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Knopick v. Jayco, Inc.

United States Court of Appeals, Seventh Circuit

July 11, 2018

Nicholas Knopick, Plaintiff-Appellant,
Jayco, Inc., Defendant-Appellee.

          Argued February 23, 2018

          Appeal from the United States District Court for the Northern District of Indiana, South Bend Division. No. 16-CV-256 - Jon E. DeGuilio, Judge.

          Before Flaum, Sykes, and Hamilton, Circuit Judges.

          Hamilton, Circuit Judge.

         In his telling, plaintiff Nicholas Knopick bought a $415, 000 jalopy, but to be more precise, a limited liability company he controls bought the $415, 000 jalopy. This factual shift determines the outcome of this case. Knopick has sued the manufacturer under the vehicle's express limited warranty. That warranty does not cover the vehicle because the warranty excludes from coverage all vehicles purchased by business entities-like limited liability companies. The district court granted summary judgment to the manufacturer. We affirm. I. Undisputed Facts for Summary Judgment

         In reviewing a grant of summary judgment, we review the facts and draw all inferences from conflicting evidence in the light reasonably most favorable to Knopick as the non-moving party. Greengrass v. International Monetary Systems Ltd., 776 F.3d 481, 485 (7th Cir. 2015). Given this summary judgment lens, we do not vouch for the objective truth of all of these facts. See KDC Foods, Inc. v. Gray, Plant, Mooty, Mooty & Bennett, P.A., 763 F.3d 743, 746 (7th Cir. 2014).

         In July 2012, Nicholas Knopick purchased a luxury recreational vehicle (or "RV," as the contract documents refer to it) from an independent dealer in Iowa for $414, 583. The RV was manufactured by defendant Jayco, Inc. When filling out the paperwork and taking title, Knopick signed the documents on behalf of a company he alone controlled, Montana Freedom Rider, LLC. Among the documents that Knopick signed for the LLC was the registration form for Jayco's two-year limited manufacturer's warranty registration.

         The limited warranty disclaims all implied warranties and substitutes more restrictive terms. Three clauses in the limited warranty are central to this case. First, the warranty makes plain that it "does not cover … any RV used for rental or other commercial purposes." Second, to remove ambiguity from the phrase "commercial purposes," the warranty explains that an RV "has been used for commercial and/or business purposes if the RV owner or user files a tax form claiming any business or commercial tax benefit related to the RV, or if the RV is purchased, registered or titled in a business name." Finally, anticipating a disgruntled buyer's future claims that the company might waive any of the warranty's limitations by performing free repairs not actually required by the warranty's terms, a separate clause states that "performance of repairs regarding anything excluded from coverage under this limited warranty shall be considered 'good will' repairs, and they will not alter the express terms of this limited warranty."

         Almost immediately after purchasing the vehicle in July, Knopick discovered he had purchased a $415, 000 lemon. According to Knopick, the RV leaked, smelled of sewage, had paint issues, and contained poorly installed features, including bedspreads screwed into furniture and staples protruding from the carpet. After taking possession of the vehicle in Iowa, Knopick drove it to Jayco's factory in Indiana for repairs. The following month, he picked up the RV in Indiana intending to drive it to his home in Texas. Concerned about continued problems with the RV, Knopick dropped it off at a repair facility in Missouri, where a Jayco driver picked it up and drove it back to Indiana for further repairs. In December, Jayco had a driver deliver the coach to Knopick in Arkansas. Knopick remained unsatisfied with the condition and requested a full refund later that month, which Jayco apparently refused.

         In July 2015, Knopick sued Jayco in state court in Florida for breach of warranty under state law and the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq. Jayco removed the action to federal court in Florida, and the case was then transferred to the Northern District of Indiana. That district court entered summary judgment for Jayco on all claims in May 2017, finding that Knopick had no rights under the express warranty because it was actually purchased by a business entity. We review de novo the district court's decision granting summary judgment. Montgomery v. American Airlines, Inc., 626 F.3d 382, 389 (7th Cir. 2010).

         II. Analysis

         Knopick's decision to have his limited liability company purchase the vehicle-for tax benefits or perhaps other reasons-poses soluble issues of federal jurisdiction but bars his warranty claims against Jayco on the merits.

         A. Federal Jurisdiction

         We begin with the jurisdictional questions. Under the Magnuson-Moss Warranty Act, federal district courts have the authority to adjudicate disputes between consumers and warrantors, but only if the amount in controversy is at least $50, 000. 15 U.S.C. § 2310(d)(1)(B) & (3)(B). Neither party raised the issue in the course of this litigation, but we have an independent obligation to determine that jurisdictional requirements are satisfied. St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 287-88 & n.10 (1938). In his original complaint, Knopick alleged that he sought damages in excess of $15, 000. In its notice of removal, Jayco claimed that ...

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