Brame v. Gen. Motors LLC

• Decision Date: 23 April 2021
• Docket Number: Case No. 20-C-1775
• Citation: 535 F.Supp.3d 832
• Parties: Gary BRAME, Jason Jager, and Glen Evans, individually and on behalf of all others similarly situated, Plaintiffs, v. GENERAL MOTORS LLC, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

535 F.Supp.3d 832

Gary BRAME, Jason Jager, and Glen Evans, individually and on behalf of all others similarly situated, Plaintiffs,

v.GENERAL MOTORS LLC, Defendant.

Case No. 20-C-1775

United States District Court, E.D. Wisconsin.

Signed April 23, 2021

Adam J. Levitt, Daniel Ferri, DiCello Levitt Gutzler LLC, Chicago, IL, Wilson D. Miles, III, Beasley Allen Crow Methvin Portis & Miles PC, Montgomery, AL, Christopher D. Stombaugh, DiCello Levitt Gutzler LLC, Platteville, WI, for Plaintiffs.

April N. Ross, Kathleen T. Sooy, Rachel Raphael, Crowell & Moring LLP, Washington, DC, Richard T. Orton, Gass Weber Mullins LLC, Milwaukee, WI, for Defendant.

DECISION AND ORDER

LYNN ADELMAN, United States District Judge

Three plaintiffs, Gary Brame, Jason Jager, and Glen Evans, allege that they purchased vehicles manufactured by General Motors LLC ("GM") that consume excessive oil. They contend that this problem relates to a design defect that affects engines used in many of the vehicles GM manufactured in model years 2010 to 2014. The plaintiffs propose to represent class of all current and former owners and lessees who purchased or leased affected vehicles in Wisconsin. Before me now is GM's motion to dismiss the complaint for failure to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6).

I. BACKGROUND

According to the allegations of the complaint, which I accept as true for the purpose of deciding the motion to dismiss, each plaintiff purchased a GM vehicle fitted with GM's Generation IV 5.3 Liter V8 Vortec 5300 LC9 engine. Plaintiff Brame purchased a used 2012 Chevrolet Avalanche in 2015 from a dealer in Fond du Lac, Wisconsin. Compl. ¶ 26. He has noticed that the vehicle "consumes an unusually high volume of oil." Id. ¶ 27. Plaintiff Jager owns a 2011 GMC Sierra that he purchased new from a dealer in Greenfield, Wisconsin, in 2011. Id. ¶ 33. The vehicle consumed an unusually high volume of oil and experienced "numerous misfires, engine knock, and a rough idle." Id. ¶¶ 34–35. His Sierra suffered complete engine failure after being driven approximately 93,550 miles. Id. ¶ 35. Plaintiff Evans owns a 2011 GMC Sierra that he purchased from a dealer in Fond du Lac, Wisconsin. He noticed that his vehicle consumed an unusually high volume of oil, and eventually he took it to a mechanic who replaced the engine. Id. ¶¶ 42–45. Before the engine was replaced, the engine would lose a full quart of oil each week. Id. ¶ 45.

The plaintiffs allege that the problems they experienced with their engines were caused by a design defect they describe as the "oil consumption defect." Compl. ¶ 7. The complaint explains the mechanics of this defect in detail. In a nutshell, the plaintiffs allege that the engine's piston rings fail to keep oil in the crankcase because GM coated the rings with an inappropriate anti-friction and anti-wear material. Id. ¶¶ 72–81.

The plaintiffs allege that the mere existence of the oil consumption defect has caused GM to breach the express "Limited Warranty" that it made to each purchaser or lessee of one of the affected vehicles. Compl. ¶ 218. As alleged in the complaint, the Limited Warranty "expressly warranted that [GM] would repair or replace defects in material or workmanship free of charge if they became apparent during the warranty period." Id. The complaint further alleges that "[t]he warranty covers repairs to correct any vehicle defect, not slight noise, vibrations, or other normal characteristics of the vehicle related to materials or workmanship occurring during the warranty period." Id. ¶ 219. The plaintiffs allege that the oil consumption defect is within the scope of the Limited Warranty. However, they do not allege that they ever asked GM or one of its dealers to repair the defect (or any of the problems caused by the defect, such as excessive oil consumption or engine failure) during the warranty period.

The plaintiffs allege that GM knew about the oil consumption defect but failed to disclose it to them through its advertising and other statements about the quality of the vehicles. The plaintiffs allege that this failure to disclose renders GM liable for fraudulent misrepresentation. Finally, the plaintiffs allege that GM's conduct resulted in unjust enrichment.

