WISDOM, Senior Circuit Judge:
This appeal presents the question whether a personal injury claim based on breach of warranty on a consumer product is cognizable under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-2312 (1982). The plaintiffs filed suit under the Magnuson-Moss Warranty Act (MMWA) and the Texas Deceptive Trade Practices Act, alleging that they sustained personal injuries and other incidental damages from exposure to formaldehyde fumes within a mobile home manufactured by one defendant and sold by another defendant. The district court ruled that state law determines both the type and the amount of damages that are recoverable under the MMWA. Because Texas law allows the recovery of damages for a personal injury caused by a breach of an implied warranty, the court held that such a claim could be brought in federal court under the MMWA. The jury returned a verdict for the plaintiffs. We hold that personal injury claims arising from breach of warranty are not cognizable under the MMWA. Accordingly, we vacate the judgment and remand with instructions to dismiss the case for lack of subject matter jurisdiction.
The plaintiffs, Sue Boelens and her minor daughters Jennifer Renea and Juli Marie, purchased a mobile home in March 1980 that was sold by the defendant Republic Homes of Texas, Inc. and manufactured by the defendant Redman Homes, Inc. It was assembled from wood products that contained urea formaldehyde resin as a bonding agent. The United States Department of Housing and Urban Development inspected and certified the home. The seller did not tell Mrs. Boelens that the home contained formaldehyde. While living in the home in Scurry, Texas, from April to September 1980, the plaintiffs experienced various physical problems and noticed an unpleasant odor. Toward the end of the summer of 1980, Juli was hospitalized and diagnosed as having viral hepatitis. Five months later, after learning that Juli had been exposed to formaldehyde in her home, Juli's physician changed his final diagnosis to chemical hepatitis caused by exposure to formaldehyde fumes.
The plaintiffs filed suit, alleging that they sustained personal injuries and incidental economic damages,
The defendants filed cross-claims for contribution and indemnity against various suppliers of the component parts used in the assembly of the mobile home. One of the third party defendants, Manville Forest Products Corp., filed a motion to dismiss on the ground that the MMWA provides only for the recovery of economic damages and not for the recovery of personal injury damages. Because the plaintiffs in their complaint had asked for economic damages of less than $50,000 — the amount-in-controversy requirement of the MMWA — Manville argued that the court should dismiss for lack of subject matter jurisdiction. The court denied Manville's motion in an order concluding that the MMWA federalizes state warranty law and that the plaintiffs' claim under Texas law for personal injury damages for breach of warranty was therefore properly before the court. The district court subsequently approved settlement agreements with some of the third party defendant suppliers, and, over the objections of the defendants, severed the cross-claims and third-party claims against the suppliers.
The case was tried before a jury in April 1983. The jury found that the mobile home was unfit for human habitation and that both of the defendants knowingly violated the DTPA and were grossly negligent in their failure to warn of the formaldehyde fumes in the mobile homes. The jury found actual damages of $178,903.80 and assessed $112,500 in common law punitive damages and $93,750 in discretionary damages under the DTPA. The district court entered judgment for the actual and punitive damages, then later granted a motion for JNOV with respect to $20,000 of future medical expenses. The district court also awarded $236,854.94 to the plaintiffs for attorneys fees, costs, and expenses, and amended the judgment to allow the defendants a $120,000 credit against actual damages on account of the plaintiffs' pretrial settlements with third party suppliers of components for the mobile home. This appeal followed.
A CLAIM FOR PERSONAL INJURY DAMAGES FOR BREACH OF WARRANTY IS NOT COGNIZABLE UNDER THE MMWA
A. Overview of the MMWA
The Magnuson-Moss Warranty Act
A written warranty for a consumer product costing more than ten dollars is subject to the following substantive obligations of the Act. The warranty must be "clearly and conspicuously" designated as a "full"
Although "limited" warranties are not subject to these standards, the Act does provide that the terms of a limited warranty may limit the duration of implied warranties only to the duration of the written warranty, and such limitation must be "conscionable" and "set forth in clear and unmistakable language and prominently displayed on the face of the warranty." Id. § 2308. Finally, subject to rules promulgated by the Federal Trade Commission, both full and limited warranties must "fully and conspicuously disclose in simple and readily understood language [their] terms and conditions". Id. § 2302(a).
