Shepard et al. v. Lucid Group USA, Inc.

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:25-cv-00149-MR-WCM
MICHAEL P. SHEPARD and )
MELISSA J. SHEPARD, )
)
Plaintiffs, )
)
vs. ) MEMORANDUM OF
) DECISION AND ORDER
LUCID GROUP USA, INC., )
)
Defendant. )
_______________________________ )
THIS MATTER is before the Court on the Defendant’s Motion for
Summary Judgment [Doc. 40] and the Plaintiffs’ Motion for Partial Summary
Judgment [Doc. 42].
I. PROCEDURAL BACKGROUND
This action arises out of a contract dispute regarding the Plaintiffs’
purchase of a 2022 Lucid Air Grand Touring vehicle in September 2022. On
May 23, 2025, the Plaintiffs Michael and Melissa Shepard filed a Complaint
against the Defendant Lucid Group USA, Inc. [Doc. 1]. On April 1, 2026, the
Defendant filed a Motion for Judgment on the Pleadings. [Doc. 24]. On May
20, 2026, the Court granted in part the Defendant’s Motion and dismissed
the Plaintiffs’ claims for trespass to chattels, negligent misrepresentation,
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and breach of implied covenant of good faith and fair dealing. [Doc. 38 at
17-18]. Six claims remain: (1) cancellation under the Magnuson-Moss
Warranty Act (“MMWA”), 15 U.S.C. §§ 2301, et seq., (2) breach of contract,
(3) breach of express warranties, (4) negligence, (5) damage in bailment,
and (6) unfair and deceptive trade practices in violation of the North Carolina
Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1 (“Chapter
75 claim”).
On June 23, 2026, the parties filed the present motions. The
Defendant moves for summary judgment on all of the Plaintiffs’ remaining
claims. [Doc. 40]. The Plaintiffs move for partial summary judgment on their
claims for breach of contract, breach of express warranties, negligence, and
damage in bailment. [Doc. 42]. The Plaintiffs and the Defendant filed their
respective responses in opposition on July 7, 2026. [Docs. 44, 45]. On July
14, 2026, the Plaintiffs and the Defendant filed their respective replies.
[Docs. 46, 48]. Having been fully briefed, this matter is now ripe for
disposition.
II. STANDARD OF REVIEW
Summary judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). “As the Supreme Court has
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observed, ‘this standard provides that the mere existence of some alleged
factual dispute between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is that there be no
genuine issue of material fact.’” Bouchat v. Baltimore Ravens Football Club,
Inc., 346 F.3d 514, 519 (4th Cir. 2003) (quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986)).
“Facts are material when they might affect the outcome of the case,
and a genuine issue exists when the evidence would allow a reasonable jury
to return a verdict for the nonmoving party.” Ballengee v. CBS Broad., Inc.,
968 F.3d 344, 349 (4th Cir. 2020) (quoting News & Observer Publ’g Co. v.
Raleigh-Durham Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010)). When
ruling on a motion for summary judgment, the Court does not “weigh the
evidence or make credibility determinations.” Guessous v. Fairview Prop.
Invs., LLC, 828 F.3d 208, 216 (4th Cir. 2016) (quoting Jacobs v. N.C. Admin.
Off. of the Cts., 780 F.3d 562, 568-69 (4th Cir. 2015)). “Regardless of
whether he may ultimately be responsible for proof and persuasion, the party
seeking summary judgment bears an initial burden of demonstrating the
absence of a genuine issue of material fact.” Bouchat, 346 F.3d at 522. If
this showing is made, the burden then shifts to the nonmoving party, who
must convince the Court that a triable issue does exist. Id.
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In considering the motion for summary judgment, the Court must view
the pleadings and materials presented “in the light most favorable” to the
nonmovant and must “draw all reasonable inferences” in the nonmovant’s
favor. Adams v. Trustees of Univ. of N.C.—Wilmington, 640 F.3d 550, 556
(4th Cir. 2011). “When cross-motions for summary judgment are before a
court, the court examines each motion separately, employing the familiar
standard under Rule 56[.]” Koppers Performance Chems., Inc. v. Argonaut-
Midwest Ins. Co., 105 F.4th 635, 640 (4th Cir. 2024) (quoting Desmond v.
