Ingram et al v. Oasis Investments, LLC et al
Filing
50
MEMORANDUM OPINION & ORDER Signed by Senior Judge Thomas B. Russell on 12/19/2017 denying 38 Motion to Strike ; granting in part and denying in part 14 Motion to Dismiss for Failure to State a Claim. cc: Counsel(KJA)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
CIVIL ACTION NO. 5:16-CV-00206-TBR
JASON INGRAM, et al.,
PLAINTIFFS
v.
OASIS INVESTMENTS, LLC, et al.,
DEFENDANTS
MEMORANDUM OPINION AND ORDER
This matter is before the Court on Defendants LeeCor Systems, LLC and Steven
Medlin’s partial motion to dismiss or, in the alternative, for a more definite statement. [DN 14.]
Plaintiffs Jason and Dilenia Ingram responded, [DN 33], and Defendants replied, [DN 27.] Fully
briefed, this matter is now ripe for decision. For the reasons discussed herein, Defendants’
motion is GRANTED IN PART AND DENIED IN PART. Additionally, Defendants’ motion
to strike Plaintiffs’ response as untimely filed, [DN 38], is DENIED.
BACKGROUND
The facts, as set out in the Ingrams’ complaint and taken as true, are as follows. Plaintiffs
Jason and Dilenia Ingram own real property on Mr. Ingram’s family’s farm in Graves County,
Kentucky. [DN 1 at 5.] In early 2015, the Ingrams decided to construct a house on this property.
At a trade show in St. Louis, Missouri, Mr. Ingram met Defendants Steve Medlin, Robert Davis,
Nathan Verning, and an unknown architect employed by Oasis Investments, LLC. [Id. at 5.] The
Ingrams informed them of their plans to build a house on their land and discussed the products
and services the men were promoting as representatives of Defendants Premium Steel Building
Systems, Inc., LeeCor Systems, LLC, and Oasis Investments, LLC. [Id.]
On or around April 23, 2015, Verning, an employee of Oasis, sent the Ingrams a
document titled “Proposal/Contract.” [DN 1-1 at 1–4.] The document detailed the “scope of
1
work to be completed” and provided a total quote of $270,000.00. [Id.] According to the
Ingrams, they accepted Oasis’s proposal and quote, and that document “became the written
contract at issue in this Complaint.” [DN 1 at 8.] Oasis began construction in September 2015.
[Id. at 20.]
During the construction project, the Ingrams also obtained services from LeeCor
Systems, LLC (“LeeCor”) and Steve Medlin, an employee of LeeCor. [Id. at 9–10.] The Ingrams
allege that, during the time they worked with LeeCor and Medlin, they were “in the business of
marketing and selling residential steel frame and prefabricated foam panel construction materials
that are designed, manufactured, packaged and/or marketed by Defendant Premium Steel
Building Systems, Inc.” [Id. at 10.] “LeeCor and Medlin hold themselves out as having
experience and expertise in selecting and/or recommending certain products for inclusion in a
new home build, such as, but not limited to, steel framing and prefabricated foam walls”
manufactured by Premium. [Id. at 11.]
Ultimately, the construction went awry. Specifically, the Ingrams assert that “[a] number
of problems have emerged, and are emerging, with the work completed by, or under the
supervision of,” Defendants. [Id. at 26.] These include, for example, “[n]oise and movement in
the subflooring/steel structure,” “[b]uckling of the roof decking,” “[w]ater infiltration around the
windows and doors and due to a lack of a vapor barrier at the basement level,” “[a]ir infiltration
through and/or around the wall panels,” “windows installed crooked, floors that noticeably slope,
walls that are not the same height, walls that are not plumb, damaged windows,” and “[o]mitted
materials and skipped steps in the framing process.” [Id. at 26–27.]
According to the Ingrams, many of the representations in the Proposal/Contract document
(“the Contract”) between them and Oasis ultimately proved to be false and/or misleading. [Id. at
2
8–9.] The Ingrams assert that, “[i]n late May or mid-Summer 2016, Oasis Construction left the
jobsite, refusing to return; and, to date, it has not completed all work required of it under the
contract.” [Id. at 21.] “To date, the Ingrams have paid Oasis Construction approximately
$248,000 for work done, purportedly done, or to be done on the new home build.” [Id.]
Additionally, the Ingrams allege that the structural system recommended to them by LeeCor and
Medlin was improper for the construction of their home and could not be installed so as to
comply with applicable building codes. They also allege that Medlin made various other
misrepresentations, such as advising then that a vapor barrier was unnecessary when, in fact, the
opposite was true.
