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Reger v. Arizona RV Centers, LLC

United States District Court, N.D. Indiana, South Bend Division

August 21, 2017

KEVIN REGER, Plaintiff,



         This action arises out of plaintiff Kevin Reger's purchase of a recreational vehicle. Mr. Reger alleges that after he received the RV, he discovered a number of defects, including rust on the chassis and frame and cracks in its roof. He also discovered that the vehicle had been used as a demonstration model at trade shows, even though he was told that it was “new.” He thus asserted a variety of claims against Thor Motor Coach, Inc., which manufactured the RV, and Arizona RV Centers, LLC, which sold him the RV. Those defendants have moved to dismiss the complaint in its entirety. For the following reasons, the motion is granted in part and denied in part.


         On August 21, 2015, Kevin Reger purchased a new Tuscany RV for $282, 999. He purchased the RV in Mesa, Arizona from Arizona RV, LLC, which does business as Camping World of Mesa AZ. As part of the sale, he executed a Retail Installment Contract and Security Agreement, which set forth the terms of his purchase from Arizona RV. The RV was manufactured by Thor Motor Coach, Inc., which also extended an express limited warranty, covering the RV for the first 12 months or 15, 000 miles. That warranty covered any defects in workmanship or materials, subject to a number of exclusions. It required Thor to repair any covered defects, and if Thor failed to do so, allowed Mr. Reger to have the RV repaired at another facility of his choice, at Thor's expense.

         At some point after he received the RV, Mr. Reger discovered a number of defects. In particular, he discovered a severe rust problem on the RV's frame and chassis. He also found cracks in the RV's roof, which he suspects were caused by excessive flexing and movement of the RV's structure due to an extension Thor made to the chassis. He further alleges that the chassis extension rendered the RF structurally unsound. In addition, he learned that the RV had been used as a demonstration model at RV shows, and that its generator had run for over 50 hours before the sale, even though the RV had been sold to him as “new.” Mr. Reger alleges that he asked Thor to repair these defects, but that it failed or refused to do so, and that it attempted to conceal the structural issues. Accordingly, within a month of the purchase, he attempted to revoke his acceptance and cancel the contract.

         Mr. Reger then filed this action against Arizona RV and Thor, seeking to rescind the transaction and also seeking damages for breaches of express and implied warranties, among other theories. He initially filed the complaint pro se, but he is now represented by counsel, who filed an amended complaint on his behalf. The defendants moved to dismiss the amended complaint, and that motion is ripe.


         In reviewing a motion to dismiss for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6), the Court construes the complaint in the light most favorable to the plaintiff, accepts the factual allegations as true, and draws all reasonable inferences in the plaintiff's favor. Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010). A complaint must contain only a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). That statement must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face, Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and raise a right to relief above the speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). However, a plaintiff's claim need only be plausible, not probable. Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012). Evaluating whether a plaintiff's claim is sufficiently plausible to survive a motion to dismiss is “‘a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'” McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011) (quoting Iqbal, 556 U.S. at 678).


         Mr. Reger's amended complaint includes seven counts, asserting claims based on implied warranties, express warranties, and consumer protection statutes. Except as noted below as to Count 3, the parties agree that Arizona law governs Mr. Reger's claims. The first three counts assert claims against Thor, while the rest are against Arizona RV. The defendants have moved to dismiss each of the counts. In response, Mr. Reger agreed to the dismissal of one count and asked for leave to amend as to some counts, but opposed the motion as to others. The Court addresses each count in turn.

         Count 1: Breach of Implied Warranty against Thor

         Mr. Reger first asserts a claim against Thor for a breach of an implied warranty of merchantability, contending that the RV was not in merchantable condition when he bought it. Mr. Reger brings this claim under the Magnuson-Moss Warranty Act, but that Act primarily adopts state law as the source of the parties' rights, so Mr. Reger must show that Arizona law would allow a claim for a breach of an implied warranty against Thor, the manufacturer of the vehicle. Anderson v. Gulf Stream Coach, Inc., 662 F.3d 775, 781 (7th Cir. 2011). Thor argues that no such warranty exists under Arizona law because it is not in privity with Mr. Reger as to the sale of the RV, since it did not sell Mr. Reger the RV-Arizona RV did-it only manufactured it.

         Different states take different approaches as to whether privity is required to give rise to an implied warranty. Because the Magnuson-Moss Act does not modify or address “a state's ability to establish a privity requirement, whether privity is a prerequisite to a claim for breach of implied warranty under the Magnuson-Moss Act therefore hinges entirely on the applicable state law.” Voelker v. Porsche Cars N. Am., Inc., 353 F.3d 516, 525 (7th Cir. 2003). “Under Arizona law, privity of contract is required to maintain an action for breach of an implied warranty.” Chaurasia v. Gen'l Motors Corp., 126 P.3d 165, 171 (Ariz.Ct.App. 2006).[1] In other words, Arizona law only provides for implied warranties by the seller in a given transaction, not by other parties that manufacture the goods being sold. Flory v. Silvercrest Indus., Inc., 633 P.2d 383, 388-89 (Ariz. 1981) (“In short, we believe that a buyer should pick his seller with care and recover any economic loss from that seller and not from parties remote from the transaction.”). Here, Thor only manufactured the RV, it did not sell the RV to Mr. Reger, so it is not in privity of contract as to the sale of the RV to Mr. Reger. Therefore, Mr. Reger cannot assert a claim for breach of an implied warranty against Thor.

         In arguing to the contrary, Mr. Reger notes that Thor did extend an express written warranty, and he argues that the express warranty created the requisite privity.[2] However, in support of that argument, he cites entirely to cases applying the laws of states other than Arizona. While some other states accept the theory that a manufacturer's express warranty satisfies the privity requirement (or do not require privity at all), Arizona has never done so. Rather, courts applying Arizona law have uniformly held that a manufacturer is not in privity with a purchaser, even when the manufacturer offers an express warranty. E.g., Chaurasia, 126 P.3d at 171; Plagens, 328 F.Supp.2d at 1073; Flory, 633 P.2d at 388-89 (holding that a claim against a manufacturer for an implied warranty failed for lack of privity, but that the plaintiff could still recover against the manufacturer under an express warranty). Mr. Reger also argues that the express warranty's disclaimer of incidental and consequential damages somehow satisfied the privity requirement. But if the express warranty itself did not create privity of contract as to the sale of the RV, then the exclusion of damages for a breach of that express warranty would not either. Therefore, because Thor was not in privity of contract to the sale of the RV, Arizona law does not allow a claim against Thor for breach of an implied warranty. The motion to dismiss is therefore granted as to Count 1.

         Count 2: Breach of Express ...

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