Leonard et al v. Bed, Bath & Beyond, Inc.
Filing
102
ORDER granting in part and denying in part 75 Third-Party Defendant Ashland Inc.'s Motion to Dismiss and granting in part and denying in part 80 Third-Party Defendant Essential Ingredients, Inc.'s Motion to Dismiss. Counts 8, 9, 11 and 12 of the Third-Party Complaint [DE-24] are DISMISSED. The action may proceed with regard to Counts 10 and 13. Signed by Senior Judge James C. Fox on 12/30/2015. (Grady, B.)
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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:15-CV-00284-F
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V.
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BED, BATH & BEYOND, INC.,
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Defendant/Third-Party Pl~tiff, . )
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V.
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NAPA HOME & GARDEN, INC., et al.
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Third-Party Defendants
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WILLIAM LEONARD and KAREN
LEONARD,
Plaintiffs,
ORDER
This matter is before the court on Third-Party Defendant Ashland, fuc.'s ("Ashland") Motion
to Dismiss [DE-75] and Third-Party Defendant Essential fugredients, fuc.'s ("Essential fugredients")
Motion to Dismiss Counts 11, 12, and 13 ofBed Bath & Beyond, fuc.'s Third-Party Complaint [DE80]. For the reasons discussed below, the instant motions are ALLOWED in part and DENIED in
part.
I.
FACTUAL AND PROCEDURAL IDSTORY
Plaintiffs William and Karen Leonard ("the Leonards") filed a complaint in the underlying
personal injury action against Bed, Bath & Beyond, fuc. ("BBB") on April 11, 2014, in the United
States District Court for the District of New Jersey. 1 Compl. [DE-l]. The Leonards' Complaint
asserts claims of Negligence, Strict Products Liability, Breach of Express Warranties, Breach of
Implied Warranties of Merchantability, Negligent Infliction of Emotional Distress, and Loss of
.
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The action was later transferred to this district. See Order of May 22, 2015 [DE-47].
Consortium. Each of the Leonards' causes of action arise out of injuries sustained by Mr. Leonard
when he was burned while attempting to use FireGel Citronella Eco-Gel Fuel ("FireGel") purchased
from BBB. See id
On January 12, 2015, BBB flied its Third-Party Complaint [DE-24] against Napa Home &
Garden, Inc., Fuel Barons, Inc., Ashland, Inc., Cycan Industries, Inc., Losorea Packaging, Inc., and
Essential Ingredients, Inc. In the event it is held liable to the Leonards, BBB seeks compensation from
Ashland and Essential Ingredients for claims sounding in Negligence, Breach of Implied Warranty,
Product Liability, Indemnification, and Contribution. Ashland's and Essential Ingredients' Motions to
Dismiss [DE-75, -80] have been fully briefed, and are now ripe for disposition. In favor of their
Motions to Dismiss, Ashland and Essential Ingredients make substantially similar legal and factual
arguments, and each company refers to and incorporates the arguments of the other. See Ashland Mot.
Dismiss Mem. [DE-76] at 1 n.1; Essential Ingredients Mot. Dismiss Mem. [DE-82] at 2 n.3.
Accordingly, the court will discuss the motions together.
II.
STANDARD OF REVIEW
On a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a court must
determine the legal sufficiency of the complaint. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009);
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In so doing, the court assumes the truth of
all facts alleged in the complaint and the existence of any fact that can be proved, consistent with
the complaint's allegations. Erickson v. Pardus, 551 U.S. 89, 94 (2007). However, the '"[f]actual
allegations must be enough to raise a right to relief above the speculative level' and have
'enough facts to state a claim to relief that is plausible on its face."' Wahi v. Charleston Area
Med. Ctr., Inc., 562 F.3d 599, 615 n.26 (4th Cir. 2009) (quoting Twombly, 550 U.S. at 555).
Moreover, although the court draws all reasonable factual inferences in a plaintiffs favor, the
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court is not obligated to accept a complaint's legal conclusions drawn from the facts. Iqbal, 556
U.S. at 678. Nor must the court accept as true "unwarranted inferences, unreasonable
conclusions, or arguments." Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting
E. Shore Mkts., Inc. v. JD. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000)). "In deciding
whether a complaint will survive a motion to dismiss, a court evaluates the complaint in its
entirety, as well as documents attached or incorporated into the complaint." E.l du Pont de
Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011).
ill.
