Rivera v. Ford Motor Company
OPINION & ORDER Granting In Part and Denying In Part Defendant's Motion to Dismiss (Dkt. 13 ) Signed by District Judge Mark A. Goldsmith. (Sandusky, K)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
Case No. 16-cv-13786
HON. MARK A. GOLDSMITH
FORD MOTOR COMPANY,
OPINION & ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT’S
MOTION TO DISMISS (Dkt. 13)
This matter is before the Court on Defendant Ford Motor Company’s motion to dismiss
(Dkt. 13). Plaintiff Jon Rivera has brought this action on behalf of himself and a class of current
and former owners of 2012-2015 Ford Focus vehicles that were allegedly sold with defective
evaporative emission control (“EVAP”) systems. These defective systems allegedly caused the
vehicles to stall while in a motion, a condition that Rivera alleges Ford was aware of at the time
of sale. For the reasons stated below, the Court grants in part and denies in part Ford’s motion.
In May 2013, Plaintiff John Rivera purchased a new 2013 Ford Focus SE from Desoto
Ford in Arcadia, Florida. Am. Compl. ¶ 15 (Dkt. 12). In October 2016, nearly three and a half
years after his purchase, Rivera began experiencing erratic idling in his vehicle. Id. ¶ 17. This
issue worsened; in one incident, the vehicle began to stall while traveling fifty miles per hour. Id.
Rivera also noticed that the vehicle’s fuel gauge was erratic, with fuel levels changing from a
quarter tank full to three-quarters full in an instant. Id. A repair technician at Charlotte County
Ford subsequently informed Rivera that his vehicle required replacement of the fuel vapor valve,
fuel tank, and fuel pump. Id. at 18. After being quoted a repair cost of approximately $1,927.50,
Rivera was informed that the repairs would not be covered under the terms of Ford’s warranties.
Rivera then went to Desoto Ford, the dealership where he purchased the vehicle, and
requested that the dealership repair the vehicle under warranty. Id. ¶ 19. The dealership informed
Rivera that it was aware of a problem with the Ford Focus’s EVAP but that any repairs would not
be covered under the factory warranty. Id.
The vehicle’s EVAP is designed to limit fuel emissions, produced in the fuel tank, from
entering the atmosphere. Id. ¶ 29. The vehicle is designed so that vapors emitting from the fuel
tank travel to a canister containing charcoal. Id. ¶ 30. The charcoal absorbs the fuel vapor for
storage purposes. Id. When the car is running, the fuel vapors stored in the canister are funneled
to the engine to be purged. Id. ¶ 31. This prevents the fuel vapors from being released as
The vehicle’s purge valve, the part at issue here, regulates how much fuel vapor enters the
engine by opening or closing as needed. Id. ¶ 32. An electronically-operated solenoid, controlled
by the vehicle’s engine computer, determines when the purge valve should allow fuel vapors to
enter the engine. Id. Generally, the solenoid opens the purge valve when the vehicle is running
and fully warmed up. Id. When the engine is off, the purge valve is shut, meaning no fuel vapors
should enter the engine. Id. When the purge valve becomes stuck in the open position, like with
Rivera’s and the rest of the putative class members’ vehicles, suction is created when the vehicle’s
engine is running. Id. ¶ 36. As a result, in addition to fuel vapors, raw fuel is sucked through the
EVAP canister, through the purge valve, and directly into the engine. Id. This raw fuel causes the
engines in the class vehicles to abruptly hesitate and stall while driving. Id. Other putative class
members have reported loss of engine power when traveling in excess of forty-five miles per hour.
Id. ¶ 37. In addition to the loss of engine power, Ford technicians have determined that the purge
valve has caused fuel tanks to collapse due to raw fuel leaving the tank rapidly. Id. ¶ 39.
In light of Desoto Ford’s statement regarding issues with the purge valve, Rivera called
Ford directly and requested a repair under warranty. Id. ¶ 20. After declining his request, Ford
informed Rivera that he could decline paying for repairs and wait to see if Ford decided to issue a
recall on the purge valves. Id. ¶ 20. Rivera subsequently paid $226.14 to have his purge valve
fixed, but has not driven it since because he believes it is not fit for regular and safe operation. Id.
