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Avenue Lofts Condos. Owners' Ass'n v. Victaulic Co.

United States District Court, D. Oregon

June 6, 2014

AVENUE LOFTS CONDOMINIUMS OWNERS' ASSOCIATION, an Oregon nonprofit corporation, Plaintiff,
v.
VICTAULIC COMPANY, a foreign corporation, Defendant

For Plaintiffs: MICHELLE K. McCLURE, STUART K. COHEN, Landye Bennett Blumstein, LLP, Portland, OR; RICHARD N. SIEVING, JENNIFER L. SNODGRASS, The Sieving Law Firm, A.P.C., Sacramento, CA.

For Defendant: ANNE COHEN, Smith Freed & Eberhard, Portland, OR.

OPINION

Page 1011

OPINION AND ORDER

ANNA J. BROWN, United States District Judge.

This matter comes before' the Court on Defendant Victaulic Company's Motion (#85) to Dismiss Claims for Fraud [Fifth Claim], Negligent Misrepresentation [Sixth Claim], and Violation of the UTPA [Fourth Claim] and Motion (#85) to Strike Punitive Damages. For the reasons that follow, the Court GRANTS Defendant's Motions.

Page 1012

BACKGROUND

The following facts are taken from the First Amended Complaint of Plaintiff Avenue Lofts Condominiums Owners' Association, Defendant's Memorandum in Support of its Motion to Dismiss, and Plaintiff's Memorandum in Opposition to Defendant's Motion to Dismiss.

Plaintiff is an Oregon nonprofit corporation and the governing body of the Avenue Lofts Condominium (the Condominium). The Condominium consists of 169 living units, 186 parking units, and 88 storage units. Construction on the Condominium was completed in 2004.

Defendant is a New Jersey corporation and at all relevant times manufactured, marketed, and supplied valves, pipe couplings, gaskets, and fittings to suppliers and installers for use in their businesses.

At some point before 2004 developer Evergreen M& F, LLC, hired Howard S. Wright Construction (HSW) as general contractor for the Condominium. HSW contracted with MSI to install the plumbing systems for the Condominium. MSI purchased plumbing components (including products manufactured by Defendant) from third-party distributor Ferguson. MSI then installed Defendant's products in the Condominium as part of the plumbing system.

At some point the

potable water piping system installed throughout the CONDOMINIUM[, which] includes VICTAULIC PRODUCTS[,] . . . prematurely deteriorated and failed or otherwise failed to properly perform. Among other things, the VICTAULIC PRODUCTS have become brittle, cracked, softened, deteriorated and disintegrated. The deterioration of the VICTAULIC PRODUCTS has caused water intrusion, pipe bursts and property damage to components of the CONDOMINIUM's General Common Elements . . . by causing damage to the potable water system itself, appliances, fixtures, walls, insulation, floor, drywall and the interiors of the living units. As deterioration and failure of the VICTAULIC PRODUCTS progresses, further widespread water intrusion and property damage is occurring.

First Am. Compl. at ¶ 35.

On June 25, 2013, Plaintiff filed a Complaint against Defendant in this Court in which it brought claims for (1) strict products liability; (2) negligence; (3) breach of express warranty; (4) violation of Oregon's Consumer Warranty Act (CWA), Oregon Revised Statute § 72.8180; (5) violation of Oregon's Unlawful Trade Practices Act (UTPA), Oregon Revised Statute § 646.608(1)(e), (g), and (t); (6) fraud; and (7) negligent misrepresentation.

Before this action was filed, Plaintiff's counsel filed an action against Defendant on February 25, 2013, on behalf of Edge Lofts Master Condominium Association (the Edge Lofts action) in Multnomah County Circuit Court in which the plaintiffs alleged claims against Defendant based on facts similar to those alleged by Plaintiff against Defendant in this case. On March 22, 2013, Defendant removed the matter to the United States District Court for the District of Oregon, and the case was assigned to Judge Michael Mosman. On June 10, 2013, Defendant filed a Motion to Dismiss the Edge Loft action in which it sought dismissal of, among other things, the plaintiff's claims for violation of the UTPA, fraud, and negligent misrepresentation.

Plaintiff's counsel also filed a Complaint against Defendant on June 17, 2013, on behalf of Benson Tower Condominium Owners Association (the Benson action) in the United States District Court for the District of Oregon in which the plaintiffs

Page 1013

alleged claims against Defendant based on facts similar to those alleged by Plaintiff against Defendant in this matter and the facts alleged by the plaintiffs in the Edge Lofts action. The Benson action was assigned to Judge Michael Simon.

On July 29, 2013, Defendant filed Motions for Centralized Pre-Trial Proceedings in each of the above three cases.

