Horizon Lawn Maint., Inc. v. Columbus-Kenworth, Inc.
| Citation | 188 F.Supp.3d 631 |
| Decision Date | 24 May 2016 |
| Docket Number | Case No. 14-cv-13779 |
| Parties | Horizon Lawn Maintenance, Inc., Plaintiff, v. Columbus-Kenworth, Inc., d/b/a Kenworth of Columbus et al., Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Gerald C. Davis, Linda D. Friedland, Cummings, McClorey, Davis & Acho, PLC, Livonia, MI, for Plaintiff.
John Nelson Childs, Brennan Manna and Diamond, LLC, Akron, OH, for Defendants.
This action involves a garden-variety contractual dispute and a significant and unsettled question of Michigan law concerning the availability of attorneys' fees to an aggrieved buyer of goods under the Michigan Uniform Commercial Code (the "Code").
Plaintiff Horizon Lawn Maintenance, Inc. ("Horizon") purchased three trucks from Defendant Columbus-Kenworth, Inc. ("CKI"). Horizon alleges that CKI breached certain express and implied warranties related to the trucks. Horizon seeks both consequential and incidental damages under the Code, and Horizon asserts that it is entitled to recover its attorneys' fees as an element of those damages.
Horizon correctly notes that two older Michigan Court of Appeals decisions—Cady v. Dick Loehr's, Inc. , 100 Mich.App. 543, 299 N.W.2d 69 (1980) and Kelynack v. Yamaha Motor Corp. , 152 Mich.App. 105, 394 N.W.2d 17 (1986) —support its claim that attorneys' fees are recoverable under the relevant section of the Code (Mich. Comp. Laws § 440.2715 ). However, the United States Courts of Appeals for the Sixth and Tenth Circuits have squarely rejected those state court decisions and have held that attorneys' fees are not available to an aggrieved buyer under the Code. See Olbrys v. Peterson Boat Works, Inc. , 81 F.3d 161 (Table), 1996 WL 143466 (6th Cir. Mar. 28, 1996) ; Webco Indus., Inc. v. Thermatool Corp. , 278 F.3d 1120 (10th Cir.2002). Moreover, the "overwhelming weight of authority is that attorney's fees are not recoverable" under the Code. Nick's Auto Sales, Inc. v. Radcliff Auto Sales, Inc. , 591 S.W.2d 709, 711 (Ky.Ct.App.1979).
This Court agrees with the Sixth and Tenth Circuits that an aggrieved buyer may not recover attorneys' fees as an element of incidental and/or consequential damages under the Code. Accordingly, the Court GRANTS summary judgment in favor of CKI with respect to Horizon's claim for attorneys' fees.
Horizon is a Michigan corporation that performs various outdoor maintenance tasks from its base of operations in Canton, Michigan. (See Sec. Am. Compl. at ¶ 1, ECF # 60 at 2, Pg. ID 1036.) CKI is an Ohio corporation that sells Kenworth trucks from its retail location in Hilliard, Ohio. (See id. at ¶ 2.)
In November and December of 2013, Horizon and CKI entered into contracts in which CKI agreed to sell Horizon three Kenworth trucks. (See id. at ¶¶ 13-14.) The total contract price for the three trucks was $242,734.44. (See id. at ¶ 15.) Horizon paid that amount to CKI, and CKI delivered all three vehicles to Horizon. (See id. at ¶¶ 12, 17.)
Horizon contends that the contracts required CKI to include in all three trucks a power take-off ("PTO") gear. (See id. at ¶ 54.) CKI did not include those gears in the trucks, and it denies that it had any obligation to do so. (See, e.g. , Ans. at ¶ 43, ECF # 61 at 6, Pg. ID 1080.)
At some point after CKI delivered the trucks to Horizon, Horizon discovered that the trucks did not contain PTO gears, and it complained to CKI. (See Sec. Am. Compl. at ¶ 42, ECF # 60 at 13, Pg. ID 1047.) The parties attempted to resolve their dispute over the PTO gears, but they did not succeed.
On September 10, 2014, Horizon filed this action against CKI (and a number of other Defendants who have since been dismissed) in the Third Judicial Circuit Court for the State of Michigan. (See ECF # 1-2 at 3, Pg. ID 8.) Horizon's Complaint asserted a number of claims under Article 2 of the Code, including revocation of acceptance under Mich. Comp. Laws § 440.2608 (Count I); breach of warranty under Mich. Comp. Laws § 440.2714 (Count II); and "buyer's remedies following revocation of acceptance" under Mich. Comp. Laws §§ 440.2711 and 440.2712 (Count III). (See Compl. at ¶¶ 34-59, ECF # 1-2 at 13-21, Pg. ID 13-26.) Horizon sought $242,734.44 in damages and an award of its "actual costs and attorneys' fees." (Id. , ECF # 1-2 at 21-22, Pg. ID 26-27.) The Defendants timely removed the action to this Court. (ECF # 1.)
