Disher et al v. Tamko Building Products, Inc. et al

Filing 233

ORDER: Defendant Tamko's Motion for Summary Judgment with Respect to the Claims of John O'Malley (Doc. 140 ) is GRANTED as to Plaintiff John OMalley's fraudulent concealment and unjust enrichment claims, but DENIED as to his strict liability and negligence claims. Signed by Judge Staci M. Yandle on 2/15/2018. (mah)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS

RICHARD DISHER, ERIC KLINE,
JOHN O’MALLEY and
DIMITRI MISHUROV, on behalf of
themselves and all others similarly situated,

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Plaintiffs,
vs.
TAMKO BUILDING PRODUCTS, INC.,
Defendant.

Case No. 14-CV-740-SMY-SCW

MEMORANDUM AND ORDER
YANDLE, District Judge:
Pending before the Court is Defendant Tamko Building Products, Inc.’s (“Tamko”)
Motion for Summary Judgment with Respect to the Claims of Plaintiff John O’Malley (Doc.
140). Plaintiff filed a response in opposition (Doc. 161). For the following reasons, the motion
is GRANTED in part and DENIED in part.
Background
In 2003, Plaintiff John O’Malley contracted with Bright Built Homes, Inc. (“Bright
Built”) to build a custom home in Fisherville, Kentucky (Doc. 140-2, pp. 15-16, p. 22).
O’Malley did not choose the brand of shingles installed on the roof, but relied instead on the
professionals from Bright Built – David Bright and Nick Davis – to select shingles that met his
specifications (Doc. 140-2, p. 30). Prior to the installation of the shingles, O’Malley told Bright
Build the specific color he wanted and instructed them to purchase a 25-year algae resistant
shingle (Doc. 140-2, pp. 31-34). During his deposition, O’Malley testified that he purchased the

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shingles specifically because of the 30-year warranty (Doc. 161-1, pp. 9-11). However, he never
asked Bright Built about the warranty applicable to the shingles selected for his home (Doc. 1402, p. 36).
The shingles came with a Limited Warranty that provided a remedy for damages caused
by manufacturing defects (Doc. 133-4). The warranty provided, in relevant part:
Tamko Full Start Period: If, during the Full Start Period, Shingles are determined
to have manufacturing defects which have directly caused leaks, Tamko will
provide the Owner with a Material Certificate for replacement shingles (or, at
Tamko’s option, the Dollar Limit Per Square identified in Table 1) and a Labor
Payment Certificate that may be used to pay the reasonable cost of installing
replacement shingles, according to the terms of this limited warranty. This is
Tamko’s Maximum Liability during the Full Start Period.
After the Full Start Period: If, after the end of the Full Start Period, Shingles are
determined to have manufacturing defects which have directly caused leaks,
Tamko’s obligation is limited to providing the Owner with a Material Certificate
for replacement shingles or, at Tamko’s option, the Dollar Limit Per Square
identified in Table 1. The Dollar Limit Per Square and the quantity of
replacement shingles will be prorated over the life of this limited warranty. This
is Tamko’s Maximum Liability after the Full Start Period. Tamko is not
responsible for the costs of labor for installing replacement shingles after the Full
Start Period. Proration shall be determined by dividing the number of months
remaining in the Term by the total number of months of the Term…
Full Start Period is defined that the initial period of the Term during which
Tamko’s obligation is not prorated. The length of the Full Start Period is listed in
Table 1.
Pursuant to Table 1 of the warranty, O’Malley’s shingles were subject to a “full start” period of
five years and a warranty term of 360 months (Doc. 140-6). The warranty also covered staining
by algae growth for a period of 10 years following the initial application (Doc. 140-6). The
Limited Warranty was printed on the outside of the wrapper of every bundle of shingles sold by
Tamko (Doc. 140-13).
O’Malley saw the bundles of shingles during installation, but did not read the Limited
Warranty or any other information printed on the wrappers (Doc. 140-2, pp. 26-27, p. 87). He
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believes Tamko defrauded him because the bundle wrapper the shingles came with stated that the
shingles were 30-year shingles, however “they only lasted 10.” (Doc. 161-1, pp. 12-13).
In 2009, O’Malley hired a contractor to re-adhere four shingles along the initial row of
shingles directly adjacent to a sheet metal gutter guard that he had installed after moving into his
home (Doc. 140-2, pp 37-39). Over the next six years, he had a total of seven shingles in the
same row re-adhered by contractors. Id., p. 77. O’Malley also noticed discoloration from algae
on his roof in 2009. Id., p. 80.
In August 2013, O’Malley emailed Tamko’s Technical Services Department to inquire
about algae and separation of the shingles (Doc. 140-9). He submitted a warranty claim to
Tamko in April 2014 (Doc. 140-10). By letter dated May 23, 2014, Tamko denied O’Malley’s
warranty claim (Doc. 140-13). The letter states that Tamko’s inspection of O’Malley’s shingle
samples revealed the shingles were improperly applied and not installed according to Tanko’s
instructions. Id. The letter also states that: (1) the limited algae warranty had expired; (2) the
wind warranty did not cover damage from winds exceeding 70 miles per hour and had, in any
event, expired; (3) O’Malley had failed to notify Tamko of any alleged problems within 30 days
of his discovery; and (4) under the express language of the Limited Warranty, no action could be
brought against Tamko after one year from the date of the discovery of the alleged problem. Id.
Discussion
Tamko argues that summary judgment is warranted on several grounds: (1) O’Malley’s
claims for strict liability and negligence are barred by the economic loss doctrine; (2) O’Malley’s
fraudulent concealment claim fails because discovery conclusively establishes that he did not
rely on any Tamko statement; and (3) O’Malley’s unjust enrichment claim fails because the
Limited Warranty governs his relationship with Tamko.

