Arbon Valley Solar LLC et al v. Thomas & Betts Corporation

Filing 20

MEMORANDUM DECISION AND ORDER. NOW, THEREFORE, it is hereby ORDERED: Defendant's Initial Motion to Dismiss 5 was rendered moot by Plaintiffs' Amended Complaint and is therefore DENIED as MOOT. Defendant's subsequent Motion to Dismis s 11 is GRANTED. Plaintiffs' Amended Complaint is Dismissed without prejudice. If Plaintiffs wish to file an Amended Complaint they shall seek leave to do so within 30 days of the date of this order, and shall submit a copy of the Second Amended Complaint with such filing. 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

ARBON VALLEY SOLAR, LLC.,
INTERCONNECT SOLAR
DEVELOPMENT, LLC., and JOHN
HESS CONSTRUCTIONS, INC.,
Plaintiffs,

Case No. 1:16-CV-0070-EJL-REB
MEMORANDUM DECISION AND
ORDER

v.
THOMAS & BETTS CORPORATION,
a Tennessee Corporation, and John and
Jane Does I through, whose true
identities are unknown,
Defendants.

This matter is before the Court on a Motion to Dismiss (Dkt. 11) filed by
Defendant Thomas & Betts Corporation. Having fully reviewed the record, the
Court finds that the facts and legal arguments are adequately presented in the briefs
and record. Accordingly, in the interest of avoiding further delay, and because the
Court conclusively finds 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.

MEMORANDUM DECISION AND ORDER - 1

I.

BACKGROUND1

Plaintiffs Arbon Valley Solar, LLC (“Arbon Valley Solar”) and Interconnect
Solar Development LLC (“Interconnect Solar”) (referred to collectively hereinafter
as “Plaintiffs”) bring claims for breach of contract and breach of the implied
covenant of good faith and fair dealing, negligence, breach of assumed duty, and
negligent hiring, supervision and training, against Defendant Thomas & Betts
Corporation (“Thomas & Betts” or “Defendant”). Plaintiffs’ claims arise out of the
construction of a solar power facility in Idaho (“Solar Project”). Arbon Valley
Solar is an affiliate of Cranney Farms, a business enterprise engaged in agricultural
operations carried out in the Arbon Valley, Idaho.
On or about December 3, 2012, Arbon Valley Solar entered into an
agreement (“Construction Agreement”) with Interconnect Solar, under which
Interconnect Solar agreed to provide all labor, materials, equipment and services
necessary to complete the Solar Project on behalf of Arbon Valley Solar. The
Solar Project was designed to charge five irrigation pivots and two irrigation wells,
which would then serve the agricultural operations of Cranney Farms by way of a
lease agreement between it and Arbon Valley Solar. Before entering into the
1

Unless otherwise noted, all facts are taken from Plaintiffs’ Amended Complaint
(Dkt. 10). The Court must accept as true all of the factual allegations contained in a
complaint when deciding a motion to dismiss. Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009).

MEMORANDUM DECISION AND ORDER - 2

Construction Agreement, Interconnect Solar contacted Thomas & Betts to seek
comment and feedback on the viability of the Construction Agreement, as well as
general contract oversight and project management with respect to the Solar
Project.
In contacting Thomas & Betts, Interconnect Solar primarily communicated
and dealt with Sammy Germany, Thomas &Betts’, “Market Development Manager
of Renewable Energy and Power Generation for the United States and Latin
America.” Mr. Germany’s business card identified him with the aforementioned
title, and also stated Mr. Germany held a PhD/MBA. Mr. Germany reviewed the
Construction Agreement between Arbon Valley Solar and Interconnect Solar.
After reviewing and confirming the viability of the Construction Agreement, Mr.
Germany agreed to provide contractual oversight, project management, and
engineer procurement for the Solar Project.
In consideration of such services, Plaintiffs tendered $50,000.00 in care of
Mr. Germany, who represented the sum would be deposited into an escrow account
maintained by Sunjoy Power, LLC (“Sunjoy Power”), a subsidiary of Thomas &
Betts. Thereafter, Mr. Germany began providing contractual oversight and project
management for the Solar Project. Mr. Germany procured engineering services by
retaining Eric R. Hepburn, a professional engineer with Hepburn and Sons, LLC
(“Hepburn and Sons”), for the purpose of completing the necessary engineering
MEMORANDUM DECISION AND ORDER - 3

plans and drawings for the Solar Project. Mr. Germany paid an invoice amount of
$7,500.00 to Hepburn and Sons from the $50,000.00 tendered by Plaintiffs to
Sunjoy Power in care of Mr. Germany.
On March 5, 2013, while conducting contractual oversight, project
management, and other duties, Mr. Germany executed an agreement
(“Confidentiality Agreement”) with Dynapower Company LLC (“Dynapower”) on
behalf of Sunjoy Power. Plaintiffs suggest the Confidentiality Agreement was
entered into for the purpose of facilitating the completion of the Solar Project.2 On
March 21, 2013, based upon Mr. Germany’s review and recommendation,
Interconnect Solar purchased four 100 kilowatt Micro Power System Inverters, for
a total purchase price of $240,000.00, from Dynapower. The products were
delivered in July or August of 2013. Interconnect Solar also purchased

2

Plaintiffs referenced the Confidentiality Agreement in their Amended Complaint
but did not attach the Confidentiality Agreement. (Dkt. 10, ¶¶ 28-30.) Thomas & Betts
submitted a copy of the Confidentiality Agreement in conjunction with its Reply brief.
(Dkt. 19-1.) “In deciding a motion to dismiss for failure to state a claim, the court
generally should not consider materials outside the complaint and pleadings. However,
the court may consider attachments to the complaint and any document referred to in
(even if not originally appended to) the complaint, when the authenticity of such a
document is not in question.” Brown v. Miller Brewing Co., 2014 WL 201699, *3
(Idaho, 2014) (citing Cooper v. Pickett, 137 F.3d 616, 622-23 (9th Cir. 1997)); see also
Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (the court may examine documents
referred to in a complaint, although not attached thereto, without transferring a motion to
dismiss into a motion for summary judgment.)

MEMORANDUM DECISION AND ORDER - 4

$100,000.00 of equipment and other products for the Solar Project from another
company, Wesco, based on the recommendation of Mr. Germany.
In April 2013, Randy Vigos, another employee of Thomas & Betts, traveled
to Boise, Idaho, to meet with Interconnect Solar, Mr. Germany, and others.
Plaintiffs suggest the meeting with Mr. Vigos concerned Defendant’s project
management, contractual oversight and engineer procurement duties in relation to
the Solar Project which were being performed by Mr. Germany. During the
aforementioned meeting, Mr. Vigos introduced himself as a manager for Thomas
& Betts and presented a business card to Interconnect Solar which identified him
as “Product Specification Specialist Pacific N.W. Region Electrical Division
Masters Award.” Both Mr. Vigos and Mr. Germany stated Mr. Vigos was the
representative of Thomas & Betts who would be able to assist with the Solar
Project in the event Mr. Germany was not available.
Following the meeting in Boise, Mr. Vigos transmitted an e-mail through his
account with Thomas & Betts to thank Bill Piske of Interconnect Solar for the
meeting and opportunity. Plaintiffs note the e-mail was also sent to Thomas &
Betts’ top level executives, and contend the e-mail thus ratified the authority
Thomas & Betts delegated to Mr. Germany to provide project management,
construction oversight, and engineer procurement in relation to the Solar Project.

MEMORANDUM DECISION AND ORDER - 5

In or about July 2013, Interconnect Solar suspected that Mr. Germany had
improperly used the professional engineer stamp of Richard D. Hepburn with
respect to the Solar Project. Interconnect Solar confronted Mr. Germany about the
authenticity of the engineering drawings and was assured by Mr. Germany that all
matters were “above board.” (Dkt. 10, ¶ 39.) However, on or about December 11,
2013, an engineer with Dynapower performed an initial assessment of the Solar
Project on behalf of Plaintiffs and concluded many deficiencies existed which
rendered the Solar Project incompatible with the operations of Arbon Valley Solar
and Cranney Farms. Moreover, on January 13, 2014, an attorney for Hepburn and
Sons sent a demand letter to Mr. Germany stating: “Our investigation demonstrates
that you and [SunJoy Power] have purposefully and with intent to deceive affixed
Mr. Hepburn’s professional engineer stamp issued by the Commonwealth of
Massachusetts to multiple drawings which you submitted to [Interconnect Solar]
for use on the [Solar Project].” (Dkt. 10, Ex. C.)
Plaintiffs thereafter learned that assembling, building and fabricating the
Solar Project in reliance upon the faulty engineering plans procured by Mr.
Germany rendered all of the labor, material, equipment and services involved in
the Solar Project incompatible and obsolete. Plaintiffs maintain they have suffered
in excess of $5,000,000.00 in losses as a direct and proximate cause of Defendant’s
actions.
MEMORANDUM DECISION AND ORDER - 6

Plaintiffs filed their Complaint and Demand for Jury Trial in Oneida County,
Idaho, district court on January 13, 2016. (Dkt. 1-3.) On February 12, 2016,
Thomas & Betts removed the matter to this Court on the basis of diversity
jurisdiction. (Dkt. 1.) On March 16, 2016, Thomas & Betts moved to dismiss
Plaintiffs’ Complaint and Demand for Jury Trial pursuant to Federal Rule of Civil
Procedure 12(b)(6). (Dkt. 5.) Plaintiffs responded by filing an Amended
Complaint on April 6, 2016.3 (Dkt. 10.) Thomas & Betts then filed the instant
Motion to Dismiss the Amended Complaint (Dkt. 11.) Although both the initial
and Amended Complaint included John Hess Construction, Inc. as a plaintiff, the
parties have since stipulated to, and the Court has approved, dismissal of the claims
of John Hess Construction, Inc. (Dkt. 16; Dkt. 17.)
II.

