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Whitesell Corp. v. Screw Products, Inc.

United States District Court, N.D. Alabama, Northwestern Division

May 2, 2018

WHITESELL CORPORATION, Plaintiff
v.
SCREW PRODUCTS, INC., Defendant

          MEMORANDUM OPINION AND ORDER

          HERMAN N. JOHNSON, JR. UNITED STATES MAGISTRATE JUDGE

         This diversity civil action proceeds before the court on Plaintiff Whitesell Corporation's (“Whitesell”) Motion for Leave to File Third Amended Complaint. (Doc. 47). Plaintiff's proposed amended complaint seeks to add: (1) Bill Marthens, the sole owner, director, and officer of Defendant Screw Products, Inc. (“SPI”) as a defendant; and (2) a claim of negligent/fraudulent misrepresentation against both SPI and Marthens.

         Based upon the following discussion, the court GRANTS IN PART and DENIES IN PART Whitesell's motion. Specifically, the court will permit the amended pleading as to the requested additions, except that Whitesell cannot aver the negligence claim against Marthens.

         Background

         Whitesell alleges that on or about January 29, 2015, it contracted with SPI and Marthens (“Defendants”) to purchase fifty-six thousand (56, 000) five-eighths inch (5/8”) nominal size, Type I hardened steel flat washers. These washers conformed to a specification of hardness that the American Society for Testing and Materials (“ASTM”) established (the “F436 specification”). The parties commemorated this purchase in writing, and Whitesell's General Terms and Conditions for Supplier governed the contract. In the proposed amended complaint, Whitesell adds an allegation that the F436 specification constituted a material element of the contract.

         Whitesell alleges that on or about January 30, 2015, Defendants delivered 56, 000 washers to Whitesell's facility in Colbert County, Alabama. In the proposed amended complaint, Whitesell adds new contentions: the invoice and shipping documents reflected that the washers conformed to the F436 specification, the washers displayed a “F436” label, and Whitesell paid $1, 537.20 for these washers in reliance upon Defendants' representations that the washers met the F436 specification.

         Whitesell's customer subsequently purchased these washers for use in assembling multiple, bolted joint applications on its commercial flatbed trailers. In addition to the washers, Whitesell supplied other fasteners that its customer installed with the washers to assemble multiple, bolted joint applications. on trailers. These bolted joint applications hold together a trailer's landing gear, wheel assembly, structural supports, kingpin, axle placement adjuster, and the coupling used to attach a trailer to a truck.

         On or about May 13, 2015, the customer allegedly informed Whitesell that cracks developed in the washers following installation in the trailers' bolted joints. Whitesell investigated immediately to determine whether the washers contained defects. Upon completing an initial investigation, Whitesell sent a Notice of Supplier Concern to Defendants on or about June 29, 2015. This notice declared that the washers did not conform with the F436 specification, and a subsequent investigation and testing confirmed the washers' defects and nonconformities.

         Whitesell alleges that the broken washers damaged and diminished the structural integrity and strength of the other fasteners installed with the washers, and the washers also damaged the bolted joint applications. The washers rendered each affected trailer unsafe until the customer could replace the fasteners and assess the damage to the related components. Therefore, as Whitesell alleges, the events compelled its customer to replace all fasteners containing the washers at a cost exceeding $1, 000 per damaged trailer.

         Moreover, the National Highway Traffic Safety Administration (“NHTSA”) issued a product safety recall on the defective and nonconforming washers, requiring substantial remediation and replacement of all installed washers together with all fastener system components used with the washers. On August 7, 2015, Whitesell reimbursed its customer for the cost of repairing the trailers that the faulty washers damaged.

         Whitesell provided documents to the Defendants demonstrating the defective washers' failure to meet the F436 specification, and subsequently demanded remuneration for the costs incurred as a result of the defective washers. Whitesell alleges that it provided details identifying (1) the NHTSA product recall, (2) the direct and proximate connection of the damage to Defendants' defective washers, and (3) the resulting costs to Whitesell and its customers. Whitesell highlights Defendants' failure to compensate Whitesell for any of these costs, despite repeated requests.

