Opinion
2:16-CV-00750-CB
02-25-2019
ADAMS POINTE I, L.P., ADAMS POINTE II, L.P., BAYBERRY NORTH ASSOCIATES L.P., AND; BETTERS REAL ESTATE HOLDINGS, L.P., INDIVIDUALLY AND ON BEHALF OF THOSE SIMILARLY SITUATED; JBCO, ADAMS POINTE III, L.P., ADAMS POINTE NORTH CONDOMINIUM ASSOCIATION, L.P., ADAMS POINTE MASTER ASSOCIATION, L.P., COULTER & GRAHAM, LLP., MICHAEL AND KATHLEEN BICHLER, JOHN EVANS, Plaintiffs, v. TRU-FLEX METAL HOSE CORP., TRU-FLEX, LLC, AND; AND PRO-FLEX LLC, Defendants, et al.
REPORT AND RECOMMENDATION
I. RECOMMENDATION
This civil putative class action was initiated on June 7, 2016 by Plaintiffs, a group of property owners, against Defendants Tru-Flex Metal Hose Corp., Tru-Flex, LLC ("Tru-Flex") and Pro Flex, LLC ("Pro-Flex") (and collectively referred to as "Defendants" or "Third-Party Plaintiffs") for the Defendants' allegedly defective product, Pro-Flex® yellow-jacketed corrugated stainless-steel tubing ("Pro-Flex®" and "CSST"). Plaintiffs allege breaches of the implied warranty of merchantability and fitness, strict liability, negligence, and Pennsylvania's Unfair Trade Practices and Consumer Protection Law and seek injunctive relief and damages. See Am. Compl. (ECF No. 186). Defendants filed Third-Party Complaints against a number of businesses, including Ward Manufacturing, LLC ("Ward") for contribution under Pennsylvania law. See Third-Party Compls. (ECF Nos. 281, 282, 283). This court has subject matter jurisdiction over the controversy pursuant to 28 U.S.C. § 1332(a) and (d).
The Third-Party Complaints are substantively identical. The pinpoint citations referred to in this report and recommendation will be taken from Tru-Flex's Third-Party Complaint (ECF No. 281).
Presently pending before the court is a motion by Third-Party Defendant Ward to dismiss the contribution claim against it pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (ECF Nos. 284 and 285). Ward alternatively moves to dismiss Plaintiffs' complaint under Federal Rule of Civil Procedure 12(b)(6). Id. For the reasons that follow, it is respectfully recommended that Ward's motion be granted and the Third-Party Plaintiffs' claim for contribution against Ward be dismissed with prejudice.
II. REPORT
a. Factual and Procedural Background
The factual background of the alleged defectiveness of yellow-jacketed CSST and the mitigation efforts of bonding and grounding was set forth at length in a prior report and recommendation. See Rep. and Rec. (ECF No. 259) at 3-7; Adams Pointe I, L.P. v. Tru-Flex Metal Hose Corp., 2:16-CV-00750-CB, 2018 WL 1363504, at *1 - *3 (W.D. Pa. Feb. 26, 2018), report and recommendation adopted, CV 16-750, 2018 WL 1334825 (W.D. Pa. Mar. 15, 2018). While this background was taken from a prior version of Plaintiffs' complaint, these facts are also pleaded in Plaintiffs' operative complaint and are incorporated as if fully set forth herein.
Plaintiffs brought this class action against Tru-Flex and Pro-Flex for the allegedly negligent manufacture, design, and distribution of Pro-Flex® CSST, which was used as part of a natural gas delivery system in Plaintiffs' properties. Plaintiffs allege that "[d]espite internal industry recognition and concern that yellow-jacketed CSST products are prone to catastrophic failure when exposed to electrical energy, [Defendants] continued the manufacture, marketing, and distribution of [Pro-Flex® CSST] . . . through retail stores to 'do-it-yourself' consumers and untrained workers." Am. Compl. (ECF No. 186) at ¶ 3. Plaintiffs allege that Defendants "possess actual knowledge that yellow-jacket Pro-Flex® CSST is placed into the stream of commerce without sufficient thickness to protect against combustion after a lightning strike or potentially even household current." Id. at ¶ 5. Plaintiffs allege that the Pro-Flex® CSST installed in their properties have caused property-damaging fires, loss of value to the structures, costs for inspection and repair, retrofitting costs, sales losses due to the presence of the materially dangerous natural gas pipe through disclosure and/or financing restrictions, and increased risk coverage costs. Id. at ¶ 6.