On December 30, 2016, the Ingrams brought suit in this Court against several
Defendants: Oasis Investments, LLC; Nathan K. Verning; LeeCor Systems, LLC; Steven
Medlin; Robert Davis; and Premium Steel Building Systems, Inc. [Id. at 1.] The Ingrams bring
claims of breach of contract; negligent construction; negligent hiring, training, retention, and
supervision; negligent provision of professional services; fraud; negligent misrepresentation;
violations of building codes under KRS § 198B.130; building professional liability under KRS §
411.256; and failure to warn. In the instant motion, two Defendants, LeeCor and Medlin, move
to dismiss certain of these claims or, alternatively, for a more definite statement. [DN 14.]
STANDARD
A complaint must contain “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). In order to survive a motion to dismiss under
Rule 12(b)(6), a party must “plead enough ‘factual matter’ to raise a ‘plausible’ inference of
wrongdoing.” 16630 Southfield Ltd. P'ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 504 (6th Cir.
2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A claim becomes plausible “when
3
the plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 556 (2007)). When considering a Rule 12(b)(6) motion to dismiss, the
court must presume all of the factual allegations in the complaint are true and draw all reasonable
inferences in favor of the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem
Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citing Great Lakes Steel v.
Deggendorf, 716 F.2d 1101, 1105 (6th Cir. 1983)). “The court need not, however, accept
unwarranted factual inferences.” Id. (citing Morgan v. Church’s Fried Chicken, 829 F.2d 10, 12
(6th Cir. 1987)). Should the well-pleaded facts support no “more than the mere possibility of
misconduct,” then dismissal is warranted. Iqbal, 556 U.S at 679. The Court may grant a motion
to dismiss “only if, after drawing all reasonable inferences from the allegations in the complaint
in favor of the plaintiff, the complaint still fails to allege a plausible theory of relief.” Garceau v.
City of Flint, 572 F. App’x. 369, 371 (6th Cir. 2014) (citing Iqbal, 556 U.S. at 677–79).
DISCUSSION
In their motion, LeeCor and Medlin request that the Court dismiss Counts I, III, V, and X
of the Ingrams’ complaint for failure to state a claim upon which relief can be granted under
Rule 12(b)(6). [DN 14 at 2.] Alternatively, LeeCor and Medlin request that the Court “require
plaintiffs to plead more specifically their claims against these defendants so that defendants can
prepare their Answers and/or otherwise prepare for trial under Rule 12(e).” [Id.] The Court will
address Defendants’ alternative motions in turn.
A. Failure to State a Claim Upon Which Relief Can be Granted
LeeCor and Medlin first request that the Court dismiss Counts I, III, V, and X of the
Ingrams’ complaint under Rule 12(b)(6).
4
1. Count One: Breach of Contract
In count one of their complaint, the Ingrams bring a claim for breach of contract against,
among other Defendants, LeeCor and Medlin. [DN 1 at 36–37.] Specifically, the Ingrams allege
that “LeeCor, Medlin and/or Premium have breached the written warranty as to the structural
system, as well as implied warranties of fitness and workmanlike performance.” [Id. at 37.] It
appears that the Ingrams reference three different types of warranties in their complaint which
they allege were breached. The Court will address each in turn.
a. Written Warranty
Though the Ingrams allege that LeeCor and Medlin breached a written warranty as to the
structural system used in the construction of their home, they have pointed to no such written
warranty issued to them by LeeCor or Medlin. They have, however, identified a warranty issued
to them by Premium, which the Ingrams attached as an exhibit to their complaint. That document
is printed on “Premium Steel Building Systems Incorporated” letterhead and titled
“WARRANTY.” [DN 1-3.] It reads:
We herby (sic) warrant that the structural framing materials supplied by us which
have been installed by others at Ingram Residence referenced above was
designed and shop fabricated in strict accordance with the drawings and
specifications. We agree to repair or replace or cause to be repaired or replaced
any or all of the materials which may prove defective within a pe1 of one (1)
iod
year from substantial completion (January 30, 201 6). Ordinary wear and tear
and unusual abuse or neglect are excluded from this warranty.
[Id.] The Warranty was signed by Premium representatives and dated April 8, 2016. [Id.] The
Ingrams do not dispute that Premium designs, manufactures, and markets the residential steel
frame and prefabricated foam panel construction materials that were used in the construction of
their home. [See, e.g., DN 1 at 10.] Accordingly, the fact that Premium provided a written
warranty to the Ingrams for those materials follows logically. However, because the Ingrams
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identify no such written warranty issued by LeeCor or Medlin for the same materials, and make
no factual allegations that one existed, the Court agrees that the Ingrams have failed to state a
claim for breach of written warranty as to those two Defendants.
b. Implied Warranty of Fitness for a Particular Purpose
The Ingrams also mention “implied warranties of fitness” in their breach of contract
claim. [Id. at 37.] In detail, they state that “LeeCor, Medlin and/or Premium have breached . . .
implied warranties of fitness and workmanlike performance.” [Id.] Section 355.2-315 of the
Kentucky Revised Statutes provides for implied warranties for fitness for a particular purpose.