The MMWA confers both public and private enforcement powers. The Federal Trade Commission or the Attorney General may sue to restrain any warrantor from making a deceptive warranty or from violating the Act. Id. § 2310(c). The FTC may treat a violation of the Act as an unfair or deceptive trade practice under the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1) (1982). 15 U.S.C. § 2310(b) (1982). The private enforcement rights conferred by the MMWA are perhaps the most far-reaching aspects of the statute.
B. The Scope of Private Enforcement Rights Under the MMWA
The provisions of the MMWA that create a private cause of action permit a "consumer"
The plaintiffs' amended complaint in this case makes a claim under the MMWA only for breach of warranty; no claim for breach of the substantive obligations of the Act is asserted. The plaintiffs argue that § 2310(d) of the MMWA authorizes suit in federal court by a consumer against a warrantor for breach of any implied warranties arising under state law. They maintain that any damages for such breach, including personal injury damages, that are recoverable under state law may also be recovered under the MMWA. Texas law allows recovery of personal injury damages for breach of an implied warranty under the Texas Uniform Commercial Code. Garcia v. Texas Instruments, Inc., 610 S.W.2d 456, 462 (Tex.1980). The plaintiffs therefore conclude that their personal injury claim was properly brought under the MMWA.
The defendants respond that § 2311(b)(2) explicitly precludes the recovery of personal injury damages arising out of a breach of an implied warranty; clause B clarifies the congressional intent that the Act not operate as a preemptive statute. That section provides:
15 U.S.C. § 2311(b)(2) (1982). The plaintiffs read this section to mean only that the MMWA itself creates no new substantive right to personal injury damages, but if
The only two reported decisions that have squarely faced the issue have held that the MMWA does not create a federal cause of action for state law personal injury claims for breach of warranty. See Bush v. American Motors Sales Corp., D.Colo.1984, 575 F.Supp. 1581, 1582; Gorman v. Saf-T-Mate, Inc., N.D.Ind.1981, 513 F.Supp. 1028, 1032-36. The district court in this case declined to follow Saf-T-Mate. The court relied instead on MacKenzie v. Chrysler Corp., 5 Cir.1979, 607 F.2d 1162, for its ruling that a federal court "must look to state law to determine the amount and type of damages available to the plaintiffs under the Magnuson-Moss Warranty Act."
1. MacKenzie is Not Dispositive of This Case
In MacKenzie, the plaintiff had purchased a station wagon manufactured by the defendant. The car had numerous problems that required the plaintiff to return it to the dealer several times for repair. The plaintiff sued the manufacturer of the car for breach of an express warranty and for breach of implied warranties under Mississippi law. The district court refused to submit an instruction to the jury regarding the MMWA, because the court found that the MMWA was not applicable to the warranty involved in the case, and that even if it were, it would overlap the implied warranty of merchantibility under Mississippi law, thereby making such an instruction redundant. The plaintiff alleged that this refusal was error.
This Court held on appeal that, because the plaintiff "would have been entitled to recover no more under the Magnuson-Moss Warranty Act than he did recover under the court's instructions regarding the express and implied warranties set out by Mississippi law, ... the court's failure to grant [the plaintiff's] requested charge, if error, was harmless and therefore insufficient to require reversal." MacKenzie v. Chrysler Corp., 5 Cir.1979, 607 F.2d 1162, 1166. We noted that the MMWA "is virtually silent as to the amount and type of damages which may be awarded for breach of an express limited warranty." Id. We stated, however, that "the legislative history clearly implies that a resort to state law is proper in determining the applicable measure of damages under the Act." Id. (emphasis added). We then concluded that the district court's instructions concerning the measure of the plaintiff's damages were correct under Mississippi law. Id. at 1166-67.