Defendants/Third-Party Plaintiffs filed Third-Party Complaints against, among others, Ward on July 17, 2018. The court granted Ward's motion to dismiss on March 15, 2018, and allowed Defendants/Third-Party Plaintiffs to amend their Third-Party Complaints with respect to their claim for contribution only against Ward. Additionally, the undersigned provided Third-Party Plaintiffs the opportunity to conduct a limited inspection of the Adams Pointe property to support their claim of contribution against Ward. Defendants' Amended Third-Party Complaints allege that during an initial partial inspection of the Adams Pointe property conducted on February 6 and 7, 2017, they were given access to the exterior of certain buildings at Adams Pointe and portions of the interiors of six units where CSST was being remediated. Am. Third-Party Compl. (ECF No. 281) at ¶ 47. Third-Party Plaintiffs claim that during this inspection, Wardflex®, the yellow-jacket CSST product produced by Ward, was present and installed at meter banks on the exterior of at least two multi-unit buildings, namely buildings 202 and 204 of the Central Village at Adams Pointe. Id. at ¶ 48. During this inspection, Wardflex® was also present in a trash can inside a unit in a multi-unit building, namely building 209, unit 6 of the Central Village at Adams Pointe. Id. at ¶ 49.
These were the relevant facts pleaded in the original Third-Party Complaints in which the contribution claim was dismissed without prejudice for Third-Party Plaintiffs to plead more specific facts in relation to how Ward contributed to Plaintiffs' damages. See Memo. Order (ECF No. 262).
On June 5 and 6, 2018, with leave of court, Third-Party Plaintiffs conducted a further inspection of the interior of Adams Pointe units, including utility closets. Id. at ¶ 50. Third-Party Plaintiffs inspected buildings 202, 204, 209 and 210 for Wardflex®, totaling an inspection of 34 units. Id. During this inspection, Wardflex® was present and installed in all ten units of building 202. Id. at ¶ 51. In four of the ten units in building 202, the Wardflex® was stamped with dates of manufacture of 1997 and 1998. Id. Third-Party Plaintiffs believe that Wardflex® was original to the construction of the building, as Adams Pointe was constructed around that same time. Id. Third-Party Plaintiffs also claim that there was no evidence of bonding of the Wardflex®, and it was installed in direct contact with metallic objects, posing a potential arc hazard. Id. Further, Third-Party Plaintiffs claim that the Wardflex® visible to them demonstrated excessive bending as well as an improper mix and matching of different CSST branded components for use in the course of a single, connected run. Id.
Additionally, Third-Party Plaintiffs allege that Wardflex® was present and installed in all seven units of building 204. Id. at ¶ 52. In six of the seven units, the Wardflex® was stamped with dates of manufacture of 1996 and 1997. Id. Third-Party Plaintiffs believe that Wardflex® was original to the construction of the building, as Adams Pointe was constructed around this time. Id. Third-Party Plaintiffs allege that during the Adams Pointe inspection, there was black pipe connected to the yellow-jacket CSST emerging from the interstitial space. Id. at ¶ 53. Third-Party Plaintiffs believe that there is a high likelihood that even where Wardflex® is not readily visible in exposed areas that it is still present as part of the gas distribution system in buildings at the property. Id. Further, Third-Party Plaintiffs allege that Wardflex® was originally installed from the meter banks to the manifolds in the mechanical rooms and from the manifolds in the mechanical rooms to the individual appliances in the units and in most instances, remediated prior to the Third-Party Plaintiffs' inspection of the units. Id. at ¶ 54.
