# JONES v. BMW OF NORTH AMERICA, LLC

> District Court, M.D. North Carolina · September 25, 2020

URL: https://www.frixlaw.com/law-library/cases/10253750

## Case

- **Court:** District Court, M.D. North Carolina
- **Decided:** September 25, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10253750

## How later opinions describe it (automated extraction)

- explaining “equitable tolling applies where the defendant has wrongfully deceived or mislead the plaintiff” and “equitable estoppel applies where . . . the defendant engages in intentional misconduct to cause the plaintiff to miss the filing deadline”
- discussing that the “discovery rule” tolls the limitations period 3 Plaintiff’s amended complaint and opposition both argue that the statute of limitations should be tolled based on equitable estoppel. (Doc. 17 ¶¶ 89–91; Doc. 20 at 7–11.
- finding that tolling did not apply because the class suit “does not adequately notify the defendants of the substantive claims against them, nor of the generic identities of the potential plaintiffs”

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

LEONARD JONES, )
)
Plaintiff, )
)
v. ) 1:20-cv-00057
)
BMW OF NORTH AMERICA, LLC, )
)
Defendant. )

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.
Before the court is the motion of Defendant BMW of North
America, LCC (“BMW”) to dismiss Plaintiff Leonard Jones’s amended
complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).
(Doc. 18.) Jones brings fraud and warranty-based claims against
BMW arising from allegedly defective N63 engines. For the reasons
set forth below, BMW’s motion to dismiss will be denied.
I. BACKGROUND
The amended complaint alleges the following facts, which the
court accepts as true and construes in the light more favorable to
Jones for purposes of the present motion:
On March 12, 2012, Jones purchased a certified pre-owned 2011
BMW 550i from BMW’s authorized dealer in Raleigh, NC. (Doc. 17
¶ 14.) Prior to purchase, Jones reviewed BMW’s New Vehicle Limited
Warranty and Certified Pre-Owned Limited Warranty. (Id. ¶ 28.)
Under both warranties, BMW promised to repair or replace components
found to be defective in material or workmanship during the term
of the warranty. (Id. ¶¶ 29, 30.)
Shortly after purchase, Jones discovered the vehicle consumed
an excessive amount of engine oil which required him to add oil
several times between BMW’s recommended oil change intervals. (Id.
¶ 16.) In 2012, Jones complained about the excessive oil

consumption to two separate BMW authorized dealers. (Id. ¶ 17.)
In response, dealership employees told Jones that the oil
consumption was normal and did not offer any repairs to resolve
the problem.1 (Id. ¶ 18.) On or around December 23, 2014, Jones
brought his vehicle to a third BMW authorized dealer who performed
a “Customer Care Package” on the vehicle. (Id. ¶ 21.) During
that visit, the authorized dealer reprogrammed the vehicle’s oil

1 In its reply brief, BMW argues for the first time that fraudulent
concealment tolling based on the BMW dealerships’ employees’ statements
would be inappropriate because Jones has not sufficiently alleged that
the BMW dealerships at issue were BMW’s agents. (Doc. 21 at 4–5, 7
n.7.) This argument fails. “Under North Carolina law, the existence
of an actual agency relationship depends on the degree of control
retained by the principal over the details of the work as it is being
performed.” Thomas v. Freeway Foods, Inc., 406 F. Supp. 2d 610, 617
(M.D.N.C. 2005) (internal quotation marks omitted). Jones’s amended
complaint includes sufficient factual allegations to suggest BMW
retained control over the BMW dealerships in relation to the execution
of warranty repairs. Specifically, Jones alleges that BMW “provides
training, materials, special tools, diagnostic software, and replacement
parts to its dealers, and demands that the warranty repairs be performed
in strict accordance with its repair guidelines, Technical Service
Bulletins, and other instructions. . . . In return, BMW pays its
authorized dealerships monetary compensation for such warranty repairs.”
(Doc. 17 ¶¶ 33–35.) Thus, on the face of the complaint, Jones has
plausibly alleged an agency relationship. See also Nyarko v. BMW of N.
Am., LLC, No. CV RDB-18-3618, 2020 WL 1491361, at *7–8 (D. Md. Mar. 27,
2020).
service interval by reducing it from the earlier of either 15,000
miles or two years to the earlier of either 10,000 miles or one
year. (Id. ¶ 22.)
Jones contends that the excessive oil consumption is the
result of a manufacturing defect afflicting BMW’s N63 engines.
(Id. ¶¶ 37, 38.) The N63 engine is a V8, twin-turbocharged engine

placed in certain BMW 5 Series, 6 Series, 7 Series, X5, and X6
vehicles from the 2009 through 2014 model years. (Id. ¶¶ 39, 40.)
The engine’s excessive consumption of engine oil is well known
among car enthusiasts and BMW owners. (Id. ¶ 42.)
Jones alleges that BMW tried to conceal the problem by issuing
a series of technical service bulletins (“TSBs”) discussing the
engine oil consumption of N63 engines but failing to acknowledge
that the engine was defective. (Id. ¶¶ 52–59.) In a TSB issued
in June 2013, BMW increased the engine oil consumption
specifications for N63 engines and directed service technicians to
double the amount of engine oil added during oil changes. (Id. ¶¶

54, 55.) Another TSB indicated that “[t]he additional engine oil
consumption of a turbocharged engine, as compared to a normally
aspirated engine, is normal and not a defect.” (Id. ¶ 56.) On
December 29, 2014, BMW launched an “N63 Customer Care Package”
which, among other things, instructed BMW technicians to offer
free replacements of various components within the N63 engine and
adjusted the recommended intervals between oil changes. (Id.
¶¶ 61, 62.)
On September 18, 2015, a class action lawsuit was filed in
the United States District Court for the District of New Jersey
which made allegations similar to those presented in this case.
See Bang v. BMW of N. Am., LLC, No. CV 15-6945, 2016 WL 7042071
(D.N.J. Dec. 1, 2016). This class action resulted in a settlement.

