Morris v. Osmose Wood Preserving, 732

• Decision Date: 01 September 1993
• Docket Number: No. 732,732
• Citation: 99 Md.App. 646,639 A.2d 147
• Parties: , Prod.Liab.Rep. (CCH) P 13,942 Patty MORRIS, et al. v. OSMOSE WOOD PRESERVING, et al. ,
• Court: Court of Special Appeals of Maryland

Page 646

99 Md.App. 646

639 A.2d 147, Prod.Liab.Rep. (CCH) P 13,942

Patty MORRIS, et al. v. OSMOSE WOOD PRESERVING, et al.

No. 732, Sept. Term, 1993.

Court of Special Appeals of Maryland.

Feb. 25, 1994.

Reconsideration Granted in Part and Opinion Corrected May 6, 1994.

Arnold Levin (Fred S. Longer, Levin, Fishbein, Sedran & Berman, on the brief), Philadelphia, PA, Gary E. Mason (Michael D. Hausfeld and Cohen, Milstein, Hausfeld & Toll, on the brief), Washington, DC (Steven M. Pavsner and Joseph Greenwald & Laake, P.A. on the brief), Greenbelt, for appellants.

Christopher Scott D'Angelo (Charles B. Casper and Montgomery, McCracken, Walker & Rhoads, on the brief), Philadelphia, PA, for appellee, Hoover.

Read K. McCaffrey (Andrew J. Toland and Patton, Boggs & Blow, on the brief), Baltimore, for appellee, Osmose.

H. Patrick Donohue and Armstrong, Donohue & Ceppos, on the brief, Rockville, for appellee, Hoover.

Philip C. Jacobson and Anderson, Coe & King, on the brief, Baltimore, for appellee, Hoover Treated Wood Products, Inc.

Argued before WILNER, C.J., and MOYLAN, J., and JAMES S. GETTY, Judge (retired), Specially Assigned.

JAMES S. GETTY, Judge, Specially Assigned.

The subject matter of this litigation relates to allegedly defective plywood roofing materials installed in residential structures throughout Maryland since 1980. The initial complaint, filed January 9, 1991, has proliferated into amended complaints two, three, and four. The roof has already fallen on the appellants herein via an order of the Circuit Court for Montgomery County, filed March 26, 1993, dismissing the Fourth Amended Complaint in its entirety and purporting to affirm the dismissal of several remaining counts in the Third Amended Complaint. Appellants' motion for reconsideration was denied by the trial court. In this appeal, they contend, in essence, that the roof cannot fall absent a hearing on the merits of their claim.

The issues raised in this appeal are:

1. Whether the trial court erred in dismissing plaintiffs' tort claims under the economic loss doctrine.

2. Whether plaintiffs must show direct reliance upon defendants' representations and omissions in order to maintain an action for damages under the Maryland Consumer Protection Act.

3. Whether the trial court erred in dismissing plaintiffs' breach of warranty claims as barred by the four year statute of limitations, and whether the plaintiffs alleged fraud that would toll the running of the statute.

Facts

This is a class action suit for damages, and for mandatory injunctive relief, seeking damages from the defendants for all expenses the plaintiffs and members of the class they represent in the State of Maryland have incurred, or will incur, for inspecting, repairing, and replacing roofs constructed with fire retardant, treated plywood ("FRT") manufactured, marketed, and/or sold by the defendants.

The named appellants are Laura Herlihy, Patty Morris, Richard Mills, and Michael Karbeling. The appellees are Osmose Wood Preserving, Inc., Hoover Treated Wood Products, Inc., and Hoover Universal, Inc. ¹ Laura Herlihy purchased a townhouse in Gaithersburg on September 28, 1983. The roof of the townhouse is constructed of FRT plywood manufactured by Hoover Universal, Inc. Patty Morris is the owner of a townhouse in Greenbelt bought November 3, 1987. The roof is constructed of FRT plywood manufactured by Osmose Wood Preserving, Inc. Richard Mills's townhouse in Greenbelt, which contains FRT plywood manufactured by Osmose, was also acquired November 3, 1987. Michael Karbeling's property was acquired July 11, 1985. The roof contains FRT plywood manufactured by Hoover Wood Products, Inc.

Appellants allege that the FRT plywood used in the construction of their respective townhouses has deteriorated, resulting in impairment of the strength and structural integrity of the roofs. Appellants contend that the roofs will need to be replaced, and that a threat of personal injury exists, although no physical injuries have occurred. The potential for injury, it is alleged, could result from walking on the roofs or from the roofs collapsing. The appellants further allege that each of the appellees marketed FRT plywood, and represented that the product was suitable for roof construction. In April, 1987, the American Plywood Association notified the appellees that the FRT plywood was subject to thermal degradation. Hoover Treated Wood Products received an inspection report from the American Plywood Association on or about March 30, 1986, describing a deteriorated FRT plywood situation. Although the appellees did not disclose the defective condition of plywood to the appellants, the dangers created by FRT plywood, it is alleged, became publicly known in 1990 through media reports, including an article in the New York Times dated April 11, 1990, and in the Montgomery Village Gazette on the same date.

