Farrell Creations & Restorations LLC v. Advance Auto Parts, Inc. et al

Filing 43

ORDER adopting 34 Memorandum and Recommendations and granting 30 Motion to Dismiss with prejudice, Defendants Axalta Coating System, LLC and Axalta Coating Systems U.S.A, LLC shall be terminated as parties. The Court adopts 40 Memorandum and Recommendations and grants in part and denies in part 36 Motion to Dismiss. Signed by District Judge Robert J. Conrad, Jr on 3/29/2019. (nvc)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION
5:18-cv-00048-RJC-DSC
FARRELL CREATIONS &
RESTORATIONS LLC

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Plaintiff,
v.
ADVANCE AUTO PARTS, INC. et al.,
Defendants.

ORDER

THIS MATTER comes before the Court on Defendants Axalta Coating
Systems, LLC and Axalta Coating Systems U.S.A., LLC’s (collectively, “Axalta”)
Motion to Dismiss Plaintiff’s Amended Complaint, (Doc. No. 30), and the parties’
associated briefs and exhibits; the Memorandum and Recommendation (“M&R”) of
the United States Magistrate Judge, (Doc. No. 34), recommending that Axalta’s
Motion be granted; Plaintiff’s Objections thereto, (Doc. No. 35); and Axalta’s
responsive briefing to Plaintiff’s Objections, (Doc. No. 38). Also before the Court is
Defendants Advance Auto Parts Incorporated and Advance Stores Company,
Incorporated’s (collectively, “Advance”) Motion to Dismiss Amended Complaint,
(Doc. No. 36), and the parties’ associated briefs and exhibits; the M&R, (Doc. No.
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40), recommending that Advance’s Motion be granted in part and denied in part;
Plaintiff’s Objection to the M&R, (Doc. No. 41); and Advance’s responsive briefing to
Plaintiff’s Objection, (Doc. No. 42). The Motions are ripe for adjudication.
I.

BACKGROUND1
Accepting the factual allegations of the Amended Complaint as true, Plaintiff

modified a 1970 Dodge Challenger (“the vehicle”) for a customer in May 2015. As
part of that process, Plaintiff purchased paint manufactured by Axalta from an
Advance Auto Parts store in Mooresville, North Carolina. Plaintiff then painted the
vehicle using the paint supplied by Advance Auto Parts.
In October and November 2015, after it became apparent that the paint was
defective, Plaintiff communicated directly with Axalta on several occasions. Axalta
employees advised Plaintiff that the paint had not been properly mixed by Advance
Auto Parts. Plaintiff spent more than $75,000.00 to strip and repaint the car.
On February 15, 2018, Plaintiff filed suit in Iredell County Superior Court
against Defendants, pursuing various negligence and warranty claims. (Doc. No. 11 ¶¶ 5–72). On March 22, 2018, Defendants removed the action to this Court on

These facts are largely copied from the Background section of the most recent
M&R. (Doc. No. 40 at 1–2). The parties have not objected to this version of the
facts, and therefore, the Court adopts and incorporates them herein. Previously,
Plaintiff had objected to one portion of the facts section in the first M&R, (Doc. No.
34). (See Doc. No. 35 at 1 (pointing out that Plaintiff, rather than employees of
Advance Auto Parts, painted the car)). The most recent M&R has addressed and
resolved the factual objection, and therefore, the Court relies on the facts as
established in the most recent M&R.
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diversity grounds. (Doc. No. 1). Removal has not been challenged and appears
proper. On June 29, 2018, Plaintiff filed an Amended Complaint, (Doc. No. 27),
alleging claims for negligence, breach of express warranty, breach of implied
warranty of merchantability, and breach of implied warranty for fitness for a
particular purpose. On July 11, 2018, Axalta, filed a Motion to Dismiss Plaintiff’s
Amended Complaint. (Doc. No. 30). And on August 8, 2018, Advance filed a Motion
to Dismiss the Amended Complaint. (Doc. No. 36).
II.

STANDARD OF REVIEW
A district court may assign dispositive pretrial matters, including motions to

dismiss, to a magistrate judge for “proposed findings of fact and recommendations.”
28 U.S.C. § 636(b)(1)(A) and (B). The Federal Magistrate Act provides that “a district
court shall make a de novo determination of those portions of the report or specific
proposed findings or recommendations to which objection is made.”

Id. at

§ 636(b)(1)(C); Fed. R. Civ. P. 72(b)(3); Camby v. Davis, 718 F.2d 198, 200 (4th Cir.
1983).
III.

DISCUSSION
Plaintiff has filed objections to both M&Rs. The Court addresses each M&R

and Plaintiff’s respective objections to the M&Rs in turn.
A.

