Nicholson v. Fitzgerald Auto Mall et al
Filing
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MEMORANDUM OPINION. Signed by Judge Richard D Bennett on 5/20/14. (bmhs, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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PAUL NICHOLSON
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Plaintiff,
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Civil Action No.: RDB-13-3711
v.
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FITZGERALD AUTO MALL, et al.
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Defendants.
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MEMORANDUM OPINION
The Plaintiff Paul Nicholson brought various statutory and common law claims
against Defendants FOC Inc. (trading as Fitzgerald Auto Mall and Fitzgerald Volkswagen),
and Volkswagen Group of America, Inc., in connection with the Defendants’ denial of a
warranty claim for a defect to his automobile. The Plaintiff asserts breach of warranty claims
pursuant to the Magnusson-Moss Warranty Act, 18 U.S.C. § 2301, et seq., the Maryland
Lemon Law, Md. Code Ann., Com. Law § 14-501, et seq., and the Uniform Commercial
Code, as adopted by Maryland in Md. Code Ann., Com. Law §§ 2-313 and 2-314, in addition
to Maryland common law claims for breach of contract, and fraud and misrepresentation.
Now pending are the Defendants’ Motions to Dismiss the Amended Complaint (ECF Nos.
30 & 31) and the Defendants’ Motions to Strike the Second Amended Complaint (ECF Nos.
34 & 35). The parties’ submissions have been reviewed and no hearing is deemed necessary.
See Loc. R. 105.6 (D. Md. 2011). For the reasons that follow, the Defendants’ Motions to
Strike the Second Amended Complaint (ECF Nos. 34 & 35) are DENIED, Defendants
Fitzgerald Auto Mall and Fitzgerald Volkswagen’s Motion to Dismiss (ECF No. 31) is
GRANTED, and Defendant Volkswagen Group of America, Inc.’s Motion to Dismiss
(ECF No. 30) is GRANTED IN PART and DENIED IN PART.1
BACKGROUND
For purposes of a motion to dismiss, this Court accepts as true the well-pled, nonconclusory factual allegations in a plaintiff’s complaint. See Aziz v. Alcolac, Inc., 658 F.3d 388,
390 (4th Cir. 2011). The Plaintiff purchased a new 2012 Volkswagen Passat on or about
December 27, 2011. Am. Compl. ¶¶ 1, 15, ECF No. 28. However, there is no allegation
with respect to the car dealership from which the Plaintiff purchased the vehicle, and it is
undisputed that Defendants Fitzgerald Auto Mall and Fitzgerald Volkswagen (collectively,
“Fitzgerald”) did not sell the vehicle in question to Nicholson. Def. Fitzgerald’s Mem. in
Support of Mot. to Dismiss 2, ECF No. 31-1.
At the time of purchase, Defendant
Volkswagen Group of America (“Volkswagen”) provided Nicholson with a New Vehicle
Limited Warranty, covering the vehicle for any manufacturer’s defect in material or
workmanship for a period of 3 years or 36,000 miles, and a Powertrain Limited Warranty to
correct any manufacturer’s defects associated with the engine, transmission, or drivetrain for
a period of five years or 60,000 miles. Am. Compl. ¶¶ 17-18. Both Warranties state that
they will be honored by “any authorized Volkswagen dealer in the United States, including
its territory.” Id. ¶ 23. The Plaintiff drove the Passat, and periodically had it serviced by
1
Concurrent with the original Complaint, the Plaintiff filed a Motion for Summary Judgment (ECF
No. 5). By filing successive amendments to the Complaint without renewing the Motion for
Summary Judgment, the Plaintiff appears to have abandoned that Motion. This Court also notes
that there is insufficient evidence in the record at this stage of the proceedings to warrant the entry
of summary judgment in the Plaintiff’s favor. Therefore, his Motion for Summary Judgment will be
DENIED. In addition, the Defendants’ Motions to Dismiss the Original Complaint (ECF Nos. 12
& 16) are DENIED AS MOOT.
