Janusz Zastawnik v. Thor Motor Coach, Inc.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

SOUTH BEND DIVISION

JANUSZ ZASTAWNIK,

Plaintiff,

v. Case No. 3:23-CV-577-CCB

THOR MOTOR COACH INC, et al.,

Defendants.

OPINION AND ORDER

Before the Court is Plaintiff Janusz Zastawnik’s fully briefed Motion for Application of

California Substantive Law to the Case. [DE 40]. Based on the applicable law, facts, and arguments,

Mr. Zastawnik’s motion is granted, and California substantive law will be applied to all his claims.

I. RELEVANT BACKGROUND

Mr. Zastawnik bought a recreational vehicle (“RV”) in California in May 2022. The RV was

manufactured by Defendant Thor Motor Coach, Inc. (“Thor”) in Indiana. Thor provided Mr.

Zastawnik with a Limited Warranty, which included both a forum-selection clause providing for

exclusive jurisdiction in Indiana for all breach of express and implied warranties claims and a choice-

of-law clause providing that all claims and controversies arising from the Limited Warranty “shall be

governed by the laws of the State of Indiana.” [DE 12-2 at 21]. In a highlighted box after these

clauses, the Limited Warranty advises that it gives the buyer specific legal rights and that the buyer

“may also have other rights, which vary from state to state and province to province.” [Id.]. After

complaining of various problems with the RV, Mr. Zastawnik sued Thor in California state court

raising four claims: (1) breach of implied warranty, (2) breach of express warranty, (3) violation of

Song-Beverly Act, and (4) violation of Uniform Commercial Code, but did not invoke the federal

Magnuson Moss Warranty Act. [DE 23].

Thor removed this case to federal court in the Central District of California. At Thor’s

request, the case was transferred to this Court based on the Limited Warranty’s forum-selection

clause. In seeking transfer, Thor recognized that California’s Song-Beverly Consumer Warranty Act

(“Song-Beverly Act”) established unwaivable rights for buyers, including Mr. Zastawnik. [DE 12-1

at 7–8]. “[T]o allay any concerns” the California court might have had about preserving Mr.

Zastawnik’s unwaivable rights under Song-Beverly, Thor stipulated in its transfer motion, and

separately by declaration of its counsel, that “the Song-Beverly Act [would] apply to [Mr.

Zastawnik’s] warranty claims pursued in an action in Indiana and that THOR [would] not oppose a

request that the Indiana court utilize Song-Beverly to adjudicate those allegations.” [DE 12-1 at 8;

see also DE 12-3 at 2].

The California court granted transfer over Mr. Zastawnik’s argument that the forum-

selection clause was unenforceable and void under the Song-Beverly Act’s anti-waiver provision.

The court found that Mr. Zastawnik had identified no statute or judicial decision clearly establishing

that “enforcement of the forum-selection clause would contravene a strong [California] public policy

. . . .” [DE 21 at 4 (citing Yei A. Sun v. Advanced China Healthcare, Inc., 901 F.3d 1081, 1090 (9th Cir.

2018)]. The court also relied on Thor’s stipulation to apply the Song-Beverly Act in Indiana finding

that it “eliminat[ed] the risk of diminishing Plaintiff’s statutory rights under California law.” [DE 21

at 4]. In granting transfer, the California court further reasoned that the Song-Beverly Act lacks any

“exceptionally arcane features” that would “defy comprehension by a federal judge sitting in

Indiana.” [Id.].

Upon arrival in this court, Mr. Zastawnik moved for application of California substantive

law to his claims. Through his Motion, Mr. Zastawnik asks this Court to apply the Song-Beverly Act

to all his claims. In support, Mr. Zastawnik argues that Thor should be held to its stipulation that

persuaded the California court to grant transfer; that judicial estoppel prohibits Thor from changing

its position here; and that the Limited Warranty’s choice-of-law clause is unenforceable under Song-

Beverly’s anti-waiver provision. Thor, on the other hand, contends that its stipulation should be

enforced, but that the stipulation did not accede to application of California law to Mr. Zastawnik’s

underlying breach of express or implied warranty claims. Thor argues that like the Magnuson Moss

Warranty Act, Song-Beverly provides only supplemental remedies for breaches of warranty claims

under the laws of any state. So Thor argues that the Limited Warranty’s choice-of-law clause

dictates application of Indiana law to Mr. Zastawnik’s breach of warranty claims, but that California

law would apply to decide what remedies flow from any breach Mr. Zastawnik proves based on

Indiana law. Thor makes no argument challenging application of California law to Mr. Zastawnik’s

explicit Song-Beverly and UCC claims.