A. Ford’s Knowledge of the Defective Purge Valve
Rivera alleges, “upon information and belief,” that Ford was aware of the EVAP defect
through the following: (i) Ford’s own records of consumer complaints; (ii) dealership repair
records; (iii) records from the National Highway Traffic Safety Administration (“NHTSA”); (iv)
warranty and post-warranty claims; and (v) its own internal Technical Service Bulletins (“TSB”).
Id. ¶ 41. As an example, Rivera alleges that Ford issued a TSB to its authorized dealerships in
March 2015 regarding inaccurate fuel gauge and inaccurate distance-until-empty readings in the
putative class members’ vehicles. Id. ¶ 42. In the TSB, Ford told dealers to replace the purge
valve, the evaporative emission canister, the fuel tank, and/or the fuel pump module if the
consumer complained of an inaccurate fuel gauge or inaccurate distance-until-empty reading. Id.
¶ 43. Rivera also alleges that “[a]s experienced manufactures [sic] Ford likely conducts tests on
incoming components, including the EVAP system, to verify the parts are free from defect and
align with Ford’s specifications.” Id. ¶ 44. Thus, according to Rivera, “Ford knew or should have
known the EVAP system was defective.” Id.
Rivera also alleges that Ford should have learned of the defective EVAP system “due to
the sheer number of reports received from dealerships.” Id. ¶ 45. Ford received numerous reports
from dealerships that customers were experiencing issues with the EVAP system. Id. These
complaints ultimately led to the release of the TSB. Id. Ford’s customer relations department also
collects and analyzes field data, including repair requests made at dealerships, technical reports
prepared by engineers, parts sales reports, and warranty claims data. Id. Ford’s warranty
department also analyzes data submitted by its dealerships in order to identify trends in its vehicles.
Id. ¶ 46. When a repair is made under warranty, dealerships must provide Ford with detailed
documentation of the problem and the fix employed to correct it. Id.
Finally, Rivera alleges that the NHTSA’s office of defects investigation has received
complaints regarding the class vehicles’ EVAP systems. Id. ¶ 52. Rivera lists six examples of
these complaints, which were filed between May 5, 2015 and July 31, 2016. Id.
B. Ford’s Warranties
Ford issues the following warranties with each class vehicle: (i) a new vehicle limited
warranty; (ii) a powertrain warranty; (iii) an emissions defect warranty; and (iv) an emissions
performance warranty. Id. ¶ 47. Under the new vehicle limited warranty, Ford agrees to repair
defects reported within the earlier of 3 years or 36,000 miles. Id. ¶ 48. Under the powertrain
warranty, Ford agrees to repair defects affecting various powertrain components within the earlier
of 5 years or 60,000 miles. Id. ¶ 49. Federal law requires vehicle manufacturers to supply a
minimum 2 year or 24,000 mile emissions defect warranty, which covers any covered parts that
fail to function due to manufacturing errors, and a 2 year or 24,000 mile emissions performance
warranty, which covers repairs necessitated due to a failed emissions test. Id. ¶ 50. Finally, vehicle
manufacturers must also issue an 8 year or 80,000 mile emissions defect warranty on certain
emission system parts. Id. ¶ 51. Rivera alleges that repairs associated with the EVAP system
should be included in these and other warranties. Id. ¶¶ 48-51.
In its motion, Ford argues that the 8 year or 80,000 mile emission defect warranty on certain
emission system parts and the 5 year or 60,000 mile warranty on certain powertrain components
are not applicable. Def. Mot. at 6 (Dkt. 13). It notes that the 8 year or 80,000 mile warranty is, by
its terms, only applicable to repairs of the catalytic converter, the electronic emissions control unit,
and onboard emissions diagnostic devices. See Warranty Guide, Ex. A to Def. Mot., at 18 (Dkt.
13-1). The class vehicles’ purge valve is not listed. Id. It also is not listed in the components
covered by the 5 year or 60,000 mile warranty. Id. at 10-11.
II. STANDARD OF REVIEW
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’ 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.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[T]he tenet that a
court must accept as true all of the allegations contained in a complaint is inapplicable to legal
Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Id. “In ruling on a motion to dismiss, the Court may
consider the complaint as well as . . . documents referenced in the pleadings and central to
plaintiff's claims.” Knight v. Bank of Am., No. 16-11662, 2016 WL 6600041, at *3 (E.D. Mich.