Third-Party Plaintiffs allege that because Plaintiffs have alleged inherent, industry-wide defects in the characteristics of yellow-jacket CSST, that the Plaintiffs' allegations of defects, breaches and negligence related to the characteristics of yellow-jacket CSST would be equally applicable to Wardflex® and Third-Party Plaintiffs. Id. at ¶ 57. Third-Party Plaintiffs recognize that Wardflex® is a unique product with different specifications than other yellow-jacket CSST and claim that the wall thickness of Wardflex® is equal to or thinner than the wall thickness of Pro-Flex®. Id. at ¶¶ 57, 59. Third-Party Plaintiffs argue that the Plaintiffs' alleged damages have been caused by the presence of yellow-jacket CSST in property owned and/or operated by them and their damages are therefore caused by the presence of any yellow-jacket CSST in the property, regardless of which CSST manufacturer's product is installed. Id. at ¶ 62.
Ward presently moves to dismiss the contribution claim levied against it and argues it is not a joint tortfeasor under Pennsylvania law. For the reasons that follow, the undersigned agrees with Ward that it is not a joint tortfeasor, and respectfully recommends that Ward's motion to dismiss be granted and this claim be dismissed with prejudice.
b. Standard of Review
Rule 14(a) allows a defendant to file a third-party complaint against a non-party "who is or may be liable to him for all or part of the plaintiff's claim against him." Fed. R. Civ. P. 14(a). The purpose of Rule 14(a) is "to permit additional parties whose rights may be affected by the decision in the original action to be joined and brought in so as to expedite the final determination of the rights and liabilities of all of the interested persons in one suit." Glens Falls Indem. Co. v. Atl. Bldg. Corp., 199 F.2d 60, 63 (4th Cir.1952).
"A third-party complaint must attempt 'to transfer to the third-party defendant the liability asserted against him by the original plaintiff.'" Monarch Life Ins. Co. v. Donahue, 702 F. Supp. 1195, 1197 (E.D. Pa. 1989) (citing Baltimore & Ohio R. Co. v. Central Ry. Serv., Inc., 636 F. Supp. 782, 786 (E.D.Pa.1986)). A defendant/third-party plaintiff may use Rule 14(a) to implead a third-party defendant "only if the proposed third-party defendant may be liable to the third-party plaintiff derivatively or secondarily." Jabara v. Lang, 1:12-CV-1833, 2014 WL 47767, at *2 (M.D.Pa. Jan. 6, 2014) (citing Naramanian v. Greyhound Lines, Inc., 07-CV-4757, 2010 WL 4628096, at *2 (E.D. Pa. Nov. 15, 2010)). Joinder is not available "when a defendant seeks to join a third party who may only be liable to the plaintiff." Id.
Because Rule 14(a) is procedural in nature, a third-party complaint must have "some substantive basis in the law for the third-party plaintiff to hold the proposed third-party defendant liable." Naramanian, 2010 WL 4628096, at *3 (citations omitted). In the instant matter, if state substantive law recognizes a right of contribution and/or indemnity, Rule 14 impleader is proper to assert such claims. See In re One Meridian Plaza Fire Litig., 820 F. Supp. 1492, 1496 (E.D. Pa. 1993). A court must determine whether the third-party complaint alleges a recognized cause of action under the law in analyzing whether the third party complaint is proper under Rule 14(a). See e.g., Meyers v. Heffernan, 12-CV-2434, 2014 WL 3343803, at *9 (D.N.J. July 8, 2014).
