Marshall v. Hyundai Motor America
Karen MARSHALL, Paul Flannery, and Darrell R. White, on behalf of themselves and all others similarly situated v. HYUNDAI MOTOR AMERICA
Attorneys
Gary S. Graifman, Esq., Michael L. Braunstein, Esq., Kantrowitz, Goldhamer & Graifman, P.C., Chestnut Ridge, NY, Gary E. Mason, Esq., Nicholas A. Migliac-cio, Esq., Whitfield Bryson & Mason, L.L.P., Washington, DC, for Plaintiffs., Michael L. Kidney, Esq., Audrey E. Moog, Esq., Washington, D.C., John J. Sullivan, Esq., Hogan Lovells U.S. L.L.P., New York, NY, for Defendant.
Full Opinion (html_with_citations)
OPINION & ORDER
Plaintiffs Karen Marshall (âMarshallâ), Darrell R. White (âWhiteâ), and Paul Flan-nery (âFlanneryâ and, collectively, âPlaintiffsâ) bring this Action against Defendant Hyundai Motor America (âHMAâ or âDefendantâ) on behalf of themselves and a
I. BACKGROUND
A. Factual History
The Court accepts all of Plaintiffsâ factual allegations as true for the purposes of the instant Motion. Plaintiffs purchased Hyundai Sonata vehicles (âSonataâ) from Hyundai dealerships and subsequently experienced problems with these vehiclesâ brake mechanisms. (Am. Compl. ¶ 1-2 (Dkt. No. 24).) Plaintiffs claim that their vehiclesâ brake assemblies were defective and that these defects âcause the braking system components to become severely worn and damaged, [which] may lead to a complete failure of the braking system.â (Id. ¶ 2.) As a result, the parts at issue needed to be replaced, but Defendant refused to cover the cost of such repair or replacement. (Id. ¶ 3.)
Plaintiffsâ vehicles are covered by a âbumper-to-bumperâ express warranty (âBasic Warrantyâ), which covers â[r]epair or replacement of any component originally manufactured or installed by [HMA or several affiliate Hyundai entities] that is found to be defective on material or workmanship under normal use and maintenance .... â (Id. ¶ 4.) The Basic Warranty covers a vehicle for five years or 60,000 miles, whichever comes first. (Id.) However, it expressly provides that âbrake pads and liningsâ are only warrantied in normal service âwhen the replacement is a result of a defect in material or factory workmanship,â and that such replacement.is only covered âfor 12 months from the date of original retail delivery [or] date of first use, or 12,000 miles, whichever occurs first.â (Id.) Plaintiffs allege that âSonatas are equipped with defective brakes,â which cause significant squealing and premature deterioration of the rotors and pads and sticking of the calipers when the brake pedal is applied if the defect is not corrected by replacement of brake pads, rotors and calipers, and brake assembly. (Id. ¶ 2.) If uncorrected, these defects âmay lead to a complete failure of the braking system.â (Id.)
Marshall purchased a Sonata from Healy Brothers Hyundai in Mt. Kisco/Bedford Hills, New York in November 2005. (Id. ¶ 23.) When Marshallâs Sonata had about 11,297 miles, a problem with the vehicleâs brakes occurred and Marshall brought the vehicle to the dealer, who replaced the brakes under the warranty. (Id. ¶ 24.) In April 2008, when the same vehicle had about 42,782 miles, Marshall experienced vehicle vibrations when applying the brakes. (Id. ¶ 24.) Marshall brought her vehicle to Falcon Hyundai, and was told that there was excessive wear on the vehicleâs brake pads and rotors. (Id.) Defendant refused to cover replacement of these parts under the Basic Warranty, so Marshall paid $429.45 for the replacement. (Id.) Marshallâs vehicle exhibited brake vibrations again in June 2010. (Id. ¶ 25.) Marshall brought the vehicle to a local repair shop, which replaced the brake pads and rotors at a cost of $388.38. (Id.) Again, Defendant refused to cover this cost under the Basic Warranty. (Id.) Marshall noticed the same noises and vibrations in September 2010 â less than 10,000 miles since the June 2010 repair. (Id. ¶ 26.) As a result, Marshall decreased the frequency of long distance trips in the vehicle and cancelled some trips altogether. (Id.)
White purchased a Sonata from a Hyundai dealer in Syracuse, New York in October 2007. (Id. ¶ 27.) In June 2009, when Whiteâs Sonata had approximately 26,739
Flannery purchased a Sonata from a Hyundai dealership in Watertown, New York in November 2007. (Id. ¶ 18.) When Flanneryâs Sonata had about 22,205 miles, Flannery noticed loud notices and vibrations from the rear of the vehicle. (Id. ¶ 20.) He took his vehicle to a local mechanic, who determined that that vehicleâs brakes and rotors required replacement, at a cost of $317.85.
replacement of Flanneryâs vehicleâs brakes and rotors. (Id. ¶ 21.)
B. Procedural History
Plaintiffs filed this Action in New York State Supreme Court, Westchester County, in March 2012. (See Notice of Removal ¶ 2 (Dkt. No. 1).) On April 18, 2012, Defendant removed this case from Supreme Court, Westchester County to this Court, pursuant to the Class Action Fairness Act 28 U.S.C. §§ 1332(d) (âCAFAâ).
II. DISCUSSION
A Standard of Review
In considering a motion to dismiss pursuant to Rule 12(b)(6), the Court is required to construe the factual allegations contained in the Complaint as true and draw all reasonable inferences in favor of the plaintiff. See Ruotolo v. City of New York, 514 F.3d 184, 188 (2d Cir.2008) (âWe review de novo a district courtâs dismissal of a complaint pursuant to Rule 12(b)(6), accepting all factual allegations in the complaint and drawing all reasonable inferences in the plaintiffs favor.â (internal quotation marks omitted)); Gonzalez v. Caballero, 572 F.Supp.2d 463, 466 (S.D.N.Y.2008) (same). Moreover, â[i]n adjudicating a Rule 12(b)(6) motion, a district court must confĂne its consideration to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken.â Leonard F. v. Isr. Disc. Bank of N.Y., 199 F.3d 99, 107 (2d Cir.1999) (internal quotation marks omitted).