Nov. 8, 2016). Because the express warranty is referenced in the pleadings and is central to many
of Rivera’s claims, it will be considered in the Court’s ruling.
A. Choice of Law
In their pleadings, the parties do not address whether the Court must apply the laws of each
consumer’s state to their claims, or whether each claim can be analyzed under Michigan law, the
state of which Ford is a citizen. Ford only briefly argues in its motion that, under Michigan’s
choice of law rules, Florida law applies to Rivera’s individual claims. Because of “the minimal
attention given to this issue by both parties,” and because Florida and Michigan law do not conflict
at this stage of the proceedings, no choice-of-law analysis is necessary. Hitachi Med. Sys. Am.,
Inc. v. Branch, No. 5:09-CV-01575, 2010 WL 816344, at *5 (N.D. Ohio Mar. 4, 2010). The Court
will thus analyze each claim under both Florida and Michigan law, as the parties have done.
B. Express Warranty
Ford first argues that Rivera’s express warranty claim should be dismissed because he has
not alleged a failure or malfunction within any of the relevant warranty periods. Despite alleging
in his complaint that all class vehicles were covered by four separate warranties, Rivera, in his
response to Ford’s motion, does not rebut Ford’s claim that none of the warranties is applicable.
Instead, Rivera argues that the limitations imposed on the warranties were unconscionable.
A plaintiff must allege both substantive and procedural unconscionability when claiming a
breach of warranty based on the theory of unconscionability. Pendergast v. Sprint Nextel Corp.,
592 F.3d 1119, 1134 (11th Cir. 2010). However, these elements “need not be present in the same
degree.” Basulto v. Hialeah Auto., 141 So. 3d 1145, 1159 (Fla. 2014) (quotation marks omitted);
see also Whirlpool Corp. v. Grigoleit Co., 713 F.3d 316, 321 (6th Cir. 2013). Courts use a “sliding
scale” when determining the existence of unconscionability. Basulto, 141 So. 3d at 1159. “In
other words, the more substantively oppressive the contract term, the less evidence of procedural
unconscionability is required to come to the conclusion that the term is unenforceable, and vice
“A contract is substantively unconscionable if its provisions are so outrageously unfair as
to shock the judicial conscience.” Licul v. Volkswagen Grp. of Am., Inc., No. 13-61686-CIV,
2013 WL 6328734, at *3 (S.D. Fla. Dec. 5, 2013). It cannot be said that the terms of the express
warranty here were substantively unconscionable. The court in Licul, addressing whether a 2 year
or 24,000 mile warranty was unconscionable, noted that the plaintiffs had not even pleaded
substantive unconscionability. The court stated that this failure to plead was “understandable
given that such limitations are both common in the industry and routinely enforced by the courts.”
Id.; see also In re OnStar Contract Litig., 278 F.R.D. 352, 385 (E.D. Mich. 2011) (noting that “the
vast majority of courts . . . have ruled that any alleged ‘defect’ that occurs outside of the time or
mileage limits of the applicable written warranty may not be the basis for an express warranty
claim” and only allowing express warranty claims to proceed based on allegations of
unconscionability as to those plaintiffs proceeding under West Virginia law, a state with a minority
view). Because Rivera cannot demonstrate substantive unconscionability, his express warranty
Even if Rivera could demonstrate substantive unconscionability, he would still have to
establish procedural unconscionability. Courts applying Florida law consider the following:
(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.
PB Prop. Mgmt., Inc. v. Goodman Mfg. Co., L.P., No. 3:12-CV-1366-J-20JBT, 2013 WL
12172912, at *4 (M.D. Fla. Aug. 28, 2013).
Rivera’s claim of procedural unconscionability rests on whether Ford had presale
knowledge of the defective purge valve. Rivera cites to Goodman, where the court held that,
“under Florida law, a warranty limitation may be unconscionable when a defect is latent and the
manufacturer knows that the product’s effectiveness is questionable.” Id. at *5. Ford cites to
Licul, where the court held that “[a] defendant’s knowledge of a latent defect at the time of sale,
however, does not salvage a claim for breach of express warranty where the warranty has expired
before the defect manifests.” Licul, 2013 WL 6328734, at *2. The court noted that “[V]irtually
all product failures discovered in automobiles after the expiration of the warranty can be attributed
to a ‘latent defect’ that existed at the time of sale or during the term of the warranty.” Id. (quoting
Abraham v. Volkswagen of Am., Inc., 795 F.2d 238, 250 (2d Cir. 1986)). “Manufacturers are
aware of these potential failures and consider them in pricing and setting limitations upon
warranties. To hold that a manufacturer’s knowledge of potential failures renders such limitations
unenforceable would thus ‘render meaningless time/mileage limitations in warranty coverage,’
and would be contrary to the overwhelming weight of precedent enforcing such limitations.” Id.
