Board of Commissioners of Shawnee County, Kansas v. Daimler Trucks North America LLC et al
Filing
26
MEMORANDUM AND ORDER granting 11 Motion to Dismiss. The Court shall grant defendants' motion to dismiss and direct that plaintiff's tort claims and implied warrantly claims against defendant, Daimler be dismissed and that plaintiff's tort claims against defendant Omaha Truck be dismissed. A breach of implied warranty claim remains against defendant Omaha Truck. Signed by District Judge Richard D. Rogers on 3/20/15. (meh)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
SHAWNEE COUNTY, KANSAS, BOARD
OF COMMISSIONERS,
Plaintiff,
v.
Case No. 15-4006-RDR-KGS
DAIMLER TRUCKS NORTH AMERICA LLC,
OMAHA TRUCK CENTER, INC. dba
Kansas Truck Center, SCRANTON
MANUFACTURING CO., INC.
Defendants.
MEMORANDUM AND ORDER
This case arises from two fires which originated within
trash trucks purchased and operated by plaintiff Board of County
Commissioners. Damage from the fires was limited to the trucks.
This case is now before the court upon the motion to dismiss of
defendants Daimler Trucks North America, LLC and Omaha Truck
Center,
claims
Inc.
against
The
motion
these
two
argues
that
defendants
plaintiff’s
and
tort-based
plaintiff’s
implied
warranty claim against defendant Daimler should be dismissed for
failure to state a claim.
The court shall grant the motion for
the reasons which follow.
I.
THE ALLEGATIONS OF THE COMPLAINT
The complaint alleges that plaintiff purchased five 2010
Freightliner trucks, Model M2-106V, from defendant Omaha Truck.
Each truck had a rear load trash compactor manufactured and
1
installed by defendant Scranton.
The chassis of each truck was
manufactured by defendant Daimler.
According to the complaint, a different truck caught fire
on two occasions.
the
truck
a
September
One fire occurred on February 8, 2013, making
complete
3,
2014
loss.
causing
The
a
loss
second
of
the
fire
occurred
on
truck’s
use.
The
complaint alleges that the fires were originated by a junction
box that controls lights and turn signals on the rear load trash
compactor.1
The junction box has also been referred to as a
power distribution module or “PDM.”
The junction box has a
Freightliner part number.
The complaint alleges the following claims:
negligence by
defendant Daimler; strict liability against Daimler; breach of
warranty
against
merchantability
Daimler;
and
Daimler;
breach
fitness
negligence
Scranton;
and
by
of
breach
for
an
Scranton;
implied
of
implied
intended
strict
warranty
warranty
of
purpose
against
liability
against
against
Scranton;
negligence against Omaha Truck; and breach of implied warranty
against
Omaha
Truck.
Plaintiff
seeks
to
recover
economic
damages for the loss of the trucks.
1
Plaintiff asserts in response to the motion to dismiss that there are other
defects in addition to the junction box, but that discovery must be conducted
to identify them.
2
III.
MOTION TO DISMISS STANDARDS
In reviewing a Rule 12(b)(6) motion to dismiss, the court
assumes as true all well-pleaded facts.
U.S. 662, 678 (2009).
Ashcroft v. Iqbal, 556
Under FED.R.CIV.P. 8(a)(2), a complaint
must show in a short and plan statement “that the pleader is
entitled
to
relief.”
The
court
will
grant
a
Rule
12(b)(6)
motion to dismiss when the factual allegations fail to “state a
claim to relief that is plausible on its face.”
v. Twombly, 550 U.S. 544, 570 (2007).
plausibility
allows
the
defendant
supra.
when
court
is
the
to
liable
plaintiff
draw
for
the
the
Bell Atl. Corp.
“A claim has facial
pleads
factual
reasonable
misconduct
content
inference
alleged.”
that
that
the
Ashcroft,
This is a “context-specific task” requiring resort to
“judicial experience and common sense,” “[b]ut where the wellpleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged - but it has not ‘show[n]’ - - ‘that the pleader is entitled to
relief.’”
Id. at 879 (quoting FED.R.CIV.P. 8(a)(2)).
IV. THE ECONOMIC LOSS DOCTRINE REQUIRES THAT PLAINTIFF’S TORTBASED CLAIMS BE DISMISSED AGAINST DEFENDANTS DAIMLER AND OMAHA
TRUCK.
