Brocuglio v. Thor Motor Coach Inc
OPINION AND ORDER DENYING 24 MOTION to Exclude Tom Bailey Valuation Testimony by Defendant Thor Motor Coach Inc; GRANTING IN PART and DENYING IN PART 26 MOTION to Dismiss for Lack of Subject Matter Jurisdiction, MOTION for Judgment on the Pleadin gs as to UDTPA Claim by Defendant Thor Motor Coach Inc; DENYING 31 RULE 56 MOTION to Strike 28 Affidavit in Support of Motion, Motion to Strike Exhibits 5, 9, 10 and 11 Attached to Declaration of John D. Sear by Plaintiffs Linda Brocuglio, Wayne Brocuglio. Judgment on the pleading is GRANTED as to Plaintiffs Linda Brocuglio and Wayne Brocuglio's UDTPA claim. That claim (Count III) is DISMISSED. Defendant Thor Motor Coach Inc's Motion to Dismiss Plaintiffs' remaining claims for lack of jurisdiction is DENIED. Plaintiffs GRANTED until 5/1/2017 to file a brief motion seeking leave to file an amended complaint. If no such motion is filed by that date, this matter will proceed to the Court's trial calendar. Signed by Senior Judge James T Moody on 3/31/17. (cer)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
LINDA BROCUGLIO and
THOR MOTOR COACH, INC.,
No. 3:14 CV 2097
OPINION and ORDER
In this action, plaintiffs Linda and Wayne Brocuglio (“Brocuglio Family”),
citizens of North Carolina, bring claims against Thor Motor Coach, Inc. (“Thor”). On
December 13, 2013, plaintiffs purchased a 2013 Four Winds Class A motor coach vehicle
(“RV”) manufactured by Thor. (DE # 1 at 2.) The RV was purchased at Carolina Coach
and Camper, LLC (“Carolina Coach”), a supplier, merchant, and authorized
representative of Thor. (Id. at 3.) Within a week of their purchase, plaintiffs discovered
major water leakage problems in the RV and returned it to Thor for servicing and
repairs. (Id. at 4.) This was just the beginning of plaintiffs’ problems with the RV, as they
discovered numerous defects requiring many lengthy repairs over the course of the
next year. (Id.) With the RV having been in repair shops for a combined 160 days,
plaintiffs provided written notice to Thor demanding either a replacement RV or their
money back. (Id.)
Thor refused this demand just as it had plaintiffs’ previous demands. (Id. at 4-5.)
Instead, Thor promised plaintiffs that, if given one more chance to repair the vehicle, “it
would be fixed correctly and [the Brocuglio Family] would come away happy.” (Id. at
5.) Furthermore, Thor promised to provide continuous progress updates on the repairs
(including photographs of their work) and to perform a “200 point” inspection before
returning it. (Id.; DE # 35-2 at 4.) Plaintiffs agreed to yet another repair. However,
plaintiffs allege that Thor broke its promises by failing to provide progress updates and
more importantly, failing to satisfactorily repair the RV. (DE # 1 at 5.)
Plaintiffs filed this action bringing breach of warranty claims under North
Carolina law and the Magnuson-Moss Warranty Act, as well as a claim under the North
Carolina Unfair and Deceptive Acts and Practices Statute (“UDTPA”). (DE # 1.) Thor
has filed a Rule 12(c) motion for judgment on the pleadings as to the UDTPA claim
based on the failure to allege actionable conduct and, alternatively, based on the
economic loss rule. (DE # 26.) Thor has also moved under Rule 12(b)(1) to dismiss
plaintiffs’ warranty claims for lack of subject matter jurisdiction based on the failure to
meet the minimum amount-in-controversy requirements. (Id.) For the following
reasons, Thor’s motion will be granted, in part, and denied, in part.
Thor has also moved to exclude the valuation testimony of plaintiffs’ expert,
Tom Bailey. (DE # 24.) The Brocuglio Family has filed their own motion to strike
various exhibits accompanying Thor’s motions. (DE # 31.) Both motions will be denied
In reviewing a motion for judgment on the pleadings pursuant to Rule 12(c), the
court applies the same standard that is applied when reviewing a motion to dismiss
pursuant to Rule 12(b)(6). Pisciotta v. Old Nat’l Bancorp., 499 F.3d 629, 633 (7th Cir. 2007).