The M&R on Axalta’s Motion to Dismiss (Doc. No. 34)

Plaintiff has objected to the M&R’s recommendation to grant Axalta’s Motion
to Dismiss. In support of its objection, Plaintiff makes two specific arguments: (1)
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Axalta owed Plaintiff a duty to ensure that Advance’s employee was qualified to mix
the paint; and (2) the economic loss doctrine is inapplicable to Plaintiff’s breach of
warranty claim against Axalta.
1.
The M&R correctly concluded that Plaintiff cannot maintain a
negligence claim against Axalta.
The M&R concluded that Plaintiff had not plead any facts to support a
negligence claim against Axalta. “Rather, Plaintiff alleges that Advance Auto
Parts[’] employees failed to properly mix the paint before it was applied to the car.”
(Doc. No. 34 at 4). In response, Plaintiff attempts to manufacture a duty between
Axalta and Plaintiff. Plaintiff now contends—for the first time—that because
Axalta sold their product through a retailer (i.e., Advance), Axalta, together with
Advance, owed Plaintiff a duty to ensure that Advance’s employee was properly
qualified to mix the products involved. Plaintiff cites no case law to support this
proposition.
The Court declines to allow Plaintiff to come in at the eleventh hour and
amend its pleadings to state the first, and perhaps most basic, element of a
negligence claim: duty. Without a duty, no breach, causation, or damages may
follow.
Yet, even if the Court were inclined to grant Plaintiff leave to amend its
pleadings (for the second time), allowing such recourse would be futile. Even if
Plaintiff could plausibly plead that Axalta owed it a duty, Plaintiff still has not
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alleged that Axalta did anything wrong in violation of that duty. While Plaintiff
has hypothesized about potential scenarios in which discovery could reveal that
Axalta’s actions might have triggered some sort of “butterfly effect” that ultimately
led to the Advance employee’s alleged negligence, the Court refuses to vivify such a
fishing expedition. Plaintiff’s wholly speculative allegations against Axalta must be
quashed. Ali v. Allergan USA Inc., No. 1:12-cv-115, 2012 WL 3692396, at *14 (E.D.
Va. Aug. 23, 2012) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007))
(“[T]his is precisely the sort of fishing expedition the Supreme Court sought to avoid
in requiring the plaintiff to plead facts demonstrating their entitlement to relief. . . .
Plaintiffs cannot be permitted to pursue . . . discovery with nothing more than
conclusory allegations and . . . hope [for] . . . favorable results.”). Accordingly, the
M&R correctly recommended dismissing Plaintiff’s negligence claim against Axalta.
2.

The M&R correctly concluded that Plaintiff cannot maintain an
implied warranty claim against Axalta.

The M&R concluded that, due to the economic loss doctrine, Plaintiff’s
implied warranty claim against Axalta also fails because the parties are not in
privity, and Plaintiff seeks to recover only its costs in repainting the car: “[t]here
are no allegations of damage to the car or any other property.” (Doc. No. 34 at 6).
Similar to the tactics Plaintiff employed in attempting to preserve its negligence
claim, Plaintiff now strains to argue, by concluding its Objections with a series of

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rhetorical questions,2 that the vehicle itself suffered some sort of hypothetical,
abstract damage. Apparently, Plaintiff now argues that there may have been some
sort of temporary devaluation of the vehicle to a hypothetical investor or prospective
purchaser while the vehicle was painted with the allegedly defective paint. This is
the first time Plaintiff makes this assertion, and it is based upon pure speculation.
Plaintiff must ground its allegations in plausible facts in order for its claims to be
legally cognizable.3 Moreover, this theoretical “diminished value of property
constitutes an economic loss” is not a cognizable injury in fact. Coker v.
DaimlerChrysler Corp., 2004 NCBC 1, 13 (N.C. Super. Ct., JD19C, Jan. 5, 2004)
(applying the economic loss doctrine in a case involving a claim that a defective
component diminished the value of a vehicle).

While posed in rhetorical format, Plaintiff propounds an answer to the question of
whether an argument can be made that “this showpiece car” did not suffer damage,
contending that the answer is a definitive “no.” On the contrary, the Court answers
the question with a definitive “yes.”
3 On a motion to dismiss for failure to state a claim, the Court must accept the
factual allegations of the claim as true and construe them in the light most
favorable to the nonmoving party. Coleman v. Maryland Ct. of Appeals, 626 F.3d
187, 189 (4th Cir. 2010). But, to survive the motion, the “complaint must contain
sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible
on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). To be “plausible on its face,” a plaintiff must
demonstrate more than “a sheer possibility that a defendant has acted unlawfully.”
Id. A plaintiff therefore must “articulate facts, when accepted as true, that ‘show’
that the plaintiff has stated a claim entitling [it] to relief, i.e., the ‘plausibility of
entitlement to relief.’” Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009)
(quoting Iqbal, 556 U.S. at 678). Here, Plaintiff has done nothing more than
intimate a sheer possibility that the vehicle itself suffered damage. This is
insufficient.
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Previously, “[u]nder the common law, a buyer of a ‘good’ could not assert a
claim against the manufacturer for breach of implied warranties because there was
no privity.” Atl. Coast Mech., Inc. v. Arcadis, Geraghty & Miller of N. Carolina.,
Inc., 623 S.E.2d 334, 339 (N.C. Ct. App. 2006) (citing Richard W. Cooper Agency,
Inc. v. Irwin Yacht & Marine Corp., 264 S.E.2d 768, 770 (N.C. Ct. App. 1980)).
Now, however, the North Carolina Products Liability Act has eliminated the privity
requirement against manufacturers, “but only for actions seeking recovery for
personal injury or property damage.” Id. (citing N.C. Gen. Stat. § 99B–2(b)).
Therefore, “[p]rivity is still required in an action for breach of implied warranties
that seeks recovery for economic loss.” Id. Here, the parties do not dispute, and the
record clearly shows, that Axalta and Plaintiff were not in privity with each other.
Therefore, the relevant inquiry is whether Plaintiff seeks recovery for purely
economic loss. “North Carolina courts have indicated that when a component part
of a product or a system injures the rest of the product or the system, only economic
loss has occurred.” Id. (citing Moore v. Coachmen Indus., Inc., 499 S.E.2d 772 (N.C.
Ct. App. 1998), which held that damage to a recreational vehicle caused by a faulty
component constituted economic loss with respect to negligence claims brought
against component manufacturer). Here, the M&R correctly determined that
Plaintiff is only seeking to recover its costs in repainting the car—i.e., its economic
loss—and therefore, the economic loss doctrine bars Plaintiff’s implied warranty
claims against Axalta.
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In sum, the Court agrees with the M&R’s analysis and conclusions regarding
Axalta’s Motion to Dismiss, and therefore ADOPTS the M&R, (Doc. No. 34), and
GRANTS Axalta’s Motion to Dismiss the Amended Complaint, (Doc. No. 30).
B.

