Starbucks Corporation v. Amcor Packaging Distribution, et al.,

Filing 55

MEMORANDUM and ORDER signed by Senior Judge William B. Shubb on 1/15/2015 ORDERING that third-party defendant Ozburn-Hessey Logistics's 48 motion to dismiss is GRANTED without leave to amend with respect to third-party plaintiff Pallets Unlimited's negligence claim and DENIED in all other respects. (Zignago, K.)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 13 STARBUCKS CORPORATION, a corporation, CIV. NO. 2:13-1754 WBS CKD MEMORANDUM AND ORDER RE: MOTION TO DISMISS FIRST AMENDED CROSSCOMPLAINT Plaintiff, 14 15 16 17 v. AMCOR PACKAGING DISTRIBUTION, et al., Defendants. 18 ----oo0oo---- 19 20 This matter is again before the court on third-party 21 defendant Ozburn-Hessey Logistics’ (“OHL”) motion to dismiss 22 Pallets Unlimited’s First Amended Third-Party Complaint (“FATC”) 23 (Docket No. 46) pursuant to Federal Rule of Civil Procedure 24 12(b)(6) for failure to state a claim upon which relief can be 25 granted, (Docket No. 48). 26 set forth in this court’s Memorandum and Order of November 5, 27 2014 (Docket No. 44) dismissing Pallets Unlimited’s original 28 third-party complaint with leave to amend. The factual and procedural history is 1 1 Pallets Unlimited re-asserts its claims of equitable 2 indemnification and negligence against OHL. Whereas its original 3 Third-party Complaint was silent as to the ownership of the 4 pallets after they were given to OHL, Pallets Unlimited now 5 alleges that Starbucks owned the coffee bags, coffee beans, and 6 wooden pallets while they were kept at OHL’s warehouse. 7 14.) 8 these items for Starbucks as a “warehouseman/bailee.” 9 allegedly kept the pallets in its warehouse until they were (FATC ¶ Pallets Unlimited also adds an allegation that OHL stored (Id.) OHL 10 shipped to Starbucks, during which time Pallets Unlimited 11 maintains that OHL bore sole responsibility for storing and 12 maintaining the pallets such that they did not develop mold. 13 (Id. ¶¶ 9-10.) 14 pallets made by Pallets Unlimited contained any mold or excessive 15 moisture at the time they were delivered to OHL’s warehouse. 16 (Id. ¶ 8.) 17 The FATC also alleges that none of the wooden In light of these new allegations, the court now 18 addresses the sufficiency of the allegations of the FATC under 19 the standards of Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 20 (2007); and Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 21 22 I. Equitable Indemnity Claim As discussed at some length in this court’s Order of 23 November 5, 2014, California law requires that, “[w]ith limited 24 exception, there must be some basis for tort liability against 25 the proposed indemnitor . . . generally based on a duty owed to 26 the underlying plaintiff.” 27 Forcum/Mackey Constr., Inc., 119 Cal. App. 4th 848, 852-53 (4th 28 Dist. 2004). BFGC Architects Planners, Inc. v. Ordinary breach of contract, without something 2 1 more, will not support liability in tort. 2 21 Cal. 4th 543, 551-52 (1999). 3 may constitute both a breach of contract and an invasion of an 4 interest protected by the law of torts.” See Erlich v. Menezes, However, “the same wrongful act Id. at 551. 5 A. A Bailee’s Duty with Regard to Bailed Goods 6 “California law generally defines a bailment as the 7 delivery of a thing in trust for a purpose upon an implied or 8 express contract.” 9 F.3d 312, 316 (9th Cir. 1993) (citing Greenberg Bros. v. Ernest Whitcombe v. Stevedoring Servs. of Am., 2 10 W. Hahn, Inc., 246 Cal. App. 2d 529, 531 (2d Dist. 1966)). 11 Generally, contract terms govern bailment relationships. 12 e.g., George v. Bekins Van & Storage Co., 33 Cal. 2d 834, 848-49 13 (1949). 