Diop v. BMW of North America, LLC
ORDER denying 23 Motion to Dismiss for Failure to State a Claim. BMW's Motion to Dismiss is DENIED WITHOUT PREJUDICE and the parties shall take discovery for ninety days limited to the issues of statute of limitations affirmative defenses and tolling. It is further ORDERED that BMW may renew its motion to dismiss on this basis on or before May 6, 2021. Signed by Chief Judge Richard E. Myers II on 1/6/2021. (Waddell, K.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
CASE NO. 5:20-CV-00025-M
BMW OF NORTH AMERICA, LLC,
This matter is before the court on Defendant BMW of North America, LLC ' s (hereinafter
"BMW") Motion to Dismiss Plaintiff's First Amended Complaint Pursuant to Rule 12(b)(6) [DE23]. For the reasons that follow, the motion will be denied.
Factual and Procedural Background
Plaintiffibrahima Diop (hereinafter "Diop") filed suit in this court in January 2020 alleging
that BMW concealed a defect with his vehicle ' s N63 engine that caused the engine to consume
excessive amounts of oil. See generally Compl. , DE-1 ; First Am. Compl. , DE-20. Diop purchased
a 2011 BMW 750Li on April 25, 2013 , from Foreign Cars International in Greensboro, North
Carolina, for $65,743 .12. DE-20 ,i 15-16. Diop first noticed the excessive oil consumption within
a few months of purchasing the car. Id. ,i 17. When the problem persisted about six months after
the car' s purchase, Diop complained to a BMW authorized dealer. Id. ,i 18. Diop complained to
BMW directly approximately five years after the car' s purchase. Id. ,i 21. Diop has spent $17,500
in out-of-pocket expenses associated with the car' s excessive oil consumption. Id. ,i 24. The cost
to repair the car' s engine is estimated at anywhere from $12,500 to $15,000. Id. ,i 23. Diop raises
five causes of action in his suit against BMW: (1) breach of warranty pursuant to the MagnusonMoss Warranty Act, 15 U.S .C. § 2301 , et seq. (hereinafter "MMWA"); (2) breach of implied
warranty of merchantability pursuant to the MMWA and N.C. Gen. Stat. § 25-2-314; (3) breach
Case 5:20-cv-00025-M Document 41 Filed 01/06/21 Page 1 of 11
of express warranties, pursuant to N.C. Gen. Stat. § 25-2-313 ; (4) violation of the Unfair and
Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1 , et seq. (hereinafter "UDTPA"); and (5)
fraudulent concealment. Id.
,r,r 93-148 .
. A class action lawsuit raising similar claims regarding BMW' s N63 engine was filed in the
District of New Jersey in September 2015 . Bang v. BMW ofN Am. , LLC, No. 15-6945, 2016 WL
7042071 , at *3 (D.N.J. Dec. 1, 2016). In December 2016, a motion to dismiss the second amended
complaint was denied. Id. at *1 , *8. Court-ordered mediation took place in July and August 2017.
Order for Reference to Mediation, Bang v. BMW of N Am., LLC, No. 15-6945 (D.N.J. June 26,
2017), ECF No. 74. The case ended in a class settlement on September 11 , 2018. Order Granting
Final Approval of Class Action Settlement, Bang v. BMW ofN Am., LLC, No. 15-6945 (D.N.J.
Sept. 11 , 2018), ECF No. 122. Diop opted out of the class action settlement on August 10, 2018.
DE-20 ,r 89.
After opting out of the Bang class action but prior to filing suit in the Eastern District of
North Carolina, Diop joined thirty-nine plaintiffs from fourteen other states in filing suit in the
District ofNew Jersey on December 3, 2018. Sarwar v. BMW ofN Am., LLC, No. 18-16750, 2019
WL 7499157, at* 1 n.2 (D.N.J. Nov. 27, 2019); DE-20 ,r 89. While that case is still ongoing, Diop' s
individual claims were severed, Sarwar, 2019 WL 7499157, at *2. Diop' s claims were dismissed
without prejudice and the District of New Jersey ordered that "the statute of limitations for any
claim asserted in this case is deemed tolled during the pendency of this action and for a period of
thirty (30) days from the date of this Order." Id. at *3. This timeline was later extended by an
additional thirty-one days, through and including January 27, 2020. Order Granting Stipulation to
Extend Tolling of Statute of Limitations, Sarwar v. BMW ofN Am. , LLC, No. 18-16750 (D.N.J.
