Ada County Highway District v. Rhythm Engineering, LLC

Filing 32

MEMORANDUM DECISION AND ORDER - NOW THEREFORE IT IS HEREBY ORDERED:1) Rhythms Motion to Dismiss Count III and Count V of Plaintiffs Complaint (Dkt. 7 ) is GRANTED in part and DENIED in part. Count V is dismissed, with leave to ACHD to amend, if ACHD files its amended complaint on or before November 4, 2016. The motion to dismiss is denied in all other respects. (Amended Complaint due by 11/4/2016.) Signed by Judge Candy W. Dale. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

ADA COUNTY HIGHWAY
DISTRICT,

Case No. 1:15-cv-00584-CWD

Plaintiff,

MEMORANDUM DECISION AND
ORDER RE: PARTIAL MOTION TO
DISMISS (DKT. 7)

v.
RHYTHM ENGINEERING, LLC, a
Kansas limited liability company ,
Defendant.

RHYTHM ENGINEERING, LLC, a
Kansas limited liability company,
Counterclaimant,
v.
ADA COUNTY HIGHWAY
DISTRICT,
Counterdefendant.

INTRODUCTION
Pending before the Court is Defendant Rhythm Engineering’s partial motion to
dismiss, seeking to dismiss Plaintiff Ada County Highway District’s claims of unjust
MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 1

enrichment and breach of implied warranty of merchantability. (Dkt. 7.) The motion is
fully briefed and the Court heard oral argument from the parties on August 22, 2016.
After review of the record and consideration of the parties’ arguments and relevant legal
authorities, the Court will grant Rhythm’s motion to dismiss the unjust enrichment claim,
with leave to amend, and will deny the motion to dismiss the breach of implied warranty
of merchantability claim.
FACTUAL BACKGROUND 1
On January 8, 2014, ACHD and Rhythm entered into an Adaptive Control
Technology Purchase Agreement (Purchase Agreement) 2 for the installation of a signal
control system on roads throughout Ada County, Idaho. Adaptive signal control
technology systems are composed of computer hardware and software, which together,
are designed to help control the flow of traffic over busy roads.
The Purchase Agreement contained a two year warranty. Compl., ¶ 9 (Dkt. 1 at 4).
Pursuant to the Purchase Agreement, Rhythm agreed to provide a full refund if, after
three months of operation, ACHD believed the adaptive signal control technology system
1

For the purposes of Rhythm’s motion to dismiss, this background section accepts as true the allegations
raised in ACHD’s Complaint. See Dole Food Co. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). The
Court must consider any disputed material facts in the light most favorable to ACHD, the nonmoving
party.

2

The Purchase Agreement is not in the record. It appears Rhythm intended to attach the Purchase
Agreement as an Exhibit to its partial motion to dismiss; however, there is no attachment in the docket.
See Mot. to Dismiss, fn. 1 (Dkt. 8) (“Attached as Exhibit A, is the Purchase Agreement in its entirety. The
Purchase Agreement consists of three distinct attachments entitled: (1) Scope of Work; (2) Work
Schedule; and, (3) Payment Schedule.”). During the hearing, Rhythm’s counsel offered to file the
Purchase Agreement, but also argued that the Court’s consideration of the Purchase Agreement is not
essential to the resolution of the issues raised in the motion to dismiss. ACHD objected to Rhythm’s
request and argued that, because Rhythm’s request for dismissal of certain claims is better suited for a
motion for summary judgment, it would be improper for the Court to consider the Purchase Agreement.
MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 2

did not reduce travel time and emission and fuel consumption, while also improving
safety. Id. To receive a full refund, ACHD had to: (1) collect before and after data using
the same collection method; (2) allow Rhythm time to “fine tune” the adaptive signal
control technology system; and (3) provide a written list of concerns to Rhythm. Id.
Between December of 2014 and October of 2015, ACHD and Rhythm
corresponded in writing and discussed, in-person, problems ACHD was experiencing
with the adaptive signal control technology system. Id. at ¶ 11 (Dkt. 1 at 4). Rhythm
attempted to correct the system’s problems; however, Rhythm’s attempts were not
successful. 3
On November 9, 2015, ACHD notified Rhythm of its rejection of the adaptive
signal control technology system and termination of the Purchase Agreement. 4 Id. at ¶ 19
(Dkt. 1 at 5). ACHD identified Section C.12 of the Purchase Agreement as the basis for
termination, 5 and asserted that the system failed field operational testing three times by
failing to automatically adjust based on the traffic conditions, which in turn, lead to the