The Supreme Court has held that â[wjhile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the âgroundsâ of his âentitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.â Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (second alteration in original) (citations omitted). Instead, the Supreme Court has emphasized that â[fjactual allegations must be enough to raise a right to relief above the speculative level,â id., and that âonce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint,â id. at 563, 127 S.Ct. 1955. Plaintiffs must allege âonly enough facts to state a claim to relief that is plausible on its face.â Id. at 570, 127 S.Ct. 1955. But if a plaintiff has ânot nudged [its] claims across the line from conceivable to plausible, the[] complaint must be dismissed.â Id.; see also Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (âDetermining whether a complaint states a plausible
B. Analysis
1. General Business Law § SW
Plaintiffs bring a claim pursuant to section 349 of the New York General Business Law, alleging that Defendant used âfalse or deceptive statements and/or knowing intentional material omissions [to] misrepresent ] and/or conceal[ ] the true defective nature of the brake system,â (Am. Compl. ¶ 59), and that such actions were âlikely to mislead a reasonable consumer purchasing the vehicle,â (id. ¶ 62). Specifically, Plaintiffs allege that Defendant âmisrepresented [the functionality of the brake system] to Plaintiffs ... at the time of purchase or lease,â (id. ¶ 58(a)), âfailed to give adequate warnings and notices regarding ... defects and problems with the brake system,â (id. ¶ 58(b)), âfailed to disclose to Plaintiffs ... that the brake system was defective,â (id. ¶ 58(c)), âcaused Plaintiffs ... to expend sums of money at [Defendantâs] dealerships and elsewhere to repair and/or replace the brake system,â (id. ¶ 58(d)), âmarketed], advertised] and promoted]â the vehicles in a deceptive way that âconcealed and failed to reveal the known [brake] defect,â (id. ¶ 58(e)), and occasionally âadmitted to some ... [vehicle] owners or lessees ... that the defect should be covered by its warranties and denied [that it should be covered] to others ... thereby maintaining] a secret warranty practice,â (id. ¶ 58(f)).
To prevail on a § 349 claim, a plaintiff must prove âthat (1) âthe defendant has engaged in an act or practice that is deceptive or misleading in a material wayâ; (2) the âplaintiff has been injured by reason thereof; and (3) the deceptive act or practice is âconsumer oriented.â â Koch v. Greenberg, 14 F.Supp.3d 247, 261 (S.D.N.Y.2014) (quoting Gaidon v. Guardian Life Ins. Co. of Am., 94 N.Y.2d 330, 704 N.Y.S.2d 177, 725 N.E.2d 598, 603-04 (1999) (âGaidon I â)). â[A]n action under § 349 is not subject to the pleading-with-particularity requirements of Rule 9(b), Fed.R.Civ.P., but need only meet the notice-pleading requirements of Rule 8(a).... â Pelman v. McDonaldâs Corp., 396 F.3d 508, 511 (2d Cir.2005). This claim is subject to a three-year statute of limitations. See Schandler v. N.Y. Life Ins. Co., No. 09-CV-10463, 2011 WL 1642574, at *4 (S.D.N.Y. Apr. 26, 2011) (noting that â[p]rivate rights of action under section 349 are governed by a three-year statute of limitationsâ); Gaidon v. Guardian Life Ins. Co., 96 N.Y.2d 201, 727 N.Y.S.2d 30, 750 N.E.2d 1078, 1083 (2001) (holding that the six-year statute of limitations for common law fraud does not apply to a claim under section 349 because it is a statutory cause of action) (âGaidon IIâ); Morelli v. Weider Nutrition Grp., Inc., 275 A.D.2d 607, 712 N.Y.S.2d 551, 553 (2000) (âClaims pursuant to General Business Law § 349 are governed by the three-year limitation period set forth in CPLR 214(2).â (citation omitted)).
Drawing all inferences in favor of Plaintiffs, the Court interprets the Amended Complaint to allege three types of deceptive business practices by Defendant: (1) misrepresentations and omissions about the functionality of the brake system prior to Plaintiffsâ purchase of their vehicles, (see Am. Compl. ¶¶ 58(a)-(e)); (2) failure to disclose information about the brake system defects through warnings or recall
a. Pre-Purchase Deceptive Practices
First, with respect to Plaintiffsâ claims of deceptive practices that induced Plaintiffs to purchase the vehicles in question, the Amended Complaint contains allegations suggesting that Defendant knew âthat there was a manufacturing defect in the brake rotors and caliper assemblies,â (Am. Compl. ¶ 30), and âcontinued to represent to ... Plaintiffs, that the Sonatas, including their brake assemblies, were properly manufactured using proper materials and/or workmanship, [and were] in good working condition,â (id. ¶ 31). Defendant is alleged to have made these misrepresentations in âadvertisements, agreements, publications, websites, owner manuals, warranty agreements, or literature given to ... Plaintiffs and members of the [purported] Class.â (Id. ¶ 33.)
As the basis for their allegation that Defendant knew about the defect, Plaintiffs claim that Defendant had knowledge about the alleged defect through âpre-re-lease testing, early service maintenance analysis and reports and data; knowledge and examination of the specifications for the various brake part[s] (e.g., rotors, hubs and caliper assemblies); knowledge of materials; and knowledge through customer complaints to Hyundi directly and through online consumer websites.â (Id. 37.) Defendant urges the Court find that the Amended Complaint insufficiently pleads a § 349 claim because these factual allegations are made âupon information and belief.â (Def.âs Mem. 10.) Indeed, there is ample case law in support of Defendantâs contention. See Woods v. Maytag Co., No. 10-CV-0559, 2010 WL 4314313, at *15 (E.D.N.Y. Nov. 2, 2010) (noting that âthe plausibility of the scheme is crucial to pleading a cause of action under GBL § 349, and when the most significant contentions are made on information and be-' lief plaintiffs will fail to set forth a cause of action under GBL § 349â (internal quotation marks omitted)); Tinlee Enters., Inc. v. Aetna Cas. & Sur. Co., 834 F.Supp. 605, 610 (E.D.N.Y.1993) (dismissing ĂĄ § 349 action where âthe most significant contentions made by [the plaintiff] are alleged on the basis of âinformation and belief â).
