Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_13-cv-08274/USCOURTS-azd-3_13-cv-08274-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

---

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA 

JAMES GUSTAFSON, on behalf of himself )

and all other persons similarly situated, )

 ) 

 Plaintiff, ) 

 ) 

vs. ) 

 )

GOODMAN MANUFACTURING COMPANY )

L.P., and GOODMAN GLOBAL, INC., )

 ) No. 3:13-cv-8274-HRH

 Defendants. ) (Prescott Division)

___________________________________________) 

O R D E R

Motion to Dismiss

Defendants move to dismiss plaintiff’s complaint.1 This motion is opposed.2 Oral

argument was requested but is not deemed necessary. 

Background

Plaintiff is James Gustafson. Defendants are Goodman Manufacturing Company,

L.P. and Goodman Global, Inc. 

1Docket No. 10. 

2Docket No. 20. 

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Case 3:13-cv-08274-JAT Document 22 Filed 04/28/14 Page 1 of 13
Plaintiff alleges that “[i]n or around 2010, [he] purchased a remodeled home” and

that “[s]oon thereafter, [he] purchased two Goodman Products for the purpose of cooling

and heating his home” from Carey’s Air Conditioning, Heating & Plumbing.3 Plaintiff

alleges that he paid “approximately $16,000“ for the two Goodman Products.4 Plaintiff’s

Goodman Products came with a “Limited Warranty” which provides that “[t]his heating

or air conditioning unit is warranted by Goodman Manufacturing Company ... to be free

from defects in materials and workmanship that affect performance under normal use and

maintenance[.]”5 The Limited Warranty further provides that “Goodman will furnish a

replacement part, without charge for the part only, to replace any part that is found to be

defective due to workmanship or materials under normal use and maintenance.”6 The

Limited Warranty does “not apply to labor, freight, or any other cost associated with the

service, repair or operation of the unit.”7 The Limited Warranty applies for ten years if the

owner registers his unit, but only applies for five years if the owner does not register his

3Class Action Complaint at 4, ¶ 12 & 13, ¶ 47, Docket No. 1. 

4

Id. at 13, ¶ 47. 

5Limited Warranty at 1, Exhibit A, Class Action Complaint, Docket No. 1. 

6

Id.

7

Id.

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Case 3:13-cv-08274-JAT Document 22 Filed 04/28/14 Page 2 of 13
unit.8

 Plaintiff has not alleged that he registered his unit, but plaintiff does allege that he

purchased “an Extended 10-Year Warranty covering parts and laborforthe two Goodman

Products.”9

Plaintiff alleges that after he purchased the two Goodman Products, “[o]verthe next

24 months, [his] Goodman Products regularly failed to emit cool air and, therefore, failed

to cool his house.”10 Plaintiff alleges that he contacted Carey’s “no fewer than 12 separate

times to fix his Goodman Products....”11 Plaintiff alleges that each time, “a technician

would come out and repair the Goodman Units, either by replacing leaked Freon in the

Goodman Products, repair[ing] orreplac[ing] any defective parts, or any other such repair

deemed necessary.”12 Plaintiff alleges that because his “Goodman Products were under

warranty, Carey’s did not charge for labor or the repairs it performed.”13 Plaintiff alleges

that in 2013, he “became so frustrated with the failure of his Goodman Products..., he

8

Id.

9Class Action Complaint at 13, ¶ 47, Docket No. 1. 

10

Id. at ¶ 48. 

11

Id.

12

Id. 

13

Id.

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Case 3:13-cv-08274-JAT Document 22 Filed 04/28/14 Page 3 of 13
purchasedaBi-AnnualMaintenance Agreement ... from River Valley Air Conditioning,Inc.

for both of his Goodman Products at a total cost of $266.00.”14

 

Plaintiff alleges that the leakage of refrigerant in the Goodman Products was caused

by defective evaporator coils.15 He further alleges that “the refrigerant leakage is due to

a defect in the design and manufacturing of the Goodman Products that existed from the

date of manufacture” and that “[d]efendants knew about the defects in the Goodman

Products.”16 Plaintiff alleges that “Goodman provided certain of its distributors a $300

allowance for each Goodman Product they sold because the refrigerant leakage problem

was so widespread.”17

Plaintiff alleges that he was not alone in his frustration with defendants’ products. 

In his complaint, plaintiff includes numerous negative comments about defendants’

products that other consumers posted on the internet.18 Plaintiff also includes comments

posted by service technicians who “criticized the poor quality of Goodman products....”19

14

Id. at 13-14, ¶ 49. 

15

Id. at 1, ¶ 3. 

16

Id. at 1, ¶ 4 & 2, ¶ 8. 

17

Id. at 2, ¶ 8. 