(quoting Abraham, 795 F.2d at 250). Abraham appears to represent the majority view. See, e.g.,
Chiarelli v. Nissan N. Am., Inc., No. 14-CV-4327 NGG VVP, 2015 WL 5686507, at *7 (E.D.N.Y.
Sept. 25, 2015) (“The case law is clear . . . [that] a defendant’s knowledge of a latent defect does
not render unconscionable a limitation contained in an express warranty.”); Hart v. Louisiana-Pac.
Corp., 641 F. App’x 222, 228-229 (4th Cir. 2016). Even assuming presale knowledge was
sufficiently pleaded, such knowledge, standing alone, is insufficient to establish procedural
C. Covenant of Good Faith and Fair Dealing
Ford next argues that Rivera’s claim for breach of the implied covenant of good faith and
fair dealing should be dismissed because Michigan law does not recognize such a claim. It also
argues that a claim does not lie under Florida law because the covenant cannot be used to override
the express contractual term that Ford was only obligated to repair defects within the warranty
period. It also notes that the covenant cannot be used to create a breach of contract where there is
no breach of an express term. In response, Rivera does not address whether the covenant is
recognized under Michigan law. Instead, he argues that Ford breached its duty of good faith and
fair dealing under Florida law when it acted in bad faith to deny repairs for the defective purge
“Unlike some other jurisdictions, Michigan does not recognize a cause of action for breach
of the implied covenant of good faith and fair dealing.” In re Leix Estate, 797 N.W.2d 673, 683
(Mich. Ct. App. 2010) (citation and quotation marks omitted). However, Florida does recognize
this implied covenant. Florida courts have held that:
[T]he implied covenant of good faith and fair dealing is designed to
protect the contracting parties’ reasonable expectations . . . [t]hus,
where the terms of the contract afford a party substantial discretion
to promote that party’s self-interest, the duty to act in good faith
nevertheless limits that party’s ability to act capriciously to
contravene the reasonable contractual expectations of the other
Cox v. CSX Intermodal, Inc., 732 So. 2d 1092, 1097-1098 (Fla. Dist. Ct. App. 1999). While the
covenant of good faith and fair dealing exists under Florida law, “the reach of this implied
contractual covenant is restricted in several respects.” Snow v. Ruden, McClosky, Smith, Schuster
& Russell, P.A., 896 So. 2d 787, 791 (Fla. Dist. Ct. App. 2005). “First, the implied covenant is
not an independent term within the parties’ contract.
Thus, it cannot override an express
contractual provision.” Id. Second, “[t]here can be no cause of action for a breach of the implied
covenant absent an allegation that an express term of the contract has been breached.” Id. at 792.
Finally, a cause of action based on the covenant will not lie where the allegations underlying the
claimed breach are duplicative of those which support the claim for breach of contract. Burger
King Corp. v. Weaver, 169 F.3d 1310, 1318 (11th Cir. 1999).
The covenant is instead “an interpreting, gap-filling tool of contract law.” Shibata v. Lim,
133 F. Supp. 2d 1311, 1318 (M.D. Fla. 2000). “It determines when a party, although not breaching
the terms of the contract in a technical sense, may no longer pursue its own self-interest at the other
party’s expense.” Enola Contracting Servs., Inc. v. URS Grp., Inc., No. 5:08CV2-RS-EMT, 2008
WL 1844612, at *3 (N.D. Fla. Apr. 23, 2008). “That situation ordinarily arises when: 1) the
contract is ambiguous about the permissibility of the conduct, or 2) when the conduct is undertaken
pursuant to a grant of discretion and the scope of that discretion has not been designated.” Shibata,
133 F. Supp. 2d at 1318. “When, however, the express terms of the contract determine the
permissibility of the conduct, no gap-filler is needed and the covenant does not apply.” Id. at 1319.
