Seaberg v. Atlas Roofing Corporation
Filing
35
ORDER granting in part and denying in part (173) Motion to Dismiss in case 1:13-md-02495-TWT. Signed by Judge Thomas W. Thrash, Jr on 6/17/2015. Associated Cases: 1:13-md-02495-TWT, 1:14-cv-03179-TWT(ss)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
IN RE ATLAS ROOFING
MDL DOCKET NO. 2495
CORPORATION CHALET SHINGLE 1:13-md-2495-TWT
PRODUCTS LIABILITY
LITIGATION
PENNY SEABERG
on behalf of herself and all others
similarly situated,
Plaintiff,
v.
CIVIL ACTION FILE
NO. 1:14-CV-3179-TWT
ATLAS ROOFING CORPORATION,
Defendant.
OPINION AND ORDER
This is a multi-district action arising out of the marketing and sale of allegedly
defective roofing shingles. It is before the Court on the Defendant Atlas Roofing
Corporation’s Motion to Dismiss [Doc. 173] Count III, Count IV, Count V, Count VI,
Count VII, and Count VIII of the Plaintiff Penny Seaberg’s Complaint. For the
reasons set forth below, the Defendant Atlas Roofing Corporation’s Motion to
Dismiss [Doc. 173] is GRANTED in part and DENIED in part.
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I. Background
The Plaintiff Penny Seaberg is a purchaser of the Atlas Chalet Shingles
(“Shingles”), which are designed, manufactured, and sold by the Defendant Atlas
Roofing Corporation (“Atlas”).1 Atlas represented and continues to represent – in
marketing material and on the Shingles packaging – that the Shingles meet applicable
building codes and industry standards.2 Atlas also provides a limited thirty-year
warranty against manufacturing defects.3
The Plaintiff claims that the Shingles are defective due to a flaw in the
manufacturing process. This process – which allegedly does not conform to applicable
building codes and industry standards – “permits moisture to intrude into the Shingle
which creates a gas bubble that expands when the Shingles are exposed to the sun
resulting in cracking and blistering of the Shingles.”4 The Plaintiff filed suit in the
U.S. District Court for the Southern District of Florida,5 asserting claims for: violation
1
Compl. ¶ 2.
2
Compl. ¶ 41.
3
Compl. ¶ 44.
4
Compl. ¶ 51.
5
“[I]n multidistrict litigation under 28 U.S.C. § 1407, the transferee court
applies the state law that the transferor court would have applied.” In re Conagra
Peanut Butter Products Liab. Litig., 251 F.R.D. 689, 693 (N.D. Ga. 2008); see also In
re Temporomandibular Joint (TMJ) Implants Products Liab. Litig., 97 F.3d 1050,
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of the Florida Deceptive and Unfair Trade Practices Act (Count I), breach of express
warranty (Count II), strict products liability (Count III), negligent design (Count IV),
fraudulent concealment (Count V), negligent misrepresentation (Count VI), and unjust
enrichment (Count VII). The Plaintiff seeks damages, litigation expenses, and
equitable relief.6 The Defendant moves to dismiss Counts III, IV, V, VI, VII, and the
Plaintiff’s request for equitable relief.
II. Legal Standard
A complaint should be dismissed under Rule 12(b)(6) only where it appears that
the facts alleged fail to state a “plausible” claim for relief.7 A complaint may survive
a motion to dismiss for failure to state a claim, however, even if it is “improbable” that
a plaintiff would be able to prove those facts; even if the possibility of recovery is
extremely “remote and unlikely.”8 In ruling on a motion to dismiss, the court must
accept the facts pleaded in the complaint as true and construe them in the light most
1055 (8th Cir. 1996) (“When considering questions of state law, however, the
transferee court must apply the state law that would have applied to the individual
cases had they not been transferred for consolidation.”). Here, both parties appear to
agree that Florida law governs the Plaintiff’s state law claims.
6
The Plaintiff’s request for equitable relief was labeled Count VIII.
7
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009); FED. R. CIV. P. 12(b)(6).
8
Bell Atlantic v. Twombly, 550 U.S. 544, 556 (2007).
