KATHLEEN McDONALD O'MALLEY, District Judge.
Before the Court is a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), (Doc. 86), filed by Defendant Citadel Builders, Inc. ("Citadel"). The Plaintiffs, Flex Homes, Inc. ("Flex Homes"), and Kenneth and Ingrid Green (collectively, "the Greens") have filed a brief in opposition (Doc. 93), and Citadel has filed a brief in reply (Doc. 95). Accordingly, this matter is ripe for adjudication. For the reasons articulated below, Citadel's motion to dismiss is
This is a dispute concerning the design, delivery, assembly and construction of pre-fabricated houses. The Court has set forth the facts and allegations giving rise to this lawsuit in detail in two previous orders. (Docs. 22 and 59.
Plaintiff Flex Homes is a builder. It is a family business owned by non-party Inga Dollinger, who is Plaintiff Ingrid Green's mother. In 2004, Ingrid Green was the Sales Manager, General Contractor, and Vice President of Flex Homes. Plaintiff Kenneth Green is Ingrid Green's husband.
In 2004, Flex Homes, an Ohio Corporation, contracted with Ritz-Craft, a Michigan and Pennsylvania Corporation, to purchase the components of pre-fabricated houses from Ritz-Craft for resale to consumers. See Doc. 1-1 ("Builder Agreement" between Ritz-Craft and Flex Homes, (the "Builder Agreement")). Flex Homes purchased the components of a pre-fabricated house from Ritz-Craft under the Builder Agreement, and resold the house to the Greens before construction
In February 2005, Ritz-Craft delivered the components of the Model Home to Flex Homes' construction site at 18715 Auburn Glen Drive in Chagrin Falls, Ohio. Pursuant to an October 27, 2004 contract between Ritz-Craft and Citadel known as a "Set Crew Agreement," Citadel assembled the components of the Model Home on-site. (Set Crew Agreement, Doc. 86-6.) In addition, the Greens (as opposed to Ritz-Craft or Flex Homes) contracted with various sub-contractors, who completed the installation and finished the interior and exterior of the Model Home, including the electrical work, HVAC, and plumbing.
The Greens immediately complained of various defects in the design, construction, and installation of the Model Home. As a result, on February 23, 2007, Flex Homes and the Greens filed suit in the Court of Common Pleas, Geauga County, Ohio alleging six counts related to the delivery, installation, and design of various components of the Model Home.
First, Defendant Ritz-Craft filed a partial motion to dismiss most of the claims against it pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Ritz-Craft's Motion to Dismiss, Doc. 6.) On March 18, 2008, the Court issued an Opinion and Order granting, in part, Ritz-Craft's Motion to Dismiss. (March 18 Opinion & Order, Doc. 22.) Specifically, the Court first found that the claims arising under the Builder Agreement are governed by Pennsylvania law based on the choice of law provision in that contract. Next, the Court dismissed the following claims:
(Id. at 23.) In addition, the Court dismissed Flex Homes' claims for lost or cancelled sales and found that the Complaint failed to adequately plead facts in support of an entitlement to punitive damages. Although the Court permitted the Plaintiffs to file an amended complaint including facts sufficient to support a claim for punitive damages, they did not do so within the time allotted.
Next, Ritz-Craft filed a motion for summary judgment with respect to many of the remaining claims. (Ritz-Craft's MSJ, Doc. 51.) In an Opinion & Order dated September 30, 2009 (September 30 Opinion & Order, Doc. 59), the Court granted summary judgment in favor of Ritz-Craft with respect to the following claims:
(Id. at 41.)
These two Opinion & Orders drastically reduced the number of claims pending against Ritz-Craft. Indeed, as it stands after the September 30 Opinion & Order, the Plaintiffs only remaining claims against Ritz-Craft are:
(Id.)
