RJ's Leasing, Inc. v. Navistar, Inc.

• Decision Date: 04 April 2022
• Docket Number: C21-1015-LTS
• Citation: 597 F.Supp.3d 1298
• Parties: RJ'S LEASING, INC. and Simon's Trucking, Inc., Plaintiffs, v. NAVISTAR, INC., Defendant.
• Court: U.S. District Court — Northern District of Iowa

597 F.Supp.3d 1298

RJ'S LEASING, INC. and Simon's Trucking, Inc., Plaintiffs,

v.NAVISTAR, INC., Defendant.

No. C21-1015-LTS

United States District Court, N.D. Iowa, Eastern Division.

Signed April 04, 2022

Clayton J. Callen, Jeffrey S. Patterson, Brian J. Sawyer, Hartline Barger LLP, Dallas, TX, Stephanie L. Hinz, Pickens Barnes & Abernathy, Cedar Rapids, IA, for Defendant.

Joshua Lloyd Christensen, John L. Riccolo, Tim Semelroth, RSH Legal PC, Cedar Rapids, IA, Lawrence Ray Lassiter, Miller Weisbrod, LLP, Dallas, TX, for Plaintiffs.

ORDER ON DEFENDANT'S MOTION TO DISMISS

Leonard T. Strand, Chief Judge

I. INTRODUCTION

This case is before me on a motion (Doc. 22) to dismiss by defendant Navistar, Inc. (Navistar). Plaintiffs Simon's Trucking, Inc., and RJ's Leasing, Inc. have filed a resistance (Doc. 25) and Navistar has filed a reply (Doc. 26). Oral argument is not necessary. See Local Rule 7(c).

II. BACKGROUND

This dispute concerns the purchase and performance of sixteen Navistar International ProStar trucks purchased by RJ's Leasing between December 2011 and December 2012 and subsequently leased to Simon's Trucking. Doc. 1 at ¶ 12. RJ's Leasing alleges that each of the trucks experienced at least one breakdown of the exhaust gas recirculation (EGR) system within the warranty period.¹ Id. at ¶ 17. The trucks were in the shop for warrantied repairs on more than 100 separate occasions. Id. at ¶ 30. Plaintiffs allege that despite Navistar's warranties, Navistar was never able to effectively repair the EGR systems and denied or otherwise refused to perform repairs or replace parts under the express warranty. Id. at ¶ 19. RJ's Leasing eventually sold the trucks, stating it received sale prices significantly below the industry average for comparable trucks. Plaintiffs allege the following claims:

• Count I – Breach of Express Warranty

• Count II – Breach of Contract

• Count III – Breach of Implied Warranty

• Count IV – Fraud

• Count V – Fraudulent Concealment

• Count VI – Unconscionability of All Warranty Disclaimers and Limitations on Remedies/Damages

Doc. 1.

The parties agree on the following timeline of events concerning plaintiffs’ lawsuits against Navistar.

• December 17, 2015 – plaintiffs filed suit in Iowa District Court for Linn County naming Navistar and another defendant. Plaintiffs voluntarily dismissed this complaint.

• November 23, 2016 – plaintiffs filed suit in United States District Court for the Northern District of Texas naming Navistar as the only defendant. This case was conditionally transferred to a multidistrict litigation pending in the United States District Court for the Northern District of Illinois and then remanded back to the Northern District of Texas.

• January 26, 2021 – the Northern District of Texas dismissed the complaint for lack of personal jurisdiction

• July 26, 2021 – plaintiffs filed their complaint in this court against Navistar

The parties agree that plaintiffs’ claims against Navistar accrued no later than 2013.

III. APPLICABLE STANDARDS

Plaintiffs assert diversity of citizenship subject matter jurisdiction pursuant to 28 U.S.C. § 1332. It is "well-settled that in a suit based on diversity of citizenship jurisdiction the federal courts apply federal law as to matters of procedure but the substantive law of the relevant state." Hiatt v. Mazda Motor Corp. , 75 F.3d 1252, 1255 (8th Cir. 1996) (citing Erie R.R. Co. v. Tompkins , 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) ). Here, the parties agree that Iowa law applies.

Navistar seeks dismissal based on statute of limitations arguments under Iowa's savings statute² and borrowing statute,³ as well as under the Federal Rules of Civil Procedure for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). The Supreme Court has provided the following guidance in considering whether a pleading properly states a claim:

Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." As the Court held in [ Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 127 S. Ct. 1955, 167 L.Ed.2d 929 (2007) ], the pleading standard Rule 8 announces does not require "detailed factual allegations," but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. Id. , at 555, 127 S. Ct. 1955 (citing Papasan v. Allain , 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L.Ed.2d 209 (1986) ). A pleading that offers "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." 550 U.S. at 555, 127 S. Ct. 1955. Nor does a complaint suffice if it tenders "naked assertion[s]" devoid of "further factual enhancement." Id. , at 557, 127 S. Ct. 1955.