GM has moved to dismiss the complaint for failure to state a claim upon which relief can be granted. GM contends that the plaintiffs’ express warranty claims must be dismissed because the Limited Warranty does not cover the alleged defect and because the plaintiffs did not provide GM with notice of the alleged breach of warranty. GM contends that the plaintiffs’ claims for fraudulent misrepresentation must be dismissed because, among other reasons, they are barred by the economic loss doctrine. Finally, GM contends that the plaintiffs’ claims for unjust enrichment must be dismissed for several reasons: because an equitable claim for unjust enrichment cannot lie when the parties’ relationship is governed by a contract, when the plaintiff has adequate legal remedies, or when the plaintiff has not conferred a benefit directly on the defendant.

II. DISCUSSION

To avoid dismissal under Rule 12(b)(6), a complaint must "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "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, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The complaint must, at a minimum, "give the defendant fair notice of what the claim is and the grounds upon which it rests." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. In construing a plaintiff's complaint, I assume that all factual allegations are true but disregard statements that are conclusory. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.

A. Breach of Express Warranty

The plaintiffs purchased their vehicles from GM dealers rather than directly from GM. However, the complaint alleges that GM made express warranties that apply to each owner of a GM vehicle and any subsequent owner. Compl. ¶ 218. The complaint alleges that the warranty is governed by Wisconsin Statute § 402.313, which is part of Wisconsin's version of Article 2 of the Uniform Commercial Code (UCC).¹ GM concedes that Wisconsin's version of the UCC controls.

GM's first argument is that its express warranty applies only to defects in "materials and workmanship," which, GM contends, excludes design defects such as the oil consumption defect. GM's second argument is that, even if the defect was within the scope of the warranty, the plaintiffs cannot succeed on a claim for breach of warranty because they do not adequately plead that they gave notice of the alleged breach, as required by Wisconsin Statute § 402.607(3)(a). I will address only the second argument because it is dispositive.²

The UCC provides that "[w]here a tender has been accepted ... [t]he buyer must within a reasonable time after the buyer discovers or should have discovered any breach notify the seller^{[3 ]} of breach or be barred from any remedy." Wis. Stat. § 402.607(3)(a). The Wisconsin Supreme Court has stated that, under this provision, the buyer must provide reasonable notice of the alleged breach. Paulson v. Olson Implement Co., Inc. , 107 Wis.2d 510, 523–25 n.8, 319 N.W.2d 855 (1982). According to the court, "[t]he seller must be informed by the buyer that the buyer considers him (as opposed to others) responsible to remedy a troublesome situation." Id. The purpose of giving such notice is "to eliminate an element of unfair surprise where a seller has not been informed that a situation is troublesome and, therefore, cannot take steps to correct it but only later has a lawsuit filed against him." Id. ; see also id. at 525–26, 319 N.W.2d 855 (quoting White and Summers for the proposition that "[t]he principal reason for requiring notice ‘is to enable the seller to make adjustments or replacements or to suggest opportunities for cure to the end of minimizing the buyer's loss and reducing the seller's own liability to the buyer’ ").

In the present case, none of the three plaintiffs alleges that he provided notice of the alleged breach to GM. What's more, no plaintiff alleges that he ever asked GM to repair the oil consumption defect within the warranty period. As far as the complaint reveals, no plaintiff brought his vehicle to a GM dealer or to another location for obtaining warranty service and asked to have the oil consumption defect fixed. This omission from the complaint is more serious than simply failing to give notice as required by UCC 2-607. The Limited Warranty did not guarantee that the plaintiffs would never experience a defect; instead, it promised that if a defect "became apparent during the warranty period," GM would repair it free of charge. Compl. ¶ 218. If the plaintiffs never asked for a free repair during the warranty period, then GM could not have breached the warranty. See Ball v. Sony Elec. Inc. , No. 05-C-307-S, 2005 WL 2406145, at *6 (W.D. Wis. 2005) (finding that plaintiffs did not allege viable claim for breach of repair warranty where they failed to allege that they brought product to defendant for repairs within the warranty period). Thus, the express-warranty claim must be dismissed for failure to plausibly allege that a breach occurred.

In any event, even if GM could have breached the warranty by failing to complete repairs that the plaintiffs never asked it to perform, the complaint would have to be dismissed for failure to give notice. The plaintiffs do not allege that they personally notified GM that they considered it "responsible to remedy a troublesome situation." Paulson , 107 Wis. 2d at 525 n.8, 319 N.W.2d 855. Instead, they contend that (1) they satisfied the notice requirement by filing the present lawsuit, and (2) they do not have to...