that there would not be any “cross contamination.” Id. Although the parts
were provided under the warranty, the labor was not, such that Reardon allegedly paid
$885 “for the diagnostic visit and labor costs to fix her Carrier system.” Id.
LaSala, a resident of Florida, purchased a new Carrier HVAC unit in April 2014.
Id. ¶ 41. LaSala received product information along with his new system, which
advertised that his unit was capable of up to of up to 15 SEER. Id. Plaintiffs asserts that
LaSala was unaware of Carrier’s DSBs at the time of purchase and the product
information he received failed to disclose the existence of a manufacturing defect. Id.
LaSala would not have had the unit purchased and installed the HVAC unit had the
product information disclosed the existence of a manufacturing defect. Id. In the spring
of 2015, plaintiff LaSala’s HVAC system was allegedly not cooling, so he contacted the
contractor that had installed the unit, who then injected the unit with A/C Re-New. Id.
¶ 42. The contractor did not charge plaintiff LaSala for the additive or the labor, but he
informed LaSala that the A/C-Renew was “just a bandaid.” Id.
Lamm, a resident of Georgia, purchased two new Bryant HVAC systems costing
approximately $10,000 total in March 2015. Id. ¶ 43. Prior to purchase, Lamm reviewed
Bryant’s website, which stated that consumers who purchased the same model would
“enjoy reliable, whole-home comfort” and that the model was “designed to operate
consistently and quietly with SEER ratings of 15 or higher.” Id. The Certificate of
Product Ratings for Lamm’s system states that it has a 16 SEER. Id. Neither the Bryant

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

website nor the Certificate of Product Ratings disclosed the existence of a defect. Id.
Plaintiffs allege that Lamm would not have purchased her HVAC units if that material
had disclosed a defect. Id. In addition, Lamm was unaware of Carrier’s DSBs at the time
of her purchase. Id. In June 2015, Lamm’s downstairs system allegedly completely shut
down. Id. ¶ 44. On June 25, 2015, an authorized contractor dispatched a service
technician to her home, who reported injecting A/C Re-New as part of Bryant protocol.
Id. Concerned about the long term effects of A/C Re-New, Lamm contacted Bryant
customer service on July 8, 2015, who told her that they did not know what the long term
effects of A/C Re-New would be. Id. Nonetheless, A/C Re-New was added to Lamm’s
system. Id.
Kimball, a resident of Maryland, purchased and installed a new Bryant HVAC
system on March 2013. Id. ¶ 45. Plaintiffs allege that, prior to Kimball’s purchase,
Kimball reviewed Bryant brochures that he received from his installer and reviewed
Bryant’s website. Id. The system he purchased was advertised as being capable of up to
22 SEER. Id. None of the Bryant documents disclosed the existence of a manufacturing
defect. Id. If they had, Kimball would not have purchased the system. Id. In addition,
Kimball was unaware of Carrier’s DSBs at the time of his purchase. Id. In May 2015,
Kimball’s system allegedly failed to blow cool air. Id. ¶ 46. An authorized contractor
advised that repair “would entail installation of a new valve, draining of old refrigerant,
adding new refrigerant and a purging of the system with nitrate to clear all contaminants,
costing Kimball $900.” Id. Unwilling to incur such out-of-pocket-expenses, Kimball
contacted another technician, who charged him $411 to install a new TXV and filter
dryer. Id. Kimball has noticed that his system’s performance is slowly declining. Id.
Klinge, a resident of Missouri, purchased a Comfortmaker HVAC system in April
2015. Id. ¶ 47. Prior to purchase, plaintiffs allege that Klinge reviewed the system’s
product efficiency and capacity information. Id. Klinge’s system was advertised as
being capable of 13 SEER which is also stated in the product specifications booklet he
received at the time of purchase. Id. None of these materials disclosed the existence of a
manufacturing defect. Id. If they had, Klinge would not have purchased his system. Id.
In addition, Klinge was unaware of Carrier’s DSBs at the time of the purchase and
installation of his system. Id. In the summer of 2015, Klinge’s noticed that his system
was not working properly. Id. ¶ 48. Klinge called the authorized installer, who
recommended adding approximately four ounces of refrigerant, but this did not solve the
problem. Id. Klinge called another service technician, who diagnosed the problem as a

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

“sticking TXV.” Id. In September 2015, a technician replaced the TXV, which Klinge
purchased. Id. However, the system allegedly continued to fail, such that the service
technician injected it with A/C Re-New. Id. Klinge has incurred approximately $433 in
out-of-pocket expenses, and avers that even after the system was injected with A/C ReNew, it has failed to operate properly. Id. Klinge contacted Comfortmaker’s customer
service but was told that they would not do anything about this problem and would not
reimburse him for his out-of-pocket expenses. Id.
Gallagher, a resident of Indiana, purchased a new Bryant HVAC system in May
2014. Id. ¶ 49. Gallagher reviewed Bryant’s website and marketing materials prior to
purchase. Gallagher’s system was advertised as being capable of up to 16 SEER but at
installation it was specified as 13 SEER because of a lack of certain equipment on the
existing furnace/air handler. Id. None of the documents disclosed the existence of a
manufacturing defect. If they had, Gallagher would not have purchased the unit. Id. In
addition, Gallagher was unaware of Carrier’s DSBs at the time of his purchase.
Gallagher’s unit allegedly had two system failures within 90 days of being turned on. Id.
¶ 50. On the first failure, the indoor coil iced up and the service technician replaced the
TXV. Four hours later, the same failure occurred. Id. In response, the service technician
replaced the TXV and the indoor coil. Id. Gallagher contacted Bryant by phone on
August 26, 2014, but Bryant allegedly did not reveal the ongoing TXV problem. Id. In
early May 2015, Gallagher’s system allegedly stopped working, and it was serviced and
injected with A/C Re-New. Id.
III.

LEGAL STANDARD

A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of the claims asserted in a complaint. Under this Rule, a district court
properly dismisses a claim if “there is a ‘lack of a cognizable legal theory or the absence
of sufficient facts alleged under a cognizable legal theory.’” Conservation Force v.
Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep’t,
901 F.2d 696, 699 (9th Cir. 1988)). “While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to
provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

“Factual allegations must be enough to raise a right to relief above the speculative level.”
Id. (internal citations omitted).
In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all
material allegations in the complaint, as well as all reasonable inferences to be drawn
from them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be
read in the light most favorable to the nonmoving party. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to
dismiss can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.”
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service,
572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the
non-conclusory ‘factual content,’ and reasonable inferences from that content, must be
plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately,
“[d]etermining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 556 U.S. at 679.
Unless a court converts a Rule 12(b)(6) motion into a motion for summary
judgment, a court cannot consider material outside of the complaint (e.g., facts presented
in briefs, affidavits, or discovery materials). In re American Cont’l Corp./Lincoln Sav. &
Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev’d on other grounds sub nom
Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court
may, however, consider exhibits submitted with or alleged in the complaint and matters
that may be judicially noticed pursuant to Federal Rule of Evidence 201. In re Silicon
Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999); Lee v. City of Los Angeles,
250 F.3d 668, 689 (9th Cir. 2001).
As a general rule, leave to amend a complaint which has been dismissed should be
freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when “the
court determines that the allegation of other facts consistent with the challenged pleading
could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture
Co., 806 F.2d 1393, 1401 (9th Cir. 1986); see Lopez v. Smith, 203 F.3d 1122, 1127 (9th
Cir. 2000).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

IV.

DISCUSSION
A.

Plaintiffs’ Warranty Claims

In the AC, plaintiffs bring fifteen breach of warranty claims against Carrier:
(1) violations of the Magnuson-Moss Warranty Act (“MMWA”); (2) breach of contract
of warranty; (3) breach of express warranty, Cal. Com. Code § 2313; (4) violations of the
Song-Beverly Act; (5) breach of implied warranty, Ariz. Rev. Stat. § 47-2314; (6) breach
of express warranty, Fla. Stat. § 672.313; (7) breach of implied warranty of
merchantability, Fla. Stat. § 672.314; (8) breach of express warranty, O.C.G.A. § 11-2313; (9) breach of implied warranty of merchantability, O.C.G.A. § 11-2-314; (10)
breach of express warranty, Ind. Code Ann. § 26-1-2-313; (11) breach of implied
warranty of merchantability, Ind. Code Ann. § 26-1-2-314; (12) breach of express
warranty, Md. Com. Code § 2-313; (13) breach of implied warranty of merchantability,
Md. Com. Code § 2-314; (14) breach of express warranty, Mo. Rev. Stat. § 400.2-313;
and (15) breach of implied warranty, Mo. Rev. Stat. § 400.2-314. The MMWA creates a
civil cause of action for consumers to enforce the terms of implied or express warranties.
See 15 U.S.C. § 2310(d). Thus, plaintiffs’ claims under the MMWA “stand or fall with
[plaintiffs’] express and implied warranty claims under state law.” Clemens v. Daimler
Chrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008).
Carrier contends that plaintiffs’ breach of warranty claims fail on several grounds:
(1) several plaintiffs do not properly allege that they submitted a warranty claim to
Carrier; (2) Carrier complied with its obligations under the express warranty; (3) the
express warranty is valid and enforceable; (4) plaintiffs cannot alter or expand the
express warranty; (5) plaintiffs’ implied warranty claims fail because their units are
operational; and (6) plaintiffs Reardon, LaSala, and Lamm cannot bring implied warranty
claims because they lack privity. MTD at 8–24.
1.

Express Warranty Claims

“A warranty is a contractual promise from the seller that the goods conform to the
promise. If they do not, the buyer is entitled to recover the difference between the value
of the goods accepted by the buyer and the value of the goods had they been as
warranted.” Daugherty v. Am. Honda Motor Co., Inc., 144 Cal. App. 4th 824, 830
(2006); see also Martin v. Medtronic, Inc., 63 F. Supp. 3d 1050, 1060 (D. Ariz. 2014);
Aprigliano v. Am. Honda Motor Co., Inc., 979 F. Supp. 2d 1331, 1340–41 (S.D. Fla.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

2013); Cline v. Advanced Neuromodulation Sys., Inc., 914 F. Supp. 2d 1290, 1296 (N.D.
Ga. 2012); Paper Mfrs. Co. v. Rescuers, Inc., 60 F. Supp. 2d 869, 882 (N.D. Ind. 1999);
Stanley v. Cent. Garden & Pet Corp., 891 F. Supp. 2d 757, 764–65 (D. Md. 2012);
Arthus v. Medtronic, Inc., 123 F. Supp. 3d 1145, 1151 (E.D. Mo. 2015).
In their complaint, plaintiffs assert that Carrier breached the express warranty
provided with each of the HVAC systems. AC ¶ 123. The warranty provides: “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.” Id. Carrier also allegedly warranted that its HVAC systems were capable of
performing to the advertised SEER rating. Id. Plaintiffs aver that Carrier breached this
contract by failing to replace defective parts, including stuck TXVs and the HVAC
systems. Id. ¶ 124. Instead of replacing defective parts, plaintiffs contend that Carrier
injected A/C ReNew, which further devalues the systems and presents a likelihood of
future problems and reduced longevity. Id. Plaintiffs assert that Carrier’s failure to purge
the system of the contaminants that degrade the efficiency of the systems causes a
likelihood of reoccurrence in the future, perhaps after Carrier’s warranties have expired.
Id. Plaintiffs contend that Carrier’s limited warranty is “unconscionable and fails in its
essential purpose.” Id. ¶ 175.
In the instant motion, Carrier argues that plaintiffs’ express warranty claims fail
because: (1) Oddo, LaSala, Kimball, and Klinge do not properly allege that they
submitted a warranty claim to Carrier; (2) the express warranty is valid and enforceable;
(3) Carrier complied with its obligations under the express warranties; and (4) plaintiffs
cannot alter or expand the express warranties. MTD at 8–19.
a.