That statute, titled “Implied warranty; fitness for particular purpose,” provides:
Where the seller at the time of contracting has reason to know any particular
purpose for which the goods are required and that the buyer is relying on the
seller's skill or judgment to select or furnish suitable goods, there is unless
excluded or modified under KRS 355.2-316 an implied warranty that the goods
shall be fit for such purpose.
Ky. Rev. Stat. Ann. § 355.2-315. In their motion to dismiss, LeeCor and Medlin argue that the
Ingrams have failed to state a claim upon which relief can be granted for their implied warranty
claim. [DN 14-1 at 4.] Specifically, they argue that the Ingrams have not pled sufficient facts
regarding the two elements of implied warranty of fitness for a particular purpose: “first, that the
seller was aware at the time of the contract that the buyer had intended a particular purpose for
the goods; second, that the buyer relied on the skill or judgment of the seller to supply goods
suitable for that particular purpose.” Smart & Assocs., LLC v. Indep. Liquor (NZ) Ltd., 226 F.
Supp. 3d 828, 851 (W.D. Ky. 2016) (citing Travelers Prop. Cas. Co. of Am. v. Rapid Power
Corp., No. 5:12–CV–00038–R, 2013 WL 1898833, at *8 (W.D. Ky. May 3, 2013)). According
to Defendants, “Plaintiffs’ single paragraph alleging three warranties . . . against three different
defendants fails to satisfy the pleading requirements of an implied warranty of fitness claim
because defendants cannot know which particular defendant had knowledge for what particular
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purpose or how that defendant’s product failed to be fit for such a purpose.” [DN 14-1 at 4.]
Although the Ingrams’ allegations are scant, the Court nonetheless finds that they have alleged
sufficient factual matter to infer that LeeCor and/or Medlin knew of the purpose for which the
Ingrams needed the structural system and that the Ingrams relied on LeeCor and/or Medlin’s skill
or judgment that the Premium structural system would be proper for that purpose.
The Ingrams allege several times throughout their complaint that the structural system
used in the construction of their home was improper. [See DN 1 at 25.] Admittedly, several of
these allegations only mention Defendant Premium. For instance, the Ingrams allege that
“Premium ‘provided the design . . . of the entire structural system’ of the Ingrams and fabricated
the same.” [DN 1 at 16.] They further assert that “Premium additionally owed the Ingrams a duty
of reasonable care in warning the Ingrams if the structural system it designed and/or sold to the
Ingrams was improper for, not permitted for, and/or unsafe for the use in the planned
construction.” [DN 1 at 25.] Additionally, they allege that “Premium warranted to the Ingrams
that the structural framing materials it supplied were ‘designed and shop fabricated in strict
accordance with the drawings and specifications.’” [DN 1 at 25.]
With regard to LeeCor, Medlin, and the structural system, however, the Ingrams allege
that LeeCor and Medlin were “in the business of marketing and selling residential steel frame
and prefabricated foam panel construction materials that are designed, manufactured, packaged
and/or marketed by Defendant PREMIUM.” [DN 1 at 10–11.] Next, they allege that LeeCor and
Medlin “hold themselves out as having experience and expertise in selecting and/or
recommending certain products for inclusion in a new home build, such as, but not limited to,
steel framing and prefabricated foam walls.” [Id. at 11.] They further allege that “Medlin and/or
Oasis Construction represented to the Ingrams that the house plan had been modified by
7
Defendant PREMIUM[‘s] . . . engineers as necessary to allow for proper and permitted
construction of the Ingrams’ home using the materials recommended to the Ingrams.” [Id. at 12.]
Ultimately, according to the Ingrams, many, if not all of these representations were false. [See id.
at 18.] While these allegations are minimal, our pleadings standards are liberal. Indeed, the Sixth
Circuit has emphasized that “the fundamental tenor of the Rules [of Civil Procedure] is one of
liberality rather than technicality.” Minger v. Green, 239 F.3d 793, 799 (6th Cir. 2001) (quoting
Miller v. American Heavy Lift Shipping, 231 F.3d 242, 248 (6th Cir. 2000)). As such, “the Rules
require that we not rely solely on labels in a complaint, but that we probe deeper and examine the
substance of the complaint.” Id.
Here, the Ingrams have alleged, throughout their complaint, that LeeCor and Medlin sold
Premium’s structural systems and that Medlin represented to the Ingrams that the structural
system would work for their home. [See DN 1 at 10–12.] The Court finds that, at this early stage,
the Ingrams have alleged sufficient facts to infer that LeeCor and/or Medlin sell Premium’s
structural systems, that they knew of the purpose for which the Ingrams sought to use one of the
structural systems, that they recommended that the Ingrams use the system in the construction of
their house, and that the system turned out to be improper. Therefore, the Court will deny
Defendants’ motion to dismiss with respect to the Ingrams’ claim of breach of implied warranty
of fitness for a particular purpose.
c. Implied Warranty of Workmanlike Performance
Third, the Ingrams claim that “LeeCor, Medlin and/or Premium have breached . . . [the]
implied warrant[y] of . . . workmanlike performance.” [DN 1 at 37.] The Supreme Court of
Kentucky has recognized
as a common law principle an implied warranty of habitability to the “buyer of a
new house from the professional builder-seller ... to the extent of holding that in
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the sale of a new dwelling by the builder there is an implied warranty that in its
major structural features the dwelling was constructed in a workmanlike manner
and using suitable materials.”
