Scott v. Honeywell International, Inc.
Filing
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ORDER. Plaintiff's Motion for Leave to File a Second Amended Class Action Complaint Pursuant to Fed. R. Civ. P. 15(a)(2) and Supporting Memorandum of Law [Docket No. 51 ] is GRANTED in part and DENIED in part. Plaintiff shall file a second amended class action complaint in conformance with this order on or before March 31, 2016. By Judge Philip A. Brimmer on 03/18/2016. (athom, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 14-cv-00157-PAB-MJW
DEREK SCOTT, individually and on behalf of others similarly situated,
Plaintiff,
v.
HONEYWELL INTERNATIONAL INC., a Delaware corporation,
Defendant.
ORDER
This matter is before the Court on plaintiff’s Motion for Leave to File a Second
Amended Class Action Complaint Pursuant to Fed. R. Civ. P. 15(a)(2) and Supporting
Memorandum of Law [Docket No. 51] filed by plaintiff Derek Scott. Plaintiff alleges that
this Court has subject matter jurisdiction over this case pursuant to 28 U.S.C.
§ 1332(d)(2).
I. BACKGROUND
On January 21, 2014, plaintiff filed this class action suit against defendant
Honeywell International, Inc., alleging breach of contract, breach of express warranty,
breach of implied warranty, strict products liability, negligence, negligent
misrepresentation, unjust enrichment, and violations of the Colorado Consumer
Protection Act, Colo. Rev. Stat. §§ 6-1-105, et seq., and the Colorado Products Liability
Act, Colo. Rev. Stat. §§ 13-21-401, et seq. Docket No. 1 at 17-28. On April 7, 2014,
defendant filed a motion to dismiss all of plaintiff’s claims pursuant to Fed. R. Civ. P.
12(b)(6) and 9(b). Docket No. 23. On April 28, 2014, plaintif f filed an amended
complaint pursuant to Fed. R. Civ. P. 15(a)(1), Docket No. 29, thereby mooting
defendant’s motion to dismiss. See, e.g., Mink v. Suthers, 482 F.3d 1244, 1254 (10th
Cir. 2007) (noting that an amended complaint “supercedes an original complaint and
renders the original complaint without legal effect”) (citation omitted). On May 12, 2014,
defendant filed a motion to dismiss with prejudice all claims in plaintiff’s amended
complaint pursuant to Fed. R. Civ. P. 12(b)(6) and 9(b). Docket No. 32. On March 30,
2015, this Court granted in part and denied in part defendant’s motion to dismiss.
Docket No. 43 at 30. Specifically, this Court dismissed plaintiff’s claims for breach of
express warranty, failure of essential purpose, breach of the implied warranties of
merchantability and fitness for a particular purpose, negligence, strict products liability,
unjust enrichment, and violation of the Colorado Products Liability Act. Id. The Court
did not state whether the dismissed claims were dismissed with or without prejudice.
See id.
On May 1, 2015, plaintiff filed the instant motion for leave to file a second
amended class action complaint pursuant to Fed. R. Civ. P. 15(a)(2). Docket No. 51.
Plaintiff’s proposed second amended complaint withdraws several claims asserted in
the first amended complaint and provides additional substantive allegations in support
of several claims asserted in the first amended complaint. Docket No. 51 at 2. First,
plaintiff’s proposed second amended complaint withdraws his claims for strict products
liability, negligence, negligent misrepresentation, unjust enrichment, and violations of
the Colorado Products Liability Act. See Docket No. 51 at 2. The Court notes that, with
the exception of plaintiff’s negligent misrepresentation claim, all the aforementioned
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claims plaintiff seeks to remove have already been dismissed. Compare Docket No. 43
at 30 with Docket No. 51 at 2. Second, plaintiff’s proposed second amended complaint
proffers additional allegations to support his claims for breach of express warranty,
breach of implied warranties of merchantability and fitness for a particular purpose, and
failure of essential purpose. See id.
Defendant opposes plaintiff’s motion for leave to amend insofar as it attempts to
resuscitate claims that this Court dismissed, which defendant argues are presumed to
have been dismissed with prejudice. Docket No. 53 at 1. Defendant also argues that
plaintiff’s motion for leave to amend should be denied as futile. Id. Defendant does not
oppose plaintiff’s withdrawal of his negligent misrepresentation claim. Id. at 2 n.1.
II. STANDARD OF REVIEW
Plaintiff seeks leave to file the proposed second amended complaint pursuant to
Fed. R. Civ. P. 15(a), which states that “a party may amend its pleading only with the
opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). Rule 15
instructs courts to “freely give leave [to amend] when justice so requires.” Id.