2
mechanic Troy Gross, at his shop Troy’s Auto. Id. ¶ 26. At his last recorded oil change on
June 5, 2013, the vehicle had been driven 27,334 miles. Id.
On July 25, 2013, within 19 months of purchase, the Plaintiff was driving the vehicle
at approximately 50 miles per hour when he alleges that it suddenly accelerated to 75-80
miles per hour on its own. Am. Compl. ¶ 4. Immediately thereafter, the vehicle shut down,
white smoke emerged, and the car would not start again. Id. ¶ 5. Nicholson promptly
reported the incident to Defendant Fitzgerald and provided documentation of all three oil
changes that had been performed on the Passat by Troy’s Auto. Id. ¶¶ 24-27. Fitzgerald
provided a loaner car while the Plaintiff’s Passat was inspected at Fitzgerald’s facility. Id. ¶
34. Fitzgerald employee Andrew Day stated that there was a hole in the side of the engine, a
significant amount of antifreeze was spread throughout the engine compartment, and the
turbo cap was blown off.2 Id. ¶ 7-9.
On July 29, 2013, Day informed the Plaintiff by telephone that the warranty did not
cover the damage because the oil filter was too old. Id. ¶¶ 28-29. Day also stated that the
receipts from Troy’s Auto were “not acceptable.” Id. ¶ 29. The Plaintiff requested, and
Fitzgerald provided by facsimile, written documentation of the decision. Id. ¶ 30. However,
the written verification contradicted Day’s previous explanation; the fax stated that “it
appears engine was over full with oil.” Id. Although Nicholson pointed out the differing
statements, the Defendants provided no further explanation at that time. Id. ¶ 31. When
2
In his original and Amended Complaints, the Plaintiff alleged that his own mechanic, Troy Gross,
stated that the oil was clean, at a normal level, and had no water in it. Am. Compl. ¶¶ 6, 10. In his
Second Amended Complaint, the Plaintiff alleges that it was Day of Defendant Fitzgerald, not
Gross, who made this representation. Second Am. Compl. ¶¶ 6, 10. This discrepancy and the
propriety of the amendment are the subject of the pending Motions.
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Nicholson inquired as to how it was determined that the oil was overfilled when all of the oil
had blown out through a hole in the side of the engine, Day responded that it was
“speculation.” Id. ¶ 32. Day also stated his belief that the Plaintiff’s mechanic, Troy Gross,
was a “fraud” and that the invoices of his service were “fraudulent” because “Passat” had
been misspelled. Id. ¶ 33. On July 31, 2013, Fitzgerald’s Director of Service, Don Sanders
also expressed his opinion that the receipts seemed “suspicious” and “a fraud due to the
misspelling of ‘Passat.’” Id. ¶ 34. Sanders then demanded that Nicholson return the loaner
vehicle that Fitzgerald had provided. Id. Sanders stated that the decision had been “made by
a higher up.” Id. ¶ 35.
Later that same day, the Plaintiff forwarded the same service receipts to Defendant
Volkswagen Group of America, Inc. Id. ¶ 36. About one week later, on August 7th,
Volkswagen Regional Case Manager “Erin B.” sent the Plaintiff a fax informing him of
Volkswagen’s determination that the “crank case of the engine [was] overfilled with oil,” and
“this is not a manufacturer shortcoming.” Id. ¶¶ 36-37. Erin B. sent a second fax the same
day, which was identical except that it added, “The Baltimore Fixed Operations Manager
(FOM), our highest point of contact in the field, also reviewed the diagnosis, and has
determined that this is not a manufacturer shortcoming.” Id. ¶ 38. Nicholson alleges that
the Defendants made certain statements with the purpose of defrauding him by avoiding
payment for replacement or repair of the Passat. Am. Compl. ¶ 67.