Plaintiffsâ PAC removes the âupon information and beliefâ language from these allegations, leaving the information to be plead âupon- personal knowledge, and based upon the investigation conducted by their counsel.â (See PAC ¶ 37, page 1 (introductory paragraph).) For the purposes of the instant Motion, the Court will assume these facts as pled in Plaintiffsâ PAC. The Court also finds that the facts as pleaded in the Amended Complaint neither âlack[ ] specificity,â nor are insufficient on their own to âplausibly suggest that the [Defendant] had knowledge of the defectâ here. Woods, 2010 WL 4314313, at *16; Cf. Horowitz v. Stryker Corp., 613 F.Supp.2d 271, 287 (E.D.N.Y.2009) (dismissing claims where the âplaintiff ma[de] no reference to the specific acts, representations and/or omissions that she claimed [were] deceptive nor [did] she allege why these acts were deceptiveâ (internal quotation marks omitted)). Rather, Plaintiffsâ PAC provides adequate detail (even if barely) and a plausible narrative as to how Defendant knew of the alleged defect, and is therefore sufficient to satisfy the pleading requirements for a § 349 claim. See Szymczak v. Nissan N. Am., Inc., No. 10-CV-7493, 2011 WL 7095432, at *16 (S.D.N.Y. Dec. 16, 2011) (holding that an
To the extent that Plaintiffsâ § 349 claims are based upon Defendantâs conduct that caused Plaintiff to purchase the vehicles at issue in this case, however, these claims are barred by the applicable three-year statute of limitations. Accrual of a § 349 claim âis not dependent upon any date when discovery of the alleged deceptive practice is said to occur.â See Statler v. Dell, Inc., 841 F.Supp.2d 642, 648 (E.D.N.Y.2012) {âStatler IIâ). Rather, such claims accrue when a plaintiff is injured by the actions alleged to have violated the Statute. See id. (âActions brought pursuant to Section 349 must be commenced within three years of the date of accrual, which occurs when plaintiff is injured by the deceptive act or practice that violated the statute.â); Gaidon II, 727 N.Y.S.2d 30, 750 N.E.2d at 1083 (noting that such a claim âfirst occurs'when plaintiff has been injured by a deceptive act or practice violating section 349â).
Here, Plaintiffs allege that Defendant knowingly made misrepresentations and omitted information about the defective brake system in place on the vehicles at issue. (See Am. Compl. ¶ 58(a)-(e).) Thus, Defendantâs misrepresentations or omissions were about the nature of the product itself, rather than a benefit from purchasing the product separate from the productâs inherent function.
Plaintiffs argue that their claims are saved, and Defendant estopped from relying on a statute of limitations defense, on equitable grounds. They argue that the doctrines of equitable tolling and/or equitable estoppel should toll the running of the statute of limitations here. (See Pis.â Mem. 15-17.) The Court disagrees.
âUnder New York law, the doctrines of equitable tolling or equitable estoppel may be invoked to defeat a statute of limitations defense when the plaintiff was induced by fraud, misrepresentations or deception to refrain from filing a timely action.â Abbas v. Dixon, 480 F.3d 636, 642 (2d Cir.2007) (internal quotation marks omitted); see also Stuart v. Stuart, No. 12-CV-5588, 2013 WL 6477492, at *4 (S.D.N.Y. Dec. 10, 2013) (same). Equitable tolling applies where a defendantâs fraudulent conduct results in a plaintiffâs lack of knowledge of a cause of action. See Pearl v. City of Long Beach, 296 F.3d 76, 82 (2d Cir.2002); DeSole v. Knoedler Gallery, L.L.C., 974 F.Supp.2d 274, 318 (S.D.N.Y.2013). A plaintiff must establish that âthe defendant wrongfully concealed material facts,â which âprevented plaintiffs discovery of the nature of the claim,â and that âplaintiff exercised due diligence in pursuing the discovery of the claim during the period plaintiff seeks to have tolled.â Koch v. Christieâs Intâl PLC, 699 F.3d 141, 157 (2d Cir.2012) (internal quotation marks omitted). Equitable estoppel, on the other hand, permits the tolling of the statute of limitations in extraordinary
âDue diligence on the part of the plaintiff is essential where he or she seeks relief from the statute of limitations.â Stuart, 2013 WL 6477492, at *5 (citing Ross v. Louise Wise Servs., Inc., 28 A.D.3d 272, 812 N.Y.S.2d 325, 333 (2006)); see also Koch, 699 F.3d at 157; Abbas, 480 F.3d at 642. Thus, âthe party seeking to invoke the doctrine bears the burden of demonstrating that it was diligent in commencing the action âwithin a reasonable time after the facts giving rise to the estoppel have ceased to be operational.â â Marincovich v. Dunes Hotels & Casinos, Inc., 41 A.D.3d 1006, 839 N.Y.S.2d 553, 556 (2007) (quoting Simcuski v. Saeli, 44 N.Y.2d 442, 406 N.Y.S.2d 259, 377 N.E.2d 713, 717 (1978)). âIf a plaintiff is on notice of potential wrongdoing but takes no steps to investigate further, equitable estoppel does not apply because of a failure of diligence.â Stuart, 2013 WL 6477492, at *5; see Corp. Trade, Inc. v. Golf Channel, No. 12-CV-8811, 2013 WL 5375623, at *6 (S.D.N.Y. Sept. 24, 2013) (finding no equitable tolling or estoppel where the plaintiff was aware of the defendantâs âcomplicity and culpabilityâ in 2008, but âtook no steps to further investigateâ the defendant, and filed its complaint in 2012 (internal quotation marks omitted)).
And so it is here. Plaintiffs make only the conclusory statement that âDefendant ] [is] estopped from relying upon any statutes of limitation by reason of [its] fraudulent misrepresentation, suppression and concealment of material facts, and any applicable statutes of limitation are tolled by such conduct.â (Am. Compl. ¶ 53.)