While neither Opinion & Order resolved any of the claims against Citadel, the September 30 Opinion & Order did address Citadel's role in this lawsuit. As of the September 30 Opinion & Order, the Plaintiffs had not served Citadel with the Complaint (Doc. 1-1) and Ritz-Craft had not served Citadel with their Cross-Claim for indemnification (Doc. 45). Accordingly, the Court ordered the Plaintiffs and Ritz-Craft to show cause why their claims against Citadel should not be dismissed for failure to prosecute.
As noted above, Citadel entered into the Set Crew Agreement with Ritz-Craft on October 27, 2004. Pursuant to this contract with Ritz-Craft, Citadel "set" the pre-fabricated home on the foundation constructed by Flex Homes and assembled the component parts of the home based on the design and instructions provided by Ritz-Craft. The Greens hired other sub-contractors in the various trades, such as B & L, to finalize the installation process.
The Set Crew Agreement between Citadel and Ritz-Craft recites that "the parties desire to establish a business relationship whereby [Citadel] performs modular and/or mobile home installation processes, subject to the terms and conditions of this AGREEMENT." (Doc. 86-6 at 1.) It further provides that Citadel is an independent contractor, as opposed to an agent or employee of Ritz-Craft; that Citadel will indemnify Ritz-Craft for "violations of this AGREEMENT that generate claims by third-parties, including any conduct by [Citadel] in connection with installation of the products"; and that the law of Pennsylvania governs the contract. (Id. at 4.)
Citadel's motion to dismiss is procedurally awkward because it was filed so late in the case—after the parties had
The Court may dismiss a claim for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). The purpose of a motion under 12(b)(6) is to test the sufficiency of the complaint—not to decide the merits of the case.
It is well-established that a complaint need not set forth in detail all of the particularities of the plaintiff's claim. See Myers v. Delaware Co., Case No. 2:07-cv-844, 2009 WL 3446752, *2, 2009 U.S. Dist. LEXIS 98143, *6, 2009 WL 3446752 (S.D.Ohio Oct. 22, 2009). Instead, Rule 8(a)(2) of the Federal Rules of Civil Procedure requires only a "short and plain statement of the claim showing that the pleader is entitled to relief." Rule 8 does not, however, "unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). While legal conclusions can provide the framework for a complaint, all claims must be supported by factual allegations. Id. The Supreme Court has indicated that "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 1949; see also Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ("[A] formulaic recitation of the elements of a cause of action" is insufficient).
To withstand a motion to dismiss pursuant to Rule 12(b)(6), a complaint must plead facts sufficient "to state a claim for relief that is plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. 1955 (emphasis added). The requisite facial plausibility exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. The plausibility requirement is not the same as a "probability requirement" but instead "asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Therefore, where a complaint pleads facts that are "merely consistent with" the defendant's liability, "its stops short of the line between possibility and plausibility of entitlement to relief." Id. (citing Twombly, 550 U.S. at 557, 127 S.Ct. 1955). Examining whether a complaint states a plausible claim for relief is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950.
A district court considering a motion to dismiss must construe the complaint in the light most favorable to the plaintiff and accept all well-pleaded allegations in the complaint as true. See Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. 1998); see also Iqbal, 129 S.Ct. at 1950 ("When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief."). Where the well-pleaded facts "do not permit the court to infer more than the mere possibility of misconduct," the complaint fails to state a claim. Iqbal, 129 S.Ct. at 1950. In sum, the allegations in the complaint
In ruling on a motion to dismiss, a court may consider: (1) any documents attached to, incorporated by, or referred to in the pleadings; (2) documents attached to the motion to dismiss that are referred to in the complaint and are central to the plaintiff's allegations, even if not explicitly incorporated by reference; (3) public records; and (4) matters of which the court may take judicial notice. Whittiker v. Deutsche Bank National Trust Co., 605 F.Supp.2d 914, 924-25 (N.D.Ohio 2009); Ruth v. Unifund CCR Partners, No. 5:08CV2689, 2009 WL 585847, *3, 2009 U.S. Dist. LEXIS 17362, *11 (N.D.Ohio Mar. 6, 2009) ("In determining whether to grant a Rule 12(b) (6) motion, the court `may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to the defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein.'"); Greenberg v. Life Ins. Co., 177 F.3d 507, 514 (6th Cir.1999); see also Fed.R.Civ.P. 10(c) ("A copy of a written instrument that is an exhibit to a pleading is part of the pleading for all purposes."). As noted above, here, the Court may take judicial notice of the prior proceedings and the record in this case.
