Consumer Has No "Ascertainable Loss" under Consumer Fraud Act Where His Product Performed Throughout Warranty Period
Cars -- like diamonds -- are forever. Or so we'd like to think. I used to have a vintage Mercedes that I bought for $4,000. I loved to sit in that car. Of course, that's all I could do with it. It never really ran. But I looked fantastic in it, sitting in my garage. My friends used to say it looked like a sedan a Latin American dictator would be assassinated in -- which was fitting, since it killed me to junk that car (which, it turns out, was held together with Bondo).
Gilbert Noble, no doubt, knows what I mean. He bought a 1999 Porsche 911 Carrera Coupe in 2005. It was already out of warranty (4 years/50,000 miles). The 1999 911 was the first year that Porsche began equipping their products with a water-cooled engine. Gilbert used his car for about a year, when he started noticing smoke billowing from the tailpipe. It turns out that antifreeze had leaked into the car's oil through a defective cylinder, irreparably damaging the engine.
Gilbert wrote Porsche. Porsche said, "Sorry, you didn't buy the car from us, and it was out of warranty when you bought it." So Gilbert sued Porsche, asserting two causes of action: (1) strict liability, and (2) violation of New Jersey's Consumer Fraud Act. The court dismissed his claim on the pleadings. Noble v. Porsche Cars North America, Inc., 2010 WL 606305 (D.N.J. Feb. 19, 2010).
The court made easy work of Gilbert's strict liability claim, holding that it was barred by the economic loss doctrine, which "bars tort claims for harm sustained to the product alone, as opposed to harm to persons or other property damage." Id. at *3.
The claim under New Jersey's Consumer Fraud Act ("CFA") was more difficult. There are three elements to a CFA claim: (1) unlawful conduct, (2) an ascertainable loss, and (3) a causal relationship between the two. The court held that, under New Jersey law, "a plaintiff cannot maintain an action under New Jersey's CFA when the only allegation is that the defendant 'provided a part -- alleged to be substandard -- that outperforms the warranty provided." Id. at *4. To hold that the CFA covers parts failures beyond the warranty period "'would be tantamount to rewriting that part of [the] contract which defined the length and scope of the warranty period . . . [which] would also have a tendency to extend those warranty programs for the entire life of the vehicle.'" Id. (citation omitted).
Gilbert (and I) learned a valuable lesson: nothing lasts forever, and when you buy a used product outside of the warranty period, you bear the risk that the product will no longer work. That's how you can buy a Mercedes for $4,000, or a Porsche 911 for whatever Gilbert paid for it.