As noted above, Rivera does not contest that Michigan law does not recognize the implied
covenant of good faith and fair dealing. He instead argues that Ford violated the implied covenant
under Florida law “when it arbitrarily, capriciously, and in bad faith refused to approve the EVAP
Defect repairs for Class members.” Pl. Resp. at 12 (Dkt. 16). This argument is unavailing. The
warranty does not leave any room for discretion in the parties’ performance; its express terms
determine the permissibility of their conduct. Shibata, 133 F. Supp. 2d at 1319. If a defect
occurred within the first 3 years or 36,000 miles, Ford was obligated to make repairs.1 If an issue
As noted by Ford, the allegedly defective component at issue here, the purge valve, is not covered
by the 5 year or 60,000 miles warranty or the 8 year or 80,000 mile warranty. See Warranty Guide
at 10-11, 18. Neither warranty lists the purge valve as one of the components to be repaired. See
id. While Rivera lists these warranties in his amended complaint, he does not argue that they are
applicable in his response to Ford’s motion; he only argues that the warranties are unconscionable.
arose outside of those parameters, Rivera was responsible for any necessary repairs. The implied
covenant of good faith and fair dealing did not apply to override the terms of the warranty to
require Ford to make repairs to Rivera’s vehicle in October 2016, three years and five months after
he purchased his vehicle. See Snow, 896 So. 2d at 791.
As a result, Rivera’s claim for breach of the covenant of good faith and fair dealing fails.
D. Unjust Enrichment
Rivera states in his response that the putative class voluntarily dismisses with prejudice its
unjust enrichment claim under Michigan law. Pl. Resp. at 23. The Court will, therefore, only
analyze whether Rivera has sufficiently pleaded a claim of unjust enrichment under Florida law.
A claim for unjust enrichment under Florida law requires “(1) a benefit conferred upon a
defendant by the plaintiff, (2) the defendant’s appreciation of the benefit, and (3) the defendant’s
acceptance and retention of the benefit under circumstances that make it inequitable for him to
retain it without paying the value thereof.” United Techs. Corp. v. Mazer, 556 F.3d 1260, 1270
(11th Cir. 2009). “No cause of action in unjust enrichment can exist where the parties’ relationship
is governed by an express contract.” Zarrella v. Pac. Life Ins. Co., 755 F. Supp. 2d 1218, 1227
(S.D. Fla. 2010). “Though Rule 8 permits alternative pleading, ‘an unjust enrichment claim can
only be pled in the alternative if one or more parties contest the existence of an express contract
governing the subject of the dispute.’” Id. (quoting In re Managed Care Litig., 185 F. Supp. 2d
1310, 1337-1338 (S.D. Fla. 2002)).
In its motion, Ford argues that there cannot be an unjust enrichment claim because the
express warranty governs this dispute. Rivera argues that “the warranty agreement is not at issue
under this claim” because he has alleged that “Ford was unjustly enriched when . . . the Class
Vehicle [was purchased] due to Ford’s false representations regarding its capabilities and value.”
Pl. Resp. at 12. In support of this claim, Rivera notes his allegation in count three of the amended
complaint which states that Ford “expressly warranted that the Class Vehicles were of high quality
and, at a minimum, would work properly.” Id. (citing Am. Comp. ¶ 97). However, count three of
the amended complaint is a claim for breach of the express warranty. Indeed, in the next paragraph,
Rivera specifically alleges that Ford “breached this warranty by selling to Plaintiff and Class
members the Class Vehicles with known EVAP system problems, which are not of high quality,
and which fail prematurely and/or fail to function properly.” Am. Compl. ¶ 98. Rivera can hardly
claim that the express warranty does not govern this issue, when he explicitly alleges in the
amended complaint that Ford’s representations regarding the quality of the class vehicles
constituted a breach of the express warranty.
Rivera argues that even if the express warranty governs this issue, Federal Rule of Civil
Procedure 8(a)(3) permits pleading in the alternative, even if the theories are inconsistent. In
support of this contention, Rivera cites to authority under Florida law that holds a claim of unjust
enrichment may survive a motion to dismiss when it is brought alongside a claim for breach of
contract. See In re Checking Account Overdraft Litig., 694 F. Supp. 2d 1302, 1321 (S.D. Fla.