Nevertheless, denying leave to amend is justified if the proposed amendments are
unduly delayed, unduly prejudicial, futile, or sought in bad faith. Foman v. Davis, 371
U.S. 178, 182 (1962); Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993). As
a general rule, the Court retains the discretion to permit such amendments. Minter v.
Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006). The Court must delineate its
rationale if it refuses leave to amend. Federal Ins. Co. v. Gates Learjet Corp., 823 F.2d
383, 387 (10th Cir. 1987).
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III. ANALYSIS
A. Prior Dismissal of Plaintiff’s Claims Pursuant to Rule 12(b)(6)
Defendant first argues that plaintiff cannot amend his breach of express
warranty, failure of essential purpose, or breach of implied warranty claims because
they were dismissed with prejudice pursuant to Fed. R. Civ. P. 12(b)(6). Docket No. 53
at 2. Defendant contends that “a dismissal under Rule 12(b)(6) must be presumed to
be with prejudice.” Docket No. 53 at 3 (quoting Lacey v. Homeowners of Am. Ins. Co.,
546 F. App’x 755, 758 (10th Cir. 2013)). Plaintiff replies with a request that the Court
clarify whether its dismissal of the claims plaintiff seeks to amend was with prejudice or
without. Docket No. 54 at 2.
Exercising its discretion, the Court will consider the merits of plaintiff’s motion for
leave to amend his complaint.
B. Motion to Amend
Plaintiff makes three arguments in support of his motion to amend: (1) there has
been no undue delay, Docket No. 51 at 3; (2) defendant will not be prejudiced, id. at 4;
and (3) the proposed amendments are not futile. Id. Defendant does not suggest that
plaintiff has unduly delayed filing his second amended complaint or that defendant will
be prejudiced. See Docket No. 53. Rather, defendant argues that plaintiff’s proposed
amendments are futile and “fail to cure any of the pleading defects cited in the Court’s
order and would be subject to dismissal for the same reasons.” Id. at 3-4. The Court
will therefore consider whether plaintiff’s amendments in the proposed second
amended complaint are futile.
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1. Breach of Express Warranty
Plaintiff’s proposed second amended complaint adds a series of allegations
regarding B.C. Building, a heating and air conditioning company. Docket No. 51-1 at
14. Plaintiff alleges that he hired B.C. Building to install his first humidifier and that
“B.C. Building is a representative agent of Honeywell.” Id., ¶¶ 66, 67. Plaintiff claims
that, following the failure of his first Honeywell humidifier, he “contacted B.C. Building to
initiate a warranty claim” and that B.C. Building replaced his humidifier “pursuant to the
terms of Honeywell’s five year warranty.” Id., ¶¶ 70, 71. These allegations regarding
plaintiff’s first humidifier indicate that B.C. Building replaced it, which would seem to
satisfy the express warranty. Plaintiff alleges that after his second Honeywell humidifier
failed, he notified B.C. Building that the second humidifier was defective, to which B.C.
Building responded that it could not provide him with a replacement humidifier because
the installation must be completed by a certified contractor, and that in order to receive
a replacement humidifier, he would need to hire B.C. Building to install the new
humidifier. Id. at 14-15, ¶¶ 73-75. Plaintiff further alleges that “Honeywell received
warranty claims from B.C. Building on [p]laintiff’s behalf” and that “Honeywell used its
relationship with B.C. Building to deny, or otherwise fail to respond to [p]laintiff’s
warranty claim.” Id. at 15, ¶ 76.
Defendant argues that plaintiff’s allegation that B.C. Building is an agent of
Honeywell “is a legal conclusion that need not be taken as true f or purposes of Rule 12
analysis.” Docket No. 53 at 4. An assertion that an individual or entity is acting as an
agent “is a conclusion of law, and thus, must be supported by allegations of fact that, if
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taken as true, would permit the conclusion to be drawn.” Procom Supply, LLC v.
Langner, No. 12-cv-00391-MSK-KMT, 2013 WL 4510243, at *2 (D. Colo. Aug. 24,
2013) (citing Wolman v. Catholic Health Sys. of Long Island, 853 F. Supp. 2d 290, 29899 (E.D.N.Y. 2012), aff’d in part, rev’d in part on other grounds sub nom. Lundy v.
Catholic Health System of Long Island., Inc., 711 F.3d 106 (2d Cir. 2013) (holding that
an agency relationship requires pleading of facts showing that agent “had apparent or
actual authority to bind” principal, and mere conclusory statements of agency status are
insufficient to state a claim)).
