Schmidt v. Ford Motor Co.

Citation: 198 F. Supp. 3d 511Docket: CIVIL ACTION NO. 12-7222, CIVIL ACTION NO. 13-7254

Court: District Court, E.D. Pennsylvania; August 1, 2016; Federal District Court

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The memorandum by District Judge Eduardo C. Robreno addresses two consolidated product liability actions against Ford Motor Company, brought by plaintiffs Jason Schmidt, Stephen Gooder, and Samuel and Deborah Gill, who own 2005 Ford Expeditions with 5.4L V8 engines. Plaintiffs allege a defect in the electronic throttle bodies causing loss of power during acceleration and seek monetary and injunctive relief for a class of affected consumers. The remaining claims include breach of express and implied warranties by the Schmidts and Gills, as well as Gooder’s claim for unjust enrichment. Ford has moved for summary judgment on all claims.

The factual background includes details about the Electronic Throttle Control System (ETC) used in the vehicles, which enhances performance through electronic controls rather than mechanical connections. In the Schmidt case, initiated in December 2012, only claims related to express and implied warranties and unjust enrichment remain following partial dismissal. Schmidt, who purchased a used 2005 Ford Explorer, did not examine warranty materials before buying. After experiencing a loss of power, he learned the throttle body assembly needed replacement, which was not covered under warranty, resulting in an out-of-pocket expense of $683.33 for repairs. The court ultimately grants Ford's motion for summary judgment, ruling in favor of Ford on all claims.

Stephen Gooder, an Illinois resident, bought a 2005 Ford Expedition in October 2011, with mileage between 110,000 and 122,000, and received a thirty-day warranty from the dealer, although he did not recall or expect a warranty from Ford. In October 2012, he experienced power loss while driving, leading to inconclusive diagnostics at Bryden Ford for which he paid $105.35. After subsequent power losses, Bryden Ford replaced the throttle body assembly in February 2013 for which Gooder paid $463.73. He has never made payments to Ford Motor Company regarding the vehicle.

The Gill family, who purchased a 2005 Ford Expedition on October 21, 2005, with approximately 10,700 miles, also did not review warranty materials or consider warranties in their purchase decision. They first experienced a power loss in late 2011 or early 2012 and sought repairs after a second incident in February 2012, incurring $520.98 for repairs, including a throttle body assembly replacement. After a third power loss in April 2013, they contacted Courtesy Ford for further repairs, which did not include replacing the throttle body assembly.

On July 15, 2014, the Court consolidated the Schmidt and Gill cases for pretrial proceedings, allowing certain claims to remain, including breach of express and implied warranty claims from both Schmidt and the Gills, and Gooder’s claim for unjust enrichment. Following substantial discovery, Ford filed a motion for summary judgment against all plaintiffs, which is now pending. Summary judgment may be granted if there are no genuine disputes over material facts, and the burden lies with the moving party to prove the absence of such disputes, after which the nonmoving party must present specific facts to show a genuine issue for trial. The Court will consider the facts in favor of the nonmoving party to determine if a reasonable jury could find in their favor.

The Court has subject matter jurisdiction over the claims under the Class Action Fairness Act (CAFA) and applies Pennsylvania's substantive choice-of-law rules. The parties agreed that the law of the Plaintiffs' respective states governs substantive issues. Schmidt’s and the Gills’ claims are governed by New Jersey law, while Gooder’s unjust enrichment claim is under Illinois law. Ford seeks summary judgment, arguing that Schmidt’s and the Gills’ breach of express warranty claims are invalid due to expiration and lack of reliance by the Gills on the warranty when purchasing their vehicle. Additionally, Ford contends that the implied warranty claims are untimely and unsupported by evidence of a violation. Gooder’s unjust enrichment claim is challenged on the basis of lacking an underlying basis under Illinois law. The Court will address each argument sequentially, starting with the breach of express warranty claims. Under both New Jersey and Mississippi law, a breach of express warranty requires demonstrating that the defendant made affirmations or descriptions about the product that were not met. Ford asserts that the express warranties have expired, while Plaintiffs argue that the ambiguous language of the warranties should be evaluated by a jury to determine if it covers the alleged defects, necessitating the Court's decision on the ambiguity of the warranties' terms.