That means that the court “take[s] the facts alleged in the complaint as true, drawing all
reasonable inferences in favor of the plaintiff.” Id. The complaint must contain only “a
short and plain statement of the claim showing that the pleader is entitled to relief.”
Fed. R. Civ. P. 8(a)(2).
While there is no need for detailed factual allegations, the complaint must “give
the defendant fair notice of what the . . . claim is and the grounds upon which it rests.”
Pisciotta, 499 F.3d at 633 (citation omitted). Factual allegations also must be enough to
raise a right to relief above the “speculative level” to the level of “plausible.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007); Ashcroft v. Iqbal, 129 S. Ct. 1937
(2009). A claim has facial plausibility “when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 129 S. Ct. at 1949. In examining the facts and matching them
up with the stated legal claims, the court must give “the plaintiff the benefit of
imagination, so long as the hypotheses are consistent with the complaint.” Sanjuan v.
Am. Bd. of Psych. & Neur., Inc., 40 F.3d 247, 251 (7th Cir. 1994).
As with a 12(b)(6) motion, a plaintiff defending a 12(c) motion “can elaborate on
his factual allegations so long as the new elaborations are consistent with the
pleadings,” and may “submit materials outside the pleadings to illustrate the facts [he]
expects to be able to prove.” Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir.
2012); see id. (“In the turmoil concerning civil pleading standards stirred up by [Iqbal]
and [Twombly], a plaintiff who is opposing a Rule 12(b)(6) or Rule 12(c) motion and who
can provide such illustration may find it prudent to do so.”).
The Federal Rules of Civil Procedure command that courts dismiss any suit over
which they lack subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). In ruling on such
a motion, the court “must accept the complaint’s well-pleaded factual allegations as
true and draw reasonable inferences from those allegations in the plaintiff’s favor.”
Franzoni v. Hartmarx Corp., 300 F.3d 767, 771 (7th Cir. 2002). However, the court may
also “properly look beyond the jurisdictional allegations of the complaint and view
whatever evidence has been submitted on the issue to determine whether in fact subject
matter jurisdiction exists.” Capitol Leasing Co. v. F.D.I.C., 999 F.2d 188, 191 (7th Cir.
“Generally the amount in controversy claimed by a plaintiff in good faith will be
determinative on the issue of jurisdictional amount, unless it appears to a legal certainty
that the claim is for less than that required by the rule.” NLFC, Inc. v. Devcom MidAmericam Inc., 45 F.3d 231, 237 (7th Cir. 1995). If material factual allegations are
contested, the proponent of federal jurisdiction must “prove those jurisdictional facts by
a preponderance of the evidence.” Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 543
(7th Cir. 2006). “Once the facts have been established, uncertainty about whether the
plaintiff can prove its substantive claim, and whether damages (if the plaintiff prevails
on the merits) will exceed the threshold, does not justify dismissal.” Id. (citing Johnson v.
Wattenbarger, 361 F.3d 991 (7th Cir. 2004)). Put another way, “jurisdiction exists unless it
is legally impossible for the recovery to exceed the minimum.” Id. at 542.
North Carolina Substantive Law Applies
A federal court sitting in diversity jurisdiction must apply the choice of law rules
of the state in which it sits. Land v. Yamaha Motor Corp., 272 F.3d 514, 516 (7th Cir. 2001)
(citing Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)). “Indiana is a lex loci delicti state: in
all but exceptional cases it applies the law of the place where harm occurred.” In re
Bridgestone/Firestone, Inc., 288 F.3d 1012, 1016 (citing Hubbard Mfg. Co. v. Greeson, 515
N.E.2d 1071 (Ind. 1987)). Here, plaintiffs are citizens of North Carolina and purchased
the allegedly-defective RV in North Carolina. Both parties agree that North Carolina
substantive law covers their claims. (DE ## 27 at 5; 33 at 12.)
Rule 12(c) Motion
Thor has moved for judgment on the pleadings with regards to plaintiffs’
UDTPA claim. (DE # 26). Pursuant to North Carolina General Statutes, section 75-1.1,
“[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts
or practices in or affecting commerce, are declared unlawful.” N.C. Gen. Stat. § 75-1.1(a)
(2015). “The determination of whether an act or practice is an unfair or deceptive
practice that violates [§ 75-1.1] is a question of law for the court.” Gray v. N.C. Ins.
