Morano v. BMW of N. Am., LLC

KEVIN McNULTY

David C. Berman, Lower Level, Morristown, NJ, for Plaintiff. Christopher J. Dalton, Rosemary Joan Bruno, Buchanan, Ingersoll & Rooney, PC, Newark, NJ, for Defendant.

KEVIN McNULTY, District Judge.

The plaintiff, John J. Morano (“Morano”), brings this putative class action against defendant, BMW of North America, LLC (“BMWNA”), for violations of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), breach of contract, breach of warranty, and punitive damages. The dispute arose when the battery in Morano's new BMW automobile would not hold a charge and his BMW dealer refused to replace it. Plaintiff alleges that BMWNA failed to clearly disclose the basis for excluding the battery problem from its Ultimate Service Program (the “Maintenance Program”) and New Passenger Vehicle Limited Warranty (the “Warranty”). Plaintiff seeks to represent a class of “all persons or entities residing in the state of Florida who purchased or leased a BMW automobile within the four (4) year period preceding the date on which the Complaint is filed.”

BMWNA has moved to dismiss Morano's claims, arguing that he failed to plead his FDUTPA claim with the particularity required by Fed. R. Civ. P. 9(b); that his breach of contract and breach of warranty claims fail for lack of privity; that the battery problem resulted from the manner in which Morano operated the vehicle; and that the punitive damages claim is unsupported by factual allegations. BMWNA also argues that the class action allegations are unsustainable because individual issues of causation predominate over any common issues of law or fact.

Pleading deficiencies aside, BMWNA's central legal argument is that it is not in privity with customers and therefore cannot be liable under applicable Florida law for breach of warranty or breach of contract. This comes as a surprise to the Court, as it doubtless would to consumers. BMWNA's warranty states that it runs to “the first retail purchaser.” But BMWNA makes no direct sales or leases to customers; it sells and leases cars only through its dealers. If the Warranty and Maintenance Program apply only to BMWNA's direct customers, then they apply to nobody. If this privity argument were correct, then BMWNA's aggressively marketed Warranty and Maintenance Program would be unenforceable, not to say illusory. I am fairly certain, however, that when Florida BMW owners bring their cars to the dealer for warranty servicing, they are not told to go away because they lack privity. At any rate, I do not agree that the Supreme Court of Florida would interpret that State's law to require privity in these circumstances. A more germane issue is whether the Warranty and Maintenance Program cover, or should have covered, the claimed defect. That, of course, is a separate issue, and a genuine one.

I have reviewed the parties' submissions, and I heard oral argument on December 16, 2012. For the reasons set forth below, the Court is persuaded that the Complaint adequately sets forth claims for relief on Mr. Morano's part, and that a decision on class certification would be premature. Defendant's motion to dismiss will therefore be DENIED.

On or about September 17, 2009, John Morano, a citizen of Florida, leased a BMW 650i CV from the Paul Miller BMW dealership, which is located in Wayne, New Jersey. (Compl. ¶¶ 1, 18–19.) Plaintiff leased his vehicle from a New Jersey dealership because his local BMW dealership, BMW of Fort Myers, referred him there. ( Id. ¶ 20.) Defendant BMWNA is a Delaware Limited Liability Company with its principal place of business in Woodcliff Lake, New Jersey. ( Id. ¶ 2.) BMWNA is the North American importer, distributor, marketer, and warrantor of BMW brand vehicles. (Memorandum of Law in Support of Motion to Dismiss (“Def. Mem.”), ECF No. 10–1, at 4 n. 3.) BMWNA does not sell or lease vehicles directly to consumers; it does so solely through dealerships, which also serve as repair centers. ( Id.)

This Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332, the diversity statute, as amended and supplemented by the Class Action Fairness Act of 2005. The claims of the individual members of the proposed class exceed the sum or value of $5,000,000, exclusive of interests and costs, and at least one member of the proposed class ( i.e., Mr. Morano himself) is a citizen of a different state (Florida) from BMWNA (New Jersey and Delaware). See 28 U.S.C. § 1332(d)(2) (“minimal diversity” requirement of the Class Action Fairness Act); 28 U.S.C. § 1332(d)(10) (for class action purposes, “an unincorporated association shall be deemed to be a citizen of the State where it has its principal place of business and the State under whose laws it is organized”).

