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Torch v. Windsor Surry Co.

United States District Court, D. Oregon, Portland Division

December 9, 2019

ROBERT TORCH and JESUS GOMEZ, individually and on behalf of all others similarly situated, Plaintiffs,


          Ann Aiken, United States District Judge

         In this putative products liability class action, defendants Windsor Surry Company, Windsor Willits Company, and Windsor Holding Company (collectively "defendants") move under Federal Rule of Civil Procedure 12(b)(6) to dismiss plaintiffs Robert Torch and Jesus Gomez's amended complaint. Defendants also move to strike all class action allegations and claims. plaintiffs move to consolidate this action with Windsor Surry Co. v. Gomez, No. 3:17-cv-01868-SI, which is currently before Judge Simon. For the reasons set forth below, defendants' motion to dismiss is granted in part and denied in part, defendants' motion to strike class allegations is denied, and plaintiffs' motion to consolidate is granted, BACKGROUND

         This is a products liability case involving allegedly defective wood boards used for external trim on houses and other buildings. The amended complaint alleges five causes of action: (1) strict products liability, (2) negligence, (3) breach of express warranty under Or. Rev, Stat, § 72.3130, (4) breach of implied warranty of merchantability under Or. Rev. Stat. § 72.3140, and (5) breach of implied warranty of fitness for a particular purpose under Or. Rev. Stat. § 72, 3150. Plaintiffs seek damages and declaratory relief on behalf of themselves and a putative class of similarly situated individuals.

         WindsorONE is a type of trim board used in construction and sold by defendants. Defendants "market[] and sell[] the pre-primed trim board for exterior application[.]" First Am. Compl. ¶ 28. It is made of Radiata Pine. Defendants advertise WindsorONE as suitable trim board for "homes, buildings, and other wood structures." Id. ¶ 58. Generally, plaintiffs allege that defendants marketed WindsorONE as a trim board that was free of defects and waterproof.

         The timeline in this case is complicated, but crucial. Taking the allegations in the First Amended Complaint as true, the order of events is as follows.

         Plaintiff Torch purchased a home in Portland, Oregon from Dan and Kay Hall ("the Halls") in 2011. Several years before plaintiff purchased the property, the Halls, with the help of their contractor, Don Young ("Young"), had added onto the structure of their house and created a garden room The Halls used WindsorONE trim board in the construction of the garden room. They purchased the trim board at Parr Lumber in Portland on several dates between October 2007 and February 2008.

         In "late 2014," Torch noticed "large splits, warping, and . . . fungus, . . growing out of the WinsdorONE trim board on the outside of the garden room Id., ¶ 114. Torch requested an inspection by Young, and Young subsequently filed a claim through Part Lumber with defendants' agent, Norcon Consulting Group ("Norcon"), in September 2015. After an investigation and inspection, defendants, through Norcon, denied coverage. Defendants contended that the source of the damage was wood decay and that the products were unprotected by any warranty against that type of damage. However, defendants of Fered a settlement for "2, 004 linear feet of WindorONE Protected trim board." Id. ¶ 125. Torch rejected that offer.

         Plaintiff Gomez built his own home in Bridal Veil, Oregon from May 2006 to April 2007. Gomez's home incorporates WindsorONE wood purchased from Parr Lumber in May 2006. "In approximately March 2014," Gomez noted that the WindsorONE wood "was beginning to show signs of deterioration," Id. ¶ 151, Gomez filed a claim similar to the one Young filed on Torch's behalf, and because the source of the damage was wood decay (and thus, in defendants' view, not covered by any applicable warranty), defendants denied coverage.

         For the purposes of this litigation, plaintiffs identify September 1, 2014, and March 15, 2014 as the dates of discovery of the wood damage for Torch and Gomez, respectively. Defendants have accepted those estimates for the putposes of the pending motions.