No claim for personal injury damages was made in MacKenzie. The plaintiff sought only damages for economic loss. No issue was raised whether this type of damages was recoverable under the MMWA. Indeed, many cases make clear that damages for economic loss — usually measured under the relevant state's Uniform Commercial Code as the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted — are recoverable under the
2. The Scope of Personal Injury Liability Under the MMWA
Section 2311(b)(2) of the MMWA provides that "[n]othing in this chapter (other than sections 2308 and 2304(a)(2) and (4) of this title) shall (A) affect the liability of, or impose liability on, any person for personal injury ...." It is evident from this language that, except for the sections recited in the parentheses, the MMWA itself creates no new cause of action for personal injury damages. The excepted sections, however, do affect potential liability for personal injury. Section 2308 forbids disclaimers of implied warranties and § 2304(a)(2) prohibits full warrantors from limiting the duration of implied warranty coverage.
By contrast, where there has not been a violation of the substantive provisions of §§ 2308 or 2304, the exceptions to § 2311(b)(2) are inoperative and the express language of § 2311(b)(2) bars liability for personal injury. We therefore conclude that § 2311(b)(2) sets up a dichotomy between personal injury claims based on a breach of the substantive provisions of §§ 2308 and 2304, which are cognizable
S.Conf.Rep. No. 1408, 93d Cong., 2d Sess., reprinted in  U.S.Code Cong. & Ad.News 7755, 7760. This passage impels the conclusion that the language of § 2311(b)(2)(A) prohibiting the imposition of liability for personal injury applies to claims "flowing from the existence of a warranty", i.e., to claims based directly upon a breach of warranty (express or implied), as opposed to claims based upon a violation of the substantive provisions of the MMWA. Therefore, because § 2308 is a substantive provision, the passage concludes that the "disclaimer on the imposition of liability contained in [§ 2311(b)(2)(A)] does not operate to negate the provisions of [§ 2308]".
Our conclusion that the MMWA does not create a federal cause of action for personal injury damages based solely on a breach of warranty is buttressed by two additional considerations. First, one of the main purposes of the MMWA was to create effective remedies for an aggrieved consumer with a small claim for which a remedy might not otherwise exist. For example, the Senate Report noted that "[b]ecause enforcement of the warranty through the courts is prohibitively expensive, there exists no currently available remedy for consumers to enforce warranty obligations." S.Rep. No. 151, 93d Cong., 1st Sess. 7 (1973). Congress realized that the ultimate solution to these enforcement problems would not be found wholly within the overburdened judicial system.
Moreover, § 2310(d)(3)(B) allows the claims of consumers to be aggregated in a class action to satisfy the $50,000 amount-in-controversy requirement of that section.
The legislative history of the Act, a close analysis of its language, and consideration of its objectives leads this Court inexorably to the conclusion that claims for personal injury damages are not the kind of claims for which a remedy would be otherwise unavailable. These claims are generally of sufficient size to make it practicable and reasonable to litigate them. Certainly this is true of those claims that would satisfy the $50,000 amount-in-controversy requirement of the MMWA.
The second consideration that supports our construction of § 2311(b)(2) is the rule that statutes conferring jurisdiction on federal courts are to be strictly construed, and doubts resolved against federal jurisdiction. See Phillips v. Osborne, 9 Cir.1968, 403 F.2d 826, 828; F & S Construction Co. v. Jensen, 10 Cir.1964, 337 F.2d 160, 161; Russell v. New Amsterdam Casualty Co., 8 Cir.1964, 325 F.2d 996, 998. The plaintiffs' construction of the MMWA would allow virtually any state products liability action for personal injury damages not related to the workplace to be brought into federal court, subject only to the amount-in-controversy requirement. Absent a clear statement of intention from Congress, there is a presumption against a statutory construction that would significantly affect the federal-state balance.
