Waterfall Homeowners Association et al v. Viega, Inc. et al
Filing
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ORDER Granting 106 Motion to Reconsider. FURTHER ORDERED that the Motions to Reconsider 107 , 108 , 109 are DENIED. Signed by Chief Judge Robert C. Jones on 11/26/12. (Copies have been distributed pursuant to the NEF - MMM)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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WATERFALL HOMEOWNERS
ASSOCIATION et al.,
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Plaintiffs,
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vs.
VIEGA, INC. et al.,
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Defendants.
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2:11-cv-01498-RCJ-GWF
ORDER
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This Rule 23 class action arises out of the installation of allegedly defective high-zinc-
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content “yellow brass” plumbing fittings in residences throughout the Las Vegas area. Several
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motions to reconsider are pending before the Court.
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I.
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FACTS AND PROCEDURAL HISTORY
Plaintiffs Waterfall Homeowners Association (“Waterfall”) and Red Bluffs at the
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Crossings Owners Association, Inc. (“Red Bluffs”) have filed the present Rule 23 class action.
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Plaintiffs represent their own 998 members directly but also wish to represent up to 10,000
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homeowners associations representing up to 250,000 similarly situated homeowner members
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throughout the Las Vegas area via this class action. Plaintiffs seek damages pursuant to Chapter
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40 of the Nevada Revised Statutes (“NRS”) based upon damage and potential future damage to
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class members’ homes arising out of the failure or potential future failure of yellow brass
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plumbing fittings and components manufactured by “Vanguard/Viega” and “Wirsbo/Uponor.”
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Plaintiffs sued the following Defendants in this Court: (1) Viega, Inc.; (2) Viega, LLC;
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(3) VG Pipe, LLC; (4) Vanguard Piping Systems, Inc.; (5) Vanguard Industries, Inc.; (6) Viega
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GMBH & Co. KG; (7) Viega International GMBH; (8) Uponor Corp.; (9) Uponor Group; (10);
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Uponor, Inc.; (11) Wirsbo Co.; (12) Uponor Wirsbo Co.; (13) Centex Homes (“Centex”); (14)
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Dynamic Plumbing Systems Inc. of Nevada; (15) Interstate Plumbing and Air Conditioning, Inc.;
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(16) Interstate Plumbing and Air Conditioning, LLC, a.k.a. Interstate Services; and (17) James
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Manning. Defendants 1–5 are referred to collectively herein as the “U.S. Viega Defendants.”
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Defendants 6–7 are referred to collectively herein as the “German Viega Defendants.”
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Defendants 1–7 are referred to collectively herein as the “Viega Defendants.” Defendants 8–9
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are referred to collectively herein as the “Finnish Uponor Defendants.” Defendants 10–12 are
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referred to collectively herein as the “U.S. Uponor Defendants.” Defendants 8–12 are referred to
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collectively herein as the “Uponor Defendants.” Many of these Defendants have been sued in
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identical class actions by the same law firms, but with different named Plaintiffs.
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Waterfall sent its Chapter 40 notice to all Defendants except Manning on March 24,
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2011. On April 20, 2011, the German Viega Defendants responded by denying liability. On
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June 22, 2011, Interstate responded by claiming the notice was defective. On June 24, 2011, the
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U.S. Viega Defendants responded by claiming the notice was defective and disclaimed any
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liability. On June 28, 2011, Centex responded by claiming the notice was defective.
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Red Bluffs sent its Chapter 40 notice to the Viega Defendants on June 11, 2011. On July
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28, 2011, Viega GMBH & Co. KG responded by claiming the notice was defective. Plaintiffs
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sued Defendants in this Court on September 16, 2011. The Complaint lists ten nominal causes of
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action: (1) Breach of Implied Warranties; (2) Breach of Express Warranties (Viega Defendants);
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(3) Breach of Express Warranties (Uponor Defendants); (4) Breach of Express Warranties (all
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Defendants except Viega and Uponor Defendants); (5) Negligence and Negligent
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Misrepresentation; (6) Strict Liability; (7) Declaratory and Equitable Relief; (8) Violation of
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Nevada Deceptive Trade Practices Act (all Defendants except Centex); (9) Alter Ego (Uponor
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Defendants); and (10) Alter Ego (against Viega Defendants). The nominal fifth cause of action
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constitutes two separate causes of action. The nominal seventh cause of action lists two
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measures of relief but no independent cause of action. The nominal ninth and tenth causes of
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action are not independent causes of action but legal theories relevant to the other underlying
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causes of action.
