Utica National Insurance Group ex rel. Pro Automotive Repair, Inc. v. BMW of North America, LLC
Docket: Civil Action No. 14-11855-KPN
Court: District Court, D. Massachusetts; September 18, 2014; Federal District Court
Utica National Insurance Group, as subrogee for Pro Automotive Repair, Inc., initiated a products liability lawsuit against BMW of North America, LLC, claiming damages from a defective Mini Cooper. Utica asserts four counts: negligence (Count I), breach of warranties (Count II), strict liability (Count III), and violations of Massachusetts General Laws chapter 93A (Count IV). BMW removed the case from Hampden County Superior Court to federal court and filed a motion to dismiss Counts III and IV under Fed. R. Civ. P. 12(b)(6). Utica opposed the motion only regarding Count IV. The court accepted the factual allegations as true and applied the standard for evaluating a motion to dismiss, as established in relevant case law, emphasizing the need for a plausible claim for relief. Ultimately, the court granted BMW's motion to dismiss Counts III and IV but allowed Utica the opportunity to amend its complaint.
The Chapter 93A claim requires that the facts necessary to establish liability be assessed based on the specific circumstances of each case. While the legal boundaries for what constitutes a violation are determined by law, the determination of unfairness or deceptiveness in actions is a factual question. The background details indicate that Pro Auto owned a 2007 Mini Cooper, which was parked in its garage on October 29, 2011, when a fire broke out the following morning, originating from the Mini Cooper and resulting in significant damage. Utica, the insurer, paid the claim related to this incident. On January 11, 2012, BMW recalled certain Mini Coopers, including the 2007 model, due to potential fire hazards associated with a malfunctioning electronic circuit board in the vehicle’s water pump. A formal demand letter was sent by Utica to BMW on April 13, 2013, which BMW denied.
At a court hearing, counsel confirmed that Utica was pursuing the claim as a subrogee of a business entity under Chapter 93A, not as a consumer. This distinction subjects Utica to a stricter standard for proving unfair or deceptive conduct compared to consumers. The standard is described as vague and reflective of the commercial environment, emphasizing when conduct crosses the line into unacceptable behavior.
The court will evaluate whether BMW engaged in unfair or deceptive conduct, considering the context of Pro Auto as an automotive retailer and BMW as a major car manufacturer. Utica argues its Chapter 93A claim is plausible due to a breach of warranty, contending this constitutes a per se violation. However, BMW asserts that a plaintiff must demonstrate more than a mere breach of warranty to adequately plead a Chapter 93A claim under Section 11. The court aligns with BMW, referencing the Supreme Judicial Court's ruling that a breach of warranty alone does not equate to a violation under Section 11, which must be assessed against general principles of liability established in Massachusetts case law.
While the Massachusetts Appeals Court previously indicated that a breach of an implied warranty could be actionable under Chapter 93A, the Knapp decision later differentiated the treatment of breach of warranty claims under Sections 9 and 11, requiring a demonstration of significantly unfair or deceptive conduct for the latter. Recent rulings further support that negligence or breach of contract/warranty alone does not establish liability under Chapter 93A, Section 11. Thus, for Utica to state a plausible claim, it must present allegations of a breach of warranty accompanied by additional conduct from BMW that is deemed unacceptable in a commercial context. The court will disregard conclusory and unsupported allegations in the complaint, focusing instead on specific factual claims.
The court is tasked with evaluating whether the facts alleged in Utica’s complaint support a reasonable inference that BMW had prior knowledge of a defect before issuing a recall. Utica claims that a breach of warranty defect caused damage and that BMW recalled the vehicle seventy-five days later. However, evidence from the recall report suggests BMW may have received up to nineteen complaints related to the recall, yet the timing and specifics of these complaints do not convincingly indicate that BMW was aware of the defect prior to the loss date. The court concludes that Utica has not provided sufficient factual support to infer BMW's preemptive knowledge regarding the defect associated with this recall.
The court cites several precedents where insufficient allegations of knowledge led to dismissals in similar cases, emphasizing that merely alleging past knowledge or customer complaints is inadequate. It highlights that Utica's additional allegations in opposition to BMW’s motion to dismiss do not rectify the complaint's deficiencies, as they lack a solid factual basis. Assertions made by Utica, such as claims of common sense regarding BMW's knowledge and intent to conceal the defect, are deemed insufficient for establishing plausible knowledge. Consequently, the court finds no basis for Utica’s claims under Chapter 93A, 11, as the allegations do not meet the required legal standards for pleading knowledge of the defect.
Utica presented additional facts at the hearing regarding BMW's motion to dismiss that could potentially support an inference of BMW's knowledge, specifically referencing prior Mini Cooper-related fires and information from other litigation. However, these facts were not included in the current record. Consequently, the court granted BMW's motion to dismiss Counts III and IV. To pursue a Chapter 93A, § 11 claim, Utica must file a motion to amend its complaint within twenty-one days. The court noted that there was no evidence in the complaint that the Mini Cooper involved was a Mini Cooper S, despite Utica's counsel's assertion. Utica’s argument that BMW's refusal to acknowledge liability constituted bad faith was dismissed, as such conduct does not suffice for a Chapter 93A claim without the context of the defendant being an insurance company under relevant Massachusetts laws. BMW cited case law to argue that a breach of warranty alone cannot support a Chapter 93A claim, although Utica referenced a case allowing a claim for failure to warn without demonstrating knowledge. The court clarified that knowledge is a necessary element in such claims. Additionally, the court examined a recall report from the National Highway Traffic Safety Administration for information that might support Utica's claim but declined to amend the complaint on its own, emphasizing that Utica must identify relevant documents independently.
