Facts
- Coach USA, Inc. (Coach) entered into a 60-month lease agreement with ABC Bus Company/ABC Bus Companies, Inc. (ABC) in 2002 to lease a 1997 Van Hool T945 bus.
- The lease provided the bus was leased “as is” and contained an express warranty clause disclaiming warranties.
- ABC expressly disclaimed the implied warranties of merchantability and fitness for a particular purpose.
- The lease also disclaimed consequential and incidental damages.
- The lease contained an indemnity/assumption-of-liability provision shifting “all liability” from ABC to Coach “no matter the cause.”
- The agreement defined “liability” broadly to include any claim “sounding in tort, contract or otherwise,” and to cover damage to persons and property (real or personal) and other losses.
- Coach used the bus to transport passengers and the passengers’ belongings.
- On July 15, 2005, the bus caught fire while in use, causing damage to the bus and to passengers’ personal property.
- Coach and its wholly owned subsidiary, Keeshin Charter Service, Inc. (Keeshin), sued ABC and the manufacturer, Van Hool N.V., asserting tort-based theories (including negligence) and seeking money damages tied to the fire, including amounts connected to passengers’ property losses.
- ABC moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing the lease’s disclaimers and liability-shifting provisions barred the claims.
- In deciding ABC’s motion, the court considered the lease because it was central to the claims and its authenticity was not in dispute.
Issues
- Whether the lease agreement’s “as is” warranty disclaimers, damages limitations, and broad liability-shifting/indemnity language barred Coach and Keeshin’s tort claims against ABC for losses arising from the bus fire, requiring dismissal under Rule 12(b)(6).
Decision
- The court granted ABC’s Rule 12(b)(6) motion to dismiss.
- The court held the parties’ contract expressly barred the claims asserted against ABC in this suit.
- The court concluded Coach and Keeshin could not avoid the lease’s risk allocation by pleading negligence and other tort theories where the contract assigned “all liability,” including tort-based liability, to Coach.
- The court relied on the lease’s “as is” provision, express disclaimer of implied warranties, and limitation on consequential/incidental damages as further support for enforcing the parties’ allocation of risk.
- The court dismissed the claims against ABC because the complaint failed to state a claim in light of the lease provisions.
Legal Principles
- On a Rule 12(b)(6) motion, a court may consider a contract referenced in the complaint and central to the plaintiff’s claims without converting the motion to one for summary judgment when authenticity is not disputed.
- Commercial parties may allocate risk by contract through warranty disclaimers, limitations on damages, and liability-shifting provisions, and courts will enforce clear, unambiguous language.
- A clause stating goods are provided “as is,” together with an express disclaimer of implied warranties, can bar warranty-based recovery for the condition or performance of the leased item.
- A contractual limitation excluding consequential or incidental damages can bar recovery for downstream losses that flow from the underlying incident when the limitation is valid and clearly stated.
- Broad liability-shifting or indemnity language that expressly applies to claims “in tort, contract or otherwise” can bar tort claims seeking to shift loss back to the counterparty when the contract places that liability on the claimant.
- A plaintiff generally cannot repackage a dispute as negligence to obtain recovery that the parties’ contract assigns to the plaintiff.
Conclusion
In Coach USA, Inc. v. Van Hool N.V., the Western District of Wisconsin dismissed Coach and Keeshin’s claims against lessor ABC under Rule 12(b)(6) because the bus lease allocated the risk of loss to Coach through an “as is” provision, express warranty disclaimers, limits on consequential and incidental damages, and a broad clause shifting all liability—including tort claims—away from ABC for the fire-related damage asserted in the lawsuit.