14 See, Several California statutes also impose an obligation 15 to exercise a certain degree of care with regard to bailed 16 property on the bailee--called a “depository” by the California 17 Civil Code.1 18 1852 states that “[a] depositary for hire must use at least 19 ordinary care for the preservation of the thing deposited.”2 20 Cal. Civ. Code § 1852. 21 out an additional standard of care for a specific type of bailee Of relevance here, California Civil Code section The California Commercial Code also sets 22 23 24 25 26 27 28 1 See Whitcombe, 2 F.3d at 316 (“The California Civil Code uses the term depository and depositor in place of the common law terms bailee and bailor. . . . The terms mean the same things.”). 2 California Civil Code section 1851 defines a nongratuitous deposit as “storage” and deems that “[t]he depositary in such case is called a depositary for hire.” Cal. Civ. Code § 1851. 3 1 called a “warehouse” or “warehouseman,”3 stating in section 7204 2 that “[a] warehouse is liable for damages for loss of or injury 3 to the goods caused by its failure to exercise care with regard 4 to the goods that a reasonably careful person would exercise 5 under similar circumstances.” 6 Cal. Com. Code § 7204(a). These statutory obligations bear a striking similarity 7 to California’s general negligence statute, California Civil Code 8 section 1714(a), which provides a duty that sounds in tort. 9 Cal. Civ. Code § 1714(a) (“Everyone is responsible . . . for an 10 injury occasioned to another by his or her want of ordinary care 11 or skill . . .”); Cabral v. Ralphs Grocery Co., 51 Cal. 4th 764, 12 771 (2011). 13 a bailee or a warehouseman owes with respect to bailed property 14 frequently describe a breach of that duty as “negligent” or 15 “negligence,”4 although they leave the source of that duty and 16 the kind of remedies available ambiguous. 17 See In addition, California courts that discuss the duty Several authorities support the conclusion that these 18 statutory duties give rise to tort liability. 19 Uniform Commercial Code Comment included in California Commercial 20 Code section 7101 notes that Article Seven “does not attempt to 21 22 23 24 25 26 27 28 In particular, the 3 The Civil Code defines a “warehouse” as “a person engaged in the business of storing goods for hire.” Cal. Com. Code § 7102(a)(13). 4 See, e.g., Greenberg Bros., 246 Cal. App. 2d at 533 (“A depositary or bailee for hire is liable only when he has been guilty of some negligence. He is chargeable only with ordinary care and diligence in safeguarding his bailor’s property . . .” (quoting Baxter v. Shanley-Furness Co., 193 Cal. 558, 561 (1924)); Scott’s Val. Fruit Exch. v. Growers Refrigeration Co., 81 Cal. App. 2d 437, 440 (1st Dist. 1947) (“[A]n action will lie against a bailee for negligent destruction of or injury to deposited goods.”). 4 1 define the tort liability of bailees, except to hold certain 2 classes of bailees to a minimum standard of reasonable care.” 3 Cal. Com. Code § 7101 cmt. (emphasis added). 4 suggests that the California Commercial Code actually does define 5 the tort liability of those classes of bailee in Division Seven 6 (the California equivalent of UCC Article Seven), including the 7 “warehouse” bailee. 8 Additionally, at least one California Court of Appeal has allowed 9 a bailor to maintain causes of action for both breach of bailment This comment See Cal. Com. Code §§ 7102(a)(13), 7204(a). 10 contract and negligence in tort after bailed property was 11 damaged. 12 Dist. 1985). 13 See Gerbert v. Yank, 172 Cal. App. 3d 544, 549-50 (2d OHL maintains that these statutes do not give rise to 14 liability in tort but merely imply a duty of care into the terms 15 of every bailment contract. 16 supports its argument primarily with the California Court of 17 Appeal case of Windeler v. Scheers Jewelers, 8 Cal. App. 3d 844 18 (1st Dist. 1970). 19 does not read Windeler as precluding the existence of an 20 independent tort duty under either California Civil Code section 21 1852 or California Commercial Code section 7204(a). 