DEFICCIO et al v. WINNEBAGO INDUSTRIES et al
Filing
13
MEMORANDUM OPINION. Signed by Judge Mary L. Cooper on 9/30/2011. (gxh)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ROBERT DEFICCIO, et al.,
Plaintiffs,
v.
WINNEBAGO INDUSTRIES, et al.,
Defendants.
:
:
:
:
:
:
:
:
:
:
:
CIVIL ACTION NO. 11-872 (MLC)
MEMORANDUM OPINION
COOPER, District Judge
Plaintiffs, Robert Deficcio and Mary Jo Deficcio
(collectively, “Plaintiffs”), brought this action in New Jersey
Superior Court, Mercer County, against defendants, Winnebago
Industries, Inc. (“Winnebago,” named in the Complaint as
“Winnebago Industries”) and Freightliner Custom Chassis Corp.
(“Freightliner,” named in the Complaint as “Freightliner, LLC”)
(collectively, “Defendants”).
Defendants removed the action to
this Court on the basis that subject matter jurisdiction exists
pursuant to 28 U.S.C. §§ 1331 and 1367.
Not. at 2-3.)
(Dkt. entry no. 1, Rmv.
The Complaint alleges violations of the New Jersey
Lemon Law, N.J.S.A. § 56:12-29 et seq. (Count I), the MagnusnonMoss Warranty Improvement Act, 15 U.S.C. § 2301 et seq. (Count
II), breach of express and implied warranties (Count III), and
the New Jersey Consumer Fraud Act (“NJCFA”), N.J.S.A. § 56:8-1 et
seq. (Count IV), in connection with a 2008 Winnebago 40TD Vectra
motor home (the “vehicle”) purchased by Plaintiffs on September
14, 2007.
(Rmv. Not., Ex. A, Compl.)1
Plaintiffs also seek
“revocation of acceptance” of the vehicle with respect to the
contract for the sale of the same due to the vehicle’s “various
nonconformities,” and demand return of the purchase price (Count
V).
(Id. at ¶¶ 60-64.)
Defendants now jointly move to dismiss the Complaint,
pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6), on
the basis that a Settlement Agreement and Release dated May 27,
2010 (“Settlement Agreement”) forecloses the Plaintiffs’ claims.
(Dkt. entry no. 8, Mot. to Dismiss.)
For the reasons stated
herein, the Court will grant the motion.
BACKGROUND
Plaintiffs purchased the vehicle for more than $253,000.
(Compl. at ¶ 7.)
Winnebago issued express written warranties
covering the vehicle’s body and non-chassis components including
a 12 month/15,000 mile bumper to bumper warranty, a 36
month/36,000 mile structural warranty, and a 10 year roof skin
warranty.
(Id. at ¶ 8.)
Freightliner warranted the vehicle’s
chassis components pursuant to a 36 month/36,000 mile express
written warranty.
(Id. at ¶ 10.)
Plaintiffs assert that
Winnebago and Freightliner both made implied warranties of
1
The vehicle is equipped with (1) a body and non-chassis
components manufactured and warranted by Winnebago, and (2) a
chassis manufactured and warranted by Freightliner. (Compl. at
¶¶ 6-7.)
2
merchantability and fitness for a particular purpose with respect
to the vehicle.
(Id. at ¶¶ 9, 11.)
Plaintiffs allege that the vehicle “has suffered numerous
breakdowns and component failures which have either not been
remedied by defendants or were not remedied by defendants within
a reasonable period of time or a reasonable number of repair
attempts.”
(Id. at ¶ 12.)
Plaintiffs delivered the vehicle to
authorized dealers for repairs on numerous occasions, but
remained dissatisfied with attempts to repair “various defective
components and/or conditions,” and found themselves occasionally
“stranded . . . at remote locations” when repairs were needed.
(Id. at ¶¶ 13-15.)
Plaintiffs ultimately contacted Winnebago
directly in an effort to arrange for repairs without the need for
Plaintiffs to deliver the vehicle to authorized dealers.
(Id. at
¶ 15.)
Plaintiffs and Winnebago negotiated certain repairs to be
made to the vehicle, and entered into the Settlement Agreement on
May 27, 2010.
Agreement.)
(Id. at ¶ 16 & Compl. Ex. E, 5-27-10 Settlement
The Settlement Agreement was executed by both
Plaintiffs before a notary, and approved “as to form and consent”
by their attorney.
The Settlement Agreement provided that
Winnebago would transport the vehicle to and from its Forest
City, Iowa manufacturing facility for repairs.
(Compl. at ¶ 17.)
Such repairs, listed in exhibits to the Settlement Agreement,
were to be “performed to commercially reasonable standards and
3
warranted by Winnebago for six (6) months from the return of the
vehicle” to Plaintiffs.
(5-27-10 Settlement Agreement at ¶ 1.)2
Additionally, Winnebago agreed to pay Plaintiffs $17,500.
(Id.)
In exchange, Plaintiffs agreed to release and forever discharge
both Winnebago and Freightliner “from any and all claims and
causes of action . . . based on any alleged defects or nonconformities which were asserted or could have been asserted
involving the Subject Vehicle up to the date of this Settlement
Agreement and Release.”
(Id. at ¶ 2.)
The Settlement Agreement further provided that Plaintiffs
agreed to release and unconditionally waive any right to use the
prior repair attempts or the repairs bargained for in the
Settlement Agreement as (1) a basis for “meeting any eligibility
requirements for any future claim under any state or federal
law,” (2) “evidence that a defect exists in the Subject Vehicle
in any future claim,” or (3) “evidence that [Winnebago or
Freightliner] . . . failed to repair the Subject Vehicle after a
reasonable number of attempts or after a reasonable opportunity
to repair it.”
(Id. at ¶ 3.)
The Settlement Agreement states
that Plaintiffs “acknowledge and agree that the Release set forth
herein is a general release and . . . agree that they have
accepted payment of the sum and other consideration specified
2
The Settlement Agreement explicitly specified that it was not
intended to diminish, suspend, or cancel any already-existing
warranty coverage in effect and applicable to the vehicle. (Id.
at 2.)
4
herein as a complete compromise of matters involving disputed
issues of law and fact arising as a result of their purchase of
the Subject Vehicle and they assume the risk that the facts or
law may be otherwise than they believe.”
(Id. at ¶ 4.)
Plaintiffs state that the vehicle remained at Winnebago’s
Iowa facility for repairs for a longer time than originally
contemplated.
(Compl. at ¶ 19.)
Plaintiffs further allege that
when the vehicle was returned to them, they noticed “numerous
unrepaired defects and conditions that were to be repaired or
replaced pursuant to” the Settlement Agreement, and in addition
the vehicle had sustained new and additional damage while in
Winnebago’s custody.
(Id. at ¶ 20.)
The Complaint lists fifty-
six examples of unrepaired damage to or defects of the vehicle.
(Id.)
The Complaint asserts that Winnebago:
(1) “knowingly and
intentionally failed to repair numerous of the defects and
conditions they agreed to perform in the [Settlement] Agreement
. . . that Winnebago believed plaintiffs would have no means of
confirming”; (2) materially breached the Settlement Agreement by
failing to adequately perform the repairs specified therein; and
(3) by materially breaching the Settlement Agreement, rendered
the Settlement Agreement void, such that “any release of claims
set forth in the [Settlement] Agreement is unenforceable.”
at ¶¶ 21-23.)
5
(Id.
The Complaint does not seek relief pursuant to the
Settlement Agreement.
Rather, each of the claims asserted
therein arose prior to the execution of the May 27, 2010
Settlement Agreement.
(See, e.g., Count I, Compl. at ¶¶ 28-30
(New Jersey Lemon Law claim referring to purchase of vehicle and
subsequent repair invoices pre-dating Settlement Agreement);
Count II, Compl. at ¶¶ 39-41 (Magnuson-Moss claim referring to
express written and implied warranties and Defendants’ “attempts
on several occasions” to comply with the same); Count III, Compl.
at ¶¶ 44-48 (breach of warranty claims referring to “the time of
the purchase and all subsequent times thereto”); Count IV, Compl.
at ¶¶ 51-55 (NJCFA claim based on “Defendants’ actions
surrounding the sale and servicing of the subject vehicle,”
servicing dealers’ alleged failure to provide invoices for some
repairs, and selling dealer’s failure to provide Plaintiffs a
Lemon Law disclosure statement); Count V, Compl. at ¶¶ 60-63
(seeking rescission of purchase contract based on alleged
nonconformities of the vehicle identified by Plaintiffs “almost
immediately after delivery of the vehicle”).)
Defendants move to dismiss the Complaint, arguing that the
Settlement Agreement is enforceable and bars Plaintiffs’ claims.
(Dkt. entry no. 8, Defs. Br. at 5.)
Defendants contend that the
plain language of the Settlement Agreement “released Defendants
from ‘any and all claims and causes of action . . . which were
asserted or could have been asserted involving the Subject
6
Vehicle up to the date of this Settlement Agreement and
Release.’”
(Defs. Br. at 5.)
