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Hanover Insurance Co. v. BASF Corp.

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

January 15, 2019

THE HANOVER INSURANCE COMPANY, Plaintiff,
v.
BASF CORPORATION; Defendant.

          MEMORANDUM OPINION

          T. MICHAEL PUTNAM UNITED STATES MAGISTRATE JUDGE

         This matter is before the court on the motion to dismiss/motion for judgment on the pleadings filed by defendant BASF Corporation. (Doc. 4). The motion has been fully briefed. The parties have consented to the jurisdiction of the undersigned magistrate judge.

         BACKGROUND

         This action was commenced by the filing of a complaint in the Circuit Court of Jefferson County, Alabama, in which the plaintiff, The Hanover Insurance Company (“Hanover”) sued BASF Corporation (“BASF”) in five counts for declaratory judgment, breach of express warranties, breach of implied warranties, negligence, and under the Alabama Extended Manufacturer's Liability Doctrine (“AEMLD”). The complaint was filed on July 31, 2018, and removed to this court by BASF on August 31, 2018.

         The complaint alleges the following facts, which are assumed to be true for purposes of the motion now before the court. The Kiva Lodge Association (“Kiva”) entered into a contract with Hudak & Dawson Construction Company (“Hudak”) on March 23, 2009, for remediation of water damage at its Kiva Dunes Clubhouse and Condominium.[1] (Complaint, doc. 1-1, ¶ 6). Another firm, Water Management Consultants (“WMC”), was retained to design the water remediation project. The contract between Kiva and Hudak was bonded by a Performance Bond issued by Hanover. As part of its design for the remediation project, WMC chose to install the “Senergy Stucco Wall System” and sealants manufactured by BASF. Hudak hired a subcontractor, Colvin Plastering, to install the Senergy Stucco Wall System and sealants.

         To reduce the cost of the project, WDC modified its original remediation design to allow the Senergy Stucco Wall System to be installed over the original stucco (as opposed to installation only after removal of the old stucco) in the “direct applied areas” of the building. (Complaint, doc. 1-1, ¶ 5) BASF reviewed and approved the modified design and agreed to issue a ten-year warranty against defects as long as the application instructions were followed by the contractor performing the application. (Id.).

         Within a year after completion of the project, the remediation repairs failed, allowing water and moisture to leak into the building. (Complaint, doc. 1-1, ¶ 9). BASF was notified of the failure of the Senergy Stucco Wall System and sealants, but took not corrective action. Kiva then sued Hudak, Colvin, WMC, and Hanover (but not BASF) in the Circuit Court of Baldwin County on April 16, 2015, [2] ultimately leading to an arbitration of the claims among them. On May 11, 2018, the arbitration panel found in favor of Kiva and against Hudak, WMC, and Hanover (as Performance Bond Surety), but not against Colvin. (Complaint, doc. 1-1, ¶¶ 10-11). BASF was not part of the arbitration. Pursuant to its Performance Bond, Hanover then paid $794, 485.50 to Kiva for full settlement and satisfaction of the arbitration award. (Complaint, doc. 1-1, ¶ 13).

         After the complaint was filed in the Circuit Court of Jefferson County, Alabama, the case was removed to this court on August 31, 2018, and the defendant filed a motion to dismiss, or in the alternative, for a judgment on the pleadings.[3] Defendant asserts that the all of the claims are time-barred. In addition, defendant argue that there was no express warranty made by BASF; that the implied warranty claim fails because BASF is not a “seller” and the Senergy Stucco Wall System and sealants are not “goods” under the Uniform Commercial Code; that the negligence and AEMLD claims are barred by the economic-loss rule; and that the Senergy Stucco Wall System and sealants are not “products” under the AEMLD.

         STANDARD OF REVIEW

         The instant motion to dismiss is premised upon the pleadings in this case and certain state-court records, of which BASF urges the court to take judicial notice. The motion is evaluated under Federal Rule of Civil Procedure 12(b)(6) because the defendant has asserted that the plaintiff failed to state a claim upon which relief may be granted.

         On a motion to dismiss, the court must accept as true all of the facts alleged in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949-51, 173 L.Ed.2d 868 (2009). Federal Rule of Civil Procedure 8(a) requires only a “short and plain statement of the claim showing that the pleader is entitled to relief.” Liberal notice pleading standards embodied in Rule 8(a) “do not require that a plaintiff specifically plead every element of a cause of action, ” Roe v. Aware Woman Ctr. for Choice, Inc., 253 F.3d 678, 683 (11th Cir. 2001), or set out in precise detail the specific facts upon which she bases her claim. The complaint must only “contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory.” Id. (quoting In re Plywood Antitrust Litigation, 655 F.2d 627, 641 (5th Cir. Unit A Sept. 8, 1981)).

         The Supreme Court raised the threshold for a sufficient pleading in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1965 (2007) (rejecting the standard from Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), that any “conceivable” set of facts supporting relief is sufficient to withstand a motion to dismiss). The threshold of plausibility is met where the plaintiff “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). To withstand scrutiny under Rule 12(b)(6) a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face, ” and that will thus “nudge [his] claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 570. This requires “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. The Eleventh Circuit Court of Appeals has explained that the principles set forth in Twombly and Iqbal require the complaint to set forth sufficient facts that “raise a right to relief above the speculative level.” Speaker v. U.S. Dep't of Health and Human Servs. Centers for Disease Control and Prevention, 623 F.3d 1371, 1380 (11th Cir. 2010).

         DISCUSSION

         A. ...


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