(Doc. 17 ¶ 92.) Jones opted out of the settlement and filed an
individual action in New Jersey District Court on December 3, 2018.
(Id.) On November 27, 2019, the New Jersey District Court severed
and dismissed without prejudice Jones’s claims with leave to re-
file as a separate action. (Id. ¶ 94); Sarwar v. BMW of N. Am.,
LLC, No. CV 18-16750, 2019 WL 7499157, at *3 (D.N.J. Nov. 27,
2019). That court further ordered that the statute of limitations
for any claims asserted in that case was deemed tolled during the
pendency of that action and for a period of thirty days from the
date of that order, ultimately extended to January 27, 2020. (Doc.
17 ¶ 95); Sarwar, 2019 WL 7499157, at *3.

Jones filed the present action on January 17, 2020 (Doc. 1)
and an amended complaint on April 21, 2020 (Doc. 17). In his
amended complaint, he brings five causes of action: breach of
warranty pursuant to the Magnuson-Moss Warranty Act (“MMWA”), 15
U.S.C. § 2301 et seq.; breach of an implied warranty of
merchantability pursuant to the MMWA and N.C. Gen. Stat. § 25-2-
314; breach of express warranties pursuant to N.C. Gen. Stat. § 25-
2-313; violation of the North Carolina Unfair and Deceptive Trade
Practices Act (“UDTPA”), N.C. Gen. Stat. § 75-1.1 et seq.; and
fraudulent concealment. (Doc. 17 ¶¶ 96–151.)
BMW now moves to dismiss these claims pursuant to Federal
Rule of Civil Procedure 12(b)(6). (Doc. 18.) Jones responded in
opposition (Doc. 20), and BMW replied (Doc. 21). The dismissal

motion is now fully briefed and ready for resolution.
II. ANALYSIS
BMW argues dismissal is appropriate on multiple grounds.
First, BMW alleges that all of Jones’ claims are barred by the
applicable statute of limitations and equitable tolling does not
apply. (Doc. 19 at 5–14.) Second, in relation to Jones’s express
warranty claim, BMW contends that Jones has not sufficiently
pleaded reliance. (Id. at 14, 15.) Lastly, in relation to Jones’s
UDTPA and fraudulent concealment claims, BMW argues that Jones has
not pleaded them with the requisite particularity and that those
claims are barred by the economic loss rule. (Id. at 15–21.) Each

of these arguments will be addressed in turn.
A. Statute of Limitations
BMW first seeks dismissal of Jones’s claims based on an
affirmative defense: the applicable statute of limitations. A
court may resolve a statute of limitations defense at the motion
to dismiss stage only if “all facts necessary to the affirmative
defense ‘clearly appear[ ] on the face of the complaint.’” Goodman
v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007) (quoting
Fredericksburg & Potomac R.R. Co. v. Forst, 4 F.3d 244, 250 (4th
Cir. 1993)). The burden of establishing the affirmative defense
rests with the defendant. Id. Further, a plaintiff is not
required to allege sufficient facts to defeat a statute of
limitations defense in his complaint. See id.

A three-year limitations period applies to Jones’s claim for
common law fraudulent concealment, N.C. Gen. Stat. § 1-52(9)
(2020), and a four-year limitations period applies to his claim
under the UDTPA, N.C. Gen. Stat. § 75-16.2 (2020). For both of
these claims, the limitations period begins to run from the time
the fraud was or should have been discovered by the plaintiff with
the exercise of reasonable diligence. See Mt. Land Props. v.
Lovell, 46 F. Supp. 3d 609, 624 (W.D.N.C. 2014) (common law fraud);
Dreamstreet Invs. Inc. v. MidCountry Bank, 842 F.3d 825, 830 (4th
Cir. 2016) (UDTPA). Jones’s North Carolina warranty-based claims
are subject to a limitations period of four years after a cause

accrues. N.C. Gen. Stat. § 25-2-725 (2020). Under North Carolina
law, a cause for breach of warranty accrues at tender of delivery.2

2 Alternatively, as BMW points out, where goods are sold with a future
performance warranty, a cause will accrue on the date when the defect
should have been discovered. N.C. Gen. Stat. § 25-2-725(2). Neither
party argues that BMW’s warranties were future performance warranties.
(See Doc. 17; Doc. 19 at 7; Doc. 20.) See also Fairchild v. Kubota
Tractor Corp., No. 1:18CV69, 2018 WL 4038126, at *5 (W.D.N.C. Aug. 23,
2018) (analyzing similar language and concluding no future performance
warranty was created). As such, the accrual of future performance
warranties will not be addressed here.
Id. The MMWA does not contain a statute of limitations. When
faced with a federal statute without a specified limitations
period, federal courts apply the limitations period of an analogous
state law. N. Star Steel Co. v. Thomas, 515 U.S. 29, 33-34 (1995).
The MMWA supplements state law by supplying a federal cause of
action for warranty violations. Wolf v. Ford Motor Co., 829 F.2d

1277, 1278 (4th Cir. 1987). Accordingly, courts adjudicating MMWA
claims apply the limitations period applicable to state law breach
of warranty claims. See, e.g., Ferro v. Volvo Penta of the Ams.,
LLC, 731 F. App’x 208, 210 (4th Cir. 2018) (applying four-year
statute of limitations applicable under North Carolina law claims
for breach of warranty to MMWA claims). Therefore, the four-year
statute of limitations applicable to North Carolina breach of
warranty claims governs. Id.; N.C. Gen. Stat. § 25-2-725 (2020).
Jones’s claims for common law fraudulent concealment and
violation of the MMWA would have begun accruing only when the
defect should have been discovered through reasonable diligence.

