WRM AMERICA INDEMNITY COMPANY, INC. v. SIEMENS BUILDING TECHNOLOGIES, INC.

Filing 32

ORDER - granting 6 Motion to Dismiss. (See Entry.) Signed by Judge William T. Lawrence on 12/5/2012. (RSF)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
TERRE HAUTE DIVISION
WRM AMERICA
INDEMNITY COMPANY, INC.,

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Plaintiff,
vs.
SIEMENS BUILDING
TECHNOLOGIES, INC.,
Defendant.

Cause No. 2:12-cv-73-WTL-WGH

ENTRY ON DEFENDANT’S MOTION TO DISMISS
Before the Court is the Defendant’s motion to dismiss (dkt. no. 6). The motion is now
fully briefed, and the Court, being duly advised, rules as follows.
I.

STANDARD

In reviewing a motion to dismiss under Rule 12(b)(6), the Court takes the facts alleged in
the complaint as true and draws all reasonable inferences in favor of the plaintiff. The complaint
must contain only “a short and plain statement of the claim showing that the pleader is entitled to
relief,” Fed. R. Civ. P. 8(a)(2), and there is no need for detailed factual allegations. However, the
statement must “give the defendant fair notice of what the . . . claim is and the grounds upon
which it rests” and the “[f]actual allegations must be enough to raise a right to relief above the
speculative level.” Pisciotta v. Old Nat’l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)).
II.

BACKGROUND

The facts as alleged in the Complaint are as follow. In June 2005, Saint Mary-of-theWoods College (“Saint Mary”) and Defendant Siemens Building Technologies, Inc. (“Siemens”)

entered into a written agreement by which Siemens was to design and install a fire and smoke
detection system at Le Fer Hall and Guerin Hall and network the existing fire system on campus.
According to Saint Mary, Siemens conducted physical inspections of the Saint Mary
buildings in question and made unilateral decisions as to the type of detection devices to install
in the buildings and the location of those devices. Siemens warranted to Saint Mary that its fire
and smoke detection system was designed and installed to the highest standards in the industry.
Siemens also warranted to Saint Mary that its designers were of the highest quality of expertise.
Around 12:30 p.m. on August 31, 2010, while school was in session at Saint Mary, a fire
alarm sounded in Guerin Hall. However, the paging system portion of Siemens’ fire alarm
system failed to operate. In addition, the fire alarm system designed and installed by Siemens
was not arranged to automatically notify the local fire department. On being alerted of the fire
alarm, the staff at Guerin Hall contacted the Security Director. The failure of the paging system
delayed the Director from reporting to Guerin Hall. Saint Mary authorities promptly alerted the
local fire department and the fire was extinguished. However, damages due to fire, smoke, and
water totaled approximately $900,000.
During the post-fire investigation, Saint Mary learned that Siemens had failed to install
any smoke or fire detection devices in the basement of Guerin Hall. Accordingly, the fire went
undetected until smoke had moved to the upper floors of the building, substantially delaying
detection and suppression. According to Saint Mary, had detectors been installed in the basement
of Guerin Hall, the smoke and fire would have been detected earlier and the vast majority of the
damage could have been avoided.
The Plaintiff in this case, WRM America Indemnity Company (“WRM”), is Saint Mary’s
insurer. Pursuant to the insurance policy between Saint Mary and WRM, WRM is entitled as

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subrogee to bring suit against Siemens for the damages incurred in the fire. Accordingly, on
January 19, 2012, WRM filed suit against Siemens in Vigo County Superior Court, alleging
claims for breach of contract, breach of express warranty, breach of implied warranty,
negligence, and gross negligence. With respect to each claim, WRM seeks compensation for
damages as well as its attorneys’ fees and, where applicable, punitive damages. Siemens
removed the case to this Court and has now moved to dismiss all but the breach of contract
claim.
III.

