Bennett et al v. Skyline Corporation et al
Filing
21
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT SKYLINE'S MOTION TO DISMISS (DKT. NO. 10 ). Signed by District Judge Irene M. Keeley on 10/3/14. (mh)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
GABRIEL BENNETT and TIFFANY
BENNETT,
Plaintiffs,
v.
//
CIVIL ACTION NO. 1:14CV129
(Judge Keeley)
SKYLINE CORPORATION, BOB’S
QUALITY HOMES, INC., and
BELPRE SAVINGS BANK,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Pending before the Court is the motion to dismiss (dkt. no.
10) filed by defendant Skyline Corporation (“Skyline”).
For the
following reasons, the Court DENIES in part Skyline’s motion to
dismiss as to Counts One, Two, Three, Four, Six, Eight, and Nine;
GRANTS in part Skyline’s motion to dismiss as to Count Six insofar
as it purports to state a stand alone claim for breach of the duty
of good faith, and as to Counts Five, Seven, Ten, Eleven, and
Twelve, and dismisses those counts without prejudice; and GRANTS
the Bennetts’ motion for leave to amend Counts Three and Four.
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
I) BACKGROUND
A)
Factual Background
Skyline is an Indiana corporation that manufactures home
components.
Home builders such as co-defendant Bob’s Quality
Homes, Inc. (“Bob’s Quality Homes”) purchase manufactured home
components
from
Skyline,
components for purchasers.
and
then
build
a
home
from
those
Skyline provides an express warranty
guaranteeing that its manufactured home components are free from
manufacturing defects.
Plaintiffs
Gabriel
and
Tiffany
Bennett
(“the
Bennetts”)
purchased a new home from Bob’s Quality Homes on April 18, 2013.
Bob’s Quality Homes represented itself to the Bennetts as an
authorized Skyline dealer/agent.
The Bennetts entered into a loan
agreement with co-defendant Belpre Savings Bank (“Belpre”) to pay
for the new home.
When the Bennetts purchased their new home, they informed
Bob’s Quality Homes that they needed the home to be delivered and
ready for occupancy by a certain date.
Although Bob’s Quality
Homes guaranteed the Bennetts that the home would be delivered and
installed within the desired time frame, it did not complete the
installation process on time.
When the home installation began to
2
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
go awry, the Bennetts instructed Belpre to refrain from disbursing
loan
funds
to
Bob’s
Quality
Homes.
Despite
the
Bennetts’
instructions, Belpre disbursed the loan funds.
In addition, Bob’s Quality Homes allegedly damaged and failed
to properly install the home.
When the Bennetts were finally able
to occupy their new home, they found nonconformities stemming from
the manufacture, delivery, and installation of the home that
substantially impaired their enjoyment of their new home.
At that point, the Bennetts contacted Bob’s Quality Homes and
Skyline to request that they undertake repairs pursuant to any
applicable warranties.
Bob’s Quality Homes and Skyline, however,
failed to repair the home in a timely fashion.
notified
Bob’s
Quality
Homes,
Skyline,
and
The Bennetts
Belpre
of
their
rejection and/or revocation of acceptance of the home.
B)
Procedural Background
The Bennetts filed suit in the Circuit Court of Calhoun
County, West Virginia, on June 26, 2014.
(Dkt. No. 1 at 1).
The
Bennetts’ complaint included twelve claims:
C
Claim One:
C
Claim Two:
Cancellation of Contract by Rejection
Cancellation of Contract by Revocation of
Acceptance
3
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
C
Claim Three:
C
Claim Four: Breach of Implied Warranty of Merchantability
C
Claim Five: Breach of Implied Warranty of Fitness
C
Claim Six: Breach of Contract and Duty of Good Faith
C
Claim Seven: Unconscionability
C
Claim Eight: Common Law Negligence
C
Claim Nine: Unfair or Deceptive Acts or Practices
C
Claim Ten: Common Law Fraud or Misrepresentation
C
Claim Eleven: Civil Conspiracy
C
Claim Twelve: Joint Venture
Breach of Express Warranties
(Dkt. No. 1-2 at 6-14).
Skyline filed a notice of removal on August 5, 2014.
No. 1).
(Dkt.
In its notice of removal, Skyline alleged that this Court
has original jurisdiction under 28 U.S.C. § 1332(a) based on
diversity of citizenship. (Dkt. No. 1 at 2).
The Bennetts are
citizens of West Virginia and reside in Calhoun County, West
Virginia.
Bob’s Quality Homes is an Ohio corporation with its
principal place of business in Ohio; Belpre is an Ohio corporation
with its principal place of business in Ohio; and Skyline is an
Indiana
corporation
with
its
principal
4
place
of
business
in
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Indiana.
construct
Id.
the
The price of the modular home components used to
Bennetts’
home,
standing
jurisdictional threshold of $ 75,000.00.
alone,
Id. at 3.
exceeds
the
Co-defendants
Belpre and Bob’s Quality Homes consented to removal. (Dkt. No. 1-1
at 1-2).
On September 10, 2014, Skyline filed a motion to dismiss the
Bennetts’ complaint for failure to state a claim upon which relief
can be granted.
Specifically, it argues that the Bennetts failed
“to plead fraud with specificity,” failed “to satisfy the statutory
prerequisite to the filing of their West Virginia Consumer Credit
and Protection Act claim,” failed to allege a recognized cause of
action for the breach of the duty of good faith and fair dealing,
and failed to state “facts sufficient to state a claim upon which
relief can be granted.”
(Dkt. No. 10 at 1, Dkt. No. 11 at 2).
On September 24, 2014, the Bennetts filed a response opposing
Skyline’s motion to dismiss, or in the alternative, seeking leave
to amend any deficiencies in their complaint.
October 1, 2014, Skyline filed a reply brief.
(Dkt. No. 17).
(Dkt. No. 19).
On
The
parties have had the opportunity of full briefing, and the motions
are ripe for review.
5
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
II) LEGAL STANDARDS
A) Motion to Dismiss
In reviewing the sufficiency of a complaint, a district court
“‘must accept as true all of the factual allegations contained in
the complaint.’”
Anderson v. Sara Lee Corp., 508 F.3d 181, 188
(4th Cir. 2007) (quoting Erickson v. Pardus, 551 U.S. 89, 94
(2007)). However, while a complaint does not need detailed factual
allegations, a plaintiff’s obligation to provide the grounds of his
entitlement to relief requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of action
will not do.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Indeed, courts “are not bound to accept as true a legal conclusion
couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265,
286 (1986).
In considering whether the facts alleged are sufficient, “a
complaint must contain ‘enough facts to state a claim to relief
that is plausible on its face.’”
(quoting
Twombly,
550
U.S.
at
Anderson, 508 F.3d at 188
547).
“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.”
