Lloyd v. General Motors Corp.

• Citation: 916 A.2d 257,397 Md. 108
• Decision Date: 08 February 2007
• Docket Number: No. 10, Sept. Term, 2002.,10, Sept. Term, 2002.
• Parties: Timothy and Bernadette LLOYD, et al. v. GENERAL MOTORS CORPORATION, et al.
• Court: Court of Special Appeals of Maryland

916 A.2d 257

397 Md. 108

Timothy and Bernadette LLOYD, et al. v. GENERAL MOTORS CORPORATION, et al.

No. 10, Sept. Term, 2002.

Court of Appeals of Maryland.

February 8, 2007.

Reconsideration Denied March 14, 2007.

John M. Mason (Marks & Sokolov, LLC, Philadelphia, Law Offices of William F. Askinazi, William F. Askinazi, Potomac, Stephen H. Ring, Stephen H. Ring, P.C., Germantown, all on briefs), for petitioners.

John H. Beisner (Neil K. Gilman, Jonathan D. Hacker, Goodwin Liu, O'Melveny & Myers LLP, Washington, DC, Karen N. Walker, Kirkland & Ellis, Washington,

DC, J. Andrew Langan, Douglas M. Poland, Chicago, IL, Richard E. Hagerty, Troutman Sanders, LLP, McLean, VA, Charles A. Newman, Kathy A. Wisniewski, Veronica A. Gioia, Bryan Cave LLP, St. Louis, MO, all on brief), for respondents.

Michael T. Wharton, Victoria H. Wink, Wharton Levin Ehrmantraut & Klein, P.A., Annapolis, amicus curiae;

Hugh F. Young, Jr., Product Liability Advisory Council, Inc., Reston, VA, of counsel.

Argued before BELL, C.J.,^* ELDRIDGE, RAKER,^* WILNER, CATHELL, HARRELL and BATTAGLIA, JJ.

BELL, C.J.

The major issue in this case is whether the cost to repair defective seatbacks, which allegedly have a tendency to collapse in rear-impact collisions, causing, in some cases, serious bodily injury or death to drivers and/or passengers in the class vehicles, constitutes a cognizable injury, in the form of economic loss for claims sounding in tort, contract, and consumer protection.

Inconsistent with the conclusion reached by the Circuit Court for Montgomery County and the Court of Special Appeals, we shall hold that the petitioners, Timothy and Bernadette Lloyd, have sufficiently alleged an injury that is cognizable under each of the petitioners' claims. Accordingly, we shall reverse the judgment of the Court of Special Appeals dismissing the petitioners' claims.

I.

The petitioners are Timothy and Bernadette Lloyd and seven other Maryland residents, who own "class vehicles," automobiles manufactured between 1990 and 1999 by the respondents, General Motors Corporation, Ford Motor Company, Daimler Chrysler Corporation and Saturn Corporation. The petitioners brought this class action to recover from the respondents the cost of repairing and/or replacing the front seats in each class vehicle. They allege that the seats are unsafe because they collapse rearward in moderate and severe rear-impact collisions. None of the petitioners or any putative class members allege that he or she has experienced personal injury as a result of the mechanical failure that caused the alleged defect. Indeed, persons with such experiences were expressly excluded from this class.¹

The Third Amended Complaint ("TAC") contains seven counts. Count one alleges negligence in the design and manufacture of the seats. Count two, sounding in strict liability, alleges that the seats were in a defective condition, rendering them "inherently dangerous and creating an unreasonable risk of serious injury or death to users" when they left the control of the defendants. Count three alleges breach of the implied warranty of merchantability. Count four alleges negligent failure to disclose, failure to warn, concealment and misrepresentation. Count five alleges fraudulent concealment and intentional failure to warn. Count six alleges unfair or deceptive trade practices under the Maryland Consumer Protection Act (CPA). Count seven alleges civil conspiracy.

Significant to the case sub judice, the TAC sets forth the following allegations of fact:

"27. Each year more than a thousand people die and many thousands more are injured in rear-impact motor vehicle collisions in the U.S. Some of these people are Maryland residents.

"29. The Defect has resulted in significant numbers of serious injuries including paraplegia, quadriplegia and death to occupants of Class Vehicles struck in rear-impact collisions.

"31. All Seats have the Defect.

"32. It is highly predictable that a certain percentage of occupants of Class Vehicles will be killed or seriously injured in rear-impact motor vehicle collisions each year in the U.S., and that some of those killed or injured will be Class Members.

"33. The automobile seat is the single most important life-saving device in an automobile in the event of a crash.