“Agency is the fiduciary relation which results from the manifestation of consent
by one person to another that the other shall act on his behalf and subject to his control,
and consent by the other so to act.” Stortroen v. Beneficial Finance Co. of Colorado,
736 P.2d 391, 395 (Colo. 1987) (citing Restatement (Second) of Agency § 1(1) (1957)).
Apparent authority “is established by evidence of ‘written or spoken words or other
conduct of the principal which, reasonably interpreted, causes a person to believe that
the principal consents to have the act done by a person purporting to act for him.”
Rush Creek Solutions, Inc. v. Ute Mountain Ute Tribe, 107 P.3d 402, 407 (Colo. App.
2004) (quoting Lucero v. Goldberger, 804 P.2d 206, 209 (Colo. App. 1990)). “Actual
authority is that authority which is in fact given to an agent.” Citywide Banks v. Armijo,
313 P.3d 647, 652 (Colo. App. 2011) (citing Life Investors Ins. Co. v. Smith, 833 P.2d
864, 868 (Colo. App. 1992)). Plaintiff does not allege facts regarding an actual agency
agreement, but simply alleges that “Honeywell relied on B.C. Building to honor its
warranty and B.C. Building’s failure to honor [p]laintiff’s warranty claim constitutes a
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failure by Honeywell to honor its warranty obligations.” Docket No. 54 at 3. Plaintiff
cites no authority for its contention that an agency relationship is established solely
because an alleged principal relies on a third party to satisfy the alleged principal’s
warranty obligations. Plaintiff does not allege any facts that could establish that B.C.
Building owed a fiduciary duty to Honeywell. There are no allegations that Honeywell,
retained B.C. Building as its agent, that by written or spoken words or conduct identified
B.C. Building as its agent, or that B.C. Building purported to act for Honeywell.
Accordingly, the Court finds plaintiff’s allegations are insufficient to establish that B.C.
Building was Honeywell’s agent.
Plaintiff argues that he “is not alleging that [d]efendant is obligated to pay
installation costs, rather, the fact that [d]efendant was ‘unable to simply provide him
with a replacement humidifier’ is demonstrative of [d]efendant’s warranty misconduct.
As a prerequisite to receiving a replacement humidifier, [p]laintiff was required to pay
[d]efendant’s third-party installers–a requirement not contemplated by the warranty.”
Docket No. 54 at 3. However, plaintiff acknowledges that Honeywell requires
installation by an HVAC professional. Docket No. 51-1 at 12, ¶ 58. Plaintif f does not
allege that he could not have the second humidifier replaced by B.C. Building, but
rather alleges that a replacement needed to be installed by a licensed contractor and
that plaintiff needed to expend money for the reinstallation. Id. at 14-15, ¶¶ 74-75.
Moreover, plaintiff alleges that B.C. Building – not Honeywell – “was unable to simply
provide him with a replacement.” Id. at 15, ¶ 75. Plaintiff does not allege that he ever
directly contacted Honeywell to provide a replacement humidifier. Given plaintiff’s
failure to provide sufficient factual allegations to establish an agency relationship
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between Honeywell and B.C. Building, it is unclear why B.C. Building’s determination
that it could not provide plaintiff with a replacement humidifier without also installing that
unit is a breach of express warranty by Honeywell. As such, the proposed second
amended complaint fails to state a plausible breach of express warranty claim and
allowing plaintiff to amend the complaint as to this claim would be futile.
2. Failure of Essential Purpose
Plaintiff argues that his proposed second amended complaint shows “that
[d]efendant’s humidifiers suffer from a latent defect and that [d]efendant failed to
provide adequate remedy.” Docket No. 54 at 3. Plaintiff’s proposed second amended
complaint alleges that “[p]laintiff and members of the Classes reasonably believed that
their Honeywell Humidifiers would last the life of the warranty” and that
the latent nature of the defect in the heating coils of the humidifiers
renders them ineffective and unfit for the purpose for which [p]laintiff and
members of the Classes bought their Honeywell Humidifiers. As a result,
Plaintiff and members of the Classes have been deprived of the
substantial value of their purchases. Plaintiff and the Classes could not
have contemplated the cost of repeated repair and replacement attempts
each of which required [p]laintiff and members of the Classes to pay for
the re-installation of each successive defective Honeywell Humidifier.
Docket No. 51-1 at 10-11, ¶¶ 45-46.
