LANDYA McCAFFERTY, District Judge.
Plaintiff Brian Begley brings this action against defendants Windsor Surry Company d/b/a WindsorONE and Windsor Willits Company d/b/a Windsor Mill. Begley raises a number of claims relating to allegedly defective wood products that defendants manufacture and sell. Begley brings this action individually and on behalf of a putative class of New Hampshire consumers. Defendants move to dismiss the amended complaint and to strike the class allegations. Begley objects to both motions. For the following reasons, the motion to dismiss is granted in part and denied in part, and the motion to strike is denied.
The following facts are taken from Begley's amended complaint, unless otherwise noted. This action relates to certain wood products that defendants manufacture and sell: the "WindsorONE line of pre-primed trim board products." Doc. no. 17 at 14. Since 1996, defendants have manufactured and sold these trim boards for exterior construction—as fascia, soffit, rake board, corner board, and window trim—as well as for interior applications.
WindsorONE trim board is made from Radiata Pine wood. Begley alleges that "nearly all" of the Radiata Pine that defendants use is sapwood, which is the outer portion of the tree stem.
To manufacture a board, defendants first cut wood from juvenile Radiata Pine trees. They cut a number of smaller boards in a manner so as to remove knots and other imperfections from the wood, and then glue these boards together with an adhesive to make a single, "finger-jointed" board.
Defendants marketed and advertised the boards as suitable for exterior application on buildings and other wood structures. Defendants stated that, as a result of its manufacturing process, WindsorONE trim board could be thought of as "turbo wood," because it "benefits from structural stability, decreased cupping, warping or twisting" and because it is "defect free."
Defendants provide a ten-year warranty for their end and edge gluing, and a five-year warranty for their primer. On their website, defendants state that they "will replace, without charge, any WindsorONE product that installed [sic] according to directions and fails to meet" the warranties.
Begley alleges that, contrary to defendants' marketing, neither the adhesive glue nor the wood itself can withstand normal outdoor weather conditions. The adhesive glue, while water resistant, is not actually waterproof and therefore breaks down through exposure to rain, snow, and other conditions. This allows water to penetrate the pieces of the board, which—because it has no resistance to rot—decays, rots, warps, and splits prematurely. The deterioration of the board can then cause deleterious effects on the underlying structure. Begley notes that treating the boards with a wood preservative could ameliorate this issue, but WindsorONE boards are not treated with any preservatives. Begley claims that WindsorONE board is thus of lower quality than boards made with cedar, redwood, Douglas fir, or eastern white pine wood, which are naturally rot resistant. Begley also alleges that defendants have known about these problems "for decades" but have nonetheless continued to market WindsorONE board as suitable for exterior applications.
Begley's experience with defendants and WindsorONE trim board began in 2004. In that year, Begley started construction on his new home in New Hampshire. He hired Paul Vandenberg to build the home. In August 2004, Vandenberg purchased WindsorONE trim boards through a local distributor and installed them throughout the exterior of the home. In total, 9,712 linear feet of WindsorONE trim board were used on the home.
Before Vandenberg purchased the trim board, the local distributor told him that WindsorONE "was great for exterior use" and "was the best trim board product on the market for exterior use."
Vandenberg completed construction in February 2005, after which Begley and his wife moved into the home. In spring 2007, Begley noticed that some pieces of the trim board were rotting, deteriorating, or crippling at the ends. He also saw that there were splits, warping, and fungi growing out of some of the wood.
The next year, in spring 2008, Begley noticed that the damage he had observed previously was spreading to other areas of his home—in total, 384 linear feet were affected. He contacted Vandenberg, who conducted an inspection. Vandenberg confirmed that it was WindsorONE trim board that was deteriorating, and, on Begley's behalf, he filed a warranty claim with defendants for the 384 linear feet of deteriorated trim board. Vandenberg also requested that defendants send a representative to inspect Begley's home.
