On April 13, Judge Beverly Reid O’Connell of the Central District of California dismissed a putative class action lawsuit against Hyundai for selling cars with allegedly defective paint, but allowed most of the plaintiffs leave to amend the complaint.
Fifteen named plaintiffs from across the country alleged that certain 2006-2016 Hyundai Santa Fe, Sonata, and Elantra automobiles had defective “self-healing” paint that Hyundai fraudulently concealed from its customers. Specifically, the plaintiffs claimed that Hyundai represented that it used “state-of-the-art paint” on its vehicles that would “stand the test of time” and “protect against corrosion, rust[,] and scratches,” when in fact Hyundai used “a coating with a short lifespan of three years” without providing “any warning or disclosure.” The plaintiffs alleged that when they informed Hyundai about the peeling paint on their cars, they were told that Hyundai would not provide any repairs because the warranty period had already expired or that the condition was just “normal wear and tear,” or Hyundai otherwise refused to assist them.
The plaintiffs brought common law claims for breach of express warranty, negligent misrepresentation, fraudulent concealment, and unjust enrichment; claims under California’s Unfair Competition Law (“UCL”), False Advertising Law (“FAL”), Consumer Legal Remedies Act (“CLRA”), and Song-Beverly Consumer Warranty Act; and claims under the consumer protection laws of Maryland, Texas, North Carolina, Florida, Illinois, and Massachusetts.
The court found the plaintiffs’ claims lacking for reasons explained in a 40-page minute order. The court dismissed the claim for breach of express warranty, finding that any representations Hyundai may have made regarding the quality of its paint did not establish a warranty of unlimited duration and that most of the plaintiffs could not plead a viable claim when the alleged defect occurred outside of the warranty period. Next, the court found that the economic loss rule barred the plaintiffs’ negligent misrepresentation claim, as the only harm the plaintiffs alleged was the diminished value of their vehicles. The court also dismissed the plaintiffs’ claim for breach of the implied warranty of merchantability under the Song-Beverly Act because they had not alleged that the paint defects rendered their cars inoperable, unsafe, or useless. Further, the court found that the plaintiffs failed to adequately allege that Hyundai knew or should have known of any alleged paint defect at the time the plaintiffs purchased their vehicles, or that they relied on the alleged misrepresentations, dooming their fraudulent concealment, UCL, CLRA, and FAL claims. The court cited the same knowledge and reliance deficiencies in dismissing the claims brought under the consumer protection laws of several other states. Finally, the court dismissed the plaintiff’s unjust enrichment claim, finding that quasi-contractual relief is inappropriate where, as here, the warranty is an express contract between the parties.
The court granted the plaintiffs leave to file an amended complaint, save for one of the named plaintiff’s claims under Massachusetts’s Unfair and Deceptive Trade Practice Act, as she had failed to give Hyundai the requisite 30-day pre-suit notice.
The case is Resnick et al. v Hyundai Motor America Inc. et al., No. 16-00593 (C.D. Cal. Apr. 13, 2017).