Baldwin v. JARRETT BAY YACHT SALES, LLC

• Decision Date: 10 December 2009
• Docket Number: No. 4:09-CV-103-D.,4:09-CV-103-D.
• Citation: 683 F. Supp.2d 385
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: Michael W. BALDWIN, and Michelle M. Baldwin, Plaintiffs, v. JARRETT BAY YACHT SALES, LLC, and Brunswick Corporation, d/b/a Hatteras Yachts, Defendants.

683 F.Supp.2d 385

Michael W. BALDWIN, and Michelle M. Baldwin, Plaintiffs, v. JARRETT BAY YACHT SALES, LLC, and Brunswick Corporation, d/b/a Hatteras Yachts, Defendants.

No. 4:09-CV-103-D.

United States District Court, E.D. North Carolina, Eastern Division.

December 10, 2009.

Charles Gordon Brown, Brown & Bunch, PLLC, Chapel Hill, NC, for Plaintiffs.

Caroline Plater, Kelley Drye & Warren LLP, Chicago, IL, J. Donald Cowan, Jr., Ellis & Winters LLP, Greensboro, NC, Mary M. Dillon, Ellis & Winters, Raleigh, NC, for Defendants.

ORDER

JAMES C. DEVER III, District Judge.

In 2006, Michael W. Baldwin and Michelle Baldwin ("plaintiffs") purchased a Hatteras 54 Convertible yacht ("yacht") from Jarrett Bay Yacht Sales, LLC ("Jarrett Bay") for over $1,951,000. Brunswick Corporation, d/b/a Hatteras Yachts ("Hatteras"), manufactured the yacht. Michael Baldwin considers himself a serious fisherman, and the yacht has not performed as he expected. As a result, plaintiffs filed suit in North Carolina state court in 2007 against Jarrett Bay and Hatteras. In 2009, plaintiffs amended their complaint to add a claim against Hatteras under 15 U.S.C. § 2310(d) of the Magnuson-Moss Warranty—Federal Trade Commission Improvement Act ("MMWA"), and defendants removed the action to this court. Plaintiffs then filed a motion to remand. On November 17, 2009, the court heard oral argument on the motion to remand and thereafter received supplemental briefs. As explained below, plaintiffs' motion to remand is denied.

I.

On April 19, 2007, plaintiffs filed this action in Wake County Superior Court. Plaintiffs' complaint contained two claims under North Carolina law: (1) revocation of acceptance under N.C. Gen.Stat. § 25-2-608 against Jarrett Bay; and, (2) breach of express warranty under N.C. Gen.Stat. § 25-2-714 against Hatteras. See Original Compl. ¶¶ 58-91. Thereafter, the Wake County Superior Court transferred the action to Pitt County Superior Court.

On August 1, 2008, plaintiffs filed a motion to amend their complaint in Pitt County Superior Court. See Pls.' Mot. for Leave to Amend Compl. Plaintiffs' motion to amend described the proposed amendment as follows: "to supplement Claim 2 with allegations regarding simultaneous breach of the Federal Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq." Id. 113(c). In their supporting memorandum of law, plaintiffs explained that the proposed amendment would not prejudice Hatteras because:

Hatteras would have conducted discovery no differently over the preceding months had Magnuson-Moss been pleaded originally because Magnuson-Moss adopts North Carolina's state warranty law. 15 U.S.C. § 2310(d). No provision of Magnuson-Moss alters the substantive elements of the Baldwins' state law claim of breach of warranty. The only substantive difference is Magnuson-Moss authorizes attorneys sic fees "if a consumer finally prevails in any action brought under 15 U.S.C. § 2310(d) ."

Pls.' Mem. in Supp. of Mot. to Amend 8. Defendants opposed the motion to amend. On May 4, 2009, the court granted the motion to amend. Baldwin v. Jarrett Bay Yacht Sales, LLC, No. 07-CV-2838 (Pitt County Super. Ct. May 4, 2009).

On May 28, 2009, plaintiffs filed their amended complaint in Pitt County Superior Court. In the amended complaint, plaintiffs added the following allegations to support a claim in count two under 15 U.S.C. § 2310(d) against Hatteras:

79. The yacht is also a "consumer good."

80. The Baldwins are also "consumers."

81. Hatteras' Express Limited Warranty also constitutes a "limited written warranty" under the Magnuson-Moss Warranty Act (15 U.S.C. § 2301, et seq.).

82. With respect to the sale of the yacht to the Baldwins, Hatteras is also a "warrantor" under the Magnuson-Moss Warranty Act.

83. With respect to the sale of the yacht to the Baldwins, Hatteras is also a "supplier" under the Magnuson-Moss Warranty Act.

....

100. As a proximate result of Hatteras' breaches and/or the failure of its Express Limited Warranty's essential purpose, the Baldwins are entitled, pursuant to 15 U.S.C. § 2310(d), to recover their costs and expenses (including attorneys' fees based on actual time expended) reasonably incurred for or in connection with the commencement and prosecution of this action.

WHEREFORE, the Baldwins respectfully pray this Court for the following relief:

....