In the opinion of the Plaintiff’s expert, “oil was forced out of the engine causing a
rod to blow and pierce the engine block wall, resulting in a catastrophic failure of the engine
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and vehicle.”3 Am. Compl. ¶ 20. According to the expert, faulty and improperly functioning
valve seals caused the engine to fail, and he ruled out other causes such as overfilling the
engine oil. Id. ¶¶ 20-21. In addition, the Plaintiff alleges that if the oil had been overfilled at
his last oil change in June of 2013, the engine would have blown almost immediately and he
could not have continued to drive it for almost two additional months. Am. Comp. ¶ 65.
On August 7, 2013, Defendant Fitzgerald charged the Plaintiff’s credit card $350.00
for the loaner car without authorization. Am. Compl. ¶ 39. That day, the Plaintiff had the
Passat towed to his residence, where he observed what appeared to be an aluminum seal
from the mouth of an oil container sitting on top of the engine. Id. ¶ 40. There was oil on
the aluminum seal and the oil filter missing. Id. The vehicle remains at the Plaintiff’s house
and the Defendants have refused to replace it or pay the cost of a new engine. Id. ¶¶ 24, 40.
The Plaintiff originally filed suit in the Circuit Court of Maryland for Anne Arundel
County via a verified Complaint (ECF No. 2). The Defendants removed the case to this
Court on the basis of federal question jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1441,
in light of the claim made under the Magnusson-Moss Warranty Act, 18 U.S.C. § 2310. The
Defendants each moved to dismiss (ECF Nos. 12 & 16). The Plaintiff filed an Amended
Complaint (ECF No. 28), asserting six counts against each Defendant, which the
Defendants again moved to dismiss (ECF Nos. 30 & 31). In responding to Volkswagen’s
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The Plaintiff’s expert is identified as Michael Fallon for the first time in the Second Amended
Complaint. Although there is a dispute regarding the filing of this amendment directly after the
Defendants argued in their Motions to Dismiss that the expert was not properly identified, this
Court concludes that whether the expert is identified by name or not is immaterial to the issue of
whether the Plaintiff has stated a claim sufficient to survive a motion to dismiss.
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Motion to Dismiss the Amended Complaint,4 the Plaintiff stated that due to a mistake in
drafting the Amended Complaint, he filed a Second Amended Complaint (ECF Nos. 32 &
33). The Defendants then moved to strike the Second Amended Complaint (ECF Nos. 34
& 35).
DISCUSSION
I.
Defendants’ Motions to Strike the Second Amended Complaint
At the outset, it is necessary to address the pending Motions to Strike, in order to
determine exactly what set of factual allegations are before this Court in deciding the
Motions to Dismiss—the facts asserted in the Amended Complaint (ECF No. 26) or the
Second Amended Complaint (ECF No. 33).
A. Standard of Review
Pursuant to Rule 15(a) of the Federal Rules of Civil Procedure, a plaintiff may amend
his or her complaint “once as a matter of course within . . . 21 days after the service of a
responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f),
whichever is earlier.” After such time has elapsed, or in the case of subsequent amendments,
“a party may amend its pleading only with the opposing party’s written consent or the
court’s leave.” Fed. R. Civ. P. 15(a)(2). Rule 15(a) requires that leave “shall be freely given
when justice so requires.” Id. In Foman v. Davis, 371 U.S. 178 (1962), the Supreme Court
enumerated certain factors to guide federal district courts in making a determination with
respect to granting leave to amend a complaint. The Court noted that, “[i]n the absence of
any apparent or declared reason—such as undue delay, bad faith or dilatory motive on the
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The Plaintiff did not specifically oppose Fitzgerald’s Motion to Dismiss the Amended Complaint
and does not address the legal arguments therein.
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part of the movant, repeated failure to cure deficiencies by amendments previously allowed,
undue prejudice to the opposing party by virtue of allowance of the amendment, futility of
amendment, etc.—the leave sought should, as the rules require, be ‘freely given.’” Id. at 182.