a. Federal Rule of Civil Procedure 12(b)(6)
A third-party defendant "must assert any defense against the third-party plaintiff's claim under Rule 12" and "may assert against the plaintiff any defense that the third-party plaintiff has to the plaintiff's claim." Fed. R. Civ. P. 14(a)(2)(A); (a)(2)(C). A motion to dismiss a third-party complaint is generally analyzed under Federal Rule of Civil Procedure 12(b)(6). Turning to the substance of the pending motion to dismiss, the applicable inquiry under Federal Rule of Civil Procedure 12(b)(6) is well-settled. Under Federal Rule of Civil Procedure 8, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Rule 12(b)(6) provides that a complaint may be dismissed for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "To survive a motion to dismiss, 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 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint that merely alleges entitlement to relief, without alleging facts that show entitlement, must be dismissed. See Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009). This " 'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary elements." Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556). Nevertheless, the court need not accept as true "unsupported conclusions and unwarranted inferences," Doug Grant, Inc. v. Great Bay Casino Corp., 232 F.3d 173, 183-84 (3d Cir. 2000), or the plaintiff's "bald assertions" or "legal conclusions." Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).
Although a complaint does not need detailed factual allegations to survive a Rule 12(b)(6) motion, a complaint must provide more than labels and conclusions. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A "formulaic recitation of the elements of a cause of action will not do." Id. (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). "Factual allegations must be enough to raise a right to relief above the speculative level" and "sufficient to state a claim for relief that is plausible on its face." Twombly, 550 U.S. at 555. Facial plausibility exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).
The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. . . . Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of 'entitlement to relief.'"Id. (quoting Twombly, 550 U.S. at 556) (internal citations omitted).
When considering a Rule 12(b)(6) motion, the court's role is limited to determining whether a plaintiff is entitled to offer evidence in support of his claims. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). The court does not consider whether a plaintiff will ultimately prevail. Id. A defendant bears the burden of establishing that a plaintiff's complaint fails to state a claim. Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).
c. Discussion
Ward moves to dismiss the contribution claim by arguing that the Third-Party Complaints are devoid of any facts showing that Ward is a joint tortfeasor. Specifically, Ward argues that the Third-Party Complaints do nothing more than allege that Wardflex® is present in the Adams Pointe buildings and it is not enough for Third-Party Plaintiffs to support its contribution claim simply by alleging its product's presence at Adams Pointe. Third-Party Plaintiffs respond that because Plaintiffs' complaint alleges that the mere presence of Pro-Flex® in Plaintiffs' properties caused Plaintiffs' damages, and that because Wardflex® is also yellow-jacket CSST and was present at Adams Pointe, Ward must have contributed to Plaintiffs' damages. Further, Third-Party Plaintiffs argue that because Plaintiffs allege that all yellow-jacket CSST was defective, that Wardflex®'s presence in Plaintiffs' properties caused Plaintiffs' damages.
A claim for contribution under Pennsylvania law "is not a recovery for the tort, but rather it is the enforcement of an equitable duty to share liability for the wrong done by both." Swartz v. Sunderland, 169 A.2d 289, 290 (Pa. 1961). The burden of proving the joint causal negligence falls upon the party seeking contribution. Wade v. S. J. Groves & Sons Co., 424 A.2d 902, 907 (Pa. Super. 1981); Restatement (Second) of Torts, § 433(B). The right of contribution is codified under Pennsylvania law and provides that it is only available among joint tortfeasors. 42 Pa. C.S. § 8324(a). Joint tortfeasors are defined as "two or more persons jointly or severally liable in tort for the same injury to persons or property, whether or not judgment has been recovered against all or some of them." 42 Pa. C.S. § 8322. To be adjudged a "joint tortfeasor," the actors "must either act together in committing the wrong, or their acts, if independent of each other, must unite in causing a single injury." Pitcavage v. Mastercraft Boat Co., 632 F. Supp. 842, 846 (M.D. Pa. 1985) (quoting Lasprogata v. Qualls, 397 A.2d 803, 805 n. 4 (1979)). "[B]efore determining whether parties are joint tortfeasors, . . . it must first be established that each party, on its own, is a tortfeasor . . . [i.e.,] 'someone who commits a tort; a wrongdoer.' " Bernard v. Air Vent, Inc., CV 17-2361, 2019 WL 144852, at *3 (M.D. Pa. Jan. 9, 2019) (citing Tortfeasor, Black's Law Dictionary (10th ed. 2014)) (determining first whether the third-party complaint sufficiently pleaded a claim alleging that the third-party defendant was liable in tort); Travelers Indem. Co. v. Stengel, 512 Fed. Appx. 249, 253 (3d Cir. 2013) (unpublished) (finding that the defendants/third party plaintiffs had to adequately plead the underlying claim against the third-party defendants to establish a right to contribution).
While the Third-Party Complaints do not specifically name any tort that Ward allegedly committed, reading the Third-Party Complaints liberally, the torts alleged against Ward are for negligence and strict liability. To maintain a claim for negligence under Pennsylvania law, a plaintiff must demonstrate "[1] that the defendant has a duty to conform to a certain standard of conduct; [2] that the defendant breached that duty; [3] that such breach caused the injury in question; and [4] actual loss or damage." Sikkelee v. Precision Airmotive Corp., 907 F.3d 701, 710 (3d Cir. 2018), reh'g denied (Dec. 11, 2018) (quoting Phillips v. Cricket Lighters, 841 A.2d 1000, 1008 (Pa. 2003)).
Here, assuming that the first and fourth elements have been met, there are no concrete facts showing that Ward breached any duty it owed to Plaintiffs or that it caused the Plaintiffs' alleged injuries. The crux of Third-Party Plaintiffs' contribution claim against Ward is that because Plaintiffs' complaint includes some facts alleging that the entire yellow-jacket CSST industry knew or should have known that yellow-jacket CSST was defective, and because Ward's yellow-jacket CSST product was found at the Adams Pointe properties, that Ward should share liability with Third-Party Plaintiffs for Plaintiffs' damages. The facts included in the amended Third-Party Complaints after the court permitted inspection of certain properties at Adams Pointe for Wardflex® are that Wardflex® was present at Adams Pointe (a fact known prior to amendment), that Wardflex® is believed to have been installed during the original construction of Adams Pointe, that there is no evidence of Wardflex® being bonded, and that Wardflex® was allegedly improperly installed in some instances. First, considering the allegations that Wardflex® was not bonded and improperly installed, there are no allegations that make it reasonable to infer that Ward was the entity who failed to bond or properly install its product, or that these alleged failures caused any damages to Plaintiffs. Third-Party Plaintiffs provide no facts alleging that the mere presence of Wardflex® in the Adams Pointe properties caused any injury to Plaintiffs, or how Third-Party Plaintiffs could somehow be liable for any damages allegedly caused by Wardflex®. Third-Party Plaintiffs attempt to claim that the defects inherent in Pro-Flex® should be attributed or imputed to Wardflex® also fails, as Third-Party Plaintiffs specifically state that the Pro-Flex® and Wardflex® products "are unique" with "different specifications," Br. in Op. (ECF No. 291) at 6, and such allegations are conclusory. No reasonable inference can be drawn that simply because Wardflex® was present at the Adams Pointe properties that it contributed to any of the losses allegedly suffered by Plaintiffs. Third-Party Plaintiffs cannot rely on such conclusory allegations concerning industry-wide defects with yellow-jacket CSST without giving any specific allegations concerning Ward or its product and how it was defective or caused any of the damages claimed by Plaintiffs.
Plaintiffs expressly reject the notion that Wardflex® caused any of its alleged damages. See Pls.' Br. in Op. (ECF No. 292 at ¶¶ 4-5) ("None of the Adams Pointe buildings identified as possessing Wardflex® were involved in a fire event. None of the Adams Pointe Named Plaintiffs seek damages caused by Wardflex®. None of the Adams Pointe Named Plaintiffs seek recovery for the removal or any type of remediation of Wardflex® product[,]" and further stating that membership in the putative class is limited to the existence of the Pro-Flex® product in the putative class members' properties).
Third-Party Plaintiffs also claim that the wall thickness of Wardflex® is equal to or thinner than the wall-thickness of Pro-Flex®. Even assuming this is true, there are still no allegations that the Wardflex® proximately caused any of the damages alleged by Plaintiffs.
