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Tatum v. Chrysler Group LLC

2011 WL 1253847 (U.S. Dist. Ct. D. N.J. 2011) (Unpublished)

FRAUD; WARRANTIES; AUTOMOBILES — The general rule is that an express warranty does not cover automobile repairs made after the applicable time or mileage period has elapsed and to hold the manufacturer liable for a vehicle part’s failure based on the manufacturer’s knowledge that the part would not last longer than the warranty period would make meaningless the time and mileage limitations in the warranty’s coverage.

A group of automobile purchasers filed a class action lawsuit against their cars’ manufacturer, alleging the braking system was inherently flawed. Specifically, they alleged that the brake pads and rotors were too small and thin to handle the braking duties required by the size and weight of the car. They alleged that the brakes on their cars required excessive, expensive, and frequent repairs. They further alleged that they were induced to buy their vehicles based upon the manufacturer’s advertisements touting the vehicle as safe, durable, and reliable, and that the manufacturer should have been aware of this brake defect and notified consumers of the defect prior to selling the car. The manufacturer filed a motion to dismiss the complaint.

The United States District Court first denied the motion, in part, as to the argument that the manufacturer, which came into existence as the result of an asset purchase agreement pursuant to a bankruptcy reorganization, could not be held liable for the obligations of the predecessor company under that agreement. It held that whether the manufacturer could impliedly assume debts and responsibilities such as the brake repairs at issue was a question that could not be decided at that time, but required a more developed factual record. Notably, the Court opined that liability could attach based upon a continuation theory because, at the very least, the product lines had remained virtually unchanged.

The Court also denied the motion in part, as to the manufacturer’s argument that the complaint alleged nothing more than disappointed consumer expectations, as the Court found the argument better suited to a factually developed record. However, it was cognizant of the fact that all of the purchasers, but one, had suffered brake failure only after the one year or 12,000 mile warranty had expired. The general rule is that an express warranty does not cover repairs made after the applicable warranty time or mileage period has elapsed. The Court said that a rule that would make a vehicle part’s failure actionable based upon a manufacturer’s knowledge would render meaningless the time/mileage limitations in a warranty’s coverage. Therefore, it stated that, as a matter of law, if the brakes on these vehicles did not fail until after the expiration of the warranties, there would be nothing on which the purchasers could rely to allege a fundamental and dangerous design defect.

The Court then granted the motion, in part, as to the purchasers’ claim of a breach of an express warranty based upon the manufacturer’s advertisements, as the court found the advertisements amounted to nothing more than non-actionable hyperbole or puffery. It specifically held that mere words of praise and commendation or which merely express the vendor’s opinion, belief, judgment or estimate, do not constitute a warranty.

The Court also granted the motion, in part, as to the purchasers’ New Jersey fraud-based claims, finding that those claims were not pled with the required specificifity. It ruled that in a case where an allegedly defective product was covered by a warranty, a claim that a defect may manifest, but has not yet manifested, itself until after the expiration of the warranty period cannot form the basis of a claim under the New Jersey Consumer Fraud Act. Rather, such a fraud claim must be sufficiently allege that the manufacturer knew, with certainty, that the product at issue or one of its components was going to fall. In this case, the purchasers merely compared the suspect vehicle with other vehicles when claiming that the manufacturer knew of the alleged defect.


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