ACE Am. Ins. Co. v. Aerco Int'l, Inc.
| Decision Date | 08 March 2021 |
| Docket Number | No. 4:20-CV-01347-JAR,4:20-CV-01347-JAR |
| Citation | 525 F.Supp.3d 990 |
| Parties | ACE AMERICAN INSURANCE CO., Plaintiff, v. AERCO INTERNATIONAL, INC., and Blackmore and Glunt, Inc., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Christopher Konzelmann, Pro Hac Vice, White and Williams LLP, Philadelphia, PA, Matthew G. Koehler, Brown and James PC, St. Louis, MO, for Plaintiff.
Scott R. Hunsaker, Tucker Ellis LLP, St. Louis, MO, Seth Wamelink, Pro Hac Vice, Tucker Ellis LLP, Cleveland, OH, for Defendant AERCO International, Inc.
Robbye Hill Toft, Law Offices of Stephen H. Larson, St Louis, MO, for Defendant Blackmore and Glunt, Inc.
This matter is before the Court on Defendant AERCO International, Inc.’s ("AERCO") Motion for Judgment on the Pleadings. (Doc. 16). The motion is fully briefed and ready for disposition. For the reasons discussed below, the motion will be granted in part.
Plaintiff ACE American Insurance Company ("ACE") is the assignee of a joint venture ("JV") between Walsh Construction Company II, LLC and Alberici Constructors, Inc. (Doc. 1 at ¶ 1). As alleged in Plaintiff's Complaint, the United States Department of Veterans Affairs awarded the JV a contract to construct a medical clinic ("Clinic") at the Jefferson Barracks complex ("Jefferson Barracks") in St. Louis, Missouri. (Id. at ¶¶ 8-10). The JV purchased two AERCO Model B+II WaterWizard water heaters for installation at the Clinic. (Id. at ¶¶ 11-13). Defendant Blackmore & Glunt, Inc. ("B&G") delivered, inspected, and started up the water heaters on or about March 9, 2018. (Id. at ¶¶ 13, 15). DeLuca Plumbing, LLC, a subcontractor of the JV, installed the water heaters. (Id. at ¶ 14).
On June 16, 2018, at approximately 2:00 A.M., the JV's project manager received a call informing him that it was "raining inside the clinic." (Id. at ¶ 22). The manager discovered that an electronically controlled release valve on the AERCO water heater was discharging hot water, causing substantial damage to the property. (Id. at ¶¶ 23-24). After another malfunction a few months later, Defendants agreed to replace the defective heater under warranty. (Id. at ¶¶ 26-30). ACE, as insurer of the JV, paid out $3,999,770.92 for losses in connection with the June 26, 2018 flooding. ACE seeks this subrogated amount and other uninsured losses as assignee of the JV, and its Complaint includes the following counts: Product Liability (Count I); Negligence (Count II); Breach of Warranty (Count III).
In deciding a motion for judgment on the pleadings under Fed. R. Civ. P. 12(c), the Court "accept[s] all facts pled by the nonmoving party as true and draw[s] all reasonable inferences from the facts in favor of the nonmovant." Waldron v. Boeing Co. , 388 F.3d 591, 593 (8th Cir. 2004) (citations omitted). This is a "strict standard, as ‘judgment on the pleadings is not properly granted unless the moving party has clearly established that no material issue of fact remains to be resolved and the party is entitled to judgment as a matter of law.’ " Unite Here Local 74 v. Pinnacle Entm't, Inc. , No. 4:10-CV-00747 ERW, 2011 WL 65934, at *2 (E.D. Mo. Jan. 10, 2011) (quoting United States v. Any and all Radio Station Transmission Equip. , 207 F.3d 458, 462 (8th Cir. 2000) ). Ultimately, a motion for judgment on the pleadings is governed by the same standard as a motion to dismiss under Fed. R. Civ. P. 12(b)(6). See Clemons v. Crawford , 585 F.3d 1119, 1124 (8th Cir. 2009).
This motion, concerning a hot water heater which allegedly malfunctioned in 2018, requires analysis of Missouri law in 1892 (or 1826, depending on which party you ask). AERCO seeks judgment on the pleadings pursuant to the federal enclave doctrine, which provides that "when an area in a State becomes a federal enclave, ‘only the [state] law in effect at the time of the transfer of jurisdiction continues in force’ as surrogate federal law." Parker Drilling Mgm't Servs., Ltd. v. Newton , ––– U.S. ––––, 139 S. Ct. 1881, 1890, 204 L.Ed.2d 165 (2019) (quoting James Stewart & Co. v. Sadrakula , 309 U.S. 94, 100, 60 S.Ct. 431, 84 L.Ed. 596 (1940) ). The doctrine stems from the federal government's power to exclusively regulate properties acquired from state governments. U.S. Const., Art. I, § 8, cl. 17 (the "Enclave Clause"). This Court must accordingly answer two questions. First, when, if ever, did Jefferson Barracks become a federal enclave? Second, were Plaintiff's claims against AERCO cognizable under Missouri law at such time?
