McCoy et al v. Southern Energy Homes, Inc. et al

Filing 118

MEMORANDUM OPINION AND ORDER granting in part and denying in part the 27 MOTION to Dismiss by The Bank of New York Mellon Corporation ("BNY"). The court GRANTS BNY's Motion to Dismiss Counts Four, Five and Six of the First Amended Complaint. Counts Ten and Eleven are also DISMISSED. The Motion to Dismiss is DENIED in all other respects. The court also DENIES BNY's 31 MOTION to Strike. Signed by Senior Judge David A. Faber on 9/28/2011. (cc: counsel of record) (arb)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
AT BLUEFIELD

WANDA MCCOY, et al.,
Plaintiffs,
v.

CIVIL ACTION NO. 1:09-1271

SOUTHERN ENERGY HOMES, INC.,
Defendants.

MEMORANDUM OPINION AND ORDER
Pending before the court is the motion to dismiss filed by
defendant The Bank of New York Mellon Corporation (“BNY”).

For

reasons expressed more fully below, that motion is GRANTED in
part and DENIED in part.
I.

Background

Plaintiffs Wanda McCoy (“McCoy”), Christopher Justice, and
Melinda Justice (collectively, “Plaintiffs”) filed this action on
October 1, 2009, asserting numerous claims relating to their
purchase of a manufactured home from Defendant J.E.B. Quality
Homes, Inc. (“J.E.B.”) on October 15, 1997.

McCoy is the mother

of Plaintiff Melinda Justice, who is married to Plaintiff
Christopher Justice. The home was manufactured by Defendant
Southern Energy Homes, Inc. (“Southern Energy”). Bank of New York

is named in this lawsuit as the assignee of the underlying
financing contract.1
According to Plaintiffs, after the Justices occupied the
home for eleven years, they began to notice “water infiltration
and mold accumulation.”

First Amended Complaint at ¶ 19.

Plaintiffs claim that a defectively designed and/or installed
roofing system caused this water infiltration and mold
accumulation.

See id. at ¶ 20.

Plaintiffs further contend that

the sales contract and loan documents prepared in connection with
the purchase of the home were incorrect because they omitted the
Justices and reflect that Wanda McCoy and her husband were the
only purchasers of the home.
Based on the foregoing, plaintiffs filed the instant lawsuit
asserting claims for rescission and cancellation (Counts One and
Two), breach of warranty (Counts Three, Four, and Five), breach
of contract/breach of the implied duty of good faith and fair
dealing (Count Six), unfair and deceptive trade practices (Count
Seven), unconscionability (Count Eight), fraud (Count Nine),
negligence (Count Ten), and strict product liability (Count
Eleven) against defendants J.E.B., BNY, and Southern Energy2.

1

According to the Complaint, JEB is defunct and dissolved.
First Amended Complaint at ¶ 8.
2

Plaintiffs accepted Southern Energy’s offer of judgment,
pursuant to Federal Rule of Civil Procedure 68. On September 1,
2011, the Clerk entered judgment against Southern Energy in the
amount of $20,000.00.
2

BNY filed the instant motion to dismiss, arguing that the
Complaint should be dismissed in its entirety.

First, BNY

contends that, because the Justices did not sign the loan
documents, they lack standing to bring the First, Second, Sixth,
Seventh, Eighth, and Ninth Claims.

BNY also contends that

plaintiffs’ claims under the Uniform Commercial Code (“UCC”) are
barred by West Virginia’s four-year statute of limitations.
Next, BNY argues that the claim for breach of the implied duty of
good faith and fair dealing should be dismissed because West
Virginia does not recognize such a stand-alone claim.

BNY’s

fourth argument is that, because plaintiffs failed to follow the
statutory prerequisites for bringing a claim under the West
Virginia Consumer Credit and Protection Act (“WVCCPA”), those
claims must be dismissed.

BNY also argues that plaintiffs’

unconscionability and fraud and misrepresentation claims were
inadequately pled and should be dismissed.

Finally, BNY moved to

dismiss plaintiffs’ negligence and strict liability claims.
However, in their Memorandum in Response to BNY’s Motion for
Summary Judgment, filed on August 26, 2011, plaintiffs informed
the court that their negligence and strict liability claims were
withdrawn.

