United States District Court, D. Minnesota
CHERYL LUCKEY, CHRISTINE COLE, ELIZABETH WELNA, ERIC TOOP, and ROBERT SQUATRITO, Plaintiffs,
ALSIDE, INC., ASSOCIATED MATERIALS, LLC, and ASSOCIATED MATERIALS INCORPORATED, Defendants.
M. Nelson, BENSON, KERRANE, STORZ & NELSON, PC, and
William James Rogers, BENSON, KERRANE, STORZ & NELSON,
PC, for plaintiffs.
Michael K. Farrell, BAKER & HOSTETLER LLP, and Karl C.
Procaccini, GREENE ESPEL PLLP, for defendants.
MEMORANDUM OPINION AND ORDER ON DEFENDANTS'
MOTION FOR JUDGMENT ON THE PLEADINGS
R. TUNHEIM Chief Judge United States District Court
Cheryl Luckey, Christine Cole, Elizabeth Welna, Eric Toop,
and Robert Squatrito are homeowners whose homes contain
windows designed and manufactured by Defendants Associated
Materials, LLC, and Associated Materials, Incorporated (doing
business as “Alside”). Plaintiffs assert numerous
claims against Alside on behalf of themselves and those
similarly situated based on alleged defects in their Alside
claims include negligence and strict liability related to the
windows' design and manufacture; breach of implied
warranties; fraud; negligent misrepresentation; consumer
fraud under Minnesota, New Hampshire, and Ohio law; unjust
enrichment; and a claim under the Magnuson-Moss Warranty Act
(“MMWA”), 15 U.S.C. § 2301 et seq.
Alside moves for judgment on the pleadings on all claims
pursuant to Fed.R.Civ.P. 12(c), asserting that the complaint
fails to state a claim upon which relief may be granted.
Court will grant Alside's motion with respect to all
claims except breach of implied warranty of merchantability
and breach of implied warranty based on course of
dealing/usage of trade. The negligence and strict liability
claims are barred by the economic loss doctrine. Plaintiffs
have failed to plead all elements of breach of implied
warranty of fitness for a particular purpose, common law
fraud, and unjust enrichment. As for the statutory consumer
fraud claims, the Court finds that Plaintiffs have failed to
plead these claims with particularity as required by
Fed.R.Civ.P. 9(b). Plaintiffs abandoned their claim under the
MMWA. The two remaining implied warranty claims will survive
judgment on the pleadings because Plaintiffs have pled facts
which, if true, could indicate that Alside's limited
warranties fail of their essential purpose.
PLAINTIFFS' FAILING ALSIDE WINDOWS
Associated Materials, LLC, and Associated Materials, Inc. are
Delaware corporations with a principal place of business in
Ohio. (Second Am. Compl. (“Compl.”) at 4, Aug.
31, 2015, Docket No. 23.) Alside designs, manufactures,
distributes, and sells windows to builders and distributors
in the continental United States for use in commercial and
residential properties, including the particular type of
window at issue in this case: the two-pane insulated glass
unit (“IGU”). (Id. at 6-7.) IGUs have
two panes of glass that are separated by low emissivity
metallic films and inert argon gas; the panes “make
use of a single seal to keep air from passing in or out of
the glass assembly.” (Id. at 7.) After the IGU
frame is assembled around the glass panes, the gas is
inserted through a small hole, which is then hermetically
sealed. If the seal fails, normal air can fill the space
between the panes of glass, causing corrosion and
condensation between the panes. (See Id. at 12, 14.)
Alside sells its windows with a variety of limited
warranties, the details of which depend on the specific line
of window at issue. (Id. at 12-15.)
Luckey, Squatrito, Toop, and Welna (the “Minnesota
Plaintiffs”) own homes containing Alside Performance
Series windows which utilize Alside's IGU technology.
(Id. at 3-4, 15, 19-21.) The Minnesota homes were
all constructed between 2006 and 2008, in the Symphony at
Town Center subdivision (“Symphony”) in Ramsey,
Minnesota. (Id. at 15-16, 19-21.) Plaintiffs allege
on information and belief that all eighty-eight townhomes in
Symphony contain Alside Performance Series windows.
(Id. at 16.) The Minnesota homes included the Alside
windows in their original construction; thus the Minnesota
Plaintiffs did not directly purchase their windows from
Alside, but rather, Alside sold windows to developers,
contractors, and/or subcontractors who built the Minnesota
homes. (Id. at 15, 19-21.) Plaintiff Christine Cole
lives in New Hampshire; she purchased a full set of
replacement windows containing Alside's IGU technology
for her home on January 22, 2002. (Id. at 3, 17.)
assert that the IGUs are failing, meaning that they incur
condensation and/or corrosion between the panes, “in
unacceptably high numbers and at unacceptably early
timeframes in the life of the products, ” as compared
to windows produced by other manufacturers, and “[m]any
Alside Two-Pane IGUs that have not yet actually failed are
subject to premature failure.” (Id. at 7-8.)