PNGI Charles Town Gaming, LLC, 630 F.3d 351, 354 (4th Cir. 2011)).
III. FACTUAL BACKGROUND
The following forecast of evidence is presented in the light most
favorable to the Plaintiffs.1
The Defendant is a designer, seller, and retailer of luxury electric
vehicles. [Doc. 1: Complaint at ¶ 7; Doc. 10: Answer at ¶ 7]. On September
14, 2022, the Plaintiffs signed a Purchase Agreement (the “Agreement”) to
purchase a new 2022 Lucid Air Grand Touring vehicle (the “Vehicle”) from
the Defendant for $145,198.60. [Doc. 42-1: Purchase Agreement (“Agmt”)
1 Because the Defendant moves for summary judgment on all of the Plaintiffs’ remaining
claims, the Court will first view the forecast of evidence in the light most favorable to the
Plaintiffs.
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at 3, 7]. The Agreement included a one-year limitations period to bring any
claim arising out of the Agreement:
You also agree that regardless of any statute or law
to the contrary, any claim or cause of action arising
out of or related to these Terms must be filed within
one (1) year after such claim or cause of action arose
or be forever barred.
[Doc. 42-1: Purchase Agmt. at 6 ¶ 11].
The Vehicle also came with a New Vehicle Limited Warranty, which
provided, in pertinent part, as follows:
Under this Lucid New Vehicle Limited Warranty,
Lucid will, without charge and as determined by Lucid
at its discretion, repair, replace, or adjust all parts on
your new vehicle that malfunction or fail during
normal use during the applicable coverage period
due to a manufacturing defect in factory-supplied
materials or factory workmanship provided your
vehicle has been properly operated and maintained
in accordance with all requirements in the owner’s
manual and any other documentation we may
provide you, and was taken to a Lucid Service Center
for a warranted repair during the warranty period.
[Doc. 1-3: New Vehicle Limited Warranty at 4].
The Defendant delivered the Vehicle to the Plaintiffs on September 28,
2022. [Doc. 1: Complaint at ¶10; Doc. 10: Answer at ¶ 10]. Upon delivery,
the Vehicle had a paint chip in the hood and window trim damage. [Doc. 42-
3: Def.’s 30(b)(6) Dep. at 51; Doc. 42-6: Melissa Shepard Dep. at 25]. One
of the Defendant’s employees documented the damage in a written
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document called a due bill. [Doc. 42-3: Def.’s 30(b)(6) Dep. at 63]. The
Plaintiffs also photographed the damage. [Doc. 42-6: Melissa Shepard Dep.
at 28-29]. Shortly after delivery, the Plaintiffs emailed the Defendant’s
customer care team about the paint chip and window trim damage observed
at delivery, as well as pixelation of the LCD panel. [Doc. 42-3: Def.’s 30(b)(6)
Dep. at 64-65]. Between September 29, 2022 and October 17, 2022, the
parties communicated by email in an attempt to schedule an appointment to
repair the damage. [Doc. 40-9: Plf.’s Answer to Def.’s Interrog. at 9]. This
appointment, however, was never scheduled, and the Defendant did not
repair the issues identified at delivery. [Doc. 42-3: Def.’s 30(b)(6) Dep. at
67].
In July 2023, the Vehicle shut down while Mr. Shepard was driving in
North Carolina. [Doc. 40-14: Vehicle Serv. Hist. at 2; Doc. 42-5: Michael
Shepard Dep. at 80-81]. Mr. Shepard contacted the Defendant’s Roadside
Assistance, and a third-party towing company towed the Vehicle to the
Defendant’s Richmond, Virginia service center. [Doc. 40-14: Vehicle Serv.
Hist. at 2; Doc. 42-5: Michael Shepard Dep. at 82]. The Vehicle’s rear
bumper was damaged during transit. [Doc. 40-14: Vehicle Serv. Hist. at 2].