STANDARD OF REVIEW

A motion to dismiss for failure to state a claim 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 a 12(b)(6) 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,
3

Plaintiffs’ Amended Complaint renders Defendant’s initial Motion to Dismiss
(Dkt. 5) moot.

MEMORANDUM DECISION AND ORDER - 7

555 (2007). Mere “labels and conclusions” or a “formulaic recitation of the
elements of a cause of action will not do.” Id. Rather, there must be “enough facts
to state a claim to relief that is plausible on its face.” Id. at 570. A claim has 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.
In Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), the Supreme Court identified
two “working principles” that underlie Twombly. First, although a court must
accept as true all factual allegations in a complaint when ruling on a motion to
dismiss, the court need not accept legal conclusions as true. Id. “Rule 8 marks a
notable and generous departure from the hyper-technical, code-pleading regime of
a prior era, but it does not unlock the doors of discovery for a plaintiff armed with
nothing more than conclusions.” Id. at 678-79. Second, only a complaint that
states a plausible claim for relief will survive a motion to dismiss. Id. at 679.
“Determining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Id.
In light of Twombly and Iqbal, the Ninth Circuit has summarized the
governing standard as follows: “In sum, for a complaint to survive a motion to
MEMORANDUM DECISION AND ORDER - 8

dismiss, the nonconclusory factual content, and reasonable inferences from that
content, must be plausibly suggestive of a claim entitling the plaintiff to relief.”
Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009). Apart from factual
insufficiency, a complaint is also subject to dismissal under Rule 12(b)(6) 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).
III.

ANALYSIS

Thomas & Betts argues the claims asserted in Plaintiffs’ Amended
Complaint should be dismissed because Plaintiffs fail to allege any relationship
between the parties that would give rise to any contractual obligation or other
duties that would support Plaintiffs’ claims. Thomas & Betts argues Plaintiffs fail
to allege any facts that indicate Mr. Germany had express, implied or apparent
authority that would allow him to provide construction oversight services on its
behalf. In the absence of any allegations of an agency relationship between Mr.
Germany and Thomas & Betts, Thomas & Betts suggests Plaintiffs’ negligence
claims must also be dismissed. Thomas & Betts maintains Plaintiffs have not
alleged it had any duty to Plaintiffs, and have not alleged any facts to show Mr.
Germany’s actions were reasonably foreseeable to Thomas & Betts. Thomas &

MEMORANDUM DECISION AND ORDER - 9

Betts also seeks dismissal of Plaintiffs’ negligence claims on the basis of the
economic loss rule.
A. Contract Claims
Plaintiffs’ first claim is for breach of contract and breach of the implied
covenant of good faith and fair dealing. The elements of a claim for breach of
contract are: (1) the existence of a contract; (2) breach; (3) causation; and (4)
damages. Mosell Equities, LLC v. Berryhill & Co., 297 P.3d 232, 241 (Idaho
2013). The implied covenant of good faith and fair dealing “is a covenant implied
by law in the parties’ contract. No covenant will be implied which is contrary to
the terms of the contract negotiated and executed by the parties.” Idaho First Nat.
Bank v. Bliss Valley Foods, Inc., 824 P.2d 841, 863 (Idaho 1991) (citations
omitted). A violation of the covenant occurs only when either party violates,
nullifies or significantly impairs any benefit of the contract. Sorensen v. Comm
Tek, Inc., 799 P.2d 70, 75 (Idaho 1990). Plaintiffs allege a valid and binding
contract was entered into by and between Plaintiffs and Thomas & Betts, that
“Defendant materially breached the contract in several respects,” and that
“Defendant… likewise breached the covenant of good faith and fair dealing
implied in the valid contract entered into by and between the parties.” (Dkt. 10, ¶
49.) Plaintiffs do not specify whether the agreement Defendant allegedly entered
into (through Mr. Germany) was written or oral.
MEMORANDUM DECISION AND ORDER - 10

In its Motion to Dismiss, Thomas & Betts argues Plaintiffs’ Amended
Complaint fails to allege either the existence of a contract between Plaintiffs and
Defendant or entry of a contract between Plaintiffs and Defendant’s authorized
agent. Thomas & Betts claims the Amended Complaint is focused entirely on the
actions of a non-party, Mr. Germany. Thomas & Betts suggests Mr. Germany
acted “largely unilaterally and in an area in which [Defendant] does not do
business,” and that Plaintiffs have not alleged facts to establish Mr. Germany had
the authority of Thomas & Betts when he agreed to provide construction
management services for Plaintiffs. (Dkt. 11-1, p. 2.)
There are three separate types of agency, any one of which is sufficient to
bind the principal to a contract entered into with a third party, provided the agent
has acted within the course and scope of the authority granted by the principal.4
Clark v. Gneiting, 501 P.2d 278 (Idaho 1972); American West Enter., Inc. v. CNH,
LLC, 316 P.3d 662, 669 (Idaho 2013). The three types of agency are: (1) express
authority (a form of agency commonly referred to as actual authority); (2) implied
authority (also referred to as actual authority); and (3) apparent authority. Id.; see
also Hieb v. Minn. Farmers Union, 672 P.2d 572, 575 (Idaho 1983).
4