18

Id. at 14-21, ¶ 52. 

19

Id. at 21-22, ¶ 53. 

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Case 3:13-cv-08274-JAT Document 22 Filed 04/28/14 Page 4 of 13
On November 20, 2013, plaintiff commenced this action. Plaintiff brings this action

“on behalf of himself and all persons and/or entities in Arizona who purchased air

conditioners, airhandlers, and heat pumps manufactured byGoodmanManufacturing Co.,

L.P. underthe trade names Goodman® and Amana® ... between November 20, 2009 [and]

November 20, 2013, [and] who incurred damages as a result of having to repair their

Goodman Products due to leakage of refrigerant.”20In his Class Action Complaint,

plaintiffs alleges a breach of express warranty claim and an Arizona Consumer Fraud Act

(ACFA) claim. 

Pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure, defendants now move

to dismiss plaintiff’s claims. 

Discussion

“Rule 12(b)(6) authorizes courts to dismiss a complaint for ‘failure to state a claim

upon which relief can be granted.’” In re Rigel Pharmaceuticals, Inc. Securities Litig., 697

F.3d 869, 875 (9th Cir. 2012) (quoting Fed. R. Civ. P. 12(b)(6)). “To avoid dismissal, the

complaint must provide ‘more than labels and conclusions, and a formulaic recitation of

the elements of a cause of action will not do.’” Id. (quoting Bell Atl. Corp. v. Twombly, 550

U.S. 544, 555 (2007)). “[A] plaintiff must ‘allege sufficient factual matter ... to state a claim

to relief that is plausible on its face.’” OSU Student Alliance v. Ray, 699 F.3d 1053, 1061 (9th

20

Id. at 1, ¶ 1 (footnote omitted). 

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Case 3:13-cv-08274-JAT Document 22 Filed 04/28/14 Page 5 of 13
Cir. 2012) (quoting Pinnacle Armor, Inc. v. United States, 648 F.3d 708, 721 (9th Cir. 2011)). 

“In evaluating a Rule 12(b)(6) motion, the court accepts the complaint’s well-pleaded

factual allegations as true and draws all reasonable inferences in the light most favorable

to the plaintiff.” Adams v. U.S. Forest Srvc., 671 F.3d 1138, 1142-43 (9th Cir. 2012). 

Defendants first argue that plaintiff has failed to state plausible claims because

plaintiff has not alleged that he suffered any damages. Damages are an essential element

of both plaintiff’s breach of express warranty claim and of his ACFA claim. See Dillon v.

Zeneca Corp., 42 P.3d 598, 602 (Ariz. Ct. App. 2002) (the plaintiffs’ breach of express

warranty claim based on statement made by sales rep failed because they suffered no loss

as a result of the statement); Grand v. Nacchio, 147 P.3d 763, 782 n.16 (Ariz. Ct. App. 2006)

(“element of consumer fraud action is showing of ‘consequent and proximate injury’”).

Defendants argue that plaintiff has not alleged any damages because he has alleged

that Carey’s did not charge for any labor or parts and thus he has not alleged that he

suffered any out-of pocket losses. Defendants argue that the $266 that plaintiff alleges he

paid forthe preventative maintenance contract cannot be considered an out-of-pocket loss

because plaintiff chose to incur this cost voluntarily and because the Limited Warranty

provides that Goodman Manufacturing is not responsible for “normal maintenance” orfor

“[d]amagesorrepairs required as a result of any improper... maintenance....”21 Defendants

21Limited Warranty at 1, Exhibit A, Class Action Complaint, Docket No. 1. 

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Case 3:13-cv-08274-JAT Document 22 Filed 04/28/14 Page 6 of 13
also argue that plaintiff’s damages cannot be based on any contention that he incurred

labor costs because the Limited Warranty provides that it does “not apply to labor, freight,

or any other cost associated with the service, repair or operation of the unit.”22 

In U.C.C. cases, “damages in cases of breach of warranty are ordinarily measured

by the difference between the actual value of the article sold and its value if it were as

warranted.” Downs v. Shouse, 501 P.2d 401, 406 (Ariz. Ct. App. 1972). Actual damages

in a consumer fraud case include out-of-pocket expenses. Holeman v. Neils, 803 F. Supp.

237, 242 (D. Ariz. 1992) (citing Parks v. Macro-Dynamics, Inc., 591 P.2d 1005, 1009 (Ariz. Ct.

App. 1979)). 