The parties do not dispute that Jefferson Barracks is a federal enclave; they just disagree over exactly when it became one. There are three requirements for the establishment of a federal enclave: (1) the United States acquires land in a state for one of the purposes mentioned in the Enclave Clause; (2) the state cedes exclusive jurisdiction to the federal government; and (3) the federal government accepts this grant of jurisdiction.1
Sultan v. 3M Co. , 2020 WL 7055576, at *6 (D. Minn. Dec. 2, 2020), appeal filed Forest Taylor v. 3M Co. , No. 20-3642 (8th Cir. Dec. 21, 2020) (citing Paul v. United States , 371 U.S. 245, 264, 83 S.Ct. 426, 9 L.Ed.2d 292 (1963) ).
AERCO contends that these requirements were met as of 1826, when "1,702 acres of common ground in the village of Carondelet ... was deeded from private landowners to the U.S. Government to establish a military post." U.S. Department of Veterans Affairs, Office of Historic Preservation, Historic Context: St. Louis VA Medical Center – Jefferson Barracks Division (Aug. 2012), available at http://www.stlouis.va.gov/news/VAMC-JB-HistoricContextFinal080712.pdf (last accessed Mar. 8, 2021).2 Plaintiff argues that the deed for this property was not actually valid until 1854, and Missouri did not fully cede jurisdiction until 1892. In City of St. Louis v. United States , the United States Court of Claims thoroughly investigated the history of Jefferson Barracks. 9 Ct. Cl. 455 (1873). As the Missouri Supreme Court has noted, an "account of this transaction, while interesting to the student of history, is otherwise irrelevant." Cockburn v. William , 301 Mo. 575, 257 S.W. 458, 461 (banc 1923).
Essentially, a U.S. Army quartermaster obtained a quitclaim deed for Jefferson Barracks from twelve inhabitants of Carondelet in 1826. City of St. Louis , 9 Ct. Cl. at 460. The U.S. Army promptly erected Jefferson Barracks, but until 1854, the land remained subject to dispute between Carondelet and the federal government. Id. at 461. Finally, in 1854, the city council of Carondelet passed an ordinance "directing the mayor to execute a deed to the United States of the barracks tract" for nominal consideration. Id. at 463. The court in City of St. Louis confirmed the validity of this deed, a decision which was affirmed by the Supreme Court. City of St. Louis v. United States , 92 U.S. 462, 23 L.Ed. 731 (1875). As the Supreme Court noted, the 1854 deed was "based upon an equitable compromise of a long-pending and doubtful question of title." Id. at 467. This Court can hardly say that either a quitclaim deed given to the U.S. Army by twelve residents in 1824 or a city ordinance passed in 1856 served to oust Missouri of jurisdiction over a large swath of property in the state.3 After all, the federal government acquires exclusive jurisdiction over a federal enclave "only with the consent of the state." Osburn v. Morrison Knudsen Corp. , 962 F. Supp. 1206, 1208 (E.D. Mo. 1997).
AERCO cites various Missouri statutes which expressly cede jurisdiction over land including Jefferson Barracks to the United States, but these statutes were not enacted until the twentieth century. See MO. REV. STAT. §§ 12.010 ; 12.020; 12.030; 12.040. The Court instead agrees with Plaintiff that 1892 is the earliest date at which it can be said that Missouri ceded exclusive jurisdiction over Jefferson Barracks. In 1892, Missouri's General Assembly passed a law explicitly providing that "exclusive jurisdiction ... is hereby ceded to the United States over and within all territory within the limits of the military post and reservation of Jefferson Barracks." Laws of Missouri, 1892, Extra Session, 16. That this statute required passing further suggests that Missouri had not yet ceded exclusive jurisdiction before 1892. Therefore, the operative question on this motion is whether Plaintiff's claims against AERCO are cognizable under Missouri law as it existed in 1892.4
The question before this Court is whether Missouri law in 1892 recognized claims for Product Liability (Count I), Negligence (Count II), and Breach of Warranty (Count III) against a remote product manufacturer with whom the plaintiff lacks privity.5 Plaintiff effectively offers two theories of liability: first, AERCO can be held liable due to its relationship with Plaintiff. Second, AERCO can be held liable for the actions of B&G, its alleged agent.
Plaintiff's nominal relationship with AERCO, a remote product manufacturer, clearly cannot serve as the basis for liability under Missouri law in 1892. Gordon v. Livingston is instructive. 12 Mo.App. 267 (1882). In Gordon , the plaintiff alleged that a City of St. Louis inspector erroneously classified a lot of wheat which was in fact of inferior grade. Upholding the trial court's judgment in favor of the defendant, the appellate court held that "[o]ne who sells a defective article to be used for a particular purpose for which it is not fit, is not, in the absence of fraud, liable for an injury caused to a third person by some defect in the construction of the article." Id. at 273. Simply put, Missouri courts only recognized product and tort liability against the direct seller as opposed to the original manufacturer. As the court explained in Gor...
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