         Before filing suit in this court, Torch and Gomez were unnamed class members in a putative class action in the Northern District of California ("California action").[1] Class certification in the California action was denied on July 24, 2017, STANDARDS

         A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief Shroyer v. New Cingular Wireless Sews., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012). "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." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

         The district court has discretion when deciding whether to strike a part of a pleading. Fed. Sav. & Loan Ins. Corp. v. Gemini Mgmt., 921 F.2d 241, 244 (9th Cir. 1990). Courts disfavor striking pleadings, and grant motions to strike infrequently. Blincoe v. W. States Chiropractic Coll, 2007 WL 2071916, No. CV-06-998-PK, *1 (D. Or. July 14, 2007). However, a court may grant a motion to strike when omission of the challenged material would have the "effect of making the trial of the action less complicated" or would result in "streamlining the ultimate resolution of the action[.]" State of Cat ex. rel. State Lands Comm'n v. United States, 512 F.Supp 36, 38 (N.D. Cal. 1981).


         Defendants insist that all of plaintiffs' claims are time-barred under Oregon law. Plaintiffs counter that the statutes of limitations do not bar this action, citing the doctrines of equitable estoppel and equitable tolling. Plaintiffs aver that fraudulent concealment both estops defendant from asserting any statute of limitations defense and equitably tolls the statutes of limitations. Lastly, plaintiffs contend that under American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), the statutes of limitations were tolled during the pendency of the California action.

         Defendants' only argument for dismissing the products liability and negligence claims is that they are time barred. Defendants also challenge plaintiffs' breach of warranty claims on timeliness grounds. But defendants argue in addition that, even if the breach of warranty claims are timely, they M for various reasons: (1) defendants explicitly disclaimed any implied warranties as well as any express warranties except two, which guarantee the end- and edge-gluing for ten years and the primer for five years; (2) no express warranties were the basis of the bargain between the parties; and (3) there is a lack of privity between the parties. Because the timeliness of each claim is potentially dispositive, I begin by analyzing the parties' statute of limitations dispute. I then proceed to analyze defendants' remaining arguments.

         I. Statutes of Limitations

         Plaintiffs bring this action in federal court under the Class Action Fairness Act ("CAFA"), 28 U.S.C. §§ 1711 et seq. "CAFA provides expanded original diversity jurisdiction for class actions meeting the amount in controversy and minimal diversity and monstrosity requirements set forth in 28 U.S.C. § 1332(d)(2)." United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union, AFL-CIO, CLC v. Shell Oil Co., 602' F.3d 1087, 1090-91 (9th Cir. 2010). "[F]edeial courts exercising diversity jurisdiction are to use state statutes of limitation." Nev. Power Co. v. Monsanto Co., 955 F.2d 1304, 1306 (9th Cir. 1992). Relatedly "[f]ederal courts must abide by a state's tolling rules, which are integrally related to statutes of limitations." Albano v. Shea Homes Ltd. P'ship, 634 F.3d 524, 530 (9th Cir. 2011).

         Plaintiffs offer two theories for effectively extending the limitations period for all of their claims. First, they argue that, due to defendants' purportedly fraudulent actions, the statutes of limitations should be equitably tolled or, in the alternative, defendants should be equitably estopped from asserting the statute of limitations defense. Second, plaintiffs contend that, due to the California action, the claims should be tolled under the American Pipe doctrine.

         A. Equitable Estoppel/Equitable Tolling

         Equitable estoppel precludes a person, by virtue of his conduct, from asserting a right that he otherwise would have had. Day v. Adv. M&D Sales, Inc., 86 P.3d 678, 682 (Or. 2004). Equitable estoppel has five elements: (1) there must be a false representation; (2) the representation must have been made with knowledge of the facts; (3) the other party must have been ignorant of the truth; (4) the representation must have been made with the intention that it should be acted upon by the other party; and (5) the other party must have been induced to act upon the representation. Id. 'Tor equitable estoppel to apply, the false representation must be one of existing material fact, and not of intention, nor may it be a conclusion from facts or a conclusion of law." Id. (internal quotation marks omitted).

         The doctrine of equitable estoppel focuses almost exclusively on the actions of the defendant. The Ninth Circuit has held that Oregon courts apply equitable estoppel to bar a statute of limitations defense under only two circumstances: (1) the defendant "lulled the plaintiff, by affirmative inducement, into delaying the filing of a cause of action, or similarly, . . . he lulled the plaintiff into believe he had no cause of action against the defendant[, ]" or (2) "there has been fraud on the part of a fiduciary in concealing material facts evincing a cause of action." Philpott v. A.H. Robbins Co., Inc., 710 F.2d 1422, 1425 (9th Cir. 1983). Plaintiffs argue that defendants should be equitably estopped from asserting a statute of limitations defense because they fraudulently concealed delects in the WindsorONE trim board, thereby delaying plaintiffs' discovery of the harm.