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favorable to the plaintiff.9 Generally, notice pleading is all that is required for a valid
complaint.10 Under notice pleading, the plaintiff need only give the defendant fair
notice of the plaintiff’s claim and the grounds upon which it rests.11
III. Discussion
A.
Injunctive and Declaratory Relief
The Plaintiff requests that the Court issue an injunction mandating that the
Defendant:
1. “[N]otify owners of the defect,”12
2. “[R]eassess all prior warranty claims and pay the full costs of repairs,”13 and
3. “[P]ay the costs of inspection to determine whether any Class member’s
Shingles needs replacement.”14
The Plaintiff also requests that the Court issue a declaratory judgment stating:
9
See Quality Foods de Centro America, S.A. v. Latin American
Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir. 1983); see also
Sanjuan v. American Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (7th
Cir. 1994) (noting that at the pleading stage, the plaintiff “receives the benefit of
imagination”).
10
See Lombard’s, Inc. v. Prince Mfg., Inc., 753 F.2d 974, 975 (11th Cir.
1985), cert. denied, 474 U.S. 1082 (1986).
11
See Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing Twombly, 127
S. Ct. at 1964).
12
Compl. ¶ 145.
13
Id.
14
Id.
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1. “The Shingles [have] a defect which results in premature failure,”15
2. “[The Defendant’s] warranty fails of its essential purpose,”16 and
3. “Certain provisions of [the Defendant’s] warranty are void as
unconscionable.”17
To begin, the Plaintiff’s request for injunctive relief must be dismissed.
Injunctive relief is only appropriate “when [a] legal right asserted has been infringed,”
and there will be irreparable injury “for which there is no adequate legal remedy.”18
Here, the Defendant argues – correctly – that the Plaintiff’s allegations do not
establish that legal remedies would be inadequate. Monetary damages would
sufficiently compensate the Plaintiff for the Shingles that have blistered and/or
cracked.19 In response, the Plaintiff argues that she is allowed to plead alternative and
15
Id.
16
Id.
17
Id.
18
Alabama v. U.S. Army Corps of Engineers, 424 F.3d 1117, 1127 (11th
Cir. 2005) (emphasis added).
19
The Plaintiff’s responses to this argument are entirely without merit. For
example, she argues that, absent injunctive relief, she “will have to file individual suits
to obtain recourse when [her] Shingles fail, which would tax . . . the resources of . .
. the Plaintiff . . . [who] will have to wait until [the] Shingles fail and bear the entire
cost of bringing suit.” Pl.’s Resp. Br., at 10. That the Plaintiff will have to invest
resources and exert effort to secure a legal remedy does not mean that legal remedies
are inadequate. In any event, if she establishes in this action that the Shingles are
indeed defective, it is unclear why the Plaintiff would have to invest a significant
amount of resources to secure relief for any Shingles that blister and/or crack after this
litigation.
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inconsistent claims.20 But the problem here is not that the Plaintiff’s request for
injunctive relief is inconsistent with her other claims, it is that she has failed to state
a plausible claim for injunctive relief to begin with.21
To receive declaratory relief, however, the Plaintiff does not have to establish
irreparable injury or the inadequacy of legal remedies.22 In moving to dismiss the
claim for declaratory relief, the Defendant first argues that the Plaintiff does not have
standing because the requested declarations will not redress her injury.23 To satisfy the
constitutional case-or-controversy requirement, “[a] plaintiff must allege personal
20
Pl.’s Resp. Br., at 4.
21
As a technical matter, the Court must dismiss the Plaintiff’s first
requested injunction – that the Defendant must notify owners of the defect – on
jurisdictional grounds. “[S]tanding is a threshold jurisdictional question which must
be addressed prior to . . . the merits of a party’s claims.” Bochese v. Town of Ponce
Inlet, 405 F.3d 964, 974 (11th Cir. 2005) (internal quotation marks omitted). “In the
absence of standing, a court is not free to opine in an advisory capacity about the
merits of a plaintiff’s claims.” Id. “To have Article III standing to pursue injunctive
relief . . . a plaintiff must have . . . an injury in fact that is capable of being redressed
by the injunction.” Virdi v. Dekalb Cnty. Sch. Dist., 216 Fed. Appx. 867, 871 (11th
Cir. 2007). Here, the Defendant correctly notes that the Plaintiff would not benefit
from this injunction. If, during this litigation, it is established that the Shingles are
indeed defective, it is unclear what the Plaintiff would gain from having the Defendant
simply notify her of this fact.