On the face of Jones’s amended complaint, there is insufficient
information to determine that date. Although Jones reports that
he noticed excess oil consumption “not long after” purchasing the
vehicle and he has cited online forum posts from BMW enthusiasts
regarding the engine’s oil consumption dating back to 2011 (Doc.
17 ¶¶ 16, 48), these facts alone are not sufficient to determine
when the overall engine defect was discoverable. As it cannot be
determined when the limitations period began to run in relation to
these claims, BMW’s motion to dismiss them on this basis will be
denied.
Regarding Jones’s warranty-based claims, as Jones purchased
the subject vehicle in March 2012 and his warranty claims began
accruing upon tender of delivery, his warranty claims would have

elapsed in March 2016. (Doc. 19 at 8.) In response to this
argument, Jones’s amended complaint asserts five bases for tolling
the applicable statute of limitations: fraudulent concealment, the
discovery rule, equitable estoppel, equitable tolling,3 and class
action tolling. Because the first four tolling arguments can be
satisfied by a common premise, i.e., that BMW took steps to conceal
the oil consumption defect from Jones which then interfered with
his ability to learn that BMW had injured him, the court addresses
them together in its discussion of fraudulent concealment tolling,
as do the parties themselves. (See Doc. 19 at 10–12; Doc. 20 at
7–11.) See Supermarket of Marlinton v. Meadow Gold Dairies, 71

F.3d 119, 122 (4th Cir. 1995) (fraudulent concealment); Childers
Oil Co. v. Exxon Corp., 960 F.2d 1265, 1272 (4th Cir. 1992)
(discussing that the “discovery rule” tolls the limitations period

3 Plaintiff’s amended complaint and opposition both argue that the
statute of limitations should be tolled based on equitable estoppel.
(Doc. 17 ¶¶ 89–91; Doc. 20 at 7–11.) In his opposition, however, he
cites the standards for both equitable estoppel and equitable tolling.
(Doc. 20 at 8.) For the purposes of the present motion, the court will
construe Jones as alleging both grounds.
for a fraud claim until a plaintiff discovers or should have
discovered the falsity of defendant’s statements); English v.
Pabst Brewing Co., 828 F.2d 1047, 1049 (4th Cir. 1987) (explaining
“equitable tolling applies where the defendant has wrongfully
deceived or mislead the plaintiff” and “equitable estoppel applies
where . . . the defendant engages in intentional misconduct to

cause the plaintiff to miss the filing deadline”).
1. Fraudulent concealment tolling
The parties agree that the Fourth Circuit’s standard for
fraudulent concealment tolling applies to the present case. (See
Doc. 19 at 10, 11; Doc. 20 at 8–11; Doc. 21 at 4 n.4.) The court
accepts that standard for the purposes of the present motion.4 The
fraudulent concealment doctrine provides that “when the fraud has
been concealed or is of such a character as to conceal itself, and
the plaintiff is not negligent or guilty of laches, the limitations
period does not begin to run until the plaintiff discovers the
fraud.” Marlinton, 71 F.3d at 122 (internal quotation marks

omitted). The doctrine applies where (1) the party pleading the

4 Without deciding the issue, the court notes that as Jones’s claims are
subject to the North Carolina statutes of limitations, North Carolina
tolling laws may be the more appropriate law for decision. See Hemenway
v. Peabody Coal Co., 159 F.3d 255, 265 (7th Cir. 1998) (“When state law
supplies the period of limitations, it also supplies the tolling rules.”)
(citing § 1983 cases, Hardin v. Straub, 490 U.S. 53 (1989), and Chardon
v. Fumero Soto, 462 U.S. 650, (1983)). North Carolina courts do not
typically recognize fraudulent concealment as a mechanism for tolling
the statute of limitations but would consider this claim under equitable
estoppel. See Friedland v. Gales, 509 S.E.2d 793, 797 (N.C. Ct. App.
1998).
statute of limitations fraudulently concealed facts that are the
basis of the plaintiff’s claim, and (2) the plaintiff failed to
discover those facts within the statutory period, (3) despite the
exercise of due diligence. Id. “Generally, whether a plaintiff
exercised due diligence is a jury issue not amenable to resolution
on the pleadings.” Edmonson v. Eagle Nat’l Bank, 922 F.3d 535,

554 (4th Cir. 2019).
BMW argues that Jones failed to sufficiently plead fraudulent
concealment on multiple grounds. First, BMW argues that Jones has
not stated facts that indicate BMW engaged in any concealment such
that the limitations period should be tolled. The court disagrees.
In his amended complaint, Jones alleges that BMW failed to disclose
the defect to him and he was precluded from knowing the severity
of the defect because of BMW’s misrepresentations and concealment.
(Doc. 17 ¶¶ 77–84.) He alleges BMW issued TSBs outlining the
defect to all BMW automotive dealers, which suggests that BMW was
aware of the problem and consciously chose not to inform consumers.