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Id. , at 570, 127 S. Ct. 1955. 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. Id. , at 556, 127 S. Ct. 1955. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Ibid. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of ‘entitlement to relief.’ " Id. at 557, 127 S. Ct. 1955 (brackets omitted).

Ashcroft v. Iqbal , 556 U.S. 662, 677-78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

Courts assess "plausibility" by " ‘draw[ing] on [their own] judicial experience and common sense.’ " Whitney v. Guys, Inc. , 700 F.3d 1118, 1128 (8th Cir. 2012) (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ). Also, courts " ‘review the plausibility of the plaintiff's claim as a whole, not the plausibility of each individual allegation.’ " Id. (quoting Zoltek Corp. v. Structural Polymer Grp. , 592 F.3d 893, 896 n.4 (8th Cir. 2010) ). While factual "plausibility" is typically the focus of a Rule 12(b)(6) motion to dismiss, federal courts may dismiss a claim that lacks a cognizable legal theory. See, e.g., Somers v. Apple, Inc. , 729 F.3d 953, 959 (9th Cir. 2013) ; Ball v. Famiglio , 726 F.3d 448, 469 (3d Cir. 2013) ; Commonwealth Prop. Advocates, L.L.C. v. Mortg. Elec. Registration Sys., Inc. , 680 F.3d 1194, 1202 (10th Cir. 2011) ; accord Target Training Intern., Ltd. v. Lee , 1 F. Supp. 3d 927 (N.D. Iowa 2014).

In considering a Rule 12(b)(6) motion to dismiss, ordinarily the court "cannot consider matters outside the pleadings without converting the motion into a motion for summary judgment." McMahon v. Transamerica Life Ins. , No. C17-149-LTS, 2018 WL 3381406, at *2 n.2 (N.D. Iowa July 11, 2018) ; see Fed. R. Civ. P. 12(b)(6). On the other hand, when a copy of a "written instrument" is attached to a pleading, it is considered "a part of the pleading for all purposes," pursuant to Federal Rule of Civil Procedure 10(c). Thus, when the pleadings necessarily embrace certain documents, I may consider those documents without turning a motion to dismiss into a motion for summary judgment. Id.

When a complaint does not state a claim for relief that is plausible on its face, the court must consider whether it is appropriate to grant the pleader an opportunity to replead. The rules of procedure permit a party to respond to a motion to dismiss by amending the challenged pleading "as a matter of course" within 21 days. See Fed. R. Civ. P. 15(a)(1)(B). Thus, when a motion to dismiss highlights deficiencies in a pleading that can be cured by amendment, the pleader has an automatic opportunity to do so. When the pleader fails to take advantage of this opportunity, the question of whether to permit an amendment depends on considerations that include:

whether the pleader chose to stand on its original pleadings in the face of a motion to dismiss that identified the very deficiency upon which the court dismissed the complaint; reluctance to allow a pleader to change legal theories after a prior dismissal; whether the post-dismissal amendment suffers from the same legal or other deficiencies as the dismissed pleading; and whether the post-dismissal amendment is otherwise futile.

Meighan v. TransGuard Ins. Co. of Am. , 978 F. Supp. 2d 974, 982 (N.D. Iowa 2013).

IV. ANALYSIS

A. Are Plaintiffs’ Fraud and Implied Warranty Claims Barred by Iowa's Five-Year Statute of Limitations?

Iowa provides a five-year statute of limitations for actions founded on unwritten contracts and fraud. See Iowa Code § 614.1(4). The parties agree that plaintiffs’ claims accrued no later than 2013. Plaintiffs argue their fraud and implied warranty claims (Counts III, IV and V) remain timely under Iowa's savings statute, which provides: "If, after the commencement of an action, the plaintiff, for any cause except negligence in its prosecution, fails therein, and a new one is brought within six months thereafter, the second shall be held a continuation of the first." Iowa Code § 614.10. "There are four prerequisites for claiming relief under this section: (1) failure of a former action not caused by the plaintiff's negligence; (2) the commencement of a new action brought within six months thereafter; (3) the parties must be the same; and (4) the cause of action must be the same." Wetter v. Dubuque Aerie No. 568 of the Fraternal Ord. of Eagles , 588 N.W.2d 130, 132 (Iowa Ct. App. 1998). "[S]avings statutes are generally regarded as remedial and are liberally construed to provide for trials on the merits, but a proper balance must always be struck between the competing policies of the statute of limitations and the savings statute." Rivera v. Woodward Resource Ctr. , 830 N.W.2d 724, 730 (Iowa 2013). Plaintiffs argue they meet these criteria because their case was refiled within six months of dismissal by the Northern District of Texas...