On August 7, 2013, Judge Mosman granted Defendant's Motions for Centralized Pre-Trial Proceedings in all three actions.

On September 6, 2013, Defendant filed Motions to Dismiss in this matter and in the Benson action that mirrored the Motion to Dismiss that Defendant filed in the Edge Lofts action.

On November 18, 2013, Defendant filed a Motion to Consolidate Hearings on Defendant's Motions to Dismiss in the three actions. On November 26, 2013, Judge Mosman granted Defendant's request for consolidated hearings.

On January 6, 2014, Judge Mosman heard oral argument on Defendant's Motions to Dismiss and, among other things: (1) granted Defendant's Motions as to each of the Plaintiffs' CWA claims on the ground that Plaintiffs failed to plead sufficiently that Defendant's products are " consumer products" within the meaning of the CWA, (2) granted Defendant's Motions as to each of the Plaintiffs' UTPA claims on the ground that Plaintiffs failed to plead sufficiently that Defendant's products are " consumer goods" within the meaning of the UTPA, and (3) granted Defendant's Motions as to each of the Plaintiffs' claims for fraud and negligent misrepresentation on the ground that Plaintiffs failed to plead the elements of justifiable reliance and to identify to whom the statements were made with the specificity required by Federal Rule of Civil Procedure 9(b). Judge Mosman also granted each of the plaintiffs leave to amend their Complaints.

On January 21, 2014, Plaintiff in this matter filed a First Amended Complaint in which it alleged claims for (1) strict products liability, (2) negligence, (3) breach of express warranty, (4) violation of the UTPA, (5) fraud, and (6) negligent misrepresentation.

Also on January 21, 2014, the plaintiffs in the Edge Lofts action filed a Second Amended Complaint and the plaintiffs in the Benson action filed a First Amended Complaint in which each of those plaintiffs asserted the same claims as those asserted by Plaintiff in this action based on facts similar to those alleged by Plaintiff in this action.

On February 24, 2014, Defendant filed nearly identical Motions to Dismiss Claims for Fraud, Negligent Misrepresentation, and Violation of the UTPA in both this matter and the Benson action. On March 5, 2014, Defendant filed a similar Motion to Dismiss in the Edge Lofts action.

This Court took Defendant's Motion to Dismiss Plaintiff's claims for fraud, negligent misrepresentation, and violation of the UTPA filed in this action under advisement on March 24, 2014.

On March 21, 2014, Defendant filed a Motion for Summary Judgment in the Edge Lofts action in which it also sought summary judgment as to the plaintiff's claims for violation of the UTPA, negligent misrepresentation, and fraud.

On April 3, 2014, Judge Mosman entered an order in all three actions dissolving the administrative consolidation of the matters.

On April 18, 2014, Judge Mosman issued an Order in the Edge Lofts action in which, among other things, he granted Defendant's Motion for Summary Judgment as to Plaintiff's claims for fraud and misrepresentation

Page 1014

based on the plaintiff's allegations that Defendant misrepresented the ability of its products to operate at temperatures lower than 230 degrees or to operate in potable water systems containing a certain percentage of chloramines such as the Portland water system.[1]

On May 27, 2014, Judge Simon issued an Opinion and Order in the Benson action in which, among other things, he also granted Defendant's Motion to Dismiss the plaintiff's claims for fraud and negligent misrepresentation based on the plaintiff's allegations that Defendant misrepresented the ability of its products to operate at temperatures lower than 230 degrees or to operate in potable water systems containing a certain percentage of chloramines such as the Portland water system. In addition, Judge Simon granted Defendant's Motion to Dismiss the plaintiff's UTPA claim.

STANDARDS

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to " state a claim to relief that is plausible on its face." [ Bell Atlantic v. Twombly, 550 U.S. 544,] 570, 127 S.Ct. 1955, 167 L.Ed.2d 929. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556. . . . The plausibility standard is not akin to a " probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Ibid. Where a complaint pleads facts that are " merely consistent with" a defendant's liability, it " stops short of the line between possibility and plausibility of 'entitlement to relief.'" Id. at 557, 127 S.Ct. 1955 (brackets omitted).

Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). See also Bell Atlantic, 550 U.S. at 555-56. The court must accept as true the allegations in the complaint and construe them in favor of the plaintiff. Din v. Kerry, 718 F.3d 856, 859 (9th Cir. 2013).

" In ruling on a 12(b) (6) motion, a court may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice." Akhtar v. Mesa, 698 F.3d 1202, 1212 (9th Cir. 2012)(citation omitted). A court, however, " may consider a writing referenced in a complaint but not explicitly incorporated therein if the complaint relies on the document and its ...


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