Defendants sent an agent from Norcon Forestry Ltd. ("Norcon") to inspect the property. After inspecting the property, the agent sent Vandenberg a report dated July 12, 2008. In the report, the agent concluded, "[A]lmost all of the damage to the trim boards may be attributed to poor design or construction practices over which Windsor had no control. As the observed damage is design or installation related, Windsor does not have practical responsibility."
In August, Norcon sent a letter to Vandenberg, which was addressed to Vandenberg, Begley, and Mrs. Begley. At the top of the letter is the following disclaimer: "OFFER OF SETTLEMENT MADE ON A WITHOUT PREJUDICE BASIS." Doc. no. 17-1 at 2. Enclosed with the letter is a release ("2008 Release"). The letter informs Vandenberg and the Begleys that Windsor Mill would supply 400 linear feet of new WindsorONE+ trim board
Doc. 17-2 at 2 (emphasis added). Vandenberg told the Begleys that they could receive credit with the local distributor for the 400 feet of trim board, but only if they signed the release. The Begleys and Vandenberg then executed the release, and Begley used the credit to purchase a different trim board product.
Begley alleges that, in fact, defendants' warranty-claim process is an artifice, as defendants have "no intention of providing the services set forth in their warranties." Doc. no. 17 at 2. Defendants allegedly deny warranty claims based on improper installation despite the fact that "no method of installation would avoid or cure the inherently defective nature of [d]efendants' design."
Regardless, seven years later, in 2015, Mrs. Begley noticed additional deterioration of other WindsorONE trim boards on the home. She filed a second warranty claim with defendants. Norcon, again acting as defendants' agent, communicated with Mrs. Begley in spring 2016 to resolve her claim. As in 2008, Norcon sent another release for the Begleys to sign. In exchange for the second release, the Begleys would receive another 400 linear feet of WindsorONE+ trim board. Because the offered trim board would only cover a small portion of the deteriorating wood they had discovered, the Begleys declined to sign the second release.
In July 2017, Begley filed the present action, both on his own behalf and as a class action. In his amended complaint, Begley raises the following claims: (1) breach of express warranty; (2) breach of the implied warranty of merchantability; (3) negligence; and (4) declaratory and injunctive relief.
Defendants have filed a motion to dismiss and a motion to strike the class allegations from Begley's complaint. The court addresses each motion below.
In support of their motion to dismiss, defendants argue: (A) the 2008 Release bars all of Begley's claims; (B) the statute of limitations bars all of Begley's claims; (C) the claim for breach of express warranty fails because the complaint does not sufficiently allege any representation that became the basis of the bargain; (D) the claims for declaratory and injunctive relief are inappropriate because Begley has adequate remedies at law, and Begley had no standing to seek injunctive relief; and (E) Begley is not entitled to seek punitive damages under New Hampshire law. After summarizing the standard of review, the court examines each argument in turn.
Under Rule 12(b)(6), the court must accept the factual allegations in the complaint as true, construe reasonable inferences in the plaintiff's favor, and "determine whether the factual allegations in the plaintiff's complaint set forth a plausible claim upon which relief may be granted."
A release may bar a subsequent action if it applies to the defendant, encompasses the claims asserted in the subsequent action, and is legally enforceable.
Begley responds that the 2008 Release is ambiguous and that, considering the circumstances surrounding its execution and the parties' subsequent conduct, the 2008 Release should be interpreted to cover only claims "relating to the 384 linear feet of trim that failed as of the date of the Release." Doc. no. 27-1 at 8. In the alternative, Begley contends the 2008 Release is unconscionable and therefore unenforceable.
The court concludes that the 2008 Release unambiguously covers Begley's present claims, but that Begley has plausibly alleged that the 2008 Release is unconscionable.
Both parties rely on New Hampshire law in interpreting and assessing the enforceability of the 2008 Release. When interpreting a contract under New Hampshire law, the court must "give the language used by the parties its reasonable meaning, considering the circumstances and the context in which the agreement was negotiated, and reading the document as a whole."
