240 F.3d 449 (5th Cir. 2001), 99-41443, Coghlan v Wellcraft Marine Corp.

Docket Nº:99-41443
Citation:240 F.3d 449
Party Name:FRANK E. COGHLAN, III, on behalf of themselves and all other similarly situated persons; JOANNA L. COGHLAN, on behalf of themselves and all other similarly situated persons, Plaintiffs-Appellants, v. WELLCRAFT MARINE CORPORATION; GENMAR INDUSTRIES, INC.; GENMAR HOLDINGS, INC.; AQUASPORT MARINE CORPORATION, Defendants-Appellees.
Case Date:January 26, 2001
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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240 F.3d 449 (5th Cir. 2001)

FRANK E. COGHLAN, III, on behalf of themselves and all other similarly situated persons; JOANNA L. COGHLAN, on behalf of themselves and all other similarly situated persons, Plaintiffs-Appellants,

v.

WELLCRAFT MARINE CORPORATION; GENMAR INDUSTRIES, INC.; GENMAR HOLDINGS, INC.; AQUASPORT MARINE CORPORATION, Defendants-Appellees.

No. 99-41443

United States Court of Appeals, Fifth Circuit

January 26, 2001

Page 450

[Copyrighted Material Omitted]

Page 451

Appeal from the United States District Court for the Southern District of Texas.

Before JOLLY, JONES, and SMITH, Circuit Judges.

EDITH H. JONES, Circuit Judge:

The Coghlans, dissatisfied boat purchasers, appeal from the district court's sua sponte dismissal of their case for failure to state a claim. Because they have stated several legally cognizable claims upon which relief might be granted, we reverse and remand in part, and affirm in part.

BACKGROUND

In May 1998, the Coghlans, residents of Texas, purchased an Aquasport 205, a type of recreational fishing boat manufactured by Wellcraft Marine Corporation. Wellcraft is a Delaware corporation with its principal place of business in Florida. The boat cost about $28,000. The Coghlans' purchase was motivated, at least in part, by Wellcraft's marketing campaign for this line of boats, which emphasized the advantages of all-fiberglass construction. In addition to rot-resistance and durability, it is generally believed among mariners that all-fiberglass boats tend to hold their value better than their wood-fiberglass hybrid counterparts.

The Coghlans assert that they relied on Wellcraft's representations that the Aquasport 205 was made entirely of fiberglass. A few months after the purchase, they discovered that the deck of the Aquasport 205 is actually composed of 1.5 inches of plywood encased entirely within fiberglass. Disappointed by this revelation, the Coghlans filed suit against Wellcraft, seeking class certification on behalf of all similarly situated Aquasport owners.

The Coghlans' suit alleged a claim against Wellcraft under the Magnuson-Moss Warranty Act (MMWA), 15 U.S.C. §§ 2301-2312, for breach of the implied statutory warranty of fitness for a particular purpose. They also pled state law claims for fraud, negligent misrepresentation, breach of contract, deceptive trade practices, unjust enrichment and civil conspiracy. In response to this laundry list of accusations, Wellcraft filed a limited motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), seeking dismissal on the pleadings of the MMWA and civil conspiracy claims.

The district court independently analyzed the pleadings and concluded that the Coghlans had failed to allege any real damages, a required element for each of their causes of action. The court went well beyond the scope of the 12(b)(6) motion before it and sua sponte ordered all the Coghlans' claims dismissed, pending a satisfactory attempt to re-plead.

The Coghlans attempted in an amended pleading to cure the deficiencies identified by the district court, but the court again concluded that the Coghlans had failed to assert the requisite "palpable injury." The court denied leave to file the amended complaint and reiterated its order dismissing all claims. The Coghlans timely appealed.

DISCUSSION

The question whether the Coghlans alleged facts stating a justiciable controversy is a matter of law, reviewed de

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novo. See Southwest Livestock and Trucking Co. v. Ramon, 169 F.3d 317 (5th Cir. 1999); Treaty Pines Invs. v. Commissioner of Internal Revenue, 967 F.2d 206, 210 (5th Cir. 1992).1 While the trial court's denial of the motion to amend is reviewed for abuse of discretion by this court, the discretion of the district court is limited by Fed. R. Civ. P. 15(a), which provides that "leave [to amend] shall be freely given when justice so requires.". Lowery v. Texas A&M Univ. System, 117 F.3d 242, 245-46 (5th Cir. 1977). It contravenes the liberal pleading presumption of Rule 15(a) and constitutes an abuse of discretion for a district court to deny a timely motion to amend where the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief. Id. at 245. A court may not dismiss on the pleadings if the allegations support relief on any possible theory. Cinel v. Connick, 15 F.3d 1338, 1341 (5th Cir. 1994).

The district court did not consider whether Texas or Florida law, the only two arguable candidates, governs the Coghlans' various state claims; it dismissed after reviewing precedents borrowed from a variety of circuits and jurisdictions. On appeal, the Coghlans rely on Florida law, neglecting to demonstrate why it applies.2 But regardless whether Texas or Florida law is applied, the Appellants managed to plead several legally cognizable claims which should not have been dismissed on the pleadings alone.

The only damage sought by the Coghlans is the benefit of their bargain with Wellcraft, or the difference in value between what they were promised, an all fiberglass boat, and what they received, a hybrid wood-fiberglass boat. Along with the "out of pocket" damages formula, which measures...

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