United States District Court, N.D. Illinois, Eastern Division
June 14, 2004.
ROBERT & PATTI SMITH, Plaintiffs,
MONACO COACH CORPORATION, Defendant.
The opinion of the court was delivered by: JAMES MORAN, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs Robert and Patti Smith brought this action against
defendant Monaco Coach Corporation (Monaco) alleging breaches of
warranty pursuant to the Magnuson-Moss Warranty Act,
15 U.S.C. § 2301 et seq. Defendant filed a motion to dismiss part of count
I along with all of counts II and III. For the following reasons,
defendant's motion is granted in part and denied in part.
The facts are taken from plaintiffs' complaint. On May 17,
2003, the Smiths purchased a motor home from Abel RV that was
manufactured by Monaco, also receiving a limited warranty. After
taking possession of the vehicle, plaintiffs noticed a number of
defects and presented the motor home to defendant's authorized
dealers for repair, but the problems have not been remedied.
Plaintiffs claim that this failure to repair constituted a breach
of the written warranty and a breach of the implied warranty of
merchantability, as defined by 15 U.S.C. § 2301(7), and that they
therefore have the right to revoke acceptance of the motor home.
We first note that plaintiffs have failed to properly assert
that this court has subject matter jurisdiction over their claims. 15 U.S.C. § 2301(d)(1)(B)
sets the jurisdictional minimum for Magnuson-Moss Act claims at
$50,000. To calculate the amount in controversy in a specific
case, plaintiffs must allege the cost of a replacement vehicle
minus the present value of the allegedly defective vehicle, and
the value that plaintiff received from the allegedly defective
vehicle. Voelker v. Porsche Cars North America, Inc.,
353 F.3d 516, 521 (7th Cir. 2003), citing Gardynski-Leschuck v.
Ford Motor Co., 142 F.3d 955, 957 (7th Cir. 1998). In
calculating the sought-after damages, plaintiffs may not include
attorneys' fees or any damages that are explicitly excluded by a
written warranty. Gardynski-Leschuck, 142 F.3d at 957-58.
Plaintiffs here allege that we have jurisdiction under
Moss-Magnuson but fail to provide any estimates of damage.
However, because the vehicle price was allegedly over $200,000,
and we believe that plaintiffs have a reasonable chance of
establishing jurisdiction, we will deal with the issues raised in
the defendant's motion to dismiss.
In deciding a Federal Rule of Civil Procedure 12(b)(6) motion
to dismiss the court assumes the truth of all well-pleaded
allegations, making all inferences in the plaintiff's favor.
Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund,
25 F.3d 417, 420 (7th Cir. 1994). The court should dismiss a claim
only if it appears "beyond doubt that the plaintiff can prove no
set of facts in support of his claim which would entitle him to
relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). While the
complaint does not need to provide the correct legal theory to
withstand a Rule 12(b)(6) motion, it must allege all of the
elements necessary to recover. Ellsworth v. City of Racine,
774 F.2d 182, 184 (7th Cir. 1985), cert. denied, 475 U.S. 1047
Defendant seeks to dismiss plaintiffs' claim for breach of
express warranty (count I) to the extent that it is based on
alleged defects that are excluded from protection. Because the
warrant created a contractual relationship, the court should not
alter the scope of rights and obligations bargained for by the parties. See Hasek v.
DaimlerChrysler Corp., 745 N.E.2d 627, 634 (Ill.App. 1 Dist.
2001). To the extent that defendant is able to prove that it
effectively disclaimed coverage for the listed defects, it will
be protected by the warranty. At this stage, plaintiffs point to
numerous defects that are covered by the warranty and allege that
the defendant did not successfully exclude coverage for the other
defects. This is enough to state a claim and to survive a motion
to dismiss as to the express warranty claim. Any final
interpretation of the warranty will require a resolution of
factual issues at some later stage in the litigation.
Defendant also seeks to dismiss counts II and III of the
complaint, arguing that plaintiffs cannot use Magnuson-Moss to
state a claim against the manufacturer of a vehicle. The act
allows plaintiffs to file a suit for breach of an implied
warranty, which it defines as "an implied warranty arising under
State law (as modified by sections 2308 and 2304(a) of this
title) in connection with the sale by a supplier of a consumer
product." 15 U.S.C. § 2301(7). In other words, we must look to
relevant Illinois law to determine whether an implied warranty
In Szajna v. General Motors Corp., 503 N.E.2d 760 (Ill.
1986), the Illinois Supreme Court attempted to resolve the issue
raised here. In doing so, it reaffirmed the traditional Illinois
rule requiring privity in implied warranty suits seeking recovery
for economic loss. Id. at 767. The court went on, however, to
interpret the Magnuson-Moss Act and found that the plaintiff
could assert an implied warranty claim against a manufacturer if
there was also a written warranty. Id. at 769. In so holding,
the court pointed to section 2308 of the act, which states:
No supplier may disclaim or modify (except as
provided in subsection (b) of this section [limiting the duration of an implied warranty
to the duration of a "limited" implied warranty]) any
implied warranty to a consumer . . . if (1) such
supplier makes any written warranty to the consumer . . .
or (2) at the time of sale, or within 90 days
thereafter, such supplier enters into a service
contract with the consumer which applies to such
Id. The court reasoned that although this section did not
modify state law privity requirements, it did allow certain
non-privity consumers to bring actions under the Magnuson-Moss
Act. Id. This decision was reaffirmed in Rothe v. Maloney
Cadillac, Inc., 518 N.E.2d 1028, 1030 (Ill. 1988), in which the
court stated that Magnuson-Moss does more than preclude a
manufacturer from disclaiming a state law implied warranty, it
actually imposes a warranty on the manufacturer that would not
exist under purely state law.