Dec. 18, 2019), ECF No. 45 .
Case 5:20-cv-00025-M Document 41 Filed 01/06/21 Page 2 of 11
Diop filed suit in this court on January 21, 2020. DE-1. BMW moved to dismiss the
complaint for failure to state a claim. DE-16. By text order dated March 31, 2020, Diop was given
up to and including April 22, 2020, to respond to BMW's motion or in the alternative to file an
amended complaint. Diop filed a First Amended Complaint on April 21, 2020. DE-20. BMW's
original motion to dismiss was denied as moot. DE-22. BMW filed a motion to dismiss the
amended complaint on May 5, 2020. DE-23. Diop responded in opposition on May 26, 2020. DE28. BMW replied in support on June 9, 2020 [DE-29] and the motion is ripe for ruling. In the
interim, this court granted a consent motion to stay discovery pending resolution of the motion to
dismiss [DE-27] and determined it had subject matter jurisdiction to hear this case [DE-40].
BMW primarily argues that the various applicable statutes of limitations preclude Diop's
claims from proceeding and that no tolling doctrines apply to save any claim. Alternatively, BMW
argues that (1) Diop has failed to allege the critical element of reliance to support his North
Carolina breach of express warranty claim, (2) Diop has failed to plead his UDTP A and fraud
claims with the requisite particularity, and finally (3) Diop' s UDTP A and fraud claims are barred
by the economic loss rule.
Motion to Dismiss Legal Standard
In considering a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure for "failure to state a claim upon which relief can be granted," a court must determine
whether the complaint is legally and factually sufficient. Fed. R. Civ. P. 12(b)(6); see Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009); Bell At!. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Giarratano
v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008).
In doing so, the court must accept all well-pled allegations in a complaint as true and must
construe all factual allegations in the light most favorable to the plaintiff. My lan Labs., Inc. v.
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Matkari, 7F.3d1130, 1134 (4th Cir. 1993). However, a court need not accept a complaint' s legal
conclusions, elements of a cause of action, and conclusory statements. Iqbal, 556 U.S. at 678 ; see
also Giarratano, 521 F.3d at 302. Nor must a court accept as true "unwarranted inferences,
unreasonable conclusions, or arguments." E. Shore Mkts., Inc. v. JD. Assocs. Ltd. P 'ship, 213 F.3d
175, 180 (4th Cir. 2000). To survive a motion to dismiss under Federal Rule of Civil Procedure
12(b)(6), a complaint must contain facts sufficient to "state a claim to relief that is plausible on its
face." Twombly, 550 U.S. at 570.
Statute of Limitations Affirmative Defense at the Motion to Dismiss Stage
As a general rule, "a defense based on the statute of limitations must be raised by the
defendant through an affirmative defense, see Fed. R. Civ. P. 8(c), and the burden of establishing
the affirmative defense rests on the defendant." Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th
Cir. 2007). A defendant's statute oflimitations affirmative defense can be raised in a Rule 12(b)(6)
motion to dismiss; however, it is seldom appropriate to do so. See Richmond, Fredericksburg &
Potomac R.R. Co. v. Forst, 4 F.3d 244, 250 (4th Cir. 1993) ("A motion under Rule 12(b)(6) is
intended to test the legal adequacy of the complaint, and not to address the merits of any affirmative
defenses."). Accordingly, a statute of limitations defense must "clearly appear on the face of the
complaint." Id. In other words, the complaint must clearly allege "all facts necessary to the
affirmative defense. " Goodman, 494 F.3d at 464. When the facts necessary to the affirmative
defense are not apparent on the face of the complaint, discovery is appropriate. See Cruz v. Maypa,
773 F.3d 138, 146-47 (4th Cir. 2014) (reversing in part the district court' s decision to grant the
defendant's motion to dismiss because the plaintiffs claims were time-barred and remanding for
discovery so the district court could determine if any or all of plaintiffs claims were equitably
Case 5:20-cv-00025-M Document 41 Filed 01/06/21 Page 4 of 11
A. Warranty-Based Claims
Because the MMWA does not contain a statute of limitations itself, "when evaluating
timeliness of claims under the MMWA, courts are directed to use the applicable state law." Ferro
v. Vol Vo Penta ofthe Ams., LLC, No. 5:17-CV-194-BO, 20 17 WL 3710071, at *2 (E.D.N.C. Aug.