However, a principal “may be bound by even unauthorized acts of his agent if
subsequent to such acts he voluntarily and knowingly ratifies what has been done even
though the principal does not actually receive the full consideration to which he is
entitled under the terms of the contract.” Clark, 501 P.2d at 280.

MEMORANDUM DECISION AND ORDER - 11

“Express authority” refers to the authority a principal has explicitly granted
the agent to act in the principal’s name. American West, 316 P.3d at 669.
“Implied authority refers to that authority which is necessary, usual, and proper to
accomplish or perform the express authority delegated to the agent by the
principal.” Id. (quoting Bailey v. Ness, 708 P.2d 900, 902-03 (Idaho 1985)).
Finally, apparent authority “is created when the principal voluntarily places an
agent in such a position that a person of ordinary prudence, conversant with the
business usages and the nature of a particular business, is justified in believing that
the agent is acting pursuant to existing authority.” Id. Although the existence of
an agency relationship is a question of fact, the party claiming an agency
relationship existed must still adequately plead the grounds upon which an
allegation of authority rests. Id. at 670 (finding plaintiff did not raise facts
sufficient to demonstrate an agency relationship on summary judgment); see also
Moto Tech, LLC v. KTM North America, Inc., 2014 WL 4793904, at *5 (D. Idaho
2014); Humphries v. Becker, 366 P.3d 1088, 1096 (Idaho 2016).
Plaintiffs claim they have adequately plead factual allegations to establish
Mr. Germany had both actual and apparent authority to bind his employer, Thomas
& Betts, to provide contractual oversight, project management, and engineer
procurement in relation to the Solar Project. Plaintiffs first suggest Mr. Germany
had actual and apparent authority to so bind Defendant because Mr. Germany was
MEMORANDUM DECISION AND ORDER - 12

a management level employee, as established by his business card identifying Mr.
Germany as Thomas & Betts’ “Market Development Manager of Renewable
Energy and Power General for the United States and Latin America.” (Dkt. 14, p.
13.)
Plaintiffs contend Mr. Germany’s business card “disclosed and
communicated to third-parties who received it that Mr. Germany operated as [a]
high level manager for [Defendant] with the management level authority over
business operations conducted in the United States and Latin America and
advertised his apparent authority to bind Defendant Thomas & Betts Corporation
to contracts entered into with third-parties.” (Dkt. 10, ¶ 18.) The Court disagrees.
Mr. Germany’s title provides no indication that he was a contracting officer for
Thomas & Betts, and instead simply illustrates Mr. Germany was an employee of
the company. An employee can have the title of “Manager” without having
contracting authority, just as an employee without this title may have authority to
contract with third parties on behalf of a company. Moreover, there are no
allegations of any acts or statements by Thomas & Betts indicating that it was
involved in any type of construction oversight management as part of its business.
In the absence of any allegations connecting Defendant’s business with the
services Mr. Germany agreed to provide, the Court cannot find Mr. Germany had

MEMORANDUM DECISION AND ORDER - 13

actual or apparent authority to bind Thomas & Betts to a construction management
contract.
Plaintiffs also suggest the fact Thomas & Betts “identified Mr. Germany on
its published website(s),” expressed the authority Defendant delegated to Mr.
Germany. (Dkt. 10, ¶ 23.) Plaintiffs do not specify how Mr. Germany was
identified on Thomas & Betts’ websites. That Mr. Germany was somehow
referenced on his company’s website does not provide any information regarding
Mr. Germany’s authority to bind Thomas & Betts to contracts with third parties.
Plaintiffs next claim Mr. Germany had actual or apparent authority because
Thomas & Betts issued Mr. Germany company-owned equipment and tools, such
as computers, email addresses, and telephones, which were used by Mr. Germany
in conjunction with the Solar Project. (Dkt. 14, p. 14.) As Thomas & Betts notes,
even the lowest level employee of a modern corporation could have access to a
company computer, telephone and email address. (Dkt. 15, p. 7.) The fact Mr.
Germany used Defendant’s equipment and technology does not indicate he had any
authority to bind Thomas & Betts to contracts with third parties.
Plaintiffs also suggest Mr. Germany had actual authority because he drafted
and signed a Confidentiality Agreement on behalf of Defendant which facilitated
the exchange of trade secrets and other proprietary information in a protected
manner by and between other parties involved in the Solar Project. (Dkt. 14, p.
MEMORANDUM DECISION AND ORDER - 14