On July 19, 2023, the Vehicle arrived at the Defendant’s Richmond
service center. [Doc. 42-3: Def.’s 30(b)(6) Dep. at 73]. The Defendant
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performed diagnostic testing on the Vehicle and determined that the Vehicle
shut down due to a high voltage failure. [Id. at 77]. The Defendant then
replaced the rear drive unit (“RDU”) and front drive unit (“FDU”), performed
battery back repair, checked for leaks, and updated all software
requirements. [Doc. 40-14: Vehicle Serv. Hist. at 3]. The Defendant also had
a local auto body shop repair the damaged bumper at no cost to the Plaintiffs.
[Doc. 40-12: Bill at 2-3]. The Defendant’s repair team noted that the “vehicle
worked ok” after the repairs were completed. [Doc. 40-14: Vehicle Serv. Hist.
at 3]. The Defendant returned the Vehicle to the Plaintiffs on October 11,
2023. [Doc. 42-3: Def.’s 30(b)(6) Dep. at 91].
The Plaintiffs noticed several new issues with the Vehicle upon its
return. [Doc. 42-5: Michael Shepard Dep. at 117]. Specifically, the Vehicle
made new noises when the Plaintiffs tried to drive it, leading the Plaintiffs to
question whether the Defendant had actually fixed the problems that caused
the Vehicle’s July shut down. [Id. at 117 (noting that it felt like “driving on two
flat tires”)]. The Plaintiffs also noted new damage to the Vehicle, including a
missing frunk divider, missing aero covers, rusting on the rotor, discoloration
of the interior seats, scratches on the driver side door, scratches near the
passenger side window, water leakage through multiple doors, damage to
the bumper light and back camera, and misalignment of the charging port.
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[Id. at 110-113; Doc. 42-3: Def.’s 30(b)(6) Dep. at 104-105]. Based on the
driving noises, new damage, and the Plaintiffs’ distrust that the Defendant
fixed the defects in the Vehicle, the Plaintiffs concluded that the car was not
safe to drive on the road. [Doc. 42-5: Michael Shepard Dep. at 117-118].
After the Vehicle was returned, the Defendant requested the Plaintiffs
sign a service invoice form detailing the repairs made to the Vehicle. [Doc.
42-3: Def.’s 30(b)(6) Dep. at 110]. The Plaintiffs refused to sign the invoice
in light of the new damage and failed repairs. [See id. at 112; Doc. 42-5:
Michael Shepard Dep. at 115].
On October 11, 2023, the Plaintiffs sent pictures of the new damage
via text message to Russell Morris, one of the Defendant’s Richmond service
center employees. [Doc. 42-3: Def.’s 30(b)(6) Dep. at 94, 103]. On
November 21, 2023, the Plaintiffs texted Mr. Morris again to complain about
the lack of repair, stating that “[i]f [the Vehicle] is not replaced or damages
fixed before end of year, [we’ll] be in process of filing suit.” [Doc. 42-3: Def.’s
30(b)(6) Dep. at 113]. The Defendant did not respond to the Plaintiffs’
concerns about the condition of the Vehicle. [Doc. 42-5: Michael Shepard
Dep. at 121-122]. On March 14, 2024, the Plaintiffs again texted Mr. Morris
to complain about the delay in fixing the damage to the Vehicle. [Doc. 42-3:
Def.’s 30(b)(6) Dep. at 113-114]. In response to this message, Mr. Morris
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provided the Plaintiffs with an email address for a different Lucid employee.
[Id.] Other than these text messages, there was no further communication
from the Plaintiffs about repairing the Vehicle.2 [Doc. 42-5: Michael Shepard
Dep. at 120-121].
On March 14, 2024, the Plaintiffs emailed Lisa Zeitz, a Lucid Roadside
Mobility Program Manager, to summarize the Plaintiffs’ dissatisfaction with
the Vehicle’s repair and the Defendant’s lack of communication. [Doc. 40-2:
Mar. 14, 2024 Emails at 2-4]. In a separate email later that day, the Plaintiffs
also stated that “[we] fully intend to file legal suit should [the Defendant] not
agree to purchase the vehicle back at a reasonable above value cost or
replace the vehicle altogether with one without aftermarket parts or
damages.” [Id. at 4]. Ms. Zeitz responded that she “will make sure the
appropriate individuals are made aware of [the Plaintiffs’] concerns and
intentions” and “we will work to make this right for you.” [Id. at 3, 5]. She
then referred the Plaintiffs’ concerns to Jake Rodenroth, a Lucid Body Repair
Program Operations Manager. [Id. at 5; Doc. 40-3: Mar. 21, 2024 Email at
2].