The United States Court of Appeals for the Fourth Circuit has held that Rule 15 “gives
effect to the federal policy in favor of resolving cases on their merits instead of disposing of
them on technicalities.” Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006). The court also
held that “leave to amend a pleading should be denied only when the amendment would be
prejudicial to the opposing party, there has been bad faith on the part of the moving party,
or the amendment would have been futile.” Id. at 427; see also Sciolino v. City of Newport News,
480 F.3d 642, 651 (4th Cir. 2007).
B. Analysis
The Defendants argue that this Court should not consider the Second Amended
Complaint or the facts asserted in Plaintiff’s Opposition to the Motions to Dismiss, to the
extent that they differ from the allegations in the Amended Complaint. It should be noted
that the Plaintiff did not seek or obtain the Defendants’ consent, or leave of Court, to file a
Second Amended Complaint, but merely did so after announcing that it would in its
Opposition to Volkswagen’s Motion to Dismiss. This was clearly not in compliance with
the requirement in Rule 15(a) that, after the initial period, “a party may amend its pleading
only with the opposing party’s written consent or the court’s leave.” See also Frederico v. Home
Depot, 507 F.3d 188, 201-02 (3d Cir. 2007) (“It is axiomatic that a complaint may not be
amended by the briefs in opposition to a motion to dismiss.”) (citation omitted).
Furthermore, the Plaintiff changed a crucial factual allegation regarding who stated that the
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oil was at a normal level. Compare Am. Compl. ¶¶ 6, 10 with Second Am. Compl. ¶¶ 6, 10. In
the verified Complaint filed in the Circuit Court of Maryland for Anne Arundel County and
in this Court, and again in the first Amended Complaint, Nicholson asserted that his
“personal mechanic, Troy Gross, checked the oil at the site of the breakdown and found that
no oil was leaking onto the ground and concluded that the oil was both clean, at a normal
operational level and had no water or other contaminant in it. He verified that the engine, in
warranty, was blown and could go no further.” Am. Compl. ¶ 10. “A verified complaint is
the equivalent of an opposing party affidavit for summary judgment purposes, when the
allegations contained therein are based on personal knowledge.” Mesmer v. St. Mary’s Cnty.,
No. DKC-10-1053, 2010 WL 4791884, at *9 n.8 (D. Md. Nov. 18, 2010) (quoting Williams v.
Griffin, 952 F.3d 820, 823 (4th Cir. 1991)).
The Defendants pointed out the inconsistency of the statement that the oil level was
normal with the Plaintiff’s allegation that the oil was forced out of the engine when faulty
cover seals caused a blown rod that pierced the engine block wall. Def. Volkswagen’s Mem.
in Support of Mot. to Dismiss 7, ECF No. 30-1. The Defendants noted, “when a complaint
contains inconsistent and self-contradictory statements, it fails to state a claim.” Hosack v.
Utopian Wireless Corp., No. DKC-11-0420, 2011 WL 1743297, at *5 (D. Md. May 6, 2011);
Ramos v. Bank of Am., N.A., No. DKC-11-3022, 2012 WL 5928732, at *4 (D. Md. Nov. 26,
2012) (noting that inconsistent allegations need not be taken as true in ruling on a motion to
dismiss). In response to the Motions to Dismiss the Amended Complaint, the Plaintiff,
without leave of Court, simply filed the Second Amended Complaint, now alleging that
Andrew Day of Defendant Fitzgerald was the one who made the representation to the
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Plaintiff that the oil in the car was clean, at a normal level, and had no water in it, and that
no other individual made such statements.
Although, at a minimum, the Plaintiff’s conduct demonstrates carelessness, this Court
cannot now conclude that the Plaintiff or his counsel has acted in bad faith as a ground to
disallow amendment. Likewise, amendment would not be futile. As to some counts in the
Second Amended Complaint, the Plaintiff asserts facts that, when taken as true, state a claim
upon which relief can be granted. Therefore, this Court weighs possible prejudice to the
Defendants against the desire to decide cases on their merits rather than dispose of claims
based on technicalities. Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006). If amendment is
allowed, any potential prejudice to the Defendants is minimal. While acknowledging that the
Plaintiff’s latest, technically improper amendment has caused a slight delay, the case is at
such an early stage that there is no surprise to the Defendants. The interest in deciding this
case on its merits strongly outweighs any inconvenience caused by the Plaintiff’s irregular
pleading. Accordingly, this Court will consider the allegations contained in the Plaintiff’s
Second Amended Complaint (ECF No. 33), and will deny the Defendants’ Motions to Strike
(ECF Nos. 34 & 35).