Real Estate Mktg., Inc. v. Franz, 885 S.W.2d 921, 923 (Ky. 1994), overruled on other grounds
by Giddings & Lewis, Inc. v. Indus. Risk Insurers, 348 S.W.3d 729 (Ky. 2011) (quoting Crawley
v. Terhune, 437 S.W.2d 743, 745 (Ky. 1969)). Courts applying this principle have explained that
it is implied only in instances in which a new house is sold by the builder of that house. In Miller
v. Massey, for instance, the Court of Appeals of Kentucky determined that no implied warranty
of workmanlike construction applied when “the plain language of the contract is that Massey is
not responsible for construction of the building; therefore, Massey is not the builder and [the
implied warranty recognized in] Crawley does not apply.” Miller v. Massey, No. 2007-CA002347-MR, 2009 WL 103160, at *5 (Ky. Ct. App. Jan. 16, 2009). In that case, the contract
provided that the defendant, Massey, had only the “responsibility for overseeing construction and
facilitating completion of the house,” rather than participating in the actual construction thereof.
Id. at *2. On the other hand, in some circumstances, courts have identified “a serious issue of
fact . . . as to whether [a] developer [or other contractor] was also the builder” for purposes of the
implied warranty of workmanlike construction. See Miller v. Hutson, 281 S.W.3d 791, 793 (Ky.
2009).1
In their motion to dismiss, Defendants argue that the Ingrams’ “claim under a warranty of
workmanlike performance fails because plaintiffs allege no facts suggesting Medlin and/or
LeeCor Systems acted as builders in this case.” [DN 14-1 at 5.] They argue that the Ingrams have
only pled that LeeCor and Medlin sold Premium’s structural systems and that Medlin was only
1
In Miller v. Hutson, it ultimately proved unnecessary for the court to determine whether the developer, Hutson,
was also the builder of the house for implied warranty purposes. This is because “Hutson also signed an expressed
written warranty covering the premises in question for one year.” Miller v. Hutson, 281 S.W.3d 791, 794 (Ky.
2009). However, had that not been the case, remand for further findings of fact would have been necessary. See id.
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present on the job site “to direct ‘those parts of the job that involved or effected (sic) the products
he sold’” for Premium. [Id. (quoting DN 1 at 11).]
True, many of the Ingrams’ allegations relate to Medlin’s duty to merely “oversee,”
“direct,” or “supervise” the construction project. [DN 1 at 12 ¶ 52, at 25 ¶ 127, at 29 ¶ 140(l).]
However, the Ingrams also allege, at some points throughout their complaint, that Medlin had a
part in actually constructing the house. For instance, they allege that Medlin “provided ‘onsite
assistance’ with the installation of [Premium’s] products in the construction performed by
Oasis.” [Id. at 17.] They also allege that, after Oasis began construction in September 2015,
“[w]ork was also performed by Medlin.” [Id. at 21.] Additionally, the Ingrams allege that Medlin
sent them an email in which he stated, among other things, that the structural “system has been
installed by an experienced contractor with onsite assistance from the President of” Premium, “as
well as myself as a local sales representative.” [Id. at 13.]
Accepting these allegations as true, which the Court must do at the 12(b)(6) stage, the
Ingrams have pled sufficient facts for the Court to infer that Medlin may have had a part in
actually building the house; specifically, in installing the structural system. Whether Medlin did,
in fact, have any part in the actual construction of the house is a matter reserved for after
discovery has taken place. At this time, however, the fact that the Ingrams have alleged that
Medlin participated, at least in part, in the construction of the house, is sufficient. Accordingly,
LeeCor and Medlin’s motion to dismiss will be denied with respect to the Ingrams’ claim of
breach of the implied warranty of workmanlike performance.
2. Count Three: Negligent Hiring, Training, Retention and Supervision
In count three of their complaint, that Ingrams assert that “LeeCor breached its duties of
reasonable care with regard to hiring, retaining, training and/or supervising Medlin and assigning
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him, or permitting him, to advise, supervise and/or perform work on the Ingrams’ project.” [DN
1 at 38.] “Kentucky’s recognition of torts based upon negligent hiring, negligent training,
negligent supervision, and negligent retention is well established.” MV Transp., Inc. v. Allgeier,
433 S.W.3d 324, 336 (Ky. 2014). These types of claims “focus on the direct negligence of the
employer which permitted an otherwise avoidable circumstance to occur.” Ten Broeck Dupont,
Inc. v. Brooks, 283 S.W.3d 705, 734 (Ky. 2009) (emphasis added).