Horizon has twice amended its Complaint. The current and operative version asserts several claims under the Code, including revocation of acceptance, breach of express warranty, and breach of implied warranty. (See Sec. Am. Compl., ECF # 60 at 10, Pg. ID 1044.) The Second Amended Complaint also reasserts Horizon's claim for actual attorneys' fees. Horizon alleges that it may recover such fees as an element of the incidental and consequential damages to which it is entitled under the Code. (See id. at ¶ 45, ECF # 60 at 13-14, Pg. ID 1047-48.)
Following discovery and an unsuccessful settlement conference, Horizon and CKI filed cross-motions for summary judgment. (See ECF ## 64, 65.) The cross-motions separately address (1) the merits of Horizon's claims and (2) Horizon's demand for attorneys' fees. With respect to the attorneys' fees issue, CKI argues that such fees are not available as incidental and/or consequential damages under the Code; Horizon insists that they are.
The Court now decides only the portion of the cross-motions concerning the availability of attorneys' fees. The Court focuses on the fees issue at this point because that issue was the primary stumbling block to a resolution at the failed settlement conference. The Court hopes and believes that with the fees issue decided, the parties can quickly reach a sensible agreement to bring this litigation to a close.
The Court has subject matter jurisdiction over this action based upon the parties' diversity of citizenship and the amount in controversy.1 See 28 U.S.C. 1332(a)(1). The Court must apply Michigan law as determined by the Michigan Supreme Court. See Erie R.R. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). But that court has not addressed the question presented here.2 Under these circumstances, the Court "must predict how the [Michigan Supreme Court] would rule by looking to all the available data." Stryker Corp. v. XL Ins. Am. , 735 F.3d 349, 360 (6th Cir.2012) (quoting Allstate Ins. Co. v. Thrifty Rent – A – Car Sys., Inc. , 249 F.3d 450, 454 (6th Cir.2001) ). "The sources of data which may guide [the Court's] inquiry include" analogous decisions of the Michigan Supreme Court; decisions of the Michigan Court of Appeals; "positions expressed in a restatement of law;" law review commentaries; and "decisions from other jurisdictions or the ‘majority rule.’ " Bailey v. V & O Press Co. , 770 F.2d 601, 604 (6th Cir.1985) (citations omitted).
Published, on-point decisions issued by the Michigan Court of Appeals are especially important "data" that this Court must consider in ascertaining how the Michigan Supreme Court would rule. See Grantham & Mann, Inc. v. Am. Safety Prod., Inc. , 831 F.2d 596, 609 (6th Cir.1987). But they are not conclusive on questions of Michigan law. Indeed, the United States Supreme Court has repeatedly recognized that a federal court sitting in diversity may disregard a state intermediate appellate court decision if the federal court "is convinced by other persuasive data that the highest court of the state would decide otherwise." West v. AT & T , 311 U.S. 223, 237, 61 S.Ct. 179, 85 L.Ed. 139 (1940) ; see also C.I.R. v. Bosch's Estate , 387 U.S. 456, 464–65, 87 S.Ct. 1776, 18 L.Ed.2d 886 (1967) ; King v. Order of United Commercial Travelers of Am. , 333 U.S. 153, 158, 68 S.Ct. 488, 92 L.Ed. 608 (1948).
Likewise, the Sixth Circuit has long recognized and repeatedly exercised its authority to deviate from intermediate state appellate decisions when convinced that a state's highest court would disagree with the appellate court. See, e.g. , Leithauser v. Hartford Fire Ins. Co., 124 F.2d 117, 119–20 (6th Cir.1941) (recognizing authority); FL Aerospace v. Aetna Casualty & Surety Co., 897 F.2d 214, 218–20 (6th Cir.1990) (); Swix v. Daisy Mfg. Co., Inc., 373 F.3d 678, 684 (6th Cir.2004) (); Manwaring v. Martinez , 527 Fed.Appx. 390, 396–97 (6th Cir.2013) (). Thus, while intermediate state appellate court decisions provide significant guidance concerning the content of state law, they are not binding on federal courts.3
Notably, the Michigan Court of Appeals has emphasized that the two appellate decisions relied on by Horizon here—Cady and Kelynack —are not even binding on state courts. In a published decision, the Michigan Court of Appeals highlighted that because Cady and Kelynack "were decided before November 1, 1990," they are "not binding precedent" under the Michigan Court Rules. A.S. Leavitt v. Monaco Coach Corp. , 241 Mich.App. 288, 616 N.W.2d 175, 186 n. 3 (2000). Cady and Kelynack warrant careful consideration, but they do not control the resolution of the attorneys' fees issue before the Court.4
Horizon argues that as an aggrieved buyer it is entitled to recover attorneys' fees as an element of the incidental and consequential damages available under Mich....
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