II.
Defendants’ Motions to Dismiss
This Court now turns to the substance of the Second Amended Complaint. After the
filing of the Second Amended Complaint, the Defendants renewed their Motions to
Dismiss, arguing that any amendment did not cure the pleading deficiencies already noted.
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A. Standard of Review
Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain a “short and
plain statement of the claim showing that the pleader is entitled to relief.” Rule 12(b)(6)
authorizes the dismissal of a complaint if it fails to state a claim upon which relief can be
granted. Fed. R. Civ. P. 12(b)(6). Therefore, “the purpose of Rule 12(b)(6) is to test the
sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a
claim, or the applicability of defenses.” Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th
Cir. 2006) (internal quotation marks and alterations omitted) (quoting Edwards v. City of
Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). When ruling on such a motion, the court must
“accept the well-pled allegations of the complaint as true,” and “construe the facts and
reasonable inferences derived therefrom in the light most favorable to the plaintiff.” Ibarra v.
United States, 120 F.3d 472, 474 (4th Cir. 1997). However, this Court “need not accept the
legal conclusions drawn from the facts, and [this Court] need not accept as true unwarranted
inferences, unreasonable conclusions or arguments.”
Nemet Chevrolet, Ltd. v.
Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir. 2009) (citation and internal quotation
marks omitted).
The Supreme Court’s opinions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007),
and Ashcroft v. Iqbal, 556 U.S. 662 (2009), “require that complaints in civil actions be alleged
with greater specificity than previously was required.” Walters v. McMahen, 684 F.3d 435, 439
(4th Cir. 2012) (citation omitted). The Supreme Court’s decision in Twombly articulated
“[t]wo working principles” that courts must employ when ruling on Rule 12(b)(6) motions to
dismiss. Iqbal, 556 U.S. at 678. First, while a court must accept as true all the factual
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allegations contained in the complaint, legal conclusions drawn from those facts are not
afforded such deference. Id.; Walters, 684 F.3d at 439 (“The mere recital of elements of a
cause of action, supported only by conclusory statements, is not sufficient to survive a
motion made pursuant to Rule 12(b)(6).” (citing Iqbal, 556 U.S. at 678.)).
Second, a
complaint must be dismissed if it does not allege “a plausible claim for relief.” Iqbal, 556
U.S. at 679, 683 (noting that a court must “draw on its judicial experience and common
sense” to determine whether the pleader has “nudged his claim across the line from
conceivable to plausible”) (citations, internal quotation marks, and alterations omitted).
B. Count I – Maryland Lemon Law Claim
The Defendants move to dismiss Count I on the ground that the defect to the Passat
occurred outside the time limit set forth in the Maryland Automotive Warranty Enforcement
Act, known as the Lemon Law. The Maryland Lemon Law requires that if a manufacturer
or factory branch, its agent, or its authorized dealer cannot repair a defect that substantially
impairs the value of a vehicle, the manufacturer must provide a comparable replacement
vehicle or refund the purchase price. Md. Code. Ann., Com. Law § 14-1502(c)(1)(i)-(ii). In
order for the Lemon Law to apply, however, the defect must have occurred during the
“Manufacturer’s warranty period,” which means the earlier of:
(i)
The period of the motor vehicle’s first 18,000 miles of operation; or
(ii)
24 months following the date of original delivery of the motor vehicle to the
consumer.
Md. Code. Ann., Com. Law § 14-1501(e)(1); Zitterbart v. Am. Suzuki Motor Corp., 958 A.2d
372, 383-84 (Md. Ct. Spec. App. 2008) (granting summary judgment to defendant where
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plaintiff provided no evidence of a defect that occurred “during the Lemon Law warranty
period”).