II. ANALYSIS

To resolve a choice-of-law issue, this Court “must apply the choice-of-law provisions [of

Indiana,] the state in which it sits.” Bailey v. Skipperliner Indus., Inc., 278 F. Supp. 2d 945, 951 (N.D.

Ind. 2003) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496–97 (1941); see also Large v.

Mobile Tool Int’l, Inc., 724 F.3d 766, 771 (7th Cir. 2013) (citing Erie v. Tompkins, 304 U.S. 64, 78

(1938)); Hubbard Mfg. Co., Inc. v. Greeson, 515 N.E.2d 1071, 1073 (Ind. 1987). In Indiana, “a choice-

of-law issue will [ordinarily] be resolved only if it appears there is a difference in the laws of the

potentially applicable jurisdictions.” Allen v. Great Am. Rsrv. Ins. Co., 766 N.E.2d 1157, 1162 (Ind.

2002). Mr. Zastawnik argues that just such a difference exists between California’s warranty law

under the Song-Beverly Act and Indiana’s warranty law.

Before turning to that alleged substantive difference between California and Indiana law,

attention must be given to two choice-of-law stipulations—the Limited Warranty’s choice-of-law

clause and Thor’s choice-of-law stipulation before the California court. “Indiana choice-of-law

doctrine favors contractual stipulations as to governing law.” Id. As to Thor’s stipulation, both

parties here agree that it should be enforced but disagree as to whether it establishes Thor’s assent to

application of California law to all of Mr. Zastawnik’s claims. Mr. Zastawnik says it does while Thor

contends that the stipulation was never intended to accede to application of California law to all the

claims in the complaint. Instead, Thor argues that through the stipulation, it acceded to application

of California law to all of Mr. Zastawnik’s claims except his two breach of warranty claims.

According to Thor, the Limited Warranty’s choice-of-law clause still provides the law of decision for

those two breach of warranty claims. Thor’s interpretation of its stipulation contradicts its plain

language and does not account for the Song-Beverly Act’s anti-waiver provision.

A. Plain Language of the Stipulation

In its transfer motion before the California court, Thor expressly stipulated “that the Song-

Beverly Act will apply to plaintiff’s warranty claims pursued in an action in Indiana and that THOR

will not oppose a request that the Indiana court utilize Song-Beverly to adjudicate those allegations.”

[DE 12-1 at 8]. At the same time, Thor submitted the Declaration of its counsel making the

following similar statement:

By this motion, THOR stipulates (1) that the Song-Beverly Consumer Warranty Act

will apply to Plaintiff’s claims as pled in his complaint; and (2) that THOR will not

oppose a request that the Indiana court utilize the Song-Beverly Consumer Warranty

Act to adjudicate those allegations if permitted to go forward.

[DE 12-3 at 2]. Neither version of the stipulation limited the application of the Song-Beverly Act as

Thor now suggests. The motion version of the stipulation explicitly applies to Mr. Zastawnik’s

“warranty claims.” [DE 12-1 at 8]. The declaration version of the stipulation even more broadly

applies to Mr. Zastawnik’s “claims as pled in his complaint.” [DE 12-3 at 2]. After both those

statements about the scope of claims subject to Song-Beverly, Thor used identical language to

stipulate that it would not oppose a request for application of Song-Beverly “to adjudicate those

allegations” in the Indiana court. Again, Thor did not qualify the term “those allegations” anyway in

its transfer motion or its counsel’s declaration. With such broad and plural wording, the plain

language of both versions of the stipulation reflects Thor’s concession that California’s Song-Beverly

Act will apply to all of Mr. Zastawnik’s claims without exception.