(c) taxation, pursuant to 15 U.S.C. § 2310(d), to Hatteras of all the Baldwins' costs and expenses, including attorneys' fees based on actual time expended reasonably incurred for or in connection with the commencement and prosecution of its claims for relief under the Magnuson-Moss Warranty Act (15 U.S.C. § 2301 et. sic seq.)....

First Am. Compl. ¶ 78-100, prayer for relief (emphasis added).

On June 5, 2009, pursuant to 28 U.S.C. §§ 1331, 1441, and 1446, defendants removed the action to this court D.E. 1. Defendants contend that plaintiffs' amended complaint replaced a state-law warranty claim in count two against Hatteras with a federal warranty claim in count two against Hatteras under 15 U.S.C. § 2310(d) of the MMWA, that the MMWA claim in count two presents a federal question under 28 U.S.C. § 1331, and that the court has supplemental jurisdiction over the state-law claim in count one under 28 U.S.C. § 1367(a). See Notice of Removal ¶¶ 19-31; Defs.' Resp. 5-6.

On July 2, 2009, plaintiffs moved to remand the action to Pitt County Superior Court D.E. 13. Plaintiffs argue that their amended complaint did not add a federal claim in count two. See Pls.' Supplemental Mem. in Supp. of Mot. to Remand 1-2. Rather, plaintiffs contend that in count two they seek substantive relief under North Carolina law for breach of warranty and "a federal cost allowance ancillary to a state law remedy" in the form of costs and expenses (including attorneys' fees) under 15 U.S.C. § 2310(d)(2). See Pls.' Mem. in Supp. of Mot. to Remand 15. Alternatively, plaintiffs contend that if the court construes count two to constitute or include a federal claim under 15 U.S.C. § 2310(d), then all claims to be tried involve matters in which North Carolina law predominates. See 28 U.S.C. § 1441(c); Pls.' Mem. in Supp. of Mot. to Remand 20. Accordingly, plaintiffs cite 28 U.S.C. § 1441(c) and ask the court to remand the action to Pitt County Superior Court. Defendants oppose remand D.E. 18.

II.

The MMWA creates a federal private cause of action for certain breach of warranty obligations. Section 2310(d) of the MMWA states:

(1) Subject to subsections (a)(3) and (e) of this section, a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief—

(A) in any court of competent jurisdiction in any State or the District of Columbia; or

(B) in an appropriate district court of the United States, subject to paragraph (3) of this subsection.

(2) If a consumer finally prevails in any action brought under paragraph (1) of this subsection, he may be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of costs and expenses (including attorneys' fees based on actual time expended) determined by the court to have been reasonably incurred by the plaintiff for or in connection with the commencement and prosecution of such action, unless the court in its discretion shall determine that such an award of attorneys' fees would be inappropriate.

(3) No claim shall be cognizable in a suit brought under paragraph (1)(B) of this subsection—

(A) if the amount in controversy of any individual claim is less than the sum or value of $25;

(B) if the amount in controversy is less than the sum or value of $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit; or

(C) if the action is brought as a class action, and the number of named plaintiffs is less than one hundred.

15 U.S.C. § 2310(d). The MMWA defines "consumer,"¹ "supplier,"² "warrantor,"³ and "written warranty."⁴

In count two of their amended complaint, plaintiffs seek damages from Hatteras under a "written warranty." See First Am. Compl. ¶¶ 78-100, prayer for relief. In accordance with 15 U.S.C. § 2301(d), plaintiffs contend that they are "consumers" seeking damages for breach of a written warranty from Hatteras, an alleged "warrantor" or "supplier." See First Am. Compl. XXXXXX-XXX, prayer for relief. Where a "consumer" seeks relief for breach of a "written warranty" from a "warrantor" or "supplier," Congress expected courts to look to state warranty law except as expressly modified in the MMWA. See Sipe v. Workhorse Custom Chassis, LLC, 572 F.3d 525, 530 (8th Cir. 2009); Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir.2008); Schimmer v. Jaguar Cars, Inc., 384 F.3d 402, 405 (7th Cir.2004); Woodson v. McGeorge Camping Ctr., Inc., No. 91-1761, 1992 WL 225264, at *10 n. 16 (4th Cir. Sept. 15, 1992) (unpublished); Walsh v. Ford Motor Co., 807 F.2d 1000, 1013-14 (D.C.Cir. 1986).⁵

An aggrieved consumer may sue to enforce rights under the MMWA in state court, 15 U.S.C. § 2310(d)(1)(A), or federal court, 15 U.S.C. § 2310(d)(1)(B). "Federal court jurisdiction, however, is limited by 15 U.S.C. § 2310(d)(3)." Saval v. BL Ltd., 710 F.2d 1027, 1029 (4th Cir.1983) (per curiam). In a non-class action, federal jurisdiction attaches to an MMWA claim under section 2310(d) where the amount in controversy is at least $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in the suit. See 15 U.S.C. § 2310(d)(3); Saval, 710 F.2d at 1029: see also Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 329 (3d Cir.2009); Schultz v. Gen.R.V. Ctr., 512 F.3d 754, 757 (6th Cir.2008); Harnden v. Jayco, Inc., 496 F.3d 579, 581-82 (6th Cir. 2007).

In this case, the parties agree that the amount in controversy...