United States District Court, N.D. Oklahoma
GREAT DIVIDE INSURANCE COMPANY, a/s/o Northeast Waste Solutions, LLC, Plaintiff,
v.
KIMBLE MIXER COMPANY, d/b/a Hines Specialty Vehicle Group; ILLINOIS TOOL WORKS, INC.; CUMMINS, INC.; FRONTIER INTERNATIONAL TRUCKS, INC.; ALSUMA TRUCK AND EQUIPMENT REPAIR, INC.; and HDA TRUCK PRIDE, INC., Defendants.
OPINION AND ORDER
CLAIRE
V. LAGAN UNITED STATES DISTRICT JUDGE.
Now
before the Court are defendant Illinois Tool Works,
Inc.'s motion to dismiss and brief in support (Dkt. #
24); defendant Kimble Mixer Company's motion to dismiss
and brief in support (Dkt. # 26); and defendant HDA Truck
Pride, Inc.'s motion to dismiss (Dkt. #
42).[1]
On July 16, 2018, plaintiff Great Divide Insurance Company,
as subrogee of its insured, Northeast Waste Solutions, LLC,
initiated this products liability action in the District
Court in and for Tulsa County, Oklahoma. Dkt. # 2-1.
Plaintiff asserts a negligence claim against Illinois Tool
Works (ITW) and Kimble (count I), a breach of warranty claim
against ITW and Kimble (count V), and a separate negligence
claim against HDA (count IV). Id. at 6-8, 12-14.
Following the removal of the action to this Court, ITW filed
a motion to dismiss (Dkt. # 24). Plaintiff filed a response
in opposition to ITW's motion (Dkt. # 27), and ITW filed
a reply (Dkt. # 33). Similarly, Kimble filed a motion to
dismiss (Dkt. # 26), plaintiff filed a response in opposition
to Kimble's motion (Dkt. # 28), and Kimble filed a reply
(Dkt. # 39). Finally, HDA filed a motion to dismiss (Dkt. #
42), and plaintiff filed a response in opposition to
HDA's motion (Dkt. # 43).
I.
At some
time prior to August 22, 2017, Northeast Waste Solutions
purchased a new 2013 Crane Carrier Corporation truck, bearing
vehicle identification number 1CYCLZ488DT050866 (“the
truck”), from Frontier International Trucks, Inc. Dkt.
# 2-1, at 5-6. At the time the truck was purchased,
defendants Kimble and/or ITW were the owners of the Crane
Carrier Corporation assets. Id. at 6. “[A]ny
warranty work or large scale maintenance and/or service
and/or repairs [to the truck] were performed by” WC
Truck Repairs and/or Alsuma Truck and Equipment Repair, Inc.,
“with parts and equipment supplied by HDA.”
Id. An insurance policy covering the truck was
issued by plaintiff to Northeast Waste Solutions.
Id. at 3.
On
August 22, 2017, the truck caught fire while being operated.
Id. at 5. Plaintiff alleges that “the fire was
caused by the defective manufacture, maintenance, service,
and/or repair of the Truck's combustible turbo exhaust
system and engine air inlet plumbing.” Id. at
6. Plaintiff alleges that, as a result of the fire, its
insured “sustained fire damage to their personal
property, loss of use, and other fire related expenses . . .
.” Id. Pursuant to the insurance policy,
plaintiff paid to its insured, and on its behalf, an amount
in excess of $169, 425. Id.
II.
Defendants
ITW and Kimble each filed a motion to dismiss the negligence
claim asserted against them in count I and the breach of
warranty claim asserted against them in count V. ITW and
Kimble raise the same arguments in support of
dismissal-specifically, that the negligence claim is barred
by the “economic loss rule, ” and that the breach
of warranty claim is barred by the Uniform Commercial Code
(UCC)'s five-year statute of limitations. Defendant HDA
also filed a motion to dismiss, stating that it simply adopts
and joins in the motions to dismiss and replies filed by ITW
and Kimble.[2] Dkt. # 42, at 1-2. Therefore, the issues
presented by the collective motions to dismiss are as
follows: (1) whether the negligence claims, asserted against
ITW and Kimble in count I and against HDA in count IV, are
barred by the economic loss rule; and (2) whether the breach
of warranty claim, asserted against ITW and Kimble in count
V, is barred by the UCC's five-year statute of
limitations.