2 While Lucid did not respond directly to the Plaintiffs’ complaints about the lack of repairs,
it did contact the Plaintiffs about signing the final invoice. [Doc. 42-3: Def’s 30(b)(6) Dep.
at 114:19-20]. The Plaintiffs refused to sign this document on three separate occasions.
[Id.]. Although the Defendant claims that this document had to be signed before additional
work could be ordered for the Vehicle, no one communicated this to the Plaintiffs. [Id. at
114, 116-117].
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On March 21, 2024, Mr. Rodenroth emailed the Plaintiffs to discuss the
Plaintiffs’ complaints regarding the repairs performed on the Vehicle. [Doc.
40-3: Mar. 21-22, 2024 Emails at 2]. In their response, the Plaintiffs repeated
their demand for a buy-back at above market value or a full replacement. [Id.
at 3]. The Plaintiffs were then referred to the Defendant’s Customer Care
and Mediation Teams. [Id. at 7].
Between April 2, 2024 and May 15, 2024, the Plaintiffs communicated
with Bill Bragger, the Defendant’s Head of Customer Care, to negotiate a
resolution to the Plaintiffs’ demands. [See Doc. 40-4: April 2-12, 2024
Emails; Doc. 40-5: April 15-18, 2024 Emails; Doc. 40-7: April 23-May 6, 2024
Emails; Doc. 40-8: May 13-15, 2024 Emails]. Mr. Bragger stated that the
Defendant could not commit to replacing or buying back the Vehicle, but that
he would nevertheless “advocate for a fair and equitable resolution.” [Doc.
40-4: April 2-12, 2024 Emails at 3]. The Plaintiffs responded by
acknowledging the Defendant’s refusal to comply with their demands and by
stating that the Defendant was “welcome to send the best proposal Lucid is
willing to offer, but most likely this will not avoid litigation.” [Id. at 4].
The Defendant, through Mr. Bragger, then sent the Plaintiffs two offers.
On April 18, 2024, the Defendant offered to completely restore the Vehicle to
all factory specifications, perform all diagnostic tests, install the latest
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software, and pay the Plaintiffs $7,500. [Doc. 40-5: April 15-18, 2024 Emails
at 5]. The Plaintiffs rejected this offer on April 21, 2024. [Doc. 40-7: April 23-
May 6, 2024 Emails at 2]. On May 13, 2024, the Defendant offered to
completely restore the Vehicle, provide a loaner car during the repairs, and
give the Plaintiffs a $10,000 cash settlement. [Doc. 40-8: May 13-15, 2024
Emails at 2]. On May 14, 2024, the Plaintiffs acknowledged, but did not
accept, this offer. [Id. at 3].
The last email communication between the parties occurred on May
15, 2024. [Id. at 4]. In his last email, Mr. Bragger stated that he was “hopeful
that we can open a dialog [sic] that will move us forward with the restoration
of your vehicle.” [Id.]. The Plaintiffs did not respond to this email, and all
later communication was through the parties’ attorneys. [Doc. 40-6: Michael
Shepard Dep. at 157].
The Plaintiffs filed the present action on May 23, 2025. [Doc. 1].
IV. DISCUSSION
A. Statute of Limitations
North Carolina law permits parties to agree through contract to a
shorter statute of limitations, so long as the limitation is not prohibited by
statute and is reasonable. Warren v. Cielo Ventures, Inc., 389 N.C. 151, 155,
926 S.E.2d 716, 719 (2026). Under the North Carolina Uniform Commercial
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Code, parties to a contract “may reduce the period of limitation to not less
than one year but may not extend it.” N.C. Gen. Stat. § 25-2-725(a).