Accordingly, Counts Ten and Eleven are DISMISSED.
II.

Standard of Review

"[A] motion to dismiss for failure to state a claim for
relief should not be granted unless it appears to a certainty

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that the plaintiff would be entitled to no relief under any state
of facts which could be proved in support of his claim."

Rogers

v. Jefferson-Pilot Life Ins. Co., 883 F.2d 324, 325 (4th Cir.
1989) (citation omitted) (quoting Conley v. Gibson, 355 U.S. 41,
48 (1957), and Johnson v. Mueller, 415 F.2d 354, 355 (4th Cir.
1969)).

"In considering a motion to dismiss, the court should

accept as true all well-pleaded allegations and should view the
complaint in a light most favorable to the plaintiff."

Mylan

Laboratories, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993);
see also Ibarra v. United States, 120 F.3d 474, 474 (4th Cir.
1997).
III.
A.

Analysis

Standing of Justices
BNY contends that the Justices do not have standing to bring

the First, Second, Sixth, Seventh, Eighth, and Ninth Claims in
the Complaint because they are not signatories to the loan
agreement.

In their response brief, plaintiffs offered a number

of exhibits which, according to them, support their argument that
the Justices have standing to assert the claims asserted herein.
BNY moved to strike the aforementioned exhibits arguing that they
are “inadmissible and present an improper attempt by Plaintiffs
to amend their First Amended Complaint through their Response
brief.”

(Doc. # 32 at p.4).

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Taking the allegations in the amended complaint as true, as
it must for purposes of this motion, the court finds that
dismissal for failure to state a claim as to the standing issue
is inappropriate at this juncture.

Therefore, the motion to

dismiss the Justices for lack of standing is DENIED without
prejudice.

However, BNY has renewed its argument regarding

standing in its pending motion for summary judgment.

Therefore,

at such time as the court rules on the summary judgment motion,
if necessary, the court will reconsider the issue of the
Justices’ standing.

When it does it will consider the exhibits

offered by plaintiffs and, therefore, the Motion to Strike (doc.
# 31) is DENIED.
B.

UCC Statute of Limitations
BNY next argues that all plaintiffs’ UCC claims are barred

by the statute of limitations.

The manufactured home at issue in

this litigation was purchased on October 15, 1997, and this
lawsuit was filed almost twelve years later.
The statute of limitations applicable to claims brought
pursuant to the UCC is four years.

That section provides:

(1) An action for breach of any contract for sale must
be commenced within four years after the cause of
action has accrued. By the original agreement the
parties may reduce the period of limitation to not less
than one year but may not extend it.
(2) A cause of action accrues when the breach occurs,
regardless of the aggrieved party's lack of knowledge
of the breach. A breach of warranty occurs when tender
of delivery is made, except that where a warranty
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explicitly extends to future performance of the goods
and discovery of the breach must await the time of such
performance the cause of action accrues when the breach
is or should have been discovered.
W. Va. Code § 46-2-725.
1.

Breach of Contract

Plaintiffs concede that the manufactured home was purchased
on October 15, 1997.

Thus, their UCC breach of contract claim

accrued on October 15, 1997.

Given operation of the four-year

statute of limitations, the claim was barred as of October 15,
2001, and Count Four is DISMISSED.
2.

Breach of Express Warranty

Breach of warranty claims are also subject to the four-year
statute of limitations and, in general, “[a] breach of warranty
occurs when tender of delivery is made.”
46-2-725(2).

W. Va. Code

§

There is, however, a future performance exception

to the statute of limitations that provides “where a warranty
explicitly extends to future performance of the goods and
discovery of the breach must await the time of such performance,
the cause of action accrues when the breach is or should have
been discovered.”

Id.

In their later filings, plaintiffs seek to avail themselves
of the future performance exception by contending that Melinda
Justice was informed the roof had a 50-year warranty.
Accordingly, the court declines to dismiss the breach of express

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warranty claim at this time but will reconsider BNY’s argument in
the context of its summary judgment motion.
3.

Breach of Implied Warranty of Merchantability

Significantly, claims for breach of implied warranties
cannot benefit from § 46–2–725(2)'s future performance exception
to the four year statute of limitations.