Citadel's motion to dismiss challenges the viability of each of the Plaintiffs' claims against Citadel. Specifically, Citadel argues that the following five claims should be dismissed:
(Doc. 86-1 at 1-2.)
Count I of the Plaintiffs' Complaint alleges that Citadel breached a contract with the Plaintiffs.
Citadel argues that it does not have a contract with either Flex Homes or the Greens. The parties to the Set Crew Agreement are Citadel and Ritz-Craft. Further, Citadel contends that the Plaintiffs are not third-party beneficiaries of the Set Crew Agreement under applicable law.
The Plaintiffs response is two-fold. First, they concede that they are not a party to a written contract with the Plaintiffs, but contend that the allegations in the Complaint are sufficient to state a claim for breach of an oral contract. Second, they argue that they are third-party beneficiaries to the Set Crew Agreement.
In reply, Citadel argues that the allegations in the Complaint are clearly insufficient to satisfy the pleading standard for breach of an oral contract. Citadel also reiterates its argument that the Plaintiffs
As a threshold issue, the Court must determine the law applicable to analyzing the viability of the Plaintiffs' breach of contract claim against Citadel, and the other claims premised upon the Set Crew Agreement.
The Set Crew Agreement includes a "Governing Law" provision that states:
(Doc. 86-6 at 4.) Nonetheless, Citadel asserts in a footnote that the Court should apply Ohio law to determine whether the Plaintiffs are third-party beneficiaries of the Set Crew Agreement. (Doc. 86-1 at n. 1.) Citadel does not cite any authority or provide any explanation for this position. The Plaintiffs do not address the issue in their response. (Doc. 93 at 5.)
In the March 18 Opinion & Order, the Court analyzed an identical choice of law provision in the Builder Agreement between Flex Homes and Ritz-Craft and concluded that Pennsylvania law applied to the determination of whether the Greens were third-party beneficiaries to that contract. (Doc. 22 at 5-6.) For the reasons articulated in that order, the Court will analyze the third-party beneficiary question with respect to the Set Crew Agreement under Pennsylvania law. See also Davidson & Jones Dev. Co. v. Elmore Dev. Co., Inc., 921 F.2d 1343, 1356 n. 15 (6th Cir.1991) (applying the law of the state specified in the contract that the putative third-party beneficiaries sought to invoke to the question of whether they were third-party beneficiaries); cf. Clintonville Service Center v. Monaco Coach Corp., Case No. 2:06cv295, 2007 WL 1024809, at *4 (S.D.Ohio Mar. 30, 2007) (refusing to use choice of law provision in a contract to resolve conflict of law question because defendant was neither a party nor a third party beneficiary to the contract); Hay Acquisition Co., I., Inc. v. Schneider, Case No. 2:04cv1236, 2005 WL 1017804, at *8 (E.D.Pa. Apr. 27, 2005).
The Court rejects the Plaintiffs' contention that the Complaint states a claim for breach of an oral contract. The Complaint repeatedly references the Builder Agreement between Flex Homes and Ritz-Craft—in fact, it is attached to the Complaint. It does not, however, mention the Set Crew Agreement, and that contract is not attached to the Complaint. In addition, it does not mention, suggest, or imply the existence of an oral agreement of any kind between any of the parties. Accordingly, the Plaintiffs' argument is reduced to the contention that asserting a generic breach of contract claim is sufficient to survive a motion to dismiss without any factual allegations relating to the particular contract at issue because, under the Rule 12(b)(6) pleading standard, "the allegation of a contract between Plaintiffs and Citadel must be accepted as true." (Doc. 93 at 4.) This is a patent misinterpretation of the Rule 12(b)(6) standard, particularly in the aftermath of the Twombly and Iqbal decisions discussed above. While the Court must construe the Complaint in the light most favorable to the Plaintiffs, the claim must be supported by factual allegations such that it is "plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. 1955. A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."