The M&R on Advance’s Motion to Dismiss (Doc. No. 40)

Plaintiff has objected to the M&R’s recommendation to grant in part and
deny in part Advance’s Motion to Dismiss. Plaintiff only objects to the M&R’s
recommendation that Plaintiff’s negligence claim against Advance be dismissed due
to the economic loss doctrine. Plaintiff contends that the economic loss doctrine is
inapplicable to its negligence claim against Advance. In support of this argument,
Plaintiff reincorporates its economic-loss-doctrine argument it already
unsuccessfully advanced in its objection to the first M&R recommending dismissal
of Plaintiff’s implied warranty claims against Axalta.
“North Carolina has adopted the economic loss rule, which prohibits the
purchaser of a defective product from bringing a negligence action against the
manufacturer or seller of that product to recover purely economic losses sustained
as a result of that product's failure to perform as expected.” Wilson v. Dryvit Sys.,
Inc., 206 F. Supp. 2d 749, 753 (E.D.N.C. 2002), aff'd, 71 F. App'x 960 (4th Cir. 2003).
As mentioned above, “North Carolina courts have indicated that when a component
part of a product or a system injures the rest of the product or the system, only
economic loss has occurred.” Id. (citing Moore v. Coachmen Indus., Inc., 499 S.E.2d
772 (N.C. Ct. App. 1998)). Here, Plaintiff seeks to recover purely for economic
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losses it has sustained. While the Court laments the expenditures Plaintiff has
paid to rectify the aesthetics of the vehicle, the law does not allow Plaintiff to seek
recovery from Advance for purely economic loss on negligence grounds. Rather,
Plaintiff must rely on its claims against Advance that are based in contract law.
Lord v. Customized Consulting Specialty, Inc., 643 S.E.2d 28, 30 (N.C. Ct. App.
2007) (“Simply stated, the economic loss rule prohibits recovery for purely economic
loss in tort, as such claims are instead governed by contract law.”).
Regarding the aspects of the M&R to which no party objected, the Court has
nevertheless conducted an independent review of the M&R and record and
concludes that those findings and conclusions of the M&R are correct and in
accordance with law.
IV.

CONCLUSION
After an independent review of the M&Rs, (Doc. Nos. 34, 40), Plaintiff’s

Objections thereto, (Doc. Nos. 35, 41) and a de novo review of the record, the Court
concludes that the M&Rs’ recommendations are correct and in accordance with law.
Accordingly, the findings and conclusions of the Magistrate Judge are accepted.
IT IS THEREFORE ORDERED THAT:
(1) The Magistrate Judge’s M&R on Axalta’s Motion to Dismiss, (Doc.
No. 34), is ADOPTED;
(2) Defendants Axalta Coating Systems, LLC and Axalta Coating
Systems U.S.A., LLC’s Motion to Dismiss Plaintiff’s Amended
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Complaint, (Doc. No. 30), is GRANTED. The Amended Complaint
as to Axalta is DISMISSED WITH PREJUDICE, and Defendants
Axalta Coating Systems, LLC and Axalta Coating Systems U.S.A.,
LLC shall be terminated as parties to this suit;
(3) The Magistrate Judge’s M&R on Advance’s Motion to Dismiss, (Doc.
No. 40), is ADOPTED;
(4) Defendants Advance Auto Parts, Incorporated and Advance Stores
Company, Incorporated’s Motion to Dismiss Amended Complaint,
(Doc. No. 36), is GRANTED IN PART and DENIED IN PART. That
is, the Court GRANTS Advance’s Motion as to Plaintiff’s negligence
claim, and the Court thereby DISMISSES Plaintiff’s negligence
claim. Advance’s Motion is DENIED in all other respects.

Signed: March 29, 2019

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