Plaintiff has adequately alleged that he suffered actual damages as a result of

defendants’ breach of warranty and violation of the ACFA.23 Plaintiff has alleged that he

had to have his Goodman Products repaired twelve times in a two-year period. A

reasonable inference that can be drawn from this fact is that the value of the products

plaintiff purchased may have been different from their value if they were free of defects as

warranted. Plaintiff has also alleged that he incurred out-of-pocket expenses in the amount

of $266. Although plaintiff voluntarily purchased the maintenance contract, he alleges that

he did so because of “the failure of his Goodman Products to perform as expected and

22

Id.

23Because plaintiff’s allegations of actual damages are sufficient, the court need not

address defendants’ argument regarding incidental or consequential damages. 

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Case 3:13-cv-08274-JAT Document 22 Filed 04/28/14 Page 7 of 13
advertised[.]”24 Based on these allegations, it is plausible that plaintiff suffered actual

damages as a result of defendants’ alleged conduct. Whether or not plaintiff can prove the

damages he alleges is an issue to be determined when the merits of plaintiff’s complaint are

before the court.

But even if plaintiff has adequately alleged damages, which he has, defendants

argue that his breach of express warranty claim must still be dismissed because he has not

adequately alleged that defendants breachedtheLimitedWarranty. TheLimited Warranty

provides that “[a]s its only responsibility, and your only remedy, Goodman will furnish

a replacement part, without charge for the part only, to replace any part that is found to

be defective due to workmanship or materials under normal use and maintenance.”25 To

state a plausible breach of express warranty claim, defendants argue that plaintiff must

allege that defendants “refused or otherwise failed to pay” for any replacement parts. 

Chaurasia v. General Motors Corp., 126 P.3d 165, 169 (Ariz. Ct. App. 2006); see also, Baba

v. Hewlett Packard Co., Case No. C 09–5946 RS, 2012 WL 5336971, at *7 (N.D. Cal. Oct. 26,

2012) (quoting Chaurasia, 126 P.3d at 169) (under Arizona law, “HP cannot have breached

the warranty if it upheld its obligation to repair or replace the defective product. On the

other hand, if HP ‘refused or otherwise failed to pay for the repair to a covered item,’ it

24Class Action Complaint at 13, ¶ 49, Docket No. 1. 

25Limited Warranty at 1, Exhibit A, Class Action Complaint, Docket No. 1. 

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Case 3:13-cv-08274-JAT Document 22 Filed 04/28/14 Page 8 of 13
would stand in breach”). Defendants argue that the allegations in plaintiff’s complaint

show that Goodman Manufacturing lived up to its warranty obligations because plaintiff

has alleged that each time he experienced a problem with his Goodman Products, he was

not charged for any parts that were needed to fix the problem. Defendants insist that

because plaintiff has alleged that he did not pay for any parts, he has failed to allege that

the Limited Warranty was breached.

Defendants are essentially arguing that plaintiff will not be able to prove a breach

of the Limited Warranty, but the question of whether plaintiff will be able to prove a breach

of the Limited Warranty goes to the merits of plaintiff’s claim, not to the adequacy of

plaintiff’s pleading. The question here is whether it is plausible, based on plaintiff’s

allegations, that defendants breached the Limited Warranty. 

As to that question, plaintiff’s complaint contains sufficient factual allegations to

make his claim that defendants breached the Limited Warranty plausible. Plaintiff

expressly alleges26that defendants breached the provision of the Limited Warranty which

states that “[t]hisheating or air conditioning unit is warranted by Goodman Manufacturing

... to be free from defects in materials and workmanship that affect performance under

normal use and maintenance[.]”27 Plaintiff alleges that defendants breached this provision

26Class Action Complaint at 27, ¶ 67, Docket No. 1. 

27Limited Warranty at 1, Exhibit A, Class Action Complaint, Docket No. 1. 

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Case 3:13-cv-08274-JAT Document 22 Filed 04/28/14 Page 9 of 13
because the Goodman Products contained defective evaporator coils that caused the

refrigerant to leak from the units thereby preventing normal use. These allegations are

sufficient to suggest that defendants breached the Limited Warranty. 

Defendants next argue that plaintiff’s breach of express warranty claimfailsbecause

plaintiff did not give proper notice of the alleged breach. To maintain a breach of warranty

claim in a U.C.C. case, “[t]he buyer must within a reasonable time after he discovers or

should have discovered any breach notify the seller of breach or be barred from any

remedy[.]” A.R.S. § 47-2607(C)(1). The alleged breaching party must be given direct

notice, which can be accomplished by the filing of a complaint. Burge v. Freelife Int’l, Inc.,

Case No. CV 09–1159–PHX–JAT, 2009 WL 3872343, at *6 (D. Ariz. Nov. 18, 2009). But, the

complaint must be filed without reasonable delay. “Ordinarily, whether notice was given

within a reasonable time is a question of fact for the jury, ‘unless it appears that only one

finding can legally be derived from the circumstances.’” Id. at *5 (quoting Pace v.