Underwriting Ass’n, 529 S.E..2d 676, 681 (N.C. 2000). To state a claim under the UDTPA,
N.C. Gen.Stat. § 75-1.1, plaintiffs must allege (1) an unfair or deceptive act or practice (2)
in or affecting commerce (3) which proximately caused actual injury to plaintiffs. Id.;
Kelly v. Georgia Pac. LLC, F. Supp. 2d 785, 798 (E.D.N.C. 2009) (citing Dalton v. Camp, 548
S.E.2d 704, 711 (N.C. 2001)).
To be actionable under the statute, conduct must be “immoral, unethical,
oppressive, unscrupulous, or substantially injurious.” Gilbane Bldg. Co. v. Fed. Reserve
Bank of Richmond, Charlotte Branch, 80 F.3d 895, 902 (4th Cir. 1996) (quoting Branch
Banking and Trust Co. v. Thompson, 418 S.E.2d 694, 700 (N.C. Ct. App. 1992)). A breach of
contract is not unfair or deceptive absent “substantial aggravating circumstances.”
Gilbane, 80 F.3d at 903 (citations omitted). Similarly, “a broken promise is unfair or
deceptive only if the promisor had no intent to perform when he made the promise.”
Id. (citing Kent v. Humphries, 275 S.E.2d 176, 182-83, modified, 281 S.E.2d43 (N.C. Ct.
App. 1981); Overstreet v. Brookland, Inc., 279 S.E.2d 1, 6 (N.C. Ct. App. 1981)).
Plaintiffs argue that they have made sufficient allegations of aggravating
circumstances to support a UDTPA claim. (DE # 33 at 15-18.) Specifically, plaintiffs
point out that in the fall of 2014, after many months of failed repair attempts, Thor
asked for one last chance to make repairs on the RV. (Id. at 15.) Plaintiffs agreed, but
only after Thor promised to provide them with continuous progress updates (with
photographic documentation) and promised to perform a “200 point” inspection of the
RV. According to plaintiffs, neither happened and the last attempt at repairs was
entirely unsuccessful. Plaintiffs argue that Thor’s promise to go above and beyond its
contractual duty to repair the RV had the tendency and capacity to mislead plaintiffs
into believing that the job would be done right.
There are two problems with plaintiffs’ argument. First, even taking all of the
allegations as true, plaintiffs have not alleged that Thor had no intent to follow through
on its promises to provide progress updates and to perform a “200 point” inspection.
Plaintiffs cite to Overstreet v. Brookland, Inc., 279 S.E.2d 1, 6 (N.C. Ct. App. 1981) for
support. In that case, the defendant promised to the plaintiff, a prospective buyer, that
no part of a subdivision would be used for nonresidential purposes. Id. However, one
year later, the defendant sold a subdivision lot to a buyer whom it knew would use the
lot for nonresidential purposes. Id. The court held that the defendant had not violated
the UDTPA because no evidence indicated that the defendant intended to break its
promise at the time defendant made the promise. Id. at 6-7; see also Wells Fargo Bank,
N.A. v. Corneal, 767 S.E.2d 374, 378 (N.C. Ct. App. 2014) (no UDTPA claim where a bank
broke a promise to allow a party to refinance a loan upon maturity because the party
did not allege that bank intended to break its promise at the time); Opsahl v. Pinehurst,
344 S.E.2d 68, 70 (N.C. Ct. App. 1986) (for similar reasons, no UDTPA claim where
defendant missed construction deadline despite agent’s representation that the
completion date was firm and would be met).
Second, even if they sufficiently alleged that Thor intentionally misled them, it is
doubtful that their reliance on that misrepresentation caused them any actual injury.
Plaintiffs’ injury is that they received a defective RV from Thor. The RV was defective
both before and after the last repair attempt. Thus, plaintiffs were no worse off than
they had been prior to Thor’s alleged deceit regarding its final attempt at making
repairs. “To recover, a plaintiff must have suffered actual injury as a proximate result of
the deceptive statement or misrepresentation.” Craven v. Cope, 656 S.e.2d 729, 733 (N.C.
Ct. App. 2008). Plaintiffs’ UDTPA claim fails because they have not alleged any actual
injury resulting from Thor’s misrepresentation.