In this case, the Plaintiff alleges that the engine failure occurred on July 25, 2013,
after the vehicle had been driven at least 27,334 miles. Second Am. Compl. ¶ 26 (noting that
mileage at an oil change on June 5, 2013). He makes no allegation that he contacted any
Defendant regarding a defect, or that any defect existed, prior to the Passat having been
driven over 18,000 mile limit set forth in Section 14-502 of the Commercial Law Article.
Because the alleged defect did not occur during the period defined by the statute, the
Maryland Lemon Law does not apply to this case. Zitterbart, 958 A.2d at 383-84. Therefore,
the Defendants’ Motions to Dismiss will be granted as to Count I.
C. Counts II-V
In Counts II-V, the Plaintiff asserts claims for breach of express and implied
warranties under Sections 2-313 and 2-314 of the Commercial Law Article of the Annotated
Code of Maryland, a Maryland common law breach of contract claim, and a claim pursuant
to the Magnusson-Moss Warranty Act, codified at 15 U.S.C. § 2301, et seq. Counts II-V all
involve limited warranties based on Maryland law. See Laing v. Volkswagen of Am., Inc., 949
A.2d 26, 37 (Md. Ct. Spec. App. 2008) (“[Magnusson-Moss] actions for breach of limited or
implied warranties are governed by state laws.”); Bussian v. DaimlerChrysler Corp., 411 F. Supp.
2d 614, 624 (M.D.N.C. 2006) (noting that Magnusson-Moss claims are subject to the same
pleading requirements and defenses as state law warranty claims).5 Thus, the same factual
5
The principal difference between a Magnusson-Moss Warranty Act claim and a Maryland law
counterpart is that the federal law allows the recovery of attorneys’ fees. 15 U.S.C. § 2310(d)(2);
Laing, 949 A.2d at 37; see also infra note 7.
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allegations purportedly support all four of these Counts against each of the Defendants, but
these claims rise and fall based on the relationship between each Defendant and the Plaintiff.
As such, Counts II-V will be dismissed as against Fitzgerald but those claims against
Volkswagen will survive the Motion to Dismiss.
1. Defendants Fitzgerald Auto Mall and Fitzgerald Volkswagen
Fitzgerald did not sell the Plaintiff the Passat.
He bought it from another,
unidentified dealer, and Fitzgerald’s first involvement with Nicholson was on July 25, 2013
when he reported that the engine had shut down and would not restart.
Therefore,
Fitzgerald was not a party to the New Vehicle Limited Warranty or the Powertrain Limited
Warranty between Nicholson and Volkswagen, upon which Counts I-V are premised. See
Black’s Law Dictionary (9th ed. 2009) (defining warranty as “[a]n express or implied promise
that something in furtherance of the contract is guaranteed by one of the contracting
parties.”). Likewise, Fitzgerald is not a “warrantor” under the Magnusson-Moss Warranty
Act. 15 U.S.C. § 2310 (“For purposes of this section, only the warrantor actually making a
written affirmation of fact, promise, or undertaking shall be deemed to have created a
written warranty, and any rights arising thereunder may be enforced under this section only
against such warrantor and no other person.”). Accordingly, the warranty-based claims in
Counts II-V may not be enforced directly against Fitzgerald.
Neither is Fitzgerald liable as Volkswagen’s agent. Walton v. Mariner Health of Md., Inc.,
894 A.2d 584, 591 (Md. 2006) (“If the contract is to benefit the principal only, the agent is
immune from personal liability for breach of that contract.”). Under Maryland law, an agent
who acts on behalf of a disclosed principal is not bound by the contract and is insulated
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from liability. Id. (citing state and federal cases), accord Magnusson-Moss Warranty Act, 15
U.S.C. § 2307 (providing that a warrantor may designate and compensate a representative to
perform duties under a warranty, but “no such designation shall relieve the warrantor of his
direct responsibilities to the consumer or make the representative a cowarrantor.”). Thus,
although the terms of the Warranties stated that they would be honored by any authorized
dealer, this contractual term does not create direct liability against a non-signatory dealer.
