James v. Terex Corporation

Filing 38

ORDER denying Defendant Terex USA, LLC d/b/a Terex Environmental Equipment's 33 Motion for Partial Judgment on the Pleadings. Signed by Judge Lisa G. Wood on 5/16/2017. (ca)

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Sn tllie States! BtKtrict Court for tfie ^outfiem Biotritt of (f^eorsta WoBttoisi IBtbiOton FILED Scott L. Poff, Clerk United States District Court By casbell at 9:40 am, May 16, 2017 JOHN JAMES, individually, and ROW EQUIPMENT, INC., Plaintiffs, V. CV 516-60 TEREX USA, LLC, d/b/a TEREX ENVIRONMENTAL EQUIPMENT, Defendant. ORDER Pending before the Court is Defendant Terex USA, LLC d/b/a Terex Environmental Equipment's Defendant") Motion for Partial Judgment on the Pleadings (Dkt. No. 33). The motion has been fully briefed and is now ripe for decision. For the reasons stated below, the Motion for Partial Judgment on the Pleadings (Dkt. No. 33) will be DENIED. Factual Background Defendant industrial wood Georgia. On is a Connecticut-based chippers. or around Plaintiffs September 6, company are both 2012, which sells residents Plaintiff of Row Equipment, Inc. ("Row") entered into a financing contract with A0 72A (Rev. 8/82) Terex Financial Services, Inc. (^'Terex Financial")^ to purchase an industrial Defendant. wood Dkt. chipper No. 15 SI (''Chipper 8. Plaintiff personally guaranteed the contract. that Chipper 1 was 1") defective. manufactured John JA. SI 9. Row later James by ("James") Plaintiffs allege purchased another industrial wood chipper ("Chipper 2") from Defendant over a year later. JA. contract. SI 15. James also personally guaranteed this Plaintiffs allege that Chipper 2 was also defective. Plaintiffs allege that Defendant knew that both Chipper 1 and Chipper 2 were defective and assured Row that Defendant would repair the defects. SISI 19, 42. Plaintiffs now bring this action as a result of Defendant's contracts and promises to fix the chippers. SI 29. LEGAL STANDARD In deciding a Rule 12(c) motion for judgment on the pleadings, a Court may consider only the pleadings—in this case, the Complaint and Answer. See Fed. R. Civ. P. 12(c). A motion for judgment on the pleadings under Rule 12(c) is governed by the same standards as a motion to dismiss under Rule 12(b)(6). The main difference between them is that a motion for judgment on the also pleadings is made after an answer and that answer may be pleadings considered under in Rule deciding 12(c) is the motion. appropriate Judgment when there ^ Terex Financial was dismissed from this case on December 12, 2016. 28. on are the no Dkt. No. material facts in dispute and the moving party is entitled to judgment as a matter of law. Merqens v. 1114, 1116-17 (llth Cir. 1999). A district court must accept as true the facts reasonable as set inferences forth in the in the Dreyfoos, 166 F.3d complaint plaintiff's and favor. Scott, 610 F.3d 701, 705 (llth Cir. 2010). draw all Randall v. Although a complaint need not contain detailed factual allegations, it must contain sufficient factual material ^'to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 54 4, 555 (2007). minimum, a either direct material At a or elements inferential necessary viable legal theory." Inc., 500 F.3d complaint should allegations to sustain ^^contain respecting a recovery all under the some Fin. Sec. Assurance, Inc. v. Stephens, 1276, 1282-83 (llth Cir. 2007) (per curiam) (quoting Roe v. Aware Woman Ctr. for Choice, Inc., 253 F.3d 678, 683 (llth Cir. 2001)). DISCUSSION Defendant seeks inducement claim. dismissal Specifically, of the Plaintiffs' Defendant relies on economic loss rule under O.C.G.A. § 51-1-11. "if the tort results itself the consequence from of a the violation contract, the fraudulent Georgia's Under Georgia law, of a duty which is right of action is confined to the parties and those in privity to that contract." O.C.G.A. § 51-1-11. However, Georgia courts and federal courts in this jurisdiction have repeatedly recognized an