353 F.3d 516 (7th Cir. 2003), 03-1444, Voelker v. Porsche Cars North America, Inc.

Docket Nº:03-1444
Citation:353 F.3d 516
Party Name:Voelker v. Porsche Cars North America, Inc.
Case Date:December 12, 2003
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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353 F.3d 516 (7th Cir. 2003)

Daniel J. VOELKER, Plaintiff-Appellant,


PORSCHE CARS NORTH AMERICA, INC., a Delaware corporation; Porsche Financial Services, Inc., a Delaware corporation; Porsche Leasing, Ltd., a Delaware corporation; et al., Defendants-Appellees.

No. 03-1444.

United States Court of Appeals, Seventh Circuit

December 12, 2003 On Resubmission[*]..

Argued Sept. 10, 2003.

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William N. Howard, Robert J. Hall (argued), Freeborn & Peters, Chicago, IL, for Plaintiff-Appellant.

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Paul E. Wojcicki (argued), Segal, McCambridge, Singer & Mahoney, Chicago, IL, for Defendants-Appellees.

Before MANION, EVANS, and WILLIAMS, Circuit Judges.

MANION, Circuit Judge.

Daniel J. Voelker appeals from the district court's dismissal of his claims for breach of written warranty and breach of the implied warranty of merchantability under the Magnuson-Moss Warranty Act, ("Magnuson-Moss Act" or "the Act") 15 U.S.C. § 2301.8 et seq., and for various violations of state law. We reverse as to Voelker's claim for breach of written warranty under the Magnuson-Moss Act and affirm as to all other claims.


Because this case comes to us after the district court granted a motion to dismiss under Fed.R.Civ.P. 12(b)(6), we assume that the facts alleged in the complaint are true. This dispute revolves around the lease of an automobile, a 2001 Porsche 911, which Dr. Ing. h.c. F. Porsche AG ("Porsche") manufactured in Germany. Through its subsidiary, Porsche Cars North America, Inc. (for our purposes, we shall refer to both entities as "Porsche"), Porsche exported the auto to the United States and sold it to Copans Motors, Inc., a Porsche dealership located in Pompano Beach, Florida, which then took title to the vehicle. In June 2001, Voelker leased the car from Copans. As part of the lease agreement, Porsche and Copans provided Voelker with a "New Car Limited Warranty" which, with enumerated exceptions, required Porsche to "repair or replace ... any factory-installed part that [wa]s defective in material or workmanship under normal use." By its own terms, this warranty was to begin "on the date the car [was] first delivered to the first retail purchaser, or the date it [wa]s first used as a demonstrator, lease, or company car, whichever c[ame] first."

Unfortunately for Voelker, less than three months after the lease began, on September 20, 2001, Walter Dreikosen ran a stop sign and his sport-utility vehicle collided with the Porsche on the driver's side, causing more than $25,000 in damages and physical injuries to Voelker. Although the car had a driver's side airbag system, it did not deploy. After the accident, the car was taken to Europa Imports for repairs. Under the lease, only Porsche parts could be used to fix the car. The parts Voelker needed were in short supply, however, and his car sat in the shop for several months. At some point, stuck with a car he could neither drive nor repair, Voelker stopped making payments to Porsche Financial Services, Inc. ("PFS"), the finance company to whom Copans had assigned the lease.

Voelker then complained to Porsche. The "Customer Commitment Department" of Porsche responded by promising Voelker that, until the repair parts were delivered to Europa Motors, it would make lease payments directly to PFS. In February 2002, however, James Ray, director of credit operations for PFS, told Voelker that he would not accept payments from Porsche because to do so would violate "banking laws." Although PFS did eventually accept two lease payments from Porsche, Ray stopped it from accepting any further payments.

In March 2002, the car was still not fixed and PFS refused to pay for the repairs. PFS claimed that, because the parts were destroyed in an accident, and not defective, they were not covered by the warranty. It then demanded that Voelker surrender the vehicle to be sold at auction, because of the overdue lease payments.