Defendants observe that Plaintiffs
do not allege in the Complaint that the Settlement Agreement is
“voidable based upon any well-established contract principles
such as fraud, duress or unconscionablility.”
(Id. at 6.)
Plaintiffs, in opposition to the motion, argue that
Winnebago’s alleged material breach of the Settlement Agreement,
by inadequately performing repairs and/or inflicting additional
damage on the vehicle, resulted in a “failure of consideration”
for the Settlement Agreement, such that Plaintiffs’ release of
claims against Defendants is not enforceable.
10, Pl. Opp’n at 8-9.)
(Dkt. entry no.
Plaintiffs also argue that the Settlement
Agreement should be set aside for “fraud and unseemly behavior”
on the basis of Plaintiffs’ allegations that Winnebago
intentionally failed to make certain repairs to the vehicle on
the assumption that Plaintiffs would not be able to confirm
whether the repairs had been made.
(Id. at 9.)
DISCUSSION
I.
12(b)(6) Motion to Dismiss Standard
In addressing a motion to dismiss a complaint under Rule
12(b)(6), the Court must “accept all factual allegations as true,
construe the complaint in the light most favorable to the
plaintiff, and determine, whether under any reasonable reading of
the complaint, the plaintiff may be entitled to relief.”
Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008).
7
At this stage, 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, 129 S.Ct. 1937, 1949
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556
(2007)).
“[W]here the well-pleaded facts do not permit the court
to infer more than the mere possibility of misconduct, the
complaint has alleged--but it has not ‘show[n]’--that the
‘pleader is entitled to relief.’”
Iqbal, 129 S.Ct. at 1950
(quoting Rule 8(a)(2)).
In evaluating a Rule 12(b)(6) motion to dismiss for failure
to state a claim, the Court may consider the complaint, exhibits
attached thereto, matters of public record, and undisputedly
authentic documents if the plaintiff’s claims are based upon
those documents.
See Pension Benefit Guar. Corp. v. White
Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).
Here,
Plaintiffs have attached to the Complaint, inter alia, the
receipt for the purchase of the vehicle, the financing agreement,
the Winnebago express written warranty, various repair invoices
and “warranty write up[s],” and the Settlement Agreement.
(Compl., Exs. A-E.)
Thus, the Settlement Agreement and other
documents attached to and relied upon in the Complaint are
properly before the Court at this juncture.
8
II.
Legal Effect of the Settlement Agreement
The parties agree that a settlement agreement is a contract,
and that the Settlement Agreement is to be interpreted pursuant
to basic contract law.
(Defs. Br. at 5; Pl. Opp’n at 8.)
However, they disagree as to the legal effect of the Settlement
Agreement, specifically the portion of the Settlement Agreement
in which Plaintiffs agreed to release Defendants from “any and
all claims and causes of action . . . which were asserted or
could have been asserted involving the Subject Vehicle” up to the
date of the Settlement Agreement, with respect to the current
action.
A.
(Defs. Br. at 5; Settlement Agreement at ¶ 2.)
Enforceability and Applicability of Settlement
Agreement
Plaintiffs’ contention that Winnebago’s alleged material
breach of the Settlement Agreement resulted in a “failure of
consideration,” such that the contract is no longer enforceable,
exhibits circular logic confusing the promise aspect of contract
formation with the performance and execution thereof.
at 8.)
(Pl. Opp’n
Essentially, Plaintiffs concede that the Settlement
Agreement was valid when entered into, but now seek to set it
aside.
Where the terms of a contract are clear, a court “must
enforce the unambiguous terms as written, and it has ‘no power to
rewrite the contract of the parties by substituting a new or
different provision from what is clearly expressed in the
9
instrument.’”
Sluka v. Landau Uniforms, Inc., 383 F.Supp.2d 649,
655 (D.N.J. 2005) (quoting E. Brunswick Sewerage Auth. v. E. Mill
Assocs., Inc., 838 A.2d 494, 497 (N.J. App. Div. 2004)).
We find
that the terms of the Settlement Agreement are clear, and no
party suggests that any term therein may be ambiguous.
The
Settlement Agreement, negotiated and entered into by both sides,
provided that Winnebago would effect certain enumerated repairs
to “commercially reasonable standards” and pay Plaintiffs
$17,500, in exchange for Plaintiffs’ release of any and all
claims under state and federal law based on alleged defects or
nonconformities against Defendants that could have been asserted
up to the date of the Settlement Agreement.
Agreement at ¶¶ 1-3.)
(Settlement
The Settlement Agreement contemplates and
provides for the situation that arose here, Plaintiffs’
dissatisfaction with the repairs performed by Winnebago, in that
Winnebago warranted such repairs for a period of six months from
the return of the vehicle to Plaintiffs.
(Id. at ¶ 1.)
Any
remaining defects or nonconformities after the return of the
vehicle would thus fall within the clear terms of the Settlement
Agreement, not act as a ground for rescission thereof.
We find that each of the claims pleaded in the Complaint are
barred by the terms of the Settlement Agreement, in that they
pertain to alleged defects and non-conformities of which
Plaintiffs were aware prior to the execution of the Settlement
Agreement and which, indeed, prompted the negotiation and
10
execution of the Settlement Agreement in the first place.
Although Plaintiffs’ brief in opposition to the motion contends
that the Complaint “sets forth claims for damages inflicted on
the vehicle during Winnebago’s purported attempts to perform” the
repairs set forth in the Settlement Agreement, none of the counts
listed in the Complaint expressly refer to these post-Settlement
Agreement alleged damages as a basis for recovery.
To the extent
Plaintiffs believe Winnebago breached the Settlement Agreement,
the proper remedy is a suit for breach of that contract; they
remain bound by its terms unless they can make the showing, by
clear and convincing proof, that the Settlement Agreement should
be set aside because it was achieved through fraud.
B.
Fraud or Deception in Entering Settlement Agreement
A settlement agreement “is a contract which, like all
contracts, may be freely entered into and which a court, absent a
demonstration of ‘fraud or other compelling circumstances,’
should honor and enforce it as it does other contracts.”
Pascarella v. Bruck, 462 A.2d 186, 190 (N.J. App. Div. 1983)
(quoting Honeywell v. Bubb, 325 A.2d 832, 835 (N.J. App. Div.
1974)).
Because of the strong public policy favoring settlement
of litigation, courts are loath to set aside settlement
agreements where the party seeking to do so cannot establish
“fraud, mutual mistake, undue haste, pressure or unseemly conduct
in settlement negotiations.”
Honeywell, 325 A.2d at 835-86.
Courts therefore require clear and convincing proof of fraud in
11
order to vacate a settlement agreement.
Nolan ex rel. Nolan v.
Lee Ho, 577 A.2d 143, 146 (N.J. 1990).
The sole allegation in the Complaint suggesting fraud is
that Winnebago “intentionally failed to perform certain hard to
confirm repairs.”
(Pl. Opp’n at 9; see Compl. at ¶ 21.)
Plaintiffs’ contention that this establishes that the Settlement
Agreement was therefore achieved through fraud or deception is a
threadbare legal conclusion not factually supported by the
pleadings, which the Court notes could be read to suggest that
Winnebago decided not to make hard-to-confirm repairs only after
entering into the Settlement Agreement.
(Compl. at ¶ 21
(“Winnebago . . . failed to repair numerous of the defects and
conditions that they agreed to perform in the May Agreement
including . . . repairs that Winnebago believed plaintiffs would
have no means of confirming.”).)
Our reading of the Complaint
simply reveals no allegation of fraud or unseemly behavior in the
inducement of the contract.
See Mortellite v. Novartis Crop
Protection, Inc., 460 F.3d 483, 492 (3d Cir. 2006).
Plaintiffs’
contention that Winnebago’s alleged failure to perform the
repairs required under the Settlement Agreement “renders that
agreement void and . . . unenforceable as a result of Winnebago’s
material breach” is, similarly, an unsupported legal conclusion
not entitled to an assumption of veracity by the Court.
129 S.Ct. at 1949-50.
12
Iqbal,
The Court finds that Plaintiffs have pleaded no factual
basis that might plausibly lead the Court to ultimately vacate
the Settlement Agreement due to fraud or deception.
As the
exhibits to the Complaint show, the Settlement Agreement was
negotiated by means of a lengthy back-and-forth exchange with
Plaintiffs’ direct involvement and the assistance of counsel.
Plaintiffs do not dispute that Winnebago took possession of the
vehicle for repairs and paid Plaintiffs $17,500.
Because the
Settlement Agreement is enforceable and bars the claims pleaded
in the Complaint, Plaintiffs’ appropriate recourse is the
warranty set forth in the Settlement Agreement and/or a cause of
action for breach of the Settlement Agreement.
The Complaint
seeks no such relief, but rather asserts the very claims that
Plaintiffs released as against Defendants in the Settlement
Agreement.
CONCLUSION
For the reasons discussed supra, the Court will dismiss the
Complaint.
Because it appears that amendment would be futile,
dismissal of the claims set forth in the Complaint will be with
prejudice.
The Court will issue an appropriate Order and Judgment.
s/ Mary L. Cooper
MARY L. COOPER
United States District Judge
Dated:
September 30, 2011
13
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?