As discussed in the Court’s March 30, 2015 order, “‘where an apparently fair and
reasonable clause because of circumstances fails in its purposes or operates to deprive
either party of the substantial value of the bargain, it must give way to the general
remedy provisions of [the UCC].’” Cooley v. Big Horn Harvestore Systems, Inc., 813
P.2d 736, 744 (Colo. 1991) (quoting Colo. Rev. Stat. § 4-2-719 comment 1 (1973)).
Determining whether a limited or exclusive remedy fails of its essential purpose raises
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two questions: one, what is the essential purpose of the exclusive remedy and, two, did
the exclusive remedy fail to accomplish such purpose? Id. As to the first question,
where, as here, the exclusive remedy is a promise to repair or replace, the essential
purpose is to supply assurance to the buyer “that within a reasonable period of time
defective goods will be put into the condition they were warranted to be in at the time
they were purchased.” Id. Second, “[a] remedy fails of its essential purpose if it
operates to deprive a party of the substantial value of the contract.” Id. at 744-45.
Plaintiff’s allegations relate to the second question – whether the remedy
deprived plaintiff of the value of the contract based on the costs of repeated repairs that
he could not have contemplated when he purchased the humidifier.
Plaintiff does not cite any Colorado case law to support his theory of failure of
essential purpose. However, plaintiff cites a case from the United States District Court
for the Eastern District of Missouri, Docket No. 42-1, Johnsen v. Honeywell Int’l Inc.,
2015 WL 631361, at *7 (E.D. Mo. Feb. 12, 2015), in which the court denied defendant’s
motion to dismiss plaintiff failure of essential purpose claim. There, plaintiff claimed
that Honeywell’s limited warranty on its TrueSTEAM humidifiers, the same as those
involved in this case, “fails of its essential purpose because Honeywell continued to
replace the defective humidifiers with other defective humidifiers.” In denying
defendant’s motion to dismiss, the court quoted Midwest Printing, Inc. v. AM Int’l, Inc.,
108 F.3d 168, 171-172 (8th Cir. 1997), for the proposition that, if a buyer accepted a
seller’s offer to replace a defective item, and the replacement item has the same
deficiencies that the buyer complained of, this supports the position that the remedy
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failed of its essential purpose. See also Gen. Motors Acceptance Corp. v. Jankowitz,
523 A.2d 695, 703-04 (N.J. Super. Ct. App. Div. 1987).
The Court agrees with plaintiff that, in a situation where a seller offers to replace
a product and the replacement product contains the same latent defect as the original
product, and where the buyer is required to pay costs associated with replacing a
replacement product that substantially decreases the value of its original bargain, the
facts may support a failure of essential purpose claim. The cost of replacing and rereplacing a defective item could ultimately result in costs that exceed that of the original
product and which the buyer could not have reasonably anticipated at the time of
purchase. Accordingly, the Court finds that the proposed second amended complaint
states a plausible failure of essential purpose claim.
3. Breach of Implied Warranties
Defendant argues that the allegations regarding breach of implied warranty
added to plaintiff’s proposed second amended complaint fail to cure the defects
identified by the Court in its March 30, 2015 order and that the new allegations are
conclusory and are not specific to plaintiff’s humidifiers. Docket No. 53 at 6-8. Plaintiff
argues that he “has submitted evidence that his humidifiers could not fulfill their
ordinary purpose of providing whole home humidification due to an alleged defect” and
that this evidence presents a fact question sufficient to support his claim. Docket No.
54 at 4.
The Court agrees with defendant. Plaintiff’s proposed second amended
complaint reflects no attempt to address the deficiencies for which this court dismissed
plaintiff’s breach of implied warranties claim. While plaintiff alleges a litany of problems
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that Honeywell humidifiers are prone to have, he fails to allege that his humidifiers
experienced any of those alleged problems or that they failed as a result of them.
Plaintiff provides no new allegations in his proposed second amended complaint
regarding why his second humidifier failed. See Docket No. 51-1 at 13-15, ¶¶ 65-78.
Accordingly, the Court finds that the proposed second amended complaint fails to state
a plausible claim for breach of implied warranties and allowing plaintiff to amend the
complaint as to this claim would be futile.
IV. CONCLUSION
For the foregoing reasons, it is
ORDERED that plaintiff’s Motion for Leave to File a Second Amended Class
Action Complaint Pursuant to Fed. R. Civ. P. 15(a)(2) and Supporting Memorandum of
Law [Docket No. 51] is GRANTED in part and DENIED in part. It is further
ORDERED that plaintiff shall file a second amended class action complaint in
conformance with this order on or before March 31, 2016.
DATED March 18, 2016.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge
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