34 F.Supp.2d 738 (D.Minn. 1999), Civ. 4-95-739, Marvin Lumber and Cedar Co. v. PPG Industries, Inc.

Docket Nº:Civ. 4-95-739 ADM/RL.
Citation:34 F.Supp.2d 738
Party Name:MARVIN LUMBER AND CEDAR COMPANY and Marvin Windows of Tennessee, Inc., Plaintiffs, v. PPG INDUSTRIES, INC., Defendant.
Case Date:January 15, 1999
Court:United States District Courts, 8th Circuit, District of Minnesota
 
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34 F.Supp.2d 738 (D.Minn. 1999)

MARVIN LUMBER AND CEDAR COMPANY and Marvin Windows of Tennessee, Inc., Plaintiffs,

v.

PPG INDUSTRIES, INC., Defendant.

No. Civ. 4-95-739 ADM/RL.

United States District Court, D. Minnesota.

Jan. 15, 1999

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[Copyrighted Material Omitted]

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Robert R. Weinstine, Winthrop & Weinstine, P.A., St. Paul, MN, for plaintiffs.

Mark B. Levinger, Assistant Attorney General for the State of Minnesota, for State of Minnesota, amicus curiae.

Michael T. Nilan, Halleland Lewis Nilan Sipkins & Johnson, P.A., Minneapolis, MN, Professor Fred Morrison, University of Minnesota Law School, for defendants.

MEMORANDUM OPINION AND ORDER

MONTGOMERY, District Judge.

I. INTRODUCTION

The above-entitled matter came on for hearing before the undersigned United

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States District Judge on October 30, 1998, pursuant to Plaintiffs' objections to Magistrate Judge Raymond L. Erickson's August 6, 1998 Report and Recommendation ("R & R"). After an extensive evaluation of the voluminous record in this lawsuit, Judge Erickson recommends that: (1) Plaintiffs' Motion to Revise Earlier Orders be denied; (2) Defendant's Motion for Summary Judgment on Plaintiffs' Legal Claims be granted; and (3) Defendant's Motion for Summary Judgment on Plaintiffs' Damages Claims be denied, as moot. Plaintiffs object to nearly every legal conclusion arrived at in the R & R and, in addition, move for certification of the following question to the Minnesota Supreme Court: "Whether Minnesota's Economic Loss Doctrine bars Plaintiffs' common law fraud and misrepresentation claims?" For the reasons set forth below, the Court rejects, as unnecessary, Magistrate Judge Erickson's conclusion that the 1998 Amendment to Minnesota Statute Section 604.10 is unconstitutional, but otherwise adopts the R & R in its entirety. Plaintiffs' Request to Certify Question of Minnesota Law is denied. Judgment is therefore entered in favor of Defendant.

II. BACKGROUND

The procedural and factual background of this matter is thoroughly and accurately set forth in the R & R and will not be fully repeated here. 1 Suffice it to say that Plaintiffs Marvin Lumber and Cedar Company, a Minnesota corporation, and Marvin Windows of Tennessee, Inc., a Tennessee corporation (hereinafter, collectively referred to as "Marvins"), commenced this action in April 1994 after they became dissatisfied with a wood preservative product--PILT--that they had purchased from Defendant PPG Industries, Inc. ("PPG"), a Pennsylvania corporation, between February 17, 1985, and December 11, 1988. Marvins allege that PPG's PILT directly resulted in premature wood rot and deterioration in the frames of the doors and windows which Marvins manufactured and sold during the period of time in which PILT was employed as Marvins' preservative. 2

On March 17, 1995, Judge Michael J. Davis of this Court dismissed with prejudice Marvins' common law tort claims--Counts V, VI, VII, and XIII--to the extent that the claims sought to recover any damages beyond those for "damage to other property." The dismissal was premised upon both the common law and statutory versions of the Economic Loss Doctrine. See Order of March 17, 1995 at 12. Thereafter, on November 1, 1995, Judge Davis affirmed his earlier ruling, by adopting the Report and Recommendation of Magistrate Judge John M. Mason, dated October 13, 1995, which denied Marvins' request to replead claims which had been dismissed with prejudice in the prior Order. Marvins now ask this Court to revise the earlier Orders by reinstating their claim for common law fraud and misrepresentation or, in the alternative, to certify the question to the Minnesota Supreme Court. PPG moves for summary judgment on all of Marvins' legal and damage claims.