28, 2017). Under North Carolina law, which the parties agree is applicable in this case, a breach
of warranty claim for the sale of goods is subject to a four-year statute of limitations. N.C. Gen.
Stat. § 25-2-725(1). The limitations period begins to run when tender of delivery is made, unless
the goods are sold with a warranty for future performance. See N.C. Gen. Stat. § 25-2-725(2). If
goods are sold with a warranty for future performance, the period runs from the date on which the
breach is or should have been discovered. Id.
Here BMW's promise to repair or replace defective components for a limited period of
time is not the same as a warranty that a product will be free from defects. Thus, it is not a future
performance warranty and the accrual occurred upon the date of delivery. Compare Haywood
Street Redevelopment Corp. v. Harry S. Peterson, Co., 120 N.C. App. 832, 836,463 S.E.2d 564,
566 (N:C. Ct. App. 1995), review denied 342 N.C. 655,467 S.E.2d 712 (N.C. 1996) (finding that
a warranty which provided that waterproofing would be free of certain defects for period extending
into future constituted a prospective warranty, guaranteeing future performance) with Cohan v.
Pella Corp., Nos. 2:14-rnn-00001-DCN, 2:14-rnn-03704-DCN, 2015 WL 6465639, at *10 (D.S.C.
Oct. 26, 2015) ("While a warranty that states that the product will be free from defects in materials
and workmanship for a period of five years explicitly extends to future performance, a warranty
that states 'we promise to repair the product if it malfunctions within the first five years' does not
explicitly guarantee the future performance of the goods."); see also Fairchild v. Kubota Tractor
Corp., No. 1:18CV69, 2018 WL 4038126, at *5 (W.D.N.C. Aug. 23, 2018) (concluding the same).
The four-year statute of limitations therefore accrued on date of purchase and delivery of the car.
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Diop purchased his car on April 25, 2013. DE-20
15. The statute-of-limitations for Diop's
warranty-based claims expired on April 25, 2017, unless any tolling doctrines apply. Diop has
argued, among other doctrines, that fraudulent concealment and equitable tolling apply to bar
BMW' s assertion of a statute-of-limitations defense, premised on the contention that BMW
actively concealed the defective engine and made material omissions and misrepresentations to
induce customers, such as Diop, to purchase their vehicles.
B. UDTPA & Fraud Claims
An alleged violation of the UDTP A "shall be barred unless commenced within four years
after the cause of action accrues." N.C. Gen. Stat.§ 75-16.2. When a UDTPA claim is based on
alleged fraudulent conduct, the cause accrues "and the limitations clock starts running-at the time
that the fraud is discovered or should have been discovered with the exercise of reasonable
diligence." Dreamstreet Invs., Inc. v. MidCountry Bank, 842 F .3d 825, 830 ( 4th Cir. 2016) (internal
quotations and citations omitted). Claims for fraud in North Carolina must be brought within three
years of their accrual. N.C. Gen. Stat. § 1-52(9). Fraud claims "shall not be deemed to have accrued
until the discovery by the aggrieved party of the facts constituting the fraud or mistake." Id.
On the face of the amended complaint, there is insufficient information to determine the
accrual date of Diop' s UDTPA and fraud claims. Diop reports that he noticed excess oil
consumption " [w]ithin a few months" of purchasing his vehicle in April 2013. DE-20
,r,r 15, 17.
The amended complaint suggests that he attempted to exercise due diligence by visiting a BMW
dealer in the fall of 2013 to identify the root cause of his vehicle ' s excessive oil consumption and
in response was informed that his vehicle was operating normally. Id.
,r,r 18-20. Diop has also cited
online forum posts from BMW enthusiasts suggesting the widespread knowledge of the N63
engine' s oil-consumption issue dating as far back as 2011. Id.
Although Diop alleges
Case 5:20-cv-00025-M Document 41 Filed 01/06/21 Page 6 of 11
that discussion of the N63 engine was a "hot topic," id.
46, the court cannot conclude that Diop
was knowledgeable of, or even had access to, such discussions or other information which would
lead him to believe that his engine had a defect.