Sagebrush Sales Co., 560 P.2d 789, 792 (Ariz. 1977)).

In Burge, the court held that complaints filed between 17 and 33 months after the

plaintiffs learned of the alleged breach were unreasonably delayed as a matter of law. Id.

at *6. In Hearn v. R.J. Reynolds Tobacco Co., 279 F. Supp. 2d 1096, 1116 (D. Ariz. 2003), the

court held that “two years constitutes unreasonably delayed notice.” And, in Pace, the

court found four months was an unreasonable delay. Pace, 560 P.2d at 792. 

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Case 3:13-cv-08274-JAT Document 22 Filed 04/28/14 Page 10 of 13
Here, plaintiff’s complaint was filed in 2013, at least two years after he discovered,

or should have discovered, the breach of warranty. Thus, as a matter of law, plaintiff’s

complaint was not filed within a reasonable time and it cannot serve as notice to

defendants. 

Plaintiff contends, however, that his complaint was not the only direct notice he

gave. He contends that he provided direct notice to defendants in 2011 “when he spoke

to [d]efendants’ representatives in Texas about the problems he was experiencing with his

units.”28 Plaintiff contends that “[t]he Goodman claims representative provided [p]laintiff

with a reference case number for his complaints.”29 But, there are no allegations in

plaintiff’s complaint to support these contentions. Plaintiff’s complaint contains no

allegations about his having contacted defendants’ representatives in 2011. 

Plaintiff also argues that defendants received direct notice of the problems he was

having with his Goodman Products each and every time Carey’s replaced a part because

defendants were providing the parts. But there are no allegations in his complaint to

support this contention. Plaintiff has not alleged that Carey’s had to contact defendants

each time it needed a replacement part and this would not be a reasonable inference to

draw from the factual allegations in plaintiff’s complaint. It is just as likely that Carey’s

28Plaintiff’sOpposition to Defendants’ Motion to Dismiss the Complaint at 9, Docket

No. 20. 

29

Id.

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Case 3:13-cv-08274-JAT Document 22 Filed 04/28/14 Page 11 of 13
had a supply of parts on hand and had no need to contact defendants when it repaired

plaintiff’s units. 

In sum, plaintiff has not alleged that he gave defendants notice of the alleged breach

of warranty within a reasonable time. Thus, plaintiff has not stated a plausible breach of

express warranty claim, and this claim is dismissed. Plaintiff will be given leave to amend

as to this claim because it is possible that he will be able to allege that he gave defendants’

direct notice of the alleged breach of warranty within a reasonable time. 

Defendants next argue that even if plaintiff adequately alleged damages, which he

has, his ACFA claim still fails because it is barred by the statute of limitations. ACFA

claims are subject to a one-year statute of limitations. Murry v. W. Amer. Mortg. Co., 604

P.2d 651, 654 (Ariz. Ct. App. 1979). “A cause of action under the ACFA accrues when the

consumer discovered or with reasonable diligence could have discovered both the ‘what’

and ‘who’ elements of the fraud.” Burge, 2009 WL 3872343, at *7 (quoting Lawhon v. L.B.J.

Institutional Supply, Inc., 765 P.2d 1003, 1007 (Ariz. Ct. App. 1988)). This occurs when the

consumer knows whose products were involved and that the products were not

performing as expected. Id. 

Plaintiff alleges that he bought his Goodman Products in 2010 and that overthe next

24 months, he had to have them repaired twelve times. Based on these allegations, it is

clear that by at least 2011, plaintiff knew the “who” and “what” elements of his ACFA

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claim. By at least 2011, plaintiff knew whose products were involved and that the products

were not performing as expected. Because plaintiff did not file his complaint until

November 2013, his ACFA claim is barred by the statute of limitations,30and this claim is

dismissed. Plaintiff will not be given leave to amend as to this claim because any

amendment would be futile. Carrico v. City and County of San Francisco, 656 F.3d 1002,

1008 (9th Cir. 2011). 

Conclusion

Defendants’ motion to dismiss31is granted. Plaintiff’s claims aredismissed. Plaintiff

is given leave to amend as to his breach of express warranty claim only. Plaintiff’s

amended complaint, should he choose to file one, shall be filed on or before May 19, 2014. 

DATED at Anchorage, Alaska, this 28th day of April, 2014. 

/s/ H. Russel Holland 

United States District Judge

30Because plaintiff’s ACFA claim is barred by the statute of limitations, the court

need not consider defendants’ particularity and failure to disclose arguments or

defendants’ argument based on Sullivan v. Pulte Home Corp., 290 P.3d 446, 454 (Ariz. Ct.

App. 2012). 

31Docket No. 10. 

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