Citadel argues that the Plaintiffs are not third-party beneficiaries of the Set Crew Agreement under Ohio law because they are neither mentioned in the contract nor are they the direct and primary beneficiaries of the contract. (Doc. 86-1 at 4-5.) It also notes, however, that the result would be the same under Pennsylvania law because the tests for third-party beneficiary status are virtually identical.
The Plaintiffs contend that determining whether they are third-party beneficiaries is a factual question inappropriate for Rule 12(b)(6) review. (Doc. 93 at 5.) In addition, the Plaintiffs make the following argument:
(Doc. 93 at 5 (emphasis in original).)
First, whether a party is a third-party beneficiary is a question of law for the Court. See Shumate v. Twin Tier Hospitality, LLC, 655 F.Supp.2d 521, 535 (M.D.Pa.2009). Specifically, whether recognition of a third-party's right to sue for breach of contract "is appropriate to effectuate the intention of the parties" is a legal question. Id. (quoting Williams Controls, Inc. v. Parente, Randolph, Orlando, Carey & Assocs., 39 F.Supp.2d 517, 535 (M.D.Pa.1999)) (citing Scarpitti v. Weborg, 530 Pa. 366, 609 A.2d 147, 150 (1992)) (quoting Guy v. Liederbach, 501 Pa. 47, 459 A.2d 744, 751 (1983)).
Second, as the Court discussed in the March 18 Opinion & Order, Pennsylvania law does not readily confer third-party beneficiary status. (Doc. 22 at 8-12.) Under the common law test, both Ritz-Craft and Citadel would have had to express an intention to benefit the Plaintiffs in the Set Crew Agreement itself. See Spires v. Hanover Fire Ins. Co., 364 Pa. 52, 70 A.2d 828, 830-31 (1950); Manor Junior Coll. v. Kaller's Inc., 352 Pa.Super. 310, 507 A.2d 1245, 1246 (1986). The Plaintiffs cannot satisfy this test because they do not even allege that the Set Crew Agreement specifically mentions or references them.
The Pennsylvania Supreme Court has also recognized that, in a narrow ranges of circumstances, the third-party beneficiary test articulated in the Restatement (Second) of Contracts § 302 (1979) is an appropriate alternative to the Spires test. Guy v. Liederbach, 501 Pa. 47, 459 A.2d 744
Liederbach, 459 A.2d at 751. As the Court explained in some detail in the March 18 Opinion & Order, however, the Restatement test is still a high hurdle for a party seeking third-party beneficiary status. (Doc. 22 at 8-12.) For example, the Pennsylvania Supreme Court has held that even a daughter who sought third-party beneficiary status to enforce child support provisions with respect to her parents' divorce settlement agreement was not a third-party beneficiary under Liederbach. Chen v. Chen, 586 Pa. 297, 893 A.2d 87 (2006). Although the agreement in Chen specifically provided for child support payments, the Court held that the child support provision was intended to ensure that the parent with custody would receive child support payments, not to confer a specific benefit on the daughter herself. Id. at 92. Here, the Set Crew Agreement is a contract between Ritz-Craft and Citadel whereby Ritz-Craft pays Citadel to set the premanufactured home on its foundation and to assemble all of the other Ritz-Craft components on-site. While the ultimate owner of the home set by Citadel benefits from Citadel's performance of the contract, neither party specifically intends to confer a benefit on a specific person or persons. Ritz-Craft and Citadel's intentions are in no way dependent upon the Plaintiffs' rights as the ultimate purchasers of the Model Home. Accordingly, the Plaintiffs do not have standing to assert a breach of contract claim under a third-party beneficiary theory.