2010) (“Defendants have not conceded that Plaintiffs are entitled to recovery under the contract,
and it is possible that if their contractual claim fails, Plaintiffs may still be entitled to recovery
under an unjust enrichment theory.”); see also Williams v. Bear Stearns & Co., 725 So. 2d 397,
400 (Fla. Dist. Ct. App. 1998) (“It is only upon a showing that an express contract exists that the
unjust enrichment or promissory estoppel count fails. Until an express contract is proven, a motion
to dismiss a claim for promissory estoppel or unjust enrichment on these grounds is premature.”).
The cases relied upon by the court in In re Checking dealt with instances where the
existence of a contract had not yet been established or the contract was established and did not
apply to certain goods. See Tracfone Wireless, Inc. v. Access Telecom, Inc., 642 F. Supp. 2d
1354, 1366 (S.D. Fla. 2009); Manicini Enterprises, Inc. v. Am. Exp. Co., 236 F.R.D. 695, 699
(S.D. Fla. 2006); Mobil Oil Corp. v. Dade Cty. Esoil Mgmt. Co., 982 F. Supp. 873, 880 (S.D. Fla.
1997). In Williams, the Court held that unjust enrichment claims were properly dismissed as to
those defendants who did not dispute the existence of a contract. Williams, 725 So. 2d at 400.2
Because the express warranty governs the claims at issue, Rivera’s unjust enrichment claim
Ford also argues that Rivera’s common law fraud claim should be dismissed because he
has not alleged a duty to disclose the alleged defective purge valve under either Florida or
Michigan law. Rivera argues that Florida law required disclosure of the defect in light of the
parties’ contractual relationship. He also contends that, under Michigan law, Ford had a duty to
disclose information that he could not have reasonably been made aware of.
Under Florida law, “[a] defendant’s knowing concealment or non-disclosure of a material
fact may only support an action for fraud where there is a duty to disclose.” TransPetrol, Ltd. v.
Radulovic, 764 So. 2d 878, 879 (Fla. Dist. Ct. App. 2000). “[S]uch duty arises when one party
has information that the other party has a right to know because of a fiduciary or other relation of
trust or confidence between them.” Id. at 880 (quoting State v. Mark Marks, P.A., 654 So. 2d
1184, 1189 (Fla. Dist. Ct. App. 1995)). An exception to this rule is that “[a] duty to disclose may
arise where a party undertakes to disclose certain facts, such that the party must then disclose the
To the extent the holding in In re Checking diverges from Williams, the latter represents the
correct view of Florida law; in fact many jurisdictions follow the same principle that where a
contract unquestionably governs a contractual relationship, unjust enrichment claims may not be
entertained. See, e.g., Restatement (Second) of Contracts § 373 (1981).
entire truth known to him.” Marriott Int’l, Inc. v. Am. Bridge Bahamas, Ltd., 193 So. 3d 902, 908
(Fla. Dist. Ct. App. 2015). Rivera does not make any allegations that Ford disclosed certain facts
regarding the EVAP system at any time before, during, or after the sale. As a result, Ford only
had a duty to disclose the defect with the EVAP system if it was a fiduciary or in another
relationship of trust or confidence with Rivera.
Ford notes that it was not Rivera’s fiduciary and argues that it did not have any other
relation of trust or confidence with him. Rivera argues that a contractual relationship gives rise to
a duty to disclose, noting the court’s holding in TransPetrol that because there was no
“confidential, contractual, or fiduciary relationship” between the company and its lawyers and
accountants, there was no duty to disclose. TransPetrol, 764 So. 2d at 880 (emphasis added). As
Ford points out, this statement was likely not intended to hold that any and all contractual
relationships give rise to confidential relationships. This would create an exception that would
swallow the rule that disclosure is only required when a special relationship exists. Courts in
Florida have required more than the existence of a contract between parties in determining the
existence of a relationship of trust or confidence. See Marriott, 193 So. 3d at 908 (“American
Bridge did not argue or introduce evidence at trial to support a finding that a fiduciary obligation,
privity, or other type of relationship existed that would have created a duty by Marriott to disclose
the funds RCRI had available to finance its contract with American Bridge.”); Friedman v. Am.