         Procedural History

         On June 3, 2016, SPI removed this action from the Circuit Court of Colbert County, Alabama. (Doc. 1). On October 4, 2016, the court issued a Rule 16 Scheduling Order. (Doc. 11). The scheduling order contained deadlines that the parties stipulated, including the completion of discovery by August 1, 2017, and the submission of dispositive motions by September 1, 2017. (Id.)

         Since the issuance of the initial scheduling order, the parties have requested two separate continuances of discovery and dispositive order deadlines, and Whitesell has filed two amended complaints. The current amended Scheduling Order established the discovery deadline at June 1, 2018, and the dispositive motions deadline at July 16, 2018. (Doc. 38). Pertinently, the Scheduling Order sets the deadline at April 2, 2018, for Whitesell to add additional causes of action or parties. (Id. at 1).

         On April 2, 2018, Whitesell filed a Motion for Leave to File Third Amended Complaint. (Doc. 47). In the proposed amended complaint, Whitesell claims new facts that it allegedly learned upon deposing Bill Marthens-the alleged sole owner, director, and officer of SPI-on March 2, 2018. Whitesell alleges that despite Defendants' representations that the washers provided to Whitesell met the F436 Specification, Defendants had no idea whether their representations were accurate. Defendants understood the importance of complying with the F436 Specification, yet Marthens stated in his deposition that he possessed no knowledge of who conducted the testing on the washers or the tester's certifications. Whitesell contends that Marthens and SPI proclaimed this material representation to Whitesell “with neither the intention nor the capability to independently ensure its veracity.” (Doc. 47-1 at 7).

         Whitesell's proposed amended complaint asserts the same seven claims present in its former complaints: negligence, breach of implied warranty of merchantability, breach of the implied warranty of fitness for a particular purpose, breach of express warranty, breach of contract, unjust enrichment, and damage to property. Whitesell's proposed amended complaint seeks to add: (1) a claim of negligent/fraudulent misrepresentation against both SPI and Marthens; and (2) Marthens as a party defendant. The court addresses each argument in turn.

         Analysis

         A. Whitesell's Negligent/Fraudulent Misrepresentation Claim

         Whitesell seeks to add a claim of negligent/fraudulent misrepresentation against both SPI and Marthens. This section will assess the request as to SPI, reserving issues regarding the addition of Marthens for subsequent sections. Because this claim relates back to the original complaint, the court GRANTS Whitesell's request to add the claim of negligent/fraudulent misrepresentation against SPI.

         Federal Rule of Civil Procedure 15 governs amended and supplemental pleadings. Absent circumstances not relevant here, [1] a party may amend the pleadings only by leave of the court or the adverse party's written consent. See Fed. R. Civ. P. 15(a)(2). “The court should freely give leave when justice so requires.” Id. Unless a substantial reason exists to deny leave to amend, “the discretion of the District Court is not broad enough to permit denial.” Fla. Evergreen Foliage v. E.I. DuPont De Nemours and Co., 470 F.3d 1036, 1041 (11th Cir. 2006)(internal quotations omitted). A court may reject an amended pleading due to the moving party's undue delay, bad faith, dilatory motive, or repeated failure to cure deficiencies by prior amendments, or where allowing the amendment would cause undue prejudice to the opposing party. See Halpin v. Crist, 405 Fed.Appx. 403, 408-09 (11th Cir. 2010)(quoting Corsello v. Lincare, Inc., 4287 F.3d 1008, 1014 (11th Cir. 2005)).

         At the outset, the court finds that Whitesell satisfies the Rule 15(a) standards. The record does not exhibit any undue delay, bad faith, dilatory motives, or repeated failure by Whitesell to cure deficiencies in prior amended pleadings. Therefore, the court cannot ...


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