Freas v. BMW of N. Am., LLC

• Decision Date: 01 August 2018
• Docket Number: Case No.: 3:17-cv-01761-H-AGS
• Citation: 320 F.Supp.3d 1126
• Parties: Alan FREAS, Jr., Plaintiff, v. BMW OF NORTH AMERICA, LLC, a Delaware corporation, Defendant.
• Court: U.S. District Court — Southern District of California

320 F.Supp.3d 1126

Alan FREAS, Jr., Plaintiff,

v.BMW OF NORTH AMERICA, LLC, a Delaware corporation, Defendant.

Case No.: 3:17-cv-01761-H-AGS

United States District Court, S.D. California.

Signed August 1, 2018

Mark Romano, Romano Stancroff & Mikhov PC, Los Angeles, CA, for Plaintiff.

Brian Takahashi, Jennifer Hinds, Bowman & Brooke, LLP, Torrance, CA, Michael J. Hurvitz, Dillon Danehy Jones, Bowman and Brooke, LLP, Ian Gordon Schuler, Dinsmore & Shohl LLP, San Diego, CA, for Defendant.

ORDER DENYING MOTION FOR SUMMARY JUDGMENT

MARILYN L. HUFF, District JudgeOn May 25, 2018, Defendant BMW of North America, LLC ("BMW") filed a motion for summary judgment. (Doc. No. 33.) Plaintiff Alan Freas, Jr. ("Freas") opposed the motion on July 16, 2018, (Doc. No. 49), and BMW filed a reply on July 23, 2018. (Doc. No. 50.) The Court held a hearing on the matter on August 1, 2018. Timothy Whelan appeared for Freas, while Michael J. Hurvitz appeared for BMW. For the reasons that follow, the Court denies the motion.

Background

I. Factual History

Freas is a San Diego area resident. (Doc. No. 1-3, Complaint, at ¶ 1.) BMW is the North American subsidiary of a major international luxury car manufacturer, and does business in Las Vegas, Nevada, among other places. (Doc. No. 33-1, Defendant's Statement of Facts, at ¶ 1.) On March 12, 2014, when Freas was living in Nevada,¹ he purchased a certified used 2011 BMW 740i ("the Vehicle") from BMW for a total financed price of $61,624.11. (Doc. No. 49-2, Plaintiff's Statement of Facts, at ¶ 1.)

Freas alleges that "since the sale, the car has been plagued by ongoing defects, including problems with the brakes, HVAC system, electrical system, and engine." (Id. at ¶ 3.) The Vehicle's chief defect is "an ongoing engine performance problem," whereby the Vehicle experiences "a loss of power and the illumination of the check engine light" during use, and cannot travel faster than "40 miles per hour or so." (Id. at ¶ 4.) Freas submitted the Vehicle for servicing eight times at BMW locations in Las Vegas from 2014 to 2016, and an additional three times at BMW locations in Southern California from 2016 to 2017. (Doc. No. 33, MSJ, at 3–4.) The Vehicle has been out of service for more than sixty cumulative days since its purchase. (Doc. No. 49-2 at ¶ 3.)

II. Procedural History

Freas filed suit in the San Diego County Superior Court on August 1, 2017, asserting claims for breach of warranty under California's Song-Beverly Consumer Warranty Act, Civil Code § 1790 et seq., and the federal Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq. (Doc. No. 1-3.) BMW removed that lawsuit to this District on August 31, 2017, and answered the complaint.² (Doc. Nos. 1, 2.) The Court dismissed Freas' Song-Beverly claim pursuant to a joint stipulation by the parties on October 3, 2017, leaving only his Magnuson-Moss claim. (Doc. No. 8.)

BMW filed the instant summary judgment motion against Freas' Magnuson-Moss claim on May 25, 2018. (Doc. No. 33.) The matter has been fully briefed and heard, and is now ripe for decision.³

Discussion

I. Legal Standards for Summary Judgment

Summary judgment is appropriate under Federal Rule of Civil Procedure 56 if the moving party demonstrates that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a) ; Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1031 (9th Cir. 2010). "A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Fortune Dynamic, 618 F.3d at 1031 (internal quotation marks and citations omitted); accord Anderson, 477 U.S. at 248, 106 S.Ct. 2505. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).