The Supreme Court of Kentucky has identified “the elements of negligent hiring and
retention a[s]: (1) the employer knew or reasonably should have known that an employee was
unfit for the job for which he was employed, and (2) the employee's placement or retention at
that job created an unreasonable risk of harm to the plaintiff.” Brooks, 283 S.W.3d at 733.
Similarly, “an employer may be held liable for negligent supervision only if he or she knew or
had reason to know of the risk that the employment created.” Booker v. GTE.net LLC, 350 F.3d
515, 517 (6th Cir. 2003) (citing Smith v. Isaacs, 777 S.W.2d 912 (Ky. 1989); Restatement
(Second) of Agency § 213 (1958)).
In their motion to dismiss, Defendants assert that the Ingrams have not pled sufficient
facts to infer that LeeCor negligently hired, trained, retained, or supervised Medlin. [DN 14 at 6–
7.] Upon review of the Ingrams’ complaint, the Court agrees. Though the Ingrams make various
allegations of Medlin’s purported negligence, they do not plead facts to suggest that LeeCor’s
own negligence caused Medlin’s conduct. For instance, the Ingrams allege, in part, that “Oasis,
Davis, the laborer named Eric, and/or Medlin failed to properly install window and door units
pursuant to the building code and the manufacturer’s installation instructions,” “failed to
properly fasten the Tuscan doors to the wall framing,” and “failed to properly install the steel
framing system, causing sloped floors in the house.” [DN 1 at 33.] At no point, however, do the
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Ingrams connect the dots between this alleged negligence by Medlin to any alleged negligent
hiring, training, supervision, or retention of Medlin by LeeCor.
The Ingrams also make allegations as to how LeeCor and Medlin, together, were
negligent, but not as it pertains to any of LeeCor’s hiring, training, retention, or supervision of
Medlin. For example, the Ingrams claim that “the wall panel system was recommended to the
Ingrams by . . . Oasis, Verning, Medlin, LeeCor, and/or Premium without meeting the necessary
design requirements for the required seismic conditions of this area, which constitutes a major
structural deficiency with the home.” [Id. at 32.] However, the Ingrams have pled no facts to
suggest that LeeCor “knew or had reason to know of the risk that the employment [of Medlin]
created,” Booker, 350 F.3d at 517, such that any act or omission by LeeCor “permitted an
otherwise avoidable circumstance to occur.” Brooks, 283 S.W.3d at 734. See, e.g., Booker, 350
F.3d at 517 (“Booker’s complaint failed to allege that Verizon knew or should have known that
the employee who drafted the electronic message would act as he or she did. While Booker
alleged that Verizon had a duty to supervise its employees and that it failed to satisfy this duty,
this Court is not bound to accept bare legal conclusions unsupported by factual allegations.”);
Auto-Owners Ins. v. Aspas, No. 3:16-CV-00189-DJH, 2017 WL 1416817, at *2 (W.D. Ky. Apr.
19, 2017) (“[T]heir proposed amended complaint rests solely on bare assertions that Valley Tire
was negligent in hiring and supervising its agents, servants, and employees. Because these
allegations are ‘devoid of ‘further factual enhancement[,]’ ’ they cannot survive a motion to
dismiss.”); Taylor v. JPMorgan Chase Bank, N.A., No. CIV. 13-24-GFVT, 2014 WL 66513, at
*10 (E.D. Ky. Jan. 8, 2014) (“What are noticeably missing, however, are the factual allegations
that show how these problems had previously manifested themselves such that Chase Bank
should have been aware that Fry and James might incite disparate racial treatment at the bank.”).
12
In their response to Defendants’ motion to dismiss, the Ingrams state “it is true that the
Complaint does not identify what LeeCor’s internal practices and policies are with regard to
hiring, training, supervision or retention.” [DN 33 at 10.] However, according to the Ingrams,
“the number and extremity of the failures in this action with which Medlin is directly associated
gives rise to a fair inference that LeeCor’s policies and practices with regard to hiring, training,
supervision and/or retention are potentially partly to blame.” [Id. at 11.] The Court disagrees. In
order for the Ingrams “to raise a ‘plausible’ inference of wrongdoing” to survive Rule 12(b)(6),
16630 Southfield, 727 F.3d at 504, they must “plead[] factual content that allows the court to
draw the reasonable inference that [LeeCor] is liable for the misconduct alleged.” Iqbal, 556 U.S.