6
Ashcroft v. Iqbal, 556 U.S.
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
662, 678 (2009). This requires “more than a sheer possibility that
a defendant has acted unlawfully.”
B)
Id.
Motion to Amend the Complaint
The Bennetts seek leave to amend their complaint if it is
deficient.
(Dkt. No. 17 at 1).
A plaintiff can amend a pleading
one time, as a matter of course, before the defendant files a
responsive pleading.
Fed. R. Civ. Pro. 15(a).
After a responsive
pleading is filed, a party may amend its pleading “only with the
opposing party’s written consent or the court’s leave.
should freely give leave when justice so requires.”
The court
Fed. R. Civ.
Pro. 15(a)(2). The Fourth Circuit has interpreted 15(a) to require
that “leave to amend a pleading should be denied only when the
amendment would be prejudicial to the opposing party, there has
been bad faith on the part of the moving party, or the amendment
would have been futile.”
Johnson v. Oroweat Foods Co., 785 F.2d
503, 509 (4th Cir. 1986) (citing Foman v. Davis, 371 U.S. 178, 182,
83 S.Ct. 227, 230 (1962)).
A court should deny leave to amend on the ground of futility
only “when the proposed amendment is clearly insufficient or
frivolous on its face.”
Johnson, 785 F.2d at 510.
Conjecture
about the underlying merits of the litigation should not enter into
7
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
the court’s decision as to whether to allow an amendment. Davis v.
Piper Aircraft, 615 F.2d 606, 613-14 (4th Cir. 1980).
III) ANALYSIS
A)
Count One: Cancellation of Contract by Rejection
In Count One of the complaint, the Bennetts seek cancellation
of contract by rejection.
(Dkt. No. 1-2 at 6).
West Virginia’s
version of the Uniform Commercial Code (“UCC”) provides that
“[r]ejection of goods must be within a reasonable time after their
delivery or tender.
It is ineffective unless the buyer seasonably
notifies the seller.”
W. Va. Code § 46-2-602(1).
See Shreve v.
Casto Trailer Sales, Inc., 149 S.E.2d 669, 242 (W. Va. 1966)
(noting a cause of action for rescission or cancellation of
contract under the Uniform Commercial Code in West Virginia).
Reasonableness is defined under the UCC as dependent on “the
nature, purpose, and circumstances of the action.”
46-1-205(a).
W. Va. Code §
The Supreme Court of Appeals of West Virginia has
held that whether a party gave notice of rejection within a
reasonable time is a question of fact for the jury to decide.
City
Nat. Bank of Charleston v. Wells, 384 S.E.2d 374, 381 (1989).
Skyline does not argue that the Bennetts’ rejection was
unreasonable, but instead alleges that, contrary to the allegations
8
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
in the complaint, the Bennetts did not reject delivery of their
home at all.
(Dkt. No. 11 at 3).
Skyline points out that the
complaint identifies neither the date nor the manner of rejection.
Id.
However, at the motion to dismiss stage, the sole inquiry is
whether a plaintiff has pleaded sufficient facts to allege a
plausible claim for relief.
Here, the Bennetts did so.
In their
complaint, they state that they “notified Defendants of [their]
rejection...of the subject home.”
(Dkt. No. 1-2 at 5).
The Court
must accept factual allegations in the complaint as true for
purposes of a motion to dismiss.
Anderson, 508 F.3d at 188.
The
Bennetts did not state the time or manner of rejection, but they
were not required to do so; the statute merely requires rejection
within a reasonable time, which is a question of fact for the jury.
According to the plain language of the complaint, the Bennetts
notified Skyline of their rejection after they afforded Skyline and
Bob’s Quality Homes an opportunity to repair the home.
Id.
Skyline also alleges in its motion to dismiss that the
Bennetts still live in their home; it notes that they have not
alleged they ever vacated their home.
Id.
Skyline points to W.
Va. Code § 46-2-602(2)(a), which provides that “after rejection any
9
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
exercise of ownership by the buyer with respect to any commercial
unit is wrongful as against the seller.”
Skyline’s
allegations
about
the
Bennetts’
exercise
of
ownership over the home after rejection deal with a factual dispute
that is not appropriate for resolution at the motion to dismiss
stage.
Section 46-2-602(2) describes the “normal duties of the
buyer upon rejection,” not whether the buyer has given proper
notice of rejection in the first place.
See Commentary, W. Va.
Code Ann. § 46-2-602(2).
The Bennetts are not required to include in their complaint
whether they continued to reside in the home after rejection, and
to consider the matter at this stage would expand the scope of the
Court’s review beyond the complaint.
See Fed. R. Civ. Pro. 12(d)
(providing that the Court must treat a 12(b)(6) motion as a motion
for
summary
pleadings).
judgment
if
it
considers
matters
outside
the
The Bennetts have pleaded sufficient facts to support
a claim for cancellation of contract by rejection.
Court denies Skyline’s motion to dismiss Count One.
10
Therefore, the
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
B)
Count Two:
Acceptance
Cancellation
of
Contract
by
Revocation
of
The Bennetts seek cancellation of contract by revocation of
acceptance
as
an
alternative
to
rejection.
cancellation
of
contract
by
(Dkt. No. 1-2 at 6).
Under W. Va. Code § 46-2-608(1), a buyer can revoke his
acceptance of goods “whose nonconformity substantially impairs its
value to him” under certain circumstances.
The buyer must have
accepted the goods either “on the reasonable assumption that its
nonconformity would be cured and it has not been seasonably cured,”
or “without discovery of such nonconformity if his acceptance was
reasonably induced either by the difficulty of discovery before
acceptance or by the seller’s assurances.”
W. Va. Code § 46-2-
608(1)(a)-(b).
In addition, the buyer must revoke his acceptance “within a
reasonable time after the buyer discovers or should have discovered
the ground for it and before any substantial change in condition of
the goods which is not caused by their own defects.”
§ 46-2-608(2).
W. Va. Code
The buyer’s revocation is not effective until he
notifies the seller.
Id.
11
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Skyline argues that the Bennetts never allege when, where, and
how the notice of revocation was communicated to Skyline, and also
fail to allege that Skyline caused the nonconformities in their
home.
(Dkt. No. 11 at 4).
Rather, the Bennetts allege that
Skyline failed to fix the nonconformities caused by Bob’s Quality
Homes.
Id.
As a preliminary matter, Skyline’s claim that the Bennetts did
not notify Skyline of their revocation of acceptance fails for the
same reason Skyline’s argument about rejection of acceptance fails.
In
the
complaint,
the
Bennetts
alleged
that
they
“notified
Defendants of [their] rejection and/or revocation of acceptance of
the subject home.”
facts
pleaded
in
(Dkt No. 1-2 at 5).
the
complaint
sufficiency of the complaint.
as
The Court must take the
true
when
reviewing
the
Anderson, 508 F.3d at 188.