A.
Negligence (Counts I and IV)
Defendants
argue that the economic loss rule bars plaintiff from
proceeding with its negligence claims, because plaintiff does
not allege any harm to property other than the allegedly
defective truck or any resulting harm other than the solely
economic damages. In Waggoner v. Town & Country
Mobile Homes, Inc., 808 P.2d 649 (Okla. 1990), the
Oklahoma Supreme Court adopted the economic loss rule, which
bars recovery under tort theories “for injury only to
the product itself resulting in purely economic loss.”
Id. at 653. The court reasoned that damages to the
product itself are recoverable under contract law in actions
brought under the UCC. Id. at 652. In Oklahoma
Gas & Electric Co. v. McGraw-Edison Co., 834 P.2d
980 (Okla. 1992), the Oklahoma Supreme Court clarified that a
plaintiff cannot circumvent the economic loss rule by
alleging only “consequential economic losses” in
addition to the damage to the defective product itself.
Id. at 982. Therefore, when a plaintiff alleges an
economic injury for damage to the product itself and for
consequential damages, such as to ancillary equipment,
clean-up, repair, and reinstallation costs, the economic loss
rule applies. United Golf, LLC v. Westlake Chem.
Corp., No. 05-CV-0495-CVE-PJC, 2006 WL 2807342, at *3
(N.D. Okla. Aug. 15, 2006) (citing Oklahoma Gas, 834
P.2d at 982). The court also recognized, however, that
damages to “other property, ” apart from the
product itself and consequential damages, are recoverable in
tort actions. Waggoner, 808 P.2d at 652; see
Oklahoma Gas, 834 P.2d at 982 (claims for personal
injury or damage to other property would not fall within
ambit of economic loss doctrine).
There
is no dispute that plaintiff alleges purely economic loss
based on the damage to the truck. Plaintiff argues, however,
that the Court should “classify the combustible turbo
exhaust system and engine air inlet plumbing as the
‘product' and the remaining damaged portions of the
Subject Truck to be ‘other property, '” to
which the economic loss rule does not apply. Dkt. # 27, at 7.
As support, plaintiff relies on Agape Flights, Inc. v.
Covington Aircraft Engines, Inc., No. CIV-09-492-FHS,
2012 WL 2792452 (E.D. Okla. July 9, 2012). In Agape,
which involved the crash and destruction of an aircraft, the
Eastern District of Oklahoma concluded that, “for the
purposes of application of the economic loss doctrine, the
Engine and its component part Fuel Pump are the
‘product' and the Aircraft is considered
‘other property.'” Id. at *4. While
the conclusion in Agape aligns with plaintiff's
desired outcome, plaintiff ignores the court's reasoning
for reaching its conclusion. The Agape court
explained that a court must “focus on the object of the
parties' bargain” to determine the scope of the
economic loss doctrine. Id. at *4. The court
determined that the parties had entered into a lease of the
engine and its component parts, but that “[n]o
contractual arrangement exist[ed] between Covington and Agape
regarding the Aircraft.” Id. Therefore, the
court concluded that the “product” was the engine
and its component parts.