In this case, Begley does not argue that any particular term of the 2008 Release is ambiguous. Rather, Begley contends that the scope of the 2008 Release becomes ambiguous in light of the surrounding circumstances, the parties' subsequent conduct, and the parties' subjective intent. For example, Begley contends that the 2008 Release must be understood with reference to the warranty claim which Begley had filed with defendants. In Begley's view, the warranty allowed him to make a claim only on "failed portion[s] of the trim," and he believed that the 2008 Release merely resolved his warranty claim to that extent. Doc. no. 27-1 at 7. For that reason, he "interpreted the language [in the 2008 Release] as applying only to future claims relating to the 384 linear feet of trim that failed as of the date of the Release."
The court is not persuaded. The language of the 2008 Release is unambiguous: Begley released defendants
Furthermore, the court declines to introduce ambiguity into the 2008 Release by considering the extrinsic facts cited by Begley. The New Hampshire Supreme Court has stated that, while "[e]xtrinsic evidence is admissible when it serves to aid in interpretation, or to clarify an ambiguity," it may not be used to "contradict unambiguous terms of a written agreement."
In short, Begley's present claims, which arise from the purchase of Windsor Mill materials for the construction of his home, unambiguously fall within the scope of the 2008 Release.
Turning to Begley's second argument, the court concludes that the complaint gives rise to a plausible claim that the 2008 Release is unconscionable. The parties do not appear to dispute that RSA 382-A:2-302 governs the question of unconscionability with respect to the 2008 Release. Under that statute, a court may determine whether a contract is unconscionable, and, if so, the court may refuse to enforce the contract, strike the unconscionable clause, or limit the application of the unconscionable clause "as to avoid any unconscionable result." RSA 382-A:2-302(1). The statute is intended to prevent unfair surprise and oppression, not to disturb the allocation of risks resulting from superior bargaining power.
The New Hampshire Supreme Court has recognized that unconscionability generally includes "an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party."
Here, construing all reasonable inferences in Begley's favor, the terms of the 2008 Release are disproportionately favorable to defendants. As defendants acknowledge, the 2008 Release absolves them of all liability for "all claims (present and future, known and unknown)," of apparently any variety. Doc. no. 23-1 at 12. The 2008 Release thus not only allocates all of the risk relating to the trim boards to Begley, but it purports to do so as to all future claims against defendants. Begley alleges that, in exchange, he received about as much replacement trim board as he was already entitled to under the warranty. These allegations, viewed favorably to Begley, support a claim that the terms of the 2008 Release are unreasonably favorable to defendants.
Similarly, taking the allegations as true and construing all reasonable inferences in Begley's favor, the complaint plausibly alleges that Begley lacked a meaningful choice when he executed the release. The critical allegation is that Begley was only given the 2008 Release to sign after he had been falsely informed that poor installation—and not a defect covered by the warranty—was to blame for the deterioration of the WindsorONE boards. With no apparent basis to insist upon the original terms of the warranty, Begley's only choice was to accept the new terms offered by defendants: receive replacement boards in exchange for the execution of the 2008 Release. Thus, to the extent that Begley otherwise had a choice in deciding whether to execute the 2008 Release, defendants arguably restricted that choice by misrepresenting that Begley had no valid warranty claim and, by implication, no other recourse should he decline to accept it.
To be sure, there are facts suggesting that defendants did not coerce or unfairly surprise Begley. Begley received the settlement offer by letter, he had a few weeks to consider its terms, and the 2008 Release is itself short and unambiguous. In addition, in 2016, when offered more replacement boards in exchange for a second release, Begley appears to have felt free to decline the offer and instead pursue litigation.
Nevertheless, the court declines to resolve these questions at present. Although one of law, the question of unconscionability is a "fact-laden" determination.
Therefore, in light of Begley's plausible claim that the 2008 Release is unconscionable, the court declines to grant the motion to dismiss on the basis of the 2008 Release.