' Plaintiffs further fail to âarticulate acts by defendant that prevented [them] from timely commencing suit.â Woods, 2010 WL 4314313, at *4 (alterations and internal quotation marks omitted) (quoting Abbas, 480 F.3d at 642). To the extent that Plaintiffs maintain that Defendantâs misrepresentations, âpost-sale campaign, warranty!,] and secret warranty practices ... left [Plaintiffs] to guess in time-wasting frustration at what was causing the vehiclesâ failure to perform,â (Pis.â Mem. 16-17), these alleged misrepresentations are part of the same deceptive conduct that Plaintiffs allege forms the basis of their § 349 claims. Specifically, the Amended Complaint alleges that Defendant continued the same deceptive practices that persuaded Plaintiffs to purchase their vehicles and remained silent - about any defect. (See, e.g., Am. Compl. ¶ 31 (âHyundai ... continued to represent to new purchasers ... as it did with Plaintiffs [that the vehicles] were properly manufacturedâ), ¶ 32 (âDefendant advertised, promoted and marketed the fitness, safety and warranty benefits of the [Sonata]â); ¶ 33 (Defendant âfailed to provide owners of the vehicle with any written warnings or notices regarding the vehicleâs defective brakesâ); ¶ 34 (asserting that Defendant âconcealed the existence of the defect,â without providing any further facts as to how Defendant did so); -¶ 37 (alleging that Defendant âwas aware of the defectâ as early as 2005, but âchose to continue to produce Sonata vehicles with defective rotors, caliper assemblies and brakĂ© assembliesâ).) At best, Plaintiffs allege that Defendant maintained the status-quo in the hopes that its customers would not discover the defect. But where an âalleged concealment con-sistĂs] of nothing but [the] defendantsâ failure to disclose the wrongs they had committed, [the New York Court of Appeals has] held that the defendants were not estopped from asserting a statute of limitations defense.â Corsello, 944 N.Y.S.2d 732, 967 N.E.2d at 1184 (citing Ross v. Louise Wise Servs., Inc., 8 N.Y.3d 478, 836 N.Y.S.2d 509, 868 N.E.2d 189, 198 (2007)). Therefore, the Amended Complaint falls
Plaintiffs have failed to plead that they were diligent in determining why their vehiclesâ brakes needed repair and why the Basic Warranty did not cover repair or replacement of the same. See Jackson, 845 F.Supp.2d at 533 (holding that â[t]he alleged years of repairs were certainly enough to put [the pjlaintiff under a duty to make inquiry and ascertain all the relevant facts prior to the expiration of the applicable Statute of Limitations,â and further finding that âthe unsupported statements replied upon by [the pjlaintiff cannot be relied upon to invoke equity to save the claimsâ (internal quotation marks omitted)). Plaintiffs have also failed to adequately plead that Defendant took additional actions to dissuade them from filing an action or to prevent Plaintiffs from discovering the alleged defect. Accordingly, the Court finds tolling does not apply here and that Plaintiffsâ § 349 claim based on Defendantâs conduct prior to Plaintiffsâ purchase of the vehicles is time-barred.
b. Post-Purchase Deceptive Practices
In addition to Plaintiffsâ argument that Defendantâs deceptive conduct in violation of § 349 caused them to purchase their vehicles, Plaintiffs also argue that Defendantâs post-sale conduct, including Defendantâs failure to cover the repair or replacement of the allegedly defective parts amounts to deceptive conduct upon which they base their claim. As discussed above, much of the post-purchase conduct that Plaintiffs allege consists of a continuation of the same allegedly deceptive conduct that induced Plaintiffs to purchase the vehicles and cannot be deemed to have harmed Plaintiffs after they had already purchased the Sonatas. (See Am. Compl. ¶ 58(a)-(e).) Drawing all reasonable inferences from the Amended Complaint in Plaintiffsâ favor, Plaintiffs allege that Defendant failed to disclose the defect to Plaintiffs âeither through warnings or recall notices,â (id. ¶ 58(c)), and that Defendantâs refusal to cover the defect under the Basic Warranty led Plaintiffs to âexpend sums of money ... to repair and/or replace the brake systemâ and its components, (id. ¶ 56(d)). The Amended Complaint contains only the briefest factual allegations to support these claims, but the Court cannot say, at this point of the proceedings, that they are insufficient or implausible. See Statler II, 841 F.Supp.2d at 648-49 (noting that the court denied the defendantâs earlier motion to dismiss on grounds that the determination as to âwhether [the p]laintiff could establish a separate Section 349 claim based upon the allegation that [the defendantâs] post-sale handling of his warranty claim amounted to deceptive conduct prohibited by the statuteâ required development of the record through discovery); Statler I, 775 F.Supp.2d at 484-85 (denying the defendantâs motion to dismiss a § 349 claim based upon alleged deceptive post-delivery conduct because â[t]he court cannot say, at this stage of the proceedings, the date upon which the [pjlaintiff first suffered
To the extent that Plaintiffs allege that Defendantâs denial of coverage under the Basic Warranty violates § 349, both White and Flannery plead that they experienced claim denials within three years of initiating this Action. (See Am. Compl. ¶ 24; PAC ¶ 20). Furthermore, any failure to issue a warning or recall might include Marshallâs vehicle and therefore apply to all three Plaintiffs. Because these harms suffered by Plaintiffs occurred within the limitations period, the Court does not see fit to dismiss Plaintiffsâ post-purchase § 849 claims at this time.
c. âSecret Warrantyâ Allegation
With respect to Plaintiffsâ allegations of âsecret warrantyâ practices, Plaintiffsâ Amended Complaint fails to plead a claim. The Amended Complaint makes no allegations that Plaintiffs or anyone they know are aware of a âsecret warranty practice,â nor any basis whatsoever for making this allegation. In fact, the only mention of such a practice â let alone allegations of fact to support its existence' â is in the paragraph that makes the allegation in a conclusory fashion.