Skyline’s argument that the Bennetts failed to allege that it
is responsible for the nonconformities leading to their revocation
of acceptance also fails.
The Bennetts alleged that Bob’s Quality
Homes “damaged the subject home and failed to properly install the
home as required by [Skyline’s] installation instructions and by
law.”
that
(Dkt. No. 1-2 at 13).
Bob’s
Quality
Homes
However, the Bennetts also alleged
is
“an
12
authorized
Skyline
dealer
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
and/or...agent.” Id. at 2. Skyline undertook repairs on the home
after the installation, but they “failed and/or refused to repair
the home in a timely manner... ,” following which, the Bennetts
revoked their acceptance of the home.
Id. at 5.
Taken together, the facts that the Bennetts’ home was damaged,
due to either installation or manufacturing problems; that Bob’s
Quality Homes is an agent of Skyline; and that Skyline failed to
repair the home in accordance with their warranty allow the Court
to infer that a nonconformity existed that substantially impaired
the value of the home to the Bennetts, and that Skyline was one of
the parties responsible for the nonconformities.
Therefore, the
Court denies Skyline’s motion to dismiss Count Two.
C)
Count Three: Breach of Express Warranties
The Bennetts allege that, before they purchased their home,
both Bob’s Quality Homes and Skyline “expressly warranted that the
subject home was free from defects and had not been damaged.”
(Dkt. No. 1-2 at 16).
The Bennetts also claim that both Bob’s
Quality Homes and Skyline “made additional ‘warranties’ as that
term is defined by W. Va. Code § 46A-6-102(8).”
Id. at 17.
W. Va. Code § 46-2-313 provides that express warranties by the
seller are created, in relevant part, by “[a]ny affirmation of fact
13
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
or promise made by the seller to the buyer which relates to the
goods and becomes part of the basis of the bargain....”
Code § 46-2-313(1)(a).
W. Va.
A cause of action for breach of warranty
generally accrues “when tender of delivery is made.”
W. Va. Code
§ 46-2-724(2).
The Bennetts included a claim for breach of express warranty
in their complaint, but they failed to include the terms of the
warranty. Skyline, however, included a copy of the warranty in its
motion to dismiss.
(Dkt. No. 11 at 5).
Although the Court will
not generally consider evidence outside the pleadings at the motion
to dismiss stage, it may do so if “it was integral to and
explicitly relied on in the complaint,” and if the plaintiffs do
not challenge its authenticity. Phillips v. LCI Intern., Inc., 190
F.3d 609, 618 (4th Cir. 1999).
Here, the Court will consider the
warranty.
The express warranty Skyline provided to the Bennetts in the
Modular
Home
Owner’s
Manual
covers
“[m]anufacturing
defects
reported to Skyline within 15 months after original delivery by an
authorized dealer.”
(Dkt. No. 11 at 5).
It specifically excludes
“[m]isuse, unauthorized repairs or alterations, minor imperfections
and dealer or owner improper transportation or setup.”
14
Id.
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Skyline
asserts
that
the
Bennetts
have
not
alleged
manufacturing defects covered by the express warranty.
11 at 6).
any
(Dkt. No.
In response, the Bennetts point to paragraph 26 of their
complaint, which states that “[t]he nonconformities discovered by
[the Bennetts] involved substandard, defective, and/or negligent
manufacture, delivery, and installation.”
(Dkt. No. 1-2 at 14).
Other than this conclusory allegation, the Bennetts have
failed to plead facts about the manufacture of their home that
would be covered under the warranty.
The Court is “not bound to
accept as true a legal conclusion couched as a factual allegation.”
Papasan, 478 U.S. at 286.
The Bennetts’ naked allegation of
negligence, without any facts to support it, is a legal conclusion.
The Bennetts alleged other facts in their complaint that
implicate negligent installation or workmanship on the part of
Bob’s Quality Homes, but these are explicitly excluded under the
terms of the express warranty.
See, e.g., Dkt. No. 1-2 at 4
(“Defendant Dealer damaged the subject home and failed to properly
install the home....”).
The Bennetts’ claim that Skyline has breached “additional”
express warranties under W. Va. Code § 46A-6-102(8) likewise fails.
(Dkt. No. 1-2 at 17). Section 46A-6-102(8) defines a “warranty” as
15
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
“express and implied warranties described and defined” in various
code
sections
under
the
West
Virginia
Consumer
Credit
and
Protection Act, including §§ 46-2-313, 314, and 315, as well as
“expressions or actions of a merchant which assure the consumer
that the goods have described qualities or will perform in a
described manner.”
W. Va. Code § 46A-6-102(8).
The portions of the UCC that are codified at §§ 46-2-313, 314,
and
315
and
cross-referenced
by
§
46A-6-102(8)
as
“express
warranties” simply lead back to the original definition of an
express warranty expounded in the UCC. Any “affirmation of fact or
promise made by the seller to the buyer which relates to the
goods,” “description of the goods,” or “sample or model” that is
part of the basis of the bargain forms an express warranty.
Code § 46-2-313(1)(a)-(c).
W. Va.
Sections 314 and 315 refer to implied
warranties, and are not relevant here. Any “expressions or actions
of a merchant” that may form the basis of an additional express
warranty are not described in the complaint.
After this intellectual exercise, the Court is none the wiser
as to the basis of any additional supposed “express warranties”
provided by Skyline to the Bennetts, other than the one contained
in the Modular Home Owner’s Manual.
16
However, the Bennetts have
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
asked for leave to amend their complaint should the Court find it
deficient.
(Dkt. No. 17 at 1).
The Bennetts have not amended
their complaint yet, and the Court cannot see how an amendment to
Count Three to explicitly allege the express warranties Skyline
violated would be in bad faith, prejudice the defendants, or be
futile.
Therefore, it denies Skyline’s motion to dismiss Count
Three, and grants the Bennetts leave to amend Count Three.
D)
Count Four: Breach of Implied Warranty of Merchantability
The Bennetts claim that Skyline breached the implied warranty
of merchantability contained in W. Va. Code §§ 46-2-314 and 46A-6107.
A warranty of merchantability is implied, unless excluded or
modified, in every contract for sale “if the seller is a merchant
with respect to goods of that kind.”
W. Va. Code § 46-2-314(1).
A merchant is defined, in relevant part, as a person who deals
in goods of the kind or otherwise by his occupation holds himself
out as having knowledge or skill peculiar to the practices or goods
involved in the transaction....” W. Va. Code § 46-2-104(1).
