Court: District Court, District of Columbia; February 14, 2018; Federal District Court
Denise J. Casper, United States District Judge, addresses a case where Plaintiffs Anthony Pagliaroni, Vicki O'Brien, Catherine Lynch, and John Costello seek damages and injunctive relief against Defendants Mastic Home Exteriors and Deceuninck North America (DNA) due to alleged design defects in the Oasis decking formula. The claims include breach of warranty, negligence, negligent misrepresentation, unjust enrichment, and violations of state consumer protection laws. Both Defendants filed motions for summary judgment, with the Court partially granting Mastic’s motion and fully granting DNA’s motions.
The Court outlines the standard for granting summary judgment, emphasizing that it is appropriate when there is no genuine dispute over material facts, with the moving party bearing the burden to demonstrate this absence. If the moving party meets this burden, the non-moving party must present significant evidence to support their claims. The Court reviews the record favorably towards the non-moving party.
In the factual background, Mastic and DNA submitted statements of material fact, which the Plaintiffs failed to adequately respond to, resulting in those facts being deemed admitted. Following a motion hearing and a month after filing their opposition, Plaintiffs sought to amend their statement of material facts. The Court denies this late-filed motion, reinforcing that it is the nonmovant's responsibility to timely highlight genuinely disputed facts.
Plaintiffs' statement of material facts does not effectively contest the critical facts of the case. However, any admissible evidence presented by the Plaintiffs has been acknowledged by the Court. DNA designed and manufactured the Oasis decking product, while Mastic (formerly Alcoa Home Exteriors, Inc., now owned by Ply Gem Industries, Inc.) marketed and distributed it. Mastic provided a limited warranty for Oasis, guaranteeing it would be free from defects for twenty-five years, but limited remedies to replacement or refund, excluding consequential and incidental damages.
Pagliaroni from Swansea, Massachusetts, constructed his Oasis deck in 2006 and first noticed cracks in August 2007, along with mold and warping issues. His contractor confirmed the problems were product-related, and after multiple attempts to contact Mastic, he submitted a warranty claim in April 2011, which Mastic approved but Pagliaroni rejected. Lynch from Harpersfield, New York, built her deck in September 2007, noted cracking in April 2009, and submitted a claim in March 2012, which Mastic also approved but she rejected. Costello from Portland, Oregon, had his Oasis deck built in March 2008 and observed issues between 2009 and 2010, being aware of the warranty's conditions.
Costello's warranty claim for his Oasis deck was approved by Mastic, which offered reimbursement, but he declined the offer. O'Brien, a resident of Buffalo, Minnesota, purchased an Oasis deck in 2006 after reviewing brochures that highlighted the Limited Warranty, acknowledging potential exclusions due to its limited nature. She first noticed mold issues on her deck between late 2010 and spring 2011 and submitted a warranty claim to Mastic on June 12, 2012. Mastic inspected the deck on August 28, 2012, but denied the claim on September 4, 2012, attributing the deck's cracking to improper installation rather than a warranty defect.
The procedural history reveals that Pagliaroni initiated a putative class action on January 27, 2012, and in the second amended complaint filed on May 29, 2013, he and other plaintiffs claimed against Mastic for breach of express warranty, negligent misrepresentation, and violations of consumer protection laws in Massachusetts, Minnesota, and New York, among other claims against both defendants. On September 22, 2015, the Court denied class certification, leaving only the individually named plaintiffs.
Regarding the statute of limitations, Mastic and DNA contend that Pagliaroni's implied warranty claims are time-barred, while plaintiffs argue the limitations period should be tolled due to fraudulent concealment of knowledge about the product's issues. Massachusetts law imposes a four-year statute of limitations for breach of warranty claims based on contract and a three-year limit for tort claims. The Court applies the four-year limit, noting that Pagliaroni's claim was not filed until January 27, 2012.