at 678 (citing Twombly, 550 U.S. at 556). Here, the Ingrams have failed to allege sufficient
factual matter regarding LeeCor’s alleged negligent hiring, training, supervision, or retention of
Medlin such that the Court can draw that reasonable inference. Although the Ingrams allege that
LeeCor had a duty to reasonably hire, train, retain, and supervise Medlin and that LeeCor
breached that duty, “this Court is not bound to accept bare legal conclusions unsupported by
factual allegations.” Booker, 350 F.3d at 517. Accordingly, Defendants’ motion to dismiss the
Ingrams’ negligent hiring, training, retention, and supervision claim against LeeCor is granted.2
3. Count Five: Fraud
The Ingrams also allege a fraud claim against Medlin. [DN 1 at 40–41.] In their motion
to dismiss, Defendants claim that the Ingrams’ fraud claim against them fails because they have
2
In their response, the Ingrams suggest that they also bring a claim of negligent hiring, training, retention, and
supervision against Medlin related to his alleged negligent supervision of Davis, an Oasis employee, on the
construction site. [See DN 33 at 10–11.] However, in Count III of their complaint, the Ingrams never allege that
Medlin breached the duty to hire, train, retain, or supervise. [See DN 1 at 38–39.] However, the Ingrams do
specifically allege that Oasis, Verning, LeeCor, and Premium breached those duties. [Id.] Because the Ingrams
failed to make that same claim regarding Medlin in their complaint, however, the Court will not consider that claim
here.
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not pled the necessary elements of a fraud claim under Kentucky law. Here, the Ingrams allege
fraud by misrepresentation. [DN 1 at 40–41.]
In Kentucky, fraud by misrepresentation comprises six elements: (1) the
defendant must have made a material misrepresentation; (2) that was false; (3)
that the defendant knew was false, or made with reckless disregard for its truth;
(4) that was intended to induce the plaintiff to act, based on the misrepresentation;
(5) that the plaintiff reasonably relied; and (6) that caused the plaintiff injury.
Republic Bank & Tr. Co. v. Bear Stearns & Co., 683 F.3d 239, 248 (6th Cir. 2012) (citing
Flegles, Inc. v. TruServ Corp., 289 S.W.3d 544, 549 (Ky. 2009)).
Though the substance of a fraud claim is governed by Kentucky law, the procedure of
pleading such a claim is governed by Federal Rule of Civil Procedure 9(b). Thompson v. Bank of
Am., N.A., 773 F.3d 741, 751 (6th Cir. 2014). Under Rule 9(b), “a party alleging fraud ‘must
state with particularity the circumstances constituting fraud or mistake. Malice, intent,
knowledge, and other conditions of a person’s mind may be alleged generally.’” Id. (quoting
Fed. R. Civ. P. (9)(b)). “The purposes of Rule 9(b) are (1) to alert defendants to the particulars of
the allegations against them so they can intelligently respond; (2) to prevent “fishing
expeditions”; (3) to protect defendants’ reputations against fraud allegations; and (4) to whittle
down potentially wide-ranging discovery to only relevant matters.” Id. (citing Chesbrough v.
VPA, P.C., 655 F.3d 461, 466–67 (6th Cir. 2011)). The Sixth Circuit has explained that, “to
satisfy Rule 9(b), a plaintiff must (1) specify the time, place, and content of the alleged
misrepresentation, (2) identify the fraudulent scheme and the fraudulent intent of the defendant,
and (3) describe the injury resulting from the fraud.” Id. (citing U.S. ex rel. SNAPP, Inc. v. Ford
Motor Co., 532 F.3d 496, 504 (6th Cir. 2008)).
In their complaint, the Ingrams allege the following: that “Oasis Construction . . . Medlin,
Verning and/or Premium acting through its agent or agents made material and false
14
misrepresentations to the Ingrams,” that “[e]ach defendant knew at the time of making the
misrepresentation that it was false – or, alternatively, made the misrepresentation recklessly,
without any knowledge of its truth and as a positive assertion,” that “[e]ach made his or its
misrepresentation(s) with the intention of inducing the Ingrams to act or with the intention that is
should be acted upon,” and “[t]he Ingrams relied upon said misrepresentation(s) and suffered
injury as a result.” [DN 1 at 40–41.]
According to Defendants, “[i]t is wholly unknown what purported statements were
fraudulent in nature and from which party given plaintiffs make a blanket allegation against all
defendants alleging that each supplied false information.” [DN 14-1 at 8.] Defendants concede
that “plaintiffs [do] separately allege various statements made by Medlin, including so-called
representations about a vapor barrier and the system as a whole,” however, they argue that
“plaintiffs never alleged which statements were allegedly false or allegedly fraudulent in an
attempt to induce plaintiffs to act.” [Id.]
However, after “prob[ing] deeper and examin[ing] the substance of the complaint” as a
whole, which the Federal Rules require, Minger, 239 F.3d at 799, the Court finds that the
Ingrams have made sufficient allegations to specifically plead fraud under Kentucky law. For
instance, the Ingrams allege that “LeeCor and Medlin hold themselves out as having experience
and expertise in selecting and/or recommending certain products for inclusion in a new home
build, such as, but not limited to, steel framing and prefabricated foam walls.” [DN 1 at 11.]
