Golden v. Gorno Bros., Inc.

• Decision Date: 14 June 2005
• Docket Number: No. 03-1991.,03-1991.
• Citation: 410 F.3d 879
• Parties: Terrance GOLDEN, Plaintiff-Appellant, v. GORNO BROS., INC., d/b/a Gorno Ford, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 879

410 F.3d 879

Terrance GOLDEN, Plaintiff-Appellant, v.GORNO BROS., INC., d/b/a Gorno Ford, Defendant-Appellee.

No. 03-1991.

United States Court of Appeals, Sixth Circuit.

Argued: November 4, 2004.

Decided and Filed: June 14, 2005.

Ian B. Lyngklip, Lyngklip & Taub, Southfield, Michigan, for Appellant.Daniel G. Kielczewski, Abbott, Nicholson, Quilter, Esshaki & Youngblood, Detroit, Michigan, for Appellee.

Before: MOORE and GIBBONS, Circuit Judges; MILLS, District Judge.^*

MILLS, D. J., delivered the opinion of the court, in which GIBBONS, J., joined.

MOORE, J.(pp. 885-88), delivered a separate dissenting opinion.

OPINION

MILLS, District Judge.

This case presents a question of first impression in this Circuit.

Terrance Golden appeals from the district court's dismissal of his claim pursuant to the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq., and several state law claims arising from his purchase of a defective automobile from Gorno Bros., Inc.("Gorno Ford").The district court dismissed the Magnuson-Moss Warranty Act claim for lack of subject matter jurisdiction on the basis that it did not satisfy the amount in controversy requirement, and declined to exercise supplemental jurisdiction over the state law causes of action.

WeAFFIRM.

I.FACTS AND PROCEDURAL BACKGROUND

The sole basis of federal subject matter jurisdiction in this case was Terrance Golden's single claim pursuant to the Magnuson-Moss Warranty Act.In May 2001, Gorno Ford sold a new, customized Ford Mustang to Golden via a retail installment contract totaling $61,708.80, which included more than $14,000 in finance charges.The pre-tax purchase price of the vehicle was $42,903.41.Almost immediately, Golden had to return his Mustang for various repairs.In the five months immediately following the purchase, the vehicle was at Gorno Ford's repair facility for a total of 44 days.

The Ford Mustang began to exhibit obvious mechanical and design problems within one week of its purchase by Golden on May 21, 2001.On May 29, the Mustang was returned to Gorno Ford's repair facility for warranty repairs.The first set of repairs was completed on June 1.Six days later, Golden returned the vehicle to the repair facility for the same problems and other defects.This set of repairs was not completed until July 12, 2001.Gorno Ford had kept the vehicle for 36 days in order to service these defects under warranty.

The persistent problem was that the Mustang's serpentine belt and throttle cable rubbed against the insulation under the hood, causing a burning smell and a risk of fire.Even after the second set of repairs, these problems continued.On the same date that the Mustang was purportedly repaired a second time, July 12, 2001, Golden again returned the vehicle to Gorno Ford's repair facility to be repaired under warranty.On July 13, Gorno Ford replaced the serpentine belt.

According to Golden, the problems with the Mustang did not end.On October 1, 2001, Golden returned the vehicle to Gorno Ford for warranty repairs because it was leaking fuel.The following day, Gorno Ford repaired the Mustang's fuel injector.However, the vehicle continued to experience mechanical problems.On October 22, 2001, Golden's attorney wrote a "Last Chance" letter to former partiesFord Motor Company and Saleen Incorporated and to Gorno Ford.¹

On March 25, 2002, Golden returned the vehicle to Gorno Ford's repair facility for a fifth time, still hoping that the constant problems would be repaired under warranty.On this occasion, Gorno Ford replaced the entire front hood on the vehicle.This repair was completed on April 10, 2002; Gorno Ford therefore retained possession of the Mustang for more than two weeks.Golden attempted to drive the vehicle, but problems persisted with the cable, the belt, and the interior of the hood.Because of the burning odor and the constant problems with the Mustang, Golden was worried about the possibility of a fire.He determined that he could no longer risk driving a vehicle with such major defects.

Golden filed suit in the Eastern District of Michigan, asserting several claims against Gorno Ford.In addition to his Magnuson-Moss Warranty Act claim, Golden asserted several state law claims.²Gorno Ford filed a motion to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1).The basis for the motion was that Golden's Magnuson-Moss Warranty Act claim failed to meet the $50,000 amount in controversy required under the statute's jurisdictional limitations, 15 U.S.C. § 2310(d)(3)(B).