(Id. ¶¶ 52–57.) Further, he alleges these TSBs were put in effect
to better conceal the engine’s defect and related excessive oil
consumption. (Id.) He also alleges that BMW launched an N63
Customer Care Package and reduced the recommended oil change
intervals in 2014 to further conceal the ongoing effects of the
manufacturing defect. (Id. ¶¶ 61–63.) Finally, Jones asserts
that BMW continued to represent to consumers that the oil
consumption was normal and not a defect, despite BMW’s knowledge
to the contrary. (Id. ¶¶ 57, 58.) When taken as true for purposes
of a motion to dismiss — as the court must — Jones’s allegations
state a plausible set of facts that would entitle him to tolling
of the statute of limitations. See also Nyarko v. BMW of N. Am.,
LLC, No. CV RDB-18-3618, 2020 WL 1491361, at *7–8 (D. Md. Mar. 27,

2020) (analyzing the same factual allegations and finding
plaintiffs sufficiently pleaded fraudulent concealment to survive
motion to dismiss); Loy v. BMW of N. Am., LLC, No. 4:19-CV-00184
JAR, 2020 WL 5095372, at *3 (E.D. Mo. Aug. 28, 2020) (same);
O'Connor v. BMW of N. Am., LLC, No. 18-CV-03190-CMA-STV, 2020 WL
1303285, at *4 (D. Colo. Mar. 19, 2020) (same); Harris v. BMW of
N. Am., LLC, No. 4:19-CV-00016, 2019 WL 4861379, at *5 (E.D. Tex.
Oct. 2, 2019) (same); Schneider v. BMW of N. Am., LLC, No. 18-CV-
12239-IT, 2019 WL 4771567, at *7 (D. Mass. Sept. 27, 2019) (same);
Carroll v. BMW of N. Am., LLC, No. 119CV000224JMSTAB, 2019 WL
4243153, at *8 (S.D. Ind. Sept. 6, 2019) (same).

Second, BMW argues that Jones did not exercise due diligence
as a matter of law because “it is clear there was both capacity
and opportunity to discover the mistake” within the statutory
period. (See Doc. 19 at 9; Doc. 21 at 2 n.2.) This argument is
unpersuasive. The precise time period during which Jones learned
of the N63 engine defect and the degree to which he exercised due
diligence involves issues of fact not suited for resolution at
this stage. At the very least, Jones’s amended complaint indicates
that he attempted to exercise due diligence by visiting two
separate BMW dealers in 2013 to identify the root of his vehicle’s
excessive oil consumption and both times he was informed that his
vehicle was operating normally. (See Doc. 17 ¶¶ 17, 18.) Although
Jones alleges that discussion of the N63 engine was a “hot topic”

in certain sectors of the internet as early as 2011 (id. ¶ 49),
the court cannot conclude at this early stage that Jones was
knowledgeable of, or even had access to, such discussions or other
information which would lead him to believe that his engine had a
defect. Accordingly, Jones has sufficiently alleged facts
supporting fraudulent concealment tolling at this stage.
2. Class action tolling
Under American Pipe & Construction Co. v. Utah, 414 U.S. 538,
554 (1974), “the commencement of a class action suspends the
applicable statute of limitations as to all asserted members of
the class who would have been parties had the suit been permitted

to continue as a class action.”5 Class action suits trigger the

5 Although North Carolina has adopted class action tolling under American
Pipe, see Scarvey v. First Fed. Sav. & Loan Ass'n of Charlotte, 552
S.E.2d 655, 661 (N.C. 2001), this case involves cross-jurisdictional
tolling, see Wade v. Danek Med., Inc., 182 F.3d 281, 287 (4th Cir. 1999)
(defining cross-jurisdictional tolling to be where courts toll the
limitations period of related state law claims during the pendency of a
class action in another court); Nyarko, 2020 WL 1491361, at *9 n.8
(arising from the Bang class action). North Carolina courts have not
decided whether to accept cross-jurisdictional tolling. In re Dairy
Farmers of Am., Inc. Cheese Antitrust Litig., No. 9 CV 3690, 2015 WL
3988488, at *31 (N.D. Ill. June 29, 2015). However, the court notes that
tolling of the limitations period because such suits properly give
defendants notice of the “essential information necessary to
determine both the subject matter and size of prospective
litigation” within the statutory limitations period. Id. at 554–
55. Such tolling ceases for an individual’s claims when the
individual putative class member opts out of the class. Womack v.

United Parcel Serv., Inc., 311 F. Supp. 2d 492, 497 (E.D.N.C.
2004).
Here, Jones relies on the Bang class action lawsuit to support
the tolling of the limitations period. However, BMW argues that
Jones’s claims should not be tolled based on that class action
because Jones’s claims are not “the same” as those raised in it.
(Doc. 19 at 13–14.) Specifically, BMW argues that Jones’s claims
are based on North Carolina law, which was not implicated in the
prior class action suit. (Id.) BMW cites Crown, Cork & Seal Co.
v. Parker in support of its contention, but this case does not
suggest that subsequent individual claims must be exactly the same

or that both cases must cite the exact same statutory provisions

few states have adopted cross-jurisdictional tolling and federal courts
have been wary to extend cross-jurisdictional tolling where states have
not decided the issue. See, e.g., Wade, 182 F.3d at 287–88 (Virginia);
Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1025 (9th Cir. 2008)
(California); Chavez v. Occidental Chemical Corp., 933 F.3d 186 (2d Cir.
2019) (refusing to determine whether New York permits cross-
jurisdictional tolling and certifying the question to the New York State
Court of Appeals). For the purposes of the present motion, as neither
party has argued this issue, the court accepts the application of cross-
jurisdictional tolling.
for class action tolling to apply. See 462 U.S. 345 (1983).
Rather, courts look to whether the claims asserted in a prior class
action suit provide defendants with sufficient notice of the
substantive claims against them. See, e.g., Davis v. Bethlehem
Steel Corp., 769 F.2d 210, 212 (4th Cir. 1985) (finding that
tolling did not apply because the class suit “does not adequately