3

On December 23, 2015, ACHD emailed Rhythm regarding the hundreds of system notifications ACHD
received with the message “camera unresponsive.” Compl., ¶ 12 (Dkt. 1 at 4). This forced ACHD to
suspend testing of the new system. Id. On March 3, 2015, ACHD notified Rhythm of detection issues
related to the system’s cameras going into “fog mode,” which apparently caused the system to use
historical data rather than then-existing traffic conditions. Id. at ¶ 13 (Dkt. 1 at 5). ACHD suspended
testing again while Rhythm identified potential fixes to the problem. On June 3, 2015, and again on
September 18, 2015, ACHD informed Rhythm that the purported fixes did not resolve the “fog mode”
issue. Id. at ¶¶ 14-15 (Dkt. 1 at 5).
4

Before informing Rhythm of its intent to terminate the Purchase Agreement, ACHD first received
approval to terminate the Purchase Agreement from the Idaho Transportation Department. Compl., ¶¶ 1718 (Dkt. 1 at 5).

5

ACHD cited also other legal remedies pursuant to Section 12.3 of the Purchase Agreement and remedies
under the Idaho Uniform Commercial Code.

MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 3

failure to reduce side street delays. Id. In its termination notice, ACHD demanded a full
refund. Id.
Three days later, Rhythm responded to the termination notice, informing ACHD
that ACHD did not have the right to terminate the Purchase Agreement under Section
C.12, ACHD’s rejection of the system was untimely under the Idaho Uniform
Commercial Code, and ACHD failed to comply with conditions of the warranty. Id. at
¶ 20 (Dkt. 1 at 6). Rhythm demanded ACHD return the adaptive signal control
technology system equipment within 30 days for a refund under the warranty. On
December 8, 2015, ACHD attempted to return the system’s equipment to Rhythm via
Federal Express overnight delivery; Rhythm refused to accept delivery of the equipment.
Id. at ¶ ¶ 24-25 (Dkt. 1 at 6).
On December 16, 2015, ACHD filed a Complaint against Rhythm asserting the
following claims: (1) breach of contract; (2) breach of express warranty; (3) breach of
implied warranty of merchantability; (4) breach of implied warranty of fitness for a
particular purpose; and (5) unjust enrichment. ACHD seeks a full refund of the purchase
costs of the adaptive signal control technology system and attorney fees.
On February 16, 2016, Rhythm filed an answer and counterclaim against ACHD
(Dkt. 6) and a partial motion to dismiss ACHD’s unjust enrichment and breach of implied
warranty of merchantability claims (Dkt. 7). The motion is ripe for the Court’s
consideration.

MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 4

LEGAL STANDARDS
I. Motion to Dismiss
A complaint fails to state a claim for relief under Rule 8 of the Federal Rules of
Civil Procedure if the factual assertions in the complaint, taken as true, are insufficient
for the reviewing court plausibly “to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 622, 678 (2009).
“Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. In other words, although Rule 8 “does not require detailed
factual allegations,… it demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Id. (internal quotations omitted). If the facts pleaded are “merely
consistent with a defendant’s liability,” the complaint has not stated a claim for relief that
is plausible on its face. Id. (internal quotations marks omitted).
II. Leave to Amend
A dismissal without leave to amend is improper unless it is beyond doubt that the
complaint “could not be saved by any amendment.” Livid Holdings Ltd. v. Salomon Smith
Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The United States Court of Appeals for
the Ninth Circuit has held that, “in dismissals for failure to state a claim, a district court
should grant leave to amend even if no request to amend the pleading was made, unless it
determines that the pleading could not possibly be cured by the allegation of other facts.”
Cook, Perkiss and Liehe, Inc. v. N. California Collection Serv., Inc., 911 F.2d 242, 247
(9th Cir. 1990). The issue is not whether plaintiff will prevail but whether she “is entitled

MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 5

to offer evidence to support the claims.” See Hydrick v. Hunter, 466 F.3d 676, 685 (9th
Cir. 2006).
DISCUSSION
I. Unjust Enrichment
Rhythm claims that Count V—unjust enrichment—must be dismissed pursuant to
Fed. R. Civ. P. 12(b)(6), because ACHD admits the existence of an enforceable express
written contract that governs the parties’ relationship. Rhythm alleges also that the unjust
enrichment claim should be dismissed because the unjust enrichment claim itself refers to
the existence of a contract, which otherwise defeats the unjust enrichment claim. To the
contrary, ACHD contends that, because it is yet to be determined whether the Purchase
Agreement is enforceable, and ACHD may plead inconsistent claims pursuant to Fed. R.
Civ. P. 8, it is premature to dismiss its unjust enrichment claim. As explained below, the
Court agrees with Rhythm’s second argument and will dismiss the unjust enrichment
claim, although will grant leave to ACHD to amend.
“Unjust enrichment, or restitution, is the measure of recovery under a contract
implied in law.” Barry v. Pac. W. Const., Inc., 103 P.3d 440, 447 (Idaho 2004). “A
contract implied in law, or quasi-contract, ‘is not a contract at all, but an obligation
imposed by law for the purpose of bringing about justice and equity without reference to
the intent of the agreement of the parties, and, in some cases, in spite of an agreement
between the parties.’” Id. (citing Continental Forest Prod., Inc. v. Chandler Supply Co.,
518 P.2d 1201 (Idaho 1974)).

MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 6

Pursuant to Idaho law, to prevail on an unjust enrichment claim, the plaintiff bears
the burden of proving: “(1) a benefit conferred upon defendant by plaintiff; (2)
appreciation by the defendant of the benefit; (3) acceptance of the benefit under
circumstances that would be inequitable for the defendant to retain the benefit without
payment of the value thereof.” Aberdeen—Springfield Canal Co. v. Peiper, 982 P.2d 917,
923 (Idaho 1999).
The doctrine of unjust enrichment, however, does not apply in circumstances
where there is an enforceable express contract between the parties covering the same
subject matter. Wilhelm v. Johnston, 30 P.3d 300, 307 (Idaho. Ct. App. 2001) (finding
that the existence of an enforceable promissory note and deed of trust precluded the
application of unjust enrichment). “The reason for this rule presently is that the remedies
for breach of an express contract, whether by law or by express agreement, afford
adequate relief.” Triangle Min. Co., Inc. v. Stauffer Chem. Co., 753 F.2d 734, 742 (9th
Cir. 1985); Thomas v. Thomas, 249 P.3d 829, 836 (Idaho 2011).
“However, an express contract cannot provide adequate relief when it is not
enforceable.” Thomas, 249 P.3d at 836. “[O]nly when the express agreement is found to
be enforceable is a court precluded from applying the doctrine of unjust enrichment in
contravention of the express contract.” Wolford v. Tankersley, 695 P.2d 1201, 1203
(Idaho 1984); see also United States v. Berkley Regional Ins. Co., 1:13-CV-00209-DOC,
at Dkt. 136 (D. Idaho March 28, 2016) (“Because a valid, enforceable Subcontract exists
that covers the subject matter of the equitable claims, [plaintiff] is precluded from
recovering under its equitable theories.”).
MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 7

Rhythm argues in its motion that ACHD “fully admits there exists a valid
enforceable contract between the parties” in its Complaint. Rhythm suggests also it can
be inferred that the Purchase Agreement is enforceable because Rhythm admitted in its
Answer that the Purchase Agreement exists, Rhythm did not allege any equitable
defenses in its Answer or assert any theories of equitable relief in its counterclaim, and
ACHD did not allege in its Complaint that the Purchase Agreement is either invalid or
not enforceable.
ACHD explained during oral argument that it is not prepared to concede that the
Purchase Agreement and each of its various provisions are enforceable before conducting
thorough discovery. In response, Rhythm argued that, while the parties may dispute the
meaning of the terms of the contract and the scope of the contract, these disagreements do
not provide ACHD the ability to proceed on its equitable theories of relief because the
parties have agreed that the Purchase Agreement itself is enforceable.
It is not yet determined whether the Purchase Agreement between the parties is
enforceable. Rhythm’s recitation of the language of the Complaint is only partially
accurate. While ACHD admitted that a Purchase Agreement exists between it and
Rhythm, ACHD has not admitted that each and every provision in the Purchase
Agreement is in fact enforceable against Rhythm or vice versa. Rhythm cites to United
States v. Berkley Regional Ins. Co., 1:13-CV-00209-DOC, at Dkt. 136 (D. Idaho March
28, 2016) for the proposition that a dispute about the terms in the contract alone does not
permit a plaintiff to proceed on equitable claims of relief. However, unlike the present

MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 8

case, there remained no dispute that the terms in the contract that addressed the issues in
the lawsuit in Berkley were valid and enforceable. 6
Acknowledgement of a written agreement and concession of enforceability are not
one in the same. Because it is not yet known whether each provision in the Purchase
Agreement that may be at issue in this case is enforceable, it is premature to dismiss
ACHD’s unjust enrichment claim on this ground. See MWI Veterinary Supply Co. v.
Wotton, 2012 WL 2576205, at *9 (D. Idaho July 3, 2012) (“[D]ismissal of the unjust
enrichment claim is premature because [plaintiff] has not unequivocally admitted that all
contractual provisions are enforceable.”).
The Court must continue its analysis, however, to determine whether ACHD’s
unjust enrichment claim should be dismissed on the basis that the claim itself is defeated
because the claim itself makes specific reference to the Purchase Agreement.
The Federal Rules of Civil Procedure permit parties to plead inconsistent factual
allegations in the alternative. See Fed. R. Civ. P. 8(d) (2) and (3). Rhythm does not
dispute that alternative and inconsistent theories of recovery are permitted; however,
Rhythm argues that Count V—the unjust enrichment claim—incorporates the allegations
regarding the Purchase Agreement into Count V. Simply put, Rhythm contends Count V
itself alleges facts that defeat the unjust enrichment claim.
“[W]here inconsistent allegations are not pled in the alternative, but are expressly
incorporated into each cause of action, an allegation may constitute a judicial admission
6

In Berkley, it was not until a post-trial motion for judgment as a matter of law under Fed. R. Civ. P 50(a)
was filed that the Court granted the defendant’s request to dismiss the plaintiff’s equitable claims.
MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 9

by the plaintiff which allows dismissal of the complaint.” U.S. Med. Instruments, Inc. v.
CFS N. Am., Inc., 2013 WL 6055387, at *9 (S.D. Cal. Nov. 13, 2013) (citing Maloney v.
Scottsdate Ins. Co., 256 Fed. Appx. 29, 32 (9th Cir. 2007)).
Review of the Complaint reveals that ACHD included language incorporating “all
of the other paragraphs of this Complaint as if set forth in full herein,” which include the
allegation of an express contract in paragraph 3 and in Count I. 7 Compl., at ¶¶ 3, 27, 50
(Dkt. 1 at 2, 8, 12). In addition, in the Complaint under the claim for unjust enrichment,
ACHD makes specific reference to the Purchase Agreement it entered into with Rhythm. 8
The allegations of the existence of a Purchase Agreement between ACHD and Rhythm
are inconsistent with the claim for unjust enrichment. Accordingly, the Court will grant
Rhythm’s motion to dismiss the unjust enrichment claim, but will grant also ACHD leave
to amend its Complaint. 9
II. Implied Warranty of Merchantability
Rhythm contends that ACHD’s breach of implied warranty of merchantability
claim should be dismissed, because (1) ACHD failed to sufficiently plead facts to support
its claim; and (2) the Purchase Agreement’s express warranty precludes ACHD’s implied
warranty of merchantability claim. The Court will address both arguments.
7

“The subject matter of this litigation is a contract that was entered into by and between ACHD and
Rhythm Engineering….” Compl., at ¶ 3 (Dkt. 1 at 2).

8

“In light of the failure of the equipment and related materials to perform as required under the terms of
the Purchase Agreement, it would be unjust for Rhythm Engineering to retain any benefit that it received
as a result of entering into the contract with ACHD.” Compl., at ¶ 52 (Dkt. 1 at 12).

9

Amendment of ACHD’s unjust enrichment claim is not futile because, as explained above, it has not yet
been determined whether all terms in the Purchase Agreement between the parties address the subject
matter of this litigation and are enforceable.

MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 10

A. ACHD sufficiently plead its claim for breach of implied warranty of
merchantability
Rhythm alleges ACHD’s Complaint fails to state a claim for breach of implied
warranty of merchantability because ACHD failed to plead facts alleging the adaptive
signal control technology system was unmerchantable at the time of delivery. Rhythm
alleges also that ACHD failed to sufficiently plead that the alleged problems rendered the
system of less than ordinary quality. The Court disagrees and finds ACHD sufficiently
plead facts to support its claim for breach of implied warranty of merchantability.
Under Idaho law, to recover for breach of implied warrant of merchantability, the
plaintiff must prove: (1) the goods purchased were subject to an implied warranty of
merchantability; (2) the goods did not comply with the warranty at the time of delivery;
(3) the purchaser's damages were due to the unmerchantable nature of the goods; and (4)
damages were suffered as a result of the breach of warranty. Dickerson v. Mountain View
Equip. Co., 710 P.2d 621 (Idaho Ct. App.1985). The test for determining breach of an
implied warranty of merchantability is to “examine whether the goods were
unmerchantable at the time of delivery.” Id.
In determining whether the product was unmerchantable at the time of delivery,
the Court is permitted to infer the merchantability of a product from circumstantial
evidence. Meldco, Inc. v. Hollytex Carpet Mills, Inc., 796 P.2d 142, 146 (Idaho Ct. App.
1990) (holding that a later manifestation of disproportionally excessive wear in a carpet
was circumstantial evidence to prove the carpet was unmerchantable at the time of
delivery); see also Verbillis v. Dependable Appliance Co., 689 P.2d 227, 229 (Idaho Ct.
MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 11

App. 1984) (“It may be inferred from circumstantial evidence showing a malfunction of
the product, the reasonableness of its use after it was acquired, and the absence of other
reasonable causes for the malfunction.”) (emphasis added).
Idaho has adopted Uniform Commercial Code § 2-314, which provides that goods
are merchantable, if they:
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, are of fair average quality within the
description; and
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind,
quality and quantity within each unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may
require; and
(f) conform to the promises or affirmations of fact made on the container or
label if any.
§ 2-314. Implied Warranty: Merchantability; Usage of Trade., Unif. Commercial Code §
2-314. “It is expected that goods be ‘generally acceptable quality under the description
used in the contract.’” Powers v. Am. Honda Motor Co., 79 P.3d 154, 157 (Idaho 2003)
(citing Dickerson, 710 P.2d at 624).
ACHD argues that the factual allegations of circumstantial evidence of latent
defects in the adaptive signal control technology system in its Complaint sufficiently state
a breach of implied warranty of merchantability claim. In support of its position, ACHD
cites to Meldco, 796 P.2d at 146 (Idaho Ct. App. 1990), to demonstrate that

MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 12

circumstantial evidence including later discovered defects may prove unmerchantability
at the time of delivery.
During oral argument, Rhythm argued the facts of this case are distinguishable
from Meldco. In Meldco, carpets purchased by plaintiffs exhibited excessive wear only
three months after they were delivered. The Idaho Supreme Court affirmed the district
court’s determination that, because there was no evidence that plaintiffs misused the
carpets, the carpets were unmerchantable at the time of delivery. Rhythm contends that,
unlike Meldco, there is an alternative plausible theory of liability. Rhythm contends that
the alleged defects in the adaptive signal control technology system may have been
caused by ACHD when ACHD installed the system. Because an alternative theory of
liability exists, Rhythm contends the Court cannot infer from circumstantial evidence that
the system was unmerchantable at the time of its delivery.
The Court finds Rhythm’s arguments unpersuasive. ACHD sufficiently plead facts
to support it breach of implied warranty of merchantability claim. The adaptive signal
control technology system was installed and allegedly “operational” by November 21,
2014. Compl., ¶ 28 (Dkt. 1 at 8). ACHD alleges in its Complaint that, as early as
December 23, 2014, it began reporting to Rhythm problems with the system—the system
kept generating hundreds of notifications with the message “camera unresponsive.”
Because of this issue, ACHD alleges it had to suspend the field operational testing.
ACHD alleges that, three months later, on March 3, 2015, the system began to randomly
go into “fog mode,” which caused the system to revert to historical data, which in turn,
impeded the system’s automatic adjustment based on changing traffic conditions. This
MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 13

