223 F.3d 873 (8th Cir. 2000), 99-1424, Marvin Lumber & Cedar Co. v. PPG Industries, Inc.
|Citation:||223 F.3d 873|
|Party Name:||MARVIN LUMBER AND CEDAR COMPANY; MARVIN WINDOWS OF TENNESSEE, INC., PLAINTIFFS - APPELLANTS, v. PPG INDUSTRIES, INC., DEFENDANT THIRD PARTY PLAINTIFF - APPELLEE, v. ELF ATOCHEM NORTH AMERICA, INC., THIRD PARTY DEFENDANT. MINNESOTA, AMICUS ON BEHALF OF APPELLANT.|
|Case Date:||August 22, 2000|
|Court:||United States Courts of Appeals, Court of Appeals for the Eighth Circuit|
Submitted: November 15, 1999
Appeal from the United States District Court for the District of Minnesota.
[Copyrighted Material Omitted]
Before Wollman, Chief Judge, Lay and Bowman, Circuit Judges.
Bowman, Circuit Judge.
Marvin Lumber and Cedar Co. and Marvin Windows of Tennessee, Inc. (collectively "Marvin") filed a multicount suit against PPG Industries, Inc. ("PPG"). The District Court dismissed several counts and granted summary judgment in favor of PPG on the rest. Marvin appeals, and we affirm in part and reverse in part.
The Marvin companies are Minnesota and Tennessee corporations that manufacture and sell custom-made wooden doors, windows, and other construction products. PPG makes and sells, among other things, wood preservatives, primers, and coatings. The dispute here arose from Marvin's purchase of wood preservatives from PPG for Marvin's use in treating its windows and doors.
For several decades, Marvin treated its wood products with a preservative containing pentachlorophenol, called Penta for short, which is effective in preventing premature wood rot and decay caused by moisture penetration. Penta had drawbacks, including toxicity, and starting in the late 1970s, alternative wood treatments began to emerge. PPG makes such a treatment called "PILT," which stands for "preservative in line treatment."
Marvin purchased and used PPG's PILT from 1985 to 1988, along with other PPG products such as primers and topcoats. On April 22, 1994, Marvin filed this suit. The complaint asserts numerous legal theories, but, ultimately, the central allegation is that PPG's products did not meet Marvin's expectations in preventing wood rot and deterioration in Marvin's doors and windows. Specifically, there are thirteen legal theories in the Amended Complaint: (I) contract; (II) express warranty; (III) implied warranty of merchantability; (IV) implied warranty of fitness for a particular purpose; (V) negligence; (VI) strict liability;
(VII) fraud and misrepresentation; (VII-XII) violations of several state antifraud statutes; and (XIII) fraudulent concealment.
The procedural background of the case is somewhat complicated. We recite only that necessary for our purposes here. On March 17, 1995, the District Court dismissed Marvin's statutory fraud claims, without prejudice, as having been pled with insufficient particularity. The same decision also dismissed Marvin's tort claims, including those sounding in common-law fraud, insofar as they related to damage to the goods sold by Marvin, based on Minnesota's economic loss doctrine. Marvin filed another complaint and on October 13, 1995, a Magistrate Judge issued a Report and Recommendation suggesting that the common-law and statutory fraud claims in the Amended Complaint be dismissed, and the District Court so ordered on October 31, 1995. Marvin then sought and obtained a statutory change from the Minnesota legislature. Relying on this change, Marvin asked the District Court to revise its earlier decisions. Another Report and Recommendation, dated August 6, 1998, suggested denial of such revision and also, on PPG's motions, recommended summary judgment against Marvin on the remaining claims. The District Court adopted the Magistrate Judge's recommendations and entered judgment for PPG on January 15, 1999, although it did not adopt the reasoning of the Report and Recommendation in its entirety. See Marvin Lumber & Cedar Co. v. PPG Indus., Inc., 34 F.Supp.2d 738 (D. Minn. 1999). Seeking reinstatement of its claims, Marvin has timely appealed.
There are three central issues in this appeal. First, we must decide whether Marvin's contract claims are barred by the governing statute of limitations. Second, we must decide whether Minnesota's economic loss doctrine bars Marvin's tort claims. Finally, we decide whether Marvin is protected by the state statutes on which it bases its statutory fraud claims.
As a diversity action, this case is governed by state substantive law. See Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938). Where the state law is uncertain, our task is to predict how the state supreme court would resolve the issue if faced with it. See Jackson v. Anchor Packing Co., 994 F.2d 1295, 1301 (8th Cir. 1993). Except for the causes of action based on Tennessee statutes, the District Court applied Minnesota law and the parties do not argue for the application of any other. Here, we review all of the District Court's determinations de novo, considering all evidence in the light most favorable to Marvin on summary judgment issues and, with regard to the Rule 12 dismissals, accepting the complaint's factual allegations as true and construing them in the light most favorable to the plaintiff. See Anderson v. Franklin County, Mo., 192 F.3d 1125, 1131 (8th Cir. 1999).