Here, the parties’ Purchase Agreement explicitly reduced the statute of
limitations for all claims “arising from or relating to” the Agreement to one
year after such claim accrued. [Doc. 42-1: Purchase Agmt. at ¶ 11]. The
Plaintiffs filed this action on May 23, 2025. [Doc. 1]. As such, any contractual
claims that accrued prior to May 23, 2024 are subject to dismissal as
untimely under the terms of the Purchase Agreement.
The Plaintiffs’ breach of contract claim is premised on the theory that
the Defendant breached the Purchase Agreement by delivering a defective
vehicle. [See Doc. 45 at 11 (“Delivering a defective vehicle when the contract
calls for delivery of the vehicle as configured is a breach of the sales
contract.”). A breach of contract claim accrues at “the time the first injury was
sustained.” Pearce v. N.C. State Hwy. Patrol Voluntary Pledge Committee,
310 N.C. 445, 449, 312 S.E.2d 421, 424 (1984) (quoting Matthieu v. Gas Co.,
269 N.C. 212, 215, 152 S.E.2d 336, 339 (1967)). Thus, the Plaintiffs’ breach
of contract claim accrued on the date of delivery of the defective vehicle,
September 28, 2022.
The Plaintiffs contend that their breach of contract claim never truly
accrued because the Defendant had not issued a “final and unequivocal
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refusal” of the Plaintiffs’ demands to replace or buyback the Vehicle. [Doc.
45 at 1, 5]. The fact that the parties were continuing to negotiate a potential
resolution of their contract dispute, however, does not affect when the
Plaintiffs’ breach of contract claim accrued.
The Plaintiffs’ warranty and MMWA claims fare no better. The MMWA
borrows the applicable limitations period under North Carolina law, which
permits parties to contractually reduce the limitations period to one year. See
N.C. Gen. Stat. § 25-2-725; Wheeler v. BMW of N. Am. LLC, 534 F. Supp.
3d 527, 534-35 (W.D.N.C. 2021) (noting that MMWA borrows North Carolina
statute of limitations for breach of warranty claims). “A breach of warranty
occurs when tender of delivery is made, except that where a warranty
explicitly extends to future performance of the goods and discovery of the
breach must await the time of such performance the cause of action accrues
when the breach is or should have been discovered.” N.C. Gen. Stat. § 25-
2-725(b). While the Plaintiffs have presented a forecast of evidence that they
experienced a number of issues with the Vehicle over a period of several
months, the undisputed forecast of evidence shows that all of these warranty
claims clearly arose and were known to the Plaintiffs prior to May 23, 2024.
As such, the Plaintiffs’ warranty and MMWA claims are also time-barred.
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The Plaintiffs’ Chapter 75 claim is based on the same conduct
underlying their claims for breach of contract, and breach of warranty, and
cancellation under the MMWA. A mere breach of a contract or breach of
warranty—even if intentional—is insufficient to state a Chapter 75 claim.
Mitchell v. Linville, 148 N.C. App. 71, 74, 557 S.E.2d 620, 623 (2001); Branch
Banking and Trust Co. v. Thompson, 107 N.C. App. 53, 62, 418 S.E.2d 694,
700 (1992). In any event, the Plaintiffs’ Chapter 75 claim is also untimely.
While Chapter 75 claims are normally governed by a four-year statute of
limitations, N.C. Gen. Stat. § 75-16.2, the parties to a contract may also
shorten this limitations period by agreement. See Warren, 389 N.C. at 155,
926 S.E.2d at 719. Like the Plaintiffs’ contract and warranty claims, any
claim the Plaintiffs had arising under Chapter 75 clearly accrued prior to May
23, 2024. Accordingly, the Plaintiffs’ Chapter 75 claim is also time-barred.
Alternatively, the Plaintiffs argue that the doctrine of equitable tolling
should bar the Defendant from relying upon any statute of limitations
defense. “Under the doctrine of equitable tolling, a party is barred from
asserting a technical defense, such as a statute of limitations, ‘when delay
has been induced by acts, representations, or conduct, the repudiation of
which would amount to a breach of good faith.’” Petty v. Marvin Lumber &
Cedar Co., 644 F. App'x 272, 273 (4th Cir. 2016) (quoting Nowell v. Great Atl.