In their motion, defendants assert first that, according to
the economic loss doctrine, plaintiff may not recover economic
losses
on
negligence
the
basis
claims.
of
Under
tort-based
the
3
product
economic
loss
liability
doctrine,
and
a
plaintiff seeking recovery for economic losses only, and not
personal injuries or damage to other property, cannot proceed
under theories sounding in tort.
Rand Const. Co. v. Dearborn
Mid-West Conveyor Co., 944 F.Supp.2d 1042, 1062 (D.Kan. 2013);
Coker v. Siler, 304 P.3d 689, 693 (Kan.App. 2013).
Plaintiff makes three arguments against the application of
the
economic
loss
doctrine
in
this
case.
First,
plaintiff
contends that the damage caused by the “defective goods” – which
we assume to mean the junction box – was not limited to the
goods themselves because the chassis and the trash compactors
were also damaged and that this constituted damage to “other
property” not covered by the economic loss doctrine.
We reject
this argument as inconsistent with Kansas case law precedent.
As defendants note, in Koss Construction v. Caterpillar, Inc.,
960 P.2d 255 (Kan. App. 1998) and Jordan v. Case Corporation,
Inc.,
993
economic
P.2d
loss
650
(Kan.
doctrine
App.
applied
1999),
to
it
fires
was
caused
held
by
that
the
defective
component parts of a machine (in Koss, hydraulic hoses in a
Caterpillar highway roller; in Jordan, an engine in a combine).
The Koss decision referred to the analysis of the United States
Supreme Court in East River S.S. Corp. v. Transamerica Delaval,
476 U.S. 858, 867 (1986) stating:
As the Supreme Court noted in East River, all but the
most simple machines have component parts. This does
not mean that damage to “other property” results when
4
one defective part causes damages to another part
within the same product.
To hold otherwise would
eliminate the distinction between warranty and strict
liability.
960 P.2d at 260.
Plaintiff
economic
loss
grounds
that
also
argues
doctrine
at
against
the
stage
should
discovery
this
be
application
of
the
case
allowed
to
of
the
upon
the
determine
defendants’ knowledge of the defects at issue in this case.
Plaintiff asserts that if defendants had knowledge of a defect
or should have had such knowledge, then defendants had a legal
duty
to
warn
plaintiff
of
the
dangers
posed
by
the
defect.
Plaintiff further suggests that defendants had an independent
legal duty to design and manufacture the junction box properly
and, therefore, plaintiff may proceed with a tort theory.
We
reject these arguments because the complaint does not contain
the legal or factual allegations which would support a claim of
failure to warn and plaintiff does not make citation to Kansas
legal authority supporting a violation of an independent legal
duty
in
plaintiff’s
response
to
the
motion
to
dismiss.
If
subsequent discovery and legal analysis supports a tort-based
theory
of
recovery,
then
plaintiff
complaint.
5
may
move
to
amend
the
V.
PLAINTIFF’S BREACH OF IMPLIED WARRANTY CLAIMS AGAINST
DEFENDANT DAIMLER MUST BE DISMISSED BECAUSE PLAINTIFF DOES NOT
ALLEGE CONTRACTUAL PRIVITY.
Defendant Daimler next argues that plaintiff’s claims of
breach
of
an
implied
warranty
should
be
dismissed
because
plaintiff does not allege facts establishing contractual privity
between plaintiff and defendant Daimler.
In response, plaintiff
agrees that contractual privity is not alleged in the complaint.
But, plaintiff argues that contractual privity is not necessary
to
proceed
upon
an
implied
warranty
claim
under
circumstances alleged in the complaint for three reasons.
due
consideration,
the
court
rejects
each
the
Upon
reason
plaintiff
inherently
dangerous
offers for negating the privity requirement.
A.
products.
Privity
is
required
even
for
Plaintiff contends that privity need not be alleged because
the trash trucks were inherently dangerous products.
Plaintiff
relies upon the following statement by the Kansas Supreme Court
in Professional Lens Plan, Inc. v. Polaris Leasing Corp., 675
P.2d 887, 898-99 (Kan. 1984):
and
merchantability
are
not
“implied warranties of fitness
extended
to
a
remote
seller
or
manufacturer of an allegedly defective product, which is not
inherently
dangerous,
for
only
economic
loss,
suffered
by
a
buyer who is not in contractual privity with the remote seller
or manufacturer.”
Plaintiff contends that the trash trucks in
6
question
in
this
case
were
“inherently
dangerous”
products
because they were heavy vehicles that traveled at relatively
high speeds.