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The Court recently decided several motions in a twenty-seven-page published order.
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First, the Court treated the U.S. Viega Defendants’ motion to strike class allegations as a motion
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to deny certification and denied the motion, giving Plaintiffs leave to amend to include
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allegations corresponding to Rule 23(b)(3). Second, the Court dismissed several claims, with
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leave to amend some of them, and ruled that Plaintiffs would have to join individual
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homeowners as named Plaintiffs, and identify individual homeowners, not other associations, as
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putative class members, to support Article III standing. Third, the Court denied a motion to
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dismiss based upon an improper Chapter 40 notice, because the question was too fact-intensive
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to be determined before summary judgment. Fourth, the Court granted a motion to dismiss as
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against the Uponor Defendants for violation of the anti-claim-splitting rule. Fifth, the Court
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denied the German Viega Defendants’ motion to dismiss for lack of personal jurisdiction based
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upon agency jurisdiction. Sixth, the Court denied a motion to stay the time for Uponor Corp.’s
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responsive pleading. Seventh, the Court ruled that the magistrate judge had erred in refusing to
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sever the U.S. Viega Defendants from the present case, but that the error was harmless in light of
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the Court’s dismissal of the Uponor Defendants. Four motions to reconsider are pending before
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the Court.
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II.
ANALYSIS
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A.
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U.S. Viega Defendants have asked the Court to reconsider severance. They argue that the
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Motion No. 106
Court was correct to rule that severance was appropriate but disagree that severance is moot
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simply because Uponor Defendants have been dismissed. Movants note that three non-Uponor
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Defendants (Centex, Interstate Plumbing and Air Conditioning, Inc., and Interstate Plumbing and
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Air Conditioning, LLC (collectively, “Interstate”)) remain in the case based upon those
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Defendants’ installation or use of Uponor products. The Court previously ruled that severance
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was proper because the Uponor/Wirsbo Defendants and the Viega/Vanguard Defendants were
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sued based upon allegedly defective plumbing components whose defects were similar but which
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had been designed, composed, manufactured, and retailed separately.
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In response, Plaintiffs ask the Court to reconsider dismissal of the Uponor Defendants for
violation of the anti-claim-splitting rule, but rather sever Uponor Defendants, Centex, and
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Interstate for consolidation with the Slaughter case. The Court grants U.S. Viega Defendants’
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motion to reconsider and severs the claims as against Centex and Interstate.
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B.
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U.S. Viega Defendants ask the Court to reconsider dismissal of Vanguard Piping
Motion No. 107
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Systems, Inc. (“VSPI”), because it “had been merged out of existence” prior to this case and
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therefore lacked the capacity to be sued. VSPI was a Kansas corporation according to the
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Complaint, and Plaintiffs argue that Kansas law permits merged corporations or the resulting
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corporation to be sued. See Kan. Stat. Ann. § 17-6711 (1972) (“Any action or proceeding,
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whether civil, criminal or administrative, pending by or against any corporation which is a party
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to a merger or consolidation shall be prosecuted as if such merger or consolidation had not taken
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place, or the corporation surviving or resulting from such merger or consolidation may be
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substituted in such action or proceeding.”). The Court denies the motion to reconsider.
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C.
