AutoZone, Inc. v. Glidden Co.

• Citation: 737 F.Supp.2d 936
• Decision Date: 10 September 2010
• Docket Number: No. 08-2851,08-2851
• Parties: AUTOZONE, INC., Plaintiff v. The GLIDDEN COMPANY, d/b/a ICI Paints, Defendant. and The Glidden Company d/b/a ICI Paints, Third-Party Plaintiff, v. BASF Construction Chemicals, LLC, Third-Party Defendant, and Autozone, Inc., Plaintiff, v. BASF Construction Chemicals, LLC, Defendant.
• Court: United States District Courts. 6th Circuit. Western District of Tennessee

737 F.Supp.2d 936

AUTOZONE, INC., Plaintiff

v.The GLIDDEN COMPANY, d/b/a ICI Paints, Defendant.andThe Glidden Company d/b/a ICI Paints, Third-Party Plaintiff,

v.BASF Construction Chemicals, LLC, Third-Party Defendant,andAutozone, Inc., Plaintiff,

v.BASF Construction Chemicals, LLC, Defendant.

No. 08-2851.

United States District Court,

W.D. Tennessee,

Western Division.

Sept. 10, 2010.

Samuel L. Crain, Jr., Burch Porter & Johnson, Memphis, TN.

Mary Hale Morris, Melissa A. Maravich, Burch Porter & Johnson, Memphis, TN, for Plaintiff.

Randall D. Noel, Eric E. Hudson, Butler Snow O'Mara Stevens & Canada, PLLC, Burch Porter & Johnson, Memphis, TN, Samuel Keith Hutto, Nelson Mullins Riley & Scarborough, LLP, Columbia, SC, for Defendant/Third-Party Plaintiff.

Mark Alan Smith, Husch Blackwell Sanders, LLP, Chattanooga, TN, for Third-Party Defendant.

ORDER GRANTING IN PART AND DENYING IN PART THIRD-PARTY DEFENDANT BASF CONSTRUCTION CHEMICALS' MOTION TO DISMISS, AND GRANTING IN PART AND DENYING IN PART THIRD-PARTY PLAINTIFF THE GLIDDEN COMPANY'S MOTION TO AMEND

SAMUEL H. MAYS, JR., District Judge.

Before the Court is Third-Party Defendant BASF Construction Chemicals, LLC's ("BASF") September 1, 2009 Motion to Dismiss Third-Party Plaintiff The Glidden Company d/b/a ICI Paints' ("Akzo Nobel") Third-Party Complaint alleging causes of action for indemnification, contribution, breach of express warranty, breach of the implied warranty of merchantability, breach of the implied warranty of fitness, and negligence. (D.E. 56.) On October 15, 2009, Akzo Nobel responded in opposition to BASF's Motion to Dismiss (D.E. 65), and on October 27, 2009, BASF filed a reply (D.E. 69).

Also before the Court is Akzo Nobel's March 31, 2010 Motion for Leave to Amend its Third-Party Complaint. (D.E. 90.) BASF responded in opposition onApril 9, 2010, arguing that amendment would be futile (D.E. 91).

Taking all facts alleged by Akzo Nobel as true, amending its Third-Party Complaint to elaborate its causes of action for indemnification, breach of express warranty, breach of the implied warranty of merchantability, and breach of the implied warranty of fitness would not be futile. Thus, the Court GRANTS Akzo Nobel's Motion to Amend to the extent the Amended Third-Party Complaint addresses those causes of action and DENIES AS MOOT BASF's Motion to Dismiss those causes of action in Akzo Nobel's original Third-Party Complaint. Amending Akzo Nobel's Third-Party Complaint to elaborate its causes of action for contribution and negligence would be futile. Therefore, the Court DENIES Akzo Nobel's Motion to Amend to the extent the Amended Third-Party Complaint would address those causes of action and GRANTS BASF's Motion to Dismiss those causes of action in Akzo Nobel's original Third-Party Complaint.

I. Factual Background

This dispute concerns the failure of exterior paint on potentially hundreds of AutoZone, Inc. ("AutoZone") retail automotive parts stores. (Memorandum in Opposition to Third-Party Defendant BASF Construction Chemicals, LLC's Motion to Dismiss Third-Party Complaint, D.E. 65, at 2.) ("Akzo Nobel Mem. in Opp'n") In 2005, AutoZone began a new store construction program. (Amended Third-Party Complaint Against BASF Construction Chemicals, LLC, D.E. 90-1, ¶ 8.) ("Am. Third-Party Compl.") As part of that program, Akzo Nobel supplied exterior paints to meet AutoZone's specifications. ( See id. ¶ 9.) One specification required Akzo Nobel to obtain products from Degussa Construction Chemicals, Inc. ("Degussa"), which was a subsidiary of Degussa Corporation and which ultimately became BASF. ( See id. ¶¶ 2-3, 9.) The products obtained included Thoro 35, Sonneborn Gray, SCC Smooth UD BS 5G, Blockfiller 749, Thoro Blockfiller, ThoroCoat, ThoroGuard, and ThoroSheen ("Degussa Products"). ( Id. ¶ 9.) Together, they constitute approximately 85% of each AutoZone store's exterior paint and are applied to hundreds of AutoZone stores. ( See id. ¶¶ 10-11.)

AutoZone also contracted with Akzo Nobel to manufacture AutoZone Orange paint for use as a stripe on each store's exterior. ( Id. ¶ 13-14.) Between 2006 and March 2008, Akzo Nobel purchased the orange pigment used to manufacture that paint from BASF. ( Id. ¶ 15.) The resulting paint was applied to newly constructed and repainted AutoZone stores. ( Id.)