Defendants contend that the statute of limitations for Pagliaroni's claims commenced in summer 2006, coinciding with the installation of his deck. Under Massachusetts law, a breach of warranty claim accrues upon the occurrence of the breach, irrespective of the aggrieved party's awareness. A breach is established at the time of delivery, unless a warranty explicitly covers future performance, in which case the cause of action accrues upon discovery of the breach. Implied warranties, however, do not extend to future performance. Consequently, Pagliaroni's breach of implied warranty claims accrued in 2006 and expired before his 2012 complaint, leading the Court to dismiss these claims as time-barred.
Regarding Pagliaroni's breach of express warranty claim against Mastic, while the warranty suggests coverage for future performance, the Court assesses when the breach should have been discovered. Citing the precedent set in Coady v. Marvin Lumber, the Court noted that claims are time-barred if they accrue at the time of purchase or upon discovery of defects. Pagliaroni first observed damages, such as cracking and mold, and began contacting Mastic in 2007, establishing that his claims began to accrue then. The Court found no genuine dispute regarding the timing of Pagliaroni's awareness of the defects, rejecting the notion that his characterization of the damage as "minor changes" in 2007 altered the accrual date. Therefore, Pagliaroni's breach of express warranty claim is also time-barred, leading the Court to grant Mastic's motion to dismiss this claim.
Pagliaroni's claims for violation of Mass. Gen. L. c. 93A, negligence, and negligent misrepresentation are deemed time-barred due to the discovery rule, which states that the statute of limitations begins when a plaintiff discovers or should have reasonably discovered their injury and its cause. Pagliaroni discovered issues with his deck in August 2007, prompting him to consult a contractor and contact Mastic. His Chapter 93A claim is subject to a four-year statute of limitations, while his negligence, negligent misrepresentation, and unjust enrichment claims fall under a three-year limit. Massachusetts law requires that the limitations period is tolled until a plaintiff becomes aware of their injury and its cause, with the burden on the plaintiff to prove that fraudulent concealment occurred. However, Pagliaroni had sufficient knowledge of the damage in 2007 and was aware that Mastic was the appropriate party for warranty claims. Consequently, the court grants the defendants' motions to dismiss Pagliaroni's negligence claims against both Mastic and DNA, along with his unjust enrichment, negligent misrepresentation, and Chapter 93A claims against Mastic, all on the grounds of being time-barred.
O'Brien's claims for breach of implied warranty are challenged as being time-barred under Minnesota law, which imposes a four-year statute of limitations. The claim arose from a deck installation in 2006, with O'Brien joining the case in a complaint filed on May 29, 2013. Under Minnesota law, a breach of implied warranty occurs at the time of delivery, and thus the statute of limitations begins then. For O'Brien's claim to proceed, she must demonstrate that equitable tolling or equitable estoppel applies.
Plaintiffs argue that Mastic's statements, which suggested the damage was not the manufacturer's fault, were intended to conceal their liability. They also reference Mastic's marketing claims about the quality of their product. However, the court emphasizes that equitable estoppel requires specific assurances from the seller that the buyer relied upon to their detriment, which was not established here. The general marketing claims do not suffice as individualized communications needed for equitable estoppel.
Additionally, the plaintiffs assert that fraudulent concealment by Mastic and DNA regarding the product's defects prevents the claim from being time-barred. To support this, plaintiffs must show that the defendants concealed facts essential to the cause of action and that O'Brien was unaware of these facts. The court notes that mere silence is insufficient for establishing fraudulent concealment; there must be evidence of deliberate behavior aimed at hiding the cause of action. Consequently, O'Brien's claim is deemed time-barred, as neither equitable estoppel nor fraudulent concealment has been adequately demonstrated.
Plaintiffs failed to demonstrate fraudulent concealment necessary for tolling the statute of limitations on O'Brien's breach of implied warranty claims for two main reasons. First, they did not identify specific facts indicating the purpose of concealing a cause of action from O'Brien, nor did they prove that O'Brien was unaware of those facts. Under Minnesota law, an implied warranty of merchantability requires products to be fit for ordinary use, and a breach occurs when a defect affects a normal buyer's use. O'Brien was aware or could reasonably have discovered that the deck was defective, that Mastic sold or distributed it, and that DNA manufactured it.
