Ziegelmann v. DaimlerChrysler Corp.

• Decision Date: 15 August 2002
• Docket Number: No. 20020041.,20020041.
• Citation: 649 N.W.2d 556,2002 ND 134
• Parties: Terry ZIEGELMANN, on behalf of himself and all those similarly situated as members of a class, Plaintiff and Appellant, v. DAIMLERCHRYSLER CORPORATION, Defendant and Appellee.
• Court: North Dakota Supreme Court

649 N.W.2d 556

2002 ND 134

Terry ZIEGELMANN, on behalf of himself and all those similarly situated as members of a class, Plaintiff and Appellant, v. DAIMLERCHRYSLER CORPORATION, Defendant and Appellee.

No. 20020041.

Supreme Court of North Dakota.

August 15, 2002.

Kim E. Brust (argued), Conmy Feste, Ltd., Fargo, N.D., David A. Domina (on brief) and Cletus W. Blakeman (on brief), Domina Law, P.C., Omaha, NE, and James I. Seifter (on brief), Kaplan & Seifter, Atlanta, GA, for plaintiff and appellant.

Stephen W. Plambeck (argued), Daniel J. Crothers (on brief) and Joel M. Fremstad (on brief), Nilles, Hansen & Davies, Ltd., Fargo, N.D., Terri Steinhaus Reiskin (on brief) and Michael Kidney (appeared), Hogan & Hartson, Washington, DC, for defendant and appellee.

VANDE WALLE, Chief Justice.

[¶ 1] Terry Ziegelmann, on behalf of himself and all those similarly situated, appealed from a judgment dismissing with prejudice his putative class action lawsuit against DaimlerChrysler Corporation for failure to state a claim upon which relief can be granted. Because Ziegelmann has not pled a legally cognizable injury, we conclude the trial court did not err in dismissing the complaint. We therefore affirm.

I

[¶ 2] In July 2001, Ziegelmann brought this action on behalf of himself and a purported class of North Dakota owners of model year 1991 through 2000 vehicles manufactured by DaimlerChrysler and its predecessor, Chrysler Corporation, that were equipped with automatic transmissions lacking a park-brake interlock device. A park-brake interlock, also known as a brake-shift interlock, prevents the movement of the transmission from the "park" position to any other gear unless the driver presses the brake pedal. Ziegelmann alleged that, since the early 1990s, "the use of the park-brake interlock has been an industry standard used in almost all vehicles that compete with Chrysler's minivans," and DaimlerChrysler "promotes its vehicles on the basis of safety and emphasizes that [it] goes beyond government minimum safety requirements to ensure that the best available safety devises are used to protect its customers." Ziegelmann alleged DaimlerChrysler "engaged in a pattern and practice of advertising, marketing and promoting its vehicles, as containing state-of-the-art, current, up-to-date safety features," and it intentionally failed to disclose to consumers that its vehicles did not contain the brake-shift interlock device and fraudulently concealed this fact from himself and other members of the class. Ziegelmann alleged "the absence of the park-shift interlock constituted a material safety risk and a defect which posed risk of substantial personal injury or death to foreseeable users of the vehicles."

[¶ 3] Ziegelmann's first claim for relief was based on "negligence." He asserted DaimlerChrysler failed to "exercise reasonable care in the design, manufacture, inspection, testing and distribution" of the vehicles; designed, manufactured and distributed vehicles that "were not reasonably and adequately safe"; failed to warn about the absence of the brake-shift interlock; failed to make reasonable inspection to correct the defect; and fraudulently concealed the lack of a brake-shift interlock. Ziegelmann's second claim for relief was based on "fraudulent concealment." He asserted DaimlerChrysler advertised, marketed and promoted its vehicles as containing "state-of-the-art, current, up-to-date safety features, including all safety features reasonably necessary to make them safe, suitable and proper vehicles for their intended use," but that the lack of a brake-shift interlock was contrary to these representations. Ziegelmann sought as damages for he and the members of the class

the (a) diminution in value of their vehicles due to the unsafe, defective and non-merchantable condition of their vehicles, (b) the cost of remedial measures to cure the defect, and (c) compensation for the reasonable rental value of a replacement vehicle during repair of each vehicle.

However, Ziegelmann "expressly disclaim[ed] any intent to seek in this suit any recovery for personal injuries or property damages that have been suffered or that may be suffered by any class member proximately caused by the absence of" a brake-shift interlock device. Ziegelmann did not allege his automatic transmission had malfunctioned, but claimed the absence of the brake-shift interlock device "poses an unreasonable danger to foreseeable users and a substantial compromise to the safety of owners, operators, users, passengers in each and all such vehicles, and the general public."