The issue before the district court was whether the entire amount of the contract, including the finance charges, should be included in determining the amount in controversy.The district court entered an order dismissing Golden's action for failure to meet the $50,000 amount in controversy requirement of the Magnuson-Moss Warranty Act.This appeal followed.

II.STANDARD OF REVIEW

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) may either attack the claim of jurisdiction on its face or it can attack the factual basis of jurisdiction.When a Rule 12(b)(1) motion attacks the factual basis for jurisdiction, the district court must weigh the evidence and the plaintiff has the burden of proving that the court has jurisdiction over the subject matter.SeeDLX, Inc. v. Kentucky,381 F.3d 511, 516(6th Cir.2004).If the district court's jurisdictional ruling is based on the resolution of factual disputes, we review those findings under a clearly erroneous standard.However, our review of the district court's application of the law to the facts is de novo.SeeRMI Titanium Co. v. Westinghouse Electric Corp.,78 F.3d 1125, 1135(6th Cir.1996).

III.ANALYSIS

The Magnuson-Moss Warranty Act provides that "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."15 U.S.C. § 2310(d)(1).The Act provides for federal district court jurisdiction of certain claims.See15 U.S.C. § 2310(d)(1)(B).However, the jurisdiction of such claims is subject to an amount in controversy requirement.The applicable portion of the Act provides, "No claim shall be cognizable in a suit brought under paragraph (1)(B) of this subsection ... (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."15 U.S.C. § 2310(d)(3)(B).

The district court determined that Golden's measure of damages under Michigan warranty law would be considerably less than the purchase price of the Mustang.It concluded, therefore, that he was unable to satisfy the $50,000 amount in controversy requirement of section 2310(d)(3)(B).On appeal, Golden contends that the district court erred in failing to consider revocation of acceptance as an available remedy under the Magnuson-Moss Warranty Act and under Michigan law.He asserts that because revocation of acceptance is an available remedy under Michigan law for breach of warranty, it is therefore an available remedy under the Magnuson-Moss Warranty Act.Pursuant to this remedy, a plaintiff may cancel the entire contract.Accordingly, Golden alleges that the amount in controversy is the entire amount of the contract, including the finance charges.Therefore, he contends that the $50,000 amount in controversy requirement is easily satisfied.

Under certain conditions, Michigan law allows a consumer to revoke the acceptance of a good "whose nonconformity substantially impairs its value to him if he has accepted it."SeeM.C.L. § 440.2608(1).The revocation of acceptance can be based on "the reasonable assumption that its nonconformity would be cured and it has not been seasonably cured."SeeM.C.L. § 440.2608(1)(a).A buyer who revokes his acceptance of goods has the same rights and duties with respect to the goods as if he had rejected them.SeeM.C.L. § 440.2608(3).A buyer who justifiably revokes acceptance may recover as much of the price as has been paid.SeeM.C.L. § 440.2711(1).

How to calculate the amount in controversy in this situation is an issue of first impression in this Court.Recently, the Seventh Circuit addressed how the amount in controversy requirement of the Magnuson-Moss Warranty Act should be determined.SeeSchimmer v. Jaguar Cars, Inc.,384 F.3d 402(7th Cir.2004).In addition to his claim under the Magnuson-Moss Warranty Act, the plaintiff in Schimmer asserted several claims pursuant to Illinois law, including a claim for revocation of acceptance.The plaintiff had purchased a new 2000 Jaguar XK8, for which he paid $69,513.00 in cash.After encountering several problems which were not repaired to his satisfaction, the plaintiff attempted to revoke acceptance of the Jaguar.Following the defendant's refusal to accept his revocation of acceptance, the plaintiff filed suit in state court.The action was subsequently removed to federal court.Id. at 403.On appeal, the Seventh Circuit first considered whether removal to federal court was proper.Although the plaintiff's complaint in Schimmer prayed for a full refund of the $69,513.00 purchase price, the Seventh Circuit determined that the amount in controversy could not exceed $50,000.It concluded, therefore, that removal to federal court was improper.Id. at 404-05.

The Illinois statutes pertaining to revocation of acceptance contain the same language as do the Michigan statutes in the casesub judice.See, e.g.,810 Ill. Comp. Stat. 5/2-608, 5/2-711(1);see also440 M.C.L. § 440.2608and440M.C.L. § 2711(1).In Schimmer, the Seventh Circuit concluded that even if Illinois law allowed a full refund of the $69,513.00 purchase price, the amount in controversy would still be less...