A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The moving party can satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to establish an essential element of the nonmoving party's case that the nonmoving party bears the burden of proving at trial. Id. at 322–23, 106 S.Ct. 2548 ; Jones v. Williams, 791 F.3d 1023, 1030 (9th Cir. 2015). Once the moving party establishes the absence of a genuine issue of material fact, the burden shifts to the nonmoving party to "set forth, by affidavit or as otherwise provided in Rule 56, ‘specific facts showing that there is a genuine issue for trial.’ " T.W. Elec. Serv., 809 F.2d at 630 (quoting former Fed. R. Civ. P. 56(e) ); accord Horphag Research Ltd. v. Garcia, 475 F.3d 1029, 1035 (9th Cir. 2007). To carry this burden, the non-moving party "may not rest upon mere allegation or denials of his pleadings." Anderson, 477 U.S. at 256, 106 S.Ct. 2505 ; see also Behrens v. Pelletier, 516 U.S. 299, 309, 116 S.Ct. 834, 133 L.Ed.2d 773 (1996) ("On summary judgment, ... the plaintiff can no longer rest on the pleadings."). Rather, the nonmoving party "must present affirmative evidence ... from which a jury might return a verdict in his favor." Anderson, 477 U.S. at 256, 106 S.Ct. 2505. Questions of law are well-suited to disposition via summary judgment. See, e.g., Pulte Home Corp. v. Am. Safety Indem. Co., 264 F.Supp.3d 1073, 1077 (S.D. Cal. 2017).

When ruling on a summary judgment motion, the Court must view the facts and draw all reasonable inferences in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). The court should not weigh the evidence or make credibility determinations. See Anderson, 477 U.S. at 255, 106 S.Ct. 2505. "The evidence of the non-movant is to be believed." Id. Further, the Court may consider other materials in the record not cited to by the parties, but it is not required to do so. See Fed. R. Civ. P. 56(c)(3) ; Simmons v. Navajo Cnty., 609 F.3d 1011, 1017 (9th Cir. 2010).

II. Analysis

BMW argues that: (i) Nevada law governs Freas' Magnuson-Moss claim; (ii) this lawsuit should be dismissed because Freas did not engage in an informal dispute settlement process prior to filing suit; (iii) Freas cannot recover for any breach of a written warranty because Nevada law precludes relief for used car purchasers, and his claims are otherwise time barred; and (iv) Plaintiff lacks sufficient evidence to create a triable fact issue as to whether the Vehicle was defective at the time of sale. (Doc. No. 33.) Freas disputes each of BMW's legal arguments, and asserts that his lay testimony combined with the large number of unsuccessful service attempts could convince a trier of fact that BMW breached express and implied warranties by delivering him a defective vehicle. (Doc. No. 49.)

As explained below, the Court agrees with BMW that Nevada law controls Freas' Magnuson-Moss claim. However, the Court concludes that: (i) Freas was not required to engage in an informal dispute settlement process before filing this suit; (ii) Freas' express warranty theory is not barred by any provision of Nevada's Lemon Law; and (iii) there are genuine issues of material fact as to whether BMW breached the implied warranty of merchantability created by Nevada's Uniform Commercial Code. The Court accordingly declines to enter summary judgment for BMW.

A. Choice of Law

Freas' sole claim is that BMW violated the federal Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., by breaching written and implied warranties created at the time the Vehicle was sold. As the Ninth Circuit has explained, "the Magnuson-Moss Warranty Act creates a private cause of action for a warrantor's failure to comply with the terms of a ... warranty." Milicevic v. Fletcher Jones Imports, Ltd., 402 F.3d 912, 918 (9th Cir. 2005) ; see also 15 U.S.C. § 2310(d)(1) (A "consumer who is damaged by the failure of a ... warrantor ... to comply with any obligation ... under a written warranty, implied warranty, or service contract" may bring suit in federal court.). However, except "in the specific instances in which Magnuson-Moss expressly prescribes a regulating rule, the Act calls for the application of state written and implied warranty law, not the creation of additional federal law." Milicevic, 402 F.3d at 918 (quoting Walsh v. Ford Motor Co., 807 F.2d 1000, 1012 (D.C. Cir. 1986) ); accord Brown v. Electrolux Home Prods., Inc., 817 F.3d 1225, 1231 (11th Cir. 2016) ; Carlson v. Gen. Motors Corp., 883 F.2d 287, 291 (4th Cir. 1989). Thus, in order to recover under Magnuson-Moss, Freas must show a violation of an express or implied warranty created and governed by state law. See, e.g., Birdsong v. Apple, Inc., 590 F.3d 955, 958 n.2 (9th Cir. 2009) ("Under [Magnuson-Moss], the court applies state warranty law."); Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 & n.3 (9th Cir. 2008) (holding that "claims under the Magnuson-Moss Act stand or fall with [a plaintiff's] express and implied warranty claims under state law").

The parties dispute which state's law governs the warranties underlying Freas' Magnuson-Moss claim. BMW argues that the Court should apply Nevada law. (Doc. No. 33 at 6–12.) Freas does not take a definitive position as to which state's law should apply in his summary judgment briefing, although he argued for California law earlier in this litigation. (Doc. No. 16 at 18.)

The Court agrees with BMW. Federal courts exercising jurisdiction under the Magnuson-Moss Warranty Act apply the...