Guardian Warranty Servs., Inc., 837 So. 2d 1165, 1165 (Fla. Dist. Ct. App. 2003) (finding no duty
to disclose when the parties had entered into an automobile service contract). Because there was
no duty to disclose, Rivera has not pleaded a claim of fraud under Florida law.
Michigan has recognized a doctrine known as “‘silent fraud,’ also known as fraud by
nondisclosure or fraudulent concealment.” M&D, Inc. v. W.B. McConkey, 585 N.W. 2d 33, 37
(Mich. Ct. App. 1998). Under this doctrine, “silence cannot constitute actionable fraud unless it
occurred under circumstances where there was a legal duty of disclosure.” Id. As noted above,
Ford had no legal duty of disclosure. As a result, Rivera’s silent fraud claim under Michigan law
F. Florida Deceptive and Unfair Trade Practices Act
Finally, Ford argues that Rivera has not stated a claim under the Florida Deceptive and
Unfair Trade Practices Act (“FDUTPA”) because he failed to allege that Ford’s alleged omission
about the defective purge valve misled consumers. The Court disagrees.
“In order to assert a claim for damages under FDUTPA, a plaintiff must establish: (1) a
deceptive act or unfair practice, (2) causation, and (3) actual damages.” State v. Beach Blvd. Auto.
Inc., 139 So. 3d 380, 393 (Fla. Dist. Ct. App. 2014). Florida courts define a “deceptive act” within
the FDUTPA “as ‘a representation, omission, or practice that is likely to mislead the consumer
acting reasonably in the circumstances, to the consumer’s detriment.’” Caribbean Cruise Line,
Inc. v. Better Bus. Bureau of Palm Beach Cnty., Inc., 169 So. 3d 164, 169 (Fla. Dist. Ct. App.
2015) (quoting PNR, Inc. v. Beacon Prop. Mgmt., Inc. 842 So. 2d 773, 777 (Fla. 2003)). An
“unfair practice” is defined as “‘one that offends established public policy and one that is immoral,
unethical, oppressive, unscrupulous, or substantially injurious to consumers.’” Id. (quoting PNR,
842 So. 2d at 777). The FDUTPA has “strengthened existing legal protections for consumers by
creating a private right of action to seek remedies for various unfair practices and deceptive acts
in the conduct of trade or commerce.” Velasco v. Chrysler Grp. LLC, No. CV 13-08080 DDP
VBKX, 2014 WL 4187796, at *5 (C.D. Cal. Aug. 22, 2014).
Courts have consistently held that “FDUTPA claims premised on a manufacturer’s failure
to disclose a known, latent defect” are sufficient to survive a motion to dismiss. Chiarelli, 2015
WL 5686507, at *17; see also Velasco, 2014 WL 4187796, at *1 (failure to disclose defect with
vehicles’ electrical systems sufficient to state a claim under FDUTPA); In re Porsche Cars N. Am.,
Inc., 880 F. Supp. 2d 801, 813 (S.D. Ohio 2012) (failure to disclose defect with plastic coolant
tubes constituted a valid claim under FDUTPA); Matthews v. Am. Honda Motor Co., No. 1260630-CIV, 2012 WL 2520675, at *1 (S.D. Fla. June 6, 2012) (failure to disclose paint
discoloration was actionable under the FDUTPA). Doll v. Ford Motor Co., 814 F. Supp. 2d 526,
548 (D. Md. 2011) (FDUTPA claim was meritorious where Ford failed to disclose torque converter
Ford argues that Rivera has not pleaded sufficient facts demonstrating that it knew of the
defect within the EVAP system. Although Ford argues that Federal Rule of Civil Procedure 9(b)’s
heightened pleading standard applies to Rivera’s FDUTPA claims, the prevailing rule seems to be
that the rule does not apply. See, e.g., Sanchez-Knutson v. Ford Motor Co., 52 F. Supp. 3d 1223,
1239 (S.D. Fla. 2014) (“While the Court acknowledges that courts within this district have reached
various conclusions about the application of Rule 9(b) to FDUTPA claims, this Court is persuaded
that Rule 9(b) does not apply to FDUTPA claims.”).