notify the defendants of the substantive claims against them, nor
of the generic identities of the potential plaintiffs”); Tosti v.
City of Los Angeles, 754 F.2d 1485, 1489 (9th Cir. 1985) (finding
that tolling applied to a different claim because the class suit
involved the same allegations and “[t]he City had ample notice of
the nature of Tosti’s discrimination claims”); Lindner Dividend
Fund, Inc. v. Ernst & Young, 880 F. Supp. 49, 54 (D. Mass. 1995)
(“While a subsequent individual suit need not necessarily be
identical in every respect to an earlier class action for the
limitations period to be tolled, . . . the class action suit must
give defendant ample notice of plaintiff's individual claim.”);

Child.’s Hosp. & Med. Ctr. Found. of Omaha v. Countrywide Fin.
Corp., No. CV-11-02056-MRP-MAN, 2011 WL 13220509, at *3 (C.D. Cal.
Aug. 22, 2011) (“Most courts to consider the issue have held that
claims need not be identical in order for American Pipe to apply.
The inquiry is whether the claims concern the same evidence,
memories, and witnesses as the subject matter of the original class
suit.”) (internal quotations marks and citations omitted). Other
courts have applied this standard to the multiple cases arising
out of the Bang class action and have allowed claims to go forward
despite not being brought under the same statutory provisions as
those in the prior class action suit. See Nyarko, 2020 WL 1491361,
at *9 n.8; Loy, 2020 WL 5095372, at *3; Schneider, 2019 WL 4771567,
at *7; Carroll, 2019 WL 4243153, at *8.

Jones opted out of the Bang class action settlement in August
2018. (Doc. 17 ¶ 92.) The claims he brings in the present action
arise from the same set of facts that underpinned the Bang class
action. Compare Bang, 2016 WL 7042071 at *1–3 with (Doc. 17 ¶¶
14–76). Further, all of the claims Jones brings under North
Carolina law mirror those brought in Bang under other states’ laws.
Compare Bang, 2016 WL 7042071 at *5–8 with (Doc. 17 ¶¶ 104–51).
Given the near-identical similarity between the facts and claims
at issue in the two cases, the court concludes that Jones has
plausibly claimed that his individual action qualifies for tolling
under American Pipe.

Because BMW has failed to carry its burden of demonstrating
on the face of the complaint that the limitations periods for
Jones’s warranty-based claims have expired, its motion to dismiss
the claims on these grounds will be denied.
B. Breach of Express Warranty Claim
Under North Carolina law, to state a claim for breach of an
express warranty, a plaintiff must show (1) there was an express
warranty of fact or a promise as to the product, (2) the plaintiff
relied on the warranty in deciding to purchase the product, and
(3) the defendant breached that warranty. Maxwell v. Remington
Arms Co., No 1:10CV918, 2014 WL 5808795, at *3 (M.D.N.C. Nov. 7,
2014) (citing Harbor Point Homeowners' Ass'n, Inc. ex rel. Bd. of
Dirs. v. DJF Enters., 697 S.E.2d 439, 447 (N.C. Ct. App. 2010)).

BMW argues that Jones has failed to sufficiently allege the
second required element, his reliance on the express warranty, and
that he instead alleges only “legal trigger words,” such that the
claim should be dismissed. (Doc. 19 at 15.) The court disagrees.
The allegations underpinning Jones’s claim of reliance are
sufficiently specific to survive a motion to dismiss. Compare
Remington, 2014 WL 5808795, at *4 (finding the plaintiff failed to
plead reliance where he alluded to the written limited warranty
but did not allege “the terms of that warranty, that he received
the warranty prior to purchase, or that he otherwise relied on the
warranty”), with Bussian v. DaimlerChrysler Corp., 411 F. Supp.

2d. 614, 621 (M.D.N.C. 2006) (finding reliance sufficiently
pleaded where plaintiff alleged that he “reasonably relied on
Defendants’ representations and warranties” and those
representations “became a basis of the bargain” between the
parties, specifying that “[a] higher level of specificity is not
required . . . at the pleadings stage”). Here, Jones has alleged
that he received both of the subject warranties prior to purchase;
that, among other things, the warranties represented that BMW would
repair the vehicle’s engine in the event of a defect; that he
relied on that representation; and that the representation was
material to his decision to purchase the vehicle. (Doc. 17 ¶¶ 28–
30.) These allegations are specific enough to demonstrate reliance
at the pleading stage. As such, BMW’s motion to dismiss Jones’s

breach of express warranty claim for failure to state a claim will
be denied.
C. Pleading with Requisite Particularity
BMW argues that Jones’s claims for fraudulent concealment and
violation of the UDTPA should be dismissed because he has not
pleaded the causes of action with the required particularity.
Fed. R. Civ. P. 9(b) creates a heightened pleading standard
for claims brought in federal court based on fraud or mistake,
including state law claims. Topshelf Mgmt., Inc. v. Campbell-
Ewald Co., 117 F. Supp. 3d 722, 725–26 (M.D.N.C. 2015). Under
this rule, parties alleging fraud “must state with particularity

