Re: ECF Nos. 19 and 22
MAUREEN P. KELLY, Chief Magistrate Judge.
Plaintiff Painter Tool, Inc. ("Plaintiff") filed this civil lawsuit seeking to recover damages it alleges to have sustained from its use of steel manufactured by Defendant Dunkirk Specialty Steel, LLC ("Dunkirk") and supplied by Defendant Earle M. Jorgensen Company ("EMJ"). Before the Court are two Motions to Dismiss: one filed by Dunkirk, ECF No. 19, and one filed by EMJ, ECF No. 22. For the reasons that follow, Dunkirk's Motion to Dismiss will be granted in part and denied in part and EMJ's Motion to Dismiss will be granted in part and denied in part.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff originally filed its Complaint in the Court of Common Pleas of Westmoreland County. The case was removed to this Court on February 13, 2017. ECF No. 1. Dunkirk filed a Motion to Dismiss on February 18, 2017. ECF No. 4. This Court subsequently granted Plaintiff's Motion for Leave to File an Amended Complaint and denied Dunkirk's Motion to Dismiss as moot. ECF Nos. 13-14. On April 4, 2017, Plaintiff filed the operative Complaint.
In the Complaint, Plaintiff makes the following allegations. On August 8, 2013, Plaintiff was awarded a contract from the United States Navy for the construction of 400 steel valves ("the Navy contract").
In or about February and March of 2014, Plaintiff completed hardness testing of the finished valve stems and assembled the first 50 valves.
After receipt of the certifications for the first 50 valves, the Navy raised concerns pertaining to the steel from which the valve stems were made.
On April 29, 2014, Dunkirk issued "the Third Material Certification" and "the Fourth Material Certification."
The Navy conducted an audit of Plaintiff and its facility in December of 2014. On December 19, 2014, in response to the audit, Plaintiff sent two samples of the finished stems, manufactured with the Materials, to Westmoreland Mechanical Testing & Research, Inc. ("WMT&R") for an independent hardness examination.
On January 6, 2015, the Navy issued a report as to its audit, finding that Dunkirk failed to provide steel that met the specifications of the Navy contract and the Purchase Order because the Materials had been heat treated to achieve Class 410, Condition H, not Class 410, Condition T.
Due to the improper hardness level of the steel, the Navy rejected the stems/valves produced by Plaintiff on multiple occasions.
Further, as a result of the audit and the defective steel, Plaintiff's business reputation and goodwill were damaged and it lost numerous Navy contracts that it would have received.
In its Complaint, Plaintiff alleges ten counts: (1) Count I against EMJ for breach of contract; (2) Count II against EMJ for breach of express warranty; (3) Count III against EMJ for breach of implied warranty of merchantability; (4) Count IV against EMJ for breach of implied warranty of fitness for a particular purpose; (5) Count V against EMJ for unjust enrichment; (6) Count VI against Dunkirk for promissory estoppel; (7) Count VII against Dunkirk for breach of express warranty; (8) Count VIII against Dunkirk for breach of implied warranty of merchantability; (9) Count IX against Dunkirk for breach of implied warranty of fitness for a particular purpose; and (10) Count X against Dunkirk for negligent misrepresentation.
On April 18, 2017, Dunkirk filed its instant Motion to Dismiss and Brief in Support. ECF Nos. 19-20. On May 15, 2017, Plaintiff filed its Brief in Opposition to Dunkirk's Motion to Dismiss. ECF No. 25. On May 25, 2017, Dunkirk filed a Reply Brief. ECF No 30.
On April 25, 2017, EMJ filed its instant Motion to Dismiss and Brief in Support. ECF Nos. 22-23. On May 15, 2017, Plaintiff filed its Brief in Opposition to EMJ's Motion to Dismiss. ECF No. 26. On May 31, 2017, EMJ filed a Reply Brief. ECF No. 31.
The Motions to Dismiss are now ripe for consideration.
II. STANDARD OF REVIEW
As the United States Supreme Court explained in
In its review, the Court may consider exhibits attached to the complaint, matters of public record and undisputedly authentic documents upon which the plaintiff's claims are based.
A. Motion to Dismiss filed by EMJ
1. Count I: Breach of contract
In Count I, Plaintiff alleges that EMJ breached its obligations under the terms of the Purchase Order by failing to ship conforming goods without any material defects. ECF No. 17 ¶ 40. Although Plaintiff's allegations under Count I do not identify the nature of the non-conformance or the specific material defect, in the preceding "Facts" section of the Complaint, and in its Brief in Opposition to EMJ's Motion to Dismiss, Plaintiff makes clear that the basis of Count I is that EMJ shipped steel bars that that been heat-treated to condition "H" and not condition "T." ECF No. 17 at 1-7; ECF No. 26 at 9.
EMJ asserts that it did not breach the Purchase Order in this manner because steel that is heat-treated to Condition "H" also meets the requirements of Condition "T." ECF No. 23 at 8. At this stage of the case, the Court will not engage in fact-finding as to the meanings of steel specifications. Plaintiff's allegations of a material difference between the specification of the steel ordered and the Materials delivered are sufficient to establish a plausible claim for breach of contract.