Proper Submission of a Warranty Claim

The MMWA and the laws of California (Oddo), Florida (LaSala), Maryland
(Kimball), and Missouri (Klinge) require consumers to provide the manufacturer with an
opportunity to cure a failure to comply with a warranty before the consumer may bring an
action for breach of warranty. See 15 U.S.C. § 2310(e) (“No action . . . may be brought .
. . for failure to comply with any obligation under any written or implied warranty or
service contract . . . unless the person obligated under the warranty or service contract is
afforded a reasonable opportunity to cure such failure to comply.”); Cal. Com. Code
§ 2607(3)(A) (“The buyer must, within a reasonable time after he or she discovers or

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CIVIL MINUTES - GENERAL

Page 10 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

should have discovered any breach, notify the seller of breach or be barred from any
remedy”); Md. Code Ann., Com. Law § 2-607(3)(A) (same); Mo. Ann. Stat. § 400.2607(3)(a) (same); Fla. Stat. Ann. § 672.607(3)(a) (same).
Carrier argues that LaSala,2 Kimball, and Klinge provided no notice to Carrier that
it failed to comply with the warranty. MTD at 10. Carrier further argues that Oddo’s
pre-litigation notice to Carrier that he intended to file a class action under the Consumer
Legal Remedies Act (“CLRA”) (1) did not constitute notice that provided Carrier with an
opportunity to cure and (2) does not constitute notice on behalf of LaSala, Kimball, and
Klinge. Id. at 10–11. Carrier contends that the CLRA letter serves a different purpose
than notice pursuant to the warranty. Reply at 4. According to Carrier, the CLRA could
not have provided the necessary notice with respect to Oddo because his unit had already
been repaired. Id.; see AC ¶ 37 (“Per the manufacturer’s recommendation, his system
was injected with A/C Re-New. . . . The original chemical contaminant and now
additional chemical contaminants remain in Oddo’s HVAC system.”).
Plaintiffs argue that they “are required only to provide notice in the manner
required by the warranty itself” and the relevant warranties required only that the
consumer contact the installer, a service technician, or a Carrier dealer to obtain warranty
service or repair. Opp’n at 6. Plaintiffs contend that LaSala, Kimball, and Klinge
contacted their installers and an authorized contractor in compliance with the warranty.
Id. According to plaintiffs, the dealers and distributors are the entities that are expected
to notify Carrier of the warranty claims. Id. at 6 n.10. Plaintiffs further argue that none
of the relevant state laws require direct notice to the manufacturer. However, plaintiffs
recognize that “before pursing any legal rights or remedies” the relevant warranties
required owners to “notify the Company in writing, by certified or registered letter . . . of
any defect or complaint.” Id. at 7; see dkt. 40-1, Request for Judicial Notice (“RJN”)
Exs. 1–7 (warranties).3 Plaintiffs argue that Oddo’s September 8, 2015 letter satisfied

2

Carrier repeatedly refers to Lamm in this section of their brief, though it appears
that Carrier intends to refer to LaSala. See MTD at 10.
3

Carrier requests that the Court take judicial notice of the warranties. See RJN.
Plaintiffs have not objected nor disputed the accuracy of the documents. “Even if a
document is not attached to a complaint, it may be incorporated by reference into a
complaint if the plaintiff refers extensively to the document or the document forms the

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

this provision in the relevant warranties. In the letter, Oddo asserted that “UTC and/or its
subsidiaries have failed to comply with the terms of their express warranties by failing to
replace the defective systems and/or component parts,” and demanded, inter alia, the
replacement of “the defective HVAC Systems, or all such parts (including refrigerant and
oil) as are necessary to fully remove all contaminants.” Oddo Letter.
The statutory notice requirements are intended to permit manufacturers to cure a
defect before owners initiate legal action. See, e.g., Cardinal Health 301, Inc. v. Tyco
Elecs. Corp., 169 Cal. App. 4th 116, 135 (2008) (“This notice requirement [of Cal. Com.
Code § 2607(3)(A)] is designed to allow the seller the opportunity to repair the defective
item, reduce damages, avoid defective products in the future, and negotiate
settlements.”); Gen. Matters, Inc. v. Paramount Canning Co., 382 So. 2d 1262, 1264 (Fla.
Dist. Ct. App. 1980) (“The notice enables the seller to make adjustments or replacements
or to suggest opportunities for cure to the end of minimizing the buyer’s loss and
reducing the sellers’ own liability to the buyer.” (quotation marks omitted)); Tietsworth
v. Sears, 720 F. Supp. 2d 1123, 1143 (N.D. Cal. 2010) (interpreting the MMWA and
noting: “In order for a manufacturer to respond to a problem with a consumer’s product,
it first must be notified of the occurrence of the problem.”). The parties are correct that
plaintiffs’ notice obligation is set forth by statute and supplemented by the warranties.
Opp’n at 5–6; Reply at 3; see Bailey v. Monaco Coach Corp., 350 F. Supp. 2d 1036,
1043 (N.D. Ga. 2004), aff’d, 168 F. App’x 893 (11th Cir. 2006) (to determine whether a
warranty was breached, looking to “the requirements imposed by Florida law,
supplemented by the terms of the Limited Warranty”). The warranties unequivocally
require notice that “stat[es] the defect or complaint and a specific request for repair,
replacement, or correction of the product under warranty, mailed at least thirty (30) days
before pursuing any legal rights or remedies.” RJN Exs. 1–7 (emphasis added). Oddo’s
letter to UTC did not provide such notice with respect to his own HVAC system because

basis of the plaintiff's claim.” United States. v. Ritchie, 342 F.3d 903, 908 (9th Cir.
2003). As plaintiffs refer extensively to the warranties in the AC and they form the basis
of their claims for breach of express warranty, the Court takes judicial notice of the
warranties. See Hoey v. Sony Elecs. Inc., 515 F. Supp. 2d 1099, 1103 (N.D. Cal. 2007)
(allowing judicial notice of express warranty); Weinstein v. Saturn Corp., No. 07-cv0348-MMC, 2007 WL 1342604, at *1 (N.D. Cal. May 8, 2007) (“Because the SAC relies
on the warranty and plaintiff has offered the relevant excerpts therefrom, the Court takes
judicial notice of the contents of the warranty.”).

CV-1985 (01/17)

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Page 12 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

Oddo’s system had already been injected with A/C Re-New and he does not allege that
his system continued to fail after that intervention. See AC ¶ 37. Indeed, in his letter,
Oddo did not ask UTC to cure any defect in his HVAC system. See Oddo Letter.
Rather, plaintiffs appear to concede that Oddo’s letter was intended to serve as the
statutorily required notice that Oddo intended to file a class action under the Consumer
Legal Remedies Act. See AC ¶ 168 (“In accordance with Cal. Civ. Code § 1782(a) &
(d), Oddo has provided Defendants with the appropriate notice and demand but
Defendants have failed to make any offer of Class-wide relief. Attached as Exhibit A is
Oddo’s CLRA notice letter.”). Moreover, the Court agrees with Carrier that Oddo’s letter
did not provide sufficient notice of the alleged defects in LaSala, Kimball, or Klinge’s
systems because the letter makes no mention of them at all. The relevant warranties
require “a specific request for repair, replacement, or other correction of the product.”
RJN Exs. 1–7. Oddo’s general request that UTC “[r]eplace the defective HVAC
Systems, or all such parts (including refrigerant and oil) as are necessary to fully remove
all contaminants,” is not such a specific request with respect to his own system or the
systems of LaSala, Kimball, or Klinge.
Because Oddo, LaSala, Kimball, and Klinge did not afford Carrier with a
reasonable opportunity to cure their HVAC system defects, Oddo, LaSala, Kimball, and
Klinge failed to fulfill the terms of their express warranties. As a result, their express
warranty claims fail. Accordingly, the Court GRANTS Carrier’s motion to dismiss
Oddo, LaSala, Kimball, and Klinge’s claims for express breach of warranty and
DISMISSES those claims without prejudice.
b.

Validity and Enforceability of the Warranties

With respect to all plaintiffs except for Reardon, plaintiffs allege that their
remedies are not limited to those available in the warranties because the warranties are
unconscionable and fail of their essential purpose, and are therefore void.4 AC ¶¶ 175–
77; 219–21; 268–70; 300–02; 332–34; 362–64. Carrier, in turn, argues that the
warranties are valid and enforceable and contest plaintiffs’ arguments that the warranties
are unconscionable and fail of their essential purpose. MTD at 14.

4

Because Reardon does not allege that her warranty was unconscionable or fails of
its essential purpose, the Court does not address Arizona law in this subsection.

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CIVIL MINUTES - GENERAL

Page 13 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

i.