[¶ 4] DaimlerChrysler moved to dismiss the action for failure to state a claim upon which relief can be granted under N.D.R.Civ.P. 12(b)(v),¹ and the trial court granted the motion. The court ruled Ziegelmann's claims based on various theories of negligence, fraud and deceit were dismissable because he did not allege actual injury, a necessary element of each of the claims. The court ruled alternatively that the tort actions were nevertheless barred by the economic loss doctrine. See, e.g., Steiner v. Ford Motor Co., 2000 ND 31, 606 N.W.2d 881

. The court also ruled the complaint failed to state a claim under North Dakota's false advertising statutes, N.D.C.C. ch. 51-12, and under the consumer fraud statutes, N.D.C.C. ch. 51-15, because no implied private right of action exists under those statutes. Ziegelmann appealed.

II

[¶ 5] The purpose of a N.D.R.Civ.P. 12(b)(vi) motion is to test the legal sufficiency of the statement of the claim presented in the complaint. Rose v. United Equitable Ins. Co., 2001 ND 154, ¶ 10, 632 N.W.2d 429. In reviewing an appeal from a Rule 12(b) dismissal, we construe the complaint in the light most favorable to the plaintiff, taking as true the well-pleaded allegations in the complaint. Burke v. North Dakota Dep't of Corr. & Rehab., 2000 ND 85, ¶ 4, 609 N.W.2d 729; Perry Center, Inc. v. Heitkamp, 1998 ND 78, ¶ 42, 576 N.W.2d 505. Because determinations on the merits are generally preferred to dismissal on the pleadings, Rule 12(b)(vi) motions are viewed with disfavor. Wells v. First Am. Bank W., 1999 ND 170,¶ 7, 598 N.W.2d 834. Accordingly, a court's scrutiny of the pleadings should be deferential to the plaintiff, id., and the complaint should not be dismissed unless "it is disclosed with certainty the impossibility of proving a claim upon which relief can be granted." Lang v. Schafer, 2000 ND 2, ¶ 7, 603 N.W.2d 904. We will affirm a judgment dismissing a complaint for failure to state a claim if we cannot "discern a potential for proof to support it." Towne v. Dinius, 1997 ND 125, ¶ 7, 565 N.W.2d 762.

A

[¶ 6] The trial court phrased the major issue in the case as "[w]hether an alleged product defect that has not manifested itself in such a way as to cause any observable adverse physical or economic harm constitutes an `injury' that will support" Ziegelmann's claims based on various theories of negligence, fraud and deceit, and concluded it could not.

[¶ 7] In this jurisdiction, the torts of negligence, fraud and deceit require proof of actual damages as an essential element of a plaintiff's case, and if no actual loss has occurred, the plaintiff fails to establish liability. Olson v. Fraase, 421 N.W.2d 820, 827 (N.D.1988). See also Schafer, 2000 ND 2, ¶ 8,

603 N.W.2d 904; Schneider v. Schaaf, 1999 ND 235, ¶ 16, 603 N.W.2d 869; Thompson v. Goetz, 455 N.W.2d 580, 585 n. 3 (N.D.1990). Ziegelmann does not dispute that actual damages are an essential element for all of his claims. In concluding Ziegelmann could not establish any actual damages or injury under the allegations of his complaint, the trial court relied on the decision of the United States Court of Appeals for the Eighth Circuit in Briehl v. Gen. Motors Corp., 172 F.3d 623 (8th Cir.1999).

[¶ 8] In Briehl, the plaintiffs, a purported class of General Motors ("GM") vehicle owners, sued GM and Kelsey-Hayes ("KH"), the manufacturer of the vehicles' anti-lock braking systems ("ABS"), based on claims for fraudulent misrepresentation, fraudulent concealment, breach of express and implied warranties, and violation of state consumer protection statutes. The gist of the plaintiffs' complaint was that "GM and KH jointly designed a dangerously defective ABS system, knew that the brakes were defective, concealed this information from the public, and promoted the ABS as a highly effective safety device." Briehl, 172 F.3d at 626. The ABS system was defective, according to the plaintiffs, because of the "pedal-to-the-floor" phenomenon, which occurred when the brakes were pressed, and was "`completely counter-intuitive to how an average driver is conditioned to respond when a hard braking maneuver is attempted.'" Id. Although a "reasonable inspection of the driving characteristics of an ABS-equipped vehicle will reveal the tendencies of ABS braking," and the plaintiffs did not allege that "the ABS is incapable of stopping the vehicles or that ABS has violated any national safety standards," the plaintiffs claimed "the `pedal-to-the-floor' phenomenon constitute[d] a defect because the performance of the brakes cause[d] drivers to react a certain way, and since GM and KH failed to inform GM vehicle owners of the allegedly unsafe condition, GM and KM ha[d] damaged" them. Id. The plaintiffs disclaimed any intent to seek recovery for personal injuries or property damage suffered, or which might be suffered, by any class member, and instead claimed damages for "lost resale value" and "overpayment for the vehicles at the time of purchase." Id.

[¶ 9] The trial court in Briehl dismissed the lawsuit for failure to state a claim upon which relief can be granted under F.R.Civ.P. 12(b)(6), because the plaintiffs did not adequately plead damages. The Eighth Circuit affirmed:

In this case, the Plaintiffs have not alleged that their ABS brakes have malfunctioned or failed. In fact, the Plaintiffs affirmatively state

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