RAY KENT, Magistrate Judge.
This matter is now before the Court on a motion for summary judgment filed by defendants Lowe's Home Centers, LLC ("Lowe's") and Generac Power Systems, Inc. ("Generac") (docket no. 25).
Plaintiff Todd Shaya filed this action in the Emmet County Circuit Court alleging the following facts. On or about October 19, 2013, plaintiff purchased a model no. 6251 generator manufactured by Generac ("the generator") from a Lowe's Home Improvement store located in Petoskey, Michigan. PageID.9. Plaintiff purchased the generator to protect a second home located at 539 Linden, Harbor Springs, Michigan ("the property") from power outages. Id. He contracted with Chosen Electric, whom he identified as an "agent of [d]efendants" to install the generator on the property. PageID.9-10. Plaintiff also purchased a transfer switch from Lowe's as directed by "[a]gents of Lowes [sic] and/or Generac." PageID.10. Lowe's sold plaintiff the generator, transfer switch and all related components, "along with installation by the installer of their choice," to plaintiff "as a package deal." Id. Plaintiff stated that he never had possession of the generator or transfer switch, which Lowe's provided directly to Chosen Electric for installation. Id.
On November 11, 2013, Chosen Electric installed the generator and transfer switch at the property. Id. Approximately three weeks after the installation, Harbor Springs suffered a power outage which lasted approximately 40 minutes. Id. However, power was not restored to the property "due to a previously known defect with the Generac Generator and/or Transfer Switch" which blocked electricity from connecting to the main electric panel, leaving the property with no power. Id. If the generator and transfer switch had worked "as represented to [p]laintiff," the generator would have supplied power to the property during the outage and then reconnected when power was restored to the area. Id.
The property was uninhabited at the time of the power outage. PageID.11. During that time, the pipes froze and burst, with water "causing severe damage to the ceiling, floors, walls, showers, toilets, cabinetry, appliances, windows and doors." Id. In addition to the water damage, mold began to grow within the property which required remediation and removal. Id. When plaintiff and his family entered the property, they discovered the damage and had to stay at a hotel because the property was uninhabitable. Id.
Plaintiff contacted personnel at Lowe's, who directed him to contact Chosen Electric and Generac. Id. Dan, an employee of Chosen Electric, determined that the generator "failed due to a defect which caused the [t]ransfer [s]witch not to operate properly." Id. According to Dan, Generac was aware of a defect with the generator "and/or" the transfer switches and advised installers in a memo that it would be sending out retrofitting kits to alleviate a potential problem. Id. Because Dan received Generac's memo after the installation of the generator, Chosen Electric instructed plaintiff to contact Generac. Id.
A Generac customer service agent told plaintiff that it knew of "these very types of problems with the [g]enerator and [t]ransfer [s]witch and that they had been determined to be faulty." Id. About one month later, Generac inspected the generator and transfer switch and advised plaintiff that both were defective. PageID.12. Plaintiff was in contact with Generac personnel who told him not to file an insurance claim and its Vice President of Customer Service, Nancy Tonkin, represented to plaintiff "that she would personally ensure that the matter was taken care of." Id. Plaintiff made no further allegations with respect to his remediation efforts with Chosen Electric, Lowe's, Generac or Tonkin.
Plaintiff alleged that the defects in the generator "and/or" transfer switch render the generator unusable and prevent power from being restored to homes where the generator is installed. Id. Plaintiff alleged to have lost at least $60,000.00 in damages as a result of the defective generator and/or transfer switch. Id. Plaintiff set forth seven counts for relief. In Count I, plaintiff alleged that defendants breached various express and implied warranties under state law related to the generator and the transfer switch. In Count II, plaintiff alleged that defendants' breaches of express and implied warranties arising under state law also violated a federal statute, the Magnuson-Moss Warranty Act, 15 U.S.C. 2301 et seq. (sometimes referred to as the "MMWA"). In Count III, plaintiff alleged that defendants violated the Michigan Consumer Protection Act, M.C.L. § 445.901 et seq. by engaging in unfair, unconscionable or deceptive methods, acts or practices in the conduct of trade or commerce. In Count IV, plaintiff alleged that defendants committed silent fraud when they purposely omitted their knowledge and remained silent, regarding the defective generator and transfer switch in an effort to induce plaintiff to purchase these items. In Count V, plaintiff alleged that defendants were negligent by performing a number of actions (i.e., failing to properly design the generator and/or transfer switch, failing to properly and adequately install components and component systems for the generator, failing to correct the defects with the generator and/or transfer switch, failing to adequately warn potential purchasers (including plaintiff) of the defects with the generator and/or transfer switch, and failing to rectify the defects with the generator and/or transfer switch prior to installation at plaintiff's property). In Count VI, plaintiff alleged that defendants are liable to him under the doctrine of promissory estoppel. Finally, in Count VII, plaintiff alleged that defendants have been unjustly enriched. PageID.13-21.
