Opinion ID: 868479
Heading Depth: 3
Heading Rank: 2

Heading: Gotthelf’s Individual Claims

Text: Because Gotthelf opted out of the Settlement Agreement, he is not barred by res judicata from pursuing his individual claims for relief.14 Gotthelf brings four claims under New Jersey law: violations of the NJCFA, common law fraud, breach of express warranty, and breach of the implied covenant of good faith and fair dealing. For substantially the same reasons provided by the District Court, we will affirm the dismissal of Gotthelf’s claims.15 One crucial deficiency in Gotthelf’s pleadings dooms all four of his claims: Gotthelf has not alleged any facts that demonstrate that Toyota had knowledge of, and intentionally concealed, the alleged defect in the HID headlamps, either before Gotthelf 14 Because res judicata bars any claims brought on behalf of the putative class, we only consider Gotthelf’s claims as to himself. He has not asserted that he brings his claims on behalf of others who opted out of the Settlement Agreement. 15 To withstand a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. In evaluating a motion to dismiss, we accept as true factual assertions in the complaint, but we disregard legal conclusions and conclusory statements. James v. City of Wilkes-Barre, 700 F.3d 675, 681 (3d Cir. 2012). Moreover, under Rule 9(b), when a plaintiff is alleging fraud or mistake, he “must state with particularity the circumstances constituting fraud or mistake,” though conditions of a person’s mind, such as knowledge or intent, may be alleged generally. Fed. R. Civ. P. 9(b). When pleading knowledge, the complaint must still contain more than a “conclusory allegation,” and the pleading must meet the “less rigid — though still operative — strictures of Rule 8.” Iqbal, 556 U.S. at 686-87. 16 leased his Prius, or prior to the expiration of Gotthelf’s 3-year/36,000 mile warranty. As such, each of his claims fails.
The New Jersey Consumer Fraud Act “provides a private cause of action to consumers who are victimized by fraudulent practices in the marketplace.” Gonzalez v. Wilshire Credit Corp., 25 A.3d 1103, 1114 (N.J. 2011). To constitute consumer fraud, “the business practice in question must be ‘misleading’ and stand outside the norm of reasonable business practice in that it will victimize the average consumer.” Turf Lawnmower Repair, Inc. v. Bergen Record Corp., 655 A.2d 417, 430 (N.J. 1995). The elements of a NJCFA claim are: “(1) an unlawful practice, (2) an ascertainable loss, and (3) a causal relationship between the unlawful conduct and the ascertainable loss.” Gonzalez, 25 A.3d at 1115. The statute defines an “unlawful practice” as: any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression[,] or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived[,] or damaged thereby. N.J. Stat. Ann. § 56:8-2. Gotthelf claims that the “unlawful practice” in which Toyota engaged was its knowing concealment of the defect in the HID headlamps. Gotthelf also claims that Toyota engaged in “an unconscionable commercial practice” by failing to disclose the defect in the HID headlamps to its customers once it became aware of the defect. Under each of these theories, however, Gotthelf is required to show that Toyota 17 “knowingly, with the intent of inducing reliance, conceal[ed], suppress[ed], or omitt[ed] a material fact.” Jersey Cent. Power & Light Co. v. Melcar Util. Co., 59 A.3d 561, 571 (N.J. 2013). Gotthelf claims that Toyota knew of the HID headlamp defect “for years while Plaintiffs[’] warranties were in full force and effect.” (Appellants’ Br. 48-49.) Nothing in the Complaint provides factual support for Toyota’s alleged knowledge and concealment of the defect, either before Gotthelf leased his Prius, or during Gotthelf’s warranty period. To the contrary, the facts demonstrate that once Toyota became aware of the defect during the NHTSA investigation, it initiated a Customer Support program to notify customers of the problem with the HID headlamps. First, the Complaint alleges that Toyota should have been aware of the HID headlamp defect through its own “[b]ooks of [k]nowledge, internal testing, information on dealership repair orders, warranty data, [and] records of customer complaints.” (App. 86.) However, Gotthelf provides no factual support for this assertion — he does not state when the alleged complaints were received, or to whom at Toyota these alleged complaints were sent. Nor does he provide any facts relating to the alleged books of knowledge, internal testing, or dealership repair orders.16 Such conclusory allegations are 16 Gotthelf also claims that, as of September 2009, over 26,000 warranty claims had been submitted on the HID headlamps. However, it is not alleged in the Complaint when these warranty claims were filed, and at what point Toyota supposedly had knowledge of a widespread defect in the HID headlamps, such that it should have notified customers of the alleged defect. 18 insufficient to establish Toyota’s knowledge, and concealment, of the HID headlamp defect. See Iqbal, 556 U.S. at 678-79 Second, Gotthelf relies on the complaints submitted to the NHTSA to establish Toyota’s knowledge, and alleged concealment, of the defect. The Complaint includes several customer complaints filed with the NHTSA, the earliest of which dates to July 1, 2007. However, these complaints were filed with the NHTSA, not with Toyota, and the NHTSA did not notify Toyota of its investigation until May 6, 2009. Gotthelf has provided no facts to support his assertion that Toyota should have known about the defect based on these complaints. Based on the facts provided in the Complaint, May 6, 2009 is the earliest date that knowledge of the alleged defect can be attributed to Toyota. However, by this time, Gotthelf’s warranty period had ended. Third, the Customer Support letter in no way helps Gotthelf’s argument that Toyota had knowledge of, and concealed, the defect. The Customer Support letter was sent after the expiration of Gotthelf’s warranty period and informed customers of the problem with the HID headlamps. Gotthelf’s assertions that the letter was sent in bad faith, or as a “cover up,” lack factual support. Because Gotthelf cannot demonstrate that Toyota engaged in “an unlawful practice” through its alleged omission or concealment of the HID headlamp defect, his NJCFA claim fails.17 17 Gotthelf also spends a considerable amount of his brief arguing that the District Court erred by requiring that Toyota knew “with certainty” that the HID headlamps 19
Gotthelf’s common law fraud claim was properly dismissed for substantially the same reasons as his NJCFA claim. The elements of a common law fraud claim under New Jersey law are: “(1) a material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages.” Gennari v. Weichert Co. Realtors, 691 A.2d 350, 367 (N.J. 1997). Because Gotthelf has not demonstrated that Toyota made any material misrepresentations or omissions of material fact, his claim fails.