Turning to whether Third-Party Plaintiffs' claim for contribution is supported by a claim for strict liability, they must allege that Ward placed its product on the market in a "defective conditions." Tincher v. Omega Flex, Inc., 104 A.3d 328, 384 (Pa. 2014). This requires Third-Party Plaintiffs to prove "(1) that the product was defective; (2) that the defect was a proximate cause of the plaintiff's injuries; and (3) that the defect causing the injury existed at the time the product left the seller's hands." Sikkelee, 907 F.3d at 710 (citations omitted) (applying Pennsylvania law).
Again, Third-Party Plaintiffs' entire theory for contribution is that because Plaintiffs generally allege that the yellow-jacket CSST industry put a defective product on the market - and because Wardflex® happens to be a yellow-jacket CSST product and present at the Adams Pointe properties - that Plaintiffs' damages must have been caused in part by Ward. In support of this, Third-Party Plaintiffs overemphasize a few allegations of Plaintiffs' complaint that serve as background concerning yellow-jacket CSST, while ignoring that Plaintiffs' claims only allege that the manufacture of Pro-Flex® was defective. Further, the Third-Party Complaints in no way provide factual allegations concerning how Wardflex® was defective or provide non-conclusory allegations making it reasonable to infer that Wardflex® was defective and caused Plaintiffs' injuries or how Ward should share liability for Third-Party Plaintiffs' allegedly defective product. Rather, Third-Party Plaintiffs rely on conclusory allegations that companies in the "CSST industry" were duplicitous in manufacturing and selling yellow-jacket CSST and attempt to impute these allegations onto Ward. These claims, while conceivable, do not include enough factual specificity that it would be reasonable to infer that Ward was involved in causing Plaintiffs' damages. Third-Party Plaintiffs have not nudged their contribution claim across the line to be considered plausible. While the court previously allowed defendants to conduct an inspection of the properties in order to gain more facts into the role, if any, Ward played in causing the Plaintiffs' damages, and allowed Third-Party Plaintiffs to amend their Third-Party Complaints in order to buttress any contribution claim against Ward, they have not met their burden of showing that it is plausible that Ward contributed to Plaintiffs' damages. The Third-Party Complaints offer only a "sheer possibility" that Ward acted unlawfully, which is not enough to survive a motion to dismiss.
While the district court in adopting the report and recommendation indicated that the original Third Party Complaints that the Defendants/Third-Party Plaintiffs "likely have sufficient factual predicates to cure their pleading deficiencies" under the Iqbal/Twombly standard to state a claim for contribution against Ward, it is respectfully recommended that Defendants/Third-Party Plaintiffs' amended Third-Party Complaints have not included any further facts which are more than a speculation that the mere presence of the Wardflex® somehow caused Plaintiffs' damages. It is too speculative to simply impute possible industry-wide misdeeds to a specific product in that industry.
Simply stated, because Third-Party Plaintiffs have not sufficiently pleaded that Ward has committed a tort, Ward cannot be a joint tortfeasor for contribution and the claim must be dismissed with prejudice.
III. CONCLUSION
Based on the foregoing, it is respectfully recommended that Third-Party Plaintiffs' claim for contribution asserted against Ward be dismissed with prejudice.
Therefore, pursuant to 28 U.S.C. § 636(b)(1)(B) and (C), Federal Rule of Civil Procedure 72, and the Local Rules for Magistrates, the parties have until March 11, 2019 to file objections to this report and recommendation. Unless Ordered otherwise by the District Judge, responses to objections are due March 25, 2019. Failure to file timely objections may constitute a waiver of any appellate rights. Brightwell v. Lehman, 637 F.3d 187, 193 n. 7 (3d Cir. 2011).
Dated: February 25, 2019.
Respectfully submitted:
s/ Cynthia Reed Eddy
Cynthia Reed Eddy
Chief United States Magistrate Judge cc: Honorable Cathy Bissoon
United States District Judge
via electronic filing
all registered counsel
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