The court does not believe the implied warranty claims in
this case hinge upon whether the trash trucks were “inherently
dangerous” products.
The key facts are whether the alleged
damage is to the product alone and whether there is privity
between plaintiff and defendant Daimler.
The Professional Lens case involved a defective computer
leased by a plaintiff who was not in privity to the computer’s
manufacturer.
the
plaintiff.
The defective computer caused an economic loss to
The
case
did
not
involve
an
“inherently
dangerous” product and it did not involve personal injuries or
damage to other property.
The court mentioned both of these
factors in denying the implied warranty claims.
It is somewhat
unclear whether the holding of the case is conditioned upon the
“non-dangerousness” of the product or the purely economic loss
or both.
Notably, the court chose to emphasize the following
statement from White and Summers, Uniform Commercial Code 407-08
(2d ed. 1980):
“The majority of courts still appear to hold
that . . . a non-privity buyer, whether commercial or consumer,
cannot recover for direct economic loss on either an express or
an implied warranty theory.”
This suggests that the type of
7
loss
is
the
key
factor
which
determines
whether
privity
is
required.
Professional Lens was decided in 1984.
In 1986, the East
River case was decided by the Supreme Court and its discussion
of tort, contract and strict liability recovery for economic
loss,
although
not
binding,
including those in Kansas.
was
persuasive
with
Koss, 960 P.2d at 259.
many
courts
East River’s
review of the topic does not emphasize the dangerousness of a
product as a controlling factor.
Instead, the type of injury is
a determining factor regarding the type of claim available and
whether
contractual
privity
may
be
required.
We
note
following comments:
“[Some] cases attempt to differentiate between the
disappointed users . . . and the endangered ones, and
permit only the latter to sue in tort.
The
determination has been said to turn on the nature of
the defect, the type of risk, and the manner in which
the injury arose.
The Alaska Supreme Court allows a
tort action if the defective product creates a
situation potentially dangerous to persons or other
property, and loss occurs as a proximate result of
that danger and under dangerous circumstances.
We find [these] positions unsatisfactory.”
476
U.S. at 869-70 (interior quotations and citations
omitted).
“[A] manufacturer in a commercial relationship has no
duty under either a negligence or a strict productsliability theory to prevent a product from injuring
itself.” Id. at 871.
“’The distinction that the law has drawn between tort
recovery for physical injuries and warranty recovery
for economic loss is not arbitrary and does not rest
on the “luck” of one plaintiff in having an accident
8
the
causing physical injury.
The distinction rests,
rather, on an understanding of the nature of the
responsibility
a
manufacturer
must
undertake
in
distributing his products.’”
Id., quoting Seely v.
White Motor Co., 63 Cal.2d 9, 18, 45 Cal.Rptr. 17, 23
(1965).
“When a product injures only itself the reasons for
imposing a tort duty are weak and those for leaving
the party to its contractual remedies are strong.”
Id.
“Damage to a product itself is most naturally
understood as a warranty claim.
Such damage means
simply that the product has not met the customer’s
expectations, or, in other words, that the customer
has received ‘insufficient product value.’”
Id. at
872, quoting White and Summers, Uniform Commercial
Code 406 (2d ed. 1980).
“[B]oth the nature of the injury and the resulting
damages indicate it is more natural to think of injury
to a product itself in terms of warranty.”
Id. at
874.
“A warranty action . . . has a built-in limitation on
liability, whereas a tort action could subject the
manufacturer to damages of an indefinite amount. The
limitation in a contract action comes from the
agreement of the parties and the requirement that
consequential damages, such as lost profits, be a
foreseeable result of the breach.
In a warranty
action where the loss is purely economic, the
limitation
derives
from
the
requirements
of
foreseeability
and
of
privity,
which
is
still
generally enforced for such claims in a commercial
setting.” Id., citing White & Summers, supra, at 389,
396, 406-10.2
The Koss decision in 1998 found the East River opinion
persuasive in rejecting tort and strict liability claims for
damage to a defective hydraulic roller which caught fire.
2
The
This appears to be the same section of the White and Summers treatise cited
by the Kansas Supreme Court in Professional Lens.
9
court also rejected an implied warranty claim, not because it
held the machine was not dangerous, but because, absent privity,
there could be no implied warranty claim where the defective
machine only caused an economic loss.3
960 P.2d at 260-61.
In 1999, the Kansas Court of Appeals expanded the Koss
holding to a noncommercial transaction in Jordan.