In order for goods to be merchantable, they “must be at least
such as
(a) pass without objection
contract description; and
17
in
the
trade
under
the
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
(b)in the case of fungible goods, are of fair average
quality within the description; and
(c) are fit for the ordinary purposes for which such
goods are used; and
(d) run, within the variations permitted by the
agreement, of even kind, quality and quantity within each
unity and among all units involved; and
(e) are adequately contained, packaged, and labeled as
the agreement may require; and
(f) conform to the promises or affirmations of fact made
on the container or label if any.”
W. Va. Code § 46-2-314(2)(a)-(f).
An implied warranty may also arise from a course of dealing or
usage of trade.
W. Va. Code § 46-2-314(3).
A merchant is not
permitted to “exclude, modify or otherwise attempt to limit” a
warranty of merchantability.
W. Va. Code § 46A-6-107.
In its answer, Skyline denied the paragraph of the Bennetts’
complaint alleging that it is a merchant; however, it cannot and
does not seriously argue that the Bennetts failed to allege that it
was a merchant of mobile homes.
(Dkt. No. 4 at 5).
The Bennetts
allege that Skyline is a manufacturer of mobile homes, including
theirs, and that it sold and warranted mobile homes. (Dkt. No. 1-2
at 1-2).
The Bennetts have alleged sufficient facts at this stage
that Skyline is a merchant.
Skyline argues, however, that the Bennetts have failed to
plausibly allege a factual basis for a cause of action for breach
18
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
of the implied warranty of merchantability.
(Dkt. No. 11 at 6).
The Bennetts’ complaint does state that their home was not fit for
occupancy, and that their use of the home was impaired.
(Dkt. No.
1-2 at 14). That is all they state, however, and their restatement
of
the
elements
of
a
breach
of
the
implied
warranty
of
merchantability, without additional facts, is not cognizable. See,
e.g., Reed v. Pfizer, Inc., 839 F.Supp.2d 571, 578-79 (E.D.N.Y.
2012) (granting motion to dismiss as to plaintiffs’ claims under
the West Virginia implied warranty of merchantability statute
because the plaintiffs’ “unsupported conclusions” that the product
was not merchantable “lack the required factual content.”).
As noted earlier, the Bennetts seek leave to amend any factual
deficiencies in their complaint, which, as to Count Four, is a
reasonable request.
(Dkt. No. 17 at 1).
Therefore, the Court
denies Skyline’s motion to dismiss, and grants the Bennetts leave
to amend Count Four.
E)
Count Five: Breach of Implied Warranty of Fitness
The Bennetts claim that Skyline breached the implied warranty
of fitness contained in W. Va. Code §§ 46-2-315 and 46A-6-107.
(Dkt. No. 1-2 at 8-9).
The buyer can rely on an implied warranty
of fitness for a particular purpose when the seller, at the time
19
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
the contract was formed, “has reason to know any particular purpose
for which the goods are required, and that the buyer is relying on
the seller’s skill or judgment to select or furnish suitable
goods.”
W. Va. Code § 46-2-315.
Whether this warranty arises is
a question of fact.
Use of goods for “a particular purpose” within the meaning of
§ 46-2-315 “differs from the ordinary purpose for which the goods
are used” and “envisages a specific use by the buyer which is
peculiar to the nature of his business....”
Code § 46-2-315.
Commentary, W. Va.
The ordinary purpose for which goods are used
“are those envisaged in the concept of merchantability and go to
uses which are customarily made of the goods in question.”
Id.
A
merchant cannot “[e]xclude, modify, or otherwise attempt to limit
any warranty,” including the warranty of fitness for a particular
purpose.”
W. Va. Code § 46A-6-107.
Skyline argues that the Bennetts’ claim for breach of implied
warranty of fitness fails because they are unable to “point to any
particular purpose for which the home was to be used, other than
the ordinary purpose of being a dwelling.”
(Dkt. No. 11 at 7).
The Bennetts allege that their home “was not fit for the particular
purpose for which it was intended.”
20
(Dkt. No. 1-2 at 9).
However,
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
as Skyline points out, the Bennetts have never stated what that
particular purpose is, other than to be used as a dwelling.
In
response, the Bennetts state only that they informed Bob’s Quality
Homes of their need to occupy the house quickly; but they still
intended to occupy the house for its ordinary purpose--as a
dwelling.
(Dkt. No. 17 at 12; Dkt. No. 1-2 at 3).
“Without
alleging a particular purpose for the mobile home other than as a
dwelling, this claim lacks an essential element, and therefore
cannot go forward.”
535
(S.D.W.
Va.
Beattie v. Skyline Corp., 906 F.Supp.2d 528,
2012).
Here,
the
Bennetts’
claim
lacks
an
essential element, and the Court, therefore, grants Skyline’s
motion to dismiss Count Five.
F)
Count Six: Breach of Contract and Duty of Good Faith
The Bennetts claim that Skyline breached its contract and the
duty of good faith contained in W. Va. Code § 46-1-203.
Section
46-1-203 “does not support an independent cause of action for
failure to perform or enforce in good faith.”
Code § 46-1-203.
Commentary, W. Va.
Rather, the failure to perform or enforce duties
under a contract in good faith “constitutes a breach of that
contract.”
Id.
See, e.g., Gaddy Eng’g Co. v. Bowles Rice McDavid
Graff & Love, 746 S.E.2d 568, 578 (W. Va. 2013).
21
BENNETT v. SKYLINE CORPORATION
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MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
The Bennetts argue that they have not asserted their breach of
duty of good faith claim as a stand alone claim, but rather to
illustrate “ one way in which the subject contract was breached.”
(Dkt. No. 17 at 12).
The Court must consider, then, whether the
Bennetts have stated a claim for breach of contract, or a claim
based solely on breach of the duty of good faith.
See Knisely v.
Nat’l Better Living Ass’n, Inc., 2014 WL 4084517 at *15 (N.D.W. Va.
Aug. 19, 2014).
To state a valid claim for breach of contract, a plaintiff
must allege “‘the breach on which the plaintiffs found their
action...[and] the facts and circumstances which entitle them to
damages.’” Knisely, 2014 WL 4084517 at *15 (quoting Exec. Risk
Indemn., Inc. v. Charleston Area Med. Ctr., Inc., 681 F.Supp.2d
694, 714 (S.D.W. Va. 2009)).
A breach of contract claim has the
following elements: “(1) ‘the existence of a valid, enforceable
contract;’
(2)
‘that
the
plaintiff
has
performed
under
the
contract;’ (3) ‘that the defendant has breached or violated its
duties or obligations under the contract; and’ (4) ‘that the
plaintiff has been injured as a result.’” Id.
The Bennetts have adequately pleaded a breach of contract
claim against Skyline.
First, a valid, enforceable contract
22
BENNETT v. SKYLINE CORPORATION
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MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
existed.
The Bennetts entered into a purchase contract with Bob’s
Quality Homes for the new mobile home manufactured by Skyline.
(Dkt. No. 1-2 at 3).
