Pyskaty v. Wide World of Cars, LLC et al

Filing 35

OPINION AND ORDER re: 16 MOTION to Dismiss for Lack of Jurisdiction . filed by Wide World of Cars, LLC. For the foregoing reasons, Wide World's motion to dismiss the Amended Complaint for lack of subject matter jurisdiction is granted. The Clerk is respectfully requested to terminate the pending motion (Docket No. 16) and close the case. (Signed by Magistrate Judge Judith C. McCarthy on 2/23/2016) (rj)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

x
MAYA PYSKATY.

Plaintiff.
OPINION AND ORDER
-against
l5Civ. 1600(JCM)
WIDE WORLD OF CARS. LLC d/h/a
WIDE WORLD BMW:
BMW I3ANK OF NORTH AMERICA;
Defendants.

x
Plaintiff Maya Pvskaty (Plaintiff’) commenced this action pursuant to the Magnuson
Moss Warranty—Federal Trade Commission Improvement Act (“MMWA”), 15 U.S.C.

§ 2301

el seq. (breach of express warranty and breach of implied warranty of merchantability). New

York General Business Law (N.Y. G.B.L.”)

§ 349 (deceptive acts and practices). N.Y. G.B.L. §

350 (unlawful false advertising), New York Uniform Commercial Code (“N.Y. U.C.C.”)
(breach of express warranty). N.Y. U.C.C.

§ 2-3 13

§ 2-3 1 4 (breach of implied warranty of

merchantability), and allegations of common-law fraud.
1
Presently before this Court is a motion by defendant Wide World of Cars, LLC (“Wide
World”) to dismiss Plaintiffs amended complaint (“Amended Complaint” or “Am. Cornpl.”
)
2
against Wide World and defendant BMW Bank of North America (BMW Bank”) (collectively,
“Defendants’) for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure

lb is acuon

IS

belbre me 1ar all purposes on consent of the parties. pursuant to 28 L SC.

636c). Docket No, 11).

Refers to P!wntilYs \mended ComplaInt. Filed a a Matter of Course Pursuant to FRCP I 5(a)( I). iDocket No. 12).

1 2(h)( 1). (Docket No. 1 6).’ Plaintiff opposes the motion. (Docket Nos. 30. 31). For the reasons
set forth below, Wide World’s motion to dismiss is granted and the Amended Complaint is
dismissed in its entirety.
4
I. BACKGROUND
This case arises out of a dispute between Plaintiff and Wide World, “an auto dealership in
the business of selling new and used vehicles.” (Am. Compl.

¶

10). BMW Bank is included as a

defendant because of its alleged status as an assignee of a contract executed by Plaintiff and
Wide World. (Id.

“

11, 12).

A. Facts

The Court assumes the parties’ familiarity with the facts in this case. Accordingly, the
Court recites only those facts necessary to resolve the present motion.
On October 31, 2013, Plaintiff and her husband (“Mr. Pyskaty”) visited Wide World and
discussed the purchase of a certified pre-owned BMW for Plaintiffs personal use. (Am. Compl.
1

13). Plaintiff and Mr. Pvskatv saw a 2010 BMW 750LX1 (“the Vehicle”), which was

displayed as a certified pre-owned (“CPO”) automobile. (Id.

20). Plaintiff asked a salesperson

about the history of the Vehicle and specifically asked if the Vehicle had been in an accident. (Id.
¶21). The salesperson “responded that the Vehicle had no accident history, was ‘perfect’ and

Wide World also moved to dismiss the Amended Complai.nt for jack of diversity jurisdiction. (.Docket No, 16 at 2).
However, th.is issue is moot because Plainti.ff now concedes th..at diversity ju.risdiction does n.ot exist. (See Docket
No, 3Oat I n.1).
BMW Bank has not moved to dismiss the Amended Complaint. Floxever. because the Court lacks subject matter
urisdiction over this action. I conclude that the Amended Complaint should he dismissed as to BMW Bank as well.
Se c
l/AI,a,th i \ I ii itoio, Dip i l( \o C\ I
RR C\ L 64 ( \RR) C\ I 290
(\RR) C\ I
2Q1 i \RR) (\ 14 2950 RR) C’v 14 2981 (\RR 201 \\ L 0740 at 2 n 2 (F D N
June 3. 2015 (NYMG has nci moved to dismiss Tuhin’s MMWA claim. Because the deficiency in Tuhins claim
identified by M & 1’ Bank applies as well to NYMG, though, I conclude that his MMWA claim should he dismissed
in its entirety.”),

had a clean Carfax.’ (Id. ¶ 22). The salesperson also confirmed that the Vehicle had passed the
inspection requirements for BMW CPO vehicles. (Id.

¶1

25). Plaintiff thereafter agreed to

purchase the Vehicle for S5 1.195. (Id. ¶ 27).
Within the first week of purchase. Plaintiff noticed that the Vehicle ran rough and
vibrated while driving.” (Am. Compi. ¶ 29). Plaintiff later noticed that the Vehicle experienced
a number of additional issues: lack of power on acceleration, (id.
locks. (Id.