the circumstances constituting fraud or mistake. Malice, intent,
knowledge, and other conditions of a person's mind may be alleged
generally.” Fed. R. Civ. P. 9(b). Parties must plead with
particularity “the time, place, and contents of the false
representations, as well as the identity of the person making the
misrepresentation and what he obtained thereby.” U.S. ex rel.
Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir.
2008) (citing Harrison v. Westinghouse Savannah River Co., 176
F.3d 776, 784 (4th Cir. 1999)). These requirements extend to
claims under the UDTPA when such claims are predicated on an
underlying fraud.6 Topshelf at 729.
The purposes of this heightened pleading standard are to give
a defendant sufficient notice of the claim to permit them to

formulate a defense; to protect against frivolous suits; to
eliminate suits where all the fraud facts are learned after
discovery; and to protect defendants from harm to their goodwill
and reputation. Humana, Inc. v. Ameritox, LLC, 267 F. Supp. 3d
669, 677 (M.D.N.C. 2017) (citing Harrison, 176 F.3d at 784).
Consequently, “[a] court should hesitate to dismiss a complaint
under Rule 9(b) if the court is satisfied (1) that the defendant
has been made aware of the particular circumstances for which [it]
will have to prepare a defense at trial, and (2) that plaintiff
has substantial prediscovery evidence of those facts.” Harrison,
176 F.3d at 784.

To state an actionable claim of fraud under North Carolina
law, the following essential elements must be shown: (1) a false
representation or concealment of a material fact, (2) that was

6 Jones’s claim under the UDTPA is based in the same nondisclosure upon
which he bases his fraudulent concealment claim. Thus, to the extent
Jones satisfies the pleading requirements for his fraudulent concealment
claim, the court will consider his claim under the UDTPA similarly
satisfied. (See Doc. 19 at 15–19 (making no arguments regarding
Plaintiff’s UDTPA claim separate from his fraudulent concealment
claim).)
reasonably calculated to deceive, (3) which was made with the
intent to deceive, (4) that did in fact deceive, and (5) resulted
in damage. Liner v. DiCresce, 905 F. Supp. 280, 288 (M.D.N.C.
1994) (citing Myers & Chapman, Inc. v. Thomas G. Evans, Inc., 374
S.E.2d 385 (N.C. 1988)). Further, when alleging fraudulent
concealment, plaintiffs must also allege that the defendant had a

duty to speak such that their silence was fraudulent. Griffin v.
Wheeler–Leonard & Co., 225 S.E.2d 557, 565 (N.C. 1976). For
parties negotiating at arm’s length, a duty to speak arises where
either (1) one party has taken affirmative steps to conceal
material facts from the other or (2) one party has knowledge of a
latent defect in the subject matter of the negotiations about which
the other party is both ignorant and unable to discover through
reasonable diligence. Breeden v. Richmond Cmty. Coll., 171 F.R.D.
189, 196 (M.D.N.C. 1997).
Here, BMW argues that Jones has failed to state a claim for
fraudulent concealment, first because Jones has not sufficiently

alleged that BMW had a duty to speak. (Doc. 19 at 17–18.) Jones,
however, has alleged facts that plausibly indicate BMW had a duty
to speak because BMW took affirmative steps to conceal material
facts regarding the defect in the N63 engine. Specifically,
Jones’s amended complaint indicates that, despite his vehicle’s
increased oil usage and BMW’s awareness of the defect, Jones was
told by multiple BMW dealerships that his engine was operating
normally. (Doc. 17 ¶¶ 17, 18, 52–58.) He alleges that BMW’s June
2013 TSB and the “N63 Customer Care Package” were both attempts to
conceal the severity of the defect from consumers and reduce
complaints. (Id. ¶¶ 54–55, 61–63.) If true, these actions
constitute affirmative acts taken to conceal a material fact — the
N63’s excessive oil consumption, indicative of an engine defect —

which would have imposed upon BMW a duty to speak.
Jones has also plausibly alleged BMW had a duty to speak
because it had knowledge of the N63 engine defect, about which
Jones was ignorant.7 (See id. ¶ 70.) He claims that BMW had
knowledge of the defect as early as 2008 based on sources not
publicly available, including pre-release testing data, durability
testing, early consumer complaints, testing conducted in response
to those complaints, aggregate data from BMW dealers, dealer repair
orders, and other internal sources. (Id. ¶ 69.) He also claims
he was ignorant of the engine defect, as demonstrated by his
decision to purchase the vehicle, the price paid for the vehicle,

and his repeated attempts to have the car repaired. (Id. at ¶¶ 17–
18, 76.) Although factual development through discovery may show
that Jones should have known about the alleged defect when he
purchased the subject vehicle based on, e.g., information that was

7 As discussed in Section A.1., supra, questions regarding the
discoverability of the defect and Jones’s due diligence are not
appropriate for resolution at the current stage.
publicly available at the time, that is not conclusively
established by the allegations in the amended complaint. The
allegations taken together plausibly suggest that BMW had a duty
to speak, such that its silence was fraudulent.
BMW further argues that Jones has failed to meet the pleading
requirements of Rule 9(b) because, relying on the standard

articulated in Harrison, 176 F.3d at 784, Jones has failed to
specifically allege the contents of the misrepresentations, the
time and place of the misrepresentations, the persons who made the
misrepresentations, and the fruit obtained thereby. (Doc. 19 at
18.) However, where a plaintiff alleges fraud by concealment — as
Jones does here — the level of particularity required is adjusted.
See Breeden, 171 F.R.D. at 196 (acknowledging that fraud by
concealment “is by its very nature, difficult to plead with
particularity”) (quoting Daher v. G.D. Searle & Co., 695 F. Supp.
436, 440 (D. Minn. 1988)). To comply with the enhanced pleading
requirements of Rule 9(b) for a claim of fraudulent concealment,

a plaintiff will usually be required to allege with reasonable
particularity: (1) the relationship or situation giving rise to
the duty to speak, (2) the event or events triggering the duty to
speak, and/or the general time period over which the relationship
arose and the fraudulent conduct occurred, (3) the general content
of the information that was withheld and the reason for its
materiality, (4) the identity of those under a duty who failed to
make such disclosures, (5) what the defendant gained by withholding
information, (6) why plaintiff's reliance on the omission was both
reasonable and detrimental, and (7) the damages proximately
flowing from such reliance. Id. at 195.
As the court has already addressed, Jones sufficiently
pleaded the situation and events giving rise to the duty to speak.