22
See Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 241
(1937) (“[A]llegations that irreparable injury is threatened are not required.”);
Katzenbach v. McClung, 379 U.S. 294, 296 (1964) (“Rule 57 of the Federal Rules of
Civil Procedure permits declaratory relief although another adequate remedy exists.”).
23
Def.’s Mot. to Dismiss, at 13-14.
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injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be
redressed by the requested relief.”24 The Plaintiff may establish redressability if she
shows that the “practical consequence” of the declaratory relief “would amount to a
significant increase in the likelihood that the [Plaintiff] would obtain relief that
directly redresses the injury suffered.”25 Here, the requested declarations – e.g., that
the Shingles are defective – would make it more likely that the Plaintiff would obtain
the necessary relief from the Defendant because it would establish an essential
component to liability. And although the Plaintiff’s remaining claims may provide
more direct relief, the Declaratory Judgment Act allows plaintiffs to seek a declaration
of rights “whether or not further relief is or could be sought.”26
Finally, the Defendant argues that the Plaintiff’s declaratory judgment claim
must be dismissed because it abridges the Defendant’s right to a jury trial.27 But as the
Eighth Circuit Court of Appeals has explained, “[a] litigant is not necessarily deprived
of a jury trial merely because it is a party to a declaratory judgment action . . . if there
would have been a right to a jury trial on the issue had it arisen in an action other than
24
Allen v. Wright, 468 U.S. 737, 751 (1984).
25
Utah v. Evans, 536 U.S. 452, 464 (2002).
26
28 U.S.C. § 2201.
27
Def.’s Mot. to Dismiss, at 14-16.
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one for declaratory judgment, then there is a right to a jury trial in the declaratory
judgment action.”28 Accordingly, the Plaintiff may pursue her claim for declaratory
relief for now.
B.
Unjust Enrichment
The Defendant argues that the Plaintiff cannot establish an unjust enrichment
claim given her allegation that there is an express warranty concerning the Shingles.
Florida courts have held that “a plaintiff cannot pursue a quasi-contract claim for
unjust enrichment if an express contract exists concerning the same subject matter.”29
Here, the Defendant correctly points out that “[a] warranty, whether express or
implied, is fundamentally a contract.”30 Consequently, based on the allegations in the
28
Northgate Homes, Inc. v. City of Dayton, 126 F.3d 1095, 1098-99 (8th
Cir. 1997); see also Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 504 (1959)
(“[T]he Declaratory Judgment Act . . . specifically preserves the right to jury trial for
both parties.”); Simler v. Conner, 372 U.S. 221, 223 (1963) (“The fact that the action
is in form a declaratory judgment case should not obscure the essentially legal nature
of the action. The questions involved are traditional common-law issues which can be
and should have been submitted to a jury under appropriate instructions as petitioner
requested . . . [and] the courts below erred in denying petitioner the jury trial
guaranteed him by the Seventh Amendment.”).
29
Diamond “S” Dev. Corp. v. Mercantile Bank, 989 So. 2d 696, 697 (Fla.
Dist. Ct. App. 2008); see also Moynet v. Courtois, 8 So. 3d 377, 379 (Fla. Dist. Ct.
App. 2009) (“[W]here there is an express contract between the parties, claims arising
out of that contractual relationship will not support a claim for unjust enrichment.”).
30
Elizabeth N. v. Riverside Grp., Inc., 585 So. 2d 376, 378 (Fla. Dist. Ct.
App. 1991) (internal quotation marks omitted).
