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Carroll v. BMW of North America, LLC

United States District Court, S.D. Indiana, Indianapolis Division

September 6, 2019

Phillip Carroll, Plaintiff,
v.
BMW of North America, LLC, and Bavarian Motor Works, Defendants.

          ORDER

          HON. JANE MAGNUS-STINSON, CHIEF JUDGE UNITED STATES DISTRICT COURT

         Plaintiff Phillip Carroll purchased a BMW 7 Series (the “Vehicle”) in 2010. On January 22, 2019, he filed suit against Defendants BMW of North America, LLC (“BMW”) and Bavarian Motor Works, seeking damages related to the Vehicle's excessive consumption of engine oil and Defendants' failure to honor the terms of their warranty, in violation of the Magnuson-Moss Warranty Act (“MMWA”) and various Indiana statutes. The Court previously denied BMW's Motion to Dismiss the suit for lack of subject-matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1), [Filing No. 12], and BMW has now filed a Motion for Leave to Appeal that denial, [Filing No. 34]. BMW has also filed two additional Motions to Dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6), based on the statute of limitations. [Filing No. 27; Filing No. 35.] These motions are now ripe for the Court's review.

         I.

         Motion for Leave to Appeal

         A. Standard of Review

         A party may petition for leave to file an interlocutory appeal of a nonfinal order under 28 U.S.C. § 1292(b). See Ahrenholz v. Bd. of Trs. of Univ. of Ill., 219 F.3d 674, 675 (7th Cir. 2000). There are four statutory criteria for granting a § 1292(b) petition: (1) the proposed appeal must involve a question of law; (2) it must be controlling; (3) it must be contestable; and (4) its resolution must speed up the litigation. Id. In addition, the petition must be filed within a reasonable time after the entry of the order to be appealed. Id. (citation omitted). The Court may only certify an order for immediate appeal if all of these criteria are satisfied. Id. at 676.

         B. Background

         Mr. Carroll's initial Complaint alleged that he purchased the Vehicle from Defendants' authorized dealer (the “Dealer”) in April 2010 for $107, 808.40. [Filing No. 1 at 3.] The general nature of Mr. Carroll's claims was that the Vehicle's engine had a defect that caused it to burn an excessive amount of engine oil and Defendants were aware of this defect, failed to disclose it, and failed to repair it as required by the warranty. [Filing No. 1 at 1-15].

         In March 2019, BMW filed its Rule 12(b)(1) Motion to Dismiss, arguing that the Court lacked subject-matter jurisdiction because Mr. Carroll could not satisfy the $50, 000 amount-in-controversy requirement under the MMWA. [Filing No. 12.] Relying on Schimmer v. Jaguar Cars, Inc., 384 F.3d 402 (7th Cir. 2004), BMW argued that the formula used to determine the amount in controversy is “the price of the replacement vehicle [or the purchase price], minus both present value of the allegedly defective car, and the value that the buyer received from use of the car.” [Filing No. 13 at 2.] According to BMW, the value that Mr. Carroll received from his use of the Vehicle is $86, 478.40, which corresponds to the overall depreciation in the Vehicle's value as determined by subtracting the car's current Kelley Blue Book value ($21, 330) from the original purchase price ($107, 808.40). [Filing No. 13 at 4-5.] Therefore, BMW argued, Mr. Carroll could not recover any damages, because the purchase price of $107, 808.40, minus the present value of $21, 330, minus the depreciation of $86, 478.40, equals $0. [Filing No. 13 at 4-5.] Alternatively, BMW proposed that the Court could determine the damages by subtracting the amount of depreciation ($86, 478.40) from the original purchase price ($107, 808.40), yielding $21, 330. [Filing No. 13 at 5.] BMW also argued that, because punitive damages are not recoverable in breach of warranty actions under Indiana law, such damages could not be included in the amount-in-controversy determination. [Filing No. 18 at 1-4].

         The Court denied BMW's motion on May 9, 2019, concluding that it could not determine, to a legal certainty, that Mr. Carroll's claim was worth less than $50, 000. [Filing No. 23.] First, the Court noted that Schimmer said nothing about how to calculate the value that a buyer received for the use of his vehicle, and BMW had merely come up with its own calculation based on the Kelley Blue Book value. [Filing No. 23 at 9-10.] The Court then concluded that, because BMW had identified no Indiana caselaw demonstrating that punitive damages were not available in breach of warranty actions, it could not be said to a legal certainty that such damages were not recoverable. [Filing No. 23 at 10-11.]

         C. Discussion

         On July 9, 2019, BMW filed a Motion for Leave to Appeal the Court's denial of its Rule 12(b)(1) Motion to Dismiss, pursuant to § 1292(b). [Filing No. 34.] In the motion, it identifies the following two restated questions that should be certified for appeal:

(1) How is the value a plaintiff received from the use of his vehicle calculated, and can Kelley Blue Book data be used to determine that value for purposes of jurisdiction under the MMWA?
(2) Does Miller Brewing Co. v. Best Beers of Bloomington, Inc. 608 N.E.2d 975, 981 (Ind. 1993), stand for the proposition that punitive damages are not available in breach of warranty actions under Indiana law, and, if not, was the Court required to use its “own best judgment” to estimate how the Indiana Supreme Court would rule on that issue?

[Filing No. 34 at 2.] BMW asserts that the Motion was filed within a reasonable time of the Court's order, given that no substantive discovery has been completed and the case is still at the motion to dismiss stage. [Filing No. 34 at 3.]

         BMW argues that the Court erred in applying the Schimmer damages formula by ignoring the “offset for usage” factor and should seek clarification from the Seventh Circuit concerning how that factor should be applied. [Filing No. 34 at 3-4.] In addition, BMW asserts that Miller Brewing-in which the Indiana Supreme Court held that punitive damages are not allowed in a breach of contract case-dictates that punitive damages are also not available in a breach of warranty action. [Filing No. 34 at 7]. If Miller Brewing does not apply, it argues, this Court should have used its own judgment to predict how the Indiana Supreme ...


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