2. Express Warranty
Plaintiffs allege that Defendant breached the terms of the Basic Warranty by failing to repair or replace parts âfound to be defective on material or workmanship.â (Am. Compl. ¶ 67.) In order to state a claim for a breach of an express warranty, Plaintiffs must plead âthat an express warranty existed, was breached, and that [Plaintiffs] had relied on that warranty.â Reed v. Pfizer, Inc., 839 F.Supp.2d 571, 578 (E.D.N.Y.2012). Defendant argues that Plaintiffs have failed to plead the breach of the warranty, because their claim is based on a design defect in this Sonata. (See Def.âs Mem. 20-21.) According to Defendant, such design defects are not covered by the Basic Warranty, which is limited to components that are âdefective on material or workmanship under normal use and maintenance.â {Id.); see, e.g., Grupo Sistemas Integrales de Telecomunicacion S.A de C.V. v. AT & T Commcâns, Inc., No. 92-CV-7862, 1996 WL 312535, at *7 (S.D.N.Y. June 10, 1996) (finding that a manufacturerâs warranty that was limited to âclaims-based on defective materials or workmanship ... exclude[d] claims of design defect â which, â like âwarranty of fitnessâ
As Defendant highlights, a number of passages in the Amended Complaint suggest that Plaintiffs are alleging a larger issue with the design of Sonatas generally rather than a defect in the manufacturing or workmanship that went into each Plaintiffsâ vehicle.
âWhether the[] alleged defects arose from a faulty design, faulty materials or faulty workmanship cannot be ascertained absent discovery, since any information concerning the true origin of the alleged defect is within the sole possession of the defendant.â Haag, 969 F.Supp.2d at 316. Furthermore, unlike in Cali, the Amended Complaint sufficiently alleges a defect apart from parts expressly excluded from warranty coverage (i.e. âbrake pads and liningsâ) and does not âmost plausablfy]â suggest a design defect rather than a manufacturing or workmanship defect that would be covered by the Basic Warranty. Cali, 2011 WL 383952, at *2-3 (dismissing the plaintiff breach of express warranty claim because the complaint alleged problems with the vehicleâs brakes, which were expressly excluded from the warranty, and because âplaintiffs less plausible argument that the problem concerns the ... overall designâ was also excluded by the warrantyâs limitation on coverage to âmaterial, workmanship or factory preparation â not defects in vehicle designâ (internal quotation marks omitted)). Therefore, the Court finds that Plaintiffs have sufficiently pleaded a claim of Defendantâs breach of the Basic Warranty.
âTo state a claim for breach of contract [under New York law], a plaintiff must allege â(1) a contract; (2) performance of the contract by one party; (3) breach by the other party; and (4) damages.â â Picini v. Chase Home Fin. L.L.C., 854 F.Supp.2d 266, 273 (E.D.N.Y.2012) (quoting Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 525 (2d Cir.1994)). Moreover, the pleadings âmust allege the provisions of the contract upon which the claim is based,â Atkinson v. Mobil Oil Corp., 205 A.D.2d 719, 614 N.Y.S.2d 36, 37 (1994) (citation omitted); accord Phoenix Four, Inc. v. Strategic Res. Corp., No. 05-CV-4837, 2006 WL 399396, at *10 (S.D.N.Y. Feb. 21, 2006) (collecting cases), and the defendantâs acts or omissions constituting the breach, see Abu Dhabi Commercial Bank v. Morgan Stanley & Co. Inc., 651 F.Supp.2d 155, 183 (S.D.N.Y.2009) (â[PJlaintiff must provide specific allegations as to the agreement between the parties, the terms of that agreement, and what provisions of the agreement were breached as a result of the acts at issue.â (footnote and internal quotation marks omitted)). See also Ellington Credit Fund, Ltd. v. Select Portfolio Servicing, Inc., 837 F.Supp.2d 162, 189 (S.D.N.Y.2011) (â[S]tating in a conclusory manner that an agreement was breached does not sustain a claim of breach of contract.â (citations omitted)).
Here, Plaintiffsâ Amended Complaint does not plead the specific contract involved, which itself may be fatal to Plaintiffsâ claim. See Dilworth v. Goldberg, 914 F.Supp.2d 433, 457-58 (S.D.N.Y.2012) (holding that the plaintiffsâ claim failed because they âdo not identify what provision of the contract was violated,â but rather asserted âonly that [the defendants ... had ... binding contracts] with Westchester County ..., plaintiff[s] [were] not a party to said contracts], said contracts] were intended for the benefit of plaintiff[s], the benefits of said contracts] to plaintiff[s] were immediate, and said defendants breached said contracts]â (internal quotation marks omitted)). Rather, the Amended Complaint asserts that âPlaintiffs ... have entered into certain contracts and warranty agreements with Hyundaiâ pursuant to which âHyundai would provide Plaintiffs ... with certain Sonata vehicles that were in proper working order and fit for their intended purpose,â and ârepair and/or service any defects or problems with the vehicles, including the braking systems,â but Defendant âbreached said contracts and agreements because it provided Plaintiffs ... with Sonata vehicles with defective brake assemblies and failed to repair the defects in the vehiclesâ brake assemblies.â (Am. Compl. ¶¶ 91, 93.) These allegations are so factually sparse as to fail to meet the pleading requirement under Twombly. See Transaero, Inc. v. Chappell, No. 13-CV-5752, 2014 WL 1783732, at *10 (E.D.N.Y. May 6, 2014) (noting that â[a] breach of contract claim will withstand a motion to dismiss only if plaintiff allege[s] the essential terms of the parties purported contract in nonconclusory language, including the specific provisions of the contract upon which liability is predicatedâ (internal quotation marks omitted)); Fink v. Time Warner Cable, 810 F.Supp.2d 633, 645 (S.D.N.Y.2011) (holding that the plaintiffsâ âsimple characterization of the nature of the promise, and the equally simplistic, allegations that [the defendant failed to perform, [were] insufficient to make the requisite plausible factual demonstration of the basis of [the plaintiffsâ claimâ), on reconsideration, No. 08-CV-9628, 2011 WL 5121068 (S.D.N.Y. Oct. 28, 2011); Chrysler Capital Corp. v. Hilltop Egg Farms, Inc., 129 A.D.2d 927, 514 N.Y.S.2d 1002, 1003 (1987) (holding that a complaint
Even if the Amended Complaint had properly pleaded a breach of contract claim, Defendant argues that the claim would be deficient because Plaintiffs are not in privity with Hyundai.