III. STANDARD OF REVIEW

A district court must make an independent, de novo evaluation of those portions of an R & R to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. See 28 U.S.C. § 636(b)(1)(C) and Local Rule 72.1(c)(2). Summary judgment is appropriate if there is

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no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Unigroup, Inc. v. O'Rourke Storage & Transfer Co., 980 F.2d 1217, 1219-20 (8th Cir.1992). The court determines the materiality of particular facts from the substantive law governing a claim. See Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Disputes over facts which might affect the outcome of the lawsuit according to applicable substantive law are material. Id. A material fact dispute is "genuine" if the evidence is sufficient to allow a reasonable jury to return a verdict for the non-moving party. Id. at 248-49, 106 S.Ct. 2505.

IV. DISCUSSION

Magistrate Judge Erickson concluded that the Minnesota Economic Loss Doctrine prohibits Marvins from any tort law-based theory of recovery. Because Marvins' UCC contract remedies are barred by the statute of limitations and their consumer protection claims are legally inadequate, it is recommended that PPG's Motion for Summary Judgment be granted. The following discussion analyzes Marvins' objections and arguments vis-à-vis: (A) the impact of the common law and statutory Economic Loss Doctrine; (B) the case for certification; (C) arguments for tolling of the UCC statute of limitations; (D) remedies for consumer fraud; and, (E) Marvins' damage claims.

A. The Minnesota Economic Loss Doctrine

Under the Economic Loss Doctrine, a commercial purchaser of a product is precluded from recovering economic damages through a tort action against the manufacturer or seller of that product. Plaintiffs in such a case are limited to available contract and warranty remedies under the Uniform Commercial Code ("UCC"). The doctrine is premised on the notion that, in complex commercial dealings between sophisticated parties, the UCC must serve as a dependable and predictable structure for determining liability--i.e., the consistent framework which parties can rely upon in negotiating contract terms and allocating risks associated with commercial agreements.

1. Background

The Economic Loss Doctrine was first formally articulated by the Minnesota courts in the 1981 case of Superwood Corp. v. Siempelkamp Corp., 311 N.W.2d 159 (Minn.1981), overruled on other grounds, Hapka v. Paquin Farms, 458 N.W.2d 683 (Minn.1990). In Superwood, the court explained:

The UCC clarifies the rights and remedies of parties to commercial transactions. For example, there are specific provisions covering warranties, see Minn.Stat. § 336.2-314 (1980); warranty disclaimers, see Minn.Stat.§ 336.2-316 (1980); liability limitations, see Minn.Stat. § 336.2-719 (1980); and notice provisions, see Minn.Stat. § 336.2-607 (1980). The recognition of tort actions in the instant case would create a theory of redress not envisioned by the legislature when it enacted the UCC. Furthermore, tort theories of recovery would be totally unrestrained by legislative liability limitations, warranty disclaimers and notice provisions. To allow tort liability in commercial transactions would totally emasculate these provisions of the UCC. Clearly the legislature did not intend for tort law to circumvent the statutory scheme of the UCC.

311 N.W.2d at 162. Minnesota decisional and statutory law further refined the doctrine during the next decade, but the essential articulation remains relatively unchanged from Superwood:

[E]conomic losses that arise out of commercial transactions, except those involving personal injury or damage to other property, are not recoverable under the tort theories of negligence and strict products liability.

Id. at 162. 3

2. Section 604.10 and the 1998 Special Session Amendment

In 1990, the Minnesota Supreme Court overruled Superwood 's "damage to other

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property" exception to the Economic Loss Doctrine in Hapka v. Paquin Farms, 458 N.W.2d 683 (Minn.1990). The Minnesota Legislature responded a year later by codifying its own version of the Economic Loss Doctrine which, among other things, reinstated the availability of tort recovery for "damage to other property." Section 604.10, as originally enacted, provided as follows:

(a) Economic loss that arises from a sale of goods that is due to damage to tangible property other than the goods sold may be recovered in tort as well as in contract, but economic loss that arises from a sale of goods between parties who are each merchants in goods of the kind is not recoverable in tort.

(b) Economic loss that arises from a sale of goods, between merchants, that is not due to damage to tangible property other than the goods sold may not be recovered in tort.

(c) The economic loss recoverable in tort under this section does not include economic loss due to damage to the goods themselves.

In 1993, the Legislature amended Section 604.10, adding the following provision:

(d) The economic loss recoverable in tort under this section does not include economic loss incurred by a manufacturer of goods arising from damage to the manufactured goods and caused by a component of the goods.

In opposing PPG's motion for summary judgment in early 1998, Marvins argued that Judge Davis and Judge Mason had erred in retroactively applying Section 604.10 to the transactions at issue in this case which took place 3-5 years prior to the statute's enactment. While the summary judgment motions were under advisement with Judge Erickson, Marvins successfully lobbied the Minnesota Legislature to amend Section 604.10 in a Special Legislative Session held in April 1998. This second amendment to the statute added the following clause:

(e) This section shall not be interpreted to bar tort...

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