Second, mere non-disclosure does not equate to fraudulent concealment. Previous cases have established that a defendant is not obligated to disclose facts that may negatively reflect on a product's performance. Consequently, Plaintiffs could not substantiate fraudulent concealment for O'Brien's claims against Mastic (Count II) and DNA (Count III), leading to the court allowing both motions as these claims are time-barred.
Regarding Lynch, the court found his claims for breach of implied warranty also time-barred under New York law, which enforces a four-year statute of limitations. Lynch's deck was installed in 2007, and he joined the case in May 2013. Without any justification for extending the accrual date beyond 2007, the court allowed Mastic's and DNA's motions concerning Lynch's breach of implied warranty claims (Count II and Count III) as well, citing them as time-barred.
Lynch's claim under New York General Business Law § 349 (GBL 349) for deceptive acts and practices is deemed time-barred. Mastic argues that Lynch's allegations regarding fraudulent concealment and equitable tolling, based on Mastic's knowledge of the product's failure and misleading marketing, do not extend the statute of limitations. Plaintiffs contend that Lynch's claim did not accrue until her decking began to cup and warp in 2011, which is when her consumer expectations were unmet. GBL 349 claims are subject to a three-year statute of limitations, and the cause of action accrues when all necessary factual circumstances have occurred, which includes being injured by a deceptive act. The case law indicates that the operative event for such claims is not the contract date or delivery of goods but rather when the injury occurs due to the deceptive act. In similar cases, the date of receipt of defective products has been applied as the accrual date. Lynch received her decking six years before filing the lawsuit, and even if the claim were considered from the time she noticed cracking in 2009, it would still be time-barred. Consequently, the Court grants Mastic's motion to dismiss Lynch's GBL 349 claim as time-barred.
Costello's claim for breach of implied warranty regarding the Mastic product is contested by DNA, which asserts that all claims are barred by Oregon's two-year statute of limitations for products liability actions. Plaintiffs counter that there is a material fact dispute regarding when the claim accrued, citing DNA's failure to demonstrate that Costello recognized the connection between the damage to his Oasis decking and DNA's conduct. They argue that substantial failures were not observed by Costello until 2011. The plaintiffs also invoke fraudulent concealment and equitable tolling, claiming that DNA's awareness of the product's failures and misleading marketing prevented Costello from discovering the claim's operative facts.
Under Oregon law, the statute of limitations begins when the plaintiff discovers, or should have discovered, the injury and its causative link to the defendant's actions, as outlined in O.R.S. 30.905. This discovery must occur within ten years from the product's purchase or the expiration of any applicable statute of repose. Costello filed his claims on May 29, 2013. The definition of a "product liability civil action" includes actions against manufacturers or sellers for damages resulting from defects in a product.
Costello's awareness of the damage began in March 2009, with further deterioration noted in April 2009 and additional issues in March 2010. Plaintiffs contend that the limitations period should start in 2011, when more significant failures became apparent. Oregon's discovery rule emphasizes the presence of observable damage that signals the need for investigation, rather than the severity of subsequent damage. Furthermore, genuine issues remain regarding Costello's awareness of DNA's involvement in the decking's manufacturing.
The discovery rule under Massachusetts law requires that a plaintiff must have knowledge or make reasonable efforts to learn about the damage and its likely cause at the time the claim accrues. In Costello's case, the record lacks sufficient evidence to determine whether he could have or should have identified the manufacturer of his Oasis decking sooner. Although DNA's response to Costello's 2012 warranty claim provided contact information for DNA, it does not clarify whether Costello’s inquiry about the defect was reasonable. The burden lies on the party asserting a statute of limitations defense to prove that an earlier investigation would have revealed the necessary facts. A prior case emphasized that simply stating a plaintiff could have sought information sooner is inadequate to start the limitations period. Despite potential issues regarding Costello's duty to investigate and whether that investigation would have linked DNA to the harm, DNA's motion for summary judgment regarding Costello's breach of implied warranty claim is granted due to a lack of demonstrated privity. Costello’s claim fails because he purchased the decking through a contractor from a distributor, ABC Suppliers, not directly from Mastic. The plaintiffs argue that privity exists through an agency relationship, as Mastic and DNA had a Sales and Distribution Agreement designating DNA as the exclusive distributor in certain territories. However, under Oregon law, to claim breach of implied warranty for economic loss, a plaintiff must show privity of contract directly with the defendant. Economic loss is defined as financial losses rather than damages for personal injury or property damage, and Oregon law requires actual control to establish privity when implicating third-party rights.