âUnder New York law, a plaintiff claiming rights as a third-party beneficiary must demonstrate: â(1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for his benefit[,] and (3) that the benefit to him is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate him if the benefit is lost.â â Fillmore E. BS Fin. Subsidiary L.L.C. v. Capmark Bank, No. 11-CV-4491, 2013 WL 1294519, at *11 (S.D.N.Y. Mar. 30, 2013) (quoting State of Cal. Pub. Emps.â Ret. Sys. v. Shearman & Sterling, 95 N.Y.2d 427, 718 N.Y.S.2d 256, 741 N.E.2d 101, 104 (2000)), aff'd, 552 Fed.Appx. 13 (2d Cir.2014); see also Subaru Distribs. Corp. v. Subaru of Am., Inc., 425 F.3d 119, 124 (2d Cir.2005) (citing State of Cal. Pub. Emps.â Ret. Sys., 718 N.Y.S.2d 256, 741 N.E.2d at 104) (noting that claimant asserting third-party-beneficiary status under a contract âmust establish that the parties to the contract intended to confer a benefit on the third partyâ).
Neither Plaintiffsâ Amended Complaint, nor their PAC, alleges facts to suggest that these conditions are satisfied here. Plaintiffsâ Memorandum in Opposition to the instant Motion asserts that Plaintiffs are third-party beneficiaries to the â[sales] contracts between Defendant and its authorized dealers ... and, in particular, the warranty provision of which Defendant is the warrantor.â (Pis.â Mem. 21.) However, Plaintiffsâ Amended Complaint fails to make any reference to these âsales contractsââlet alone facts from which the Court could infer that the contracts were intended to benefit Plaintiff. While Plaintiffsâ contention that the âsales contractsâ included the warranty provisions by which Defendant provided coverage for Plaintiffsâ vehicles may provide a basis to infer that the contracting parties intended to benefit Plaintiffs, no such allegation appears in Plaintiffsâ Amended Complaint or in their PAC. The Court has broadly construed Plaintiffsâ Amended Complaint, however â[i]t is long-standing precedent in this circuit that parties cannot amend their pleadings through issues raised solely in their briefs.â Olde Monmouth Stock Transfer Co. v. Depository Trust & Clearing Corp., 485 F.Supp.2d 387, 393 (S.D.N.Y.2007) (internal quotation marks omitted). Accordingly, Plaintiffs have failed to plead that they are third-party beneficiaries sufficiently to survive Defendantâs Motion. See, e.g., Fillmore E. BS Fin. Subsidiary L.L.C., 2013 WL 1294519, at *11 (âThe naked assertion ... that the oral agreement was intended to
Alternatively, Plaintiffs argue that they have a right of action under the contract because Defendant and Plaintiffs are in a relationship of ânear privity.â (Pis.â Mem. 22-23.) Plaintiffs have not provided, nor has the Court found in its own legal research, any legal authority to suggest that a duty to a non-contracting party stemming from ânear privityâ applies outside the malpractice or negligent misrepresentation context. See, e.g., In re MF Global Holdings Ltd. Inv. Litig., 998 F.Supp.2d 157, 187 (S.D.N.Y.2014) (noting that â[b]ecause the [plaintiffs] had no contractual relationship with [the defendant], they can recover in negligence only if they can establish a relationship with [the defendant] so close as to approach that of privity.â (internal quotation marks omitted)); Direct Mail Prod. Servs. Ltd. v. MBNA Corp., No. 99-CV-10550, 2000 WL 1277597, at *3-5 (S.D.N.Y. Sept. 7, 2000) (finding defendant to be sufficiently closely related to a signatory to the contract at issue where the several provisions of the contract âplainly gave [the plaintiff] reason to know that one of the reasons motivating [signatory defendant] was a desire to confer a pecuniary benefit on related [defendants]â and where âbecause the [contract] explicitly provided that the data supplied by [plaintiff] could be used for the benefit of related [defendants], it was entirely foreseeable that the related [defendants] might ... become bound up in any disputes premised upon allegations of improper usageâ); Sec. Investor Prot. Corp. v. BDO Seidman, L.L.P., 95 N.Y.2d 702, 723 N.Y.S.2d 750, 746 N.E.2d 1042, 1048 (2001) (considering âwhether liability can be imposed by a non-privy third partyâ for the purposes of the plaintiffs negligent misrepresentation claim).
In the end, Plaintiffs have failed to plead sufficient facts that they were in privity with Defendant, or that their relationship was such that they can prevail on the contract claim. See Olde Monmouth Stock Transfer Co., 485 F.Supp.2d at 393 (rejecting the plaintiffs attempt to raise new issues in their briefing in response to defendantsâ motion to dismiss); Haag, 969 F.Supp.2d at 316 (dismissing similar breach of contract claim because Hyundai was not in privity with plaintiff vehicle purchasers); Mandarin Trading, 919 N.Y.S.2d 465, 944 N.E.2d at 1110 (dismissing the plaintiffs breach of contract claim on the grounds that, by âfailing to plead the salient terms of a valid and binding contract, [the plaintiff] cannot show that the contract was intended for its immediate benefitâ). Therefore this claim is dismissed.
L Unjust Enrichment
In their fourth claim against HMA, Plaintiffs allege that Defendantâs distribu
â âThe theory of unjust enrichment lies as a quasi-contract claim. It is an obligation the law creates in the absence of any agreement.â â Diesel Props S.r.l. v. Greystone Bus. Credit II L.L.C., 631 F.3d 42, 54 (2d Cir.2011) (quoting Goldman v. Metro. Life Ins. Co., 5 N.Y.3d 561, 807 N.Y.S.2d 583, 841 N.E.2d 742, 746 (2005)). Thus, when a âmatter is controlled by contract,â the plaintiff has no valid claim for unjust enrichment under New York law. Goldman, 807 N.Y.S.2d 583, 841 N.E.2d at 746 (finding no unjust enrichment claim existed where the plaintiffs alleged that denial of insurance coverage by [the defendants breached the partiesâ insurance agreement because âthe matter is controlled by contractâ); see Statler I, 775 F.Supp.2d at 485 (âWhere a valid contract governs the subject matter in a lawsuit, a plaintiff may not recover in quasi-contract, and it is appropriate to dismiss a claim for unjust enrichment.â); Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382, 521 N.Y.S.2d 653, 516 N.E.2d 190, 193 (1987) (âThe existence of a valid and enforceable written contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter.â (citations omitted)). âCourts interpreting New York state law have found that, in cases involving allegedly defective products, express warranties cover the subject matter at issue and an unjust enrichment claim does not lie.â In re Porsche Cars N. Am., Inc., 880 F.Supp.2d 801, 863 (S.D.Ohio 2012); see also Wiseberg v. Toyota Motor Corp., No. 11-CV-3776, 2012 WL 1108542, at *12 (D.N.J. Mar. 30, 2012) (dismissing the plaintiffs unjust enrichment claims on the basis that the sale of the vehicle at issue âwas pursuant to a contract with specific warranty obligations that [the defendant] allegedly breached by its post-sale conductâ).