         In the alternative, Plaintiffs contend the statute of limitations should be equitably tolled with respect to all of their claims. As the Ninth Circuit has explained, the doctrine of equitable tolling applies "in situations where, despite all due diligence, the party invoking equitable tolling is unable to obtain vital information bearing on the existence of the claim." Socop-Gonzalez v. INS, 272 F.3d 1176, 1193 (9th Cir. 2001) (en banc) (internal quotation marks omitted) (alterations normalized). For example, federal courts have allowed equitable tolling "where the [plaintiff] has been induced or tricked by his adversary's misconduct into allowing the filing deadline to pass," Irwin v. Dep't of Veterans Affairs, 498 U.S. 89, 96 (1990) (internal quotation marks omitted). Although "the application of the doctrine of equitable tolling to Oregon's statutes of limitation would not be contrary to Oregon law," Hubbard v. Progressive Universal Ins., 2012 WL 3925057, No. 3:11-cv-1120-ST, *4 (D. Or. Aug. 6, 2012), "Oregon law provides very little precedent for equitable tolling[, ]" V.T. v. City of Medford, Or., 2015 WL 300270, No. 1:09-cv-03007-PA, *5 (D. Or. Jan. 22, 2015). Other jurisdictions generally hold that “[t]he predicates for equitable tolling are bad faith, deception, or false assurances by the defendant and the exercise of diligence by the plaintiff." Millay v. Cam, 955 P.2d 791, 797 (Wash. 1998). Courts consider prejudice to the defendant and decline to apply equitable tolling in cases where Plaintiffs"seek to avoid the consequences of them own negligence." Simmons v. Methodist Hosps. of Dallas, 106 F.Supp.3d 799, 807 (N.D, Tex. 2015) (internal quotation marks omitted).

         Plaintiffs offer fraudulent concealment as a justification for equitably tolling their claims and estopping defendants from pleading the statute of limitations defense. "Fraudulent concealment in the pertinent sense involves concealment of the feet that a cause of action lias accrued against the defendant." Classen v. Arete NW, LLC, 294 P.3d 520, 526 (Or. Ct. App. 2012) (internal quotation marks omitted); see also Lukovsky v. City & Cnty. of San Francisco, 535 F.3d 1044, 1051 (9th Cir. 2008) (explaining that the "actions taken by the defendant to prevent a plaintiff from filing suit" are "sometimes referred to as 'fraudulent concealment'") (quoting Johnson v. Henderson, 314 F.3d 409, 414 (9th Cir. 2002) (emphasis omitted)).

         Plaintiffs cite Chaney v. Fields Chevrolet Co., 503 P.2d 1239 (Or. 1972) in support of their argument that fraudulent concealment triggers equitable tolling and equitable estoppel in this case. In Chaney, the plaintiff purchased a car on credit from the defendant and subsequently returned it. Chaney, 503 P.3d at 1239. The return of the car was governed by a contractual provision that, when the car was resold, any surplus beyond the remaining balance on the loan would go to the plaintiff. "[The d]efendant resold the vehicle in 1964 for more than the amount owing on the contract, but concealed [that] fact from plaintiff" Id. It wasn't until the next year, in 1965, when the plaintiff discovered he was due the surplus. Id. at 1239-40. In 1971, plaintiff sued to recover the money. Id. at 1240. Because the suit was brought outside the applicable six-year statute of limitations, plaintiff argued that the statute should be tolled for the year that defendant knew about, and concealed, the surplus owed to plaintiff Id. at 1239-42, Citing an American Law Reports summary, the court explained:

According to the majority rule, . . fraudulent concealment of a cause of action from the one in whom it resides by the one against whom it lies constitutes an implied exception to the statute of limitations, postponing the commencement of the running of the statute until discovery or reasonable opportunity of discovery of the feet by the owner of the cause of action, Under this rule, one who wrongfully conceals material facts and thereby prevents discovery of his wrong or of the fact that a cause of actbn has accrued against him is not permitted to assert the statute of limitations as a bar to an action against him[.]