issue, ACHD alleges, was never adequately repaired, and caused ACHD to suspend its
field operational testing on two other occasions.
While ACHD does not specifically allege the adaptive signal control technology
system was unmerchantable at the time of delivery, it does allege that only one month
after the system was installed and “operational,” ACHD began experiencing problems
with the system. This circumstantial evidence of latent defects with the system, if true,
may demonstrate that the system was unmerchantable at the time of delivery.
The Court is not persuaded by Rhythm’s argument that the presence of a plausible
alternative theory of liability precludes ACHD from relying on circumstantial evidence to
plead a breach of implied warranty of merchantability claim. Meldco was an appeal of the
district court’s decision following a bench trial. The district court’s decision in Meldco
was based on evidence. Here, there is no evidence in the record before the Court that the
alleged defects were caused by ACHD during its installation of the system. Rhythm’s
argument is better suited for a motion for summary judgment.
Moreover, the Court finds also that ACHD has sufficiently alleged facts to support
that the system was not of generally acceptable quality under the description used in the
contract. ACHD alleges the system was intended to adjust traffic signals based on the
flow of then-existing traffic. ACHD pleads in its Complaint that field operational testing
had to be discontinued three times because the system failed to adjust traffic lights based
on the then-existing flow of traffic. Failure to perform the very function that the system
was intended to perform, demonstrates the system was not of generally acceptable
quality.
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Accordingly, because the Court finds ACHD has plead facts, if proven as true,
support a claim for breach of implied warranty of merchantability, the Court will deny
Rhythm’s motion to dismiss this claim on these grounds.
B. It is too soon to determine whether the express warranties in the Purchase
Agreement conflict with the implied warranty of merchantability
Rhythm alleges that ACHD’s breach of implied warranty of merchantability claim
should be dismissed because the detailed express warranties in the Purchase Agreement
displace any implied warranty of merchantability. For the following reasons, the Court
finds it premature at the motion to dismiss stage to dismiss the breach of implied
warranty of merchantability claim on this ground.
Idaho Code § 28-2-317 provides:
Warranties whether express or implied shall be construed as consistent with
each other and as cumulative, but if such construction is unreasonable the
intention of the parties shall determine which warranty is dominant. In
ascertaining that intention the following rules apply:
(a) Exact or technical specifications displace an inconsistent sample
or model or general language of description.
(b) A sample from an existing bulk displaces inconsistent general
language of description.
(c) Express warranties displace inconsistent implied warranties other
than an implied warranty of fitness for a particular purpose.
Idaho Code § 28-2-317.
Rhythm contends the express warranty and implied warranty for merchantability
are in conflict as to remedies. Rhythm argues that the express warranties define the
precise remedies ACHD is entitled to if the product does not perform as expected.
MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 15

Specifically, under one warranty, ACHD is entitled to a full refund within a certain time
period if it follows certain procedures. If ACHD is permitted to continue its claim for
breach of implied warranty of merchantability, Rhythm argues without citing any case
law that ACHD may be able to seek remedies that are beyond or in conflict with those
available under the express warranty.
At this stage, the record before the Court lacks sufficient facts and evidence to
determine whether the express warranties in the Purchase Agreement and the implied
warranty of merchantability are in conflict. The Purchase Agreement, let alone the
specific language of the express warranties, are not before the Court. As explained above,
ACHD may allege inconsistent claims for relief under Rule 8. Accordingly, the Court
will deny Rhythm’s motion to dismiss ACHD’s breach of implied warranty of
merchantability claim on this ground as well.
ORDER
NOW THEREFORE IT IS HEREBY ORDERED:
1)

Rhythm’s Motion to Dismiss Count III and Count V of Plaintiff’s
Complaint (Dkt. 7) is GRANTED in part and DENIED in part. Count V
is dismissed, with leave to ACHD to amend, if ACHD files its amended
complaint on or before November 4, 2016. The motion to dismiss is
denied in all other respects.
September 01, 2016

MEMORANDUM DECISION AND ORDER RE: PARTIAL MOTION TO DISMISS - 16