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Summary Judgment is “the put up or shut up moment in a lawsuit, when a party must
show what evidence it has that would convince a trier of fact to accept its version of events.”
Johnson v. Cambridge Indus., Inc., 325 F.3d 892, 901 (7th Cir. 2003). Summary judgment is
proper only if the moving party can demonstrate that there is no genuine issue as to any material
fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the burden of establishing
that no material facts are genuinely in dispute; any doubt as to the existence of a genuine issue
must be resolved against the moving party. Lawrence v. Kenosha County, 391 F.3d 837, 841
(7th Cir. 2004). Summary dismissal is warranted where the non-moving party “has failed to
make a sufficient showing on an essential element of her case with respect to which she has the
burden of proof.” Celotex, 477 U.S. at 323.
Economic Loss Doctrine
Kentucky’s economic loss doctrine prevents a plaintiff from recovering in tort for
damage caused by a defective product when the only damages are to the product itself and
consequential damages such as lost profits. See Giddings & Lewis, Inc. v. Industrial Risk
Insurers, 348 S.W.3d 729, 733 (Ky. 2011). The doctrine requires any recovery for those types of
damages to be sought through contract claims. Id.
Tamko contends that Kentucky’s economic loss doctrine bars O’Malley’s strict liability
and negligence claims. However, the Sixth Circuit Appellate Court recently held that under
Kentucky law, the economic loss doctrine does not extend to consumer transactions. See State
Farm Mut. Auto. Ins. Co. v. Norcold, Inc., 849 F.3d 328 (6th Cir. 2017). Given that this matter
involves a consumer transaction, the economic loss doctrine is inapplicable.