The Plaintiffs' second argument, i.e., that it would be unfair not to recognize the Plaintiffs' contractual rights under the Set Crew Agreement because the Defendants have "have attempted to construct a contractual maze which insulates all concerned from liability" (Doc. 93 at 5), fails based on the same logic.
Consequently, the Plaintiffs' breach of contract claims against Citadel are hereby
The Court must analyze the Plaintiffs' implied warranty of merchantability and fitness for a particular purpose claims in light of the conclusion that the Plaintiffs are neither parties to a contract with Citadel nor third-party beneficiaries to the Set Crew Agreement. As the Court explained in the March 18 Opinion & Order, the choice of law provision in the Set Crew Agreement does not apply to the Plaintiffs because they are neither parties nor third-party beneficiaries of that contract. Further, under Ohio law, privity of contract is generally a prerequisite to a breach of the implied warranties of merchantability and fitness for a particular purpose. See Curl v. Volkswagon of Am., Inc., 114 Ohio St.3d 266, 871 N.E.2d 1141, 1147-48 (2007); Lawyers Coop. Publ'g Co. v. Muething, 65 Ohio St.3d 273, 603 N.E.2d 969, 972 (1992) ("[A]bsent a contractual relationship between the plaintiff and defendant, an action based on contract for breach of warranty does not exist."). (See generally Doc. 22 at 15.)
The Plaintiffs contend that "the same `remote manufacturer' argument that this Court applied to the Ritz-Craft Defendants should [not] apply to [Citadel]." (Doc. 93 at 6.) They assert that the differences between Ritz-Craft and Citadel's role are dispositive of this issue and that there are no disclaimer of warranty provisions in their "contractual relationship" with Citadel. (Id.) This argument fails at the outset because the relationship between Citadel and the Plaintiffs is not contractual. The same false comparison undermines the Plaintiffs disclaimer of warranties distinction. There are no warranties to disclaim as between the Plaintiffs and Citadel because, unlike Ritz-Craft and Flex Homes, the Plaintiffs and Citadel do not have a contractual relationship of any kind.
Accordingly, the Plaintiffs' claims for breach of implied warranty of merchantability and fitness for a particular purpose are
Citadel's arguments in support of dismissal of the Plaintiffs' implied warranty of workmanship and negligence claims are premised on the Court finding that the Plaintiffs are third-party beneficiaries to the Set Crew Agreement. (Doc. 86-1 at 8.)
It is undisputed that only the Greens, not Flex Homes, are asserting an OCSPA claim. (See Doc. 93 at 6.)
Citadel argues that the Greens' claim against it under the Ohio Consumer Sales Practices Act ("OCSPA") should be dismissed because the Complaint does not allege that the Greens and Citadel engaged in a "consumer transaction" as defined by the statute. (Doc. 86-1 at 7; Doc. 95 at 3.)
The Greens argue that Citadel violated the OCSPA because transfer of a service is within the statutory definition of a "consumer transaction." They believe Citadel provided a service to the Greens pursuant to a contract when it assembled the components of the Model Home. (Doc. 93 at 7.) The Greens point to paragraph 18 of the Complaint, which states:
(Doc. 1 at 5.) They contend that it would be inappropriate for the Court to determine whether the Greens and Citadel engaged in a "consumer transaction" in the context of a Rule 12(b)(6) analysis. (Id.)
The Greens' contention that it is inappropriate to determine whether a transaction is a "consumer transaction" in the context of a Rule 12(b)(6) motion is reasonable. As the Court explained in the September 30 Opinion & Order, Ohio courts use a totality of the circumstances test to analyze whether a transaction is a "consumer transaction" for purposes of the OCSPA. (Doc. 59 at 22-23.)