While we must follow the Illinois Supreme Court's
interpretation of state law, Highsmith v. Chrysler Credit
Corp., 18 F.3d 434, 442 (7th Cir. 1994), we are not obliged
to follow its interpretations of federal statutes. RAR, Inc. v.
Turner Diesel, Ltd., 107 F.3d 1272 1276 (7th Cir. 1997). The
courts in this district that have dealt with this issue have
overwhelmingly rejected the Szajna approach. See, e.g.,
Kutzler v. Thor Industries Inc., 2003 WL 21654260 (N.D. Ill.);
Diamond v. Porsche Cars North America, Inc., 2002 WL 31155064
(N.D. Ill. 2002); Kowalke v. Bernard Chevrolet, Inc., 2000WL
656660 (N.D. Ill. 2000); Larry J. Soldinger Assocs., Ltd. v.
Aston Martin Lagonda of North America, Inc., 1999 WL 756174
(N.D. Ill. 1999); but see Cohen v. AM General Corp.,
264 F. Supp.2d 616, 621 (N.D. Ill. 2003) (accepting Szajna approach
without discussion); see also Abraham v. Volkswagon of
America, Inc., 795 F.2d 238, 247-48 (2d Cir. 1986); Walsh
v. Ford Motor Co., 807 F.2d 1000, 1014 (D.C. Cir. 1986) (both
holding that the Magnuson-Moss Act did not alter or abolish state
law privity requirements). Specifically, in Soldinger, Judge
Pallmeyer found that Congress had no intention of modifying
traditional privity requirements or creating new state law
obligations when writing Magnuson-Moss. 1999 WL 756174 at *9-10. The Act does
not discuss privity and points to state law as the only
foundation for implied warranties. Id.
The Seventh Circuit has yet to definitively settle this issue,
though it came close in Voelker, 353 F.3d at 525. In that case
the court determined that the plaintiff could not bring a claim
against the vehicle's manufacturer because he failed to allege
privity. Id. In doing so, the court cited to Rothe for the
proposition that Illinois law requires privity to recover for
economic damages for breach of an implied warranty. Id. The
Seventh Circuit did not, however, discuss the Illinois Supreme
Court's findings in Szajna with respect to the Magnuson-Moss
Act. Plaintiffs argue that that decision changed the law of
privity in Illinois and we must follow the Supreme Court's
interpretation of state law. They claim that here, unlike in
Voelker, privity exists in light of Szajna and Rothe. We
In finding that consumers who possess a written warranty could
bring a Magnuson-Moss Act claim for breach of implied warranty,
the Illinois Supreme Court explicitly referred to these
purchasers as "non-privity" consumers. Szajna, 503 N.E.2d at
769. In other words, the court believed that the federal statute
did not affect traditional common law privity, but instead
allowed certain customers who failed to meet the traditional
requirements to bring a claim anyway. Id. That determination
was purely an interpretation of the Magnuson-Moss Act, not
Illinois state law.
We believe that the Soldinger line of cases is correct in
finding that Magnuson-Moss did not intend to extend implied
warranties to customers not protected by traditional state law.
Section 2301(7) expressly limits implied warranties to those
"arising under" state law, except where modified in sections 2308
and 2304(a). Those two sections preclude warrantors from
disclaiming or modifying existing warranties they do not create
new obligations. In Illinois, an implied warranty does not arise in the absence of privity,
meaning there is nothing for a defendant to disclaim or modify.
See Soldinger, 1999 WL 756174 at *8-10; Abraham, 795 F.2d
at 247-48. Plaintiffs do not have an implied warranty to enforce.
In count III of their complaint, plaintiffs seek to revoke
acceptance of the motor home pursuant to section 2310(d), which
allows for equitable relief. Such relief may be granted to remedy
breach of either written or implied warranties. While revocation
of acceptance is one of the remedies contemplated by
Magnuson-Moss, section 2310(d) does not actually authorize
specific types of relief, but instead only creates a
jurisdictional basis for traditional state law claims.
Gardnyski-Leschuck, 142 F.3d at 956. In order to determine
whether a specific remedy is available, we must again consult
state law. Kutzler, 2003 WL 21654260 at *7.
Again, there is a split in the authority as to whether such a
remedy is available against a manufacturer in Illinois. In
Kutzler, Judge Schenkier relied on Gasque v. Mooers Motor Car
Co., Inc., 313 S.E.2d 384 (Va. 1984), in finding that a
plaintiff could not bring such an action. 2003 WL 21654260 at
*7-8. On the other hand, Judge Pallmeyer, in Soldinger, found
that plaintiff could seek revocation based on breach of an
express warranty without discussing the difference between a
seller and a manufacturer. 1999 WL 756174 at *10-11.
We agree with Kutzler that Illinois law does not provide for
such a remedy against a manufacturer. First, the language of
section 2-608 of the Uniform Commercial Code (UCC), codified in
Illinois at 810 ILCS 5/2-608, seems to expressly limit buyers
from seeking the remedy against sellers. Secondly, the court in
Gasque (also interpreting section 2-608 of the UCC) is
persuasive in holding that the purpose of revocation is to cancel
the sale and return the parties to status quo ante. 313 S.E.2d
at 390. Because the manufacturer was not involved in the sale
transaction, it would have no role in the cancellation only the
parties actually involved in the sale would be affected. Id.
Plaintiffs are directed to submit a statement establishing that
we have jurisdiction over their claims. Defendant Monaco's motion
to dismiss is granted as to counts II and III, and denied as to
© 1992-2004 VersusLaw Inc.