22 of Windeler cited by OHL discusses damages for a plaintiff’s 23 mental suffering and emotional distress, not damages to her 24 property. 25 statutory provisions at issue here apply specifically to bailed 26 property and impose liability only for damage to that property. 27 See Cal. Com. Code § 7204(a) (“A warehouse is liable for damages 28 for loss of or injury to the goods caused by its failure to (See OHL’s Reply at 7 n.7.) (See OHL’s Reply at 7-9.) However, this court See Windeler, 8 Cal. App. 3d at 849-51. 5 It The section Both 1 exercise care with regard to the goods . . .” (emphasis added)); 2 Cal. Civ. Code § 1852 (“A depositary for hire must use at least 3 ordinary care for the preservation of the thing deposited.” 4 (emphasis added)). 5 “warehouse” bailee that Pallets Unlimited alleges here. 6 court thus finds Windeler distinguishable from the instant case. 7 Nor did Windeler involve the kind of The Accordingly, because OHL has not provided, and the 8 court cannot find, any persuasive authority that precludes tort 9 liability under California Civil Code section 1852 or California 10 Commercial Code section 7204(a), the court concludes that a 11 “warehouseman/bailee” relationship may provide a basis for 12 liability sounding in tort as between OHL and Starbucks. 13 14 15 B. Pallets Unlimited States a Claim for Equitable Indemnity Pallets Unlimited also plausibly alleges the remaining 16 elements of equitable indemnity. 17 because of OHL’s “lack of ordinary care in the management and 18 maintenance of the OHL Warehouse, and its failure to exercise due 19 diligence to ensure that [Starbucks’s] bags, beans and pallets 20 suffered no harm while stored at the OHL Warehouse.” 21 10, 14-15.) 22 $4,932,115.76 in damages, which through this lawsuit, it has 23 sought to recover from Amcor and Pallets Unlimited. 24 Pallets Unlimited alleges that any liability it incurs to 25 Starbucks is attributable to OHL’s fault. 26 It alleges that mold developed (FATC ¶¶ 9- As a result, Starbucks allegedly suffered (Id. ¶ 12.) (Id. ¶ 17.) Accordingly, because Pallets Unlimited has alleged a 27 duty in tort between OHL and Starbucks, fault on the part of OHL, 28 and resulting damages to Pallets Unlimited for which OHL is 6 1 allegedly responsible, see Bailey v. Safeway, Inc., 199 Cal. App. 2 4th 206, 217 (1st Dist. 2011) (listing elements), Pallets 3 Unlimited has stated a plausible claim for equitable indemnity. 4 The court must therefore deny OHL’s motion to dismiss this claim. 5 II. 6 Negligence Claim In its November 5, 2014 Order, this court rejected 7 Pallets Unlimited’s argument that OHL owed a duty to protect it 8 from the prospect of purely economic loss it now faces as a 9 result of Starbucks’s claims against it, noting that Pallets 10 Unlimited did not allege any injury to its person or property, 11 instead alleging only damages in the form of “potential 12 liability” to Starbucks, as well as “damages relating to 13 attorney’s fees and costs of suit herein.” 14 California law, the court could not find any basis for such a 15 duty. (See Nov. 5, 2014 Order at 12-16.) 16 After surveying The court sees no significant difference between the 17 negligence claim it rejected in its prior Order and the 18 negligence claim Pallets Unlimited re-asserts in its FATC. 19 (Compare FATC ¶¶ 19-25, with Pallets’s Compl. ¶¶ 15-18.) 20 Pallets Unlimited does not allege any injury to its person or 21 property. 22 Starbucks by failing to ensure that the bags, beans, and pallets 23 owned by Starbucks were kept free of mold. 24 Unlimited then asserts that, due to this breach, it has suffered 25 damages in the form of “potential liability to [Starbucks],” 26 “damages relating to attorneys’ fees and costs of suit herein.” 27 (Id. ¶ 25.) 