Although Skyline was not a party to that
initial contract, Skyline undertook repairs on the damaged mobile
home after the Bennetts complained.
Id. at 5.
Also, the Bennetts
have alleged that an agency relationship exists between Skyline,
the manufacturer, and Bob’s Quality Homes, the dealer. Id. at 2-3.
If an agency relationship does exist, the contract obligations
between Bob’s Quality Homes and the Bennetts could be imputed to
Skyline.
Second, the Bennetts performed under the contract.
The
Bennetts contracted with Bob’s Quality Homes to exchange money for
a new mobile home.
Bob’s
Quality
The Bennetts’ bank, Belpre, disbursed funds to
Homes,
explicit instructions.
albeit
allegedly
against
the
Bennetts’
(Dkt. No. 1-2 at 5).
Third, the Bennetts have sufficiently alleged Skyline’s breach
of the contract.
After the Bennetts performed their end of the
bargain, Skyline undertook repairs, but “failed and/or refused to
repair the home in a timely manner.”
(Dkt. No. 1-2 at 5).
Specifically, Skyline breached the express and implied warranties;
refused
to
“properly
deliver,
23
install,
and
repair
the
new
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
manufactured home”; misrepresented both “the condition of the new
manufactured
home
and...Defendants’
qualifications
and
capabilities”; requested, disbursed, and received “loan funds prior
to completion of the subject home and without [the Bennetts’]
authorization”; and failed “to remedy the problems brought about by
the Defendants’ unlawful conduct in a timely fashion.”
Id. at 9.
Finally, the Bennetts have adequately pleaded injury.
They
allege that they were unable to move into their new home on time,
discovered “repeated nonconformities” once they finally moved in,
and,
as
a
result,
“suffered
monetary
loss,
incidental,
consequential, actual and compensatory damages, and emotional and
mental distress, loss of use, aggravation, anxiety, annoyance and
inconvenience.”
(Dkt. No. 1-2 at 6).
For the reasons discussed, the Court grants Skyline’s motion
to dismiss Count Six to the extent it alleges a stand alone cause
of action for breach of the duty of good faith, but otherwise
denies the motion to dismiss.
G)
Count Seven: Unconscionability
The Bennetts allege that, “[g]iven the condition of the
subject home at the time of sale and delivery, the purchase price
24
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
charged, and paid, for the home was unconscionable as a matter of
law.”
(Dkt. No. 1-2 at 10).
The
court
may
refuse
to
enforce
an
agreement
that
is
unconscionable at the time it was made, or appears to have been
induced by unconscionable conduct.
W. Va. Code § 46A-2-121(1)(a).
Unconscionability is a question of law, and can generally be
decided on summary judgment.
Hager v. American General Finance,
Inc., 37 F.Supp.2d 778, 787 (S.D.W. Va. 1999). This does not mean,
however, that the Court cannot address unconscionability on a
motion to dismiss.
See, e.g., Adkins v. CMH Homes Inc., 2014 WL
2112859 at *4-5 (S.D.W. Va. May 19, 2014); Heavener v. Quicken
Loans, Inc., 2013 WL 2444596 at *4-5 (N.D.W. Va. June 5, 2013).
However, dismissal is improper if questions of fact exist as to
“whether the parties’ bargaining power was grossly unequal so as to
render the transactions between the plaintiffs and defendants
unconscionable.” Id. Herrod v. First Republic Mortg. Corp., Inc.,
625 S.E.2d 373, 379-80 (W. Va. 2005).
Several
factors
play
into
the
analysis
when
determining
whether a transaction is unconscionable, including “the relative
positions of the parties, the adequacy of the bargaining position,
and the existence of meaningful alternatives available to the
25
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
plaintiffs.” Hager v. American General Finance, Inc., 37 F.Supp.2d
778, 786-87 (1999).
‘gross
inadequacy
“A bargain may be unconscionable if there is
in
bargaining
power,
together
with
terms
unreasonably favorable to the stronger party....’” Id. (citing Troy
Mining Corp. v. Itmann Coal Co., 176 W. Va. 599, 346 S.E.2d 749,
753 (1986)). “Gross inadequacy in bargaining power may exist where
consumers are totally ignorant of the implications of what they are
signing, or where the parties involved in the transaction include
a national corporate lender on one side and unsophisticated,
uneducated consumers on the other.”
Id. (internal citations
omitted).
Skyline argues that the Bennetts “failed to allege any factual
support for their legal conclusion that the purchase price paid for
their home was unconscionable as a matter of law, or that the
transaction documents were unconscionable.”
(Dkt. No. 11 at 8).
After carefully reviewing the complaint, the Court agrees.
The
Bennetts rely on “the condition of the subject home at the time of
sale and delivery,” “the purchase price charged, and paid, for the
home,”
and
“the
above-described
transaction
and
transaction
documents prepared by Defendants” to support their assertion that
the transaction was unconscionable.
26
(Dkt. No. 1-2 at 10).
It is
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
helpful
to
note
unconscionability,
the
usually
distinction
concerned
between
with
procedural
unfairness
in
the
bargaining process and formation of the contract, and substantive
unconscionability, which is concerned with fairness in the contract
itself.
See Adkins v. CMH Homes, Inc., 2014 WL 2112859 at *4-5
(N.D.W. Va. May 19, 2014).
allege
facts
to
support
Here, the Bennetts have failed to
a
claim
for
either
procedural
or
substantive unconscionability.
As to procedural unconscionability, the Bennetts state in
Count Seven that “[t]he above-described transaction and transaction
documents prepared by Defendants were unconscionable at the time
they were made.”
allege
any
documents.
facts
(Dkt. No. 1-2 at 10).
concerning
the
However, they fail to
transaction
and
transaction
On April 18, 2013, they signed a contract with Bob’s
Quality Home.
Id. at 3.
Their home purchase was accompanied by an
express manufacturers’ warranty that they understood to be part of
the bargain. Id. at 3-4. Bob’s Quality Homes allegedly made false
representations about the quality and conditions of the home on
which the Bennetts then relied when they purchased the home.
Id.
at 4.
However, the Bennetts fail to allege any facts regarding a
gross
inequality
of
bargaining
27
power,
contract
terms
that
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
unreasonably favored the defendants, or any other suggestion that
the bargaining and contract process was unconscionable.
lack
of
factual
support
for
a
claim
of
Given the
procedural
unconscionability, the Court dismisses that claim, and turns next
to whether the complaint includes an adequate claim for substantive
unconscionability.
As to that issue, the Bennetts’ claim likewise fails.
They
allege that their contract with Bob’s Quality Homes included
several express and implied warranties covering “any repairs or
replacements needed during the warranty period.”
Id. at 4.
than that, however, they include no contract terms.
Other
They only
allege that the entire transaction was unconscionable because they
“were in a disadvantaged position, not knowing what communications
occurred between Defendants, and having no viable alternatives to
secure housing for their family.”