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& Pac. Tea Co., 250 N.C. 575, 108 S.E.2d 889, 891 (1959)). “However, a
plaintiff who seeks to obtain equitable tolling of a limitations period must
show that he reasonably relied upon a representation made by the
Defendant.” Petty, 644 F. App’x at 273 (citing Town of Pineville v.
Atkinson/Dyer/Watson Architects, P.A., 114 N.C. App. 497, 442 S.E.2d 73,
74-75 (1994)).
In relying upon equitable tolling, the Plaintiffs cite evidence of the
parties’ extensive negotiations to attempt to resolve their existing claim.
These negotiations, however, are irrelevant to the issue of when their claim
accrued. When a breach occurs, the claim accrues and the statute of
limitations begins to run. In order to assert equitable tolling of that statute of
limitations, the Plaintiffs must present some forecast of a representation—
i.e., an assertion of a pre-existing fact—on which the Plaintiffs reasonably
relied in order to defer filing their suit. The Plaintiffs, however, have failed to
present any forecast of evidence that such a representation was made.
Once the Vehicle was returned to the Plaintiffs on October 11, 2023, the
Plaintiffs expressed their dissatisfaction with the Vehicle and the attempts at
repair. What ensued from there was only an attempt to negotiate a resolution
to the Plaintiffs’ claims. But negotiations are not representations. They do
not serve to extend the limitations period (indefinitely) or to form a basis for
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equitable tolling. Even if they did, however, no such negotiations or
exchanges took place after May 15, 2024, and any tolling that may have
been provided thereby ceased. The Plaintiffs, however, did not file within
one year of that date. Thus, even if equitable tolling were to apply in this
case (it does not), the Plaintiffs’ claims are still time barred. Accordingly, the
Court concludes that the Defendant is entitled to summary judgment with
respect to the Plaintiffs’ claims for breach of contract, breach of warranty, and
cancellation under the MMWA.
B. Economic Loss Rule
The economic loss rule generally bars tort claims “for [a defendant’s]
simple failure to perform his contract, even though such failure was due to
negligence or lack of skill.” Cresent Univ. City Venture, LLC v. Trussway
Mfg., Inc., 376 N.C. 54, 58, 852 S.E.2d 98, 101 (2020) (citing N.C. State
Ports Auth. v. Lloyd A. Fry Roofing Co., 294 N.C. 73, 83, 240 S.E.2d 345,
351 (1978)). To avoid the economic loss rule, a plaintiff’s tort claim must be
based on an extra-contractual duty that is separate and distinct from the
contract. Legacy Data Access, Inc. v. Cadrillion, LLC, 889 F.3d 158, 165-66
(4th Cir. 2018); Wheeler, 534 F.Supp.3d at 533.
The Plaintiffs’ claims for negligence and damage in bailment are
fundamentally claims for faulty performance under a contract. The parties’
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bailment relationship arose under the Agreement and Limited Warranty. The
Defendant did not have an extra-contractual duty to safeguard the Vehicle
beyond its obligations in those agreements. Accordingly, the economic loss
rule precludes the Plaintiffs’ tort claims.
V. CONCLUSION
For the foregoing reasons, the Court concludes that the Defendant is
entitled to summary judgment as to all of the Plaintiffs’ claims. Accordingly,
the Defendant’s Motion for Summary Judgment is granted, the Plaintiffs’
Motion for Partial Summary Judgment is denied, and this action is dismissed
with prejudice.
ORDER
IT IS, THEREFORE, ORDERED that the Defendant’s Motion for
Summary Judgment [Doc. 40] is GRANTED, and the Plaintiffs’ Motion for
Partial Summary Judgment [Doc. 42] is DENIED. The Plaintiffs’ claims for
cancellation under the Magnuson-Moss Act, breach of contract, breach of
express warranties, unfair and deceptive trade practices (Chapter 75),
negligence, and damage in bailment are DISMISSED WITH PREJUDICE.
A Judgment consistent with this Memorandum of Decision and Order
shall be entered contemporaneously herewith.
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The Clerk of Court is respectfully directed to close this civil action.
IT IS SO ORDERED.
Signed: September 28, 2026
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