Defendants removed this action to the Western District, stating that is was a civil action which this Court had original jurisdiction under the Magnuson-Moss Warranty Act and 28 U.S.C. § 1331 ("[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States"). See Notice of Removal (docket no. 1).
Defendants have moved for summary judgment on all of plaintiff's claims. "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Rule 56 further provides that "[a] party asserting that a fact cannot be or is genuinely disputed must support the assertion by":
Fed. R. Civ. P. 56(c)(1).
In Copeland v. Machulis, 57 F.3d 476 (6th Cir. 1995), the court set forth the parties' burden of proof in a motion for summary judgment:
Copeland, 57 F.3d at 478-79 (citations omitted). "In deciding a motion for summary judgment, the court views the factual evidence and draws all reasonable inferences in favor of the nonmoving party." McLean v. 988011 Ontario Ltd., 224 F.3d 797, 800 (6th Cir. 2000).
As discussed, this Court assumed jurisdiction of this state court action based upon the federal question raised in Count II, which alleged a violation of the MMWA. Upon reviewing the record, the Court concludes that plaintiff failed to meet the amount in controversy required to pursue a claim under the MMWA. For this reason, the Court lacks subject matter jurisdiction of the federal claim which served as the basis for removal. "Subject matter jurisdiction may be raised at any stage in the proceedings, including on appeal. When a statute conditions federal court jurisdiction on the satisfaction of an amount in controversy requirement, the failure to meet that specified amount divests the federal courts of subject matter jurisdiction." Schultz v. General R.V. Center, 512 F.3d 754, 756 (6th Cir. 2008) (internal citation omitted). For the reasons discussed below, this action will be remanded to the state court for failing to meet the amount in controversy requirement.
The "unusual jurisdictional clause" in the MMWA, 15 U.S.C. § 2310(d)(1), allows consumers to enforce written and implied warranties in federal court, borrowing state law causes of action. Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955, 956 (7th Cir.1998). " In other words, an aggrieved customer may sue on state-law claims in federal court, whether or not the parties are of diverse citizenship." Id.
Rickard v. Teynor's Homes, Inc., 279 F.Supp.2d 910, 919 (N.D. Ohio 2003).
"The MMWA is a somewhat unique federal statute in that merely alleging a violation of the act is insufficient to confer federal question jurisdiction; a separate $50,000 amount in controversy requirement must also be satisfied." Schultz, 512 F.3d at 757. See 15 U.S.C. § 2310(d)(3)(B) ("No claim shall be cognizable [in federal court]... if the amount in controversy is less than the sum or value of $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit."). Courts apply the legal certainty test to MMWA claims, finding that "federal subject matter jurisdiction exists if there is a probability that the value of the matter in controversy exceeds the jurisdictional amount." Schultz, 512 F.3d at 756 (internal quotation marks omitted).
Plaintiff's action involves a MMWA claim arising from the purchase of the generator and transfer switch. For purposes of determining the amount in controversy under the MMWA, the court begins the calculation with the value of the goods involved. See, e.g., Schultz, 512 F.3d at 759 (where the alleged MMWA violation involved the revocation of acceptance of a vehicle "the amount in controversy is to be determined by the price of a replacement vehicle, minus both the present value of the allegedly defective car and the value that the plaintiff received from the use of the allegedly defective car") (internal quotation marks and emphasis omitted).
Here, the total cost of the goods involved, including installation, was $4,269.00. See Exterior Solutions Installed Sales Contract (the "Sales Contract") (entered into by plaintiff and Lowe's) (docket no. 34-1, PageID.319). The sales contract reflects a sales price of $2,249.00 for the generator and an installation cost of $2,220.00. Id. at PageID.322. Based on these figures, the amount in controversy for the goods purchased is far below the amount required to bring a claim under the MMWA. Even if the Court considered the entire sales contract amount of $4,269.00 as the total price of the goods with installation, the amount in controversy still falls far short of the amount required to seek relief under the MMWA.