DISCUSSION
A. Component Seller Doctrine
Ashland argues, primarily, that the component seller doctrine bars its liability to BBB. The
United States District Court for the Middle District of North Carolina described and applied this
doctrine in Travelers Ins. Co. v. Chrysler Corp., 845 F. Supp. 1122 (M.D.N.C. 1994). Noting the
absence of any North Carolina or Fourth Circuit case on point, the court in Travelers relied on a case
out of the Sixth Circuit to hold that a "component part manufacturer [has] no duty to analyze the
design of the completed product" because "extending the duty to make a product safe to the
manufacturer of a nondefective component part would be tantamount to charging a component part
manufacturer with knowledge that is superior to that of the completed product manufacturer." !d.
(quoting Childress v. Gresen Mfg. Co., 888 F.2d 45, 49 (6th Cir. 1989)). Ashland argues that it is the
mere manufacturer of a component part, and as\ such, is not liable for the finished product's defects.
Ashland Mot. Dismiss Mem. [DE-76] at 12-14.
Ashland's argument with regard to the component seller doctrine is premature. BBB's
complaint alleges that Ashland's role in the production of FireGel was more than that of a mere
component seller. See Third-Party Compl. [DE-24]
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144 ("Ashland, Inc.... participated in the
design, manufacture, packaging, labeling, distribution and supply for retail sale ... [of] the FireGel
products that are the subject ofPlaintiffs Complaint."). Although Ashland may disagree with the facts
as alleged by BBB, the court must take BBB's well-pleaded allegations as true when considering a
motion to dismiss under Rule 12(b)(6). Assuming, as it must, that Ashland participated as alleged in
the design and manufacture of FireGel, the court does not find the component seller doctrine
applicable at this stage of the litigation?
B. Negligence
To prove a products liability claim under a negligence theory, the plaintiff must1 show that:
"(1) the product was defective at the time it left the control of the defendant, (2) the defect wa~s the result
of defendant's negligence, and (3) the defect proximately caused plaintiff damage." Red Hill Hosiery
Mill, Inc. v. MagneTek, Inc., 530 S.E.2d 321, 326 (N.C. Ct. App. 2000). Thus, simply demonstrating the
existence of a defective product is insufficient-the plaintiff must also prove the elements of common law
negligence. See id. at 326 n.5. These elements are: "(1) a legal duty[,] (2) a breach thereof[,] and (3)
injury proximately caused by the breach." Fussell v. NC. Farm Bureau Mut. Ins. Co., 695 S.E.2d 437,
440 (N.C. 2010) (quoting Stein v. Asheville City Bd. ofEduc., 626 S.E.2d 263, 267 (N.C. 2006)).
Essential Ingredients argues that BBB fails to allege that it has suffered an injury, and thus
fails to state a claim for negligence. Instead, according to Essential Ingredients, BBB' s negligence
claim is merely a disguised claim for indemnification or contribution. According to Essential
Ingredients, the alleged injury at issue in this case was suffered by the Leonards-not BBB. Essential
Ingredients points to the Third-Party Complaint, which "expressly admits that BBB has not suffered
any actionable negligence but is only seeking recovery in the event it is eventually held liable for harm
caused to Plaintiffs." Essential Ingredients Mot. Dismiss Mem. [DE-82] at 6 (citing Third-Party
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Ashland cites several cases from state and federal courts in which the component seller doctrine has barred liability
in similar circumstances. Ashland Mot. Dismiss Mem. [DE-76] at 9-10. The court notes that the majority of these
cases were decided at the summary judgment stage, rather than on a motion to dismiss under Rule 12(b)(6).
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Complaint [DE-24] ~ 174 ("If any of the allegations in Plaintiff's Complaint are true, which Bed Bath
and Beyond denies, Essential Ingredients, Inc. breached its duty and was negligent.")). Here, the court
agrees with Essential Ingredients. By alleging that it will be injured-and thus its claim against
Essential Ingredients will arise-only if it is found liable to the Leonards, BBB clearly presents a
claim for contribution or indemnity, rather than actionable negligence.