14.) However, the Confidentiality Agreement at issue was between Sunjoy Power,
Mr. Germany’s affiliate, and Dynapower. (Dkt. 19-1, p. 2.) The Confidentiality
Agreement does not establish that Mr. Germany had authority to bind Thomas &
Betts because the contracting party was Sunjoy Power, not Thomas & Betts.
Plaintiffs do not provide any detail as to the purported relationship between Sunjoy
Power and Thomas & Betts. The Court cannot infer Thomas & Betts was aware
of, or authorized, the Confidentiality Agreement in the absence of such
information.
Plaintiffs also claim Mr. Germany had agency authority because Plaintiffs
tendered $50,000.00 to Thomas & Betts “in care of Sammy Germany who
represented that the monies would be deposited into an escrow account maintained
by Sunjoy Power[.]” (Dkt. 10, ¶ 25.) The fact Plaintiffs tendered payment directly
to Mr. Germany, to be held in escrow by a company other than Thomas & Betts,
for services for which there is no indication Thomas & Betts provided, actually
undermines Plaintiffs’ agency theory.
Plaintiffs next contend Mr. Germany had actual authority because Thomas &
Betts permitted Mr. Germany and Mr. Vigos to travel to Boise to meet and discuss
Defendant’s duties in relation to the Solar Project. (Dkt. 14, p. 14.) That Thomas
& Betts allowed two of its employees to travel to Boise to meet with Interconnect
Solar does not establish that Mr. Germany had authority to bind Thomas & Betts to
MEMORANDUM DECISION AND ORDER - 15

a construction management contract. Thomas & Betts manufactures electrical
connectors. Thomas & Betts could send Mr. Germany and Mr. Vigos, a “Product
Specialist,” to Boise to discuss providing electrical connectors to Interconnect
Solar without any knowledge of the construction management contract. Notably,
neither Mr. Germany nor Mr. Vigos’s titles mention construction oversight. As
Thomas & Betts emphasizes, Plaintiffs do not explain how individuals holding
titles which do not mention construction oversight, who work for a company that
does not provide construction oversight, were somehow empowered to bind
Thomas & Betts to a construction oversight contract. (Dkt. 15, p. 7.)
Plaintiffs also suggest Thomas & Betts ratified Mr. Germany’s authority
because, after the aforementioned meeting in Boise, Mr. Vigos sent an email
through his account with Thomas & Betts thanking Mr. Piske of Interconnect Solar
for the opportunity and to meet him and Mr. Germany to discuss the Solar Project.
(Dkt. 14, p. 14.) Defendant’s “top level executives” were copied on the email.
(Id.) The entirety of Mr. Vigos’s e-mail states:
Thanks again for the opportunity to meet with you and Sammy in Boise to
discuss the project you are building over in Idaho. Per our discussion of the
applications I have reviewed the drawings and put together a suggested list
of material for you and Sammy to review.
I selected components for the ground grid & ground ring in compression and
mechanical, flexible braid (check sizing), lay in and compression lugs, PMA
Conduit and mounting clamps. I used the U L Listed conduit that was the
most recommended by PMA for solar applications.
I would suggest a meeting with Holly Lane our Agency Sales Rep in Boise,
and your Wesco Sales Rep to review pricing and availability of these items,
MEMORANDUM DECISION AND ORDER - 16

some may be 3-4 weeks out, so please consider that in your planning
process.
I also have a 14-Ton battery crimp tool that you can borrow for the EZGround compression, and Color-Keyed lugs, you will just need to purchase
the associated Dies needed for the connectors.
Please let me know if I may be of further assistance, and thank you again for
this opportunity.
(Dkt. 19.)5
Like his visit to Boise, Mr. Vigos’s email is consistent with Thomas & Betts
providing electrical connectors to Interconnect Solar in connection with the Solar
Project. The e-mail contains no discussion of construction oversight services.
Defendant’s “top level executives” cannot be said to have ratified a construction
management agreement by receiving Mr. Vigos’s email when the email makes no
mention of such an agreement.
While none of the facts Plaintiffs identify plausibly suggest Mr. Germany
had actual or apparent authority to bind Thomas & Betts to the construction
management contract at issue, perhaps the most glaring deficiency in Plaintiffs’
Amended Complaint is the facts it omits. For instance, Plaintiffs claim
Interconnect Solar “contacted Defendant Thomas & Betts Corporation seeking
comment and feedback on the viability of the Construction Agreement, general
5

Plaintiffs reference the aforementioned e-mail in their Amended Complaint but
did not attach it. (Dkt. 10, ¶ 38.) Defendant submitted a copy of the e-mail with its
Reply. (Dkt. 19.) The Court may consider the e-mail in deciding the Motion to Dismiss
(without converting the Motion to Dismiss into a Motion for Summary Judgment) since
the e-mail is referenced in the Complaint. See supra, text accompanying note 2.