There, the
court affirmed a summary judgment order dismissing an implied
warranty
claim
against
a
combine
manufacturer
and
a
combine
engine manufacturer for the loss of the combine after it caught
fire.
The court held there could be no recovery in tort or
strict liability or implied warranty for pure economic loss.
963 P.2d at 651-52.
In David v. Hett, 270 P.3d 1102 (Kan. 2011), the Kansas
Supreme Court engaged in an extended discussion of these cases
and others.
The court did not indicate that it disapproved of
the holdings in Koss or Jordan.
We find nothing in our analysis
which is contrary to David, although there the court indicated
that, in the context of residential construction, the economic
3
Relying upon Koss, Judge Vratil of this court did not consider the
dangerousness of a product in dismissing an implied warranty claim where
there was a lack of privity.
In Full Faith Church of Love West, Inc. v.
Hoover Treated Wood Products, Inc., 224 F.Supp.2d 1285, 1292 (D.Kan. 2002),
the court keyed upon the fact that the alleged damages were limited to
economic loss.
The plaintiff asserted that an implied warranty claim to
recover economic loss could be maintained if the defective product was
inherently dangerous.
Judge Vratil rejected this argument, ruling that the
privity requirement remains unless the defective product causes physical
injuries.
Judge O’Connor of this court did employ a dangerousness analysis
in Sithon Maritime Co. v. Holiday Mansion, 983 F.Supp. 977, 988 (D.Kan.
1997). This, however, was prior to the Koss decision.
10
loss doctrine may not bar a tort action alleging that defective
construction constituted a violation of a duty imposed by law.
In sum, the trash trucks’ alleged dangerousness does not
obviate the need to allege contractual privity in order to bring
an implied warranty claim to recover for the damage done to the
trash trucks because of the trucks’ defects.
B.
The damage done to other parts of the trucks not
manufactured by defendant Daimler does not make contractual
privity unnecessary to bring an implied warranty claim.
Plaintiff
more
than
the
also
argues
chassis
that
plaintiff
manufactured
by
suffered
defendant
damage
Daimler
to
and
that, therefore, plaintiff suffered damage to “other property”
which removes the necessity of showing contractual privity for
an implied warranty claim.
We reject this argument for the same
reasons discussed earlier in this opinion.
Namely, the argument
has been overruled in Koss as making too fine a distinction
between
a
distinction
product
which
and
would
the
components
eliminate
of
the
the
product
difference
–
a
between
warranty and strict liability.
C.
The Kansas Consumer Protection Act does not eliminate
the need to allege contractual privity in this case.
Finally, plaintiff contends that privity is not required by
Kansas
law
pursuant
to
the
(“KCPA”), K.S.A. 50-639(b).4
Kansas
Consumer
Protection
Act
The court agrees with defendant
4
K.S.A. 50-639(b) provides: “Notwithstanding any provision of law, no action
for breach of warranty with respect to property subject to a consumer
11
Daimler that the KCPA does not apply to these facts because
plaintiff is not a “consumer” as defined by the statute.
The
KCPA defines “consumer” as “an individual, husband and wife,
sole proprietor, or family partnership who seeks or acquires
property or services for personal, family, household, business
or agricultures purposes.”
Board
of
County
definition
of
K.S.A. 50-624(b).
Commissioners
“consumer”
and
does
not
therefore,
The plaintiff
fit
its
within
purchase
this
of
the
trash trucks is not a “consumer transaction” regulated by the
statute.
VI.
See K.S.A. 50-624(c).
CONCLUSION
For
the
above-stated
reasons,
the
court
shall
grant
defendants’ motion to dismiss and direct that plaintiff’s tort
claims and implied warranty claims against defendant Daimler be
dismissed
and
that
plaintiff’s
Omaha Truck be dismissed.
breach
of
warranty
claim
tort
claims
against
defendant
As the court reads the complaint, a
remains
pending
against
defendant
Daimler and a breach of implied warranty claim remains against
defendant Omaha Truck.
transaction shall fail because of a lack of privity between the claimant and
the party against whom the claim is made. An action against any supplier for
breach of warranty with respect to property subject to a consumer transaction
shall not, of itself, constitute a bar to the bringing of an action against
another person.”
12
IT IS SO ORDERED.
Dated this 20th day of March, 2015, at Topeka, Kansas.
s/RICHARD D. ROGERS
Richard D. Rogers
United States District Judge
13
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