BBB argues that it must plead the third-party defendants' predicate tortious conduct in order to
sustain its claims for contribution or indemnity and thus, it is entitled to plead that tortious conduct as
an independent cause of action. BBB mistakenly conflates the elements of its claims. The basis of
liability in indemnification and contribution is the tortious conduct of the third-party defendant that led
to the original plaintiffs-in this case, the Leonards-injuries.3 The basis for liability in negligence is
the defendant's tortious conduct leading to the injury of the party bringing the negligence claimhere, BBB. Thus, the predicate tortious conduct to be pleaded in support of indemnification and
contribution is that which led to the Leonards' injuries, while the tortious conduct to be pleaded in
support of a negligence claim is that which led to BBB' s injuries.
Additionally, even if BBB was entitled to an independent claim of negligence here, the
economic loss rule would prohibit recovery. In an action for negligence, "North Carolina follows the
majority rule and does not allow the recovery of purely economic losses." AT&T Corp. v. Med Review,
Inc., 876 F. Supp. 91, 93 (E.D.N.C. 1995) (citing Chicopee, Inc. v. Sims Metal Works, Inc., 391 S.E.2d
211, 217 (1990)). Generally, the Fourth Circuit "views physical harm as a distinguishing factor
between noneconomic and economic losses." Id at 94 (citing 2000 WatermarkAss'n, Inc. v. Celotex
Corp., 784 F.2d 1183, 1185-86 (4th Cir. 1986)). Thus, where the only injury alleged is "damage
to ... financial resources .... [,] such loss [is] not recoverable under tort law in a products liability
3
See Hunsucker v. High Point Bending & Chair Co., 75 S.E.2d 768, 771 (N.C. 1953). Indemnification and
contribution will be discussed more thoroughly below.
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action in North Carolina." Id BBB has alleged only potential economic losses, which are not
compensable by way of a products liability claim sounding in negligence.
BBB has not alleged that it has suffered any injury. Further, to the extent that BBB has alleged
an injury to itself, the injury is merely economic. Accordingly, BBB's negligence claims against
Ashland and Essential Ingredients are DISMISSED.
C. Breach of Warranty/Product Liability
To state a products liability claim grounded in warranty, the plaintiff must show that: "(1) the
defendant warranted the product (express or implied) to plaintiff, (2) there was a breach of that
warranty in that the product was defective at the time it left the control of the defendant, and (3) the
defect proximately caused plaintiff damage." Red Hill Hosiery Mill, Inc., 530 S.E.2d at 326. Because
a warranty, ''whether express or implied, is contractual in nature [,] [o]nly a person in privity with the
warrantor may recover on the warranty." Terry v. Double Cola Bottling Co., 138 S.E.2d 753, 754
(N.C. 1964). North Carolina's Products Liability Act creates a narrow exception to the privity
requirement, providing that:
[a] claimant who is a buyer, as defined in the Uniform Commercial Code, of
the product involved, ... may bring a product liability action directly against the
manufacturer of the product involved for breach of implied warranty; and the lack of
privity of contract shall not be grounds for the dismissal of such action.
N.C. Gen. Stat.§ 99B-2(b) (2013). This exception to the privity requirement, however, does not apply
where a claim is for purely economic loss. Energy Inv 'rs Fund, L.P. v. Metric Constructors, Inc., 525
S.E.2d 441, 446 (N.C. 2000).
As discussed above, BBB' s claim is for purely economic loss. Thus, to sustain a claim for
breach of warranty, BBB must show that it was in privity of contract with the third-party defendants.
In its complaint, BBB alleges that it purchased FireGel pursuant to a contract with Napa Home &
Garden, Inc. Third-Party Compl. [DE-24]
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105. In contrast, BBB alleges that Ashland "participated
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in the design, manufacture, packaging, labeling, distribution and supply for retail sale ... [of] the
FireGel," and that Ashland "was engaged in the distribution of the FireBurners and/or FireGel into the
stream of commerce." Id
~~168-69.