Here,
no relevant contract has been filed as an exhibit to any of
the pleadings; nonetheless, the “object of the
parties' bargain” is clear from the allegations in
plaintiff's petition. Plaintiff alleges that “the
Truck, ” which plaintiff defines as “the 2013
Crane Carrier Corporation Truck . . . containing the Cummins
73494172-ISL G CM2180 engine, ” “was purchased
new from Frontier.” Dkt. # 2-1, at 5-6. Accordingly,
plaintiff clearly alleges that its insured purchased the
truck, including the Cummins engine, as a single integrated
unit. See also id. at 7 (alleging that ITW and
Kimble acted negligently by, inter alia,
“[f]ail[ing] to manufacture, assemble, distribute, sell
and otherwise place into the stream of commerce a properly
functioning Truck”). Moreover, there is no indication
whatsoever in the petition that a contractual arrangement
exists between plaintiff's insured and any moving
defendant regarding only the combustible turbo exhaust system
and/or engine air inlet plumbing. Therefore, based on the
reasoning in Agape, the entire truck, including the
Cummins engine, constitutes the “product” for
purposes of the economic loss rule. Such a conclusion is also
in accordance with Supreme Court case law. In Saratoga
Fishing Co. v. J.M. Martinac & Co., 520 U.S. 875
(1995), the Supreme Court emphasized that the
“product” is not the various component parts;
rather, the “product” is the product itself as
placed in the stream of commerce by the manufacturer and
distributors. Id. at 883. Moreover, in East
River Steam Ship Corp. v. Transamerica Delaval, Inc.,
476 U.S. 858 (1986), the Supreme Court noted that,
“[s]ince all but the very simplest of machines have
component parts, [a contrary] holding would require a finding
of ‘property damage' in virtually every case where
a product damages itself. Such a holding would eliminate the
distinction between warranty and strict products
liability.” Id. at 867. Having determined that
the entire truck, including the Cummins engine, constitutes
the “product, ” the Court finds that
plaintiff's negligence claims are barred by the economic
loss rule because plaintiff alleges purely economic loss
based on damage to the product.[3] Accordingly, the Court finds that
the motions to dismiss should be granted as to counts I and
IV of the petition.
B.
Breach of Warranty (Count V)
Defendants
ITW and Kimble argue that plaintiff's breach of warranty
claim (count V) is barred by the UCC's statute of
limitations. Under Oklahoma law, a five-year statute of
limitations governs express and implied breach of warranty
claims. Okla. Stat. tit. 12A, § 2-725(1). However,
“by the original agreement[, ] the parties may reduce
the period of limitation to not less than one (1) year . . .
.” Id. Defendants assert that, based on the
terms and conditions of an express warranty, it was a
one-year warranty and expired in May 2014. Dkt. # 26, at 7.
Defendants argue that, because a plaintiff cannot bring a
claim on the basis of an expired warranty, plaintiff's
claim for breach of warranty is barred. Id. at 8. To
determine whether the parties, by the original agreement,
limited the time in which a breach of express warranty claim
can be brought, the Court must review the warranty. A copy of
the purported warranty is attached to Kimble's motion
(see Dkt. # 26-1). However, the warranty has not
been filed as an exhibit to any pleadings, see
Fed.R.Civ.P. 7(a), and it, therefore, constitutes material
that is outside the scope of the pleadings. Pursuant to
Federal Rule of Civil Procedure 12(d), “[i]f, on a
motion under Rule 12(b)(6) or 12(c), matters outside the
pleadings are presented to and not excluded by the court, the
motion must be treated as one for summary judgment under Rule
56. All parties must be given a reasonable opportunity to
present all the material that is pertinent to the
motion.” Defendants argue, however, that because the
warranty “is central to plaintiff's claim and
referred to in the complaint, ” the Court may consider
the warranty without treating the motions as ones for summary
judgment. Dkt. # 26, at 7 n.1.
As an
initial matter, plaintiff fails to specify in its petition
whether it is asserting a claim for breach of an express
warranty or a claim for breach of an implied warranty. For
example, plaintiff first alleges that “[d]efendants
implied that the Truck would be manufactured, assembled,
distributed and/or sold in a workmanlike manner and with the
necessary knowledge, skill, care and ability”; however,
plaintiff then alleges that “[d]efendants, by and
through its agents, workmen and employees, breached the
above-mentioned express and/or implied warranties . . .
.” Dkt. # 2-1, at 13-14. Because the breach of warranty
claim is so vague, any reference therein to an express
warranty is insufficient as to allow the Court to consider
the warranty without treating the motions as ones for summary
judgment. Accordingly, the Court finds that, in order to
consider the terms ...