28 Again, Instead, it alleges that OHL breached its duty to (FATC ¶ 24.) What changes Pallets Unlimited does make to its 7 Pallets 1 negligence claim only strengthen the court’s conclusion that this 2 negligence claim essentially duplicates Pallets Unlimited’s 3 indemnification claim. 4 (suggesting that Pallets Unlimited’s negligence claim might be 5 construed as an attempt to salvage its indemnity claim).) 6 time, Pallets Unlimited explicitly alleges that OHL should 7 compensate it for any liability it incurs to Starbucks because 8 “such liability would be solely, directly, and legally due to the 9 primary and active fault . . . of Cross-Defendant OHL.” 10 (See Nov. 5, 2014 Order at 15 n.7 This (FATC ¶ 24.) 11 This new allegation repeats verbatim Pallets 12 Unlimited’s allegation under its equitable indemnity claim. 13 ¶ 17 (“. . . such liability would be solely, directly and legally 14 due to the primary and active fault . . . of Cross-Defendant 15 OHL”).) 16 negligence claim attempt to provide Pallets Unlimited with the 17 same relief: compensation for the damages and costs it incurs in 18 its suit against Starbucks. 19 Pallets Unlimited is entitled to be indemnified for “damages, 20 judgments, attorneys’ fees, and related costs or expenses 21 incurred in defending the principal action”), with id. ¶ 25 22 (stating that Pallets Unlimited has suffered damages including 23 “potential liability to [Starbucks] based on [Starbucks’s] 24 Complaint, damages relating to attorneys’ fees, and costs of suit 25 herein”).) 26 (Id. Both Pallets Unlimited’s indemnity claim and its (Compare FATC ¶ 18 (stating that Nonetheless, Pallets Unlimited urges this court to 27 recognize a new duty based on the “special relationship” between 28 it and OHL by applying the factors enumerated by the California 8 1 Supreme Court in J’Aire Corp. v. Gregory, 24 Cal. 3d 799 (1979). 2 These factors include (1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct and (6) the policy of preventing future harm. 3 4 5 6 7 8 Id. at 804. 9 A California Court of Appeal’s recent rejection of this 10 argument is instructive. 11 Cal. App. 4th 1318, 1340-42 (4th Dist. 2014). 12 in that case also argued that the court should recognize a new 13 duty of care under J’Aire. 14 facts, the court in Mega RV applied the six J’Aire factors and 15 concluded that none of them supported the recognition of such a 16 duty. 17 See Mega RV Corp. v. HWH Corp., 225 Id. at 1340-41. The manufacturer Faced with analogous Id. at 1341-42. Pallets Unlimited makes no attempt to distinguish Mega 18 RV and fails to address the six J’Aire factors. 19 that, because OHL and it were involved in a “chain of supply” for 20 the wooden pallets at issue, and “[i]n the litigious world we 21 live in,” it was “foreseeable” that Starbucks would seek 22 compensation from Pallets Unlimited for damages caused to its 23 property, OHL owed it a duty of care. 24 Opp’n at 13-16.) 25 to a duty under California law, see Erlich, 21 Cal. 4th at 552, 26 and Pallets Unlimited provides no other reason for imposing a 27 duty in this case. It argues only (See FATC ¶ 22; Pallets’s However, foreseeability alone cannot give rise 28 9 1 Accordingly, because no authority supports the 2 existence of a duty of care between OHL and Pallets Unlimited and 3 the court declines to recognize one under J’Aire, see Mega RV, 4 225 Cal. App. 4th at 1338-42, the court must grant OHL’s motion 5 to dismiss this claim. 6 IT IS THEREFORE ORDERED that third-party defendant 7 Ozburn-Hessey Logistics’s motion to dismiss be, and the same 8 hereby is, GRANTED without leave to amend with respect to third- 9 party plaintiff Pallets Unlimited’s negligence claim and DENIED 10 in all other respects. 11 Dated: January 15, 2015 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10

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