They also state that
Medlin specifically assured Mr. Ingram that he had the experience and ability
necessary to oversee a residential construction project using the materials he
markets and sells and represented that he would be present at the new home build
in question “every step of the way” to assure proper construction.
15
[Id. at 12.] Next, the Ingrams allege that Medlin assured them that copies of the house plans had
been sent to Premium and modified “as necessary to allow for proper and permitted construction
of the Ingrams’ home using the materials recommended to the Ingrams.” [Id.] Additionally, the
Ingrams claim that they consulted with Medlin about whether a “vapor barrier” needed to be
installed “between the prefabricated foam wall panels and the brick veneer” and that Medlin
advised that a vapor barrier was not required. [Id.] According to the Ingrams, “[t]he vapor barrier
. . . should have been recommended and installed by Oasis.” [Id. at 13.] Finally, the Ingrams
allege that “[o]ne or more of the foregoing statements was false and/or intended to mislead the
Ingrams.” [DN 1 at 14.]
The Court is satisfied that these allegations against LeeCor and Medlin are sufficiently
specific so as to “alert defendants to the particulars of the allegations against them so they can
intelligently respond,” a key purpose of Rule 9(b)’s particularity requirement. Thompson, 773
F.3d at 751. In essence, the Ingrams assert, first, that LeeCor and Medlin represented that they
could adequately recommend materials to be used in the construction of the Ingrams’ home, but
that they improperly and intentionally recommended the use of Premium’s structural system.
Second, they allege that Medlin represented that he would ensure that the system was properly
installed, but that this representation was false and that the system was not installed properly.
Third, they assert that Medlin misrepresented that a vapor barrier was not necessary, which
turned out to be false, as they allege that one should have been recommended. “Such [] lie[s], if
proven, could sustain a claim for fraud.” Republic Bank, 683 F.3d at 249. At this time, the Court
finds that these allegations provide enough specificity to state a claim for fraud under Kentucky
law and to allow LeeCor and Medlin to form their responses. To the extent Defendants seek
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additional detail, they will have the opportunity to obtain those details through discovery.
Accordingly, Defendants’ motion to dismiss the Ingrams’ fraud claim is denied.
4. Count Ten: Failure to Warn
Finally, Defendants move to dismiss the last count of the Ingrams’ complaint, labeled
“Failure to Warn.” [DN 1 at 44.] In support of that claim, the Ingrams allege that
Premium, LeeCor, Medlin and/or Oasis Construction and/or Verning (hereinafter
collectively “Oasis”) knew, or should have known, from the house plans that they
modified, the applicable building code, and/or their knowledge of the products
recommended to the Ingrams that the products and/or methods of construction
they recommended and employed were not permissible and/or suitable and that
use of them would result in damage to the Ingrams, including, but not limited to,
having a home not compliant with the building code.
[Id.] The Ingrams further allege that “Premium, LeeCor, Medlin and/or Oasis failed to warn the
Ingrams” “that the house as specified in the plans reviewed, and modified by one or more of
these defendants, could not be built to code using Premium’s structural system,” and “that the
structure would not otherwise meet the building code, including, but not limited to, with regard
to gravity, wind and seismic load requirements.” [Id. at 45.]
In their motion to dismiss, LeeCor and Medlin argue that the Ingrams’ failure to warn
claim “combine[s] several possible tort/contract theories under a single count” and that “[t]his
count is not properly pled. It is not a failure to warn count at all.” [DN 14-1 at 9.] After
reviewing Kentucky law on “failure to warn” liability, the Court agrees. As far as the Court can
discern, Kentucky law recognizes three categories of failure to warn claims. First, for product
manufacturers, “a failure to warn claim may be premised on an absence of warning or an
inadequate warning” related to the foreseeable and expected use of a potentially dangerous
product. Enlow v. St. Jude Med., Inc., 210 F. Supp. 2d 853, 859 (W.D. Ky. 2001). Second,
“premises owners can be held to a duty to warn upon a showing of known dangerousness and a
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failure to warn.” CertainTeed Corp. v. Dexter, 330 S.W.3d 64, 79 (Ky. 2010) (citing Brewster v.
Colgate–Palmolive Co., 279 S.W.3d 142, 143 (Ky. 2009)). Third, individuals with an “enhanced
ability to observe the conditions under which [the person causing the harm] might be expected to
be especially dangerous” may have a duty to warn a third party of possible harm. Grand Aerie
Fraternal Order of Eagles v. Carneyhan, 169 S.W.3d 840, 850–51 (Ky. 2005) (citations
omitted). “The most common applications of this theory of liability occur within the contexts of
the state/parolee relationship, and the psychotherapist/patient relationship.” Id. (internal citations
omitted).