Plaintiffs attribute the widespread IGU seal failure to
design and manufacturing defects,  resulting from Alside's
alleged failure to perform adequate “testing, quality
control, and research and development” that could have
led to “greater durability and reliability” and
would have made the “IGUs' construction more in
line with the accepted industry standards.”
(Id. at 7-9.) In addition, Plaintiffs allege that
Alside was aware or should have been aware of the defects in
the IGUs, positing that even if Alside lacked actual notice,
the “abnormally large number of warranty claims”
from IGU owners put Alside on notice of the defects.
(Id. at 9.) Despite this awareness, Alside failed to
notify or warn customers and also failed to recall the
defective IGUs, which it continues to manufacture and sell.
(Id. at 9-10.)
allege that they each own one or more Alside window that has
“failed, ” and that “no less than 40 of the
88 townhomes in Symphony contain at least one [Alside IGU
window] with condensation and/or corrosion between the panes
of glass, and many units have multiple [Alside IGU windows]
with that type of visible damage to them.”
(Id. at 16-17.) Plaintiffs allege that their damages
include property damage to the windows themselves,
“inconvenience, aggravation, loss of use of their
windows, other noneconomic damages, and/or economic damages
as a result of the condensation and corrosion that obscures
the windows, and the inadequate warranties and warranty
service provided by [Alside].” (Id. at 2.)
Minnesota Plaintiffs first noticed the failure of one or more
Alside IGUs “[a]t some point in time” after
purchasing their homes, while Cole noticed her first IGU
failure in February 2004. (Id. at 15, 17, 20-21.)
Each Plaintiff has submitted at least one warranty claim to
Alside based on condensation and/or corrosion between window
panes. Alside provided replacement IGUs in each
instance at no cost to the warranty- holder with the
exception of Cole - in Cole's case, Alside only provided
free replacements for ten years, after which Alside relied on
language in its limited warranty and instead offered to
provide replacement IGUs for 50% of the cost. (Id.
at 18.) Alside did not pay for removal of old or installation
of new IGUs for any of the Plaintiffs, based on its
interpretation of Plaintiffs' limited warranties.
Plaintiffs either paid a contractor to do this work or, in
Cole's case, installed the replacement IGUs themselves.
(Id. at 16-18, 20-21.)
initiated this lawsuit on May 20, 2015 and filed the
operative complaint on August 31, 2015. The Court has subject
matter jurisdiction based on 28 U.S.C. § 1332(d)(2)
because the amount in controversy for the proposed class
exceeds $5, 000, 000 and at least one class member is a
citizen of a state other than Ohio or Delaware - Alside's
states of citizenship. Plaintiffs assert sixteen claims on
behalf of themselves and three proposed classes - a
nationwide class, a Minnesota class, and a New Hampshire
class - comprised of “[a]ll persons (including both
natural persons and legal entities) [in the relevant
geographic location] who presently own or have owned real
property containing Alside Two-Pane IGUs.”
(Id. at 24-25.) Plaintiffs' allegations fall
into three general categories: product liability in tort,
fraud and misrepresentation,  and breach of
October 8, 2015, Alside filed a motion to dismiss based on
improper venue, or alternatively to transfer venue, which the
Court subsequently denied. On May 2, 2016, Alside filed an
Answer, and on May 10, 2016, Alside filed the instant motion
for judgment on the pleadings pursuant to Fed.R.Civ.P.
STANDARD OF REVIEW
a motion for judgment on the pleadings pursuant to
Fed.R.Civ.P. 12(c), the Court applies the same standard as
under a motion to dismiss pursuant to Rule 12(b)(6).
Clemons v. Crawford, 585 F.3d 1119, 1124
(8th Cir. 2009). Therefore, the Court is required
to “‘accept as true all factual allegations set
out in the complaint' and to ‘construe the
complaint in the light most favorable to the [plaintiff],
drawing all inferences in [the plaintiff's]
favor.'” Ashley Cty. v. Pfizer, Inc., 552
F.3d 659, 665 (8th Cir. 2009) (quoting
Wishnatsky v. Rovner, 433 F.3d 608, 610
(8th Cir. 2006)). Although a complaint need not
contain “detailed factual allegations, ” it must
contain sufficient factual allegations “to raise a
right to relief above the speculative level.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
“[A] formulaic recitation of the elements of a cause of
action will not do.” Id. The “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 Twombly, 550 U.S. at 570). In
addition to the pleadings, the Court may properly consider
materials that are necessarily embraced by the pleadings.
