ACH Enterprises 1 LLC v. Viking Yacht Co.

• Decision Date: 07 October 2011
• Docket Number: Civ. Action No. 11–3571 (JEI/JS).
• Parties: ACH ENTERPRISES 1 LLC, on behalf of itself and others similarly situated, Plaintiff, v. VIKING YACHT COMPANY, Defendant.
• Court: U.S. District Court — District of New Jersey

75 UCC Rep.Serv.2d 727

817 F.Supp.2d 465

ACH ENTERPRISES 1 LLC, on behalf of itself and others similarly situated, Plaintiff,

v.VIKING YACHT COMPANY, Defendant.

Civ. Action No. 11–3571 (JEI/JS).

United States District Court, D. New Jersey.

Oct. 7, 2011.

Lite DePalma Greenberg, LLC, by Joseph J. DePalma, Esq., Bruce D. Greenberg, Esq., Newark, NJ, for Plaintiffs.

Duane Morris LLP, by Dana Ash, Esq., Philadelphia, PA, for Defendant.

OPINION

IRENAS, Senior District Judge:

This is a breach of warranty suit.¹ Plaintiff alleges that it, and others similarly situated, purchased from Defendant Viking Yacht Company yachts with a latent defect in the gel coat covering the hulls of the boats. Viking Yacht moves to dismiss the claims, asserting that they are barred by the applicable statute of limitations. For the reasons stated herein, the Motion will be granted.

I.

The parties' dispute arises from cracked gel coat on over 800 yachts sold by Defendant Viking Yacht. This is not the first lawsuit to arise from the allegedly defective “953 Series” gel coat. The undersigned presided over the trial of Viking Yacht's breach of warranty suit against the gel coat manufacturer in July of 2009, which Viking Yacht lost. Many of the background facts relevant to this case may be found in opinions generated from the prior lawsuit and will not be repeated. See generally Viking Yacht Co. v. Composite One LLC, 385 Fed.Appx. 195 (3d Cir.2010); Viking Yacht Co. v. Composites One LLC, 622 F.Supp.2d 198 (D.N.J.2009); Viking Yacht Co. v. Composites One LLC, 496 F.Supp.2d 462 (D.N.J.2007). Suffice it to say that Viking Yacht alleged in its previous case, and Plaintiff also alleges, that the 953 Series gel coat cracks when exposed to the elements, and such cracking is very expensive to repair.²

The instant Motion exclusively concerns the timeliness of Plaintiff's Complaint, thus only a few facts and allegations require discussion. “In February of 2008, Plaintiff purchased a used 65' Viking Convertible [Yacht] that was manufactured by Viking in 2001.” (Compl. ¶ 43) “In April of 2008, only two months after the purchase, the Defect rapidly manifested on the Convertible Yacht, resulting in extensive and catastrophic gel coat cracking on the hull.” ( Id. ¶ 46) Sometime between April 2008 and August 2008, Plaintiff “demanded” a “warranty repair” of the defect. (Id. ¶ 47) Allegedly, Viking Yacht initially agreed to repair the cracked gel coat, but then in November 2009, cancelled the scheduled repair informing Plaintiff by letter that it had lost its lawsuit against the gel coat manufacturer and that “Viking is not, and may never be, in a position to repair these boats and absorb these additional costs.” (Compl. Ex. 3) The letter did, however, state that Viking Yacht would pursue an appeal.³ ( Id.)

On June 21, 2011, Plaintiff filed the instant Complaint which alleges three counts: (1) violation of the Magnuson–Moss Warranty Act, 15 U.S.C. § 2301 et seq.; (2) breach of express warranty pursuant to New Jersey's Uniform Commercial Code; and (3) breach of the implied warranties of merchantability and fitness for a particular purpose pursuant to New Jersey's Uniform Commercial Code.

Plaintiff alleges that Viking Yacht breached its written warranty by refusing to repair the cracked gel coat. The “Viking Yacht Company One Year Limited Warranty” states, in relevant part:

Viking Yacht Company warrants to the original purchase, for a period of One (1) year, from the date of delivery or Eighteen (18) months from the date of shipment from the factory, or upon completion of Two Hundred (200) hours of operation, which ever comes first, the following: That Viking will, through the selling dealer, replace or repair, at the discretion of Viking, any part or component, manufactured by Viking which is proven to the satisfaction of Viking to be defective, and which has occurred under normal use and service within the warranty period.