We agree with the conclusion of the district court in Saf-T-Mate:
Gorman v. Saf-T-Mate, Inc., N.D.Ind.1981, 513 F.Supp. 1028, 1035. We hold that § 2311(b)(2) of the MMWA prohibits claims arising from personal injury based solely on a breach of warranty, express or implied. One may, however, recover personal injury damages under the MMWA where there has been a violation of the substantive provisions of § 2308 (prohibiting disclaimer of implied warranties), § 2304(a)(2) (prohibiting full warrantors from limiting the duration of implied warranty coverage) or § 2304(a)(3)
THE PLAINTIFFS HAVE NOT MET THE AMOUNT IN CONTROVERSY REQUIREMENT OF THE MMWA
A. State Law Determines Whether Punitive Damages are Available Under the MMWA
Section 2310(d)(3)(B) provides that no claim is cognizable under the MMWA unless the amount in controversy is at least $50,000. To determine whether the amount in controversy requirement is satisfied, we must look to the complaint. The amount stated in the complaint is itself dispositive of jurisdiction if the claim is apparently made in good faith, unless it appears to a legal certainty that the claim is really for less than the jurisdictional amount. E.g., St. Paul Mercury Indemnity Co. v. Red Cab Co., 1938, 303 U.S. 283, 288-89, 58 S.Ct. 586, 590, 82 L.Ed. 845, 848; Dassinger v. South Central Bell Telephone Co., 5 Cir.1974, 505 F.2d 672, 673-74.
The amended complaint in this case seeks the following damages: (1) $2,479.20 for past medical expenses of Juli and Jennifer Boelens; (2) an unspecified amount for alleged future medical expenses of Juli and Jennifer Boelens; (3) $600,000, $150,000, and $100,000, respectively, for Juli, Jennifer, and Sue Boelens for physical pain, mental anguish, physical impairment, the loss of enjoyment and loss of quality of life, and increased risk of cancer; (4) $1,000,000 in punitive damages; (5) $15,946.33 for the lost investment in the mobile home and for additional costs of alternative housing for the plaintiffs up to the time of trial; (6) $25,000 for the displacement of the plaintiffs from their home and the anxiety and inconvenience caused thereby; and (7) an unspecified amount of attorneys fees.
These claims for damages may be grouped for jurisdictional purposes into the following categories:
Damages for economic loss are clearly recoverable under the MMWA, and those damages may be used to satisfy the amount-in-controversy requirement. Because of our holding that personal injury damages for breach of warranty are not recoverable under the MMWA, these damages may not be counted toward satisfaction of the amount-in-controversy requirement. Nor may the claim for attorneys fees be used to satisfy the jurisdictional amount, because § 2310(d)(3) requires that the amount in controversy be calculated "exclusive of interests and costs". Attorneys fees are "costs" within the meaning of § 2310(d)(3). Saval v. BL Ltd., 4 Cir.1983, 710 F.2d 1027, 1032-33. The plaintiffs can satisfy the amount-in-controversy requirement of $50,000 only if their claim for punitive damages may be counted along with the claim for economic loss.
Punitive damages are recoverable under the MMWA for breach of warranty only if they may be recovered in a breach of warranty action brought under the governing state law. Saval v. BL Ltd., 4 Cir.1983, 710 F.2d 1027, 1033; Schaffer v. Chrysler Corp., N.D.Ind.1982, 544 F.Supp. 182, 184-85; Lieb v. American Motors Corp., S.D.N.Y.1982, 538 F.Supp. 127, 132-33; Novosel v. Northway Motor Car Corp., S.D.N.Y.1978, 460 F.Supp. 541, 545. The parties agree that the relevant state law in this case is that of Texas. We therefore must examine whether Texas law permits the recovery of punitive damages for breach of warranty.
B. Texas Law Does Not Permit Recovery of Punitive Damages For Breach of Warranty
Texas law follows the rule that "exemplary damages cannot be recovered for a simple breach of contract, where the breach is not accompanied by a tort, even though the breach is brought about capriciously
When, however, "a distinct, wilful tort is alleged and proved in connection with a suit upon a contract, one may recover punitive damages". City Products Corp. v. Berman, 610 S.W.2d 446, 450 (Tex.1980). The plaintiffs argue that the jury's finding that the defendants were grossly negligent for their failure to warn the plaintiffs about formaldehyde fumes would support an award under Texas law of punitive damages as a contemporaneous tort with the breach of an implied warranty. The plaintiffs conclude that their claim for punitive damages may therefore be used to satisfy the jurisdictional amount in controversy.