Breach of express warranty claims are evaluated based on the clear and unambiguous terms of the warranties under both New Jersey and Mississippi law. Courts begin with the contract's plain language to ascertain the parties' intent. If a contract is materially ambiguous, summary judgment is inappropriate, and extrinsic evidence may be used to clarify its meaning. Ambiguities require the case to be presented to a trier of fact, whereas clear contracts must be enforced as written. In the context of summary judgment, the court's role is to assess whether the contract is ambiguous, with questions of contract interpretation being legal rather than factual. In this case, the plaintiff did not identify any ambiguities in Ford’s express warranties as outlined in the 2005 Model Year Warranty Guide, which includes a "New Vehicle Limited Warranty," an "Emissions Defect Warranty," and an "Emissions Performance Warranty," each with distinct coverage expiration dates and specific parts covered. The plaintiff's cited cases regarding ambiguity are not applicable, as they fail to identify a specific ambiguous term in Ford’s warranties, unlike the case of Forbes v. General Motors Corp., where a specific term was deemed ambiguous.

In State Farm Mutual Automobile Insurance Co. v. Ford Motor Co., the court found a jury question regarding whether a limited warranty excluded subsequent vehicle damage from alleged defects. In the current case, Plaintiffs argue that Defendant's warranty terms are ambiguous due to inconsistent interpretations of coverage. However, Defendant asserts that the Emissions Defect Warranty clearly covers specific components, including the catalytic converter and powertrain control module, for eight years or 80,000 miles, while other parts are covered under different warranty periods. The warranty guide's section detailing what is covered lists both the long-term warranty parts and an additional thirty-two parts, including the Throttle Body Assembly, which only fall under shorter warranty periods. This distinction does not imply ambiguity, as the presence of the throttle body in the list does not equate to it being covered for eight years or 80,000 miles. Despite expert opinion suggesting confusion over the coverage, the court emphasizes that ambiguity requires more than mere misunderstanding. Plaintiffs fail to demonstrate that the warranty terms are subject to multiple reasonable interpretations. The court also references Gladden v. Cadillac Motor Car Division, where warranty limitations were found legally ineffective due to lack of clarity and prominence, reinforcing that warranty terms must be clearly communicated to be enforceable.

Plaintiffs contend that Ford’s Warranty Guide is confusing, lacking clarity in its coverage terms. However, unlike the case of Gladden, there is no claim that Ford’s warranty terms illegally exclude specific components or evade liability. Furthermore, Plaintiffs misinterpret Herbstman v. Eastman Kodak Co.; the New Jersey Supreme Court stated that mutual understanding of warranty language indicates clarity but did not limit clarity to such cases. Disagreement over contract terms does not inherently create legal ambiguity. Plaintiffs have not demonstrated any ambiguity in the warranty terms, which are deemed clear, thus the court will interpret them based on their plain meaning regarding coverage of the throttle body assembly.

Additionally, Plaintiffs’ express warranty claims are time-barred, arising from incidents that occurred over six years after their vehicles' initial sale and after exceeding 60,000 miles driven. Plaintiffs’ claims pertain specifically to the repair and replacement of throttle body assemblies, which must fall within a warranty period that exceeds both six years and 60,000 miles. The New Vehicle Limited Warranty, which provides coverage for three years or 36,000 miles, does not apply, as it commenced six years prior to the lawsuit and does not cover the requested repairs, which are categorized as maintenance and thus excluded under the warranty.