Unconscionability

Carrier argues that plaintiffs fail to allege facts that render Carrier’s warranty
unconscionable because plaintiffs do not allege that the warranty is both substantively
and procedurally unconscionable. Id. at 15. Carrier contends that the warranties,
including their limitations, are not substantively unconscionable because they do not
create an “overly harsh or one-sided result[] that shock[s] the conscience.” Id. (quoting
Berenblat v. Apple, Inc., Nos. 08-cv-4969 JF-PVT, 09-cv-1649-JF-PVT, 2010 WL
1460297, *5 (N.D. Cal. Apr. 9, 2010). In addition, Carrier asserts that the limited
warranties are not procedurally problematic because (a) plaintiffs do not allege they were
subject to undue pressure or that the terms were a surprise; (b) any disparity in bargaining
power is not sufficient to render the warranty procedurally unconscionable; and
(c) plaintiffs cannot plausibly allege there were no alternative air conditioner
manufacturers. MTD at 16.
Plaintiffs argue that the warranty is unconscionable because Carrier knowingly
distributed defective HVAC systems without disclosing the defect and at the same time
provided a take-it-or-leave-it warranty that does not cover the full costs of repair. Opp’n
at 9. Plaintiffs assert that other courts have found that other plaintiffs adequately alleged
unconscionability in virtually identical circumstances. Id. at 10. Courts reached the
contrary conclusion only where the plaintiffs either failed to allege defendants’ pre-sale
knowledge of the defect or the defect arose because of environmental variables. Id. at
10–11. Lastly, plaintiffs argue that the existence of alternative air conditioning
manufacturers is not, alone, dispositive of unconscionability. Id. at 11–12.
Unconscionability generally “has both a procedural and a substantive element, the
former focusing on oppression or surprise due to unequal bargaining power, the latter on
overly harsh or one-sided results.” Armendariz v. Found. Health Psychcare Servs., Inc.,
6 P.3d 669, 690 (2000) (quotation marks omitted). In California, Georgia, Florida, and
Maryland, both types of unconscionability must be present in order for a court to refuse
to enforce a contract. See id.; NEC Techs., Inc. v. Nelson, 478 S.E.2d 769, 771–72 (Ga.
1996) (recognizing that unconscionability generally has a procedural and substantive
aspect); Losapio v. Comcast Corp., No. 1:10-cv-3438-RWS, 2011 WL 1497652, at *6
(N.D. Ga. Apr. 19, 2011) (“For a contract to be unconscionable under Georgia law, there
must generally be both procedural and substantive unconscionability.” (citing NEC
Techs. , 478 S.E.2d at 773 n.6); Licul v. Volkswagen Grp. of Am., Inc., No. 13-cv-61686,

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Page 14 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

2013 WL 6328734, at *3 (S.D. Fla. Dec. 5, 2013) (applying Florida law and asserting
that “[a] contract or clause is unconscionable when it is both procedurally and
substantively unconscionable”); Freedman v. Comcast Corp., 190 Md. App. 179, 207–08
(2010) (“The prevailing view is that both procedural and substantive unconscionability
must be present in order for a court to invalidate a contractual term as unconscionable. . .
. Although this precise statement has only been made by a dissenting minority of the
Court of Appeals, we believe that it accurately reflects Maryland Law[.]”); Cicle v. Chase
Bank USA, 583 F.3d 549, 554 (8th Cir. 2009) (“Before a contract will be deemed
unenforceable on the grounds of unconscionability, a court applying Missouri law must
find it both procedurally and substantively unconscionable.”). By contrast, “[u]nder
Indiana law, a contract may be substantively unconscionable, procedurally
unconscionable, or both.” Jackson v. Bank of Am. Corp., 711 F.3d 788, 792 (7th Cir.
2013).
For a contract to be substantively unconscionable, the results must be so harsh as to
“shock the conscience.” Aron v. U-Haul Co. of California, 143 Cal. App. 4th 796, 808
(2006) (quotation marks omitted); see also Gainesville Health Care Ctr., Inc. v. Weston,
857 So. 2d 278, 284–85 (Fla. Dist. Ct. App. 2003) (“To determine whether a contract is
substantively unconscionable, a court must look to the terms of the contract, itself, and
determine whether they are so outrageously unfair as to shock the judicial conscience.”
(quotation marks omitted)); Johnson v. Wells Fargo Bank, N.A., No. 1:14-cv-02988LMM, 2015 WL 12591792, at *3 (N.D. Ga. June 17, 2015) (“Georgia law sets a high bar
for finding unconscionability. As the Georgia Supreme Court has explained, ‘[a]n
unconscionable contract is such an agreement as no sane man not acting under a delusion
would make, and that no honest man would take advantage of.’ Similarly stated,
[u]nconscionable conduct must shock the conscience.” (citation and quotation marks
omitted)); Shih Ping Li v. Tzu Lee, 62 A.3d 212, 235 (Md. Ct. Spec. App. 2013),
(“[U]nconscionability can be classified as . . . ‘substantive’ when the terms are so onesided as to ‘shock the conscience’ of the court.”) aff’d, 85 A.3d 144 (Md. 2014); cf.
Jackson, 711 F.3d at 792 (“In Indiana, an unconscionable contract is one that no sensible
man not under delusion, duress or in distress would make, and [that] no honest and fair
man would accept.” (quotation marks omitted); Cicle, 583 F.3d 549, 554 (“Missouri
courts have described an unconscionable agreement as one in which ‘no man in his
senses and not under delusion would make, on the one hand, and as no honest and fair
man would accept on the other,’ or one where there is ‘an inequality so strong, gross, and

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CIVIL MINUTES - GENERAL

Page 15 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

manifest that it must be impossible to state it to one with common sense without
producing an exclamation at the inequality of it.’”).
In the operative complaint, plaintiffs allege that their limited warranties are
substantively unconscionable primarily because the warranties limit the remedies
available and thus fails to make plaintiffs whole. AC ¶¶ 175, 176, 219, 220, 268, 269,
300, 301, 332, 333, 362, 363. The relevant warranties state: “if a part fails due to defect
during the applicable warranty period [Carrier] will provide a new or remanufactured
part, at [Carrier’s] option, to replace the defective part at no charge for the part.” RJN
Exs. 1–7. The warranties limit available remedies: “THIS WARRANTY DOES NOT
COVER . . . labor or other costs incurred for diagnosing, repairing, removing, installing,
shipping, servicing, or handling of either failed [or defective] parts, or replacement parts,
or new units.” Id.
The Court concludes that plaintiffs’ allegations that the warranties’ remedies are
limited are not sufficient to plead substantive unconscionability. The statutes governing
the relevant warranties expressly permit a seller to limit the remedies available to the
buyers. See Cal. Com. Code § 2719(1)(a) (“The agreement . . . may limit or alter the
measure of damages recoverable under this division, as by limiting the buyer’s remedies
to return of the goods and repayment of the price or to repair and replacement of
nonconforming goods or parts”); Fla. Stat. Ann. § 672.719(1)(a); Ga. Code Ann. § 11-2719(a)(1) (same); Ind. Code Ann. § 26-1-2-719 (same); Md. Code Ann., Com. Law § 2719(1)(a) (same); Mo. Ann. Stat. § 400.2-719(1)(a) (same). In addition, other courts
considering the same warranties determined that they were not substantively
unconscionable, “because the terms in no way shock the conscience.” Grassi v. Int’l
Comfort Prod., LLC, No. 1:15-cv-00253-JAM, 2015 WL 4879410, at *4 (E.D. Cal. Aug.
14, 2015) (quotation marks omitted); Sumer v. Carrier Corp., No. 14-cv-04271-VC, 2015
WL 758314, at *1 (N.D. Cal. Feb. 20, 2015) (“Sumer I”) (same).
Plaintiffs’ allegation of procedural unconscionability relies on their contention that
the “warranty is a contract of adhesion, presented solely on a take-it or leave-it basis,
which [plaintiffs] have no opportunity to negotiate.” AC ¶¶ 175, 219, 268, 300, 332, 362.
“[B]road allegations of procedural unconscionability, stating simply that there was
unequal bargaining power and there was lack of meaningful choice relating to the
limitations on the warranties,” are not sufficient to state a claim. Fisher v. Honda N.

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Page 16 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

Am., Inc., No. 13-cv-09285-JAK, 2014 WL 2808188, at *9 (C.D. Cal. June 12, 2014)
(quotation marks omitted).
In California, “[t]he procedural element of unconscionability focuses on two
factors: oppression and surprise. Oppression arises from an inequality of bargaining
power which results in no real negotiation and an absence of meaningful choice. Surprise
involves the extent to which the supposedly agreed-upon terms of the bargain are hidden
in a prolix printed form drafted by the party seeking to enforce the disputed terms.”
Aron, 143 Cal. App. 4th at 808 (citations omitted). To show oppression, California
courts consider whether the complaining party had “reasonably available sources of
supply from which to obtain desired goods or services free of the terms claimed to be
unconscionable.” Id. at 809 (quoting Dean Witter Reynolds, Inc. v. Superior Court 211
Cal. App. 3d 758, 768 (1989)). Here, plaintiffs do not allege that there were no
alternative air conditioning manufacturers from which Oddo could have obtained HVAC
systems. Nor do plaintiffs allege that Oddo was surprised by the terms of the warranty.
As a result, the Court concludes that plaintiffs have not adequately pleaded procedural
unconscionability with respect to Oddo. See Berenblat, 2010 WL 1460297, at *5
(concluding that plaintiffs failed to show a warranty is procedurally unconscionable, even
where the terms of the warranty were non-negotiable, because plaintiffs did not allege
they lacked other options for purchasing the relevant goods or for obtaining additional
warranty protection, and because plaintiffs did not claim that they were surprised by the
terms of the express warranty, which were prominent in the text).
Florida courts apply a balancing, or sliding scale approach to unconscionability.
Basulto v. Hialeah Auto., 141 So. 3d 1145, 1160 (Fla. 2014). Although “both the
procedural and substantive aspects of unconscionability must be present,” they need not
be present “to the same degree,” and “both should be evaluated interdependently rather
than as independent elements.” Id. at 1161. To determine procedural unconscionability
under Florida law, “courts must look to: (1) the manner in which the contract was entered
into; (2) the relative bargaining power of the parties and whether the complaining party
had a meaningful choice at the time the contract was entered into; (3) whether the terms
were merely presented on a “take-it-or-leave-it” basis; and (4) the complaining party’s
ability and opportunity to understand the disputed terms of the contract.” Pendergast v.
Sprint Nextel Corp., 592 F.3d 1119, 1135 (11th Cir. 2010). Here, plaintiffs do not allege
that LaSala purchased his HVAC unit under duress, that he lack a meaningful choice with
respect to purchasing HVAC systems, or that he did not have the ability or opportunity to

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CIVIL MINUTES - GENERAL

Page 17 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

understand the terms of the warranty. While it appears that the terms of the warranty
were presented on a “take-it-or-leave-it” basis, absent other indicia of procedural
unconscionability and absent substantive unconscionability, the Court concludes that
plaintiffs fail to adequately plead that LaSala’s warranty was unconscionable under
Florida’s sliding scale approach to unconscionability.
Pursuant to Georgia law, “[p]rocedural unconscionability addresses the process of
making the contract” and relevant factors include “the age, education, intelligence,
business acumen and experience of the parties, their relative bargaining power, the
conspicuousness and comprehensibility of the contract language, the oppressiveness of
the terms, and the presence or absence of a meaningful choice.” NEC Techs., 478 S.E.2d
at 771–72. With respect to procedural unconscionability, plaintiffs allege only that
Lamm had no opportunity to negotiate the warranty, thereby addressing the “bargaining
power” factor. However, Georgia—like Florida—appears to take a balancing approach
to unconscionability. See NEC Techs., 478 S.E.2d at 773 n.6 (“Research supports the
statement . . . that [m]ost courts take a ‘balancing approach’ to the unconscionability
question, and to tip the scales in favor of unconscionability, most courts seem to require a
certain quantum of procedural plus a certain quantum of substantive unconscionability.”
(citation omitted)). Therefore, absent other indicia of procedural unconscionability and
absent substantive unconscionability, the Court concludes that plaintiffs fail to adequately
plead that Lamm’s warranty was unconscionable under Georgia law. See Caley v.
Gulfstream Aerospace Corp., 428 F.3d 1359, 1377 (11th Cir. 2005) (“Although there is
some bargaining disparity here, . . . the plaintiffs have failed to show that the [contract]
and its making is so one-sided as to be unconscionable.”).
Interpreting Indiana law, the Seventh Circuit has concluded that “[u]nequal
bargaining power does not by itself . . . make a contract process unconscionable.”
Jackson, 711 F.3d at 793. Because plaintiffs do not allege any other “irregularities in the
bargaining process,” id., the Court concludes that plaintiffs fail to plead that Gallagher’s
warranty was procedurally unconscionable.
In Maryland, “[a] contract of adhesion is not automatically deemed per se
unconscionable.” Walther v. Sovereign Bank, 872 A.2d 735, 746 (Md. 2005). Rather,
where plaintiffs allege that a contract is one of adhesion, a court “must examine the
substance of the particular provision at issue.” Id. at 746–47. Because the Court has
already concluded that Kimball’s warranty was not substantively unconscionable, the

