Burzlaff v. Thoroughbred Motorsports, Inc.

• Citation: 758 F.3d 841
• Decision Date: 10 July 2014
• Docket Number: No. 13–2520.,13–2520.
• Parties: Ronald BURZLAFF, Plaintiff–Appellee, v. THOROUGHBRED MOTORSPORTS, INC., Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

758 F.3d 841

Ronald BURZLAFF, Plaintiff–Appellee,

v.THOROUGHBRED MOTORSPORTS, INC., Defendant–Appellant.

No. 13–2520.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 10, 2014.

Decided July 10, 2014.

Shad A. Mewrin, Schaumberg Law Office LLC, Milwaukee, WI, for Plaintiff–Appellee.

Nathaniel Cade, Jr., Cade Law LLC, Milwaukee, WI, for Defendant–Appellant.

Before WOOD, Chief Judge, HAMILTON, Circuit Judge, and KENDALL, District Judge.^*

HAMILTON, Circuit Judge.

The trial judge in this case provided textbook examples of how to construe a statute and how to modify pattern jury instructions that do not quite fit the facts of the specific trial. Plaintiff Ronald Burzlaff bought a defective “Stallion” motorized tricycle from defendant Thoroughbred Motorsports, Inc. When Burzlaff reported the first of multiple problems to Thoroughbred, the company instructed him to take his vehicle to a nearby Ford dealer for warranty repairs. Burzlaff wound up doing so repeatedly. After the vehicle had been out of service for repairs for 71 days during the first year, Burzlaff finally demanded under the Wisconsin Lemon Law that Thoroughbred replace the vehicle or refund his purchase price. Thoroughbred refused. A further effort to repair the vehicle at the Thoroughbred factory in Texas also failed to correct the defects.

Burzlaff then sued Thoroughbred under the federal Magnuson–Moss Warranty Act, 15 U.S.C. § 2301 et seq., and the Wisconsin Lemon Law, Wis. Stat. § 218.0171.¹ A jury found for Burzlaff on both claims. The district court awarded double damages plus costs and attorney fees for a total judgment of nearly $95,000 under the more generous provisions of the state Lemon Law. On appeal, Thoroughbred challenges the jury instructions on the Lemon Law claim, the sufficiency of the evidence on that claim, and the submission of the Magnuson–Moss claim to the jury. We affirm in all respects.

I. Factual and Procedural Background

We present the facts as shown by trial evidence when viewed in the light most favorable to the jury's verdict. Harvey v. Office of Banks and Real Estate, 377 F.3d 698, 701 (7th Cir.2004). On October 19, 2009, plaintiff Ronald Burzlaff purchased a Thoroughbred Motorsports “Stallion” Motor Trike at a total cost of over $35,000. The Stallion is an unusual vehicle with a steering wheel, heat and air conditioning, and other features uncommon in motorcycles. Defendant Thoroughbred Motorsports, Inc. is a small company based in Texas with only about 20 authorized dealers nationwide. Burzlaff bought his Stallion from the only Thoroughbred dealer in Wisconsin, which is located 300 miles from Burzlaff's home in Greenfield.

During the first year after purchase, Burzlaff experienced numerous problems with his vehicle. It was delivered without a gas cap and would not start. The heating and air conditioning failed. The transmission leaked. The cooling system leaked. Other plugs and seals leaked. The steering wheel was loose and the front wheel came out of alignment, making the vehicle unstable. One tire would not hold air. The radio did not work. The headlight and taillight sockets were loose.

In November 2009, Burzlaff telephoned Thoroughbred about the first issues with his vehicle. He explained that the only Wisconsin dealer would be inconvenient for repairs because it was too far away. Burzlaff had seen a 2009 brochure for the Stallion advertising its Ford-made drivetrain and boasting that the Stallion could be serviced at Ford dealers. He asked about the possibility of going to a Ford dealer. The Thoroughbred representative told Burzlaff he could take it to a nearby Ford dealer for warranty repairs. (Burzlaff was also told to go to specialized shops for other problems, such as radio and tire repairs.)

During the first year, the vehicle was in various shops for repairs for a total of 71 days. That number is significant because a vehicle is not deemed a “lemon” under the Wisconsin law unless either there have been four unsuccessful attempts to repair the same defect or the vehicle is out of service for 30 or more days during the first year. See Wis. Stat. § 218.0171(1)(h) (defining “reasonable attempt to repair”).

Thoroughbred did not specify a particular Ford dealer. Burzlaff chose to go to Amato Ford, a nearby Ford dealer. Although Amato Ford was not an authorized Thoroughbred dealer, Burzlaff knew it had previously serviced other Stallions. Over that first year, Thoroughbred provided Amato Ford with parts and excerpts from the Stallion manual to help it repair Burzlaff's vehicle. Amato Ford billed the repairs directly to Thoroughbred, which paid for all of them. Thoroughbred never instructed Amato Ford to stop repairing Burzlaff's vehicle.