‘

50): engine sluggishness while in reverse. (id.

acceleration. (id.

‘

‘

42); malftinctioning door

59): lack of power or hesitation on

81); and intermittent loss of power steering. (id.

83). Plaintiff visited

service centers on various occasions in November 2013, January 2014, April 2014, and May
2014. (id.

¶L

35, 42-43. 45, 53, 59). and she paid for several repairs in an attempt to fix the

Vehicle. (see. e.g.. id.

43-44, 48. 54, 57. 60-62).

In or about June 2014, Plaintiff reached out to BMW of North America (“BMW-NA”) to
request its assistance in returning the Vehicle for a refund, (Am. Compl.

¶ 64), but BMW-NA

told her she would have to speak to Wide World. (Id. ¶ 65). Plaintiff returned to Wide World
and “indicated her desire to revoke acceptance of the vehicle and arrange for return, rescission,
and refund.” (Id.

¶ 74).

Wide World responded that it would only’ accept the Vehicle as a trade-

in and that it would value the Vehicle at $35,000 for the purposes of trade-in. (Id. ¶1 75, 76).
Plaintiff dccl med Wide World’s otTer. (Id.

‘

77). At some point Plaintiff became concerned that

the Vehicle had been in a prior accident and. on .Tune 12. 2014. Plaintiff obtained an Autocheck
report o.n the Vehicle which indicated that the Vehicle had in fact sustained a rear impact
collision on August 24. 2012, (Id.

?

78-80). Plaintiff took the Vehicle off the road during the

summer of 2014. and she has kept it garaged since that time. (Id

83-84).

Plaintiff alleges that the Vehicle has a number of traits that would inform a dealership.
hut not a lavperson. that the Vehicle had been in a major accident. (Am. Compi.

86).

Therefore, according to Plaintiff. Wide World knew that the service history and Carftix report it
gave her were “materially inaccurate, incomplete and false at the time provided.” (Id. ¶ 90).
Plaintiff also alleges that Defendants created a ‘written warranty under their advertised CPO
program.” (Id. ‘1)20). and that Defendants breached this warranty because the Vehicle “suffers
from significant defects in its condition and

...

compliance with the BM\V CPO requirements

was not properly serviced and/or repaired in

prior to sale,”

(Id.

‘

121).

B. Claims and Alleged Damages
Plaintiff asserts the ft)Ilowing claims in the Amended Complaint: (I) breach of implied
warranty of merchantability under the MMWA (“Count 1”); (2) breach of express written
warranty under the MMWA (“Count II”); (3) breach of express warranty under N.Y. U.C.C.
313 (“Count 111”): (4) breach of implied warranty of merchantability under N.Y. U. CC.

§ 2-

§ 2-314

(“Count IV”); (5) common-law fraud (“Count V”); (6) deceptive acts and practices under N.Y.
G.B.L.

§ 349 (“Count VT”); and (7) unlawful false advertising under N.Y. G.B.L. § 350 (“Count

VII”).
In connection with these claims. Plaintiff seeks to recover the Rllowing damages: (i)
actual damages on all counts, (Am. Coinpl. ¶ 117, 124, 133, 137. 145, 157, 165); (ii) up to
S 1 .000 in treble damages on Count Vl, Id.

‘

1 57 i: iii up to SI 0.000 in treble damaties on

Count VII, (6/ ¶ 165); (iv punitive damages in an unspecified amount on Counts 111, IV, VI and
\ 11 (id at 23

t

(c (dl

15 165)

actual damages” on Count V. (Id.

‘

punitie d lrnagLs ol no’ ICSN than threc timcs hLl

146); (vi) reasonable attornevs fees, costs. and expenses on

4

Counts I. II, Ill and IV. (id ¶ 117, 124, 133. 137): (vii) costs and expenses on Count V. (id at
23

1

(e)); and (viii) reasonable attornevs fees and

costs on

Counts VI and VII. (Id.

157, 165).

As to actual damages, Plaintiff alleges the following: (i) a diminished value of the

Vehicle of approximately $30,717 at the time of sale and approximately $36,330 at the time of
suit, (see Am. Compl.

“

94-95. Opp. at 6): (ii) “approximately $3,000” in repairs, (Am. Compi.
5

•T 96); (iii) pain and suffering in an unspecified amount, (id

¶ 97); (iv) approximately $8,240 for

payments on the Vehicle made during the eight-month period prior to suit when the Vehicle was

“undriveab1e’ and kept in a garage, (Am. Compi. ¶ 83, 84, 98; Opp. at 6-7); and (v) arguably,
6
an unspecified amount of “insurance expenses” for the same eight-month period, (Opp. at 7).