Accordingly, EMJ's Motion to Dismiss Count I will be denied.
2. Count II: Breach of express warranty
As it did in seeking to dismiss Count I, EMJ seeks to dismiss Count II on the basis that the steel EMJ sold to Plaintiff met or exceeded all of the express requirements of the Purchase Order. ECF No. 23 at 9-10. As the Court found in denying EMJ's Motion to Dismiss Count I, the Court finds that the determination as to whether the express requirements were met or exceeded by a different heat-treated condition is a question of fact not appropriate for resolution at this stage.
Accordingly, EMJ's Motion to Dismiss Count II will be denied.
3. Count III: Breach of implied warranty of merchantability
In Count III, Plaintiff alleges that EMJ breached its implied warranty of merchantability in that the Materials "did not pass without objection in the trade under the description in the Purchase Order." ECF No. 17 ¶ 51.
As the United States Court of Appeals for the Third Circuit recently explained:
EMJ argues that: (1) Plaintiff fails to allege that the Materials were not below commercial standards or generally unacceptable in the trade; and (2) EMJ expressly disclaimed the warranty of merchantability in its order confirmation. ECF No. 23 at 10-11.
In opposition to EMJ's Motion to Dismiss, Plaintiff asserts that the Materials were not merchantable because they had been heat-treated to a condition other than that specified in the Purchase Order. ECF No. 26 at 13-15.
Because Plaintiff only alleges that the Materials failed to meet its specifications and fails to allege a defect in the steel which prevented it from being used for its ordinary purpose, Plaintiff fails to advance a plausible claim as to a breach of implied warranty of merchantability. Accordingly, EMJ's Motion to Dismiss Count III will be granted.
4. Count IV: Breach of implied warranty of fitness for a particular purpose
In Count IV, Plaintiff alleges, inter alia, that EMJ was aware that Plaintiff would use the Materials for a particular purpose in a shipboard system for the Navy and that Plaintiff relied on EMJ's skill and judgment in purchasing the Materials. ECF No. 17 ¶¶ 54, 57.
As the United States Court of Appeals for the Third Circuit has explained:
EMJ acknowledges that the Purchase Order referenced a number designation for Plaintiff's contract with the Navy, but EMJ argues that the allegations as to its knowledge of Plaintiff's purpose in purchasing the Materials are mere conclusory statements which should not be credited. ECF No. 23 at 12. In its Response to EMJ's Motion to Dismiss, Plaintiff confirms that it is relying on its reference in the Purchase Order to the Navy Contract to "impute constructive knowledge upon EMJ that [Plaintiff] was purchasing steel for a particular purpose." ECF No. 28 at 15. The Purchase Order is attached to operative Complaint. ECF No. 17-1. The sole reference therein to the Navy contract is in a box identifying Plaintiff's Contract as: N00104-13-C-FA78.
Plaintiff thus fails to advance a plausible claim as to a breach of implied warranty of fitness for a particular purpose. Accordingly, EMJ's Motion to Dismiss Count IV will be granted.
5. Count V: Unjust enrichment
In Plaintiff's Response to EMJ Motion to Dismiss, it concedes to the dismissal of Count V. ECF No. 26 at 16. Accordingly, EMJ's Motion to Dismiss Count V will be granted.
B. Motion to Dismiss filed by Dunkirk
1. Count VI: Promissory estoppel
In Count VI, Plaintiff alleges that it relied on Dunkirk's promise as to the specifications of the Materials. ECF No. 17 at 11-12.
In support of its Motion to Dismiss, Dunkirk first argues that Plaintiff cannot maintain a claim for promissory estoppel against Dunkirk where Dunkirk made no promise that could form the basis of such a claim. ECF No. 20 at 15.
Pennsylvania has adopted § 90 of the Restatement (Second) of Contracts which states:
In response to this argument, Plaintiff identifies the express promise made by Dunkirk as the representation in the First Material Certification that the Materials were heat-treated to condition "T." ECF No. 25 at 8. Although Dunkirk baldly asserts that "it is not possible to contort Dunkirk's Material Certifications into an express promise," ECF No. 20 at 15, the Court finds that the representations made in the First Material Certification establish a plausible basis for a promissory estoppel claim.
Dunkirk also argues that Plaintiff fails to allege reasonable reliability on the First Material Certification.
Finally, Dunkirk appears to challenge the "injustice" prong of the promissory estoppel claim, contrasting the cost of the steel and the corrective action taken with the amount of damages sought.
Accordingly, Dunkirk's Motion to Dismiss is denied as to Count VI.
2. Count VII: Breach of express warranty
In Count VII, Plaintiff alleges that Dunkirk breached an express warranty by providing Plaintiff with steel that "did not conform to the description or specifications required under the Purchase Order
In support of its Motion to Dismiss as to Count VII, Dunkirk argues that it only made an express warranty to EMJ, not to Plaintiff. ECF No. 20 at 18-19.
In Pennsylvania, a third party may enforce an express warranty "only under circumstances where an objective fact-finder could reasonably conclude that: (1) the party issuing the warranty intends to extend the specific terms of the warranty to the third party (either directly or through an intermediary); and (2) the third party is aware of the specific terms of the warranty, and the identity of the party issuing the warranty."
In its operative Complaint, Plaintiff alleges that "[b]y providing the various Material Certifications, Dunkirk made an affirmation of fact or promise that the steel it manufactured that was ultimately provided to [Plaintiff] under the Purchase Order would conform to that affirmation or promise." ECF No 17 ¶ 76. Plaintiff fails to allege, however, that Dunkirk intended the specific terms of any express warranty to extend to Plaintiff. Instead, in opposition to Dunkirk's Motion to Dismiss, Plaintiff argues that because Dunkirk gave a warranty to EMJ which EMJ provided to Plaintiff, it can be inferred that Dunkirk gave a warranty to Plaintiff. ECF No. 25 at 12-13. Plaintiff provides no authority for such an inference and none is evident to the Court.
Accordingly, Dunkirk's Motion to Dismiss as to Count VII will be granted.
3. Count VIII: Breach of implied warranty of merchantability
In the Complaint, Plaintiff alleges that Dunkirk breached an implied warranty of merchantability "in that the Materials did not pass without objection in the trade under the description in the Purchase Order and for which Dunkirk had warranted." ECF No. 17 ¶ 83.
In support of its Motion to Dismiss as to Count VIII, Dunkirk argues that Plaintiff does not allege that the steel that Dunkirk provided was unfit for commercial use as stainless steel alloy. ECF No. 20 at 22-24.
As set forth infra:
As to the Purchase Order, Dunkirk was not a party thereto. Thus, the Purchase Order is not a basis on which Plaintiff can advance a plausible claim against Dunkirk. As to Dunkirk's express warranty, a variation as to a certain specification thereof does not necessarily denote to a defect in the Materials. Because Plaintiff has failed to allege a defect in the steel which prevented it from being used for its ordinary purpose, Plaintiff failed to advance a plausible claim as to a breach of implied warranty of merchantability. Accordingly, Dunkirk's Motion to Dismiss Count VIII will be granted.
4. Count IX: Breach of implied warranty of fitness for a particular purpose
In the Complaint, Plaintiff alleges the following facts in support of Count IX:
ECF No. 17 ¶¶ 86-89.
In support of its Motion to Dismiss, Dunkirk argues that this claim fails because "it would be impossible for Dunkirk to have known of [Plaintiff's] purposes at the time it sold and shipped the steel to EMJ, which is the only relevant time with respect to [Plaintiff's] implied warranty of fitness claim against Dunkirk." ECF No. 20 at 21.
As set forth infra:
Plaintiff's allegations as to Dunkirk's knowledge of Plaintiff's purpose are contradicted by allegations in the "FACTS" section of the Complaint where Plaintiff makes clear that it contacted EMJ, not Dunkirk, to purchase the Materials.
In support of its argument, Plaintiff cites to
Because Plaintiff's allegations in support of this claim fail to establish that Dunkirk knew of Plaintiff's purpose for the Materials at the time of their sale and thus fail to establish a plausible claim for breach of implied warranty for fitness for a particular purpose, Dunkirk's Motion to Dismiss as to Count IX is granted.
5. Count X: Negligent misrepresentation
In Count X, Plaintiff alleges that it justifiably relied on Dunkirk's misrepresentation as to the material specifications of the Materials. ECF No. 17 at 14-15.
In support of its Motion to Dismiss, Dunkirk argues that this claim is barred by the economic loss doctrine. ECF No. 20 at 19-20. As explained by the United States Court of Appeals for the Third Circuit:
In opposition to Dunkirk's Motion to Dismiss, Plaintiff asserts that the economic loss doctrine is inapplicable to this case on the basis of the exception to the doctrine set forth by the Pennsylvania Supreme Court in
Plaintiff asserts that the
Plaintiff alleges in the Complaint that Dunkirk is a specialty finished and semi-finished steel manufacturer. ECF No. 17 ¶ 2. There is no allegation that Dunkirk is in a business of providing information, nor does it appear that it is. Thus, the narrow exception set forth in
Accordingly, Dunkirk's Motion to Dismiss Count X will be granted.
For the foregoing reasons, EMJ's Motion to Dismiss, ECF No. 22, will be denied as to Count I and Count II and granted as to Count III, Count IV and Count V.
Additionally, Dunkirk's Motion to Dismiss, ECF No. 19, will be denied as to Count VI and granted as to Count VII, Count VIII, Count IX and Count X. An appropriate Order follows.
AND NOW, this 13
IT IS FURTHER ORDERED that the Motion to Dismiss filed by Dunkirk, ECF No. 19, is DENIED as to Count VI and GRANTED as to Count VII, Count VIII, Count IX and Count X.