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144-45. BBB makes identical allegations as to Essential Ingredients. Id
At no point does BBB allege that it was in privity of contract with either company.
Accordingly, BBB's breach of warranty claims against Ashland and Essential Ingredients are
DISMISSED.
D. Indemnification
In general, ''there is no right to indemnity as between joint tortfeasors." Hunsucker v. High
Point Bending & Chair Co., 75 S.E.2d 768, 771 (N.C. 1953). However, "when the active negligence
of one tortfeasor and the passive negligence of another tortfeasor combine and proximately cause an
injury to a third person," the passively negligent party may seek indemnity from the actively negligent
party. Id An actively negligent party, on the other hand, may not seek indemnity from a joint
tortfeasor. See Greene v. Charlotte Chern. Labs., Inc., 120 S.E.2d 82, 89 (N.C. 1961) ("There can be
no indemnity among joint tortfeasors when both are actively negligent.").
Essential Ingredie:n.ts argues that BBB was actively negligent as the seller of the FireGel that
injured Mr. Leonard, and as such, is not entitled to indemnity. Essential Ingredients further argues that
primary-secondary liability does not arise where one defendant alleges sole responsibility of his
codefendant, and that BBB has alleged that the third-party defendants are solely liable to the
Leonards. Essential Ingredients Mot. Dismiss Mem. [DE-82] at 11-12. This is not an accurate
summary of BBB's allegations. BBB specifically alleges that, if BBB is liable to the Leonards,
"Essential Ingredients, Inc., is a joint tortfeasor and is jointly liable" and that BBB' s liability, if any, is
only "secondary, passive, technical, vicarious, or imputed." Third-party Compl. [DE-24]
BBB makes identical allegations against Ashland. Id
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184-85.
160-61. Although the court need not accept
BBB's legal conclusions as true, it must assume the truth of the factual allegations in the Third-Party
Complaint, as well as the existence of any fact that can be proven consistent with those allegations.
Erickson v. Pardus, 551 U.S. 89, 94 (2007). Based on BBB's allegations as to the third-party
defendants' role in producing FireGel and BBB's own role in selling it, the court can assume the
existence of facts supporting joint tortfeasorship and primary-secondary liability. BBB has pleaded a
claim for indemnification sufficient to survive a Rule 12(b)(6) motion to dismiss.
E. Contribution
In North Carolina, the right to contribution among joint tortfeasors is statutory. N.C. Gen. Stat.
§ 1B-1 (a) ("[W]here two or more persons become jointly or severally liable in tort for the same injury
to person or property ..., there is a right of contribution among them even though judgment has not
been recovered against all or any of them."). However, "[t]here is no right to contribution from one
who is not a joint tortfeasor." Holland v. Edgerton, 355 S.E.2d 514, 517 (N.C. Ct. App. 1987).
Ashland and Essential Ingredients argue that BBB has failed to plead facts sufficient to allege
that they are joint tortfeasors. See Ashland Mot. Dismiss Mem. [DE-76] at 17 ("BB&B luis not
alleged that K.lucel is defective, and has not alleged that Ashland substantially participated in the
design ofFireGel. Therefore, BB&B has not stated a claim against Ashland under the component part
doctrine, and Ashland cannot be a joint tortfeasor with BB&B."); see also Essential Ingredients Mot.
Dismiss Mem. [DE-82] at 13. For the reasons already discussed related to indemnification, the court
finds that BBB has alleged facts sufficient to state a claim for contribution, including the existence of
joint tortfeasorship.
IV.
CONCLUSION
For the foregoing reasons, Ashland, Inc.'s Motion to Dismiss [DE-75] is ALLOWED in part
and DENIED in part. Counts 8 and 9 of the Third-Party Complaint [DE-24] are DISMISSED. The
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action may proceed with regard to Count 10. Third-Party Defendant Essential Ingredients, Inc.'s
Motion to Dismiss Counts 11, 12, and 13 of Bed Bath & Beyond, Inc.'s Third-Party Complaint [DE80] is ALLOWED in part and DENIED in part. Counts 11 and 12 of the Third-Party Complaint [DE24] are DISMISSED. The action may proceed with regard to Count 13.
SO ORDERED.
This the
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