TAYLOR TOURS, LLC et al v. SENSATA TECHNOLOGIES, B.V. et al

Filing 27

MEMORANDUM AND/OR OPINION SIGNED BY HONORABLE JAN E. DUBOIS ON 2/17/17. 2/21/17 ENTERED AND COPIES MAILED TO UNREP AND E-MAILED.(ti, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
TAYLOR TOURS, LLC, and
NATIONAL INTERSTATE INSURANCE
COMPANY, as subrogee of Taylor Tours,
LLC,
Plaintiffs,

CIVIL ACTION

NO. 16-4682
v.
SENSATA TECHNOLOGIES, INC.,
SENSATA TECHNOLOGIES OF
MASSACHUSETTS, INC.,
PREVOST CAR, INC.,
PREVOST CAR (US), INC., and
TEXAS ELECTRONIC INSTRUMENTS,
Defendants.
DuBois, J.

February 17, 2017
MEMORANDUM

I.

INTRODUCTION
This is a product liability case. Plaintiffs, Taylor Tours, LLC, and National Interstate

Insurance Company, as subrogee of Taylor Tours, LLC, purchased a tour bus and replacement
circuit breakers for the bus from defendants Prevost Car, Inc., and Prevost Car (US), Inc.
(collectively “Prevost”). Following a tour bus fire allegedly caused by a defect in the bus’s
electrical system or a faulty replacement circuit breaker, plaintiffs filed this suit, asserting
negligence, strict product liability, and breach of warranties claims under Pennsylvania law
against Prevost and other defendants. Presently before the Court is Prevost’s Motion to Dismiss.
For the reasons that follow, the Court denies Prevost’s Motion.
II.

BACKGROUND
The facts of the case as set forth in plaintiffs’ Amended Complaint are summarized as

follows.
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Plaintiff Taylor Tours is an Arizona Limited Liability Company that “designs,
manufactures, assembles, sells and otherwise distributes tour buses.” Am. Compl. ¶ 1.1 Plaintiff
National Interstate Insurance Company, as subrogee of Taylor Tours, is an Ohio corporation that
provided insurance to Taylor Tours during the relevant time period. Am. Compl. ¶¶ 2-3.
Prevost defendants, Delaware corporations with their principal place of business in Canada,
design, manufacture, assemble, sell, and distribute buses, coaches, and motor homes. Am.
Compl. ¶¶ 6-7.
At some point prior to July 2, 2014, Prevost designed, manufactured, and placed into the
stream of commerce tour buses, including a 2008 Prevost MTH SL2 45E tour bus. Am. Compl.
¶ 10. Taylor Tours purchased the 2008 tour bus from Prevost. Am. Compl. ¶ 11. Taylor Tours
alleges that Prevost incorrectly installed a circuit breaker in the bus, constructed the bus in a
manner which allowed moisture and other elements to enter into the bus’s circuit breakers, failed
to install proper overcurrent protection in the bus, and provided defective replacement circuit
breakers for the bus. Am. Compl. ¶¶ 12-16.
On July 2, 2014, a “fire erupted within the subject tour bus” that Taylor Tours purchased
from Prevost. Am. Compl. ¶ 18. The fire allegedly caused extensive damage to Taylor Tours’
real and personal property, and “other consequential and incidental damage including clean-up
costs, repair, and other associated expenses.” Am. Compl. ¶¶ 18-19. Subsequent investigation
of the origin of the fire “revealed significant arcing on circuitry within the bus,” and that the
“subject circuit breaker failed to open to stop the electrical event before the fire occurred.” Am.
Compl. ¶ 20.

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The Court notes that plaintiffs’ Response states that Taylor Tours “is in the business of
operating tour buses.” Pls. Resp. 2.
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Plaintiffs filed their initial Complaint in the Philadelphia Court of Common Pleas on July
25, 2016. On August 29, 2016, Prevost removed the case to federal court, invoking diversity
jurisdiction. On September 6, 2016, Prevost filed a Motion to Dismiss. (Doc. No. 4). Plaintiffs
subsequently filed an Amended Complaint. (Doc. No. 16, filed Nov. 3, 2016). In their
Amended Complaint, plaintiffs assert claims against Prevost for strict product liability (Count
IV), negligence (Count V), and breach of warranties (Count VI). Prevost filed the pending
Motion to Dismiss on November 7, 2016. (Doc. No. 17). Prevost seeks dismissal of all claims
against it.
III.