Gotthelf’s breach of express warranty claim was also properly dismissed. The Unexpected Extinguishment occurred in Gotthelf’s HID headlamps after the 3- year/36,000 mile warranty period had elapsed. In New Jersey, “[a] breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.” N.J. Stat. Ann. § 12A:2- 725(2) (emphasis added). Therefore, if a warranty is a “future performance” warranty, “the cause of action accrues when the breach is or should have been discovered.” Poli v. would fail. Because the Complaint has failed to plead facts to establish Toyota’s knowledge during the relevant time period, we do not need to address whether the District Court erred by requiring a heightened standard. 20 DaimlerChrysler Corp., 793 A.2d 104, 107 (N.J. Super. Ct. App. Div. 2002). In Poli, the court determined that a seven-year/70,000 mile powertrain warranty was a “future performance warranty.” Id. at 108. The warranty at issue here, for three-years/36,000 miles, is substantially the same as the one in Poli, and falls within the “future performance exception” of N.J. Stat. Ann. § 12A:2-725(2). The cause of action did not accrue until the defect manifested itself. Therefore, for statute of limitations purposes, the breach of the warranty occurs when the defect manifests itself, not when the defect first “exists.” There is no reason the same rule should not apply when deciding whether the defect was covered by the warranty. New Jersey courts have intimated that plaintiffs can only recover for breach of warranty if the defects were discovered during the warranty period. Cf. Comm’rs of Fire Dist. No. 9 v. Am. La France, 424 A.2d 441, 572 (N.J. Super. Ct. App. Div. 1980) (“[I]f the warranty explicitly extended to future performance of the truck, the four-year limitations period did not begin to run until the breach — the paint defect — was or should have been discovered by the plaintiff, provided the defect arose within the warranty period.” (emphasis added)); ACH Enters. 1. LLC v. Viking Yacht Co., 817 F. Supp. 2d 465, 470 (D.N.J. 2011) (“[T]the future performance exception found in N.J.S.A. § 12A:2-725(2) only applies if the defect is discovered during the warranty period.”). Furthermore, this interpretation is consistent with the general rule of express warranties. See Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 616 (3d Cir. 1995) (“[T]he general rule, from which we see no reason to deviate, is that an express warranty 21 does not cover repairs made after the applicable time has elapsed. Thus, latent defects discovered after the term of the warranty are not actionable.” (alterations, citations, and internal quotations marks omitted)). Because Gotthelf alleges that the defect manifested itself outside the warranty period, he does not state a valid claim for breach of warranty. 4. Breach of the Implied Covenant of Good Faith and Fair Dealing Finally, Gotthelf has alleged no facts which show that Toyota breached the implied covenant of good faith and fair dealing. Every contract in New Jersey contains an implied covenant of good faith and fair dealing. See Kalogeras v. 239 Broad Ave., L.L.C., 997 A.2d 943, 953 (N.J. 2010). “The party claiming a breach of the covenant of good faith and fair dealing must provide evidence sufficient to support a conclusion that the party alleged to have acted in bad faith has engaged in some conduct that denied the benefit of the bargain originally intended by the parties.” Brunswick Hills Racquet Club, Inc. v. Route 18 Shipping Cntr. Assocs., 864 A.2d 387, 396 (N.J. 2005) (internal quotation marks omitted). Gotthelf’s warranty agreement with Toyota is a contract. He claims that Toyota breached the covenant of good faith and fair dealing in the warranty contract by failing to provide him notice of the defect within the warranty period. Because Gotthelf has not shown that Toyota had knowledge of the defect during Gotthelf’s warranty period, this claim was properly dismissed.