The Court's analysis would end here, but for plaintiff's contention that his losses exceeded the cost of the goods. He seeks consequential damages of "over $59,000.00" based on cost estimates to repair the water damage caused by the alleged malfunction of the generator and/or switch. See Plaintiff's Response (docket no. 35, PageID.299). Specificially, plaintiff stated that according to "Exhibit E" of his affidavit, the "repair estimates total $56,265.30." Plaintiff's Response at PageID.300; Repair estimates, PageID.338-338. For purposes of this opinion, the Court will view the repair estimates of $56,265.30 as the amount of plaintiff's alleged damages. While this figure exceeds the $50,000.00 jurisdictional amount in controversy under the MMWA, plaintiff's claim still fails.
Under the facts of this case, these consequential damages are not included in calculating the MMWA's requisite amount in controversy. The MMWA allows manufacturers to expressly exclude consequential damages in their warranties. See 15 U.S.C. § 2304(a)(3) (stating that a "warrantor may not exclude or limit consequential damages for breach of any written or implied warranty on such product, unless such exclusion or limitation conspicuously appears on the face of the warranty[.]") (emphasis added). Under Michigan's version of the Uniform Commercial Code, consequential damages are defined as "injury to person or property proximately resulting from any breach of warranty." M.C.L. § 440.2715(2)(b). A seller of goods may limit a buyer's remedies with respect to consequential damages. See M.C.L. § 440.2719(3) ("Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.").
Here, defendants have produced copies of the Generac warranty and the sales contract containing the Lowe's warranty. Plaintiff had access to both warranties, which expressly exclude consequential and incidental damages. The sales contract included the following terms with respect to the warranties:
Lowe's Sales Contract, PageID.320-321.
The Generac warranty provided in pertinent part that:
Generac Warranty, PageID.138. These warranties excluding consequential damages are consistent with M.C.L. § 440.2719(3). Plaintiff provides no basis for the Court to conclude that the warranty exclusions (which in this case apply to property damage) are unconscionable.
A plaintiff bringing a claim under the MMWA is subject to a warranty provision which excludes consequential damages. When such damages are excluded, they are not considered in calculating the $50,000.00 required amount in controversy. See Ferrer Santiago v. Daimler Chrysler Corp., 265 F.Supp.2d 171, 172-73 (D.P.R. 2003) (where consequential damages are excluded from a warranty as allowed under 15 U.SC. § 2304(a), plaintiffs in an MMWA action are subject to that provision in calculating the jurisdictional amount in controversy). Accordingly, any consequential damages caused by the alleged malfunction of the generator and/or transfer switch are not included in determining whether plaintiff has met the $50,000.00 jurisdictional requirement under the MMWA.
Finally, even if the consequential damages were not expressly excluded by the warranties, plaintiff would still not reach the requisite amount in controversy. It is undisputed that plaintiff agreed to accept an insurance settlement of $29,000.00 to repair the damage to the property. In a letter dated June 16, 2014, Jeffrey Kempfer, a Special Field Claims Representative for Farmers Insurance Exchange ("Farmers"), memorialized the agreement between plaintiff and Farmers for repairing the property, stating in pertinent part:
Letter (June 16, 2014) (docket no. 25-4, PageID.140).
Under the subrogation clause of plaintiff's insurance policy, Farmers, which is not a party to this litigation, owns the right to recover the $27,500.00 it paid for repairs. See Farmers Next Generation Homeowners Policy for 539 Linden Dr., Harbor Springs, MI 49740 (docket no. 25-5, PageID.143, 201) ("When we pay for any loss or damage, an
Assuming, for purposes of this motion, that plaintiff could demonstrate that his actual losses are reflected in the $56,265.30 cost estimate, and that he retains the right to seek damages in excess of those paid by Farmers, the most that plaintiff could recover from defendants would be $29,065.30 (i.e., the $56,365.30 estimated costs minus the $27,500.00 paid by Farmers). This amount is still far below the $50,000.00 amount in controversy required under the MMWA. For all of these reasons, the Court will grant defendants' motion for summary judgment as to the MMWA claim alleged in Count II.
Defendants removed this action from state court based upon the federal question raised in plaintiff's Magnuson-Moss Warranty Act claim. See Notice of Removal at PageID.2; 28 U.S.C. § 1331. Because plaintiff failed to meet the $50,000.00 amount in controversy, the Court finds that plaintiff has not stated a cognizable claim under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2310(d)(3)(B). The Court lacks subject matter jurisdiction over plaintiff's remaining state law claims, which will be remanded to the state court. See 28 U.S.C. § 1447(c) ("[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded").
Accordingly, defendants' motion for summary judgment (docket no. 25) is