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Page 18 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

Court concludes that allegations of a “take-it-or-leave-it” warranty are insufficient to
plead unconscionability under Maryland law.
Like Florida and Georgia, “Missouri cases suggest that [procedural and substantive
unconscionability] should be considered together and balanced, so that if there exists
gross procedural unconscionability then not much be needed by way of substantive
unconscionability and vice versa.” Cicle, 583 F.3d at 554. In addition, like Indiana and
Maryland, absence of bargaining power alone is not sufficient to make a contract
procedurally unconscionable. See id. (“These sorts of take-it-or-leave-it agreements
between businesses and consumers are used all the time in today’s business world. If
they were all deemed to be unconscionable and unenforceable contracts of adhesion, or if
individual negotiation were required to make them enforceable, much of commerce
would screech to a halt. Because the bulk of contracts signed in this country are form
contracts—a natural concomitant of our mass production-mass consumer society—any
rule automatically invalidating adhesion contracts would be completely unworkable. The
agreement at issue here is not so procedurally unconscionable as to render it
unenforceable unless the agreement is grossly unconscionable in substance.” (citations
and quotation marks omitted)). Because the Court has already concluded that Klinge’s
warranty was not substantively unconscionable, the Court concludes that allegations of a
“take-it-or-leave-it” warranty are insufficient to plead unconscionability under Missouri
law.
The Court therefore concludes that plaintiffs have failed to plead that their
warranties were unconscionable.
ii.

Fails of Its Essential Purpose

Plaintiffs allege that Carrier’s warranties fail of their essential purpose because the
contractual remedies are insufficient to make them whole. AC ¶¶ 175–76; 219–20; 268–
69, 300–01; 332–33; 362–63. According to Carrier, a warranty fails of its essential
purpose only if repeated repair attempts are unsuccessful, and that test is not met here.
Id. at 17–18. Carrier argues that plaintiffs fail to plead that the warranties fail of their
essential purpose because: (1) plaintiffs fail to allege that they gave Carrier an
opportunity to repair, a prerequisite to asserting a failure of essential purpose and (2)
plaintiffs’ TXVs were successfully unclogged following repair and plaintiffs do not aver
that there was a recurring problem after repair. Id.

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Page 19 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

Plaintiffs assert that a limited remedy fails of its essential purpose where “the
circumstances existing at the time of the agreement have changed so that the enforcement
of the limited remedy would essentially leave plaintiff with no remedy at all.” Opp’n at
12 (quoting S.F. Bay Area Rapid Transit v. GE Transp. Sys. Glob. Signaling LLC, No.
06-cv-03749-JSW, 2010 WL 2179769, *6 (N.D. Cal. May 27, 2010). According to
plaintiffs, injecting HVAC systems with A/C Re-New does not remove the contaminants
and causes further damage, and Carrier has refused to take further action to fully remove
all contaminants. Id. at 12–13. Therefore, plaintiffs contend that they have alleged facts
sufficient to plead that the limited warranty fails of its essential purpose. Id. at 13.
Under the relevant state laws, a limited “repair or replace” warranty fails of its
essential purpose when a warrantor fails to successfully repair defects within a reasonable
time. See Sumer, 2015 WL 758314, at *1 (“[U]nder California law, a repair or replace
remedy fails of its essential purpose only if repeated repair attempts are unsuccessful
within a reasonable time.”); Richter v. Monaco Coach Corp., No. 5:08-cv-207-WTHDAB, 2009 WL 1537894, at *4 (M.D. Fla. June 2, 2009) (interpreting Florida law, “[a]
repair-or-replace warranty fails of its essential purpose if the warrantor does not
successfully repair defects within a reasonable time or within a reasonable number of
attempts.”); Helpling v. Rheem Mfg. Co., No. 1:15-cv-2247-WSD, 2016 WL 1222264, at
*7 (N.D. Ga. Mar. 23, 2016) (“The case law . . . tends to allow breach of warranty claims
to proceed only where a plaintiff establishes that a warrantor is unable to remedy an
alleged defect after multiple attempts to remedy, or where a warrantor refuses to comply
with the terms of the limited warranty.”); Swan Lake Holdings, LLC v. Yamaha Golf
Cart Co., No. 3:09-cv-228-PPS, 2010 WL 3894576, at *7 (N.D. Ind. Sept. 27, 2010)
(“Indiana courts find that an exclusive remedy of repair or replacement . . . has failed of
its essential purpose where attempted repairs fail to correct the problem.”); Baney Corp.
v. Agilysys NV, LLC, 773 F. Supp. 2d 593, 605 (D. Md. 2011) (“[A] repair remedy fails
of its essential purpose when the seller has refused to make repairs as he was required or
where he cannot repair the product.” (quotation marks omitted)); Williams v. United
Techs. Corp., No. 2:15-cv-04144-NKL, 2015 WL 7738370, at *5 (W.D. Mo. Nov. 30,
2015) (“A repair and replace warranty fails its essential purpose when the warrantor
because of his negligence in repair or because the goods are beyond repair, is unable to
put the goods in warranted condition.” (quotation marks omitted)).
In similar circumstances, courts have concluded that plaintiffs failed to adequately
plead that warranties failed their essential purposes where the plaintiffs did not allege that

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Page 20 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

their HVAC units failed to provide cooling after defendants took steps to repair or replace
the systems. See Helpling, 2016 WL 1222264, at *8 (“[T]he Complaint fails to allege
that their [HVAC] Units continued to have any problems after they applied A/C Renew.
Where the warranty’s remedy—that is, repairing or replacing the defective parts—can fix
the alleged defect, the warranty does not fail in its essential purpose.” (citation omitted));
Justice v. Rheem Manufacturing Co., No. 9:14-cv-80017-WPD, slip op. at 8 (S.D. Fla.
Aug. 22, 2014 ) (Dkt. No. 47) (“According to the allegations, Rheem is able to repair or
replace components of Rheem ACs in order to render the units functional and capable of
providing cooling. . . . These allegations exhibit a functioning warranty that led to
repairs, rather than a warranty that failed to provide Plaintiffs with meaningful recourse
whenever their Rheem ACs ceased cooling. Thus, the essential purpose doctrine does not
render the warranty void.”); Sumer, 2015 WL 758314, at *1 (“Here, when the coil failed
during the warranty period, Carrier replaced the coil at no charge to Sumer. This
replacement coil functioned for nearly five years.”); Grassi, 2015 WL 4879410, at *4
(finding plaintiff’s “essential purpose” argument “unpersuasive” because plaintiff’s
allegations established that defendant repaired the HVAC unit by replacing the failed part
with a functioning part). In the instant case, plaintiffs do not allege that the repairs on
their HVAC systems failed to render their units workable. Moreover, plaintiffs’
allegations with respect to the potential damage caused by A/C Re-New are speculative
and do not establish that the repairs were unsuccessful. See AC ¶ 25 (“The long-term
effects of this so-called fix are, at best, unknown.”). Accordingly, the Court finds that
plaintiffs have failed to adequately allege that the warranties fail of their essential
purpose.
iii.

Summary

Because the Court finds that plaintiffs have failed to adequately allege that the
warranties are unconscionable or fail of their essential purpose, the Court concludes that
plaintiffs have failed to adequately plead that the warranties are invalid or unenforceable.
c.

Carrier’s Compliance with its Obligations under Express
Warranties

Carrier argues that it complied with its warranty obligations by providing
replacement parts that restored cooling (new TXVs and a de-clogging additive), and
exceeded their obligation by providing a labor allowance, even though the warranty

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

excludes labor costs. MTD at 10–11. The relevant warranties state: “if a part fails due to
defect during the applicable warranty period [Carrier] will provide a new or
remanufactured part, at [Carrier’s] option, to replace the defective part at no charge for
the part.” RJN Exs. 1–7. In addition, the warranties state: “THIS WARRANTY DOES
NOT COVER . . . labor or other costs incurred for diagnosing, repairing, removing,
installing, shipping, servicing, or handling of either failed [or defective parts, or
replacement parts, or new units.” Id. Carrier addresses three of plaintiffs’ arguments.
First, Carrier contends that plaintiffs’ allegations that their HVAC units do not provide
the desired energy efficiency does not state a claim for breach of warranty because the
warranties exclude from coverage “electricity or fuel costs, or increases in electricity or
fuel costs from any reason whatsoever.” MTD at 12 (quoting RJN Exs. 1–7). Second,
Carrier argues that Oddo, Reardon, and Kimball’s alleged payment for the injection of
A/C Re-New and labor costs are not attributable to defendants because bulletins
authorized TXV replacement and the additive injection at no charge and Carrier provided
labor credits. MTD at 12. According to Carrier, that plaintiffs incurred costs relating to
replacement demonstrates that they did not follow the process for submitting a warranty
claim. Id. In addition, Carrier argues that labor costs are expressly excluded under the
warranty. Id. Third, Carrier asserts that the allegations of “unknown” future effects of
the additive, AC ¶ 25, do not state a claim for breach of warranty because the potential
for harm is too vague and speculative. MTD at 13.
In response, plaintiffs argue that the A/C Re-New injections did not satisfy
Carrier’s obligations under the warranties because the repairs addressed the symptoms of
the defect, not the underlying defect, and because the injections cause additional hidden
damage. Opp’n at 13. Because the alleged defect in this case “infects the entire HVAC
system,” plaintiffs appear to argue that simply replacing a part does not satisfy Carrier’s
obligations; instead, plaintiffs argue that Carrier’s failure to provide plaintiffs with
HVAC systems free from defects violates the warranties. Id. at 14. Plaintiffs contend
that, notwithstanding bulletins authorizing free parts and labor credits, Oddo, Reardon,
and Kimball actually incurred out-of-pocket costs. Id. at 16. And plaintiffs argue that
the operative complaint includes detailed allegations about the detrimental effects of A/C
Re-New, showing that the additive is “substantially certain to manifest in a future
malfunction” and that it “causes immediate damage and further devalues the alreadydefective systems.” Id. at 14.