"36. The inclusion of properly designed dual recliner mechanisms greatly increases the resistance to rearward collapse of the backrest, and minimizes injury to the occupants. []

"40. The Seats are unreasonably unsafe in moderate and severe rear-impact collisions because they are so weak they deform and/or collapse rearward, allowing the occupant to slide or ramp up the seat-back and suffer hyper extension of the spine over the top of the Seat, or to be hurled into the rear seat area. The latter event can result in injuries not only to the occupant who is hurled back, but also to those already seated in the rear of the vehicle, including children in safety seats positioned as recommended by the manufacturer. Additional hazards caused by Seat collapses include: 1) the loss of vehicle control when the driver is unable to reach pedals or hand controls, and 2) delayed escape from the vehicle in the event of fire."

The petitioners filed this suit in the Circuit Court for Montgomery County. Before the petitioners filed pleadings seeking certification of a class, the respondents moved, pursuant to Maryland Rule 2-322(b),² to dismiss the complaint for failure to state a claim upon which relief could be granted. The trial court granted the motion, holding that "the economic loss doctrine would not support the cause of action being sought by the plaintiffs in this case, and there is insufficient basis to allow a fraud claim to continue against these defendants."

The petitioners noted an appeal to the Court of Special Appeals. In an unreported opinion, that court affirmed the dismissal of the action. It reasoned that, for each claim, the petitioners failed to plead sufficiently the required allegation of injury or actual harm to withstand a motion to dismiss. The intermediate appellate court also held that the petitioners failed to plead the fraud and conspiracy claims sufficiently, characterizing the allegations as "vague, confused, and extremely ambiguous" and, as well, as supported by insufficient facts.

The petitioners filed a petition for Writ of Certiorari, which we granted. Lloyd v. GM, 369 Md. 179, 798 A.2d 551 (2002). The petitioners urge this Court to reverse the judgment of the Court of Special Appeals, which, they argue, is erroneous for failing to conclude that the cost to class members to fix the defective seatbacks, a proven cause of serious bodily injury or death in rear-collision accidents, constituted a cognizable injury. More particularly, the petitioners aver that such required remedial expenditures constitute economic loss, which this Court has permitted to be recovered when the product defect factor creates an unreasonable risk of death or serious injury. That economic loss, the petitioners submit, is recoverable under each of the substantive legal counts alleged in the Third Amended Complaint, including those alleging violation of the Consumer Protection Act, breach of warranty, fraud, and conspiracy.

The respondents do not agree. They argue that the Circuit Court and the intermediate appellate court ruled correctly. They submit that the petitioners have not stated a cognizable injury, which they must do in order to recover under the claims asserted in the Third Amended Complaint. Specifically, the respondents deny that the petitioners have suffered actual harm to person or property or experienced product malfunction as a result of the product defect, and thus, they contend, the damages sought by the petitioners are simply speculative. The respondents also argue that the petitioners failed to argue in their Petition for Certiorari that the Court of Special Appeals erred in dismissing the fraud and civil conspiracy claims and, therefore, have waived the right to raise the issue before this Court. In any event, the respondents assert, in accordance with the holding of the Court of Special Appeals, that the petitioners did not plead the fraud and conspiracy claims with sufficient particularity to state a cognizable claim.

II.

Upon review of a motion to dismiss a complaint for failure to state a claim upon which relief can be granted, a court must "assume the truth of all well-pleaded facts and allegations in the complaint, as well as all inferences that can reasonably be drawn from them," Morris v. Osmose Wood Preserving, 340 Md. 519, 531, 667 A.2d 624, 630 (1995), and order dismissal only if the allegations and permissible inferences, if true, would not afford relief to the plaintiff, i.e., the allegations do not state a cause of action. A.J. Decoster Co. v. Westinghouse, 333 Md. 245, 249, 634 A.2d 1330, 1332 (1994). See also Sharrow v. State Farm Mutual Ins. Co., 306 Md. 754, 768, 511 A.2d 492, 499-500 (1986), in which we stated the rule as follows: "[I]n considering the legal sufficiency of [a] complaint to allege a cause of action for tortious interference, we must assume the truth of all relevant and material facts that are well pleaded and all inferences which can be reasonably drawn from those pleadings." Mere conclusory charges that are not factual allegations may not be considered. Morris, supra, 340 Md. at 531, 667 A.2d at 631, Faya v. Almaraz, 329 Md. 435, 443, 620 A.2d 327, 331 (1993). Moreover, in determining whether a petitioner has alleged claims upon which relief can be granted, "[t]here is ... a big difference between that which is necessary to prove the [commission of a tort] and that which is necessary merely to allege [its commission]," Sharrow supra, 306 Md. at 770, 511 A.2d at 500, and, when that is the issue, the court's decision does not pass on the merits of the claims; it merely determines the plaintiff's right to bring the action....