Accordingly, these facts alone are insufficient for the court to determine when the UDTP A
and fraud claims accrued and thereby determine when the statutes of limitations expired. The
possibility that tolling could apply to save all of Diop's claims is an additional reason why it is too
early to rule on BMW's statute-of-limitations argument without more information. Therefore, the
court will deny without prejudice BMW's motion and allow this case to proceed to limited
discovery so the parties may fully uncover the facts that may give rise to a statute-of-limitations
defense and the applicability of tolling doctrines.
BMW's Alternative Arguments for Dismissal
The court has considered BMW's alternative arguments for dismissal and finds them
unpersuasive. The court addresses each in tum.
A. Specific Reliance
To state a claim for breach of an express warranty under North Carolina law, a party must
show "(1) an express warranty as to a fact or promise relating to the goods, (2) which was relied
upon by the plaintiff in making his decision to purchase, (3) and that this express warranty was
breached by the defendant." Harbour Point Homeowners' Ass 'n, Inc. ex rel. Bd. of Directors v.
DJF Enters., Inc., 206 N.C. App. 152, 162, 697 S.E.2d 439, 447 (N.C. Ct. App. 2010) (citation
omitted). BMW argues that Diop has failed to sufficiently allege the second required element, his
reliance on the express warranty, and that he instead alleges only "legal trigger words," such that
the claim should be dismissed. DE-24 at 11-12. The court disagrees.
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In Maxwell v. Remington Arms Co., the plaintiff brought a claim for breach of warranty
related to the purchase of two firearms that were recalled by the manufacturer. No. 1:10CV918,
2014 WL 5808795 , at *1 (M.D.N.C. Nov. 7, 2014). The plaintiff did not specify where, when, or
from whom he bought the firearms, the price he paid, the terms of the warranty, or how he relied
on the warranty. Id. at * 1, *4. The court dismissed the claim, finding the plaintiff failed to
adequately allege the reliance element. Id. at *4.
In Ford Motor Credit Co. v. McBride , by contrast, a buyer claimed breach of express
warranty when he discovered that the vehicle he purchased had a defective passenger seat that
continuously fell into a reclining position. 257 N.C. App. 590, 591-92, 811 S.E.2d 640, 643-44
(N.C. Ct. App. 2018). At the time of purchase, the buyer informed the seller that he was in the
market for a personal-use vehicle. Id. at 596, 811 S.E.2d at 646. The seller told the buyer that the
vehicle could safely transport multiple people at the same time, that the vehicle was free of
mechanical defects, and gave a written warranty for thirty-six months or 36,000 miles. Id. The
buyer alleged that he relied on these statements and the warranty and that he would not have
purchased the vehicle without these representations. Id. The court found these allegations, taken
as true, sufficient to state a claim. Id.
Here, Diop alleges multiple instances ofreliance on the "New Vehicle Limited Warranty."
First, Diop alleges that prior to purchasing the vehicle, he relied on the representations contained
within the "New Vehicle Limited Warranty," including representations that BMW would repair
an engine defect, and that this was material to his decision to purchase. DE-20 ,r 26. Diop goes on
to specifically reference the four-year/50,000-mile warranty to repair or replace any of the
vehicle' s defective components. Id.
,r 27. Finally, Diop alleges he relied on the warranty during
his purchase and considered it the "basis of the bargain." Id.
,r 111 . These allegations, taken as
Case 5:20-cv-00025-M Document 41 Filed 01/06/21 Page 8 of 11
true, are specific enough to demonstrate reliance at the pleading stage. As such, BMW' s motion
to dismiss Diop' s breach of express warranty claim for failure to state a claim will be denied.
B. Pleading with Particularity
BMW argues that Diop fails to plead his UDTP A and fraud claims with the requisite
particularity. DE-24 at 13-15. The Federal Rules of Civil Procedure create a heightened pleading
standard for claims brought in federal court based on fraud or mistake, including such claims
brought pursuant to state law. Topshelf Mgmt., Inc. v. Campbell-Ewald Co., 117 F. Supp. 3d 722,
725-26 (M.D.N.C. 2015). Under this rule, parties alleging fraud "must state with particularity the
circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a
person' s mind may be alleged generally." Fed. R. Civ. P. 9(b). Parties must plead with particularity
"the time, place, and contents of the false representations, as well as the identity of the person
making the misrepresentation and what he obtained thereby." US. ex rel. Wilson v. Kellogg Brown
& Root, Inc., 525 F.3d 370, 379 (4th Cir. 2008) (citing Harrison v. Westinghouse Savannah River
Co., 176 F.3d 776, 784 (4th Cir. 1999)). These requirements extend to claims under the UDTPA
when such claims are predicated on an underlying fraud. Topshelf, 117 F. Supp. 3d at 731-32.