Rawls v. Associated

Materials, LLC, 2011 WL 3297622 (S.D.W. Va. 2011); see also
Western Recreational Vehicles v. Swift Adhesives, 23 F.3d 1547,
1550-51 (9th Cir. 1994) (noting that no implied warranty can meet
the requirements of the future performance exception); Atl.
Health Sys. v. Cummins Inc., No. 08–3192, 2010 U.S. Dist. LEXIS
133745, at *14, 2010 WL 5252018 (D.N.J. 2010) (“Implied
warranties, by their very nature, cannot extend to future
performance because such an extension must be explicit and an
implied warranty cannot explicitly state anything.”); Woods v.
Maytag Co., No. 10–cv–559, 2010 U.S. Dist. LEXIS 116595, at *6–7,
2010 WL 4314313 (E.D.N.Y. 2010) (holding that § 2–725(2)'s future
performance exception “does not apply to the Plaintiff's causes
of action for breach of the implied warranty of fitness and the
implied warranty of merchantability” because neither are express
warranties, as required for the exception to apply); Shaw v.
Brown & Williamson, 973 F. Supp. 539, 550 (D. Md. 1997)
(“[A]ctions for breach of an implied warranty cannot extend to
future performance since such an extension must be explicit.”);

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Fritchie v. Alumax Inc., 931 F.Supp. 662, 672 (D. Neb. 1996)
(“implied warranties do not trigger the UCC § 2–725(2)
exception”); Providence & W.R. Co. v. Sargent & Greenleaf, Inc.,
802 F.Supp. 680, 689 (D.R.I. 1992) (“By definition, implied
warranties cannot explicitly extend to the future.”).

Therefore,

the breach of implied warranty of merchantability claim is timebarred by the four-year statute of limitations and subject to
dismissal.
4.

Breach of Implied Warranty of Fitness

Like the claim for breach of the implied warranty of
merchantability, this claim is barred by the four-year statute of
limitations.

Accordingly, BNY’s motion to dismiss Count Five is

GRANTED.
C.

Good Faith and Fair Dealing
BNY also argues that plaintiffs’ claim for breach of the

implied duty of good faith and fair dealing under the UCC should
be dismissed because West Virginia does not recognize it as a
cause of action.

Plaintiffs counter that it was not pled as a

stand-alone claim.
The implied covenant of good faith and fair dealing does not
provide an independent cause of action under West Virginia law
that is separate and apart from a breach of contract claim.
Stand Energy Corp. v. Columbia Gas Transmission Corp.,

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373 F.Supp.2d 631 (S.D.W. Va. 2005).

Accordingly, plaintiffs’

claim is subsumed within their breach of contract claim under the
UCC and, as discussed above, is barred by the four-year statute
of limitations found in the UCC.

D.

Failure to Follow WVCCPA Prerequisites
BNY contends that plaintiffs failed to follow the statutory

prerequisites for bringing a claim under the unfair and deceptive
acts provisions of the WVCCPA and that their failure to do so
mandates dismissal of this claim.

Given that plaintiffs are not

required to allege satisfaction of statutory prerequisites in
their complaint, it is inappropriate to find that they have
failed to state a claim for their failure to do so.

The court

will, however, reconsider BNY’s argument in this regard when it
takes up the motion for summary judgment.
E.

Sufficiency of the Fraud and Unconscionability Claims
BNY contends Counts Eight and Nine, asserting claims for

unconscionability and fraud and misrepresentation should be
dismissed for failure to adequately allege the elements of those
claims.

The court finds that the claims are sufficiently pled to

withstand a motion to dismiss and the motion to dismiss Counts
Eight and Nine is denied.
IV.

Conclusion

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Based on the foregoing, BNY’s motion to dismiss Counts Four,
Five, and Six of the First Amended Complaint is GRANTED.
Ten and Eleven are also DISMISSED.
DENIED in all other respects.

Counts

The motion to dismiss is

The motion to strike is also

DENIED.
The Clerk is directed to send copies of this Memorandum
Opinion and Order to all counsel of record.
IT IS SO ORDERED this 28th day of September, 2011.
ENTER:

David A. Faber
Senior United States District Judge

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