MEMORANDUM DECISION AND ORDER - 17

contract oversight and project management, and engineer procurement, with
respect to the solar power project at issue.” (Dkt. 10, ¶ 15.) Plaintiffs do not
specify why they contacted Thomas & Betts to provide such services, and fail to
provide any detail regarding how they discovered or came into contact with the
company. Plaintiffs also state, “[i]n contacting Defendant Thomas & Betts
Corporation, Plaintiff Interconnect Solar primarily communicated with and dealt
its management level employee and agent Sammy Germany.” (Id., ¶ 16.)
Plaintiffs do not explain how they came into contact with Mr. Germany or why he
was their primary and, with the exception of Mr. Vigos, apparent only contact with
Thomas & Betts. Did Plaintiffs contact Thomas & Betts, request construction
management services, and receive Mr. Germany’s contact information as a result?
Did Plaintiffs learn from others or from their own research that Thomas & Betts
provided construction management services? If so, Plaintiffs claim of agency may
have more weight. The Amended Complaint is strangely silent regarding the
genesis of Plaintiffs’ contact with, and relationship to, both Thomas & Betts and
Mr. Germany.
Finally, while the Court must accept Plaintiffs’ factual allegations as true,
and must find Mr. Germany agreed to provide construction management services
and implied he had the authority to offer such services on behalf of Thomas &
Betts, apparent authority cannot be created by the acts and statements of the agent
MEMORANDUM DECISION AND ORDER - 18

alone. Idaho Title Co. v. Am. States Ins. Co., 531 P.2d 227, 230 (Idaho 1975). As
discussed, Plaintiffs have not identified any acts or statements on behalf of Thomas
& Betts which suggest Mr. Germany had authority to bind it to a construction
management contract. Further, the third party seeking to bind a principle must use
reasonable diligence to ascertain the agent’s authority, and “[r]easonable diligence
encompasses a duty to inquire with the principal about the agent’s authority.”
Podolan v. Idaho Legal Aid Servs., Inc., 854 P.2d 280, 287 (Idaho Ct. App. 1993)
(citation omitted). “If no inquiry is made, the third party is chargeable with
knowing what kind of authority the agent actually had, if any, ‘and the fault cannot
be thrown on the principal who never authorized the act or contract.’” Id. (citation
omitted). Plaintiffs do not allege any facts to show that they used reasonable
diligence to ascertain Mr. Germany’s alleged authority to act for Thomas & Betts.
In light of the significant omissions in the Amended Complaint and failure
to plausibly establish Mr. Germany had actual or apparent authority to bind
Thomas & Betts to the construction management contract, the Court must dismiss
Plaintiffs’ breach of contract and breach of the implied covenant of good faith and
fair dealing claims. Plaintiffs fail to plausibly allege either the existence of a
contract between Plaintiffs and Thomas & Betts, or that Mr. Germany had either
express, apparent or implied authority when he agreed to provide construction
management services on behalf of Thomas & Betts.
MEMORANDUM DECISION AND ORDER - 19

B. Negligence Claims
Plaintiffs bring three negligence-based claims against Thomas & Betts.
Plaintiffs first allege Thomas & Betts negligently breached its duty to exercise
reasonable care and control over the administration of the agreements entered into
by and between the parties. (Dkt. 10, ¶¶ 51-54.) The elements of a negligence
claim are: (1) a duty recognized by law requiring the defendant to conform to a
certain standard of conduct; (2) breach of that duty; (3) a causal connection
between the defendant’s conduct and the plaintiff’s injury; and (4) actual loss or
damage. Johnson v. McPhee, 210 P. 3d 563, 574 (Idaho Ct. App. 2009) (citing
Brooks v. Logan, 903 P.2d 73, 78 (Idaho 1995)).
Thomas & Betts argues Plaintiffs’ negligence claim must be dismissed
because Plaintiffs have not plausibly alleged the existence of a relationship giving
rise to a duty by Thomas & Betts. “Whether a duty exists is a question of law.”
Beers v. Corp. of President of Church of Jesus Christ of Latter-Day Saints, 316
P.3d 92, 97 (Idaho 2013). Plaintiffs’ sole support for the duty allegedly owed by
Thomas & Betts to Plaintiffs is the construction management contract between Mr.
Germany and Plaintiffs. Because Plaintiffs have failed to plausibly allege either
that there was a contract between Thomas & Betts and Plaintiffs, or that Mr.
Germany had the authority to bind Thomas & Betts to construction management
contract he agreed to, Plaintiffs fail to state an essential element of their negligence
MEMORANDUM DECISION AND ORDER - 20