We do not agree. It is evident from the cases that Texas law awards punitive damages for the accompanying tort, not for the breach of warranty itself. To recover punitive damages, "an independent tort" must be separately pleaded and proved. Amoco Production Co. v. Alexander, 622 S.W.2d 563, 571 (Tex.1981); see Texas Power & Light Co. v. Barnhill, 639 S.W.2d 331, 334 (Tex.App.1982). Compare Canon, U.S.A. v. Carson Map Co., Inc., 647 S.W.2d 321, 323-24 (Tex.App.1982), holding that the defendant's actions in breach of warranty "lacked the requisite distinct tort aspects necessary as a predicate for the award of exemplary damages". "[T]he exemplary damages are allowed not for the breach but for the tort." National Finance Co. v. Fregia, 78 S.W.2d 1081, 1082 (Tex.Civ.App.1935). For example, in Koenning v. Manco Corp., 521 S.W.2d 691 (Tex.Civ.App.1975), the plaintiff claimed that the defendants' actions with respect to a natural gas lease constituted both a breach of contract and tortious fraud and gross negligence. The court held that, because the tort claim, which formed the basis upon which the plaintiff might recover exemplary damages, was barred by the statute of limitations, the only right left upon which the plaintiff could sue was that created by contract, and exemplary damages were therefore not available. Id. at 703.
The plaintiffs rely on Charalambous v. Jean Lafitte Corp., 652 S.W.2d 521 (Tex.App.1983), to support their contention that Texas law allows recovery of punitive damages for acts in breach of contract that "contemporaneously" constitute a tort. In Charalambous, the plaintiffs sued for breach of a commercial lease. The trial court granted the defendants' motion to disregard the jury finding of exemplary damages on the ground that exemplary damages are not recoverable in actions for breach of ordinary commercial contracts. On appeal, the court reversed and awarded exemplary damages because it found that "the plaintiffs have established a constructive eviction which is a tort." Id. at 526. It is clear, however, that the court awarded exemplary damages for the tort alone:
Id. at 527 (emphasis added).
We conclude that Texas courts distinguish a contract or warranty action
The plaintiffs' claim for damages for personal injury arising from breach of warranty is not cognizable under the MMWA. Because Texas law does not allow punitive damages for a breach of warranty per se and because attorneys fees are "costs" within the meaning of § 2310(d)(3), only the plaintiffs' claim for economic loss may be counted toward satisfaction of the jurisdictional amount. Because that claim is for $15,946.33, the plaintiffs do not meet the $50,000 amount-in-controversy requirement. The only federal question raised by the plaintiffs was the cause of action for breach of warranty under the MMWA. That claim did not confer jurisdiction; the pendent state law claims therefore must be dismissed. "Even where substantial time and resources have been expended in the trial of an action in federal court, pendent state claims must be dismissed if it later is determined that there never existed a federal claim sufficient to invoke the jurisdiction of the federal court." Crane Co. v. American Standard, Inc., 2 Cir.1979, 603 F.2d 244, 254.
The judgment of the district court is VACATED and the case is remanded with instructions to dismiss for lack of subject matter jurisdiction.
The Texas Department of Health tested the mobile home for formaldehyde fumes using a Draeger Tube pump and found formaldehyde in quantities of from seven to ten parts per million (ppm). Dr. James Beall, a toxicologist and member of the Federal Panel on Formaldehyde, testified that most people would find 0.10 ppm of formaldehyde to be uncomfortable in a living environment. There was evidence, however, that the tests were unreliable. The Draeger Tube had not been calibrated for about two years before the test, even though OSHA regulations require calibration immediately before the test. The Draeger Tube test is not certified by NIOSH and is no longer used by the Texas Department of Health. One of the defendants, Redman Homes, also tested the mobile home for formaldehyde and found only 0.1, 0.04, and 0.02 ppm. Dr. Beall testified that he had no confidence in Redman's test results and that he believed Juli's hepatitis was caused by exposure to formaldehyde.