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German Viega Defendants ask the Court to reconsider its ruling that there is personal
Motion No. 108
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jurisdiction over them in Nevada based upon agency jurisdiction. The Court relied upon Bauman
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v. DaimlerChrysler Corp. (Bauman I), 579 F.3d 1088, 1094–95 (9th Cir. 2009), and Movants
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argue that the Supreme Court’s ruling in Goodyear Dunlop Tires Operations, S.A. v. Brown, 131
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S. Ct. 2846, 2851 (2011) undermines that case. According to Bauman I, “[t]o satisfy the agency
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test, the plaintiff must make a prima facie showing that the subsidiary represents the parent
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corporation by performing services sufficiently important to the [parent] corporation that if it did
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not have a representative to perform them, the [parent] . . . would undertake to perform
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substantially similar services.” See 579 F.3d at 1094 (internal quotation marks omitted;
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alterations in original). Bauman I was vacated, but the Court of Appeals reached the same
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conclusion as to the agency jurisdiction issue on May 18, 2011 after rehearing, based upon the
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same reasoning. See Bauman v. DaimlerChrysler Corp. (Bauman II), 644 F.3d 909, 921–24 (9th
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Cir. 2011). The Supreme Court decided Goodyear on June 27, 2011. In that case, the Supreme
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Court ruled that a state court could not exercise general jurisdiction over a foreign subsidiary of
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Goodyear USA based purely upon the fact that some of the foreign subsidiary’s (non-case-
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related) products reached the forum through the stream of commerce via the actions of other
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Goodyear USA affiliates. See Goodyear, 131 S. Ct. at 2851–52. All parties had agreed there was
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no specific jurisdiction, because the bus accident at issue did not occur within the forum. (See
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id.). Here, the German Viega Defendants stand in a different position than did the Goodyear
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subsidiaries from France, Luxembourg, and Turkey in that case. The German Viega Defendants
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are alleged to be not subsidiaries whose products came to the Nevada forum through no action of
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their own and who have no contact with Nevada directly or through their own subsidiaries, but
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rather they are alleged to be the parents of subsidiaries over which there is general jurisdiction in
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Nevada.
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Next, German Viega Defendants argue that the Court did not perform the seven-factor
reasonableness analysis of personal jurisdiction:
(1) the extent of the defendant’s purposeful injection into the forum; (2) the
defendant’s burdens from litigating in the forum; (3) the extent of conflict with the
sovereignty of the defendant’s forum; (4) the forum state’s interest in adjudicating
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the dispute; (5) the most efficient judicial resolution of the controversy; (6) the
importance of the forum to the plaintiff's interest in convenient and effective relief;
and (7) the existence of an alternative forum.
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Ziegler v. Indian River Cnty., 64 F.3d 470, 475 (9th Cir. 1995). Movants have the burden of
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demonstrating a compelling case that jurisdiction is not reasonable. Burger King Corp. v.
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Rudzewicz, 471 U.S. 462, 477 (1985). They have not done so either in the present motion to
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reconsider, which includes no argumentation concerning the seven factors or reasonableness
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generally, or in the original motion to dismiss, which includes some argumentation, although not
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according to the seven factors. The original motion includes mostly uncontroversial citations to
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cases explaining the requirement of reasonableness. Movants rely mainly on a case from the
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Eastern District of Texas that predates Baumer by nearly three decades. The Court denies the
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motion.
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D.
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Plaintiffs ask the Court to reconsider dismissal of their strict liability claim. Alternately,
Motion No. 109
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they ask the Court to certify the issue to the Nevada Supreme Court or to the Ninth Circuit for
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immediate appeal. The Court has already certified the question to the Nevada Supreme Court in
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another case.
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The Court dismissed the strict liability claim because under Calloway v. City of Reno,
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993 P.2d 1259 (Nev. 2000), a building is not a product for the purposes of strict liability, and
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damage to a building from a defective plumbing system constitutes damage to the building by
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itself causing only economic loss addressable in contract, not tort, id. at 1268–69. Plaintiffs note
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that the Nevada Supreme Court in Olson v. Richard ruled that “notwithstanding our holding in
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Calloway, a negligence claim can be alleged in a construction defects cause of action initiated
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under Chapter 40.” 89 P.3d 31, 33 (Nev. 2004). Plaintiffs argue that the same reasoning should
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be applied to strict liability claims. The Oslon Court reasoned that the legislature in enacting
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Chapter 40 “did not intend for the economic loss doctrine to preclude a homeowner from alleging
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a negligence claim in a construction defects cause of action initiated pursuant to Chapter 40.” Id.
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It is not clear the same reasoning should apply to strict liability claims. The Olson Court was
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itself split.
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CONCLUSION
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IT IS HEREBY ORDERED that the Motion to Reconsider (ECF No. 106) is GRANTED.
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IT IS FURTHER ORDERED that the Motions to Reconsider (ECF Nos. 107, 108, 109)
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are DENIED.
IT IS SO ORDERED.
Dated this 26th day of November, 2012.
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ROBERT C. JONES
United States District Judge
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