Great Divide Insurance Co. v. Kimble Mixer Co.

          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 ...