(Dkt. No. 17 at 13).
The Court can infer from the complaint that the Bennetts had
no viable housing alternative.
alone,
is
insufficient
to
However, this allegation, standing
sustain
a
claim
for
substantive
unconscionability, which is concerned with the fairness of the
contract itself.
Here, the Bennetts merely allege that the
28
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
contract
contained
various
warranties,
later
breached
by
the
Defendants, and that they had no viable housing alternative.
The
Court
is
mindful
that,
generally,
disposal
of
unconscionability claims is improper if questions of fact exist as
to “whether the parties’ bargaining power was grossly unequal so as
to render the transactions between the plaintiffs and defendants
unconscionable.”
Hager, 37 F.Supp.2d at 787.
The Bennetts,
however, have failed to allege even the elements of the claim that
would justify permitting the parties to proceed, and the Court
therefore dismisses Count Seven.
H)
Count Eight: Common Law Negligence
The Bennetts allege common law negligence.
The Supreme Court
of Appeals of West Virginia describes negligence as “the violation
of the duty of taking care under the given circumstances.
It is
not absolute; but is always relative to some circumstances of time,
place, manner, or person.” Dicken v. Liverpool Salt & Coal Co., 23
S.E. 582 (1895).
Courts generally define negligence in terms of
(1) whether the defendant owes a legal duty to the plaintiff; (2)
whether
the
defendant
breached
that
duty;
(3)
whether
the
defendant’s breach actually and proximately caused the plaintiff’s
29
BENNETT v. SKYLINE CORPORATION
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MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
injury; and, (4) whether the plaintiff suffered damages.
See,
e.g., Marcus v. Staubs, 736 S.E.2d 360, 370-74 (W. Va. 2012).
Whether a defendant owes a duty to the plaintiff is a question
of law to be decided by the Court, not a question of fact for the
jury.
Marcus, 736 S.E.2d at 370.
Generally, tort liability “will
not arise for breach of contract unless the action in tort would
arise independent of the existence of the contract.”
Beattie v.
Skyline Corp., 906 F.Supp.2d 528, 543 (S.D.W. Va. 2012).
The Bennetts allege that Bob’s Quality Homes owed them a duty
“to
adequately
inspect
the
home
site,
to
make
accurate
and
appropriate recommendations about installation of the subject home
at
the
site,
home
promptly,
carefully, and in accordance with the sales agreement.”
(Dkt. No.
1-2 at 10).
and
to
deliver
and
install
the
Allegedly, Bob’s Quality Homes breached this duty by
damaging the home during delivery and installation.
Id.
The
Bennetts also assert that Bob’s Quality Homes and Skyline owed them
a duty of care to perform the requested repairs on the home in “a
good and workmanlike manner within a reasonable time period,” and
that they breached this duty by performing faulty repairs.
11.
30
Id. at
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Skyline concedes that the Bennetts have “generically alleged
their negligence claim sufficiently” for purposes of the motion to
dismiss, but argues that those general negligence claims “are
directed primarily to [Bob’s Quality Homes] and [Belpre].”
No. 11 at 9).
(Dkt.
The Bennetts respond that their allegations against
Bob’s Quality Homes also pertain to Skyline, because they have
alleged that Bob’s Quality Homes is Skyline’s “authorized dealer
and/or as an agent.” (Dkt. No. 1-2 at 2-3; see Dkt. No. 17 at 13).
They correctly point out that this relationship establishes the
potential for joint and several liability (Dkt. No. 17 at 14; Dkt.
No. 1-2 at 3).
At the motion to dismiss stage, the Court finds
that the Bennetts’ negligence allegations are sufficient, and
denies Skyline’s motion to dismiss Count Eight.
I)
Count Nine: Unfair or Deceptive Acts or Practices
The Bennetts allege that Skyline committed acts that were per
se unfair and deceptive in the sale, installation, financing, and
repair of their new manufactured home.
(Dkt. No. 1-2 at 11).
They
allege general, unspecified unfair or deceptive acts pursuant to W.
Va. Code § 46A-6-104, as well as specifically enumerated instances
of deceptive acts.
Id.
31
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Under the West Virginia Consumer Credit and Protection Act
(“the WVCCPA”), a consumer who suffers a monetary loss as a result
of an unfair or deceptive act may bring an action to recover
damages.
W. Va. Code § 46A-6-106(a).
The elements of a cause of
action under § 46A-6-106(a) include “unlawful conduct by the
seller, an ascertainable loss on the part of the consumer, and a
causal connection between the ascertainable loss and the conduct
forming the basis of the lawsuit.”
Stanley v. Huntington Nat’l
Bank, 2012 WL 254135 at *7 (N.D.W. Va. Jan. 27, 2012) (citing White
v. Wyeth, 705 S.E.2d 828, 835 (W. Va. 2010)).
A
consumer,
however,
cannot
bring
an
action
“until
the
consumer has informed the seller or lessor in writing and by
certified mail of the alleged violation and provided the seller or
lessor twenty days from receipt of the notice of violation to make
a cure offer.”
W. Va. Code § 46A-7-106(b).
See Stanley, 2012 WL
254135 at *7 (“This Court agrees that even if the plaintiff’s
claims
fell
within
the
purview
of
Section
46A-6-106(a),
the
plaintiff’s failure to comply with the mandatory prerequisite set
forth in Section 46A-6-106(b) bars her from bringing a claim.”).
Skyline argues that the Bennetts have failed to meet the
notice prerequisite, thus requiring dismissal of Count Nine. (Dkt.
32
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
No. 11 at 9).
On May 9, 2014, the Bennetts sent a certified letter
informing Skyline of their claims.
letter,
(Dkt. No. 10-1).
In that
they state that “they have several legitimate claims
against [Skyline]–including probable violations of article six of
the West Virginia Consumer Credit and Protection Act.”
Id.
Although the May 9, 2014, letter was not included in the Bennetts’
complaint,1 the Court may consider it because “it was integral to
and explicitly relied on in the complaint,” and the plaintiffs do
not challenge its authenticity.
Phillips, 190 F.3d at 618.
Skyline points out that the Bennetts’ letter mentioned neither
a specific violation nor the twenty-day cure period.
at 10).
(Dkt. No. 11
However, the West Virginia legislature did not include
specific requirements for the notice letter other than that it must
provide notice of a violation of the WVCCPA.
Virginia is sparse on this point.
Case law in West
It is clear, however, that
courts will grant a defendant’s motion to dismiss when the notice
letter fails even to mention the WVCCPA. See Stanley v. Huntington
Nat’l Bank, 492 Fed. Appx. 456, 461 (4th Cir. 2012) (unreported)
(affirming the district court’s dismissal of a plaintiff’s WVCCPA
1
In the interest of full disclosure, Skyline included the
letter as am addendum to its motion to dismiss. Dkt. No. 10-1.
