McQuarrie v. PNC Bank, N.A.
| Decision Date | 07 September 2012 |
| Docket Number | CIVIL ACTION NO. 12-137-JBC |
| Parties | NANCY McQUARRIE, PLAINTIFF, v. PNC BANK, N.A., DEFENDANT. |
| Court | U.S. District Court — Eastern District of Kentucky |
This matter is before the court on PNC Bank's motion to dismiss (R. 15). Nancy McQuarrie's claims arise out of PNC's alleged actions in breaching her safety deposit box in violation of the contract between the parties and then failing to return the contents of the box to McQuarrie. Because most of the counts in McQuarrie's amended complaint state a plausible claim for relief, the court will grant the motion in part and deny it in part, and will dismiss only McQuarrie's claims of fraud and outrage.
The court accepts the following facts, submitted by McQuarrie in her amended complaint, as true for purposes of this motion. See League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007). McQuarrie held a safety deposit box at the Fayette Mall branch of PNC Bank in Lexington. On or about June 6, 2011, PNC drilled into and breached McQuarrie's box without her permission and, as a result, the contents of the box were misplaced and/or stolen. Around the same time, PNC contacted McQuarrie to tell her of its intention to breach the box; however, at the time of that call, the box had already beenbreached. McQuarrie commenced an action in Fayette Circuit Court, alleging violations of the Kentucky Consumer Protection Act, negligence, breach of contract, outrage, conversion, and fraud, and asserting a right to punitive damages. PNC removed the action to this court based on diversity of the parties and filed the present motion to dismiss, in which it seeks dismissal of all of McQuarrie's claims except her breach-of-contract claim. PNC primarily argues that McQuarrie's tort claims are subsumed by her contract claim; however, as this is not the case, the court will dismiss only those counts as to which McQuarrie has failed to state a plausible claim for relief. See Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Thus, the court will dismiss McQuarrie's fraud and outrage claims and will allow her other claims to proceed on their merits.
Although the parties have submitted evidence on this motion, the court will address it as a motion to dismiss under Fed. R. Civ. P. 12(b)(6). The court will consider the lease agreement between the parties, submitted by PNC with its motion, in the context of the motion to dismiss without converting it into a motion for summary judgment because the agreement is "central to the plaintiff's claim." Greenberg v. Life Ins. Co. of Virginia, 177 F.3d 507, 514 (6th Cir. 1999). Though the particular document is not expressly mentioned in the amended complaint, McQuarrie asserts breach-of-contract claims, and the lease agreement provides the basis for and the bounds of the relationship between the parties. It is accordingly properly considered part of the pleadings. Id. Further, in order to prevent the conversion of this motion into a motion for summary judgment, the court expresslyrejects for the purposes of this motion the additional exhibits proffered by McQuarrie in her response. See Max Arnold & Sons, LLC v. W.L. Hailey & Co., Inc., 452 F.3d 494, 503 (6th Cir. 2006).
Though a contract does form the basis for the relationship between the parties, McQuarrie's claims are not barred by the economic loss rule because it does not apply under these circumstances. In Kentucky, the economic loss rule provides that "a manufacturer in a commercial relationship has no duty under either a negligence or strict products-liability theory to prevent a product from injuring itself." Giddings & Lewis, Inc. v. Industrial Risk Insurers, 348 S.W.3d 729, 738 (2011). Economic damages that directly result from the loss of personal property, such as repair or replacement costs or lost profits, are thus unrecoverable in tort, but must be recovered through an action on the contract between the parties. Id. Conversely, "losses for injuries to people and to other property, in these commercial transactions, remain subject to the traditional products liability theories." Id. The Giddings & Lewis court addressed, but did not determine, whether this doctrine extends into cases regarding consumer products rather than just commercial products. See id. at 737 n. 5. This case, however, involves no product that generated an economic loss; the contract at issue for the safety deposit box characterizes the arrangement between the parties as a lease of property, see R. 15-3 at 1, and such a lease is not contemplated under the economic loss rule. The existence of a contract, by itself, does not preclude a plaintiff from bringing an action in tort for damages related to a violation of thatcontract. See Lewis v. Ceralvo Holdings, LLC, No. 4:11-cv-00055-JHM, 2012 WL 32607 at *3 (W.D. Ky. Jan. 6 2012). Accordingly, McQuarrie's tort claims are not subsumed by her contract claim, and must therefore be analyzed individually.
First, McQuarrie's negligence claim is not barred by the bailment clause in the lease. As stated above, the lease characterizes the relationship between the parties as one of a lease of property, and explicitly denies the creation of the bailment relationship that has historically been applied to purchasers and providers of safety deposit boxes. See, e.g., James v. Webb, 827 S.W.2d 702, 704 (Ky. Ct. App. 1991). Paragraph 4 of the lease provides that "[l]essor shall under no circumstances be considered a bailee, or otherwise howsoever in control or possession of the contents of the leased box, except as provided in Paragraph 11 hereof." R. 15-3 at 1. For a bailment relationship to exist, goods must be entrusted and delivered from one party to another and accepted by the receiving party, see Adika v. Smith, 466 F.3d 503, 507 (6th Cir. 2006); the instant lease explicitly denies such acceptance in this case. McQuarrie's negligence claim does assert that PNC had a duty to her as a bailee, and PNC is correct that the lease bars it from having any duties as a bailee of the property in the box. However, upon breaching McQuarrie's box and taking possession of the contents therein, PNC assumed a duty of care that is expressly stated by Paragraph 10 of the lease: "[t]he liability of the Lessor in respect to property deposited in the box is limited to loss caused by neglect to exercise ordinary care and diligence to prevent the opening of the box by any person other than the Lessee . . . ." R. 15-3 at 1. Underthe terms of the lease, therefore, PNC may be liable for the failure to exercise ordinary care under these circumstances. As the complaint states a plausible claim for relief on this issue, the court will not dismiss McQuarrie's negligence claim.
Second, the Kentucky Consumer Protection Act, KY. REV. STAT. 367.170 ("KCPA"), applies to this case because of the nature of the contractual arrangement between the parties. The lease at issue characterizes the arrangement between the parties as a lease of property, and Kentucky has applied the KCPA to similar property leases in landlord-tenant cases. For instance, in Miles v. Shauntee, 664 S.W.2d...
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