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Voelker responded by filing suit in the Circuit Court of Cook County, Illinois, alleging violations of three federal statutes, the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq., the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., and the Magnuson-Moss Act, as well as numerous claims under state law. The defendants then timely removed the case to the Northern District of Illinois, asserting in the notice of removal that the district court had original jurisdiction over the three federal claims and supplemental jurisdiction over the claims grounded in state law. Voelker did not move to remand back to state court. Eventually, on a Rule 12(b)(6) motion, the district court dismissed all of Voelker's federal claims and all but a few of Voelker's state claims. The district court then remanded the remaining state claims. Voelker appeals the dismissal of his claims under the Magnuson-Moss Act, Illinois Uniform Commercial Code ("UCC") (810 ILCS 5/1-101, et seq.), the New Vehicle Buyer Protection Act (815 ILCS 380/1, et seq.), a theory of fraudulent inducement, the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/2, et seq.), a theory of tortious interference with contract, and a theory of breach of contract.


This court reviews de novo the district court's grant of the defendants' motion to dismiss under Rule 12(b)(6). International Mktg., Ltd. v. Archer-Daniels-Midland Co., 192 F.3d 724, 729 (7th Cir. 1999). Dismissal is proper "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984).

A. Claims Under the Magnuson-Moss Act

Voelker claims breach of written warranty and breach of the implied warranty of merchantability against Porsche and Copans under the Magnuson-Moss Act. Although the parties have not briefed the issue, it is not clear at the outset that these claims were removed properly and, accordingly, it is unclear that this court has subject matter jurisdiction over them. Federal courts are obliged to inquire sua sponte wherever the propriety of the removal of a claim to federal court is in question. Tylka v. Gerber Products, Co., 211 F.3d 445, 447 (7th Cir. 2000). Our review of this issue is plenary. Id.

Removal is proper over any action that could have been filed originally in federal court. Id. at 448. There are two conceivable ways in which Voelker's Magnuson-Moss claims could originally have been brought in federal court: under federal question jurisdiction or under supplemental jurisdiction. Under 15 U.S.C. § 2301(d)(1)(B), federal question jurisdiction exists over a Magnuson-Moss claim where the amount in controversy is at least $50,000. Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955, 959 (7th Cir. 1998). In their notice of removal to federal court, § 2301(d)(1) was the only basis that the defendants put forth to justify federal jurisdiction over the Magnuson-Moss claims. To calculate the amount in controversy under § 2301(d)(1)(B), however, the party asserting federal jurisdiction must allege the cost of the replacement vehicle, minus both the present value of the allegedly defective vehicle and the value that the plaintiff received from the allegedly defective vehicle. Id. at 957. Unfortunately, no party has provided us with the relevant numbers to plug into the Gardynski-Leschuck formula, and we are thus in no position to conclude that jurisdiction

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under § 2301(d)(1)(B) existed over the Magnuson-Moss claims. That leaves the question of whether federal jurisdiction over the Magnuson-Moss claims could exist under the statute governing supplemental jurisdiction, 28 U.S.C. § 1367.

Supplemental jurisdiction over the Magnuson-Moss claims could have existed in the district court. That court had federal question jurisdiction over the TILA and FCRA claims and, because both of those claims and the Magnuson-Moss claims arise from the same controversy, it also had the discretionary authority to exercise supplemental jurisdiction over the Magnuson-Moss claims. See 28 U.S.C. § 1367(a) (2000); see also Suber v. Chrysler Corp., 104 F.3d 578, 588 n. 12 (3d Cir. 1997) (holding that district courts may exercise supplemental jurisdiction over Magnuson-Moss claims); Wetzel v. American Motors Corp., 693 F.Supp. 246, 249-51 (E.D.Pa.1988) (same). Once we determine that the district court had the power to entertain, under its supplemental jurisdiction, a claim that it actually reached on the merits, the existence of federal jurisdiction over that claim is established and our review is limited to whether the district court's discretion was abused. Peter Bay Homeowners Ass'n v. Stillman, 294 F.3d 524, 534 (3d Cir. 2002); see also Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1491-92 (7th Cir. 1996) (holding that federal jurisdiction existed for a claim over which the district court could have, but did not explicitly, invoke supplemental jurisdiction). Given that neither party objects to the district court's de facto exercise of its supplemental jurisdiction, and no exceptional circumstances exist, any possible issue of whether the district court abused its discretion by exercising supplemental jurisdiction over the Magnuson-Moss claims is waived. New Jersey Turnpike Auth. v. PPG Indus., 197 F.3d 96, 113 (3d Cir. 1999).

Having concluded that we have jurisdiction to reach the issue, we turn to whether the district court properly dismissed Voelker's claims for breach of both written and implied warranties under the Magnuson-Moss Act. The statute allows a "consumer" to bring a suit where he claims to be "damaged by the failure of a supplier, warrantor, or...

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