As to her breach of warranty claims (Counts 1. II. III and IV), Plaintiff states that she “is
entitled to and reserves the right, at her discretion, to elect cancellation and rescission of the loan
in

lieu of those actual damages attributable to the vehicles diminished value.” (Am. Compl. ¶

118, 125, 134. 138).
C. Wide World’s Motion to Dismiss for Lack of Jurisdiction

CulTently before the Court is Wide World’s motion to dismiss the Amended Complaint
for lack of subject matter jurisdiction. Wide World argues that this Court lacks jurisdiction
because Plaintiffs claims do not meet the MMWAs $50,000 amount-in-controversy threshold.
Wide World puts forth several arguments in support of its motion. First. Wide World
claims that Plaintiff is not entitled to a refund under the MMWA because the only warranties

Rerers to Plainti tN Memorandum ot Law in Opposition to [)efendani Wide \k orid ol Cars. LLCs Motion to
I)ismiss. Docket i5o30L
Plaintiff does not allege these expenses in the Amended Complaint hut merel asserts them in her opposition
papers.

at

issue here are limited warranties.

7
(Motion

at

38),

Second. Wide World asserts that Plaintiffs

actual damages amount to either S 28.022 or S30.717. depending on the figures utilized. (h/ at 4).
Third, Wide World argues that Plaintiffs “lemon law” claim fails because Plaintiff failed to
9
give Wide World a reasonable opportunity to repair the Vehicle’s defects. (Id, at 5). Fourth.
Wide World argues that a statutory warranty given under New York’s lsed Car Lemon Law.
N.Y. G.B.L.

§ 198-a, does not constitute a ‘written warranty” under the MMWA. (Id.). Fifth,

Wide World states that Counts I and IV fail because Wide World did not make or adopt any
written

warranty.

(Id. at 5-6). Sixth, Wide World claims that Plaintiffs surviving causes of

action fail to meet the MM WA’s $50,000 threshold because Plaintiff cannot include either
attorneys’ fees or punitive damages in the computation of damages as to those causes of action.
(Id. at 6).
Plaintiff opposes the motion. First. Plaintiff argues that she can include damages for state
law claims when computing the MMWA’s $50,000 requirement. (Opp.’° at 10-13). Second,
Plaintiff argues that she is entitled to revoke acceptance of the Vehicle and that her revocation
amount exceeds $50.000. (Id. at 14-15). Third, Plaintiff argues that the MMWA claims alone
exceed $50,000 because she can include punitive damages as to her MMWA claims. (Id. at 1617). Fourth. Plaintiff claims that Wide World’s attempt to disclaim any implied warranties fails
because multiple written warranties attach to this transaction. (Id. at 1 7-21). Fifth, Plaintiff

Refers to t\!de \Vorid’s \lemorandum of] ,aw (Docket No.

S.

Wide \k orld’s Motion does not contain page numbers, Therefore, citations refer to the page numbers assigned to
the Motion upon electronic (0mg.

It is unclear to which ia this term refers. The Court notes that Plaintiff does not assert a cause of acuon under
New York’s Used Car Lemon law. N.Y. G.13.L. 19$-a.
° Refers to PlaintifPs Memorandum of Las in Oppo:sition to Defendant Wide World of Cars, LLC’s Motion to
iDismiss. (Dock.et o 30).

6

writes that she did not sue under New Yorks Used Car Lemon Law, that the MMWA requires
an opportunity to “cure.” not an opportunity to “repair,” and that Wide World had plenty of
opportunities to address the issues with the Vehicle. (Id at 21-22). Sixth, Plaintiff argues that
her warranty claims should be considered in determining jurisdiction because Wide World’s
disclaimer of warranties is not effective under New York law and. in any event, does not
disclaim anything of importance. (Id. at 22-23). Seventh, Plaintiff argues that a purported
disclaimer and release does not absolve Defendants from liability for fraud. (Jd. at
Wide World responds with several arguments. First, Wide World concludes that the
Amended Complaint must be dismissed in its entirety because the only federal claims (Counts I
and II) fail to state a cause of action. (Reply’ at 4). Wide World argues that Count II must be
2
dismissed because the CPO limited warranty was issued by BMW-NA, not Wide World. (Id. at
2). Wide World asserts that Count I must he dismissed because: (i) the CPO limited warranty
does not cover Plaintiffs claim that the Vehicle was in a prior accident; (ii) a breach of express
warranty by a car manufacturer does not automatically constitute a breach of implied warranty
by a car dealership; and (iii) Wide World expressly disclaimed any express or implied
warranties. (Id. at 2-4). Second, Wide World states that Plaintiff fails to meet the required
$50,000 threshold because Plaintiff may not include state law claims, pain and suffering.
attorneys’ fees. punitive damages, the cost of repairs, or loan payments in her computation of
damages under the MMWA, 1d at 4-7). Third, Wide World argues that Plainti IT is not entitled
to a “refund” under the MM\VA and that. in any

C\

ent. Plaintiffs refund wunki he reduced bs a

As to her tifth. siuh, and seventh argyments, Plaintiff also asserts that Wide \k orlds claims are nor susceptible to
resolution on a motion to dismiss hut addressed them so as not to
waive any arguinents” (pp. at I).
Refers to Wide World’s Reply Memorandum of Low, (Docket No, 33).

reasonable amount of depreciation and therefore would not exceed the MMWAs S50.000
jurisdictional minimum. (id. at 7-8).
II. DISCUSSION
A. Federal Question Jurisdiction and the MMWA’s Amount-In-Controversy Requirement

Federal district courts have original jurisdiction with respect to “all civil actions arising
under the Constitution, laws, or treaties of the United States.” 28 U.S.C.