Where there is a bona fide dispute as to whether a relevant contract exists or covers the disputed issue, however, courts have permitted plaintiffs to pursue both unjust enrichment and breach of contract claims. See Kuzian v. Electrolux Home Prods., Inc., 937 F.Supp.2d 599, 618 (D.N.J.2013) (âAn unjust enrichment claim is unavailable where it simply duplicates, or replaces, a conventional contract or tort claim, but unjust enrichment may be pleaded in the alternative where there is a bona fide dispute whether a relevant contract exists or covers the dispute at issue.â); Labajo v. Best Buy Stores, L.P., 478 F.Supp.2d 523, 531 (S.D.N.Y.2007) (âWhen there is a bona fide dispute as to the existence of a contract, a party may proceed upon a theory of unjust enrichment, and an unjust enrichment claim may be alleged alongside a breach of contract claim.â); Ox v. Union Cent. Life Ins. Co., No. 94-CV-4754, 1995 WL 634991, at *6 (S.D.N.Y. Oct. 27, 1995) (holding that, as long as a factual issue remains about the validity of the contract at issue, ârecovery under a theory of unjust enrichment may be proper, even in the presence of an alternative breach of contract claimâ); Cf. Bristol Vill., Inc. v. La.-Pac. Corp., 916 F.Supp.2d 357, 367 (W.D.N.Y.2013) (dismissing the plaintiffs unjust enrichment claim where âthere [was] no bona fide
Here, however, the Parties do not dispute the existence of the Basic Warranty, but rather whether Plaintiffsâ injuries are covered under the terms of that agreement.
5. Declaratory Judgment
Lastly, Plaintiffs seek a declaratory judgment to the effect âthat the remedial work necessary to correct the Vehiclesâ braking system is covered by the warranty.â (Pis/ Mem. 24; see Am. Compl. ¶ 99.) â âIt is within the broad discretion of the trial court whether to exercise declaratory jurisdiction/ â Deutsche Alt-A Sec. Mortg. Loan Trust, Series 2006-OA1 v. DB Structured Prods., Inc., 958 F.Supp.2d 488, 507 (S.D.N.Y.2013) (quoting Camofi Master LDC v. Coll. Pâship, Inc., 452 F.Supp.2d 462, 480 (S.D.N.Y.2006)); see also Muller v. Olin Mathieson Chem. Corp., 404 F.2d 501, 505 (2d Cir.1968). Here, however, Plaintiffs have already asserted the same remedy for which they seek declaratory judgment in Plaintiffsâ claim for breach of express warranty. (See Am. Compl. ¶ 73 (âIn addition, Plaintiffs seek[ ] a declaratory judgment as set forth herein below in the Sixth Claim.â).) â[C]ourts have found declaratory judgment to be inappropriate where a party has already invoked its right to a coercive remedy.â Piven v. Wolf Haldenstein Adler Freeman & Herz L.L.P., No. 08-CV-10578, 2010 WL 1257326, at *11 (S.D.N.Y. Mar. 12, 2010); see also Apple Records, Inc. v. Capitol Records, Inc., 137 A.D.2d 50, 529 N.Y.S.2d 279, 281 (1988) (âA cause of action for a declaratory judgment is unnecessary and inappropriate when the plaintiff has an adequate, alternative remedy in another form of action, such as breach of contract.â); Assured Guar. Mun. Corp. v. UBS Real Estate Sec., Inc., No. 12-CV-1579, 2012 WL 3525613, at *6 (S.D.N.Y. Aug. 15, 2012) (same). Here, as Plaintiffs have sought the same relief arising out of the alleged breach of the Basic Warranty agreement as in Plaintiffsâ request for declaratory judgment, Plaintiffsâ request for declaratory judgment is dupli-cative of their other claims and is dismissed without prejudice.
C. Leave to Amend
Leave to amend a complaint should be freely given âwhen justice so
Plaintiffs have now amended their Complaint one time and have attached a âProposed Amended Class Action Complaintâ along with their materials in response to Defendantâs Motion To Dismiss. The PAC was filed as a result of the Courtâs discussion with the Parties at the September 10, 2013 premotion conference, (see Dkt. (minute entry for Sept. 10, 2013)), and issues discussed by the Parties in their premotion letters, (see Dkt. Nos. 27, 28). Thus, Plaintiffsâ failure to fix the deficiencies in their initial complaint, after being provided with full notice of it, is alone sufficient ground to deny leave to amend. See In re Eaton Vance Mut. Funds Fee Litig., 380 F.Supp.2d 222, 242 (S.D.N.Y.2005) (denying leave to amend because âthe plaintiffs have had two opportunities to cure the defects in their complaints, including a procedure through which the plaintiffs were provided notice of defects in the [amended complaint] by the defendants and given a chance to amend their [amended complaint],â and âplaintiffs have not submitted a proposed amended complaint that would cure these pleading defectsâ), aff'd sub nom. Bellikoff v. Eaton Vance Corp., 481 F.3d 110 (2d Cir.2007). Accordingly, the Court declines to grant Plaintiff leave to amend.
III. CONCLUSION
For the reasons stated above, Defendantsâ Motion To Dismiss. is Granted in part and Denied in part: the Motion is Granted with respect to Plaintiffs breach-of-contract, unjust enrichment, and declaratory judgment claims. The Motion is Denied with respect to Plaintiffsâ express warranty and § 349 claims, insofar as the § 349 claim is based on Defendantâs conduct after Plaintiffs purchased their vehicles. Defendantâs Motion is Granted with respect to all other § 349 claims.