Id. at 1241. The court went on to hold that the complaint "allege[d] sufficient facts which, if true, would toll the statute for the length of the time required to permit the bringing of the present action." Id. at 1242. Through this discussion, the Chaney court made clear that, with respect to fraudulent concealment, equitable estoppel and equitable tolling are two sides of the same coin; both doctrines turn on whether the defendant, in bad faith, caused the delay in filing the complaint.

         The Ninth Circuit has interpreted Oregon case law, specifically citing Chaney, to mean that a non-fiduciary's mere concealment of the tacts underlying a cause of action is insufficient to trigger equitable estoppel. Philpott, 710 F.2d at 1425. Rather, the defendant must affirmatively hill the plaintiff into delaying filing suit or into believing that he has no cause of action. Id. In other words, in order to avoid a statute of limitations bar on a theory of fraudulent concealment, "the plaintiff must point to . . . some active conduct by the defendant above and beyond the wrongdoing upon which the plaintiffs claim is filed, to prevent the plaintiff from suing in time." Lukovsky, 535 F.3d at 1052 (internal quotation marks omitted) (emphasis in original).

         Here, plaintiffs have not identified any alleged bad faith apart from the defendants' putported concealment of the defects in WindsorONE trim board. They have not alleged any affirmative actions designed to delay the filing of this lawsuit. I hold that, on the facts of this case, there is no fraudulent concealment to justify application of equitable estoppel or equitable tolling, Pleading fraudulent actions does not establish fraudulent concealment for estoppel or tolling purposes. See Id. ("The primary problem with plaintiffs' argument is that their alleged basis for equitable estoppel is the same as their cause of action, "); Benson Tower Condo. Owners Ass'n v. Victaulic Co., 2014 WL 5285475, No. 3:13-cv-01010-SI, *10 (D. Or. October 15, 2014) ('The mere fact that Plaintiff has adequately pleaded fraud does not import a discovery rule into the statute of limitations for a related breach of warranty claim.'').

         On March 27, 2018, plaintiffs filed a Notice of Supplemental Authority, submitting an Opinion and Order by Judge McCafferty from the U.S. District Court for the District of New Hampshire ("New Hampshire action").[2] The New Hampshire action is a putative class action against the same defendants and arising out of similar tactual allegations. Judge McCafferty found that the plaintiff in the New Hampshire action had sufficiently pleaded fraudulent concealment. That ruling does not change the analysis here for two reasons. First, Judge McCafferty was applying New Hampshire law to the plaintiffs' claims; the doctrine of fraudulent concealment is not identical across all jurisdictions and I am bound to follow the Oregon Supreme Court and the Ninth Circuit in analyzing that doctrine's applicability. Second, the pleadings in the New Hampshire case are distinguishable from the pleadings before me.

         The plaintiff in the New Hampshire action specifically alleged that defendants' "warranty-claim process is an artifice" and that defendants "deny warranty claims based on improper installation despite the fact that no method of installation would avoid or cure the inherently defective nature of defendants' design." Pls'. Notice Supp. Auth. Ex. 1 at 7 (internal quotation marks omitted). Judge McCafferty held that whether fraudulent concealment tolled the statute of limitations turned, in part, on "the effect of the allegedly false inspection report" the plaintiff had received. Id. at 21. A sham inspection procedure is the sort of affirmative action that could lull a plaintiff into not acting on his rights, as necessary to toll the statute of limitations under the fraudulent concealment doctrine in the Ninth Circuit. Plaintiffs in this case have not alleged that defendants performed a sham inspection here. As such, fraudulent concealment does not aid plaintiffs' in the timeliness of their claims.

         Importantly, even if fraudulent concealment did equitably toll the statute of limitations (or, alternatively stated, equitably estop defendants from asserting a limitations defense) here, it would suspend the running of the limitations period for plaintiffs' claims only through the date on which plaintiffs discovered the defect in the WindsorONE trim board. See Chaney, 503 P.2d at 1242. Such tolling would not affect the timeliness of plaintiffs' products liability or negligence claims because the Oregon statutes of limitation for those claims already incorporate a discovery rule-that is, even in the absence of fraudulent concealment, the limitations period runs from the date on which the plaintiff discovered or reasonably should have discovered the defect. See Or. Rev. Stat. ยง 30.905(1) ...

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