§ 1331. Here, Plaintiff

invokes federal jurisdiction pursuant to the MM\VA. a federal law authorizing consumers to sue
suppliers, warrantors or service contractors “for damages and other legal and equitable relief’ for
failure to comply with any written warranty, implied warranty, or service contract. 15 U.S.C.

§

23 10(d)(1). An action under the MMWA may be brought in state or federal court. Id. However,
the MMWA states that:
No claim shall be cognizable in a suit brought [ in federal courtj—
(A) if the amount in controversy of any individual claim is less than the sum or
value of $25.00;
(B) f the amount in controversy is less than the sum or value of $50,000
(exclusive of interests and costs) computed on the basis of all claims to be
determined in the suit; or
(C) if the action is brought as a class action, and the number of named plaintiffs is
less than 100.
Id.

2310(d)(3) (emphasis added).
A party invoking federal jurisdiction ‘has the burden of proving that it appears to a

reasonahle prehahilitv that the claim is in excess of the statutory jurisdictional amount.”
Scherer v. Equitable Life Assurance Soc i’ of U i. 347 F,3d 394, 397 (2d Cir, 2003) (citations
omitted. Courts recognize “a rebuttable presumption that the face of the complaint is a good
faith representation of the actual amount in controversy.” Id. (citation omitted), To overcome
this presumption. “the party opposing jurisdiction must show to a legal certaintv that the

8

amount recoverable does not meet the jurisdictional threshold.” id. (citation omitted). The ‘legal
certainty” test sets a high bar: “[T)he legal impossibility of recovery must be so certain as
virtually to negative the plaintiffs good faith in asserting the claim.” Id. (citation omitted)
(alteration in original). l-lowever. a party may prove “legal certainty” in a case “where recovery
is limited by the terms of a contract, where the governing law places limits upon the damages
recoverable, [or) where the amount demanded is merely Colorable for the purpose of obtaining
jurisdiction.” Vovosel v. ‘ortht’av Motor

Car

Corp.. 460 F. Supp. 541. 544 (N.D.N.Y. 1978)

(citations omitted).
Here, Plaintiff alleges damages greater than $50,000 on the face of the Amended
Complaint, (see Section 1(B), supra). and she has therefore established a “reasonable
probability” that the amount in controversy exceeds the MMWA’s statutory minimum.
However, as set forth below, the Court finds that the governing law limits Plaintiffs recoverable
damages, and therefore there is “legal certainty” that Plaintiff will not be able to establish the
$50.000 jun sdictional minimum.
i. State Law Claims
Courts disagree on whether state law claims may be considered for the purpose of
meeting the MMWA’s $50,000 amount-in-controversy requirement. Compare Harnden v. Jayco.
Inc.. 496 F.3d 579. 582 (6th Cir. 2007) (“We may consider this state-law claim in computing
whether the amount-in-controversy requirement is met [under the MM WA).”) with Scai!ou v.
Nissan N Am,, Inc., 771 F.3d 883. 887-88 (5th Cir. 20.14) (“damages for any pendent state-law
claims should not be included to satisfy the jurisdictional amount lunder the MMWA].”)
(citation omitted) and Ansari v. Be/ia Auto.
(“We

are also

Inc.. 145 F.3d 1270. 1272 (11th Cir. 1998)

[ml agreement with the Fifth Circuit that the amount in controversy for purposes

of [the MMWA] does not include damages flowing from any pendent stale law claim brought by
a plaintiff.”).
The Second Circuit has never examined this issue. and I agree with those courts holding

that state law claims may not he included in computing the MM WA’s jurisdictional threshold.
First, the text of the statute supports such a finding. On first glance, Subpart (B) of 15 U.S.C.

§

231 0(d)(3) (stating that the amount in controversy is to be ‘computed on the basis of all claims
to be determined in the suit”) appears to include state law claims. However, when read in
context with Subparts (A) and (C) of the same section, “it is apparent that the term ‘all claims’
most likely refers to the sum of all of the individual MMWA claims contemplated in Subpart
(A).” Critney v. Nat ‘1 CTh Ford, Inc., 255 F. Supp. 2d 1146, 1148 (S.D. Cal. 2003). Second, the
legislative history of the MMWA supports the same interpretation. See H.R.REP. No. 93—1107. at
7724 (1974) (indicating that Congress wanted to avoid having “trivial or insignificant actions”
brought in federal court), as reprinted in 1974 U.S.C.C.A.N. 7702, 7724. Indeed:
[wiere the § 23 l0(d)(3) limitation on federal actions read to allow aggregation of
the amounts sought in related state claims, Congress’s purpose in crafting the
section would be thwarted. No longer would there be any difference between the
set of MMWA cases cognizable in state court and those allowed in federal court
because virtually all such warranty actions would surely include related state
claims, particularly fraud claims, which, if allowed to be aggregated with the
federal claim, would easily meet the $50,000 requirement. It follows that
Congress’s clear intent to limit federal jurisdiction over MMWA claims can be
given proper effect only by construing the phrase in § 23l0(d)(3)—”all claims to
be determined in this suit”—--to mean “all M:iJILI claims,”
Donahue v, BE! Page Dyota., ihe,, 164 F. Supp. 2d 778, 782 (ED. Va, 2001) (em.pha5i.s in.

oricinal). Third, the concept of supplemental jurisdiction compels th.is result. A distriL t. court
may only exercise supplemental jurisdiction over state law claims if it first has original
jurisdiction over a related federal cause of action or through diversity jurisdiction. See 28 U.S.C.