Plaintiffs' express warranty claims are not supported by the Emissions Defect Warranty or the Emissions Performance Warranty. The Emissions Defect Warranty covers certain parts for eight years or 80,000 miles, including emissions-related components, but the throttle body assembly alleged to be defective is not included in this coverage. Although Plaintiffs' claims arose during the warranty period, the throttle body assembly falls under a different section of the warranty that limits coverage to two years or 24,000 miles, which Plaintiffs exceeded. Similarly, the New Vehicle Limited Warranty provides coverage for three years or 36,000 miles, which Plaintiffs also surpassed. As such, all applicable warranties have expired, and Plaintiffs cannot demonstrate any genuine issue of fact regarding an affirmation or promise by the defendant related to the product's performance. The Court will grant summary judgment in favor of the Defendant on the express warranty claims.

Reliance on the warranties is central to the Gills’ breach of express warranty claim, which the Defendant argues is invalid under Mississippi law due to a lack of reliance on the warranty when purchasing the vehicle. The Mississippi Products Liability Act (MPLA) mandates that a claimant must show justifiable reliance on a warranty to establish a breach claim. The case of Forbes v. General Motors Corp. illustrates that reliance can exist even without reading the warranty documentation. In the Gills’ situation, Mr. Gill did not review warranty materials prior to purchasing the vehicle, nor did he consider the warranty in his decision. Although he received the Owner’s Manual, he does not recall reading it, and Mrs. Gill also did not review any warranty materials. There is no evidence that any salesperson or advertisement communicated the warranty terms to them. Consequently, the court found no material fact dispute regarding the Gills’ lack of reliance on the warranties, leading to the granting of summary judgment for the Defendant on this claim.

Regarding the breach of implied warranty claims, the Defendant contends these claims are time barred. The Plaintiffs argue that the Defendant waived the statute of limitations defense by not adequately raising it in prior pleadings. However, the Defendant had indicated that certain claims might be barred by statutes of limitation in their answer to the Amended Complaint, thus notifying the Plaintiffs. The court noted that the Plaintiffs had sufficient opportunity to prepare a response after the Defendant elaborated on the defense in its summary judgment motion, leading to no prejudice against the Plaintiffs. The court will evaluate the timeliness of the implied warranty claims, which are governed by Mississippi law for the Gills and New Jersey law for Schmidt. Under New Jersey law, the statute of limitations for breach of warranty is four years, starting when the breach occurs.

A breach of warranty occurs upon delivery of goods, unless a warranty specifies future performance, in which case the cause of action arises when the breach is discovered or should have been discovered. The delivery refers to the original seller's transfer to the original buyer, not subsequent transfers to ultimate users. In this case, Ford delivered a 2005 Ford Expedition to a dealership on March 15, 2005, while the subsequent delivery to Schmidt occurred on December 27, 2012, over seven years later. Schmidt's breach of implied warranty claim is barred by the four-year statute of limitations, as it was filed after this period.

Similarly, the Gills’ breach of implied warranty claim is time-barred under Mississippi law, which allows six years to file a breach of contract claim from the time of delivery. Although the exact delivery date to the Gills is unclear, they purchased the vehicle on October 21, 2005, and did not file their claim until December 12, 2013, exceeding the six-year limit.

Consequently, the Court will grant summary judgment in favor of Ford for both Schmidt's and the Gills' claims due to expiration of the statutes of limitations. Additionally, Gooder’s unjust enrichment claim, governed by Illinois law, is challenged by the Defendant on the grounds that an express contract exists and that Gooder has not demonstrated any fraudulent behavior. To prevail in an unjust enrichment claim under Illinois law, a plaintiff must prove the absence of an adequate legal remedy, that the defendant retained an unfair benefit to the plaintiff’s detriment, and that such retention violates principles of justice and equity.

Unjust enrichment claims cannot be pursued when a specific contract governs the relationship between the parties. Under Illinois law, damages for unjust enrichment are not applicable if there is an existing contract concerning the disputed matter. The relevant contract's subject matter—not its specific terms—determines its applicability. In this case, the Ford Warranty Guide governs the parties' relationship regarding the throttle body assembly replacement and repair, covered under the Emissions Defect Warranty or the Emissions Performance Warranty. Consequently, Gooder cannot assert an unjust enrichment claim against Ford based on quasi-contract.

