Magnus Pacific Corporation v. Advanced Explosives Demolition, Inc

Filing 39

MEMORANDUM DECISION AND ORDER. IT IS HEREBY ORDERED that Defendant's Motion for Judgment on the Pleadings 28 is GRANTED and Plaintiff's strict liability and negligent misrepresentation claims are DISMISSED WITH PREJUDICE. Plaintiff's breach of contract, negligence, and intentional misrepresentation claims remain at issue. Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

MAGNUS PACIFIC CORPORATION, a
California corporation,
Plaintiff,

Case No. 2:13-CV-0060-EJL-CWD
MEMORANDUM DECISION AND
ORDER

ZURICH AMERICAN INSURANCE
COMPANY,
Plaintiff-Intervener,
v.
ADVANCED EXPLOSIVES
DEMOLITION, INC., an Idaho
corporation,
Defendant.

Plaintiff Magnus Pacific Corporation (“Plaintiff” or “Magnus Pacific”) filed
the instant action against Defendant Advanced Explosives Demolition, Inc.
(“Defendant” or “AED”), alleging breach of contract, negligence, strict liability,
intentional misrepresentation and negligent misrepresentation. Pending before the
Court is Defendant’s Motion for Judgment on the Pleadings pursuant to Federal
Rule of Civil Procedure 12(c). (Dkt. 28.) Specifically, Defendant seeks entry of

MEMORANDUM DECISION AND ORDER - 1

judgment in favor of AED on Plaintiff’s strict liability and negligent
misrepresentation claims.
Having fully reviewed the record, the Court finds that the facts and legal
arguments are adequately presented in the briefs. Accordingly, in the interest of
avoiding further delay, and because the Court conclusively finds that the decisional
process would not be significantly aided by oral argument, this matter shall be
decided on the record before this Court without oral argument. For the reasons set
forth below, the Court grants Defendant’s Motion for Judgment on the Pleadings.
BACKGROUND1
Plaintiff is a remediation and geotechnical contractor serving private and
public sector clients with a full array of construction capabilities. Defendant is an
explosives demolition contractor with demolition and implosion experience. In
February of 2012, Plaintiff contacted AED regarding potential use of AED’s
services to demolish two buildings as part of an ongoing project at the Boise White
Paper (“BWP”) plant in St. Helens, OR. In March 2012, AED gave a PowerPoint
presentation to Plaintiff and BWP outlining AED’s capabilities and prior projects.
During this presentation, AED highlighted its experience with imploding buildings

1

The following facts are taken from Plaintiff’s complaint (Dkt. 1), and must be accepted
as true for the purposes of deciding AED’s motion. Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009).

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within mill facilities, including implosions conducted close to existing facilities,
with no damage to surrounding operations. Plaintiff and BWP were primarily
concerned with the proximity of certain structures to the buildings to be imploded.
AED assuaged this concern with several specific examples of implosions it had
completed that were in close proximity to other structures. AED recommended
implosion as the best and safest option for demolition of the two buildings.
Plaintiff thereafter decided to utilize AED for the implosion project, and the
parties executed a contract for implosion of one of the two buildings (“R3”), on
April 20, 2012. On August 14, 2012, R3 was imploded. Following the implosion,
personnel for AED, Magnus Pacific and BWP walked the site to determine if any
surrounding structures had suffered damage as a result of the implosion. During
the walkthrough, it became apparent that active facilities and structures
surrounding R3 had suffered extensive damage. After AED denied responsibility
for Magnus Pacific’s damages and failed to provide any clean-up help or other
remedy for the unsuccessful implosion, Magnus Pacific filed the instant lawsuit
against AED for breach of contract, negligence, strict liability, intentional
misrepresentation, and negligent misrepresentation. AED filed the instant Motion
for Judgment on the Pleadings on October 7, 2013.

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STANDARD OF REVIEW
Motions for judgment on the pleadings are governed by Federal Rule of
Civil Procedure 12(c). The principal difference between motions filed pursuant to
Federal Rule;3383;3384;3383;3384 of Civil Procedure 12(b) and
Rul;3387;3388;3387;3388e 12(c) is the time of filing. Dworkin v. Hustler
Magazine Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). A party may move for a
judgment on the pleadings at any point after the pleadings close but early enough
not to delay trial. Fed. R. Civ. P. 12(c). “Because the motions are functionally
identical, the same standard of review applicable to a Rule 12(b) motion applies to
its Rule 12(c) analog.” Dworkin, 867 F.2d at 1192.
A motion pursuant to Rule 12(b)(6) or Rule 12(c) challenges the legal
sufficiency of the claims stated in the complaint. Conservation Force v. Salazar,
646 F.3d 1240, 1242 (9th Cir. 2011). To sufficiently state a claim to relief and
survive such motion, the pleading “does not need detailed factual allegations,”
however, the “[f]actual allegations must be enough to raise a right to relief above
the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Mere “labels and conclusions” or a “formulaic recitation of the elements of a cause
of action will not do[.]” Id. (citations omitted). Rather, there must be “enough
facts to state a claim to relief that is plausible on its face.” Id. at 570. A claim has
MEMORANDUM DECISION AND ORDER - 4

facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct
alleged. Id. at 556. The plausibility standard is not akin to a “probability
requirement,” but does require more than a sheer possibility that a defendant acted
unlawfully. Id. Apart from factual insufficiency, a complaint is also subject to
dismissal where it lacks a cognizable legal theory, Balistreri v. Pacifica Police
Dept., 901 F.2d 696, 699 (9th Cir. 1990), or where the allegations on their face
show that relief is barred for a legal reason. Jones v. Bock, 549 U.S. 199, 215
(2007).
ANALYSIS
As an initial matter, Plaintiff concedes the merits of AED’s motion with
respect to its negligent misrepresentation claim, and does not oppose dismissal of
that claim. (Dkt. 32, p. 2.) The Court accordingly dismisses Plaintiff’s negligent
misrepresentation claim and limits further analysis to Plaintiff’s strict liability
claim. AED suggests Plaintiff’s strict liability claim should be dismissed because
Idaho law does not recognize a claim for strict liability for personal services.2
(Dkt. 28-1, p. 6) (citing Hoffman v. Simplot Aviation, Inc., 539 P.2d 584 (Idaho
2

Much of AED’s brief in support of its Motion for Judgment on the Pleadings is devoted
to establishing Idaho substantive law applies to this dispute. (Dkt. 28-1, pp. 2-5.) As
Plaintiff does not contest application of Idaho law, the Court need not conduct a choice of
law analysis and will apply Idaho state law for purposes of the present motion.

MEMORANDUM DECISION AND ORDER - 5

1975)). Magnus Pacific counters that AED has not shown demolition work
constitutes a “personal service” under Hoffman, and suggests the Restatement’s
application of strict liability to those who carry out “abnormally dangerous
activities” is instead applicable. (Dkt. 32, p. 3) (citing Restatement (Second) of
Torts, § 519 (1977)).
The law in Idaho regarding strict liability is found in Idaho Code § 6-1402.
Under this code section, the term “product seller” means:
[A]ny person or entity that is engaged in the business of selling products,
whether the sale is for resale, or for use or consumption. The term includes
a manufacturer, wholesaler, distributor, or retailer of the relevant product.
The term also includes a party who is in the business of leasing or bailing
such products.
I.C. § 6-1402.
Pursuant to Idaho Code § 6-1402(1)(a), the term ‘product seller’ does not include:
A provider of professional services who utilizes or sells products within the
legally authorized scope of its professional practice. A nonprofessional
provider of services is not included unless the sale or use of a product is the
principal part of the transaction, and the essence of the relationship between
the seller and purchaser is not the furnishing of judgment, skill, or services.
I.C. § 6-1402(1)(a).
“Product” is defined under this section as, “any object possessing intrinsic value,
capable of delivery either as an assembled whole or as a component part or parts,
and produced for introduction into trade or commerce.” I.C. § 6-1402(3).

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Magnus Pacific does not allege, nor even suggest in its Response to
Defendant’s Motion for Judgment on the Pleadings, that AED sold, manufactured
or distributed any type of product. The complaint instead alleges that AED
provided demolition services to Magnus Pacific. As the Court held in Britton v.
Dallas Airmotive Inc., 2010 WL 797177, at *17 (D. Idaho 2010), “it is beyond
reasonable dispute that, under Idaho law, the rule of strict liability does not extend
beyond sellers of products to sellers of services.” (citing Hoffman v. Simplot
Aviation, Inc., 539 P.2d 584 (1975)).
In Hoffman, the Idaho Supreme Court reaffirmed that Idaho has adopted the
rule of strict liability in tort as set forth in the Restatement (Second) of Torts, §
402(A) (1965). This section “deals specifically and only with the sale of a
product.” Hoffman, 539 P.2d at 587.3 Idaho courts have not extended the rule of
3

