Nat'l Fire Ins. Co. of Hartford v. Johnson Controls Fire Prot. LP, CIVIL ACTION NO. 18-5379
| Decision Date | 23 August 2019 |
| Docket Number | CIVIL ACTION NO. 18-5379 |
| Parties | NATIONAL FIRE INSURANCE CO. OF HARTFORD v. JOHNSON CONTROLS FIRE PROTECTION LP |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Presently before the Court is Defendant's Motion to Dismiss Plaintiff's First Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 6.) For the following reasons, Defendant's Motion will be denied.
Plaintiff National Fire Insurance Company of Hartford is the insurer of The Kendal Corporation. .) The Kendal Corporation and its affiliate, Barclay Friends, are the owners and operators of an assisted living community located in West Chester, Pennsylvania. (Id. ¶ 8.) The community consists of several buildings, one of which, called the Woolman Building, was used as a residential personal care facility for the elderly. (Id. ¶ 9.) The Woolman Building was outfitted with an automatic fire sprinkler system in the living spaces, common areas, and attic portions of the building. (Id. ¶ 10.) Beginning in 2009, the sprinkler system was tested, maintained, inspected, and repaired by SimplexGrinnell. (Id. ¶ 12.) In 2014, SimplexGrinnell and Barclay Friends entered into a Service Solution Agreement that governed SimplexGrinnell's provision of fire protection system monitoring services. (Service Agreement, FAC Ex. B.) By its terms, this Agreement terminated on December 31, 2016 (id.), and the parties did not negotiate a new agreement (FAC ¶ 16). However, SimplexGrinnell, which, by 2016, had merged with Defendant Johnson Controls Fire Protection LP, continued to perform fire protection system services at the community "pursuant to individual and separate transactions." (Id. ¶¶ 17-18.)1
One of these transactions, performed in May of 2017, involved SimplexGrinnell replacing a leaking "OS&Y valve" in the sprinkler system. (FAC ¶ 23.) The Complaint states:
The 4" OS&Y valve was in a "series" of valves which could be used, separately or in combination with each other, to isolate portions or all of the fire suppression systems. In May, 2017, SimplexGrinnell's agents, representatives and employees closed several of the 4" OS&Y valves on either side of the leaking control valve in order to isolate the leaking valve, remove it and replace it. Upon completion . . . SimplexGrinnell failed to return all of the 4" OS&Y valves to their fully open positions, thereby preventing water from supplying the fire suppression systems protecting the Woolman Building.
(Id. ¶¶ 24-26.) The OS&Y valves were also "equipped with valve tamper switches that are intended to monitor whether the valves are maintained in proper position in order to assure the supply of water to the systems in the event of a fire." (Id. ¶ 27.) After SimplexGrinnell completed its repair work in May of 2017, it failed to return the valve tamper switch for at least one of the valves to its full open position. (Id. ¶ 28.) Because the valve tamper switch was not in its proper position, it did not signal that one of the OS&Y valves was not fully open. (Id. ¶ 29.)
In June and August of 2017, SimplexGrinnell returned to the Woolman Building to inspect the fire sprinkler system. (Id. ¶ 32; June Inspection, MTD Ex. B; August Inspection,MTD Ex. C.) SimplexGrinnell reported in June that all sprinkler system main control valves and other valves were in the appropriate closed or open position, and that all control valves were sealed or supervised in the appropriate position. (June Inspection 2.) It also reported two deficiencies in the system but did not mention the control valves or tamper switches. (Id. at 6.) The report is signed by a SimplexGrinnell inspector. (Id. at 4, 6.) In the August inspection report, SimplexGrinnell again stated that all sprinkler system main control valves and other valves were in the appropriate closed or open position, and that all control valves were sealed or supervised in the appropriate position. (August Inspection 2.) Even though it reported another deficiency in the system, it did not discuss the control valves or tamper switches. (Id. at 7.) This report was also signed by a SimplexGrinnell inspector. (Id. at 4, 7.)
On November 16, 2017, a fire started in the Woolman Building. (FAC ¶ 42.) The building's smoke detectors activated and signaled the local fire and police departments. (Id. ¶ 44.) However, because SimplexGrinnell failed to properly re-open one of the OS&Y valves during its May 2017 repair work, the only water that reached the sprinkler heads was residual water in the pipes. (Id. ¶ 45.) The closed OS&Y valve prevented additional water from flowing to the sprinkler heads. (Id. ¶ 46.) Ultimately, "[t]he fire spread throughout the Woolman [B]uilding and adjacent connected structures," causing the deaths of four residents, "damages to the building and personal property and equipment located in the structures, loss of business income and extra expenses." (Id. ¶ 48; Resp. 2, ECF No. 8.)