Defendants next argue that each claim is barred by its respective statute of limitations. Before addressing these arguments, it will be helpful to restate the relevant dates alleged in the complaint. In spring 2007, Begley first discovered rotting on some pieces of WindsorONE trim board on his home (approximately ten years before the filing of the complaint). In spring 2008, Begley noticed deterioration on additional trim boards, and Vandenberg filed a warranty claim with defendants (nine years before complaint). In July 2008, Norcon sent the purportedly false inspection report to Vandenberg (nine years before complaint). "At some point in 2015," Mrs. Begley noticed further rotting and deterioration on WindsorONE trim board installed on the home, and she filed a second warranty claim (approximately two years before complaint). Doc. no. 17 at 31. Begley claims that it was not until the discovery of further rotting in 2015 that he had "obtained the information essential to bringing suit." Doc. no. 27-1 at 13. Begley filed this action in July 2017.
Defendants contend that Begley's claims for negligence and declaratory and injunctive relief are barred by the three-year statute of limitations set forth in RSA 508:4, I. Begley asserts that his claims are timely under the discovery rule, as well as under the doctrines of fraudulent concealment and equitable tolling.
Under RSA 508:4, I, "all personal actions . . . may be brought only within 3 years of the act or omission complained of." However, the statute contains an exception known as the discovery rule, which "tolls the limitations period until a plaintiff discovers, or should reasonably have discovered, the causal connection between the harm and the defendant's negligent or wrongful act."
Distinct from the discovery rule are the doctrines of fraudulent concealment and equitable tolling. The former doctrine "states that when facts essential to the cause of action are fraudulently concealed, the statute of limitations is tolled until the plaintiff has discovered such facts or could have done so in the exercise of reasonable diligence."
Defendants argue that fraudulent concealment and equitable tolling do not apply because the complaint does not sufficiently allege any sort of wrongful conduct by defendants which would trigger those doctrines. Defendants also assert that Begley's claims for tolling under any theory must fail because Begley was on notice of a potential claim by spring 2008, which is when Begley filed his warranty claim with defendants. Therefore, defendants assert that the statute of limitations ran years before Begley filed this action.
Taking the allegations in the light most favorable to Begley, the complaint plausibly alleges that, as tolled, Begley's claims were timely filed. There are sufficient allegations supporting Begley's arguments that defendants actively thwarted his ability to discover essential information and that he was not otherwise on notice of a claim until 2015. Ultimately, the application of the above tolling doctrines will turn on a number of factual issues, including the extent of Begley's knowledge of the defects in the trim boards, the degree to which he participated in investigating and pursuing the 2008 warranty claim with Vandenberg,
Defendants assert that the claims for breach of express warranty and breach of the implied warranty of merchantability are barred by the four-year statute of limitations fixed by RSA 382-A:2-725.
Begley argues that fraudulent concealment and equitable tolling apply to render his warranty claims timely.
In
In addition, however, the First Circuit concluded that equitable tolling is inapplicable to implied-warranty claims governed by RSA 382-A:2-725.
Begley urges the court to refrain from applying
The same result does not obtain with respect to the express-warranty claim.
For these reasons, with respect to his express-warranty claim, Begley may rely on the doctrines of fraudulent concealment and equitable tolling to resist defendants' statuteof-limitations argument. Because there are sufficient facts to plausibly support such theories,
Defendants argue that the complaint does not sufficiently allege that any representation by defendants became the basis of the bargain, an essential requirement to create an express warranty under RSA 382-A:2-313. Begley counters that he has adequately alleged the existence of express warranties for purposes of RSA 382-A:2-313. The court agrees with Begley.
RSA 382-A:2-313 provides:
RSA 382-A:2-313(1)(a)-(b). "To create an express warranty, the seller is not required to use formal words, such as `warranty' or `guarantee' or have the specific intention to create a warranty."
A guarantee, promise, or description "becomes part of the basis of the bargain if it would naturally induce the purchase of the product."
In this case, there are sufficient allegations that Begley became aware of defendants' marketing materials during the bargaining process. Specifically, the complaint alleges that Vandenberg "relayed to [Begley]" the information he learned in defendants' "marketing materials, product brochures, and product warranty." Doc. no. 17 at 27. The complaint further states that Begley "chose to purchase WindsorONE trim board based on the information Vandenberg received . . . and thereafter communicated to [Begley]."
