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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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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