Enervations, Inc. v. Minn. Mining & Mfg. Co.,
380 F.3d 1066, 1069 (8th Cir. 2004).
PRODUCT LIABILITY AND NEGLIGENT MISREPRESENTATION
failed to brief any response to Alside's arguments in
favor of dismissal of Claims 1-4 (alleging negligent product
design and manufacturing and strict product liability based
on design and manufacturing defects) or Claim 8 (negligent
misrepresentation). This abandonment of the claims alone is a
sufficient basis for dismissal. See, e.g., Espey
v. Nationstar Mortg., LLC, No. 13-2979, 2014 WL 2818657,
at *11 (D. Minn. June 19, 2014); Koenen v. Homecomings
Fin. LLC, No. 11-945, 2011 WL 3901874, at *2-3 (D. Minn.
Sept. 6, 2011).
Plaintiffs had not abandoned these claims, Alside would still
be entitled to judgment on the pleadings as a matter of law
based on the economic loss doctrine. Under Minn. Stat. §
604.101, “a buyer may not bring a product defect tort
claim for compensatory damages unless the defect
‘caused harm to the buyer's tangible personal
property other than the goods or the buyer's real
property.'” Daigle v. Ford Motor Co., 713
F.Supp.2d 822, 829 (D. Minn. 2010) (quoting Minn. Stat.
§ 604.101, subd. 3). “A buyer is also prohibited
from bringing ‘a common law misrepresentation claim
against a seller relating to the goods sold . . . unless the
misrepresentation was made intentionally or
recklessly.'” Johnson v. Bobcat Co., 175
F.Supp.3d 1130, 1145 (D. Minn. 2016) (quoting Minn. Stat.
§ 604.101, subd. 4).
Hampshire courts similarly bar tort claims seeking damages
for purely economic loss, defined as “the diminution in
the value of a product because it is inferior in quality,
” as opposed to harm to persons or property resulting
from a defective product. Lockheed Martin Corp. v. RFI
Supply, Inc., 440 F.3d 549, 552-56 (1st Cir.
2006) (quoting Ellis v. Robert C. Morris, Inc., 513
A.2d 951, 954 (N.H. 1986), overruled on other grounds by
Lempke v. Dagenais, 547 A.2d 290, 297-98 (N.H. 1988)).
New Hampshire also bars negligent misrepresentation claims
seeking damages for purely economic loss other than in narrow
circumstances not present here. See Plourde Sand &
Gravel v. JGI E., Inc., 917 A.2d 1250, 1257-58 (N.H.
have failed to allege facts sufficient to demonstrate damages
beyond economic loss. They allege damages to the windows, in
the form of condensation and corrosion, as well as
“inconvenience, aggravation, loss of use of their
windows, other noneconomic damages, and/or economic damages
as a result of the condensation and corrosion.” (Compl.
at 2, 16-17.) Because the only harm alleged with sufficient
specificity is economic loss, see Iqbal, 556 U.S. at
678, the economic loss doctrine bars Plaintiffs' claims
for negligent product design and manufacture and strict
liability.Plaintiffs' common law negligent
misrepresentation claim also fails as a matter of law under
Minnesota and New Hampshire law. Minn. Stat. § 604.101,
subd. 4 (“A buyer may not bring a common law
misrepresentation claim against a seller relating to the
goods sold or leased unless the misrepresentation was made
intentionally or recklessly.”); Plourde, 917
A.2d at 1257-58 (requiring the plaintiff to plead that that
the defendant had a special reason to anticipate the reliance
of the plaintiff on a negligent misrepresentation and also
that the plaintiff directly relied on the alleged negligent
misrepresentation in order to state a claim for negligent
misrepresentation resulting in purely economic loss).
Claims 5 and 7, Plaintiffs allege that in selling defective
IGUs, Alside breached the implied warranty of merchantability
and an implied warranty arising from course of dealing or
usage of trade. See Minn. Stat. §
336.2-314, N.H. Rev. Stat. § 382-A:2-314.
argue that because of Alside's breaches, Plaintiffs
suffered damages to their windows, inconvenience, and
aggravation, and they incurred costs related to removing
damaged windows and installing replacement windows.
Plaintiffs therefore assert that they are entitled to
“reasonable damages in an amount to be proven at trial
as to the implied warranty claims.” (Compl. at 41.)
Alside counters that the limited warranties applicable to
Plaintiffs' IGUs validly limit Plaintiffs' remedies
to repair or replacement, and even if remedies are not
limited to repair or replacement, the limited warranties'
separate provision excluding consequential and incidental
damages is valid.
the Uniform Commercial Code (“UCC”), transactions
involving the sale of goods give rise to an implied warranty
“that the goods shall be merchantable . . . if the
seller is a merchant with respect to goods of that
kind.” Minn. Stat. §§ 336.2-102, 336.2-314;
N.H. Rev. Stat. §§ 382-A:2-102, 382-A:2-314. The
statute defines “merchantable” goods as those
that meet various minimum standards, including that they
“are fit for the ordinary purposes for which such goods
are used.” Minn. Stat. § 336.2-314(2), N.H. Rev.