On two grounds, defendants argue that Begley's requests for declaratory and injunctive relief fail as a matter of law: (1) Begley's other causes of action provide adequate remedies at law, precluding equitable relief; and (2) Begley has no standing to seek injunctive relief because he has failed to allege that he is likely to purchase defendants' products again. Begley responds that his requests for equitable relief are proposals for relief on behalf of a possible 23(b)(2) class.
Defendants' first argument does not justify dismissal of Begley's requests for declaratory and injunctive relief. The mere fact that Begley has pleaded claims for monetary relief does not necessarily demonstrate that he has adequate remedies at law. A party may plead alternative, even inconsistent, forms of relief.
Nor is the court persuaded by defendants' argument on standing. Although Begley may not wish to purchase WindsorONE trim boards again, the complaint alleges that WindsorONE trim boards are still installed on his home and are continuing to deteriorate; defendants develop no argument as to why those allegations do not suffice to show that Begley is "likely to suffer future injury."
Defendants argue that New Hampshire law does not permit punitive damages under these circumstances. Begley does not dispute, or even address, defendants' contention.
Under RSA 507:16, "No punitive damages shall be awarded in any action, unless otherwise provided by statute." Given that Begley does not contest defendants' argument, let alone identify a source for punitive damages, the court grants defendants' motion to dismiss Begley's request for punitive damages.
In sum, the court grants the motion to dismiss only to the extent it seeks dismissal of the implied-warranty claim and the request for punitive damages.
Defendants request that the court strike the class allegations from the complaint. They raise four grounds: (1) the proposed class is overbroad and contains members who lack standing; (2) Begley is an atypical and inadequate class representative; (3) the proposed class is unascertainable and cannot satisfy the numerosity requirement; and (4) the proposed class cannot satisfy the superiority and predominance requirements of Rule 23(b)(3).
As explained below, the court concludes that defendants' objections to Begley's proposed class action are premature, and should be resolved at the class-certification phase.
The First Circuit has held that district courts may "use their authority under Federal Rule of Civil Procedure 12(f) to delete the complaint's class allegations."
"To obtain class certification, the plaintiff must establish the four elements of Rule 23(a) and one of several elements of Rule 23(b)."
As a general matter, the issues raised by defendants are more properly addressed on a motion for class certification, rather than a motion to strike. While the court must engage in a "rigorous analysis" on a motion for class certification,
First, defendants take issue with the class definition, arguing that it is defective in a number of ways. But at present, the class definition set forth in the amended complaint is "a proposal—and not by any means a certainty."
Second, defendants argue that Begley is an atypical and inadequate class representative, because he is subject to a number of unique defenses. It is true that "[b]oth typicality and adequacy may be defeated where the class representatives are subject to unique defenses which threaten to become the focus of the litigation."
Third, defendants assert that the proposed class is unascertainable and cannot satisfy the numerosity requirement. Defendants argue that because they do not sell WindsorONE boards directly to consumers, the "identities of the members of [the] alleged class" are unknown and cannot be uncovered through discovery. Doc. no. 24-1 at 13-14. They point out that a district court in the Northern District of California denied class certification for a similar suit against defendants on this basis.
Fourth, defendants contend that the proposed class cannot meet the superiority and predominance requirements of Rule 23(b)(3). To decide whether a class action is the superior method for adjudicating the controversy, the court considers the following factors:
Fed. R. Civ. P. 23(b)(3)(A)-(D). For the predominance inquiry, the court determines whether "there is reason to think that individualized questions will overwhelm common ones and render class certification inappropriate."
The court is not in a position to properly assess and weigh the considerations bearing on superiority and predominance. Both involve a more expansive inquiry that would benefit from full discovery and briefing.
Accordingly, the court denies defendants' motion to strike. However, the court does so without prejudice to defendants raising these arguments on a motion for class certification.
For the foregoing reasons, defendants' motion to dismiss (doc. no. 23) is granted to the extent it seeks dismissal of the implied-warranty claim and request for punitive damages, and is otherwise denied. Defendants' motion to strike (doc. no. 24) is denied without prejudice to raising their arguments on a motion for class certification.
SO ORDERED.