33
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
claim when the letter sent by the plaintiff did not assert a
violation of the WVCCPA).
Skyline
mentions
numerous
allegations
in
the
Bennetts’
complaint that bolster their WVCCPA claim. (See Dkt. No. 11 at 1012 (representing that repairs would be performed properly when
Skyline should have known it was not possible, and failing to
promptly
refund
all
moneys
are
among
the
allegation)).
Nonetheless, it argues that the Bennetts do not assert these claims
against Skyline, but rather, against Belpre and Bob’s Quality
Homes.
Id. at 10.
Skyline’s argument disregards the Bennetts’
allegation that Bob’s Quality Homes is an authorized dealer and/or
agent of Skyline.
(Dkt. No. 1-2 at 2-3).
For purposes of this
motion to dismiss, the Bennetts’ agency allegation makes these
claims plausible against Skyline.
The specific allegations in the
Bennetts’ complaint, coupled with the May 9, 2014, letter, are
sufficient to defeat Skyline’s motion to dismiss Count Nine.
In the alternative, Skyline asserts that the Court should
grant its motion to dismiss because the WVCCPA does not apply to an
Ohio sales transaction to purchase a modular home built in Ohio and
financed by an Ohio mortgage lender.
(Dkt. No. 11 at 12).
In
support of its argument, Skyline cites Joy v. Chessie Employees
34
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Fed. Credit Union, 411 S.E.2d 261, 265 (W. Va. 1991).
There, the
Supreme Court of Appeals of West Virginia refused to apply the
WVCCPA to a Maryland loan agreement, contracted for with a Maryland
credit union, secured by West Virginia real property.
There, the
West
finance
Virginia
business.
resident
used
the
loan
proceeds
to
a
Joy, 411 S.E.2d at 265.
The facts in Joy differ from those in the instant case in at
least one important respect, however.
Here, two West Virginia
residents secured an Ohio loan with West Virginia property in order
to improve their West Virginia property. In Joy, the Supreme Court
of Appeals of West Virginia noted as significant the fact that “the
money from the loan was used to finance a business–not to improve
the real property.” 411 S.E.2d at 265. The Bennetts’ contract was
to deliver and install a home in West Virginia.
Therefore, the
Court declines to dismiss Count Nine on this alternate ground.
J)
Count Ten: Common Law Fraud and Misrepresentation
The Bennetts claim that Bob’s Quality Homes misrepresented the
quality and condition of the home, and their qualifications to
deliver and install the home properly and promptly.
at 13).
(Dkt. No. 1-2
In addition, they claim that Belpre falsely promised to
protect their interest, and to disburse loan funds only upon Bob’s
35
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Quality Homes’ completion of the home installation.
Id.
The
Bennetts state that they justifiably relied upon the defendants’
representations when deciding to purchase their home, and that they
were damaged by the misrepresentations.
Id. at 13-14.
The elements of a cause of action for fraud include:
“‘(1)
that the act claimed to be fraudulent was the act of the defendant
or induced by him; (2) that it was material and false; that
plaintiff relied upon it and was justified under the circumstances
in relying upon it; and (3) that he was damaged because he relied
upon it.’”
Cordial v. Ernst & Young, Syl. Pt. 3, 483 S.E.2d 248,
259 (W. Va. 1996) (quoting Lengyel v. Lint, Syl. Pt. 1, 280 S.E.2d
66 (W. Va. 1981), and Muzelak v. King Chevrolet, Inc., Syl. Pt. 2,
368 S.E.2d 737 (1927)).
Under Federal Rule of Civil Procedure 9(b), a plaintiff
alleging fraud must “state with particularity the circumstances
constituting fraud or mistake.”
The circumstances that must be
pleaded with particularity include “the time, place, and contents
of the false representations, as well as the identity of the person
making
the
misrepresentation
and
what
he
obtained
thereby.”
Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th
36
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Cir. 1999).
“Malice, intent, knowledge, and other conditions of a
person’s mind may be alleged generally.”
Fed. R. Civ. Pro. 9(b).
Skyline argues, and the Court agrees, that the Bennetts’
complaint is almost completely devoid of facts regarding the “time,
place, and contents” of the alleged fraud and misrepresentations.
The Bennetts merely state that Bob’s Quality Homes guaranteed to
deliver and install the home within the Bennetts’ desired time
frame,
and
that
Bob’s
Quality
Homes
further
represented
its
qualifications and capabilities to deliver and install the home.
(Dkt. No. 1-2 at 3).
Later on in the complaint, the Bennetts do
plead that Bob’s Quality Homes’ representations were false, but
they fail to state any detail surrounding the misrepresentations.
Id. at 4. The Bennetts freely admit that “without discovery,” they
“are
unable
to
state
any
more
details”
about
the
alleged
misrepresentations, and seek leave to amend their pleading if their
allegations in Count Ten are deficient.
“The
standard
set
forth
by
Rule
(Dkt. No. 17 at 15-16).
9(b)
aims
to
provide
defendants with fair notice of claims against them and...prevent
fraud actions in which all the facts are learned only following
discovery....”
McCauley v. Home Loan Inv. Bank, F.S.B., 710 F.3d
551, 560 (4th Cir. 2013).
Thus, in the Court’s view, it would be
37
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
futile to grant the Bennetts’ motion to amend in the face of their
admission that they cannot state any more facts at this stage.
Therefore, it denies the Bennetts’ request for leave to amend the
complaint and grants Skyline’s motion to dismiss Count Ten.
K)
Count Eleven:
Civil Conspiracy
The Bennetts claim that Skyline, Bob’s Quality Homes, and
Belpre were engaged in a civil conspiracy.
(Dkt. No 1-2 at 14).
West Virginia recognizes a cause of action for civil conspiracy,
Kessel v. Leavitt, 511 S.E.2d 720, 753 (W. Va. 1998), which is
defined as “a combination of two or more persons by concerted
action to accomplish an unlawful purpose or to accomplish some
purpose, not in itself unlawful, by unlawful means.”
Dunn v.
Rockwell, 689 S.E.2d 255, 268 (W. Va. 2009) (quoting Dixon v.
American Indus. Leasing Co., 253 S.E.2d 150, 152 (W. Va. 1979)).
Importantly, “[t]he cause of action is not created by the
conspiracy but by the wrongful acts done by the defendants to the
injury of the plaintiff.”
Id.
Thus, civil conspiracy is not a
stand alone cause of action, but is “a legal doctrine under which
liability for a tort may be imposed on people who did not actually
commit a tort themselves but who shared a common plan for its
commission with the actual perpetrator(s).”
38
Id. at 269.
