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Lack v. Cruise America, Inc.

United States District Court, N.D. California

September 1, 2017

Robert O. Lack, Plaintiff,
v.
Cruise America, INC., Defendant.

          ORDER DENYING MOTION TO DISMISS RE: DKT. NO. 8

          Yvonne Gonzalez Rogers, United States District Court Judge

         Plaintiff Robert Lack filed this action against defendant Cruise America, Inc. (“Cruise America”) for alleged misrepresentations and deceptive conduct in relation to the sale of a used motorhome. Lack filed his complaint in the Superior Court of California in and for the County of Alameda, and Cruise America removed the action based on diversity jurisdiction, on June 12, 2017. (Notice of Removal (“NOR”), Dkt. No. 1.) The complaint alleges the following causes of action: (i) violation of the Consumer Legal Remedies Act for damages and injunctive relief, pursuant to California Civil Code sections 1750, et seq. (the “CLRA”); (ii) intentional misrepresentation; and (iii) negligent misrepresentation. (NOR Exh. A, “Complaint.”)

         Currently pending before the Court is Cruise America's motion to dismiss under Rule 12(b)(6) for failure to meet the plausibility requirement under Rule 8 and the particularity standard under Rule 9(b). (Dkt. No. 8 at 2, “Mtn.”)[1]

         Having carefully considered the papers and pleadings in this action, and for the reasons set forth more fully below, the Court Denies defendant's motion to dismiss.

         I. FACTUAL ALLEGATIONS

         Plaintiff Robert Lack alleges that, on September 17, 2014, he negotiated the purchase of a used 2008 Thor Majestic 28A motorhome from Cruise America. (Complaint ¶ 6.) Lack alleges that, during the sales negotiation, he requested permission to conduct an independent inspection of the vehicle, but Cruise America deterred him from doing so, representing that he “would be wasting his money” since the vehicle “had been thoroughly inspected at its home plant, completely refurbished and was in excellent condition.” (Id. at ¶ 6.) Lack alleges that defendant had him watch a video that explained how all motorhomes sold by Cruise America were “fully refurbished before being sold, ” including processing “through a detailed checklist to make sure everything is working properly;” inspection of the chassis, tires, and brakes; checking and replacing fluids; and scrutinizing all onboard systems. (Id.) Lack was told that all vehicles come with a 12 month/12, 000 mile warranty at no additional charge. (Id.)

         Based upon those representations, Lack alleges that he agreed to purchase the vehicle for a total price of $24, 239.00, and paid a $500.00 down payment on September 17, 2014. (Complaint ¶ 7.) On September 24, 2014, Lack paid the remaining $23, 739 and signed a purchase agreement. He alleges that he “paid extra” for two extended warranties, as indicated on an unsigned version of the purchase agreement attached to the complaint. (Id. at ¶¶ 6-7; see also Exh. A thereto.)

         Lack accepted delivery of the motorhome in Newark, California, on September 24, 2014, and it broke down while he was driving it home. (Complaint ¶ 9.) The motorhome required a replacement of the rear axle before it could be returned to Cruise America's premises to complete repairs. The dealer-recommended repair facility found the vehicle had suffered severe water damage, requiring at least $15, 000 in repairs. (Id.) Cruise America refused to complete the recommended repairs. Lack alleges further inspection showed that the motorhome has body rot, rust damage, and other major deficiencies from pre-existing severe water damage caused by being submerged. (Id.) He further alleges that he has made many trips to have repairs performed, or redone; that he has lost use of the vehicle for over six weeks due to repairs; and that additional repairs will be needed, costing over $22, 000. (Id.)

         II. LEGAL STANDARD

         Pursuant to Federal Rule of Civil Procedure Rule 12(b)(6), a complaint may be dismissed for failure to state a claim upon which relief may be granted. Dismissal for failure to state a claim under Rule 12(b)(6) is proper if there is a “lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (citing Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)). The complaint must plead “enough facts to state a claim [for] relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). If the facts alleged do not support a reasonable inference of liability, stronger than a mere possibility, the claim must be dismissed. Id. at 678-79; see also In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (stating that a court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences”).

         “Federal Rule of Civil Procedure 8(a)(2) requires only a ‘short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'” Twombly, 550 U.S. at 554-55 (quoting Fed.R.Civ.P. 8(a)(2)) (alteration in original). Even under the liberal pleading standard of Rule 8(a)(2), “a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986) (internal brackets and quotation marks omitted)). After disregarding conclusory allegations, the material factual allegations must be enough to raise a right to relief “above the speculative level.” Id. “[S]ome threshold of plausibility must be crossed at the outset before [litigation] should be permitted to go into its inevitably costly and protracted discovery phase.” Id. at 558. The Court will not assume facts not alleged, nor will it draw unwarranted inferences. Iqbal, 556 U.S. at 679 (“Determining whether a complaint states a plausible claim for relief [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.”).

         Additionally, Rule 9 establishes a heightened pleading standard for allegations of fraud. Fed.R.Civ.P. 9(b) (“In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.”); see Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997) (noting that to be alleged with particularity under Rule 9(b), a plaintiff must allege “the ‘who, what, when, where, and how'” of the alleged fraudulent conduct); see also Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). Rule 9(b) requires the identification of the circumstances establishing the fraud, so that a defendant can respond to the allegations adequately. Odom v. Microsoft Corp., 486 F.3d 541, 554 (9th Cir. 2007). However, the rule is not so stringent as to bar claims where specific details, not essential to preparing a defense, are not alleged. Id. at 554-55 (inability to recall names of store employees alleged to have sold products in consumer fraud claim would not be subject claim to dismissal under Rule 9(b)). Moreover, where a plaintiff alleges “a unified course of fraudulent conduct and rel[ies] entirely on that course of conduct as the basis of a claim[, ] . . . the claim is said to be ‘grounded in fraud' or to ‘sound in fraud, ' and the pleading of that claim as a whole must satisfy the particularity requirement of Rule 9(b).” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04, 1106 (9th Cir. 2003).

         III. DISCUSSION

         Cruise America seeks dismissal on the grounds that Lack fails to state facts sufficient to constitute a cause of action, and fails to allege fraud with particularity as required by Rule 9(b). Specifically, Cruise America argues that Lack's complaint: (i) fails to allege fraud, misrepresentation, or a violation of the CLRA because Cruise America's statements were non-actionable puffery; (ii) relies on conclusory allegations of CLRA violations which renders it, as a whole, ...


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