In his complaint, Rivera alleges that Ford knew of the defect through a combination of
records of consumer complaints, dealership repair records, NHTSA records, warranty and postwarranty claims, and TSBs. Am. Comp. ¶ 41. Courts have held that a manufacturer’s knowledge
of a latent defect may be inferred when such complaints and records exist. See Catalano v. BMW
of N. Am., LLC, 167 F. Supp. 3d 540, 559 (S.D.N.Y. 2016) (finding knowledge of defect had been
properly alleged based on complaints to NHTSA, repair records, warranty claims, and TSBs);
Velasco, 2014 WL 4187796, at *1 (allowing FDUTPA claim to survive motion to dismiss because
of allegation that Chrysler knew of defect through past recalls and recent complaints to NHTSA).
There are some distinctions between Catalano and Velasco and the present case. For
instance, the TSB identified by Rivera was not issued until March 2015, nearly two years after
Rivera’s vehicle was purchased. Further, the earliest of the listed complaints to the NHTSA was
not filed until May 2015, two years after Rivera’s purchase. However, the complaint states that
the listed complaints “are just a small sampling of complaints submitted to the [NHTSA] regarding
the Class Vehicles.” Am. Compl. ¶ 52. Rivera also alleges that Ford had or should have had
knowledge of the defect with the EVAP system based on “the sheer number of reports received
from dealerships.” Id. ¶ 45. Rivera notes that reports regarding repairs made under warranty are
to be sent to Ford “with detailed documentation of the problem and the fix employed to correct it.”
Id. ¶ 46. Rivera alleges that this data is analyzed by Ford’s warranty department and customer
relations department. Accepting as true Rivera’s factual allegations, and drawing all inferences in
his favor, the Court finds that Rivera has sufficiently pleaded Ford’s knowledge of the defective
EVAP system at the time of sale.
Finally, Ford argues that it was not misleading when it failed to disclose a “safety” defect.
In his complaint, Rivera alleges that Ford’s “unfair or deceptive acts or practices were likely to
deceive reasonable consumers, including Plaintiff and the Florida Class, about the true safety and
reliability of the Class Vehicles.” Id. ¶ 91. Ford notes a ruling by the Massachusetts Supreme
Judicial Court that “a bare assertion that a defendant, while representing the opposite, has
knowingly manufactured and sold a product that is ‘defective,’ or suffers from ‘safety-related
defects,’ does not suffice to state a viable claim.” Iannacchino v. Ford Motor Co., 888 N.E.2d 879,
888 (Mass. 2008). The court in Iannacchino held that “[w]hen the standard that a product allegedly
fails to meet is not one legally required by and enforced by the government, a claim of economic
injury based on overpayment lacks the premise that the purchase price entitled the plaintiffs to a
product that met that standard.” Id.
Ford argues that, pursuant to Iannacchino, Rivera was required to allege that the defect was
in violation of the National Highway Traffic Safety Act, or some other controlling governmental
standard, in order to state a claim. However, Iannacchino was decided under Massachusetts law.
There is no requirement that a claim alleging an undisclosed, “safety-related defect” must allege a
violation of some governmental standard in order for a claim under the FDUTPA to lie. See Smith
v. Ford Motor Co., 749 F. Supp. 2d 980, 989 (N.D. Cal. 2010), aff’d, 462 F. App’x 660 (9th Cir.
2011) (“The Court declines to follow Iannacchino. Ford cites to no case authority, and the Court
is aware of none, in which a court, applying California law in deciding whether to impose a duty
to disclose a safety-related defect, has required a plaintiff to offer evidence of a violation of a
standard legally required by and enforced by the government.”). Further, like the plaintiffs in
Smith, and unlike the plaintiffs in Iannacchino, Rivera has alleged property damage as a result of
the alleged defect. See Am. Compl. ¶ 76.
As a result, Rivera has sufficiently pleaded a claim under the FDUTPA.
For the reasons stated above, the Court grants in part and denies in part Ford’s motion to
dismiss (Dkt. 13). The Court dismisses Rivera’s claims for breach of express warranty, breach of
the covenant of good faith and fair dealing, unjust enrichment, and fraud. Rivera has withdrawn
his claim for violations of the Michigan Consumer Protection Act. As a result, only his FDUTPA
Dated: August 15, 2017
s/Mark A. Goldsmith
MARK A. GOLDSMITH
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served upon counsel of record and any
unrepresented parties via the Court's ECF System to their respective email or First Class U.S. mail
addresses disclosed on the Notice of Electronic Filing on August 15, 2017.
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