In Skoog v. Cty. of Clackamas, 469 F.3d 1221, 1230 (9th Cir. 2006), the issue of privity in relation to implied warranty claims under Oregon law is examined. Plaintiffs assert that privity is not required for breach of implied warranty claims under the Oregon Consumer Warranty Act. However, their complaint does not mention this Act and instead references UCC statutes from Massachusetts, Minnesota, New York, and Oregon. Since the claims seek damages solely for economic loss, the determination of whether Costello's breach of implied warranty claim should be dismissed hinges on the existence of privity between Costello and DNA or Mastic.
The court notes that there is no privity between an ultimate purchaser and a manufacturer when the property is purchased through an intermediate seller. Plaintiffs argue that a Sales and Distribution Agreement and deposition testimony indicate a direct relationship between Mastic and DNA via ABC Suppliers, which they claim establishes privity. However, ABC Suppliers is characterized as an intermediate seller, negating any privity with the manufacturer and leading to the dismissal of Costello's claims against DNA.
Regarding Mastic, the question of privity depends on whether an agency relationship exists between Mastic and ABC Suppliers. Oregon law defines an agency relationship as a fiduciary connection where one party acts on behalf of another. The record does not conclusively establish the nature of the relationship; thus, a genuine issue of material fact persists regarding privity between Mastic and ABC Suppliers, resulting in the denial of Mastic's motion concerning Costello's breach of implied warranty claim.
Additionally, Mastic contends that the express warranty claims from Lynch, O'Brien, and Costello seek remedies beyond those allowed by the Limited Warranty, which specifies that the exclusive remedy is either a replacement product or a refund. Plaintiffs argue that the Limited Warranty is unenforceable due to its non-delivery post-purchase, and under applicable law, an exclusive or limited remedy may be deemed unenforceable if it fails of its essential purpose.
A seller may limit or modify the recoverable damages under the Uniform Commercial Code by restricting remedies to the return of goods and repayment or repair and replacement. A remedy is considered to have failed its essential purpose if circumstances change such that the limited remedy leaves the plaintiff with no effective remedy. In the case of Lynch, O'Brien, and Costello, while they were aware of the Limited Warranty and submitted claims under it, the key issue remains whether their agreements with Mastic included the Limited Warranty. Generally, advertisements are not enforceable offers, and acceptance by consumers typically occurs upon shipment of merchandise with any associated promises. The defendants failed to provide evidence showing that the Limited Warranty was part of the initial offer or acceptance, relying instead on the plaintiffs' awareness and claims for summary judgment. Mastic's motion to dismiss the express warranty claims from Lynch, O'Brien, and Costello was denied.
Regarding O'Brien's statutory claims under Minnesota law, Mastic contends they fail as neither the Minnesota Unlawful Trade Practices Act (MUTPA) nor the Minnesota False Statement in Advertising Act (MFSAA) allows for a private right of action. O'Brien must fulfill the requirements of the Minnesota Private Attorney General Act to assert these claims, demonstrating a public benefit from the action. Mastic argues that without class certification, O'Brien's remaining claims for compensatory damages and injunctive relief do not fulfill this requirement. Plaintiffs counter that O'Brien's claim meets the public benefit criterion, citing cases where compensatory damages claims proceeded due to misrepresentations affecting the public, despite a limited number of claimants.