He has also specifically alleged the content of the information
withheld and its materiality. Although Jones has not identified
a specific natural person who failed to make the required
disclosures, this is not strictly necessary when alleging fraud
against a corporate defendant. See Smith v. Clark/Smoot/Russell,
796 F.3d 424, 432–33 (4th Cir. 2015) (rejecting Rule 9(b) challenge
to allegations involving false certification of pay records where
the plaintiff identified the perpetrators as the corporate
defendants and provided evidence of the fraud); United States ex
rel. Bledsoe v. Community Health Sys., Inc., 501 F.3d 493, 506
(6th Cir. 2007) (rejecting contention that, “in addition to

alleging specific false claims, the [plaintiff] must plead the
identity of the specific individual employees within the defendant
corporation who submitted false claims to the government,” and
“hold[ing] that while such information is relevant to the inquiry
of whether a relator has pled the circumstances constituting fraud
with particularity, it is not mandatory”). Here, Jones has made
sufficient allegations regarding BMW’s actions, and the actions of
its agents, such that the “who” requirement of Rule 9(b) is
satisfied. Further, Jones has sufficiently alleged reasonable
reliance (see Doc. 17 ¶ 143) and damages stemming from the
misrepresentation (id. ¶ 72 (explaining he incurred more frequent
maintenance visits, increased out-of-pocket spending on
replacement oil, and decreased resale value on his vehicle)).

Lastly, the amended complaint demonstrates that had Jones known of
the engine defect, he would not have purchased the subject vehicle,
illustrating the fruits obtained from the misrepresentation. (Id.
¶¶ 7, 76, 130, 148.) Taken together, and mindful of the Fourth
Circuit’s instruction in Harrison, 176 F.3d at 784 (“A court should
hesitate to dismiss a complaint under Rule 9(b) if the court is
satisfied (1) that the defendant has been made aware of the
particular circumstances for which [it] will have to prepare a
defense at trial, and (2) that plaintiff has substantial
prediscovery evidence of those facts.”), the court is satisfied
that Jones has pleaded fraudulent concealment and the fraud

underlying his UDTPA claim with sufficient particularity.
D. Economic Loss Rule
In North Carolina, the economic loss rule “generally bars
recovery in tort for damages arising out of a breach of contract.”
Rountree v. Chowan Cty., 796 S.E.2d 827, 830 (N.C. Ct. App. 2017).
“The rationale for the economic loss rule is that the sale of goods
is accomplished by contract and the parties are free to include,
or exclude, provisions as to the parties’ respective rights and
remedies, should the product prove to be defective.” Moore v.
Coachmen Indus., 499 S.E.2d 772, 780 (N.C. Ct. App. 1998). Thus,
a “tort action must be grounded on a violation of a duty imposed
by operation of law,” not a violation of a duty arising purely
from “the contractual relationship of the parties.” Rountree, 796

S.E.2d at 831 (internal quotation marks and citation omitted).
“Accordingly, North Carolina law requires courts to limit
plaintiffs’ tort claims to only those claims which are
‘identifiable’ and distinct from the primary breach of contract
claim.” Legacy Data Access, Inc. v. Cadrillion, LLC, 889 F.3d
158, 164 (4th Cir. 2018) (quoting Broussard v. Meineke Disc.
Muffler Shops, Inc., 155 F.3d 331, 347 (4th Cir. 1998)).
BMW argues that Jones’s claims for fraudulent concealment and
violations of the UDTPA are barred by the economic loss rule
because Jones has not alleged that BMW breached a duty separate
from those required of it under the relevant warranties.8 (Doc.

19 at 19–21.) The court disagrees.

8 BMW relies on Bussian v. DaimlerChrysler Corp. in support of this
argument. 411 F. Supp. 2d. 614 (M.D.N.C. 2006). However, Bussian
“limit[ed] its decision to cases . . . involving allegations of a
defective product where . . . the allegations of unfair trade practices
are intertwined with the breach of contract or warranty claims.” Id.
at 627. Here, Jones alleges unfair and deceptive trade practices at
least partially in relation to the inducement of the contract, separate
from his claims under the warranty. To that extent, Bussian is
inapplicable. This is consistent with the decisions of multiple courts
that have declined to extend the holding of Bussian in similar cases.
See, e.g., In re Caterpillar, Inc., C13 & C15 Engine Prod. Liab. Litig.,
“Under North Carolina law, a party to a contract owes the
other contracting party a separate and distinct duty not to provide
false information to induce the execution of the contract.”9
Schumacher Immobilien Und Beteiligungs AG v. Prova, Inc., No.
1:09cv00018, 2010 WL 3943754, at *2 (M.D.N.C. Oct. 7, 2010); see
also Ada Liss Grp. v. Sara Lee Corp., No. 06CV610, 2010 WL 3910433,

at *11 (M.D.N.C. Apr. 27, 2010) (finding that the defendant owed
the plaintiff “a duty not to provide deceptive or misleading
information” in connection with their distributorship agreement);
but see Wireless Commc’ns, Inc. v. Epicor Software Corp., Civil
No. 3:10CV556–DSC, 2011 WL 90238, at *5 (W.D.N.C. Jan. 11, 2011)
(distinguishing Ada Liss and Schumacher on the basis that the