The Clerk of the Court is respectfully requested to terminate the pending Motion. (See Dkt. No. 30.)
SO ORDERED.
. Plaintiffsâ Amended Complaint states that this event occurred "[i]n or about June 2007,â (Am. Compl. ¶ 27), but Plaintiffsâ Memorandum in Opposition ("Pis.â Mem.â) clarifies that this was a typographical error, "which should have read 'June 2009,â â (Pis.â Mem. 3 n. 2 (Dkt. No. 34.)).
. Plaintiffsâ Proposed Amended Class Action Complaint places this incident in September 2011. (See Graifman Decl. Ex. B, ¶ 20 (Dkt. No. 33).)
. CAFA grants federal courts jurisdiction over proposed class actions where the amount in controversy exceeds five million dollars, any plaintiff is diverse from any defendant, and the class contains at least one hundred potential members. See 28 U.S.C. § 1332(d)(2)(A), (d)(5)(B).
. The Amended Complaint also includes a claim under General Business Law § 350, (see Am. Compl. ¶¶ 54-65), however Plaintiffs have decided not to pursue this claim. (See Pls.âs Mem. 5 (listing the causes of action Plaintiffs allege and omitting a § 350 claim); Def.âs Mem. 10 n. 5 (noting that Plaintiffs represented at the September 10, 2013 Pre-motion Conference that they were abandoning their § 350 claim).)
.Plaintiffs' Amended Complaint also asserts a claim for "breach of implied warranty,â (Am. Compl. ¶¶ 75-82), however Plaintiffs have decided not to pursue this claim, (see Pis.â Mem. 5 n. 4 (Dkt. No. 34); Graifman Decl. Ex. B, at 27 (deleting Plaintiffs' "Breach of Implied Warranty of Merchantabilityâ cause of action from Plaintiffsâ Proposed Amended Class Action Complaint)). Here, such a claim might be barred against HMA by the lack of privity between Plaintiffs and HMA. See Haag v. Hyundai Motor America, 969 F.Supp.2d 313, 316-17 (W.D.N.Y.2013) (dismissing the plaintiff's breach of implied warranty claim because it failed to allege sufficient privity with the defendant, Hyundai Motor America, where plaintiff had purchased his vehicle from a Hyundai dealer); Cali v. Chrysler Grp.
. In contrast, the Gaidon II plaintiffs alleged that the defendants "engaged in deceptive marketing and sales practices in promoting sales of its 'vanishing premium' policies through agents' representations and personalized graphic illustrations showing that, after a specified period, 'the policy's dividends would thereafter cover the premium costs.' " Gaidon II, 727 N.Y.S.2d 30, 750 N.E.2d at 1080 (citation omitted). The New York Court of Appeals rejected the defendantâs argument that the plaintiffsâ section 349 claims accrued when they purchased the policies, which "failed to contain terms reflecting the vanishing premium illustrations,â and instead held that plaintiffsâ "injuries occurred when they were first called upon to pay additional premiums beyond the date by which they were led to believe that policy dividends would be sufficient to cover all premium costs.â Id., 727 N.Y.S.2d 30, 750 N.E.2d at 1083-84. The court further found that the "gravamen of
. Plaintiffs have made no effort to amend this section in their Proposed Amended Class Action Complaint, despite filing it after Defendant's Motion To Dismiss. (See PAC ¶ 53.)
. The Amended Complaint fails to plead when Flannery experienced brake problems, though Plaintiffsâ PAC places these events ââin or around September 2011.â (Compare Am. Compl. ¶ 20 with PAC ¶ 20.) Plaintiffsâ PAC also contains edits to make it clear that Plaintiff requested ââthat Defendant cover the repair or replacement under [the Basic Warranty]â prior to "br[inging] the vehicle to a local mechanic who determined that the brakes and rotors required replacement.â (PAC 1121.) However, Plaintiffs provide no explanation as to why Flannery would inquire about warranty coverage prior to the determination that replacement was required.
. Plaintiffsâ PAC further fails to plead any facts that would support allegations of a âsecret warranty practice,â yet it continues to assert this practice as grounds for Plaintiffsâ § 349 claim. {Compare Am. Compl. ¶ 58(f) with PAC ¶ 58(f).)
. For example, the second paragraph of the Amended Complaint pleads that âSonatas are equipped with defective brakes,â and that âSonatas manifestâ the squealing and premature deterioration of brake parts if not repaired, not that Plaintiffs' vehicles or some subset of Sonatas have these issues. (Am. Compl. ¶ 2.)
. The Court notes that a comparison between the originally filed Complaint and the Amended Complaint in this action reveals several passages where Plaintiffs have replaced the phrase "design flawâ or "design defectâ with âmaterial and/or workmanship defect.â (See Def.'s Mem. 22.) While this may not bode well for Plaintiffs' likelihood of success at later stages of this Action, the Court must take all facts in the Amended Complaint as true for the purposes of the instant Motion and draw all reasonable inferences in favor of the Plaintiffs. See Ruotolo, 514 F.3d at 188 (noting that, when considering a Motion To Dismiss, the court "accept[s] all factual allegations in the complaint and draw[s] all reasonable inferences in the plaintiffâs favor.â (internal quotation marks omitted)).
. In fact, Defendant suggests that the vagueness as to the details of the "contract" alleged in the Amended Complaint is due to the fact that Plaintiffsâ contractual relationships are with independent Hyundai dealers rather than with HMA. (See Def.âs Mem. 24 n. 9.)
. In fact, another district court in the Second Circuit has already told Plaintiffs' counsel that a claim for unjust enrichment concerning HMA's failure to cover replacement brakes is precluded by an express warranty claim against HMA. See Haag, 969 F.Supp.2d at 317 ("It is well settled that where a valid warranty governs the subject matter of a suit, a plaintiff cannot recover in quasi-contract, and it is appropriate to dismiss and unjust enrichment claim.â). The Haag court further found that "[hjaving chosen to sue for breach of warranty, plaintiff cannot plead an alternative quasi-contract claim in the hopes of modifying the terms of that warranty.â Id.