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Page 22 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

Absent a “failure due to defect” of the HVAC systems or a “part fail[ure],” see
RJN Exs. 1–7, the warranties do not require Carrier to provide repairs. After plaintiffs
were provided with TXV replacements and injections of A/C Re-New, plaintiffs do not
allege any further failure or malfunction of their HVAC units. As a result, the Court
concludes that plaintiffs have failed to plead that the repairs provided, including the
injection of A/C Re-New, did not satisfy Carrier’s obligations under the warranties.
The possibility that A/C Re-New might cause a later malfunction is not enough to
allege a breach of the warranties. In Helpling v. Rheem Manufacturing Company, 2016
WL 1222264, the U.S. District Court for the Northern District of Georgia concluded that
allegations of the potentially harmful effects of A/C Re-New “do not sufficiently show
that Rheem breached its limited warranty, because the Complaint does not allege that
[plaintiff’s] Rheem Units continue to malfunction.” Id. at *7. Plaintiffs argue that their
allegations are distinct from those in Helpling because plaintiffs’ allegations with respect
to A/C Re-New are more specific and because plaintiffs allege immediate harm, not just
future harm. Opp’n at 14. While it is true that plaintiffs in this case provide greater
specificity with respect to the potential for A/C Re-New to cause harm, such specificity
does not overcome the flaw that their claims share with the Helpling plaintiffs: here, too,
plaintiffs fail to allege that their HVAC units continued to malfunction after the injection
of A/C Re-New. In addition, plaintiffs allege only the possibility of future harm arising
from the injection of A/C Re-New—not current failures of their units. See AC ¶ 25
(“The long-term effects of this so-called fix are, at best, unknown. . . . A/C Re-New
changes . . . the viscosity of the oil [which] . . . may cause additional wear and tear on the
compressor and other components. Likewise, changes to the thermodynamic properties
of the refrigerant from the original tar and addition of A/C Re-New can cause premature
failure of equipment and loss of energy efficiency. Thus, the injection of A/C Re-New
itself may shorten the lifespan of the equipment or cause other issues in the future, after
the warranty has expired, while the original contamination still remains in the system.
Contractors have acknowledged the potential harmful effects of A/C Re-New because it
is highly acidic, and could cause damage to coils and premature system failure.”
(emphases added)).
The Court further concludes that plaintiffs have failed to plead that Carrier did not
satisfy its obligations under the warranties with respect to Oddo, Kimball, and Reardon’s
out-of-pocket costs. Oddo and Kimball are not entitled to recover costs on the basis of
the warranties because Oddo and Kimball failed to afford Carrier with a reasonable

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CIVIL MINUTES - GENERAL

Page 23 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

opportunity to cure. See supra Part IV.A.1.a. With respect to Reardon, plaintiffs allege
that he incurred costs for a diagnostic visit and labor costs. AC ¶ 40. The warranties
expressly state that they “DO[] NOT COVER: Labor or other costs incurred for
diagnosing, repairing, removing, installing, shipping, servicing, or handling of either
failed parts or replacement parts, or new units.” See RJNs Exs. 1–7 (emphasis added).
Such limitations are permissible. See supra Part IV.A.1.b.i.
Accordingly, the Court concludes that plaintiffs have failed to plead that Carrier
did not comply with its obligations under the express warranties.
d.

Plaintiffs Cannot Alter or Expand Express Warranty

Carrier argues that plaintiffs may not avoid Carrier’s limited warranties by relying
on advertisements and marketing materials to expand the warranty because: (a) five of
the seven plaintiffs have not referred to or provided the content of any advertising or
marketing materials on which they claim to have relied; (b) the warranty makes clear that
it is exclusive and disclaimed any alteration by any distributor, dealer, or other person;
(c) the advertising statements that Oddo and Lamm point to are general opinions about
the quality and value of Carrier’s products, which are not actionable and do not create an
express warranty; and (d) the SEER ratings associated with plaintiffs’ units cannot serve
as warranties because the express warranty is exclusive, plaintiffs do not allege that their
systems failed to perform in accordance with their SEER ratings, and the Energy Policy
and Conservation Act preempts a warranty claim premised on representations about a
unit’s SEER, 42 U.S.C. § 6297(g).5 MTD at 19–22. Plaintiffs do not respond to these
arguments in their opposition. The Court concludes that plaintiffs may not rely on
marketing statements to expand the scope of the express warranties, which state that they
are exclusive. See Williams, 2015 WL 7738370, at *6 (concluding that a provision that
made expressed warranties exclusive “validly disclaimed any warranties which could
have been created by the generic marketing statements”).

5

In their opposition, plaintiffs assert that only one plaintiff, Oddo, alleges that the
SEER ratings formed part of the express warranty and plaintiffs withdraw this portion of
Oddo’s warranty claim. Opp’n at 15 n.18. As a result, the Court does not address the
question of whether SEER ratings may serve as warranties.

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CIVIL MINUTES - GENERAL

Page 24 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

e.

Summary

With respect to plaintiff’s breach of express warranty claims, the Court GRANTS
Carrier’s motion to dismiss Oddo, LaSala, Kimball, and Klinge’s claims for express
breach of warranty and DISMISSES those claims without prejudice because Oddo,
LaSala, Kimball, and Klinge did not afford Carrier with a reasonable opportunity to cure
the defects. Furthermore, the Court has found that plaintiffs fail to plead adequately that:
(1) Carrier’s warranties are invalid and unenforceable because they are unconscionable
and fail of their essential purpose; and (2) Carrier did not comply with its obligations
under the express warranties. The Court therefore concludes that plaintiffs have failed to
state claims for breach of their express warranties. Accordingly, the Court GRANTS
Carrier’s motion to dismiss the following claims: 1 (to the extent plaintiffs plead
breach of express warranty), 4, 9, 14, 18, 21, 24, and 27, and DISMISSES those
claims without prejudice.
2.

Implied Warranty Claims

A “breach of the implied warranty of merchantability means the product did not
possess even the most basic degree of fitness for ordinary use.” Mocek v. Alfa Leisure,
Inc., 114 Cal. App. 4th 402, 406 (2003); see also Ram Head Outfitters, Ltd. v. Mecham,
No. 09-cv-1382-PHX-MHM, 2011 WL 1429623, at *7 (D. Ariz. Apr. 14, 2011); Jovine
v. Abbott Labs., 795 F. Supp. 2d 1331, 1340 (S.D. Fla. 2011); Kraft Reinsurance Ireland,
Ltd. v. Pallets Acquisitions, LLC, 845 F. Supp. 2d 1342, 1356 (N.D. Ga. 2011); U.S.
Automatic Sprinkler Co. v. Reliable Automatic Sprinkler Co., 719 F. Supp. 2d 1020,
1026 (S.D. Ind. 2010); Bailey v. Atlantic Automotive Corp., 992 F. Supp. 2d 560, 574
(D. Md. 2014); Williams, 2015 WL 7738370, at *6.
In the instant motion, Carrier contends that plaintiffs’ implied breach of warranty
claims fail for four reasons: (1) plaintiffs do not allege that their HVAC systems were not
restored to working condition; (2) plaintiffs’ allegation that the A/C Re-New will have an
unknown know effect is too speculative to establish a breach of implied warranty;
(3) Carrier satisfied its obligations under the express warranties, and therefore also
fulfilled its obligations under the implied warranties; and (4) Reardon, LaSala, and
Lamm’s implied warranty claims fail because they do not allege they were in privity with
the manufacturers and Arizona, Florida, and Georgia require privity of contract for such
claims. MTD at 22–24. Plaintiffs argue, in turn, that there was a breach of the implied

CV-1985 (01/17)

CIVIL MINUTES - GENERAL

Page 25 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

warranties because “[t]he systems were all unfit for ordinary use at the time of sale.”
Opp’n at 16. Plaintiffs further assert that because all plaintiffs except Reardon injected
A/C Re-New into their HVAC unit, “all but Reardon’s systems continue to contain an
undisclosed, latent defect.” Id.
Plaintiffs’ arguments are unavailing. “[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.” Grassi, 2015 WL 4879410, at *5 (quoting Parenteau v.
Gen. Motors, LLC, No. 14-cv-4961-RGK-MAN, 2015 WL 1020499, at *11 (C.D. Cal.
Mar. 5, 2015)). Plaintiffs do not allege in the operative complaint that the injection of the
A/C Re-New into their systems has resulted in any current defect in their HVAC systems.
See Helpling, 2016 WL 1222264, at *8 n.7 (dismissing a complaint when it “only
vaguely suggests—without alleging—that the use of A/C Renew may cause long-term
damage”). In fact, as described above, plaintiffs do not allege at all that their units are
currently not operational. The Court therefore concludes that plaintiffs have failed to
allege a fundamental defect that renders their HVAC systems unfit for their ordinary
purpose. See Grassi, 2015 WL 4879410, at *5 (dismissing breach of implied warranty
claim “because the [complaint] establishes that Defendant complied with the implied
warranty” by “fix[ing] the problem”); Sumer I, 2015 WL 758314, at *1 (“[A]s with
[plaintiff’s] express warranty claims, the implied warranty claim fails on the merits
because when the first coil failed during the one-year implied warranty period,
[defendant] replaced the leaking coil at no cost to [plaintiff].”); Williams, 2015 WL
7738370, at *7 (dismissing breach of implied warranty claim even though the product
“functioned for a far shorter period of time than expected” because defendants repaired
and replaced the necessary components and the product was operational for a time
afterwards)). Accordingly, plaintiffs have failed to state claims for breach of their
implied warranties. The Court notes that plaintiffs “do not dispute that Reardon’s
Arizona implied warranty claim, Ariz. Rev. Stat. § 47-2314, may be dismissed due to
lack of privity.” Opp’n at 18 n.21.
The Court therefore GRANTS Carrier’s motion to dismiss the following claims: 1
(to the extent plaintiffs plead breach of implied warranty), 10, 12, 15, 19, 22, 25, and 28.
The Court DISMISSES claims 1, 10, 15, 19, 22, 25, and 28 without prejudice.
However, the Court DISMISSES claim 12 with prejudice because plaintiffs

CV-1985 (01/17)

CIVIL MINUTES - GENERAL

Page 26 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

acknowledge that Reardon lacks privity and may not bring an implied warranty claim
under Arizona law.
B.

Plaintiffs’ Fraud-Based Claims

Plaintiffs assert eleven claims against Carrier arising from their allegedly
fraudulent conduct: negligent misrepresentation (claim 2); fraudulent concealment (claim
5); and violations of seven States’ consumer protection and/or unfair trade practices laws
premised on misrepresentations and omissions (claims 6, 7, 8, 11, 13, 16, 17, 20, 23, 26).
Carrier contends that plaintiff’s fraud-based claims fail on several grounds:
(1) plaintiffs fail to identify actionable misrepresentations or false statements;
(2) plaintiffs fail to plead reliance on any statement or omission, and therefore fail to
plead causation; (3) plaintiffs cannot plead fraudulent omissions in light of Carrier’s
disclosures in a series of bulletins; and (4) several of the plaintiffs’ claims are barred
under the economic loss doctrine. MTD at 25–31.
1.