APPLICABLE LAW
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a party to respond to a

pleading by filing a motion to dismiss for “failure to state a claim upon which relief can be
granted.” To survive a motion to dismiss, the complaint must allege facts that “‘raise a right to
relief above the speculative level.’” Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir. 2007)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A 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 Twombly, 550 U.S. at 570). A
district court first identifies those factual allegations that constitute nothing more than “legal
conclusions” or “naked assertions.” Twombly, 550 U.S. at 555, 557. Such allegations are “not
entitled to the assumption of truth” and must be disregarded. Iqbal, 556 U.S. at 679. The court
then assesses “the ‘nub’ of the plaintiff[’s] complaint—the well-pleaded, nonconclusory factual
allegation[s]”—to determine whether it states a plausible claim for relief. Id.

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IV.

DISCUSSION
In its Motion to Dismiss, Prevost argues that plaintiffs’ strict product liability and

negligence claims against Prevost are barred by the economic loss doctrine. Mot. at 5. Prevost
also contends that plaintiffs’ breach of warranties claim is barred by the expiration of their
express warranty from Prevost and by the four-year statute of limitations for breach of implied
warranties contained in the Uniform Commercial Code. Mot. at 10. The Court will address each
argument in turn.
A.

Strict Product Liability and Negligence Claims

Prevost asserts that Count Four and Five of plaintiffs’ Amended Complaint, alleging
strict product liability and negligence, respectively, are barred by the economic loss doctrine to
the extent that plaintiffs allege damage to the tour bus itself. Mot. at 5. The Court disagrees.
“As it originally developed, the economic loss doctrine provided that no cause of action
could be maintained in tort for negligence or strict liability where the only injury was ‘economic
loss’—that is, loss that is neither physical injury nor damage to tangible property.” 2-J Corp. v.
Tice, 126 F.3d 539, 541 (3d Cir. 1997). The United States Supreme Court expanded the
economic loss doctrine, providing that “a manufacturer in a commercial relationship has no duty
under either a negligence or strict products-liability theory to prevent a product from injuring
itself.” East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 871 (1986). The
United States Court of Appeals for the Third Circuit and the Pennsylvania Superior Court have
predicted that the Pennsylvania Supreme Court would adopt the holding in East River. See
Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 618-21 (3d Cir. 1995); REM Coal
Clark Equip. Co., 563 A.2d 128, 132 (Pa. Super. Ct. 1989).

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Economic loss includes “damage to the product itself and consequential damages in the
nature of costs of repair or replacement or lost profits.” REM, 563 A.2d at 403. It also includes
“loss of business reputation and goodwill.” Valley Forge Convention & Visitors Bureau v.
Visitor’s Servs., Inc., 28 F. Supp. 2d 947, 951 (E.D. Pa. 1998). However, “while tort recovery is
barred for damage a product causes itself, such recovery is available for damage the failing
product causes to ‘other property.’” 2-J Corp., 126 F.3d at 542.
Plaintiffs allege that Prevost “installed circuitry within the bus in such a manner that the
circuits eventually failed,” “constructed and/or assembled the bus in such a manner . . . [that]
increased the risk of fire,” “failed to install proper overcurrent protection within the bus,” and
“provided defective replacement circuit breakers to Taylor Tours.” Am. Compl. ¶¶ 12-16.
Plaintiffs do not specify whether the tour bus fire was caused by faulty circuit breakers, improper
installation of circuitry, or a defective replacement circuit breaker.
Although not cited by the parties, the Sea-Land case held that “every component that was
the benefit of the bargain should be integrated into the product” and is not considered “other
property.” Sea-Land Serv., Inc. v. Gen. Elec. Co., 134 F.3d 149, 153 (3d Cir. 1998). The SeaLand court went on to state “[s]ince all commercial parties are aware that replacement parts will
be necessary, the integrated product should encompass those replacement parts when they are
installed[.]” Id. at 154. In Sea-Land, a customer purchased an engine in 1988 and a replacement
connecting rod for that engine in 1990 from the same company. Id. The replacement connecting
rod was allegedly defective and caused damage to the engine. Id. at 152. Despite the two year
lapse between the purchase of the engine and the purchase of the replacement connecting rod, the
Third Circuit held that the replacement connecting rod was “integrated” into the engine. Id. at
154-55. Thus, damage to the engine caused by the defective connecting rod did not constitute