No. 1:14-CV-3722 JBS-JS, 2015 WL 4591236, at *36 (D.N.J. July 29, 2015);
In re MyFord Touch Consumer Litig., 46 F. Supp. 3d 936, 966–67 (N.D.
Cal. 2014); see also Ellis v. Louisiana-Pac. Corp., 699 F.3d 778, 787
(4th Cir. 2012) (“North Carolina courts have never addressed whether
UDTPA claims are subject to the [economic loss rule].”); Coker v.
DaimlerChrysler Corp., 617 S.E.2d 306, 319 (N.C. Ct. App. 2005) (Hudson,
J., dissenting) (“[B]y enacting a remedy for economic losses suffered
by reason of an act deemed wrongful by the statute, the legislature has
effectively preempted the economic loss rule for those cases covered by
the act.”).

9 North Carolina law also imposes a duty not to defraud others.
Definitive Staffing Sols., Inc. v. Staffing Advantage, L.L.C., No. 7:18-
CV-187-FL, 2019 WL 3660878, at *6 (E.D.N.C. Aug. 6, 2019) (citing Forbis
v. Neal, 649 S.E.2d 382, 387 (N.C. 2007), and Ragsdale v. Kennedy, 209
S.E.2d 494, 500 (N.C. 1974)). This duty may be considered separate from
a breach of contract where “allegations of fraud and deceit are obvious
from the manner in which the breach is alleged.” See Oestreicher v. Am.
Nat. Stores, Inc., 225 S.E.2d 797, 808 (N.C. 1976); see also Definitive
Staffing, 2019 WL 3660878, at *6. The court does not read the pleadings
as presenting such a case and, as such, does not consider this as a
separate duty upon which Jones can rely to overcome the economic loss
rule.
plaintiffs in those cases “specifically pled facts that the
defendants never intended to perform the contracts or specifically
intended to deceive the plaintiffs,” whereas the plaintiff in
Wireless Commc’ns never “allege[d] that Epicor entered into the
Agreement with the intent not to perform”). As discussed above,
North Carolina imposes a duty to disclose on parties negotiating

at arm’s length where (1) one party has taken affirmative steps to
conceal material facts from the other or (2) one party has
knowledge of a latent defect in the subject matter of the
negotiations about which the other party is both ignorant and
unable to discover through reasonable diligence. Breeden, 171
F.R.D. at 196.
The extent to which Jones’s fraudulent concealment and UDTPA
claims are barred by the economic loss rule thus depends on whether
Jones has sufficiently alleged that BMW had a duty to disclose the
N63 engine defects prior to the sale of the vehicle and the
execution of the warranties. See also Definitive Staffing Sols.,

Inc. v. Staffing Advantage, L.L.C., No. 7:18-CV-187-FL, 2019 WL
3660878, at *6 (E.D.N.C. Aug. 6, 2019) (“While plaintiff’s breach
of contract claim looks to whether defendant performed under the
Agreement, plaintiff’s fraud and UDTPA claims focus on whether
defendants procured the Agreement under false pretenses or
deceptively performed under the Agreement to increase their income
without plaintiff’s knowledge or consent.”).
As discussed in Section A.1., supra, Jones alleges BMW had a
duty to disclose, such that its silence would constitute false
inducement of a contract, because (1) BMW took affirmative acts to
conceal the severity of the engine defect from him and (2) BMW had
knowledge of the engine defect, about which Jones was ignorant and
could not discover through reasonable diligence. In support of

the first rationale, Jones reports that BMW took affirmative acts
to conceal the defect by having service technicians report the
engine functioning as normal in 2012, instructing service
technicians to put double the recommended amount of oil in affected
vehicles starting in June 2013, and launching the Customer Care
Package and altering the recommended oil change intervals in
December 2014. However, each of these acts occurred after Jones
purchased the vehicle in March 2012. As these acts of concealment
occurred after Jones entered the warranty contract, they do not
support a claim that BMW was under a duty to disclose at the time
of contracting such that its silence constituted the false

inducement of the contract.
Alternatively, Jones argues that BMW was under a duty to
disclose because it knew about the engine defect while Jones was
ignorant and unable to discover it through reasonable diligence.
This rationale is plausible. As discussed in Section A.1., supra,
Jones has alleged that BMW had knowledge of the defect at the time
of contracting based on sources of information unavailable to
consumers. Jones has plausibly claimed his ignorance of the defect
based on his purchase of the vehicle, the price he paid for the
vehicle, and his repeated attempts to have the car repaired.
Although Jones must also ultimately show that he was unable to
discover the defect through his own reasonable diligence, this
issue is not well-suited for determination at the motion to dismiss

stage. Edmonson, 922 F.3d at 554 (“Generally, whether a plaintiff
exercised due diligence is a jury issue not amenable to resolution
on the pleadings.”) As such, the court is satisfied that Jones
has plausibly claimed that BMW violated a duty separate from those
owed to him by the warranties — specifically a duty not to provide
false information, or fraudulently remain silent, to induce the
execution of the contract — such that his fraud and UDTPA claims
survive a motion to dismiss.
III. CONCLUSION
For the reasons stated,
IT IS THEREFORE ORDERED that BMW’s motion to dismiss (Doc.

18) is DENIED.

/s/ Thomas D. Schroeder
United States District Judge

September 25, 2020

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10253750. Public record. Not legal advice.