The Pleadings

The defendants filed motions to dismiss the Second Amended Complaint and the court (McKenna, J.), by order dated July 29, 1991, stated that:

1. All counts as to each defendant in tort (strict liability, Count I; negligence, Count II; and negligent misrepresentation, Count IV) are dismissed with prejudice and final judgments are directed on these counts,

2. All claims for breach of implied warranty, (Count III) against Hoover Universal and HTWP with respect to plaintiffs Herlihy and Karbeling, are dismissed with prejudice as barred by limitations, and final judgment are directed on this Count,

3. Osmose's motion to dismiss Count III is denied,

4. All defendants' motions to dismiss Count V under the State Consumer Protection Act are denied, and

5. Plaintiffs shall file a more definite statement regarding Count III as to Osmose and Count V as to all defendants.

Appellants then filed a Third Amended Complaint, reasserting the claims dismissed with prejudice in Judge McKenna's prior order. Rather than filing a more definite statement of Count III as to Osmose, appellants repeated, verbatim, the allegations made in the Second Amended Complaint and provided a more definite statement as to Count V, the Maryland Consumer Protection Act.

The Third Amended Complaint was greeted with motions to dismiss the counts remaining under Judge McKenna's order and it is these motions that were addressed by Judge Cave on September 25, 1992. Following the hearing before Judge Cave, appellants filed a Fourth Amended Complaint excising some allegations that the appellees characterized as "scandalous."

As pointed out earlier herein, Judge Cave dismissed the Fourth Amended Complaint in its entirety. He also dismissed Count III (implied warranty) as to Osmose, and indicated that the "... granting of the Motion to Dismiss Counts I and II by Judge McKenna will not be disturbed. The Court also declines to disturb the dismissal by Judge McKenna of Counts IV, V, and VI." From the record, however, it is clear that Count VI was never before Judge McKenna; it appeared for the first time in the Third Amended Complaint filed three months after Judge McKenna's order dated July 29, 1991. More important, Judge McKenna did not dismiss Count V; he denied the motion to dismiss as to all defendants and required that plaintiffs file a more definite statement as to that count relating to State Consumer Protection Acts.

For the purposes of this appeal, we shall assume that Judge Cave would have dismissed Count V, since he believed it had been dismissed and "declined to disturb the dismissal." It would serve no worthwhile purpose to remand the case for clarification of what appears to us to be patently obvious.

Standard of Review

Appellate review of a judgment granting a motion to dismiss pursuant to Md. Rule 2-322 requires that this Court assume as true all well-pleaded material facts in the complaint and all reasonable inferences that may be drawn therefrom. If facts are alleged that, if proved, would entitle plaintiffs to relief, then the motion to dismiss was improperly granted. See Stone v. Chicago Title Ins. Co., 330 Md. 329, 624 A.2d 496 (1993); MacGill v. Blue Cross of Maryland, 77 Md.App. 613, 551 A.2d 501, cert. denied, 315 Md. 692, 556 A.2d 673 (1989).

Issue I

The Supreme Court has emphasized the need to maintain the separation of tort and contract law to prevent "contract law [from] drown[ing] in a sea of tort." East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 866, 106 S.Ct. 2295, 2299, 90 L.Ed.2d 865 (1986). Accordingly, the Court held 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. The case involved a suit by a shipbuilder against the manufacturer of turbines installed in four supertankers. The turbines malfunctioned in each of the four vessels causing substantial economic damages for replacement and lost revenue. The Court determined that the failure, or damage, to a product is a warranty claim, which simply means that the product has not met the customer's expectations. The customer, however, may obtain the benefit of his bargain by a breach of warranty action.

East River, supra, was decided by the Supreme Court on June 16, 1986. Thereafter, the Court of Appeals (McAuliffe, J.), on November 14, 1986, addressed the issue of whether economic losses are recoverable in tort, or whether such claims are to be pursued as a breach of warranty. See Council of Co-Owners v. Whiting-Turner, 308 Md. 18, 517 A.2d 336 (1986). In that case the condominium owners association brought a tort action against the general contractor, developers and architects involved in the construction of a building, alleging the negligent failure to construct ten vertical utility shafts with materials having a fire resistance rating of two hours as required by both the design and the local fire code. The owners alleged that these latent conditions created a fire hazard that "presents a...