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Courts have granted summary judgment or dismissal as to claims
of civil conspiracy when there is no underlying tort to support the
claim. See, e.g., Long v. M&M Transp., LLC, __ F.Supp.2d ___, 2014
WL 4388337 at *13 (N.D.W. Va. Sept. 5, 2014).
In addition, the
court should grant a motion to dismiss a civil conspiracy charge
when the plaintiffs claim that the defendants “engaged in a civil
conspiracy” and “individually and collectively” committed wrongs,
but fail to allege facts to support that allegation.
Tucker v.
Thomas, 853 F.Supp.2d 576, 594 (N.D.W. Va. 2012).
The Bennetts do not allege a specific tort underlying the
civil
conspiracy
charge
in
Count
Eleven,
and
the
Court
has
dismissed their common law fraud and misrepresentation claim in
Count Ten.
The only other tort claim remaining is the common law
negligence claim in Count Eight.
(Dkt. No. 1-2 at 14, 10-11).
By
its very definition, however, a civil conspiracy claim does not
sound in negligence.
See generally 15A C.J.S. Conspiracy § 4
(2014). Civil conspiracy consists of two or more people who engage
in concerted action to accomplish an unlawful purpose, or to
accomplish a lawful purpose by unlawful means. Dunn, 689 S.E.2d at
268.
39
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
In Mallamo v. Town of Rivesville, the Supreme Court of Appeals
of West Virginia noted the distinction between negligence and an
intentional tort for purposes of a civil conspiracy action.
S.E.2d 525, 534 (W. Va. 1996).
477
There, a plaintiff brought both a
negligence and a civil conspiracy claim against the town of
Rivesville after he was shot by a Marion County deputy executing an
arrest warrant. Id. at 527-29. By statute, political subdivisions
like Rivesville are “liable for injury or loss to persons ‘caused
by the negligent performance of acts by their employees while
acting within the scope of employment.’” Id. at 534 (quoting W. Va.
Code § 29-12A-4(c)(2) (1986)) (emphasis in original).
The Court
found, however, that “conspiracy is an intentional act, and not a
negligent one,” immunizing Rivesville from the civil conspiracy
charge.
Id.
The Bennetts must also plead sufficient factual support for
the existence of the conspiracy.
The Bennetts’ complaint includes
a general allegation that “each Defendant was the principal, agent
or
employee
of
each
other
Defendant,”
conclusion, not a factual allegation.2
2
but
this
is
a
legal
Id. at 3. This allegation
This allegation differs in kind from the Bennetts’
allegation that Bob’s Quality Homes is an “authorized Skyline
dealer and/or as an agent” of Skyline (Dkt. No. 1-2 at 2). That is
40
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
is insufficient to show the existence of “a combination of two or
more persons...to accomplish an unlawful purpose or to accomplish
some purpose, not in itself unlawful, by unlawful means.”
689 S.E.2d at 268.
Dunn,
The Bennetts also allege that “an undisclosed
personal and/or business relationship” exists between Belpre and
Bob’s Quality Homes.
(Dkt. No. 1-2 at 5).
This is the closest the
Bennetts come to alleging facts to support the existence of the
civil conspiracy, and it is not close enough.
Although the Bennetts seek leave to amend their complaint,
their civil conspiracy claim fails as a matter of law because the
only intentional tort claim pleaded, Count Ten, has been dismissed.
Therefore, the Court grants Skyline’s motion to dismiss Count
Eleven.
L)
Count Twelve:
Joint Venture
The Bennetts’ final claim is that Skyline was engaged in a
joint
venture
with
Belpre
and
Bob’s
Quality
manufactured homes to West Virginia consumers.
14).
Homes
to
sell
(Dkt. No. 1-2 at
A joint venture is “an association of two or more persons to
carry out a single business enterprise for profit, for which
a factual allegation, taken as true for the purposes of a motion to
dismiss, and is sufficient to allege an agency relationship between
Bob’s Quality Homes and Skyline.
41
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
purpose they combine their property, money, effects, skill, and
knowledge.”
Armor v. Lantz, Syl. Pt. 5, 535 S.E.2d 737, 742 (W.
Va. 2000) (citing Price v. Halstead, Syl. Pt. 2, 355 S.E.2d 380
(1987)).
A joint venture generally arises out of a contractual
relationship.
Id.
Members of a joint venture are jointly and
severally liable for the obligations arising out of the venture,
and actions of the joint venture bind individual venturers. Id. at
743.
The distinguishing characteristics of a joint venture were
outlined by the Supreme Court of Appeals of West Virginia in
Pownall v. Cearfoss, 40 S.E.2d 886, 893-94 (W. Va. 1946). Although
an exact definition does not exist, “a contract, written or verbal,
is essential to create the relation of joint adventurers.”
893.
In
addition,
the
joint
venturers
“must
combine
Id. at
their
property, money, efforts, skill, or knowledge, in some common
undertaking of a special or particular nature....”
Id.
A profit-
sharing agreement, whether express or implied, is also essential to
create a joint venture.
Id.
An agreement to share losses is not
essential, especially “if the nature of the undertaking is such
that no losses...are likely to occur.”
42
Id. at 894.
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Even if the Bennetts had alleged sufficient facts to plead a
joint venture claim, which is unlikely, their claim fails.
They
allege that Skyline, Bob’s Quality Homes, and Belpre are engaged in
a joint venture to sell manufactured homes in West Virginia. (Dkt.
No. 1-2 at 14).
They have failed to allege, however, why that
supposed joint venture relationship, if it does exist, is illegal
or tortious.
The Bennetts are required to “plead[] factual content that
allows
the
court
to
draw
the
reasonable
inference
defendant is liable for the misconduct alleged.”
U.S. at 678.
that
the
Ashcroft, 556
This requires “more than a sheer possibility that a
defendant has acted unlawfully.”
Id.
Here, the Bennetts have not
alleged any misconduct, thus failing to nudge their claims “across
the line from conceivable to plausible.” Twombly, 550 U.S. at 570.
As a result, the Court dismisses Count Twelve.
IV) CONCLUSION
For the reasons discussed, the Court DENIES in part Skyline’s
motion to dismiss as to Counts One, Two, Three, Four, Six, Eight,
and Nine; GRANTS in part Skyline’s motion to dismiss as to Count
Six insofar as it purports to state a stand alone claim for breach
of the duty of good faith, and as to Counts Five, Seven, Ten,
43
BENNETT v. SKYLINE CORPORATION
1:14CV129
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
SKYLINE’S MOTION TO DISMISS [Dkt. No. 10]
Eleven, and Twelve, and dismisses those counts without prejudice;
and, GRANTS the Bennetts’ motion for leave to amend Counts Three
and Four.
It is so ORDERED.
The Court directs the Clerk to transmit copies of this order
to counsel or record.
DATED: October 3, 2014.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE
44
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