exception to the economic loss rule for fraudulent inducement claims. Holloman v. D.R. Horton, Inc., 524 S.E.2d 790, 797 (Ga. Ct. App. 1999) {''The economic loss rule is inapplicable in the presence of passive concealment or fraud."); Manhattan Constr. Co. v. McArthur Elec., Inc., No. 1:06-CV-1512, 2007 WL 295535, at *11- 12 (N.D. Ga. conversion Jan. claim 30, 2007) under the (denying a motion "misrepresentation to dismiss exception" a to Georgia's economic loss rule where the complaint alleged that defendant "willfully and wrongfully violated [plaintiff's] statutory rights"); see also Rakip v. Paradise Awnings Corp., 514 F. App'x 917, 921 (11th Cir. 2013) (finding that Florida courts have consistently held that the Florida economic loss rule does not bar a claim for civil theft or conversion). Defendant appears to acknowledge this exception. 37 pp. 1-2. Dkt. No. However, Defendant points to a number of cases that indicate that the economic loss rule may still be applicable when a plaintiff makes a fraudulent inducement claim based upon the same conduct and asserting the same damages as a breach of contract/warranty claim. For instance, the Georgia Supreme Court has explained that the law of warranties, rather than tort law, is the disappointed properly. appropriate expectations mechanism when a to litigate product a fails purchaser's to perform Vulcan Mater. Co., Inc. v. Driltech, Inc., 306 S.E.2d 253, 256-57 (Ga. 1983). Indeed, some courts have applied the economic loss rule when a plaintiff asserts that a tort occurred based on the same conduct as the plaintiff's breach of contract claim. Foxworthy, Inc. v. CMG Life Servs., Inc., No. 1:11-CV- 2682, 2012 WL 1269127 (N.D. Ga. Apr. 16, 2012). In Foxworthy, the plaintiff alleged negligent misrepresentation and breach of contract based upon an alleged failure to comply with a specific provision in the agreement. since the failure negligent to live up ^d. at *3. misrepresentation to terms economic loss rule applied. promised 1^. The court found that claim in was the based on agreement, a the Therefore, the court dismissed all tort claims based on the breach of the agreement. Id. Defendant asserts that the holding in Foxworthy indicates that Plaintiffs' fraud claims are essentially the same as their breach of contract claims, just repainted with the brush of tort law, and therefore the economic loss rule applies. 37 pp. 2-3. This is not so. Dkt. No. No. It is certainly arguable that Plaintiffs' fraud claim must be dismissed to the extent it ""is not breach independent of [their] Foxworthy, 2012 WL 1269127, at *3. of contract claim." But Plaintiffs sufficiently allege conduct which is independent from that associated with their breach of contract claim. Defendant seems to focus on the argument that any inducement to enter the contract for the wood chippers is barred by the economic loss rule because Plaintiffs also sue for breach of those very contracts. This may well be, but this is not what Plaintiffs allege. Plaintiffs' breach claim asserts that they were sold defective wood chippers, while their fraudulent inducement claim is based on later assertions that defective chippers. Dkt. No. 15 that the damages Plaintiffs' are entirely fraudulent Defendant would fix the 41-48. Indeed, it is possible different inducement claim as is well. such. upon based As post- contractual conduct that may reveal independent damages, rather than pre-contractual essentially constitutes the same action as their breach of contract claim. Therefore, the economic loss rule conduct does that not apply to this action, and Defendant's motion will be denied. CONCLUSION For the d/b/a Terex reasons set forth above. Environmental Defendant Terex Equipment's Motion USA, LLC for Partial Judgment on the Pleadings {Dkt. No. 33) is hereby DENIED. SO ORDERED, this 16th day of May, 2017. LKA GODBEY WQOD, JUDGE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF GEORGIA

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