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Complaint, the Plaintiff has not stated a plausible unjust enrichment claim. In
response, the Plaintiff first argues that she ought to be allowed to pursue her unjust
enrichment claim since she may not prevail on her contract claim. But the Plaintiff
may only prevail on an unjust enrichment claim in the absence of a contract, not just
in the absence of a successful contract claim.31 The Plaintiff then argues that she is
stating her unjust enrichment claim in the alternative. But “[u]njust enrichment may
only be pleaded in the alternative to a breach of contract claim where one of the
parties asserts that the contract governing the dispute is invalid.”32 Because both
parties acknowledge that there is a valid warranty, the Plaintiff’s unjust enrichment
claim should be dismissed.33
31
See Speier-Roche v. Volksw Agen Grp. of Am. Inc., No. 14-20107-CIV,
2014 WL 1745050, at *8 (S.D. Fla. Apr. 30, 2014) (“Plaintiff’s failure to state a claim
for breach of warranty does not save the unjust enrichment claim.”).
32
Degutis v. Fin. Freedom, LLC, 978 F. Supp. 2d 1243, 1265 (M.D. Fla.
2013).
33
See, e.g., id. at1266 (“In this case, it is undisputed by Plaintiff that an
express mortgage contracts exists between Plaintiff and the Defendants. Even though
Plaintiff argues that it is alleging the unjust enrichment claim in the alternative, . . .
Plaintiff is not alleging that the contract is invalid. . . . Thus, Plaintiffs claim for unjust
enrichment fails.”); Speier-Roche, 2014 WL 1745050, at *8 (“Plaintiff attempts . . .
to assert ‘in the alternative’ a claim for unjust enrichment despite the existence of an
express warranty governing her rights. This argument is contrary to the weight of
authority holding that an unjust enrichment claim can only be pled in the alternative
if one or more parties contest the existence of an express contract governing the
subject of the dispute. . . . Here, because there is an express warranty governing
Plaintiff’s rights, her unjust enrichment claim must fail.”); Zarrella v. Pacific Life Ins.
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C.
Strict Products Liability, Negligent Design, Fraudulent
Concealment, and Negligent Misrepresentation
The Defendant argues that the Plaintiff’s claims for strict products liability,
negligent design, fraudulent concealment, and negligent misrepresentation are barred
by the “economic loss rule.” Florida courts have adopted the economic loss rule in the
context of products liability torts “to protect manufacturers from liability for economic
damages caused by a defective product beyond those damages provided by warranty
law.”34 It is “a judicially created doctrine that sets forth the circumstances under which
a tort action is prohibited if the only damages suffered are economic losses.”35
Economic losses are defined as “damages for inadequate value, costs of repair and
replacement of the defective product, or consequent loss of profits – without any claim
Co., 755 F. Supp. 2d 1218, 1227 (S.D. Fla. 2010) (“Plaintiffs contend that their unjust
enrichment claim should survive dismissal anyway because it is a claim in the
alternative pursuant to Federal Rule of Civil Procedure 8. . . . The parties do not
dispute the existence of an express contract governing their insurance policy
agreement, so the equitable remedy of unjust enrichment is not available.
Accordingly, . . . the Court will dismiss the claim with prejudice.”); Central Magnetic
Imaging Open MRI of Plantation, Ltd. v. State Farm Mut. Auto. Ins. Co., 789 F. Supp.
2d 1311, 1317 (S.D. Fla. 2011) (“No party here contests the existence of a valid
contract. In fact, in the unjust-enrichment claim, Plaintiff does not challenge the
validity of the PIP insurance contracts . . . [a]s there is a valid express contract that no
party challenges, Plaintiff may not recovery under unjust enrichment, and may not
assert it as an alternative.”).
34
Tiara Condo. Ass’n, Inc. v. Marsh & McLennan Companies, Inc., 110
So. 3d 399, 403 (Fla. 2013).
35
Id. at 401.
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of personal injury or damage to other property.”36 Here, the Plaintiff only adequately
alleges an injury to the Shingles themselves. Although the Complaint contains a
vague allegation that other property was damaged,37 a party must do more than
“tender[] naked assertion[s] devoid of further factual enhancement.”38
In response, the Plaintiff argues that “negligent misrepresentation and
fraudulent inducement/concealment claims [are] exceptions to the economic loss
rule.”39 The Florida Supreme Court has stated that “[w]here a contract exists, a tort
action will lie for either intentional or negligent acts considered to be independent
from acts that breached the contract.”40 However, “[m]isrepresentations relating to the
breaching party’s performance of a contract do not give rise to an independent cause
of action in tort, because such misrepresentations are interwoven and indistinct from
the heart of the contractual agreement.”41 When “the only alleged misrepresentation
36
Id.