§ 1367(a).

If the term “all claims’ in Subpart (13) included state law claims. ‘1hen in those cases
10

where the MMWA claims are for less than $50,000, the district court would be deriving original
jurisdiction from pendent state claims over which it can exercise supplemental jurisdiction only
if it has original jurisdiction. An interpretation that condones such jurisdictional ‘bootstrapping’
cannot be correct.” Critney. 255 F. Supp. 2d at 1149.
Therefo% Plaintiff’s state law claims will not be considered in determining whether
Plaintiff meets the MMWA’s amount-in-controversy requirement.
II. MMWA Claims
Accordingly, this Court has jurisdiction only if the damages from the MMWA claims
alone constitute $50,000. In MMWA suits, “damages ordinarily are limited to the difference
between the value of the goods accepted and the value they would have had if they had been as
warranted.” Lieb v. Am. Motors Corp., 538 F. Supp. 127, 133 (S.D.N.Y. 1982) (citations
omitted). See also, e.g., Heiko v. Keil Equip. Ca, No.02 Civ. 7570(BSJ), 2004 WL 230991, at
*2 (S.D.N.Y. Feb. 5. 2004) (citing Lieb and N.Y. U.C.C.

§ 2-714(2)). Damages for pain and

suffering are generally not recoverable for MMWA claims. See Woody. Gem Motors Corp., No.
CV 08-5224(JFB)(AKT), 2010 WL 3613812, at *lO(E.D.N.y. Aug. 23,2010), report and
recommendation adopted, No. 08-CV-5224 (JFBXAKT), 2010 WL 3613809 (E.D.N.Y. Sept. 15,
2010). Neither are attorneys’ fres. See. e.g., Boelens v. Redman Homes, Inc., 748 F.2d 1058,
1069(5th Cir. 1984) (noting that the MMWA “requires that the amount in controversy be
calculated ‘exclusive of interests and costs”’ and finding that “[a]ttorneys fees are ‘costs’ within
the meaning of [the MMWA]”) (citation omitted).
The MMWA is silent on “whether exemplary and punitive damages may be considered
with actual damages in order to exceed the requisite amount in controversy.” Novosel, 460 F.
Supp. at 544. As a general matter, punitive damages claims are subject to heightened scrutiny

11

when they are being asserted to satisfy an amount-in-controversy requirement See Zahn v. Int’l
Paper Co., 469 F.2d 1033, 1033 n.1 (2d Cir. 1972) (“Indeed, in computing jurisdictional amount,
a claim for punitive damages is to be given closer scrutiny, and the trial judge accorded greater
discretion, than a claim for actual damages.”) (citation omitted); accordKTExp. v. WojfCanyon
ofAm.. Inc.. (114, No.09 Civ. 7l23BS.J), 2010 WL 5249231, at *1 (S.D.N.Y. Dec. 17,2010).
Courts in the Second Circuit have generally declined to consider punitive damages wten
calculating the MMWA amount in controversy. See, e.g., Fleiko, 2004 WI. 230991, at *2;
Alkhaiib. 2015 WI. 3507340, at *24: Lieb, 538 F. Supp. at 133.
However, it is clear that punitive damages are recoverable under the MMWA ifthey
would be recoverable in a breach-of-warranty action brought under governing state law. See,
e.g., Rosen v. Gupta, No. 99-7226, 2000 WL 639964, at *1, *2 (2d Cir. May 17, 2000) (summary
order) (affirming magistrate and district court opinion noting that “punitive damages are only
recoverable under [the MMWA] ifthey would be recoverable in a breach of warranty action
brought under governing state law.”); Wood v. Maguire Ama LLC, No. 5:09-CV-0640
(GTS/GHL), 2011 WL 4478485, at 3 (N.D.N.Y. Sept. 26,2011) (citing Rosen), affd sub nom.
Woody. MaguireAuta, LLC, 508 F. App’x 65 (2d Cir. 2013) (summary order). Under New
York law, [a] claim for punitive damages stemming from a breach of warranty is judged by the
same standard for punitive damages arising from a breach of contract.” Mayline EnlerpriseL Inc.
v. Milea 7”ruckSales Corp., 641 F. Supp. 2d 304,313 (S.D.N.Y. 2009) (citation omitted). The
standard for awarding punitive damages when a claim arises from a breach of contract is ‘a

strict one,’ and this extraordinary remedy will be available only in a limited number of
instances.” Rocanova v. Equitable We Assur. Soc. ofUS, 83 N.Y.2d 603,613 (N.Y. 1994)
(citations omitted). The New York Court of Appeals summarized this standard as follows:

12

[T]he pleading elements required to state a claim for punitive damages as an
additional and exemplary remedy when the claim arises from a breach of contract
are: (1) defendanfs conduct must be actionable as an independent tort; (2) the
tortious conduct must be of the egregious nature set forth in Walker v. Sheldon (10
NY2d 401, 404—405. supra (sic) Us., the breach of contract must also involve a
fraud evincing a high degree of moral turpitude” and demonstrating °such wanton
dishonesty as to imply a criminal indifference to civil obligations”]; (3) the
egregious conduct must be directed to plaintiff; and (4) it must be part ofa pattern
directed at the public generally.
New York Univ. v. Corn 7 Ins. Ca, 87 N.Y.2d 308,316 (N.Y. 1995) (emphasis added) (citations

omitted). In determining whether conduct is directed at the public generally,” New York law

distinguishes “between ‘a gross and wanton fraud upon the public’ and ‘an isolated transaction
incident to an otherwise legitimate business.’

..

.

[implying that] [t]he latter.

. .

would not

constitute conduct aimed at the public generally.” TVf Records v. Island DefJam Music Grp,
412 F.3d 82,95 (2d dr. 2005) (quoting Walker v. Sheldon, 179 N.E.2d 497,500 (N.Y. 1961)).
See also Id at 94 (noting that Rocanova and New York University made it “clear that punitive
damages were recoverable in a contract action [under New York law] only ‘if necessary to
vindicate a public right”) (citations omitted); Bristol VilL, Inc. v. Louislana-Pac. Cap., 916 F.
Supp. 2d 357, 371 (W.D.N.Y. 2013) (Under New York law, “punitive damages for the breach of
contractual obligations, such as express warranties, are generally unavailable unless necessary to
vindicate a public right.”) (citations omitted).
t3
195
,
51
Here, Plaintiff alleges that she purchased the Vehicle for $ and that, at the time

of the sale, the Vehicle was actually worth approximately $20,478. (Am. Compl. 94).
Therefore, using the ordinary formula outlined in Lieb, 538 F. Supp. at 133, supra, Plaintiff has

“Wide World claims that the purchase price of the Vehicle was acwally S48.500. (Affirmation of Keith V. IaRose
115) (Docket No. 17). The Court need not resolve this dispute because the Court does not have jurisdiction
regardless of whether the purchase price was $48,500 or $51,195.
13

alleged actual MMWA damages of approximately S30,71 7. This is clearly insufficient to meet
the MMWA threshold.
Plaintiff also seeks to amend the Amended Complaint to add punitive damages to her
MMWA claims. (See Opp. at 1 7 n.4). Ho\\ ever. Plaintiff could not use such proposed punitive
damages to meet the \IMWA minimum because Wide World’s alleged conduct is more akin to
“an isolated transaction incident to an otherwise legitimate business” than “a gross and wanton
fraud upon the public.” Til I?ecords. 4 2 F.3d at 95 (citation omitted). In other words, punitive
damages are not “necessary to vindicate a public right” in this case, as required by New York
law, Id. at 94 (citations omitted). See, e.g.. May/me. 641 F. Supp. 2d at 312 (rejecting plaintiffs
argument “that the fraud was directed at the general public

...

because the truck was held out for

sale to the general public with an altered odometer” and holding that plaintiff could not recover
punitive damages under New York law because plaintiff proved “only a single incident of
odometer alteration”): Slegich v. Saab Cars USA, Inc., 676 N.Y.S.2d 756, 756 (N.Y. App. Term
1998) (holding that plaintiff was not entitled to punitive damages in case involving dealer’s
failure “to disclose a presale repair to the plaintiffs Saab automobile” on the grounds that
“Plaintiffs general assertion that he was ‘only one of many members of the public who entered
the defendant [dealer’sl showroom to purchase a ‘new’ car’. is hardly sufficient to sustain a
finding that defendants’ conduct constituted a public wrong.”) (alteration in original). Where, as
here, punitive damages are unavailable under New York law, they should not be included in
caiculaune the amount n controversy Ibr urisdictionai purposes. e LoubakIlale v (arpoini.

LLC,No, 08 CV 4798(ARR). 2011 WL 703920, at *13 (E.D.N.Y Jan. 10, 2011) (citation
omitted). repoi’/ and reeoniiiicndation adopted. No. 08—C V-4798(ARR)(CLP). 2011 WI. 704902
(L.D.N.Y, Feb. 16, 201 1) (“plaintilis demand of 83,000,000 in punitive damages should not he

14

considered in calculating the amount in controversy requirement because punitive damages are
not permitted in these circumstances under New York law.”).
Accordingly, the alleged damages from Plaintiffs MMWA claims alone fail to satisfy the
\1MWA’ s 550.000 amount-in-controversy requirement.
iii. Re’ocation of Acceptance

Plaintiff also argues that she is entitled to revoke acceptance of the Vehicle and that her
revocation amount exceeds $50.000.

