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Adelman v. Rheem Manufacturing Co.

United States District Court, D. Arizona

August 14, 2015

Craig Adelman and Jason McGee, Plaintiffs,
v.
Rheem Manufacturing Company, Defendant.

ORDER AND OPINION [RE: MOTION AT DOCKET 24; AND ORDER REQUIRING ANSWER]

JOHN W. SEDWICK, Senior District Judge.

I. MOTION PRESENTED

At docket 24 defendant Rheem Manufacturing Company ("Rheem") moves to dismiss the Amended Complaint of plaintiffs Craig Adelman ("Adelman") and Jason McGee ("McGee) (collectively, "plaintiffs") pursuant to Federal Rule of Civil Procedure 12(b)(6) or, alternatively, for a more definite statement pursuant to Rule 12(e). Plaintiffs oppose at docket 32. Rheem replies at docket 38. Oral argument was not requested and would not assist the court.

II. BACKGROUND

This case is a putative class action brought by consumers of allegedly defective air conditioners, air handlers, and heat pumps manufactured by Rheem. Plaintiffs allege that the copper evaporator and condenser coils in these products are defective because they leak refrigerant. The Amended Complaint ("complaint") contains the following eight causes of action: (1) for declaratory relief regarding their rights under Rheem's express warranties; (2) for an injunction requiring Rheem to take corrective action; (3) breach of Rheem's express warranties; (4) violation of the Magnuson-Moss Warranty Act ("MMWA"); (5) unjust enrichment; (6) breach of Rheem's express warranties under Arizona law; (7) violation of the Arizona Consumer Fraud Act ("ACFA"); and (8) violation of the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA").[1]

III. STANDARD OF REVIEW

Rule 12(b)(6) tests the legal sufficiency of a plaintiff's claims. In reviewing such a motion, "[a]ll allegations of material fact in the complaint are taken as true and construed in the light most favorable to the nonmoving party."[2] To be assumed true, the allegations, "may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively."[3] Dismissal for failure to state a claim can be based on either "the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory."[4] "Conclusory allegations of law... are insufficient to defeat a motion to dismiss."[5]

To avoid dismissal, a plaintiff must plead facts sufficient to "state a claim to relief that is plausible on its face.'"[6] "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."[7] "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."[8] "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.'"[9] "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief."[10]

IV. DISCUSSION

A. Breach of Warranty Claims

According to the limited warranty attached to plaintiffs' complaint, Rheem warrants that the equipment covered by the warranty is free from defects, and promises to repair or replace any part that fails in normal use and service within the warranty period.[11] The warranty further states in capital letters: "THE MANUFACTURER'S SOLE LIABILITY WITH RESPECT TO DEFECTIVE PARTS OR FAILURE SHALL BE AS SET FORTH IN THIS LIMITED WARRANTY, AND ANY CLAIMS FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES ARE EXPRESSLY EXCLUDED."[12]

Counts three, four, and six of the complaint allege warranty-related claims. Count three alleges that Rheem breached its express warranty "because Plaintiffs and the Class Members did not receive a Rheem Product that was free of defects;"[13] count four alleges that Rheem's breach violates the MMWA;[14] and count six alleges that Rheem's breach violates Arizona law.[15] Plaintiffs seek a variety of remedies for Rheem's alleged breach, including consequential damages such as diagnostic costs, costs of lost refrigerant, and costs related to higher utility bills.

Rheem argues that each of plaintiffs' warranty-related causes of action fails to state a claim for several reasons. First, Rheem argues that plaintiffs' claims for consequential damages are precluded by the limited warranty, which limits plaintiffs' remedies to repair and replacement. And second, Rheem argues that plaintiffs' claims for repair and replacement fail because plaintiffs do not allege that Rheem has failed to repair or replace any part.[16] Plaintiffs respond by arguing that the warranty's limitation of remedies should not be given effect because the warranty's remedy fails its essential purpose and, alternatively, the warranty is unconscionable.

1. The Warranty's Remedy Satisfies Its Essential Purpose

Limited remedies that fail their essential purpose are unenforceable.[17] A remedy fails its essential purpose where the "product is so deficient it cannot be fixed or the warrantor fails to replace or repair the part."[18] The essential purpose of an exclusive repair or replacement remedy "is to ensure that the purchaser receives a product which conforms to the express warranty, "[19] which in this case means a product "free from defects in materials and workmanship."[20] Plaintiffs argue that Rheem's remedy fails this essential purpose because "the replacement of a defective copper coil with an equally defective copper coil does not cure' the defect, but instead postpones the second or subsequent manifestation of the defect."[21]

Plaintiffs' argument is at odds with the facts alleged in their complaint. The complaint states not only that Rheem's allegedly defective products can be fixed by replacing the copper coils with aluminum coils, [22] but also that Rheem stopped "replacing defective copper coils with equally defective copper coils" in 2013.[23] These allegations show that the warranty's remedy can fix the defect, and that Rheem has ...


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