Plaintiff also attempts to distinguish Hoffman because the court there noted Idaho has
not adopted strict liability in tort “absent fault” in the context of strict liability, whereas
Plaintiff contends AED is at fault for the extensive damage that resulted from AED’s
defective blasting. (Dkt. 32, p. 4) (quoting Hoffman, 539 P.2d at 587, “[n]either this court
nor, with one exception, any other court has adopted strict liability in tort absent fault in
the context of personal services.”) However, as AED notes, the Hoffman court’s “absent
fault” reference was simply recognition that under the doctrine of strict liability, liability
is imposed even where a defendant has exercised utmost care and is without fault. (Dkt.
34, p. 2.) Plaintiff’s claim that AED was at fault is not applicable to its strict liability
claim; requiring Plaintiff to prove fault is analytically the same thing as requiring Plaintiff
to prove negligence. “The baseline common law regime of tort liability is negligence.
When it is a workable regime, because the hazards of an activity can be avoided by being
careful (which is to say, nonnegligent), there is no need to switch to strict liability.”
Indiana Harbor Belt Railroad Co. v. American Cyanamid Co., 916 F.2d 1174, 1177 (7th
Cir. 1990).

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strict liability to providers of services. Id.; see also Steiner Corp. v. American
District Telegraph, 683 P.2d 435, 438 (Idaho 1984) (“because this contract
involves a contract for services, no cause of action can be maintained based on
strict liability.”) Magnus Pacific’s claim that AED has not shown that Plaintiff’s
demolition work constitutes a “personal” service is thus unavailing. (Dkt. 32, p.
2.) AED provided demolition services to Magnus Pacific but did not manufacture,
sell or distribute any product. As such, a claim for strict liability against AED is
not available under Idaho law.
Magnus Pacific argues the Restatement “very specifically does apply strict
liability to those who carry on ‘abnormally dangerous activities.’” (Dkt. 32, p. 3)
(citing Restatement (Second) of Torts, § 519 (1977)). However, Magnus Pacific
does not cite, and the Court could not locate, any Idaho case adopting § 519 of the
Restatement as law. Moreover, even if the Court assumed Idaho would adopt §
519, Magnus Pacific fails to allege sufficient facts to establish AED’s demolition
services constitute an “abnormally dangerous activity.” Notably, § 520 of the
Restatement of Torts provides six factors to consider when determining whether an
activity is abnormally dangerous, including:
(a)

existence of a high degree of risk of some harm to the person, land or
chattels of others;
(b) likelihood that the harm that results from it will be great;
(c) inability to eliminate the risk by the exercise of reasonable care;
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(d)
(e)

extent to which the activity is not a matter of common usage;
inappropriateness of the activity to the place where it is carried on;
and
(f)
extent to which its value to the community is outweighed by its
dangerous attributes.
Restatement (Second) of Torts, § 520 (1977).
Magnus Pacific fails to adequately allege AED’s conduct satisfied any of the six
factors indicative of an “abnormally dangerous activity” under § 520. As such,
even if Idaho had adopted § 520, Magnus Pacific’s complaint must be dismissed
because it fails to provide non-conclusory factual content to plausibly suggest it is
entitled to relief. Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009).
Finally, Magnus Pacific suggests AED conceded the strict liability nature of
its business activities in its contract with Magnus Pacific and cannot now argue
that strict liability does not apply. (Dkt. 32, pp. 3-4.) Specifically, the demolition
services contract between Magnus Pacific and AED stated “[i]n consideration of
the strict liability nature of many of AED’s operations, the parties hereto agree that
this agreement shall be governed by and interpreted in accordance with laws of
Kootenai County, ID[.]” (Dkt. 1, p. 14.) AED did not concede strict liability.
Instead, this provision simply recognizes that strict liability may be imposed for
demolition work in certain jurisdictions. By agreeing to application of Idaho law,
the parties insulated AED from the strict liability that another jurisdiction’s law

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may impose. Magnus Pacific agreed to this choice of law provision, and does not
contest application of Idaho law to its strict liability claim. Because Idaho does not
recognize strict liability for providers of services absent a relevant product,
Magnus Pacific cannot maintain a cause of action against AED based on strict
liability. Steiner Corp. v. American District Telegraph, 683 P.2d 435, 438 (Idaho
1984).
ORDER
IT IS HEREBY ORDERED that Defendant’s Motion for Judgment on the
Pleadings (Dkt. 28) is GRANTED and Plaintiff’s strict liability and negligent
misrepresentation claims are DISMISSED WITH PREJUDICE.
Plaintiff’s breach of contract, negligence, and intentional misrepresentation
claims remain at issue.
DATED: May 5, 2014

Honorable Edward J. Lodge
U. S. District Judge

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