The defendants argue that the district court lacked subject matter jurisdiction of this case because a mobile home is not a "consumer product" within the meaning of the MMWA. Because of our holding that the district court lacked subject matter jurisdiction for other reasons, we do not reach this issue. We note, however, that the Federal Trade Commission has concluded that a mobile home is a "consumer product" under the MMWA. See Federal Trade Commission Advisory Opinion, Keller, Thoma, Toppin & Schwarze, P.C., 42 Fed.Reg. 37440, 37441 (1977) (Section 700.4 of the FTC regulations under the MMWA applies to "all consumer products sold with mobile homes, which are themselves consumer products"); Federal Trade Commission, Magnuson-Moss Warranty Act Implementation and Enforcement Policy, 40 Fed.Reg. 25721, 25722 (1975) ("Consumer product as defined in the Act includes the following items, and any other items that are tangible personal property and are normally used for personal, family, or household purposes: boats, photographic film and chemicals, clothing, appliances, jewelry, furniture, typewriters, motor homes, automobiles, mobile homes, vehicle parts and accessories, stereos, carpeting, small aircraft, toys, and food.") (emphasis added). Because the FTC is vested with various rulemaking authority under the MMWA, its views concerning the scope of the MMWA would be entitled to great weight.
Gorman v. Saf-T-Mate, N.D.Ind.1981, 513 F.Supp. 1028, 1035.
Schroeder, supra note 5, at 27-28. We agree with Professor Schroeder that §§ 2308 and 2304 "can affect liability for personal injuries by making a cause of action for breach of implied warranty available," because those sections prohibit disclaimers of implied warranties. At issue, however, is whether such an action may be brought in federal court. Professor Schroeder's concluding sentence seems to assume the answer to this question by flatly stating that the MMWA "allows a private action for breach of implied warranty" without qualification. His conclusion is therefore circular. Moreover, this reading of § 2311(b)(2) seems to cause the exceptions to swallow the rule entirely.
Denicola, supra note 3, at 297 n. 107. The legislative history, however, suggests that Congress believed that most of the actions brought under the MMWA would in fact be class actions. "The purpose of these jurisdictional provisions [of § 2310(d)(3)] is to avoid trivial or insignificant actions being brought as class actions in the federal courts." H.R.Rep. No. 1107, 93d Cong., 2d Sess., reprinted in  U.S.Code Cong. & Ad.News 7702, 7724. Congress might well have believed that grievances brought by an individual consumer would be largely channeled through the informal dispute resolution mechanisms encouraged by § 2310(a).
S.Conf.Rep. No. 1408, 93d Cong., 2d Sess., reprinted in  U.S.Code Cong. & Ad.News 7755, 7760. If the last clause of the last sentence of this passage, referring to state law, were not present, the passage would clearly support our construction of § 2311(b)(2). The parties disagree as to the meaning of the final clause. The plaintiffs contend that it means that if state law imposes liability for personal injury, then the defendant is also liable under the MMWA. The defendants maintain that the clause simply states the obvious fact that a warrantor could be liable under state law (i.e., in state court), although not under the MMWA (in federal court).
We find this passage so ambiguous that we cannot say that it cuts one way or the other. The district court in Saf-T-Mate offered this interpretation:
Gorman v. Saf-T-Mate, N.D.Ind.1981, 513 F.Supp. 1028, 1035 n. 8. Regardless whether this interpretation of the passage is correct, we agree with the court's conclusion: "[The] reference [to state law in the final clause of the passage] could be interpreted in several ways, but where the terms of the statute are clear and the legislative history is highly ambiguous, it seems safer to adopt the interpretation of the legislative history that is most consistent with the plain language of the statute." Id.