Plaintiffs also assert that Thor unfairly refused their demands for a refund or
replacement RV. (DE # 33 at 17.) They argue that such conduct violated the UDTPA in
that it was an “inequitable assertion of [Thor’s] power or position.” (Id.) Yet, the cases
plaintiffs cite in support of their assertion involve breaches of fiduciary duty or outright
fraud and thus bear little resemblance to their own allegations . See Compton v. Kirby,
577 S.E.2d 905 (N.C. Ct. App. 2003); Libby Hill Seafood Restaurants, Inc. v. Owens, 303
S.E.2d 565 (N.C. Ct. App. 1983). Plaintiffs present no support for the contention that a
company’s refusal to grant a full refund or replacement for a defective product amounts
to “immoral, unethical, unscrupulous, or substantially injurious” conduct that is
proscribed by the UDTPA. Bolton Corp. v. T.A. Loving Co., 380 S.E.2d 796, 809 (N.C. Ct.
App. 1989) (citing Opsahl, 344 S.E.2d at 76) (internal quotation marks removed).
Thor also argues that the economic loss rule bars plaintiffs’ UDTPA claim. (DE
# 27 at 10-11.) Whether North Carolina courts would apply this rule to UDTPA claims is
very much an open question. See Ellis v. Louisiana-Pacific Corp., 699 F.3d 778, 787 n.5 (4th
Cir. 2012) (“North Carolina courts have never addressed whether UDTPA claims are
subject to the [economic loss rule] and in the absence of such direction we are welladvised to rely on other grounds.”). However, the court need not decide that issue
because it finds that plaintiffs’ UDTPA claim fails on the merits. See Buffa v. Cygnature
Constr. and Dev., Inc., 796 S.E.2d 64 (N.C. Ct. App. 2016) (looking at the merits to uphold
trial court’s grant of summary judgment on UDTPA claim where the trial court
originally ruled that the economic loss rule applied).
Plaintiffs briefly argue that they should be permitted to file an amended
complaint if their UDTPA claim is dismissed. (DE # 33 at 4) See Runnion ex rel. Runnion
v. Girl Scouts of Greater Chicago and NW Indiana, 786 F.3d 510, 519 (7th Cir. 2015).
Discovery is closed and the dispositive motion deadline has lapsed. Thus, the court
hesitates to grant leave to amend at this late stage. However, the briefing on this issue is
insufficient for the court to rule on the matter at this time. Plaintiffs will be afforded the
opportunity to file a motion seeking leave to file an amended complaint.
Rule 12(b)(1) Motion
Thor moves to dismiss plaintiffs’ remaining warranty claims for lack of subject
matter jurisdiction based on the failure to meet the minimum amount in controversy
requirement. “The Magnuson-Moss Act allows a plaintiff to sue in federal court for
breach of warranty, 15 U.S.C. § 2310(d)(1), provided that certain jurisdictional
thresholds are met.” Schimmer v. Jaguar Cars, Inc., 384 F.3d 402, 405 (7th Cir. 2004). One
requirement is that the amount in controversy must reach $50,000. Id. When a plaintiff
relies on state law causes of action, the court looks to state law to “determine the
remedies available, which in turn informs the potential amount in controversy.” Id.
(citing Gardynski-Leschuck v. Ford Motor Co. 142 F.3d 955, 956 (7th Cir. 1998). Plaintiffs’
Magnuson-Moss Act claims are substantively identical to their state law warranty
claims. Thus, for jurisdiction to exist, it must be legally possible for their damages to
exceed $50,000 based on the remedies available under North Carolina law.
The Seventh Circuit has developed the following formula for determining the
amount in controversy in cases such as this: “the price of the replacement vehicle,
minus both the present value of the allegedly defective [vehicle] and the value that the
plaintiff received from the use of the allegedly defective [vehicle]. Schimmer, 384 F.3d at
405-406 (citing Gardynski-Leschuck, 142 F.3d at 957); Voelker v. Porsche Cars of N. America,
Inc., 353 F.3d 516, 521 (7th Cir. 2003).
Naturally, the parties offer competing figures for the amount in controversy
calculation. The logical starting point for the first number, the price of the replacement
vehicle, is the “Sales Contract” (DE # 1-1 at 1-3) which lists a retail price of $132,779. See
Gardynski-Leschuck, 142 F.3d at 956 (“the car had a purchase price of some $18,500, and
this is the figure that matters for jurisdictional purposes”). However, Thor contends that
the retail price on the contract was inflated by the fact that plaintiffs received a very
large “dealer discount” which, for business purposes, was added to the trade-in value
for plaintiffs’ old RV. (DE # 27 at 20-21.) However, nothing in the sales contract reflects
this discount, and plaintiffs contend that none of the Carolina Coach sales
representatives discussed this discount with them during the sale. (See DE # 33 at 6.)