Before the end of the first year after the purchase, Burzlaff met the president and founder of Thoroughbred, Jeffrey Vey, at a motorcycle rally in Wisconsin. Burzlaff complained about the ongoing repairs and asked Vey to have Thoroughbred replace the vehicle or refund his purchase price. Vey refused to replace or refund, but he offered to transport Burzlaff's Stallion back to the factory in Texas for repairs. Burzlaff followed up with a letter to Vey later that month, but the vehicle was not actually picked up for transport to the factory until some weeks later, more than one year after the purchase.

Six more months passed before the vehicle was returned to Burzlaff. Burzlaff then filed suit against Thoroughbred in a Wisconsin state court alleging violations of the Lemon Law, Wis. Stat. § 218.0171, and the federal Magnuson–Moss Warranty Act, 15 U.S.C. § 2301 et seq. Thoroughbred removed the case to the Eastern District of Wisconsin. The parties consented to have Magistrate Judge Goodstein preside over the case under 28 U.S.C. § 636(c). The parties stipulated the amount of pecuniary damages to be $35,633.23, which was the total purchase price.

The jury found for Burzlaff on both claims. The court awarded double damages, then available under the Wisconsin Lemon Law, Wis. Stat. § 218.0171(7), plus costs and attorney fees, for a total judgment of $94,907.96. No damages were awarded on the Magnuson–Moss claim. On appeal, Thoroughbred challenges the Lemon Law jury instructions, the sufficiency of the evidence, and the submission of the Magnuson–Moss Act claim to the jury. After a brief detour into subject matter jurisdiction, we address those contentions in turn.

II. AnalysisA. Federal Jurisdiction

This case turns the usual pattern of supplemental jurisdiction on its head. Here the district court had original jurisdiction over the state law claim but only supplemental jurisdiction over the federal law claim. To explain this oddity:

Thoroughbred's notice of removal asserted two grounds for federal jurisdiction: federal question jurisdiction based on the Magnuson–Moss Act claim and diversity because the parties were citizens of different states and over $75,000 was in controversy. But federal question jurisdiction under 28 U.S.C. § 1331 is not available here. A warranty claim under the Magnuson–Moss Act may be brought in either state or federal court, but for the federal court to have jurisdiction under the Act, the amount in controversy must equal or exceed “the sum or value of $50,000 (exclusive of interest and costs) computed on the basis of all claims to be determined in this suit.” 15 U.S.C. § 2310(d)(3)(B); Schimmer v. Jaguar Cars, Inc., 384 F.3d 402, 403–04 (7th Cir.2004).

The Magnuson–Moss Act provides for damages, including attorney fees, but Burzlaff's compensatory damages under the Act could not have been more than the purchase price of $35,633.23. Cf. Schimmer, 384 F.3d at 405 (holding that amount in controversy was less than purchase price where full refund was not permissible under state law); Gardynski–Leschuck v. Ford Motor Co., 142 F.3d 955, 957–59 (7th Cir.1998) (setting forth detailed calculations for determining amount in controversy under the Magnuson–Moss Act). Burzlaff's attorney fees at the time of removal could not reasonably have reached the nearly $15,000 needed to make up the difference. See Gardynski–Leschuck, 142 F.3d at 958 (in determining amount in controversy under Magnuson–Moss Act, attorney fees are limited to those incurred at time of filing in federal court).

Oddly enough, though, the claim under the Wisconsin Lemon Law satisfies the higher $75,000 amount-in-controversy requirement for federal diversity jurisdiction under 28 U.S.C. § 1332. In 2009 and 2010 when Burzlaff's vehicle was new, the Wisconsin law allowed damages of twice the amount of any pecuniary loss. Wis. Stat. § 218.0171(7). (The provision was amended effective March 1, 2014 to limit such awards to actual pecuniary loss.) The parties stipulated here that the pecuniary loss was $35,633.23, and Burzlaff had used the vehicle very little, which avoided complications that could otherwise have arisen as in Gardynski–Leschuck and Schimmer.

Twice the pecuniary loss was $71,266.46. That was still short of $75,000, but the Wisconsin law also provides for recovery of disbursements and attorney fees. Wis. Stat. § 218.0171(7). For purposes of determining the amount in controversy under diversity jurisdiction, attorney fees can be included if they are part of damages, but the amount is limited to the amount accrued at the time of removal. See Gardynski–Leschuck, 142 F.3d at 958–59. It was not unreasonable to think that Burzlaff and his attorney had invested at least $3,733.55 in fees at that time. Thoroughbred certainly thought that was true when it represented that the amount in controversy exceeded $75,000 in the notice of removal. We could not say it was a legal certainty at the time of removal that Burzlaff could not recover damages of more than $75,000. See Carroll v. Stryker Corp., 658 F.3d 675, 680–81 (7th Cir.2011). The district court therefore had original diversity jurisdiction over the state law claim. It could then properly exercise supplemental jurisdiction over...