Plaintiffs can demonstrate a public benefit by contesting significant misrepresentations to the public, as established in case law. Courts evaluate whether the relief sought includes injunctive relief beyond mere damages, noting that the absence of either does not automatically negate public benefit. The private standing rule is broadly interpreted to promote the enforcement of statutory violations. However, in this case, O'Brien failed to show her claim serves a public interest, as courts have not granted standing under Minn. Stat. 8.31 for plaintiffs seeking only monetary damages related to products no longer available to the public. Previous cases highlighted that claims solely for compensatory damages do not benefit the public when the products are discontinued and class certification has been denied.
Mastic's sales and marketing of Oasis decking have ceased, limiting any potential relief to O'Brien alone. Consequently, the court granted Mastic’s motion concerning O'Brien's claims under the Minnesota Uniform Trade Practices Act (MUTPA) and the Minnesota Fair Sales and Advertising Act (MFSAA).
Regarding unjust enrichment claims, Mastic and DNA argued these claims fail due to the existence of an adequate legal remedy under Mastic's express warranty, which the plaintiffs did not oppose. Thus, the court allowed the dismissal of the unjust enrichment claims.
For negligence and negligent misrepresentation claims, Mastic contended these are barred by the economic loss rule, and DNA raised the same argument for Lynch and O'Brien's negligence claims. The plaintiffs did not dispute these arguments, resulting in the court allowing the dismissal of the negligence and negligent misrepresentation claims.
Plaintiffs' claims for declaratory and/or injunctive relief were also deemed unsuccessful under the Declaratory Judgment Act, which requires an actual controversy to grant such relief.
Courts have significant discretion in granting declaratory relief, which is not available in the absence of an ongoing legal violation. Declaratory judgments aim to clarify the parties' legal rights and obligations regarding future conduct rather than address past liabilities. The First Circuit's decision in Diaz-Fonseca v. Puerto Rico highlighted that a declaratory judgment can be vacated for abuse of discretion if it lacks a clear need for such pronouncements or exceeds the scope of the issues presented and supported by evidence.
In the current case, the Plaintiffs seek a declaration regarding defects in Oasis decking, asserting that the Defendants were aware of these defects and challenging the enforceability of Mastic's warranty. However, parts of the requested declarations are merely retrospective liabilities and do not provide any legal benefit or influence on Defendants' obligations. Furthermore, the requests for audits and assessments exceed the evidence and pleadings since, after the denial of the motion for class certification, the focus shifted to individual claims rather than the broader inventory.
For Count XIII, which pertains to injunctive relief, the Plaintiffs must demonstrate: 1) irreparable injury, 2) inadequacy of legal remedies, 3) a balance of hardships favoring equitable relief, and 4) that a permanent injunction would not harm the public interest.
Plaintiffs failed to demonstrate the necessary criteria to support Count XIII, as their alleged injuries are not irreparable and adequate legal remedies exist through monetary damages. The Court determined that the equities and public interest would be negatively impacted if injunctive relief were granted that affected the entire business practices of Defendants, especially since Plaintiffs are only representing individual interests rather than a certified class. Consequently, the Court granted Mastic and DNA's motions regarding the claims for declaratory and injunctive relief.
The Court partially allowed Mastic's motion for summary judgment and fully allowed DNA's motions for summary judgment, leaving only Count I (breach of express warranty against Mastic) as to O'Brien, Costello, and Lynch, and Count II (breach of implied warranty against Mastic) as to Costello. Melisa Burnett, a putative class representative, dismissed her claims with prejudice. Plaintiffs did not oppose Defendants' motions for summary judgment related to Pagliaroni's negligence claims. Claims for breach of implied warranty by Pagliaroni, O'Brien, and Lynch were dismissed as time-barred, and the Court did not address arguments regarding Mastic's express warranty excluding implied warranty claims.
The Plaintiffs' references to other cases were deemed inapposite. Claims for declaratory or injunctive relief were ruled inadequate to support O'Brien's Counts IX and X. The Court denied Defendants' motion for sanctions as largely moot due to the timing of the motion, which was filed over three years after the notice of deficiency. Even if timely, the sanctions would not be warranted given the context. The Court permitted Plaintiffs to supplement their damage computations only for the surviving portions of Counts I and II, with a deadline set for March 1, 2018.