Wayne Brocuglio’s testimony is consistent with the retail price of $132,779. (DE # 35-11
As for the present value of the defective RV, Wayne Brocuglio testified that he
received an $85,000 trade-in offer from another dealer. (Id. at 14-15.) This offer is within
the same range as figures from the National Automobile Dealers Association guide for
the RV which listed a trade-in value of $70,190 and a used retail value of $91,800. (DE
# 28-5 at 2.)
Thus, the retail price, $132,779, minus the $85,000 estimated present value results
in damages totaling $47,779 – just shy of the $50,000 threshold.1 In determining the
amount in controversy under the Magnuson-Moss Act, legal fees and costs at the time
of filing may also be included. Gardynski-Leschuck, 142 F.3d at 958; see also Burzlaff v.
Thoroughbred Motorsports, Inc., 758 F.3d 841, 845 (7th Cir. 2014) (“Burzlaff’s attorney fees
at the time of removal could not reasonably have reached the nearly $15,000 needed to
make up the difference.”). Plaintiffs have submitted an affidavit from their attorney
The court has not attempted to subtract the value of plaintiffs’ use of the RV.
Neither party has presented any evidence on this point, and based on the allegations,
any such benefit would likely be minimal. Moreover, under North Carolina law,
damages are not offset by the benefit of use where vehicles are owned as opposed to
leased. Blankenship v. Town and Country Ford, Inc., 622 S.E.2d 638, 643 (N.C. Ct. App.
2005) (upholding damages calculation of the difference between amount paid and the
car’s actual value without offsetting use of the vehicle.)
attesting that the total costs and fees incurred prior to the filing of the complaint
amounted to $3,479.15, thus bringing the total amount in controversy safely above the
threshold to $51,258.05.
Thor proposes a separate amount in controversy figure, based upon the
testimony of plaintiffs’ expert Tom Bailey, who opined that the difference in value
between the defective RV and a non-defective RV was $24,500. (DE # 27 at 17.)
Ironically, Thor has also moved to exclude Bailey’s valuation testimony on the grounds
that it is unreliable and that he does not explain how he arrived at that figure. (DE # 24.)
Whatever weight should be placed on this competing figure, it is not enough to
convince the court that jurisdiction does not exist as a matter of legal certainty.
Whether a jury would ultimately agree with Thor regarding the “dealer
discount” or Bailey’s expert testimony is not at issue for the present motion. In response
to Thor’s 12(b)(1) challenge, plaintiffs submitted competent proof regarding the retail
price of the RV, its current value, and their pre-filing fees and costs. Applying the
Schimmer formula, those figures meet the $50,000 threshold. The court cannot say with
certainty that it is legally impossible for plaintiffs’ damages to reach $50,000. Meridian,
441 F.3d at 542. As such, the court finds that subject matter jurisdiction exists over
plaintiffs’ remaining claims.
Motions to Strike
Thor filed a motion to strike the valuation testimony of plaintiffs’ expert Tom
Bailey. (DE # 24.) However, the court did not rely upon Bailey’s opinion testimony in
deciding the present motions. Plaintiffs filed their own motion to exclude certain
exhibits accompanying Thor’s motion to dismiss. (DE # 31.) Plaintiffs’ motion sought to
foreclose Thor from introducing parol evidence for the purpose of contradicting the
retail price as listed on the sales contract. (DE # 32.) Resolution of this issue did not bear
on the outcome of Thor’s combined motion for judgment on the pleadings and motion
to dismiss for lack of subject matter jurisdiction. Accordingly, both motions are denied
For the foregoing reasons, Thor’s motion (DE # 26) is GRANTED, in part, and
DENIED, in part. Judgment on the pleadings is GRANTED as to plaintiffs’ UDTPA
claim. That claim (Count III) is dismissed. Thor’s motion to dismiss plaintiffs’ remaining
claims for lack of jurisdiction is DENIED.
Thor’s motion to exclude (DE # 24) is DENIED. Plaintiffs’ motion to strike (DE
# 31) is DENIED.
Plaintiffs are GRANTED until May 1, 2017, to file a brief motion seeking leave to
file an amended complaint. If no such motion is filed by that date, this matter will
proceed to the court’s trial calendar.
Date: March 31, 2017
s/ James T. Moody
JUDGE JAMES T. MOODY
UNITED STATES DISTRICT COURT
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