Fitzgerald simply had the authority to act on Volkswagen’s behalf to determine whether the
damage to the Passat was covered by the applicable Warranties. But warranty claims are by
definition for manufacturer’s defects and are therefore paid by the manufacturer; the dealer
has no independent duty to perform warranty work without reimbursement from
Volkswagen. See 15 U.S.C. § 2307. The Plaintiff does not make any argument to the
contrary.
For all those reasons, Counts II-V will be dismissed as against Defendants
Fitzgerald Auto Mall and Fitzgerald Volkswagen.
2. Defendant Volkswagen
Defendant Volkswagen moves to dismiss Counts II-V on the ground that the
Plaintiff fails to adequately allege a “defect” that could support claims for either breach of
express or implied warranty under Md. Code Ann., Com. Law §§ 2-313 and 2-314, a
Maryland common law breach of contract claim, or a claim pursuant to the MagnussonMoss Warranty Act, 15 U.S.C. § 2301, et seq. The Plaintiff does not acknowledge the
plausibility standard of pleading set forth in Twombly and Iqbal, but rather argues that the
Second Amended Complaint meets the requirements for notice pleading. Pl.’s Opp. to
Motions to Strike 3. Nevertheless, contrary to Volkswagen’s characterization of the Second
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Amended Complaint, Nicholson has adequately alleged a defect. Nicholson plainly states
that he purchased the new Volkswagen Passat, that the vehicle suffered a catastrophic
failure, and that the failure occurred within the period applicable to several warranties.
Although it is Volkswagen’s position that the engine failed due to oil overfilling and not a
manufacturer’s defect, this Court does not decide the merits of the action at this stage.
Presley, 464 F.3d at 483 (noting that “the purpose of Rule 12(b)(6) is to test the sufficiency of
a complaint and not to resolve contests surrounding the facts”). Taking the Plaintiff’s wellpled factual allegations as true, the catastrophic engine failure resulted from faulty seals,
which (without deciding the question) could plausibly be construed as a manufacturer’s
defect covered by warranty. Volkswagen’s argument that the Plaintiff’s expert’s opinion is
speculation is not grounds for granting the Motion to Dismiss. Although the expert’s
determination may ultimately prove to be unsupported by the evidence, the Plaintiff need
not prove his case at this juncture. Sea Pines Real Estate Cos., 679 F.3d at 291 (“A complaint
need not make a case against a defendant or forecast evidence sufficient to prove an element of
the claim.”). He has stated a plausible claim for violations of the various warranties that may
apply, and therefore Defendant Volkswagen’s Motion to Dismiss Counts II-V will be
denied.6, 7
6
Volkswagen argues that Count IV for breach of contract should be dismissed for the additional
reason that it is duplicative of Count II for breach of express warranty. While both those claims are
premised on the same factual allegations, Count II is a statutory claim while Count IV is based solely
on the contract between the parties. Because the Plaintiff’s claim for breach of contract could exist
in the absence of the statute upon which Count II is based, any overlap in the claims is not grounds
for dismissal.
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This Court notes that the Plaintiff cannot claim attorneys’ fees or prejudgment interest for Counts
II (breach of express warranty), III (breach of implied warranty), IV (breach of contract), and VI
(fraud and misrepresentation) because even if he prevails on any of those claims, there is no
allegation of a contractual or statutory provision providing for fee shifting, and there is no allegation
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D. Count VI – Fraud and Misrepresentation
Finally, all Defendants move to dismiss Nicholson’s claim in Count VI for fraud and
misrepresentation. Pursuant to Rule 9 of the Federal Rules of Civil Procedure, a higher
standard applies to pleading a fraud claim. “In alleging fraud or mistake, a party must state
with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b).