Plaintiff had an insurance policy with The Kendal Corporation and Barclay Friends at the time of the fire and has made payments to them in excess of $10,600,000. (FAC ¶¶ 49, 51.)
Plaintiff filed a subrogation action against Defendant in the Philadelphia Court of Common Pleas on November 7, 2018, alleging that Defendant is responsible for the actions of SimplexGrinnell. On December 11, 2018, Plaintiff filed a First Amended Complaint. (FAC.) Plaintiff brings claims against Defendant for negligence, gross negligence, and wanton and willful misconduct (Count I); negligent misrepresentation (Count II); intentional misrepresentation and fraud (Count III); and breach of implied warranty of workmanlike services (Count IV). (Id.) On December 12, 2018, Defendant removed the action to this Court. (ECF No. 1.) On January 9, 2019, Defendant filed the instant Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (MTD, ECF No. 6.) On January 21, 2019, Plaintiff filed a Response in opposition to Defendant's Motion. (Resp.)
Rule 12(b)(6) provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. A motion under Rule 12(b)(6) tests the sufficiency of the complaint against the pleading requirements of Rule 8(a). Under Rule 8(a)(2), "[a] pleading that states a claim for relief must contain a short and plain statement of the claim showing that the pleader is entitled to relief." "To survive a motion to dismiss, 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 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Courts need not accept "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Iqbal, 556 U.S. at 678. This "'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element."Phillips v. Cty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556).
Defendant seeks to dismiss the First Amended Complaint on two grounds. First, Defendant argues that the claims should be dismissed pursuant to the gist of the action doctrine because Plaintiff's claims sound in tort but the duties allegedly breached are in fact governed by the contracts between the parties. Second, Defendant argues that the misrepresentation and fraud claims should be dismissed pursuant to Rule 9(b) for lack of specificity. We address each of Defendant's arguments.
"Pennsylvania's gist of the action doctrine 'bars claims for allegedly tortious conduct where the gist of the conduct sounds in contract rather than tort.'" Quandry Sols., Inc. v. Verifone, Inc., No. 07-097, 2007 U.S. Dist. LEXIS 15264, at *6 (E.D. Pa. Mar. 1, 2007) (quoting Hospicomm v. Fleet Bank, N.A., 338 F. Supp. 2d 578, 582 (E.D. Pa. 2004)). "The purpose of the doctrine is to 'preclud[e] plaintiffs from re-casting ordinary breach of contract claims into tort claims.'" Id. at *6-7 (quoting eToll v. Elias/Savion Advert., Inc., 811 A.2d 10, 14 (Pa. Super. Ct. 2002)).
To determine whether a fraud claim is barred by the gist of the action doctrine, "the Court must first assess the alleged breach of the 'social duty imposed by the law of torts' (i.e., the fraud)," and then compare that breach to Defendant's contractual obligations under the parties' agreements. SodexoMAGIC, LLC v. Drexel Univ., 333 F. Supp. 3d 426, 454 (E.D. Pa. 2018) (quoting Bruno v. Erie Ins. Co., 106 A.3d 48, 70 (Pa. 2014)). Where "the 'nature of the duty' alleged to be violated arises out of Defendants' contractual promises," the gist of the actiondoctrine bars the fraud claim. Downs v. Andrews, 639 F. App'x 816, 821 (3d Cir. 2016) (quoting Bruno, 106 A.3d at 68). In Bruno, the court stated the following "general governing principle which can be derived from our prior cases":
[O]ur Court has consistently regarded the nature of the duty alleged to have been breached, as established by the underlying averments supporting the claim in a plaintiff's complaint, to be the critical determinative factor in determining whether the claim is truly one in tort, or for breach of contract. . . . If the facts of a particular claim establish that the duty breached is one created by the parties by the terms of their contract—i.e., a specific promise to do something that a party would not ordinarily have been obligated to do but for the existence of the contract—then the claim is to be viewed as one for breach of contract. If, however, the facts establish that the claim involves the defendant's violation of a broader social duty owed to all...
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