claim. Claim Two of the Amended Complaint fails to adequately allege Thomas &
Betts had a duty to Plaintiffs and is therefore dismissed.
The third claim of the Amended Complaint alleges Breach of an Assumed
Duty. “Even when an affirmative duty generally is not present, a legal duty may
arise if one voluntarily undertakes to perform an act, having no prior duty to do
so.” Id. at 100 (quoting Baccus v. Ameripride Servs., Inc., 179 P.3d 309, 313
(Idaho 2008)). However, liability for an assumed duty can only “come into being
to the extent that there is in fact an undertaking.” Id. (quoting Udy v. Custer
Cnty., 34 P.3d 1069, 1072 (Idaho 2001)).
Plaintiffs suggest Thomas & Betts voluntarily undertook the duty to procure
engineering services for, and to provide contractual oversight of, the Solar Project.
Plaintiffs cite the following facts to establish Thomas & Betts assumed such duty:
 Thomas & Betts through its authorized agent undertook to procure
engineering services by retaining Eric Hepburn, P.E., for the purpose
of completing the necessary engineering plans and drawings for the
solar power project;
 Thomas & Betts through its authorized agent undertook to secure a
Confidentiality Agreement relating to the project in question;

MEMORANDUM DECISION AND ORDER - 21

 Based upon Thomas & Betts’ authorized manager’s review advice and
recommendation, Plaintiff Interconnect Solar purchased four (4) 100
kilowatt Micro Power System Inverters from Dynapower Company;
 Based upon Thomas & Betts’ authorized manager’s review, advice
and recommendation, Plaintiff Interconnect Solar purchased
equipment and other products for the solar power project in question
from [Wesco].
(Dkt. 14, p. 17.)
Each of the aforementioned allegations involve the undertaking of Mr.
Germany. The Amended Complaint does not allege Thomas & Betts was involved
in the construction management contract, assigned it to Mr. Germany, instructed
Mr. Germany to perform, or allowed Mr. Germany—or any other employee—to
enter the contract on its behalf. Because Plaintiffs have not established Mr.
Germany had the authority to take the aforementioned actions on behalf of Thomas
& Betts, Plaintiffs’ breach of an assumed duty claim must be dismissed.
Finally, Plaintiffs allege Thomas & Betts negligently breached its duty to
properly hire, train and supervise its employee Sammy Germany. (Dkt. 10, ¶¶ 6063.) Although Idaho has never explicitly recited the elements of a claim for
negligent hiring or supervision, the Idaho Supreme Court implicitly recognized
such claim was viable in Cook v. Skyline Corp., 13 P.3d 857, 865 (Idaho 2000).
MEMORANDUM DECISION AND ORDER - 22

Neighboring jurisdictions have held an employer may be liable for harm caused by
an incompetent or unfit employee if (1) the employer knew, or in the exercise of
ordinary care, should have known of the employee’s unfitness before the
occurrence; and (2) retaining the employee was a proximate cause of the plaintiff’s
injury. See, e.g., Betty Y. v. Al-Hellou, 988 P.2d 1031, 1033 (Wash. Ct. App.
1999); Crisman v. Pierce Cnty. Fire Protection Dist. No. 21, 60 P.3d 652, 654
(Wash. Ct. App. 2002). In addition, an employer’s duty is limited to only
foreseeable victims. Betty Y., 988 P.2d at 1033.
Here, there are no allegations that Thomas & Betts was engaged in the
business of providing construction management services, that Mr. Germany was
hired to provide such services on behalf of Thomas & Betts, that Thomas & Betts
had reason to know Mr. Germany was not qualified to provide construction
oversight, that Thomas & Betts knew or had reason to know that Mr. Germany was
considering or ever agreed to provide construction management services for
Plaintiffs, that Thomas & Betts had any knowledge that Mr. Germany accepted
$50,000 from Plaintiffs for construction oversight and management, or that
Thomas & Betts should have reasonably foreseen that Mr. Germany would try to
generate income by providing construction management services. In the absence
of such allegations, Plaintiffs fail to state a claim for negligent hiring and
supervision.
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Plaintiffs suggest Mr. Germany’s actions in relation to the Solar Project
were foreseeable to Thomas & Betts because Mr. Vigos copied Thomas & Betts’
high-level employees when he sent Interconnect Solar the email thanking them for
the meeting in Boise. However, as previously discussed, the email in question
contained no mention of construction management services and no indication that
Mr. Germany had agreed to provide such services on Defendant’s behalf.
Plaintiffs also suggest “employees at Wesco and Dynapower had knowledge
of the project in question and knowledge of Thomas & Betts’ involvement
therein.” (Dkt. 14, p. 18.) Plaintiffs do not identify the employees at Wesco or
Dynapower who purportedly had such knowledge, do not provide any detail
regarding the specific knowledge such employees allegedly had, and do not submit
any declarations or other evidence in support of this claim. As such, Plaintiffs’
negligent supervision claim fails to meet the threshold of a plausible claim and
must be dismissed.
C. Idaho Code § 6-1607(2)
Thomas & Betts also seeks dismissal of Plaintiffs’ negligence claims under
Idaho law. Specifically, Idaho Code § 6-1607(2) codifies the common law on
respondeat superior as follows:
There shall be a presumption that an employer is not liable in tort based
upon an employer/employee relationship for any act or omission of a current
employee unless the employee was wholly or partially engaged in the
employer’s business, was on the employer’s premises when the allegedly
MEMORANDUM DECISION AND ORDER - 24