(Kasinski Decl. Ex. 1) ⁴

Viking Yacht moves to dismiss all three claims of the Complaint, asserting that they are time-barred.

II.

Federal Rule of Civil Procedure 12(b)(6) provides that a court may dismiss a complaint “for failure to state a claim upon which relief can be granted.” In order to survive a motion to dismiss, a complaint must allege facts that raise a right to relief above the speculative level. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see also Fed.R.Civ.P. 8(a)(2).

While a court must accept as true all allegations in the plaintiff's complaint, and view them in the light most favorable to the plaintiff, Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir.2008), a court is not required to accept sweeping legal conclusions cast in the form of factual allegations, unwarranted inferences, or unsupported conclusions. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.1997). The complaint must state sufficient facts to show that the legal allegations are not simply possible, but plausible. Phillips, 515 F.3d at 234. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).

III.

The Court addresses the timeliness of (1) the U.C.C. breach of express warranty claim; (2) the U.C.C. breach of implied warranties claims; and (3) the Magnuson–Moss Act claim, in that order.

A.

Viking Yacht argues that the express warranty claim is barred by the applicable statute of limitations, which provides in relevant part,

(1) An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued....

(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 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.

N.J. S.A. 12A:2–725(1)–(2).

Viking Yacht argues that the breach of express warranty claim is barred under either the general accrual rule: “a breach of warranty occurs when tender of delivery is made”; or the “future performance” exception: “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.” N.J.S.A. 12A:2–725(2).

Thus, the first question presented is whether the repair warranty at issue concerns performance of the gel coat upon tender of delivery or performance of the gel coat sometime in the future. The Court concludes that, under New Jersey law, the warranty is a future performance warranty.

The New Jersey Appellate Division has twice observed that “a seller's agreement to repair or replace defects in parts that become evident during a specified period of time ... ‘cannot be characterized as a mere representation of the product's condition at the time of delivery rather than its performance at a future time.’ ” Poli v. DaimlerChrysler Corp., 349 N.J.Super. 169, 176–77, 793 A.2d 104 (App.Div.2002) (quoting Docteroff v. Barra Corp. of Am., Inc., 282 N.J.Super. 230, 242, 659 A.2d 948 (App.Div.1995)). Stated more succinctly, a promise to “repair” a “covered defect [arising] at any time during the period of the warranty” is “a promise relating to ‘[a good's] performance at a future time.’ ” Id. at 177, 793 A.2d 104 (quoting Docteroff, 282 N.J.Super. at 242, 659 A.2d 948).

More recently, Judge Kugler applied Poli and Docteroff to conclude that a warranty “that promises a future condition-that the [goods] will be free from defect-and subsequently contemplates an obligation to repair should the [goods] not perform” is a future performance warranty. South Jersey Gas Co. v. Mueller Co. Ltd., No. 09–4194, 2010 WL 1742542 at *6 (D.N.J. April 27, 2010). ⁵ Judge Kugler explained that such a warranty “is more than a mere representation of the condition of the goods at the time of delivery or a covenant to repair or replace. It promises that the [goods] will act in a certain way, not merely that the [seller] will act in a certain way.” Id.

The warranty in this case is similar to the warranties in Docteroff, Poli, and South Jersey Gas. Viking Yacht promised to “replace or repair ... any part or component ... which is proven to the satisfaction of Viking to be defective, and which has occurred under normal use and service within the warranty period.” (Kasinski Decl. Ex. 1) Such a warranty extends to the performance of the gel coat during the warranty period and thus is a future performance warranty.

Having concluded that the warranty at issue is a future performance warranty, one might also conclude that the instant suit, filed in 2011, is timely because the four-year window for filing the instant Complaint began running in April, 2008 when Plaintiff allegedly discovered the gel coat cracking. However, Viking Yacht, relying on Judge Kugler's extensive analysis in South Jersey Gas,⁶ argues that the analysis is not so simple. Viking Yacht argues, and Judge Kugler concluded, that “[ N.J.S.A. 12A:2–725(2) ] plainly instructs that the running of the statute awaits discovery of the defect, provided the defect is discovered during the warranty period.” South Jersey Gas, 2010 WL 1742542 at *7 (emphasis in original). In this case, the one year warranty period allegedly began sometime in 2001 and expired sometime in 2002. (See Compl. ¶ 43) If the Court accepts Viking Yacht's argument, the suit is nevertheless untimely because Plaintiff alleges that the defect was not discovered until April, 2008—well after the warranty expired.

In South Jersey Gas, the warranty period was one...