The rationale behind this heightened pleading standard is to give a defendant sufficient
notice of the claim to permit him to formulate a defense, to protect against frivolous suits, to
eliminate suits where all the fraud facts are learned after discovery, and to protect defendants from
harm to their goodwill and reputation. Humana, Inc. v. Ameritox, LLC, 267 F. Supp. 3d 669, 67677 (M.D.N.C. 2017) (citing Harrison, 176 F.3d at 784). "Consequently, a court should hesitate to
dismiss a complaint under Rule 9(b) if the court is satisfied ( 1) that the defendant has been made
aware of the particular circumstances for which it will have to prepare a defense at trial, and (2)
Case 5:20-cv-00025-M Document 41 Filed 01/06/21 Page 9 of 11
that plaintiff has substantial prediscovery evidence of those facts ." Id. (internal quotations, bracket,
and citation omitted).
Mindful of the Fourth Circuit' s instruction in Harrison and taking all of the allegations in
the amended complaint as true for purposes of this motion to dismiss, the court is satisfied that
Diop has pleaded fraudulent concealment and the fraud underlying his UDTP A claim with
sufficient particularity. Diop alleges the BMW knew of the N63 engine issues as early as 2008.
DE-20 ,r 5, 49-54, 58-62, 66. Despite this knowledge, BMW took steps to conceal this from Diop
and other customers by inter alia directing dealers to describe the excessive oil consumption as
,r 19, issuing a technical service bulletin in June 2013 that instructed technicians to
add double the amount of engine oil to vehicles with N 63 engines, id.
,r 51, and launching the
"Customer Care Package" that reduced the recommended oil-change interval, id.
,r 60. BMW' s
motion to dismiss Diop' s UDTPA and fraudulent concealment claims will be denied.
C. Economic Loss Rule
BMW argues that Diop' s claims of fraudulent concealment and violations of the UDTPA
are barred by the economic loss rule because Diop has not alleged that BMW breached a duty
separate from those required of it under the relevant warranties. DE-24 at 15-17. North Carolina
has adopted the economic loss rule, which prohibits the purchaser of a defective product from
using tort law to recover for economic losses. Moore v. Coachmen Indus., Inc., 129 N.C. App.
389, 401-02, 499 S.E.2d 772, 780 (N.C. Ct. App. 1998). The Fourth Circuit has counseled that it
is not the place of a federal court sitting in diversity to "create or extend the North Carolina
common law." Time Warner Ent.-Advance/Newhouse P 'ship v. Carteret-Craven Elec.
Membership Corp., 506 F.3d 304, 315 (4th Cir. 2007). Whether North Carolina courts would apply
the economic loss rule to UDTPA claims is very much an open question and as such the Fourth
Case 5:20-cv-00025-M Document 41 Filed 01/06/21 Page 10 of 11
Circuit specifically declined to wade into the province of state courts to make such a ruling. See
Ellis v. Louisiana-Pac. Corp., 699 F.3d 778, 787 n.5 (4th Cir. 2012) ("Furthermore, the North
Carolina courts have never addressed whether UDTP A claims are subject to the ELR, and in the
absence of such direction, we are well-advised to rely on other grounds."). This court declines to
rule on these claims at this time. BMW's motion to dismiss Diop's UDTPA and fraudulent
concealment claims pursuant to the economic loss rule will held in abeyance pending resolution
of the statute-of-limitations issues.
BMW's Motion to Dismiss [DE-23] is DENIED WITHOUT PREJUDICE AND THE
PARTIES SHALL TAKE DISCOVERY FOR NINETY DAYS LIMITED TO THE ISSUES OF
STATUTE OF LIMITATIONS AFFIRMATIVE DEFENSES AND TOLLING. It is further
ORDERED that BMW MAY RENEW ITS MOTION TO DISMISS ON THIS BASIS ON OR
BEFORE MAY 6, 2021.
so ORDERED this the _!i_ day of January, 2021.
RICHARD E. MYERS II
CHIEF UNITED STATES DISTRICT mDGE
Case 5:20-cv-00025-M Document 41 Filed 01/06/21 Page 11 of 11
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