Misrepresentations

Because plaintiffs’ misrepresentation claims sound in fraud, plaintiffs must comply
with the heightened pleading standard of Federal Rule of Civil Procedure 9(b), which
requires that the circumstances constituting a claim for fraud be pled with particularity.
Fed. R. Civ. P. 9(b). “It is established law, in this circuit and elsewhere, that Rule 9(b)’s
particularity requirement applies to state-law causes of action.” Vess v. Ciba-Geigy
Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003). [W]hile a federal court will examine
state law to determine whether the elements of fraud have been pled sufficiently to state a
cause of action, the Rule 9(b) requirement that the circumstances of the fraud must be
stated with particularity is a federally imposed rule.” Hayduk v. Lanna, 775 F.2d 441,
443 (1st Cir. 1985) (emphasis in original). To satisfy Rule 9(b), a plaintiff must “identify
the ‘who, what, when, where and how of the misconduct charged,’ as well as ‘what is
false or misleading about [the purportedly fraudulent conduct], and why it is false.”
Cafasso, ex rel. United States v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th
Cir. 2011) (quoting Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir.
2010)).
Plaintiffs argue that each plaintiff alleges that he or she reviewed statements
concerning SEER efficiency made by Carrier on its website, in marketing brochures,

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CIVIL MINUTES - GENERAL

Page 27 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

and/or materials provided with the HVAC systems. Opp’n at 29 (pointing to AC ¶¶ 36,
39, 41, 43, 45, 47). Specifically, plaintiffs allege that:
 Oddo reviewed Arcoaire’s website, which states that its HVAC systems are
“BUILT TO LAST,” and Arcoaire’s materials advertising the system as “high
efficiency” and “capable of up to a 16 Seasonal Energy Efficiency Ratio[.]”
AC ¶ 36.
 Reardon received product information that indicated that her systems were
“capable of up to 16 SEER.” Id. ¶ 39.
 LaSala received product information that indicated that his system was “capable
of up to 15 SEER.” Id. ¶ 41.
 Lamm reviewed Bryant’s website, which states that its consumers will “enjoy
reliable whole-home comfort” and that its air conditioners are “designed to
operate consistently and quietly with SEER ratings of 15 or higher.” Id. ¶ 43.
 Kimball reviewed Bryant brochures, which advertised the system he purchased
as “being capable of up to 22 SEER.” Id. ¶ 45.
 Klinge’s system was advertised and described in the product specifications
booklet “as being capable of 13 SEER.” Id. ¶ 47.
 Gallagher’s system was advertised as being capable of up to 16 SEER but, at
installation, it was specified as 13 SEER because he lacked certain equipment.
Id. ¶ 49.
The Court first finds that the website advertisements on which Oddo and Lamm
allegedly relied cannot be the basis for claims of fraudulent misrepresentation because
such statements are puffery and are, therefore, not actionable as a basis for claims of
fraud or misrepresentation. See Grassi, 2015 WL 4879410, at *6 (statements 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[]’ . . . are indeed puffery”); Tomek
v. Apple, Inc., No. 2:11-cv-02700-MCE, 2013 WL 3872774, at *5 (E.D. Cal. July 25,
2013) (statements characterizing a computer as a “huge leap[ ] in performance” that
makes it “so your work just goes smoother and faster,” are “[g]eneralized, vague, and
unspecified assertions [that] constitute ‘mere puffery’ upon which a reasonable consumer
could not rely” (citations and quotation marks omitted)) aff’d, 636 F. App’x 712 (9th Cir.
2016); Next Century Commc’ns Corp. v. Ellis, 318 F.3d 1023, 1028–29 (11th Cir. 2003)
(finding that fraud and negligent misrepresentation claims failed because the defendant’s
characterization of a corporation’s performance as “strong” constituted “mere puffery”

CV-1985 (01/17)

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Page 28 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

under Georgia law). In addition, the Court finds that plaintiffs do not allege in the AC
that their HVAC systems cannot function to the advertised level of efficiency. Rather,
plaintiffs alleged that “it is substantially likely that almost all of the impacted HVAC
systems are not functioning as efficiently as they would have functioned absent impurities
in the manufacturing process.” AC ¶ 29 (emphases added). Because plaintiffs do not
allege that their systems failed to function at the SEER ratings indicated for their
respective units, the Court cannot conclude that Carrier misrepresented the capabilities of
the HVAC systems. Therefore, the Court GRANTS Carrier’s motion to dismiss
plaintiffs’ claims based on misrepresentations. The Court DISMISSES without
prejudice claims 2, 5, 6, 7, 8, 11, 13, 16, 17, 20, 23, 26 to the extent such claims rely on
alleged misrepresentations.
2.

Omissions
a.

Whether Rule 9(b) is Satisfied

Plaintiffs allege that they would not have purchased their HVAC units had the
advertising, marketing materials, and or product information disclosed the existence of a
manufacturing defect, which was material. AC ¶¶ 36, 39, 41, 43, 45, 47, 49, 110, 111.
As a result of the alleged failure to disclose the defect, plaintiffs raise several claims
based on fraudulent omission and/or concealment. See id. ¶¶ 128–37; 141(d), 145–46,
153–55, 160–61, 166, 194, 207, 253, 255, 290, 318–19, 323, 349, 353. Carrier argues
that plaintiffs’ allegations of reliance on the omission are boilerplate and insufficient as a
matter of law. MTD at 28. Carrier also contends that plaintiffs fail to sufficiently allege
the circumstances surrounding their review of any product information. Id. at 29.
When a claim rests on a fraudulent omission, the Rule 9(b) standard is somewhat
relaxed because “a plaintiff cannot plead either the specific time of [an] omission or the
place, as he is not alleging an act, but a failure to act.” Huntair, Inc. v. Gladstone, 774 F.
Supp. 2d 1035, 1044 (N.D. Cal. 2011) (quotation marks omitted). Nonetheless, a
plaintiff alleging a fraudulent omission or concealment must plead the claim with
particularity. See Bias v. Wells Fargo & Co., F. Supp. 2d, 2013 WL 1787158, *12 (N.D.
Cal. Apr. 25, 2013) (“Although Plaintiffs’ allegations do allege a fraud based in part on
omissions, a plaintiff must still plead such claim with particularity.”); Kearns v. Ford
Motor Co., 567 F.3d 1120, 1127 (9th Cir. 2009) (“Because the Supreme Court of
California has held that nondisclosure is a claim for misrepresentation in a cause of action

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CIVIL MINUTES - GENERAL

Page 29 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

for fraud, it (as any other fraud claim) must be pleaded with particularity under Rule
9(b).”). Courts disagree as to what exactly a plaintiff alleging a fraudulent omission must
plead in order to satisfy Rule 9(b). For example, this Court has stated that, to plead the
circumstances of omission with specificity, a plaintiff must:
describe the content of the omission and where the omitted information
should or could have been revealed, as well as provide representative
samples of advertisements, offers, or other representations that plaintiff
relied on to make her purchase and that failed to include the allegedly
omitted information.
Gomez v. Carmax Auto Superstores California, LLC, No. 2:14-cv-09019-CAS-PL, 2015
WL 350219, at *6 (C.D. Cal. Jan. 22, 2015) (quoting Marolda v. Symantec Corp., 672 F.
Supp. 2d 992, 1002 (N.D. Cal. 2009)); see also Parenteau, 2015 WL 1020499, at *7
(dismissing omission claims where plaintiff did “not allege any contact with Defendant
(as distinct from the dealer) prior to purchasing her vehicle where omissions regarding
the defect at issue should or could have been revealed,” and did not “allege with any
degree of specificity which advertisements, offers, or other representations she relied on
that failed to include the omitted information”). However, other courts have concluded
that a plaintiff’s allegation of a “‘wholesale nondisclosure’ of a material defect” is
sufficient unless the defendant demonstrates that there was “a document or
communication that [the plaintiff] should have reviewed before purchase[.]” See
Herremans v. BMW of N. Am., LLC, No. 14-cv-02363-MMM-PJW, 2014 WL 5017843,
at *19 (C.D. Cal. Oct. 3, 2014); Doyle v. Chrysler Grp. LLC, No. 13-cv-00620-JVS,
2014 WL 3361770, at *6 (C.D. Cal. July 3, 2014) (concluding it would be “nonsensical”
to “require Plaintiffs to prove they reviewed every [relevant] communication” including
“press releases, continually updated web pages, countless mailings, and advertisements in
a variety of media”).
Plaintiffs allege that: (1) Oddo, prior to his purchase, “extensively reviewed
Arcoaire’s website and marking materials provided by his Arcoaire distributor”;
(2) Reardon “received product information from her home builder which indicated . . .
that Reardon’s systems was [sic] capable of up to 16 SEER”; (3) LaSala “received
product information with [his] new system”; (4) Lamm, prior to purchase, “reviewed
Bryant’s website, as well as information from her installer which provided efficiency and
capacity information”; (5) Kimball, prior to purchase, “reviewed Bryant brochures that he

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

received from his installer and reviewed Bryant’s website”; (6) Klinge, prior to purchase,
“reviewed Comfortmaker’s product efficiency and capacity information”; and
(7) Gallagher “reviewed Bryant’s website and marketing materials.” AC ¶¶ 36, 39, 41,
43, 45, 47, 49 (emphases added).
The Court concludes that plaintiffs sufficiently plead the circumstances of
omission with respect to Oddo, Lamm, Kimball, Klinge, and Gallagher to satisfy the
more stringent standard set forth in Marolda and Parenteau. These plaintiffs also
sufficiently allege reliance on an allegedly material misrepresentation.6 The Court
therefore DENIES Carrier’s motion to dismiss Oddo, Lamm, Kimball, Klinge, and
Gallagher’s claims based on fraudulent omission or concealment—to the extent
Carrier contests the specificity of plaintiffs’ pleadings. However, plaintiffs do not
allege that Reardon or LaSala actually reviewed the product information on their HVAC
systems, notwithstanding the fact that plaintiffs themselves identify the materials that
Reardon and LaSala should have read. Therefore, Reardon and LaSala do not satisfy
even the more liberal standard applied in Herremans. Accordingly, Reardon and LaSala
fail to allege fraudulent omission and concealment with sufficient specificity to satisfy
Rule 9(b). The Court therefore GRANTS Carrier’s motion to dismiss Reardon and
LaSala’s claims based on fraudulent omission and concealment and DISMISSES
without prejudice claims 2, 5, 11, and 13 in relation to Reardon and LaSala to the
extent such claims rely on alleged omissions.
b.

Whether Carrier Disclosed the Alleged Defect

Carrier also argues that plaintiffs’ omissions claims fail because Carrier actually
disclosed that some of its HVAC units might experience a TXV clog through its Dealer
Service Bulletins (“DSBs”). MTD at 30. Plaintiffs contend that they were not aware of
the DSBs, which were “issued as early as 2014,” AC ¶ 16, because the bulletins were not
made available to consumers. Opp’n at 20. Plaintiffs therefore contend that the DSBs do
not constitute disclosures. Id.