DISCUSSION

In its Counts II and III, WRM asserts causes of action for breach of express warranty and
breach of implied warranty against Siemens. WRM alleges that Siemens made express
warranties “outside the contract” in the form of verbal statements, written documents, and
marketing materials and also impliedly warranted to Saint Mary regarding the capability of the
system, its level of competency, and the functioning of the system. WRM’s claims must be
dismissed, Siemens argues, because its claims are contradicted by the contract, which provides
that the written warranties in the contract are “in lieu of and exclude all other warranties,
statutory, express, or implied.” Furthermore, Siemens argues, the warranty claims are barred by
the contract’s integration clause. The Court agrees with Siemens.1
As an initial matter, the Court notes that WRM argues that the UCC is inapplicable to the
contract at issue because the contract is one for services. See 810 ILCS 5/2-102 (“this Article
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The parties disagree over what law applies to each claim. To the extent that resolution
of the motion to dismiss the warranty claims relies on contract interpretation, the analysis is
governed by Illinois law pursuant to the terms of the contract. Resolution of the negligence
claims relies on tort law; as the contract does not purport to apply beyond its own terms, the
resolution of the negligence claims is governed by Indiana law. See Kuehn v. Childrens Hospital,
Los Angeles, 119 F.3d 1296, 1302 (7th Cir. 1997) (“A [choice-of-law] provision will not be
construed to govern tort as well as contract disputes unless it is clear that this is what the parties
intended.”).
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applies to transactions in goods”). Assuming for the purposes of this motion that WRM is
correct, the implied warranties of the UCC do not arise, Brandt v. Boston Scientific Corp., 792
N.E.2d 296, 303 (Ill. 2003) (UCC’s implied warranties “appl[y] only if a mixed contract is
predominantly for goods and only incidentally for services”), and it is unclear whether implied
warranties otherwise arise in a contract for services, see Insul-Mark Midwest, Inc. v. Modern
Materials, Inc., 594 N.E.2d 459, 466 (Ind. Ct. App. 1992) (declining to imply warranty of quality
as term of service contract, but leaving “for another day the question whether implied warranties
are appropriate in consumer service transactions”), adopted in part by 612 N.E.2d 550, 556 (Ind.
1993); Stewart Warner Corp. v. Burns Int’l Sec. Servs., Inc., 343 F. Supp. 953, 954 (D. C. Ill.
1972) (finding no authority in Illinois for expanding doctrine of implied warranties to cover sales
of services). Thus, it is not clear whether, as a matter of law, any implied warranties can arise
under the contract at issue. Regardless, even if implied warranties arise under this type of
contract, WRM’s claim for breach of implied warranty must fail in the face of the contractual
disclaimer.
Article 6.3 of the contract explicitly disclaims warranties other than those described in a
previous provision of the contract, and while WRM attempts to skirt the disclaimer by arguing
that it (1) was not part of the contract; and/or (2) renders the contract ambiguous, neither of these
theories carries the day for WRM.
WRM first argues that the disclaimer clause was “neither signed, initialed nor accepted
by Saint Mary’s” and was “buried” in a three-page set of unsigned conditions, which conditions
were not part of the contract. However, WRM ignores that the disclaimer is found in the exhibit
it attached to its Complaint, which exhibit it described as “a true and complete copy” of the
agreement between Siemens and Saint Mary. Indeed, WRM even cites to another provision of

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the contract in its Complaint, which provision also occurs on an unsigned, uninitialed page.
WRM cannot now be heard to attack the truth and accuracy of the document it attached to its
Complaint.
WRM also attempts to manufacture ambiguity in the terms in the contract in order to
circumvent the effect of the disclaimer. According to WRM, one provision of the contract giveth
certain warranties whilst another taketh away. However, the terms of the warranties and the
terms of the disclaimer fit neatly together, as the disclaimer refers to the warranties set forth in
the contract and contemplates their continued existence while at the same time disclaiming any
other warranties. WRM does not identify any implied warranties that could exist in spite of this
disclaimer.2 Because WRM has not alleged a theory under which it might plausibly recover on
its breach of implied warranty claim, this claim must be dismissed.
WRM’s breach of express warranty claim also fails. “When two parties have made a
contract and have expressed it in a writing to which they have both assented as the complete and
accurate integration of that contract, evidence, whether parol or otherwise, of antecedent
understandings and negotiations will not be admitted for the purpose of varying or contradicting
the writing.” CFC Investment, LLC, v. McLean, 900 N.E.2d 716, 722 (Ill. App. Ct. 2008)
(quoting Kelrick v. Koplin, 219 N.E.2d 758, 761 (Ill. 1966)). Here, the contract contains an
integration clause, which provides: “The Agreement . . . constitutes the entire, complete and
exclusive agreement between the parties relating to the services . . . and the equipment . . . to be
provided . . . and shall supersede and cancel all prior agreements and understandings, written or