37
Compl. ¶ 120.
38
Iqbal, 556 U.S. at 678.
39
Pl.’s Resp. Br., at 23.
40
HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So. 2d 1238, 1239
(Fla. 1996) (emphasis added).
41
Straub Capital Corp. v. L. Frank Chopin, P.A., 724 So. 2d 577, 579 (Fla.
Dist. Ct. App. 1998) (emphasis added); see also Aprigliano v. American Honda Motor
Co., 979 F. Supp. 2d 1331, 1337 (S.D. Fla. 2013) (“Usually claims for negligent
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concerns the heart of the parties’ agreement, simply applying the label of [fraud] to
a cause of action will not suffice to subvert the sound policy rationales underlying the
economic loss doctrine.”42 Indeed, “[t]o hold otherwise would allow the economic loss
rule to be manipulated such that any time a purchaser received a defective product that
did not cause any injuries or damage to other property, such a purchaser could assert
claims for negligent and fraudulent concealment regarding the defect to avoid the
economic loss rule.”43 Here, the relevant representations – whether express or implied
by the Defendant’s silence – are certainly related to the Defendant’s obligation under
the contract: to provide Shingles that meet the stated standard of quality.44 Thus,
because “[a]ll of the allegations that Plaintiff uses to support [her] claims for . . .
fraudulent concealment . . . and negligent misrepresentation relate to whether
misrepresentation are barred by the economic loss rule where, as here, there are claims
for breach of warranty alongside tort claims and the allegations contained in both are
similar.”).
42
Hotels of Key Largo, Inc. v. RHI Hotels, Inc., 694 So. 2d 74, 77 (Fla.
Dist. Ct. App. 1997).
43
Burns v. Winnebago Indus., Inc., No. 8:13-CV-1427-T-24, 2013 WL
4437246, at *4 (M.D. Fla. Aug. 16, 2013).
44
Compl. ¶ 130 (“Defendant represented that the Shingles conformed to all
applicable building codes and industry standards, that the Shingles would be free from
defects . . ..”); Compl. ¶ 122 (“Atlas . . . had a duty . . . to disclose . . . the true facts
and their knowledge concerning the Shingles; that is that said product was defective,
would prematurely fail, and otherwise were not warranted and represented by Atlas.”).
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Defendant adequately performed under the contract-that is, whether Defendant
breached the agreement by providing . . . defective [Shingles],”45 the Plaintiff’s
fraudulent concealment and negligent misrepresentation claims must be dismissed. In
addition, the Plaintiff’s strict products liability and negligent design claims must be
dismissed as well.46
45
HTC Leleu Family Trust v. Piper Aircraft, Inc.,
1:12-CV-21118-KMM, 2012 WL 4982633, at *4 (S.D. Fla. Oct. 17, 2012).
46
No.
The Plaintiff argues that her negligent misrepresentation and fraudulent
concealment claims are based on pre-contract conduct, and depend on certain facts
that are not relevant to her breach of warranty claim. Pl.’s Resp. Br., at 24-25. This
misunderstands the relevant inquiry. The question is simply whether the
representations at issue “concern[] the heart of the parties’ agreement,” Hotels of Key
Largo, 694 So. 2d at 77 (emphasis added); not whether the facts required to establish
all of the claims are identical. Obviously, the fraud claims have different elements, and
so they will partially turn on different facts. But this does not mean they are
sufficiently distinct from the breach of warranty claim. Cf. id. at 78 (“[T]he plaintiffs
claim that contrary to the defendant’s pre-contract representations, the plaintiffs were
not listed with the system fast enough . . . [but] this type of fraud claim is not
independent of the contract and thus the economic loss doctrine applies.”) (emphasis
added).
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IV. Conclusion
For these reasons, the Court GRANTS in part and DENIES in part the
Defendant Atlas Roofing Corporation’s Motion to Dismiss [Doc. 173].
SO ORDERED, this 17 day of June, 2015.
/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge
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