6

The parties dispute whether plaintiffs must allege reliance on Carrier’s omission.
See MTD at 28; Opp’n at 21–28. Because the Court finds that plaintiffs’ allege reliance
with sufficient particularity, the Court need not resolve at this time whether reliance is a
required element for each common law and state law claim for omission and concealment
that plaintiffs plead.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

In Sumer I, the court dismissed plaintiff’s claim that Carrier fraudulently failed to
disclose to purchasers of its air conditioning units that the copper evaporator coils in
those units were defective due to their susceptibility to formicary corrosion. 2015 WL
758314, at *2. The court reached this conclusion because Carrier had stated, in a
brochure available to consumers, that coil corrosion was possible and particularly
prevalent in high humidity regions. Id. After Sumer amended his complaint, the court
again dismissed Sumer’s fraudulent omission claim because Carrier’s brochure, along
with an industry report discussing the tendency of copper coils to corrode, meant that
Sumer could not plausibly allege that Carrier had “exclusive knowledge” of the alleged
defect. Sumer v. Carrier Corp., No. 14-cv-04271-VC, 2015 WL 3630972, at *2 (N.D.
Cal. June 10, 2015) (“Sumer II”). Plaintiffs contend that Sumer I and Sumer II are not
applicable here because Carrier’s DSBs were not made available to consumers. Opp’n at
20. Carrier, by contrast, argues that the form of disclosure is irrelevant to whether
Carrier’s knowledge of the TXV problem was exclusive. Reply at 21–22. Carrier further
contends that the plaintiff’s citation to the DSBs in their complaint demonstrates that the
DSBs were in fact publicly available. Id. at 22.
Reardon and Kimball purchased their HVAC units before the DSBs were issued in
2014. See AC ¶¶ 39, 45. As a result, the DSBs cannot constitute a disclosure of the TXV
problems with respect to Reardon and Kimball. In addition, drawing all inferences in
favor of plaintiffs, the Court concludes that plaintiffs have adequately alleged that, even
though Carrier may have known of the defect, that information was not conveyed to
consumers. Therefore, the Court DENIES Carrier’s motion to dismiss plaintiffs’
fraudulent omission and concealment claims to the extent Carrier seeks dismissal on
the basis of disclosure.
3.

The Economic Loss Doctrine and LaSala, Lamm, Kimball, and
Gallagher’s Common Law Negligent Misrepresentation and
Fraudulent Concealment Claims

Carrier argues that LaSala, Lamm, Kimball, and Gallagher’s common law
negligent misrepresentation and fraudulent concealment claims are barred by the
economic loss doctrine because those plaintiffs only allege damages related to the HVAC
products they purchased. MTD at 31. Florida, Georgia, Maryland, and Indiana—where
these four plaintiffs reside—follow the economic loss doctrine. See Tiara Condo. Ass’n,
Inc. v. Marsh & McLennan Companies, Inc., 110 So. 3d 399, 401 (Fla. 2013) (“[T]he

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

economic loss rule is a judicially created doctrine that sets forth the circumstances under
which a tort action is prohibited if the only damages suffered are economic losses.”);
Hanover Ins. Co. v. Hermosa Const. Grp., LLC, 57 F. Supp. 3d 1389, 1395 (N.D. Ga.
2014) (“The economic loss rule provides that a plaintiff may not recover in tort for purely
economic damages arising from a breach of contract.” (citing Gen. Elec. Co. v. Lowe’s
Home Centers, Inc., 608 S.E.2d 636, 637 (Ga. 2005))); Morris v. Osmose Wood
Preserving, 667 A.2d 624, 630 (Md. 1995) (“[T]he economic loss rule . . . prohibits a
plaintiff from recovering in tort for purely economic losses—losses that involve neither a
clear danger of physical injury or death, nor damage to property other than the product
itself.”); JMB Mfg., Inc. v. Child Craft, LLC, 799 F.3d 780, 785 (7th Cir. 2015) (“Indiana
courts apply the economic loss rule to preclude recovery in tort for purely economic
loss—pecuniary loss unaccompanied by any property damage or personal injury (other
than damage to the product or service provided by the defendant).” (quotation marks
omitted)).
Plaintiffs concede that Kimball and Gallagher’s negligent misrepresentation and
fraudulent omissions claims may be dismissed under the economic loss doctrines of
Maryland and Indiana. Opp’n at 30. The Court therefore DISMISSES with prejudice
claims 2 and 5 with respect to Kimball and Gallagher. Plaintiffs do not address
LaSala’s common law negligent misrepresentation and fraudulent omissions claims,
which arise under Florida law. However, it appears that the same logic applies equally to
LaSala’s claim. The Court therefore DISMISSES without prejudice claims 2 and 5
with respect to LaSala for the additional reason that they are barred by the economic
loss doctrine.
Plaintiffs argue that Lamm’s common law negligent misrepresentation and
fraudulent omissions claims should not be dismissed under Georgia law because there is
a “misrepresentation exception” to the economic loss rule in Georgia. Opp’n at 30.
Plaintiffs are correct that Georgia recognizes a “misrepresentation exception” to the
economic loss rule. See Home Depot U.S.A., Inc. v. Wabash Nat. Corp., 724 S.E.2d 53,
59 (Ga. 2012). The misrepresentation exception entails: “(1) the negligent supply of false
information to foreseeable persons, known or unknown; (2) such persons’ reasonable
reliance upon that false information; and (3) economic injury proximately resulting from
such reliance.” Squish La Fish, Inc. v. Thomco Specialty Prod., Inc., 149 F.3d 1288,
1291 (11th Cir. 1998) (citing Hardaway Co. v. Parsons, Brinckerhoff, Quade & Douglas,
Inc., 479 S.E.2d 727, 729 (Ga. 1997)). Because plaintiffs have not alleged that Carrier

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

presented Lamm with false information, the Court concludes that the misrepresentation
exception does not apply. Therefore, Georgia’s economic loss doctrine bars Lamm’s
common law negligent misrepresentation and fraudulent omissions claims. The Court
therefore DISMISSES without prejudice claims 2 and 5 with respect to Lamm
because they are barred by the economic loss doctrine.
Plaintiffs argue that Arizona’s economic loss doctrine does not bar Reardon’s
common law misrepresentation and fraudulent omissions claims because the economic
loss doctrine is in flux in Arizona. Opp’n at 30. Plaintiff’s point to one district court that
declined to extend Arizona economic loss rule to a negligent misrepresentation claim.
See Homeland Ins. Co. of N.Y. v. Sw. Real Estate Purchasing Grp. Inc., No. 12-cv00856-PHX-FJM, 2012 WL 6050616, at *4 (D. Ariz. Dec. 5, 2012) (“The extension of
the [economic loss rule] to negligent misrepresentation would go beyond the rule’s
purpose and essentially eliminate the tort of negligent misrepresentation.”). Carrier, in
turn, points to an Arizona court of appeals that expressly “reject[ed]” the argument that
the economic loss doctrine does not apply to fraud and misrepresentation claims because
“[t]he Arizona Supreme Court held . . . that a contracting party is limited wholly to its
contractual remedies for purely economic loss related to the subject of the parties’
contract.” Cook v. Orkin Exterminating Co., 258 P.3d 149, 153 n.6 (Ariz. Ct. App.
2011). At least one district court has found the rule articulated in Cook to be “overly
broad.” Jes Solar Co. v. Matinee Energy, Inc., No. 12-cv-626-TUC-DCB, 2015 WL
10943562, at *3 (D. Ariz. Nov. 2, 2015). While there appears to be some disagreement
among courts in Arizona, ultimately this Court is bound by the Ninth Circuit’s conclusion
that, “[a]lthough Arizona has yet to decide this issue, . . . negligent misrepresentation . . .
would not be excepted from the ‘economic loss’ rule by the Arizona Supreme Court.”
Apollo Grp., Inc. v. Avnet, Inc., 58 F.3d 477, 480 (9th Cir. 1995); see also Int’l Franchise
Sols. LLC v. BizCard Xpress LLC, No. 13-cv-0086-PHX-DGC, 2013 WL 2152549, at *3
(D. Ariz. May 16, 2013) (applying the economic loss rule to bar tort claims alleging
negligence and negligent misrepresentation); Maricopa Cty. v. Office Depot, Inc., No.
2:14-cv-1372-HRH, 2014 WL 6611562, at *7 (D. Ariz. Nov. 21, 2014) (“[P]laintiff’s
common law fraud claims . . . are barred by the economic loss rule.”). Accordingly, the
Court concludes that Arizona’s economic loss doctrine bars Reardon’s common law
negligent misrepresentation and fraudulent omissions claims. The Court therefore
DISMISSES without prejudice claims 2 and 5 with respect to Reardon for the
additional reason that they are barred by the economic loss doctrine.

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Page 34 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

C.

Plaintiffs’ Unfair Trade Practices Claims

The parties dispute whether plaintiff has adequately alleged unfair trade practice
claims that are distinct from plaintiffs’ omission and fraud based claims. According to
Carrier, plaintiffs allege that Carrier engaged in unfair trade practices because Carrier
continued to sell air conditioners after learning that some of its units were experiencing
clogged TXVs. MTD at 32. Carrier argues that such claims fail as a matter of law
because Carrier was not required to recall or retrofit all units that could have been
affected by the TXV issue. Id. Plaintiffs argue that they do not allege a “failure to
retrofit or recall.” Opp’n at 30. Rather, plaintiffs contend that Carrier sold defective
HVAC systems with a warranty that was insufficient to cover repairs and imposed
“repairs” that caused further damage. Id. at 30–31. That Carrier knowingly engaged in
such conduct was—according to plaintiffs—immoral, unethical and unscrupulous, and
constituted an unfair trade practice under the relevant state laws. Id. at 32–33.
The Court has already found that: (1) plaintiffs have failed to allege that their
HVAC units continued to malfunction after repairs were instituted; (2) plaintiffs have
failed to allege that Carrier’s warranties are unconscionable and failed of their essential
purpose; and (3) plaintiffs’ allegations with respect to the potential damage caused by the
injection of A/C Re-New are speculative and do not establish that the repairs were
unsuccessful. Therefore, the Court concludes that plaintiffs may not maintain unfair
trade practices claims based on allegations that Carrier sold defective HVAC systems
with an insufficient warranty and imposed “repairs” that caused further damage.
Accordingly, the Court GRANTS Carrier’s motion to dismiss claims 6, 8, 11, 13, 16,
17, 20, 23 and 26 to the extent these claims are based on such allegations. Such claims
are hereby DISMISSED without prejudice.
D.