Stat. § 382-A:2-314(2). The implied warranty of
merchantability may be excluded or modified in accordance
with Minn. Stat. § 336.2-316 and N.H. Rev. Stat. §
permits parties to limit remedies for breach of warranty.
Minn. Stat. § 336.2-316(4); N.H. Rev. Stat. §
382-A:2-316(5). Parties may agree to “limit the
buyer's remedies . . . to [the exclusive remedy of]
repair and replacement of non-conforming goods or parts,
” but “[w]here circumstances cause an exclusive
or limited remedy to fail of its essential purpose, ” a
buyer may pursue other remedies permitted under the UCC.
Minn. Stat. § 336.2-719(1), (2); N.H. Rev. Stat. §
382-A:2-719(1), (2). Buyers' remedies under the UCC
include damages based on the difference “between the
value of the goods accepted and the value they would have had
if they had been as warranted, ” Minn. Stat. §
336.2-714, N.H. Rev. Stat. § 382-A:2-714, as well as
incidental and consequential damages, Minn. Stat. §
336.2-715, N.H. Rev. Stat. § 382-A:2-715. In addition,
“[c]onsequential damages may be limited or excluded
unless the limitation or exclusion is unconscionable.”
Minn. Stat. § 336.2-719(3); N.H. Rev. Stat. §
Relationship Between Limited Remedy and Exclusion of
asserts that under both Minnesota and New Hampshire law, even
if the repair-or-replace limited remedy is invalid, the
exclusion of consequential and incidental
damages is separately enforceable.
relies on two Minnesota cases to support its argument about
exclusion of consequential and incidental damages:
International Financial Services, Inc. v. Franz, 534
N.W.2d 261 (Minn. 1995), and Taylor Investment Corp. v.
Weil, 169 F.Supp.2d 1046 (D. Minn. 2001). In
Franz, the court explained that “the better
reasoned approach is to treat the repair or replacement
remedy and a consequential damage exclusion as discrete and
independent contractual provisions. Accordingly, the
consequential damage exclusion is valid unless it is
unconscionable.” Franz, 534 N.W.2d at 269;
see Weil, 169 F.Supp.2d at 1058 (quoting
Franz, 534 N.W.2d at 269). However, both
Franz and Weil addressed UCC transactions
in which the parties were merchants of relatively equal
bargaining power. Weil, 169 F.Supp.2d at 1058;
Franz, 534 N.W.2d at 269. This line of cases
is not intended to establish that a consequential damage bar
survives a failure of the limited repair remedy in consumer
transactions that involve relatively commonplace or
uncomplicated products . . . . [S]uch consumer transactions
will continue to be governed by the principles enunciated in
Jacobs v. Rosemount Dodge-Winnegabo South, 310
N.W.2d 71 (Minn. 1981), and Durfee v. Rod Baxter Imports,
Inc., 262 N.W.2d 349 (Minn. 1977).
Franz, 534 N.W.2d at 269.
Jacobs, consumers bought a defective motor home
under a warranty limiting remedies to repair or replacement
and separately excluding recovery of consequential damages.
The Minnesota Supreme Court held that notwithstanding the
exclusion of consequential damages in the warranty, the
remedies set out in UCC Chapter 336, including consequential
damages, were available to the buyers because “[t]he
limitations on remedies set out in the warranties in this
case have operated to deprive [the buyers] of the substantial
value of their bargain.” Jacobs, 310 N.W.2d at
75, 77-78; see also Durfee, 262 N.W.2d at 357
(permitting recovery of incidental damages in relation to a
consumer transaction, despite a warranty clause excluding
incidental damages, when the exclusive repair-and-replace
remedy failed of its essential purpose). Based on
Jacobs and Durfee, the Court concludes that
under Minnesota law, in a consumer transaction under the UCC,
when a limited remedy fails of its essential purpose, a
separate clause excluding consequential and/or incidental
damages is also unenforceable even if it is not
only New Hampshire case Alside cites to support its argument
regarding the separate enforceability of a consequential
damages exclusion involved a transaction between merchants.
See Xerox Corp. v. Hawkes, 475 A.2d 7, 10-12 (N.H.
1984). Therefore, without a more developed legal argument
about the proper application of New Hampshire law, the Court
declines to hold that under New Hampshire law, an exclusion
of consequential and/or incidental damages is enforceable
unless unconscionable even if a repair-or-replace limited
remedy fails of its essential purpose. The Court proceeds at
the motion-to-dismiss stage as though New ...