“[T]he ‘circumstances’ required to be pled with particularity under Rule 9(b) are ‘the time,
place, and contents of the false representations, as well as the identity of the person making
the misrepresentation and what he obtained thereby.” Harrison v. Westinghouse Savannah River
Co., 176 F.3d 776, 784 (4th Cir. 1999) (citation omitted). In Maryland, the elements of fraud
or misrepresentation are:
(1) that the defendant made a false representation to the plaintiff, (2) that its
falsity was either known to the defendant or that the representation was made
with reckless indifference as to its truth, (3) that the misrepresentation was
made for the purpose of defrauding the plaintiff, (4) that the plaintiff relied on
the misrepresentation and had the right to rely on it, and (5) that the plaintiff
suffered compensable injury resulting from the misrepresentation.
SpinCycle, Inc. v. Kalender, 186 F. Supp. 2d 585, 590 (D. Md. 2002) (citing Alleco, Inc. v. Harry &
Jeannette Weinberg Found., Inc., 665 A.2d 1038, 1047 (Md. 1995)).
The Plaintiff alleges that the Defendants gave a fraudulent explanation for the
damage to his vehicle in order to avoid replacing the car or paying for a new engine. He also
asserts that he relied on these representations, but does not state how he so relied or why
of wrongful conduct forcing the Plaintiff into litigation with a third party or of malicious
prosecution. Nova Research, Inc. v. Penske Truck Leasing Co., 952 A.2d 275, 281 (Md. 2008) (noting the
limited exceptions to the American Rule on attorneys’ fees). As noted, supra note 6, if the Plaintiff
finally prevails on his claim in Count V against Defendant Volkswagen under the Magnusson-Moss
Warranty Act, he may seek attorneys’ fees. 15 U.S.C. § 2310(d)(2). In addition, because his fraud
claim in Count VI will be dismissed, the Plaintiff will not be allowed to seek punitive damages.
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any reliance was justifiable. Likewise, he does not state how any misrepresentation by the
Defendants caused him any damages beyond the engine that was already blown.
Even assuming for the purposes of this Motion to Dismiss that the Defendants
intentionally made misrepresentations to Nicholson for the purpose of defrauding him, he
alleges that he disagreed with their conclusions and did not believe them. Therefore, he did
not rely on the allegedly false representations. Moreover, he did not act on any of the
Defendants’ representations by, for example, paying the Defendants for repairs. He does
not allege any other way in which he was damaged by being told that the engine failure was
caused by overfilling of oil. As with any claim, a threadbare recital of the elements of a fraud
cause of action is insufficient to survive a motion to dismiss. Walters v. McMahen, 684 F.3d
435, 439 (4th Cir. 2012). Therefore, the Plaintiff has failed to plead his claim for fraud and
misrepresentation according to the requirements of Rule 9 of the Federal Rules of Civil
Procedure. Accordingly, Defendant Fitzgerald’s Motion to Dismiss will be granted as to the
fraud claim asserted in Count VI.
In sum, Nicholson has not stated any claims upon which relief can be granted against
Fitzgerald Auto Mall or Fitzgerald Volkswagen,8 but has stated plausible claims against
Defendant Volkswagen in Counts II-V only.
CONCLUSION
For the reasons stated above, the Defendants’ Motions to Strike the Second
Amended Complaint (ECF Nos. 34 & 35) are DENIED, Defendants Fitzgerald Auto Mall
8
The Plaintiff has not argued in opposition to Fitzgerald’s legal arguments, or contested Fitzgerald’s
statement that because he has elected not to oppose its Motion to Dismiss, that Motion should be
granted. Therefore, in addition to the grounds for dismissal noted above, this Court concludes that
the Plaintiff has abandoned his claims against Fitzgerald.
17
and Fitzgerald Volkswagen’s Motion to Dismiss (ECF No. 31) is GRANTED, and
Defendant Volkswagen Group of America, Inc.’s Motion to Dismiss (ECF No. 30) is
GRANTED IN PART and DENIED IN PART. Additionally, the Defendant’s Motions to
Dismiss the Original Complaint (ECF Nos. 12 & 16), as well as the Plaintiff’s Motion for
Summary Judgment (ECF No. 5), are DENIED AS MOOT.
A separate Order follows.
Dated: May 20th, 2014
/s/
Richard D. Bennett
United States District Judge
18
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