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damage to “other property,” and recovery in tort for damage to the engine was barred by the
economic loss doctrine. Id. at 154-55. In reference to the two year gap between the purchase of
the engine and the replacement part, the Third Circuit stated that “[t]he timing of the purchase of
the component part may be relevant, but it is not dispositive.” Id. at 155.
While the facts in this case appear similar to the facts at issue in Sea-Land, the Court does
not have sufficient information to determine the applicability of Sea-Land’s holding to this case.
The Amended Complaint only states that, prior to July 2, 2014, Taylor Tours purchased a
Prevost tour bus and Prevost provided defective replacement circuit breakers to Taylor Tours.
¶¶ 11, 16. The Complaint does not say anything about the amount of time that elapsed between
the purchase of bus and the replacement circuit breakers. Without this information, the Court is
unable to determine if the bus and replacement circuit breakers comprise one integrated product.
Accordingly, the Court concludes that dismissal of plaintiffs’ strict product liability and
negligence claims based on the economic loss doctrine is inappropriate at this stage of the case.
The Court thus denies that part of Prevost’s Motion that seeks to dismiss plaintiffs’ strict product
liability and negligence claims on that ground.
B.

Breach of Warranties

Prevost also moves to dismiss plaintiffs’ breach of warranties claim. Prevost argues that
plaintiffs’ breach of warranties claim is barred by the expiration of Prevost’s express warranty on
the tour bus and by the four-year statute of limitations contained in the Uniform Commercial
Code, 13 Pa. Cons. Stat. § 2725(a). Mot. to Dism. at 10. The Court disagrees.
In support of its argument that the express warranty on the bus expired prior to the fire,
Prevost attached a copy of the warranty on the bus to its Motion to Dismiss. However, in their
Complaint, plaintiffs allege that the tour bus fire was caused by faulty replacement circuit

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breakers provided by Prevost after the purchase of the bus. Thus, the Court does not address
whether it may consider the express warranty attached to the Motion at this stage because the
express warranty only covers the tour bus—not the allegedly defective replacement circuit
breakers. For that reason, the Court denies that part of Prevost’s Motion that seeks to dismiss
plaintiffs’ claim for breach of an express warranty.
Plaintiffs also allege that Prevost breached its implied warranties of fitness for a
particular purpose and merchantability as set forth in 13 Pa. Cons. Stat. § 2-315 and § 2-314(c).
Prevost contends that the breach of implied warranties claim is barred by the four-year statute of
limitations contained in the Uniform Commercial Code (“UCC”). Under the UCC, an aggrieved
party has four years from the time of delivery of a product to bring a claim for breach of the
statutory warranties of fitness for a particular purpose and merchantability. 13 Pa. Cons. Stat.
§ 2725(a) and (b).
The Complaint in this case does not include the exact date that Prevost delivered the tour
bus to Taylor Tours or the date on which Prevost provided the allegedly defective replacement
circuit breakers to Taylor Tours. It states only that these events occurred prior to the date of the
bus fire, July 2, 2014. Thus, the Court is unable to determine whether plaintiffs’ claim for
breach of implied warranties is barred by the four-year statute of limitations of the UCC. The
Court thus denies that part of Prevost’s Motion that seeks a dismissal of plaintiffs’ claim for
breach of implied warranties on that ground.
V.

CONCLUSION
For the foregoing reasons, Prevost’s Motion to Dismiss is denied. An appropriate order

follows.

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