Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. S.C.: Pella unable to have unfair trade practices, MMWA claims “tossed out the window”, (Oct 27, 2015)

By Michael Menzhuber, J.D., LL.M.

Two homeowners adequately alleged claims that Pella Corporation violated the Maine Unfair Trade Practices Act (MUTPA), breached an express warranty to repair and replace and failed to comply with building codes, and violated the Magnuson-Moss Warranty Act (MMWA), the federal district court in Charleston, South Carolina has ruled. Thus, Pella’s motion to dismiss was denied (Cohan v. Pella Corporation, October 26, 2015, Norton, D.).

Background. In reliance on a Pella sales representative’s representations, Clara Cohan and Sharon Balzar purchased Architect Series windows from Pella for their home in 2001. In response to a warranty claim made by the homeowners in June 2010, a Pella representative informed them that, despite the fact Pella had sold them factory-painted windows, they should have painted the edges of the window when they were installed. The representative replaced the damage window in exchange for a labor charge.

In August 2010, the plaintiffs filed a second warranty claim to have Pella paint the edges of all the windows, which was refused. When the plaintiffs began preparing to paint the windows, they found they windows were damaged and, in September 2010, filed a third warranty claim. In February 2011, they were informed that Pella was unable to assist them with their warranty claim. In September 2014, the homeowners filed a class action complaint against Pella, alleging, among other things: (1) violation of the MUTPA; (2) breach of express warranty; and (3) violation of the MMWA. Subsequently, Pella filed a motion to dismiss.

MUTPA. The court first determined that the plaintiffs’ MUTPA claim was based on fraud because the core of their allegations charged that Pella failed to disclose a known defect in the windows with the intent that the purchasers would rely upon its failure to disclose in the purchasing the windows. Consequently, the heightened pleading standard required by Federal Rule of Civil Procedure 9(b) applied to the plaintiffs’ claim.

Second, the court found that the plaintiffs’ individual MUTPA claim, relating to the sale of their windows, was sufficiently pleaded because they specified the time, place, and content of the allegedly fraudulent acts. However, the plaintiffs’ class claim under MUTPA did not meet the Rule 9(b) heightened pleading standard because it was based on fraudulent omissions rather than assertions.

The court noted that, because of the difficulty in applying the Rule 9(b) standard to fraudulent concealment or omission claims, a relaxed, less formulaic version of the rule is sometimes applied. Because it found that the reasoning supporting a relaxed standard was persuasive, the court applied it to the plaintiffs’ fraud-based claims, to the extent that they asserted fraudulent omissions or concealments. Thus, the plaintiffs’ claim of fraudulent omissions satisfied the relaxed Rule 9(b) standard because it alleged that: (1) Pella was aware of a defect; (2) Pella concealed that defect from consumers; and (3) the plaintiffs would have taken different action if they had known about the defect.

Breach of express warranty. The court determined that the plaintiffs adequately pleaded a breach of express warranty relating to Pella’s alleged failure to comply with the warranty in August and September 2010. The plaintiffs alleged that Pella refused to paint the window edges, in response to their August 2010 warranty request and failed to respond to their September 2010 warranty request. The plaintiffs also adequately pleaded a breach of express warranty relating to a failure to comply with applicable standards that explicitly extend to future performance because they alleged that: (1) Pella warranted that it complied with all applicable codes and standards; (2) the warranty extended to future performance because the anticipated life of the windows was twenty to twenty-five years; (3) these representations formed part of the basis of the bargain at the time of the sale; and (4) Pella failed to comply with the applicable standards.

MMWA. Pella argued that the plaintiffs’ MMWA claim should fail because they were time-barred and because the plaintiffs’ state-law warranty claims fail. The court, however, noted that the MMWA does not create a warranty but was, instead, a vehicle for enforcing warranties created by state law. Therefore, because Pella’s motion to dismiss the plaintiffs’ express warranty claim was denied as it pertained to Pella’s failure to repair or replace, the court denied the motion to dismiss the plaintiffs’ MMWA claim.

The case is No. 2:14-mn-03704-DCN.

Attorneys: Daniel K. Bryson (Whitfield Bryson & Mason LLP) for Clara Cohan. John P. Mandler (Faegre, Baker Law Firm) for Pella Corp.

Companies: Pella Corp.

Cases: StateUnfairTradePractices SouthCarolinaNews