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In addition, as WRM argues that the UCC does not apply to the parties’ transaction, the
Court does not address WRM’s argument that the disclaimer is unenforceable under the UCC.
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oral, relating to the subject matter of the Agreement.”3 Therefore, as a matter of law, there are
no effective express warranties by Siemens that differ from the terms of the Agreement and any
express warranties the Siemens made were superseded by the Agreement. As a result, WRM’s
claim for breach of express warranty must be dismissed.
In Courts IV and V, WRM asserts causes of action for negligence and gross negligence
against Siemens. WRM lists several duties it argues it was owed by Siemens: the duty to design
and install a system that would provide detection coverage for all areas where fire could
reasonably be expected to occur; the duty to know and be familiar with applicable fire codes and
regulations; the duty to advise Saint Mary of the available options to protect the buildings in
question; the duty to advise Saint Mary of the major areas of the buildings that remained
unprotected as a result of the system designed and installed by Siemens; the duty to comply with
applicable fire codes and regulations and applicable standards of care; the duty to provide Saint
Mary with a fully working fire alarm system as contemplated by the Agreement; and the duty to
disclose known risks associated with not installing smoke detectors in the basement of Guerin
Hall. Siemens argues that these duties are beyond the scope of the contract and what could be
implied in law; therefore, the negligence claim must be dismissed.
WRM admits that the work performed by Siemens is governed by the following standard:
“The Work performed by [Siemens] shall be conducted in a manner consistent with the degree of
care and skill ordinarily exercised by reputable companies performing the same or similar Work
in the same locale acting under similar circumstances and conditions.” See Compl. ¶ 14. “Where
the source of a party’s duty to another arises from a contract, ‘the tort law should not interfere.’ .
. . ‘[T]he question is . . . whether [the defendant] is alleged to have done anything that constituted
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WRM does not argue that any exception exists to the application of the integration

clause.
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an independent tort if there were no contract.” JPMCC 2006-CIBC14 Eads Parkway LLC v. DBL
Axel, LLC, 977 N.E.2d 354, 364 (Ind. Ct. App. 2012). Here, any duty existing between the
parties arises out of this contractual provision; absent the contract, Siemens owes WRM no duty.
Therefore, to the extent that WRM seeks to assert a negligence claim, it is dismissed.
However, as the Court reads it, the duties WRM alleges may fall under the contractual
standard. WRM will ultimately have to prove that the actions and advisories it alleges should
have been carried out would have been performed by a “reputable company performing the same
or similar Work,” but at this stage, it is plausible. Therefore, WRM’s allegations are still relevant
as a clarification of its breach of contract claim.
Turning to WRM’s gross negligence claim, it too must be dismissed. While the parties
dispute whether Siemens and Saint Mary’s contractual relationship precludes claims for
negligence or gross negligence, even if WRM could assert such claims, its claim for gross
negligence is insufficient as pled. Gross negligence requires “a conscious, voluntary act or
omission in reckless disregard of the consequences.” NIPSCO v. Sharp, 790 N.E.2d 462, 466
(Ind. 2003). WRM has not pled any facts rendering such a situation plausible and this claim must
therefore be dismissed.
Finally, Siemens moves to dismiss WRM’s request for punitive damages and attorneys’
fees. As the Court has dismissed all but WRM’s claim for breach of contract, it need not address
WRM’s accompanying requests for punitive damages. With respect to attorneys’ fees, Siemens’
motion must granted. Even if, as WRM argues, “the insurer succeeds to all rights, remedies, and
claims of its insured,” generally attorneys’ fees are not recoverable as damages unless they are
provided for by some prior contract or statute. E.g., Goldstein v. DABS Asset Manager, Inc. 886
N.E.2d 1117, 11121 (Ill. Ct. App. 2008). WRM has not pointed to any provision in the contract

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or statute entitling it to attorneys’ fees. Accordingly, to the extent WRM’s claim for breach of
contract requests relief in the form of attorneys’ fees, that aspect of its claim for relief is
dismissed.
IV.

CONCLUSION

For the foregoing reasons, Siemens’ motion to dismiss is GRANTED.
SO ORDERED:

12/05/2012
_______________________________
Hon. William T. Lawrence, Judge
United States District Court
Southern District of Indiana

Copies to all counsel of record vie electronic communication.

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