tortious act or omission of the employee occurred, or was otherwise under
the direction or control of the employer when the act or omission occurred.
I.C. § 6-1607(2).
Plaintiffs respond Idaho Code § 6-1607(2) “clearly does not immunize an
employer from the negligent acts of a current employee when the employee was
wholly or partially engaged in the employer’s business, and reasonably appeared to
be engaged in the employer’s business or was otherwise under the direction or
control of the employer when the act or omission occurred.” (Dkt. 14, pp. 17-18.)
As discussed, Plaintiffs have not plausibly alleged Mr. Germany was wholly or
partially engaged in Thomas & Betts’ business when he agreed to provide
construction management services for Plaintiffs. Thomas & Betts does not provide
such services and Plaintiffs have not offered any facts (other than an e-mail which
did not mention construction management) to suggest Thomas & Betts knew Mr.
Germany had agreed to provide construction management. Further, as outlined in
Section III.A, supra, Plaintiffs have not adequately alleged Mr. Germany was
under the direction or control of Thomas & Betts when he provided negligent
construction management services. As currently alleged, Plaintiffs’ negligence
claims must be dismissed under Idaho Code § 6-1607(2).
D. Economic Loss Doctrine
Thomas & Betts also seeks dismissal of Plaintiffs’ negligence claims under
the economic loss rule. Generally, the economic loss rule holds that “a plaintiff
MEMORANDUM DECISION AND ORDER - 25

may not recover in tort where the sole allegation is that the defendant prevented the
plaintiff from gaining a purely economic advantage.” Aardema v. U.S. Dairy Sys.,
Inc., 215 P.3d 505, 510 (Idaho 2009). Because Plaintiffs do not dispute their
damages are purely economic, the economic loss rule applies to this case.
Plaintiffs claim the economic loss doctrine does not bar its negligence claims
because it was in a “special relationship” with Thomas & Betts. (Dkt. 14, p. 19.)
“The special relationship exception to the general rule of non-recovery applies to
‘an extremely limited group of cases’ ‘where the relationship between the parties is
such that it would be equitable to impose a duty on a defendant to protect against
another’s economic interest.’” JH Kelly, LLC v. Tianwei New Energy Holdings
Co., Ltd., 68 F.Supp.3d 1194, 1201 (D. Idaho 2014) (quoting Duffin v. Idaho Crop
Imp. Ass’n, 895 P.2d 1195, 1201 (Idaho 1995)). The Idaho Supreme Court has
found the existence of a special relationship in two situations. “One situation is
where a professional or quasi-professional performs personal services.” Blahd v.
Richard B. Smith, Inc., 108 P.3d 996, 1001 (Idaho 2005). “The other situation
involving a special relationship is where an entity holds itself out to the public as
having expertise regarding a specialized function, and by so doing, knowingly
induces reliance on its performance of that function.” Id.
Plaintiffs do not identify which special relationship exception applies in this
case, and fail to set forth facts to support either form of special relationship.
MEMORANDUM DECISION AND ORDER - 26

Plaintiffs instead suggest, “[a]t this early stage in the proceedings, one or both
exceptions to the economic loss rule” applies. (Dkt. 14, p. 19.) Because the
allegations in the Amended Complaint do not justify imposing a duty of care on
Thomas & Betts to protect Plaintiffs’ economic interest in their contract with Mr.
Germany, Plaintiffs’ negligence claims must be dismissed.
ORDER
NOW, THEREFORE, it is hereby ORDERED:
1. Defendant’s Initial Motion to Dismiss (Dkt. 5) was rendered moot by
Plaintiffs’ Amended Complaint and is therefore DENIED as MOOT;
2. Defendant’s subsequent Motion to Dismiss (Dkt. 11) is GRANTED:
3. Plaintiffs’ Amended Complaint is Dismissed without prejudice6;
4. If Plaintiffs wish to file an Amended Complaint they shall seek leave to
do so within thirty (30) days of the date of this order, and shall submit a
copy of the Second Amended Complaint with such filing. In the absence
of such filing, or if the Court determines amendment should not be
permitted upon reviewing the proposed Second Amended Complaint,
judgment shall be entered for Defendant Thomas & Betts.
6

A dismissal without leave to amend is improper unless it is beyond doubt that the
complaint “could not be saved by any amendment.” Harris v. Amgen, Inc., 573 F.3d 728,
737 (9th Cir. 2009). Because it is conceivable Plaintiffs could allege additional facts to
cure the deficiencies identified above, the dismissal is without prejudice.

MEMORANDUM DECISION AND ORDER - 27

SO ORDERED.

DATED: January 19, 2017

_________________________
Edward J. Lodge
United States District Judge

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