The paint AutoZone purchased developed problems. ( See id. ¶¶ 12, 16.) Once applied, it cracked, peeled, and faded. ( See id.) In part because of those problems, AutoZone sued Akzo Nobel, alleging breach of contract. (Amended Complaint for Breach of Contract and, if Appropriate, Other Relief, D.E. 45, ¶ 11.) ("AutoZone's Compl.") AutoZone alleges that Akzo Nobel breached express warranties that "all material delivered shall be free of defects for a period of five (5) years from completion and/or date delivery [sic] of all goods ...." ( Id.) AutoZone seeks, inter alia, the cost of curing warranty defects currently known and the cost it is reasonably certain to incur in the future. ( Id. at 7.)

Akzo Nobel filed an Answer and a Third-Party Complaint against BASF. Akzo Nobel seeks indemnity and contribution to the extent Akzo Nobel is found liable to AutoZone, and recovery for breach of express warranty, the implied warranty of merchantability, the implied warranty of fitness for a particular purpose, and negligence. (Am. Third-Party Compl. ¶¶ 18, 24, 27.)

AutoZone then sued BASF directly, alleging breach of contract and seeking compensatory damages. (Amended Complaint for Breach of Contract, D.E. 60-1, at 5.) BASF, in its Answer, admits that it and/or Degussa had issued certain warranties directly to AutoZone for products applied to AutoZone stores, and that Degussa occasionally supplied products to Akzo Nobel that may have been used on AutoZone stores. (Defendant BASF Construction Chemicals, LLC's Answer to Plaintiff's Amended Complaint, D.E. 61, ¶¶ 7-8.) ("BASF's Answer") The Court granted AutoZone's Motion to Consolidate its action against BASF with the original disputes between AutoZone and Akzo Nobel, and Akzo Nobel and BASF. (Order Consolidating Cases, D.E. 66, at 2.)

Akzo Nobel filed a Motion for Leave to Amend its Complaint on March 31, 2010. (Motion and Memorandum of Defendant and Third-Party Plaintiff Akzo Nobel Paints LLC, Formerly Known as The Glidden Company D/B/A/ ICI Paints for Leave to Amend Complaint, D.E. 90.) ("Mot. to Amend")

II. Jurisdiction and Choice of Law

Plaintiff AutoZone is a Nevada corporation with its principal place of business in Memphis, Tennessee. (AutoZone's Compl. ¶ 1.) Defendant and Third-Party Plaintiff Akzo Nobel is a Delaware corporation with its principal place of business in Strongsville, Ohio. (Am. Third-Party Compl. ¶ 1.) Defendant and Third-Party Defendant BASF is a Delaware corporation with its principal place of business in Beachwood, Ohio. (BASF's Answer ¶ 2.)

Complete diversity exists between AutoZone and Akzo Nobel and between AutoZone and BASF. See V & M Star, LP v. Centimark Corp., 596 F.3d 354, 355 (6th Cir.2010) (citing Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89, 126 S.Ct. 606, 163 L.Ed.2d 415 (2005)). The amount in controversy exceeds $75,000. ( See AutoZone's Compl. ¶ 17.) Therefore, the Court has diversity jurisdiction under 28 U.S.C. § 1332. Medlen v. Estate of Meyers, 273 Fed.Appx. 464, 469 (6th Cir.2008) (citing Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978)). The Court has supplemental jurisdiction over Akzo Nobel's Third-Party Complaint against BASF. See Grimes v. Mazda N. Am. Operations, 355 F.3d 566, 572 (6th Cir.2004).

In a diversity action, the Court applies the choice of law rules of the forum state. See Morell v. Star Taxi, 343 Fed.Appx. 54, 57 (6th Cir.2009). Here, the parties have not discussed where any contract was made or any allegedly tortious conduct occurred. They agree in their respective motions and memoranda that Tennessee substantive law applies. "Because the parties agree to the particular state law application, the court will apply Tennessee law and will not conduct a choice of law analysis sua sponte." Americoach Tours, Inc. v. Detroit Diesel Corp., No. 04-2016 B/V, 2005 WL 2335369, at *1 (W.D.Tenn. Sept. 23, 2005) (citations omitted); see In re Korean Air Lines Disaster of Sept. 1, 1983, 932 F.2d 1475, 1495 (D.C.Cir.1991) ("Unlike jurisdictional issues, courts need not address choice of law questions sua sponte."). Therefore, the Court will apply Tennessee substantive law.

III. Standard of Review

"Federal Rule of Civil Procedure 15(a)(2) provides that leave to amend shall be freely given when justice so requires." Riverview Health Inst. LLC v. Med. Mut. of Ohio, 601 F.3d 505, 520 (6th Cir.2010). However, when a proposed amendment would be futile because the cause of action cannot withstand a Rule 12(b)(6) motion to dismiss, courts may deny a motion toamend to assert or support that cause of action. See id.

Under Federal Rule of Civil Procedure 12(b)(6), the Court may dismiss an action when a complaint fails to state a claim upon which relief can be granted. Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 562 (6th Cir.2003). In deciding whether to grant a motion to dismiss for failure to state a claim, the Court must construe the complaint in the light most favorable to the plaintiff, accept as true all factual allegations in the complaint, and draw all reasonable inferences in the plaintiff's favor, but "need not accept as true legal conclusions or unwarranted factual inferences." Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir.2007) (quoting Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir.2000)); see Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). The Court need not "accept as true a legal conclusion couched as a factual allegation." See Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir.2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

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