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Accordingly,

Tamko’s motion for summary judgment is denied as to O’Malley’s strict liability and negligence
claims.
Fraudulent Concealment
To prevail on a fraud by omission claim under Kentucky law “a plaintiff must prove: ‘(1)
the defendant had a duty to disclose the material fact at issue; (2) the defendant failed to disclose
the fact; (3) the defendant’s failure to disclose the material fact induced the plaintiff to act; and
(4) the plaintiff suffered actual damages as a consequence.’” Republic Bank & Trust Co. v. Bear
Stearns & Co., Inc., 683 F.3d 239, 255 (6th Cir. 2012) quoting Waldridge v. Homeservices of
Ky., Inc., 384 S.W.3d 165, 171 (Ky. App. Ct. 2011). “The existence of a duty to disclose is a
question of law for the court.” Giddings & Lewis, Inc. v. Indus. Risk Insurers, 348 S.W.3d 729,
747–48 (Ky. 2011).
Not every nondisclosure constitutes fraud by omission. Rather, a duty to disclose arises
in four circumstances: “(1) where there is a confidential or fiduciary relationship between the
parties; (2) where the duty is provided by statute; (3) where a defendant has partially disclosed
material facts to the plaintiff but created the impression of full disclosure; and (4) where one
party to a contract has superior knowledge and is relied upon to disclose the same.” Id. citing
Giddings, 348 S.W.3d at 747–48; see also Rivermont Inn, Inc. v. Bass Hotels & Resorts, Inc.,
113 S.W.3d 636, 641 (Ky. Ct. App. 2003). Where a fiduciary duty does not exist, Kentucky
courts have been careful not to apply the other three circumstances so broadly as to transform
every day, arms-length business transactions into fiduciary relationships. See Gresh v. Waste
Servs. of Am., Inc., 311 F. App'x 766, 772 (6th Cir. 2009).
None of the four circumstances applies to O’Malley’s claims. First, there is no evidence
nor do the parties allege that O’Malley and Tamko had a confidential or fiduciary relationship.

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Fiduciary relationships arise if the parties understood and agreed “that confidence was reposed
by one party and trust accepted by the other.” In re Sallee, 286 F.3d 878, 893 (6th Cir. 2002).
Fiduciary relationships can be informal, but they must evidence circumstances showing both
parties agreed that one party would be acting in the interest of the other. Id. O’Malley has also
not invoked any statute that would create a duty to disclose or alleged that Tamko partially
disclosed material facts or information regarding the shingles.
Likewise, a superior-knowledge duty of disclosure is inapplicable. The Sixth Circuit has
rejected arguments that the specialized knowledge possessed by a seller creates fiduciary
obligations to buyers. See Greenberg v. Life Ins. Co. of Virginia, 177 F.3d 507, 521–22 (6th Cir.
1999). As Tamko had no duty to disclose material facts regarding the shingles, O’Malley’s
fraudulent concealment claim fails as a matter of law.
Unjust Enrichment
Under Kentucky law, unjust enrichment requires: (i) a benefit conferred upon defendant
at plaintiff's expense; (ii) a resulting appreciation of benefit by the defendant; and (iii)
inequitable retention of benefit without payment for its value.”). Collins v. Kentucky Lottery
Corp., 399 S.W.3d 449, 455 (Ky. Ct. App. 2012).

“However …‘[t]he doctrine of unjust

enrichment has no application in a situation where there is an explicit contract.’ Shane v. Bunzl
Distrib. USA, Inc., 200 F. App'x 397, 404 (6th Cir. 2006) quoting Codell Constr. Co. v.
Commonwealth, 566 S.W.2d 161, 165 (Ky. Ct. App. 1977).
Here, the Limited Warranty is an explicit contract which covered O’Malley’s shingles in
the event of manufacturing defects. 1 Because the warranty covers the same subject matter as his

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Under the warranty terms, if a manufacturing defect causing a leak was found, Tamko agreed to cover the
complete cost of both replacement shingles and the labor to install them during the full-start period. After the fullstart period, Tamko’s obligation was prorated over the 30-year life of the Limited Warranty. Tamko also agreed to

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unjust enrichment claim, Tamko’s motion for summary judgment as to that claim must be
granted as a matter of law.
Conclusion
For the foregoing reasons, Defendant Tamko’s Motion for Summary Judgment is
GRANTED as to Plaintiff John O’Malley’s fraudulent concealment and unjust enrichment
claims, but DENIED as to his strict liability and negligence claims.
IT IS SO ORDERED.
DATED: February 15, 2018
s/ Staci M. Yandle
STACI M. YANDLE
United States District Judge

pay the reasonable costs for cleaning shingles stained by algae growth for a period of 10 years after the initial
application.

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