(Opp. at

Plaintiff implicitly concedes that she is not entitled to a “refund’ under Section 2304 of
the MMWA because the only

warranties

alleged here are limited warranties. (Opp. at 14). The

Court agrees. See LaRose Aff. Ex.’ G; Kra/I v. Staten Island Boat Sales, Inc.. 715 F. Supp. 2d
464, 478 n.7 (S.D.N.Y. 2010) (“The federal minimum standards for warranties, set forth in 15
U.S.C.

§ 2304. do not apply to warranties designated ‘limited,’ like that which [Defendant]

provided to Plaintifi’.”) (citation omitted). Moreover, even if Plaintiff were entitled to a refund
under the MMWA, the refund amount would almost certainly fail to meet the $50,000
jurisdictional minimum because Plainti If used the Vehicle for approximately nine months. See

Plaintiff sometimes uses the terni “rescission” as opposed to “revocation of acceptance.” (See, e.g.. Opp. at 15.
Am. Compl. ¶ 118. 125. 134, 138). To the extent Plaintiff is arguing that she is entitled to the equitable remedy of
rescission of her loan or her contract with Wide World. this claim also fails to establish jurisdiction. The Supreme
Court has stated that in an action seeking the equitable remedy of declaratory or injunctive relief “it is well
established that the amount in controversy is measured by the value of the ohiect of the litigation” hour
;
i
i
2 t S
) 1,1
J off or
o
1
20061 iun.
2J (
I /
6
5 pp 2d 4
(D Co”r
2009) (applying the hour rule in an action involving rescission). Here, the “object of the litigation” is the Vehicle,
and the value of the Vehicle at the time ofsu.it was less than $50000. See Am, Compl. ¶ 95; 15 U.S.C. 2301(12)
§
(indicating that any refund for the Vehicle should he modified to account for “reasonable depreciation”). Therefore,
e en if Plaintiff were entitled to rescission. “this Court icouldi conceive of no set of circumstances wherein plaintiff
could recover an amount that would satisf the
amount in controversy threshold[.1” .tlastor v. Acumen. No. 08—
CV-802. 2009 WI. 170664$. at 3 \V.D,N.Y. Tune 17. 2009t.
‘

‘‘

...

Refers to exhibits attached to the Affirmation of Keith V. LaRose (Docket No, 17).

Am. Compi.

13. 83-84: 15 U.S.C.

§ 2301(12) (stating that the term

“refund” means

“refunding the actual purchase price (less reasonable depreciation based
on actual use where

permitted by rules of the Commission).”).
Fherefore. the Court must look to New York slate law to determine whether Plaintiff is
entitled to revoke her acceptance of the Vehicle. See Kolle v. Mains/up Corp.. No.
04CV71 l(TCP)(MLO), 2006 WL 1085067, at *2 (E.D.N.Y. Apr. 20, 2006) (“When a warrantor
issues a limited written warranty, the MMWA provides that the Court must look to State law
to determine a plaintiff’s entitlement to damages or other equitable remedies.”) (citations
omitted): Shuldinan v. DaitnlerC7uinsler Corp., 768 N.Y.S.2d 214, 216 (N.Y. App. Div. 2003)
(“the MMWj\ is silent as to the remedies for breach of a limited written warranty. Accordingly,
the court must look to State law to determine the plaintiffs’ entitlement to damages or other legal
or equitable relief’) (citations omitted). Under New York law, revocation of acceptance is
available if, in relevant part. the buyer accepted a nonconforming good “whose noncomformity
substantially impairs its value to him” and “his acceptance was reasonably induced either by the
difficulty of discovery before acceptance orb the seller’s assurances.” N.Y. U.C.C.

§ 2-608(1).

See also Murphy v. Mallard Coach Co., 582 N.Y.S.2d 528, 530-31 (N.Y. App. Div. 1992).
“Revocation of acceptance must occur within a reasonable time after the buyer discovers or
should have discovered the ground for

itFi” N.Y. U. CC. § 2-608(2).

The Court need not decide whether Plaintiff could revoke her acceptance of the Vehicle
because even if Plaintiff couRt revoke her acceptance. she would not he entitled to a full refund
of the Vehicle’s purchase price. Upon revoking acceptance. a party may recover “so much of the
pi i.

h u ben p dl j N

I C C

2

11(1)

Section 2-711(1) ) Sci ulo

g I di 1 aftd

Retail IIoidins. Inc. v. Sunidoun. Inc.. No. 06 Civ. 611 9(LTS)(iTlK. 2010 \VL 5298113.

16

*7

(S.D.N.Y. Dec. 23,2010) (citing Section 2-711(1) and holding that plaintiffs were
“entitled to

recover the price paid for the goods that they removed from their stores and returned to
Defendant” but ‘obviously [could] not recover the amount of unpaid invoices”); Exp.
Dev.
Canada v. Elec Apparatus & Power. L L. C, No. 03 Civ.2063(IIBP). 2008 WL 49005
57, at * 18
(S.D.N.Y. Nov. 14, 2008) (citing Section 2-711(1) and holding that counterclaimant was
“entitled to the return of its partial payment”).
A party revoking acceptance may also recover one of two additional remedies. First; a
party may “cover” by purchasing substitute goods and may obtain certain damages incurre

d

thereby. N.Y. U.C.C.

ft 2-711(lXa), 2-7 12. However, where a party ‘did not cover,...

damages under 2-7 12 are not available.” Singapore Recycle Ctr. Pie Lii v. Kad Int’l Mkig.,
Inc.,
No. 06-CV-4997 (RRM)(RER), 2009 WL 2424333, at’ 14 (E.D.N.Y. Aug. 6, 2009), report
and
recommendation adopted sub nom. Singapore Recycle Cir. PTE Lii

V.

Kad Int’l Mktg., Inc., No.

06-CV4997 (RRM)(RER), 2009 WL 2778003 (E.D.N.Y. Sept. 1,2009). Second, and in
the
alternative, a party revoking acceptance may “recover damages for non-delivery as provided
[N.Y. U.C.C.

in

§ 2-713 (“Section 2-713”)].” N.Y. U.C.C. § 2-71 1(fl(b). Under Section 2-713, a

party may be entitled to “the difference between the market price at the time when the buyer
learned ofthe breach and the contract price together with any incidental and consequential
damages provided in [N.Y. U.C.C.

§ 2-715 (‘Section 2-715”)] but less expenses saved in

consequence of the seller’s breach.” lit

§ 2-713. Under Section 2-715. incidental damages

‘include expenses reasonably incurred in inspection, receipt. transportation and care and custod

y

of goods rightfully rejected, any commercially reasonable charges, expenses or commissions

in

connection with effecting cover and any other reasonable expense incident to the delay or other
breach,” Id.

2-715(1). and conscqucntial damages consist of”(a) any loss resulting from

17

general or particular requirements and needs of which the seller at the time of contracting
had
reason to know and which could not reasonably be prevented by cover or otherwise;
and (h)
injury

to person or propert proximalel\ resulting from an breach of warranty.” ki

§ 2—71 5(2).

See also, e.g.. Maxi’ell v. Crahtiee Ford, Inc.. 543 N.Y.S.2d 626. 630 (NY. Just. Ct.
1989)
(noting

that a buyer who revoked acceptance of a vehicle could ‘recover the purchase price

under Section 2—711 and incidental and consequential damages under Section 2—715.”).
Here. Plaintiff “put down a deposit of S2.000,’ (Am. Cornpl.

‘

28). and it appears that

she had paid approximately $16A80 in car payments at the time of suit.’ Therefore, Plainti
6
ff
may be entitled to recover approximately $18,480—”so much of the price as has been paid”—
under Section 2-711(1). Plaintiff has chosen not to “cover” by purchasing a replacement vehicle.
(Id.

‘

98), and therefore damages pursuant to Section 2-7 12 are not available. As to damages

under Section 2-7 13. Plaintiff has not alleged ‘the difference between the market price at the
time when the buyer learned of the breach and the contract price,” and there is no indication that
the market price of the Vehicle (i.e.. the market price of a comparable 2010 BMW 750LX1), has
changed significantly from the alleged contract price of$51.195. C’f Kashi v. Graisos. 790 F.2d
1050, 1056 (2d Cir. 1986) (remanding to the district court for additional findings of fact with
regard to damages under Section 2-71 3 where the “market price” of soybean meal was
determined each day by the Chicago Board of irade) .As to incidental and consequential

damages under

Section

spe.flt attempting to

2-715, Plaintiff may he able to recover the “approximately S3,000” she

repair t.hc Vehicle, (z\m. C:ompl. [ 96), and she arguably could recover

“insurance expenses” liar the eight-month period prior to suit when the Vehicle was

Plaintiff alleges monthly car payments of SI ,030, (Aim Compl. ¶ 98. She purchased the Vehicle
on or about
Octvber 3 1. 20 3, i “ 13, 27), and filed suit on March 4. 201 5. (I)ocket To. I i. Therefore Plaintiff
had made
anpro\!malci\ sixteen monfl]i\ car pa meats at the time of suit.

18

“undriveahie” and kept in a garage. (Id.

84. 98:

Opp. at 7).

However, even assuming Plaintiff

could recover such expenses, her alleged damages under Section 2-715. together with the
approximately $18,480 in alleged damages recoverable under Section 2-711(1’). would not
amount to S50.000.
Accordingly, even if she chooses to revoke acceptance of the Vehicle. Plaintiffs claims
fail to satisfy the MMWA’s $50.000 amount-in-controversy requirement.
Ill. CONCLUSION
For the foregoing reasons. Wide World’s motion to dismiss the Amended Complaint for
lack of subject matter jurisdiction is granted.’ The Clerk is respectfully requested to terminate
7
the pending motion (Docket No. 1 6) and close the case.
Dated: February 23, 2016
White Plains, New York
SO ORDEREI):
7...
/

7

/ /

JUDITH C. McCARTHY
United States Magistrate Judge

Because the ours strants Wide \Vorids motion on the erounds outlined in this Opinion and Order,
address \\ ide Worlds additjonai arguments for dismissal.

19

it

need not