Seahorn Investments, L.L.C. v. Goodman Manufacturing Co.

Case: 16-60066 Document: 00513575081 Page: 1 Date Filed: 06/30/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-60066 FILED
Summary Calendar June 30, 2016
Lyle W. Cayce
Clerk
SEAHORN INVESTMENTS, L.L.C.,
Plaintiff - Appellant
v.
GOODMAN MANUFACTURING COMPANY, L.P.; GOODMAN GLOBAL,
INCORPORATED,
Defendants - Appellees
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 1:15-CV-311
Before KING, CLEMENT, and OWEN, Circuit Judges.
PER CURIAM:*
Plaintiff–Appellant Seahorn Investments, L.L.C., (Seahorn) purchased
129 Goodman heating, ventilation, and air conditioning (HVAC) units and
installed those units at an apartment complex owned by Seahorn. The HVAC
units were covered by a Limited Warranty, providing that “Goodman will
furnish a replacement part, without charge for the part only,” if any part was
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 16-60066
defective. The warranty period only covered a specified time period beginning
on the date of installation or, if that date could not be verified, beginning three
months after the date of manufacture. Although Seahorn does not specify the
dates on which the HVAC units were manufactured, purchased, or installed,
Seahorn pleaded that the HVAC units began to fail months or years after
installation because the units’ evaporator coils were defectively designed or
manufactured.
Seahorn filed suit in Mississippi state court, asserting claims that
Goodman, inter alia, breached the express warranty and implied warranty of
merchantability when it sold the allegedly defective HVAC units. Goodman
removed the suit to federal court on the basis of diversity jurisdiction, pursuant
to 28 U.S.C. § 1332, and moved to dismiss the complaint for failure to state a
claim upon which relief could be granted under Federal Rule of Civil Procedure
12(b)(6). The district court granted the motion. As to the breach of express
warranty claim, the district court found that Seahorn failed to state a claim
because the complaint did not plead sufficient facts to show that Goodman
failed to replace defective HVAC parts as required under the warranty or that
the defects occurred within the warranty period. As to the implied warranty
of merchantability claim, the district court found that Seahorn did not plead
sufficient facts showing that the HVAC units were unmerchantable at the time
of sale or that Seahorn provided Goodman with notice or an opportunity to
cure. 1 The district court therefore dismissed the suit, and Seahorn timely
appealed.
This court reviews de novo a district court’s grant of a motion to dismiss
for failure to state a claim, “accepting all well-pleaded facts as true and viewing
those facts in the light most favorable to the plaintiff.” True v. Robles, 571 F.3d
1 The district court also dismissed several claims conceded by Seahorn.
2
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412, 417 (5th Cir. 2009) (quoting Stokes v. Gann, 498 F.3d 483, 484 (5th Cir.
2007)). “To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on
its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). 2 A claim is facially plausible if the
complaint “allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. at 678. “Dismissal is
appropriate when the plaintiff has not alleged enough facts to state a claim to
relief that is plausible on its face or has failed to raise his right to relief above
the speculative level.” Bass v. Stryker Corp., 669 F.3d 501, 506 (5th Cir. 2012).
With state law claims, as in the instant case, “[a] federal court sitting in
diversity applies the substantive law of the forum state.” Learmonth v. Sears,
Roebuck & Co., 710 F.3d 249, 258 (5th Cir. 2013).
On appeal, Seahorn argues that the district court erred in dismissing its
claims for breach of an express warranty and the implied warranty of
merchantability. 3 As to the breach of an express warranty, Seahorn argues
that Goodman breached the Limited Warranty because of defective parts in
the purchased HVAC units. An express warranty is created by “[a]ny
affirmation of fact or promise made by the seller to the buyer which relates to
the goods and becomes part of the basis of the bargain creates an express
warranty that the goods shall conform to the affirmation or promise.” Miss.
Code Ann. § 75-2-313. Accepting Seahorn’s factual allegations that the HVAC
units contained defective parts as true, Seahorn has still failed to state a
2 While Seahorn contends that the more permissive pre-Twombly pleading standard
should apply to this case, the plausibility standard expounded in Twombly and Iqbal applies
to all civil actions. Iqbal, 556 U.S. at 684.
3 Seahorn has abandoned any other issues on appeal by failing to adequately brief
those issues in its initial brief. Tewari De-Ox Sys., Inc. v. Mountain States/Rosen, L.L.C.,
637 F.3d 604, 610 (5th Cir. 2011).
3
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plausible claim. A warrantor breaches an express warranty when it fails to
fulfill its obligations under the warranty. Massey-Ferguson, Inc. v. Evans, 406
So. 2d 15, 19 (Miss. 1981). Here, the express warranty obligated Goodman to
provide a replacement part for any defective part in a particular HVAC unit
covered by the warranty. While Seahorn alleges that the HVAC units had
defective parts, nowhere in its complaint does Seahorn allege that Goodman
refused or failed to replace parts covered by the Limited Warranty. See
31 Richard A. Lord, Williston on Contracts § 79:22 (4th ed. 2004) (“[W]here
there is an agreement to repair or to replace goods, that agreement is not
breached until there has been a refusal or failure to repair.”). Moreover, the
district court correctly noted that Seahorn’s complaint did not allege when the
HVAC units were installed or manufactured. Therefore, whether the limited
warranty period covers any of the alleged defects cannot be determined “above
[a] speculative level.” Bass, 669 F.3d at 506. Seahorn has therefore failed to
state an express warranty claim “that is plausible on its face.” Twombly, 550
U.S. at 570.
Seahorn also failed to state a claim for breach of the implied warranty of
merchantability. A plaintiff must plead sufficient facts on five elements for
this claim:
(1) That a “merchant” sold “goods,” and he was a merchant with
respect to “goods of the kind” involved in the transaction, (2) which
were not merchantable at the time of the sale, and (3) injuries and
damages to the plaintiff or his property, (4) caused proximately
and in fact by the defective nature of the goods, and (5) notice to
the seller of the injury.
Watson Quality Ford, Inc. v. Casanova, 999 So. 2d 830, 834 (Miss. 2008)
(quoting Vince v. Broome, 443 So. 2d 23, 26 (Miss. 1983)). In particular, a
plaintiff must provide notice to the seller because, although “there may have
been a breach of warranty of merchantability, the seller has a right to attempt
4
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cure.” Fitzner Pontiac-Buick-Cadillac, Inc. v. Smith, 523 So. 2d 324, 328 (Miss.
1988). Here, Seahorn failed to plead any fact showing that it had notified
Goodman of the defective parts in the HVAC units or that Goodman had an
opportunity to cure those defects. See Watson Quality Ford, 999 So. 2d at 834–
35 (“An opportunity for the seller to cure is a ‘reasonable requisite’ of a buyer’s
‘right of recovery.’”). 4 Seahorn has failed to plead sufficient facts as to one of
the elements of an implied warranty of merchantability claim and therefore
has failed to state a plausible claim for relief. See Iqbal, 556 U.S. at 678.
For the foregoing reasons, we AFFIRM the judgment of the district court.
4 Seahorn’s complaint mentions informing a different entity—Mayo’s Air
Conditioning/Heating—of the alleged defects, but Seahorn has not advanced any authority
that such action would be sufficient to provide notice to Goodman under Mississippi law. See
Mercury Marine v. Clear River Const. Co., 839 So. 2d 508, 514 (Miss. 2003) (noting that a
manufacturer “was entitled to cure” defects as a prerequisite to recovery).
5