In Thor’s Response Opposing Motion to Apply California Substantive Law [DE 41], Thor

does not dispute that Mr. Zastawnik’s Song-Beverly and UCC claims should be decided based on

application of California law, which leaves only the question of what law should apply to the implied

and express warranty claims. And those remaining claims are warranty claims consistent with the

language of Thor’s stipulation. [See DE 12-1 at 8; DE 12-3 at 2]. Therefore, the limitation Thor

advocates for does not track the plain language of its stipulations.

Moreover, judicial estoppel precludes Thor from advocating for enforcing the Limited

Warranty’s choice-of-law clause now after agreeing to waive the choice-of-law provision to get the

California court to enforce the Limited Warranty’s forum-selection clause and transfer the case to

Indiana. An equitable doctrine “invoked by a court at its discretion,” judicial estoppel “generally

prevents a party from prevailing in one phase of a case on an argument and then relying on a

contradictory argument to prevail in another phase.” New Hampshire v. Maine, 532 U.S. 742, 749

(2001) (internal quotations omitted). Judicial estoppel is designed to “prevent the perversion of the

judicial process” and should “be applied where ‘intentional self-contradiction is being used . . . .’” In

re Cassidy, 892 F.2d 637, 641 (7th Cir. 1990) (quoting Scarano v. Cent. R. Co. of N.J., 203 F.2d 510, 513

(3d Cir. 1953)). “It should not be used where it would work an injustice, such as where the former

position was the product of inadvertence or mistake[,] or where there is only an appearance of

inconsistency between the two positions, but both may be reconciled.” Id. at 642 (internal citations

omitted); see also Smith v. Metro. Prop. & Cas. Ins. Co., No. 3:20-CV-053-JD-MGG, 2020 WL 5946599,

at *3 (N.D. Ind. Oct. 7, 2020). Thor does not even try to suggest that its stipulation inadvertently or

mistakenly agreed to apply California law to all Mr. Zastawnik’s claims. Rather, Thor purports that

it intentionally stipulated to exactly what it wanted in the California court—application of California

law to all of Mr. Zastawnik’s claims except the decision on whether Thor breached the Limited

Warranty. Thor argues that the language of the Limited Warranty, advising the buyer that he may

have legal rights beyond those in the Limited Warranty based on the laws of each state, supports this

intent. [See DE 12-2 at 21]. Yet, as explained above, the plain language of both stipulations

contradicts Thor’s current position. Thor is judicially estopped from changing its position on the

intent of its stipulation in the California court. As a result, the stipulation has already established

that California law applies to all Mr. Zastawnik’s claims, and all aspects of his claims, including

whether Thor breached its express warranty or any implied warranty accompanying the sale of the

RV to Mr. Zastawnik.

B. Song-Beverly Anti-Waiver Provision and Substantive Rights

The Limited Warranty’s choice-of-law clause is unenforceable and void under the Song-

Beverly Act. The Act provides that “[a]ny waiver by the buyer of consumer goods of the provisions

of this chapter, except as expressly provided in this chapter, shall be deemed contrary to public

policy and shall be unenforceable and void.” Cal. Civ. Code § 1790.1. In a case interpreting the

same forum-selection and choice-of-law provisions in Thor’s Limited Warranty, the Southern

District of California held that the “choice-of-law provision would cause [the plaintiffs in that case]

to lose any protections under California’s Song-Beverly Act that do not exist under Indiana law,

which is contrary to public policy.” Waryck v. Thor Motor Coach, Inc., Case No. 22-cv-1096-L-MDD,

2023 WL 3794002, at *4 (S.D. Cal. Jan. 13, 2023). In Waryck, Thor argued that its stipulation to

allow the plaintiffs to pursue their claims in the Northern District of Indiana under California law

would eliminate any public policy concerns the choice-of-law clause posed but the Waryck court

refused to accept Thor’s stipulation finding it still contravened California public policy. Id. at *5. In

that case, Thor had “state[d] that it knowingly presents agreements to California consumers

containing clauses that are prohibited under California law [and that when] arguments about these

types of clauses are initially raised in California courts, Thor . . . may agree to stipulate them away.”

