City of High Point v. Suez Treatment Solutions Inc.
Decision Date | 09 September 2020 |
Docket Number | 1:19CV540 |
Citation | 485 F.Supp.3d 608 |
Court | U.S. District Court — Middle District of North Carolina |
Parties | The CITY OF HIGH POINT, NORTH CAROLINA, Plaintiff, v. SUEZ TREATMENT SOLUTIONS INC., Fidelity and Deposit Company of Maryland, and CPPE Carbpm Process & Plant Engineering S.A., Defendants. |
Whitney D. Pierce, Zachary T. Dawson, Bruce P. Ashley, Fox Rothschild LLP, Greensboro, NC, for Plaintiff.
Kevin Guy Williams, Michael David Phillips, Bell Davis & Pitt, P.A., Winston-Salem, NC, for Defendants Suez Treatment Solutions Inc., Fidelity and Deposit Company of Maryland.
Gilbert Charles Laite, III, Kelly C. Hanley, Williams Mullen, Raleigh, NC, for Defendant CPPE Carbon Process & Plant Engineering S.A.
Plaintiff the City of High Point, North Carolina (the "City") brings causes of action for negligence, products liability, breach of warranties, and unfair and deceptive trade practices against Defendant CPPE Carbon Process & Plant Engineering S.A. ("CPPE Carbon").1 (Doc. 1.) This matter is before the court on Defendant CPPE Carbon's motion to dismiss, (Doc. 45), which the court will grant in part and deny in part for the reasons set forth in this Memorandum Opinion and Order.
On a motion to dismiss, a court must "accept as true all of the factual allegations contained in the complaint ...." Ray v. Roane, 948 F.3d 222, 226 (4th Cir. 2020) (citing King v. Rubenstein, 825 F.3d 206, 212 (4th Cir. 2016) ). The facts, taken in the light most favorable to Plaintiff, are as follows.
A lengthy recitation of the facts is not necessary. The court incorporates the factual details from its Memorandum Opinion and Order denying Defendant Suez's partial motion to dismiss. See City of High Point v. Suez Treatment Sols. Inc., No. 1:19CV540, 2020 WL 1307017, at *1 (M.D.N.C. Mar. 19, 2020). Additional relevant factual findings will be addressed as needed in this Opinion.
Plaintiff the City is a municipality located in North Carolina. (Complaint ("Compl.") (Doc. 1) ¶ 1.) In August 2011, Plaintiff hired Hazen and Sawyer, P.C. ("Hazen") to provide engineering services for an upgrade of the facilities at the Treatment Plant ("the Project"). (Id. ¶ 15.) Hazen acted as Plaintiff's agent. (Id. ¶ 19.)
Defendant Suez is a corporation organized under the laws of New York with its principal place of business in Virginia. (Id. ¶ 2.) Suez "provides environmental equipment, and design and installation services to companies and municipalities." (Id. )
Defendant CPPE Carbon is a Société Anonyme organized under the laws of Luxembourg, with its principal place of business there as well. (Id. ¶ 4.) CPPE Carbon "supplies air-pollution control equipment, along with design and installation services related to that equipment."
(Id. ) This Memorandum Opinion only pertains to CPPE Carbon.
Plaintiff contracted with Suez to install a Mercury Removal System ("MRS") in Plaintiff's incinerator (the "Incinerator") in Plaintiff's wastewater treatment plant (the "Treatment Plant"). "Suez represented to Hazen that CPPE needed to be the manufacturer of the portions of the MRS that CPPE was able to supply and design," and "that the inclusion of CPPE's products and its unique ‘Kombisorbon’ mercury removal process in the MRS would best enable the City to comply with the MACT standards for the control of mercury emissions."2 (Id. ¶ 20.) In particular, Suez "represented to Hazen that a granulated activated carbon adsorber ("GAC unit") designed and manufactured by CPPE needed to be part of the MRS." (Id. ¶ 21.) GAC units use a specific process, involving layers of activated carbon granules, to remove pollutants from exhaust gas. (Id. )
Plaintiff alleges that "[n]ormally, the City on a large construction project enters into a professional services contract with a design professional, such as Hazen, for the design of the project, and then enters into a contract with a general contractor for the construction of the project." (Id. ¶ 47.) But here, Plaintiff entered into separate "supply" agreements with equipment suppliers, one of which was with Suez, at Hazen's recommendation. (Id. ¶¶ 48, 50.) Hazen prepared the specifications for the contract bid process, which included that CPPE Carbon, "with which Suez had an existing contractual relationship, be the sole source of much of the equipment in the MRS, including the GAC unit." (Id. ¶ 55.) Suez won in the bidding process, and Plaintiff awarded Suez the contract. (Id. ¶ 61.) Plaintiff alleges, "[w]hen Suez was making its representations to Hazen, and at all times relevant to this litigation, Suez served as a sales force, representative and/or distributor in the United States for CPPE." (Id. ¶ 24.)