Furthermore, unjust enrichment claims under Illinois law may also arise from unlawful conduct such as fraud or duress. If underlying claims of unlawful conduct are dismissed, the unjust enrichment claim fails. Gooder’s fraud claim has already been dismissed, and there is no evidence of duress or undue influence presented against Ford, thus precluding this avenue for his claim as well.

Gooder contends that his unjust enrichment claim stands as a separate cause of action independent of quasi-contract liability or the previously dismissed fraud claim. He cites Illinois case law that recognizes unjust enrichment as an independent cause of action, arguing that a plaintiff can proceed without an accompanying fraud claim if sufficient wrongdoing is alleged against the defendant.

Gooder’s claim of unjust enrichment is legally flawed. In the case of Peddinghaus, a beneficiary alleged fraud, breach of fiduciary duty, and unjust enrichment against family members after selling trust shares. The court found sufficient grounds for fraud due to the brother acting as an agent for the defendants. For unjust enrichment, the court established that a plaintiff must demonstrate the defendant unjustly retained a benefit to the plaintiff's detriment, violating principles of justice and equity. However, the court ruled that the plaintiff could not pursue unjust enrichment under a quasi-contract theory because the purchase agreement defined the relationship. Instead, it acknowledged the possibility of pursuing unjust enrichment as a tort claim, contingent on sufficient fraud allegations.

Gooder’s unjust enrichment claim fails legally under both quasi-contract and tort theories since it is tied to a previously dismissed fraud claim. Moreover, for unjust enrichment, a plaintiff must show the defendant received a benefit that it would be inequitable to retain without payment. Gooder cannot establish a direct benefit to Ford, as he purchased the vehicle from a used car dealer, not from Ford itself. Although unjust enrichment claims can be made based on indirect benefits, Gooder does not demonstrate that such a benefit exists in this case, as established in relevant case law.

An unjust enrichment claim can be based on indirect benefits. In this case, Gooder paid Bryan Ford for repairs on his vehicle but failed to prove that the dealership shared any profits with Ford Motor Company. Gooder admitted to not having made direct payments to Ford and did not provide evidence that Ford parts were used in the repair. Citing a precedent, the court noted that mere assertions without supporting evidence do not suffice for establishing unjust enrichment. The court concluded that there was no evidence of Ford profiting from Gooder’s transaction, as any benefit Ford received was from the previous owner at the time of the vehicle's purchase. Consequently, the court granted summary judgment in favor of Ford regarding Gooder’s unjust enrichment claim. The court also noted the dismissal of several counts from the Schmidt and Gill amended complaints, with only specific warranty claims remaining against Ford. The undisputed facts were acknowledged, and disputed facts were considered in favor of the plaintiffs.

Plaintiff Lee Pullen’s quasi-contract claim was allowed to proceed initially, but he and his claims were subsequently dismissed by stipulation, which the Court approved. Pullen was intended to represent similarly situated California residents and vehicle owners. Ford mistakenly indicated that Goo-der's unjust enrichment claim was governed by Mississippi law but ultimately applied Illinois law for summary judgment arguments regarding that claim. The standards set by Twombly and Iqbal, which require plausibility for pleadings, do not apply to affirmative defenses, which need only provide fair notice. Additionally, Plaintiff failed to utilize Federal Rule of Civil Procedure 56(d), which allows parties to request additional discovery time when opposing summary judgment. This rule requires an affidavit detailing the specific information sought and its relevance. The future performance exception does not apply to claims of breach of implied warranty, as implied warranties cannot extend to future performance explicitly. The Court determined that the implied warranty claims were time-barred, thus negating the need to address whether the plaintiffs had evidence of their vehicles' merchantability or defects at the time of sale.