Id. Based on Thor’s statements, the Waryck court found that California consumers could lose certain

unwaivable Song-Beverly rights under Thor’s Limited Warranty if they did not challenge application

of Indiana law to their claims. Id. The Waryck court then concluded: “That scheme is contrary to

California public policy and the Court should not condone or encourage it.” Id.

Mr. Zastawnik would similarly lose certain unwaivable rights under the Song-Beverly Act if

the choice-of-law provision here were to be enforced. The Song-Beverly Act “regulates warranty

terms, imposes service and repair obligations on manufacturers . . . who make express warranties,

requires disclosure of specified information in express warranties, and broadens a buyer’s remedies

to include costs, attorney’s fees, and civil penalties.” Murillo v. Fleetwood Enters., Inc., 17 Cal. 4th 985,

989 (1998) (citing Cal. Civ. Code §§ 1790–1795.8); see also Nat’l R.V., Inc. v. Foreman, 34 Cal. App. 4th

1072, 1080 (1995). Thus, Song-Beverly mandates warranty-related conduct and provides specified

remedies enforceable through both the breach of express warranty and breach of implied warranty

claims defined in the Act. See Cal. Civ. Code §§ 1791.1, 1791.2; see also Smith v LG Elects. U.S.A., Inc.,

No. C 13-4361 PJH, 2014 WL 989742, at *9 (N.D. Cal. Mar. 11, 2014). The question becomes

whether Indiana law would provide Mr. Zastawnik with the same rights. Thor thinks it would.

Thor argues—in a footnote—that Indiana and California warranty law are “not so

different.” [DE 41 at 3 n.1]. From that, Thor seems to be urging the Court to infer that Mr.

Zastawnik would not lose any rights if Indiana warranty law were applied to his breach of implied

and express warranty claims. As Thor notes, Indiana warranty law has developed “certain well-worn

principles” about the number of days out of service, the number of repair attempts, and exhaustion

of warranty-based remedies necessary to establish a breach of warranty. [DE 41 at 3 n.1 (citing

Zylstra v. DRV, LLC, 8 F.4th 597, 607–09 (7th Cir. 2021) (153 days out of service is not

unreasonably long to amount to breach of warranty); Mathews v. REV Recreation Grp., Inc., 931 F.3d

619, 622 (7th Cir. 2019) (at least four attempts to repair a nonconformity to show that warranty

failed of its essential purpose))]. These principles reflect somewhat specific requirements for

proving breach of warranty under Indiana law. Thor compares these Indiana principles to

California’s warranty law “requiring proof that a covered nonconformity was not repaired after a

reasonable number of attempts.” [Id. (citing Oregel v. Am. Isuzu Motors, Inc., 90 Cal. App. 4th 1094,

1101 (2001))]. Thor does not, however, provide any examples of California law establishing similarly

specific thresholds for repair attempts or days out of service relevant to proving a breach of

warranty. Without that, Thor has not supported its inference that Mr. Zastawnik would enjoy the

same rights under both Indiana and California law.

The Song-Beverly Act is a “strongly pro-consumer” remedial measure “intended for the

protection of the consumer [and] should be given a construction calculated to bring its benefits into

action.” Dominguez v. Am. Suzuki Motor Corp., 160 Cal. App. 4th 53, 58 (2008) (citing Murillo, 17 Cal.

4th at 989–90). Given its intentionally broad protections for consumers, the Song-Beverly Act

operates differently than the federal Magnuson Moss Warranty Act (“MMWA”). The MMWA only

provides federal jurisdiction for state breach of warranty claims such that liability under the MMWA

arises out of state law. Priebe v. Autobarn, Ltd., 240 F.3d 584, 587 (7th Cir. 2001). “[E]xcept in

specific instances in which Magnuson-Moss expressly prescribes a regulating rule, the [MMWA] calls

for the application of state written and implied warranty law, not the creation of additional federal

law.” Milicevic v. Fletcher Jones Imports, Ltd., 402 F.3d 912, 918 (9th Cir. 2005). As highlighted above,

the Song-Beverly Act prescribes rules regulating the content, application, and enforcement of

express and implied warranties. See Murillo, 17 Cal. 4th 989–90. Such provisions of Song-Beverly

thus distinguish it from both the MMWA and Indiana warranty law based on Thor’s own

delineation of Indiana warranty principles.