Citadel's argument, however, is that the Complaint does not allege that a "transaction" of any kind occurred between Citadel and the Greens:
(Doc. 95 at 3.) The Complaint specifically alleges that "[t]he Greens purchase of the [Model Home] is a "Consumer Transaction" as defined by R.C. 1345.01(A)." (Doc. 1 at 6.) It also alleges that "Defendants are a `Supplier' and a `Person' as defined by R.C. 1345.01." (Id.) "Defendants" includes Citadel. Thus, the Plaintiffs' Complaint recites the essential elements of a OCSPA claim against Citadel.
The next question is whether the Plaintiffs have alleged sufficient facts in support of their OCSPA claim against Citadel to satisfy the Twombly/Iqbal plausibility standard. See Iqbal, 129 S.Ct. at 1949-50 ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."); Twombly,
(Doc. 1 at 3.) In other words, the Plaintiffs allege that Citadel performed a service for Flex Homes under the Builder Agreement between Ritz-Craft and Flex Homes and performed a service for the Greens as third-party beneficiaries to that same contract. The Builder Agreement is attached to the Complaint as an exhibit,
Finally, the Court must address Citadel's request to strike the allegations regarding punitive damages from the Complaint. (See Doc. 86-1 at 3.)
Citadel argues that, despite the fact that the Court expressly provided the Plaintiffs with an opportunity to augment their allegations relating to punitive damages, they failed to do so and the Complaint does not allege facts in support of the actual malice element of punitive damages under Ohio law. (Id.) Citadel correctly notes that the Court's March 18 Opinion & Order instructed the Plaintiffs to amend the Complaint to assert a basis for punitive damages or their request for such damages would be stricken from the Complaint.
The Plaintiffs argue that their request for punitive damages may not be stricken at the Rule 12(b)(6) stage of the proceedings. (Doc. 93 at 2.) Without citation to authority, the Plaintiffs assert that including a request for punitive damages in the prayer for relief is "all that is required by law." (Id. at 3.)
The Court rejected the Plaintiffs' argument on this issue in the March 18 Opinion & Order and does so again here. For the reasons discussed more fully in the March 18 Opinion & Order, the Plaintiffs failed to allege facts supporting a request for punitive damages. Under applicable Ohio law, it is not sufficient to simply request punitive damages in the prayer for relief. See Lum v. Mercedes Benz USA, L.L.C., No. 3:05cv7191, 2006 WL 1174228, *2 (N.D.Ohio Apr. 18, 2006). Although the Court allowed the Plaintiffs to amend their complaint to assert the factual basis of a proper claim for punitive damages, they did not avail themselves of that opportunity. Accordingly, the Plaintiffs' request for punitive damages is hereby
Defendant Citadel Builders, Inc.'s Motion To Dismiss Plaintiffs' Complaint (Doc. 86) is
Additionally, the Plaintiffs' claims for punitive damages against all Defendants are
Finally, all claims against the "John Doe Subcontractors" are hereby
As a result of this Opinion & Order, as well as the Court's March 18 Opinion &
• None: all of Flex Homes' claims against Ritz-Craft have been dismissed. (See Doc. 59.)
• Count II: Breach of the Implied Warranty of Workmanship;
• Count IV: Negligence (as and to the extent described in Doc. 59);
• Count V: Products Liability (for damages other than emotional distress (see Doc. 59)).
• Count II: Breach of the Implied Warranty of Workmanship;
• Count IV: Negligence.
• Indemnification.
• Indemnification.
• Indemnification.
• Indemnification.
This case is scheduled for mediation before Magistrate Judge David S. Perelman, on a date to be determined in July 2010. (Doc. 96.) Regardless of the date of the mediation, and without extending any deadlines currently in place, all discovery—both fact discovery and expert discovery—must be complete by
(Doc. 86-1 at 8.)
(Doc. 22 at 22-23.)