The Uniform Commercial Code (U.C.C.), adopted in Minnesota, establishes that Article 2 contract claims must be brought within four years of their accrual. See Minn. Stat. § 336.2-725(1) (1998). Ordinary warranty claims generally accrue upon tender of delivery. See id. § 336.2-725(2). Marvin last took delivery of PPG's product in December 1988 and failed to file suit until April 1994, almost two years too late. Two circumstances might allow the claims as timely: if PPG fraudulently concealed its breach from Marvin or if PPG expressly warranted the future performance of its products. We believe there is a jury question as to the existence of a future performance warranty.
Marvin alleges that PPG fraudulently concealed the PILT defects forming the basis of Marvin's causes of action, which would toll the statute of limitations until Marvin discovered or had a reasonable
opportunity to discover the concealed defects. See Hydra-Mac, Inc. v. Onan Corp., 450 N.W.2d 913, 918 (Minn. 1990). To prevail, Marvin must show that PPG fraudulently concealed "the very existence of the facts which establish the cause of action" and that Marvin was "actually unaware" of these facts. Id. at 918-19. Since these are disputes of fact, summary judgment is appropriate only where a reasonable juror could not find fraudulent concealment. See Miles v. A.O. Smith Harvestore Prods., Inc., 992 F.2d 813, 817 (8th Cir. 1993). The District Court found that the evidence in the record does not create a genuine issue of material fact on fraudulent concealment. See Marvin Lumber & Cedar Co., 34 F.Supp.2d at 755. We agree.
The substance of Marvin's ordinary warranty claims is that PPG warranted that PILT would adequately prevent wood rot, but the product failed. The first critical question therefore is whether PPG fraudulently concealed PILT's alleged failure to prevent rot in Marvin's wood products. Acts that can constitute fraudulent concealment include outright misrepresentations, see Hines v. A.O. Smith Harvestore Prods., Inc., 880 F.2d 995, 998-99 (8th Cir. 1989) (applying Missouri law), or failures to disclose information when a duty of disclosure is present, such as in a fiduciary relationship, see Cohen v. Appert, 463 N.W.2d 787, 790-91 (Minn. Ct. App. 1990). No such disclosure duty arises from the arms-length transactions of the parties here. See Metropolitan Fed. Bank v. W.R. Grace & Co., 999 F.2d 1257, 1261 (8th Cir. 1993). Misleading partial disclosures, however, may constitute affirmative fraud, see M.H. v. Caritas Family Servs., 488 N.W.2d 282, 288 (Minn. 1992), and fraudulent concealment, see Iverson v. Johnson Gas Appliance Co., 172 F.3d 524, 529 (8th Cir. 1999) (discussing independent tort of fraudulent concealment). If there is evidence that PPG undertook fraudulently concealing acts, the second question would be whether Marvin still knew or should have known of the facts that make up its cause of action. See Hydra-Mac, Inc., 450 N.W.2d at 919. Because Marvin has not supplied any evidence of the necessary fraudulent acts, we need not reach the second inquiry.
In attempting to make out a triable case of fraudulent concealment, Marvin repeats many of its general contract and fraud claims, alleging that PPG misrepresented PILT's effectiveness and also that PPG made misrepresentations that, while not directly vouching for PILT's effectiveness, tend to support it. For example, Marvin alleges that PPG misled Marvin about long-term research supporting PILT's effectiveness, about PILT's certification by an industry standards organization, about changes in the formulation and manufacturing process for PILT during the time Marvin bought it, and about the similarity between the type of PILT sold to Marvin and the type sold to a well-known competitor. All of these misrepresentations, Marvin alleges, fraudulently prevented Marvin from learning that PILT was failing. Marvin's argument fails because, even if PPG fraudulently made such representations, those acts do not constitute fraudulent concealment of Marvin's ordinary warranty claims.
Two cases are illustrative. In both Hines and Miles, the plaintiffs sued the manufacturer of a particular model of grain elevator that allegedly failed to protect its contents as promised. In both cases, defendant raised a statute of limitations defense. In Hines, the plaintiff alleged that, while inherent and known design defects were the cause of the elevator's failure, the seller misled Hines by fooling him into believing that the problem was faulty seals, which could be fixed, and the seller attempted to repair the seals. This Court held that a genuine issue of material fact existed as to fraudulent...
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