Plaintiffs’ Unjust Enrichment Claims

Carrier argues that plaintiffs’ claims for unjust enrichment fail as a matter of law
because: (1) California and Georgia do not treat unjust enrichment as an independent
claim; and (2) even in states that do recognize unjust enrichment claims, such claims are
precluded by warranty claims. MTD at 34–35.
Under Arizona, Florida, Georgia, Indiana, Maryland, and Missouri law, a plaintiff
may not recover under an unjust enrichment theory where a warranty covers the subject
matter in dispute. See Trustmark Ins. Co. v. Bank One, Arizona, NA, 48 P.3d 485, 492

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

(Ariz. Ct. App. 2002) (“As our supreme court has explained . . . if there is a specific
contract which governs the relationship of the parties, the doctrine of unjust enrichment
has no application.” (quotation marks omitted)); David v. Am. Suzuki Motor Corp., 629
F. Supp. 2d 1309, 1324 (S.D. Fla. 2009) (“[T]he theory of unjust enrichment is equitable
in nature and is, therefore, not available where there is an adequate legal remedy. It
follows that a party may not maintain an action for unjust enrichment if the damages
sought are covered by an express contract.” (citation and quotation marks omitted)); In re
Porsche Cars N. Am., Inc., 880 F. Supp. 2d 801, 846 (S.D. Ohio 2012) (“When a
consumer seeks compensation for a defective product that failed, the warranty covers the
subject matter in dispute and an unjust enrichment claim does not lie. A plaintiff cannot
use an unjust enrichment claim to alter or expand the terms of an express warranty that
covers the product that is the subject of his or her claim.” (citation omitted) (applying
Georgia law)); Terrill v. Electrolux Home Prod., Inc., 753 F. Supp. 2d 1272, 1291 (S.D.
Ga. 2010) (concluding that, when express warranty claims fail, allowing plaintiffs to
recover under an unjust enrichment theory would impermissibly expand the terms of the
warranty); Reid v. Unilever U.S., Inc., 964 F. Supp. 2d 893, 922 (N.D. Ill. 2013) (“In
general, the remedy of unjust enrichment is not available when a specific contract
governs the parties’ relationship.”); Stavropoulos v. Hewlett-Packard Co., No. 13-cv5084, 2014 WL 2609431, at *6 (N.D. Ill. June 9, 2014) (“[U]nder Illinois law, [b]ecause
unjust enrichment is based on an implied contract, where there is a specific contract
which governs the relationship of the parties, the doctrine of unjust enrichment has no
application. Therefore, Stavropoulos cannot allege an unjust enrichment count based on
his breach of warranty claim.” (citation and quotation marks omitted)); Thorogood v.
Sears, Roebuck & Co., No. 06-cv-1999, 2006 WL 3302640, at *5 (N.D. Ill. Nov. 9, 2006)
(“Where unjust enrichment claims incorporate by reference allegations of the existence of
a contract between the parties, courts will dismiss the unjust enrichment claim.”); cf.
Baldwin v. Star Sci., Inc., No. 14-cv-588, 2016 WL 397290, at *11 (N.D. Ill. Feb. 2,
2016) (“[W]here the plaintiff’s claim of unjust enrichment is predicated on the same
allegations of fraudulent conduct that support an independent claim of fraud, resolution
of the fraud claim against the plaintiff is dipositive of the unjust enrichment claim as
well.” (quotation marks omitted)). Janusz v. Gilliam, 947 A.2d 560, 567 (Md. 2008) (“In
Maryland, a claim of unjust enrichment, which is a quasi-contract claim, may not be
brought where the subject matter of the claim is covered by an express contract between
the parties.” (quotation marks omitted)); Doll v. Ford Motor Co., 814 F. Supp. 2d 526,
551 (D. Md. 2011) (“Plaintiffs have not disputed Defendant’s contention that an express
contract governs the subject matter of the claim. Consequently, without a dispute

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

concerning the existence of a contract, Plaintiffs are barred from alleging both theories in
their Amended Complaint.”); FLF, Inc. v. World Publications, Inc., 999 F. Supp. 640,
642 (D. Md. 1998) (“It is settled law in Maryland, and elsewhere, that a claim for unjust
enrichment may not be brought where the subject matter of the claim is covered by an
express contract between the parties.”); Howard v. Turnbull, 316 S.W.3d 431, 436 (Mo.
Ct. App. 2010) (“If the plaintiff has entered into an express contract for the very subject
matter for which he seeks recovery, unjust enrichment does not apply, for the plaintiff’s
rights are limited to the express terms of the contract.”); Patterson Oil Co. v. Verifone,
Inc., No. 2:15-cv-4089, 2015 WL 6149594, at *9 (W.D. Mo. Oct. 19, 2015) (“[T]he
unjust enrichment claim arises out of the express warranty contract and must be
dismissed.”); Budach v. NIBCO, Inc., No. 2:14-cv-04324, 2015 WL 3853298, at *8
(W.D. Mo. June 22, 2015) (“A plaintiff is certainly entitled to bring an unjust enrichment
claim as an alternative ground for relief. But here Budach’s unjust enrichment claim is
based in part on the warranty. He alleges he would not have ‘purchased NIBCO’s PEX
products had [he] known that those PEX Products were defective and that NIBCO would
not honor the terms of its express warranty.’ Thus, his unjust enrichment claim arises out
of the express warranty contract and must be dismissed.” (citation and quotation marks
omitted)). Here, plaintiffs seek to recover under a theory of unjust enrichment because
they allegedly “incurred unreimbursed, out-of-pocket expenses for materials, tools, and
other supplies necessary to repair the defective systems, which rightfully should have
been covered by Defendants.” AC ¶ 116. These damages are covered by the express
terms of plaintiffs’ warranties. As a result, the Court concludes that Reardon, LaSala,
Lamm, Kimball, Klinge, and Gallagher fail to state claims for unjust enrichment. The
Court therefore GRANTS Carrier’s motion and DISMISSES without prejudice claim
3 with respect to Reardon, LaSala, Lamm, Kimball, Klinge, and Gallagher.
By contrast, in Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753 (9th Cir. 2015),
the Ninth Circuit reviewed a district court’s dismissal of a unjust enrichment claim on the
grounds that it was duplicative or superfluous of other contractual claims. In its review,
the Ninth Circuit recognized that “in California, there is not a standalone cause of action
for ‘unjust enrichment.’” Id. at 762. Nonetheless, the Ninth Circuit concluded that the
plaintiff’s allegations were sufficient to state a “‘quasi-contract’ cause of action” and the
duplicative nature of a quasi-contractual claim was an insufficient basis for dismissal. Id.
at 762–63. Subsequently, “[s]everal decisions . . . have permitted what were previously
considered to be superfluous unjust enrichment claims to survive the pleading stage in
light of the Ninth Circuit’s decision in Astiana.” Loop AI Labs Inc. v. Gatti, No. 15-cv 
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

00798, 2015 WL 5158639, at *7 (N.D. Cal. Sept. 2, 2015); see also Main v. Gateway
Genomics, LLC, No. 15-cv-02945-AJB-WVG, 2016 WL 7626581, at *16 (S.D. Cal.
Aug. 1, 2016) (“Defendant moves to dismiss Plaintiffs’ claim for unjust enrichment on
the grounds that it is not a separate cause of action under California law. . . . The Ninth
Circuit [in Astiana] recently foreclosed upon the argument advanced by Defendant.”); In
re Safeway Tuna Cases, No. 15-cv-05078-EMC, 2016 WL 3743364, at *2 (N.D. Cal.
July 13, 2016) (pursuant to Astiana, permitting breach of warranty and unjust enrichment
claims, even though they are duplicative); Arroyo v. TP-Link USA Corp., No. 5:14-cv04999-EJD, 2015 WL 5698752, at *11 (N.D. Cal. Sept. 29, 2015) (permitting plaintiff to
plead breach of express warranty and unjust enrichment); but see Dickey v. Advanced
Micro Devices, Inc., No. 5:15-cv-04922-RMW, 2016 WL 1375571, at *8 (N.D. Cal. Apr.
7, 2016) (“In this case, the court finds that plaintiff’s unjust enrichment theory rests on
allegations covered by other claims that provide for legal remedies. Plaintiff’s unjust
enrichment claim is superfluous, and, accordingly, dismissed.” (citation and quotation
marks omitted)). Accordingly, the Court DENIES Carrier’s motion to dismiss Oddo’s
unjust enrichment claim.
VI.

CONCLUSION

Breach of Express Warranty
The Court DISMISSES without prejudice claims 1 (to the extent plaintiffs plead
breach of express warranty), 4, 9, 14, 18, 21, 24, and 27.
Breach of Implied Warranty
The Court GRANTS Carrier’s motion to dismiss the following claims: 1 (to the
extent plaintiffs plead breach of implied warranty), 10, 12, 15, 19, 22, 25, and 28. The
Court DISMISSES claims 1, 10, 15, 19, 22, 25, and 28 without prejudice, and
DISMISSES claim 12 with prejudice.
Misrepresentation
The Court DISMISSES without prejudice claims 2, 5, 6, 7, 8, 11, 13, 16, 17, 20, 23
and 26 to the extent such claims rely on alleged misrepresentations.

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Page 38 of 40 

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

Fraudulent Omission and Concealment
To the extent Carrier’s motion contests the specificity of plaintiffs’ pleadings, the
Court DENIES Carrier’s motion to dismiss Oddo, Lamm, Kimball, Klinge, and
Gallagher’s fraudulent omission and concealment claims. However, the Court GRANTS
Carrier’s motion to dismiss Reardon and LaSala’s fraudulent omission and concealment
claims and, therefore, DISMISSES without prejudice claims 2, 5, 11, and 13 in relation to
Reardon and LaSala to the extent such claims rely on alleged omissions or concealment.
The Court DENIES Carrier’s motion to dismiss plaintiffs’ fraudulent omission and
concealment claims to the extent Carrier seeks dismissal on the basis of disclosure of the
TXV issue.
Common Law Negligent Misrepresentation and Fraudulent Concealment Claims
The Court DISMISSES without prejudice claims 2 and 5 with respect to Reardon,
LaSala, and Lamm because those claims are barred by the economic loss doctrine.
The Court DISMISSES with prejudice claims 2 and 5 with respect to Kimball and
Gallagher because plaintiffs concede that these claims are barred by the economic loss
doctrine.
Unfair Trade Practices
The Court DISMISSES without prejudice claims 6, 8, 11, 13, 16, 17, 20, 23, and
26 to the extent these claims are based on allegations that Carrier sold defective HVAC
systems with an insufficient warranty and imposed “repairs” that caused further damage.
Unjust Enrichment
The Court DISMISSES without prejudice claim 3 with respect to Reardon, LaSala,
Lamm, Kimball, Klinge, and Gallagher. The Court DENIES Carrier’s motion to dismiss
claim 3 in relation to Oddo.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
8:15-cv-01985-CAS(Ex)
Date January 24, 2016
STEVE ODDO ET AL. v. ARCOAIRE AIR CONDITIONING AND
HEATING ET AL.

Plaintiffs shall have fourteen (14) days from the date of this order to file a second
amended complaint addressing the deficiencies identified herein.
IT IS SO ORDERED.
00 
Initials of Preparer

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CIVIL MINUTES - GENERAL

: 

00 

CMJ 

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