The California Legislature drafted Song-Beverly with the intent to provide broad consumer

protections related to warranties on consumer goods, including RVs, and incorporated regulating

rules into the Act to accomplish those goals. See Nat’l R.V., Inc., 34 Cal. App. 4th at 1081) (“the Act

was aimed at eliminating consumer frustration caused by defective products and easing some of the

difficulties inherent in pursuing claims arising out of product warranty disputes.”). The record

includes nothing to show that California has limited those broad Song-Beverly protections. Cf.

Rheinhart v. Nissan N. Am., Inc., 92 Cal. App. 5th 1016, 1034 (2023) (“The Act’s antiwaiver provision

is extremely broad; it is not limited to warranties or any particular time frame during the purchase

process, but encompasses all mandated remedies afforded to buyers.”). And unlike the MMWA,

which depends on the warranty laws of the states, Song-Beverly stands independently providing the

standards for breach of express and implied warranties in addition to remedies for any breach. As a

result, application of Indiana law to Mr. Zastawnik’s warranty claims could deprive him of his

substantive legal rights under Song-Beverly in violation of California public policy. Accordingly, the

Limited Warranty’s choice-of-law clause is unenforceable and void.

C. Indiana Choice-of-Law Analysis

Without an enforceable choice-of-law provision, Indiana choice-of-law rules would govern

the law of decision for Mr. Zastawnik’s claims. In contract matters, “the court will consider the

different contacts the parties have with the forums at issue.” Travelers Indem. Co. v. Summit Corp. of

Am., 715 N.E.2d 926, 931 (Ind. Ct. App. 1999); see also Large, 724 F.3d at 771. Relevant contacts

include “(a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of

performance, (d) the location of the subject matter of the contract, and (e) the domicil [sic],

residence, nationality, place of incorporation and place of business of the parties.” Travelers Indem.

Co., 715 N.E.2d at 931 (quoting Dana Corp. 690 N.E.2d at 291). The parties’ location is typically

given the most weight. Large, 724 F.3d at 771 (citing Ky. Nat’l Ins. Co. v. Empire Fire & Marine Ins.

Co., 919 N.E.2d 565, 575 (Ind. Ct. App. 2010)). “If the place of negotiating the contract and place

of performance are in the same state, the law of that state will usually be applied.” Bailey, 278 F.

Supp. 2d at 953 (quoting Restatement (Second) of Conflict of Laws § 188 (1971)).

Here, the parties’ relevant contacts favor California. The Limited Warranty was executed as

part of the sale of the RV in California. Any negotiation related to the Limited Warranty is not

known to the Court as this time, but logically would have occurred at the time of the sale in

California. The RV was delivered to Mr. Zastawnik in California and repair attempts were

presumably all made in California. [DE 23 at 2 (“This action is properly filed in Los Angeles County

because the acts and omission that give rise to Plaintiff’s claims took place [in] this County, and

Defendants transact substantial business in this County.”)]. Thor also maintains business

relationships in California facilitating sales and repairs of its products there. Mr. Zastawnik resides

in California. Thor is incorporated in Indiana and maintains its manufacturing business in Indiana.

As a result, the parties’ contacts in California exceeded those in Indiana. Taken together, California

had the most significant relationship to the transactions at the heart of this case and California law

should apply. See Bailey, 278 F. Supp. 2d at 953; cf. Shearer v. Thor Motor Coach, Inc., No. 3:19-CV-965-

PPS-MGG, 2020 WL 3618795, at *6 (N.D. Ind. July 1, 2020) (finding Florida had more intimate

contacts in an RV case then applying Florida substantive law).

III. CONCLUSION

For the reasons discussed above, Mr. Zastawnik’s Motion for Application of California

Substantive Law is GRANTED. [DE 40]. California law will be used to decide all of Mr.

Zastawnik’s claims. Thor’s motion for summary judgment [DE 55] will be addressed by separate

order of this Court.

SO ORDERED.

September 20, 2024

/s/Cristal C. Brisco

CRISTAL C. BRISCO, JUDGE

UNITED STATES DISTRICT COURT