The allegations the Ingrams make in support of their failure to warn claim do not fall
under any of the three categories of failure to warn liability recognized in Kentucky. They do not
allege that LeeCor or Medlin failed to warn them of any known dangerousness of the structural
system used in their house, or of any potential harm to a third person, but that the structural
system was improper for the construction, could not be installed in accordance with applicable
building codes, and was not installed by sufficiently trained contractors. [See DN 1 at 44–45.]
These allegations, when taken as true, do not state a claim upon which relief can be granted for
“failure to warn.” Rather, they are more properly directed toward claims of ordinary negligent
construction, negligent provision of professional services, negligent misrepresentation, and
building code violations, which the Ingrams also allege in their complaint and which remain
pending in the case. For these reasons, LeeCor and Medlin’s motion to dismiss will be granted
with respect to Plaintiffs’ failure to warn claim.
B. More Definite Statement
To the extent the Court denies LeeCor and Medlin’s motion to dismiss, LeeCor and
Medlin request that the Court require the Ingrams to make a more definite statement as to the
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remaining claims against them under Rule 12(e). With respect to the Ingrams’ claims of breach
the implied warranty of fitness for a particular purpose, breach the implied warranty of
workmanlike performance, and fraud, the Court has denied LeeCor and Medlin’s motion to
dismiss. However, the Court will not require the Ingrams to make a more definite statement as to
those claims.
Federal Rule of Civil Procedure 12(e) provides that
[a] party may move for a more definite statement of a pleading to which a
responsive pleading is allowed but which is so vague or ambiguous that the party
cannot reasonably prepare a response. The motion must be made before filing a
responsive pleading and must point out the defects complained of and the details
desired.
Fed. R. Civ. P. 12(e). However, “[a] motion for more definite statement is designed to strike at
unintelligibility rather than simple want of detail.” United States v. Paul, No. CIV. A. 6:07-CV36, 2008 WL 2074024, at *2 (E.D. Ky. May 13, 2008) (quoting Schwable v. Coates, 2005 WL
2002360, at *1 (N.D. Ohio August 18, 2005)). Therefore, “[it] must be denied where the subject
complaint is not so vague or ambiguous as to make it unreasonable to use pretrial devices to fill
any possible gaps in detail.” Id. (quoting Schwable, 2005 WL 2002360, at *1). Here, though the
Ingrams’ allegations may be limited, they are not unintelligible such that LeeCor and Medlin
cannot possibly formulate a response. The Court is confident that Defendants can obtain the
additional information they seek through discovery. Accordingly, Defendants’ 12(e) motion is
denied.
C. Motion to Strike
After the Ingrams filed their response to LeeCor and Medlin’s motion to dismiss, LeeCor
and Medlin made a motion to strike the Ingrams’ response as untimely. [DN 38.] Therein,
Defendants explain that their motion to dismiss was filed on March 6, 2017. [See DN 14.] The
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Ingrams did not respond to that motion until June 9, 2017, more than three months later. [See DN
33.] Under our Local Rules, “a party opposing a motion must file a response within 21 days of
service of the motion. Failure to timely respond to a motion may be grounds for granting the
motion.” LR 7.1(c).
In response, the Ingrams’ counsel concedes that the response was filed late, but explains
that this untimeliness was due to a calendaring error. [DN 41 at 2–3.] The Ingrams’ counsel
further explains:
The delay here was not intentional, was not meant to gain any advantage, and was
not intended as a slight to the Court or to opposing counsel. In fact, it was not
intended at all. Rather, the delay resulted from a calendaring error by counsel and
oversight during an office move. Upon discovery, a brief response was
immediately filed. The delay caused no prejudice to the Moving Defendants.
Striking the Response is a harsh remedy and is not required for purposes of
justice.
[Id. at 4.] The Court agrees. LeeCor and Medlin offer no justification for striking the Ingrams’
response other than the fact that the response was untimely filed. In other words, they have
identified no alleged bad faith or ascertainable prejudice as a result of the late filing.
Accordingly, the Court finds that striking the Ingrams’ response is unnecessary, and therefore
will deny Defendants’ motion.
CONCLUSION
For the reasons stated herein, IT IS HEREBY ORDERED as follows:
(1) Defendants LeeCor and Medlin’s partial motion to dismiss or, in the alternative, for a
more definite statement, [DN 14], is GRANTED IN PART AND DENIED IN PART.
The motion is GRANTED with respect to Plaintiffs’ breach of written warranty,
negligent hiring, training, retention and supervision, and failure to warn claims, which are
dismissed for failure to state a claim upon which relief can be granted. The motion is
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DENIED with respect to Defendants’ alternative request for a more definite statement as
to Plaintiffs’ remaining claims.
(2) Defendants’ motion to strike Plaintiffs’ response, [DN 38], is DENIED.
IT IS SO ORDERED.
Date:
December 19, 2017
cc:
Counsel
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