After installing the MRS and restarting the Incinerator (together, the "System"), two high-temperature or fire incidents occurred in the Incinerator. Neither Suez nor CPPE Carbon allegedly noticed or reported the increased levels of carbon monoxide. (Id. ¶ 79.) The following day, Suez and CPPE Carbon left the Treatment Plant without instructing Plaintiff or its staff on how to monitor the System. (Id. ¶ 80.) Plaintiff did not have control over the System prior to the first incident. (Id. ¶ 89.) This incident resulted in extensive damage to the System, and the System was inoperable. (Id. ¶¶ 90-92.) Suez and CPPE Carbon allegedly conducted "disorganized, poorly planned, patchwork repair efforts" on the System. (Id. ¶¶ 99–101.) Plaintiff alleges "Suez, either alone or in conjunction with CPPE, also modified the design of the MRS or changed various operating parameters and procedures for the MRS." (Id. ¶ 102.) After the second fire or high-temperature incident, Plaintiff installed an alternative system from another company. (Id. ¶¶ 122, 127.)
Plaintiff filed this action in this court on May 23, 2019. (Compl. (Doc. 1).) CPPE Carbon filed a motion to dismiss, (Doc. 45), and a supporting brief, (Mem. of Law in Supp. of Mot. to Dismiss ("CPPE's Br.") (Doc. 46)). Plaintiff responded, , and CPPE Carbon replied (CPPE's Reply (Doc. 56)).
Plaintiff brings four causes of action against CPPE Carbon, numbered causes of action eight through eleven in the Complaint. Plaintiff's Eighth Cause of Action alleges negligence under state law. (Compl. (Doc. 1) ¶¶ 189-203.) Plaintiff's Ninth Cause of Action alleges breach of warranties under state law. (Id. ¶¶ 204-11.) Plaintiff's Tenth Cause of Action is a state law products liability action. (Id. ¶¶ 212-22.) Finally, Plaintiff's Eleventh Cause of Action alleges Unfair and Deceptive Trade Practices under N.C. Gen. Stat. § 75-1.1 (the "UDTPA"). (Id. ¶¶ 223-28.)
The court has already disposed of Suez's partial motion to dismiss. (Doc. 57.)
Because this is an action brought under diversity of citizenship jurisdiction, North Carolina substantive law applies. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79–80, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).
The standard for a motion to dismiss under Rule 12(b)(6), however, is a procedural matter controlled by federal law. See, e.g., Colgan Air, Inc. v. Raytheon Aircraft Co., 507 F.3d 270, 275 (4th Cir. 2007) ; Wilson v. Dryvit Sys., Inc., 206 F. Supp. 2d 749, 752 (E.D.N.C. 2002), aff'd, 71 F. App'x 960 (4th Cir. 2003) (per curiam). To survive a Rule 12(b)(6) motion, "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A claim is plausible on its face if "the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable" and demonstrates "more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 556–57, 127 S.Ct. 1955 ). When ruling on a motion to dismiss, this court accepts the complaint's factual allegations as true. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Further, this court liberally construes "the complaint, including all reasonable inferences therefrom, ... in plaintiff's favor." Estate of Williams-Moore v. All. One Receivables Mgmt., Inc., 335 F. Supp. 2d 636, 646 (M.D.N.C. 2004) (citation omitted). This court does not, however, accept legal conclusions as true, and "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
CPPE Carbon argues Plaintiff's causes of action are all barred, at least in part, by the economic loss rule. (CPPE's Br. (Doc. 46) at 13, 22–23, 25–26.) CPPE Carbon also argues that Plaintiff fails to submit sufficient facts to plausibly allege a UDTPA cause of action or a breach of warranties cause of action. (Id. at 21, 24.)
Plaintiff argues that the economic loss rule cannot bar its causes of action against CPPE Carbon because there was no contract between Plaintiff and CPPE Carbon. (Pl.’s Resp. (Doc. 51) at 13–14.)
CPPE Carbon argues that Plaintiff experienced only economic loss and therefore Plaintiff's cause of action is barred regardless of whether they were in privity. (CPPE's Br. (Doc. 46) at 17–19; CPPE's Reply (Doc. 56) at 2–6.) CPPE Carbon further argues that Plaintiff "fails to allege that CPPE breached any separate duty to the City imposed by law or that the City does not have available to it a remedy in contract or warranty." (CPPE's Br. (Doc. 46) at 13.)
The court will address CPPE Carbon's challenges to each of Plaintiff's causes of action in turn.
CPPE Carbon argues that the economic loss rule applies regardless of whether there is privity between Plaintiff and CPPE Carbon. (CPPE's Br. (Doc. 46) at...
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