New BMW vehicles come with a 4 year/50,000 mile Ultimate Service “no maintenance” program. The model year 2009 BMW 6 Series Service and Warranty Information manual describes the Maintenance Program, in part, as follows:

The BMW Maintenance Program is a benefit designed to help reduce the cost of ownership. This program has been devised with the following objectives: to maximize vehicle safety, reliability, and resale value by minimizing breakdowns resulting from wear, and minimizing cost and inconvenience by computing maintenance intervals based upon the specific manner in which each individual vehicle is driven. 2009 1, 3, 5, and 6 Series vehicles purchased from any authorized BMW center in the United States or Puerto Rico are covered by The BMW Maintenance Program for 48 months or 50,000 miles.
(Dalton Decl., ECF No. 10–5, Ex. A., pp. 1–2.) Exclusions from coverage under the Maintenance Program include the following: damage which results from negligence, improper operation of the vehicle, wear and tear or deterioration due to driving habits or conditions, improper repair, environmental influences, flood, accident, or fire damage. ( Id. at p. 2.)

Typically, when a court relies on matters outside of the pleadings, it must convert the motion to dismiss into a motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. That procedure is designed to provide all parties with a reasonable opportunity to present and respond to all materials pertinent to the motion. SeeFed. R. Civ. P. 12(d); Pension Ben. Guar. Corp. v. White Consol. Industries, Inc., 998 F.2d 1192, 1196 (3d Cir.1993). A court may, however, consider extraneous documents that are referred to in the complaint or documents on which the claims in the complaint were based without converting the motion to dismiss into one for summary judgment. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.1997); Pension Benefit, 998 F.2d at 1196. That is permitted because, when a complaint refers to or relies on the document, “the plaintiff obviously is on notice of the contents of the document, and the need for a chance to refute evidence is greatly diminished.” Pension Benefit, 998 F.2d 1192 at 1196–97. Therefore, I will rely on the Maintenance Program and Warranty—which are the very foundation of the Complaint—and will not convert the motion to dismiss into one for summary judgment.

New BMW vehicles also come with a 4 year/50,000 mile New Passenger Vehicle Limited Warranty. The warranty for the 2009 BMW 6 Series explicitly names BMWNA as the “warrantor.” (Dalton Decl., Ex. A., p. 33) BMWNA “warrants 2009 U.S. specification vehicles distributed by BMWNA or sold through the BMWNA European Delivery Program against defects in materials or workmanship to the first retail purchaser, and each subsequent purchaser.” ( Id.) The Warranty provides that “upon discovery of a defect in material or workmanship” the vehicle must be brought to the workshop of an authorized BMW center. “The BMW center will, without charge for parts of labor, either repair or replace the defective part(s) using new or authorized remanufactured parts.” ( Id.)

As is common, this Warranty contains exclusions. Excluded from coverage are, among other things, damage “which results from negligence, improper operation of the vehicle, improper repair, lack of or improper maintenance [and] ... [f]ailure to maintain the vehicle properly in accordance with the instructions in the Owner's Manual or the Service section of this Statement, that results in the failure of any part of the vehicle....” ( Id.) Regarding batteries in particular, the Service and Warranty Information Manual (which contains the Maintenance Program and the Warranty) provides:

Battery Care

If your car is driven only for short distances of less than 10 miles over a prolonged period of time, without an occasional drive at highway speeds, the engines [ sic ] charging system will not maintain the battery. Insufficient use of the vehicle could result in short term starting problems and in the long term could damage the battery.
(Dalton Decl., Ex. A., p. 18.) In short, the Warranty, like the Maintenance Program, excludes from coverage losses caused by the owner's failure to use or maintain the car properly.

The Plaintiff, Mr. Morano, states that he saw BMW's advertisements touting the Maintenance Program and Warranty and visited his local BMW center in Fort Myers, Florida. (Compl. ¶ ¶ 1, 17–20.) That Fort Myers dealer gave Mr. Morano a brochure explaining BMW's comprehensive “no-cost ownership” program. ( Id. at ¶ 17.) The Fort Myers dealership did not enter into a lease with Morano, but arranged for him to lease a new BMW 650i convertible through a BMW dealership in New Jersey. ( Id. at ¶¶ 18–19.)

Very soon after Morano acquired the car, the battery failed to hold a charge. ( Id. at ¶ 21.) Morano alleges that he operated and maintained his vehicle properly and that the battery problems occurred through no fault of his own. When he took the vehicle to the Fort Myers dealer in January 2011, the service technicians noted the following on his invoice:

cked faults, more than 20 faults, almost all from low battery voltage, cleared and reset all systems, recked only battery exhaustive discharge will not clear. as/per serv. Writer, charge battery reset today/ok. after charging most of the day, recked battery, only 400 cca in a 850cca battery, test with midtronics shows replace battery, advised serve. writer/ok.
(Labrie Decl., ECF No. 10–2, ¶ 2, Ex. A. [spelling and abbreviations as in original] ) The car's onboard diagnostic system provided the technicians with information about the car's battery and charge status, as well as its driving history. (Labrie Decl. ¶ 3.) In the preceding 32 days, Plaintiff's vehicle had been driven 65 times for a total of 388 miles—an average of about 6 miles per trip. ( Id.) The system reported the following trip breakdown: